Daily Archives: September 9, 2021

Wall Street to Mission Control: Can space tourism pay off?

With the COVID-19 pandemic curtailing earthly travel, space tourism may seem like a far-fetched dream—but some companies are betting on high demand.
By Chris Daehnick and Jess Harrington – The space industry saw record-breaking growth in 2020 as investors, undeterred by the COVID-19 pandemic, poured almost $9 billion into private companies. While some of these businesses are simply providing parts and services to government agencies like NASA, others want to venture into space with their own crew and rockets. One ambitious goal, which several companies are now pursuing, involves space tourism for any private citizen willing to pay a hefty fee.

Having private companies lead space exploration ventures was the stuff of science fiction when the human spaceflight era dawned 60 years ago in April 1961. But such companies have now demonstrated the safety and performance of their systems for a full spectrum of operations. Plans to offer private flights are becoming reality, so what does the future hold? To answer this question, we look at industry trends, investment patterns, and the obstacles ahead.

Governments monopolized space exploration in its early days because of the staggering investment and high risks involved. Exhibit 1 shows some of the early milestones of space flight, as well as other important developments through 2000. National pride and the desire to be “first” were also powerful motivators, although many countries now appreciate the value of collaboration, as seen with the International Space Station. Private companies, with vastly fewer resources, had little reason to investigate crewed missions because the likelihood of getting government approval and seeing decent returns was dim. more>

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Updates from Chicago Booth

Who is right about inflation?
The US Fed and consumers have very different expectations about the future
By Brian Wallheimer – Inflation chatter started heating up this spring, along with inflation itself. In April 2021, the US Consumer Price Index, which measures how fast prices change, rose at a 4.2 percent annual rate, more than double the usual target rate. Then in May, the inflation rate soared to 5 percent. With the worst of the pandemic seemingly easing, US consumers were apparently venturing out again and spending at a fast clip.

The figures took inflation watchers off guard. The Wall Street Journal’s editorial page noted that Federal Reserve chairman Jerome Powell had wanted some inflation but would likely be surprised by the force of April’s numbers, saying, “Powell’s inflation ship has come in, albeit more rudely than he probably wanted.”

Financial journalists and investors, always looking for signs of how the central bank will react to signs of inflation or deflation, kicked into high gear, trying to anticipate the timing of any Fed actions.

But consumers—who actually drive inflation—seemed unfazed, apparently already operating with the understanding that prices were rising fast, and would continue to do so. Homeowners remodeling their homes during the pandemic were aware of historically high lumber prices. Home cooks felt the impact on food prices. Buyers of both new and used cars saw prices surge due to a shortage of computer chips. more>

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Updates from ITU

The basis for safer digital finance
By Bilel Jamoussi – The transformations we are seeing in numerous fields – from energy and mobility to health care, agriculture, and financial services – all hinge on digital technologies, along with an array of associated business ecosystems. All these technologies and systems must be reliable, secure and deserving of our trust.

The Financial Inclusion Global Initiative (FIGI) is an open framework for collaboration led by the International Telecommunication Union (ITU), the World Bank Group, and the Committee on Payments and Market Infrastructures (CPMI).

Our partnership brings together the expertise to accelerate digital financial inclusion. With the support of the Bill & Melinda Gates Foundation, we have brought together the full range of stakeholders set to benefit from this expertise.

The World Bank Group and CPMI have helped to build a strong understanding of the policy considerations surrounding digital identity and incentivizing the use of electronic of payments.

ITU’s work has focused on security, infrastructure and trust – secure financial applications and services, reliable digital infrastructure, and the resulting consumer trust that our money and digital identities are safe. more>

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Is the U.S. Market Due for a Breather?

Why two critical factors could serve as catalysts for a near-term pullback in stock indices, and how investors can play it.
By Lisa Shalett – Major U.S. stock indices charged higher in August, regularly setting new highs, but more out of “climbing the wall of worry”—as in, the market’s tendency to move up even against a host of negative factors—than based on any economic or profit fundamentals.

This means that stock-price resilience likely reflects an overpriced market. Indeed, many investors seemed to have ignored numerous risk factors, including the resurgence of COVID-19 hospitalizations in the U.S.falling consumer confidence, higher interest rates and significant shifts in geopolitics in China and the Middle East.

Why has the market been so complacent? We believe that today’s market dynamics are increasingly responsive to nuanced communications from the Federal Reserve, which seems to have successfully convinced investors that central bankers can thread the policy needle without mistakes. At its recent annual Jackson Hole Economic Symposium, for instance, the Fed reiterated its view that inflation will likely prove transitory, meaning it’s in no rush to raise interest rates. more>