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China lithium battery makers to raise contract quotes in 2022

China's first-tier lithium battery makers will raise contract quotes by 20% next year, according to industry sources......»»

Category: topSource: digitimesNov 25th, 2021

Green Energy: A Bubble In Unrealistic Expectations

Green Energy: A Bubble In Unrealistic Expectations Authored by David Hay via Everegreen Gavekal blog, “You see what is happening in Europe. There is hysteria and some confusion in the markets. Why?…Some people are speculating on climate change issues, some people are underestimating some things, some are starting to cut back on investments in the extractive industries. There needs to be a smooth transition.” - Vladimir Putin (someone with whom this author rarely agrees) “By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of its citizens.” – John Maynard Keynes (an interesting observation for all the modern day Keynesians to consider given their support of current inflationary US policies, including energy-related) Introduction This week’s EVA provides another sneak preview into David Hay’s book-in-process, “Bubble 3.0” discussing what he thinks is the crucial topic of “greenflation.”  This is a term he coined referring to the rising price for metals and minerals that are essential for solar and wind power, electric cars, and other renewable technologies. It also centers on the reality that as global policymakers have turned against the fossil fuel industry, energy producers are for the first time in history not responding to dramatically higher prices by increasing production.  Consequently, there is a difficult tradeoff that arises as the world pushes harder to combat climate change, driving up energy costs to painful levels, especially for lower income individuals.  What we are currently seeing in Europe is a vivid example of this dilemma.  While it may be the case that governments welcome higher oil and natural gas prices to discourage their use, energy consumers are likely to have a much different reaction. Summary BlackRock’s CEO recently admitted that, despite what many are opining, the green energy transition is nearly certain to be inflationary. Even though it’s early in the year, energy prices are already experiencing unprecedented spikes in Europe and Asia, but most Americans are unaware of the severity. To that point, many British residents being faced with the fact that they may need to ration heat and could be faced with the chilling reality that lives could be lost if this winter is as cold as forecasters are predicting. Because of the huge increase in energy prices, inflation in the eurozone recently hit a 13-year high, heavily driven by natural gas prices on the Continent that are the equivalent of $200 oil. It used to be that the cure for extreme prices was extreme prices, but these days I’m not so sure.  Oil and gas producers are very wary of making long-term investments to develop new resources given the hostility to their industry and shareholder pressure to minimize outlays. I expect global supply to peak sometime next year and a major supply deficit looks inevitable as global demand returns to normal. In Norway, almost 2/3 of all new vehicle sales are of the electric variety (EVs) – a huge increase in just over a decade. Meanwhile, in the US, it’s only about 2%. Still, given Norway’s penchant for the plug-in auto, the demand for oil has not declined. China, despite being the largest market by far for electric vehicles, is still projected to consume an enormous and rising amount of oil in the future. About 70% of China’s electricity is generated by coal, which has major environmental ramifications in regards to electric vehicles. Because of enormous energy demand in China this year, coal prices have experienced a massive boom. Its usage was up 15% in the first half of this year, and the Chinese government has instructed power providers to obtain all baseload energy sources, regardless of cost.  The massive migration to electric vehicles – and the fact that they use six times the amount of critical minerals as their gasoline-powered counterparts –means demand for these precious resources is expected to skyrocket. This extreme need for rare minerals, combined with rapid demand growth, is a recipe for a major spike in prices. Massively expanding the US electrical grid has several daunting challenges– chief among them the fact that the American public is extremely reluctant to have new transmission lines installed in their area. The state of California continues to blaze the trail for green energy in terms of both scope and speed. How the rest of the country responds to their aggressive take on renewables remains to be seen. It appears we are entering a very odd reality: governments are expending resources they do not have on weakly concentrated energy. And the result may be very detrimental for today’s modern economy. If the trend in energy continues, what looks nearly certain to be the Third Energy crisis of the last half-century may linger for years.  Green energy: A bubble in unrealistic expectations? As I have written in past EVAs, it amazes me how little of the intense inflation debate in 2021 centered on the inflationary implications of the Green Energy transition.  Perhaps it is because there is a built-in assumption that using more renewables should lower energy costs since the sun and the wind provide “free power”.  However, we will soon see that’s not the case, at least not anytime soon; in fact, it’s my contention that it will likely be the opposite for years to come and I’ve got some powerful company.  Larry Fink, CEO of BlackRock, a very pro-ESG* organization, is one of the few members of Wall Street’s elite who admitted this in the summer of 2021.  The story, however, received minimal press coverage and was quickly forgotten (though, obviously, not be me!).  This EVA will outline myriad reasons why I think Mr. Fink was telling it like it is…despite the political heat that could bring down upon him.  First, though, I will avoid any discussion of whether humanity is the leading cause of global warming.  For purposes of this analysis, let’s make the high-odds assumption that for now a high-speed green energy transition will continue to occur.  (For those who would like a well-researched and clearly articulated overview of the climate debate, I highly recommend the book “Unsettled”; it’s by a former top energy expert and scientist from the Obama administration, Dr. Steven Koonin.) The reason I italicized “for now” is that in my view it’s extremely probable that voters in many Western countries are going to become highly retaliatory toward energy policies that are already creating extreme hardship.  Even though it’s only early autumn as I write these words, energy prices are experiencing unprecedented increases in Europe.  Because it’s “over there”, most Americans are only vaguely aware of the severity of the situation.  But the facts are shocking…  Presently, natural gas is going for $29 per million British Thermal Units (BTUs) in Europe, a quadruple compared to the same time in 2020, versus “just” $5 in the US, which is a mere doubling.  As a consequence, wholesale energy cost in Great Britain rose an unheard of 60% even before summer ended.  Reportedly, nine UK energy companies are on the brink of failure at this time due to their inability to fully pass on the enormous cost increases.  As a result, the British government is reportedly on the verge of nationalizing some of these entities—supposedly, temporarily—to prevent them from collapsing.  (CNBC reported on Wednesday that UK natural gas prices are now up 800% this year; in the US, nat gas rose 20% on Tuesday alone, before giving back a bit more than half of that the next day.) Serious food shortages are expected after exorbitant natural gas costs forced most of England’s commercial production of CO2 to shut down.  (CO2 is used both for stunning animals prior to slaughter and also in food packaging.)  Additionally, ballistic natural gas prices have forced the closure of two big US fertilizer plants due to a potential shortfall of ammonium nitrate of which “nat gas” is a key feedstock.  *ESG stands for Environmental, Social, Governance; in 2021, Blackrock’s assets under management approximated $9 ½ trillion, about one-third of the total US federal debt. With the winter of 2021 approaching, British households are being told they may need to ration heat.  There are even growing concerns about the widespread loss of life if this winter turns out to be a cold one, as 2020 was in Europe.  Weather forecasters are indicating that’s a distinct possibility.   In Spain, consumers are paying 40% more for electricity compared to the prior year.  The Spanish government has begun resorting to price controls to soften the impact of these rapidly escalating costs. (The history of price controls is that they often exacerbate shortages.) Naturally, spiking power prices hit the poorest hardest, which is typical of inflation whether it is of the energy variety or of generalized price increases.  Due to these massive energy price increases, eurozone inflation recently hit a 13-year high, heavily driven by natural gas prices that are the equivalent of $200 per barrel oil.  This is consistent with what I warned about in several EVAs earlier this year and I think there is much more of this looming in the years to come. In Asia, which also had a brutally cold winter in 2020 – 2021, there are severe energy shortages being disclosed, as well.  China has instructed its power providers to secure all the coal they can in preparation for a repeat of frigid conditions and acute deficits even before winter arrives.  The government has also instructed its energy distributors to acquire all the liquified natural gas (LNG) they can, regardless of cost.  LNG recently hit $35 per million British Thermal Units in Asia, up sevenfold in the past year.  China is also rationing power to its heavy industries, further exacerbating the worldwide shortages of almost everything, with notable inflationary implications. In India, where burning coal provides about 70% of electricity generation (as it does in China), utilities are being urged to import coal even though that country has the world’s fourth largest coal reserves.  Several Indian power plants are close to exhausting their coal supplies as power usage rips higher. Normally, I’d say that the cure for such extreme prices, was extreme prices—to slightly paraphrase the old axiom.  But these days, I’m not so sure; in fact, I’m downright dubious.  After all, the enormously influential International Energy Agency has recommended no new fossil fuel development after 2021—“no new”, as in zero.  It’s because of pressure such as this that, even though US natural gas prices have done a Virgin Galactic to $5 this year, the natural gas drilling rig count has stayed flat.  The last time prices were this high there were three times as many working rigs.  It is the same story with oil production.  Most Americans don’t seem to realize it but the US has provided 90% of the planet’s petroleum output growth over the past decade.  In other words, without America’s extraordinary shale oil production boom—which raised total oil output from around 5 million barrels per day in 2008 to 13 million barrels per day in 2019—the world long ago would have had an acute shortage.  (Excluding the Covid-wracked year of 2020, oil demand grows every year—strictly as a function of the developing world, including China, by the way.) Unquestionably, US oil companies could substantially increase output, particularly in the Permian Basin, arguably (but not much) the most prolific oil-producing region in the world.  However, with the Fed being pressured by Congress to punish banks that lend to any fossil fuel operator, and the overall extreme hostility toward domestic energy producers, why would they?  There is also tremendous pressure from Wall Street on these companies to be ESG compliant.  This means reducing their carbon footprint.  That’s tough to do while expanding their volume of oil and gas.  Further, investors, whether on Wall Street or on London’s equivalent, Lombard Street, or in pretty much any Western financial center, are against US energy companies increasing production.  They would much rather see them buy back stock and pay out lush dividends.  The companies are embracing that message.  One leading oil and gas company CEO publicly mused to the effect that buying back his own shares at the prevailing extremely depressed valuations was a much better use of capital than drilling for oil—even at $75 a barrel. As reported by Morgan Stanley, in the summer of 2021, an US institutional broker conceded that of his 400 clients, only one would consider investing in an energy company!  Consequently, the fact that the industry is so detested means that its shares are stunningly undervalued.  How stunningly?  A myriad of US oil and gas producers are trading at free cash flow* yields of 10% to 15% and, in some cases, as high as 25%. In Europe, where the same pressures apply, one of its biggest energy companies is generating a 16% free cash flow yield.  Moreover, that is based up an estimate of $60 per barrel oil, not the prevailing price of $80 on the Continent. *Free cash flow is the excess of gross cash flow over and above the capital spending needed to sustain a business.  Many market professionals consider it more meaningful than earnings.  Therefore, due to the intense antipathy toward Western energy producers they aren’t very inclined to explore for new resources.  Another much overlooked fact about the ultra-critical US shale industry that, as noted, has been nearly the only source of worldwide output growth for the past 13 years, is its rapid decline nature.  Most oil wells see their production taper off at just 4% or 5% per year.  But with shale, that decline rate is 80% after only two years.  (Because of the collapse in exploration activities in 2020 due to Covid, there are far fewer new wells coming on-line; thus, the production base is made up of older wells with slower decline rates but it is still a much steeper cliff than with traditional wells.)  As a result, the US, the world’s most important swing producer, has to come up with about 1.5 million barrels per day (bpd) of new output just to stay even.  (This was formerly about a 3 million bpd number due to both the factor mentioned above and the 2 million bpd drop in total US oil production, from 13 million bpd to around 11 million bpd since 2019).  Please recall that total US oil production in 2008 was only around 5 million bpd.  Thus, 1.5 million barrels per day is a lot of oil and requires considerable drilling and exploration activities.  Again, this is merely to stay steady-state, much less grow.  The foregoing is why I wrote on multiple occasions in EVAs during 2020, when the futures price for oil went below zero*, that crude would have a spectacular price recovery later that year and, especially, in 2021.  In my view, to go out on my familiar creaky limb, you ain’t seen nothin’ yet!  With supply extremely challenged for the above reasons and demand marching back, I believe 2022 could see $100 crude, possibly even higher.  *Physical oil, or real vs paper traded, bottomed in the upper teens when the futures contract for delivery in April, 2020, went deeply negative.  Mike Rothman of Cornerstone Analytics has one of the best oil price forecasting records on Wall Street.  Like me, he was vehemently bullish on oil after the Covid crash in the spring of 2020 (admittedly, his well-reasoned optimism was a key factor in my up-beat outlook).  Here’s what he wrote late this summer:  “Our forecast for ’22 looks to see global oil production capacity exhausted late in the year and our balance suggests OPEC (and OPEC + participants) will face pressures to completely remove any quotas.”  My expectation is that global supply will likely max out sometime next year, barring a powerful negative growth shock (like a Covid variant even more vaccine resistant than Delta).  A significant supply deficit looks inevitable as global demand recovers and exceeds its pre-Covid level.  This is a view also shared by Goldman Sachs and Raymond James, among others; hence, my forecast of triple-digit prices next year.  Raymond James pointed out that in June the oil market was undersupplied by 2.5 mill bpd.  Meanwhile, global petroleum demand was rapidly rising with expectations of nearly pre-Covid consumption by year-end.  Mike Rothman ran this chart in a webcast on 9/10/2021 revealing how far below the seven-year average oil inventories had fallen.  This supply deficit is very likely to become more acute as the calendar flips to 2022. In fact, despite oil prices pushing toward $80, total US crude output now projected to actually decline this year.  This is an unprecedented development.  However, as the very pro-renewables Financial Times (the UK’s equivalent of the Wall Street Journal) explained in an August 11th, 2021, article:  “Energy companies are in a bind.  The old solution would be to invest more in raising gas production.  But with most developed countries adopting plans to be ‘net zero’ on carbon emissions by 2050 or earlier, the appetite for throwing billions at long-term gas projects is diminished.” The author, David Sheppard, went on to opine: “In the oil industry there are those who think a period of plus $100-a-barrel oil is on the horizon, as companies scale back investments in future supplies, while demand is expected to keep rising for most of this decade at a minimum.”  (Emphasis mine)  To which I say, precisely!  Thus, if he’s right about rising demand, as I believe he is, there is quite a collision looming between that reality and the high probability of long-term constrained supplies.  One of the most relevant and fascinating Wall Street research reports I read as I was researching the topic of what I have been referring to as “Greenflation” is from Morgan Stanley.  Its title asked the provocative question:  “With 64% of New Cars Now Electric, Why is Norway Still Using so Much Oil?”  While almost two-thirds of Norway’s new vehicle sales are EVs, a remarkable market share gain in just over a decade, the number in the US is an ultra-modest 2%.   Yet, per the Morgan Stanley piece, despite this extraordinary push into EVs, oil consumption in Norway has been stubbornly stable.  Coincidentally, that’s been the experience of the overall developed world over the past 10 years, as well; petroleum consumption has largely flatlined.  Where demand hasn’t gone horizontal is in the developing world which includes China.  As you can see from the following Cornerstone Analytics chart, China’s oil demand has vaulted by about 6 million barrels per day (bpd) since 2010 while its domestic crude output has, if anything, slightly contracted. Another coincidence is that this 6 million bpd surge in China’s appetite for oil, almost exactly matched the increase in US oil production.  Once again, think where oil prices would be today without America’s shale oil boom. This is unlikely to change over the next decade.  By 2031, there are an estimated one billion Asian consumers moving up into the middle class.  History is clear that more income means more energy consumption.  Unquestionably, renewables will provide much of that power but oil and natural gas are just as unquestionably going to play a critical role.  Underscoring that point, despite the exponential growth of renewables over the last 10 years, every fossil fuel category has seen increased usage.  Thus, even if China gets up to Norway’s 64% EV market share of new car sales over the next decade, its oil usage is likely to continue to swell.  Please be aware that China has become the world’s largest market for EVs—by far.  Despite that, the above chart vividly displays an immense increase in oil demand.  Here’s a similar factoid that I ran in our December 4th EVA, “Totally Toxic”, in which I made a strong bullish case for energy stocks (the main energy ETF is up 35% from then, by the way):  “(There was) a study by the UN and the US government based on the Model for the Assessment of Greenhouse Gasses Induced Climate Change (MAGICC).  The model predicted that ‘the complete elimination of all fossil fuels in the US immediately would only restrict any increase in world temperature by less than one tenth of one degree Celsius by 2050, and by less than one fifth of one degree Celsius by 2100.’  Say again?  If the world’s biggest carbon emitter on a per capita basis causes minimal improvement by going cold turkey on fossil fuels, are we making the right moves by allocating tens of trillions of dollars that we don’t have toward the currently in-vogue green energy solutions?” China's voracious power appetite increase has been true with all of its energy sources.  On the environmentally-friendly front, that includes renewables; on the environmentally-unfriendly side, it also includes coal.  In 2020, China added three times more coal-based power generation than all other countries combined.  This was the equivalent of an additional coal planet each week.  Globally, there was a reduction last year of 17 gigawatts in coal-fired power output; in China, the increase was 29.8 gigawatts, far more than offsetting the rest of the world’s progress in reducing the dirtiest energy source.  (A gigawatt can power a city with a population of roughly 700,000.) Overall, 70% of China’s electricity is coal-generated. This has significant environmental implications as far as electric vehicles (EVs) are concerned.  Because EVs are charged off a grid that is primarily coal- powered, carbon emissions actually rise as the number of such vehicles proliferate. As you can see in the following charts from Reuters’ energy expert John Kemp, Asia’s coal-fired generation has risen drastically in the last 20 years, even as it has receded in the rest of the world.  (The flattening recently is almost certainly due to Covid, with a sharp upward resumption nearly a given.) The worst part is that burning coal not only emits CO2—which is not a pollutant and is essential for life—it also releases vast quantities of nitrous oxide (N20), especially on the scale of coal usage seen in Asia today. N20 is unquestionably a pollutant and a greenhouse gas that is hundreds of times more potent than CO2.  (An interesting footnote is that over the last 550 million years, there have been very few times when the CO2 level has been as low, or lower, than it is today.)  Some scientists believe that one reason for the shrinkage of Arctic sea ice in recent decades is due to the prevailing winds blowing black carbon soot over from Asia.  This is a separate issue from N20 which is a colorless gas.  As the black soot covers the snow and ice fields in Northern Canada, they become more absorbent of the sun’s radiation, thus causing increased melting.  (Source:  “Weathering Climate Change” by Hugh Ross) Due to exploding energy needs in China this year, coal prices have experienced an unprecedented surge.  Despite this stunning rise, Chinese authorities have instructed its power providers to obtain coal, and other baseload energy sources, such as liquified natural gas (LNG), regardless of cost.  Notwithstanding how pricey coal has become, its usage in China was up 15% in the first half of this year vs the first half of 2019 (which was obviously not Covid impacted). Despite the polluting impact of heavy coal utilization, China is unlikely to turn away from it due to its high energy density (unlike renewables), its low cost (usually) and its abundance within its own borders (though its demand is so great that it still needs to import vast amounts).  Regarding oil, as we saw in last week’s final image, it is currently importing roughly 11 million barrels per day (bpd) to satisfy its 15 million bpd consumption (about 15% of total global demand).  In other words, crude imports amount to almost three-quarter of its needs.  At $80 oil, this totals $880 million per day or approximately $320 billion per year.  Imagine what China’s trade surplus would look like without its oil import bill! Ironically, given the current hostility between the world’s superpowers, China has an affinity for US oil because of its light and easy-to-refine nature.  China’s refineries tend to be low-grade and unable to efficiently process heavier grades of crude, unlike the US refining complex which is highly sophisticated and prefers heavy oil such as from Canada and Venezuela—back when the latter actually produced oil. Thus, China favors EVs because they can be de facto coal-powered, lessening its dangerous reliance on imported oil.  It also likes them due to the fact it controls 80% of the lithium ion battery supply and 60% of the planet’s rare earth minerals, both of which are essential to power EVs.     However, even for China, mining enough lithium, cobalt, nickel, copper, aluminum and the other essential minerals/metals to meet the ambitious goals of largely electrifying new vehicle volumes is going to be extremely daunting.  This is in addition to mass construction of wind farms and enormously expanded solar panel manufacturing. As one of the planet’s leading energy authorities Daniel Yergin writes: “With the move to electric cars, demand for critical minerals will skyrocket (lithium up 4300%, cobalt and nickel up 2500%), with an electric vehicle using 6 times more minerals than a conventional car and a wind turbine using 9 times more minerals than a gas-fueled power plant.  The resources needed for the ‘mineral-intensive energy system’ of the future are also highly concentrated in relatively few countries. Whereas the top 3 oil producers in the world are responsible for about 30 percent of total liquids production, the top 3 lithium producers control more than 80% of supply. China controls 60% of rare earths output needed for wind towers; the Democratic Republic of the Congo, 70% of the cobalt required for EV batteries.” As many have noted, the environmental impact of immensely ramping up the mining of these materials is undoubtedly going to be severe.  Michael Shellenberger, a life-long environmental activist, has been particularly vociferous in his condemnation of the dominant view that only renewables can solve the global energy needs.  He’s especially critical of how his fellow environmentalists resorted to repetitive deception, in his view, to undercut nuclear power in past decades.  By leaving nuke energy out of the solution set, he foresees a disastrous impact on the planet due to the massive scale (he’d opine, impossibly massive) of resource mining that needs to occur.  (His book, “Apocalypse Never”, is also one I highly recommend; like Dr. Koonin, he hails from the left end of the political spectrum.) Putting aside the environmental ravages of developing rare earth minerals, when you have such high and rapidly rising demand colliding with limited supply, prices are likely to go vertical.  This will be another inflationary “forcing”, a favorite term of climate scientists, caused by the Great Green Energy Transition. Moreover, EVs are very semiconductor intensive.  With semis already in seriously short supply, this is going to make a gnarly situation even gnarlier.  It’s logical to expect that there will be recurring shortages of chips over the next decade for this reason alone (not to mention the acute need for semis as the “internet of things” moves into primetime).  In several of the newsletters I’ve written in recent years, I’ve pointed out the present vulnerability of the US electric grid.  Yet, it will be essential not just to keep it from breaking down under its current load; it must be drastically enhanced, a Herculean task. For one thing, it is excruciatingly hard to install new power lines. As J.P. Morgan’s Michael Cembalest has written: “Grid expansion can be a hornet’s nest of cost, complexity and NIMBYism*, particularly in the US.”  The grid’s frailty, even under today’s demands (i.e., much less than what lies ahead as millions of EVs plug into it) is particularly obvious in California.  However, severe winter weather in 2021 exposed the grid weakness even in energy-rich Texas, which also has a generally welcoming attitude toward infrastructure upgrading and expansion. Yet it’s the Golden State, home to 40 million Americans and the fifth largest economy in the world, if it was its own country (which it occasionally acts like it wants to be), that is leading the charge to EVs and seeking to eliminate internal combustion engines (ICEs) as quickly as possible.  Even now, blackouts and brownouts are becoming increasingly common.  Seemingly convinced it must be a role model for the planet, it’s trying desperately to reduce its emissions, which are less than 1%, of the global total, at the expense of rendering its energy system more similar to a developing country.  In addition to very high electricity costs per kilowatt hour (its mild climate helps offset those), it also has gasoline prices that are 77% above the national average.  *NIMBY stands for Not In My Back Yard. While California has been a magnet for millions seeking a better life for 150 years, the cost of living is turning the tide the other way.  Unreliable and increasingly expensive energy is likely to intensify that trend.  Combined with home prices that are more than double the US median–$800,000!–California is no longer the land of milk and honey, unless, to slightly paraphrase Woody Guthrie about LA, even back in the 1940s, you’ve got a whole lot of scratch.  More and more people, seem to be scratching California off their list of livable venues.  Voters in the reliably blue state of California may become extremely restive, particularly as they look to Asia and see new coal plants being built at a fever pitch.  The data will become clear that as America keeps decarbonizing–as it has done for 30 years mostly due to the displacement of coal by gas in the US electrical system—Asia will continue to go the other way.  (By the way, electricity represents the largest share of CO2 emission at roughly 25%.)  California has always seemed to lead social trends in this country, as it is doing again with its green energy transition.  The objective is noble though, extremely ambitious, especially the timeline.  As it brings its power paradigm to the rest of America, especially its frail grid, it will be interesting to see how voters react in other states as the cost of power leaps higher and its dependability heads lower.  It’s reasonable to speculate we may be on the verge of witnessing the Californication of the US energy system.  Lest you think I’m being hyperbolic, please be aware the IEA (International Energy Agency) has estimated it will cost the planet $5 trillion per year to achieve Net Zero emissions.  This is compared to global GDP of roughly $85 trillion. According to BloombergNEF, the price tag over 30 years, could be as high as $173 trillion.  Frankly, based on the history of gigantic cost overruns on most government-sponsored major infrastructure projects, I’m inclined to take the over—way over—on these estimates. Moreover, energy consulting firm T2 and Associates, has guesstimated electrifying just the US to the extent necessary to eliminate the direct consumption of fuel (i.e., gasoline, natural gas, coal, etc.) would cost between $18 trillion and $29 trillion.  Again, taking into account how these ambitious efforts have played out in the past, I suspect $29 trillion is light.  Regardless, even $18 trillion is a stunner, despite the reality we have all gotten numb to numbers with trillions attached to them.  For perspective, the total, already terrifying, level of US federal debt is $28 trillion. Regardless, as noted last week, the probabilities of the Great Green Energy Transition happening are extremely high.  Relatedly, I believe the likelihood of the Great Greenflation is right up there with them.  As Gavekal’s Didier Darcet wrote in mid-August:  ““Nowadays, and this is a great first in history, governments will commit considerable financial resources they do not have in the extraction of very weakly concentrated energy.” ( i.e., less efficient)  “The bet is very risky, and if it fails, what next?  The modern economy would not withstand expensive energy, or worse, lack of energy.”  While I agree this an historical first, it’s definitely not great (with apologies for all the “greats”).  This is particularly not great for keeping inflation subdued, as well as for attempting to break out of the growth quagmire the Western world has been in for the last two decades.  What we are seeing in Europe right now is an extremely cautionary case study in just how disastrous the war on fossil fuels can be (shortly we will see who or what has been a behind-the-scenes participant in this conflict). Essentially, I believe, as I’ve written in past EVAs, we are entering the third energy crisis of the last 50 years.  If I’m right, it will be characterized by recurring bouts of triple-digit oil prices in the years to come.  Along with Richard Nixon taking the US off the gold standard in 1971, the high inflation of the 1970s was caused by the first two energy crises (the 1973 Arab Oil Embargo and the 1979 Iranian Revolution).  If I’m correct about this being the third, it’s coming at a most inopportune time with the US in hyper-MMT* mode. Frankly, I believe many in the corridors of power would like to see oil trade into the $100s, and natural gas into the teens, as it will help catalyze the shift to renewable energy.  But consumers are likely to have a much different reaction—potentially, a violently different reaction, as I noted last week.  The experience of the Yellow Vest protests in France (referring to the color of the vest protestors wore), are instructive in this regard.  France is a generally left-leaning country.  Despite that, a proposed fuel surtax in November 2018 to fund a renewable energy transition triggered such widespread civil unrest that French president Emmanuel Macron rescinded it the following month. *MMT stands for Modern Monetary Theory.  It holds that a government, like the US, which issues debt in its own currency can spend without concern about budgetary constraints.  If there are not enough buyers of its bonds at acceptable interest rates, that nation’s central bank (the Fed, in our case) simply acquires them with money it creates from its digital printing press.  This is what is happening today in the US.  Many economists consider this highly inflationary. The sharp and politically uncomfortable rise in US gas pump prices this summer caused the Biden administration to plead with OPEC to lift its volume quotas.  The ironic implication of that exhortation was glaringly obvious, as was the inefficiency and pollution consequences of shipping oil thousands of miles across the Atlantic.  (Oil tankers are a significant source of emissions.)  This is as opposed to utilizing domestic oil output, as well as crude from Canada (which is actually generally better suited to the US refining complex).  Beyond the pollution aspect, imported oil obviously worsens America’s massive trade deficit (which would be far more massive without the six million barrels per day of domestic oil volumes that the shale revolution has provided) and costs our nation high-paying jobs. Further, one of my other big fears is that the West is engaging in unilateral energy disarmament.  Russia and China are likely the major beneficiaries of this dangerous scenario.  Per my earlier comment about a stealth combatant in the war on fossil fuels, it may surprise you that a past NATO Secretary General* has accused Russian intelligence of avidly supporting the anti-fracking movements in Western Europe.  Russian TV has railed against fracking for years, even comparing it to pedophilia (certainly, a most bizarre analogy!).  The success of the anti-fracking movement on the Continent has essentially prevented a European version of America’s shale miracles (the UK has the potential to be a major shale gas producer).  Consequently, the European Union’s domestic natural gas production has been in a rapid decline phase for years.  Banning fracking has, of course, made Europe heavily reliant on Russian gas shipments with more than 40% of its supplies coming from Russia. This is in graphic contrast to the shale output boom in the US that has not only made us natural gas self-sufficient but also an export powerhouse of liquified natural gas (LNG).  In 2011, the Nord Stream system of pipelines running under the Baltic Sea from northern Russia began delivering gas west from northern Russia to the German coastal city of Greifswald.  For years, the Russians sought to build a parallel system with the inventive name of Nord Stream 2.  The US government opposed its approval on security grounds but the Biden administration has dropped its opposition.  It now appears Nord Stream 2 will happen, leaving Europe even more exposed to Russian coercion.  Is it possible the Russian government and the Chinese Communist Party have been secretly and aggressively supporting the anti-fossil fuel movements in America?  In my mind, it seems not only possible but probable.  In fact, I believe it is naïve not to come that conclusion.  After all, wouldn’t it be in both of their geopolitical interests to see the US once again caught in a cycle of debilitating inflation, ensnared by the twin traps of MMT and the third energy crisis? *Per former NATO Secretary General, Anders Fogh Rasumssen:  Russia has “engaged actively with so-called non-governmental organizations—environmental organizations working against shale gas—to maintain Europe’s dependence on imported Russian gas”. Along these lines, I was shocked to listen to a recent podcast by the New Yorker magazine on the topic of “intelligent sabotage”.  This segment was an interview between the magazine’s David Remnick and a Swedish professor, Adreas Malm.  Mr. Malm is the author of a new book with the literally explosive title “How To Blow Up A Pipeline”.   Just as it sounds, he advocates detonating pipelines to inhibit fossil fuel distribution.  Mr. Remnick was clearly sympathetic to his guest but he did ask him about the impact on the poor of driving energy prices up drastically which would be the obvious ramification if his sabotage recommendations were widely followed.  Mr. Malm’s reaction was a verbal shrug of the shoulders and words to the effect that this was the price to pay to save the planet. Frankly, I am appalled that the venerable New Yorker would provide a platform for such a radical and unlawful suggestion.  In an era when people are de-platformed for often innocuous comments, it’s incredible to me this was posted and has not been pulled down.  In my mind, this reflects just how tolerant the media is of attacks on the fossil fuel industry, regardless of the deleterious impact on consumers and the global economy. Surely, there is a far better way of coping with the harmful aspects of fossil fuel-based energy than this scorched earth (literally, in the case of Mr. Malm) approach, which includes efforts to block new pipelines, shut existing ones, and severely restrict US energy production.  In America’s case, the result will be forcing us to unnecessarily and increasingly rely on overseas imports.  (For example, per the Wall Street Journal, drilling permits on federal land have crashed to 171 in August from 671 in April.  Further, the contentious $3.5 trillion “infrastructure” plan would raise royalties and fees high enough on US energy producers that it would render them globally uncompetitive.) Such actions would only aggravate what is already a severe energy shock, one that may be worse than the 1970s twin energy crises.  America has it easy compared to Europe, though, given current US policy trends, we might be in their same heavily listing energy boat soon. Solutions include fast-tracking small modular nuclear plants; encouraging the further switch from burning coal to natural gas (a trend that is, unfortunately, going the other way now, as noted above); utilizing and enhancing carbon and methane capture at the point of emission (including improving tail pipe effluent-reduction technology); enhancing pipeline integrity to inhibit methane leaks; among many other mitigation techniques that recognize the reality the global economy will be reliant on fossil fuels for many years, if not decades, to come.  If the climate change movement fails to recognize the essential nature of fossil fuels, it will almost certainly trigger a backlash that will undermine the positive change it is trying to bring about.  This is similar to what it did via its relentless assault on nuclear power which produced a frenzy of coal plant construction in the 1980s and 1990s.  On this point, it’s interesting to see how quickly Europe is re-embracing coal power to alleviate the energy poverty and rationing occurring over there right now - even before winter sets in.  When the choice is between supporting climate change initiatives on one hand and being able to heat your home and provide for your family on the other, is there really any doubt about which option the majority of voters will select? Tyler Durden Tue, 10/26/2021 - 19:30.....»»

Category: worldSource: nytOct 26th, 2021

Futures Surge After Powell-Driven Rout Proves To Be "Transitory"

Futures Surge After Powell-Driven Rout Proves To Be "Transitory" Heading into yesterday's painful close to one of the ugliest months since March 2020, which saw a huge forced liquidation rebalance with more than $8 billion in Market on Close orders, we said that while we are seeing "forced selling dump into the close today" this would be followed by "forced Dec 1 buying frontrunning after the close." Forced selling dump into the close today. Forced Dec 1 buying frontrunning after the close — zerohedge (@zerohedge) November 30, 2021 And just as expected, despite yesterday's dramatic hawkish pivot by Powell, who said it was time to retire the word transitory in describing the inflation outlook (the same word the Fed used hundreds of times earlier in 2021 sparking relentless mockery from this website for being clueless as usual) while also saying the U.S. central bank would consider bringing forward plans for tapering its bond buying program at its next meeting in two weeks, the frontrunning of new monthly inflows is in full force with S&P futures rising over 1.2%, Nasdaq futures up 1.3%, and Dow futures up 0.9%, recovering almost all of Tuesday’s decline. The seemingly 'hawkish' comments served as a double whammy for markets, which were already nervous about the spread of the Omicron coronavirus variant and its potential to hinder a global economic recovery. "At this point, COVID does not appear to be the biggest long-term Street fear, although it could have the largest impact if the new (or next) variant turns out to be worse than expected," Howard Silverblatt, senior index analyst for S&P and Dow Jones indices, said in a note. "That honor goes to inflation, which continues to be fed by supply shortages, labor costs, worker shortages, as well as consumers, who have not pulled back." However, new month fund flows proved too powerful to sustain yesterday's month-end dump and with futures rising - and panic receding - safe havens were sold and the 10-year Treasury yield jumped almost 6bps, approaching 1.50%. The gap between yields on 5-year and 30-year Treasuries was around the narrowest since March last year. Crude oil and commodity-linked currencies rebounded. Gold remained just under $1,800 and bitcoin traded just over $57,000. There was more good news on the covid front with a WHO official saying some of the early indications are that most Omicron cases are mild with no severe cases. Separately Merck gained 3.8% in premarket trade after a panel of advisers to the U.S. Food and Drug Administration narrowly voted to recommend the agency authorize the drugmaker's antiviral pill to treat COVID-19. Travel and leisure stocks also rebounded, with cruiseliners Norwegian, Carnival, Royal Caribbean rising more than 2.5% each. Easing of covid fears also pushed airlines and travel stocks higher in premarket trading: Southwest +2.9%, Delta +2.5%, Spirit +2.3%, American +2.2%, United +1.9%, JetBlue +1.3%. Vaccine makers traded modestly lower in pre-market trading after soaring in recent days as Wall Street weighs the widening spread of the omicron variant. Merck & Co. bucked the trend after its Covid-19 pill narrowly gained a key recommendation from advisers to U.S. regulators. Moderna slips 2.1%, BioNTech dips 1.3% and Pfizer is down 0.2%. Elsewhere, Occidental Petroleum led gains among the energy stocks, up 3.2% as oil prices climbed over 4% ahead of OPEC's meeting. Shares of major Wall Street lenders also moved higher after steep falls on Tuesday. Here are some of the other biggest U.S. movers today: Salesforce (CRM US) drops 5.9% in premarket trading after results and guidance missed estimates, with analysts highlighting currency-related headwinds and plateauing growth at the MuleSoft integration software business. Hewlett Packard Enterprise (HPE US) falls 1.3% in premarket after the computer equipment maker’s quarterly results showed the impact of the global supply chain crunch. Analysts noted solid order trends. Merck (MRK US) shares rise 5.8% in premarket after the company’s Covid-19 pill narrowly wins backing from FDA advisers, which analysts say is a sign of progress despite lingering challenges. Chinese electric vehicle makers were higher in premarket, leading U.S. peers up, after Nio, Li and XPeng reported strong deliveries for November; Nio (NIO US) +4%, Li (LI US ) +6%, XPeng (XPEV US) +4.3%. Ardelyx (ARDX US) shares gain as much as 34% in premarket, extending the biotech’s bounce after announcing plans to launch its irritable bowel syndrome treatment Ibsrela in the second quarter. CTI BioPharma (CTIC US) shares sink 18% in premarket after the company said the FDA extended the review period for a new drug application for pacritinib. Allbirds (BIRD US) fell 7.5% postmarket after the low end of the shoe retailer’s 2021 revenue forecast missed the average analyst estimate. Zscaler (ZS US) posted “yet another impressive quarter,” according to BMO. Several analysts increased their price targets for the security software company. Shares rose 4.6% in postmarket. Ambarella (AMBA US) rose 14% in postmarket after forecasting revenue for the fourth quarter that beat the average analyst estimate. Emcore (EMKR US) fell 9% postmarket after the aerospace and communications supplier reported fiscal fourth-quarter Ebitda that missed the average analyst estimate. Box (BOX US) shares gained as much as 10% in postmarket trading after the cloud company raised its revenue forecast for the full year. Meanwhile, the omicron variant continues to spread around the globe, though symptoms so far appear to be relatively mild. The Biden administration plans to tighten rules on travel to the U.S., and Japan said it would bar foreign residents returning from 10 southern African nations. As Bloomberg notes, volatility is buffeting markets as investors scrutinize whether the pandemic recovery can weather diminishing monetary policy support and potential risks from the omicron virus variant. Global manufacturing activity stabilized last month, purchasing managers’ gauges showed Wednesday, and while central banks are scaling back ultra-loose settings, financial conditions remain favorable in key economies. “The reality is hotter inflation coupled with a strong economic backdrop could end the Fed’s bond buying program as early as the first quarter of next year,” Charlie Ripley, senior investment strategist at Allianz Investment Management, said in emailed comments. “With potential changes in policy on the horizon, market participants should expect additional market volatility in this uncharted territory.” Looking ahead, Powell is back on the Hill for day 2, and is due to testify before a House Financial Services Committee hybrid hearing at 10 a.m. ET. On the economic data front, November readings on U.S. private payrolls and manufacturing activity will be closely watched later in the day to gauge the health of the American economy. Investors are also awaiting the Fed's latest "Beige Book" due at 2:00 p.m. ET. On the economic data front, November readings on U.S. private payrolls and manufacturing activity will be closely watched later in the day to gauge the health of the American economy. European equities soared more than 1.2%, with travel stocks and carmakers leading broad-based gain in the Stoxx Europe 600 index, all but wiping out Tuesday’s decline that capped only the third monthly loss for the benchmark this year.  Travel, miners and autos are the strongest sectors. Here are some of the biggest European movers today: Proximus shares rise as much as 6.5% after the company said it’s started preliminary talks regarding a potential deal involving TeleSign, with a SPAC merger among options under consideration. Dr. Martens gains as much as 4.6% to the highest since Sept. 8 after being upgraded to overweight from equal- weight at Barclays, which says the stock’s de-rating is overdone. Husqvarna advances as much as 5.3% after the company upgraded financial targets ahead of its capital markets day, including raising the profit margin target to 13% from 10%. Wizz Air, Lufthansa and other travel shares were among the biggest gainers as the sector rebounded after Tuesday’s losses; at a conference Wizz Air’s CEO reiterated expansion plans. Wizz Air gains as much as 7.5%, Lufthansa as much as 6.8% Elis, Accor and other stocks in the French travel and hospitality sector also rise after the country’s government pledged to support an industry that’s starting to get hit by the latest Covid-19 wave. Pendragon climbs as much as 6.5% after the car dealer boosted its outlook after the company said a supply crunch in the new vehicle market wasn’t as bad as it had anticipated. UniCredit rises as much as 3.6%, outperforming the Stoxx 600 Banks Index, after Deutsche Bank added the stock to its “top picks” list alongside UBS, and Bank of Ireland, Erste, Lloyds and Societe Generale. Earlier in the session, Asian stocks also soared, snapping a three-day losing streak, led by energy and technology shares, as traders assessed the potential impact from the omicron coronavirus variant and U.S. Federal Reserve Chair Jerome Powell’s hawkish pivot. The MSCI Asia Pacific Index rose as much as 1.3% Wednesday. South Korea led regional gains after reporting strong export figures, which bolsters growth prospects despite record domestic Covid-19 cases. Hong Kong stocks also bounced back after falling Tuesday to their lowest level since September 2020. Asia’s stock benchmark rebounded from a one-year low, though sentiment remained clouded by lingering concerns on the omicron strain and Fed’s potentially faster tapering pace. Powell earlier hinted that the U.S. central bank will accelerate its asset purchases at its meeting later this month.  “A faster taper in the U.S. is still dependent on omicron not causing a big setback to the outlook in the next few weeks,” said Shane Oliver, head of investment strategy and chief economist at AMP Capital, adding that he expects the Fed’s policy rate “will still be low through next year, which should still enable good global growth which will benefit Asia.” Chinese equities edged up after the latest economic data showed manufacturing activity remained at relatively weak levels in November, missing economists’ expectations. Earlier, Chinese Vice Premier Liu He said he’s fully confident in the nation’s economic growth in 2022 Japanese stocks rose, overcoming early volatility as traders parsed hawkish comments from Federal Reserve Chair Jerome Powell. Electronics and auto makers were the biggest boosts to the Topix, which closed 0.4% higher after swinging between a gain of 0.9% and loss of 0.7% in the morning session. Daikin and Fanuc were the largest contributors to a 0.4% rise in the Nikkei 225, which similarly fluctuated. The Topix had dropped 4.8% over the previous three sessions due to concerns over the omicron virus variant. The benchmark fell 3.6% in November, its worst month since July 2020. “The market’s tolerance to risk is quite low at the moment, with people responding in a big way to the smallest bit of negative news,” said Tomo Kinoshita, a global market strategist at Invesco Asset Management in Tokyo. “But the decline in Japanese equities was far worse than those of other developed markets, so today’s market may find a bit of calm.” U.S. shares tumbled Tuesday after Powell said officials should weigh removing pandemic support at a faster pace and retired the word “transitory” to describe stubbornly high inflation In rates, bonds trade heavy, as yield curves bear-flatten. Treasuries extended declines with belly of the curve cheapening vs wings as traders continue to price in additional rate-hike premium over the next two years. Treasury yields were cheaper by up to 5bp across belly of the curve, cheapening 2s5s30s spread by ~5.5bp on the day; 10-year yields around 1.48%, cheaper by ~4bp, while gilts lag by additional 2bp in the sector. The short-end of the gilt curve markedly underperforms bunds and Treasuries with 2y yields rising ~11bps near 0.568%. Peripheral spreads widen with belly of the Italian curve lagging. The flattening Treasury yield curve “doesn’t suggest imminent doom for the equity market in and of itself,” Liz Ann Sonders, chief investment strategist at Charles Schwab & Co., said on Bloomberg Television. “Alarm bells go off in terms of recession” when the curve gets closer to inverting, she said. In FX, the Turkish lira had a wild session, offered in early London trade before fading. USD/TRY dropped sharply to lows of 12.4267 on reports of central bank FX intervention due to “unhealthy price formations” before, once again, fading TRY strength after comments from Erdogan. The rest of G-10 FX is choppy; commodity currencies retain Asia’s bid tone, havens are sold: the Bloomberg Dollar Spot Index inched lower, as the greenback traded mixed versus its Group-of-10 peers. The euro moved in a narrow range and Bund yields followed U.S. yields higher. The pound advanced as risk sentiment stabilized with focus still on news about the omicron variant. The U.K. 10-, 30-year curve flirted with inversion as gilts flattened, with money markets betting on 10bps of BOE tightening this month for the first time since Friday. The Australian and New Zealand dollars advanced as rising commodity prices fuel demand from exporters and leveraged funds. Better-than-expected growth data also aided the Aussie, with GDP expanding by 3.9% in the third quarter from a year earlier, beating the 3% estimated by economists. Austrian lawmakers extended a nationwide lockdown for a second 10-day period to suppress the latest wave of coronavirus infections before the Christmas holiday period.  The yen declined by the most among the Group-of-10 currencies as Powell’s comments renewed focus on yield differentials. 10-year yields rose ahead of Thursday’s debt auction In commodities, crude futures rally. WTI adds over 4% to trade on a $69-handle, Brent recovers near $72.40 after Goldman said overnight that oil had gotten extremely oversold. Spot gold fades a pop higher to trade near $1,785/oz. Base metals trade well with LME copper and nickel outperforming. Looking at the day ahead, once again we’ll have Fed Chair Powell and Treasury Secretary Yellen appearing, this time before the House Financial Services Committee. In addition to that, the Fed will be releasing their Beige Book, and BoE Governor Bailey is also speaking. On the data front, the main release will be the manufacturing PMIs from around the world, but there’s also the ADP’s report of private payrolls for November in the US, the ISM manufacturing reading in the US as well for November, and German retail sales for October. Market Snapshot S&P 500 futures up 1.2% to 4,620.75 STOXX Europe 600 up 1.0% to 467.58 MXAP up 0.9% to 191.52 MXAPJ up 1.1% to 626.09 Nikkei up 0.4% to 27,935.62 Topix up 0.4% to 1,936.74 Hang Seng Index up 0.8% to 23,658.92 Shanghai Composite up 0.4% to 3,576.89 Sensex up 1.0% to 57,656.51 Australia S&P/ASX 200 down 0.3% to 7,235.85 Kospi up 2.1% to 2,899.72 Brent Futures up 4.2% to $72.15/bbl Gold spot up 0.2% to $1,778.93 U.S. Dollar Index little changed at 95.98 German 10Y yield little changed at -0.31% Euro down 0.1% to $1.1326 Top Overnight News from Bloomberg U.S. Secretary of State Antony Blinken will meet Russian Foreign Minister Sergei Lavrov Thursday, the first direct contact between officials of the two countries in weeks as tensions grow amid western fears Russia may be planning to invade Ukraine Oil rebounded from a sharp drop on speculation that recent deep losses were excessive and OPEC+ may on Thursday decide to pause hikes in production, with the abrupt reversal fanning already- elevated volatility The EU is set to recommend that member states review essential travel restrictions on a daily basis in the wake of the omicron variant, according to a draft EU document seen by Bloomberg China is planning to ban companies from going public on foreign stock markets through variable interest entities, according to people familiar with the matter, closing a loophole long used by the country’s technology industry to raise capital from overseas investors Manufacturing activity in Asia outside China stabilized last month amid easing lockdown and border restrictions, setting the sector on course to face a possible new challenge from the omicron variant of the coronavirus Germany urgently needs stricter measures to check a surge in Covid-19 infections and protect hospitals from a “particularly dangerous situation,” according to the head of the country’s DIVI intensive-care medicine lobby. A more detailed breakdown of global markets courtesy of Newsquawk Asian equity markets traded mostly positive as regional bourses atoned for the prior day’s losses that were triggered by Omicron concerns, but with some of the momentum tempered by recent comments from Fed Chair Powell and mixed data releases including the miss on Chinese Caixin Manufacturing PMI. ASX 200 (-0.3%) was led lower by underperformance in consumer stocks and with utilities also pressured as reports noted that Shell and Telstra’s entrance in the domestic electricity market is set to ignite fierce competition and force existing players to overhaul their operations, although the losses in the index were cushioned following the latest GDP data which showed a narrower than feared quarterly contraction in Australia’s economy. Nikkei 225 (+0.4%) was on the mend after yesterday’s sell-off with the index helped by favourable currency flows and following a jump in company profits for Q3, while the KOSPI (+2.1%) was also boosted by strong trade data. Hang Seng (+0.8%) and Shanghai Comp. (+0.4%) were somewhat varied as a tech resurgence in Hong Kong overcompensated for the continued weakness in casinos stocks amid ongoing SunCity woes which closed all VIP gaming rooms in Macau after its Chairman's recent arrest, while the mood in the mainland was more reserved after a PBoC liquidity drain and disappointing Chinese Caixin Manufacturing PMI data which fell short of estimates and slipped back into contraction territory. Finally, 10yr JGBs were lower amid the gains in Japanese stocks and after the pullback in global fixed income peers in the aftermath of Fed Chair Powell’s hawkish comments, while a lack of BoJ purchases further contributed to the subdued demand for JGBs. Top Asian News Asia Stocks Bounce Back from One-Year Low Despite Looming Risks Gold Swings on Omicron’s Widening Spread, Inflation Worries Shell Sees Hedge Funds Moving to LNG, Supporting Higher Prices Abe Warns China Invading Taiwan Would Be ‘Economic Suicide’ Bourses in Europe are firmer across the board (Euro Stoxx 50 +1.6%; Stoxx 600 +1.1%) as the positive APAC sentiment reverberated into European markets. US equity futures are also on the front foot with the cyclical RTY (+2.0%) outpacing its peers: ES (+1.2%), NQ (+1.5%), YM (+0.8%). COVID remains a central theme for the time being as the Omicron variant is observed for any effects of concern – which thus far have not been reported. Analysts at UBS expect market focus to shift away from the variant and more towards growth and earnings. The analysts expect Omicron to fuse into the ongoing Delta outbreak that economies have already been tackling. Under this scenario, the desk expects some of the more cyclical markets and sectors to outperform. The desk also flags two tails risks, including an evasive variant and central bank tightening – particularly after Fed chair Powell’s commentary yesterday. Meanwhile, BofA looks for an over-10% fall in European stocks next year. Sticking with macro updates, the OECD, in their latest economic outlook, cut US, China, Eurozone growth forecasts for 2021 and 2022, with Omicron cited as a factor. Back to trade, broad-based gains are seen across European cash markets. Sectors hold a clear cyclical bias which consists of Travel & Leisure, Basic Resources, Autos, Retail and Oil & Gas as the top performers – with the former bolstered by the seemingly low appetite for coordination on restrictions and measures at an EU level – Deutsche Lufthansa (+6%) and IAG (+5.1%) now reside at the top of the Stoxx 600. The other side of the spectrum sees the defensive sectors – with Healthcare, Household Goods, Food & Beverages as the straddlers. In terms of induvial movers, German-listed Adler Group (+22%) following a divestment, whilst Blue Prism (+1.7%) is firmer after SS&C raised its offer for the Co. Top European News Wizz Says Travelers Are Booking at Shorter and Shorter Notice Turkey Central Bank Intervenes in FX Markets to Stabilize Lira Gold Swings on Omicron’s Widening Spread, Inflation Worries Former ABG Sundal Collier Partner Starts Advisory Firm In FX, the Dollar remains mixed against majors, but well off highs prompted by Fed chair Powell ditching transitory from the list of adjectives used to describe inflation and flagging that a faster pace of tapering will be on the agenda at December’s FOMC. However, the index is keeping tabs on the 96.000 handle and has retrenched into a tighter 95.774-96.138 range, for the time being, as trade remains very choppy and volatility elevated awaiting clearer medical data and analysis on Omicron to gauge its impact compared to the Delta strain and earlier COVID-19 variants. In the interim, US macro fundamentals might have some bearing, but the bar is high before NFP on Friday unless ADP or ISM really deviate from consensus or outside the forecast range. Instead, Fed chair Powell part II may be more pivotal if he opts to manage hawkish market expectations, while the Beige Book prepared for next month’s policy meeting could also add some additional insight. NZD/AUD/CAD/GBP - Broad risk sentiment continues to swing from side to side, and currently back in favour of the high beta, commodity and cyclical types, so the Kiwi has bounced firmly from worst levels on Tuesday ahead of NZ terms of trade, the Aussie has pared a chunk of its declines with some assistance from a smaller than anticipated GDP contraction and the Loonie is licking wounds alongside WTI in advance of Canadian building permits and Markit’s manufacturing PMI. Similarly, Sterling has regained some poise irrespective of relatively dovish remarks from BoE’s Mann and a slender downward revision to the final UK manufacturing PMI. Nzd/Usd is firmly back above 0.6800, Aud/Usd close to 0.7150 again, Usd/Cad straddling 1.2750 and Cable hovering on the 1.3300 handle compared to circa 0.6772, 0.7063, 1.2837 and 1.3195 respectively at various fairly adjacent stages yesterday. JPY/EUR/CHF - All undermined by the aforementioned latest upturn in risk appetite or less angst about coronavirus contagion, albeit to varying degrees, as the Yen retreats to retest support sub-113.50, Euro treads water above 1.1300 and Franc straddles 0.9200 after firmer than forecast Swiss CPI data vs a dip in the manufacturing PMI. In commodities, WTI and Brent front month futures are recovering following yesterday’s COVID and Powell-induced declines in the run-up to the OPEC meetings later today. The complex has also been underpinned by the reduced prospects of coordinated EU-wide restrictions, as per the abandonment of the COVID video conference between EU leaders. However, OPEC+ will take centre stage over the next couple of days, with a deluge of source reports likely as OPEC tests the waters. The case for OPEC+ to pause the planned monthly relaxation of output curbs by 400k BPD has been strengthening. There have been major supply and demand developments since the prior meeting. The recent emergence of the Omicron COVID variant and coordinated release of oil reserves have shifted the balance of expectations relative to earlier in the month (full Newsquawk preview available in the Research Suite). In terms of the schedule, the OPEC meeting is slated for 13:00GMT/08:00EST followed by the JTC meeting at 15:00GMT/10:00EST, whilst tomorrow sees the JMMC meeting at 12:00GMT/07:00EST; OPEC+ meeting at 13:00GMT/08:00EST. WTI Jan has reclaimed a USD 69/bbl handle (vs USD 66.20/bbl low) while Brent Feb hovers around USD 72.50/bbl (vs low USD 69.38/bbl) at the time of writing. Elsewhere, spot gold and silver trade with modest gains and largely in tandem with the Buck. Spot gold failed to sustain gains above the cluster of DMAs under USD 1,800/oz (100 DMA at USD 1,792/oz, 200 DMA at USD 1,791/oz, and 50 DMA at USD 1,790/oz) – trader should be aware of the potential for a technical Golden Cross (50 DMA > 200 DMA). Turning to base metals, copper is supported by the overall risk appetite, with the LME contract back above USD 9,500/t. Overnight, Chinese coking coal and coke futures rose over 5% apiece, with traders citing disrupted supply from Mongolia amid the COVID outbreak in the region. US Event Calendar 7am: Nov. MBA Mortgage Applications, prior 1.8% 8:15am: Nov. ADP Employment Change, est. 525,000, prior 571,000 9:45am: Nov. Markit US Manufacturing PMI, est. 59.1, prior 59.1 10am: Oct. Construction Spending MoM, est. 0.4%, prior -0.5% 10am: Nov. ISM Manufacturing, est. 61.2, prior 60.8 2pm: U.S. Federal Reserve Releases Beige Book Nov. Wards Total Vehicle Sales, est. 13.4m, prior 13m Central Banks 10am: Powell, Yellen Testify Before House Panel on CARES Act Relief DB's Jim Reid concludes the overnight wrap If you’re under 10 and reading this there’s a spoiler alert today in this first para so please skip beyond and onto the second. Yes my heart broke a little last night as my little 6-year old Maisie said to me at bedtime that “Santa isn’t real is he Daddy?”. I lied (I think it’s a lie) and said yes he was. I made up an elaborate story about how when we renovated our 100 year old house we deliberately kept the chimney purely to let Santa come down it once a year. Otherwise why would we have kept it? She then asked what about her friend who lives in a flat? I tried to bluff my way through it but maybe my answer sounded a bit like my answers as to what will happen with Omicron. I’ll test both out on clients later to see which is more convincing. Before we get to the latest on the virus, given it’s the start of the month, we’ll shortly be publishing our November performance review looking at how different assets fared over the month just gone and YTD. It arrived late on but Omicron was obviously the dominant story and led to some of the biggest swings of the year so far. It meant that oil (which is still the top performer on a YTD basis) was the worst performer in our monthly sample, with WTI and Brent seeing their worst monthly performances since the initial wave of market turmoil over Covid back in March 2020. And at the other end, sovereign bonds outperformed in November as Omicron’s emergence saw investors push back the likelihood of imminent rate hikes from central banks. So what was shaping up to be a good month for risk and a bad one for bonds flipped around in injury time. Watch out for the report soon from Henry. Back to yesterday now, and frankly the main takeaway was that markets were desperate for any piece of news they could get their hands on about the Omicron variant, particularly given the lack of proper hard data at the moment. The morning started with a sharp selloff as we discussed at the top yesterday, as some of the more optimistic noises from Monday were outweighed by that FT interview, whereby Moderna’s chief executive had said that the existing vaccines wouldn’t be as effective against the new variant. Then we had some further negative news from Regeneron, who said that analysis and modelling of the Omicron mutations indicated that its antibody drug may not be as effective, but that they were doing further analysis to confirm this. However, we later got some comments from a University of Oxford spokesperson, who said that there wasn’t any evidence so far that vaccinations wouldn’t provide high levels of protection against severe disease, which coincided with a shift in sentiment early in the European afternoon as equities begun to pare back their losses. The CEO of BioNTech and the Israeli health minister expressed similar sentiments, noting that vaccines were still likely to protect against severe disease even among those infected by Omicron, joining other officials encouraging people to get vaccinated or get booster shots. Another reassuring sign came in an update from the EU’s ECDC yesterday, who said that all of the 44 confirmed cases where information was available on severity “were either asymptomatic or had mild symptoms.” After the close, the FDA endorsed Merck’s antiviral Covid pill. While it’s not clear how the pill interacts with Omicron, the proliferation of more Covid treatments is still good news as we head into another winter. The other big piece of news came from Fed Chair Powell’s testimony to the Senate Banking Committee, where the main headline was his tapering comment that “It is appropriate to consider wrapping up a few months sooner.” So that would indicate an acceleration in the pace, which would be consistent with the view from our US economists that we’ll see a doubling in the pace of reductions at the December meeting that’s only two weeks from today. The Fed Chair made a forceful case for a faster taper despite lingering Omicron uncertainties, noting inflation is likely to stay elevated, the labour market has improved without a commensurate increase in labour supply (those sidelined because of Covid are likely to stay there), spending has remained strong, and that tapering was a removal of accommodation (which the economy doesn’t need more of given the first three points). Powell took pains to stress the risk of higher inflation, going so far as to ‘retire’ the use of the term ‘transitory’ when describing the current inflation outlook. So team transitory have seemingly had the pitch taken away from them mid match. The Chair left an exit clause that this outlook would be informed by incoming inflation, employment, and Omicron data before the December FOMC meeting. A faster taper ostensibly opens the door to earlier rate hikes and Powell’s comment led to a sharp move higher in shorter-dated Treasury yields, with the 2yr yield up +8.1bps on the day, having actually been more than -4bps lower when Powell began speaking. They were as low as 0.44% then and got as high as 0.57% before closing at 0.56%. 2yr yields have taken another leg higher overnight, increasing +2.5bps to 0.592%. Long-end yields moved lower though and failed to back up the early day moves even after Powell, leading to a major flattening in the yield curve on the back of those remarks, with the 2s10s down -13.7bps to 87.3bps, which is its flattest level since early January. Overnight 10yr yields are back up +3bps but the curve is only a touch steeper. My 2 cents on the yield curve are that the 2s10s continues to be my favourite US recession indicator. It’s worked over more cycles through history than any other. No recession since the early 1950s has occurred without the 2s10s inverting. But it takes on average 12-18 months from inversion to recession. The shortest was the covid recession at around 7 months which clearly doesn’t count but I think we were very late cycle in early 2020 and the probability of recession in the not too distant future was quite high but we will never know.The shortest outside of that was around 9 months. So with the curve still at c.+90bps we are moving in a more worrying direction but I would still say 2023-24 is the very earliest a recession is likely to occur (outside of a unexpected shock) and we’ll need a rapid flattening in 22 to encourage that. History also suggests markets tend to ignore the YC until it’s too late. So I wouldn’t base my market views in 22 on the yield curve and recession signal yet. However its something to look at as the Fed seemingly embarks on a tightening cycle in the months ahead. Onto markets and those remarks from Powell (along with the additional earlier pessimism about Omicron) proved incredibly unhelpful for equities yesterday, with the S&P 500 (-1.90%) giving up the previous day’s gains to close at its lowest level in over a month. It’s hard to overstate how broad-based this decline was, as just 7 companies in the entire S&P moved higher yesterday, which is the lowest number of the entire year so far and the lowest since June 11th, 2020, when 1 company ended in the green. Over in Europe it was much the same story, although they were relatively less affected by Powell’s remarks, and the STOXX 600 (-0.92%) moved lower on the day as well. Overnight in Asia, stocks are trading higher though with the KOSPI (+2.02%), Hang Seng (+1.40%), the Nikkei (+0.37%), Shanghai Composite (+0.11%) and CSI (+0.09%) all in the green. Australia’s Q3 GDP contracted (-1.9% qoq) less than -2.7% consensus while India’s Q3 GDP grew at a firm +8.4% year-on-year beating the +8.3% consensus. In China the Caixin Manufacturing PMI for November came in at 49.9 against a 50.6 consensus. Futures markets are indicating a positive start to markets in US & Europe with the S&P 500 (+0.73%) and DAX (+0.44%) trading higher again. Back in Europe, there was a significant inflation story amidst the other headlines above, since Euro Area inflation rose to its highest level since the creation of the single currency, with the flash estimate for November up to +4.9% (vs. +4.5% expected). That exceeded every economist’s estimate on Bloomberg, and core inflation also surpassed expectations at +2.6% (vs. +2.3% expected), again surpassing the all-time high since the single currency began. That’s only going to add to the pressure on the ECB, and yesterday saw Germany’s incoming Chancellor Scholz say that “we have to do something” if inflation doesn’t ease. European sovereign bonds rallied in spite of the inflation reading, with those on 10yr bunds (-3.1bps), OATs (-3.5bps) and BTPs (-0.9bps) all moving lower. Peripheral spreads widened once again though, and the gap between Italian and German 10yr yields closed at its highest level in just over a year. Meanwhile governments continued to move towards further action as the Omicron variant spreads, and Greece said that vaccinations would be mandatory for everyone over 60 soon, with those refusing having to pay a monthly €100 fine. Separately in Germany, incoming Chancellor Scholz said that there would be a parliamentary vote on the question of compulsory vaccinations, saying to the Bild newspaper in an interview that “My recommendation is that we don’t do this as a government, because it’s an issue of conscience”. In terms of other data yesterday, German unemployment fell by -34k in November (vs. -25k expected). Separately, the November CPI readings from France at +3.4% (vs. +3.2% expected) and Italy at +4.0% (vs. +3.3% expected) surprised to the upside as well. In the US, however, the Conference Board’s consumer confidence measure in November fell to its lowest since February at 109.5 (vs. 110.9 expected), and the MNI Chicago PMI for November fell to 61.8 9vs. 67.0 expected). To the day ahead now, and once again we’ll have Fed Chair Powell and Treasury Secretary Yellen appearing, this time before the House Financial Services Committee. In addition to that, the Fed will be releasing their Beige Book, and BoE Governor Bailey is also speaking. On the data front, the main release will be the manufacturing PMIs from around the world, but there’s also the ADP’s report of private payrolls for November in the US, the ISM manufacturing reading in the US as well for November, and German retail sales for October. Tyler Durden Wed, 12/01/2021 - 07:47.....»»

Category: blogSource: zerohedgeDec 1st, 2021

Highlights of the day: Server makers may see chip shortage last into 2H22

Demand for servers remain robust, but component shortages have been undermining server shipments. Chip supply for servers is expected to persist into second-half 2022. TSMC is making progress in its advanced packaging technology. The foundry house has entered the next stage for its 3DFabric family of 3D silicon stacking. Suppliers of cylindrical lithium cells have notified clients that they will raise prices by 5-15% in first-quarter 2022......»»

Category: topSource: digitimesDec 1st, 2021

EV Space is All Charged-Up With IPO News: ETFs to Play

Wall Street is abuzz with the electric vehicle IPOs. Phoenix Motors filed for an initial public offering in the United States on Monday after Rivian made a blockbuster market debut in early November. Wall Street is abuzz with the tale of two electric vehicle (EV) stocks — Rivian RIVN and Tesla TSLA. Tesla’s success is known to all. And Rivian Automotive, the electric-vehicle company backed by Amazon.com Inc. (AMZN) (which has 20% stake in the automaker) and Ford Motor, went public on Nov 10, 2021, through a high-profile IPO. As many as 153 million shares were sold at an initial offering price of $78.00, valuing the company at $66.5 billion. Shares of RIVN had an awesome spike on the market debut.Phoenix Motors filed for an initial public offering in the United States on Monday, becoming the latest EV maker looking to cash in on a growing investor appetite for eco-friendly automobiles, per Reuters. Phoenix Motors unveiled its finances for the first time in its filing, revealing a decline in revenues and wider losses for the nine months ended September 2021. Phoenix, founded in 2003, launched its first electric drivetrain in 2009 and sold its first commercial EV shuttle bus in 2014.This puts the spotlight onSimplify Volt Robocar Disruption And Tech ETF VCAR,Global X Autonomous & Electric Vehicles ETF DRIV and iShares Self-Driving EV And Tech ETF IDRV. The global strive for electrification is causing a three-year wave of initial public offerings in the electric vehicle space that could raise about $100 billion until the end of 2023, according to Bank of America Corp, as quoted on Bloomberg.Growing investments in the sector, ranging from batteries to charging cars, will see companies spinning off units as well as go public, said Patrick Steinemann, co-head of Global Mobility Group Investment Banking at Bank of America, the Bloomberg article noted. One of the largest IPOs to hit next year will be the spinoff of LG Chem Ltd.’s battery unit LG Energy Solution in South Korea, which could raise about $10 billion. It’s one of the world’s biggest battery makers after China’s Contemporary Amperex Technology Co., the Bloomberg article pointed out.The top 10 battery makers are expected to nearly triple their manufacturing capacity by 2022 to meet the upcoming surge in demand, according to BloombergNEF. Against this backdrop, below we highlight a few EV ETFs that are good bets currently.EV ETFs in FocusSimplify Volt Robocar Disruption And Tech ETF (VCAR)Simplify Volt Robocar Disruption and Tech ETF is active and does not track a benchmark. The fund VCAR looks to concentrate on those few disruptive companies poised to dominate autonomous driving and enhance the concentrated exposures with options. The ETF VCAR charges 95 bps in fees.Global X Autonomous & Electric Vehicles ETF (DRIV)The Global X Autonomous & Electric Vehicles ETF seeks to provide investment results that correspond generally to the price and yield performance of the Solactive Autonomous & Electric Vehicles Index. The index tracks the price movements in shares of companies that are active in the electric vehicles and autonomous driving segments. The fund DRIV charges 68 bps in fees.iShares Self-Driving EV And Tech ETF (IDRV)The iShares Self-Driving EV and Tech ETF seeks to track the investment results of the NYSE FactSet Global Autonomous Driving and Electric Vehicle Index. The index comprises developed and emerging market companies that may benefit from growth and innovation in and around electric vehicles, battery technologies and autonomous driving technologies. The ETF IDRV charges 47 bps in fees. Want key ETF info delivered straight to your inbox? Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Global X Autonomous & Electric Vehicles ETF (DRIV): ETF Research Reports Tesla, Inc. (TSLA): Free Stock Analysis Report iShares SelfDriving EV and Tech ETF (IDRV): ETF Research Reports Simplify Volt Robocar Disruption and Tech ETF (VCAR): ETF Research Reports Rivian Automotive, Inc. (RIVN): Get Free Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 30th, 2021

Highlights of the day: TSMC expands partnership with OSATs

To meet surging demand for heterogeneous chips, TSMC is expected to adopt a more agile mode of cooperation with OSATs. TSMC's majr foundry competitor Samsung Electronics has announced plans to build a new fab in the US state of Texas. Samsung is eyeing orders from major US chip vendors. China first-tier lithium battery makers have refrained from raising prices this year, but they are now looking to raise prices by 20% next year......»»

Category: topSource: digitimesNov 25th, 2021

Futures Rebound From Post-CPI Rout As China Property Stocks Soar

Futures Rebound From Post-CPI Rout As China Property Stocks Soar US futures rose and European bourses once again rebounded from overnight lows, this time after concerns that scorching US and Chinese CPI and PPI prints will prompt central banks to tighten much sooner than expected. The bounce was aided by a surge in Chinese property developers which booked their best two-day gain in six years, joined by a jump in technology stocks, as investors speculated Beijing may soften regulatory crackdowns on the two industries. At 730am S&P futures were up 16.75 ot 0.36 to 4,658.50, Dow Jones futs were up 40 points or 0.11% and Nasdaq futures were up 97.50 or 0.61%. The dollar index rose and cash Treasurys are closed today for Veterans day. Wednesday’s stronger-than-forecast data on U.S. consumer prices finally crushed the argument that inflation is transitory and weighed on the tech sector in particular as Treasury yields spiked. Tesla shares rose 5% in premarket trading following filings that showed Chief Executive Officer Elon Musk sold $5 billion in stock in the electric-vehicle maker a few days after the shares hit a record high. Disney dropped 4.8% in premarket trading to lead declines among Dow components after reporting the smallest rise in Disney+ subscriptions since the service's launch and posted downbeat profit at its theme park division. SoFi rose as much as 16% in premarket after Jefferies said the fintech’s third-quarter results were a “strong” beat. Amazon-backed electric-vehicle maker Rivian Automotive jumped 4.9%, adding to the nearly 30% gain on its blockbuster trading debut. Chinese tech stocks got some comfort from a report that ride-hailing company Didi Global Inc. is getting ready to relaunch its apps in China by the end of the year as an investigation wraps up. Here are some of the biggest U.S. movers today: Beyond Meat (BYND US) shares plunged 20% in premarket after the maker of plant-based meats released a disappointing sales projection for 4Q. Fossil (FOSL US) jumped 33% premarket after the accessory maker boosted its net sales forecast for the full year. Bumble (BMBL US) the dating app that lets women make the first move, reported earnings in the third quarter that missed analysts’ estimates. The shares fell 7% premarket. Disney (DIS US) shares fall as much as 5.3% in premarket, with analysts flagging softness in its Disney+ subscribers and net income in its fiscal fourth quarter. Rivian (RIVN US) jumps 8% in premarket after the electric truck maker soared in its trading debut on Wednesday. Didi (DIDI US) gains 4% in premarket after Reuters reported that the company is preparing to reintroduce its apps in China by the end of the year as regulators wrap up their investigations into the ride- hailing giant. Marqeta (MQ US) gains 17% premarket, with analysts saying the payments platform delivered a strong beat-and-raise report for 3Q. SoFi Technologies (SOFI US) rises 15% premarket with Jefferies saying the fintech’s 3Q results are a “strong” beat. Figs (FIGS US) shares sank 14% in postmarket trading on Wednesday, after the seller of scrubs for health-care workers reported a third-quarter profit in line with analysts’ estimates. Oscar Health (OSCR US) fell 10% postmarket Wednesday after the upstart health insurer projected a deeper adjusted Ebitda loss for the full year. Payoneer Global (PAYO US), the payment solutions company, gained 8% premarket after its full- year revenue forecast beat the average analyst estimate. Wish (WISH US) fell 2% after the e-commerce services company posted an Ebitda loss for the fourth quarter Despite today's mini relief rally, investors are bracing for tighter monetary policy sooner rather than later, after Wednesday’s stronger-than-forecast data on U.S. consumer prices dealt a blow to the argument that inflation is transitory. Meanwhile, Bloomberg reported that the European Central Bank could stop buying bonds as early as next September if inflation looks to have sustainably returned to the official target, Governing Council member Robert Holzmann said. “This is the perfect time to gravitate toward defensive plays, to take profit and to be in the sectors that are strategically positioned toward this volatile market that presents a lot of challenges,” Katerina Simonetti, senior vice president at Morgan Stanley Private Wealth Management, said on Bloomberg Television. Market participants were also watching developments around the nomination of the Federal Reserve Chair, with President Joe Biden still weighing whether to keep Jerome Powell for a second term or elevate Fed Governor Lael Brainard to the post In Europe, equities pushed into the green after a muted start, with the Stoxx 600 Index up 0.1% while the Euro Stoxx 50 is little changed as France's CAC outperformed and the U.K.’s exporter-heavy FTSE 100 Index rose as the pound held near an 11-month low after better-than-expected economic growth data. Basic resources, construction and banking names are the strongest sectors; travel and oil & gas the notable laggards. The Stoxx Europe 600 basic resources sub-index rose as much as 2.9%, the most in about a month, as iron ore rebounds and other metals rise. Anglo American, Rio Tinto, BHP, Glencore and Norsk Hydro among those leading gains by index points.ArcelorMittal also rallied after 3Q results. Miners are outperforming gains on the Stoxx Europe 600, which is up 0.2%. Iron ore’s rout halted as expectations build for an easing of the real-estate turmoil in China that’s battered demand, while aluminum jumped as supplies of the metal tighten. And speaking of Europe, ECB-dated OIS rates now price ~20bps of hikes by end-2022 as STIRs globally wrestle with the latest hot inflation prints. Here are some of the biggest European movers this morning: Auto Trader jumped as much as 15% to a record high, with Jefferies saying its new guidance should drive mid-single-digit upgrades to consensus estimates for the online car listings platform. Sika shares surge as much as 12% following the acquisition of construction chemicals peer MBCC, with Baader, Vontobel and Morgan Stanley all positive on the deal. ArcelorMittal shares rise as much as 4.4% after the steelmaker’s results, with Citi saying the update has a positive tone despite the numbers missing estimates. Siemens shares rise as much as 2.8% with analysts saying the German industrial group’s update was encouraging, with its dividend among the main positives. Johnson Matthey shares plummet as much as 20% after the company warned on its current trading and said it will exit its battery business. Burberry shares slump as much as 10% after the luxury goods company’s comparable store sales missed market expectations, with analysts saying consensus estimates are likely to remain unchanged, and the focus will be on the upcoming management change. Earlier in the session, Asia’s regional benchmark declined, on track for a third day of losses, after monthly U.S. consumer prices rose at the fastest annual pace since 1990, raising concerns over costs and monetary policy moves. The MSCI Asia Pacific Index slid as much as 0.6%, before paring most of the losses, with several tech hardware stocks weighing on the benchmark and Tencent the biggest drag after its 3Q revenue missed analyst estimates. Still, the Hang Seng Tech Index ended the day higher after Reuters reported that Didi Global is getting ready to relaunch apps in China by the end of the year. Investors have been cautiously eyeing inflation data as the next market catalyst amid the ongoing pandemic. China helped lead Asian stocks lower Wednesday after reporting a spike in producer prices. “The inflation number spoke to scope for greater and longer-lasting tightening, which understandably hurt the tech sector,” said Ilya Spivak, head of Greater Asia at DailyFX. “The vulnerability there is to longer-term financing, because near-term is pretty well locked in for the most part,” he said. India, Taiwan and the Philippines posted the steepest declines Thursday, while Australian equities slid after unemployment unexpectedly jumped in October. China was the top performer as property developers rallied, while Japan’s benchmarks posted their first rise in five sessions as the yen weakened.  Japanese equities rose, rebounding after after a four-day loss, as electronics and auto makers climbed while the yen weakened. Trading houses and machinery makers were also among the biggest boosts to the Topix, which rose 0.3%. Fanuc and SoftBank Group were the biggest contributors to a 0.6% gain in the Nikkei 225. The yen slightly extended its 0.9% overnight loss against the dollar. Tokyo shares fluctuated in early trading after U.S. stocks fell by the most in a month and Treasury yields spiked. Labor Department data showed consumer prices rose last month at the fastest annual pace since 1990, putting pressure on the Federal Reserve to end near-zero interest rates sooner than expected “Investors had been selling value stocks and buying up growth stocks, but now that’s being reversed,” said Mamoru Shimode, chief strategist at Resona Asset Management. Going forward “the environment will be a favorable one for Japanese equities,” he said, noting the local market’s underperformance against global peers. In rates, Treasury futures are mixed with a curve-flattening bent, remaining near low end of Wednesday’s range, when above-estimate CPI and poor 30-year bond auction caused a selloff across the curve. As noted above, the Cash Treasuries market is closed Thursday for Veteran’s Day. Treasury 10-year yields closed Wednesday at 1.549%, nearly 10bp higher on the day; EGBs and gilts are slightly richer on the day out to the 10-year sector, while curves are mildly steeper. Wednesday’s price action in the U.S. sent ripples through European markets, which now price 20bps of ECB rate hikes in December 2022 for the first time since the start of the month.  Euribor futures add 4-6 ticks in red and green packs. Bunds and gilts bear steepen gently. Peripheral spreads widen at the margin. Short end Italy underperforms despite a decent reception at today’s auctions. In FX, the Bloomberg Dollar Spot Index reached its strongest level in a year and the greenback advanced against all of its Group-of-10 peers, with the biggest losses seen among some commodity currencies. Cable inched lower to trade below $1.34 for the first time since December 2020. The U.K. economy grew more strongly than expected in September after a surge in service industries and construction. GDP rose 0.6% from August, the Office for National Statistics said Thursday. That was quicker than the 0.4% pace anticipated by economists. The Australian and New Zealand dollars were the worst G-10 performers; Aussie fell and Australian sovereign yields trimmed an opening spike after the nation’s jobless rate jumped to 5.2%. The initial move was in line with Treasuries, which plunged after U.S. inflation came in at the hottest since 1990. In commodities, crude futures fade a pop higher after quiet Asian trade; WTI is little changed near $81.20, Brent stalls below $83. Spot gold rises back toward Wednesday’s best levels, trading near $1,860/oz. Base metals are in the green with LME aluminum outperforming To the day ahead now, and the main data highlight will be the UK’s preliminary Q3 GDP reading. From central banks, the ECB will be publishing their Economic Bulletin, and speakers include the ECB’s Makhlouf, Schnabel and Hernandez de Cos, along with the BoE’s Mann. Otherwise, the European Commission will be releasing their latest economic forecasts, and it’s the Veterans’ Day Holiday in the United States. Market Snapshot S&P 500 futures up 0.4% to 4,658.25 STOXX Europe 600 up 0.1% to 484.44 MXAP little changed at 197.72 MXAPJ down 0.2% to 647.07 Nikkei up 0.6% to 29,277.86 Topix up 0.3% to 2,014.30 Hang Seng Index up 1.0% to 25,247.99 Shanghai Composite up 1.2% to 3,532.79 Sensex down 0.8% to 59,898.81 Australia S&P/ASX 200 down 0.6% to 7,381.95 Kospi down 0.2% to 2,924.92 Gold spot up 0.7% to $1,862.18 U.S. Dollar Index up 0.19% to 95.03 German 10Y yield little changed at -0.24% Euro down 0.2% to $1.1461 Brent Futures up 0.7% to $83.18/bbl Top Overnight News from Bloomberg The European Central Bank could stop buying bonds as early as next September if inflation looks to have sustainably returned to the official target, Governing Council member Robert Holzmann said China’s efforts to limit fallout from China Evergrande Group’s crisis are gathering steam. A series of articles published in state media in the past few days signal support measures are on the way to help developers tap debt markets, potentially easing a liquidity crunch that began with Evergrande’s meltdown five months ago Customers of international clearing firm Clearstream received overdue interest payments on three dollar bonds issued by Evergrande, a spokesperson for Clearstream said A more detailed look at global markets courtesy of Newsquawk Asian equity markets traded mixed as positive Chinese developer headlines including news of Evergrande payments, helped the region partially shrug off the losses seen stateside where duration sensitive stocks underperformed as yields surged following a hot CPI print and a soft 30yr auction. ASX 200 (-0.6%) declined with the index led lower by tech and energy which followed suit to the heavy losses in their US counterparts and with disappointing jobs data adding to the headwinds. Nikkei 225 (+0.6%) coat-tailed on the advances in USD/JPY which briefly climbed above the 114.00 level and with a slew of earnings releases providing a catalyst for individual stock prices. Hang Seng (+1.0%) and Shanghai Comp. (+1.2%) were varied with notable strength in property names after Evergrande was reported to have paid the overdue interest on three bonds to avoid a default and with China said to be considering moderating property curbs to help troubled developers unload assets. In addition, the PBoC continued with its mild liquidity efforts and it was also reported that the Biden-Xi virtual meeting is tentatively scheduled for next Monday, although weakness in tech capped upside in the Hong Kong benchmark with shares in index heavyweight Tencent pressured post-earnings as the Beijing crackdown decelerated revenue growth to the slowest pace since the Co. listed in 2004. Finally, 10yr JGBs suffered spillover selling from global peers including T-notes which declined by a point to below 131.00 and with prices also hampered after a weak 30yr auction, while focus in Japan shifted to the enhanced liquidity auction for longer dated government bonds which printed a lower b/c although the highest accepted spread returned positive. Top Asian News Indonesian Stocks Close at Record High on Economic Rebound Signs of Easing as Delayed Bond Coupons Paid: Evergrande Update Asia Stocks Slip After U.S. Inflation Spike, Weak Tencent Sales Kaisa Tells Investors It May Not Make Coupon Payments: REDD European equities (Eurostoxx 50 -0.1%) broadly trade mixed following on from this week’s firm inflation reports from the US and China. The handover from APAC was also mixed with focus on China amid notable strength in property names after Evergrande was reported to have paid the overdue interest on three bonds to avoid a default. Furthermore, the PBoC continued with its mild liquidity efforts and it was also reported that the Biden-Xi virtual meeting is tentatively scheduled for next Monday. Stateside, futures are a touch firmer (ES +0.2%) in the wake of yesterday’s cash market losses which saw duration sensitive stocks underperform as yields surged. From a macro perspective, Axios reported overnight that inflation concerns could see US Senator Manchin “punt” President Biden's Build Back Better agenda into next year. Eyes on the Wall St. open will be on Tesla after CEO Musk offloaded USD 5bln of stock in the Co. Back to Europe, Goldman Sachs outlook for 2022 sees a price target for the Stoxx 600 of 530 (vs. current 483) which would deliver a total return of around 13% and mark a continuation of the current bull market, albeit at a slower pace. Sectors in Europe are somewhat mixed with Basic Resources a clear outperformer amid broad strength in mining names and following earnings from ArcelorMittal (+2.9%) which sent the Co.’s shares to the top of the CAC. Banking names are also on a firmer footing amid the favourable yield environment post-CPI with Lloyds (+1.3%) and Commerzbank (+3.0%) supported by broker upgrades at Keefe Bruyette and Morgan Stanley respectively. To the downside, Oil & Gas names are softer as the crude complex struggles to recoup recent losses. Retail names have been weighed on by Burberry (-6.2%) post-earnings with the Co. noting that performance in Europe remains under pressure. Renault (-3.1%) sits at the foot of the CAC after Daimler opted to sell its stake in the Co. for USD 364mln. Finally, Johnson Matthey (-16.3%) is the clear laggard in the region after its CEO announced his decision to step down and the Co. announced it is to exit the battery materials business. Top European News U.K. Growth Data Leave December BOE Rate Rise in the Balance Scholz Aims to ‘Winter Proof’ Germany Against New Covid Wave Kering Says Creative Head Daniel Lee to Leave Bottega Veneta Gas Crunch Fuels RWE Profits as Energy Giant Burns Coal In FX, the Dollar took some time out for reflection and a rest after extending yesterday’s post-US CPI gains with the additional thrust of a supply-related ramp up in Treasury yields following a poor new long bond auction. However, the index could not quite muster enough bullish momentum to touch 95.000 until APAC buyers got a chance to respond to the strength of the inflation data and bear-steepening reaction in debt markets that evolved after initial bear-flattening. The DXY subsequently reset, refuelled and cleared the psychological barrier more convincingly, at 95.101 before fading again as several basket components found underlying bids and technical support around key levels, but still seems bid and upwardly mobile in thinner trading volumes due to Veteran’s Day. NZD/AUD - Perhaps perversely given overnight macro fundamentals, the Kiwi is lagging down under with Aud/Nzd cross elevated near 1.0400, though this could be in recognition of a sharp retreat in NZ food prices and mitigating factors leading to Aussie labour metrics missing consensus by some distance right across the board. Whatever the rationale, Nzd/Usd is lower than Aud/Usd in absolute terms even though the former is holding above 0.7100 and latter has now lost 0.7300+ status. CAD - Weaker WTI crude (in relative terms rather than on the day per se) is not helping the Loonie’s cause after it managed to contain losses on Wednesday, as Usd/Cad hovers near the top of a 1.2535-1.2473 range awaiting the BoC’s Q3 Senior Loan Officer Survey tomorrow for further direction from a Canadian perspective. CHF/EUR/JPY/GBP - All giving up more ground to the Greenback, but to varying degrees with the Franc trying to keep sight of 0.9200, the Euro defend 1.1450 having closed below 1.1500 and a key Fib retracement just shy of the round number, the Yen stay within touching distance of 114.00 and Sterling stop the rot after letting go of the 1.3400 handle again. On that note, a late December 2020 low in Cable at 1.3361 remains intact ahead of 1.3350 for semi-sentimental reasons and then a deep channel trendline from 1.3330-20, while Usd/Jpy has scope to be drawn to decent option expiry interest at 113.70 (1.6 bn) if not similar size spanning 113.60-00. In commodities, WTI and Brent have been choppy this morning with catalysts limited and conditions thinner than normal on account of Veteran’s Day. Price action thus far has seen the benchmarks print a range in excess of USD 1.00/bbl in a narrow timespan, note, that these parameters remain comfortably within yesterday’s levels; currently, both WTI and Brent are at the lower-end of this band as any initial attempt at a recovery has fizzled out with the USD likely a factor. While newsflow directly for the complex has been sparse attention remains on the monthly oil surveys, COVID-19 and geopolitics. Firstly, the OPEC MOMR is scheduled for release today and as a reminder the EIA STEO, under greater focus given US crude/SPR watch, raised 2021 world oil demand growth forecast by +60k BPD to 5.11mln BPD Y/Y increase this week, but cut its 2022 forecast by 130k BPD to 3.35mln BPD Y/Y increase. On COVID, the demand-side is attentive to increasing cases in areas such as Germany with the effective Chancellor-in-waiting Scholz saying further measures will be needed through Winter; additionally, the Netherlands outbreak team are recommending a short lockdown and Beijing has implemented various local measures. Finally, geopolitics is attentive to the situation in Belarus after Lukashenko said they will respond to any sanctions and has suggested closing gas and goods transit through the area. Moving to metals, spot gold and silver remain towards the top-end of yesterday’s parameters, but are only modestly firmer on the session, as newsflow has been slim and the USD’s more gradual upside and lack-of cash UST action is providing a respite from yesterday’s upside. Action that saw spot gold supported by almost USD 40/oz from opening levels. Elsewhere, ArcelorMittal’s earnings update featured a forecast for global steel demand to increase between 12-13% this year excluding China given a softening of real demand. US Event Calendar 9:45am: Nov. Langer Consumer Comfort, prior 49.2 Central Banks Nothing major scheduled DB's Jim Reid concludes the overnight wrap Yesterday was one of those days to just go “wow” at. The headline YoY US CPI rate of 6.2% was the highest since the 6.3% in 1990, which means that unless you’re at least 50 this will be the highest US inflation print of your career. In fact, apart from 2 months in 1990 at 6.3%, you’d have to go back to 1982 to find a higher print. So you’d have to probably be at least 60 to remember anything like this in your work life, other than that brief spike in 1990. In more detail, for the 6th time in the last 8 months, the headline print came in above the consensus estimate on Bloomberg, with prices up by +0.9% on a month-on-month basis (vs. +0.6% expected). If you look at the reading to two decimal places, it was actually the strongest monthly inflation since July 2008, so hardly a sign that those pressures have been dimming as we move towards year end. We’ll go through some of the moves in more depth below, but markets didn’t react well to the prospect of a more inflationary future, with both bonds and equities moving lower as investors moved to price in earlier and a more rapid pace of future rate hikes by the Fed. A horrible 30 year auction 4.5 hours later cemented a big rise in yields on the day. Note US bond markets are closed today for Veterans Day. Equities remain open but trading will be thin. Just completing the inflation picture, the October price rise was a fairly broad-based one that included upward pressure across all the main categories, including components that are tied to more persistent inflation. Admittedly, a big driver was energy inflation (+4.8% on a monthly basis), but even if you stripped out the more volatile factors, core inflation was still up +0.6% (vs. +0.4% expected), sending the annual core inflation measure up to its highest since 1991, at +4.6% (vs. +4.3% expected). There were also further signs of pressure from the housing categories, with owners’ equivalent rent (+0.44%) seeing its largest monthly increase since June 2006. This housing inflation is coming in bang on script (see page 19 of my 1970s chart book here). Medical care services (+0.49%) was also a big contributor to the upside surprise. The broad-based price gains drove trimmed mean and median CPI, measures of underlying trend inflation, to their highest levels since 1983. There’ll understandably be questions for the Fed off the back of this release, and markets responded by bringing forward their pricing of the first rate hike to the July 2022 meeting. In fact, by the close of trade, roughly an extra 13bps of hikes were priced in by end-2022 relative to the previous day. It’s also worth noting that the latest CPI release means that the real fed funds rate in October was beneath -6%, which is lower than at any point in the 1970s, where the bottom was -5% (see page 3 in the same 1970s chart book and draw the line down another few tenths of a basis point). So by this measure, monetary policy is even more accommodative now than it was back then, in a decade that saw inflation get progressively out of control. For more on those 1970s comparisons, take a look at our full note from last month (link here.) Treasuries understandably sold off, led by the front end and belly of the curve, as investors brought forward the likely timing of future rate hikes. 5yr Treasuries increased +13.5bps (the biggest one-day increase since February), and 10yrs +11.4bps (largest increase since September). The yield curve flattened, with 5s30s down -4.9bps to 68.5bps, the flattest since March 2020. Longer-dated yields were drifting higher through the New York session but accelerated after a 5.2bp tail in the 30yr Treasury auction. The tail was the highest since 2011, and primary dealer takedown was almost 2 standard deviations above average over the last year. Unlike after less-than-stellar auctions earlier this year, bonds stabilised for the rest of the day, with the 30yr +8.6 bps higher, only +1.7bps above pre-auction trading. After all, 30yr yields have rallied 26.0bps since early October, inclusive of today’s poor auction, as there has been some long-end duration demand. Indeed, even with the policy rate repricing, 5y5y rates, one proxy for long-run or terminal policy rates, remain below 2%, after increasing just +6.2bps. This is also manifest in record low real yields through the curve. 10yr real yields initially sunk to an all-time low intraday at -1.253% after the CPI print before ultimately increasing +3.0bps on the day to -1.17%. Likewise, 5yr real yields touched -1.97% in the aftermath of the CPI print, and closed the day +2.5bps higher than Tuesday’s close at -1.88%. With nominal yields outpacing real yields, inflation compensation increased across the curve: 5yr breakevens increased +11.1bps to 3.10%, an all-time high, whilst 10yr breakevens increased +6.4bps to a post-2006 high of 2.71%. Gold (+0.97%), and other precious metals, including silver (+1.37%) and platinum (+0.75%) gained, as did Bitcoin, which clipped another all-time high, $68,992, intraday. The dollar (+0.90%) also benefitted. The continued prevalence of high inflation is having increasing political ramifications, and President Biden put out a statement following the release, commenting on the inflation data (as well as the more positive weekly jobless claims). He said that reversing the trend in inflation was “a top priority for me” and laid a decent chunk of the blame at rising energy costs. He said that he’d directed the National Economic Council to look at further ways of reducing energy costs, and that he’d also “asked the Federal Trade Commission to strike back at any market manipulation or price gouging in this sector”. However, we also heard from moderate Democratic senator Joe Manchin of West Virginia, who tweeted that “the threat posed by record inflation to the American people is not ‘transitory’ and is instead getting worse. … DC can no longer ignore the economic pain Americans feel every day.” Manchin is a key swing vote on Biden’s Build Back Better Plan, and he has already influenced cutting the bill from the $3.5tn initially envisaged to a framework half that size, due in part to the potential inflationary impact of additional spending. From the Fed however, the only signal we got came from San Francisco Fed President Daly (one of the most dovish FOMC members), who gave an interview with Bloomberg TV shortly following the CPI print. She notably referred to inflation as “eye-popping”, but demurred when asked about changing the course of Fed policy, asserting that it would be premature to “start changing our calculations about raising rates” or to accelerate the pace of tapering. Higher inflation and pricing of aggressive Fed tightening was not a good combination for US risk. The S&P 500 fell -0.82% in its second consecutive decline (which feels like its own record after the recent run), and was down more than a percent intraday. Energy (-2.97%) led the declines (more below) but, tech (-1.68%) and communication services (-1.25%) each declined more than a percent due to the increase in discount rates. Commensurate with the big rate selloff, the Nasdaq (-1.66%) also underperformed. Meanwhile, European equities outperformed, with the STOXX 600 up +0.22% to reach an all-time high, just as the DAX (+0.17%) and the CAC 40 (+0.03%) also hit new records. To be fair, US equities were only slightly down on the day when European bourses closed. Sovereign bonds echoed the US moves however, and a selloff across the continent saw yields on 10yr bunds (+4.9bps), OATs (+6.8bps) and BTPs (+9.5bps) all move higher. Stocks in Asia are trading mixed overnight with CSI (+0.89%) leading the pack, followed by the Shanghai Composite (+0.59%), and the Nikkei (+0.56%) in the green while the Hang Seng (-0.16%) and KOSPI (-0.59%) have lost ground. Staying on inflation, Japan’s PPI for October came out at 8.0% year-on-year (7.0% consensus and 6.3% previous), the highest since 1981. Elsewhere, in Australia the unemployment rate for October saw a big surprise, jumping to 5.2% (4.9% consensus, 4.6% previous) as many people re-entered the labour force after lockdowns. The participation rate rose to 64.7% from 64.5% in September. Futures are indicating a muted start to the day in the US & Europe with S&P 500 futures (+0.08%) up but DAX futures (-0.28%) catching down with the late US sell-off. One solace on the inflation front was a decline in energy prices yesterday, with both Brent crude (-2.52%) and WTI (-3.34%) losing ground. That followed 3 consecutive gains and came after the US EIA reported that crude oil inventories had risen by +1.00m barrels last week. There was also another decline in natural gas prices, with US futures falling -1.99% in their 4th consecutive decline, whilst European futures were down -4.06%. Looking at yesterday’s other data, the weekly initial jobless claims for the US over the week through November 6 fell to 267k (vs. 260k expected). That’s their 6th successive weekly decline and takes the measure to a post-pandemic low. To the day ahead now, and the main data highlight will be the UK’s preliminary Q3 GDP reading. From central banks, the ECB will be publishing their Economic Bulletin, and speakers include the ECB’s Makhlouf, Schnabel and Hernandez de Cos, along with the BoE’s Mann. Otherwise, the European Commission will be releasing their latest economic forecasts, and it’s the Veterans’ Day Holiday in the United States. Tyler Durden Thu, 11/11/2021 - 07:48.....»»

Category: personnelSource: nytNov 11th, 2021

EV Roundup: TSLA CEO Musk"s Mysterious Tweets Make the Most Noise

Tesla (TSLA) CEO Musk leaves Twitterati open-mouthed with a bizarre poll asking his followers to vote whether he should sell 10% of his stock. Last week, Fisker, Inc. FSR and Nikola Corporation NKLA released third-quarter 2021 results. XL Fleet XL provided third-quarter preliminary updates. China-based electric vehicle (EV) players NIO Inc. NIO and Li Auto LI posted October delivery count. But what caught the most attention was EV king Tesla TSLA CEO Musk’s tweets.Last to last week, Tesla made big headlines as it entered the elite $1-trillion club, following the biggest-ever order from car rental giant Hertz. However, last week, Musk downplayed the $4.2-billion deal. On Nov 2, Musk took to Twitter to raise doubts about the potential deal with car rental giant Hertz. He tweeted: “No contract has been signed yet.” In fact, Musk also went on to clarify that demand for Tesla vehicles still overshoots supply, hence Hertz would not garner any discount on its large vehicle order. Thus, the deal will have zero impact on the company’s economics. Hertz followed up on Musk’s tweet by reiterating that it is still moving ahead with the purchase order and has already started receiving deliveries of Tesla vehicles. However, Hertz failed to confirm if a contract had or had not been signed with Tesla in light of Musk's tweet.Over the weekend, Musk again left Twitterati open-mouthed with a bizarre poll asking his followers to vote whether he should sell 10% of his stock. The tweet read: “Much is made lately of unrealized gains being a means of tax avoidance, so I propose selling 10% of my Tesla stock.” “I will abide by the results of this poll, whichever way it goes,” he added. With the majority of his followers voting in the favor of the stock sale, it remains to be seen if Musk keeps his promise.Tesla currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Other Stories That Made Headlines1. Fisker inked a long-term battery supply deal with CATL for its upcoming all-electric Fisker Ocean SUV. Per the agreement, CATL will provide small and large battery packs to Fisker, with an initial battery capacity of more than 5 gigawatt-hours annually from 2023 through 2025. The primary high-capacity pack will use a lithium nickel manganese cobalt cell chemistry, while the second smaller pack will be based on lithium-ion phosphate chemistry. Together, the two different batteries will enable Fisker to offer a line-up of different ranges and levels of performance to consumers when the Ocean is rolled out. Fisker will utilize CATL’s unique dual-chemistry cell capability to optimize vehicle performance and achieve cost effectiveness across the Fisker Ocean line-up.In a separate release, Fisker released third-quarter 2021 numbers. The company reported an adjusted loss per share of 37 cents, wider than the Zacks Consensus Estimate of 34 cents. Net cash used in operating activities and capital expenditure totaled $103.4 million and $15.8 million, respectively, for the quarter under review. Fisker exited the quarter with cash and cash equivalents of $1.4 billion.2. Nikola reported third-quarter 2021 adjusted loss of 22 cents a share, narrower than the Zacks Consensus Estimate of a loss of 26 cents. The firm’s research & development and selling, general and administrative costs flared up 53.2% and 193.3% year over year to $78.9 million and $192.9 million, respectively. As of Sep 30, Nikola had cash and cash equivalents of $586.9 million, down from $840.9 million on Dec 31, 2020. It is on track to deliver 25 pre-series Nikola Tre BEVs to dealers and customers by 2021-end.3. NIO released its delivery count for the month of October 2021. The China-based EV company delivered 3,667 vehicles last month, which declined 27.5% year over year amid low production volume due to restructuring and upgrades to manufacturing lines. Supply-chain distortions amid chip crunch also played spoilsport. The deliveries consisted of 218 ES8s, 2,528 ES6s and 921 EC6s. As of Oct 31, cumulative deliveries of ES8, ES6 and EC6 totaled 145,703 vehicles.4. Li Auto also released delivery numbers for October. The company delivered 7,649 Li ONEs last month, surging 107.2% year over year. As of October-end, the cumulative deliveries of Li ONEs totaled 95,516 units. The company exited the quarter with 162 retail stores in 86 cities, and 223 servicing centers and Li Auto-authorized body and paint shops in 165 cities.5. XL Fleet provided third-quarter 2021 preliminary updates. The company expects the results to be impacted by the global chip shortage and a lack of new fleet chassis. Revenues are expected to come in at $3.2 million. XL Fleet expects to exit the third quarter with cash and cash equivalents of $367 million. Meanwhile, the company named Eric Tech as the new CEO. The change will be effective from Dec 1, 2021.6. Rivian Automotive, which has filed for IPO, raised the offer price of its shares on Friday and is now seeking a roughly $65 billion valuation. This is higher than the $53 billion valuation that it aimed for early last week. The company now plans to offer 135 million shares priced within $72-$74 apiece, higher than the previous range of $57-$62. At the high end of the revised range, Rivian would raise nearly $10 billion at its market debut.Price PerformanceThe following table shows the price movement of some of the major EV players over the past week and six-month period.Image Source: Zacks Investment ResearchIn the past six months, all stocks have increased, apart from Lordstown. In the past week, all stocks have increased, apart from XPeng and Li Auto. What’s Next in the Space?Stay tuned for announcements of upcoming EV models and any important updates from the red-hot industry. Industry watchers will track China EV sales data for October 2021, which is likely to be released by the China Association of Automobile Manufacturers this week. Also, watch out for the quarterly earnings release of Workhorse and Hyliion. Infrastructure Stock Boom to Sweep America A massive push to rebuild the crumbling U.S. infrastructure will soon be underway. It’s bipartisan, urgent, and inevitable. Trillions will be spent. Fortunes will be made. The only question is “Will you get into the right stocks early when their growth potential is greatest?” Zacks has released a Special Report to help you do just that, and today it’s free. Discover 7 special companies that look to gain the most from construction and repair to roads, bridges, and buildings, plus cargo hauling and energy transformation on an almost unimaginable scale.Download FREE: How to Profit from Trillions on Spending for Infrastructure >>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 XL Fleet Corp. (XL): Get Free Report Tesla, Inc. (TSLA): Free Stock Analysis Report Fisker Inc. (FSR): Free Stock Analysis Report NIO Inc. (NIO): Free Stock Analysis Report Nikola Corporation (NKLA): Free Stock Analysis Report Li Auto Inc. Sponsored ADR (LI): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksNov 9th, 2021

Canoo (GOEV) Joins Forces With Panasonic for Battery Supply

Canoo (GOEV) selects Panasonic for the supply of batteries for its upcoming Lifestyle vehicle. Canoo Inc. GOEV has signed an agreement with Panasonic Corp. PCRFY, per which the latter will supply batteries for its Lifestyle Vehicle. The vehicle is scheduled for production in the fourth quarter of 2022 and will be built by the contract manufacturer VDL Nedcar. The vehicle will aid product demand in the United States and Canada.Canoo has developed proprietary battery system technologies that consist of a structurally integrated battery module with built-in safety features. The focus of the engineering team has been to reduce the cost per unit of energy stored while ensuring high performance, safety, reliability, durability, and adaptability with future cell technologies. Instead of enclosing and sealing battery modules, it integrates them directly into the platform structure. This optimizes cost, space and mass, which consequently improves vehicle range and safety.The technology boasts a wide range of integrated battery-related safety features including a high-strength steel frame and innovative crash features, such as a proprietary hollow-can crumple zone to protect the battery during side collision events to better safeguard passengers and battery integrity. The unique design also enables ease of service repairs and upgrades to the battery at the module level thus creating cost efficiencies for owners.Canoo noted that the team is dedicated in its efforts to enhance the safety and lower the cost of ownership of its battery technology. It is enthusiastic to work with Panasonic, which is a pioneer in the electric vehicle batteries domain.Shares of Canoo have declined 26.3% over a year against the industry’s 69.6% rally.Image Source: Zacks Investment ResearchCanoo — which shares space with other electric vehicle makers like Tesla TSLA and Nikola Corporation NKLA — currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.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 Tesla, Inc. (TSLA): Free Stock Analysis Report Panasonic Corp. (PCRFY): Free Stock Analysis Report Nikola Corporation (NKLA): Free Stock Analysis Report Canoo Inc. (GOEV): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksOct 27th, 2021

Lithium price surge sends battery makers scrambling for supply

Lithium price has been on the rise since 2020, bringing production costs of EV batteries higher. Theoretically, prices of battery cells and battery packs will rise by at least 30%, according to GGII. Battery-grade lithium carbonate price has risen 440% since 2020 to CNY175,000-205,000 (US$27,300-32,000) per tonne as of October 13, 2021. Many material suppliers have seen orders extend to 2022......»»

Category: topSource: digitimesOct 25th, 2021

A famed RV maker unveiled its latest over $210,000 Mercedes-Benz Sprinter camper van - see inside the new Jayco Terrain

Demand for RVs, especially camper vans, have remained strong as RV makers continue to face supply chain - and consequently production - challenges. The rear of the 2022 Jayco Terrain. Jayco Jayco has unveiled its latest camper van: the $210,750 Mercedes-Benz Sprinter-based 2022 Terrain. Over the past few years, Jayco has been looking to "put a ton of focus in the van segment." Demands for RVs have remained strong as RV makers continue to face supply chain challenges. Jayco - a longstanding RV maker owned by Thor Industries - has rolled out its latest camper van, the 2022 Terrain, as demand for RVs remains resilient. The 2022 Jayco Terrain. Jayco Tiny homes on wheels have been in high demand since the start of COVID-19, and for now, its popularity shows no signs of slowing down. A big RV. Scott Olson/Getty Images This year, wholesale RV shipments will likely "reach an all-time high" while continuing to grow through next year, according to data from the RV Industry Association. Van-influencer Nikita Crump sits on top of her van, a Ford Transit Connect. Nikita Crump Source: RV Industry Association  One particular recreational vehicle has grown the most in popularity over the past covid-plagued years: class B RVs, or camper vans, Ryan Eash, Jayco's product director, told Insider. Shutterstock According to Eash, camper vans are "currently an over 10,000-unit-a-year market, which has really doubled from the last 18 months." The 2022 Jayco Terrain. Jayco Unsurprisingly, amid this boom in popularity, Jayco has felt the pressure to expand its camper van lineup: "We're going to continue to build our van portfolio as fast as we can," Eash said. The rear of the 2022 Jayco Terrain. Jayco "We have really felt over the past couple of years that we need to put a ton of focus in that van segment," Eash said, noting the particularly "underserved" off-grid four-by-four market. The bathroom inside the 2022 Jayco Terrain. Jayco Enter Jayco's new four-by-four Terrain built on a 144-inch Mercedes-Benz Sprinter, which tackles this specific segment. The layout of the 2022 Jayco Terrain. Jayco Let's take a closer look at the van, which starts at $210,750 with a required "customer value package." Inside the 2022 Jayco Terrain. Jayco Source: Jayco  The new Jayco Terrain has been under development for the past 1.5 years. The 2022 Jayco Terrain with the table extension. Jayco The van - which is just under 20 feet long - can sleep two people and seat four. Inside the 2022 Jayco Terrain. Jayco According to Eash, the van appeals to the younger, more adventurous crowd with its "clean and modern [look] with a rugged feel that one would want going off-road." The 2022 Jayco Terrain. Jayco Heading inside, the front driver and passenger seats can swivel to face the interior of the van. These two seats can then be used in conjunction with the flip-up table and two additional reclinable passenger seats to create a small dining room-like space. Inside the 2022 Jayco Terrain. Jayco But if you'd rather dine outside, there's also an exterior fold-down table and an awning with lights for shaded outdoor lounging. The 2022 Jayco Terrain with the table extension. Jayco The van's bathroom is located just behind the two passenger seats. This space fits a shower, a toilet, removable shelves, a clothing line, and a roof vent. The bathroom inside the 2022 Jayco Terrain. Jayco The kitchen is right across from the bathroom and comes with everything you might need to prepare a quick meal, such as an induction cooktop, a refrigerator, a sink, and pull-out countertop and pantry extensions. Inside the 2022 Jayco Terrain. Jayco Like most camper van layouts, the bedroom is behind the bathroom and kitchen. Here, you'll find a drop-down bed that can be stored in the ceiling when it's not in use. The rear of the 2022 Jayco Terrain. Jayco Storage is important when you're living a downsized life on the road. To accommodate this necessity for storage space, the Terrain has roof racks and an under-bed garage. Inside the 2022 Jayco Terrain's garage. Jayco The van is also lined with LED lights, an air conditioner, and a heating system to moderate the temperature and brightness inside the tiny home on wheels. The layout of the 2022 Jayco Terrain. Jayco All of this is powered by the lithium battery, inverter, alternator, and solar panels, which can support the tiny home on wheels while it's operating off-grid. Inside the 2022 Jayco Terrain. Jayco To make the van off-road capable, Jayco included features like upgraded shocks and an anti-roll bar. The rear of the 2022 Jayco Terrain. Jayco The company has begun shipping the new Terrain to its dealers over the last month. The 2022 Jayco Terrain. Jayco And so far, it's been seeing "overwhelming interest" in the Terrain from both existing #VanLifers and those new to the lifestyle, according to Eash. Inside the 2022 Jayco Terrain. Jayco But at the same time, the RV and auto industries have been plagued by the ongoing supply chain and computer chip crisis, which has hindered production efforts for many major RV makers. Buy it used. Shutterstock Source: Insider "We're building as many [RVs] as we possibly can, but as of right now, the demand for motorhomes is way higher than what can be supplied, not just [from] us at Jayco, but the entire industry," Eash said. cruisinhughesin/Shutterstock "We're doing as best we can, but currently retail demand still outpaces what we're able to supply," he continued. Stanislaw Pytel/Reuters Read the original article on Business Insider.....»»

Category: topSource: businessinsiderOct 24th, 2021

First-tier China lithium battery makers keep prices unchanged for LTA clients

First-tier China-based lithium battery makers, despite continual hikes in material cost, have kept quotes unchanged for LTA (long-term agreement) supplies, according to industry sources......»»

Category: topSource: digitimesOct 19th, 2021

Futures Rebound From Overnight Slide As Oil Keeps Rising

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

Category: personnelSource: nytOct 12th, 2021

Futures Slide, Nasdaq Plunges As Yields Surge And Oil Tops $80

Futures Slide, Nasdaq Plunges As Yields Surge And Oil Tops $80 For much of 2021, a vocal contingent of market bulls had claimed that there is no way the broader market could sell off as long as the gigacap tech "general" refused to drop. Well, it looks like that day is finally upon us because this morning US equity futures are sliding again, continuing their Monday drop as yields from the US to Germany again, the 10Y TSY rising as high as 1.55%, driven to an extent by Fed tapering fears but mostly by the surge in oil which has pushed Brent above $80, the highest price since late 2018. The dollar gained amid the deteriorating global supply crunch from oil to semiconductors. The surge in oil sparked a new round of stagflation fears, sending Nasdaq futures down 240 points or 1.3% as the yield on the benchmark 10-year U.S. Treasury climbed sharply. S&P 500 and Dow Jones futures also retreated, with spoos sliding below 4,400 as to a session low of 4,390. Rising bond yields prompted a shift from growth to cyclical stocks in the United States, in a move that analysts expect could become more permanent after a prolonged period of supressed bond yields. The premarket selloff was led by semiconductor stocks which tracked similar falls for European peers, as a rising 10-year Treasury yield puts pressure on the tech sector. Applied Materials Inc. led a slump in chip stocks in New York premarket trading while Nvidia was down 2.6%, AMD -2.1%, Applied Materials -2.9%, Micron -1.6%. Meanwhile retail trader favorite meme stock Naked Brand Group, an underwear and swimwear retailer, rises again after having surged 40% in the past two trading sessions after Chairman Justin Davis-Rice said in a letter to shareholders that he believes the company has found a “disruptive” potential acquisition in the clean technology sector. Frequency Electronics also soared after being awarded a contract by the Office of Naval Research to develop an atomic clock. Chinese stocks listed in the U.S. were mixed and semiconductor stocks declined. Here are some of the other notable U.S. movers today: iPower (IPW US) shares rise as much as 61% in U.S. premarket trading after the online hydroponics equipment retailer posted 4Q and FY21 earnings Alibaba (BABA US) rises 2.5% in U.S. premarket trading after the company’s shares listed in Hong Kong rose, adding to the Hang Seng Tech Index’s gains Frequency Electronics (FEIM US) soars 20% in U.S. premarket trading after being awarded a contract by the Office of Naval Research to develop an atomic clock Concentrix (CNXC) jumped 5.9% in Monday after hours trading after setting its first dividend payment and buyback program since being spun off from from Synnex in December Brookdale Senior Living (BKD US) shares fell in extended trading on Monday after announcing a $200 million convertible bond offering Altimmune (ALT US) rose as much as 4.2% in Monday postmarket trading on plans to announce results for an early stage study of ALT-801 in overweight people on Tuesday Ziopharm Oncology (ZIOP US) fell in extended trading after company said it cut about 60 positions, or a more than 50% reduction in personnel, to extend its cash runway into 1H 2023 Montrose Environmental Group (MEG US) was down 2.8% Monday postmarket after offering shares via JPMorgan, BofA Securities, William Blair The main catalyst for the stock selloff was the continued drop in Treasurys which sent the 10-year Treasury rising as high as 1.55% while shorter-dated rates surged toward pre-pandemic levels. This in turn was driven by the relentless meltup in commodities: overnight Brent roared above $80 a barrel - on its way to Goldman's revised $90 price target - on louder signs that demand is running ahead of supply and depleting inventories as the world finds itself in an unprecedented energy crisis. The international crude benchmark extended a recent run of gains to hit the highest since October 2018, while West Texas Intermediate also climbed. Oil’s latest upswing has come with a flurry of bullish price predictions from banks and traders, forecasts for surging demand this winter, and speculation the industry isn’t investing enough to maintain supplies. The jump to $80 also is adding inflationary pressure to the global economy at a time when prices of energy commodities are soaring. European natural gas, carbon permits and power rose to fresh records Tuesday, with little sign of the rally slowing. As Bloomberg notes, traders have begun reassessing valuations amid multiplying global risks, while Fed officials have communicated increasingly hawkish signals in recent days as supply-chain bottlenecks threaten to keep inflation elevated. China’s growth slowdown which saw Goldman lower its q/q Q3 GDP forecast to a flat 0.0%, and a debt crisis in the nation’s property market.have also fueled the risk-off shift. "Central bankers have set out how they want to normalize monetary policy for some time,” Chris Iggo, chief investment officer for core investments at AXA Investment Managers, said in a note. “That process could start soon. The realization of this has the potential to provoke some volatility in rates and equities." Elsewhere, European stocks also declined with the Stoxx Europe 600 dragged down most by technology shares. Europe’s Stoxx Tech Index drops as much as 2.8% to a five-week low after falling 1.5% on Monday having previously touched its highest level since 2000 earlier in the month. Single-stock downgrades also weighed. Stocks which performed particularly well this year are among the biggest fallers, with chip equipment makers BE Semi -4.6% and ASML -4.4%, and chipmaker Nordic Semi down 4.2%. Among other laggards, Logitech drops as much as 8.5% after being downgraded to underweight at Morgan Stanley. Earlier in the session, Asian stocks fell for the first time in four days as declines in technology names overshadowed a rally in energy shares.  The MSCI Asia Pacific Index dropped as much as 0.7%, with a jump in U.S. Treasury yields weighing on richly-valued tech stocks. That’s even as the region’s oil and gas shares climbed amid signs of a global energy crunch. Chipmakers Taiwan Semiconductor Manufacturing and Samsung Electronics were the biggest drags on the Asian benchmark. “The climb in yields led to the selling of growth stocks that have been strong, with investors rotating into names that are sensitive to business cycles - not unlike what happened in U.S. equities,” said Shutaro Yasuda, an analyst at Tokai Tokyo Research Center.  Asian equities have been recovering after being whipsawed by concerns over any fallout from China Evergrande Group’s debt troubles. As worries over the distressed property developer abate, the pace of rise in Treasury yields and global inflation data are being closely watched for clues on the U.S. Federal Reserve’s policy stance. Australia’s equity benchmark was among the biggest losers in Asia Tuesday, dragged down by losses in mining and healthcare stocks. Still, broad-based gains in oil explorers and refiners helped mitigate the Asian market’s retreat. In South Korea, importers and distributors of liquefied petroleum gas and liquefied natural gas rallied as the price of natural gas jumped. The future of Evergrande is being forensically scrutinized by investors after the company last Friday did not meet a deadline to make an interest payment to offshore bond holders. Evergrande has 30 days to make the payment before it falls into default and Shenzen authorities are now investigating the company's wealth management unit. Without making reference to Evergrande, the People's Bank of China (PBOC) said Monday in a statement posted to its website that it would "safeguard the legitimate rights of housing consumers". Widening power shortages in China, meanwhile, halted production at a number of factories including suppliers to Apple Inc and Tesla Inc and are expected to hit the country's manufacturing sector and associated supply chains. Analysts cautioned the ongoing blackouts could affect the country's listed industrial stocks. "What we see in China with the developers and the blackouts is going to be a negative weight on the Asian markets," Tai Hui, JPMorgan Asset Management's Asian chief market strategist told Reuters. "Most people are trying to work out the potential contagion effect with Evergrande and how far and wide it could go. We keep monitoring the policy response and we have started to see some shift towards supporting homebuyers which is what we have been expecting." In rates, as noted above, the selloff in Treasuries gathered pace in Asia, early Europe session leaving yields cheaper by 3.5bp to 5.5bp across the curve with 20s and 30s extending above 2% and 10-year through 1.50%. Treasury 10-year yields traded around 1.53%, cheaper by 4.5bp on the day after topping at 1.55%, highest since mid-June; in front- and belly, 2- and 5-year yields remain near cheapest levels in at least 18 months; in 10-year sector, gilts lag by 3bp vs. Treasuries while German yields are narrowly richer. Gilts underperformed further, where long-end yields are cheaper by up to 7.5bp on the day. Treasury futures volumes over Asia, early European session were at more than twice usual levels, with most activity seen in 10-year note contract; eurodollar futures volumes were also well above recent average. With recent aggressive move higher in yields, threat of convexity hedging has exacerbated moves as rate hike premium continues to filter into the curve after last week’s FOMC. Auctions conclude Tuesday with 7-year note sale, while busy Fed speaker slate includes Fed Chair Powell. In FX, the Bloomberg dollar index reached the highest level in more than a month as rising energy costs drove up Treasury yields for a fourth session. The dollar gained against all its peers; Japan’s currency slid for a fifth day against the greenback before a speech Tuesday from Fed Chair Jerome Powell who will say inflation is elevated and is likely to remain so in coming months, according to prepared remarks. Treasury two-year yields rose to the highest since March 2020. “Dollar-yen saw the clearest expression of Treasury yield increases and we attributed this divergence to the surge in energy prices,” says Christopher Wong, senior foreign-exchange strategist at Malayan Banking in Singapore. U.S. natural gas futures soared to their highest since February 2014 on concern over tight inventories. Brent oil topped $80 a barrel amid signs demand is outrunning supply. The euro slipped to hit its lowest level since Aug. 20, nearing the year-to-date low of $1.1664. The Treasury yield curve bear steepened; euro curves followed suit, with the yield on U.K. 10-year notes soaring past 1% for the first time since March 2020 on the prospects for Bank of England policy tightening. In commodities, Crude futures extend Asia’s gains. WTI rises as much as 1.6% to highs of $76.67 before stalling. Brent holds above $80. Spot gold trades around last week’s lows near $1,740/oz. Base metals are mixed: LME aluminum outperforming, rising as much as 1.1%; nickel and copper are in the red. Looking at the day ahead, one of the main highlights will be the appearance of Fed Chair Powell, and Treasury Secretary Yellen at the Senate Banking Committee. Otherwise, central bank speakers include ECB President Lagarde, Vice President de Guindos, and the ECB’s Schnabel, Panetta and Kazimir, along with the BoE’s Mann and the Fed’s Evans, Bowman and Bostic. US data highlights include the US Conference Board’s consumer confidence indicator for September and the FHFA house price index for July. Market Snapshot S&P 500 futures down 0.7% to 4,403.50 STOXX Europe 600 down 1.2% to 456.83 MXAP down 0.4% to 200.06 MXAPJ down 0.4% to 641.05 Nikkei down 0.2% to 30,183.96 Topix down 0.3% to 2,081.77 Hang Seng Index up 1.2% to 24,500.39 Shanghai Composite up 0.5% to 3,602.22 Sensex down 1.4% to 59,209.94 Australia S&P/ASX 200 down 1.5% to 7,275.55 Kospi down 1.1% to 3,097.92 Brent Futures up 0.8% to $80.15/bbl Gold spot down 0.4% to $1,742.61 U.S. Dollar Index up 0.20% to 93.57 German 10Y yield rose 2.7 bps to -0.196% Euro down 0.1% to $1.1681 Top Overnight News from Bloomberg Chinese authorities are striving to signal to traders that whatever happens to China Evergrande Group, its debt crisis won’t spiral out of control or derail the economy Brent oil roared above $80 a barrel, the latest milestone in a global energy crisis, on signs that demand is running ahead of supply and depleting inventories As the dust settles on Germany’s election, control over the finances of Europe’s largest economy could fall to a 42-year-old former tech entrepreneur who wants to lower taxes and tighten spending Wells Fargo agreed to pay $37 million in penalties and forfeiture to settle U.S. claims that it overcharged almost 800 commercial customers that used its foreign exchange services, the latest in a series of scandals at the bank A more detailed look at global markets courtesy of Newsquawk Asian equity markets traded mixed following on from a Wall Street lead where value outperformed growth and tech suffered as yields rose. ASX 200 (-1.5%) was the laggard with losses in healthcare, gold miners and tech frontrunning the declines which dragged the index beneath 7300. Nikkei 225 (-0.2%) was lacklustre and briefly approached 30k to the downside but then bounced off worse levels amid a softer currency, while the KOSPI (-1.1%) also declined following a suspected North Korean ballistic missile launch and with a recent South Korean court order to sell seized Mitsubishi Heavy assets as compensation for wartime forced labour, threatening a flare up of tensions between Japan and South Korea. Hang Seng (+1.2%) and Shanghai Comp. (+0.5%) were underpinned after the PBoC continued to inject liquidity ahead of the approaching National Day holidays and with Hong Kong led higher by strength in property names after the PBoC stated it will safeguard legitimate rights and interests of housing consumers which also provided Evergrande-related stocks further reprieve from their recent sell-off. Finally, 10yr JGBs retreated on spillover selling from T-notes after yields rose on the back of further Fed taper rhetoric and with prices not helped by the uninspiring 2yr and 5yr auctions stateside, while weaker results at the 40yr JGB auction also provided a headwind for prices. Top Asian News Top-Performing Global Luxury Stock Seen Cooling After 680% Gain China Power Price Hike Sought Amid Supply Crunch: Energy Update Macau Evacuates Airport Quarantine Hotel After Outbreak Iron Ore Dips Again as China Power Crisis Adds to Steel Curbs Bourses in Europe extended on the losses seen at the cash open and trade lower across the board (Euro Stoxx 50 -1.7%; Stoxx 600 -1.7%) as sentiment retreated from a mixed APAC handover as month-end looms alongside tier 1 data and a slew of central bank speakers. US equity futures have also succumbed to the mood in Europe alongside the surge in global yields – which takes its toll on the NQ (-1.5%) vs the ES (-0.8%), YM (-0.4%) and RTY (-0.3%). From a more technical standpoint, ESZ1 fell under its 50 DMA (4,431) and tested the 4,400 level to the downside, whilst NQZ1 briefly fell under 15k and the YMZ1 inches towards its 100 DMA (34,489). Back to Europe, the FTSE 100 (-0.4%) sees losses to a lesser extent vs its European peers as energy prices and yields keep the index oil giants and banks supported – with some of the top gainers including Shell (+2.8%), BP (+2.1%). Sectors in Europe are predominantly in the red, but Oil & Gas buck the trend. Sectors also portray more of a defensive bias, whilst the downside sees Tech, Real Estate, and Travel & Leisure at the foot of the bunch, with the former hit by the rise in yields, which sees the US 10yr further above 1.50%, the 20yr above 2.00% and the UK 10yr hitting 1.00% for the first time since March 2020. In terms of individual movers, Smiths Group (+3.8%) is at the top of the Stoxx 600 following encouraging earnings. ING (+0.3%) holds onto gains after sources noted SocGen's (-0.6%) interest in ING's retail banking arm. Finally, chip-maker ASM International (-3.5%) has succumbed to the broader tech weakness despite upping its guidance and announcing capacity expansion by early 2023. Top European News U.K. 10-Year Yield Rises Past 1% for First Time Since March 2020 Goldman’s Petershill Unit Valued at $5.5 Billion in U.K. IPO Go-Ahead Sinks as U.K. Takes Over Southeastern Rail Franchise Hedge Funds and Private Equity Are Targeting European Soccer In FX, It took a while for the index to breach resistance ahead of 93.500, but when US Treasuries resumed their bear-steepening run and the intensity of the moves in futures and cash picked up pace the break beyond the half round number was relatively quick and decisive. Indeed, the DXY duly surpassed its post-FOMC peak (93.526) and a prior recent high from August 19 (93.587) on the way to reaching 93.619 amidst almost all round Dollar gains, as 5, 10, 20 and 30 year yields all rallied through or further above psychological levels (such as 1%, 1.5% and 2% in the case of the latter two maturities). However, petro and a few other commodity currencies are displaying varying degrees of resilience in the face of general Greenback strength that is compounded by buy signals for September 30 rebalancing on spot month, quarter and half fy end. Ahead, trade data, consumer confidence, more regional Fed surveys, speakers and the 7 year auction. NZD/CHF/JPY/AUD - The Kiwi was already losing altitude above 0.7000 vs its US counterpart and 1.0400 against the Aussie on Monday, so the deeper retreat is hardly surprising to circa 0.6975 and 1.0415 awaiting some independent impetus that may come via NZ building consents tomorrow. Meanwhile, the Franc has recoiled towards 0.9300 in advance of comments from SNB’s Maechler and the Yen continues to suffer on the aforementioned rampant yield and steeper curve trajectory on top of a more pronounced 1+ sd portfolio hedge selling requirement vs the Buck, with Usd/Jpy meandering midway between 110.94-111.42 parameters irrespective of renewed risk aversion due to same bond rout dynamic. Back down under, Aud/Usd has faded from around 0.7311 to the low 0.7260 area, though holding up a bit better in wake of not quite as weak as forecast final retail sales overnight. CAD/EUR/GBP - All softer against their US rival, but the Loonie putting up a decent fight with ongoing help from WTI crude that has now topped Usd 76.50/brl, and Usd/Cad also has decent option expiry interest to keep an eye on given 1.2 bn rolling off at 1.2615 and an even heftier 3 bn at 1.2675 compared to current extremes spanning 1.2693-1.2652. Elsewhere, the Euro has lost its battle to stay afloat of multiple sub-1.1700 lows even though EGBs are tumbling alongside USTs and the same goes for Sterling in relation to the 1.3700 handle irrespective of the 10 year Gilt touching 1% for the first time since March 2020. SCANDI/EM - Brent’s advances on Usd 80 brl have been offset to an extent by soft Norwegian retail sales data, as the Nok pares more of its post-Norges Bank gains, while the Sek looks somewhat caught between stalls following a recovery in Swedish consumption, but big swing in trade balance from surplus to larger deficit. However, the Try is taking no delight from the costlier price of oil or remarks from Turkey’s Deputy Finance Minister contending that interest rates can move lower by reducing the current account and budget deficits, or conceding that Dollarisation is a problem and steps need to be taken to enhance confidence in the Lira. Conversely, the Cnh and Cny are still holding a firm line following another net injection of 2 week funds from the PBoC and the Governor saying that China will lengthen the period for the implementation of normal monetary policy, adding that it has conditions to keep a normal and upward yield curve, as it sees no need to purchase assets at present. In commodities, WTI and Brent futures have extended on the gains seen during APAC hours, which saw the Brent November contract topping USD 80/bbl, albeit the volume and open interest has migrated to the December contract – which topped out just before the USD 80/bbl mark. WTI November meanwhile advanced past the USD 76/bbl mark to a current peak at USD 76.67/bbl (vs low USD 75.21/bbl). Desks have been attributing the leg higher to tight supply – with the UK fuel situation further deteriorating amid a shortage of drivers coupled with panic buying. It's worth bearing in mind that the demand side of the equation has also seen supportive, with the US announcing the lifting of international travel curbs recently alongside the economic resilience to the Delta variant heading into the winter period. Traders would also be keeping an eye on the electricity situation in China, which in theory would provide tailwinds for diesel demand via generators, although this could be offset by a slowdown in economic activity due to power outages. There has also been growing noise for OPEC+ to hike output beyond the monthly plan of 400k BPD, with some African nations also struggling to ramp up production due to maintenance issues and lack of investments. Ministers recently noted that the plan would be maintained at next week's confab. As a reminder, the OPEC World Oil Outlook is set to be released at 13:30BST/08:30EDT, although the findings may be stale given the recent developments in crude dynamics. Major banks have also provided commentary on Brent following Goldman Sachs' bullish call recently, with Barclays upping its forecast for both benchmarks due to supply deficits, whilst Morgan Stanley maintained its forecast but suggested that the USD 85/bbl Brent scenario clearly exists. MS also noted that oil inventories continue to draw at high rates and suggest that the market is more undersupplied than generally perceived; the analysts see the market undersupplied into 2022 amid its expectation for further OPEC discipline. Nat gas also remains in focus, with prices +11% at one point, whilst Russia's Kremlin said Russia remains the safeguard of natural gas to Europe and Gazprom is ready to discuss new gas supply contracts with increased volumes to meet rising European demand. It's also worth being aware of the increasing likelihood of state intervention at these levels as nations attempt to save or at least cushion consumers and company margins. Elsewhere, precious metals are under pressure as the Buck remains buoyant, with spot gold still under USD 1,750/oz as it inches closer to the 11th August low of USD 1,722/oz. Spot silver remains within recent ranges above USD 22/oz. Overnight Chinese nickel and tin prices extended losses with traders citing subdued demand, whilst coking coal and coke futures leapt on tight supply. US Event Calendar 8:30am: Aug. Advance Goods Trade Balance, est. -$87.3b, prior -$86.4b, revised -$86.8b 8:30am: Aug. Retail Inventories MoM, est. 0.5%, prior 0.4%; Wholesale Inventories MoM, est. 0.8%, prior 0.6% 9am: July S&P CS Composite-20 YoY, est. 20.00%, prior 19.08% 9am: July S&P/CS 20 City MoM SA, est. 1.70%, prior 1.77% 9am: July FHFA House Price Index MoM, est. 1.5%, prior 1.6% 10am: Sept. Conf. Board Consumer Confidence, est. 115.0, prior 113.8 Expectations, prior 91.4 Present Situation, prior 147.3 10am: Sept. Richmond Fed Index, est. 10, prior 9 Central Bank Speakers 9am: Fed’s Evans Makes Welcome Remarks at Payments Conference 10am: Powell and Yellen Appear Before Senate Banking Panel 1:40pm: Fed’s Bowman Speaks at Community Bank Event 3pm: Fed’s Bostic Discusses the Economic Outlook 7pm: Fed’s Bullard Discusses U.S. Economy and Monetary Policy DB's Jim Reid concludes the overnight wrap What a difference a week makes. You hardly hear the word Evergrande now. We asked in a flash poll last week whether we would still be talking about it in a month or whether it would be a distant memory by then. Maybe we should have narrowed the time frame to a week! We’ve quickly moved on to rate hikes and rising bond yields as the topic de jour. A further rise in the Bloomberg Commodity Spot Index (+1.87%) to a fresh high for the decade helped reinforce the move. Indeed, sovereign bond yields moved higher once again yesterday amidst a sharp rise in inflation expectations, with those on 10yr Treasury yields rising +3.6bps to 1.487%, their highest level in over 3 months. Meanwhile the 2yr yield rose +0.8bps to 0.278%, its highest level since the pandemic began, which comes on the back of last week’s Fed meeting that prompted investors to price in an initial rate hike from the Fed by the end of 2022. The moves in Treasury yields were almost entirely driven by higher inflation breakevens, with 10yr breakevens up +3.7bps. That echoed similar moves in Europe, where the German 10yr breakeven (+4.7bps) hit a post-2013 high of 1.653%, and their Italian counterparts (+3.9bps) hit a post-2011 high. The biggest move was in the UK however, where the 10yr breakeven (+13.2bps) reached its highest level since 2008, which comes amidst a continued fuel shortage in the country, alongside another rise in UK natural gas futures, which were up +8.20% yesterday to £190/therm, exceeding the previous closing peak set a week earlier. We were waiting for the wind to blow in this country to get alternatives back on stream and boy did it blow yesterday but with no impact yet on gas prices. Lower real rates dampened the rise in yields across the continent, though yields on 10yr bunds (+0.5bps), OATs (+0.9bps), BTPs (+1.3bps) and gilts (+2.7bps) had all moved higher by the close of trade. Those spikes in commodity prices were evident more broadly yesterday, with energy prices in particular seeing a major increase. Brent crude oil prices were up +1.84% to $79.53/bbl, marking their highest closing level since late-2018, and this morning in trading they have now exceeded the $80/bbl mark with a further +0.94% increase. It was much the same story for WTI (+1.99%), which closed at $75.45/bbl, which was its own highest closing level since 2018 too. And those pressures in UK natural gas prices we mentioned above were seen across Europe more broadly, where futures were up +8.92%. With yields moving higher and inflationary pressures growing stronger, tech stocks struggled significantly yesterday, with the NASDAQ down -0.52%. The megacap tech FANG+ index fell -0.15% on the day, but was initially down as much as -1.7% in early trading. The NASDAQ underperformed the S&P 500, which was only down -0.28%, but that masked significant sectoral divergences, with interest-sensitive growth stocks struggling, just as cyclicals more broadly posted fresh gains. More specifically, energy (+3.43%), bank (+2.29%) and autos (+2.19%) led the S&P, while biotech (-1.65%) and software (-1.39%) shares were among the largest laggards. European equities were also pretty subdued, with the STOXX 600 down -0.19%, though the DAX was up +0.27% following the results of the German election, which removed the tail risk outcome of a more left-wing coalition featuring the SPD, the Greens and Die Linke. Staying on the political scene, we are now less than 72 hours away from a potential US government shutdown as it stands. As was expected, Republicans in the Senate blocked the House-passed measure to fund the government for another 2 months and raise the debt ceiling for 2 years. While Democrats have not put forward their alternative strategy if Republicans refuse to vote to lift the debt ceiling, their only option would be to attach it to the budget reconciliation plan that currently makes up much of the Biden economic agenda. In an effort to keep all party members on board, Speaker Pelosi moved the vote on the $550bn bipartisan infrastructure bill to Thursday in order to give all sides more time to finish the larger budget bill and pass both together. It is a going to be a very busy Thursday, since Congress will have to also pass the funding bill that day. Republicans and Democrats already agree on a funding bill to keep the government open that does not include the debt ceiling increase so it is just a matter of how exactly the debt ceiling provision goes through without a Republican Senate vote. Overnight in Asia, equity indices are seeing a mixed performance. On the one hand, most of the region including the Nikkei (-0.24%) and KOSPI (-0.80%) are trading lower as investors begin to price in tighter monetary policy from the Fed. However, the Hang Seng (+1.50%), Shanghai Composite (+0.53%) and CSI (0.38%) have all advanced after the People’s Bank of China said that they would ensure a “healthy property market”. Looking forward, US equity futures are pointing to little change, with those on the S&P 500 down just -0.05%, and 10yr Treasury yields have risen +1.9bps this morning to trade above 1.50% again. Back to the German election, where the aftermath yesterday saw various party leaders assess the results and stake their claims to participate in a new coalition. As a reminder, the SPD came in first place with 25.7%, but the CDU/CSU weren’t far behind on 24.1%, making it mathematically possible for either to form a government in a coalition with the Greens and the FDP. The SPD’s chancellor candidate, Finance Minister Olaf Scholz, appealed for the Greens and FDP to join him in forming a government, and told the media that he wanted to form a coalition before Christmas. Meanwhile Green co-leader Robert Habeck said that “Of course there is a certain priority for talks with the SPD and the FDP”, but said that this didn’t mean they wouldn’t speak with the CDU/CSU either. As the SPD were calling for an alliance, the tone sounded more negative from the CDU’s leadership, even though Armin Laschet said that he had not given up on the idea of forming a government. Notably, Laschet said that no party was able to draw a clear mandate from the result, including the SPD, and this echoed remarks from the CSU leader Markus Söder, who said that the conservatives had no mandate to form a government, though they could “make an offer out of a sense of responsibility for the country.” Meanwhile, attention will turn to the FDP and the Greens to see which way they’re leaning when it comes to forming a government. FDP leader Lindner said that he would hold preliminary talks with the Greens, after which they would be open to invitations from either the SPD or the CDU/CSU for further discussions. Back on the UK, there was an interesting speech from BoE Governor Bailey yesterday, where he echoed the line from the MPC minutes last week, saying that “all of us believe that there will need to be some modest tightening of policy to be consistent with meeting the inflation target sustainable over the medium-term”. However, he also said that their view was that “the price pressures will be transient”, and that “monetary policy will not increase the supply of semi-conductor chips … nor will it produce more HGV drivers.” He then further added that tighter policy “could make things worse in this situation by putting more downward pressure on a weakening recovery of the economy”. So a bit of a mixed message of backing rate hike expectations but warning about its impact on growth. Over in the US we heard from a host of Fed speakers with Governor Brainard saying that while “employment is still a bit short of the mark” of “substantial further progress”, she expects that the labour market will recover enough to start tapering asset purchases soon. Separately on the inflation debate, Minneapolis Fed President Kashkari argued that this year’s pickup in US inflation has been a byproduct of the supply disruptions associated with Covid and that policy makers should not react to it just yet. He cited the need to get US employment back up as the Fed’s “highest priority”. New York Fed President Williams agreed with his colleague, saying that “this process of adjustment may take another year or so to complete as the pandemic-related swings in supply and demand gradually recede.” And Chicago Fed President Evans is even worried about downside inflation risks, as he is " more uneasy about us not generating enough inflation in 2023 and 2024 than the possibility that we will be living with too much.” Lastly, news came out yesterday that Boston Fed President Rosengren will retire this week due to health concerns. He was due to step down in June regardless as there is a mandatory retirement age of 65. Dallas Fed President Kaplan also announced his retirement yesterday, which will take effect October 8th. Both officials have drawn scrutiny in recent days stemming from their recent disclosure of trading activity over the last year, though the activity did not violate the Fed’s ethics code even as Fed Chair Powell announced an official review of those rules. The Boston Fed President will be a voting member on the FOMC next year, and the Dallas Fed President in 2023. Running through yesterday’s data, the preliminary reading for US durable goods orders in August showed growth of +1.8% (vs. +0.7% expected), and the previous month was also revised up to show growth of +0.5% (vs. -0.1% previously). Meanwhile core capital goods orders grew by +0.5% (vs. +0.4% expected), and the previous month’s growth was revised up two-tenths. Finally, the Dallas Fed’s manufacturing activity index for September came in at 4.6 (vs. 11.0 expected) – its lowest reading since July 2020. To the day ahead now, and one of the main highlights will be the appearance of Fed Chair Powell, and Treasury Secretary Yellen at the Senate Banking Committee. Otherwise, central bank speakers include ECB President Lagarde, Vice President de Guindos, and the ECB’s Schnabel, Panetta and Kazimir, along with the BoE’s Mann and the Fed’s Evans, Bowman and Bostic. US data highlights include the US Conference Board’s consumer confidence indicator for September and the FHFA house price index for July. Tyler Durden Tue, 09/28/2021 - 07:52.....»»

Category: blogSource: zerohedgeSep 28th, 2021

EV Roundup: F Partners With Redwood, LI Trims Q3 Delivery Guidance & More

While Ford (F) ties up with Redwood Materials for EV battery recycling, Li Auto (LI) cuts delivery view for the third quarter of 2021 amid chip crisis. The electric vehicle (EV) revolution is accelerating, with companies leaving no stone unturned to establish a strong foothold in this domain. Consumers are demanding more electric options and manufacturers are also rising to the occasion. While EV makers are getting all charged up, countries, states, and cities are also stepping up their clean energy targets, turning the future in favor of e-mobility. The pressure for legacy automakers to make a transition from conventional fossil fuel vehicles has been mounting. In fact, last week, BMW AG and Daimler AG DDAIF were sued by a German environmental group for refusing to strengthen their carbon emission goals. While the car giants have plans to shift from petrol and diesel vehicles to green modes of transportation, the plaintiffs contend their strategies are inadequate to meet the global climate targets and are of the opinion that the companies need to set more ambitious goals, including terminating the sale of fossil-fuel cars by 2030. Rundown of the Week’s Most Important StoriesDaimler announced that it has joined forces with Stellantis and TotalEnergies in an EV battery venture in Europe to secure supplies for Mercedes-Benz. The auto biggie is set to hold a 33% interest in battery manufacturer Automotive Cells Company (ACC) — a joint venture established by Stellantis and TotalEnergies in 2020. The entire project is expected to be worth more than 7 billion euros to achieve a capacity of at least 120 gigawatt hours in Europe. By the end of the decade, Daimler’s investment in the battery facility venture is not likely to exceed $1.2 billion or 1 billion euros, starting with a mid-three-digit-million spending next year. ACC is set to commence supplying batteries for Mercedes-Benz by mid-decade.Ford F announced that it is partnering with Redwood Materials — a leading battery materials company — to make EVs more sustainable and economical for customers by building a domestic battery supply chain, creating recycling options for end-of-life vehicles, and enhancing battery production. The collaboration with Redwood will help ensure that the right infrastructure is in place to cost-effectively recycle the end-of-life Ford batteries for creating a solid pool of domestic raw materials and thus, making EVs economical. The U.S. auto giant has invested $50 million in Redwood to support the latter’s expansion in the United States.Li Auto LI lowered its third-quarter 2021 delivery guidance. The China-based EV maker now expects to deliver 24,500 vehicles in the third quarter, down from the previous projection of vehicle deliveries between 25,000 and 26,000 units. Amid heightened pandemic-induced concerns in Malaysia, the production of chips dedicated for Li Auto’s millimeter-wave radar supplier has been severely disrupted. This prompted the company to slash its delivery guidance for the third quarter. Li Auto currently carries a Zacks Rank #4 (Sell).Volkswagen AG VWAGY announced that it is commencing the construction of a production plant for battery systems in Hefei, China. The plant, named VW Anhui Components Company, will be the first of its kind to be fully owned by the China wing of the company and will begin production in second-half 2023. The Germany-based auto biggie presently operates an EV production plant together with JAC in Hefei, known as Volkswagen Anhui, and the new plant will be set up in its vicinity. The automaker plans to invest more than $164 million in the new plant by 2025. The initial capacity will be 150,000-180,000 battery systems annually for the company’s Anhui EV facility.Allison Transmission ALSN entered into a strategic collaboration partnership agreement with Jing-Jin Electric (“JJE”) to accelerate the development of best-in-class electrified powertrain solutions for global commercial vehicles. The collaboration aims to bank on JJE’s dominance in electric motor and inverter development, and its robust foothold in the commercial vehicle electrified powertrain market in China, while exploiting Allison’s expertise in fully electric and electric hybrid commercial duty propulsion systems. Additionally, Allison has pledged to provide debt financing to back on JJE North America’s efforts for commercial vehicle electric drive product development, testing and manufacturing.Blink Charging BLNK made two announcements that will expand its distribution channels and ease out the access of its sustainable EV charging stations. It announced that Sourcewell, a self-sustaining government organization offering contract purchasing solutions, has awarded it with a cooperative purchasing contract in the Electric Vehicle Supply Equipment category. The purchasing contract will make its EV chargers accessible to a broad range of entities. In another development, Blink signed an agreement with the city of San Antonio to install its first publicly accessible EV charging station at the San Antonio Zoo. The deal paves way for the deployment of 202 Level 2 charging stations and three DC fast-chargers across the city.Honda Motor HMC announced that it is targeting initial annual sales of 70,000 units for the all-new electric Prologue sport utility vehicle (SUV) when it first hits the U.S. market in 2024. The Honda Prologue SUV will be the first volume battery-electric vehicle for North America. In addition to Honda Prologue, the company will also unveil an all-electric Acura SUV in 2024 in North America. Both Honda Prologue SUV and Acura SUV will utilize General Motors’ Ultium-branded EV architecture and battery system. Honda currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.General Motors GM unveiled three new electric motors for Ultium-based EVs at the 2021 Mackinac Policy Conference. The motors — a 180-kilowatt front-drive motor, a 255-kW rear and front-drive motor, and a 62-kW all-wheel-drive assist motor — will power the automaker’s future EVs and debut on the 2022 GMC Hummer EV. These are designed in-house by General Motors. Additionally, the company has developed the software for Ultium Drive’s motor controllers, which, per the auto biggie, is crucial for catering to the propulsion needs of various vehicle types with a minimal set of components. This new controller is also going to be first integrated into the GMC Hummer EV. In a separate development, General Motors announced an investment of $300 million in China’s autonomous driving startup Momenta.Price PerformanceThe following table shows the price movement of some of the major EV players over the past week and six-month period.Image Source: Zacks Investment ResearchIn the past six months, all stocks have decreased apart from Tesla, XPeng and Li Auto. Lordstown bore the maximum brunt, with shares declining more than 33%. The past week also displayed a mixed price trend, with Canoo registering the maximum gain.Li Auto was the worst performer of the past week, with its shares sliding 10.2%. In fact, close peers XPeng and NIO also dipped 9.4% and 5.6%, respectively. The big dip in these companies was sparked amid fears that the highly indebted China-based real-estate developer Evergrande Group could possibly collapse, resulting in a wave of defaults in China's bloated property market.What’s Next in the Space?Stay tuned for announcements of upcoming EV models and any important updates from the red-hot industry. Also, watch out for September delivery updates from NIO, Li Auto and XPeng that are set to be reported later this week. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. You know this company from its past glory days, but few would expect that it's poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks' Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ford Motor Company (F): Free Stock Analysis Report Daimler AG (DDAIF): Free Stock Analysis Report Honda Motor Co., Ltd. (HMC): Free Stock Analysis Report General Motors Company (GM): Free Stock Analysis Report Allison Transmission Holdings, Inc. (ALSN): Free Stock Analysis Report Blink Charging Co. (BLNK): Get Free Report Volkswagen AG (VWAGY): Free Stock Analysis Report Li Auto Inc. Sponsored ADR (LI): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 27th, 2021

Futures Slide Alongside Cryptocurrencies Amid China Crackdown

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

Category: blogSource: zerohedgeSep 24th, 2021

5 Stocks to Watch as EV Adoption Revs Up

EV adoption has witnessed significant growth this year. Thus, investors should keep an eye on Nikola (NKLA), Hyliion (HYLN), Tesla (TSLA), Ford (F) & General Motors (GM). Electric vehicles (EV) are rapidly gaining in terms of reliability and a way to reduce the global carbon footprint. Longest-lasting, farthest-driving and affordable batteries are the key parameters of the race in the EV market.The automobile industry is moving toward electrification and the U.S. government is providing aid through the promotion of EV infrastructure and consumer rebates. Regardless of the government’s boost and the infrastructure bill scheduled to be passed on Sep 27, the industry is poised to witness tremendous growth.Consumer enthusiasm has been a key to EV growth, as can be seen from the boom in sales. In the first quarter of 2021, global EV sales surged 160% from the same quarter last year to 2.6 million units, according to a report by Canalys. Sales have been spectacular despite several supply-side constraints, especially the pandemic and chip shortage.China is the largest EV market while Europe has the highest EV adoption, with Norway leading with more than 80% of new car sales. Meanwhile, the United States is trying to catch up and the Biden administration hopes 40% to 50% of all new cars sales to be EVs by 2030.Recent technological developments are also boosting the EV space, starting from carmakers to battery producers and charging networks. In fact, batteries are the linchpin of any EV and this segment has especially witnessed exponential growth. Companies like Hyliion Holdings Corp. HYLN are developing electric powertrains that are compatible with renewable natural gas and hydrogen fuel cells. Meanwhile, QuantumScape announced a major breakthrough in solid-state lithium metal batteries that can totally change the way consumers view EVs.The EV market has also created several niches like battery recycling and disposal of old batteries. Companies like Li-Cycle Holdings, founded only in 2016, estimates that the EV industry will produce more than 15 million tons of discarded lithium-ion batteries by 2030. Li-Cycle, a battery recycling firm, plans to capture this segment by offering an outlet for used batteries and a sustainable source for materials to be used in recycled batteries. It aims to recover usable materials from thrown-away batteries and touts that up to 95% of the battery materials can be processed for recovery, which in turn will reduce waste.Automobile bigwigs are also investing millions into EVs. On Sep 22, Ford Motor Company F reported that it is investing $50 million in Redwood Materials to recycle EV batteries. Redwood, which is well known for recycling batteries for e-bike, will expand its manufacturing facilities and cater to make EVs more sustainable and affordable. This deal is part of the $22-billion plan that Ford earlier announced to up its game in the EV market. The company also has the Mach-E, the e-Transit commercial van, and an electric F-150 line-up, set to be launched this year and the next.5 Stocks to WatchGlobal administration bodies are increasing regulations to phase out fossil fuel-powered vehicles and promoting EV infrastructure. Additionally, the decline in the cost of batteries and the luxury that EVs provide are also attracting buyers. Per a Meticulous Market Research forecast, the global EV market is expected to reach $2.5 trillion by 2027, at a CAGR of 33.6% from 2020. The company estimates the sale of 233.9 million units by 2027, at a CAGR of 21.7%.Given the positives, we have shortlisted five stocks covering EV manufacturers (pure-play & traditional), battery makers and charging networks that are poised to grow and investors should look out for.Nikola Corporation NKLA develops and commercializes battery-electric (BEV) and fuel cell electric (FCEV) Class 8 trucks for the short, medium, and long-haul trucking sector and also offers hydrogen EVs, EV drivetrains, vehicle components, and energy storage systems. Earlier in September, Nikola inaugurated a joint-venture manufacturing facility with CNH Industrial dedicated to the development of the Nikola Tre electric heavy-duty trucks.The company’s expected earnings growth rate for the current quarter is 16.1% against the Zacks Automotive - Domestic industry’s projected decline of 48.7%. The Zacks Consensus Estimate for this company’s current-year earnings has been revised 18.5% upward over the past 60 days. Nikola currently holds a Zack Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Hyliion Holdings designs, develops, and sells electrified powertrain solutions and also provides battery management systems for hybrid and fully EV applications. This Zack Rank #2 company that belongs to the Zacks Automotive - Original Equipment industry has an expected earnings growth rate of 50% for the current quarter. The Zacks Consensus Estimate for this company’s current-year earnings has been revised 9.4% upward over the past 60 days.Tesla, Inc. TSLA designs, develops, manufactures, leases, and sells electric vehicles, and energy generation and storage systems.The company’s expected earnings growth rate for the current year is more than 100% compared with the Zacks Automotive - Domestic industry’s projected growth of 15.2%. The Zacks Consensus Estimate for this company’s current-year earnings has been revised 19.1% upward over the past 60 days. Tesla carries a Zack Rank #3 (Hold).Ford, a Zack Rank #3 company, designs, manufactures, markets, and services a range of Ford trucks, cars, sport utility vehicles, electrified vehicles, and Lincoln luxury vehicles. The company plans to add F-150 Lightning with four series and two battery options to the range of Mustang Mach-E catalog by spring 2022.The auto giant has an expected earnings growth rate for the current year of more than 100% compared with the Zacks Automotive - Domestic industry’s projected growth of 15.2%. The Zacks Consensus Estimate for this company’s current-year earnings has been revised 28.2% upward over the past 60 days.General Motors Company GM designs, builds, and sells cars, trucks, crossovers, and automobile parts. The company recently unveiled the Cadillac LYRIQ show car and the GMC HUMMER EV, which joined the Chevrolet Bolt EV, and is currently on the market. The auto giant will invest $27 billion in EVs and associated products between 2020 and 2025.This Zack Rank #3 company’s expected earnings growth rate for the current year is 25.7% compared with the Zacks Automotive - Domestic industry’s projected growth of 15.2%. The Zacks Consensus Estimate for this company’s current-year earnings has been revised 0.7% upward over the past 90 days. More Stock News: This Is Bigger than the iPhone! It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market. Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.Click here for the 4 trades >>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 Ford Motor Company (F): Free Stock Analysis Report General Motors Company (GM): Free Stock Analysis Report Tesla, Inc. (TSLA): Free Stock Analysis Report Nikola Corporation (NKLA): Free Stock Analysis Report Hyliion Holdings Corp. (HYLN): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 23rd, 2021

EV Roundup: TSLA Under NTSB Scrutiny, WKHS Drops Suit Against USPS & More

While Tesla's (TSLA) Model 3 crash in Florida triggers 2nd NTSB scrutiny for the firm this year, Workhorse (WKHS) voluntarily withdraws its lawsuit against USPS over mail truck contract. The electric vehicle (EV) market has been growing prolifically, with both legacy automakers and pure-play EV makers stepping up efforts to launch new models. While electric cars are taking off in a big way, the pickups have been rather slow in shifting gears to electric. But that’s about to change soon. Last week, the first edition version of Rivian Automotive’s all-electric R1T pickup truck rolled off the assembly line at the company’s Illinois factory. With that, this California EV startup becomes the first company to bring an e-truck into the U.S. market, beating auto giants like Tesla TSLA, Ford F and General Motors GM. Deliveries of the “Launch Edition” R1T truck will commence this month. Keeping up with the heightened competition, Ford also commenced pre-production of F-150 Lightning. The company will invest another $250 million to ramp up the production capacity of its upcoming e-pickup to 80,000 annually.Meanwhile, Canada-based EV maker GreenPower Motor GP announced the delivery of its first fully-electric BEAST School Bus to Santa Maria Joint Union High School District. Another Canada-based EV player ElectraMeccanica SOLO also revealed plans to launch deliveries of its flagship SOLO EV for a select group of early reservation holders and fleets effective Oct 4, 2021. Deliveries to other customers and reservation holders will step up gradually once the output ramps up. Meanwhile, China-based EV startup XPeng XPEV officially launched its P5 family sedan at a price range of RMB157,900-RMB223,900. With customer deliveries in China scheduled to commence by October-end, this would be the world’s first production vehicle with built-in LiDAR technology.Recap of the Week’s Most Important StoriesNikola Corporation NKLA and CNH Industrial’s Iveco truck unit inaugurated the joint-venture manufacturing facility in Germany, dedicated to the development of Nikola Tre electric heavy-duty trucks. The production line, currently anticipated to be capable of manufacturing 1,000 units per shift a year, will likely be substantially ramped up in the upcoming years. The first Nikola Tre models produced at the facility will be deployed for select customers in the United States in 2022. The companies also announced their collaboration for testing and subsequent implementation of heavy-duty EVs and charging infrastructure at the Port of Hamburg during 2022. Tesla’s Model 3 crash in Florida last week, which killed two people, will be investigated by the U.S. National Transportation Safety Board (“NTSB”). It is still debatable whether the vehicle involved in the crash was equipped with Autopilot or not. The NTSB will commence its investigation today and complete the work within a week so as to issue a preliminary report in about 30 days. This will be the second probe by the agency in a fatal accident involving Tesla’s models in less than six months’ time. The NTSB is also investigating a lethal crash in Texas involving a Model S sedan that crashed in a tree and burst into flames, killing both passengers in April. Meanwhile, Wedbush Securities, a Los Angeles-based investment firm,anticipates Tesla — which currently carries a Zacks Rank #3 (Hold) — to deliver 900,000 cars in 2021, followed by 1.3 million deliveries in 2022. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.Workhorse Group Inc. WKHS voluntarily withdrew its lawsuit protesting the United States Postal Service’s (USPS) decision to let Oshkosh’s Defense arm build the next-generation mail truck. The dismissal of the lawsuit comes from Workhorse’s newly-appointed CEO, Rick Dauch, who took over just six weeks ago, following several quarters of unattained production targets. Reportedly, Dauch sees multiple business opportunities for Workhorse’s last-mile delivery trucks and drone system, and wants to kindle the company’s focus on taking advantage of those. Dauch has further stated his intention of cooperating with the government on future electric vehicles (EV), rather than challenge it through litigation.General Motors is working with South Korea's LG Energy Solution, its long-time EV partner, in tracking and solving problems linked to the battery fires in Chevrolet Bolts that have paralyzed the vehicle’s entire production line. General Motors has discovered two manufacturing defects in the battery cells supplied by LG from two of its plants (one in South Korea and one in Michigan) — a torn anode tab and folded separator — which, in rare circumstances, might lead to a battery fire. This has triggered three recalls (affecting roughly 142,000 cars) and cost $1.8 billion to the automaker since last November. To resolve the issue, the entire battery pack for the older models will be replaced, while the newer models will have only the defective modules within the pack replaced. The U.S. auto giant has extended the suspension of Bolt EV and EUV production till mid-October.Price PerformanceThe following table shows the price movement of some of the major EV players over the past week and six-month period.Image Source: Zacks Investment ResearchIn the past six months, all stocks have decreased, apart from Tesla, XPeng, and Li Auto. Canoo bore the maximum brunt, with shares declining 55%. The past week also displayed a mixed price trend, with Lordstown Motors registering the maximum gain and Li Auto being the worst performer.What’s Next in the Space?Stay tuned for announcements of upcoming EV models and any important updates from the red-hot industry. Breakout Biotech Stocks with Triple-Digit Profit Potential The biotech sector is projected to surge beyond $2.4 trillion by 2028 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases. Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Recommendations from previous editions of this report have produced gains of +205%, +258% and +477%. The stocks in this report could perform even better.See these 7 breakthrough stocks now>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Ford Motor Company (F): Free Stock Analysis Report General Motors Company (GM): Free Stock Analysis Report Tesla, Inc. (TSLA): Free Stock Analysis Report GreenPower Motor Company Inc. (GP): Free Stock Analysis Report Workhorse Group, Inc. (WKHS): Free Stock Analysis Report ElectraMeccanica Vehicles Corp. (SOLO): Free Stock Analysis Report Nikola Corporation (NKLA): Free Stock Analysis Report XPeng Inc. Sponsored ADR (XPEV): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 21st, 2021

CATL reportedly to raise LFP battery quotes

China-based Contemporary Amperex Technology (CATL), a LFP (lithium ferrous phosphate) battery maker in the supply chain of Tesla, reportedly will raise its quotes by 10% to reflect increased costs for LFP materials, according to industry sources......»»

Category: topSource: digitimesMay 17th, 2021

Notebook battery suppliers to raise prices by 10-15%

Notebook battery module makers are poised to raise their quotes by 10-15% to reflect rising raw materials costs, according to industry sources......»»

Category: topSource: digitimesMar 12th, 2021

7 questions potential camper van or RV owners should ask themselves before purchasing one

The price of camper vans ranges from a few thousand dollars to hundreds of thousands of dollars, depending on the build. The Last Resort Mercedes-Benz Sprinter conversion by Advanced RV.Advanced RV Camper vans have skyrocketed in popularity throughout COVID-19. There are several routes potential owners can take, from building one yourself to purchasing prebuilt units. Here's a guide potential camper van owners should ask themselves before making the investment.  Converted camper vans have become a popular living and travel trend across the US, and skyrocketing RV sales throughout COVID-19 has proven that tiny homes on wheels are here to stay.For some, the freedom a van provides a sense of freedom and mobility that isn't possible with a traditional house. And since the start of COVID-19, the #VanLife community has expanded to include remote workers, digital nomads, travelers, minimalists, and more. The number of people who have realized their passion for tiny homes on wheels has grown to include a large community across social media: on Instagram, #VanLife currently has over 11.6 million hashtagged posts, while #campervan has over 4 million hashtagged posts.The camper van community has also been featured in the national spotlight. In March 2020, camper van conversion company Boho Vans was featured on "Shark Tank", where company owners Brett Ellenson and David Sodemann secured Barbara Corcoran's investment of $150,000 cash upfront and a $150,000 line of credit for a 10% stake.With all of this attention, it's no surprise that camper van conversion companies and RV makers have seen a surge in sales and client inquiries during the coronavirus pandemic. In June, Thor Industries — a major RV maker that owns brands like Jayco and Airstream — reported a $14.32 billion order backlog. Shortly after, Bob Martin, Thor's president and CEO, told CNBC's Jim Cramer on "Mad Money" that the company was "pretty much sold out for the next year."There are many ways to purchase a camper van, from doing it yourself to seeking help from a conversion company. Here are the seven questions you should ask yourself if you're looking to purchase your own tiny home on wheels.Why do you want a camper van?Boho Camper Van's Houston.Justin OrtonEstablishing your reasons for wanting to purchase a camper van will allow you to figure out what you want inside of your van. For example, if your plan is to live in the van from Saturday to Sunday for weekend warrior adventures, you might not need a large battery pack or water tanks.But if you plan on living in your van full-time and off-grid, your build may require a larger battery pack, solar panels, or an inverter.More importantly, clarifying why you want a camper van is important because the final product could potentially amount to a more than $100,000 investment for a custom build. If you want a camper van for an occasional annual trip, the big-ticket price might not be worth it. But if you plan on using the camper on a weekly or daily basis, or for extended periods of time, it may be."Have patience with yourself and do research in order to get comfortable and to know that it's something you want," Gianna Bachowski of Our Van Quest told Insider. "Sometimes, you have to get a little uncomfortable, so trusting in that process is important."What's your budget?Wayfarer Vans.Wayfarer VansThe big budget question also affects how you want your camper van to be converted.If your budget is in the single-digit thousands, you may want to consider doing your own conversion or purchasing a conversion kit, such as the $5,196 to $11,394 kit from Wayfarer Vans.If you want a camper van just to be able to sleep in your car, maybe owning an entirely outfitted van might not be the best choice. Lean towards options like an inflatable car tent or a bed-in-a-box instead of a converted van.And if you're just investing in a camper van because you want a full kitchen on the road, there are also kitchen units that are designed to be placed in the trunk of a car.For those who want a custom converted van, the possibilities are endless, but so is the possible price tag: some fully converted campers could eventually amount to the price of a small home.If you have a higher budget but don't want to design a custom build, several companies also offer fully converted and designed vans at a higher cost. For example, Advanced RV has an over $400,000 camper van based inside a 170-inch Mercedes-Benz Sprinter cab.For those who want a full conversion but don't want to cough up life savings, there's an in-between option. There are several companies in the market that offer less expensive non-custom conversions done in-shop. By having a set universal interior design, companies can streamline their production and material sourcing process, therefore decreasing the price of the final conversion.What van base do you want?The Last Resort Mercedes-Benz Sprinter conversion by Advanced RV.Advanced RVKnowing what vehicle base you want is important if you plan on using a van conversion company: several companies will only convert certain van models. It's important to note that some conversion companies may even require clients to supply their own van or van purchases for the conversion.Many camper vans are built on the wildly popular Mercedes-Benz Sprinter. However, the Sprinter is undeniably more expensive than a Ram ProMaster, another popular camper body.While the 2021 Mercedes-Benz Cargo Sprinter currently starts at $$36,355, the 2022 Ram ProMaster City has an MSRP of $$25,065.Several conversion companies also use the Ford Transit van as the starting base. A 2021 Ford Transit Cargo has an MSRP of $35,270.When do you want your camper to be ready?Boho Van's Encore.Micah AdamsKnowing when you want your camper to be ready to go could affect how you go about converting your van.If you plan on doing it yourself, setting a time you want to complete your conversion project by will allow you to create a week-by-week or month-by-month schedule. However, if you plan on using a company to create a custom camper, the wait could be between several months to over a year, depending on the time it takes to convert the van and the company's potential waitlist length. For example, Vansmith told Insider in May that it's normally booked two to three months in advance but spends about five to eight weeks creating its builds.A general rule of thumb is that conversion companies that work with a set interior design will be able to deliver a finished van faster than companies that focus on custom conversions.For example, Campovan spent four months on its custom Sprinter-based camper with a Japanese soaking bathtub, while Cascade Campers — which has a uniform conversion process across all of its vans — only spends three days on its builds, albeit the final product won't be to spec.What are your must-haves and things you would like?Freedom Vans' Fitz Roy build.Freedom VansIt's important to have a list of items you absolutely need, and amenities that you would like but don't consider essential. Vans are undeniably small, and it's important to plan according to the size of the space, especially since it might be difficult to fit larger items, like a toilet. Having a list of must-haves before starting the building process will allow you to design your van around items that you consider a necessity.In the end, sacrifices in the "must-have" list may have to be made, but that doesn't mean there aren't workaround alternatives. It's important to remember that what may be a "must-have" in an actual home might not be as important in a camper van. For example, an indoor and enclosed shower space may take up too much precious interior space, but if you consider a shower unit necessary, it might be worth implementing an outdoor shower instead."It is a small space, so what we try to do is figure out what kind of gear [would you] be hauling, and then what are your top gear needs, and then just get creative," co-owner of Freedom Vans, a camper van conversion company, Kyleigh Rogers told Insider. "Every person's needs are so different.""There are some compromises in the small space, but if you're willing to have more modular [design], you can fit more things in there," Rogers continued.Could any of the amenities you want play double duty? Using some creativity could help conserve space. In the end, the goal is to optimize the small van to fit as many features as you want, while still creating a space that doesn't feel cramped.For example, instead of creating a "living room" and seating area, make the passenger and driver seats swivel so they can face the interior space. Or if you find that there isn't room for a heating unit, make your diesel cooktop work double duty as a heater to warm the interior of the van, like what Campovans implemented in its custom Sprinter build.What's your preferred interior style?2020 Airstream Atlas.AirstreamIf you're looking to find a conversion company, it's important to note that different shops have different design styles. While you're creating your vision board for your own camper van, make sure you have an idea of how you want to style the interior of your van and try to find a company that best reflects this. If that's not possible, look for a conversion company that can create everything custom and from scratch.When it comes to picking a company, Rogers notes that it's important to find one that not only compliments your vision but also communicates well with you. "Even after getting the van, if you have questions about it or if something happens, you want to feel comfortable like reaching out to [the company] and talking to them about it," Rogers said.Where do you plan on taking your camper?Ready.Set.Van.Ready.Set.Van.It's important to outfit your camper according to where you may want to travel to. For example, if you plan on staying in tropical places, a heater may not be as necessary as an air conditioning unit or fans. Maybe even consider an awning so you can lounge outside your van in the shade.But for those who want to brave the winter winds in a van, extra insulation and a heater may be key.If you plan on trekking through uncharted terrains in your camper van, you might need exterior protective gear, such as a grille bar, or systems that could improve the van's handling off-road, such as better tires or a suspension lift kit.Read the original article on Business Insider.....»»

Category: dealsSource: nytDec 3rd, 2021