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    Crypto is a 'speculative vehicle' and should be regulated, says boss of central bank group BIS

    A visual representation of digital currencies.Yuriko Nakao | Getty ImagesLONDON — Cryptocurrencies are used to evade laws and should face more regulation, according to the general manager of the Bank for International Settlements (BIS).Many digital coins are “used to do some arbitrage, or to circumvent some regulations,” Agustin Carstens told CNBC’s Joumanna Bercetche in an interview aired Wednesday.He added that laws against money laundering and the financing of terrorism were “absent in many applications of some cyber currencies.”Bitcoin and other virtual currencies have seen huge gains over the last year, as investors have looked to diversify their holdings in the coronavirus pandemic. Bitcoin bulls view the token as a sort of “digital gold,” claiming it can act as an inflation hedge in times of economic crisis and massive stimulus.However, cryptocurrencies have also gained a reputation for their involvement in illegal activities. They are pseudonymous, making it harder to track down who is making transactions. Earlier this year, U.S. Treasury Secretary Janet Yellen said the government would need to “curtail” the use of crypto for criminal transactions.Bitcoin is up more than 80% since the start of the year, though it’s down about 12% from a record high above $61,000 earlier this month. Ether, another digital coin, has more than doubled year-to-date, but is down 18% from its all-time record of over $2,000.Cryptocurrencies are notorious for being subject to wild swings in price. Carstens said he thinks cryptocurrencies are being used as a “speculative vehicle” and doesn’t see them as a threat to central banks and the established financial system.”I don’t see any dominance of cyber currencies,” he said, adding cryptocurrencies haven’t made “any inroads in terms of working as money.””Stablecoins also have some limited applications,” Carstens said, referring to digital coins that are tied to external assets like the U.S. dollar to minimize price volatility. “They have their own role for very specific purposes. Therefore, I don’t see any challenge … to sovereign money coming from these privately used currencies.”His comments arrive as various central banks around the world are exploring their own digital currencies. China has led the pack, trialling its digital yuan in a number of cities, while Sweden’s central bank is also considering whether to introduce a digital version of its krona currency as cash usage declines rapidly in the Scandinavian country.Last year, the BIS and several central banks including the U.S. Federal Reserve, European Central Bank and the Bank of England published a report laying out some key requirements for central bank digital currencies, or CBDCs. They recommended that CBDCs compliment, not replace, cash and other forms of legal tender, and support rather than harm financial stability.Central banks’ push toward digital currencies was catalyzed in part by Facebook’s plan to introduce its own token in partnership with other private companies. Initially called Libra but now known as Diem, the project drew an instant backlash from regulators around the world due to worries that it may undermine sovereign currencies.That’s because of the huge reach of Facebook in particular, which is used by well over 2 billion people. Carstens warned that stablecoins like libra would need be strictly regulated.”The issue of what is backing those currencies is of the essence,” he said. “We have many, many episodes in the history of finance where, something that is supposed to be completely backed, at the end it doesn’t end up being fully backed.”There have long been fears that tether, one of the most widely used stablecoins today, may not have had enough cash reserves to back all the tokens in circulation. Ifinex, the parent company of Tether and crypto exchange Bitfinex, recently reached a settlement with the New York attorney general’s to end an investigation into the firms over this issue.”I think we need to work on regulation so that these instruments are fit for purpose,” Carstens said. More

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    The Fear Coach Drewe Broughton: The No 1 reason managers lose their job

    “I think this is the number one reason managers lose their job — they often can’t build that emotional connection or bond with players.”Football, that random dispenser of joy and woe, mimics life in its unpredictability. Yet we so often reduce the game to numbers and patterns, counting on past results and experiences to repeat themselves because, well, that’s what happened in the past.A group of good players should make a good team. Decorated players should make winning managers. Spending money should equal success. Given what they earn, footballers should be happy, and so on. On paper this, on paper that.Tactics, team selections, form and statistics are pored over in minute detail. They matter greatly, of course, but some areas of the game are still woefully neglected: feeling, morale, and perhaps most important: player fear. With no tangible metrics, they cannot be analyzed.Call it mental health, wellbeing, vulnerability or admitting weakness, though improving, they’re also still at odds with football’s macho, stiff-upper-lip traditions. And though it is becoming more accepted that footballers aren’t robots, the idea that their emotions could actually block performance still rarely enters the narrative.Instead, poor performance is often put down to tactics, injury, the manager, or simply the idea they were never good enough in the first place.Drewe Broughton, a former striker who made over 500 appearances in the Football League over 17 years, across 22 clubs, is on a mission to improve emotional and spiritual awareness of top football coaches.Broughton himself felt form acutely throughout his career as purple patches came and went, but his tendency to look within prompted him to stop and ask: “What is happening for me here?”. His coaches rarely did.Broughton believes the likes of Pep Guardiola, Jurgen Klopp and Brendan Rodgers, among others, possess a common trait: empathy. Elsewhere in the game, it is still lacking.Defined, empathy is the ability to sense other’s emotions — not to be confused with sympathy. In a footballing sense, Broughton believes empathy is difficult to crack, but more coaches are showing that ability and seeing rewards in their relationships with players.What happens when that relationship builds? The player will run and fight more for you. It really is that simple.MANCHESTER, ENGLAND – NOVEMBER 11: Man Utd manager Jose Mourinho (L) and Man City manager Pep Guardiola gesture during the Premier League match between Manchester City and Manchester United at the Etihad Stadium on November 11, 2018 in Manchester, United Kingdom.Simon Stacpoole/Offside | Offside | Getty Images”First and foremost, before we even get to tactics, every guy in that dressing room has the fear of humiliation,” Broughton tells Sky Sports. “Before they do any tactical work, good coaches deal with that first. That creates an environment of honesty, and the best relationships are honest ones, not relationships in which you hide feelings, tip-toe around.”Everyone wants tangibles these days, but you can’t see empathy. I think life is really simple. Just be honest with someone: that’s vulnerability. It’s really simple, but simple is hard to do.”It’s not simple when it’s been your habit for so many years though. The hardest thing to do in life is to feel, but players are so desperate to feel, to feel human, to connect. But they struggle, they shut off their feelings, and I think a lot of coaches have done the same because they are often ex-players.”Brendan Rodgers for example, deep down, believes tactics are pretty irrelevant. At the end of it all, it’s really, ultimately all about getting people to run and fight for you. Can you build that connection with a person, and then with the player? That’s what it’s all about. I listened to Rogers recently say ‘The most important thing beyond the tactical and technical is connecting with players emotionally, getting them to run for you’.”Our natural human reaction to pain is to run away, bury it, avoid it. As a footballer though, you cannot avoid constant emotional trauma. You are in the team, out the team, ignored by a coach or manager, then told you are great, then jeered from the crowd. It’s such a traumatic, emotional career that you cut off from the pain.”Broughton’s own journey is layered and colorful. He played for 22 clubs including Peterborough, Southend and MK Dons, was a scorer at 17 on his debut for Norwich, and was in England’s U20 squad alongside the likes of Michael Owen, Jamie Carragher and Emile Heskey.But throughout his career, the pressure Broughton put on himself crippled him.”Firstly, at a core level, I am very sensitive, I am emotionally very intelligent. Intellectually intelligent? Not so much. I had to carry that through football, and what confused a lot of my old-school, tough managers is that they looked at me and thought I was a ‘proper old-school player’. But actually, behind the scenes I was still me, I hurt, I was human, I felt everything. It confused people, and it was confusing for me to carry around in my career. I was constantly thinking: ‘Who am I?'”I put a lot of pressure on myself — the thought of not winning a header, losing a game, not winning a game, would overwhelm me, and I couldn’t share that pressure. So on the pitch, I was either a 1/10 or a 9/10.”When the big, bad guy didn’t come out in the 90 minutes, I’d be shamed twice as hard as the average player, because they expected me to come out and hit hard. I would beat myself up and then try to act hard, but I was broken inside. That’s where the acting out with addiction started. That was my 17 years, flip-flopping between that, until I was broken.Read more stories from Sky SportsBale: I plan to return to Real MadridEngland U21s at the Euros on Sky: Hinchcliffe’s previewVan Basten on why offside should be scrapped”It’s not a case of being mentally tough and resilient; I had that in abundance, living year to year contracts and having to perform to earn another deal for 17 years, no back up, no safety net, so mental toughness isn’t it. It’s the fact that we are human and to be human is to feel. You can’t feel if you want to survive.”So many players are acting that out. It comes out with gambling, drinking, whatever. Today so many players use Snus — the smokeless, moist powder tobacco pouch you put under your lip – some clubs try and ban it but it’s all to alter your mood, to numb the internal suffering.”Broughton developed a sex addiction, and was admitted to Tony Adams’ Sporting Chance clinic via the PFA. After rehab, Broughton stayed loosely in the game, studying biomechanics, injury prevention and movement therapy from 2006 to 2011.He the built Surpass Fitness, which he ran from 2011 to 2015, with Harry Kane, Aaron Ramsey, Theo Walcott, Alex Oxlade-Chamberlain, Craig Bellamy and more coming through the door. That’s where talking therapy develops.”Naturally, that relationship is intimate because they sit on your couch, and I’m putting my hands on them. There’s trust involved in laying your hands on another person and touching of another’s skin. That’s why a lot of players open up with their physical therapist — the player is giving you their body for you to help them.”I have a character that enables people to open up quickly. I’d chat to players, and players would begin to open up. I could be around the emotions. I was able to share the solutions I’d learned after such a brutal period of self-reflection and self-understanding that I had gone on after playing and rehab, and they would say: ‘S***, that really resonates, can we talk more about that?'”Broughton eventually shifted his focus from physical to mental therapy, providing holistic support for professional players who wanted private help, rather than going through official streams at their club. The fear of showing weakness to coaches, and in-turn weakening the chance of playing time, prompts this.Now, after six years of one-to-one help with players, including three years of coaching hundreds of business owners, staff and delivering workshops and talks, Broughton’s carefully-curated bootcamps are aimed at helping coaches to understand their players’ fears and unlock their potential.”The young academy players come in pure, open and vulnerable, asking people to show them the way, but what you tend to have is emotionally unaware people in coaching positions.”The player then progresses to the pro game, which has more damaged ex-players in it, so the constant solutions are always tactical, technical and physical. All the things that are tangible and measurable. That’s what the coaches fall back on.”Broughton is acutely aware, both through his experience and talking to current professional footballers, just how much certain feelings are avoided behind the scenes at football clubs. If a player admits weakness, they fear they will not be in the starting XI at the weekend. If a coach admits weakness, they risk ‘losing the dressing room’.But Broughton believes the best coaches today do this. The facing up of fear and re-framing of vulnerability is central to his teachings.”Fear is central to the bootcamps. One player I worked with, whose side had lost a couple games, told me the team had a 40-minute team meeting on the Monday after a defeat, and the coach said: ‘Guys, give me some feedback, what’s going on right now?'”Everyone looked at their feet. My client spoke up and said: ‘I think we’re playing with fear.’ Apparently you could have heard a pin drop.”One of the staff very quickly said: ‘Nah, nah I don’t think it’s fear… nobody is scared. Are you? Are you? I wouldn’t say we are scared!’ It was very quickly brushed under the carpet. My client just walked out and laughed.”But fear is there, right at the top — when you don’t quite want the ball, you’re playing sideways passes, it looks like you’re showing for it but you’re not, you’re half getting to the ball.”Fear is the F word. We’re warriors, you’re not allowed to say the F word! Or, so we think. Obviously players are never going to say they’re scared, they’re men! They can’t show weakness!”But it’s just honesty, nothing more. The All Blacks, the most successful rugby team, some would say sports team, of all time – they call it vulnerability. They see vulnerability as the super power of leadership. Vulnerability is honesty.”There’s always a lot of pushback at the start when I teach this, because people think it’s weakness, particularly in a macho work. The egos are so big, the defence mechanisms are put up, they are all products of the environment they are in.”LEICESTER, ENGLAND – MARCH 21: Brendan Rodgers, Manager of Leicester City is interviewed at full-time during the Emirates FA Cup Quarter Final match between Leicester City and Manchester United at The King Power Stadium on March 21, 2021 in Leicester, England.Alex Pantling | Getty Images Sport | Getty ImagesA mix of coaches have already signed up to Broughton’s bootcamps, which started in March, including the director of coaching at a Championship club, an ex-international manager, a director of football at an MLS club and several younger academy coaches.Over six weeks, and in groups of 10 maximum, the coaches will gather each week for a few hours to work on learning to how to improve emotional intelligence, empathy, compassion and understand the foundations of fear. Broughton also offers bootcamps to business leaders, having worked closely with several CEOS at financial companies in the City.Some of the testimonials, even after session one, show the impact of these discussions.One ex-Premier League international and Championship manager said: “Last night was amazing, I woke up with a positive feeling that I’m on the right path. I don’t think this will be an easy course in so many different ways but I’m looking forward to what lies ahead.”One head of coaching said: “From this, I had a terrific meeting with my staff for next season — I introduced rapport and empathy to the discussion and then vulnerability with examples. Initially it was quiet because it was uncomfortable, but 30 minutes later we had vibrant and enthusiastic discussion.”And another assistant manager from a foreign club said: “I woke up with tonnes of new questions and realisations about matters I’ve completely ignored for way too long.”The aim is to turn the next generation of coaches into empathetic and compassionate people, moving away from the idea of control over a group through fear, an old-school trait so many ex-players cling to as they move into coaching.Broughton adds: “Players just want to be loved, they want to be themselves, they want to be able to tell the manager they have lost a bit of confidence and are a bit afraid at the moment – afraid of mistakes or being humiliated. But you just can’t say it.”Why? Because the minute you say that, you trigger that feeling in another person. But if that coach can’t feel empathy – which so many coaches can’t because that empathy is buried under all the times they have felt like that as a player – you are now triggering that emotion in them. The coach then reacts, baulks, and denies.”At this point, the coach is essentially saying: ‘This is really uncomfortable for me right now. I am now really uncomfortable.”I want to help change the landscape for coaches in the next 20, 30 years. I want the next generation of coaches to have these skills.” More

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    Fosun Pharma shares tumble nearly 5% after Hong Kong suspends BioNTech Covid vaccinations

    Branding for the vaccination program on the clothing of a staff outside a community vaccination center administering the BioNTech Covid-19 vaccine imported by Fosun Pharma in Hong Kong, China, on Wednesday, March 17, 2021.Chan Long Hei | Bloomberg via Getty ImagesShares of China’s Shanghai Fosun Pharmaceutical Group fell after Hong Kong and Macao announced Wednesday they were suspending BioNTech Covid vaccinations.Fosun Pharma, BioNTech’s partner in the development and distribution of the Comirnaty Covid-19 vaccine in greater China, notified the cities of a packaging flaw in batch 210102 of the vaccine.Hong Kong and Macao said they were suspending the German-made vaccinations as a precautionary measure.Hong Kong-listed shares of Fosun Pharma plunged 4.83% on Wednesday.The cities said BioNTech and Fosun Pharma are investigating the cause of the vial cap defect, adding that there is currently no reason to doubt the safety of the vaccine.Hong Kong authorities later sought to reassure citizens in a Wednesday press conference following the initial announcements.”The entire process of vaccination, it is very stringent,” said Sophia Chan, Hong Kong secretary for food and health. “We saw that certain vial caps had been loose, but these vials had been thrown away, so they have not been injected into citizens.”Macao said all of its messenger RNA, or mRNA, vaccines belong to the affected batch. Hong Kong said it would also temporarily suspend vaccinations from batch 210104 until the investigation is completed.Director of Hong Kong’s department of health Dr. Constance Chan said Fosun’s investigation in Hong Kong will mainly focus on the logistics chain, including transportation, handling and delivery of the vaccines. She added that BioNTech will inspect its manufacturing plant in Germany.Hong Kong approved the BioNTech vaccine for emergency use in January, while Macao granted the vaccine special import authorization in late February. Both territories received their first batch of shots in late February.BioNTech’s mRNA-based vaccine has a demonstrated effectiveness of 95% in adults, according to data from its global phase 3 clinical trial. And real-world data has shown “very strong” results from Pfizer-BioNTech’s Covid two-dose vaccine even after just one shot.The news comes as countries around the world race to vaccinate their populations in the face of rising Covid cases in most regions.So far, Hong Kong has approved vaccines from BioNTech and China’s Sinovac. As of Tuesday, the city said about 403,000 people have received a first dose, of which 252,800 were Sinovac shots and 150,200 were BioNTech.Globally, more than 124 million infections have been reported and the death toll from Covid has surpassed 2.7 million, according to data compiled by Johns Hopkins University.— CNBC’s Christine Wang contributed to this report. More

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    Electric automakers must brace for rising battery materials costs, Goldman says

    A GM employee poses with an example of the company’s next-generation lithium metal batteries at GM Chemical and Materials Systems Lab in Warren, Michigan, September 9, 2020.Steve Fecht | General Motors | Handout | via ReutersBEIJING — Growing demand for electric car batteries will cause prices of the main materials to surge, Goldman Sachs analysts said in a March 18 note.That in turn will drive prices of batteries higher by about 18%, affecting the total profit of electric car makers since the battery accounts for about 20% to 40% of the vehicle cost, the Goldman analysts said.While the report didn’t give specific price targets for the commodities, the analysts’ model predicted a return to historical peak prices would more than double the cost of lithium for electric battery makers. That of cobalt would also double, while the cost of nickel would rise by 60%.”Prices for the three main natural resources have been rising since the start of 2021,” the Goldman report said. “We believe that in order to promote sustainable EV industries, some countries may consider implementing policies to increase national stockpiles.”A new type of batteryLimited availability of nickel suitable for car batteries could even accelerate a shift to another kind of battery called lithium iron phosphate (LFP), the report said. Tesla and Chinese start-up Xpeng are among automakers already using this type of battery, which does not use nickel or cobalt but stores relatively less energy.If nickel prices hit their historic high of $50,000 per tonne, that could add $1,250 to $1,500 per electric vehicle, which could hurt consumer demand for the cars, the analysts said.Ultimately, the growth of the electric car industry and demand for battery materials depends on how many vehicles people buy. The tipping point for consumers broadly to switch from gas-powered vehicles to electric cars is generally expected to come when the battery cost has fallen sufficiently.That shift could happen in the next decade. Goldman predicts battery costs will drop below that of internal combustion engines in 2030. More

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    Stock futures are flat amid renewed concern about pandemic recovery

    U.S. stock futures were flat in overnight trading on Tuesday amid renewed investor concern about the global recovery from the coronavirus pandemic.Dow futures rose 10 points. S&P 500 futures gained 0.04% and Nasdaq 100 futures rose 0.15%.On Tuesday, stocks tied to an economic recovery led the losses amid rising new coronavirus cases in the U.S. and abroad.The Dow Jones Industrial Average lost more than 300 points, dragged down by a 3.4% drop in Caterpillar’s stock. The S&P 500 fell 0.76% with major losses from airlines and cruise lines. The Nasdaq Composite dropped 1.12% as Facebook, Apple and Tesla all closed lower.The small-cap benchmark Russell 2000 fell 3.58%, for its worst day since June.Many regions of the world are seeing rising Covid-19 cases as highly contagious variants continue to spread, the World Health Organization said. Germany and France are extending or enforcing new lockdown measures.Concerns about the recovery come on the one-year anniversary of the market bottom. Stocks have rebounded from the market bottom with the S&P 500 rallying about 80% since the low one year ago, marking the best start to a new bull market on record. On Wednesday, Federal Reserve Chairman Jerome Powell and Treasury Secretary Janet Yellen will continue their testimony to the U.S. House Committee on Financial Services. In the first joint appearance Tuesday, the pair acknowledged the richly valued asset prices in the markets, but said that they are not concerned about financial stability.”I’d say that while asset valuations are elevated by historical metrics, there’s also belief that with vaccinations proceeding at a rapid pace, that the economy will be able to get back on track,” Yellen said during the testimony. “I think that in an environment where asset prices are high, that what’s important is for regulators to make sure that the financial sector is resilient and to make sure that markets work well.”Powell said that the economic recovery from the pandemic had “progressed more quickly than generally expected and looks to be strengthening.”However, he said that the sectors of the economy hardest-hit by the pandemic “remain weak” and the unemployment rate “underestimates the shortfall,” so the recovery still had a long way to go.Treasury yields dipped on Tuesday with the 10-year Treasury yield hovering around 1.62%.General Mills, Tencent, KB Homes and RH are among the companies reporting earnings on Wednesday. More

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    Lingering Covid symptoms pose 'really serious problem,' researcher says

    A researcher who studies so-called Covid long-haulers warned that lingering symptoms are a grim reality and can pose a serious problem. “We’ve been tracking around 60 distinct symptoms in this patient population,” said David Putrino, the Director of Rehabilitation Innovation at Mount Sinai Hospital in New York. “We really just need to focus on helping these patients and spreading awareness that this is, indeed, a really serious problem associated with Covid.”A new study out of Northwestern University shows that 85% of long-haulers — Covid patients who have largely recovered from the worst of the disease, but continue to experience long-term symptoms — experienced four or more neurologic symptoms. Those symptoms include brain fog, headaches, numbness or tingling, loss of taste and smell, and muscle pain. Northwestern scientists call it the first study of its kind. It tracked 100 Covid patients, mostly women at an average age of 43.Putrino told CNBC’s “The News with Shepard Smith” that the prevalence of long Covid is changing how physicians treat patients, even for routine complaints. “I think that pre-Covid, there were a lot of people showing up with non-specific symptoms and they were concerned that they were being treated with formula-medicine, as opposed to being very patient-centric and symptom-centric in treatment approaches,” said Putrino. “One of the things that physicians have to do now, as we’re seeing this increase in Covid long-hauler activity, is listen to what patients are telling them.” More

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    Just how anchored are America’s inflation expectations?

    SINCE DEMOCRATS proposed a $1.9trn fiscal stimulus in January, hawks have warned that America’s economy might overheat. With cheques for $1,400 now landing in bank accounts, President Joe Biden reportedly considering spending another $3trn on infrastructure and the Federal Reserve showing no sign of putting the brakes on the rebound from the pandemic, the predictions of impending doom are getting louder. The latest was delivered by Larry Summers, a former treasury secretary, on March 20th. Mr Summers sees it as more likely than not that the economy will suffer either from an inflation surge or from the crushing effects of higher interest rates. America, he says, has the least responsible economic policy in 40 years.The worst-case scenario painted by inflation hawks can be broken into stages. First, inflation will soon rise mechanically as numbers from the spring of 2020, when the economy and commodity prices slumped, fall out of comparisons with a year earlier. On that everyone agrees.The next phase is a second wave of inflation as spending by newly-vaccinated consumers rebounds from the pandemic faster than production can keep up. Even stimulus advocates typically admit that overheating is a risk, and it would be more likely should more deficit spending pass. Mr Biden may unveil the spending side of his infrastructure bill alongside his preliminary annual budget proposals for government departments, which are due next week. Whereas some of any Biden infrastructure bill may be paid for by raising taxes, it seems unlikely that Congress would raise $3trn this way, rather than relying on at least some extra borrowing.It is the last stage of the doomsday timeline that is most controversial, in which temporary inflation turns permanent as the public’s inflation expectations rise and become self-fulfilling. Workers, anticipating a higher cost of living, demand higher pay; forward-thinking firms raise prices. The result would be a return to the 5% plus inflation of the late 1960s, or perhaps even the 10%-plus rates of the 1970s.In recent decades the grip of the Fed on inflation expectations seemed ironclad. Even when in 2019 unemployment plumbed depths not seen since the 1960s, inflation expectations did not stir very much. In theory that makes all inflation surprises temporary. “Having [inflation expectations] anchored at 2% is what gives us the ability to push hard when the economy’s really weak,” said Jerome Powell, the Fed’s chairman, on March 17th.But how strong is the anchor? There are at least three types of inflation expectations: those priced into financial markets; those that appear in surveys of households and businesses; and those of professional forecasters. Market expectations have been spooking hawks. The ten-year bond yield has risen to about 1.7%, up from 0.5% in early August. However, the inflation expectations incorporated in these yields remain broadly consistent with the Fed’s target (see Buttonwood). The bigger problem is tail risk. William Marshall of Goldman Sachs, a bank, calculates that the implied inflation risk premium—in effect, the price of insuring against very high inflation—has risen. The market-implied probability of average consumer-price inflation exceeding 3% per year for the next five years is over 30%, according to the Minneapolis Fed. That does not imply 1970s-style inflation, but would be uncomfortable for the Fed.The evidence suggests that survey expectations are more important than market prices. Households’ inflation expectations have not budged much, though consumers, like investors, have become less certain about the future (see chart). The danger is that the public is poorly informed, and its expectations are therefore fickle. Even firms do not seem to pay much attention to inflation nowadays. When Olivier Coibion of the University of Texas and three co-authors surveyed top executives in April 2018, 55% said that they did not know what inflation would be over the next year. When they do have a view, both firms and households chronically overestimate price rises. Consumers seem unduly swayed by the price of petrol. The authors concluded that the public’s expectations looked “anything but anchored”.Professional forecasters can give Mr Powell most comfort. They are nearly unanimous and unwavering in believing what the Fed says about the long term. Yet their historical record as an early warning signal is not encouraging. As the economy overheated in the late 1960s prognosticators were behind the curve, according to the Livingston survey, the best available record of their views.Part of the explanation is that forecasting inflation is hard. Even with today’s vastly improved methods, after two years the consensus inflation forecast is on average off by 0.4 percentage points in one direction or another, calculates Goldman Sachs. Someone who forecasts that a central bank’s target will lose credibility before it happens can look unhinged. Even Mr Summers—who does not suffer from excessive humility—couches his predictions in probabilities which make it nearly impossible for him to be proved wrong.Joseph Gagnon of the Peterson Institute, a think-tank, says the Fed should promise “dramatically” higher interest rates if inflation rises and does not fall back. Saying this too soon would knock confidence. Arguably, however, the Fed is undermining the implicit understanding that it will tackle overheating by emphasising its duty to ensure a thriving jobs market that reduces inequality. That makes it harder to imagine the central bank crushing inflation by engineering a recession, as happened in the 1980s. Should enough people doubt its hypothetical resolve, the door to persistently higher inflation—or to a painful credibility test—would be ajar. More

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    One year after Covid-19 market bottom, Canaccord Genuity's Tony Dwyer says stocks are in 'no man's land'

    Canaccord Genuity’s Tony Dwyer is temporarily dialing back his appetite for stocks.On the one-year anniversary of the Covid-19 bottom, he’s telling investors the market is in “no man’s land.””We’re in this period where the Russell 1000 growth mega cap stocks aren’t oversold anymore and the cyclical or economic recovery theme isn’t extreme overbought anymore,” the firm’s chief market strategist told CNBC’s “Trading Nation” on Tuesday. “So, I don’t really see a near-term tactical edge until we see some sign of an extreme that just doesn’t exist right now.”Dwyer, who’s bullish for the year, has been partial to S&P 500 groups tied to a strong economic rebound. But he notes those areas don’t provide a good entry point right now for new money.”The other part of no man’s land is that economic recovery theme got so extreme that we actually even downgraded the financials [to neutral] last Friday,” he added.The KBW Bank Index, which tracks the performance of the group, is up 107% in the past year. So far this year, it has soared almost 19%.Dwyer believes the gains face near-term trouble due to risks associated with economic growth.”It’s what made us downgrade the financials. You actually have long-term interest rates come down because the markets start thinking the global recovery may not be as rapid,” said Dwyer. “The risk is not in our view right now higher interest rates and economic acceleration. That’s what we want.”Flashback to the lowDwyer may be on pause right now. But a day after the 2020 market low, he predicted a significant relief rally on expectations of massive fiscal and monetary support. The market was back at all-time highs before year’s end.”The SPX [S&P 500] has already dropped nearly 34% in under a month suggesting the panic phase should be nearly done based on the 14-week RSI [Relative Strength Index],” Dwyer wrote to clients on March 24, 2020. “Such extreme oversold readings have suggested the ‘panic phase’ of a crash was largely in the rear-view mirror.”On Tuesday, the S&P 500 closed at 3,910.52 — a 79% gain from the March 2020 bottom. Meanwhile, the tech-heavy Nasdaq is up 93% in the same period and closed at 13,227.70.”We still love the economic recovery theme. We have excess liquidity that is historic. You go into recessions and sustained bear markets when you have a need for money with limited access to it. The opposite is true today,” Dwyer said. “We’ve never seen this level of global liquidity in the marketplace.”Disclaimer More