Advertisements


Ether Drops As Whale Moves 73K ETH to Binance

On-chain researcher Lookonchain warned of selling pressure in ether after a whale moved large amounts of the cryptocurrency to Binance......»»

Category: forexSource: coindeskNov 28th, 2022

Futures Jump As Crypto Turmoil Fades, Dip Buyers Make Cautious Appearance

Futures Jump As Crypto Turmoil Fades, Dip Buyers Make Cautious Appearance After dropping to the edge of a bear market, with Eminis sliding to precisely 3,855 or exactly 20% lower than the all time high, US index futures rebounded sharply from the brink (the same way they did on Dec 24, 2018 when the S&P spent a few minutes in a bear market) as the stabilization of much of the cryptosphere (where no new stablecoins suddenly cratered to 0) and an overnight easing in Treasury yields provided some relief after a two-day slide. Nasdaq 100 futures climbed 1.7% as of 730 a.m. in New York. S&P 500 futures were also higher, rising 1.1%, as high as 3976 after dropping to 2,855 yesterday. Twitter shares plunged as much as 26% in New York premarket trading after Elon Musk tweeted that his deal for the social media company was "temporarily on hold." Yields on 10-year US Treasury yields fell for a fourth consecutive day on Thursday, reaching 2.85%, before edging higher again on Friday. The dollar index dipped but remains on course for its longest streak of weekly gains since 2018, while bitcoin and ether reversed several days of harrowing losses to rise back over 30,000 and 2,000, respectively. Abating panic in the cryptocurrency market was among the highlights of a risk-on environment on the last day of the week. Bitcoin added about $1,800 to top $30,000. US cryptocurrency-exposed stocks including Riot Blockchain Inc. and Marathon Digital Holdings Inc. also rallied premarket. In notable premarket moves, Twitter slumped 21% after bidder Elon Musk tweeted deal was “temporarily on hold” pending details about fake accounts. On the other end, Robinhood surged 20% after cryptocurrency billionaire Sam Bankman-Fried snapped up a 7.6% stake, while Affirm jumped 30% after earnings. Cryptocurrency-exposed stocks climbed as digital assets started to rebound after the recent rout linked to the implosion of the TerraUSD stablecoin. Coinbase rose 11% despite being sued over its role in the promotion and trading of a stablecoin that purportedly had its value pegged to the price of the Japanese yen.  Bank stocks rose in premarket trading Friday, putting them on track to snap a six-day losing streak. Here are all the notable premarket movers: Twitter (TWTR US) shares slump as much as 19% premarket after Musk says deal is “temporarily on hold pending details”. Tesla (TSLA US) shares hit a session high, rising nearly 5% on the news Megacap tech stocks and semiconductor makers rally in US premarket trading amid a broad rebound across growth sectors, while Korean chip peer Samsung was said to be in talks to hike chipmaking prices. Apple (AAPL US) +2.1%, Meta Platforms (FB US) +2.4%, Microsoft (MSFT US) +1.8% Robinhood (HOOD US) shares surge as much as 27% in U.S. premarket trading after cryptocurrency billionaire Sam Bankman-Fried disclosed a new 7.6% stake in the online brokerage Cryptocurrency-exposed stocks climb in US premarket trading as digital assets started to rebound after the recent rout linked to the implosion of the TerraUSD stablecoin. Riot Blockchain (RIOT US) +7.9%, Marathon Digital (MARA US) +7.2% US-listed Chinese stocks rise in premarket trading, with sentiment boosted by the Fed’s pushback on speculation of steeper interest-rate hikes and Shanghai’s new timeline to end a grueling lockdown. Alibaba (BABA US) +3.3%, JD.com (JD US) +4%, Pinduoduo (PDD US) +4.3%. New Relic (NEWR US) declined 9% in postmarket. It delivered a mixed fourth quarter, according to analysts, with revenue growth coming in ahead of consensus, albeit with a lower beat compared to the last period Figs (FIGS US) sinks as much as 27% in US premarket trading, with Cowen saying that the scrubs maker’s cut to its full-year 2022 sales growth and Ebitda margin guidance is “well below” previous guidance Compass (COMP US) jumpped 7% in extended trading after the real-estate software company reported larger-than-expected revenues in the first quarter, despite guiding toward lower- than-expected second-quarter revenue First Solar Inc. (FSLR US) shares gained 2.8% in extended trading on Thursday, as Piper Sandler upgrades the stock to overweight from neutral Stocks have plunged this year as traders fretted over the impact tighter monetary will have on growth, with the S&P 500 dropping to precisely 20% from its recent peak before bouncing. On Thursday, Fed Chair Jerome Powell on Thursday reaffirmed that the central bank is likely to raise interest rates by a half percentage point at each of its next two meetings, while leaving open the possibility it could do more. The Fed chair also said that whether a soft landing can be executed or not may depend on factors that they cannot control but added they have tools to get inflation under control and that it will ultimately be more painful if high inflation is not dealt with and becomes entrenched. Furthermore, he noted that with perfect hindsight, it would have been better to have hiked rates sooner, according to Reuters. As the Federal Reserve embarks on interest-rate hikes to tame surging inflation, expensive growth shares, including the tech sector, have suffered as higher rates mean a bigger discount for the present value of future profits. This marks a shift in investor outlook after tech stocks had been some of the market’s best performers for years.  “While we continue to see positives for the market, investor sentiment isn’t likely to turn until we get greater clarity on the 3Rs -- rates, recession and risk,” said Mark Haefele, chief investment officer, UBS Global Wealth Management. “Until then, we favor parts of the market that should outperform in an environment of rising policy rates, slowing growth, and geopolitical uncertainty.” At $1.1 billion, tech stocks suffered their biggest outflows so far this year in the week to May 11, second only to financials, which lost $2.6 billion, Bank of America CIO Michael Hartnett wrote in a note, citing EPFR Global data. By contrast, US stocks overall noted their first inflow in five weeks at $93 million. It’s a “very tough time,” Kathy Entwistle, managing director at Morgan Stanley Private Wealth Management, said on Bloomberg Television. “We’re holding just still and quiet and patient and waiting for some more insights as to where we’re going. We still see a lot of volatility on the horizon." In Europe, the Stoxx 600 Index rose 1.2% as the lowest valuations since the start of the pandemic drew buyers. Banks and technology stocks led gains, while autos and telecommunication shares underperformed.  Here are Europe's biggest movers: Evotec shares rise as much as 9.5% after Deutsche Bank analyst Falko Friedrichs raised the recommendation to buy from hold, citing a unique opportunity to invest in a firm with an entire partnered drug pipeline “for free.” Deutsche Telekom shares advance 1.8% after raising full-year outlook for adjusted Ebitda after leases, reflecting higher forecasts for T-Mobile US. Freenet shares gain as much as 4.8% 1Q results show a good start to the year, and there may be scope for a guidance upgrade in 1H22, Citi (buy) writes in note Fortum shares advance as much as 11% on Friday -- the biggest intraday gain since 2009 -- after SEB and Danske Bank raised their recommendation on the stock citing the Finnish utility’s Russia exit and de-risking related to Uniper gas contracts. UCB shares fall as much as 17% after the company said the US FDA said it can’t approve UCB’s psoriasis treatment bimekizumab in its current form, forcing the company and analysts to reasses 2022 expectations. Drax falls as much as 7.6% and is among weakest performers in the Stoxx 600 on Friday after Credit Suisse gives the stock its only negative rating, moving to underperform on elevated power prices. SalMar drops as much as 4%, falling alongside peers in the Norwegian salmon and seafood sector, after a slew of several companies in the sector reported 1Q earnings that came in below expectations. Unipol and UnipolSai drop in Milan trading after releasing first-quarter results and the 2022-2024 strategic plan; analysts note lower-than-expected cumulative dividends in plan for UnipolSai. European Union nations said it may be time to consider delaying a push to ban Russian oil if the bloc can’t persuade Hungary to back the embargo. Wheat production in Ukraine, one of the biggest growers, will fall by one-third compared to last year, according to a US forecast. Earlier in the session, Asian stocks rallied as battered technology shares bounced back, with the regional benchmark still on track for its worst weekly losing streak since 2015 on worries about higher interest rates and lockdowns in China. The MSCI Asia Pacific Index rose as much as 1.8%, advancing with US futures as comments from Federal Reserve Chair Jerome Powell signaled rate hikes of more than 50 basis points may be unlikely. SoftBank was among the biggest boosts after its results, along with Tencent and TSMC. Traders said Friday’s rebound was largely driven by the unwinding of short positions following the recent selloff, with many still nervous about how China’s virus measures can complicate the already murky global economic outlook. The Asian equity measure was on track for its sixth-straight weekly decline, down 2.5% in the past five sessions. “We have to be watchful on the impact of China’s lockdowns, that’s going to have an effect on inflation as well as on growth,” said Jumpei Tanaka, a strategist at Pictet. “Up until now, the earnings outlook hasn’t been lowered that much. The market has been adjusting valuations because of the Fed’s rate hikes. The next key point is how corporate earnings will be affected.” Japan’s Nikkei rose 2.6%, boosted by gains in Tokyo Electron after strong profits as well as SoftBank. In Hong Kong, the Hang Seng Tech Index jumped 4.5%. India’s key equity indexes fell for a 6th straight session and posted their longest stretch of weekly losses in two years as investors’ appetite faded on the back of the local currency’s plunge to a record low and disappointing earnings.  The S&P BSE Sensex declined 0.3% to 52,793.62 in Mumbai after erasing advance of as much as 1.6% during the session. The NSE Nifty 50 Index retreated 0.2% to its lowest level since July 30. Both gauges have retreated 3.7% and 3.8% for the week respectively and fallen for a fifth straight week, their longest run of losses since April 2020. “The fear of rising inflation and expectations of more rate hikes in the near term are weighing on investors’ minds,” according to Kotak Securities analyst Amol Athawale.“Traders are selling at every opportunity given that there seems to be no respite from the negative news flows.” The Sensex and Nifty are now about 14.5% off their peak levels in Oct.  Ten of the 19 sector sub-indexes compiled by BSE Ltd. dropped on Friday, led by metal companies. For the week, utilities stock gauge was the worst performer, dropping about 11%.  ICICI Bank contributed the most to the Sensex’s decline, easing 2.7%. Out of 30 shares in the Sensex index, 15 rose while rest fell. In rates, Treasuries were pressured lower as stock futures pushed through Thursday’s session highs, following gains across European equities. 10-year TSY yields rose to around 2.90%, cheaper by 5bp on the day and sitting close to session highs into early session -- both bunds and gilts underperform slightly across the sector. Risk sentiment was boosted by a rebound in cryptocurrencies, leaving Treasury yields cheaper by up to 6bp across long-end of the curve where 20-year sector underperforms. Long-end led losses steepening 5s30s by 2bp on the day and 2s10s by 2.8bp. The Dollar issuance slate is empty so far; six deals were priced for $11.5b Thursday, taking weekly total to $21.7b vs. $30b projected -- two names decided to stand down. Bund, gilt and UST curves bear-steepen. Peripheral spreads widen, short-dated BTPs lag, widening 5bps to core. Yields on Japan’s debt fell even as those on Treasuries rise across the curve in Asia amid higher equities. In FX, the Bloomberg Dollar Spot Index slumped and the greenback weakened against all of it Group-of-10 peers apart from the yen as investor demand for haven assets ebbed after Federal Reserve Chair Jerome Powell pushed back against speculation of more aggressive interest-rate hikes. Risk sensitive Scandinavian currencies as well ask the Australian dollar led gains. The main theme in the FX options space Friday is gamma selloff following the large swings this week. Still, demand for low-delta exposure on a haven basis remains better bid, with greenback topside in good demand versus the euro and the pound. European government bonds followed US Treasuries lower, snapping a recent rally. Treasury yields rose by 3-7 bps as the curve bear- steepened. The yen pared early weakness after BOJ’s Kuroda stressed FX stability. China’s yuan strengthens against the dollar following warnings from the CBIRC with gains fading following soft loan data. In commodities, Crude futures advance, WTI gains stall near $108. Base metals trade poorly with much of the LME complex down over 1%. Spot gold trades in a narrow range near $1,823/oz. In crypto, Bitcoin rose back above $30,000.  Binance said that withdrawals for Lunar and UST will open when the market becomes more stable, will suspend spot trading for LUNA/BUSD and UST/BUSD at 09:30BST, May 13th. To the day ahead now, and data releases include Euro Area industrial production for March, along with the University of Michigan’s preliminary consumer sentiment index for May. Otherwise, central bank speakers include the Fed’s Kashkari and Mester, as well as the ECB’s Centeno, Nagel and Schnabel. Market Snapshot S&P 500 futures up 1.1% to 3,970.75 STOXX Europe 600 up 1.2% to 429.53 MXAP up 1.7% to 160.25 MXAPJ up 1.9% to 522.21 Nikkei up 2.6% to 26,427.65 Topix up 1.9% to 1,864.20 Hang Seng Index up 2.7% to 19,898.77 Shanghai Composite up 1.0% to 3,084.28 Sensex up 1.2% to 53,564.26 Australia S&P/ASX 200 up 1.9% to 7,075.11 Kospi up 2.1% to 2,604.24 German 10Y yield little changed at 0.91% Euro up 0.2% to $1.0403 Brent Futures up 0.8% to $108.30/bbl Gold spot up 0.0% to $1,822.04 U.S. Dollar Index down 0.25% to 104.59 Top Overnight News from Bloomberg Calls are growing for China’s government to sell more bonds to pay for extra stimulus to boost an economy facing its greatest challenges since the initial few months of the pandemic in 2020 For global investors trying to gauge the fallout from surging interest rates and slowing economic growth, Hong Kong is quickly emerging as a must-watch market. While Hong Kong’s $466 billion foreign-reserves stockpile and plentiful interbank liquidity suggest little chance of an imminent crisis, signs of financial stress are building UK Chancellor of the Exchequer Rishi Sunak said the Brexit settlement in Northern Ireland is causing economic and political harm and called on the European Union to be flexible, comments likely to be seen as an attempt to publicly align himself with Boris Johnson after reports of a rift With the U.K. wilting under the fastest inflation in three decades, supermarkets are raising prices at an even quicker rate, according to a new analysis prepared for Bloomberg. That’s turning the screws on shoppers who are already grappling with higher gas and heating bills and falling real incomes Some EU nations are saying it may be time to consider delaying a push to ban Russian oil so they can proceed with the rest of a proposed sanctions package if the bloc can’t persuade Hungary to back the embargo Beijing reported a slight increase in new Covid-19 cases after officials late Wednesday denied the city will be locked down amid growing concern the Chinese capital’s response to a persistent outbreak is about to be intensified Investors are deep in risk-off mood with outflows from stocks, bonds, cash and gold, Bank of America strategists said, citing EPFR Global data A more detailed look at global markets courtesy of Newsquawk APAC stocks were firmer as risk momentum picked up following on from the volatile session on Wall St where the major indices finished mixed but almost wiped out all losses after a late ramp up heading into the close. ASX 200 traded with respectable gains and back above the 7,000 level with tech frontrunning the advances. Nikkei 225 outperformed as focus remained on earnings, while SoftBank surged amid buyback hopes and despite a record loss. Hang Seng and Shanghai Comp joined in on the elated mood with Hong Kong led by strength in tech, although the advances in the mainland were moderated by the mixed COVID headlines with Beijing to conduct the next round of mass COVID testing, while Shanghai aims to achieve zero community spread by the middle of this month and is considering expanding the scale of output resumption. Top Asian News Shanghai Vice Mayor said they aim to have no community spread of coronavirus by mid-May and are considering expanding the scale of production resumption, while they will aim to open up, ease traffic restrictions and open shops in an orderly manner, according to Reuters. Shanghai is to prioritise resuming classes for grades 9, 11 and 12, while supermarkets, convenience and department stores will resume offline operations in an orderly manner and other services such as hairdressing will open gradually, according to Global Times. China Banking and Insurance Regulatory Commission says the Yuan's weakening is not sustainable, adding do not bet on the unilateral devaluation and appreciation or you could face unnecessary losses; retreat in the Yuan was normal market reaction.. BoJ Governor Kuroda said Japan still hasn't achieved a situation where inflation is stably and sustainably at 2%, while the expected rise in inflation is driven mostly by energy costs and is lacking sustainability. Kuroda reiterated the BoJ must continue monetary easing to reach its price target and it is premature to debate an exit from ultra-easy policy, while he also said it is appropriate to maintain the current dovish forward guidance on interest rates, according to Reuters. North Korea said around 350k have shown fever symptoms of an 'unknown cause' and 187.8k are being treated in isolation, while it reported 18k COVID-19 cases and 6 died from a fever in which one was confirmed as a COVID death, according to KCNA and Yonhap. European bourses are firmer as the rebound from Thursday's selloff continues, Euro Stoxx 50 +1.3%. US futures are similarly bolstered across the board, NQ outpacing peers modestly as Tech recoups, ES +0.9%. Samsung (005930 KS) is reportedly in talks to hike chipmaking prices by up to 20%, according to Bloomberg sources. Elon Musk says the Twitter (TWTR) deal is temporarily on hold, pending details supporting the calculation that spam/fake accounts represent less than 5% of users. Pressure in TWTR subsequent extended to -13% in the pre-market; extending to -19% after five-minutes. Top European News UK PM Johnson is considering as many as 90k job cuts in civil service, according to ITV. GVS Shares Rise After Agreeing to Buy Haemotronic for EU212m EU Starts to Consider Oil Sanctions Delay as Hungary Digs In UCB Plunges After FDA Says It Can’t Approve Psoriasis Drug Now Black Bankers Fight to Hold Finance Accountable for Its Promises FX Dollar and Yen shed some safe haven gains as risk sentiment recovers ahead of the weekend; DXY slips from fresh 2022 peak at 104.920, though still positive, and USD/JPY up near 129.00 vs new retracement low circa 127.50. Aussie takes advantage of pickup in risk appetite and Yuan bounce amidst verbal intervention; AUD/USD hovering under 0.6900 from sub-0.6850 yesterday, USD/CNH and USD/CNY around 6.8000 vs 6.8370 and 6.8110. Euro, Pound and Franc regroup, but remain vulnerable around psychological levels; 1.0400, 1.2200 and parity in EUR/USD, Cable and USD/CHF respectively. Loonie off recent lows post hawkish BoC comments and pre Q1 Loans Survey, USD/CAD close to 1.3000 and 1.1bln option expiry interest between 1.2990 and the round number. Peso underpinned after 50 bp Banxico hike as 1 of the 5 voters dissented for 75 bp. Czech Koruna caught between CNB minutes underlining dovish leaning of new head and Holub opining that May’s hike may not be the final one. Fixed Income Bonds bounce after conceding ground to recovering risk assets. Bunds find support just ahead of 154.00, Gilts in the low 120.00 zone and 10 year T-note at 119-07. Curves re-steepen after decent US 30 year sale completes the Quarterly Refunding remit and attention turns to 20 year and 10 year TIPS auctions next week. Commodities WTI and Brent are firmer moving with the broad rebound in risk-assets, however, upside is capped amid the EU considering omitting the proposed Russia oil embargo from the 6th sanctions round. WTI resides around USD 107/bbl (106.29-108.13 intraday range) and Brent trades just under USD 109/bbl (107.79-109.79 intraday range). Spot gold is contained around USD 1820/oz, though it is coming under modest pressure as the DXY picks up most recently. US Event Calendar 08:30: April Import Price Index MoM, est. 0.6%, prior 2.6%; YoY, est. 12.2%, prior 12.5% 08:30: April Export Price Index MoM, est. 0.7%, prior 4.5%; YoY, est. 19.2%, prior 18.8% 10:00: May U. of Mich. Sentiment, est. 64.0, prior 65.2; Current Conditions, est. 69.3, prior 69.4; Expectations, est. 61.5, prior 62.5 10:00: May U. of Mich. 1 Yr Inflation, est. 5.5%, prior 5.4%; 5-10 Yr Inflation, prior 3.0% DB's Jim Reid concludes the overnight wrap As those working in this industry know, spreadsheet errors can have consequences – often costly ones. My fiancée doesn’t spend as much time on Excel as I do, but with our wedding coming up in July, she’s been using a spreadsheet to keep track of the number of guests. I privately regard this sheet to be an abomination, so in the interests of our future marriage I’ve tried to avoid the subject. But a couple of weeks ago I was told that we needed more guests and had to extend further invites, since we were up against the reception venue’s minimum. This I duly did, although having already invited my friends, I mostly resorted to being a lot more generous on my plus-one policy. At the weekend however, she showed me the spreadsheet. It turned out she hadn’t extended the range on the guest list sum function, and we were already comfortably above what we needed. I won’t tell you how much these extra invites have cost us. Thankfully as a primary school teacher she doesn’t teach Excel to her 5- and 6-year-olds, although I then discovered with even more alarm that she’s considered the spreadsheet expert at her school… It’s been a costly few weeks in markets too as investors have priced in growing recession risks, and over the last 24 hours we’ve seen some incredible intraday volatility across a range of asset classes. At one point in the New York afternoon, the S&P 500 had been down -1.94% at the lows, which left it just shy of a -20% decline since its all-time closing peak that would mark the formal start of a bear market. But then in the final hour there was a major recovery that meant the index only saw a modest -0.13% fall on the day, even if that still marked a fresh one-year low. Futures markets are implying we’re going to see that rally extended today, with those for the S&P up +0.92% this morning. But even if we do see a recovery of that sort of magnitude, then the major losses we’ve already seen this week mean it would still be the first time in over a decade that the index has posted 6 consecutive weekly declines. That pattern of deep losses followed by a late recovery was echoed more broadly yesterday, with the NASDAQ paring back losses of more than -2% on the day to eke out a marginal +0.06% advance. For the FANG+ index (-0.30%), the late recovery wasn’t enough to bring it back into positive territory, and there was a significant milestone reached since its latest slump means it’s now more than -40% beneath its all-time high, which surpasses its losses during the Covid selloff of 2020 when it was “only” down by -34% from peak to trough. European equities lost ground too, and the STOXX 600 (-0.75%) similarly saw a second-half recovery, having been as low as -2.41% earlier in the day. Unlike in April, when the equity declines were triggered by the prospect of a more aggressive Fed tightening cycle and went hand-in-hand with sovereign bond losses, this week’s declines have much more obviously surrounded global growth risks, which you can see in the way that Fed Funds futures are now beginning to take out some of the tightening they’d been pricing in over the year ahead. Only yesterday, the futures-implied rate by the FOMC’s December meeting came down by -5.3bps to still be beneath its level from 3 weeks earlier, which marks a change from the almost relentless march higher we’ve seen over the last 8 months. In fact the only major interruption to that trend so far has come from Russia’s invasion of Ukraine in late-February, before the inflationary consequences of the conflict reasserted themselves on market pricing. With investors expecting less monetary tightening and seeking out safe havens, yesterday witnessed a major sovereign bond rally across countries and maturities. The 10yr Treasury yield came down -7.3bps to 2.85%, and at the front-end of the curve, 2yr yields were down -7.8bps to 2.56%. This came on a day with another round of Fed speakers sounding the same tune of late, including Chair Powell who said that +50bp hikes at the next two meetings were probably appropriate. Meanwhile, he sounded an even more pessimistic tone on the path of the economy given the impending tightening, noting that getting inflation back to target would “include some pain” and that whether a soft landing can be arranged is up to matters beyond the Fed’s control. Over in Europe the declines were even larger, with yields on 10yr bunds (-14.6bps) undergoing their biggest daily move since the start of March, as yields on 10yr OATs (-13.8bps), BTPs (18.4bps) and gilts (-16.5bps) saw similar declines. A noticeable feature of the recent sovereign bond rally is how investors’ expectations of future inflation have come down significantly over recent days, with the 10yr German breakeven falling from a peak of 2.98% on May 2 to just 2.29% yesterday, which is an even faster decline than the one seen during the initial phase of the Covid pandemic in March 2020. That flight to havens was evident in foreign exchange markets too, where the dollar index strengthened a further +0.97% to levels not seen since 2002. Conversely, that saw the euro close beneath the $1.04 mark for the first time since late-2016, although the traditional safe haven of the Japanese Yen was the top-performing G10 currency yesterday, strengthening +1.27% against the US Dollar and +2.61% against the Euro. When it came to cryptocurrencies, Bitcoin hit an intraday low of $25,425 shortly after the European open, which is the first time it’s traded that low since late 2020, before recovering its losses to end the session higher at $28,546, and this morning it’s rebounded another +6.34% to hit $30,356. Overnight in Asia we’ve seen a significant rebound in equity markets too, with the Nikkei (+2.52%), the Hang Seng (+2.00%) and the KOSPI (+1.72%) all seeing sizeable advances, and the Shanghai Comp (+0.56%) also posting a solid gain. Those earlier comments from Chair Powell after the US close have supported risk appetite, particularly since he echoed his previous comments about the Fed being on course for further 50bp hikes at the next couple of meetings, rather than moving towards 75bps in the aftermath of the stronger-than-expected CPI reading. A number of yesterday’s other moves have also begun to unwind, with the Japanese Yen down -0.50% against the US Dollar this morning, whilst yields on 10yr Treasuries have risen +3.6bps overnight. Separately in Shanghai, officials said that they planned to stop community spread of Covid-19 and start reopening by May 20, which is the first time that a timeline has been put forward as to when the lockdown might end. Elsewhere yesterday, there was a significant +13.50% rise in European natural gas futures after Gazprom said that gas flows wouldn’t be able to go through the Yamal pipeline because of Russian-imposed sanctions on European companies. But on the other hand, Bloomberg reported that some EU nations were considering a delay in sanctioning Russian oil in light of Hungarian opposition, and instead pushing ahead with the rest of the sanctions package. There were also further signs of the geopolitical shifts as a result of Russia’s invasion, after Finland’s President and Prime Minister endorsed NATO membership, saying the country should apply “without delay”. Staying on the political sphere, tensions have continued to fester between the UK and the EU over the Northern Ireland Protocol, and yesterday’s statements from the two sides indicated there was a difficult phone call between UK Foreign Secretary Truss and EU Commission Vice President Šefčovič. The UK Foreign Office’s readout of the call said that “if the EU would not show the requisite flexibility … we would have no choice but to act.” Then Šefčovič said in his own statement that it was “of serious concern that the UK government intends to embark on the path of unilateral action.” So one to watch into next week given press reports we could hear more from the UK side then. Looking at yesterday’s data, the US PPI reading added to the picture of elevated inflationary pressures. The headline monthly gain for April came in at +0.5% as expected, but the March reading was revised up two-tenths to +1.6%, meaning that the year-on-year figure only came down to +11.0% (vs. +10.7% expected). We also had the weekly initial jobless claims for the week through May 7, which came in at 203k (vs. 193k expected). And in the UK, the Q1 GDP reading was a bit below consensus at +0.8% (vs. +1.0% expected), and looking at the monthly reading for March specifically there was actually a -0.1% contraction (vs unchanged expected). To the day ahead now, and data releases include Euro Area industrial production for March, along with the University of Michigan’s preliminary consumer sentiment index for May. Otherwise, central bank speakers include the Fed’s Kashkari and Mester, as well as the ECB’s Centeno, Nagel and Schnabel. Tyler Durden Fri, 05/13/2022 - 07:56.....»»

Category: smallbizSource: nytMay 13th, 2022

A crypto whale scooped up 50 billion shiba inus as the meme coin slumped this week

Recent moves by shiba inu whales have driven the cryptocurrency to soar and tumble because of their dominance in the market. id-work/Getty Images A crypto whale scooped up 50 billion shiba inu coins worth $1.8 million on Thursday as its continued to tumble.  Shiba inu has fallen 17% in the past seven days alongside a wider sell-off in cryptocurrencies. On Tuesday, another big holder purchased nearly 100 billion shiba inu coins. Sign up here for our daily newsletter, 10 Things Before the Opening Bell. An ethereum whale purchased close to $1.8 million worth of shiba inu as the dogecoin-inspired coin slid this week during a wider sell-off in digital currencies.The whale — a popular term for a big holder — bought 50 billion of the meme coins on Thursday, according to data from Whalestats, which tracks activity for the 1,000 largest ethereum wallets. That brought the Jiraiya wallet's total holdings to 1.67 trillion shiba inu, worth $59.6 million.It follows another big shiba inu bet on Tuesday, when another whale scooped up close to 100 billion worth $3.5 million, this time on the Binance Smart Chain. Shiba inu has fallen about 17% over the past seven days, and is down 2.9% in the past 24 hours at $0.00003524, according to CoinMarketCap data. Digital currencies have tumbled as fears about the Omicron coronavirus variant detected last week roiled asset markets. Over the past seven days, leading cryptocurrency bitcoin has lost 12.9% and second-place ether, the native token of the ethereum network, has dropped 9.1%. Crypto investors have been bracing for a stronger dollar if US inflation continues to soar. On Friday, official data showed the Consumer Price Index rose 6.8% year-on-year, its highest level since 1982.Shiba inu is in the hands of a few big investors. Its biggest whale holds over 410 trillion of the coin, which is 41% of its total supply, according to CoinMarketCap data. Recent moves by shiba inu whales have driven the cryptocurrency to soar and tumble because of their dominance in the market. In November, the meme coin tumbled by as much as 21% after a big holder moved $2.3 billion worth out of wallets, which spread fears the coins would be sold and pull the price down hugely. A month earlier, shiba inu climbed 22% to hit a new record high, after another whale purchased 276.6 billion coins, worth about $11.5 million.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderDec 10th, 2021

Futures Drop After Horrific Intel Guidance, Brace For PCE Data

Futures Drop After Horrific Intel Guidance, Brace For PCE Data US futures dropped after yesterday's meltup, led lower by semiconductor stocks and traded in a tight range on Friday after a catastrophic earnings report and guidance from (former?) chip giant Intel, while investors awaited key inflation figures for clues on what the Fed will do next week. Nasdaq 100 futs were down 0.3% by 7:30 a.m. ET while S&P 500 futures dropped 0.2%. Europe’s Stoxx 600 index was 0.1% higher, building on its 0.4% gain from Thursday. The Bloomberg Dollar Spot index was modestly higher, while most Group-of-10 currencies remained under pressure amid muted trading. Treasuries were on the back foot, mirroring moves in German and UK bond markets. Oil and gold rose, while Bitcoin fell for a second-straight day. Focus today will be on the latest reading of the core personal consumption expenditures index, the Fed’s preferred inflation data. Before the Intel report on Thursday, the S&P 500 index achieved its highest close in more than a month and the Nasdaq 100 rose 2% to a four-month high. Yesterday’s rally began with Tech earnings and then accelerated with macro data both a showing a resilient economy but one whose metrics are approaching Fed-preferred levels. Yesterday’s 7Y auction was strong, making 8 of 8 auctions this year where demand was strong enough to move yields lower. Data on Thursday also showed US gross domestic product expanded at a faster-than-forecast pace into the end of 2022. That encouraged hopes the world’s biggest economy can achieve a soft landing, but could temper expectations of a Federal Reserve pivot towards rate cuts later this year. “Stronger data may negate the argument for recession, but then, it means the Fed has to be more hawkish,” Boardman-Weston said. “Markets are in a bit of a Catch-22.” “You are seeing more and more companies turn cautious about the earnings outlook,” said Dan Boardman-Weston, chief investment officer at BRI Wealth Management. “If there is a recession, earnings will have to decline and price-to-earnings ratios have to come down.” Another dampener was the continued rout in companies linked to Indian billionaire Gautam Adani. His corporate empire has shed some $50 billion of market value in less than two sessions following an explosive report from short seller Hindenburg. The losses dragged India’s Nifty 50 index to three-month lows. In premarket trading, Intel shares plunged 11% after the chipmaker issued one of its weakest ever quarterly forecasts as a slump in personal-computer sales hits the business. Analysts say they were surprised by the magnitude of the weakness in the forecast. Visa shares rise as much as 1% in US premarket trading after the payments company’s earnings beat expectations, prompting analysts to raise their targets on the stock in the hope that the firm will be able to weather a weaker economic environment as travel rebounds and foreign exchange pressures ease. Bank stocks were lower in premarket trading, putting them on track to snap a two day winning streak. In corporate news, Wells Fargo kept Chief Executive Officer Charlie Scharf’s pay at $24.5 million for 2022. Meanwhile, South Korea’s financial regulator has fined US-based Citadel Securities almost $10 million over its use of high-frequency trades that allegedly disrupted the market. Here are some more notable premarket movers: Buzzfeed shares jump as much as 28% in US premarket trading, set to extend yesterday’s 120% rally on the digital-media firm’s plans to use OpenAI. Eastman Chemical’s results missed expectations and the chemicals group’s outlook implies an improvement across 2023 that may be viewed as ambitious, analysts say. Eastman shares fell 3% in extended trading after the update. Hasbro shares sink as much as 5.3% in US premarket trading after the toy and game maker reported weaker 4Q sales that fell short of analyst estimates. Jefferies says the quarter is just a “painful period” in the firm’s transformation, which will see it cut 1,000 jobs and reshuffle management. Truist Securities says the results raise concerns around the firm’s ability to grow in 2023. L3Harris outpaced estimates in its 4Q results and its outlook is good enough to match low expectations, analysts say. Shares in the aerospace and defense group rose 3% in after- hours trading. KLA Corp shares declined 5.5% in extended trading on Thursday after the semiconductor capital equipment company gave a third-quarter revenue forecast that was below expectations at the midpoint. Despite Friday's weakness, US stocks remain on track for their best month since July, while the Nasdaq 100 is on course for its fourth straight week of gains - its longest such streak since mid-August - as investors bet signs of easing inflation will prompt the Fed to ease the pace of rate hikes.  While the Fed is set to hike interest rates by 25 basis points next week — shifting away from last year’s bigger moves — hopes for end-2023 rate cuts are “a step too far” and may end up being frustrated, according to Erick Muller, head of product and investment strategy at Muzinich & Co. Ltd. “We will probably see the Fed say ‘we are entering the final phase but listen carefully guys: we will continue to raise rates,” Muller said. “A lot of volatility in rates will depend on the path of inflation from here.” Victoria Scholar, head of investment at Interactive Investor, said Friday’s declines also suggested some profit taking after the strong run of gains. “On top of that, there’s growing caution ahead of the PCE price index, which could provide some clues into the US inflation outlook at the Fed’s next move,” she said. Meanwhile, a note from Bank of America showed investors continued to prefer non-US equities in the week through Jan. 25. European stock funds had $3.4 billion of inflows, the note said citing EPFR Global data, while US funds saw just $300 million. And speaking of Europe, the continent's equity indexes were slightly higher on the day and on course for a weekly gain as earning season continues in earnest. The Stoxx 600 is up 0.1%, led by outperformance in the energy, construction and consumer product sectors. Travel and retail fall. The Stoxx index has gained almost 7% so far, but caution has seeped in as company earnings trickle out. Here are some of the biggest European movers on Friday: LVMH rose to a fresh record high, up 0.8% in early trading as the market focused on the prospects of the Chinese market reopening for the luxury behemoth rather than its weak 2H operating profit margins SSAB gains as much as 11% as the Swedish steelmaker’s higher-than-forecast dividend and plans for a buyback offset its 4Q earnings miss, according to analysts Husqvarna rises as much as 16% after Germany’s Bosch said it would acquire shares in the Swedish lawn-care and outdoor equipment firm, increasing its stake to about 12% Sainsbury climbs as much as 6.5%, the most intraday since November, after convenience-store operator Bestway Group said it has acquired or agreed to acquire a 3.45% stake in the grocer JCDecaux gains as much as 6.6% after reporting better- than-expected 4Q revenue, even though the outdoor advertising firm’s China business was hit by a drop in mobility Adidas rises as much as 2.5% after the sportswear brand was upgraded to buy at Warburg, which said the company’s low starting point will ensure earnings will improve Hennes & Mauritz drops as much as 7.9%, the most since May, after the clothing retailer reported fourth-quarter gross margin that missed analyst estimates Remy Cointreau falls as much as 3.2% after the premium spirits maker’s US inventories overshadowed 3Q organic revenue that beat the average estimate Scor drops as much as 8.2%, the most intraday since July, after Chief Executive Officer Laurent Rousseau resigned less than two years into the role Vestas pares declines of as much as 5.6% as analysts said external challenges continue to weigh on the firm, but that there are signs of improvements Earlier in the session, Asian stocks advanced for a sixth straight day, supported by mild risk-on sentiment ahead of US consumer spending data that would offer further clues on the Federal Reserve’s policy path. The MSCI Asia Pacific Index climbed as much as 0.6%, headed for its highest close since April. India’s benchmarks fell the most in the region, dragged by Adani Group shares. Hong Kong’s Hang Seng Index climbed despite increasing restrictions against China’s semiconductor industry. The gains in broader Asia track overnight moves in US markets, where stocks jumped as data showed that America’s economic growth is cooling somewhat and as tech shares rallied. Investors are awaiting data on US personal income and consumption as well as home sales later in the day, among the final set of data the Fed will analyze before setting rates next week. “The disinflation impulse is likely to stretch further, as has been evident from CPI releases lately, likely continuing to build a case for a 25bps rate hike by the Fed next week,” Saxo Capital Markets strategists wrote in a note. With Friday’s gains, the MSCI Asia gauge is set to cap its fifth weekly advance. Shares in South Korea were among the top gainers in the region while Vietnam’s stock measure jumped in a catch-up rally as traders returned from the Lunar New Year holidays. Mainland markets reopen Monday.  Next week is set to be one of the busiest this earnings season in Asia with over 200 companies reporting, according to Bloomberg-compiled data. Traders will assess the impact of higher interest rates and slowing demand on corporate profits in the region, with China’s reopening expected to provide some reprieve Japanese equities posted modest gains after a tech rally drove peers higher in New York, with investors assessing the implications of the latest economic data including a slowdown in US economic growth.  The Topix Index rose 0.2% to close at 1,982.66 in Tokyo, while the Nikkei advanced 0.1% to 27,382.56. Mitsubishi UFJ Financial Group Inc. contributed the most to the Topix Index gain, increasing 2.7%. “US GDP data showed that interest rate hike is slowly taking effect, and concerns about further hikes have receded,”said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management. Indian stocks declined for a straight second session on Friday as a selloff in Adani Group shares deepened after a damaging report from a short-seller.  The S&P BSE Sensex shed 1.5% in Mumbai as traders returned from a one-day holiday, while the NSE Nifty 50 Index extended its drop to 1.6%. Friday’s drop was biggest single-day plunge since Dec. 23 for both gauges while their two-day slide was most since Sept. 26. For the week the indexes slipped more than 2% each and are more than 6% away from their all-time high level seen early December. The India VIX Index, a measure of volatility expectations, rose 18%, the most since Feb. 24, tracking plunge in the benchmark. S&P BSE AllCap Index, India’s broadest gauge by number of companies, saw 1006 companies declining while 158 advanced.  Adani Green Energy, Adani Transmission and Adani Total Gas all slumped 20% in the second trading session after US investment firm Hindenburg Research released a report alleging financial malpractice.  The fresh bout of selling happened as market participants evaluated the impact of US short-seller Hindenburg Research’s report on Adani Group, Nishit Master, a portfolio manager with Axis Securities said in note.  Markets will likely stabilize over the next few days as investors opt for bargain buying as good stocks with history of free cash flow generation are available at reasonable valuations, he added. Foreign investors have been sellers of Indian shares this month, taking out $1.6 billion through Jan. 24, after net selling $167 million in December.  The Dollar Index is flat ahead of US PCE data later today, trading mixed against its Group-of-10 peers, though currencies largely consolidated recent moves. The yen led gains and the pound and the Swedish krona were the worst performers and the pound underperformed its G10 rivals. The euro traded in a narrow 1.0866-1.0900 range. Volumes were 60% above recent averages Thursday as traders position for next week’s meetings by the Fed and the ECB. European bonds slipped, led by the belly, and 10-year German yields headed for their biggest weekly increase so far in 2023 The pound and gilts slipped, with the UK currency heading for its first week of losses against the dollar since the start of the year. BOE also meets next week The yen strengthened after Tokyo inflation data beat estimates, adding to expectations that the Bank of Japan may tweak its ultra-loose monetary policy. Tokyo consumer prices excluding fresh food rose 4.3% y/y in January, fastest pace since 1981; estimate 4.2% gain New Zealand dollar was steady after paring an earlier advance. Business confidence index rose to -52 in January from -70.2 in December, according to ANZ Bank New Zealand In rates, treasuries were pressured lower, following losses across core European rates with Italian bonds notably underperforming over the London session. US yields were cheaper by up to 6.5bp across 10-year sector which leads losses on the day, cheapening 5s10s30s fly by 2.6bp and steepening 2s10s by 3bp; in 10-year sector bunds lag by additional 1.5bp on the day while Italian bonds trade 5bp cheaper. US session focus switches to data with US personal spending and PCE deflator expected. In commodities, oil prices extended gains, benefiting signs of a resilient US economy and China’s continued recovery; WTI added 1.2% to trade near $82.00. Analysts at Goldman Sachs predicted crude prices to head to $100 a barrel later this year from current levels just above $80. Spot gold is little changed at $1,928/oz. Gas markets were pressured as Freeport's Texas LGN plant has received approval to restart alongside forecasts for elevated European temperatures next week. EU proposed a price cap on Russian premium oil products of USD 100/bbl and USD 45/bbl on discounted oil products, while EU governments are to discuss the proposals today before entry into force on February 5th. Bitcoin is little changed and holding around the USD 23k mark, with fresh catalysts limited and focus on upcoming key US data. Looking at the day ahead, data releases from the US include personal income, personal spending and the Fed's preferrered inflation indicator, the core PCE, as well as December’s pending home sales and the University of Michigan’s final consumer sentiment index for January. Over in Europe, there’s also French consumer confidence for January, the Euro Area money supply for December. Lastly, earnings releases include American Express, Charter Communications and Chevron. Market Snapshot   S&P 500 futures down 0.3% to 4,061.25 MXAP up 0.4% to 170.70 MXAPJ up 0.2% to 560.17 Nikkei little changed at 27,382.56 Topix up 0.2% to 1,982.66 Hang Seng Index up 0.5% to 22,688.90 Shanghai Composite up 0.8% to 3,264.81 Sensex down 1.5% to 59,300.13 Australia S&P/ASX 200 up 0.3% to 7,493.83 Kospi up 0.6% to 2,484.02 STOXX Europe 600 up 0.1% to 454.54 German 10Y yield little changed at 2.25% Euro little changed at $1.0884 Brent Futures up 1.4% to $88.67/bbl Gold spot down 0.1% to $1,927.47 U.S. Dollar Index little changed at 101.84 Top Overnight News from Bloomberg Back-to-back interest-rate increases of 50 basis points are approaching from the European Central Bank, whose battle with persistent inflation will see it hike borrowing costs until May, according to a Bloomberg survey of economists The IMF said Sweden might have to require banks to hold more capital and increase funding for the financial regulator, as risks rise in the country’s property sector Japan and the Netherlands are poised to join the US in limiting China’s access to advanced semiconductor machinery, forging a powerful alliance that will undercut Beijing’s ambitions to build its own domestic chip capabilities, according to people familiar with the negotiations Nearly a year into an invasion that was supposed to take weeks, Vladimir Putin is preparing a new offensive in Ukraine, at the same time steeling his country for a conflict with the US and its allies that he expects to last for years Putin demanded his government to come up with a plan for re-jigging Russia’s oil levies in a move to offset the effects from western energy sanctions on the nation’s budget revenues A more detailed look at global markets courtesy of Newsquawk APAC stocks traded with a positive bias after the mostly strong US data releases, albeit with advances capped as participants also digested earnings including disappointing results from Intel, and firm Tokyo CPI data. ASX 200 was marginally higher on return from holiday with the index propped up by tech and financials. Nikkei 225 lacked decisiveness following firm Tokyo CPI data in which core inflation rose at its fastest pace since 1981 and further added to the pressure for the BoJ to rethink its ultra-easy policy. Hang Seng was choppy and struggled to sustain early gains after data showed a wider contraction in Hong Kong’s exports and with Japan and the Netherlands set to join the US’s chip curbs on China. Top Asian News Japan and the Netherlands agreed to join the US on China chip curbs with US, Dutch and Japanese officials set to conclude talks as early as today, while the Netherlands is to expand restrictions on ASML (ASML NA) and Japan will set similar limits on Nikon (7731 JT), according to Bloomberg and Reuters. Hong Kong Dollar Bears Stage a Comeback as Funding Costs Slide India Regulator to Study Hindenburg Report on Adani Group: Rtrs Apple’s iPhone Dominated China Last Quarter Despite Disruptions European bourses are near unchanged levels, Euro Stoxx 50 +0.3%, though a very mild positive skew is seen in quiet post-earnings newsflow. LVMH slips with attention on lower margins, Intel (-9.5% pre-market) lags after a miss on the headline metrics and a weak market outlook. US futures are lower across the board with the NQ -0.5% lagging post-INTC; focus for the session ahead is firmly on US PCE before next week's hefty Central Bank docket. Top European News UK Chancellor Hunt says the best cut in tax right now would be a cut in inflation, today's announcement is more of a general plan/guide, will need to wait for budgetary events for further details. Should aim for the most competitive tax regime of any major nation but sound money needs to come first. Need restraint in public spending. Unlikely that we will have the headroom to cut business taxes in March. 7 EU nations Finance Ministers have sent a letter to Trade Commissioner Dombrovskis have pushed back on plans for "permanent or excessive non-targeted subsidies" in response to the US green subsidies/Inflation Reduction Act, via Politico. IMF Article IV review of Sweden: mild recession likely, 2023 growth -0.3%. HICP expected to moderate to 6.5% in 2023. Strong employment is a positive, should somewhat offset household burden from rates/inflation Vestas Sees More Pain Ahead for Beleagured Wind Industry Sainsbury Rises After Bestway Group Buys Stake, May Add More Libya Says More Deals to Follow Eni’s $8 Billion Gas Investment Ionos Owners See IPO Proceeds Raising Up to €543 Million FX DXY is firmer but somewhat mixed vs peers, with the index sub-102.00 as the JPY outperforms after hot Tokyo CPI. At best, USD/JPY tested but failed to move below 129.50 to the downside, and remains towards the lower-end of a 129.51-130.26 range. Overall, EUR, CAD and CHF are little changed awaiting impetus from the afternoon US data docket with specific developments elsewhere limited; pivoting, 1.0880, 1.3320 and 0.92 respectively. GBP is the main laggard for no obvious/specific reason, Cable has struggled to make any move above 1.24 stick, with EUR/GBP above 0.8800 at best though the move stalled ahead of the 0.8811 21-DMA. Fixed Income Core benchmarks have continued to slip despite a limited early-doors bounce/ any positivity from another well-received US auction. Bunds have given up a handful of touted interim levels during their descent to a 137.09 low, with the associated yield above 2.25%, though shy of the 2.27% 11th January best. Gilts fell to a 104.30 trough, but remain above recent lows, while the UST decline has seemingly paused for breath above 114.15 ahead of US PCE. Commodities WTI and Brent March futures have been moving higher since the European cash equity open, with the former back above USD 82/bbl (vs low USD 81.08/bbl) and the latter north of USD 88.50/bbl (vs low USD 87.55/bbl), in limited fresh newsflow. Gas markets are pressured as Freeport's Texas LGN plant has received approval to restart alongside forecasts for elevated European temperatures next week. EU proposed a price cap on Russian premium oil products of USD 100/bbl and USD 45/bbl on discounted oil products, while EU governments are to discuss the proposals today before entry into force on February 5th. Strikes at TotalEnergies (TTE FP) sites have been suspended, will be proposed again on January 31st, via CGT Union. Spot gold is little changed in narrow sub-15/oz parameters with any potential upside capped by the firmer USD, base metals are mixed but contained overall. Geopolitics Japan is to impose additional sanctions against Russian individuals and entities, while it will impose an additional export ban on military-related items to Russia as part of sanctions. according to Reuters. US Event Calendar 08:30: Dec. Personal Income, est. 0.2%, prior 0.4% Personal Spending, est. -0.1%, prior 0.1% Real Personal Spending, est. -0.1%, prior 0% 08:30: Dec. PCE Deflator MoM, est. 0%, prior 0.1% PCE Deflator YoY, est. 5.0%, prior 5.5% PCE Core Deflator YoY, est. 4.4%, prior 4.7% PCE Core Deflator MoM, est. 0.3%, prior 0.2% 10:00: Jan. U. of Mich. Sentiment, est. 64.6, prior 64.6 Current Conditions, est. 68.6, prior 68.6 Expectations, est. 62.0, prior 62.0 1 Yr Inflation, est. 4.0%, prior 4.0%; 5-10 Yr Inflation, est. 3.0%, prior 3.0% 10:00: Dec. Pending Home Sales YoY, est. -35.4%, prior -38.6% Dec. Pending Home Sales (MoM), est. -1.0%, prior -4.0% 11:00: Jan. Kansas City Fed Services Activ, prior -5 DB's Jim Reid concludes the overnight wrap I’m relieved to nearly make it to the end of the week in one piece. Whilst my fever has gone I’m still weak and at home there’s 2 sets of penicillin being taken, one perforated ear drum, and a wife who went to bed at just after 7pm last night. In the olden days there would be a big cross on our door. We are supposed to be going to a containment room tonight, where you get locked into a room for an hour and have to find a way out by deciphering all the clues with your team. Sounds like hard work! Markets deciphered a lot of mixed clues yesterday and, after some cause for concerns, decided that it was easier to shrug it all off and drive equities to fresh 2023 highs. Earnings also helped the mood, to be fair. The S&P 500 closed up +1.10% (YTD highs), just as credit spreads tightened and oil prices recovered from their losses earlier in the week. We still think we are in a positive sweet spot but there was certainly stuff to worry about in the US data yesterday. It depends on whether you saw the glass half full or half empty element of it. When it came to those data releases, an important one was the Q4 GDP release from the US, which showed the economy grew by an annualised +2.9% at the end of last year (vs. +2.6% expected). That’s certainly some distance from a recession and there was lots of focus on it being above consensus. However, a key point of caution is that 1.5pp of it was attributable to inventory growth, with net exports and the government adding 0.6pp each. Final sales to private domestic purchasers was soft and showed signs of grinding to a halt. So the details weren’t as flattering as the headline number might suggest at first glance. In the meantime though, the report also offered confirmation that inflation was slowing down, with the PCE price index that the Fed targets up by an annualised +3.2% in Q4, the slowest since Q4 2020, whilst core PCE was up +3.9%, the slowest since Q1 2021. It wasn’t just the GDP release that aided hopes of a soft landing, however, as the weekly initial jobless claims for the week ending January 21 came down to 186k (vs. 205k expected). That’s their lowest level since April, and this isn’t just a blip either, since the 4-week moving average fell beneath 200k for the first time since May. Continuing claims were up to +1,675k (survey +1,658k) though so a bit mixed. Net, net the market took the more positive side of the ledger though and investors moved to price in slightly more central bank rate hikes over the coming months. For instance, the rate priced in by Fed funds futures for the December meeting was up by +3.8bps to 4.47%. Similarly, the ECB rate priced for December was also up +4.7bps. That led to a noticeable rise in sovereign bond yields, with the 10yr Treasury yield up +5.3bps on the day to 3.495%, followed up by a +3.13bps move overnight in Asia to 3.53%. The US dollar (+0.19%) also advanced into the afternoon before giving back some gains toward the end of the US session. In Europe it was much the same story, with yields on 10yr bunds (+5.8bps), OATs (+7.7bps) and BTPs (+8.6bps) all posting a solid increase as we approach next week’s round of central bank meetings. More details on that equity rally now. It was a big roundtrip for the S&P 500, which had been up +0.91% in the first 15 minutes of trading, before being down nearly -0.1% on the day just 90 minutes into trading. Once all the data was absorbed risk rallied through the rest of the day right through the European close. In Europe the STOXX 600 came down from its own intraday high of +0.76% to end at +0.42%, but it missed out on the last lag of the rally last night. On a sectoral basis, energy stocks (+3.32%) were the biggest outperformer in the S&P, aided by a +1.89% rise in Brent crude oil prices that took oil back to $87.47/bbl and then another +0.4% higher to $87.82/bbl in early trading in Asia. Megacap tech stocks were another winner, with the FANG+ index up +3.02% to its highest level since September thanks to a surge in Tesla (+10.97%) after its earnings release. However, some of the more defensive sectors like consumer staples (-0.28%) lagged behind the broader index. Intel was down -9.7% in after-market trading following its earnings announcement. The chipmaker surprised investors by offering a negative earnings forecast for Q1’23 and the lowest quarterly revenue target since 2010. The company has pointed to poor PC sales as the main driver of the expected weakness. Visa was trading +1.1% higher in post-market trading despite seeing purchase volumes rise less than expected in Q4’22, and expectations that higher prices will slow consumer demand. Against that backdrop, US stock futures are indicating a negative start with contracts tied to the S&P 500 (-0.29%), as well as the NASDAQ 100 (-0.61%), ticking down. Asian equity markets are struggling to gain traction this morning despite that strong tech-led handover from Wall Street overnight. Across the region, the KOSPI (+0.70%) is leading gains with the Nikkei (-0.03%) and the Hang Seng (-0.05%) slightly below the flatline. Elsewhere, markets in China are closed for the Lunar New Year. In early morning data, Tokyo’s CPI for January came out with an upside surprise as headline inflation advanced to +4.4% year-on-year (vs. +4.0% expected), hitting a four-decade high. It followed a downwardly revised +3.9% increase in the previous month. Meanwhile, the Japanese Yen (+0.15%) is positively responding against the dollar, trading at $130.03 as the stronger inflation data reinforced market expectations that increasing quickening inflation could push the Bank of Japan to move away from its ultra-easy policy. Looking at yesterday’s other data, US durable goods orders were up by +5.6% in December (vs. +2.5% expected), although excluding transportation they were much as expected at -0.1% (vs. -0.2% expected). Otherwise, new home sales in December came in at an annualised 616k (vs. 612k expected), with a downward revision in November’s figure to 602k (vs. 640k previously). Lastly, the Kansas City Fed’s manufacturing activity index beat expectations at -1 (vs. -8 expected), which is the first increase in that measure in 6 months. To the day ahead now, and data releases from the US include personal income, personal spending and PCE for December, as well as December’s pending home sales and the University of Michigan’s final consumer sentiment index for January. Over in Europe, there’s also French consumer confidence for January, the Euro Area money supply for December. Lastly, earnings releases include American Express, Charter Communications and Chevron. Tyler Durden Fri, 01/27/2023 - 08:07.....»»

Category: blogSource: zerohedge15 hr. 1 min. ago

Futures Rise Boosted By Solid Tesla Earnings, Chevron"s Giant Buyback

Futures Rise Boosted By Solid Tesla Earnings, Chevron's Giant Buyback In a mirror image of Tuesday's action, when MSFT earnings hammered stocks (after first headfaking them higher) only to see the selloff reverse completely during the course of Wednesday trading, on Thursday US equity futures and tech stocks were set to gain after an upbeat earnings report from Tesla reinforced optimism about the health of Corporate America. As of 7:30am, Nasdaq 100 futures were up 0.7% while S&P 500 futures rose 0.3%. Tesla jumped about 8% in premarket trading after the electric-car maker reported better-than-expected profit and said it was on track to deliver about 1.8 million vehicles this year. Risk sentiment was boosted by news that US energy giant Chevron had authorized a massive $75 billion stock buyback, representing 22% of its outstanding shares, helping elevate energy stocks around the globe. Asia stocks jumped to 9-month highs as Hong Kong returned from break and European stocks rose by 0.4%. Meanwhile, the dollar continued to weaken as speculation continued to mount that the Fed is drawing closer to the end of its rate-hiking cycle, and would follow in the footsteps of first Canada and then Indonesia, both of which have officially paused. Bonds and gold edged lower. In premarket trading, all eyes were on Tesla which rose 7.3% after the electric-car maker reported better-than-expected profits and said it was on track to deliver about 1.8 million vehicles this year. Analysts noted that the EV market leader’s output target looks conservative as new factories in Berlin and Austin are set to add more capacity this year. Among peers: Rivian (RIVN US) +3.5%, Lucid (LCID US) +3.4%, Nikola (NKLA US) +1.9%, Nio (NIO US) +4.9%, Xpeng (XPEV US) +5.1%, Li Auto (LI US) +5%. Bank stocks traded higher in premarket trading Thursday, putting them on track to gain for a second straight day. In corporate news, a New York Stock Exchange employee failed to properly shut down a disaster-recovery system, leading to Tuesday’s chaotic opening session. Meanwhile, Cboe Global Markets wants to list more tokens on its crypto exchange, as established firms from traditional finance seek to capitalize on demand for reliable counterparties following the collapse of FTX. Here are some other notable premarket movers: Chevron (CVX US) gains 2.5% after it announced plans to buy back $75 billion of shares and increase dividend payouts after a year of record profits that evoked angry denunciations from politicians around the world as soaring energy prices squeezed consumers. Pfizer (PFE US) drops 1.8% in premarket trading as UBS downgrades the stock to neutral, saying estimates for the pharma giant’s Covid-19 franchise still look too high. IBM (IBM US) shares slip 2% after the tech infrastructure and IT services company’s free cash flow for 4Q fell short of estimates, which Morgan Stanley analysts say was a “significant blemish” in the quarter. That overshadowed IBM’s estimate-beating revenue and profit for the fourth- quarter. BuzzFeed (BZFD US) shares were indicated up about 35% following a Wall Street Journal report that the company reached a content creation deal with Meta. The deal was agreed last year and is worth nearly $10 million, WSJ cites people familiar with the matter as saying. Seagate (STX US) shares rise 7.6% as its quarterly update was better than expected and the computer- hardware firm’s guidance underpins a positive view on the stock, analysts say. Teradyne (TER US) falls 3% after its 1Q earnings forecast missed the average analyst expectation, on lower demand for semiconductors and storage tests. Fourth-quarter earnings beat analysts’ estimates. Las Vegas Sands (LVS US) shares gain 2.1% as analysts raise their price targets on the stock. They said better-than-expected results despite travel restrictions boded well for a recovery. US stocks have kicked off 2023 with a rally that has set the S&P 500 on course for its best January since 2019, as investors bet that the Federal Reserve will slow the pace of rate hikes in time to avert a recession. Deutsche Bank AG strategists said this week they expect further gains in the first quarter as an economic contraction is “running late.” Commenting on yesterday's dramatic market reversal, Goldman trader John Flood writes that "when the market/stocks dont go down on bad news (MSFT guide) typically a bullish signal. I think we learned a lot from this price action today: this mkt is more resilient than most of us are giving it credit for (be very thoughtful/selective with your short positions as squeezes will be common this Q). Worth noting CVX raised the dividend by 6% and authorized a monster $75B buyback...energy complex will outperform on this tomorrow. Reminder buyback blackout period ends post close this Friday." Today all eyes will be on US GDP figures due later today, with economists expecting the data to show a slowdown in growth at the end of the year. Focus has also been on the fourth-quarter earnings season for signs of how companies plan to navigate slowing demand and elevated inflation. Analysts are projecting the first quarterly decline in US profits since 2020, but some market strategists have warned profit margin estimates for 2023 are still too high. “Earnings have not been great but they are not disastrous either,’ said Rupert Thompson, chief economist at asset manager Kingswood Holdings Ltd. “Institutional investors have been short equities so you are seeing some of those positions being covered.”  Thompson sees the January stock surge as overdone, given recession risks ahead, but did not discount further short-term gains because “if you do get a 5% pullback, people who missed the rally may think ‘shall we just bite the bullet now rather than wait for another 5% fall?” "Sentiment remains fixated on the path of inflation, and where the Fed will go with interest-rate policy,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown. Today’s economic data will be crucial to see “whether demand is being squeezed out of the economy and whether more storm clouds are gathering on the horizon,” she said. Soft-landing bets for the US economy and expectations the Federal Reserve is nearing the end of its rate-hiking cycle have lifted stock markets and put the dollar on course for its worst monthly performance since last May. On Thursday, it held around flat against its Group-of-10 peers as investors awaited economic growth and jobs data as well as a core price index that could determine the Fed’s policy path. In Europe, the Stoxx 600 was higher by 0.5% with outperformance in the tech sector after Nokia and STMicroelectronics posted better-than-expected numbers. Results from telecoms group Nokia Oyj and chipmaker STMicroelectronics NV were applauded by investors, helping to lift the Stoxx 600 index by half a percent. Here are some of the biggest European movers on Wednesday: Sabadell shares soar as much as 10% after the Spanish lender reported 4Q net profit that beat estimates and gave above- consensus estimates guidance Sartorius AG rises as much as 8.3% after the laboratory equipment firm reassured the market with an update to its financial targets; its subsidiary Sartorius Stedim Biotech rises, too STMicro jumps as much 9.3% after the chipmaker projected first-quarter and full-year sales ahead of consensus estimates, defying a slowdown in the broader semiconductor industry Nokia shares gain as much as 7.2%, the biggest intraday climb since July, after the telecom equipment maker outlined full-year outlook that met expectations Diageo falls as much as 7.4%, weighing on peers in the alcohol and beverages sector, after the Johnnie Walker maker’s results disappointed in North America and delivered an uncertain outlook Volvo shares slide as much as 4.9% in early trading after the Swedish truck producer reported 4Q22 earnings that came in below consensus SEB falls as much as 4.8%, the most since October, after the Swedish lender reported 4Q figures that beat expectations but were of a low quality, according to Citi Novartis falls as much as 2.4% on being cut to neutral from buy at Citi on a more cautious outlook for the Swiss pharma group’s cholesterol drug Leqvio and prostate cancer drug Pluvicto SAP shares fall as much as 4.1% after it’s free cash flow outlook for 2023 missed estimates, even though the firm still projected at least a double-digit growth for operating profits Earlier in the session, stocks in Asia Pacific rose for a fifth straight day as investors in Hong Kong returned from Lunar New Year holidays that delivered a boost to consumption. The MSCI Asia Pacific Index climbed as much as 0.8% to the highest since April 22. Hong Kong-listed stocks rallied as data on spending and tourism during the three-day break signaled a recovery in demand is gaining traction in China. The Hang Seng Index closed at its highest since March. “Stocks in Hong Kong would probably remain on the stronger side,” Chetan Seth, an Asia Pacific equity strategist at Nomura, told Bloomberg Television. “What we might see in the months ahead is improvement in activity indicators.”  Benchmarks in South Korea, Indonesia and Singapore also rose as traders assessed the global economy’s prospects. China’s reopening has triggered a rebound across Asia, with investors now looking beyond Covid infection figures to evaluate how a recovery in the region’s largest economy will impact earnings. The MSCI Asia gauge is outperforming the S&P 500 by more than four percentage points so far in 2023 Japanese stocks fell, while markets in Australia, China, India, Taiwan and Vietnam were closed. Japanese stocks closed slightly lower, erasing early gains and halting a four-day winning streak, as investors assessed prospects for corporate earnings and the global economy. The Topix fell 0.1% to close at 1,978.40, while the Nikkei declined 0.1% to 27,362.75. Sony contributed the most to the Topix decline, decreasing 1.3%. Out of 2,161 stocks in the index, 893 rose and 1,116 fell, while 152 were unchanged. “There is a continued wait-and-see mood as there are two important indicators, the FOMC meeting and ISM employment reports coming up next week,” said Shogo Maekawa a global market strategist at JP Morgan Asset Management In FX, the Bloomberg Dollar Index swung between moderate gains and losses. The Norwegian krone and Australian dollar led gains, while Sweden’s krona lagged.  The euro retreated after six days of gains versus the greenback, though it is likely to enjoy continued monetary policy support, as several European Central Bank rate-setters spoke in favor of further hefty policy-tightening over coming months.  Traders are likely to parse reports on US economic growth, initial jobless claims and a core price index due Thursday to gauge if the Fed will opt for a smaller rate hike on Feb. 1. Recent commentary from some central bank officials has backed the case for a quarter point increase In rates, treasuries were lower after following gilts and, to a lesser extent, bunds during European morning. US yields cheaper by up to 4bp across long-end of the curve which leads losses on the day; 10-year yields back up to around 3.48% with gilts underperforming by additional 2bp in the sector and bunds trading broadly in line. UK and German 10-year yields rise by 4bps and 2bps respectively. A raft of US economic data is set to be released, and auction cycle concludes with 7-year notes following strong demand for 5- and 2-year sales. $35b 7-year notes at 1pm New York time is final coupon auction of the November-to-February financing quarter; all previous coupon auctions during January have stopped through. The WI 7-year around 3.525% is ~40bp richer than January’s stop-out and below auction stops since August. Saira Malik, chief investment officer of Nuveen, said earnings risk in a consumer-led slowdown will act as a headwind to equities, with a shift into bonds underscoring the fragile sentiment. “You can start to increase your duration in fixed-income and get strong total returns in it without a lot of these heavy macro risks that are going to hit equities,” Malik said in an interview with Bloomberg TV. “Equities considering their valuation are less attractive.” Elsewhere, oil prices rose for a second day, lifted by expectations of demand recovery in China. Crude future advance with WTI gaining 0.9% to trade near $80.90. Spot gold falls roughly 0.5% to trade near $1,937/oz. Bitcoin fell more than 2%, reversing much of Wednesday’s gain. Looking to the busy day ahead now, data releases from the US include the advance estimate of Q4 GDP, preliminary durable goods orders for December, new home sales for December and the weekly initial jobless claims. Otherwise, earnings releases include Visa, Mastercard, Intel, American Airlines and Comcast. Market Snapshot S&P 500 futures up 0.2% to 4,038.75 MXAP up 0.6% to 170.22 MXAPJ up 1.1% to 558.68 Nikkei down 0.1% to 27,362.75 Topix down 0.1% to 1,978.40 Hang Seng Index up 2.4% to 22,566.78 Shanghai Composite up 0.8% to 3,264.81 Sensex down 1.3% to 60,205.06 Australia S&P/ASX 200 down 0.3% to 7,468.30 Kospi up 1.7% to 2,468.65 STOXX Europe 600 up 0.5% to 454.33 German 10Y yield little changed at 2.19% Euro down 0.1% to $1.0900 Brent Futures up 0.4% to $86.50/bbl Gold spot down 0.5% to $1,937.17 U.S. Dollar Index up 0.17% to 101.81 Top Overnight Stories BOJ members were divided over whether the 2% inflation goal could be sustainably achieved and felt the extreme level of accommodation should be sustained. Also, The IMF suggested that the BOJ could allow more flexibility in 10-year bond yields, a move that would involve policy changes for the central bank. RTRS / Nikkei China’s most scenic destinations have been inundated during the Spring Festival holiday, as Beijing’s shift away from Covid Zero spurred a travel frenzy despite the country’s ongoing omicron outbreak. BBG Bank of Indonesia has delivered enough interest-rate increases, according to Governor Perry Warjiyo, who signaled that this round of tightening is coming to an end as the Federal Reserve also winds down. This is the second central bank in as many days (after the Bank of Canada yesterday) to signal an end to rate hikes. BBG Pakistan’s economy is at risk of collapse, with rolling blackouts and a severe foreign currency shortage leaving businesses struggling to operate as authorities attempt to revive an IMF bailout to relieve the deepening crisis. FT Adani Group may take legal action against Hindenburg Research after the US short seller alleged "brazen" market manipulation and accounting fraud. Shares of Adani-related entities slumped yesterday, shaving $12 billion off the empire of Asia's richest man, and a raft of its companies' dollar bonds fell further today. BBG Eurozone officials start talks on creating a huge multibillion-euro fund to compete w/the US green energy subsidies. London Times The NYSE mayhem earlier this week was due to simple human error, people familiar said — an exchange employee didn't correctly shut down a backup system running overnight so heading into Tuesday, the NYSE's computers treated the 9:30 a.m. bell as a continuation of trading, skipping the opening auctions. No word yet on the cost of the chaos. BBG Donald Trump's back. Meta will reinstate the former president's social media accounts "in the coming weeks" following a two-year suspension. He had 34 million followers on Facebook and 23 million on Instagram back in 2021 but, more important, his re-election campaign will now be able to buy ads to raise money via direct appeals or by capturing users' contact info to solicit them directly. BBG Tesla jumped as much as 8% premarket after profit beat, though there were mixed signals on the outlook. Elon Musk said production may top 1.8 million vehicles this year. BBG A more detailed look at global markets courtesy of Newsquawk APAC stocks traded somewhat mixed amid key holiday closures and after the flat handover from Wall St where the major indices recouped most of their initial losses after the BoC’s dovish hike. Nikkei 225 was subdued amid a firmer currency and upside in yields, while the government also lowered its overall economic assessment for the first time in 11 months. KOSPI gained despite the weaker-than-expected GDP data although the finance minister flagged the likelihood of a return to growth for the current quarter. Hang Seng outperformed as participants in Hong Kong returned from the Lunar New Year holiday and were greeted by strength in tech, property and autos, although trade across the rest of the region remained relatively quiet owing to the closures in Australia, China, Taiwan, India and Vietnam. Top Asian News BoJ Summary of Opinions from the January meeting stated it is appropriate to maintain current monetary easing including YCC and that the BoJ must keep yields from rising across the curve while being mindful of the bond market function. Furthermore, they must spend more time to gauge the impact of the December decision and must conduct a review of policy at some point although it is appropriate to maintain easy policy for now, while they still see some distance in achieving the price goal and noted it will take some time to achieve sustained wage growth. IMF (policy proposal on Japan) says the BoJ should allow bond yields to move in a more flexible manner; If significant upside inflation risks materialise, BoJ needs to be ready to withdraw stimulus strong, e.g. by increasing interest rates; possible options for the BoJ include widening the yield bank, increasing the yield target, targeting shorter yields and shifting to a quantity target; BoJ policy is appropriate as inflation is likely to ease but risks are becoming more pronounced; FX intervention should be limited to special circumstances such as disorderly market conditions. Japan is to downgraded its COVID classification on May 8th, via NHK. European bourses are firmer across the board, Euro Stoxx 50 +0.6%, with a busy morning for earnings dictating the state of play before Stoxx 600 heavyweight LVMH's (MC FP) earnings, due after-market on Thursday. Stateside, futures are firmer across the board, ES Mar'23 +0.2% and comfortably above the 4k mark and as such the 10- and 200-DMAs which reside on either side of the figure. NDX +0.6% is the incremental outperformer after a well received update from Tesla (TSLA) +7% pre-market while IBM (IBM) slips -1.6% after its Q4 report. Top European News US and EU are reportedly discussing a potential deal regarding critical raw materials and minerals, to enable the EU to benefit from the US' Inflation Reduction Act/green investment plan, via Bloomberg citing sources. UK 2022 car production fell 9.8% Y/Y to 775k units, while car and light van production for 2023 is expected to increase 15% Y/Y to 984k units, according to SMMT. UK ONS says consumer behaviour indicators were broadly similar to the prior week. Irish Finance Minister McGrath says Brexit talks have reached a new level. Italian Economy Minister says before April they intend to extend relief measures to assist families and firms with energy costs, could alter regulations on capital gains tax. Denmark Calls for Mandatory Military Service for Women Europe Gas Prices Rebound After Slump With Asia Demand in Focus Diageo Drops as Sales Growth Slows in Crucial US Market Saipem Top Oil Services Pick at JPMorgan, Subsea 7 Cut FX DXY slips to a minor new 101.500 y-t-d low, but holds in and pares some losses pre-US data raft. Aussie and Kiwi remain underpinned on inflation grounds, but AUD/USD heavy on 0.7100 handle and NZD/USD clipped around 0.6500. Yen recoils between 129.00-130.00 range vs Buck as Japan's top currency diplomat warns that sharp moves will not be tolerated, CNH bid as HK markets return from holiday with COVID reopening optimism. Euro and Pound wobble above 1.0900 and 1.2400 vs Dollar and ahead of technical resistance. Morgan Stanley's month-end USD rebalancing model: expects the USD to underperform in January, with weakness expected vs all G10 currencies ex-NOK. CBRT announced support for the conversion of firms' foreign exchange obtained from abroad into Turkish liras to support 'liraization' in commercial activities, with firms to be provided with FX conversion support corresponding to 2% of the amount converted. Fixed Income Core benchmarks have continued to ease from best levels with the IMF's BoJ/Japan policy proposal adding to the pressure. Bunds holding just above 138.00 within 138.62-137.91 parameters while Gilts are just below 105.00 towards the mid-point of a 105.66-104.72 range. USTs are similarly contained around the 115.00 handle as participants await US data and a subsequent 7yr auction. Commodities WTI and Brent March futures remain underpinned by the China-demand narrative, though are relatively rangebound overall and spent much of the morning trading with no firm direction with focus on geopols and French strike action. US and European gas futures are experiencing a modest divergence, with ING suggesting the US Nat Gas pressure is due to milder weather. TotalEnergies (TTE FP) says pension reforms strike action is interrupting shipments at French production sites, except for the Feyzin refinery (119k BPD). Continue to ensure petrol stations are supplied, no shortage. 24-hours strike declared at the 140k BPD Fos-Sur-Mer oil refinery in France, according to BFM TV citing an Esso Union official. German energy regulator says there is not enough gas saving in the third calendar week; household, business and industry consumption down 9%in total in that week (vs 20% target). Spot gold has been dipping from best levels amid seemingly yield-driven USD upside while LME copper is relatively resilient but has slipped from best levels. Geopolitics Russian Kremlin says it sees the sending of Western tanks to Ukraine as direct and growing involvement in the conflict. Russian Security Council's Secretary Patrushev says the US and NATO are participating in the Ukrainian conflict and want to prolong it. US Event Calendar 08:30: 4Q GDP Annualized QoQ, est. 2.6%, prior 3.2% 4Q GDP Price Index, est. 3.2%, prior 4.4% 4Q PCE Core QoQ, est. 3.9%, prior 4.7% 4Q Personal Consumption, est. 2.8%, prior 2.3% 08:30: Dec. Durable Goods Orders, est. 2.5%, prior -2.1% Dec. -Less Transportation, est. -0.2%, prior 0.1% Dec. Cap Goods Orders Nondef Ex Air, est. -0.2%, prior 0.1% Dec. Cap Goods Ship Nondef Ex Air, est. -0.4%, prior -0.1% 08:30: Jan. Initial Jobless Claims, est. 205,000, prior 190,000 Continuing Claims, est. 1.66m, prior 1.65m 08:30: Dec. Advance Goods Trade Balance, est. -$88.1b, prior -$83.3b, revised -$82.9b 08:30: Dec. Retail Inventories MoM, est. 0.2%, prior 0.1% Wholesale Inventories MoM, est. 0.5%, prior 1.0% 08:30: Dec. Chicago Fed Nat Activity Index 10:00: Dec. New Home Sales MoM, est. -4.4%, prior 5.8% New Home Sales, est. 612,000, prior 640,000 11:00: Jan. Kansas City Fed Manf. Activity, est. -8, prior -9 DB's Jim Reid concludes the overnight wrap Morning from Milan. Yet another first time since the pandemic started trip. Always nice to be back. I’d almost forgotten how good the food is here! It was a fairly positive macro dinner with clients generally constructive. It was unique to be in Italy and see no-one really too concerned about Italy credit quality which is testimony to the various EU/ECB packages both pre and post the pandemic and also impressive given how far the ECB has come on rates and how far it still has to go. With markets overall on the calm side too at the moment we're getting our mini vol from entering earnings crossfire season where a big name’s quarterly report can pick you off. Indeed, sentiment yesterday was heavily influenced at first by Microsoft’s disappointing cloud sales outlook from after the bell on Tuesday night. The company’s shares were down around -4.5% soon after the open, before sentiment steadily improved as the day progressed. By the end of the day, it had clawed its way back up to have only lost -0.59%. More broadly, the Nasdaq and S&P 500 hit intraday lows of -2.34% and -1.69%, respectively, before closing at -0.18% and -0.02%. So a decent recovery. After the close, we then heard from Tesla and IBM. Tesla reported adjusted earnings of $1.19 EPS ($1.12 EPS expected) as it sought to boost output quickly to achieve its previous guidance of 1.8mn vehicles delivered this year. In after-market trading it then advanced +5.5%, especially after Elon Musk said that he expected demand would remain strong despite an expected contraction and that there was a new “next-generation” vehicle that would be announced in March. IBM (-2.0% after-market) also beat earning expectations at $3.60 EPS (consensus was $3.58), and increased its sales forecast whilst announcing they would be cutting headcount by 1.5%. Against this backdrop, US equity futures are looking more positive this morning, with those on the S&P 500 (+0.12%) and the NASDAQ 100 (+0.35%) both higher. With the S&P 500 finishing the day largely unchanged, 12 of 24 industry groups were in positive territory for the day. Telecoms (+2.50%), banks (+1.17%), insurance (+0.78%), and food & beverage (+0.73%) outperformed, whereas transports (-1.43%) and utilities (-1.36%) were the biggest laggards. Europe closed before the last of the rally in the US, with the STOXX 600 finishing down -0.29%. The STOXX Technology index was similarly down -1.66% at the lows before staging a late recovery itself that only left it down -0.13%. Much like US equities, US bonds saw a decent range and by the close yields on 10yr Treasuries were down -1.1bps on the day to 3.44% (range 3.42-3.49%). By contrast in Europe, yields on 10yr bunds (+0.3bps), OATs (+1.1bps) and BTPs (+3.3bps) all moved higher to varying degrees. That followed fresh comments from ECB speakers, with Slovenia’s Vasle saying that rates should go up by 50bps at the next two meetings. Ireland’s Makhlouf also endorsed continuing with 50bps into March, saying that “We need to continue to increase rates at our meeting next week – by taking a similar step to our December decisions – and also at our March meeting.” Ahead of the Fed and ECB decisions next week, we did get a decision yesterday from the Bank of Canada. They hiked by 25bps as expected, but said in their statement that they expect “to hold the policy rate at its current level while it assesses the impact of the cumulative interest rate increases.” Governor Macklem did make clear in his press conference statement that this was “a conditional pause”, and said they were willing to do more if needed to get inflation back to target. However, it’s still an important milestone after a series of 8 hikes at consecutive meetings, particularly given speculation about when the Fed might reach a similar point in their own hiking cycle. Speaking of the Fed, they’re currently in their blackout period, but the Washington Post reported yesterday that Vice Chair Brainard was a top contender to become the next head of the National Economic Council at the White House. If that happened, that would open up a space on the board as well as the Vice Chair position, although as it stands Brainard’s position as both a Governor and Vice Chair currently last until H1 2026. Nevertheless, there is a precedent for such a move from the Fed to the White House, such as when former Chair Bernanke went from being a Fed Governor to Chair of the Council of Economic Advisers in 2005, before going back to the Fed as Chair the following year. Similarly, Janet Yellen made the same move from Fed Governor to CEA Chair in 1997. Staying with the White House, the Biden administration announced that the US would be sending 31 M1 Abrams tanks to Ukraine, adding on to those confirmed by Germany. Delivery of the US tanks could take months but training would begin soon. The German tanks are expected to be sent to Ukraine within three months. Overnight in Asia, equities have posted advances for the most part, with the Hang Seng up +1.89% as it resumed trading following a holiday. That leaves the index on track for its highest closing level since April last year, and brings its gains since the end of October to +53% now. In the meantime, the KOSPI was also up +1.44%, but the Nikkei is down -0.20% this morning amidst a further strengthening in the Japanese Yen, which stands at 129.36 per US Dollar this morning. Looking at yesterday’s other data, the Ifo business climate indicator from Germany rose to a 7-month high of 90.2 in January (vs. 90.3 expected). And the expectations component rose to an 8-month high of 83.2 (vs. 82.0 expected). To the day ahead now, and data releases from the US include the advance estimate of Q4 GDP, preliminary durable goods orders for December, new home sales for December and the weekly initial jobless claims. Otherwise, earnings releases include Visa, Mastercard, Intel, American Airlines and Comcast. Tyler Durden Thu, 01/26/2023 - 08:06.....»»

Category: personnelSource: nytJan 26th, 2023

Futures Slide On Ugly Microsoft Outlook, Renewed War Escalation Fears

Futures Slide On Ugly Microsoft Outlook, Renewed War Escalation Fears US equity futures slumped on Wednesday after Microsoft started off the tech giants' earnings parade by pulling off the old pump and dump, first jumping on Azure/Cloud results which beat estimates, but then erasing all gains and slumping during the company's conference call after the company's guidance disappointed, forecasting slower earnings and weaker demand (separately, hours later customers reported difficulties across multiple regions in accessing Microsoft 365 services, which the company attributed to networking issues). Earnings reports from companies such 3M, Boeing and chipmaker Texas Instruments also reinforced concerns about the health of corporate America and added to investors’ jitters as they await updates from the likes of Tesla and IBM. Fears also grew that a decision to send German and US tanks to Ukraine would provoke an escalation in the war. As a result, contracts on the tech-heavy Nasdaq fell 1.3% at 7:15 a.m. ET while S&P 500 futures dropped 0.8%, and traded right around 4,000. The Bloomberg Dollar Spot Index was little changed, leading to mixed trading in Group-of-10 currencies. Treasuries edged higher, mirroring gains in most UK and German government bonds. Brent crude was little changed, while gold and Bitcoin fell. In premarket trading, all eyes were on Microsoft which fell after saying revenue growth in its Azure cloud-computing business will decelerate in the current period and warned of a further slowdown in corporate software sales. Amazon and Alphabet also fell in sympathy, dragging other cloud stocks lower (Amazon.com -1.6% and Alphabet -1.1%; Snowflake -3.1%, Datadog -4.0%, Adobe  -1.4). Texas Instruments suffered its first sales decline since 2020 and gave a tepid forecast for the current quarter. Microsoft comprises about 12% of the Nasdaq 100, while Texas Instruments has a weighting of 1.4%. Here are other notable premarket movers: Enphase Energy (ENPH US) declines 4% after it was cut to neutral from overweight at Piper Sandler as demand for residential solar loans dipped more than the broker expected. Precigen (PGEN US) drops 16% after an offering of shares priced at $1.75 apiece, representing a 20% discount to the last close. Proceeds to be used to fund the development of product candidates and for other general corporate purposes. Block (SQ US) declines 4% as Oppenheimer cuts the stock to market perform from outperform, saying the firm looks less defensively-positioned than other payments names. Intuitive Surgical’s (ISRG US) falls 8.9% as the medical tech firm’s quarterly results are overshadowed by the company saying it won’t launch a new multiport robotic system in FY23, which analysts say removes a positive catalyst for the stock. Capital One’s (COF US) slumps 3.3% following the release of results. Its earnings slightly missed expectations and analysts flag a quicker-than-expected acceleration in net charge-offs for the company. Keep an eye on Stryker (SYK US) as it was initiated by KeyBanc at sector weight, which says the US med-tech firm’s valuation “reflects an above-average growth rate with some risk of mean reversion over time.” A weak earnings outlook, fears of US recession as well as the potential escalation in the Ukraine-Russia war were all contributing to the market pullback, according to Kenneth Broux, a strategist at Societe Generale. “The market is definitely worried about slowing earnings growth especially on tech, so there has been a sense the market wants to keep selling tech and the dollar,” Broux said. “But a huge tail risk now is what happens in Ukraine, if there is an escalation in the conflict and Europe gets drawn into the conflict.” While today's drop will hurt, the Nasdaq 100 Index has surged 8.3% this year, on track for the best January since 2019. Expectations that the Federal Reserve will soon pivot away from its hawkish policy have aided the rally, though strategists are increasingly preferring non-US equities this year as they hunt for cheaper valuations and grow concerned about a US recession. Investors are now parsing earnings statements for the impact of the economic slowdown on results. “The main focus is clearly on US big tech,” said Fabio Caldato, a partner at Olympia Wealth Management. “How can those bulls in a China shop reassure the financial community? Just showing growth. We remain very cautious on this aspect and prefer to underweight the whole sector.” Next, all eyes will be on Tesla when the electric-car maker reports results after the market closes on Wednesday. Investors will focus on demand, profitability and 2023’s expected pace of deliveries. They are also keen to learn whether Chief Executive Officer Elon Musk will name a new CEO of Twitter. In Europe, the Stoxx 600 was down 0.6% and on course for its first back-to-back declines of the year. Shares in major European software firms such as SAP SE and Sage Group Plc. feeling the heat from Microsoft and Dutch chip-tool maker ASML Holding NV falling after posting a profit miss. Here are the most notable European movers: EasyJet shares rise as much as 12% after the budget carrier reported 1Q revenue that was 8% ahead of consensus and projected strong trends will continue into the second quarter Aviva shares gain as much as 3.5%, the most since October, with JPMorgan saying the general insurance underwriting update from the group will provide some reassurance Caverion shares rise as much as 4.1% after the Bain-led consortium increased its offer for the Finnish building-maintenance-services firm following a rival bid from private equity firm Triton Hill & Smith rises as much as 2.2% after delivering an unscheduled trading update guiding to operating profit above expectations, which Jefferies describes as “pleasing to read” ASML shares fall as much as 2.3%, trimming a recent rally, after the Dutch chip-tool giant’s profitability target missed higher Street expectations despite its bullish sales growth forecast for 2023 Netcompany shares plunge as much as 23%, the most on record, after the Danish IT consultant’s Ebitda margin guidance for 2023 missed expectations Aroundtown shares dropped as much as 7.4% after Societe Generale cut its recommendation to sell from buy as part of a more cautious view on REITs Gjensidige shares fall as much as 9.9% with analysts saying the Norwegian insurer’s results were weak across the board and that the lack of a special dividend will disappoint Earlier in the session, Asian stocks headed for a fourth straight daily gain as tech stocks rose amid lighter trading volumes and holidays in China and Hong Kong. The MSCI Asia Pacific Index advanced as much as 0.4% to its highest since early June. Samsung Electronics and SK Hynix were among the biggest contributors to the gauge’s advance as Korea traders returned from the Lunar New Year holidays. “With the global growth outlook narrative shifting more toward a soft landing rather than recession, we are seeing the tech sector come back in favor for now,” said Charu Chanana, strategist at Saxo Capital Markets. “But caution is warranted as inflation risks are back on the horizon with China’s reopening.”  Tech investors also assessed Microsoft’s second-quarter earnings release, which showed profit beat estimates although the company gave a downbeat revenue forecast. Traders are now turning their attention to Tesla’s result announcement later Wednesday. Singapore stocks led gains in Asia Pacific alongside their South Korean peers. Japanese stocks rose as investors continued to assess the overall economy and shifted their focus to upcoming earnings. The Topix rose 0.4% to 1,980.69 at the close in Tokyo, while the Nikkei advanced 0.4% to 27,395.01. The yen weakened 0.2% to 130.44 per dollar. Keyence contributed the most to the Topix’s gain, increasing 1.7%. Out of 2,161 stocks in the index, 1,342 rose and 699 fell, while 120 were unchanged.  “Global economic recession risk has declined sharply as China and Europe demand is expected to improve this year,” said Daniel Yoo, head of global asset allocation at Yuanta Securities Korea. “Overall tech demand including capex investments of global corporations isn’t slowing down much.” Stocks in India fell ahead of the expiry of monthly derivative contracts on Wednesday. Adani Group shares were among major decliners after activist investor Hindenburg Research shorted the group. The S&P BSE Sensex slid 0.9% to 60,404.47, as of 11:09 a.m. in Mumbai, while the NSE Nifty 50 Index declined 1%. All but one of BSE Ltd.’s 20 sector sub-indexes declined, led by a gauge of service industry stocks.  HDFC Bank contributed the most to the Sensex’s decline, decreasing 1.8%. All but three of 30 shares in the Sensex dropped.  All stocks controlled by Adani Group fell after Hindenburg Research accused firms owned by Asia’s richest man of “brazen” market manipulation and accounting fraud. Representatives for the Adani Group didn’t immediately respond to calls and emails seeking comment, saying the company would issue a statement in response later. Meanwhile, Australian stocks dropped after data showed that domestic inflation accelerated to the fastest pace in 32 years in the final three months of 2022. Trading volumes have been light in Asia this week as markets in China, Hong Kong, Taiwan and Vietnam remain closed for the new-year break. A blackout period on communications ahead of the Federal Open Market Committee’s policy meeting next week has supported risk appetite, with the MSCI Asia gauge up about 25% from an October low In FX, the Bloomberg Dollar Index was little changed even as the greenback advanced against most of its Group-of-10 peers, with notable outperformance in the Aussie dollar after CPI surprised to the upside. Kiwi dollar is the weakest among the G-10’s. The pound fell for a third day and gilts rose, led by the belly, after data showed UK factories’ fuel and raw material costs rose at the slowest pace in almost a year. Input prices rose 16.5% in December from a year ago, down from a peak of 24.6% in June. Money markets went to fully price in a 25-basis point rate cut by the Bank of England before the end of the year The euro fell a first day in six against the US dollar, though moves were limited to a narrow range. Bunds advanced, outperforming Italian notes. The Canadian dollar was little changed while overnight volatility in dollar- loonie rose to its highest level since Jan. 12 as traders position for the Bank of Canada policy decision. The implied breakeven of around 84 pips may be understating the possibility of outsized swings in the pair. Australian dollar rose against all of its G-10 peers, to trade at the highest level since August versus the greenback, and the nation’s bonds tumbled after 4Q inflation accelerated to the fastest pace in 32 years in the final three months of 2022. The outcome of 7.8% from a year earlier exceeded forecasts of 7.6% and prompted money markets to price in an interest-rate hike at next month’s central bank meeting. Kiwi dollar was the worst G-10 performer as New Zealand inflation held near three-decade high at 7.2% but undershoot RBNZ’s forecast. In rates, the risk-averse tone benefited bonds, with UK and German 10-year yields falling by 8bps and 6bps respectively. Treasuries also rose as the Treasury curve bull-flattened modestly and as futures extending through Tuesday’s highs, following wider gains across gilts after soft UK factory price inflation data.  Treasury yields richer by around 2bp from belly out to long-end with 10-year at 3.42%, lagging gilts by almost 4bp in the sector after sharp rally across UK bonds. The US auction cycle resumes at 1pm with $43b 5-year sale, before Thursday’s $35b 7-year notes; strong 2- year auction Tuesday traded through the WI by 1.3bp. In commodities, oil prices are little changed with WTI hovering around $80.10. Spot gold falls roughly 0.6% to trade near $1,926/oz Bitcoin is back below the USD 23k mark, though remains just above the WTD trough set on Monday at USD 22.3k. On today's calendar, we get data on US mortgage application (up 7.0%, vs up 27.9% last week). The EIA will release figures on oil inventories at 10:30 a.m. The US will sell $24 billion of two-year floating-rate notes and $36 billion of 17-week bills at 11:30 a.m., followed by $43 billion of five-year notes at 1 p.m. From central banks, the main highlight will be the Bank of Canada’s latest policy decision. Finally, earnings releases include Tesla, Boeing, IBM, AT&T and Abbott Laboratories. Market Snapshot S&P 500 futures down 0.5% to 4,011.25 MXAP up 0.3% to 169.09 MXAPJ up 0.2% to 553.07 Nikkei up 0.4% to 27,395.01 Topix up 0.4% to 1,980.69 Hang Seng Index up 1.8% to 22,044.65 Shanghai Composite up 0.8% to 3,264.81 Sensex down 1.3% to 60,174.06 Australia S&P/ASX 200 down 0.3% to 7,468.30 Kospi up 1.4% to 2,428.57 STOXX Europe 600 down 0.3% to 451.94 German 10Y yield little changed at 2.11% Euro little changed at $1.0884 Brent Futures up 0.5% to $86.56/bbl Gold spot down 0.3% to $1,930.94 U.S. Dollar Index little changed at 101.93 Top Overnight News from Bloomberg A gauge of German business expectations by the Ifo institute rose to 86.4 in January from 83.2 the previous month. That’s the fourth consecutive improvement and a bigger increase than economists had anticipated. A measure of current conditions slipped, however European natural gas headed for a third day of declines as ample supplies and reserves, along with the return of milder weather, help to ease the region’s energy crisis With the Federal Reserve’s Feb. 1 interest-rate decision a week away, traders in the options market are contemplating a scenario in which the rate hike it’s expected to deliver ends up being the last one of the tightening cycle Japan’s broken bond market continued to throw up anomalies with central bank ownership of some government debt exceeding the amount outstanding, according to its latest data Japan’s government cut its monthly view of the economy for the first time since February 2022, reflecting gathering concerns over the outlook for the global economy A More detailed look at global markets courtesy of Newsquawk APAC stocks were mixed after the indecisive performance stateside owing to the varied data releases and geopolitical tensions, while the region also digested firmer-than-expected inflation data from Australia and New Zealand. ASX 200 failed to sustain an initial foray above 7,500 with the index subdued by hot CPI data which printed its highest since 1990 and boosted the market pricing for the RBA to continue with its hiking cycle next month. Nikkei 225 gradually edged higher with trade uneventful in the absence of any pertinent drivers although Dai Nippon Printing outperformed after Elliot Management built a stake in the Co. of slightly under 5%. KOSPI was among the biggest gainers on return from the Lunar New Year holiday with the index also driven by strength in top-weighted stock Samsung Electronics. Top Asian News US Secretary of State Blinken is likely to warn China against aiding Russia when visiting Beijing, according to SCMP. Australian PM Albanese said there is increased engagement at different levels between Australian and Chinese agencies, according to Reuters. North Korea ordered a 5-day lockdown of its capital Pyongyang due to increasing cases of an unspecified respiratory illness, according to South Korean-based NK News. Japan lowers its overall economic view in January; first time in 11 months. Japanese Gov't official, citing BoJ's Kuroda, says the BoJ will resolutely keep monetary environment easy; BoJ aims to regain market functionality by tweaking YCC operations and maintaining an easy monetary environment. European bourses are pressured across the board, Euro Stoxx 50 -0.6%, after a sluggish post-MSFT start to the session and thereafter a further waning in the general risk tone. Within Europe, a strong update from ASML has been overshadowed by the MSFT pressure, while the likes of Ryanair and IAG are buoyed by easyJet. Stateside, futures are all in the red with the NQ -1.2% lagging and the ES Mar'23 below 4k and its 200-DMA at 3999, to a 3996.5 session trough. NYSE said it is thoroughly examining the glitch and that the exchange ended Tuesday with a normal close, while a regular open is expected on Wednesday, according to Reuters. Top European News German Economy Minister sees 2023 German GDP at 0.2% (vs -0.4% in Autumn forecast); 2023 inflation seen at 6% (vs prev. 7%); "we do not see signs of marked recession as feared by many observers". In-fitting with earlier reports via the likes of Bloomberg and Reuters in recent sessions. French Regulator Set to Provisionally Close Government EDF Offer Traders Reverse Course to Bet BOE Will Cut Rates Before Year-End UK’s Growth Potential Falls, Reducing Hunt’s Room for Tax Cuts Renault Gets Two Upgrades, Shares Rise as Nissan Deal Nears Ukraine Latest: Allies to Send Tanks; Kishida Pressed to Visit UK Parliament Seeks Power to Scrutinize Finance Regulators Notable US Headlines US House Speaker McCarthy said they need to have a responsible debt ceiling and called for eliminating wasteful spending, while he added debt is the greatest threat to the nation and that President Biden needs to stop playing politics on the debt ceiling. US President Biden is close to naming the next National Economic Council head, Fed Vice Chair Brainard has emerged as the top contender, according to Washington Post sources; current NEC Director Deese is expected to leave soon, no decision made yet. US Senator Manchin is to reportedly introduce a bill to delay EV tax credit due to disagreements over how to implement the programme, according to WSJ. FX The DXY has spent the morning in close proximity to the 102.00 mark and has most recently extended to fresh session highs of 102.12 amid a general decline in the risk tone. AUD is the standout outperformer after much hotter-than-expected CPI while the NZD was only able to derive fleeting support from its own inflation data, at best AUD/USD and NZD/USD above 0.71 and 0.65 respectively. JPY has settled down somewhat after Tuesday's pronounced action and was relatively resilient to Japan downgrading its economic assessment for the first time in almost a year. The aforementioned decline in sentiment that bolstered the USD did so at the expense of Cable and EUR/USD which moved below and further below 1.23 and 1.09 respectively. Fixed Income Core EGBs have continued to extend with the Bund comfortably above 139.00, though the upside seemingly stalled after a brief breach of Fib resistance. An easing/pullback that was perhaps spurred by mixed German auction results; though, benchmarks remain elevated overall with Gilts once again outperforming and closer to 106.00 vs 105.08 low (current high 105.79). Stateside, USTs are firmer though lagging their EZ peers a touch ahead of a USD 43bln 5yr outing. Commodities WTI and Brent front-month futures trade with no firm direction in early European hours, similar to yesterday’s price action, as market participants await the next catalyst for the complex. US Energy Inventory Data (bbls): Crude +3.4mln (exp. +1.0mln), Cushing +3.9mln, Gasoline +0.6mln (exp. +1.8mln), Distillate -1.9mln (exp. -1.1mln) US Treasury issued a license allowing Trinidad and Tobago to develop Venezuela's Dragon offshore gas field. Spot gold and base metals have been impacted by the general risk tone with the yellow metal unable to glean any haven support as the USD remains firm. Geopolitics Ukrainian President Zelensky said Russia is readying for new aggression and that Ukraine will prevent further Russian actions, while he added Russia is intensifying its offensive towards Ukraine's Bakhmut. Russian Ambassador to the US said Washington's possible deliveries of tanks to Ukraine would be a blatant provocation and it is clear Washington is trying to inflict a strategic defeat on us, according to Reuters. EU ambassadors have now formally given green light to roll over all the EU’s economic sanctions on Russia for an additional six months, via Radio Free Europe's Jozwiak. German government is to send Leopard 2 tanks to Ukraine, Germany is to approve re-export of Leopard 2 tanks. US Event Calendar 7am: U.S. MBA Mortgage Applications, 7.0%, prior 27.9% DB's Jim Reid concludes the overnight wrap There’s been a little bit of a bias towards risk-off sentiment over the last 24 hours, thanks partly to some weaker-than-expected earnings releases that added to growing concerns about a potential US recession. The S&P 500 (-0.07%) came off its 7-week high from the previous day, oil prices took a sharp turn lower, and sovereign bonds rallied on both sides of the Atlantic. After the close, Microsoft did report better-than-expected earnings due to strength from their cloud-services business (Azure) even as their consumer businesses faltered. Their shares initially traded 4.5% higher before reverting late last night and are now down -1% in after-market trading after news came out during the earnings call that Azure sales could slow in Q1. S&P and NASDAQ futures are -0.46% and -0.78% down respectively as I type. Those small equity losses in the normal trading session came as the flash PMIs for the US showed the economy still in contractionary territory at the start of the year. To be fair, the numbers were a bit better than expected, but even with the upside surprise the composite PMI was only at 46.6 (vs. 46.4 expected), which is its 7th consecutive month beneath the expansionary 50-mark. Looking at the details, the US PMIs also showed that input price rises had increased in January after 7 months of moderating, so that adds to some other indicators so far this quarter suggesting price pressures might be a bit more resilient than thought. The more negative tone from the data was then cemented by the Richmond Fed’s manufacturing index, which came in at a post-Covid low of -11 (vs. -5 expected). Although the US numbers continued to point towards contraction, there was some better news from the Euro Area as the flash composite PMI came in at 50.2 (vs. 49.8 expected). That’s the first time it’s been above 50 since June, and came amidst upside surprises in both the services (50.7 vs. 50.1 expected) and manufacturing PMIs (48.8 vs. 48.5 expected) as well. The readings offer yet more evidence that the European economy has been faring better over recent months, echoing the rise in consumer confidence we saw the previous day. With all this positive news out of Europe lately, our economists updated their forecasts yesterday (link here) and are no longer expecting a recession in 2023 as flagged in our German upgrade two weeks ago. That comes amidst falling gas prices, lower inflation, and declining uncertainty, which means our economists now expect the Euro Area to grow by +0.5% in 2023. They’ve also lowered their headline inflation outlook for 2023 to 5.8%, and now see 2024 at just 1.8%. Nevertheless, they don’t think the ECB can take their foot off the hawkish pedal just yet, since an improved growth outlook and stronger domestic demand raises the threat of more persistent underlying inflation. Speaking of the ECB, yesterday saw a fresh round of commentary as the Governing Council debate how long to keep hiking rates by 50bps. On the one hand, Lithuania’s Simkus said that “there’s a strong case for staying on the course that’s been set for the coming meetings of 50 basis-point increases.” However the Executive Board’s Pannetta, one of the biggest doves on the council, said that beyond the next meeting in February “any unconditional guidance … would depart from our data-driven approach”. For now, investors are continuing to price in two 50bp moves as the most likely outcome, with +92.1bps worth of hikes priced over the next couple of meetings. As this debate was ongoing, sovereign bonds rallied strongly on both sides of the Atlantic, with yields on 10yr Treasuries down -5.7bps to 3.45%. That was led by a sharp decline in real yields, which fell -7.6bps on the day. However, near-term policy expectations from the Fed were little changed ahead of their meeting a week from today, and the terminal rate priced for June was down just -0.1bps, whilst the 2yr Treasury yield fell -1.7bps to 4.21%. In Asia 10yr Treasury yields have moved back +1.29bps higher as we go to press. Back to yesterday, and there was a stronger rally in Europe, with yields on 10yr bunds (-5.1bps), OATs (-6.9bps) and BTPs (-11.1bps) all seeing a sharp decline. As mentioned at the top, it was a bit of a battle for equities, with the major indices struggling to gain much traction after their recent rally. That left both the S&P 500 (-0.07%) and Europe’s STOXX 600 (-0.24%) with modest declines, although that was partly down to a drag from energy stocks after prices took a significant hit yesterday. For instance, Brent crude oil prices (-2.34%) had their worst day in nearly three weeks, falling to $86.13/bbl, whilst natural gas prices in Europe fell -11.71% to €58.27 per megawatt-hour as they closed in on the lows from last week. In the US, one of the worst performing industries for the S&P was Media & Entertainment (-1.02%), whose losses were partially due to the -2.09% pullback by Alphabet as the US Department of Justice did indeed sue the ad-giant under US anti-trust laws. This is the second such suit and a resolution could take years according to legal experts cited by Bloomberg. Asian equity markets are continuing with their winning streak even with US futures lower. As I type, the KOSPI (+1.27%) is surging as trading has resumed after the Lunar New year holiday while the Nikkei (+0.43%) has rebounded after opening lower in morning trade. Markets in China and Hong Kong remain closed for the holidays. Elsewhere, the S&P/ASX 200 (-0.12%) is in negative territory following disappointing inflation data out from Australia. Australian inflation rose to +8.4% y/y in December from +7.3% in November while surpassing market expectations for a rise of 7.7%. With inflation pressures broadening, its implication for policy rates pushed 10yr bond yields sharply higher (+5.2 bps) to settle at 3.52%, as we go to print. Meanwhile, the Australian dollar (+0.75%) is trading higher, hitting a 5-month high against the US dollar to trade at $0.7099. Back to yesterday's data, and the flash PMI releases were the main data highlight, but we did also get the UK’s public finance statistics for December. That showed public sector net borrowing (ex-banking groups) at £27.4bn (vs. £17.3bn expected), which was driven by more spending on energy support along with higher debt interest. Meanwhile, the latest flash PMIs from the UK weren’t as optimistic as their counterparts in the Euro Area, with the composite PMI falling to 47.8 (vs. 48.8 expected). That’s the lowest reading on that measure in two years, back when the economy went into lockdown again at the start of 2021. To the day ahead now, and data releases include the Ifo’s business climate indicator for January from Germany. From central banks, the main highlight will be the Bank of Canada’s latest policy decision. Finally, earnings releases include Tesla, Boeing, IBM, AT&T and Abbott Laboratories. Tyler Durden Wed, 01/25/2023 - 07:55.....»»

Category: blogSource: zerohedgeJan 25th, 2023

Market Goes Haywire With Dozens Of NYSE Trading Halts At The Open After "Technical Glitch"

Market Goes Haywire With Dozens Of NYSE Trading Halts At The Open After "Technical Glitch" Update (9:52am ET). According to the NYSE, as of 9:48am, all systems are back to normal, although that is an understatement in a market where nobody knows what the correct opening price is! We are still waiting for the NYSE to give a detailed explanation of what caused this latest "broken markets" episode. While it is still unclear what was the "technical glitch" that sent the world's biggest companies into a multi-trillion market cap rollercoaster, Bloomberg reports that "a wave of sell orders targeting financial services stocks swept across American equity exchanges at the open of trading Tuesday, sending companies including Wells Fargo & Co. and Morgan Stanley to brief but sharp plunges from which they mostly quickly recovered." After closing Monday at $45.03, Wells Fargo fell as low as $38.10 before bouncing back, while Morgan Stanley plunged to $84.93 after ending at $97.13 on Monday. That may be accurate, it's not comprehensive as virtually every NYSE-listed stock was slammed at the open, only to rebound powerfully before tumbling once more. Indeed, as noted below, other impacted stocks included the likes of Walmart, McDonald’s and Exxon. These stocks saw drops of at least 12% before they were halted. Their moves have now rebounded to less than 1% in either direction. Tuesday’s transactions occurred in New York Stock Exchange-listed securities and took place on virtually every trading platform, including ones overseen by CBOE Global Markets and private venues reporting to the Finra trade reporting facility. * * * It has been a while since we had a market-wide break. Something snapped at exactly 9:30:00 am ET this morning when stocks opened for trading, only... they didn't, as instead hundreds of NYSE-listed stocks were immediately halted for trading after breaching circuit breaker limits... ... which among others saw giga-caps such as Exxon, Morgan Stanley, Verizon, AT&T, Nike, and Wells Fargo tumbling as much as 11%... ... while McDonalds traded down to $236.42 before rebounding to $268.32 - a $55 billion swing in market cap in seconds - before being almost immediately halted. While it is unclear what the "technical glitch", as CNBC called it, in question was many stocks had abnormally large moves when stocks opened for trading, which triggered the resulting volatility halts. It took several minutes for the circuit breakers to be lifted and for trading to return to something resembling normalcy although nobody knows if these prices are accurate or still affected by whatever glitch halted trading. Tyler Durden Tue, 01/24/2023 - 09:50.....»»

Category: blogSource: zerohedgeJan 24th, 2023

Futures Dip As Tech Rally Faces First Major Test With Microsoft Earnings

Futures Dip As Tech Rally Faces First Major Test With Microsoft Earnings The rally in US tech stocks and European markets paused on Tuesday as investors prepared for earnings updates from industry giants, including Microsoft and Texas Instruments. US equity futures fell after the tech-heavy Nasdaq 100 posted its best two-day gain since November, as traders braced for the worst tech earnings slump since 2016. Europe’s region’s Stoxx 600 Index erased an early advance to fall into the red. At 7:30am ET, S&P 500 futures were 0.2% lower and Nasdaq futures were down 0.3%; the tech-heavy benchmark is up8.5% in January, on pace for its best month since July even as profit estimates are declining and as Federal Reserve officials advocate for more policy tightening to combat inflation if at a slower, 25bps pace. The USD rose; Treasuries were unchanged while commodities were mixed with strength in natgas, nickel, oil and precious metals. In pre-market trading, Alphabet shares fell slightly after a Bloomberg News report that the US Justice Department could file an antitrust lawsuit against Google as soon as Tuesday regarding the search giant’s dominance over the digital advertising market. Microsoft, which reports results today, was little changed. Yesterday the world’s largest software maker confirmed it is investing $10 billion in OpenAI, the owner of artificial intelligence tool ChatGPT. Advanced Micro Devices fell in pre-market trading, after Bernstein downgraded the stock to market perform from outperform, citing a worsening PC climate and “semi-destructive behavior” by rival Intel Corp. Here are the other notable pre-market movers: 3M forecast adjusted earnings per share for 2023; the guidance missed the average analyst estimate. Shares decline 4.9%. GE forecast adjusted earnings per share for 2023; the guidance missed the average analyst estimate. Shares gain 1.8%. Johnson & Johnson guided to stronger earnings for 2023 than analysts were expecting after a year in which the pharma division suffered because of waning demand for its unpopular Covid-19 shot. Shares rise 0.5%. Lyft shares gain 3.4% after KeyBanc upgrades the ride- hailing firm to overweight from sector weight, with broker saying data indicates that the firm is turning a corner, while cost-cutting could boost Ebitda. HighPeak Energy shares rise 15% after the oil producer’s board voted to initiate a process to evaluate strategic alternatives including a potential sale. Zions shares drop 2.7% after the bank’s total deposits fell short of Wall Street estimates, with analysts also disappointed by the firm’s forecast for net interest income which they said could put pressure on estimates amid a tough macroeconomic backdrop. Watch oil and gas stocks as Morgan Stanley says it’s increasingly selective in the sector as it continues to see a “mixed setup” for North American shares ahead of earnings. Upgrades Marathon Oil to overweight, and cuts APA and Ovintiv to equal-weight. Keep an eye on Target shares as Oppenheimer begins coverage at outperform, seeing potential for a “strong multi-year profit recovery” and opportunity for the discount retailer to capture market share. KeyBanc initiates coverage of Virgin Galactic Holdings at sector weight, saying the company could be highly profitable if it succeeds in ramping up its “next-generation” spaceship fleet, but that its performance hinges on execution. Amazon’price target and 2024 outlook cut at Telsey Advisory Group as the spending environment becomes more challenging and growth rates normalize after a couple of years of acceleration during Covid. Shares decline 0.3%. Cheesecake Factory downgraded at Raymond James to market perform from outperform reflecting concerns about the restaurant chain operator’s ability to recover pre-Covid margins. The brokerage also cut its rating on Dine Brands Global, the parent company of Applebee’s Neighborhood Grill + Bar and IHOP restaurants. Shares decline 1.8%. Cymabay Therapeutics gains 11% in premarket trading after the offering priced via Piper Sandler, Raymond James, Cantor Fitzgerald. Halliburton Co. boosted its dividend 33% as the world’s biggest provider of fracking services follows its oil-and-gas clients by expanding shareholder returns amid tight global supplies for crude. Shares gain 0.3%. HighPeak Energy (HPK) shares rise 17% after the oil producer’s board voted to initiate a process to evaluate strategic alternatives including a potential sale. Lululemon Athletica Inc. (LULU) falls as much as 2.1% after Bernstein analyst Aneesha Sherman cut her recommendation on the athleticwear maker to underperform from market perform. PennantPark Floating (PFLT) drops 6.4% after an offering of 4.25m shares raised proceeds of $47.6 million, or $11.20 apiece, representing a discount to last close. Verizon Communications Inc.’s profit outlook trailed Wall Street estimates in a sign that consumer wireless business continues to weigh down performance as the company turns to costly phone giveaways to compete with its peers. Shares decline 2%. In previewing this week's barrage of tech earnings, JPMorgan writes that with MSFT earnings coming today, and the balance of the FANG+ complex next week, "many are asking whether the US can reverse its underperformance. In the near-term, the answer seemingly lies with Tech earnings, which are expected to experience their largest decline since 2016, according to Bloomberg. Longer-term, a Fed pause may not be enough given the difference in growth rates of regions economies. The weakening USD has been a bigger benefit to international Equities than it has to create a domestic earnings tailwind. It may also be the case where the US is more vulnerable to margin compression than its international counterparts. Longer-term, if we do experience a Fed pivot this year, then would anticipate a strong, positive buying impulse for Tech." Wall Street has been slashing earnings estimates for months for the tech sector, which is projected to be the biggest drag on S&P 500 profits in the fourth quarter, data compiled by Bloomberg Intelligence show. The danger for investors, however, is that analysts still prove too optimistic, with demand for the industry’s products crumbling as the economy cools. “We do not see much scope for markets to rally in the near term, especially given our outlook for continued pressure on corporate profit growth,” Mark Haefele, chief investment officer at UBS Global Wealth Management, said in a note echoing what is now a consensus view with identical sentiment shared by his peers at Goldman, JPM, and Bank of America. Haefele noted that UBS GWM’s S&P 500 target for both June and December, at 3,700 points and 4,000 points, were both below Monday’s 4,020 close. “In our view, the risk-reward trade-off remains unfavorable for broad US indexes, and we retain a least preferred stance on US equities and the technology sector,” he added. European stocks also traded lower with the Stoxx 600 down 0.3%. Energy, miners and personal care are the worst performing sectors while insurance and media rise. The risk-off tone has benefited bonds with UK and German benchmarks rising and 10-year borrowing costs falling by 5bps and 2bps respectively. Here are the most notable European movers: Norwegian salmon farmers surge after a politician told newspaper Dagbladet the party is open to modifying a proposed resource tax to be levied on seafood producers in Norway Logitech shares edge up by as much as 2.4% as analysts highlighted better sell- through figures, market-share gains and solid 3Q cash flow from the computer-equipment maker Swatch shares rise 2.1% after analysts said China’s ending of its zero-Covid stance should mean a robust rebound in demand Topdanmark shares bounce as much as 4.9%, the most since February 2022, with a higher-than- expected special dividend the highlight of the Danish insurer’s results Marston’s shares gain as much as 8.7%, with analysts saying the trading update from the UK pub company shows some encouraging sales trends Senior Plc gains as much as 12% in early trading, after the company issued a trading update Monday showing a “strong finish” to the year, with profits ahead of expectations Ericsson shares fall as much as 2.9% after being cut to sell from neutral at Goldman Sachs with the broker bearish on the telecoms-equipment group’s ongoing downside risks Associated British Foods shares slip as much as 1.7% after the food processing and retailing company posted a trading update noting a softer sugar segment offsetting strong performances elsewhere Direct Line shares fall as much as 3.2% as Citi switches to a new system to better value European insurance stocks, cutting the company to sell Dometic slides as much as 4.4% after Pareto Securities cut the Swedish recreational vehicle equipment maker to hold, with US demand in “free fall” in the short term Meanwhile, European flash business activity data, while better than expected, highlighted ongoing weakness across the euro bloc and in Britain, while US figures later in the day will offer investors a snapshot of how the world’s largest economy is faring.  Commenting on today's PMI data, which came out as follows... Germany Jan. Flash Manufacturing PMI 47; Est 48 Germany Jan. Flash Services PMI 50.4; Est 49.5 France Jan. Flash Manufacturing PMI 50.8; Est 49.5 France Jan. Flash Services PMI 49.2; Est 49.8 UK Jan. Flash Services PMI 48; Est 49.5 UK Jan. Flash Manufacturing PMI 46.7; Est 45.5 ... Goldman writes that "the January flash PMIs showed significant improvements in future expectations and other forward-looking indicators like new orders also improved on the margin." And some more details: The Euro area composite flash PMI increased by 0.9pt to 50.2 in January, above consensus expectations. The increase in the composite index was broad-based across sectors, with the services sector surpassing the 50 threshold for the first time since July. Across countries, the improvement was led by the periphery and Germany, offset partially by a moderation in France. In the UK, the composite flash PMI decreased by 1.2pt to 47.8, well below consensus expectations. We see three main takeaways from today's data. First, the upside surprise in the data today and the Euro area composite PMI surpassing the 50 threshold confirm our view that Euro area growth prospects have improved significantly recently. Second, cost inflation is moderating but the increase in output prices released today provided another reminder that underlying inflation remains sticky. Third, today's data reinforce our expectation that the UK will underperform the Euro area even with falling energy prices. PMI data aside, the upcoming wave of US corporate earnings — from tech giants such as Microsoft Corp. and Texas Instruments Inc. as well as industrials such as GE — is likely to dominate attention. “It’s all about earnings,” said Peter Kinsella, head of FX strategy at asset manager UBP. “Given that equities are trading at elevated levels, any earnings disappointment would justify a shift lower in stocks.” Kinsella said there was scope for bonds to rally and reckons that the dollar, already down about 1.7% this year against a basket of rivals, has likely seen its peak as the Federal Reserve approaches the end of its rate-hiking cycle. The US central bank bank is expected to cut rates by a smaller 25 basis points at a Jan. 31-Feb. 1 meeting. “The market is saying inflation is done and dusted, which justifies a turn in tone from the Fed,” Kinsella added. “Overall I am off the view we saw the multi-year dollar peak last year.” Earlier in the session, Asian stocks extended their recent rise in holiday thinned trading, as investors looked beyond expected near-term earnings weakness and rising US interest rates. The MSCI Asia Pacific Index rose 0.8%, poised for a third straight day of gains, driven by industrial and technology shares. Japan led the advance for a second session, with China and much of the region still shut for Lunar New Year. “With job cuts proceeding apace, the markets likely continue to ignore short-term earnings and look into next year,” a bullish scenario, analyst Mark Chadwick wrote in a note on Smartkarma. Growth stocks also benefit with “Fed hike risks out of the headlines and consensus now around peak rates at 5%.” Major Asian tech stocks reporting results this week include South Korean EV battery maker LG Energy Solution and Japanese robot maker Fanuc. In addition to the rebound in global peers, local shares have also gained on optimism over China’s reopening and easing corporate crackdowns Japanese stocks rose Tuesday, gaining traction after a tech rally drove gains in US peers and amid growing optimism that the Federal Reserve will be less hawkish than previously expected. The Topix Index rose 1.4% to 1,972.92 at the market’s close in Tokyo, while the Nikkei advanced 1.5% to 27,299.19. Sony Group Corp. contributed the most to the Topix’s advance, increasing 1.9%. Mitsubishi UFJ Financial and Toyota Motor were other notable gainers. Among 2,161 stocks in the index, 1,713 rose, 369 fell and 79 were unchanged. “The rise in US stocks is positive to Japanese equities, especially with a fairly strong sentiment that US interest rate hikes might come to an end soon,” said Tomo Kinoshita, a global market strategist at Invesco Asset Management. “In Japan, exporters are rebounding as concerns over yen’s appreciation cool and inbound demand continues to contribute to the rally.” Australian stocks rose for a fifth session; the S&P/ASX 200 index rose 0.4% to close at 7,490.40, led by gains in mining and real estate shares. The benchmark closed at the highest since April 21, extending gains for fifth session.  In New Zealand, the S&P/NZX 50 index fell 0.1% to 11,932.92 In FX, the Bloomberg Dollar Spot Index swung to a gain in European session and the greenback rose against all of its Group-of-10 peers apart from the yen and the Swedish krona. The pound fell to the bottom of the G-10 pile after PMI data highlighted the looming risk of a recession in the UK economy. Readings from France and Germany were more mixed but enough to prompt the euro to reverse an earlier advance.  Traders position for a series of US data releases and the next meetings by the world’s major central banks, and the dollar meets topside demand through options. The euro climbed toward $1.09 only to reverse its gain after Germany’s manufacturing PMI unexpectedly fell. Germany’s composite PMI however came in better than forecast, at 49.7, and the composite for the whole euro zone entered expansionary territory after rising to 50.2, versus expected 49.8. Separately, German February GfK consumer confidence improved to -33.9 versus estimate -33.3 The pound fell against all of its G-10 peers and gilts outperformed Treasuries and bunds after S&P Global’s UK PMI fell to 47.8 in January from 49 the month before, well below economists’ forecasts for little change The yen advanced for the first time in three days and bonds fell. Investors were waiting for the Bank of Japan’s summary of opinions from its January meeting and Tokyo inflation data later this week to see if a further policy change was in store Australian sovereign bonds pared opening losses as markets parsed improved National Australia Bank business confidence, instead focusing on how components to business conditions softened. Australian and New Zealand dollars swung to losses in European trading In rates, Treasuries are slightly richer with yields shedding 1-3bps across the curve, supported by a wider rally in gilts after lower-than-estimated UK PMI services gauge. The 10Y TSY is around 3.50%, richer by 1bp vs Monday’s close while lagging gilts by 2bp in the sector. The risk-off tone has benefited bonds with UK and German benchmarks rising and 10-year borrowing costs falling by 5bps and 2bps respectively. In core European rates gilts outperform in bull-steepening move where front-end and belly yields are richer by 5bp on the day. The US auction cycle begins at 1pm with $42b 2-year note sale, ahead of $43b 5- year and $35b 7-year notes Wednesday and Thursday. Focal points of US session also include January PMIs, along with 2-year note auction, first of this week’s three coupon sales.   In commodities, crude futures are little changed while spot gold rises 0.3% to trade near $1,938/oz. FBI said two hacker groups associated with North Korea were behind the USD 100mln theft from US crypto firm Harmony Horizon Bridge last June, according to Reuters. Looking to the day ahead now, the main data highlight will be the January flash PMIs from Europe and the US. Elsewhere, central bank speakers include ECB President Lagarde, along with the ECB’s Knot and Vujcic. Earnings releases include Microsoft, General Electric, Danaher, Johnson & Johnson, Lockheed Martin, Texas Instruments, Union Pacific and Verizon Communications. Market Snapshot S&P 500 futures down 0.1% to 4,031.75 STOXX Europe 600 down 0.1% to 453.95 MXAP up 0.6% to 168.43 MXAPJ little changed at 551.68 Nikkei up 1.5% to 27,299.19 Topix up 1.4% to 1,972.92 Hang Seng Index up 1.8% to 22,044.65 Shanghai Composite up 0.8% to 3,264.81 Sensex up 0.1% to 61,016.22 Australia S&P/ASX 200 up 0.4% to 7,490.40 Kospi up 0.6% to 2,395.26 German 10Y yield little changed at 2.18% Euro little changed at $1.0867 Brent Futures down 0.5% to $87.73/bbl Gold spot up 0.2% to $1,935.75 U.S. Dollar Index down 0.11% to 102.03 Top Overnight News From Bloomberg The UK government sank deeper into debt in December as rising debt-interest payments and the cost of insulating consumers and businesses from the energy-price shock strained the public finances. The budget deficit stood at £27.4 billion ($34 billion), a record for the month and almost triple the £10.7 billion shortfall a year earlier Some UK homes are requested to curb power demand on Tuesday evening as the nation’s grid struggles for a second day to plug the gap left by a drop in wind generation The immense wealth coming from Norway’s gas and oil fields is underpinning a new refrain among market experts: it’s time for a big rebound in the krone A more detailed summary of overnight events courtesy of Newsquawk Asia-Pacific stocks were positive and took impetus from the tech rally on Wall Street but with trade quiet amid a lack of fresh catalysts and as many participants in the region remained absent with markets in China, Hong Kong, Taiwan, South Korea, Singapore, Malaysia and Vietnam all closed for the holiday. ASX 200 was underpinned by strength in the real estate, tech and mining industries albeit with gains capped after a mixed NAB business survey and soft PMI data which showed a contraction in the manufacturing and services.  Nikkei 225 continued its outperformance and climbed above the 27,000 level with the index unaffected by the latest preliminary PMI data in which Manufacturing PMI contracted for the 3rd consecutive month although Services and Composite PMIs improved with the latter back in expansionary territory, while reports also noted that Japan is considering early May for its planned downgrade of COVID policy. Top Asian News US President Biden's Administration reportedly confronted China's government with evidence that suggested some China SOEs may be providing assistance to Russia's war effort, according to Bloomberg. The first three days of the Chinese Spring Festival holidays saw bookings for domestic hotel and scenic spots increase by 56% and 79% Y/Y, according to data by online travel agency Tongcheng Travel cited by these Global Times; Domestic air ticket bookings rose by 30%, China's passenger trips via railway, road, waterway and plane amounted 23.53 million on Monday, up 67.7% Y/Y. BoJ Governor Kuroda says markets moves are becoming more stable, via Reuters. European bourses are a touch softer overall, Euro Stoxx 50 -0.2%, and relatively unreactive to better-than-expected EZ Flash PMIs. Albeit, the FTSE 100 -0.4% is lagging slightly following its own PMIs, which point to a particularly grim start to the UK economy for 2023. Stateside, futures are a touch softer but contained overall, ES -0.2% but above 4k, ahead of data points and key earnings including MSFT. Top European News Euro-Area Business Activity Unexpectedly Grows at Start of Year Britain and the EU are unlikely to make major changes to the underlying Brexit deal, according to a report by the academic body UK in a Changing Europe cited by Reuters. ECB's Nagel said ECB is not done on far too high inflation, according to L'Express; additionally, Villeroy said the ECB probably will reach peak rates by summer. Judge Removed From HSBC Dispute Over Loan to Hot Yoga Studio UK Homes Asked to Curb Power for Second Day as Wind Fades Ukraine Latest: Stoltenberg Confident of Solution on Tanks Soon Notable data EU S&P Global Composite Flash PMI (Jan) 50.2 vs. Exp. 49.8 (Prev. 49.3); “The region is by no means out of the woods yet, however, as demand continues to fall – merely dropping at a reduced rate – and an upturn in the rate of inflation of selling prices for both goods and services will add encouragement to the hawks to push for further monetary policy tightening. The case for higher interest rates is fuelled further by the upturn in employment growth recorded during the month and signs of higher wages driving the latest upturn in price pressures." EU S&P Global Manufacturing Flash PMI (Jan) 48.8 vs. Exp. 48.5 (Prev. 47.8); Services Flash PMI (Jan) 50.7 vs. Exp. 50.2 (Prev. 49.8) German S&P Global Composite Flash PMI (Jan) 49.7 vs. Exp. 49.6 (Prev. 49.0); Click here for more detail. German S&P Global Manufacturing Flash PMI (Jan) 47.0 vs. Exp. 47.9 (Prev. 47.1); Services Flash PMI (Jan) 50.4 vs. Exp. 49.6 (Prev. 49.2) UK Flash Composite PMI (Jan) 47.8 vs. Exp. 49.1 (Prev. 49.0): "Jobs also continued to be lost as firms tightened their belts in the face of these headwinds, though many other firms reported being constrained by an ongoing lack of available labour." UK Flash Services PMI (Jan) 48.0 vs. Exp. 49.7 (Prev. 49.9); Manufacturing PMI (Jan) 46.7 vs. Exp. 45.5 (Prev. 45.3) German GfK Consumer Sentiment (Feb) -33.9 vs. Exp. -33.0 (Prev. -37.8, Rev. -37.6) FX The USD has benefitted from a PMI-induced decline in Sterling, with the DXY lifted to a 102.17 peak and Cable testing 1.23 to the downside. In contrast, the EUR was underpinned by Monday's late-doors ECB speak though EUR/USD stalled on a test of 1.09 before contrasting EZ/regional PMIs. JPY is the marked outperformer having been below 130.00 against the USD, though it has given back some of this recovery momentum in face of the above USD action. CAD is contained pre-BoC with the Antipodeans equally rangebound ahead of inflation data. Brazil's Finance Minister Haddad said President Lula and Argentina's President Fernandez requested the creation of a clearing house with a common currency to settle accounts, but added it has no name or deadline and their idea does not seek monetary unification as is the case with the Euro, according to Reuters. Fixed Income EGBs perhaps gleaned initial support on technical factors, though subsequent action was driven by a marked spike in Gilts to near 105.00. Much of the UK move was driven by the region's PMI release though subsequent bearish fiscal developments served as a fleeting headwind for Gilts and, to a lesser extent, peers more broadly with Bunds continuing to slip post-PMIs. USTs are a touch firmer given the above action and ahead of its own data release and 2yr issuance. UK sells GBP 6bln 2053 Gilt via syndication, order book closed in excess of GBP 65bln, according to a bookrunner. Commodities The crude benchmarks are little changed/slightly softer as a GBP-induced lift to the USD weighs on the complex. However, WTI and Brent remain underpinned overall by the broader improving demand picture amid the Lunar New Year holiday. US is weighing the cancellation of the next SPR sale, according to sources cited by Energy Intel. Dubai sets the official crude differential to DME Oman for April at a USD 0.20/bbl discount. Norwegian Energy Ministry plans a 2023 APA oil and gas licensing round, adding acreage to the Norwegian and Barents sea. 5.4 magnitude earthquake strikes Nepal, via EMSC. Spot gold has slipped from its intraday peak given USD action, though the yellow metal continues to glean support from the slightly softer equity tone while LME Copper has slipped from best but remains in proximity to USD 9.5k/T. Geopolitics Russian Chief of the General Staff Gerasimov said the new army plan considers threats such as Finland and Sweden's desire to join NATO, and the use of Ukraine as a tool of hybrid war against Russia, according to TASS. Polish Defence Minister said Germany has now received Poland's official request to re-export Leopard tanks to Ukraine; following the German Defence Minister saying there is no new position on the Leopard tanks. US Event Calendar 08:30: Jan. Philadelphia Fed Non-Manufactu, prior -17.1, revised -12.8 09:45: Jan. S&P Global US Composite PMI, est. 46.4, prior 45.0 09:45: Jan. S&P Global US Services PMI, est. 45.0, prior 44.7 09:45: Jan. S&P Global US Manufacturing PM, est. 46.0, prior 46.2 10:00: Jan. Richmond Fed Index, est. -5, prior 1 DB's Jim Reid concludes the overnight wrap Risk assets got the week off to a very strong start yesterday, with the S&P 500 (+1.19%) at a 7-week high as investors awaited a raft of earnings reports over the coming days. However, just as equities were surging to fresh highs for 2023, there were also growing concerns about a potential US recession, with the Conference Board’s leading index for December falling by a larger-than-expected -1.0% (vs. -0.7% expected). So that’s a further negative signal after last week’s downbeat releases on retail sales and industrial production, and one that will increase the focus on today’s flash PMIs for January. In many respects, this divergence between more positive markets and weak economic data echoes what Jim and I published last week in our “Sweet Spot” note (link here). We pointed out how it was consistent to be tactically positive on risk assets whilst maintaining our (very) bearish view for H2 2023. In essence, since October markets have been less concerned about inflation and where rates might need to go, with terminal pricing for the Fed funds remaining steady around the 5% mark for a few months now. But we also haven’t reached the US recession that we’re forecasting for H2, which is giving markets scope to rally in the meantime. Indeed, we show in the piece this is also consistent with the historic pattern, with the S&P 500 only tending to turn significantly lower a few weeks before the recession on average. When it came to that release from the Conference Board, the -1.0% decline in December marked the 10th successive monthly decline for the leading index. Furthermore, it means that it’s now down -6.0% on a year-on-year basis, the most since June 2020. Bear in mind that on every other occasion the index has been down by that amount in a single year, the US economy has either been in a recession or was just emerging from one. So clearly not a positive sign by historic standards. For the time being at least, investors put aside their caution on a recession, with equities seeing a strong rally on both sides of the Atlantic. Tech stocks led the advance, which continues their very strong performance in January so far. The NASDAQ was up +2.01%, thus bringing its YTD gains to +8.58%. Meanwhile the FANG+ index of megacap tech stocks saw even larger gains, with a +4.03% advance that brought its own YTD performance to +14.80%, and puts it on track for its best monthly performance since August 2020. After the close there was a Bloomberg report that the US Justice Department was set to sue Google’s parent company Alphabet as soon as today about their digital ad dominance. Alphabet shares were down -0.9% in after-market trading, but futures for the NASDAQ 100 more broadly saw little reaction, and are only down -0.02% this morning. Elsewhere, the cyclical sectors outperformed in line with the risk-on tone for the day, but there was a broader underperformance in Europe, with the STOXX 600 only up +0.52%. Whilst equities were buoyant, sovereign bonds lost ground amidst the risk-off tone, with yields on 10yr Treasuries up by +3.1bps yesterday to 3.51%, followed up by a +0.7bps move overnight to 3.52% as we go to print. That was echoed in Europe too, with yields on 10yr bunds (+2.9bps), OATs (+3.2bps) and BTPs (+3.4bps) seeing similar rises of their own. Those moves came as there was some pushback from ECB speakers about the idea of slowing their rate hikes down from 50bps after the February meeting, with Slovakia’s Kazimir saying yesterday that “we need to deliver two more 50 basis-point moves”. After the close, we also heard from President Lagarde, who said that “We will stay the course to ensure the timely return of inflation to our target”. Looking forward, the main highlight today will be the flash PMIs for January, since they’ll provide an initial steer on how the global economy is performing into 2023. Last month both the US and the Eurozone composite PMIs were in contractionary territory, thus adding to fears about a potential recession. However, the year so far has brought some relatively good news, with European natural gas currently around its lowest in over a year, alongside clear signs that consumer confidence has begun to recover. When it comes to the PMIs, our European economists think the positive impact of easing uncertainty is more likely to come in services than manufacturing. Overnight, we’ve already had some initial PMI numbers from Japan and Australia, which have added to that picture that the global economy might be faring worse than feared. Starting with Japan, the composite PMI moved back into expansionary territory at 50.8, following two months beneath the 50 mark. The manufacturing PMI did remain in contractionary territory at 48.9, but services saw a stronger move higher to 52.4. Meanwhile in Australia, there was also a rise in the composite PMI overnight to 48.2 (vs. 47.5 previously), so still in contractionary territory but a change from three consecutive declines in the PMI. Those more positive PMI releases along with the US equity rally has boosted sentiment in Asian markets this morning, with the Nikkei (+1.52%) as well as the S&P/ASX 200 (+0.44%) both trading in positive territory. However, several major markets across the region remained closed for the Lunar New year holiday. Elsewhere, equity futures suggest that US stocks will hold onto yesterday’s gains, with those on the S&P 500 basically stable at +0.02%. Otherwise yesterday, there was a fair amount of optimism across different asset classes. For instance, Brent crude oil closed above $88/bbl for the first time in 2023 (+0.64% yesterday), which is a decent jump after trading beneath $78/bbl at the lows around the start of the month. Elsewhere, Bloomberg’s index of US financial conditions showed they were at their most accommodative levels since last February. And we also saw the Euro move above $1.09 in trading for the first time since April, before closing back at $1.087. Finally in other data yesterday, the European Commission’s preliminary consumer confidence indicator for the Euro Area in January rose to -20.9 (vs. -20.0 expected). That was beneath expectations, but still the strongest that reading has been since last February. To the day ahead now, and the main data highlight will be the January flash PMIs from Europe and the US. Elsewhere, central bank speakers include ECB President Lagarde, along with the ECB’s Knot and Vujcic. Earnings releases include Microsoft, General Electric, Danaher, Johnson & Johnson, Lockheed Martin, Texas Instruments, Union Pacific and Verizon Communications. Tyler Durden Tue, 01/24/2023 - 08:06.....»»

Category: blogSource: zerohedgeJan 24th, 2023

Armored vehicles from 5 countries are headed to Ukraine, but there"s still some big items left on Kyiv"s heavy armor wish list

Kyiv has long sought American M1 Abrams tanks and the German-made Leopard tanks, but those powerful weapons remain out of reach. A challenger 2 Main Battle Tank during a Land Combat demonstration.Ben Birchall — PA Images/Contributor/Getty Images Five countries have said they'll send armored vehicles to Ukraine.  The US, Germany, France, and Sweden will provide armored fighting vehicles, and the UK will send tanks. Still, some big items long requested by Kyiv have been kept out of Western military aid packages. Western security assistance to Ukraine as it fights Russia has ramped up in the first few weeks of the new year, with five different countries announcing that they intend to provide Kyiv with armored combat vehicles. On Thursday, Sweden, an aspiring NATO member, became the latest country to announce that it will send much-sought-after military hardware, pledging to transfer Combat Vehicle 90 infantry fighting vehicles to Ukraine as part of its largest aid package so far.Sweden has joined the US, Germany, and France, which have said that they will send Bradley, Marder, and AMX-10 RC armored vehicles, respectively. And the UK has said that it will send a squadron of Challenger 2 tanks to Ukraine, making it the first Western country to send Western-made tanks to Kyiv.While these much-sought-after weapons will give Ukraine a significant boost in firepower and ground combat capability, a handful of big-ticket items on Kyiv's heavy armor wish list continue to be kept out of military aid packages, such as the German-made Leopard tank and the American M1 Abrams tank. NATO countries have pressed Germany to approve sending its tanks to Ukraine, but Berlin has been unwilling to sign off on any transfers, saying that the US would also need to send its own tanks. However, Polish Prime Minister Mateusz Morawiecki said on Thursday that his country may eventually go rogue and send its Leopard tanks to Kyiv without German approval. Ukraine's push to secure tanks and fighting vehicles comes as Russia's unprovoked invasion nears its one-year mark, with fighting heavily concentrated in the eastern Donbas region. Heavy armor could help Kyiv make advances in what has turned into a bloody and grinding affair. Take a look at the five pieces of heavy armor that Western countries are sending to Ukraine.AMX-10 RCFrench soldiers practice shooting an AMX-10RC in Afghanistan's Surobi district on September 24, 2010.JOEL SAGET/AFP via Getty ImagesFrance was the first country to announce that it would send Western-made armored vehicles to Ukraine, opening the door to additional transfers. French President Emmanuel Macron told Ukrainian President Volodymyr Zelenskyy in early January that Paris would transfer the AMX-10 RC to Kyiv.The AMX-10 RC is a French-made armored combat and reconnaissance vehicle. It was first designed in the early 1970s and has decades of combat experience in places like the Middle East and Afghanistan. Capable of traveling at up to 50 mph, the vehicle is armed with a 105 mm cannon and armor to protect it against small arms fire and shrapnel. M2 BradleyTroopers with 3rd Armored Brigade Combat Team, 1st Cavalry Division firing the 25mm canon on a Bradley fighting vehicle in order to zero the vehicles weapons systems at a range in Poland on August 18, 2022. .US military photo by Staff Sgt. Charles PorterSoon after France's announcement, the US followed suit with its own pledge to send Western armor to Ukraine.The White House announced it would send 50 M2A2 Bradley fighting vehicles — capable of transporting troops, conducting reconnaissance missions, and providing fire support.Bradley fighters are armed with a 25 mm M242 Bushmaster chain gun and a 7.62 mm M240C machine gun, as well as a Tube-Launched, Optically-Tracked, Wire-Guided (TOW) missile system.The weapon was designed by BAE Systems and has been in use since the early 1980s. It played a prominent role in both the Gulf and Iraq wars. MarderA Marder armored personnel carrier is on display during a presentation at the 'Erzgebirgskaserne' barracks in Marienberg, eastern Germany, Thursday, Jan. 12, 2023.AP Photo/Michael SohnThe US decision to transfer Bradleys to Ukraine was presented alongside Germany, which said it would provide Kyiv with Marder infantry fighting vehicles.This weapon was designed in the 1960s and has seen on-the-ground experience in Afghanistan and Kosovo. It is equipped with a 20 mm automatic cannon and anti-tank missiles, and is defended by steel armor.   The Marder can travel up to 40 mph and can carry a crew of three and six fully-equipped infantry soldiers, according to Forbes.   Challenger 2A Challenger 2 main battle tank uses smoke as camouflage during a demonstration for the families watching The Royal Tank Regiment Regimental Parade, on September 24, 2022 in Bulford, England.Photo by Finnbarr Webster/Getty ImagesPerhaps the most significant of the heavy armor going to Ukraine is the Challenger 2 — the UK's main battle tank.Defense chief Ben Wallace announced on Monday that the UK would send a squadron of the tanks as part of the country's "most significant package of combat power" for Ukraine so far.First introduced in the 1990s, the Challenger 2 was built to replace its predecessor, the Challenger 1, and has seen combat experience in Iraq and Eastern Europe. A crew of four can operate the weapon, which is armed with a L30A1 120 mm rifled gun, a chain gun, and a machine gun. On roads, it has a range of 340 miles and can travel at speeds of up to 37 mph; off-roads, this drops to 160 miles and 25 mph, respectively.Combat Vehicle 90A Norwegian Combat Vehicle 90 moves towards an objective during a combined level brigade attack in Setermoen, Norway, April 27, 2022.US Marine Corps photo by Cpl. Yvonna GuyetteSweden's government announced on Thursday that it would send an undisclosed number of Combat Vehicle 90 (CV90) fighting vehicles with ammunition to Ukraine as part of its biggest military aid package to the country.The CV90 is an infantry fighting vehicle built by BAE systems in the early 1990s. It has seen combat experience in Afghanistan and Liberia. Sweden is one of several European countries that has the weapon in its arsenal.Two users can operate the vehicle's cannon, the primary armament accompanying its multiple grenade launchers and machine gun.Read the original article on Business Insider.....»»

Category: smallbizSource: nytJan 19th, 2023

Futures Drift Higher After BOJ Reversal, Await PPI And Retail Sales

Futures Drift Higher After BOJ Reversal, Await PPI And Retail Sales US stock-index futures were muted on Wednesday, swinging between gains and losses, as investors initially welcomes a dovish announcement by the BOJ which refrained from further expanding its yield curve control band, then turned to corporate earnings for more clues on the health of corporate America amid growing prospects for a recession. Nasdaq 100 and the S&P 500 futures were up 0.2% as of 7:15 a.m. in New York. Treasury and JGB yields tumbled after the BOJ kept monetary settings unchanged, while the yen first slid against the dollar but then recovered all losses amid expectations the BOJ has only bought a few weeks of time. WTI crude added 1.7% this morning and has been holding above $80 amid optimism around China reopening demand. Dollar is weaker; DXY at 102 helping gold trade back over $1900. Among notable movers in premarket trading, Moderna Inc. climbed 6.7% after saying its vaccine against respiratory syncytial virus infections met targets. IBM dropped 1.9% after Morgan Stanley cut the stock to equal-weight from overweight, saying that it is transitioning out of more defensive IT hardware name. Bank stocks are mixed as investors await the release of key economic data, including the Beige Book and retail sales. Coinbase said it’s halting operations in Japan. Meanwhile, Bank of Montreal has received approval from the Federal Reserve to acquire San Francisco-based Bank of the West. Here are the other notable premarket movers: United Airlines (UAL US) rises 2.6%, boosting carrier peers, after the airline operator’s guidance for the first quarter and 2023 beat analyst estimates. Brokers pointing to strong growth in sales, assuaging any worries over demand taking a hit from an economic slowdown. American Airlines +1.4%, Delta Air +1% GoDaddy (GDDY US) gains 3% after the website domain company was upgraded to outperform from inline at Evercore ISI, with the broker highlighting the firm’s relatively recession- resistant business model and new-product cycle. International Business Machines (IBM US) drops 1.9% after Morgan Stanley cut the stock to equal-weight from overweight, saying that it is transitioning out of more defensive IT hardware names. Skechers (SKX US) slides 2.1% after Morgan Stanley downgraded it to equal-weight on valuation, risk of FY23 guidance missing expectations and as the market shifts to early-cycle names. The broker raised Gap (GPS US) to equal-weight and anticipates a 2023 of two halves for US specialty retail and department stores. SmileDirectClub (SDC US) jumps 13% after the maker of dental aligners projected a narrower Ebitda loss for 2023 and said that it planned to rejig its global workforce and introduce additional cost savings. Jefferies, however, remains cautious on the stock, saying that the company saw a “weak” finish to a tough year. Oatly (OTLY US) gains 6.3% after Mizuho Securities upgrades its rating on the oat drink company to buy from hold, with long-term growth seen still intact. While US stocks have gained in the new year as cooling inflation spurred bets of a softening in the Federal Reserve’s policy, they’ve dramatically underperformed international peers as investors worry that the combination of rising interest rates and slowing consumer demand could trigger an economic contraction. A weaker dollar and optimism around a China reopening have lured investors to non-US stocks. Goldman Sachs strategists said US equity funds have seen outflows in the first two weeks of the year, while Europe has seen inflows — both major trend reversals from 2022. UK inflation as well as a more muted start to the US earnings-reporting season boosted those who believe monetary easing would have to begin this year. The yen dropped as much as 2.6% against the dollar after Japan’s policymakers doubled down on defending their stimulus, defying intense market speculation. The currency later trimmed the losses to 0.7%. Even as investors remain on guard for the central bank to continue large scale bond buying to protect its yield goal, there are doubts about how long it can continue. The yen’s drop proved to be an idiosyncratic trend in the foreign-exchange markets as the dollar fell against all but five of its 31 major peers including the Japanese currency. Meanwhile, Analysts expect fourth-quarter earnings to show a drop of 2.7%, the first year-over-year decline since 2020, according to data from Bloomberg Intelligence. “Given the difficult backdrop, there’s fear among some parts of the market that US earnings forecasts might still be too high for 2023 and that stocks might not be able to sustain their current strength,” said Russ Mould, investment director at AJ Bell. He added that reports from the likes of Procter & Gamble Co., Schlumberger Ltd., Microsoft Corp. and Tesla Inc. “will certainly be ones to watch as their fortunes could have a major influence on market sentiment.” European equity markets are mixed after the BOJ sent the yen spiraling lower by leaving its policy settings unchanged. The Stoxx 600 is up 0.1% with gains in the CAC and FTSE 100 while the DAX trades lower; today's move brought the total Stoxx 600 gains since a Sept. 29 low to more than 19%. If the index closes at 20% or higher, it will join other regional peers in confirming a technical bull market. Tech, travel and miners are the best performing sectors while chemicals and real estate fall.  Here are the notable European movers: Richemont shares gain as much as 2.8% in Europe despite the Cartier owner posting worse-than-expected 3Q sales as investors take the view that disruptions in China caused by a surge in Covid infections may prove temporary. Just Eat Takeaway.com jumps as much as 16% after 4Q Ebitda beat estimates as the food delivery firm said it remains focused on improving profitability. Peers Deliveroo and Delivery Hero rose as much as +5.5% and 6.3% respectively ASM International shares rise as much as 8.7% after 4Q update shows a strong beat on sales that is likely to boost sentiment on the semiconductor-equipment maker, analysts say. ASML shares rise as much as 2.1% in sympathy. Capgemini shares rise as much as 3.5%, hitting highest in just over a month, after Barclays upgrades the IT services firm to overweight on greater resilience in its business mix and on utilization. EQT shares drop as much as 8.4%, the most in more than three months, after the investment firm delivered results which analysts say missed on adjusted Ebitda. Continental shares fall as much as 5% after the German car-parts and tiremaker said late Tuesday that it expects FY22 adjusted free cash flow of €200m, below its outlook range of €600m to €800m. Encavis shares fall as much as 5.3% after Barclays analyst cut the recommendation to underweight from equalweight, Orsted also downgraded. Barclays notes that growth pipeline valuations for the two energy companies have moved significantly above vertically integrated peers. Wise shares drop as much as 5%, extending yesterday’s double-digit losses, after the UK money- transfer firm’s growth slowed and missed analyst expectations. Earlier in the session Asian stocks edged higher as Japanese shares advanced after the Bank of Japan announced no change to its yield curve control policy, countering broader caution ahead of the Lunar New Year holidays. The MSCI Asia Pacific Index erased an earlier loss of as much as 0.7% to rise 0.5%, lifted by communication services and health care shares. Japanese equities jumped as the yen fell after the BOJ kept policy on hold, pushing back against intense market speculation of policy change by ramping up the defense of its stimulus framework. “What has been happening so far is a fairly easy pattern to understand,” said Makoto Furukawa, chief portfolio strategist at Mitsubishi UFJ Morgan Stanley Securities. “I think the pattern of bank stocks rising and exchange-rate-sensitive stocks being hit will continue. Expectations for further revisions to the BOJ’s policy will emerge.” South Korea was among the biggest losers on Thursday, dragged by a loss in Samsung Electronics. Chinese benchmarks were mixed in thin volumes before market closures next week. The MSCI Asian stock benchmark has gained more than 20% from an October low to enter a bull market, outperforming US and European peers. Japanese stocks have underperformed, with the Nikkei down almost 1% in the same span, hurt in part by the BOJ’s December move to widen a band on bond yields. Australian stocks edged higher: the S&P/ASX 200 index rose to close at 7,393.40, as healthcare and technology shares buoyed the benchmark. In New Zealand, the S&P/NZX 50 index rose 0.3% to 11,920.41. The nation’s home sales fell 39% y/y in December, according to the Real Estate Institute of New Zealand. The Bloomberg Dollar Index is down 0.3%, swinging to a loss in European trading as the greenback weakened against all of its Group-of-10 peers apart from the yen; the JPY traded well off its worst levels. EUR gained after ECB’s Villeroy said he was surprised by the sources story suggesting they are considering smaller hikes beyond February. GBP rose after data showed UK core CPI was slightly stronger than expected in December.  Some more details: The yen slumped as much as as 2.6% against the dollar, hitting 131.58, and Japan’s bond yields fell by up to 11bps after the BOJ pushed back against intense market speculation of policy change by ramping up the defense of its stimulus framework. Risk reversals in the front-end rallied in the run-up to the BOJ decision in favor of greenback calls, suggesting that the market was positioning for a no-change decision by the central bank. The move for risk reversals suggests that investors are still looking for bullish yen expressions over the medium-term, and especially after Kuroda’s term ends in April The Swiss franc extended its advance against to 0.9131 per dollar, the strongest level in a year The euro extended an advance against the dollar and bunds reversed opening gains after ECB official Francois Villeroy de Galhau said that guidance from ECB President Christine Lagarde that borrowing costs will continue to be lifted in half-point steps for some time still holds. One trader has placed a large bet using options on German 5-year futures, targeting the yield to rise above 2.40% for maximum profit, up from about 2.13% currently The pound rose against the dollar and traders added to wagers on the BOE’s hiking cycle after UK inflation figures showed month-on-month and core readings came in higher than anticipated in December In rates, Treasuries and JGBs spiked higher overnight after the Bank of Japan kept monetary settings unchanged with no nod to any concession on current policy; 10-year TSY yields fell as much as 8.3bp to 3.465% and were trading at 3.47% last. Gains have been broadly maintained into early US session, with 10-year note futures trading near day’s high. Heavy US economic data slate includes PPI and retail sales, and Treasury auctions 20-year bonds. UK and German government bonds pared earlier advances to trade in the red as Treasury yields were richer by 3bp to 7bp across the curve with gains led by intermediates, flattening 2s10s spread by 4bp on the day; 10-year yields trade around 3.48% with bunds and gilts underperforming by 4bp and 7bp in the sector. Most gains in Treasuries were made during aggressive rally in JGBs after Bank of Japan policy announcement, which left benchmark JGB 10-year richer by around 8bp on the day. US Treasury auctions resume with $12b 20-year bond reopening at 1pm. In commodities, crude futures rose with WTI adding 1.7% to trade near $81.50. Spot gold rises roughly $4 to trade near $1,913/oz To the day ahead now, and data releases from the US include December’s PPI, retail sales and industrial production, whilst from the UK we’ll also get the December CPI release. From central banks, we’ll hear from the ECB’s Villeroy, and the Fed’s Bostic, Harker and Logan. Lastly, the Fed will also be releasing their Beige Book. Market Snapshot S&P 500 futures little changed at 4,012.00 MXAP up 0.5% to 166.79 MXAPJ up 0.3% to 546.45 Nikkei up 2.5% to 26,791.12 Topix up 1.7% to 1,934.93 Hang Seng Index up 0.5% to 21,678.00 Shanghai Composite little changed at 3,224.41 Sensex up 0.6% to 61,049.16 Australia S&P/ASX 200 little changed at 7,393.36 Kospi down 0.5% to 2,368.32 STOXX Europe 600 up 0.1% to 457.14 German 10Y yield little changed at 2.10% Euro up 0.6% to $1.0855 Brent Futures up 1.1% to $86.89/bbl Gold spot up 0.3% to $1,913.84 U.S. Dollar Index down 0.39% to 101.99 Top Overnight News from Bloomberg ECB policymakers are starting to consider a slower pace of interest-rate hikes than President Christine Lagarde indicated in December, according to officials with knowledge of their discussions The BOJ standing pat caught some traders by surprise, but is unlikely to douse speculation that it will normalize policy as inflation in Japan accelerates and Governor Haruhiko Kuroda nears the end of his term China’s top economic official told an audience of international billionaires and bankers that his country’s economy will likely rebound to its pre-pandemic growth trend this year after coronavirus infections passed their peak A more detailed look at global markets courtesy of Newsquawk APAC stocks were positive albeit with price action mostly kept rangebound after the weak lead from Wall Street, while focus overnight centred on the BoJ policy announcement in which the central bank defied the increased speculation for a policy tweak. ASX 200 was flat with strength in the tech and consumer sectors offset by losses in commodity-related stocks. Nikkei 225 was boosted after the BoJ stuck with its ultra-easy policy settings and reaffirmed its dovish guidance. Hang Seng and Shanghai Comp were choppy but with strength in key tech names after China approved licences for 88 new games including titles from Tencent and NetEase in a further sign of an end to its tech crackdown. Top Asian News PBoC injected CNY 133bln via 7-day reverse repos with the rate kept at 2.00% and injects CNY 447bln via 14-day reverse repos with the rate kept at 2.15% for a CNY 515bln net injection. China's NDRC's said the economic development situation this year is still complicated, external environment is turbulent and pressure is still large, but it is confident and capable of promoting the continuous recovery and overall improvement of China's economy, according to Reuters. Hong Kong is expected to end its COVID mask mandate by March or April, according to sources cited by Ming Pao News. European bourses are contained overall, Euro Stoxx 50 +0.1%, as the dovish BoJ fails to provide impetus. US futures are similarly steady ahead of earnings, data and Fed speak, ES +0.1%. Within Europe, sectors are mixed with marked outperformance in Tech after updates from Just Eat and ASM International. Top European News ECB's Villeroy reaffirms that a European recession should be avoided in 2023, will bring inflation back to target around 2024/2025. Lagarde's 50bp guidance remains valid. Will remain at the terminal rate for as long as is necessary; will go to the terminal by summer, not there yet. UK Chancellor Hunt is reportedly planning a "slimmed down" spring budget which will not feature tax cuts within the statement, via The Guardian citing sources which add that there will be tax cuts before the next election, with the autumn statement the most likely point to announce such a change. Germany is reportedly to narrowly avoid a 2023 recession, with price-adj. growth of 0.2%, via Reuters citing source/draft of the economic report; Inflation: 2023 6.0%, 2024 2.8%. Magnitude 7.0 earthquake strikes off Sulawesi, Indonesia; Tsunami waves are possible for coasts located within 300km of Indonesia's quake epicentre, Pacific Tsunami Centre says. Ukraine Latest: Helicopter Crash Kills 18 People Near Kyiv Sweden Boosts Capacity to Send Power South to Ease Supply Crunch French Power Crunch This Winter Now Less Likely, Grid Says Women Are Macron’s Biggest Critics on Pension Reform BASF Drops After €7.3 Billion Russia Writedown Sparks Loss BOJ BoJ kept its policy settings unchanged with rates at -0.10% and YCC maintained to target 10yr JGBs at 0% via unanimous vote, while it kept the yield band and yield target unchanged. BoJ stuck with its forward guidance on interest rates and guidance that it will continue large-scale JGB buying and make nimble responses for each maturity, while it reiterated that it will not hesitate to take additional easing measures as necessary. Furthermore, the BoJ extended the fund operation to support financial lending by one year and the Outlook Report contained cuts to Real GDP growth forecasts and mostly upward revisions to Core CPI estimates, although fiscal 2023 and fiscal 2024 Core CPI forecasts remained below the 2% price goal. BoJ Governor Kuroda (post-meeting press conference) says he is not expecting 10yr JGB yields to continue trading with yields above 0.5%, and there is no need to further expand its bond target band; today's decision is not a change in BoJ's monetary policy. It is still early days since the adjustment to yield bands made in December, BoJ needs more time to assess impact on market functions. YCC is fully sustainable, widening band has made YCC more sustainable. Important for FX rates to move stably, reflecting fundamentals; he has no specific comments on FX levels, noting that currency policy is the jurisdiction of the government. FX Yen yields gains made on the premise of further BoJ YCT adjustment as the Bank holds fire. USD/JPY jumps to 131.57 from the low 128.00 area at one stage, DXY rebounds accordingly to 102.900 before sharp reversal on the back of strength elsewhere in the index. Sterling extends on UK pay gains as services and core inflation top consensus, Cable breaches 1.2300 on the way to 1.2360+ peak. Euro eyes resistance in the high 1.0800 zone as the Dollar recoils and Kiwi approaches 0.6500 and Aussie takes firmer hold of 0.7000 handle PBoC set USD/CNY mid-point at 6.7602 vs exp. 6.7644 (prev. 6.7222) Fixed Income Core benchmarks have picked off the European morning's lows to near unchanged levels, but remain shy of overnight BoJ-inspired peaks. The overnight BoJ derived upside seemingly fizzled out amid ECB's Villeroy dismissing the dovish source reports and hot UK core CPI. Stateside, USTs are holding firmer than their EGB peers ahead of a packed afternoon docket. Commodities Crude benchmarks are bid and have broken out of contained overnight ranges following the latest geopolitical rhetoric, lifting the complex to fresh YTD peaks. WTI Feb’23 and Brent Mar’23 are at the top-end of USD 80.55-81.86/bbl and USD 86.13-87.43/bbl parameters, ranges that mark fresh YTD peaks for the complex, though, the benchmarks remain well within late-2022 extremes. China's NDRC warned iron ore trading companies and iron ore futures companies against price gouging and speculation, while it will step up supervision on iron ore's spot and futures markets, according to Reuters. IEA Oil Market Report: Demand set to increase by 1.9mln BPD to a record of 101.7mln BPD. Spot gold is essentially unchanged and unable to derive much support from the Dollar’s weakness as the overall tone remains a tentative one post-BoJ. Copper prices are bid this morning in the wake of disruption to Glencore’s Antapaccay copper mine in Peru, which is operating at restricted capacity amid anti-government protests, according to Reuters sources. Geopolitics US reportedly sends Ukraine US arms which were stored in Israel, according to NYT. Russian Foreign Minister Lavrov says discussions with Ukraine President Zelenskiy are not possible; ready to respond to Western proposals on Ukraine but have not seen any serious proposals; adds, that they will have to take corresponding military measures if Finland/Sweden were to join NATO. Ukrainian Minister of Internal Affairs has died in a helicopter crash near Kyiv, according to local journalists. Serbian President Vucic says Crimea is Ukraine, and the EU path is the only one for Serbia. US Event Calendar 07:00: Jan. MBA Mortgage Applications 27.9%, prior 1.2% 08:30: Dec. Retail Sales Ex Auto and Gas, est. 0%, prior -0.2% 08:30: Dec. PPI Final Demand MoM, est. -0.1%, prior 0.3%; YoY, est. 6.8%, prior 7.4% PPI Ex Food and Energy MoM, est. 0.1%, prior 0.4%; YoY, est. 5.6%, prior 6.2% 08:30: Dec. Retail Sales Advance MoM, est. -0.9%, prior -0.6% Retail Sales Ex Auto MoM, est. -0.5%, prior -0.2% Retail Sales Control Group, est. -0.3%, prior -0.2% 09:15: Dec. Industrial Production MoM, est. -0.1%, prior -0.2% 09:15: Dec. Capacity Utilization, est. 79.5%, prior 79.7% 09:15: Dec. Manufacturing (SIC) Production, est. -0.2%, prior -0.6% 10:00: Nov. Business Inventories, est. 0.4%, prior 0.3% 10:00: Jan. NAHB Housing Market Index, est. 31, prior 31 14:00: Federal Reserve Releases Beige Book 16:00: Nov. Total Net TIC Flows, prior $179.9b Central Bank speakers 09:00: Fed’s Bostic Makes Welcoming Remarks at Academic Conference 14:00: Fed’s Harker Discusses the Economic Outlook 14:00: Federal Reserve Releases Beige Book 17:00: Fed’s Logan Gives Speech in Austin DB's Jim Reid concludes the overnight wrap The big news overnight is that there is no big news overnight as the BoJ met economists expectation that they wouldn’t change anything on YCC today despite increasing market expectation that they would. The policy does seems unsustainable if current conditions persist though as since the last meeting on December 20th, they've spent $265bn (a whopping 6% of annual GDP!) buying bonds. Indeed, as George Saravelos pointed out yesterday there are some reports suggesting the BoJ may own more than 100% of some benchmark 10yr bonds. So not only has it bought the entire stock, but it has lent it out to short-sellers who have sold it back to the BoJ. Before the meeting our Japanese economists suggested that he does expect the BoJ to abandon YCC by the end of Q2 this year, but more around forces such as the “shunto” spring wage negotiations, a positive output gap and leadership changes at the bank. It is clear from the market reaction that although economists expected no change the market was set up for one as the Yen has slumped -2.54% against the dollar, marking its biggest one-day drop since March 2020, trading at $131.42 as I type. Given this, the Nikkei (+2.45%) is leading gains across the region. Meanwhile, yields on 10yr Government Bonds tumbled well below policy cap, declining around -10bps, to trade at 0.40% following the central bank’s decision (they did dip to 0.36% immediately after). US 10yr Treasuries are -6bps lower on the back of the news. The BOJ did enhance its YCC by expanding its fund-supply market operations by offering funds of up to 10 years against pooled collateral to financial institutions for both fixed- and variable-rate loans. This is hoped to ease pressure on the swaps market and help market function. We will see. The press conference is to come after we go to press, so we'll see if that changes anything. In the rest of Asia, equity markets are lower with the KOSPI (-0.69%) being the biggest underperformer followed by Chinese equities with the CSI (-0.22%) and the Hang Seng (-0.11%) both down whilst the Shanghai Composite (-0.03%) is just below flat. In overnight trading, US stock futures are edging higher with contracts on the S&P 500 (+0.12%) and NADAQ 100 (+0.17%) climbing after a weaker start. Central banks were also driving markets yesterday ahead of the BoJ, with a strong European rally after Bloomberg reported that the ECB might go for a smaller 25bps hike in March following another 50bps move in February. Obviously this is just a report, but if true it would be significant, as it would be a slower pace than President Lagarde implied at the last meeting in December. Indeed, she said that “we should expect to raise interest rates at a 50 basis-point pace for a period of time”, so it would imply that this “period of time” could actually just be one meeting. The article only said that 25bps in March was “gaining support”, but there were some massive market moves in response to its release. Investors immediately adjusted their expectations for ECB policy over the coming months, with the rate priced in by the June meeting down -9.3bps on the day. That led to a significant rally in sovereign bonds too, with yields on 10yr German bunds down -8.4bps, having fallen from 2.14% just before the report came out to an intraday low of 2.06% immediately after. That was echoed across the continent, with yields on 10yr OATs (-10.1bps) and BTPs (-12.6bps) falling by even larger margins, and it left the spread of 10yr Italian yields over bunds at just 180bps, their tightest level since April. This buoyancy was seen amongst European equities as well, which continued their run as one of the top-performing assets of 2023. The STOXX 600 (+0.40%) and the DAX (+0.35%) both surged following the Bloomberg report, which brings their YTD gains to +7.43% and +9.07%, respectively. And for the DAX those gains mean the index is now at its highest level since mid-February, just before Russia’s invasion of Ukraine began. Another factor helping to boost sentiment in Europe was the release of the latest ZEW survey from Germany. That saw a massive upside surprise in the expectations component for January, which came in at an 11-month high of 16.9 (vs. -15.0 expected), thus adding to the growing body of evidence on the brightening outlook in Europe. Over in the US, the picture wasn’t quite as rosy as investors came back from holiday. Indeed, the S&P 500 (-0.20%) ended a run of 4 consecutive gains after weak earnings releases dampened risk appetite, with Goldman Sachs (-6.44%) as the second-worst performer in the entire S&P 500 after their earnings missed expectations. On the other hand, fellow major US bank Morgan Stanley (+5.91%) was the second-best performing S&P 500 member as the company beat expectations and pushed a rosier guidance than its peers. The best performer was Tesla (7.43%) which continues to have a rollercoaster time of it. Around this we also had the latest Empire State manufacturing survey for January, which fell to a new low for this cycle at -32.9 (vs. -8.6 expected). And apart from April and May 2020 at the height of the pandemic, that’s now the lowest reading for the survey since Q1 2009. For US Treasuries there was also a relative underperformance with Europe, with the 10yr yield up +4.4bps to 3.547%. This has reversed overnight on the BoJ news mentioned at the top. The Fed’s next meeting just two weeks from now we start to come firmly into view now, where investors are placing a very high weight on a downshift in the pace of rate hikes to 25bps. It also comes as further posturing takes place ahead of US debt ceiling negotiations. Yesterday, House Speaker McCarthy called on Senate Democrats and the White House to discuss conditions on raising the debt ceiling such as changes to major entitlement programs and discretionary spending, while White House Press Secretary Jean-Pierre remained adamant that the Biden Administration would not be negotiating over the debt ceiling. Treasury Secretary Yellen told lawmakers late last week that the government would need to start using “extraordinary measures” by the end of this week in order to avoid running out of cash. Elsewhere, UK gilts lagged slightly behind the rest of Europe with the 10yr yield “only” down -6.0bps. That followed UK labour market data that showed nominal wage running at +6.4% over the three months ending-November (vs. +6.2% expected). In turn, that led investors to raise the prospects of another 50bps hike from the BoE in February, with the hike priced in up +1.8bps on the day to 44.6bps. In other news, oil prices continued their steady advance over recent days, with Brent crude (+1.73%) nearly closing above $86/bbl for the first time this year. That uptick in energy prices was seen more broadly as well, with European natural gas futures (+7.71%) coming off their 16-month low to close at €59.35 per megawatt-hour. Lastly, at Davos yesterday, European Commission President von der Leyen said in a speech that in order “to keep European industry attractive, there is a need to be competitive with offers and incentives that are currently available outside the European Union”. That follows EU criticism of the recent Inflation Reduction Act in the US, which they consider to unfairly subsidise US firms. Our own European economists put out a note yesterday on the issue (link here) where they write the US legislation is probably more of an additional competitiveness shock to the EU, which could reinforce the energy crisis and the fear that high energy costs could linger for years. They also look at how the US policies might negatively impact the EU over different time horizons. To the day ahead now, and data releases from the US include December’s PPI, retail sales and industrial production, whilst from the UK we’ll also get the December CPI release. From central banks, we’ll hear from the ECB’s Villeroy, and the Fed’s Bostic, Harker and Logan. Lastly, the Fed will also be releasing their Beige Book. Tyler Durden Wed, 01/18/2023 - 08:03.....»»

Category: dealsSource: nytJan 18th, 2023

Treasuries Drift Higher After BOJ Reversal, Await PPI And Retail Sales

Treasuries Drift Higher After BOJ Reversal, Await PPI And Retail Sales US stock-index futures were muted on Wednesday, swinging between gains and losses, as investors initially welcomes a dovish announcement by the BOJ which refrained from further expanding its yield curve control band, then turned to corporate earnings for more clues on the health of corporate America amid growing prospects for a recession. Nasdaq 100 and the S&P 500 futures were up 0.2% as of 7:15 a.m. in New York. Treasury and JGB yields tumbled after the BOJ kept monetary settings unchanged, while the yen first slid against the dollar but then recovered all losses amid expectations the BOJ has only bought a few weeks of time. WTI crude added 1.7% this morning and has been holding above $80 amid optimism around China reopening demand. Dollar is weaker; DXY at 102 helping gold trade back over $1900. Among notable movers in premarket trading, Moderna Inc. climbed 6.7% after saying its vaccine against respiratory syncytial virus infections met targets. IBM dropped 1.9% after Morgan Stanley cut the stock to equal-weight from overweight, saying that it is transitioning out of more defensive IT hardware name. Bank stocks are mixed as investors await the release of key economic data, including the Beige Book and retail sales. Coinbase said it’s halting operations in Japan. Meanwhile, Bank of Montreal has received approval from the Federal Reserve to acquire San Francisco-based Bank of the West. Here are the other notable premarket movers: United Airlines (UAL US) rises 2.6%, boosting carrier peers, after the airline operator’s guidance for the first quarter and 2023 beat analyst estimates. Brokers pointing to strong growth in sales, assuaging any worries over demand taking a hit from an economic slowdown. American Airlines +1.4%, Delta Air +1% GoDaddy (GDDY US) gains 3% after the website domain company was upgraded to outperform from inline at Evercore ISI, with the broker highlighting the firm’s relatively recession- resistant business model and new-product cycle. International Business Machines (IBM US) drops 1.9% after Morgan Stanley cut the stock to equal-weight from overweight, saying that it is transitioning out of more defensive IT hardware names. Skechers (SKX US) slides 2.1% after Morgan Stanley downgraded it to equal-weight on valuation, risk of FY23 guidance missing expectations and as the market shifts to early-cycle names. The broker raised Gap (GPS US) to equal-weight and anticipates a 2023 of two halves for US specialty retail and department stores. SmileDirectClub (SDC US) jumps 13% after the maker of dental aligners projected a narrower Ebitda loss for 2023 and said that it planned to rejig its global workforce and introduce additional cost savings. Jefferies, however, remains cautious on the stock, saying that the company saw a “weak” finish to a tough year. Oatly (OTLY US) gains 6.3% after Mizuho Securities upgrades its rating on the oat drink company to buy from hold, with long-term growth seen still intact. While US stocks have gained in the new year as cooling inflation spurred bets of a softening in the Federal Reserve’s policy, they’ve dramatically underperformed international peers as investors worry that the combination of rising interest rates and slowing consumer demand could trigger an economic contraction. A weaker dollar and optimism around a China reopening have lured investors to non-US stocks. Goldman Sachs strategists said US equity funds have seen outflows in the first two weeks of the year, while Europe has seen inflows — both major trend reversals from 2022. UK inflation as well as a more muted start to the US earnings-reporting season boosted those who believe monetary easing would have to begin this year. The yen dropped as much as 2.6% against the dollar after Japan’s policymakers doubled down on defending their stimulus, defying intense market speculation. The currency later trimmed the losses to 0.7%. Even as investors remain on guard for the central bank to continue large scale bond buying to protect its yield goal, there are doubts about how long it can continue. The yen’s drop proved to be an idiosyncratic trend in the foreign-exchange markets as the dollar fell against all but five of its 31 major peers including the Japanese currency. Meanwhile, Analysts expect fourth-quarter earnings to show a drop of 2.7%, the first year-over-year decline since 2020, according to data from Bloomberg Intelligence. “Given the difficult backdrop, there’s fear among some parts of the market that US earnings forecasts might still be too high for 2023 and that stocks might not be able to sustain their current strength,” said Russ Mould, investment director at AJ Bell. He added that reports from the likes of Procter & Gamble Co., Schlumberger Ltd., Microsoft Corp. and Tesla Inc. “will certainly be ones to watch as their fortunes could have a major influence on market sentiment.” European equity markets are mixed after the BOJ sent the yen spiraling lower by leaving its policy settings unchanged. The Stoxx 600 is up 0.1% with gains in the CAC and FTSE 100 while the DAX trades lower; today's move brought the total Stoxx 600 gains since a Sept. 29 low to more than 19%. If the index closes at 20% or higher, it will join other regional peers in confirming a technical bull market. Tech, travel and miners are the best performing sectors while chemicals and real estate fall.  Here are the notable European movers: Richemont shares gain as much as 2.8% in Europe despite the Cartier owner posting worse-than-expected 3Q sales as investors take the view that disruptions in China caused by a surge in Covid infections may prove temporary. Just Eat Takeaway.com jumps as much as 16% after 4Q Ebitda beat estimates as the food delivery firm said it remains focused on improving profitability. Peers Deliveroo and Delivery Hero rose as much as +5.5% and 6.3% respectively ASM International shares rise as much as 8.7% after 4Q update shows a strong beat on sales that is likely to boost sentiment on the semiconductor-equipment maker, analysts say. ASML shares rise as much as 2.1% in sympathy. Capgemini shares rise as much as 3.5%, hitting highest in just over a month, after Barclays upgrades the IT services firm to overweight on greater resilience in its business mix and on utilization. EQT shares drop as much as 8.4%, the most in more than three months, after the investment firm delivered results which analysts say missed on adjusted Ebitda. Continental shares fall as much as 5% after the German car-parts and tiremaker said late Tuesday that it expects FY22 adjusted free cash flow of €200m, below its outlook range of €600m to €800m. Encavis shares fall as much as 5.3% after Barclays analyst cut the recommendation to underweight from equalweight, Orsted also downgraded. Barclays notes that growth pipeline valuations for the two energy companies have moved significantly above vertically integrated peers. Wise shares drop as much as 5%, extending yesterday’s double-digit losses, after the UK money- transfer firm’s growth slowed and missed analyst expectations. Earlier in the session Asian stocks edged higher as Japanese shares advanced after the Bank of Japan announced no change to its yield curve control policy, countering broader caution ahead of the Lunar New Year holidays. The MSCI Asia Pacific Index erased an earlier loss of as much as 0.7% to rise 0.5%, lifted by communication services and health care shares. Japanese equities jumped as the yen fell after the BOJ kept policy on hold, pushing back against intense market speculation of policy change by ramping up the defense of its stimulus framework. “What has been happening so far is a fairly easy pattern to understand,” said Makoto Furukawa, chief portfolio strategist at Mitsubishi UFJ Morgan Stanley Securities. “I think the pattern of bank stocks rising and exchange-rate-sensitive stocks being hit will continue. Expectations for further revisions to the BOJ’s policy will emerge.” South Korea was among the biggest losers on Thursday, dragged by a loss in Samsung Electronics. Chinese benchmarks were mixed in thin volumes before market closures next week. The MSCI Asian stock benchmark has gained more than 20% from an October low to enter a bull market, outperforming US and European peers. Japanese stocks have underperformed, with the Nikkei down almost 1% in the same span, hurt in part by the BOJ’s December move to widen a band on bond yields. Australian stocks edged higher: the S&P/ASX 200 index rose to close at 7,393.40, as healthcare and technology shares buoyed the benchmark. In New Zealand, the S&P/NZX 50 index rose 0.3% to 11,920.41. The nation’s home sales fell 39% y/y in December, according to the Real Estate Institute of New Zealand. The Bloomberg Dollar Index is down 0.3%, swinging to a loss in European trading as the greenback weakened against all of its Group-of-10 peers apart from the yen; the JPY traded well off its worst levels. EUR gained after ECB’s Villeroy said he was surprised by the sources story suggesting they are considering smaller hikes beyond February. GBP rose after data showed UK core CPI was slightly stronger than expected in December.  Some more details: The yen slumped as much as as 2.6% against the dollar, hitting 131.58, and Japan’s bond yields fell by up to 11bps after the BOJ pushed back against intense market speculation of policy change by ramping up the defense of its stimulus framework. Risk reversals in the front-end rallied in the run-up to the BOJ decision in favor of greenback calls, suggesting that the market was positioning for a no-change decision by the central bank. The move for risk reversals suggests that investors are still looking for bullish yen expressions over the medium-term, and especially after Kuroda’s term ends in April The Swiss franc extended its advance against to 0.9131 per dollar, the strongest level in a year The euro extended an advance against the dollar and bunds reversed opening gains after ECB official Francois Villeroy de Galhau said that guidance from ECB President Christine Lagarde that borrowing costs will continue to be lifted in half-point steps for some time still holds. One trader has placed a large bet using options on German 5-year futures, targeting the yield to rise above 2.40% for maximum profit, up from about 2.13% currently The pound rose against the dollar and traders added to wagers on the BOE’s hiking cycle after UK inflation figures showed month-on-month and core readings came in higher than anticipated in December In rates, Treasuries and JGBs spiked higher overnight after the Bank of Japan kept monetary settings unchanged with no nod to any concession on current policy; 10-year TSY yields fell as much as 8.3bp to 3.465% and were trading at 3.47% last. Gains have been broadly maintained into early US session, with 10-year note futures trading near day’s high. Heavy US economic data slate includes PPI and retail sales, and Treasury auctions 20-year bonds. UK and German government bonds pared earlier advances to trade in the red as Treasury yields were richer by 3bp to 7bp across the curve with gains led by intermediates, flattening 2s10s spread by 4bp on the day; 10-year yields trade around 3.48% with bunds and gilts underperforming by 4bp and 7bp in the sector. Most gains in Treasuries were made during aggressive rally in JGBs after Bank of Japan policy announcement, which left benchmark JGB 10-year richer by around 8bp on the day. US Treasury auctions resume with $12b 20-year bond reopening at 1pm. In commodities, crude futures rose with WTI adding 1.7% to trade near $81.50. Spot gold rises roughly $4 to trade near $1,913/oz To the day ahead now, and data releases from the US include December’s PPI, retail sales and industrial production, whilst from the UK we’ll also get the December CPI release. From central banks, we’ll hear from the ECB’s Villeroy, and the Fed’s Bostic, Harker and Logan. Lastly, the Fed will also be releasing their Beige Book. Market Snapshot S&P 500 futures little changed at 4,012.00 MXAP up 0.5% to 166.79 MXAPJ up 0.3% to 546.45 Nikkei up 2.5% to 26,791.12 Topix up 1.7% to 1,934.93 Hang Seng Index up 0.5% to 21,678.00 Shanghai Composite little changed at 3,224.41 Sensex up 0.6% to 61,049.16 Australia S&P/ASX 200 little changed at 7,393.36 Kospi down 0.5% to 2,368.32 STOXX Europe 600 up 0.1% to 457.14 German 10Y yield little changed at 2.10% Euro up 0.6% to $1.0855 Brent Futures up 1.1% to $86.89/bbl Gold spot up 0.3% to $1,913.84 U.S. Dollar Index down 0.39% to 101.99 Top Overnight News from Bloomberg ECB policymakers are starting to consider a slower pace of interest-rate hikes than President Christine Lagarde indicated in December, according to officials with knowledge of their discussions The BOJ standing pat caught some traders by surprise, but is unlikely to douse speculation that it will normalize policy as inflation in Japan accelerates and Governor Haruhiko Kuroda nears the end of his term China’s top economic official told an audience of international billionaires and bankers that his country’s economy will likely rebound to its pre-pandemic growth trend this year after coronavirus infections passed their peak A more detailed look at global markets courtesy of Newsquawk APAC stocks were positive albeit with price action mostly kept rangebound after the weak lead from Wall Street, while focus overnight centred on the BoJ policy announcement in which the central bank defied the increased speculation for a policy tweak. ASX 200 was flat with strength in the tech and consumer sectors offset by losses in commodity-related stocks. Nikkei 225 was boosted after the BoJ stuck with its ultra-easy policy settings and reaffirmed its dovish guidance. Hang Seng and Shanghai Comp were choppy but with strength in key tech names after China approved licences for 88 new games including titles from Tencent and NetEase in a further sign of an end to its tech crackdown. Top Asian News PBoC injected CNY 133bln via 7-day reverse repos with the rate kept at 2.00% and injects CNY 447bln via 14-day reverse repos with the rate kept at 2.15% for a CNY 515bln net injection. China's NDRC's said the economic development situation this year is still complicated, external environment is turbulent and pressure is still large, but it is confident and capable of promoting the continuous recovery and overall improvement of China's economy, according to Reuters. Hong Kong is expected to end its COVID mask mandate by March or April, according to sources cited by Ming Pao News. European bourses are contained overall, Euro Stoxx 50 +0.1%, as the dovish BoJ fails to provide impetus. US futures are similarly steady ahead of earnings, data and Fed speak, ES +0.1%. Within Europe, sectors are mixed with marked outperformance in Tech after updates from Just Eat and ASM International. Top European News ECB's Villeroy reaffirms that a European recession should be avoided in 2023, will bring inflation back to target around 2024/2025. Lagarde's 50bp guidance remains valid. Will remain at the terminal rate for as long as is necessary; will go to the terminal by summer, not there yet. UK Chancellor Hunt is reportedly planning a "slimmed down" spring budget which will not feature tax cuts within the statement, via The Guardian citing sources which add that there will be tax cuts before the next election, with the autumn statement the most likely point to announce such a change. Germany is reportedly to narrowly avoid a 2023 recession, with price-adj. growth of 0.2%, via Reuters citing source/draft of the economic report; Inflation: 2023 6.0%, 2024 2.8%. Magnitude 7.0 earthquake strikes off Sulawesi, Indonesia; Tsunami waves are possible for coasts located within 300km of Indonesia's quake epicentre, Pacific Tsunami Centre says. Ukraine Latest: Helicopter Crash Kills 18 People Near Kyiv Sweden Boosts Capacity to Send Power South to Ease Supply Crunch French Power Crunch This Winter Now Less Likely, Grid Says Women Are Macron’s Biggest Critics on Pension Reform BASF Drops After €7.3 Billion Russia Writedown Sparks Loss BOJ BoJ kept its policy settings unchanged with rates at -0.10% and YCC maintained to target 10yr JGBs at 0% via unanimous vote, while it kept the yield band and yield target unchanged. BoJ stuck with its forward guidance on interest rates and guidance that it will continue large-scale JGB buying and make nimble responses for each maturity, while it reiterated that it will not hesitate to take additional easing measures as necessary. Furthermore, the BoJ extended the fund operation to support financial lending by one year and the Outlook Report contained cuts to Real GDP growth forecasts and mostly upward revisions to Core CPI estimates, although fiscal 2023 and fiscal 2024 Core CPI forecasts remained below the 2% price goal. BoJ Governor Kuroda (post-meeting press conference) says he is not expecting 10yr JGB yields to continue trading with yields above 0.5%, and there is no need to further expand its bond target band; today's decision is not a change in BoJ's monetary policy. It is still early days since the adjustment to yield bands made in December, BoJ needs more time to assess impact on market functions. YCC is fully sustainable, widening band has made YCC more sustainable. Important for FX rates to move stably, reflecting fundamentals; he has no specific comments on FX levels, noting that currency policy is the jurisdiction of the government. FX Yen yields gains made on the premise of further BoJ YCT adjustment as the Bank holds fire. USD/JPY jumps to 131.57 from the low 128.00 area at one stage, DXY rebounds accordingly to 102.900 before sharp reversal on the back of strength elsewhere in the index. Sterling extends on UK pay gains as services and core inflation top consensus, Cable breaches 1.2300 on the way to 1.2360+ peak. Euro eyes resistance in the high 1.0800 zone as the Dollar recoils and Kiwi approaches 0.6500 and Aussie takes firmer hold of 0.7000 handle PBoC set USD/CNY mid-point at 6.7602 vs exp. 6.7644 (prev. 6.7222) Fixed Income Core benchmarks have picked off the European morning's lows to near unchanged levels, but remain shy of overnight BoJ-inspired peaks. The overnight BoJ derived upside seemingly fizzled out amid ECB's Villeroy dismissing the dovish source reports and hot UK core CPI. Stateside, USTs are holding firmer than their EGB peers ahead of a packed afternoon docket. Commodities Crude benchmarks are bid and have broken out of contained overnight ranges following the latest geopolitical rhetoric, lifting the complex to fresh YTD peaks. WTI Feb’23 and Brent Mar’23 are at the top-end of USD 80.55-81.86/bbl and USD 86.13-87.43/bbl parameters, ranges that mark fresh YTD peaks for the complex, though, the benchmarks remain well within late-2022 extremes. China's NDRC warned iron ore trading companies and iron ore futures companies against price gouging and speculation, while it will step up supervision on iron ore's spot and futures markets, according to Reuters. IEA Oil Market Report: Demand set to increase by 1.9mln BPD to a record of 101.7mln BPD. Spot gold is essentially unchanged and unable to derive much support from the Dollar’s weakness as the overall tone remains a tentative one post-BoJ. Copper prices are bid this morning in the wake of disruption to Glencore’s Antapaccay copper mine in Peru, which is operating at restricted capacity amid anti-government protests, according to Reuters sources. Geopolitics US reportedly sends Ukraine US arms which were stored in Israel, according to NYT. Russian Foreign Minister Lavrov says discussions with Ukraine President Zelenskiy are not possible; ready to respond to Western proposals on Ukraine but have not seen any serious proposals; adds, that they will have to take corresponding military measures if Finland/Sweden were to join NATO. Ukrainian Minister of Internal Affairs has died in a helicopter crash near Kyiv, according to local journalists. Serbian President Vucic says Crimea is Ukraine, and the EU path is the only one for Serbia. US Event Calendar 07:00: Jan. MBA Mortgage Applications 27.9%, prior 1.2% 08:30: Dec. Retail Sales Ex Auto and Gas, est. 0%, prior -0.2% 08:30: Dec. PPI Final Demand MoM, est. -0.1%, prior 0.3%; YoY, est. 6.8%, prior 7.4% PPI Ex Food and Energy MoM, est. 0.1%, prior 0.4%; YoY, est. 5.6%, prior 6.2% 08:30: Dec. Retail Sales Advance MoM, est. -0.9%, prior -0.6% Retail Sales Ex Auto MoM, est. -0.5%, prior -0.2% Retail Sales Control Group, est. -0.3%, prior -0.2% 09:15: Dec. Industrial Production MoM, est. -0.1%, prior -0.2% 09:15: Dec. Capacity Utilization, est. 79.5%, prior 79.7% 09:15: Dec. Manufacturing (SIC) Production, est. -0.2%, prior -0.6% 10:00: Nov. Business Inventories, est. 0.4%, prior 0.3% 10:00: Jan. NAHB Housing Market Index, est. 31, prior 31 14:00: Federal Reserve Releases Beige Book 16:00: Nov. Total Net TIC Flows, prior $179.9b Central Bank speakers 09:00: Fed’s Bostic Makes Welcoming Remarks at Academic Conference 14:00: Fed’s Harker Discusses the Economic Outlook 14:00: Federal Reserve Releases Beige Book 17:00: Fed’s Logan Gives Speech in Austin DB's Jim Reid concludes the overnight wrap The big news overnight is that there is no big news overnight as the BoJ met economists expectation that they wouldn’t change anything on YCC today despite increasing market expectation that they would. The policy does seems unsustainable if current conditions persist though as since the last meeting on December 20th, they've spent $265bn (a whopping 6% of annual GDP!) buying bonds. Indeed, as George Saravelos pointed out yesterday there are some reports suggesting the BoJ may own more than 100% of some benchmark 10yr bonds. So not only has it bought the entire stock, but it has lent it out to short-sellers who have sold it back to the BoJ. Before the meeting our Japanese economists suggested that he does expect the BoJ to abandon YCC by the end of Q2 this year, but more around forces such as the “shunto” spring wage negotiations, a positive output gap and leadership changes at the bank. It is clear from the market reaction that although economists expected no change the market was set up for one as the Yen has slumped -2.54% against the dollar, marking its biggest one-day drop since March 2020, trading at $131.42 as I type. Given this, the Nikkei (+2.45%) is leading gains across the region. Meanwhile, yields on 10yr Government Bonds tumbled well below policy cap, declining around -10bps, to trade at 0.40% following the central bank’s decision (they did dip to 0.36% immediately after). US 10yr Treasuries are -6bps lower on the back of the news. The BOJ did enhance its YCC by expanding its fund-supply market operations by offering funds of up to 10 years against pooled collateral to financial institutions for both fixed- and variable-rate loans. This is hoped to ease pressure on the swaps market and help market function. We will see. The press conference is to come after we go to press, so we'll see if that changes anything. In the rest of Asia, equity markets are lower with the KOSPI (-0.69%) being the biggest underperformer followed by Chinese equities with the CSI (-0.22%) and the Hang Seng (-0.11%) both down whilst the Shanghai Composite (-0.03%) is just below flat. In overnight trading, US stock futures are edging higher with contracts on the S&P 500 (+0.12%) and NADAQ 100 (+0.17%) climbing after a weaker start. Central banks were also driving markets yesterday ahead of the BoJ, with a strong European rally after Bloomberg reported that the ECB might go for a smaller 25bps hike in March following another 50bps move in February. Obviously this is just a report, but if true it would be significant, as it would be a slower pace than President Lagarde implied at the last meeting in December. Indeed, she said that “we should expect to raise interest rates at a 50 basis-point pace for a period of time”, so it would imply that this “period of time” could actually just be one meeting. The article only said that 25bps in March was “gaining support”, but there were some massive market moves in response to its release. Investors immediately adjusted their expectations for ECB policy over the coming months, with the rate priced in by the June meeting down -9.3bps on the day. That led to a significant rally in sovereign bonds too, with yields on 10yr German bunds down -8.4bps, having fallen from 2.14% just before the report came out to an intraday low of 2.06% immediately after. That was echoed across the continent, with yields on 10yr OATs (-10.1bps) and BTPs (-12.6bps) falling by even larger margins, and it left the spread of 10yr Italian yields over bunds at just 180bps, their tightest level since April. This buoyancy was seen amongst European equities as well, which continued their run as one of the top-performing assets of 2023. The STOXX 600 (+0.40%) and the DAX (+0.35%) both surged following the Bloomberg report, which brings their YTD gains to +7.43% and +9.07%, respectively. And for the DAX those gains mean the index is now at its highest level since mid-February, just before Russia’s invasion of Ukraine began. Another factor helping to boost sentiment in Europe was the release of the latest ZEW survey from Germany. That saw a massive upside surprise in the expectations component for January, which came in at an 11-month high of 16.9 (vs. -15.0 expected), thus adding to the growing body of evidence on the brightening outlook in Europe. Over in the US, the picture wasn’t quite as rosy as investors came back from holiday. Indeed, the S&P 500 (-0.20%) ended a run of 4 consecutive gains after weak earnings releases dampened risk appetite, with Goldman Sachs (-6.44%) as the second-worst performer in the entire S&P 500 after their earnings missed expectations. On the other hand, fellow major US bank Morgan Stanley (+5.91%) was the second-best performing S&P 500 member as the company beat expectations and pushed a rosier guidance than its peers. The best performer was Tesla (7.43%) which continues to have a rollercoaster time of it. Around this we also had the latest Empire State manufacturing survey for January, which fell to a new low for this cycle at -32.9 (vs. -8.6 expected). And apart from April and May 2020 at the height of the pandemic, that’s now the lowest reading for the survey since Q1 2009. For US Treasuries there was also a relative underperformance with Europe, with the 10yr yield up +4.4bps to 3.547%. This has reversed overnight on the BoJ news mentioned at the top. The Fed’s next meeting just two weeks from now we start to come firmly into view now, where investors are placing a very high weight on a downshift in the pace of rate hikes to 25bps. It also comes as further posturing takes place ahead of US debt ceiling negotiations. Yesterday, House Speaker McCarthy called on Senate Democrats and the White House to discuss conditions on raising the debt ceiling such as changes to major entitlement programs and discretionary spending, while White House Press Secretary Jean-Pierre remained adamant that the Biden Administration would not be negotiating over the debt ceiling. Treasury Secretary Yellen told lawmakers late last week that the government would need to start using “extraordinary measures” by the end of this week in order to avoid running out of cash. Elsewhere, UK gilts lagged slightly behind the rest of Europe with the 10yr yield “only” down -6.0bps. That followed UK labour market data that showed nominal wage running at +6.4% over the three months ending-November (vs. +6.2% expected). In turn, that led investors to raise the prospects of another 50bps hike from the BoE in February, with the hike priced in up +1.8bps on the day to 44.6bps. In other news, oil prices continued their steady advance over recent days, with Brent crude (+1.73%) nearly closing above $86/bbl for the first time this year. That uptick in energy prices was seen more broadly as well, with European natural gas futures (+7.71%) coming off their 16-month low to close at €59.35 per megawatt-hour. Lastly, at Davos yesterday, European Commission President von der Leyen said in a speech that in order “to keep European industry attractive, there is a need to be competitive with offers and incentives that are currently available outside the European Union”. That follows EU criticism of the recent Inflation Reduction Act in the US, which they consider to unfairly subsidise US firms. Our own European economists put out a note yesterday on the issue (link here) where they write the US legislation is probably more of an additional competitiveness shock to the EU, which could reinforce the energy crisis and the fear that high energy costs could linger for years. They also look at how the US policies might negatively impact the EU over different time horizons. To the day ahead now, and data releases from the US include December’s PPI, retail sales and industrial production, whilst from the UK we’ll also get the December CPI release. From central banks, we’ll hear from the ECB’s Villeroy, and the Fed’s Bostic, Harker and Logan. Lastly, the Fed will also be releasing their Beige Book. Tyler Durden Wed, 01/18/2023 - 08:03.....»»

Category: worldSource: nytJan 18th, 2023

Futures Trim Losses As Focus Turns To Earnings

Futures Trim Losses As Focus Turns To Earnings US stock futures slipped for a second day as investors braced for a busy week of parsing earnings reports for signs of an earnings recession, falling profitability and an economic slowdown. Contracts on the S&P 500 fell 0.2% at 7:10 a.m. ET, recovering from a -0.5% drop earlier, while Nasdaq 100 futures dropped 0.3% after trading in the cash market was closed on Monday for a holiday. The dollar was flat after rebounding from an 8 month low on Monday while the US 10-year Treasury yield rises to top about 3.55%. In premarket trading, shares of Chinese electric-vehicle makers like XPeng Inc. retreated amid worries over demand and competition after the company slashed prices on its models in China. Bank stocks were also lower as Goldman Sachs and Morgan Stanley were set to report their fourth-quarter results before the bell. In corporate news, Bank of America shares got their only sell-equivalent rating after the company flagged a slowdown in lending last week. Whirlpool fell 6% in early New York trading after reporting fourth-quarter net sales of $4.90 billion, compared with forecasts for $5.15 billion. Freeport McMoRan slid 2.6%. Bloomberg Intelligence analysts predict copper could fall to $8,000 a ton from more than $9,000 now as physical demand indicators are weakening. Here are some other notable premarket movers: Pfizer (PFE US) stock slides 1.5% after it was cut to equal-weight from overweight at Wells Fargo, which sees an earnings downgrade cycle on the horizon for the pharma giant. Cryptocurrency-related stocks rally, as Bitcoin extends its winning streak into a 14th day and trades above the $21,000 level. Coinbase +6%, Riot Platforms +8.3%, Bakkt +10%, Marathon Digital +9.4% MGO Global rises 43% to $6.65 in premarket trading, reversing losses from a volatile initial trading session in which the stock more than tripled before closing lower, the latest in a series of wild debuts for US small-cap listings. Keep an eye on Tesla after Jefferies cut its target for the stock to $180 from $350, as the brokerage slashed sales and earnings estimates for the electric-car maker. The company last week cut prices across its lineup in an effort to stoke demand after several quarters of disappointing deliveries. Watch Wells Fargo stock as it was cut to hold from buy at Jefferies with the risk-reward on the US lender now looking more balanced. Keep an eye on utilities as KeyBanc Capital Markets turned more negative on the outlook for the sector into 2023, downgrading CenterPoint Energy and Southern Co to sector weight. Watch Global Payments stock as it was upgraded to overweight at Morgan Stanley, which says that fintech and payments sector offers “increasingly compelling” valuations from a more favorable backdrop. Piper Sandler downgrades Bandwidth (BAND US), DigitalOcean (DOCN US) and RingCentral (RNG US) to neutral as it tweaks its cloud automation software ratings, with Nice (NICE US) upgraded to overweight and Nutanix (NTNX US) its top pick. Morgan Stanley is guarded on hardline, broadline and food retail coverage to start 2023 as it sees more headwinds than tailwinds, with the magnitude of the headwinds outweighing the tailwinds. Wayfair (W US) and Kroger (KR US) upgraded to equal-weight from underweight; National Vision (EYE US) downgraded to equal-weight from overweight. Bank stocks reversed losses to trade higher on Friday, even after JPM CEO Jamie Dimon and BofA's Brian Moynihan warned of an uncertain economic environment as four of the six biggest US lenders reported their fourth-quarter results. Lenders Goldman Sachs Group Inc. and Morgan Stanley report earnings on Tuesday. Investors will dissect results for the impact of the Federal Reserve’s interest rate hikes and signs of consumer spending slowdown. “The spread between our earnings model and consensus forecasts is nearly as wide as it’s ever been and suggests a drawdown in stocks for which most are not prepared,” Morgan Stanley’s Michael Wilson wrote in his latest gloomy note. “The main culprit is the elevated and volatile inflationary environment which is likely to play havoc with profitability.” Meanwhile, according to Bank of America’s latest global fund manager survey, investors are the most underweight on US equities since 2005 as improving market sentiment sends them flocking toward cheaper regions. Allocation to US equities “collapsed” during the first month of 2023, with investors a net 39% underweight the asset class, they said, exceeding even the UK’s 15%. At the same time, participants in the January poll were “a lot less bearish” than in the fourth quarter, sparking a rotation to emerging markets, Europe and cyclical stocks, and away from pharmaceuticals, technology and the US, strategists led by Michael Hartnett wrote in a note. Investors had their expectations for a pause in central-bank tightening damped by ECB Chief Economist Philip Lane, who said interest rates will have to move into restrictive territory to bring inflation back to target. BlackRock Inc. Vice Chairman Philipp Hildebrand said he saw no chance of policy easing this year. Data including a record increase in UK wages signaled further rate hikes are necessary. “We’ve just hit pause and I am sure there’s some profit taking,” said James Athey, investment director at Edinburgh-based abrdn. “We‘re into the earnings season which likely brings with it risks and volatility. If you run a risk-parity or 60/40 book, you’ve done brilliantly already this year. It seems prudent to trim some risk.” US corporate earnings may set the tone for traders this week as the reporting season moves up a gear. Of the 30 companies on the S&P 500 that have posted earnings so far, 24 have beaten analysts’ expectations. However, UBS Wealth Management expects “quite a bit of downside here on the earnings” in the US, according to Hartmut Issel, head of Asia Pacific equities. European stocks and bonds are both in the red as investors contemplated the prospect of ongoing monetary tightening after ECB Chief Economist Lane said rates will have to move into restrictive territory. The BOE are also facing pressure to continue hiking after UK wages rose at their fastest rate on record, excluding the pandemic. The Stoxx 600 was down 0.2% and on course to snap a four-day winning streak with technology, real estate and autos leading declines. Here are some of the most notable European movers: ABB shares rise as much as 1.9% after Redburn upgrades stock to buy from sell, saying recent business exits could mean the Swiss industrial group can grow faster than earlier expected Wacker Chemie, one of Europe’s largest producers of polysilicon, rose as much as 3.7% after prices of the material used in solar panels surged in China Infineon shares rise as much as 2.4% after Barclays starts coverage of European semiconductor stocks with a preference for Infineon and STMicro, rating both overweight Alten shares rise as much as 4.5% after Kepler Cheuvreux raised its recommendation for the French engineering company to buy from hold, citing its ability to deliver strong growth Lindt shares rise as much as 1.1% after the Swiss chocolate maker delivered estimate-beating organic sales growth, Vontobel says, with FY23 guidance in line with mid-term targets Wise shares fall as much as 7.1% after the UK money-transfer firm’s volume growth slowed, coming in below analyst expectations in the fiscal third quarter Ocado Group shares decline as much as 11% after the online grocer reported 4Q retail sales that missed analyst estimates. Morgan Stanley said period performance was “disappointing” Philips falls as much as 5.6% after UBS cut the Dutch medical technology group to sell, describing a recent month-long rally as “unjustified,” and flagging downside risks to earnings Hugo Boss drops as much as 2.7% as Deustche Bank said a “mild” beat of 4Q consensus estimates failed to impress investors Asian stocks were mixed as investors assessed data on China’s economic growth and braced for the Bank of Japan’s key policy decision due Wednesday. The MSCI Asia Pacific Index was little changed as of 4:30p.m. Hong Kong time, as losses in financial shares offset an advance in consumer discretionary stocks. Hong Kong’s Hang Seng Index fell 0.8%, ending a four-day rally. Alibaba gained 1% after news that billionaire-investor Ryan Cohen has acquired a stake worth hundreds of millions of dollars in the second half of last year. China’s CSI 300 Index ended flat after a report showed the nation’s gross domestic product grew 3% in 2022, higher than economists expected. The market took a breather after three days of gains fueled by optimism over reopening and eased tech regulations.  “I believe that the market will welcome such numbers,” said Hao Hong, chief economist at Grow Investment Group, in a Bloomberg TV interview. Still, “if the property sector takes more time to recover, it will affect consumption as well. So this year is actually going to be more challenging than last year.”  Investors in Asia will also monitor speeches by several Federal Reserve officials this week, as well as comments by central bankers during the World Economic Forum’s annual meeting in Davos, Switzerland. Japanese stocks rose, ending a two-day loss, as investors adjusted positions before the Bank of Japan’s policy decision tomorrow. Although almost all economists polled by Bloomberg expect no change at the BOJ on Wednesday, some investors are bracing for more action as the central bank struggles to keep bond yields below its target.  The Topix Index rose 0.9% to 1,902.89 as of the market close in Tokyo, while the Nikkei 225 advanced 1.2% to 26,138.68. Toyota Motor contributed the most to the Topix’s gain, increasing 2.5%. Out of 2,161 stocks in the index, 1,570 rose and 474 fell, while 117 were unchanged Australian stocks dipped: the S&P/ASX 200 index closed slightly lower at 7,386.30, snapping four days of gains, as losses in mining and technology stocks weighed on the gauge.  Most markets across Asia fell as traders digested data that showed China’s economy growing at the second slowest pace since the 1970s.  In New Zealand, the S&P/NZX 50 index rose 0.6% to 11,881.00 India’s benchmark stock gauge posted its biggest advance in more than a week as Reliance Industries led gains among energy firms amid improving outlook for the sector. The S&P BSE Sensex rose 0.9% to 60,655.72 in Mumbai, its largest single-day jump since Jan. 9. The NSE Nifty 50 Index rallied by a similar measure. All but three of the 20 sector sub-gauges compiled by BSE Ltd. gained, led by capital goods makers. Reliance Industries gained 1.4%, after five-straight declines, to push the oil-and-gas sector gauge to an all-time high after the government lowered windfall tax on locally-produced crude and export of diesel.  Outlook for oil and gas companies has been improving as moderating crude prices allow state-run refiners to lower marketing losses while Reliance Industries benefits from higher margins.  The Bloomberg Dollar Index inched up 0.1% as the greenback traded higher against most of its Group-of-10 peers. Scandinavian currencies were the worst performers while the Swiss franc led G-10 gains. The pound gained and gilts slumped in the wake of UK labor data that showed wages rose at a near-record pace for the three months through November. Yields rose 5-7bps across the curve and traders also bolstered bets on the BOE’s peak rate The euro inched lower, but held above $1.08. Bunds eased across the curve and Italian bonds underperformed. Germany January ZEW investor expectations rose to 16.9 versus estimate -15.0 Japan’s benchmark yield briefly rose above the central bank’s ceiling for a third day as the Bank of Japan starts a two-day policy meeting. The yen fell for a second day. Most economists expect the BOJ to stand pat although market watchers don’t rule out an adjustment including another widening of the yield band to 0.75 or higher, or a scrapping of the yield curve control The Australian and New Zealand dollars reversed an Asia session gain amid broad-based dollar strengthening. Australia’s consumer confidence jumped 5%, the largest monthly gain since April 2021, aided by a temporary respite from interest-rate increase as the Reserve Bank’s board doesn’t meet this month In rates, the Treasury curve extended bear-steepening move after 30-year yields gap higher from the reopen after Monday’s US holiday. Treasury yields were cheaper by up to 7bp across long-end of the curve with 10-year note futures trading toward bottom of Monday’s range; 10-year yields around 3.56% and cheaper by ~5bp vs Friday’s close. Gilts weaker over London session after UK wages rise faster than forecast while European supply pressures also weigh on core rates.  Long-end-led losses in US curve steepen 2s10s, 5s30s cash spreads by 5bp and 4bp vs Friday’s close. UK and German government bonds fall with 10-year borrowing costs rising 6bps and 2bps respectively. In commodities, rose to session highs after earlier dropping  WTI rose 0.65% to trade above $80. Spot gold falls roughly $10 to trade near 1,906/oz. Bitcoin is essentially unchanged on the session and resides in particularly narrow sub-USD 400 parameters after last week's marked upside. To the day ahead now, and data releases include UK unemployment for November, the German ZEW survey for January, Canadian CPI for December, and the US Empire State manufacturing survey for January. Central bank speakers include the ECB’s Centeno and the Fed’s Williams. Finally, earnings releases include Goldman Sachs, Morgan Stanley and United Airlines. Market Snapshot S&P 500 futures down 0.3% to 4,007.75 MXAP little changed at 165.62 MXAPJ down 0.4% to 544.25 Nikkei up 1.2% to 26,138.68 Topix up 0.9% to 1,902.89 Hang Seng Index down 0.8% to 21,577.64 Shanghai Composite down 0.1% to 3,224.25 Sensex up 0.9% to 60,629.94 Australia S&P/ASX 200 little changed at 7,386.29 Kospi down 0.9% to 2,379.39 STOXX Europe 600 down 0.1% to 454.10 German 10Y yield little changed at 2.19% Euro little changed at $1.0822 Brent Futures up 0.4% to $84.78/bbl Gold spot down 0.4% to $1,908.36 U.S. Dollar Index up 0.17% to 102.38 Top Overnight News from Bloomberg ECB Governing Council member Mario Centeno said the euro-area economy is performing better than many anticipated in the face of record inflation and the energy crisis that erupted after Russia attacked Ukraine ECB Chief Economist Philip Lane said interest rates will have to move into “restrictive territory” to bring inflation back to target Investors are looking to bet against Italy’s peer-beating bond rally, saying the gains have gone too far. They argue the ECB is expected to keep hiking interest rates and is unlikely to stand in the way of a selloff given how narrow the spread over German bunds remains Investors are the most underweight on US equities since 2005 as improving market sentiment sends them flocking toward cheaper regions, according to Bank of America’s global fund manager survey Some 467,000 working days in the UK were lost to strikes in November, a 10-year high, after a wave of walkouts caused by the most severe cost-of-living crisis in a generation. Days lost over a six-month period reached the highest level since 1989-90 The BOJ’s policy decision due Wednesday is shaping up to be the biggest risk for the dollar-yen pair since the global financial crisis. The currency pair’s overnight implied volatility jumped as high as 54.4 vol, the highest since November 2008, as traders positioned for another policy tweak following a surprise move in December An arbitrage trade that rattled Japan’s bond market last year looks to be back. The spread between the prices on Japanese 10-year debt and similar-maturity futures has swelled in recent weeks, providing room for so-called basis trades that try to take advantage of the difference This year is pivotal for the Japanese economy to move away from decades of deflationary thinking toward sustained real wage growth, according to the head of the country’s largest labor union While China’s GDP grew 3% last year, the second-slowest pace since the 1970s, fourth- quarter and December data came in better than economists had expected China’s population started shrinking in 2022 for the first time in six decades, the latest milestone in a worsening demographic crisis for the world’s second-largest economy A more detailed look at global markets courtesy of Newsquawk APAC stocks traded mixed in which most bourses lacked firm direction in the absence of a lead from the US due to MLK Jr. Day and despite the better-than-expected Chinese economic growth and activity data. ASX 200 was subdued with the index contained after it hit resistance at the 7,400 level, while an improvement in Westpac Consumer Confidence and an increase in Rio Tinto’s quarterly output did little to inspire trade. Nikkei 225 outperformed with strength in the auto sector driving the advances and as the BoJ kicked off its 2-day policy meeting with markets second-guessing what the central bank will decide regarding its ultra-easy policy. Hang Seng and Shanghai Comp were lacklustre despite encouraging data in which Chinese GDP, Industrial Production and Retail Sales figures all topped estimates. Nonetheless, the 3.0% growth for 2022 was much lower than the ‘abandoned’ target of around 5.5% and President Xi’s hint of at least 4.4% growth, while China also noted its population shrunk for the first time since 1961 and the death rate was the highest since 1974. Top Asian News PBoC injected CNY 205bln via 7-day reverse repos with the rate kept at 2.00% and injected CNY 301bln via 14-day reverse repos with the rate kept at 2.15% for a CNY 504bln net injection. China's Customs said GDP grew 3.0% Y/Y in 2022 and that China was able to stabilise the economy, but added that the foundation for economic recovery is not solid yet, according to Reuters. China's stats bureau stated China's population in 2022 shrunk for the first time since 1961 and the death rate was the highest since 1974, although the stats bureau chief later noted they should not worry about China's population decline and overall labour supply still exceeds demand. The stats bureau chief also said that benign inflation in China will create room for macro policies and that the property sector's drag on economic growth this year will not be larger than in 2022, according to Reuters. European equities trade marginally lower following a mixed APAC lead, Euro Stoxx 50 -0.3%. Sectors in Europe are now mostly lower with no overall bias, but with Chemicals and Industrials outperforming and Autos and Energy towards the bottom. US equity futures are softer but off worse levels with the ES holding above 4,000 throughout the Tuesday session. Top European News ECB's Centeno says Q4 growth within Europe is likely to be positive. European Economy Commissioner Gentiloni says we have to strengthen competitiveness by streamlining state aid rules, have a good EU-US partnership; need to support competitiveness, not begin a subsidy war with the US. European Commission President von der Leyen says to avoid fragmenting the EU's single market and to support clean tech across the EU, EU has to step up finding; For medium term will prepare a European sovereignty fund but it will take time. Germany's BDI President says mild recessionary tendencies will predominate at the start of the year, sees upward trend; Economy expected to shrink by 0.3% in 2023; sees real 1% increase in export of goods and services this year (vs 1.5% global trade). FX A choppy Tuesday session thus far for the Dollar as the index matched yesterday’s 102.56 peak in APAC hours before waning towards the unchanged mark ahead of the European cash open. CNH is softer intraday despite supportive Chinese data overnight, which saw Q4 GDP, IP and Retail Sales top expectations across the board. USD/JPY is choppy in a 128.23-129.13 parameter, but within recent ranges, whilst the technical “death cross” is more evident as the 50 DMA (135.60) falls further below the 200 DMA (136.67). Mixed trade seen across both the EUR and GBP with the latter leading the way following the UK jobs data following strong wages metrics which subsequently lifted BoE market pricing for a 50bps hike (at the time) to around 72% from 63% pre-release. PBoC set USD/CNY mid-point at 6.7222 vs exp. 6.7234 (prev. 6.7135) Fixed Income Core benchmarks are downbeat after UK and German data, with USTs in tandem directionally but with magnitudes more contained ahead of Fed's Williams. Bunds and, post-open, Gilts printed session lows of 137.66 and 103.37 respectively post-UK jobs data, with the benchmarks nearing but not retesting these points after a particularly strong ZEW release. Following the UK jobs data, we have seen an uptick in BoE pricing for 50bp in February to a 75% probability from circa. 63% pre-release. Commodities WTI and Brent front-month futures diverge intraday on account of the US MLK holiday on Monday which resulted in no WTI settlement. WTI Feb holds onto a USD 79/bbl status whilst Brent trades on either side of USD 85/bbl in what has been a choppy session. Spot gold has been drifting lower as the Dollar remains firm, with the yellow metal trundling lower from highs of USD 1,919/oz down to around USD 1,905/oz. Base metals are softer across the board (but to varying degrees) despite the supportive Chinese data overnight as a firmer Dollar exerts pressure on the complex. China's state planner, NDRC is to lower retail prices of gasoline an diesel by CNY 205/tonne and CNY 195/tonne respectively as of January 18th. Radio Free Europe's Jozwiak writes "Review underway on the Russian oil price cap. Currently at USD 60 but I understand there is a good chance that it might be lowered a bit in upcoming weeks". OPEC Secretary General is very bullish on China, and cautiously optimistic on the global economy; Chinese demand will grow by 500k barrels this year; waiting to see what happens after China's New Year holiday (Jan 21st-29th). Geopolitics Russian Defence Ministry discussed increasing the number of military personnel to 1.5mln (vs ~1.3mln in 2022), according to Tass; says major changes in Russian army will take place from 2023-26. Ukrainian President Zelensky said the attack in Dnipro underscores the need for new and faster decisions on weapons supplies, while he added they expect key decisions from partners on arms supplies at the Ramstein meeting. Russian-installed Donetsk authorities confirm that Russia has control of Soledar, via Tass. Russia deployed an SU-27 fighter plane to escort a German naval aircraft over the Baltic, according to Interfax. Russian Kremlin when asked about a potential meeting between the CIA's Burns and Russia spy chief says "this kind of dialogue is beneficial". UK is reviewing whether to designate Iran’s Revolutionary Guards as a terrorist organisation, according to FT. China's Foreign Ministry spokesperson says they are discussing the details of a visit from US Secretary of State Blinken. Iran's IRGC have conducted "major drills" in the Persian Gulf, according to Tasnim; details light. US Event Calendar 08:30: Jan. Empire Manufacturing, est. -8.6, prior -11.2 Central Bank Speakers 15:00: Fed’s Williams Gives Welcoming Remarks DB's Jim Reid concludes the overnight wrap I hope you are all looking forward to the rest of the year now after Blue Monday was navigated yesterday, which flew hot on the heels of Friday 13th at the end of last week. To be fair markets of late haven't been either depressing or scary. However we took pause for breath yesterday, given the US holiday, with nothing much happening. The main news has instead been overnight, where we’ve just had the release of the Chinese GDP figures for Q4 that covers the December surge in Covid cases. The data was better than expected but still showed the scars from Covid. Q4 GDP (+2.9%) beat expectations (+1.6%) with the FY at +3% (+2.7% expected and +8.1% in 2021) - the second lowest year since China re-emerged from the economic wilderness in the 1970s. Momentum was much stronger than expected in December though. Retail sales dropped -1.8% y/y in December, much better than -9.0% fall expected by analysts and compared to a -5.9% decline in the prior month. Meanwhile, industrial production grew +1.3% y/y, well above the +0.1% predicted by Bloomberg. At the same time, fixed asset investment for 2022 rose by +5.1%, slightly above the +5% expected by Bloomberg. Asian markets are lower though led by the Hang Seng (-1.25%) followed by the KOSPI (-0.77%), the Shanghai Composite (-0.27%) and the CSI (-0.16%). Elsewhere, the Nikkei (+1.28%) is bucking the trend this morning, recouping some of the losses from the previous two sessions. In overnight trading, stock futures in the US are indicating a negative opening with contracts on the S&P 500 (-0.32%) and NASDAQ 100 (-0.54%) trading in the red. Meanwhile, yields on 10yr USTs (+2.95 bps) have edged higher to 3.53% after the holiday. Looking back at yesterday now, it was an incredibly uneventful session for the most part, even adjusting for the impact of the US holiday. For instance, if you look at US futures markets (since spot markets were closed), S&P 500 futures had barely budged by the time Europe went home, with a modest decline of -0.10%. It was a similar story for bonds, where futures also saw little change, perhaps in part since expectations of the Fed’s terminal rate for June moved up by just +0.002bps on the day. That said, despite the lack of excitement, the VIX index of volatility ticked up from its one-year low on Friday, moving up +1.14pts to 19.49pts. Back in Europe there wasn’t much happening either, but one trend to note was the continued decline in natural gas futures yesterday, which fell back to a 16-month low of €55.45 per megawatt-hour. Although these prices are still well above their historic norms, they’ve now come down by more than half in the last month, so this is a big and positive shock if it ends up being sustained. In turn, that led to a fresh decline in inflation expectations, and the 10yr German breakeven came down a further -2.9bps to a 3-month low of 2.05%. That greater optimism on the inflation side wasn’t enough to prevent a modest decline in sovereign bonds yesterday, with yields on 10yr bunds (+0.6bps), OATs (+0.6bps) and BTPs (+0.6bps) all seeing a small increase. Gilts were an underperformer, with 10yr yields up +1.8bps rise on the day as UK assets more broadly saw a slight underperformance. That came as BoE Governor Bailey testified before the Treasury Committee of MPs, where he warned that there was a risk that inflation wouldn’t drop as fast as expected. Overall however, there was nothing revelatory on how they’re thinking about the next decision on February 2. With the positive gas news boosting sentiment more broadly, European equities advanced for the most part. The STOXX 600 rose +0.46%, taking the index up to its highest level since April, with other advances for the FTSE 100 (+0.20%), the DAX (+0.31%) and the CAC 40 (+0.28%). That continues the very positive start to the year for European equities, and means that the YTD returns now stand at +7.00% for the STOXX 600 and +8.69% for the DAX. Finally, the World Economic Forum’s annual meeting at Davos opened last night, which will continue for the rest of the week. Numerous political and business leaders are gathering there, and today’s speakers include European Commission President Ursula Von der Leyen, Chinese Vice Premier Liu He, Spanish PM Pedro Sánchez and German finance minister Christian Lindner. Separately, it’s not actually a Davos meeting, but we heard yesterday that US Treasury Secretary Yellen and Chinese Vice Premier Liu He would be meeting in Zurich. To the day ahead now, and data releases include UK unemployment for November, the German ZEW survey for January, Canadian CPI for December, and the US Empire State manufacturing survey for January. Central bank speakers include the ECB’s Centeno and the Fed’s Williams. Finally, earnings releases include Goldman Sachs, Morgan Stanley and United Airlines. Tyler Durden Tue, 01/17/2023 - 07:36.....»»

Category: blogSource: zerohedgeJan 17th, 2023

Teslas are finally getting cheaper. It"s a sign Elon Musk"s back is against the wall.

The EV maker is cutting prices on some of its top models as it faces down challenges with demand and competition against a backdrop of rising rates. Elon Musk in front of a TeslaGetty Tesla cutting prices by up to 20% on its models in a sign of trouble for Elon Musk. The EV maker wants to spur demand as rising interest rates pose challenges. It also faces bigger and better competition and falling demand. If you're in the market for a brand new Tesla, now might be the moment to splash out: Elon Musk just made it a whole lot cheaper to join the electric vehicle club.The EV firm has cut prices on some of its top models – including the Model Y SUV and Model 3 – by up to 20% across the US and Europe, per changes made to prices of vehicle listings on its site on Thursday. Though the cars remain relatively expensive, it's a big drop on premium pricing. And it's a sign that Tesla is in defense mode after months of gradual price rises to its vehicles.Price drops come on the heels of the company missing market estimates for deliveries last year amid an economic downturn that has wiped its market capitalization from a $1 trillion high to less than $400 billion. And though Musk has previously talked about making Teslas more affordable, it's more likely that his hand has been forced by circumstance.—Anas Alhajji (@anasalhajji) January 8, 2023 Interest rate woesSince taking over at Twitter, Musk has increasingly used the platform to make clear that he is unhappy with the way the Fed has been pursuing aggressive interest rate hikes to bring inflation back down to its target of 2%. In November, the billionaire tweeted that the "Fed needs to cut interest rates immediately" over concerns that "they are massively maplifting the probability of a severe recession."Rising interest rates have taken a toll on Tesla. Investors soured on its stock for the same reasons tech stocks are down more generally — speculative companies betting on the future are less appetizing to investors right now than safe-haven value stocks like commodities.That's triggered rethink about whether or not Tesla should be priced as a normal car company or a tech company, with the latter traditionally enjoying significant markups on the promise of an industry-shaking innovation. Rate rises are forcing investor clarity on this.Interest rate hikes have also increased the costs of financing the purchase of a Tesla, making it harder for consumers already battered by inflation to make the switch. In response to a Twitter thread about consumers who took out loans before the interest rate rises took effect — and now face steeper repayments — Musk tweeted that it could potentially trigger "the biggest financial crisis ever."Demand is a bigger problem than the Fed In a research note, Dan Ives, senior equity research analyst at Wedbush Securities, said "it's no secret that demand for Tesla is starting to see some cracks" as a global slowdown of the economy that started in 2022 continues into 2023. And a "softening demand for the global EV market" is a bigger driver of price cuts than interest rate hikes, Simon Moores, CEO of Benchmark Mineral Intelligence, a price reporting agency for the EV supply chain, told Insider.Moores added that when it comes to demand, "backlog orders have come down significantly for Tesla," making price cuts is "a good way to increase the immediate- and medium-term sales pipeline". The EV battle gears upFinally, Tesla is no longer the only name in the EV game. After years of being the only real player in the industry, traditional automakers have started to catch up, bringing rival offerings to consumers looking to switch from gas.Teslas made up 65.4% of new EV registrations in the US from January to September in 2022, according to figures from an Experian report on the automotive industry published in December – down from 68.2% in 2021 and 79.4% in 2020. Tesla remains EV leader, but Ford and Kia have increased their share of the market.ExperianThat trend is only set to continue, which means Tesla needs to take competition and affordability seriously. Chris Beauchamp, chief market analyst at IG, notes the price cuts replicate similar moves Tesla has made in China, where cuts earlier this month led to protests. Price cuts will of course be welcomed by consumers. The Model Y's cheaper price in the US makes it eligible for the Inflation Reduction Act incentive – a tax credit offering from the US government aimed at making EVs more affordable for potential buyers, added Moores.Though the cuts hurt Tesla's share price in the short term, it's a move the firm can currently afford to make: a rapid global expansion to plant Gigafactories in places such as Berlin and Shanghai has given it more scope to be flexible. Wedbush's Ives estimates that "all together these price cuts could spur demand" by 12-15% globally in 2023. It shows that Tesla is ready to go on the offensive."This is a clear shot across the bow at European automakers and US stalwarts (GM and Ford) that Tesla is not going to play nice in the sandbox with an EV price war now underway," he said.Read the original article on Business Insider.....»»

Category: smallbizSource: nytJan 16th, 2023

Tesla drops as the EV maker cuts prices in the US and Europe, deepening the stock"s rout

Investors are driving down Tesla's stock after news of the latest price cuts, but the reductions may end up being the right move, Wedbush said. Tesla CEO Elon Musk.Getty Tesla shares fell Friday after the company cut prices on its electric vehicles in the US and in Europe.  Tesla stock finished 2022 among the S&P 500's 10 biggest decliners.  Investors may later come to see Tesla's price cuts as the 'right' move directed by CEO Elon Musk, said Wedbush Securities.  Tesla shares were knocked lower Friday after price cuts on its electric vehicles emerged from the company, keeping pressure on the stock that was among the worst-hit during 2022's equity rout. Price reductions ranged between 6% to 20% in the US for its Model 3 sedan, its Model Y SUV and various performance models, according to its website listings. Tesla also reduced prices in European markets including Germany and France. The stock fell 6.3% to $115.83 in premarket trade with more than 7 million shares exchanging hands, paring the loss to about 5% as regular trading got underway. The stock slid 64% in 2022, landing within the S&P 500's top 10 largest percentage decliners. Tesla's moves in the US and in Europe follow recent price cuts in China and other markets in Asia aimed at bolstering sales. "It's no secret that demand for Tesla is starting to see some cracks in this global slowdown for 2023," Wedbush analyst Dan Ives said in a note to clients Friday. "While the initial reaction to these cuts will naturally be negative on the Street at first, we believe this was the right strategic poker move by Musk & Co. at the right time," he said, referring to Tesla CEO Elon Musk.Tesla in 2022 delivered a record 1.3 million EVs but fourth-quarter deliveries fell short of market expectations. Investors and analysts including Ives at Wedbush have voiced concern that Musk has been too focused on his $44 billion acquisition of Twitter at Tesla's expense. Musk himself has pushed back on that view, blaming the Federal Reserve's aggressive interest rate hikes for sinking Tesla's valuation. Tesla's market cap dropped by more than $690 billion in 2022.Read the original article on Business Insider.....»»

Category: personnelSource: nytJan 13th, 2023

Futures At Session High, Just Shy Of 4,000, Ahead Of CPI

Futures At Session High, Just Shy Of 4,000, Ahead Of CPI US futures are trading near session highs after earlier fluctuating between gains and losses ahead of make-or-break inflation data which many expect will show price pressures continuing to ease. S&P 500 futures traded 0.1% higher as of 7:30am ET, just shy of 4,000, one day after the S&P 500 clocked this year’s first back-to-back gains on Tuesday and Wednesday. The gains stem from bets that cooling inflation ill give the Federal Reserve room to slow its pace of rate hikes, a take substantiated by Boston Fed chief Susan Collins, who said she was leaning toward a quarter-point move at the bank’s Feb. 1 meeting. Treasuries steadied after gains in Wednesday’s session, with the 10Y trading at 3.52%, while a gauge of dollar strength edged lower as investors looked beyond the drumbeat of hawkish comments from Federal Reserve officials. The yen rallied on a report that the Bank of Japan will look into the side effects of its ultra-loose monetary policy. Commodities are mostly higher with the dollar weaker. Yesterday, the Fed’s Collins supported a 25bps hike, inline with market expectations coming into CPI. US air traffic was disrupted by a FAA system outage but is back online; US reopening names continue to rally, once again in sympathy with China. Media is flagging the rallies in meme stocks, which may mean that the retail investor is coming back to the market after having sold a near record >$3bn last week. Today’s focus is on the CPI print and the balance of this note includes analysis of the print with views from around the firm, including monetization methods. “Markets are positioned for a CPI reading which will not disturb their march forward”, said Andrea Tueni, head of sales trading at Saxo Banque France. But “the last three publications generated a lot of volatility across markets so there’s a lot at stake,” he added. Among premarket movers, Tesla fell 2% after Bloomberg reported that an expansion of the company’s plant in Shanghai has been delayed, putting a roadblock in the way of its ambitions to increase its market share in China. Bed Bath & Beyond shares surged another 26%, extending Wednesday gains, after a rally in other so-called meme stocks. Here are other notable premarket movers: Spotify shares fall 2.2%, Roku (ROKU US) declines 3.1%, Unity Software (U US) down 2.8% after Jefferies downgraded them in a note on US media outlook, while upgrading Netflix and JAKKS. Netflix shares gain 1.6% after Jefferies raised the recommendation to buy from hold, citing upside surprises to 2024 operating margin. Tesla fell 1.2%, erasing earlier gains, after Bloomberg reported that an expansion of the US electric carmaker’s plant in Shanghai has been delayed. Bed Bath & Beyond shares surge 21% in US premarket trading, extending Wednesday gains after a rally in other so-called meme stocks. Marathon Digital shares advance 8.6%, leading cryptocurrency-exposed stocks higher as Bitcoin rallies to break back above the $18,000 level, extending gains for a ninth consecutive session — its longest streak since July 2020. Oramed’s US shares plunge 71% after the company’s experimental oral insulin failed in a late-stage clinical trial of Type 2 diabetes patients. Keep an eye on chemicals after KeyBanc Capital Markets said that it sees a favorable risk skew in the sector’s stocks for 2023, although with only modest upside. The broker downgrades DuPont de Nemours to sector weight. Citi says it continues to favor US exchange operators over brokers into 2023, in a note cutting Virtu Financial (VIRT US) to neutral. Every aspect of Thursday’s CPI report will be scrutinized, with extra attention on core inflation, which excludes food and energy and is seen as a better indicator than the headline measure. The projected 5.7% increase would be well above the Fed’s goal, helping explain its intention of keeping rates higher for longer. But the year-over-year price growth would also show moderation. “Core inflation remains well above target,” said Ronald Temple, chief market strategist at Lazard Ltd. “Having been late to act, the Fed is unlikely to pause the tightening cycle until inflation is definitively under control.” There was a note of caution in the morning note from JPM's Market Intelligence team, which warned that most of a CPI miss may already be priced in: The SPX is +4.2% since last Friday, leading to multiple conversations as to whether a cooler CPI print is priced in. That seems to be the view from my client conversations, with most thinking we see a spike on the print and then fade from there. Their rationale? The print will confirm the deflationary narrative, but it will not be low enough to materially reprice bonds lower. To clarify, this CPI print should not change Fed expectations for 25bps hikes in both February and March. Further, any subsequent Fedspeak is likely to be hawkish given that financial conditions are now looser than at Jackson Hole (is it possible that the Fed could keep 2023 meetings as “live meetings” after they pause?). While recognizing that inflation expectations are lower now, the Fed’s concern is likely to be that, given the relative strength of the US Consumer, that you could see inflation accelerate higher if lending conditions ease. Thinking about today’s session, I do think there is still the ability for the market to experience another rally despite the moves coming into the print. Longer-term, earnings are the next key catalyst and if Q4 GDP is stronger than expected, this should be reflected in earnings since EPS growth tends to be more correlated to nominal growth rather than real growth. European equity indexes rose with the Stoxx 600 up 0.7% and reaching highest since last April as traders bet US inflation will show further signs of cooling. The CAC and FTSE have gain 0.6% while the DAX adds 0.5%. Real estate, autos and travel are the strongest performing sectors. Here are the biggest European movers: Whitbread jumps as much as 4.9%, hitting the highest since February 2022, with analysts saying its “positive” trading update implied improvements in 2023 and 2024 performance Vodafone shares rise 3% after BofA upgraded to buy, saying easing energy costs and the telecom’s improving price traction should result in positive revision to earnings estimates Asos shares soar the most since October, after the struggling fast-fashion retailer said it was making headway in plans to turn around its performance Boozt gains as much as 11%, rebounding from the previous day’s 9.9% plunge, after the Swedish online retailer beat expectations in its 4Q report; a “positive relief,” DNB says Logitech shares drop as much as 19% in early trading, the most since April 2011, after its second guidance cut in three quarters. The moves pull peers, including GN Store Nord and Demant, lower Ubisoft shares tumble as much as 22% after forecasting an operating loss, delaying the Skull & Bones title for a sixth time, and saying recent game launches “have not performed as well as expected” Halfords drops as much as 24%, the most since June 2022, as Peel Hunt trimmed its rating to add from buy, noting labor shortages and cost pressures couuld squeeze profit Signify shares slumped as much as 6% after the company lowered its full-year guidance once again on Covid-19 disruptions in China Earlier in the session, Asian stocks advanced, as miners in Australia climbed on demand optimism ahead of highly-awaited US inflation data.  The MSCI Asia Pacific Index rose as much as 0.8% to the highest since August before paring. Japan’s MUFJ, AIA in Hong Kong and Australia’s BHP boosted the index the most while the Chinese tech rally took a pause.  The stock benchmark in Australia was a notable winner in the region, advancing 1.2% to the highest in five weeks, as miners rallied amid hopes China’s reopening will spur demand for metals. Equities in Japan posted moderate gains helped by financials after a report said the Bank of Japan is reviewing the side effects of its ultra-easy monetary policy. Benchmarks in Hong Kong and mainland China fluctuated between gains and losses as traders digested Chinese inflation data. Trading volume was 14% lighter than average ahead of key consumer price data from the US due later Thursday.  “Continued rerating triggered by improved sentiment is carrying markets higher,” said Lorraine Tan, director of equity research at Morningstar Asia. “Inflation pressure is easing and interest rates should be peaking within the next six months.”  While consensus view is that US prices have peaked, investors will scrutinize the upcoming inflation report for any indication of the Federal Reserve’s future rate hike path.  Asian equities have outperformed US peers so far 2023 amid reversals in the dollar strength and China’s Covid Zero policy. Easing concerns over China’s regulatory risks and property sector have also lured investors back to the region.  “A lot of things that have been bothering me were reversed,” Ajay Kapur, head of APAC and Global EM strategy at Bank of America Securities, told Bloomberg TV, referring to China’s policy turnaround in November. “I’m still quite constructive.” Elsewhere in Asia, the Indonesian benchmark rose, one day after entering a technical correction. Japanese stocks edged higher as investors assessed reports on the Bank of Japan’s plans and awaited US inflation data that may influence Federal Reserve policy. The Topix rose 0.4% to close at 1,908.18, while the Nikkei was little changed at 26,449.82. The yen gained 0.7% against the dollar after a Yomiuri report that the BOJ is considering further policy tweaks at its meeting next week. Mitsubishi UFJ Financial Group contributed the most to the Topix gain, increasing 5% after the Yomiuri report. Out of 2,162 stocks in the index, 786 rose and 1,257 fell, while 119 were unchanged. “US CPI is definitely one factor to watch, but the BOJ’s YCC change last December still has a lingering effect,” said Hiroshi Matsumoto, senior client portfolio manager at Pictet Asset Management. “It seems that stocks had been oversold on the policy change, and the market is still recovering from it.”  Australia stocks jumpe to a five week high, buoyed by miners. The S&P/ASX 200 index rose 1.2% to close at 7,280.40, its highest level since Dec. 6. The benchmark outperformed regional stock gauges, boosted by banks and miners. Materials shares have been climbing on bets that China’s reopening will fuel demand for metals. Read: China Reopening Sends Australian Mining Stocks Near Record High In New Zealand, the S&P/NZX 50 index rose 0.2% to 11,664.88. India’s benchmark stock index dropped for a third day ahead of key economic data including retail inflation. Bharti Airtel and Reliance Industries declined amid rising worries over the impact of 5G services on telecom companies’ pricing recovery. The S&P BSE Sensex fell 0.3% to 59,958.03 in Mumbai, while the NSE Nifty 50 Index declined 0.2%. For the week, the benchmark gauge is flat, helped by a sharp rally on Monday.  Small and mid-cap stock gauges also declined. BSE Ltd.’s 20 sector sub-gauges were mixed, with capital goods firms leading the advance while oil & gas companies were worst performers. Software exporter Infosys, which reported December quarter earnings after close of trading, posted higher-than-expected profit, while raising sales forecast.   Consumer price inflation probably rose 5.9% in December from a year ago, according to a Bloomberg survey, and little changed from the previous month. Data for industrial output in November will also be released after close of markets. In Fx, the Bloomberg Dollar Index is down 0.2% with the JPY a clear outperformer among the G-10’s. SEK is the weakest. The Bloomberg Dollar Spot Index extended losses in the European session as the yen rallied by as much as 1.2%, to 130.89 per dollar. The greenback traded mixed against the other Group-of-10 peers, with moves confined to narrow ranges. The yen’s rally followed after the Yomiuri newspaper said policy makers will consider adjusting their bond purchases and make further policy tweaks if they believe they are necessary, without giving any attribution. The cash 10-year yield remained pinned against the 0.50% ceiling while the 15- year yield added 8bps The euro inched up to a day high of 1.0775. Bunds climbed, led by the belly, and Italian bonds outperformed. Money markets added to ECB tightening wagers, paring some of Wednesday’s late declines after policymakers Rehn and De Cos warned of significant rate hikes The pound traded higher against the dollar. The Bank of England’s Catherine Mann is due to speak Thursday, with money markets easing wagers on the scope for further rate hikes In rates, the treasuries curve extends Wednesday’s flattening move with long-end outperforming ahead of 30-year auction, following a wider rally across core European rates led by gilts. US session events include December CPI report and several Fed speakers.  US long-end yields richer by about 3bp, flattening 2s10s, 5s30s spreads by 1.5bp and 2bp vs Wednesday’s close; the 10-year trades around 3.52%, trailing bunds by 2.5bp, gilts by 5.5bp in the sector. UK gilts outperform as deteriorating macro backdrop continues to take BOE rate-hike premium out of the UK swaps market. In US, December inflation data is expected to build a case for a downsized 25bp rate hike at the February policy meeting. The US auction cycle concludes with $18bn in 30-year reopening at 1pm; Wednesday’s 10- year auction stopped through by 0.5bp with strong participation metrics. WI 30-year yield at ~3.640% is ~13bp cheaper than December’s result reflecting curve-steepening in the interim. UK and German bonds are marginally higher having pared most of their earlier advance. In commodities, oil rose for a sixth day on hopes US inflation is cooling and as China’s crude buying ramps up before the Lunar New Year holidays. WTI was up 0.9% to trade above $78. Spot gold rises roughly $8 to trade near $1,884/oz. Base metals are mixed. In crypto, bitcoin rose above the $18k mark, with today's action bringing it back towards its 14th December best, which itself is just shy of USD 18.5k. Coinbase is reportedly considering exiting the Japanese market, via Nikkei. Looking the day ahead now, the main data highlight will be the US CPI release for December, whilst other data includes the weekly initial jobless claims. From central banks, we’ll hear from the Fed’s Harker, Bullard and Barkin, as well as the BoE’s Mann, and the ECB will be publishing their Economic Bulletin. Market Snapshot S&P 500 futures little changed at 3,990.25 MXAP up 0.7% to 163.37 MXAPJ up 0.3% to 537.24 Nikkei little changed at 26,449.82 Topix up 0.4% to 1,908.18 Hang Seng Index up 0.4% to 21,514.10 Shanghai Composite little changed at 3,163.45 Sensex down 0.2% to 59,967.65 Australia S&P/ASX 200 up 1.2% to 7,280.40 Kospi up 0.2% to 2,365.10 STOXX Europe 600 up 0.6% to 450.19 German 10Y yield little changed at 2.17% Euro little changed at $1.0766 Brent Futures up 0.4% to $82.99/bbl Brent Futures up 0.4% to $82.99/bbl Gold spot up 0.4% to $1,883.84 U.S. Dollar Index down 0.14% to 103.04 Top Overnight News from Bloomberg Overnight volatility remains high in the majors as traders await the release of the US CPI data. While dollar-topside bets lose traction across, it’s the shift in the pound’s volatility skew that gains attention while yen bullish exposure meets another catalyst The euro’s rally against the dollar has stalled over the past month at resistance around its May high. Bulls are hoping Thursday’s US inflation data will provide enough ammunition for it to breach that barrier and resume its progress toward $1.10 Consumers’ expectations for inflation over the next 12 months declined to 5% in November from 5.4% in October, the ECB said Thursday in a statement summarizing the results of its monthly survey Kazakhstan said local brokerages that snapped up Russian sovereign debt last year did so largely on behalf of clients who were Kazakh and Russian residents Britain’s markets watchdog has warned of potential “systemic defaults” among wholesale brokers in the City of London that may be unfit to weather sudden shocks and longer periods of stress HSBC Holdings Plc lost its bid to topple a reputation-bruising decision that it illegally rigged the Euribor benchmark, in a setback that removes part of the gloss from a procedural victory that overturned millions of euros in European Union fines China hasn’t updated its daily Covid reports for three days, adding to global concerns that the information vacuum is masking the true impact of the world’s biggest outbreak. A more detailed look at global markets courtesy of Newsquawk APAC stocks traded mixed as the major indices failed to fully sustain the early momentum from Wall St. ASX 200 was led higher by outperformance in the commodity-related industries and the top-weighted financial sector, while the latest trade data showed a wider trade surplus.  Nikkei 225 faded early gains after a report that the BoJ is to review the side effects of its monetary easing. Hang Seng and Shanghai Comp swung between gains and losses with the Hong Kong benchmark initially boosted by the reopening play which helped energy, auto and casino names. However, Chinese markets then failed to sustain the early moment amid losses in tech and as participants digested mixed inflation data from the mainland in which CPI matched estimates but factory gate prices fell by more than expected. Top Asian News PBoC injected CNY 65bln via 7-day reverse repos with the rate kept at 2.00% and CNY 52bln via 14-day reverse repos with the rate kept at 2.15% for a CNY 115bln net daily injection. US and Taiwan intend to focus on five areas this weekend during their first round of negotiations towards a trade agreement and indicated a readiness for subset deals as the sides make progress, according to WSJ. BoJ is to review the side effects of its massive monetary easing at its policy meeting next week due to skewed interest rates in markets despite last month's tweak in its bond yield control policy, according to Yomiuri. TSMC Offers Mixed Outlook, Lower Spending for Tough Year Ahead China’s Covid Zero Enforcement Army Faces Unpaid Wages, Job Loss Fosun Is Said to Weigh Sale of Belgian Diamond-Grading Firm IGI HSBC Loses Fight at EU Top Court Over Euribor Rigging Charge European bourses are firmer across the board, Euro Stoxx 50 +0.5%, though price action has been fairly contained in slim pre-CPI newsflow. US futures are essentially unchanged, ES -0.1%, ahead of December's CPI and Fed speak before and after the key data. TSMC (2330 TT) Q4 (TWD) net 295.9bln (exp. 289.4bln), rev. 625.5bln (prelim. 625.5bln), says smartphone and PC demand dropped more severely than expected. Guides Q1 (TWD) rev. 16.7bln-17.5bln (exp. 16.4bln) and sees H1 revenue down mid-to-high single digit percentage. Tesla's (TSLA) expansion of its Shanghai plant has been delayed, according to Bloomberg sources; cites concerns in Chinese government over CEO Musk's Starlink having such a large presence in China. Top European News ECB Consumer Expectations Survey: Inflation is seen at 5% (vs. prev. view of 5.4%) over the next 12 months; 3 year inflation is seen at 2.9% vs. prev. view of 3.0%. UK and EU are preparing to enter an intense phase of negotiations from next week, via Bloomberg citing sources; aim of this is to move into the negotiating "tunnel", ahead of the April N. Ireland agreement anniversary. A Third of Dublin’s Office Supply Dormant After Cuts Arbonia Falls After Margin Warning; Modest Downgrade Needed: ZKB Apollo-Backed Gaming Firm Lottomatica Weighs $1 Billion IPO RBC Sees Tough Year For Business Services, Cuts Three Stocks   FX Yomiuri Yen revival keeps Greenback grounded awaiting US CPI data. USD/JPY probes 131.00 vs almost 133.00 on Wednesday and DXY tethered to pivotal 103.000 level. Pound perks up on 1.2100 handle as Dollar drifts, Euro consolidates around 1.0750 axis and Aussie pivots 0.6900 with support from a wider than forecast trade surplus. PBoC set USD/CNY mid-point at 6.7680 vs exp. 6.7698 (prev. 6.7756) S. African Finance Minister says they want to resolve the Eskom issue ASAP, part of this is sorting the balance sheet. Appropriate announcement will be made on February 22nd. Fixed Income Bonds wane after an early bull run to and through new big figure levels for Bunds and Gilts at 138.45 and 104.14 respectively. US Treasuries more reserved ahead of inflation report as T-note holds just under w-t-d peak and resistance within a 114-11/22 range. Commodities Upside for the crude space has occurred this morning seemingly without a fresh specific catalyst or driver, with the space perhaps taking advantage of a pre-CPI softening in the USD and the somewhat constructive European risk tone. Lifting WTI Feb’23 to a new WTD peak of USD 78.29/bbl, though this is someway shy of last week’s USD 81.50/bbl best. China's customs officials in the Guangdong province reportedly received notice from the local gov't that they can clear Australian coal shipments, via WSJ citing sources. Morgan Stanley expects Brent prices to remain range-bound for remainder of Q1, around current USD 80-85/bbl range. Spot gold is similarly taking advantage of the USD’s pullback but remains slightly shy of yesterday’s USD 1886/oz best thus far, while base metals are softer across the board. Magnitude 6.4 earthquake strikes Coquimbo, Chile, according to EMSC. Geopolitics US Defence Secretary Austin said China's military is engaging in provocative behaviour around Taiwan to try to establish a new normal, but added that he seriously doubts Chinese provocations are a prelude to an imminent invasion of Taiwan, according to Reuters. Taiwan's Defence Ministry said five Chinese air force planes crossed the Taiwan Strait median line in the past 24 hours, according to Reuters. US Event Calendar 08:30: Dec. CPI MoM, est. -0.1%, prior 0.1% CPI YoY, est. 6.5%, prior 7.1% CPI Ex Food and Energy MoM, est. 0.3%, prior 0.2% CPI Ex Food and Energy YoY, est. 5.7%, prior 6.0% Real Avg Hourly Earning YoY, prior -1.9%, revised -2.1% Real Avg Weekly Earnings YoY, prior -3.0%, revised -3.3% 08:30: Jan. Initial Jobless Claims, est. 215,000, prior 204,000 Continuing Claims, est. 1.71m, prior 1.69m 14:00: Dec. Monthly Budget Statement, est. -$65b, prior -$21.3b Central Bank Speakers 08:45: Fed’s Harker Discusses the Economic Outlook 11:30: Fed’s Bullard Discusses the US Economy and Monetary Policy 12:40: Fed’s Barkin Speaks in Richmond DB's Jim Reid concludes the overnight wrap Morning from Copenhagen on a big day for global markets. Both the worst and best days for the S&P 500 in 2022 came on days of a CPI release. As such, it's inevitable that today’s US CPI has the ability to shape the next month. Indeed, after a long run of inflation surprising on the upside, the latest releases have seen two downside surprises on CPI in a row for the first time since the pandemic, which has led to growing hopes that the Fed might achieve a soft landing after all. Furthermore, core inflation has also been increasingly subdued, with the most recent number for November showing monthly core inflation at a 15-month low. Those readings helped to bolster the case for the Fed to downshift their rate hikes last month, and if we did get a third downside surprise today, clearly that would add further fuel on market speculation about a Fed pivot later in the year. In terms of what to expect today, our US economists think that falling gas prices over December will take headline CPI into negative territory at just -0.15% on the month (vs. -0.1% consensus). They also expect core CPI to remain subdued at +0.22% on a monthly basis (vs. +0.3% consensus), which would be only slightly above the 15-month low of +0.20% in November. If those forecasts are right, then that would take year-on-year growth in CPI down to +6.3% (vs. +6.5% consensus), its lowest in over a year, whilst core CPI would be down to +5.6% (vs. +5.7% consensus). As ever, the individual components will be in focus, particularly the stickier ones that change less frequently. Ahead of that release, growing optimism about the inflation outlook led to a major rally in sovereign bonds yesterday, particularly in Europe. For instance, yields on 10yr OATs (-14.1bps), BTPs (-18.7bps) and gilts (-14.8bps) all plummeted, and although there was a contract roll on the 10yr bund, the generic series on Bloomberg was also down -10.4bps. In part that was driven by a fresh decline in natural gas prices, which were down -5.56% yesterday to €65.45/MWh, just above their one-year closing low last week. That rally got further support later in the session by a Bloomberg report which said that German Chancellor Scholz was supportive of a new joint EU financing instrument to help the EU compete against US green subsidies. That helped spreads tighten in particular, with the gap between Italian and German 10yr yields now down to 183bps, which is down by a significant -28.9bps since the start of the year. And the optimism was also clear from other European assets, with the Euro closing at its highest level since May at $1.076, just as the iTraxx Crossover index tightened -10.0bps to levels last seen in April. In the US, Treasuries rallied as investors looked forward to the CPI release, with 10yr yields down -7.9bps to 3.539% and are down another -1.5bps in Asia at 3.524%. However, the moves have been much more subdued at the front end, with the 2yr yield only down -2.9bps (unch overnight), and there was little sign from Fed funds futures that investors were adjusting their policy outlook either. Indeed, the terminal rate priced in for June was little changed ahead of the CPI today, up just +0.4bps to 4.947%. The lack of movement was despite Boston Fed President Collins saying that she was leaning toward downshifting to a 25bps hike in the February meeting. For equities, this benign economic backdrop led to further advances, with the S&P 500 up another +1.28%. 22 of 24 industry groups finished up on the day with 80% of overall constituents gaining yesterday. Tech stocks outperformed in that, with the NASDAQ (+1.76%) advancing for a 4th consecutive session for the first time since September. As an example of the swing back, Tesla (+3.68% yesterday) is now up +13.99% from the recent lows on January 3rd. Back in Europe, there were similar gains, with the STOXX 600 (+0.38%), the DAX (+1.17%) and the CAC 40 (+0.80%) all seeing robust advances, which brought the YTD performance for the DAX up to +7.36%. Asian equity markets have failed to extend the overnight gains on Wall Street though with the Hang Seng (-0.33%), the Shanghai Composite (-0.23%) and the CSI (-0.08%) surrendering their opening gains whilst the Nikkei (+0.10%) and the KOSPI (+0.34%) are just in positive territory. Outside of Asia, US stock futures are fluctuating between gains and losses with contracts on the S&P 500 (+0.04%) just above flat while those on the NASDAQ 100 (-0.05%) trading fractionally lower ahead of the key inflation report. Data overnight from China showed that inflation accelerated to +1.8% y/y in December, in line with market expectations, driven by rising food prices despite economic activity remaining soft due to Covid. It followed the prior month’s reading of +1.6%. However, factory gate prices (producer prices) dropped -0.7% y/y in December (v/s -0.1% expected), but up from a fall of -1.3% in November. Elsewhere, Australia’s trade surplus unexpectedly grew in November to A$13.20 billion (v/s +A$11.30 billion expected), compared with last month’s revised reading of A$12.74 billion. The figure was at its highest level since a record high hit in June. In the FX market, the Japanese yen (+0.77%) is strengthening against the dollar this morning, trading at $131.43 following the news that the Bank of Japan (BOJ) will review the side-effects of its ultra-loose policy at next week’s policy meeting. Elsewhere, several commodities have put in a pretty decent performance over the last 24 hours. For instance, Brent crude oil prices were back up by +3.21% to $82.67/bbl, having risen every day so far this week. They are up another +0.17% in Asia. Separately, copper prices were up +2.17% last night to their highest level since June, having been supported by growing optimism about Chinese demand given the reopening. Lastly, there wasn’t much data of note yesterday, although Italian retail sales for November unexpectedly grew by +0.8% (vs. -0.3% expected). To the day ahead now, and the main data highlight will be the US CPI release for December, whilst other data includes the weekly initial jobless claims. From central banks, we’ll hear from the Fed’s Harker, Bullard and Barkin, as well as the BoE’s Mann, and the ECB will be publishing their Economic Bulletin. Tyler Durden Thu, 01/12/2023 - 07:57.....»»

Category: personnelSource: nytJan 12th, 2023

Futures Rise Ahead Of Inflation Data As China Reopening Lifts Sentiment Again

Futures Rise Ahead Of Inflation Data As China Reopening Lifts Sentiment Again US equity futures were set to rise for a second day as upbeat sentiment ahead of tomorrow's key CPI print - which JPM gives 85% odds of pushing stocks at least 1.5% higher - lifted global markets despite a freak outage of key FAA advisory system this morning led to a nationwide ground halt for all domestic flights (until at least 9am) pre. Contracts on the S&P 500 and Nasdaq 100 ticked up 0.1% as of 7:15am ET while Europe’s Stoxx 600 Index rose 0.8%. The FTSE 100 climbed within striking distance of a record high; Asian equities were supported by China lifting Covid restrictions. Among the top corporate news, Credit Suisse weighs cutting by half the bonus pool for 2022 after a turbulent year and Apple plans to start using its own custom displays in mobile devices as early as next year. Treasury yields dropped and the dollar gained for the second day in a row. Among US premarket movers, airline stocks slipped in New York premarket as the failure of a key pilot notification system operated by the Federal Aviation Administration disrupted air travel. American Airlines Group Inc. fell 1.1% and United Airlines Holdings Inc. was down 0.6%. Delta Air Lines Inc. fell 0.8% as the FAA ordered a ground halt of all flights until at least 9am. Bed Bath & Beyond surged again and were on course for a third day of gains. World Wrestling Entertainment rose as much as 5.3%, extending a rally sparked by speculation that the company may sell itself. Chairwoman and co-CEO Stephanie McMahon announced she’s resigning from the company. Here are some other notable premarket movers: US biotech Prokidney surges 34% after early data from a mid-stage trial of its cell therapy for chronic kidney disease. Jefferies said the treatment has multi-billion dollar potential. CarMax falls 4.8% after JPMorgan cut its recommendation on the used-car retailer to underweight from neutral, citing unfavorable risk-reward following recent outperformance. JinkoSolar Holding ADRs rise 1.9% after Roth Capital upgrades the solar panel maker to buy, saying US policy improvements point to a stronger outlook. Levi Strauss drops 1.5% as Citi downgrades to neutral from buy to reflect what it describes as a challenging US backdrop in the near to medium term. Keep an eye on PTC and Autodesk as Berenberg begins coverage of both US design software companies with buy ratings, and initiates AspenTech at hold, saying all three have the potential to continue outperforming the industry in terms of growth. Data and analytics providers could be in focus as Redburn says they will have a significant opportunity to capitalize on growing and increasingly complex risk factors in financial markets. The broker has buy ratings on MSCI (MSCI US), S&P (SPGI US) and London Stock Exchange (LSEG LN), though initiates Verisk (VRSK US) at sell and cuts Morningstar (MORN US) to neutral. The gains of US stocks since the start of 2023 has surprised many (very bearish) strategists who believe that much of the advance is conditional on inflation easing, which would allow the Federal Reserve to slow the pace of rate hikes. And while hawkish comments on Monday by San Francisco and Atlanta Fed presidents put a chill on the rally, a lack of subsequent reinforcement by Chair Powell led to a sharp rally on Tuesday. The next test for the market comes on Thursday with the US inflation report which will determine if the Fed hikes by 25bps or 50bps on Feb 1, and it’s widely believed that a lower-than-expected reading would trigger further gains.  Investors are also closely watching technical levels as the S&P 500 Index nears its 200-day moving average. “Tomorrow’s CPI event risk could be a decider where the S&P 500 can either break above its 200-day moving average, the 4,000 level and the downtrend line, or we head back to 3800,” says Gurmit Kapoor, a cross-asset sales trader at Aurel BGC. While Powell didn’t directly comment on the Fed’s next steps at a forum in Stockholm, he did say that “restoring price stability when inflation is high can require measures that are not popular in the short term as we raise rates to slow the economy.” Fed Governor Michelle Bowman said the central bank has more work to do to curb inflation, noting that further tightening is needed. “We do expect an inflection in central bank policy later on this year,” said Mark Haefele, chief investment officer at UBS Global Wealth Management. “More risk-tolerant investors can look to anticipate this turn by phasing into markets, seeking early winners from a global improvement in sentiment, and identifying beneficiaries from China’s reopening. “However, we don’t believe we have yet reached the inflection point in policy or economic growth, and as we enter 2023 we continue to favor a defensive tilt when adding exposure in both equity and fixed-income markets,” he said. “The prospect of a less cloudy economic outlook in both Europe and the US after recession risks in both regions eased back, combined with the reopening of the Chinese economy, is providing strong support toward risk appetite from investors,” said Pierre Veyret, a technical analyst at ActivTrades. “The lack of clear hints from Fed Chairman Jerome Powell yesterday also contributed to keeping the bullish trading stance alive, and most traders will now look toward tomorrow’s US inflation print for further clues.” In Europe, real-estate and mining stocks led a 0.4% gain in the Stoxx Europe 600 Index amid subsiding inflation worries. Miners were boosted by optimism China’s economic reopening will spur demand for metals. Among the top corporate news, Credit Suisse weighs cutting by half the bonus pool for 2022 after a turbulent year. Here are some of the biggest European movers on Wednesday: Vestas shares jump as much as 5.6%, the most in a month, after being raised to buy at Jefferies, which says an inflection point has been reached for wind-turbine manufacturers JD Sports shares jump as much as 6.5%, reaching April highs, after the sports retailer said it sees headline pre-tax profit toward the top end of current market expectations TeamViewer shares gain as much as 7.3% after the software company reported preliminary 4Q billings. RBC says the firm posted “a surprisingly stronger- than-expected finish to the year” Corbion rises as much as 11%, reaching an almost 11-month high, after Barclays upgrades to overweight in note on “renewed conviction” following the Dutch ingredients maker’s CMD Bang & Olufsen rises as much as 4.5% on better-than-expected 2Q results. Nordnet says “B&O does what it can and maybe even a little more” despite a challenging environment Grafton shares rise as much as 4.7% after it predicted its profit will be at the top end of analysts’ forecasts. Investec expects 2022 underlying consensus profit to edge up Direct Line shares slump 30%, pulling peers down with it, after saying it no longer expects to pay a final dividend; news that is likely to be a “major shock” to the market, Jefferies says Adyen declines as much as 3.4% after BofA cuts the stock to neutral, saying risks of further slowdown in e-commerce sales and margin compressions are not properly accounted for Maersk shares fall as much as 4.1%, the most since November, after Goldman Sachs cut its recommendation to sell, anticipating a “great unwind” in air and sea freight markets Eurofins Scientific declines as much as 4.9% and is among the worst performers on France’s SBF 120 index after two brokers cut their recommendations for the French laboratory group Earlier in the session, Asia’s equity benchmark resumed its advance, led by gains in key regional markets including Japan, South Korea and Hong Kong.  The MSCI Asia Pacific Index climbed as much as 0.9% to the highest level in almost five months before paring about half of its gain. Tencent and Alibaba were the top contributors, with tech and communication services among the major sectoral boosters. “A lot of traders and investors see the US being closer to peak inflation — if we have not already passed that point. Then that as a corollary also indicates an end to global central bank rate hike cycles,” said Justin Tang, head of Asian research at United First Partners.  Though Chinese shares dropped on Wednesday, with liquor giant Kweichow Moutai among the decliners, investor sentiment remains bullish amid further signs of fading regulatory risks in the tech sector as well as more support coming for property developers. The dramatic recovery in Chinese equities, with a gauge of mainland companies listed in Hong Kong up more than 40% in about two months, helped the broad Asian benchmark enter a bull market this week. The key gauge is outperforming US peers so far in 2023 boosted by optimism over China’s reopening and a weakening dollar. “In general the Chinese markets have been a pretty tough place to invest for almost five years now. So that recovery we’ve seen from below, there’s still a lot of value, support in the marketplace,” David Perrett, co-head of Asian equities at M&G Investment Management, said in an interview with Bloomberg TV In FX, the Bloomberg dollar gauge rose, after hovering near a seven-month low and the greenback was mixed against its Group-of-10 peers, though most currencies traded in relatively narrow ranges. The euro traded in a narrow $1.0726-1.0757 range The Australian dollar led G-10 gains after solid inflation and retail sales prints for November reinforced expectations for a quarter-percentage-point interest rate hike at the Reserve Bank’s first meeting of the year next month. CPI advanced 7.4% seasonally adjusted from a year earlier, up from 6.9% in October and exceeding economists’ median estimate. Core prices, or the trimmed-mean gauge, climbed to 5.6% in November compared with a forecast 5.5%. Retail sales beat most estimates. The yen was sandwiched between large options expiring on Wednesday. Japan’s 30-year bonds gained after an auction of this tenor met resilient demand and the central bank announced unscheduled debt purchases. The Egyptian pound plunged 5% against the US dollar on Wednesday, after the International Monetary Fund said authorities were showing commitment to a flexible exchange rate. In rates, treasury yields trimmed their advance from the previous session as yields shed up to 6bps as the curve bull-flattened and with the rate on 10-year debt slipping to below 3.58% as investors remained focused on the price outlook for the US. UK spreads flatter, leading core European rates higher with 2s10s, 5s30s tighter by 5.5bp and 2.5bp on the day; Bunds also bull-flattened and outperformed Treasuries as money markets eased ECB tightening bets before a German 10-year bond sale. Focus is also on scheduled ECB speeches. Japan’s 30-year bonds gained after an auction of this tenor met resilient demand and the central bank announced unscheduled debt purchases. In commodities, oil reversed an earlier decline as traders weighed the outlook for stronger Chinese demand against a reported build in US crude stockpiles. Optimism over demand from China was evident in the iron ore market, with the steel-making ingredient rallying above $120 a ton in Singapore. Copper rose above $9,000 a ton for the first time since June, fueled by hopes of increased consumption by the world’s top user of the metal. Looking to the day ahead now, it's a quiet day and data releases include US Mortgage applications. Otherwise, central bank speakers include the ECB’s Holzmann, Villeroy and De Cos. Market Snapshot S&P 500 futures up 0.2% to 3,948.50 MXAP up 0.5% to 162.36 MXAPJ up 0.3% to 535.96 Nikkei up 1.0% to 26,446.00 Topix up 1.1% to 1,901.25 Hang Seng Index up 0.5% to 21,436.05 Shanghai Composite down 0.2% to 3,161.84 Sensex little changed at 60,124.03 Australia S&P/ASX 200 up 0.9% to 7,195.34 Kospi up 0.3% to 2,359.53 STOXX Europe 600 up 0.5% to 448.06 German 10Y yield little changed at 2.25% Euro up 0.1% to $1.0746 Brent Futures up 0.8% to $80.75/bbl Brent Futures up 0.8% to $80.76/bbl Gold spot up 0.5% to $1,885.60 U.S. Dollar Index little changed at 103.25 Top Overnight News from Bloomberg The collective hive mind of Wall Street is backing a view that the euro rally is just getting started. With energy prices tumbling and calls for a region-wide recession falling to the wayside, a clear narrative is emerging that the worst of the economic damage is over and European assets are cheap In Germany, Italy and Spain — three of the currency bloc’s top four economies — anxiety at inflation over the next year is close to or below the average since the euro was introduced in 1999, European Commission data show Only a slowdown in core inflation can alter the ECB’s resolve to raise interest rates, according to Governing Council member Robert Holzmann The ECB needs to be pragmatic as it raises interest rates in the coming months to get to a level by the summer that is sufficiently high to bring inflation back toward 2%, Governing Council member Francois Villeroy de Galhau said The French economy continued to grow at the end of 2022 and should avoid a contraction in the first weeks of the year despite headwinds from surging energy prices, a Bank of France survey showed China shouldn’t bail out the debt that local governments take off their balance sheets so as to discourage them from allowing hidden liabilities to snowball out of control, according to former Finance Minister Lou Jiwei Japan’s Finance Ministry will likely issue sovereign bonds to fund decarbonization efforts from the latter half of fiscal year 2023 after assessing investor needs, Michio Saito, a senior official at the ministry, says in a TV Tokyo interview A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks initially tracked the advances on Wall Street after Fed Chair Powell refrained from any major policy rhetoric and as participants looked ahead to upcoming US CPI data with hopes of softening price growth. ASX 200 tested the 7,200 level to the upside with the index led by outperformance in the mining and materials sectors, while participants also digested better-than-expected Retail Sales and a pickup in monthly inflation metrics. Nikkei 225 gained as earnings trickled in with outperformance in Yaskawa Electric after growth in its top and bottom lines, while there was encouragement from news that Fast Retailing will boost wages by as much as 40%. Hang Seng and Shanghai Comp were firmer for a bulk of the session after the PBoC pledged support measures including for the property sector and boosted its short-term liquidity efforts ahead of next week’s Lunar New Year celebrations, although gains were capped in the mainland after the recent mixed loans and aggregate financing data. Top Asian News PBoC injected CNY 65bln via 7-day reverse repos with the rate kept at 2.00% and it injected CNY 22bln via 14-day reverse repos with the rate kept at 2.15% for a CNY 71bln net daily injection. Analysts noted there is room for China to cut RRR and interest rates this year, while analysts also see room for a rate cut in the property sector, according to China Securities Journal. BoJ offered to buy JPY 100bln in 1-3yr JGBs, JPY 100bln in 3-5yr JGBs, JPY 300bln in 5yr-10yr JGBs, JPY 200bln in 10yr-25yr JGBs and JPY 50bln in 25yr+ JGBs, while it also offered to buy an unlimited amount of JGBs at a fixed rate with maturities of 1yr-3yr and 3yr-5yr in an unscheduled announcement. Stocks Climb Amid Optimism Over Inflation, China: Markets Wrap Egypt Pound Plunges 5% in Test of Shift to Currency Flexibility Russia to Restart FX Operations in Yuan Under Fiscal Rule Philippine Finance Chief Sees Rate Hike Cycle Nearing End European bourses are firmer across the board, Euro Stoxx 50 +0.8%, with an easing in yields seemingly spurring a modest extension of opening gains. Sectors are primarily in the green, though Insurance names are pressured in sympathy with Direct Line while Retail-related stocks are supported after updates from the likes of JD Sports. US futures posting marginal gains, ES +0.2%, with the US docket particularly thin ex-supply ahead of Thursday's CPI. US FAA has reported a system equipment outage, all flights nationwide have been grounded, according to a source familiar with the situation, cited by NBC Washington reporter. Top European News ECB's Villeroy says they will need to be pragmatic on speed of hikes, will have to raise rates more in the coming months. Should aim to reach the terminal rate by the summer. Domestic inflation is likely to peak in H1, will avoid hard landing scenario. ECB's Holzmann says rates will need to rise significantly further to reach levels that are sufficiently restrictive to ensure a timely return of inflation to target. Inflation is expected to subside but risks remain to the upside. There are no signs of de-anchored market expectations. Activist Coast Capital Sells Vodafone Stake Within a Year Russia to Sell Yuan From Wealth Fund as Oil Price Hits Budget Ukraine Latest: Zelenskiy Says Russian War Won’t Turn to WWIII Direct Line Shares Tumble as Insurer Cuts Dividend on Claims FX DXY forms a foothold on 103.000 handle within a tight band post-Powell and pre-US CPI. Aussie outperforms on perky inflation metrics, strong retail sales data and gains in iron ore prices, AUD/USD holds near 0.6900 and AUD/NZD rebounds from around 1.0800 to top 1.0850. Euro retains grasp of 1.0700 handle, but Sterling sags around 1.2150 axis and Yen weakens after closing below a Fib to circa 132.75 and away from decent option expiries at 132.50. PBoC set USD/CNY mid-point at 6.7756 vs exp. 6.7776 (prev. 6.7611) Fixed Income Core benchmarks continued to gain momentum throughout the morning with little clear sign of concession pre-supply and perhaps deriving some support from ECB remarks. However, the rally has run out of steam with a sub-par German outing aiding the pullback, with Bunds and Gilts now sub 137.00 and 103.00 respectively. Stateside, USTs have been following suit and it remains to be seen if the looming 10yr supply will influence broader action, an auction which follows Tuesday's strong 3yr. UK DMO is to launch a new conventional Gilt maturing October 2053 in the week commencing January 23rd. Commodities WTI and Brent have experienced a firmer start to the mid-week session, with the benchmarks posting upside of around USD 0.30/bbl within relatively narrow ranges that keeps the complex within WTD and recent parameters US and allies are reportedly preparing the next round of sanctions on Russian oil, via WSJ; intending to cap the sales price of Russian exports of refined petroleum products. Russian Kremlin, on possible losses from oil price caps, says there have been hardly any cases of the caps yet. Chinese Commerce Ministry will continue to impose anti-subsidy tariffs on dried distillers grains with solubles (DDGS) imported from the US. Standout mover has been LME Copper which eclipsed the USD 9k mark in an extension of yesterday’s price action after fairly contained/rangebound APAC trade for base metals. Spot gold is modestly firmer and resides towards the top-end of a USD 1872-1886/oz range, which is a fresh multi-month high leaving the figure itself as resistance before the May 2022 USD 1909/oz peak. Geopolitics Russia's ambassador to the US commented that the US training of Ukrainian troops on Patriot systems confirms Washington's de facto participation in the conflict and that the US administration's goal is to inflict the most damage on Russia on the battlefield by the hands of Ukrainians, according to Reuters. Russian Kremlin says there is a positive dynamic in the military situation around Ukrainian town of Soledar Putin is open to discussions on Ukraine. Russian Rights Commissioner says important ceasefire proposals have been made during her meeting with Turkish and Ukrainian colleagues in Turkey, via Reuters. Russia and Iran are working on a new shipping corridor to bypass sanctions and are looking to work with India, according to Nikkei. ] US Event Calendar 07:00: Jan. MBA Mortgage Applications 1.2%, prior -10.3% DB's Jim Reid concludes the overnight wrap Morning from Helsinki where snow is on the ground. This is the start of a whistle stop 4 countries in 2 days 2023 outlook tour. I've been coming here around this week every year for about the last 25, apart from the last 2 due to Covid. So it's nice to have the old routine back. In the past I've landed in wild snow storms, seen the temperature hit -20c, seen piles and piles of snow, and yet everything always runs. Impressive! This year it's all fairly calm with the temperature just above zero. Markets have also been relatively quiet over the last 24 hours as we await tomorrow's all important US CPI print. There was some speculation that remarks from Fed Chair Powell could inject some volatility into proceedings but overall markets turned steadily higher after his lack of commentary on the policy outlook at his panel in Stockholm. Looking through the various moves yesterday, some of the biggest came from longer-dated core sovereign bond yields. For instance, yields on 10yr Treasuries were up +8.7bps to 3.619%, marking their biggest daily increase so far this year, and taking yields up to their highest level since the weak ISM services release last Friday. We have given back -3bps of that climb in Asia as I type. The rise yesterday though came as investors took out some of the dovish expectations for the Fed they’d been pricing over recent days, with the futures-implied rate for end-2023 up by +2.0bps on the day to 4.459%. Separately, we also heard from the Treasury Department that they were increasing the size of their T-bill auctions. It comes with many expecting that they’ll soon announce extraordinary measures in order to avoid exceeding the statutory cap imposed by the debt ceiling. Sticking with the US Treasury Department, it was reported yesterday that Treasury Secretary Yellen has agreed to remain in her post after having been asked to by President Biden last month. This is a confirmation of Secretary Yellen’s own professed wished from back in November when she said she intended to stay through the entirety of Biden’s first term. This means at least one part of the upcoming debt ceiling negotiations will have some stability. Bloomberg reported that the Biden administration was preparing to turnover some cabinet-level positions now that the midterms are over. Over in Europe it was a similar story, with yields on 10yr bunds (+8.0bps) seeing the largest increase on the day, along with smaller increases for OATs (+7.0bps) and BTPs (+3.6bps). And as in the US, the moves occurred with investors taking out some of the dovishness priced for the ECB, which got further support after the ECB’s Schnabel said that “interest rates will still have to rise significantly” and that “inflation will not subside by itself”. When it comes to the Fed, we did hear from Chair Powell yesterday, but despite the anticipation he didn’t comment on the policy outlook. He was speaking on a panel on central bank independence, and stuck to that topic by defending the merits of an independent monetary policy. Interestingly, he acknowledged that “restoring price stability when inflation is high can require measures that are not popular in the short term as we raise interest rates to slow the economy.” Otherwise, he explicitly said that the Fed should “stick to our statutory goals and authorities”, and said that they would not be a “climate policymaker”. With little to go off from Powell, the focus will now turn to tomorrow’s US CPI release for December. With Powell not taking a hawkish tone, equities drifted higher after Europe logged off. The S&P 500 ticked +0.70% higher, with both the NASDAQ (+1.01%) and the Dow Jones (+0.56%) also rising. The rally had a distinct risk-on tone with communications (+1.29%) and consumer discretionary (+1.26%) names outperforming while defensives like staples (-0.16%) and utilities (+0.04%) lagged. Having closed beforehand and catching up to the US reversal late Monday, European equities pulled back with the STOXX 600 down -0.59% on the day. Asian markets are stronger this morning. As I type, the Nikkei (+1.02%) is leading gains followed by the Hang Seng (+1.01%), the KOSPI (+0.40%), the CSI (+0.22%) and the Shanghai Composite (+0.20%). Outside of Asia, stock futures in the US are fluctuating with contracts on the S&P 500 (+0.04%) just above flat while those on the NASDAQ 100 (-0.05%) are trading fractionally lower. Meanwhile, European futures tied to the DAX (+0.55%) are catching back up. Early morning data showed that inflationary pressures are yet to ease in Australia as CPI advanced +7.3% y/y in November (v/s +7.2% expected), up from a surprise pullback to +6.9% in October. The latest inflation reading is at its highest level in 30 years with housing costs being the main contributor to the annual increase. Separately, retail sales rebounded +1.4% m/m in November, buoyed by consumer appetite for Black Friday sales despite rising interest rates and high inflation. Market expectations were for a +0.6% gain as against October’s upwardly revised +0.4% rise. The Australian dollar (+0.39%) nudged higher against the dollar, trading at $0.69 on the prospect of more interest rate hikes by the Reserve Bank of Australia (RBA). In commodity news, copper prices are trading at the highest level since June inching towards $9,000 a ton as China’s exit from the Zero Covid policy enhanced the demand outlook of the commodity. Elsewhere yesterday, the French government outlined a plan that would see the country’s retirement age rise to 64 by 2030, up from 62 at present. Moves to reform the pension system have long been an ambition of President Macron’s, but a previous attempt in his first term was postponed during the Covid-19 pandemic, and there remains opposition from trade unions and some other political parties. Macron’s party no longer has an absolute majority in parliament either, but they have made some concessions to the conservative Les Républicains to try and secure their votes. In other news, the World Bank released their latest round of economic projections yesterday, with their global growth projection for 2023 now at +1.7%, marking a downgrade from their +3.0% forecast back in June. Those downgrades were mainly driven by the advanced economies, where growth is now seen at just +0.5% (vs. +2.2% in June), but the forecasts for emerging market and developing economies were also lowered, with this year’s growth now seen at +3.4% (vs. +4.2% in June). Finally, there wasn’t a great deal of other data yesterday. One release in the US was the NFIB’s small business optimism index, which fell more than expected to 89.8 in December (vs. 91.5 expected). That’s the second-lowest reading in over a decade. Elsewhere, French industrial production grew by a faster-than-expected +2.0% in November (vs. +0.8% expected). To the day ahead now, and data releases include Italian retail sales for November. Otherwise, central bank speakers include the ECB’s Holzmann, Villeroy and De Cos. Tyler Durden Wed, 01/11/2023 - 08:04.....»»

Category: worldSource: nytJan 11th, 2023

"A Sanctions-Evasion War-Chest Ahead Of Taiwan Invasion" - Why Is China Hoarding Gold Again?

'A Sanctions-Evasion War-Chest Ahead Of Taiwan Invasion' - Why Is China Hoarding Gold Again? A month ago, we confirmed the identity of the "mystery" gold-buyer who had been suddenly hording the precious metal in recent months. Specifically, we identified China as the hidden whale buying the barbarous relic when all around them are decrying it's inflation-hedging help, remarking at the time that for China, the need to find an alternative to dollars, which dominate its reserves, has rarely been greater. Tensions with the US have been high since measures taken against its semiconductor firms, while Russia’s invasion of Ukraine has demonstrated Washington’s willingness to sanction central bank reserves. In other words, now that the US has shown it is ready to weaponize the dollar, any USD reserves held by the Fed, Western banks or any other counterparty, could and will be promptly confiscated if China does something unpalatable... like invading Taiwan. Which is why China is desperately seeking money without counterparty risk. Here it has just two choices: crypto or gold. For now, it has picked the latter. Today, commodities strategists at TD Securities agree that the gold whale could be the Chinese official sector. "The rally in gold prices over the past two months has defied analyst expectations for continued weakness, including TD Securities. Yet, we see little evidence that the rise in gold prices is associated with a changing macro narrative. Given the bearish macro backdrop, speculative interest in gold has remained exceptionally lackluster as the world barrels towards a recession," senior commodity strategist Daniel Ghali writes. "Armed with a flows-based approach, we present strong evidence that behemoth Chinese and official sector purchases may have single-handedly catalyzed a $150/oz mispricing in gold markets," he adds. Chinese traders have been the only directly observable underlying buyers. Our tracking of the top ten participants in Shanghai highlights a notable increase in net length from this cohort, equivalent to 100 tonnes in notional gold since December 20th. This was primarily driven by more than 16k SHFE lots of new longs acquired over this timeframe, continuing the trend of notable rise in Shanghai gold length since early November. The pace of gold purchases from Shanghai traders has yet to show any sign of slowing as traders' net length approaches last-twelve-month highs. Further, signs of Chinese interest in gold are also apparent in the yellow metal's microstructure. Chinese gold premiums remain extremely elevated by historical standards, which points to strong underlying demand for the yellow metal. While premiums are below the extreme levels seen over the summer of 2022, when Mainland gold supply was constrained by lackluster quotas, their recent strength is rather a symptom of outstanding demand. In turn, rather than viewing gold's resilience as a function of a changing macroeconomic narrative, Chinese demand at a massive scale is likely the main culprit behind the strong price action that has defied analyst and trader views over past months. This helps to explain the disconnect between gold and real rates, in favor of a tighter relationship with currencies. However, Ghali notes that "what is less clear is what has driven these massive purchases." The TD Securities' strategist has a few ideas: Reserve Currency Ambitions: A contingent of market participants has suggested that gold is gaining market share as a reserve asset. After all, USD valuations have moved to extremes following the build-up in USD cash and associated stagflation hedges. European data surprises are surging with growth expectations on the rise as extremely mild weather helped the region fare with the ongoing energy shock, at the same time as a fast-paced Chinese reopening bolsters rest-of-world growth — factors which are all in support of a cyclical peak in USD value. Most importantly, however, is the rise in perceived sanctions risks associated with USD reserves held in the East, following the introduction of Western sanctions on Russia this year; these have likely bolstered official purchases. This is consistent with official purchases announced by Turkey, Qatar and other nations. Market participants have pointed to the rapprochement between China and Gulf nations to support the thesis that demand for USD reserves is indeed declining. President Xi attended the very first China-Arab States Summit in history, seen as an echo to FDR’s meeting with King Abdul Aziz Ibn Saud in 1945 which cemented a new paradigm amounting to US security guarantees exchanged for oil sold in US dollars. Today, US incentives to provide security are likely to decline over the coming decade along with Western oil demand, whereas China's growing demand for energy is likely to solidify trade with GCC nations over this timeframe. President Xi also spoke of a new paradigm — one of all-dimensional energy cooperation, which will entirely rely on RMB settlement for oil and gas trade over the next five years. While the long-term resilience of this thesis is difficult to rank in the present, this narrative is certainly consistent with price action associated with a steep accumulation of gold in support of the renminbi. Hedging Sanctions: We previously discussed the rise in perceived sanctions risks associated with USD reserves held in the East, following the introduction of Western sanctions on Russia this year. A less likely scenario worth considering is whether a steep increase in gold reserves could be associated with the building of a sanction-evasion war chest tied to China's geopolitical ambitions. Tensions between China and Taiwan have come to a boil over the past year with a heightened sense of fear of a military confrontation since the war in Ukraine. In turn, some market participants could plausibly fear that the steep accumulation of gold is preceding a military confrontation, but there is little concrete evidence to support this. Further, one could argue that this is inconsistent with an apparent détente with the West, highlighted by the recent lifting of China's embargo on Australian coal and a notable shift in China's foreign policy communications. Chinese Reopening Demand: Our tracking of Shanghai gold positioning appears to loosely correlate with the frequency of Chinese reopening-themed news stories. Official sector purchases, however, are likely to have correlated more closely. After China’s widespread Q2 lockdowns had depressed jewellery, bar and coin demand, it is plausible that the comeback in sales observed during Q3 has gathered steam amid robust pent-up demand. While this is less appealing than a grandiose narrative about a change in geopolitical regimes, it is also consistent with the sharp recovery in gold demand observed with urban Indian consumers over the past year and with price action associated with a surge in Chinese demand. However, this thesis would clearly be more transient and would likely imply that gold prices are subject to a steep consolidation once Chinese pent-up demand is satiated and reverts to normality. This scenario would increase risks of a consolidation towards $1700/oz or below, given gold's steep overvaluation relative to its recent historical relationship with real rates. Restocking for Chinese New Year: Similarly, Chinese New Year has tended to seasonally buoy gold prices. Several market participants anticipate this trend, and it's plausible that large pent-up demand for gold associated with Chinese New Year celebrations are tied to the end of Zero-Covid. Over the past five years, gold prices have rallied from November to year-end in every single instance, averaging a 3.25% gain. The exceptional 10.7% gain in gold prices observed in this time horizon for 2022 could plausibly be tied to extremely elevated demand tied to these celebrations. Unfortunately, we find little concrete evidence to support this view. Nonetheless, this scenario would also likely be associated with a sharp slump in demand as Chinese New Year approaches. Lacking additional data, we don't find sufficient evidence at this time to bolster our conviction on what has driven Chinese purchases. The massive demand impulse from the official sector certainly fits with China's reserve currency ambitions and with the accumulation of a sanctions war chest, but the latter appears inconsistent with an apparent détente in foreign policy. While central bank buying rarely drives sustainable gold rallies, it can provide an important pillar of support when prices fall. The precious metal has been under pressure this year from the Federal Reserve’s aggressive monetary tightening, though it has held up relatively well against moves in the dollar and Treasury yields. “As deglobalisation accelerates, the non-G-10 nations are expected to ‘re-commoditize’ and ramp up gold holdings,” said Nicky Shiels, head of strategy at MKS PAMP SA. Finally, as Zoltan Pozsar wrote most recently here (and in a must-read note last month), the role of gold may be changing as first Russia, then other countries (China) seek to force out the petrodollar and replace it with petrogold, a move which would finally lead to substantial price upside for the yellow metal which has gone nowhere in the past 2 years. Remember Zoltan's portfolio advice: Commodities should include three types of gold: yellow, black, and white. Yellow gold is gold bars. Black gold is oil. White gold is lithium for EVs. Tyler Durden Mon, 01/09/2023 - 15:45.....»»

Category: blogSource: zerohedgeJan 9th, 2023

"A Sanctions-Evasion War-Chest Ahead Of Taiwan Invasion" - Why Is China Hording Gold Again?

'A Sanctions-Evasion War-Chest Ahead Of Taiwan Invasion' - Why Is China Hording Gold Again? A month ago, we confirmed the identity of the "mystery" gold-buyer who had been suddenly hording the precious metal in recent months. Specifically, we identified China as the hidden whale buying the barbarous relic when all around them are decrying it's inflation-hedging help, remarking at the time that for China, the need to find an alternative to dollars, which dominate its reserves, has rarely been greater. Tensions with the US have been high since measures taken against its semiconductor firms, while Russia’s invasion of Ukraine has demonstrated Washington’s willingness to sanction central bank reserves. In other words, now that the US has shown it is ready to weaponize the dollar, any USD reserves held by the Fed, Western banks or any other counterparty, could and will be promptly confiscated if China does something unpalatable... like invading Taiwan. Which is why China is desperately seeking money without counterparty risk. Here it has just two choices: crypto or gold. For now, it has picked the latter. Today, commodities strategists at TD Securities agree that the gold whale could be the Chinese official sector. "The rally in gold prices over the past two months has defied analyst expectations for continued weakness, including TD Securities. Yet, we see little evidence that the rise in gold prices is associated with a changing macro narrative. Given the bearish macro backdrop, speculative interest in gold has remained exceptionally lackluster as the world barrels towards a recession," senior commodity strategist Daniel Ghali writes. "Armed with a flows-based approach, we present strong evidence that behemoth Chinese and official sector purchases may have single-handedly catalyzed a $150/oz mispricing in gold markets," he adds. Chinese traders have been the only directly observable underlying buyers. Our tracking of the top ten participants in Shanghai highlights a notable increase in net length from this cohort, equivalent to 100 tonnes in notional gold since December 20th. This was primarily driven by more than 16k SHFE lots of new longs acquired over this timeframe, continuing the trend of notable rise in Shanghai gold length since early November. The pace of gold purchases from Shanghai traders has yet to show any sign of slowing as traders' net length approaches last-twelve-month highs. Further, signs of Chinese interest in gold are also apparent in the yellow metal's microstructure. Chinese gold premiums remain extremely elevated by historical standards, which points to strong underlying demand for the yellow metal. While premiums are below the extreme levels seen over the summer of 2022, when Mainland gold supply was constrained by lackluster quotas, their recent strength is rather a symptom of outstanding demand. In turn, rather than viewing gold's resilience as a function of a changing macroeconomic narrative, Chinese demand at a massive scale is likely the main culprit behind the strong price action that has defied analyst and trader views over past months. This helps to explain the disconnect between gold and real rates, in favor of a tighter relationship with currencies. However, Ghali notes that "what is less clear is what has driven these massive purchases." The TD Securities' strategist has a few ideas: Reserve Currency Ambitions: A contingent of market participants has suggested that gold is gaining market share as a reserve asset. After all, USD valuations have moved to extremes following the build-up in USD cash and associated stagflation hedges. European data surprises are surging with growth expectations on the rise as extremely mild weather helped the region fare with the ongoing energy shock, at the same time as a fast-paced Chinese reopening bolsters rest-of-world growth — factors which are all in support of a cyclical peak in USD value. Most importantly, however, is the rise in perceived sanctions risks associated with USD reserves held in the East, following the introduction of Western sanctions on Russia this year; these have likely bolstered official purchases. This is consistent with official purchases announced by Turkey, Qatar and other nations. Market participants have pointed to the rapprochement between China and Gulf nations to support the thesis that demand for USD reserves is indeed declining. President Xi attended the very first China-Arab States Summit in history, seen as an echo to FDR’s meeting with King Abdul Aziz Ibn Saud in 1945 which cemented a new paradigm amounting to US security guarantees exchanged for oil sold in US dollars. Today, US incentives to provide security are likely to decline over the coming decade along with Western oil demand, whereas China's growing demand for energy is likely to solidify trade with GCC nations over this timeframe. President Xi also spoke of a new paradigm — one of all-dimensional energy cooperation, which will entirely rely on RMB settlement for oil and gas trade over the next five years. While the long-term resilience of this thesis is difficult to rank in the present, this narrative is certainly consistent with price action associated with a steep accumulation of gold in support of the renminbi. Hedging Sanctions: We previously discussed the rise in perceived sanctions risks associated with USD reserves held in the East, following the introduction of Western sanctions on Russia this year. A less likely scenario worth considering is whether a steep increase in gold reserves could be associated with the building of a sanction-evasion war chest tied to China's geopolitical ambitions. Tensions between China and Taiwan have come to a boil over the past year with a heightened sense of fear of a military confrontation since the war in Ukraine. In turn, some market participants could plausibly fear that the steep accumulation of gold is preceding a military confrontation, but there is little concrete evidence to support this. Further, one could argue that this is inconsistent with an apparent détente with the West, highlighted by the recent lifting of China's embargo on Australian coal and a notable shift in China's foreign policy communications. Chinese Reopening Demand: Our tracking of Shanghai gold positioning appears to loosely correlate with the frequency of Chinese reopening-themed news stories. Official sector purchases, however, are likely to have correlated more closely. After China’s widespread Q2 lockdowns had depressed jewellery, bar and coin demand, it is plausible that the comeback in sales observed during Q3 has gathered steam amid robust pent-up demand. While this is less appealing than a grandiose narrative about a change in geopolitical regimes, it is also consistent with the sharp recovery in gold demand observed with urban Indian consumers over the past year and with price action associated with a surge in Chinese demand. However, this thesis would clearly be more transient and would likely imply that gold prices are subject to a steep consolidation once Chinese pent-up demand is satiated and reverts to normality. This scenario would increase risks of a consolidation towards $1700/oz or below, given gold's steep overvaluation relative to its recent historical relationship with real rates. Restocking for Chinese New Year: Similarly, Chinese New Year has tended to seasonally buoy gold prices. Several market participants anticipate this trend, and it's plausible that large pent-up demand for gold associated with Chinese New Year celebrations are tied to the end of Zero-Covid. Over the past five years, gold prices have rallied from November to year-end in every single instance, averaging a 3.25% gain. The exceptional 10.7% gain in gold prices observed in this time horizon for 2022 could plausibly be tied to extremely elevated demand tied to these celebrations. Unfortunately, we find little concrete evidence to support this view. Nonetheless, this scenario would also likely be associated with a sharp slump in demand as Chinese New Year approaches. Lacking additional data, we don't find sufficient evidence at this time to bolster our conviction on what has driven Chinese purchases. The massive demand impulse from the official sector certainly fits with China's reserve currency ambitions and with the accumulation of a sanctions war chest, but the latter appears inconsistent with an apparent détente in foreign policy. While central bank buying rarely drives sustainable gold rallies, it can provide an important pillar of support when prices fall. The precious metal has been under pressure this year from the Federal Reserve’s aggressive monetary tightening, though it has held up relatively well against moves in the dollar and Treasury yields. “As deglobalisation accelerates, the non-G-10 nations are expected to ‘re-commoditize’ and ramp up gold holdings,” said Nicky Shiels, head of strategy at MKS PAMP SA. Finally, as Zoltan Pozsar wrote most recently here (and in a must-read note last month), the role of gold may be changing as first Russia, then other countries (China) seek to force out the petrodollar and replace it with petrogold, a move which would finally lead to substantial price upside for the yellow metal which has gone nowhere in the past 2 years. Remember Zoltan's portfolio advice: Commodities should include three types of gold: yellow, black, and white. Yellow gold is gold bars. Black gold is oil. White gold is lithium for EVs. Tyler Durden Mon, 01/09/2023 - 15:45.....»»

Category: personnelSource: nytJan 9th, 2023

Trickles Of Optimism As China’s Borders Reopen But Caution Remains Amid Cost-Of-Living Crisis

China drops more travel restrictions boosting sentiment among investors. FTSE 100 opens higher following rises in Asia and on Wall Street. Brent crude creeps up again amid expectations of higher demand. US jobs report buoys hopes that Federal Reserve may soon drop its aggressive stance. Hopes rise about the prospects for breakthrough on UK public […] China drops more travel restrictions boosting sentiment among investors. FTSE 100 opens higher following rises in Asia and on Wall Street. Brent crude creeps up again amid expectations of higher demand. US jobs report buoys hopes that Federal Reserve may soon drop its aggressive stance. Hopes rise about the prospects for breakthrough on UK public sector strikes. Fresh energy bill support won’t fully insulate UK firms from fresh price shocks. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q4 2022 hedge fund letters, conferences and more   China Reopens Borders The dismantling of more barriers to entry into China has seen more trickles of optimism seep into financial markets. The lifting of quarantine requirements for incoming travellers with now only a negative PCR test needed, will come as a sharp relief for the Chinese business community. Domestic travel will also get a significant boost with the issuing of visas for Hong Kong and Macau resuming. Hopes are high that this will give consumers a big jolt of confidence, and help power China’s recovery from the pandemic, particularly once waves of infections subside. Expectations of higher demand for energy in China and hopes that there may be a softer landing for the US economy from the ravages of interest rate rises, have boosted the price of oil, with Brent Crude up more than 2%, trading above $80 a barrel. The Fed May Drop It's Aggressive Stance Expectations have risen that aggressive moves by the Federal Reserve are finally bruising the resilient labour market and wounding a wage spiral. The closely watched monthly jobs report showed average earnings were slowing, data which traders have clung onto as evidence that the central bank might not have to ramp up rates so high and leave them there as long. Although jobs growth is still resilient, the rate is also slowing, boosting hopes that demand and supply in the labour market may be returning to a better equilibrium. This pushed up the S&P 500 strongly on Friday, and is set to help buoy stocks today. However, policymakers are still likely to stay cautious, fearful that if they drop their guard, inflation may still come back to bite. Investors will be watching closely for fresh indications about just how the fight is going from the latest snapshot on US consumer prices due out on Thursday. There was a cautious but positive start to the FTSE 100 in early trade, with commodity giants rising strongly, boosted by better sentiment about China’s outlook, but investors still mindful of the challenging months ahead and the problems facing the UK economy. The UK government has adopted a slightly more conciliatory tone with striking public sector workers, promising individual talks with unions, but there is clearly a huge chasm to cross, while the disruption dents UK output. Caution Remains Amid Cost-Of-Living Crisis Worries about bill fright among businesses should subside a little with fresh support for energy costs being committed by the UK government, but there is still concern they won’t be fully insulated. The scheme will offer a discount on wholesale prices, not cap bills, which will mean companies will be more exposed to fluctuations in the energy market, but it should be less onerous for the taxpayer. Wholesale gas costs, which usually set electricity prices too,  have subsided dramatically since the painful peaks earlier this year. This will be a relief but there will still be concerns that firms could be hit by future spikes in volatility in the energy market. Investors are still mindful about the onerous effects of the cost-of-living crisis, which is a long way from over, according to the HL Savings & Resilience Barometer released today. Although there are now glimpses of light at the end of the long tunnel, it’s still a painful journey for consumers and companies. Article by Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.....»»

Category: blogSource: valuewalkJan 9th, 2023

Stock valuations are still high, and that suggests the market has yet to bottom and could fall as much 30%, Bank of America says

"Given drops in equity sentiment and positioning, one of the biggest risks today might be that of being under-invested in stocks," Subramanian said. (Photo by Scott Heins/Getty Images)The stock market has yet to find its bottom based on its rich valuation, according to Bank of America.BofA said elevated valuations suggest the stock market could ultimately fall 30% from current levels."The S&P 500 still screens as statistically expensive vs. history on 17 out of 20 measures we track," BofA said.Despite the stock market's 19% decline in 2022 amid positive earnings growth, there could still be more pain ahead, Bank of America said in a Monday note.The bank said valuations are still too high for the stock market, which means a bottom has yet to be reached for stock prices."The S&P 500 still screens as statistically expensive vs. history on 17 out of 20 of the measures we track," Bank of America's Savita Subramanian said. "Ahead of prior market bottoms, the index screened as expensive on just four measures, on average."Prior stock market bottoms saw the S&P 500 trade below its average forward price-to-earnings ratio, its trailing normalized price-to-earnings ratio, and its median forward price-to-earnings ratio. "But it trades above average on all three today," Subramanian highlighted.The valuation differences are even more extreme when you compare stocks to bonds, according to the note, which suggests big moves in markets for a return to the average."Where stocks traded cheap relative to bonds over the last 10+ years, the income differential now indicates 30% downside risk to stocks or 30% upside risk to bonds to get back to historical averages," Subramanian said. Such a decline would send the S&P 500 to levels not seen since the onset of the COVID-19 pandemic in April 2020.Giving Subramanian additional pause in believing that the worst is over for the stock market is the fact that only 40% of BofA's "bull market signposts" have been triggered in recent weeks. That's compared to the typical 80% of bullish signposts that would be triggered before prior market bottoms, according to the note.Despite the bearish outlook, Subramanian did highlight one factor that could serve as a tailwind for stock prices going forward: everyone is bearish. According to BofA, Wall Street strategists have aggressively increased their exposure to bonds relative to stocks during the turmoil and volatility of 2022. Even hedge funds are now 40% net long utility stocks, which is the most bond-like sector in the S&P 500 and speaks to widespread risk-off sentiment among market participants. "Given drops in equity sentiment and positioning, one of the biggest risks today might be that of being under-invested in stocks," Subramanian said.Of all the sectors in the market, Subramanian is most bullish on financial stocks and believes they "may be a good spot to park assets in the near-term" as the broader market takes time to find its footing."We are overweight the sector and see it as a higher quality sector with better earnings stability than the S&P 500, cleaner balance sheets thanks to US regulators, and less recession risk than other more crowded and expensive cyclical sectors like Info Tech," Subramanian said. Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 9th, 2023

Futures Rise On China Reopening, End Of Tech Crackdown As Asia Enters Bull Market

Futures Rise On China Reopening, End Of Tech Crackdown As Asia Enters Bull Market Futures extended their Friday post payrolls gain on the back of Chine reopening optimism coupled with speculation that China's tech crackdown is finally ending - just as we speculated this weekend when reporting on Jack Ma's ceding control of Ant Financial. S&P futures rose 0.4% as of 7:30 am ET while Nasdaq contracts 100 added 0.5%. And while European stocks were mostly in the green, the bulk of overnight action was in Asia where the Hang Seng Tech Index jumped 3.2% Monday, led by Alibaba Group after a top central bank official said the clampdown on the Internet sector was drawing to a close. The broader market also advanced, with a gauge of Chinese equities listed in Hong Kong rising 2%, helping push the MSCI Asia Index up 20% from its October low, setting it up for a bull market. The dollar weakened to a seven month low and oil rallied. Among premarket movers, Bed Bath & Beyond shares surged as much as 75%, set to rally after losing nearly half of their value in the previous week on bankruptcy worries amid mounting losses, and ahead of the company’s earnings due Tuesday. Coinbase and Riot Platforms led cryptocurrency-exposed stocks higher in premarket trading as Bitcoin rallied to extend gains for a sixth consecutive session — its longest streak in nearly a year. Lululemon dropped after the athletic apparel maker forecast a weaker gross margin. Here are other notable premarket movers: Oracle is upgraded to overweight from neutral at Piper Sandler as its cloud transformation takes hold. The brokerage also noted that fiscal 2024 might be a watershed year for the software company, where growth in operating profits and earnings per share could accelerate to more than 10%. Oracle shares are up 1.3%. Piper Sandler upgrades Uber to overweight and cuts DoorDash to underweight, recommending a pair-trade between the two as it favors ride-hailing over delivery in 2023. Elsewhere, Jefferies starts DoorDash with an underperform rating, with a buy on Uber. Uber shares rose 2.3%. Dash shares down 4.2%. Ally Financial upgraded to neutral from underweight at Piper Sandler, with headwinds seen as now priced into the stock. Shares rise 1.9%. Credit Suisse says fertilizer prices are on a downward trajectory in a note double-downgrading Mosaic (MOS) to underperform. Shares fall 1.1%. Elf Beauty is downgraded to hold from buy at Jefferies, with broker saying risk-reward is balanced for the cosmetics company against an uncertain macroeconomic backdrop. Shares fall 1.1%. Ipsen shares drop after it agreed to acquire Albireo for $42/share in cash plus a contingent value right (CVR) of $10/share related to the U.S. FDA approval of Bylvay in biliary atresia. Albireo shares soar 93%. Jefferies sees another year of uncertainty ahead for US bank stocks, in a note upgrading its ratings on Truist (TFC) and First Republic (FRC) and downgrading both Signature Bank (SBNY) and Regions Financial (RF). TFC falls 0.09%. FRC rises 1.2%. SBNY shares fall 0.4%. RF falls 1%. KeyBanc trims its natural gas price estimates for 2023 following a relatively mild winter to date and cuts its ratings on Comstock Resources (CRK) and Pioneer Natural Resources (PXD). CRK shares rise 0.8%. PXD rises 1%. There is a strong industry backdrop for Harmonic (HLIT), with greater competition in the broadband service market pushing cable multiple-system operators (MSOs) to invest aggressively, Jefferies writes in note that upgrades the stock to buy. Shares rise 1.8%. Lanvin Group is rated neutral at Citi, which initiated coverage on the stock noting that the luxury fashion group has solid brands but clear evidence of a turnaround is required to merit a buy call. Shares rise 3.5%. Markets closed last week solidly in the green, encouraged by Friday's jobs report which showed wage growth slowing, lifting the S&P 500 2.3% to notch its first winning week in over a month. They face another test on Thursday with CPI data that will likely help determine the size of the Federal Reserve’s next interest-rate increase. After the easing in wage inflation, swaps contracts showed investors expect the policy rate to peak at under 5% this cycle, down from 5.06% just before Friday’s jobs report. While traders remain divided about the size of February’s hike, with 32 basis points of tightening priced in, it appears that a quarter-point move is seen as more likely than a half-point increase. While pressure on the Fed to hike by 50 basis points on Feb. 1 has eased, “policy makers appear to be increasingly frustrated by market-pricing at odds with Fed signaling in terms of both the terminal funds rate and timing of initial rate cut,” BNP Paribas economists led by Carl Riccadonna wrote in a note to clients. “This could tilt their bias toward a more forceful response at the next meeting.” And while market pessimism is still dominant, analysts at Wells Fargo said Friday’s gains may be more durable than some expect, being “driven by a pro-cyclical post-jobs report reaction — not by risk/short-covering.” This market action “probably creates some positive investor sentiment since long-only’s are making money and short-sellers are faring better than one might expect.” On the other hand, Morgan Stanley strategists said US equities face much sharper declines than many pessimists expect with the specter of recession likely to compound their biggest annual slump since the global financial crisis. The bank's equity strategist, Michael Wilson, long one of the most vocal bears on US stocks, said while investors are generally pessimistic about the outlook for economic growth, corporate profit estimates are still too high and the equity risk premium is at its lowest since the run-up to 2008. That suggests the S&P 500 could fall much lower than the 3,500 to 3,600 points the market is currently estimating in the event of a mild recession, he said. At the same time, US stocks have been lagging the rebound in European, Asian and emerging-market peers as American equities trade at a hefty valuation premium. European markets also started the week amid a generally buoyant mood, as continental bourses opened higher, after posting the best week since March on optimism about China’s reopening, an easing energy crisis and signs of cooling inflation. Europe’s Stoxx 600 Index climbed 0.5%, touching the highest since mid-December with construction, technology and energy leading gains amid optimism over China’s demand for raw materials.  On the data front, euro zone unemployment was unchanged in November at 6.5% as expected. Here are some of Europe's biggest movers: UCB gains as much as 4.9%, the most in almost 11 months, after the Belgian biopharma company said its 2022 results should come in toward the high end of guidance Geberit shares climb as much as 3.5% after Goldman Sachs raised its recommendation on the Swiss manufacturer to neutral from sell, citing reduced risk related to energy prices BioArctic rises as much as 29% after Eisai and Biogen’s Alzheimer’s drug Leqembi (lecanemab-irmb) received accelerated approval from the FDA. The treatment originates from BioArctic TGS gains as much as 15%, the most intraday since 2020, after a 4Q update that DNB said showed a strong beat on late sales and supportive management comments on order inflow SAES Getters shares surge as much as 36%, the most on record, after SAES Group entered an agreement with Resonetics to sell its Nitinol production business for about $900m in cash AstraZeneca falls after agreeing to buy US biotech CinCor Pharma for as much as $1.8 billion. Analysts say the acquisition is a good fit for the firm’s existing cardiovascular franchise Fresnillo falls as much as 2.5% as RBC Capital Markets downgrades stock to sector perform, as it sees operational momentum widely priced in and expects limited growth in the pipeline Frontier Developments shares fall as much as 42%, its biggest intraday decline on record, after the video-game firm said it no longer expects to meet FY23 consensus expectations Ambea drops as much as 6.9%, the most since Dec. 23, after the Swedish elder care company saw its target price cut at DNB to SEK52 from SEK73 on continued headwinds due to inflation Devolver Digital shares fall as much as 9.5%, dropping to a record low, after downgrading profit expectations for FY22 in a trading update. Goodbody called the update “disappointing.” Earlier in the session, Asia’s benchmark stock index was on track to enter a bull market, as China’s reopening and a weakening dollar lure investors back to the region. The MSCI Asia Pacific Index climbed as much as 1.9% on Monday, taking its advance from an Oct. 24 low to more than 20%. The Asian benchmark is up 3.7% so far in 2023, beating the S&P 500 Index by about two percentage points. That’s after they both slumped about 19% last year, their worst performance since 2008. Gauges in Hong Kong, Taiwan and South Korea led gains in the session, while Japan was closed for a holiday. Strategists have predicted a better year for Asian equities after a dismal 2022, especially as stocks in China, which carry the second-highest weighting in the regional gauge after Japan, turned a corner in November following the nation’s shift away from stringent virus curbs. The bull market milestone comes after the MSCI Asia gauge tumbled nearly 40% from a peak in early 2021. The MSCI Emerging Markets Index is on track to enter a bull market after surging more than 20% from its October low, boosted by Chinese stocks after the nation pivoted on its Covid strategy and offered more policy support for the economy.   “The rally has been fast and furious, so it is only natural to expect some profit-taking,” said Charu Chanana, senior strategist at Saxo Capital Markets Pte. “There are also some risks to keep a tap on, such as BOJ’s hawkish shift and company earnings. But that being said, there is still room for Asian markets to outperform global peers in 2023.” Australian stocks climbed for a fourth day as miners advanced. The S&P/ASX 200 index rose 0.6% to close at 7,151.30, capping four consecutive days of advances. The winning streak is the benchmark’s longest since Nov. 25. The gauge followed Wall Street shares higher after US economic data boosted optimism for slower Fed rate hikes. Miners and energy shares contributed the most to the Australian index’s move. In New Zealand, the S&P/NZX 50 index rose 0.2% to 11,646.45. In FX, the Bloomberg Dollar Spot Index fell to its lowest level since June as the dollar weakened against all of its Group-of-10 peers apart from the yen. It pared the drop in European hours. NOK, NZD are best performers among G10’s. The euro pared gains after rising to $1.07. Bunds and Italian bonds underperformed Treasuries, with the largest losses seen in the belly of curves, while money markets added to peak ECB rate wagers. Focus is also on the EU’s first bond sales of the year The pound advanced, while gilts bear flattened. Bank of England Chief Economist Huw Pill comments are due later Norway’s krone and the Australian dollar led G-10 gains, with the latter climbing to $0.6947, its highest level in more than four months, supported by China’s reopening. AUD curve bull steepens with 3-year yield ~13bps lower Turkey’s lira weakened as investors weighed President Recep Tayyip Erdogan’s signal that general elections will be held in early May, a month earlier than scheduled In rates, Treasuries were pressured lower with losses led by long-end, continuing Friday’s post-payrolls steepening move amid wave of block trades. US yields are higher by as much as 4bp at long-end, steepening 5s30s, 2s10s spreads by around 2bp; 10-year around 3.595%, cheaper by 3.5bp on day but outperforming bunds in the sector by ~2.5bp.  Treasuries took their cue from wider bear-steepening move across core European rates following first EU bond sales of the year. Another heavy IG credit issuance slate is expected this week, which also includes December CPI data Thursday and Fed Chair Powell appearance Tuesday.   In commodities, crude futures advanced, pushing Brent up almost 3.5% to trade near $81.11. Spot gold rises roughly $8 to trade near $1,873/oz while base metals are in the green. In crypto, Bitcoin is firmer and has managed to surpass and gain a more convincing foothold above USD 17k, after fleeting breaches of the figure in recent sessions, with the 16th Dec USD 17524 peak into play The only event on today's quiet calendar is the consumer credit print at 3pm ET. There are two Fed speakers on deck as well, Bostic and Daly, speaking shortly after noon. Market Snapshot S&P 500 futures up 0.4% to 3,932.00 STOXX Europe 600 up 0.5% to 446.56 MXAP up 1.7% to 161.51 MXAPJ up 2.4% to 535.12 Nikkei up 0.6% to 25,973.85 Topix up 0.4% to 1,875.76 Hang Seng Index up 1.9% to 21,388.34 Shanghai Composite up 0.6% to 3,176.08 Sensex up 1.4% to 60,752.44 Australia S&P/ASX 200 up 0.6% to 7,151.33 Kospi up 2.6% to 2,350.19 German 10Y yield little changed at 2.27% Euro up 0.3% to $1.0677 Brent Futures up 3.0% to $80.90/bbl Brent Futures up 3.0% to $80.89/bbl Gold spot up 0.4% to $1,873.06 U.S. Dollar Index down 0.27% to 103.60 Top Overnight News from Bloomberg Central banks aren’t giving up their inflation fight yet with the peak in interest rates still to come in most economies, but pauses will come at some point in 2023 — and perhaps even pivots The ECB predicts wage growth — a key indicator of where inflation is headed — will be “very strong” in the coming quarters, strengthening the case for more interest-rate hikes, the institution said Monday in an article to be published in its Economic Bulletin UK Prime Minister Rishi Sunak is set for talks with the union leaders directing the wave of strikes that have hobbled the UK since the start of the year, as the threat of more widespread action hangs over the country Russian President Vladimir Putin’s plans to squeeze Europe by weaponizing energy look to be fizzling at least for now. Mild weather, a wider array of suppliers and efforts to reduce demand are helping, with gas reserves still nearly full and prices tumbling to pre- war levels The SNB expects an annual loss of about 132 billion francs ($143 billion), more than five times the previous record, it said Monday in preliminary results. The largest part of this, 131 billion francs, stems from collapsed valuations of its large pile of holdings in foreign currencies, accrued as a result of decade-long purchases to weaken the franc A ship has been refloated after running aground in the Suez Canal and briefly disrupting traffic in the waterway that’s vital for global trade Brazil’s capital was recovering early Monday from an insurrection by thousands of supporters of ex-President Jair Bolsonaro who stormed the country’s top government institutions, leaving a trail of destruction and testing the leadership of Luiz Inacio Lula da Silva just a week after he took office Chinese officials are considering a record quota for special local government bonds this year and widening the budget deficit target as they ramp up support for the world’s second- largest economy, according to people familiar with the matter Japanese Prime Minister Fumio Kishida said careful explanation and communication with markets would be part of consideration on monetary policy, when asked about possible future changes in the Bank of Japan’s ultra-loose policy A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks gained with the MSCI Asia Pacific index on course to enter a bull market as the region took impetus from last Friday’s rally on Wall St. ASX 200 was led higher by strength in the commodity-related sectors and with sentiment also helped by China’s border reopening which JPMorgan predicts could boost Australia’s economy by nearly one percentage point over the next two years, although gains are capped following disappointing building approvals data. KOSPI outperformed with the index and shares in LG Electronics unfazed by the Co.’s softer preliminary Q4 earnings. Hang Seng and Shanghai Comp were supported after China’s border reopening over the weekend added to the hopes of an economic recovery and with Alibaba shares spearheading the advances in Hong Kong after Jack Ma ceded control of affiliate Ant Group. Top Asian News Chinese President Xi Jinping stressed the importance of remaining committed to advancing reform, exploring new ground and carrying forward the fighting spirit, in a bid to modernize the work of judicial, procuratorial, and public security organs, according to China Economic Net. PBoC official Guo Shuqing said China’s growth will return to a normal path as China provides further support to households and companies to help recover following the end of the zero-Covid policy, according to People’s Daily. Tens of thousands of travellers began to fly in and out of mainland China on Sunday following the removal of nearly all of China’s border restrictions, according to WSJ. China’s health security administration said talks to include Pfizer’s (PFE) Paxlovid in the drug list for basic state health insurance failed due to the Co.’s high quotation for the antiviral medicine, according to Reuters. Six Chinese cities set GDP targets for this year ranging from 5.5%-7.0%, according to Securities Daily. Japanese PM Kishida said they must choose a successor to BoJ Governor Kuroda best suited for the post at the time when Kuroda’s term ends in April and must discuss with the next BoJ Governor the relationship between the government's and BoJ's policies. Kishida added that the government and BoJ must work closely together and each should play their own roles in achieving sustained price stability, while he noted that the government is ready to respond flexibly using reserves when asked if further steps could be taken to soften the blow on households from rising prices, according to Reuters. China reportedly considering a record special debt quota and a wider budget deficit, via Bloomberg; considering a deficit ratio of circa. 3% for the year. New special bond quota of up to CNY 3.8tln. European bourses are firmer across the board, Euro Stoxx 50 +0.3%, as the constructive APAC tone continues amid a limited European docket. Sectors are primarily in the green, with defensive names lagging somewhat in-fitting with the risk tone. US futures are in the green, ES +0.4%, in-fitting with the above sentiment ahead of Fed speak and a NY Fed Consumer Expectations survey. Apple's (AAPL) iPhone exports from India have doubled to a record USD 2.5bln, via Bloomberg. Top European News BoE’s Mann said energy price caps could be lifting inflation in other sectors by boosting consumer spending and noted it is unclear what would happen to inflation when caps are removed, according to Bloomberg. UK PM Sunak said inflation is not guaranteed to decline this year and that the government will need to be disciplined to ensure inflation is brought down, according to Reuters. In other news, PM Sunak said he was willing to discuss pay increases for nurses in an effort to end strikes as ministers prepare to meet union leaders on Monday, according to FT. Czech Central Bank Governor Michl said they expect a significant drop in inflation from spring and are ready to raise rates further if the baseline scenario of a decline in inflation does not materialise, while he added that policy will be strict until inflation begins declining, according to Reuters. FX   DXY continues to slip below the 104.00 mark between 103.860-420 parameters towards key technical support and its December low (103.380). Action which is benefitting peers across the board ex-JPY, which is suffering amid the easing in USTs/EGBs and a Japanese holiday, with USD/JPY above 132.50. Antipodeans are the current outperformers with AUD surpassing 0.69 and Kiwi eclipsing 0.64 vs USD, before waning slightly. EUR/USD hit, but failed to breach, 1.07 while Cable is off best but still above 1.21 in a 1.2089-1.2174 range. PBoC set USD/CNY mid-point at 6.8265 vs exp. 6.8276 (prev. 6.8912)   Fixed Income EGBs under pressure and continuing to retreat from Friday's best, with Bunds down by nearly 100 ticks and Gilts similarly dented though managing to retain 102.00 at present USTs are similarly softer, though have largely been consolidating towards the APAC trough given the absence of Japanese participants ahead of Fed speak and NY survey, with yields modestly firmer across the curve. Commodities Crude benchmarks are bid this morning, with WTI Feb and Brent Mar posting upside in excess of 3.0% or USD 2.0/bbl respectively. Action has been driven by China’s ongoing reopening and fresh geopolitical headlines, alongside other crude-specific developments (see below). Qatar set February marine crude OSP at Oman/Dubai plus USD 0.75/bbl and land crude OSP at Oman/Dubai plus USD 2.10/bbl. In relevant news, Qatar Energy is to sign Ras Laffan Petrochemicals Complex agreements with the project to cost USD 6bln and it created a JV with Chevron Phillips Chemicals of which it owns 70% and Chevron (CVX) owns 30%, according to Reuters. Iraq’s Oil Minister said the Karbala oil refinery will begin commercial production in mid-March, according to Reuters. US DoE rejected the initial batch of bids from oil companies to resupply a small amount of oil to the SPR in February, according to Reuters. Colonial Pipeline said repairs at the Witt Booster Station were completed and Line 3 returned to normal operations as of 17:51 EST on Sunday, according to Reuters. China has issued a second batch of 2023 crude oil import quotas to independent refiners totalling 111.82mln/T, via Reuters citing sources. Iraq February Basrah medium crude OSP to Asia -USD 1.40/bbl vs Oman/Dubai average, via Somo; to Europe at -USD 8.95/bbl vs Dated Brent. Spot gold is fairly contained around the mid-point of USD 1864-1880/oz parameters, with the yellow metal deriving some upside from the DXY struggling to attain a positive foothold; next resistance mark is USD 1885/oz from the 9th of May. Geopolitics Ukrainian President Zelensky said Ukrainian forces were repelling Russian attacks on Bakhmut in eastern Donbas and were holding position in nearby Soledar under very difficult conditions, according to Reuters. Russia’s Defence Ministry said it struck a building in eastern Ukraine which killed more than 600 Ukrainian troops in retaliation for Ukraine’s deadly strike against a Russian barracks, although Ukrainian officials denied there were any casualties and said the strike by Russia only damaged civilian infrastructure, according to Reuters and ITV. Russia and Belarus will conduct joint air force drills on January 16th-February 1st, according to the Belarusian Defence Ministry cited by Reuters. Russian Kremlin has rejected suggestions from Ukraine that Russian official Kozak is sounding out officials in Europe about a potential peace deal. Swedish PM Kristersson said they have fulfilled commitments made to Turkey at the Madrid summit but noted that Turkey is demanding concessions that Stockholm cannot give to approve its application to join NATO, according to FT. China's military said it carried out combat drills around Taiwan on Sunday, while Taiwan's Defence Ministry stated 28 Chinese aircraft crossed the Taiwan Strait median line and entered the air defence zone in the past 24 hours. Furthermore, Taiwan's presidential office said it condemns China's recent military drills around Taiwan and that Taiwan's position is very clear whereby it will not escalate conflict nor provoke disputes but added that it will firmly defend its sovereignty and national security, according to Reuters. Crypto Bitcoin is firmer and has managed to surpass and gain a more convincing foothold above USD 17k, after fleeting breaches of the figure in recent sessions, with the 16th Dec USD 17524 peak into play. Bafin warns of Godfather malware attack on banking/crypto apps. US Event Calendar 15:00: Nov. Consumer Credit, est. $25b, prior $27.1b Central bank Speakers 12:30: Fed’s Bostic Takes Part in Moderated Discussion 12:30: Fed’s Daly Interviewed in WSJ Live event DB's Jim Reid concludes the overnight wrap I hope your Sunday was more peaceful than mine. I played my first round of golf since back surgery (don't tell my consultant) and got stuck at the golf course afterwards as there was a big police search with helicopters over the area I walk home across. My wife and kids were out in the garden at the time and had to rush in as the copter nearly landed in the adjoining field. So at least they knew I wasn't making up being delayed. Had it not been pouring with rain I would have had time for another 9 by the time I could make it home via a huge detour. To be fair for me there are worst places to be stuck but it was a touch concerning. That capped the end of a week where if you thought 2023 might start calmer than 2022 then you may have wanted to think again as there was plenty to debate and plenty of big swings in markets and data. In fact, after weak European headline inflation last week and a bad miss for the US Services ISM on Friday it was the best week for 10yr German bunds (-35.8bps) since data on Bloomberg starts around reunification in 1990. This week the main highlights are a speech from Powell in Sweden tomorrow morning, US and China CPI on Thursday, and Q4 US earnings season starting in earnest with 3 big financials on Friday. Before we go through things in more detail it's worth recapping Friday's US data which resulted in a major shift lower in yields. Payrolls were firm as expected with the headline at +223k and unemployment unexpectedly falling a tenth to 3.5%, the lowest since Neil Armstrong first walked on the moon. As our US economists discuss here though, there were signs of slowing growth in the report with, for example, hours worked (34.3hrs vs. 34.4hrs) and average hourly earnings (+0.3% vs. +0.4%) declining. These factors led US yields lower after the report but the Services ISM dropping from 56.5 to 49.6 was a bit of shocker, especially when the consensus was at 55. There’s a chance the exceptionally cold weather could have artificially depressed the survey but the associated commentary wasn’t great and new orders fells 10.8 points to 45.2 which outside the pandemic is the lowest since the GFC and levels only previously associated with recessions. 2 and 10yr yields fell -21bps and -16bps on the day but around 15-16bps of both moves came after the ISM which shows its impact. Ironically the S&P 500 climbed +2.28% on the day but c.1.75% of this was after this shocker of a print showing that the influence of rates on equities outweighed the economic concerns. Such an equity move couldn't possibly last if this ISM print heralded in a stream of recessionary data. It can only last if the data suggests an environment weak enough to merit the Fed pausing soon with the economy managing a soft landing. Remarkably European PMIs now stand near a record high relative to the US which is part of the reason for preferring European credit given it still trades wide to the US. A fuller review of the week for assets (a significant one to start the year) can be found at the end as usual. Let's move on to this week now and start with the US CPI print for December on Thursday which will be the pivotal data point in January. In terms of the MoM rate, the headline CPI is expected at -0.15% at DB (consensus 0.0% vs. +0.10% previously) with core CPI expected at +0.22% at DB (+0.3% consensus vs. +0.20% previously). In terms of YoY, headline is expected to drop from 7.1% to 6.3% at DB (6.5% consensus) with core falling from 6% to 5.6% (5.7% consensus). Another inflation-related data point will come from the University of Michigan survey on Friday, where the gauge of consumer inflation expectations will be in focus. Other US data releases will include consumer credit (DB forecast +$30.5B vs +$27.1 in October) today and the NFIB small business optimism index on Tuesday. Central bank speakers will also be in the spotlight with appearances from Fed Chair Powell and BoE Governor Bailey at the Riksbank's International Symposium on Central Bank Independence tomorrow. We will also hear from a number of other Fed and ECB speakers throughout the week (see day by day calendar for the list). In Europe, key data releases will include industrial production and trade data in Germany, France and the Eurozone. Over in the UK, all eyes will be on the monthly GDP report for November on Friday. Elsewhere, retail sales (Wednesday) figures will be published in Italy along with the unemployment rate (today) for November. Over in China, the CPI and the PPI on Thursday will be the standout. Turning to earnings now and some of the largest American banks including JPMorgan, Citi and BofA will kick off the earnings season on Friday. We will also hear from BlackRock and UnitedHealth that day. The day before all eyes will be on results from TSMC as concerns over supply-demand dynamics and US-China tensions continue to weigh on the sector, with the Philadelphia semiconductor index down -35% in 2022. Asian equity markets are continuing their buoyant start to the year overnight and carried on where Wall Street left off it on Friday night. As I type, the KOSPI (+2.33%) is the strongest performer across the region with the Hang Seng (+1.60%), the CSI (+0.67%) and the Shanghai Composite (+0.54%) also edging higher amid receding risk-off sentiment after Hong Kong and China resumed quarantine-free travel over the weekend thereby marking the end of the Covid Zero policy. Elsewhere, markets in Japan are closed for a holiday. Futures on the S&P 500 (+0.36%), the NASDAQ 100 (+0.54%) and the DAX (+0.75%) are trading higher as well. Crude oil prices are also higher with Brent futures (+1.18%) at $79.50/bbl and WTI (+1.25%) at $74.69/bbl as we go to print. Early morning data showed that Australia’s building approvals (-9.0% m/m) dropped further in November compared to a downwardly revised -5.6% decline in October. In the US, the House Republican leadership standoff came to an end over the weekend after Republican Kevin McCarthy was elected as speaker after 14 failed attempts following days of gruelling negotiations. Recapping last week now, and markets put in a strong start to 2023 as signs of economic weakness and declining inflationary pressures raised hopes that central banks wouldn’t be as aggressive as feared on hiking rates. In particular, the aforementioned ISM services index on Friday created a major bond and equity rally to end the week. However ominously it means December was the first month since May 2020 that both the ISM US services and manufacturing components were in contractionary territory. On the back of ISM and payrolls, investors immediately moved to price in a less aggressive pace of rate hikes from the Federal Reserve. For instance, futures pricing for the end-2023 rate came down by -10.3bps over the week (-19.0bps on Friday) to 4.48%. That was a big catalyst for risk assets, with the S&P 500 surging +2.28% on Friday, which brought the index back into positive territory for the week at +1.45%. It also led to a massive decline in Treasury yields, with the 10yr down -31.7bps over the week (-16.0bps Friday) to 3.558%. Over in Europe there was a similarly optimistic picture, aided by the news on Friday from the flash Euro Area CPI release. That showed headline inflation falling to +9.2% in December (vs. +9.5% expected), although core inflation did hit a record high of +5.2%. This backdrop meant equities and bonds surged across the continent, with the STOXX 600 up +4.60% (+1.16% Friday) to mark its strongest weekly performance since March. At the same time, 10yr bund yields fell -35.8bps (-10.5bps Friday), marking their largest weekly decline in records going back to German reunification in 1990. Let's see what week 2 of 2023 brings Tyler Durden Mon, 01/09/2023 - 08:05.....»»

Category: blogSource: zerohedgeJan 9th, 2023