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: Facing the biggest inflation surge in 30 years, shoppers expect to spend a lot more this holiday season

Quick-moving shoppers are acting now to avoid slim pickings later, with 70% saying they want to avoid out-of-stock notices......»»

Category: topSource: marketwatchNov 25th, 2021

4 Mutual Funds to Pick as US Service Sector Hits Record High

Solid job additions are boosting the US economy and supporting the manufacturing and service sectors. The U.S. economy is gradually recovering from the coronavirus pandemic-induced slump. Solid job additions are boosting the economy and supporting the manufacturing and service sectors. In fact, growth in the American service sector has been higher than expected in October. Per the Institute for Supply Management’s (ISM) report on Nov 3, its services PMI climbed to 66.7 in October from 61.9 in the month before. ISM’s service PMI has now grown for the 17th consecutive month.Business activities in the service sector grew by 7.5 percentage points to 69.8%, while new orders are up 6.2 percentage points to 69.7% in October. Though supply-chain disruptions and shortage of labor and materials are constraining capacity and impacting overall business conditions, improvement in the labor market upholds the momentum.Record Employment a HeadwindOn Nov 5, the U.S. Bureau of Labor Statistics reported that companies added 531,000 in October, surpassing the consensus estimate of 442,000.  The report also stated that September’s figure was upwardly revised to 312,000 and August’s job additions were up from 366,000 to 483,000. Stronger-than-expected job additions in October helped the unemployment rate drop down to 4.6%.In total, the private sector added 604,000 new jobs last month, while there was a significant decline in jobs from the government. Additionally, average hourly earnings rose 0.4% in October and are now 4.9% higher over the last 12 months.The report supports that the biggest labor shortage in years is still holding back the U.S. economy from recovery and adding to the largest surge in inflation in three decades. However, there have been solid job additions in leisure and hospitality, professional and business services, manufacturing, and transportation and warehousing spaces.Rapid vaccination and reopening efforts are improving consumer confidence as they are gearing up for the holiday season. The heathy jobs market is also allowing them to indulge in spending despite the rising inflation. In such a scenario, investing in mutual funds with significant exposure to services-related companies may prove prudent.4 Funds to BuyWe have, thus, selected four service-related mutual funds carrying a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy) that are poised to gain from such factors. Moreover, these funds have encouraging three and five-year returns. Additionally, the minimum initial investment is within $5000.We expect these funds to outperform peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also the likely future success of the fund.The question here is: why should investors consider mutual funds? Reduced transaction costs and portfolio diversification without several commission charges associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).Fidelity Select Leisure Portfolio FDLSX fund invests a bulk of its assets in securities of companies engaged in the design, production or distribution of goods or services in the leisure and recreation industries. The fund seeks growth of capital and invests both in U.S. and non-U.S. companies.This Sector – Other product has a track of positive total returns for more than 10 years. Specifically, the fund has returned 16.6% and 17.1% over the past three and five years, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.FDLSX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.77%, which is below the category average of 0.79%.Fidelity Select Retailing Portfolio FSRPX fund aims for capital appreciation. This non-diversified fund invests a large portion of its assets in the common stock of companies engaged in merchandising finished goods and services, primarily to individual consumers.This Sector - Other product has a history of positive total returns for more than 10 years. Specifically, FSRPX has returned 18.4% and 21.6% over the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.FSRPX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.73%, which is below the category average of 0.79%.Fidelity Select Financial Services Portfolio FIDSX fund aims for capital appreciation. This non-diversified fund invests the majority of assets in the common stock of companies engaged in providing financial services to consumers and the industry.This Sector - Finance product has a history of positive total returns for over 10 years. Specifically, FIDSX has three and five-year return of 14.4% and 15.8%, respectively. To see how this fund performed compared to its category, and other #1 and 2 Ranked Mutual Funds, please click here.FIDSX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.77% versus the category average of 1.08%.Fidelity Select Consumer Discretionary Portfolio FSCPX fund aims for capital appreciation. This non-diversified fund invests the majority of its assets in common stocks of companies that manufacture and distribute consumer discretionary goods and services. FSCPX invests in both domestic and foreign stocks.This Zacks Sector-Other product has a history of positive total returns for more than 10 years. Specifically, the fund has three and five-year returns of 16.7% and 18%, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.FSCPX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.73%, below the category average of 0.79%.Want key mutual fund info delivered straight to your inbox?Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >> Bitcoin, Like the Internet Itself, Could Change Everything Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities. Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly. See 3 crypto-related stocks 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 Get Your Free (FSRPX): Fund Analysis Report Get Your Free (FDLSX): Fund Analysis Report Get Your Free (FIDSX): Fund Analysis Report Get Your Free (FSCPX): Fund Analysis Report 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: zacksNov 8th, 2021

Futures Melt Up To New Record High Ahead Of Payrolls

Futures Melt Up To New Record High Ahead Of Payrolls US index futures continued their relentless meltup on the last day of the week, before today's jobs report which is expected to bounce strongly from last month's disappointing print (exp. 450K, up from 194K), and could set the pace for the Fed's taper into 2022 if it is too much of an outlier in either direction. At 730am, e-mini S&P futures were up 8.25 or 0.18% to 4,681.5, a new all time high; Nasdaq futures rose 48 points or 0.29% and Dow futures were up 35 or 0.1%. 10Y yields were flat at 1.53% and the dollar index jumped, while Brent traded just above $80 after yesterday's rout. “Investors took comfort from the Federal Reserve’s slow and steady approach when announcing the time-line for its taper program,” said Michael Hewson, chief market analyst at CMC Markets in London. “Today’s payrolls report should confirm that the U.S. labor market is still improving.” After one of the busiest earnings days this season, it has been a furious session with Expedia to News jumping in premarket trading on better-than-expected results.  Airbnb jumped 7.7% after the travel website reported record sales and earnings that exceeded analyst estimates. Meanwhile, Peloton crashed 33% after the fitness company cut its annual revenue forecast by as much as $1 billion because of declining demand in the post-pandemic economy.  Here are some of the biggest U.S. movers today: Peloton (PTON US) shares tanked 32% in U.S. premarket trading after analysts said its results and reduced guidance implied weaker demand than expected, and that the home-fitness company’s business model may need a rethink Square (SQ US) shares drop 4.5% in U.S. premarket trading after its 3Q results fell short of the consensus estimate, but its outlook remains strong, analysts say. The weakness in its Cash App and Bitcoin revenue could have been predicted, they added. Airbnb (ABNB US) shares rose 8% in U.S. premarket after the vacation-rental giant reported record sales and earnings that beat analysts’ estimates. RBC and Barclays hiked their price targets, citing improving earnings and supply-demand dynamics in 2022 NRX Pharmaceuticals (NRXP US) and Relief Therapeutics (RLF SW), which are partners on a drug to treat Covid-19, tumbled after the U.S. Food and Drug Administration declined to issue an emergency use authorization for the medication. GoPro (GPRO US) shares soar 17.2% premarket Tuesday after the maker of mountable and wearable cameras reported third-quarter results that exceeded analyst estimates Expedia (EXPE US) shares rally in premarket trading, as the online travel agency reports third-quarter revenue and adjusted earnings that beat expectations. The company’s CEO also gave positive commentary about a recovery in the travel industry Novavax (NVAX US) climbs as much as 6% after the biotech company said it filed with the World Health Organization for emergency use listing for its Covid vaccine Pinterest (PINS US) rises 5% in premarket trading after the company reported stronger-than-expected profit and revenue that met analysts’ estimates Microchip (MCHP US) gains 2.5% in premarket trading after projecting revenue and adjusted EPS that exceeded the average analyst estimates Ontrak (OTRK US) jumped 24% postmarket after the tele-health company boosted its full-year guidance Grid Dynamics (GDYN US) jumped 18% in postmarket trading after the information-technology services company forecasts full-year revenue that beat the average analyst estimate Pfizer (PFE) surged more than 10% after the company announced it would seek approval for a new covid pill after strong trial data. Looking ahead now, we’ll cap off a very busy macro week today with the US jobs report for October As previewed earlier, consensus expects +450k increase in nonfarm payrolls, which in turn would send the unemployment rate down a tenth to a post-pandemic low of 4.7%. The last couple of jobs reports have seen some downside surprises, but if realized, that +450k number would be the strongest jobs growth in 3 months. We’ve had some fairly positive labor market data in advance of the jobs report too, with the ADP’s report of private payrolls exceeding expectations on Wednesday at 571k (vs. 400k expected), and yesterday the weekly initial jobless claims for the week through October 30 fell to a fresh post-pandemic low of 269k (vs. 275k expected). The Fed made it clear this week that labor market evolution after the delta variant will be a key determinant in the future path of monetary policy. In any case, risk euphoria was strong with Europe as well, where stocks scaled another record peak as consumer and tech companies led the Stoxx Europe 600 Index up 0.2% to an all-time high poised for the longest winning streak since mid-June. FTSE MIB and FTSE 100 outperformed at the margin. Technology stocks outperformed, while energy and travel and leisure stocks declined. Among the biggest movers, Allegro.eu SA soared 7.8% after Poland’s largest e-commerce bought a Czech peer in a $1 billion deal. Euronext NV fell 4.4% after the exchange operator’s third-quarter results undershot expectations. However, most travel stocks dropped as a fourth wave of the pandemic hits the continent, with Germany reporting record infections. European stocks extended October’s recovery to return to their all-time highs, as investors scooped up the region’s stocks thanks to a reassuring earnings season and as central banks signal they are in no hurry to raise interest rates just yet. “We’ve seen a fairly benign reaction to the earnings season, in some respects. Perhaps people were a little bit nervous going into it,” Alastair George, chief investment strategist at Edison Group, said by phone. “The market troughed in the early part of October and has bounced back since then, and if we look at earnings revisions, they’re not as robust as they were earlier on in the Covid recovery cycle, but we’re not seeing downgrades,” George added. Asian equities fell, as a slide in bond yields globally and a decline in Hong Kong-listed tech shares weighed on sentiment. The MSCI Asia Pacific Index slid as much as 0.5%, led lower by consumer discretionary and utility shares. Alibaba and Tencent were the biggest drags with analysts accessing earnings outlooks ahead of the companies’ quarterly results announcements. Hong Kong’s Hang Seng Tech Index fell 1.6%, while the benchmark Hang Seng Index dropped 1.4%. Traders are now awaiting the U.S. jobs report later Friday for further cues on monetary policy tightening. “Markets will be seeking confirmation on whether the job market recovery warrants a mid to late-2022 lift-off in rates as reflected in the Fed funds futures,” Jun Rong Yeap, market strategist at IG Asia, wrote in a note. The Asian stock benchmark is set for a weekly rise of less than 1% as the earnings season progresses. Supply-chain constraints and inflation worries are being cited as concerns by many of the largest companies in the region, with several seeing their shares tumble as the chip shortage prompts them to slash their annual profit forecasts. India’s stock market was closed for a holiday Friday. Japanese stocks fell as the yen held its strength against the dollar and investors assessed the potential supply response from the U.S. to a gradual hike in production from OPEC+. The Topix index dropped 0.7% to close at 2,041.42 in Tokyo, while the Nikkei 225 declined 0.6% to 29,611.57. Toyota Motor contributed the most to the Topix’s loss, decreasing 1.4%. Out of 2,181 shares in the index, 540 rose and 1,589 fell, while 52 were unchanged. Japan’s currency was little changed at 113.64 yen per dollar, after gaining 0.2% on Thursday Australia's S&P/ASX 200 index rose 0.4% to 7,456.90, its highest close since Sept. 16. The benchmark gained 1.8% for the week.  Eight of the 11 subgauges finished Friday trade higher, with miners and healthcare stocks driving the gains.  The Reserve Bank of Australia struck an upbeat note on the economy, while maintaining that faster wages growth and inflation will take some time and the first interest-rate increase is unlikely before 2024. Administration soared after receiving a conditional, non-binding indicative takeover proposal from investment fund Carlyle Asia Partners V. Clinuvel tumbled after it was cut to hold at Jefferies.  In New Zealand, the S&P/NZX 50 index rose 1% to 13,074.61. In FX, the Bloomberg Dollar Spot Index reached its strongest level in more than three weeks as the greenback was steady or higher versus all of its Group-of-10 peers. The euro traded near its cycle lows following strong U.S. data and renewed dovish commentary by European Central Bank officials and options now paint a similar outlook. The slowdown in inflation next year may not be as intense and quick as the European Central Bank had anticipated a few months ago, ECB Vice President Luis de Guindos says. The pound fell against all its Group-of-10 peers and gilts rallied, sending yields down by as many as 5 basis points. Money markets no longer fully price the Bank of England raising its key rate to 1% in Dec. 2022, pushing bets out to Feb. 2023. Labor market data is an important piece of the jigsaw for the BOE, Governor Andrew Bailey says in an interview with BBC Radio 4. Australia’s 10-year bonds had their first weekly gain in more than two months after the BOE joined the RBA and the Fed in pushing back against aggressive rate-hike bets; the Aussie and Kiwi weakened. The yen rose as traders unwound bearish bets on the currency before the release of key U.S. jobs data and repricing of the outlook for policy tightening. In rates, the 10Y yield was unchanged at 1.53%. Gilts extend Thursday’s post-BO shockE rally, richening ~5bps across the curve in a modest flattening move. Short sterling futures add 2.5-3 ticks in red and green packs as expectations for higher rates are pared back. MPC-dated OIS rates factor in only 11bps of hike by the December meeting and no longer fully price the Bank’s rate at 1% by end-2022. Bunds follow, cash USTs drift ahead of today’s payrolls release. In commodities, crude futures hold a narrow range after OPEC+ rebuffed U.S. demands for accelerated output.with WTI trading just below $80. Spot gold drifts higher, briefly testing $1,800/oz. Base metals are mixed: LME lead and tin rally, zinc drops over 1.5% with canceled warrants hitting the highest since August To the day ahead now, and the main data highlight will be the aforementioned US jobs report, but European data will also include September figures on Euro Area retail sales and German and French industrial production. Central bank speakers will include the ECB’s Vice President de Guindos, as well as the ECB’s Holzmann, Centeno and Panetta, in addition to the BoE’s Ramsden, Pill and Tenreyro. Market Snapshot S&P 500 futures little changed at 4,674.25 STOXX Europe 600 up 0.1% to 483.89 German 10Y yield little changed at -0.24% Euro little changed at $1.1558 MXAP down 0.4% to 198.36 MXAPJ down 0.3% to 645.66 Nikkei down 0.6% to 29,611.57 Topix down 0.7% to 2,041.42 Hang Seng Index down 1.4% to 24,870.51 Shanghai Composite down 1.0% to 3,491.57 Sensex up 0.5% to 60,067.62 Australia S&P/ASX 200 up 0.4% to 7,456.94 Kospi down 0.5% to 2,969.27 Brent Futures up 0.8% to $81.22/bbl Gold spot up 0.4% to $1,798.55 U.S. Dollar Index little changed at 94.35 Top Overnight News from Bloomberg Germany reported record Covid-19 infections for a second straight day, as a fourth wave of the pandemic hits Europe and threatens to overwhelm hospitals in some hot spots The increasingly influential expectations gap between bond traders and central bankers faces a fresh test Friday -- U.S. jobs data that could reignite or damp out the inflation concerns policy makers tried to downplay this week A shortage of homes for sale and a buoyant labor market are expected to underpin the U.K. housing market as consumers come under pressure from soaring inflation and higher interest rates, according to Halifax A more detailed look at global markets courtesy of Newsquawk Asian equity markets traded cautiously following a somewhat mixed handover from the US where the S&P 500 and Nasdaq extended on fresh record highs with outperformance in rate-sensitive stocks alongside the rally in global bonds. However, the DJIA lagged but with only marginal losses as attention shifted to the upcoming NFP jobs data, while Chinese developer default concerns provided headwinds in Asia after reports Kaisa Group missed a payment on its wealth management product. ASX 200 (+0.4%) was underpinned by strength in the mining-related sectors as gold producers benefitted from the recent advances in the precious metal which approached just shy of the USD 1800/oz level and with sentiment also helped by the continued dovish tone by the RBA in its quarterly Statement on Monetary Policy, although advances were capped amid losses in tech and with energy names suffering due to lower oil prices. Nikkei 225 (-0.6%) weakness was a function of recent adverse currency flows but with downside stemmed as participants digest a slew of earnings releases and reports the government is considering cash handouts of JPY 100k to under-18s. Hang Seng (-1.4%) and Shanghai Comp. (-1.0%) were both subdued with Hong Kong pressured by losses in the blue chip financial, tech and energy stocks and with property names also constrained by the missed Kaisa Group payment which the Shenzhen-based developer plans to repay in instalments. It was also reported that China told certain smaller banks to limit wealth products, although the losses in the mainland were cushioned after the PBoC upped its liquidity effort despite still resulting in a net daily drain. Finally, 10yr JGBs were higher following on from the gains in global counterparts which were spurred by the surprise BoE hold on rates and with the weakness in Japanese stocks also helping keep bond prices afloat, with price action also unfazed by the lack of purchases from the BoJ which were instead seeking to buy corporate bonds with 1yr-3yr maturities for Nov. 10th. Top Asian News Japan Eases Many Covid-Era Border Restrictions as Cases Slump Developer in China Misses Payment on Loan Backed by Fantasia World’s Largest Pension Fund GPIF Posts $17 Billion Gain HSBC Requests All of Its Hong Kong Staff to Get Vaccinated European equities broadly trade on a marginally firmer footing (Euro Stoxx 50 +0.4%; Stoxx 600 +0.2%) with the Stoxx 600 set to close the week out with gains of around 1.6%. Macro commentary for the session has been relatively light thus far in the wake of yesterday’s BoE surprise. The handover from the APAC session was predominantly a negative one with Hang Seng (-1.4%) and Shanghai Comp. (-1%) both subdued as stocks in Hong Kong were pressured by losses in the blue-chip financial, tech and energy stocks and with property names also constrained by the missed Kaisa Group payment which the Shenzhen-based developer plans to repay in instalments. Stateside, futures have been inching higher ahead of the latest US jobs report with consensus looking for a 450k addition in nonfarm payrolls. Events in Washington are also worth keeping an eye on after CNN’s Raju reported yesterday that House Dems see Friday as the day they can finish the rule, USD 1.75tln Build Back Better bill and infrastructure bill. The Infrastructure bill would then go to Biden’s desk and the USD 1.75tln bill would go to the Senate for further negotiation with Manchin and other Senate Dems. Back to Europe, sectors are relatively mixed with Telecom names outperforming amid gains in BT (+1.8%) who sit at the top of the FTSE 100 as speculation continues to rumble on that billionaire investor Patrick Drahi could make a move for the Co. Deutsche Telekom is also providing support for the sector after confirming that IFM is to buy 50% in Co's Glasfaserplys GmbH for EUR 900mln. To the downside, Travel & Leisure names lag as opening gains for IAG (-2.1%) proved to be fleeting with the Co. warning of a potential EUR 3bln FY loss alongside Q3 earnings. Elsewhere, Oil & Gas names are trading lower alongside losses in the crude complex, with Basic Resources also near the foot of the leaderboard. Top European News Adler Pressure Builds With Idle Cranes and Angry Berlin Buyers Axa Jumps to More Than 3-Year High After Share Buyback Plan Europe Gas Prices Rebound as Traders Eye Russia’s Next Move ECB’s Guindos Says Inflation Will Slow in 2022 ‘Without a Doubt’ In FX, the Dollar index has gained some traction and has broken out of the 94.273-417 APAC range in the run-up to the US labour market report – with the headline NFP print forecast at 450k (full preview available in the Newsquawk Research Suite), although anything short of an extreme jobs reports this month will likely not sway the Fed's dials following the taper announcement earlier this week - which will commence later this month. On the fiscal front, the US House is to meet at 12:00GMT/08:00EDT to debate the procedural rule to put the social spending bill on the floor. Democrats hope to debate and vote on the social spending and infrastructure bills today, according to Fox. From a technical perspective, DXY eyes yesterday 94.475 high ahead of the YTD peak at 94.563. GBP, EUR - Sterling is the marked laggard thus far in what is seemingly a hangover on the day after the BoE coupled with Brexit risk, as the UK and EU's Brexit negotiators are set to meet in a bid to temper down cross-channel frictions. Governor Bailey made an appearance on UK radio this morning but failed to provide much in the way of additional colour regarding yesterday's policy decision – with markets currently assigning a 2/3 chance of a 15bps hike in December. On that note, BoE's new Chief Economist Pill, alongside MPC members Tenreyro and Ramsden, are all slated to speak throughout the session. Over to Brexit developments, RTE's Connelly recently reported that there is a "growing expectation" that the UK will trigger Article 16 - suggesting that "the view is that the EU's response could be much swifter and more 'radical' than expected.", although a special meeting of the bloc's leaders will likely be needed before any move. From a technical standpoint, EUR/GBP breached overnight resistance at 0.8565 before briefly topping the 200 DMA at 0.8584. In turn, GBP/USD declined from its 1.3508 high to a base sub-1.3450, with some traders suggesting the pair ran into sellers just ahead of a Fib level at 1.3511. EUR is supported by the EUR/GBP cross, with EUR/USD relatively flat on the day and still above yesterday's 1.1527 low. EUR/USD also looks ahead to some OpEx – with EUR 1.4bln between 1.5555-60 alongside some EUR 725mln at strike 1.1575. AUD, NZD, CAD - The high-beta non-US dollars all post modest intraday losses. The Aussie sits at the bottom of this bunch after the RBA's SoMP overnight reiterated a patient approach, with headwinds also felt by a decline in iron ore prices overnight whilst copper trades lacklustre. NZD is softer in sympathy whilst the Loonie bears the brunt of lower post-OPEC crude prices. AUD/USD has declined from a 0.7408 peak and dips under its 200 DMA (0.7379) ahead of the 50 DMA (0.7364). NZD/USD meanwhile loses ground under the 0.7100 mark – which also coincides with its 21 and 200 DMAs. USD/CAD eyes its 200 DMA at 1.2479 from a 1.2450 base in the run-up to the Canadian jobs report – with the pair also cognizant of USD 1.3bln in OpEx between 1.2500-05. In commodities, WTI and Brent front-month futures consolidate following yesterday's post-OPEC+ declines and heading into today's main event – the US labour market report. To recap the OPEC+ confab, ministers opted to continue the current plan to hike monthly output by 400k BPD (despite calls from the US to up output by 600-800k BPD), whilst reports also suggested that there will be no compensation for the underproduction seen from some nations. Traders are now on the lookout for a US response, with Washington yesterday reiterating the use of tools against oil prices. As a reminder, US Energy Secretary Granholm in an FT interview in October raised the prospect of an SPR release, whilst also refusing to rule out a ban on oil crude oil exports, suggesting “it is also a tool”. From the demand side, China’s economic slowdown has prompted JPM to downgrade the nation’s GDP growth forecast by 1ppt to 4.0%, citing the lingering impact of the power crunch and resurgence in COVID. It’s also worth noting that next week will see the Chinese inflation metrics, with oil prices expected to contribute to another Y/Y rise in PPI. WTI Dec trades just under USD 80/bbl (vs 78.96/bbl low) whilst Brent Jan trades on either side of USD 81/bbl (vs low 80.26/bbl). Turning to metals, spot gold and silver are uninteresting heading into the US jobs report whilst LME copper remains under USD 9,500/t. Overnight, Dalian iron ore futures fell once again to log a fourth consecutive week of losses amid China’s crackdown on the raw material. US Event Calendar 8:30am: Oct. Change in Nonfarm Payrolls, est. 450,000, prior 194,000 Change in Private Payrolls, est. 420,000, prior 317,000 Unemployment Rate, est. 4.7%, prior 4.8% Underemployment Rate, prior 8.5% Labor Force Participation Rate, est. 61.7%, prior 61.6% Average Hourly Earnings YoY, est. 4.9%, prior 4.6% Average Hourly Earnings MoM, est. 0.4%, prior 0.6% Average Weekly Hours All Emplo, est. 34.8, prior 34.8 3pm: Sept. Consumer Credit, est. $16b, prior $14.4b DB's Jim Reid concludes the overnight wrap Markets had another buoyant session yesterday as they received a dovish surprise from the Bank of England, just as they were digesting the Fed’s tapering decision from the previous evening. In response, markets shifted gear and pushed back pricing of future rate hikes, which in turn led to a sharp rally across the curve in sovereign bond markets in every major economy. And with investors lowering the odds of a near-term removal in monetary policy support, that helped equities take another leg higher, with the S&P 500 (+0.42%) advancing for the 15th time in the last 17 sessions to reach a fresh all-time high. We’ll start with the BoE as they generated the main headlines, and contrary to building expectations that a potential rate hike could be imminent, the MPC in fact voted by 7-2 to keep Bank Rate on hold at 0.1%, with only the most hawkish members favouring a 15bps increase. This came in spite of the fact that the BoE upgraded their inflation forecasts yet again, now seeing CPI peaking “at around 5% in April 2022”. The meeting summary did say that if the data was in line with their projections it would “be necessary over coming months to increase Bank Rate”, but overall it was a pretty dovish decision, with the MPC also voting by 6-3 to continue with its existing QE program. In their forecasts that were conditioned on the market-implied path for Bank Rate, they said “a margin of spare capacity is expected to emerge”, and that CPI would be beneath target at the end of the forecast period, so again pushing back against market pricing that had been looking for multiple hikes in 2022. In response, our UK economists have shifted their call for lift-off of 15bps to December, before seeing further 25bps hikes in May 2022 and February 2023. For more details, see their reaction note (link here). Markets reacted strongly to the decision as investors were surprised by the extent of the BoE’s dovishness. Gilts rallied sharply and outperformed sovereign bonds elsewhere, with 5yr yields (-20.0bps) seeing their biggest move lower in over 5 years, back in the immediate aftermath of the 2016 Brexit referendum. The 2yr yield was also down a massive -21.1 bps, marking its own biggest move lower since the initial market panic over Covid-19 back in March 2020. And sterling (-1.37%) had its worst performance against the dollar so far this year, which therefore left it as the worst performer among the G10 currencies too. The BoE meeting triggered a rally of global sovereign bonds, though whilst the gilt curve bull steepened, most other curves wound up flatter on the day. In the US, yields on 10yr Treasuries fell -7.7 bps to 1.53%, marking their biggest move lower since August, whilst the 2yr Treasury yield retreated -4.4bps. Real yields continue to drive the treasury curve, with the 10yr real yield down -8.6 bps to move back beneath -1% again. Elsewhere in Europe, yields on 10yr bunds (-5.6bps), OATs (-6.4bps) and BTPs (-11.4bps) all declined as well, with lower real yields the driver once again. This dramatic shift to price in greater monetary support for longer was good news for equities yesterday, with the major indices pressing on to fresh all-time highs. By the close of trade, the S&P 500 (+0.42%) had hit a new record, though in reality it was a fairly narrow-based advance, with fewer than half of the companies in the index actually moving higher on the day, whilst financials (-1.34%) underperformed against the backdrop of lower yields and a flatter curve. Interest-sensitive tech stocks did much better, with the NASDAQ (+0.81%) also at a record high as it achieved a 9th consecutive daily advance, its longest winning streak since 2019, whilst the FANG+ index of megacap tech stocks advanced +1.29% to reach a fresh high of its own. Over in Europe, the STOXX 600 (+0.41%) hit a record high too, even if the index was similarly hampered by financials (-0.86%), and records were also attained by Germany’s DAX (+0.44%) and France’s CAC 40 (+0.53%). That rally in equities hasn’t carried over into Asia this morning where indices including the Nikkei (-0.72%), the KOSPI (-0.65%), the Hang Seng (-0.96%) and the Shanghai Composite (-0.25%) are all trading lower. However, the surge in sovereign bonds has been echoed elsewhere, with yields on Australian 10yr debt down -4.0bps this morning, and bonds also advanced in China after the PBOC increased their short-term cash injections yet again. Speaking of Chinese debt, Kaisa Group Holdings Ltd, a developer, and its units listed in Hong Kong were suspended from trading after the company missed payments on wealth products and raised liquidity concerns. Meanwhile, the latest Covid-19 outbreak in China continued to spread, with a further 90 new cases reported on Friday, 22 of which were asymptomatic. Otherwise, S&P 500 futures (+0.01%) are almost unchanged this morning and yields on 10y Treasuries have moved up +1.2bps. Looking ahead now, we’ll cap off a very busy macro week today with the US jobs report for October, which is out at 12:30 London time. In terms of what to expect, our US economists are looking for a +400k increase in nonfarm payrolls, which in turn would send the unemployment rate down a tenth to a post-pandemic low of 4.7%. The last couple of jobs reports have seen some downside surprises, but if realised, that +400k number would be the strongest jobs growth in 3 months. We’ve had some fairly positive labour market data in advance of the jobs report too, with the ADP’s report of private payrolls exceeding expectations on Wednesday at 571k (vs. 400k expected), and yesterday the weekly initial jobless claims for the week through October 30 fell to a fresh post-pandemic low of 269k (vs. 275k expected). The Fed made it clear this week that labour market evolution after the delta variant will be a key determinant in the future path of monetary policy. Speaking of the Fed, it was reported by Dow Jones that Fed Chair Powell was seen visiting the White House yesterday. It comes with just 3 months left until the end of Powell’s current 4-year term, and follows President Biden saying on Tuesday that an announcement on the Fed position would come “fairly quickly”. For reference, the decision on who would be nominated as Fed Chair had already been announced at this point 4, 8 and 12 years ago. As well as the BoE, the other important meeting was that from the OPEC+ group, who rejected the demands from President Biden and others for a larger increase in oil production. They decided to increase output by +400k b/d in December, though afterwards oil actually gave up its surge earlier in the day to end the session lower, with WTI moving all the way from an intraday peak where it was up +3.17% to close down by -2.54%. A spokesperson for the US National Security Council said that the US would consider a range of tools to deal with oil prices, and Energy Secretary Granholm said last month that releasing crude oil from the strategic petroleum reserve was being considered. Lastly on the data front, the Euro Area composite PMI for October was revised down a tenth from the flash reading to 54.2, whilst the services PMI was also revised down a tenth to 54.6. Separately, the Euro Area PPI reading for September came in at +16.0% year-on-year (vs. +15.4% expected). Lastly, the preliminary Q3 reading of nonfarm productivity showed an annualised decline of -5.0% (vs. -3.1% expected), which was its largest quarterly decline since 1981. To the day ahead now, and the main data highlight will be the aforementioned US jobs report, but European data will also include September figures on Euro Area retail sales and German and French industrial production. Central bank speakers will include the ECB’s Vice President de Guindos, as well as the ECB’s Holzmann, Centeno and Panetta, in addition to the BoE’s Ramsden, Pill and Tenreyro. Tyler Durden Fri, 11/05/2021 - 08:12.....»»

Category: personnelSource: nytNov 5th, 2021

Payrolls Preview: This One Actually Matters

Payrolls Preview: This One Actually Matters October's NFP (consensus exp. +450k) prints tomorrow morning, two days after the FOMC taper announcement on Wednesday. And due to the flexible nature of the monthly tapering, employment reports (together with inflation prints) will now be far more critical as part of the broader evolution of data, which if too divergent could serve to accelerate/decelerate the pace of tapering, not to mention their importance in gauging the road to full employment, and as a result eventual rate lift-off. As Newsquawk notes in its NFP preview, labor proxies have largely been constructive, with the ADP report surprising to the upside, although everyone knows about the rocky correlation between the two. Initial Jobless Claims and Continued Jobless Claims continued to show a decline to successive post-pandemic lows after some prior bumps due to Hurricane Ida. ISM business surveys continued to signal growth, with the Manufacturing employment sub-index rising further into expansionary territory, but Services declining slightly with continued high rates of turnover, albeit still above 50.0. While Challenger Layoffs saw the second consecutive M/M rise to take the level to its highest since May, the firm reported vaccine mandates as the biggest factor for October layoffs. WIth that in mind, here is what consensus expects when the Bureau of Labor Statistics will release the October employment situation report at 08:30EDT on November 5th: Change in nonfarm Payrolls: exp. 450K, Last 194K China in private nonfarm payrolls: exp. 415K, Last 317K Unemployment rate: exp. 4.7%, Last 4.6% Underemployment rate: exp. Last 8.5% Labor force participation rate: exp. 61.8%, Last 61.6% Average hourly earnings M/M:  exp. 0.4%, Last 0.6% Average hourly earnings Y/Y:  exp. 4.9%, last 4.6% POLICY: The October jobs report comes two days after the Fed made its taper announcement. The FOMC statement said that the taper rate of USD 10bln/m and USD 5bln/m of Treasuries and MBS, respectively, could change if needed. Accordingly, an extreme jobs report in either direction could serve to be the trigger for taper adjustments. Meanwhile, Powell said he wants to see more progress on the employment rate before considering rate lift-off, but interestingly, said maximum employment could be met by the middle of next year (although Powell had no clue just what that means). PAYROLLS: The consensus looks for 450k nonfarm payrolls to be added to the US economy in October after 194k in September, which would be a cooler rate of growth than the three- and six-month average rates at 550k/month and 583k /month, respectively. Aggregating the nonfarm payrolls data since March 2020, 154mln Americans are employed as of September, still down by around 5mln from pre-pandemic levels. Goldman Sachs looks for +525k, above the consensus of +450k. As the bank writes, "after two weak months of job growth, tomorrow’s report reflects the first full month of hiring following the expiration of federal enhanced unemployment benefits. The bank's forecast reflects improving public health, strong labor demand,and a partial education rebound as schools gradually fill positions left open at the start of the school year. On the negative side, the seasonal factors may have evolved to fit the strong October 2020 data, raising the seasonal hurdle into morrow’s report. MEASURES OF SLACK: The Unemployment Rate is expected at 4.7% (prev. 4.8%); Labour Force Participation previously at 61.6% vs 63.2% pre-pandemic; U6 measure of underemployment was previously at 8.5% vs 7.0% prepandemic; Employment-population ratio was previously 58.7% vs 61.1% pre-pandemic. These measures of slack will again be used to provide more insight into how Fed officials are judging labor market progress, with many in recent months noting that they are closely watching the Underemployment Rate, Participation Rate, and the Employment-Population Ratio for a better handle on the level of slack that remains in the economy. Indeed, Powell on Wednesday reiterated his view that the unemployment rate understates the shortfall in employment with ground still to be made. EARNINGS: Average Hourly Earnings expected at +0.4% M/M (prev. +0.6%); Average Hourly Earnings expected at +4.9% Y/Y (prev. +4.6%); Average Workweek Hours expected at 34.8hrs (prev. 34.8hrs). ADP: The ADP National Employment Report was encouraging, showing 571k jobs added in October, beating the expected +400k and a better pace than the prior +523k (revised lower from +568k). The report highlighted “Leisure and hospitality remains one of the biggest beneficiaries to the recovery, yet hiring is still heavily impacted by the trajectory of the pandemic, especially for small firms. Current bottlenecks in hiring should fade as the health conditions tied to the COVID-19 variant continue to improve, setting the stage for solid job gains in the coming months". Note ADP's correlation to ADP lately has been far from perfect, thus should be taken with a pinch of salt when trying to determine the strength of the BLS' NFP. Analysts at Goldman Sachs suggest "The October ADP report is consistent with a strong pace of job gains following the end of the federal enhanced unemployment benefits, and we continue to expect nonfarm payroll growth to rebound in this Friday’s employment report". INITIAL JOBLESS CLAIMS: Initial jobless claims data for the week that coincides with the BLS jobs report survey window saw claims at 291k – down from the 351k for the September jobs data survey window – where analysts said claims had fallen at a faster rate than the bump up induced from Hurricane Ida; the corresponding continuing claims data has fallen to 2.480mln in the October survey period vs 2.802mln in the September survey period. In aggregate, the data continues to point to a declining trend, with the bump in prior months seemingly fading. BUSINESS SURVEYS: The Services and Manufacturing ISM reports showed divergent trends again in October, with the service sector employment sub-index easing to 51.6 from 53.0, signalling growth, but at a slower rate, while the manufacturing equivalent rose for a second month, printing 52.0 from 50.2. On the manufacturing sector, ISM said companies are still struggling to meet labour-management plans, but for a second month there were modest signs of progress: "An increasing percentage of comments noted improvements regarding employment, compared to less than 5 percent in September." It said, "an overwhelming majority of panellists indicate their companies are hiring or attempting to hire," where 90% of comments were about seeking additional staffing, while 28% of those expressed difficulty in filling positions down from "nearly half" in September. "The increasing frequency of comments on turnover rates and retirements continued a trend that began in August," ISM said. Meanwhile, in the services sector, employment activity remained in expansionary territory for a fourth straight month; respondents noted, "Staffing and turnover remain significant challenges" and "Continued difficulty filling positions, especially front-line." Also, "Drivers are in short supply; rate of turnover has increased." CHALLENGER LAYOFFS: Job cuts rose to 22.8k in October, the highest since May, from 17.9k in September, marking the second consecutive M/M rise from the Challenger report. 22% of those cuts were attributed to vaccine mandate refusals. Challenger writes, "Last month, the majority of cuts (5,796) were attributed to plant, store, and unit closing. Workers’ refusing to comply with vaccine mandates accounted for 5,071 cuts in October." It adds, "Since June, when vaccines were widely available to adults, 6,843 workers have been cut or left their jobs for this reason. It is currently the 10th highest reason for job cuts this year." On seasonal hiring, "Through October, Challenger has tracked 939,300 seasonal hiring plans from Retailers, Transportation, and Warehousing companies, up 11% from the 849,350 announced during the 2020 holiday season." Challenger concludes, "It is the most since the firm began tracking these direct announcements in 2012." ARGUING FOR A BETTER-THAN-EXPECTED REPORT End of federal enhanced unemployment benefits. The expiration of federal benefits in some states boosted job-finding rates over the summer, and all remaining such programs expired on September 5. As shown in Exhibit 1, the microdata indicated a cumulative 6pp boost to job-finding probabilities for workers losing $300 top-up payments and a 12pp boost for workers losing all benefits. 4.2mnindividuals stopped receiving unemployment compensation between early September and the October survey week, and we are assuming a boost to October job growth on the order of 250k-400k from this channel. Public health. The Delta wave coincided with a late-summer slowdown in job growth, with leisure and hospitality employment growth slowing sharply in August and September (see Exhibit 2). Covid infection rates peaked just before the September survey period and steadily declined over the following month, and restaurant seatings on Open Table have also rebounded (see same Exhibit). Leisure and hospitality job growth picked up from the +56k average pace of the last two reports to around 200-250k in October. This would still be well below the ~400k monthly pace of June and July. Relatedly, the number of workers on unpaid leave increased by 742k cumulatively in August and September (sa by GS), some of whom likely returned to work in time for the October survey period. Big Data. High-frequency data on the labor market were mixed but generally encouraging between the September and October survey weeks. Four of the five measures tracked indicate an above-consensus payroll gain (see Exhibit 3). However, the Homebase data that directionally flagged last month’s payroll miss indicates a smaller rise ADP. Private sector employment in the ADP report increased by 571k in October, above consensus expectations for a 400k gain and consistent with strong growth in the ADP panel. Employer surveys. The employment components of business surveys generally increased in October. The Goldman services survey employment tracker increased 0.2pt to 54.6 and the manufacturing survey employment tracker increased 1.4pt to 59.0. The Goldman Sachs Analyst Index (GSAI) increased 4.4pt to 72.9 in October, and the employment component rose 2.1pt to a record-high of 74.0. Job availability. The Conference Board labor differential—the difference between the percent of respondents saying jobs are plentiful and those saying jobs are hard to get—increased to 45.0, the highest level since 2000. JOLTS job openings decreased by 659k in August to 10.4mn but remain significantly higher than the pre-pandemic record. Jobless claims. Initial jobless claims fell during the October payroll month, averaging 320k per week vs. 339k in September. Continuing claims in regular state programs decreased 572k from survey week to survey week. ARGUING FOR A WEAKER THAN EXPECTED REPORT: Seasonality. The October seasonal factors may have evolved unfavorably due to the crisis—specifically by fitting to last October’s reopening-driven job surge (privatepayrolls +954k mom sa). Coupled with above-trend October growth in several of the years leading up to the crisis, the seasonal factors may evolve to offset some of the strength we forecast in the BLS employment panel in tomorrow’s report. Vaccine mandates. The vaccine mandates announced by the Biden administration non September 9 may have weighed on October job growth in healthcare and government. But while the mandates apply to roughly 25mn unvaccinated workers,the deadline for compliance is generally not until early January. Accordingly, any payroll growth drag is more likely to materialize in future reports. NEUTRAL/MIXED FACTORS: School reopening. Education payrolls declined 180k in September (public and private), despite all 100 of the largest school districts being open for in-person learning, as some janitors and support staff did not return for the fall school year,perhaps due to labor supply constraints. While schools will eventually fill these open positions, the start-of-year catalyst for a large rise in education jobs has passed, and Goldman assumes only around 50k of job creation in these industries in tomorrow’s report (mom sa). Job cuts. Announced layoffs reported by Challenger, Gray & Christmas rebounded 18% month-over-month in October after increasing by 12% in September (sa by GS).Nonetheless, layoffs remain near the three-decade low on this measure Tyler Durden Thu, 11/04/2021 - 22:25.....»»

Category: blogSource: zerohedgeNov 4th, 2021

Forget the supply chain ruining Christmas. Companies are prepping for a blowout holiday season.

The supply-chain crisis is still causing shortages and delays, but firms see something else. They plan to hire a record amount of holiday workers. A help wanted sign is posted outside of Dunkin Donuts in Downtown Crossing in Boston on June 14, 2021. Jessica Rinaldi/The Boston Globe/Getty Images Companies plan to hire 939,300 seasonal workers for the holidays, according to outplacement firm Challenger Gray & Christmas. That's a record. It would be 11% more than last year and the most in the dataset going back to 2012. The report suggests companies expect the supply-chain crisis to fade before holiday spending booms. The supply-chain crisis will ruin the holiday season, according to some really smart people. But companies are preparing for a completely different Thanksgiving-Christmas-Hanukkah gauntlet: a blowout shopping binge.US retailers, warehousing businesses, and transportation companies plan to hire 939,300 seasonal workers to handle holiday demand, outplacement and business coaching firm Challenger Gray & Christmas said in a report published Thursday. That would be a record. It's up 11% from last year's count and the most planned hires since the company began tracking the data in 2012.The report paints an encouraging picture for the ever-critical holiday season. Supply shortages and shipping bottlenecks continue to plague the US recovery. Online out-of-stock warnings are nearly triple the pre-crisis trend, and prices continue to climb at the fastest pace in more than a decade.The mix of high inflation and supply issues threatened to sap a key driver of the recovery. Consumer spending counts for roughly 70% of economic activity, and the holidays see Americans spend hundreds of billions of dollars. A spending surge would see the economy rebound faster and Americans return to pre-pandemic life sooner. The alternative is a malaise.Experts also expect the supply-chain pressures to ease soon. It's likely the US is "past the peak pinch," Jefferies economists led by Aneta Markowska said in a note published October 15, while one of the world's major warehousing CEOs just called a peak this week. Improvements likely began in mid-October and will continue into 2022, the Jefferies team added.The pace of holiday season hiring, though, is already behind the trends seen over the last two years, according to data from jobs website Indeed. The share of seasonal postings that are "hiring urgently" has also ballooned to 7.2%, as of November 1, from last year's reading of o.6%.As seen in the following chart with data provided by Indeed, the share of seasonal job postings per million as of November 1 is 29% below the share of seasonal job postings per million in 2020. It's also down 26% from 2019. !function(){"use strict";window.addEventListener("message",(function(e){if(void 0!==e.data["datawrapper-height"]){var t=document.querySelectorAll("iframe");for(var a in e.data["datawrapper-height"])for(var r=0;r.....»»

Category: topSource: businessinsiderNov 4th, 2021

Futures Hit Fresh All-Time Highs, Treasuries Rise On Post-Fed Euphoria

Futures Hit Fresh All-Time Highs, Treasuries Rise On Post-Fed Euphoria US equity futures plowed on to record-er highs overnight, propped up by a slew of stellar earnings reports and as investors shrugged off the Federal Reserve's first steps to begin paring its pandemic-era support as Powell reiterated that the central bank can be patient on raising interest rates (even if rate hikes odds pricing in lliftoff in July were virtually unchanged after Powell's announcement). The Fed Chair announced Wednesday that the central bank will start reducing bond purchases, adding that officials won’t flinch from action if warranted by inflation. The U.S. dollar and Treasuries advanced. “There was no dramatic Hulk-like metamorphosis from the Fed last night as they kept close to expectation," DB's Jim Reid said in a note. At 730 a.m. ET, Dow e-minis were down 7 points, or 0.02%, S&P 500 e-minis were up 6.75 points, or 0.15%, having earlier tagged a record high 4,662.5, and Nasdaq 100 e-minis were up 61.25 points, or 0.39%. The U.S. dollar and Treasuries advanced. The S&P 500 and Nasdaq notched record all-time closes for their fifth straight sessions on Wednesday, while the Dow Jones Industrial Average posted a record close for the fourth session in a row. A cheery third quarter earnings season coupled with upbeat commentary about future growth from corporate America has helped Wall Street largely dismiss concerns around rising prices, supply chain snags and a mixed macro-economic picture. A widely expected move by the Fed on announcing its plan to start tapering its monthly bond purchases beginning this month, while sticking to the belief about the "transitory" nature of inflation and waiting for more job growth - before raising interest rates, also helped sentiment. Fed policy makers announced a stimulus-tapering plan as expected, but expressed no hurry to raise benchmark rates even though inflation may run hot for months. While that supported risk-taking in stock markets, a second-day reality check appeared to have emerged in the bond and currency markets. A tug-of-war looked set to continue between dovish central banks and markets pricing in quicker-than-expected rate hikes. Data due at 08:30 a.m. ET is expected to show the number of Americans filing new claims for unemployment benefits fell to a fresh 19-month low last week; It will be followed by a more comprehensive nonfarm payrolls report on Friday: "The risks are now skewed towards the (payrolls data) finally aligning with signals elsewhere in the U.S. economy, after a few months of disappointments," said Jeffrey Halley, senior market analyst, at OANDA. "A number north of 500K could cause equity markets to reconsider ignoring the implications of the Fed taper. Similarly, a low print will keep the lower-for-longer monetary party in equities going well into the night." Elsewhere, U.S. Representative Rick Larsen said on Wednesday his fellow House Democrats could complete votes on President Joe Biden's social spending and infrastructure bills as early as midday on Friday In premarket trading, shares of Qualcomm jumped 8.1% after the chipmaker forecast better-than-expected profit and revenue for its current quarter on soaring demand for chips used in phones, cars and other internet-connected devices. Tesla added 1.9% and was set for a record open, while mega-cap tech titans GAMMA (f/k/a FAAMG) edged higher. Oil firms including Exxon and Chevron rose 0.9% and 0.5%, respectively, tracking crude prices. Biotech darling Moderna imploded as much as 11% after it missed expectations and guided sharply lower. Here are some of the biggest U.S. movers today: Qualcomm (QCOM US) gains 8% premarket as results at the chip giant showed a robust performance against a backdrop of supply constraints, while strength in Android handsets is underpinning growth. Booking (BKNG US) gained 3.7% in post-market trading Wednesday after the company reported gross bookings that beat analysts’ forecasts, as an increase in Covid-19 vaccination rates helped spur a rebound. Roku (ROKU US) falls 7% in premarket after third-quarter results that missed expectations on key metrics for the maker of streaming equipment. Upland Software (UPLD US) slumps 22% in premarket after results, with Jefferies downgrading the stock as it’s the third quarter in a row the firm has not delivered a beat on the top line. Skilz (SKLZ US) drops as much as 13% in premarket after the mobile games platform operator reported a net loss for the third quarter. TDH (DOGZ US) surges as much as 173% in U.S. premarket trading after the pet food firm and meme-trader favorite announced a placement. Magnite (MGNI US) falls 10% in premarket after the advertising solutions firm reported adjusted revenue for the third quarter that lagged behind the average analyst estimate. Qorvo (QRVO US) falls 7% in premarket trading after a sales forecast for the communications systems-maker that fell short of the average analyst estimate. Fastly (FSLY US) jumped 11% in premarket after the infrastructure software maker reported quarterly revenue that surpassed the average analyst estimate after misses in the past two quarters. QuinStreet (QNST US) climbs 21% premarket as the online marketing company raises its full year outlook. European stocks popped higher on the open, then drifted off best levels. The Euro Stoxx 50 rose as much as 0.7% with real estate, oil & gas and healthcare the strongest sectors. Alstria Office REIT AG soared as much as 20% after Brookfield Asset Management Inc. made a bid to take it private. Earlier in the session, Asian stocks rose, headed for their first gain in three days, after the Federal Reserve moved to taper stimulus while saying it will be patient on raising interest rates.  The MSCI Asia Pacific Index climbed as much as 0.7%, driven by gains in technology shares including Tencent, Alibaba and Keyence. Japan and China led gains around the region, with stocks also climbing in Indonesia, Thailand and Hong Kong. The Fed indicated it was alert to inflation risks but still sees them as transitory due to pandemic-related supply and demand imbalances. The S&P 500 climbed to a fresh record high after the Fed comments, pushing its gain for 2021 to 24%, while the Asian benchmark is little changed on the year. “The Fed seems to create market expectations that the decoupling of asset purchases reduction and rate hikes remains intact,” said Banny Lam, head of research at CEB International Investment Corp. “Widening negative real interest rates also provide continued support to Asian equities.” Markets in Singapore, India and Malaysia are closed for holidays In Australia, the S&P/ASX 200 index rose 0.5% to close at 7,428.00, boosted by banks, real estate and technology shares. Eight of the 11 industry groups closed higher. Nib rose after the insurance provider reported premium revenue A$669.5 million, up 8.5% year on year. Domino’s Pizza plunged after the pizza chain operator outlined some inflationary risks for 2022 and flagged weaker sales in Japan. Australia’s bright trade picture was underpinned by strong commodities exports. September trade data revealed the surplus narrowing to A$12.2 billion, after an estimated A$12.4 billion. In New Zealand, the S&P/NZX 50 index fell 0.4% to 12,943.94 In FX, the Bloomberg Dollar Spot Index recovered Wednesday’s drop and advanced 0.3% versus all of its Group-of-10 peers apart from the yen amid speculation that a buoyant U.S. economy will support the currency. The Bloomberg Dollar index erased its losses this week, staying within a bullish technical range it has traded in since June. The Treasury curve bull-flattened with U.S. 10-year Treasury yields falling 3bps to 1.57%. “Dollar-yen looks to be finding some support” as it seems reasonable to expect Treasury yields to trend higher, said Sean Callow, senior currency strategist at Westpac. The Fed “may not be moving any more swiftly than expected to the exit from emergency levels of policy accommodation, but it is still exiting,” Ryan Wang, a U.S. economist at HSBC Holdings Plc, wrote in a note. “This should be enough to support the dollar against a number of currencies where central-bank guidance is more overtly dovish. The continued moderation in global activity is also likely to support the USD.” The euro fell to its weakest level this week and was the worst performer among G-10 currencies; European bond yields fell, led by the short end. The pound fell against a stronger dollar and gained against the euro as investors weighed up the Bank of England’s upcoming monetary policy announcement. The pound’s volatility skew versus the dollar has shifted modestly higher this week ahead of the Bank of England policy decision, yet remains deeply in favor of downside exposure. Norway’s krone extended losses against both the dollar and the euro, even as Norges Bank left its key rate unchanged at 0.25% as expected while reitirating that the policy rate will most likely be raised in December. In rates, curves flattened as 5-, 10- and 30-year bond yields fell at least two basis points each on Thursday, while the two-year rate was little changed. Treasuries were higher with the curve flatter, erasing a portion of Wednesday’s post-FOMC bear-steepening losses. The 10-year yield was richer by ~3bp at 1.57%, outperforming bunds by ~2bp, gilts by ~1bp; Bank of England rate decision priced into overnight swaps is a hike, while analysts favor no change. Treasuries outperformed European bond markets, with stock futures holding Wednesday’s record highs. Bank of England rate decision at 8am ET may deliver first increase since the pandemic. U.S. curves were flatter, unwinding some of Wednesday’s steepening, with 2s10s tighter by ~2bp. In commodities, crude futures rally, recouping over half of Wednesday’s losses. WTI rises 0.9% to regain a $81-handle, Brent adds over 1% before stalling near $83 ahead of OPEC+ gathering. Spot gold holds Asia’s narrow range near $1,775/oz. Base metals are mixed: LME copper and nickel are the best performers; tin and zinc are in the red. Looking at the day ahead now, and the highlight will be the aforementioned BoE meeting, while there’ll also be remarks from ECB President Lagarde, the ECB’s de Cos, Elderson and Schnabel, and BoE Deputy Governor Cunliffe. On the data side, releases include German factory orders for September, the Euro Area October services and composite PMIs and September PPI reading, whilst from the US there’s the September trade balance and the weekly initial jobless claims. Lastly, the OPEC+ group will be meeting to discuss output, and earnings releases today include Moderna, Square, Airbnb, Uber, Duke Energy and Regeneron. Market Snapshot S&P 500 futures up 0.1% to 4,659.50 STOXX Europe 600 up 0.5% to 483.53 MXAP up 0.6% to 199.02 MXAPJ up 0.4% to 647.67 Nikkei up 0.9% to 29,794.37 Topix up 1.2% to 2,055.56 Hang Seng Index up 0.8% to 25,225.19 Shanghai Composite up 0.8% to 3,526.87 Sensex down 0.4% to 59,771.92 Australia S&P/ASX 200 up 0.5% to 7,427.99 Kospi up 0.3% to 2,983.22 German 10Y yield little changed at -0.18% Euro down 0.5% to $1.1551 Brent Futures up 0.8% to $82.57/bbl Gold spot up 0.3% to $1,776.28 U.S. Dollar Index up 0.37% to 94.21 Top Overnight News from Bloomberg The Bank of England will decide Thursday whether to deliver its first interest-rate hike since the pandemic as a divided Monetary Policy Committee grapples with spiking inflation and slowing growth The U.S. is asking OPEC+ to increase output by as much as 800,000 barrels a day, said delegates and diplomats, but the organization is expected to stick to its planned gradual increase, according to a Bloomberg survey Investors are hoping the Federal Reserve can manage the path toward rate hikes as smoothly as its taper announcement, according to strategists, who are cautiously optimistic the coming months will see moderate advances for yields, the dollar and equities. Friday’s labor report is seen as the next flash point for markets, given rates traders remain relatively aggressive about the need for Chair Jerome Powell to avoid being overly patient about hiking borrowing costs Bank of Japan Governor Haruhiko Kuroda and Prime Minister Fumio Kishida helped further shore up the nation’s commitment to its 2% inflation goal and tamp down any lingering speculation of a rethink of the target or tapering plans Having abandoned its experimental bond-yield target two days ago, the Reserve Bank of Australia is now left with the trusty old tools of policy making -- facing traders who still reckon it’s behind the curve Here is a more detailed breakdown of global markets courtesy of Newsquawk Asia-Pac stocks traded higher amid tailwinds from the fresh record highs stateside in the aftermath of the FOMC where the Fed announced it is to begin tapering asset purchases but suggested it was in no rush to hike rates. ASX 200 (+0.5%) was kept afloat by advances in tech and financials but with gains in the index capped after weak Retail Sales data and rising COVID-19 cases for Australia’s most populous states, while the energy sector underperformed after oil prices tumbled 4.5% yesterday due to bearish inventory data and the announcement that Iran nuclear talks will resume on November 29th in Vienna. Nikkei 225 (+0.9%) was buoyed on return from holiday as it coat-tailed on the recent advances in USD/JPY and with Japan mulling easing border controls as soon as next Monday, with Toyota also holding on to gains after a jump in H1 profits and JPY 150bln buyback announcement, although the Nikkei finished well off intraday highs after stalling on approach to the 30k level. Hang Seng (+0.8%) and Shanghai Comp. (+0.8%) conformed to the broad upbeat mood but was slow to start after another substantial liquidity drain by the PBoC despite the suggestion by Chinese press that recent reverse repo action showed stabilisation efforts. In addition, COVID-19 concerns continued to linger with Beijing having suspended inbound trains from 23 regions to curb the spread of the virus, while there was also attention on the geopolitical front after the US Department of Defense warned that China’s nuclear stockpile is outpacing forecasts and with China conducting week-long live-fire drills in the East China Sea. Finally, 10yr JGBs were steady with only a slight pullback seen from yesterday’s advances and with prices largely ignoring the subdued picture in T-notes which were pressured heading into the Fed taper announcement, while JGBs were also kept afloat after the 10yr inflation-indexed auction from Japan which showed an increase in both the b/c and lowest accepted prices. Top Asian News From Pianos to Paint, the Chip Crunch Is Hurting Japan Earnings Toyota’s Swelling Profits Belie Global Auto Parts Shortages EU Lawmakers’ Call for High Level Taiwan Ties Defies China Shimao Halts Retail Investors’ Bids for Local Bonds After Plunge Stocks in Europe hold onto the positive bias (Euro Stoxx 50 +0.4%; Stoxx 600 +0.5%) - which originally emanated from the post-FOMC Wall Street session and later reverberated across APAC. US equity futures have been consolidating following yesterdays post-Powell ramp, with the NQ (+0.4%) outperforming the RTY (+0.2%), ES (+0.1%) and YM (Unch). Back to Europe, bourses are posting broad-based gains in what was a morning doused in European corporate updates, whilst the UK’s FTSE 100 (+0.4%) is on standby for the BoE policy decision (full preview available in the Newsquawk Research Suite). Sectors in Europe are mostly firmer with no real overarching bias. Oil & Gas lead the gains following yesterday’s underperformance and in the run-up to the JMMC/OPEC+ meetings later today. Healthcare meanwhile is boosted by pharma-behemoths Roche (+2.5%) and Novartis (+1.6%) after the firms agreed on a bilateral transaction for the sale of 53.3mln (approximately 33%) Roche bearer shares held by Novartis for a total consideration of USD 20.7bln. This in turn has pushed the SMI (+0.8%) to modestly outperform the region. The Telecoms sector is also buoyed by BT (+5.7%) amid constructive earnings, but gains for the sector are capped Telefonica (-1.6%), who hold a larger sector weighting, following their metrics. The morning has been busy in terms of bank earnings, although the sector is constrained by yield dynamics. Nonetheless, SocGen (+3.3%), ING (+1.1%), Commerzbank (+5.2%) and Credit Suisse (+0.7%) all reported today – with the latter also announcing the exit of its prime brokerage activities and will be shifting its focus on to its wealth management business in a bid to better manage risks. Over to the consumer sector, Sainsbury’s (-4.3%) trundles lower after flagging complications from supply chain issues. Finally, in terms of M&A, Alstria Office (+17.5%) soars after Brookfield offered to buy the Co. for EUR 19.50/shr in cash, a premium to yesterday’s EUR 16.62/shr closing price. Top European News Brookfield Enters German Real Estate Fray With Bid for Alstria Credit Suisse Flags Loss Next Quarter to Cap Year to Forget Novartis Unwinds Roche Ties With $20.7 Billion Stake Sale Aston Martin Counts on $3 Million Valkyrie as SUV Drives Rebound In FX, the Dollar has erased all and more of its initial or knee-jerk declines in wake of the FOMC policy meeting that confirmed the start of QE tapering in a few days' time at the pre-announced pace, but kept clear distance between the unwinding of asset purchase and rate lift-off. However, there was a subtle tweak to the language regarding inflation to indicate less of a transitory assessment and Fed chair Powell refrained from using the ‘t’ word in his press conference before responding to a question by saying that it is also used to convey the view that prices rises caused by bottlenecks and supply-demand imbalances will not leave a legacy of persistently higher inflation. In index terms, a marginally higher peak at 94.280 vs 94.217 at best on Wednesday follows a fractionally higher low of 93.818 vs 93.809 and brings Monday’s w-t-d apex (94.313) back into contention ahead of Challenger Lay-offs, jobless claims, trade data and Q3 labour costs that were highlighted by Powell as a key gauge of tightness in the labour market, which he expected to reach max employment levels by mid-2022. EUR - Mixed Eurozone services and composite PMIs have not afforded the Euro any protection from the aforementioned Greenback revival, while the yield backdrop is also weighing as EGB/UST spreads widen, but Eur/Usd might glean some support from option expiries as 1.1 bn resides at 1.1550 and 1.1525. Moreover, the headline pair has found underlying bids around the half round number and a recent trough comes in at 1.1535 (October 29) ahead of the double 2021 low of 1.1525. GBP - Sterling is also succumbing to the broad Buck bounce, but also treading cautiously into the BoE amidst a marked unwind of rate hike pricing via Short Sterling contracts alongside a recovery in UK debt. Cable is hovering around 1.3620 having pulled up just shy of 1.3700 and options are anticipating an 80 pip break-even for the live MPC event that is far from certain even though ‘markets’ are anticipating a 15 bp hike. Note also, implied volatility on the Eur/Gbp straddle suggests a 43 pip move either way, though the cross may also be prone to movement from the current 0.8491-65 range pending developments in France where Brexit Minister Frost is aiming to untangle crossed lines over fishing licences. NZD/AUD/CAD - The Kiwi, Aussie and Loonie are all weaker vs their US counterpart, with Nzd/Usd and Aud/Usd hovering in the low 0.7100s and 0.7400s respectively, and the latter not far off post-RBA reversal lows after downbeat Q3 retail sales and exports within the overall trade balance overnight. Meanwhile, only a tame rebound in crude prices appears to be capping Usd/Cad around a 1.2400 axis in advance of Canadian trade and the jobs face-off with the US on Friday. CHF/JPY - Relative outperformers, or at least holding up better than other majors in the face of the Dollar rebound, as the Franc meanders between 0.9144-11 irrespective of a deterioration in Swiss consumer sentiment and the Yen contains losses below 114.00 on the return of Japanese markets from Culture Day to a benign bond backdrop overall. Note, hefty option expiry interest may keep Usd/Jpy restrained as 2.1 bn sits at the round number and a further 1.8 bn at 114.30. In commodities, WTI and Brent front-month futures have firmer on the day as the benchmarks clamber off yesterday’s worst levels despite the rampant Dollar and in the run-up to the JMMC and OPEC+ meetings slated for 13:00GMT and 14:00GMT respectively (full preview available in the Newsquawk Research Suite). Markets expect a continuation of the current plan to ease output curbs by 400k BPD/m. Outside calls have been getting louder for the producers to open the taps more than planned amid inflationary feed-through to consumers and company margins, although ministers, including de-facto heads Saudi and Russia, have been putting weight behind current plans, with no pushback seen from members within OPEC+ thus far. Furthermore, the COVID situation in China is deteriorating, hence ministers will likely express a cautious approach. However, the US is asking OPEC+ to increase supply by 600-800k BPD, according to delegates. Note some journalists noted that there are three options the US has offered OPEC+, 1) a 600k BPD hike, 2) an 800k BPD hike and 3) 100% compliance on a 400k BPD hike. Nonetheless, sources suggested OPEC+ is likely to stick to plans to raise output by 400k BPD despite calls from the US for extra supply; adding that the US has plenty of capacity to raise output itself. The US-OPEC+ dynamics will be worth keeping on the radar following this meeting. As a reminder, the US threatened the release of its SPR whilst also refusing to rule out oil export bans – suggesting that all tools are being looked at in a bid to lower prices. It’s also worth being cognizant of the knock-on effect the OPEC+ decision will have on Iranian nuclear talks – scheduled to resume on November 29th – with higher oil prices and a lack of OPEC+ coordination, possibly providing more incentives for the US to offer more concessions. WTI Dec takes aim at USD 82/bbl (vs 79.74/bbl low) at the time of writing whilst Brent Jan extends above USD 83/bbl (vs 81.07/bbl low). Metals markets are less interesting this morning, spot gold and silver are consolidating and trade relatively flat, with the former around USD 1,775/oz and the latter just north of USD 23.50/oz. Meanwhile, LME copper is modestly firmer but trades on either side of USD 9,500/t. US Event Calendar 8:30am: Oct. Initial Jobless Claims, est. 275,000, prior 281,000; Continuing Claims, est. 2.15m, prior 2.24m 8:30am: 3Q Unit Labor Costs, est. 7.0%, prior 1.3%; Nonfarm Productivity, est. -3.1%, prior 2.1% 8:30am: Sept. Trade Balance, est. -$80.2b, prior -$73.3b DB's Jim Reid concludes the overnight wrap This morning I’m actually going to put a suit on for the first time in nearly 20 months. In a way I’ll be upset if it fits me as I’ve been doing my Bryson DeChambeau weights routine for much of this time between pockets of injuries and surgery. However, I suspect 30-40mins 3 or 4 times a week won’t leave my suit too vulnerable to an “Incredible Hulk” moment when I put it on. There was no dramatic Hulk-like metamorphosis from the Fed last night as they kept close to expectations and delivered the $15/bn a month taper that our US econ team and consensus expected (Their full review is here). They pre-announced the purchase pace for November and December, whilst remarking that a similar pace would likely prevail so long as the economy evolves as expected. The Fed maintained the pace of taper would change in step with any changes to the outlook. The statement slightly tweaked the characterisation of inflation, noting that it was expected to be transitory. Chair Powell explained this in the press conference, maintaining the institutional view that elevated inflation was not expected to remain persistent and would return to the Fed’s long-term goal as supply bottlenecks abated and Covid-19 moved to the rear-view mirror. He also admitted the change reflected the reality that inflation has been much higher than they had expected, and recognised the burdens that it created for everyday consumers. The press conference spent a lot of time focusing on the dichotomy between high near-term inflation and the Committee’s assessment of full employment, as the market moves to pricing when lift-off will take place. The Chair noted the Committee will need to be flexible when judging what constitutes full employment, as it is a moving target and has moved since before the pandemic. A key point he returned to multiple times is the Committee would need to judge how the labour market evolves once the Delta variant is well and truly behind us. While stressing patience in evaluating these incoming data, he maintained optionality by also noting the Fed would stand ready to raise rates if inflation were threating to move persistently above the Fed’s goal. This risk management consideration is why they’re maintaining flexibility over the pace of taper. STIR markets were still pricing lift-off to take place sometime in 3Q 2022, and for there to be 2 hikes next year, unchanged from before the meeting. Equities were mostly flat on the day before the announcement but progressively climbed higher during and after the presser, with the S&P 500, Nasdaq, and DJIA finishing the day +0.65%, +1.04%, and +0.29% higher, respectively. 2yr yields increased +1.8bps on the day but closed roughly where they were pre-announcement. 10yr yields were +5.3bps higher on the day though with around +4bps added post FOMC and around +9bps from the early lows when fixed income was rallying across the globe. Elsewhere, 10yr breakevens were wider, increasing +3.6bps to 2.56%. Meanwhile, ECB President Lagarde sounded in no hurry to follow the BoE (preview immediate below for today) and the Fed on rate hikes. In a speech yesterday, she said that their three conditions for raising rates “are very unlikely to be satisfied next year”, as “the outlook for inflation over the medium term remains subdued” in spite of the recent surge in inflation. She re-emphasised the point in an interview almost verbatim later in the day while the Fed presser was ongoing, stating a 2022 hike was very unlikely, offering more forceful pushback of market pricing than she opted for during last week’s Governing Council meeting. Central banks will remain in the spotlight again today thanks to the BoE’s policy decision, which is out at 12:00 London time. Our UK economists are expecting that they’ll deliver their first post-pandemic rate hike of 15bps, taking the Bank Rate up to 0.25%, as well as end their current QE program. Similarly to the US, this comes amidst inflation readings that have persistently surprised to the upside over recent months, with CPI at +3.1% in September, and our economists write that they see the BoE’s forecasts being upgraded to show peak CPI nearer to 5%, remaining above target for nearly all of next year, which is broadly in line with recent comments from Chief Economist Pill in a recent FT interview. For more details see their preview (link here). Against this backdrop of central bank action, we had some solid economic data out of the US yesterday that further supported risk appetite. First, there was the ISM services index for October, which rose to a record high of 66.7 (vs. 62.0 expected), so a very promising sign at the start of Q4, even if the prices paid measure rose to 82.9, which was the highest since 2005. Before that we also had the ADP’s report of private payrolls for October, which showed an increase of +571k (vs. +400k expected), which is the strongest growth since June. That comes ahead of tomorrow’s US jobs report, where our economists are looking for growth of +400k in the headline nonfarm payrolls number, with the unemployment rate ticking down to 4.7%. I’ve been trying to get my mantra of the US more likely travelling down a “growthflation” path (over “stagflation”) into the vernacular. However, I think I’ll need a better term if I want it to rival say “BRICs”! That backdrop of positive data supported European markets ahead of the Fed, where the STOXX 600 advanced +0.35% to hit another all-time high. Sovereign bonds advanced too, with yields on 10yr bunds (-0.3bps), OATs (-0.8bps) and BTPs (-2.4bps) all moving lower, though gilts (+3.6bps) were the exception ahead of the BoE later. The strong data also lifted us off the yield lows of the day as we started with a big bond rally. We also saw some significant movements in energy prices, with European natural gas futures surging back +13.23% yesterday amidst a recent decline in fuel shipments from Russia, whilst both Brent crude (-3.22%) and WTI (-3.63%) oil prices saw a major pullback ahead of today’s OPEC+ meeting. In Asia, most major indices are trading higher this morning, including the Nikkei 225 (+0.74%), the KOSPI (+0.30%), the Hang Seng (+0.27%) and the Shanghai Composite (+0.64%), amid gains in US equities yesterday. S&P 500 futures (+0.01%) are almost unchanged, while the 10y US Treasury is at 1.60% (-0.5bps). Meanwhile on the political scene, the US Democrats were reacting to a bad set of results in Tuesday’s election, after the Republicans won the Virginia governor’s race. However, the New Jersey governor’s race was won by Democrat Gov. Phil Murphy 50.2% vs 49%, but came in much closer than the polls had suggested before the election. Gov. Murphy is the first Democrat to win re-election as governor in the state since 1977. Overall though, since President Biden won those two states in 2020 by 10pts and 16pts, respectively, the results have obviously come as a shock to many Democrats. The situation has strong echoes of 2009, a year after President Obama’s election when the Democrats also had control of the presidency and both houses of Congress, when they were trying to push through Obamacare. That round of elections saw the Republicans win the gubernatorial elections in both Virginia and New Jersey (following Democratic victories on the previous occasion), before the Republicans went onto make sizeable gains in the 2010 midterm elections the following year. There’s still just over a year until President Biden’s first set of midterm elections, but the Democrats will be hoping this doesn’t presage a repeat of those 2010 losses. Lastly on the data front, US factory orders grew by +0.2% in September (vs. +0.1% expected). Separately, the UK’s composite PMI was revised up a point from the flash reading to 57.8, and the US composite PMI was also revised up three-tenths to 57.6. To the day ahead now, and the highlight will be the aforementioned BoE meeting, while there’ll also be remarks from ECB President Lagarde, the ECB’s de Cos, Elderson and Schnabel, and BoE Deputy Governor Cunliffe. On the data side, releases include German factory orders for September, the Euro Area October services and composite PMIs and September PPI reading, whilst from the US there’s the September trade balance and the weekly initial jobless claims. Lastly, the OPEC+ group will be meeting to discuss output, and earnings releases today include Moderna, Square, Airbnb, Uber, Duke Energy and Regeneron. Tyler Durden Thu, 11/04/2021 - 07:53.....»»

Category: blogSource: zerohedgeNov 4th, 2021

Janet Yellen Flip-Flops, Insists Biden"s "BBB" Plan Will Actually Help Suppress Inflation

Janet Yellen Flip-Flops, Insists Biden's 'BBB' Plan Will Actually Help Suppress Inflation Before jetting off to Rome for a weekend G-20 summit in Rome, President Biden on Thursday offered his most detailed outline yet of the Dems new $1.75 trillion social spending/climate changing package, a number that was too small for progressives, who proceeded to block a Thursday vote on the president's "bipartisan" infrastructure bill. Speaking to CNBC from Rome where Yellen is attending the G-20 conference of global leaders with President Biden, the Treasury Secretary delivered her latest pitch in support of the $1.75 trillion social spending-climate agenda, covering a critical area of concern that her boss did his best to avoid during his speech yesterday. That subject? Inflation, which Biden's aides probably felt might be too dangerous for him to discuss due to his cognitive decline. And so Treasury Secretary Yellen was left to pick up the slack with a 0500ET interview on CNBC's Worldwide Exchange. The broad takeaway from her remarks: President Biden's two-party social-spending-climate plan and his "bipartisan" infrastructure plan will actually help lower inflation by reducing costs for households for key services like child-care, health care and other issues. Ultimately, she expects these pressures to subside by the second half of next year. “I don’t think that these investments will drive up inflation at all,” she told CNBC’s Sara Eisen during a live “Worldwide Exchange” interview. Months ago, Yellen was one of the first to warn about the looming inflationary beast. But now she's in charge of taming it, so of course her rhetoric has changed. Biden claimed during his White House address yesterday that "17 Nobel winning economists" had signed off on his framework, claiming it wouldn't push up inflation because it would be - more or less - be fully paid for by tax hikes while creating new economic opportunities. Right now, the bigger driver of inflation is the supply-side shocks like those unveiled by Apple during last night's earnings. "I think supply chain issues are holding our economy back somewhat...it will take a while to boost supply." @SecYellen discusses the impact of the supply chain crunch on the American and global economy, and tells @SaraEisen when to expect some relief: pic.twitter.com/yyzrsOSlmL — Worldwide Exchange (@CNBCWEX) October 29, 2021 Yellen renewed her push for White House spending plans that are unpopular with several factions of Congress and have yet to be approved. But even as the headline CPI number hits its highest level in 30 years, Yellen insisted that Biden's program would be a net benefit for workers. "It will boost the economy’s potential to grow, the economy’s supply potential, which tends to push inflation down, not up," she said. "For many American families experiencing inflation, seeing the prices of gas and other things that they buy rise, what this package will do is lower some of the most important costs, what they pay for health care, for child care. It’s anti-inflationary in that sense as well." The only problem with Yellen's worldview right now is that, as the holiday's approach, GDP is slowing because more than 100 ships are being left floating in a massive logjam making it nearly impossible for companies to obtain the goods they need ahead of the holiday season. As we noted the other day, economists from the American farm bureau warned that the US is headed for its expensive Thanksgiving ever. In effect, the reality of our current economy reflects the exact opposite of what Yellen says is coming just around the corner. "Not only has inflation risen, but growth also has decelerated. Due in large part to supply issues that have left dozens of ships stranded at U.S. ports, the pace of gross domestic product growth slowed to 2% in the third quarter, the slowest rate since the pandemic-induced recession ended in April 2020. Part of the administration’s G-20 agenda will be addressing its pet economic concerns, including the implementation of a global minimum for corporate taxes, as well as addressing climate change and the supply chain issues that have hampered growth and threaten to cut into holiday spending patterns. Yellen said she expects the supply chain issues "will be addressed over the medium term." She called the White House’s Build Back Better program "transformational" in addressing the economy’s needs as the nation seeks to emerge from the Covid-19 pandemic. She insisted that the spending plans are "fully paid for" through tax proposals primarily aimed at higher earners and corporations. "I think it really helps us invest in physical capital. That’s public infrastructure that’s important to productivity growth," she said. "There’s investment in human capital, there’s investment in research and development, the support that families will receive that will help them participate in the labor market." As we quipped on twitter just a week ago, the nabobs running American fiscal and monetary policy have been slowly moving the goalposts vis-a-vis inflation since the start of the year, when Larry Summers first warned about the risks of rising inflation - prompting his fellow academics to response with a mix of derision and mockery. Big finance experts: Q1 2021: There is inflation, but it's transitory Q3 2021: Ok, inflation isn't transitory, but there is no stagflation Q1 2022: Ok, there is stagflation, but this time is different and we are definitely not in the 1970s — zerohedge (@zerohedge) October 22, 2021 Now, Treasury Secretary Janet Yellen has revised the narrative once again: President Biden's massive spending plan won't stoke even more inflation (like other recent COVID-related stmulus plans have) because the Biden plan will help stoke economic growth by allowing more women to participate in the workforce while investing in "public infrastructure." She called the White House’s Build Back Better program “transformational” in addressing the economy’s needs as the nation seeks to emerge from the Covid-19 pandemic. She insisted that the spending plans are “fully paid for” through tax proposals primarily aimed at higher earners and corporations. “I think it really helps us invest in physical capital. That’s public infrastructure that’s important to productivity growth,” she said. “There’s investment in human capital, there’s investment in research and development, the support that families will receive that will help them participate in the labor market.” In the end, she's hopeful that economic growth will accelerate and inflation will recede. But to claim that this is a certainty is magical thinking at best. Over the past few weeks, the debate surrounding the inherent "transitoriness of inflation" has become increasingly fierce, forcing Fed Chairman Jerome Powell to tacitly signale to other senior Fed officials that the word "transitory" shouldn't be used during public remarks, even as  America's current inflationary issues, as the accelerating price pressures have already risen more quickly than the Fed had anticipated (something billionaire PTJ warned is the "biggest threat to society). Yellen said she Friday she expects inflation to ebb over time and return to its longer-run average around 2%, which tracks with the Fed's latest economic projections. The fact that it hasn't subsided as quickly as the Fed had hoped is simply a reflection of the fact that humanity is still caught in an unprecedented pandemic in a globalized world. "I think it’s still fair to use [‘transitory’] in the sense that even if it doesn’t mean a month or two, it means a little bit longer than that. I think it conveys that the pressures that we’re seeing are related to a unique shock to the economy," she said. "As the United States recovers and as vaccinations proceed globally, and the global economic activity revives, that pricing pressure will ease." To be sure, not every business has been harmed or frustrated by inflation. Take hotels, for instance, which have the luxury of re-setting their prices every night.  "If you look at the $3 trillion of incremental savings during COVID, there’s a long way to go to spend it all. Thank you Federal Reserve and the U.S. Congress for fiscal and monetary stimulus," said CEO Christopher Nassetta. But what we would like to know is why Yellen and other top officials at the Fed and elsewhere seem so blithe to throw away their reputations as sober-minded observers of the American economy. There was - not all that long ago - a time when Yellen spoke honestly about the inflationary threat. But now that this threat has apparently surpassed the Fed and Treasury's worst-case scenarios, the Bide Admin and its top economic officials have decided to return to magical thinking while Biden weighs deploying the National Guard to drive trucks laden with goods off boatss. Tyler Durden Fri, 10/29/2021 - 19:05.....»»

Category: blogSource: zerohedgeOct 29th, 2021

UK Faces "Plan B" Peril: COVID Multiplies The Economic Threat

UK Faces 'Plan B' Peril: COVID Multiplies The Economic Threat Authored by Bill Blain via MorningPorridge.com, “T’was the best of times, t’was the worst of times …” The risks of Plan B and a further Covid Lockdown are multiplying. It will clearly impact markets, but the real economic effects of Covid combined with energy costs, supply chains and bleak company earnings forecasts may be pushing us towards stagflation anyway. "How to address the biggest economic shock in 300 years?” asked UK Chancellor Rishi Sunak while doing his pre-budget politicking last week. Whatever you believe or don’t believe about Covid, Sunak is quite right to consider it at the centre of the on-going economic crisis. Markets should factor that reality accordingly – which boils down to a very simple question: how much will Covid force Central Banks and Governments to act to stabilise the global economy? This week pay attention to the UK Budget on Wednesday on how Chancellor Sunak addresses the ongoing critical-care needs of the UK by stepping away from his previous “policy-mistake” sounding mention of austerity spending cuts and tax-rises to make noises about increased “levelling out” spending. Hanging over everything will be the question – how much more economic pain could Covid inflict? It’s a tough question.  A new lockdown would be economic suicide. The UK government plans to ride it out – but the history of the last 19 months says they won’t hesitate to make a U-Turn and institute Plan B if they think their credibility is on the line if the numbers of infections surge and the health service looks swamped. That’s a potential trade: should you sell UK stocks now on the likelihood the government will panic? (And buy-them back almost immediately as the Bank of England stops the noise about a rate cut and QE taper.) But… another question is how much will rising infection numbers cause the economy to contract anyway? How much has confidence already been dented? Here in Blighty, It’s a tale of two headlines: Daily Mirror: Fears of new lockdown Christmas as scientists warn tougher Covid measures needed NOW. Daily Telegraph: Coronavirus cases to slump this winter, say scientists. The papers looks like it boils down to a political split – which may reflect the UK’s national pride in our venerable National Health Service. How much we are prepared to sacrifice to protect the sacred cow of the NHS has become a badge. The left-leaning, Labour supporting Daily Mirror is peddling one set of scientific views, while the daily journal of the Conservative Party, the Torygraph, finds another set of white-coats to quote. What does the threat of Plan B or further lockdowns mean for the UK economy? A quick glance round the motorway service stations we stopped in yesterday shows many more people wearing masks, and I’ll be interested in how many people start working from again as the perceived threat level rises. I wonder how rationally people consider the pandemic. The vector for the rise in infections is schoolchildren being children – their interactions will diminish this week due to mid-term holidays. Back in September, a British Medical Journal report (How is vaccination affecting hospital admissions and deaths?) said 84% of hospital admissions before July had not been vaccinated, although rates of vaccinated infections were rising – their conclusion was simple: unvaccinated people are 3 times as likely to go to hospital and 3 times more likely to die. There is a broad consensus the efficacy of vaccines wanes after 5-6 months – hence booster shots. Maybe the best way to move forward is the Swedish solution of taking personal responsibility to rising infection numbers? However, research in the Guardian earlier this year suggests that strict-lockdown Denmark and easy-going Sweden experienced similar levels of economic dislocation, but Sweden suffered a death rate 5 times higher than Denmark! It’s down to behaviour – Sweden kept the schools, offices, shops and pubs open, but people got careful, stopped going out and kept the kids at home anyway. As the supply chain crisis continues, and energy prices go through the roof, we already know it’s going to be a tough holiday season – retailers warning of toy shortages and price hikes on scarce Turkeys. It impacts consumer behaviour – we all want to spend, but if we can’t because of rising prices and falling incomes, and it feels dangerous to do so – then what effect does that have on spending patterns? It’s got to be negative. We’re seeing the supply chain effects beginning to hit corporate results – an increasing number of firms have been giving lacklustre holiday earnings guidance. Intel took a spanking last week on the back of expectations of a downbeat outlook. Snap got pummelled on the back of a disappointing Q3 number. This week is big for Big Tech earnings – and names from Apple to Amazon could be pummelled by supply chain shortages and the problems these cause meeting holiday demand. Headlines about a downbeat Apple sales forecast have consequences – not just in making global consumers a little more depressed about the future. The very first thing junior economists learn about is multiplier effects – on consequences as lay-people call them. A company finds it can’t get it full allocation of Christmas units to sell so it cuts advertising, cuts stuff overtime and starts planning to cut investment in new plants, warehouses and future spending. Repeat over the whole economy, and with everyone with less in their pockets… as “transitory” inflation feels increasingly permanent, and you’ve got a perfect recipe for stagflation. I often get accused of being a misery-guts and far too negative about the state of the global economy. My own market mantras include the classic: “Things are never as bad as you fear, but never as good as you hope”. Think about that for a moment. Covid caused the greatest economic downspike in 300 years, but the actions of swift government interventions to prop up commerce and fuel consumer spending kept the global economy functional, but wobbly. The markets quickly began to anticipate recovery and upside – yet these remain vulnerable to the news and perceptions around this Coronavirus. Covid fears are multiplying again. Renewed Covid instability on the back of lockdown news from China, Europe, Australasia, wherever, will continue to roil markets. Supply chains remain fractured and the consequences of the virus effects on the global economy will continue. Get used to it… Tyler Durden Tue, 10/26/2021 - 03:30.....»»

Category: blogSource: zerohedgeOct 26th, 2021

Futures Reverse Losses Ahead Of Key CPI Report

Futures Reverse Losses Ahead Of Key CPI Report For the second day in a row, an overnight slump in equity futures sparked by concerns about iPhone sales (with Bloomberg reporting at the close on Tuesday that iPhone 13 production target may be cut by 10mm units due to chip shortages) and driven be more weakness out of China was rescued thanks to aggressive buying around the European open. At 800 a.m. ET, Dow e-minis were up 35 points, or 0.1%, S&P 500 e-minis were up 10.25 points, or 0.24%, and Nasdaq 100 e-minis were up 58.50 points, or 0.4% ahead of the CPI report due at 830am ET. 10Y yields dipped to 1.566%, the dollar was lower and Brent crude dropped below $83. JPMorgan rose as much as 0.8% in premarket trading after the firm’s merger advisory business reported its best quarterly profit. On the other end, Apple dropped 1% lower in premarket trading, a day after Bloomberg reported that the technology giant is likely to slash its projected iPhone 13 production targets for 2021 by as many as 10 million units due to prolonged chip shortages. Here are some of the biggest U.S. movers today: Suppliers Skyworks Solutions (SWKS US), Qorvo (ORVO) and Cirrus Logic (CRUS US) slipped Tuesday postmarket Koss (KOSS US) shares jump 23% in U.S. premarket trading in an extension of Tuesday’s surge after tech giant Apple was rebuffed in two patent challenges against the headphones and speakers firm Qualcomm (QCOM US) shares were up 2.7% in U.S. premarket trading after it announced a $10.0 billion stock buyback International Paper (IP US) in focus after its board authorized a program to acquire up to $2b of the company’s common stock; cut quarterly dividend by 5c per share Smart Global (SGH US) shares rose 2% Tuesday postmarket after it reported adjusted earnings per share for the fourth quarter that beat the average analyst estimate Wayfair (W US) shares slide 1.8% in thin premarket trading after the stock gets tactical downgrade to hold at Jefferies Plug Power (PLUG US) gains 4.9% in premarket trading after Morgan Stanley upgrades the fuel cell systems company to overweight, saying in note that it’s “particularly well positioned” to be a leader in the hydrogen economy Wall Street ended lower in choppy trading on Tuesday, as investors grew jittery in the run-up to earnings amid worries about supply chain problems and higher prices affecting businesses emerging from the pandemic. As we noted last night, the S&P 500 has gone 27 straight days without rallying to a fresh high, the longest such stretch since last September, signaling some fatigue in the dip-buying that pushed the market up from drops earlier this year. Focus now turn to inflation data, due at 0830 a.m. ET, which will cement the imminent arrival of the Fed's taper.  "A strong inflation will only reinforce the expectation that the Fed would start tapering its bond purchases by next month, that's already priced in," said Ipek Ozkardeskaya, senior analyst at Swissquote Bank. "Yet, a too strong figure could boost expectations of an earlier rate hike from the Fed and that is not necessarily fully priced in." The minutes of the Federal Reserve's September policy meeting, due later in the day, will also be scrutinized for signals that the days of crisis-era policy were numbered. Most European equities reverse small opening losses and were last up about 0.5%, as news that German software giant SAP increased its revenue forecast led tech stocks higher. DAX gained 0.7% with tech, retail and travel names leading. FTSE 100, FTSE MIB and IBEX remained in the red. Here are some of the biggest European movers today: Entra shares gain as much as 10% after Balder increases its stake and says it intends to submit a mandatory offer. Spie jumps as much as 10%, the biggest intraday gain in more than a year, after the French company pulled out of the process to buy Engie’s Equans services unit. Man Group rises as much as 8.3% after the world’s largest publicly traded hedge fund announced quarterly record inflows. 3Q21 net inflows were a “clear beat” and confirm pipeline strength, Morgan Stanley said in a note. Barratt Developments climbs as much as 6.3%, with analysts saying the U.K. homebuilder’s update shows current trading is improving. Recticel climbs 15% to its highest level in more than 20 years as the stock resumes trading after the company announced plans to sell its foams unit to Carpenter Co. Bossard Holding rises as much as 9.1% to a record high after the company reported 3Q earnings that ZKB said show strong growth. Sartorius gains as much as 5.9% after Kepler Cheuvreux upgrades to hold from sell and raises its price target, saying it expects “impressive earnings growth” to continue for the lab equipment company. SAP jumps as much as 5% after the German software giant increased its revenue forecast owing to accelerating cloud sales. Just Eat Takeaway slides as much as 5.8% in Amsterdam to the lowest since March 2020 after a 3Q trading update. Analysts flagged disappointing orders as pandemic restrictions eased, and an underwhelming performance in the online food delivery firm’s U.S. market. Earlier in the session, Asian stocks posted a modest advance as investors awaited key inflation data out of the U.S. and Hong Kong closed its equity market because of typhoon Kompasu. The MSCI Asia Pacific Index rose 0.2% after fluctuating between gains and losses, with chip and electronics manufacturers sliding amid concerns over memory chip supply-chain issues and Apple’s iPhone 13 production targets. Hong Kong’s $6.3 trillion market was shut as strong winds and rain hit the financial hub.  “Broader supply tightness continues to be a real issue across a number of end markets,” Morgan Stanley analysts including Katy L. Huberty wrote in a note. The most significant iPhone production bottleneck stems from a “shortage of camera modules for the iPhone 13 Pro/Pro Max due to low utilization rates at a Sharp factory in southern Vietnam,” they added. Wednesday’s direction-less trading illustrated the uncertainty in Asian markets as traders reassess earnings forecasts to factor in inflation and supply chain concerns. U.S. consumer price index figures and FOMC minutes due overnight may move shares. Southeast Asian indexes rose thanks to their cyclical exposure. Singapore’s stock gauge was the top performer in the region, rising to its highest in about two months, before the the nation’s central bank decides on monetary policy on Thursday. Japanese stocks fell for a second day as electronics makers declined amid worries about memory chip supply-chain issues and concerns over Apple’s iPhone 13 production targets.  The Topix index fell 0.4% to 1,973.83 at the 3 p.m. close in Tokyo, while the Nikkei 225 declined 0.3% to 28,140.28. Toyota Motor Corp. contributed the most to the Topix’s loss, decreasing 1.3%. Out of 2,181 shares in the index, 608 rose and 1,489 fell, while 84 were unchanged. Japanese Apple suppliers such as TDK, Murata and Taiyo Yuden slid. The U.S. company is likely to slash its projected iPhone 13 production targets for 2021 by as many as 10 million units as prolonged chip shortages hit its flagship product, according to people with knowledge of the matter Australian stocks closed lower as banks and miners weighed on the index. The S&P/ASX 200 index fell 0.1% to close at 7,272.50, dragged down by banks and miners as iron ore extended its decline. All other subgauges edged higher. a2 Milk surged after its peer Bubs Australia reported growing China sales and pointed to a better outlook for daigou channels. Bank of Queensland tumbled after its earnings release. In New Zealand, the S&P/NZX 50 index rose 0.2% to 13,025.18. In rates, Treasuries extended Tuesday’s bull-flattening gains, led by gilts and, to a lesser extent, bunds. Treasuries were richer by ~2bps across the long-end of the curve, flattening 5s30s by about that much; U.K. 30-year yield is down nearly 7bp, with same curve flatter by ~6bp. Long-end gilts outperform in a broad-based bull flattening move that pushed 30y gilt yields down ~7bps back near 1.38%. Peripheral spreads widen slightly to Germany. Cash USTs bull flatten but trade cheaper by ~2bps across the back end to both bunds and gilt ahead of today’s CPI release. In FX, the Bloomberg Dollar Spot Index fell by as much as 0.2% and the greenback weakened against all of its Group-of-10 peers; the Treasury curve flattened, mainly via falling yields in the long- end, The euro advanced to trade at around $1.1550 and the Bund yield curve flattened, with German bonds outperforming Treasuries. The euro’s volatility skew versus the dollar shows investors remain bearish the common currency as policy divergence between the Federal Reserve and the European Central Bank remains for now. The pound advanced with traders shrugging off the U.K.’s weaker-than-expected economic growth performance in August. Australia’s sovereign yield curve flattened for a second day while the currency underperformed its New Zealand peer amid a drop in iron ore prices. The yen steadied after four days of declines. In commodities, crude futures hold a narrow range with WTI near $80, Brent dipping slightly below $83. Spot gold pops back toward Tuesday’s best levels near $1,770/oz. Base metals are in the green with most of the complex up at least 1%. To the day ahead now, and the main data highlight will be the aforementioned US CPI reading for September, while today will also see the most recent FOMC meeting minutes released. Other data releases include UK GDP for August and Euro Area industrial production for August. Central bank speakers include BoE Deputy Governor Cunliffe, the ECB’s Visco and the Fed’s Brainard. Finally, earnings releases include JPMorgan Chase, BlackRock and Delta Air Lines. Market Snapshot S&P 500 futures up 0.1% to 4,346.25 STOXX Europe 600 up 0.4% to 459.04 MXAP up 0.2% to 194.60 MXAPJ up 0.4% to 638.16 Nikkei down 0.3% to 28,140.28 Topix down 0.4% to 1,973.83 Hang Seng Index down 1.4% to 24,962.59 Shanghai Composite up 0.4% to 3,561.76 Sensex up 0.8% to 60,782.71 Australia S&P/ASX 200 down 0.1% to 7,272.54 Kospi up 1.0% to 2,944.41 Brent Futures down 0.4% to $83.12/bbl Gold spot up 0.5% to $1,768.13 U.S. Dollar Index down 0.23% to 94.30 German 10Y yield fell 4.2 bps to -0.127% Euro little changed at $1.1553 Brent Futures down 0.4% to $83.12/bbl Top Overnight News from Bloomberg Vladimir Putin wants to press the EU to rewrite some of the rules of its gas market after years of ignoring Moscow’s concerns, to tilt them away from spot-pricing toward long-term contracts favored by Russia’s state run Gazprom, according to two people with knowledge of the matter. Russia is also seeking rapid certification of the controversial Nord Stream 2 pipeline to Germany to boost gas deliveries, they said. Federal Reserve Vice Chairman for Supervision Randal Quarles will be removed from his role as the main watchdog of Wall Street lenders after his title officially expires this week. The EU will offer a new package of concessions to the U.K. that would ease trade barriers in Northern Ireland, as the two sides prepare for a new round of contentious Brexit negotiations. U.K. Chancellor of the Exchequer Rishi Sunak is on course to raise taxes and cut spending to control the budget deficit, while BoE Governor Andrew Bailey has warned interest rates are likely to rise in the coming months to curb a rapid surge in prices. Together, those moves would mark a simultaneous major tightening of both policy levers just months after the biggest recession in a century -- an unprecedented move since the BoE gained independence in 1997. Peter Kazimir, a member of the ECB’s Governing Council, was charged with bribery in Slovakia. Kazimir, who heads the country’s central bank, rejected the allegations A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were mixed following the choppy performance stateside with global risk appetite cautious amid the rate hike bets in US and heading into key events including US CPI and FOMC Minutes, while there were also mild headwinds for US equity futures after the closing bell on reports that Apple is set to reduce output of iPhones by 10mln from what was initially planned amid the chip shortage. ASX 200 (unch.) was little changed as gains in gold miners, energy and tech were offset by losses in financials and the broader mining sector, with softer Westpac Consumer Confidence also limiting upside in the index. Nikkei 225 (-0.3%) was pressured at the open as participants digested mixed Machinery Orders data which showed the largest M/M contraction since February 2018 and prompted the government to cut its assessment on machinery orders, although the benchmark index gradually retraced most its losses after finding support around the 28k level and amid the recent favourable currency moves. Shanghai Comp. (+0.4%) also declined as participants digested mixed Chinese trade data in which exports topped estimates but imports disappointed and with Hong Kong markets kept shut due to a typhoon warning. Finally, 10yr JGBs were steady with price action contained after the curve flattening stateside and tentative mood heading to upcoming risk events, although prices were kept afloat amid the BoJ’s purchases in the market for around JPY 1tln of JGBs predominantly focused on 1-3yr and 5-10yr maturities. Top Asian News Gold Edges Higher on Weaker Dollar Before U.S. Inflation Report RBA Rate Hike Expectations Too Aggressive, TD Ameritrade Says LG Electronics Has Series of Stock-Target Cuts After Profit Miss The mood across European stocks has improved from the subdued cash open (Euro Stoxx 50 +0.5%; Stoxx 600 +0.3%) despite a distinct lack of newsflow and heading into the official start of US earnings season, US CPI and FOMC minutes. US equity futures have also nursed earlier losses and trade in modest positive territory across the board, with the NQ (+0.5%) narrowly outperforming owing to the intraday fall in yields, alongside the sectorial outperformance seen in European tech amid tech giant SAP (+4.7%) upgrading its full FY outlook, reflecting the strong business performance which is expected to continue to accelerate cloud revenue growth. As such, the DAX 40 (+0.7%) outperformed since the cash open, whilst the FTSE 100 (-0.2%) is weighed on by underperformance in its heavyweight Banking and Basic Resources sectors amid a decline in yields and hefty losses in iron ore prices. Elsewhere, the CAC 40 (+0.3%) is buoyed by LMVH (+2.0%) after the luxury name topped revenue forecasts and subsequently lifted the Retail sector in tandem. Overall, sectors are mixed with no clear bias. In terms of individual movers, Volkswagen (+3.5%) was bolstered amid Handelsblatt reports in which the Co was said to be cutting some 30k jobs as costs are too high vs competitors, whilst separate sources suggested the automaker is said to be mulling spinning off its Battery Cell and charging unit. Chipmakers meanwhile see mixed fortunes in the aftermath of sources which suggested Apple (-0.7% pre-market) is said to be slashing output amid the chip crunch. Top European News The Hut Shares Swing as Strategy Day Feeds Investor Concern U.K. Economy Grows Less Than Expected as Services Disappoint Man Group Gets $5.3 Billion to Lift Assets to Another Record Jeff Ubben and Singapore’s GIC Back $830 Million Fertiglobe IPO In FX, the Dollar looks somewhat deflated or jaded after yesterday’s exertions when it carved out several fresh 2021 highs against rival currencies and a new record peak vs the increasingly beleaguered Turkish Lira. In index terms, a bout of profit taking, consolidation and position paring seems to have prompted a pull-back from 94.563 into a marginally lower 94.533-246 range awaiting potentially pivotal US inflation data, more Fed rhetoric and FOMC minutes from the last policy meeting that may provide more clues or clarity about prospects for near term tapering. NZD/GBP - Both taking advantage of the Greenback’s aforementioned loss of momentum, but also deriving impetus from favourable crosswinds closer to home as the Kiwi briefly revisited 0.6950+ terrain and Aud/Nzd retreats quite sharply from 1.0600+, while Cable has rebounded through 1.3600 again as Eur/Gbp retests support south of 0.8480 yet again, or 1.1800 as a reciprocal. From a fundamental perspective, Nzd/Usd may also be gleaning leverage from the more forward-looking Activity Outlook component of ANZ’s preliminary business survey for October rather than a decline in sentiment, and Sterling could be content with reported concessions from the EU on NI customs in an effort to resolve the Protocol impasse. EUR/CAD/AUD/CHF - Also reclaiming some lost ground against the Buck, with the Euro rebounding from around 1.1525 to circa 1.1560, though not technically stable until closer to 1.1600 having faded ahead of the round number on several occasions in the last week. Meanwhile, the Loonie is straddling 1.2450 in keeping with WTI crude on the Usd 80/brl handle, the Aussie is pivoting 0.7350, but capped in wake of a dip in Westpac consumer confidence, and the Franc is rotating either side of 0.9300. JPY - The Yen seems rather reluctant to get too carried away by the Dollar’s demise or join the broad retracement given so many false dawns of late before further depreciation and a continuation of its losing streak. Indeed, the latest recovery has stalled around 113.35 and Usd/Jpy appears firmly underpinned following significantly weaker than expected Japanese m/m machinery orders overnight. SCANDI/EM - Not much upside in the Sek via firmer Swedish money market inflation expectations and perhaps due to the fact that actual CPI data preceded the latest survey and topped consensus, but the Cnh and Cny are firmer on the back of China’s much wider than forecast trade surplus that was bloated by exports exceeding estimates by some distance in contrast to imports. Elsewhere, further hawkish guidance for the Czk as CNB’s Benda contends that high inflation warrants relatively rapid tightening, but the Try has not derived a lot of support from reports that Turkey is in talks to secure extra gas supplies to meet demand this winter, according to a Minister, and perhaps due to more sabre-rattling from the Foreign Ministry over Syria with accusations aimed at the US and Russia. In commodities, WTI and Brent front-month futures see another choppy session within recent and elevated levels – with the former around USD 80.50/bbl (80.79-79.87/bbl) and the latter around 83.35/bbl (83.50-82.65/bbl range). The complex saw some downside in conjunction with jawboning from the Iraqi Energy Minster, who state oil price is unlikely to increase further, whilst at the same time, the Gazprom CEO suggested that the oil market is overheated. Nonetheless, prices saw a rebound from those lows heading into the US inflation figure, whilst the OPEC MOMR is scheduled for 12:00BST/07:00EDT. Although the release will not likely sway prices amidst the myriad of risk events on the docket, it will offer a peek into OPEC's current thinking on the market. As a reminder, the weekly Private Inventory report will be released tonight, with the DoE's slated for tomorrow on account of Monday's Columbus Day holiday. Gas prices, meanwhile, are relatively stable. Russia's Kremlin noted gas supplies have increased to their maximum possible levels, whilst Gazprom is sticking to its contractual obligations, and there can be no gas supplies beyond those obligations. Over to metals, spot gold and silver move in tandem with the receding Buck, with spot gold inching closer towards its 50 DMA at 1,776/oz (vs low 1,759.50/oz). In terms of base metals, LME copper has regained a footing above USD 9,500/t as stocks grind higher. Conversely, iron ore and rebar futures overnight fell some 6%, with overnight headlines suggesting that China has required steel mills to cut winter output. Further from the supply side, Nyrstar is to limit European smelter output by up to 50% due to energy costs. Nyrstar has a market-leading position in zinc and lead. LME zinc hit the highest levels since March 2018 following the headlines US Event Calendar 8:30am: Sept. CPI YoY, est. 5.3%, prior 5.3%; MoM, est. 0.3%, prior 0.3% 8:30am: Sept. CPI Ex Food and Energy YoY, est. 4.0%, prior 4.0%; MoM, est. 0.2%, prior 0.1% 8:30am: Sept. Real Avg Weekly Earnings YoY, prior -0.9%, revised -1.4% 2pm: Sept. FOMC Meeting Minutes DB's Jim Reid concludes the overnight wrap So tonight it’s my first ever “live” parents evening and then James Bond via Wagamama. Given my daughter (6) is the eldest in her year and the twins (4) the youngest (plus additional youth for being premature), I’m expecting my daughter to be at least above average but for my boys to only just about be vaguely aware of what’s going on around them. Poor things. For those reading yesterday, the Cameo video of Nadia Comanenci went down a storm, especially when she mentioned our kids’ names, but the fact that there was no birthday cake wasn’t as popular. So I played a very complicated, defence splitting 80 yard through ball but missed an open goal. Anyway ahead of Bond tonight, with all this inflation about I’m half expecting him to be known as 008 going forward. The next installment of the US prices saga will be seen today with US CPI at 13:30 London time. This is an important one, since it’s the last CPI number the Fed will have ahead of their next policy decision just 3 weeks from now, where investors are awaiting a potential announcement on tapering asset purchases. Interestingly the August reading last month was the first time so far this year that the month-on-month measure was actually beneath the consensus expectation on Bloomberg, with the +0.3% growth being the slowest since January. Famous last words but this report might not be the most interesting since it may be a bit backward looking given WTI oil is up c.7.5% in October alone. In addition, used cars were up +5.4% in September after falling in late summer. So given the 2-3 month lag for this to filter through into the CPI we won’t be getting the full picture today. I loved the fact from his speech last night that the Fed’s Bostic has introduced a “transitory” swear jar in his office. More on the Fedspeak later. In terms of what to expect this time around though, our US economists are forecasting month-on-month growth of +0.41% in the headline CPI, and +0.27% for core, which would take the year-on-year rates to +5.4% for headline and +4.1% for core. Ahead of this, inflation expectations softened late in the day as Fed officials were on the hawkish side. The US 10yr breakeven dropped -1.9bps to 2.49% after trading at 2.527% earlier in the session. This is still the 3rd highest closing level since May, and remains only 7bps off its post-2013 closing high. Earlier, inflation expectations continued to climb in Europe, where the 5y5y forward inflation swap hit a post-2015 high of 1.84%. Also on inflation, the New York Fed released their latest Survey of Consumer Expectations later in the European session, which showed that 1-year ahead inflation expectations were now at +5.3%, which is the highest level since the survey began in 2013, whilst 3-year ahead expectations were now at +4.2%, which was also a high for the series. The late rally in US breakevens, coupled with lower real yields (-1.6bps) meant that the 10yr Treasury yield ended the session down -3.5bps at 1.577% - their biggest one day drop in just over 3 weeks. There was a decent flattening of the yield curve, with the 2yr yield up +2.0bps to 0.34%, its highest level since the pandemic began as the market priced in more near-term Fed rate hikes. In the Euro Area it was a very different story however, with 10yr yields rising to their highest level in months, including among bunds (+3.5bps), OATs (+2.9bps) and BTPs (+1.0bps). That rise in the 10yr bund yield left it at -0.09%, taking it above its recent peak earlier this year to its highest closing level since May 2019. Interestingly gilts (-4.0bps) massively out-performed after having aggressively sold off for the last week or so. Against this backdrop, equity markets struggled for direction as they awaited the CPI reading and the start of the US Q3 earnings season today. By the close of trade, the S&P 500 (-0.24%) and the STOXX 600 (-0.07%) had both posted modest losses as they awaited the next catalyst. Defensive sectors were the outperformers on both sides of the Atlantic. Real estate (+1.34%) and utilities (+0.67%) were among the best performing US stocks, though some notable “reopening” industries outperformed as well including airlines (+0.83%), hotels & leisure (+0.51%). News came out after the US close regarding the global chip shortage, with Bloomberg reporting that Apple, who are one of the largest buyers of chips, would revise down their iPhone 13 production targets for 2021 by 10 million units. Recent rumblings from chip producers suggest that the problems are expected to persist, which will make central bank decisions even more complicated over the coming weeks as they grapple with increasing supply-side constraints that push up inflation whilst threatening to undermine the recovery. Speaking of central bankers, Vice Chair Clarida echoed his previous remarks and other communications from the so-called “core” of the FOMC that the current bout of inflation would prove largely transitory and that underlying trend inflation was hovering close to 2%, while admitting that risks were tilted towards higher inflation. Atlanta Fed President Bostic took a much harder line though, noting that price pressures were expanding beyond the pandemic-impacted sectors, and measures of inflation expectations were creeping higher. Specifically, he said, “it is becoming increasingly clear that the feature of this episode that has animated price pressures — mainly the intense and widespread supply-chain disruptions — will not be brief.” His ‘transitory swear word jar’ for his office was considerably more full by the end of his speech. As highlighted above, while President Bostic spoke US 10yr breakevens dropped -2bps and then continued declining through the New York afternoon. In what is likely to be Clarida’s last consequential decision on monetary policy before his term expires, he noted it may soon be time to start a tapering program that ends in the middle of next year, in line with our US economics team’s call for a November taper announcement. In that vein, our US economists have updated their forecasts for rate hikes yesterday, and now see liftoff taking place in December 2022, followed by 3 rate increases in each of 2023 and 2024. That comes in light of supply disruptions lifting inflation, a likely rise in inflation expectations (which are sensitive to oil prices), and measures of labour market slack continuing to outperform. For those interested, you can read a more in-depth discussion of this here. Turning to commodities, yesterday saw a stabilisation in prices after the rapid gains on Monday, with WTI (+0.15%) and Brent Crude (-0.27%) oil prices seeing only modest movements either way, whilst iron ore prices in Singapore were down -3.45%. That said it wasn’t entirely bad news for the asset class, with Chinese coal futures (+4.45%) hitting fresh records, just as aluminium prices on the London Metal Exchange (+0.13%) eked out another gain to hit a new post-2008 high. Overnight in Asia, equity markets are seeing a mixed performance with the KOSPI (+1.24%) posting decent gains, whereas the CSI (-0.06%), Nikkei (-0.22%) and Shanghai Composite (-0.69%) have all lost ground. The KOSPI’s strength came about on the back of a decent jobs report, with South Korea adding +671k relative to a year earlier, the most since March 2014. The Hong Kong Exchange is closed however due to the impact of typhoon Kompasu. Separately, coal futures in China are up another +8.00% this morning, so no sign of those price pressures abating just yet following recent floods. Meanwhile, US equity futures are pointing to little change later on, with those on the S&P 500 down -0.12%. Here in Europe, we had some fresh Brexit headlines after the UK’s Brexit minister, David Frost, said that the Northern Ireland Protocol “is not working” and was not protecting the Good Friday Agreement. He said that he was sharing a new amended Protocol with the EU, which comes ahead of the release of the EU’s own proposals on the issue today. But Frost also said that “if we are going to get a solution we must, collectively, deliver significant change”, and that Article 16 which allows either side to take unilateral safeguard measures could be used “if necessary”. Elsewhere yesterday, the IMF marginally downgraded their global growth forecast for this year, now seeing +5.9% growth in 2021 (vs. +6.0% in July), whilst their 2022 forecast was maintained at +4.9%. This masked some serious differences between countries however, with the US downgraded to +6.0% in 2021 (vs. +7.0% in July), whereas Italy’s was upgraded to +5.8% (vs. +4.9% in July). On inflation they said that risks were skewed to the upside, and upgraded their forecasts for the advanced economies to +2.8% in 2021, and to +2.3% in 2022. Looking at yesterday’s data, US job openings declined in August for the first time this year, falling to 10.439m (vs. 10.954m expected). But the quits rate hit a record of 2.9%, well above its pre-Covid levels of 2.3-2.4%. Here in the UK, data showed the number of payroll employees rose by +207k in September, while the unemployment rate for the three months to August fell to 4.5%, in line with expectations. And in a further sign of supply-side issues, the number of job vacancies in the three months to September hit a record high of 1.102m. Separately in Germany, the ZEW survey results came in beneath expectations, with the current situation declining to 21.6 (vs. 28.0 expected), whilst expectations fell to 22.3 (vs. 23.5 expected), its lowest level since March 2020. To the day ahead now, and the main data highlight will be the aforementioned US CPI reading for September, while today will also see the most recent FOMC meeting minutes released. Other data releases include UK GDP for August and Euro Area industrial production for August. Central bank speakers include BoE Deputy Governor Cunliffe, the ECB’s Visco and the Fed’s Brainard. Finally, earnings releases include JPMorgan Chase, BlackRock and Delta Air Lines. Tyler Durden Wed, 10/13/2021 - 08:13.....»»

Category: blogSource: zerohedgeOct 13th, 2021

Futures Rebound From Overnight Slide As Oil Keeps Rising

Futures Rebound From Overnight Slide As Oil Keeps Rising US equity-index futures erased earlier declines, rebounding from a loss of as much as 0.8% helped by the start of the European session and easing mounting concerns about stagflation from rising energy prices, signs of widening regulatory scrutiny by China, and the upcoming third-quarter earnings which is expected to post a sharply slower pace of growth and beats than recent record quarters. At 730am ET, Dow e-minis were up 5 points, or 0.1%, S&P 500 e-minis were up 7.25 points, or 0.16%, and Nasdaq 100 e-minis were up 46.75points, or 0.31%. Oiil rose 0.3% to $83.86/bbl while the dollar dipped and 10Y yield drifted back under 1.60%. Gains in tech stocks kept Nasdaq futures afloat on Tuesday, while energy names rose as Brent resumed gains, trading around $84/bbl on expectations that a power crisis from Asia to Europe will lift demand and tighten global balances. Higher oil prices and supply chain disruptions have set off alarm bells for businesses and consumers ahead of the third-quarter reporting season that kicks off on Wednesday with JPMorgan results.  "We believe that market participants could stay concerned over high energy prices translating into further acceleration in inflation, and thereby faster tightening by major central banks," said Charalambos Pissouros, head of research at JFD Group. In the pre-market, Tesla rose 0.7% after data showed the electric vehicle maker sold 56,006 China-made vehicles in September, the highest since it started production in Shanghai about two years ago. Oil firms including Exxon Mobil and Chevron Corp gained 0.1% and 0.3%, respectively, as Brent crude hit a near-three year high on energy crunch fears. Here are the notable movers: China’s Internet sector is one of the “most undervalued” in Morningstar’s coverage, says Ivan Su, an analyst, adding that Tencent (TCEHY US) and Netease (NTES US) are top picks MGM Resorts (MGM US) rises 2% in U.S. premarket trading after stock was upgraded to outperform from neutral and price target more than doubled to a Street-high $68 at Credit Suisse Quanterix (QTRX US) jumped 20% in Monday postmarket trading after the digital-health company announced that its Simoa phospho-Tau 181 blood test has been granted breakthrough device designation by the U.S. FDA as an aid in diagnostic evaluation of Alzheimer’s disease Relay Therapeutics (RLAY US) fell 7% in Monday postmarket trading after launching a $350 million share sale via Goldman Sachs, JPMorgan, Cowen, Guggenheim Securities Westwater Resources (WWR US) rose as much as 26% in Monday postmarket trading after its board of directors approved construction of the first phase of a production facility in Alabama for battery ready graphite products TechnipFMC (FTI US) in focus after co. was awarded a substantial long-term charter and services contract by Petrobras for the pipelay support vessel Coral do Atlântico Fastenal, which was one of the first companies to report Q3 earnings, saw its shares fall 2.4% in premarket trading on Tuesday, after the industrial distributor said the Covid-related boost was fading. The company said growth in the quarter was slightly limited by either slower expansion or contraction in sales of certain products related to the pandemic, when compared to the previous year quarter. While there was an uptick in sales of certain Covid-related supplies, the unit price of many products was down significantly, the company said in a statement.  Third-quarter sales and profit were in line with the average analyst estimate "While investors want to believe the narrative that stock markets can continue to move higher, this belief is bumping up against the reality of how the continued rise in energy prices, as well as supply-chain pressures, are likely to impact company profit margins,” said Michael Hewson, chief market analyst at CMC Markets in London. In Europe, losses led by basic resources companies and carmakers outweighed gains for utilities and tech stocks, pulling the Stoxx Europe 600 Index down 0.1%. Metals miner Rio Tinto was among the worst performers, dropping 2.7%. European equities climbed off the lows having lost over 1% in early trade. Euro Stoxx 600 was down -0.35% after dropping as much as 1.3% initially, led by basic resources companies and carmakers outweighed gains for utilities and tech stocks. The DAX is off 0.3%, FTSE 100 underperforms in a quiet morning for news flow. Miners, banks and autos are the weakest sectors after China reported a sharp drop in auto sales; utilities, tech and real estate post modest gains. European tech stocks slide, with the Stoxx Tech Index dropping as much as 1.4% in third straight decline, as another broker downgrades TeamViewer, while Prosus and chip stocks come under pressure. TeamViewer shares fall as much as 5.1% after Deutsche Bank downgrades the remote software maker to hold from buy following recent guidance cut. Asian stocks fell, halting a three-day rally as uncertainty over earnings deepened amid elevated inflation, higher bond yields and the risk of a widening Chinese crackdown on private industry. The MSCI Asia Pacific Index slid as much as 1.2%, led by technology and communication shares. Alibaba plunged 3.9% following a rally over the past week, while Samsung Electronics tumbled to a 10-month low after at least five brokers slashed their price targets, as China’s power crisis is seen worsening supply-chain disruptions. “Given the run-up in tech so far, it’s not difficult for investors to harvest profits first before figuring out if techs can maintain their growth when yields rise,” said Justin Tang, head of Asian research at United First Partners. Shares in Hong Kong and the mainland were among the worst performers after Chinese authorities kicked off an inspection of the nation’s financial regulators and biggest state-run banks in an effort to root out corruption. The MSCI Asia Pacific Index is down 12% from a February peak, with a global energy crunch lifting input prices and the debt crisis at China Evergrande Group weighing on the financial sector. Investors are waiting to see how this impacts earnings, according to Jun Rong Yeap, a market strategist at IG Asia.  “Increasing concerns on inflation potentially being more persistent have started to show up,” he said. “This comes along with the global risk-off mood overnight, as investors look for greater clarity from the earnings season on how margins are holding up, along with the corporate economic outlook.” Japan’s Topix index also fell, halting a two-day rally, amid concerns about a global energy crunch and the possibility of a widening Chinese crackdown on private industry. The Topix fell 0.7% to 1,982.68 at the 3 p.m. close in Tokyo, while the Nikkei 225 declined 0.9% to 28,230.61. SoftBank Group Corp. contributed the most to the Topix’s drop, decreasing 2.4%. Out of 2,181 shares in the index, 373 rose and 1,743 fell, while 65 were unchanged. “Market conditions were improving yesterday, but pushing for higher prices got tough when the Nikkei 225 approached its key moving averages,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management.  The Nikkei’s 75-day moving average is about 28,500 and the 200-day moving average is about 28,700, so some investors were taking profits, he said. Japan’s spot power price increased to the highest level in nine months, as the global energy crisis intensifies competition for generation fuel before the winter heating season. In FX, the Bloomberg Dollar Spot Index reversed an overnight gain as the greenback slipped against all of its Group-of-10 peers. Risk sensitive Scandinavian currencies led gains, followed by the New Zealand and Australian dollars. The pound was little changed while speculators ramped up wagers on sterling’s decline at the fastest rate in more than two years, Commodity Futures Trading Commission data show, further breaking the link between anticipated rate increases and currency gains. The yen steadied after three days of declines. The Turkish lira extended its slide to a record low after President Recep Tayyip Erdogan hinted at a possible military offensive into neighboring Syria. Fixed-income was quiet by recent standards: Treasury futures were off lows of the day, improving as S&P 500 futures pare losses during European morning, and as cash trading resumed after Monday’s holiday. The 10Y yield dipped from 1.61% to 1.59% after hitting 1.65% based on futures pricing on Monday, but the big mover was on the front end, where 2-year yields climbed as much as 4bps to 0.35% the highest level since March 2020 reflecting increased expectations for Fed rate hikes, as Treasury cash trading resumed globally. Two coupon auctions during U.S. session -- of 3-and 10-year notes -- may weigh on Treasuries however.  Treasury and gilt curves bull-flatten with gilts outperforming at the back end. Bunds have a bull-steepening bias but ranges are narrow. Peripheral spreads tighten a touch with long-end Italy outperforming peers. In commodities, Crude futures drift higher in muted trade. WTI is up 0.25% near $80.70, Brent trades just shy of a $84-handle. Spot gold remains range-bound near $1,760/oz. Base metals are mixed with LME lead and nickel holding small gains, copper and aluminum in the red. Looking at the day ahead, central bank speakers include the Fed’s Vice Chair Clarida,Bostic and Barkin, as well as theECB’s President Lagarde, Makhlouf, Knot, Villeroy, Lane and Elderson. Data highlights from the US include the JOLTS job openings for August, and the NFIB’s small business optimism index for September which came in at 99.1, below last month's 100.1. The IMF will be releasing their latest World Economic Outlook. Market Snapshot S&P 500 futures little changed at 4,351.50 STOXX Europe 600 down 0.6% to 454.90 MXAP down 0.9% to 194.41 MXAPJ down 1.0% to 635.42 Nikkei down 0.9% to 28,230.61 Topix down 0.7% to 1,982.68 Hang Seng Index down 1.4% to 24,962.59 Shanghai Composite down 1.2% to 3,546.94 Sensex little changed at 60,149.85 Australia S&P/ASX 200 down 0.3% to 7,280.73 Kospi down 1.4% to 2,916.38 German 10Y yield fell 6 bps to -0.113% Euro up 0.1% to $1.1565 Brent Futures up 0.4% to $84.01/bbl Gold spot up 0.2% to $1,757.84 U.S. Dollar Index little changed at 94.29 Top Overnight Headlines from Bloomberg The EU drew record demand for its debut green bond, in the sector’s biggest-ever offering. The bloc registered more than 135 billion euros ($156 billion) in orders Tuesday for a sale of 12 billion euros of securities maturing in 2037 Investors are dumping negative-yielding debt at the fastest pace since February as concerns about inflation and reduced central bank stimulus propel global interest rates higher French President Emmanuel Macron unveiled a 30-billion-euro ($35 billion) plan to create the high-tech champions of the future and reverse years of industrial decline in the euro area’s second-largest economy British companies pushed the number of workers on payrolls above pre-coronavirus levels last month, an indication of strength in the labor market that may embolden the Bank of England to raise interest rates. As the Biden administration and governments around the world celebrate another advance toward an historic global tax accord, an obscure legal question in the U.S. threatens to tear it apart Chinese property developers are suffering credit rating downgrades at the fastest pace in five years, as a recent slump in new-home sales adds to concerns about the sector’s debt woes German investor confidence declined for a fifth month in October, adding to evidence that global supply bottlenecks and a surge in inflation are weighing on the recovery in Europe’s largest economy Social Democrat Olaf Scholz’s bid to succeed Angela Merkel as German chancellor is running into its first test as tensions emerge in talks to bridge policy differences with the Greens and pro-business Free Democrats A more detailed breakdown of global markets from Newsquawk Asian equity markets traded mostly lower following the indecisive mood stateside where the major indices gave back initial gains to finish negative amid lingering inflation and global slowdown concerns, with sentiment overnight also hampered by tighter Beijing scrutiny and with US equity futures extending on losses in which the Emini S&P retreated beneath its 100DMA. ASX 200 (-0.3%) was subdued as weakness in energy, tech and financials led the declines in Australia and with participants also digesting mixed NAB business survey data. Nikkei 225 (-0.9%) was on the backfoot after the Japan Center for Economic Research noted that GDP contracted 0.9% M/M in August and with retailers pressured after soft September sales updates from Lawson and Seven & I Holdings, while the KOSPI (-1.4%) was the laggard on return from holiday with chipmakers Samsung Electronics and SK Hynix subdued as they face new international taxation rules following the recent global minimum tax deal. Hang Seng (-1.4%) and Shanghai Comp. (-1.3%) adhered to the downbeat picture following a continued liquidity drain by the PBoC and with Beijing scrutinising Chinese financial institutions’ ties with private firms, while default concerns lingered after Evergrande missed yesterday’s payments and with Modern Land China seeking a debt extension on a USD 250mln bond to avoid any potential default. Finally, 10yr JGBs eked minimal gains amid the weakness in stocks but with demand for bonds limited after the recent subdued trade in T-note futures owing to yesterday’s cash bond market closure and following softer results across all metrics in the 30yr JGB auction. Top Asian News Alibaba Stock Revival Halted on Concerns of Rising Bond Yields Iron Ore Rally Pauses as China Steel Curbs Cloud Demand Outlook China’s Star Board Sees Rough Start to Fourth Quarter: ECM Watch Citi Lists Top Global Stock Picks for ‘Disruptive Innovations’ European bourses kicked the day off choppy but have since drifted higher (Euro Stoxx 50 -0.4%; Stoxx 600 Unch) as the region remains on standby for the next catalyst, and as US earnings season officially kicks off tomorrow – not to mention the US and Chinese inflation metrics and FOMC minutes. US equity futures have also nursed earlier losses and reside in relatively flat territory at the time of writing, with broad-based performance seen in the ES (Unch), NQ (+0.2%), RTY (-0.2%), YM (Unch). From a technical standpoint, some of the Dec contracts are now hovering around their respective 100 DMAs at 4,346 for the ES, 14,744 for the NQ, whilst the RTY sees its 200 DMA at 2,215, and the YM topped its 21 DMA at 34,321. Back to Europe, cash markets see broad-based downside with the SMI (-0.1%) slightly more cushioned amid gains in heavyweight Nestle (+0.6%). Sectors kicked off the day with a defensive bias but have since seen a slight reconfiguration, with Real Estate now the top performer alongside Food & Beverages, Tech and Healthcare. On the flip side, Basic Resources holds its position as the laggard following yesterday's marked outperformance and despite base metals (ex-iron) holding onto yesterday's gains. Autos also reside at the bottom of the bunch despite constructive commentary from China's Auto Industry Body CAAM, who suggested the chip supply shortage eased in China in September and expected Q4 to improve, whilst sources suggested Toyota aims to make up some lost production as supplies rebound. In terms of individual movers, GSK (+2.3%) shares spiked higher amid reports that its USD 54bln consumer unit has reportedly attracted buyout interest, according to sources, in turn lifting the FTSE 100 Dec future by 14 points in the immediacy. Elsewhere, easyJet (-1.9%) gave up its earlier gains after refraining on guidance, and despite an overall constructive trading update whereby the Co. sees positive momentum carried into FY22, with H1 bookings double those in the same period last year. Co. expects to fly up to 70% of FY19 planned capacity in FY22. In terms of commentary, the session saw the Germany ZEW release, which saw sentiment among experts deteriorate, citing the persisting supply bottlenecks for raw materials and intermediate products. The release also noted that 49.1% of expects still expect inflation to rise further in the next six months. Heading into earnings season, experts also expect profits to go down, particularly in export-tilted sectors such a car making, chemicals and pharmaceuticals. State-side, sources suggested that EU antitrust regulators are reportedly likely to open an investigation into Nvidia's (+0.6% Pre-Mkt) USD 54bln bid from Arm as concessions were not deemed sufficient. Top European News Soybeans Near 10-Month Low as Supply Outlook Expected to Improve EasyJet Boosts Capacity as Travel Rebound Gathers Pace Currency Traders Are Betting the BOE Is About to Make a Mistake Citi Lists Top Global Stock Picks for ‘Disruptive Innovations’ In FX, the Buck has reclaimed a bit more lost ground in consolidatory trade rather than any real sign of a change in fundamentals following Monday’s semi US market holiday for Columbus Day and ahead of another fairly light data slate comprising NFIB business optimism and JOLTS. However, supply awaits the return of cash Treasuries in the form of Usd 58 bn 3 year and Usd 38 bn 10 year notes and Fed commentary picks up pace on the eve of FOMC minutes with no less than five officials scheduled to speak. Meanwhile, broad risk sentiment has taken a knock in wake of a late swoon on Wall Street to give the Greenback and underlying bid and nudge the index up to fresh post-NFP highs within a 94.226-433 band. NZD/AUD - A slight change in fortunes down under as the Kiwi derives some comfort from the fact that the Aud/Nzd has not breached 1.0600 to the upside and Nzd/Usd maintaining 0.6950+ status irrespective of mixed NZ electric card sales data, while the Aussie takes on board contrasting NAB business conditions and confidence readings in advance of consumer sentiment, with Aud/Usd rotating either side of 0.7350. EUR/CAD/GBP/CHF/JPY - All rangy and marginally mixed against their US counterpart, as the Euro straddles 1.1560, the Loonie meanders between 1.2499-62 with less fuel from flat-lining crude and the Pound tries to keep sight of 1.3600 amidst corrective moves in Eur/Gbp following a rebound through 0.8500 after somewhat inconclusive UK labour and earnings data, but hardly a wince from the single currency even though Germany’s ZEW survey missed consensus and the institute delivered a downbeat assessment of the outlook for the coming 6 months. Elsewhere, the Franc continues to hold within rough 0.9250-90 extremes and the Yen is striving to nurse outsize losses between 113.00-50 parameters, with some attention to 1 bn option expiries from 113.20-25 for the NY cut. Note also, decent expiry interest in Eur/Usd and Usd/Cad today, but not as close to current spot levels (at the 1.1615 strike in 1.4 bn and between 1.2490-1.2505 in 1.1 bn respectively). SCANDI/EM - The Nok and Sek have bounced from lows vs the Eur, and the latter perhaps taking heed of a decline in Sweden’s registered jobless rate, but the Cnh and Cny remain off recent highs against the backdrop of more Chinese regulatory rigour, this time targeting state banks and financial institutions with connections to big private sector entities and the Try has thrown in the towel in terms of its fight to fend off approaches towards 9.0000 vs the Usd. The final straw for the Lira appeared to be geopolitical, as Turkish President Erdogan said they will take the necessary steps in Syria and are determined to eliminate threats, adding that Turkey has lost its patience on the attacks coming from Syrian Kurdish YPG controlled areas. Furthermore, he stated there is a Tal Rifaat pocket controlled by YPG below Afrin and that an operation could target that area which is under Russian protection. However, Usd/Try is off a new ATH circa 9.0370 as oil comes off the boil and ip came in above forecast. In commodities, WTI and Brent front-month futures are choppy and trade on either side of the flat mark in what is seemingly some consolidation and amid a distinct lack of catalysts to firmly dictate price action. The complex saw downticks heading into the European cash open in tandem with the overall market sentiment at the time, albeit the crude complex has since recovered off worst levels. News flow for the complex has also remained minimal as eyes now turn to any potential intervention by major economies in a bid to stem the pass-through of energy prices to consumers heading into winter. On that note, UK nat gas futures have been stable on the day but still north of GBP 2/Thm. Looking ahead, the weekly Private Inventory data has been pushed back to tomorrow on account of yesterday's Columbus Day holiday. Tomorrow will also see the release of the OPEC MOMR and EIA STEO. Focus on the former will be on any updates to its demand forecast, whilst commentary surrounding US shale could be interesting as it'll give an insight into OPEC's thinking on the threat of Shale under President Biden's "build back better" plan. Brent Dec trades on either side of USD 84/bbl (vs prev. 83.13-84.14 range) whilst WTI trades just under USD 81/bbl after earlier testing USD 80/bbl to the downside (USD 80-80.91/bbl range). Over to metals, spot gold and silver hold onto modest gains with not much to in the way of interesting price action, with the former within its overnight range above USD 1,750/oz and the latter still north of USD 22.50/oz after failing to breach the level to the downside in European hours thus far. In terms of base metals, LME copper is holding onto most of yesterday's gains, but the USD 9,500/t mark seems to be formidable resistance. Finally, Dalian and Singapore iron ore futures retreated after a four-day rally, with traders citing China's steel production regaining focus. US Event Calendar 6am: Sept. SMALL BUSINESS OPTIMISM 99.1,  est. 99.5, prior 100.1 10am: Aug. JOLTs Job Openings, est. 11m, prior 10.9m 11:15am: Fed’s Clarida Speaks at IIF Annual Meeting 12:30pm: Fed’s Bostic Speaks on Inflation at Peterson Institute 6pm: Fed’s Barkin Interviewed for an NPR Podcast DB's Jim Reid concludes the overnight wrap It’s my wife’s birthday today and the big treat is James Bond tomorrow night. However, I was really struggling to work out what to buy her. After 11.5 years together, I ran out of original ideas at about year three and have then scrambled round every year in an attempt to be innovative. Previous innovations have seen mixed success with the best example being the nearly-to-scale oil portrait I got commissioned of both of us from our wedding day. She had no idea and hated it at the closed eyes big reveal. It now hangs proudly in our entrance hall though. Today I’ve bought her a lower key gamble. Some of you might know that there is a US website called Cameo that you can pay famous people to record a video message for someone for a hefty fee. Well, all her childhood heroes on it were seemingly too expensive or not there. Then I saw that the most famous gymnast of all time, Nadia Comăneci, was available for a reasonable price. My wife idolised her as a kid (I think). So after this goes to press, I’m going to wake my wife up with a personalised video message from Nadia wishing her a happy birthday, saying she’s my perfect ten, and praising her for encouraging our three children to do gymnastics and telling her to keep strong while I try to get them to play golf instead. I’m not sure if this is a totally naff gift or inspired. When I purchased it I thought the latter but now I’m worried it’s the former! My guess is she says it’s naff, appreciates the gesture, but calls me out for the lack of chocolates. Maybe in this day and age a barrel of oil or a tank of petrol would have been the most valuable birthday present. With investor anticipation continuing to build ahead of tomorrow’s CPI release from the US, yesterday saw yet another round of commodity price rises that’s making it increasingly difficult for central banks to argue that inflation is in fact proving transitory. You don’t have to be too old to remember that back in the summer, those making the transitory argument cited goods like lumber as an example of how prices would begin to fall back again as the economy reopened. But not only have commodity aggregates continued to hit fresh highs since then, but lumber (+5.49%) itself followed up last week’s gains to hit its highest level in 3 months. Looking at those moves yesterday, it was a pretty broad-based advance across the commodity sphere, with big rises among energy and metals prices in particular. Oil saw fresh advances, with WTI (+1.47%) closing above $80/bbl for the first time since 2014, whilst Brent Crude (+1.53%) closed above $83/bbl for the first time since 2018. Meanwhile, Chinese coal futures (+8.00%) hit a record after the flooding in Shanxi province that we mentioned in yesterday’s edition, which has closed 60 of the 682 mines there, and this morning they’re already up another +6.41%. So far this year, the region has produced 30% of China’s coal supply, which gives you an idea as to its importance. And when it came to metals, aluminium prices (+3.30%) on the London Metal Exchange rose to their highest level since the global financial crisis, whilst Iron Ore futures in Singapore jumped +7.01% on Monday, and copper was also up +2.13%. The one respite on the inflation front was a further decline in natural gas prices, however, with the benchmark European future down -2.73%; thus bringing its declines to over -47% since the intraday high that was hit only last Wednesday. With commodity prices seeing another spike and inflation concerns resurfacing, this proved bad news for sovereign bonds as investors moved to price in a more hawkish central bank reaction. Yields in Europe rose across the continent, with those on 10yr bunds up +3.0bps to 0.12%, their highest level since May. The rise was driven by both higher inflation breakevens and real rates, and leaves bund yields just shy of their recent post-pandemic closing peak of -0.10% from mid-May. If they manage to surpass that point, that’ll leave them closer to positive territory than at any point since Q2 2019 when they last turned negative again. It was a similar story elsewhere, with 10yr yields on OATs (+2.6bps), BTPs (+3.9bps) and gilts (+3.1bps) likewise reaching their highest level in months. The sell-off occurred as money markets moved to price in further rate hikes from central banks, with investors now expecting a full 25 basis point hike from the Fed by the end of Q3 2022. It seems like another era, but at the start of this year before the Georgia Senate race, investors weren’t even pricing in a full hike by the end of 2023, whereas they’re now pricing in almost 4. So we’ve come a long way over 2021, though pre-Georgia the consensus CPI forecast on Bloomberg was just 2.0%, whereas it now stands at 4.3%, so it does fit with the story of much stronger-than-expected inflation inducing a hawkish response. Yesterday’s repricing came alongside a pretty minimal -0.15% move in the Euro versus the dollar, but that was because Europe was also seeing a similar rates repricing. Meanwhile, the UK saw its own ramping up of rate hike expectations, with investors pricing in at least an initial 15bps hike to 0.25% happening by the December meeting in just two months’ time. Overnight in Asia, stocks are trading in the red with the KOSPI (-1.46%), Shanghai Composite (-1.21%), Hang Seng (-1.20%), the Nikkei (-0.93%) and CSI (-0.82%) all trading lower on inflation concerns due to high energy costs and aggravated by a Wall Street Journal story that Chinese President Xi Jinping is increasing scrutiny of state-run banks and big financial institutions with inspections. Furthermore, there were signs of a worsening in the Evergrande debt situation, with the firm missing coupon payments on a 9.5% note due in 2022 and a 10% bond due in 2023. And there were fresh indications of a worsening situation more broadly, with Sinic Holdings Group Co. saying it doesn’t expect to pay the principal or interest on a $250m bond due on October 18. Separately in Japan, Prime Minister Fumio Kishida said on Monday that he will raise pay for public workers and boost tax breaks to firms that boost wages to try and improve the country’s wealth distribution. Back to yesterday, and the commodity rally similarly weighed on thin-volume equity markets, though it took some time as the S&P 500 had initially climbed around +0.5% before paring back those gains to close down -0.69%. Before the late US sell-off, European indices were subdued, but the STOXX 600 still rose +0.05%, thanks to an outperformance from the energy sector (+1.49%), and the STOXX Banks Index (+0.13%) hit a fresh two-year high as the sector was supported by a further rise in yields. On the central bank theme, we heard from the ECB’s chief economist, Philip Lane, at a conference yesterday, where he said that “a one-off shift in the level of wages as part of the adjustment to a transitory unexpected increase in the price level does not imply a trend shift in the path of underlying inflation.” So clearly making a distinction between a more persistent pattern of wage inflation, which comes as the ECB’s recent forward guidance commits them to not hiking rates “until it sees inflation reaching two per cent well ahead of the end of its projection horizon and durably for the rest of the projection horizon”, as well as having confidence that “realised progress in underlying inflation is sufficiently advanced to be consistent with inflation stabilising at two per cent over the medium term”. Turning to the political scene, Brexit is likely to be in the headlines again today as the UK’s Brexit negotiator David Frost gives a speech in Lisbon where he’s expected to warn that the EU’s proposals on the Northern Ireland Protocol are insufficient. That comes ahead of a new set of proposals that are set to come from the EU tomorrow, with the two sides disagreeing on the extent of border controls required on trade from Northern Ireland with the rest of the UK. Those controls were put in place as part of the Brexit deal to prevent a hard border being put up between Northern Ireland and the Republic of Ireland, whilst also preserving the integrity of the EU’s single market. But the UK’s demands for adjustments have been met with opposition by the EU, and speculation has risen that the UK could trigger Article 16, which allows either side to take unilateral safeguard measures, if the protocol’s application “leads to serious economic, societal or environmental difficulties that are liable to persist, or to diversion of trade”. On the data front, there wasn’t much data to speak of with the US holiday, but Italy’s industrial production contracted by -0.2% in August, in line with expectations. To the day ahead now, andcentral bank speakers include the Fed’s Vice Chair Clarida,Bostic and Barkin, as well as theECB’s President Lagarde, Makhlouf, Knot, Villeroy, Lane and Elderson. Data highlights from the US include the JOLTS job openings for August, and the NFIB’s small business optimism index for September. In Europe, there’s also UK unemployment for August and the German ZEW Survey for October. Lastly, the IMF will be releasing their latest World Economic Outlook.     Tyler Durden Tue, 10/12/2021 - 07:56.....»»

Category: personnelSource: nytOct 12th, 2021

Futures Slide As Soaring Oil Nears $85

Futures Slide As Soaring Oil Nears $85 While cash bonds may be closed today for Columbus Day, which may or may not be a holiday - it's difficult to know anymore with SJW snowflakes opinions changing by the day - US equity futures are open and they are sliding as soaring oil prices add to worries over growing stagflation (Goldman and Morgan Stanley both slashed their GDP estimates over the weekend even as they both see rising inflation), fueling concern that a spreading energy crisis could hamper economic recovery (as a reminder, yesterday we had one, two, three posts on stagflation, showing just how freaked out Wall Street suddenly is). Rising raw material costs, labor shortages and other supply chain bottlenecks have raised concerns of elevated prices hammering corporate profits while rising rates are suggesting that a tidal wave of inflation is coming. And while cash bonds may be closed, one can easily extrapolate where they would be trading based on TSY futures which are currently trading at a 1.65% equivalent. But while cash bonds may be closed, the big mover on Monday was oil, with WTI surging nearly 3% and touched a seven-year high as an energy crisis gripping the major economies showed no sign of easing. Meanwhile, Brent rose just shy of $85, rising to the highest since late 2018 when the Fed abruptly reversed tightening course. Over in China, coal futures reached a record as flooding shuttered mines. The surge in oil lifted shares of Chevron Corp, Exxon Mobil Corp and APA Corp between 1.2% and 3% in premarket trading. At the same time, rising rates hit FAAMGs, with Apple, Microsoft and Amazon all falling between 0.6% and 0.8%. The surge above 1.6% for 10-year Treasury yields is intensifying debate among strategists over how to position investor portfolios amid anxiety over whether transitory inflation is transitioning into stagflation. Lucid Group rose 2.2% and Occidental Petroleum climbed 3.1%, leading gains in the U.S. premarket session. Here are some of the biggest movers and stocks to watch today: U.S.-listed Chinese tech stocks soar 2% to 5% in premarket trading, extending their recent rebound. Rally supported by Beijing slapping a smaller-than-expected fine on food delivery giant Meituan and last week’s news that U.S. President Joe Biden was planning to meet with Xi Jinping before the end of the year. Alibaba (BABA US +5%) leads gains, while JD.com (JD US) and Baidu (BIDU US) rise 2% apiece Watch U.S. energy stocks as oil surges past $80 a barrel as the global power crunch rattled a market in which OPEC+ has only been restoring output at a modest pace. Exxon Mobil (XOM US +1.1%), Chevron (CVX US +1%) and Occidental (OXY US +3.1%) among top risers in premarket trading. Robinhood (HOOD US) dropped 2%; the company was under pressure in U.S. premarket trading as a looming share sale by early investors and a toughening regulatory environment for cryptocurrencies are adding to the headwinds in the stock market for the darling of the U.S. retail trading mania. ChemoCentryx (CCXI US) up 2% in U.S. premarket trading, adding to Friday’s massive gains after the drug developer won U.S. approval for Tavneos as a treatment for a rare autoimmune disorder Cloudflare (NET US) slides 1.8% in U.S. premarket trading after Piper Sandler downgraded stock to neutral Akerna Corp. (KERN US) gained in Friday postmarket trading after Matthew Ryan Kane, a board member, bought $346,032 of shares, according to a filing with the U.S. Securities & Exchange Commission. “We see rising risks to global growth and evidence of more persistent inflation, which makes us more cautious on the outlook for global markets overall,” Salman Ahmed, global head of macro and strategic asset allocation at Fidelity International, wrote in a note to clients. In Europe, the Stoxx 600 Index fell 0.2%, led by declines in travel and property firms. Miners and energy stocks were the two strongest-performing sectors in Europe on Monday on rising prices for iron ore and oil. The Stoxx 600 Basic Resources Index climbed as much as 2.4%, while the Energy Index gains as much as 1.5% to the highest since Feb. 24, 2020. European banking stocks also advanced on Monday, following four weeks of gains, and traded about 1.3% below pre-pandemic high. The sector has gained 36% ytd, is the best performer among 20 European sectors in 2021. Up 0.7% today, outperforming a slightly weaker broader Stoxx 600 Index and as investors tilt toward cyclical sectors. Earlier in the session, Asian stocks jumped, buoyed by Hong Kong-listed technology shares including Meituan, which was consigned a lower-than-expected regulatory fine. The MSCI Asia Pacific Index climbed as much as 0.9%, driven by the consumer-discretionary and communication sectors. Alibaba and Meituan were the top contributors to the gauge, each surging about 8% in the first trading in Hong Kong after the food-delivery giant was handed a $533 million fine for violating anti-monopolistic practices.  The result of the investigation into Meituan is “a relief and likely to provide closure to the share price overhang,” Citigroup analysts wrote in a note Friday, when the penalty was announced.  Hong Kong’s stock gauge was among the top performing in the region. Japan’s benchmarks also climbed as the yen weakened to an almost three-year low against the dollar and new Prime Minister Fumio Kishida said he’s not considering changes to the country’s capital-gains tax at present. Improved sentiment in China is providing much-needed support to Asian equities, which declined for four straight weeks amid uncertainty circling global markets. Power shortages in China and India, supply-chain woes, inflation risks and rising bond yields are all on the radar as the earnings season kicks off. “We are still in a market that is very, very concerned about the growth outlook,” said Kyle Rodda, market analyst at IG Markets. These sort of rallies that appear almost inexplicable are “symptomatic of the market still trying to piece together all pieces of the puzzle,” he added. Australia The S&P/ASX 200 index fell 0.3% to close at 7,299.80, with most subgauges taking a hit. Miners advanced, posting gains for a third session, offsetting losses in healthcare and consumer discretionary stocks.  Star Entertainment was the worst performer after a report saying the company had enabled suspected money laundering, organized crime and fraud at its Australian casinos for years. Fortescue surged after the company said it plans to build a green energy factory to rival China.  In New Zealand, the S&P/NZX 50 index dropped 0.5% to 13,019.37. In FX, the pound crept higher to touch an almost 2-week high versus the dollar and the Gilt curve shifted higher, led by the front-end, after the Bank of England’s Michael Saunders, one of the most hawkish members of the Monetary Policy Committee, suggested in remarks published Saturday that investors were right to bring forward bets on rate hikes. Hours earlier, Governor Andrew Bailey warned of a potentially “very damaging” period of inflation unless policy makers take action. Australia’s dollar led gains among G-10 currencies on the back of increases in oil, natural gas and iron ore prices and as Sydney emerges from a 15- week lockdown on Monday. Iron ore futures extended gains as improved rebar margins at Chinese steel mills buoyed demand prospects. The yen dropped against the dollar, with analysts forecasting more weakness ahead as the nation’s yield differentials widen. As noted above, treasury futures slumped in U.S. trading Monday, with the cash market closed for Columbus Day; they implied a yield of 1.65% on the 10Y. 10-year note futures price is down 8+/32, a price change equivalent to a yield increase of about 3bp. Benchmark 10-year yield ended Friday at 1.615%, its highest closing level since June, as investors focused on the inflationary aspects in mixed September employment data. China's10-year government bond futures declined to a three-month low while the yuan advanced as the central bank’s latest liquidity draining weakened expectations of fresh monetary policy easing. Futures contracts on 10-year notes fall 0.4% to 99.14, the lowest level since July 12. It dropped 0.4% on Friday. 10-year sovereign bond yields rose 5bps, the biggest gains in two months, to 2.96%. Looking ahead, upcoming reports on third-quarter company profits which start this week are seen as the next potential pressure point in a market already under siege from slowing global growth, sticky inflation and tighter monetary policies. Global earnings revisions are sliding - an omen for U.S. stocks that have taken their cue from rising earnings estimates all year. “The coming earnings’ season in the U.S. will be heavily scrutinized for pricing power, margins and clues on the shortage situation, as well as wage pressures,” according to Geraldine Sundstrom, a portfolio manager at  Pacific Investment Management Co. in London. “Already a number of large multinationals have issued warnings about production cuts and downgraded their Q3 outlook due to supply chain and labor shortages.” Market Snapshot S&P 500 futures down 0.3% to 4,371.25 STOXX Europe 600 down 0.2% to 456.41 German 10Y yield up 1.5 bps to -0.135% Euro little changed at $1.1568 MXAP up 0.8% to 196.45 MXAPJ up 0.7% to 642.13 Nikkei up 1.6% to 28,498.20 Topix up 1.8% to 1,996.58 Hang Seng Index up 2.0% to 25,325.09 Shanghai Composite little changed at 3,591.71 Sensex up 0.5% to 60,358.30 Australia S&P/ASX 200 down 0.3% to 7,299.79 Kospi down 0.1% to 2,956.30 Brent Futures up 1.9% to $83.98/bbl Gold spot down 0.1% to $1,755.02 U.S. Dollar Index up 0.11% to 94.17 Top Overnight News from Bloomberg The U.S. labor market will see “ups and downs” as the pandemic lingers, but it’s premature to judge that the recovery is in peril, said San Francisco Federal Reserve President Mary Daly Treasury Secretary Janet Yellen said she expects Congress to take action soon to bring the U.S. into line with a global minimum tax agreed on last week by 136 countries Chinese builders are looking to payment extensions or debt exchanges to avoid default on imminent bond obligations as liquidity conditions tighten for the real estate sector Austria will get a new chancellor, though the career diplomat stepping into Sebastian Kurz’s shoes is a close ally of the departing conservative leader who resigned over a corruption scandal Just because pandemic inflation is transitory doesn’t mean it’s going away anytime soon. That’s the awkward conclusion that policy makers and investors are arriving at, as prices accelerate all over the world. European natural gas has climbed 25% in two weeks, and oil topped $80 for the first time since 2014. Fertilizers hit a record on Friday, which means food prices -- already at a 10- year peak -- will likely rise even higher A more detailed summary of overnight news from Newsquawk Asia-Pac stocks traded mostly positive but ended the day somewhat mixed after having shrugged off the early weakness stemming from last Friday’s lacklustre performance stateside and disappointing NFP jobs data. Note, markets in Taiwan and South Korea were closed. ASX 200 (-0.3%) was the laggard with underperformance in tech, consumer stocks and defensives overshadowing the gains in commodities and with Star Entertainment the worst hit with losses of more than 20% after media outlets alleged that it enabled suspected money laundering, organised crime, fraud and foreign interference which the Co. said were misleading reports. However, downside for the index was limited as New South Wales businesses reopened from the lockdown that lasted for over three months. Nikkei 225 (+1.6%) reversed opening losses as exporters cheered a weaker currency and with the government mulling over JPY 100bln financial support for chip factory construction. Hang Seng (+2.0%) and Shanghai Comp. (Unch) were both positive following talks between China's Vice Premier Liu He and USTR Tai on Saturday in which China was said to be negotiating for a cancellation of tariffs and sanctions. The advances in Hong Kong were led by tech stocks including Meituan despite the Co. being fined CNY 3.4bln by China’s market regulator for monopolistic behaviour, as the amount was seen to be a slap on the wrist, while the gains in the mainland were only mild as participants also reflected on the substantial liquidity drains by the PBoC totalling a net CNY 510bln since Saturday. Finally, 10yr JGBs were pressured amid the gains in Japanese stocks and lack of BoJ purchases in the market, while price action was also not helped by the continued weakness in T-note futures amid the semi-holiday conditions in US for Columbus Day in which the NYSE and the Nasdaq will open but bonds trading will remain shut. Top Asian News Australian IPOs Heading for Biggest Haul Since 2014: ECM Watch Syngenta’s Shanghai IPO Proposal Suspended For Earnings Update China Junk-Rated Dollar Bond Rout Deepens Amid Builder Worries China’s 10-Year Bond Yield Jumps By The Most Since August Bourses in Europe are mostly but modestly lower (Euro Stoxx 50 -0.1%, Stoxx 600 -0.2%) whilst the FTSE 100 (+0.2%) bucks the trend, owing to firm performances in its heavyweight sectors. US equity futures meanwhile trade within tight ranges with broad-based losses of some 0.3-0.4%. Fresh fundamental catalysts have remained light, although inflation and stagflation remain on traders' minds heading into this week's US and Chinese inflation metrics and against the backdrop of rising energy prices. Thus, the sector configuration sees Basic Resources, Oil & Gas and Banks at the top of the bunch, whilst the downside sees Travel & Leisure, Real Estate and Retail, with no overarching theme to be derived. Basic Resources is the marked outperformer as base metals are bolstered in what seems to be a function of the coal shortage in Asia, with iron ore contracts also surging overnight and copper following suit, in turn boosting the likes of Rio Tino (+3.2%), Antofagasta (+3.1%), Glencore (+3.1%), BHP (+2.8%). The top of the Stoxx 600 is dominated by metal names. In terms of individual movers, Carrefour (-2.2%) is softer after sources stated that exploratory talks over a Carrefour-Auchan tie-up ended due to the complexity of the deal. Evotec (+0.7%) holds onto gains as it seeks a Nasdaq listing. Roche (+0.6%) and Morphosys (+3.7%) underpin the health sector after the Cos received Breakthrough Therapy Designation from the US FDA for gantenerumab for the treatment of Alzheimer's disease. Top European News BOE Officials Double Down on Signals of Imminent Rate Hike Brexit Clash on Northern Ireland Means Headaches for Johnson Asos CEO Beighton Steps Down as Sales Growth Slows Adler Shares Flounder After Asset Disposal Plan, Past M&A Report In FX, the Aussie has secured a considerably firmer grip of the 0.7300 handle vs its US rival as COVID-19 restrictions are relaxed in NSW and base metals tread water after a mostly positive APAC equity session overnight. However, Aud/Usd is also firmer on the back of ongoing Greenback weakness and long liquidation from what some are calling ‘stretched’ levels of IMM positioning going in to Friday’s NFP release, while the Aud/Nzd cross has rebounded further above 1.0550 in wake of a rise in NZ virus cases that has prompted the PM to keep Auckland on level 3 alert for another week pending review. Hence, Nzd/Usd is capped around 0.6950 and continues to lag on the unwinding of Kiwi longs built up in advance of last week’s universally anticipated 25 bp RBNZ hike. Back to the Buck, but looking at the index in relation to where it was before and after the latest BLS report, 94.000 is providing some underlying support on Columbus Day that is not a full US market holiday, but will see cash Treasuries remain closed. Moreover, the DXY is gleaning momentum within a narrow 94.028-214 range via marked Yen underperformance amidst the latest rout in bonds and more pronounced technical impulses as Usd/Jpy extends beyond 112.50 and sets yet another 2021 peak around 112.95. GBP - Sterling is taking up post-payrolls Dollar slack as well, but firmer in its own right too as comments from BoE Governor Bailey and MPC member Saunders add to the growing expectation that rate hikes may be delivered sooner than had been expected before the former revealed that policy-setters were evenly divided at 4-4 in August on the subject of minimum criteria being achieved for tightening. Cable is hovering under 1.3650 and Eur/Gbp is sub-0.8500 in response, with the latter not really fazed by the UK-EU rift on NI protocol. CAD/NOK - The Loonie remains firm against its US peer after the stellar Canadian jobs data and Usd/Cad continues to probe support/bids at 1.2450 against the backdrop of strength in oil prices that is also keeping the Norwegian Krona afloat and Eur/Nok eyeing deeper sub-10.0000 lows irrespective of marginally mixed vs consensus inflation metrics. CHF/EUR/SEK - All rather rangy, aimless and looking for inspiration or clearer direction as the Franc straddles 0.9275 vs the Greenback, but remains firmer against the Euro above 1.0750 following only a faint rise in Swiss domestic bank sight deposits. Meanwhile, the Euro is pivoting 1.1575 vs the Buck and looks hemmed in by decent option expiry interest just outside the range given.1 bn rolling off between 1.1540-50 and 1.6 bn from 1.1590-1.1600 at the NY cut. Elsewhere, the Swedish Crown is slipping on risk-off grounds towards 10.1250 having tested resistance circa 10.1000. In commodities, WTI and Brent front-month futures continue the upward trajectory seen during the APAC session, with the complex underpinned heading into the winter period and against the backdrop of higher gas prices. The gains have been more pronounced in the US counterpart vs the global benchmark with no clear catalysts behind the outperformance, although this may be a continuation of the unwind seen after reports suggested a release of the US SPR (Strategic Petroleum Reserve) is unlikely. For context, reports of such a release last week took the WTI-Brent arb to almost USD 4.2/bbl vs USD 2.7/bbl at the time of writing. Furthermore, there have also been reports of lower US production under President Biden's "build back better" initiative, which puts more weight on renewable energy, with some energy analysts also suggesting that OPEC+ sees less of a threat from a "shale boom" as a result. Back to price action, WTI has been in the limelight after topping the USD 80/bbl overnight and extending gains to levels north of USD 81.50/bbl (vs low 79.55/bbl), whilst the Brent Dec contract topped USD 84.00/bbl (vs low USD 82.50/bbl). In terms of other news flow, sources suggested the fire at Lebanon's Zahrani fuel tank has been put out after the energy minister suggested the fire was contained – the cause of the fire is not yet known. Gas prices also remain elevated with UK nat gas futures relatively flat on the day but still north of GBP 2/Thm vs GBP 1/Thm mid-August and vs GBP 4/Thm last week, whilst the Qatari Energy Minister said he is unhappy about gas prices being high amid negative follow-through to customers. Over to metals, spot gold and silver are somewhat lacklustre, but with magnitudes of price action contained, with the former meandering just north of USD 1,750/oz and the latter above USD 22.50/oz heading into this week's key risk events. Overnight, iron ore futures were bolstered some 10% in Dalian and Singapore Exchanges amid fears of coking coal supply shortages - coking coal is an essential input to produce iron and steel. Traders should also be cognizant of the Chinese metrics released this week as another elevated PPI metric could see the release of more state reserves, as had been the case over the recent months. Using the Caixin PMIs as a proxy for the release, the PMI suggested sharp increases in both input costs and output prices – largely owed to supply chain delays, with the "rate of inflation was the quickest seen for four months, amid reports of greater energy and raw material costs. This, in turn, led to a solid increase in prices charged". The measure for output prices its highest in three months, whilst "the pressure of rising costs was partly transmitted downstream to consumers, as the demand was not weak." US Event Calendar Nothing major scheduled DB's Jim Reid concludes the overnight wrap A reminder that it’s Columbus Day today where US bond markets are closed. Equity markets are open but expect it to be quiet. Ahead of this, this morning we have published our latest monthly survey results covering over 600 global market participants. See here for more. For the first time since June, the biggest perceived risk to markets is now higher yields and inflation, whilst direct Covid-19 risks are out of the top 3 for the first time. A further equity correction before YE remains the consensus now. 71% expect at least another 5% off equities at some point before YE (68% correctly suggested that last month). A very overwhelming 84% thought the next 25bps move in 10yr US Treasury yields would be up. Of some additional interest is that the definition of stagflation is varied but that the majority think it’s a high or very high risk for the next 12 months. The extreme of this view surprised me. While I’ve long thought the market has underestimated the inflation risks I would still say there is enough of a growth cushion for 2022. However it’s clear the risks have built. Anyway, lots more in the survey. Thanks for filling it in and see the results for details. The week ahead will centre around the US CPI release on Wednesday but it might be a touch backward looking given that energy has spiked more recently and that used car prices are again on the march after a late summer fall that will likely be captured in this week’s release. Elsewhere, we’ve got a potentially more challenging US earnings season than that seen over the last year will commence with the big financials from Wednesday. In addition minutes from the last FOMC will give clues to the latest taper thinking on Wednesday as well. The IMF/World Bank meetings will generate plenty of headlines this week with their latest world outlook update tomorrow the highlight. The best of the rest data wise consists of JOLTS (Tuesday),which we think is a better labour market indicator than payrolls albeit a month behind, US PPI (Thursday) which will give a scale of building pipeline price pressures, US retail sales and UoM consumer sentiment (Friday), and China’s CPI and PPI (Thursday). With all that to look forward to, markets have started the week on a strong note, with equity indices including the Hang Seng (+2.02%), Nikkei (+1.57%), CSI (+0.32%) and Shanghai Composite (+0.32%) all moving higher, whilst the Kospi (-0.11%) has seen a slight decline. Japanese stocks have been buoyed by comments from new PM Kishida over the weekend that he isn’t currently considering changes to the country’s capital-gains tax. That comes with just 20 days remaining until the country’s general election. Separately in China, the country’s energy woes continue with 60 of 682 coal mines closed in the Shanxi province due to heavy floods, with Chinese coal futures up +8.00% this morning. And the property market issues are continuing to persist, with a new Chinese developer Modern Land seeking a 3 month extension to a $250 million dollar bond due to mature on October 25. By the end of last week, a Bloomberg index of Chinese junk-rated dollar bonds had seen yields climb to a decade-high above 17%, so clearly one to still look out for. Unlike in Asia, equity futures are pointing lower in the US and Europe this morning, with those on the S&P 500 down -0.21%. In terms of the main highlight it’s clearly US CPI mid-week. Given my views that inflation risks have been massively understated this year I’ve been saying for months that these reports have potentially been the most important monthly data we have seen for years. But since they mostly come and go with a “meh… mostly transitory” and a relative whimper, I’ve clearly been wrong to over hype them. So ignore me when I say that this month’s report might not be that interesting. With energy soaring over the last month and signs of inflation pressures continuing to build elsewhere then I’m not sure we can read too much into this month’s figures. Take used cars. Given the 2-3 month lag between actual prices and their CPI impact, this month will more than likely reflect a softening of prices in the summer. However September saw prices rise +5.4% so this will probably show up towards the end of the year along with the recent rise in energy costs. Our economists expect a +0.41% headline (vs. +0.27% previously) and +0.27% core (vs. +0.10%) mom rate. This is a bit above consensus and would take the yoy rate to 5.4% (up a tenth) and 4.1% (unch) respectively. Speaking of inflationary pressures, this morning has seen energy prices take a further leg higher, with WTI oil (+1.90%) moving back above $80/bbl for the first time since late 2014, whilst Brent crude (+1.42%) has moved above $83/bbl. European natural gas prices will continue to be an important one to follow amidst the astonishing price surge there, but the declines at the end of last week mean prices finished the week down by more than -45% since their intraday peak on Wednesday, before the comments from Russian President Putin that brought down prices. The rest of the day-by-day calendar is at the end as usual but although it’s a second tier release normally, tomorrow’s JOLTS will be interesting in as far as it might confirm that the main labour problems in August were a lack of supply rather than demand. The report’s full value is reduced by it being a number of weeks out of date but there’s a reasonable argument for saying that this is a better gauge of the state of the labour market than the payroll release. We go through Friday’s mixed report at the end when looking back at last week. Outside of data, it’s that time again as earnings season gets going, with a number of US financials kicking things off from mid-week. In terms of the highlights, we’ll hear from JPMorgan Chase, BlackRock and Delta Air Lines on Wednesday. Then on Thursday, we’ll get UnitedHealth, Bank of America, Wells Fargo, Morgan Stanley, Citigroup, US Bancorp and Walgreens Boots Alliance. Finally on Friday, we’ll hear from Charles Schwab and Goldman Sachs. For more info on the upcoming earnings season, you can read DB’s equity strategists Q3 S&P 500 preview here. Back to markets, it was interesting over the weekend that the BoE’s Saunders chose to endorse market expectation of an earlier start to the hiking cycle in the UK rather than push back against it. He is on the more hawkish end of the spectrum but it was an important statement. Earlier, Governor Bailey suggested that there could potentially be a very damaging period of higher inflation ahead if policy makers didn’t react. Interestingly our survey showed that the market thinks the BoE is likely to make a policy error by being too hawkish so a battle seems likely to commence over policy here in the UK over the coming weeks and months. The November meeting appears live. Those comments have helped to support the pound this morning, which is up by +0.16% against the US Dollar. Looking back to last week now, risk sentiment was supported in the first full week of Q4 by easing European energy prices and a cease fire on the debt ceiling that avoided disaster and bought Washington lawmakers 8 weeks to find a more permanent solution. Global equity indices thus gained on the week: the S&P 500 picked up +0.79%, with a slight -0.19% pullback on Friday, and European equities kept pace with the STOXX 600 rallying +0.97% (-0.28% on Friday). Cyclical stocks led the way on both sides of the Atlantic; energy stocks were among the best performers whist financials benefitted from higher yields and a steeper curve. Speaking of which, US 10yr Treasury yields gained a punchy +14.1bps to close the week at 1.603%, their highest levels since early June. The benchmark gradually increased 3.0bps after Friday’s employment data. Inflation compensation continued to drive rate increases, as US 10yr breakevens gained +13.5 bps to finish the week at 2.515%. We need to go back to May to find higher levels. The sovereign yield increases were global in nature, with German bunds gaining +7.3bps and UK gilts +15.6bps higher. German 10yr breakevens gained +3.9bps while UK breakevens were +12.0bps higher. US nonfarm payrolls increased +194k in September, well below consensus expectations of a +500k gain, though private payrolls increased +317k and net two month revisions were up +169k. The unemployment rate ticked down to a post-pandemic low of 4.8% on the back of a declining labour force participation rate. Average hourly earnings were robust, increasing +0.6% mom (+0.4% expected). Taken in concert, the print likely cleared the (admittedly low) bar to enable the FOMC to announce tapering at the November meeting, whilst also feeding the creeping stagflation narrative (see survey results). Elsewhere, building on a preliminary July deal, the OECD said 136 nations have signed up to implement a 15% minimum global tax rate to address adequate taxation of multinational tech firms. As part of the deal, countries agreed not to impose any additional digital services taxes.       Tyler Durden Mon, 10/11/2021 - 08:12.....»»

Category: blogSource: zerohedgeOct 11th, 2021

Futures Slide Alongside Cryptocurrencies Amid China Crackdown

Futures Slide Alongside Cryptocurrencies Amid China Crackdown US futures and European stocks fell amid ongoing nerves over the Evergrande default, while cryptocurrency-linked stocks tumbled after the Chinese central bank said such transactions are illegal. Sovereign bond yields fluctuated after an earlier selloff fueled by the prospect of tighter monetary policy. At 745am ET, S&P 500 e-minis were down 19.5 points, or 0.43%, Nasdaq 100 e-minis were down 88.75 points, or 0.58% and Dow e-minis were down 112 points, or 0.33%. In the biggest overnight news, Evergrande offshore creditors remain in limbo and still haven't received their coupon payment effectively starting the 30-day grace period, while also in China, the State Planner issued a notice on the crackdown of cryptocurrency mining, will strictly prohibit financing for new crypto mining projects and strengthen energy consumption controls of new crypto mining projects. Subsequently, the PBoC issued a notice to further prevent and dispose of the risks from speculating on cryptocurrencies, to strengthen monitoring of risks from crypto trading and such activities are illegal. The news sent the crypto space tumbling as much as 8% while cryptocurrency-exposed stocks slumped in U.S. premarket trading. Marathon Digital (MARA) drops 6.5%, Bit Digital (BTBT) declines 4.7%, Riot Blockchain (RIOT) -5.9%, Coinbase -2.8%. Big banks including JPMorgan, Citigroup, Morgan Stanley and Bank of America Corp slipped about 0.5%, while oil majors Exxon Mobil and Chevron Corp were down 0.4% and 0.3%, respectively, in premarket trading.Mega-cap FAAMG tech giants fell between 0.5% and 0.6%. Nike shed 4.6% after the sportswear maker cut its fiscal 2022 sales expectations and warned of delays during the holiday shopping season. Several analysts lowered their price targets on the maker of sports apparel and sneakers after the company cut its FY revenue growth guidance to mid-single- digits. Here are some of the biggest U.S. movers today: Helbiz (HLBZ) falls 10% after the micromobility company filed with the SEC for the sale of as many as 11m shares by stockholders. Focus Universal (FCUV), an online marketing company that’s been a favorite of retail traders, surged 26% in premarket trading after the stock was cited on Stocktwits in recent days. Vail Resorts (MTN) falls 2.7% in postmarket trading after its full-year forecasts for Ebitda and net income missed at the midpoint. GlycoMimetics (GLYC) jumps 15% postmarket after announcing that efficacy and safety data from a Phase 1/2 study of uproleselan in patients with acute myeloid leukemia were published in the journal Blood on Sept. 16. VTV Therapeutics (VTVT) surges 30% after company says its HPP737 psoriasis treatment showed favorable safety and tolerability profile in a multiple ascending dose study. Fears about a sooner-than-expected tapering amid signs of stalling U.S. economic growth and concerns over a spillover from China Evergrande’s default had rattled investors in September, putting the benchmark S&P 500 index on course to snap a seven-month winning streak. Elaine Stokes, a portfolio manager at Loomis Sayles & Co., told Bloomberg Television, adding that “what they did is tell us that they feel really good about the economy.” While the bond selloff vindicated Treasury bears who argue yields are too low to reflect fundamentals, others see limits to how high they can go. “We’d expected bond yields to go higher, given the macro situation where growth is still very strong,” Sylvia Sheng, global multi-asset strategist with JPMorgan Asset Management, said on Bloomberg Television. “But we do stress that is a modest view, because we think that upside to yields is still limited from here given that central banks including the Fed are still buying bonds.” Still, Wall Street’s main indexes rallied in the past two session and are set for small weekly gains. European equities dipped at the open but trade off worst levels, with the Euro Stoxx 50 sliding as much as 1.1% before climbing off the lows. France's CAC underperformed at the margin. Retail, financial services are the weakest performers. EQT AB, Europe’s biggest listed private equity firm, fell as much as 8.1% after Sweden’s financial watchdog opened an investigation into suspected market abuse. Here are some of the other biggest European movers today: SMCP shares surge as much as 9.9%, advancing for a 9th session in 10, amid continued hopes the financial troubles of its top shareholder will ultimately lead to a sale TeamViewer climbs much as 4.2% after Bankhaus Metzler initiated coverage with a buy rating, citing the company’s above-market growth AstraZeneca gains as much as 3.6% after its Lynparza drug met the primary endpoint in a prostate cancer trial Darktrace drops as much as 9.2%, paring the stock’s rally over the past few weeks, as a technical pattern triggered a sell signal Adidas and Puma fall as much as 4% and 2.9%, respectively, after U.S. rival Nike’s “large cut” to FY sales guidance, which Jefferies said would “likely hurt” shares of European peers Earlier in the session, Asian stocks rose for a second day, led by rallies in Japan and Taiwan, following U.S. peers higher amid optimism over the Federal Reserve’s bullish economic outlook and fading concerns over widespread contagion from Evergrande. Stocks were muted in China and Hong Kong. India’s S&P BSE Sensex topped the 60,000 level for the first time on Friday on optimism that speedier vaccinations will improve demand for businesses in Asia’s third-largest economy. The MSCI Asia Pacific Index gained as much as 0.7%, with TSMC and Sony the biggest boosts. That trimmed the regional benchmark’s loss for the week to about 1%. Japan’s Nikkei 225 climbed 2.1%, reopening after a holiday, pushing its advance for September to 7.7%, the best among major global gauges. The Asian regional benchmark pared its gain as Hong Kong stocks fell sharply in late afternoon trading amid continued uncertainty, with Evergrande giving no sign of making an interest payment that was due Thursday. Among key upcoming events is the leadership election for Japan’s ruling party next week, which will likely determine the country’s next prime minister. “Investor concerns over the Evergrande issue have retreated a bit for now,” said Hajime Sakai, chief fund manager at Mito Securities Co. in Tokyo. “But investors will have to keep downside risk in the corner of their minds.” Indian stocks rose, pushing the Sensex above 60,000 for the first time ever. Key gauges fell in Singapore, Malaysia and Australia, while the Thai market was closed for a holiday. Treasuries are higher as U.S. trading day begins after rebounding from weekly lows reached during Asia session, adding to Thursday’s losses. The 10-year yield was down 1bp at ~1.42%, just above the 100-DMA breached on Thursday for the first time in three months; it climbed to 1.449% during Asia session, highest since July 6, and remains 5.2bp higher on the week, its fifth straight weekly increase. Several Fed speakers are slated, first since Wednesday’s FOMC commentary set forth a possible taper timeline.  Bunds and gilts recover off cheapest levels, curves bear steepening. USTs bull steepen, richening 1.5bps from the 10y point out. Peripheral spreads are wider. BTP spreads widen 2-3bps to Bunds. In FX, the Bloomberg Dollar Spot Index climbed back from a one-week low as concern about possible contagion from Evergrande added to buying of the greenback based on the Federal Reserve tapering timeline signaled on Wednesday. NZD, AUD and CAD sit at the bottom of the G-10 scoreboard. ZAR and TRY are the weakest in EM FX. The pound fell after its rally on Thursday as investors looked ahead to BOE Governor Andrew Bailey’s sPeech next week about a possible interest-rate hike. Traders are betting that in a contest to raise borrowing costs first, the Bank of England will be the runaway winner over the Federal Reserve. The New Zealand and Aussie dollars led declines among Group-of-10 peers. The euro was trading flat, with a week full of events failing “to generate any clear directional move,” said ING analysts Francesco Pesole and Chris Turner. German IFO sentiment indeces will “provide extra indications about the area’s sentiment as  businesses faced a combination of delta variant concerns and lingering supply disruptions”. The Norwegian krone is the best performing currency among G10 peers this week, with Thursday’s announcement from the Norges Bank offering support In commodities, crude futures hold a narrow range up around best levels for the week. WTI stalls near $73.40, Brent near $77.50. Spot gold extends Asia’s gains, adding $12 on the session to trade near $1,755/oz. Base metals are mixed, LME nickel and aluminum drop ~1%, LME tin outperforms with a 2.8% rally. Bitcoin dips after the PBOC says all crypto-related transactions are illegal. Looking to the day ahead now, we’ll hear from Fed Chair Powell, Vice Chair Clarida and the Fed’s Mester, Bowman, George and Bostic, as well as the ECB’s Lane and Elderson, and the BoE’s Tenreyro. Finally, a summit of the Quad Leaders will be held at the White House, including President Biden, and the Prime Ministers of Australia, India and Japan. Market Snapshot S&P 500 futures down 0.3% to 4,423.50 STOXX Europe 600 down 0.7% to 464.18 German 10Y yield fell 8.5 bps to -0.236% Euro little changed at $1.1737 MXAP up 0.4% to 201.25 MXAPJ down 0.5% to 643.20 Nikkei up 2.1% to 30,248.81 Topix up 2.3% to 2,090.75 Hang Seng Index down 1.3% to 24,192.16 Shanghai Composite down 0.8% to 3,613.07 Sensex up 0.2% to 60,031.83 Australia S&P/ASX 200 down 0.4% to 7,342.60 Kospi little changed at 3,125.24 Brent Futures up 0.4% to $77.57/bbl Gold spot up 0.7% to $1,755.38 U.S. Dollar Index little changed at 93.14 Top Overnight News from Bloomberg China Evergrande Group’s unusual silence about a dollar-bond interest payment that was due Thursday has put a focus on what might happen during a 30-day grace period. The Reserve Bank of Australia’s inflation target is increasingly out of step with international counterparts and fails to account for structural changes in the country’s economy over the past 30 years, Westpac Banking Corp.’s Bill Evans said. With central banks from Washington to London this week signaling more alarm over faster inflation, the ultra-stimulative path of the euro zone and some of its neighbors appears lonelier than ever. China’s central bank continued to pump liquidity into the financial system on Friday as policy makers sought to avoid contagion stemming from China Evergrande Group spreading to domestic markets. A more detailed look at global markets courtesy of Newsquawk Asian equity markets traded mixed with the region failing to fully sustain the impetus from the positive performance across global counterparts after the silence from Evergrande and lack of coupon payments for its offshore bonds, stirred uncertainty for the company. ASX 200 (-0.4%) was negative as underperformance in mining names and real estate overshadowed the advances in tech and resilience in financials from the higher yield environment. Nikkei 225 (+2.1%) was the biggest gainer overnight as it played catch up to the prior day’s recovery on return from the Autumnal Equinox holiday in Japan and with exporters cheering the recent risk-conducive currency flows, while KOSPI (-0.1%) was lacklustre amid the record daily COVID-19 infections and after North Korea deemed that it was premature to declare that the Korean War was over. Hang Seng (-1.2%) and Shanghai Comp. (-0.8%) were indecisive after further liquidity efforts by the PBoC were offset by concerns surrounding Evergrande after the Co. failed to make coupon payments due yesterday for offshore bonds but has a 30-day grace period with the Co. remaining quiet on the issue. Finally, 10yr JGBs were lower on spillover selling from global counterparts including the declines in T-notes as the US 10yr yield breached 1.40% for the first time since early-July with the pressure in bonds also stemming from across the Atlantic following a more hawkish BoE, while the presence of the BoJ in the market today for over JPY 1.3tln of government bonds with 1yr-10yr maturities did very little to spur prices. Top Asian News Rivals for Prime Minister Battle on Social Media: Japan Election Asian Stocks Rise for Second Day, Led by Gains in Japan, Taiwan Hong Kong Stocks Still Wagged by Evergrande Tail Hong Kong’s Hang Seng Tech Index Extends Decline to More Than 2% European equities (Stoxx 600 -0.9%) are trading on the back foot in the final trading session of the week amid further advances in global bond yields and a mixed APAC handover. Overnight, saw gains for the Nikkei 225 of 2.1% with the index aided by favourable currency flows, whilst Chinese markets lagged (Shanghai Comp. -0.8%, Hang Seng -1.6%) with further liquidity efforts by the PBoC offset by concerns surrounding Evergrande after the Co. failed to make coupon payments due yesterday for offshore bonds. As context, despite the losses in Europe today, the Stoxx 600 is still higher by some 1.2% on the week. Stateside, futures are also on a softer footing with the ES down by 0.4% ahead of a busy Fed speaker schedule. Back to Europe, sectors are lower across the board with Retail and Personal & Household Goods lagging peers. The former has been hampered by losses in Adidas (-3.0%) following after hours earnings from Nike (-4.2% pre-market) which saw the Co. cut its revenue guidance amid supply chain woes. AstraZeneca (+2.1%) sits at the top of the FTSE 100 after announcing that the Lynparza PROpel trial met its primary endpoint. Daimler’s (+0.1%) Mercedes-Benz has announced that it will take a 33% stake in a battery cell manufacturing JV with Total and Stellantis. EQT (-6.5%) sits at the foot of the Stoxx 600 after the Swedish FSA announced it will open an investigation into the Co. Top European News EQT Investigated by Sweden’s FSA Over Suspected Market Abuse Gazprom Says Claims of Gas Under-supply to Europe Are ‘Absurd’ German Sept. Ifo Business Confidence 98.8; Est. 99 German Business Index at Five-Month Low in Pre-Election Verdict In FX, the rot seems to have stopped for the Buck in terms of its sharp and marked fall from grace amidst post-FOMC reflection and re-positioning in the financial markets on Thursday. Indeed, the Dollar index has regained some poise to hover above the 93.000 level having recoiled from 93.526 to 92.977 over the course of yesterday’s hectic session that saw the DXY register a marginal new w-t-d high and low at either end of the spectrum. Pre-weekend short covering and consolidation may be giving the Greenback a lift, while the risk backdrop is also less upbeat ahead of a raft of Fed speakers flanking US new home sales data. Elsewhere, the Euro remains relatively sidelined and contained against the Buck with little independent inspiration from the latest German Ifo survey as the business climate deteriorated broadly in line with consensus and current conditions were worse than forecast, but business expectations were better than anticipated. Hence, Eur/Usd is still stuck in a rut and only briefly/fractionally outside 1.1750-00 parameters for the entire week, thus far, as hefty option expiry interest continues to keep the headline pair in check. However, there is significantly less support or gravitational pull at the round number today compared to Thursday as ‘only’ 1.3 bn rolls off vs 4.1 bn, and any upside breach could be capped by 1.1 bn between 1.1765-85. CAD/NZD/AUD - Some payback for the non-US Dollars following their revival, with the Loonie waning from 1.2650+ peaks ahead of Canadian budget balances, though still underpinned by crude as WTI hovers around Usd 73.50/brl and not far from decent option expiries (from 1.2655-50 and 1.2625-30 in 1.4 bn each). Similarly, the Kiwi has faded after climbing to within single digits of 0.7100 in wake of NZ trade data overnight revealing a much wider deficit as exports slowed and imports rose, while the Aussie loses grip of the 0.7300 handle and skirts 1.1 bn option expiries at 0.7275. CHF/GBP/JPY - The Franc is fairly flat and restrained following a dovish SNB policy review that left in lagging somewhat yesterday, with Usd/Chf and Eur/Chf straddling 0.9250 and 1.0850 respectively, in contrast to Sterling that is paring some hawkish BoE momentum, as Cable retreats to retest bids circa 1.3700 and Eur/Gbp bounces from sub-0.8550. Elsewhere, the Yen has not been able to fend off further downside through 110.00 even though Japanese participants have returned to the fray after the Autumn Equinox holiday and reports suggest some COVID-19 restrictions may be lifted in 13 prefectures on a trial basis. SCANDI/EM/PM/CRYPTO - A slight change in the pecking order in Scandi-land as the Nok loses some post-Norges Bank hike impetus and the Sek unwinds a bit of its underperformance, but EM currencies are bearing the brunt of the aforementioned downturn in risk sentiment and firmer Usd, with the Zar hit harder than other as Gold is clings to Usd 1750/oz and Try down to deeper post-CBRT rate cut lows after mixed manufacturing sentiment and cap u readings. Meanwhile, Bitcoin is being shackled by the latest Chinese crackdown on mining and efforts to limit risks from what it describes as unlawful speculative crypto currency trading. In commodities, WTI and Brent are set the conclude the week in the green with gains in excess of 2% for WTI at the time of writing; in-spite of the pressure seen in the complex on Monday and the first-half of Tuesday, where a sub USD 69.50/bbl low was printed. Fresh newsflow has, once again, been limited for the complex and continues to focus on the gas situation. More broadly, no update as of yet on the Evergrande interest payment and by all accounts we appear to have entered the 30-day grace period for this and, assuming catalysts remain slim, updates on this will may well dictate the state-of-play. Schedule wise, the session ahead eyes significant amounts of central bank commentary but from a crude perspective the weekly Baker Hughes rig count will draw attention. On the weather front, Storm Sam has been upgraded to a Hurricane and is expected to rapidly intensify but currently remains someway into the mid-Atlantic. Moving to metals, LME copper is pivoting the unchanged mark after a mixed APAC lead while attention is on Glencore’s CSA copper mine, which it has received an offer for; the site in 2020 produced circa. 46k/T of copper which is typically exported to Asia smelters. Elsewhere, spot gold and silver are firmer but have been very contained and remain well-within overnight ranges thus far. Which sees the yellow metal holding just above the USD 1750/oz mark after a brief foray below the level after the US-close. US Event Calendar 10am: Aug. New Home Sales MoM, est. 1.0%, prior 1.0% 10am: Aug. New Home Sales, est. 715,000, prior 708,000 Central Bank Speakers 8:45am: Fed’s Mester Discusses the Economic Outlook 10am: Powell, Clarida and Bowman Host Fed Listens Event 10:05am: Fed’s George Discusses Economic Outlook 12pm: Fed’s Bostic Discusses Equitable Community Development DB's Jim Reid concludes the overnight wrap WFH today is a bonus as it’s time for the annual ritual at home where the latest, sleekest, shiniest iPhone model arrives in the post and i sheepishly try to justify to my wife when I get home why I need an incremental upgrade. This year to save me from the Spanish Inquisition I’m going to intercept the courier and keep quiet. Problem is that such speed at intercepting the delivery will be logistically challenging as I remain on crutches (5 weeks to go) and can’t grip properly with my left hand due to an ongoing trapped nerve. I’m very glad I’m not a racehorse. Although hopefully I can be put out to pasture in front of the Ryder Cup this weekend. The big news of the last 24 hours has been a galloping global yield rise worthy of the finest thoroughbred. A hawkish Fed meeting, with the dots increasing and the end of QE potentially accelerated, didn’t quite have the ability to move markets but the global dam finally broke yesterday with Norway being the highest profile developed country to raise rates this cycle (expected), but more importantly a Bank of England meeting that saw the market reappraise rate hikes. Looking at the specific moves, yields on 10yr Treasuries were up +13.0bps to 1.430% in their biggest daily increase since 25 February, as both higher real rates (+7.9bps) and inflation breakevens (+4.9bps) drove the advance. US 10yr yields had been trading in a c.10bp range for the last month before breaking out higher, though they have been trending higher since dropping as far as 1.17% back in early-August. US 30yr yields rose +13.2bps, which was the biggest one day move in long dated yields since March 17 2020, which was at the onset of the pandemic and just days after the Fed announced it would be starting the current round of QE. The large selloff in US bonds saw the yield curve steepen and the long-end give back roughly half of the FOMC flattening from the day before. The 5y30y curve steepened 3.4bps for a two day move of -3.3bps. However the 2y10y curve steepened +10.5bps, completely reversing the prior day’s flattening (-4.2bps) and leaving the spread at 116bp, the steepest level since first week of July. 10yr gilt yields saw nearly as strong a move (+10.8bps) with those on shorter-dated 2yr gilts (+10.7bps) hitting their highest level (0.386%) since the pandemic began.That came on the back of the BoE’s latest policy decision, which pointed in a hawkish direction, building on the comment in the August statement that “some modest tightening of monetary policy over the forecast period is likely to be necessary” by saying that “some developments during the intervening period appear to have strengthened that case”. The statement pointed out that the rise in gas prices since August represented an upside risks to their inflation projections from next April, and the MPC’s vote also saw 2 members (up from 1 in August) vote to dial back QE. See DB’s Sanjay Raja’s revised rate hike forecasts here. We now expect a 15bps hike in February. The generalised move saw yields in other European countries rise as well, with those on 10yr bunds (+6.6bps), OATs (+6.5bps) and BTPs (+5.7bps) all seeing big moves higher with 10yr bunds seeing their biggest climb since late-February and back to early-July levels as -0.258%. The yield rise didn’t stop equity indices recovering further from Monday’s rout, with the S&P 500 up +1.21% as the index marked its best performance in over 2 months, and its best 2-day performance since May. Despite the mood at the end of the weekend, the S&P now starts Friday in positive territory for the week. The rally yesterday was led by cyclicals for a second straight day with higher commodity prices driving outsized gains for energy (+3.41%) and materials (+1.39%) stocks, and the aforementioned higher yields causing banks (+3.37%) and diversified financials (+2.35%) to outperform. The reopening trade was the other main beneficiary as airlines rose +2.99% and consumer services, which include hotel and cruiseline companies, gained +1.92%. In Europe, the STOXX 600 (+0.93%) witnessed a similarly strong performance, with index led by banks (+2.16%). As a testament to the breadth of yesterday’s rally, the travel and leisure sector (+0.04%) was the worst performing sector on this side of the Atlantic even while registering a small gain and lagging its US counterparts. Before we get onto some of yesterday’s other events, it’s worth noting that this is actually the last EMR before the German election on Sunday, which has long been signposted as one of the more interesting macro events on the 2021 calendar, the results of which will play a key role in not just domestic, but also EU policy. And with Chancellor Merkel stepping down after four terms in office, this means that the country will soon be under new management irrespective of who forms a government afterwards. It’s been a volatile campaign in many respects, with Chancellor Merkel’s CDU/CSU, the Greens and the centre-left SPD all having been in the lead at various points over the last six months. But for the last month Politico’s Poll of Polls has shown the SPD consistently ahead, with their tracker currently putting them on 25%, ahead of the CDU/CSU on 22% and the Greens on 16%. However the latest poll from Forschungsgruppe Wahlen yesterday suggested a tighter race with the SPD at 25, the CDU/CSU at 23% and the Greens at 16.5%. If the actual results are in line with the recent averages, it would certainly mark a sea change in German politics, as it would be the first time that the SPD have won the popular vote since the 2002 election. Furthermore, it would be the CDU/CSU’s worst ever result, and mark the first time in post-war Germany that the two main parties have failed to win a majority of the vote between them, which mirrors the erosion of the traditional big parties in the rest of continental Europe. For the Greens, 15% would be their best ever score, and exceed the 9% they got back in 2017 that left them in 6th place, but it would also be a disappointment relative to their high hopes back in the spring, when they were briefly polling in the mid-20s after Annalena Baerbock was selected as their Chancellor candidate. In terms of when to expect results, the polls close at 17:00 London time, with initial exit polls released immediately afterwards. However, unlike the UK, where a new majority government can immediately come to power the day after the election, the use of proportional representation in Germany means that it could potentially be weeks or months before a new government is formed. Indeed, after the last election in September 2017, it wasn’t until March 2018 that the new grand coalition between the CDU/CSU and the SPD took office, after attempts to reach a “Jamaica” coalition between the CDU/CSU, the FDP and the Greens was unsuccessful. In the meantime, the existing government will act as a caretaker administration. On the policy implications, it will of course depend on what sort of government is actually formed, but our research colleagues in Frankfurt have produced a comprehensive slidepack (link here) running through what the different parties want across a range of policies, and what the likely coalitions would mean for Germany. They also put out another note yesterday (link here) where they point out that there’s still much to play for, with the SPD’s lead inside the margin of error and with an unusually high share of yet undecided voters. Moving on to Asia and markets are mostly higher with the Nikkei (+2.04%), CSI (+0.53%) and India’s Nifty (+0.52%) up while the Hang Seng (-0.03%), Shanghai Comp (-0.07%) and Kospi (-0.10%) have all made small moves lower. Meanwhile, the Evergrande group missed its dollar bond coupon payment yesterday and so far there has been no communication from the group on this. They have a 30-day grace period to make the payment before any event of default can be declared. This follows instructions from China’s Financial regulators yesterday in which they urged the group to take all measures possible to avoid a near-term default on dollar bonds while focusing on completing unfinished properties and repaying individual investors. Yields on Australia and New Zealand’s 10y sovereign bonds are up +14.5bps and +11.3bps respectively this morning after yesterday’s move from their western counterparts. Yields on 10y USTs are also up a further +1.1bps to 1.443%. Elsewhere, futures on the S&P 500 are up +0.04% while those on the Stoxx 50 are down -0.10%. In terms of overnight data, Japan’s August CPI printed at -0.4% yoy (vs. -0.3% yoy expected) while core was unchanged in line with expectations. We also received Japan’s flash PMIs with the services reading at 47.4 (vs. 42.9 last month) while the manufacturing reading came in at 51.2 (vs. 52.7 last month). In pandemic related news, Jiji reported that Japan is planning to conduct trials of easing Covid restrictions, with 13 prefectures indicating they’d like to participate. This is likely contributing to the outperformance of the Nikkei this morning. Back to yesterday now, and one of the main highlights came from the flash PMIs, which showed a continued deceleration in growth momentum across Europe and the US, and also underwhelmed relative to expectations. Running through the headline numbers, the Euro Area composite PMI fell to 56.1 (vs. 58.5 expected), which is the lowest figure since April, as both the manufacturing (58.7 vs 60.3 expected) and services (56.3 vs. 58.5 expected) came in beneath expectations. Over in the US, the composite PMI fell to 54.5 in its 4th consecutive decline, as the index hit its lowest level in a year, while the UK’s composite PMI at 54.1 (vs. 54.6 expected) was the lowest since February when the country was still in a nationwide lockdown. Risk assets seemed unperturbed by the readings, and commodities actually took another leg higher as they rebounded from their losses at the start of the week. The Bloomberg Commodity Spot index rose +1.12% as Brent crude oil (+1.39%) closed at $77.25/bbl, which marked its highest closing level since late 2018, while WTI (+1.07%) rose to $73.30/bbl, so still a bit beneath its recent peak in July. However that is a decent rebound of roughly $11/bbl since its recent low just over a month ago. Elsewhere, gold (-1.44%) took a knock amidst the sharp move higher in yields, while European natural gas prices subsidised for a third day running, with futures now down -8.5% from their intraday peak on Tuesday, although they’re still up by +71.3% since the start of August. US negotiations regarding the upcoming funding bill and raising the debt ceiling are ongoing, with House Speaker Pelosi saying that the former, also called a continuing resolution, will pass “both houses by September 30,” and fund the government through the first part of the fiscal year, starting October 1. Treasury Secretary Yellen has said the US will likely breach the debt ceiling sometime in the next month if Congress does not increase the level, and because Republicans are unwilling to vote to raise the ceiling, Democrats will have to use the once-a-fiscal-year tool of budget reconciliation to do so. However Democrats, are also using that process for the $3.5 trillion dollar economic plan that makes up the bulk of the Biden agenda, and have not been able to get full party support yet. During a joint press conference with Speaker Pelosi, Senate Majority Leader Schumer said that Democrats have a “framework” to pay for the Biden Economic agenda, which would imply that the broad outline of a deal was reached between the House, Senate and the White House. However, no specifics were mentioned yesterday. With Democrats looking to vote on the bipartisan infrastructure bill early next week, negotiations today and this weekend on the potential reconciliation package will be vital. Looking at yesterday’s other data, the weekly initial jobless claims from the US for the week through September 18 unexpectedly rose to 351k (vs. 320k expected), which is the second week running they’ve come in above expectations. Separately, the Chicago Fed’s national activity index fell to 0.29 in August (vs. 0.50 expected), and the Kansas City Fed’s manufacturing activity index also fell more than expected to 22 in September (vs. 25 expected). To the day ahead now, and data highlights include the Ifo’s business climate indicator from Germany for September, along with Italian consumer confidence for September and US new home sales for August. From central banks, we’ll hear from Fed Chair Powell, Vice Chair Clarida and the Fed’s Mester, Bowman, George and Bostic, as well as the ECB’s Lane and Elderson, and the BoE’s Tenreyro. Finally, a summit of the Quad Leaders will be held at the White House, including President Biden, and the Prime Ministers of Australia, India and Japan. Tyler Durden Fri, 09/24/2021 - 08:12.....»»

Category: blogSource: zerohedgeSep 24th, 2021

Advertisers demand agencies prove their eco credentials

In this week's Insider Advertising newsletter we're covering sustainability metrics in RFPs, supply-chain issues for ad plans, and Facebook's comms. Hello and welcome back to Insider Advertising, your weekly look at the biggest stories and trends affecting Madison Avenue and beyond. I'm Lara O'Reilly, Insider's media and advertising editor. If this was forwarded to you, sign up here.As we gear up for the big holiday quarter, Facebook advertisers are already experiencing their nightmare before Christmas as Apple's recent privacy changes take effect. In a blog post Wednesday, Facebook said some advertisers' post-iOS 14 difficulties were hitting harder than they had expected. Some of those issues could be attributed to Facebook underreporting conversions on iOS devices by about 15%, the company said. Direct-to-consumer and so-called performance advertisers in particular are bracing for a bumpy Q4.Let's get you caught up on this week's other big advertising news:Marketers are pushing their ad agencies to be eco-friendlySupply-chain shortages are affecting ad plansFacebook is embarking on a more defensive comms approachIt's not easy being green Investors can make this happen, if they want to. Frank Bienewald/LightRocket via Getty Images It's been a little over five years since big brands like General Mills and HP made headlines by setting out requirements for their ad agencies to diversify their workforces.Now, an increasing number of advertisers are also asking agencies pitching for their business to lay out their sustainability commitments, the Insider correspondent Patrick Coffee reports, quoting one agency exec who said it's now part of every pitch.But while sustainability metrics are now front and center of many RFPs, I'd wager that few advertisers are at the point where they can audit compliance with the promises being made."It's an important part of any process, but many of the areas can be quite challenging on an ongoing basis," Ryan Kangisser, the managing partner of strategy at the media-advisory firm MediaSense, told me. What's more, as the coronavirus pandemic forced nearly all businesses to significantly rev up their e-commerce operations, some advertisers could do well with turning the mirror back on themselves. Global delivery volume records that were set last year are likely to be smashed once again in the holiday quarter."As e-commerce gets bigger, we all have to recognize the energy and power required to fuel all the e-commerce sites and clicks and transactions that are exponentially exploding at the moment," said Richard Robinson, a managing director of the pitch consultancy Oystercatchers.Yet, Robinson said, when brands are leaned on to ask who is ultimately responsible for sustainable e-commerce within their companies - The CMO? CDO? IT? Supply chain? - many execs still don't have a solid answer."The e-commerce kahuna is everyone's inconvenient secret at the moment," Robinson added.Hey big spenderAs e-commerce spending continues to soar through 2021 and beyond, so too is retailer spending on digital ads.Retail has long been the biggest-spending sector on digital ads in the US - which makes sense, as it's the category with the clearest visibility about whether the ads drove a sale. eMarketer; Taylor Tyson/Insider Insider Intelligence forecasts US retailer digital ad spending will blast through the $50 billion mark in 2022 - "a mark that no other industry will approach in the next couple of years," the Insider-owned research company's analysts wrote. In fact, Insider Intelligence doesn't predict any other single category will spend more than $20 billion in digital ads a year until 2023.In the meantime, retailers and e-commerce companies like Walmart, Target, and Instacart are busily building their own ad businesses and taking on the market leader Amazon by using their valuable first-party data to help advertisers target the shoppers most likely to buy their products. Insider Intelligence estimates that US retail media ad spending will grow almost 28% to reach $24 billion this year.You can't always get what you want FILE PHOTO: A General Motors assembly worker works on assembling a V6 engine, used in a variety of GM cars, trucks and crossovers, at the GM Romulus Powertrain plant in Romulus, Michigan, U.S. August 21, 2019. Rebecca Cook/File Photo Insider's senior reporter Lauren Johnson reports: Supply-chain issues are affecting ad spend, Ad Age reported, and it's not just mom and pops grappling to stock their shelves.Automakers like GM are also contending with big issues that make it hard to get their products to people, and big names are cutting advertising spend as a result, according to four agency sources who handle ad buying for the auto industry.One ad buyer said GM brands like Ford and Chevy, as well as the Dutch automaker Stellantis, cut ad spend earlier this year in response to computer-chip shortages that slashed production cycles, adding that car brands shifted their messaging from selling new vehicles to encouraging people to buy used cars at local dealerships. Representatives for Ford, Chevy, and Stellantis did not respond to requests for comment.Agency sources said that such cuts had hit mostly TV advertising and that in cases in which only some of a brand's products were unavailable, advertisers redirected digital ad spend to promote in-stock items with performance tactics like programmatic advertising that can track sales of products.Read more: KFC isn't advertising chicken tenders on TV because of supply-chain shortagesSorry seems to be the hardest word Facebook CEO Mark Zuckerberg in New York City on Friday, October 25, 2019. AP Photo/Mark Lennihan A few years ago, as sure as spring would turn to summer and summer to fall, it felt as if the latest Facebook mea culpa was only ever a few months away. (The Washington Post even made a handy timeline.) Yet while Facebook has been significantly ramping up its own ad spend of late, don't expect to see any more full-page apology ads from the social network in your favorite newspaper anytime soon.As The New York Times reported, amid the weight of negative scrutiny on the company, Facebook's communications execs are pressing on with a different strategy: No more apologies.That attack-dog approach has been in plain view following The Wall Street Journal's explosive "Facebook Files" investigative series, which uncovered a litany of serious issues on that platform that the company appears to be aware of but has failed to fully address.Facebook's vice president of global affairs, Nick Clegg, fired back with his "What the Wall Street Journal Got Wrong" blog post. Mark Zuckerberg, who personally hasn't responded to The Journal's reporting, instead wagged his finger at The Times for implying he had posted a video of himself riding an "electric surfboard" instead of a hydrofoil. Over on Twitter, a Facebook representative sought to play down The Times' reporting of "Project Amplify," the social network's initiative to show people positive stories about the company on the platform.Meanwhile, the heat on Facebook shows no sign of petering out:Another Facebook ad boycott could be around the cornerSenators said they'd investigate Facebook's internal research into Instagram's effects on the mental health of young usersOne of Wall Street's top internet analysts says Facebook and Instagram user satisfaction just dropped to all-time lowsRecommended readingWaze CMO Erin Clift has left amid leadership shake-up at the Google-owned company - InsiderRoku is rolling out a new tool to compete with Facebook and Google for the $16 billion local advertising market - InsiderAT&T CEO John Stankey says he's unhappy with the company's brand and is planning a more future-facing refresh - CNBCVideoAmp has begun testing its cross-platform TV- and video-measurement ratings alternative with five major ad holding companies - CampaignAudi is looking for a new ad agency to handle its $185 million ad business - InsiderTikTok insiders describe how parent company ByteDance's culture principles, called 'ByteStyles,' are used to reward and reprimand - InsiderSee you next week - and in the meantime please do continue sending your feedback and news tips for this newsletter to loreilly@insider.com Read the original article on Business Insider.....»»

Category: topSource: businessinsiderSep 23rd, 2021

Invest in These 3 Funds as Retail Sales Rebound in August

Retail sales surged in August as Americans resumed spending on services that were avoided at the onset of the pandemic. Americans continue to splurge despite the spread of the Delta variant in August, pushing retail sales up by 0.7%, after a downwardly revised decline of 1.8% in July. The U.S. Census Bureau reported on Sep 16 that retail and food services sales are now 15% higher than the same period last year.Clothing and clothing accessories stores witnessed a 38.8% rise in sales, with sales advancing in almost every major retail category. In fact, retails sales were much stronger in August, on a 1.8% rise, excluding auto sales. A shortage of new cars and trucks due to chip scarcity continues to plague the market, affecting sales at auto dealers.Meanwhile, high inflation continues to bother consumers, curtailing consumers’ current spending when compared to spring. However, Americans are comfortably spending on services they avoided during the pandemic like dining out, hotel rentals, movies and theater tickets, airfare, etc, compared to the year-ago period. Although rise in new coronavirus cases slowed demand for the aforementioned services and sales at restaurants were flat last month.Sales across groceries, home centers, gas stations and home furnishings stores continued to rise last month, while sales of big-box electronics retailers, especially those selling hobby items and sports equipment, slipped.August’s retail sales not only outpaced the consensus estimate of a 0.9% decline but also highlighted that Americans are willing to spend and have an appetite for big budget vacations as well as new cars and trucks. Additionally, the University of Michigan on Sep 17 reported that its preliminary reading for the index of consumer sentiment rebounded to 71 in September, after a steep decline of nearly 9 points in August.With the holiday season approaching, Americans are expected to continue to spend elaborately, especially on clothes, electronics and jewelry. Per Mastercard SpendingPulse forecast, holiday retail sales are expected to rise 7.4% from a year earlier. Bain and Deloitte also forecast sales growth between 7% and 9%.Big brands like Walmart have already started hiring freight handlers and lift drivers for the holiday season and beyond, and plan to hire 20,000 supply chain employees. Home Depot has reported the selling out of Halloween decorations, which were released early this year. This signals at higher sales of Christmas decorations this year. 3 Fund PicksGiven the rebound in retail sales in August, we are optimistic that the trend will continue for the rest of the year, especially during the holiday season. Hence, we have shortlisted three mutual funds that are poised to grow and carry a Zacks Mutual Fund Rank #1 (Strong Buy) or 2 (Buy). Moreover, these funds have encouraging one and three-year returns. Additionally, the minimum initial investment is within $5000.We expect these funds to outperform peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most of the fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also on the likely future success of the fund.The question here is: why should investors consider mutual funds? Reduced transaction costs and diversification of portfolio without several commission charges that are associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).Fidelity Select Retailing Portfolio FSRPX fund aims for capital appreciation. This non-diversified fund invests a large portion of its assets in the common stock of companies engaged in merchandising finished goods and services, primarily to individual consumers.This Zacks Sector-Other product has a history of positive total returns for more than 10 years. Specifically, FSRPX has returned nearly 21% and nearly 23% over the past three and five-year period, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.FSRPX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.73%, which is below the category average of 0.79%.Fidelity Select Leisure Portfolio FDLSX fund aims for capital appreciation. This non-diversified fund invests majority of assets in common stocks of companies, principally engaged in the design, production, or distribution of goods or services in the leisure industries.This Zacks Sector-Other product has a history of positive total returns for more than 10 years. Specifically, FDLSX has three and five-year return of 16.6% and 16.5%, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.FDLSX has a Zacks Mutual Fund Rank #1 and an annual expense ratio of 0.77%, which is below the category average of 0.79%.Fidelity Select Consumer Staples Portfolio FDFAX fund aims for capital growth. It invests majority of assets in securities of companies primarily engaged in manufacturing, marketing or distribution of consumer staples products. The non-diversified fund invests in both U.S. and non-U.S. issuers.This Zacks sector – Other product has a history of positive total returns for more than 10 years. Specifically, FDFAX has returned 12.7% and 7.6% over the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.FDFAX has a Zacks Mutual Fund Rank #2 and an annual expense ratio of 0.75% versus the category average of 0.76%.Want key mutual fund info delivered straight to your inbox?Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week.Get it free >> Breakout Biotech Stocks with Triple-Digit Profit Potential The biotech sector is projected to surge beyond $2.4 trillion by 2028 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases. Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Recommendations from previous editions of this report have produced gains of +205%, +258% and +477%. The stocks in this report could perform even better.See these 7 breakthrough stocks 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 Get Your Free (FSRPX): Fund Analysis Report Get Your Free (FDFAX): Fund Analysis Report Get Your Free (FDLSX): Fund Analysis Report 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: zacksSep 21st, 2021

Precarious Market Action

Precarious Market Action Dan Laboe here, Editor of the Headline Trader portfolio. I am covering for the acclaimed Jim who will be back in action tomorrow. The market is growing increasingly cautious as we enter post-earnings season action. This precarious market posture was apparent in today's dicey trade. Stocks were buoyant for most of the day (trading right around even) until the last hour of the session, where indecisiveness turned into panic, causing all the major averages to spill into the close. We are entering a seasonally weak period for the public equity market (September & October have been the worst months for stocks in the past decade), where down days are expected. Market participants are increasingly taking on the mindset that this may be as good as it gets, which could cause further short-term volatility. This is the second consecutive down day for all the major averages, with the S&P 500 and Dow Jones slipping 1.07% & 1.08%, respectively. The growth-driven Nasdaq 100 was punished marginally less because of its larger decline yesterday but still experienced a 0.97% decline. The VIX broke above its 200-day moving average for just the 3rd time since early March, and its 50-day turned into a support today. This may be an indication that volatility will remain with us for a time. Consumer discretionary, the biggest laggard yesterday following weak retail sales data, was the only market sector to close in the green today. This morning, robust earnings from Lowe's (LOW) and TJX (TJX) drove fresh hope back into the retail space. Fed Minutes July's Fed Minutes were published this afternoon, and the markets had an immediate knee-jerk reaction to the Fed's focus on the potential impact of the Delta-variant, causing the US 10 Year yield to plummet and equity indexes to jump in the 5 minutes that followed its release. This move quickly reversed with an exaggerated move in the opposite direction, which inevitably led to the end of session sell-off. Today's released Fed Minutes were stale. The Fed in last month's FOMC meeting is not the same Fed that we have today. Since the exceptional July jobs report earlier this month, members of the Fed have changed their stance on the tapering timeline. In the last couple of weeks, several Central Bankers have come out and said that it would be prudent to start paring its $120 billion in asset purchases sooner rather than later. The markets are now pricing in a September announcement (FOMC meeting September 21-22) to start tapering in October and complete its asset purchasing program in mid-2022. This morning, St. Louis Fed president James Bullard discussed the risks of delaying monetary tightening, stating that if the Fed's inflation projections are wrong, they may be forced to implement abrupt and potentially "very disruptive" policy changes. He declared that "every indication is that labor markets are about as tight as they ever get." Bullard wants the Fed to be done tapering by the first quarter of next year so that the Central Bank would have the flexibility to begin liftoff (first Fed Funds rate hike) as soon as possible. Every day it seems that the Fed gets more hawkish, but if the Delta-variant does begin to impact the economy, this narrative will quickly reverse.  Is This As Good As It Gets? Market participants are taking on a 'this is as good as it gets' mentality with peak earnings growth, ultra-low interest rates, peak consumer demand, and accommodative monetary/fiscal policies, all now ostensibly in the rearview mirror. Investors still have their mouths open as we round out a jaw-dropping Q2 earnings season. This was one of the best earnings seasons in history, with 88% of companies beating EPS estimates by an average of 17.5% while exhibiting record profit margins averaging 13.6%. Earnings and revenues are up an unprecedented 103% & 28% year-over-year, respectively. Despite the exceptionally weak Q2 2020 EPS comps, earnings are still up over 30% from pre-pandemic levels. Now investors are looking at decelerating earnings growth in the coming quarters, forcing market participants to reevaluate the market's rich valuation multiples. Since the pandemic lockdowns began, the Fed-induced ultra-low interest rate environment has provided a nice tailwind for high-growth stocks. Record low cost of capital (driven by low yields) provided nascent innovation-powered companies with an almost endless upside in the equity market. Analysts were able to catapult the value of growth businesses' projected future earnings, justifying some of the crazy valuation multiples we saw earlier this year. Most of the over euphoric valuations on unprofitable growth stocks have been compressed by the rising yields in anticipation of liftoff. Consumer spending took off in the first 4 months of 2021 as the economic reopening drove an unparalleled tidal wave of pent-up demand on Main Street. The pandemic lockdowns and resulting record levels of savings/wealth in the US ($19 trillion increase in wealth, 26% increase in net wealth) propelled our society's propensity to spend as storefronts reopened across the country. This effect has decelerated since April, causing investors to question if peak consumer spending is in the past. With back-to-school shopping and the holiday season around the corner, I find this notion unlikely. The unprecedented level of accommodation provided by record monetary (Federal Reserve) and fiscal (Federal Government) spending amid the pandemic is the only reason that our economy has been able to not only recover at such a speed but come out the other side better than ever. The PPP loans, COVID checks, and unemployment benefits provided by the Federal government provided the economy with enough liquidity to do a little better than survive last year and now thrive during the recovery. The Fed's swift action of dropping Fed Fund rates to 0-0.25% and its subsequent $120 billion monthly asset purchases (aka quantitative easing) allowed the equity market to take off after the initial pandemic sell-off. The accommodative monetary and fiscal policies are beginning to phase out. Still, I expect the aforementioned positive impacts will continue to echo in our economy for quarters to come. The best is yet to come. We are reentering the Roaring 20s with ambition. Technological advancements are accelerating faster than ever, pushing our economy to do the same. I expect to see growing annual stock market returns as prolifically advancing tech thrusts valuations to continuously new highs. A Technical Omen That Could Spell Trouble For Investors A Hindenburg Omen, a technical indicator that signals an elevated probability of a market crash, has been reached by this precarious market. This indicator looks for an elevated number of new 52-week highs and lows that surpasses 2.2% of all securities traded that day (the number of highs cannot be more than double the number of lows), along with an upward trending 50-day moving average, and negatively shifting market sentiment (indicated by the McClellan Oscillator or MCO). This indicator generally implies that market participants are tentative and uncertain. The Hindenburg Omen almost always precedes a stock market downturn but is only about 25% accurate when it is seen. Investors have been positioning themselves defensively as post-earnings price action commenced. These defensive investors are buying stocks in low beta sectors like health care, utilities, consumer staples, and real estate, which have led over the past week of trading. All of the previously mentioned sectors have lagged the broader market over the past 52-weeks, so it's only natural for weakness chasing money managers to rotate into these segments even if an index level correction (10%+ decline from recent highs) isn't coming. I'm not running for the hills quite yet, with trillions of bullish capital still waiting to be deployed on even the most immaterial dips. I am also not adding many new positions to my portfolio. I don't think we will experience a full correction, but I do believe that some consolidation may be in order over the next few months.  Cathie Wood vs. The Big Short's Michael Burry Expected interest rate growth and overzealous valuation multiples on ultra-high-growth stocks have some investors betting against Cathie Wood's Ark Innovation ETF (ARKK). 'Big Short' investor, Michael Burry, who is famous for predicting and profiting from the 2008 financial crisis, revealed a $31 million put position against ARKK, along with a $731 million bet against Tesla (TSLA), which happens to be Cathie's largest holding, in his latest 13-F filing (institutional investment managers' SEC required quarterly report). The actively traded ARKK fund has become the benchmark for high-growth 'market-disruptors,' and Cathie Wood has become an investing icon. Her innovation-driven ETF saw an impressive bull run during the pandemic, exhibiting a 384% 11-month rally from its March 2020 lows to its peak in mid-February, but has recently fallen out of market favor. Soaring yields forced investors to reevaluate the extreme growth multiples in Cathie's 4th Industrial Revolution focused holdings. Cathie Wood fired back at the press surrounding Burry's notable position against her ETF with a tweet saying, "I do not believe that he (Michael Burry) understands the fundamentals that are creating explosive growth and investment opportunities in the innovation space." Burry doesn't have a vendetta against Cathie Wood but sees a short-term trading opportunity. He is making a relatively small bet in his over $2 billion Scion Asset Management portfolio (ARKK put up just 1.5% of total assets under management). Burry believes that the current fundamentals of ARKK's high growth holdings are out of whack in this rising interest rate environment, and he is not alone with this thinking. A record 13.5% of outstanding ARKK shares are currently held short (24.87 million shares), and a Short ARKK ETF, which will trade under the ticker SARK, is awaiting SEC approval. ARKK is looking at a days-to-cover short ratio (number of shares held short divided by daily volume) of 4.6, which isn't exactly a concerning level yet, but it is growing. I personally love how Cathie Wood views this rapidly advancing market and focuses on long-term profitability instead of short-term volatility. I perceive Cathie's pandemic success as a reflection of her savvy ability to recognize market-disrupting innovators, and it finally paid off after more than 5 years of flying under the radar (relatively speaking). That being said, I still utilize her ETF for put option opportunities when they reveal themselves because of the speed at which ARKK moves. Cathie Wood remains one of if not the most influential players in the market today. "The Cathie Wood Effect" has replaced "The Warren Buffett Effect" in this rapidly progressing and digitalizing economic/market environment. ARKK is undoubtedly a long-term hold for the commencing 4th Industrial Revolution, which is already changing the world in which we live.  Today’s Portfolio Highlights Options Trader: Following some of this week's precarious price action, Kevin is pulling profits on the September call option in Nasdaq, Inc (NDAQ), after almost two months of holding. The NDAQ September 180 call contracts crossed the 30 days till expiration threshold, and Kevin doesn't want to lose that time premium baked into these options. This exchange has been an excellent trade for the Options Trader portfolio this year, with NDAQ providing three separate profit-driving trades since April. According to Kevin: "First one was a $892 gain on 4/16. Second one was a $906 gain on 6/24. Looks like we'll get approx. $435 on this one." NDAQ has been on an absolute tear so far this year, rallying over 40% year-to-date (more than doubling the S&P 500s performance). Kevin stated that he would likely jump back into this trade as he still sees further upside potential. Stocks Under $10: The health care sector has led the broader market over the past month of trading, with Moderna (MRNA) and Pfizer (PFE) leading the pack. Brian is taking advantage of this sector's momentum with the addition of Immunovant (IMVT) on this down day for the market. IMVT and its development of monoclonal antibodies for the treatment of autoimmune diseases are developing an early treatment for those with COVID. Brian expects this stock to get a Delta-variant catalyzed boost, and most analysts seem to agree with him with every price target showing a sizable increase from current price levels. Surprise Trader:  Car manufacturers are struggling to keep up with demand as chip shortages continue to plague the space, causing used/old cars to stay on the road longer. Dave is taking advantage of this notion with a read-through trade, adding Advanced Auto Parts (AAP) to the Surprise Trader portfolio. More old cars on the road means more tune-ups and breakdowns that will require vehicle parts. The company is reporting before open next Tuesday, and Dave believes that it has some strong upside potential that the markets are yet to price in. Happy Wednesday! DanRecommendations from Zacks' Private Portfolios: Believe it or not, this article is not available on the Zacks.com website. The commentary is a partial overview of the daily activity from Zacks' private recommendation services. If you would like to follow our Buy and Sell signals in real time, we've made a special arrangement for readers of this website. Starting today you can see all the recommendations from all of Zacks' portfolios absolutely free for 7 days. Our services cover everything from value stocks and momentum trades to insider buying and positive earnings surprises (which we've predicted with an astonishing 80%+ accuracy). Click here to "test drive" Zacks Ultimate for FREE >>  Zacks Investment Research.....»»

Category: topSource: zacksSep 21st, 2021

We Analyzed the Emissions 4 Families Generated in a Week. Here’s What We Learned About Living Greener

If 2021 was one of our last, best, chances to save the planet, it was also the year that we bought lots and lots of stuff, cooped up at home and frustrated with the pandemic. That shopping acted counter to the goal of reducing our carbon footprint; consumption drives about 60% of greenhouse gas emissions… If 2021 was one of our last, best, chances to save the planet, it was also the year that we bought lots and lots of stuff, cooped up at home and frustrated with the pandemic. That shopping acted counter to the goal of reducing our carbon footprint; consumption drives about 60% of greenhouse gas emissions globally, as the factories that make our stuff and the ships and trucks that bring it to us generate emissions, not to mention the emissions caused by mining for raw materials and farming the food we eat. Amazon alone reported in June that its emissions went up 19% in 2020 because of the boom in shopping during the pandemic. [time-brightcove not-tgx=”true”] Still, it can be hard, as an individual or a family, to care enough to change habits. Buying things has become one of the few sources of joy for many people since COVID-19 began sweeping the globe—and shopping online has become necessary for people trying to stay at home and avoid potential exposure. But goods are so cheap and easily available online that it feels harmless to add one more thing to your shopping cart. Convincing yourself to be environmentally conscious in your shopping habits feels a bit like convincing yourself to vote—obviously you should do it, but do the actions of one person really matter? As I kept buying things that I thought I needed while cooped up at home, I wondered: how much was my shopping, individually, contributing to climate change? Those pairs of extra-soft sweatpants, those reams of high density rubber foam that I use to baby-proof my apartment, those disposable yogurt bins and takeout food containers, all made from plastic and paper and other raw materials; was I—and other U.S. families spending so much money on stuff—making it that much harder to reach the COP26 goal of preventing warming from going beyond 1.5°C? Read more: Our Shopping Obsession is Causing a Literal Stink In order to estimate the carbon footprint of the shopping habits of families like mine, I asked four families in four cities—Denver, Colo., Atlanta, Ga., San Francisco, Calif., and Salem, Mass.—to track their spending the week beginning on Cyber Monday, Nov. 29, so I could try to determine what parts of their holiday spending were most harmful to the environment. I chose to calculate their carbon footprint rather than other impacts like the amount of water used to make the products they bought because scientists agree on the urgency of reducing greenhouse gas emissions to protect the planet’s future.   Courtesy photoThe baby in the Salem family opens a holiday gift. Measuring one’s carbon footprint is difficult, especially because much of the environmental impact from spending is upstream, at the factories that burn fossil fuels to make cars, for example, and at the farms that raise cows for our consumption and release methane. So I asked for help from David Allaway, a senior policy analyst at the Oregon Department of Environmental Quality, who has been working for years to calculate the carbon footprint that comes from consumer spending. To figure out how much the consumption habits of Oregonians contribute to climate change, and what the state should be doing to remedy this, Allaway commissioned the Stockholm Environment Institute to produce the first state-level analysis of the environmental footprint of Oregon’s consumer spending in 2011. This analysis, called consumption-based emissions accounting, roughly estimates the emissions that come from consumer purchases in 536 different categories, including things as specific as beef cattle, books, and full-service restaurants. It counts the emissions of all purchases by consumers, regardless of where those emissions were created—in Mexico, picking, packing, and shipping bananas; in Saudi Arabia, drilling for and refining petroleum. Allaway has refined the analysis since then and completed it again in 2015. Allaway agreed to use the model he has honed to calculate the carbon footprint of these four families, based on how much money they spent in each category. The families sent me their expenses, excluding housing, and I entered them into the categories in Allaway’s model. This is, of course, an inexact model: The families only tracked one week of spending, and their spending was self-reported, so it’s possible they missed an expense or two. Still, the estimates give a good overview of the emissions driven by the behavior of different families. They only tracked one week of spending, and I prorated their electricity and power costs, so this is still an inexact calculator. A family might spend a lot one week and not much the following week. Still, the estimates give a good overview of just how much of a difference individuals can make in reducing their carbon footprint, and they shed light on exactly how our spending drives emissions. Although many consumers have a lot of guilt about disposing of things once they’re done with them, whether it be plastic packaging or a shirt that they’ve worn a few times and then stained, we just looked at consumption. That’s because the emissions from the disposal of goods is tiny compared to the emissions created from producing something in the first place. “By the time you purchase something, 99% of the damage has already been done,” Allaway told me. This means that the “reduce” part of “reduce, reuse, recycle,” is the most important. Read more: How American Consumers Broke the Supply Chain Buying less stuff is a piece of reducing emissions, but families can most reduce their carbon footprints through their eating and travel habits. The Denver family, which is vegetarian and has solar panels on their roof, had a significantly smaller footprint than the others. The families that ate beef and dairy and that bought plane tickets were responsible for the most emissions. There’s a reason the Swedish have a word “flygskam,” or “flight shame”: one flight can cancel out the most tightfisted family’s progress for a week. In general, spending on services and experiences, like concert tickets or museum subscriptions, is more environmentally friendly than spending on goods, because part of what you are paying for is labor. Allaway estimates that every $100 spent on materials accounts for about three times more emissions than $100 spent on services. Of course, there are exceptions—spending $100 on a steak dinner for two could have higher emissions than spending $100 on groceries to make a vegan meal at home. A few more quick caveats: these are all families with annual incomes of more than $100,000, and I sourced them from friends of friends and social media. They are all white, which is the group that is responsible for the highest levels of consumption in the U.S., and as a result, the most emissions. TIME agreed to use only their initials and the cities in which they live in order to encourage them to openly share their consumption habits without fear of being shamed for their purchases. The results varied widely, from a family in San Francisco that had a weekly carbon footprint of 1,267 kg of carbon dioxide equivalent—about the same as driving from New York to San Francisco in a gas-powered car—to the family in Denver whose weekly carbon footprint was just 360 kgCO2, the equivalent of driving from Denver to Tucson. Here are their detailed weekly breakdowns. The Family That Spends a Lot Online A.S. + W.H. Location: Salem, Mass. Children: 1-year-old Combined household income: about $200,000 Total emissions: 819 kgCO2e   This family spent about $2,800 for the week and had a carbon footprint of 819 kgCO2e, the equivalent of a passenger car driving 2,058 miles, according to the EPA’s Greenhouse Gas Equivalencies Calculator. That’s the same as they would have emitted from driving from Salem, Mass. to Charleston, S.C., and back. A.S and W.H. own their home in the coastal community of Salem, Mass. and have a baby daughter. Before becoming parents, the couple was used to buying things and using them for years. But they’re finding that as their daughter grows, their pace of shopping has sped up. “One of the things that makes having a baby so wasteful is that you need something, and when you need it, you need it urgently,” A.S. told me. “You need it for three weeks, and then you don’t need it anymore.” Online shopping has been a source of contention for the couple; W.H. buys almost everything online, which his spouse thinks creates needless waste. The two have asked their extended family to cut back on buying goods and to gift them experiences or services instead, but relatives have been resistant to change. Their biggest single source of consumption-based emissions from the week, 138 kgCO2e, came from buying stuff online. They spent $298.99 for gifts for two family friends: two subscription boxes from Little Passports, which will send the recipients crafts, puzzles and books about different locations around the world for a year. This falls into the “dolls, toys, and games” category, which means the emissions-per-dollar would have been calculated the same regardless of what dolls, toys, and games they bought. Most of the emissions in this category come from the factories that make this stuff, rather than the materials mined or produced to create them, Allaway said, so it wouldn’t really matter environmentally whether they bought these toys at Amazon, Walmart or at a local toy store. They also bought a $269.20 wall sconce, a purchase that created 105 kgCO2e. Aside from those purchases, their biggest emissions came from the food they ate—specifically beef and dairy products. A.S. and W.H. had a pizza dinner with family during the week and a few snacks and coffees at local restaurants; all meals out, whether sit-down or take-out, are categorized as services. But they did buy around $40 worth of ice cream, yogurt and cheese, and they participated in a food share that provided them with around $28 of red meat (the protein changes every week.) Dairy and beef cause a lot more emissions than vegetables; the family spent roughly the same amount on vegetables and on dairy products, but the dairy was responsible for more than double the emissions as their veggies. The couple told me that they’ve been trying to cut back on dairy but have had a hard time finding an environmentally-responsible alternative; almond milk uses up crucial water, for example, and coconut milk requires a lot of emissions-heavy transport to get from where coconuts are grown to New England. They also wonder whether cutting back on things they enjoy is worth the sacrifice. Spending $30 on beef produces about 47 kgCO2e, which is the same as driving about 120 miles. Why should they stop buying cheese if their neighbor is driving that far to commute to and from work every week? “That’s one of the big pieces of friction between me and my husband,” A.S. told me. “I think he sees this as too big of a problem for any individual behavior to change.” The Family That Eats Out a Lot M.C. and N.A. Location: Atlanta, Ga. Children: 14 months and 3 ½ years old Combined household income: $100k-$200k Total emissions: 757 kgCO2e   This family spent about $1,361 for the week and had consumption-based emissions of 757 kg CO2e, the same as if they’d driven a car 1,902 miles, according to the EPA’s Greenhouse Gas Equivalencies Calculator. That’s the distance from Atlanta to Las Vegas. The Atlanta family’s emissions came in slightly lower than the Salem family’s. M.C. told me that this week was atypical for them because they usually buy diapers and fill up on gas, and they didn’t do either this week. They did eat out a lot—they were surprised by how much, once they started counting, but because of the way Allaway’s model works, restaurants are a lower-emissions way to spend money than buying a lot of goods. (The model doesn’t account for what you eat at a restaurant, but since so much of a restaurant’s bill is for service, rather than a tangible product, the spending often creates lower emissions.) M.C. told me that because they’re in their car so much, they often stop by quick-service restaurants like Chick-Fil-A to get a fast dinner if they don’t have time to prepare something at home. The pandemic has made them feel guilty about the environmental repercussions of eating out so much, because even sit-down restaurants serve food on disposable plates, with plastic utensils. But their biggest source of emissions for the week was something out of their control—electricity generation. Their electricity bill is about $200 a month but can be as high as $500 in the summer and winter, the family told me. I prorated that to $50 a week, which led to 254 kg CO2e, one of the highest single weekly sources of emissions for any family. (That’s the equivalent of a car driving from New York to Detroit.) The Atlanta and Denver households had higher emissions from their electricity and natural gas bills than the other two families in part because these regions are more reliant on coal-fired power plants, Allaway said. N.A., who works in finance, takes public transit to work, and the family has been trying to move away from spending money on things and toward spending on experiences. But something like cutting back on red meat or being more conscious about the products they buy can be hard, M.C. said. She has enough going on already. “With two little kids, I don’t think about it,” she said. The Family That Travels A.A. and M.T. Location: San Francisco Children: 18 months Combined household Income: more than $300,000 Total emissions: 1,267 kg CO2e   The wealthiest families create the most emissions, and that was certainly true with the San Francisco family, which was the highest-earning of the four families and which generated the highest emissions: the equivalent of driving from San Francisco to Miami. A.A. told me she thought the family had been buying way too much stuff online, and they did buy more stuff online than any of the other families —$60 on clothes from Target, $23 for a baby float on Amazon, $48 for diapers on Amazon, $21 for baby wipes. They also shopped at brick and mortar stores—$26 at a local bookstore, $37 at CVS for razors and snacks, $18 at a local hardware store. And they spent a lot on restaurants—about $300 in total. But none of those purchases drove the bulk of their emissions. Instead, that came from a $400 purchase of two round-trip airline tickets from San Francisco to Los Angeles, which created 436 kg CO2e, the single largest emissions from any purchase of the four families for the week. Because prices were discounted when they bought the tickets, that’s probably a low estimate of the emissions from their flight; the emissions calculator run by myclimate, an international nonprofit, estimates that a roundtrip flight for two between those two cities would generate 614 kg of CO2e, more than the 333 kg the family would have created by driving. (Taking a train would have lowered their emissions further, but also would have taken 12 hours one way.) They also spent $400 on hotel reservations, leading to 123 kg CO2e. This is intuitive—we all know that flying creates a lot of emissions. But it was illuminating to see just how much more it creates than other things do. That one trip to LA bumped the family’s emissions from 708 kg in the week to 1,276. A.A. told me they haven’t flown much since the pandemic started and bought the tickets to attend a close friend’s wedding. In the last two years, they’ve flown far less than they did before the pandemic and before having children. Instead, they’ve stayed home and explored San Francisco, or driven to destinations within an hour or two. They say they feel lucky to be able to do that where they live and will think twice before buying plane tickets on a whim going forward, but that unless costs go up, it may be hard to resist a getaway. The Family That Buys Used M.C. and N.A. Location: Denver Children: 9, 7, and 4 years old Combined household income: More than $200,000 Total emissions: 360 kg CO2e The Denver family has been trying to be more environmentally-conscious for years, and they had the lowest emissions, despite having the most family members (although they were the only family without a kid in diapers.) Their emissions were far lower than those of the other three families, adding up to the equivalent of a drive from Denver to Tucson. They do just about everything they can do to reduce emissions: M.C. doesn’t eat meat or cook it at home; her husband and children only eat meat if it’s served at a friend’s house. The family tries to avoid dairy products (one of the items they bought this week was vegan “egg”nog); they buy used clothes from ThredUp; their home has solar panels. M.C. said the family has always been conscious about reducing waste but became more serious about it a few years ago; when all their friends were moving to the suburbs, they moved to a more urban area of Denver, where N.A. could walk to work. “The driving we were doing was more impactful than the plastic wrap on a bag of pasta,” M.C. said. The couple knew they would have to make some sacrifices when they had children, but they didn’t want to give up on their environmental goals. They decided to wrest control over what their life looked like. “We realized that we could make some more intentional choices, set up our life in a way that not only decreased environmental impact, but also made our life happier,” she said. They enjoy being able to walk to so many places. M.C. has really never liked meat; she would occasionally cook it for her kids but stopped doing so three years ago. They’ll treat themselves to real cheese or real eggnog occasionally, but usually they go vegan. Their biggest emissions came from their use of natural gas—they spend about $44 a month on natural gas, despite their solar panels. Because solar power is so variable—it may be sunny one day, and then cloudy for a week—most systems that run on renewables like solar also use some natural gas. Still, the Denver family avoided a lot of emissions in places where other families didn’t. They spent $156 on clothes, but all from ThredUp, a used clothing site, which generated only 17 kg CO2e, according to Allaway’s estimates. The San Francisco family, by contrast, spent $61 on new clothes, which resulted in 26 kg CO2e. (Allaway’s model treats used goods as having a very low carbon footprint because it assigns the carbon footprint to the previous user, who bought them new; but buying used clothes does have some carbon footprint since the clothes are transported from the warehouses where they’re stored.) M.C. said she knows her kids might resist wearing used clothes as they get older and that there may be a day when they don’t want Christmas gifts from the thrift store. But they’re trying to teach their children not to be consumed by materialism, she said. She wants them to find happiness from something other than new things. When I asked M.C. if she thought her sacrifices were worth it, she said yes. Her family’s choices allow the couple and their children to focus on relationships, she said. She hopes she has motivated some friends and family to change their behavior, too. But ultimately, it’s about being aware of the urgency of environmental awareness, she said. “By trying to reduce my own emissions, that helps me stay in touch with the broader issues and think about the ways I can be an advocate for change in the areas that really will have an impact,” she said. What Your Family Can Do Of course, the emissions that the Denver family saved compared to the San Francisco family would be wiped out by one individual taking an hourlong flight on a private jet. It can be hard to rationalize making dramatic behavioral changes when reducing individual emissions can feel fruitless. Even the annual emissions of the San Francisco family—around 66 metric tons of CO2—pale in comparison to the electricity use of just one U.S. supermarket over the course of a year: 1,383 metric tons of CO2. But changing your behavior is not fruitless, Allaway says. Individuals by themselves might not be able to make enough of a difference to prevent the worst effects of climate change, but collective action—lots of individuals working together—might. Still, many of our preconceived notions about what to buy can be wrong. In the winter, Oregon consumers who buy tomatoes from nearby British Columbia have a bigger carbon footprint than those who buy tomatoes from faraway Mexico, because the Canadian tomatoes are grown in power-hungry greenhouses, Allaway has found. Out-of-season apples from New Zealand may have less of a carbon footprint than local apples that have been put in cold storage for months. Coffee beans delivered in a fully recyclable steel container have a higher climate impact than beans delivered in non-recyclable plastic because of the steel container’s weight. There are behavioral changes you can make that will almost certainly lower your emissions. You can reduce your driving and flying. You can switch to renewable energy. You can buy lighter goods, which use less materials than heavyweight goods, and buy things that have to travel a smaller distance to get to your home (although that in itself is hard to parse out, because a “locally-made” toy may have been created from materials imported from China, which negates the benefits of buying something local). You can buy things that are made from plants rather than animals, and buy used goods whenever possible. (Of course, there’s a caveat there, too—buying a used car that is a gas guzzler would be worse than buying a new electric vehicle.) But if you’re trying to choose individual products that were created with lower emissions, you’ll have a tough task ahead of you. Right now, one of the only ways to know which products have the lowest carbon footprint is to read their life cycle assessment, which is a document that measures their environmental impact from cradle to grave. In Europe, many companies also offer Environmental Product Declarations, which are abbreviated versions of life-cycle assessments, says Sarah Cashman, director of Life Cycle Services at ERG, an environmental consulting group. These documents are hard to decipher, dotted with words like “eutrophication potential,” (the nutrient runoff from farming or manufacturing). EPD InternationalA chart in a 49-page diaper environmental product declaration document There is no report card that lets customers easily see which products are made, transported, and sold with lower emissions than others. Amazon has tried to start labeling some products as “climate-pledge friendly” so that shoppers can choose green products that have received a third-party sustainability certification from a qualifying organization. But even that puts a lot of burden on a consumer to read every label on every item that they buy. So much responsibility for creating less waste has already fallen onto the consumer that asking them to take one more step, as the families above said, is too much. There is a solution, though. Consumers can demand more from companies, who can take on the responsibility of lowering emissions for the products they make every step of the way. The supply chains of eight global industries account for more than 50% of greenhouse gas emissions, according to the Boston Consulting Group. There are companies that already have a head start. Patagonia says that 86% of its emissions come from the raw materials it uses and their supply chains, and through its Supply Chain Environmental Responsibility Program, it is aiming to use only renewable or recycled materials to make its products by 2025. Most companies won’t do this unprompted, but if consumers start shopping at places that are reducing emissions in their supply chain, companies will start looking at their supply chains in order to stay in business. A database of companies that are legitimately working on this would be a good first step. It may feel like there’s nothing you can do as an individual or as a family, but collective action could look like millions of families preferring to shop at places that are working to dramatically reduce emissions in their supply chain. Buying less may not be an option for many families, but Americans have proved, if nothing else, that they know how to shop smart.  .....»»

Category: topSource: timeJan 6th, 2022

Futures Tread Water With Traders Spooked By Spike In Yields

Futures Tread Water With Traders Spooked By Spike In Yields After futures rose to a new all time high during the Tuesday overnight session, the mood has been decided more muted after yesterday's sharp rates-driven tech selloff, and on Wednesday U.S. futures were mixed and Nasdaq contracts slumped as investors once again contemplated the effect of expected rate hikes on tech stocks with lofty valuations while waiting for the release of Federal Reserve minutes at 2pm today. At 730am, Nasdaq 100 futures traded 0.3% lower amid caution over the impact of higher yields on equity valuations, S&P 500 Index futures were down 0.1%, while Europe’s Stoxx 600 gauge traded near a record high. The dollar weakened, as did bitcoin, while Brent crude rose back over $80. “The sharp rise in U.S. yields this week has sparked a move from growth to value,” said Jeffrey Halley, senior market analyst at Oanda Asia Pacific. “Wall Street went looking for the winners in an inflationary environment and as a result, loaded up on the Dow Jones at the expense of the Nasdaq.” Concerns related to the pandemic deepened as Hong Kong restricted dining-in, closed bars and gyms and banned flights from eight countries including the U.S. and the U.K. to slow the spread of the omicron variant. Meanwhile, a selloff in technology stocks extended to Asia, where the Hang Seng Tech Index tumbled as much as 4.2%, sending the gauge toward a six-year low. Traders are now caught in a quandary over deepening fears on global growth combined with a faster tightening by the Federal Reserve. “Earlier we thought that rate hikes wouldn’t be on the table until mid-2022 but the Fed seems to have worked up a consensus to taper faster and hike sooner rather than later,” Steve Englander, head of global G-10 FX research at Standard Chartered, said in a note. “But we don’t think inflation dynamics will support continued hiking. We suspect the biggest driver of asset markets will be when inflation and Covid fears begin to ebb.” Data on Tuesday showed mixed signs on U.S. inflation. Prices paid by manufacturers in December came in sharply lower than expected. However, figures showing a faster U.S. job quit rate added to concerns over wage inflation. With 4.5 million Americans leaving their jobs in November, compared with 10.6 million available positions, the odds increased the Fed will struggle to influence the employment numbers increasingly dictated by social reasons. The data came before Friday’s monthly report from the Labor Department, currently forecast to show 420,000 job additions in December. In premarket trading, tech giants Tesla, Nvidia and Advanced Micro Devices were among the worst performers. Pfizer advanced in New York premarket trading after BofA Global Research recommended the stock. Shares of Chinese companies listed in the U.S. extended their decline after Tencent cut its stake in gaming and e-commerce company Sea, triggering concerns of similar actions at other firms amid Beijing’s regulatory crackdown on the technology sector. Alibaba (BABA US) falls 1.2%, Didi (DIDI US) -1.8%. Here are the other notable premarket movers: Shares in electric vehicle makers fall in U.S. premarket trading, set to extend Tuesday’s losses, amid signs of deepening competition in the sector. Tesla (TSLA US) slips 1.1%, Rivian (RIVN US) -0.6%. Beyond Meat (BYND US) shares jump 8.9% premarket following a CNBC report that Yum! Brands’ KFC will launch fried chicken made with the company’s meat substitute. Recent selloff in Pinterest (PINS US) shares presents an attractive risk/reward, with opportunities for the social media company largely unchanged, Piper Sandler writes in note as it upgrades to overweight. Stock gains 2.3% in premarket trading. Senseonics Holdings (SENS US) shares rise 15% premarket after the medical technology company said it expects a U.S. Food and Drug Administration decision in weeks on an updated diabetes- monitoring system. MillerKnoll (MLKN US) shares were down 3.1% in postmarket trading Tuesday after reporting fiscal 2Q top and bottom line results that missed analysts’ estimates. Annexon (ANNX US) was down 23% postmarket Tuesday after results were released from an experimental therapy for a fatal movement disorder called Huntington’s disease. Three patients in the 28- person trial discontinued treatment due to drug-related side- effects. Wejo Group (WEJO US) shares are up 34% premarket after the company said it’s developing the Wejo Neural Edge platform to enable intelligent handling of data from vehicles at scale. Smart Global (SGH US) falls 6% postmarket Tuesday after the computing memory maker forecast earnings per share for the second quarter. The low end of that forecast missed the average analyst estimate. Beyond Meat (BYND) shares surge premarket after CNBC KFC launch report UBS cut the recommendation on Adobe Inc. (ADBE US) to neutral from buy, citing concerns over the software company’s 2022 growth prospects. Shares down 2% in premarket trading. Oncternal Therapeutics (ONCT US) shares climb 5.1% premarket after saying it reached consensus with the FDA on the design and major details of the phase 3 superiority study ZILO-301 to treat mantle cell lymphoma. In Europe, the energy, chemicals and car industries led the Stoxx Europe 600 Index up 0.2% to near an all-time high set on Tuesday. The Euro Stoxx 50 rises as much as 0.6%, DAX outperforms. FTSE 100 lags but rises off the lows to trade up 0.2%. Nestle dropped 2.4%, slipping from a record, after Jefferies cut the Swiss food giant to underperform. Utilities were the worst-performing sector in Europe on Wednesday as cyclical areas of the market are favored over defensives, while Uniper and Fortum fall following news of a loan agreement.  Other decliners include RWE (-2.4%), Endesa (2.1%), Verbund (-1.3%), NatGrid (-1.2%), Centrica (-1.2%). Earlier in the session, technology shares led a decline in Asian equity markets, with investors concerned about the prospects of higher interest rates and Tencent’s continued sale of assets. The MSCI Asia Pacific Index fell as much as 0.6%, the most in two weeks, dragged down by Tencent and Meituan. The rout in U.S. tech spilled over to Asia, where the Hang Seng Tech Index plunged 4.6%, the most since July, following Tencent’s stake cut in Singapore’s Sea. Declines in tech and other sectors in Hong Kong widened after the city tightened rules to curb the spread of the omicron variant. Most Asian indexes fell on Wednesday, with Japan an exception among major markets as automakers offered support. The outlook for tighter monetary policy in the U.S. and higher Treasury yields weighed on the region’s technology shares, prompting a rotation from growth to value stocks.   Read: China Tech Selloff Deepens as Tencent Sale Spooks Traders Asian equities have underperformed U.S. and European peers amid slower recoveries and vaccination rates in the past year. With omicron rapidly gaining a foothold in Asia, there is a risk of “any further restriction measures, which could cloud the services sector outlook, along with disruption to supply chains,” said Jun Rong Yeap, a strategist at IG Asia Pte.  Philippine stocks gained as trading resumed following a one-day halt due to a systems glitch. North Korea appeared to have launched its first ballistic missile in about two months, just days after leader Kim Jong Un indicated that returning to stalled nuclear talks with the U.S. was a low priority for him in the coming year. India’s key equity gauges posted their longest run of advances in more than two moths, driven by a rally in financial stocks on hopes of revival in lending on the back of capex spending in the country. The S&P BSE Sensex rose 0.6% to 60,223.15 in Mumbai, its highest since Nov. 16, while the NSE Nifty 50 Index advanced 0.7%. Both benchmarks stretched their winning run to a fourth day, the longest since Oct. 18. All but six of the 19 sector sub-indexes compiled by BSE Ltd. climbed, led by a gauge of banking firms. “I believe from an uncertain, volatile environment, the Nifty is now headed for a directional move,” Sahaj Agrawal, a head of derivative research at Kotak Securities, writes in a note. The Nifty 50 crossed a significant barrier of the 17,800 level and is now expected to trade at 19,000-19,500 level in the medium term, Agrawal added. HDFC Bank contributed the most to the Sensex’s gain, increasing 2.4%. Out of 30 shares in the Sensex, 18 rose, while 12 fell In FX, Bloomberg Dollar Spot index slpped 0.2% back toward Tuesday’s lows, falling as the greenback was weaker against most of its Group-of-10 peers, SEK and JPY are the best performers in G-10, CAD underperforms. Scandinavian currencies and the yen led gains, though most G-10 currencies were trading in narrow ranges. Australia’s dollar reversed an Asia-session loss in European trading. The yen rebounded from a five-year low as investors trimmed short positions on the haven currency and amid a decline in Asian stock markets. Treasuries were generally flat in overnight trading, with the curve flatter into early U.S. session as long-end outperforms, partially unwinding a two-day selloff to start the year with Tuesday witnessing a late block sale in ultra-bond futures. 10-year yields traded as high as 1.650% ahead of the US open after being mostly flat around 1.645%; yields were richer by up to 2bp across long-end of the curve while little change from front-end out to belly, flattening 2s10s, 5s30s spreads by 0.5bp and 1.8bp; gilts outperformed in the sector by half basis point. Focus expected to continue on IG issuance, which has impacted the market in the past couple of days, and in U.S. afternoon session FOMC minutes will be released. IG dollar issuance slate includes EIB $5B 5-year SOFR and Reliance Ind. 10Y/30Y/40Y; thirteen borrowers priced $23.1b across 30 tranches Tuesday, making it the largest single day volume for U.S. high-grade corporate bonds since first week of September. European peripheral spreads widen to core. 30y Italy lags peers, widening ~2bps to Germany with order books above EU43b at the long 30y syndication. Ten-year yields shot up 8bps in New Zealand as its markets reopened following the New Year holiday. Aussie yields advanced 4bps. A 10-year sale in Japan drew a bid-cover ratio of 3.46. In commodities, crude futures were range-bound with WTI near just below $77, Brent nearer $80 after OPEC+ agreed to revive more halted production as the outlook for global oil markets improved, with demand largely withstanding the new coronavirus variant. Spot gold puts in a small upside move out of Asia’s tight range to trade near $1,820/oz. Base metals are mixed. LME nickel lags, dropping over 2%; LME aluminum and lead are up ~0.8%.  Looking at the day ahead, data releases include the December services and composite PMIs from the Euro Area, Italy, France, Germany and the US. On top of that, there’s the ADP’s December report of private payrolls from the US, the preliminary December CPI report from Italy, and December’s consumer confidence reading from France. Separately from the Federal Reserve, we’ll get the minutes of the December FOMC meeting. Market Snapshot S&P 500 futures little changed at 4,783.25 MXAP down 0.4% to 193.71 MXAPJ down 0.9% to 626.67 Nikkei up 0.1% to 29,332.16 Topix up 0.4% to 2,039.27 Hang Seng Index down 1.6% to 22,907.25 Shanghai Composite down 1.0% to 3,595.18 Sensex up 0.7% to 60,300.47 Australia S&P/ASX 200 down 0.3% to 7,565.85 Kospi down 1.2% to 2,953.97 STOXX Europe 600 up 0.1% to 494.52 German 10Y yield little changed at -0.09% Euro up 0.2% to $1.1304 Brent Futures down 0.4% to $79.72/bbl Gold spot up 0.3% to $1,819.73 U.S. Dollar Index down 0.13% to 96.13 Top Overnight News from Bloomberg The U.S. yield curve’s most dramatic steepening in more than three months has little to do with traders turning more optimistic on the economy or betting on a more aggressive timetable for raising interest rates The surge in euro-area inflation that surprised policy makers in recent months is close to its peak, according to European Central Bank Governing Council member Francois Villeroy de Galhau Some Bank of Japan officials say it’s likely the central bank will discuss the possible ditching of a long-held view that price risks are mainly on the downward side at a policy meeting this month, according to people familiar with the matter Turkish authorities are keeping tabs on investors who are buying large amounts of foreign currency and asked banks to deter their clients from using the spot market for hedging-related trades as they struggle to contain the lira’s slide Italy is trying to lock in historically low financing costs at the start of a year where inflationary and political pressures could spell an end to super easy borrowing conditions North Korea appears to have launched its first ballistic missile in about two months, after leader Kim Jong Un indicated he was more interested in bolstering his arsenal than returning to stalled nuclear talks with the U.S. A More detailed breakdown of overnight news from Newsquawk Asia-Pac equities traded mostly in the red following the mixed handover from Wall Street, where the US majors maintained a cyclical bias and the NDX bore the brunt of another sizeable Treasury curve bear-steepener. Overnight, US equity futures resumed trade with mild losses and have since been subdued, with participants now gearing up for the FOMC minutes (full Newsquawk preview available in the Research Suite) ahead of Friday’s US jobs report and several scheduled Fed speakers. In APAC, the ASX 200 (-0.3%) was pressured by its tech sector, although the upside in financials cushioned some losses. The Nikkei 225 (+0.1%) was kept afloat by the recent JPY weakness, whilst Sony Group rose some 4% after its chairman announced EV ambitions. The KOSPI (-1.2%) was dealt a blow as North Korea fired a projectile that appeared to be a ballistic missile, but this landed outside of Japan’s Exclusive Economic Zone (EEZ). The Hang Seng (-1.6%) saw its losses accelerate with the Hang Seng Tech Index tumbling over 4% as the sector tackled headwinds from Wall Street alongside domestic crackdowns. China Huarong Asset Management slumped over 50% as it resumed trade following a nine-month halt after its financial failure. The Shanghai Comp. (-1.0%) conformed to the mostly negative tone after again seeing a hefty liquidity drain by the PBoC. In the debt complex, the US T-note futures held a mild upside bias since the resumption of trade, and the US curve was somewhat steady. Participants also highlighted large short-covering heading into yesterday’s US close ahead of the FOMC minutes. Top Asian News Asian Stocks Slide as Surging Yields Squeeze Technology Sector China’s Growth Forecast Cut by CICC Amid Covid Outbreaks BOJ Is Said to Discuss Changing Long-Held View on Price Risks Gold Holds Gain With Fed Rate Hikes and Treasury Yields in Focus European equities (Stoxx 600 +0.1%) trade mixed in what has been a relatively quiet session thus far with the final readings of Eurozone services and composite PMIs providing little in the way of fresh impetus for prices. The handover from the APAC region was predominantly a soft one with Chinese bourses lagging once again with the Hang Seng Tech Index tumbling over 4% as the sector tackled headwinds from Wall Street alongside domestic crackdowns. Meanwhile, the Shanghai Comp. (-1%) conformed to the mostly negative tone after again seeing a hefty liquidity drain by the PBoC. Stateside, the ES and RTY are flat whilst the NQ lags once again after yesterday bearing the brunt of another sizeable treasury curve bear-steepener. In terms of house views, analysts at Barclays expect “2022 to be a more normal yet positive year for equities, looking for high single-digit upside and a broader leadership”. Barclays adds that it remains “pro-cyclical (Industrials, Autos, Leisure, reopening plays and Energy OW), and prefer Value to Growth”. Elsewhere, analysts at Citi stated that “monetary tightening may push up longer-dated nominal/real bond yields, threatening highly rated sectors such as IT or Luxury Goods. Alternatively, higher yields could help traditional value trades such as UK equities and Pan-European Financials”. Sectors in Europe are mostly higher, with auto names leading as Renault (+3.4%) sits at the top of the CAC, whilst Stellantis (+0.6%) has seen some support following the announcement that it is planning for a full battery-electric portfolio by 2028. Elsewhere, support has also been seen for Chemicals, Oil & Gas and Banking names with the latter continuing to be supported by the current favourable yield environment. To the downside, Food and Beverage is the clear laggard amid losses in Nestle (-2.6%) following a broker downgrade at Jefferies. Ocado (+5.5%) sits at the top of the Stoxx 600 after being upgraded to buy at Berenberg with analysts expecting the Co. to sign further deals with new and existing grocery e-commerce partners this year. Finally, Uniper (-2.4%) sits near the bottom of the Stoxx 600 after securing credit facilities totalling EUR 10bln from Fortum and KfW. Top European News U.K. Weighs Dropping Covid Test Mandate for Arriving Travelers German Energy Giant Uniper Gets $11 Billion for Margin Calls European Gas Extends Rally as Russian Shipments Remain Curbed Italian Inflation Hits Highest in More Than a Decade on Energy In FX, notwithstanding Tuesday’s somewhat mixed US manufacturing ISM survey and relatively hawkish remarks from Fed’s Kashkari, the week (and year) in terms of data and events really begins today with the release of ADP as a guide for NFP and minutes of the December FOMC that confirmed a faster pace of tapering and more hawkish dot plots. As such, it may not be surprising to see the Buck meandering broadly and index settling into a range inside yesterday’s parameters with less impetus from Treasuries that have flipped from a severe if not extreme bear-steepening incline. Looking at DXY price action in more detail, 96.337 marks the top and 96.053 the bottom at present, and from a purely technical perspective, 96.098 remains significant as a key Fib retracement level. JPY/EUR/AUD/GBP/NZD - All taking advantage of the aforementioned Greenback fade, and with the Yen more eager than others to claw back lost ground given recent underperformance. Hence, Usd/Jpy has retreated further from multi-year highs and through 116.00 to expose more downside potential irrespective of latest reports via newswire sources suggesting the BoJ is expected to slightly revise higher its inflation forecast for the next fiscal year and downgrade the GDP outlook for the year ending in March. Similarly, the Euro is having another look above 1.1300 even though EZ services and composite PMIs were mostly below consensus or preliminary readings and German new car registrations fell sharply, while the Aussie is retesting resistance around 0.7250 and its 50 DMA with some assistance from firm copper prices, Cable remains underpinned near 1.3550 and the 100 DMA and the Kiwi is holding mainly above 0.6800 in the face of stronger Aud/Nzd headwinds. Indeed, the cross is approaching 1.0650 in contrast to Eur/Gbp that is showing signs of changing course following several bounces off circa 0.8333 that equates to 1.2000 as a reciprocal. CHF/CAD - The Franc and Loonie appear a bit less eager to pounce on their US peer’s retrenchment, as the former pivots 0.9150 and latter straddles 1.2700 amidst a downturn in crude pre-Canadian building permits and new house prices. SCANDI/EM - Little sign of any fallout from a slowdown in Sweden’s services PMI as overall risk sentiment remains supportive for the Sek either side of 10.2600 vs the Eur, but the Nok is veering back down towards 10.0000 in line with slippage in Brent from Usd 80+/brl peaks reached on Tuesday. Elsewhere, the Zar is shrugging off a sub-50 SA PMI as Gold strengthens its grip on the Usd 1800/oz handle and the Cnh/Cny are still underpinned after another PBoC liquidity drain and firmer than previous midpoint fix on hopes that cash injections might be forthcoming through open market operations into the banking system from the second half of January to meet rising demand for cash, according to China's Securities Journal. Conversely, the Try has not derived any real comfort from comments by Turkey’s Finance Minister underscoring its shift away from orthodox policies, or insistence that budget discipline will not be compromised. In commodities, crude benchmarks are currently little changed but have been somewhat choppy within a range shy of USD 1/bbl in European hours, in-spite of limited fresh newsflow occurring. For reference, WTI and Brent reside within USD 77.26-76.53/bbl and USD 80.25-79.56/bbl parameters respectively. Updates for the complex so far include Cascade data reporting that gas flows via the Russian Yamal-Europe pipeline in an eastward direction have reduced. As a reminder, the pipeline drew scrutiny in the run up to the holiday period given reverse mode action, an undertaking the Kremlin described as ‘operational’ and due to a lack of requests being placed. Separately, last nights private inventories were a larger than expected draw, however, the internals all printed builds which surpassed expectations. Today’s EIA release is similar expected to show a headline draw and builds amongst the internals. Elsewhere, and more broadly, geopolitics remain in focus with Reuters sources reporting that a rocket attack has hit a military base in proximity to the Baghdad airport which hosts US forces. Moving to metals, spot gold and silver are once again fairly contained though the yellow metal retains the upside it derived around this point yesterday, hovering just below the USD 1820/oz mark. US Event Calendar 7am: Dec. MBA Mortgage Applications -5.6%, prior -0.6% 8:15am: Dec. ADP Employment Change, est. 410,000, prior 534,000 9:45am: Dec. Markit US Composite PMI, prior 56.9 9:45am: Dec. Markit US Services PMI, est. 57.5, prior 57.5 2pm: Dec. FOMC Meeting Minutes DB's Jim Reid concludes the overnight wrap As you may have seen from my CoTD yesterday all I got for Xmas this year was Omicron, alongside my wife and two of our three kids (we didn’t test Bronte). On Xmas Day I was cooking a late Xmas dinner and I suddenly started to have a slightly lumpy throat and felt a bit tired. Given I’d had a couple of glasses of red wine I thought it might be a case of Bordeaux-2015. However a LFT and PCR test the next day confirmed Covid-19. I had a couple of days of being a bit tired, sneezing and being sniffly. After that I was 100% physically (outside a of bad back, knee and shoulder but I can’t blame that on covid) but am still sniffly today. I’m also still testing positive on a LFT even if I’m out of isolation which tells me testing to get out of isolation early only likely works if you’re completely asymptomatic. My wife was similar to me symptom wise. Maybe slightly worse but she gets flu badly when it arrives and this was nothing like that. The two kids had no real symptoms unless being extremely annoying is one. Indeed spending 10 days cooped up with them in very wet conditions (ie garden activity limited) was very challenging. Although I came out of isolation straight to my home office that was still a very welcome change of scenery yesterday. The covid numbers are absolutely incredible and beyond my wildest imagination a month ago. Yesterday the UK reported c.219k new cases, France c.272k and the US 1.08 million. While these are alarming numbers it’s equally impressive that where the data is available, patients on mechanical ventilation have hardly budged and hospitalisations, while rising, are so far a decent level below precious peaks. Omicron has seen big enough case numbers now for long enough that even though we’ve had another big boost in cases these past few days, there’s nothing to suggest that the central thesis shouldn’t be anything other than a major decoupling between cases and fatalities. See the chart immediately below of global cases for the exponential recent rise but the still subdued levels of deaths. Clearly there is a lag but enough time has passed that suggests the decoupling will continue to be sizeable. It seems the main problem over the next few weeks is the huge number of people self isolating as the variant rips through populations. This will massively burden health services and likely various other industries. However hopefully this latest wave can accelerate the end game for the pandemic and move us towards endemicity faster. Famous last words perhaps but this variant is likely milder, is outcompeting all the others, and our defences are much, much better than they have been (vaccines, immunity, boosters, other therapeutic treatments). Indeed, President Biden directed his team to double the amount of Pfizer’s anti-covid pill Paxlovid they order; he called the pill a game changer. So a difficult few weeks ahead undoubtedly but hopefully light at the end of the tunnel for many countries. Prime Minister Boris Johnson noted yesterday that Britain can ride out the current Omicron wave without implementing any stricter measures, suggesting that learning to live with the virus is becoming the official policy stance in the UK. The head scratcher is what countries with zero-covid strategies will do faced with the current set up. If we’ve learnt anything from the last two years of covid it is that there is almost no way of avoiding it. Will a milder variant change such a stance? Markets seem to have started the year with covid concerns on the back burner as day 2 of 2022 was a lighter version of the buoyant day 1 even if US equities dipped a little led by a big under-performance from the NASDAQ (-1.33%), as tech stocks got hit by higher discount rates with the long end continuing to sell off to start the year. Elsewhere the Dow Jones (+0.59%) and Europe’s STOXX 600 (+0.82%) both climbed to new records, with cyclical sectors generally outperforming once again. Interestingly the STOXX Travel & Leisure index rose a further +3.11% yesterday, having already surpassed its pre-Omicron level. As discussed the notable exception to yesterday’s rally were tech stocks, with a number of megacap tech stocks significantly underperforming amidst a continued rise in Treasury yields, and the rotation towards cyclical stocks as investors take the message we’ll be living with rather than attempting to defeat Covid. The weakness among that group meant that the FANG+ index fell -1.68% yesterday, with every one of the 10 companies in the index moving lower, and that weakness in turn meant that the S&P 500 (-0.06%) came slightly off its record high from the previous session. Showing the tech imbalance though was the fact that the equal weight S&P 500 was +0.82% and 335 of the index rose on the day. So it was a reflation day overall. Staying with the theme, the significant rise in treasury yields we saw on Monday extended further yesterday, with the 10yr yield up another +1.9bps to 1.65%. That means the 10yr yield is up by +13.7bps over the last 2 sessions, marking its biggest increase over 2 consecutive sessions since last September. Those moves have also coincided with a notable steepening in the yield curve, which is good news if you value it as a recessionary indicator, with the 2s10s curve +11.3bps to +88.7bps over the last 2 sessions, again marking its biggest 2-day steepening since last September Those moves higher for Treasury yields were entirely driven by a rise in real yields, with the 10yr real yield moving back above the -1% mark. Conversely, inflation breakevens fell back across the board, with the 10yr breakeven declining more than -7.0bps from an intraday peak of 2.67%, the highest level in more than six weeks, which tempered some of the increase in nominal yields. The decline in breakevens was aided by the release of the ISM manufacturing reading for December, since the prices paid reading fell to 68.2, some way beneath the 79.3 reading that the consensus had been expecting. In fact, that’s the biggest monthly drop in the prices paid measure in over a decade, and leaves it at its lowest level since November 2020. Otherwise, the headline reading did disappoint relative to the consensus at 58.7 (vs. 60.0 expected), but the employment component was above expectations at 54.2 (vs. 53.6 expected), which is its highest level in 8 months and some promising news ahead of this Friday’s jobs report. Staying with US employment, the number of US job openings fell to 10.562m in November (vs. 11.079m expected), but the number of people quitting their job hit a record high of 4.5m. That pushed the quits rate back to its record of 3.0% and just shows that the labour market continues to remain very tight with employees struggling to hire the staff needed. This has been our favourite indicator of the labour market over the last few quarters and it continues to keep to the same trend. Back to bonds and Europe saw a much more subdued movement in sovereign bond yields, although gilts were the exception as the 10yr yield surged +11.7bps as it caught up following the previous day’s public holiday in the UK. Elsewhere however, yields on bunds (-0.2bps), OATs (-1.1bps) and BTPs (+0.9bps) all saw fairly modest moves. Also of interest ahead of tonight’s Fed minutes, there was a story from the Wall Street Journal late yesterday that said Fed officials are considering whether to reduce their bond holdings, and thus beginning QT, in short order. Last cycle, the Fed kept the size of its balance sheet flat for three years after the end of QE by reinvesting maturing proceeds before starting QT. This iteration of QE is set to end in March, so any move towards balance sheet rolloff would be a much quicker tightening than last cycle, which the article suggested was a real possibility. As this cycle has taught us time and again, it is moving much faster than historical precedent, so don’t rely on prior timelines. Balance sheet policy and the timing of any QT will be a major focus in tonight’s minutes, along with any signals for the timing of liftoff and path of subsequent rate hikes. Overnight in Asia markets are trading mostly lower with the KOSPI (-1.45%), Hang Seng (-0.85%), Shanghai Composite (-0.81%) and CSI (-0.67%) dragged down largely by IT stocks while the Nikkei (+0.07%) is holding up better. In China, Tencent cut its stake in a Singapore based company yesterday by selling $ 4 billion worth shares amidst China's regulatory crackdown with investors concerned they will do more. This has helped push the Hang Seng Tech Index towards its lowest close since its inception in July 2020 with Tencent and companies it invested in losing heavily. Moving on, Japan is bringing forward booster doses for the elderly while maintaining border controls in an effort to contain Omicron. Futures are indicating a weaker start in DM markets with the S&P 500 (-0.25%) and DAX (-0.11%) both tracking their Asian peers. Oil prices continued their ascent yesterday, with Brent Crude (+1.20%) hitting its highest level since the Omicron variant first emerged on the scene. Those moves came as the OPEC+ group agreed that they would go ahead with the increase in output in February of 400k barrels per day. And the strength we saw in commodities more broadly last year has also continued to persist into 2022, with copper prices (+1.12%) hitting a 2-month high, whilst soybean prices (+2.49%) hit a 4-month high. Looking at yesterday’s other data, German unemployment fell by -23k in December (vs. -15k expected), leaving the level of unemployment at a post-pandemic low of 2.405m in December. Finally, the preliminary French CPI reading for December came in slightly beneath expectations on the EU-harmomised measure, at 3.4% (vs. 3.5% expected). To the day ahead now, and data releases include the December services and composite PMIs from the Euro Area, Italy, France, Germany and the US. On top of that, there’s the ADP’s December report of private payrolls from the US, the preliminary December CPI report from Italy, and December’s consumer confidence reading from France. Separately from the Federal Reserve, we’ll get the minutes of the December FOMC meeting. Tyler Durden Wed, 01/05/2022 - 08:07.....»»

Category: blogSource: zerohedgeJan 5th, 2022

8 Top CEOs Give Their Predictions for the Wild Year Ahead

(To receive weekly emails of conversations with the world’s top CEOs and business decisionmakers, click here.) Nearly two years into the COVID-19 pandemic, business leaders are heading into 2022 facing the strong headwinds of the Omicron variant, continued pressure on supply chains, and the great resignation looming over the labor market. TIME asked top leaders… (To receive weekly emails of conversations with the world’s top CEOs and business decisionmakers, click here.) Nearly two years into the COVID-19 pandemic, business leaders are heading into 2022 facing the strong headwinds of the Omicron variant, continued pressure on supply chains, and the great resignation looming over the labor market. TIME asked top leaders from across the world of business to share their priorities and expectations for the year ahead. Albert Bourla, CEO of Pfizer, wants to leverage the advances his pharmaceutical company has made in fighting COVID-19 to tackle other diseases, while Rosalind “Roz” Brewer, CEO of Walgreens Boots Alliance, has made improving access to healthcare one of her goals over the next year. GoFundMe CEO Tim Cadogan says building trust will be at the heart of decision-making at the crowdfunding platform—both with workers and its wider community. [time-brightcove not-tgx=”true”] Innovation is key to Intel CEO Patrick P. Gelsinger and Forerunner Ventures founder and managing partner Kirsten Green. And Rothy’s CEO Stephen Hawthornthwaite, Albemarle CEO Kent Masters, and Gene Seroka, executive director of the Port of Los Angeles, shared their suggestions for how companies and policymakers can respond to persistent supply chains problems. Read on to see how some of the most powerful people in business envision the coming year. (These answers have been condensed and edited for clarity.) What are the biggest opportunities and challenges you expect in the year ahead? Albert Bourla, CEO of Pfizer: The scientific advancements made by Pfizer and others over the past year have brought us very powerful tools to battle the worst pandemic of our lives. But, unfortunately, we don’t see everyone using them. I am concerned about the limited infrastructure and resources in the poorest countries as they struggle to administer their supply of COVID-19 vaccines to their people. Some of these countries have asked us to pause our deliveries of doses while they work to address these issues. While I am proud of the work Pfizer has done to make vaccines available to low- and lower middle-income countries over the past year, we need to find new ways to support the World Health Organization as they work with NGOs and governments to address these infrastructure issues. Getty ImagesAlbert Bourla, CEO, Pfizer Over the next year I’d like us to help find solutions to issues like the shortage of medical professionals, vaccine hesitancy due to limited educational campaigns, lack of equipment and even roads to allow timely delivery of vaccines. Throughout every chapter of this pandemic, we have been reminded of the importance of collaboration and innovative thinking. We need to work harder than ever before to address these health inequities so that people around the globe are protected from the virus. Pat Gelsinger, CEO of Intel: Throughout the history of technology, we’ve seen the pendulum swinging between centralized and decentralized computing. And there is still a tremendous untapped opportunity in edge computing as we bring greater intelligence to devices such as sensors and cameras in everything from our cars to manufacturing to the smart grid. Edge computing will not replace cloud; we’re swinging back to where decentralized compute becomes the primary growth for new workloads because the inference and AI analysis will take place at the edge. Technology has the power to improve the lives of every person on earth and Intel plays a foundational role within. We aim to lead in the opportunity for every category in which we compete. Roz Brewer, CEO of Walgreens: The pandemic affirmed Walgreens as a trusted neighborhood health destination to help our customers and patients manage their health. We provide essential care to our communities, including administering more than 50 million COVID-19 vaccines as of early December 2021. The opportunity ahead of us at Walgreens Health—our new segment launched this past fall—is to create better outcomes for both consumers and partners, while lowering costs across the care continuum. A year from now I want to look back on this time as an inflection point and a moment in time where real, lasting change happened—that we will all have collectively banded together to get through the pandemic and at the same time delivered real change toward improving accessible and affordable healthcare. I feel inspired and hopeful that some good will come out of this very difficult time in our country and the world’s history. Jason Redmond—AFP/Getty ImagesRosalind Brewer, CEO of Walgreens, speaks in Seattle, Washington on Mar. 20, 2019. Tim Cadogan, CEO of GoFundMe: We’re going to see continued disruption in the world and the workplace in 2022—this will require more people to come together to help each other. Our opportunity is to use our voice and platform to bring more people together to help each other with all aspects of their lives. Asking for help is hard but coming together to help each other is one of the most important and rewarding things we can do in life. We are continuously improving our product to make it easier for more people to both ask for and give help, whether it’s helping an individual fulfill a dream, working on a global cause like climate change, or supporting a family during a difficult time. Kirsten Green, founder and managing partner of Forerunner Ventures: We are nearly two years into the pandemic, and it is still ongoing. We must embrace this new normal and figure out how to make that reality work for our businesses, our consumers, and our people. Thankfully, we often see innovation come out of these periods of change and fluctuation. At the same time, it’s hard to come to terms with the fact that the world has evolved, and it is still important to understand that the ‘reset’ button just got hit for a lot of people. Values, goals, and core needs are being reevaluated and reestablished, and we as a society need to figure out how to move forward during a volatile period. Gene Seroka, executive director of the Port of Los Angeles: Our industry needs to help drive the American economic recovery amid the impact of the COVID-19 pandemic. The top priority remains getting goods to American consumers and creating a more fluid supply chain. We also need to address the growing trade imbalance. Imports are at all-time highs while U.S. exports have declined nearly 40% over the past three years in Los Angeles. We have to help American manufacturers and farmers get their products to global markets. With the passage of the Infrastructure Investment and Jobs Act, our team is working to get our fair share of federal funds to accelerate projects to improve rail infrastructure, local highways and support facilities. The Port of Los Angeles is the nation’s primary trade gateway, yet east and gulf coast ports have received most of the federal funding in the past decade. The best return on port infrastructure investment is in Los Angeles, where the cargo we handle reaches every corner of the country. Kent Masters, CEO of Albemarle: Challenges will likely continue to include competition for top talent, supply chain disruptions due to possible pandemic impacts to raw material availability and logistics, and potential inflation impacts to material and freight costs, all of which we’re monitoring closely so we can respond quickly. With the global EV market growing rapidly, we have a tremendous opportunity ahead of us for years to come. Next year, we’ll advance our lithium business through new capacity ramp-ups in Chile, Australia and China, and restart the MARBL Lithium Wodgina hard rock resource in Australia to help feed our new conversion assets and meet customer needs. We’re also keenly focused on organizational goal alignment and continuous improvement to drive greater productivity through our global workforce next year. What do you expect to happen to supply chains in 2022? Gelsinger: The unprecedented global demand for semiconductors—combined with the impact of the global pandemic—has led to an industry-wide shortage, which is impacting technology providers across the industry. Intel is aggressively stepping in to address these issues and build out more capacity and supply around the globe for a more balanced and stable supply, but it will take time and strong public-private partnerships to achieve. Read more: From Cars to Toasters, America’s Semiconductor Shortage Is Wreaking Havoc on Our Lives. Can We Fix It? Brewer: We learned a lot over the past two years and companies are taking action with investments in capacity, resiliency and agility for supply chains across the world. We will continue finding creative ways to increase manufacturing and shipping capacity. Manufacturers will continue expanding capacity and increasing the diversity in their supplier base to reduce reliance of single sourcing. Companies will continue to invest to increase resiliency through expanded inventory positions, extended planning horizons and lead-times, and increased agility in manufacturing and logistics capabilities to fulfill customer needs. As the marketplace changes, we must be agile and adapt quickly as we respond to shifts in consumer behavior. Investments in technology, such as real time supply chain visibility and predictive/prescriptive analytics, will enable companies to deliver the speed and precision expected by today’s consumer. Seroka: Goods and products will get to market. The maritime logistics industry must raise the bar and make advances on service levels for both our import and export customers. Retailers will be replenishing their inventories in the second quarter of the year. And by summer, several months earlier than usual, we’ll see savvy retailers bringing in products for back to school, fall fashion and the winter holidays. Despite the challenges, retail sales reached new highs in 2021. Collectively, supply chains partners need to step up further to improve fluidity and reliability. Stephen Hawthornthwaite, CEO of Rothy’s: In 2022, pressure from consumers for transparency around manufacturing and production, coupled with pandemic learnings about existing supply chain constraints, will push businesses to condense their supply chains and bring in-house where possible. I also predict that more brands will test make-to-demand models to better weather demand volatility and avoid supply surpluses—a benefit for businesses, consumers and the planet. Nimbleness and a willingness to innovate will be crucial for brands who wish to meet the demands of a post-pandemic world. At Rothy’s, we’ve built a vertically integrated model and wholly-owned factory, enabling us to better navigate the challenges that production and logistics present and unlock the full potential of sustainability and circularity. Courtesy of Rothy’sStephen Hawthornthwaite, chairman and CEO, Rothy’s Green: The pandemic crystallized what a lot of us knew to be true, but hadn’t yet evaluated: There’s not nearly as much innovation in the supply chain as a flexible world is going to need. What we’re seeing now is a giant wake-up call to the entire commerce ecosystem. This is more than a rallying cry; it’s a mandate to reevaluate how we’re managing our production processes, and 2022 will be the start of change. Expect a massive overhaul of the system, and expect to see more investment building innovation, efficiency, and sustainability into the supply chain space. Read more: How American Shoppers Broke the Supply Chain Masters: As the pandemic continues with new variants, we expect global supply chain issues to persist in 2022. To what degree remains to be seen, but I would expect impacts to some raw materials, freight costs, and even energy costs. On a positive note, we can successfully meet our customer obligations largely because of our vertically integrated capabilities. This helps us continue to be a reliable source of lithium, as well as bromine. Worldwide logistics issues are a factor, but more marginal in the supply question when the determining factor is the ability to convert feedstock to product and bolster the supply chain. In lithium, we have active conversion facilities running at full capacity now. As we bring more capacity online (La Negra III/IV, Kemerton I/II, Silver Peak expansion, and our Tianyuan acquisition in China) while making more efficient use of our feedstocks, it will help strengthen the global supply chain. How will the labor market evolve and what changes should workers expect in the coming year? Brewer: The labor market will continue to be competitive in 2022. I often say to my team: as an employer, it’s not about the products we make, it’s not about our brand. It’s about how are we going to motivate team members to feel good about themselves, fulfilled and passionate about their work, to contribute at their highest level of performance. How do we create a culture that means Walgreens Boots Alliance is the best place to work—so our team members say, “Yes, pay me for the work that I do, but help me love my job.” In the coming year and beyond, broadly across the market, we will see that managers will continue to become even more empathetic and listen more actively to their team members as people. Workers will expect that employers and their managers accept who they are as their whole, authentic selves, both personally and professionally. Read more: The ‘Great Resignation’ Is Finally Getting Companies to Take Burnout Seriously. Is It Enough? Gelsinger: Our employees are our future and our most important asset, and we’ve already announced a significant investment in our people for next year. As I’ve said, sometimes it takes a decade to make a week of progress; sometimes a week gives you a decade of progress. As I look to 2022, navigating a company at the heart of many of the pandemic-related challenges, we must all carefully consider what shifts are underway and what changes are yet to come. It will continue to be a competitive market and I expect you’ll continue to see companies establish unique benefits and incentives to attract and retain talent. We expect the “hybrid” mode that’s developed over the past years to become the standard working model going forward. Al Drago/Bloomberg—Getty ImagesPatrick Gelsinger, chief executive officer of Intel Corp., speaks during an interview at an Economic Club of Washington event in Washington, D.C., U.S., on Dec. 9, 2021. Bourla: The past couple of years have challenged our workforce in ways that we never would have imagined. Companies have asked employees to demonstrate exceptional flexibility, commitment, courage and ingenuity over the past two years—and they have risen to the challenge. I predict that we are likely to see an increase in salaries in the coming year due to inflation—and I believe this is a good thing for workers, as it will help close the gap in income inequality. That said, financial rewards are no longer the only thing that employees expect from their employers. Increasingly, people want to work for a company with a strong culture and a defined purpose. As such, companies will need to foster and promote a culture in which employees feel respected and valued for their contributions and made to feel that they are integral to furthering the purpose of their company. Businesses that are able to create such a culture will not only be able to attract the best talent, but also maximize the engagement, creativity and productivity of their people by enabling them to bring their best selves to every challenge. Green: For many years, Forerunner has been saying, “It’s good to be a consumer. Consumers want what they want, when they want it, how they want it, and they’re getting it.” That same evolution of thought has now moved into the labor market: It’s a worker’s market, not a company’s market, and the relationship between the worker and the employer needs to evolve because of that. Workers should expect to get more flexibility, respect, benefits, and pay in some cases—but they still need to show up and deliver impact at work. It’s a two-way street, and we need to tap into a broader cultural work ethic. As a society, we need to be more holistic in our approach to meeting both company and worker needs. Read more: The Pandemic Revealed How Much We Hate Our Jobs. Now We Have a Chance to Reinvent Work Seroka: There’s a need for more truck drivers and warehouse workers in southern California. President Biden’s new Trucking Action Plan funds trucker apprentice programs and recruit U.S. military veterans. It’s an important step forward to attract, recruit and retain workers. Private industry needs to look at improved compensation and benefits for both truckers and warehouse workers. We need to bring a sense of pride and professionalism back to these jobs. On the docks, the contract between longshore workers and the employer’s association expires June 30. Both sides will be hard at work to negotiate and reach an agreement that benefits the workers and companies while keeping cargo flowing for the American economy. Courtesy Port of Los AngelesGene Seroka, executive director, Port of Los Angeles. Masters: I think there will still be a fight for talent next year. It’s a tight labor market overall and Covid-19 restrictions are a challenge in some regions. Albemarle has a really attractive growth story and profile, especially for workers interested in combatting climate change by contributing in a meaningful way to the clean energy transition. We are embracing a flexible work environment, much like other companies are doing, and upgrading some benefits to remain an employer of choice in attracting and retaining the best people on our growth journey. And, of course, we should all expect pandemic protocols to continue next year to ensure everyone’s health and safety. How do you see your role as a leader evolving over the coming year? Bourla: We are entering a golden age of scientific discovery fueled by converging advancements in biology and technology. As an industry, we must leverage these advancements to make disruptive changes in the way we discover, develop and bring new medicines to patients. Since I became CEO of Pfizer, we have been working to reimagine this process by operating as a nimbler, more science-driven organization, focused on delivering true breakthroughs for patients across our six therapeutic areas. In the past few years, we have demonstrated our ability to deliver on this promise of bringing true scientific breakthroughs through our colleagues’ tireless work in COVID-19. But there is more work to be done to address the unmet need in other disease areas—and now is the time to do it. In the year ahead, my leadership team and I will focus on leveraging these advancements in biology and technology, as well as the lessons learned from our COVID-19 vaccine development program, so that we may continue to push this scientific renaissance forward. This is critical work that we must advance for patients and their families around the world who continue to suffer from other devastating diseases without treatment options. Gelsinger: We are in the midst of a digital renaissance and experiencing the fastest pace of digital acceleration in history. We have immense opportunities ahead of us to make a lasting impact on the world through innovation and technology. Humans create technology to define what’s possible. We ask “if” something can be done, we understand “why,” then we ask “how.” In 2022, I must inspire and ensure our global team of over 110,000 executes and continues to drive forward innovation and leadership on our mission to enrich the lives of every person on earth. Brewer: Purpose is the driving force at this point in my career. I joined Walgreens Boots Alliance as CEO in March of 2021, what I saw as a rare opportunity to help end the pandemic and to help reimagine local healthcare and wellbeing for all. Seven months later, we launched the company’s new purpose, vision, values and strategic priorities. My role as CEO now and in 2022 is to lead with our company’s purpose—more joyful lives through better health—at the center of all we do for our customers, patients and team members. I’m particularly focused on affordable, accessible healthcare for all, including in traditionally medically underserved communities. Healthcare is inherently local, and all communities should have equitable access to care. John Lamparski—Getty Images for Advertising Week New YorkTim Cadogan, CEO of GoFundMe, speaks in New York City on Sept. 26, 2016. Cadogan: The last two years were dominated by a global pandemic and social and geopolitical issues that will carry over into 2022. The role of leaders in this new and uncertain environment will be to deliver value to their customers, while helping employees navigate an increasingly complex world with a completely new way of working together. Trust will be at the center of every decision we make around product development and platform policies—do the decisions we are making align with our mission to help people help each other and do they build trust with our community and our employees? Green: Everything around us is moving at an accelerated pace, and being a leader requires you to operate with a consistent set of values while still leaning into opportunity. Arguably, the pandemic has been the most disruptive time in decades—a generational disruption on par with the Depression or WWII. People’s North Stars are in the process of transforming, and leaders need to figure out what that means for their companies, their cultures, and their work processes. How does this change require leaders to shift their priorities as a business? Courtesy, Forerunner VenturesKirsten Green, founder and managing partner, Forerunner Ventures Masters: My leadership style is to make decisions through dialogue and debate. I encourage teams to be curious about other perspectives, be contrarian, actively discuss, make decisions, and act. I wasn’t sure how well we could do this from a strictly remote work approach during the pandemic, but watching our teams thrive despite the challenge changed my mind. Our people adapted quickly to move our business forward. We’ve worked so well that we’re integrating more flexibility into our work environment in 2022. With this shift to hybrid work, it will be important for all leaders, myself included, to empower employees in managing their productivity, and ensure teams stay engaged and focused on our key objectives. We’re facing rapid growth ahead, so our culture is vital to our success. I’ll continue to encourage our teams to live our values, seek diverse viewpoints, be decisive, and execute critical work to advance our strategy. Courtesy of Albemarle Kent Masters, CEO of Albemarle Seroka: Overseeing the nation’s busiest container port comes with an outsized responsibility to help our nation—not just the Port of Los Angeles—address the challenges brought about by the unprecedented surge in consumer demand. That means taking the lead on key fronts such as digital technology, policy and operational logistics. On the digital front, our industry needs to use data better to improve the reliability, predictability, and efficiency in the flow of goods. Policy work will focus on improving infrastructure investment, job training and advocating for a national export plan that supports fair trade and American jobs. Operationally, we’ll look for new ways to improve cargo velocity and efficiency......»»

Category: topSource: timeJan 2nd, 2022

2021 Greatest Hits: The Most Popular Articles Of The Past Year And A Look Ahead

2021 Greatest Hits: The Most Popular Articles Of The Past Year And A Look Ahead One year ago, when looking at the 20 most popular stories of 2020, we said that the year would be a very tough act to follow as there "could not have been more regime shifts, volatility moments, and memes than 2020." And yet despite the exceedingly high bar for 2021, the year did not disappoint and proved to be a successful contender, and if judging by the sheer breadth of narratives, stories, surprises, plot twists and unexpected developments, 2021 was even more memorable and event-filled than 2020. Where does one start? While covid was the story of 2020, the pandemic that emerged out of a (Fauci-funded) genetic lab team in Wuhan, China dominated newsflow, politics and capital markets for the second year in a row. And while the biggest plot twist of 2020 was Biden's victory over Trump in the presidential election (it took the pandemic lockdowns and mail-in ballots to hand the outcome to Biden), largely thanks to Covid, Biden failed to hold to his biggest presidential promise of defeating covid, and not only did he admit in late 2021 that there is "no Federal solution" to covid waving a white flag of surrender less than a year into his presidency, but following the recent emergence of the Xi, pardon Omicron variant, the number of covid cases in the US has just shattered all records. The silver lining is not only that deaths and hospitalizations have failed to follow the number of cases, but that the scaremongering narrative itself is starting to melt in response to growing grassroots discontent with vaccine after vaccine and booster after booster, which by now it is clear, do nothing to contain the pandemic. And now that it is clear that omicron is about as mild as a moderate case of the flu, the hope has finally emerged that this latest strain will finally kill off the pandemic as it becomes the dominant, rapidly-spreading variant, leading to worldwide herd immunity thanks to the immune system's natural response. Yes, it may mean billions less in revenue for Pfizer and Moderna, but it will be a colossal victory for the entire world. The second biggest story of 2021 was undoubtedly the scourge of soaring inflation, which contrary to macrotourist predictions that it would prove "transitory", refused to do so and kept rising, and rising, and rising, until it hit levels not seen since the Volcker galloping inflation days of the 1980s. The only difference of course is that back then, the Fed Funds rate hit 20%. Now it is at 0%, and any attempts to hike aggressively will lead to a horrific market crash, something the Fed knows very well. Whether this was due to supply-chain blockages and a lack of goods and services pushing prices higher, or due to massive stimulus pushing demand for goods - and also prices - higher, or simply the result of a record injection of central bank liquidity into the system, is irrelevant but what does matter is that it got so bad that even Biden, facing a mauling for his Democratic party in next year's midterm elections, freaked out about soaring prices and pushed hard to lower the price of gasoline, ordering releases from the US Strategic Petroleum Reserve and vowing to punish energy companies that dare to make a profit, while ordering Powell to contain the surge in prices even if means the market is hit. Unfortunately for Biden, the market will be hit even as inflation still remain red hot for much of the coming year. And speaking of markets, while 2022 may be a year when the piper finally gets paid, 2021 was yet another blockbuster year for risk assets, largely on the back of the continued global response to the 2020 covid pandemic, when as we wrote last year, we saw "the official arrival of global Helicopter Money, tens of trillions in fiscal and monetary stimulus, an overhaul of the global economy punctuated by an unprecedented explosion in world debt, an Orwellian crackdown on civil liberties by governments everywhere, and ultimately set the scene for what even the World Economic Forum called simply "The Great Reset." Yes, the staggering liquidity injections that started in 2020, continued throughout 2021 and the final tally is that after $3 trillion in emergency liquidity injections in the immediate aftermath of the pandemic to stabilize the world, the Fed injected almost $2 trillion in the subsequent period, of which $1.5 trillion in 2021, a year where economists were "puzzled" why inflation was soaring. This, of course, excludes the tens of trillions of monetary stimulus injected by other central banks as well as the boundless fiscal stimulus that was greenlighted with the launch of helicopter money (i.e., MMT) in 2020. It's also why with inflation running red hot and real rates the lowest they have ever been, everyone was forced to rush into the "safety" of stocks (or stonks as they came to be known among GenZ), and why after last year's torrid stock market returns, the S&P rose another 27% in 2021 and up a staggering 114% from the March 2020 lows, in the process trouncing all previous mega-rallies (including those in 1929, 1938, 1974 and 2009)... ... making this the third consecutive year of double-digit returns. This reminds us of something we said last year: "it's almost as if the world's richest asset owners requested the covid pandemic." A year later, we got confirmation for this rhetorical statement, when we calculated that in the 18 months since the covid pandemic, the richest 1% of US society have seen their net worth increase by over $30 trillion. As a result, the US is now officially a banana republic where the middle 60% of US households by income - a measure economists use as a definition of the middle class - saw their combined assets drop from 26.7% to 26.6% of national wealth as of June, the lowest in Federal Reserve data, while for the first time the super rich had a bigger share, at 27%. Yes, the 1% now own more wealth than the entire US middle class, a definition traditionally reserve for kleptocracies and despotic African banana republics. It wasn't just the rich, however: politicians the world over would benefit from the transition from QE to outright helicopter money and MMT which made the over monetization of deficits widely accepted in the blink of an eye. The common theme here is simple: no matter what happens, capital markets can never again be allowed to drop, regardless of the cost or how much more debt has to be incurred. Indeed, as we look back at the news barrage over the past year, and past decade for that matter, the one thing that becomes especially clear amid the constant din of markets, of politics, of social upheaval and geopolitical strife - and now pandemics -  in fact a world that is so flooded with constant conflicting newsflow and changing storylines that many now say it has become virtually impossible to even try to predict the future, is that despite the people's desire for change, for something original and untried, the world's established forces will not allow it and will fight to preserve the broken status quo at any price - even global coordinated shutdowns - which is perhaps why it always boils down to one thing - capital markets, that bedrock of Western capitalism and the "modern way of life", where control, even if it means central planning the likes of which have not been seen since the days of the USSR, and an upward trajectory must be preserved at all costs, as the alternative is a global, socio-economic collapse. And since it is the daily gyrations of stocks that sway popular moods the interplay between capital markets and politics has never been more profound or more consequential. The more powerful message here is the implicit realization and admission by politicians, not just Trump who had a penchant of tweeting about the S&P every time it rose, but also his peers on both sides of the aisle, that the stock market is now seen as the consummate barometer of one's political achievements and approval. Which is also why capital markets are now, more than ever, a political tool whose purpose is no longer to distribute capital efficiently and discount the future, but to manipulate voter sentiments far more efficiently than any fake Russian election interference attempt ever could. Which brings us back to 2021 and the past decade, which was best summarized by a recent Bill Blain article who said that "the last 10-years has been a story of massive central banking distortion to address the 2008 crisis. Now central banks face the consequences and are trapped. The distortion can’t go uncorrected indefinitely." He is right: the distortion will eventually collapse especially if the Fed follows through with its attempt rate hikes some time in mid-2020, but so far the establishment and the "top 1%" have been successful - perhaps the correct word is lucky - in preserving the value of risk assets: on the back of the Fed's firehose of liquidity the S&P500 returned an impressive 27% in 2021, following a 15.5% return in 2020 and 28.50% in 2019. It did so by staging the greatest rally off all time from the March lows, surpassing all of the 4 greatest rallies off the lows of the past century (1929,1938, 1974, and 2009). Yet this continued can-kicking by the establishment - all of which was made possible by the covid pandemic and lockdowns which served as an all too convenient scapegoat for the unprecedented response that served to propel risk assets (and fiat alternatives such as gold and bitcoin) to all time highs - has come with a price... and an increasingly higher price in fact. As even Bank of America CIO Michael Hartnett admits, Fed's response to the the pandemic "worsened inequality" as the value of financial assets - Wall Street -  relative to economy - Main Street - hit all-time high of 6.3x. And while the Fed was the dynamo that has propelled markets higher ever since the Lehman collapse, last year certainly had its share of breakout moments. Here is a sampling. Gamestop and the emergence of meme stonks and the daytrading apes: In January markets were hypnotized by the massive trading volumes, rolling short squeezes and surging share prices of unremarkable established companies such as consoles retailer GameStop and cinema chain AMC and various other micro and midcap names. What began as a discussion on untapped value at GameStop on Reddit months earlier by Keith Gill, better known as Roaring Kitty, morphed into a hedge fund-orchestrated, crowdsourced effort to squeeze out the short position held by a hedge fund, Melvin Capital. The momentum flooded through the retail market, where daytraders shunned stocks and bought massive out of the money calls, sparking rampant "gamma squeezes" in the process forcing some brokers to curb trading. Robinhood, a popular broker for day traders and Citadel's most lucrative "subsidiary", required a cash injection to withstand the demands placed on it by its clearing house. The company IPOed later in the year only to see its shares collapse as it emerged its business model was disappointing hollow absent constant retail euphoria. Ultimately, the market received a crash course in the power of retail investors on a mission. Ultimately, "retail favorite" stocks ended the year on a subdued note as the trading frenzy from earlier in the year petered out, but despite underperforming the S&P500, retail traders still outperformed hedge funds by more than 100%. Failed seven-year Treasury auction:  Whereas auctions of seven-year US government debt generally spark interest only among specialists, on on February 25 2021, one such typically boring event sparked shockwaves across financial markets, as the weakest demand on record hit prices across the whole spectrum of Treasury bonds. The five-, seven- and 10-year notes all fell sharply in price. Researchers at the Federal Reserve called it a “flash event”; we called it a "catastrophic, tailing" auction, the closest thing the US has had to a failed Trasury auction. The flare-up, as the FT put it, reflects one of the most pressing investor concerns of the year: inflation. At the time, fund managers were just starting to realize that consumer price rises were back with a vengeance — a huge threat to the bond market which still remembers the dire days of the Volcker Fed when inflation was about as high as it is today but the 30Y was trading around 15%. The February auaction also illustrated that the world’s most important market was far less liquid and not as structurally robust as investors had hoped. It was an extreme example of a long-running issue: since the financial crisis the traditional providers of liquidity, a group of 24 Wall Street banks, have pulled back because of higher costs associated with post-2008 capital requirements, while leaving liquidity provision to the Fed. Those banks, in their reduced role, as well as the hedge funds and high-frequency traders that have stepped into their place, have tended to withdraw in moments of market volatility. Needless to say, with the Fed now tapering its record QE, we expect many more such "flash" episodes in the bond market in the year ahead. The arch ego of Archegos: In March 2021 several banks received a brutal reminder that some of family offices, which manage some $6 trillion in wealth of successful billionaires and entrepreneurs and which have minimal reporting requirements, take risks that would make the most serrated hedge fund manager wince, when Bill Hwang’s Archegos Capital Management imploded in spectacular style. As we learned in late March when several high-flying stocks suddenly collapsed, Hwang - a former protege of fabled hedge fund group Tiger Management - had built up a vast pile of leverage using opaque Total Return Swaps with a handful of banks to boost bets on a small number of stocks (the same banks were quite happy to help despite Hwang’s having been barred from US markets in 2013 over allegations of an insider-trading scheme, as he paid generously for the privilege of borrowing the banks' balance sheet). When one of Archegos more recent bets, ViacomCBS, suddenly tumbled it set off a liquidation cascade that left banks including Credit Suisse and Nomura with billions of dollars in losses. Conveniently, as the FT noted, the damage was contained to the banks rather than leaking across financial markets, but the episode sparked a rethink among banks over how to treat these clients and how much leverage to extend. The second coming of cryptos: After hitting an all time high in late 2017 and subsequently slumping into a "crypto winter", cryptocurrencies enjoyed a huge rebound in early 2021 which sent their prices soaring amid fears of galloping inflation (as shown below, and contrary to some financial speculation, the crypto space has traditionally been a hedge either to too much liquidity or a hedge to too much inflation). As a result, Bitcoin rose to a series of new record highs that culminated at just below $62,000, nearly three times higher than their previous all time high. But the smooth ride came to a halt in May when China’s crackdown on the cryptocurrency and its production, or “mining”, sparked the first serious crash of 2021. The price of bitcoin then collapsed as much as 30% on May 19, hitting a low of $30,000 amid a liquidation of levered positions in chaotic trading conditions following a warning from Chinese authorities of tighter curbs ahead. A public acceptance by Tesla chief and crypto cheerleader Elon Musk of the industry’s environmental impact added to the declines. However, as with all previous crypto crashes, this one too proved transitory, and prices resumed their upward trajectory in late September when investors started to price in the launch of futures-based bitcoin exchange traded funds in the US. The launch of these contracts subsequently pushed bitcoin to a new all-time high in early November before prices stumbled again in early December, this time due to a rise in institutional ownership when an overall drop in the market dragged down cryptos as well. That demonstrated the growing linkage between Wall Street and cryptocurrencies, due to the growing sway of large investors in digital markets. China's common prosperity crash: China’s education and tech sectors were one of the perennial Wall Street darlings. Companies such as New Oriental, TAL Education as well as Alibaba and Didi had come to be worth billions of dollars after highly publicized US stock market flotations. So when Beijing effectively outlawed swaths of the country’s for-profit education industry in July 2021, followed by draconian anti-trust regulations on the country's fintech names (where Xi Jinping also meant to teach the country's billionaire class a lesson who is truly in charge), the short-term market impact was brutal. Beijing’s initial measures emerged as part of a wider effort to make education more affordable as part of president Xi Jinping’s drive for "common prosperity" but that quickly raised questions over whether growth prospects across corporate China are countered by the capacity of the government to overhaul entire business models overnight. Sure enough, volatility stemming from the education sector was soon overshadowed by another set of government reforms related to common prosperity, a crackdown on leverage across the real estate sector where the biggest casualty was Evergrande, the world’s most indebted developer. The company, whose boss was not long ago China's 2nd richest man, was engulfed by a liquidity crisis in the summer that eventually resulted in a default in early December. Still, as the FT notes, China continues to draw in huge amounts of foreign capital, pushing the Chinese yuan to end 2021 at the strongest level since May 2018, a major hurdle to China's attempts to kickstart its slowing economy, and surely a precursor to even more monetary easing. Natgas hyperinflation: Natural gas supplanted crude oil as the world’s most important commodity in October and December as prices exploded to unprecedented levels and the world scrambled for scarce supplies amid the developed world's catastrophic transition to "green" energy. The crunch was particularly acute in Europe, which has become increasingly reliant on imports. Futures linked to TTF, the region’s wholesale gas price, hit a record €137 per megawatt hour in early October, rising more than 75%. In Asia, spot liquefied natural gas prices briefly passed the equivalent of more than $320 a barrel of oil in October. (At the time, Brent crude was trading at $80). A number of factors contributed, including rising demand as pandemic restrictions eased, supply disruptions in the LNG market and weather-induced shortfalls in renewable energy. In Europe, this was aggravated by plunging export volumes from Gazprom, Russia’s state-backed monopoly pipeline supplier, amid a bitter political fight over the launch of the Nordstream 2 pipeline. And with delays to the Nord Stream 2 gas pipeline from Russia to Germany, analysts say the European gas market - where storage is only 66% full - a cold snap or supply disruption away from another price spike Turkey's (latest) currency crisis:  As the FT's Jonathan Wheatley writes, Recep Tayyip Erdogan was once a source of strength for the Turkish lira, and in his first five years in power from 2003, the currency rallied from TL1.6 per US dollar to near parity at TL1.2. But those days are long gone, as Erdogan's bizarre fascination with unorthodox economics, namely the theory that lower rates lead to lower inflation also known as "Erdoganomics", has sparked a historic collapse in the: having traded at about TL7 to the dollar in February, it has since fallen beyond TL17, making it the worst performing currency of 2021. The lira’s defining moment in 2021 came on November 18 when the central bank, in spite of soaring inflation, cut its policy rate for the third time since September, at Erdogan’s behest (any central banker in Turkey who disagrees with "Erdoganomics" is promptly fired and replaced with an ideological puppet). The lira recovered some of its losses in late December when Erdogan came up with the "brilliant" idea of erecting the infamous "doom loop" which ties Turkey's balance sheet to its currency. It has worked for now (the lira surged from TL18 against the dollar to TL12, but this particular band aid solution will only last so long). The lira’s problems are not only Erdogan’s doing. A strengthening dollar, rising oil prices, the relentless covid pandemic and weak growth in developing economies have been bad for other emerging market currencies, too, but as long as Erdogan is in charge, shorting the lira remains the best trade entering 2022. While these, and many more, stories provided a diversion from the boring existence of centrally-planned markets, we are confident that the trends observed in recent years will continue: coming years will be marked by even bigger government (because only more government can "fix" problems created by government), higher stock prices and dollar debasement (because only more Fed intervention can "fix" the problems created by the Fed), and a policy flip from monetary and QE to fiscal & MMT, all of which will keep inflation at scorching levels, much to the persistent confusion of economists everywhere. Of course, we said much of this last year as well, but while we got most trends right, we were wrong about one thing: we were confident that China's aggressive roll out of the digital yuan would be a bang - or as we put it "it is very likely that while 2020 was an insane year, it may prove to be just an appetizer to the shockwaves that will be unleashed in 2021 when we see the first stage of the most historic overhaul of the fiat payment system in history" - however it turned out to be a whimper. A big reason for that was that the initial reception of the "revolutionary" currency was nothing short of disastrous, with Chinese admitting they were "not at all excited" about the prospect of yet one more surveillance mechanism for Beijing, because that's really what digital currencies are: a way for central banks everywhere to micromanage and scrutinize every single transaction, allowing the powers that be to demonetize any one person - or whole groups - with the flick of a switch. Then again, while digital money may not have made its triumphant arrival in 2021, we are confident that the launch date has merely been pushed back to 2022 when the rollout of the next monetary revolution is expected to begin in earnest. Here we should again note one thing: in a world undergoing historic transformations, any free press must be throttled and controlled, and over the past year we have seen unprecedented efforts by legacy media and its corporate owners, as well as the new "social media" overlords do everything in their power to stifle independent thought. For us it had been especially "personal" on more than one occasions. Last January, Twitter suspended our account because we dared to challenge the conventional narrative about the source of the Wuhan virus. It was only six months later that Twitter apologized, and set us free, admitting it had made a mistake. Yet barely had twitter readmitted us, when something even more unprecedented happened: for the first time ever (to our knowledge) Google - the world's largest online ad provider and monopoly - demonetized our website not because of any complaints about our writing but because of the contents of our comment section. It then held us hostage until we agreed to implement some prerequisite screening and moderation of the comments section. Google's action was followed by the likes of PayPal, Amazon, and many other financial and ad platforms, who rushed to demonetize and suspend us simply because they disagreed with what we had to say. This was a stark lesson in how quickly an ad-funded business can disintegrate in this world which resembles the dystopia of 1984 more and more each day, and we have since taken measures. One year ago, for the first time in our 13 year history, we launched a paid version of our website, which is entirely ad and moderation free, and offers readers a variety of premium content. It wasn't our intention to make this transformation but unfortunately we know which way the wind is blowing and it is only a matter of time before the gatekeepers of online ad spending block us again. As such, if we are to have any hope in continuing it will come directly from you, our readers. We will keep the free website running for as long as possible, but we are certain that it is only a matter of time before the hammer falls as the censorship bandwagon rolls out much more aggressively in the coming year. That said, whether the story of 2022, and the next decade for that matter, is one of helicopter or digital money, of (hyper)inflation or deflation: what is key, and what we learned in the past decade, is that the status quo will throw anything at the problem to kick the can, it will certainly not let any crisis go to waste... even the deadliest pandemic in over a century. And while many already knew that, the events of 2021 made it clear to a fault that not even a modest market correction can be tolerated going forward. After all, if central banks aim to punish all selling, then the logical outcome is to buy everything, and investors, traders and speculators did just that armed with the clearest backstop guarantee from the Fed, which in the deapths of the covid crash crossed the Rubicon when it formally nationalized the bond market as it started buying both investment grade bonds and junk bond ETFs in the open market. As such it is no longer even a debatable issue if the Fed will buy stocks after the next crash - the only question is when. Meanwhile, for all those lamenting the relentless coverage of politics in a financial blog, why finance appears to have taken a secondary role, and why the political "narrative" has taken a dominant role for financial analysts, the past year showed vividly why that is the case: in a world where markets gyrated, and "rotated" from value stocks to growth and vice versa, purely on speculation of how big the next stimulus out of Washington will be, the narrative over Biden's trillions proved to be one of the biggest market moving events for much of the year. And with the Biden stimulus plan off the table for now, the Fed will find it very difficult to tighten financial conditions, especially if it does so just as the economy is slowing. Here we like to remind readers of one of our favorite charts: every financial crisis is the result of Fed tightening. As for predictions about the future, as the past two years so vividly showed, when it comes to actual surprises and all true "black swans", it won't be what anyone had expected. And so while many themes, both in the political and financial realm, did get some accelerated closure courtesy of China's covid pandemic, dramatic changes in 2021 persisted, and will continue to manifest themselves in often violent and unexpected ways - from the ongoing record polarization in the US political arena, to "populist" upheavals around the developed world, to the gradual transition to a global Universal Basic (i.e., socialized) Income regime, to China's ongoing fight with preserving stability in its gargantuan financial system which is now two and a half times the size of the US. As always, we thank all of our readers for making this website - which has never seen one dollar of outside funding (and despite amusing recurring allegations, has certainly never seen a ruble from the KGB either, although now that the entire Russian hysteria episode is over, those allegations have finally quieted down), and has never spent one dollar on marketing - a small (or not so small) part of your daily routine. Which also brings us to another critical topic: that of fake news, and something we - and others who do not comply with the established narrative - have been accused of. While we find the narrative of fake news laughable, after all every single article in this website is backed by facts and links to outside sources, it is clearly a dangerous development, and a very slippery slope that the entire developed world is pushing for what is, when stripped of fancy jargon, internet censorship under the guise of protecting the average person from "dangerous, fake information." It's also why we are preparing for the next onslaught against independent thought and why we had no choice but to roll out a premium version of this website. In addition to the other themes noted above, we expect the crackdown on free speech to accelerate in the coming year when key midterm elections will be held, especially as the following list of Top 20 articles for 2021 reveals, many of the most popular articles in the past year were precisely those which the conventional media would not touch out of fear of repercussions, which in turn allowed the alternative media to continue to flourish in an orchestrated information vacuum and take significant market share from the established outlets by covering topics which the public relations arm of established media outlets refused to do, in the process earning itself the derogatory "fake news" condemnation. We are grateful that our readers - who hit a new record high in 2021 - have realized it is incumbent upon them to decide what is, and isn't "fake news." * * * And so, before we get into the details of what has now become an annual tradition for the last day of the year, those who wish to jog down memory lane, can refresh our most popular articles for every year during our no longer that brief, almost 11-year existence, starting with 2009 and continuing with 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019 and 2020. So without further ado, here are the articles that you, our readers, found to be the most engaging, interesting and popular based on the number of hits, during the past year. In 20th spot with 600,000 reads, was an article that touched on one of the most defining features of the market: the reflation theme the sparked a massive rally at the start of the year courtesy of the surprise outcome in the Georgia Senate race, where Democrats ended up wining both seats up for grabs, effectively giving the Dems a majority in both the House and the Senate, where despite the even, 50-seat split, Kamala Harris would cast the winning tie-breaker vote to pursue a historic fiscal stimulus. And sure enough, as we described in "Bitcoin Surges To Record High, Stocks & Bonds Battered As Dems Look Set To Take Both Georgia Senate Seats", with trillions in "stimmies" flooding both the economy and the market, not only did retail traders enjoy unprecedented returns when trading meme "stonks" and forcing short squeezes that crippled numerous hedge funds, but expectations of sharply higher inflation also helped push bitcoin and the entire crypto sector to new all time highs, which in turn legitimized the product across institutional investors and helped it reach a market cap north of $3 trillion.  In 19th spot, over 613,000 readers were thrilled to read at the start of September that "Biden Unveils Most Severe COVID Actions Yet: Mandates Vax For All Federal Workers, Contractors, & Large Private Companies." Of course, just a few weeks later much of Biden's mandate would be struck down in courts, where it is now headed to a decision by SCOTUS, while the constantly shifting "scientific" goal posts mean that just a few months later the latest set of CDC regulations have seen regulators and officials reverse the constant drone of fearmongering and are now even seeking to cut back on the duration of quarantine and other lockdown measures amid a public mood that is growing increasingly hostile to the government response. One of the defining political events of 2021 was the so-called "Jan 6 Insurrection", which the for America's conservatives was blown wildly out of proportion yet which the leftist media and Democrats in Congress have been periodically trying to push to the front pages in hopes of distracting from the growing list of failures of the Obama admin. Yet as we asked back in January, "Why Was Founder Of Far-Left BLM Group Filming Inside Capitol As Police Shot Protester?" No less than 614,000 readers found this question worthy of a response. Since then many more questions have emerged surrounding this event, many of which focus on what role the FBI had in organizing and encouraging this event, including the use of various informants and instigators. For now, a response will have to wait at least until the mid-term elections of 2022 when Republicans are expected to sweep one if not both chambers. Linked to the above, the 17th most read article of 2021 with 617,000 views, was an article we published on the very same day, which detailed that "Armed Protesters Begin To Arrive At State Capitols Around The Nation." At the end of the day, it was much ado about nothing and all protests concluded peacefully and without incident: perhaps the FBI was simply spread too thin? 2021 was a year defined by various waves of the covid pandemic which hammered poor Americans forced to hunker down at home and missing on pay, and crippled countless small mom and pop businesses. And yet, it was also a bonanza for a handful of pharma companies such as Pfizer and Moderna which made billions from the sale of "vaccines" which we now know do little if anything to halt the spread of the virus, and are instead now being pitched as palliatives, preventing a far worse clinical outcome. The same pharma companies also benefited from an unconditional indemnity, which surely would come in useful when the full side-effects of their mRNA-based therapies became apparent. One such condition to emerge was myocarditis among a subset of the vaxxed. And while the vaccines continue to be broadly rolled out across most developed nations, one place that said enough was Sweden. As over 620,000 readers found out in "Sweden Suspends Moderna Shot Indefinitely After Vaxxed Patients Develop Crippling Heart Condition", not every country was willing to use its citizens as experimental guniea pigs. This was enough to make the article the 16th most read on these pages, but perhaps in light of the (lack of) debate over the pros and cons of the covid vaccines, this should have been the most read article this year? Moving on to the 15th most popular article, 628,000 readers were shocked to learn that "Chase Bank Cancels General Mike Flynn's Credit Cards." The action, which was taken by the largest US bank due to "reputational risk" echoed a broad push by tech giants to deplatform and silence dissenting voices by literally freezing them out of the financial system. In the end, following widespread blowback from millions of Americans, JPMorgan reversed, and reactivated Flynn's cards saying the action was made in error, but unfortunately this is just one example of how those in power can lock out any dissenters with the flick of a switch. And while democrats cheer such deplatforming today, the political winds are fickle, and we doubt they will be as excited once they find themselves on the receiving end of such actions. And speaking of censorship and media blackouts, few terms sparked greater response from those in power than the term Ivermectin. Viewed by millions as a cheap, effective alternative to offerings from the pharmaceutical complex, social networks did everything in their power to silence any mention of a drug which the Journal of Antibiotics said in 2017 was an "enigmatic multifaceted ‘wonder’ drug which continues to surprise and exceed expectations." Nowhere was this more obvious than in the discussion of how widespread use of Ivermectin beat Covid in India, the topic of the 14th most popular article of 2021 "India's Ivermectin Blackout" which was read by over 653,000 readers. Unfortunately, while vaccines continue to fail upward and now some countries are now pushing with a 4th, 5th and even 6th vaccine, Ivermectin remains a dirty word. There was more covid coverage in the 13th most popular article of 2021, "Surprise Surprise - Fauci Lied Again": Rand Paul Reacts To Wuhan Bombshell" which was viewed no less than 725,000 times. Paul's reaction came following a report which revealed that Anthony Fauci's NIAID and its parent, the NIH, funded Gain-of-Function research in Wuhan, China, strongly hinting that the emergence of covid was the result of illicit US funding. Not that long ago, Fauci had called Paul a 'liar' for accusing him of funding the risky research, in which viruses are genetically modified or otherwise altered to make them more transmissible to humans. And while we could say that Paul got the last laugh, Fauci still remains Biden's top covid advisor, which may explain why one year after Biden vowed he would shut down the pandemic, the number of new cases just hit a new all time high. One hope we have for 2022 is that people will finally open their eyes... 2021 was not just about covid - soaring prices and relentless inflation were one of the most poignant topics. It got so bad that Biden's approval rating - and that of Democrats in general - tumbled toward the end of the year, putting their mid-term ambitions in jeopardy, as the public mood soured dramatically in response to the explosion in prices. And while one can debate whether it was due to supply-issues, such as the collapse in trans-pacific supply chains and the chronic lack of labor to grow the US infrastructure, or due to roaring demand sparked by trillions in fiscal stimulus, but when the "Big Short" Michael Burry warned that hyperinflation is coming, the people listened, and with over 731,000 reads, the 12th most popular article of 2021 was "Michael Burry Warns Weimar Hyperinflation Is Coming."  Of course, Burry did not say anything we haven't warned about for the past 12 years, but at least he got the people's attention, and even mainstream names such as Twitter founder Jack Dorsey agreed with him, predicting that bitcoin will be what is left after the dollar has collapsed. While hyperinflation may will be the endgame, the question remains: when. For the 11th most read article of 2021, we go back to a topic touched upon moments ago when we addressed the full-blown media campaign seeking to discredit Ivermectin, in this case via the D-grade liberal tabloid Rolling Stone (whose modern incarnation is sadly a pale shadow of the legend that house Hunter S. Thompson's unforgettable dispatches) which published the very definition of fake news when it called Ivermectin a "horse dewormer" and claimed that, according to a hospital employee, people were overdosing on it. Just a few hours later, the article was retracted as we explained in "Rolling Stone Issues 'Update' After Horse Dewormer Hit-Piece Debunked" and over 812,000 readers found out that pretty much everything had been a fabrication. But of course, by then it was too late, and the reputation of Ivermectin as a potential covid cure had been further tarnished, much to the relief of the pharma giants who had a carte blanche to sell their experimental wares. The 10th most popular article of 2021 brings us to another issue that had split America down the middle, namely the story surrounding Kyle Rittenhouse and the full-blown media campaign that declared the teenager guilty, even when eventually proven innocent. Just days before the dramatic acquittal, we learned that "FBI Sat On Bombshell Footage From Kyle Rittenhouse Shooting", which was read by over 822,000 readers. It was unfortunate to learn that once again the scandal-plagued FBI stood at the center of yet another attempt at mass misinformation, and we can only hope that one day this "deep state" agency will be overhauled from its core, or better yet, shut down completely. As for Kyle, he will have the last laugh: according to unconfirmed rumors, his numerous legal settlements with various media outlets will be in the tens if not hundreds of millions of dollars.  And from the great US social schism, we again go back to Covid for the 9th most popular article of 2021, which described the terrifying details of one of the most draconian responses to covid in the entire world: that of Australia. Over 900,000 readers were stunned to read that the "Australian Army Begins Transferring COVID-Positive Cases, Contacts To Quarantine Camps." Alas, the latest surge in Australian cases to nosebleed, record highs merely confirms that this unprecedented government lockdown - including masks and vaccines - is nothing more than an exercise in how far government can treat its population as a herd of sheep without provoking a violent response.  The 8th most popular article of 2021 looks at the market insanity of early 2021 when, at the end of January, we saw some of the most-shorted, "meme" stocks explode higher as the Reddit daytrading horde fixed their sights on a handful of hedge funds and spent billions in stimmies in an attempt to force unprecedented ramps. That was the case with "GME Soars 75% After-Hours, Erases Losses After Liquidity-Constrained Robinhood Lifts Trading Ban", which profiled the daytrading craze that gave an entire generation the feeling that it too could win in these manipulated capital markets. Then again, judging by the waning retail interest, it is possible that the excitement of the daytrading army is fading as rapidly as it first emerged, and that absent more "stimmies" markets will remain the playground of the rich and central banks. Kyle Rittenhouse may soon be a very rich man after the ordeal he went through, but the media's mission of further polarizing US society succeeded, and millions of Americans will never accept that the teenager was innocent. It's also why with just over 1 million reads, the 7th most read article on Zero Hedge this year was that "Portland Rittenhouse Protest Escalates Into Riot." Luckily, this is not a mid-term election year and there were no moneyed interests seeking to prolong this particular riot, unlike what happened in the summer of 2020... and what we are very much afraid will again happen next year when very critical elections are on deck.  With just over 1.03 million views, the 6th most popular post focused on a viral Twitter thread on Friday from Dr Robert Laone, which laid out a disturbing trend; the most-vaccinated countries in the world are experiencing  a surge in COVID-19 cases, while the least-vaccinated countries were not. As we originally discussed in ""This Is Worrying Me Quite A Bit": mRNA Vaccine Inventor Shares Viral Thread Showing COVID Surge In Most-Vaxxed Countries", this trend has only accelerated in recent weeks with the emergence of the Omicron strain. Unfortunately, instead of engaging in a constructive discussion to see why the science keeps failing again and again, Twitter's response was chilling: with just days left in 2021, it suspended the account of Dr. Malone, one of the inventors of mRNA technology. Which brings to mind something Aaron Rogers said: "If science can't be questioned it's not science anymore it's propaganda & that's the truth." In a year that was marked a flurry of domestic fiascoes by the Biden administration, it is easy to forget that the aged president was also responsible for the biggest US foreign policy disaster since Vietnam, when the botched evacuation of Afghanistan made the US laughing stock of the world after 12 US servicemembers were killed. So it's probably not surprising that over 1.1 million readers were stunned to watch what happened next, which we profiled in the 5th most popular post of 2021, where in response to the Afghan trajedy, "Biden Delivers Surreal Press Conference, Vows To Hunt Down Isis, Blames Trump." One person watching the Biden presser was Xi Jinping, who may have once harbored doubts about reclaiming Taiwan but certainly does not any more. The 4th most popular article of 2021 again has to do with with covid, and specifically the increasingly bizarre clinical response to the disease. As we detailed in "Something Really Strange Is Happening At Hospitals All Over America" while emergency rooms were overflowing, it certainly wasn't from covid cases. Even more curiously, one of the primary ailments leading to an onslaught on ERs across the nation was heart-related issues, whether arrhytmia, cardiac incidents or general heart conditions. We hope that one day there will be a candid discussion on this topic, but until then it remains one of the topics seen as taboo by the mainstream media and the deplatforming overlords, so we'll just leave it at that. We previously discussed the anti-Ivermectin narrative that dominated the mainstream press throughout 2021 and the 3rd most popular article of the year may hold clues as to why: in late September, pharma giant Pfizer and one of the two companies to peddle an mRNA based vaccine, announced that it's launching an accelerated Phase 2/3 trial for a COVID prophylactic pill designed to ward off COVID in those may have come in contact with the disease. And, as we described in "Pfizer Launches Final Study For COVID Drug That's Suspiciously Similar To 'Horse Paste'," 1.75 million readers learned that Pfizer's drug shared at least one mechanism of action as Ivermectin - an anti-parasitic used in humans for decades, which functions as a protease inhibitor against Covid-19, which researchers speculate "could be the biophysical basis behind its antiviral efficiency." Surely, this too was just another huge coincidence. In the second most popular article of 2021, almost 2 million readers discovered (to their "shock") that Fauci and the rest of Biden's COVID advisors were proven wrong about "the science" of COVID vaccines yet again. After telling Americans that vaccines offer better protection than natural infection, a new study out of Israel suggested the opposite is true: natural infection offers a much better shield against the delta variant than vaccines, something we profiled in "This Ends The Debate' - Israeli Study Shows Natural Immunity 13x More Effective Than Vaccines At Stopping Delta." We were right about one thing: anyone who dared to suggest that natural immunity was indeed more effective than vaccines was promptly canceled and censored, and all debate almost instantly ended. Since then we have had tens of millions of "breakout" cases where vaccinated people catch covid again, while any discussion why those with natural immunity do much better remains under lock and key. It may come as a surprise to many that the most read article of 2021 was not about covid, or Biden, or inflation, or China, or even the extremely polarized US congress (and/or society), but was about one of the most long-suffering topics on these pages: precious metals and their prices. Yes, back in February the retail mania briefly targeted silver and as millions of reddit daytraders piled in in hopes of squeezing the precious metal higher, the price of silver surged higher only to tumble just as quickly as it has risen as the seller(s) once again proved more powerful than the buyers. We described this in "Silver Futures Soar 8%, Rise Above $29 As Reddit Hordes Pile In", an article which some 2.4 million gold and silver bugs read with hope, only to see their favorite precious metals slump for much of the rest of the year. And yes, the fact that both gold and silver ended the year sharply lower than where they started even though inflation hit the highest level in 40 years, remains one of the great mysteries of 2021. With all that behind us, and as we wave goodbye to another bizarre, exciting, surreal year, what lies in store for 2022, and the next decade? We don't know: as frequent and not so frequent readers are aware, we do not pretend to be able to predict the future and we don't try despite endless allegations that we constantly predict the collapse of civilization: we leave the predicting to the "smartest people in the room" who year after year have been consistently wrong about everything, and never more so than in 2021 (even the Fed admitted it is clueless when Powell said it was time to retire the term "transitory"), which destroyed the reputation of central banks, of economists, of conventional media and the professional "polling" and "strategist" class forever, not to mention all those "scientists" who made a mockery of the "expertise class" with their bungled response to the covid pandemic. We merely observe, find what is unexpected, entertaining, amusing, surprising or grotesque in an increasingly bizarre, sad, and increasingly crazy world, and then just write about it. We do know, however, that after a record $30 trillion in stimulus was conjured out of thin air by the world's central banks and politicians in the past two years, the attempt to reverse this monetary and fiscal firehose in a world addicted to trillions in newly created liquidity now that central banks are freaking out after finally getting ot the inflation they were hoping to create for so long, will end in tears. We are confident, however, that in the end it will be the very final backstoppers of the status quo regime, the central banking emperors of the New Normal, who will eventually be revealed as fully naked. When that happens and what happens after is anyone's guess. But, as we have promised - and delivered - every year for the past 13, we will be there to document every aspect of it. Finally, and as always, we wish all our readers the best of luck in 2022, with much success in trading and every other avenue of life. We bid farewell to 2021 with our traditional and unwavering year-end promise: Zero Hedge will be there each and every day - usually with a cynical smile - helping readers expose, unravel and comprehend the fallacy, fiction, fraud and farce that defines every aspect of our increasingly broken system. Tyler Durden Sun, 01/02/2022 - 03:44.....»»

Category: personnelSource: nytJan 2nd, 2022

Futures Hit New All Time High As Santa Rally Drags Everything Higher

Futures Hit New All Time High As Santa Rally Drags Everything Higher The Santa rally, which made an expected appearance during yesterday thinly-traded session now that most desks have closed their books for the year pushing stocks to their 69th all-time high for 2021, is back (as discussed in "Goldman: There Has Been No FOMO In Late 2021, This Changes In 5 Trading Sessions") amid a combination of low volume, delta-chasing, dealer gamma and a plain old short squeeze (as predicted correctly by Marko Kolanovic), and has pushed e-minis just shy of 4,800 this morning, and a little over 200 points away from the 2022 year-end targets by both JPM and Goldman. Stocks in Europe advanced along with US equity futures as traders evaluated the resilience of the global recovery to a record spike in coronavirus cases. 10-year Treasury yields and the dollar were little changed. Oil surged to a five-week peak, while iron ore futures extended a decline after data showed softening Chinese steel output. Bitcoin tumbled following fresh selling out of Asia, where the PBOC seems to have a death wish against the cryptocurrency. As Bloomberg notes, global stocks are on course for a third year of double-digit returns, powered by trillions in liquidity from the Fed and other central banks. The climb has overcome coronavirus waves and a late-year shift by some key central banks toward tighter monetary policy to fight high inflation (it also explains why most of the gains were achieved early in the year). Concerns remain that those variables could spur heightened volatility. “The remedies that we put in place to counter the Covid recessions, they were so substantial, we had massive stimulus,” Sandip Bhagat, chief investment officer of Whittier Trust, said on Bloomberg Television. “We’ll be left with a legacy of those policy responses well into the future” and stocks can continue advancing, he said. Here are some of the biggest U.S. movers today: Apple (AAPL US) shares are up 0.3%, with the stock now just about 1% shy of hitting a historic $3 trillion market valuation for the iPhone maker. The shares are on track for a fifth straight gain. ADDvantage Technologies Group (AEY) shares jump 9% after the communications infrastructure company reported a 61% increase in revenue during the fourth quarter. Arrival SA (ARVL) gains 2.4% after the electric-vehicle company announced that it has started trials of the Arrival Bus at a testing facility in the U.K. Bit Digital (BTBT) falls 3%, down with other crypto stocks as Bitcoin tumbles back below the $50,000 level. Clear Secure (YOU) rises 3% after Grasso Global CEO Steve Grasso said last night on CNBC’s “Fast Money” that shares “should be up another 30% from current levels.” Flotek Industries (FTK) rallies 46% after the company said it received an unsolicited indication of interest for all or part of the environmental solutions company. JinkoSolar Holding Co. (JKS), controlling shareholder of Jinko Solar, shares are up 3% after the China Securities Regulatory Commission allows Jinko Solar to list on the Star board in Shanghai. Kiniksa Pharmaceuticals (KNSA) shares plunge 16% after the company said its phase 3 trial of mavrilimumab in COVID-19-related acute respiratory syndrome did not meet the primary efficacy endpoint. LiveOne  (LVO) shares rises 21% after the company entered into a binding letter of intent for an exclusive option to purchase Trader2b’s business or its assets and operations. Tesla (TSLA) shares rise 1.6% as Wedbush says the company is in a strong position heading into 2022. China demand is key for bull thesis on Tesla, analyst Daniel Ives writes. Elsewhere, cryptocurrency-linked stocks fell in premarket trading as Bitcoin tumbled back below the $50,000 level as the now traditional selling pressure out of Asia emerged right on schedule (see "The Crypto Trading Cycle: Asian Weak Hands Selling To US Whales"). Bitcoin fell as much as 4.5% and trades at $49,167 as of 6:35 a.m. in New York. o    Other digital currencies are also lower this morning, with Ether falling 3.5%, while Litecoin slips 4% and Monero drops 3.8%. Overnight, a flood of omicron infections took global Covid-19 cases to a daily all-time high on Monday. The surge has disrupted global reopening and could squeeze hospitals. At the same time, investors are taking comfort that while highly contagious, Omicron is a far less severe illness. Meanwhile, France announced it would force its citizens to work from home for most of next month to contain the spread of the highly transmissible omicron variant. Meanwhile, an outbreak in the western Chinese city of Xi’an continued to fester, with new cases hitting a record high days after its 13 million residents were locked down. The U.K. government won’t introduce stricter restrictions in England before the end of the year, despite the rapid spread of the omicron variant. In Europe, the Stoxx Europe 600 index nudged closer to last month’s record high, with utilities leading the advance as all industry sectors gained while French travel and catering stocks dropped on the country's new work-from-home order. Pierre & Vacances, an operator of holiday villages and residences, drops 1.8% in Paris trading, while tour operator Voyageurs du Monde falls 1% after the French government announced new measures amid efforts to contain the spread of the omicron variant. Earlier in the session, Asian stocks climbed, following a rise in U.S. peers to fresh record highs, as investors’ risk appetite improved.  The MSCI Asia Pacific Index rose as much as 0.8%, driven by an advance in hardware technology firms. Japan led gains around the region, while Hong Kong underperformed. Australia and New Zealand remained shut for holidays. The key Asian stock gauge is on course for a monthly advance of about 1.9%, which would be its best since August. Positive economic data and easing worries over the omicron coronavirus variant have helped of late, although the measure is still down 3.3% on the year amid the selloff in Chinese tech giants. “U.S. equities are so strong that investors here can’t help but pick up stocks and chase the rally amid fear of being left behind,” said Ayako Sera, a market strategist at Sumitomo Mitsui Trust Bank in Tokyo. “But it’s not as if there are loads of new reasons to buy stocks now, so some caution is needed.” The S&P 500 Index posted its 69th record close for 2021 on optimism stocks can withstand risks from the coronavirus and tighter policy. TSMC and Tokyo Electron were among the top contributors to the Asian benchmark’s rise Tuesday after the Philadelphia Semiconductor Index rallied 2.7% to an all-time high.  “U.S. yields are strangely stable,” Sera added. “It may be that some are looking way ahead and thinking that not too many hikes will be required down the road” thanks to the swift rate increases expected from the New Year, she said.  The latest escalation in Beijing’s wider regulatory clampdown on private industry casts more doubt over the prospects for overseas initial public offerings, which had proceeded virtually unchecked for two decades. Meanwhile, the People’s Bank of China -- which on the weekend vowed more economic support -- boosted a short-term liquidity injection.   India’s benchmark stock gauge advanced for a second day, tracking regional peers after the S&P 500 climbed to a record high. The S&P BSE Sensex rose 0.8% to 57,897.48 in Mumbai, while the NSE Nifty 50 Index increased 0.9%. All 19 sectoral sub-gauges compiled by BSE Ltd. gained, led by a measure of capital goods companies. Asian Paints Ltd. contributed the most to the Sensex’s gain, increasing as much as 2.9%. Out of 30 shares in the Sensex index, 28 rose and two fell. Most regional markets advanced as investors’ risk appetite improved. India’s economy expanded at a steady pace in November, a month that also saw the omicron virus variant raising fresh concerns about risks to the recovery, according to data tracked by Bloomberg News. In FX, the yen steadied close to the 115 level against the dollar while Japanese stocks climbed. Turkey’s lira declined after the central bank introduced new measures to discourage lenders from holding foreign-exchange savings accounts, while two former governors of the monetary authority were subjected to criminal complaints over comments. Bitcoin slid below $50,000, a level some analysts view as a key pivot for assessing the largest cryptocurrency’s outlook heading into 2022 In rates, bonds were little changed after low liquidity resulted in no trading of the benchmark 10-year issue yesterday. Treasury yields were slightly higher on the day amid gains for European stocks and U.S. futures, and $57BN 5-year note auction ahead at 1pm ET. Yields are higher by as much as 1bp across the curve after declining slightly during Asia session; U.K. bond market is closed.  Monday’s 2-year sale tailed slightly, and last month’s 5-year drew weak demand following a spate of extreme volatility in the sector that continued through mid-December as Fed policy evolved. The yield on China’s 10-year sovereign bonds declined to the lowest level since June 2020, as interbank borrowing costs fell after the central bank boosted short-term liquidity. China is seen adding stimulus to stabilize growth next year, with various ministries vowing more proactive measures to reverse the slowdown caused by a worsening property slump, weak consumption and the coronavirus. On today's calendar, expected data includes October FHFA house price index and S&P CoreLogic CS home prices at 9am, and December Richmond Fed manufacturing index at 10am; no Fed speakers slated this week. Poultry producer Cal-Maine Foods is scheduled to report earnings. Market Snapshot S&P 500 futures up 0.3% to 4,796.75 STOXX Europe 600 up 0.5% MXAP up 0.8% to 193.35 MXAPJ up 0.5% to 627.48 Nikkei up 1.4% to 29,069.16 Topix up 1.4% to 2,005.02 Hang Seng Index up 0.2% to 23,280.56 Shanghai Composite up 0.4% to 3,630.11 Sensex up 0.8% to 57,904.60 Australia S&P/ASX 200 up 0.4% to 7,420.30 Kospi up 0.7% to 3,020.24 Brent futures up 0.8% to $79.19/bbl Gold spot up 0.1% to $1,814.36 U.S. Dollar Index little changed at 96.05 German 10Y yield up 1bp to -0.23% Euro little changed at $1.133 Top Overnight News from Bloomberg Global Covid-19 cases hit a daily record on Monday, disrupting the holiday season a year after vaccines first started rolling out and two years after the emergence of the virus Russia will start talks first with the U.S. on its demands for guarantees of an end to NATO’s eastward expansion before a proposed Jan. 12 meeting between the military alliance and Moscow, Foreign Minister Sergei Lavrov said The vast majority of Libor benchmarks are about to be consigned to the history books, with final settings taking place at the end of this week US Event Calendar 9am: Oct. FHFA House Price Index MoM, est. 0.9%, prior 0.9% 10am: Dec. Richmond Fed Index, est. 11, prior 11 Tyler Durden Tue, 12/28/2021 - 08:12.....»»

Category: blogSource: zerohedgeDec 28th, 2021

US Futures Hit All Time High As Santa Rally Spreads Markets Cheer

US Futures Hit All Time High As Santa Rally Spreads Markets Cheer The Santa Claus rally is here, and stocks are set to make their 69th all-time high for 2021 when they open in 90 minutes. US index futures rose to fresh all time highs despite amid thin, holiday-muted trading and a mood of caution as traders evaluated spiking coronavirus cases as investors monitored progress on the Biden administration’s economic stimulus and social spending plan after president-in-waiting Kamala Harris said neither her nor Joe Biden are giving up on the bill. Futures on the S&P 500 and the Nasdaq 100 futures both climbed 0.3% at 745 a.m. in New York, the former trading at all time highs of 4,733. The dollar strengthened, 10-year U.S. Treasury yields were little changed while crude oil and gold dipped. A dollar gauge ticked up. In overnight news, Kamala Harris said the Biden administration is seeking a path forward for its “Build Back Better” economic stimulus. Elsewhere, US holiday sales jumped 8.5% from last year as consumers spent more money on clothes, jewelry and electronics, a report from Mastercard SpendingPulse showed. Still, in U.S. premarket trading, U.S. travel stocks retreated, led by United Airlines Holdings Inc., after hundreds of flights were canceled over Christmas due to a spike in Covid-19 cases. Here are some of the more notable premarket movers: United Airlines Holdings (UAL US) -2.9%, Delta Air Lines (DAL US) -2% and American Airlines (AAL US) -2.1%. Velo3D (VLD US) rose in afterhours trading Thursday after announcing delivery of its first Sapphire XC to an aerospace customer. Surgalign Holdings (SRGA US) dropped in postmarket after filing for the potential sale of equity and debt securities. In the latest covid developments, Anthony Fauci, one of the top U.S. medical advisers, said Americans should stay vigilant because omicron cases can still overwhelm hospitals even if evidence suggests the strain’s symptoms may be less severe. That said, the predominant thread was one of lack of trading as most desks have closed for the year: for markets overall, “either the headline reel will spur ugly intraday moves on holiday-thinned liquidity, or volatility will remain so flatline, that if it were an ECG, the doctors and nurses would be yelling code blue,” Jeffrey Halley, a senior market analyst at Oanda, wrote in a note. In Europe, stocks edged up amid thinner trading volumes as investors monitored the surge in Covid-19 cases. Over the weekend, China’s central bank pledged greater economic support over the weekend, contrasting with steps by the Federal Reserve and other central banks to fight inflation by cutting stimulus. The outlook for monetary policy, Covid and company earnings are shaping views on whether global stocks can keep rising after nearly doubling from pandemic lows. Asian stocks slipped in thin trading ahead of the year-end holidays as investors weighed the latest developments in virus cases related to the omicron variant.  The MSCI Asia Pacific Index swung between a loss of 0.2% and a gain of less than 0.1%. Hardware technology giants provided the biggest support to the measure as chipmakers advanced, while industrial names and software companies fell. Coronavirus cases surged across the globe, with China reporting over the weekend the highest number of local cases since January. Singapore plans to make vaccination a condition for the approval of new applications for and renewal of existing long-term passes, work passes, and permanent residences starting Feb. 1. “While there is worry that infections will continue to spread, the sense is that it’s not likely to develop into serious cases or trigger another series of lockdowns,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management. “I still see room for share price gains during the few trading days left this year.”  The Asian stock benchmark rose 0.4% last week, with sentiment boosted by positive U.S. economic-growth data and a U.K. study suggesting omicron infections are less likely to lead to hospitalization.   Benchmarks in South Korea and Japan were among the worst performers in the region for the day, while Malaysian and Philippine stocks outperformed. Markets in Australia, New Zealand and Hong Kong are shut for the holidays. India’s benchmark equity index advanced, overcoming a weak start to the session, boosted by gains in Tech Mahindra Ltd.  The S&P BSE Sensex rose 0.5% to 57,420.24 in Mumbai, reversing losses of as much as 1%. The NSE Nifty 50 Index also climbed by a similar measure. Sixteen of the 19 sector sub-indexes compiled by BSE Ltd. gained, led by a gauge of healthcare companies. Tech Mahindra Ltd. rose 3.6% and was the best performer on both key indexes. Out of 30 shares in the Sensex index, 24 rose and 6 fell. Private sector lender RBL Bank Ltd. dropped 18.5% after a decision by the nation’s central bank to appoint a new director to the board raised concerns about the outlook for the small private-sector lender. India also announced a program to vaccinate teenagers from the ages of 15 to 18 starting next year and booster doses for health-care workers as omicron-fueled Covid-19 cases spike. The announcement was made by Prime Minister Narendra Modi over the weekend. Still, several states have imposed night curfews and restrictions on public gatherings to keep a check on the spread of the new variant.  “Markets are facing pressure on every rise and it would only subside if the cases tally remains under control,” Ajit Mishra, vice president of research at Religare Broking Ltd. wrote in a note. “We recommend keeping a check on leveraged positions amid volatility and letting the markets stabilize.” In FX, the Bloomberg Dollar Index rose as much as 0.2%, rebounding from its lowest level in more than a month; the New Zealand dollar and the Norwegian krone led declines among G-10 peers. The pound outperformed peers following a report that Chancellor of the Exchequer Rishi Sunak plans to cut tens of thousands of jobs within the U.K. civil service to save government budgets 5% over the next three years. Turkey’s lira snapped a five-day rally, challenging government assurances that it’s on a more stable footing after measures were introduced a week ago to stem its collapse. In rates, 10- year Treasury yields dipped 1bp to 1.49% after rising nine basis points last week. Treasuries were mixed with short-maturity yields higher on the day as the final week of the year begins, ahead of $56b 2-year note auction at 1pm ET. Amid expectations that Fed will start raising interest rates next year, last month’s 2-year auction tailed by more than 1bp. Yields are higher by 1bp-2bp in 2- to 5-year sectors with longer-maturity tenors little changed, flattening curve spreads slightly; 10-year at 1.494% is inside last week’s range. WI 2-year yield at ~0.76% exceeds auction stops since February 2020; last month’s drew 0.623%. The auction cycle includes $57b 5-year note Tuesday, $56b 7-year Wednesday. Expected data include the Dallas Fed Manufacturing Outlook survey. No major earnings or central bank events are scheduled. Market Snapshot S&P 500 futures up 0.2% to 4,724.50 STOXX Europe 600 up 0.3% German 10Y yield up 2 bps to -0.23% Euro little changed at $1.1310 MXAP down 0.2% to 191.83 MXAPJ little changed at 624.02 Nikkei down 0.4% to 28,676.46 Topix down 0.4% to 1,977.90 Hang Seng Index up 0.1% to 23,223.76 Shanghai Composite little changed at 3,615.97 Sensex up 0.5% to 57,433.95 Australia S&P/ASX 200 up 0.4% to 7,420.30 Kospi down 0.4% to 2,999.55 Brent futures little changed at $76.06/bbl Gold spot down 0.3% to $1,805.61 U.S. Dollar Index up 0.2% to 96.22 Top Overnight News from Bloomberg The Biden administration is seeking a path forward for its “Build Back Better” economic stimulus and social spending plan, Vice President Kamala Harris said Sunday Coronavirus infections surged across the globe with China reporting the highest number of local cases since January, darkening the year-end holiday period China’s central bank pledged greater support for the economy on Saturday and said it will make monetary policy more forward-looking and targeted US Event Calendar 10:30am: U.S. Dallas Fed Manf. Activity, Dec., est. 13.0, prior 11.8     Tyler Durden Mon, 12/27/2021 - 08:07.....»»

Category: blogSource: zerohedgeDec 27th, 2021