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Ethiopian Airlines sees crash settlement with Boeing by end-June

Ethiopian Airlines expects a settlement with planemaker Boeing by end of June over the crash of an 737 MAX plane in March 2019, CEO Tewolde Gebremariam told Reuters on Friday......»»

Category: topSource: reutersMay 15th, 2020

The Boeing 777X won"t be delivered to airlines until 2025. Take a look at the enormous new flagship Boeing hopes will be its redemption.

The Boeing plane is the largest twin-engine jet to ever take to the skies and will carry more passengers than its predecessor while using less fuel. The first flight of the Boeing 777X.Stephen Brashear/Getty Boeing's newest aircraft, the Boeing 777X, flew for the first time in January 2020 after lengthy delays. It's the largest twin-engine jet in the world and Boeing's latest new aircraft to fly since the grounding of the 737 Max. Boeing said in April that certification delays have pushed its first delivery back to 2025. Visit Business Insider's homepage for more stories. Boeing's latest history-making plane continues to be delayed. The Boeing 777X will not be delivered until late 2023, its manufacturer announced on Wednesday, further delaying the aircraft's debut well-beyond the planned time frame of 2020. Boeing attributed the delay to numerous factors including the pandemic, reduced demand, and new certification requirements. The twin-engine jet first graced the skies in January 2020 when it lifted off from Paine Field in Everett, Washington following a day of weather delays. A total of four test aircraft now roam the skies, pushing the limits of the aircraft in advance of its certification to fly passengers.Boeing designed the 777X to be the first next-generation variant of Boeing's popular 777 product line, which first flew in the 1990s and currently sees service with the world's leading airlines. The plane is equipped with new engines developed by General Electric and a longer pair of wings, enabling it to carry more passengers while operating more efficiently than its predecessor aircraft, effectively replacing the Boeing 747 Jumbo Jet. When it first took flight, the 777X became the largest twin-engine jet aircraft to ever fly. Though a milestone aircraft for Boeing, its 2020 aerial debut was hampered by the crash of an Ethiopian Airlines Boeing 737 Max and the subsequent worldwide grounding of the narrow-body jet due to issues with the aircraft's software stemming from its development.Take a look at the plane Boeing hopes will be its redemption.  Boeing's 777 became popular in the mid-90s as the next step up from its 767. Large twin-engine aircraft were gaining popularity due to their efficiency and changing attitudes toward their safety.A Boeing 777-200 test aircraft.Reuters/StringerSource: BoeingFast-forward to more recent days: Boeing looked back to its famous 777 to see if it could be improved using technology from its latest widebody, the smaller 787 Dreamliner.View of one of two Rolls Royce Trent 1000 engines of Boeing 787 Dreamliner during a media tour of the aircraft ahead of the Singapore Airshow in SingaporeReutersRead More: Boeing's revolutionary 787 Dreamliner has changed air travel forever. Here's how the company left competitors in the dust with a risky $8 billion bet.Source: BoeingAnd so, the 777X was born.A Boeing 777X aircraft being built by Boeing.Stephen Brashear/GettyJust like the aircraft that came before it, Boeing would create two variants, the -8 and -9.A Boeing 777X aircraft in production.Stephen Brashear/GettyThe -9 aircraft would be the first to be manufactured, with production beginning in October 2017.A Boeing 777X without paint at Paine Field.JASON REDMOND/AFP/GettySource: BoeingAt 251 feet and 9 inches in the length, the aircraft would be the largest twin-engine aircraft to roam the skies.A Boeing 777x aircraft.LINDSEY WASSON/ReutersSource: BoeingIts wingspan is almost as wide as the aircraft is long — wingtip to wingtip it spans 212 feet and 8 inches.The wingspan of a Boeing 777X.TERRAY SYLVESTER/ReutersSource: BoeingThe aircraft has two different wingspan lengths thanks to a unique feature of the aircraft: the wingtips extend flat before takeoff to improve fuel efficiency.The retractable wingtips of a Boeing 777X.TERRAY SYLVESTER/ReutersPilots activate the function via a switch in the cockpit and retract them right after landing to avoid hitting anything on the ground.A Boeing 777X with its wingtips retracted.TERRAY SYLVESTER/ReutersThe wingspan with the extended wingtips is 235 feet, nearly enough to fit two Boeing 757 aircraft back to back.A Boeing 777X preparing to take flight.LINDSEY WASSON/ReutersSource: BoeingWhile the range of the new -9 and the last generation 777-300ER are comparable, the draw to the new aircraft is its efficiency and extra carrying capacity.A Boeing 777X taxing back to its hangar.LINDSEY WASSON/ReutersSource: BoeingThe aircraft's increased efficiency and similar range to its predecessors despite the additional load are made possible thanks to General Electric Aviation's GE9X engines.A General Electric GE9X engine used exclusively on the Boeing 777X.JASON REDMOND/AFP/GettySource: BoeingThe huge engines are large enough for a Boeing 737 fuselage to fit inside.The GE Aviation GE9X engine powers the Boeing 777X.TERRAY SYLVESTER/ReutersThe fuel-efficient measures of the aircraft lead Boeing to boast that it will offer 10 percent less fuel burn, emissions, and operating costs.A Boeing 777X aircraft taxing in Washington.Stephen Brashear/Getty ImagesSource: BoeingBoeing also estimates that the -9 can carry 426 passengers in a two-cabin configuration, 30 more than the -300ER.A Boeing 777X taxing to the hangar.TERRAY SYLVESTER/ReutersSource: BoeingPassengers can look forward to larger windows, more natural light, quieter engines, and a more spacious cabin.A Boeing 777X taxing at Paine Field.JASON REDMOND/AFP/GettySource: BoeingIts first flight was scheduled for January 24, 2020, three years after production began. That flight was scrapped, however, due to bad weather in the area.A Boeing 777X taxis following a failed first flight attempt.LINDSEY WASSON/ReutersThe next day, with the sun shining, the aircraft successfully departed from Paine Field north of Seattle and away from the grounded Max aircraft at Boeing Field.The first flight of the Boeing 777X.Stephen Brashear/GettyA monumental day for Boeing, the aircraft performed routine tests before heading back to Seattle.The flight path of the Boeing 777X's first flightFlightRadar24Source: FlightRadar24But not before stopping for a photo with Mt. Rainer, a Boeing staple.The first Boeing 777X flight landing at Boeing Field.JASON REDMOND/AFP/GettyThe second 777X built by Boeing took flight on April 30, 2020, flying for just under 3 hours on its first trip to the skies.The second Boeing 777X test aircraft taking flight for the first time.BoeingSource: BoeingThe second of four flight test aircraft, this plane tested the 777X's flight handling characteristics and performance capabilities. Boeing flew the plane from its birthplace at Everett, Washington's Paine Field to Seattle's Boeing Field.The second Boeing 777X test aircraft taking flight for the first time.BoeingSource: BoeingA third aircraft took flight on August 3, 2020, departing from its home at Paine Field and heading as far south as Salem, Oregon before heading home via Spokane, Washington and a few touch-and-go maneuvers at an airport in Moses Lake, Washington.Boeing's third 777X aircraft departing on a test flight.BoeingSource: Flighradar24This test aircraft will focus on the auxiliary power unit – known as the third engine as it provides additional energy for functions such as engine start – as well as the aircraft's avionics, flight loads, and propulsion performance.Boeing's third 777X aircraft departing on a test flight.BoeingInstead of the Boeing house livery that its predecessors wear, the third aircraft's fuselage is nearly all white with the Boeing logo and other small lettering and branding providing the only color.Boeing's third 777X aircraft departing on a test flight.BoeingThe tail, however, remained the same.Boeing's third 777X aircraft departing on a test flight.BoeingThe aircraft will continue test flights until it receives certification from the world's aviation regulatory agencies. So far, Boeing has logged around 100 hours of test flying with the new type.A Boeing 777X test flight.Stephen Brashear/GettyWhen it does receive the certification, expected to be rigorous following the issues exposed with the Boeing 737 Max certification, deliveries can begin to customers, with Emirates first on the list.Emirates Boeing 777-300ER aircraft in Dubai.ReutersSource: ForbesSeven other airlines have the aircraft on order including Lufthansa, Singapore Airlines, Qatar Airways, British Airways, All Nippon Airways, Etihad Airways, and Cathay Pacific.A Boeing 777X aircraft departing Paine Field.JASON REDMOND/AFP/GettySource: BoeingAs is Boeing's custom, painted on the side of the fuselage of the first test plane are the tails of each airline that has an order in for the plane.A Boeing 777X aircraft on its first test flight.Stephen Brashear/Getty ImagesThe cost per plane stands at $442.2 million, but some airlines receive discounts for buying in bulk.A Boeing 777X aircraft preparing for takeoff.JASON REDMOND/AFP/GettySource: BoeingFor the majority of the airlines on the list, an Airbus aircraft serves as the flagship, though the 777X will likely take that spot.A Boeing 777X preparing for its first test flight amid bad weather.Stephen Brashear/GettyThe first delivery – and likely the first passenger flight – of the aircraft was expected in late 2023 following pandemic-related delays.A taxing Boeing 777 in Seatle, Washington.JASON REDMOND/AFP/GettyRead More: Boeing's Washington facilities closed indefinitely due to COVID-19. Take a look at the greatest successes and failures which were built there."This schedule, and the associated financial impact, reflect a number of factors, including an updated assessment of global certification requirements, the company's latest assessment of COVID-19 impacts on market demand, and discussions with its customers with respect to aircraft delivery timing," Boeing said in a statement at the time.A Boeing 777X test flight.Stephen Brashear/GettyIn April 2022, the company announced plans to halt production of the 777x through 2023 amid certification delays, pushing the jet's entry into service to 2025.Boeing 777X.BoeingSource: BoeingThis delay will give Boeing time to address the 777X's certification process but will incur an additional $1.5 billion in costs until the jet resumes production.Boeing 777X.BoeingUntil then Boeing will have to be satisfied with its creation of the world's largest twin-engine passenger jet.The Boeing 777X at Dubai Airshow 2021.Thomas Pallini/InsiderRead the original article on Business Insider.....»»

Category: personnelSource: nytApr 27th, 2022

Tesla’s Free Cash Flow Is Still Resoundingly Negative

Stanphyl Capital’s commentary for the month ended March 31, 2022, discussing their short position in Tesla Inc (NASDAQ:TSLA). We remain short the biggest bubble in modern stock market history, Tesla Inc. (TSLA) which, despite a steadily sliding share of the world’s EV market and a share of the overall auto market that’s only around 1.5%, […] Stanphyl Capital’s commentary for the month ended March 31, 2022, discussing their short position in Tesla Inc (NASDAQ:TSLA). We remain short the biggest bubble in modern stock market history, Tesla Inc. (TSLA) which, despite a steadily sliding share of the world’s EV market and a share of the overall auto market that’s only around 1.5%, Trevor Scott points out has a market cap roughly equal to the next 20 largest automakers combined: 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 2021 hedge fund letters, conferences and more So here’s why we remain short Tesla: Tesla has no “moat” of any kind; i.e., nothing meaningfully proprietary in terms of its electric car technology (which has now been surpassed by numerous competitors), while existing automakers—unlike Tesla­—have a decades-long “experience moat” of knowing how to mass-produce, distribute and service high-quality cars consistently and profitably. Excluding working capital benefits and sunsetting emission credit sales Tesla generates negative free cash flow. Growth in sequential unit demand for Tesla’s cars is at a crawl relative to expectations. Elon Musk is a pathological liar who under the terms of his SEC settlement cannot deny having committed securities fraud. Tesla’s Q1 Deliveries Tesla’s Q1 2022 delivery number (to be reported in early April) will likely only be slightly better than Q4 2022’s 308,000, perhaps a 20,000 (or fewer) unit gain that would be a rounding error for an auto company trading at even one-tenth of Tesla’s valuation. If in any quarter GM or VW or Toyota sold 2.02 million vehicles instead of 2 million or 1.98 million, no one would pay the slightest bit of attention to the difference. Seeing as Tesla is still being valued at over seventeen GMs, it’s time to start looking at its relatively tiny numerical sequential sales growth, rather than Wall Street’s sell-side hype of “percentage off a small base.” In other words, if you want to be valued at a giant multiple of “the big boys,” you should be treated as a big boy. And yes, Tesla is somewhat capacity constrained, but so are all its competitors. Let’s see how quickly “constraint” morphs into “excess capacity” when the German and Texas factories are fully online! Meanwhile in January Tesla reported results for Q4 2021 and once again proved that it’s a truly horrible business. Although the company claimed to have generated $2.8 billion in free cash flow for the quarter, that was almost entirely created by massively increased payables & accrued liabilities, and by stock-based compensation. After adjusting for those factors (and a tiny increase in receivables), Tesla’s free cash flow was just $119 million, and that undoubtedly included several hundred million dollars of previously earned & billed emission credit sales, a revenue stream which will almost entirely disappear next year as other automakers begin selling enough electric cars of their own. Thus, despite all the sell-side and media hype, on a sustainable basis Tesla’s free cash flow is still resoundingly negative. An Energy Company And for those of you who think that Tesla is “really an energy company,” in Q4 “Tesla Energy” had revenue of $688 million (down 8.5% year-over-year and 8% sequentially) and cost of revenue of $739 million, meaning it had a negative gross margin. So if Tesla is “really an energy company,” it’s even more screwed than if it’s just a car company! Meanwhile, perhaps the biggest reason Tesla has recently been able to post marginally increasing sequential quarterly deliveries is because competitors’ production is at the lowest level in decades due to the massive chip shortage, thereby eliminating a number of “Tesla alternatives.” Yet Tesla is enjoying record production because Musk (a notorious “corner-cutter”) is apparently willing to either substitute untested, non-auto-grade chips for the more durable chips he can’t get (please see my Twitter post about this) or simply eliminate entire crucial safety systems such as back-up steering and crash-avoidance radar. Meanwhile, many Tesla bulls sincerely believe that ten years from now the company will be twice the size of Volkswagen or Toyota, thereby selling around 20 million cars a year (up from the current run-rate of around 1.3 million); in fact in March Musk himself even raised this as a possibility. To illustrate how utterly absurd this is, going from 1.3 million cars a year today to 20 million in ten years means that in addition to one million cars a year of eventual production from the new German and Texas factories, Tesla would have to add 35 more brand new 500,000 car/year factories with sold out production; i.e., a new factory nearly every single quarter for ten years! And what then? Well, then you’d have a car company approximately twice the size of Toyota (current market cap: $249 billion) or Volkswagen (current market cap: $110 billion). If that would make Tesla worth, say, $500 billion in 10 years, discounting that back at 15%/year and allowing for enough share dilution to pay for all those factories, Tesla—in that absurdly optimistic scenario—would be worth just $100/share today, down almost 93% from its current price. Another favorite hype story from Tesla bulls has been “the China market.” But based on the Chinese domestic (non-export) sales numbers we have for January and February it appears that Q1 2022 sales there barely grew (or may have even contracted)  from Q4 2021’s. And in Q4 Tesla had only around 1.5% of the overall Chinese passenger vehicle market and just 11% of the BEV market. Meanwhile,  as Tesla continues to sell its fraudulent & dangerous so-called “Full Self Driving” the head of that program just took a four-month sabbatical; the last major Tesla executive who did that (Doug Field) never returned. In a sane regulatory environment Tesla, having sold this garbage software for over five years now… …would be prosecuted for “consumer fraud,” and indeed the regulatory tide may finally be turning, as two U.S. senators continue to question its safety and in October the NHTSA appointed a harsh critic of this deadly product to advise on its regulation. (For all known Tesla deaths see here.) Are major write-downs and refunds on the way, killing the company’s slight “claimed profitability”? Stay tuned! Meanwhile, Guidehouse Insights continues to rate Tesla dead last among autonomous competitors: Another favorite Tesla hype story has been built around so-called “proprietary battery technology.” In fact though, Tesla has nothing proprietary there—it doesn’t make them, it buys them from Panasonic, CATL and LG, and it’s the biggest liar in the industry regarding the real-world range of its cars. And if new-format 4680 cells enter the market some time in 2024 (as is now expected), even if Tesla makes some of its own,  other manufacturers will gladly sell them to anyone. Build Quality Meanwhile, Tesla build quality remains awful (it ranks second-to-last in the latest Consumer Reports reliability survey) while the latest survey from British consumer organization Which? found it to be one of the least reliable cars in existence. And Tesla’s worst-rated Model Y faces current (or imminent) competition from the much better built electric Audi Q4 e-tron, BMW iX3, Mercedes EQB, Volvo XC40 Recharge, Volkswagen ID.4, Ford Mustang Mach E, Nissan Ariya, Hyundai Ioniq 5 and Kia EV6. And Tesla’s Model 3 now has terrific direct “sedan competition” from Volvo’s beautiful Polestar 2, the great new BMW i4 and the premium version of Volkswagen’s ID.3 (in Europe), plus multiple local competitors in China. And in the high-end electric car segment worldwide the Audi e-tron (substantially improved for 2022!) and Porsche Taycan outsell the Models S & X (and the newly updated Tesla models with their dated exteriors and idiotic shifters & steering wheels won’t change this), while the spectacular new Mercedes EQS, Audi e-Tron GT and Lucid Air make the Tesla Model S look like a fast Yugo, while the extremely well reviewed new BMW iX does the same to the Model X. And oh, the joke of a “pickup truck” Tesla previewed in 2019 (and still hasn’t shown in production-ready form) won’t be much of “growth engine” either, as it will enter a dogfight of a market; in fact, Ford’s terrific 2022 all-electric F-150 Lightning now has over 200,000 retail reservations (plus many more fleet reservations), GM has introduced its fantastic 2023 electric Silverado with over 110,000 reservations and Rivian’s pick-up has gotten excellent early reviews. Regarding safety, as noted earlier in this letter, Tesla continues to deceptively sell its hugely dangerous so-called “Autopilot” system, which Consumer Reports has completely eviscerated; God only knows how many more people this monstrosity unleashed on public roads will kill despite the NTSB condemning it. Elsewhere in safety, the Chinese government forced the recall of tens of thousands of Teslas for a dangerous suspension defect the company spent years trying to cover up, and now Tesla has been hit by a class-action lawsuit in the U.S. for the same defect. Tesla also knowingly sold cars that it knew were a fire hazard and did the same with solar systems, and after initially refusing to do so voluntarily, it was forced to recall a dangerously defective touchscreen. In other words, when it comes to the safety of customers and innocent bystanders, Tesla is truly one of the most vile companies on Earth. Meanwhile the massive number of lawsuits of all types against the company continues to escalate. So here is Tesla’s competition in cars... (note: these links are regularly updated) Porsche Taycan Porsche Taycan Cross Turismo Porsche Macan Electric SUV Officially Coming in 2023 Volkswagen ID.3 Volkswagen ID.4 Electric SUV Volkswagen unveils ID.6 SUV EV in China Volkswagen ID.Buzz electric van Volkswagen ID Vizzion confirmed - answer to the Tesla Model 3 VW’s Cupra brand counts on performance for Born EV Cupra, VW brand to get entry-level battery-powered cars Volkswagen unveils $7.1B commitment to boost product line-up, R&D, mfg in N. America Audi e-tron Audi e-tron Sportback Audi E-tron GT Audi Q4 e-tron Audi Q6 e-tron confirmed for 2022 launch 2022 Audi A6 e-tron set to take on Tesla Audi will expand EV lineup with electric A6 wagon Audi TT to be axed in 2023 for 'emotional', electric replacement Hyundai Ioniq 5 Hyundai Ioniq 6 Will Be a Slick-Looking EV Sedan Hyundai Kona Electric Genesis reveals their first EV on the E-GMP platform, the electric GV60 crossover Genesis Electrified GV70 Revealed With 483 Horsepower And AWD Kia Niro Electric: 239-mile range & $39,000 before subsidies Kia EV6: Charging towards the future Kia EV4 on course to grow electric SUV range Jaguar’s All-Electric i-Pace Jaguar to become all-electric brand; Land Rover to Get 6 electric models Daimler will invest more than $47B in EVs and be all-electric ready by 2030 Mercedes EQS: the first electric vehicle in the luxury class 2023 Mercedes-Benz EQS SUV Interior Unveiled With Up To Seven Seats Mercedes-Benz unveils EQE electric sedan with impressive 400-mile range Mercedes EQE SUV to rival BMW iX and Tesla Model X Mercedes EQC electric SUV available now in Europe & China Mercedes-Benz Launches the EQV, its First Fully-Electric Passenger Van Mercedes-Benz EQB Makes Its European Debut, US Sales Confirmed Mercedes-Benz unveils EQA electric SUV with 265 miles of range and ~$46,000 price Ford Mustang Mach-E Available Now Ford F-150 Lightning electric pick-up available 2022 Ford set to launch ‘mini Mustang Mach-E’ electric SUV in 2023 Ford to launch 7 EVs in Europe in big electric push Ford’s Lincoln brand to launch full slate of electric SUVs by 2026 Volvo Polestar 2 Polestar 3 will hit U.S. market in Q1 2023 Volvo XC40 Recharge Volvo C40 electric sedan to challenge Tesla Model 3, VW ID3 Polestar 3 will be an electric SUV that shares its all-new platform with next Volvo XC90 Chevrolet Bolt sedan, 259-mile range starting at $31,000 Chevrolet Bolt EUV electric crossover Cadillac All-Electric Lyriq Available Spring 2022 GMC 2022 ALL-ELECTRIC SUPERTRUCK HUMMER EV GM’s 2023 electric Silverado pickup truck GMC to launch electric Hummer SUV in 2023 GM announces electric versions of the 2023 Chevy Equinox & Blazer SUVs starting @ $30,000 GM Launches BrightDrop to Electrify the Delivery of Goods and Services BMW leads off EV offensive with iX3 BMW expands EV offerings with iX tech flagship and i4 sedan BMW i7 EV, with 600 hp, will be most powerful variant of new 7 Series flagship 2022 BMW iX1 electric SUV spied Renault-Nissan alliance plows $26B into EV blitz- will jointly launch 35 new EVs Nissan vows to hop back on EV podium with Ariya Nissan LEAF e+ with 226-mile range is available now Nissan Unveils $18 Billion Electric-Vehicle Strategy Renault upgrades Zoe electric car as competition intensifies Renault Dacia Spring Electric SUV Renault to boost low-volume Alpine brand with 3 EVs Renault's electric Megane will debut new digital cockpit Stellantis promises 'heart-of-the-market SUV' from new, 8-vehicle EV platform Chrysler to go all-EV by 2028 Alfa Romeo's First Electric Car Will Arrive in 2024 Peugeot e-208 PEUGEOT E-2008: THE ELECTRIC AND VERSATILE SUV Peugeot 308 will get full-electric version Subaru shows off its first electric vehicle, the Solterra SUV Citroen compact EV challenges VW ID3 on price Rivian R1T Is the Most Remarkable Pickup We’ve Ever Driven Maserati going fully electric by 2030 -all vehicles will offer a BEV version by 2025 Mini Cooper SE Electric Toyota’s Electric bZ4X Goes On Sale in Spring 2022 Toyota will have lineup of 30 full EVs by 2030; Lexus will be all-electric brand Honda and Sony to build, sell EVs by 2025 Opel sees electric Corsa as key EV entry 2021 Vauxhall Mokka revealed as EV with sharp looks, massive changes Skoda Enyaq iV electric SUV offers range of power, battery sizes Electric Skoda Enyaq coupe to muscle-in on Tesla Model 3 Skoda plans small EV, cheaper variants to take on French, Korean rivals Nio to launch in five more European countries after Norway BYD will launch electric SUV in Europe The Lucid Air Achieves an Estimated EPA Range of 517 Miles on a Single Charge Bentley will start output of first full EV in 2025 All-electric Rolls-Royce Spectre to launch in 2023 – firm to be EV-only by 2030 Aston Martin will build electric vehicles in UK from 2025 Meet the Canoo, a Subscription-Only EV Pod Coming in 2021 Two new electric cars from Mahindra in India; Global Tesla rival e-car soon Former Saab factory gets new life building solar-powered Sono Sion electric cars Foxconn aims for 10% of electric car platform market by 2025 And in China… How VW Group plans to dominate China's EV market VW Goes Head-to-Head With Tesla in China With New ID.4 Crozz Electric SUV Volkswagen’s ID.3 EV to be produced by JVs with SAIC, FAW in 2021 2022 VW ID.6 Revealed With Room For Seven And Two Electric Motors China-built Audi e-tron rolls off production line in Changchun Audi Q2L e-tron debuts at Auto Shanghai Audi will build Q4 e-tron in China Audi Q5 e-tron Confirmed For China Audi in cooperation company for local electric car production with FAW FAW Hongqi starts selling electric SUV with 400km range for $32,000 FAW (Hongqi) to roll out 15 electric models by 2025 BYD goes after market left open by Tesla with four cheaper models for budget-conscious buyers BYD said to launch premium NEV brand ‘Dolphin’ in 2022 Top of Form Bottom of Form Daimler & BYD launch DENZA electric vehicle for the Chinese market Geely announces premium EV brand Zeekr Geely, Mercedes-Benz launch $780 million JV to make electric smart-branded cars Mercedes styled Denza X 7-seat electric SUV to hit market Mercedes ‘makes mark’ with China-built EQC BMW, Great Wall to build new China plant for electric cars BAIC Goes Electric, & Establishes Itself as a Force in China’s New Energy Vehicle Future BAIC BJEV, Magna ready to pour RMB2 bln in all-electric PV manufacturing JV Toyota partners with BYD to build affordable $30,000 electric car Ford MUSTANG MACH-E ROLLS OFF ASSEMBLY LINE IN CHINA FOR LOCAL CUSTOMERS Lexus to launch EV in China taking on VW and Tesla GAC Aion about to start volume production of 1,000-km range AION LX GAC Toyota to ramp up annual capacity by 400,000 NEVs GAC kicks off delivery of HYCAN 007 all-electric SUV Nio – Ready For Tomorrow Nio steps up plans for mass-market brand to compete with VW, Toyota Xpeng Motors sells multiple EV models SAIC-GM to build Ultium EV platform in Wuhan Chevrolet Menlo Electric Vehicle Launched in China Buick Introduces New VELITE 6 EV with Extended Range Buick Velite 7 EV And Velite 6 PHEV Launch In China Dongfeng launches the all-electric Voyah  PSA to accelerate rollout of electrified vehicles in China SAIC, Alibaba-backed EV brand IM begins presale of first model L7 Hyundai Motor Transforming Chongqing Factory into Electric Vehicle Plant Polestar said to plan China showroom expansion to compete with Tesla Jaguar Land Rover's Chinese arm invests £800m in EV production Renault reveals series urban e-SUV K-ZE for China Renault & Brilliance detail electric van lineup for China Renault forms China electric vehicle venture with JMCG Honda plans China EV plant to expand lineup GAC Honda launches pure electric car brand ‘e:NP’ Geely launches new electric car brand 'Geometry' – will launch 10 EVs by 2025 Geely, Foxconn form partnership to build cars for other automakers Fiat Chrysler, Foxconn Team Up for Electric Vehicles Baidu to create an intelligent EV company with automaker Geely Leapmotor starts presale of C11 electric SUV on Jan. 1 2021 Changan forms subsidiary Avatar Technology to develop smart EVs with Huawei, CATL WM Motors/Weltmeister Chery Seres Enovate China's cute Ora R1 electric hatch offers a huge range for less than US$9,000 Singulato JAC Motors releases new product planning, including many NEVs Seat to make purely electric cars with JAC VW in China Iconiq Motors Hozon Aiways Skyworth Auto Youxia CHJ Automotive begins to accept orders of Leading Ideal ONE Infiniti to launch Chinese-built EV in 2022 Human Horizons Chinese smartphone giant Xiaomi to launch electric car business with $10 billion investment Lifan Technology to roll out three EV models with swappable batteries in 2021 Here’s Tesla’s competition in autonomous driving… Waymo ranked top & Tesla last in Guidehouse leaderboard on automated driving systems Tesla has a self-driving strategy other companies abandoned years ago Fiat Chrysler, Waymo expand self-driving partnership for passenger, delivery vehicles Waymo and Lyft partner to scale self-driving robotaxi service in Phoenix Jaguar and Waymo announce an electric, fully autonomous car Renault, Nissan partner with Waymo for self-driving vehicles Geely’s Zeekr, Waymo partner on autonomous ride-hailing vehicle for the U.S. market Volvo, Waymo partner to build self-driving vehicles Volvo Cars’ unsupervised autonomous driving feature Ride Pilot to debut in California Cruise and GM Team Up with Microsoft to Commercialize Self-Driving Vehicles Cadillac Super Cruise Sets the Standard for Hands-Free Highway Driving Honda Joins with Cruise and General Motors to Build New Autonomous Vehicle Honda launching Level 3 autonomous cars Volkswagen moves ahead with Autonomous Driving R&D for Mobility as a Service VW, Bosch partner to develop autonomous driving systems Volkswagen teams up with Microsoft to accelerate the development of automated driving VW taps Baidu's Apollo platform to develop self-driving cars in China Ford “Blue Cruise” ARGO AI AND FORD TO LAUNCH SELF-DRIVING VEHICLES ON LYFT NETWORK Hyundai and Kia Invest in Aurora Toyota, Denso form robotaxi partnership with Aurora Aptiv and Hyundai Motor Group complete formation of autonomous driving joint venture Amazon’s Zoox unveils electric robotaxi that can travel up to 75 mph Nvidia and Mercedes Team Up to Make Next-Gen Vehicles Daimler's heavy trucks start self-driving some of the way SoftBank, Toyota's self-driving car venture adds Mazda, Suzuki, Subaru Corp, Isuzu Daihatsu  Continental & NVIDIA Partner to Enable Production of Artificial Intelligence Self-Driving Cars Mobileye and Geely to Offer Most Robust Driver Assistance Features Mobileye Starts Testing Self-Driving Vehicles in Germany Mobileye and NIO Partner to Bring Level 4 Autonomous Vehicles to Consumers Lucid Chooses Mobileye as Partner for Autonomous Vehicle Technology Alibaba-backed AutoX unveils first driverless RoboTaxi production line in China Nissan gives Japan version of Infiniti Q50 hands-free highway driving Hyundai to start autonomous ride-sharing service in Calif. Pony.ai Receives Approval for Paid Autonomous Robotaxi Services in Beijing Baidu Apollo’s autonomous driving service is now inclusive to all the megacities in China Toyota to join Baidu's open-source self-driving platform Baidu, WM Motor announce strategic partnership for L3, L4 autonomous driving solutions Volvo will provide cars for Didi's self-driving test fleet BMW and Tencent to develop self-driving car technology together BMW, NavInfo bolster partnership in HD map service for autonomous cars in China GM Invests $300 M in Momenta to deliver self-driving technologies in China FAW Hongqi readies electric SUV offering Level 4 autonomous driving Tencent, Changan Auto Announce Autonomous-Vehicle Joint Venture Huawei teams up with BAIC BJEV, Changan, GAC to co-launch self-driving car brands GAC Aion, DiDi Autonomous Driving to co-develop driverless NEV model BYD partners with Huawei for autonomous driving Lyft, Magna in Deal to Develop Hardware, Software for Self-Driving Cars Xpeng releases autonomous features for highway driving Nuro Becomes First Driverless Car Delivery Service in California Deutsche Post to Deploy Test Fleet Of Fully Autonomous Delivery Trucks ZF autonomous EV venture names first customer Magna’s new MAX4 self-driving platform offers autonomy up to Level 4 Groupe PSA’s safe and intuitive autonomous car tested by the general public Mitsubishi Electric to Exhibit Autonomous-driving Technologies in New xAUTO Test Vehicle Apple acquires self-driving startup Drive.ai Motional to begin robotaxi testing with Hyundai Ioniq 5 in Los Angeles JD.com Delivers on Self-Driving Electric Trucks NAVYA Unveils First Fully Autonomous Taxi Fujitsu and HERE to partner on advanced mobility services and autonomous driving Great Wall’s autonomous driving arm Haomo.ai receives investment from Meituan Plus.ai, Iveco to start L4 autonomous heavy-duty truck test in Europe, China T3 Mobility, IDRIVERPLUS to pilot Robotaxi operation in Suzhou with autonomous+manual model Here’s where Tesla’s competition will get its battery cells… Panasonic (making deals with multiple automakers) LG Samsung SK Innovation Toshiba CATL BYD Volkswagen to Build Six Electric-Vehicle Battery Factories in Europe How GM's Ultium Battery Will Help It Commit to an Electric Future GM to develop lithium-metal batteries with SolidEnergy Systems Ford, SK Innovation announce EV battery joint venture BMW & Ford Invest in Solid Power to Secure All Solid-State Batteries for Future Electric Vehicles Stellantis affirms commitment to build battery factory in Italy with Mercedes, TotalEnergies Stellantis and LG to Invest Over $5 Billion CAD in Joint Venture for Li-Ion Battery Plant in Canada Stellantis and Factorial Energy to Jointly Develop Solid-State Batteries for Electric Vehicles Mercedes-Benz to build 8 battery factories in push to become electric-only automaker Toyota to build plant in N.C. capable of making up to 1.2M batteries a year Toyota Outlines Solid-State Battery Tech, $13.6 Billion Investment Nissan Announces Proprietary Solid-State Batteries Daimler joins Stellantis as partner in European battery cell venture ACC Renault signs EV battery deals with Envision, Verkor for French plants Nissan to build $1.4bn EV battery plant in UK with Chinese partner UK companies AMTE Power and Britishvolt plan $4.9 billion investment in battery plants Freyr Verkor Farasis Microvast Akasol Cenat Wanxiang Eve Energy Svolt Romeo Power ProLogium Hyundai Motor developing solid-state EV batteries Morrow Here’s Tesla’s competition in charging networks… Infrastructure Bill: $7.5 billion Towards Nationwide Network of 500,000 EV Chargers Electrify America EVgo Chargepoint Ionity Europe Shell Plans To Deploy Around 500,000 Charging Points Globally By 2025 51 U.S. electric companies commit to build nationwide EV fast charging network by end of 2023 GM to distribute up to 10 chargers to each of its dealerships starting early 2022 Circle K Owner Plans Electric-Car Charging Push in U.S., Canada 191 U.S. Porsche dealers are installing 350kw chargers ChargePoint to equip Daimler dealers with electric car chargers Ford introduces 12,000 station charging network, teams with Amazon on home installation Petro-Canada Introduces Coast-to-Coast Canadian Charging Network Volta is rolling out a free charging network E.ON and Virta launch one of the largest intelligent EV charging networks in Europe Volkswagen plans 36,000 charging points for electric cars throughout Europe Smatric has over 400 charging points in Austria Allego has hundreds of chargers in Europe PodPoint UK charging stations BP Will Invest £1 Billion In UK Charging Infrastructure Instavolt is rolling out a UK charging network Fastned building 150kw-350kw chargers in Europe Aral To Install Over 100 Ultra-Fast Chargers In Germany Deutsche Telekom launches installation of charging network for e-cars Total to build 1,000 high-powered charging points at 300 European service-stations NIO teams up with China’s State Grid to build battery charging, swapping stations BYD, Shell to build joint venture for EV charging network development in China Volkswagen-based CAMS launches supercharging stations in China Volkswagen, FAW Group, JAC Motors, Star Charge formally announce new EV charging JV BMW to Build 360,000 Charging Points in China to Juice Electric Car Sales BP, Didi Jump on Electric-Vehicle Charging Bandwagon Evie rolls out ultrafast charging network in Australia Evie Networks To Install 42 Ultra-Fast Charging Sites In Australia And here’s Tesla’s competition in storage batteries… Panasonic Samsung LG Energy Solutions BYD AES + Siemens (Fluence) GE Hitachi ABB Toshiba Saft Johnson Contols EnerSys SOLARWATT Sonnen Kyocera Generac Kokam Eaton Tesvolt Kreisel Leclanche Lockheed Martin Honeywell EOS Energy Storage ESS UET electrIQ Power Stem ENGIE Redflow Primus Power Simpliphi Power Invinity Murata Bluestorage Adara Blue Planet Aggreko Orison Moixa Powin Energy Nidec Powervault Kore Power Shanghai Electric LithiumWerks Natron Energy Energy Vault Ambri Voltstorage Cadenza Innovation Morrow Gridtential Villara Elestor Flexgen SolarEdge Q-Cells Huawei ADS-TEC Form Energy Enphase Sumitomo Electric Stryten Energy Freyr Growatt Polarium C4V Thanks, Mark Spiegel Updated on Apr 1, 2022, 11:00 am (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkApr 1st, 2022

Futures Drift Lower After Kremlin Dashes Ukraine Peace Hopes; Curve Inversion Persists

Futures Drift Lower After Kremlin Dashes Ukraine Peace Hopes; Curve Inversion Persists After yesterday's explosive session, which saw stocks trade in violent kneejerk response to conflicting headlines out of Ukraine at first, only to post the biggest ever post FOMC reversal, as markets realized that the Fed's overly hawkish ambitions are too great and doom the rapidly slowing economy to an accelerated recession, overnight trading has been positively subdued with emini S&P futs trading in a tight 20 point range between 4,340 and 4,360 until 6 am ET, when European stocks turned negative and US equity futures suddenly dropped as much as 0.5%, after the Kremlin said reports of major progress in Ukraine talks are "wrong" and Kremlin spokesman Dmitry Peskov dismissed reports that the warring parties are moving toward a settlement, blaming Kyiv for slowing the negotiations, crippling any hope for a quick ceasefire deal and adding to worries about the outlook for economic growth as the Federal Reserve’s campaign against inflation gets underway. Futures were already wavering as the bond market flagged a growing risk that the Fed’s efforts to rein in prices could trigger an economic downturn with the 5s10s curve inverting. Ominously, Brent jumped more than $5/bbl after tumbling below $100 yesterday. Contracts on the Nasdaq 100 dipped 0.4% by 7:30 a.m. in New York, while S&P 500 futures were 0.34% lower. The benchmark S&P 500 on Wednesday posted its best two-day rally since April 2020 as the Fed hiked interest rates by a quarter point and Chair Jerome Powell signaled the economy could weather tighter monetary policy. Gold and 10Y yields dropped to session lows, and bitcoin was modestly lower on the session. Europe was slightly green while Asia stocks closed higher, led by the Hang Seng which rose 7% On Wednesday, the Fed raised borrowing costs by a quarter percentage point and signaled hikes at all six remaining meetings in 2022, while projecting an "above-normal" policy rate at 2.8% by the end of 2023. Chair Jerome Powell said the U.S. economy is “very strong” and can handle monetary tightening. Treasuries advanced, while a portion of the bond curve - the gap between 5- and 10-year yields - inverted for the first time since March 2020, a sign investors expect recession. The Fed also said it would begin shrinking its $8.9 trillion balance sheet at a “coming meeting,” without elaborating as Biden breathes down Powell's neck to get inflation under control. Meanwhile, the commodity shock from Russia’s war in Ukraine is continuing to aggravate price pressures and economic risks, portending more market volatility. “It won’t be easy -- rarely has the Fed safely landed the U.S. economy from such inflation heights without triggering an economic crash,” Seema Shah, chief strategist at Principal Global Investors, said in emailed comments. “Furthermore, the Russia-Ukraine conflict, of course, has the potential to disrupt the Fed’s path. But for now, the Fed’s priority has to be price stability.” “This type of normalization policy does not always end well,” said Nicolas Forest, global head of fixed income at Candriam Belgium SA. “While the Fed began its tightening cycle later than usual, at a time when inflation has never been so high, financial conditions could also harden, making the 2.80% target ambitious in our view. In this context, it is easy to understand why the U.S. curve has flattened.” In the latest Ukraine war developments, Russia continued to “hammer” cities like Kharkiv and Cherniyiv with bombardments and rocket systems and isn’t acting like it wants to settle, Pentagon spokesman John Kirby said in an interview with Bloomberg TV. Meanwhile, Russia’s Finance Ministry said a $117 million interest payment due on two dollar bonds had been made to Citibank in London amid mounting speculation that the country is heading for a default. Russia had until the end of business Wednesday to honor the coupons on the two notes. The ruble gained for a sixth day in Moscow trading, while the country’s stock market remains shut. Here are some more headlines courtesy of Newsquawk: Ukrainian President Zelensky said talks with Russia are challenging but are still ongoing. He added that Russia has the advantage in the air and already crossed all red lines, while he hopes for assistance from allies. Russian Foreign Minister says that discussions with Ukraine are continuing via video link with the sides discussing humanitarian and political issues. Ukrainian Defense Minister says so far there is nothing to satisfy us in negotiations with Russia; a peaceful solution can be reached with Russia, but "on our terms". Russian Kremlin says their delegation is putting colossal energy into Ukraine peace talks, conditions are absolutely clear. Agreement with Ukraine with clear parameters could very fast stop what is going on; on the recent FT report re. peace talk progress said this is not right, elements are correct but the entire peace is not true. A rebound in China stocks listed on U.S. exchanges also cooled a day after they soared the most since at least 2001 on a pledge from Beijing to keep its stock market stable. American depository receipts of Alibaba were down 2% in premarket trading following their biggest gain since their trading debut in September 2014, while Baidu dropped 5.7%. Here are some other notable premarket movers: Shares in Marrone Bio (MBII US) jumped 20% premarket after announcing a merger pact with Bioceres Crop Solutions (BIOX US), which falls 5.9%. Williams-Sonoma (WSM US) gained 6.2% in extended trading Wednesday after the home-goods retailer reported adjusted fourth-quarter earnings that beat the average analyst estimate. The company also raised its dividend and announced a share buyback authorization. In Europe, the Stoxx 600 index gained, nearly erasing losses that were sparked by Russia’s invasion of Ukraine. The index then dipped on the abovementioned news out of the Kremlin which said reports of major progress in Ukraine talks are “wrong”, only to bounce back into the green. DAX and FTSE MIB lag, slipping ~1%. Banks, autos and personal care are the worst performing sectors. Energy, real estate and tech outperform.  Here are some of the biggest European movers today: Deliveroo shares rise as much as 9.8% after reporting full-year results, with Barclays (equal-weight) saying the food-delivery company’s mid-term margin commentary was “helpful.” Grenke shares jump 16%, the most since May, after the company reported dividend per share that beat the average analyst estimate. EQT shares rise as much as 9.5%, extending Wednesday’s 12% gain following the acquisition of Baring Private Equity Asia for $7.5 billion in what is the biggest takeover of a private equity firm by another in the sector. Atos shares jump as much as 7.4% after BFM Business reported that Airbus has been mulling a possible takeover of the French IT firm’s cybersecurity unit. Atos reiterated that its BDS cybersecurity business is not for sale. DiaSorin shares soar as much as 9.7%, their best day in nearly one year as analysts upgraded the Italian diagnostics company following results, with the firm reporting net income for the full year that beat the average analyst estimate. Verbund shares rise as much as 7.7% after 2021 profit beats estimates and Austria’s biggest utility forecasts higher profit next year. Thyssenkrupp shares fall as much as 11% after the company suspended its full-year forecast for free cash flow. The move is a disappointment, given the FCF focus in the steel company’s equity story after years of cash burn, Deutsche Bank says. Asian stocks extended their rebound through a second day after Chinese shares rallied again on a vow of state support and the Federal Reserve expressed confidence in the U.S. economy.  The MSCI Asia Pacific Index rallied as much as 3.6%, lifted by technology and consumer-discretionary shares. Japan and Hong Kong benchmarks led the way, with the Hang Seng Index surging 17% over two days, its biggest back-to-back advance since the Asian financial crisis in 1998, and the Topix jumping 2.5%.  A combination of China’s pledge to stabilize markets, Fed comments on the U.S. economy’s strength after the expected quarter-point interest rate hike by the central bank, and hopes for progress on Russia-Ukraine talks have put Asian stocks on track to end four consecutive weekly losses. “Following recent corrections, markets have reached a point that prices in, or presumes, a fair amount of rate hikes and economic stress,” said Ellen Gaske, lead economist for G-10 economies at PGIM Fixed Income. “It would not be surprising to see investors begin to inch back into the market in search of yield.” Japanese equities rose for a fourth day, as investors were cheered by comments from the Federal Reserve on U.S. economic growth and China’s moves to support its market. Electronics and machinery makers were the biggest boosts to the Topix, which rose 2.5%, to the highest level since Feb. 21. All 33 industry groups advanced. Fast Retailing and Tokyo Electron were the biggest contributors to a 3.5% rise in the Nikkei 225. The yen extended its losses against the dollar after weakening 3.4% over the previous eight sessions. The Fed raised interest rates by a quarter percentage point and signaled hikes at all six remaining meetings this year, while saying “the American economy is very strong” and able to handle tighter policy. Global stocks got a lift Wednesday after Beijing vowed to keep its stock market stable. “The FOMC dot plot clearly shows that the number of interest rate hikes will be reasonable, and the stock market is pleased that the risk of accelerating long-term interest rates rising due to monetary policy following has decreased,” said Kazuharu Konishi, head of equities at Mitsubishi UFJ Kokusai Asset Management. In domestic news, a magnitude-7.3 earthquake struck near Fukushima prefecture late Wednesday, killing four and injuring dozens of people, as well as derailing a bullet train and disrupting power India’s benchmark stocks index rose, tracking regional peers, as lenders drove gains. The S&P BSE Sensex climbed 1.8% to 57,863.93, in Mumbai. The measure added 4.2% this week, and with local markets closed for a holiday Friday, it is the biggest weekly advance for the index since February 2021. With today’s gains, it completely recovered all losses that followed Russia’s invasion of Ukraine.   Mortgage lender Housing Development Finance Corp. rose 5.4%, its biggest jump in over a year and was the best performer on the Sensex, which saw all but two of 30 shares advance. Seventeen of 19 sectoral sub-indexes compiled by BSE Ltd. gained, led by a gauge of realty companies. The NSE Nifty 50 Index added 1.8% to 17,287.05 on Thursday. China’s pledge to support its markets, the prospect of progress on Russia-Ukraine cease-fire talks and the U.S. Federal Reserve’s comments on America’s economic strength boosted sentiment. Brent crude, a major import for India, down to $100 a barrel from $127.98 last week, also eased concerns. The Fed announcement was on expected lines for the market and they rallied in relief, Nishit Master, portfolio manager at Axis Securities wrote in a note.  “Despite the recent rally, the markets will continue to remain volatile in the near future on the back of tightening of liquidity conditions globally. One should use this volatility to increase equity allocation for the long term.” In rates, the post-Fed flattening move has extended as investors continue to digest expectations on latest policy path, with some strategists calling for a top in yields. 10-year yields around 2.12%, richer by ~6bp on the day and outperforming bunds and gilts by  4.5bp and 3bp; 2s10s spread is flatter by ~4bp on the day.  US TSY yields are richer by as much as 7bp across long-end of the curve, flattening 5s30s by a further 2.4bp with the spread dropping as low as 24.2bp;  the 5s10s was again inverted, trading fractionally in the red after first inverting yesterday during Powell's FOMC presser. In FX, the Bloomberg Dollar Spot Index pared a loss and the greenback traded mixed after earlier sliding against all of its Group- of-10 peers apart from the Swedish krona, as risk aversion gave rise to a haven bid. The euro snapped a three- day advance after the news out of Kremlin dampened sentiment; short-dated European benchmark bond yields were little changed while they contracted longer out on the curve. The pound advanced and gilts rose, led by the long end before the Bank of England looks all but certain to take interest rates back to their pre- Covid level. The Australian dollar still outperformed G-10 peers after the nation’s February unemployment rate falls to the lowest since 2008, boosting bets of earlier interest-rate hikes. The yen inched up amid risk aversion, but still held near its lowest level in six years as Bank of Japan Governor Haruhiko Kuroda vowed to continue with monetary stimulus even after the Federal Reserve kicked of its rate hike cycle Wednesday. In commodities, WTI crude futures climb near $99.50 while Brent rallies through $102; spot gold adds ~$16 to trade around $1,944. Base metals are mixed; LME nickel falls 8% to maximum limit while LME aluminum gains 1.8%. Bitcoin is modestly softer but remains well within yesterday's parameters and retains a USD 40k handle. Looking at the day ahead now and housing starts, building permits, initial jobless claims and industrial production are due. We will also hear from ECB's Lagarde, Lane, Knot, Schnabel and Visco. Earnings releases include Accenture, Enel, FedEx, Dollar General and Verbund. Market Snapshot S&P 500 futures down 0.3% at 4,337.00 STOXX Europe 600 up 0.4% to 450.44 MXAP up 3.5% to 178.08 MXAPJ up 4.0% to 582.21 Nikkei up 3.5% to 26,652.89 Topix up 2.5% to 1,899.01 Hang Seng Index up 7.0% to 21,501.23 Shanghai Composite up 1.4% to 3,215.04 Sensex up 2.1% to 58,014.18 Australia S&P/ASX 200 up 1.1% to 7,250.80 Kospi up 1.3% to 2,694.51 German 10Y yield little changed at 0.38% Euro up 0.2% to $1.1057 Brent Futures up 3.0% to $100.97/bbl Gold spot up 0.7% to $1,940.77 U.S. Dollar Index down 0.42% to 98.21 Top Overnight News Russia’s Finance Ministry said a $117 million interest payment due on two dollar bonds had been made to Citibank in London amid mounting speculation that the country is heading for a default Rates and currency markets are skeptical of the Bank of England’s ability to tame inflation without triggering an economic slowdown. Policymakers may undo tightening as soon as next year, swaps contracts suggest After the Federal Reserve raised interest rates and signaled hikes at all six remaining meetings this year, a section of the Treasury curve -- the gap between five- and 10-year yields -- inverted for the first time since March 2020. Meanwhile the flattening trend between two- and 10-year yields continued Hungary’s central bank kept the effective interest rate unchanged after a rally in the forint eased pressure on policy makers to further hike the European Union’s highest key rate Commodities trader Pierre Andurand sees a path for crude oil to get to $200 by the end of the year as historically tight markets struggle to ramp up production and replace lost supply from Russia A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks gained post-FOMC while Chinese tech remained euphoric on support pledges. ASX 200 was led higher again by outperformance in tech and following strong jobs data. Nikkei 225 rallied after recent currency weakness and despite the deadly earthquake in Fukushima. Hang Seng and Shanghai Comp. continued to benefit from China’s recent policy support pledges which  lifted the NASDAQ Golden Dragon China Index by 33% and with the PBoC boosting its liquidity efforts. Significant gains were also seen amongst developers after reports that China is not planning to expand its pilot property tax reform this year. Top Asian News China Affirms Friendship With Ukraine, Promise to ‘Never Attack’ Indonesia Holds Rates While Monitoring Inflation, War Risks War in Ukraine Triggers Slew of Shelved IPOs in Japan: ECM Watch Strong Quake Hits Japan, Killing Two and Halting Factories European bourses are predominantly negative, Euro Stoxx 50 -0.4%, after a relatively constructive open post Wall St./APAC handover. Initial upside faded as updates on Russia/Ukraine are downbeat overall and push back further on some of Wednesday's more constructive updates. US futures are lower across the board, ES -0.4%, after yesterday's upbeat close post a hawkish-FOMC. Top European News Raiffeisen CEO Says Bank is Considering Exit From Russia UBS, Mitsubishi Sell Japan Realty Unit to KKR for $2 Billion Russia’s Ruined Gameplan for Ukraine Is Visible in the South Diageo Rises; JPMorgan Lifts to Overweight on U.S. Position In FX, the dollar flips after hawkish Fed hike and more aggressive dot plot before unwinding all and more upside in buy rumor, sell fact reaction; DXY almost 100 ticks down from pre-FOMC peak and just off 98.000. Aussie outperforms following upbeat labour data and Kiwi lags on the back of sub-forecast GDP, AUD/USD eyeing Fib ahead of 0.7350, AUD/NZD back up over 1.0700 and NZD/USD capped into 0.6850. Sterling firm awaiting confirmation of 25 bp hike from the BoE and vote split plus MPC minutes for further guidance; Cable close to 1.3200 at best and EUR/GBP sub-0.8400. Euro clears 1.1000 again, while Yen extends decline to cross 119.00 line. Lira looks ahead to CBRT with high bar for any direct support in contrast to Real that got a full point hike from BCB and signal of more to come. Brazilian Central Bank raised the Selic rate by 100bps to 11.75%, as expected, while the decision was unanimous and it considered it appropriate to advance monetary tightening significantly into even more restrictive territory. In commodities, crude futures continue to nurse recent wounds, with Brent May back around USD 102.50/bbl while WTI April inches toward USD 100/bbl. Upside occurred, picking up from initial choppy action, amid the most recent geopolitical developments from the Kremlin and Ukrainian Defence Ministry. India may purchase up to 15mln bbls of oil from Russia with state-run oil firms preparing to  purchase heavy volumes of Russian crude that's going at a deep discount to help ease the margin pressure oil refiners. China is to increase gasoline prices by CNY 750/ton and diesel by CNY 7220/ton as of March 18th, according to the NDRC via CCTV. Italy is considering blocking the export of raw materials, according to the Deputy Industry Minister. Spot gold/silver are firmer given geopolitical-premia., while LME Nickle hit the new adj. limit down of 8% after the reopen. In fixed income, debt derives impetus from downturn in risk sentiment as Russia and Ukraine deny major strides towards ceasefire deal. Bond curves remain flatter following Fed's hawkish dot plots. Bonos and OATs soak up Spanish and French supply. US Event Calendar 8:30am: March Initial Jobless Claims, est. 220,000, prior 227,000; March Continuing Claims, est. 1.48m, prior 1.49m 8:30am: Feb. Building Permits, est. 1.85m, prior 1.9m; Building Permits MoM, est. -2.4%, prior 0.7%, revised 0.5% 8:30am: Feb. Housing Starts, est. 1.7m, prior 1.64m; Housing Starts MoM, est. 3.8%, prior -4.1% 8:30am: March Philadelphia Fed Business Outl, est. 14.8, prior 16.0 9:15am: Feb. Industrial Production MoM, est. 0.5%, prior 1.4% Capacity Utilization, est. 77.9%, prior 77.6% Manufacturing (SIC) Production, est. 1.0%, prior 0.2% DB's Jim Reid concludes the overnight wrap After I press send today I’ll be venturing back on a plane for the first time in two years this morning. I'm off to give a speech at a conference in Cannes just at the time when all the tabloid papers here say that London is going to be hotter than Greece and the Costa Brava in a rare March warm spell here in the UK. Rarer than a warm spell in the UK in March, we now have the start of only the fourth Fed hiking cycle in 27 years. We saw a wild ride in markets after the decision as initially the hawkish dot plot led to a big sell off in rates, and an S&P 500 that fell nearly -1.5% from pre announcement levels and into negative territory for the session. However markets completely turned on Powell’s comments in the press conference that the probability of recession was "not particularly elevated" and that the "economy is very strong" and can handle tighter policy. The S&P closed +2.24%, completing its biggest 2-day move in 23 months, while the Nasdaq climbed +3.77%. The big winners were mega cap tech stocks, with the FANG+ index putting in its best day on record, climbing +10.19%. The latter were almost certainly helped by earlier news that China would “actively introduce policies that benefit markets” and take steps to ease the most spartan lockdown measures. The FANG index includes Baidu and Alibaba that were up nearly +40% yesterday. To be fair the Fed meeting and the surrounding price action makes sense. Although I think the risks of a US recession by late 2023 / early 2024 are increasingly elevated I'm not convinced that the risks are particularly high in 2022. The start of the hiking cycle isn't historically the problem point for the economy or for that matter equities. Further to this, in my CoTD yesterday (link here) I showed that on average it takes around three years from the first Fed hike to recession. However the bad news is that all but one of the recessions inside 37 months (essentially three years) occurred when the 2s10s curve inverted before the hiking cycle ended. With all the recessions that started later than that, none of them had an inverted curve when the hiking cycle ended. In fact, hiking cycles that ended with the curve still in positive territory saw the next recession hit 53 months on average after the first rate hike, whereas the next recession for hiking cycles that ended with an inverted curve started on average in 23 months, so just under two years. As a reminder, none of the US recessions in the last 70 years have occurred until the 2s10s has inverted. On average it takes 12-18 months from inversion to recession. The problem is that all but one of the hiking cycles in the last 70 years have seen a flatter 2s10s curve in the first year of hikes. The exception saw a very small steepening. So these are the risks. Indeed the yield curve flattened after the Fed with 2s10s moving from just under +31bps to +21bps an hour later. It closed at +23bps. 10yr yields rose 6bps after the announcement but reversed most of this into the close and ended +4.1bps on the day at 2.18%. We are at 2.137% this morning. The rise in 2 years was more durable at +8.9bps on the day with a -2.4bps reversal this morning to 1.912%. At one point yesterday this was +15bps on the day and at a hair's breadth below 2%. The tighter policy path meant that breakevens declined and real rates increased; 10yr Treasury breakevens fell -5.5bps to 2.80%. Digging into the meeting itself. Two years to the day after cutting rates to the zero lower bound, the Fed raised rates by 25 basis points yesterday, and communicated a much tighter path of policy to come (our US econ team’s full recap here). Yesterday’s meeting came with an updated Summary of Economic Projections, and the dots were much more hawkish. The median dot showed expectations for 7 hikes in 2022, including yesterday and in line with what our US economics team is expecting, and which would represent a hike at every meeting for the rest of the year. The median dot reaches 2.75% next year, above the Fed’s long-run estimate for the fed funds rate, signaling policy will need to get to a restrictive stance. Indeed, the dots actually showed the long-run neutral fed funds rate fell, so a restrictive stance will come even sooner. These were just the medians. There was considerable variance in the dots, and Chair Powell noted the risks to inflation were to the upside, suggesting rates could be even higher than what the hawkish medians are suggesting. On the balance sheet, the Fed noted that QT would start at a coming meeting. Chair Powell signaled it could start as early as May, noting the Committee made excellent progress on the parameters of balance sheet runoff, even if they did not provide more details yesterday. Chair Powell noted the minutes from this meeting would have more details around runoff parameters. Elsewhere in the press conference, the Chair noted that every meeting was live, and that the Fed would move more quickly if appropriate, which ostensibly means +50bp hikes are on the table, but also said the Fed’s expected QT program will equate to approximately one more hike, which is in line with our team’s expectations for QT this year. Indeed, each of the next few meetings is pricing a meaningful chance of a +50bp hike. He noted the Fed would be evaluating month-over-month inflation readings when determining the pace of policy tightening and that financial conditions needed to be tighter. In all, a hawkish meeting, which was expected, with little for doves to cling to. After yesterday’s Fed hike, it is the Bank of England turn to raise rates with the decision scheduled for 12pm London time. A preview from our UK economist is available here. Our team expects a +25bps hike to bring the key rate to its pre-pandemic level of 0.75%. They also added a +25bps June hike to their projections for the path of the monetary policy in 2022, which would bring the benchmark rate to 1.5% by the end of this year. Beyond 2022, they see another hike in February 2023 that would bring the key rate to 1.75%, their projected terminal rate. More on their economic outlook for the UK can be found in the UK Macro Handbook here. As of this morning, the market is pricing in slightly less than 70bps of hikes by the end of 2022. Turning to geopolitics, net net, more positive news flow came out of Russia-Ukraine talks, as a neutrality model that would allow Ukraine to preserve its army seems to be among options on the negotiations table. While comments were otherwise scarce, the head of Russian delegation Vladimir Medinsky said that the talks were going slowly and strenuously. Meanwhile, Russia was officially excluded from Council of Europe yesterday. Putin’s address on Russian TV was pretty hawkish but he was talking to a domestic audience. An FT report that suggested significant progress in the talks contributed to the optimism that fuelled European shares higher as the STOXX 600 gained +3.06%, although an earlier catalyst for the rally was China’s announcement of economic support. Country-level stock markets like Germany’s DAX (+3.76%) and France’s CAC 40 (+3.68%) have notched even stronger gains. The former is now just 1.30% below its pre-invasion close on February 23rd. On that China story, the news was that Shanghai would not implement a strict lockdown in response to the recent outbreak but would instead encourage working from home helped support risk sentiment. Arguably more impactful for markets, top economic ministers noted that the government would introduce policies to benefit markets after the recent volatility, which was a boon to equities. Following on from this, Asian stock markets have surged higher for a second day. The regional sentiment remains buoyant as a rally led by the Hang Seng (+5.79%), CSI (+3.19%) and Shanghai Composite (+2.59%) came after a blistering surge in tech stocks over the last 24 hours as a top Chinese official in his comments yesterday stated that the administration will introduce market friendly policies. Elsewhere, the Nikkei (+3.14%) is sharply higher this morning, extending the gains in the previous two sessions while the Kospi (+1.77%) is also surging. US stock futures are fairly flat. Prior to the Fed’s decision, European yields rallied after Sweden’s Riksbank governor did not rule out a possibility of a hike as early as this year – a significant shift from its previous 2024 projections. Swedish yields marched higher across the curve in response, with 10y rising by +7.2bps and hitting the highest level since January 2019 and the 2s10s curve steepening (+1.3bps), while the krona rose by +1.73% against the dollar in what was an overall down day for the greenback as the Bloomberg USD index declined by -0.35%. The British pound (+0.48%) rose as well ahead of the BoE decision and the yield on gilts (+5.3bps) reached the highest level since November 2018. Together with aforementioned geopolitical developments, these news fuelled risk appetite and bond yields rose across most of the Eurozone before we even got to the Fed. Moves in bunds (+6.0bps), OATs (+4.2bps) and BTPs (-0.3bps) were accompanied by sizeable declines in underlying breakevens, with those on bunds (-5.1bps) and BTPs (-5.1bps) edging lower. Inflation expectations were partially muted by a rather calm day for major commodities. Both Brent (-1.89%) and WTI (-1.45%) dipped although this has been reversed so far this morning. There were more fun and games in nickel after a week of no trading due to last week’s massive spike. This time trading was suspended as prices dropped below the new daily threshold and a technical glitch occurred. Despite relative calm in oil markets, other Russia-related commodities continued to slide, especially so in Europe. The Dutch TTF futures for April delivery fell by -10.73% yesterday and around -70% since their intra-day peak on March 7th. Meanwhile, E.ON, German energy supplier, announced it will stop new purchases of gas from Russian companies, although the firm has no long-term contracts. Soft commodities like corn (-3.69%) and wheat (-7.36%), export of which was recently sanctioned by Russia, also declined. In yesterday’s data releases, US retail sales came in at +0.3%, below +0.4% expected, with gasoline spending (+5.3%) driving the advance. The NAHB index also disappointed (79 vs 81 expected), dropping to a six month low. To the day ahead now and housing starts, building permits, initial jobless claims and industrial production are due from the US. We will also hear from ECB's Lagarde, Lane, Knot, Schnabel and Visco. Earnings releases include Accenture, Enel, FedEx, Dollar General and Verbund. Tyler Durden Thu, 03/17/2022 - 07:58.....»»

Category: blogSource: zerohedgeMar 17th, 2022

There’s a Problem With How We Train Truckers

New training guidelines years in the making lack a major safety component: minimum behind-the-wheel training time for truckers, despite an increase in fatal crashes involving big-rigs In most states, aspiring barbers have to spend 1,000 hours or more in training before they get a license. To drive a 40,000-pound truck, though, there’s no minimum behind-the-wheel driving time required, no proof of ability to navigate through mountains, snow, or rain. There’s just a medical exam, a multiple-choice written exam, and a brief driving test—which in some states can be administered by the school that drivers paid to train them. As trucking companies hustle to hire more drivers in response to supply chain issues, though, the roads could be getting more dangerous—and there were 4,895 people killed in crashes involving large trucks in 2020, 33% more than in the 3,686 fatalities in 2010. In the coming months, the minimum age to be licensed to drive commercial trucks interstate will drop from 21 to 18 for thousands of drivers as part of a pilot program announced by the Biden administration. And on Feb. 7, standards for driver training that have been in the works for three decades were set to finally go into effect, but they don’t include a critical component: a minimum number of hours of behind-the-wheel training. [time-brightcove not-tgx=”true”] Read more: There’s Not a Trucker Shortage; There’s a Trucker Retention Problem “We don’t want to do the hard things in this industry, which is spending extra money, taking extra time to train people to safely operate trucks,” says Lewie Pugh, who owned and operated a truck for 22 years and is now executive vice president of the Owner-Operator Independent Drivers Assn. His association has long pushed for higher training standards, which they say would help the high-turnover industry retain workers. The ramifications of sending inexperienced drivers on the road are evident in the fiery crashes along the nation’s highways that kill people in smaller vehicles and tie up traffic for hours. In April 2019, four people were killed in Colorado when Rogel Aguilera-Mederos, who had little experience driving on mountainous terrain, lost control of his truck. Aguilera-Mederos, who was 23 at the time, had earned his commercial driver’s license in Texas and was heading to Wyoming when his brakes failed coming down a mountain on I-70. Aguilera-Mederos was sentenced to 110 years in prison for vehicular manslaughter, later reduced to 10 years by the Colorado governor. But the responsibility shouldn’t only lie on the driver’s shoulders, argues his lawyer, James Colgan. “My client never received any formal training in mountain passes and how to deal with them,” Colgan told me. The trucking company “let this inexperienced driver take a mountain pass—they actually encouraged it.” “My client never received any formal training in mountain passes and how to deal with them.”  David Zalubowski—APWorkers clear debris from Interstate 70 on April 26, 2019, in Lakewood, Colo., following a deadly pileup involving a semi-truck hauling lumber. The truck driver who was convicted of causing the fiery pileup that killed four people said he had no experience navigating mountain roads; his 110-year sentence was later reduced to 10 years. The trucking company that hired Aguilera-Mederos, Castellano 03 Trucking LLC, has since gone out of business and was not held accountable in the case. Aguilera-Mederos had only earned his commercial driver’s license 11 months before the crash, and his regular driver’s license two years before that, according to court transcripts. He had been working for Castellano 03 Trucking for three weeks when he found himself barreling down a mountain at 80 m.p.h. with a 75,000-pound load and no brakes. “I held the steering wheel tight and that’s when I thought I was going to die,” he told investigators. Why There Aren’t Training Rules Now Concerned with a high level of truck driver crashes, Congress in 1991 ordered the Federal Highway Administration to create training requirements for new drivers of commercial vehicles. Highway safety advocates sued after no requirements had been created by 2002, but after a number of court cases, there were still no driving training requirements by 2012, when MAP-21, a law passed by Congress, mandated new standards.. In 2014, the Federal Motor Carrier Safety Administration—the FHA’s successor agency— brought together a committee to negotiate guidance for minimum training requirements. The panel came up with a long list of recommendations, including at least 30 hours training behind the wheel and some amount of time driving on a public road. The behind-the-wheel rules were a stipulation that only two members of the 25-member committee opposed. Both represented lobbying groups for the trucking industry, which argued that there was no scientific evidence showing that behind-the-wheel training led to safer drivers, says Peter Kurdock, general counsel for the Advocates for Highway and Auto Safety, who was on the committee. One major carrier, Schneider, which supported minimum behind-the-wheel training , said it “often” encountered newly-licensed drivers who had never operated a commercial motor vehicle on a highway or interstate. But when the final rules were released in 2016, a minimum number of behind-the-wheel hours had been dropped. The agency said it was not able to find data that proved the value of such training and that it was important to avoid imposing extra training costs on proficient drivers. (In the same document, the agency acknowledged that 38% of commercial motor vehicle drivers said they did not receive adequate entry-level training to safely drive a truck under all road and weather conditions, according to a 2015 survey from the National Institute for Occupational Safety and Health.) Read more: How American Shoppers Broke the Supply Chain “That is some of the most invaluable experience that a new truck driver learns—sitting behind the wheel with someone who is an experienced driver saying, ‘This is about to happen. This is how you avoid this critical safety situation,’” Kurdock says. “We feel it’s a significant failing of the rule.” People seeing a commercial pilot’s license, by contrast, have to have at least 250 hours of flight time; if they want to work for passenger airlines, they have to have 1,500 hours of flight time. The advisory committee’s recommendations, originally scheduled to take effect in 2020, were delayed and now are due to begin Feb. 7, 2022. They create a training-provider registry and require would-be drivers to sign up with a school that is on the registry. But to be listed on the registry, schools are allowed to self-certify that they qualify. “What’s actually changing?” the American Trucking Association asks, on a section of its website devoted to the new regulations. “For organizations that have a structured program in place today, the truth is – not much.” Colgan, the lawyer, says more stringent training would skewer the economics of trucking, which ensures that the company that can charge the cheapest rates often gets the business. “It comes down to the almighty dollar—if you required truckers to be trained like that, it would slow everything down,” he says. The American Trucking Assn. did not return calls requesting comment for this story. “We don’t want to do the hard things in this industry, which is spending extra money, taking extra time to train people to safely operate trucks.”If anything, there’s a push to speed things up in the trucking industry as supply chain issues create demand for more drivers to haul more stuff. On Feb. 2, the FMCSA said it would allow trucking schools in all states to administer the written portion of CDL tests for drivers, in addition to the driving test, a reversal of previous guidance, which could get new drivers on the roads faster. In November 2021, 11 Republican Senators asked the FMCSA to let 18-year-olds obtain commercial driver licenses for interstate trucking. “Inaction to grow America’s pool of truck drivers threatens to drive up shipping expenses, prolong delays, and burden already-strained consumers with additional costs,” they said in a letter. Andrew Hetherington for TIMETrucks outside Atlanta GA on February 5th 2022. Partly in response to that letter, the Infrastructure Investment and Jobs Act signed by President Biden in November 2021 ordered the Secretary of Transportation to create a pilot apprenticeship program for 18-to-20 year-olds within 60 days. “Segments of the trucking industry have been pushing for teenage truckers to drive interstate for years, but the most recent supply chain challenges are being used as a way to push forward that proposal,” Cathy Chase, the president of the Advocates for Highway and Auto Safety, told me. How A Trucker Learns The problems with training aren’t just about a lack of standards. The first year that people spend driving a truck usually consists of long weeks on the road making low wages, a far cry from the six-figure salary and independent lifestyle pitched to new students. Many drivers who get their commercial driver’s license (CDL) drop out once they get a taste of that life. Over the course of four years, only 20% of the 25,796 drivers who started with CRST, a carrier that promised free training and a job afterward, actually finished the training and started driving independently, according to a class-action lawsuit filed in Massachusetts over the company’s debt collection practices. (CRST agreed to pay $12.5 million to settle the lawsuit, but a former CRST driver has objected to the settlement and is still pursuing claims against the company.) “What our current system of training does is it throws people into the deep end with no support into the absolute worst and toughest and most dangerous jobs and just burns them out,” says Steve Viscelli, a sociologist and the author of The Big Rig: Trucking and the Decline of the American Dream. “Segments of the trucking industry have been pushing for teenage truckers to drive interstate for years, but the most recent supply chain challenges are being used as a way to push forward that proposal.”Because new drivers are so expensive to insure, most get trained at big, long-haul trucking companies that are self-insured. These companies recruit would-be drivers by offering to pay for them to get their CDLs in exchange for a promise to work for the company once they’re licensed. Obtaining a CDL takes a few weeks. Only after that do most newly licensed drivers spend significant time on the road, when they’re paired with more experienced drivers who are supposed to show them the ropes. This saves the companies money, because federal regulations stipulate that truck drivers can only drive 11 hours straight after 10 hours off. Putting two drivers together lets one take the wheel while the other sleeps in the truck and enables companies to move freight in half the time it would take a solo driver. In addition, newly licensed drivers are paid cents per mile to haul the loads, providing a major source of cheap labor. But the system means that new drivers are spending weeks sharing a truck with a stranger who has the upper hand in their relationship and the power to hurt their job prospects, because the trainer tells the company if the trainee is ready to drive on their own. Often, one person sleeps while the other drives, dimming prospects for the student to actually learn from the trainer, even though the trainer gets a few extra cents per mile to accompany a trainee. Some trainers barely have any more experience than the students. This is done in tens of thousands of trucks across the country, and horror stories abound. Read more: How to Reduce Your Family’s Emissions and Live Greener Kay Crawford, a 25-year-old who signed up to become a truck driver during the pandemic after getting sick of the low pay and danger of being a sheriff’s deputy, says she was sexually harassed numerous times by her trainers. One kept telling her he needed a woman and propositioned her; another refused to meet her anywhere but her hotel room. The company did nothing once she reported the incidents. The training coordinator said, ‘I got you work, you’re not accepting it, and I have 14 other students I need to get in a truck,’” she told me. After three separate bad experiences with trainers, Crawford decided to give up on trucking. She’s still hounded by the school, which says she owes it $6,000, despite her sexual harassment claims. “At that point, trucking pretty much disgusted me,” she said. Despite having her CDL, she can’t get a new job because she’s not insurable without long-haul trucking experience, she said. Her experience isn’t uncommon. One CRST student alleged that her trainer raped her in the cab of her truck and the company then billed her $9,000 for student driver training; company employees testified that CRST only considered sexual assault claims to be valid if they were corroborated by a third party or recorded. The case, Jane Doe v. CRST, was settled last year and though CRST agreed to pay $5 million, it did not admit wrongdoing. Despite dozens of legal battles like that one, training has changed little in decades. (There is now a second Jane Doe v. CRST complaint making its way through the courts, filed by another woman who said she was sexually assaulted by her trainer.) Brita Nowak, a longtime truck driver, said that her trainer hit and slapped her when she was learning on the road with a big carrier two decades ago; when she reported him, “they called me a pill,” and asked for proof of her assault, she said. She didn’t have any proof and had to put up with the abuse until her trainer hit an overpass and damaged the truck; then, she says, the company switched her to another trainer. Andrew Hetherington for TIMEOwner-operator Brita Nowak outside Atlanta, GA, on February 5th 2022. Even some people who have good trainers say that they earn less than the minimum wage in their first year of trucking, which makes the sacrifices of being so far from family for long periods of time hard to bear. Crawford said she never made more than $500 a week; even in training, she spent long unpaid hours waiting to load or unload. The Massachusetts lawsuit against CRST alleged that new drivers made between $0 an hour and $7.19 per hour between 2014 and 2015 because CRST deducted money from their paychecks for housing, physical exams, drug tests, and training reimbursement. “These are bad companies, I wouldn’t send my worst enemy to them,” says Desiree Wood, the founder and president of REAL Women in Trucking, which advocates for better standards for drivers. CRST did not respond to a request for comment. Hardly a week goes by on her group’s Facebook page without women complaining about trainers who aren’t helping them learn how to drive, or who are creating dangerous conditions for them on the road. One woman, Memory Collins, told me that she was so exhausted from a lack of sleep two days into training that she felt unsafe driving. She pulled off the highway only to find there was no place to safely stop. She woke her sleeping trainer, who helped her get back on the highway, but a week later, the company told her she’d hit a car while trying to turn around and fired her. When she called other companies to try to get hired, she was told she was too much of a liability. “You have some people who come out of training and know how to drive, others come out of training not prepared, and know they’re not prepared, and just hope they’ll be ok,” says Elaina Stanford, a truck driver who came up training through a big company. Truck driver training has been turned into a “profit center” for some big companies, says Viscelli, the sociologist. Some people training to become truck drivers get federal workforce development money to pay for their tuition, which saves companies having to cover training costs. Then, the companies pay the newly licensed drivers beginner rates, and when they quit because of the miserable conditions, the cycle is repeated. “They have figured out how to make that inexperienced, unsafe labor profitable,” Viscelli says, of the trucking companies. In 2020, local workforce boards in California invested $11.7 million of federal money on truck driver training schools, five times what they spent the year before. An effort to improve training The Biden administration says it is trying to improve training. Its Trucking Action Plan, announced in mid-December, launched a 90-day program that aims to work with carriers to create more registered apprenticeships in trucking. It’s also specifically focusing on recruiting veterans into trucking. Registered apprenticeships are the gold standard for workforce training and could improve trucker training, says Brent Parton, a senior advisor at the Labor Department overseeing the program. With a registered apprenticeship, would-be truckers get a guarantee that a trucking company will pay for their CDL and for on-the-road training, and that they will commit to certain wage increases over time. These type programs do exist in trucking, mostly set up by unions like the Teamsters who still can guarantee good jobs in trucking. The Teamsters have a program that holds truck driver training on military installations, taking six weeks to help drivers get a CDL and learn to drive on the road. They get union jobs with ABF Freight after they’ve completed the program, making more money than most entry-level drivers. Andrew Hetherington for TIMEOwner-operator Brita Nowak outside Atlanta, GA, on February 5th 2022. But most trucking companies don’t have the time or money to invest in extensive training. The concern among advocates is that the new apprenticeships, including the program to license 18-to-21-year olds to drive interstate commerce, will be akin to slapping a new label on the subpar training that exists. “We’re hoping this isn’t a title for what we’re already doing,” Pugh, of OOIDA said. The White House says its new program will be different, and that this is the first step in creating trucking jobs that people will want to keep for life. But advocates already have doubts. One of the first companies that signed up to work with the White House on its registered apprenticeships was CRST. In the last two years, it’s agreed to pay out at least $17 million in settlements over lawsuits filed against it for wage theft and incidents that occurred while training people who wanted to become truckers......»»

Category: topSource: timeFeb 7th, 2022

The Problem With How We Train Truckers

New training guidelines years in the making lack a major safety component: minimum behind-the-wheel training time for truckers, despite an increase in fatal crashes involving big-rigs In most states, aspiring barbers have to spend 1,000 hours or more in training before they get a license. To drive a 40,000-pound truck, though, there’s no minimum behind-the-wheel driving time required, no proof of ability to navigate through mountains, snow, or rain. There’s just a medical exam, a multiple-choice written exam, and a brief driving test—which in some states can be administered by the school that drivers paid to train them. As trucking companies hustle to hire more drivers in response to supply chain issues, though, the roads could be getting more dangerous—and there were 4,895 people killed in crashes involving large trucks in 2020, 33% more than in the 3,686 fatalities in 2010. In the coming months, the minimum age to be licensed to drive commercial trucks interstate will drop from 21 to 18 for thousands of drivers as part of a pilot program announced by the Biden administration. And on Feb. 7, standards for driver training that have been in the works for three decades were set to finally go into effect, but they don’t include a critical component: a minimum number of hours of behind-the-wheel training. [time-brightcove not-tgx=”true”] “We don’t want to do the hard things in this industry, which is spending extra money, taking extra time to train people to safely operate trucks,” says Lewie Pugh, who owned and operated a truck for 22 years and is now executive vice president of the Owner-Operator Independent Drivers Assn. His association has long pushed for higher training standards, which they say would help the high-turnover industry retain workers. The ramifications of sending inexperienced drivers on the road are evident in the fiery crashes along the nation’s highways that kill people in smaller vehicles and tie up traffic for hours. In April 2019, four people were killed in Colorado when Rogel Aguilera-Mederos, who had little experience driving on mountainous terrain, lost control of his truck. Aguilera-Mederos, who was 23 at the time, had earned his commercial driver’s license in Texas and was heading to Wyoming when his brakes failed coming down a mountain on I-70. Aguilera-Mederos was sentenced to 110 years in prison for vehicular manslaughter, later reduced to 10 years by the Colorado governor. But the responsibility shouldn’t only lie on the driver’s shoulders, argues his lawyer, James Colgan. “My client never received any formal training in mountain passes and how to deal with them,” Colgan told me. The trucking company “let this inexperienced driver take a mountain pass—they actually encouraged it.”   David Zalubowski—APWorkers clear debris from Interstate 70 on April 26, 2019, in Lakewood, Colo., following a deadly pileup involving a semi-truck hauling lumber. The truck driver who was convicted of causing the fiery pileup that killed four people said he had no experience navigating mountain roads; his 110-year sentence was later reduced to 10 years. The trucking company that hired Aguilera-Mederos, Castellano 03 Trucking LLC, has since gone out of business and was not held accountable in the case. Aguilera-Mederos had only earned his commercial driver’s license 11 months before the crash, and his regular driver’s license two years before that, according to court transcripts. He had been working for Castellano 03 Trucking for three weeks when he found himself barreling down a mountain at 80 m.p.h. with a 75,000-pound load and no brakes. “I held the steering wheel tight and that’s when I thought I was going to die,” he told investigators. Why There Aren’t Training Rules Now Concerned with a high level of truck driver crashes, Congress in 1991 ordered the Federal Highway Administration to create training requirements for new drivers of commercial vehicles. Highway safety advocates sued after no requirements had been created by 2002, but after a number of court cases, there were still no driving training requirements by 2012, when MAP-21, a law passed by Congress, mandated new standards.. In 2014, the Federal Motor Carrier Safety Administration—the FHA’s successor agency— brought together a committee to negotiate guidance for minimum training requirements. The panel came up with a long list of recommendations, including at least 30 hours training behind the wheel and some amount of time driving on a public road. The behind-the-wheel rules were a stipulation that only two members of the 25-member committee opposed. Both represented lobbying groups for the trucking industry, which argued that there was no scientific evidence showing that behind-the-wheel training led to safer drivers, says Peter Kurdock, general counsel for the Advocates for Highway and Auto Safety, who was on the committee. One major carrier, Schneider, which supported minimum behind-the-wheel training , said it “often” encountered newly-licensed drivers who had never operated a commercial motor vehicle on a highway or interstate. But when the final rules were released in 2016, a minimum number of behind-the-wheel hours had been dropped. The agency said it was not able to find data that proved the value of such training and that it was important to avoid imposing extra training costs on proficient drivers. (In the same document, the agency acknowledged that 38% of commercial motor vehicle drivers said they did not receive adequate entry-level training to safely drive a truck under all road and weather conditions, according to a 2015 survey from the National Institute for Occupational Safety and Health.) “That is some of the most invaluable experience that a new truck driver learns—sitting behind the wheel with someone who is an experienced driver saying, ‘This is about to happen. This is how you avoid this critical safety situation,’” Kurdock says. “We feel it’s a significant failing of the rule.” People seeing a commercial pilot’s license, by contrast, have to have at least 250 hours of flight time; if they want to work for passenger airlines, they have to have 1,500 hours of flight time. The advisory committee’s recommendations, originally scheduled to take effect in 2020, were delayed and now are due to begin Feb. 7, 2022. They create a training-provider registry and require would-be drivers to sign up with a school that is on the registry. But to be listed on the registry, schools are allowed to self-certify that they qualify. “What’s actually changing?” the American Trucking Association asks, on a section of its website devoted to the new regulations. “For organizations that have a structured program in place today, the truth is – not much.” Colgan, the lawyer, says more stringent training would skewer the economics of trucking, which ensures that the company that can charge the cheapest rates often gets the business. “It comes down to the almighty dollar—if you required truckers to be trained like that, it would slow everything down,” he says. The American Trucking Assn. did not return calls requesting comment for this story. If anything, there’s a push to speed things up in the trucking industry as supply chain issues create demand for more drivers to haul more stuff. On Feb. 2, the FMCSA said it would allow trucking schools in all states to administer the written portion of CDL tests for drivers, in addition to the driving test, a reversal of previous guidance, which could get new drivers on the roads faster. In November 2021, 11 Republican Senators asked the FMCSA to let 18-year-olds obtain commercial driver licenses for interstate trucking. “Inaction to grow America’s pool of truck drivers threatens to drive up shipping expenses, prolong delays, and burden already-strained consumers with additional costs,” they said in a letter. Andrew Hetherington for TIMETrucks outside Atlanta GA on February 5th 2022. Partly in response to that letter, the Infrastructure Investment and Jobs Act signed by President Biden in November 2021 ordered the Secretary of Transportation to create a pilot apprenticeship program for 18-to-20 year-olds within 60 days. “Segments of the trucking industry have been pushing for teenage truckers to drive interstate for years, but the most recent supply chain challenges are being used as a way to push forward that proposal,” Cathy Chase, the president of the Advocates for Highway and Auto Safety, told me. How A Trucker Learns The problems with training aren’t just about a lack of standards. The first year that people spend driving a truck usually consists of long weeks on the road making low wages, a far cry from the six-figure salary and independent lifestyle pitched to new students. Many drivers who get their commercial driver’s license (CDL) drop out once they get a taste of that life. Over the course of four years, only 20% of the 25,796 drivers who started with CRST, a carrier that promised free training and a job afterward, actually finished the training and started driving independently, according to a class-action lawsuit filed in Massachusetts over the company’s debt collection practices. (CRST agreed to pay $12.5 million to settle the lawsuit, but a former CRST driver has objected to the settlement and is still pursuing claims against the company.) “What our current system of training does is it throws people into the deep end with no support into the absolute worst and toughest and most dangerous jobs and just burns them out,” says Steve Viscelli, a sociologist and the author of The Big Rig: Trucking and the Decline of the American Dream. Because new drivers are so expensive to insure, most get trained at big, long-haul trucking companies that are self-insured. These companies recruit would-be drivers by offering to pay for them to get their CDLs in exchange for a promise to work for the company once they’re licensed. Obtaining a CDL takes a few weeks. Only after that do most newly licensed drivers spend significant time on the road, when they’re paired with more experienced drivers who are supposed to show them the ropes. This saves the companies money, because federal regulations stipulate that truck drivers can only drive 11 hours straight after 10 hours off. Putting two drivers together lets one take the wheel while the other sleeps in the truck and enables companies to move freight in half the time it would take a solo driver. In addition, newly licensed drivers are paid cents per mile to haul the loads, providing a major source of cheap labor. But the system means that new drivers are spending weeks sharing a truck with a stranger who has the upper hand in their relationship and the power to hurt their job prospects, because the trainer tells the company if the trainee is ready to drive on their own. Often, one person sleeps while the other drives, dimming prospects for the student to actually learn from the trainer, even though the trainer gets a few extra cents per mile to accompany a trainee. Some trainers barely have any more experience than the students. This is done in tens of thousands of trucks across the country, and horror stories abound. Kay Crawford, a 25-year-old who signed up to become a truck driver during the pandemic after getting sick of the low pay and danger of being a sheriff’s deputy, says she was sexually harassed numerous times by her trainers. One kept telling her he needed a woman and propositioned her; another refused to meet her anywhere but her hotel room. The company did nothing once she reported the incidents. The training coordinator said, ‘I got you work, you’re not accepting it, and I have 14 other students I need to get in a truck,’” she told me. After three separate bad experiences with trainers, Crawford decided to give up on trucking. She’s still hounded by the school, which says she owes it $6,000, despite her sexual harassment claims. “At that point, trucking pretty much disgusted me,” she said. Despite having her CDL, she can’t get a new job because she’s not insurable without long-haul trucking experience, she said. Her experience isn’t uncommon. One CRST student alleged that her trainer raped her in the cab of her truck and the company then billed her $9,000 for student driver training; company employees testified that CRST only considered sexual assault claims to be valid if they were corroborated by a third party or recorded. The case, Jane Doe v. CRST, was settled last year and though CRST agreed to pay $5 million, it did not admit wrongdoing. Despite dozens of legal battles like that one, training has changed little in decades. (There is now a second Jane Doe v. CRST complaint making its way through the courts, filed by another woman who said she was sexually assaulted by her trainer.) Brita Nowak, a longtime truck driver, said that her trainer hit and slapped her when she was learning on the road with a big carrier two decades ago; when she reported him, “they called me a pill,” and asked for proof of her assault, she said. She didn’t have any proof and had to put up with the abuse until her trainer hit an overpass and damaged the truck; then, she says, the company switched her to another trainer. Andrew Hetherington for TIMEOwner-operator Brita Nowak outside Atlanta, GA, on February 5th 2022. Even some people who have good trainers say that they earn less than the minimum wage in their first year of trucking, which makes the sacrifices of being so far from family for long periods of time hard to bear. Crawford said she never made more than $500 a week; even in training, she spent long unpaid hours waiting to load or unload. The Massachusetts lawsuit against CRST alleged that new drivers made between $0 an hour and $7.19 per hour between 2014 and 2015 because CRST deducted money from their paychecks for housing, physical exams, drug tests, and training reimbursement. “These are bad companies, I wouldn’t send my worst enemy to them,” says Desiree Wood, the founder and president of REAL Women in Trucking, which advocates for better standards for drivers. CRST did not respond to a request for comment. Hardly a week goes by on her group’s Facebook page without women complaining about trainers who aren’t helping them learn how to drive, or who are creating dangerous conditions for them on the road. One woman, Memory Collins, told me that she was so exhausted from a lack of sleep two days into training that she felt unsafe driving. She pulled off the highway only to find there was no place to safely stop. She woke her sleeping trainer, who helped her get back on the highway, but a week later, the company told her she’d hit a car while trying to turn around and fired her. When she called other companies to try to get hired, she was told she was too much of a liability. “You have some people who come out of training and know how to drive, others come out of training not prepared, and know they’re not prepared, and just hope they’ll be ok,” says Elaina Stanford, a truck driver who came up training through a big company. Truck driver training has been turned into a “profit center” for some big companies, says Viscelli, the sociologist. Some people training to become truck drivers get federal workforce development money to pay for their tuition, which saves companies having to cover training costs. Then, the companies pay the newly licensed drivers beginner rates, and when they quit because of the miserable conditions, the cycle is repeated. “They have figured out how to make that inexperienced, unsafe labor profitable,” Viscelli says, of the trucking companies. In 2020, local workforce boards in California invested $11.7 million of federal money on truck driver training schools, five times what they spent the year before. An effort to improve training The Biden administration says it is trying to improve training. Its Trucking Action Plan, announced in mid-December, launched a 90-day program that aims to work with carriers to create more registered apprenticeships in trucking. It’s also specifically focusing on recruiting veterans into trucking. Registered apprenticeships are the gold standard for workforce training and could improve trucker training, says Brent Parton, a senior advisor at the Labor Department overseeing the program. With a registered apprenticeship, would-be truckers get a guarantee that a trucking company will pay for their CDL and for on-the-road training, and that they will commit to certain wage increases over time. These type programs do exist in trucking, mostly set up by unions like the Teamsters who still can guarantee good jobs in trucking. The Teamsters have a program that holds truck driver training on military installations, taking six weeks to help drivers get a CDL and learn to drive on the road. They get union jobs with ABF Freight after they’ve completed the program, making more money than most entry-level drivers. Andrew Hetherington for TIMEOwner-operator Brita Nowak outside Atlanta, GA, on February 5th 2022. But most trucking companies don’t have the time or money to invest in extensive training. The concern among advocates is that the new apprenticeships, including the program to license 18-to-21-year olds to drive interstate commerce, will be akin to slapping a new label on the subpar training that exists. “We’re hoping this isn’t a title for what we’re already doing,” Pugh, of OOIDA said. The White House says its new program will be different, and that this is the first step in creating trucking jobs that people will want to keep for life. But advocates already have doubts. One of the first companies that signed up to work with the White House on its registered apprenticeships was CRST. In the last two years, it’s agreed to pay out at least $17 million in settlements over lawsuits filed against it for wage theft and incidents that occurred while training people who wanted to become truckers......»»

Category: topSource: timeFeb 7th, 2022

Top 10 Themes For 2022: Part 2

Top 10 Themes For 2022: Part 2 Picking up where we left off with the first five of Deutsche Bank's Top 10 Themes For 2022, here is Part 2 of what the bank thinks will be the biggest themes of the coming year. Themes covered include i) Antitrust (or competition) renaissance; ii) The end of free money in stock markets; iii) Space: a worrying geopolitical frontier; iv) Central Bank Digital Currencies: Growing into reality and v) ESG bonds go mainstream. (click here for Part 1 which covers the following themes 1) An overheating economy; 2) Covid optimism; 3) A hypersonic labor market and inflation; 4) Corporate focus on asset efficiency; 5). Inventory glut. ) * * * 6. Antitrust (or competition) renaissance, by Luke Templeman Like it or not, US companies will likely face tougher competition in 2022. The rest of the western world is likely to follow suit. An executive order issued by President Biden in July argued that over the last several decades, “competition has weakened in too many markets”. It blamed this for widening racial, income, and wealth inequalities, as well as suppressing worker power. A “whole-of-government” effort was promised on 72 initiatives. That followed just months after the chair of the Federal Trade Commission was given to Lina Khan who is known for her work on anti-trust and competition issues. If Biden’s initiatives have teeth, companies may be about to witness a sharp reversal of the trend towards less competition seen over the past few decades. The following charts show just two indicators that life has become more difficult for new companies in the US. The result of diluted competition is that corporate profit margins have grown. Last quarter’s results showed that profit margins in S&P 500 companies have hit multi-decade highs (despite covid) and have almost doubled to 11.2 per cent (on a four-quarter rolling basis). That has helped corporate earnings comfortably outpace GDP over the last two decades. Of course, falling costs of labor and capital over the last few decades have helped boost profits. But in a textbook competitive market, these advantages should be competed out and/or passed onto customers. The tighter competition has been, in part, due to consolidation after rule changes in the 1980s gave corporates the confidence to ramp-up mergers and acquisitions. Hence a lower number of large firms in many markets. For instance, only a handful of mobile carriers and airlines compared with their numbers 20 years ago. Meanwhile, there is an open-ended question of whether some large technology groups stifle or promote competition. Some argue that scale delivers cheap goods to customers; other say it reduces innovation and the incentive to spend on capex and workers. Regardless of the reason for less competition, Biden appears to have the political will to boost it. And this desire will be undergirded by the will of workers. Post-covid, many workers, particularly low paid staff, have significantly greater bargaining power. As a result, long-standing discontent with wages lagging profits are morphing into action. Large firms, including Amazon, Disney, and McDonald's, have all given pay rises since covid. So, with political will at the top supported by worker power at the bottom, the companies stuck in the middle should expect that 2022 will usher in an era of greater competition, an easier time for new entrants, and more hurdles to mega-acquisitions. It could mean that companies come to see high profit margins as an anomaly rather than the norm. * * * 7. The end of free money in stock markets, Luke Templeman “Will the stock market crash in 2022 as the Fed tapers and likely raises rates?” While many investors fret over this question, the forgotten theme that may accompany the end of free money is not whether stock markets will crash. Rather, it is how investors may be forced, for the first time in a decade, to consider how the end of free money may reorder equity markets on the inside. The end of stimulus is certain to slow the money flow into equity markets. And if rising interest rates push bond yields higher, investors will have options elsewhere in bond markets and other rate-sensitive investments that have been ignored in recent years. As investments aside from equities become more appealing, frustrated active asset managers may finally witness the return of fundamental investing. Equity markets will be shocked by the return of fundamentals. After all, in the era of free money, many frustrated ‘value’ managers have given up. The following charts show that as markets recovered from the financial crisis, traditional ‘value’ investing became very difficult. The reason for the underperformance of ‘value’ is not simply explained by the outperformance of technology ‘growth’ stocks. It is also because the financial crisis catalyzed the era of super-cheap money. A significant proportion of this poured into equity markets, much through passive funds which bought the index. As a result, all stocks began to move in similar ways regardless of the profitability of the underlying companies. The following chart shows that between the 2008 financial crisis and covid, the dispersion (or spread) of stock returns disconnected from the dispersion of returns on equity. In other words, even though corporate profits were more different, their stock prices remained similar. Since covid, stock markets have flirted with the idea of once again discriminating between companies with strong and weak profitability. But the stimulus-fuelled rally has largely ended that. Investors are, once again, simply throwing their money at the entire stock market, particularly in passive funds. In 2022, as equity markets lose the flood of money that has propped up all stocks over the last decade, investors may be forced to become more discerning. There are signs this is beginning to happen. Postcovid, the dispersion of returns is higher than it has been in almost a decade. Accelerating the return of fundamentalism could be a tightening in business conditions. Wage pressure, exposure to ESG issues, and the Biden administration’s desire to increase competition, will likely have a disproportionate effect on poor quality companies that investors have hitherto propped up. That will further highlight the gap to market values and widen the differences between companies. None of this means overall equity markets will crash. Rather, it may lead to a reordering within equity markets as we witness the return of fundamental value investing. Finally, active managers may be back in vogue. * * * 8. Space: a worrying geopolitical frontier, Galina Pozdnyakova Against the backdrop of rising geo-political tensions between several countries, 2022 is shaping up to be the year when tensions over the potential for the militarization of space become a top geo-political negotiation topic. The problem is that most parties have an incentive to avoid agreeing on new rules. Many would rather keep space as a ‘wild west’. Of course, several countries have national space laws, and international treaties such as the Outer Space Treaty of 1967 are in place. Yet they do not adequately govern modern weaponisation of space technologies. And with no consensus over boundaries and control over space objects, and blurred lines between defence and weapons systems, the risk of conflict is rising. The reality of the military threat in space will be amplified in 2022 as politicians digest recent high-profile events. The Russian ASAT test in November showed that the country can take down satellites – an ability also demonstrated by the US (2008), China (2007) and India (2019). Meanwhile, France recently became the fourth country to launch electromagnetic-monitoring military satellites, following the US,  China, and Russia. The importance of space has surged in the past few years as falling launch costs have led to an increased number of satellites in orbit and, thus, and increased dependence upon them. Aside from military uses, future conflicts will certainly target communications, GPS, and finance applications that all rely on satellites. Countries have quickly taken the military risks of space more seriously. Over autumn, QUAD leaders agreed to finalize “Space Situational Awareness Memorandum of Understanding” this year. Separately, the UK pushed a resolution on “threatening and irresponsible space behaviours” which passed the first stage at the UN and will be reviewed in December. Responding to the threats, new military space divisions have popped up over the last two years. Japan’s Space Operations Squadron and the UK’s Space Command were both created since 2020. They follow the creation of China’s Strategic Support Force in 2015, and the US Space Force in 2019. The latter will receive a 13 per cent budget increase in 2022. The 2022 completion of the Chinese space station, Tiangong, will also mark a shift in soft space power. It will increase China’s scientific research capabilities and its collaboration with other countries. The station’s advanced technologies and equipment, as well as modular design, will allow for multiple use cases. Meanwhile, the International Space Station is only approved to operate until 2024. So 2022 will likely be the year where space becomes the next frontier of an arms race between key global powers. Layering these issues on top of existing geopolitical tensions will create an unusual situation for world leaders. Everyone wants everyone else to play by the rules. Yet the rules of space are antiquated and there is a heavy incentive for most powers to avoid cementing new ones. The tensions above the Earth appear set to amplify tensions on it. Space threats are already becoming a topic of geo-political negotiation and, in 2022, they will likely become front-and-center. * * * 9. Central Bank Digital Currencies: Growing into reality, Marion Laboure There is a clear move towards a cashless society (as a mean of payment) and CBDCs is set to progressively replace cash. The question is no longer « if » but « when » and « how ». Today, 86 per cent of central banks are developing a CBDC; 60 per cent are experimenting at the proof-of-concept stage. Central banks representing about a fifth of the world’s population are likely to issue a general purpose CBDC in the next two years. We believe that a large majority of countries will have a CBDC live in the next five to six years. Emerging economies will lead the race. They will move quicker and with higher adoption than advanced economies. The Bahamas and the Eastern Caribbean are live; China will be live in February 2022. In five years, many emerging economies will have moved; including many Asian countries. The ECB/Fed will soon start piloting projects and, if successful, are expected to be live around 2025-26. The main barriers for advanced economies are: cultural/privacy; low interest rates; older demography, heavily reliance on cards. A CBDC itself is not going to rebalance the international order between the US and China. But this is the Chinese global, 360 strategy with very advanced payments technologies which is creating an advantage to pay in their currencies and will continue to gain market share. China benefits from advanced payments systems (especially settlement technologies) that could change the deal and attract merchants and vendors to use this new, more efficient currency. The Chinese government has made tremendous efforts to internationalize the renminbi, like the US intervention in the early twentieth century. China aims to become a world leader in science and innovation by 2050. China is also massively investing in advanced technologies and is currently the second largest investor in artificial intelligence enterprises after the US. Indeed, China appears on track to have an “AI ecosystem” built by 2030. * * * 10. ESG bonds go mainstream, Luke Templeman Amongst the many themes turbocharged by the covid catalyst, ESG bond issuance is one of the most prominent. In 2022, ESG bond issuance is set to go mainstream. Investors have taken notice. In fact, the holdings of ESG bond exchange-traded funds have tripled to over $45bn since the covid outbreak. As the chart below shows, that surge of interest follows years of very little growth. The growth of ESG bonds appears to have breached a tipping point. Not just because investors are keen to hold ESG debt, but also because corporates see that ESG issues now affect their business and investment risk. Indeed, in our recent survey, 19 per cent of corporate debt issuers say that over the last 12 months, environmental factors have impacted their rating. A smaller, but still material proportion, report that social and governance factors have had an impact. Now that there is a firm nexus between ESG issues and business risk, ESG instruments (primarily bonds) have become a gateway through which corporates begin to address their impact on problems like climate change. Since early last year, over half of corporates have either offered their first ESG instrument or are currently preparing to do so. Some of the strongest issuance in 2022 will likely be of sustainability-linked bonds. These bonds, which have quickly become very popular, generally offer corporates an interest rate discount if they hit certain ESG targets. From a base of close to zero two years ago, sustainability-linked bonds have comprised up to half the ESG bond issuance in the second half of 2021. Investors have quickly fallen in love with sustainability-linked bonds. Just over half of investors say these types of bonds are the most promising instrument out of a pool of ESG assets. That is over double the next highest response, which is European green bonds, with 21 per cent. Driving sustainability-linked bonds is the sudden growth in the number of businesses that publish quantifiable ESG performance targets. Indeed, a third of corporate debt issuers have already started to do so since 2020. A further 21 per cent will begin publishing in the next 12 months and that will leave only 6 per cent without any plans to do so. Aside from investor demand and published corporate targets that have laid the platform for the growth of sustainability-linked bonds in 2022, corporates have discovered the ‘signalling’ benefits. Just over 60 per cent of companies in our survey said the main benefit of their company’s ESG instrument was that it “enables us to convey our sustainability strategy”. A further 22 per cent say these instruments expand their investor base. Meanwhile, half say there are pricing benefits. Definitions on how to do ESG investing ‘well’ differ given the breath-taking pace at which it is evolving. Regardless, corporates and investors have now created the market for ESG bonds. With companies starting to publish specific ESG targets, it seems inevitable that in 2022 there will be a surge in issuance from corporates and strong appetite from investors. Tyler Durden Thu, 12/23/2021 - 16:50.....»»

Category: blogSource: zerohedgeDec 23rd, 2021

Futures Drift Lower In Illiquid Session As Virus Fears Resurface

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

Category: dealsSource: nytDec 9th, 2021

NASDAQ Jumps 2% as Tech Makes a Comeback

NASDAQ Jumps 2% as Tech Makes a Comeback SPECIAL ALERT: The November episode of the Zacks Ultimate Strategy Session is now available for viewing! Tune in to this "must-see" event when Kevin Matras, Dr. John Blank, David Bartosiak and Sheraz Mian discuss the investment landscape from several angles. Don't miss your chance to hear: ▪ Sheraz and David Agree to Disagree on the sectors best positioned to perform in 2021 and beyond ▪ Kevin discusses what investors should do now that the election is over in Zacks Mailbag ▪ Sheraz and John choose one portfolio to give feedback for improvement ▪ And much more Simply log on to Zacks.com and view the November episode here. And please let us know what you think of this format. Email all feedback to mailbag@zacks.com. The NASDAQ recouped most of its recent losses on Wednesday, as the two-day rotation out of tech paused and the Dow finally took a break. The market has been a different place since news of a vaccine that’s reportedly more than 90% effective at preventing covid. Money surged into recovery names on Monday and Tuesday. But you can’t keep tech down for long! The NASDAQ jumped 2.01% (or about 232 points) on Wednesday to 11,786.43. The index had lost nearly 3% in the previous two sessions, so it got about two-thirds of the way back. The FAANGs were all higher, led by more than 3% advances for Apple (AAPL) and Amazon (AMZN) each. Netflix (NFLX) increased more than 2% and Facebook (FB) rose 1.5%. The S&P was up 0.77% to 3572.66, but the Dow declined 0.08% (or around 23 points) to 29,397.63.   The loss ended a two-day winning run for the Dow, which may not seem too impressive until you realize that it soared just under 1100 points in those two days. The market was so impressed with the vaccine news that it focused on names set to take off once we get back to normal, such as airlines, cruise companies, hotels, etc. However, we’re not back to normal just yet. In fact, we’re still dealing with rising coronavirus cases and the threat of lockdowns. Meanwhile, you know what’s taken a backseat amid all the vaccine hopes and election results? Earnings season! And that’s too bad, because its been a pretty good ride. More than 90% of S&P companies have reported Q3 results. Over 84% of them beat earnings expectations, while more than 75% topped revenue estimates. “The earnings outlook has been steadily improving since early July, as the U.S. economy started coming out of the pandemic-driven slump,” said Sheraz Mian in his Earnings Trends article posted today.   “While pockets of entrenched weakness remain, the pace and magnitude of the recovery has largely been better than expected.” Make sure to read his complete article titled: “Handicapping the Improving Earnings Picture”.  Today's Portfolio Highlights: Options Trader: In addition to beating earnings by 20% in its most recent report. Arthur J. Gallagher (AJG) has also broken out of a bullish consolidation pattern. Kevin expects more upside to come from this Zacks Rank #1 (Strong Buy) provider of insurance brokerage, consulting services, and third-party claims settlement and administration services. On Wednesday, the editor bought to open two April 120.00 Calls. Get more specifics in the full write-up.  Home Run Investor: Stocks in the building products space continue to move higher, so that’s where Brian went for today’s addition. The editor picked up Construction Partners (ROAD), an infrastructure & road construction company that beat the Zacks Consensus Estimate by 25% in its most recent report. Rising earnings estimates have made the stock a Zacks Rank #2 (Buy). If ROAD can keep the earnings momentum going, Brian thinks the stock could move a lot higher. Meanwhile, the portfolio also sold Brown & Brown (BRO, +3.8%) and Meridian Bioscience (VIVO) on Wednesday. Read the full write-up for more on all of today’s moves. Surprise Trader: Earnings estimates for Teekay LNG Partners (TGP) are on the rise, but the stock has been giving up ground. Dave doesn’t mind such a divergence, since it gives the share price plenty of running room moving forward. The company has a positive Earnings ESP of 10.71% for the quarter coming before the bell tomorrow, which makes this one of the editor’s “quick turnaround” ideas. He also appreciates that the company is a big dividend payer with a yield over 8%. The portfolio added TGP on Wednesday with a 12.5% allocation, while also getting out of Wolverine World Wide (WWW). The complete commentary has more on today’s action.   Commodity Innovators: With the market rallying sharply so far in November, Jeremy sees the potential for pullbacks in certain areas. Therefore, he took profits in three names on Wednesday. The biggest winner was premier specialty chemicals provider Albemarle Corporation (ALB), which ran beyond the portfolio’s targets. It was sold today for a 26.7% return in a little over two months. The editor would be willing to re-enter on any pullbacks. The other sells on Wednesday were Teucrium Soybean ETF (SOYB) for a 10% return in about six weeks and iShares Silver Trust (SLV) for a 5.8% profit in approximately the same amount of time. Read more in the full write-up. Until Tomorrow, Jim Giaquinto Recommendations from Zacks' Private Portfolios: Believe it or not, this article is not available on the Zacks.com website. The commentary is a partial overview of the daily activity from Zacks' private recommendation services. If you would like to follow our Buy and Sell signals in real time, we've made a special arrangement for readers of this website. Starting today you can see all the recommendations from all of Zacks' portfolios absolutely free for 7 days. Our services cover everything from value stocks and momentum trades to insider buying and positive earnings surprises (which we've predicted with an astonishing 80%+ accuracy). Click here to "test drive" Zacks Ultimate for FREE >>  Zacks Investment Research.....»»

Category: topSource: zacksSep 21st, 2021

Ethiopian Airlines sees crash settlement with Boeing by end-June

Ethiopian Airlines expects a settlement with planemaker Boeing by end of June over the crash of an 737 MAX plane in March 2019, CEO Tewolde Gebremariam told Reuters on Friday......»»

Category: topSource: reutersMay 15th, 2020

Gold futures posts a gain of just over 2%

Gold futures climbed sharply on Wednesday, with prices up by just over 2% to settle at their highest in almost a week. Gold prices welcomed the Bank of England's "dramatic intervention that avoided an imminent gilts crash and sent global bond yields sharply lower," said Edward Moya, senior market analyst at OANDA. "This was somewhat expected and serves as a reminder that gold will do just fine once the global bond market selloff is truly over." December gold rose $33.80, or 2.1%, to settle at $1,670 an ounce on Comex. That's the highest most-active contract settlement since Sept. 22, FactSet data show. Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news......»»

Category: topSource: marketwatch12 hr. 10 min. ago

This Emerging Market ETF Breezed Past S&P 500 in 2022

Turkey ETF gained more than 25% this year versus a decline of 9.2% in the S&P 500. The year so far has been caught up with high inflationary pressure across the world due to supply-chain issues, the Russia-Ukraine war, high energy prices, a commodity super-cycle, a super-hawkish Fed, rising rates across the globe as central banks have been tightening policies to rein in inflation, risk-off trade sentiments and a global market crash. The S&P 500 is off 22.5% so far this year (as of Sep 23, 2022).The Fed started rate hikes this year and had enacted a 300-bp rise so far this year, which actually caused recessionary fears. The broader emerging markets were hurt badly mainly due to pain in Chinese equities. A stronger greenback also hurt emerging market ETFs. Most emerging economies’ currencies have been falling to multi-year lows against the greenback. Dollar strength also tightened EMs’ ability to obtain credit.Against this backdrop, Turkey ETF iShares MSCI Turkey ETF TUR (up 25.5%) breezed past the S&P 500 this year. The fund even added 5.5% past month against a 9.2% decline in the S&P 500.  Let’s delve a little deeper.Turkey ETF in FocusThe underlying MSCI Turkey IMI 25/50 Index is a free float-adjusted market capitalization index designed to measure broad-based equity market performance in Turkey. The Index consists of stocks traded primarily on the Istanbul Stock Exchange. The fund charges 57 bps in fees and yields 2.57% annually.Why the Move?The Borsa Istanbul 100 index hit a fresh record past month as investors continued to use equities as a hedge for surging prices and a falling lira. The central bank has been cutting rates continuously despite red-hot inflation. The country’s monetary policymakers opted for a 100-basis point cut last week, bringing the key one-week repo rate from 13% to 12%.Previously, the central bank unexpectedly slashed its key rate by 100bps to 13% in its August meeting, adding to the 600 bps reduction of the key rate since September 2021, per tradingeconomics. This has bolstered the equity market.Can the Rally Sustain?The rally is less likely to sustain as profit taking in banking shares already caused a slump in the market last week. Banks traded in Istanbul have seen continued growth since Q3 of 2021, per tradingeconomics. But sustained rate cuts no longer be favorable for bank stocks.The lira nosedived over 50% since September 2021 and annual inflation in Turkey soared past 80% in August, the highest in nearly 24 years. This has caused negative real rates. Many economists predict a further decline in the lira. London-based Capital Economics sees it falling to 24 against the greenback by March 2023, as quoted on a CNBC article.“Room for further easing is becoming increasingly limited because of the pressure this is putting on the lira and real rates,” Liam Peach, the firm’s senior emerging markets economist, told CNBC. “Turkey is running such a large current account deficit, and it has become dependent on inflows of foreign capital to finance that. FX reserves in Turkey are so low that the central bank is really in no position to step in,” he said, as quoted on CNBC. Want key ETF info delivered straight to your inbox? Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report iShares MSCI Turkey ETF (TUR): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 27th, 2022

"This Is A Global Metacrisis": Markets Risk Replaying 1987, 1994, 1997, 2000, 2008, The Arab Spring, 2012, 2015, And 2020 All At The Same Time

"This Is A Global Metacrisis": Markets Risk Replaying 1987, 1994, 1997, 2000, 2008, The Arab Spring, 2012, 2015, And 2020 All At The Same Time By Michael Every of Rabobank Even the neoliberals don't want neoliberalism “Are you now, or have you ever been, a member of the Neoliberal Party?” Markets were roiled Monday, with another epic surge in bond yields. “Stocks and bonds have worst half in history” was the Bloomberg headline; as our own Christian Lawrence points out, it was the worst 60/40 portfolio return in 90 years, and the second worst in 122 years. Ouch! Then we saw a massive bear steepening of the US curve on the day, with 2-year yields +14bp to 4.34% and 10-year yields +24bp to 3.92%, the highest since 2010. Ouch again! The neoliberal view since August had been that after reaching 3.50% the next destination for 10s was 3%, then 2.5%, then something far lower. To be fair, that’s how neoliberalism has worked since Volcker: lower yield highs, lower yield lows, cut rates, and let markets rip! Not anymore though, it seems. Some of that move was a likely selling of Treasuries to cover other liabilities as markets tumbled all over. Even so, the Fed’s Mester underlined yet again that US rates will stay higher for longer, and that ‘longer’ part of the message may be starting to sink in further down the curve – US 5-year yields were up 21bp for example, and the market is now pricing out any rate cuts for 2023, which was already our house view. Bostic then added that the Fed hadn’t lost credibility with the public: the gentleman doth protest too much, as doth the markets. This all ostensibly started with the UK and the flash crash in Gilts and the GBP, which Bloomberg was referring to as the Great British Peso yesterday. Poor King Charles: even before his face appears on UK banknotes, they have become less valuable. However, the fact that the crisis has spread shows the problems run far deeper than “Brexit”. In particular, the radical tax-cutting UK budget from Friday and the weekend’s promise of more to come is a last roll of the dice for the Tory government; perhaps for ‘Global Britain’; and maybe for the neoliberal economic philosophy. After all, the most diverse UK cabinet in history has produced what some call the most monomaniacally neoliberal budget in history (apart from vast energy subsidies that sit alongside the absence of any rationing); and it is publicly being called “The Economics of Narnia”, of “Lalaland”, “Kami-Kwasi”, and worse by non-neoliberals and by neoliberals. Of course, those historical claims are wrong. Past neoliberal UK budgets allowed for the deliberate starvation of millions under the banner of free trade, as detailed here for those who think markets are untainted by the evident evils of too much state control: read it, even if just to argue back. Yet some voices whisper that the bait and switch is to slash taxes, then be forced to slash state spending to match. Wouldn’t that play well with voters right now? Even the bankers richly rewarded in the UK Budget are betting against the policies in it. On the Great British Peso, my 2022 meme that “DM = EM”, was predicated on the view that an early rates pivot against a deliberately supply-constrained backdrop would see commodity prices surge, FX crumble, and yields surge. Clearly, massive unfunded tax cuts aimed at the wealthiest and asset markets produce the same outcome – who knew?! Equally, who knew Western governments would feel pressured into populist policies rather than saying “tough luck”? As in an EM, now UK rates need to rise even higher than before: the market expectation is of a BOE rates peak of 5.75%, when many would not have bet on even 0.575% a year ago. Yesterday, market whispers were of an emergency BOE inter-meeting hike. All we got was an anodyne statement from Governor Bailey basically saying, “The Bank is monitoring developments in financial markets very closely in light of the significant repricing of financial assets,” and that it would look at the issue at its scheduled meeting. Down went GBP again. Markets will now test the BOE and the ‘Peso’ – and if they don’t hike, disaster. Worse, an emergency rate hike would put the BOE and the government at loggerheads – again a disaster. Logically, the BOE could ‘help’ by carrying out a rates pivot – and again it means disaster. Or the government could tighten fiscal policy against the current backdrop – disaster. Or it could loosen fiscal policy via more tax-cuts - we already see the market views this as a disaster. You can see why even neoliberals, and investors in UK assets, are back-tracking. It’s not that neoliberalism didn’t have a good run. It won the Cold War via consumer and public borrowing the USSR could not match. It brought decades of global peace and prosperity (interspersed by US invasions, bombings, and drone strikes). It just also has a nasty tendency to collapse into the flames of war now and then, as in the 1910s, 20s and 1930s, and again today. Let’s focus on the market scepticism of 1980’s neoliberalism for 2022 Britain: Will the money the wealthy are to be given be channelled into supplies of energy and industry? Not the former, which fuels the latter, because the pay-off is uncertain. While we need fossil fuels now, we ostensibly won’t need them in 10 years or so. So, why invest tens of billions? Green energy also requires fossil fuel for its inputs, or new/rare minerals the UK does not produce. In both cases, the economy remains structurally hamstrung on the supply side. Will the extra money the wealthy are to be given be channelled into a military response to Russia’s mobilisation, as PM Truss rightly argues, “Freedom must be better armed than tyranny”?  No. The latter is up to the government, which is increasing defence spending to 3% of GDP – without the taxes to fund it. And yet this is not the 1980s. The UK has large debts and little industry. The other side has low debts and huge industry, and key commodities. The West cannot ‘beat them without fighting’ with state spending as rates rise, or with consumer spending; and we *are* already literally ‘fighting them’ across different dimensions. (US rate hikes are doing a good job though.) Will the new money be saved? Perhaps. But if so, will UK banks lend it to the above sectors only? No. They don’t do that kind of thing anymore. The money might flow back into Gilts given yields are soaring: but in that case the government is doing all the heavy lifting, while paying 5.75% interest on top for no reason. Will the tax-cut money be spent? If so, welcome to higher inflation and rates! Or perhaps the wealthy will buy a new, larger house, and screw the energy bills. That’ll show the Russians! As markets are showing, this is not a British, but a global problem. It is rooted in a neoliberal ‘lower for longer’, financialized economy facing up to much higher rates driven by a structural real economy supply-side shock. Indeed, markets risk replaying 1987, 1994, 1997, 2000, 2008, the Arab Spring, 2012, 2015, and 2020 all at the same time. As flagged in January, this is a global metacrisis. Europe is grappling with an energy crisis the IOGP sees lasting for 3-5 years, as NordStream 1 gas supply goes down, perhaps under sabotage; a German recession; a Russian mobilization; the need to re-arm; and key German firms like VW and others saying they will stop local production if energy prices don’t decline. And it has a new Italian government to complicate EU decision-making. The new Italian PM is no neoliberal. Italian 10-year yields were +14bp to 4.55% on Monday vs. 1.05% at the start of the year. The ECB talked vaguely about its toolkit to cap yields, but Lagarde also said would not fix “policy errors”: was she referring to Italy, her rate hikes, or decades of neoliberalism? She also decried EU governments for spending, making her rates task more difficult. Yet would it be better if energy prices soared, and inflation with it? Disaster or disaster – you choose. In Australia, the RBA keeps promising to under-arm bowl its base rate not much higher than 2.50% and to soon move back to tiny 25bp hikes to save the housing market. It risks following in the UK’s policy wake with a lag. AUD is sagging, trading below 0.6450 this morning, and Aussie yields are being dragged towards their June peak (with 10s at 4.08% vs. a 4.20% 2022 high and 3s at a new 2022 high of 3.77%), and the RBA’s credibility is being dragged through the mud. In the US, as the Fed hikes, the stock market and housing market crumble. Meanwhile, President Biden is telling US companies to cut pump prices of gasoline, when their margins are only 2c a litre on retail sales, and the Democrats are pitching that the government should buy and sell up to half of the Strategic Petroleum Reserve (the remaining half, presumably) to keep energy prices down. The Buy Low and Sell High Act would obligate purchases below $60 and sales above $90, as well as massively expand stockpiles of refined products across the country (at a time of no spare refinery capacity). None of this oil would be allowed to be exported to China, or nations under US sanctions. Whether it passes or not, this shows a further breakdown in neoliberal thought, and takes us back to deglobalised, price-constrained markets that were once normal for many commodities.   Meanwhile, it’s not just the West seeing things crumble. Iran faces country-wide street protests. It’s possible, if unlikely, the regime could fall. Certainly, the young generation seem as keen on Tehran’s leadership as young Britons are in the Tories. There were also wild --wrong!-- rumors on China over the weekend, where CNY was officially fixed above 7 for the first time since 2020 yesterday, and fresh lows await. Everyone is grasping at air as to where this all stops: I used to say 7.75, where the HK$ used to sit, and 8.28, where CNY used to be pegged to the dollar, but that was just a directional anchor. Worse, pork prices are surging, apparently up 30% y-o-y last week, prompting more dips into the Strategic Pork Reserve. As Russia’s Ukraine referendums/territorial grab comes to a close this evening, its matching mobilisation appears unpopular: martial law and closed borders ahead remains the rumour. Economists @mironov_fm and @itskhoki argue the maths says up to 1m men may be mobilised. While that seems a small number for Russia, because of the demographic hole of the 90s and early 2000s, there are now only 7.3m men aged 20-29, many of whom are about to be killed, injured, or flee abroad. Other reports make clear the weight of conscription will fall outside Moscow and St. Petersburg, where Russia’s extractive industries are found. The short-term economic impact could therefore be as catastrophic as the long-term demographic one. Some are even talking about the threat this could pose to the entire Russian state ahead. While not underplaying what the Russians may ultimately prove capable of if they mobilise, the tale of an Estonian conscript’s week in 1984’s Soviet Army is still instructive. To avoid shooting-range duty, without bullets, he takes army vegetables to a school in exchange for used squat toilets; these are taken to an apartment construction site, and he is told where to find discarded timber, with which he builds a cabin for an officer. Then he installs bathtubs in the apartments, which allows the theft of a Finnish bathtub for an officer in exchange for stolen jet fuel; the Soviet bathtub swapped for it is to transport vegetable scraps from the army to a pig farm – but there are no longer any vegetables; so he steals potatoes from a collective farm using tools stolen from farmers and the fire brigade. Half go to fill the army’s ration stores; the rest are divided among officers, and sold privately as “dacha grown”, or swapped for sugar or Finnish chocolate. In short, it’s not just neoliberalism that doesn’t work: Pepe Escobar, where art thou? If there is anything that does work now, it is long cash and the US dollar. The neoliberal trade was to sell the DXY at 105, 110, but who knows where it now stops: 115? We were at 114.5 at one point yesterday! 120? Why not? But why stop there? There is naturally market chatter about a new ‘Plaza Accord’, which is not at all neoliberal, but serves those who want to see markets stabilize quickly. However, this also displays little grasp of the US-Japan relationship in the 1980s vs. the US-entire world today. How would the dollar be forced down against all major FX when US rates are going up, inflation is high, and the US is proving itself to be the least dirty shirt in the dirty laundry basket? At some point, this will become directly geopolitical, not markets driven. The Fed will throw out swap-lines to stabilise other markets. Yet this will NOT happen on “neoliberal” or global terms. Rather, the deal will be for US friends only, and as part of a realignment of supply chains that favours the US. It might even happen under the auspices of a digital dollar to reinforce the muscle of the Eurodollar system even further. As an example of what this might entail, in order to get the nuclear subs underpinning the AUKUS pact as soon as possible, Australia is reportedly expected to pay to expand *US* ship-building capacity, the product of which will flow south, before it makes its own. Will the US also now get European heavy industry and high value-added auto manufacturing, alongside high-end semiconductors? And that alongside slices of off-shored Chinese production flowing to it and to Mexico? Tell me how the US doesn’t without using neoliberal terms like “because markets”. Then tell me how this impacts assets without using neoliberal terms like “because markets”. Tyler Durden Tue, 09/27/2022 - 11:50.....»»

Category: worldSource: nytSep 27th, 2022

"Global Gloom": World Markets Plunge To Start The Week As Global Currency Crash Hits Max Pain And Beyond

"Global Gloom": World Markets Plunge To Start The Week As Global Currency Crash Hits Max Pain And Beyond The rout which hammered stocks on Friday, nearly pushing them to close at a new 2022 low, resumed overnight when the global FX crisis returned with a bang, and a flash crash in the British pound which as noted late last night, plummeted 500pips in thin trading, to fresh record lows following Friday's shocking mini-budget announcement which confirmed the UK has no idea what it is doing and will cut rates and issue more debt just as the BOE is desperately trying to tighten financial conditions. The plunge in cable was however just one symptom of a bigger malaise, namely the relentless surge in the dollar which overnight hit fresh record highs as the BBDXY rose as high as 1,355 before briefly fading the surge... ... as every dollar-denominated debt issuer in the world is suffering crippling pain and begging Powell to do something to ease the unprecedented shock of the strongest dollar in history just as the world slumps into a global depression. Alas, so far there is nothing but silence from the Fed - which will likely have to make some announcement on central bank currency swaps at some point before the open today to avoid an even more epic FX rout - and as traders await something to break big time across global markets... This is the week of the barbell trade: deep OTM calls and puts as things either break or CBs panic. — zerohedge (@zerohedge) September 26, 2022 ... this morning futures have tumbled another 0.7%, as eminis drop to 3,683 while Nasdaq futures are down 0.8% to 11,290 on fears that Federal Reserve rate hikes to combat persistently elevated inflation will crush the economy into a full-blown recession, or depression, and the VIX soared above 32. It wasn't just FX and stocks crashing: British bonds also cratered as yields surged to the highest in more than a decade, sparking talk of emergency action by the Bank of England. For one example of the total chaos look no further than 5Y UK Gilts which have exploded 51bps higher and last traded around 4.58% as the market now prices in Similar implosions were observed in US TSYs, where the 10Y traded just shy of Friday's mini blowout, and was last seen at 3.7828% as bond traders are hit by VaR shocks at the same time in every possible market. Turning back to stocks, the rout wasn't isolated to just one market and an index of global stocks traded to the lowest since 2020. European equities extended declines after sliding into a bear market on Friday, with mining and energy stocks underperforming as metals and oil fell. “We’re in a period of global gloom, with pessimism blanketing different countries for different reasons,” said Ed Yardeni, president of his eponymous research firm, who warned of growing storm clouds for the US economy. “The latest data jibe with our growth recession scenario, but the risks of a full-blown recession are obviously increasing,” he wrote in a note Monday. In premarket trading, major US tech and internet stocks including Apple, Amazon and Microsoft tumbled. Here are some other notable premarket movers: Farfetch (FTCH US) shares fall as much as 4.43% in US premarket trading, after Citi begins coverage of the luxury online retailer with a sell rating, with broker flagging “weak” underlying profitability. Shares of US-listed Macau casinos jump in premarket trading, after Macau government said tour groups from mainland China could resume as early as November. Wynn Resorts (WYNN US) jumps 5.4%; Las Vegas Sands (LVS US) +6.9%, Melco (MLCO US) +9.6% and MGM resorts (MGM US) +1.6% Cryptocurrency-exposed stocks edged higher in premarket trading on Monday as Bitcoin rose above $19,000. Marathon Digital (MARA US) +1.9%, Coinbase (COIN US) +0.4% Keep an eye on Diana Shipping (DSX US) and Safe Bulkers (SB US) as Jefferies downgraded them to hold from buy and lowered dry bulk estimates to reflect the decline in dry bulk charter rates. European shares extended their fall to Dec. 2020 lows; sliding 1% and extending losses as investors priced a major economic shock and recession. The Stoxx 600 Index was down 1% by 10:50am in London, touching its lowest since December 2020, with real estate and banks among the worst performing sectors, while technology shares outperformed. Italy’s FTSE MIB bucked broader European declines to trade little changed, after Giorgia Meloni won a clear majority in Sunday’s election, in line with expectations. Banks and real estate stocks were the worst-performing sectors in Europe on Monday, with declines led by UK stocks as the pound and UK bonds slump. The Stoxx 600 Banks Index and the Stoxx 600 Real Estate are both down at least 2.5% while the benchmark gauge is 1.1% lower. The bank index decline is led by UK names including Virgin Money (-10%), Lloyds (-4.6%) and NatWest (-4.5%). Virgin Money was today resumed with a hold rating at Berenberg; broker said that the lender is expected to see revenue declines and a sector- lagging return on tangible equity which will affect ability to re-rate. Among real estate stocks, the UK’s Safestore Holdings (-4.2%), Assura (-3.9%) and Derwent London (-3.8%) are among the worst performers; non-index member housebuilders, including Persimmon, Bellway and Taylor Wimpey, are also plunging as the pound’s slump prompts talk of emergency action by the Bank of England. Here are the most notable movers today: The Stoxx 600 Tech Index rises as much as 2.4%, set for its biggest one-day outperformance against the broader Stoxx 600 since early-August, with semiconductor stocks leading gains. Among chip stocks, ASML rose as much as +3.7% after Santander upgraded the stock to neutral from underperform Italy’s FTSE MIB index gains, bucking weaker markets in Europe, after Giorgia Meloni won a clear majority in Sunday’s election. While the outcome was in line with expectations, the fact that the coalition didn’t obtain a super majority needed to change the constitution reassures investors. Telecom Italia rose as much +7.4%, FinecoBank +5.1%, Moncler +4.4% Unilever shares rise as much as 3.7% after it announced that CEO Alan Jope will retire from the company at the end of 2023, in a move that Jefferies analyst Martin Deboo (buy) sees as a positive development. RPS Group shares rise as much as 13% after Tetra Tech’s agreed deal to buy the company at 222p/share in cash, representing a 7.8% premium to an offer WSP made in August. Liberum does not rule out a counterbid. Belimo shares rise as much as 8.5% since the market isn’t fully pricing in its growth outlook, Berenberg says in a note, moving to buy and establishing a Street-high CHF440 target. The stock gains as much as 8.1%, the most since March 2021. Zalando shares rise as much as 4.8% after Citi analyst says they like the long-term investment story, short-term earnings risks are still high. UK Domestics: the most remarkable reaction to Friday’s not-so-mini budget, however, might be in lenders’ shares. The decline in banking stocks reflects investors’ pessimistic view on Britain’s economy. HSBC fell as much as 2.9%; Lloyds -4.3%, NatWest -4.7% and Barclays -3.0%. Virgin Money UK shares drop as much as 10% after Berenberg resumed a hold rating in note, stating that in many ways the UK small banks are “more different than they are alike.” Utilities are the day’s worst-performing European sector. Citi analyst Piotr Dzieciolowski says the EU’s funding for its policy response has so far been insufficient and also expects uncertainty to persist for UK names. United Utilities fell as much as -3.4%, Drax -3.8% Geopolitical risks from the war in Ukraine to escalating tensions over Taiwan and unrest in Iran also weighed on sentiment. Meanwhile, the OECD cut almost all growth forecasts for the Group of 20 next year while anticipating further interest-rate hikes, and a gauge of German business confidence deteriorated. Earlier in the session, a rout in Asian stocks extended into Monday as rising concerns about a global recession and weak demand hit the region’s exporters and materials producers. The MSCI Asia Pacific Index declined as much as 2.3% to the lowest since April 2020, dragged lower by TSMC, BHP and Toyota Motor. All but one sector traded lower with materials leading the slump.  South Korean stocks fell the most in the region, with the benchmark tumbling 3% to more than a two-year low. The Korean market’s heavy tech exposure has proven costly amid rising rates and a stronger dollar, with fears that a looming recession may wreak havoc on global demand. Gauges in Hong Kong and China reversed earlier gains as the region’s selloff intensified.   Korea Assets Are Asia’s Biggest Losers on Global Recession Angst “Investor sentiment is again at the stage of extreme fear,” said Lee Kyoung-Min, an analyst at Daishin Investment. “It is becoming solid and clear that Kospi and other global stock markets are on a mid-to-long term downward trend.” Asian stock benchmarks are being buffeted by global headwinds as well as risks of their own. The Federal Reserve’s relentless rate hike campaign is pushing Asian currencies lower and raising the risk of capital outflows, while China’s adherence to Covid Zero is hurting growth in the region’s economic giant.  If Monday’s losses are extended through the week, the MSCI Asia Pacific Index will see its longest run of declines since 2015. Japan stocks declined more than 2% as the nation resumed trading after a holiday on Friday. The Philippine stock market was closed Monday as Super Typhoon Noru barreled into the main Luzon island.  Among the key issues investors are watching this week are speeches by central bank officials in US and Europe, including Fed Chair Jerome Powell on Tuesday. Japanese equities tumbled as the market reopened following a three-day weekend, tracking US peers lower after the Fed’s hawkish comments last week deepened fears of a global downturn. The Topix fell 2.7% to close at 1,864.28, while the Nikkei declined 2.7% to 26,431.55. Toyota Motor contributed the most to the Topix decline, decreasing 3.2% after its monthly production update lagged expectations. Out of 2,169 stocks in the index, 145 rose and 1,985 fell, while 39 were unchanged. “There is a possibility that inflation will not subside and interest rates will rise further, which the markets will not like,” said Shoji Hirakawa, a chief global strategist at Tokai Tokyo Research. In Australia, the S&P/ASX 200 index fell 1.6% to close at 6,469.40, as energy and mining shares plummeted. An energy gauge including oil and coal linked securities declined by the most since March 2020.  The New Zealand market was closed for a holiday In India, key stocks gauges plunged to their lowest closing levels in almost two months as the global equity rout continues. The S&P BSE Sensex dropped 1.6% to 57,145.22 in Mumbai to its lowest since July 28. The NSE Nifty 50 Index fell 1.8%, its biggest single-day plunge since Sept. 16. Both the indexes, down in four of the past five weeks, have lost almost 6% since this month’s peak. Volatility in domestic equities is likely to remain elevated this week, pending monthly derivatives expiry on Thursday. Of 30 shares in the Sensex index, 24 fell and 6 advanced. All but one of the 19 sector sub-indexes compiled by BSE Ltd. declined, led by utilities and power companies.  The Indian rupee weakened to a new record against the dollar amid surging US Treasury yields. The Reserve Bank of India’s rate-setting panel will announce monetary policy later this week. As noted above, while stocks are ugly, rates are a horrorshow as Treasuries extended their worst bond slide in decades as a dollar gauge rose to yet another record. Treasuries extended losses in a bear flattening move with yields cheaper by up to 10bp across the belly of the curve. US 10-year yields around 3.78%, cheaper by 6bp on the day with 5s30s spread flatter by 5bp, dropping as low as -45.4bp in European session; UK yields cheaper by 60bp to 25bp from front- end out to long-end of the curve. The Move comes as market participants brace for accelerated policy tightening from global central banks and headlines such as this: *TRADERS PRICE IN UP TO 200BPS OF BOE RATE HIKES BY NOVEMBER Yields on 2-year gilts are 60bp cheaper heading into early US session, while the pound recovers slightly after reaching a fresh all-time low. US session focus on 2-year auction, while a barrage of Fed speakers are expected for the week. Peripheral spreads widen to Germany with 10y BTP/Bund widening 7bps to 238bps. FX, of course, is a disaster, with the Bloomberg Dollar Spot Index rising a fifth consecutive day as the greenback advanced versus most of its Group-of-10 peers. The pound plunged almost 5% to $1.0350 in Asian trading, the lowest recorded in Bloomberg data going back to 1971, while gilts crashed after the UK government vowed to press ahead with more tax cuts, stoking fears that new fiscal policies will send inflation and debt soaring, triggering emergency rate hikes. The options market signals no respite even as the pound rebounded from a record low hit during the Asia session. The yield on two- year bonds surged more than 55 basis points to 4.51%, while the 10-year yield rose 37 basis points to 4.19%. Money markets price in more than 150 basis points of rate increases by the BoE’s next policy meeting in November The euro steadied after earlier dropping to $0.9554; European bond yields rose; Italian bonds underperformed German peers. Giorgia Meloni won a clear majority in Sunday’s Italian election, setting herself up to become the country’s first female prime minister at the head of the most right-wing government since World War II. Germany’s IFO business expectations slid to 75.2 in September from 80.3 in August. That’s the lowest since April 2020. Analysts had predicted a drop to 79. An index of current conditions also fell. The Australian and New Zealand dollars pared some losses after earlier touching fresh 2-year lows. Aussie bond yields rose by up to 13bps, led by the front end The yen weakened amid a broadly stronger dollar. Bank of Japan Governor Haruhiko Kuroda said the government’s intervention in the foreign exchange market last week was appropriate given the recent volatility in the yen The currency’s rally is “untenable” for risk assets, according to a note by Morgan Stanley strategists led by Michael Wilson, while Sian Fenner, senior Asia economist for Oxford Economics, said that “It’s a king US dollar...“It’s adding to inflationary pressures and more central banks raising rates more than we have historically seen.” In commodities, WTI slides almost 1% to trade near $78/bbl. Spot gold mostly unchanged near $1,643/oz. Bitcoin climbs above $19,000. Trading this week will be punctuated by a number of economic reports including US initial jobless claims and gross-domestic-product data, along with PMI figures from China. Choppiness in price moves is likely with a steady stream of Federal Reserve officials speaking through the week. Looking at today's calendar, we get the September Dallas Fed manufacturing activity index, and the August Chicago Fed national activity index. Central bank speakers include the Fed's Bostic, Collins, Logan and Mester; ECB's Lagarde also speaks as does Nagel, Guindos, Centeno and Panetta speak, BoE's Tenreyro speaks. Market Snapshot S&P 500 futures little changed at 3,706.25 MXAP down 2.0% to 142.24 MXAPJ down 1.4% to 463.08 Nikkei down 2.7% to 26,431.55 Topix down 2.7% to 1,864.28 Hang Seng Index down 0.4% to 17,855.14 Shanghai Composite down 1.2% to 3,051.23 Sensex down 1.2% to 57,378.30 Australia S&P/ASX 200 down 1.6% to 6,469.41 Kospi down 3.0% to 2,220.94 STOXX Europe 600 down 0.2% to 389.70 German 10Y yield little changed at 2.08% Euro little changed at $0.9683 Brent Futures down 0.7% to $85.59/bbl Brent Futures down 0.7% to $85.59/bbl Gold spot up 0.1% to $1,645.98 U.S. Dollar Index little changed at 113.22 Top Overnight News from Bloomberg Chancellor of the Exchequer Kwasi Kwarteng must do more to reassure the markets about his plans for the economy after a selloff sent the pound crashing to an all-time low against the dollar, said Gerard Lyons, an external adviser to Prime Minister Liz Truss The UK’s foreign currency holdings are a fraction of the huge stockpiles built up by some of its peers, making unilateral intervention in the market to prop up the plunging pound a tall order for UK policymakers. The UK had $108 billion in foreign currency reserves at the end of August, according to data from the IMF Hedge funds ramped up bullish bets on the pound just days before the UK government’s unexpectedly large tax cuts sent the currency tumbling The ECB’s newest policy maker, Boris Vujcic, says “it’s clear that this is the right way to go,” backing this month’s 75-basis point interest-rate hike ECB Vice President Luis de Guindos said the biggest problem facing the continent’s economy is record inflation, which is becoming more broad-based, threatening investment and consumer spending ECB Governing Council member Yannis Stournaras says the central bank must maintain the main principles of gradualism and flexibility, since the problem it faces is different from the one that the US Fed faces China made it more expensive to bet against the yuan in the derivatives market, ramping up support for the currency as it slides toward the weakest level since the 2008 financial crisis A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks traded mostly negative in a resumption of last week's global stock rout amid the continued surge in the dollar and higher yields, while there was also FX volatility which saw a flash crash in GBP/USD to a record low. ASX 200 was dragged lower amid losses in the commodity-related sectors and with sentiment dampened by the collapse of potential M&A deals involving Ramsay Health-KKR and Link Administration-Dye & Durham. Nikkei 225 underperformed with Mazda Motors among the worst hit as it considers exiting Russian operations. Hang Seng and Shanghai Comp retraced most of their initial losses with Hong Kong underpinned following the scrapping of hotel quarantine policy and with casinos boosted as Macau is to resume tour groups from China, while the property industry benefits after China Construction Bank formed a CNY 30bln housing rental fund and some Twitter sources also circulated that some China state banks were reportedly ordered to buy stocks to contain selling. Top Asian News PBoC injected CNY 42bln via 7-day reverse repos with the rate kept at 2.00% and CNY 93bln via 14-day reverse repos with the rate kept at 2.15% for a net CNY 133bln injection. There were rumours circulating on social media of a coup against Chinese President Xi, although experts and journalists in Beijing dismissed the rumours and said there was no evidence to support them, according to The Print. Philippines Stock Exchange announced a trading suspension for Monday amid a typhoon in the capital, according to Reuters. European bourses are softer after a mixed cash open and despite a brief foray higher, Euro Stoxx 50 -0.5%, as sentiment remains subdued amid recession/inflation concerns. The breakdown features modest outperformance in the FTSE MIB as Italian election results are in-line with expectations. Stateside, futures are lower across the board in-fitting with peers going into a week of Fed speak and inflation data. Top European News UK PM Truss said she is determined to make the special relationship with the US even more special and said she agreed with US President Biden that it is vital to protect the Northern Ireland Good Friday Agreement, while she wants to find a way forward with a negotiated solution with the EU, according to Reuters and a CNN interview. UK PM Truss is to review visa schemes in an attempt to ease UK labour shortages, according to FT. UK Chancellor Kwarteng hinted that more tax cuts are on the way and claimed his tax cuts “favour people right across the income scale” amid accusations they mainly help the rich, according to Evening Standard. UK Chancellor Kwarteng said he is focused on growing the economy and the longer term when asked about the market reaction to his statement on Friday. Kwarteng added that he shares ideas with BoE Governor Bailey but added that Bailey is completely independent and Kwarteng is confident the BoE is dealing with inflation, according to Reuters. UK opposition Labour Party leader Starmer said they would reintroduce the top rate of income tax at 45% which the government announced to scrap last week, while he added that they will support the government plan to lower the basic rate of income tax to 19%, according to Reuters. Italy's right-wing bloc is seen winning the national election with 43.3% and centre-left bloc is seen winning 25.4%, according to the first projection by LA7 TV based on the actual vote count.. Click here for newsquawk snap analysis. Italy's Meloni said Italians gave clear backing to a centre-right government led by the Brothers of Italy and said the situation is difficult and needs contribution from everyone. It was separately reported that Italy's Democratic Party conceded in the election and said it will be the main opposition force, while Italy's Meloni claimed leadership of the next Italian government, according to Reuters and AFP. FX DXY climbed to a fresh YTD high of 114.58 before paring modestly, but remaining firmer, as GBP in particular lifts off worst levels. Cable succumbed to a flash crash overnight, with GBP/USD hitting an all-time-low around 1.0350 as participants confidence in the economy slips. EUR suffers amid the mentioned USD move but derives relative benefit from GBP, while ECB speakers thus far have added little. Antipodeans and CAD weighed on by broader risk and commodity pressure. Japanese Finance Minister Suzuki said the government and BoJ share views on concerns about a weak JPY, while he added that FX intervention had a certain effect and there is no change to the stance that they will respond to market moves as needed, according to Reuters. PBoC set USD/CNY mid-point at 7.0298 vs exp. 7.0019 (prev. 6.9920) PBoC imposed a 20% risk reserve requirement for FX forward sales from September 28th to rein in yuan weakness. Fixed Income Gilts have retained some composure after slumping over 200ticks at the commencement of trade and have settled around halfway between intraday extremes. EGBs downbeat in sympathy while BTPs marginally lag core-EGB peers as Italian as-expected election results are digested with BTP-Bund only modestly wider as such. Stateside, USTs are pressured in-fitting with peers and also conscious of the week's supply docket getting underway via a 43bln 2yr. Central Banks Fed’s Bostic (2024 voter) said inflation is too high and that they need to do all they can to bring it down and said demand is beginning to shrink which will ultimately pay dividends in inflation levels. Bostic also stated that there are scenarios where they can avoid deep pain but there will likely be some job losses, according to Reuters. BoJ's Kuroda says the BoJ will maintain accommodative monetary conditions to support companies, hopes to support a positive economic cycle, long-term inflation expectations have begun to heighten, via Reuters. Intervention from the MoF is an "appropriate" move, does not think gov't intervention and BoJ policy are contradictory. Amamiya says the domestic economy is picking up, must carefully watch how FX moves affect the economy and prices. BoJ Governor Kuroda says when he stated that BoJ forward guidance will not change for 2-3yrs, did not refer to guidance on keeping short and long-term rates at present of lower levels via Reuters. ECB's de Guindos says Q3 and Q4 point towards growth rates being close to zero within the EZ, the scenario is market by high uncertainty, lower growth and higher inflation. ECB's Panetta says ECB is assessing the potential of distributed ledger technology (DLT) and "the extent to which it could improve our services.". Capital Economics calls for the BoE to "get on the front foot with a big rate hike". Allianz's El-Erian says, on GBP, the fall is about extra tax cuts and Chancellor Kwarteng could recalibrate this. Alternative, would be for the BoE to hike at an emergency meeting. Adding, he would hike by 100bp. BoE publishes key elements of the 2022 annual cyclical scenario stress test; includes a scenario where the Bank Rate is assumed to rise rapidly to a peak of 6% in early 2023 before gradually reduced to sub-3.5%. Commodities WTI and Brent November futures remain subdued in early European trade following last week’s recession-induced losses. Spot gold trades in tandem with the Buck and sees resistance at around USD 1,650/oz after falling to USD 1,627/oz as a casualty of the Sterling flash crash overnight. LME metals are softer across the board with 3M copper futures having a hard time reclaiming USD +7,500/t status with upside capped by the Buck. Iraq began trial operations at the Karabala oil refinery which has a production capacity of 140k bpd, according to a statement from the Oil Ministry. German Chancellor Scholz signed a strategic agreement with UAE’s President on accelerating energy security and industrial growth, while UAE’s ADNOC signed an agreement with Germany’s RWE which includes ADNOC exporting its first LNG cargo to RWE and will conduct trial shipments of low-carbon ammonia to Germany. Furthermore, Chancellor Scholz said while visiting Doha that he talked with the Emir about LNG deliveries and that they want to achieve further progress, according to Reuters. Germany is preparing a national electricity price cap to be implemented this fall in the scenario the EU falls to agree on a similar move for the entirety of the bloc, via WSJ citing officials. Vitol's CEO said at the Asia Pacific Petroleum Conference that Russian gas supply cuts put enormous strain on supply-demand in Europe and that high gas prices are to impact 60%-80% of demand, while Ecopetrol's CEO said they are increasing crude exports to Europe this year to replace Russian supplies and are drilling 600 oil wells this year. Anglo American (AAL LN) tightens copper production guidance for Chile to 560k-580k tonnes of copper (prev. 560k-600k tonnes) due to lower throughput at Los Bronces caused by a combination of water restrictions and a change in ore characteristics, via Reuters. US Event Calendar 08:30: Aug. Chicago Fed Nat Activity Index, est. 0.23, prior 0.27 10:30: Sept. Dallas Fed Manf. Activity, est. -10.0, prior -12.9 Central Banks 10:00: Boston Fed’s Susan Collins Speaks to Boston Chamber of... 12:00: Fed’s Bostic Discusses Income Inequality 12:30: Fed’s Logan Speaks at Banking Conference 16:00: Fed’s Mester Discusses Economic Outlook DB's Jim Reid concludes the overnight wrap I wonder whether any research report has ever been written whilst watching synchronised swimming? Well if not, then you’re reading the first ever as I’m getting a head start on the early morning news by starting this on Sunday evening watching my daughter Maisie do her second session after getting into the local club. Watching this sport is going to take some getting used to after years of watching football, cricket, golf, F1, athletics, rugby... actually.... virtually every sport bar synchronised swimming. I think everyone felt they were swimming in a tsunami of newsflow last week after one of the most incredible macro weeks in recent memory in terms of breadth of events. Yes there have been more extreme weeks in crises but last week had a bit more variety and was outside of a crisis period. If over 500bps of global rate hikes wasn’t enough, you also had 2yr US yields moving higher for the 12th successive day on Friday (the longest steak since data begins in 1976), the BoJ intervening in FX markets for the first time since 1998, and what can only be termed as one of the darker days for sterling assets on record on Friday after a mammoth tax giveaway in what was a mini-budget in name and not by nature. Henry and I put a note out on Friday night (link here) showing that it was the third worst day for Sterling (-3.57%) since Black Wednesday in 1992, with the worst two since being the day after the Brexit vote (-8.1%) and after the initial covid shock in 2020 (-3.71%) when there was a global flight to dollars. We also show a graph of daily Sterling moves back to 1862 and on that it was the 41st worst day in history spanning 47,000 trading days. Obviously in the long era of fixed FX rates there were the occasional big devaluations which were much bigger than Friday. This morning is Asia it fell around -4.5% at one point (1.0392) which was a record low against the Dollar. It's around -2.78% as I type. This follows a weekend interview where Chancellor Kwarteng suggested that more tax cuts were to come so that certainly was a red rag to markets. Will we hear from the upper echelons of the BoE today? Watch out for any comments, especially at the market open. DB's George Saravelos suggested on Friday that the Bank of England need to do an inter meeting hike to restore policy credibility. There’s also a graph in our note mentioned above showing that Friday was the worst day for 5yr gilts (+50.3bps) since a +200bps hike in 1985 when sterling was also slumping. So maybe omens here. I suppose the only slight mystery is the timing of the sell-off as the mini-budget in magnitude was broadly in-line with the recent elevated fiscal expectations that had been building. However perhaps it was the unabashed revival of trickle-down economics that had markets a little aghast. It goes against the current economic orthodoxy and the overall zeitgeist of our immediate times. As such there is likely to be concerns of a credibility issue. We are publishing our long-term study today with the title “How we got here, and where we’re going?”. In it we try to put the current macro woes into historical context in an attempt to work out where we’re going. There are quite a few people who have proof-read it on my team and they were all thoroughly depressed at the end. I didn't feel that way writing it but maybe it's a case of starting point perceptions. Anyway, look out for it around the European lunchtime. Overnight in Italy, the right-wing alliance led by Giorgia Meloni's Brothers of Italy party was on course to become the nation’s first woman prime minister after exit polls gave it a clear majority. With the full results due later today, she is predicted to win up to 26% of the vote ahead of her closest rival Enrico Letta from the centre left. The right wing alliance is slated to be on course for around 43% of the vote, enough for a majority if correct. As I type, the euro is extending its losses against the dollar for the fifth day, its longest streak since April 28, falling as much as -0.5% to 0.9638, albeit being overshadowed by Sterling. For this week we have an array of consumer-driven economic data in the US and some important European inflation prints. We will also get a number of consumer sentiment indicators across the key economies and PMIs from Asia. Away from the data, there are more than 30 central banker appearances across the Fed and the ECB to keep markets busy. Tomorrow also sees referendums in the Russia-annexed Ukrainian territories as the conflict goes into its eight month. Going through the data in more details now. Starting with the US, the PCE and personal income and spending data will be front and centre for markets next week as they gauge the extent of inflationary pressures and the strength of the consumer. The Fed’s preferred inflation gauge, the PCE, due Friday, will be watched for signs of price pressures we saw in last week's CPI report. Our US economists expect core PCE to edge higher by +0.5% MoM (vs +0.1% in July) which won’t allow the Fed to take the foot off the tightening pedal. For the other two data points, our team forecasts a +0.1% MoM increase for both income and consumption. Final US Q2 GDP will also be released on Thursday and although DB expect no change to the -0.6% second reading, watch out for the annual benchmark revisions back to Q1 2017. History could be re-written that could have some implications for how we all think about the economy. In other US data, we will also get the consumer confidence index on Tuesday, along with durable goods orders, and inventories data on Wednesday, with the Chicago PMI on Friday. Over in Europe, all eyes will be on September's inflation data, including the Euro Area flash CPI release on Friday. Our economists are expecting the measure to hit a record +9.5%, up from the previous record of +9.1% in August. Other data in the region will include consumer and economic sentiment from Germany, France, Italy and the Eurozone throughout the week. Meanwhile, EU energy ministers will meet again on Friday regarding the emergency intervention amid elevated energy prices. Finally, next week's earnings line up will feature a number of retail bellwethers on Thursday. Among them will be Nike, H&M and Next. Micron will report that day as well. See our usual day by day guide to the week at the end which contains many of the key Fed and ECB speakers including Powell and Lagarde. Stock markets across Asia are mostly lower this morning. The Kospi (-2.40%), Nikkei (-2.30%) and the S&P/ASX 200 (-1.40%) are leading the declines. Meanwhile, the Hang Seng (+0.11%) is swinging between gains and losses after rising by +2.45% initially with Chinese shares mixed as the Shanghai Composite (-0.10%) is trading lower while the CSI (+0.46%) is up as we go to press. Stock futures in DMs are pointing to further losses with contracts on the S&P 500 (-0.49%), NASDAQ 100 (-0.46%) and DAX (-0.33%) all moving lower. Early morning data showed that Japan’s manufacturing sector continued to expand albeit at a slower pace as the latest au Jibun Bank manufacturing PMI slipped to a 20-month low of 51.0 in September from 51.5 in August, pulled lower by high energy and raw material prices that was exacerbated by a weak yen. At the same time, the au Jibun Bank services PMI returned to expansion, recording a level of 51.9 in September from August's 49.5 final reading. Moving on to China, in order to stabilise expectations in the FX market, the People’s Bank of China (PBOC) today raised the risk reserve requirement on foreign exchange forward sales to 20% from 0% beginning September 28 as the yuan faces increasing depreciation pressure, in line with most major currencies amid broad dollar strength. Looking back now on a week that will not be forgotten anytime soon. While there were historic central bank hikes all week, the biggest news came from the fiscal authorities, following the UK’s budget Friday, which had the largest tax cut package since the 1970s. Gilt yields had their largest one-day increase in decades with 2yrs +44.7bps, 5yrs +50.3bps, and 10yrs +33.3bps. As we mentioned at the top, 5yrs yields saw their largest move since 1985 after a +200bps hike aimed at helping a plunging currency. The pound fell -3.57% against the US dollar to within a percentage point of the weakest in the post-Bretton Woods 51yr free float era. It was already a busy macro week before the blockbuster budget, where we got more than 500bps of global central bank hikes and a currency intervention from Japan. In terms of the biggest players, the Fed delivered its third consecutive 75bp hike while the BoE delivered its second 50bp hike in a row, with both banks guiding toward yet more tightening, while the BoJ remained the outlier by keeping its accommodative policy in place, which isn’t going to help the yen turnaround even with intervention. When all was said and done, sovereign bonds and equities sold off in size, while yield curves flattened. 2yr Treasuries (+33.4bps, +7.9bps Friday), 2yr Bunds (+38.5bps, +7.2bps Friday), 2yr Gilts (+82.1bps, +44.7bps Friday) reached their highest levels since 2007, 2008, and 2008, respectively, as markets priced in more tightening to overcome inflationary pressures (and in the case of the UK, fiscal expansion). 10yr Treasuries (+23.5bps, -2.9bps Friday) ended the week a touch lower on the day but hit their highest levels since 2011 during the week, while 10yr Bunds (+26.8bps, +5.9bps Friday), and 10yr Gilts (+69.1bps, +33.3bps Friday) hit their highest levels since 2013 and 2011, respectively. The mixture unsurprisingly proved unpalatable to risk assets, driving the STOXX 600 and S&P 500 back to their lows for the year. The STOXX 600 retreated -4.37% on the week and -2.34% on Friday, the worst weekly and daily return since mid-June. The S&P 500 fell -4.65% (-1.75% Friday), returning to bear market territory. The FTSE managed to stay above its YTD lows, but still fell -3.01% on the week, its worst weekly return since mid-June as well, and retreated -1.97% on Friday, the worst daily return since early July. Tyler Durden Mon, 09/26/2022 - 08:08.....»»

Category: blogSource: zerohedgeSep 26th, 2022

“Global Gloom": World Markets Plunge To Start The Week As Global Currency Crash Hits Max Pain And Beyond

“Global Gloom": World Markets Plunge To Start The Week As Global Currency Crash Hits Max Pain And Beyond The rout which hammered stocks on Friday, nearly pushing them to close at a new 2022 low, resumed overnight when the global FX crisis returned with a bang, and a flash crash in the British pound which as noted late last night, plummeted 500pips in thin trading, to fresh record lows following Friday's shocking mini-budget announcement which confirmed the UK has no idea what it is doing and will cut rates and issue more debt just as the BOE is desperately trying to tighten financial conditions. The plunge in cable was however just one symptom of a bigger malaise, namely the relentless surge in the dollar which overnight hit fresh record highs as the BBDXY rose as high as 1,355 before briefly fading the surge... ... as every dollar-denominated debt issuer in the world is suffering crippling pain and begging Powell to do something to ease the unprecedented shock of the strongest dollar in history just as the world slumps into a global depression. Alas, so far there is nothing but silence from the Fed - which will likely have to make some announcement on central bank currency swaps at some point before the open today to avoid an even more epic FX rout - and as traders await something to break big time across global markets... This is the week of the barbell trade: deep OTM calls and puts as things either break or CBs panic. — zerohedge (@zerohedge) September 26, 2022 ... this morning futures have tumbled another 0.7%, as eminis drop to 3,683 while Nasdaq futures are down 0.8% to 11,290 on fears that Federal Reserve rate hikes to combat persistently elevated inflation will crush the economy into a full-blown recession, or depression, and the VIX soared above 32. It wasn't just FX and stocks crashing: British bonds also cratered as yields surged to the highest in more than a decade, sparking talk of emergency action by the Bank of England. For one example of the total chaos look no further than 5Y UK Gilts which have exploded 51bps higher and last traded around 4.58% as the market now prices in Similar implosions were observed in US TSYs, where the 10Y traded just shy of Friday's mini blowout, and was last seen at 3.7828% as bond traders are hit by VaR shocks at the same time in every possible market. Turning back to stocks, the rout wasn't isolated to just one market and an index of global stocks traded to the lowest since 2020. European equities extended declines after sliding into a bear market on Friday, with mining and energy stocks underperforming as metals and oil fell. “We’re in a period of global gloom, with pessimism blanketing different countries for different reasons,” said Ed Yardeni, president of his eponymous research firm, who warned of growing storm clouds for the US economy. “The latest data jibe with our growth recession scenario, but the risks of a full-blown recession are obviously increasing,” he wrote in a note Monday. In premarket trading, major US tech and internet stocks including Apple, Amazon and Microsoft tumbled. Here are some other notable premarket movers: Farfetch (FTCH US) shares fall as much as 4.43% in US premarket trading, after Citi begins coverage of the luxury online retailer with a sell rating, with broker flagging “weak” underlying profitability. Shares of US-listed Macau casinos jump in premarket trading, after Macau government said tour groups from mainland China could resume as early as November. Wynn Resorts (WYNN US) jumps 5.4%; Las Vegas Sands (LVS US) +6.9%, Melco (MLCO US) +9.6% and MGM resorts (MGM US) +1.6% Cryptocurrency-exposed stocks edged higher in premarket trading on Monday as Bitcoin rose above $19,000. Marathon Digital (MARA US) +1.9%, Coinbase (COIN US) +0.4% Keep an eye on Diana Shipping (DSX US) and Safe Bulkers (SB US) as Jefferies downgraded them to hold from buy and lowered dry bulk estimates to reflect the decline in dry bulk charter rates. European shares extended their fall to Dec. 2020 lows; sliding 1% and extending losses as investors priced a major economic shock and recession. The Stoxx 600 Index was down 1% by 10:50am in London, touching its lowest since December 2020, with real estate and banks among the worst performing sectors, while technology shares outperformed. Italy’s FTSE MIB bucked broader European declines to trade little changed, after Giorgia Meloni won a clear majority in Sunday’s election, in line with expectations. Banks and real estate stocks were the worst-performing sectors in Europe on Monday, with declines led by UK stocks as the pound and UK bonds slump. The Stoxx 600 Banks Index and the Stoxx 600 Real Estate are both down at least 2.5% while the benchmark gauge is 1.1% lower. The bank index decline is led by UK names including Virgin Money (-10%), Lloyds (-4.6%) and NatWest (-4.5%). Virgin Money was today resumed with a hold rating at Berenberg; broker said that the lender is expected to see revenue declines and a sector- lagging return on tangible equity which will affect ability to re-rate. Among real estate stocks, the UK’s Safestore Holdings (-4.2%), Assura (-3.9%) and Derwent London (-3.8%) are among the worst performers; non-index member housebuilders, including Persimmon, Bellway and Taylor Wimpey, are also plunging as the pound’s slump prompts talk of emergency action by the Bank of England. Here are the most notable movers today: The Stoxx 600 Tech Index rises as much as 2.4%, set for its biggest one-day outperformance against the broader Stoxx 600 since early-August, with semiconductor stocks leading gains. Among chip stocks, ASML rose as much as +3.7% after Santander upgraded the stock to neutral from underperform Italy’s FTSE MIB index gains, bucking weaker markets in Europe, after Giorgia Meloni won a clear majority in Sunday’s election. While the outcome was in line with expectations, the fact that the coalition didn’t obtain a super majority needed to change the constitution reassures investors. Telecom Italia rose as much +7.4%, FinecoBank +5.1%, Moncler +4.4% Unilever shares rise as much as 3.7% after it announced that CEO Alan Jope will retire from the company at the end of 2023, in a move that Jefferies analyst Martin Deboo (buy) sees as a positive development. RPS Group shares rise as much as 13% after Tetra Tech’s agreed deal to buy the company at 222p/share in cash, representing a 7.8% premium to an offer WSP made in August. Liberum does not rule out a counterbid. Belimo shares rise as much as 8.5% since the market isn’t fully pricing in its growth outlook, Berenberg says in a note, moving to buy and establishing a Street-high CHF440 target. The stock gains as much as 8.1%, the most since March 2021. Zalando shares rise as much as 4.8% after Citi analyst says they like the long-term investment story, short-term earnings risks are still high. UK Domestics: the most remarkable reaction to Friday’s not-so-mini budget, however, might be in lenders’ shares. The decline in banking stocks reflects investors’ pessimistic view on Britain’s economy. HSBC fell as much as 2.9%; Lloyds -4.3%, NatWest -4.7% and Barclays -3.0%. Virgin Money UK shares drop as much as 10% after Berenberg resumed a hold rating in note, stating that in many ways the UK small banks are “more different than they are alike.” Utilities are the day’s worst-performing European sector. Citi analyst Piotr Dzieciolowski says the EU’s funding for its policy response has so far been insufficient and also expects uncertainty to persist for UK names. United Utilities fell as much as -3.4%, Drax -3.8% Geopolitical risks from the war in Ukraine to escalating tensions over Taiwan and unrest in Iran also weighed on sentiment. Meanwhile, the OECD cut almost all growth forecasts for the Group of 20 next year while anticipating further interest-rate hikes, and a gauge of German business confidence deteriorated. Earlier in the session, a rout in Asian stocks extended into Monday as rising concerns about a global recession and weak demand hit the region’s exporters and materials producers. The MSCI Asia Pacific Index declined as much as 2.3% to the lowest since April 2020, dragged lower by TSMC, BHP and Toyota Motor. All but one sector traded lower with materials leading the slump.  South Korean stocks fell the most in the region, with the benchmark tumbling 3% to more than a two-year low. The Korean market’s heavy tech exposure has proven costly amid rising rates and a stronger dollar, with fears that a looming recession may wreak havoc on global demand. Gauges in Hong Kong and China reversed earlier gains as the region’s selloff intensified.   Korea Assets Are Asia’s Biggest Losers on Global Recession Angst “Investor sentiment is again at the stage of extreme fear,” said Lee Kyoung-Min, an analyst at Daishin Investment. “It is becoming solid and clear that Kospi and other global stock markets are on a mid-to-long term downward trend.” Asian stock benchmarks are being buffeted by global headwinds as well as risks of their own. The Federal Reserve’s relentless rate hike campaign is pushing Asian currencies lower and raising the risk of capital outflows, while China’s adherence to Covid Zero is hurting growth in the region’s economic giant.  If Monday’s losses are extended through the week, the MSCI Asia Pacific Index will see its longest run of declines since 2015. Japan stocks declined more than 2% as the nation resumed trading after a holiday on Friday. The Philippine stock market was closed Monday as Super Typhoon Noru barreled into the main Luzon island.  Among the key issues investors are watching this week are speeches by central bank officials in US and Europe, including Fed Chair Jerome Powell on Tuesday. Japanese equities tumbled as the market reopened following a three-day weekend, tracking US peers lower after the Fed’s hawkish comments last week deepened fears of a global downturn. The Topix fell 2.7% to close at 1,864.28, while the Nikkei declined 2.7% to 26,431.55. Toyota Motor contributed the most to the Topix decline, decreasing 3.2% after its monthly production update lagged expectations. Out of 2,169 stocks in the index, 145 rose and 1,985 fell, while 39 were unchanged. “There is a possibility that inflation will not subside and interest rates will rise further, which the markets will not like,” said Shoji Hirakawa, a chief global strategist at Tokai Tokyo Research. In Australia, the S&P/ASX 200 index fell 1.6% to close at 6,469.40, as energy and mining shares plummeted. An energy gauge including oil and coal linked securities declined by the most since March 2020.  The New Zealand market was closed for a holiday In India, key stocks gauges plunged to their lowest closing levels in almost two months as the global equity rout continues. The S&P BSE Sensex dropped 1.6% to 57,145.22 in Mumbai to its lowest since July 28. The NSE Nifty 50 Index fell 1.8%, its biggest single-day plunge since Sept. 16. Both the indexes, down in four of the past five weeks, have lost almost 6% since this month’s peak. Volatility in domestic equities is likely to remain elevated this week, pending monthly derivatives expiry on Thursday. Of 30 shares in the Sensex index, 24 fell and 6 advanced. All but one of the 19 sector sub-indexes compiled by BSE Ltd. declined, led by utilities and power companies.  The Indian rupee weakened to a new record against the dollar amid surging US Treasury yields. The Reserve Bank of India’s rate-setting panel will announce monetary policy later this week. As noted above, while stocks are ugly, rates are a horrorshow as Treasuries extended their worst bond slide in decades as a dollar gauge rose to yet another record. Treasuries extended losses in a bear flattening move with yields cheaper by up to 10bp across the belly of the curve. US 10-year yields around 3.78%, cheaper by 6bp on the day with 5s30s spread flatter by 5bp, dropping as low as -45.4bp in European session; UK yields cheaper by 60bp to 25bp from front- end out to long-end of the curve. The Move comes as market participants brace for accelerated policy tightening from global central banks and headlines such as this: *TRADERS PRICE IN UP TO 200BPS OF BOE RATE HIKES BY NOVEMBER Yields on 2-year gilts are 60bp cheaper heading into early US session, while the pound recovers slightly after reaching a fresh all-time low. US session focus on 2-year auction, while a barrage of Fed speakers are expected for the week. Peripheral spreads widen to Germany with 10y BTP/Bund widening 7bps to 238bps. FX, of course, is a disaster, with the Bloomberg Dollar Spot Index rising a fifth consecutive day as the greenback advanced versus most of its Group-of-10 peers. The pound plunged almost 5% to $1.0350 in Asian trading, the lowest recorded in Bloomberg data going back to 1971, while gilts crashed after the UK government vowed to press ahead with more tax cuts, stoking fears that new fiscal policies will send inflation and debt soaring, triggering emergency rate hikes. The options market signals no respite even as the pound rebounded from a record low hit during the Asia session. The yield on two- year bonds surged more than 55 basis points to 4.51%, while the 10-year yield rose 37 basis points to 4.19%. Money markets price in more than 150 basis points of rate increases by the BoE’s next policy meeting in November The euro steadied after earlier dropping to $0.9554; European bond yields rose; Italian bonds underperformed German peers. Giorgia Meloni won a clear majority in Sunday’s Italian election, setting herself up to become the country’s first female prime minister at the head of the most right-wing government since World War II. Germany’s IFO business expectations slid to 75.2 in September from 80.3 in August. That’s the lowest since April 2020. Analysts had predicted a drop to 79. An index of current conditions also fell. The Australian and New Zealand dollars pared some losses after earlier touching fresh 2-year lows. Aussie bond yields rose by up to 13bps, led by the front end The yen weakened amid a broadly stronger dollar. Bank of Japan Governor Haruhiko Kuroda said the government’s intervention in the foreign exchange market last week was appropriate given the recent volatility in the yen The currency’s rally is “untenable” for risk assets, according to a note by Morgan Stanley strategists led by Michael Wilson, while Sian Fenner, senior Asia economist for Oxford Economics, said that “It’s a king US dollar...“It’s adding to inflationary pressures and more central banks raising rates more than we have historically seen.” In commodities, WTI slides almost 1% to trade near $78/bbl. Spot gold mostly unchanged near $1,643/oz. Bitcoin climbs above $19,000. Trading this week will be punctuated by a number of economic reports including US initial jobless claims and gross-domestic-product data, along with PMI figures from China. Choppiness in price moves is likely with a steady stream of Federal Reserve officials speaking through the week. Looking at today's calendar, we get the September Dallas Fed manufacturing activity index, and the August Chicago Fed national activity index. Central bank speakers include the Fed's Bostic, Collins, Logan and Mester; ECB's Lagarde also speaks as does Nagel, Guindos, Centeno and Panetta speak, BoE's Tenreyro speaks. Market Snapshot S&P 500 futures little changed at 3,706.25 MXAP down 2.0% to 142.24 MXAPJ down 1.4% to 463.08 Nikkei down 2.7% to 26,431.55 Topix down 2.7% to 1,864.28 Hang Seng Index down 0.4% to 17,855.14 Shanghai Composite down 1.2% to 3,051.23 Sensex down 1.2% to 57,378.30 Australia S&P/ASX 200 down 1.6% to 6,469.41 Kospi down 3.0% to 2,220.94 STOXX Europe 600 down 0.2% to 389.70 German 10Y yield little changed at 2.08% Euro little changed at $0.9683 Brent Futures down 0.7% to $85.59/bbl Brent Futures down 0.7% to $85.59/bbl Gold spot up 0.1% to $1,645.98 U.S. Dollar Index little changed at 113.22 Top Overnight News from Bloomberg Chancellor of the Exchequer Kwasi Kwarteng must do more to reassure the markets about his plans for the economy after a selloff sent the pound crashing to an all-time low against the dollar, said Gerard Lyons, an external adviser to Prime Minister Liz Truss The UK’s foreign currency holdings are a fraction of the huge stockpiles built up by some of its peers, making unilateral intervention in the market to prop up the plunging pound a tall order for UK policymakers. The UK had $108 billion in foreign currency reserves at the end of August, according to data from the IMF Hedge funds ramped up bullish bets on the pound just days before the UK government’s unexpectedly large tax cuts sent the currency tumbling The ECB’s newest policy maker, Boris Vujcic, says “it’s clear that this is the right way to go,” backing this month’s 75-basis point interest-rate hike ECB Vice President Luis de Guindos said the biggest problem facing the continent’s economy is record inflation, which is becoming more broad-based, threatening investment and consumer spending ECB Governing Council member Yannis Stournaras says the central bank must maintain the main principles of gradualism and flexibility, since the problem it faces is different from the one that the US Fed faces China made it more expensive to bet against the yuan in the derivatives market, ramping up support for the currency as it slides toward the weakest level since the 2008 financial crisis A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks traded mostly negative in a resumption of last week's global stock rout amid the continued surge in the dollar and higher yields, while there was also FX volatility which saw a flash crash in GBP/USD to a record low. ASX 200 was dragged lower amid losses in the commodity-related sectors and with sentiment dampened by the collapse of potential M&A deals involving Ramsay Health-KKR and Link Administration-Dye & Durham. Nikkei 225 underperformed with Mazda Motors among the worst hit as it considers exiting Russian operations. Hang Seng and Shanghai Comp retraced most of their initial losses with Hong Kong underpinned following the scrapping of hotel quarantine policy and with casinos boosted as Macau is to resume tour groups from China, while the property industry benefits after China Construction Bank formed a CNY 30bln housing rental fund and some Twitter sources also circulated that some China state banks were reportedly ordered to buy stocks to contain selling. Top Asian News PBoC injected CNY 42bln via 7-day reverse repos with the rate kept at 2.00% and CNY 93bln via 14-day reverse repos with the rate kept at 2.15% for a net CNY 133bln injection. There were rumours circulating on social media of a coup against Chinese President Xi, although experts and journalists in Beijing dismissed the rumours and said there was no evidence to support them, according to The Print. Philippines Stock Exchange announced a trading suspension for Monday amid a typhoon in the capital, according to Reuters. European bourses are softer after a mixed cash open and despite a brief foray higher, Euro Stoxx 50 -0.5%, as sentiment remains subdued amid recession/inflation concerns. The breakdown features modest outperformance in the FTSE MIB as Italian election results are in-line with expectations. Stateside, futures are lower across the board in-fitting with peers going into a week of Fed speak and inflation data. Top European News UK PM Truss said she is determined to make the special relationship with the US even more special and said she agreed with US President Biden that it is vital to protect the Northern Ireland Good Friday Agreement, while she wants to find a way forward with a negotiated solution with the EU, according to Reuters and a CNN interview. UK PM Truss is to review visa schemes in an attempt to ease UK labour shortages, according to FT. UK Chancellor Kwarteng hinted that more tax cuts are on the way and claimed his tax cuts “favour people right across the income scale” amid accusations they mainly help the rich, according to Evening Standard. UK Chancellor Kwarteng said he is focused on growing the economy and the longer term when asked about the market reaction to his statement on Friday. Kwarteng added that he shares ideas with BoE Governor Bailey but added that Bailey is completely independent and Kwarteng is confident the BoE is dealing with inflation, according to Reuters. UK opposition Labour Party leader Starmer said they would reintroduce the top rate of income tax at 45% which the government announced to scrap last week, while he added that they will support the government plan to lower the basic rate of income tax to 19%, according to Reuters. Italy's right-wing bloc is seen winning the national election with 43.3% and centre-left bloc is seen winning 25.4%, according to the first projection by LA7 TV based on the actual vote count.. Click here for newsquawk snap analysis. Italy's Meloni said Italians gave clear backing to a centre-right government led by the Brothers of Italy and said the situation is difficult and needs contribution from everyone. It was separately reported that Italy's Democratic Party conceded in the election and said it will be the main opposition force, while Italy's Meloni claimed leadership of the next Italian government, according to Reuters and AFP. FX DXY climbed to a fresh YTD high of 114.58 before paring modestly, but remaining firmer, as GBP in particular lifts off worst levels. Cable succumbed to a flash crash overnight, with GBP/USD hitting an all-time-low around 1.0350 as participants confidence in the economy slips. EUR suffers amid the mentioned USD move but derives relative benefit from GBP, while ECB speakers thus far have added little. Antipodeans and CAD weighed on by broader risk and commodity pressure. Japanese Finance Minister Suzuki said the government and BoJ share views on concerns about a weak JPY, while he added that FX intervention had a certain effect and there is no change to the stance that they will respond to market moves as needed, according to Reuters. PBoC set USD/CNY mid-point at 7.0298 vs exp. 7.0019 (prev. 6.9920) PBoC imposed a 20% risk reserve requirement for FX forward sales from September 28th to rein in yuan weakness. Fixed Income Gilts have retained some composure after slumping over 200ticks at the commencement of trade and have settled around halfway between intraday extremes. EGBs downbeat in sympathy while BTPs marginally lag core-EGB peers as Italian as-expected election results are digested with BTP-Bund only modestly wider as such. Stateside, USTs are pressured in-fitting with peers and also conscious of the week's supply docket getting underway via a 43bln 2yr. Central Banks Fed’s Bostic (2024 voter) said inflation is too high and that they need to do all they can to bring it down and said demand is beginning to shrink which will ultimately pay dividends in inflation levels. Bostic also stated that there are scenarios where they can avoid deep pain but there will likely be some job losses, according to Reuters. BoJ's Kuroda says the BoJ will maintain accommodative monetary conditions to support companies, hopes to support a positive economic cycle, long-term inflation expectations have begun to heighten, via Reuters. Intervention from the MoF is an "appropriate" move, does not think gov't intervention and BoJ policy are contradictory. Amamiya says the domestic economy is picking up, must carefully watch how FX moves affect the economy and prices. BoJ Governor Kuroda says when he stated that BoJ forward guidance will not change for 2-3yrs, did not refer to guidance on keeping short and long-term rates at present of lower levels via Reuters. ECB's de Guindos says Q3 and Q4 point towards growth rates being close to zero within the EZ, the scenario is market by high uncertainty, lower growth and higher inflation. ECB's Panetta says ECB is assessing the potential of distributed ledger technology (DLT) and "the extent to which it could improve our services.". Capital Economics calls for the BoE to "get on the front foot with a big rate hike". Allianz's El-Erian says, on GBP, the fall is about extra tax cuts and Chancellor Kwarteng could recalibrate this. Alternative, would be for the BoE to hike at an emergency meeting. Adding, he would hike by 100bp. BoE publishes key elements of the 2022 annual cyclical scenario stress test; includes a scenario where the Bank Rate is assumed to rise rapidly to a peak of 6% in early 2023 before gradually reduced to sub-3.5%. Commodities WTI and Brent November futures remain subdued in early European trade following last week’s recession-induced losses. Spot gold trades in tandem with the Buck and sees resistance at around USD 1,650/oz after falling to USD 1,627/oz as a casualty of the Sterling flash crash overnight. LME metals are softer across the board with 3M copper futures having a hard time reclaiming USD +7,500/t status with upside capped by the Buck. Iraq began trial operations at the Karabala oil refinery which has a production capacity of 140k bpd, according to a statement from the Oil Ministry. German Chancellor Scholz signed a strategic agreement with UAE’s President on accelerating energy security and industrial growth, while UAE’s ADNOC signed an agreement with Germany’s RWE which includes ADNOC exporting its first LNG cargo to RWE and will conduct trial shipments of low-carbon ammonia to Germany. Furthermore, Chancellor Scholz said while visiting Doha that he talked with the Emir about LNG deliveries and that they want to achieve further progress, according to Reuters. Germany is preparing a national electricity price cap to be implemented this fall in the scenario the EU falls to agree on a similar move for the entirety of the bloc, via WSJ citing officials. Vitol's CEO said at the Asia Pacific Petroleum Conference that Russian gas supply cuts put enormous strain on supply-demand in Europe and that high gas prices are to impact 60%-80% of demand, while Ecopetrol's CEO said they are increasing crude exports to Europe this year to replace Russian supplies and are drilling 600 oil wells this year. Anglo American (AAL LN) tightens copper production guidance for Chile to 560k-580k tonnes of copper (prev. 560k-600k tonnes) due to lower throughput at Los Bronces caused by a combination of water restrictions and a change in ore characteristics, via Reuters. US Event Calendar 08:30: Aug. Chicago Fed Nat Activity Index, est. 0.23, prior 0.27 10:30: Sept. Dallas Fed Manf. Activity, est. -10.0, prior -12.9 Central Banks 10:00: Boston Fed’s Susan Collins Speaks to Boston Chamber of... 12:00: Fed’s Bostic Discusses Income Inequality 12:30: Fed’s Logan Speaks at Banking Conference 16:00: Fed’s Mester Discusses Economic Outlook DB's Jim Reid concludes the overnight wrap I wonder whether any research report has ever been written whilst watching synchronised swimming? Well if not, then you’re reading the first ever as I’m getting a head start on the early morning news by starting this on Sunday evening watching my daughter Maisie do her second session after getting into the local club. Watching this sport is going to take some getting used to after years of watching football, cricket, golf, F1, athletics, rugby... actually.... virtually every sport bar synchronised swimming. I think everyone felt they were swimming in a tsunami of newsflow last week after one of the most incredible macro weeks in recent memory in terms of breadth of events. Yes there have been more extreme weeks in crises but last week had a bit more variety and was outside of a crisis period. If over 500bps of global rate hikes wasn’t enough, you also had 2yr US yields moving higher for the 12th successive day on Friday (the longest steak since data begins in 1976), the BoJ intervening in FX markets for the first time since 1998, and what can only be termed as one of the darker days for sterling assets on record on Friday after a mammoth tax giveaway in what was a mini-budget in name and not by nature. Henry and I put a note out on Friday night (link here) showing that it was the third worst day for Sterling (-3.57%) since Black Wednesday in 1992, with the worst two since being the day after the Brexit vote (-8.1%) and after the initial covid shock in 2020 (-3.71%) when there was a global flight to dollars. We also show a graph of daily Sterling moves back to 1862 and on that it was the 41st worst day in history spanning 47,000 trading days. Obviously in the long era of fixed FX rates there were the occasional big devaluations which were much bigger than Friday. This morning is Asia it fell around -4.5% at one point (1.0392) which was a record low against the Dollar. It's around -2.78% as I type. This follows a weekend interview where Chancellor Kwarteng suggested that more tax cuts were to come so that certainly was a red rag to markets. Will we hear from the upper echelons of the BoE today? Watch out for any comments, especially at the market open. DB's George Saravelos suggested on Friday that the Bank of England need to do an inter meeting hike to restore policy credibility. There’s also a graph in our note mentioned above showing that Friday was the worst day for 5yr gilts (+50.3bps) since a +200bps hike in 1985 when sterling was also slumping. So maybe omens here. I suppose the only slight mystery is the timing of the sell-off as the mini-budget in magnitude was broadly in-line with the recent elevated fiscal expectations that had been building. However perhaps it was the unabashed revival of trickle-down economics that had markets a little aghast. It goes against the current economic orthodoxy and the overall zeitgeist of our immediate times. As such there is likely to be concerns of a credibility issue. We are publishing our long-term study today with the title “How we got here, and where we’re going?”. In it we try to put the current macro woes into historical context in an attempt to work out where we’re going. There are quite a few people who have proof-read it on my team and they were all thoroughly depressed at the end. I didn't feel that way writing it but maybe it's a case of starting point perceptions. Anyway, look out for it around the European lunchtime. Overnight in Italy, the right-wing alliance led by Giorgia Meloni's Brothers of Italy party was on course to become the nation’s first woman prime minister after exit polls gave it a clear majority. With the full results due later today, she is predicted to win up to 26% of the vote ahead of her closest rival Enrico Letta from the centre left. The right wing alliance is slated to be on course for around 43% of the vote, enough for a majority if correct. As I type, the euro is extending its losses against the dollar for the fifth day, its longest streak since April 28, falling as much as -0.5% to 0.9638, albeit being overshadowed by Sterling. For this week we have an array of consumer-driven economic data in the US and some important European inflation prints. We will also get a number of consumer sentiment indicators across the key economies and PMIs from Asia. Away from the data, there are more than 30 central banker appearances across the Fed and the ECB to keep markets busy. Tomorrow also sees referendums in the Russia-annexed Ukrainian territories as the conflict goes into its eight month. Going through the data in more details now. Starting with the US, the PCE and personal income and spending data will be front and centre for markets next week as they gauge the extent of inflationary pressures and the strength of the consumer. The Fed’s preferred inflation gauge, the PCE, due Friday, will be watched for signs of price pressures we saw in last week's CPI report. Our US economists expect core PCE to edge higher by +0.5% MoM (vs +0.1% in July) which won’t allow the Fed to take the foot off the tightening pedal. For the other two data points, our team forecasts a +0.1% MoM increase for both income and consumption. Final US Q2 GDP will also be released on Thursday and although DB expect no change to the -0.6% second reading, watch out for the annual benchmark revisions back to Q1 2017. History could be re-written that could have some implications for how we all think about the economy. In other US data, we will also get the consumer confidence index on Tuesday, along with durable goods orders, and inventories data on Wednesday, with the Chicago PMI on Friday. Over in Europe, all eyes will be on September's inflation data, including the Euro Area flash CPI release on Friday. Our economists are expecting the measure to hit a record +9.5%, up from the previous record of +9.1% in August. Other data in the region will include consumer and economic sentiment from Germany, France, Italy and the Eurozone throughout the week. Meanwhile, EU energy ministers will meet again on Friday regarding the emergency intervention amid elevated energy prices. Finally, next week's earnings line up will feature a number of retail bellwethers on Thursday. Among them will be Nike, H&M and Next. Micron will report that day as well. See our usual day by day guide to the week at the end which contains many of the key Fed and ECB speakers including Powell and Lagarde. Stock markets across Asia are mostly lower this morning. The Kospi (-2.40%), Nikkei (-2.30%) and the S&P/ASX 200 (-1.40%) are leading the declines. Meanwhile, the Hang Seng (+0.11%) is swinging between gains and losses after rising by +2.45% initially with Chinese shares mixed as the Shanghai Composite (-0.10%) is trading lower while the CSI (+0.46%) is up as we go to press. Stock futures in DMs are pointing to further losses with contracts on the S&P 500 (-0.49%), NASDAQ 100 (-0.46%) and DAX (-0.33%) all moving lower. Early morning data showed that Japan’s manufacturing sector continued to expand albeit at a slower pace as the latest au Jibun Bank manufacturing PMI slipped to a 20-month low of 51.0 in September from 51.5 in August, pulled lower by high energy and raw material prices that was exacerbated by a weak yen. At the same time, the au Jibun Bank services PMI returned to expansion, recording a level of 51.9 in September from August's 49.5 final reading. Moving on to China, in order to stabilise expectations in the FX market, the People’s Bank of China (PBOC) today raised the risk reserve requirement on foreign exchange forward sales to 20% from 0% beginning September 28 as the yuan faces increasing depreciation pressure, in line with most major currencies amid broad dollar strength. Looking back now on a week that will not be forgotten anytime soon. While there were historic central bank hikes all week, the biggest news came from the fiscal authorities, following the UK’s budget Friday, which had the largest tax cut package since the 1970s. Gilt yields had their largest one-day increase in decades with 2yrs +44.7bps, 5yrs +50.3bps, and 10yrs +33.3bps. As we mentioned at the top, 5yrs yields saw their largest move since 1985 after a +200bps hike aimed at helping a plunging currency. The pound fell -3.57% against the US dollar to within a percentage point of the weakest in the post-Bretton Woods 51yr free float era. It was already a busy macro week before the blockbuster budget, where we got more than 500bps of global central bank hikes and a currency intervention from Japan. In terms of the biggest players, the Fed delivered its third consecutive 75bp hike while the BoE delivered its second 50bp hike in a row, with both banks guiding toward yet more tightening, while the BoJ remained the outlier by keeping its accommodative policy in place, which isn’t going to help the yen turnaround even with intervention. When all was said and done, sovereign bonds and equities sold off in size, while yield curves flattened. 2yr Treasuries (+33.4bps, +7.9bps Friday), 2yr Bunds (+38.5bps, +7.2bps Friday), 2yr Gilts (+82.1bps, +44.7bps Friday) reached their highest levels since 2007, 2008, and 2008, respectively, as markets priced in more tightening to overcome inflationary pressures (and in the case of the UK, fiscal expansion). 10yr Treasuries (+23.5bps, -2.9bps Friday) ended the week a touch lower on the day but hit their highest levels since 2011 during the week, while 10yr Bunds (+26.8bps, +5.9bps Friday), and 10yr Gilts (+69.1bps, +33.3bps Friday) hit their highest levels since 2013 and 2011, respectively. The mixture unsurprisingly proved unpalatable to risk assets, driving the STOXX 600 and S&P 500 back to their lows for the year. The STOXX 600 retreated -4.37% on the week and -2.34% on Friday, the worst weekly and daily return since mid-June. The S&P 500 fell -4.65% (-1.75% Friday), returning to bear market territory. The FTSE managed to stay above its YTD lows, but still fell -3.01% on the week, its worst weekly return since mid-June as well, and retreated -1.97% on Friday, the worst daily return since early July. Tyler Durden Mon, 09/26/2022 - 08:08.....»»

Category: blogSource: zerohedgeSep 26th, 2022

Friday Was The Highest Put Option Volume Session In History

Friday Was The Highest Put Option Volume Session In History Friday was a bad day for stocks, and while spoos managed to stage a tiny end-of-day bounce to avoid sliding below the 2022 June closing low of 3,666, one can only describe Friday's action as a crash - which is what we did - especially in the bond world where things are starting to break, as Michael Hartnett explained in "The Bond Crash of 2022" But even just looking at equities, it was a full-blown capitulation: as Goldman's flow trader John Flood observed, the last day of trading saw continued Long Only (L/O) derisking in broken names (Goldman's asset manager sell skew peaked at 21% Friday which was 91st $-ile vs 52 week look back), at the same time as Goldman saw meaningful supply in growth complex. Away from L/Os, hedge funds added to macro shorts (this dynamic keeping grosses higher than expected in this tape). And while stocks remain in a buyback blackout until the start of earnings season in roughly 3 weeks time, month-end pension rebalance sees a modest $7bn for sale, while CTAs are now at -100% net shorts, and are mostly done shorting here (Goldman calculates some -$1BN a day for the next week but doesn't get much bigger even if the market breaks lower). Still, the lack of major forced selling is hardly sufficient to bring buyers back into the market, especially ahead of another low-liquidity week where ascendant bears will again set the market tone - as a reminder, with Rosh Hashanah on Monday and Tuesday, attendance will be light and liquidity will be tough to come by. However, what was perhaps the most notable market feature of Friday's (orderly) selloff is the record surge in hedging: while call buying has collapsed, Friday saw the highest put option volume in historyat just shy of 34 million contracts. Of course, the last time put buying soared to a fresh high, was June 13 which also marked the market's lows for the year. That's why as Goldman's Flood writes, "we are now officially primed for a nasty move higher at some point next week that will promptly be re-shorted." Still, absent a dovish pivot by the Fed - which will come the moment the BLS admits it missed some 10 million unemployed workers in a gross, pre-midterm election "oversight" - the broader market trend into year-end still points lower as neither depressed sentiment not positioning alone can push market higher for a sustained period of time (although they certainly can for a several day stretch). Meanwhile, as we noted extensively on Friday, the move higher in yields - both int he US and across the pond - is starting to get some real attention as the "market is sniffing out that these European Governments are between a rock and a hard place: adding fiscal support to safeguard from higher energy prices is making inflation problem worse and leading CB's to be more aggressive." And while the VIX will likely stay below 30 next week, especially if those who just bought puts in record amounts are forced to monetize (i.e., sell) should we avoid another trapdoor move lower, and we get another poweful delta meltup, the real volatility these days is in the "bond VIX", the MOVE, which is about to take out its March 16, 2020 covid all time highs, even as stock VIX simply refuses to move above 30 in any sustained move. Still, an eventual convergence between these two series is the only option - unless the market is terminally broken - and either VIX will explode to the 60-80 zone in the coming days, or else yields will have to tumble down on either recession fears or a hint by central banks that QE is coming back even as rate hikes persist for a few more months, until the entire global economy tumbles into a very steep and very disinflationary recession. Tyler Durden Sun, 09/25/2022 - 12:00.....»»

Category: blogSource: zerohedgeSep 25th, 2022

Donald Trump will fight hard against Letitia James" lawsuit. Ex-AG insiders say these are his top 5 defenses.

Former NY AG prosecutors predict a slow-motion legal brawl where Trump will cry foul, claim ignorance, and delay, delay, delay. Donald Trump speaking at the NRA convention in Houston, TX, on May 27, 2022. New York Attorney General Letitia James, right, speaks in Washington, DC on Nov. 12, 2019.Left, Brandon Bell/Getty Images. Right, Chip Somodevilla/Getty Images Donald Trump has 5 ways to fight Letitia James' lawsuit, ex-NY AG prosecutors told Insider. Trump will play dumb, cry bias, and delay, delay, delay, they said. James filed a 220-page lawsuit against Trump, his family, and the Trump Organization on Wednesday. Donald Trump will try every legal tactic possible to save his Manhattan-based business empire from New York attorney general Letitia James' lawsuit, former office prosecutors said.It won't be pretty, and barring a settlement, it won't be fast, they said of the slow-motion legal brawl to come. But it will be heated, these New York AG veterans said of the battle over Wednesday's lawsuit and its potentially corporation-crippling penalties.James accused Trump of routinely lying about the value of his properties to secure hundreds of millions in bank loans and tax breaks; she wants a judge to order $250 million in penalties and to bar the Trump family from selling, buying, collecting rent, or borrowing money in New York. The outcome is by no means assured.Insider spoke to three defense lawyers who, before going into private practice, spent years prosecuting complex financial cases for the New York AG's office. Here are their picks for Trump's top 5 defenses.Trump Defense No. 1: She's out to get me"I never heard of her," Trump complained to Fox News host Sean Hannity on Wednesday, hours after the lawsuit dropped."But I saw this woman," he said of James' 2018 run for AG. "And she said, 'We're going to get him.'" "Her whole campaign was based on that," he added.It was not the first time Trump has raised the "She's out to get me" defense. He's cried "bias" repeatedly and unsuccessfully in fighting James' three-year investigation into the Trump Organization. In February he even compiled her history of anti-Trump statements into an 11-page spreadsheet. "They're definitely going to waste a lot of paper trying to make that argument again," in motions to dismiss filed in the coming weeks, predicted Tristan Snell, the lead prosecutor on the AG office's separate, successful investigation into Trump University."It will get them nowhere," except for "whipping up their own supporters," said Snell, who went on to found MainStreet.law."It's certainly not going to fly with the judge," agreed another former NY AG prosecutor, attorney and author Kenneth McCallion.But another former AG's office prosecutor, Armen Morian, thought the bias defense could still have legs as an argument for dismissing the lawsuit. "It's not trivial that she was out there saying, 'I'm going to go after Trump,'" said Morian, who prosecuted complex financial frauds from 2006 to 2019 before founding Morian Law."It's a violation of her oath of office and a violation of his due process rights," Morian said.Defense No. 2: real estate valuations are subjectiveA property's worth is subjective, and Trump's side will certainly argue this in trying to beat James' lawsuit. But you can't simultaneously low-ball (for a tax break) and high-ball (to impress lenders) values for the same property, as James is alleging Trump did for years, the former prosecutors said. "They can't both be true" at the same time, said McCallion. "And you don't have to prove which one was true and which one was false" to show fraud.You also can't pull a valuation out of thin air. "There's subjective, and there's complete fantasyland," noted Snell.Fantasyland, as in Trump's objectively false 2015 claim that his Trump Tower triplex on Manhattan's Fifth Avenue spanned 33,000 square feet. It was actually 11,000 square feet, a whopper of an exaggeration first reported by Forbes.Tripling his square footage let Trump claim his triplex was worth $327 million in collateral for a bank loan.It's an "absurd" appraisal, James told reporters in unveiling the lawsuit, given that at the time, "only one apartment in New York City had ever sold for even $100 million."Morian countered, though, that it's common real estate practice for businesses to seek out and to use very different valuations, depending on whether you're trying to lower your taxes or impress a bank."So long as the valuation is based on some rationale, you are not required to use the same methodology" for every appraisal, Morian argued."The methodology could have been wrong. The methodology could have been optimistic. But that doesn't make a fraudulent statement," he said."You can't say your 3-year-old daughter's version of the Mona Lisa is worth the same as the Mona Lisa," Morian explained. "That would be ridiculous. And you can't say the Mona Lisa is worth $3. But basically, there's a broad range of discretion for how you value assets."Defense No. 3: I just signed whatever they gave meTrump has claimed he signed all the questionable paperwork without really looking at it. "If he wasn't a sophisticated, or purported sophisticated, investor and developer that might be true," said McCallion, who heads McCallion & Associates and is the author of "Profiles in Cowardice in the Trump Era.""But Trump was a very hands-on guy, for better or worse, in the Trump Organization world."It's also safe to assume, Snell said, that Trump was repeatedly asked in his August deposition whether, in fact, he blindly relied on his appraisers and accountants. But instead of answering, Trump repeatedly pleaded the Fifth. Should the suit go to trial, case law allows the judge to infer that Trump was hiding the truth."Answering 'I plead the Fifth' translates out to, 'No, it was me,'" standing behind all the funny math, Snell said.Still, the judge must at least weigh any "I just signed what they gave me" defense, Morian said. "Does that absolve him? Probably not," Morain said. "But it can be a very sound factual defense that the courts would have to consider."Defense No. 4: I never said you should trust me"We have a disclaimer, right on the front," Trump told Hannity of the financial statements James is suing over, the ones she says wildly exaggerated his worth."And it basically says, you know, get your own people. You're at your own risk ... so don't rely on the statement that you're getting," Trump said his disclaimers warn, "because it may not be accurate. It may be way off." Besides, Trump argued, the banks that loaned him money "have the best lawyers in the world." They should know better than to take him at his word."She's trying to defend banks that had unbelievable legal talent," Trump complained.Trump actually has a point, Morian argued."All you have to do is put in a tiny footnote" in a financial statement, putting the bank on notice to double-check the numbers, "and that can be enough" to avoid liability for fuzzy math, he said. "Because it's assumed that the reader of the financial statement is a sophisticated party," Morian added. Besides, "I bet you all these [banks] were applying a 'Trump haircut' — they were assuming he was exaggerating shit by, say, 30 percent, who knows." Defense No. 5: No victim, no harm, no foul"By the way," Trump also told Hannity, "I paid 'em back ... They didn't lose money ... the banks made a lot of money. She's trying to defend banks that got paid off." It's the no victim, no harm, no foul defense.Or, as Trump White House budget director Mitch Mulvaney tweeted Friday, "Seriously, who is the victim here? If the banks thought they had been defrauded, they could sue on their own."Morian sees their point, too."There's a yawning silence" from the banks Trump allegedly tricked into lending to him, he noted.And it's almost like James has filed what's known as a private claim, Morian added — "like the attorney general is suing on behalf of Deutsche Bank. She has no standing to do that.""That will be front and center in the motions to dismiss," agreed McCallion. "It will be her burden to show she has authority to bring this case."But James isn't calling the banks victims.The victims, she tweeted on Wednesday, are those she is sworn to protect, the people of New York state."Trump's crimes are not victimless," she told reporters."When the well-connected and powerful break the law to get more money than they're entitled to, it reduces resources available to working people, small businesses, and taxpayers." Read the original article on Business Insider.....»»

Category: worldSource: nytSep 24th, 2022

FedEx Fiscal Q1 Earnings Disappoints: ETFs in Focus

The transport bellwether FedEx (FDX) delivered disappointing first-quarter fiscal 2023 results. The courier company missed both earnings and revenue estimates. After the closing bell on Sep 22, transport bellwether FedEx FDX delivered disappointing first-quarter fiscal 2023 results. The courier company missed both earnings and revenue estimates.The earnings miss has pushed shares of FDX down by 1% at the close in after-market hours. As a result, ETFs with the highest allocation to FedEx are expected to gain. These include First Trust Nasdaq Transportation ETF FTXR, American Customer Satisfaction ETF ACSI, ProShares Supply Chain Logistics ETF SUPL, iShares U.S. Transportation ETF IYT, and Pacer Industrials and Logistics ETF SHPP.FedEx Earnings in FocusEarnings per share came in at $3.44, missing the Zacks Consensus Estimate of $3.69 but declining from the year-ago earnings of $4.37 per share. Revenues grew 5.5% year over year to $23.2 billion and fell shy of the estimated $23.35 billion.The parcel company is looking to reduce costs. It plans to generate total cost savings of $2.2-$2.7 billion in fiscal 2023. In the first quarter, the company realized about $300 million of these savings and expects to score $700 million in savings in the second quarter.For second-quarter fiscal 2023, FedEx issued revenue guidance of $23.5-$24 billion and earnings per share guidance of $2.65 or greater (see: all the Industrials ETFs here).ETFs in FocusLet’s delve into each ETF below:First Trust Nasdaq Transportation ETF (FTXR)First Trust Nasdaq Transportation ETF offers exposure to the 30 most-liquid U.S. transportation securities based on volatility, value and growth by tracking the Nasdaq US Smart Transportation Index. FedEx holds a 3.2% share in the basket. Railroads, trucking, automobiles and auto parts occupy the top spots in the basket.First Trust Nasdaq Transportation ETF has amassed $76.4 million in its asset base and charges 60 bps in annual fees. The average trading volume is moderate at 21,000 shares. The fund has a Zacks ETF Rank #2 (Buy).American Customer Satisfaction ETF (ACSI)American Customer Satisfaction ETF seeks to track the performance of the American Customer Satisfaction Investable Index, which utilizes proprietary customer satisfaction scores to weight stocks within each sector by their relative customer satisfaction scores. It holds 35 stocks in its basket, with FedEx making up for a 2.7% share (read: 'Shrinkflation' to Save Consumer Staples ETFs).American Customer Satisfaction ETF has accumulated $69.2 million in its asset base while trades in a meager average daily volume of under 500 shares. It charges 65 bps in annual fees.ProShares Supply Chain Logistics ETF (SUPL)ProShares Supply Chain Logistics ETF is the first ETF focused exclusively on the companies poised to potentially benefit from the transformation of how raw materials and goods move around the world. These logistics companies include leading global shipping, railroad, air and trucking companies that collectively touch every point of the supply chain. It follows the FactSet Supply Chain Logistics Index, charging investors 58 bps in annual fees. ProShares Supply Chain Logistics ETF holds 41 stocks in its basket, with FedEx accounting for 3.9% of assets.ProShares Supply Chain Logistics ETF has AUM of $1.7 million and trades in volume of 500 shares per day.iShares U.S. Transportation ETF (IYT)iShares U.S. Transportation ETF tracks the S&P Transportation Select Industry FMC Capped Index, giving investors exposure to a small basket of 49 securities. Of these, FedEx makes up for 3.8% of the assets. Within the transportation sector, railroads and air freight and logistics take the top two spots with 30.4% and 30.2% share, respectively, while trucking (22.5%) and airlines (15.1%) round off the next two.iShares U.S. Transportation ETF has accumulated $786.3 million in AUM while it sees a good trading volume of around 172,000 shares a day. The fund charges 39 bps in fees per year and has a Zacks ETF Rank #2 with a Medium risk outlook (read: 4 Top-Ranked Sector ETFs to Buy Now).Pacer Industrials and Logistics ETF (SHPP)Pacer Industrials and Logistics ETF tracks the Pacer Global Supply Chain Infrastructure Index, which aims to offer investors exposure to globally-listed stocks and depositary receipts involved in the support and functioning of global distribution supply chains. It holds 103 stocks in its basket, with FedEx accounting for 3.1% share.Pacer Industrials and Logistics ETF debuted in the space in June and has accumulated $0.9 million in its asset base. It charges 60 bps in annual fees. Want key ETF info delivered straight to your inbox? Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week.Get it free >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report FedEx Corporation (FDX): Free Stock Analysis Report iShares U.S. Transportation ETF (IYT): ETF Research Reports American Customer Satisfaction ETF (ACSI): ETF Research Reports First Trust NASDAQ Transportation ETF (FTXR): ETF Research Reports ProShares Supply Chain Logistics ETF (SUPL): ETF Research Reports Pacer Industrials and Logistics ETF (SHPP): ETF Research Reports To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksSep 23rd, 2022

Boeing Settles With SEC For $200 Million Over "Misleading Investors" On 737 Max Safety

Boeing Settles With SEC For $200 Million Over "Misleading Investors" On 737 Max Safety Boeing Co. reached a $200 million settlement with the Securities and Exchange Commission on Thursday into allegations that the aircraft manufacturer and former chief executive deceived investors and the public about the safety of the 737 MAX plane that killed 346 people in two crashes.  Dennis Muilenburg, Boeing's former CEO, agreed to pay $1 million to settle with the SEC. According to the SEC, after the first 737 MAX crash, Muilenburg understood a flight control function called the Maneuvering Characteristics Augmentation System was an ongoing safety issue but assured the public that the airplane was airworthy.  Here's an overview of how the MCAS works:  After the second crash, Muilenburg and Boeing assured the public that there were gaps in the certification process concerning the MCAS flight control system, despite the SEC indicating there was "contrary information."  "In times of crisis and tragedy, it is especially important that public companies and executives provide full, fair and truthful disclosures to the markets," SEC Chairman Gary Gensler wrote in a statement. He said Muilenburg and Boeing "failed in this most basic obligation" to be "full, fair, and truthful in disclosures to the markets."  "They misled investors by providing assurances about the safety of the 737 MAX, despite knowing about serious safety concerns," Gensler continued.  The settlement revealed by the SEC on Thursday is based on the statements the former exec and aerospace manufacturer made to Wall Street.  In a separate criminal investigation, the Justice Department found a former Boeing pilot deceived air-safety regulators about how the MAX's MCAS operated. Boeing agreed to pay $2.5 billion in a legal settlement with DOJ -- some of it was earmarked for families who lost loved ones in the two MAX crashes.  "Boeing and Muilenburg put profits over people by misleading investors about the safety of the 737 MAX all in an effort to rehabilitate Boeing's image following two tragic accidents that resulted in the loss of 346 lives and incalculable grief to so many families," said Gurbir S. Grewal, Director of the SEC's Enforcement Division. Last year, current and former company directors reached a $237.5 million settlement with shareholders over the board's lack of oversight of the MAX.  Meanwhile, Boeing shares are down 68% off the record high put in right before the second MAX crash in early March 2019.  Boeing's best-selling plane was grounded for 20 months and returned to the skies in November 2020.  Tyler Durden Fri, 09/23/2022 - 08:25.....»»

Category: blogSource: zerohedgeSep 23rd, 2022

Why is Trump calling NY AG Letitia James "Peekaboo?" Michael Cohen has a theory, and it isn"t X-rated or racist

Donald Trump's fixer-turned-critic doesn't think any of the rampaging racist and X-rated "Peekaboo" origin theories are right. His theory? "Dementia." Getty Images/AP Photo Donald Trump coined a nickname for New York's AG after she sued him: Letitia 'Peekaboo' James.  Speculation has run rampant, with leading theories claiming 'peekaboo' is either racist or X-rated. Michael Cohen has a simpler theory: 'I think Trump has dementia.' Speculation has run rampant since Donald Trump — apparently stung by Wednesday's massive lawsuit against his family and business — lashed out at New York's attorney general, calling her "Letitia Peekaboo James."Trump had already called Letitia James "racist" for months prior to her suing him, in a not-so-veiled allusion to the AG being African American. But what, social media now wonders, does Trump mean by this new nickname, which he doubled down on Thursday."Racist A.G. Letitia "Peekaboo" James, the failed Gubernatorial candidate," Trump called the AG in a new Truth Social post.Trump fixer-turned-critic Michael Cohen doesn't like the odds on either of the leading peekaboo nickname-origin theories, one of which is X-rated and the other of which is deeply racist.Cohen thinks his own simpler theory is most likely: Trump, he says, is coming undone, mentally."My opinion? He has dementia," Cohen told Insider on Thursday. "Especially with the additional stress that is now on top of him." Cohen had not heard of the "peekaboo" nickname when reached by Insider on Thursday."Isn't that a toy?" he asked. "Isn't that — oh no, that's Pikachu."Cohen didn't think much of the X-rated theory, floated around AG circles, which references some of the more graphic definitions of "peekaboo" from Urban Dictionary."There's no way in the world that Donald Trump knows the Urban Dictionary," Cohen insisted. "Considering he doesn't even know the English dictionary."Neither did Cohen like the other leading theory, popular on Reddit and Twitter, claiming Trump was alluding to a racist term that sounds a lot like "peekaboo," but starts with a "J."The "J-word" is "not an option," said Cohen, who doesn't think Trump would ever use such a derogatory slur in a public statement.Trump is, in fact, "a racist," Cohen had alleged in his testimony before Congress in 2019, when he recounted his ex-boss remarking that, "only the blacks could live like this," while being chauffeured through a poor neighborhood in Chicago. But "there's no chance" Trump would racially slur James publicly, including in a Truth Social post, Cohen insisted.Instead, he thinks an "impaired" Trump may have been reaching for a metaphor to describe the failed, pre-lawsuit settlement negotiations with James' office.Perhaps, Cohen theorized, Trump believed James had toyed with him as they haggled over a potential dollar-figure that could have made the lawsuit go away before it was filed."Let me put it to you this way," Cohen said. "As you sit and listen to Trump speak, you realize that he has at best a 10-year-old's vocabulary. He's using peekaboo as a hide and seek term."The failed settlement talks were clearly on Trump's mind after James unveiled her lawsuit, which alleges Trump falsely inflated his worth by billions, and which seeks $250 million in penalties and the hamstringing of his business in New York. The lawsuit will be fought over for years, former prosecutors with the NY AG's office have told Insider. In griping about the failed settlement during a Fox News interview Wednesday night, Trump told host Sean Hannity two things that could not simultaneously be true.First Trump said he had expected the case would settle. Then he said he actually would not have settled, because "even if I paid a very small amount, you're sort of admitting guilt.""His rambling about 'we were settling' and then questioning why anyone would settle when they're not guilty is indicative of some cognitive impairment," mused Cohen.Cohen said that as Trump's right-hand man, he knew him at his most savvy. Now, he sees a man who "is coming undone" and who he said appeared physically stooped and mentally rambling on Hannity.A lawyer for Trump did not immediately respond to a request for guidance on the new nickname's meaning."There's no way he'll explain it. He never explained covfefe," Cohen noted."I really don't know what Trump was thinking," he added. "Actually, neither does he."          Read the original article on Business Insider.....»»

Category: topSource: businessinsiderSep 22nd, 2022

"Who Wants To Hold Volatile Risk Assets When You Can Hold Cash?"

"Who Wants To Hold Volatile Risk Assets When You Can Hold Cash?" Reinforcing our thoughts in the last week that 'TINA has left the building', Morgan Stanley's Andrew Sheets wrote over the weekend that for much of the last 12 years, it was common to hear some variation of 'TINA' (There Is No Alternative), the idea that one needed to be long stocks and bonds because cash offered so little. Low yields were not the primary reason why stocks rallied over that time; global equities and global equity earnings simply rose by the same amount (~100%). But was TINA a helpful mental crutch for markets, especially in times of stress? Absolutely. These tighter policy rates are now scrambling that mindset. Six-month US T-bills yield about ~3.75% and, as we discussed last month, cash and short-term fixed income increasingly offer lower volatility and high yield within a cross-asset portfolio. US 1- to 5-year credit yields ~4.9% against an S&P 500 earnings yield of ~5.9%. But over the last 30 days, the S&P 500 has been 5.7 times more volatile. In short, investors now have a number of higher-yielding, lower-volatility alternatives if they want to step back from the market. The fear among investors is further fomented by the realization, as Nomura's Charlie McElligott writes, that the "broadening-out" inflation (both Core Services and a surprise reacceleration in Core Goods) and increasing evidence of “Wage-Price Spiral” >>> unanchoring of Inflation Expectations - but versus still “too hot” Labor- and Wage Growth- data... ...continue the fuel market repricing of higher Fed “Terminal Rate” in this week’s Fed meeting and beyond, with Mar23 FFOIS now comfortably parked ~ 4.50 (4.482 last)... ...which is part of the “FCI tightening impulse” driving US Dollar and Real Yields to multi-year highs which is causing so much strain for Risk-Assets, as “hard landing” is viewed as the only realistic US Economic outcome in ’23 with the Fed "slamming the breaks." Shifting from the fundamental to the technical, McElligott notes that Options Dealer Positioning is in “Negative Gamma vs Spot” regime (where again we currently find ourselves, and have been for majority of the year 2022), making markets prone to outsized moves due to intraday hedging flows which counterproductively “press” underlying market moves, acting as an “momentum accelerant” which mechanically “has to” sell into lows and / or buy into highs, acting as a net “liquidity TAKER” which further exacerbates the magnitude of ranges and iVol. So within both this particular: 1) Equities Vol “market structure” context, in addition to 2) the larger Macro theme of Equities currently being punished under the global Central Bank regime of “Tight FCIs until demand-side Inflation is killed” ...a topic that is part of almost every conversation we are currently having with clients is “Who wants to hold volatile Risk-Assets when you can hold CASH?”, as global Central Banks are telling you that we have months left of the “financial conditions tightening shocks” left until we see Terminal Rates at a level where the “demand-side” of Inflation is broken…versus say owning and rolling 3m US T-Bills yielding 3.10% in “risk-free heaven,” now a net 1.5% over SPX 12m Div Yield The Nomura strategist also notes that further to this “End of TINA” -era of “Equities over everything,” Asset Allocation –type Clients are voicing “cautiously constructive” long-term views on US Credit  > Equities as well, where we currently see decade-high type pick-up with A’s yielding a very “real” 4.91%, Baa @ 5.45%, Ba @ 7.10% and B @9.04%, but particularly where 1m rVol on US Investment Grade is 5.9, and for High Yield is 7.9…versus US Equities benchmark S&P 500 as a 26 Vol asset! This idea that there now IS actual competition again for Equities as the de facto “bulk weighting” for US Investors is going to be critical as we move forward, particularly when thinking about “Who is the Incremental Seller of Equities From Here?”, especially IF there there is to be another “leg down,” as the Fed is forced to “crash-land the plane” The punchline to all this is that McElligott believe a “next leg” shock-down in Equities in coming-months would probably require the “401k Investor Class” to sees years-worth of positive Equities performance wiped-out first (back to pre-COVID levels), which then in conjunction with the “Return of Cash” as a viable Asset Class, would drive a larger “Asset Allocation” regime shift out of Equities and back towards Fixed-Income now yielding at levels which allow it to act as AAA - “An Actual Alternative” to Equities, but at a much lower Vol -in a future-state where the Inflation monster has been slayed, but likely via a hard “Recessionary” outcome. Finally, as we discussed over the weekend, the chart below shows the SPX returns for the weeks into OPEX (top chart) and after OPEX (bottom), illustrating the stark contrast of negative returns into OPEX, and positive returns out of OPEX. BUT, for those hoping to BTFD and play this swing again; as SpotGamma explains, it's different this time because the huge event risk surrounding this week's FOMC meeting is holding implied volatility up. You can see this reflected in the term structure between 9/20 (pre-FOMC) & 9/22 (post-FOMC). SpotGamma's view remains that FOMC is going to trigger a large directional move which should last into month end. Ultimately a move back above the 4000 Vol Trigger signals a full risk-on for markets with a move up into 4200 by 9/30. If Powell triggers bearish sentiment, we target recent lows of 3650 by 9/30. Tyler Durden Mon, 09/19/2022 - 12:25.....»»

Category: worldSource: nytSep 19th, 2022