The mysterious iron ball at the center of the Earth may have stopped spinning and reversed direction
A 3D rendering of the Earth's layers, including its inner core. (Getty Images)
- Earth's inner core may have paused and reversed its spin, a new study suggests.
- Earthquakes and nuclear blasts can send seismic waves through the mysterious solid-iron core.
- Those waves hint that the core changed direction in the 1970s, and may be undergoing another reversal today.
Living on Earth's surface, we only see about 0.5% of the planet. Deep below the crust, then the hot rock mantle, then the liquified outer core, lies one of our planet's biggest mysteries: the solid iron core at the center.
That iron ball — Earth's inner core — may have recently stopped rotating, then reversed direction for no apparent reason, a new study found.
That may sound apocalyptic, but don't worry. Scientists don't think it will significantly change life on the surface, except by befuddling them.
"It's probably benign, but we don't want to have things we don't understand deep in the Earth," John Vidale, a geophysicist at the University of Southern California, told The Washington Post.
Published in the journal Nature Geoscience on Monday, the peer-reviewed research suggests that the solid inner core of the Earth could experience changes in its rotation every several decades.
Scientists can't look directly at the inner core, but they can get hints of its activities from powerful earthquakes and Cold War nuclear-weapons tests, which have sent seismic waves reverberating through the center of the Earth.
Those deep seismic waves have shown that the core is mostly composed of pure, solid iron and nickel, and that it may spin a little faster than the rest of the Earth.
If the inner core was inert, spinning in line with the outer layers of the planet, similar waves should travel similar paths through it. But over time, the movement of those waves changes, indicating that the core itself is changing. Spinning is one of the leading explanations for these seismic mismatches.
The new study throws a wrench in the core's spin. It looks closely at seismic waves from the 1960s to the present day. The researchers found a quirk starting in 2009: In the last decade, the paths of similar seismic waves did not change.
That suggests the inner core may have stopped spinning around that time.
Data from two pairs of nuclear blasts hint at a similar pause around 1971, with the core spinning eastward afterwards, leading the researchers to believe that the inner core may pause and reverse its spin about every 70 years.
The theory is that Earth's magnetic field pulls the inner core and causes it to spin, while the gravitational field of the mantle creates a counter force, dragging on the inner core. Every few decades, one force may win out over the other, changing the spin of the great iron ball.
Explaining these quirks in the seismic record is difficult, and involves speculation, since there is so little information about the inner core.
Another explanation is that the surface of the inner core is changing over time, rather than the whole iron ball spinning. Lianxing Wen, a seismologist at Stony Brook University, discussed this theory in a 2006 paper and still stands by it today. He told The Washington Post that would explain the pauses in 1971 and 2009.
"This study misinterprets the seismic signals that are caused by episodic changes of the Earth's inner core surface," Wen told the Post.
The new study may help shed further light on the mysterious nature of the inner core and how it interacts with Earth's other layers. It could be a long time before scientists piece together the full picture, though — if they ever do.
"It's certainly possible we'll never figure it out," Vidale told The New York Times.
Still, he said, "I'm an optimist. The pieces are going to fall into place someday."
Until then, Vidale and his colleagues will just keep listening to seismic waves that travel from one side of the planet to the other, straight through the iron core that the researchers themselves can never reach.
Gapping down
In reaction to earnings/guidance:
- ISRG -8.9%, BORR -5.6%, MRTN -5.2%, FFIV -4.4%, TRMK -3.7%, KMB -2.9%, CNI -2.5% (also approves normal course issuer bid to repurchase up to 32 mln shares; also increases dividend), MSFT -2.5%, ASML -1.9%, NEE -1.7%, COF -1.5%, ADP -1.5%, BA -1.5%, TEL -1.3%, ABT -1.2%, WAL -1%, TXN -0.8%, NDAQ -0.7%
Other news:
- PGEN -16.9% (Phase 1 data for PRGN-2012 AdenoVerse; prices offering of 42857143 shares of its common stock at $1.75 per shareg)
- HMN -7.7% (provides estimate of damage due to Winter Storm Elliott)
- PACB -6.6% (prices offering of 17.5 mln shares of its common stock at $10.00 per share)
- KOPN -5.7% (stock offering)
- VCSA -1.8% (approves a 17% workforce reduction plan; also confirms prior guidance for Q4)
- FTI -1.4% (awarded substantial MSA for subsea services with Petrobras)
- PLRX -1% (prices offering of 8333334 shares of its common stock at a price to the public of $30.00 per share)
Analyst comments:
- SQ -3.7% (downgraded to Perform from Outperform at Oppenheimer)
- ABNB -3% (downgraded to Underperform from Hold at Gordon Haskett)
- BLMN -2.2% (downgraded to Market Perform from Outperform at BMO Capital Markets)
- BKNG -2% (downgraded to Neutral from Buy at BofA Securities)
Gapping up
In reaction to earnings/guidance:
- EHTH +17.3%, LRN +10.9%, RES +5.9%, EXTR +3.5%, T +2.2%, GD +2.1%, TXT +2%, USB +1.5%, SLGN +1.4%, NAVI +1.3%, NXGN +1%, GPI +1%, FCF +0.9%, ELV +0.8%
Other news:
- GOEV +13.4% (announces definitive partnership agreement with GCC Olayan as exclusive distributor of its electric vehicles in Saudi Arabia) DCPH +8.9% (presents results from ctDNA Analysis of INTRIGUE Phase 3 study)
- NWS +4.8% (Murdoch withdraws proposal for NWS-FOX merger)
- FOX +3.9% (Murdoch withdraws proposal for NWS-FOX merger)
- LBRT +3.7% (increases existing share repurchase authorization to $500 mln)
- NWSA +3.4% (Murdoch withdraws proposal for NWS-FOX merger)
- TUSK +3.1% (submits $379 mln claim to FEMA)
- IPHA +2.5% (announces HSR clearance regarding expansion of its collaboration with Sanofi (SNY) on NK Cell Engagers)
- FOXA +1.8% (Murdoch withdraws proposal for NWS-FOX merger)
- NETI +1.2% (signs two new contracts in NW Europe)
Early premarket gappers
- Gapping up:
- GOEV +26%, EHTH +17.3%, LRN +15.6%, DCPH +6.1%, NWS +4.5%, FOX +3.9%, LBRT +3.7%, TUSK +3.1%, NWSA +1.8%, KOPN +1.6%, NKLA +1.5%, SLGN +1.4%, NAVI +1.3%, NETI +1.2%, IPHA +1.1%, FOXA +1%, NXGN +1%, VRA +0.9%, FCF +0.9%, VBTX +0.6%, LMT +0.5%
- Gapping down:
- PGEN -17.4%, ISRG -8.5%, HMN -7.6%, PACB -6.7%, AREN -6.4%, BORR -6%, MRTN -5.2%, PLRX -5%, FFIV -4.4%, VCSA -3.6%, COF -3.5%, EFC -3%, CNI -2.6%, MSFT -2.6%, TRMK -2.5%, ASML -1.8%, BTBT -1.4%, TXN -1.3%, TEL -1.3%, IP -1.2%, WAL -1%, ELV -0.7%
EY auditors escape potential Wirecard sanctions after leaving profession
Watchdog closes cases against four individuals who handed back licences
Germany’s audit watchdog closed investigations against four current and former EY auditors involved in inspecting collapsed payments firm Wirecard after they handed back their professional licences and left the profession earlier this month.
Under German law, Apas can only probe and sanction potential misconduct by active accountants who are enrolled in the country’s register of public accountants.
As the watchdog’s delayed ruling into EY’s controversial audit for the disgraced German payments firm approaches, four current and former employees this month resigned from the country’s chamber of public accountants, the WPK.
According to people familiar with the matter, the three EY audit partners who were in charge of the Wirecard audit since 2016 were among those who resigned: Martin Dahmen, who is still employed by EY, as well as Andreas Budde and Andreas Loetscher, who have both left the firm. While Budde retired, Loetscher in 2018 became Deutsche Bank’s head of accounting, but later left the bank. The fourth individual was a less senior auditor who worked a lot on the Wirecard mandate.
The four were part of a group of 12 current and former EY employees who were under investigation by Apas since Wirecard collapsed into insolvency in June 2020. The company received a clean bill of health from EY for close to a decade, but eventually had to disclose that €1.9bn in corporate cash and half of the company’s reported revenue did not exist.
If the watchdog finds serious wrongdoing it can temporarily, or permanently, ban accountants and fine them up to €500,000.
Apas told the Financial Times that the case against four individuals who handed back their licenses was closed. It declined to confirm their identities but told the FT that the number of individuals under investigation had recently dropped from 12 to eight.
The watchdog added that any sanctions levied require that individuals be a member of the audit profession. “If the appointment as an auditor is waived for whatever reason, for legal reasons the professional oversight ends as well,” Apas told the FT in a statement, adding that and “ongoing investigation is automatically closed.”
In a statement to the FT, the WPK referred to its publicly available database of licensed accountants, adding that four former members resigned in early 2023.
EY confirmed that “individual auditors have decided to renounce their licenses as auditors”, declining to comment further.
A lawyer for Dahmen told the FT that his client’s step was “a personal decision” but was discussed with EY.
“Mr Dahmen wanted to draw a line under the matter and to look forward,” he said, adding that his client was still certain that he conducted the audits to the best of his knowledge and beliefs and that the auditors were deceived by Wirecard.
A lawyer for Budde declined to comment, and Loetscher did not immediately respond to a request for comment.
Adani shares take $9.4bn hit after Hindenburg bets against group
Short seller releases report as billionaire businessman pushes ahead with fundraising
Shares in listed companies tied to India’s sprawling Adani Group shed $9.4bn in value after short seller Hindenburg Research released a report targeting the conglomerate controlled by billionaire business magnate Gautam Adani.
Shares in seven listed Adani Group companies were down 4.6 per cent on average in afternoon trading in Mumbai, with those in flagship business Adani Enterprises falling as much as 3.7 per cent. Those falls brought the combined loss in market capitalisation for Adani Group stocks to about Rs762bn ($9.4bn).
Adani’s businesses are expanding rapidly. The self-made tycoon started as a commodity trader in the 1980s before ultimately building India’s largest private infrastructure group with about a dozen ports and eight airports. The group has multiple subsidiaries spanning sectors including data and defence.
The report comes as Adani, whose net worth of roughly $118bn ranks him as Asia’s richest person, according to Bloomberg, pushes forward with a fundraising to fuel the rapid expansion of his existing industrial and fossil fuel outfits as well as green energy businesses.
In the report, Hindenburg alleges that Adani Group has engaged in stock price manipulation and accounting fraud over the course of decades, and presents a list of 88 questions related to those allegations which “we hope the Adani Group will be pleased to answer”.
Jugeshinder Singh, the chief financial officer of Adani Group, said the conglomerate was “shocked” by the Hindenburg report, describing it as “a malicious combination of selective misinformation and stale, baseless and discredited allegations”.
Singh said the timing of the report, coming days ahead of a share offer by Adani Enterprises, was intended to “undermine the Adani Group’s reputation” and damage demand for the upcoming offering. He added that the group “has always been in compliance with all laws”.
The report from Hindenburg, published on Wednesday morning ahead of the market opening in Mumbai, asserts that “even if you ignore the findings of our investigation . . . [Adani Group’s] key listed companies have 85 per cent downside purely on a fundamental basis owing to sky-high valuations”.
Hindenburg said it had taken a short position on Adani Group companies “through US-traded bonds and non-Indian-traded derivative instruments”.
The billionaire businessman has maintained that his companies’ valuations are justified.
Adani announced plans last year to increase the amount of freely traded shares in Adani Enterprises after the company’s share price gained more than 3,300 per cent in three years. Public bidding for a share offer by Adani Enterprises that is aiming to raise up to Rs200bn is expected to begin on Friday.
The shareholdings of several Mauritius-based investment funds in Adani Enterprises and other listed Adani Group companies have come under scrutiny from Indian regulators in the past.
Analysts have raised concerns over the debt-fuelled growth of Adani Group, noting that the conglomerate’s total debts of almost Rs2tn (about $24bn) are equivalent to nearly seven times pre-adjusted earnings.
In December, the billionaire businessman told the Financial Times that some analysts “have not understood [his businesses] in real terms”.
“Who understands are my lenders, my banks, my global investors. Every time Adani comes into the market, they love to invest. And that’s how we are continuously growing,” he said.
The Adani Group, which derives much of its revenues from mining and burning coal, has vowed to become one of the world’s largest green energy businesses by investing $70bn by 2030 in everything from green hydrogen to solar panel manufacturing.
Adani launched a hostile takeover of Indian broadcaster NDTV last year, in an attempt to build a media business.
>>> Up
* Amplifon Raised to Buy at Jefferies; PT 29.20 euros
* Darktrace Raised to Overweight at Morgan Stanley; PT 410 pence
* EasyJet Raised to Buy at HSBC; PT 630 pence (+)
* Forterra Raised to Buy at Numis; PT 255 pence (+)
* GN Store Nord Raised to Hold at Jefferies; PT 170 kroner
* Opap Raised to Buy at Citi; PT 16 euros
* Philip Morris Raised to Buy at Goldman; PT $120
* Renault Raised to Buy at AlphaValue/Baader
* Renault Raised to Outperform at Bernstein; PT 45 euros (+)
* Saipem Raised to Buy at Citi; PT 2 euros
* Viaplay Raised to Buy at Handelsbanken
* Zalando Raised to Buy at Bryan Garnier; PT 50 euros (+)
>>> Down
* Aixtron Cut to Hold at Deutsche Bank; PT 33 euros
* Alstom Orders Positive, Guidance Confirmation Reassuring: Citi (+)
* Aroundtown Cut to Sell at SocGen (+)
* Atrium Ljungberg Cut to Reduce at Kepler Cheuvreux (+)
* Balder Cut to Hold at Pareto Securities; PT 61 kronor (+)
* Banca IFIS Cut to Accumulate at Banca Akros (+)
* BFF Bank Cut to Neutral at Banca Akros (+)
* Brinova Fastigheter Cut to Reduce at Kepler Cheuvreux (+)
* Caverion Cut to Reduce at Inderes; PT 8.50 euros (+)
* Cibus Nordic Cut to Hold at Pareto Securities; PT 160 kronor (+)
* Dios Cut to Hold at Pareto Securities; PT 84 kronor (+)
* Direct Line Cut to Hold at Berenberg; PT 160 pence
* Dr Martens Cut to Hold at HSBC; PT 140 pence
* Fabege Cut to Hold at Pareto Securities; PT 104 kronor (+)
* Grand City Properties Cut to Hold at SocGen (+)
* Hexagon Cut to Hold at Berenberg
* Lufthansa PT Raised to 13.50 euros at Bankhaus Metzler (+)
* Mips Cut to Sell at Pareto Securities; PT 295 kronor (+)
* Pharma Mar Cut to Hold at Bestinver; PT 65.20 euros (+)
* Royal Unibrew Cut to Neutral at Bryan Garnier; PT 525 kroner (+)
* Sonova Cut to Underperform at Jefferies; PT 200 Swiss francs
* Swatch Cut to Hold at SBG Securities; PT 335 Swiss francs (+)
* Wihlborgs Cut to Hold at Pareto Securities; PT 83 kronor (+)
>>> Initiation
* Azelis Rated New Equal-Weight at Morgan Stanley
* Brenntag Rated New Overweight at Morgan Stanley
* Daetwyler Rated New Hold at Berenberg; PT 220 Swiss francs
* IMCD Rated New Equal-Weight at Morgan Stanley
* Intervest Offices & Warehouses Rated New Neutral at Oddo BHF (+)
* LumenRadio Rated New Buy at SEB Equities; PT 100 kronor
* Petershill Rated New Buy at Berenberg; PT 220 pence
>>> Call
* Aixtron’s Potential Reflected in Shares, Cut at Deutsche Bank (+)
* Brenntag Is Morgan Stanley’s Top EU Chemicals Distributor Pick
* Darktrace Growth Story Seen Intact, Morgan Stanley Upgrades (+)
* Daetwyler New Hold at Berenberg With Short-Term Headwinds Ahead
* Direct Line Cut to Hold, Berenberg Highlights Dividend Cut Risks (+)
* Saipem Raised to Buy at Citi on Positioning for Offshore Growth
* Sonova, Demant Cut and Amplifon, GN Store Upgraded at Jefferies
UK pension schemes search out forestry investments
Nest and Cushon schemes with £26bn under management look to put funds into trees as a growth area
Nest and Cushon, two UK pension schemes with combined assets of more than £26bn, are in a joint search for asset management partners to develop new forestry investment strategies to address climate change pressures.
Both pension schemes believe that allocating money to forestry projects will offset environmentally damaging emissions from other investments and deliver attractive returns as the price of carbon rises to reflect the increasing costs of pollution by human activity.
The schemes have set aside an initial £600mn for a joint investment mandate and, by combining forces, aim to secure lower fees with third party managers. This kind of partnership approach has already been employed successfully by some of the largest pension funds in Australia.
Nest presently manages about £25bn on behalf of 10mn members, as the UK largest workplace pension scheme, and expects to invest some 2 per cent of its assets into forestry and other natural capital projects
“We want to explore how much money managers can actually put into work in timberland on an annual basis and how much it will cost,” said Mark Fawcett, chief investment officer at Nest.
Cushon, which expects to have assets of around £900mn by the end of this year, anticipates that it could grow its allocation to natural capital strategies up to 5 per cent of its assets over time, including controversial carbon credits. It has already agreed to act as a seed investor in a new Schroders multi-asset climate fund which is seeking regulatory approval for a launch by the end of the first quarter.
“Climate change represents a material risk to our members’ future returns. Pension providers have an opportunity to deliver sustainable investments thanks to natural capital, in both an environmental and a financial sense,” said Julius Pursaill, a strategist at Cushon.
Both pension schemes say they will avoid forestry projects where logging contributes to deforestation. Forests in tropical zones, such as the Amazon, offer high carbon sequestration potential, for example, but suffer from local political and fire risk, as well as the effects of climate change.
Mainstream asset managers that offer forestry management as an option to UK clients include Abrdn, Axa Investment Managers, Gresham House, JPMorgan, M&G and Nuveen. Schroders teamed up last year with Conservation International, a US non-profit environmental group, to launch Akaria Natural Capital which intends to invest in climate projects in Asia.
Carbon credit schemes based on forestry projects as a way of offsetting polluter emissions have ballooned in recent years but are unregulated and are notoriously fraught with issues regarding their quality and verification.
Among the pitfalls of carbon credit schemes are that the projects do not capture as much carbon as they claim. Accurately tracking the trees, often in remote areas, calculating the carbon stored, the health of the trees and distinguishing between species that store carbon at different rates are among the practical issues.
The influential Science Based Targets initiative has barred offsets from counting towards corporate net zero targets.
bon offsets: a licence to pollute or a path to net zero emissions?
But the UK had the potential to attract investments into its nascent carbon offset market which could provide stable and guaranteed revenue streams to landowners, said Brendan Curran, policy fellow at the Grantham Institute on Climate Change at the London School of Economics.
“Verification and monitoring of carbon credits projects created by UK forestry projects should be easier than in many emerging markets,” he said.
The UK government has pledged to reach a target of 30,000 hectares of new woodland planting a year by 2025, with 67,333 hectares of woodland carbon projects registered at the end of December. It is estimated that those plantings would allow around 21.7mn tonnes of carbon to be sequestered — a fraction of what is required if the UK is to meet its target of net zero emissions by 2050 from 1990 levels.