Charts: The Reserve Bank of Australia Unexpectedly Raised the Cash Rate by 25bps to 3.85% in May

Source : Trading Economics

Charts: Global Bank Lending Standard Tightened Substantially Since 2022

Source : Bloomberg

Humour: News in Cartoon

China’s Industrial Profits Keep Plunging as Prices Decline

Profits at industrial firms in China continued to plunge in the first three months of the year, as a pickup in factory production failed to offset a further decline in prices.

Industrial profits in the January-March period declined 21.4% from a year earlier, the National Bureau of Statistics said Thursday. The drop narrowed only slightly from a fall of 22.9% in the first two months of 2023.

Profits for the single month of March fell 19.2% from a year ago, according to official figures.

“The decline in industrial companies’ profits is still relatively big, and companies’ losses are still high,” NBS statistician Sun Xiao said in a statement accompanying the data. “We should continue focusing on expanding market demand, lift market confidence, improve companies’ expectations, better coordinate supply and sales, and push for industrial companies’ profits to rebound faster.”

There were some positive signs: Car industry profits grew 9.1% in March from a year earlier, driven by recovering car demand and rebounding sales, according to Sun. That reversed a 41.7% plunge in the January-February period.

Several consumer product manufacturing sectors also saw improvement, with the alcohol, beverage and refined tea industry recording a 39.9% jump in profits last month, according to the NBS statement.

While factory activity has been improving, it’s been tough for companies to pull themselves out of last year’s deep, Covid-induced slump. Exports rebounded last month, largely due to resilient demand from Southeast Asia and other markets, yet the pickup in industrial output fell short of expectations.

Producer deflation has also persisted, a sign that factories are unable to boost prices, which is weighing on their profits.

What Bloomberg Economics Says…

The demand for manufactured goods is still very weak, despite a rebound in overall economic growth that’s been led by services after the end of Covid Zero. With the recovery still patchy, the government must maintain a supportive policy stance and be prepared to offer more stimulus.

– David Qu, China economist

Foreign firms continued to lag behind other companies, though the pace of the fall in their profits is improving: a 24.9% fall in the first three months, compared to a 35.7% decline in January and February.

Profits at private firms fell 23% in the January-to-March period, while those at state-owned enterprises dropped 16.9%.

The world’s second-largest economy is recovering at a faster pace than expected, with several economists upgrading their growth forecasts for the year after better-than-expected first-quarter data. Still, the strength of the rebound is under scrutiny as the global environment remains uncertain.

Beijing is targeting economic growth of around 5% for the year, aided in large part by a rebound in consumer demand and stronger infrastructure investment.

Source : BNN Bloomberg

Infographic: Which Countries are Granted the Most New Patents?

See large image . . . . . .

Source : Visual Capitalist

Sourcing Shift from China Pulls US Import Share to More than a Decade Low

Mark Szakonyi wrote . . . . . . . . .

Efforts by U.S. importers to reduce their reliance on China to mitigate the risks of pandemic-driven disruption and rising geopolitical tensions are finally showing up in containerized trade flow, reaccelerating a decades-long bleed of production out of the so-called world’s factory.

China, including Hong Kong, still dominates the sourcing landscape, supplying 40.7 percent of U.S. imports last year. But that market share was down from 42.4 percent in 2021 and was nearly as low as in 2006, when the share was just 0.1 percentage point higher, according to data from PIERS, a sister product of the Journal of Commerce within S&P Global.

“Our sourcing and production base remains open and is operating with greater diversification, stemming from a concerted effort to move production closer to consumption where it makes sense,” Matt Puckett, CFO of apparel conglomerate VF Corporation, told investors in early January. “We are still feeling the effects from the eight weeks of large-scale lockdowns in China during the first quarter as the impacts work through the system.”

Clothing importers such as VF Corporation, along with shippers of furniture, home goods, electronics, toys, and athletic equipment, are driving the shift out of China, according to the PIERS analysis. Chinese-made goods accounted for 35.1 percent of U.S. imports of apparel and accessories in 2022, down from 37.1 percent in 2021 and a peak of 44.2 percent in 2018. China’s share of couches, lamps, and other furniture and home goods coming into the U.S. shrank to 52.6 percent last year from 55 percent in 2021; in 2010, that number was 71.6 percent.

While total U.S. containerized imports ticked up 0.3 percent last year, overall shipments from China fell 3.7 percent. That’s about 435,500 fewer TEU moving off Chinese docks to US ports.

‘Balancing’ act

In terms of containerized ocean trade, the decline in sourcing out of China has most favored Vietnam, followed by South Korea and India. Vietnam, the second-largest source of U.S. containerized imports, saw its share rise from 8.2 percent to 8.7 percent last year, thanks to increased sourcing of electronics, footwear, and apparel. South Korea’s electronics and auto parts industries benefited from increased U.S. sourcing, expanding the country’s share of total U.S. imports to 4.1 percent in 2022 from 3.8 percent the previous year. The share of U.S. imports from India inched up to 3.9 percent last year from 3.8 percent in 2021, driven by increases in apparel and iron and steel components.

Although it’s not captured in the PIERS analysis because much of the volume does not move by container ship, anecdotal evidence, coupled with strong reported trade growth, suggests Mexico has also benefited from increased sourcing of U.S. goods and components. The total value of U.S. imports from Mexico via truck, rail, ocean, and air jumped 19.2 percent year over year to $418.9 billion in the first 11 months of 2022, according to the latest available data from the U.S. Bureau of Transportation Statistics.

“We’ve spoken a lot about balancing between China sourcing and the rest of the world sourcing, including in the Americas and especially, Mexico, which leads to near-shoring for the U.S. and Canadian market and even the Latin American markets,” Julien Miniberg, CEO of Helen of Troy, said during the company’s fiscal third-quarter earnings call in early January.

Sourcing from Mexico and, to a lesser degree, other Latin American countries, has cut lead times for Helen of Troy, an importer of housewares and health and beauty products, allowing it to keep inventories lower and reducing its exposure to volatile ocean freight prices, Miniberg said.

Cross-border trucking rates rise and fall on seasonal demand, but those fluctuations pale in comparison to the rollercoaster ride container spot rates have been on for the past two-plus years. Average Asia-U.S. West Coast rates, for example, rocketed from $1,400 per FEU prior to the COVID-19 pandemic to as high as $14,000 per FEU, and then back down again. Excluding Mexico, Honduras was the only Latin American country last year to increase its share of U.S. sourcing, accounting for 0.8 percent of total imports, up from 0.7 percent, according to PIERS.

Who has capacity to handle new volumes?

With importers acting on their desire to shift some sourcing out of China — as opposed to just “looking at options” — the question becomes exactly where the volumes currently produced in China can go. The sheer size of China’s market share means minor shifts equate to hundreds of thousands of TEU, but Vietnam and India are hardly brimming over with the kind of high-quality manufacturing capacity China is known for, and their ports and inland infrastructure have neither the scale nor the resilience of the Chinese export shipping system.

From a pure procurement standpoint, Vietnam, India, and other alternatives to China stand to see rising labor wages, as new factory entrants try to lure workers away. They also lack China’s established industrial clusters, which offer the convenience of having components located just a truck haul away, rather than an ocean journey.

Procon Pacific is looking at sourcing more industrial packaging supplies out of Southeast Asia and possibly in Nigeria, Ethiopia, and Turkey. But Daniel Krassenstein, global supply chain director hasn’t ruled out tapping Chinese vendors more, either.

“Some of the large Chinese vendors have reduced their capacity, partly because of COVID and partly because of demand going down,” Krassenstein told the Journal of Commerce. “But the Chinese vendors are still large players that can handle our volume, and they can scale up without difficulty, as long as (free on board] costs are in line.”

Source : S&P Global

---

Read also at Business Insider

Even Chinese companies are moving supply chains out China to avoid geopolitical risks. Here are the 6 places they’re heading for instead. . . . . .

Mind-Reading Technology Can Turn Brain Scans Into Language

Dennis Thompson wrote . . . . . . . . .

A mind-reading device seems like science fiction, but researchers say they’re firmly on the path to building one.

Using functional MRI (fMRI), a newly developed brain-computer interface can read a person’s thoughts and translate them into full sentences, according to a report published May 1 in Nature Neuroscience.

The decoder was developed to read a person’s brain activity and translate what they want to say into continuous, natural language, the researchers said.

“Eventually, we hope that this technology can help people who have lost the ability to speak due to injuries like strokes or diseases like ALS,” said lead study author Jerry Tang, a graduate research assistant at the University of Texas at Austin.

But the interface goes even further than that, translating into language whatever thoughts are foremost in a person’s mind.

“We also ran our decoder on brain responses while the user imagined telling stories and ran responses while the user watched silent movies,” Tang said. “And we found that the decoder is also able to recover the gist of what the user was imagining or seeing.”

Because of this, the decoder is capable of capturing the essence of what a person is thinking, if not always the exact words, the researchers said.

For example, at one point a participant heard the words, “I don’t have my driver’s license yet.” The decoder translated the thought as, “She has not even started to learn to drive yet.”

The technology isn’t at the point where it can be used on just anyone, Tang said.

Training the program required at least 16 hours of participation from each of the three people involved in the research, and Tang said the brain readings from one person can’t be used to inform the scans of another.

The actual scan also involves the cooperation of the person, and can be foiled by simple mental tasks that deflect a participant’s focus, he said.

Still, one expert lauded the findings.

“This work represents an advance in brain-computer interface research and is potentially very exciting,” said Dr. Mitchell Elkind, chief clinical science officer of the American Heart Association and a professor of neurology and epidemiology at Columbia University in New York City.

“The major advance here is being able to record and interpret the meaning of brain activity using a non-invasive approach,” Elkind explained. “Prior work required electrodes placed into the brain using open neurosurgery with the risks of infection, bleeding and seizures. This non-invasive approach using MRI scanning would have virtually no risk, and MRIs are done regularly in brain-injured patients. This approach can also be used frequently in healthy people as part of research, without introducing them to risk.”

Powerful results prompt warning that ‘mental privacy’ may be at risk

Indeed, the results of this study were so powerful that Tang and his colleagues felt moved to issue a warning about “mental privacy.”

“This could all change as technology gets better, so we believe that it’s important to keep researching the privacy implications of brain decoding, and enact policies that protect each person’s mental privacy,” Tang said.

Earlier efforts at translating brain waves into speech have used electrodes or implants to record impulses from the motor areas of the brain related to speech, said senior researcher Alexander Huth. He is an assistant professor of neuroscience and computer science at the University of Texas at Austin.

“These are the areas that control the mouth, larynx, tongue, etc., so what they can decode is how is the person trying to move their mouth to say something, which can be very effective,” Huth said.

The new process takes an entirely different approach, using fMRI to non-invasively measure changes in blood flow and blood oxygenation within brain regions and networks associated with language processing.

“So instead of looking at this kind of low-level like motor thing, our system really works at the level of ideas, of semantics, of meaning,” Huth said. “That’s what it’s getting at. This is the reason why what we get out is not the exact words that somebody heard or spoke. It’s the gist. It’s the same idea, but expressed in different words.”

The researchers trained the decoder by first recording the brain activity of the three participants as they listened to 16 hours of storytelling podcasts like the “Moth Radio Hour,” Tang said.

“This is over five times larger than existing language datasets,” he said. “And we use this dataset to build a model that takes in any sequence of words and predicts how the user’s brain would respond when hearing those words.”

The program mapped the changes in brain activity to semantic features of the podcasts, capturing the meanings of certain phrases and associated brain responses.

The investigators then tested the decoder by having participants listen to new stories.

Making educated guesses based on brain activity

The decoder essentially attempts to make an educated guess about what words are associated with a person’s thoughts, based on brain activity.

Using the participants’ brain activity, the decoder generated word sequences that captured the meanings of the new stories. It even generated some exact words and phrases from the stories.

One example of an actual versus a decoded story:

Actual: “I got up from the air mattress and pressed my face against the glass of the bedroom window expecting to see eyes staring back at me but instead finding only darkness.”

Decoded: “I just continued to walk up to the window and open the glass I stood on my toes and peered out I didn’t see anything and looked up again I saw nothing.”

The decoder specifically captured what a person was focused upon. When a participant actively listened to one story while another played simultaneously, the program identified the meaning of the story that had the listener’s focus, the researchers said.

To see if the decoder was capturing thoughts versus speech, the researchers also had participants watch silent movies and scanned their brain waves.

“There’s no language whatsoever. Subjects were not instructed to do anything while they were watching those videos. But when we put that data into our decoder, what it spat out is a kind of a description of what’s happening in the video,” Huth said.

The participants also were asked to imagine a story, and the device was able to predict the meaning of that imagined story.

“Language is the output format here, but whatever it is that we’re getting at is not necessarily language itself,” Huth said. “It’s definitely getting at something deeper than language and converting that into language, which is kind of at a very high level the role of language, right?”

Decoder is not yet ready for prime-time

Concerns over mental privacy led the researchers to further test whether participants could interfere with the device’s readings.

Certain mental exercises, like naming animals or thinking about a different story than the podcast, “really prevented the decoder from recovering anything about the story that the user was hearing,” Tang said.

The process still needs more work. The program is “uniquely bad” at pronouns, and requires tweaking and further testing to accurately reproduce exact words and phrases, Huth said.

It’s also not terribly practical since it now requires the use of a large MRI machine to read a person’s thoughts, the study authors explained.

The researchers are considering whether cheaper, more portable technology like EEG or functional near-infrared spectrometry could be used to capture brain activity as effectively as fMRI, Tang said.

But they admit they were shocked by how well the decoder did wind up working, which led to their concerns over brain privacy.

“I think my cautionary example is the polygraph, which is not an accurate lie detector, but has still had many negative consequences,” Tang said. “So I think that while this technology is in its infancy, it’s very important to regulate what brain data can and cannot be used for. And then if one day it does become possible to gain accurate decoding without getting the person’s cooperation, we’ll have a regulatory foundation in place that we can build off of.”

Source: HealthDay