Pelosi Confirms Start Of Asia Trip, Makes No Mention Of Taiwan As Chinese Anger Grows

Pelosi Confirms Start Of Asia Trip, Makes No Mention Of Taiwan As Chinese Anger Grows The budding army of amateur flight-trackings sleuths on twitter was proven correct again when less than a day after a barrage of unconfirmed reports that the world's greatest investor, Nancy Pelosi, was on her way to Asia - where he supposedly is planning to visit Taiwan, a move which some say could spark World War 3 - on Sunday morning her office confirmed that the House Speaker has begun her anticipated trip to Asia, with her office naming four destinations but making no mention of Taiwan. The official release of her itinerary comes amid more warnings from Beijing over her possible visit to the island. Pelosi, the third in line of US presidential succession, is leading a six-member congressional delegation to Singapore, Malaysia, South Korea and Japan, according to a statement released by her office early on Sunday which however skipped any mention of Taiwan, after days of intense speculation about a likely stop there fuelled tensions, with Beijing calling it a “provocation” and warning Washington against “playing with fire”. But the careful wording of the statement did not rule out the possibility of a visit either. "In Singapore, Malaysia, South Korea and Japan, our delegation will hold high-level meetings to discuss how we can further advance our shared interests and values, including peace and security, economic growth and trade, the Covid-19 pandemic, the climate crisis, human rights and democratic governance,” the statement said. “America is firmly committed to smart, strategic engagement in the region, understanding that a free and flourishing Indo-Pacific is crucial to prosperity in our nation and around the globe.” Singapore’s foreign ministry confirmed on Sunday that Pelosi would be visiting for two days starting on Monday. The delegation led by Pelosi includes Gregory Meeks, chairman of the US House foreign affairs committee, Mark Takano, chairman of the veterans’ affairs committee, and Suzan DelBene, vice chairwoman of the ways and means committee. Two other Democratic congressmen, Raja Krishnamoorthi and Andy Kim, are also travelling with her. To be sure, Beijing will be following every move of the delegation extremely closely as it regards Taiwan as a breakaway province, to be reunited by force if necessary, and has repeatedly warned against any official exchanges with the self-governed island, going so far as hinting it would shoot down her plan and start a war if Pelosi were to visit the island. It earlier described the possible trip to Taiwan as a move to support “Taiwan independence”, in violation of the one-China policy. Meanwhile, the possibility for a stopover in Taiwan has not been ruled out completely. “The statement is very carefully written. It only says that Pelosi is going for a trip to the Indo-Pacific region, including four nations while making no mention of Taiwan. So, in the case of Pelosi making a surprise visit to Taiwan, the press release still holds as she has never formally acknowledged or denied that Taiwan is a stop in her trip,” said Wu Junfei, a researcher at the Hong Kong-China Economic and Cultural Development Association think tank. “For now, Pelosi still has ample room to manoeuvre. The final result will still depend on how China and the US continue with the negotiations.” In recent day, China doubled down on its warning rhetoric to the US. On Saturday the state broadcaster CCTV published for the first time a video showing the launch of DF-17 hypersonic missile – a clip that was later deleted. The move has been widely seen as a clear warning, even though the video, which was subtitled “the target: win”, was ostensibly celebrating the anniversary of the founding of the army. Also on Friday, in another signal of Beijing's displeasure with Pelosi's trip, the Chinese military started a series of exercises, including live-fire drills in the waters off Fujian, the province adjacent to Taiwan Island. Air force spokesman Shen Jinke said on Sunday: “The air force has a strong will, full confidence and sufficient capability to defend the national sovereignty and territorial integrity.” Xiaoyu Pu, associate professor of political science at the University of Nevada in Reno, said one possibility was that Pelosi could touch down on Taiwan “just for a short while” before proceeding to Japan and South Korea. If that happens, he predicted a strong military response from Beijing but not to the point of no return. “You have to bear in mind that while China is putting tremendous pressure on the Biden administration to stop the trip, it is also hard for her to back down from this trip after the hype. There will be lots of domestic political pressures if the trip is cancelled, given the current anti-China atmosphere in the US,” Pu said. “Xi [Jinping] and [Joe] Biden had certainly spoken on this issue on their recent call. Both sides must have talked about potential responses and consequences … Both sides shall leave some rooms for the preparation of their face-to-face meeting in November.” In other words... On Saturday, we reported that online flight trackers showed that a plane believed to be carrying Pelosi’s party had landed in Hawaii in the early hours of Saturday and stayed there for 16 hours. The plane then took off at 7pm local time (5am on Sunday GMT) heading towards Asia, about an hour before Pelosi’s statement was released. Pelosi said they had a fuel stop in Hawaii where they also had a briefing from US Indo-Pacific Command leadership, as well as a visit to the Pearl Harbor Memorial and the USS Arizona. Hu Xijin, the outspoken former state media editor of state-owned tabloid Global Times, posted on Weibo that Pelosi’s latest statement may have been an attempt to “reduce the provocative meaning of her visit to Taiwan”, but “as long as she lands in Taiwan, the Chinese side will not accept it”.  He added: “Now we must not be careless, and must continue to warn her loudly: do not go to Taiwan, there will be serious consequences.” Earlier on Saturday, Hu said “it is OK [for the People’s Liberation Army] to shoot down Pelosi’s plane” if it was escorted to Taiwan by US fighter jets. In an earlier post on Twitter, the former head of a tabloid published by the Chinese Communist party’s flagship newspaper group said that China should “punish” Pelosi if she did not cancel her planned visit to Taiwan. “[The] PLA Air Force will surely make her visit a disgrace to herself and to the US,” Hu added. “Pelosi is one of the most important national leaders in the US,” said Lu Xiang, a US expert at the Chinese Academy of Social Sciences in Beijing. “For people in her position, every move comes with consequences. If she visits Taiwan without the consent of China there would be serious consequences, including military consequences.” Biden last week said the Pentagon believes it is “not a good idea” for Pelosi to visit Taiwan at the moment. In response to the latest developments, the South China Morning Post, Hong Kong's newspaper of record since British colonial rule and currently controlled by Alibaba published an op-ed slamming Taiwan president Tsai Ing-wen, titled "Cowardly silence in Taipei as Pelosi plans trip", in which the author slams the president writing that "aAt a moment of real danger, by staying quiet and letting Washington decide whether the US House speaker should visit as if the island has no say in the matter, President Tsai Ing-wen is turning Taiwan into America’s 51st state." "For Beijing, it’s sheer provocation. For Washington, it’s showing support to a friend. Of course, both countries have agendas quite at odds with the best interests of the Taiwanese." Still, when all is said and done, we still remain confident that World War 3 will not begin over the itinerary of the most infamous Congressional insider-trader. Still, US Congress is best known for its unfathomable stupidity and hubris, so keep a close eye on the plane's current flight path which is available below: Tyler Durden Sun, 07/31/2022 - 11:00.....»»

Category: dealsSource: nytJul 31st, 2022

US Equity Futures Reverse Overnight Decline, Turn Positive As Oil Surges

US Equity Futures Reverse Overnight Decline, Turn Positive As Oil Surges U.S. equity futures and European bourses stocks reversed modest overnight losses and turned higher as US traders got to their desks on Monday as crude oil extended a climb and investors monitored diplomatic efforts to bring an end to Russia’s almost month-old war in Ukraine.  S&P futures rose 0.07% or 3 points after earlier sliding almost 30 points; Nasdaq futures were flat. Focus on Monday will be on a speech by Fed Chair Jerome Powell after the central bank kicked off a rate-hiking cycle last week.  Powell is set to speak at the annual meeting of the National Association for Business Economics at 12pm ET; text release and Q&A are expected. In addition to concerns about Russian crude supply, which Russia's deputy prime minister Novak said could surge to $300/bbl if Russian oil is shunned, also jumped after Saudi Arabia announced a “temporary reduction” in oil output at an Aramco facility after Yemen’s Houthi rebels launched multiple cross-border attacks on Sunday .A drone assault on the YASREF refinery, in the Yanbu Industrial City on the Red Sea, has “led to a temporary reduction in the refinery’s production, which will be compensated for from the inventory,” the energy ministry said in a statement. WTI rose as high as $108, surging $15 from prices hit last Tuesday, with Brent trading around $113. The S&P 500 last week had its biggest gain since November 2020 and European equities recouped all of their losses triggered by Russia’s invasion of Ukraine nearly a month ago as peace negotiations and the lure of cheap valuations drew investors back. But that optimism may not be justified, given the “increasingly brutal measures that Russian forces are taking,” according to  Michael Hewson, chief analyst at CMC Markets in London. “There appears to be a growing disconnect between what markets are doing and what is happening on the ground in Ukraine,” he said in a report. “Commodity markets continue to chop wildly” and “concerns about inflation are still posing awkward questions for central banks,” Hewson wrote. A key question is whether last week’s stock rebound and drop in volatility are durable. European equities have recouped all of their losses triggered by Russia’s invasion of Ukraine nearly a month ago as optimism around peace negotiations and the lure of cheapened valuations draw investors back. But a historic spike in commodity prices on supply concerns shows little sign of easing, keeping traders on high alert over inflation and shaking their faith in the Federal Reserve to douse price pressures while keeping the economic recovery on track. “The Fed comes out last week and basically tells you they have to do more -- into higher inflation but slowing growth,” Brian Weinstein, head of global fixed income at Morgan Stanley Investment Management, said in an interview with Bloomberg TV. “It certainly looks like the market is afraid of a traditional Fed goes too much, slows the economy down, and we don’t get the much-anticipated soft landing.” In premarket trading, Boeing stock tumbled 6.6% after a China Eastern Airlines Boeing 737-800NG (yes, THE 737 MAX) plane carrying 132 people crashed in southwestern China. Additionally, US-listed Chinese stocks slumped in premarket trading Monday, following their Asian peers lower, as investors were disappointed after Chinese banks left the loan prime rate unchanged despite expectations of some easing. Large-cap technology stocks are leading the decline including Alibaba -5.6%, -6%, NetEase -5.7%, Pinduoduo -5.6% and Baidu -3.4%. Among other China stocks listed in the U.S. that are lower this morning: Nio -2%, Li Auto -4.2%, XPeng -4.3%, Didi -5.9%, KE Holdings -6.4%, Lufax -3.2%, -6.2%, Bilibili -7.6% and Tencent Music -7.5%. Other notable premarket movers: Anaplan (PLAN US) shares jump 27% in U.S. premarket after Thoma Bravo agreed to acquire U.S. enterprise software company in a deal valued at $10.7 billion, adding to a string of deals this year by cash-rich private equity firms. Nielsen Holdings (NLSN US) shares decline in U.S. premarket after it rejected an acquisition proposal from a private equity consortium, valuing the company at $25.40/share, a price that doesn’t “adequately compensate shareholders for Nielsen’s growth prospects.” Uber (UBER US) shares are slightly lower in U.S. premarket trading after price target is lowered at RBC Capital Markets, with broker less positive on the ride-hailing giant versus peer Lyft following proprietary driver supply analysis. Alleghany Corp. (Y US) shares could be active as Berkshire Hathaway Inc. is buying it for $11.6 billion in cash. In the latest developments, Ukraine rejected a Russian demand that its forces lay down their arms Monday and leave the besieged southern port of Mariupol, which has been under intense Russian bombardment. Morgan Stanley’s chief U.S. equity strategist Michael Wilson said the recent rebound in U.S. stocks is an opportunity to sell and position more defensively.  Meanwhile, U.S. President Joe Biden will speak with European leaders ahead of his trip to the continent this week. Senior U.S. officials will also meet with executives of Exxon Mobil Corp., JPMorgan Chase & Co. and other firms about the impact of the invasion and sanctions.  European equities had a subdued start to the week with most indexes opening flat. Euro Stoxx 50 and DAX rise slightly, while the FTSE MIB outperformed gaining 0.7%. Energy and mining stocks lead gains, tech and travel are in the red. Commodity-linked stocks are the biggest gainers on the Stoxx Europe 600 as prices rally with the war in Ukraine nearing the end of its first month with no conclusion in sight. The basic resources sub-index rises 1.8% as the energy sub-index gains 1.5%. Rio Tinto, Glencore and Anglo American are among the miners rising while Shell, BP and Equinor lead gains among energy stocks. Meanwhile, Europe’s formerly “unstoppable” luxury stocks are facing a swath of new challenges, from rising rates, war in Ukraine and China risks, leaving investors and analysts divided on whether valuations have fallen far enough yet. The MSCI Europe Textiles Apparel & Luxury Goods Index is down 14% this year, following three years of outsized gains. Hermes, the maker of $10,000 Birkin bags, is among top decliners, down 21% after a whopping 75% jump last year. Louis Vuitton owner LVMH, meanwhile, recently lost its crown as Europe’s biggest company to food giant Nestle. Investors were already dumping pricey luxury stocks in favor of cheaper shares amid concerns about rate hikes, while the war in Ukraine added further uncertainty. Valuation-wise, the group now trades at about a 60% premium to the broader market, near pre-pandemic levels and below its 5-year average. Asia stocks fell after China’s lenders kept borrowing costs unchanged. The MSCI Asia Pacific Index was down 0.5% as of 3:13 p.m. in Singapore, erasing an earlier gain of 0.4%, weighed by declines in financials and communication services. The regional benchmark’s bumpy day followed its best week since February 2021. “Some may have clung to expectations for an LPR cut today, which I think will come later when they assess the growth drag from the outbreak,” said Wai Ho Leong, strategist at Modular Asset Management. “Peace talks and the Xi-Biden call also did not deliver substantive outcomes.” Stocks climbed last week as China pledged to stabilize its markets, and some traders had expected some help from banks’ loan prime rate announcement Monday. Talks between Xi Jinping and Joe Biden held Friday also failed to excite investors, although China’s top envoy to Washington pledged his country “will do everything” to de-escalate the war in Ukraine.  Hong Kong Lifts Overseas Flight Ban; Cuts Hotel Quarantine Shares slid in China and Hong Kong, erasing earlier gains. Stocks in South Korea and Malaysia led declines in the region. Japanese markets were closed for a holiday. India’s stocks took a breather on Monday after a sharp rally last week, as a drop in financial and consumer goods companies weighed on the indexes. The S&P BSE Sensex fell 1% to 57,292.49 in Mumbai, while the NSE Nifty 50 Index dropped by an equal measure. The gauges posted their biggest single-day drop since March 15. All but three of the 19 sector sub-indexes compiled by BSE Ltd fell, led by a gauge of utility companies. “Slowing rural sector is a risk even as urban consumption is showing signs of relatively better performance,” according to JM Financial analyst Dhananjay Sinha. Lower than expected growth and higher inflation are a key risk to Indian companies’ profitability, he added. Metal stocks were among gainers as Vedanta, Hindalco Industries and Coal India rose on the back of rising prices and worsening demand-supply scenario.   ICICI Bank contributed the most to Sensex’s decline, decreasing 1.3%. Out of 30 shares in the Sensex, 25 fell, while 5 declined. In FX, most FX majors are range-bound, as the DXY hovers on 98.000 handle awaiting speeches from Fed’s Bostic and chair Powell. Loonie underpinned by strong oil prices -Usd/Cad straddling 1.2600. Franc firm ahead of SNB policy assessment as Swiss sight deposits suggest less intervention; USD/CHF near 0.9300 and EUR/CHF sub-1.0300. Euro straddles 1.1050 with hawkish ECB commentary supportive, but hefty option expiries capping the upside (almost 2.8bln at 1.1100) Aussie unwinding recent gains on technical grounds and in wake of defeat for PM Morrison’s liberal party in local election - Aud/Usd back below 0.7400. Sterling still smarting after last week’s dovish BoE hike - Cable around 1.3150 and Eur/Gbp probing 100 DMA at 0.8415. In rates, Treasuries followed wider losses across gilts while front-end leads the move lower, flattening the curve.  2Y-5Y yields cheaper by ~4bp, flattening 5s30s spread by ~3bp; 10-year yields around 2.18%, higher by ~2bp vs ~4bp for U.K. 10- year. Bunds and gilts bear steepen, cheapening roughly 3bps across the back end. Cash USTs open bear flatter with short dated yields up close to 5bps. Peripheral spreads are slightly wider to core. In commodities, crude futures extend Asia’s gains; WTI adds ~4% to trade just shy of a 109-handle. Spot gold trades a narrow range in small positive territory near $1,924/oz. Base metals are mixed; LME nickel trades limit down for the fourth straight session. LME aluminum gains 3.8%, trading just off the late-Asia highs after Australia, the world’s biggest exporter of alumina, announced a ban on shipments to Russia. Bitcoin is modestly pressured but contained within last week's parameters overall, holding above USD 41k. Today's calendar is relatively quiet, with just the Chicago Fed National Activity Index on dex (exp 0.5, down from 0.69). Powell speaks at NABE at 12pm although it is unlikely he will make any monetary policy comments. Market Snapshot S&P 500 futures up 0.1% to 4,448.75 STOXX Europe 600 little changed at 455.00 MXAP down 0.5% to 177.54 MXAPJ down 0.7% to 579.14 Nikkei up 0.7% to 26,827.43 Topix up 0.5% to 1,909.27 Hang Seng Index down 0.9% to 21,221.34 Shanghai Composite little changed at 3,253.69 Sensex down 0.8% to 57,428.60 Australia S&P/ASX 200 down 0.2% to 7,278.55 Kospi down 0.8% to 2,686.05 Brent Futures up 3.8% to $112.03/bbl Gold spot up 0.2% to $1,924.77 U.S. Dollar Index little changed at 98.27 German 10Y yield little changed at 0.39% Euro little changed at $1.1048 Brent Futures up 3.8% to $112.03/bbl Top Overnight News from Bloomberg Ukraine rejected a Russian demand to surrender of the embattled southern port city of Mariupol, and an aide to President Volodymyr Zelenskiy said Russian forces are using “more destructive artillery.” More talks on ending the war are expected on Monday after Turkey said the two sides had made progress on key points Chinese banks left borrowing costs unchanged in line with expectations as the focus shifts to other possible easing measures from the central bank after top leaders pledged to boost the economy European Central Bank Vice President Luis de Guindos has yet to see any indication that soaring inflation rates are leading to higher wage demands, according to an interview with Handelsblatt Oil rose for a third day as the war in Ukraine neared the end of its first month with no end in sight, and Iranian-backed rebels attacked energy facilities in key exporter Saudi Arabia Hong Kong will lift a ban on flights from nine countries including the U.S. as of April 1, and cut the time incoming travelers need to spend in hotel quarantine in half provided they test negative, Chief Executive Carrie Lam said China and Russia’s trade relationship has become more complicated since the war started more than three weeks ago, raising questions about the future flow of energy, metals and crops between the two powerhouses A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were choppy with sentiment clouded amid the uncertain geopolitical climate and higher oil prices. ASX 200 was indecisive as outperformance in tech was offset by losses in financials and with PM Morrison’s Liberal Party defeated in South Australia's state election, raising concerns for the government ahead of the federal election in two months Nikkei 225 was closed for the Vernal Equinox holiday. Hang Seng and Shanghai Comp. swung between gains and losses with an early surge in Hong Kong tech stocks ahead of a widely speculated relaxation to COVID restrictions after the city’s daily cases fell to a threeweek low and with China’s tech hub of Shenzhen resuming normal work output. However, the gains were wiped out with the mainland hampered as Shanghai tussles with a COVID-19 outbreak, while the PBoC also kept its Loan Prime Rates unchanged, as expected. Top Asian News Indonesia Ends Quarantine Requirement for Overseas Travelers Asia Stocks Edge Down as Concerns Linger on China Policy Support Russia’s War Lifts Default Risk for Distressed Economies China Confirms Ambassador Met With Russian Defense Official European bourses are contained and haven't differed too far from the unchanged mark overall, Euro Stoxx 50 +0.1%, as we await updates on Russia-Ukraine. Developments throughout the morning have been limited, and commentary from the Kremlin is predominantly infitting with last-week's/weekend updates. US futures are pressured, ES -0.2%, awaiting geopolitical catalysts with Fed speak, including Chair Powell, ahead. China Eastern airlines passenger jet flying from Kunming to Guangzhou on Monday experienced an accident in Guangxi, via State Media; unknown injuries/deaths from the accident. Craft was a Boeing (BA) 737 . Subsequently, China's Aviation Regulator confirms the crash of the China Eastern airlines passenger jet carrying 132 people. Boeing -8.3% in the pre-market Berkshire Hathaway (BRK/B) is to purchase Alleghany Corp (Y) for USD 848.02/shr (vs. close USD 676.75 /shr) in a USD 11.6bln transaction. Top European News ECB’s Lagarde Says She’s Not Seeing Elements of Stagflation Now LSE Group to Sell BETA+ to Motive Partners, Clearlake: Sky S&T CEO’s Grosso Tech to Offer EU15.30/Shr for ~5.5m S&T Shares Julius Baer Says Sanctioned Clients in ‘Low Single Digits’ In FX, DXY hovers on 98.000 handle awaiting speeches from Fed’s Bostic and chair Powell. Loonie underpinned by strong oil prices -Usd/Cad straddling 1.2600. Franc firm ahead of SNB policy assessment as Swiss sight deposits suggest less intervention; USD/CHF near 0.9300 and EUR/CHF sub-1.0300. Euro straddles 1.1050 with hawkish ECB commentary supportive, but hefty option expiries capping the upside (almost 2.8bln at 1.1100) Aussie unwinding recent gains on technical grounds and in wake of defeat for PM Morrison’s liberal party in local election - Aud/Usd back below 0.7400. Sterling still smarting after last week’s dovish BoE hike - Cable around 1.3150 and Eur/Gbp probing 100 DMA at 0.8415. In commodities, WTI and Brent have been dipping from best-levels, but remain underpinned on the session amid weekend geopolitical premia.; albeit, the European morning's developments have been more limited. WTI May resides around USD 107/bbl (vs high ~108.20/bbl) while its Brent counterpart trades just under USD 112 /bbl (vs high ~112.75/bbl). Saudi-led coalition reported that Yemen Houthis targeted a gas station in Khamis Mushait on Saturday which resulted in material damage to civilian cars and homes but no casualties, according to the state news agency. Saudi-led coalition also said it destroyed an explosive-laden boat to thwart an attack on shipping in the Red Sea, while it was also reported that Aramco’s petroleum products distribution plant in Jeddah was attacked and production at a Saudi oil refinery in Yanbu declined momentarily after an attack by Houthis. Saudi Aramco reported FY net income USD 110.0bln vs prev. USD 49.0bln Y/Y, while the CEO expects oil demand to return to pre-pandemic levels by year-end and said they are seeing healthy demand especially in Asia. Saudi Aramco's CEO also noted that there is limited spare capacity which is declining every month with global spare capacity around 2mln bpd and that the market is very tight in terms of available barrels. US Event Calendar and Central Bank speakers 8am: Fed’s Bostic Gives Speech at NABE Conference 8:30am: Feb. Chicago Fed Nat Activity Index, est. 0.50, prior 0.69 12pm: Fed Chair Powell speaks at NABE DB's Jim Reid concludes the overnight wrap After a few weekends with some dramatic news of late, this weekend was relatively sparse in terms of new incremental news flow. The conflict and negotiations continue but without any major developments. Last week was the best for US and European equities since November 2020’s US election week; so markets are coming to terms with the current state of the conflict. Over the weekend, Ukrainian officials rejected an offer given by the Russian military for its forces and civilians to surrender the city of Mariupol as shelling continued in Kyiv. Separately, the White House announced that President Joe Biden will travel to Poland in his upcoming trip to Europe for urgent talks with NATO and European allies. Mr. Biden is also hosting a call with his counterparts in the UK, Germany and Italy today at 11am UK time. Overnight, Turkey’s Foreign Minister Mevlut Cavusoglu indicated that Ukraine and Russia are close to an agreement following progress in peace talks and is hopeful for a ceasefire if both the sides do not backtrack from their current positions. However there is no other developments on the current state of negotiations. Asian equity markets have started the week on a weaker footing with the Hang Seng (-0.69%), reversing its early morning gains after it rose more than 1%. Mainland Chinese stocks are also dipping as I type with the CSI (-0.66%) and Shanghai Composite (-0.10%) lower after the PBOC kept the one-year loan prime rate unchanged at 3.7%. Elsewhere, markets in Japan are closed for a holiday. Moving on, stock futures in the DMs are also falling, as contracts on the S&P 500 (-0.42%), Nasdaq (-0.60%) and DAX (-0.58%) are all down. Oil prices are up this morning with Brent futures advancing +3.08% to $111.25/bbl while WTI futures are up +3.23% at $108.08/bbl, as I type. Elsewhere, today's holiday in Japan means no USTs trading in Asia. One of the key events this week will be Thursday’s March flash PMIs from around the world where we’ll see the first impact of the Russia/Ukraine conflict on activity, especially in Europe. Outside of that, UK CPI data on Wednesday is going to be very interesting after the BoE warned on both growth and inflation last week in their surprisingly dovish hike. See our UK economist’s review here. There is also the Spring UK (Budget) Statement on Wednesday (preview here) where all things fiscal will be in focus. Wednesday's new home sales, Friday's pending home sales and Thursday's durable goods are the main economic releases in the US. There's plenty of Fed speak to sharpen up the message from last week's FOMC but don't expect a chorus line singing from the same song sheet. The dot plot showed the range of YE '22 Fed funds rates, as forecast by the committee, was a historically wide 1.4% to 3.1%. Boston (non-voter hawk) and Chair Powell himself are up today with the latter also on the docket on Wednesday. Williams (dove) will be on a panel tomorrow but also gives a speech on Friday. Daly (non-voter / dove) speaks tomorrow, Wednesday and Friday. Mester (voter / hawk) speaks tomorrow. Bullard (voter / hawk) is up on Wednesday and remember he was the lone 50bps dissenter last week. Kashkari (non-voter / dove), Governor Waller (hawk) and Chicago President Evans (non-voter / dove) speak on Thursday. Barkin (non-voter / hawk) concludes the Fed's business for the week on Friday. Looking back at last week now and the conflict raged on but peace negotiations between Ukraine and Russia continued, with the headlines presenting a staccato back and forth about Ukrainian and Russian leaders’ current perceptions of the negotiation outlook. Markets seemed to look through this back-and-forth and took solace that negotiations were even happening, which was a material step up from where we were but a short time ago. In particular, both sides reported common ground on Ukraine’s neutral status and lack of NATO membership as a positive. Another positive came on Friday after Presidents Biden and Xi Jinping spoke. China’s support for Russia remained a key unknown, but following the call both sides expressed aspirations for a peaceful resolution to the conflict, and for tensions to not escalate any further. Ahead of the meeting, US diplomatic officials warned that the US would impose costs on China were it to support the Russian invasion. Russian sovereign bond payments made their way to creditors via custodians, despite some uncertainty, avoiding a default. Nevertheless, S&P cut the rating on Russian sovereign debt another notch, considering it at high risk of default. However, Russia’s remaining interest repayments this month will keep investors anxious as a $447 million payment is due on March 31, followed by a $2 billion payment as a bond comes due on April 4. Dragging on sentiment were American intelligence reports that President Putin was prepared to re-engage in nuclear sabre rattling should the conflict drag on. That drove futures lower at the time of release but was not enough to drag risk negative on the week. That said it was a good week for risk with the S&P 500 and STOXX 600 gaining +6.16% (+1.17% Friday) and +5.43% (+0.91% Friday) over the week, respectively. That marked the best weekly performance for both indices since the week of the US Presidential election in November 2020. Financials and mega cap tech stocks performed even better. The S&P and STOXX bank indices gained +6.60% (-0.15% Friday) and +8.72% (+0.22% Friday), respectively, while the FANG+ gained +13.61% (+3.37%). That was the best weekly performance ever for the FANG+, which also put in its best daily performance ever on Wednesday following the Fed meeting, and more positive Chinese state support news (the index contains Baidu and Alibaba), gaining +10.19%. Speaking of the Fed, after two years at the zero lower bound, the FOMC raised policy rates by 25 basis points, with the dots projecting an additional 150 basis points of tightening this year, in line with DB expectations. Further, the Fed’s projections put policy into an explicitly restrictive stance by 2023. Despite the tightening, Chair Powell did not place particularly high risks on a recession occurring in the next year, which was apparently enough to help equities, with the S&P gaining +2.24% the day of the meeting in addition to the gangbusters day for the FANG+ index. The Fed also announced plans to start reducing their bond holdings at a coming meeting. Chair Powell noted the asset holding reductions would roughly equate to an additional 25 basis points of tightening this year and could commence as early as the FOMC’s next meeting in May. Money markets ended the week pricing around 167 basis points of additional policy rate tightening, suggesting some probability of a 50 basis point hike this year, which the Chair did not rule out. 10yr Treasury yields gained +15.8bps (-2.1bps Friday) on the week, driven entirely by real yields, which increased +22.7bps (+1.5bps Friday). The 2s10s yield curve continued its flattening, as 2yr yields gained +18.8bps (+2.2bps Friday), bringing the level to 20.5bps, the lowest since early March 2020. The Bank of England also hiked rates, raising the Bank Rate by 25 basis points in an 8-1 decision. The lone dissenter preferred to keep policy rates on hold, in contrast to the four dissenters in the February meeting which voted for a 50 basis point increase. Forward guidance added to the dovish tone, as it emphasised two-sided risks around the outlook, with downside impacts to growth featuring as prominent as upside risks to inflation, in contrast with recent advanced economy central bank communications. In line, 10yr gilt yields lagged other DM yields, gaining +0.6bps (-6.8bps Friday), as 10yr bunds increased +12.4bps (-1.2bps Friday). 2yr gilt yields priced out hikes, falling -10.9bps (-8.9bps Friday). Markets are pricing the Bank Rate to end the year at 1.87%, as opposed to 2.0% a week ago. Meanwhile, the Bank of Japan left policy unchanged, and warned of downside risks to growth stemming from the invasion of Ukraine, picking up the BoE’s dovish mantle. In line with the improvement in risk sentiment, crude oil prices fell a modest -3.97% over the week (+1.21% Friday), but still put in some large intraday swings. Prices also eased following reports that progress on the Iran nuclear deal would not be handcuffed by sanctions on Russia. European natural gas also fell -23.42% (-0.65% Friday). Given the volatility in energy markets, French President Macron warned the state may need to seize control of some energy firms. Elsewhere, sentiment was boosted by reports that China would actively introduce policies that benefit markets and take steps to avoid the most spartan lockdown measures. Tyler Durden Mon, 03/21/2022 - 07:52.....»»

Category: blogSource: zerohedgeMar 21st, 2022

Rally Fizzles As Futures Slide Ahead Of $3.5 Trillion OpEx

Rally Fizzles As Futures Slide Ahead Of $3.5 Trillion OpEx After a torrid three days which pushed US stocks up almost 6%, the best 3-day run since the Nov 2020 election.. ... U.S. index futures finally dropped on Friday one day after JPMorgan again said to BTFD, as traders were concerned Washington may take a tougher stance on China for its muted response to Russia’s invasion of Ukraine during a phone call between Xi and Biden set for Friday morning, while bracing for volatility on quad-witching day where $3.5 trillion in options and derivatives are set to expire... ... as the concurrent rebalancing of benchmark indexes including the S&P 500 sill send volumes soaring. Contracts on the S&P 500 and the Nasdaq 100 both ticked lower about 0.6%. Oil dropped after yesterday's remarkable surge with WTI trading around $102, while Treasuries and the dollar rose and bitcoin traded just above $40,000.  In premarket trading, FedEx retreated 2% after missing analysts’ estimates. Morgan Stanley analysts said the magnitude of the misses in the U.S. company’s Express and ground units may be “jarring” for investors. GameStop slumped 7% after reporting quarterly losses that were wider-than-expected, with Baird saying that the video-game retailer’s margins were “significantly” below expectations. Other notable premarket movers include: Astra Space (ASTR US) drops 5% in premarket trading after the company postponed its fourth-quarter results by two weeks to March 31. AvePoint (AVPT US) declined 1% in extended trading Thursday after the software company gave a revenue outlook for 2022 that fell short of even the lowest analyst estimate compiled by Bloomberg. “No clear directional price action will be expected today as traders will also have to brace for a triple witching day in addition to the complicated geopolitical context, which should drive market volatility higher, providing a complicated set-up to very short-term investor,” said Pierre Veyret, a technical analyst at ActivTrades. “In this environment of tightening monetary policy and higher inflation risks globally, we continue to believe in more downside for risk assets over the medium term,” Mizuho International Plc multi-asset strategist Peter Chatwellwrote in a note to clients. In the latest developments, Russia’s foreign minister repeated a threat to target arms convoys in Ukraine sent by the U.S. and its allies. President Joe Biden will tell Chinese counterpart Xi Jinping the U.S. will “impose costs” if Beijing backs Russia, in a call planned for 9 a.m. EDT. Here are the key things to watch: US President Biden will speak with Chinese President Xi at 09:00EDT on Friday, while it was separately reported that President Biden called Russian President Putin a murderous dictator and pure thug. US President Biden's administration reportedly hardened its stance towards China ahead of Biden-Xi call on Friday, while officials believe Russia is moving closer to supporting the Kremlin. Russian Kremlin says that the Russian delegation in peace talks has expressed a readiness to work faster but the Ukraine delegation has not shown a similar readiness, negotiations continue. Ukraine Deputy PM says nine humanitarian corridors have been agreed for Friday. Ukrainian Presidential aide Zhovkva says talks with Russia are progressing, but only slowly; will not negotiate an inch of Ukrainian territory. Russian Foreign Minister Lavrov says Russia's goal is to remove threats to Russia on Ukrainian soil; any weapons cargo to Ukraine is considered as "fair game" for Russia. A number of countries including China, India, Brazil and Mexico "will not dance to the tune of the United States", via Sky News Arabia. Russian President Putin and French President Macron will speak on Friday. In Europe, the Stoxx Europe 600 Index dropped 0.1% but was set for its best week since November 2020. Retail and miners outperformed, while autos, energy and travel are the worst-performing sectors in European stocks. FTSE MIB outperforms, adding 0.1%, CAC 40 lags, dropping 0.6%. S&P futures decline 0.5%. Investors continued to favor U.S. equity funds in the week to March 16, with $32 billions pouring into the strategy, while all other regions had outflows, according to Bank of America strategists, citing EPFR Global data.  U.S. data on Friday include existing home sales, while no major companies are scheduled to report results Asian stocks steadied after a two-day rally, as investors await the outcome of talks between U.S. President Joe Biden and his Chinese counterpart Xi Jinping on the war in Ukraine later Friday.  The MSCI Asia Pacific Index erased earlier losses to trade little changed. The rebound late in the day was led by moves in Chinese stocks, with shares on the mainland ending higher and those in Hong Kong paring declines. China’s benchmark CSI 300 Index flipped from a loss of as much as 1% to gain 0.3% in afternoon trading, with energy and financials leading. The energy subgauge was up 2.6%, financials +2% with Seazen Holdings and Ping An Insurance among the top performers. Walvax and Shanghai Pharmaceuticals top the broader gauge, with sentiment for the sector lifted after Chinese firms signed agreements to make a generic version of Pfizer’s Covid pill. Most other major gauges in the region posted gains.  Investors remain cautious amid concerns Washington may take a tougher stance on China for its muted response to Russia’s invasion of Ukraine, though Beijing denies that it has tacitly backed the war. President Biden is set to speak by phone with Xi on Friday at 9 a.m. in Washington. “I don’t think we can escape from volatility,” said Manishi Raychaudhuri, head of APAC Equity Research at BNP Paribas. “Earlier in the year, we were only dealing with uncertainties surrounding the global central banks’ reaction function to inflation. Now, we also have to deal with geopolitical tensions and we have no visibility how exactly that situation is going to end.”  READ: Biden Team Hardens View of China Tilting Toward Putin on Ukraine Japanese stocks gained as the Bank of Japan doubled down on its commitment to continue with stimulus even if inflation continues to accelerate. The rebound in Chinese stocks came as traders speculated the central bank could further ease monetary policy soon, following the authorities’ pledge to stabilize markets. For the week, the MSCI Asia Pacific Index was poised for a 3.9% advance, the best performance in months In FX, the Bloomberg Dollar Spot Index advanced as the greenback was steady to higher against all Group-of-10 peers apart from the Swiss franc; Treasury yields fell by up to 2bps, led by the long end Commodity-linked currencies apart from the Norwegian krone held up against the dollar while the euro underperformed. Euro options gauges have reached or are very close to the levels seen before Russia’s invasion of Ukraine as traders position for lower geopolitical risks. European benchmark yields fell, led by the short end, and with the core outperforming the periphery. The pound was steady while the Gilts yield curve bull-steepened sharply as money markets pared BOE tightening wagers following Thursday’s dovish hike. The yen headed for a second weekly decline as the Bank of Japan kept its ultra-loose monetary policy while central banks in the U.S. and U.K. raised rates earlier this week. Super-long Japanese government bonds outperformed. Bank of Japan Governor Haruhiko Kuroda doubled down on his commitment to continue with stimulus even if inflation continues to accelerate, in a rebuttal of the need to join a global wave of central banks normalizing policy. In rates, Treasuries advanced with yields richer by more than 4bp across long-end of the curve, following steeper gains for gilts. 10-year TSY yield was at 2.14% is richer by 3bp vs Thursday’s close vs more than 7bp decline for U.K. 10-year; U.S. 2s10s is flatter by ~2bp with U.K. curve steeper by more than 3bp.  The U.K. curve bull-steepened during London session, pricing in lower odds of a 50bp rate hike by Bank of England following yesterday’s dovish turn. Declines for U.S. stock futures also support Treasuries. Three Fed speakers are scheduled during Friday’s session, and St. Louis Fed President Bullard, who dissented from this week’s decision to raise rates by a quarter point in favor of a larger move, said in a statement the policy rate should rise above 3% this year. In commodities, WTI crude futures fade, trading at around $103 after rising as high as $106.28. Spot gold falls roughly $9 to trade around $1,930/oz. Most base metals trade in the green; LME tin rises 2.3%, outperforming peers. Looking at today's calendar, we will get existing home sales and the leading index from the US. In Europe, Italy’s and Eurozone’s trade balances are due. Elsewhere, retail sales for Canada will be published. Now that the Fed blackout period is over, we will hear from Kashkari, Barkin amd Bowman. Market Snapshot S&P 500 futures down 0.5% to 4,388.75 STOXX Europe 600 down 0.1% to 449.96 MXAP little changed at 178.10 MXAPJ down 0.1% to 580.94 Nikkei up 0.7% to 26,827.43 Topix up 0.5% to 1,909.27 Hang Seng Index down 0.4% to 21,412.40 Shanghai Composite up 1.1% to 3,251.07 Sensex up 1.8% to 57,863.93 Australia S&P/ASX 200 up 0.6% to 7,294.35 Kospi up 0.5% to 2,707.02 German 10Y yield little changed at 0.39% Euro down 0.3% to $1.1062 Brent Futures up 1.2% to $107.93/bbl Gold spot down 0.3% to $1,936.83 U.S. Dollar Index up 0.23% to 98.20 Top Overnight News from Bloomberg China’s muted response to Russia’s invasion of Ukraine has hardened views within the Biden administration that President Xi Jinping may be moving closer to supporting Moscow as the conflict continues, according to several people familiar with the matter Chinese President Xi Jinping pledged to reduce the economic impact of his Covid-fighting measures, signaling a shift in a longstanding strategy that has minimized fatalities but weighed heavily on the world’s second-largest economy Russian President Vladimir Putin told German Chancellor Olaf Scholz that Ukraine is trying to “stall” talks by putting out “more and more new unrealistic demands,” according to the readout of the phone talks from the Kremlin Russia’s central bank meeting in Moscow on Friday will be little more than a cameo for the Bank of Russia in an economic drama playing out across the world’s biggest country, as the wipeout of household wealth, food shortages and a dash for the exits by foreign companies and Russians shatter three decades of policy making after the Soviet collapse Russian dollar bonds rose, and the cost of insuring the nation’s debt against default dropped after people familiar with the matter said funds earmarked for interest payments on the Russian government’s dollar notes were sent to the payment agent China made its biggest push to weaken the yuan through its currency fixings this week as virus-related curbs and rising commodity prices threatened to slow the economy China sailed its aircraft carrier Shandong through the Taiwan Strait on Friday, Reuters reports, citing an unidentified person with direct knowledge of the matter Investors in China’s $870 billion of offshore bonds are facing up to the realities of being last in line as borrowers struggle to pay during an unprecedented wave of distress that’s sent defaults to a record Argentina’s senate approved the government’s $45 billion agreement with the International Monetary Fund on Thursday, clearing the way for its final approval by the lender’s board of directors Iceland faces a lower risk of speculative money flows because of shifts in global monetary policy after Russia’s invasion of Ukraine, central bank Governor Asgeir Jonsson said A more detailed look at global markets courtesy of Nesquawk Asia=Pac stocks eventually traded mostly positive following on from Wall St's best 3-day gain since 2020. ASX 200 was underpinned by commodity-related sectors including energy after oil rallied over 9% yesterday. Nikkei 225 eked marginal gains amid the lack of fireworks at the BoJ policy announcement Hang Seng and Shanghai Comp. were mixed as tech stocks in Hong Kong faded their mid-week surges and with China said to weigh a Tencent overhaul by separating WeChat Pay from the core business and a new licence requirement. Conversely, the mainland was indecisive with downside cushioned amid further efforts by Chinese press to instill confidence in the equity market and with participants awaiting the Biden-Xi call. Top Asian News First Hong Kong-Listed SPAC Has Slow Start In Trading Debut Taiwanese Crypto Exchange MaiCoin Is Said to Weigh Nasdaq IPO China Reopening Names Mixed as Pfizer’s Covid Pill Arrives Shell’s Prelude LNG Export Plant Cleared by Regulator to Restart European bourses, Euro Stoxx 50 -0.6%, have become incrementally more pressure after a relatively contained cash open, all eyes on the US-China meeting and Fed speak. US futures are similarly pressured, ES -0.6%, but have been somewhat more contained thus far; reminder, today is Quad Witching. Sectors, were initially mixed in Europe but have been drifting lower and are all in negative territory with the exception of some mild support for Defensives. Top European News U.K. Regulator Revokes RT’s License to Broadcast in the U.K. BNP Paribas Upgraded at SocGen on Capital, Shares Decline Ted Baker Gains as Sycamore Studies Bid for U.K. Fashion Brand P&O Crew Mutiny After Firing Threatens Biggest U.K. Trade Artery In FX, Dollar regains poise after post-FOMC demise with DXY pivoting 98.000. Yen still lagging following no change from ultra accommodating BoJ, USD/JPY just shy of 119.00. Euro loses grip of 1.1100 handle where decent option expiry interest starts and ends at 1.1110 (1.44bln). Pound pares some post-dovish BoE hike declines and Rouble was unphased by the CBR keeping rates unchanged after the significant intra-meeting hike; Cable straddles 1.3150 and USD/RUB firmly above 100.0000. In fixed income, bonds bounced firmly ahead of the weekend as risk sentiment sours and stocks head into quad-witching on a weak footing. Curves continue to flatten following Fed and BoE tightening. Gilts extend outperformance and recovery gains on a dovish leaning MPC split and guidance. In commodities, WTI and Brent front-month futures are firmer but off best levels as the complex continues to nurse some of this week’s earlier losses. WTI Apr resides just above USD 104/bbl (vs weekly high 109.72/bbl) whilst Brent May trades hovers around USD 108.00 (vs weekly high 113.15.bbl). UK PM Johnson was unable to secure an agreement with Abu Dhabi and Saudi Arabia to boost oil output after a visit to the region although Downing Street claimed the trip was not about quick fixes, according to Politics Home. LME says some trades have gone through below the Nickel limit, such trades will be cancelled; hit the adjusted limit down of -12%. Spot gold/silver are pressured as the USD retains an underlying bid, eyes on Biden-Xi call. US Event Calendar 10am: Feb. Existing Home Sales MoM, est. -6.2%, prior 6.7% 10am: Feb. Leading Index, est. 0.3%, prior -0.3% 10am: Feb. Home Resales with Condos, est. 6.1m, prior 6.5m DB's Jim Reid concludes the overnight wrap Morning from Cannes where I want a refund given I haven't seen the sun yet while it's apparently barmy hot at home. My hotel is off the beaten track and has a small rooftop pool. I decided to put my gym kit on yesterday and have my lunch sandwich by the side of it as this was a novelty after a long winter at home. Within 2 minutes I was freezing and went back to my room. I should have got the message when no-one else was there. I'm at a big property conference and I have to say the streets were very busy last night as I walked back from giving an after dinner speech. It's remarkable how quickly normality is returning after Covid. Talking of normal, we’re running a quick flash poll for a couple more hours this morning as to whether you think this time is different. Normally in first 9-12 months after the start of a Fed hiking cycle equities go up, credit tightens, yields go up and the curve flattens. Will this time be different? We have five one click answers. It took me 7 seconds to complete myself. All help appreciated. The link to the survey is here. Answers in my Chart of the Day (CoTD) later today. If you want to be added to CoTD let me know. Yesterday was met with a flurry of conflicting headlines about the future prospects of negotiations around the war, with the back and forth reaching frenzied levels after most markets had called it a day. US intelligence warned that President Putin was likely to increase nuclear sabre rattling should the war drag on. This is something that hasn't come up since three weekends ago so worrying news. Meanwhile, the State Department reported they saw no signs Putin was ready to stop his invasion, dampening hopes of a diplomatic conclusion. On the upside, China’s UN envoy reportedly called for maximum restraint in the Ukraine war, which will hopefully make Russia feel less emboldened. Earlier in the day the Kremlin and Ukrainian officials had already pushed back on optimistic reports about the state of negotiations. However markets climbed a wall of worry (S&P 500 +1.23%) until the nuclear headlines after the close. As I type, S&P futures are -0.66% down with 10-yr UST yields flattish at 2.174%. The main moves yesterday centered around crude oil and gilts, which rallied across the curve following the BoE meeting. The Bank Rate was raised another +25bps, but couched in much more dovish communications than we’re used to of late from DM central banks. Meanwhile, oil staged another comeback, with Brent futures gaining +8.79% and advancing another 2% this morning. Finally, Russia’s sovereign bond payments made its way to custodians, which enabled payments to creditors, this helping equities in the US session. Elsewhere on the conflict, the US is re-upping its military support to Ukraine to the tune of $800 million of new weaponry. President Biden is set to speak with Chinese President Xi Jinping later today about the conflict, where Biden will reportedly emphasize the US will impose costs on China were it to support Russia in the conflict. The US House of Representatives followed through on earlier threats by voting to revoke Russia’s most favored nation status in international trade, enabling the US to impose material tariffs against Russian imports. Diving into yesterday’s BoE meeting. The central bank hiked by +25bps, as widely expected, becoming the first major central bank to bring its key rate back to the pre-pandemic level and an overview by our UK economist is available here. The lone dissent yesterday was for keeping policy on hold, unlike the February meeting when four dissenters preferred a +50bp rate hike. A big shift. Further, the guidance in the statement implied the MPC was much more concerned about potential drags on growth. That said, the guidance still expects modest further tightening, albeit with risks around that path being much more two-sided than they previously were. Our UK economists maintained their call for further Bank Rate increases at the May, June, and August meetings. Gilts outperformed across the curve, with 2yrs falling -11.7bps and 10yr gilts dropping -6.6bps to 1.56%, while the pound lost -0.16% versus the dollar and -0.51% versus the euro. Price action in the rest of Europe was more muted, with yields on 10yr bunds (-0.7bps) and OATs (-1.3bps) slightly lower. The commodity rally drove 10yr bund breakevens +3.4bps wider. Nominal Treasury yields were similarly muted, with 10yr yields falling -1.4bps. However, that masks a large pickup in 10yr Treasury breakevens, which gained +13.6bps to 2.94% on the rise in energy costs. On energy, oil climbed steadily throughout the day, with Brent futures gaining +8.79% and ending their short-lived stint below $100/bbl. No one development discretely drove oil prices, but the negative tone around the conflict as well as heightened volatility in commodity markets contributed. For their part, European natural gas prices gained another +2.56%. French President Macron noted the state may have to take control of some energy firms amid the recent market turmoil. He had backing from the ECB’s Visco who said administered prices would not be a bad idea. Agricultural commodities kept with recent trends and climbed as well, with corn and wheat futures gaining +3.18% and +2.15%, respectively. Equity markets put in a mixed performance on both sides of the Atlantic. The STOXX 600 gained +0.45%, while the DAX and CAC were mirror images, the DAX falling by -0.36% with the CAC picking up +0.36%. The S&P 500 outperformed, climbing +1.23%, benefitting from the pick up in sentiment following Russia’s bond payment making its way to bond holders. Energy (+3.48%) re-assumed its place as the best performing sector following the jump in oil prices, though every sector ended the day in positive territory. Overnight in Asia, equity markets are mostly trading lower, after the nuclear headlines. The Hang Seng (-2.43%) is lagging in early trade giving up some of its gains fueled by China’s recent support pledge. In mainland China, the Shanghai Composite (-0.22%) and CSI (-0.89%) are drifting lower, shedding earlier sessions gains while the Kospi (+0.08%) is just above the flatline. Elsewhere, the Nikkei (+0.28%) is up after the BOJ held steady on monetary policy. In a largely expected decision, the central bank kept its interest rate targets unchanged but warned of heightening growth risks emanating from the Russian-Ukraine war as it stuck with a dovish tone. Additionally, the BOJ downgraded its economic assessment just two months after it was upgraded, due to surging Omicron COVID-19 variant cases. Earlier today, economic data released showed that Japan’s national consumer price index (CPI) grew +0.9% y/y in February, matching Bloomberg estimates but much higher than January’s +0.5% increase. The strong inflation figures clearly demonstrates signs of growing inflationary pressure from higher energy costs. If one were looking for evidence of global de-dollarization in oil trade invoicing, yesterday was a setback, as there were reports of Indian refiners buying Russian oil at a deep discount using US dollars, despite speculation a rupee-ruble settlement mechanism would be used. A story to keep an eye on over the longer-term. Looking at yesterday’s data releases, the Philadelphia Fed business outlook survey showcased a material beat, printing at 27.4 versus expectations of 14.5. US jobless claims came in at 214k, slightly below the expected 220k and lower than the previous revised value of 229k. Housing starts (1769k vs 1700k expected) and building permits (1859k ss 1850k) also beat estimates on the upside. There was no sign of a slowing US economy yesterday. In today’s data releases, we will get existing home sales and the leading index from the US. In Europe, Italy’s and Eurozone’s trade balances are due. Elsewhere, retail sales for Canada will be published. Tyler Durden Fri, 03/18/2022 - 08:06.....»»

Category: blogSource: zerohedgeMar 18th, 2022

Russia could use failed talks with US and NATO as "pretext" for invading Ukraine, experts and officials warn

"In a real sense," one expert said, "this does give them a kind of veil of legitimacy if they decide to invade Ukraine." Russian President Vladimir Putin during a meeting with Turkish President Recep Tayyip Erdogan at the Bocharov Ruchei residence on September 29.Vladimir SmirnovbackslashTASS via Getty Images Russia has spent this week engaging US and its NATO allies in talks amid tensions over Ukraine. Some experts and officials have raised concerns Russia could use failed talks as a pretext to invade. "This does give them a kind of veil of legitimacy if they decide to invade Ukraine," one expert said. Some senior US officials and Russia watchers have expressed concerns that Russia may use this week's stalled diplomatic talks in Europe as a pretext to invade Ukraine, as Moscow continues its aggressive moves near Ukraine's border while making demands that the US and its NATO allies have dismissed as non-starters. White House press secretary Jen Psaki questioned Tuesday whether Russia will "use discussions as pretext to claim that diplomacy couldn't possibly work in order to proceed with the aggressive rhetoric and actions, most importantly, that they have portrayed at the border."Similarly, Deputy Secretary of State Wendy Sherman, who has been leading the US delegation during this week's talks, said on Wednesday that Russia must decide "whether they really are about security, in which case they should engage, or whether this was all a pretext, and they may not even know yet."There has been almost no movement on either side of the negotiating table during this week's talks. Jim Townsend, an adjunct senior fellow in the Transatlantic Security Program at the Center for New American Security, told Insider Wednesday "you can only say that there's been progress in the sense that it hasn't blown up."On Thursday, Russian Deputy Foreign Minister Sergei Ryabkov dashed hopes for further talks, saying he sees "no grounds" for doing so. "There is, to a certain extent, a dead end or a difference in approaches," he said. "I do not see reasons to sit down in the coming days, to gather again and start these same discussions."Russia, which invaded and annexed the Crimea peninsula from Ukraine in 2014, has moved a significant force of tens of thousands of troops into positions along the former Soviet republic's border in recent weeks. The Kremlin has denied any plans to invade, but it continues to assume an alarming posture, stirring fears of a large-scale invasion of its neighbor, possibly to annex additional territory in the east, seize the capital, or some other to-be-determined endgame.Ukraine's forces stand little chance of stopping a major Russian advance given its numerical advantages in tanks, troops and air power. And the Biden administration has signaled it would not send troops in if Russia invades Ukraine because it is not a NATO member and the US is therefore not obligated to defend it.Russian armor and troops engaged in live-fire drills near Ukraine on Tuesday, which Sherman decried as being unconducive to the ongoing diplomatic discussions. Meanwhile, Russian President Vladimir Putin has continued to strongly push for binding security guarantees from the US and NATO, including provisions stating that Ukraine and Georgia must never be permitted to join NATO and that the alliance reduce its presence in eastern Europe.The US and NATO have repeatedly made it clear that the alliance's open-door policy is nonnegotiable, but the Kremlin has nonetheless persisted in making this demand, among others, even doubling down on them despite opposition. And as its demands have been dismissed, Moscow has made statements pointing to the possibility of conflict."The Russian side has repeatedly proposed to the alliance to take measures to de-escalate the situation," Alexander Fomin, who serves as Russia's deputy defense minister, said on Wednesday. "On the part of the alliance, Russian initiatives were ignored. This creates prerequisites for incidents and conflicts, undermines the foundations of security."A Russian service member walks near a T-72B3 main battle tank during military drills at the Kadamovsky range in the Rostov region of Russia on December 20, 2021.Sergey Pivovarov/Reuters'The big question'Some experts worry that Russia may have no intention of pursuing a diplomatic resolution to the Ukraine crisis and is effectively searching for an excuse, such as failed talks, to escalate the situation.Other expert observers suspect that Putin may be hedging his bets by pursuing diplomatic engagement in hopes of achieving his objectives without conflict while preparing to use military force if such endeavors are unsuccessful, which is how a Kremlin spokesperson characterized talks Thursday.Steven Pifer, the US ambassador to Ukraine from 1998 to 2000, told Insider the "big question" hanging over this week's talks is whether Russia's security proposals, which include "unacceptable demands," are meant to be "the opening bid in a serious give-and-take negotiation, or did the Kremlin put them forward expecting, indeed seeking, rejection so as to have another pretext for taking military action against Ukraine?"Both US and NATO officials have told their Russian counterparts that there's potentially space for common ground on some provisions proposed by Moscow, such as limitations on the size and scope of military exercises in the region, Pifer said, but NATO won't "renounce further enlargement or agree to withdraw forces from states that joined the Alliance after 1997.""How Moscow responds to this will tell us the answer to the big question," Pifer said, adding that "it may well be that Putin and the Kremlin have not yet decided.""But it does appear that the Russians are putting in place the capabilities for major military operations against Ukraine if that is the Kremlin's decision," he said.Putin, another expert warned, may feel it necessary to achieve something beyond seizing the world's attention with his threats and troop build-up."They certainly set the table to be able to do that. And, it is up to Putin," Townsend said. "If he feels that he's not going to get anything out of this, certainly not something that he could point to as a success, a big success, if he feels that he's just getting crumbs, then he almost has to go into Ukraine."That said, he explained, the question then is what does Putin get out of invading Ukraine."This really isn't about Ukraine anymore. Ukraine kind of started this off, but this is much more about the overall security architecture in Europe," Jeffrey Edmonds, a Russia expert at CNA and a former CIA military analyst, told Insider. "This was about Ukraine. Ukraine's a symptom of a much deeper problem that they have to solve.""This is a conversation that has been going on for 30 years," Edmonds said. "This has built up to a crescendo where they're going to force a solution to a longstanding problem," one way or another, either through talks or through military action.After the fall of the Soviet Union, eastern European countries long in Russia's shadow opted to join NATO, including Poland, Romania and Slovakia, as well as the three Baltic states that border Russia. This eastward expansion has been the subject of heated debate over whether it brought the NATO shield too close to countries Russia has exerted influence over.Putin likely "has various contingencies in mind," he said, explaining to Insider that Putin knows he has a decision to make."If we were to move on things in such a way that he thought he could get a lot out of it or get a big deal out of it, then probably he would back down," Edmonds said. But talks with Russia do not appear to be addressing the issues at the heart of the problem, Russian security concerns, and could fail to ease tensions."So, in a real sense," he explained, "this does give them a kind of veil of legitimacy if they decide to invade Ukraine." For the moment, he said, "I don't think the decision's really been made" on what the next step is for Russia.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 13th, 2022

Futures Drift Lower In Illiquid Session As Virus Fears Resurface

Futures Drift Lower In Illiquid Session As Virus Fears Resurface After three days of torrid gains, US futures and European markets fell as concerns about economic risks from restrictions to control the new variant outweighed optimism about the efficacy of vaccines after a study from Japan found that the omicron variant is 4.2 times more transmissible (as largely expected) in its early stage than delta. Both S&P 500 and Nasdaq futures dropped around -0.4% as traders awaited earnings from Broadcom, Oracle and Costco after the market close and tomorrow's key CPI print, while European equities drifted lower in quiet trade with little fresh news flow to drive price action. Uncertainty about monetary policy could keep stocks “significantly volatile,” according to Pierre Veyret, a technical analyst at ActivTrades in London. “Investors are likely to remain cautious and keep on monitoring the macro outlook, especially today’s U.S. initial jobless claims, in order to gather more clues on what and when could be the Fed’s next move,” said Veyret. In Asia, China Evergrande Group and Kaisa Group Holdings Ltd. officially defaulted on their dollar debt, while the People’s Bank of China raised its foreign currency reserve requirement ratio for a second time this year after the yuan climbed to the highest since 2018. Among individual moves, CVS Health Corp. jumped in pre-market trading after saying it would buy back shares and raise dividends. Drugmakers including Pfizer rose, while travel companies and airlines declined. European stocks erased gains of as much as 0.3% with the Stoxx 600 trading -0.1% in the red as investors weigh new economic restrictions prompted by the omicron variant against earlier optimism. The real estate subgroup was best performer, up 0.7%; energy company shares lead declines with a drop of 1.2%. The Euro Stoxx 50 is down 0.25%, reversing a modest push into the green at the open. Other cash indexes trade either side of flat. Oil & gas and retail names are the weakest sectors. UniCredit SpA rose after saying it will return at least 16 billion euros ($18.1 billion) to shareholders by 2024. Meanwhile, Electricite de France SA fell with the government considering a cap on regulated power tariffs to help curb soaring electricity prices. Here are some of the biggest European movers today: LPP shares rose as much as 12% after its 3Q earnings beat expectations. The figures confirm a rebound of sales in traditional stores and stronger margins, according to analysts. UniCredit shares gain as much as 8.4%, the most since November 2020, after the Italian lender unveiled its new strategic plan that includes the distribution of at least EU16b to shareholders by 2024. Société Marseillaise du Tunnel Prado Carénage (SMTPC) shares rise as much as 5.5% after Vinci Concessions and Eiffage said they reached a pact to act in concert for a tender offer at EU27/share. Zur Rose drops as much as 7.3% in Zurich after an offering of 650,000 shares priced at CHF290 apiece, representing a 12% discount to the last close. Neste Oyj shares slid as much as 5.7% as investors digested the unexpected resignation of Chief Executive Officer Peter Vanacker from the helm of the world’s biggest maker of renewable diesel. FirstGroup shares fall as much as 5.9% after 1H results, with Chairman David Martin saying the U.K.’s work-from- home edict will “clearly have an impact” on commuter trips. There are potential downside risks to estimates in the short term, if Covid restrictions tighten, according to Liberum (buy). Dr. Martens released solid 1H results, but there’s “nothing material to flag” and unlikely to be upgrades to FY Ebitda estimates, Morgan Stanley says in a note. Shares drop as much as 5.2% after initially gaining 8.9%. Electricite de France shares fall as much as 5.1% after Le Figaro said the French government is considering taking additional steps to keep electricity prices from rising too much amid a spike in energy costs. The global equity rally will be tested as traders expect volatility until there’s more clarity on omicron’s threat to the economy, and ahead of U.S. consumer inflation numbers this week and a Federal Reserve meeting next week that may provide clues on the pace of tapering and interest rate increases. “We are looking to potentially have a rise in volatility even if the market continues higher around those events next week,” said Frances Stacy, Optimal Capital portfolio strategist, on Bloomberg Television. “Many of the catalysts that gave us this boom out of Covid are slowing. And then you have the Fed potentially tapering into a decelerating economy.” Geopolitical tensions are also adding to investor concerns. Germany’s new foreign minister Annalena Baerbock doubled down on warnings from western politicians to Russia over Ukraine, saying that Moscow would pay a high price if it went ahead with an invasion of its neighbor. Separately, the U.S. said it will place SenseTime Group Inc. on an investment blacklist Friday, accusing the artificial intelligence startup of enabling human rights abuses. That’s after the U.S. House of Representatives on Wednesday passed legislation designed to punish China for its treatment of Uyghur Muslims in the country’s Xinjiang province. Asian stocks rose for a third day as investors reassessed concerns over the new virus strain and factored in the possibility that the Federal Reserve will accelerate the end of its quantitative easing.  The MSCI Asia Pacific Index added as much as 0.5%, extending its advance since Tuesday to almost 3%. Information technology and communication services were the sectors providing the biggest support to the climb, with benchmarks in China and Hong Kong among the region’s best performers. The CSI 300 Index gained 1.7% as consumer stocks rallied.   “The market had been initially wary of the Fed’s hawkish tilt in their stance, and a change in how they view inflation, but investors don’t seem too worried about it anymore,” said Tetsuo Seshimo, a fund manager at Saison Asset Management Co. “But this isn’t a theme that’s going away in the short term.”  Asia’s benchmark headed for its highest since Nov. 25, set to erase losses since the omicron variant was detected during the U.S. Thanksgiving holidays, but still in negative territory for 2021. The S&P 500 Index is up 25% this year, after gaining Wednesday on announcements by Pfizer Inc. and BioNTech SE that early lab studies showed a third dose of their Covid-19 vaccine neutralizes the omicron variant. “Funds are flowing into growth stocks with high estimated profit growth and ROE levels, a continuation of moves seen from yesterday,” said Takashi Ito, an equity market strategist at Nomura Securities in Tokyo. “But there could be some profit taking after the market rose for a few consecutive sessions.” Japanese stocks fell, cooling off after a two-day rally as investors weighed the potential impact of the omicron variant on the global economy. Electronics and auto makers were the biggest drags on the Topix, which fell 0.6%. Fanuc and Tokyo Electron were the largest contributors to a 0.5% loss in the Nikkei 225 Indian stocks ended higher, after swinging between gains and losses several times through the session, as traders shifted their focus to key economic data globally and at home in the days ahead.  The S&P BSE Sensex rose 0.3% to close at 58,807.13 in Mumbai, after falling as much as 0.5% earlier in the day. The gauge has gained 3.6% in the last three sessions, its biggest three-day advance in over a seven-month period, on optimism the economic recovery will be resilient despite the spread of the new Covid variant, with the RBI continuing its policy support intact.  The NSE Nifty 50 Index also advanced by similar magnitude on Thursday. Reliance Industries Ltd. contributed the most to the Sensex gain, rising 1.6%. Out of 30 shares in the Sensex index, equal number of stocks rose and fell. Fifteen of 19 sectoral indexes compiled by BSE Ltd. gained, led by a gauge of capital goods companies. The Reserve Bank of India kept borrowing costs at a record-low on Wednesday and voted 5-1 to retain its accommodative policy stance for as long as is necessary, reflecting its bias to support economic growth. The RBI expects the economy to expand 9.5% expansion in the year ending March, one of the fastest paces among the major growing world economies.  Markets’ focus will now shift to U.S. inflation data this week and a Federal Reserve meeting next week, which may provide clues on the pace of tapering and policy tightening. India will release its factory output data on Friday and consumer-price inflation on Monday.  “All eyes will be on crucial macro data (CPI & IIP) outcome which may further provide some direction to the markets,” Ajit Mishra, vice-president research at Religare Broking Ltd., wrote in a note. “The focus will remain on the global cues and updates regarding the new variant. We reiterate our cautious yet positive stance on the markets and suggest traders to focus on managing risk.” Australian stocks edged lower as miners, consumer shares retreated. The S&P/ASX 200 Index fell 0.3% to close at 7,384.50, snapping a four-day winning streak. Miners and consumer discretionary shares contributed the most to the benchmark’s decline. Redbubble was the worst performer, dropping the most since Oct. 14. Sydney Airport was among the top performers after regulators cleared a proposed takeover of the company. The stock also joined a global rally in travel shares after Pfizer and BioNTech said initial lab studies show a third dose of their Covid-19 vaccine may be effective at neutralizing the omicron variant. In New Zealand, the S&P/NZX 50 index fell 0.8% to 12,771.83 In rates, Treasury yields were mostly lower, led by the long end of the curve, while underperforming German bunds. 10Y TSY yields are lower by ~2bp at 1.4973%, trailing declines of 3bp-5bp for most European 10-year yields but remaining above 200-DMA, which it closed above Wednesday for first time since Nov. 29. Treasury futures trade near session highs, with cash yields lower by 3bp-4bp from the 5-year sector to the long end, inside Wednesday’s bear-steepening ranges. European bond markets lead the move, led by Ireland which cut 2022 issuance plans, as virus concerns weighed on most equity markets. U.S. auction cycle concludes with $22b 30-year reopening at 1pm ET, following two Fed purchase operations. Wednesday’s 10Y reopening auction drew 1.518%, tailing by about 0.4bp; Tuesday’s 3Y, which drew 1.000%, also trades at a profit, yielding 0.989% The WI 30Y yield 1.865% is below auction stops since January as sector has benefited from expectations that Fed rate increases beginning next year may strain the economy, as well as from strong equity-market performance driving increased allocation to bonds In FX, the Bloomberg Dollar Spot Index resumed its ascent, climbing 0.2% as the dollar advanced versus all Group-of-10 peers apart from the yen. TRY and ZAR are the weakest in EMFX.  The euro retreated, nearing the $1.13 handle and after touching a one-week high yesterday. One-week volatility for euro and sterling has risen to multi-month highs, with meetings by the Federal Reserve, the European Central Bank and the Bank of England in focus. The British pound fell as Goldman Sachs Group Inc. pushed back its forecast for a U.K. rate hike and business groups called for government support after Prime Minister Boris Johnson announced restrictions to curb the spread of the variant, which Bloomberg Economics estimates could cost the economy as much as 2 billion pounds ($2.6 billion) a month. A study found omicron is 4.2 times more transmissible than the delta variant in its early stages.   The pound hovered near its lowest level in more than a year against the dollar as fresh coronavirus restrictions weighed on the U.K.’s economic outlook. Expectations that the Bank of England will raise interest rates next Thursday continue to wane, with markets pricing less than six basis points of hikes. Goldman pushed back its forecast for a U.K. rate hike and business groups called for government support after Prime Minister Boris Johnson announced restrictions to curb the spread of the variant, which Bloomberg Economics estimates could cost the economy as much as 2 billion pounds ($2.6 billion) a month. A study found omicron is 4.2 times more transmissible than the delta variant in its early stages. Norway’s krone led losses among G-10 currencies as it snapped a three-day rally that had taken it to an almost three-week high against the greenback. In commodities, Crude futures drift lower. WTI slips back near $72 having stalled near $73 during Asian trade. Brent dips 0.5%, finding support just above $75. Spot gold trades flat near $1,782/oz Looking at the day ahead now, and it’s a quiet one on the calendar, with data releases including the US weekly initial jobless claims, as well as the German trade balance for October. Market Snapshot S&P 500 futures down 0.2% to 4,691.00 STOXX Europe 600 up 0.2% to 478.52 MXAP up 0.4% to 195.63 MXAPJ up 0.7% to 638.47 Nikkei down 0.5% to 28,725.47 Topix down 0.6% to 1,990.79 Hang Seng Index up 1.1% to 24,254.86 Shanghai Composite up 1.0% to 3,673.04 Sensex up 0.3% to 58,839.03 Australia S&P/ASX 200 down 0.3% to 7,384.46 Kospi up 0.9% to 3,029.57 Brent Futures down 0.3% to $75.58/bbl Gold spot up 0.0% to $1,783.15 U.S. Dollar Index up 0.20% to 96.09 German 10Y yield little changed at -0.34% Euro down 0.2% to $1.1318 Top Overnight News from Bloomberg European Central Bank governors are to discuss a temporary increase in the Asset Purchase Program with limits on the size and time of the commitment at a Dec. 16 meeting, Reuters reports, citing six people familiar with the matter Hungary raised interest rates for a fifth time in less than a month as policy makers try to rein in the fastest inflation in 14 years. The central bank hiked the one-week deposit rate by 20 basis points on Thursday to 3.3%, broadly matching the median estimate in a Bloomberg survey China’s central bank has signaled a limit to its tolerance for the yuan’s recent advance by setting its reference rate at a weaker-than-expected level China Evergrande Group and Kaisa Group Holdings were downgraded to restricted default by Fitch Ratings, which cited missed dollar bond interest payments in Evergrande’s case and failure to repay a $400 million dollar bond in Kaisa’s. Evergrande Group’s inability to meet its obligations will be dealt with in a market-oriented way, the head of the nation’s central bank said PBOC is exploring interlinking the e-CNY, as the digital yuan is known, system into the Faster Payment System in Hong Kong, says Mu Changchun, head of the Chinese central bank’s Digital Currency Institute Money managers have shown some tentative signs that they may be willing to start buying more Chinese dollar bonds again, after demand for the securities plunged to a 27-month low in November Greece plans to early repay the total amount of IMF’s bailout loan to the country in the first quarter of 2022, Finance Minister Christos Staikouras says in a Parapolitika radio interview The omicron variant of Covid-19 is 4.2 times more transmissible in its early stage than delta, according to a study by a Japanese scientist who advises the country’s health ministry, a finding likely to confirm fears about the new strain’s contagiousness Pfizer will have data telling how well its vaccine prevents infections with the omicron variant before the end of the year A detailed look at global markets courtesy of newsquawk Asian equity markets eventually traded mixed as the early tailwinds from the US gradually waned despite the recent encouragement on the vaccine front. All major US indices were underpinned in which the S&P 500 reclaimed the 4,700 level and approached closer to its ATHs, while Apple extended on record levels and moved closer to USD 3tln valuation. The ASX 200 (-0.3%) was initially kept afloat by resilience in defensives, although upside was restricted amid weakness in tech alongside concerns of a further deterioration in ties with China after Australia’s decision to boycott the Beijing Winter Olympics. The Nikkei 225 (-0.5%) was rangebound with the Japanese benchmark stalled by resistance ahead of the 29k level, although the downside was cushioned by recent currency weakness and a modest improvement in the Business Survey Index. The Hang Seng (+1.1%) and Shanghai Comp. (+1.0%) outperformed after China’s NDRC pledged support measures to boost consumption in rural areas and with some chatter regarding the possibility of another RRR cut in Q1 next year according SGH Macro citing a senior Chinese official. Furthermore, participants digested mixed inflation data from China including firmer than expected factory gate prices. CPI Y/Y was softer than forecast but it still registered the fastest pace of increase since August last year. Finally, 10yr JGBs briefly declined below the 152.00 level following the bear steepening stateside in which T-notes tested 130.00 to the downside and following a somewhat tepid US 10yr offering in which the b/c increased from prior but remained short of the six-auction average, while the results of the 5yr JGB auction were mixed and failed to spur prices with higher accepted prices offset by a weaker b/c. Top Asian News Evergrande Declared in Default as Massive Restructuring Looms China Dollar Junk Bonds Up After Fitch Move on Kaisa, Evergrande Gold Steady as Traders Assess Virus Risk Before Inflation Data China’s Credit Growth Rebounds After Slowing for Almost a Year Stocks in Europe trade have drifted lower in recent trade, giving up the modest gains seen at the open (Euro Stoxx 50 -0.5%, Stoxx 600 -0.2%), and following the mixed lead from APAC and amidst a lack of fresh fundamental catalysts. US equity futures are also subdued, with a relatively broad-based performance seen across the ES (-0.3%), NQ (-0.4%), YM (-0.3%) alongside some mild underperformance in the RTY (-0.6%). Markets are awaiting tomorrow’s US CPI metrics, but more importantly, are gearing up for next week’s blockbuster FOMC confab. Desks have attributed this week’s rebound to several factors working in unison, including a milder Omicron variant (thus far), Chinese policy easing, FOMO, buybacks/upbeat corporate commentary alongside the widely telegraphed hawkish Fed pivot. On the last note, it’s also worth keeping in mind that the rotating voters next year on the FOMC will be more hawkish with the addition of George, Mester and Bullard as voters, albeit some empty spots remain – namely Brainard’s spot as she takes over the Vice-Chair position. Back to Europe, sectors are mostly in the green but portray a defensive bias – with Healthcare, Telecoms, Food & Beverages and Personal & Household Goods at the top of the bunch, whilst Oil & Gas, Retail and Travel & Leisure resides on the other end of the spectrum. In terms of individual moves, UniCredit (+7.8%) shot up to the top of the Stoxx 600 after unveiling its 2024 targets – with the Co. looking to return at least EUR 16bln via dividend and buybacks between 2021-24. Sticking with banks, Deutsche Bank (-2.1%) is pressured after the US DoJ reportedly told Deutsche Bank it may have violated a criminal settlement, due to failures in alerting authorities about internal complaints at its asset management unit, according to sources. Elsewhere, AstraZeneca (+1.0%) is supported as its long-acting antibody combination received emergency use authorisation in the US for COVID-19 prevention in some individuals. Finally, Rolls-Royce (-3.7%) slipped despite an overall positive trading update. Top European News Rolls-Royce Sinks as Omicron Clouds Outlook for 2022 Comeback Harbour Energy Plans Dividend But Pushes Back Tolmount Again Toxic U.K. Tory Press Is Flashing Warning Sign for Boris Johnson Credit Suisse Chairman Horta-Osorio Broke Quarantine Rules In FX, the Greenback remains rangy amidst undulating US Treasury yields and a fluid flow of Omicron related headlines that are filling the void until this week’s main macro release arrives tomorrow in the form of CPI data. However, the index is drifting down in almost ever decreasing circles having retreated a bit further from peaks to a marginally deeper sub-96.000 trough on Wednesday, at 95.848, and forming a fractionally firmer base currently to stay within contact of the psychological level within a narrow 96.154-95.941 band, thus far. Ahead, latest jobless claims updates and the last refunding leg comprising Usd 22 bn long bonds after a reasonable 10 year outing, overall. CHF/EUR/CAD - No obvious reaction to Swiss SECO forecasts even though supply bottlenecks and stricter COVID-19 measures are putting a strain on the economy internationally in winter 2021/22, according to the Government affiliated body. Similarly, ECB sources reporting that views on the GC are converging on a limited, temporary increase of the APP at December’s policy meeting, via an envelope or time specified increase with more frequent reviews, hardly impacted the Euro, as Eur/Usd remained towards the bottom of a 1.1346-16 range and Usd/Chf continued to straddle 0.9200, albeit mostly on the weaker side. Meanwhile, the Loonie has also slipped to the back of the major ranks following yesterday’s largely non BoC event against the backdrop of softer crude prices and an indifferent risk tone, with Usd/Cad hovering mainly above 1.2650 between 1.2645-80 parameters. JPY/GBP/NZD/AUD - All sticking to tight confines against their US peer, as the Yen rotates around 113.50 again and Pound pivots 1.3200 in limbo awaiting top tier UK data on Friday that might shed more light on what is gearing up to be another tight BoE rate call next week. Moreover, Usd/Jpy looks pretty well and heavily flanked by option expiry interest either side and in between its 113.81-35 extremes given large amounts running off at the NY cut - see 6.59GMT post on the Headline Feed for full details. Elsewhere, the pendulum has swung down under in favour of the hitherto underperforming Kiwi, as Nzd/Usd popped over 0.6800 and Aud/Nzd stalled ahead of 1.0550 alongside a pull back in Aud/Usd from 0.7185+ at best to test support into 0.7150 in wake of comments by RBA’s Harker and the RBNZ rebalancing its TWI. In short, the former said Australia’s economy can run hot while dodging the runaway inflation that’s plaguing much of the world, signaling monetary policy will stay ultra-loose for some time yet, while the latter culminated in a bigger Cny contribution at 27% from 23.5%. SCANDI/EM - Another day and more appreciation for the Cnh and Cny, at least in early hours, with validation via the PBoC setting a sub-6.3500 midpoint fix for the onshore Yuan vs Buck. However, the offshore then re-weakened past 6.3500 per Dollar after the Chinese central bank opted to raise the FX RRR by 2ppts - effective 15th Dec. Meanwhile, the Nok gives back after midweek gains as Brent slips with WTI to the detriment of the Rub and Mxn as well. Conversely, the Huf has a further 20 bp 1 week repo hike from the NBH to lean on and the Brl got a boost from 150 bp tightening on top of the BCB signalling the same again when COPOM delivers its next SELIC rate call. In commodities, WTI and Brent front month futures have drifted lower from their best levels printed overnight, which saw WTI Jan briefly mount USD 73.00/bbl and Brent Feb eclipse 76.50/bbl. The complex was unfazed by WSJ source reports suggesting the Biden administration is said to be moving to tighten enforcement of sanctions against Iran, whilst US officials say if there is no progress in the nuclear talks. This comes ahead of the resumption of nuclear talks today, albeit the US delegation will only travel to Vienne over the weekend. With the likelihood of an imminent deal somewhat slim, participants will be eyeing any further deterioration in relations alongside additional demand/sanctions. Aside from that, price action will likely be dictated by the overall market tone in the absence of macro catalysts. Elsewhere, reports suggested the Marathon pipeline has been shut due to a crude oil leak estimated to be around 10 barrels from the 20-inch diameter Illinois pipeline, but again the headlines failed to spur the oil complex. Over to metals, spot gold trades sideways and remains under that cluster of DMAs which today sees the 100 at 1,790/oz, 200 and 1,792.50/oz and 50 and 1,795/oz. LME copper meanwhile has been drifting lower since the end of APAC trade, but the contract remains north of USD 9,500/t. US Event Calendar 8:30am: Dec. Initial Jobless Claims, est. 220,000, prior 222,000; Continuing Claims, est. 1.91m, prior 1.96m 9:45am: Dec. Langer Consumer Comfort, prior 51.0 10am: Oct. Wholesale Inventories MoM, est. 2.2%, prior 2.2%; Wholesale Trade Sales MoM, est. 1.0%, prior 1.1% 12pm: 3Q US Household Change in Net Wor, prior $5.85t DB's Jim Reid concludes the overnight wrap On the theme of advertising, here’s a final reminder about our special monthly survey for 2022, which will be closing today at 1pm London time. We ask about rates, equities, and the path of Covid-19 in 2022, amongst other things, and also return to a festive question we asked in 2019, namely your favourite ever Christmas songs. The link is here and it’s your last chance to complete. All help filling in very much appreciated. Following the strongest 2-day equity performance so far this year, yesterday saw the rally begin to peter out amidst growing concern that another round of restrictions over the coming weeks could set back the economic recovery. Ultimately the issue from a health perspective is that even if Omicron does prove to be less severe, which the initial indications so far have pointed to, a rise in transmissibility could offset that, and ultimately mean that more people are in hospital as a much bigger number of people would actually get Covid-19, even if a lower proportion of them are severely affected. We’ll start with the good news, and one new piece of information yesterday was that Pfizer and BioNTech announced the results from an initial study showing that three doses of their vaccine neutralised the Omicron variant of Covid-19. President Biden tweeted that the new data was “encouraging” and said it reinforced the point that boosters offer the highest protection, whilst Pfizer’s chief executive said that the final verdict would be the real-world efficacy data, which they expect to see toward the end of this year. We also had an update from the EU’s ECDC, who said that of the 337 Omicron cases reported in the EU/EEA so far, all of them were either asymptomatic or mild where severity was available, and that no deaths had yet been reported. Obviously, these sample sizes aren’t big enough to come to concrete conclusions yet, but if things continue this way that’s clearly a promising sign. On the other hand, the spread of infections has continued in South Africa, and the country reported 19,482 cases, which is the highest number since Omicron was first reported. That comes as a study from a Japanese scientist advising the health ministry in Japan said that Omicron was 4.2 times more transmissible than delta in its early stage. That hasn’t been peer-reviewed yet but would certainly back up all the other indications that this is a much more transmissible variant than seen before. These growing warning signs have led governments to keep toughening up restrictions, and here in the UK, the government announced they’d be moving to “Plan B” in England, which will see the reintroduction of guidance to work from home from Monday, and an extension of face masks to most public indoor venues. They will also be making Covid-19 passes mandatory for nightclubs and venues with large crowds, though a negative test will also be sufficient. That comes as cases have continued to rise, with the 7-day average now above 48,000 and at its highest level since January. Separately in Denmark, the government said that schools would close early for the Christmas break, amongst other restrictions. Equities struggled against this backdrop, with Europe’s STOXX 600 down -0.59%, although the S&P 500 managed to pare back its earlier losses to eke out a +0.31% gain. Cyclicals underperformed, but we did see volatility continue to subside, with the VIX down to its lowest closing level since Omicron emerged, at 19.9pts. In addition, there was an outperformance from tech stocks, with the NASDAQ (+0.64%) and the FANG+ index (+0.62%) seeing solid gains. The increasing risk-off tone didn’t bother oil prices either, with Brent crude (+0.50%) and WTI (+0.43%) continuing their run of gains this week, including further gains overnight, whilst European natural gas futures (+5.86%) closed above €100 per megawatt-hour for the first time in nearly 2 months. Over in sovereign bond markets, yields moved higher on both sides of the Atlantic for the most part, with those on 10yr Treasuries up +4.8bps to 1.52%, though this morning they’re down by -1.2bps. That’s the first time they’ve closed back above 1.5% since the session just before Thanksgiving, ahead of the news emerging about the Omicron variant. In Europe, there was an even bigger sell-off, with yields on 10yr bunds (+6.3bps), OATs (+6.9bps) and BTPs (+10.4bps) all moving higher, alongside a further widening in peripheral spreads. This more mixed performance has continued overnight in Asia, with a number of indices trading higher including the CSI (+1.76%), the Shanghai Composite (+1.03%), Hang Seng (+0.89%), and the KOSPI (+0.37%). However, both the Nikkei (-0.27%) and Australia’s ASX 200 (-0.28%) lost ground. On the data front, China’s inflation numbers this morning showed that CPI rose to +2.3% year-on-year in November, slightly lower than forecast +2.5%, albeit still the highest since last August. The PPI readings remained much stronger, but did fall back from a 26-year high last month to +12.9% year-on-year (vs. +12.1% forecast). Looking ahead, futures are indicating a mixed start in the US & Europe with S&P 500 (-0.13%) and DAX (+0.12%) seeing modest moves in either direction. Overnight we also heard from President Biden on Russia, who said that he hoped to announce high-level talks by tomorrow where they would discuss Russian concerns about NATO, and that this would include at least four major NATO allies. President Biden said the meeting was an explicit attempt to “bring down the temperature along the eastern front” that’s ramped up over recent days and weeks. Nevertheless, President Biden reinforced that the US was ready to implement severe economic sanctions should Russia invade Ukraine, telling reporters that he said to Putin there would be “economic consequences like none he’s ever seen”. Back to yesterday, and the Bank of Canada kept policy on hold at their meeting, as was expected. The bank reinforced their expectation for the 2 percent inflation target to be sustainably achieved in the “middle quarters of 2022”. Like other DM central banks, they are focused on persistently elevated inflation, which they tied to supply constraints that will take some time to alleviate. We had some rate hikes elsewhere, however, yesterday with Brazil’s central bank taking rates up by 150bps to 9.25%, whilst Poland’s hiked rates by +50bps to 1.75%. The main data of note yesterday were the US job openings for October, which rose to 11.033m (vs. 10.469m expected) after 2 successive monthly declines. Notably the quits rate, which is a good indicator of labour market tightness, saw its first monthly decline since May as it came down to 2.8%, from an all-time record of 3.0%. To the day ahead now, and it’s a quiet one on the calendar, with data releases including the US weekly initial jobless claims, as well as the German trade balance for October. Tyler Durden Thu, 12/09/2021 - 07:55.....»»

Category: dealsSource: nytDec 9th, 2021

Putin"s power doesn"t exist in a vacuum: Here are 14 of his biggest enablers, from billionaire oligarchs to world leaders

Putin relies on a vast network of elites he can co-opt or dupe into supporting his corrupt and authoritarian regime waging a brutal war in Ukraine. Nikolai Patrushev; Roman Abramovich; Vladimir Putin; Xi Jinping; Elon MuskLintao Zhang, Pool/Associated Press; Sang Tan/Associated Press; Kay Nietfeld/picture alliance/Getty Images; Alex Brandon/Associated Press; Evan Agostini/Invision/Associated Press Vladimir Putin maintains a cadre of supporters despite his growing global isolation. Russian oligarchs, world leaders, and American pundits have all enabled Putin's war in Ukraine. Here are some of the key figures that have helped empower Putin. Russian President Vladimir Putin launched an unprovoked attack on Ukraine in February, but the invasion was the culmination of two decades in power that have been enabled by world leaders, billionaire oligarchs, and other powerful figures.Putin, a Soviet KGB officer-turned-politician, has effectively stayed in power for over two decades. He served his first two terms as Russia's president from 2000-2008, and was elected president again in 2012. He also served as the Russian prime minister from 1999-2000 and 2008-2012.In his latest term as president, Putin drastically escalated conflict with Ukraine, including with the 2014 annexation of Crimea by force, a move deemed by most of the world to be illegal and illegitimate. His time in power has also been marred by reports of murdered dissidents, a steady rotting of democracy in Russia, and interference in foreign elections, including in the US.Still, influential figures have continued to support Putin, either through direct support, like partnerships or reliance on Russian energy products, or indirectly, by uncritically echoing his talking points or allowing him to proceed relatively unchecked. Here are some of the key figures who have enabled Putin's power.Dmitry MedvedevRussian President Vladimir Putin and then-Prime Minister Dmitry Medvedev attend a wreath-laying ceremony at the Tomb of the Unknown Soldier in Moscow, Russia, Thursday, Feb. 23, 2017.Ivan Sekretarev/Associated PressFormer Russian President Dmitry Medvedev has been in lockstep with Putin — his presidential predecessor and successor — over the country's war efforts since the February invasion.Medvedev, a close Putin ally who's leveled genocidal threats against Ukraine, was elected president in 2008, following the latter's first two terms. Russia's constitution at the time limited Putin to two consecutive terms, but he managed to maintain power in Medvedev's administration, serving as prime minister from 2008 to 2012.When Putin reclaimed the presidency in 2012 in an election marred by allegations of fraud, Medvedev took his place as prime minister, a position he held until 2020 when he stepped down to ease Putin's efforts to overhaul Russia's constitution.Putin also appointed him deputy chair of the Security Council of Russia, a position he still holds today.Medvedev has provided increasingly aggressive support for Putin's Ukraine invasion, issuing several bellicose statements about the conflict, as well as Russia's nuclear arsenal. In June, Medvedev threatened to strike "targets in the West" after the US agreed to provide Ukraine with advanced rocket systems and later expressed a desire to "disappear" all of Moscow's enemies.In September, he reiterated Putin's thinly veiled nuclear threats, emphasizing that Putin's warning was "definitely not a bluff, and earlier this month, framed Russia's ongoing, unprovoked war as a sacred conflict with "Satan."Sergei ShoiguRussian President Vladimir Putin (L) accompanied by Sergei Shoigu gestures as he fishes in the remote Tuva region in southern Siberia, on August 3, 2017.Alexey Nikolsky/SPutnik/AFP via Getty ImagesA loyal and longtime friend to Putin, Defense Minister Sergei Shoigu was once considered a possible successor to the Russian presidency. But as the official responsible for Russia's war in Ukraine, Shoigu has become a lightning rod for criticism amid the oft-failing war effort. Shoigu has marked a steady ascent through Russia's elite, utilizing his close relationships with powerful people, including Russia's first president, Boris Yeltsin, and then Putin himself. Shoigu and Putin's friendship appeared to go beyond politics: The two often vacationed together in the Siberian woods where they would go fishing and hikingDespite having never actually served in the military, Shoigu has executed Putin's defense aspirations for years, spearheading the invasion and annexation of Crimea in 2014 and contributing to Russia's intervention in Syria the following year. The West sanctioned Shoigu just one day after Russia's unprovoked invasion of Ukraine. But months of mounting Russian military failures have sparked rumors of a rift between Putin and Shoigu. Even so, Shoigu has remained silent, despite his apparent role as Putin's scapegoat. "Shoigu is willing to basically be Putin's bulletproof vest," Mark Galeotti, who heads the Russia-focused consultancy Mayak Intelligence, told Insider's Sophia Ankel.Nikolai PatrushevRussian Security Council Secretary Nikolai Patrushev and Russia's President Vladimir Putin during a meeting with the Secretary-General of the Japanese National Security Council.Mikhail MetzelbackslashTASS via Getty ImagesNikolai Patrushev, who serves as secretary of Russia's Security Council, is another longtime Putin ally and one of the exceedingly few people in power known to have the president's trust. Patrushev and Putin are old KGB comrades whose relationship dates back to 1998, and is regarded as one of the most powerful siloviki, as the close aides who advocate force are known. Galeotti told The Washington Post in July that Patrushev has long been the "devil on Putin's shoulder whispering poison into his ear." Since the war began, Patrushev has undertaken several foreign trips on behalf of Russia's war effort, speaking for Putin on a variety of topics as the 70-year-old president grew increasingly reclusive. "His ideas form the foundations of decisions taken by Putin," Tatiana Stanovaya, the founder of the Russian political consultancy R.Politik, told The Post of Patrushev. "He is one of the few figures Putin listens to." Since the invasion, Patrushev has emerged as a dependable frontman and frequent public promoter of Russia's war. His prominence on the global stage has prompted questions about his personal aims and whether or not he may be seeking Putin's power for himself.The Kremlin has brushed off suggestions that the security secretary has amassed new powers, but some intelligence experts see Patrushev as Putin's likely replacement should the president fall ill. The Russian OligarchsIn this Nov. 10, 2017, file photo, Russia's President Vladimir Putin, left, and Oleg Deripaska, right, attend the APEC Business Advisory Council dialogue in Danang, Vietnam.Mikhail Klimentyev, Sputnik, Kremlin Pool Photo via AP, FileDozens of Russian oligarchs were among the first to be hit with Western sanctions in the immediate aftermath of the invasion over their close ties to President Putin.Many of these ultra-rich, Russian businessmen helped fuel Putin's meteoric rise to power and helped keep him there.Several of the "original" oligarchs amassed their power during the "perestroika" reforms to Russia's economy and political system in the late 1980s. After the fall of the Soviet Union, these men bought up industrial companies being sold off by the state, padding their pockets and increasing their influence.When Putin took the presidency in 2000, he vowed to crack down on corruption in the government, exiling certain oligarchs. But men who remained friendly to Putin — and who vowed to stay out of politics — were able to grow even richer, leaving Putin to his political machinations without much of a check. A new wave of Russian security elites emerged in the 1990s. These quasi-military elites would come to be known as silovarchs — a combination of the word oligarch and siloviki, a reference to the Russian military. Hugo Crosthwaite, a lead analyst at security intelligence firm Dragonfly, told Insider's Sam Tabahriti that the siloviki are much more a part of Putin's close circle and partial to his regime."Siloviki are ultimately closer to the president than oligarchs are," he said. But some of these siloviki and Oligarchs wield more "Putin power" than others. Roman AbramovichRoman Abramovich no longer owns Chelsea FC.Clive Mason/Getty ImagesRoman Abramovich has emerged as one of Russia's most recognizable oligarchs thanks to his previous ownership of Chelsea Football Club, a top-flight London soccer team which he oversaw for nearly two decades.In recent months, Abramovich has found himself in the spotlight after he was sanctioned by the European Union and the UK following Russia's invasion of Ukraine. As Western officials were seizing his many assets, including his massive yacht, Abramovich was acting as an unofficial envoy in peace talks between Russia and Ukraine in the spring. Though not an official member of the negotiations team, Abramovich's access to such conversations offer insight into what is believed to be his close relationship with Putin. European officials say Abramovich has "privileged access" to the Russian president and has maintained close ties with Putin for decades, Insider's Grace Dean and James Dean reported in April.Abramovich himself has repeatedly denied any financial links to Putin or a close relationship with the president. But Western officials say the oligarch and his businesses have received "preferential treatment and concessions" from Putin, including tax breaks and grants.The Times of London reported that Abramovich met with Putin in March and handed the president a handwritten note from Ukrainian President Volodymyr Zelenskyy seeking peace, which Putin promptly dismissed.Gennady TimchenkoRussian tycoon Gennady Timchenko, left, attends a meeting of Russian President Vladimir Putin, right, with French businessmen in the Kremlin in Moscow, Russia, Wednesday, May 25, 2016.Sergei Karpukhin/Pool Photo via APTimchenko, a billionaire trader and businessman who faced US sanctions ahead of Russia's invasion, is another notable oligarch with close ties to Putin. The sixth richest man in Russia, Timchenko was the wealthiest oligarch to face US sanctions earlier this year. The two men have been friends since the early 1990s, according to The Guardian, when Putin, a rising political star at the time, gifted Timchenko an oil export license to aid the St. Petersburg oil trader. Timchenko emerged as a co-founder of Gunvor Group, a Swiss-based trading house that exports billions of dollars of Russian oil. Both the company and Putin have rejected allegations that the Russian president was a "sleeper" beneficiary of Gunvor's activities, profiting off oil exports, The Guardian reported. But the US in 2014 sanctioned Timchenko along with other members of the "Russian leadership's inner circle," alleging that Timchenko's energy sector activities had direct links to Putin. Timchenko said he had sold his stake in Gunvor the day before he was sanctioned by the US in 2014 over the annexation of Crimea. Timchenko remains the founder and owner of the private investment firm Volga Group which is a major shareholder in Russia's massive natural gas producer Novatek.Chinese leader Xi JinpingRussian President Vladimir Putin (L) and Chinese leader Xi Jinping pose for a photograph during their meeting in Beijing, on February 4, 2022.Photo by ALEXEI DRUZHININ/Sputnik/AFP via Getty ImagesChina and Russia are not formal allies, but ties between the two countries, particularly related to trade and defense, have expanded over the past decade. The two countries consider each other strategic partners, and said in February their relationship has "no limits."In early February, as concern mounted over the possibility of Russia invading Ukraine, Chinese officials asked Russian officials to wait until after the end of the Winter Olympics in Beijing, according to Western intelligence officials.The intelligence report indicated that Chinese officials had some level of prior knowledge about the planned invasion, although it wasn't clear if Chinese leader Xi Jinping and Putin had communicated directly. But the request to delay may have emboldened Putin to actually go through with it, Simon Miles, an assistant professor at Duke University's Sanford School of Public Policy and a historian of the Soviet Union and US-Soviet relations, told Insider.Following the invasion, as Western countries issued crippling sanctions against Russia, China continued to purchase Russian oil and gas, serving as a lifeline for the Kremlin to continue with the war efforts. China, which is the largest purchaser of Russian oil, has even quietly increased its purchases since the war began.Xi has also refrained from condemning the invasion, though in September Putin acknowledged the Chinese leader had concerns about the war. But when the United Nations Security Council voted to condemn Russia's annexation of Ukrainian territories as illegal, China abstained.Indian Prime Minister Narendra ModiIndian Prime Minister Narendra Modi meeting Russian President Vladimir Putin in May, 2018.Getty ImagesLike China, India has also maintained its relationship with Russia throughout the war, continuing to buy energy products. India also drastically increased its purchases of Russian oil in the spring at highly discounted rates, essentially helping to fund the war efforts in Ukraine.India has refrained from condemning Russia's invasion, and the two countries have referred to their relationship as a "special and privileged strategic partnership."Indian Prime Minister Narendra Modi did criticize the war in September during a face-to-face meeting with Putin. "Today's era is not an era of war, and I have spoken to you on the phone about this," Modi said. Putin acknowledged Modi's concerns and said he too wanted the war to end as soon as possible.However, fear of losing the support of China and India may have actually encouraged Putin to escalate the war, in hopes of ending it sooner. And when the United Nations Security Council voted to condemn Russia's annexation of Ukrainian territories, India also abstained.Belarusian President Alexander LukashenkoRussian President Vladimir Putin (R) greets Belarusian President Alexander Lukashenko (L) during the welcoming ceremony in Saint Petersburg, Russia, December,20,2019.Photo by Mikhail Svetlov/Getty ImagesBelarus, along with its authoritarian president, Alexander Lukashenko, has been Putin's most important ally on the world stage. The country, located north of Ukraine, is Russia's only ally in Europe.Belarus has deep ties to Russia and the two remained close even after the dissolution of the Soviet Union in 1991. The countries are connected by a number of political, economic, and defense deals, including the Union State, the Eurasian Economic Union, and the Collective Security Treaty Organization, a military alliance of post-Soviet states that Putin has propped up as NATO's counterpart.Lukashenko, who has been referred to as Europe's last dictator, and Putin have a close relationship, with Belarus supporting Russia in the war effort. Belarus served as a staging ground for Russian troops prior to the invasion and has since been used by Russia to launch ballistic missiles into Ukraine. Hospitals in Belarus near the Ukrainian border have also taken in wounded Russian soldiers.Lukashenko, who's known for outlandish claims including that vodka protects against COVID-19, at one point even seemed to spill Russia's war plans for Ukraine.Gerhard SchröderGerman Chancellor Gerhard Schroeder, right, Russian President Vladimir Putin, center, and French President Jacques Chirac at a joint press conference in Svetlogorsk, Kaliningrad, July 3, 2005.JOHANNES EISELE/AFP via Getty ImagesFormer German Chancellor Gerhard Schröder has forged deep ties with Russia and Putin.While in office, Schröder, who served as chancellor from 1998 to 2005, supported building the first undersea gas pipeline that would directly deliver Russian natural gas to Germany. Three weeks after leaving office, Schröder became head of the board of shareholders for Nord Stream, the company behind the pipeline, despite concerns about a conflict of interest or wrongdoing.He has since made nearly $1 million a year from energy companies controlled by the Kremlin, The New York Times reported. Schröder has been one of Germany's most prominent proponents of importing Russian energy to fuel the country's industrial economy.As Germany was forced to confront it's reliance on Russia's oil and gas in the wake of the Ukraine invasion, some placed blame on Schröder, who critics say has promoted Russian energy at the expense of Germany's long-term interests.Schröder was also criticized in August after having a private meeting with Putin during a trip to Moscow. He told German media he had nothing to apologize for and said the West should properly acknowledge Russia's "real fears of being hemmed in" by antagonistic countries, The Guardian reported. He also recommended Ukraine remain neutral and that both sides needed to compromise. Schröder is now being investigated by Germany's Social Democrats, the party he has been a part of since 1963, over his ties to Russia and Putin.Olga SkabeyevaRussia-1 host Olga Skabeyeva has played a key role in the Kremlin's propaganda strategy amid the war in Ukraine.YouTube/UATV EnglishOlga Skabeyeva has emerged as perhaps the most passionate and prominent Russian TV propagandist among a sea of TV propagandists who have been pushing the Kremlin's talking points since the war began.Nicknamed the "propagandist-in-chief" and the "iron doll of Putin TV," Skabeyeva has been a dependable, frequent face in Putin's war effort, delivering intense, often-fabricated rants on the government-owned TV channel Russia-1 about Russia's military struggles, Western leaders, and the Ukrainian army.Skabeyeva has built her career over the last 15 years of the Putin regime serving as a mouthpiece for the administration, experts told Insider's Michelle Mark earlier this year. She hosts the political talk show "60 Minutes" on Russia-1 alongside her husband Yevgeny Popov, offering polarizing and divisive — though almost certainly Putin-approved — analysis and propaganda. In April she sparked international outcry after she said on television that Russia was in the middle of World War III, marking a notable shift in the Kremlin's acceptable rhetoric regarding Ukraine.Sarah Oates, a professor and senior scholar at the University of Maryland's Philip Merrill College of Journalism previously told Insider that Skabeyeva's inflammatory words were no accident, as Russian TV presenters often receive their talking points directly from the government.Vasily Gatov, a Russian media researcher and visiting fellow at the USC Annenberg Center on Communication Leadership and Policy, compared her to Fox News host Tucker Carlson, and called her a "monster" in an April interview.Elon MuskElon Musk.Michael Gonzalez/Getty ImagesTesla and SpaceX billionaire Elon Musk in recent months has pushed Kremlin talking points to his 118 million followers on Twitter, the site he now owns.On October 3, Musk tweeted a poll suggesting a Ukraine-Russia peace plan that included holding elections in four Ukrainian territories Russia claimed to have annexed in a move that was widely decried as illegitimate and illegal. The plan also suggested Crimea, which Russia has illegally occupied since 2014, be acknowledged as part of Russia, that Ukraine remain neutral, and a water supply to Crimea be guaranteed.Musk's peace plan was so favorable to Russia and specific to water rights in southern Ukraine that one leading Russia analyst, Fiona Hill, said it had the Kremlin's fingerprints on it, though Musk has denied speaking to Putin.Musk's tweet sparked harsh criticism from Ukrainian officials, including President Volodymyr Zelensky, who suggested the billionaire was supporting Putin. But Musk has continued to chime in about the war, including in a tweet emphasizing the importance of Crimea to Russian national security, another point pushed by the Kremlin.Donald TrumpUS President Donald Trump (L) and Russia's President Vladimir Putin shake hands before attending a joint press conference after a meeting at the Presidential Palace in Helsinki, on July 16, 2018.YURI KADOBNOV/AFP via Getty ImagesFormer President Donald Trump has often bragged about his close relationship with Putin and frequently downplayed the national security threat posted by Russia, ignoring warnings from US intelligence agencies.In 2014, after Putin invaded Crimea, Trump praised the Russian president in a speech at the Conservative Political Action Conference and said the rest of Ukraine would fall "fairly quickly." He later claimed the people of Crimea would rather be with Russia.When US intelligence agencies concluded Russia had interfered in the 2016 election through an online disinformation and propaganda campaign intended to help Trump and hurt Hillary Clinton, Trump doubted them, accepting Putin's denials. He later acknowledged the meddling, but has frequently dismissed it or contradicted US intel.In 2019, Trump's first impeachment was over an accusation that he withheld aid to Ukraine, which was still in ongoing conflict with Russia, in order to find dirt on Biden, his political opponent.And since the war began, Trump has continued to push Kremlin talking points and praise Putin. When Russia invaded in February, Trump lauded Putin's justification for invading as "genius" and "savvy." In October, Trump appeared to take blame for the invasion away from Putin and place it on US leadership — exactly where the Russian president says it belongs. "They actually taunted him, if you really look at it, our country and our so-called leadership taunted Putin," Trump told right-wing network Real America's Voice. "I would listen, I would say, you know, they're almost forcing him to go in with what they're saying. The rhetoric was so dumb."Trump also pushed a Ukraine-Russia peace deal after Putin threatened the use of nuclear weapons, playing into Putin's plans in a way that some experts described as "dangerous."Tucker CarlsonThe Fox News host Tucker Carlson on December 7, 2021.Fox NewsFox News host Tucker Carlson has frequently repeated Putin's talking points by sharing them on "Tucker Carlson Tonight," one of cable news' most-watched shows. Just before Russia invaded Ukraine, Carlson devoted a 15-minute segment to talking about how the US should not care about the looming conflict between the two countries.He claimed concern over the conflict was not about protecting Ukraine but because Democrats "want you to hate Putin" and that NATO doesn't want Russia to exist. He also said NATO's "one and only goal is to hold back the development of Russia," echoing claims made by Putin.He's also repeatedly attacked the country of Ukraine, whose citizens have mounted a society-wide response and begun to regain territory seized by the Russian invaders who have left mass graves in their wake.Following the invasion, Carlson acknowledged Putin and Russia were to blame but continued to spread their messages to his massive audience. In March a leaked memo showed the Kremlin even instructing Russian state media to play clips from Carlson's show "as much as possible," Mother Jones reported.At various points Carlson has defended Putin, downplayed the threat posed by Russia, repeated unsubstantiated and unlikely claims pushed by the Kremlin that the US was behind the Nord Stream pipelines sabotage, and falsely said the US is only providing aid to Ukraine as "payback for the 2016 election."Read the original article on Business Insider.....»»

Category: worldSource: nytNov 24th, 2022

US and Indian troops are teaming up for tough training in the Himalayas near a tense border with China

The US Army's newest division is on the ground in India as both countries try to manage rising tensions with China US and Indian soldiers during a field-training exercise for Yudh Abhyas in Alaska in October 2021.US Air Force/Alejandro Peña US soldiers are training with Indian troops in the Himalayas this month for exercise Yudh Abhyas. This year's version of the exercise is being held near India's disputed border with China. It also takes place as the US and India strengthen their ties and manage rising tensions with China. US soldiers arrived in India this month for Yudh Abhyas, venturing to the Himalayas for the 18th iteration of the annual exercise to train in cold, mountainous conditions with Indian troops.The exercise, held around Auli in the northern state of Uttarakhand, comes as the US and India both manage rising tensions with China, and the training is seen as a message to each other and to China about the strength of their relations.Yudh Abhyas has alternated between the US and India since the early 2000s. In 2021, it took place in Alaska for only the second time. The US participants this year are members of the Alaska-based 11th Airborne Division, which was reactivated this summer to focus on operations in extreme cold and mountainous conditions — a skill set getting renewed attention from the US, its allies, and their rivals."The Army typically doesn't go to the Himalayas, and now we have an Arctic force and we're training in the Arctic. We feel confident that we could do things like that now that the Army couldn't do before," Maj. Gen. Brian Eifler, 11th Airborne Division commander, said in an interview at the Association of the US Army conference in Washington DC in October.—I Corps (@I_Corps) November 19, 2022"The Indian Army asked us last year to train at 10,000 feet up in the Himalayas," Gen. Charles Flynn, head of the US Army's Pacific forces, said at the conference. "Now we have a force capable of being able to say, 'Yes, we'll be there.'"According to an Indian press release, the two-week exercise will focus on humanitarian assistance and disaster relief and include "all operations related to peace keeping & peace enforcement." In addition to a command-post exercise and expert discussions, it will include a field-training exercise involving "establishment and functioning of surveillance grids," mountain-warfare training, and casualty evacuation and combat medical aid "in adverse terrain and climatic conditions," as well as drone and counter-drone operations, the release says.The exercise was originally scheduled for October and US soldiers wanted to parachute in, but the jump didn't work out and the exercise was delayed until this month, kicking off on November 19.US soldiers play cards as they acclimatize to the elevation in Uttarakhand in November.US Army 11th Airborne Division"But they do want us to be up there and have us in Himalayas, and we're like, 'Yeah, absolutely,'" Eifler said, adding as part of US Indo-Pacific Command, his division's task is to focus on working with countries in the region "that have those extreme cold [conditions] and mountain terrain."Yudh Abyhas has previously taken place elsewhere in northern India, including in Uttarakhand, but this year it is being held only about 60 miles from the Line of Actual Control, a 2,100-mile boundary separating China and India that was established as part of a truce following their 1962 border war.Parts of the LAC remain disputed, and after decades of relative calm, that dispute flared in June 2020, when at least 20 Indian soldiers and four Chinese troops were killed in a brawl in the Ladakh region northwest of where Yudh Abyhas is being held.Since then, New Delhi and Beijing have held a series of talks leading to the disengagement of troops and equipment that both sides moved into the area before and after the June 2020 clash, but they continue to bolster their military presence and infrastructure in the region.An Indian army convoy on a highway leading to Ladakh, in Kashmir's Ganderbal district in June 2020.REUTERS/Danish Ismail"The US and India probably anticipated that conducting the exercise near the Chinese border would draw Beijing's ire. It sends a useful hint — to both China and equally the Indian Army — that the US appreciates India's security concerns on the border," Arzan Tarapore, South Asia research scholar at Stanford University's Shorenstein Asia-Pacific Research Center, told Insider."But as far as political signaling goes, the US and India have still left some room to escalate — while this iteration is near the border, it is not near disputed stretches of the LAC or near recent crisis areas," Tarapore added.The exercise also reflects the recent advancement of US-Indian relations, particularly on defense issues. "The deepening of strategic and defense ties on a bilateral front has been significant," India's ambassador to the US, Taranjit Singh Sandhu, said this month.Between 2002 and 2020, the two militaries signed four foundational agreements allowing for expanded cooperation on logistics and communications and sharing of classified information.Indian soldiers during Yudh Abhyas in Alaska in October 2021.US Air Force/Alejandro PeñaIn addition to increased US arms sales and larger exercises, the militaries have achieved several milestones in recent years, including the first visit by a US bomber aircraft and the first repair of a US naval ship in an Indian shipyard.The US Army has sent India's army some 30,000 sets of "extreme cold-weather gear" for individuals and small units "over the last couple of years," Flynn said in October, "because operating at that altitude and in those conditions is radically different" from other environments.Tarapore, whose researches Indian defense policy, said that beyond political signals, US-Indian military exercises should aim to build "understanding, trust, and interoperability.""We should be watching to see if each iteration of Yudh Abayas gets more realistic, more complicated, tests more military functions, and scenarios more likely to be used in the real world," Tarapore told Insider, adding that this year's focus on disaster response and "some fairly complex staff and field components" was "a good sign.""The more complex and realistic an exercise is, the better postured they will be to work together in real contingencies — and to deter potential adversaries," Tarapore said. "Ultimately, that's the goal of the military relationship."Read the original article on Business Insider.....»»

Category: personnelSource: nytNov 22nd, 2022

US-China Backchannel Forum To Halt "Downward Trajectory" In Ties Revealed

US-China Backchannel Forum To Halt "Downward Trajectory" In Ties Revealed A significant and unexpected new Wall Street Journal report has revealed that a few days prior to the Xi-Biden meeting last week at the G20 summit in Bali, the two countries embarked upon a private back-channel dialogue of top policy advisers and business executives in New York, which was approved by both governments.  The meeting was described by Retired Adm. Mike Mullen as seeking to prevent the continued "downward trajectory" in US-China relations "at a dangerous time." Beijing is relying on an American businessman described as an "old friend of China" with a long successful track record of positive dealings in China: insurance executive Maurice "Hank" Greenberg. "As the two great powers of the time, we need to try to turn this around," Mullen commented of the closed-door talks earlier this month. Xinhua: Chinese Premier Li Keqiang shakes hands with Maurice R. "Hank" Greenberg during a meeting with overseas delegates attending the China Development Forum in Beijing in March 2016. The 97-year old Greenberg, chief executive of insurance and investment firm C.V. Starr & Co. and former CEO of insurance giant American International Group Inc., is seen from Beijing as a trusted American intermediary symbolizing a time of better, more pragmatic-oriented business and trade policies between the two economic superpowers. The WSJ underscores that a Chinese delegation of this caliber hasn't come to the US for dialogue since before the coronavirus pandemic. Greenberg has long been vocal as being in favor of deepened US engagement with China, having penned a July op-ed in the Journal arguing toward that end. In the piece, he called for renewed efforts to "re-establish a constructive bilateral dialogue." That's when, per sources cited in the report, "Qin Gang, China’s ambassador to Washington and a career diplomat deeply trusted by Mr. Xi, brought the piece to the Chinese leadership’s attention," and the delegation was readied to go to New York. "Mr. Xi then greenlighted the Foreign Ministry to form a group that mirrored the one set up by Mr. Greenberg, which is made up of former senior officials and business leaders." According to details of the meeting which was viewed by both sides as an sidetrack initiative corresponding to the first face-to-face meeting with Xi of the Biden presidency: The Chinese and U.S. groups held discussions at C.V. Starr’s headquarters on Park Avenue on Nov. 10 and the next day, with 13 members from each side participating. Among the Americans, according to the people, are Mr. Greenberg, Paul Fribourg, CEO of agribusiness ContiGroup Cos., former U.S. Sen. Joe Lieberman and two former U.S. ambassadors to Beijing: Max Baucus, a former Democratic senator from Montana, and Terry Branstad, the former Republican governor of Iowa.  The Chinese delegation led by Wang Chao, a former vice foreign minister, invited the forum - which participants call the "Morefar Project" - to continue meeting together, with the next round of talks offered to be hosted in China next year.  AFP via Getty Images Areas of potential business cooperation were explored, while candid talks were had on the Taiwan crisis, with the Chinese delates reiterating that eventual reunification with the mainland remains a top priority for Beijing. The White House was reportedly briefed on the contents of the candid exchange, and updated on plans for future meetings. Tyler Durden Mon, 11/21/2022 - 11:25.....»»

Category: personnelSource: nytNov 21st, 2022

Futures Surge Over 4,000 As Yields And Dollar Slide On Positive US-China Sentiment, Solid Earnings

Futures Surge Over 4,000 As Yields And Dollar Slide On Positive US-China Sentiment, Solid Earnings US futures jumped from Monday's shallow dip, which in turn followed the S&P 500’s best week since June, boosted by a triple-whammy of positive news out of China, including the Xi-Biden meeting which pointed to easing tensions between Washington and Beijing, China's Covid pivot and property measures, and solid earnings from Walmart which boosted guidance and announced a new $20BN buyback. Contracts on the Nasdaq 100 extended earlier gains and were up 1.1% as of 7:1 a.m. ET while S&P 500 futures surged above 4000, rising almost 1.0%. Treasury yields and the dollar slipped while bitcoin resumed its modest rise. At 8:30am we get another inflation read in the form of the latest PPI Print, which is also expected to ease modestly. In premarket trading, chipmakers AMD, Nvidia and Intel Corp. rose between 1.3%-2% while Tesla Inc., Inc., Apple Inc., and Alphabet Inc. all added about 1% each. Coinbase and Marathon Digital led cryptocurrency-linked stocks higher as Bitcoin extended gains with investors waiting for more details about an industry-recovery fund promised by Binance Holdings Chief Executive Officer Changpeng ‘CZ’ Zhao. Chinese stocks listed in the US were set to rise for a fourth day, after a triple-whammy of positive news including Xi-Biden meeting, Covid pivot and property measures. Alibaba (BABA US) soared 11% in premarket trading. Lithium-exposed stocks edged lower following a selloff in Asian peers amid worries over potentially weaker demand from Chinese firms. Here are the other notable premarket movers: Getty Images (GETY US) falls 12% in US premarket trading, after the media company reported third quarter earnings that missed the average analyst estimate. Ginkgo Bioworks (DNA US) shares slip as much as 2.6% in US premarket trading as the cell-programming platform provider’s revenue beat was eclipsed by worries over how a tougher economic environment could impact prospects. Harley-Davidson (HOG US) is initiated with an underperform rating, its only sell-equivalent recommendation, and a $39 PT at Jefferies, which says the strength in the motorcycle maker’s shares is overdone. Lithium-exposed stocks edged lower in US premarket trading following a selloff in Asian peers amid worries over potentially weaker demand from Chinese firms. Nubank (NU US) shares jump 15% in premarket trading after the Brazilian digital bank’s third-quarter results. Morgan Stanley said the lender delivered a strong print, showing beats for client net adds, revenue, gross profit and adjusted net income. Shoals Technologies (SHLS US) shares soar as much as 22% in US premarket trading, on track for its biggest rise in five months, as analysts nudged their price targets higher after the solar energy products supplier narrowed its revenue forecast for the full year. Brokers said that the firm’s rising backlog and awarded orders bode well for the future and increase visibility for next year Markets have turned risk-on in recent days, trading off a softer-than-expected US data print that many reckon will allow the Fed to raise rates in 50 basis-point increment, after consecutive 75 basis-point hikes. That view was encouraged by dovish comments from Vice Chair Lael Brainard who said on Monday it would probably be “appropriate soon to move to a slower pace of increases.” “The issue the market has to wrestle with is how long is the Fed going to keep rates at that level and I think there is some positive sentiment out there that the Fed is going to pivot sometime in 2023,” Peter Kraus, Chairman and CEO at Aperture Investors, told Bloomberg Television. Sentiment also got a solid boost overnight following signs of easing tensions between the US and China (even if Xi probably does not see it that way, and instead he delivered a speech at the G20 summit in Bali, Indonesia, in which he urged against politicizing food and energy issues, and called for scrapping unilateral sanctions and restrictions on technology cooperation in this area, something which won't happen). In any case, after the meeting between Joe Biden and Xi Jinping on Monday, Washington said the two sides would resume cooperation on issues including climate change and food security, and that Biden and Xi jointly chastised the Kremlin for loose talk of nuclear war over Ukraine. Investors also remain focused on central banks: Swissquote analyst Ipek Ozkardeskaya said equity markets are in “a vicious circle” as “investors want to feel better, but the Fed can’t let them feel much better as a market rally would play against its inflation fight.” Last week’s rebound was a “flash in the pan, but the downside risks have certainly eased,” she said. Meanwhile, markets are watching growing risks to earnings following corporate America’s weakest reporting season since the first quarter of 2020, and the outlook for stock markets in 2023. “The equity market will continue to rally until the end of the year with some volatility, but once you get to 2023 there will be some realization that interest rates will actually start to slow economic activity,” said Peter Kraus, chief executive officer at Aperture Investors. “In 2023, you will have more volatility and you’ll have a decline in equity markets,” Kraus said on Bloomberg TV. The latest Bank of America’s global fund manager survey for November showed sentiment remains “uber-bearish,” with investors still crowded into the dollar and cash, while tech stocks remain unpopular. “My biggest concern is the market gets ahead of itself and we get into a situation where the Fed feels it needs to rein in, and tighten more than it otherwise would have, as markets became too frothy,” Kristina Hooper, chief global strategist at Invesco said on Bloomberg Radio. In Europe the Stoxx 600 index swung between losses and gains, though the market is close to a three-month high and Germany’s Dax index is on the cusp of a technical bull-market, having narrowly missed that milestone on Monday. The Euro Stoxx 50 rises 0.1%. CAC 40 outperforms peers, adding 0.3%, FTSE MIB lags, dropping 0.3%. Utilities, food & beverages outperformed while retail and telecoms underperform as more sectors turn negative on the day. Here are some of the biggest European movers today: Teleperformance shares rise as much as 9.4%, the third session of gains in a recovery from a recent drop suffered by the customer relationship management services firm following a report related to its content moderation business in Colombia. UK utilities and energy firms advance after reports that UK’s Chancellor Jeremy Hunt is considering a new 40% windfall tax on the “excess returns” of electricity generators. Drax rises 4.0%, Centrica +5.0% BAE Systems shares gain as much as 4.1% after a trading update from the defense contractor that analysts said shows trading momentum remains solid. Ambu falls as much as 16%, the most since May, after the Danish medical technology firm’s latest earnings and outlook disappointed, according to analysts. Ocado shares plunge as much as 13% in Tuesday morning trading, paring the 30% rally in the previous two sessions after last week’s softer-than-expected US inflation data provided a boost to growth stocks. Nexi shares fall as much as 11%, the most intraday since March 2020, after holder Intesa Sanpaolo sold its stake in the payment services firm. Vodafone shares slump as much as 9.2% and are on track for their lowest close in 25 years after the telecom operator trimmed its outlook for Ebitda after- leases to the lower end of its previous range, citing higher energy costs. Cellnex slides as much as 6.5% after a share placement of 25.6m shares at EU33.50/share. Earlier in the session, Asian stocks rallied as China led the region higher, buoyed by more property easing measures and signs of reduced US-China tensions. The MSCI Asia Pacific Index rose as much as 1.9% to a two-month high, lifted by technology shares. Chinese stocks in the sector helped pace the benchmark’s gain as investors bet the worst may be over for some of the major players. Meanwhile, Taiwan’s TSMC surged after a filing showed Warren Buffett recently bought a stake of about $5 billion in the chipmaker. China and Hong Kong benchmarks extended their recent rebounds, with the Hang Seng Index entering a bull market, gaining as much as 4.2% as regulators moved to further ease a liquidity crunch faced by real estate developers. Sentiment was also lifted by Monday’s meeting between Joe Biden and Xi Jinping that generated hopes of warmer ties between the two superpowers. That encounter offset the weak retail sales data that underscored the impact of Covid lockdowns on China’s economy. There’s “some easing of bilateral tensions from the Xi-Biden meeting,” said Marvin Chen, a Bloomberg Intelligence analyst, who added that China’s macro data, which came in below expectations, could “boost the probability of more easing measures in the near term.”  Japanese equities erased earlier losses, as investors weighed Fed comments for clues on where rate hikes might go and as improvement in US-China ties lifted sentiment across Asia.  The Topix Index rose 0.4% to 1,964.22 as of market close Tokyo time, while the Nikkei advanced 0.1% to 27,990.17. Sumitomo Mitsui Financial Group Inc. contributed the most to the Topix Index gain, increasing 4.2% as the company raised its key profit forecast and announced a share buyback plan. Out of 2,165 stocks in the index, 1,308 rose and 766 fell, while 91 were unchanged. “The financial results are almost all done as of yesterday and the stock market is running out of materials,” said Hideyuki Suzuki, general manager at SBI Securities. “All the important indicators from the FOMC, US CPI data, and earnings are over. The question is what the future holds from here.” Stocks in India advanced as easing inflation boosted investors’ sentiment while the country’s corporate earnings season ended. A rally in lenders boosted the benchmark Sensex to a new high while pushing the NSE Nifty 50 Index near its record level. The S&P BSE Sensex rose 0.4% to 61,872.99 in Mumbai, while the NSE Nifty 50 Index advanced by an similar measure. Thirteen of the 19 sector sub-indexes advanced, led by oil and gas and telecom companies.    ICICI Bank contributed the most to the index gain, increasing 1.9%. Out of 30 shares in the Sensex index, 19 rose and 10 fell, while 1 was unchanged. The consumer-price index for October rose 6.77%, easing from the 7.4% rise in September, which was the highest level in nearly two years, while the pace of wholesale inflation slowed to 8.4%, its first single digit reading in 19 months. In FX, the dollar resumed its decline, giving G-10 FX some relief. The yen trades at around the level of 139/USD, while pound rises to $1.18.  The Bloomberg Dollar Spot Index swung to a loss early in the European session as the greenback weakened against all of its Group-of-10 peers. Treasury yields fell, led by the belly of the curve. The five-year yield was down around 5bps. The euro rose to a four-month high of $1.0437. Most European bond yields fell, led by the long end of the curve; Italy’s 10-year yield fell by 10bps and Germany’s by 4bps. Germany Nov. ZEW investor expectations rise to -36.7; est. -51.0 The pound rose against both the dollar and the euro after UK wages grew at the fastest pace in more than a year. Investors will also be watching inflation data Wednesday and the UK’s fiscal announcement Thursday UK investors are facing the biggest glut of gilts in nearly a decade. Government bond sales will hit £185 billion ($217 billion) for this fiscal year to April, according to the median estimate of 10 banks surveyed by Bloomberg. The bid-to- cover on a UK 10-year gilt sale fell to its lowest level since Oct. 2019 at 2.11, according to data compiled by Bloomberg The Aussie and Kiwi touched fresh two-month highs. RBA minutes showed policy makers were prepared to return to larger rate hikes if needed. Australia’s bond curve twist-flattened. The yen rebounded on broad-based dollar weakness. The Japanese currency earlier dropped after data showed Japan’s economy unexpectedly shrank in the third quarter. In rates, Treasury and bunds 10-year yields are about 1.5bps lower, gilts 10-year yield little changed. Treasury futures topped Monday’s highs in early US trading, led by bunds after ECB’s Villeroy said a slower pace of hikes is likely after next month’s meeting. Into the move 10-year yields drop below 50-DMA for the first time since August.  The US Treasuries' advance was led by the belly, with 5-year yields richer by nearly 6bp on the day, steepening 5s30s spread by ~3bp; 10-year, lower by 4.5bp at ~3.81%, trails bunds by more than 2bp.US auctions resume Wednesday with $15b 20-year bonds, followed by $15b 10-year TIPS Thursday. In commodities, WTI crude futures ease to below $85; as benchmarks are pressured with the overarching COVID headwind weighing on the demand side and overshadowing any potential upside from the USD & G20. Currently, WTI Dec’22 and Brent Jan’23 are lower by just over USD 1/bbl and have printed fresh November troughs of USD 84.06/bbl and USD 91.52/bbl respectively. Precious metals have lost their initial shine but spot gold remains in proximity to yesterday's USD 1775/oz high. Ags. are in focus on the above reports, though initial pressure has eased a touch as Russia says it will make a decision at an appropriate time. To the day ahead now, and data releases from the US include October’s PPI reading and the Empire state manufacturing survey for November, while in Europe there’s UK employment data for October and the German ZEW survey for November. Central bank speakers include the Fed’s Harker, Cook, Barr and the ECB’s Elderson. Finally, earnings releases include Walmart and Home Depot. Market Snapshot S&P 500 futures up 0.6% to 3,990.50 STOXX Europe 600 little changed at 432.94 MXAP up 1.9% to 154.34 MXAPJ up 2.3% to 500.95 Nikkei little changed at 27,990.17 Topix up 0.4% to 1,964.22 Hang Seng Index up 4.1% to 18,343.12 Shanghai Composite up 1.6% to 3,134.08 Sensex up 0.3% to 61,785.91 Australia S&P/ASX 200 little changed at 7,141.63 Kospi up 0.2% to 2,480.33 German 10Y yield down 2.1% to 2.13% Euro up 0.6% to $1.0394 Brent Futures down 1.3% to $91.89/bbl Gold spot up 0.2% to $1,774.81 U.S. Dollar Index down 0.35% to 106.29 Top Overnight News from Bloomberg Signs of inflation peaking in the US are a relief for policy makers around the world who’ve been raising interest rates at a record pace to combat price pressures, ECB Governing Council member Francois Villeroy de Galhau said UK Chancellor Jeremy Hunt is considering a new 40% windfall tax on the “excess returns” of electricity generators as part of his sprawling package of tax rises and spending cuts this week, according to a person familiar with the proposal Oil inventories in developed nations have sunk to the lowest since 2004, leaving global markets vulnerable as sanctions on Russian exports take effect, according to the International Energy Agency Global investors reduced their holdings of China government bonds in the onshore market for a ninth-month running in October amid concerns over policy uncertainty spurred by President Xi Jinping’s consolidation of power A more detailed look at global markets courtesy of Newsquawk APAC stocks traded mixed following a weak lead from Wall Street with newsflow also quiet overnight. ASX 200 saw pressure from its Metals & Mining sector, whilst the RBA minutes provided little in terms of hints for the upcoming meeting and left all options open. Nikkei 225 saw some downside after Q3 Japanese GDP unexpectedly fell into contraction, but losses were trimmed as the JPY weakened. KOSPI was contained whilst Taiwan’s Taiex outperformed as TSMC was boosted by a Berkshire Hathaway stake in the name. Hang Seng and Shanghai Comp cheered the meeting between US President Biden and Chinese President Xi, which was telegraphed as candid, whilst Chinese stocks saw little action to the Retail Sales contraction and sub-forecast IP metrics. Top Asian News China reports 1,661 new confirmed COVID cases in mainland (prev. 1,794 a day earlier), via Reuters. PBoC injected CNY 850bln via 1yr MLF at a maintained rate of 2.75%; PBoC injected CNY 172bln via 7-day reverse repos with the rate at 2.00% for a CNY 170bln net injection. PBoC said longer-term fund injection exceeds Nov MLF maturities, according to Bloomberg. Chinese Vice President Wang said China will maintain strong policy continuity, according to Bloomberg. China's Stats Bureau said will actively expand demand, stabilise employment and prices; will consolidate the foundation of economic recovery; economic recovery slows due to COVID flare-ups, via Reuters. China's stats bureau spokesman said the property market shows some positive changes but the downward trend continues; expects China's CPI to remain benign, via Reuters. European bourses are mixed overall, Euro Stoxx 50 +0.2%, as opening gains scale back after a mostly constructive APAC session. Stateside, US futures are firmer across the board with Tech leading after strong APAC tech trade and in wake of Fed's Brainard, ES +0.7%. Home Depot Inc (HD) Q1 2023 (USD): EPS 4.24 (exp. 4.12), Revenue38.9bln (exp. 37.95bln); Comps sales +4.3% (exp. 3.1%); reaffirms FY22 guidance. Top European News UK PM Sunak will accept an official recommendation to increase the living wage from GBP 9.50 an hour to about GBP 10.40 an hour — a rise of nearly 10%, according to The Times. UK Chancellor Hunt is considering a 40% windfall tax on "excess returns" made by electricity generators as part of his Autumn Statement, according to Bloomberg sources. ECB's Villeroy said ECB will probably continue to hike rates but may do so in a more flexible and less rapid manner; jumbo hikes will not become a new habit. We are clearly approaching the normalisation range of around 2%, via Reuters. EU Parliament and member states agreed on an EU budget for 2023, according to dpa. G20 draft declaration noted that central banks will continue to appropriately calibrate the pace of monetary policy tightening, via Reuters. FX DXY continues to slip after a pronounced move which occurred prior to the European cash open, currently near sub-106.00 lows to the broad benefit of peers. USD/JPY has been touted by some as a key driver of the above move given its quick move from above-140.00 to sub 139.00. GBP benefits from the USD weakness and perhaps firm wage metrics though this was accompanied by an unexpected unemployment uptick, ahead of Wednesday's CPI and Thursday's fiscal update. Yuan remains in keen focus as it moves comparatively closer to the 7.00 handle, though proved resilient to soft overnight data with focus firmly on the broader USD move. SEK was unfased by soft-headline but hot-core vs exp. CPIF metrics, though this has prompted SEB to raise the risk of a 100bp Riksbank hike. Fixed Income BTPs are leading the fixed income complex with upside in excess of a point to a session peak of 117.26 vs trough 116.04 on supply-side dynamics. Bunds are similarly bid though to a lesser extent than periphery counterparts, having incrementally surpassed yesterday's 139.26 peak. Well-received German 7yr supply sparked limited upside while a softer UK outing caused Gilts to temporarily pullback to near-unchanged. USTs move in tandem with EGBs with yields lower as such in wake of Fed's Brainard, who backed the FOMC downshifting to a lower increment of rate hikes in December. Retail orders for the November 2028 BTP Italia reach EUR 4bln, via Reuters citing Bourse data. Commodities Crude benchmarks are pressured with the overarching COVID headwind weighing on the demand side and overshadowing any potential upside from the USD & G20. Currently, WTI Dec’22 and Brent Jan’23 are lower by just over USD 1/bbl and have printed fresh November troughs of USD 84.06/bbl and USD 91.52/bbl respectively. IEA Monthly Oil Market Report: 2023 global oil output is to grow 740k BPD to 100.7mln BPD. Demand growth will slow to 1.6 mb/d in 2023, down from 2.1 mb/d this year, as mounting economic headwinds impede gains. Russia is reportedly expected to agree to extend the Black Sea grain-export deal, via Bloomberg. Subsequently, Russia says it will announce its decision on extension of Black Sea grains deal in an appropriate time, TASS reports. Precious metals have lost their initial shine but spot gold remains in proximity to yesterday's USD 1775/oz high. Ags. are in focus on the above reports, though initial pressure has eased a touch as Russia says it will make a decision at an appropriate time. G20 Australian PM says there were positive discussions on trade embargoes levelled on Australia by China. Adds, the meeting with Chinese President Xi was another important step towards stabilising the relationship, will cooperate where possible with China. Many steps yet to take. Chinese President Xi says Sino-Australian relations have encountered difficulties in recent years and this is not what we wanted to see, according to State Media Russian Foreign Minister Lavrov says he has proposed to the G20 the removal of discriminatory barriers on energy markets; UN will deal with the removal of barriers for Russian grain and fertilizers; the G20 draft declaration has reference to an exchange of views re. Ukraine, West added phrase that many delegations condemned Russia. Russia highlighted alterative points of view. Geopolitics Chinese President Xi said China advocates a ceasefire in the Ukraine crisis and calls for peace talks, via state media. Chinese President Xi told US President Biden that China will make all efforts for peaceful "reunification" with Taiwan, according to the Chinese Foreign Minister. China upholds the "one country, two systems" proposal for Taiwan, according to Reuters Chinese President Xi told French President Macron that China and Europe should expand two-way trade and investments, via state media. US Event Calendar 08:30: Oct. PPI Final Demand YoY, est. 8.3%, prior 8.5% Oct. PPI Final Demand MoM, est. 0.4%, prior 0.4% Oct. PPI Ex Food and Energy YoY, est. 7.2%, prior 7.2% Oct. PPI Ex Food and Energy MoM, est. 0.3%, prior 0.3% Oct. PPI Ex Food, Energy, Trade YoY, est. 5.6%, prior 5.6% Oct. PPI Ex Food, Energy, Trade MoM, est. 0.3%, prior 0.4% 08:30: Nov. Empire Manufacturing, est. -6.0, prior -9.1 Central Banks 09:00: Fed’s Harker Discusses the Economic Outlook 09:00: Fed’s Cook Discusses Post-Covid Challenges Facing Women 10:00: Fed Vice Chair for Supervision Barr Speaks Before Senate Panel DB's Jim Reid concludes the overnight wrap I appreciate the EMR is often a medical bulletin as well as a market report and today's there's a new entry on the former. It looks like I'm going to have a back operation in the next few weeks. My sciatic nerve has no room to move and while I'm not in pain at the moment (unlike earlier this year) due to two injections in recent months, I have constant tingling and pins and needles down my leg. All conservative approaches have hit the end of the road and the worry is that if I leave it too long I'll do permanent damage to the nerve. If anyone wants to make a late intervention to help sway me one way or the other in terms of back surgery feel free to do so. I think my mind is made up though as I don't see an alternative. All a bit scary but all with the aim of getting me 30 more years (minimum) on the golf course and the chance to reach my goal of getting to scratch before the ageing process prevents that!! The injection of optimism inserted into the limbs of the financial market after last week's US CPI report showed some signs of fading yesterday although there's been a recovery in Asia as China continues to support the economy and the interpretation of Biden/Xi meeting yesterday is spun a bit more positively in Asia. Yields have risen across the Treasury curve to start the week as investors moved to dial back some of their more dovish post-CPI expectations for next year. In part, that was prompted by some pretty hawkish comments from Fed Governor Waller on Sunday night that we mentioned in yesterday’s edition. But that trade was then given further momentum by the New York Fed’s latest Survey of Consumer Expectations, which showed inflation expectations moving higher across all horizons, and echoes the uptick we saw in the University of Michigan’s reading last Friday as well. Consistent with that, our US economist's composite measure of inflation expectations has increased. They've published their latest series in a full update, available here. Diving into those inflation expectations from yesterday, the New York Fed’s latest survey showed the 1yr expectation moving up half a point to 5.9%, 3yr expectations rising two-tenths to 3.1%, and 5yr expectations up two-tenths as well to 2.4%. To be fair, all those measures are still below their levels as recently as Q2, but the upticks over the last couple of months will raise some fears that the longer inflation remains elevated, the more difficult it’ll be to keep expectations anchored around target levels. For now you would have to say that long-run expectations have held in remarkably well in the face of 40-yr highs in actual inflation. October's US PPI will be an important release today, especially the health care component that feeds directly into core PCE - the Fed's preferred gauge. A notable push back on the slightly more hawkish momentum to start the week were comments as Europe closed from Fed Vice Chair Brainard, who struck a far less hawkish tone than Governor Waller had the previous day. For instance, Brainard said that it would “probably be appropriate soon to move to a slower pace of increases”, which gave further support to the idea the Fed will slow down its hikes to a 50bp pace next month (fully priced now though). That wasn’t too out of line with the rest of Fed speakers since the November meeting, but where the Vice Chair did separate herself was by noting the step down in pace need not be explicitly tied to a higher terminal rate, something Chair Powell argued during his Press Conference, and she did not explicitly rule out interest rate cuts next year, which would be more of a ‘pivot’ rather than the recently communicated ‘pause’ for the Fed. That gave risk assets a bit of support, but it appears she is out of consensus from the rest of the Committee, so the gains were not sustained. With all said and done, investors ended the day expecting a slightly more aggressive Fed, with the rate priced in by Fed funds futures for end-2023 up +6.2bps to 4.46%. As a result, US Treasury yields rose across the board as trading resumed after Friday’s Veterans’ Day holiday. The 10yr yield was up +4.1bps to 3.85% (3.87% in Asia), and the more policy-sensitive 2yr yield saw an even larger move of +5.7bps to 4.39%. Those moves were driven by real yields, with the 10yr real yield up +8.4bps on the day to 1.49%. As you'll see from my CoTD yesterday, 10yr US real yields had their second largest fall since the GFC on Thursday (link here). Only the intitial covid related fall in March 2020 beats it. Against that backdrop, US equities struggled for momentum too, with the S&P 500 (-0.89%) losing ground after its massive +6.52% surge over the previous two sessions. The more cyclical sectors led the declines, and the NASDAQ (-1.12%) lost even more ground on the day. However in Europe there was a much more positive story, with the STOXX 600 up +0.14% to its highest level in over two months, alongside gains for the FTSE 100 (+0.92%), the CAC 40 (+0.22%) and the DAX (+0.62%). This European strength was evident in sovereign bond markets too, where yields on 10yr bunds (-1.5bps), OATs (-1.2bps) and BTPs (-3.0bps) all ended the day lower. Asian equity markets are mostly trading higher this morning with the Hang Seng (+3.62%) sharply higher lifted by the outperformance of the Hang Seng Tech index (+6.81%) as Chinese listed tech stocks rose significantly. Stocks in mainland China are also up with the CSI (+1.47%) and the Shanghai Composite (+1.27%) extending their previous session gains despite a slew of disappointing economic data. As discussed at the top, the Asian interpretation is that we saw a slight easing of China-US tensions following the Biden-Xi meeting on the sidelines of the G20 summit in Indonesia (more below). Elsewhere, the Nikkei (+0.10%) is modestly higher with the KOSPI (-0.11%) bucking the trend in early trade. In overnight trading, US stock futures are pointing to a positive start with contracts on the S&P 500 (+0.52%) and the NASDAQ 100 (+0.74%) both rising. Coming back to China, early morning data revealed that industrial production rose +5.0% y/y in October, lower than the market expected rise of +5.3% and much slower than September’s +6.3% increase indicating a further loss of momentum in the world’s second biggest economy. At the same time, retail sales unexpectedly contracted -0.5% y/y (v/s +0.7% expected), down from +2.5% growth in September as strict Covid restrictions along with a downturn in property markets pushed consumers to tighten their belts. Markets are largely ignoring this data as covid and property restrictions have subsequently been eased so the direction of travel should get more positive from here. Elsewhere, Japan’s economy unexpectedly shrank for the first time in four quarters as Q3 GDP fell -0.3% q/q (v/s +0.3% expected) compared to an upwardly revised growth of +1.1% in the prior quarter as inflation and the weak yen hit the country. In the geopolitical sphere, let's now recap US President Biden and Chinese President Xi's first meeting in person as the leaders of their respective countries yesterday. That took place on the sidelines of the G20 summit in Indonesia, and the White House said afterwards that US Secretary of State Blinken would visit China to follow up on the discussions, which was taken by many as a positive sign towards de-escalating tensions. However, there were some points of tension, with the White House statement saying that Biden had “raised U.S. objections to the PRC’s coercive and increasingly aggressive actions towards Taiwan, and China’s statement said that “anyone that seeks to split Taiwan from China will be violating the fundamental interests of the Chinese nation”. So something for the hawks and doves but the conclusion might be that the summit beat low expectations coming into it. Staying on politics, it’s now been a week since the midterm elections and we still don’t know which party will control the House of Representatives following the weekend confirmation that the Democrats took the Senate. It’s looking increasingly likely it will go to the Republicans, who currently have a lead in the vote count across enough of the outstanding districts to win a majority, and NBC’s forecast points to a narrow 220-215 Republican majority based on what we currently have as well. As we go to press, the current tally stands at 217 Republicans and 204 Democrats with Republicans just 1 win away from taking the House. Tonight however, attention will turn towards the 2024 presidential contest, since former President Trump has said he’ll be making an announcement at 9pm EST, and speculation has centred around a potential 2024 announcement. Normally, the presidential announcements from the top-tier contenders happen around Q1 or Q2 of the year after the midterms. But if today does mark an announcement, the rationale for going early will be to clear the field of other potential contenders, with Trump hoping that the Republican primary is effectively uncontested like normally happens for sitting presidents. As it stands, Trump’s biggest rival for the nomination is widely considered to be Florida Governor Ron DeSantis, who was re-elected Governor last week with lead of almost 20 points over his Democratic opponent. He was seen to be the Republican's big success story of the night. The crypto saga continues, but there was some stabilisation in Bitcoin prices, which retreated just -0.57% after bouncing around all day. There’s certainly still more to come on the story as it becomes clear who was exposed to failed exchanges and funds, but Marion Laboure on my team has already contextualised the episode and looks ahead about what it implies in her piece out yesterday. Link here To the day ahead now, and data releases from the US include October’s PPI reading and the Empire state manufacturing survey for November, while in Europe there’s UK employment data for October and the German ZEW survey for November. Central bank speakers include the Fed’s Harker, Cook, Barr and the ECB’s Elderson. Finally, earnings releases include Walmart and Home Depot. Tyler Durden Tue, 11/15/2022 - 07:47.....»»

Category: dealsSource: nytNov 15th, 2022

Putin won"t attend the G20 in person, sending his foreign minister instead

Russian officials said that Putin may give a video speech instead of going to the G20 summit in Indonesia in person, amid major tensions over Ukraine. Russian President Vladimir Putin in Veliky Novgorod, Russia, on September 21, 2022.Gavriil Grigorov, Sputnik, Kremlin Pool Photo via AP Putin said he won't go to the G20 in person, though he may give a speech by video, officials said.  Foreign Minister Sergei Lavrov will lead the Russian delegation in Bali, Russia said.  Zelenskyy has said he will boycott if Putin goes. Officials said he may attend by videoconference.  President Vladimir Putin said he will not attend the G20 gathering in Indonesia and will send Russia's foreign minister in his place, according to Russian and Indonesian officials. While Foreign Minister Sergei Lavrov will lead the Russian delegation in person, Putin may give a speech by video at the event being held in Bali later this month, state-owned news agency TASS reported. Indonesian official Luhut Binsar Pandjaitan confirmed the news that Putin wouldn't go, CNBC Indonesia reported. Putin's absence from the gathering, which is slated for November 15 and 16, turns attention to the question of Ukrainian President Volodymyr Zelenskyy's attendance.On November 3, Zelenskyy said he would boycott the event if Putin was there. Unlike Russia, Ukraine is not a member of the G20 group of nations, but has been invited by host nation Indonesia. Zelenskyy later said that he will attend the summit, likely via video link-up, Ukrainian state broadcaster Suspilne reported on Tuesday. Indonesia has a tradition of neutrality, and its president, Joko Widodo, has resisted pressure from several G20 countries to rescind Putin's invitation.In September, Indonesia's ambassador to Russia, Jose Tavares, told Russian state media that his government was ready to facilitate the revival of peace talks between the two leaders. Russia's invasion of Ukraine has been at the heart of considerable tension within the G20 this year, with diplomats and leaders of countries aligned with Ukraine staging multiple walk-outs, as Insider's Marianne Guenot reported. In July, Lavrov walked out of a G20 meeting after being confronted by leaders who accused Russia of causing a global food crisis through its blockade of Ukrainian ports, The Guardian reported at the time. Read the original article on Business Insider.....»»

Category: dealsSource: nytNov 10th, 2022

White House Held Secret Talks With Putin Aides To Avert US-Russia War

White House Held Secret Talks With Putin Aides To Avert US-Russia War The White House has reportedly held secretive behind-the-scenes dialogue with the Kremlin related to the war in Ukraine, The Wall Street Journal revealed on Sunday, citing unnamed US and allied officials. National Security Advisor Jake Sullivan spearheaded the secret talks with high-level Russian officials in recent months, reportedly with the aim of reducing the risk of the two nuclear-armed superpowers stumbling into a direct broader conflict.  "The officials said that U.S. national-security adviser Jake Sullivan has been in contact with Yuri Ushakov, a foreign-policy adviser to Mr. Putin. Mr. Sullivan also has spoken with his direct counterpart in the Russian government, Nikolai Patrushev, the officials added," according to WSJ. Image via Georgetown University/Center for New American Security "The aim has been to guard against the risk of escalation and keep communications channels open, and not to discuss a settlement of the war in Ukraine, the officials said." Talks between Sullivan and top Russian officials haven't been disclosed on a public level since March. In response to the WSJ story, the Biden administration neither confirmed nor denied the claims of secret contact between the two sides, with National Security Council spokeswoman Adrienne Watson when asked if Sullivan had the conversations replying in a Sunday night statement, "People claim a lot of things." Further the report notes, "Several U.S. officials said that Mr. Sullivan is known within the administration as pushing for a line of communication with Russia, even as other top policy makers feel that talks in the current diplomatic and military environment wouldn’t be fruitful." The report doesn't indicate whether the alleged phone calls were positive or led to a lessening of tensions from Washington's perspective, nor is it known precisely when they took place. US-Moscow relations have hit an all-time historic low in the wake of the Feb.24 invasion of Ukraine, with the two nations' top diplomats, Secretary of State Antony Blinken and his Russian counterpart Sergey Lavrov, having only spoken once (at least one publicly disclosed conversation) - which was focused on a potential prisoner swap.  President Biden in an early October media interview appeared to shut the door on the possibility of talks with Putin, saying at the time, "Look, I have no intention of meeting with him. But for example, if he came to me at the G20 and said I want to talk about the release of Griner, I’d meet with him. I mean, it would depend," he explained. Left: presidential aide for foreign affairs Yuri Ushakov, The timing of the new WSJ revelations are interesting, given the report came the day after The Washington post said the White House is now privately urging the Ukrainian government to show openness toward negotiations with Russia. US officials cited in that Saturday report say the onset of a harsh winter, and the fact that Ukraine is already experiencing rolling emergency blackouts due to Russia's attacks on the energy grid, is likely to make Zelensky amenable to ceasefire talks.  The US officials believe that Kiev "is attempting to lock in as many military gains as it can before winter sets in, when there might be a window for diplomacy." But from Russia's perspective, the unprecedented inflows of US and Western arms to Ukrainian forces, including increasingly advanced and longer range missile systems, has also served to make diplomacy nearly impossible while increasing the risk of direct confrontation with NATO. But is there now hope of new ceasefire talks on the horizon?  Tyler Durden Mon, 11/07/2022 - 10:05.....»»

Category: dealsSource: nytNov 7th, 2022

Turkey"s President Erdogan is emerging as a power player in Ukraine after brokering an abrupt reversal by Russia

As the war in Ukraine drags on, Turkey's President Recep Tayyip Erdoğan is playing an increasing role in getting both sides to the table. Turkey's President Recep Tayyip Erdogan shakes hands with Russia's President Vladimir Putin during a meeting in Iran on September 7, 2018.Kirill Kudryavtsev/AFP/Getty Images Turkey's President Recep Tayyip Erdoğan has become a key bridge between Russia and Ukraine. He was critical in efforts Wednesday to get Russia to abandon a threat to block grain exports. As Russia grows more isolated, Turkey's role is becoming increasingly important in negotiations. When Russia backed down earlier this week over its threats to block grain shipments out of Ukraine, it was Turkish President Recep Tayyip Erdoğan who was among the first to break the news.Speaking to Turkey's parliament, Erdogan said Russian Defence Minister Sergei Shoigu had informed his Turkish counterpart that the deal would resume shortly.Russian state news agency TASS later reported the agreement came about through the mediation of the United Nations and Turkey.As Russia grows more isolated, both diplomatically and economically, Turkey's role is becoming increasingly important.Throughout the conflict the country has walked a thin line. It has declined to sanction Russia, and has given Russia's sanctioned oligarchs safe harbor, even as it has condemned the war.In September Erdoğan, who has had his own tensions with leaders in Europe and Washington, told PBS News Hour that Russia should not just retreat from the territory taken since February 24, but that it should also "return Crimea to its rightful owners.""The lands which were invaded will be returned to Ukraine," he added.Even so, Turkey is one of the few countries that seems to be able to get both sides to the table, with Erdoğan increasingly positioning himself as a key regional player in discussions between Russia and Ukraine.The original grain export deal had been brokered by Turkey, along with the United Nations, with the aim of averting a major global hunger crisis, with Russia and Ukraine the world's biggest grain exporters.Erdoğan also played an important role in a prisoner exchange in which Russia released Ukrainian commanders who had operated from the Azovstal steelworks in Mariupol. These were individuals that Moscow had previously threatened to put before a military tribunal and possibly execute.And he hosted preliminary peace talks between the countries in Istanbul in March, which failed to go anywhere.At home, Erdoğan faces a more challenging time, heading into an election year with strong economic headwind and one of the highest rates of inflation in the world. Still, on the international stage this latest development could lead to the West relying more and more on Turkey's influence in the months ahead.After this latest development, Ukrainian President Volodymyr Zelenskyy personally thanked Erdoğan for "his active participation in preserving the grain deal, for his steadfast support of sovereignty and territorial integrity of Ukraine".Later in the day, Erdogan told Turkish broadcaster ATV that he had discussed with Zelenskyy sending grains to African countries, and that Russian President Vladimir Putin had proposed to him sending grain to countries like Djibouti, Somalia and Sudan first, given the situation on the ground there.Those who have watched developments in recent months are increasingly aware of Erdoğan's growing role and influence."[I] mentioned that Ankara [Turkey's capital] could have a final say here but didn't expect them to have so much influence on Putin," Andrei Sizov, the head of SovEcon, an agricultural markets research firm, wrote on Twitter on Wednesday. "Really wonder what Erdoğan's secret is."Read the original article on Business Insider.....»»

Category: topSource: businessinsiderNov 3rd, 2022

Futures Tumble, Briefly Drop Below 3,600, Despite Latest Panic Pivot By Bank of England

Futures Tumble, Briefly Drop Below 3,600, Despite Latest Panic Pivot By Bank of England Another day, another rout, only this time there was an even more ominous twist. It's shaping up as another risk off day on Wall Street, and around the world, as stocks fell... again... as usual... pressured by the relentless rout in the chip sector (following Friday's decision by the Biden administration to put fresh curbs on China’s access to US semiconductor technology) which sent chip giant Taiwan Semi conductor plunging 8.3%, its biggest drop on record, and wiped out $240 billion in market cap from the global semiconductor sector, while US futures extended their Monday slump amid general amid fears of persistently high inflation two days ahead of the CPI report, and signs that company earnings were set to disappoint. A gauge of the dollar climbed to the highest this month before reversing.  But the ominous twist today is that for the second time in two weeks, the BOE stepped in the market, this time boosting its "temporary" QE to add linker bonds to its usual array of gilt purchases to tackle what it called “fire-sale dynamics.”  While this helped lift gilts and cable (if only briefly), its effect on futures was truly transitory, with the Emini dumping as much as 1% to a low of 3584, falling below the key level of 3,600, before stabilizing uneasily just above 3,600. It was down 0.6% at last check, while Nasdaq future were 0.5% lower as of 7:45am ET. In US premarket trading, Meta Platforms slipped after it was cut to neutral from overweight by Atlantic Equities, which sees the social media giant’s growth outlook increasingly challenged by the strengthening macro headwinds and growing competition for advertising dollars; it was also added by Russia to a list of terrorist and extremist organizations. Here are some other notable premarket movers: Zoom shares decline 3% in premarket trading as Morgan Stanley cut the recommendation on the stock to equal-weight from overweight, saying the company’s online business needs to normalize post Covid for the firm to unlock the “tremendous value” in its enterprise platform. Roblox falls as much as 3.8% in premarket trading after Barclays initiates coverage with an underweight rating, saying the gaming platform’s daily users are “fairly saturated” and growth is decelerating post Covid. Amgen shares rise 1.7% in premarket trading after being upgraded to overweight from equal-weight by Morgan Stanley, which highlighted the “unappreciated upside” in the biopharma’s mid-term pipeline. Lululemon shares rise 1.3% in premarket trading after Piper Sandler upgraded the athletic apparel brand to overweight from neutral, noting the company’s momentum in the broker’s Spring 2022 Taking Stock With Teens survey. Elastic drops 2.4% in US premarket trading as Wells Fargo initiates at underweight, giving the application software company its only negative analyst rating. Leggett & Platt shares fell 8.6% in postmarket trading on Monday after the company lowered sales guidance for the full-year. Piper Sandler reduced the price target to a Street low, noting that the company’s speciality foam business is not only losing share but has been “disproportionately impacted” by weakness in the bed-in-a-box part of the market. The mood remains extremely fragile ahead of Thursday’s US inflation data, with the case for another 75 basis-point rate hike likely to be strong if the reading comes in higher than than forecast. Fed officials until now show little sign they are in a mood to pause the rate-hiking cycle despite the potential hit to economic growth. “We have not seen the impact of tightening,” Michael Kelly, head of the multi-asset team at PineBridge Investments told Bloomberg TV. “That lies ahead and when we see that, it’s another leg down for risk assets.” Meanwhile, Russian President Vladimir Putin threatened further missile attacks on Ukraine after hitting Kyiv and other cities in the most intense barrage of strikes since the first days of its invasion. “It’s little wonder investors enter the week in a dreary mood, especially with headlines from Ukraine signaling a further escalation in geopolitical tensions,” said Christopher Smart, chief global strategist at Barings. European stocks also declined with the Euro Stoxx 50 falling 0.9%. Energy, chemicals and miners are the worst performing sectors. IBEX outperforms peers, dropping 0.7%, FTSE MIB lags, dropping 1.4%. Here are the biggest premarket movers: Qiagen shares rise as much as 7.2%, the most intraday since November 2021, after a Dow Jones report that Bio-Rad Laboratories is in talks to combine with the German diagnostics firm. Airbus shares rise as much as 1.3% after September deliveries of 55 aircraft seen as “an encouraging data point,” compatible with the jetmaker reaching its target of 700 deliveries this year, Deutsche Bank analysts write in a note. Dustin shares rise as much as 10%, the most since January, after the Swedish computer and technology retail company reported 4Q results which Handelsbanken said included “solid” organic growth helped by its corporate and public sector unit. Boozt rises as much as 9%, the most since August, after Danske Bank upgraded the Swedish online fashion retailer to buy from hold, seeing an attractive share after recent weak performance despite a “more resilient business model than before.” Mining and energy stocks decline more than the broader European market on Tuesday as metals and crude slide amid concerns over weaker demand due to global economy slowdown and strengthening dollar. BP dropped as much as 3.4%, and Shell -2.4% European semiconductor stocks fall for a third day, following a rout in shares of Asian chip powerhouses including Samsung and TSMC. ASML declined as much as -2.8% Givaudan shares are down as much as 8.3%, reaching the lowest value since March 2020, after the company reported weaker-than-expected 3Q sales. Analysts are worried about soft growth in North America and a miss by the taste and wellbeing division amid a weakening consumer backdrop. Ferrexpo shares decline as much as 11% in early trading on Tuesday, most in three weeks, after the iron- ore maker said production has been temporarily suspended at group’s operations in Ukraine due to limited power supply. Asian equities headed for a third day of declines amid a continued selloff in semiconductor shares, with markets in Taiwan, South Korea and Japan declining as trading resumed after holidays. The MSCI Asia Pacific Index dropped as much as 2.2%, with a technology sub-gauge falling more than 4%. Chip-related stocks in the region declined in the wake of fresh curbs on China’s access to US technology. The Hang Seng Tech Index also fell more than 3% amid the geopolitical tensions. Read: Chipmaker Rout Engulfs TSMC, Samsung With $240 Billion Wiped Out Hong Kong’s benchmark gauge slipped after a state-owned newspaper endorsed China’s Covid-Zero policy for the second day in a row, quashing investors’ hopes for a relaxation around the upcoming Communist Party congress. Chinese shares edged higher. Rising geopolitical risks are also weighing on sentiment, after Russia bombarded Kyiv and other Ukrainian cities. Meanwhile, investors remain on edge amid the prospect of more aggressive monetary tightening ahead of the release of US consumer-inflation data on Thursday. “Thin volumes, high volatility and uncertainty, and a bearish sentiment globally means investors will overreact on the downside to any negative news,” Olivier d’Assier, head of APAC applied research at Qontigo, wrote in a note. Several data releases this week, as well as a further escalation in the war in Ukraine, may trigger further selling, he added. The MSCI’s Asian stock benchmark is once again approaching the lowest level since April 2020, having fallen more than 4% over a three-day period. Japanese stocks fell, dragged by losses in technology shares amid concerns on earnings and the impact of new US curbs on chip-related exports to China. The Topix fell 1.9% to close at 1,871.24, while the Nikkei declined 2.6% to 26,401.25. Out of 2,168 stocks in the Topix, 285 rose and 1,833 fell, while 50 were unchanged. The market was closed for a holiday Monday. Tokyo Electron slid more than 5% after the Biden administration put fresh curbs on Chinese access to US chip technology. Tech sentiment was also hurt by a forecast cut at Yaskawa Electric, while Fast Retailing dropped more than 3% ahead of its earnings report this week.  “With around 30% of Japanese tool makers’ orders coming from China, we think we are now likely to see cancelations hurting backlogs just when the chip market is facing a major oversupply,” said Amir Anvarzadeh, a strategist at Asymmetric Advisors Ltd., adding that Tokyo Electron would be among the hardest hit. In FX, the Bloomberg Dollar Spot Index rose for fifth day as commodity currencies fell versus the greenback. Aussie and loonie were the worst G-10 performers as global growth concerns prompted traders to seek haven in the dollar; China signaled it may retain its strict Covid Zero policy, hitting stocks and commodities including iron ore The euro halted a four-day decline. German bonds advanced while Italy’s yield premium over Germany rose, paring some of Monday’s sharp drop amid doubts about Germany’s support for joint EU debt issuance. UK bonds edged higher in a bull-steepening move after the Bank of England expanded its financial stability operations, adding inflation-linked debt to its purchases, while pausing the sale of corporate bonds. The focus is on the result of the BOE’s daily bond-buying operation, a sale of 2051 linkers by the government and Governor Andrew Bailey’s comments later. The pound traded weaker versus the euro and was little changed against the dollar. Options traders are adding downside exposure in the pound again as cable retreats toward the $1.10 handle. The yen traded in a narrow range amid caution the authorities will step in to prevent further currency losses. Government bonds fell in tandem with overseas peers. In rates, Treasuries pared a decline and the curve bear steepened after the panicking BOE expanded its QE operation. The 10-year yields pated Monday’s gilt-led losses led by gains in UK bond market, after earlier touching 4%, while the 30-year yield hit its highest level since 2014; yields on two-year Treasuries rose to the highest since 2007. US cash market, closed Monday’s for bank holiday, remains cheaper vs Friday’s close by as much as 6bp at long end. US 10-year yield is higher by ~4bp at 3.92%, steepening 2s10s by ~5bp vs Friday’s close, with 5s30s also ~5bp wider on the day; gilts bull-steepen with UK 2-year yields richer by 11bp on the day. As reported earlier, Monday’s record slide in gilts was arrested after BOE said inflation-linked notes will be included in this week’s remaining buybacks. US auctions resume at 1pm New York time with $40b 3-year note sale, followed by 10- and 30-year sales Wednesday and Thursday In commodities, WTI drifts 2.6% lower to trade near $88.74. Spot gold falls roughly $3 to trade near $1,665/oz. Most base metals are in the red.  Bitcoin hovers around the USD 19,000 mark whilst Ethereum remains under 1,300. Looking to the day ahead now, it's another quiet event calendar with just the NFIB’s small business optimism index from the US for September out today (92.1, above 91.6 expected). From central banks, we’ll hear from BoE Governor Bailey and Deputy Governor Cunliffe, the ECB’s Lane and Villeroy, as well the Fed’s Mester. Finally, the IMF will be publishing their latest World Economic Outlook. Market Snapshot S&P 500 futures down 0.7% to 3,599.25 STOXX Europe 600 down 0.9% to 386.58 MXAP down 2.0% to 137.94 MXAPJ down 2.1% to 445.19 Nikkei down 2.6% to 26,401.25 Topix down 1.9% to 1,871.24 Hang Seng Index down 2.2% to 16,832.36 Shanghai Composite up 0.2% to 2,979.79 Sensex down 0.7% to 57,610.70 Australia S&P/ASX 200 down 0.3% to 6,644.99 Kospi down 1.8% to 2,192.07 Brent Futures down 1.5% to $94.71/bbl Gold spot down 0.1% to $1,667.26 U.S. Dollar Index little changed at 113.21 German 10Y yield little changed at 2.30% Euro little changed at $0.9708 Top Overnight News from Bloomberg Record inflation and the danger of winter energy shortages are sinking confidence in the euro-zone economy. As the hard data gradually worsen, the hawks who currently steer ECB policy have only a limited opportunity to deliver more big hikes UK unemployment fell unexpectedly to the lowest since 1974 as people dropped out of the workforce at a record rate. The government said 3.5% of adults were looking for work in the three months through August, down from 3.6% the month before. Economists had expected no change From Japanese pensions and life insurers to foreign governments and US commercial banks, where once they were lining up to get their hands on US government debt, most have now stepped away. And then there’s the Federal Reserve, which a few weeks ago upped the pace that it plans to offload Treasuries from its balance sheet to $60 billion a month Credit Suisse Group AG is the last of 16 banks to face a US class-action lawsuit accusing it of conspiring with others to rig the foreign exchange market A more detailed breakdown courtesy of RanSquawk APAC stocks traded with a negative bias as several markets returned from the long weekend and reacted to the recent bearish themes with tech stocks hit due to the US’s chip tech curbs on China and with global sentiment not helped by the heightened geopolitical concerns after Russia’s missile assault on Ukrainian cities. ASX 200 was indecisive after mixed data and with the index subdued by underperformance in tech and energy. Nikkei 225 declined with the reopening of Japan’s borders overshadowed by tech sector woes which also saw heavy selling pressure on South Korean and Taiwanese chipmakers. Hang Seng and Shanghai Comp. were mixed with notable losses in tech and casino stocks in which the latter suffered after domestic trips in China during the National Day Golden Week holiday fell by 18% Y/Y, while sentiment was also dampened by increased lockdown concerns as China tightened COVID controls ahead of the Communist Party congress including the rollout of mandatory biweekly mass testing in Shanghai. Top Asian News China Securities Daily suggested that China may cut RRR in Q4. People's Daily said China must stick to zero-COVID policy which is sustainable and key to stabilising the economy. China's Xi'an announced on Tuesday to suspend onsite classes for some students amid the COVID-19 flare-ups, other areas including culture venues, tourist attractions and cinemas also suspended services on Tuesday, according to Global Times. PBoC set USD/CNY mid-point at 7.1075 vs exp. 7.1038 (prev. 7.0992) Japanese PM Kishida said the BoJ needed to maintain policy until wages increase, while he urged companies that increase prices to raise pay also and said the government will prepare measures to help companies raise salaries, according to FT. Japanese Finance Minister Suzuki said they are closely watching FX moves with a strong sense of urgency and will respond to excess FX moves, according to Reuters. Japan's MOF top currency official Kanda said they are always ready to take necessary steps against FX volatility and said he can make a decision on FX intervention anywhere even from an aeroplane, according to TBS. Japanese Chief Cabinet Secretary Matsuno said they are closely watching FX moves with a high sense of urgency; to take appropriate steps on excess FX moves, via Reuters. Japan is to draw up economic measures before the end of October, according to NHK. RBI likely sold USD in spot and received forwards via state-run banks, according to traders cited by Reuters. RBNZ Governor Orr said in the Annual Report that there is more work to do and increasing the OCR is the most effective way we can reduce inflation and support maximum sustainable employment over the coming years, consistent with our monetary policy remit. European bourses are once again underwater as the selling pressure from yesterday has bled through into today’s session. Sectors in Europe are mostly softer but Retail is the standout outperformer. Stateside, US futures are also on the backfoot with the e-mini S&P Dec contract dipping below 3600 in a continuation of yesterday’s losses. Top European News Barclaycard UK consumer spending rose 1.8% Y/Y in September which was the slowest pace since February 2021. Germany's government rejected the report about Chancellor Scholz backing joint EU debt for loans to ease the energy crisis and said "such plans are not known in the government", according to a source cited by Reuters. German Chancellor Scholz said Germany will discuss inflation reduction act with the US; there must be no customs war, via Reuters. EU trade commissioner said it is working on a new temporary state aid framework which will allow countries to support firms hit by high energy bills; adds that decoupling from China is not an option for EU companies, via Reuters. UK Chancellor Kwarteng will need to plug a GBP 60bln hole in the public finances with either spending reductions or a tax raid, according to the IFS via the Telegraph. BoE said it intends to purchase index-linked Gilts, effective from Oct 11-14, and announced a temporary pause to corporate bond sales. Linker purchases will act as a backstop to restore order; purchases are time limited. Many pension funds feel that the BoE intervention in gilts market should be extended to October 31st "and possibly beyond", according to the Pension Fund Trade Body cited by Reuters. Brookfield, DigitalBridge Said to Weigh Vantage Stake Bid European Gas Rises on Supply Risks as Russia Escalates War Apollo Makes Quick Gains on CLOs Dumped by UK Pension Funds Credit Suisse Is Final Holdout in FX Rigging Case Going to Trial Discounted Fuel, Grains Make Taliban Boost Trade With Russia FX DXY is firmer on the day with a current intraday high of 113.50 (vs a 112.95 low) G10s are mixed vs the USD with the CAD and AUD the laggards, in-fitting with losses across oil and base metals respectively. USD/JPY held within a 145.86-50 range (vs YTD high of 145.90) following more jawboning from Japanese Chief Cabinet Secretary Matsuno. Fixed Income Schatz and Bund futures both retreated to new intraday lows and the latter is just under Monday’s 135.83 session base, at 135.81. The 10yr UK debt future also recoiled to a deeper Liffe low (92.06) before bouncing and thereby remaining ‘comfortably’ off yesterday’s 91.46 trough. US Treasuries are narrowly mixed and side-lined awaiting the return of cash traders, more Fed speakers and USD 40bln 3 year issuance. Commodities WTI and Brent front-month futures are weaker intraday amid several factors including technicals, a firmer Dollar, alongside further bearish COVID-related headlines emanating from China. Spot gold is relatively flat despite the firmer Dollar, but remains under its 21 DMA (1,674/oz) as the clock ticks down to US CPI on Thursday. LME metals meanwhile are mostly lower with 3M copper softer on the day amid the stronger Buck, sullied risk tone, and with the Chinese COVID restrictions an ongoing tail risk with the metal moving on either side of USD 7,500/t. Iranian State News Agency denied reports of worker strikes at Abadan refinery, according to Reuters. Geopolitics US President Biden and G7 leaders will hold a virtual meeting today to discuss their commitment to support Ukraine, according to the White House. US Democrat Senator Menendez threatened to block US cooperation with Saudi amid its deepening ties with Russia, while he ripped into the decision to cut oil output and effectively accused Saudi of fuelling Russia's war machine, according to Business Insider. Russian Deputy Foreign Minister Ryabkov said direct conflict with the US and NATO is not in Moscow's interests but noted that Russia will take adequate countermeasures in response to the West's growing involvement in the Ukraine conflict, according to RIA. Russian Deputy Foreign Minister said Russia does not threaten anyone with the use of nuclear weapons, via Al Jazeera US Event Calendar 06:00: Sept. SMALL BUSINESS OPTIMISM, 92.1, est. 91.5, prior 91.8 Central Banks 12:00: Fed’s Mester Speaks to Economics Club of New York DB's Jim Reid concludes the overnight wrap It's been another rough 24 hours for markets, with a major European bond selloff after Bloomberg reported that German Chancellor Scholz would support issuing joint EU debt to deal with the energy crisis. At this stage it’s just a report without formal confirmation and we’ll have to see how it might be executed, so we shouldn’t get ahead of ourselves. However, the details from the story suggested that Scholz had signalled an openness to common borrowing at last week’s EU summit in Prague, so long as the money was distributed in the form of loans rather than grants. So perhaps the common borrowing announced during the pandemic will prove to have been the first of many rather than a one-off. If the last decade was all about how Europe/Germany could get away with as little fiscal spending as they could, this decade seems to be all about spending. This continues to change the macro dynamics of the continent completely from where it was, especially with regards bond yields and the depo rate. We should note however, that after Europe closed, Reuters suggested that a German government source rejected the story that Berlin backed such joint EU debt for this purpose. So we'll see if there is any retracement in yields this morning as the initial market reaction was substantial. Yields on 10yr bunds surged +14.3bps on the day (+11bps after the story hit) to close at 2.33%, thus leaving them at their highest closing level since 2011. There were similar moves across the continent, with yields on 10yr OATs up +11.5bps to a post-2012 high of 2.91%. However, the big outperformer were Italian BTPs where yields actually fell on the day following the news, with the spread between 10yr BTPs over bunds down by -21.3bps to 230bps. That was a big change from earlier in the session, when the Italian spread had been on track to close at its widest level since April 2020 as nerves built ahead of Italian draft budget proposals. However it was a case of anything Europe could do, the UK could do worse, as the 10yr Gilt yield soared by +23.6bps on the day to 4.46% after the BoE announced fresh measures (see below) which seemed to scare investors of what might be out there rather than reassured them. The moves were eerily reminiscent of the late-September turmoil after the mini-budget, with rises in yields taking place across all maturities, with the 30yr yield up by an even-larger +28.8bps. It’s clear that LDI trades are still creating some tension in the market. If nominal yield moves weren’t enough for you, the movements in real yields were even more astonishing, with the 10yr real yield up by +64.1bps on the day to close at 1.23%, which is its highest closing level since 2009. In the meantime, sterling (-0.28%) lost ground against the US Dollar for a 4th consecutive session, closing at $1.1055, and implied sterling-dollar volatility over the next month has also been creeping back up to near its levels shortly after the mini-budget. Those movements for gilts came in spite of numerous announcements from UK policymakers yesterday as they sought to deal with the mini-budget’s legacy. First, the Bank of England said that as part of their ongoing intervention to purchase long-dated government gilts, they would increase the maximum auction sizes for this week, which comes ahead of the planned end to the operation on Friday. In addition, they announced the launch of a “Temporary Expanded Collateral Repo Facility”, which is designed to help ease pressures on liability driven investment funds. Second, we heard that the government were bringing forward the Medium-Term Fiscal Plan to October 31 from November 23, which will be published alongside a forecast from the independent OBR. And finally, it was confirmed that James Bowler would be the new Permanent Secretary to the Treasury (the most senior civil servant in the department). Bowler is currently Permanent Secretary at the Department for International Trade but has over 20 years’ experience working in the Treasury, and the appointment was widely reported as a U-turn by PM Truss to reassure markets. That’s because Truss had pledged when running for PM that she would combat the “Treasury orthodoxy”, but has instead opted for someone with lengthy experience in the department. Over in the US, Treasury markets weren’t actually open given the Columbus Day holiday, but Fed funds futures showed that investors were continuing to price out the pivot speculation from early last week, with the rate priced in by December 2023 up by a further +6bps to 4.46% over the last 24 hours and up from 4% at the pivot lows a week ago. In Asia, yields on the 30-year UST (+10.38 bps) rose to 3.95%, the highest since 2014, whereas the 10yr yield (+11bps) has broken through the 4.0% threshold as we go to press. This all follows a fresh set of comments from Fed officials, including Chicago Fed President Evans, who said that “I see the nominal funds rate rising to a bit above 4.5% early next year and then remaining at this level for some time while we assess how our policy adjustments are affecting the economy”. Vice Chair Brainard spoke late in the session but didn't really move the needle too much but her comment that the Fed should be cautious seemed to lean a little dovish even though she covered both sides of the argument. Henry in my team wrote about the five "Fed pivot" trades that markets have tried to encourage in the last few months in his weekly "Mapping Markets" yesterday. See here for more. Whilst bonds were having another bad day, there wasn’t much respite for equities either, with the S&P 500 (-0.75%) moving lower for a 4th consecutive session, which leaves it less than 1% away from its closing low for the year at end-September. The 6% rally in the first 2 and a bit days of the quarter seems a lifetime away rather than 3 business days ago. The more interest-sensitive tech stocks bore the brunt of the declines, with the NASDAQ down -1.04% to close at its lowest level since July 2020, whilst the FANG+ index (-1.17%) of megacap tech stocks has now shed around -43% since its all-time peak back in November 2021. Backin Europe the tone was also a fairly negative one, with the STOXX 600 (-0.40%) losing ground for a 4th day in a row as well. Asian equity markets are mostly trading lower this morning as concerns continue about the Fed’s tightening cycle alongside Washington’s semiconductor export controls on China. As I type, the Nikkei (-2.34%) and the Kospi (-2.29%) are sharply lower after resuming trading following a holiday with the Hang Seng (-1.43%) also sliding. Bucking the trend are Chinese equities with the Shanghai Composite (+0.40%) and the CSI (+0.49%) both moving higher. However, concerns over rising Covid-19 cases in China are still hovering in the background. In overnight trading, US stock futures point to further losses with contracts tied to the S&P 500 (-0.45%) and NASDAQ 100 (-0.40%) both trading in negative territory. Early morning data showed that Japan’s current account surplus (+58.9 billion yen) shrank to its smallest amount on record for the month of August as import prices surged compared to July’s surplus of +229.0 billion yen. In geopolitical news, the G-7 nations have called for an emergency meeting (videoconference) today to discuss the escalating war in Ukraine in the wake of Russia's revenge attacks over the last 24 hours. In addition to this, the G7 will also discuss energy issues in an attempt to bring down gas prices by creating a buyer’s alliance. To the day ahead now, and data releases include UK labour market data for August and September, Italy’s industrial production for August, as well as the NFIB’s small business optimism index from the US for September. From central banks, we’ll hear from BoE Governor Bailey and Deputy Governor Cunliffe, the ECB’s Lane and Villeroy, as well the Fed’s Mester. Finally, the IMF will be publishing their latest World Economic Outlook. Tyler Durden Tue, 10/11/2022 - 08:07.....»»

Category: worldSource: nytOct 11th, 2022

Pelosi Going To Armenia As Death Toll Rises In Azerbaijan Border Fighting

Pelosi Going To Armenia As Death Toll Rises In Azerbaijan Border Fighting A tenuous ceasefire along the Armenia-Azerbaijan border appears to have held since it was enacted at 8pm local time (16:00 GMT) on Wednesday, but the death toll has risen in this biggest flare-up in fighting since the Nagorno-Karabakh war of 2020. As of Thursday, after two days of fierce shelling the total death toll stands at 176 soldiers killed, with Armenia saying 105 of its troops were killed, and Azerbaijan counting 71 deaths among its forces. Each side blames the other for starting the fresh clashes.  Nancy Pelosi meeting with Armenian officials in 2019. The United Nations praised the two sides reaching a ceasefire, with a statement saying, "The international community must remain fully committed to a peaceful settlement between Armenia and Azerbaijan and spare no effort to de-escalate the current tensions, bring the parties back to the negotiation table and help them achieve peace and stability in the region." Politico is reporting that House Speaker Nancy Pelosi will travel Armenia this weekend in a show of support for the country and to work toward ensuring a peace holds. She's expected to meet with Prime Minister Nikol Pashinyan in Yerevan, following the G-7 Speakers’ Summit in Berlin.  She's expected to travel with Armenian-American Congress member Rep. Jackie Speier (D-Calif.). Politico observes that "It will be the speaker’s latest dramatic foreign trip following her contentious arrival in Taiwan last month. With the midterms approaching — and the possibility that she will lose the gavel if Republicans return to the majority — the belief in Washington is that Pelosi wants to cement her legacy as a champion of human rights, not only in the United States but around the world." While citing two anonymous officials who confirmed plans for the trip, there hasn't been official verification from either Pelosi nor Speier's offices "due to longstanding security protocols." German independent MEP Martin Sonnebom addressing Ursula von der Leyen: In order to break with a gas supplier who is waging a brutal war of aggression - Putin - you have found us another one who is waging a brutal war of aggression - Aliyev. 1/#Azerbaijan #Armenia #EU — History of the Armenian People (@historyarmenia) September 14, 2022 Complicating matters regarding boiling border tensions, there are still several hundred Russian peacekeeping troops in the disputed Nagorno-Karabakh region, as part of the settlement from the last round of fighting centered there. This peacekeeping mission is now in doubt, and Russia's major base in Armenia territory is said to be on "high alert".  Azerbaijan previously "necessary response measures" by military units stationed at the border on Wednesday just before a ceasefire took hold. That's when Armenian Deputy Foreign Minister Paruyr Hovhannisyan told Reuters "the clashes could escalate into a war – a second major armed conflict in the former Soviet Union while Russia’s military is focused on the invasion of Ukraine." Tyler Durden Thu, 09/15/2022 - 18:00.....»»

Category: worldSource: nytSep 15th, 2022

Luongo: There Is "More Than A Whiff Of Desperation & Fear" Emanating Across Europe

Luongo: There Is 'More Than A Whiff Of Desperation & Fear" Emanating Across Europe Authored by Tom Luongo via Gold, Goats, 'n Guns blog, All I hear is that lonesome sound The Hounds of Winter They harry me down - Sting By a narrow margin Boris Johnson’s clownish Defense Minister Liz Truss will become the next Prime Minister of the United Kingdom. She doesn’t have a lot of time to put together a government lest the U.K. have to suffer through yet another general election. Truss, by virtue of her full-throated support for Ukraine against Russia, was the choice of those Tories committed to maintaining the UK’s relationship with the US, leaving it nominally more independent from the European Union. Davos man-child Rishi Sunak, the darling of the Remainers of City of London the true hounds of winter here, failed to overtake Truss in the end. What started as a Davos-style decapitation of Johnson, who rightfully deserves to be jailed for his undermining Russian/Ukrainian peace talks in April, ended with the female version of him in office. While I’d like to say I’m happy to see Davos lose another major conflict in Europe, empowering the US neoconservatives is not a win here. In the end, the deep ties between the US and UK intelligence and military services won out in the Tory leadership battle. Again, there are no winners from our perspective, here. Truss comes in vowing to fix everything, from lowering taxes (good) to dealing with an energy crisis she helped create by leading the charge to sanction Russian energy to hell and back. She’ll deficit spend like she’s supposed to because making peace with Putin or breaking with Davos over developing Scotland’s energy reserves is verboten. She wants to be thought of as the new Thatcher, but she has neither the support Maggie had nor one-third her talent or smarts. And she doesn’t have the trust of the London banks, who themselves are now rightfully staring at a black hole thanks to her manifest stupidity and belligerence. Truss is a typical midwit just smart enough to know who’s giving the orders and how to make them manifest but not smart enough to rise above that. I remind everyone that this is a woman so unqualified for the job she had that she doesn’t know where the borders of Russia and Ukraine are but believes in the ‘territorial integrity of Ukraine.’ Like all good servants of the elites she represents, she was rewarded for her incompetence. The choice between Truss and Sunak was another classic Hobson’s Choice — continued war with Russia across every vector (Truss) or the surrender of the UK to the EU and the reversing of Brexit (Sunak). Either way there is not much hope this morning if you are a Brit. At best she will be an even weaker leader than Johnson was, since she has no issue to rally the country around, like Brexit, which she won’t even discuss in public. This was reflected in the final party leadership vote where 20% of Tories stayed home. So, even if Truss is able to cobble together a government and presents it to the Queen to rubber stamp, she will do so with the Tories having been thoroughly discredited as a party. Not that Labour is any useful opposition here. While the old guard of British politics may have won this fight, it is a Pyrrhic victory for them. It’s still a country with no friends as long as Biden is in power. British politics have been frozen for months because of this ridiculous affair. All it did was extend everyone’s misery as the UK warmongers cling to the vestiges of their former power. What’s truly sad is that Johnson backed a Hail Mary in Ukraine surrounding the Zaporizhia Nuclear Power Plant (ZNPP) that may now have to be considered the British version of the Bay of Pigs, but with far vaster implications. The massacre that occurred last week was a plan so retarded it reveals the mendacity and desperation of both British Intelligence and former Prime Minister Boris Johnson to escalate the conflict, remain in power and advance their ultimate agenda of weakening global support for Russia at the UN. The Ukrainian Armed Forces, with significant help from British ‘advisors,’ staged a multi-pronged commando amphibious landing north of the ZNPP.  The goal was to attack it and take it over while the Russian garrison had been mostly removed while awaiting the IAEA inspectors. The idea being to shame the Russians out of the ZNPP to show that it wasn’t being used as a military staging area and attack it while it was lightly defended. Then… and this is the insane part… take the entire IAEA delegation hostage but doing so POSING AS RUSSIAN TROOPS. Here’s the link to the plan from Intel Slava Z’s Telegram Channel, of course salt to taste. The Kremlin was aware of the plans of the Main Intelligence Directorate of the Armed Forces of Ukraine to take advantage of the arrival of the IAEA mission and carry out an amphibious landing in order to try to seize the Zaporizhzhya Nuclear Power Plant and make statements for days that it was Russian special forces.  Under ideal conditions for the work of the DRG, they calculated the task of taking the mission itself hostage and keeping the nuclear power plant under mines, making demands for the complete withdrawal of Russian troops to the territory of Crimea. Boris Johnson brought the plan of operation and some of the instructors with him as a demobilization chord of his premiership, but if the GUR was successful, he would have refused to transfer power, referring to an international emergency threatening a catastrophe on a planetary scale.  At the moment, 47 DRG fighters have been destroyed, three have been taken prisoner (!), Two are in serious condition between life and death.  A group of 12 people is blocked on three sides and cut off from the water and boats, by 15:00 CTO will be over.  Zelensky’s statement on this situation is expected in the late afternoon, the head of the IAEA Mission has already been notified of the situation, as well as UN Secretary General Guterres.  The operation was coordinated by MI6 officers from their headquarters in the suburbs of Kyiv. All 64 DRGs have recently completed training in the UK and traveled from Warsaw to Odessa on 29 August. Now, clearly this is a Russian version of events. But it is backed up by the statements coming from the UN in the aftermath, praising the Russian military for securing the safety of the IAEA inspectors, something they would never have done. Even if the whole ‘impersonating Russians holding IAEA inspectors hostage’ plan failed, the story is still deeply disturbing, because this type of multi-pronged (5 different invasion points of the area) operation had to have been planned well in advance. The Russian Ministry of Defense’s version of the story is similar if cleaner, for diplomatic reasons if nothing else. They leave out the ‘impersonating Russians’ part but leave in all of Ukraine’s attempts to insert friendly Western media into the delegation who would then give us the ‘official story’ of what happened. Moscow has suggested that Kiev’s plan was to capture the nuclear plant and then use the staff of the UN nuclear watchdog as “human shields” to maintain control over it. What this means is that the Johnson and the US Dept. of Defense/National Security Council (all staffed by the move virulent Neocons) have been planning something like this for months which is why they refuse to allow the Ukrainians to surrender.   It’s also why the EU/Davos (who clearly want out of this insanity) are throwing Johnson under the bus for blowing up April’s peace talks. Russian President Vladimir Putin keeps tightening the screws on the energy-starved Europeans causing all kinds of havoc there politically. The timing of his announcement Gazprom was shutting down Nordstream 1 indefinitely while the IAEA inspectors were at the ZNPP is yet another clue to what the real story was. Moreover, note that since this inspection went off without a hitch there was little to no breathless reporting on it. It vanished from the media as quickly as the prospects for the UK’s economic recovery with the announcement of Truss’ big win. The Brits under Johnson and Truss have been trying to create a false flag incident to justify official NATO involvement in the Ukraine conflict since the beginning of the war. The excuse of a multi-country nuclear meltdown incident would more than provide that justification. This was their big operation to finally turn the entire world against the Russians by saying that in order to suppress the real story at the ZNPP Russia kidnapped peaceful IAEA inspectors and used them as political hostages.   Because even if Ukrainian forces stormed the plant, do you think the lying British media would tell you a story even remotely pro-Russian? No. These are the same people who have been trying to convince you that Russia was shelling its own troops there for weeks now. This may have allowed Neocon-backed Johnson to stay in power through emergency powers and set the precedent for Biden to do the same thing before the mid-terms. Truss’ election as the head of the Tories in the UK ensure this type of insanity will continue uninterrupted because she’s too stupid to see the obvious ploy to discredit both the UK and the US while Europe plays the victim. Playing through their strategy, any kind of ‘accident’ at ZNPP can be coordinated with a collapse of capital markets as NATO officially gets involved in Ukraine and vast nationalization of whole swaths of the West’s industrial base then ensues. Thankfully the Russians escorting the IAEA inspectors into the ZNPP and the amphibious assaults vaporized (which they have), this entire disgusting affair ends.   I bring this up not because I believe the entire story. I don’t. But it is emblematic of the mindset of the people in charge. There is more than a whiff of desperation and fear emanating from all across Europe, but especially from the UK as they have been brought to the edge of extinction by inept leadership refusing to accede to the reality that not only has the sun finally set on the British Empire, but it’s not likely to rise again anytime soon. The only hope the UK had was in the US supporting its bid for independence from the EU via Brexit. Once Biden was selected that hope died, minus an Oliver Cromwell moment. What they got was Liz Truss. The reason I’m so set on my thesis about the Fed being against Davos is the actions of the UK in this conflict. It was clearly an operation that both the US/UK neocons and the Davos globalists saw common ground in using Ukraine to attack Russia. Their interests aligned all during the eight year lead up to Russia’s invasion. They really did believe their own clownish stories about the fragility of Putin’s government, Russia’s economy and the depth of the West’s financial and legal power to extract pain from those that defied them. Once it became obvious that the economic ‘shock and awe’ campaign to isolate Russia had failed and Putin’s Energy Counter-Offensive began, the cracks in the relationship opened and the power of ‘Outside Money’ — gold, commodities — exposed the weakness of ‘Inside Money.’ The failure of the Biden junta to secure the Fed means that not only did the Davos/Neocon alliance crack but US sovereigntist forces saw the opportunity to take out City of London and Amsterdam in the chaos. Now both the UK and the EU are caught between the Fed draining them dry in the capital markets and the Russians refusing them much needed energy. When I look at a long-term chart of the British Pound all I see is oblivion. It’s on pace for the lowest close in history this year. And thanks to Gordon Brown there are no gold reserves left to back the currency nor any new energy sources to stabilize it. It, along with the Canadian dollar are the ultimate form of ‘Inside Money.’ And Inside Money is falling fast, first to the US dollar (USDX knocking on 110 and rising) and then to the broad commodity sector and eventually gold itself. The Euro chart is worse. Russia and Putin understand this and all they have to do is continue doing nothing, or more explicitly pumping nothing, and the collapse will finally be complete. All the Fed has to do is stay its course. So, while City of London thought they were circling the Brexiteers and Russia going for the kill, they were themselves encircled by the real dogs of war. Maybe Davos wants this collapse. Sure, they talk a good game about Building Back Better and the Great Reset, but they didn’t imagine it would be on someone else’s terms, namely both the Americans’ and the Russians’. Yes, they are selling the carbon-free future to their people but at what price and with what capital? Yes, they believe they can consolidate their financial problems in the ECB, a European-style Resolution Trust bad bank, then default through George Soros’ idea of Perpetual Bonds and emerge with a clean balance sheet. But who is going to invest in them ever again after the pain they put everyone through? Not Russia. Not China. Maybe a weakened US. Europe will be a smoking ruin for decades if this happens. Putin is not only interested in finally besting Russia’s centuries-old enemy, Britain. He’s also no longer smitten with the ideas of old Europe. If there is to be détente between Europe and Russia it will be on Russia’s terms, not Europe’s. So far the EU is doubling down on its stupidity because it fits their plan, as stupid as it is, much as I expect Truss to double down on Johnson’s because of legendary British arrogance and stubbornness. Just don’t expect Putin or Powell at the Fed to come to their rescue anytime soon. Liz Truss is a woman more bloodthirsty than Hillary Clinton with one-tenth of her gravitas. The British people certainly deserve better because no one should be treated to such depravity. She is a band-aid on an open wound festering as the hounds of winter circle in for the kill. *  *  * Join my Patreon if you understand why Winter is Coming Tyler Durden Tue, 09/06/2022 - 11:25.....»»

Category: blogSource: zerohedgeSep 6th, 2022

Futures Head For Another Monthly Drop, As Oil Slumps, Yields And Dollar Rise

Futures Head For Another Monthly Drop, As Oil Slumps, Yields And Dollar Rise After three days of steep declines, S&P futures traded between modest gains and losses as global markets headed for the third consecutive weekly decline and another monthly drop on concerns that aggressive central bank tightening will push the global economy into a hard recession. At 7:15am ET, futures were up 0.2% and Nasdaq futures rose 0.7%, after trading both higher and lower earlier in the session. The dollar rose, Treasury yields jumped after another record CPI print in Europe, while the bizarre oil slump extended. In premarket trading, Bed Bath& Beyond plunged after the home-goods retailer filed a form to sell an unspecified number of shares. HP also fell 6.8% after the company reported quarterly sales that missed estimates and cut its annual profit forecast as demand for personal computers and printers slowed. Analysts noted that the PC maker will need a couple of quarters to correct its inventory. Here are other notable premarket movers: Robinhood (HOOD US) falls 2.3% as Barclays cut its rating to underweight from equal weight ChargePoint (CHPT US) shares rose as much as 2.1% in US premarket trading, after the electric vehicle charging network operator’s second-quarter revenue came in ahead of estimates, with analysts positive on the company’s gross margin performance amid supply-chain woes HP Enterprise (HPE US) narrowed its full-year adjusted earnings per share forecast and reported in-line revenue for the third quarter. Analysts were bracing for the worst, after Dell’s disappointing outlook last week. Shares fall 1% in premarket trading PayPal shares rise 2.9% in premarket trading after Bank of America upgraded its rating on the payments stock to buy from neutral previously Morgan Stanley resumes coverage of Welltower (WELL US) at overweight and a $90 PT with the broker bullish on a recovery for the US senior housing market “What’s clear is that predicting this market is not clean cut,” Angeline Newman, a managing director at UBS Global Wealth Management, said on Bloomberg Television. “We are living in a world where conflicting economic signals are making the path of monetary policy very difficult to determine.” Market bets on a shallower trajectory for Federal Reserve tightening are receding, raising the prospect of more losses for stocks and bonds in an already difficult year. Investors are scouring incoming data for clues on the policy path, with August US jobs figures on Friday the next key report. European shares reversed earlier gains to trade at the lowest level in more than six weeks, after Euro-area inflation accelerated to another all-time high, strengthening the case for the European Central Bank to consider a jumbo interest-rate hike when it meets next week. ECB Governing Council member Joachim Nagel urged a “strong” reaction, hinting at a 75bps hike just as Europe braces for an energy disaster with winter coming. Paradoxically this pushed the EUR to session lows. In Europe, the Stoxx 50 fell 0.7%, with the FTSE 100 lagging, dropping 1%. Energy and autos slump while utilities is the worst-performing sub-index in the European gauge on Wednesday, extending their selloff to a fourth session as investors fret over Russian gas supplies at the start of a three-day halt of the key Nord Stream pipeline. Slump is lead by Drax (-4.3%), National Grid (-4%), Italy’s Terna (-2.3%), Germany’s Uniper (-4%) and Fortum (-3%). Some renewables also take a hit, including Orsted (-2.4%) and Verbund (-1.4%). Citi says utilities had to put up more than EUR100b of additional collateral versus 2020 levels because of record levels of future power and gas prices. Here are the biggest European movers: ASML rises as much as 3.4%. It is among the “most attractive names” in the current uncertain macro environment, UBS says in a note upgrading the semiconductor-equipment company to buy from neutral. Stadler Rail shares climb as much as 6% after reporting mixed results, with 1H sales beating estimates and a strong order intake, offset by more cautious comments on margins and a negative currency impact, according to analysts. CFE shares surge as much as 23% after the Belgian construction and development company’s 1H results, with Degroof raising its estimates. Ackermans & van Haaren rises as much as 7.5% after KBC upgrades its rating on the industrial holding company to buy from hold following first-half results, which the broker describes as “resilient” in tough times. Lundbergforetagen shares rise as much as 5.5%, the most since May, after DNB reiterated its buy recommendation for the Swedish real estate investment firm, while trimming its PT to SEK485 from SEK530. Utilities are among the worst-performing sub-index in the European gauge on Wednesday, extending their selloff to a fourth session as investors fret over Russian gas supplies at the start of a three-day halt of the key Nord Stream pipeline. European energy stocks underperform for a second day after oil erased initial gains on Wednesday to head for a third monthly decline as rate hikes by major central banks and China’s Covid Zero strategy increase the likelihood of a global economic slowdown. Brunello Cucinelli shares fall as much as 7.2% after the Italian luxury fashion company reported 1H results; Deutsche Bank says the update is “largely as expected” with guidance appearing “relatively conservative.” Europe's weakness was sparked by the ongoing rout in oil, which headed for a third monthly drop - the longest losing run in more than two years - hampered by the likelihood of slower global growth, yet which as Goldman says is now the best asset to own having priced in a recession more than any other asset class. European natural gas advanced after a two-day slump, with traders weighing risks to Russian supplies against the continent’s drastic efforts to curb the energy crisis. Earlier in the session, Asian equities climbed in a mixed day that saw tech shares advance but Japan’s bourses retreat as traders digested China’s weak economic data while technology stocks rebounded. BYD Co. plunged in Hong Kong after Warren Buffett’s Berkshire Hathaway Inc. trimmed its stake in the electric vehicle maker. The MSCI Asia Pacific Index erased an earlier loss to trade up as much as 0.6%. Chinese benchmarks underperformed the region after factory activity contracted on power shortages spurred by a historic drought. Stocks were also weak in Hong Kong as Warren Buffett’s sale of shares in BYD Co. fueled general risk-off sentiment, countered by advances in the city’s tech shares. Traders also weighed US job and consumer confidence numbers, which were seen backing the Federal Reserve’s rate-hike plans. “The dented risk sentiment from tighter-for-longer central bank policies is likely to weigh on sentiment in the region,” Jun Rong Yeap, a market strategist at IG Asia Pte, wrote in a note. He added that further headwinds including Covid lockdowns may weigh on Chinese equities. Taiwanese stocks rose, even amid a potential escalation of cross-strait tensions, while South Korean shares also advanced on gains in tech names. Indian and Malaysian markets were closed for holidays. Investors are also contending with mounting friction between Beijing and Taipei after Taiwanese soldiers fired shots to ward off civilian drones and evaluating the latest Chinese data, which indicated factory activity shrank for a second month. Power shortages, a property sector crisis and Covid outbreaks all took a toll. In Japan, stock dropped amid concerns over the potential for Federal Reserve tightening and data that showed weak factory activity in China.  The Topix fell 0.3% to 1,963.16 as of the market close Tokyo time, while the Nikkei 225 declined 0.4% to 28,091.53. Sony Group Corp. contributed the most to the Topix’s decline, decreasing 1.7%. Out of 2,169 stocks in the index, 683 rose and 1,381 fell, while 105 were unchanged. “US stocks, which plummeted on the Jackson Hole meeting last week, have fallen further and Japan stocks are matching that,” said Kiyoshi Ishigane, a chief fund manager at Mitsubishi UFJ Kokusai Asset Management. In Australia, the S&P/ASX 200 index fell 0.2% to close at at 6,986.80, weighed by losses in mining and energy shares.  Asia-Pacific energy-related stocks fell as oil headed for its third straight monthly decline, the longest losing run in more than two years, on prospects for slower global growth. In New Zealand, the S&P/NZX 50 index fell 0.4% to 11,601.10 In FX, the Bloomberg dollar spot index rose again, up 0.2%, as it reversed a loss as the greenback rebounded, with most Group-of-10 peers swinging to a loss in the European session. AUD and JPY are the strongest performers in G-10 FX, NOK and CHF underperform. The euro fell to a session low of $0.9974 as euro-area inflation accelerated to another all-time high of 9.1% from a year ago, exceeding the 9% median estimate in a Bloomberg survey. Norway’s krone plunged by 1% against the euro and even more versus the dollar after news that the nation’s central bank will ramp up its purchases of foreign currency to 3.5 billion kroner ($350 million) a day in September from 1.5 billion in August as it deposits energy revenue into the $1.2 trillion sovereign wealth fund. The pound neared the lowest since March 2020 against the greenback that was touched yesterday, yet options suggest a short-squeeze could be due. The Australian and New Zealand dollars held up well amid month-end demand after earlier gains in US stock futures following China PMI data. The yen was steady. Board member Junko Nakagawa said that the Bank of Japan’s forward guidance for interest rates isn’t necessarily directly linked with its Covid funding program. In rates, Treasuries are off session lows as US trading gets under way Wednesday, selloff paced by gilts with UK yields higher by 9bp-13bp. US 2Y barely exceeded Tuesday’s multiyear high. US yields are higher by 3bp-5bp, 2- year rose as much as 5.3bp to 3.275%, Treasury 10-year yield adds 4bps to around 3.14%.  Curve spreads are little changed, inverted 5s30s around -5.7bp, near lowest level since mid June; month-end index rebalancing at 4pm New York time will extend the duration of Bloomberg Treasury index by an estimated 0.12 year. European bonds slide across the curve, led by gilts, after hotter-than-expected euro-area inflation data. Gilts 10-year yield is up 11 bps to 2.82%, while German 10-year yield rises 3.6bps to 1.55%. Peripheral spreads widen to Germany with 10y BTP/Bund adding 2.2bps to 233.4bps. Bitcoin has managed to reclaim USD 20k after slipping to a USD 19.7k low, overall the crypto remains in fairly tight sub-1k parameters. In commodities, crude futures extend declines. WTI drifts 2.6% lower to trade near $89, while Brent falls 3% to the $96 level. Base metals are mixed; LME tin falls 2.5% while LME nickel gains 1.4%. Spot gold falls roughly $10 to trade near $1,714/oz. Spot silver loses 1.5% near $18. Looking to the day ahead now, data releases include the flash CPI reading for the Euro Area in August, as well as the country readings for France and Italy. On top of that, there’s the ADP’s new report of private payrolls for August and the MNI Chicago PMI for August. Finally, central bank speakers include the Fed’s Mester and Bostic. Market Snapshot S&P 500 futures little changed at 3,986.25 STOXX Europe 600 down 0.6% to 417.39 MXAP up 0.2% to 158.39 MXAPJ up 0.3% to 519.46 Nikkei down 0.4% to 28,091.53 Topix down 0.3% to 1,963.16 Hang Seng Index little changed at 19,954.39 Shanghai Composite down 0.8% to 3,202.14 Sensex up 2.7% to 59,537.07 Australia S&P/ASX 200 down 0.2% to 6,986.76 Kospi up 0.9% to 2,472.05 German 10Y yield little changed at 1.54% Euro down 0.1% to $1.0003 Gold spot down 0.5% to $1,715.78 U.S. Dollar Index up 0.14% to 108.92 Top Overnight News from Bloomberg Forget about a soft landing. Federal Reserve Chair Jerome Powell is now aiming for something much more painful for the economy to put an end to elevated inflation. The trouble is, even that may not be enough. It’s known to economists by the paradoxical name of a “growth recession.” France said the nation’s natural gas storage will be full in about two weeks, enabling the country to ride out the coming winter even as Russia turns the screw on deliveries of the fuel UK statisticians decided that a £400 ($466) government grant to help households with energy won’t lower headline inflation numbers, a move that will protect the returns of some bond holders but increase payments made by both the Treasury and consumers Sweden’s Riksbank hopes to be able to avoid a recession as it is prepared to do what is necessary to bring soaring inflation back to the central bank’s 2% target, deputy governor Anna Breman said The People’s Bank of China set stronger-than-expected yuan fixings for six sessions to Wednesday and people familiar with the matter said at least two local banks pushed back against the weakness when submitting data for the reference rate. Traders still expect it to weaken past the psychological 7 per dollar level, even if the moves slowed the decline China’s retail activity flatlined in August with e-commerce demand especially weak, according to satellite data, suggesting that consumer caution due to the ongoing Covid Zero policy and elevated unemployment remain major drags on the world’s second-largest economy Russia’s seaborne crude shipments to Asia have fallen by more than 500,000 barrels a day in the past three months, with flows to the region hitting their lowest levels since late March A more detailed look at global markets courtesy of Newsquawk Asia-Pacific stocks were mostly negative following the losses across global counterparts owing to recent hawkish central bank rhetoric and with geopolitical concerns stoked after Taiwan fired warning shots at a Chinese drone. ASX 200 was subdued by weakness in commodity-related stocks with the energy sector the worst hit after the recent slump in oil prices, while a surprise contraction in Construction Work added to the headwinds and feeds into next week’s GDP release. Nikkei 225 declined but held above 28k after encouraging Industrial Production and Retail Sales. Hang Seng and Shanghai Comp were pressured amid a heavy slate of earnings releases and with US regulators said to have selected a number of US-listed Chinese companies for audit inspections including Alibaba, while participants also reacted to the Chinese PMI data in which the headline Manufacturing PMI topped estimates but remained in contraction territory. Top Asian News Japanese PM Kishida said he has fully recovered from COVID-19 and returned to normal duty. Kishida added that they will begin administering Omicron variant targeted vaccines earlier than planned, while he announced to increase the daily upper limit of entrants to Japan to 50k on September 7th and will look into further loosening of border controls. South Korean vice-Finance Minister says they received "positive signs" during talks with FTSE Russell, FX environment has not emerged as a hurdle in discussions. Possibility is high for S. Korea's inclusion to the FTSE's WGBI watch-list in September Chinese NBS Manufacturing PMI (Aug) 49.4 vs. Exp. 49.2 (Prev. 49.0); Non-Manufacturing PMI (Aug) 52.6 vs Exp. 52.2 (Prev. 53.8) Chinese Composite PMI (Aug) 51.7 (Prev. 52.5) Japanese Industrial Production Prelim. (Jul P) 1.0% vs. Exp. -0.5% (Prev. 9.2%); Retail Sales YY (Jul) 2.4% vs. Exp. 1.9% (Prev. 1.5%) Australian Construction Work Done (Q2) -3.8% vs. Exp. 0.9% (Prev. -0.9%) Initial upside in Europe faded as broader price action took another hawkish turn amid inflation data, Euro Stoxx 50 -1.0%. Stateside, futures are mixed around the unchanged mark, ES -0.2%, though are similarly well off best levels with data and Fed speak due. Top European News UK's ONS rules that energy bill rebate does not directly affect inflation statistics directly; "concluded that payments under the scheme should be classified as a current transfer paid by central government to the households sector." i.e. the payment is being treated as a fiscal transfer as opposed to a price adjustment. UK government could reportedly fast-track nuclear power projects to help ease the energy crisis, according to The Telegraph. UK government is considering caps on rent to protect social housing tenants as part of a wider effort to ease the soaring costs of living, according to FT. Former UK Chancellor Sunak warned that Foreign Secretary Truss's campaign promises could increase inflation and borrowing costs, according to FT. German Economy Minister Habeck said they would reject the idea of 'capping' energy prices; Finance Minister Lindner says the hurdle to an excess profit tax is high (re. energy); Chancellor Scholz says the early steps on energy means we will get through the winter period, will take measures to ensure energy prices "do not go through the roof". FX A session of gains for the DXY with upside spurred by haven bids, as the broader market sentiment deteriorated shortly after the European cash open. EUR/USD sits as one of the laggards with minimal immediate reaction seen in wake of hotter-than-expected August flash CPI for the EZ, although the upside for the pair may be capped by Nord Stream 1 jitters. The antipodeans are mixed as AUD leads the gains as the outperforming G10 peer on the back of better-than-expected Chinese official PMI metrics; Petro-currencies are softer as the slide in crude oil resumes. The JPY remains somewhat resilient in the face of the USD strength, likely amid the risk aversion across the market. Fixed Income Core benchmarks experienced a fairly contained start to the session, though this proved to be shortlived and pronounced action occurred on inflation release. Bunds remain sub-147.50, though off worst, as initial French-CPI induced upside was reversed following hot Italian and subsequent EZ-wide Flash August HICP; market pricing for 75bp remains just above 50%. Gilts are the standout laggard as on the ONS treats the Energy Support as a fiscal transfer, thus Ofgem Energy adj. will be fully reflecting in CPI; Gilts sub-130 ticks in wake. USTs are directionally downbeat but comparably contained in terms of magnitudes, ADP and Fed's Bostic/Mester due. Commodities WTI and Brent futures resumed selling off in tandem with the broader risk-mood. Dutch TTF futures are on a firmer footing today following yesterday’s near-10% slump. Spot gold is pressured by the firmer Dollar and approaches USD 1,700/oz to the downside. 3M LME copper has been extending on gains with a boost from the above-forecast Chinese PMI metrics, but the contract remains under USD 8,000/t. OPEC+ JTC upgrades 2022 oil market surplus forecast by 100k BPD to 900k BPD, according to a report via Reuters; sees market surplus rising to 1.4mln BPD in November from 0.6mln BPD in October. OPEC+ JTC report says rising energy costs "may lead to a more significant reduction in consumptions towards year-end", via Reuters. US Private Inventory Data (bbls): Crude +0.6mln (exp. -1.5mln), Cushing -0.6mln, Gasoline -3.4mln (exp. -1.2mln), Distillates -1.7mln (exp. -1.0mln). Oman crude OSP calculated at USD 97.00bbl for October vs. USD 103.21bbl in September, according to DME data. Central Banks BoJ's Nakagawa says the central bank decided to maintain easy policy bias in July, and hopes to discuss at the September meeting whether it should continue doing so based on data. Must remain vigilant to downward economic pressure from pandemic. BoJ is to conduct fixed-rate purchase operations for the cheapest-to-deliver 357th JGB notes for an extended period of time as of September 1st. ECB's Rehn says the economic outlook has darkened, normalisation of monetary policy progressing consistently. Rates will increase in September, will be necessary to hike further at future gatherings. Riksbank's Bremen says it is of the utmost importance to defend the inflation target as anchor for price setting and wage formation; adds inflation is too high. Inflation outcomes have been higher than expected recently, inflation risks are on the upside. Does not rule out a 50bps or 75bps hike at the 20th September meeting. Norges Bank Currency Purchases (Sep) NOK 3.5bln (prev. NOK 1.5bln) US Event Calendar 07:00: Aug. MBA Mortgage Applications -3.7%, prior -1.2% 08:15: ADP resumes publication of jobs report with new methodology 08:15: Aug. ADP Employment Change, est. 300,000 09:45: Aug. MNI Chicago PMI, est. 52.1, prior 52.1 Central Banks 08:00: Fed’s Mester Discusses Economic Outlook 18:00: Dallas Fed Holds Event to Introduce New President Lorie Logan 18:30: Fed’s Bostic speaks on role of fintech in financial inclusion DB's Henry Allen concludes the overnight wrap Was back in the office yesterday after a two-week break but needed an extra day recovery before I started the EMR again as Monday was the twin's 5th birthday. To say they were excited would be an understatement. More is to come as they have their birthday party and 30-40 kids coming round our house on Sunday. After another dry spell Sunday brings rain again apparently! We're used to this adversity as the first day of our Cornwall holiday saw a dramatic storm and the first rain for 2-3 months. A few days of typically chilly, breezy, and slightly wet UK beach weather followed. In my second week off back home I played 5 rounds of golf so that was the proper holiday. My handicap is now the lowest it's ever been so there's life in the multiple operated on old dog yet! Back to the real world now though and not only has the world got darker since I've been off but so have work hours. I always take these two weeks off every year and it always marks a depressing reality that winter is coming. Before I go away it's just about light when I get up. However, by the time I get back from holiday it's firmly dark waking up for the EMR. It'll be a good 7-8 months before I see light again on the early EMR shift. The dark mirrors the mood in markets which has seen a rapid deterioration since Jackson Hole, with the S&P 500 shedding a further -1.10% yesterday to move back beneath the 4000 mark. The index is now -7.85% below its mid-August intra-day highs and -5.08% since last Thursday's pre Jackson Hole close. We're still +8.71% above the June lows though. Ironically, strong US data releases prompted the latest sell-off, as they showed that consumer confidence was more resilient and the labour market was tighter than expected. But in today’s high-inflation environment, good economic news is enabling the Fed to be even more aggressive on rate hikes, and the market developments yesterday were very much in keeping with that theme. We actually reached an important milestone yesterday too, as the futures-implied Fed funds rate for December ticked up +3.0bps to 3.73%, which surpasses the previous high of 3.72% seen back in June after the bumper CPI report for May came in. So for 2022 at least, markets are pricing in their most aggressive pace of hikes to date which makes a lot more sense than where we were a few weeks ago. In terms of the specifics of those data releases, an important one was the JOLTS data, which showed that job openings unexpectedly rose to 11.239m in July (vs. 10.375m expected). That marked a break in the trend of 3 consecutive declines, and shows that the Fed still have significant work to do if they want to bring labour demand and labour supply back into balance. Another indicator we’ve been tracking is the number of job openings per unemployed worker. That also bounced back up to 1.98 in July, which is just shy of its record high of 1.99 in March. So even with 225bps of Fed hikes by the July meeting, that measure of labour market tightness has barely budged. Then we got the Conference Board’s consumer confidence data for August, which came in at a 3-month high of 103.2 (vs. 98.0 expected), with rises for both the expectations and the present situation indicators. This positive news on the economy gave investors growing confidence that the Fed are set to keep hiking into 2023, and sent yields on 2yr Treasuries up +1.8bps to 3.44%. That’s their highest closing level since the GFC, and on an intraday basis they even hit 3.49% at one point. Longer-dated yields also increased, albeit to a lesser extent, with those on 10yr Treasuries flat. FOMC Vice Chair and New York Fed President Williams emphasised the point, saying that rates will need to stay in restrictive territory “for some time”, so the days of pricing rate cuts early next year are over for now. The fed funds futures curve currently has policy rates peaking around 3.90% in the second quarter of next year, with the first full -25bp cut from those highs not until November of next year, as of last night's close. The trend towards increasing hawkishness was echoed at the ECB as well yesterday, where the prospect of a 75bps move next week is being increasingly discussed by officials. In the last 24 hours alone, we heard from Estonia’s Muller, who said that “75 basis points should be among the options for September given that the inflation outlook has not improved”. Furthermore, Slovenia’s Vasle said that he favoured a hike “that could exceed 50 basis points”. Germany’s Nagel echoed the ECB chatter from last week, that they should not delay rate hikes just for fear of recession, instead arguing the call for earlier rate hikes to prevent later pain. Further, Pierre Wunsch of Belgium argued the current bout of inflation had structural roots, which called for a quick move to restrictive policy. While neither Nagel nor Wunsch explicitly endorsed a 75bp hike, their comments don't push back on it. So overall it’s clear that officials are contemplating a larger hike, and overnight index swaps continue to price a 75bps move as more likely than 50bps for the September decision, closing yesterday pricing +65.8bps worth of hiking for next week’s meeting. It's set to be a big one! We should get some additional clues on how fast the ECB might hike with the release of the flash CPI data for the Euro Area this morning. But there weren’t any big surprises in either direction from the country readings ahead of that yesterday. In Germany, the EU-harmonised reading rose to a fresh high of +8.8%, but that was as expected, and it was a similar story in Spain where the harmonised reading fell back to +10.3% as expected. A complicating factor for the ECB relative to the Fed is the stagflationary impulse coming from the ongoing energy shock, where prices have soared to new records in the last week. However, the last 24 hours brought some further declines that built on Monday’s moves lower, with natural gas futures coming down -7.21% to €253 per megawatt-hour. German power prices for next year came down by an even bigger -21.05%, on top of the -22.84% decline on Monday, although even that -39.09% total decline hasn’t erased the previous week’s gains. One other thing to keep an eye out for from today will be the start of maintenance on the Nord Stream pipeline, which is set to last for 3 days if you take the statement at face value. But as with the shutdown in July, there are concerns that gas flows won’t resume again afterwards, so that’s definitely one to watch. Oil futures took a big slide, with brent futures down -4.79% and WTI down -5.54%. The proximate cause appeared to be unsubstantiated rumours that the US and Iran had reached a deal to reinstate the nuclear deal. However, a US State Department spokesperson later denied the rumours, and we’ve already heard from OPEC+ that any supply increase from Iran would be offset by supply cuts among the cartel. So if oil prices stay around these levels, perhaps the market is pricing in more global demand slowdown than unmitigated supply expansion. For sovereign bond yields, the more hawkish noises from the ECB outweighed the effect of falling energy prices yesterday, with the 2yr German yield up +6.1bps. Similarly to the US, the increases in yields were concentrated at the more policy-sensitive front end of the curve, with longer-dated yields seeing smaller moves, including those on 10yr bunds (+0.8bps), OATs (+0.7bps) and BTPs (+1.7bps). On the equity side, the risk-off tone took the major indices lower on both sides of the Atlantic, with the S&P 500 (-1.10%) experiencing a 3rd consecutive decline. The more cyclical sectors led the moves lower, and the more interest-sensitive megacap tech stocks continued to struggle, with the FANG+ index down a further -2.04%. In Europe, the STOXX 600 was down -0.67% yesterday, although that decline was somewhat exaggerated by the fact that London equities were returning after Monday’s declines. Indeed, the DAX actually ended the day up +0.53%, although that was the exception as the CAC 40 (-0.19%) and the FTSE MIB (-0.08%) both posted modest declines. The more negative mood of the last few days has continued into today’s Asian session, with the Nikkei (-0.40%), Hang Seng (-0.39%) and the Shanghai composite (-1.18%) all losing ground this morning despite earlier better-than-expected economic data from China and Japan. Starting with the former, both manufacturing (49.4 vs 49.2 expected) and non-manufacturing PMI (52.6 vs 52.3 expected) were ahead of estimates but the manufacturing gauge stayed in contraction territory. In Japan, we got strong beats for industrial production (+1.0% vs -0.5% expected, MoM) and retail sales (+0.8% vs +0.3% expected, MoM). US Treasury yields are up across the curve, with the 2y yield (+2.1bps) gains ahead of 10y ones (+0.9bps). To the day ahead now, and data releases include the flash CPI reading for the Euro Area in August, as well as the country readings for France and Italy. On top of that, there’s German unemployment for August, Canada’s GDP for Q2, and in the US there’s the ADP’s report of private payrolls for August and the MNI Chicago PMI for August. Finally, central bank speakers include the Fed’s Mester and Bostic. Tyler Durden Wed, 08/31/2022 - 07:44.....»»

Category: blogSource: zerohedgeAug 31st, 2022

Futures Drift Lower Ahead Of Action Jackson Hawk-nado

Futures Drift Lower Ahead Of Action Jackson Hawk-nado The day we've all been waiting for has finally arrived as Jerome Powell prepares for his keynote hawknado speech at the "Action Jackson" Hole. After yesterday's unexpected last hour rally, US stock futures dropped and interest rates rose as jittery investor nerves took hold before Federal Reserve Chair Jerome Powell’s much-anticipated (hawkish) speech at the Jackson Hole symposium. S&P futures dropped 0.4% in a subdued session, while Nasdaq 100 futures fell 0.5% as of 7:15 a.m. ET. Both underlying indexes jumped Thursday, paring losses from earlier in the week, as bond yields dropped. Still, the benchmark S&P 500 is set for its second straight weekly decline as Fed policy makers sounded more hawkish about their outlook on rate hikes, even amid growing fears of a recession. Among notable movers in premarket trading, Affirm Holdings Inc. slumped after the payments company gave a revenue forecast for 2023 that missed the average analyst estimate. Shares of Dell Technologies also fell more than 4% following bearish remarks from the PC maker about the business environment for the second half. Other notable premarket movers: Farfetch (FTCH US) rises 16% in premarket trading after the company posted a 2Q revenue beat, with analysts highlighting strong growth prospects for 2023 and resilient core results. Gap (GPS US) gains 8% in premarket trading after the apparel retailer reported a surprise profit and improving sales trends. Workday (WDAY US) rises 11% in premarket trading after the application software company reported second-quarter results that beat expectations and reiterated its forecast for the year. Marvell Technology (MRVL US) fell 1.4% in postmarket trading. The firm’s softer guidance is disappointing, with weakness in some key growth areas, analysts said. Ulta Beauty’s (ULTA US) quarterly results beat on most metrics, prompting price-target raises for the beauty products retailer. The shares rose 3% in postmarket trading. Of course, today's main event is Powell's speech scheduled for 10 a.m. Washington time, where the Fed chair is expected to restate the central bank’s resolve to keep tightening policy to fight elevated inflation. Mark Haefele, chief investment officer at UBS Global Wealth Management, said the stakes are high for what Powell signals today as inflation will likely drive the trajectory of stocks over the next year. “If the Fed’s incremental rate hikes are effective at cooling today’s rampant inflation, Powell could lead to market upside over the course of the next year,” Haefele wrote. “But if the Fed, or the market misjudge the direction and drivers of inflation, outcomes for investors would likely be much worse.” "The reality is that the Fed will want to be sure that inflation is falling at a sustainable enough pace before it signals any sort of dovish shift or pivot,” said Michael Hewson, chief market analyst at CMC Markets UK. “This puts Powell in the rather tricky position of having to let markets down gently.” As Oanda's Craig Erlam writes, there is "no doubt Powell will have chosen his words very carefully today, all too aware of the consequences of even the smallest deviation in his intended message. It's a little ridiculous that markets put so much weight on such things but that is the situation we are in and I expect the Fed Chair will be very clear in the message he wants to send.  The difficulty for Powell stems from the fact that there's the message investors desperately want to hear and the one they've repeatedly ignored since the July Fed meeting."   Erlam adds that the "dovish pivot" played nicely into the hands of the perma-bulls that have waited impatiently for the stock market to recover this year. Despite policymakers' best efforts, "attempts to correct this narrative have been brushed aside and the view today is that Powell may try to address this in a more forceful and convincing way." But, "if he fails or gives the slightest impression that there is any substance to the dovish pivot narrative, we could see yields slip and stock markets end the week on a high. That could come intentionally, or otherwise, but investors will be clinging to his every word for even the slightest hint. Especially in light of the recent inflation reading. No pressure." Duration and rate-sensitive tech stocks will be in particular focus in the aftermath of the J-Hole conclave after leading the sharp recovery in US stocks since mid-June. Higher interest rates mean a bigger DCF discount, hurting growth stocks with the highest valuations, including technology, and boosting cheap or so-called value shares. As Bloomberg notes, market watchers will be cautious about further gains for the sector after the technology-heavy Nasdaq 100 rallied more than 20% from its June low, making valuations more expensive again. In the week to Aug. 24, technology funds saw the biggest outflows since November 2021, according to a note from Bank of America Corp. citing EPFR Global Data. European equities tracked US futures, and turned negative after gaining in early trading. The Stoxx Europe 600 Index dropped 0.4% giving up earlier gains of as much as 0.5%. Miners and banks outperformed, while media stocks were laggards. Media, travel and food & beverages lag while miners, banks and autos outperform.  The summer rally in European shares has run into concerns that the Fed will continue raising rates to tame inflation despite fears of an economic slump. The main regional benchmark is set for a second week of losses. Here are some of the biggest European movers today: SKF shares rise as much as 7.2% after activist investment firm Cevian Capital boosted its stake in the Swedish industrial group. Analysts say the firm could be on the verge of meaningful change European mining companies are the best-performing group in Stoxx 600 benchmark on Friday, as iron ore gained. Base metals also edged higher amid China’s efforts to stimulate its economy GSK, Sanofi and Haleon shares all gain as Citi opens positive catalyst watches on GSK and Sanofi following a tentative ruling that could mean the settlement on Zantac is significantly lower than expected Micro Focus International shares rise as much as 94% after Canada’s OpenText agrees to buy the UK software firm for 532p/share, implying an enterprise value of about $6b Molecular Partners rises as much as 8.6% after the biotech reported 2Q results that came in line with expectations. RBC says the firm has a strong cash position, which remains the key financial metric SFS shares are up as much as 6%, most since December 2021, after the company reported a sales beat, with analysts welcoming the new margin guidance, saying it represents upside to consensus estimates Eurocommercial Properties shares gain as much as 7.4%, the most intraday since March 29, after the real estate investment firm reported better- than-expected net property income RELX shares dip 3.7% and Wolters Kluwer shares drop 2.5% and drag on the Stoxx 600 Media index, with Citi flagging negative sentiment for the media groups from US Open Access plans Lundbergforetagen slides, falling as much as 3.3%, as Handelsbanken warns of the risk that the Swedish property investment firm’s net asset value (NAV) discount could increase still further H&M shares drop as much as 2.1% as price targets are cut at at least three more brokers, with analysts bearish on the outlook for the Swedish fast- fashion retailer amid a weaker consumer environment Earlier in the session, Asian stocks advanced for a second day, as technology stocks gained ahead of Federal Reserve Chair Jerome Powell’s speech at Jackson Hole.  The MSCI Asia Pacific Index climbed 0.4%, trimming gains later in the day as US futures slipped. TSMC and Samsung were among the biggest boosts as global chipmakers rallied, while Alibaba and peers climbed after reports of talks to avoid delistings of Chinese stocks in New York. Australia stocks were among the biggest gainers, with the benchmark gauge up 0.8%.  Investors will monitor Powell’s remarks later Friday for clues on the path of the Fed’s interest rate hikes ahead of its September meeting. Recent comments by Fed officials have indicated the US central bank may focus on taming high inflation, triggering a selloff in equities earlier this week. Read: Fed’s Jackson Hole Conference Is Underway: Here’s What to Expect “To some degree, we are expecting Chair Powell may well push back against the ideas that we should expect the dovish pivot any time soon,” Audrey Goh, an investment strategist at Standard Chartered Bank SG, said in an interview with Bloomberg TV. “Whether this rally will extend, I think the key is really the dollar. We really need to see a weak dollar for risk assets to sustain recovery,” she said.  Friday’s advance following a jump in the previous session has helped the MSCI’s Asian stock benchmark finish the week almost flat. The gauge had slumped earlier in the week amid concerns that the Fed may ramp up its hawkishness and mixed corporate earnings. The gauge is down 17% this year, underperforming global peers on steep losses in Chinese shares Japanese stocks tracked gains in US peers as investors weighed comments from Federal Reserve officials which signaled a resolve to tighten further to tame inflation.  The Topix rose 0.2% to close at 1,979.59, while the Nikkei advanced 0.6% to 28,641.38. Sony Group Corp. contributed the most to the Topix gain, increasing 1% as the company said it will increase PlayStation 5 console prices in certain countries. Out of 2,170 stocks in the index, 1,053 rose and 969 fell, while 148 were unchanged. St. Louis Fed chief James Bullard said officials should act quickly and lift their policy benchmark to a 3.75% to 4% range by year end. Bullard spoke to CNBC in Jackson Hole, where Fed Chair Jerome Powell is due to make a speech Friday. “For Japan stocks the remarks will have a different aspect depending on the industry, with a more hawkish tone favorable for export-related stocks as interest rates rise and the yen will weaken,” said Tomo Kinoshita, a global market strategist at Invesco Asset Management. But, “overall, of course the more dovish the more favorable it will be for the markets.”  Australia's S&P/ASX 200 index rose 0.8% to close at 7,104.10, boosted by banks and mining shares. Soaring profits unveiled by Australian miners this week were a beacon of light amid the gloom dominating economic headlines.  The benchmark erased 0.2% this week, snapping five weeks of gains, in the lead up to Federal Reserve Chair Jerome Powell’s speech at Jackson Hole on Friday. Investors will monitor Powell’s remarks for clues on the path of the Fed’s interest rate hikes ahead of its September meeting. In New Zealand, the S&P/NZX 50 index fell 0.2% to 11,608.29 Stocks in India rose in line with Asian peers on Friday as Kotak Mahindra Bank and Larsen & Toubro gained. The key equity gauges still posted their first weekly drops since mid-July, with investors remaining cautious ahead of the US Federal Reserve’s commentary about monetary-policy outlook. The S&P BSE Sensex rose 0.1% to 58,833.87 in Mumbai, paring its weekly loss to 1.4%. The NSE Nifty 50 Index climbed 0.2% on Friday. Among the 30 members on the Sensex, 19 gained and 11 fell. The gauge on Thursday took a surprise dive in the last hour of trade due to the expiry of the monthly derivative contracts.  Much of the advance in Indian stocks since June have been driven by purchases by foreign investors. However, the inflows moderated this week on risk-aversion ahead of Fed Chair Jerome Powell’s speech at the Jackson Hole symposium on Friday, which will help investors gauge the future course of rate hikes by the US central bank. Foreign investors have purchased $110m of Indian stocks this week through Aug. 24, compared with net buying of more than $1 billion for preceding three weeks. In FX, the greenback pared gains against most of its Group-of-10 currencies. DKK and EUR are the strongest performers in G-10 FX, NZD and GBP underperform. The Bloomberg Dollar Spot Index little changed after rising 0.3% earlier. As Powell delivers the much anticipated speech, “markets may find enough reason to push their peak rate pricing closer to the 4.0% mark today, which should ultimately offer some support to the dollar,” Francesco Pesole, a strategist at ING Groep NV wrote in a note. Australian and New Zealand dollars fell the most among G-10 currencies as they were sold by fast money funds in last minute positioning ahead of Powell’s speech, according to Asia-based FX traders. “The Fed has been pretty clear in its messaging so I would be surprised if Powell suddenly changed direction or threw something else into the mix,” said Darren Langer, co-head of Australian fixed income at Yarra Capital EUR/GBP up 0.3%; GBP/USD down 0.1%. The pound fell as much as 0.5% after the UK energy regulator raised the caps on energy prices, a move likely to escalate inflationary pressures NZD/USD fell 0.3% to 0.621. The Reserve Bank of New Zealand Governor Adrian Orr forecast sharply slower economic growth to constrain demand and tamp down inflation while suggesting the central bank may be nearing the end of its aggressive hiking cycle AUD/USD dropped 0.1% to 0.6955 after falling as much as 0.4% USD/JPY rose 0.3% to 136.886 In rates, Treasuries were lower led by intermediates, re-steepening 2s10s spread back toward middle of Thursday’s range. Bunds and more notably gilts outperform Treasuries, while S&P 500 futures are also under pressure with European stocks. US 10-year yield 3.07% is cheaper by 5bp on the day, underperforming bunds by ~1bp, gilts by ~5bp; 2s10s is steeper by ~4bp with front-end Treasuries only marginally cheaper on the day. Bunds 10-year yield up about 2 bps to 1.33%, while gilts appear relatively muted in comparison as 10-year yield is unchanged at 2.61. IG dollar issuance slate empty so far, and just $1.3b of new supply has been seen this week. Three-month dollar Libor +2.64bp to 3.06957%. In commodities, WTI trades within Thursday’s range, adding 0.6% to around $93. Most base metals are in the green; LME nickel rises 1.6%, outperforming peers. Spot gold falls roughly $6 to trade near $1,752/oz. Bitcoin and ethereum both slumped, going back to levels last ween on Wednesday. To the day ahead now, the main highlight will be Fed Chair Powell’s speech at Jackson Hole. Otherwise, data releases from the US include July’s personal income and personal spending, along with the University of Michigan’s final consumer sentiment index for August. From Europe, there’s the GfK consumer confidence index from Germany for September, as well as consumer confidence readings from France and Italy too for August. Market Snapshot S&P 500 futures down 0.3% to 4,190.00 STOXX Europe 600 little changed at 433.05 MXAP up 0.4% to 160.81 MXAPJ up 0.5% to 525.76 Nikkei up 0.6% to 28,641.38 Topix up 0.2% to 1,979.59 Hang Seng Index up 1.0% to 20,170.04 Shanghai Composite down 0.3% to 3,236.22 Sensex up 0.4% to 59,023.37 Australia S&P/ASX 200 up 0.8% to 7,104.06 Kospi up 0.2% to 2,481.03 German 10Y yield little changed at 1.34% Euro little changed at $0.9978 Brent Futures up 0.9% to $100.20/bbl Brent Futures up 0.9% to $100.21/bbl Gold spot down 0.4% to $1,751.78 U.S. Dollar Index little changed at 108.54 Top Overnight News from Bloomberg From canceling Friday night trips to the pub to pushing back soccer practice, global investors are pulling out all the stops to ensure they’re ready for the most important gathering of central bankers this year. China is using China Aerospace Science and Industry Corp to ship millions of barrels of Venezuelan oil despite US sanctions, Reuters reports, citing three unidentified people and tanker tracking data Europeans are taking colder showers, offices are turning down thermostats and stores are dimming lights to avoid blackouts and freezing homes this winter in the fallout from Russia’s war in Ukraine The cost of French power jumped to a fresh record as its nuclear fleet faces further outages going into what’s set to be a very expensive winter. UK households will pay almost triple the price to heat their homes this winter compared with a year ago A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks took impetus from Wall St where stocks eventually shrugged off the initial choppy mood and ramped up heading into the close with outperformance in the Nasdaq amid a lower yield environment. ASX 200 was underpinned amid a slew of earnings releases and with the consumer-related sectors leading the gains after Australia’s largest retailer Wesfarmers reported a 9% increase in revenue. Nikkei 225 gained from the open with the index unfazed by firm Tokyo CPI data which printed its fastest pace of increase since 2014, as this is seen as unlikely to trigger an adjustment of BoJ policy. Hang Seng and Shanghai Comp conformed to the constructive mood as participants digested a slew of earnings results including PetroChina’s record profit and with tech stocks buoyed after delisting concerns were soothed by reports that China and the US are nearing a deal regarding company audits. Top Asian News US suspended 26 US flights by Chinese carriers after China's COVID action limited some US flights, according to the DOT cited by Reuters. Chinese state planner official says domestic inflation is likely to quicken slightly later in 2022 and early next year. China has asked some US-listed Chinese companies and their audit firms to make preparations for American inspections in Hong Kong, according to Reuters sources. Chinese Financial Regulators have informally told lenders to make more loans, and raise some banks' loan quotas and loan-growth requirements, according to Reuters sources. European bourses are currently contained, Euro Stoxx 50 -0.2%, as initial price action eased with catalyst thin pre-Powell. Stateside, futures are under modest pressure, ES -0.4%, and the NQ -0.6% lags slightly given modest yield upside. US Chip software producer Synopsys is set to expand into Vietnam amid the Chinese tech war, according to the Nikkei. Panasonic (6752 JT) says they are considering various EV battery business strategies, nothing decided yet. Top European News Ofgem UK Energy Price Cap – Q4 2022 (GBP): Default 3549 (prev. 1971, exp. 3582), +80.06%; Standard Credit 3764 (prev. 2100), +79.2%; Prepayment Meter 3641 (prev. 2017), +80.5%. UK Tory leadership frontrunner Truss is considering plans to invoke Article 16 regarding the Northern Ireland Protocol within days if she becomes the next PM, according to government insiders cited by FT. UK Tory leadership frontrunner Truss has reportedly been meeting with the business secretary and her prospective chancellor regarding a significant support package to help with energy bills, according to The Times citing sources. German Economy Ministry spokesperson says they are looking at changes to the gas levy. FX DXY fades earlier gains but trades within a 108.25-75 range throughout the morning. EUR outperforms and has been resilient as EUR/USD sees large OpEx above parity. GBP, AUD, CHF, and CAD are all relatively flat vs the Buck, whilst NZD and JPY lag. Fixed Income Despite fairly pronounced ranges, over 100 ticks in Bunds, the general tone is tentative with benchmarks within WTD parameters. USTs are pressured, with yields elevated and the curve bear-steepening but, again, well within recent ranges. SONIA strip takes a slight dovish skew, though Gilts unfased, following the as-expected Ofgem cap announcement. Commodities WTI and Brent October contracts are consolidating following yesterday's slide in prices. Spot gold resides around USD 1,750/oz after dipping under its 10 DMA (USD 1,756.60/oz) Base metals are mixed but copper prices remain supported and reside around USD 8,250/t. UAE is supportive of the latest statement from Saudi Arabia on crude markets, via Reuters citing sources. Four ships loaded with grain are leaving Ukrainian ports and another five ships are arriving for loading, according to Al Jazeera citing the Turkish Defense Ministry. US Event Calendar 08:30: July Personal Income, est. 0.6%, prior 0.6% July Personal Spending, est. 0.5%, prior 1.1% July Real Personal Spending, est. 0.4%, prior 0.1% 08:30: July PCE Deflator MoM, est. 0%, prior 1.0%; PCE Deflator YoY, est. 6.4%, prior 6.8% 08:30: July PCE Core Deflator MoM, est. 0.2%, prior 0.6%; PCE Core Deflator YoY, est. 4.7%, prior 4.8% 08:30: July Retail Inventories MoM, est. 1.2%, prior 2.0% July Wholesale Inventories MoM, est. 1.4%, prior 1.8% 08:30: July Advance Goods Trade Balance, est. -$98.5b, prior -$98.2b, revised - $98.6b 10:00: Aug. U. of Mich. Sentiment, est. 55.4, prior 55.1 Aug. U. of Mich. Expectations, est. 55.0, prior 54.9 Aug. U. of Mich. Current Conditions, est. 55.6, prior 55.5 Aug. U. of Mich. 1 Yr Inflation, est. 5.0%, prior 5.0%; 5-10 Yr Inflation, est. 3.0%, prior 3.0% DB's Jim Reid concludes the overnight wrap After much anticipation over the quiet summer season, today will finally see Fed Chair Powell deliver his annual speech at Jackson Hole. When we heard from Powell following the last FOMC meeting in July, markets interpreted his comments in a dovish light that helped send risk assets on a strong rally over the following weeks. That was given further fuel by the much weaker-than-expected CPI print a couple of weeks back too. But that narrative moved into reverse over the last week or so, in part due to mounting expectations that Powell could deliver a more hawkish message later today, and investors have responded accordingly. Indeed, the rate which Fed funds futures are pricing in for December 2023 is up by +75bps since the start of the month, as investors have shifted their expectations closer towards what FOMC officials have actually been saying about the future path of rates. Irrespective of the leaning of Powell’s remarks, today is likely to mark a big divergence from the messages of recent years. It was only back in 2019 that Powell used his speech to comment that “Low inflation seems to be the problem of this era, not high inflation.” Then in 2020 as he discussed the Fed’s review of their monetary policy framework, he said that “The persistent undershoot of inflation from our 2 percent longer-run objective is a cause for concern.” And even in 2021 as inflation had risen above target, Powell discussed why the inflation spike was likely be temporary, citing factors such as the absence of broad-based price pressures. So we’ve come a long way since then. In terms of what to look out for today, our US economists don’t expect that Powell will deliver explicit guidance for the September meeting given that we’ve still got another jobs report and CPI print beforehand. However, they do think he’ll likely to skew his remarks in a hawkish direction to ensure the Fed’s inflation-fighting credentials are unquestioned, not least after the comments from July were interpreted in a dovish light. You can read their full preview here. With all that to look forward to, markets put in a very strong performance over the last 24 hours, with the S&P 500 (+1.41%) seeing its largest gain in nearly two weeks, just as sovereign bonds have also rallied on both sides of the Atlantic. Sentiment was boosted by hopes that Powell might not be as hawkish as some fear, along with better-than-expected data releases. They included the US weekly initial jobless claims for the week through August 20, which fell to 243k (vs. 252k expected), as well as the continuing claims for the previous week which fell to 1.415m (vs. 1.441m expected). On top of that, Q2’s GDP contraction was revised to show a shallower -0.6% annualised decline (vs. -0.9% previously). Those more positive moves for key assets came in spite of the latest deterioration in Europe’s energy situation, as the continent experienced yet another day of record prices. Natural gas futures surged a further +10.02% to settle at a new high of €321 per megawatt-hour. And if that wasn’t enough, German power prices for next year saw their largest daily increase so far in 2022, with an astonishing +16.39% rise taking them to their own record of €748 per megawatt-hour. Meanwhile in France, EDF announced they were extending the return dates following a number of reactor outages, and power prices for next year rose +14.99% to €903 per megawatt-hour. Finally in the UK, today will see the energy regulator Ofgem announce the latest energy price cap that will apply from October, and as our UK economist has written (link here) we could see a rise of around 80%. Unlike the pattern over recent days however, this latest inflationary impulse failed to knock sovereign bonds. Indeed, the moves brought a stop to a run of 7 consecutive declines for European sovereigns that’s taken 10yr bund yields up by +47bps over that time. By the close of trade, yields on 10yr bunds (-5.4bps), OATs (-5.6bps) and BTPs (-12.8bps) had all fallen back, and peripheral spreads also tightened in line with the broader risk-on move across asset classes. Back in the US, Treasuries put in a similarly strong rally and 10yr yields fell -7.8bps to 3.03%, even as Fed officials continued to point in a hawkish direction ahead of Powell’s remarks today. Early in the day we heard from Atlanta Fed President Bostic, who said regarding the September meeting that “at this point, I’d toss a coin between the two” on whether to hike by 75bps again or 50bps. We then heard from Kansas City Fed President George, who said there was “more room to go” on hiking rates. And Philadelphia Fed President Harker said that “we don’t need to rush way up and then way down – we need to go up and sit for a while and let things play out”. So comments that point away from swift reversal after the hiking cycle has concluded. Finally, St Louis Fed President Bullard repeated his stance of moving rates to 3.75-4% by the end of the year, so 150bps higher than at present, and said that he favoured frontloading rate hikes. Equities saw little reaction to any of the Fed commentary yesterday, although there was a strong rally in the final hour of US trading that helped the S&P 500 (+1.41%) record a broad-based advance where every sector moved higher on the day. The more cyclical sectors led the gains, with megacap tech stocks outperforming as the FANG+ Index rose +3.06%. In Europe, the main indices closed before that late surge, yet the STOXX 600 still posted a +0.30% gain. That equity rally has continued in Asia this morning, where Chinese equities have been further supported by reports that regulators are making progress in talks over the delisting of companies in New York. Against that backdrop, the major indices in the region are all in positive territory, with the Nikkei (+0.72%) leading the way, followed by the Hang Seng (+0.70%), the KOSPI (+0.27%) and the CSI 300 (+0.02%). We also got some inflation data from Japan for August, where Tokyo’s CPI came in above expectations at +2.9% (vs. +2.7% expected). Looking forward however, the mood is a bit less optimistic, with S&P 500 futures down -0.13% this morning ahead of Powell’s speech later. 10yr Treasuries have also reversed course with a +2.4bps rise in yields to 3.05%. With everything else going on, the release of the ECB minutes from their July meeting got somewhat less attention. Nevertheless, there were still some interesting headlines, including that “some members” were in favour of a smaller 25bp move at the last meeting, since that was what had been indicated in June, and that with “recession risks looming, an increase of 25 basis points was seen as more in line with a gradual monetary policy normalisation.” The minutes also pointed out how “there might be more persistence in the inflation process than embedded in models where parameters were maintained at the values that had been estimated in a low-inflation environment”. Separately, there were some negative comments about forward guidance moving forward, with the comment that “specific forward guidance” on rates “was seen as excessively constraining the Governing Council’s optionality, flexibility and data-dependence”. Looking at yesterday’s other data, German GDP growth in Q2 was revised a tenth higher from the preliminary estimate to show a +0.1% expansion. Furthermore, the Ifo’s business climate indicator for August also held up better than expected, with the reading “only” falling back to 88.5 (vs. 86.8 expected), although it was still the lowest since June 2020. Otherwise, the Kansas City Fed’s manufacturing index for August fell back to 3 (vs. 10 expected), which was its lowest level since July 2020. To the day ahead now, and the main highlight will be Fed Chair Powell’s speech at Jackson Hole. Otherwise, data releases from the US include July’s personal income and personal spending, along with the University of Michigan’s final consumer sentiment index for August. From Europe, there’s the GfK consumer confidence index from Germany for September, as well as consumer confidence readings from France and Italy too for August. Tyler Durden Fri, 08/26/2022 - 07:47.....»»

Category: blogSource: zerohedgeAug 26th, 2022

Biden Drops More Crucial Demands To Get Iran Deal

Biden Drops More Crucial Demands To Get Iran Deal Authored by Khaled Abu Toameh via The Gatestone Institute, "First, Biden decided to waive the demand to include the role of Iran's terrorists in the region in the talks [in Vienna]... Biden decided not to address this issue at all, nor the role of terrorist militias affiliated with Iran in the Arab countries." — Sayed Zahra, deputy editor of the Gulf's Akhbar Al-Khaleej, August 20, 2022. The second demand Biden gave up, according to Zahra, includes the issue of Iran's ballistic missile program and the threat it poses to the security and stability of the region, the US itself and its interests. "The issue is not whether the agreement is signed or not.... [T]here is something more dangerous than this: Biden has completely abandoned the Arabs, allies and non-allies alike." — Sayed Zahra, August 20, 2022. The Iranian-backed Houthi militia in Yemen, [Kheirallah] added, is continuing to recruit hundreds of fighters. "What will the Houthis do with these fighters? Are they preparing for new rounds of fighting, or is their goal limited to threatening neighboring countries, primarily the Kingdom of Saudi Arabia?" — Kheirallah Kheirallah, veteran Lebanese journalist, Alraimedia, August 17, 2022. The Iranian regime, [Kheirallah] wrote, cannot survive without its expansionist project. "The collapse of this project means the collapse of the regime, similar to the collapse of the Soviet Union. In Lebanon, Iran is flexing its muscles through Hezbollah, which asserts daily that it is the ruling party. In Iraq, Iran refuses to admit that it is rejected by the majority of the Iraqi people.... Unfortunately, there is no American administration capable of understanding the meaning and repercussions of the presence of an Iranian entity in the Arabian Peninsula. Iran escalates everywhere it considers itself present through its militias. There is a question that will arise soon: Will the US administration facilitate this escalation through a deal it concludes with the Islamic Republic that provides it with large financial resources? To put it more clearly, does America consider itself concerned with the security of its allies in the region, or should these people manage their own affairs in the way they see fit?" — Kheirallah Kheirallah, Annahar, August 17, 2022. "Iran still considers interference in the affairs of other countries in the region as one of its top priorities.... for the sake of regional hegemony." — Hamid Al-Kaifaey, Iraqi author, Sky News Arabia, August 14, 2022. "The most striking thing about the ongoing international negotiations with the Iranian regime regarding its suspicious nuclear program is that the international community has become confident and certain that this regime is lying and engaged in all forms of deception to achieve its goals without meeting international demands.... Anyone who relies on the Iranian regime is engaged in self-deception. Western countries have completed more than three decades of practicing the policy of appeasement and alignment with the Iranian regime and provided it with many privileges without getting anything in return." — Alladdin Touran, member of the Foreign Affairs Committee of the National Council of Resistance of Iran, Elaph, August 15, 2022. US President Joe Biden, it seems, has effectively decided to sacrifice the Arabs, their interests, demands and fears in order to appease Iran. This view, expressed by Sayed Zahra, deputy editor of the Gulf's Akhbar Al-Khaleej newspaper, is shared by many prominent Arab political analysts who say they are extremely worried about the possibility that the US and other Western powers may sign a new nuclear agreement with Iran's mullahs. Referring to reports that progress has been achieved towards striking a new deal with the mullahs, Zahra said that the alleged breakthrough appears to have occurred after Biden decided to waive two pre-conditions. Zahra accused Biden of being in collusion with Iran. "First, Biden decided to waive the demand to include Iran's terrorist role in the region in the talks [in Vienna]," Zahra wrote. "Biden decided not to address this issue at all, nor the role of terrorist militias affiliated with Iran in the Arab countries." The second demand Biden gave up, according to Zahra, includes the issue of Iran's ballistic missile program and the threat it poses to the security and stability of the region and the US itself and its interests. By dropping the two demands, "Biden has practically decided to acquiesce to Iran and its entire terrorist expansion project in the Arab region," the influential newspaper editor argued. "This is a dangerous development. The issue is not whether the agreement is signed or not. This is no longer important. The issue is that the Biden administration made its choice between Iran and the Arab countries in this way. The matter is not limited to these concessions made by Biden; there is something more dangerous than this: Biden has completely abandoned the Arabs, allies and non-allies alike." Veteran Lebanese journalist Kheirallah Kheirallah expressed frustration with the Biden administration for ignoring the mullahs' expansionist project and its tools and proxies, especially the Iranian missile and drone program. "The program poses a threat to every country in the region," Kheirallah wrote. "This was evident when Iran recently started firing long-range missiles and drones from Yemen towards Saudi Arabia and the United Arab Emirates. There is an American and Iranian tendency to conclude a deal that would provide Iran with much-needed funds. Kheirallah wrote that Iran has been working to escalate tensions in the Arab countries it occupies: Iraq, Syria, Yemen and Lebanon. The Iranian-backed Houthi militia in Yemen, he added, is continuing to recruit hundreds of fighters. "What will the Houthis do with these fighters?" Kheirallah asked. "Are they preparing for new rounds of fighting, or is their goal limited to threatening neighboring countries, primarily the Kingdom of Saudi Arabia? The US has failed to reassure its [Arab] allies in the region. When viewing the chronology events in the region since Biden entered the White House, it becomes clear that we are facing a confused administration that could not take any initiative. In light of the lack of confidence [in the Biden administration], a US-Iranian deal will raise all kinds of fears in the absence of any answer to an obvious question: What is the US position on Iran's behavior outside its borders and its missile program and drones?" In another article, Kheirallah wrote that the Biden administration does not appear to be worried about the security of its Arab allies. This, he said, is the reason why Iran is continuing to flex its muscles to show that its expansionist project has not stopped faltered and that it is determined to take it to the end, regardless of whether or not the mullahs reach a new deal with "the American Big Satan." The Iranian regime, he wrote, cannot survive without its expansionist project. "The collapse of this project means the collapse of the regime, similar to the collapse of the Soviet Union," Kheirallah said. "In Lebanon, Iran is flexing its muscles through Hezbollah, which asserts daily that it is the ruling party. In Iraq, Iran refuses to admit that it is rejected by the majority of the Iraqi people, who expressed this in the last legislative elections. Iran refuses to acknowledge the defeat of its supporters in these elections. We see it currently seeking to overturn the results of those elections, starting with disrupting the formation of a new government and political life in the entire country. In Syria, Iran, in light of Russia's preoccupation with the Ukrainian war, has become the number one player in that country. This includes southern Syria, where it is expanding daily and increasing its smuggling activity to Jordan and across it to the Arab Gulf states. But the place where Iran is most active than anywhere else is Yemen. It took advantage of the truce announced last April in order to recruit more fighters. The Houthis, and behind them Iran, are encouraged by the American fluidity in dealing with them. Unfortunately, there is no American administration capable of understanding the meaning and repercussions of the presence of an Iranian entity in the Arabian Peninsula. Iran escalates everywhere it considers itself present through its militias. There is a question that will arise soon: Will the US administration facilitate this escalation through a deal it concludes with the Islamic Republic that provides it with large financial resources? To put it more clearly, does America consider itself concerned with the security of its allies in the region, or should these people manage their own affairs in the way they see fit?" Iraqi author Hamid Al-Kaifaey pointed out that since Joe Biden came to power, his administration has embarked on "vigorous measures" to return to the nuclear agreement with Iran. "The Democratic administration, whether under former president Barack Obama, or the current president, Joe Biden, adopts the method of diplomatic dealing with Iran and engaging in negotiations with it in order to stop its attempts to build a nuclear bomb, instead of the policy of maximum pressure adopted by the previous Republican administration... Just as the policy of maximum pressure has failed to dissuade Iran from its relentless pursuit of developing its nuclear program, so as to enable it to manufacture a nuclear bomb, the policy of negotiation and diplomacy pursued by the Biden administration has also failed so far to bring Iran back to the nuclear agreement." The Iraqi writer said that he has no doubt that Iran is determined to build an atomic bomb, just as it is determined to develop its other offensive war industries, such as drones and long-range ballistic missiles. "A return to the nuclear deal will enhance Iran's capabilities because it allows it to interact with the outside world, export oil and gas, and develop sectors of the Iranian economy instead of being under severe and comprehensive punishments," Al-Kifaey warned. "The Iranian economic situation is constantly getting worse, due to the US sanctions imposed by the administration of former President Trump, which President Biden has maintained, and despite that, Iran still considers interference in the affairs of other countries in the region as one of its top priorities. Iranian interference in the affairs of neighboring countries greatly increased after 2015, the year of the nuclear agreement. While the countries of the world are trying to solve their economic problems, reduce the rate of inflation and unemployment and find alternative sources of energy, Iran is ignoring the suffering of its people and their difficult economic conditions, and is trying to exploit the current international conditions to develop its military capabilities, nuclear and conventional, and its ballistic missiles, for the sake of regional hegemony." Alladdin Touran, member of the Foreign Affairs Committee of the National Council of Resistance of Iran, an international opposition organization based in France, warned the Biden administration and the Western powers that it would be a "big mistake" to trust the Iranian regime. "The most striking thing about the ongoing international negotiations with the Iranian regime regarding its suspicious nuclear program is that the international community has become confident and certain that this regime is lying and engaged in all forms of deception to achieve its goals without meeting international demands... The Iranian regime has engaged in a lot of rhetoric and various childish actions in the ways and methods that it used in the nuclear talks, especially by putting forward demands unrelated to the talks in return for its efforts to remove its terrorist Revolutionary Guard Corps from the list of terrorist organizations. Anyone who relies on the Iranian regime is engaged in self-deception. Western countries have completed more than three decades of practicing the policy of appeasement and alignment with the Iranian regime and provided it with many privileges without getting anything in return. The international community should know that this regime can never abide by any agreement, especially if it is not in its interest and affects its own plans. With or without a nuclear agreement, Iran will not give up its efforts to produce and manufacture the atomic bomb. Confidence in the Iranian regime is a big mistake that must be avoided." Judging from the reactions of many Arabs to a possible revival of the Iran nuclear deal, it is obvious that America's Arab allies have lost confidence in the Biden administration and its policy of appeasing the mullahs. The Arabs' biggest fear is that this policy will embolden Iran's mullahs and encourage them to proceed with their scheme to expand their control of the Arab countries -- an existential threat to their national security. Tyler Durden Mon, 08/22/2022 - 08:10.....»»

Category: blogSource: zerohedgeAug 22nd, 2022

It"s time to start worrying about China again

China is one of the US' largest customers. As its economy struggles and tensions over Taiwan rise, the United States is bracing for impact. biden, xi meeting 2011Lintao Zhang/Getty Images China's slowing economic growth and supply-chain challenges have impacted the US economy. US-China tensions have risen amid news House Speaker Pelosi will visit Taiwan. These economic and national security challenges could rival international focus on Russia and Ukraine. The US economy is already struggling as new GDP data shows multiple quarters of contraction. But it could face further pressure as developments in China — a familiar economic foe — threaten to spill over globally.A few weeks ago, China reported GDP growth of 0.4% in the second quarter, falling short of the 1% projected by analysts polled by Reuters. It was the worst report since the country reported a 6.8% contraction in the first quarter of 2020 as it began battling the pandemic. Additionally, House Speaker Nancy Pelosi just landed in Taiwan as part of her Asian tour, the highest-ranking US official to visit the island nation in 25 years. This has escalated tensions between the US and China, which views Taiwan — a self-governing democracy — as a Chinese territory. China has said it would view Pelosi's visit as support for the island's independence, and her visit "will lead to serious consequences," according to Chinese Foreign Ministry spokesman Zhao Lijian.Both developments could have major economic and national security implications for the US and echo back to the last time China ruled economic news during trade wars with former-President Trump in which the two countries traded tariffs in attempt to each protect their domestic industries.China accounts for a large chunk of US exports: The 3rd-biggest customer in 2021 at $151 billion through its purchases of goods like machinery, oilseeds and soybeans. And supply chain constraints hampering China's economy are among the many factors pushing inflation in the US to record-high levels and feeding fears of a pending recession. And whether it be next year or in a decade, if a Chinese invasion of Taiwan leads to something beyond a trade war, the economic ramifications could be substantial, to say the least. China's economy is slowing China's muted second quarter growth was driven in part by the zero-Covid policies, which included strict lockdowns and quarantines intended to stamp out the virus. They brought much of the economy to a standstill. In June, the unemployment rate in China of people in cities aged 16 to 24 rose to 19.3%, the highest level since the figure was first released in 2018. In addition to falling short of projections, the GDP report may have even understated the slowing of the Chinese economy. There is widespread skepticism among economists about the accuracy of Chinese economic data, and many have speculated the Chinese economy actually experienced a contraction in the second quarter. "We think the evidence is clear that China's economy contracted significantly in the second quarter," Logan Wright, director of China markets research at Rhodium Group, told The Washington Post. A disappointing GDP report isn't the only bad news for the Chinese economy in recent weeks. In June, property values fell for a 10th straight month, and as construction has slowed, homebuyers in over 20 cities have begun refusing to pay their mortgages on unfinished projects.China's manufacturing activity also unexpectedly contracted in July — further highlighting the economy's sluggish growth as of late. And due to all of these factors, Chinese consumer confidence has taken a nosedive. Despite some scaling back Covid restrictions as cases eased in June, which allowed business activity to resume, recent case spikes tied to a new variant have led to some restrictions being reinstated, suggesting there could be further economic disruptions in the months ahead. Economists have long debated when China will surpass the US as the world's largest economy — some estimates predict 2030. But if slowing growth, a potential overseas debt crisis, and a shrinking workforce — spurred by the country's one-child policy — generate further economic obstacles down the road, the passing of the torch may be less inevitable than it once seemed. Tensions over Taiwan are rising as China's economic power dragsWhile China's economic challenges have negative impacted the US economy, a significant political conflict could make things even worse — potentially putting the countries' economic relationship in jeopardy. Such a conflict isn't unthinkable, particularly if tensions escalate further in response to Speaker Pelosi's visit to Taiwan on Tuesday.While the US does not have formal diplomatic relations with Taiwan, President Biden has suggested it would supply weapons to Taiwan in the event of an attack from China. Whether the US would take action beyond this — potentially leading to a military conflict — remains uncertain. The world may receive the answer soon enough. While there has been previous speculation China would invade Taiwan by 2025 or 2030, some US officials reportedly fear it could come within the next 18 months.  After all, Chinese President Xi Jinping, reportedly doesn't see the economy as the only path to making China the "great power" he hopes it to be."It's the idea of China standing up, no longer hiding and biding, and being a world power be taken seriously, " Gerard DiPippo, a senior fellow in the economics program at the Center for Strategic & International Studies, told Axios. "Economics is part of that, but the non-economic side is louder now than it was ten years ago."While an economic slowdown may weaken China to some degree, it's possible this shift in focus to the "non-economic side" could actually increase the likelihood of a confrontation with the US.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderAug 3rd, 2022

Global stocks fall as US-China tensions mount while the dollar steadies after Fed-driven rally

Equities were in the red as tension between the US and China grows, while investors eyed the OPEC meeting for oil supply developments. The OPEC meeting will be in focus as oil supply constraints trouble markets.Spencer Platt/Getty Images Global stocks declined Wednesday as tensions heat up between US and China over Taiwan.  The dollar eased after a steep rally the day before when investors snapped up safe-havens.  Oil prices tumbled ahead of an OPEC meeting where supply is expected to stay tight.  Global stocks fell on Wednesday, as US-China tensions mounted, while the dollar steadied after rallying in the previous session following hawkish rhetoric from Federal Reserve officials. The MSCI World Index of global shares fell 0.1% while US futures rose across the board. S&P 500, Dow Jones and Nasdaq 100 futures gained 0.31% and 0.36% and 0.23%, respectively.Asian markets were mixed, with China's CSI 300 index falling almost 1%, while Taiwan's benchmark stock index gained 0.20%. Elsewhere in Europe, stocks climbed across the board even as energy concerns escalate. Frankfurt's DAX and Paris' CAC rose 0.28% and 0.27% respectively.Pressure is building between US and China after US House Speaker Nancy Pelosi visited Taiwan on Tuesday as part of a tour of Asia. China, which claims Taiwan is part of its territory, however, retaliated with verbal aggression over the visit, saying it would "not sit idly by" if such a senior ranking US politician visits the island. 'This issue will linger far longer than market's attention spans will allow. Yet geostrategists are largely united in the view that we are still worryingly close to a potential Fourth Taiwan Strait Crisis," analysts at Rabobank said. Meanwhile, the dollar eased after rising nearly 1% the day prior after Fed officials signaled more work needed to be done to cool down fast price growth, with San Francisco regional Fed President Mary Daly saying the Fed's work was "nowhere near" done on fighting inflation. The yield on the key US 10-year Treasury note, which moves inversely to the price, rose as investors digested no end to an aggressive monetary policy. In oil markets, benchmark Brent crude tumbled 0.97% to trade at $99.58 a barrel, while  WTI crude lost 1.18% ahead of The Organization of the Petroleum Exporting Countries (OPEC) meeting Wednesday in which supply increases are expected to remain largely unchanged, with no additional output. "With the group having under-impressed on the production roadmap for now, any increases in targets may remain underwhelming. A decision not to raise production would also disappoint, especially after President Joe Biden visited Saudi Arabia this month hoping to strike a deal on oil production," Saxo Bank said. Europe's continent-wide STOXX 600 stock index dropped 0.22%. Japan's yen lost 0.1%. Cryptocurrency solana plunged 2.41% in the past 24 hours after a hack drained millions from about 5,000 wallets. Read the original article on Business Insider.....»»

Category: smallbizSource: nytAug 3rd, 2022