‘The high for equities is not in,’ says technical strategist who unpacks the stocks to buy now.

Siegel argues that bonds, which have been giving stocks the shove, have proven to be a terrible inflation hedge, but investors have forgotten that given it’s 40 years since the last big price shock. “Stocks are excellent long-term hedges, stocks do beautifully against inflation, bonds do not,” he told CNBC on Tuesday.

Don’t miss: ‘Bond math’ shows traders bold enough to bet on Treasurys could reap dazzling returns with little risk

Other stock cheerleaders out there are counting on a fourth-quarter rally, which, according to LPL Financial, delivers on average a 4.2% gain as portfolio managers snap up stock winners to spiff up performances.

Our call of the day from Evercore ISI’s head of technical strategy, Rich Ross, is in the bull camp as he declares the “high for equities is not in,” and suggests some stocks that will set investors up nicely for that.

Ross notes November is the best month for the S&P 500
SPX,
Russell 2000
RUT
and semiconductors
SOX,
while the November to January period has seen a 6% gain on average for the Nasdaq Composite
COMP.
He says if the S&P can break out above 4,430, the next stop will be 4,630 within 2023, putting him at the bullish end of Wall Street forecasts.

In addition, even with 10-year Treasury yields back at their highs, the S&P 500 is still ahead this week and that’s a “great start” to any rally, he adds.

Evercore/Bloomberg

What else? He says “panic bottoms” seen in bond proxies, such as utilities via the Utilities Select Sector SPD exchange-traded fund ETF
XLU,
real-estate investment trusts and staples, are “consistent with a bottom in bond prices,” which is closer than it appears if those proxies have indeed bottomed.


Evercore/Bloomberg

Among the other green shoots, Ross sees banks bottoming following Bank of America
BAC,
+1.14%

earnings “just as they did in March of ’20 after a similar 52% decline which culminated in a year-end rally which commenced in Q4.”

He sees expanding breadth for stocks — more stocks rising than falling — adding that that’s a buy signal for the Russell 2000, retail via the SPDR S&P Retail ETF
XRT
and regional banks via the SPDR S&P Regional Banking
KRE.

The technical strategist also says it’s time to buy transports
DJT,
with airlines “at bear market lows and deeply oversold,” while railroads are also bottoming and truckers continue to rise.

As for tech, he’s a buyer of semiconductors noting they tend to gain 7% on average in November, and Nvidia
NVDA,
-2.88%

has been under pressure as of late. He also likes software such as Microsoft
MSFT,
+0.82%
,
Zscaler
ZS,
+0.66%
,
MongoDB
MDB,
+0.90%
,
Intuit
INTU,
-1.43%
,
Oracle
ORCL,
-0.05%
,
Adobe
ADBE,
+0.93%
,
CrowdStrike
CRWD,
+0.55%

and Palo Alto Networks
PANW,
+1.38%
.


Evercore/Bloomberg

“The strong tech will stay strong and the weak will get strong,” says Ross.

The markets

Stocks
SPX

COMP
are dropping, with bond yields
BX:TMUBMUSD10Y

BX:TMUBMUSD02Y
mixed. Oil prices
CL.1,
+1.82%

BRN00,
+1.69%

have pared a stronger rally after a deadly hospital explosion in Gaza City, with Iran reportedly calling for an oil embargo against Israel. Gold
GC00,
+1.84%

has shot up $35.

For more market updates plus actionable trade ideas for stocks, options and crypto, subscribe to MarketDiem by Investor’s Business Daily.

The buzz

Morgan Stanley
MS,
-6.02%

posted a 10% earnings fall, but beat forecasts, with shares down. Abbott Labs
ABT,
+3.12%

is up after upbeat results and aguidance hike and Procter & Gamble
PG,
+2.91%

is up after an earnings beat. Tesla
TSLA,
-0.89%

(preview here) and Netflix
NFLX,
-1.20%

(preview here) will report after the close.

Read: Ford CEO says Tesla, rival automakers loving the strike. He may be wrong

United Airlines shares
UAL,
-7.83%

are down 5% after the airline lowered guidance due to the Israel/Gaza war. Spirit AeroSystems
SPR,
+22.60%

surged 75% after the aircraft components maker announced a production support deal with Boeing
BA,
+0.88%
.

Housing starts came short of expectations, with the Fed’s Beige Book of economic conditions coming at 2 p.m. Also, Fed Gov. Chris Waller will speak at noon, followed by New York Fed Pres. John Williams at 12:30 p.m. and Fed Gov. Lisa Cook at 6:55 p.m.

China’s third-quarter GDP rose 4.9%, slowing from 6.3% in the previous quarter, but beating expectations.

Middle East tensions are ratcheting up with protests spreading across the region after a massive deadly blast at a Gaza City hospital, and airports evacuated across France over terror threats. President Biden told Israeli Prime Minister Benjamin Netanyahu that “it appears as though it was done by the other team.”

Read: Treasury says Hamas leaders ‘live in luxury’ as it unveils new sanctions

Best of the web

Bridgewater says the market has entered the second stage of tightening

Why the FDA needs to halt Cassava Sciences’ Alzheimer’s clinical trials

Hail, heat, rot in Italy push France to top global winemaking spot

Attacks across Europe put Islamist extremism back in spotlight

The tickers

These were the top-searched tickers on MarketWatch as of 6 a.m.:

Ticker

Security name

TSLA,
-0.89%
Tesla

AMC,
-0.73%
AMC Entertainment

AAPL,
-0.39%
Apple

GME,
-1.20%
GameStop

NIO,
-2.99%
Nio

AMZN,
-1.10%
Amazon

PLTR,
-0.59%
Palantir

MULN,
-0.06%
Mullen Automotive

TPST,
-11.20%
Tempest Therapeutics

TTOO,
-8.20%
T2 Biosystems

Random reads

Loudest purr in the world. Congrats Bella the cat.

Asteroid sample offers window to ancient solar system

Need to Know starts early and is updated until the opening bell, but sign up here to get it delivered once to your email box. The emailed version will be sent out at about 7:30 a.m. Eastern.

Listen to the Best New Ideas in Money podcast with MarketWatch financial columnist James Rogers and economist Stephanie Kelton.

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Knowledge gaps for perishable liquid food packs threaten Green Deal

Professor Fredrik Nilsson, Packaging Logistics, Faculty of Engineering, Lund University

Policymakers are currently deliberating on packaging reuse targets in the proposed EU Packaging and Packaging Waste Regulation (PPWR). But do they have the necessary evidence to make those decisions for all packaged products? A systematic review of 159 relevant scientific studies on packaging alternatives for perishable liquid foods[1] — milk, juices, nectars and plant-based drinks — suggests there is a clear gap in holistic impact assessment knowledge.

Packaging of perishable liquid foods exists in various forms such as aseptic paper-based beverage cartons or non-aseptic solutions such as plastic or glass bottles. Each packaging solution has an impact on the quality, safety and shelf life of the food it contains. In assessing packaging solutions, efforts should be made to understand the wider context of reuse targets for perishable liquid foods, with consideration for packaging types, food security, food safety, food waste and environmental impacts.

In both research and policy contexts, packaging is still often considered separately from its contents in impact assessments.

However, in both research and policy contexts, packaging is still often considered separately from its contents in impact assessments, despite an existing body of knowledge and evidence showing that food and its packaging should be treated as an integrated unit.

Consequently, policymakers served only with evidence of packaging impacts could be misled and make inaccurate decisions when discussing the measures included in the proposed EU Packaging and Packaging Waste Regulation (PPWR). This risks undermining the EU’s Green Deal ambitions.

The importance of the analysis

One of the primary objectives of the proposed PPWR is to ensure that “all packaging in the EU is reusable or recyclable in an economically viable way by 2030”, in line with the EU Green Deal and the EU Circular Economy Action Plan. Setting reusable packaging targets was always likely to spark a robust debate with the food industry. The European food system uses a large amount of packaging and the use of single-use packaging in particular has grown significantly in the past decades. For perishable liquid foods, producers today prefer recyclable single-use packaging — such as aseptic beverage cartons — for the sale of 75 percent of milk, 59 percent of juices and a major share of plant-based drinks in the EU[2].

We undertook a comprehensive and systematic analysis of all identifiable studies on single-use versus reusable packaging for perishable liquid foods.

With a specific focus on the 154 billion liters of perishable liquid foods produced in the EU each year[3], a more fundamental question occurred to the Packaging Logistics division in the Faculty of Engineering at Lund University. We wondered if a sufficient body of evidence existed to help policymakers make packaging reuse decisions, so we undertook a comprehensive and systematic analysis of all identifiable studies on single-use versus reusable packaging for perishable liquid foods.

The scale of the knowledge gap that we uncovered was eye-opening.

Findings from the study

Based on an analysis of 159 identified scientific papers, we came to three main conclusions.

First, the research and knowledge of food waste for single-use packaging compared to reusable packaging alternatives for perishable liquid foods was clearly insufficient. No studies were found that evaluated reusable packaging for such foods in relation to food waste, consequently no studies were found comparing single-use packaging with reusable packaging in this regard. A few studies were found that evaluated different single-use packaging alternatives in terms of the packaging and the liquid food being contained, finding that multilayer carton packages had the lowest environmental impact. Most environmentally-focused studies on food packaging did not consider the food saved or wasted.

The research and knowledge of food waste for single-use packaging compared to reusable packaging alternatives for perishable liquid foods was clearly insufficient.

Second, there were few studies comparing reusable and single-use packaging for perishable liquid foods in terms of food safety and quality. Instead, the majority of sampled papers simply provided insights and evidence for critical factors to be considered in food production and supply chain handling to keep liquid foods safe and of sufficient quality. This analysis surfaced several challenges related to reusable packaging, some related to food safety and others to quality limitations. For example, some studies pointed out quality-related challenges from plastic refillable bottles, such as the absorption of chemicals from previous use.

Finally, while there were many papers addressing shelf life as a critical aspect for perishable liquid foods — and many that empirically provided evidence of lower food waste in retail and at the consumer stage when shelf life is prolonged — there were still sizable knowledge gaps. No studies were found that compared the shelf life of single-use versus reusable packaging for perishable liquid foods. None were found that evaluated the shelf life of reusable packaging for such foods in relation to food waste, and none were found that clarified what optimal shelf life is for different products.

In our view, the key knowledge gaps at this time are: evidence of food waste impacts for reusable alternatives, so that a comparison with recyclable single-use packaging is possible; comparative studies on food safety and quality impacts through using single-use and reusable alternatives; shelf life comparisons; impact assessments that also take into account climate and land-use impacts; and, most importantly, food packaging studies that take into account the product that the packaging contains and protects. 

Key knowledge gaps need to be addressed

Policymakers should be insisting on accessing a more holistic knowledge base built on assessment of impact, before they finalize reusable packaging targets in the PPWR. 

The evidence we have today suggests that greater food safety, food security and food quality could be achieved by increasing the use of recyclable single-use packaging.

A more holistic perspective is crucial to help policymakers avoid measures that might miss higher environmental gains, compromise consumers’ health and wellbeing, and reconfigure the packaging industry. Further knowledge might indicate that reusable packaging for perishable liquid foods is feasible under specific circumstances. However, the evidence we have today suggests that greater food safety, food security and food quality could be achieved by increasing the use of recyclable single-use packaging. Support for that choice is already demonstrated today through the packaging chosen by the majority of European milk, juice and plant-based drink producers.


[1] Perishable foods are defined in EU legislation under Regulation (EU) No 1169/2011 as foods which, from a microbiological point of view, are highly perishable and are therefore likely after a short period to constitute an immediate danger to human health.

[2] AIJN, Liquid Fruit Market Report, 2018, p.7 https://aijn.eu/files/attachments/.598/2018_Liquid_Fruit_Market_Report.pdf

[3] Key figures on the European food chain, Eurostat, 2021



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High-quality recycling loops are best for circular economy

On Europe’s journey to a circular economy, high quality recycling is essential. In fact, the recycling of fibre-based packaging constitutes one of the best examples. If you put your used paper products in the right recycling bin, you can count on them making their way to a facility that will recycle those materials so they can be used again many times to make packaging for breakfast cereal, boxes to carry your online deliveries, newspapers, and a whole host of other useful products.

Currently, about 75 percent of the raw materials used for the fibres in our packaging come from recycling. The rest comes from sustainably-managed forests. Our packaging helps keep fossil fuels in the ground, playing its part in making our planet greener. This is why fibre-based materials are widely recognized as one of the most sustainable choices available for packaging.

This is why fibre-based materials are widely recognized as one of the most sustainable choices available for packaging.

The EU’s packaging waste regulation: a key chance to enhance recycling systems

At Fibre Packaging Europe we believe the upcoming Packaging and Packaging Waste Regulation (PPWR) has a key role in making recycling even better. We now have a chance to set an ambitious 90 percent separate collection target for all EU member countries.  Here separate collection means transferring materials from your paper and board bin to the recycling plant. There is no better way to ensure that our packaging reaches recyclers after it has been used, and it will further increase an already-remarkable 81.5 percent recycling rate (Eurostat, 2020), higher by volume than plastic, metal and glass combined.

Where we see a risk in the PPWR is if the regulation gets the definition of ‘high-quality’ recycling twisted by restricting it only to what it calls ‘closed loops’. A closed loop means a cereal box would need to be recycled into another cereal box. When fibres are allowed to be recycled universally into any paper and board application and product, it is effective, it is resource efficient, and it reduces CO2 emissions through avoided transportation (to that cereal box factory). Most importantly, it is a good and simple way to continue increasing recycling rates.


Brought to you by Fibre Packaging Europe

Don’t get the loop twisted: why material loops make most sense for paper

But don’t just take it from us. We spoke to seasoned professionals in the recycling business that Fibre Packaging Europe represents to hear first-hand their thoughts on closed loops, the real challenges recyclers face and what can be done to overcome them.

Does closed-loop recycling have a role to play for fibre-based packaging? John Melia, strategy development and innovation director at DS Smith’s Recycling Division, is very clear on this point. “Closed-loop recycling of paper packaging would make no sense in a mature, well-functioning recycling system built on a thriving market for secondary raw materials. It would bring disruption to the market, reduce the quality and lifespan of fibre, and increase the use of fossil fuels in the supply chain. This would be a significant step back from the high-performing recycling system we have today.” 

Recycling systems based on ‘material loops’, on the other hand, mean that the raw materials we get from recycling processes are used in way that is far more versatile. They can be used to make a wide range of sustainable products that we use every day. The system works, and there is already in Europe a unique, thriving market for secondary raw materials in the fibre-based industry. In 2020, 56 million tons of ‘Paper for Recycling’ collected were transformed into equally high-quality new paper and board products.

If fibres get to the right recyclers, they have the tools to do the job

So how to make a high-quality recycling system even better? It all starts with collection.

“All fibre-based packaging is recyclable if, through collection and sorting, the material is guided to the right type of recycling mill”, explains Michel Willems, European Business Coordinator at Smurfit Kappa Recycling. ‘Separate’ collection systems, ones where non-paper materials such as plastic, metal and glass are collected separately from used paper products, can make it much easier to sort and send the material to the right recycling facilities. When it comes to fibre-based packaging products that are discarded by households, there’s an opportunity to further increase recycling rates.

So how to make a high-quality recycling system even better? It all starts with collection.

As a general principle, the more homogenous a fibre-based waste stream is, the easier it is to find the correct mill to do the recycling. Nonetheless, the great advantage of fibre packaging recycling is that a homogenous waste stream is not an absolute necessity for the majority of paper-based products. Most can easily be collected in the same bin, for example, at home. Such a stream, following standard quality checks, is ready for immediate recycling at many mills throughout Europe”, said Michel.

“Our business is built around reducing the environmental impact of packaging on the planet, improving supply chains for billions of people. We have an excellent, high-performance recycling system for cardboard with the highest recycling rate of any packaging material in Europe. Corrugated board packaging occupies a very special place because it has been the most recycled product forever. We recycle a box a minimum of 25 times in its life. At the end, it just returns to nature. Our environmentally friendly product is 100 percent renewable, recyclable and biodegradable”, added Michel.

For John Melia, this point is far more important to a successful circular economy than looking at changing recycling systems. “The EU should be focusing on what we know will bring rates of paper recycling even higher: better recycling infrastructure including increased segregation of recycling raw materials through separate collection of municipal waste,” he says. “We in the industry are doing our part, but achieving the full potential of the fibre recycling system will only be possible through government policies that focus on what we know will make a difference.”

So, when we look to complete the loop on the circular economy, let’s listen to the recyclers themselves. Let’s build on the high-quality recycling that already exists to build a greener Europe with the packaging products we know are sustainable.



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#Highquality #recycling #loops #circular #economy

No silver bullet: Ensuring the right packaging solutions for Europe

When most people think of McDonald’s they likely think of quality food, good value and consistently reliable convenient service. But I hope they also think about our values.

At McDonald’s, we care deeply about our impact on the world. Our purpose is to feed and foster local communities. We are always striving to use our influence and scale to make a positive impact on the planet and in the communities we serve across Europe and globally. We are on a journey to help implement and accelerate solutions to keep waste out of nature and valuable materials in use.

Our purpose is to feed and foster local communities.

During my trip to Europe, I’ve seen some of these solutions in action. While in Brussels I had the opportunity to visit one of our restaurants at the forefront of advancing our circularity goals. McDonald’s is the first major partner of a pioneering initiative ‘The Cup Collective’. It is a great project by Stora Enso and Huhtamaki to collect cardboard beverage and ice cream cups in and around our restaurants and recycle them on an industrial scale into paper fiber. At our busy  restaurant in Brussels-North station, I saw the initiative firsthand. This is a fantastic example of several stakeholders working together to solve a problem through their expertise and innovation.

I know policymakers across the EU are trying to solve many of the greatest challenges we face today, including Europe’s growing packaging waste problem, and we at McDonald’s fully support this, as the example above demonstrates. The problem is, history itself is littered with examples of the unintended consequences of well-meaning policies and laws. I believe the current Packaging and Packaging Waste proposal by the EU is one such regulation. By focusing solely on reusable packaging, we at McDonald’s and many of our partners and competitors in the informal dining out sector believe that Packaging and Packaging Waste Regulation (PPWR) will actually be counterproductive to the overall goals of the Green Deal. And we support the goals of the Green Deal, which is why this concerns us.

The informal eating-out sector is particularly complex and is not well understood. We feel the impact study the EU commissioned ahead of the PPWR proposal did not necessarily reflect that as much as it could have. We want such important decisions to be based on science, facts, and evidence, which is why we commissioned a report with the global management consultancy Kearney to assess environmental, economic, hygiene and affordability impacts of various packaging solutions. As a result of this, we firmly believe the proposal will be damaging not only for the environment, but also for the economy, food safety and for consumers.

Of course, the idea of reusing something over and over again as opposed to only once seems like the obvious solution — but it’s more complicated than that. For reuse models to have a positive impact on the environment, consumers need to return the reusables. A reusable cup needs to be returned and reused 50 to 100 times — whether for takeaway or dine-in — to make it environmentally preferable to a single-use paper cup.

Reusables by their very nature also need to be washed every time they’re used. For an industry like ours, serving millions of customers every day, that requires significant energy and water. Europe’s water infrastructure is already under stress, and the Kearney study shows reusable packaging requirements for dine-in restaurants would increase water use — and could require up to 4 billion liters of additional water each year. Washing also requires more energy resulting in increased greenhouse emissions. The study shows that a shift to 100 percent reusable packaging by 2030 would increase greenhouse emissions by up to 50 percent for dine-in and up to 260 percent for takeaway. They also require specialist washing to ensure they meet hygiene standards.

The study shows that a shift to 100 percent reusable packaging by 2030 would increase greenhouse emissions.

When it comes to plastics we are particularly concerned. McDonald’s has made huge progress when it comes to reducing plastic in our supply chain and restaurants. In the European Union, more than 90 percent of our packaging is locally sourced, primarily from European paper packaging suppliers. We are shifting packaging materials to more sustainable alternatives to ensure easier recovery and recycling. 92.8 percent (by weight) of McDonald’s food packaging in Europe is wood fiber and 99.4 percent of that fiber packaging comes from recycled or certified sources.

Worryingly though, the study we commissioned says that reuse models will lead to a sharp increase in plastic materials in Europe.Reuse targets proposed in the PPWR will create four times the amount of plastic packaging waste for dine-in, and 16 times for takeaway. That’s a lot more plastic instead of recyclable paper and cardboard and is the opposite of what the EU wants to achieve.

So, what should be done? Given that Kearney’s data shows recyclable, fiber-based packaging has the greater potential to benefit the environment, economy, food safety and consumers, we believe the EU should pause and conduct a full impact study before moving ahead. The European Commission’s current impact assessment lacks depth and does not consider economic and food safety aspects. Member countries should not unilaterally introduce legislation before this has been assessed to avoid fragmentation of the single market.

We believe the EU should pause and conduct a full impact study before moving ahead.

In dine in and takeaway, we are looking for equivalence of treatment between recycled and recyclable (paper based) single use packaging and reusable tableware. Any legislation should take into account the specific needs of complex business sectors, and the right packaging solutions.

A rush to a solution for a complicated situation will only make the problem worse. I hope that the report McDonald’s commissioned and launched with Kearney will stimulate the policy debate about the mix of solutions needed. Europe has a proud history of collaboration and pragmatism when it comes to solving important problems and challenges, and I am confident we can draw on that when it comes to this particular issue — because there really is no silver bullet when it comes to solving Europe’s packaging problem.

www.nosilverbullet.eu



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