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Futures Movers: Stock futures gain as Wall Street looks to snap 8-week losing streak

U.S. stock-index futures gained late Sunday, after Wall Street last week sank to is longest losing streak since 1932......»»

Category: topSource: marketwatch5 hr. 28 min. ago Related News

Goldman Trader: After A Brutal Week, Here Is The "Cat And Mouse" Question That Needs To Be Answered

Goldman Trader: After A Brutal Week, Here Is The "Cat And Mouse" Question That Needs To Be Answered From Tony Pasquariello, Goldman head of hedge fund coverage Cat and Mouse A brutal week in the markets, with no shortage of blame to go around: the persistence of global central bank hawkishness, gathering recession concerns, ongoing retail liquidation (and, an element of reflexivity). Here’s the central question that I’m trying to work out: if the interest rate market is correct, and terminal Fed Funds rate is going to be somewhere around 3%, at what point is that fully priced into the broader markets? On one hand, there’s already been a very significant tightening of US financial conditions, so you could argue that we’re getting close.   Said another way: you know that financial markets live in the future ... so, when the day comes where everyone can clearly see the end of the tightening cycle, the trading community will be ahead of it and assets will already be on the move. On the other hand, the target rate is still south of 1% and core PCE is still north of 5%, so you could also argue that we’re still much closer to the start of this tightening cycle than to the end of it [for a more detailed discussion, see "The Fed Has Crossed The "Hard Landing" Rubicon So How High Will It Hike? One Bank Crunches The Numbers"]. Said yet another way: as long as inflation is running hot and the labor market is too tight ... again, the inconvenient truth is the Fed has more wood to chop and the markets have more risk to sort out. In a related vein: at what point does the FOMC view an easing of financial conditions and decide that they DON’T need to beat it back? In that spirit, cue Bill Dudley (link): “the Fed has to be happy with the fact that financial conditions have tightened ... they’re getting traction ... they still have to do what they said they’re going to do.” With apologies for thinking out loud here, it’s these type of cat-and-mouse questions that illustrate the difficulty of assessing the current interplay between the Fed and the asset markets.   To be sure, the task of culling jobs is hugely unenviable, but the Fed is still so far off the inflation mark; at the very least, they need to demonstrate the trajectory of core inflation is clearly headed lower, even if they ultimately lose their nerve before reaching 2.0% [maybe the Fed is not so far off: see "Fed Mission Accomplished: Real-Time Indicators Show The Labor Market Just Cratered"]. On that last point, as Joe Briggs in GIR pointed out to me, the FOMC actually sent a similar signal with their March SEP dots, which showed 3½ hikes in 2023 and 0 hikes in 2024 ... despite median inflation forecasts of 2.6% in 2023 and 2.3% in 2024. Here’s where I’m going with all of this: even though financial conditions have tightened considerably ... and, even though this Fed will likely back off once the jobs losses begin to mount (they’re the same folks who ran the AIT play, after all) ... the fact is there’s still a lot of ground to cover before they can declare victory over inflation ... which should keep some pressure on risk assets a bit longer. To add another layer of complexity: as Dominic Wilson in GIR pointed out to me, the stock market usually bottoms when the Fed flinches (see early ’16, early ’19) ... or, if there’s a real growth problem, when the second derivative of economic activity turns (see Mar ’09, Apr ’20).    In that context, again my instinct is we’re just not there yet -- not only does the Fed put feel both smaller and farther out of the money than we’ve been accustomed to for a long time (arguably since the post-1994 era began), but the longer the tightening cycle rolls along, and the higher the unemployment rate goes, the more the markets will rightly worry about a recession (even if you believe, as I do, that the US economy is durable with plenty of nominal GDP still sloshing around). I’ll conclude this narrative with a chart, to followed by quick points and more charts ... I can find no better illustration of what’s currently challenging the stock market than this (link): 1-a. on the positioning front, the glaring wedge between hedge funds and households persists: i. GS Prime Brokerage data reflects some of the largest reduction of leverage on record (link).  n/b: I suspect the huge underperformance of implied volatility traces back to this point (which, for those watching, has been an immense oddity -- over the past 15 years, there have been 36 daily selloffs of 4% or more, and the VIX was never as low as it was on Wednesday). ii. that said, I continue to worry about the impact of US households de-risking.   here’s one way to frame it: total fund inflows from November of 2020 through March of 2022 were $1.34tr ... since the tide turned seven weeks ago, we’ve only unwound $47bn.   iii. given immense ownership differentials -- see chart 11 below for an illustration of how huge households are -- to my eye this nets out in favor of the bears.   now, if there’s a group who can help diffuse the supply/demand problem, it’s US corporates (yes, buyback activity through our franchise has picked up meaningfully over recent weeks).  1-b. A related point: as detailed by the WSJ (link) and our own team (link), the retail investor is quickly exiting the call option party.  to make the point: in the pre-COVID era, average daily notional in call options on US single stocks was around $100bn. At the peak in November of 2021 -- which is when a number of high velocity stocks put in their highs -- it was around $500bn. Fast forward to today, and we’re back down to $185bn/day. 2. The recent period has been a textbook illustration of the stark difference between volume and liquidity: volume in cash equities has never been higher (e.g. an average of 12.7bn shares per day in 2021, which is nearly 2x the run rate of 2019) ... yet, top-of-book liquidity in S&P futures registers in just the 3rd percentile of the past six years.   3. despite the ongoing selloff, the past few weeks have also brought moments that illustrate the difficulty of trading stocks from the short side, even if this is a bear market.  see chart 12 below, or witness daily price action in a custom basket of popular shorts, ticker GSCBMSAL. For the most short-term macro traders amongst you, if you want to play S&P from the short side, my sincere advice is to go home flat each night and reassess tomorrow morning -- this is a market to be traded, aggressively, but with extreme discipline. An alternative to this ultra-tactical approach is to utilize put spreads or 1-day gamma (ideas available). 4. I’m no expert in crude oil, but I’ve probably spent 10,000 hours with those who are, so here’s a bullish take: despite a record SPR release, a very strong dollar, shutdowns in the second largest economy on the planet and a break lower in most all risky assets, crude oil has largely stood its ground ... you can probably see where I’m going with this.  For the take of an expert, this note is worth a glance, the (surprising) punch line as I read it: “own commodities as financial conditions tighten.  in the past, spot and roll returns performed well when real rates rose, and particularly when financial conditions additionally tightened” (link). 5. US consumption: again, I worry a lot about building pressures on the low end consumer. While parts of this week’s data set were encouraging -- namely HD and government retail sales data -- what we heard from WMT and TGT was brutally clear: in addition to shipping and inventory issues, the cost of food and fuel is impinging on the US consumer.  This, as much as anything, was THE story of the week. On the other end of the spectrum, high end consumption is still off the charts (witness recent news stories on Manhattan real estate, art or fine wines).  I continue to think the medium-term reckoning of this wedge takes the form of ... higher taxes. 6. on US housing, I admit that a profoundly positive story has gotten a lot more complicated. On one hand, supply/demand favors ongoing strength. On the other hand, affordability seems to be a serious issue, and the move in mortgage rates is very significant.  Where do we come out? As Jan Hatzius in GIR put it to me, informally, there’s not necessarily a clear conclusion: “We cut our forecasts on homebuilding activity and house prices modestly, but the shortage of houses and overall tightness of the market should substantially dampen pressure on the sector.” If you’re interested, we have some interesting charts on this topic.  7. China: the data is so bad, it’s simply eye-popping (witness the worst IP print on record). In fact, GIR has cut our expectation of 2022 Chinese GDP growth to just 4%, which ex-2020 would be the slowest growth rate since ... 1990 (link).  for the sake of balance, Shanghai is set to reopen on June 1st and I suspect foreign trading length is approaching rock bottom.  For a balanced and comprehensive assessment of the regional economic outlook, this is worth a glance: link.   8. This is, if nothing else, some interesting brain food.  I asked Daniel Chavez in GIR to mark the moves in the COVID era in some popular assets. There are a lot of ways to approach this choose-your-own-adventure; the way we cut it was total returns from the lows of March 2020 to the highs (in NDX) of November of 2021 ... then from the November highs to today ... and then from the pre-COVID highs to today. A few things stick out to me, here’s one: point-to-point across the full COVID era, US energy stocks have far outperformed the stay-at-home stocks: 9. In a related spirit, and with credit to sales & trading colleague Brian Friedman, if you look the overlay of NDX P/E (white) with inverted 30-year US real yields (yellow), equities are doing what the move in real rates would suggest they should be doing: 10. With credit to David Kostin in GIR, here’s a bigger picture on tech.  For all of the recent troubles, you still have to marvel at the sustained growth of US mega cap names.  now I suppose the mega question is ... would you be willing to fade the broad pattern of this chart: 11. Another level set from GIR ... which, again, illustrates the size of households vs hedge funds (** 2% **) in the domestic equity market:  12. with credit to a client, an analog from the aftermath of the immediate aftermath in the LEH period, which again illustrates the difficulty of being short in the middle or late stages of a bear market: 13. Finally, and to continue the recent thread, this is a powerful chart of de-globalization ... If this were a chart of a security, I’d be inclined to sell it (link) Tyler Durden Sun, 05/22/2022 - 13:50.....»»

Category: smallbizSource: nyt8 hr. 59 min. ago Related News

"Crop Scouts" Scour Midwest Ahead Of Wheat Harvest Amid Menacing Megadrought  

"Crop Scouts" Scour Midwest Ahead Of Wheat Harvest Amid Menacing Megadrought   Droughts, flooding, heatwaves, and even war threaten wheat production worldwide, pushing up the price of bread, pizza crust, pastries, and noodles. Just about every major producer is facing some issue, and the latest is in the US, where 'crop scouts' have begun to scour arid fields across the Midwestern US. Bloomberg reports crop scouts from the wheat industry have begun to examine plants in farm fields in Kansas to Oklahoma to Nebraska. Harvest is just a few weeks away, and there are concerns devastating droughts have caused damage in US wheat country. Some farmers already are writing off losses from parched grains. The US Department of Agriculture expects lower yields in Kansas, the top-growing state for hard red winter wheat, a staple relied on for bread flour. The shortfall is seen by USDA as pushing national production to the smallest since 1963, fueling fear of global food shortages as war in Ukraine and weather challenges elsewhere puts supplies at risk. -Bloomberg It's very clear the world is now looking at North America for robust wheat production, and with that, there need to be optimum conditions and strong yields. However, that may not be the case.  "This is a very challenging year with not a lot of good news," said crop scout Romulo Lollato, a wheat specialist at Kansas State University. He pointed out that minimal rainfall and freezing temperatures in early April could have damaged crop yields. Aaron Harries, vice president of research and operations for Kansas Wheat, said, "it's been a weather roller coaster" across the Midwest. Some scouts see bright spots after recent rains. Though a megadrought continues to consume large swathes of farmland.  Meanwhile, wheat futures in Chicago are soaring, near all-time highs, as traders are pricing in what could be a year of low harvest production.  Last week, the World Agricultural Supply and Demand Estimates (WASDE) report published by the USDA showed wheat production in Ukraine is expected to plunge by one-third this season compared with last year.  AGRICULTURAL MARKETS: The USDA just published its first really detailed look at 2022-23 crop year, painting a tight outlook for corn and wheat, with production down. On the other hand, rice will enjoy a larger -- and record high -- harvest | #OATT #Ukraine pic.twitter.com/MJgXcZRje4 — Javier Blas (@JavierBlas) May 12, 2022 There are also concerns in Canada, India, and China about harvest declines due to adverse weather conditions. Then there's the Black Sea region, plagued by war that will plunge crop production this year and next.  The final production numbers for the US won't be known for months, though crop scouts will have an idea of what wheat supplies could look like after they wrap up their inspections. USDA's expected to release its estimate based on hundreds of samples on Thursday.  Tyler Durden Sat, 05/21/2022 - 22:00.....»»

Category: personnelSource: nytMay 21st, 2022Related News

Five Warning Signs The End Of Dollar Hegemony Is Near... Here"s What Happens Next

Five Warning Signs The End Of Dollar Hegemony Is Near... Here's What Happens Next Authored by Nick Giambruno via InternationalMan.com, It’s no secret that China and Russia have been stashing away as much gold as possible for many years. China is the world’s largest producer and buyer of gold. Russia is number two. Most of that gold finds its way into the Russian and Chinese governments’ treasuries. Russia has over 2,300 tonnes—or nearly 74 million troy ounces—of gold, one of the largest stashes in the world. Nobody knows the exact amount of gold China has, but most observers believe it is even larger than Russia’s stash. Russia and China’s gold gives them access to an apolitical neutral form of money with no counterparty risk. Remember, gold has been mankind’s most enduring form of money for over 2,500 years because of unique characteristics that make it suitable to store and exchange value. Gold is durable, divisible, consistent, convenient, scarce, and most importantly, the “hardest” of all physical commodities. In other words, gold is the one physical commodity that is the “hardest to produce” (relative to existing stockpiles) and, therefore, the most resistant to inflation. That’s what gives gold its superior monetary properties. Russia and China can use their gold to engage in international trade and perhaps back the currencies. That’s why gold represents a genuine monetary alternative to the US dollar, and Russia and China have a lot of it. Today it’s clear why China and Russia have had an insatiable demand for gold. They’ve been waiting for the right moment to pull the rug from beneath the US dollar. And now is that moment… This is a big problem for the US government, which reaps an unfathomable amount of power because the US dollar is the world’s premier reserve currency. It allows the US to print fake money out of thin air and export it to the rest of the world for real goods and services—a privileged racket no other country has. Russia and China’s gold could form the foundation of a new monetary system outside of the control of the US. Such moves would be the final nail in the coffin of dollar dominance. Five recent developments are a giant flashing red sign that something big could be imminent. Warning Sign #1: Russia Sanctions Prove Dollar Reserves “Aren’t Really Money” In the wake of Russia’s invasion of Ukraine, the US government has launched its most aggressive sanctions campaign ever. Exceeding even Iran and North Korea, Russia is now the most sanctioned nation in the world. As part of this, the US government seized the US dollar reserves of the Russian central bank—the accumulated savings of the nation. It was a stunning illustration of the dollar’s political risk. The US government can seize another sovereign country’s dollar reserves at the flip of a switch. The Wall Street Journal, in an article titled “If Russian Currency Reserves Aren’t Really Money, the World Is in for a Shock,” noted: “Sanctions have shown that currency reserves accumulated by central banks can be taken away. With China taking note, this may reshape geopolitics, economic management and even the international role of the U.S. dollar.” Russian President Putin said the US had defaulted on its obligations and that the dollar is no longer a reliable currency. The incident has eroded trust in the US dollar as the global reserve currency and catalyzed significant countries to use alternatives in trade and their reserves. China, India, Iran, and Turkey, among other countries, announced, or already are, doing business with Russia in their local currencies instead of the US dollar. These countries represent a market of over three billion people that no longer need to use the US dollar to trade with one another. The US government has incentivized almost half of mankind to find alternatives to the dollar by attempting to isolate Russia. Warning Sign #2: Rubles, Gold, and Bitcoin for Gas, Oil, and Other Commodities Russia is the world’s largest exporter of natural gas, lumber, wheat, fertilizer, and palladium (a crucial component in cars). It is the second-largest exporter of oil and aluminum and the third-largest exporter of nickel and coal. Russia is a major producer and processor of uranium for nuclear power plants. Enriched uranium from Russia and its allies provides electricity to 20% of the homes in the US. Aside from China, Russia produces more gold than any other country, accounting for more than 10% of global production. These are just a handful of examples. There are many strategic commodities that Russia dominates. In short, Russia is not just an oil and gas powerhouse but a commodity superpower. After the US government seized Russia’s US dollar reserves, Moscow has little use for the US dollar. Moscow does not want to exchange its scarce and valuable commodities for politicized money that its rivals can take away on a whim. Would the US government ever tolerate a situation where the US Treasury held its reserves in rubles in Russia? The head of the Russian Parliament recently called the US dollar a “candy wrapper” but not the candy itself. In other words, the dollar has the outward appearance of money but is not real money. That’s why Russia is no longer accepting US dollars (or euros) in exchange for its energy. They are of no use to Russia. So instead, Moscow is demanding payment in rubles. That’s an urgent problem for Europe, which cannot survive without Russian commodities. The Europeans have no alternative to Russian energy and have no choice but to comply. European buyers must now first buy rubles with their euros and use them to pay for Russian gas, oil, and other exports. This is a big reason why the ruble has recovered all of the value it lost in the initial days of the Ukraine invasion and then made further gains. In addition to rubles, the top Russian energy official said Moscow would also accept gold or Bitcoin in return for its commodities. “If they want to buy, let them pay either in hard currency—and this is gold for us… you can also trade Bitcoins.” Here’s the bottom line. US dollars are no longer needed (or wanted) to buy Russian commodities. Warning Sign #3: The Petrodollar System Flirts With Collapse Oil is by far the largest and most strategic commodity market. For the last 50 years, virtually anyone who wanted to import oil needed US dollars to pay for it. That’s because, in the early ’70s, the US made an agreement to protect Saudi Arabia in exchange for ensuring, among other things, all OPEC producers only accept US dollars for their oil. Every country needs oil. And if foreign countries need US dollars to buy oil, they have a compelling reason to hold large dollar reserves. This creates a huge artificial market for US dollars and forces foreigners to soak up many of the new currency units the Fed creates. Naturally, this gives a tremendous boost to the value of the dollar. The system has helped create a deeper, more liquid market for the dollar and US Treasuries. It also allows the US government to keep interest rates artificially low, thereby financing enormous deficits it otherwise would be unable to. In short, the petrodollar system has been the bedrock of the US financial system for the past 50 years. But that’s all about to change… and soon. After it invaded Ukraine, the US government kicked Russia out of the dollar system and seized hundreds of billions in dollar reserves of the Russian central bank. Washington has threatened to do the same to China for years. These threats helped ensure that China cracked down on North Korea, didn’t invade Taiwan, and did other things the US wanted. These threats against China may be a bluff, but if the US government carried them out—as it recently did against Russia—it would be like dropping a financial nuclear bomb on Beijing. Without access to dollars, China would struggle to import oil and engage in international trade. As a result, its economy would come to a grinding halt, an intolerable threat to the Chinese government. China would rather not depend on an adversary like this. This is one of the main reasons it created an alternative to the petrodollar system. After years of preparation, the Shanghai International Energy Exchange (INE) launched a crude oil futures contract denominated in Chinese yuan in 2017. Since then, any oil producer can sell its oil for something besides US dollars… in this case, the Chinese yuan. There’s one big issue, though. Most oil producers don’t want to accumulate a large yuan reserve, and China knows this. That’s why China has explicitly linked the crude futures contract with the ability to convert yuan into physical gold—without touching China’s official reserves—through gold exchanges in Shanghai (the world’s largest physical gold market) and Hong Kong. PetroChina and Sinopec, two Chinese oil companies, provide liquidity to the yuan crude futures by being big buyers. So, if any oil producer wants to sell their oil in yuan (and gold indirectly), there will always be a bid. After years of growth and working out the kinks, the INE yuan oil future contract is now ready for prime time. And now that the US has banned Russia from the dollar system, there is an urgent need for a credible system capable of handling hundreds of billions worth of oil sales outside of the US dollar and financial system. The Shanghai International Energy Exchange is that system. Back to Saudi Arabia… For nearly 50 years, the Saudis had always insisted anyone wanting their oil would need to pay with US dollars, upholding their end of the petrodollar system. But that could all change soon… Remember, China is already the world’s largest oil importer. Moreover, the amount of oil it imports continues to grow as it fuels an economy of over 1.4 billion people (more than 4x larger than the US). China is Saudi Arabia’s top customer. Beijing buys over 25% of Saudi oil exports and wants to buy more. The Chinese would rather not have to use the US dollar, the currency of their adversary, to buy an essential commodity. In this context, The Wall Street Journal recently reported that the Chinese and the Saudis had entered into serious discussions to accept yuan as payment for Saudi oil exports instead of dollars. The WSJ article claims the Saudis are angry at the US for not supporting it enough in its war against Yemen. They were further dismayed by the US withdrawal from Afghanistan and the nuclear negotiations with Iran. In short, the Saudis don’t think the US is holding up its end of the deal. So they don’t feel like they need to hold up their part. Even the WSJ admits such a move would be disastrous for the US dollar. “The Saudi move could chip away at the supremacy of the US dollar in the international financial system, which Washington has relied on for decades to print Treasury bills it uses to finance its budget deficit.” Here’s the bottom line. Saudi Arabia—the linchpin of the petrodollar system—is flirting in the open with China about selling its oil in yuan. One way or another—and probably soon—the Chinese will find a way to compel the Saudis to accept the yuan. The sheer size of the Chinese market makes it impossible for Saudi Arabia—and other oil exporters—to ignore China’s demands to pay in yuan indefinitely. Moreover, using the INE to exchange oil for gold further sweetens the deal for oil exporters. Sometime soon, there will be a lot of extra dollars floating around suddenly looking for a home now that they are not needed to purchase oil. It signals an imminent and enormous change for anyone holding US dollars. It would be incredibly foolish to ignore this giant red warning sign. Warning Sign #4: Out of Control Money Printing and Record Price Increases In March of 2020, the chair of the Federal Reserve, Jerome Powell, exercised unfathomable power… At the time, it was the height of the stock market crash amid the COVID hysteria. People were panicking as they watched the market plummet, and they turned to the Fed to do something. In a matter of days, the Fed created more dollars out of thin air than it had for the US’s nearly 250-year existence. It was an unprecedented amount of money printing that amounted to more than $4 trillion and nearly doubled the US money supply in less than a year. One trillion dollars is almost an unfathomable amount of money. The human mind has trouble wrapping itself around such figures. Let me try to put it into perspective. One million seconds ago was about 11 days ago. One billion seconds ago was 1988. One trillion seconds ago was 30,000 BC. For further perspective, the daily economic output of all 331 million people in the US is about $58 billion. At the push of a button, the Fed was creating more dollars out of thin air than the economic output of the entire country. The Fed’s actions during the Covid hysteria—which are ongoing—amounted to the biggest monetary explosion that has ever occurred in the US. When the Fed initiated this program, it assured the American people its actions wouldn’t cause severe price increases. But unfortunately, it didn’t take long to prove that absurd assertion false. As soon as rising prices became apparent, the mainstream media and Fed claimed that the inflation was only “transitory” and that there was nothing to be worried about. Of course, they were dead wrong, and they knew it—they were gaslighting. The truth is that inflation is out of control, and nothing can stop it. Even according to the government’s own crooked CPI statistics, which understates reality, inflation is rising. That means the actual situation is much worse. Recently the CPI hit a 40-year high and shows little sign of slowing down. I wouldn’t be surprised to see the CPI exceed its previous highs in the early 1980s as the situation gets out of control. After all, the money printing going on right now is orders of magnitude greater than it was then. Warning Sign #5: Fed Chair Admits Dollar Supremacy Is Dead “It’s possible to have more than one reserve currency.” These are the recent words of Jerome Powell, the Chairman of the Federal Reserve. It’s a stunning admission from the one person who has the most control over the US dollar, the current world reserve currency. It would be as ridiculous as Mike Tyson saying that it’s possible to have more than one heavyweight champion. In other words, the jig is up. Not even the Chairman of the Federal Reserve can go along with the farce of maintaining the dollar’s supremacy anymore… and neither should you. Conclusion It’s clear the US dollar’s days of unchallenged dominance are quickly ending—something even the Fed Chairman openly admits. To recap, here are the five imminent, flashing red warning signs the end of dollar hegemony is near. Warning Sign #1: Russia Sanctions Prove Dollar Reserves “Aren’t Really Money” Warning Sign #2: Rubles, Gold, and Bitcoin for Gas, Oil, and Other Commodities Warning Sign #3: The Petrodollar System Flirts With Collapse Warning Sign #4: Out of Control Money Printing and Record Price Increases Warning Sign #5: Fed Chair Admits Dollar Supremacy Is Dead If we take a step back and zoom out, the Big Picture is clear. We are likely on the cusp of a historic shift… and what’s coming next could change everything. *  *  * The economic trajectory is troubling. Unfortunately, there’s little any individual can practically do to change the course of these trends in motion. The best you can and should do is to stay informed so that you can protect yourself in the best way possible, and even profit from the situation. That’s precisely why bestselling author Doug Casey and his colleagues just released an urgent new PDF report that explains what could come next and what you can do about it. Click here to download it now. Tyler Durden Sat, 05/21/2022 - 14:30.....»»

Category: worldSource: nytMay 21st, 2022Related News

From burgers to breakfast cereal, some key ingredients are being hit by food export bans — industry experts tell us what might be next

Countries are increasingly imposing food export bans and its amping up prices worldwide. Experts say these prices won't die down any time soon. Getty Images Food prices are soaring from export bans and it's affecting everything from burgers to cereal.  Commodities including wheat, sugar, and cooking oils have become fewer to find.  "Prices are real high and they don't seem to be going down any soon," an industry expert said.  Heatwaves, poor harvests, supply-chain bottlenecks and disruption from war in Ukraine have sent food prices soaring this year. In response, a number of countries around the world have imposed export bans in order to protect their own national food supply, which has only added to the problem.Export bans have affected food products from wheat and beef to palm oil, as countries scramble to protect domestic prices and maintain food security. And the scenario has been even more complicated by COVID-19-induced supply chain disruptions and environmental factors such as droughts last year. "There is a myriad of problems, none of which would resolve themselves in any great hurry," Marc Ostwald, chief economist at ADM Investor Services International, a UK-based multi-asset brokerage firm, told Insider. It's not the first time the world has suffered from an agricultural commodity price shock. Food inflation was a problem from 2007 to 2008 in the aftermath of the global financial crisis, where countries like Ukraine and other major grain exporters banned supplies to defend domestic prices. India and Vietnam, the biggest exporters of rice, also restricted imports to fight soaring food prices. A similar situation is playing out now, where Ukraine again has halted wheat exports, in part because war will almost certainly disrupt the planting of the new crop this year. Indonesia has placed a blanket ban on the export of palm oil, and Argentina has blocked certain beef cuts. These bans only stand to worsen a cost-of-living crisis, where people face surging food price inflation and rising utility bills, after a series of sanctions on Russian energy exports. "We're at a point where prices are real high, and they don't seem to be going down any soon. As long as prices are high, there's going to be a temptation for some countries to try to help their consumers by keeping prices low," Joseph Glauber, a researcher at the International Food Policy Research Institute told Insider. Experts also at IFPRI point out that more food export bans "tend to be contagious, as other exporting countries follow suit and implement their own bans," suggesting further measures may be on the horizon.Here are the key agricultural exports that have been restricted in the last year and what it's meant for food prices. Industry experts also tell Insider what commodities could be banned next. Bloomberg/Business InsiderWheatAndy Sacks/Getty ImagesProblems are piling up in the wheat market as major producers including Russia, Ukraine, India, and Kazakhstan have banned exports. Russia, which is the world's largest exporter, had already introduced quotas and new taxes on exports in 2021 prior to its war with Ukraine, in an effort to cool down domestic food inflation. After invading Ukraine however, the Kremlin placed additional wheat export bans on ex-Soviet countries. The measures were put in place "to protect the domestic food market in the face of external constraints," the government said, per Reuters. The world's second-largest producer, India, is the latest country to make the same move. Earlier this month, India said it would stop wheat exports to protect its food security as a result of the war and high inflation. The announcement caused wheat prices to soar by 4.36% in a day to $12.28 a bushel, topping their highest since mid-March. "India's actions set a precedent: the world's largest democracy has instituted a ban, a practice much more associated with more authoritarian governments," Cullen Hendrix of the Peterson Institute for International Economics told Insider.He added: "The demonstration effect on other democracies may be large, especially if markets are buffeted by more bad news like lower-than-anticipated harvests in other major exporting countries." Palm OilWorkers harvesting oil palm fruits in Malaysia.Giles Clarke/Getty ImagesIndonesia, the world's biggest exporter of edible-oils, banned the shipping of palm oil as the country grapples with a shortage of cooking oil.The ban was also enacted as a way to tame domestic prices of its staple cooking oil down.After Indonesia imposed the ban, prices initially shot by 7% but later eased after it was reported Indonesia was only banning bulk and packaged RBD palm olein - a more processed type of oil. Palm oil prices have risen by more than 50% so far in 2022, far outstripping gains in other major ingredients.In a most recent development, however, Bloomberg among other outlets reported that Indonesia lifted its ban on palm oil exports in light of improvements in domestic supply and prices. Sunflower oilA supermarket shelf in Spain is seen half stocked with sunflower oil.Paco Freire/SOPA Images/LightRocket/Getty Images)Alongside wheat, Russia also capped the export of sunflower seeds between April and August. It also imposed an export quota on sunflower oil to calm prices at home, per Reuters. Ukraine and Russia are the world's largest producers of sunflower oil, with Ukraine accounting for about 50% of the sunflower oil trade in the world, according to Glauber. "This set of measures will eliminate the possibility of shortages, as well as sharp increases in the cost of raw materials and socially important products in Russia," the ministry on March 31, per the outlet. Sunflower oil has risen by nearly 68% in 2022, and has risen 50% since the end of March alone. Soybean oilPhoto by STR/AFP via Getty ImageThe oil crop industry has had no break, with Argentina also suspending export sales of soybean meal and soybean oil. The step from the world's top exporter of soy oil and meal came after weeks of drought in the country. "The ghost of the productive disaster of 2018 is surrounding 2021/22 soy," the Rosario grains exchange said in February, per Reuters."There's new bad news for Argentina concerning the weather. 'La Nina' has gained ground and it's impact will not be diminished, like we thought up to just some days ago," the exchange added. During a "La Niña" weather pattern, temperatures in the southern third of the US usually rise, meaning the region is vulnerable to droughts. With the onset of soy oil and meal export bans, Reuters reported that US soy meal futures rose by more than 2.2% while soy oil futures fell by 1.26%. Soybean oil, which is used in cooking and even some industrial applications, is the second-most used vegetable oil after palm oil. Soybean oil futures have gained nearly 60% so far this year.  BeefPhoto by AAron Ontiveroz/MediaNews Group/The Denver Post via Getty ImagesAway from oils, Argentina imposed a ban on the export of seven beef cuts until 2023, per Bloomberg. The country is the fifth-largest beef exporter, tallying about 6% of the world's beef exports, according to the USDA.The restrictive measures came with the intent to cool down local prices for local consumers after inflation hit 50.9% in 2021.While live cattle futures have risen 12% in the last year, the price consumers pay for their burger patties has risen more quickly. According to the USDA, the retail price of ground beef has risen by 20% in the last 12 months.SugarPhoto by Melissa Erichsen/picture alliance via Getty ImagesA number of countries have also frozen exports of sugar in recent months. This includes Russia, Algeria, Kosovo, and Ukraine. "People are suddenly becoming aware that their food security is not what they thought it was," ADM's Ostwald said.The price of sugar has gained around 30% in the last 12 months, adding to pressure on food manufacturers and consumers.Maize...Corn could be a commodity hit by export bans in the future.Photo credit should read CFOTO/Future Publishing via Getty ImagesSpeaking to Glauber, there may be more commodities that could be restricted in the future, including corn. "The maize market certainly has been disrupted by the fact that right now, Ukraine can't export any maize," Glauber said, as a result of military operations in the country from its war with Russia. Hendrix echoed similar sentiments. He said: "If additional products were to become a concern, it would likely be substitutes for those basic staples being caught by the current bans or restrictions, including wheat, sunflower and palm oils, and the like. These would be things like corn and other vegetable oils." The broader picture, according to ADM's Ostwald, is focusing on improving aging infrastructure in the agricultural industry. "We've had a technology boom and we've used it in the wrong places," he said. He added: "We've got ageing infrastructure everywhere, we've been complacent about supply-chains, and if we'd actually be thinking ahead above all, at government levels, we wouldn't have a lot of these problems." Corn prices have risen by just 10% in the last year, a far cry from the 41% rise in the cost of wheat or the near-75% gain in palm oil. But they're still at their highest in a decade. Read the original article on Business Insider.....»»

Category: topSource: businessinsiderMay 21st, 2022Related News

Nymex July WTI oil futures end at $110.28 a barrel, up 39 cents, or 0.4%

This is a Real-time headline. These are breaking news, delivered the minute it happens, delivered ticker-tape style. Visit www.marketwatch.com or the quote page for more information about this breaking news......»»

Category: topSource: marketwatchMay 20th, 2022Related News

Jobless Claims, Philly Fed Can"t Turn Pre-Market Around

Initial Jobless Claims zoomed up to their highest level in the past 12 weeks: 218K was well above the 200K expected. Thursday, May 19, 2022The bears are still on the prowl this morning, and economic data released ahead of the opening bell isn’t impressive enough to send them back to their caves. Ahead of the data reports, the Dow was down another -324 points, the S&P 500 -39 and the Nasdaq -124 points.Initial Jobless Claims zoomed up to their highest level in the past 12 weeks: 218K was well above the 200K expected, and a bigger margin than considered with a downwardly revised 197K the previous week. Sub-200K is a psychologically pleasing new jobless claims number, and even 218K is within range of a healthy labor market. But we’ll keep an eye on whether we continue to go up from here.Continuing Claims set yet another new low two weeks ago (this metric reports a week in arrears from Initial Claims): 1.317 million is beneath the previous 50+-year low set the previous week of 1.342 million. When you have to go back to when Sonny & Cher were still together to find a better long-term jobless claims rate, you know you have a strong labor force. But again, we’ll see how these new claims jumping up affects longer-term claims, if at all, over time.The Philly Fed Manufacturing Index has also set a new cycle low for the month of May: 2.6 — well off the 15.0 expected, as well as the unrevised 17.6 last month. In fact, this is the weakest productivity level for the 6th largest metropolis in the U.S. since May 2020, which was the peak lows of the pandemic. It could be worse, however: it could be a negative May read, like Empire State was earlier this month. Again, we’re looking at goods-producing, like jobless claims, wrangling their way from peak levels. Where are they headed?After the opening bell, we’ll get new data on Existing Home Sales for April. This headline figure is expected to come down a tad, from March’s 5.77 million reported to 5.64 million last month. Since the Fed began raising interest rates this year — and especially since the last 50-basis-point bump — we have seen an almost immediate effect in mortgage rates, and we’re starting to see demand for housing a bit on the wane.Pre-market futures have stayed where they were ahead of these new data reports: down. Big shocker, I know. Forget letting air out of the balloon, we’re now at the point of dehydrating market valuations for stocks across the investment spectrum. Let’s hope they revive before all our portfolios turn to jerky.Questions or comments about this article and/or its author? Click here>> 7 Best Stocks for the Next 30 Days Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops." Since 1988, the full list has beaten the market more than 2X over with an average gain of +25.4% per year. So be sure to give these hand-picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Invesco QQQ (QQQ): ETF Research Reports SPDR S&P 500 ETF (SPY): ETF Research Reports SPDR Dow Jones Industrial Average ETF (DIA): ETF Research Reports To read this article on Zacks.com click here......»»

Category: topSource: zacksMay 20th, 2022Related News

Stocks See Worst Day in 2 Years: Inverse ETFs Shine

The bearish sentiments have raised the appeal for inverse or inverse-leveraged ETFs as these fetch outsized returns on bearish sentiments in a short span. Wall Street logged in its worst day since the early months of the pandemic due to rounds of disappointing earnings from some of the major retailers, underscoring that inflation is hurting corporate profits. Additionally, tightening monetary policy is weighing on economic growth,The bearish sentiments have raised the appeal for inverse or inverse-leveraged ETFs as these fetch outsized returns on bearish sentiments in a short span. ProShares Ultra VIX Short-Term Futures ETF UVXY, BMO REX MicroSectors FANG+ Index -3X Inverse Leveraged ETN FNGD, Direxion Daily Semiconductor Bear 3x Shares SOXS, Direxion Daily S&P Biotech Bear 3x Shares LABD and ProShares UltraPro Short QQQ SQQQ outperformed on the May 18 session and might continue their strong performance if sentiments remain the same (read: S&P 500 Near Bear Market: Inverse ETFs in Focus).Inverse and inverse-leveraged ETFs either create an inverse short position or a leveraged inverse short position in the underlying index through the use of swaps, options, futures contracts and other financial instruments. Due to their compounding effect, investors can enjoy higher returns in a very short time, provided the trend prevails.The S&P 500 fell 4% on May 18, while the Dow Jones Industrial lost 3.6%. This marks the worst one-day loss for both indices since June 2020. Target Corp. TGT tumbled more than 20% in its worst rout since 1987, after it trimmed its profit forecast. Retailers from Walmart Inc. WMT to Macy’s Inc. (M) were caught in the rout. As such, the consumer staples and consumer discretionary sectors lagged (read: Walmart Slumps on Q1 Earnings Miss: ETFs in Focus).Meanwhile, the Nasdaq 100 fell the most among the major benchmarks, plunging more than 5% as growth-related tech stocks sank.ProShares Ultra VIX Short-Term Futures ETF (UVXY) – Up 21.6%ProShares Ultra VIX Short-Term Futures ETF offers exposure to one and one-half times (1.5X) the daily performance of the S&P 500 VIX Short-Term Futures Index. It seeks to profit from increases in the expected volatility of the S&P 500, as measured by the prices of VIX futures contracts.ProShares Ultra VIX Short-Term Futures ETF has accumulated $771.4 million and charges 95 bps in annual fees. It trades in an average daily volume of 74.1 million shares.BMO REX MicroSectors FANG+ Index -3X Inverse Leveraged ETN (FNGD) – Up 15%BMO REX MicroSectors FANG+ Index -3X Inverse Leveraged ETN seeks to offer three times inverse leveraged exposure to the NYSE FANG+ Index, an equal-dollar weighted index, targeting the highly-traded growth stocks of next-generation technology and tech-enabled companies in the technology and consumer discretionary sectors.BMO REX MicroSectors FANG+ Index -3X Inverse Leveraged ETN has accumulated $102.4 million in its asset base. It charges 95 bps in annual fees and trades in an average daily volume of 774,000 shares.Direxion Daily Semiconductor Bear 3x Shares (SOXS) – Up 14.9%Direxion Daily Semiconductor Bear 3x Shares targets the semiconductor corner of the technology sector with three times inverse leveraged exposure to the ICE Semiconductor Index (read: 5 Inverse ETFs That Are Up More Than 60% in April).Direxion Daily Semiconductor Bear 3x Shares has amassed about $239.7 million in its asset base while charging 95 bps in fees per year. Volume is good as it exchanges 66.7 million shares per day on average.Direxion Daily S&P Biotech Bear 3x Shares (LABD) – Up 14.8%Direxion Daily S&P Biotech Bear 3x Shares seeks to deliver three times the inverse daily performance of the S&P Biotechnology Select Industry Index, which includes the domestic companies from the biotechnology industry.Direxion Daily S&P Biotech Bear 3x Shares has amassed $107.5 million in its asset base and has an average daily volume of around 4 million shares. LABD charges investors 94 bps in annual fees.ProShares UltraPro Short QQQ (SQQQ) - Up 14.5%ProShares UltraPro Short QQQ provides three times inverse exposure to the daily performance of the Nasdaq-100 Index, charging 95 bps in annual fees. The index measures the performance of the 100 largest domestic and international non-financial companies listed on the Nasdaq Stock Market based on market capitalization.ProShares UltraPro Short QQQ has AUM of $3 billion and trades in an average daily volume of about 104 million shares.Bottom LineWhile the strategy is highly beneficial for short-term traders, it could lead to huge losses compared with traditional funds in fluctuating or seesawing markets. Further, their performances could vary significantly from the actual performance of their underlying index over a longer period compared to a shorter period (such as weeks or months) due to their compounding effect (see: all the Inverse Equity ETFs here).Still, for ETF investors bearish on equities for the near term, either of the above products could make an interesting choice. Clearly, these could be intriguing for those with a high-risk tolerance, and a belief that the “trend is the friend” in this specific corner of the investing world. Want key ETF info delivered straight to your inbox? Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Target Corporation (TGT): Free Stock Analysis Report Walmart Inc. (WMT): Free Stock Analysis Report ProShares Ultra VIX ShortTerm Futures ETF (UVXY): ETF Research Reports Direxion Daily S&P Biotech Bear 3X Shares (LABD): ETF Research Reports ProShares UltraPro Short QQQ (SQQQ): ETF Research Reports Direxion Daily Semiconductor Bear 3X Shares (SOXS): ETF Research Reports MicroSectors FANG Index 3X Inverse Leveraged ETNs (FNGD): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksMay 20th, 2022Related News

Weekly Jobless Claims Exceed Expectations

Weekly Jobless Claims Exceed Expectations The bears are still on the prowl this morning, and economic data released ahead of the opening bell isn’t impressive enough to send them back to their caves. Ahead of the data reports, the Dow was down another -324 points, the S&P 500 -39 and the Nasdaq -124 points.Initial Jobless Claims zoomed up to their highest level in the past 12 weeks: 218K was well above the 200K expected, and a bigger margin than considered with a downwardly revised 197K the previous week. Sub-200K is a psychologically pleasing new jobless claims number, and even 218K is within range of a healthy labor market. But we’ll keep an eye on whether we continue to go up from here.Continuing Claims set yet another new low two weeks ago (this metric reports a week in arrears from Initial Claims): 1.317 million is beneath the previous 50+-year low set the previous week of 1.342 million. When you have to go back to when Sonny & Cher were still together to find a better long-term jobless claims rate, you know you have a strong labor force. But again, we’ll see how these new claims jumping up affects longer-term claims, if at all, over time.The Philly Fed Manufacturing Index has also set a new cycle low for the month of May: 2.6 — well off the 15.0 expected, as well as the unrevised 17.6 last month. In fact, this is the weakest productivity level for the 6th largest metropolis in the U.S. since May 2020, which was the peak lows of the pandemic. It could be worse, however: it could be a negative May read, like Empire State was earlier this month. Again, we’re looking at goods-producing, like jobless claims, wrangling their way from peak levels. Where are they headed?After the opening bell, we’ll get new data on Existing Home Sales for April. This headline figure is expected to come down a tad, from March’s 5.77 million reported to 5.64 million last month. Since the Fed began raising interest rates this year — and especially since the last 50-basis-point bump — we have seen an almost immediate effect in mortgage rates, and we’re starting to see demand for housing a bit on the wane.Pre-market futures have stayed where they were ahead of these new data reports: down. Big shocker, I know. Forget letting air out of the balloon, we’re now at the point of dehydrating market valuations for stocks across the investment spectrum. Let’s hope they revive before all our portfolios turn to jerky. 7 Best Stocks for the Next 30 Days Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops." Since 1988, the full list has beaten the market more than 2X over with an average gain of +25.4% per year. So be sure to give these hand-picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksMay 20th, 2022Related News

Pre-Markets Up to Close Another Rough Week

We're looking at the eighth-straight down week for the Dow, seven for the S&P 500 and Nasdaq. Friday, May 20, 2022Pre-market futures are up at this hour, but the damage for the week has already been done. Barring a superlative blowout to the upside — like if China suddenly got its supply back online or the war in Ukraine somehow ends — we’re looking at the eighth-straight down week for the Dow, seven for the S&P 500 and Nasdaq. The Dow is currently +220 points, the S&P +35 and the Nasdaq +150 points.Just this week, both the Dow and the S&P have dropped -3%, and that’s the relative good news; the Nasdaq is down -3.5%. This adds to the market misery that so far has defined the year 2022: the Dow is -14% year to date, the S&P -18% and the Nasdaq -27%. In other words, the indices have all seen better days.And tempting as it would be to call a bottom here, these markets have been surprising to the downside too often to make a claim so seemingly foolhardy. What we do know — from economic data out recently — is that we’re starting to see inventories beginning to build, which should alleviate supply strain to a certain extent, which could lead to lower price points, which would counter inflation metrics.We also know the Fed is planning to raise interest rates by 50 basis points at both its June and July meetings, bringing the Fed funds rate to 1.75-2.00% by Labor Day, as well as begin the draw-down of $9 trillion on the Fed’s balance sheet by $30 billion per month through the summer, then $60 billion from that point on. This means the era of cheap money is most certainly over, and market participants have been pricing in this fact (quite painfully) of late.The end of Q1 earnings season is just about here, though next week will still bring us some key items on the economic front: New Home Sales, Durable Goods, a revision to Q1 GDP, jobless claims, PCE inflation and minutes to the most recent Fed meeting from the first week of May. If what the market hates more than anything is uncertainty, the cure is at hand: we gather more and more certainty as the days and weeks roll along.Questions or comments about this article and/or its author? Click here>> Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Invesco QQQ (QQQ): ETF Research Reports SPDR S&P 500 ETF (SPY): ETF Research Reports SPDR Dow Jones Industrial Average ETF (DIA): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report.....»»

Category: topSource: zacksMay 20th, 2022Related News

Wall Street Likely to Close Another Week in the Red

Wall Street Likely to Close Another Week in the Red Pre-market futures are up at this hour, but the damage for the week has already been done. Barring a superlative blowout to the upside — like if China suddenly got its supply back online or the war in Ukraine somehow ends — we’re looking at the eighth-straight down week for the Dow, seven for the S&P 500 and Nasdaq. The Dow is currently +220 points, the S&P +35 and the Nasdaq +150 points.Just this week, both the Dow and the S&P have dropped -3%, and that’s the relative good news; the Nasdaq is down -3.5%. This adds to the market misery that so far has defined the year 2022: the Dow is -14% year to date, the S&P -18% and the Nasdaq -27%. In other words, the indices have all seen better days.And tempting as it would be to call a bottom here, these markets have been surprising to the downside too often to make a claim so seemingly foolhardy. What we do know — from economic data out recently — is that we’re starting to see inventories beginning to build, which should alleviate supply strain to a certain extent, which could lead to lower price points, which would counter inflation metrics.We also know the Fed is planning to raise interest rates by 50 basis points at both its June and July meetings, bringing the Fed funds rate to 1.75-2.00% by Labor Day, as well as begin the draw-down of $9 trillion on the Fed’s balance sheet by $30 billion per month through the summer, then $60 billion from that point on. This means the era of cheap money is most certainly over, and market participants have been pricing in this fact (quite painfully) of late.The end of Q1 earnings season is just about here, though next week will still bring us some key items on the economic front: New Home Sales, Durable Goods, a revision to Q1 GDP, jobless claims, PCE inflation and minutes to the most recent Fed meeting from the first week of May. If what the market hates more than anything is uncertainty, the cure is at hand: we gather more and more certainty as the days and weeks roll along. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksMay 20th, 2022Related News

"80% Chance Of Dread": Every Time This Happened Before, The Fed Bailed Out The Market

"80% Chance Of Dread": Every Time This Happened Before, The Fed Bailed Out The Market With stock futures set to rebound today - at least until the rip sellers re-emerge on this $1.9 trillion op-ex day - absent a 3% surge, stocks are set for a 7th consecutive week of declines... ... the longest such stretch since 2001. And while traders are fixated on what today's op-ex delivers, others are turning their attention to the furious Wednesday selloff - and subsequent Thursday drop - and what it suggests for markets and the economy. As Bloomberg's Ven Ram writes, while economists are frantically trying to figure out the probability of a recession, stock traders are at least sensing some kind of alarm. According to the BBG Markets Live commentator, while in more “normal” times, you would expect that a 4% selloff in the S&P 500 Index to lure buyers who were earlier on the sidelines, this time around that did not happen. Ram set up a backtest to check this out, parsing data from the start of the millennium, with the null hypothesis being that all significant declines are followed by a bounce-back, however minuscule. There have only been 40 instances when we have seen a selloff matching the threshold of a 4% -- or greater -- single-day decline. Statistically, that means if you trade stocks for a 1,000 consecutive days, you may witness such an occasion on just seven such days. (Before the global financial crisis, there were only four such instances since the start of the test period!) Here is the interesting part: on most occasions when stocks sold off on that scale, investors bought back enough on the following day to push the S&P 500 Index into positive territory. However, that failed to happen on Thursday. According to Ram, that is incredibly rare "and has mostly happened when the U.S. economy has faced a stern test of character: during the bursting of the dotcom bubble, the global financial crisis and the first wave of the pandemic as the table below shows." And here an even more remarkable fact: of the 40 occasions the selloff exceed 4%, there have been only 14 instances when it hasn’t been greeted with follow-through buying (excluding this week). On only three of those occasions were the findings not coincidental to - or heralding - something being seriously amiss with the economy, "meaning traders are ascribing a near-80% chance of spotting something dreadful."   As Ram concludes, "clearly, Wednesday’s slump was about more than just another correction amid the Fed’s continuing interest-rate increases. If it had been, investors would have waded right back in to swoop in and benefit from what they may have perceived as beaten-down valuations." The fact that didn’t happen prompts the Bloomberg commentator to speculate that traders are probably factoring in a collapse in earnings growth that may coincide with a sharp slowdown in the economy, or worse, a recession. There is another read of the above: on all previous "plunge and non-bounce" occasions, the Fed stepped in: to end the Great Financial Crisis, the Fed launched QE; to end the 2011 "US downgrade" rout, the Fed announced Operation Twist; to reverse the 2020 Covid Crash, the Fed went all in with trillions in QE, Repos and bond purchases. Will it really do nothing this time and leave the market to crash, dragging both the US and global economy down with it? Yes, the S&P cratering from here will kill deflation... it will also spark the biggest depression in U.S. history. And while it may not have crossed the minds of Biden's handlers, a second great depression may be even worse for the Democrats' approval rating than hyperinflation... Tyler Durden Fri, 05/20/2022 - 10:44.....»»

Category: blogSource: zerohedgeMay 20th, 2022Related News

Top-Down Or Bottom-Up, Finding Diamonds In The Rough Takes Time

This post contains sponsored advertising content. This content is for informational purposes only and not intended to be investing advice. (Friday Market Open) Equity index futures are pointing to a higher open as investors hope to build on Thursday’s afternoon rally. The Cboe Market Volatility Index (VIX) fell to 28.6 in premarket action as Asian markets rallied off favorable rate news.   Potential Market Movers The People’s Bank of China cut a key interest rate on Friday for the second time this year which sparked a rally in Chinese stocks. The Hong Kong Hang Seng rose 2.96%, while the Shanghai exchange rallied 1.6%, and the BSE Sensex climbed 2.91%. China’s neighbors also rose on the news with Japan’s Nikkei gaining 1.27% and Singapore increasing 1.56%. One reason why stocks have struggled to bounce back is because many investors are deleveraging and liquidating positions. Rising rates and market uncertainty has made trading on margin more costly. According to FINRA, margin balances fell by about $50 billion from February to April. May numbers are likely to be released by Monday, which could reflect further decreases. The reduction of margin reflects a reduction in demand for shares. Additionally, Melvin Capital Management LP plans to shutter its hedge funds and return money to its investors. Melvin had experienced large losses over the last 17 months and drew attention when it tried to short GameStop (NYSE: GME). According to Bloomberg, chief investment officer Gabe Plotkin has decided to close the doors. This is another flow of funds out the market. Investors are weeding through several mixed earnings reports this morning: Deere & Co. (NYSE: DE) beat on top- and bottom-line numbers and raised its earnings guidance but fell 4.26% in premarket trading anyway. Investors may be focused on the decline in operating margins.   Foot Locker (NYSE: FL) beat on earnings despite missing on revenue. FL offered guidance at the “upper end” of the range leading to a 2.31% rally before the opening bell. Ross Stores (NASDAQ: ROST) missed on earnings and revenue after the close on Thursday and plunged 23.19% in extended-hours trading. Decker’s (NYSE: DECK) rallied nearly 16%after beating on earnings and revenue after yesterday’s close. The company reported record sales in UGG boots and raised guidance. Applied Materials (NASDAQ: AMAT) also missed on top- and bottom-line numbers after yesterdays’ close. The semiconductor maker fell 2.47% in after-hours trading but trimmed its losses to 0.59% before the opening bell. Palo Alto Networks (NASDAQ: PANW) beat on earnings and revenues yesterday evenings causing the stock to rally 10.23% in extended-hours trading. Despite the premarket bullishness, the 10-year Treasury yield (TNX) fell 25 basis ...Full story available on Benzinga.com.....»»

Category: earningsSource: benzingaMay 20th, 2022Related News

Russia will stop supplying gas to Finland after its refusal to pay in rubles, marking the third European country cut off by Moscow

"It is highly regrettable that natural gas supplies under our supply contract will now be halted," Finland's Gasum said about Russia's supply cutoff. People gather around a truck run by Gasum, a state-owned gas and energy company in Finland.Gasum Russia will halt the supply of natural gas to Finland on Saturday.  Finland's Gasum said it will not pay for the energy source in rubles to meet Moscow's demands.  Poland and Bulgaria were cut off from Russian gas in late April.  Russia will halt the supply of natural gas to Finland, after Finnish energy company Gasum said it won't pay in rubles to comply with demands Moscow put in place after launching its war against Ukraine.Natural gas imports to Finland under Gasum's supply contract will be suspended on Saturday at 7 a.m. local time, the company said in a statement on Friday. State-owned Gasum said it will deliver natural gas to customers from other sources through the Balticconnector pipeline that connects with Estonia."It is highly regrettable that natural gas supplies under our supply contract will now be halted," Mika Wiljanen, Gasum's CEO, said in the statement. "However, we have been carefully preparing for this situation and provided that there will be no disruptions in the gas transmission network, we will be able to supply all our customers with gas in the coming months." Earlier this week, Gasum said it would take its contract dispute with Russia's Gazprom Export to arbitration.Finland's cutoff comes after Poland and Bulgaria in late April were similarly shut out from gas supplies for refusing to pay using Russia's local currency. Russian President Vladimir Putin in March ordered "unfriendly countries" to use rubles to pay for Russian gas even though contracts generally required dollar-based transactions. He made the move after Western nations imposed financial sanctions against Moscow for invading Ukraine in late February. Poland and Bulgaria rejected paying rubles for gas supplies, saying Russia's demand would represent a breach of contract and would dodge sanctions on Russia's central bank. Europe has been highly dependent on Russian energy for decades as Moscow supplied around 40% of the region's gas needs.Benchmark Dutch futures contracts tracking Europe's wholesale gas price fell 1.9% to 89.40 euros per megawatt hour ($94.31) on Friday, according to data from Investing.com.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderMay 20th, 2022Related News

Futures Jump After China Cuts Main Lending Rate By Most On Record But $1.9 Trillion Op-Ex Looms...

Futures Jump After China Cuts Main Lending Rate By Most On Record But $1.9 Trillion Op-Ex Looms... After months of endless jawboning and almost no action, overnight China finally cut its main mortgage interest rate by the most on record since the rate was introduced in 2019, as it tries to reduce the economic impact of Covid lockdowns and a property sector slowdown. The five-year loan prime rate was lowered from 4.6% to 4.45% on Friday (even as the 1 Year LPR was unchanged at 3.70%) . The reduction in the rate, which is set by a committee of banks and published by the People’s Bank of China, will directly reduce the borrowing costs on outstanding mortgages across the country (the move wasn’t much of a shock as the central bank had kept the 1-Year MLF Rate unchanged earlier in the week and effectively cut interest rates for first-time homebuyers by 20bps on Sunday). The rate cut was long overdue for China's property market which has experienced 8 straight months of home-price reductions with developers under extreme pressure. There was more bad news for China's embattled tech sector as Canada banned Huawei Technologies and ZTE equipment from use in its 5G network. The good news is that China's easing helped push Asian stocks higher, while European markets and US stock index futures also rose on Friday as buyers returned after a selloff fueled by recession fears saw the underlying S&P 500 lose more than $1 trillion in market value this week. Contracts on the S&P 500 advanced 1.1% as of 7:15a.m. in New York suggesting the index may be able to avoid entering a bear market (which would be triggered by spoos sliding below 3,855) at least for now, although today's $1.9 trillion Option Expiration will likely lead to substantial volatility, potentially to the downside.  Even with a solid jump today, should it not reverse as most ramps in recent days, the index - which is down almost 19% from its January record - is on track for a seventh week of losses, the longest such streak since March 2001. Futures on the Nasdaq 100 and Dow Jones indexes also gained. 10Y TSY yields rebounded from yesterday's tumble while the dollar was modestly lower. Gold and bitcoin were flat. In premarket trading, shares of gigacap tech giants rose, poised to recover some of the losses they incurred this week. Nasdaq 100 futures advanced 1.7%. The tech heavy benchmark has wiped out about $1.3 trillion in market value this month. Apple (AAPL US) is up 1.3% in premarket trading on Friday, Tesla (TSLA US) +2.6%.Palo Alto Networks jumped after topping estimates. Continuing the retail rout, Ross Stores cratered after the discount retailer cut its full-year outlook and first quarter results fell short of expectations. Here are some other notable premarket movers: Chinese stocks in US look set to extend this week’s gains on Friday after Chinese banks cut the five-year loan prime rate by a record amount, an effort to boost mortgage and loan demand in an economy hampered by Covid lockdowns. Alibaba (BABA US) +2.6%, Baidu (BIDU US) +1.1%, JD.com (JD US) +2.6%. Palo Alto Networks (PANW US) rises 11% in premarket trading on Friday after forecasting adjusted earnings per share for the fourth quarter that exceeded the average of analysts’ estimates. Applied Materials (AMAT US) falls 2.1% in premarket trading after its second-quarter results missed expectations as persistent chip shortages weighed on the outlook. However, Cowen analyst Krish Sankar notes that “while the macro/consumer data points have weakened, semicap demand is still healthy.” Ross Stores Inc. (ROST US) shares sank 28% in US premarket trade on Friday after the discount retailer cut its full-year outlook and 1Q results fell short of expectations, prompting analysts to slash their price targets. Foghorn Therapeutics (FHTX US) shares plunged 26% in postmarket trading after the company said the FDA has placed the phase 1 dose escalation study of FHD-286 in relapsed and/or refractory acute myelogenous leukemia and myelodysplastic syndrome on a partial clinical hold. Wix.com (WIX US) cut to equal-weight from overweight at Morgan Stanley as investors are unlikely to “give credit to a show-me story” in the current context which limits upside catalysts in the near term, according to note. Deckers Outdoor (DECK US) jumped 13% in US postmarket trading on Thursday after providing a year sales outlook range with a midpoint that beat the average consensus estimate. VF Corp’s (VFC US) reported mixed results, with analysts noting the positive performance of the company’s North Face brand, though revenues did miss estimates amid a tricky macro backdrop. The outdoor retailer’s shares rose 2.2% in US postmarket trading on Thursday. “The ‘risk-on’ trading mood has registered a solid rebound during the last couple of hours as traders cheered the significantly dovish monetary decision from China after the PBoC cut one of the key interest rates by a record amount,” said Pierre Veyret, a technical analyst at ActivTrades. “This will provide a fresh boost to the economy, helping small businesses and mitigate the negative impacts of lockdowns in the world’s second-largest economy.” Still, the broader market will have to fend off potential risks from options expiration, which is notorious for stirring up volatility. Traders will close old positions for an estimated $1.9 trillion of derivatives while rolling out new exposures on Friday. This time round, $460 billion of derivatives across single stocks is scheduled to expire, and $855 billion of S&P 500-linked contracts will expire according to Goldman. Rebounds in risk sentiment have tended to fizzle this year. Investors continue to grapple with concerns about an economic downturn, in part as the Federal Reserve hikes interest rates to quell price pressures. Global shares are on course for an historic seventh week of declines. “The risk-on trading mood has registered a solid rebound during the last couple of hours as traders cheered the significantly dovish monetary decision from China,” said Pierre Veyret, an analyst at ActivTrades. “This move significantly contrasts with the lingering inflation and recession risks in Western economies, where an increasing number of market operators and analysts are questioning the policies of central banks.” In Europe, the Stoxx Europe 600 index added 1.5%, erasing the week’s losses. The French CAC 40 lags, rising 0.9%. Autos, travel and miners are the strongest-performing sectors, rebounding after two days of declines. Basic resources outperformed as industrial metals rallied. Consumer products was the only sector in the red as Richemont slumped after the Swiss watch and jewelry maker reported operating profit for the full year that missed the average analyst estimate and its Chairman Johann Rupert said China is going to take an economic blow and warned the Chinese economy will suffer for longer than people think. The miss sent luxury stocks plunging: Richemont -11%, Swatch -3.8%, Hermes -3.2%, LVMH -1.9%, Kering -1.7%, Hugo Boss -1.7%, etc. These are the biggest European movers: Rockwool rises as much as 10% as the market continued to digest the company’s latest earnings report, which triggered a surge in the shares, with SocGen and BNP Paribas upgrading the stock. Valeo and other European auto stocks outperformed, rebounding after two days of losses. Citi says Valeo management confirmed that auto production troughed in April and activity is improving. Sinch gained as much as 5.4% after Berenberg said peer’s quarterly results confirmed the cloud communications company’s strong positioning in a fast-growing market. Lonza shares gain as much as 4.1% after the pharmaceutical ingredients maker was raised to outperform at RBC, with the broker bullish on the long-term demand dynamics for the firm. THG shares surge as much as 32% as British entrepreneur Nick Candy considers an offer to acquire the UK online retailer, while the company separately announced it rejected a rival bid. Maersk shares rise as much as 4.6%, snapping two days of declines, as global container rates advance according to Fearnley Securities which says 2H “looks increasingly promising.” PostNL shares jump as much as 8.2% after the announcement that Vesa will acquire sole control of the Dutch postal operator. Analysts say reaction in the shares is overdone. Dermapharm shares gain as much as 6.1%, the most since March 22, with Stifel saying the pharmaceuticals maker is “significantly undervalued” and have solid growth drivers. Richemont shares tumble as much as 14%, the most in more than two years, after the luxury retailer’s FY Ebit was a “clear miss,” with cost increases in operating expenses. Luxury peers were pulled lower alongside Richemont after the company’s disappointing earnings report, in which its CEO also flagged the Chinese market will lag for longer than people assume. Instone Real Estate shares drop as much as 12% as the stock is downgraded to hold from buy at Deutsche Bank, with the broker cutting its earnings estimates for the property developer Earlier in the session, Asia-Pac stocks picked themselves up from recent losses as risk sentiment improved from the choppy US mood. ASX 200 gained with outperformance in tech and mining stocks leading the broad gains across industries. Hang Seng and Shanghai Comp strengthened with a rebound in tech setting the pace in Hong Kong and with the mainland also lifted following the PBoC’s Loan Prime Rate announcement in which it defied the consensus by maintaining the 1-Year LPR at 3.70% but cut the 5-Year LPR by 15bps to 4.45%, which is the reference for mortgages. Nonetheless, this wasn’t much of a shock as the central bank had kept the 1-Year MLF Rate unchanged earlier in the week and effectively cut interest rates for first-time homebuyers by 20bps on Sunday. Japanese stocks regain footing in the wake of Thursday’s selloff, after Chinese banks cut a key interest rate for long-term loans by a record amount. The Topix rose 0.9% to 1,877.37 at the 3 p.m. close in Tokyo, while the Nikkei 225 advanced 1.3% to 26,739.03. Toyota Motor Corp. contributed the most to the Topix’s gain, increasing 2.1%. Out of 2,171 shares in the index, 1,511 rose and 567 fell, while 93 were unchanged. In Australia, the S&P/ASX 200 index rose 1.2% to close at 7,145.60 on the eve of Australia’s national election. Technology shares and miners led sector gains. Chalice Mining climbed after getting approvals for further exploration drilling at the Hartog-Dampier targets within its Julimar project. Novonix advanced with other lithium-related shares after IGO announced its first and consistent production of battery grade lithium hydroxide from Kwinana. In New Zealand, the S&P/NZX 50 index rose 0.5% to 11,267.39 India’s benchmark stocks index rebounded from a 10-month low and completed its first weekly gain in six, boosted by an advance in Reliance Industries.  The S&P BSE Sensex jumped 2.9% to 54,326.39 in Mumbai. The NSE Nifty 50 Index also rose by a similar magnitude on Friday. Stocks across Asia advanced after Chinese banks lowered a key interest rates for long-term loans.   Reliance Industries climbed 5.8%, the largest advance since Nov. 25, and gave the biggest boost to the Sensex, which had all 30 member stocks trading higher. All 19 sector indexes compiled by BSE Ltd. advanced, led by a gauge of realty stocks.  “Stocks in Asia and US futures pushed higher today amid a bout of relative calm in markets, though worries about a darkening economic outlook and China’s Covid struggles could yet stoke more volatility,” according to a note from SMC Global Securities Ltd.  In earnings, of the 36 Nifty 50 firms that have announced results so far, 21 have either met or exceeded analyst estimates, while 15 have missed forecasts. In FX, the Bloomberg Dollar Spot Index inched higher as the greenback traded mixed against its Group-of-10 peers. Treasuries fell modestly, with yields rising 1-2bps. The euro weakened after failing to hold on to yesterday’s gains that pushed it above $1.06 for the first time in more than two weeks. Inversion returns for the term structures in the yen and the pound, yet for the euro it’s all about the next meetings by the European Central Bank and the Federal Reserve. The pound rose to a session high at the London open, coinciding with data showing UK retail sales rose more than forecast in April. Retail sales was up 1.4% m/m in April, vs est. -0.3%. Other showed a plunge in consumer confidence to the lowest in at least 48 years. The Swiss franc halted a three-day advance that had taken it to the strongest level against the greenback this month. Australia’s sovereign bonds held opening gains before a federal election Saturday amid fears of a hung parliament, which could stifle infrastructure spending. The Australian and New Zealand dollar reversed earlier losses. The offshore yuan and South Korean won paced gains in emerging Asian currencies as a rally in regional equities bolstered risk appetite. In rates, Treasuries were slightly cheaper as S&P 500 futures advanced. Yields were higher by 2bp-3bp across the Treasuries curve with 10- year around 2.865%, outperforming bunds and gilts by 1.7bp and 3.5bp on the day; curves spreads remain within 1bp of Thursday’s closing levels. Bunds and Italian bonds fell, underperforming Treasuries, as haven trades were unwound. US session has no Fed speakers or economic data slated. UK gilts 2s10s resume bear-flattening, underperforming Treasuries, after BOE’s Pill said tightening has more to run. Gilts 10y yields regain 1.90%. Bund yield curve-bear steepens. long end trades heavy with 30y yield ~6bps cheaper. Peripheral spreads widen to core with 5y Italy underperforming. Semi-core spreads tighten a touch. In commodities, WTI trades within Thursday’s range, falling 0.5% to around $111. Most base metals trade in the green; LME lead rises 2.6%, outperforming peers. LME nickel lags, dropping 1.5%. Spot gold is little changed at $1,844/oz. KEY HEADLINES: Looking at the day ahead, there is no macro news in the US. Central bank speakers include the ECB’s Müller, Kazāks, Šimkus, Centeno and De Cos, along with the BoE’s Pill. Finally, earnings releases include Deere & Company. Market Snapshot S&P 500 futures up 1.1% to 3,940.00 STOXX Europe 600 up 1.2% to 433.00 MXAP up 1.6% to 164.68 MXAPJ up 2.1% to 539.85 Nikkei up 1.3% to 26,739.03 Topix up 0.9% to 1,877.37 Hang Seng Index up 3.0% to 20,717.24 Shanghai Composite up 1.6% to 3,146.57 Sensex up 2.5% to 54,115.12 Australia S&P/ASX 200 up 1.1% to 7,145.64 Kospi up 1.8% to 2,639.29 German 10Y yield little changed at 0.97% Euro down 0.2% to $1.0567 Gold spot up 0.2% to $1,845.64 U.S. Dollar Index up 0.25% to 102.98 Brent Futures down 0.4% to $111.55/bbl Top Overnight News from Bloomberg BOE Chief Economist Huw Pill said monetary tightening has further to run in the UK because the balance of risks is tilted toward inflation surprising on the upside ECB Governing Council Member Visco says a June hike is ‘certainly’ out of the question while July is ‘perhaps’ the time to start rate hikes China’s plans to bolster growth as Covid outbreaks and lockdowns crush activity will see a whopping $5.3 trillion pumped into its economy this year Chinese banks cut a key interest rate for long- term loans by a record amount, a move that would reduce mortgage costs and may help counter weak loan demand caused by a property slump and Covid lockdowns China’s almost-trillion dollar hedge fund industry risks worsening the turmoil in its stock market as deepening portfolio losses trigger forced selling by some managers. About 2,350 stock-related hedge funds last month dropped below a threshold that typically activates clauses requiring them to slash exposures, with many headed toward a level that mandates liquidation Investors fled every major asset class in the past week, with US equities and Treasuries a rare exception to massive redemptions Ukraine’s central bank is considering a return to regular monetary policy decisions as soon as next month in a sign the country is getting its financial system back on its feet after a shock from Russia’s invasion The Group of Seven industrialized nations will agree on more than 18 billion euros ($19 billion) in aid for Ukraine to guarantee the short-term finances of the government in Kyiv, according to German Finance Minister Christian Lindner The best may already be over for the almighty dollar as growing fears of a US recession bring down Treasury yields A more detailed look at global markets courtesy of Newsquqawk Asia-Pac stocks picked themselves up from recent losses as risk sentiment improved from the choppy US mood.  ASX 200 gained with outperformance in tech and mining stocks leading the broad gains across industries. Nikkei 225 was underpinned following the BoJ’s ETF purchases yesterday and despite multi-year high inflation. Hang Seng and Shanghai Comp strengthened with a rebound in tech setting the pace in Hong Kong and with the mainland also lifted following the PBoC’s Loan Prime Rate announcement in which it defied the consensus by maintaining the 1-Year LPR at 3.70% but cut the 5-Year LPR by 15bps to 4.45%, which is the reference for mortgages. Nonetheless, this wasn’t much of a shock as the central bank had kept the 1-Year MLF Rate unchanged earlier in the week and effectively cut interest rates for first-time homebuyers by 20bps on Sunday. Top Asian News Chinese Premier Li vows efforts to aid the resumption of production, via Xinhua; will continue to build itself into a large global market and a hot spot for foreign investment, via Reuters. US and Japanese leaders are to urge China to reduce its nuclear arsenal, according to Yomiuri. It was also reported that Japanese PM Kishida is expected to announce a defence budget increase during the summit with US President Biden, according to TV Asahi. Offshore Yuan Halts Selloff With Biggest Weekly Gain Since 2017 Hong Kong Dollar Traders Brace for Rate Spike Amid Intervention Shanghai Factory Output Fell 20 Times Faster Than Rest of China Japan’s Inflation Tops 2%, Complicating BOJ Stimulus Message European indices have started the week's last trading day positively and have extended on gains in early trade. Swiss SMI (+0.5%) sees its upside capped by losses in Richemont which provided a downbeat China outlook. European sectors are almost wholly in the green with a clear pro-cyclical bias/anti-defensive bias - Healthcare, Personal & Consumer Goods, Telecoms, Food & Beverages all reside at the bottom of the chart, whilst Autos & Parts, Travel & Leisure and Retail lead the charge on the upside. US equity futures have also been trending higher since the reopening of futures trading overnight Top European News Holcim, HeidelbergCement Said to Compete for Sika US Unit Prosus Looking to Sell $6 Billion Russian Ads Business Avito European Autos Outperform in Rebound, Driven by Valeo, Faurecia Volkswagen Pitted Against Organic Farmer in Climate Court Clash FX DXY bound tightly to 103.000, but only really firm relative to Yen on renewed risk appetite. Yuan back to early May peaks after PBoC easing of 5 year LPR boosts risk sentiment - Usd/Cny and Usd/Cnh both sub-6.7000. Kiwi outperforms ahead of anticipated 50 bp RBNZ hike next week and with tailwind from Aussie cross pre-close call election result. Euro and Pound capped by resistance at round number levels irrespective of hawkish ECB commentary and surprisingly strong UK consumption data. Lira lurching after Turkish President Erdogan rejection of Swedish and Finnish NATO entry bids. Japanese PM Kishida says rapid FX moves are undesirable, via Nikkei interview; keeping close ties with overseas currency authorities, via Nikkei. Fixed Income Debt futures reverse course amidst pre-weekend risk revival, partly prompted by PBoC LPR cut. Bunds hovering above 153.00, Gilts sub-119.50 and T-note just over 119-16. UK debt also taking on board surprisingly strong retail sales metrics and EZ bonds acknowledging more hawkish ECB rhetoric. Commodities WTI and Brent July futures consolidate in early European trade in what has been another volatile week for the crude complex. Spot gold has been moving in tandem with the Buck and rose back above its 200 DMA Base metals are mostly firmer, with LME copper re-eyeing USD 9,500/t to the upside as the red metal is poised for its first weekly gain in seven weeks Russia's Gazprom continues gas shipments to Europe via Ukraine, with Friday volume at 62.4mln cubic metres (prev. 63.3mbm) Central Banks BoE Chief Economist Pill says inflation is the largest challenge faced by the MPC over the past 25 years. The MPC sees an upside skew in the risks around the inflation baseline in the latter part of the forecast period. Pill said further work needs to be done. "In my view, it would be preferable to have any such gilt sales running ‘in the background’, rather than being responsive to month-to-month data news.", via the BoE. ECB's Kazaks hopes the first ECB hike will happen in July, according to Bloomberg. ECB's Muller says focus needs to be on fighting high inflation, according to Bloomberg. ECB's Visco says the ECB can move out of negative rate territory; a June hike is "certainly" out of the question but July is perhaps the time to start Chinese Loan Prime Rate 1Y (May) 3.70% vs. Exp. 3.65% (Prev. 3.70%); Chinese Loan Prime Rate 5Y (May) 4.45% vs. Exp. 4.60% (Prev. 4.60%) Fed's Kashkari (2023 voter) said they are removing accommodation even faster than they added it at the start of COVID and have done quite a bit to remove support for the economy through forward guidance. Kashkari stated that he does not know how high rates need to go to bring inflation down and does not know the odds of pulling off a soft-landing, while he is seeing some evidence they are in a longer-term high inflation regime and if so, the Fed may need to be more aggressive, according to Reuters US Event Calendar Nothing major scheduled DB's Jim Reid concludes the overnight wrap The good thing about having all these injuries in recent years is that when it comes down to any father's football matches or sport day races I now know that no amount of competitive juices make getting involved a good idea. However my wife has not had to learn her lesson yet and tomorrow plays her first netball match for 37 years in a parents vs schoolgirls match. The mums had a practise session on Tuesday and within 3 minutes one of them had snapped their ACL. I'll be nervously watching from the sidelines. Markets were also very nervous yesterday after a torrid day for risk sentiment on Tuesday. Although equities fell again yesterday it was all fairly orderly. This morning Asia is bouncing though on fresh China stimulus, something we discussed in yesterday's CoTD here. More on that below but working through things chronologically, earlier the Stoxx 600 closed -1.37% lower, having missed a large portion of the previous day’s US selloff, but generally continues to out-perform. US equities bounced around, with the S&P 500 staging a recovery from near intraday lows after the European close, moving between red and green all day (perhaps today's option expiry is creating some additional vol) before closing down -0.58%. This sent the index to a fresh one year low and puts the week to date loss at -3.06%, having declined -18.68% since its January peak. Barring a major reversal today, the index is now on track to close lower for a 7th consecutive week for the first time since 2001. In terms of the sectoral breakdown, it was another broad-based decline yesterday, but consumer discretionary stocks (+0.13%) recovered somewhat following their significant -6.60% decline the previous day. Consumer staples, meanwhile, continued their poor run, falling -1.98%, while tech (-1.07%) was not far behind. Those losses occurred against the backdrop of a fresh round of US data releases that came in beneath expectations, which also helped the dollar index weaken -0.93% to mark its worst daily performance since March. First, there were the weekly initial jobless claims for the week through May 14, which is one of the timeliest indicators we get on the state of the economy. That rose to 218k (vs. 200k) expected, which is its highest level since January. Then there was the Philadelphia Fed’s manufacturing business outlook survey for May, which fell to a two-year low of 2.6 (vs. 15.0 expected). And finally, the number of existing home sales in April fell to its lowest level since June 2020, coming in at an annualised rate of 5.61m (vs. 5.64m expected). The broader risk-off move that created meant that sovereign bonds rallied on both sides of the Atlantic. Yields on 10yr Treasuries were down -4.7bps to 2.84%, which follows their -10.2bps decline in the previous session. We didn’t get much in the way of Fed speakers yesterday, but Kansas City Fed President George nodded to recent equity market volatility, saying that it was “not surprising”, and that whilst policy wasn’t aimed at equity markets, “it is one of the avenues through which tighter financial conditions will emerge”. So no sign yet of the Fed being unhappy about tighter financial conditions so far, and markets are continuing to fully price in two further 50bp moves from the Fed in June and July. Nobody said getting inflation back to target from such lofty levels would be easy. So if you’re looking for a Fed put, it may take a while. Later on, Minneapolis Fed President Kashkari drove that point home, saying he was not sure how high rates ultimately needed to go, but said the Fed must ensure inflation does not get embedded in expectations. Over in Europe debt moves were more significant yesterday, having not taken part in the late US rally on Wednesday. Yiields on 10yr bunds (-8.0bps), OATs (-7.4bps) and BTPs (-6.2bps) all saw a reasonable decline on the day. Over in credit as well, iTraxx Crossover widened +10.2bps to 478bps, which surpasses its recent high earlier this month and takes it to levels not seen since May 2020. We also got the account from the April ECB meeting, although there wasn’t much there in the way of fresh headlines, with hawks believing that it was “important to act without undue delay in order to demonstrate the Governing Council’s determination to achieve price stability in the medium term.” That group also said that the monetary policy stance “was no longer consistent with the inflation outlook”. But then the doves also argued that moving policy “too aggressively could prove counterproductive” since monetary policy couldn’t tackle “the immediate causes of high inflation.” Asian equity markets are trading higher this morning after the People’s Bank of China (PBOC) lowered key interest rates amid the faltering economy. They cut the 5-year loan prime rate (LPR) – which is the reference rate for home mortgages for the second time this year from 4.6% to 4.45%, the largest cut on record, as Beijing seeks to revive the ailing housing sector to prop up the economy. Meanwhile, it left the 1-year LPR unchanged at 3.7%. Across the region, the Hang Seng (+1.83%) is leading gains in early trade with the Shanghai Composite (+1.11%) and CSI (+1.41%) also trading up. Elsewhere, the Nikkei (+1.08%) and Kospi (+1.75%) are trading in positive territory. Outside of Asia, equity futures in DMs indicate a positive start with contracts on the S&P 500 (+0.75%), NASDAQ 100 (+1.01%) and DAX (+1.13%) all notably higher. In other news, Japan’s national CPI rose +2.5% y/y in April, the highest for the headline rate since October 2014 and compared to the previous month’s +1.2% increase. Oil prices are lower with Brent futures -0.77% down to $111.18/bbl, as I type. To the day ahead now, and data releases include UK retail sales and German PPI for April, as well as the advance Euro Area consumer confidence reading for May. Central bank speakers include the ECB’s Müller, Kazāks, Šimkus, Centeno and De Cos, along with the BoE’s Pill. Finally, earnings releases include Deere & Company. Tyler Durden Fri, 05/20/2022 - 08:02.....»»

Category: smallbizSource: nytMay 20th, 2022Related News

Market Snapshot: U.S. stock futures climb after China rate cut, as Dow faces worst weekly losing streak in history

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Futures Movers: Oil prices drift lower, while natural gas sees sharper fall

Oil prices are set to end the eek with gains, while natural-gas futures are slumping, though still facing a strong weekly rise......»»

Category: topSource: marketwatchMay 20th, 2022Related News

US futures rise after China"s lending rate cut, but global stocks head for a record losing streak thanks to grim economic outlook

The S&P 500 is on the brink of a bear market, an index of global stocks is headed for a record run of weekly losses, and the Fed won't help, strategists said. Traders work the floor of the New York Stock Exchange (NYSE)David Dee Delgado/Getty Images US stock futures rose on Friday, but the overall backdrop showed a decline in investor confidence. China cut a key lending rate to ward off harm to its economy, sending Asian stocks higher on the day. An index of global shares headed for a seventh straight weekly loss, its longest losing stretch ever.  US stock futures rose Friday, buoyed by China cutting a key lending rate, although an index of global equities headed for a record-breaking streak of weekly losses as the outlook for the economy grew increasingly bleak.Futures on the S&P 500 and Dow Jones rose around 1% in early European trading, while those on the Nasdaq 100 gained 1.5%. The benchmark indices are set for a 3% decline this week, with the S&P 500 on the verge of entering official bear-market territory.Equity bulls hoping for a sign that the Federal Reserve might offer words of comfort had to digest Kansas City Fed President Esther George's comments Thursday on recent market volatility, which she said was "not surprising".George said in an interview with CNBC that Fed policy isn't aimed at stock markets, though these are "one of the avenues through which tighter financial conditions will emerge". "So no sign yet of the Fed being unhappy about tighter financial conditions so far, and markets are continuing to fully price in two further 50-basis point moves from the Fed in June and July," Deutsche Bank strategist Jim Reid said."Nobody said getting inflation back to target from such lofty levels would be easy. So if you're looking for a Fed put, it may take a while," he added, referring to the belief the central bank will step in to support falling markets.Meanwhile, the MSCI All-World index of global shares rose 0.5%. But it's heading for a seventh consecutive weekly loss, the longest since its inception in 2001.Asian markets got a boost from signs of monetary policy easing in China on Friday. The CSI 300 was up almost 2% on the day, while the Hang Seng gained nearly 3%.The People's Bank of China made a historically large cut to its five-year loan prime rate, used to price mortgages, as it attempts to shore up the property sector and protect its economy from further damage from COVID-19 lockdowns.But inflation and its likely impact on the broader economy remained front and center. Consumer inflation in Japan topped 2% for the first time in over seven years. In Europe, German wholesale inflation hit record highs for a fifth month in a row in April, although the pan-regional STOXX 600 echoed the broader push higher in global equities and rose 1.1%.On Thursday, data showed initial US jobless claims rose to their highest since late January in the latest week. Also, a key reading of manufacturing activity in the Mid-Atlantic region fell to two-year lows in early May, although a sub-index of prices pressures showed a slowdown.The dollar, which hit its highest in 20 years this month, gained 0.1% on the day, but was still facing its biggest weekly loss since late January in light of weakening economic data."Not until the Fed pours cold water on tightening expectations should the dollar build a top. And yesterday Fed hawk, Esther George, said that even this 'rough week' in equity markets would not blow the Fed off course," ING head of global markets Chris Turner said. Oil, which can act as a barometer of economic sentiment, eased as traders took profit on a steep rally the previous day. Crude futures have gained 45% so far this year, propelled by an expectation that global supply will fall short of demand, particularly if more countries ban imports of Russian oil. With inflation starting to dent growth, the oil demand outlook is looking less rosy. The International Energy Agency, which two months ago forecast an energy-price shock this year, said in its monthly report last week that slowing demand and rising supply will stop the market moving into deficit this year.Brent crude was last down 0.4% at $111.63 a barrel, while WTI futures dipped 0.5% to $109.33 a barrel.Read more: Goldman Sachs lays out the case for investing more of your money in real assets — and reveals which ones it's most bullish on as the stock market crashesRead the original article on Business Insider.....»»

Category: topSource: businessinsiderMay 20th, 2022Related News

Market Snapshot: U.S. stock futures climb after China rate cut, as Dow in danger of worst weekly losing streak in history

A China rate cut is driving some optimism for markets on Friday, but investors remain wary as the S&P 500 teeters on the edge of a bear market......»»

Category: topSource: marketwatchMay 20th, 2022Related News

Market Snapshot: U.S. stock futures climb after China rate cut, as Dow headed for its worst losing streak in history

A China rate cut is driving some optimism for markets on Friday, but investors remain wary as the S&P 500 teeters on the edge of a bear market......»»

Category: topSource: marketwatchMay 20th, 2022Related News