Biden admin misses major oil lease deadline: "an absolute disgrace"

The Biden administration mysteriously delayed a key oil and gas leasing announcement Thursday despite promising to issue the legally-mandated decision......»»

Category: topSource: foxnewsJul 1st, 2022

Biden Nemesis Exxon Reports Record Earnings As Company Prints $20 Billion In Cash

Biden Nemesis Exxon Reports Record Earnings As Company Prints $20 Billion In Cash The Biden administration will be terribly vexed to learn that the one company it hates the most, Exxon (we are confident the sentiment is mutual) reported record Q2 earnings (largely thanks to Biden's SPR release which has proven to be a risk-free arb black gold mine for the company) which smashed expectations and also reiterated guidance while maintaining its generous $30 billion buyback program. The biggest North American oil explorer followed European giants Shell Plc and TotalEnergies, as well as US peer Chevron in disclosing unprecedented results.  Here are the Q2 details for the company which is reaping the rewards from surging commodity prices and the Biden admin's destructive "green energy" policies that have sent gas prices to record highs. Net income reached $17.9 billion, surpassing the previous record set in 2008. Adjusted EPS $4.14, beating the estimate $3.98 and about 4x more than the $1.10 year ago Operating cash flow in Q2 was a record $20 billion; on a YTD basis, Free Cash Flow in H1 has more than doubled Y/Y to $27.7 bilion. Going down the list: Refinery throughput 3,988 KBD Total revenues & other income $115.68 billion, estimate $119.4 billion Upstream production 3,732 koebd, estimate 3,720 koebd Refinery throughput 3,988 KBD, estimate 4,068 KBD Crude oil, NGL, bitumen and synthetic oil production 2,298 KBD, estimate 2,358 KBD Some more financial highlights: Generated earnings of $17.9 billion (vs $5.5 billion in the first quarter of 2022) and cash flow from operating activities of $20 billion in second-quarter 2022 as a result of increased production, higher realizations and margins, and aggressive cost control Cash increased by $7.8 billion in the second quarter, as strong cash flow from operating activities more than covered capital investments and shareholder distributions. Free cash flow in the quarter totaled $16.9 billion. Shareholder distributions were $7.6 billion for the quarter, including $3.7 billion of dividends. Net-debt-to-capital ratio improved to 13% reflecting a period-end cash balance of $18.9 billion. The debt-to-capital ratio was 20%, at the low-end of the company's target range. Capital investments totaled $9.5 billion for first half of 2022; on track with full-year guidance And some further details on production: Oil-equivalent production in the second quarter was 3.7 million barrels per day. Excluding entitlement effects, divestments, and government mandates, including the impact of curtailed production in Russia, oil-equivalent production increased 4% versus the first quarter. Liquids volumes increased nearly 35,000 barrels per day and natural gas volumes grew by more than 150 million cubic feet per day. XOM said it is helping meet increased demand by expanding its refining capacity by about 250,000 barrels per day in the first quarter of 2023 - representing the industry's largest single capacity addition in the U.S. since 2012. Exxon also maintained its stock buyback program, which it tripled to $30 billion in April, as well as its CapEx program at $21 billion to $24 billion, above the estimate of $18.27 billion. That said, Exxon’s capital spending in Q2 was surprisingly low at just $4.6 billion. In order to meet its $21B-$24B guidance, Exxon likely will have to pick up the pace on spending aggressively in the second half of the year. “Earnings and cash flow benefited from increased production, higher realizations, and tight cost control,” said Darren Woods, chairman and chief executive officer. “Strong second-quarter results reflect our focus on the fundamentals and the investments we put in motion several years ago and sustained through the depths of the pandemic. And speaking of CapEx, one of Exxon CEO Darren Woods’ favorite slides is back in the presentation after a notable absence: The oil industry is not investing enough to keep up with future demand: Here’s something else that's interesting from Exxon's slide presentation (see below): They expect America’s tight oil industry to produce record high volumes this year of 8.5m b/d. That’s in spite all the complaints and warnings about inflationary pressures across the nation. On top of that, the entire sector is warning of a lack of labor, while equipment for use in the projects are getting snapped up so rapidly it’s making availability through next year already tight. While Exxon’s sky-high profits come at a sensitive political time for the oil industry, which has been accused by idiot politicians and democrats in general of profiteering from the fallout from Russia’s invasion of Ukraine and failing to invest enough in new drilling (largely because of democrat policies), the recent retreat in crude and gasoline prices may provide executives with some cover from the political backlash they faced in June, when President Joe Biden accused Exxon of making “more money than God.” To be sure, the bears are warning that with recession fears gathering pace, the second quarter may end up marking the high point for Big Oil this year; on the other hand Exxon's money printing machine may be just getting started if politicians indeed follow through with their abjectly retarded Russian price cap idea which will send oil above $200/bbl. For now however, somewhat lower oil prices simply mean that the bonanza may be a little more muted but will last longer. Additionallly, US refining margins also have deflated somewhat since touching all-time highs, though natural gas prices remain elevated around the world. As Bloomberg notes, Exxon CEO Darren Woods has made a series of public appearances and statements in recent weeks defending the industry’s profit surge. Woods has also repeatedly pointed out that Exxon incurred a record loss of more than $20 billion in 2020 which did not lead to a White House bailout, and took on vast amounts of debt to finance major projects like deepwater oil production in Guyana and refinery expansions that will increase fuel supplies in the coming years. As an aside, the Manchin-Schumer climate and energy pact did include several things that are likely on Exxon’s wish list, such as locking in lease sales, and even pairing renewable rights to oil and gas lease sales. While Exxon didn't directly comment on the Manchin-Schumer deal earlier this week, CEO Woods says the US needs “clear and consistent” policy that promotes US resource development. “This policy could include regular and predictable lease sales, as well as streamlined regulatory approvals and support for infrastructure such as pipelines.” Wall Street was unified in its praise of the company's record earnings: “The key drivers of the beat were the upstream, as well as lower corporate costs relative to our estimates,” RBC’s Co-Head of European Energy Research Biraj Borkhataria says in a note. Jefferies (hold): “Strong set of numbers beating consensus in both upstream and downstream,” analyst Giacomo Romeo wrote in a note. Notes wide earnings per share beat “primarily driven by international downstream” Vital Knowledge: “Keep in mind that Exxon provides analysts with a first look at their quarterly results in an 8K filing, so they tend to not beat by as much as CVX,” Adam Crisafulli wrote. Downstream saw “explosive growth thanks to record refining margins” Exxon stock, which we have been recommending since late 2020, has climbed more than 50% this year, has blown away all of its peer majors and remains the third-best performer in the S&P 500 Index.  The company's Q2 slideshow is below: Tyler Durden Fri, 07/29/2022 - 07:38.....»»

Category: personnelSource: nytJul 29th, 2022

Delta just ordered 100 Boeing 737 MAX 10 jets to upgrade its narrowbody fleet. Take a look inside one of the test planes.

Delta will split the cabin into first class and economy and fly from major hubs like Seattle and New York. Taylor Rains/Insider Delta Air Lines just ordered 100 Boeing 737 MAX 10 aircraft — the largest of the MAX family. The cabin will be split into first class and economy and fly from major hubs like Seattle and New York. The MAX 10 is longer than other variants and requires specially designed landing gear to avoid potential damage to its tail on takeoff. Delta Air Lines has placed a $13.5 billion order for 100 of Boeing's 737 MAX 10 jet — the largest of the MAX variant. The deal also has an option for 30 more planes.Delta Air LinesSource: Delta Air LinesA signing ceremony took place at the Farnborough Air Show in England on Monday, marking the first large Boeing order that Delta has placed in 11 years. Deliveries will begin in 2025.Delta Senior Vice President of Fleet & TechOps Supply Chain Mahendra Nair and President and CEO of Boeing Commercial Airplanes Stan Deal at the Farnborough International Air Show 2022.Delta Air LinesSource: Delta Air Lines, CNBC"The Boeing 737-10 will be an important addition to Delta's fleet as we shape a more sustainable future for air travel, with an elevated customer experience, improved fuel efficiency and best-in-class performance," Delta CEO Ed Bastian said.Delta Boeing 737 MAX 10 CFM International LEAP-1B engines.Delta Air LinesSource: Delta Air Lines"This aircraft will be piloted, served, and maintained by the very best professionals in the business, and it's your hard work and dedication to our customers that always sets us apart," he continued.Delta Air LinesSource: Delta Air LinesThe MAX 10 is one of two planes in the MAX family that does not yet have regulatory approval to fly. The other model still undergoing certification is the company's smallest variant — the 737 MAX 7.Boeing 737 MAX 7 in Boeing livery. A Southwest 737 MAX 8 sits behind.Taylor Rains/InsiderBoeing is on a tight deadline to get the MAX 10 certified. If it does not receive regulatory approval by December 31, 2022, then federal law will require the manufacturer to upgrade the cockpit to meet the latest safety standards.Boeing 737 MAX 10.Taylor Rains/InsiderSource: US CongressThe current cockpit design, which is similar to earlier 737 variants, is favored by airlines because it doesn't require additional pilot training, Delta SVP Mahendra Nair said on Monday, per the Wall Street Journal.Boeing 737 MAX 10 test aircraft at the Farnborough International Airshow.Taylor Rains/InsiderSource: The Wall Street JournalHowever, if Boeing misses the December 31 deadline, the MAX 10's crew alert systems would differ from the MAX 8 and 9, requiring airlines to pay for separate training.Boeing 737 MAX 10 test aircraft at the Farnborough International Airshow.Taylor Rains/InsiderSource: The Wall Street JournalNair explained that if Boeing has to upgrade the systems, the airline "will have to rethink about where we are." But, Delta said the deal has "adequate protection" where the carrier can choose to purchase a different MAX variant, the Business Journals reported.Boeing 737 MAX lineup in Seattle. The planemaker has five variants: the 737 MAX 7, 8, 8200, 9, and 10.Taylor Rains/InsiderSource: The Wall Street Journal, The Business JournalsA Boeing spokesperson told Insider at the Farnborough International Airshow that the certification timing is "completely in the hands of the regulator," but said, "Boeing's plan is to certify the plane — that's the intention — and we're still working on that path."Boeing 737 MAX 10 test aircraft at the Farnborough International Airshow.Taylor Rains/InsiderIf Boeing can't get the plane certified by the end of the year, the planemaker may ask for an extension from the Federal Aviation Administration, which the agency can grant, according to Senator Maria Cantwell (D-Wash).Boeing 737 MAX 10 test aircraft at the Farnborough International Airshow.Taylor Rains/InsiderSource: The Wall Street JournalHowever, Boeing CEO Dave Calhoun told Aviation Week in early July that if the plane is not given a waiver, then the planemaker may cancel the program, saying "a world without the MAX 10 is not that threatening." However, he added he does not expect to shelve the plane, but "it's just a risk."Boeing CEO Dave CalhounMandel Ngan/ContributorSource: Aviation WeekThe order comes as Boeing trails European aircraft manufacturing giant Airbus, which recently won a $37 billion order from China's three biggest airlines. A Boeing spokesperson said they missed out on the deal due to "geopolitical differences."Airbus A320.AirbusBeijing says it's 'natural' for the US to 'feel sour' after Boeing loses out to Airbus on $37 billion China plane dealBoeing is still recovering from the crash of two Boeing MAX planes in 2018 and 2019 that led to a worldwide grounding of the jet, causing the planemaker to fall behind Airbus.Ethiopian Airlines' 737 MAX crashed in 2019.Skycolors/ShutterstockHowever, Delta's order, as well as United Airlines' order for 200 MAXs last year, suggests airlines are putting their trust back in Boeing.United Airlines Boeing 737 MAX 9.Thomas Pallini/InsiderI flew on United's Boeing 737 MAX 8 in economy from Newark to Seattle and saw how the upgraded cabin easily competes with Delta and AmericanI toured one of Boeing's 737 MAX 10 experimental planes to learn how the testing and certification are done — take a look.Boeing 737 MAX 10 test aircraft at the Farnborough International Airshow.Taylor Rains/InsiderWalking inside, the first thing I noticed were giant black tanks. According to a Boeing flight test engineer on the plane, they are water barrels that are used to control the center of gravity during test flights.Boeing 737 MAX 10 test aircraft at the Farnborough International Airshow.Taylor Rains/InsiderHe explained that there are also tanks in the back of the plane, and engineers will load them to their max to test the limits of the aircraft.The orange wiring is part of the testing but is not part of the final passenger aircraft.Taylor Rains/InsiderBeing able to manipulate the center of gravity will simulate the aircraft fully loaded with passengers.Panels on the aircraft for testing.Taylor Rains/InsiderEngineers will also put large sandbags in the aft of the plane to add weight and test performance.The aft section of the plane.Taylor Rains/InsiderOn the plane, engineers sit at stations throughout and receive live data from the jet on screens. Here, they can monitor the jet and ensure it's performing as expected.Boeing 737 MAX 10 test aircraft at the Farnborough International Airshow.Taylor Rains/InsiderAn engineer told Insider that they will conduct the same test several times a day and that flights can last anywhere from two to eight hours.Boeing 737 MAX 10 test aircraft at the Farnborough International Airshow.Taylor Rains/InsiderWhen engineers or other employees are traveling on the jet instead of working, they sit in dedicated passenger seats located throughout the plane.Boeing 737 MAX 10 test aircraft at the Farnborough International Airshow.Taylor Rains/InsiderOne of the main focuses of the MAX 10 is the landing gear.Boeing 737 MAX 10 test aircraft at the Farnborough International Airshow.Taylor Rains/InsiderBecause the MAX 10 is longer than previous MAX variants, the plane needs to stand higher to give the tail more clearance on takeoff so it does not suffer a tail strike.Boeing 737 MAX 10 test aircraft at the Farnborough International Airshow.Taylor Rains/InsiderTo do this, Boeing has designed the landing gear to stand taller but still fit inside the same size wheel well.Boeing 737 MAX 10 test aircraft at the Farnborough International Airshow.Taylor Rains/InsiderAccording to the engineer, the gear expands for takeoff but can compress to make the jet sit lower at airport gates, negating the need for new infrastructure.Boeing 737 MAX 10 test aircraft at the Farnborough International Airshow.Taylor Rains/InsiderThe employees actually do tail strike testing as well to prove that the airplane is still structurally sound after a tail strike and the jet is still safe, according to one of the engineers.Boeing 737 MAX 10 test aircraft at the Farnborough International Airshow.Taylor Rains/InsiderIn the cockpit are glass screens and heads-up displays. A flight test engineer said that one screen unique to the MAX 10 is a moving map of the airfield that shows where the jet is at when taxiing around.Boeing 737 MAX 10 test aircraft at the Farnborough International Airshow.Taylor Rains/InsiderThe MAX 10 is powered by CFM LEAP 1-B engines, which were specifically designed for the 737 MAX, according to Boeing. For Delta, the engines will make the MAX 10 20%-30% more fuel efficient than retiring narrowbodies in the carrier's fleet.Boeing 737 MAX 10 test aircraft at the Farnborough International Airshow.Taylor Rains/InsiderMoreover, the chevron design on the back of the engines reduces noise by 50% compared to the 737 Next-Generation models.Boeing 737 MAX 10 test aircraft at the Farnborough International Airshow.Taylor Rains/InsiderWhen the MAX 10 is delivered to Delta, the airline will have over 300 Boeing 737 jets in its fleet, which is its second-largest aircraft family behind the A320. Here's what passengers can expect.Delta Boeing 737 MAX 10.Delta Air LinesBoeing's 737 MAX 10 can carry up to 204 passengers in a two-class configuration, according to the planemaker. Delta said it would fit its jets with 182 seats split into economy and first.Boeing mock image of its Sky Interior.BoeingAbout one-third of the cabin would be configured with premium seating, according to the airline. Specifically, Delta's jet will feature 162 economy seats, including 33 in Comfort+ and 129 in the Main Cabin…Delta Comfort+.Delta Air Lines…and 20 in first class. Delta recently flew its first-ever A321neo, which is fitted with the carrier's new domestic first class. It's possible the seat will also be configured on the MAX 10s.Delta A321neo first class.Jennifer Bradley Franklin/InsiderDelta said the planes, which have a range of 3,3000 nautical miles, will fly from Delta's largest hubs, including New York, Boston, Atlanta, Detroit, Minneapolis-St. Paul, Seattle, and Los Angeles.Delta Air Lines at JFK.Ron Adar/ShutterstockOnboard, passengers will experience Boeing's Sky Interior, which includes a spacious interior, inflight entertainment, on-demand video, power ports, and WiFi.Inflight entertainment mockup from Boeing.BoeingPassengers will also have access to large pivoting overhead bins, which maximizes the number of bags that can fit…Space bins on the Boeing 737 MAX 10 test aircraft at the Farnborough International Airshow.Taylor Rains/Insider…as well as huge windows, which are 20% larger than the competing A320 jet, according to Boeing.Windows on the Boeing 737 MAX 10 test aircraft at the Farnborough International Airshow.Taylor Rains/InsiderRead the original article on Business Insider.....»»

Category: smallbizSource: nytJul 22nd, 2022

The Astonishing Implications Of Schedule F

The Astonishing Implications Of Schedule F Authored by Jeffrey Tucker via The Brownstone Institute, Two weeks before the 2020 general election, on October 21, 2020, Donald Trump issued an executive order (E.O. 13957) on “Creating Schedule F in the Excepted Service.”  It sounds boring. Actually, it would have fundamentally changed, in the best possible way, the entire functioning of the administrative bureaucracy that rules this country in a way that bypasses both the legislative and judicial process, and has ruined the checks and balances inherent in the US Constitution.  The administrative state for the better part of a century, and really dating back to the Pendleton Act of 1883, has designed policy, made policy, structured policy, implemented policy, and interpreted policy while operating outside the control of Congress, the president, and the judiciary.  The gradual rise of this 4th branch of government – which is very much the most powerful branch – has reduced the American political process to mere theater as compared with the real activity of government, which rests with the permanent bureaucracy.  Any new president can hire the heads of agencies and they can hire staff, which are known as political appointees. These 4,000 political appointees ostensibly rule 432 agencies (as listed by the Federal Register) as well as some 2.9 million employees (aside from the military and postal service) that effectively inhabit permanent jobs. This permanent state – sometimes called the deep state – knows the ropes and the processes of government far better than any temporary political appointee, thus reducing the appointed jobs to cosmetic positions for the press to hound while the real actions of government take place behind the scenes.  From 2020 and onward, the American people got to know this administrative state well. They ordered us to wear masks. They deployed their influence to close small businesses and churches. They limited how many people we could have in our homes. They festooned our businesses with plexiglass and told everyone to stay six-feet apart. They demanded two weeks of quarantine when crossing state borders. They decided which medical procedures were elective and non-elective. And they finally demanded compliance with vaccine mandates at the penalty of job loss.  None of this was ordered by legislation. It was all invented on the spot by the permanent staff of the Centers for Disease Control and Prevention. We had no idea they had such power. But they do. And that same power which allowed those egregious attacks on rights and liberties also belongs to the Food and Drug Administration, the Department of Labor, the Environmental Protection Agency, the Department of Agriculture, the Department of Homeland Security, and all the rest.  Donald Trump came into office with the promise of draining the swamp, without understanding entirely what that meant. He gradually came to realize that he had no control over most of the affairs of government, not because he had no patience for the legislative process but because he had no ability to terminate the employment of most of the civilian bureaucracy. Nor could his political appointees control it. The media, he gradually came to realize, echoed the priorities and concerns of this administrative state due to long-established relationships that led to nonstop leaks that spread false information.  In May of 2018, he took his first steps to gain some modicum of control over this deep state. He issued three executive orders (E.O. 13837, E.O. 13836, and E.O.13839) that would have diminished their access to labor-union protection when being pressed on the terms of their employment. Those three orders were litigated by the American Federation of Government Employees (AFGE) and sixteen other federal labor unions.  All three were struck down with a decision by a DC District Court. The presiding judge was Ketanji Brown Jackson, who was later rewarded for her decision with a nomination to the Supreme Court, which was affirmed by the US Senate. The prevailing and openly stated reason for her nomination was said to be mostly demographic: she would be the first black woman on the Court. The deeper reason was more likely traceable to her role in thwarting actions by Trump which had begun the process of upending the administrative state. Jackson’s judgment was later reversed but Trump’s actions were embroiled in a juridical tangle that rendered them moot.  Following the lockdowns of mid-March 2020, Trump became increasingly frustrated with the CDC and Anthony Fauci in particular. Trump was profoundly aware that he had no power to fire the man, despite his epicly terrible role in prolonging Covid lockdowns long after Trump wanted to open up to save the American economy and society.  Trump’s next step was radical and brilliant: the creation of a new category of federal employment. It was called Schedule F.  Employees of the federal government classified as Schedule F would have been subject to control by the elected president and other representatives. Who are they? They are those who met the following criteria: Positions of a confidential, policy-determining, policy-making, or policy-advocating character not normally subject to change as a result of a Presidential transition shall be listed in Schedule F. In appointing an individual to a position in Schedule F, each agency shall follow the principle of veteran preference as far as administratively feasible. Schedule F employees would be fired. “You’re fired” was the slogan that made Trump TV famous. With this order, he would be in a position to do the same to the federal bureaucracy. The order further demanded a thorough review throughout the government.  Each head of an executive agency (as defined in section 105 of title 5, United States Code, but excluding the Government Accountability Office) shall conduct, within 90 days of the date of this order, a preliminary review of agency positions covered by subchapter II of chapter 75 of title 5, United States Code, and shall conduct a complete review of such positions within 210 days of the date of this order. The Washington Post in an editorial expressed absolute shock and alarm at the implications: The directive from the White House, issued late Wednesday, sounds technical: creating a new “Schedule F” within the “excepted service” of the federal government for employees in policymaking roles, and directing agencies to determine who qualifies. Its implications, however, are profound and alarming. It gives those in power the authority to fire more or less at will as many as tens of thousands of workers currently in the competitive civil service, from managers to lawyers to economists to, yes, scientists. This week’s order is a major salvo in the president’s onslaught against the cadre of dedicated civil servants whom he calls the “deep state” — and who are really the greatest strength of the U.S. government. Ninety days after October 21, 2020 would have been January 19, 2021, the day before the new president was to be inaugurated. The Washington Post commented ominously: “Mr. Trump will try to realize his sad vision in his second term, unless voters are wise enough to stop him.” Biden was declared the winner due mostly to mail-in ballots.  On January 21, 2021, the day after inauguration, Biden reversed the order. It was one of his first actions as president. No wonder, because, as The Hill reported, this executive order would have been “the biggest change to federal workforce protections in a century, converting many federal workers to ‘at will’ employment.”  How many federal workers in agencies would have been newly classified at Schedule F? We do not know because only one completed the review before their jobs were saved by the election result. The one that did was the Congressional Budget Office. Its conclusion: fully 88% of employees would have been newly classified as Schedule F, thus allowing the president to terminate their employment.  This would have been a revolutionary change, a complete remake of Washington, DC, and all politics as usual.  Trump’s EO 13957 was a dagger aimed directly at the heart of the beast. It might have worked.  It would have gotten us closer to the restoration of a Constitutional system of government in which we have 3 – not 4 – branches of government that are wholly controlled by the people’s representatives. It would have gone a long way toward gutting the administrative state of its power and returning the affairs of state to the people’s control.  The action was stopped dead due to the election results.  Whatever one’s view of Trump, one has to admire the brilliance of this executive order. It shows that Trump had come to understand the problem and actually innovate a fundamental solution, or at least the beginnings of one. The “deep state” as we’ve come to know it would have been curbed, and we would have taken a step toward recreating the system that existed before the Pendleton Act of 1883.  Many efforts have been deployed through the years to regain constitutional control over the permanent bureaucracy. An example is the Hatch Act of 1939 which forbids employees of the government to work for political campaigns. That act turned out to be toothless – one does not need to work for a campaign in order to skew one’s labor in the direction of always granting the federal government more power and control – and largely made irrelevant in the succeeding decades.  Trump came to office promising to drain the swamp but it was very late in his term before he figured out the means at his disposal to do just that. His final effort took place merely two weeks before the election that was decided in favor of his opponent Biden, who quickly reversed this action just two days following the deadline of an ordered review that would have reclassified, and thus gained control over, a sizable portion of the administrative state.  With Executive Order 12003 (“Protecting the Federal Workforce”), Biden saved the deep state’s bacon, leaving the efforts finally to drain the swamp to another day and another president.  Still, Executive Order 13957 exists in the archives as a possible path forward to restore checks and balances in the US system of government. A new Congress can also take such steps at least symbolically.  Until something takes place to restore the people’s control of the administrative state, a sword of Damocles will continue to hang over the entire country and we will never be safe from another round of lockdowns and mandates.  Should a genuinely reformist president ever take office, this executive order must be issued on the very first day. Trump waited too long but that mistake need not be repeated.  Tyler Durden Thu, 06/30/2022 - 16:30.....»»

Category: blogSource: zerohedgeJun 30th, 2022

Berkshire Hathaway HomeServices New York Properties Appoints New President & CEO and EVP/Director of Sales, as Brokerage Maps Aggressive Expansion Across NYC Market

Berkshire Hathaway HomeServices New York Properties (BHHSNYP) is pleased to announce the addition of two widely revered industry leaders – Steven James and Brad Loe – as the company commences a significant brand expansion across the New York City residential brokerage market.  The newly expanded New York City-based leadership team... The post Berkshire Hathaway HomeServices New York Properties Appoints New President & CEO and EVP/Director of Sales, as Brokerage Maps Aggressive Expansion Across NYC Market appeared first on Real Estate Weekly. left to right: Brad Loe, Candace Adams, Diane Ramirez, Steven James Berkshire Hathaway HomeServices New York Properties (BHHSNYP) is pleased to announce the addition of two widely revered industry leaders – Steven James and Brad Loe – as the company commences a significant brand expansion across the New York City residential brokerage market.  The newly expanded New York City-based leadership team will oversee the organization’s ‘explosive growth’ across the city, inclusive of exponential agent count and new office locations on the Upper West Side, Downtown Manhattan and in Brooklyn, with more to follow. Steven James will serve as the New York City brokerage’s president & CEO; Brad Loe has been appointed executive vice president, director of sales.  The pair will work alongside Candace Adams, president & CEO of Berkshire Hathaway HomeServices New England/New York/Hudson Valley Properties, and Diane Ramirez, the New York City brokerage’s chief strategy officer – who joined the executive team at the end of last year – to form the company’s leadership team.  Adams will continue overseeing all three brokerages (New England/New York/Hudson Valley Properties), while James, Loe and Ramirez will govern the company’s New York City operations.  “With Steven, Brad, and Diane at the helm, BHHSNYP will expand strategically across New York City while creating a productive, inclusive, and professional work environment that also focuses on personal growth and mentorship,” said Adams. “Our goal is to be the absolute best brokerage in New York, knowing that we are leveraging the venerable Berkshire Hathaway brand.” “No other firm in New York has this caliber of experienced, proven leadership, coupled with the backing of Berkshire Hathaway,” continued Adams. “Berkshire Hathaway HomeServices marries the local, national, and global real estate markets for its clients.”   “This is the right moment…the right brand,” said James.  “To be able to create a new platform that addresses what agents do on a day-to-day basis is incomparable. Agents get lost in the shuffle at big companies — or their achievements go unrecognized. Berkshire Hathaway HomeServices diligently works to be particularly agent centric. We are the ideal brokerage for agents who may have long-term concerns about the stability of their career trajectories. Through our work here, we want to be advocates and sounding boards for these individuals, maintaining an open-door policy that fosters growth as well as greatness.” James and Loe most recently served as executive directors of brokerage development for HomeServices of America, the parent company of the Berkshire Hathaway HomeServices franchise network.   Prior to those roles, James was president and CEO of Douglas Elliman’s New York City brokerage and director of sales for its East Side office.  Loe, highly respected as a mentor to his agents for nearly two decades, was executive manager of sales at Douglas Elliman’s 1995 Broadway and 575 Madison Avenue offices. In the face of volatile markets and an ever-changing industry, agents want to know that they are going to a company that is a true “forever brand” – especially one that has just exponentially increased its influence in New York City with the addition of two industry icons.  “Berkshire Hathaway HomeServices has a major presence across the United States and around the world and there’s amplified awareness surrounding the brand in New York City, specifically,” adds Loe.  “We will continue to grow our footprint here in the City and our impact will be transformative.  Our agents are our clients, and our focus will be on developing and expanding their books of business.  My own mantra has always been: ‘when an agent’s business grows, the company’s business grows.’  The agent is the most important factor in this equation – and will continue to be the cornerstone of this brokerage.”  “Berkshire Hathaway HomeServices represents a new strength and the kind of partner that agents want to be aligned with as they grow their careers,” added Adams. “Steven and Brad will not only ensure that tenfold but will help catapult our brokerage toward its next tier of success.” The appointments of James and Loe to the Berkshire Hathaway HomeServices New York Properties leadership team is the latest triumph for the brokerage.  Just last month, the firm signed a new, seven-year lease for its offices at 590 Madison Ave., almost doubling the size of its current space.  James, Loe and Ramirez will work out of this office, effective immediately.   “Bringing dynamic, hardworking individuals to our team — who are the absolute top-tier of the industry and capable of being true differentiators to our agents — is precisely our goal,” concludes Christy Budnick, CEO of the Berkshire Hathaway HomeServices franchise network.  “The trio they are forming with Diane (Ramirez), coupled with revered oversight by Candace (Adams), will cement the brokerage’s reputation as one of the most powerful in the U.S.” The post Berkshire Hathaway HomeServices New York Properties Appoints New President & CEO and EVP/Director of Sales, as Brokerage Maps Aggressive Expansion Across NYC Market appeared first on Real Estate Weekly......»»

Category: realestateSource: realestateweeklyApr 25th, 2022

"There Is No Place Left To Hide": Mike Wilson Says The Bear Market Is About To Turn Grisly

"There Is No Place Left To Hide": Mike Wilson Says The Bear Market Is About To Turn Grisly The last time we heard from Morgan Stanley's chief US equity strategist Mike Wilson one week ago, he was plumbing the depths of bearishness (as much as Morgan Stanley would permit him of course: as we have long noted, Bank of America's own in house "Michael" strategist -  that would be Hartnett - has been far more bearish), and he concluded that soaring inflation is no longer a positive catalyst for either earnings growth or stocks, to wit: the "positive effects of inflation on earnings growth have reached their peak and are now more likely to be a headwind to growth, (particularly as inflation forces the Fed to remain uber hawkish) and in that context, the growing rise in back end rates is having a meaningful impact on interest rate sensitive areas of the economy and market, like housing and impacting stocks." That said, Wilson was still unwilling to go "full bear", and as had commented in his notes for a while, he expected defensives to dominate in this late cycle environment (that said, Wilson conceded that "the overall index remains a bit of a mystery with the P/E down only 11% in the face of a 120bps move in 10-year yields") as he believed that the incredibly strong flows into equity from asset owners (both retail, pensions and other endowments) had made a decision to abandon bonds in favor of what is - for now - viewed as the better inflation hedge (namely stocks) would continue. It is these flows which Wilson said are "keeping the main index bid and more expensive thereby leaving the real message about growth at the sector level", and is also why the bearish strategist remained bullish on defensives as the message from the market was, to Wilson, "crystal clear" and in line with his own bearish view—i.e., growth is slowing and "likely more than most forecasts incorporate, especially for 2023 when the risk of recession has increased the most." So fast forward to today when in his latest Weekly Warm-up Note "Harder to Hide as the Bear Gets Grisly" (available to pro subscribers in the usual place), Wilson drops all pretense of "cautious optimism" and turns all-in bear, writing that "with defensive stocks now expensive and offering little absolute upside, the S&P500 appears ready to join the ongoing bear market" and while his (formerly) favorite sector, defensives, can still outperform, he warns that it's just a relative trade at this point. Finally, while inflation may well be peaking, he doesn't view this as bullish, "because it means margins & EPS have peaked too." Digging into the note, Wilson first explains why he no longer believes defensives are a clear outperformer, for the simple reason that it is now "harder to hide." As the strategist shows, "over the past 12 months, the US equity market has provided plenty of opportunity to investors in certain areas even as the major averages have traded flat to down (SPX +2%, DOW -1%, NDX -4%, RTY -15%). However, one needed to be nimble and trade it well." Here, Wilson pats himself on the back for correctly calling the market inflection points on the Morgan Stanley Fresh Money Buy List, which has dramatically outperformed the S&P in the past year: As equity strategists, our primary job is to help clients find the best areas of the market at the right time, since beating the averages is the name of the game. Our sector and style preferences are reflected in our Fresh Money Buy List, which closely follows those recommendations. Over the past 12 months, that list is up nearly 19%, or 15% above the S&P 500." With that said, Wilson admits that "unfortunately, we now find ourselves at a bit of a loss for new ideas. In short, the market has been so picked over at this point, it's not clear where the next rotation lies." This is a problem because in his experience, when there are no more clear rotations, "it usually means the overall index is about to fall sharply with almost all stocks falling in unison." If that sounds dramatically bearish, well it is... to an extent, and as Wilson admits, this is what he - and Zero Hedge too - has been waiting for as his Fire and Ice narrative concludes — a fast tightening Fed right into the teeth of a slowdown (something we also discussed yesterday in  "There's A Growing Consensus The Fed Will Keep Going Until The Market Breaks"). And while Wilson's "defensive" posture since November had worked well, he can't argue for absolute upside anymore for these groups given the major re-rating they have experienced in both absolute and relative terms, which he views as "another sign that investors know what's coming and are bracing for it the best they can by hiding in such stocks." In terms of timing, Wilson looks to the "accelerative" (to the downside) price action on Thursday and Friday which he says supports the view that we are now entering this "much broader sell-off phase." Friday, in particular, appears indicative of what to expect next — lower beta/defensive stocks outperform but they still go down. Another important signal from the market lately is how poorly Materials and Energy stocks have traded, particularly the former. Some of the reversals in the base metals stocks have been eye popping, with most securing outsized reversal patterns on a weekly basis. To Wilson, "this signifies the market's realization that we are now entering the Ice phase, and that growth will be the primary concern for stocks from here rather than inflation, the Fed and interest rates." And speaking of inflation and interest rates, Wilson - who last week said inflation had hit a level that was now destructive to stocks and EPS growth  - believes inflation and inflation expectations have likely peaked (we disagree), and he says that while others have been using this as a bullish argument, Wilson would like to send a clear warning—be careful what you wish for: "There's no doubt that a fall in inflation should take pressure off the back end of the rate curve, which arguably could relieve pressure on valuations for some stocks. The problem is that falling inflation comes with lower nominal GDP growth and therefore sales and EPS growth, too. For many companies it could be particularly painful if those declines in inflation are swift and sharp. The move in some of the aforementioned Materials stocks suggest that's exactly what could be in store for commodity prices. In other words, the Morgsn Stanlty strategist says that "the Energy and Materials names could be in for a period of underperformance after being one of the big winners of 2022."  Here we disagree again, because a far more accurate take of what is coming to commodities can be gleaned from reading the latest Goldman and Zoltan Pozsar notes which are extremely bullish on both commodity prices and equities. Yet aside for a few modest disagreements, we find it much more interesting that for Wilson the bottom line is that we "we are at an important inflection point for inflation, the mirror image of our call in April 2020 to look for higher inflation when we were at the trough of the COVID recession."  At that time Wilson suggested inflation would be a big part of the next recovery given the nature of the stimulus—i.e., helicopter money — at a time when supply would be constrained. He also thought this would lead to extremely positive operating leverage and earnings growth (something we also noted at the time). Fast forward to today and that's where we are. The question now is will that last remaining positive tailwind continue or will it turn into a headwind for earnings growth? Wilson' view is that it will be more of the latter for many sectors and companies and this is why he had been positioned in defensives and/or stocks with high operational efficiency. In other words, the stock market seems to be foreshadowing the peak in inflation and a tougher earnings environment overall. To Wilson, this all lines up with Wilson's "hotter but shorter cycle"  analysis that compares the current period to the immediate post WWII period in the 1940s. As a reminder, the explosive spike in inflation during that era was quickly followed by a sharp decline. The result was a classic boom/bust that most investors do not seem prepared for even though the stock market internals appear to be strongly signaling that's exactly what's about to happen. Furthermore, and this is why Wilson sees the bear market turning full grizly, if the stock market is about to experience a more significant decline at the index level during which there are very few places to make positive returns, it will simply feed the  disinflationary forces described above. If it gets bad enough, it could even feel deflationary for many segments of the economy where discounting returns. This, Wilson warns, "will show up via margin pressure and earnings misses." Finally, Wilson pre-empts one of the obvious counters to his latest views, namely "if inflation and growth is decelerating sharply, doesn’t that mean a return to the secular growth companies that can easily carry the overall market?" Here Wilson notes that while normally he would say yes, but this time many of the secular growers are also vulnerable now to earnings disappointment due to the pay back in demand for many of the goods and services offered by such companies. In our other words, these companies likely benefitted more than average from the COVID dynamics. Therefore, they will not be immune to the bust in growth as they normally tend to be. In fact, they could be worse off. Keep in mind that the COVID recession was unusual due to the lock-downs and work/stay at home phenomenon. As such, Wilson believes that Y2K may offer a better road map on what to expect next. While he will share the analysis in a future note, as a spoiler alert, Wilson writes that he anticipates a mild recession in technology spending (both consumer and corporate) even as the overall economy avoids one (here, we most certainly disagree). Yet even this cautiously optimistic does not bode well for the majority of secular growers that drive the overall index - recall the FAAMG names alone accounted for a quarter of the S&P's entire market cap not too long ago - and it is especially negative for non-profitable ones in Wilson's view. There is much more in the full Michael Wilson note available to pro subscribers. Tyler Durden Mon, 04/25/2022 - 14:45.....»»

Category: blogSource: zerohedgeApr 25th, 2022

2 Secrets to Quick Profits this Earnings Season

Why do some stocks plunge on a positive earnings surprise while others skyrocket? Dave will show you how to tell the difference before a company reports as we begin this important earnings season. This may be one of the most important earnings seasons in a long time. That is because stocks have come under pressure after their huge run up to all-time highs. The market is weighing the impact of Omicron on the lingering global pandemic, as well as the heightened inflationary outlook.This sets us up for the ultimate showdown this earnings season. Will the reopening trade dominate the headlines? Or will an increasingly hawking Fed spook investors?Some major market averages like the NASDAQ Composite have already recently retested key support levels near their 200-day moving averages. Others, like the Russell 2000 Small Cap Index, are near the bottom end of long-term trading ranges. So, if corporate earnings are better than expected, then it should act as a catalyst propelling stocks back to the highs. On the other hand, if profits fall short, then stocks are likely to experience a nasty correction.That is the story for the overall market. As for individual stocks, there will be big winners and losers depending on the strength of their reports. This brings to mind one of the most confusing things about earnings season:Why do some stocks skyrocket on a positive earnings surprise while others fall off a cliff? In this article we are going to tackle this little understood issue. Better yet, I will share with you two ways to profit from surprises this earnings season. More on that later. 3 Reasons Stocks Can Drop After a Positive Earnings Surprise 1) Estimates vs. Expectations: The standard definition of an earnings surprise is when actual earnings comes in higher than earnings estimates. But those estimates are the “published” numbers from the brokerage analysts. Quite often investors tend to develop their own unique set of expectations that can differ greatly from the Wall Street analysts. If there is too much optimism ahead of the release, then actual earnings will need to be a blowout in order to appease investors inflated expectations. This is the most common reason why some stocks fall after a “supposed” earnings beat.2) Quality of Earnings: The highest quality earnings come from having robust revenue growth. This means that the company’s products or services are in high demand and should stay that way into the future. However, these days far too much of the earnings being reported is generated from cost cutting and other “accounting gimmickry”. The problem with that is that the benefits of these moves don’t last.   When the market gets a whiff that the earnings are unsustainable, no matter how strong the beat, shares will most likely drop.3) Forward Guidance: Plain and simple, when you buy a stock you are taking an ownership stake. And what owners of companies care about is the stream of future earnings. So if a company beats earnings for the quarter just reported, but warns that future quarters will see lower earnings, then that stock will go down... and go down fast. 2 Ways to Make Money on Earnings Surprises So now that we have outlined things that can go wrong after an earnings surprise, let's shift gears and talk about something even more important; How to turn a profit from earnings surprises. Here are two ways to go about it.More . . .------------------------------------------------------------------------------------------------------Buy These Stocks BEFORE They Report EarningsNext week 114 companies are set to report earnings. What if you could know in advance which few look to rock Wall Street and pop in price?Now you can.Zacks' proprietary "ESP" formula predicts positive earnings surprises with almost unthinkable 80.87% accuracy. This has led to double-digit gains in a matter of days.Your chance for access ends at midnight Sunday, January 16.See Surprise Stocks Now >>------------------------------------------------------------------------------------------------------Good Way: Buy shares in any company that had an earnings surprise and rose the day following the news. These stocks experience what academics call the "Post Earnings Announcement Drift". Studies clearly show that these stocks usually outperform the market over the next 9 months. Conversely, you should sell any stock in your portfolio that misses its earnings numbers as it likely to underperform the market for the next few quarters. The downside of this approach is that there are literally thousands of stocks to choose from every quarter.Best Way: Find stocks where the earnings “whispers” tip you off that a big surprise is coming. Buy the shares shortly before the announcement and enjoy quick gains of 10%, 15%, 20% when the earnings surprise is officially reported.I know what you’re thinking. There are no Magic 8-balls for the stock market, so how can this possible??? But fret not; this isn’t a magic show. It’s pure science.The concept of finding a profitable source of earnings whispers has long been the Holy Grail of stock investing. Many experts have tried and failed to make this work. In fact, we had been researching this for countless years.Early on we found clues that identified stocks more likely to surprise, but not necessarily rise in price. It wasn’t until the summer of 2010 that we discovered the right combination of elements. Since refinements were made in 2014, the system has correctly called POSITIVE surprises a whopping 80.87% of the time with the vast majority accelerating in price.The Easy Way to Apply This Breakthrough  Here’s the challenge: In each earnings season, including now, there are hundreds of stocks that are likely to achieve positive surprises.That is why our Zacks research team poured so much effort into creating a special strategy that uses additional filters to narrow down the lists. It detects rare companies that are most likely to both beat earnings and jump in price.This drives the portfolio I am managing called the Zacks Surprise Trader.I can't share all the details of the secret formula with you, but our system relies on two under-used signals coming from the brokerage analyst community. These two whispers are then layered on top of other time-tested elements such as the Zacks Rank and Zacks Industry Rank to find only the best stocks... in the best industries... with the best chances of beating earnings and quickly rising in price.If you would like to receive our precise whisper trading signals through the heart of this earnings season, I invite you to look inside our Surprise Trader portfolio ASAP.Now is the absolute best time to do it. From 114 companies scheduled to report earnings next week, I have locked onto a small handful of standouts predicted to exceed expectations when their earnings reports are released.New Surprise Stock to Post Monday Morning Check our live recommendations right now, and be first to the one I’m adding Monday. You can take advantage of ripples of buying even before a company reports earnings.Don't miss your chance to beat Wall Street to the punch and make the most of the potential double-digit price pops. Our signals predict big positive surprises and they've been right a remarkably consistent 80.87% of the time!They’ve led us to recent gains like +114.4%, +77.9%, +22.5%, and +70.9% in as little as 6 days.¹Bonus Report: Another reason to look into this right away is that you are also invited to download our just-released "Early Warning Alert" report. It reveals Stocks to Sell BEFORE They Report Earnings in the Coming Weeks. Our strategy works both ways, and you can use this report to avoid companies that are more likely to report negative surprises from January 17-28.See our Surprise Trader stocks and “Early Warning Alert” right now >>All the Best,DaveDave Bartosiak is Zacks' resident earnings surprise expert. He selects stocks and delivers daily commentary for our Surprise Trader portfolio.¹ The results listed above are not (or may not be) representative of the performance of all selections made by Zacks Investment Research's newsletter editors and may represent the partial close of a position.  Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report To read this article on click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 14th, 2022

Greenwald: NBC News Uses Ex-FBI Official Frank Figliuzzi To Urge Assange"s Extradition, Hiding His Key Role

Greenwald: NBC News Uses Ex-FBI Official Frank Figliuzzi To Urge Assange's Extradition, Hiding His Key Role Authored by Glenn Greenwald via, Two of the television outlets on which American liberals rely most for their news — NBC News and CNN — have spent the last six years hiring a virtual army of former CIA operatives, FBI officials, NSA spies, Pentagon chiefs, and DOJ prosecutors to work in their newsrooms. The multiple ways in which journalism is fundamentally corrupted by this spectacle are all vividly illustrated by a new article from NBC News that urges the prosecution and extradition of Julian Assange, claiming that the WikiLeaks founder, once on U.S. soil, will finally provide the long-elusive proof that Trump criminally conspired with Russia. Twitter profile of former FBI Assistant Director Frank Figliuzzi, now of NBC News The NBC article is written by former FBI Assistant Director and current NBC News employee Frank Figliuzzi, who played a central role during the Obama years in the FBI's attempt to investigate and criminalize Assange: a rather relevant fact concealed by NBC when publishing this. But this is how U.S. security state agents now directly control corporate news outlets. During the Cold War and then in the decades following it, the U.S. security state constantly used clandestine measures to infiltrate U.S. corporate media outlets and shape U.S. media coverage in order to propagandize the domestic population. Indeed, intelligence agencies have a long, documented record of violating their charter by interfering in domestic politics through formal programs to manipulate U.S. media coverage. In 1974, The New York Times’ Seymour Hersh exposed that “the [CIA], directly violating its charter, conducted a massive, illegal domestic intelligence operation” which included “assembling domestic intelligence dossiers” and “recruiting informants to infiltrate some of the more militant dissident groups.” The Senate's Church Committee report in 1976 concluded that “intelligence excesses, at home and abroad, were not the 'product of any single party, administration, or man,”; rather, “Intelligence agencies have undermined the constitutional rights of citizens primarily because checks and balances designed by the framers of the Constitution to assure accountability have not been applied.” A 1977 Rolling Stone exposé by Carl Bernstein — entitled “The CIA and the Media” — revealed “more than 400 American journalists who in the past twenty-five years have secretly carried out assignments for the CIA" — including the most influential news executives in the country: William Paley of CBS, Henry Luce of Time Inc., Arthur Hays Sulzberger of the New York Times. Bernstein laid out how sweeping the CIA's commandeering of mainstream media outlets was: Some of these journalists' relationships with the Agency were tacit; some were explicit. There was cooperation, accommodation and overlap. Journalists provided a full range of clandestine services -- from simple intelligence gathering to serving as go-betweens with spies in Communist countries. Reporters shared their notebooks with the CIA. Editors shared their staffs. Some of the journalists were Pulitzer Prize winners, distinguished reporters who considered themselves ambassadors-without-portfolio for their country. Most were less exalted: foreign correspondents who found that their association with the Agency helped their work; stringers and freelancers who were as interested it the derring-do of the spy business as in filing articles, and, the smallest category, full-time CIA employees masquerading as journalists abroad. In many instances, CIA documents show, journalists were engaged to perform tasks for the CIA with the consent of the managements America's leading news organizations. The history of the CIA's involvement with the American press continues to be shrouded by an official policy of obfuscation and deception. . . . By far the most valuable of these associations, according to CIA officials, have been with The New York Times, CBS, and Time Inc. In 1996, the Senate Intelligence Committee issued a lengthy report entitled “CIA's Use of Journalists and Clergy in Intelligence Operations" after “the House of Representatives [took] a vote on the subject as to the prohibition of use of journalists and others by the CIA." In 2008, The New York Times’ David Barstow won a Pulitzer for exposing the Pentagon's secret plot to disseminate Defense Department talking points by placing former officials as “analysts" at each news network who, in secret, coordinated their claims. In 2014, The Intercept obtained the CIA's communications with journalists through a FOIA request and discovered that national security reporter Ken Dilanian routinely submitted his drafts about the CIA to agency officials before publication; his newspaper at the time, The Los Angeles Times, pronounced itself “disappointed” and said he may have violated the paper's rules, but he was promptly hired by the Associated Press and now covers the intelligence community for . . . NBC News. Revealingly, none of those multiple Congressional and media exposés deterred the CIA and related agencies from contaminating domestic media coverage. Over the last six years, the opposite happened: this tactic has accelerated greatly. U.S. security state services now not only shape but often control news coverage — not by clandestine tactics but right out in the open. Many of the top security state officials over the last two decades have been hired to deliver "news” for these two major corporate networks: former CIA Director John Brennan (NBC), former Homeland Security Secretary James Clapper (CNN), former Assistant FBI Director Frank Figliuzzi (NBC), former Homeland Security Advisor Fran Townsend (CNN), disgraced former FBI Deputy Director Andrew McCabe (CNN), former NSA and CIA Director Michael Hayden (CNN), and countless others. This career path from the Deep State to NBC/CNN is now so common that those who are fired in disgrace or resign immediately show up on their payroll. As but one illustrative example: on February 2, 2018, FBI official Josh Campbell wrote a self-serving op-ed in The New York Times flamboyantly announcing his resignation over alleged interference by Trump officials; two days later, CNN announced it had hired Campbell as a "law enforcement analyst,” where he continues to "report the news.” In 2018, the DOJ's Inspector General concluded that McCabe, while serving as former FBI Deputy Director, had lied to the Bureau about his role in the leaks; CNN then hired him. The reasons this is so dangerous are self-evident. Allowing the U.S. security state to shape the news converts media outlets into a form of state TV. As Politico's Jack Shafer wrote in 2018 under the headline "The Spies Who Came Into the TV Studio": Standard journalistic contributors—reporters, anchors, editors, producers—pursue the news wherever it goes without fear or favor, as the famous motto puts it. But almost to a one, the TV spooks still identify with their former employers at the CIA, FBI, DEA, DHS, or other security agencies and remain protective of their institutions. This makes nearly every word that comes out of their mouths suspect. These security state agencies were created to lie and spread disinformation; allowing them to place their top operatives at news outlets obliterates even the pretense that there is any separation between them and corporate journalism. Worse, it requires these media outlets to pretend they are adversarially reporting on agencies which their own colleagues recently helped run. And, worst of all, it creates a massive conflict of interest whereby news “analysts” are commenting on stories in which they played central roles in their prior, often-very-recent life as a security state operative — as happened repeatedly during Russiagate when people like John Brennan were “analyzing” investigations for NBC News which they helped launch or of which they are targets. The New York Times, Dec. 23, 2019 To call all of this a conflict of interest is to gravely understate the case. It is an all-but-explicit merger between the security state and the corporate media. This latest NBC News article on Assange by former FBI Assistant Director Figliuzzi features all of these corrupt dynamics. MSNBC has been repeatedly promoting it. That is remarkable on its own: a so-called "news outlet” is cheering — indeed, salivating over — the Biden administration's attempt to criminalize Assange under “espionage” laws for the sin of reporting genuine documents showing all sorts of improper conduct by the agencies whose former operatives now staff that network. Given that press freedom groups in the West have uniformly condemned the prosecution of Assange as a grave threat to a free press, it is stunning to watch a corporation that claims to be in the news business cheering rather than denouncing it. But for the U.S. media, that is just ordinary corruption and subservience to the CIA: it is hardly rare to find "journalists” giddy over the prospect of Assange's ongoing imprisonment. What makes this new article particularly notable is that the FBI — when Figliuzzi was a senior official there — was directly involved in the attempt to investigate, frame and prosecute Assange. Yet the article, while identifying its analyst as “the assistant director for counterintelligence at the FBI, where he served 25 years as a special agent and directed all espionage investigations across the government,” makes no mention of his direct personal interest in the Assange prosecution. The primary claim of this article is an unhinged conspiracy theory. Figliuzzi asserts that extraditing Assange onto U.S. soil could endanger Donald Trump. The former FBI official barely conceals his glee over the prospect that Assange could somehow offer up dirt on Trump in exchange for a promise of leniency from prosecutors: If the Department of Justice plays its cards right, it can make the case precisely about those Russian government hacks and WikiLeaks' dissemination of the content of those hacks by offering a deal to Assange in return for what he knows. That’s what should worry Trump and his allies. . . . Assange may be able to close the gap between collusion and criminal conspiracy. Assange got the Democratic National Committee data dump from an entity long suspected to be a front for the GRU, the Russian military intelligence service. . . Assange may be able to help the U.S. government in exchange for more lenient charges or a plea deal. Prosecutions can make for strange bedfellows. A trade that offers a deal to a thief who steals data, in return for him flipping on someone who tried to steal democracy sounds like a deal worth doing. So, DOJ, if you’re listening… That Assange "stole data” is an absolute lie — not even the U.S. Government claims this — but NBC News has previously shown that it has no qualms about disseminating that particular lie. As for Figliuzzi’s belief that Assange possesses secret information about Trump's collusion with Russia over the 2016 election: that is nothing short of madness. Robert Mueller did not even attempt to interview Assange, precisely because the Special Counsel (Figliuzzi's former boss) obviously recognized that Assange had no information that would assist Mueller's investigation to determine whether Trump or his associates criminally conspired with Russia. If Assange really has information showing Trump criminally worked with the Kremlin, how can Figliuzzi justify that Mueller, during eighteen months of investigating that question, never even sought to speak to Assange? Moreover, if — as Figliuzzi fantasizes — Assange were in possession of some sort of smoking gun that Mueller never found but which would finally prove Trump's guilt on various crimes, why did Trump not pardon Assange? After all, if this twisted fantasy that NBC News is promoting had any validity — namely, Trump will be in big trouble once the U.S. succeeds in extraditing Assange to the U.S. to stand trial — why was it the Trump administration that brought these charges against Assange in the first place, and why would Trump not have pardoned Assange in order to prevent such a deal from taking place? None of what Figliuzzi is claiming has any evidence to support it or even makes any minimal sense. But as usual, that is no bar to NBC News and MSNBC publishing and aggressively promoting it. As I will never tire of pointing out, it is the corporate media outlets that most vocally denounce disinformation which are the ones guilty of spreading it most frequently and destructively. What makes this NBC article by Figliuzzi worse than standard media disinformation is that the former FBI official is writing about events in which he had direct personal involvement, without any disclosure of this fact. In 2011, Iceland’s Minister of the Interior, Ogmundur Jonasson, discovered that FBI agents had been deployed to his country under false pretenses. The FBI's counterintelligence unit, led by Figliuzzi, had claimed they were there because they wanted to help the Icelandic government stop an “imminent attack” by hackers into Iceland's government databases. That was a lie. As The New York Times reported two years later, the FBI went to Iceland in order to dig up dirt on Assange and WikiLeaks that would enable their prosecution. At the time, Assange was spending significant time in Iceland; he concluded that the country's broad press freedom and privacy protections, as well as support from several politicians, enabled him to work there safely. The FBI unit under Figliuzzi focused its counterintelligence efforts in Iceland on recruiting a very young WikiLeaks insider with a history of criminality and mental illness, Sigurdur Ingi Thordarson, in order to provide incriminating information about Assange. When Jonasson, the Interior Minister, discovered the truth, he expelled the FBI from his country, as The Times recounted: But when “eight or nine” F.B.I. agents arrived in August, Mr. Jonasson said, he found that they were not investigating an imminent attack, but gathering material on WikiLeaks, the activist group that has been responsible for publishing millions of confidential documents over the past three years, and that has many operatives in Iceland. . . . The F.B.I.’s activities in Iceland provide perhaps the clearest view of the government’s interest in Mr. Assange. A young online activist, Sigurdur Ingi Thordarson (known as Siggi), told a closed session of Iceland’s Parliament this year that he had been cooperating with United States agents investigating WikiLeaks at the time of the F.B.I.’s visit in 2011. . . The F.B.I. efforts left WikiLeaks supporters in Iceland shaken. “The paranoia,” [Parliament member Birgitta] Jonsdottir said, “is going to kill us all.” The FBI's counterintelligence efforts under Figliuzzi in Iceland succeeded. Thordarson became a key witness for the FBI in its efforts to prosecute Assange. Indeed, the pending indictment against the WikiLeaks founder — which is the basis for the Biden DOJ's demand that he be extradited from the U.K. — heavily relies on accusations from Thordarson (the indictment refers to him as "Teenager” and to Iceland as "NATO Country-1"). Even a cursory review of the indictment shows how central to the case against Assange are the allegations which the FBI induced Thordarson to make: "In September 2010, ASSANGE directed Teenager to hack into the computer of an individual formerly associated with WikiLeaks and delete chat logs containing statements of ASSANGE.” But in June of this year, Thordarson recanted his allegations against Assange. Speaking to the Icelandic newspaper Stundin, Thordarson confessed how he had been caught stealing money from WikiLeaks by forging an email in Assange's name and directing WikiLeaks’ funds to be sent to his personal account. He “saw a way out” of the pending criminal problem by helping the FBI in its hunt against Assange. Thus, "on August 23d, [Thordarson] sent an email to the US Embassy in Iceland offering information in relation to a criminal investigation,” and he then became the FBI's star witness. Providing the FBI with false allegations against Assange helped the FBI but did not help Thordarson much: he was shortly thereafter convicted on charges of “massive fraud, forgeries and theft on the one hand and for sexual violations against underage boys he had tricked or forced into sexual acts on the other.” Yet “Thordarson was sentenced in 2013 and 2014 and received relatively lenient sentences” as the judge reviewed his cooperation activities as well as his formal psychiatric diagnosis that he is a sociopath. Even after that lenient punishment, Thordarson continued to commit crimes, piling up numerous other criminal charges. That was when the FBI, eager to indict Assange, again saw an opportunity in Thordarson: In May 2019 Thordarson was offered an immunity deal, signed by [U.S. Deputy Attorney General Kellen S.] Dwyer, that granted him immunity from prosecution based on any information on wrongdoing they had on him. The deal, seen in writing by Stundin, also guarantees that the DOJ would not share any such information to other prosecutorial or law enforcement agencies. That would include Icelandic ones, meaning that the Americans will not share information on crimes he might have committed threatening Icelandic security interests – and the Americans apparently had plenty of those but had over the years failed to share them with their Icelandic counterparts. With Assange now behind bars based on the indictment he helped the FBI secure, Thordarson decided to come clean. He had lied to the FBI and fed them false incriminating information against Assange because he knew that would help shield him from accountability for his own crimes. In other words, at the heart of the FBI's case against Assange — one compiled by the FBI's counterintelligence operations under Figliuzzi before he went to NBC News — is a chronic criminal with a history of fraud, sexual assault against minors, and serious psychiatric illness. And he has now recanted his claims. If NBC News were a legitimate news operation, it would obviously bar Figliuzzi from “reporting on” or “analyzing” a major press freedom case in which the FBI was so intricately involved, and implicated, during his tenure there. But the opposite is true. Figliuzzi is obsessed with Assange's prosecution and extradition, talking about it often both on his social media account and on NBC and MSNBC platforms. Beyond the issue of journalistic ethics — which nobody should expect of NBC and MSNBC at this point — something more sinister is going on here. The Biden administration's aggressive pursuit of Assange's extradition, along with its demand that he be kept imprisoned while the judicial process is pending, has been denounced with increasing fervor by press freedom and civil liberties groups that are usually allies of the Democrats. That even includes the ACLU. Leaders from around the world, including on the left, have been strongly condemning the Biden administration. Other countries are now frequently holding up Biden's assault on press freedom, along with the British government, as a reason why those two countries lack credibility to sermonize about press freedom. This new argument pushed by NBC News and its former FBI operative Frank Figliuzzi — liberals should cheer Assange's prosecution because we can squeeze him once he is here to turn on and implicate Trump — seems like a barely disguised political ploy to protect the Biden White House from criticism. NBC News knows that liberals crave Trump’s prosecution above all, so trying to convince them that Assange's extradition could advance that — as false as that obviously is — would likely benefit the White House which NBC serves, by fortifying support among Trump-obsessed liberals or at least diluting opposition. But taken on its own terms, the argument now being promoted by NBC to justify Assange's extradition is deeply disturbing. What they are essentially arguing is that the entire prosecution is a pretext. Though justified based on Assange's alleged lawbreaking in connection with the 2010 publication by WikiLeaks of the Iraq and Afghanistan war logs, the real benefit, according to NBC, is the opportunity to pressure Assange to turn on Trump in connection with the 2016 election. In other words, they are keeping Assange imprisoned for years, and working to bring him to the U.S., because they believe they can force him with promises of leniency to offer up information they can use against Trump — just as the FBI manipulated the young, mentally unwell Icelandic teenager to offer false accusations against Assange. And that would also create the added incentive to treat Assange as abusively as possible to turn the pressure as high up as possible for him to implicate Trump. Indeed, on the day Assange was arrested in London, a smiling Sen. Joe Manchin (D-WV) all but proclaimed this to be the real purpose of the extradition ("he'll be our property and we can get the truth and the facts from him"): That the U.S.'s corporate newsrooms are now filled with former agents of the U.S. security state on their payrolls is one of the most significant and disturbing media developments in recent years. It means that dirty, scheming operatives like Frank Figliuzzi can now do their dirty work not in the shadows or in agencies known to be guilty for decades of this sort of treachery and lies, but under the cover of “respectable” media outlets. When Figliuzzi speaks — or when John Brennan or James Clapper or Andrew McCabe do — the lips of these media outlets are moving but the CIA and the FBI and the DOJ are the ones actually speaking. That has been true for decades, but at least they had the decency to maintain the pretense. That security state agencies have now dispensed with the formalities and control these news outlets so directly reveals the utter impunity with which they now operate, particularly in establishment liberal circles. That an FBI official who played a key role in concocting false accusations against Assange now "reports” or “analyzes” that very same case under the logo of NBC News says more about the institutional corruption of these news outlets than thousands of articles could ever get close to. To support the independent journalism we are doing here, please subscribe, obtain a gift subscription for others and/or share the article Tyler Durden Sun, 01/02/2022 - 18:00.....»»

Category: worldSource: nytJan 2nd, 2022

Forget Black Friday. A flood of bargains is coming in January.

Products delayed by the supply chain crisis will end up heavily discounted at stores next year, analysts say. Analysts say we'll see major discounting next year.Vickie Flores/In Pictures via Getty Images Analysts say shoppers should prepare for major discounts in January.  This is because supply chain delays are causing products to arrive too late for the holidays. These items will likely end up on discount racks, they say. If you didn't get the deals and discounts you were hoping for this Black Friday, fear not, for January is likely to be awash with bargains, analysts say. This is because the ongoing supply chain crisis, which is preventing products from getting to where they need to be in time for the holidays, is likely to lead to major discounts in the post-holiday season, a group of BMO analysts wrote in a note to clients this week. "We believe it critical to point out that unlike last year's actual supply-chain shutdown (factories shut, vendors shut, stores shut), supply chains are not shut down this year, they are slowed down. Meaning, the issue is less one of creation and more one of transportation," these analysts wrote.They continued: "That means that product is slowly inching its way across the globe and country. Unfortunately, that will likely lead to mistimed floorsets as product misses its intended season, likely triggering promotions and clearance."In other words, when product finally makes its way to stores, it's likely headed straight for the discount racks. Some retailers shed light on how grave the situation has become in recent earnings calls. Victoria's Secret CEO Martin Waters said that 45% of the brand's fall season inventory has been delayed. Though it has already canceled 10 million units that would arrive too late, it's expected to head into next year with more product than usual. And these products, which may be seasonal, are likely to be more vulnerable to discounts. This is particularly concerning for retailers who, in the past year, had finally managed to break the 12 year cycle of discounting which has plagued the retail sector since the last recession.The pandemic forced retailers to think lean, BMO analyst Simeon Siegel said. "They canceled their purchase orders, supply chains shut down, and there was no product coming out," he told Insider on a recent call."For the first time in a very long time, retailers were protected from themselves," he said. Now, retailers are more likely to fall back into the discounting trap again, which is hard to break, he added. Some might just choose to offload inventory rather than having it clogging up their stores next year, which should present lots of buying opportunities for off-price stores such as TJ Maxx and Ross, experts say. While discounts might be good news for shoppers who are already feeling the pinch from rising inflation rates and watered-down promotions this Black Friday, they nonetheless may not get the deals they're hoping for, Siegel said. "Anything that is good will sell out. Anything that is bad and that misses a deadline? That is going to sit on the shelf and rack up promotions again," he said. Read the original article on Business Insider.....»»

Category: topSource: businessinsiderNov 30th, 2021

Global Coordinated SPR Release "Highly Unlikely"; Instead Here Is What The White House Will Do

Global Coordinated SPR Release "Highly Unlikely"; Instead Here Is What The White House Will Do With Biden now in a panicked scramble to give the public the impression that he is doing something, anything to lower gas prices, whether it is sending angry letters to the FTC to scapegoat oil and gas giants for his admin's catastrophic "green" policies, or casually and politely asking Xi Jinping - one of the world's biggest oil importers - to "come on, man" and release some oil from the Chinese strategic petroleum reserve, some are starting to expect that a 1970s price controls is next on the Biden agenda now that the midterm elections are less than a year away. But before we get there, some are asking - is there any chance for a coordinated global SPR release? After all, one could argue that with gas prices soaring in both the US and China, the two superpowers' interest are - for once - aligned. The answer, at least according to JPMorgan, is "highly unlikely." In a note from JPM's Natasha Kaneva, she writes that since October, when US Energy Secretary Jennifer Granholm first mentioned that the Biden administration was considering a release from the government strategic stockpile of crude oil, "a chorus of Democratic senators  including Senate Majority Leader Schumer has called for the White House to leverage the Strategic Petroleum Reserve to attempt to lower fuel prices for Americans. With rising inflation and retail gasoline prices at seven-year highs, the Biden administration is under intense pressure to do something" even if other Democrats, like the top Democrat in the House, Steny Hoyer saying he is against an SPR release.  And while neither JPM nor Goldman- believe an SPR release will be effective in curbing prices at the pump (in fact, Goldman predicted that an SPR release would only lead to more pain down the line), the White House does have a few options at its disposal to immediately deliver volumes of crude oil to the still-undersupplied market and is likely to act on at least one of them. Some history Though the Biden Administration has the legal authority to draw down the US strategic petroleum reserve (SPR) as it wishes, the Energy Policy and Conservation Act gives the president and the DOE the power to draw down SPR stocks as necessary during what the president deems an emergency and to sell up to 30 mb in what the president deems “likely to become” an emergency, a unilateral emergency sale from the SPR without coordination with the IEA is unprecedented.  As shown in the next chart, presidentially-directed emergency releases have occurred only three times over the last 30 years and all happened before the US shale revolution significantly reduced US dependence on imported crude. It's worth noting that all three releases were executed in accordance with IEA's Coordinated Emergency Response Mechanism (CERM), which allows for differentiated national responses to an oil crisis, in that it does not oblige all 29 IEA member countries to release their emergency reserves (or in equal proportions). The CERM activation must be approved by unanimity of the Governing Board, the main decision-making body of the IEA, composed of energy ministers from each member country. Once release action is recommended, the board suggests the volume of oil equivalent to be made available to the market by each IEA member, where individual contributions are based on the country’s share of total IEA oil consumption. The punchline: while the IEA has shown willingness to work with member countries and producers to try to stabilize oil prices, without a specific supply disruption to point to OPEC+ production cuts may qualify, but it may be hard to justify given that the producer group is already raising its supply. As such, JPM notes that "there does not appear to be an explicit need for a collective response." In fact, the desire for a response among the IEA member countries appears to be limited to the US and purely for political reasons, just so Joe Biden can approach the mid-terms with the price of oil lower. And though the US holds a greater voting share than the other members because of its outsized demand allocation, JPM thinks that the IEA Governing Board is well short of consensus and a collective action and a resulting coordinated emergency sale is unlikely. So if a SPR release is unlikely, what is? One option is a large SPR Volume Exchange. According to Kaneva, while there is no precedent for a unilateral emergency sale from the SPR, there is a long history of volume exchanges and one example of a volume exchange of a similar magnitude to that of the largest emergency SPR sale. The 2000 Heating Oil Exchange, used by the Clinton Administration to support the establishment of a home heating oil reserve in the Northeast US, was for more than 30 mbd, similar in magnitude to the largest emergency sale. Delivering SPR volumes via an exchange agreement gives the Biden administration and the DOE wide latitude in how it can attempt to address the current undersupply in the global crude oil market without the risk of damaging its relationships within the IEA. In a volume exchange agreement, the DOE loans SPR barrels to oil market participants for a specified period of time after which the recipients return the volumes to the SPR. There does not appear to be any statutory limit on the volume the DOE can exchange and the deadline for volumes to be returned can be extended at the discretion of the DOE. This means that the DOE could deliver 30 mb—or, theoretically, as much as it wants—to the market today and wait until crude oil balances normalize to require the return of those barrels, no matter how long it takes. A less possible, if still likely option, is an accelerated mandated SPR sale schedule The DOE may be able to move a sale of 18 mb mandated to occur over the next three years to sell those barrels immediately. In the 2015 Bipartisan Budget Act, congress mandated that the DOE sell 8 mb from SPR in FY2022 and 10 mb in FY2023. The 2018 Bipartisan Budget Act also mandates sales, but is a little more flexible on timing, requiring 30 mb of SPR sales between FY2022 and FY2025. That means that, theoretically, the DOE could sell up to 38 mb from the SPR in FY2022. Some of those sales have already started, with the DOE selling 20 mb in August 2021. 11.6 mb of that volume has already been delivered to winning bidders in November with the remaining 8 mb to be delivered by the end of the year. With the mechanism for this sale already in place, with broad discretion from the legislation on timing, and without the risk of alienating IEA allies, accelerating this 18 mb of mandated sales may be the easiest of the options the White House has. Of course, as we noted earlier, a form of this appears to already be taking place: as the next chart shows, the US SPR has seen drawdowns for 10 straight weeks, during which more than 15 million barrels of crude have been withdrawn. And, at 606 million barrels, the US SPR is at its lowest since 2003, and it seems more declines are on the horizon. Incidentally, the latest SPR withdrawal of 3.25 million barrels from the SPR is the biggest in more than a decade. As an aside, some are asking how much SPR volume is available to sell, if the Biden admin actually goes that way? The answer is that aside from coordination with other IEA members on an emergency sale, the US has the ability to sell as much volume as it wants from the SPR and still remain compliant with the IEA reserves requirement. The DOE had around 606 million barrels of oil in strategic reserves last week, equal to about 39 days of US crude oil demand and nearly 200 days of US net imports of crude oil. According to the Agreement on an International Energy Programme (I.E.P.), the founding document of the IEA, IEA member countries each are required to hold emergency oil stocks equivalent to at least 90 days of net oil imports. Member countries may consider industry stocks in addition to government reserve stocks to meet their 90-day storage target. With all that in mind, what does the JPM strategist think will happen? Well, With global oil markets moving into surplus as early as 1Q22 and with limited impact on global crude prices, much less prices at the pump, JPM does not believe that "any additional drawdown from SPR is necessary." Key officials at the DOE seem to agree, preferring a wait-and-see approach, and, on Tuesday, before the US Senate Energy Committee, the EIA acting administrator Stephen Nalley, testified that the impact of an SPR release would be short-lived and that the price impact of a 15-48 mb release over a short period would only bring down crude oil prices down by about $2/bbl (or the equivalent to as much as 10 cents per gallon of gasoline), in line with our previous analysis. Furthermore, with midterm elections still a year away, President Biden likely has time to wait. However, with inflation rising and under pressure from Senate Democrats, JPM thinks the White House will ask the DOE to execute an exchange agreement, accelerate mandated sales, or a combination of both. More from JPM: We expect about 30 mb to be delivered from the SPR over the course of a month and to be completed before the end of the 2021. Though the SPR is designed to draw down inventories at a rate of 4.4 mbd, assuming sufficient pipeline capacity, SPR drawdowns have never exceeded a pace of more than 0.9 mbd in any given week of previous major sales and exchanges. Even then, 30 mb in a month is faster than the largest emergency drawdown, the 2011 Libya sale, which was completed over the course of two months.   Tyler Durden Wed, 11/17/2021 - 12:32.....»»

Category: blogSource: zerohedgeNov 17th, 2021

Republican Youngkin Wins VA Governor Race

Republican Youngkin Wins VA Governor Race With over 99% of the votes counted (and with a record turnout of over 3 million), Republican newcomer Glenn Youngkin holds a 2 point lead over former Democratic Governor Terry McAuliffe. Matt Walsh is pretty clear on who's to blame (to thank) for this Republican victory (notably McAuliffe won Loudon 55-44, but @Redistrict forecast that he would need a 14pts lead to support a state-wide win)...   I want to thank the Loudoun County school board. None of this would have been possible without you. Tonight’s result was your handiwork. Congratulations! — Matt Walsh (@MattWalshBlog) November 3, 2021 And Donald Trump, Jr has some thoughts for President Biden... When Biden wakes up tomorrow afternoon, somebody’s gonna have to tell him he’s now officially presiding over the collapse of the Democrat party — Donald Trump Jr. (@DonaldJTrumpJr) November 3, 2021 MSNBC is taking it well... MSNBC is taking it well — Benny (@bennyjohnson) November 3, 2021 *  *  * Update (2030ET): In a somewhat stunning - yet completely predictable - turn of events, Fairfax County - the largest and most prosperous in the state - has reportedly missed its self-imposed deadline to count early ballots. Terry McAuliffe’s campaign says Fairfax County will not meet their self-imposed deadline of 8pm to count early votes. A portion of the early votes in Fairfax County need to be rescanned and there is no set timeline for that yet. His staff says that could delay the results. Breaking: Fairfax County, Virginia has announced that they are *RE-SCANNING* ballots and will be releasing their vote totals later tonight. — Kyle Becker (@kylenabecker) November 2, 2021 The problem was reportedly with a thumb drive of the early ballots... Fairfax County is rescanning roughly 20,000 ballots from early voting sites after there was a technical issue with a thumb drive the votes are stored on, according to a Fairfax County official. Official says there is a paper trail of votes cast and are working on it now@wusa9 — Kolbie Satterfield (@KolbieReports) November 3, 2021 This is not good for 'faith in democracy'... Regardless of cause, delayed results from Fairfax County - the pivotal county in the commonwealth of Virginia - is REALLY BAD for public trust. — Ian Haworth (@ighaworth) November 3, 2021 *  *  * Update (2000ET): Voter turnout is reportedly very strong, on track to break 3 million votes, exceeding the 2017 record:   Based on local turnout reports, VA is on track to break 3 million votes, which would surpass gubernatorial record of 2.6M set in 2017. Not clear which side that benefits, but this isn't a scenario in which turnout in blue areas is falling through the floor. #VAGOV — Dave Wasserman (@Redistrict) November 2, 2021 Notably, Virginia tends to punish the president’s party. In the last 12 Virginia gubernatorial elections, the president’s party has won only once. Obviously, a Youngkin win would be a boost for Republican prospects to take control of both chambers of Congress.  *  *  * Today is the last day for Virginians to vote in what has become an unexpectedly close race for governor between former Democratic Gov. Terry McAuliffe and newcomer Republican candidate, Glenn Youngkin - who has gained considerable ground in recent days. Political watchers across the country are keeping tabs on this year's race as a proxy for the political mood, as the outcome may offer insight into what might be ahead for both parties in the 2022 midterm elections. From the beginning, Democrats expected McAuliffe to coast into the Governor's mansion in a state which saw Biden beat Trump by 10 points in the last election - yet Youngkin has gained massive ground after focusing on parents' anger over schools - which includes pandemic mandates and critical race theory. McAuliffe, meanwhile, said during a debate with Youngkin "I don’t think parents should be telling schools what they should teach," a decidedly poor move. McAuliffe’s campaign has faltered amid anecdotal accounts of an apathetic Democratic voter base. Biden’s standing in the commonwealth is mediocre, with his approval rating in the low 40s in several polls. The upshot is that Youngkin appears to have the momentum going into Election Day on Tuesday. The level of enthusiasm at recent campaign events has been tangibly greater for Youngkin, even in the Democratic-leaning Northern Virginia suburbs. -The Hill Meanwhile, the University of Virginia's Center for Politics has shifted its opinion of the race from "leans Democratic" to "leans Republican."  “Youngkin has the enthusiasm, the environment, the history, and perhaps even the issues (given his focus on education and its increasing salience in polling). McAuliffe has the state’s Democratic lean in his favor. However, we do feel we owe it to readers to push this race one way or the other and not just move it to a Toss-Up rating at the end. So we’re moving from Leans Democratic to Leans Republican.” PredictIt has Youngkin with a significant lead. The shift comes after McAuliffe spent considerable time pressing his Democratic colleagues on Capitol Hill to pass two major bills in order to show that Democrats are able to capitalize on their slim majority in Congress - yet fighting within the party has resulted in a political quagmire. And as the New York Post notes, what's going on in Virginia may be part of a 30-year political epicycle in which a Democrat wins the White House and then 'lurches left' - causing a backlash that reverberates to off-year elections in Virginia and New Jersey. In 1993 it was Bill Clinton, who ran for office as a “new kind of Democrat,” promising to “end welfare as we know it” and pledging not to raise taxes on the middle class. Instead Clinton moved left, dumping his welfare reform promise in favor of an unpopular nationalized health care scheme that a Democratic Congress never even put to a vote, raising taxes on the middle class, and promoting the boutique liberal cause of gays in the military (though ultimately settling for the muddle of “don’t ask, don’t tell”). Republicans swept the governors’ races in Virginia and New Jersey in 1993 and made large gains in both state legislatures, previewing the GOP landslides in the House and Senate in 1994, when Republicans gained 54 seats in the House for their first House majority in 40 years, and eight seats in the Senate that also gave the GOP a majority. Clinton immediately tacked to the center and remained there for the rest of his presidency. The pattern repeated itself in 2009 following Barack Obama's sharp left turn from the vague platform of "hope and change," leading to Republicans to once again capture the governorships of Virginia and New Jersey that year. A win for Youngkin would be a massive boost to Republicans nationwide - and would add to President Biden's woes which include failing approval ratings, supply chain issues, inflation, and absolute chaos trying to get his legislative agenda passed. As The Hill's Niall Stanage notes, "Even a narrow win for Democrats in Virginia would likely not be enough to calm the party’s nerves as it looks towards next year’s midterm elections — and beyond, to the 2024 presidential election where they fear the specter of Trump will be resurrected."   Tyler Durden Tue, 11/02/2021 - 20:45.....»»

Category: blogSource: zerohedgeNov 3rd, 2021

VA Governor Race Called For Republican Youngkin

VA Governor Race Called For Republican Youngkin With over 70% of the votes counted, Decision Desk has called the race for Republican newcomer Glenn Youngkin who holds a 9 pts lead over Democratic Terry McAuliffe. Additionally @Redistrict has called the race for Youngkin... I've seen enough: Glenn Youngkin (R) defeats Terry McAuliffe (D) in the Virginia governor's race. #VAGOV — Dave Wasserman (@Redistrict) November 3, 2021 Matt Walsh is pretty clear on who's to blame (to thank) for this Republican victory (notably McAuliffe won Loudon 55-44, but @Redistrict forecast that he would need a 14pts lead to support a state-wide win)... I want to thank the Loudoun County school board. None of this would have been possible without you. Tonight’s result was your handiwork. Congratulations! — Matt Walsh (@MattWalshBlog) November 3, 2021 And Donald Trump, Jr has some thoughts for President Biden... When Biden wakes up tomorrow afternoon, somebody’s gonna have to tell him he’s now officially presiding over the collapse of the Democrat party — Donald Trump Jr. (@DonaldJTrumpJr) November 3, 2021 MSNBC is taking it well... MSNBC is taking it well — Benny (@bennyjohnson) November 3, 2021 *  *  * Update (2030ET): In a somewhat stunning - yet completely predictable - turn of events, Fairfax County - the largest and most prosperous in the state - has reportedly missed its self-imposed deadline to count early ballots. Terry McAuliffe’s campaign says Fairfax County will not meet their self-imposed deadline of 8pm to count early votes. A portion of the early votes in Fairfax County need to be rescanned and there is no set timeline for that yet. His staff says that could delay the results. Breaking: Fairfax County, Virginia has announced that they are *RE-SCANNING* ballots and will be releasing their vote totals later tonight. — Kyle Becker (@kylenabecker) November 2, 2021 The problem was reportedly with a thumb drive of the early ballots... Fairfax County is rescanning roughly 20,000 ballots from early voting sites after there was a technical issue with a thumb drive the votes are stored on, according to a Fairfax County official. Official says there is a paper trail of votes cast and are working on it now@wusa9 — Kolbie Satterfield (@KolbieReports) November 3, 2021 This is not good for 'faith in democracy'... Regardless of cause, delayed results from Fairfax County - the pivotal county in the commonwealth of Virginia - is REALLY BAD for public trust. — Ian Haworth (@ighaworth) November 3, 2021 *  *  * Update (2000ET): Voter turnout is reportedly very strong, on track to break 3 million votes, exceeding the 2017 record:   Based on local turnout reports, VA is on track to break 3 million votes, which would surpass gubernatorial record of 2.6M set in 2017. Not clear which side that benefits, but this isn't a scenario in which turnout in blue areas is falling through the floor. #VAGOV — Dave Wasserman (@Redistrict) November 2, 2021 Notably, Virginia tends to punish the president’s party. In the last 12 Virginia gubernatorial elections, the president’s party has won only once. Obviously, a Youngkin win would be a boost for Republican prospects to take control of both chambers of Congress.  *  *  * Today is the last day for Virginians to vote in what has become an unexpectedly close race for governor between former Democratic Gov. Terry McAuliffe and newcomer Republican candidate, Glenn Youngkin - who has gained considerable ground in recent days. Political watchers across the country are keeping tabs on this year's race as a proxy for the political mood, as the outcome may offer insight into what might be ahead for both parties in the 2022 midterm elections. From the beginning, Democrats expected McAuliffe to coast into the Governor's mansion in a state which saw Biden beat Trump by 10 points in the last election - yet Youngkin has gained massive ground after focusing on parents' anger over schools - which includes pandemic mandates and critical race theory. McAuliffe, meanwhile, said during a debate with Youngkin "I don’t think parents should be telling schools what they should teach," a decidedly poor move. McAuliffe’s campaign has faltered amid anecdotal accounts of an apathetic Democratic voter base. Biden’s standing in the commonwealth is mediocre, with his approval rating in the low 40s in several polls. The upshot is that Youngkin appears to have the momentum going into Election Day on Tuesday. The level of enthusiasm at recent campaign events has been tangibly greater for Youngkin, even in the Democratic-leaning Northern Virginia suburbs. -The Hill Meanwhile, the University of Virginia's Center for Politics has shifted its opinion of the race from "leans Democratic" to "leans Republican."  “Youngkin has the enthusiasm, the environment, the history, and perhaps even the issues (given his focus on education and its increasing salience in polling). McAuliffe has the state’s Democratic lean in his favor. However, we do feel we owe it to readers to push this race one way or the other and not just move it to a Toss-Up rating at the end. So we’re moving from Leans Democratic to Leans Republican.” PredictIt has Youngkin with a significant lead. The shift comes after McAuliffe spent considerable time pressing his Democratic colleagues on Capitol Hill to pass two major bills in order to show that Democrats are able to capitalize on their slim majority in Congress - yet fighting within the party has resulted in a political quagmire. And as the New York Post notes, what's going on in Virginia may be part of a 30-year political epicycle in which a Democrat wins the White House and then 'lurches left' - causing a backlash that reverberates to off-year elections in Virginia and New Jersey. In 1993 it was Bill Clinton, who ran for office as a “new kind of Democrat,” promising to “end welfare as we know it” and pledging not to raise taxes on the middle class. Instead Clinton moved left, dumping his welfare reform promise in favor of an unpopular nationalized health care scheme that a Democratic Congress never even put to a vote, raising taxes on the middle class, and promoting the boutique liberal cause of gays in the military (though ultimately settling for the muddle of “don’t ask, don’t tell”). Republicans swept the governors’ races in Virginia and New Jersey in 1993 and made large gains in both state legislatures, previewing the GOP landslides in the House and Senate in 1994, when Republicans gained 54 seats in the House for their first House majority in 40 years, and eight seats in the Senate that also gave the GOP a majority. Clinton immediately tacked to the center and remained there for the rest of his presidency. The pattern repeated itself in 2009 following Barack Obama's sharp left turn from the vague platform of "hope and change," leading to Republicans to once again capture the governorships of Virginia and New Jersey that year. A win for Youngkin would be a massive boost to Republicans nationwide - and would add to President Biden's woes which include failing approval ratings, supply chain issues, inflation, and absolute chaos trying to get his legislative agenda passed. As The Hill's Niall Stanage notes, "Even a narrow win for Democrats in Virginia would likely not be enough to calm the party’s nerves as it looks towards next year’s midterm elections — and beyond, to the 2024 presidential election where they fear the specter of Trump will be resurrected."   Tyler Durden Tue, 11/02/2021 - 20:45.....»»

Category: smallbizSource: nytNov 2nd, 2021

Telecom Stock Roundup: AT&T Beats, Corning Misses Q3 Earnings Estimates & More

While AT&T (T) beats third-quarter earnings estimates driven by strength in key areas of 5G, fiber and HBO Max, Corning (GLW) misses the same despite record revenues. Over the past five trading days, U.S. telecom stocks have witnessed a steep decline as the $1.2 trillion infrastructure bill failed to make any headway in the House despite President Biden’s continued efforts to broker a deal between the warring factions of the Democrats. The bill has been stuck in a potential stalemate for weeks, as several progressive Democrats wanted it to be tied to the larger $3.5 trillion budget reconciliation bill that is facing massive backlash from both Republicans and Democrats. As the Oct 31 deadline (set by the Democrats to pass the bill) inch closer, frantic negotiations pick up the pace to dispel the uncertainty brewing within the sector. The Democrats have currently put forth a range of $1.5 trillion to $2 trillion for the social spending reconciliation package, slashing it from $3.5 trillion and abandoning some key provisions within the bill in order to win the trust of the progressives. The ongoing negotiations are expected to lead to a broader consensus on some of the sweeping policies that the government is aiming to implement before the November 2022 congressional elections.While the policy paralysis continued to cripple operations, the administration aimed to steady the ship by recommending Jessica Rosenworcel as the permanent chairwoman of the FCC. The government also nominated consumer advocate Gigi Sohn for the third empty Democratic Commissioner seat. The five-member FCC was deadlocked with two Republican and two Democratic representations and the government reportedly waited more than nine months to make the due nominations. The current nominations enjoy broad-based support from various advocacy groups and are likely to prove beneficial for the federal government in the long run in implementing key policy changes. The White House is further expected to nominate Alan Davidson as director of the Commerce Department's National Telecommunications and Information Administration, which advises the government on telecommunications and information policy issues and is likely to oversee the funding for expanding the ambit of Internet access to all Americans.Meanwhile, the FCC has issued an order to bar China Telecom from operating in the United States over national security concerns. The federal agency has offered the China-based telecommunications firm 60 days to discontinue its services in the country. Although the punitive move is not likely to cause significant losses to the carrier that generates the bulk of its revenue from domestic operations, it is expected to aggravate the strained Sino-US relationship as the battle for 5G supremacy heats up. The latest FCC move follows an earlier decision by the NYSE in January to delist three China-based telecom firms, namely China Mobile, China Telecom, and China Unicom, from major U.S. indices in compliance with a November 2020 executive order by President Trump over alleged ties with the state-owned military.  Regarding company-specific news, quarterly earnings and preliminary results primarily took the center stage over the past five trading days.Recap of the Week’s Most Important Stories1.     AT&T Inc. T reported mixed third-quarter 2021 results as healthy wireless traction was partially offset by lower contribution from divested businesses and lower demand for legacy voice and data services. The company recorded modest subscriber growth backed by a resilient business model and robust cash flow position driven by a diligent execution of operational plans. AT&T expects to continue investing in key areas of 5G, fiber and HBO Max and adjust its business according to the evolving market scenario to fuel long-term growth while maintaining a healthy dividend payment and actively pruning debt.Excluding non-recurring items, adjusted earnings were 87 cents per share compared with 76 cents in the year-earlier quarter. Adjusted earnings for the third quarter beat the Zacks Consensus Estimate by 9 cents. Quarterly GAAP operating revenues decreased 5.7% year over year to $39,922 million, largely due to the divestment of the U.S. video business and other businesses, partially offset by higher equipment sales within the Mobility business and growth in subscription-based revenues within WarnerMedia. The top line missed the consensus mark of $40,542 million.      2.     Corning Incorporated GLW reported unimpressive third-quarter 2021 results, wherein both the bottom and the top lines missed the Zacks Consensus Estimate. Lower production levels in the automotive industry due to the semiconductor chip shortage affected sales by almost $40 million and earnings per share (EPS) by 2 cents.Core net income increased to $485 million or 56 cents per share from $380 million or 43 cents per share in the year-ago quarter. The bottom line, however, missed the Zacks Consensus Estimate by 2 cents. Core sales grew to $3,639 million from $3,007 million. The top line, however, missed the consensus estimate of $3,665 million.3.    Juniper Networks, Inc. JNPR reported modest third-quarter 2021 results, wherein the bottom line matched the Zacks Consensus Estimate but the top line missed the same. Investments in customer solutions and sales organizations are enabling the company to capitalize on the solid demand across each of its end markets.Non-GAAP net income was $152 million or 46 cents per share (in line with the company’s guidance) compared with $144.4 million or 43 cents per share in the year-ago quarter. The bottom line matched the Zacks Consensus Estimate. Quarterly total revenues increased to $1,188.8 million (slightly below the mid-point of the company’s guidance due to the negative impact of supply chain constraints) from $1,138.2 million in the prior-year quarter driven by solid demand. The top line, however, missed the consensus estimate of $1,206 million.4.    Knowles Corporation KN reported healthy third-quarter 2021 results, wherein both the bottom and the top lines beat the Zacks Consensus Estimate. The company is focused on delivering high-value, differentiated solutions to a diverse set of growing end markets to expand its gross margin. Non-GAAP net income was $43 million or 45 cents per share (above the high end of the company’s guidance) compared with $22.3 million or 24 cents per share in the year-ago quarter. The bottom line beat the Zacks Consensus Estimate by 6 cents. Quarterly revenues grew 13.2% year over year to $233 million (above the mid-point of the company’s guidance), driven by solid demand across its Audio and Precision Devices segments. The top line surpassed the consensus estimate of $232 million.  5.    Bandwidth Inc. BAND recently issued preliminary results for third-quarter 2021. The selective preliminary metrics offer clarity regarding its business operations as it aims to navigate through an adverse revenue impact from distributed denial of service attack in September.Management currently expects third-quarter GAAP revenues to be about $131 million, up 54% year over year, and well above prior expectations of $123.6-$124.6 million. This includes Communications Platform-as-a-Service revenues of $107.4 million (up 46% year over year) compared with earlier expectations of $106.1-$107.1 million. The higher revenue projection is primarily attributable to healthy demand trends driven by a customized networking infrastructure. The Zacks Consensus Estimate for revenues is currently pegged at $124 million.Price PerformanceThe following table shows the price movement of some of the major telecom stocks over the past week and six months.Image Source: Zacks Investment ResearchIn the past five trading days, Juniper has been the best performer with its stock gaining 4.3% while Bandwidth has declined the most with its stock falling 5.8%.Over the past six months, Motorola has been the best performer with its stock appreciating 24.6% while Bandwidth has declined the most with its stock falling 58.3%.Over the past six months, the Zacks Telecommunications Services industry has declined 12.2% while the S&P 500 has rallied 8.7%.Image Source: Zacks Investment ResearchWhat’s Next in the Telecom Space?In addition to 5G deployments and product launches, all eyes will remain glued to how the administration implements key policy changes to safeguard the interests of the industry and address the bottlenecks to spur growth as the earnings season moves to the business end. Bitcoin, Like the Internet Itself, Could Change Everything Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities. Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly. See 3 crypto-related stocks now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report AT&T Inc. (T): Free Stock Analysis Report Juniper Networks, Inc. (JNPR): Free Stock Analysis Report Corning Incorporated (GLW): Free Stock Analysis Report Knowles Corporation (KN): Free Stock Analysis Report Bandwidth Inc. (BAND): Free Stock Analysis Report To read this article on click here......»»

Category: topSource: zacksOct 28th, 2021

Learning From Trader Joe’s, Joe Coulombe

It’s a rare person who can run their own business, and rarer still are those who can do it well. And in a world of stiff competition and consumer fickleness, those people who’s businesses can both survive and thrive in that environment are probably the rarest of them all. Q3 2021 hedge fund letters, conferences […] It’s a rare person who can run their own business, and rarer still are those who can do it well. And in a world of stiff competition and consumer fickleness, those people who’s businesses can both survive and thrive in that environment are probably the rarest of them all. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get Our Activist Investing Case Study! Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below! (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2021 hedge fund letters, conferences and more If you choose a manager to whom you entrust your capital, in the words of Charlie Munger, choose a ‘business fanatic.’ Such individuals live, sleep and breathe their businesses. They’re not bound by the same restraints as most business people; constantly pushing boundaries, trialing new approaches, thinking outside the box, challenging conventional wisdom and always looking for business improvements. If you’re in business, these are the last type of people you want to compete with. One man that epitomized such fanaticism was the late Joe Coulombe, founder of the convenience store chain that carried his name, Trader Joe’s. “Edward H. Heller, a pioneer venture capitalist used the term ‘vivid spirit’ to describe the type of individual to whom he was ready to give significant financial backing. He said that behind every unusually successful corporation was this kind of determined entrepreneurial personality with the drive, the original ideas, and the skill to make such a company a truly worthwhile investment.” Phil Fisher Joe tells his story in the book, ‘Becoming Trader Joe - How I Did Business My Way and Still Beat the Big Guys.’ It contains a wealth of wisdom, particularly when it comes to thinking about running a successful retailer. Over more than a quarter of a century, Trader Joe’s sales grew at a compound rate of 19% per year and the company’s net worth grew at a compound rate of 26% per annum over the same period - no mean feat for a commodity business that’s hard to differentiate. Furthermore, the business never lost money in a year and incredibly each year was more profitable than the last. When the competitor 7-Eleven extended it’s footprint into California in the 1970’s, Pronto Markets, the precursor to Trader' Joe’s, already enjoyed the highest sales per store of any convenience operator in America by a factor of three. A high wage policy, strong locations, a few liquor licences, and the beginnings of a differentiated strategy through product knowledge was the core of their success. One of the mental models I particularly enjoyed in the book was Joe’s concept of ‘Double Entry Retailing.’ A form of second level thinking, Joe recognised that making changes to Demand Side factors had an influence on Supply Side factors which aren’t always obvious. A striking example was the introduction of orange juice freshly squeezed on the premises. While a great Demand Side success - customers embraced the product - it was a total nightmare to administer because of the Supply Side issues; the great variation in sweetness of oranges over the course of a year, difficulty in ensuring machines squeezed the right amount and disposal of the leftover rinds. As a result it was eventually phased out. You’ll recognise many of the characteristics that form a common link with the other great businesses we’ve studied. I’ve included some of my favourite extracts from the book below. Harnessing Demographic & Technological Change ‘The clue, the keystone of the arch of Trader Joe’s, was a small news item in Scientific American in 1965. When we left Stanford, my father-in-law, Bill Steere, a professor of botany, gave me a subscription to Scientific American. In terms of creating my fortune, it’s the most important magazine I’ve ever read. The news item said that, of all the people in the US who were qualified to go to college in 1932, in the pit of the Depression, only 2 percent did. By contrast, in 1964, of all the people qualified to go to college 60 percent in fact actually did. The big change, of course, was the GI Bill of Rights that went into effect in 1945. A second news item, one from the Wall Street Journal, told me that the Boeing 747 would go into service in 1970, and that it would slash the cost of international travel. In Pronto Markets we had noticed that people who travelled - even to San Francisco - were far more adventurous in what they were willing to put in their mouths. Travel is, after all, a form of education. Trader Joe’s was conceived from those two demographic news stories. What I saw here was a small but growing demographic opportunity in people who were well educated. 7-Eleven, and the whole convenience store genre, served the most basic needs of the most mindless demographics with cigarettes, Coca-Cola, milk, Budweiser, candy, bread, eggs. I saw an opportunity to differentiate ourselves radically from mainstream retailing to mainstream people.” Obliquity “I hope you’ll consider the following, my favourite quote from my favourite book on Management, ‘The Winning Performance’ by Clifford and Cavanaugh,’ ‘The fourth (general themes in winning corporations] is a view of profit and wealth-creation as inevitable byproducts of doing other things well. Money is a useful yardstick for measuring quantitative performance and profit and an obligation to investors. But … making money as an end in itself ranks low.’” A Bias to Action & Tenacity “In 1962, Barbara Tuchman published ‘The Guns of August’, an account of the first ninety days of WWI, It’s the best book on management - and, especially, mismanagement - I’ve ever read. The most basic conclusion I drew from from her book was that, if you adopt a reasonable strategy, as opposed to waiting for an optimum strategy, and stick with it, you’ll probably succeed. Tenacity is as important as brilliance.” “Trying to find an optimum solution in business is a waste of time; the factors in the equation are changing all the time.” Value, Empower & Pay Employees Well “You’ve got to have something to hang your hat on. The one core value I chose was our high compensation policies, which I put in place from the very start in 1958… This is the most important single business decision I ever made: to pay people well. First Pronto Markets and then Trader Joe’s had the highest-paid, highest benefitted people in retail.” “Time and again I am asked why no one has successfully replicated Trader Joe’s. The answer is that no one has been willing to pay the wages and benefits, and thereby attract - and keep - the quality of people who work at Trader Joe’s.” “[I was asked,] ‘But how could you afford to pay so much more than your competition?’ The answer, of course, is that good people pay by their extra productivity. You can’t afford to have cheap employees.” “Equally important was our practice of giving every full-time employee an interview every six months. At Stanford I’d been taught that employees never organise (join unions) because of the money; they organise because of un-listened-to grievances.” “The [store] Captains had the salary plus a bonus that theoretically had no limit. The bonus was based on Trader Joe’s overall profit, allocated among the stores based on each store’s contribution. In 1988, several Captains made bonuses of more than 70 percent of their base pay. Unless a bonus system promises, and delivers big rewards, it should be abandoned.” “My idea, often stated to everybody, was that the [store] Captains should have the chance to make more than executives in the office. In a traditional chain store, managers aspire to become bureaucrats with cushy, high-paying jobs in the office. I wanted to kill such aspirations at the start.” “Part timers .. at a time when the minimum wage was $4.35, we often paid $13.00 per hour because these people were worth it.” “Productivity in part is a product of tenure. That’s why I believe that turnover is the most expensive form of labor expense.” “We instituted full health and dental insurance back in the 1960's when it was cheap. When I left, we were paying $6,000 per employee per year!” “Each full-timer was supposed to be able to perform every job in the store, including checking, balancing the books, ordering each department, stocking, opening, closing, going to the bank, etc. Everybody worked the check stands in the course of the day, including the [store] Captain.” “In thirty years we never had a layoff of full-time employees. Seasonal swings in business were handled with overtime pay to full-time employees, and by adjusting part-time hours. The stability of full-time employment at Trader Joe’s was due in part to caution opening new stores, and insisting on high volume stores.” “Cost of goods sold is the dominant expense. The funny thing is that grocers seem to spend more effort squeezing payroll than squeezing Cost of Goods Sold, though there is at least five times more opportunity in the latter.” Retail & Real Estate Decisions ‘First we upped the investment ante by taking only prime locations, which could generate the most sales, even though the rents were higher. A lease is an investment, perhaps the most serious and certainly the least changeable a retailer can make. Financially, a lease is simply a long-term loan… Most retail bankruptcies come from bad real estate leasing decisions… Early in my career I learned there are two kinds of decisions: the ones that are easily reversible and the ones that aren’t. Fifteen-year leases are the least-reversible decisions you can make. That’s why, throughout my career, I kept absolute control of real estate decisions.” “The keys to management are strong locations with good people.” “People often ask me, how many stores did we have at such-and-such time? It’s the wrong question to ask. What’s important is dollar sales. For example, from 1980 to 1988, we increased the number of stores by 50 percent but sales were up 340 percent.” “My preference is to have a few stores, as far apart as possible, and to make them as high volume as possible.” “Too many stores, to many irreversible leases, too much geographical saturation was a recurrent theme in the failure of American retail chains in the twentieth century.” “Ancient Mariner Retailers claim that ‘volume solves everything.’ If it’s profitable volume, they’re right. Things go most sour in the lowest-volume stores. It’s like riding a bicycle, the faster it goes, the more stable it is. The ‘normal distribution’ of most chains is 20% dogs, 60% okay stores, and 20% winners. I believe in ruthlessly dumping the dogs at whatever cost. Why? Because their real cost is in management energy. You always spend more time trying to make the dogs acceptable than in raising the okay stores into winners. And it’s in the dogs that you always have the most personnel problems." “I believe that the sine qua non for successful retailing is demographic coherence: all your locations should have the same demographics whether you are selling clothing or wine.” “I liked semi-decayed neighbourhoods, were the census tract income statistics looked terrible, but the mortgages were all paid-down, and the kids had left home. Housing and rental prices tend to be lower, and more suitable for those underpaid academics. Related to this, I was more interested in the number of households in a given area than the number of people in a ZIP code. Trader Joe’s is not a store for kids or big families. One or two adults is just fine.” “Computerisation has radically upgraded the statistics available: I’d probably do it more formally now. But there’s no substitute for ‘driving’ a location to ferret out traffic problems. And do it at night, too.” “I hardly need to mention that a trading area is rarely determined by a radius. It’s determined by geographical barriers, boulevard access, and where the demographics lie.” “Let’s go back to the question of number of stores. How do you space them? Here are some parameters: You need to have enough stores in a trading area to economically amortise the radio advertising. You need enough stores in an area to have a large enough pool of employees. My rule was that distance between stores should not be measured in miles but in driving time. I wanted no less than twenty minutes between stores. That pretty much avoided the dread word, cannibalisation. Could a given trading area support more Trader Joe’s? Almost certainly! I figured we could break even at ten thousand core residences. But I wanted super-volume stores. If the credo that super-volume stores have the fewest operating problems is valid, then the overall health of the chain, in the long run, is maximised.” “How many trading areas should you enter? As long as you can preserve the culture of the company, and as long as logistics don’t kill you, go ahead.” “Never, never, never sign a lease with a ‘continuous operation’ clause. That clause means you must stay open - you can’t ‘go dark’ and just pay the rent.” Product Knowledge “The buyers at the supermarket chains knew nothing about what they sold, and they don’t want to know. What they did know all about was extorting slotting allowances, cooperative ad revenue, failure allowances, and back-haul concessions from the manufacturers.” Four Tests “The advantage of hard liquor merchandise was that it met three tests: a) A high value per cubic inch, essential to a small store format b) A high rate of consumption c) It had to be easily handled If we could have added a fourth test, it would be that we had to be outstanding in the field. Still trying to maximise the use of a small store, I looked for categories that met the Four Tests; high value per cubic inch, high rate of consumption; easily handled; and something in which we could be outstanding in term of price or assortment. For example, diamonds met the first test but flunked the second. Fruits and vegetables met the first and second but flunked the third because produce requires constant reworking. Fresh meat flunked the third test even more.” Purpose “Most of my ideas about how to act as an entrepreneur are derived from ‘The Revolt of the Masses’ by Jose Ortega y Gasset, the greatest Spanish philosopher of the twentieth century. I believe it offers a master ‘plan of action’ for the would-be entrepreneur, who usually has no reputation and few resources. Ortega offers an explanation of how such a person can get an enterprise started. In the context of the career of Julius Caesar, an entrepreneur who started without power, Otega says of the state: ‘Human life, by its very nature, has to be dedicated to something, an enterprise glorious or humble, a destiny illustrious or trivial .. The State begins when groups, naturally divided, find themselves obliged to live in common. The obligation is not of brute force, but implies an impelling purpose, a common task which is set before the dispersed groups. Before all, the State is a plan of action and a Programme of Collaboration. The men are called upon so that together they may do something .. It is pure dynamism, the will to do something in common, and thanks to this the idea of the state, is bounded by no physical limits.” Most of my career has been spent selling ‘plans of action and programmes of collaboration.’ If you want to know what differentiates me from most manager’s that’s it. From the beginning, thanks to Ortega y Gasset, I’ve been aware of the need to sell everybody.” Radical Transparency “Throughout my career, my policy has been full disclosure to employees about the true state of affairs, almost to the point of imprudence. I took a cue from General Patton, who thought that the greatest danger was not that the enemy would learn the plans, but that his own troops would not.” Growth “Growth for the sake of growth still troubles me. It seems unnatural, even perverted. This helps explain why I went from 1974 to 1978 without opening another store. To keep sales increasing during the mid-1970s, we relied on new ideas implemented in existing stores. This was my favourite form of growth. I don’t think that any given store ever fully realises its potential.” Smallness & Empowerment “We developed a prototype [Trader Joe’s] store of 4,500 square feet. Here’s a good question: Given my need to get away from convenience stores, why did I stick with small stores? The answer was verbalised for us in ‘In Search of Excellence,’ Tom Peter’s best-selling book on management. He called it ‘The Power of Chunking’: ‘The essential building block of a company is the section [which] within its sphere does not await executive orders but takes initiatives. The key factor for success is getting one’s arms around almost any practical problem and knocking it off… The small group is the most visible of the chunking devices.’ The fundamental ‘chunk’ of Trader Joe’s is the individual store with its highly paid [store] Captain and staff; the people who are capable of exercising discretion. I admire Nordstrom’s fundamental instruction to its employees: use your judgement. Trader Joe’s finally settled down at an average of about eight thousand square feet in the 1980’s, but the concept of a relatively small store with a relatively small staff remains in force.” Marketing & Customers “At all times I wrote the Fearless Flyer [marketing newsletter] for over-educated, underpaid people. This requires two mindsets: Trader Joe’s Fearless Flyer Newsletter 1) There are no such things as consumers - dolts who are driven by drivel to buy stuff they don’t need or even want. There are only customers, people who are reasonably well informed, and very well focused in their buying habits. 2) We always looked up to the customers in the text of the Fearless Flyer. We assumed they knew more than they did, we never talked down to them. 3) Given the first two assumptions, we assumed that our readers had a thirst for knowledge, 180 degrees opposite from supermarket ads. We emphasised ‘informative advertising.’ Originally, we distributed the Fearless Flyer only in stores and to a small but growing list. [Later,] by mailing to addresses rather than to individuals - by blanketing entire ZIP codes - we were able to tremendously expand the distribution of the Fearless Flyer. The ZIPs to which we mailed, of course, were chosen on the basis of the likely concentration of over-educated and underpaid people.” Word of Mouth “Word of Mouth: The Power of True Believers. As everyone knows, word of mouth is the most effective advertising of all. I have been known to say that there’s no better business to run than a cult. Trader Joe’s became a cult of the over-educated and underpaid, partly because we deliberately tried to make it a cult and partly because we kept the implicit promises with our clientele.” “There aren’t many cult retailers who successfully retain their cult status over a long period of time. A couple in California are In-N-Out Burger and Fry’s Electronics. But across America, in every town, there’s a particular donut shop, pizza parlour, bakery, greengrocer, bar, etc. that has a cult following of True Believers.” Pricing “One of the fundamental tenets of Trader Joe’s is that retail prices don’t change unless costs change. There are no weekend ad prices, no in-and-out pricing… I have always believed that supermarkets pricing is a shell game and I wanted no part of it.” Retailing “The fundamental job of a retailer is to buy goods whole, cut them into pieces, and sell the pieces to the ultimate consumers. This is the most important mental construct I can impart on those of you who want to enter retailing. Most ‘retailers’ have no idea of the formal meaning of the word. Time and again, I had to remind myself just what my role in society was supposed to be.” “[We decided] no outsiders of any sort were permitted in the store. All the work was done by employees.]” “From 1958 through 1976, we tried to carry what the customer asked for, given the limits of our small stores and other operational parameters. Each store probably had access to ten thousand stock keeping units (SKUs), of which about three thousand were actually stocked in any given week. By the time I left in 1989, we were down to a band of 1,100 to 1,500 SKUs, all of which were delivered through a central distribution system.” “Along the way not only did we drop a lot of products that our customers would have liked us to sell, even at not-outstanding prices, but we stopped cashing checks in excess of the amount of purchase, we stopped full-case discounts, and we persistently shortened the hours. We violated every received wisdom of retailing except one: we delivered great value, which is where most retailers fall.” “[We were] willing to discontinue any product if we were are unable to offer the right deal to the customer.” “Instead of national brands, [we] focused on either Trader Joe’s label products or ‘no label’ products like nuts and dried fruits.” “We wouldn’t try to carry a whole line of spices, or bag candy, or vitamins. Each SKU had to justify itself as opposed to riding piggyback into the stores just so we had a ‘complete’ line. Depth of assortment was of no interest.” “Each SKU would stand on its own two feet as a profit centre. We would earn a gross profit on each SKU that was justified by the cost of handling that item. There would be no ‘loss leaders.’” “Above all we would not carry any item unless we could be outstanding in terms of price (and make a profit at that price) or uniqueness.” ‘I do not believe in keeping ‘spoils’ in the back room until some salesperson comes by to pick them up. I believe that products should move in only one direction, never back up the supply chain. When a bottle was broken, a can dented, or a ‘short fill’ was discovered, it went to the trash bin.” “A guideline: No private label product was introduced for the sake of having a private label. This is 100 percent contrary to the policy of most supermarkets… Each private label product had to have a reason, a point of differentiation.” “The willingness to do without any given product is one of the cornerstones of Trader Joe’s merchandising philosophy.” “No bulky products like paper towels or sugar, because the high-value-per-cubic inch rule still prevailed.. We simply went out of business on the ‘bulkers’ and did not replace them with private labels.” “I believe in the wisdom that you gain customers one by one, but you lose them in droves.” “Back in 1967, [we] made a bet that rising levels of education would fragment the masses, that a small but growing group of people would be dissatisfied with having to consume what everybody else consumed… This philosophical approach put us in conflict with the mainstream of American retailing, which emphasises continuous products. Thus when a supermarket promotes Coca-Cola it doesn’t have to explain that Coca-Cola is a secret formula for a soft drink created a century ago in Atlanta.. Wines have not been popular in America because, intrinsically, they are not continuous products. You can’t just order up some more sugar and chemicals and make another batch. In 1987, I outlined to the buyers where I thought we should go: 1) we want continuous products. Any sane person does. We want continuous products which are profitable without creating a high-price image. 2) to create such products, they needed to be differentiated at least in order to avoid direct price comparison. 3) products in which we had an absolute buying advantage. For example, we were the largest seller of cheap Bordeaux blanc in the United States. 4) I was willing to continue to indulge in the spectacular ‘closeout’ sales of branded products, but I wanted to do so in the context of much greater overall sales, principally generated by continuous products, most of them private label.” “I don’t think that the internet grocery store will successfully invade food retailing because you’re dealing with four different temperatures: dry grocery, refrigerated products, frozen products, and ice cream when you try to home-deliver foods.” “Showmanship is the sum total of all efforts to make contact with the customer. It’s the most ephemeral, the most difficult, and the most important of the Demand Side activities.” “All the research on whether people turn to the left or the right, or whether you can ‘force’ people to the rear of the store, is irrelevant if you’re a value retailer.” Win-Win “Honour thy vendors: After all, these are the guys you’re buying from. They should not be treated as adversaries. Five year plan 1977 said, ‘Buying, therefore, is not just a matter of trying to beat down suppliers on price. It is a creative exercise of developing alternatives.’ Many of our best product ideas and special buying opportunities came from our vendors.” “Vendors should be regarded as an extension of the retailer, a Marks and Spencer concept. Their employees should be regarded almost as employees of the retailer. Concern for their welfare should be shown, because employee turnover at vendors sometimes can be more costly than turnover of your own employees.” “Tenants who enter negotiations with the idea of beating the landlord at the objective future game usually get the kind of landlords they deserve. And vice versa.” “Other non-merchandise vendors are very much extensions of Trader Joe’s and should be treated as much. Since we owned no trucks, warehouses, etc., I asked our people to keep track of the outsourced drivers and do their best to see that our contractors were paid reasonable wages with reasonable working conditions. Turnover is the most expensive labour expense!’ Committees “I want to make it quite clear that I called all the shots. I reject management by committee.” Economies of Scale “The point where the ‘buying power’ and ‘selling power’ curves cross each other creates the magical physical thresholds. There are two magical physical thresholds that a retailer must achieve to be competitive: the truckload, and the ocean container load. These thresholds mark the limit of most economies of scale.” Focus & Outsource “We tried to stay out of all functions that were not central to our primary job in society: namely, buying and selling merchandise.. [We’d] been getting rid of all functions except those buying and selling. We got rid of our own maintenance people, we sold off almost all the real estate we had acquired during the 1970’s, we never took mainframe computing in-house, etc. Some choice quotes from Dr. Drucker: ‘In-house service activities have little incentive to improve their productivity .. The productivity is not likely to ramp up until it is possible to be promoted for doing a good job at it. And that will happen in support work only when such work is done by separate, free standing enterprises.’” Business Problems “All businesses have problems. It’s the problems that create the opportunities. If a business is easy, every simple bastard would enter it.” “This is one of the most important things I can impart; in any troubled company the people at lower levels know what ought to be done in terms of day-to-day operations. If you just ask them, you can find answers.” Adapt, Challenge the Status Quo “Believe me, you have to have a system for everything that has to happen in your business - you just may not be conscious of it. And you probably have still other systems that are not needed. That’s why The Winning Performance calls for a ‘continued contempt for business as usual.’ To practice ‘constitutional contempt,’ you have to arrive every day with the attitude, ‘Why do we do such-and-such that way?’ Better yet, why do we do it at all? Usually the answer is, ‘We’ve always done it that way,’ ‘That’s the way we did it at my last job,’ or ‘All our competitors are doing it.’ Mental Model - Double Entry Retailing “I hit on the idea of using double entry accounting as an analogy, what I call Double Entry Retailing. On the left side of the ledger is the business in terms of how its customers see it: I call this the Demand Side. On the right side of the ledger are the factors that limit or determine the retailer's ability to satisfy those demands: the Supply Side. All businesses, whether manufacturing, wholesaling, services, etc., have [the] fearful symmetry of both Demand and Supply sides. And all businesses are subject to the ultimate supply-side constraint of cash: you can do anything, no matter how stupid, within that fearful symmetry, as long as you don't run out of cash. From my view, the Demand Side of Retailers can be analysed in terms of five variables: The assortment of merchandise offered for sale. Pricing: stability and relative to competition. Convenience: geographical, in-store, and time. Credit: the accepted methods of payment. Showmanship: the sum of all activities that result in making contact with the customer, from advertising to store architecture to employee cleanliness. Here are factors on the Supply Side: Merchandise Vendors Employees  The way you do things: "habits" and "culture" Systems Non-merchandise vendors Landlords Governments Bankers and investment bankers Stockholders Crime As in double entry accounting, the change in any factor must be matched by a corresponding change in another factor. For example, a decision to increase geographical convenience (Demand Side) obviously involves some change of policy with landlords (Supply Side) including the amount of rent you're willing to pay. Consider how Barney's paid through the nose because they thought they had to offer the geographical convenience of being in Beverly Hills. How big a factor was this in Barney's subsequent bankruptcy? Was it Demand Side success at the price of Supply Side failure? The lists above aren't much different from other businesses. What distinguishes retailing is the asymmetry of the fearful symmetry: the huge number of customers (Demand Side) vs. the number of suppliers. This is the exact opposite of a government defence contractor. This lopsided butterfly may cause a retailer to act as if the only people they have to ‘sell’ to are customers: the Demand Side. That’s a major mistake. All the people on the supply side have to be sold, too.” “One of the smartest things we ever did was to cut the hours of Trader Joe’s. This is mostly a Supply Side question, but the quality and attitude of the employees handling our customers is a Demand Side factor.” Employee Ownership “From the beginning of Pronto Markets, one of my basic principles, one of my basic goals, was employee ownership of the business. Getting there, however, was complicated.” Summary I found the similarities between Trader Joe’s approach to retailing and the German retailer Aldi strikingly similar. Despite being on opposite sides of the world, both businesses evolved complementary retailing practices: a focus on private label, above market wages for employees, a win-win mentality and continuous innovation. It’s little wonder the Albrecht family were attracted to the business. Aldi acquired Trader Joe’s in 1979 and retained Joe as the independent manager for another ten years. Paying staff well, empowering and sharing information with them and maintaining smallness are consistent themes across many of the successful business stories we’ve studied. When it comes to the specifics of retailing, the analogy of super-volume stores better able to provide balance is a useful one. As are the insights into economies of scale, pricing strategy, jettisoning poorly performing stores, the power of word-of-mouth marketing and the means to abolish bureaucracy through the outsourcing of non-essential functions. Every business has its own quirks and idiosyncrasies. Identifying what they are and how they contribute to a firm’s success can provide clues in our own quest to find compounding machines; in the long run, it’s business success which determines share prices. The more businesses you study, the larger the toolkit of mental models you’ll have to apply in your investment endeavours. Source: 'Becoming Trader Joe - How I Did Business My Way & Still Beat the Big Guys,’ Joe Coulombe, Patty Civalleri. Harper Collins. 2021. Follow us on Twitter : @mastersinvest * NEW * Visit the Blog Archive Article by Investment Masters Class Updated on Oct 26, 2021, 1:11 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkOct 26th, 2021

Futures Slide On Stagflation Fears As 10Y Yields Spike

Futures Slide On Stagflation Fears As 10Y Yields Spike US index futures dropped after IBM and Tesla fell after their quarterly results, with investors turned cautious awaiting more reports to see the see the adverse impact of supply chain disruption and labor shortages on companies even as jitters remained over elevated inflation and the outlook for China’s property sector. The dollar reversed an overnight drop, while Treasuries fell pushing the 10Y yield to a 5-month high of 1.68%. At 745 a.m. ET, Dow e-minis were down 98 points, or 0.3%, S&P 500 e-minis were down 14 points, or 0.31%, and Nasdaq 100 e-minis were down 49.25 points, or 0.32%. In the premarket, Tesla fell 1% in premarket trading as it said on Wednesday its upcoming factories and supply-chain headwinds would put pressure on its margins after it beat Wall Street expectations for third-quarter revenue. AT&T rose 1% in pre-market trading after exceeding Wall Street’s expectations for profit and wireless subscriber growth. PayPal Holdings also climbed as it explores a $45 billion acquisition of social media company Pinterest Inc., in what could be the biggest technology deal of the year. Dow gained 1.1% after it posted a more than a five-fold jump in third-quarter profit as economic recovery boosted prices for chemicals. IBM plunged 4.7% after it missed market estimates for quarterly revenue as its managed infrastructure business suffered from a decline in orders. Some other notable premarket movers: Digital World Acquisition (DWAC US) surges 30% after the blank-check company agreed to merge with Trump Media & Technology. Former U.S. President Donald Trump says the new company plans to start a social media firm called Truth Social. Denny’s (DENN US) rises 1.4% as the restaurant chain is upgraded to buy from hold at Truist Securities, which sees upside to 3Q estimates, partly due to expanding operating hours. ESS Tech (GWH US) adds 4.6% as Piper Sandler says the stock offers a compelling entry point for investors seeking exposure to energy storage, initiating coverage at overweight. As Bloomberg notes, corporate results have tempered but not dissipated worries that cost pressures could slow the pandemic recovery. Among S&P 500 companies that have disclosed results, 84% have posted earnings that topped expectations, a hair away from the best showing ever. Yet, the firms that surpassed profit forecasts got almost nothing to show for it in the market. And misses got punisheddearly, by the widest margin since Bloomberg started tracking the data in 2017. European equities faded early losses but remain in small negative territory. Euro Stoxx 50 is 0.4% lower having dropped ~0.8% at the open. IBEX lags peers. Miners led a retreat in Europe’s Stocks 600 index, while industrial commodities including copper and iron ore reversed earlier gains; retail and banks were also among the weakest sectors. Concerns about the inflationary impact of higher prices have risen in recent days, with everyone from Federal Reserve officials to Tesla weighing in on cost pressures. Unilever Plc pushed rising raw material costs onto consumers, increasing prices by the most in almost a decade. Meanwhile, Hermes International said sales surged last quarter, showing resilience compared to rival luxury-goods makers. European autos dropped after Volvo Group warned that the global semiconductor shortage and supply-chain challenges will continue to cap truckmaking. Here are some of the biggest European movers today: Soitec shares gain as much as 7.3% in Paris, the stock’s best day since June, after reporting 2Q results and raising its full- year sales forecast. BioMerieux shares rise as much as 5.9%. Sales in 3Q were well ahead of expectations on strong U.S. demand for BioFire respiratory panels, Jefferies (hold) writes in a note. Randstad shares rise as much as 4.7%, the most intraday since Dec. 2020, with RBC (sector perform) saying the staffing firm’s 3Q earnings topped estimates. Sodexo shares rise as much as 4.8% after activist investor Sachem Head took a stake in the French catering co., saying the investment is passive and that Sodexo is going “activist on itself.” Zur Rose shares fall as much as 8.1% after the Swiss online pharmacy cut its growth guidance and posted 3Q sales that Jefferies says missed consensus expectations. Nordic Semi shares drop as much as 7% before recovering some losses, after results; Mirabaud Securities says any weakness in the stock is a “great buying opportunity.” Eurofins shares drop as much as 7.5%, the most in nearly a year, after the laboratory-testing company left its 2021 Ebitda and free cash flow guidance unchanged, which Morgan Stanley says implies a lower Ebitda margin versus previous guidance. Bankinter shares fell as much as 6.6%, most intraday since December. Jefferies highlighted the weaker trend for the Spanish lender’s 3Q net interest income. Earlier in the session, Asian equities fell in late-afternoon trading as investors sold Japanese and Hong Kong-listed tech shares, which helped trigger broader risk aversion among investors. Ailing China Evergrande Group sank on a worsening cash squeeze, while other developers rallied after regulators said their funding needs are being met. The MSCI Asia Pacific Index slid as much as 0.8%, with Japanese equities slumping by the most in over two weeks as the yen -- typically seen as a safe haven -- strengthened against the dollar, likely boosted by technical factors. Toyota Motor and Alibaba were the biggest drags on the regional benchmark as higher bond yields weighed on sentiment toward the tech sector. The story “shapes up to be worries about higher inflation and the follow-on policy response,” said Ilya Spivak, head of Greater Asia at DailyFX. Bucking the downtrend were Chinese developers, which shrugged off China Evergrande Group’s scrapping of a divestment plan and climbed after regulators said risks in the real estate market are controllable and reasonable funding needs are being met. China was one of the region’s top-performing equity markets.  Still, Asian stocks continue to feel pressure from higher U.S. bond yields as the 10-year rate surpassed 1.6%. In addition, earlier optimism about earnings is being muted by the outlook for inflation and supply-chain bottlenecks. Chinese growth, global supply constraints and inflation are “acting as a bit of a brake on markets,” said Shane Oliver, head of investment strategy & chief economist at AMP Capital. However, with U.S. equities trading near a record high, investors are “a bit confused,” he said. Japanese equities fell by the most in over two weeks, extending losses in afternoon trading as the yen strengthened against the dollar. Electronics and auto makers were the biggest drags on the Topix, which fell 1.3%, with all 33 industry groups in the red. Tokyo Electron and Fast Retailing were the largest contributors to a 1.9% loss in the Nikkei 225. S&P 500 futures and the MSCI Asia Pacific Index similarly extended drops. “There has been a general turn in equity market sentiment evident by the afternoon decline in U.S. equity futures and main regional equity indexes,” said Rodrigo Catril, senior foreign-exchange strategist at National Australia Bank Ltd. “The reversal in risk-sensitive FX pairs like the AUD is reflecting this u-turn.” The Japanese currency gained 0.2% to 114.05 per U.S. dollar, while the Australian dollar weakened. The yen is still down 9.5% against the greenback this year, the worst among major currencies. Yen Faces Year-End Slump as U.S. Yield Premium Spikes With Oil The gain in the yen on Thursday probably followed technical indicators suggesting the currency was oversold and positioning seen as skewed, said Shusuke Yamada, head of Japan foreign exchange and rates strategy at Bank of America in Tokyo. The rally may be short-lived, as rising oil prices are expected to worsen Japan’s terms of trade, and monetary policies between Japan and overseas are likely to diverge further In FX, the Bloomberg Dollar Spot Index reversed an earlier loss to rise as much as 0.2% as the greenback advanced versus all its Group- of-10 peers apart from the yen; risk-sensitive currencies, led by the New Zealand dollar, were the worst performers. The pound weakened against the dollar and was little changed versus the euro into the European session. U.K. government borrowing came in significantly lower than official forecasts, but a surge in debt costs sent a warning to the government ahead of the budget next week. The U.K.’s green gilt may price today, subject to market conditions, after being delayed earlier this week. The Australian and New Zealand dollars reversed intraday gains on sales against the yen following losses in regional stock indexes. A kiwi bond auction attracted strong demand. The yen headed for a second session of gains as a selloff in Japanese equities fuels haven bids. Government bonds consolidated. In rates, the Treasury curve flattened modestly as yields on shorter-dated notes inched up, while those on longer ones fell; the bund curve shifted as yields rose about 1bp across the curve. Yields were richer by less than 1bp across long-end of the curve, flattening 2s10s, 5s30s spreads by ~1bp each; 10-year yields rose to a 5 month high of 1.68%, outperforming bunds by 2bp and gilts by 4bp on the day. Long end USTs outperform, richening ~2bps versus both bunds and gilts. Peripheral spreads tighten slightly. U.S. breakevens are elevated ahead of $19b 5Y TIPS new issue auction at 1pm ET. In commodities, oil slipped from 7 year highs, falling amid a broad-based retreat in industrial commodities, though trader focus was glued to a surging market structure as inventories decline in the U.S.; Oil’s refining renaissance is under threat from the natural gas crisis; American drivers will continue to face historically high fuel prices. WTI was lower by 0.5% to trade near $83 while Brent declined 0.8% before finding support near $85. Spot gold is range-bound near $1,785/oz. Base metals are mixed. LME nickel and copper are deep in the red while zinc gains 1.5%.  Bitcoin was volatile and dropped sharply after hitting an all time high just above $66,500. Looking at the day ahead now, and data releases from the US include the weekly initial jobless claims, existing home sales for September, the Conference Board’s leading index for September, and the Philadelphia Fed’s business outlook for October. Central bank speakers will include the Fed’s Waller and the ECB’s Visco, while the Central Bank of Turkey will be making its latest monetary policy decision. Otherwise, earnings releases include Intel, Danaher, AT&T and Union Pacific. Market Snapshot S&P 500 futures down 0.3% to 4,515.25 STOXX Europe 600 down 0.2% to 469.02 MXAP down 0.7% to 199.61 MXAPJ down 0.4% to 659.34 Nikkei down 1.9% to 28,708.58 Topix down 1.3% to 2,000.81 Hang Seng Index down 0.5% to 26,017.53 Shanghai Composite up 0.2% to 3,594.78 Sensex down 1.1% to 60,560.47 Australia S&P/ASX 200 little changed at 7,415.37 Kospi down 0.2% to 3,007.33 Brent Futures down 1.0% to $84.98/bbl Gold spot up 0.2% to $1,785.09 U.S. Dollar Index up 0.11% to 93.67 German 10Y yield up 0.7 bps to -0.119% Euro down 0.1% to $1.1639 Top Overnight News from Bloomberg China Evergrande Group scrapped talks to offload a stake in its property-management arm and said real estate sales plunged about 97% during peak home-buying season, worsening its liquidity crisis on the eve of a dollar-bond deadline that could tip the company into default. Its shares plunged as much as 14% on Thursday. China’s goods imports from the U.S. have only reached about 53% of the $200 billion worth of additional products and services it promised to buy under the trade deal signed last year, far behind its purchasing target. Signs that policy makers are accelerating toward an interest-rate hike have traders fumbling around to figure out what that means for sterling. Money managers at Jupiter Asset Management and Aberdeen Asset Management turned neutral in recent days, following similar moves by Amundi SA and William Blair Investment Management. The price on eight out of 10 bonds sold in the first three quarters of this year by European investment-grade borrowers fell after issuance, wiping almost 23.5 billion euros ($27.3 billion) from portfolios. The Turkish lira is looking vulnerable as speculation grows that policy makers will cut interest rates again despite the deteriorating inflation outlook. Option traders see a more than 60% chance that the currency will weaken to an all-time-low of 9.50 per U.S. dollar over the next month, according to Bloomberg pricing. That’s the next key psychological threshold for a market trading largely in uncharted territory ahead of Thursday’s decision. A more detailed look at global markets courtesy of Newsquawk Asia-Pac indices traded somewhat mixed after the similar performance stateside where the broader market extended on gains in which the DJIA touched a fresh record high and the S&P 500 also briefly approached within 5 points of its all-time peak as attention remained on earnings, although the Nasdaq lagged with tech and duration-sensitive stocks pressured by higher longer-term yields. ASX 200 (+0.1%) was positive as Victoria state approaches the end of the lockdown at midnight and with the index led by outperformance in mining stocks and real estate. However, gains were capped amid weakness in energy as shares in Woodside Petroleum and Santos were pressured following their quarterly production results in which both posted a decline in output from a year ago, albeit with a jump in revenue due to the rampant energy prices, while Woodside also flagged a 27% drop in Wheatstone gas reserves. Nikkei 225 (-1.9%) felt the pressure from the pullback in USD/JPY and with focus shifting to upcoming elections whereby election consulting firm J.A.G Japan sees the LDP losing 40 seats but win enough to maintain a majority with a projected 236 seats at the 465-strong Lower House. Hang Seng (-0.5%) and Shanghai Comp. (+0.2%) were varied despite another respectable PBoC liquidity effort with the mood slightly clouded as Evergrande concerns persisted with Co. shares suffering double-digit percentage losses after it resumed trade for the first time in three weeks and after its deal to sell a stake in Evergrande Property Services fell through, while reports that Modern Land China cancelled its USD 250mln bond repayment plan on liquidity issues added to the ongoing default concerns although it was later reported that Evergrande secured a three-month extension on USD 260mln Jumbo Fortune bond which matured on October 3rd. Finally, 10yr JGBs traded flat with the underperformance in Japanese stocks helping government bonds overlook the pressure in global counterparts and continued losses in T-note futures following the weak 20yr auction stateside, although demand for JGBs was limited by the absence of BoJ purchases. Top Asian News China Vows to Keep Property Curbs, Evergrande Risk Seen Limited Abu Dhabi Funds Hunt for Asian Unicorns Ahead of IPOs: ECM Watch Biden’s Pick for China Envoy Draws Sharp Lines With Beijing Carlyle, KKR Among Firms Said to Mull $2 Billion Tricor Bid Bourses in Europe have held onto the downside bias seen since the cash open, but with losses less pronounced (Euro Stoxx 50 -0.4%; Stoxx 600 -0.2%) despite a distinct lack of news flow in the EU morning, and as Chinese property woes weighed on APAC markets, but with earnings seasons picking up globally. US equity futures are also softer with modest and broad-based losses ranging from 0.2-0.3%. Back to Europe, the Netherland’s AEX (+0.3%) outperforms as Unilever (+3.3%) also lifts the Personal & Household Goods sector (current outperformer) following its earnings, whereby underlying sales growth of +2.5%, as +4.1% price growth offset a -1.5% decline in volumes, whilst the group noted: "Cost inflation remains at strongly elevated levels, and this will continue into next year". The AEX is also lifted by Randstad (+4.5%) post earnings after underlying EBITDA topped forecasts. Sectors in Europe are mixed with a slight defensive bias. On the downside, there is clear underperformance in Basic Resources as base metals pull back, whilst Oil & Gas names similarly make their way down the ranks. In terms of individual movers. ABB (-5%) resides at the foot of the SMI (+0.2%) as the group sees revenue growth hampered by supply constraints. Nonetheless, flows into Food & Beverages supports heavy-weight Nestle (+1.0%) which in turn supports the Swiss index. Other earnings-related movers include Barclays (-0.4%), SAP (+1.5%), Carrefour (+1.5%), Nordea (-1.8%), and Swedbank (+2.7%). Top European News Volvo Warns More Chip Woes Ahead Will Curtail Truck Production Hermes Advances After Dispelling Worries on China Demand Stagflation Risk Still Means Quick Rate Hikes for Czech Banker Weidmann Exit Could Pave Way for Bundesbank’s First Female Chief In FX, the Dollar has regained some composure across the board amidst a downturn in broad risk sentiment, but also further retracement in US Treasuries from bull-flattening to bear-steepening in wake of an abject 20 year auction that hardly bodes well for the announcement of next week’s 2, 5 and 7 year issuance, or Usd 19 bn 5 year TIPS supply due later today. In index terms, a firmer base and platform around 94.500 appears to be forming between 93.494-701 parameters ahead of initial claims, the Philly Fed and more housing data as the focus switches to existing home sales, while latest Fed speak comes via Daly and Waller. However, the DXY and Greenback in general may encounter technical resistance as the former eyes upside chart levels at 93.884 (23.6% Fib of September’s move) and 93.917 (21 DMA), while a major basket component is also looking in better shape than it has been of late as the Yen reclaims more lost ground from Wednesday’s near 4 year lows to retest 114.00 in the run up to Japanese CPI tomorrow. NZD/AUD/NOK - No real surprise to see the high beta Antipodeans bear the brunt of their US rival’s revival and the Kiwi unwind some of its post-NZ CPI outperformance irrespective of the nation’s FTA accord in principle with the UK, while the Aussie has also taken a deterioration in NAB quarterly business business confidence into consideration. Nzd/Usd is back below 0.7200 and Aud/Usd has retreated through 0.7500 after stalling just shy of 0.7550 before comments from RBA Governor Lowe and the flash PMIs. Elsewhere, the Norwegian Crown has largely shrugged off the latest Norges Bank lending survey showing steady demand for credit from households and non-financial institutions, but seems somewhat aggrieved by the pullback in Brent from just above Usd 86/brl to under Usd 85 at one stage given that Eur/Nok is hovering closer to the top of a 9.7325-9.6625 range. EUR/CHF/GBP/CAD - All softer against their US counterpart, albeit to varying degrees as the Euro retains a relatively secure grip around 1.1650, the Franc straddles 0.9200, Pound pivots 1.3800 and Loonie tries to contain declines into 1.2350 having reversed from yesterday’s post-Canadian CPI peaks alongside WTI, with the spotlight turning towards retail sales on Friday after a passing glance at new housing prices. SEK/EM - Some traction for the Swedish Krona in a tight band mostly sub-10.0000 vs the Euro from a fall in the nsa jobless rate, but the Turkish Lira seems jittery following a drop in consumer confidence and pre-CBRT as another 100 bp rate cut is widely expected, and the SA Rand is on a weaker footing ahead of a speech by the Energy Minister along with Eskom’s CEO. Meanwhile, the Cnh and Cnh have lost a bit more momentum against the backdrop of ongoing stress in China’s property market, and regardless of calls from the Commerce Ministry for the US and China to work together to create conditions for the implementation of the Phase One trade deal, or fees on interbank transactions relating to derivatives for SMEs being halved. In commodities, WTI and Brent Dec futures have gradually drifted from the overnight session peaks of USD 83.96/bbl and USD 86.10/bbl respectively. The downturn in prices seems to have initially been a function of risk sentiment, with APAC markets posting losses and Europe also opening on the back foot. At the time of writing, the benchmark resides around under USD 83/bbl for the former and sub-USD 85/bbl for the latter. Participants at this point are on the lookout for state interventions in a bid to keep prices from running. Over in China, it’s worth keeping an eye on the COVID situation – with China's Beijing Daily stating "citizens and friends are not required to leave the country, do not gather, do not travel or travel to overseas and domestic medium- and high-risk areas", thus translating to lower activity. That being said, yesterday’s commentary from the Saudi Energy Minister indicated how adamant OPEC is to further open the taps. UBS sees Brent at USD 90/bbl in December and March, before levelling off to USD 85/bbl for the remainder of 2022 vs prev. USD 80/bbl across all timelines. Elsewhere, spot gold and silver are relatively flat around USD 1,785 and USD 22.25 with nothing new nor interesting to report thus far, and with the precious metals moving in tandem with the Buck. Base metals meanwhile are softer across the board as global market risk remains cautious, with LME copper trading on either side of USD 10k/t. US Event Calendar 8:30am: Oct. Continuing Claims, est. 2.55m, prior 2.59m 8:30am: Oct. Initial Jobless Claims, est. 297,000, prior 293,000 8:30am: Oct. Philadelphia Fed Business Outl, est. 25.0, prior 30.7 9:45am: Oct. Langer Consumer Comfort, prior 51.2 10am: Sept. Existing Home Sales MoM, est. 3.6%, prior -2.0% 10am: Sept. Leading Index, est. 0.4%, prior 0.9% 10am: Sept. Home Resales with Condos, est. 6.09m, prior 5.88m DB's Jim Reid concludes the overnight wrap I watched the first of the new series of Succession last night. I like this program as it makes me think I’ve got a totally normal and non-dysfunctional family. It’s a good benchmark to have. There are few dysfunctional worries in equities at the moment as even with the pandemic moving back onto investors’ radars, the resurgence in risk appetite showed no sign of diminishing yesterday, with the S&P 500 (+0.37%) closing just a whisker below early September’s record high. It’s an impressive turnaround from where the narrative was just a few weeks ago, when the index had fallen by over -5% from its peak as concerns from Evergrande to a debt ceiling crunch set the agenda. But the removal of both risks from the immediate horizon along with another round of positive earnings reports have swept away those anxieties. And this has come even as investors have become increasingly sceptical about the transitory inflation narrative, as well as fresh signs that Covid-19 might be a serious issue once again this winter. Starting with the good news, US equities led the way yesterday as a number of global indices closed in on their all-time highs. As mentioned the S&P 500 rallied to close just -0.02% beneath its record, which came as part of a broad-based advance that saw over 75% of the index move higher. Elsewhere, the Dow Jones (+0.43%) also closed just below its all-time high back in August. After the close, Tesla fell short of revenue estimates but beat on earnings, despite materials shortages and port backlogs that have prevented production from reaching full capacity, a common refrain by now. Overall 17 out of 23 S&P 500 companies beat expectations yesterday, meaning that the US Q3 season beat tally is now 67 out of 80. Meanwhile in Europe, equities similarly saw advances across the board, with the STOXX 600 (+0.32%) hitting its highest level in over a month, as it moved to just 1.2% beneath its record back in August. For sovereign bonds it was a more mixed picture, with 10yr Treasury yields moving higher again as concerns about inflation continued to mount. By the close of trade, the 10yr yield had risen +2.0bps to 1.57%, which was driven by a +4.6bps increase in inflation breakevens to 2.60%, their highest level since 2012. That came as oil prices hit fresh multi-year highs after the US EIA reported that crude oil inventories were down -431k barrels, and gasoline inventories were down -5.37m barrels, which puts the level of gasoline inventories at their lowest since November 2019. That saw both WTI (+1.10%) and Brent crude (+0.87%) reverse their earlier losses, with WTI closing at a post-2014 high of $83.87/bbl, whilst Brent hit a post-2018 high of $85.82/bbl. Yields on 2yr Treasuries fell -1.0bps however, after Fed Vice Chair Quarles and President Mester joined Governor Waller in pushing back against the more aggressive path of Fed rate hikes that has recently been priced in. Even so however, money markets are still implying around 1.75 hikes in 2022, about one more hike than was priced a month ago. Separately in Europe, sovereign bonds posted a much stronger performance, with yields on 10yr bunds (-2.0bps), OATs (-2.6bps) and BTPs (-3.4bps) all moving lower. Overnight in Asia stocks are trading higher this morning with the Shanghai Composite (+0.46%), CSI (+0.35%) and KOSPI (+0.23%) all advancing, whilst the Hang Seng (-0.20%) and the Nikkei (-0.45%) have been dragged lower by healthcare and IT respectively. Meanwhile Evergrande Group (-12.60%) fell sharply in Hong Kong after news that it ended talks on the sale of a majority stake in its property services division to Hopson Development. And we’ve also seen a second day of sharp moves lower in Chinese coal futures (-11.0%) as the government is mulling measures to curb speculation. And there have also been a number of fresh Covid cases in China, with 21 new cases reported yesterday, as the city of Lanzhou moved to shut down schools in response. Elsewhere in Asia, with just 10 days now until Japan’s general election, a poll by Kyodo News found that the ruling Liberal Democratic Party would likely maintain its parliamentary majority. Futures markets are indicating a slow start for markets in the US and Europe, with those on the S&P 500 (-0.09%) and the DAX (-0.05%) both pointing lower. As we’ve been mentioning this week, the Covid-19 pandemic is increasingly returning onto the market radar, with the number of global cases having begun to tick up again. This has been reflected in a number of countries tightening up restrictions, and yesterday saw Russian President Putin approve a government proposal that October 31 to November 7 would be “non-working days”. In the Czech Republic, it was announced that mask-wearing would be compulsory in all indoor spaces from next week, and New York City moved to mandate all municipal workers to get vaccinated, with no alternative negative test result option now available. In Singapore, it was announced that virus restrictions would be extended for another month, which includes a limit on outdoor gatherings to 2 people and a default to work from home. Finally in the UK, the weekly average of cases has risen above 45k per day, up from just under 30k in mid-September. There is lots of talk about the need to put in place some additional restrictions but it feels we’re a fair way from that in terms of government-mandated ones. From central banks, it was announced yesterday that Bundesbank president Weidmann would be stepping down on December 31, leaving his position after just over a decade. He said that he was leaving for personal reasons, and in his letter to the Bundesbank staff, said that “it will be crucial not to look one-sidedly at deflationary risks, but not to lose sight of prospective inflationary dangers either.” It’ll be up to the next government to decide on the new appointment. Staying on Europe, our economists have just released an update to their GDP forecasts, with downgrades to their near-term expectations as supply shortages for goods and energy have created headwinds for the recovery. They now see 2021 growth at +4.9% (down -0.1pp from their previous forecast), whilst 2022 has been downgraded to 4.0% (-0.5pp). Alongside that, they’ve also included the latest oil and gas price movements into their inflation forecasts, and now project Euro Area 2022 HICP at 2.3%, although they don’t see this above-target inflation persisting, with their 2023 HICP forecast remaining unchanged at 1.5%. You can read the full note here. Speaking of inflation, we had a couple of inflation releases yesterday, including the UK’s CPI data for September, which came in slightly beneath expectations at 3.1% (vs. 3.2% expected), whilst core CPI also fell to 2.9% vs. 3.0% expected). As we discussed earlier this week though, there was some downward pressure from base effects, since in September 2020 we had a recovery in restaurant and cafe prices after the government’s Eat Out to Help Out scheme in August ended, and that bounce back has now dropped out of the annual comparisons. UK inflation will rise a fair amount in the months ahead. Otherwise, we also had the CPI release from Canada for September, which rose to 4.4% (vs. 4.3% expected), which is its highest reading since February 2003. Finally, bitcoin hit an all-time high, with the cryptocurrency up +2.92% to close at a record $65,996, which was slightly down from its intraday peak of $66,976. Bitcoin has surged over recent weeks, and as it stands it’s up +49.3% so far this month at time of writing, which would mark its strongest monthly performance so far this year. This latest move has occurred along with the first trading of options on Bitcoin-linked ETFs, which the US first listed the day prior. To the day ahead now, and data releases from the US include the weekly initial jobless claims, existing home sales for September, the Conference Board’s leading index for September, and the Philadelphia Fed’s business outlook for October. Central bank speakers will include the Fed’s Waller and the ECB’s Visco, while the Central Bank of Turkey will be making its latest monetary policy decision. Otherwise, earnings releases include Intel, Danaher, AT&T and Union Pacific. Tyler Durden Thu, 10/21/2021 - 08:20.....»»

Category: blogSource: zerohedgeOct 21st, 2021

Stocks Rebound and Finish Higher After Debt Ceiling Offer

Stocks Rebound and Finish Higher After Debt Ceiling Offer SPECIAL ALERT: Remember, we need your input to make next week’s new Zacks Ultimate Strategy Session episode the best it can be. There are two ways you can participate: 1) Zacks Mailbag: In this regular segment, Kevin Matras answers your questions ranging from current market conditions, general investing wisdom, usage of the Zacks Rank or any resources of and more. Pretty much anything goes. 2) Portfolio Makeover: Sheraz Mian and Jeremy Mullin review a customer portfolio to give feedback for improvement. No need to send us personal information such as dollar value of holdings. Simply email us with all of the tickers you own. Just make sure to email your submissions for either one, or both, by Thursday morning, October 7. Email now to Congress kicked the debt ceiling can down the road a bit on Wednesday, reversing the market’s fortunes today by turning a more than 1% plunge for the major indices into slight gains. Meanwhile, a better-than-expected ADP employment report was a nice beginning to three consecutive days of jobs data. The market may have been a tad more concerned about the debt ceiling problem than it was letting on. Investors were pretty sure that a deal could be worked out before Treasury Secretary Janet Yellen’s October 18 deadline. But, hey, this is Congress! You never really know.   So news of a short-term debt ceiling extension was applauded by stocks. Now Washington has through November to get something done and keep the U.S. from defaulting on its debt for the first time in history. As a result, stocks recovered from a more than 1% plunge in the afternoon and finished with small gains. The NASDAQ rose 0.47% (or about 68 points) to 14,501.91, while the S&P climbed 0.41% to 4363.55. The Dow advanced 0.30% (or around 102 points) to 34,416.99. Those results are a whole lot better than the declines from earlier in the session (which included a more than 450-point plunge for the Dow), and marks a second consecutive day in the green. The S&P and Dow are both up for the week more than halfway through, while the NASDAQ has yet to recover from its over 2% drop on Monday. In other news, the ADP employment report, which had been a disappointment in recent months, easily beat expectations as we prepare for a deluge of jobs data. Private payrolls added 568,000 last month, compared to expectations of only 425K. It was a nice improvement from the previous print of 374K, which drastically missed expectations of more than 600K. Tomorrow is Thursday, so we’ll be getting jobless claims as usual. But the main event comes on Friday with the Government Employment Situation report. And shortly thereafter a new earnings season begins… Today's Portfolio Highlights: Marijuana Innovators: Cannabis stocks are going through a rough stretch at the moment, so Ben decided to add a stock on Wednesday that is a well-known and rather boring pick that will provide the portfolio with some stability. That new buy is Innovative Industrial Properties (IIPR), a real estate investment trust focused on properties leased to experienced, state-licensed operators for medical-use cannabis facilities. The stock climbed in recent months as cannabis stocks continually dropped. Furthermore, it continues to sign large legal U.S. cannabis growers to long lease agreements. IIPR also provides the service with income, as it keeps raising its dividend and boasts a 30-year U.S. Treasury-topping yield. Read the full write-up for more on this new addition. By the way, this portfolio had the best performer among all ZU services today as Jazz Pharmaceuticals (JAZZ) rose 6.9%. Counterstrike: "Two pieces of news swung the momentum. First, GOP Senator Leader McConnell offered a short-term debt ceiling extension that would run into December. This kicks the can down the road, BUT we have more time to make everyone happy and agree on something. "Next, we had the China/Tawain risk taken away. Beijing had some comments that they will respect the Taiwan Relations Act. Additionally, Biden and Xi will have a digital meeting in the near future. This is great progress and the first step in improving relations. "Taking away those two risks was worth about 40 handles of upside in the SPX. Not an Earth-shattering move, but we will take it." -- Jeremy Mullin All the Best, Jim Giaquinto Recommendations from Zacks' Private Portfolios: Believe it or not, this article is not available on the website. The commentary is a partial overview of the daily activity from Zacks' private recommendation services. If you would like to follow our Buy and Sell signals in real time, we've made a special arrangement for readers of this website. Starting today you can see all the recommendations from all of Zacks' portfolios absolutely free for 7 days. Our services cover everything from value stocks and momentum trades to insider buying and positive earnings surprises (which we've predicted with an astonishing 80%+ accuracy). Click here to "test drive" Zacks Ultimate for FREE >>  Zacks Investment Research.....»»

Category: topSource: zacksOct 7th, 2021

DOJ Announces Launch Of National Crypto Enforcement Team As FDIC Mulls Insuring Stablecoins

DOJ Announces Launch Of National Crypto Enforcement Team As FDIC Mulls Insuring Stablecoins One of the catalysts behind crypto's impressive surge in the past week emerged last Friday, when the WSJ reported that the Biden admin was seeking to regulate stablecoin issuers as banks and was "considering ways to impose bank-like regulation on the cryptocurrency companies that issue stablecoins, including prodding the firms to register as banks." Coming at the same time as both Jerome Powell and Gary Gensler said they did not seek to bank crypto, the news was confirmation that the regulatory apparatus was seeking to integrate the crypto space within the confines of the state - especially since taxes on cryptos are expected to generate tens of billions in government revenues to the Democrats "deficit neutral" multi-trillion spending plan. In short, this was very good news for digital tokens as it eliminated the worst possible outcome: a China-style terminal crackdown on the sector. Today, we got more good news when Cointelegraph reported that an official from the Office of the Attorney General said the United States government is going to take a more active role in enforcement action against actors using cryptocurrencies for money laundering and other cybercrimes. In effect, the DOJ is already policing cryptos as if they were securities, providing an implicit security to investors even though the formal regulatory treatment of cryptos remains nebulous. Speaking at the Aspen Institute Cyber Summit on Wednesday, Deputy Attorney General Lisa Monaco said the Justice Department had launched the National Cryptocurrency Enforcement Team, who aim is to target platforms “that help criminals launder or hide their criminal proceeds.” Monaco cited her office’s work against Darknet-based Bitcoin (BTC) mixing service Helix in August but said the U.S. government should be doing more. “We want to strengthen our capacity to dismantle the financial ecosystem that enables these criminal actors to flourish and — quite frankly — to profit from what they’re doing,” said Monaco. “We’re going to do that by drawing on our cyber experts and cyber prosecutors and money-laundering experts.” Monaco, who has often been a central figure in the U.S. government’s response to major ransomware and cyberattacks involving cryptocurrency payments, added that “cryptocurrency exchanges want to be the banks of the future. We need to make sure that folks can have confidence when they’re using these systems, and we need to make sure we’re poised to root out abuse that can take hold on them.” She should know: she was part of a task force that “found and recaptured” millions of dollars worth of Bitcoin paid to the allegedly Russia-based DarkSide hackers following an attack on the Colonial Pipeline system in May. What Monaco didn't say is that by accelerating enforcement actions, the DOJ was in effect providing confidence to millions of retail investors that someone was looking after their interest in a market which the government had for years depicted as the "wild wild west." Needless to say, such as intervention will only increase retail participation. Meanwhile, in a clear indication that the government is already planning how to capitalize, and not penalize, the incipient stablecoin industry, the Federal Deposit Insurance Corp, or FDIC, a key U.S. banking regulator, is reportedly studying whether certain stablecoins might be eligible for its coverage, Coindesk reported citing five people familiar with the agency’s thinking said. The agency is trying to analyze what so-called pass-through FDIC insurance might look like for the reserves that stablecoin issuers hold at banks, the sources said. Such coverage would insure holders of the tokens against losses up to $250,000 if the bank holding the collateral were to fail. The FDIC is also looking at what regular, direct deposit insurance might look like for banks that want to issue stablecoins, people familiar with the discussions said. “This is all part of a process by which they are trying to bring stablecoins into the banking system in a responsible manner,” one insider said. “It depends on what’s backing the stablecoins. If it’s backed by reserves at the Fed[eral Reserve] for cash then I think you just make the argument that it’s a deposit. If it’s backed by Treasurys, I think you’ll have a hard time treating it as a deposit.” That all may be, but once again it misses the forest for the trees, namely that the government is taking increasingly permissive steps to give new investors some implicit comfort that the government is watching out for their interests and, in the case of stablecoins, that they may even be insured from total losses should the stablecoin issuer collapse. That said, it wasn't exactly clear how an FDIC backstop would work for stablecoins: if the FDIC went ahead and provided deposit insurance for stablecoins, it would apply only if a bank that was banking a stablecoin issuer or that was issuing a stablecoin itself went into receivership. Even in this scenario, it’s rare that FDIC insurance would enter into the picture because the agency generally takes a failed bank’s assets and deposits and sells them to a healthy bank. “The FDIC is probably looking at whether stablecoins can count as deposits or whether someone’s ownership of a stablecoin is a deposit at the stablecoin issuer,” said Todd Phillips, a former FDIC lawyer who is now the director of financial regulation and corporate governance at the Center for American Progress, a Washington think tank. The coverage could present challenges for issuers. Typically, these companies identify customers when they deposit cash for stablecoins or redeem the tokens for cash. But since stablecoins run on open, public blockchain networks (usually Ethereum), theoretically anyone with a crypto wallet that hasn’t been blacklisted can receive stablecoins from and send them to other wallets. “One thing to remember is that each person has insurance of only up to $250,000,” said Phillips. “So, the stablecoin issuer would need to keep track of who is the current holder of their stablecoin, and how many they own.” Whatever the FDIC insures has to not compromise the rest of the agency’s mission, he said. How the agency proceeds could potentially help protect consumers, Phillips added. “The FDIC basically has one overriding mission which is to ensure the safety of the Deposit Insurance Fund, the DIF,” Phillips said. “If the FDIC were to insure a stablecoin, that insurance would come out of the DIF and the FDIC will want to be very sure that they are on legal footing and that whatever they do doesn’t risk the DIF.” “The FDIC has strict rules as to which institutions may call themselves FDIC-insured or use the FDIC logo for advertising,” he said. “Just as how the FDIC’s logo on a bank’s website allows savers to be confident that the bank is a safe, insurance of particular stablecoins and permission to use the FDIC logo would provide clarity about which stablecoins, up to the insurance limit, will not lose value.” It’s likely that the agency will ask for public comment from the industry before any actual policy change is taken, Phillips said. “I also imagine there are conversations going on between the four FDIC directors, since you need a majority of them to approve a new regulation,” he said. Tyler Durden Wed, 10/06/2021 - 19:31.....»»

Category: blogSource: zerohedgeOct 6th, 2021

Futures Slide On Evergrande, Stagflation, Energy Crisis Fears

Futures Slide On Evergrande, Stagflation, Energy Crisis Fears Stock futures ticked lower on Monday, hurt by weakening sentiment in Asia and Europe amid growing worries about economic stagflation, the global energy crisis and renewed fears about property developer China Evergrande whose stock was halted overnight in Hong Kong, while Tesla shares rose after reporting a record number of electric vehicle deliveries. At 715 a.m. ET, Dow e-minis were down 114 points, or 0.33%, S&P 500 e-minis were down 16.25 points, or 0.37%, and Nasdaq 100 e-minis were down 73.75 points, or 0.5%. “The global chip and energy shortage is getting worse, the inflation is rising, the recovery may be slowing, and that puts central banks between a rock and a hard place,” Ipek Ozkardeskaya, a senior analyst at Swissquote, wrote in a note. “The best they could do is to do nothing, or to tighten their monetary policy to avoid losing control on the economy.” The most notable overnight event was the suspension of trading in shares of debt-laden Evergrande which unsettled markets further about any fallout from its troubles even as media reports said the company would sell a stake in its property management unit for over $5 billion. Wall Street’s main indexes were battered in September, hit by worries about the U.S. debt ceiling, the fate of a massive infrastructure spending bill and the meltdown of heavily indebted China Evergrande Group. On the second trading day of October, investors took a defensive stance, with a cautious approach to riskier assets as a spreading energy crunch meets concerns over the duration of broader rising prices and the tapering of economic stimulus efforts. Investors also kept close watch on rising U.S. Treasury yields after data last week showed increased consumer spending, accelerated factory activity and elevated inflation growth, which could help push the Federal Reserve towards tightening its accommodative monetary policy sooner than expected. Among individual stocks, Merck & Co. extended its gains from Friday on the results of its experimental Covid pill. The stock climbed 2.6% premarket. 3M shares fell 1.5% after J.P. Morgan cut its rating on the industrial conglomerate’s stock to “neutral” from “overweight”.  Here are some of the other notable premarket movers today: Tesla (TSLA  US) shares climb 2.6% higher in U.S. premarket trading after the electric car maker reported record 3Q deliveries that easily beat estimates Amplify Energy (AMPY US) shares plummet 33% in premarket trading after California beaches in northern Orange County were closed and wetlands contaminated by a huge oil spill caused by a broken pipeline off the coast DHT Holdings (DHT US) shares rose as much as 3.7% in Friday extended trading after the company said it bought 1.23m of its own shares Offerpad Solutions (OPAD US) was down 3.1% Friday postmarket after registering shares for potential sale Adverum Biotechnologies (ADVM US) shares rose as much as 23% in Friday extended trading after co. reported new long-term data from the OPTIC clinical trial of ADVM-022 single, in-office intravitreal injection gene therapy Markets also awaited U.S. Joe Biden’s new plan on China trade strategy, with U.S. Trade Representative Katherine Tai set for new talks with Beijing later in the day over its failure to keep promises made in a “Phase 1” trade deal struck with former President Donald Trump. Biden's new plan follows a top-to-bottom review of import tariffs and other measures imposed by the Trump administration; reports also said that USTR will today say that China is not complying with the Phase 1 deal. Europe's Stoxx 600 Index trades flat, erasing earlier losses of as much as 0.6%, helped by gains in health care and basic resources shares. The healthcare sub index rose 0.8% after AstraZeneca’s Enhertu got a breakthrough therapy designation while basic resources sub-index up 0.3% as iron ore rallies. Euro Stoxx 50 is down 0.2% having declined as much as 1% at the open. FTSE MIB lags on the recovery; FTSE 100 trades flat. Autos, banks and travel names are the weakest sectors. Here are some of the biggest European movers today: Adler Group shares jump as much as 18%, briefly erasing the previous week’s declines, after the firm said it’s reviewing strategic options that may result in a sale of assets Wm Morrison declines as much as 3.8% after the offer terms from winning bidder CD&R disappointed investors Sainsbury rises as much as 5.9% and Tesco gains 1.7% on speculation that CD&R’s Morrison deal may drive further interest in Britain’s grocery sector at a time when cash-rich buyout funds are stalking undervalued U.K. companies; also, a report says Tesco will announce a share buyback program this week Plus500 gains as much as 6.1% after the contracts-for-difference trading firm says full-year profit will beat market expectations Bewi rises as much as 9.9% after the owner of 50% of building products company Jackon Holding accepted Bewi’s offer BT slumps as much as 7.8% to a six-month low following a Telegraph report that Sky is closing in on a broadband investment deal with Virgin Media O2, raising worries over competition Azelio falls as much as 22% after newspaper Dagens Industri raised questions about orders for the renewable energy equipment developer Aryzta tumbles as much as 13% after results, halting a four-day winning streak Frasers falls as much as 12%, the most since December. Bank of America cut the owner of the Sports Direct retail chain to underperform from buy Asia stocks also declined, with Hong Kong shares a drag, after debt-ridden China Evergrande Group’s trading was suspended while investors also sold health care-related names and appeared wary heading into the final quarter of 2021. The MSCI Asia Pacific Index slipped as much as 0.8%. Vaccine maker CanSino Biologics and Shanghai Fosun Pharmaceutical Group were the biggest decliners on the measure as Merck & Co. said its experimental Covid-19 antiviral pill cuts the risk of hospitalization and death in half. “Investors will need to take a sell-first ask-later stance given current elevated valuation levels of vaccine stocks,” said Justin Tang, head of Asian research at United First Partners. Also weighing on traders’ minds is the global energy crisis, which has spread to India and is stoking inflation concerns. Speculation about the potential restructuring of China Evergrande Group, which has suspended trading of its Hong Kong shares, is also affecting sentiment at a time liquidity is thinner. The mainland Chinese market is closed through Thursday for Golden Week holidays. Singapore’s benchmark Straits Times Index was among the top-performing gauges in Asia Pacific as the country takes steps toward further reopening. Measures across the cyclicals-heavy Southeast Asian markets also rose, while tech stocks including Alibaba and Meituan took a hit. Asian assets will be sold alongside global peers in the short term, said Tai Hui, chief Asia market strategist at JPMorgan Asset Management. “But we think cyclical sectors, especially exporters, should also perform well for the rest of the year, especially as more Asian economies are seeing a rising level of vaccination,” he added. Japanese equities fell for a sixth-straight day, as investor concerns deepened over contagion from China’s real-estate sector woes on the suspension of trading in shares of Evergrande and its property management unit. Electronics makers were the biggest drag on the Topix, which declined 0.6%, capping its worst losing streak since February 2020. Tokyo Electron and Fanuc were the largest contributors to a 1.1% drop in the Nikkei 225. “It’s possible Evergrande news flow is impacting Japan stocks, the issues surrounding the property firm aren’t resolved,” said Mamoru Shimode, chief strategist at Resona Asset Management. “It’s also important to keep in mind markets overall have been in risk-off mood since the latter half of September.” Travel and retail stocks gained, following U.S. peers higher after promising results for Merck’s experimental Covid-19 pill and amid signs of a pick-up in Japanese department-store sales. Meanwhile, Fumio Kishida was appointed prime minister by parliament Monday, and was set to reveal a new cabinet lineup as he seeks to revive support for his ruling party ahead of a general election that could likely come this month. In rates, Treasuries are near session lows, the 10Y TSY pushing on 1.50% cheaper by ~3.5bp on the day and near middle of last week’s 1.44%-1.565% range in early U.S. session after erasing gains that pushed yields to lowest levels in a week. 5s30s curve at ~111.7bp is steeper by nearly 2bp, probing 50-DMA and approaching last week’s high. Gilts led the selloff during European morning as regional stocks recovered from a weak open. Curve steepens, with long-end yields cheaper by around 4bp vs Friday’s close.  Peripheral spreads widen with long end Italy underperforming. Semi-core spreads tighten at the margin. In FX, Bloomberg dollar index is little changed; NOK, CAD and CHF are the best performers in G-10, JPY lags but trading ranges are narrow. Crude futures hold slightly in the red in choppy trade. The Bloomberg Dollar Spot Index was steady and the greenback traded in tight ranges against its Group-of-10 peers. The euro reversed a modest decline to trade above $1.16, while the pound hovered after touching its highest level in nearly a week during the Asia session. Expected volatility is now at the highest in five months. The currency fell to a year-to-date low last week amid concerns over soaring energy prices, falling business confidence and the end of the government’s furlough scheme. The Aussie dollar was flat and option markets aren’t expecting the RBA’s policy decision Tuesday to be an eventful one for spot. The yen inched lower after earlier touching a one-week high when concern over potential contagion from indebted Chinese developer Evergrande weighed on Japanese stocks. In commodities, WTI is down 0.25% near $75.70, Brent just 0.1% lower near $79.20 ahead of today’s OPEC+ virtual gathering. Spot gold drops ~$10 to test Friday’s low near $1,750/oz. Base metals trade well with LME aluminum and zinc rising over 1% to outperform peers. Bitcoin and cryptos dropped after a burst higher late on Sunday, following the China Evergrande suspension even though i) the news appears to be positive and is in relation to the latest asset sale and ii) China has banned trading in cryptos, so it wasn't exactly clear why any mainlanders would be selling to meet margin calls. On today's calendar, we get August factory orders, and the final August durable goods orders, core capital goods orders. We also get more central bank speakers including Fed's Bullard, BoE’s Ramsden, ECB Vice President de Guindos and ECB’s Makhlouf. Market Snapshot S&P 500 futures down 0.4% to 4,324.25 STOXX Europe 600 little changed at 453.24 MXAP down 0.5% to 194.02 MXAPJ down 0.3% to 629.26 Nikkei down 1.1% to 28,444.89 Topix down 0.6% to 1,973.92 Hang Seng Index down 2.2% to 24,036.37 Shanghai Composite up 0.9% to 3,568.17 Sensex up 1.1% to 59,391.71 Australia S&P/ASX 200 up 1.3% to 7,278.54 Kospi down 1.6% to 3,019.18 Brent Futures little changed at $79.22/bbl Gold spot down 0.5% to $1,752.29 U.S. Dollar Index little changed at 93.96 German 10Y yield rose 1.4 bps to -0.210% Euro up 0.1% to $1.1613 Top Overnight News from Bloomberg China Evergrande Group and its property-services arm were halted in Hong Kong stock trading amid a report that the developer agreed to sell a controlling stake in the unit to raise much- needed cash U.K. Prime Minister Boris Johnson said he won’t fall back on immigration to solve the U.K.’s truck driver shortage, as he presented supply chain troubles that have left supermarket shelves bare and gas stations dry as a “period of adjustment” in the wake of Brexit and the pandemic House Speaker Nancy Pelosi reset the clock on Saturday, giving lawmakers until Halloween to strike a deal on both the bipartisan $550 billion infrastructure deal and a broader, signature package of social spending, health care and tax measures they must pass with only Democratic votes Germany’s Social Democrats under chancellor-in-waiting Olaf Scholz signaled progress in talks with the Greens on forming a coalition government with the Free Democrats, while Angela Merkel’s bloc kept the door ajar for a conservative-led alliance Japan’s Fumio Kishida was appointed prime minister by parliament Monday, and is set to reveal a new cabinet lineup as he seeks to revive support for his ruling party ahead of a general election that could likely come this month. A more detailed look at global markets courtesy of Newsquawk Asian equity markets traded mixed as ongoing Evergrande default concerns clouded over the initial optimism following Friday’s rebound on Wall St where all major indices found some reprieve from last week’s downturn, although the S&P 500 still suffered its worst weekly performance since February and US equity futures also failed to hold on to opening gains with this week’s upcoming risk events adding to the cautiousness including the OPEC+ meeting later today, a bout of Asia-Pac central bank policy decisions from Tuesday and Friday’s NFP job data. The ASX 200 (+1.3%) outperformed, with the index unfazed by the absence of key market participants with mainland China away for Golden Week, South Korea closed due to National Foundation Day, and amid the quasi-holiday conditions in Australia as New South Wales observed Labour Day. Nonetheless, the local benchmark was propped up by the top-weighted financials sector with shares in Australia’s largest bank CBA boosted following a AUD 6.0bln off-market buyback and with reopening stocks, especially those in the travel industry, among the biggest gainers. The Nikkei 225 (-1.1%) wiped out its opening advances despite the lack of significant news catalyst for the reversal which was spearheaded by exporter names, while the focus in Japan turned to PM Kishida’s confirmation in parliament and for details of the new Cabinet members. The Hang Seng (-2.2%) was heavily pressured by losses in health and biotech stocks, while property names also suffered amid the current Evergrande fears after a USD 260mln note from Jumbo Fortune Enterprises matured on Sunday which was guaranteed by China Evergrande Group and its unit Tianji Holding Ltd, while there is no grace period for the payment but five days will be allowed for administrative or technical errors. Furthermore, shares of Evergrande, its property services unit and structured products have all been halted which reports circulating that Hopson Development is to acquire a 51% stake in Evergrande Property Services for HKD 40bln. Finally, 10yr JGBs tracked recent upside in T-notes and with support also from the negative mood in Japanese stocks, as well as the BoJ’s presence in the market for over JPY 1tln of JGBs mostly concentrated in 1yr-5yr maturities. Top Asian News Singapore Eyes More Vaccinated Travel Lanes in Cautious Reopen India Farm Protests Gather Momentum After 4 Demonstrators Killed U.S. Natural Gas Jumps Amid Strong Overseas Demand for Fuel Suzuki Takes Japan Finance Reins as Election, Stimulus Loom Major bourses in Europe have adopted somewhat of a mixed picture (Euro Stoxx 50 Unch; Stoxx 600 -0.2%), following on from the broad-based downbeat cash open seen as Europe picked up the baton from APAC. US equity futures see modest losses across the board but have again drifted off worst levels. Nonetheless, the NQ (-0.5%) remains the slight laggard vs its RTY (-0.1%), ES (-0.2%) and YM (-0.4%) counterparts. Sectors are now mixed with a slight defensive tilt, with Healthcare and Food & Beverages among the top gainers, whilst financials bear the brunt of the yield decline on Friday, with Banks at the foot of the bunch. In terms of individual movers, Morrisons (-3.8%) has accepted CD&R’s takeover offer, which has left Fortress empty-handed but has fanned speculation that the group may look towards Sainsbury’s (+5.9%), Tesco (+1.7%) or Marks & Spencer (+1.5%) as potential targets, with the former being the best suitor, according to reports. Elsewhere BT (-7%) plumbed the depths with some citing reports that Sky is to partner with Virgin Media-O2 in a move set to intensify the challenge to BT’s infrastructure builder Openreach. Top European News U.K.’s Fuel Crisis Has at Least a Week to Run as Army Steps In Adler Group Weighs Asset Sales to Cut Debt After Multiple Bids Amazon Rival Noon to Raise $2 Billion From Backers Including PIF Romanian Billionaire Petrescu Dies in Plane Crash Near Milan In FX, the broader Dollar and index remain caged to a tight range, with the latter within a narrow 93.900-94.104 band after last week printing a new YTD peak at 94.504. The Dollar remains on standby as risk events are abundant this coming week, including deliberations on Capitol Hill and Friday’s NFP. In terms of the developments in Washington, congressional leaders set a new unofficial month-end deadline to pass the infrastructure bill, and USD 3.5tln spending package, and House progressives were reported to offer to reduce spending to save the bill and are willing to compromise on the USD 3.5tln amount with limits but rejected moderate Democrat Senator Manchin’s USD 1.5tln offer. Over to the Fed and a story to keep on the radar - Fed’s Clarida (seen as the nucleus of the Fed) reportedly shifted out of a bond fund into a stock fund last year, which occurred a day prior to Fed Chair Powell issuing a statement of potential policy action due to the pandemic. A spokesperson passed this off as “pre-planned” balancing, but a similar situation led to the early resignation of Kaplan and Rosengren. Elsewhere, USTR Tai is to today unveil the China trade policy following a top-to-bottom review of the Trump admin’s tariffs and other measures. The pre-release noted that the US would begin a process to exempt certain products from tariffs on Chinese imports, with the US also seeking a meeting on Phase 1. That being said, officials noted that all tools remain on the table when asked about further tariffs. Net-net, the release was constructive and, as such, provided tailwinds to the CNH, whereby USD/CNH dipped from 6.4560 to a low of 6.4385. AUD, NZD, CAD - The non-US Dollars somewhat vary with the Loonie attached to price action in the oil complex heading into the OPEC+ meeting later today. The NZD outperforms in the G10 bunch, with the AUD on the other side of the spectrum in what is a busy central bank week for the antipodeans. The AUD/NZD cross will likely take some focus as the RBNZ is poised to hike its OCR, whilst the RBA is seen holding policy steady. AUD/NZD has made its way back towards 1.4050 from its 1.0485 overnight high. NZD/USD meanders around 0.6950 (0.6927-53 range) whilst AUD/USD hovers around the 0.7250 mark (where AUD 1bln of OpEx resides), with the 21 DMA at 0.7295 and the 50 at 0.7311. EUR, GBP - Both European majors trade relatively flat in the European morning, but Brexit rhetoric has ramped up with UK Brexit Minister Frost warning the EU that the UK is prepared to trigger Article 16 unless the EU agrees to replace the Northern Ireland Protocol. There were separate reports that ministers will be given a deadline of the end of next month to decide on whether to suspend the Northern Ireland Brexit deal unilaterally, and senior sources warned that unless the EU was prepared to engage in a “serious negotiation” during the coming weeks, the government would have no choice but to suspend the deal by December. EUR/GBP topped its 100 and 21 DMAs (both at 0.8566) after finding a floor at its 100 DMA (0.8546). EUR/USD is back above 1.1600 (vs 1.1588 base) with EUR 1bln options expiring at the figure. GBP/USD hovers mid-range between 1.3534-77. In commodities, WTI and Brent front-month futures have clambered off worst levels but remain tentative ahead of the OPEC+ confab later today (full preview in the Newsquawk Research Suite). In terms of the long and short of it, markets expect OPEC+ to stick to its plan of raising monthly oil output by +400k BPD; albeit, some look for a larger-than-planned hike. Oil journalists have said this morning that despite the noise surrounding a greater-than-planned hike, ministers expect the current plan to be maintained, although drama in the meeting cannot be omitted. Upside during the European session coincided with headlines suggesting “OPEC+ is seen keeping output policy unchanged”, citing sources, although this was poorly phrased as it incorrectly intimates production being unchanged as opposed to plans for the 400k BPD hike being unchanged. Other things to be aware of aside from OPEC, BioNTech CEO expects the virus to likely mutate and that a new vaccine formulation could be required by the middle of next year, according to the FT, whilst the Gulf of Oman has seen cyclone Shaheen hit the area, although exports are not expected to be impacted yet aside from a delay in loadings. WTI Nov resides just under 76/bbl (75.30-76.20 range) whilst Brent Dec hovers sub USD 79.50/bbl (78.75-79.50/bbl range.) Elsewhere, spot gold and silver have been drifting lower in tandem with the rise in yields seen throughout the morning, with the former briefly dipping under USD 1,750/oz whilst spot silver fell under USD 22.40/oz. Turning to base metals, LME copper posts modest gains and remains north of USD 9,000/t, with some dip-buying being cited. US Event Calendar 10am: Aug. Cap Goods Ship Nondef Ex Air, prior 0.7% 10am: Aug. Cap Goods Orders Nondef Ex Air, prior 0.5% 10am: Aug. -Less Transportation, prior 0.2% 10am: Aug. Factory Orders Ex Trans, est. 0.4%, prior 0.8% 10am: Aug. Factory Orders, est. 1.0%, prior 0.4% 10am: Aug. Durable Goods Orders, est. 1.8%, prior 1.8% 10am: Fed’s Bullard Takes Part in Panel Discussion on the Economy DB's Jim Reid concludes the overnight wrap It’s certainly an odd financial world at the moment. The negatives are obvious and revolve mostly around delta, weaker than expected growth, the energy crisis, ever higher inflation and tighter central bank policy. The positives are that the base effects with numerous lockdowns imposed in Q4 2020 to at least the start of Q3 2021 mean that it won’t be that difficult for growth to still be numerically healthy for a few more quarters. So once the disappointment of growth not being as high as was hoped at this stage fades we should still be left with decent growth. Famous last words but covid should play less and less part in our lives over the year ahead as vaccines and better treatments (eg Merck antiviral pill news on Friday) become more and more widespread. In addition, stimulus and excess savings remain high and financial conditions are still very loose. While regular readers will know I’ve long been beating the drum on higher inflation and will continue to do so, I’m not convinced that growth is rolling over enough for stagflation to be the best description of the outlook for the next 12 months. However I suppose much depends on how you define it. Whilst on the topic of the energy crisis, the world is full of pictures of the UK population queuing for petrol because of a perceived shortage of HGV drivers. We’ll never know if there was actually a shortage that would have threatened fuel supplies as when the story broke 10 days ago panic set in and we had a fuel run (not as shocking as a bank run but formed from the same cloth) as the population desperately tried to refuel. My wife decided to hold out thinking the situation would resolve itself. However by Saturday night we had 10 miles left in the tank and during the day she had passed 6-7 petrol stations with either no fuel or huge queues. As we were putting the kids to bed she announced that she was getting desperate and stressed about it and was going to go out now as she was worried she wouldn’t be able to take the kids to school this week if she didn’t go out to the local area to try to find petrol. I said she was crazy to go at peak time (partly as I didn’t want to put the kids to bed alone - tough on crutches) and urged her to go very early Sunday morning instead. She ignored me and ventured out on what I thought was a suicide mission. 20 minutes later she was back with a full tank! I’ve no idea how and I won’t ask! I apologised! Outside of all the ongoing energy and stagflation chatter, all roads this week point to payrolls Friday as unless there is a marked deterioration across the whole sweep of labour market indicators within the report, this will likely be the catalyst to cement the November taper barring an exogenous or market shock. Investors will also be increasingly focused on the US debt ceiling deadline, whilst Congress simultaneously grapples with the infrastructure bill and the reconciliation package. Elsewhere on the political scene, coalition negotiations in Germany will be important to look out for, as the parties seek to form a government after the election. Before we look ahead, markets have started the week with a risk-off tone, with Asian equities including the Hang Seng (-2.17%), Kospi (-1.62%), the Nikkei (-0.95%) all moving lower while markets in China remain closed. Stocks pared gains on the news that Evergrande’s trading had been suspended in Hong Kong, with a filing from the Hong Kong Stock Exchange saying that this was “pending the release by the Company of an announcement containing inside information about a major transaction.” Meanwhile Bloomberg reported earlier that Evergrande had guaranteed a dollar note worth $260m with an official due date of Oct 3 by Jumbo Fortune Enterprises, making the effective due date today since maturity was on a Sunday. Elsewhere in Asia, NHK reported that Japan’s incoming Prime Minister, Fumio Kishida, planned to hold a general election on October 31, and looking forward, US equity futures are also pointing lower, with those on the S&P 500 down -0.32%. Looking ahead, the US jobs report will be one of the main macro highlights this week, and follows last month’s release that strongly underwhelmed expectations, with nonfarm payrolls growth of just +235k in August being the slowest since January. So another poor release would not be welcome news even if it did reflect labour shortages. In terms of what to expect this time around, our US economists are forecasting a pickup in September, with nonfarm payrolls growing by +400k, and the unemployment rate ticking down to a post-pandemic low of 5.1%. Remember in the weak report last month, yields rose on the day as markets focused on the wage increases rather than the poor headline number. As we said at the time the bond reaction to last month’s report probably helped signal the end of the extreme positive technicals and short positioning in treasuries. Over the summer strong inflation and decent data couldn’t help treasuries sell off, indicating bullet proof technicals but the period around last month’s release seemed to turn the tide the other way a bit. The other important data release this week will be the global services and composite PMIs out tomorrow, which will give an indication of how the economy has fared into the end of Q3. That said, the flash readings we’ve already had have indicated slowing growth momentum across the major economies, so it will be interesting to see where things progress from here. Turning to the US, negotiations in Congress will be in focus as legislators face the debt ceiling deadline this month (expected to be breached around October 18th according to Treasury Secretary Yellen last week), just as the Democrats are also seeking to pass a $550bn bipartisan infrastructure bill and a reconciliation package. On Saturday, Speaker Pelosi seemed to suggest that the new deadline was October 31st for the bipartisan bill which highlights how much difference there still is between the progressives and moderates on the reconciliation package. Will they eventually find a compromise for a lower amount than the original $3.5tn (maybe around $2tn) that makes nether side happy but gets the legislation through? Staying on the political scene, there’ll also be a focus on coalition negotiations in Germany, where exploratory talks have now begun between the parties. The Greens and the liberal FDP will be key to forming a majority in the new Bundestag, with 210 seats between them, as both the centre-left SPD and the conservative CDU/CSU bloc still hope to lead the next coalition. Initial exploratory talks began with the SPD yesterday, and the FDP have also spoken to the CDU/CSU, with the Greens set to follow tomorrow. On the central bank side it’s a quieter week ahead, with the two G20 policy decisions expected from the Reserve Bank of Australia (tomorrow) and the Reserve Bank of India (Friday). In Australia, our economist is expecting no change in policy and a reaffirmation of their dovish policy outlook. And in India, our economist also expects the MPC to keep all key policy rates unchanged, with our base case remaining for a reverse repo rate liftoff starting from December. The day-by-day calendar is at the end as usual. Back to last week, and global equity markets slid for the third week out of the last four as the S&P 500 fell -2.21%, with a +1.15% increase on Friday not stopping the index from having its worst week since the end of February. The losses were primarily led by growth and technology stocks as the NASDAQ declined -3.20% on the week, while cyclicals such as banks (+1.92%) and energy (+5.78%) stocks outperformed. European equities similarly fell back, as the STOXX 600 ended the week -2.24% lower after Friday’s -0.42% loss came prior to a late US rally. Global sovereign bonds sold off for a sixth straight week, though most of that selling came in the first two days as the global risk-off tone caused investors to search for havens. US 10yr Treasury yields still ended the week up +1.1bps, despite Friday’s -2.6bp decline. Bond yields in Europe moved higher as well, with those on 10yr bunds increasing +0.4bps, to trade at their highest levels since early-July. And 10yr yields on French OATs (+1.2bps) and Italians BTPs (+3.1bps) also rose further. UK gilts underperformed them all with yields increasing +7.7bps. The major driver of the move in global yields was rising inflation expectations with US 10yr breakevens increasing +4.5bps, while 10yr bund and breakevens rose +9.3bps to reach their highest level since 2013 and gilt breakevens (+3.5bps) rose to their highest level since 2008 even though they were much higher mid-week. The US September ISM manufacturing survey rose to 61.1 from 59.9 in the prior month even as supply bottlenecks intensified. This along with strong demand readings from businesses and consumers have led to higher prices which are mostly being passed onto consumers. This was seen in the PCE deflator data from Friday which showed prices rose 4.3% (4.2% expected) y/y with the core reading increasing 3.6% (3.5% expected) y/y. The University of Michigan survey showed respondents’ inflation expectations in a year dropped slightly from the initial reading 4.6% (4.7% initial , 4.8% exp), which was in-line with last month. 5-10yr expectations remain elevated at 3.0%. Overall the sentiment reading of 72.8 (71.0 prior) was better than the initial survey but still was the fifth worst reading in a decade, with only last month and the early months of the pandemic having been lower. Separately, Euro-area inflation reached its highest level since September 2008 on Friday as the headline September CPI print registered at 3.4% y/y (3.3% expected) in September, fuelled by the cost of energy and travel. Meanwhile, in Europe the manufacturing PMI readings were largely in-line with the preliminary readings with the Euro Area print sitting at 58.6 (58.7 prior) with Germany (58.4) and France (55.0) both just under their prior readings. Tyler Durden Mon, 10/04/2021 - 07:55.....»»

Category: dealsSource: nytOct 4th, 2021

Mixed Session While Watching Yields and Washington

Mixed Session While Watching Yields and Washington The NASDAQ made an attempt to recover some of yesterday’s sharp losses this morning, but the rally ultimately failed on Wednesday as Treasury yields steadied but remained high. The other major indices managed slight gains as we move toward the final day of September. The tech-heavy index slipped 0.24% (or about 34 points) to 14,512.44. This decline makes four straight days of losses for the NASDAQ, including yesterday’s 2.8% plunge. The 10-year is still above 1.5%, but remains below its recent high of more than 1.56%. Meanwhile, the Dow rose 0.26% (or about 90 points) to 34,390.72, following a 1.6% plunge on Tuesday that snapped a four-day winning streak. The S&P was up 0.16% to 4359.46 after a 2% dip yesterday. The historically difficult month of September mercifully comes to an end tomorrow. The sharp Tuesday selloff made this already lackluster period look even worse. The NASDAQ is now down more than 5% for the month, while the S&P and Dow are off 3.7% and 2.8%, respectively. However, the S&P and NASDAQ are slightly higher for the quarter, which also ends on Thursday. Congress isn’t helping the situation. Another thing that expires tomorrow is the government’s funding, which means October could begin with a shutdown. A bill that would’ve kept things funded through early December was blocked on Monday and they’re still trying to get something done before the deadline. And then there’s the debt ceiling, which needs to be taken care of sometime in October or risk an unprecedented default of U.S. debt. At the moment, the market is much more concerned about rising yields than anything happening in Washington, though news from the Capitol could certainly impact stocks over the next few sessions. “The good news is that we've been through so many government shutdowns over the last 10 years, that Wall Street doesn't get panicked anymore. But the bigger concern is still the debt ceiling," said Tracey Ryniec in Insider Trader. "So far, Wall Street is still assuming it will get raised by the Oct 18 deadline that Treasury Secretary Yellen says is the absolute last day the US can pay its bills. But the gamesmanship around the debt ceiling isn't healthy either. I would look for further weakness on Wall Street until some of these issues are resolved.” Do you think September 2021 will go out quietly tomorrow? You probably shouldn’t bet on it. Let’s buckle up and see what happens... Today's Portfolio Highlights: Headline Trader: The SPAC (special purpose acquisition company) market came under a lot of pressure earlier this year, but now Dan thinks “this nascent asset class has sunk back below investors’ radars”. Therefore, it looks like a good place to invest again, and the editor sees a fantastic opportunity with G Squared Ascend I (GSQD). This blank check company intends to merge with Transfix, a “revolutionary” digital business-to-business (B2B) freight marketplace powered by AI. The company is still not profitable, but the freight marketplace has tremendous opportunities for margin improvements, especially when using innovative technologies. The editor decided to add GSQD on Wednesday with a 5% allocation due to its potential moving forward and to better diversity the portfolio with a low beta name. Read the full write-up for a lot more on this new addition.   Home Run Investor: That selloff the other day was nothing but a buying opportunity to Brian. And on Wednesday, he followed through by adding a company with tons of potential moving forward. Sumo Logic (SUMO) provides software solutions that it calls “continuous intelligence”. This is a new overlay that works with all the cloud components and helps organize and process the data that is coming in. SUMO hasn’t hit the mainstream yet, but it is already routinely beating the Zacks Consensus Estimate with an average surprise of 36% over the past four quarters. Rising earnings estimates lifted the company to Zacks Rank #2 (Buy) status. Since the portfolio was full, the editor needed to sell a name before making a new addition. He decided to get out of Smith & Wesson Brands (SWBI) for a more than 6% return in about four months. See the complete commentary for more on today’s action. Large-Cap Trader: With the difficult month of September about to end, it’s time for John to make a few changes to the portfolio. This time, he’s only selling one name by getting out of Lattice Semiconductor (LSCC) on fears of a selloff moving forward. The position brings a profit of 23.4% in just two months. The editor is keeping an eye on the holiday shopping season with his three new buys today, which are: • Capri Holdings Ltd. (CPRI) – apparel & accessories • Walmart (WMT) – retail giant • Qualcomm (QCOM) – leader in wireless technologies These new buys are all Zacks Rank #2s (Strong Buys) in highly-ranked spaces (Top 25% or better in the Zacks Industry Rank). Furthermore, their most recent earnings surprises and their four-quarter average surprises are both in the double digits. John believes that these names will perform well in the upcoming holiday shopping season, which means they should have a strong end to 2021 and solid start to 2022. The portfolio weights will be approximately 5.2% for each position. Read the complete commentary for more specifics on all these moves. Have a Good Evening, Jim Giaquinto Recommendations from Zacks' Private Portfolios: Believe it or not, this article is not available on the website. The commentary is a partial overview of the daily activity from Zacks' private recommendation services. If you would like to follow our Buy and Sell signals in real time, we've made a special arrangement for readers of this website. Starting today you can see all the recommendations from all of Zacks' portfolios absolutely free for 7 days. Our services cover everything from value stocks and momentum trades to insider buying and positive earnings surprises (which we've predicted with an astonishing 80%+ accuracy). Click here to "test drive" Zacks Ultimate for FREE >>  Zacks Investment Research.....»»

Category: topSource: zacksSep 30th, 2021

Biden"s defense secretary says Trump admin. didn"t handover plans for Afghanistan withdrawal, despite making deal with Taliban

"In terms of handoff from administration to administration, secretary to secretary, there was no handoff to me," Austin said. Secretary of Defense Lloyd Austin, left, and Joint Chiefs Chairman Gen. Mark Milley, right, pictured in Maryland. Alex Brandon - Pool/Getty Images Defense Secretary Lloyd Austin to House lawmakers he received no plans from Trump officials for the Afghanistan withdrawal. "There was no handoff to me of any plans for a withdrawal," Austin said. The Trump admin. made a deal with the Taliban to pull all US troops by May 1. See more stories on Insider's business page. Defense Secretary Lloyd Austin on Wednesday told House lawmakers that Trump officials did not handover any plans to him for the Afghanistan withdrawal. The Trump administration set the stage for the pullout via a February 2020 deal with the Taliban, which included a pledge to withdraw US troops by May 1, 2021. "There was no handoff to me of any plans for a withdrawal," Austin said during a House Armed Services Committee hearing on the Afghanistan withdrawal. Austin added that he was "confident" Gen. Austin Miller, who stepped down as the top US commander in Afghanistan in July, was "making plans" for a pullout. "But in terms of handoff from administration to administration, secretary to secretary, there was no handoff to me," Austin said. Secretary of State Antony Blinken made a similar point in a House hearing earlier this month. "We inherited a deadline. We did not inherit a plan," Blinken said. Pulling off a withdrawal from the longest conflict in US history was always going to be a highly complex task, involving removing or destroying valuable military equipment and safely pulling out thousands of US forces - all while hoping the fledgling US-backed Afghan government would not collapse in the process.Ultimately, the Afghan government fell in concert with the US departure and Taliban takeover, which prompted scenes of mass chaos at the Kabul airport. Austin said the evacuation of thousands of people in August amounted to the "largest airlift conducted in U.S. history."President Joe Biden came into office with the drawdown of US forces in Afghanistan already underway. A blueprint for the next steps in the withdrawal from the administration that initiated the pullout could've made the process smoother. The Trump administration's February 2020 with the Taliban - known as the Doha agreement - called for the US to pull all troops by May. The agreement, which the US-backed Afghan government was excluded from, set up a 14-month timetable for the withdrawal of "all military forces of the US, its allies, and Coalition partners, including all non-diplomatic civilian personnel, private security contractors, trainers, advisors, and supporting services personnel." Biden largely upheld the agreement, though he extended the deadline for the withdrawal. Gen. Mark Milley, the chairman of the Joint Chiefs of Staff, told both Senate and House lawmakers this week that the Taliban failed to live up to nearly all of the commitments the militant group made under the deal. The Taliban did not attack US forces after the agreement, but Milley said the militant Islamists "never renounced Al Qaeda or broke its affiliation with them." Milley and Gen. Kenneth McKenzie, commander of US Central Command, also told lawmakers the Doha agreement was detrimental to morale among Afghan forces.The Biden administration has laid much of the blame on the Taliban's rapid conquest of Afghanistan on the Afghan military. Before marching into Kabul in mid-August, the Taliban took over major cities at a blistering pace - often without much of a fight. Just weeks before, Biden had expressed "trust" in the abilities of Afghan forces, who were trained and armed by the US.The Biden administration has faced rampant criticism over its handling of the Afghanistan withdrawal. But Republicans who've gone after the administration over the pullout have often ignored the fact the Trump administration paved the way for the withdrawal by making a deal with the Taliban. Read the original article on Business Insider.....»»

Category: topSource: businessinsiderSep 29th, 2021

Futures Slide On Growing Stagflation Fears As Treasury Yields Surge

Futures Slide On Growing Stagflation Fears As Treasury Yields Surge US index futures, European markets and Asian stocks all turned negative during the overnight session, surrendering earlier gains as investors turned increasingly concerned about China's looming slowdown - and outright contraction - amid a global stagflationary energy crunch, which sent 10Y TSY yields just shy of 1.50% this morning following a Goldman upgrade in its Brent price target to $90 late on Sunday. At 745 a.m. ET, S&P 500 e-minis were down 4.75 points, or 0.1% after rising as much as 0.6%, Nasdaq 100 e-minis were down 83 points, or 0.54% and Dow e-minis were up 80 points, or 0.23%. The euro slipped as Germany looked set for months of complex coalition talks. While the market appears to have moved beyond the Evergrande default, the debt crisis at China's largest developer festers (with Goldman saying it has no idea how it will end), and data due this week will show a manufacturing recovery in the world’s second-largest economy is faltering faster. A developing energy crisis threatens to crimp global growth further at a time markets are preparing for a tapering of Fed stimulus. The week could see volatile moves as traders scrutinize central bankers’ speeches, including Chair Jerome Powell’s meetings with Congressional panels. “Most bad news comes from China these days,” Ipek Ozkardeskaya, a senior analyst at Swissquote Group Holdings, wrote in a note. “The Evergrande debt crisis, the Chinese energy crackdown on missed targets and the ban on cryptocurrencies have been shaking the markets, along with the Fed’s more hawkish policy stance last week.” Oil majors Exxon Mobil and Chevron Corp rose 1.5% and 1.2% in premarket trade, respectively, tracking crude prices, while big lenders including JPMorgan, Citigroup, Morgan Stanley and Bank of America Corp gained about 0.8%.Giga-cap FAAMG growth names such as Alphabet, Microsoft,, Facebook and Apple all fell between 0.3% and 0.4%, as 10Y yield surged, continuing their selloff from last week, which saw the 10Y rise as high as 1.4958% and just shy of breaching the psychological 1.50% level. While growth names were hit, value names rebounded as another market rotation appears to be in place: industrials 3M Co and Caterpillar Inc, which tend to benefit the most from an economic rebound, also inched higher (although one should obviously be shorting CAT here for its China exposure). Market participants have moved into value and cyclical stocks from tech-heavy growth names after the Federal Reserve last week indicated it could begin unwinding its bond-buying program by as soon as November, and may raise interest rates in 2022. Here are some other notable premarket movers: Gores Guggenheim (GGPI US) shares rise 7.2% in U.S. premarket trading as Polestar agreed to go public with the special purpose acquisition company, in a deal valued at about $20 billion. Naked Brand (NAKD US), one of the stocks caught up in the first retail trading frenzy earlier this year, rises 11% in U.S. premarket trading, extending Friday’s gains. Among other so-called meme stocks in premarket trading: ReWalk Robotics (RWLK) +6.5%, Vinco Ventures (BBIG) +18%, Camber Energy (CEI) +2.9% Pfizer (PFE US) and Opko Health (OPK US) in focus after they said on Friday that the FDA extended the review period for the biologics license application for somatrogon. Opko fell 3.5% in post-market trading. Aspen Group (ASPU) climbed 10% in Friday postmarket trading after board member Douglas Kass buys $172,415 of shares, according to a filing with the U.S. Securities & Exchange Commission. Seaspine (SPNE US) said spine surgery procedure volumes were curtailed in many areas of the U.S. in 3Q and particularly in August. Tesla (TSLA US) and other electric- vehicle related stocks globally may be active on Monday after Germany’s election, in which the Greens had their best-ever showing and are likely to be part of any governing coalition. Europe likewise drifted lower, with the Stoxx Europe 600 Index erasing earlier gains and turning negative as investors weighed the risk to global growth from the China slowdown and the energy crunch. The benchmark was down 0.1% at last check. Subindexes for technology (-0.9%) and consumer (-0.8%) provide the main drags while value outperformed, with energy +2.4%, banks +2% and insurance +1.3%.  The DAX outperformed up 0.5%, after German election results avoided the worst-case left-wing favorable outcome.  U.S. futures. Rolls-Royce jumped 12% to the highest since March 2020 after the company was selected to provide the powerplant for the B-52 Stratofortress under the Commercial Engine Replacement Program. Here are some of the other biggest European movers today IWG rises as much as 7.5% after a report CEO Mark Dixon is exploring a multibillion-pound breakup of the flexible office-space provider AUTO1 gains as much as 6.1% after JPMorgan analyst Marcus Diebel raised the recommendation to overweight from neutral Cellnex falls as much as 4.3% to a two-month low after the tower firm is cut to sell from neutral at Citi, which says the stock is “priced for perfection in an imperfect industry” European uranium stocks fall with Yellow Cake shares losing as much as 6% and Nac Kazatomprom shares declining as much as 4.7%. Both follow their U.S. peers down following weeks of strong gains as the price of uranium ballooned For those who missed it, Sunday's closely-watched German elections concluded with the race much closer than initially expected: SPD at 25.7%, CDU/CSU at 24.1%, Greens at 14.8%, FDP at 11.5%, AfD at 10.3% Left at 4.9%, the German Federal Returning Officer announced the seat distribution from the preliminary results which were SPD at 206 seats, CDU/CSU at 196. Greens at 118, FDP at 92, AfD at 83, Left at 39 and SSW at 1. As it stands, three potential coalitions are an option, 1) SPD, Greens and FDP (traffic light), 2) CDU/CSU, Greens and FDP (Jamaica), 3) SPD and CDU/CSU (Grand Coalition but led by the SPD). Note, option 3 is seen as the least likely outcome given that the CDU/CSU would be unlikely willing to play the role of a junior partner to the SPD. Therefore, given the importance of the FDP and Greens in forming a coalition for either the SPD or CDU/CSU, leaders of the FDP and Greens have suggested that they might hold their own discussions with each other first before holding talks with either of the two larger parties. Given the political calculus involved in trying to form a coalition, the process is expected to play out over several months. From a markets perspective, the tail risk of the Left party being involved in government has now been removed due to their poor performance and as such, Bunds trade on a firmer footing. Elsewhere, EUR is relatively unfazed due to the inconclusive nature of the result. We will have more on this in a subsequent blog post. Asian stocks fell, reversing an earlier gain, as a drop in the Shanghai Composite spooked investors in the region by stoking concerns about the pace of growth in China’s economy.  The MSCI Asia Pacific Index wiped out an advance of as much as 0.7%, on pace to halt a two-day climb. Consumer discretionary names and materials firms were the biggest contributors to the late afternoon drag. Financials outperformed, helping mitigate drops in other sectors.  “Seeing Shanghai shares extending declines, investors’ sentiment has turned weak, leading to profit-taking on individual stocks or sectors that have been gaining recently,” said Shoichi Arisawa, an analyst at Iwai Cosmo Securities. “The drop in Chinese equities is reminding investors about a potential slowdown in their economy.”  The Shanghai Composite was among the region’s worst performers along with Vietnam’s VN Index. Shares of China’s electricity-intensive businesses tumbled after Beijing curbed power supplies in the country’s manufacturing hubs to cut emissions. The CSI 300 still rose, thanks to gains in heavily weighted Kweichow Moutai and other liquor makers. Asian equities started the day on a positive note as financials jumped, tracking gains in U.S. peers and following a rise in Treasury yields. Resona Holdings was among the top performers after Morgan Stanley raised its view on the stock and Japanese banks. The regional market has been calmer over the past few trading sessions after being whipsawed by concerns over any fallout from China Evergrande Group’s debt troubles. While anxiety lingers, many investors expect China will resolve the distressed property developer’s problems rather than let them spill over into an echo of 2008’s Lehman crisis. Japanese equities closed lower, erasing an earlier gain, as concerns grew over valuations following recent strength in the local market and turmoil in China. Machinery and electronics makers were the biggest drags on the Topix, which fell 0.1%. Daikin and Bandai Namco were the largest contributors to a dip of less than 0.1% in the Nikkei 225. Both gauges had climbed more 0.5% in morning trading. Meanwhile, the Shanghai Composite Index fell as much as 1.5% as industrials tumbled amid a power crunch. “Seeing Shanghai shares extending declines, investors’ sentiment has turned weak, leading to profit-taking on individual stocks or sectors that have been gaining recently,” said Shoichi Arisawa, an analyst at Iwai Cosmo Securities Co. “The drop in Chinese equities is reminding investors about a potential slowdown in their economy. That’s why marine transportation stocks, which are representative of cyclical sectors, fell sharply.” Shares of shippers, which have outperformed this year, fell as investors turned their attention to reopening plays. Travel and retail stocks gained after reports that the government is making final arrangements to lift all the coronavirus state of emergency order in the nation as scheduled at the end of this month. Australia's commodity-heavy stocks advanced as energy, banking shares climb. The S&P/ASX 200 index rose 0.6% to close at 7,384.20, led by energy stocks. Banks also posted their biggest one-day gain since Aug. 2. Travel stocks were among the top performers after the prime minister said state premiers must not keep borders closed once agreed Covid-19 vaccination targets are reached. NextDC was the worst performer after the company’s CEO sold 1.6 million shares. In New Zealand, the S&P/NZX 50 index. In FX, the U.S. dollar was up 0.1%, while the British pound, Australian dollar, and Canadian dollar lead G-10 majors, with the Swedish krona and Swiss franc lagging. •    The Bloomberg Dollar Spot Index was little changed and the greenback traded mixed versus its Group-of-10 peers o    Volatility curves in the major currencies were inverted last week due to a plethora of central bank meetings and risk-off concerns. They have since normalized as stocks stabilize and traders assess the latest forward guidance on monetary policy •    The yield on two-year U.S. Treasuries touched the highest level since April 2020, as tightening expectations continued to put pressure on front-end rates and ahead of debt sales later Monday •    The pound advanced, with analyst focus on supply chain problems as Prime Minister Boris Johnson considers bringing in army drivers to help. Bank of England Governor Andrew Bailey’s speech later will be watched after last week’s hawkish meeting •    Antipodean currencies, as well as the Norwegian krone and the Canadian dollar were among the best Group-of-10 performers amid a rise in commodity prices •    The yen pared losses after falling to its lowest level in six weeks and Japanese stocks paused their rally and amid rising Treasury yields   In rates, treasuries extended their recent drop, led by belly of the curve ahead of this week’s front-loaded auctions, which kick off Monday with 2- and 5-year note sales.  Yields were higher by up to 4bp across belly of the curve, cheapening 2s5s30s spread by 3.2bp on the day; 10-year yields sit around 1.49%, cheaper by 3.5bp and underperforming bunds, gilts by 1.5bp and 0.5bp while the front-end of the curve continues to sell off as rate-hike premium builds -- 2-year yields subsequently hit 0.284%, the highest level since April 2020. 5-year yields top at 0.988%, highest since Feb. 2020 while 2-year yields reach as high as 0.288%; in long- end, 30-year yields breach 2% for the first time since Aug. 13. Auctions conclude Tuesday with 7-year supply. Host of Fed speakers due this week, including three scheduled for Monday. In commodities, Brent futures climbed 1.4% to $79 a barrel, while WTI futures hit $75 a barrel for the first time since July, amid an escalating energy crunch across Europe and now China. Base metals are mixed: LME copper rises 0.4%, LME tin and nickel drop over 2%. Spot gold gives back Asia’s gains to trade flat near $1,750/oz In equities, Stoxx 600 is up 0.6%, led by energy and banks, and FTSE 100 rises 0.4%. Germany’s DAX climbs 1% after German elections showed a narrow victory for social democrats, with the Christian Democrats coming in a close second, according to provisional results. S&P 500 futures climb 0.3%, Dow and Nasdaq contracts hold in the green. In FX, the U.S. dollar is up 0.1%, while the British pound, Australian dollar, and Canadian dollar lead G-10 majors, with the Swedish krona and Swiss franc lagging. Base metals are mixed: LME copper rises 0.4%, LME tin and nickel drop over 2%. Spot gold gives back Asia’s gains to trade flat near $1,750/oz Investors will now watch for a raft of economic indicators, including durable goods orders and the ISM manufacturing index this week to gauge the pace of the recovery, as well as bipartisan talks over raising the $28.4 trillion debt ceiling. The U.S. Congress faces a Sept. 30 deadline to prevent the second partial government shutdown in three years, while a vote on the $1 trillion bipartisan infrastructure bill is scheduled for Thursday. On today's calendar we get the latest Euro Area M3 money supply, US preliminary August durable goods orders, core capital goods orders, September Dallas Fed manufacturing activity. We also have a bunch of Fed speakers including Williams, Brainard and Evans. Market Snapshot S&P 500 futures down 0.1% to 4,442.50 STOXX Europe 600 up 0.3% to 464.54 MXAP little changed at 200.75 MXAPJ little changed at 642.52 Nikkei little changed at 30,240.06 Topix down 0.1% to 2,087.74 Hang Seng Index little changed at 24,208.78 Shanghai Composite down 0.8% to 3,582.83 Sensex up 0.2% to 60,164.70 Australia S&P/ASX 200 up 0.6% to 7,384.17 Kospi up 0.3% to 3,133.64 German 10Y yield fell 3.1 bps to -0.221% Euro down 0.3% to $1.1689 Brent Futures up 1.2% to $79.04/bbl Gold spot little changed at $1,750.88 U.S. Dollar Index up 0.15% to 93.47 Top Overnight News from Bloomberg House Speaker Nancy Pelosi put the infrastructure bill on the schedule for Monday under pressure from moderates eager to get the bipartisan bill, which has already passed the Senate, enacted. But progressives -- whose votes are likely vital -- are insisting on progress first on the bigger social-spending bill Olaf Scholz of the center-left Social Democrats defeated Chancellor Angela Merkel’s conservatives in an extremely tight German election, setting in motion what could be months of complex coalition talks to decide who will lead Europe’s biggest economy China’s central bank pumped liquidity into the financial system after borrowing costs rose, as lingering risks posed by China Evergrande Group’s debt crisis hurt market sentiment toward its peers as well Global banks are about to get a comprehensive blueprint for how derivatives worth several hundred trillion dollars may be finally disentangled from the London Interbank Offered Rate Economists warned of lower economic growth in China as electricity shortages worsen in the country, forcing businesses to cut back on production Governor Haruhiko Kuroda says it’s necessary for the Bank of Japan to continue with large-scale monetary easing to achieve the bank’s 2% inflation target The quant revolution in fixed income is here at long last, if the latest Invesco Ltd. poll is anything to go by. With the work-from-home era fueling a boom in electronic trading, the majority of investors in a $31 trillion community say they now deploy factor strategies in bond portfolios A more detailed look at global markets courtesy of Newsquawk Asian equity markets traded somewhat mixed with the region finding encouragement from reopening headlines but with gains capped heading towards month-end, while German election results remained tight and Evergrande uncertainty continued to linger. ASX 200 (+0.6%) was led higher by outperformance in the mining related sectors including energy as oil prices continued to rally amid supply disruptions and views for a stronger recovery in demand with Goldman Sachs lifting its year-end Brent crude forecast from USD 80/bbl to USD 90/bbl. Furthermore, respectable gains in the largest weighted financial sector and details of the reopening roadmap for New South Wales, which state Premier Berijiklian sees beginning on October 11th, further added to the encouragement. Nikkei 225 (Unch) was kept afloat for most of the session after last week’s beneficial currency flows and amid reports that Japan is planning to lift emergency measures in all areas at month-end, although upside was limited ahead of the upcoming LDP leadership race which reports noted are likely to go to a run-off as neither of the two main candidates are likely to achieve a majority although a recent Kyodo poll has Kono nearly there at 47.4% of support vs. nearest contender Kishida at 22.4%. Hang Seng (+0.1%) and Shanghai Comp. (-0.8%) were varied with the mainland choppy amid several moving parts including back-to-back daily liquidity efforts by the PBoC since Sunday and with the recent release of Huawei’s CFO following a deal with US prosecutors. Conversely, Evergrande concerns persisted as Chinese cities reportedly seized its presales to block the potential misuse of funds and its EV unit suffered another double-digit percentage loss after scrapping plans for its STAR Market listing. There were also notable losses to casino names after Macau tightened COVID-19 restrictions ahead of the Golden Week holidays and crypto stocks were hit after China declared crypto activities illegal which resulted in losses to cryptoexchange Huobi which dropped more than 40% in early trade before nursing some of the losses, while there are also concerns of the impact from an ongoing energy crisis in China which prompted the Guangdong to ask people to turn off lights they don't require and use air conditioning less. Finally, 10yr JGBs were flat but have clawed back some of the after-hour losses on Friday with demand sapped overnight amid the mild gains in stocks and lack of BoJ purchases in the market. Elsewhere, T-note futures mildly rebounded off support at 132.00, while Bund futures outperformed the Treasury space amid mild reprieve from this month’s losses and with uncertainty of the composition for the next German coalition. Top Asian News Moody’s Says China to Safeguard Stability Amid Evergrande Issues China’s Tech Tycoons Pledge Allegiance to Xi’s Vision China Power Crunch Hits iPhone, Tesla Production, Nikkei Reports Top Netflix Hit ‘Squid Game’ Sparks Korean Media Stock Surge Bourses in Europe have trimmed the gains seen at the open, albeit the region remains mostly in positive territory (Euro Stoxx 50 +0.4%; Stoxx 600 +0.2%) in the aftermath of the German election and amid the looming month-end. The week also sees several risk events, including the ECB's Sintra Forum, EZ CPI, US PCE and US ISM Manufacturing – not to mention the vote on the bipartisan US infrastructure bill. The mood in Europe contrasts the mixed handover from APAC, whilst US equity futures have also seen more divergence during European trade – with the yield-sensitive NQ (-0.3%) underperforming the cyclically-influenced RTY (+0.4%). There has been no clear catalyst behind the pullback since the Cash open. Delving deeper into Europe, the DAX 40 (+0.6%) outperforms after the tail risk of the Left party being involved in government has now been removed. The SMI (-0.6%) has dipped into the red as defensive sectors remain weak, with the Healthcare sector towards to bottom of the bunch alongside Personal & Household Goods. On the flip side, the strength in the price-driven Oil & Gas and yield-induced Banks have kept the FTSE 100 (+0.2%) in green, although the upside is capped by losses in AstraZeneca (-0.4%) and heavy-weight miners, with the latter a function of declining base metal prices. The continued retreat in global bonds has also hit the Tech sector – which resides as the laggard at the time of writing. In terms of individual movers, Rolls-Royce (+8.5%) trades at the top of the FTSE 100 after winning a USD 1.9bln deal from the US Air Force. IWG (+6.5%) also extended on earlier gains following reports that founder and CEO Dixon is said to be mulling a multibillion-pound break-up of the Co. that would involve splitting it into several distinct companies. Elsewhere, it is worth being cognizant of the current power situation in China as the energy crisis spreads, with Global Times also noting that multiple semiconductor suppliers for Tesla (Unch), Apple (-0.4% pre-market) and Intel (Unch), which have manufacturing plants in the Chinese mainland, recently announced they would suspend their factories' operations to follow local electricity use policies. Top European News U.K. Relaxes Antitrust Rules, May Bring in Army as Pumps Run Dry Magnitude 5.8 Earthquake Hits Greek Island of Crete German Stocks Rally as Chances Wane for Left-Wing Coalition German Landlords Rise as Left’s Weakness Trumps Berlin Poll In FX, the Aussie is holding up relatively well on a couple of supportive factors, including a recovery in commodity prices overnight and the Premier of NSW setting out a timetable to start lifting COVID lockdown and restrictions from October 11 with an end date to completely re-open on December 1. However, Aud/Usd is off best levels against a generally firm Greenback on weakness and underperformance elsewhere having stalled around 0.7290, while the Loonie has also run out of momentum 10 pips or so from 1.2600 alongside WTI above Usd 75/brl. DXY/EUR/CHF - Although the risk backdrop is broadly buoyant and not especially supportive, the Buck is gleaning traction and making gains at the expense of others, like the Euro that is gradually weakening in wake of Sunday’s German election that culminated in narrow victory for the SPD Party over the CDU/CSU alliance, but reliant on the Greens and FDP to form a Government. Eur/Usd has lost 1.1700+ status and is holding a fraction above recent lows in the form of a double bottom at 1.1684, but the Eur/Gbp cross is looking even weaker having breached several technical levels like the 100, 21 and 50 DMAs on the way down through 0.8530. Conversely, Eur/Chf remains firm around 1.0850, and largely due to extended declines in the Franc following last week’s dovish SNB policy review rather than clear signs of intervention via the latest weekly Swiss sight deposit balances. Indeed, Usd/Chf is now approaching 0.9300 again and helping to lift the Dollar index back up towards post-FOMC peaks within a 93.494-206 range in advance of US durable goods data, several Fed speakers, the Dallas Fed manufacturing business index and a double dose of T-note supply (Usd 60 bn 2 year and Usd 61 bn 5 year offerings). GBP/NZD/JPY - As noted above, the Pound is benefiting from Eur/Gbp tailwinds, but also strength in Brent to offset potential upset due to the UK’s energy supply issues, so Cable is also bucking the broad trend and probing 1.3700. However, the Kiwi is clinging to 0.7000 in the face of Aud/Nzd headwinds that are building on a break of 1.0350, while the Yen is striving keep its head afloat of another round number at 111.00 as bond yields rebound and curves resteepen. SCANDI/EM - The Nok is also knocking on a new big figure, but to the upside vs the Eur at 10.0000 following the hawkish Norges Bank hike, while the Cnh and Cny are holding up well compared to fellow EM currencies with loads of liquidity from the PBoC and some underlying support amidst the ongoing mission to crackdown on speculators in the crypto and commodity space. In commodities, WTI and Brent front-month futures kicked the week off on a firmer footing, which saw Brent Nov eclipse the USD 79.50/bbl level (vs low 78.21/bbl) whilst its WTI counterpart hovers north of USD 75/bbl (vs low 74.16/bbl). The complex could be feeling some tailwinds from the supply crunch in Britain – which has lead petrol stations to run dry as demand outpaces the supply. Aside from that, the landscape is little changed in the run-up to the OPEC+ meeting next Monday, whereby ministers are expected to continue the planned output hikes of 400k BPD/m. On that note, there have been reports that some African nations are struggling to pump more oil amid delayed maintenance and low investments, with Angola and Nigeria said to average almost 300k BPD below their quota. On the Iranian front, IAEA said Iran permitted it to service monitoring equipment during September 20th-22nd with the exception of the centrifuge component manufacturing workshop at the Tesa Karaj facility, with no real updates present regarding the nuclear deal talks. In terms of bank commentary, Goldman Sachs raised its year-end Brent crude forecast by USD 10 to USD 90/bbl and stated that Hurricane Ida has more than offset the ramp-up in OPEC+ output since July with non-OPEC+, non-shale output continuing to disappoint, while it added that global oil demand-deficit is greater than expected with a faster than anticipated demand recovery from the Delta variant. Conversely, Citi said in the immediate aftermath of skyrocketing prices, it is logical to be bearish on crude oil and nat gas today and forward curves for later in 2022, while it added that near-term global oil inventories are low and expected to continue declining maybe through Q1 next year. Over to metals, spot gold and silver have fallen victim to the firmer Dollar, with spot gold giving up its overnight gains and meandering around USD 1,750/oz (vs high 1760/oz) while spot silver briefly dipped under USD 22.50/oz (vs high 22.73/oz). Turning to base metals, China announced another round of copper, zinc and aluminium sales from state reserves – with amounts matching the prior sales. LME copper remains within a tight range, but LME tin is the outlier as it gave up the USD 35k mark earlier in the session. Finally, the electricity crunch in China has seen thermal coal prices gain impetus amid tight domestic supply, reduced imports and increased demand. US Event Calendar 8:30am: Aug. Cap Goods Ship Nondef Ex Air, est. 0.5%, prior 0.9% 8:30am: Aug. Cap Goods Orders Nondef Ex Air, est. 0.4%, prior 0.1% 8:30am: Aug. -Less Transportation, est. 0.5%, prior 0.8% 8:30am: Aug. Durable Goods Orders, est. 0.6%, prior -0.1% 10:30am: Sept. Dallas Fed Manf. Activity, est. 11.0, prior 9.0 Central Banks 8am: Fed’s Evans Speaks at Annual NABE Conference 9am: Fed’s Williams Makes Opening Remarks at Conference on... 12pm: Fed’s Williams Discusses the Economic Outlook 12:50pm: Fed’s Brainard Discusses Economic Outlook at NABE Conference DB's Jim Reid concludes the overnight wrap Straight to the German elections this morning where unlike the Ryder Cup the race was tight. The centre-left SPD have secured a narrow lead according to provisional results, which give them 25.7% of the vote, ahead of Chancellor Merkel’s CDU/CSU bloc, which are on 24.1%. That’s a bit narrower than the final polls had suggested (Politico’s average put the SPD ahead by 25-22%), but fits with the slight narrowing we’d seen over the final week of the campaign. Behind them, the Greens are in third place, with a record score of 14.8%, which puts them in a key position when it comes to forming a majority in the new Bundestag, and the FDP are in fourth place currently on 11.5%. Although the SPD appear to be in first place the different parties will now enter coalition negotiations to try to form a governing majority. Both Olaf Scholz and the CDU’s Armin Laschet have said that they will seek to form a government, and to do that they’ll be looking to the Greens and the FDP as potential coalition partners, since those are the most realistic options given mutual policy aims. So the critical question will be whether it’s the SPD or the CDU/CSU that can convince these two to join them in coalition. On the one hand, the Greens have a stronger policy overlap with the SPD, and governed with them under Chancellor Schröder from 1998-2005, but the FDP seems more in line with the Conservatives, and were Chancellor Merkel’s junior coalition partner from 2009-13.  So it’s likely that the FDP and the Greens will talk to each other before talking to either of the two biggest parties. For those wanting more information, our research colleagues in Frankfurt have released a post-election update (link here) on the results and what they mean. An important implication of last night’s result is that (at time of writing) it looks as though a more left-wing coalition featuring the SPD, the Greens and Die Linke would not be able for form a majority in the next Bundestag. So the main options left are for the FDP and the Greens to either join the SPD in a “traffic light” coalition or instead join the CDU/CSU in a “Jamaica” coalition. The existing grand coalition of the SPD and the CDU/CSU would actually have a majority as well, but both parties have signalled that they don't intend to continue this. That said, last time in 2017, a grand coalition wasn’t expected after that result, and there were initially attempts to form a Jamaica coalition. But once those talks proved unsuccessful, discussions on another grand coalition began once again. In terms of interesting snippets, this election marks the first time the SPD have won the popular vote since 2002, which is a big turnaround given that the party were consistently polling in third place over the first half of this year. However, it’s also the worst ever result for the CDU/CSU, and also marks the lowest combined share of the vote for the two big parties in post-war Germany, which mirrors the erosion of the traditional big parties we’ve seen elsewhere in continental Europe. Interestingly, the more radical Die Linke and AfD parties on the left and the right respectively actually did worse than in 2017, so German voters have remained anchored in the centre, and there’s been no sign of a populist resurgence. This also marks a record result for the Greens, who’ve gained almost 6 percentage points relative to four years ago, but that’s still some way down on where they were polling earlier in the spring (in the mid-20s), having lost ground in the polls throughout the final weeks of the campaign. Markets in Asia have mostly started the week on a positive note, with the Hang Seng (+0.28%), Nikkei (+0.04%), and the Kospi (+0.25%) all moving higher. That said, the Shanghai Comp is down -1.30%, as materials (-5.91%) and industrials (-4.24%) in the index have significantly underperformed, which comes amidst power curbs in the country. In the US and Europe however, futures are pointing higher, with those on the S&P 500 up +0.37%, and those on the DAX up +0.51%. Moving onto another big current theme, all the talk at the moment is about supply shocks and it’s not inconceivable that things could get very messy on this front over the weeks and months ahead. However, I think the discussion on supply in isolation misses an important component and that is demand. In short we had a pandemic that effectively closed the global economy and interrupted numerous complicated supply chains. The global authorities massively stimulated demand relative to where it would have been in this environment and in some areas have created more demand than there would have been at this stage without Covid. However the supply side has not come back as rapidly. As such you’re left with demand outstripping supply. So I think it’s wrong to talk about a global supply shock in isolation. It’s not as catchy but this is a “demand is much higher than it should be in a pandemic with lockdowns, but supply hasn't been able to fully respond” world. If the authorities hadn’t responded as aggressively we would have plenty of supply for the demand and a lot of deflation. Remember negative oil prices in the early stages of the pandemic. So for me every time you hear the phrase “supply shock” remember the phenomenal demand there is relative to what the steady state might have been. This current “demand > supply” at lower levels of activity than we would have had without covid is going to cause central banks a huge headache over the coming months. Should they tighten due to what is likely to be a prolonged period of higher prices than people thought even a couple of months ago or should they look to the potential demand destruction of higher prices? The risk of a policy error is high and the problem with forward guidance is that markets demand to know now what they might do over the next few months and quarters so it leaves them exposed a little in uncertain times. This problem has crept up fast on markets with an epic shift in sentiment in the rates market after the BoE meeting Thursday lunchtime. I would say they were no more hawkish than the Fed the night before but the difference is that the Fed are still seemingly at least a year from raising rates and a lot can happen in that period whereas the BoE could now raise this year (more likely February). That has focused the minds of global investors, especially as Norway became the first central bank among the G-10 currencies to raise rates on the same day. Towards the end of this note we’ll recap the moves in markets last week including a +15bps climb in US 10yr yields in the last 48 hours of last week. One factor that will greatly influence yields over the week ahead is the ongoing US debt ceiling / government shutdown / infrastructure bill saga that is coming to a head as we hit October on Friday - the day that there could be a partial government shutdown without action by the close on Thursday. It’s a fluid situation. So far the the House of Representatives has passed a measure that would keep the government funded through December 3, but it also includes a debt ceiling suspension, so Republicans are expected to block this in the Senate if it still includes that. The coming week could also see the House of Representatives vote on the bipartisan infrastructure bill (c.$550bn) that’s already gone through the Senate, since Speaker Pelosi had previously committed to moderate House Democrats that there’d be a vote on the measure by today. She reaffirmed that yesterday although the timing may slip. However, there remain divisions among House Democrats, with some progressives not willing to support it unless the reconciliation bill also passes. In short we’ve no idea how this get resolved but most think some compromise will be reached before Friday. Pelosi yesterday said it “seems self-evident” that the reconciliation bill won’t reach the $3.5 trillion hoped for by the administration which hints at some compromise. Overall the sentiment has seemingly shifted a little more positively on there being some progress over the weekend. From politics to central banks and following a busy week of policy meetings, there are an array of speakers over the week ahead. One of the biggest highlights will be the ECB’s Forum on Central Banking, which is taking place as an online event on Tuesday and Wednesday, and the final policy panel on Wednesday will include Fed Chair Powell, ECB President Lagarde, BoE Governor Bailey and BoJ Governor Kuroda. Otherwise, Fed Chair Powell will also be testifying before the Senate Banking Committee on Tuesday, alongside Treasury Secretary Yellen, and on Monday, ECB President Lagarde will be appearing before the European Parliament’s Committee on Economic and Monetary Affairs as part of the regular Monetary Dialogue. There are lots of other Fed speakers this week and they can add nuances to the taper and dot plot debates. Finally on the data front, there’ll be further clues about the state of inflation across the key economies, as the Euro Area flash CPI estimate for September is coming out on Friday. Last month's reading showed that Euro Area inflation rose to +3.0% in August, which was its highest level in nearly a decade. Otherwise, there’s also the manufacturing PMIs from around the world on Friday given it’s the start of the month, along with the ISM reading from the US, and Tuesday will see the release of the Conference Board’s consumer confidence reading for the US as well. For the rest of the week ahead see the day-by-day calendar of events at the end. Back to last week now and the highlight was the big rise in global yields which quickly overshadowed the ongoing Evergrande story. Bonds more than reversed an early week rally as yields rose for a fifth consecutive week. US 10yr Treasury yields ended the week up +8.9bps to finish at 1.451% - its highest level since the start of July and +15bps off the Asian morning lows on Thursday. The move saw the 2y10y yield curve steepen +4.5bps, with the spread reaching its widest point since July as well. However, at the longer end of the curve the 5y30y spread ended the week largely unchanged after a volatile week. It was much flatter shortly following the FOMC and steeper following the BoE. Bond yields in Europe moved higher as well with the central bank moves again being the major impetus especially in the UK. 10yr gilt yields rose +7.9bps to +0.93% and the short end moved even more with the 2yr yield rising +9.4bps to 0.38% as the BoE’s inflation forecast and rhetoric caused investors to pull forward rate hike expectations. Yields on 10yr bunds rose +5.2bps, whilst those on the OATs (+6.3bps) and BTPs (+5.7bps) increased substantially as well, but not to the same extent as their US and UK counterparts. While sovereign debt sold off, global equity markets recovered following two consecutive weeks of declines. Although markets entered the week on the back foot following the Evergrande headlines from last weekend, risk sentiment improved at the end of the week, especially toward cyclical industries. The S&P 500 gained +0.51% last week (+0.15% Friday), nearly recouping the prior week’s loss. The equity move was primarily led by cyclicals as higher bond yields helped US banks (+3.43%) outperform, while higher commodity prices saw the energy (+4.46%) sector gain sharply. Those higher bond yields led to a slight rerating of growth stocks as the tech megacap NYFANG index fell back -0.46% on the week and the NASDAQ underperformed, finishing just better than unchanged (+0.02). Nonetheless, with four trading days left in September the S&P 500 is on track for its third losing month this year, following January and June. European equities rose moderately last week, as the STOXX 600 ended the week +0.31% higher despite Friday’s -0.90% loss. Bourses across the continent outperformed led by particularly strong performances by the IBEX (+1.28%) and CAC 40 (+1.04%). There was limited data from Friday. The Ifo's business climate indicator in Germany fell slightly from the previous month to 98.8 (99.0 expected) from 99.4 on the back a lower current assessment even though business expectations was higher than expected. In Italy, consumer confidence rose to 119.6 (115.8 expected), up just over 3pts from August and at its highest level on record (since 1995). Tyler Durden Mon, 09/27/2021 - 08:09.....»»

Category: personnelSource: nytSep 27th, 2021