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A MERICA'S BANKS ended 2018 as stockmarket pariahs. For a year or more after Donald Trump was elected president, their shares had been borne aloft by looser regulation, tax cuts and rising interest rates. But investors began to fret that those forces were fading, the long economic expansion would soon end and banks' profitability was therefore at its peak. In the last four months of last year some lenders' stocks dropped by 20%-plus, far more than the S&P 500's 13.6%. The result was "recession prices without a recession", according to Mike Mayo, an analyst at Wells Fargo.
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Now it seems things aren't quite so bad after all. Prices have perked up (see chart). The fourth-quarter earnings season, which started on January 14th, has brought reassurance, rather than renewed worry, at least for the very biggest. Of the leading banks that had published their numbers when The Economist went to press on January 17th, only Citigroup and Bank of New York Mellon recorded a return on equity below 10%. The industry probably enjoyed its best year since the crisis.

To be sure, not all the quarter's news was good. Mighty JPMorgan Chase, the country's biggest bank, for once fell short of analysts' profit forecasts. Investment bankers had mixed fortunes in tempestuous markets. Bond investors stayed away as credit spreads widened. Betsy Graseck of Morgan Stanley points out that high-yield spreads rose by the most since 2011, when Standard & Poor's, a rating agency, downgraded the American government. Fixed-income revenues slid-by 21%, year on year, at Citigroup. Underwriting stalled for most, as companies were wary of launching share and bond sales on choppy waters. Still, merger business stayed buoyant and the stockmarket's volatility helped equity trading: revenues rose by 17% at Goldman Sachs. (Morgan Stanley, Goldman's great rival, was due to report on January 17th.)

Away from Wall Street, there are few signs yet that profitability is faltering. Despite Mr Trump's blustering on trade, the shutdown of the federal government and the sheer longevity of the boom, employment and growth data remain healthy. Net interest margins have widened, although banks have had to pay more for deposits as customers have shifted cash out of accounts that don't pay interest into those that do. Commercial and industrial lending-which had hitherto grown steadily rather than spectacularly-even accelerated, to 10.3%, at an annual rate, in the fourth quarter. Guy Moszkowski of Autonomous Research adds, however, that companies may be tapping bank credit lines as capital markets tighten.

Some think 2019 could be even better than 2018. According to Mr Mayo, who expects another record year for earnings, improving efficiency is the "most unappreciated" factor. The biggest banks, he thinks, are starting to reap the benefits of scale and enormous investments in technology. In the fourth quarter Bank of America boasted a cost-to-income ratio at its retail bank of 45%, down from 60% in mid-2015.

That, plus the reinforcement of balance-sheets forced on banks since the crisis, should equip lenders for a downturn and increased credit losses when the weather finally turns. "We don't exactly know where we are in the cycle," Jamie Dimon, JPMorgan's boss, told analysts on January 15th. All he, or anyone else, knows is that there is one. And that banks are in much better nick than a decade ago.

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The big beasts of American banking rumble on

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A MERICA'S BANKS ended 2018 as stockmarket pariahs. For a year or more after Donald Trump was elected president, their shares had been borne aloft by looser regulation, tax cuts and rising interest rates. But investors began to fret that those forces were fading, the long economic expansion would soon end and banks' profitability was therefore at its peak.

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THE numbers are stark. Cancer claimed the lives of 8.8m people in 2015; only heart disease caused more deaths. Around 40% of Americans will be told they have cancer during their lifetimes. It is now a bigger killer of Africans than malaria. But the statistics do not begin to capture the fear inspired by cancer's silent and implacable cellular mutiny. Only Alzheimer's exerts a similar grip on the imagination.

Confronted with this sort of enemy, people understandably focus on the potential for scientific breakthroughs that will deliver a cure. Their hope is not misplaced. Cancer has become more and more survivable over recent decades owing to a host of advances, from genetic sequencing to targeted therapies. The five-year survival rate for leukemia in America has almost doubled, from 34% in the mid-1970s to 63% in 2006-12. America is home to about 15.5m cancer survivors, a number that will grow to 20m in the next ten years. Developing countries have made big gains, too: in parts of Central and South America, survival rates for prostate and breast cancer have jumped by as much as a fifth in only a decade.
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From a purely technical perspective, it is reasonable to expect that science will one day turn most cancers into either chronic diseases or curable ones. But cancer is not fought only in the lab. It is also fought in doctors' surgeries, in schools, in public-health systems and in government departments. The dispatches from these battlefields are much less encouraging.

Cell-side research

First, the good news. Caught early, many cancers are now highly treatable. Three out of four British men who received a prostate-cancer diagnosis in the early 1970s did not live for another ten years; today four out of five do. Other cancers, such as those of the lung, pancreas and brain, are harder to find and treat. But as our Technology Quarterly in this issue shows, progress is being made. Techniques to enable early diagnosis include a device designed to detect cancer on the breath; blood tests can track fragments of DNA shed from tumours. Genome sequencing makes it ever easier to identify new drug targets.

The established trio of 20th-century cancer treatments-surgery, radiation and chemotherapy-are all still improving. Radiotherapists can create webs of gamma rays, whose intersections deliver doses high enough to kill tumours but which do less damage to healthy tissue as they enter and leave the body. Some new drugs throttle the growth of blood vessels bringing nutrients to tumours; others attack cancer cells' own DNA-repair kits. Cancer may be relentless; so too is science.

The greatest excitement is reserved for immunotherapy, a new approach that has emerged in the past few years. The human immune system is equipped with a set of brakes that cancer cells are able to activate; the first immunotherapy treatment in effect disables the brakes, enabling white blood cells to attack the tumours. It is early days, but in a small subset of patients this mechanism has produced long-term remissions that are tantamount to cures. Well over 1,000 clinical trials of such treatments are under way, targeting a wide range of different cancers. It is even now possible to reprogram immune cells to fight cancer better by editing their genomes; the first such gene therapy was approved for use in America last month.

Yet cancer sufferers need not wait for the therapies of tomorrow to have a better chance of survival today. Across rich and poor countries, the survivability of cancer varies enormously. Men die at far higher rates than women in some countries; in other countries, at similar levels of development, they do comparably well. The five-year survival rate for a set of three common cancers in America and Canada is above 70%; Germany achieves 64%, whereas Britain manages a mere 52%. Disparities exist within countries, too. America does well in its treatment of cancer overall, but suffers extraordinary inequalities in outcomes. The death rate of black American men from all cancers is 24% higher than it is for white males; breast-cancer death rates among blacks are 42% higher than for whites. A diagnosis in rural America is deadlier than one in its cities.

Practical as well as pioneering

Variations between countries are partly a reflection of health-care spending: more than half of patients requiring radiotherapy in low- and middle-income countries do not have access to treatment. But big budgets do not guarantee good outcomes. Iceland and Portugal do not outspend England and Denmark on health care as a proportion of GDP, but past studies show wide variation in survivability in all cancers.

Instead, the problem is often how money is spent, not how much of it there is. To take one example, a vaccine exists against the human papillomavirus (HPV), which causes cancers of the cervix in women, as well as cancers of the head and neck. Rwanda started a programme of routine vaccination in 2011, and aims to eradicate cervical cancer by 2020. Other countries are far less systematic. Vaccinations could help prevent cervical cancer in 120,000 Indian women each year.

Policymakers are not powerless. More can be done to verify which treatments (and combinations thereof) work best. A £1.3bn ($2bn) cancer-drug fund in England, which made expensive new medicines easier to obtain, did not assess the efficacy of the drugs it provided-a huge missed opportunity. Measuring the incidence and survival of cancer, through cancer registries, spotlights where patients are being failed. Access to health care matters, too: the number of Americans whose cancers were diagnosed at the earliest possible opportunity went up after Obamacare was enacted. And prevention remains the best cure of all. Efforts to rein in tobacco use averted 22m deaths (many of them to cancer) between 2008 and 2014. Yet only a tenth of the world's population lives in countries where taxes make up at least three-quarters of the price of cigarettes, as recommended by the World Health Organisation.

Taxes and budgeting are a lot less exciting than tumour-zapping proton beams and antibodies with superpowers. But the decisions of technocrats are as important as the work of technicians. Cancer kills millions of people not simply for want of scientific advance, but also because of bad policy.

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THE numbers are stark. Cancer claimed the lives of 8.8m people in 2015; only heart disease caused more deaths. Around 40% of Americans will be told they have cancer during their lifetimes. It is now a bigger killer of Africans than malaria.

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South Africa is back in recession for the first time since 2009.

Africa's second biggest economy contracted by 0.7% in the first quarter, a poor performance that was fueled by weakness in trade and manufacturing.

The slump surprised analysts who were expecting the economy to rebound after it shrank by 0.3% in the final three months of 2016.

A recession is defined as two consecutive quarters of contraction.

It's the latest warning sign for South Africa, which has seen its credit rating slashed to junk by two agencies in recent months. The big worry? Political instability.

President Jacob Zuma ousted finance minister Pravin Gordhan and a slew of other top ministers in April, setting off a new round of turmoil and economic uncertainty.

Gordhan had built a reputation as a steady hand who expertly guided South Africa's economy and promoted its business interests. He first served as finance minister between 2009 and 2014, and returned to the job in December 2015, much to the relief of international investors.

But Gordhan and Zuma clashed over issues such as the management of state-owned enterprises and the need for a big new economic plan.

Related: South Africa's currency plummets after finance minister fired

The rand, which had strengthened under Gordhan's watch, plunged in the immediate aftermath of his firing.

The currency fell by 1.2% against the dollar after the GDP figures were released Tuesday.

"The policy agenda is at increased risk of being overshadowed by political infighting," S&P Global Ratings analysts wrote this week. "We believe the current political environment could result in the private sector delaying business investment decisions."

CNNMoney (London) First published June 6, 2017: 8:25 AM ET

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South Africa sinks into first recession since financial crisis

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Africa's second biggest economy contracted by 0.7% in the first quarter, a poor performance that was fueled by weakness in trade and manufacturing. The slump surprised analysts who were expecting the economy to rebound after it shrank by 0.3% in the final three months of 2016.

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Consider a perfectly competitive market for Cell Phones in the United States. Suppose that a new technological innovation makes the production of cell phones cheaper. On a clearly labeled supply and demand graph show what happens to the equilibrium price and quantity. In addition, write a brief explanation that states which curve or curves (if any) shift and why.

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Cashmere products make up $4 billion of the $60 billion global luxury apparel market, according to data provided by Bain & Company. “The cashmere knitwear market is definitely outgrowing the luxury apparel market,” says Federica Levato, senior consultant at Bain & Company, who cites “casualisation of the market” — dressed-down, comfort-led trends like athleisure — as the main driver of demand.
While cotton, silk, or leather — all key raw materials on which the luxury fashion sector depends — can be produced in modified farming systems, cashmere production relies on natural grasslands in limited geographies. As a result, it is especially vulnerable to environmental change.

“The availability of cashmere has suffered because of the degradation of the native grasslands, which the animals depend on for their food,” says Elisa Niemtzow, consumer sectors director at BSR and co-author of Kering and BSR’s report. “We’re talking about changes in temperature, in water availability and in the extreme winter conditions.

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LONDON, United Kingdom - A fashion business exercises careful control: over its image; its business growth; where possible, over how consumers respond to its brand. But even the world's most prestigious luxury houses cannot control the climate.

According to a report released this month by and non-profit consultancy Business for Social Responsibility (BSR), climate change is already having noticeable effects on global cashmere supplies - and this impact is likely to get worse.

Currently, cashmere products make up €4 billion of the €60 billion global luxury apparel market, according to data provided by Bain & Company. "The cashmere knitwear market is definitely outgrowing the luxury apparel market," says Federica Levato, senior consultant at Bain & Company, who cites "casualisation of the market" - dressed-down, comfort-led trends like athleisure - as the main driver of demand.

In the last few years, the "democratisation" of the fashion industry has caught up with cashmere. Once a highly expensive commodity, available to an exclusive few; today, affordable, casual cashmere products have permeated the high street. At Uniqlo and , pure cashmere knitwear starts at $79.90; while athleisure retailer Kit & Ace has built its brand around "technical cashmere," - blends of cashmere and sport-friendly materials like spandex.

But, cashmere is under threat. Made of the fine winter undercoat of Hircus goats, the global cashmere clip is estimated to be between 15,000 and 20,000 metric tonnes, or 6,500 tonnes of "pure" cashmere after it is cleaned. Luxury brands are more selective in their sourcing, centring on Mongolia and Inner Mongolia (an autonomous region within China that borders Mongolia), and using only the finer, longer and whiter fibres. However, most of the global cashmere output comes from China, where The Nature Conservancy estimates there are over 100 million goats. According to the National Resources Defense Council, it can take four goats to produce enough fibres for one sweater.

While cotton, silk, or leather - all key raw materials on which the luxury fashion sector depends - can be produced in modified farming systems, cashmere production relies on natural grasslands in limited geographies. As a result, it is especially vulnerable to environmental change.

"The availability of cashmere has suffered because of the degradation of the native grasslands, which the animals depend on for their food," says Elisa Niemtzow, consumer sectors director at BSR and co-author of Kering and BSR's report. "We're talking about changes in temperature, in water availability and in the extreme winter conditions."

According to the United Nations Development Programme, 90 percent of Mongolia is fragile dry-land, under increasing threat of desertification. In 2010, the combined impact of a drought the preceding summer (which reduced available forage in the grasslands) and a dzud (an extremely severe winter), saw more than nine million livestock perish in the country, of which most were cashmere goats.

According to Pier Luigi Loro Piana, deputy chairman of Italian fashion house Loro Piana, which specialises in luxury cashmere and wool products, the recurring dzud has seen Mongolia and Inner Mongolia suffer cashmere shortages for 50 years. "You learn over the years how to balance these potential shortages," he says. "Unfortunately, they continue to have an impact on the shepherds and their communities, on the animals, the environment."

However, in recent years, the environmental obstacles facing cashmere have worsened. To tackle rising demand, many producers increased the size of their herds - from 1993 to 2009, Mongolia's livestock population grew from approximately 23 million to 44 million - creating a vicious cycle. More goats mean more grazing; which, in turn, leads to degradation of the grasslands. The result is undernourished goats with coarser hairs, causing the supply of high-quality cashmere to shrink. To make up the lost revenue, herders breed bigger herds, setting off the cycle again.

"There's been an absolute avalanche of people wanting more and more cashmere, and pushing the price, pushing the supply chain," says James Sugden OBE, a director of luxury cashmere clothing label, Brora, and former managing director of Scottish woollen mill, Johnstons of Elgin. "It has created a problem, insomuch as in some areas, some growers, tempted by higher volumes have gone for volume rather than quality."

"Lately what has really worried us as a potential risk for the whole industry is the quantity approach: quantity seems to be overtaking quality," concurs Mr Loro Piana.

Cashmere's future is even more precarious. While the dzud is an extreme, cashmere yields depend on harsh winter conditions to grow their high-quality undercoats. Looking forwards to 2036 to 2060, Kering and BSR warn that rising temperatures due to global warming could also constrain goats' winter hair growth, causing further decline in the quality of cashmere. "There's sort of a perfect storm," says Elisa Niemtzow.

So, what does this mean for fashion businesses? According to Niemtzow, luxury brands are already seeing decreases in availability of high quality cashmere. "You can either take it as a decrease in quality or a decrease in availability," she says. Either way, the raw material is running out.

Two years ago, the Chinese government put restrictions on farmers' acreage, in a bid to reduce the stripping of the pastureland. However, Outer Mongolia and other producing regions like Afghanistan have no such controls. Even within China, "The problem still remains in terms of finding quality fibre, consistently," cautions James Sugden.

These changes present not only an environmental concern, but a business risk too. So how does an industry respond, when a raw material that its products - and, therefore, its profits - rely on, becomes endangered?

"Our industry's challenge is to change this unsustainable system and put new, sustainable practices in place," says Marie-Claire Daveu, chief sustainability officer and head of international institutional affairs at Kering. "Companies need to recognise that their business depends on natural capital and also impacts many livelihoods at the base of their supply chain."

According to Daveu, Kering's brands are working with their suppliers to create "production systems that are more resilient to the shocks of climate change impacts," such as sustainable herding practises and holistic management of pasturelands, or implementing early warning/disaster management systems to respond to negative weather events.

But, with demand for cashmere still high, companies must consider the herding communities in their supply chains, and make it worth their while to farm less, but better. "Desertification also exacerbates economic hardship for herders and drives them into poverty and displacement to urban slums," says Una Jones, chief executive officer of the Sustainable Fibre Alliance (SFA), which was formed in 2015 to unite companies, governments and NGOs to tackle sustainability issues in the cashmere industry, by establishing the first Sustainable Cashmere Standard, which will pilot in 2016.

In 2009, Loro Piana, which was acquired by LVMH in 2013, launched a five-year selective breeding programme, involving about 24,000 cashmere goats in China. By breeding only the most productive animals, the scheme aims to elevate the quality of hair on each animal, resulting in smaller herds but higher yields of quality cashmere - thus easing pressure on the land and avoiding desertification.

The project has "improved standards of living for goats and pastors, as well as a restored balance between animals and environment," says Mr Loro Piana. A luxury fashion business, he says, must choose "Integrity, investments, research, respect and aiming for the best quality versus mere exploitation."

"In bad years, we pre-pay. We give the farmers advance money, in order to see them through the winters," says Sugden of Brora, which processes its garments in Scotland and sources its cashmere from Inner Mongolia, where goats are not just sources of cashmere, but meat and milk for the herding communities. If the commodity price of cashmere drops, "Our responsibility is to try and not take advantage of that. We want consistency of quality, number one. The price is secondary," he says.

"A number of luxury brands and retailers are stepping up to the plate," says Una Jones, to tackle the industry's current "unsustainable production and consumption patterns and how the sector will have to change to meet their future demands." Last year, for example, Burberry added protecting its cashmere supply to the company's environmental targets for 2017.

But is it too late for the so-called "diamond fibre?" Should fashion business also adapt their strategies to the possibility of shrinking cashmere supplies?

As more environmental changes make farming more challenging, and modernisation across Asia tempts younger generations away from their families herding businesses, James Sugden says luxury brands have a "duty" to support their suppliers, by protecting the price, and ensuring suppliers understand, "It's better to be at the top end of the market, and not to be tempted by the larger orders from Uniqlo or the like." But, he adds, "The bulk producers have a responsibility."

At Kering, Daveu, remains positive. "Ultimately, availability will also be positively affected," she says, of Kering's collaborative efforts. "We have a tremendous opportunity now to work on this issue to create a vibrant cashmere industry that helps regenerate natural systems and supports the livelihoods of millions of people. Let's look to the solution, not just the problem."

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LONDON, United Kingdom - A fashion business exercises careful control: over its image; its business growth; where possible, over how consumers respond to its brand. But even the world's most prestigious luxury houses cannot control the climate.

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1. Draw the graph for the cashmere market, showing private and social costs and the private and social equilibrium.
2. Formulate an economic prediction about the cashmere market.

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Evan Osnos talks with Stephen Colbert about Cashmere and the impact of cashmere production in China

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Here's How Much the iPhone 7 Cost to Manufacture

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Apple's iPhone 7 is expensive, but the company is still making healthy profits on the sale of each new smartphone, according to iFixit.

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My essay on the wealth tax... Resources are listed at the bottom, so feel free to read the articles linked as well.