Get Ready for a Gold Rush

IAMGOLD Corporation (NYSE:IAG) Q2 2023 Earnings Call Transcript August 11, 2023 Operator: Thank you for standing by. This is the conference operator. Welcome to the IAMGOLD Second Quarter 2023 Operating and Financial Results Conference Call and Webcast. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, […] IAMGOLD Corporation (NYSE:IAG) Q2 2023 Earnings Call Transcript August 11, 2023 Operator: Thank you for standing by. This is the conference operator. Welcome to the IAMGOLD Second Quarter 2023 Operating and Financial Results Conference Call and Webcast. As a reminder, all participants are in listen-only mode and the conference is being recorded. After the presentation, there will be an opportunity to ask questions. [Operator Instructions] At this time, I’d like to turn the conference over to Graeme Jennings, Vice President, Investor Relations and Corporate Communications for IAMGOLD. Please go ahead, Mr. Jennings. Graeme Jennings: Thank you, operator. Welcome everyone to the IAMGOLD second quarter 2023 results conference call. Joining me today on the call are Renaud Adams, President and Chief Executive Officer; Maarten Theunissen, Chief Financial Officer; Bruno Lemelin, Senior Vice President, Operations and Projects; Tim Bradburn, Senior Vice President, General Counsel, and Corporate Secretary and Jerzy Orzechowski, Executive Project Director Cote Gold. Before we begin, we are joined today from IAMGOLD’s Toronto (ph) office, which is located on 313 territories on the traditional lands of many nations including the Mississauga of the credit, [indiscernible]. At IAMGOLD, we believe respecting and upholding indigenous rights is founded upon relationships that foster trust, transparency, and mutual respect. Please note that our remarks on this call will include forward-looking statements and refer to non-IFRS measures. We encourage you to refer to the cautionary statements and disclosures on non-IFRS measures, including the presentation and the reconciliations of these measures in our most recent MD&A each under the heading non-GAAP financial measures. With respect to the technical information to be discussed, please refer to the information on the presentation under the heading qualified person and technical information. The slides referenced on this call can be viewed on our website. And I will now turn the call over to our President and CEO, Renaud Adams. Renaud Adams: Thank you, Graeme, and good morning, everyone and thank you for joining us. The second quarter for IAMGOLD was an important period for the company, as our operating teams made significant strides at both Essakane and Westwood, to bring our year-to-date attributable production to 220,000 ounces of gold and gas costs 1,234 per ounce, while keeping a safe work environment. We will walk through the quarterly operating results in more detail in a moment, but I want to congratulate our Essakane team for their remarkable resilience to allow for the mine to resume both mining and milling at full capacity in a very complex environment. Secondly, resolve significant progress of the Cote Gold Project. In June, the site reached over 1,900 workers’ site. Working together to push the project to approximately 86% completion. We remain on track with the top end of our cost to complete guidance in line with the project planned capital. Further, we are now seeing activities begin to critical transition from bulk construction to finishing activities and operational readiness. At Westwood, we continue to execute on our optimization plant, with the objective to turn the mine into a positive cash flow producer in the near term. The second quarter was my first four quarters as CEO in IAMGOLD and my conviction has only grown that this is a company poised position itself amongst our peers. We are entering a transformational period for the company and I’m extremely pleased with the expertise, relevant experience and leadership in place at IAMGOLD. Our zero harm missions continue be our priority number one, and we are looking at our corporate ESG strategy and execution. When we look ahead to 2024, once Cote Gold comes online and should Westwood take the next step, the next step in production post rehabilitation. The company will have a significantly higher production base and lower cost profile, providing a strong foundation cash flow and growth opportunities in Canada. Yet, before we get there, the short-term goals for IAMGOLD are cleared. Bring Cote online with a focus on achieving a steady and sustainable ramp up of operations and manage operations at Essakane and Westwood to improve our margin, while ensuring the safety of people in the community in which we operate. Longer-term, our goal is for IAMGOLD to become a high margin intermediate gold producer with a strong operating base in Canada. Financially, we will characterize returning our 70% position in Cote with our partners, Sumitomo, as well as use our cash flow to optimize our balance sheet and deliver the company to have a more efficient and balanced capital structure. With that, we will now dive into the operating and financial results and highlights for the quarter. I’m on Slide 5. Starting with health and safety, the company has seen an improving trend year-over-year, with a days away, restricted transferred duty rate of 0.39 and a total recordable injury rate of 0.66, based on 200,000 hours work, ensuring a safe work environment would always be our primary focus at IAMGOLD and our goal continue to be Zero Harm. On production, in Q2, the company produced 107,000 ounces of gold on an attributable basis, putting us well on the path for our auction guidance target of 410,000 to 470,000 ounces of gold this year. As we will get into a moment, the production results were driven by a second of performing to plan and higher grades recently revalidated underground zone at Westwood, which helped to mitigate the impact of some operating restriction due to poor air quality in the region for the forest fires in the quarter. The second quarter saw IAMGOLD report cash cost of $1,376 ounce sold and an all in sustaining cost of $1,912 per ounce. Our cost increase over the year prior mainly due to increase costs of blended supplies, including fuel, higher power costs and previously forecasted lower grade [indiscernible], as well as an increased rehabilitation cost at Westwood. As a result, we expect costs to come in at the top end of our annual guidance ranges. On Slide 6. Turning to Essakane. The mine reported Q2 attributable gold production of 88,000 ounce bringing the year-to-date total to 180,000 ounces of gold. Mining activities totaled 13.5 million tonnes, a significant increase quarter-over-quarter as the mining fleet returned operations to full capacity. Mining activity in the second quarter completed the transition to Phase 5, resulting in a higher strip ratio, in line with — and our plans as the operations move to new mining phases and lower grades from the prior quarter when grades were positively influenced from desired feed of material from the bottom of Phase 4 of the pit. Mill throughput in the second quarter was 3.1 million tonnes at an average head grade of 1.11 grams a tonne with throughput 42% higher than the first quarter. As operations were able to resume at full capacity to the improved ability to move necessary supply around the country. The mill reported an average recovery of 89%, which declined slightly from the prior quarter and the year prior due to lower grade including higher concentration of gravity carbon and sulfur. On a comp basis, as an added reported cash cost of $473 an ounce, an increase for the first quarter has head grades declined 30% from Q1 at the highest strip ratio. Additionally, we saw sustained system higher prices consumable as inflation pressures ease, but with signed — with few signs of reversal as well. Increase of the landed cost of fuel due to the impact of the security situation in the supply chain, higher labor costs to depreciation of the local currency and an increase in power generation costs as heavy fuel normally used for power generation was periodically substituted with more expenses like fuel in order to maintain operations during the period where supplies was limited. We are currently building additional tank at this accounting (ph), which will increase the HFO, head of storage capacity at 5 gram approximately 50%. We expect that the extra capacity will be in place in early Q4. On an all-in-sustaining basis, cost increase to $1,587 per ounce due to the higher operating costs as well as schedule higher volume, which stripping as the mine enters the new mine phases. Looking ahead, Essakane is on track for our production going into range of 340,000 to 380,000 ounces of gold. Mining activity is expected to maintain normal operating levels in the second half of the year, including increased level of waste stripping to open phases for 2024 onwards. The mill feed will consist of a combination of direct feed and stockpile as the mine fleet sequences through the targeted phases of waste stripping. Capital expenditure guidance for Essakane has unchanged and approximately $155 million. We increased volume of capital that provides waste in the second half of the year which total, while total tonnes moved are in line with the second quarter to provide access to mine areas in support of the 2024, 2025 production plan. It is worth noting that the mining activity and stripping programs assume no significant disruptions in the supply chain resulting from the security situation in the country and the region. The company plans to file an updated life of mine or as account an updated mineral resources during the fourth quarter of 2023. This will include the details of assessing the 9.9 million tonnes of stockpile material through the CIO circuit versus the prior plan to outline capital intensive heat leach scenario. On Slide 7. Turning to Westwood. Gold production was 19,000 ounces in the quarter. 40,000 ounces [indiscernible] year-to-date. Westwood continues to be in a unique position, as IAMGOLD has been essentially rebuilding the underground mine at the same time as active mining operations are being conducted. The mine has made significant strides over the year towards taking the next step in production entering 2024. Mining activity in the second quarter totaled 212,000 tonnes of ore, which was lower than the prior quarter, due to the impact of heavy wildfire smoke and the vicinity of the mine operations required for multiple underground shift to be canceled to ensure the continued safety of our workforce. However, it is worth highlighting that underground mining activities returned 56,000 tonnes of ore at a grade of 7.6 grams a ton, which is the highest grade mine from underground in over five years. As we begin to see the benefit of [indiscernible] and activities reopening previously [indiscernible]. Mill throughput within the second quarter was 251,000 tonnes at an average head grade of 2.52 grams a tonne and improved recoveries of 94% of the — on the higher grade. Cash costs and all-in-sustaining costs continue to apply at Westwood with a very high sensitivity to line output and due to the increased levels of ground support required for development and rehabilitation work relative to the annual plan. Additionally, mining activity started at the satellite open pit Fayolle with minimal productions in the quarter, yet adding $2.4 million of the failed development capital to operating cost. Looking ahead, Westwood is well on track with our guidance range of 78,000 to 90,000 ounces this year. Production levels and unit costs are expected to improve into the second half of the year, benefiting from the continued advancement of underground development, providing access to more and higher grade stope sequence. Mill fee will continue to be supplemented from available satellite surface deposits, including increased proportion of ore feed from the sale property in the second half of the year. On Slide 8, I just want to take a moment to dive a little deeper into our activities at Westwood. Underground development year-to-date is near record development rate with 2,855 meters of lateral development completed to secure safe access to multiple ore faces, including high grade pass producing areas, which would allow for increased operational flexibility in support of the 2024 and beyond production plan. We have increased the sustaining capital expenditure guidance for Westwood by $35 million. Of the underground rehabilitation, and development has been progressing ahead of schedule due to better than planned productivity rates, moving some of the 2024 work into 2023 and reducing the work required in 2024, while some of the rehabilitation work requires, more ground, support increasing costs. This work not only is allowing the return of mining into a higher grade area, that were previously closed, but also opened the door for potential mineral reserve increases should this variance been upgraded from resources as they are proven to be mineable. We will have an update 43 101 (ph) for Westwood in the fourth quarter. As production volumes increases and rehabilitation work decrease we expect to see cost cut down. With the goal of positioning the assets for positive free cash flow for a better and profitable 2024 and beyond. Slide 9. Turning to Côté Gold. I am pleased to have our executive project director here with us today, to walk us through the developments and progress in the quarter. Jerzy? Jerzy Orzechowski: Thank you, Renaud. The second quarter, considerable progress was made at Côté Gold (ph), achieving significant milestones and earthworks processing plant and operating readiness. It was a critical quarter as we started the quarter in the spring fall or the fresh head season. Water management systems have been put in place, handled the tasks administratively, and I must compliment the teams for the planning and management. At the end of the quarter, the project was approximately 86% complete. And as Renaud mentioned, we are now seeing activities move from the bulk construction to the more detailed and have very important finishing derivatives. The physical changes of the site have been remarkable, and I’ll walk you through some pictures on [indiscernible]. We currently have been over 1,900 workers at the site, with the camp at peak capacity, despite the house, our construction teams, contractors and subcontractors have done a great job and we have reached the 225 million hours’ worth milestone. On earthworks, we completed phase 1 on the TMF and have started to accumulate water in preparation for the pump startup. The primary and secondary crushing circuit made considerable achievements with the HPGR arriving on-site and installation progressing at the first phase. Inside of the plant, the installation of the ball new liners was ongoing and the multi-server active site to facilitate installation in early Q3. We have [indiscernible] completion of the leach tanks and installation of the agitators from our approximately six weeks to eight weeks later than originally planned, in order to prioritize the workforce on a critical installation of the crushing circuits. Finally, the power substation is now being commissioned with the connection to the provincial hydro grids schedule for this model. To allow the full electrification of site and the deployment of electric shovel later this quarter. Moving to recent pictures. Let me walk you through the main project areas of the site. Moving left to right on top to the bottom. Here we can see the TMF. As we are looking north east of the plant, the first line that you see, the boundary was at 92 million meter (ph) location, which was completed in Q1 and preparation for the fresh head season. The second liner boundary at 396, which completes phase 1 and allows for accumulation of water for the startup that you can see was also done. The next phase we’ll see the down rising to 409 elevation to allow for the full first 12 months of operations. Next in the middle top is the high voltage substation. And as I mentioned earlier, the substation focus has shifted from construction to decommissioning to prepare for amortization and collection of [indiscernible] hydro grid. Top right is the view of the primary crusher, where this fueling auxiliaries (ph) are complete and we are not putting the roof decking in place to commission the bridge crane for a final few lifts of the crusher components. Bottom left, we have an HPGR area illustrating very advanced mechanical installation and the teams are focusing around piping and electric lines position. The bottom middle is grinding with the bone of our action very advanced. We are transitioning to the final stage of sub-construction and early commissioning activities. And on the bottom right, you see the leach tank farm area, where we are concentrating on finalization of mechanical action, electrical and confusion of the piping installation. Moving on to the timeline. The Côté Gold continues to track well to the updated project schedule works production in early ‘24. We are working on close alignment with our partners, Sumitomo and our contractors to ensure that copies both safely on time and in the current budget and scope. Our focus in Q3 will be on complementing the construction of the remaining portions of the plant and starting pre-commissioning activities. Q4 will be focused on finalization of pre-commissioning of preparation for the oral introduction early in the year. With that, I will turn the call back to you Renaud. Thank you. Renaud Adams: Thank you, Jerzy. And on Côté, I’d like to add that our goal is straightforward. We want to ramp up — we want to ramp up of Côté to be among the most successful major gold projects there enough (ph). That is not to say, we are naive about the challenges ahead, but the team we have in place and continue to build, I’ve done this before. We’re excited about the future at Côté and what it means for IAMGOLD. On Slide 12. Of course, when talking about the future, we need to continue to highlight Gosselin. We are continuing to drill at Gosselin with nearly 1,000 meters complete so far this year. The deposit has only been drilled with a fraction of the meters compared to Côté and to half the debt and remains open long stride in our dam (ph). Our last batch of assays results earlier this year successfully intersected mineralization to the south, to the [indiscernible] and below the current resource boundary of the deposit. The goal of the current drill program is two-fold. Continue to expand the mineralized envelope of Gosselin, as well as infill to support ongoing technical study to advance metallurgical testing and to support mining and infrastructure study to begin reviewing alternative for potential inclusion of the Gosselin deposit, deposit into a future according to life of mine plan. We expect to have results for the ongoing drilling program in early Q4. WE believe that Gosselin with its initial resources of 3.4 million indicated ounces and 1.7 million ounces occurred continue to be in the early stage of discovery and Gosselin, its location immediately adjacent to the Côté deposit as a potential to add real value to the Côté project. With that, I will pass the call over to our CFO, who will walk us through Côté pending and financial review. Maarten?: Maarten Theunissen: Thank you, Renaud and good morning, everyone. Looking at project spending, the Côté Gold UJV incurred $270.1 million in project expenditures on 100% basis, or $189.1 million on a 70% basis during the quarter. It is worth highlighting that for accounting purposes, the JV funding and amending agreement does not meet the requirements on our IFRS to recognize the dilution of the company’s interest in the Côté UJV as a sale and so the company will continue to account and report for 70% of the assets and liabilities of the joint venture, as well as 70% of the incurred project expenditure. The company has recognized the financial liability on the balance sheet that approximates the current repurchase price, representing the $250 million funding contribution that Sumitomo made on IAMGOLD behalf. That resulted in our interest being diluted to 60.3%, as well as incremental funding that Sumitomo made due to their increased ownership and the accrued fee for the repurchase option. The liability will continue to increase with the 9.7% of incremental funding that Sumitomo provides until Côté achieves commercial production. This commencement of construction, $2.23 billion of the planned $2.965 billion of the project expenditure has been incurred. Looking ahead, the remaining cost to incur to complete Côté is estimated at $665 million to $735 million at 100% or $4165 million to $515 million at 70%. The higher range of the estimate to complete of $735 million will take us to the $2.965 billion for the August 2022 technical report. The table at the bottom outlines the provision of the Côté cost to complete guidance with the actual spending amount incurred quarter-over-quarter. In order to convert the expected incurred cost to complete at 70% to IAMGOLD’s actual funding requirements as a 60.3% joint venture partner. The incurred cost is just for changes in working capital, lease funding received and the decrease in the required cash balance helped by the UJV, when the level of expenditure reduces after the completion of construction. Our goals need to fund 60.3% of this target going forward. Now that funding a great arrangement and dilution has been concluded. During Q2, Sumitomo funded the remaining $61 million of the $250 million total as per the agreement on behalf of the company and an additional $18 million due to increased ownership. Sumitomo funded all of the joint venture cash flows up to May and the company commenced funding in June and funded approximately $60 million to the UJV during Q2. IAMGOLD will now fund 60.3% of the UJV cash golds that is approximately $425 million to $475 million during the construction phase. Turning to the Q2 financials. Revenue from continuing operations totaled $238.8 million from sales of 111,000 ounces at an average realized price of $1,973 per ounce. Adjusted EBITDA from continuing operations was $63.8 million for the quarter, translating to an adjusted loss per share of $0.01. In terms of our financial position, IAMGOLD ended the quarter with $747.7 million in cash and cash equivalents and $452.5 million available via the fully undrawn credit facility, which equates to total liquidity of approximately $1.2 billion. We are investing excess cash and funds in Canada at rates close to 5%. We note that within cash and cash equivalents $91.3 million was held by Côté Gold and $170.1 million was held by Essakane. For Côté, the Côté Gold UJV requires its joint venture partners to fund in advance two months of future expenditures and cash goals or might at the beginning of each such month, resulting in the month end cash balance approximating the following month’s expenditure. For Essakane, the company mainly uses dividends to repatriate funds, of which the company will receive 90% based on its ownership net of dividend taxes. It’s a planned dividend during the second quarter of $120 million, which was received by IAMGOLD subsequent to the quarter end, net of minority interest and withholding taxes. We note that the full extent of the credit facility availability is subject to a net debt to EBITDA [indiscernible] and interest coverage covenant. Therefore, the full extent of additional liquidity of the facility is reliant on the ability of our operations to generate sufficient EBITDA to support the [indiscernible] of the company. This is one of the reasons why we announced the $400 million term loan in the quarter, which allowed the company to pay down the credit facility and use the term loan for the capital requirements of Côté and therefore, de-linking Côté funding from certain items in the macroeconomic environment and our other operations. The term loan improves on both balance sheet and strength and flexibility allowing trade facility to be available to support working capital requirements during a better pivotal year, we were ramping up Côté as well as delivering the legacy gold by prepayment agreement and gives us some measure of insurance in case of foreseeing challenges with changes in the operating for macroeconomic environment. IAMGOLD’s fund is remaining portion of the Côté UJV funding estimate of $425 million to $475 million from available cash balances and the remaining proceeds from the Bambouk asset sales. And as Renaud noted at the beginning of the call, as Côté wraps up, we can then direct our attention to key longer term financial goals of returning to 70% in the Côté UJV and delivering our balance sheet towards a more optimal capital structure. With that, I will pass the call back to Renaud. Thank you, Renaud. Renaud Adams: Thank you, Maarten. And I really want to take a moment here to thank everyone on the IAMGOLD team for the tireless efforts and dedication. This is an exciting time for this company. I should also note that we will be holding a gold in mine tour (ph) for our investors and analyst in October. And I encourage you to reach out to Graeme and myself to save us part of the trip. We expect it would be very well attended considering the progress at Côté to date. With that, I would like to pass the call back to the operator for the Q&A. Operator? Q&A Session Follow Iamgold Corp (NYSE:IAG) Follow Iamgold Corp (NYSE:IAG) We may use your email to send marketing emails about our services. Click here to read our privacy policy. Operator: Thank you. We’ll now begin the question-and0answer session. [Operator Instructions] Our first question is from Lawson Winder with Bank of America Securities. Please go ahead. Lawson Winder, your line is open. Lawson Winder: Thank you, operator. Good morning, Renaud and team. And Renaud, it’s very nice to hear from you. I wanted to just ask your, get an idea for your long term vision for IAMGOLD now that you’ve been in the role for about a quarter, a little over a quarter, particularly with respect to geographic focus and could IAMGOLD look to potential — potentially exit Burkina Faso once Côté has ramped up. And, yeah, I guess I’ll leave it there for now and follow-up after. Renaud Adams: Yeah. I appreciate the questions. And as you, as I mentioned on the call, our priority right now is definitely focused on Côté building a strong Canadian platform, continue to operate safely as a [indiscernible] significant mine for us as generated and continue to generate cash flow. We appreciate this situation right now in the Burkina and the regions, but our efforts and focus continue to make the mine work well for us and mission on contributor. As we move forward in the future, we’ll address some of the step by step the building of this company. But I would say at this stage, while we continue to focus on the strong and the safe operation of this [indiscernible] in parallel, as I mentioned, this is also to develop and grow a very strong base in Canada. This is as see the gain? Lawson Winder: I also wanted to ask about the plan to update the life of mine plan for Essakane. So just, I know it’s still early and you haven’t released the study yet, but is the thinking that the mine life might be reduced as a result of MOA away from the heap leach? Renaud Adams: No, we’re definitely not seeing a reduction. there was obviously questions about those tonnes that were previously meant to be on the heap leach, but I believe the team has worked very hard and diligently doing corporate those (ph), we’ve been capable as well to replace some ounces mines. So, we are not at expecting a reductions of life of mine. Lawson Winder: Okay, great. And I wanted to touch on Westwood, just given that, I mean, you’ve had knowledge of this asset for just about as long as anyone. You’ve kind of painted a picture of an improved outlook going forward in the — in your prepared remarks and in the MD&A. I am just curious like what is the upside for this mine? And you would well know that when this mine was first conceived of, I mean, the thought was it could produce 200,000 ounces a year. We’re far from that, but I mean, is even anything in the 100,000 ounce range potentially achievable in your view? Renaud Adams: Well, we are already under guidance of [indiscernible] at this year, in the guidance, 70,000, 90,000, which we’re we feel pretty strong that we’re going to meet well, as we continue, but you mentioned the 200,000 ounces. That’s definitely not the goal in the near future to push the mine to its limit. I would rather see this mine focused on quality, returning to a very strong and higher grade on the ground which we are readily — economics of this mine. So in the short term, of course, we’re using the satellite, the surface satellites. But the real game here as we continue to diligently prepare the mine is to return to the higher grade area and focused on quality as we move forward. So while we don’t see this mine necessarily now returning to the 200,000, we’re definitely feel strong that it could be a 125,000 to 150,000 ounces producer at a much better margin. Lawson Winder: And then if I could just ask about Côté finally and the autonomous truck haulage, is the assumption that you will be operating at a 100% autonomous truck haulage from day one or is there some flexibility built in there to sort of allow for potential hiccups. And the reason I’m asking is, we’ve seen other autonomous truck programs roll out and take quite a time, — quite an amount of time to get up to sort of full run rate and obviously it’s great you started early this year, but we’d just love to get your thoughts on that sort of ups and downs. Thanks. Renaud Adams: Well, I’m surely looking forward to the site tour in October to see the enormous progress and how it’s been, but I’ll ask Bruno to add a bit to that question. Bruno Lemelin: It’s kind of – and loss from — it was part of the original assumption to start from the get go with the autonomous fleet. And right now, what we see is, we see a ramp up that is on par as target. And again, there’s no need for an operation of the fleet via operators. So actually, we are commissioning trucks one after the other and they are fully utilized, autonomously and it works real good. Lawson Winder: Okay. Thank you all very much. Renaud Adams: Thanks. Operator: The next question is from Anita Soni with CIBC World Markets. Please go ahead. Anita Soni: Hi. Good morning, Renaud and team. A few questions from me. Just in terms of Côté, can you talk a little bit more about a process where you are, the leach tanks and that you said you were optimizing just to look for the critical leach tanks or to get those up and running? Can you talk about like how many of the total leach tanks that you have that you’re build the ones that are — you are new running at the beginning and how does that impact the ramp up going into 2024? Renaud Adams: I would ask Jerzy to give some details to it, but what I could tell you that overall, we are not saying issues, but with the tanks that would impact the commissioning of the mine. Jerzy? Jerzy Orzechowski: Yeah. Thank you, Renaud. Maybe if we can go back to the slide we have shown with the leach tank, so you can see the installation is quite advanced/ We are in a piping electrical installation work. Most of the detectors have been installed and we have to reshuffle the workforce to deal with some critical areas, which is the crushing circuit. As I mentioned, we have a capacity right now, so we are making tactical decisions of where to shift the manpower to deal with some critical issues of work to move forward with the decommissioning activities. As you see from that picture, the tonnes are in quite advanced stage and we are basically getting them ready for the pre-commissioning work and the hydro tests. We will be starting with the first four, five tonnes and then we’ll be gradually introducing more tonnes in the circuit and the start-up progresses. Anita Soni: Okay. Can I get — I have a second question with regard to the tailings facility. I think you gave us a little bit of color on that, but could you tell me how much capacity in the Phase 1? And then how much additional capacity were you looking for in the phase 2 of the dam? Jerzy Orzechowski: Oh, phase 2 of the dam is the full one year capacity of production. Phase 1 is about 1.5 million cubic meters, which allows us to accumulate enough of the water for a start up in commission. And phase 1 is complete. That’s — this is why some color on it, as you mentioned, because the best way to visualize it is to look at the liner lines. So, what you see, the second liner is basically phase 1 completion. As you can see, this picture is from July. So you can see there’s actually, if you look at the bottom of that picture, and there’s quite a bit of work, which is already advanced in the phase 2. Anita Soni: Okay. So the phase 2 is the full on, but my understanding is that you would definitely want that completed by Q4, right? I mean, is it a central line dam, right? So you need the retention, the time for the beaching to occur. Is that the case? Jerzy Orzechowski: That’s correct. Yeah. Anita Soni: Okay. Sorry. Renaud Adams: Yes, please repeat that, Andrea (ph). Jerzy Orzechowski: We are okay from a start-up. We have enough capacity to start up right now. Anita Soni: Sure. Okay. And then just in terms of, when we think about next year, you said early 2024, with six months out, can you give us some color on what early means? Like, when do you expect to have first gold pours out, like the beginning of the quarter in Q — in January or is it the end of the quarter or are we getting into Q2? It’s like, I just want to try again an idea of what 2024 would look like? Jerzy Orzechowski: I don’t think we’ll — we’re prepared to give you much finer date than the first quarter. I think this is… Renaud Adams: Yeah. I mean, one thing that is very important here Anita is, we had a chance to discuss that previously is the focus is really on ramp up and achieving and getting as close to the nameplate possible rather than focusing on the single item of the gold port. We want the gold port to be incorporated in the most efficient way to reach our nameplate. So having said that, we’re still pretty confident that the gold pour would occur early in Q1. Anita Soni: Early in Q1. Okay. All right. And then I just want to circle back on Westwood. You talked about maybe getting to 125 to 150 ultimately there. And I think you said the La Fayolle (ph) property should be adding contributing to the mix in the back half of the year. Could you remind me what the grades are at that one in the open pit? Renaud Adams: Bruno? Bruno Lemelin: Hello, Anita. Fayolle expect at around 4 to 5 grand per ton. So, we intend to close to 100,000 tonnes this year for us from Fayolle. Anita Soni: Okay. And how much have you done today there are zero to-date on La Fayolle. Bruno Lemelin: Just [indiscernible]. Anita Soni: Okay. Thank you very much. That’s all my questions. Renaud Adams: Thank you, Anita. Operator: [Operator Instructions] Our next question is from Mike Parkin with National Bank. Please go ahead. Mike Parkin: Hi guys. Thanks for taking my questions. Can I just confirm the timing of life of mine update for Essakane? When does that — do live? Renaud Adams: Did you see the technical report to [indiscernible]? Mike Parkin: Yes. Renaud Adams: So, Q4, from at least somewhere, you know, like in mid Q4. So, we want to have everyone a chance to digest properly their report prior to our early 2024 earnings. Mike Parkin: Okay. And then you’ve guided to higher costs and obviously Essakane is kind of your bigger asset. It’s been a bit lumpy but it’s been kind of tracking around $110 million over the last 12 months with Q1 being a bit late given the lower throughput. Can you give us a sense of like what’s going to drive, you were about $120 million direct operating costs in Q2? To get in line with guidance that kind of have a sense that it’s got to come down a bit in the second half and what changes there to get you into a slightly lower cost profile to get in line with guidance? Renaud Adams: Well, you would appreciate, of course, if you compared with the last couple of years, a big ticket is of course the increase in spending around the security. I mean, it is what it is. We need to do what we needs to be done, to keep everyone safe and the team has done an awesome job on this. But one of the biggest ticket, of course, as mentioned is fuel. And if you look at the Q2, for instance, the overrun and the FFO, LFO using LFO to generate power is a very big ticket. This is basically $100 an ounce and overall impact on the Q2. So moving forward, having said that, even though the cost has increased, there was a significant decrease in the mining unit cost in Q2 compared to Q1 of almost $1 a ton. So the mine is operating extremely well, but unfortunately, you have some inflation. So if we — I think the extra capacity of storage as we move towards Q4 will be a big element of it. Having more storage inventory and providing us with more chance to operate power 100%, which HFO will be a big, big, big ticket to it. But other than that, I’m totally convinced is not a performance and operating performance issue. It’s a procurement issue. It’s a security and it’s a difficulty sometimes to provide HFO for power. As we advance, should we have a better controls on the fuel supply and power generation being with HFO. Those will be the basic that gets to return to a full pass. Mike Parkin: Okay. Thanks very much guys. Operator: The next question is from Tanya Jakusconek with Scotiabank. Please go ahead. Tanya Jakusconek: Great. Good morning. Thank you for taking my questions. Just wanted to know, when is the technical study of Gosselin coming out? You mentioned that you are working on that one as well? Renaud Adams: Yeah. The — I think that this stage is metallurgical studies is prohibited priority. And as we mentioned, more we drill Gosselin, more we grow it. And I think it’s relevant to say that at this stage, we need to have a pretty good idea of the size of the Gosselin and what it needs to know before we dive too quick into studies and so forth. So I think 23 part of 24, we’re going to continue to be very aggressive on the drilling and growing the deposit, doing all metallurgical studies. And Bruno, you can add, but I definitely do not see the rush to any integration study or perhaps they even late ’24, ‘25. Unidentified Company Representative: Exactly. Hello, Tanya. This is [indiscernible]. And in addition with the metallurgical testing, we have also [indiscernible] type testing to perform. And obviously, the delineation drilling that is currently ongoing. Tanya Jakusconek: Okay. So all of this combined maybe late ‘24, ‘25 until the market gets some sense? Renaud Adams: Yes. Tanya Jakusconek: That be fair? Okay. All right. So that’s helpful there. And just on Essakane, I know, Mike asked about the cost. So should we just be thinking the rest of the year? Because you mentioned Westwood, we’re progressively getting better quarter-on-quarter and improvement in cost quarter-on-quarter as Essakane more evenly balance for the rest of the year. Would that be fair way of looking at that mine? Renaud Adams: Hello, Tanya. We should see forecast to be moderately lower in Q3 and Q4 as the situation with the fuel gets normalized. We also expect capitalized waste stripping to pursue its current plant program as well. And for mining as well, overall to have relatively the same kind of cost pressure we see on the input [indiscernible]. Tanya Jakusconek: Okay. So production evenly split? Renaud Adams: The great scenario is going to be also relatively the same. Tanya Jakusconek: Okay. And then can I ask because obviously getting the cash flow, getting cash flow from Essakane, we’ve got higher risks with the security issues in country. Can you just remind me what you’re doing there to try and mitigate this risk as much as you can with inventories on-site. Can you just remind me what you have there? So should something occur, which we hope doesn’t, but just an idea of what you have on-site and inventory levels? Renaud Adams: So Tanya, that as we’re trying to secure supplies, we’re increasing our working capital, we’ll have a slight impact related to the additional capacity for a fuel storage in Q4. We’re trying to do the same for ammonium nitrate for explosives. Maybe you want to talk a bit more about that, Maarten? Maarten Theunissen: Yeah. Good morning, Tanya. So we are seeing an increase in the inventory at the site as we are trying to build more capacity when there’s good opportunities to bring supplies in. So there was an increase in there. I think your question also asked about cash, getting cash out of the country. We, Essakane dividend of $120 million during the quarter, they had about $170 million of cash at the end of the quarter because of buildup. And we received that dividend after the closure of the quarter. So, we continue to be successful. No issues in moving funds from the country or having the hotels out of the country. Tanya Jakusconek: Okay. I was just wondering more like fuel explosives, other consumables are you carrying inventory the six months? Should I be thinking like that’s sort of your inventory levels? Three, six months, Is that fair? Maarten Theunissen: Yeah. And effective for fuel, we usually have an inventory close in between 15 days to 30 days. The expectation now is to increase that capacity close to 40 to 45 days. Tanya Jakusconek: Okay. For some reason, I thought you had longer. Sorry. Maarten Theunissen: No, I’m not on the, no, it’s actually lower. This is very much in line with, especially for field with best practices usually like when you said like 20 days will be more than enough usually and it has been in the past. Now because of the logistic of the convoy systems rather than frequent and periodically. So, we accumulate trucks and then we can avoid them. So there is a need here to increase because we do not have — as a previously, like a daily shipment and so forth. So we accumulate, we come voice (ph), so we need to increase the capacity, but it’s just very much in line with the matter of fact in Canada, you would have less than that. Tanya Jakusconek: Yeah. Okay. Great. Good luck. Thank you. Renaud Adams: Thanks. Operator: This concludes the time allocated for questions on today’s call. I’d like to hand the call back over to Graeme Jennings for closing remarks. Graeme Jennings: Thank you very much, operator, and thank you to everyone for joining us this morning. As always, should you have any additional questions, please reach out to Renaud or my — myself be at phone or email. Thank you all. Be safe and have a great day. Operator: This concludes today’s conference calls. You may disconnect your lines. Thank you for participating, and have a pleasant day. Follow Iamgold Corp (NYSE:IAG) Follow Iamgold Corp (NYSE:IAG) We may use your email to send marketing emails about our services. Click here to read our privacy policy......»»

In this article, we will take a look at the 10 stocks that will make you rich in 2023. To see more such companies, go directly to 5 Stocks That Will Make You Rich in 2023. To make money by investing in the stock market, one ought to follow time-tested investing principles with patience. But […] In this article, we will take a look at the 10 stocks that will make you rich in 2023. To see more such companies, go directly to 5 Stocks That Will Make You Rich in 2023. To make money by investing in the stock market, one ought to follow time-tested investing principles with patience. But sometimes the market creates opportunities that have the potential to reward investors who are ready to ride the bandwagon of time. Artificial intelligence is the ultimate money-making bandwagon of 2023 and perhaps several years to come. While many believe AI is quickly becoming a hype and pushing stocks’ valuation to dangerous levels, there are credible analysts who still believe tech stocks have a long way to go in this AI revolution. The AI Gold Rush Wedbush’s Dan Ives recently said that the AI “gold rush” would be driving tech stocks higher in the second half of 2023. “The 2nd, 3rd, and 4th derivatives of this A.I. Gold Rush are just starting to evolve for the tech landscape. As we have covered the tech sector for decades and saw the dot.com bubble and burst firsthand, [we believe] this is the start of a 4th Industrial Revolution playing out across tech over the coming years that is still being underestimated by the Street in our opinion,” Ives said during an interview with CNBC. Not all bubbles are bad. Some bubbles have the potential to make investors rich and give them evergreen gains and long-term opportunities. SkyBridge Capital Founder Anthony Scaramucci, while talking to BNN Bloomberg, said that while AI is “probably in a bubble,” there are still some AI stocks that should be in investors’ portfolio. Anthony Scaramucci specifically talked about Nvidia, a stock many analysts believe has become overvalued amid its latest AI-driven performance. Scaramucci said that Nvidia may be overvalued currently “but if you own it for the next 15 years, you’ll probably be OK.” One of the biggest reasons why AI stocks have the potential to gain further is the explosive potential and applications of generative AI. According to Bloomberg Intelligence, the generative AI market could expand by about 40%, to $1.3 trillion by 2032. The AI Bubble and How to Make the Most of It Billionaire investor George Soros’ thoughts on bubbles are interesting and have become highly relevant in the current backdrop. Soros in 2009 famously said: “When I see a bubble forming, I rush to buy, adding fuel to the fire.” In a detailed lecture in 2009, Soros explained his bubble theory. Soros thinks that a boom-bust cycle is set in motion when a trend and a misconception positively reinforce each other. Positive reinforcements keep inflating the bubble through positive feedbacks. This bubble is tested by market dynamics from time to time but if the trend is strong enough, it survives this test, according to Soros. This cycle enters what Soros calls the “twilight” stage when the trend begins to lose stream but nonetheless maintains inertia before eventually beginning to decline. At what stage the current AI boom is? No one can say for sure but an overwhelming majority of market analysts believe the AI revolution is just getting started. To make money from this revolution, analysts recommend some stocks that are expected to ride the AI wave. Our Methodology In this article, we picked stocks that are expected to keep gaining value based on the AI hype and AI-related growth catalysts in 2023 and beyond, according to analysts. Disclaimer: The stocks discussed in the article were selected using a consensus opinion-based approach, using credible analyst reports, websites and price estimates. However, there is no guarantee that these stocks will appreciate in value in future. The purpose of this article is news and education based on research. Stocks That Will Make You Rich in 2023 10. SoftBank Group Corp. (OTC:SFTBY) Number of Hedge Fund Holders: N/A Japanese investment giant SoftBank Group Corp. (OTC:SFTBY) has not been much impressive over the past few years. Its Vision Fund has posted huge losses and its China investments have been painfully unprofitable. But SoftBank Group Corp. (OTC:SFTBY)’s chief Masayoshi Son recently announced the company is ready to shift to “offense mode” and benefit from the AI revolution. “What I am interested in most, what I am working on most, is the AI revolution. I believe that mankind is going to be exceeded by computer or AI. We would like to be [in] the leading position for the AI revolution,” Son reportedly said. SoftBank Group Corp. (OTC:SFTBY) is preparing to publicly list British semiconductor company ARM later this year. Analysts believe the move could give Softbank a huge AI-related boost. Jefferies analyst Atul Goyal upgraded SoftBank Group Corp. (OTC:SFTBY) shares to Buy and said: “We expressed a view that SBG stock will rally ahead of the ARM IPO later in the year… But given (the) market’s fascination for semi-stocks, we think it makes sense to move early.” 9. Palantir Technologies Inc. (NYSE:PLTR) Number of Hedge Fund Holders: 31 Palantir Technologies Inc. (NYSE:PLTR) is going ballistic over AI and made headlines earlier this year by launching AIP, its AI platform for defense and military. Palantir Technologies Inc. (NYSE:PLTR) could become the go-to solutions provider for all things AI for defense and military applications. Palantir Technologies Inc. (NYSE:PLTR) has gained about 140% year to date through July 7. Dan Ives counted Palantir Technologies Inc. (NYSE:PLTR) among the top companies he believes could gain from the AI market which he thinks could reach $800 billion over the next 10 years. As of the end of the first quarter of 2023, 31 hedge funds tracked by Insider Monkey had stakes in Palantir Technologies Inc. (NYSE:PLTR). 8. CrowdStrike Holdings, Inc. (NASDAQ:CRWD) Number of Hedge Fund Holders: 72 Some analysts believe Texas-based CrowdStrike Holdings, Inc. (NASDAQ:CRWD) could make investors rich in 2023 and beyond as the software company’s products are seeing huge demand. Recently, BTIG Research added CrowdStrike Holdings, Inc. (NASDAQ:CRWD) in its list of top picks for the rest of 2023. BTIG is bullish on CrowdStrike Holdings, Inc. (NASDAQ:CRWD) amid its dominance in the endpoint security/EDR market, high win rates against rivals like Microsoft, strong customer recognition, and successful performance in emerging product categories. Morgan Stanley analysts recently said that AI has created a new opportunity in the cybersecurity domain. They believe AI-led automation in the industry could create $30 billion in productivity gains and much of those could go to a few companies including CrowdStrike Holdings, Inc. (NASDAQ:CRWD), Palo Alto Networks Inc. (NYSE:PANW) and Microsoft Corporation (NASDAQ:MSFT). Artisan Developing World Fund made the following comment about CrowdStrike Holdings, Inc. (NASDAQ:CRWD) in its Q1 2023 investor letter: “Top contributors to performance for the quarter included graphics semiconductor company Nvidia, Southeast Asian e-commerce platform Sea, Latin American marketplace MercadoLibre, online travel marketplace Airbnb, and endpoint security company CrowdStrike Holdings, Inc. (NASDAQ:CRWD). CrowdStrike rebounded as its financial results eased demand-related concerns in its core endpoint business, while adoption in platform adjacencies continued to rise.” 7. Tesla Inc. (NASDAQ:TSLA) Number of Hedge Fund Holders: 82 Being a leader and first mover in the lucrative EV industry gives Tesla Inc. (NASDAQ:TSLA) an advantage that it keeps enjoying, thanks to Elon Musk’s relentless innovation and proactive approach. Tesla Inc. (NASDAQ:TSLA) has already gained about 155% year to date through July 7. Tesla Inc. (NASDAQ:TSLA) is gaining after the company posted Q2 delivery numbers. Tesla Inc. (NASDAQ:TSLA) delivered 466,140 electric vehicles in the second quarter of 2023, surpassing estimates of 445,000 units.  This was an 83% year-over-year growth. Wedbush Securities analyst Dan Ives said Tesla Inc. (NASDAQ:TSLA)’s price cuts earlier this year gave the company an advantage as demand of EVs remain strong.  Ives thinks Tesla Inc. (NASDAQ:TSLA) is on track to hit 1.8 million unit delivery milestone for 2023. “With this delivery beat, we believe the sum-of-the-parts story for Tesla is another step towards coming into play with its newly released supercharger network OEM deals, energy business, AI driven autonomous path, unmatched battery ecosystem, and increased production scale/scope globally adding to the Tesla golden EV success story,” Ives said. Ives has a $300 price target on Tesla Inc. (NASDAQ:TSLA). Cathie Wood of ARK, which has a $1.13 billion stake in Tesla Inc. (NASDAQ:TSLA), thinks Tesla shares could reach $3000 by 2025. 6. Palo Alto Networks Inc. (NYSE:PANW) Number of Hedge Fund Holders: 87 Palo Alto Networks Inc. (NYSE:PANW) is another stock that analysts believe can ride the AI bandwagon. Goldman Sachs recently released its “Rule of 10” screen picks which include companies that have showed strong sales growth over the past couple of years and are expected to continue posting solid revenue growth. Palo Alto Networks Inc. (NYSE:PANW) made it to the list. Palo Alto Networks Inc. (NYSE:PANW) is uniquely positioned to benefit from the AI boom. The company launched its platform XSIAM that uses automation and AI for information and cybersecurity. Palo Alto Networks Inc. (NYSE:PANW)’s CEO has a special focus on AI and the company is expected to see more growth based on its AI products. He said during fiscal Q3 earnings call in May: “I think there is no doubt we will continue to deploy our proprietary AI models for XSIAM or for our network security use case as I highlighted. We believe in our preliminary analysis over the last three months and driving a lot of these work streams internally that there is a dare there with generative AI. So we believe that we will be deploying generative AI over the course of the next few months, and we’ll talk more about it At a later event. But we think that has an opportunity both to significantly improve our customer efficiency and the efficacy of our products, at the same time, also to drive efficiencies within the way we run Palo Alto Networks. I think last but not the least, which is something you didn’t ask, but I’ll say, separately, Lee and his team have been working hard to see and look at the adverse impact that generative AI could have in terms of adversaries using Generative AI to build new malware, to try and attack our customers.” TimesSquare U.S. Mid Cap Growth Strategy made the following comment about Palo Alto Networks, Inc. (NASDAQ:PANW) in its Q4 2022 investor letter: “Within Information Technology, Palo Alto Networks, Inc. (NASDAQ:PANW) offers network security solutions to enterprises, services providers, and government entities. The company delivered another strong quarter with revenues, billings, and earnings all above the consensus. Management recognizes a challenging macro environment that is altering customer behavior such as increased deal scrutiny and elongating sales cycles. Their shares pulled back by -15% during the quarter.”   Click to continue reading and see 5 Stocks That Will Make You Rich in 2023.   Suggested articles: 16 Most Adulterous Countries in the World 20 Countries with the Best Economy in the World 15 Most Popular States to Retire to in the U.S. Disclosure: None. 10 Stocks That Will Make You Rich in 2023 is originally published on Insider Monkey......»»

Insider is covering the historic twin labor stoppages upending Hollywood. Here's a look at our coverage of the simultaneous SAG-AFTRA and WGA strikes. Members of two key Hollywood unions — SAG-AFTRA and the Writers Guild of America — are both on strike against Hollywood studios, networks, and streamers.FREDERIC J. BROWN/AFP via Getty Images The Hollywood writers' strike got a boost when actors joined the picket lines in July. Writers and actors have had contentious negotiations with streamers and studios over issues like wages and AI. Together, the SAG-AFTRA and WGA strikes have upended development and promotion of new content. Hollywood has been ground to a virtual halt by simultaneous actors' and writers' strikes, marking the first time in more than 60 years that both guilds have organized a labor action against the studios.On May 2, the Writers Guild of America and its more than 10,000 scribes called a strike after failing to reach an agreement with the Alliance of Motion Picture and Television Producers, the trade association that represents Hollywood companies like streamers, networks, and studios. In July, after a month of its own negotiations with the AMPTP, SAG-AFTRA also called a strike, resulting in its more than 160,000 members withholding their labor from the Hollywood companies, too. A state of near-paralysis has taken hold in the entertainment industry this summer, with no clear end in sight.Late night television shows went dark immediately after the writers hit the picket lines, and countless more shows, films, and other projects have been shut down or closed their doors in solidarity with members of both striking unions. Meanwhile, thousands of writers and actors have turned out into the streets of Los Angeles and New York City to demand better protections from the studios around issues like wages, staffing, and the rise of artificial intelligence.Consumers will notice some changes both in the near term and the longer term. One glaring example of the dual strikes' impact has been the absence of actors and writers participating in the promotion new movies like "Barbie" and "Oppenheimer." That's because both unions' rules prohibit their members from campaigning on behalf of new projects — and it's not yet clear what that could mean for viewership or ticket sales.But a key question on everyone's mind is: What does this mean for my favorite TV shows? In that case, consumers probbaly won't notice a big change until the start of the broadcast networks' fall season, when popular shows like "Abbott Elementary" won't return right away.Insider has been covering the major developments in the course of this game-changing story for Hollywood. Here's a look at what's driving the strikes, and how they could leave a lasting mark on the entertainment business.Why are Hollywood writers and actors on strike?In April, an overwhelming 98% of members of the Writers Guild of America voted to authorize leadership of their union to strike. That strike eventually got underway in early May.In June, a similar number — 97.91%— of members of the actors' guild, SAG-AFTRA, also voted to authorize a strike. That union initiated a strike in mid-July, with its president, actress Fran Drescher, saying at a press conference: "You cannot keep being dwindled and marginalized and disrespected and dishonored.""You have to wake up and smell the coffee," she said of the studios. "We demand respect and to be honored for our contribution."The threat of generative AI is an issue of paramount importance that's united both actors and writers.Writers worry that AI could supplant their role in generating new scripts. Actors fear that it could digitally replicate their likenesses and drive some groups, like background actors, into obsolescence — a notion that the studios have denied. Both unions are also on strike over compensation — it's become extremely difficult for the middle class of working actors and writers to make ends meet.A separate issue affecting writers deeply is the advent of "mini rooms," an increasingly-common practice called that they say limits WGA members' headcount on projects, depriving them of work opportunities.Read more about the issues and demands driving the WGA and SAG-AFTRA strikes:At the heart of both strikes are the same fears underpinning change in almost every other industry: the unstoppable incursion of AI into our workplaces, including Hollywood.Hollywood writers outlined their primary reasons for striking and vowed to keep striking for "as long as it takes."Early on in the strike, writers behind the Paramount+ series "iCarly" told Insider why they were heading to the picket lines together, with showrunner Ali Schouten decrying Hollywood studios' "corporate greed" in an exclusive interview.When will the SAG-AFTRA and WGA strikes end?It's anybody's guess when both strikes will end. Some experts have hypothesized that the AMPTP may be inclined to wrap up the strike faster under the pressure of two unions withholding their labor. Others have said that all sides are dug in and the frameworks for finding a solution are increasingly complicated.Some are predicting that the writers' strike appears to be on course to outlast the previous the 100-day WGA strike of 2007-8, which cost the California economy roughly $2 billion.A controversial story published in July by the trade publication Deadline, based on unnamed sources, suggested that the studios were planning to stall as long as possible. "The endgame is to allow things to drag on until union members start losing their apartments and losing their houses," an anonymous "studio executive" told the outlet.In a statement to Insider following the Deadline article, an AMPTP spokesperson insisted that's inaccurate. "These unnamed people are not speaking on behalf of our companies who are committed to reaching a deal and getting our industry back to work," the spokesperson said.But for many writers and actors the comments became something of a rallying cry to stay energized on the picket lines. "We're fighting for the survival of television and film writing as a sustainable career, period," Adam Conover, a TV creator and WGA board member, said in a video recorded on the picket lines in May.While Hollywood executives like Netflix co-CEO Ted Sarandos and Warner Bros. Discovery CEO David Zaslav have publicly voiced respect for the actors' and writers' right to strike, tensions continue to heat up around the labor action. The unions have claimed that NBCUniversal, for example, obstructed its sidewalk to thwart picketers, and cut back trees that would have provided shade to picketers.Read more about why the strike could go on and how it could end:Actors told Insider they're battle-ready and will outlast the studios: Why Netflix, Max, and Paramount+ series stars are bringing their 'war' over pay and AI to Hollywood companies that are 'trying to kill our industry.'Actors and writers are encouraging people to help by donating to their emergency funds. Here's how you can show SAG-AFTRA and WGA members that you support them as they hold the line.Every Hollywood company is having a terrible summer except Netflix, whose global content machine will help it ride out the actors' strike: 'They just aren't worried.'What shows are canceled and how are the networks and streamers affected?An overwhelming number of productions have closed up shop during the strikes, and stalwarts of network TV, like late-night comedy shows, have also gone dark.But viewers may wonder why they're still seeing new shows debut on networks and streamers this summer. Films and series are produced months — and sometimes years — before they make their way to audiences, and Hollywood anticipated a possible strike, with distributors stockpiling months' worth of programming to stave off a summertime content drought and retain viewers. Their stores of new content won't last forever, but the studios and streamers hope they've banked enough material to minimize disruption for consumers.Unscripted programming — think game shows, dating competitions, singing and talent showdowns, and popular franchises like "The Real Housewives" or "The Kardashians — is an area poised to boom.Reality TV doesn't rely on union members to produce, which is why this format also thrived during the last writers' strike. This time, a number of companies look set up to exploit the unscripted gold rush.Read more about how Hollywood companies prepared for the strikes:Check out some of the nearly two dozen reality reality TV companies — that have produced shows like "The Kardashians" and "Queer Eye" — which stand to benefit from a boom in unscripted contentWhy Apple TV+ could be hit harder than Netflix, Disney+, and other streamers by the writers' strike — check out the key reasons it's vulnerable.How Netflix, Amazon, Disney+, and other streamers are armed for the writers' work stoppage.Sure, if the studios' stockpile of content runs dry while the strikes are on, we may have less to watch for a while. But Insider's Chris Johnston lays out why this could be a golden opportunity to catch up on hits from recent years that you might have missed.Getting a job in Hollywood right now: Is anyone still hiring?Even though the companies say they are prepped for a long haul, the strikes come as they're facing a multitude of challenges. By midway through the year, entertainment companies had slashed more than 15,000 jobs, the outplacement firm Challenger, Gray & Christmas told Insider. For many jobseekers, Hollywood is really starting to feel like a desert.Hiring for creative roles is broadly on hiatus with so many productions shut down. Employees in all capacities of development and production have been hit — not just writers, who are foregoing paychecks by striking, but also on-set workers of all stripes. Hopefuls looking to break into the industry told Insider it feels impossible to get a job right now. One avenue for newcomers has been to try to carve out roles for themselves as social-media influencers, and studios are contracting young talent from platforms like Instagram and TikTok to shine a light on their content.But influencers with aspirations to join the actors' union one day must tread carefully not to break its rules — and many high-profile figures in the creator economy have already said they won't do work for Hollywood's struck companies.Read more about how the strikes have affected workers hoping to break into Hollywood:Insider spoke to early-career professionals about the hurdles they're up against while trying to find work during the strike. Some job-seekers painted a dismal picture of getting crushed by "skyrocketing" debt, crumbling hope, and endless hours "just doom-scrolling LinkedIn."An assistant at Netflix — who created a popular newsletter as a 'blueprint' for young people trying to break into Hollywood — outlined why many of her fellow assistants share the same fears as actors and writers.Even as studios tap influencers, the practice is raising questions about running afoul of the unions. Here's why influencers considering using the strikes as a stepping stone should seriously reflect on the bridges they might be burning.Take a look at our ongoing tracker of the latest media and entertainment companies — like Disney, Warner Bros., Paramount, and Amazon Studios — to slash headcount.Which companies are embracing automation and AI in entertainment?Even with the WGA and SAG-AFTRA fighting hard to stop the relentless march of tech and AI, it's unlikely these forces will disappear even when the strikes end and new deals are in place.It seems far more likely that Hollywood companies will continue to embrace the efficiencies, cost-cutting opportunity, and storytelling potential of these tools.As the space matures, companies are innovating new ways to automate famous actors' voices, digitally resurrect deceased talent, and even use algorithms to anticipate which movies will crush it at the box office — and which are just doomed to get crushed.These pressures set the industry up for a long-term battle as a generations-old business model is remade by Wall Street and Big Tech.Read more about how AI is disrupting entertainment and which companies are leading the way:AI is disrupting Hollywood, and one investor sees huge potential in startups harnessing data to identify valuable IP for TV and film.11 startups developing AI to disrupt Hollywood and scoring hundreds of millions in VC and private equity fundingWe've gathered 18 pitch decks that have helped media and tech startups nab millions in funding to disrupt entertainment — check out how these companies are positioning themselves.Do you work in Hollywood? Are you a writer, actor, or professional at a network, streamer, or studio? Contact Insider's Hollywood reporters with your stories: Reed Alexander can be reached via email at ralexander@insider.com, and Lucia Moses can be reached at lmoses@insider.com.Read the original article on Business Insider.....»»

Futures Flat With S&P On Cusp Of Bull Market, Oil Jumps After OPEC Production Cut Futures are flat with oil jumping after OPEC+ cut output by an extra 1mm bpd in a unilateral move by Saudi Arabia taking its production to the lowest level for several years.At 7:30am ET, S&P futures were flat, while Nasdaq futures were down 0.2% with some artificial-intelligence exposed stocks like Nvidia Corp. and C3.ai Inc. trading down. In contrast, Apple Inc. surpassed its previous closing record in premarket ahead of what’s expected to be its most significant product launch event in nearly a decade. Oil rose 2%, with oil giants such as Chevron and Exxon up in premarket trading. The Bloomberg dollar index is up as are 10Y yields now that the market's attention turns to the $1+ trillion deluge in new debt issuance. Gold dropped, as did bitcoin after the crypto currency got its usual Asian session rugpull. Oil-related stocks rose in US premarket trading after Saudi Arabia announced it would scale back oil output by a further 1 million barrels a day in July, taking the OPEC+ member’s production to the lowest level for several years after a slide in crude prices. Saudi Energy Minister Prince Abdulaziz bin Salman said he “will do whatever is necessary to bring stability to this market”; with oil prices being weighed down by relentless shorting by hedge funds amid a softer economic outlook.  The rest of the 23-nation OPEC+ group offered no additional action to buttress the current market, but did pledge to maintain their existing cuts until the end of 2024. Chevron, Exxon Mobil and Occidental Petroleum all rise more than 1%, as do Phillips 66 and Schlumberger. Also in premarket trading, Apple rose 0.6% putting the shares on track to reach a new record high. The company is expected to launch a mixed-reality headset at the Worldwide Developers Conference on Monday, marking its most significant product launch in nearly a decade. Here are some other notable premarket movers: Bellerophon Therapeutics shares slid 74% Monday after the company said its phase 3 rebuild study of INOpulse to treat fibrotic interstitial lung disease failed to meet its primary endpoint. Day One Biopharmaceuticals shares rise as much as 35% after the biotech company provided updated data for its drug for the treatment of pediatric low-grade brain tumors that was “highly impressive,” according to a Wedbush analyst. Epam Systems falls as much as 11% after the IT services company cut its adjusted earnings per share forecast for the second quarter. ImmunoGen shares gain as much as 19% in premarket trading on Monday, after the biotech company provided full results from its late-stage trial for its treatment of ovarian cancer. Oil-related stocks rise after Saudi Arabia announced it would scale back oil output by a further 1 million barrels a day in July, taking the OPEC+ member’s production to the lowest level for several years after a slide in crude prices. Palo Alto Networks Inc. (PANW) shares gain 4.9% on Monday, following a Friday announcement that the stock is set to replace Dish Network Corp. in the S&P 500. Southwestern Energy Co. (SWN) rises 2% as it looks like a “logical target” for either Coterra Energy Inc. or Chesapeake Energy Corp., according to Citi. With the debt ceiling now behind us, markets will now prepare for a deluge of issuance; BBG reports that bearish positioning in the S&P is highest since 2007 while bullish bets on NDX are near last year’s highs. Meanwhile, the steamrolling of the bears continues with S&P 500 is just 0.2% short of a 20% gain from its October low in the previous trading session; the Nasdaq 100 is already firmly in a bull market, as traders anticipate a pause in the Federal Reserve’s rate hiking cycle. Expectations that any slowdown in the US would be mild and optimism about developments in AI have also fueled the gains. James Athey, investment director at Abrdn, said the advance toward a bull market focused on the small number of important but highly backward-looking economic readings that suggest the economy is doing well. “The broader data set shows much less strength and much more volatility and vulnerability,” he said. “But until jobs crack, I’m sure equities will choose to ignore.” Strategists are split about the path forward for stocks from here. A Morgan Stanley team led by Michael Wilson said the likelihood of Fed rate cuts in 2023 and durable growth playing out simultaneously is low and they expect a tactical correction in equities before a durable recovery and a real bull market. UBS Global Wealth Management strategists also said the risk-reward balance for stocks, especially in the US, remains unfavorable. On the flip side, Evercore ISI strategists raised their S&P 500 target as inflation easing likely signals a Fed pause. Meanwhile, frustration among bears has rarely been greater with more stocks making new 52-week lows in the S&P 500 than 52-week highs in May.  “Breadth is awful,” Athey said, referring to the limited number of stocks contributing to the rally. “There’s very narrow leadership. It doesn’t look too healthy to me.” In Europe, the Stoxx 50 is little changed while FTSE 100 outperforms peers, adding 0.6%, FTSE MIB lags, dropping 0.3%. Consumer products, tech and travel are the worst-performing sectors. The region continues to lose momentum from being the proxy for China’s reopening boom; do investors buy the dip with China looking to add stimulus? PMIs continue to slow and are at 3-month lows. Value is leading, Momentum is lagging; Defensives over Cyclicals. UKX +0.5%, SX5E -0.0%, SXXP +0.1%, DAX +0.0%. Here are some of the most notable European moves: Energy stocks were among the strongest gainers in Europe Monday as crude advanced following Saudi Arabia’s pledge to make an extra 1 million barrel-a-day supply cut in July, taking its production to the lowest level for several years. Shell rises as much as 1.6%. Shares of European telecom operators rise across the board, rebounding from a selloff on Friday when Bloomberg News reported that Amazon is planning to provide low-cost mobile phone service to Prime members in the US. Deutsche Telekom and Vodafone gain respectively as much as 3.5% and 3.4%. UBS shares gain 1.3% on Monday after the banking giant announced it expects to complete its acquisition of Credit Suisse as early as June 12. ZKB sees this as a positive development, initiating what it sees as a “protracted integration process.” Credit Suisse rises as much as 2.3%. Asos shares jump as much as 14%, the most since Jan. 12, after the Sunday Times reported that the online fast fashion retailer received a takeover approach from Turkish online retailer Trendyol in December. Indivior shares surge as much as 13%, to highest in 15 weeks, after the drugmaker announces it has reached an agreement to resolve antitrust claims brought by the Attorneys General of 41 states and the District of Columbia. Red flags that pricey luxury shares have hit a peak are piling up as conviction on the China reopening trade takes a hit. LVMH shares fall as much as 1.2% Viaplay shares fall as much as 59% to a record low after the Nordic media firm slashed its 2023 guidance, scrapped 2025 targets and said CEO Anders Jensen stepped down with immediate effect. Bollore shares fall as much as 3.7%, after Kepler Cheuvreux cut its recommendation on the French conglomerate to hold from buy, noting the stock’s recent outperformance and the simplified offer. Earlier in the session, Asian stocks were mostly positive amid momentum from Friday's post-NFP gains on Wall Street and as participants digested stronger Chinese Caixin Services and Composite PMI data. Hang Seng and Shanghai Comp. were kept afloat following the encouraging Caixin PMIs but with gains capped amid US-China frictions and after China’s Cabinet noted that the foundation for the economic recovery is not solid, while property names were also pressured despite reports that China is mulling a support package for the property sector and bolster the economy. Australia's ASX 200 was led higher by gains across nearly all sectors with early tailwinds in energy names following Saudi Arabia’s additional 1mln bpd output cut, while the RBA is seen to keep rates unchanged at tomorrow’s meeting. The Nikkei 225 climbed above 32,000 for the first time since 1990 with exporters propelled by a weaker currency. Key stock gauges in India ended with gains mirroring a board-based rally across Asian markets on Monday as investors assess prospects of a pause in rate hikes by the Federal Reserve and easing concerns over a US recession. The S&P BSE Sensex rose 0.4% to 62,787.47 in Mumbai just shy of its all-time closing high levels, while the NSE Nifty 50 Index advanced 0.3% to 18,593.85. Strong automobile sales data triggered buying in auto stocks in India with the Nifty Auto index climbing 1.3%, its best day since May 8. In FX, the Bloomberg Dollar Spot Index gained as much as 0.3%, taking gains into a second day, after last week’s jobs data added to the market’s view that the Fed will raise rates by 25 basis points next month. CAD and EUR are the strongest performers in G-10 FX, with the Canadian currency receiving some support as oil prices advance; SEK and GBP underperforms. BRL (1.1%), COP (1.1%) lead gains in EMFX, TRY (-1.1%) lags. In rates, Treasuries were cheaper across the curve, following bigger losses in core European rates with S&P 500 futures steady near Friday’s highs.  The two-year Treasury yield rises 4 basis points to 4.54%, rising toward a 2-1/2-month high of 4.64% touched just over a week ago. Yields higher by 4bp-6bp on the day with 2s5s30s fly wider by 2bp as belly underperforms; 10-year yields around 3.74% with bunds and gilts cheaper by 2bp and 1.5bp in the sector. Traders are pricing in a near 90% possibility that the Fed will hike rates to 5.5% in July; they see just the prospects of a June rise at around 30%. Elsewhere, gilts bear-flatten, Bunds bear-steepen. Peripheral spreads are mixed to Germany; Italy widens, Spain widens and Portugal tightens. In commodities, Crude oil futures remain higher by about 2% after a 4.6% advance sparked by Saudi Arabia’s output-cut pledge at weekend’s OPEC+ meeting. Spot gold falls roughly $6 to trade near $1,942/oz. US session includes factory orders data and ISM services gauge and Durable Goods/Cap Goods, while Fed speakers are in quiet period ahead of June 13-14 FOMC meeting.   Market Snapshot S&P 500 futures little changed at 4,289.00 MXAP up 0.6% to 163.41 MXAPJ up 0.2% to 514.82 Nikkei up 2.2% to 32,217.43 Topix up 1.7% to 2,219.79 Hang Seng Index up 0.8% to 19,108.50 Shanghai Composite little changed at 3,232.44 Sensex up 0.5% to 62,885.07 Australia S&P/ASX 200 up 1.0% to 7,216.27 Kospi up 0.5% to 2,615.41 STOXX Europe 600 up 0.1% to 462.66 German 10Y yield little changed at 2.36% Euro down 0.2% to $1.0689 Brent Futures up 2.5% to $78.06/bbl Gold spot down 0.3% to $1,941.52 U.S. Dollar Index up 0.24% to 104.26 Top Overnight News 1) Inflation is pushing Japan into a new era that could lift equities by spurring more households to move savings out of low-yielding bank deposits, the head of the country’s stock exchange operator has said. Hiromi Yamaji, president of the JPX group that controls the Tokyo and Osaka exchanges, said he expected many Japanese to stop sitting on so much cash — the country’s households have amassed ¥1 quadrillion ($7tn) in bank savings — and look to stock markets for better returns in response to rising living costs. FT 2) China’s defense minister attacked the US policy in the Pacific, accusing the Pentagon of stoking confrontation (and a Chinese navy ship sailed within 140 meters of a US Navy guided missile destroyer). Worth noting China will soon account for less than 50% of US imports from low-cost countries in Asia as Western firms shift supply chains out of the mainland.  London Telegraph / FT 3) China’s Caixin services PMI for May was strong, coming in at 57.1 (up from 56.4 in April and ahead of the Street’s 55.2 forecast). Also, Indonesia’s CPI for May undershot the Street, coming in at +2.66% (down from 2.83% in April and below the Street’s 2.81% forecast). RTRS 4) Ukrainian President Volodymyr Zelensky said he was now ready to launch a long-awaited counteroffensive but tempered a forecast of success with a warning: It could take some time and come at a heavy cost. “We strongly believe that we will succeed,” Zelensky said in an interview in this southern port city as his country’s military girded for what could be one of the war’s most consequential phases as it aims to retake territory occupied by Russia. WSJ 5) Banks in the US could see their capital requirements jump as much as 20% under new rules being formulated at the Fed (the rules would apply to institutions with assets >$100B, and fee-based activities, such as wealth mgmt. or interchange revenue, will be punished under the new framework). Also, Banks in the US are preparing to sell commercial property loans at a discount even when borrowers are current on their payments as firms rush to reduce their exposure to this segment of the market. WSJ / FT 6) With a debt ceiling deal freshly signed into law Saturday by President Joe Biden, the US Treasury is about to unleash a tsunami of new bonds to quickly refill its coffers. This will be yet another drain on dwindling liquidity as bank deposits are raided to pay for it — and Wall Street is warning that markets aren’t ready. BBG 7) Yesterday’s OPEC+ meeting was moderately bullish, on net, with three main developments. First, Saudi Arabia pledged to deliver an additional 1mb/d unilateral “extendible” output cut in July (bullish). Second, the voluntary cuts from the 9 OPEC+ countries are scheduled to extend until December 2024, from December 2023 previously (somewhat bullish). Third, output baselines will be redistributed in 2024 from countries struggling to reach their targets to those with ample spare capacity (somewhat bearish output effect, but bullish cohesion). GIR 8) Hedge funds accelerated selling in US Energy amid price declines last week. Last week’s notional net selling in US Energy was the largest in 10 weeks and ranks in the 97th percentile vs. the past five years. Info Tech was the most notionally net bought global sector on the Prime book for the 4th straight week. Last week’s net buying in Info Tech was the largest in 5+ months and ranks in the 92nd percentile vs. the past five years. GS PB 9) AMZN wireless story met with skepticism as firms deny involvement (Amazon, T-Mobile, and Verizon all said nothing is in the works) and analysts suggest economics/logistics don’t make sense. Barron's 10) More bank insiders are buying shares in their own companies, a vote of confidence in the industry after a crisis sparked by the collapse of four regional lenders earlier this year. The number of buyers has already jumped to 778 in the second quarter through May 26 from 524 in the first three months of the year, according to research firm VerityData, which said the surge is being driven by small and midsize banks. More purchasers stepped up even as share prices sank to multiyear lows in early May. BBG A more detailed look at global markets courtesy of Newsquawk APAC stocks were mostly positive amid momentum from Friday's post-NFP gains on Wall Street and as participants digested stronger Chinese Caixin Services and Composite PMI data. ASX 200 was led higher by gains across nearly all sectors with early tailwinds in energy names following Saudi Arabia’s additional 1mln bpd output cut, while the RBA is seen to keep rates unchanged at tomorrow’s meeting. Nikkei 225 climbed above 32,000 for the first time since 1990 with exporters propelled by a weaker currency. Hang Seng and Shanghai Comp. were kept afloat following the encouraging Caixin PMIs but with gains capped amid US-China frictions and after China’s Cabinet noted that the foundation for the economic recovery is not solid, while property names were also pressured despite reports that China is mulling a support package for the property sector and bolster the economy. Top Asian News on Friday, while the meeting was said to be candid, constructive and part of ongoing efforts to maintain open lines of communication, according to the Treasury. China is soon to account for less than half of US low-cost imports from Asia in 2023 for the first time in over a decade, according to an annual reshoring index from Kearney cited by the FT. Wuhan Commerce Bureau said initial talks have started with Disney (DIS) for the US firm to start a project in the city, according to Reuters. European equities trade flat with not much in the way of weekend newsflow to guide prices following Friday’s solid session for the region, whilst the FTSE 100 narrowly outperforms. Equity sectors are a mixed bag with Telecoms top of the leaderboard, followed closely by Energy and Real Estate, while Tech, Travel & Leisure, and Consumer Products & Services reside at the bottom. US equity futures are flat following Friday’s session of gains (ES -0.1%, NQ -0.2%, RTY +0.1%) Top European News BoE is looking to broaden reform of the deposit guarantee scheme after the collapse of SVB's UK arm highlighted the weakness of the current regime, according to FT. ECB's Vujcic said Eurozone inflation risks are tilted to the upside; wage pressures are "still very lively", according to Bloomberg. Fitch affirmed the Bank of England at AA-; Outlook Negative. S&P said France's "AA/A-1+" ratings affirmed; outlook remains negative; says tighter financial conditions and still-high core inflation will restrain France's economic activity in 2023 and 2024 FX DXY maintains a bullish momentum above 104.00 in the wake of Friday’s strong US payrolls gain which resulted in a hawkish tilt in Fed pricing. USD/JPY rebounds sharply towards 140.50 from just shy of 140.00 overnight amidst higher Treasury yields and wider spreads to JGBs after slowdowns in Japan’s services and composite PMIs. Euro extends declines against its US counterparts and against the backdrop of mostly sub-prelim or expected Eurozone services and composite PMIs. Aussie straddles 0.6600 on the eve of the RBA that could be a very close call. Yuan weakens irrespective of a firmer than forecast Chinese Caixin services PMI that boosted the composite number along with the manufacturing PMI, as China-US/Canadian/NATO tensions overshadowed the encouraging surveys. PBoC set USD/CNY mid-point at 7.0904 vs exp. 7.0918 (prev. 7.0939) Fixed Income Bunds are off worst levels having pared some losses from 134.81 amidst more mixed Eurozone macro releases including soft PMIs, PPI, Sentix readings vs a healthier-than-expected German trade balance. Gilts have slipped to a new intraday base, albeit marginal at 96.25 in recent trade and probably in recognition of minor upward revisions to the final services and composite PMIs US Treasuries remain underwater, but the curve is a bit more stable after post-NFP flattening in advance of the final PMIs, services ISM and a speech from Fed’s Mester. Commodities WTI and Brent contracts gapped higher upon the return of futures trading following the weekend OPEC+ deliberations (see below). Spot gold is subdued under USD 1,950/oz as the Dollar index remains firmer on the session – with the yellow metal finding support at its 100 DMA (1,939/oz) earlier. Base are mostly subdued but to varying degrees amid the aforementioned APAC growth concerns, although the complex has trimmed losses. Iron ore continued rising overnight. OPEC+ Meeting Saudi Arabia announced it is to cut an additional 1mln bpd of oil output for July in which its output will drop to 9mln bpd and all other OPEC+ producers agreed to extend earlier cuts through to the end of 2024. OPEC+ agreed to a new output target of 40.4mln bpd from 2024 with the output target for 2024 lowered by 1.4mln bpd and said Russia, Angola and Nigeria are to see significant production cuts in 2024, while the next OPEC+ meeting is to take place on November 26th, according to Reuters. Saudi’s Energy Minister said they are not targeting prices and that the extra voluntary cut is a precautionary measure, while they will keep the markets in suspense on whether the additional voluntary cut for July will be extended and will review the extra voluntary cuts every month. Saudi’s Energy Minister said Russia is delivering on its oil output commitments, while the UAE’s Energy Minister said there are some discrepancies in Russian production numbers and they don’t want politics involved in how they look at Russian production numbers, according to Reuters. Russian Deputy PM Novak said OPEC+ agrees total oil output cuts of 3.66mln bpd and that the oil market is more or less balanced, while he added they are seeing oil demand rising and they have the possibility of tweaking decisions. Furthermore, he said they will take decisions so that the oil market is stable and that Russia is fulfilling its obligations in full, according to Reuters. White House officials said they will continue to work with all fuel producers to ensure energy markets support US economic growth, according to Reuters. Tyler Durden Mon, 06/05/2023 - 08:19.....»»

 S&P 500 rejected further upside, and is ready for correction within this upswing – the correction characteristics would determine the ... Read more  S&P 500 rejected further upside, and is ready for correction within this upswing – the correction characteristics would determine the path forward as hearing Bullard talk two more rate hikes wasn‘t something the market had discounted. 2y yield rose to 5.40% , and 10y is above the midpoint of its recent range at 3.72% – yet stocks are holding up so far, and especially tech, Big Tech is ignoring the glaring disconnect to TLT – these two usually go hand in hand, but GOOGL, MSFT and AAPL with NVDA are still holding up. Talking the last two, there is some short-term technical vulnerability (as in suspect series of latest daily candles) showing up, and I wonder how much more nosebleed for NVDA can come following its earnings tomorrow after the close. Today is shaping up on a risk-off note, reflecting the poor European manufacturing data that has already pushed many real assets towards my corrective targets. Meanwhile, the long-dated Treasuries outlook is going to change in the following weeks – the run higher will be though more muted than otherwise would have been thanks to the Fed no longer being the buyer, and Treasury General Account replenisment needs following debt ceiling resolution, which would work to suck some liquidity off the market place. Recession is to start in Q3, and the consumer is getting increasingly into hot water. With household debt over $17T, credit card debt not really retreating (revolving credit up 17% in Mar annualized), the stress is showing in XRT and recent earnings calls from WMT, TGT… leaving AMZN not immune either, methinks. Don‘t forget that the LEIs I mention so often, have been declining for 13 months in a row, and show no sign of turning. Fed isn‘t happy about the GDP, real estate or job market status as relates its larger inflation ight. Stock market sellers are to retake initiative once this rally runs its course. Keep enjoying the lively Twitter feed via keeping my tab open at all times (notifications on aren’t enough) – combine with Telegram that always delivers my extra intraday calls (head off to Twitter to talk to me there), but getting the key daily analytics right into your mailbox is the bedrock. So, make sure you‘re signed up for the free newsletter and make use of both Twitter and Telegram – benefit and find out why I’m the most blocked market analyst and trader on Twitter. Let‘s move right into the charts (all courtesy of www.stockcharts.com) – today‘s full scale article contains 4 of them. S&P 500 and Nasdaq Outlook 4,154 is the first stop, and the fact we‘re reaching it with barely a move higher in USD but accompanied by significant real asset declines, means to me it would be worthwhile to not rush and instead assess the degree of buyers‘ weakness. 4,136 followed by 4,115 might not be that far, considering this is happening without any scary debt ceiling headlines. Gold, Silver and Miners Precious metals have still ways to go, and my gold $1,930 and other silver and copper targets loom. USD at 103.30 would prove cheap, and its upswing is ready to continue, with the debt ceiling resolution probably not signifying selloff, but relief over “default averted”. Thank you for having read today‘s free analysis, which is a small part of my site‘s daily premium Monica’s Trading Signals covering all the markets you’re used to (stocks, bonds, gold, silver, miners, oil, copper, cryptos), and of the daily premium Monica’s Stock Signals presenting stocks and bonds only. Both publications feature real-time trade calls and intraday updates. While at my site, you can subscribe to the free Monica‘s Insider Club for instant publishing notifications and other content useful for making your own trade moves. Turn notifications on, and have my Twitter profile (tweets only) opened in a fresh tab so as not to miss a thing – such as extra intraday opportunities. Thanks for all your support that makes this great ride possible! Thank you, Monica Kingsley Stock Trading Signals Gold Trading Signals Oil Trading Signals Copper Trading Signals Bitcoin Trading Signals www.monicakingsley.co mk@monicakingsley.co All essays, research and information represent analyses and opinions of Monica Kingsley that are based on available and latest data. Despite careful research and best efforts, it may prove wrong and be subject to change with or without notice. Monica Kingsley does not guarantee the accuracy or thoroughness of the data or information reported. Her content serves educational purposes and should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks and options are financial instruments not suitable for every investor. Please be advised that you invest at your own risk. Monica Kingsley is not a Registered Securities Advisor. By reading her writings, you agree that she will not be held responsible or liable for any decisions you make. Investing, trading and speculating in financial markets may involve high risk of loss. Monica Kingsley may have a short or long position in any securities, including those mentioned in her writings, and may make additional purchases and/or sales of those securities without notice......»»

In today's edition: Why Apple's upcoming "Reality" headset risks being "one of the greatest tech flops of all time," how BookTok helped book sales, and more. We made it to Friday again. I'm Lara O'Reilly, a senior correspondent on the advertising team in London, filling in for Diamond Naga Siu.You catch me at the end of a busy week for the ad business. It's the US TV upfronts, the annual dog-and-pony show where networks like NBCUniversal and Warner Bros. Discovery hold glitzy, celeb-packed events to present their upcoming lineup of programming and create a short window to lock in billions of dollars of ad commitments.What's that got to do with tech? The big TV networks are increasingly touting their streaming services and data prowess. And tech giants like Netflix and YouTube are now crashing the party, too. (Though Netflix appeared to wimp out from its in-person presentation, seemingly worried about interruptions from striking writers.)Let's jump into today's biggest tech news.If this was forwarded to you, sign up here. Download Insider's app here.Google CEO Sundar Pichai (left) and Microsoft CEO Satya Nadella (right)Getty Images1. AI startup cloud deals by Microsoft, Google, and Amazon are ringing "accounting alarm bells" across Silicon Valley over revenue "round-tripping." As Big Tech firms invest in AI startups in exchange for commitments to use their cloud services, some investors question whether those arrangements are artificially inflating cloud revenue growth.Quid-pro-quo arrangements are becoming more common in the frenzied generative AI space: Google and Anthropic; Microsoft and OpenAI; Amazon Web Services and Hugging Face.Investors and analysts say these transactions can juice revenue growth through a practice known as "round tripping," where money goes out via the startup investment and comes right back in the form of cloud spending. Accounting rules have gray areas, making it hard to find out how exactly the revenue is recognized.Read the full story.In other news:Apple CEO Tim CookJerod Harris/Getty Images Entertainment2. A former Apple marketing executive predicts the company's upcoming "Reality" headset risks being "one of the greatest tech flops of all time." Apple is expected to debut its "mixed-reality headset" next month. Michael Gartenberg told Insider that if the rumors and leaks around the headset "are correct," it "would be a very un-Apple product."3. How the BookTok phenomenon helped send book sales to an all-time high and reignite a love for reading. Hundreds of authors are benefiting from the success of TikTok and its #BookTok, which has fetched more than 138 billion views. From authors to stores, the book world is turning to TikTok to drive sales and build community.4. Gene Munster thinks more tech layoffs are coming. In an interview with Insider, Munster, managing partner at Deepwater Asset Management, said bosses are preparing to tighten further on the "laptop generation." Find out which tech giants he thinks are top candidates to make deeper cuts to their workforces.5. Banks are eager to be part of the generative AI gold rush. But while Wall Street's biggest banks all have dedicated AI leaders, no two banks have the same org structure. Meet 12 execs leading the AI strategy at top US banks like Goldman Sachs, JPMorgan, and Morgan Stanley.6. A new lawsuit alleges that Elon Musk told an investor during a 4 a.m. conversation that Twitter would only pay rent for its offices "over his dead body." Over the last few months, Twitter's landlords in London, New York City, and San Francisco have sued the company over claims that it was failing to pay rent. This lawsuit said Musk's attorney justified not paying rent and described San Francisco as a "shithole." 7. Google is pressing ahead with its plan to kill off third-party tracking cookies in its Chrome browser. But some advertising and privacy groups aren't convinced the cookie alternatives Google is proposing are ready for public consumption yet. Read more on why some industry insiders are still skeptical about Google's Privacy Sandbox initiative.8.  Elon Musk wanted to build a bathroom next to his office at Twitter so he didn't have to wake up his bodyguards when he needed to pee in the night, lawsuit says. Quite considerate, really! But of course this is Twitter, and Musk, so all may not be what it seems on the surface — it forms part of the earlier-mentioned suit, which accuses Musk and X.Corp, Twitter's parent company, of violating 14 counts, including fraud, breach of contract, and labor-rights laws.Odds and ends:Yursi Abu Barak is a senior first officer for Emirates airlines in Dubai.Emirates9.  The official ChatGPT app for iPhones is now available in the US. The ChatGPT app can answer voice queries and sync search histories across devices. Read on to find out more about what you can use the AI app for.10. Is a long-haul flight in your plans this summer?A former Singapore Air Force pilot who now flies one of the longest commercial flights in the world offers his top tips for keeping comfortable. Make sure to pack your noise-canceling headphones. Curated by Lara O'Reilly in London. (Feedback or tips? Email loreilly@insider.com or tweet @larakiara.) Edited by Hallam Bullock (tweet @hallam_bullock) in London.Read the original article on Business Insider.....»»

Artificial Intelligence (AI) has become this year’s favorite buzzword, particularly after the successful launch of OpenAI’s ChatGPT. Now, investors are pouring tens of billions of dollars into startups specializing in generative AI — and new reports suggest that some of that funding comes at the expense of crypto companies. AI Investment Surges to Record High Levels The […] Artificial Intelligence (AI) has become this year’s favorite buzzword, particularly after the successful launch of OpenAI’s ChatGPT. Now, investors are pouring tens of billions of dollars into startups specializing in generative AI — and new reports suggest that some of that funding comes at the expense of crypto companies. AI Investment Surges to Record High Levels The launch of ChatGPT, an artificial intelligence chatbot developed by OpenAI, in November last year led to the start of an AI gold rush, particularly after it became the fastest-growing app in history. Several other tech giants, including Google and Alibaba, have raced to release their versions. The rapid advancement of AI technologies captured the attention of VC firms globally. Investors from Shanghai to Silicon Valley started pouring tens of billions of dollars into AI startups in a bid to become involved in this booming market. In the first quarter of this year, the industry raised approximately $18 billion in funding. Among the leaders are noted companies such as OpenAI, SnaboxAQ, Alternyx, Adept AI, and Anthropic, according to data accumulated by MPost. More specifically, OpenAI, the company behind ChatGPT, received $10 billion in a corporate round led by Microsoft. The company behind the viral chatbot Chat GPT has recently rolled out its latest AI model, GPT-4, which can process image and text inputs. Furthermore, Palo Alto-based SandboxAQ raised $500 million in a venture round from prominent investors such as Time Ventures, Breyer Capital, T. Rowe Price, and Eric Schmidt. Alteryx also raised $450 million in a post-IPO debt round. According to leading data and analytics firm GlobalData, 3,198 AI startups received $52.1 billion in funding across 3,396 VC deals in 2022. The company noted that while AI funding initially saw a slight drop last year, there was a rebound in both VC funding deals volume and value in Q4 2022. AI Funding Comes at the Expense of Crypto Companies The recent surge in AI funding has negatively impacted crypto funding. According to Evan Cheng, founder of Mysten Labs, AI startups are now receiving crypto’s share of venture capital money, the crypto veteran said during a Word on the Block interview with Forkast News. Cheng explained that early-stage crypto companies can still raise funds, though their valuations have been hurt due to the recent crypto meltdown. However, late-stage funding for startups has become harder, with only exceptional companies receiving support. “But once you get to the late Series A and Series B stage, the growth capital is hard to come by. It has to be an exceptional startup to get funded, unless you’re in the bubble of the excitement around generative AI right now, it’s going to be a lot harder for any startup to raise money.” Despite the difficulty, Cheng said the situation presents an opportunity for developers to create an open and transparent infrastructure. He said that people have built products that serve tens of thousands, hundreds of thousands, or millions of customers before coming to the space and building products. “They are going to be younger, smaller, nimble, more experimental teams out there trying out brand new ideas, and a lot of them will fail. Some of them will be successful.” AI Is the Most Revolutionary Technology in Decades Since the recent AI boom, several experts have claimed that AI is the next big technological revolution that could bring significant changes worldwide. Bill Gates claimed that AI is the most revolutionary technology he has seen in decades, on par with computers, cell phones, and the internet. Gates, whose tech company Microsoft is the biggest investor in OpenAI, has said that AI technologies could improve lives. In a March blog post, the billionaire said almost all businesses and industries would be impacted by the rise of AI. “The development of AI is as fundamental as the creation of the microprocessor, the personal computer, the Internet, and the mobile phone. Entire industries will reorient around it. Businesses will distinguish themselves by how well they use it.” Gates added that AI could help scientists develop vaccines, teach students math, and replace jobs in task-oriented fields like sales and accounting. “The rise of AI will free people up to do things that software never will—teaching, caring for patients, and supporting the elderly, for example,” he wrote. Cathie Wood, CEO and co-founder of Ark Investment, has also echoed the same point of view. In the firm’s “Big Ideas 2023” report, she estimated that if AI vendors can realize just 10% of the value created by their products, AI software could produce $14 trillion in revenue by 2030. This article originally appeared on The Tokenist Sponsored: Find a Qualified Financial Advisor Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now......»»

Friday's top analyst upgrades and downgrades included Alphabet, Chegg, Citizens Financial, Comstock Resources, Coterra Energy, CubeSmart, Emerson Electric, Fastly, General Electric, Las Vega Sands, Medical Properties Trust, Microsoft, Nio, Novavax, Raytheon Technologies, Sea, Tesla, Tripadvisor, Ventas, Welltower and WestRock. The futures traded lower after a dreadful Thursday that saw all the major indexes finish the day lower. The Dow Jones industrial average posted its first back-to-back losses in a month. Big-time earnings disappointments from AT&T and American Express got the selling started, and some very cautious commentary from big tech helped keep it going. While many strategists continue to predict the Federal Reserve will pivot and even lower rates this year, the reality is that with inflation remaining stubbornly higher than expected, not only will rates go up another 25 basis points in early May, some now feel there could be two rate hikes after that. Treasury yields were lower across the curve Thursday, as buyers returned as the stock market rolled over. The rush to the safety of government securities came as the yield on the two-year note had jumped a stunning 50 basis points in less than a month. The short paper closed Thursday at 4.15%. With the 10-year note closing at 3.55%, the inversion between the two remained at 60 basis points. Brent and West Texas Intermediate crude were down again, as the latter fell back below the $80 level to close the day at $77.85. While oil has backed up from the big move higher, which was a result of OPEC announcing a big production cut, analysts cite the summer driving season and increased Chinese demand as support for higher prices to come. Natural gas closed lower on the day at $2.20. Gold closed flat but back over the $2,000 level at $2003 as worried investors hurry back to the bullion. Some feel that gold can take a run at new all-time highs, especially if there is any big-time weakness in the equity markets. Bitcoin closed lower again on Thursday, down 1.85% at $28,277. 24/7 Wall St. reviews dozens of analyst research reports each day of the week with a goal of finding fresh ideas for investors and traders alike. Some of these daily analyst calls cover stocks to buy. Other calls cover stocks to sell or avoid. Remember that no single analyst call should ever be used as a basis to buy or sell a stock. Consensus analyst target data is from Refinitiv. These are the top analyst upgrades, downgrades and initiations seen on Friday, April 21, 2023. Alphabet Inc. (NASDAQ: GOOGL): Bernstein reiterated a Buy rating on the search giant and trimmed its $130 target price to $125. The consensus target is $124.64. Thursday’s closing share price was $105.29. Capri Holdings Ltd. (NYSE: CPRI): Raymond James upgraded the stock from Outperform to Strong Buy with a $60 target price. The consensus target is $60.03. The stock closed on Thursday at $45.69. Chegg Inc. (NYSE: CHGG): Craig Hallum raised its Hold rating to Buy and its $20 target price to $25. The consensus target is $20.38. The stock closed over 5% on Thursday at $18.60 after the upgrade. ALSO READ: 5 Analyst Favorite ‘Strong Buy’ Value Stocks With Dependable Dividends wallst_recirc_link_tracking_init( "4532700616442a06662440", "text" ); Citizens Financial Group Inc. (NYSE: CFG): The BofA Securities downgrade to Neutral from Buy included a target price cut to $33 from $37. The consensus target is $38.53. The stock closed almost 5% lower on Thursday at $29.06 due to the downgrade. Comstock Resources Inc. (NYSE: CRK): As Citigroup upgraded the stock to Neutral from Sell, its $10 target price rose to $12. The consensus target is $14.59. The shares closed on Thursday at $11.08. Sponsored: Find a Qualified Financial Advisor Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you’re ready to be matched with local advisors that can help you achieve your financial goals, get started now......»»

Friday's top analyst upgrades and downgrades included Alphabet, Chegg, Citizens Financial, Comstock Resources, Coterra Energy, CubeSmart, Emerson Electric, Fastly, General Electric, Las Vega Sands, Medical Properties Trust, Microsoft, Nio, Novavax, Raytheon Technologies, Sea, Tesla, Tripadvisor, Ventas, Welltower and WestRock. The futures traded lower after a dreadful Thursday that saw all the major indexes finish the day lower. The Dow Jones industrial average posted its first back-to-back losses in a month. Big-time earnings disappointments from AT&T and American Express got the selling started, and some very cautious commentary from big tech helped keep it going. While many strategists continue to predict the Federal Reserve will pivot and even lower rates this year, the reality is that with inflation remaining stubbornly higher than expected, not only will rates go up another 25 basis points in early May, some now feel there could be two rate hikes after that. Treasury yields were lower across the curve Thursday, as buyers returned as the stock market rolled over. The rush to the safety of government securities came as the yield on the two-year note had jumped a stunning 50 basis points in less than a month. The short paper closed Thursday at 4.15%. With the 10-year note closing at 3.55%, the inversion between the two remained at 60 basis points. Brent and West Texas Intermediate crude were down again, as the latter fell back below the $80 level to close the day at $77.85. While oil has backed up from the big move higher, which was a result of OPEC announcing a big production cut, analysts cite the summer driving season and increased Chinese demand as support for higher prices to come. Natural gas closed lower on the day at $2.20. Gold closed flat but back over the $2,000 level at $2003 as worried investors hurry back to the bullion. Some feel that gold can take a run at new all-time highs, especially if there is any big-time weakness in the equity markets. Bitcoin closed lower again on Thursday, down 1.85% at $28,277. 24/7 Wall St. reviews dozens of analyst research reports each day of the week with a goal of finding fresh ideas for investors and traders alike. Some of these daily analyst calls cover stocks to buy. Other calls cover stocks to sell or avoid. Remember that no single analyst call should ever be used as a basis to buy or sell a stock. Consensus analyst target data is from Refinitiv. These are the top analyst upgrades, downgrades and initiations seen on Friday, April 21, 2023. Alphabet Inc. (NASDAQ: GOOGL): Bernstein reiterated a Buy rating on the search giant and trimmed its $130 target price to $125. The consensus target is $124.64. Thursday’s closing share price was $105.29. Capri Holdings Ltd. (NYSE: CPRI): Raymond James upgraded the stock from Outperform to Strong Buy with a $60 target price. The consensus target is $60.03. The stock closed on Thursday at $45.69. Chegg Inc. (NYSE: CHGG): Craig Hallum raised its Hold rating to Buy and its $20 target price to $25. The consensus target is $20.38. The stock closed over 5% on Thursday at $18.60 after the upgrade. 24/7 Wall St. 5 Analyst Favorite ‘Strong Buy’ Value Stocks With Dependable Dividends wallst_recirc_link_tracking_init( "1948163364428847c06ec", "graphic" ); Citizens Financial Group Inc. (NYSE: CFG): The BofA Securities downgrade to Neutral from Buy included a target price cut to $33 from $37. The consensus target is $38.53. The stock closed almost 5% lower on Thursday at $29.06 due to the downgrade. Comstock Resources Inc. (NYSE: CRK): As Citigroup upgraded the stock to Neutral from Sell, its $10 target price rose to $12. The consensus target is $14.59. The shares closed on Thursday at $11.08. Coterra Energy Inc. (NASDAQ: CTRA): Citigroup raised its Sell rating to Neutral and its $22 price target to $25. The consensus target is $30.45. Thursday’s close was at $25.56. CubeSmart (NYSE: CUBE): BMO Capital Markets downgraded the stock to Market Perform from Outperform. It also trimmed its $54 target price to $52, just below the $52.22 consensus target. Thursday’s close was at $45.65. Emerson Electric Co. (NYSE: EMR): Wells Fargo’s upgrade was to Overweight from Equal Weight, and its $90 target price increased to $105. The consensus target is $101.92. Shares closed on Thursday at $85.87. Fastly Inc. (NASDAQ: FSLY): when Morgan Stanley upgraded the shares to Equal Weight from Underweight, its $12 target price rose to $18. The consensus target is $20.38. Thursday’s close was at $16.32. F5 Inc. (NASDAQ: FFIV): the Overweight rating at Barclays has dropped to Equal Weight. The analyst also dropped the $166 target price to $140, well below the $164.83 consensus target. The shares closed on Thursday at $134.16. General Electric Co. (NYSE: GE): The Jefferies upgrade was from Hold to Buy with a $120 target price. The consensus target is $100.89. Thursday’s final trade was for $99.76 a share. Las Vega Sands Corp. (NYSE: LVS): Stifel reiterated a Buy rating and raised its $66 target price to $73. Jefferies also kept a Buy rating, and its $66 price target is now $69. Barclays reiterated an Overweight rating and lifted its target price to $69 from $64. The consensus price target is $66.21. The shares closed almost 4% higher on Thursday at $61.53 after strong quarterly results. Medical Properties Trust Inc. (NYSE: MPW): Wells Fargo initiated coverage with an Equal Weight rating and a $9 target price. The consensus target is $12.42. The stock closed on Thursday at $8.23. Microsoft Corp. (NASDAQ: MSFT): KeyBanc Capital Markets reiterated an Overweight rating and raised its $316 target price to $335. That is well above the $300.11 consensus target and Thursday’s closing print of $286.11. Sponsored: Tips for Investing A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now. Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit......»»

Artificial intelligence has become one of the most talked about technologies over the past few years. Many see AI with ... Read more Artificial intelligence has become one of the most talked about technologies over the past few years. Many see AI with large dollar signs in their eyes. However, every new technology has a lag between invention and commodification and just as every new technology has the risk that it won’t pan out. For investors, this poses a challenge. While the risks are real so, too, are the opportunities. So, for a technology that is still effective in the drumroll phase, how can you invest? Here are a few ideas. For more personalized investment advice, consider working with a financial advisor. 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 Walter Schloss Series in PDF Get the entire 10-part series on Walter Schloss 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); Q1 2023 hedge fund letters, conferences and more Artificial Intelligence Industry Artificial intelligence has not yet been truly monetized. Now, there’s a lot to unpack in that statement. For starters, tech companies have been integrating AI into their software for a generation and making tons of money off it. From autocorrect to playlists to the monsters in World of Warcraft, companies have been profiting off software decision-making for a long time. The new AI, however, is a different thing entirely. The news-making artificial intelligence has come in the form of predictive algorithms like ChatGPT’s chatbot software and DALL-E’s image generator. These tools remain experimental. They are inventions and innovations but, at the time of writing, not yet products. Part of that is because engineers still aren’t quite sure what they are yet. Advocates say that current AI software represents a fundamentally new tool, one that will change the way we interact with information and each other. Critics argue that they are just high-volume autocorrects, machines best suited for reorganizing existing work at best and stealing it at worst, but incapable of creating new value. In both cases, monetization is a challenge. If tools like ChatGPT represent a true leap forward, then companies will need some time to figure out their commercial use. If, instead, they fundamentally rely on copying and pasting the work of others, then they may be more novelty than revolution. However, that doesn’t mean that there aren’t opportunities to invest and profit yourself. Here are some of the best ways you can benefit financially from the early stages of AI development. Invest In Individual Stocks Like Google and Microsoft Alphabet (NASDAQ:GOOG), or Google, and Microsoft (NASDAQ:MSFT), which kept its maiden name, are some of the earliest companies racing for commercial AI applications. In both cases, their goal is to search. Both companies want to turn their search engines into a conversational source of inquiry, analysis and advice. Instead of searching for information by a string of keywords, you would just ask the search engine questions and it would pop out the answer based on what’s out there on the web. In this way, AI’s best and worst qualities align with the business model of search. The goal is to paraphrase articles like this onto Google/Microsoft sites, so those companies can collect the ad revenue without having to pay for the work. Google’s Bard AI remains experimental and, true to the product’s core design, Bing’s AI search remains underwhelming. However, both companies hope to make this a major product at some point in the future. This is a theme that applies broadly: Invest in companies that are will use AI in their products. As currently designed, AI will most likely be a backend feature in an enormous range of technology products. So, for example, while your phone is the front-end product, meaning the product you directly interact with, AI will become part of the back-end, meaning one of the many moving pieces that make your phone work. Look for companies that can use AI in their products. Invest in them directly, so that you can collect their gains from this new technology. Use Robo-Traders Robo-traders have emerged as a major section of the market and for a good reason. A robo-trader is a company that offers algorithmically managed portfolios. In essence, you invest your money according to a series of goals or conditions that you establish, then the brokerage manages that portfolio based on its own software model. These have shown particularly good results for investors because they tend to seek long-term investments, which tend to outperform short-term and high-volume trading. Artificial intelligence has the potential to improve this further. Investors are already experimenting with AI-built portfolios and investment strategies. This trend will only continue to grow and the companies that build their portfolios with AI from the ground up will stand to benefit significantly. Invest In AI Funds As with all industries, an excellent way to invest in AI is through relevant funds. In fact, there’s something of a gold rush on artificial intelligence ETFs right now. The market is filled with companies that are looking to capitalize on companies that operate in or around this technology. For an investor, this is both an opportunity and a problem. The opportunities are out there, but how do you identify good investments? One good approach is to start by deciding how you want to invest in AI. There are ETFs, for example, such as Global X Robotics & Artificial Intelligence ETF (BOTZ) and ROBO Global Robotics and Automation Index ETF (ROBO), among others that let you invest in this market. These funds invest in stocks and assets that support AI, such as companies that make the chips and hardware that AI companies depend on. Other funds will try to invest directly, buying into companies that are developing AI software itself, while others will invest in the companies that will use AI in their own products. The best place to start with an AI-related fund is to look at how it invests. That will help you figure out if this is something you’re interested in. The Bottom Line Artificial intelligence could very well be the next big boom. However, it can be difficult to determine the right areas that could make strong investments. Both directly and indirectly, AI might present plenty of opportunities that you can profit from. Finding the right one for you will depend on a number of factors including your expectation of risk. Technology Investment Tips Investing in any new technology is a risk. When it pays off, it can pay off big, but there are no guarantees. A financial advisor can help you determine the best investment plan for you when it comes to AI. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now. Finance and technology go hand-in-hand and the industry dedicated to that idea is called fintech. It’s important to fully understand how the industry operates if you’re wanting to invest. The post How to Invest in Artificial Intelligence appeared first on SmartAsset Blog......»»

Nordstrom was founded over a century ago with money from the Klondike Gold Rush. Today, the fourth generation of Nordstroms is running the company. Erik and Pete Nordstrom in 2012.Frank Franklin II/AP Nordstrom was founded in 1901 by Swedish immigrant John W. Nordstrom, who used the money he made in the Alaska gold rush to start the company.  Over a century later, the fourth generation of Nordstroms is running the company: brothers Erik and Peter Nordstrom, who serve as CEO and president, respectively, of the department store chain.  But the family dynasty may be ending: the brothers told The New York Times that their children might not be interested in working their way up the ladder. John W. Nordstrom, a Swedish immigrant who arrived in the US in the late 1800s and headed to Alaska during the Klondike Gold Rush, founded Nordstrom. He made $13,000, which he used to open a shoe store with a friend, Carl Wallin.Darron Cummings/APSource: NordstromBy the 1920s, the Wallin & Nordstrom brand had grown to two locations in Seattle, and John was ready to retire. He and Wallin sold their shares in the business to Nordstrom's sons, Everett and Elmer, with a third son, Lloyd, joining a few years later. A family business was born.A Nordstrom shoe department in 1997.Greg Smith/CORBIS/Corbis via Getty ImagesSource: Nordstrom"The depression hit us in 1929, and for five years, we struggled with the store. Everett and I put in long hours, did janitorial work, trimmed windows and helped with our books," Elmer Nordstrom wrote in a letter to Nordstrom employees in the late 1990s, describing the Great Depression.A Hooverville in Seattle in 1934. "Hoovervilles" were shantytowns of temporary homes during the Great Depression in the US.Getty ImagesSource: Seattle TimesBut Nordstrom hung on. By the early 1960s, it had become the nation's largest independent-shoe-store chain. The brothers began expanding the business by acquiring two local apparel retailers — women's apparel came first, and men's and children's clothing followed a few years later.A Nordstrom store in 1997.Greg Smith/CORBIS/Corbis via Getty ImagesSource: Forbes, NordstromThe third generation of Nordstroms took over in 1968: Everett's son, Bruce; Elmer's sons, James and John; and Lloyd's son-in-law, Jack. This new branch of the family tree took the company public in 1971 and introduced an off-price division, Nordstrom Rack, in 1973.Bruce Nordstrom.Getty ImagesSource: Forbes, NordstromThe Nordstroms spent the next two decades expanding the business, opening stores across the country from Alaska to Virginia. By this time, Everett and Lloyd Nordstrom had died, but Elmer Nordstrom lived to be 88. He was working in his office right up until his death in 1993.A Nordstrom department store in southern California in 1998.Rolando Otero/Los Angeles Times via Getty ImagesSource: Nordstrom, Seattle TimesIn 1995, the third generation of Nordstroms retired as co-chairs of the business, handing the empire over to the next wave, a group of brothers and cousins who had all worked their way up through the ranks.From left: Blake, Peter, Erik, and Jamie Nordstrom in 2007.John Wilcox/MediaNews Group/Boston Herald via Getty ImagesSource: The New York Times, NordstromBut the business was struggling. Sales growth had been stalling for several years and rumors were swirling that the family wasn't getting along with two top executives, John Whitacre, the CEO, and Michael Stein, the CFO, neither of whom were family members. On September 1, 2000, both Whitacre and Stein resigned.A Nordstrom store in Chicago in 2003.Scott Olson/Getty ImagesSource: The New York TimesBlake Nordstrom, who had started working at the company in 1974, took over as president. His father, Bruce, became the chair of Nordstrom's board.Blake Nordstrom in 2010.Tina Fineberg/APSource: The New York TimesBlake's goal was to return Nordstrom to its core value: customer service. He trimmed the fat and got rid of the consultants who had been brought in to turn things around. Soon, Nordstrom began growing once again, according to The New York Times.Vince Talotta/Toronto Star via Getty ImagesSource: The New York TimesThe Times described Blake as "a model Nordstrom": He often wished employees a happy birthday a day early so he could be the first, carried others' luggage, and filled his brother's woodshed if he noticed it running low.Blake and Erik Nordstrom.Getty ImagesSource: The New York TimesIn 2015, Pete and Erik joined Blake as co-presidents of Nordstrom. The company's board said at the time that the brothers had already "supported the business as a team for many years."Blake, Pete, and Erik Nordstrom.John Wilcox/MediaNews Group/Boston Herald via Getty ImagesSource: NordstromIn January 2019, Blake died suddenly at age 58. He had recently been diagnosed with lymphoma, which his doctors had said was treatable. But he started feeling sick while on a trip with his wife and died shortly after returning home.Blake Nordstrom at a Nordstrom Rack in 2018.Vince Talotta/Toronto Star via Getty ImagesSource: The New York Times"He was the best out west. Just a tremendous young man," his father, Bruce, told The Times in 2019. His brother, Erik, said at the time that he would often reflexively think to ask Blake for advice. "Something will come up and I'll have this thought in my head like, 'Oh, Blake's better at that,' or 'That's Blake's strength,'" Erik said.Erik and Blake Nordstrom.Getty ImagesSource: The New York TimesNordstrom had other issues to contend with around the same time: profits had been faltering as online shopping started to edge out traditional retail. Plus, Nordstrom had been spending big to revamp its stores, acquire e-commerce brands like Trunk Club and HauteLook, and build a new Manhattan flagship store that cost a reported $500 million.Jae C. Hong/APSource: The Wall Street Journal, Vogue BusinessBy 2018, Nordstrom's sales had declined every year since 2012. "About the worst thing that could happen is to be known as the generation at Nordstrom that screwed it up," Pete Nordstrom told The Wall Street Journal at the time.Pete Nordstrom in 2012.Frank Franklin II/APSource: The Wall Street JournalThen the pandemic hit, initially shuttering stores nationwide. Nordstrom later permanently closed 20% of its fleet and has since announced it would close down Canadian operations entirely.A shuttered Nordstrom store.JIM WATSON/AFP via Getty ImagesSource: WWD, NordstromThe company's market capitalization has plunged over the past eight years from a peak of $15 billion to around $2.6 billion. In early 2023, multiple reports said the activist investor Ryan Cohen was building a stake in the company, sending the share price soaring.A Nordstrom store.ReutersSource: Markets InsiderMeanwhile, Erik Nordstrom was named the sole CEO of the business in early 2020. "He's the smartest," Bruce had told The Times a few months prior. After Erik's promotion, his older brother, Pete, stayed in the president role and continued overseeing the merchandising side of the business.Erik Nordstrom in 2019.Shannon Stapleton/ReutersSource: The New York Times, The Wall Street JournalBut both Erik and Pete seem to agree that whoever succeeds them at the company will not be a Nordstrom, because they'd need to work their way up over decades just like the generations before them. "I just think it's a different deal for our kids," Pete told The Times. "There's a lot of work to get from here to there."Erik and Pete Nordstrom in 2012.Frank Franklin II/APSource: The New York TimesThese days, Bruce Nordstrom and his sister, Anne Gittinger, are the largest individual shareholders in the family business. Though their respective net worths took a dip in 2020 during the onset of the pandemic, Forbes estimated in April 2022 that Bruce was worth $1 billion.Bruce Nordstrom.Getty ImagesSource: Insider, ForbesRead the original article on Business Insider.....»»

Futures Flat As Attention Turns To Fed Rate Hikes US futures are flat with bond yields reversing an overnight drop, lifted by the belly of the curve; the USD weaker for 8 of the past 9 days, and commodities mostly higher as investors shift their focus back to concerns about inflation and potential further monetary tightening from the recent banking-industry chaos; after all, a bank hasn't failed in at least a few days.  WTI has soared 5.6% this week. S&P 500 contracts were little changed as of 7:45 a.m. ET, after earlier gaining as much as 0.4% and closing 0.2% higher on Monday. Nasdaq 100 futures slid 0.2% after the tech-heavy benchmark lost 0.7% on Monday following strong gains over the previous two weeks. European stocks advanced along with Asian equities and the dollar traded lower as fears of broader contagion from the banking turmoil eased. According to JPM, If bank contagion fears subside, we may see a resurgence in both bond yields and commodities as growth, before the banking crises, was stronger than expected led by the US and a reopened China. "However, banking crises typically have wide-ranging, and negative, impacts on growth and employment." Today’s macro data focus includes inventories, housing prices, regional mfg updates, and Consumer Confidence. Keep an eye on the confidence number as that can impact spending. In premarket trading, Alibaba shares soared 9% after the Chinese e-commerce company planned to split into six units that will individually explore IPOs. Shares in fellow Chinese ADRs also rallied. First Republic Bank gained 3.1% adding to a 12% jump on Monday after First Citizens BancShares’s agreement to buy Silicon Valley Bank reassured investors in regional lenders. PVH climbed 12% in premarket as the owner of Calvin Klein and Tommy Hilfiger issued stronger-than-expected earnings forecasts. Lyft rose as much as 5.2% after the ridesharing company appointed David Risher as CEO. Here are some other notable premarket movers: Array Technologies gains 3.7% after Truist Securities raises the solar equipment manufacturer to buy from hold, saying it has made significant progress addressing past challenges related to its product portfolio, execution and margin structure. Carnival Corp. is raised to equal-weight from underweight at Wells Fargo as the cruise operator has low near-term refinancing risk, its business in Europe is holding up well, and its annual Ebitda forecast is reasonable. Its shares gain 1.7% after dropping 4.8% on Monday following its earnings report. Ciena Corp. shares are up 3.2% in premarket trading after Raymond James upgraded the communications equipment company to strong buy from outperform. Occidental Petroleum advances as much as 2.2% after being upgraded to outperform from market perform at Cowen, with the broker saying the oil and gas company stands out for its “superior” exposure to oil pricing, share support, capital structure and differentiated catalyst rich profile. . PVH shares surge 12% after the parent company of Calvin Klein and Tommy Hilfiger issued stronger-than-expected forecasts for revenue growth and reported fourth-quarter earnings per share that beat estimates. Analysts found the company’s performance to be strong, flagging the beat to EPS as well as the strong outlook. . Viking Therapeutics said it plans to initiate a Phase 2 study of VK2735 in patients with obesity in mid-2023 based on Phase 1 trial results. Shares gain 50%. Virgin Orbit fell more than 9.5% after the launch provider placed workers on furlough as it seeks rescue financing or bankruptcy. "For now, it looks like the major stress around the banking crisis is calming down and markets can switch back to monitoring the inflation-recession dynamics," said Marija Veitmane, senior multi-asset strategist at State Street Global Markets in London. As jitters in the banking sector subside, investors are again turning their attention to economic fundamentals and the outlook for Federal Reserve policy. Swaps have meanwhile priced in a more than 50% probability of a rate hike at the next meeting; they continue to expect sharp easing later however, with pricing suggesting the policy rate will slide to around 4.3% in December, down from around 4.95% in May. Not all agree. “We see major central banks moving away from a ‘whatever it takes’ approach, stopping their hikes and entering a more nuanced phase that’s less about a relentless fight against inflation but still one where they can’t cut rates,” strategists at BlackRock Investment Institute, including Wei Li and Alex Brazier, wrote in a note. Hugh Gimber, global market strategist at JPMorgan Asset Management, also doesn’t foresee rate cuts anytime soon, even if hikes pause, and cautions against stock-market optimism on it. “I think the market is right to price a Fed pause,” he said in an interview on Bloomberg TV. “The question here is how big the feed through from a deterioration in lending standards is to really get inflation lower towards target, and I’m not that convinced we will see that very quickly. I think we would need a pretty significant economic shock to get there in 2H. Rate cuts are more of a 2024 story.” European stocks are in the green although they’ve pared gains since the open as investors remain cautious amid risks to the global financial system. The Stoxx 600 has trims gains to 0.2% while Deutsche Bank swings to a ~2% fall from from ~2% rise. Energy, miners and autos are the strongest-performing sectors. Here are the most notable European movers: GSK gains as much as 0.9% after it announced positive results from an endometrial cancer drug trial. Shore Capital describes the published data as “promising” Ocado shares rise as much as 5.7% after the online grocer’s retail joint venture with Marks & Spencer beat sales expectations in the first quarter Zalando shares rise as much as 3.2% as HSBC upgrades the online fashion retailer to buy from hold, saying its momentum is moving in the right direction Marks & Spencer shares gain as much as 3.1% as Credit Suisse hikes its price target, saying the UK retailer’s recovery momentum is building Eurocash jumps as much as 11% after the retailer posted record 4Q Ebitda of 308m zloty and cut debt ratios, seen by analysts as a soothing signal Telecom Italia shares rise as much as 3.4% after Bloomberg reported that Italian state-backed lender CDP plans to raise its offer for the carrier’s landline network Diageo shares slip as much as 0.9% after the British distiller said Ivan Menezes plans to retire as chief executive officer, which analysts say is a loss Embracer shares slump as much as 15%, after the video-game maker said licensing deals with several industry partners are unlikely to be completed before the month ends Norma shares fall as much as 15% as Baader highlights the tech hardware firm’s conservative FY23 margin outlook due to ongoing burdens from efforts to restructure CMC Markets falls as much as 6.3%, adding to a 21% drop Monday when the online trading company released a downbeat earnings update late in the session Schibsted shares drop as much as 9.6% as a weaker short-term guidance for the Norwegian media and classified advertising group offsets higher longer-term targets Synthomer shares drop as much as 19% with Morgan Stanley saying it sees further consensus downgrades ahead for the UK chemicals firm following its FY results Elsewhere in markets, Asian stocks gained as a lull in new developments in the banking sector gave investors a chance to adjust positions and assess whether the Federal Reserve will lower rates to buttress the US economy.  The MSCI Asia Pacific Index rose as much as 0.9%, halting a two-day losing streak. A sub-gauge of financial shares jumped more than 1% as they followed US peers higher. Australia, Japan and South Korea advanced. Hong Kong’s Hang Seng Index gained about 1%, while China’s mainland indexes fluctuated. “Asia still remains relatively well insulated from the latest round of US/European bank turmoil,” Citigroup analysts including Johanna Chua wrote in a note. “Direct exposure of Asia to the affected financial institutions is very limited.” Asia’s regional equity gauge has climbed more than 2% over the past week as US bank shares regained their footing after tumbling last week and fanning fears of a looming economic slowdown. Doubleline Capital’s Jeffrey Gundlach said on CNBC that he expects a US recession to start in a few months, and that the Federal Reserve will need to respond “very dramatically.” Japanese stocks rose for a second day as concerns around financial institutions cooled after First Citizens BancShares Inc. agreed to buy failed Silicon Valley Bank.  The Topix rose 0.2% to close at 1,966.67, while the Nikkei advanced 0.2% to 27,518.25. Sumitomo Mitsui Financial Group contributed the most to the Topix gain, increasing 2.7%. Out of 2,159 stocks in the index, 799 rose and 1,232 fell, while 128 were unchanged. “Overall risk tolerance has increased now that the Silicon Valley Bank situation appears to have calmed down,” said Ryuta Otsuka, strategist at Toyo Securities. “However, it is hard to expect large market moves in Japan as we are approaching the end of the fiscal year.” Australian stocks extended rose with the S&P/ASX 200 index rising 1% to close at 7,034.10, extending gains for a second session, boosted by mining shares and banks. Lithium miners, some of the benchmark’s most shorted names, rallied after Liontown rebuffed a takeover bid from Albemarle.  Equities across Asia climbed, US stock futures edged higher and the dollar declined as fears of broader contagion from the banking turmoil eased. Investors await Australia’s CPI print due Wednesday.  In New Zealand, the S&P/NZX 50 index rose 1.4% to 11,771.27 Stocks in India were mostly lower on Tuesday as key gauges headed for their fourth consecutive monthly decline amid tepid sentiment for global equities.  The S&P BSE Sensex fell 0.1% to 57,613.72 in Mumbai, while the NSE Nifty 50 Index declined 0.2%. The benchmark gauge has slipped about 2.1% this month and is on course for its longest losing monthly streak since Feb. 2016. Software major Infosys contributed the most to the Sensex’s decline, decreasing 0.8%. Out of 30 shares in the Sensex index, 11 rose, while 19 fell. All 10 companies related to the Adani Group fell, led by a 7% plunge in flagship firm Adani Enterprises after a newspaper report said the conglomerate will probably seek more time to repay a $4 billion loan it took out last year.  Foreign investors have been buyers of $1.3b of local shares this month through March 24, mainly on back of GQG Partners’ stake purchase in Adani companies. “Barring gains in select banking and metal stocks, other sectors witnessed profit-taking as caution prevailed ahead of the F&O expiry on Wednesday,” Kotak Securities analyst Shrikant Chouhan said. In FX, the Bloomberg Dollar Spot Index slipped 0.1%, marking its eighth day of declines in the past nine sessions, weighed by a jump in the yen on domestic demand ahead of the fiscal year-end in Japan.  Exporters in Japan and Australia added to the selling of the dollar as they increased hedging to cover prior long positions in the greenback, Asia- based FX traders said. The New Zealand dollar and Japanese yen are the best performers among the G-10s while the Swiss franc is the weakest. In rates, the five-year Treasury yield rises as much as 7 basis points to 3.67%, while the two-year yield climbs 4 basis points to 4.04% after sliding as low as 3.89% earlier in the session; a selloff in Treasuries since the start of the week has lifted most yields from six-month lows reached on Friday. 10-year yields around 3.55%, cheaper by 2bps on the day with bunds lagging by additional 5bp in the sector; 2-year yields cheaper by around 7bp on the day, remain above 4% level vs. Monday’s 3.954% auction stop. As BBG's Beth Stanton notes, Monday's poorly-bid 2Y auction is now under water vs its 3.954% stop with May rate hike back in favor. Auction cycle continues with $43b 5Y at 1pm. WI yield 3.65% is between last two 5Y stops. The US auction cycle resumes with $43b 5-year note sale at 1pm, follows Monday’s poor 2-year result; WI 5-year at 3.63% is ~48bp richer than February’s stop-out. German two-year borrowing costs are up 12bps. Traders are now betting on a roughly 50/50 chance that the Fed will deliver a final quarter-point hike in May, followed by a similar-sized cut in September; market pricing reflects a diminishing outlook for a series of cuts in the coming months, and a growing view that the Fed may keep rates on hold for longer. BlackRock sees the Fed continuing to raise interest rates despite traders betting otherwise as fears of a banking crisis convulse markets. “We don’t see rate cuts this year – that’s the old playbook when central banks would rush to rescue the economy as recession hit,” its strategists write in a note. “We see a new, more nuanced phase of curbing inflation ahead: less fighting but still no rate cuts.” In commodities, crude futures advance with WTI up 0.5% to trade near $73.15. Spot gold falls 0.3% to around $1,951. European and US gas benchmarks diverge slightly in European trade; Morgan Stanley writes that “prices likely still need to move lower to incentivize an adequate supply response, but we may be approaching the bottom”. Looking to the day ahead, we will have a number of data releases from the US including the Conference Board consumer confidence, the Richmond Fed manufacturing index and business conditions, the Dallas Fed services activity, the January FHFA house price index, and February’s wholesale and retail inventories and advance goods trade balance. We will also have Italy’s March manufacturing and consumer confidence as well as economic sentiment data, and from France the March manufacturing and consumer confidence data. The BoE’s Bailey will testify today on the Silicon Valley Bank crisis, and we will also hear from ECB’s Muller. Finally, we will have earnings releases from Micron, Walgreens Boots Alliance and Lululemon. Market Snapshot S&P 500 futures little changed at 4,009.00 STOXX Europe 600 up 0.3% to 446.06 MXAP up 0.6% to 159.53 MXAPJ up 0.6% to 512.94 Nikkei up 0.2% to 27,518.25 Topix up 0.2% to 1,966.67 Hang Seng Index up 1.1% to 19,784.65 Shanghai Composite down 0.2% to 3,245.38 Sensex little changed at 57,596.88 Australia S&P/ASX 200 up 1.0% to 7,034.09 Kospi up 1.1% to 2,434.94 German 10Y yield little changed at 2.30% Euro up 0.2% to $1.0818 Brent Futures up 0.5% to $78.49/bbl Gold spot down 0.2% to $1,952.30 US Dollar Index down 0.17% to 102.69 Top Overnight News Alibaba plans to split its $220 billion business into six main units encompassing e-commerce, media and the cloud, each of which will explore fundraising or IPOs when the time's right. Group CEO Daniel Zhang will head up the cloud intelligence division, a nod to the growing role AI will play in the e-commerce leader's portfolio in the long run. BBG Binance’s CEO Changpeng Zhao shot back at the CFTC, calling its lawsuit over alleged violations of derivatives regulations "unexpected and disappointing," given compliance efforts and cooperation with regulators. His firm doesn't trade for profit or manipulate the market, he said. The suit has "an incomplete recitation of facts." BBG China has significantly expanded its bailout lending as its Belt and Road Initiative blows up following a series of debt write-offs, scandal-ridden projects and allegations of corruption. A study published on Tuesday shows China granted $104bn worth of rescue loans to developing countries between 2019 and the end of 2021. The figure for these years is almost as large as the country’s bailout lending over the previous two decades. FT Semiconductor companies seeking federal grants under the Chips Act could face a tough decision: take Washington’s help to expand in the U.S., or preserve their ability to expand in China. The Biden administration last week proposed new rules detailing restrictions chip companies would face on operations in China and other countries of concern if the companies accept taxpayer funding. WSJ Balances at the Fed's RRP facility climbed, even as rates in the private market rose as much as 15 bps above the central bank's offering yield. Ninety-eight counterparties parked $2.22 trillion at the RRP, up $1.7 billion from Friday. BBG The Federal Reserve’s top official on banking supervision has blamed the collapse of Silicon Valley Bank on a “textbook case of mismanagement”, saying the board of the US central bank had been briefed on the troubles at the California lender in mid-February. FT The Treasury's top domestic policy official Nellie Liang will tell Congress regulators are ready to repeat steps taken after recent bank failures. She testifies today with the Fed's chief of banking supervision, Michael Barr, and FDIC head Martin Gruenberg. The ECB's top oversight official urged global scrutiny of the CDS market. And BOE boss Andrew Bailey said UK banks are strong. BBG Calm returned to Israeli cities Tuesday and protests against Israeli Prime Minister Benjamin Netanyahu’s judicial overhaul dispersed after the premier agreed to suspend the controversial plan and Israeli President Isaac Herzog offered to host compromise talks between the two sides. WSJ DIS has eliminated its next-generation storytelling and consumer experiences unit, the small division that was developing metaverse strategies, according to people familiar with the situation, as part of a broader restructuring that is expected to reduce head count by around 7,000 across the company over the next two months. WSJ In the battle for the biggest prize in China’s trillion-dollar pension market, BlackRock Inc. and other global firms have little chance of attracting clients like Judy Deng: BBG The Federal Deposit Insurance Corp. stuck to its guns and didn’t offer bailouts to keep two lenders from collapsing. Instead, it struck deals that included millions of dollars of sweeteners for the acquiring banks that sent their stocks soaring: BBG The US took its most forceful move yet on Monday to crack down on crypto exchange Binance Holdings Ltd. and its chief executive officer Changpeng Zhao: BBG A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks traded mixed with a mild positive bias as global banking sector fears continued to dissipate and with early advances led by energy after the recent surge in oil prices although gains were capped in the region as North Korean nuclear rhetoric stoked geopolitical concerns. ASX 200 was boosted amid strength in the commodity-related sectors with outperformance in energy after oil prices notched the largest daily gain since October and financials were also lifted as Australia downplayed the risks to domestic banks from the recent global banking issues. Nikkei 225 was indecisive despite Japan reiterating plans for a JPY 2.2tln economic stimulus package with trade stuck in a narrow range near 27,500 after the nuclear rhetoric by North Korea which called for the scaling up of weapons-grade nuclear materials and included similar language used before its last nuclear test in 2017. Hang Seng and Shanghai Comp. were choppy ahead of key earnings results and after PBoC liquidity efforts. Top Asian News China's Foreign Ministry said Premier Li Qiang met with foreign representatives at the China Development Forum in Beijing on Monday and met with executives including Apple (AAPL) CEO Cook, while Li told executives China will unswervingly expand its opening up, according to Reuters. US and Japan reached a trade deal for critical EV battery minerals in which the deal prohibits enacting export restrictions on lithium, cobalt, nickel, manganese and graphite, according to US officials. Furthermore, the deal includes provisions to combat non-market practices, while access for Japanese automakers to the battery minerals portion of USD 7,500 in US EV tax credit depends on the tax guidance this week from the US Treasury. China is reportedly aiming to set up 30+ key auto chips standards by 2025, according to the Ministry of Industry and Information Technology. A magnitude 5.7-5.9 earthquake occurred offshore Eastern Aomori Prefecture, Japan; NHK says it has a prelim. magnitude of 6.1; no tsunami warning issued. European bourses were initially firmer across the board in a continuation of the APAC tone, though benchmarks have since eased from best and are flat/mixed. Sectors are mixed with Energy outperforming while Banking names were firmer but have eased off of best levels and incrementally into the red alongside the broader benchmarks throughout the morning. Stateside, futures are mixed/flat, though with the bias inching further into the red, as the region awaits todays Senate Banking Committee hearing on the recent banking turmoil with Fed' Barr in attendance. Meta Platforms Inc. (META) plans to lower some bonus payouts and will more frequently assess employee performance, according to an internal memo, part of a sweeping revamp of the social-media company that includes large head-count reductions, WSJ reports. Alibaba (BABA/9988 HK) business unit can reportedly pursue fundraising and IPOs when ready, according to Bloomberg; Alibaba to restructure into six main business divisions. Top European News Kantar UK Supermarket update (Mar): Grocery price inflation has climbed again to reach 17.5% over the four weeks to 19 March 2023, a new record based on our latest market data. ECB's Muller says inflation is slowing but it is too early to declare a victory. Banks ECB's Enria says current events confirm that strong, demanding supervision is needed more than ever. Adds, there have been some fast outflows of bank deposits in some cases. BoE's Bailey says does not think any of the features of recent banks issues are causing stress in the UK; Ramsden says will keep a close eye on bank funding costs. US Treasury official Liang said the US government will use tools to prevent banking contagion again if warranted and that the US financial system is significantly stronger now due to stronger capital and liquidity requirements, while she added the US must ensure that banking regulations and supervision are appropriate for today's risk and challenges, according to her prepared testimony, according to Reuters. French PNF Financial Prosecutors says searches are underway at five banking/financial firms located within Paris and the Paris La Defense district re. a tax probe, German prosecutors assisting. Societe General (GLE FP) confirms its offices are being searched. S&P says they are yet to see any meaningful contagion for APAC from the US regional banks/Credit Suisse (CSGN SW) turmoil. FX The USD has been incrementally softer throughout the morning within relatively narrow 102.52-102.76 parameters, most recently the DXY has attempted to pare initial downside. Action which comes to the mixed fortune of peers, with AUD, NZD and JPY outperforming given the risk tone and as the JPY attempts to recover from Monday's pressures; holding below 0.67, 0.625 and above 131.00 respectively. CHF resides as the laggard, with downside seemingly stemming from the risk tone rather than any fresh Swiss banking concern, EUR/CHF above 0.99 to a 0.99300 peak. In close proximity is the CAD which is unable to benefit from crude upside while GBP and EUR are contained around 1.08 and 1.23 respectively vs USD with Central Bank speak thus far not moving the dial. Citi month-end model: Prelim. estimate points to moderate USD selling vs all major currencies ex-EUR, via Reuters. Click here for more detail. PBoC set USD/CNY mid-point at 6.8749 vs exp. 6.8737 (prev. 6.8714) Fixed Income EGBs are under pressure in a continuation of the firmer risk tone from APAC trade; however, benchmarks are off worst levels as equities inch into the red. Specifically, Bunds are below 136.00 with the associated 10yr yield firmly above 2.30% though yet to breach 2.35%. Gilts and the EZ periphery are in-line with mentioned core counterparts and have been unaffected by numerous Central Bank officials where the focus has been on recent banking turmoil. Supply wise, the Italian and German sales passed without fanfare and were well-received overall though demand was slightly softer when compared to the prior outings. Commodities Crude benchmarks continue to climb aided by the softer dollar and the latest geopolitical tensions re. N. Korea; WTI and Brent holding above USD 73/bbl and USD 78/bbl respectively. European and US gas benchmarks diverge slightly in European trade; Morgan Stanley writes that “prices likely still need to move lower to incentivize an adequate supply response, but we may be approaching the bottom”. Spot gold is pressured by the risk tone and failing to benefit from the softer USD with the yellow metal below the USD 1959/oz 10-DMA and holding around USD 1950/oz currently, base metals conversely are modestly firmer. Russian Deputy PM Novak says the domestic fuel and energy complex is sustainable despite challenges, hopes to agree on key contract terms for the Power of Siberia 2 gas pipeline to China this year. Russia should look to produce at least 100mln/T of LNG per year by 2030. Geopoliitcs Russian Defence Ministry said it fired supersonic anti-ship missiles at a mock target in the Sea of Japan. North Korean leader Kim guided the nuclear weaponisation programme and inspected nuclear trigger technology during a recent simulation. Kim also called for constant efforts to improve nuclear capability and said the country should be fully ready to use nuclear weapons at any time, while he called for the scaling up of weapons-grade nuclear materials to exponentially increase nuclear weapons arsenal. North Korea also alleged that US and South Korea military drills involving an air carrier are aimed at pre-emptive nuclear strike and said that US anti-North Korean activities are intensifying to unacceptable levels, according to KCNA. North Korea is reportedly preparing to resume foreign diplomatic activity after three years of COVID isolation, according to FT; North Korean officials recently resumed travels to Russia and China. Belarus' Foreign Minister says they have been forced to take steps ensuring security in the face of NATO potentially increasing within neighbouring nations, via Tass. Crypto Binance CEO said the CFTC complaint appears to have an incomplete recitation of the facts and they do not agree with the issues alleged in the complaint. Binance CEO said they intend to respect and collaborate with US and other regulators around the world, while he added that Binance.com does not trade for profit or manipulate the market under any circumstances, according to Reuters. US Event Calendar 08:30: Feb. Advance Goods Trade Balance, est. -$90b, prior - $91.5b, revised -$91.1b 08:30: Feb. Retail Inventories MoM, est. 0.2%, prior 0.3% Wholesale Inventories MoM, est. -0.1%, prior -0.4%, revised -0.3% 09:00: Jan. FHFA House Price Index MoM, est. -0.2%, prior -0.1% 09:00: Jan. S&P Case Shiller Composite-20 YoY, est. 2.55%, prior 4.65% S&P/Case-Shiller US HPI YoY, prior 5.76% S&P/CS 20 City MoM SA, est. -0.50%, prior -0.51% 10:00: March Conf. Board Consumer Confidence, est. 101.0, prior 102.9 Expectations, prior 69.7 Present Situation, prior 152.8 10:00: March Richmond Fed Index, est. -10, prior -16 10:30: March Dallas Fed Services Activity, prior -9.3 Central Banks 10:00: Fed’s Barr Appears Before Senate Banking Panel DB's Jim Reid concludes the overnight wrap After a hectic 2 and a half weeks that has felt like a year, the week has started on a much calmer footing. I'm on holiday for a couple of weeks from Thursday so I'm hoping that I don't have to do zoom meetings from the ski slopes. My ski outfit and technique won't make that a pretty sight. As we highlighted in our CoTD yesterday (link here) we have to be careful not to fight the battle of the last war. Large banks in the US and Europe are completely different entities than they were going into the GFC. For large US banks for example, securities and loans/leases on their balance sheets as a % of deposits are lower than when our data starts in 1985 and at below 100% are massively down from their GFC peaks of over 150%. We don't have the same long term data for Europe but the declines since the GFC are of similar magnitudes. In contrast corporates are more levered now than during the GFC and this cycle could ultimately be more corporate default focused vs financials as per say 2001-2002 rather than 2008-09. See Steve Caprio's full note here for more on this and how corporate spreads are too tight to financials now. So no new news was good news yesterday and some risk premium was removed from the market. This was most evident in bonds with US 2yr and 10yr yields up +22.9 bps and +15.4bps respectively. The S&P 500 was up +0.80% in the first hour of trading but did retrace the entire move back to flat before rallying in the US afternoon to finish with a an overall modest gain of +0.17%, whilst the STOXX 600 climbed +1.05%. US banks led the US move higher, having traded off their lows from last week, with the S&P 500 banks index up +3.05%. European banks were earlier +1.69% higher. Narrowing in, First Citizens jumped 49% at the market open after its agreement to buy SVB Financial Group’s Silicon Valley Bank, ending the day up by +53.74%. First Republic Bank similarly jumped at the open by +27.45% after a Bloomberg report that US authorities were considering an expansion to their emergency lending facility, the Bank Term Funding Program, that had been created on March 12 with the collapse of SVB and Signature Bank. Against this backdrop, the gauge of regional US banks, the KBW index, closed up +2.54% yesterday, with the leaders including First Republic (+12.14%), Comerica (+5.40%) and KeyCorp (+5.31%). Improving risk sentiment saw investors pare back their expectations of Fed rate cuts, as the implied rate for the Fed’s May meeting gained +9.2bps, bringing it to 4.950%. In other words, fed futures are now pricing in a 53% chance of a +25bps hike in May. For December’s meeting, markets trimmed their expectations of rate cuts from over -94bps on Friday to nearly -74bps, as the implied rate rose +29.5bps to 4.206%. Back on this side of the pond, the German March Ifo business confidence index printed above expectations at 91.2 (vs 88.3 expected), and up from 88.5 for February. The other two individual components of the release also beat expectations, with business climate rising to 93.3 (vs 91 expected) and current assessment at 95.4 (vs 94.1 expected). Although the Ifo survey typically demonstrates less sensitivity to financial market uncertainty relative to other surveys coming from Germany such as the ZEW survey, the release is consistent with last Friday’s PMIs that suggested the Eurozone economy remains in, or at least was in decent shape, before the banking crisis hit. Consequently, the DAX outperformed relative to the broader STOXX 600 index, up +1.14%, whilst the STOXX 600 advanced by +1.05%. For the latter, all major sectors were in the green, with sector leaders including health care (+1.93%), utilities (+1.31%) and autos (+1.89%). The CAC also gained yesterday, up by +0.90%. Following from Friday’s jitters about European banking sector stability, ECB’s Simkus emphasised that ‘bank liquidity, capitalisation (are) high in euro area.’ ECB’s De Cos echoed this sentiment, stating ‘euro-zone banks (are) well-prepared for adverse scenarios’. We also heard from several other ECB’s speakers yesterday, as ECB’s Schnabel stated she had pushed for the ECB statement to say that more hikes were a possibility as opposed to the verbal assurance that had been made by President Lagarde. ECB’s Centeno’s comments were more dovish, as he stated that they “don’t see long-term inflation expectations de-anchoring”, with “no signs of second-round effects in wage-setting.” Markets moved to price in a modestly higher terminal rate as Eurozone overnight index swaps for July were up +7.5bps bringing the rate to 3.321%. The rate for year-end also increased, up +11.5bps to 3.226%, pricing in a 1 in 3 chance of a -25bps rate cut by December. Against this backdrop, yields across the German sovereign yield curve were up yesterday, with the 10yr bund yield climbing +9.8bps higher bringing the yield to 2.227%. The 2yr yield gained +12.8bps to 2.521% Asian equity markets are mostly higher overnight. As I type, the Hang Seng (+0.60%), the KOSPI (+0.44%) and the Nikkei (+0.07%) are higher but with stocks in mainland China mixed with the CSI (-0.16%) edging lower while the Shanghai Composite (+0.05%) is oscillating between gains and losses. US stock futures are a little higher with contracts tied to the S&P 500 (+0.16%) and NASDAQ 100 (+0.17%) printing mild gains. Meanwhile, yields on 10yr Treasuries (-1.89bps) are slightly lower, trading at 3.51% while 2Yr Treasuries (-3.5bps) are trading at 3.96% as we go to press. In early morning data, retail sales in Australia rose +0.2% m/m in February, in-line with market expectations, down from a revised +1.8% increase in January, signifying that households are reining in spending in response to higher interest rates. The subdued data adds to the case for a pause by the Reserve Bank of Australia (RBA) at its April 4th meeting. Meanwhile, the CPI data scheduled to be released tomorrow will be of note for the central bank. Turning to commodities, WTI crude futures performed strongly yesterday, rising +5.13% to over $72.81/bbl, whilst Brent crude gained +4.17% to $78.12/bbl. European natural gas futures also gained +3.49% yesterday. The rally in energy prices was due to both supply-side and demand-side pressures. On demand, the rally in bank stocks and purchase of SVB seemed to ease concerns of a wider financial crisis. Meanwhile, a legal dispute between the Iraqi semi-autonomous region of Kurdistan and Turkey has put about 400,000 bbl/day of exports in limbo. This come as French refineries are running at a fraction of normal capacity due to the ongoing protests in the country. A Bloomberg report had as much as 80% of the nation’s crude-processing capacity stalled. Finally, yesterday also saw the release of the Dallas Fed Manufacturing Activity for March which fell below expectations at -15.7 (vs -10 expected). This was a further decline from -13.5 last month as perceptions of broader business conditions deteriorated over the month. Now looking to the day ahead, we will have a number of data releases from the US including the Conference Board consumer confidence, the Richmond Fed manufacturing index and business conditions, the Dallas Fed services activity, the January FHFA house price index, and February’s wholesale and retail inventories and advance goods trade balance. We will also have Italy’s March manufacturing and consumer confidence as well as economic sentiment data, and from France the March manufacturing and consumer confidence data. The BoE’s Bailey will testify today on the Silicon Valley Bank crisis, and we will also hear from ECB’s Muller. Finally, we will have earnings releases from Micron, Walgreens Boots Alliance and Lululemon. Tyler Durden Tue, 03/28/2023 - 08:09.....»»

The US Business Model Is Collapsing Authored by James Howard Kunstler via DailyReckoning.com, Money is all theoretical… until it’s not. Paper money is bad enough, as France learned under the tutelage of the rascal John Law in the early 1700s. The nation was broke, exhausted by foolish wars, and heaped under unbearable debt. Monsieur Law, a Scottish genius-wizard (the Jerry Lewis of political economy), landed in Paris, cast a spell on the regent Duc d’Orléans, set up a magic credit engine fueled by dreams of untold riches-to-come burgeoning out of the vast, new-found lands called Louisiana up the Mississippi River and modern finance was born! The stock-and-money schemes known as the Mississippi Bubble soon ruined France and put finance in such a bad odor that the word “banque” could not be used in polite society there for a century to come. Monetary inflation became a thing for the first time since Roman days — a much easier trick with printed paper banknotes than with silver coins — but the effect was the same: the evaporation of “wealth” (which is what money supposedly represents). At the height of the crisis, trading in gold was criminalized, though that was so easily worked around due to sheer custom and habit that the Crown had to re-legalize it. The frenzy from start to finish lasted only a few years, but the nation was set on the path that would eventually lead to revolution. Law ended his days dolefully running card games in Venice. The U.S. Likewise, the creaking polity called the USA in our time spawned many new incarnations of John Law as it transitioned from being “the arsenal of democracy” — you know, making real things — to a land of make-believe, where unicorns galloped over rainbows conjured by computer magic and utopian wishes of equity, diversity and inclusion. The overhang of previously amassed wealth kept those dreams going long after we discontinued the rough and messy business of making stuff, and thereby generating real wealth. But now a klaxon blares, signaling the end of dream-time, and the nation wakes up in a ramshackle house with the floor giving way under the bed. The rot was plain to see in the banking architecture built on U.S. Treasury paper (bills, notes, bonds) as rising interest rates undercut the price of all the debt paper issued previously at lower rates. And this was the collateral that banks generally held the depositors’ money in. So when it became necessary to declare a problem with the balance sheet, and cash had to be raised to cover it, the Treasury paper could only be sold at a loss, liabilities exceeded assets, word got out, depositors rushed to secure the money in their accounts and that was all she wrote for yon bank, in this case, Silicon Valley Bank, the first to crumble. House of Cards Since banks today exist in a vast matrix of interconnected obligations — promises to pay this-and-that — fear grows that the rot from one bank, such as SVB, will infect many other banks that are no longer able to keep their promises about paying this-and-that, leading to a daisy-chain of things not getting paid. For an economy, that’s about the same as the blood ceasing to circulate in a body. As if all the operations around finance in this land were not already unsound and degenerate enough, the alleged president just cancelled moral hazard altogether. It’s now official: From here forward there will be no consequences for banking fraud, poor decision-making, fiduciary recklessness, self-dealing or any of the other risks attendant to the handling of other people’s money. Bailing out the Silicon Valley Bank and Barney Frank’s deluxe Signature Bank means that the government will now have to bail out every bank every time something goes wrong. The trouble, of course, is that the government doesn’t have the means to bail out every bank. Its only resort is to ask the Federal Reserve to summon new money from a magic ether where the illusion of wealth is conjured to paper over ever greater fissures in the splintering matrix of racketeering that America has become. That will quickly translate into U.S. dollars losing value, that is, accelerating inflation, which is how nature punishes you when your government lies and pretends that it has a bad situation well in hand. The Jupiter and Minerva of American Banking The practice in situations such as this (say, as in 2008-09) is for the governing authorities — who supposedly rule over the banking world like gods — to rush to rescue these outfits with “liquidity,” money (or representations of it) as required to re-balance things or maybe provide the impression of re-balancing until something else can be figured out. The Jupiter and Minerva of American banking, Jay Powell and Janet Yellen, were faced with just that sort of call for divine intervention over the weekend as fear seeped into every nook and crevice of the money world that wealth was flaring away in the long-feared-of conflagration out of the dumpster banking had become. Sunday morning, Ms. Yellen told CBS News “bailouts, no way” but by the afternoon Mr. Powell cried “bailouts, way,” and they had to get their story straight. They offered up $25 billion to bail out depositors for a smoldering system that will arguably require a trillion dollars or more of liquidity to quench the spreading fires. One thing looks for sure: The interest rate hikes that Mr. Powell spoke of so confidently only days ago just got stashed into his folder labeled “Fuggeddabowdit.” So the campaign to control inflation must now yield to the urgent need to create a whole lot of money to spray over those fires. The U.S. Business Model Is Collapsing You may have noticed that the value of your money has been slip-sliding away the past year or so. Peanut butter at five bucks a jar, and all. The situation at hand kind of guarantees that we’ll be seeing a whole lot more of that. And then the gods of money will have lost control of the interest rate console altogether. No more tweaking the broken knobs. More inflation will prompt U.S. Treasury paper holders to dump what they can while there’s still some value to retrieve. But the U.S. has to issue more debt for all the bailouts and theoretical buyers of new debt will perforce bid up the rates to keep up with inflation… and yet the U.S. can’t possibly bear the burden of paying higher interest on its debt. Looks like the business model for running the USA is breaking down before our eyes. Luckily, Cap’n “Joe Biden” is at the helm of this steaming garbage barge. His conference room full of geniuses is ready with the solution to our predicament: the long-mythologized central bank digital currency — a dream-come-true for would be tyrants… the Godzilla of unicorns whinnying atop the biggest rainbow of all: the promise of endless magic money for everybody, forever. All you have to do to get it is: Surrender your decision-making power over your own life. The government will amalgamate your few remaining assets in a CBDC account, tell you exactly what to spend it on and shut off your little card if you show any contrary impulses. Well, they can try it. I doubt it will work. Instead, the government will melt down in its own rancid puddle of insolvency, the meta-grift will grind to an end and it will be everyone for his/her/they self in the broke-down Palace of Chaos for a while… until things emergently reconstruct. But I get a little ahead of myself. It’s not even ten o’clock on Monday morning. Oh, and then there’s Ukraine… Tyler Durden Tue, 03/21/2023 - 16:20.....»»

Futures Reverse Overnight Plunge As European Banks Stabilize From Historic Rout US equity futures, global markets and European bank stocks have stabilized, rebounding off worst levels which saw Europe's brand new banking megagiant UBS plunge as much as 16% before recouping most of the losses... ... as investors digested UBS’s agreement to buy Credit Suisse as well as central bank moves to boost dollar liquidity in an effort to restore confidence in the global financial system. Futures contracts on the S&P 500 were little changed at 7:30 a.m. ET after tumbling 1% earlier. The Stoxx Europe 600 index was modestly higher, with banks and financial services still the sharpest fallers. UBS shares sank as much as 16%, while Credit Suisse sank 60%. European bank stocks pared losses with the Stoxx Europe 600 Banks Index down less than 1%, after after dropping as much as 6%. A gauge of Asian shares fell by more than 1%. In premarket trading, First Republic Bank was poised to extend last week’s record loss as the US lender’s shares plunged 19% after S&P cut its credit rating again. Wells Fargo and Citigroup trimmed US premarket declines. Gold-mining stocks rallied in premarket trading on Monday, after a $3.2 billion deal between UBS and troubled lender Credit Suisse failed to calm nerves in the banking industry, knocking risk appetite. Newmont, the biggest US-listed gold miner, gains as much as 2.6%; Harmony Gold Mining +5.6%, Gold Fields +2.2%, New Gold +3.4%, Wheaton Precious Metals +1.5%, First Majestic Silver +2%, Pan American Silver +0.7%. The price of gold rose above $2,000 an ounce for the first time in a year amid safe-haven appeal. Here are some other notable premarket movers: Cryptocurrency-exposed stocks rise after Bitcoin extended its gains for a fifth consecutive session, with the digital asset reaching levels not seen in about nine months. Marathon Digital (MARA US) +5.6%, Riot Platforms (RIOT US) +8% and Coinbase (COIN US) +4.2% Energy stocks decline as investors’ concern about the banking system spur broad risk aversion and drag crude prices lower. Exxon Mobil (XOM US) slid 1.3%, Chevron (CVX US) -1.1%, Occidental Petroleum (OXY US) -1.1%. For those who were lucky enough to be away from their computers this weekend, this is what you missed: Credit Suisse shareholders will receive 1 share in UBS (UBSN SW) for 22.48 shares in Credit Suisse which reflects a merger consideration of CHF 3bln and that FINMA determined that Credit Suisse’s additional tier 1 capital in the aggregate nominal amount of around CHF 16bln will be written off. Credit Suisse also told staff in a memo that the details of the transaction are being worked through and no disruption to client services is expected, while it told staff there will be no changes to payroll arrangements and bonuses will still be paid on March 24th. UBS said the company will suspend share buybacks and that they did not initiate the discussions but believe the transaction is financially attractive to UBS shareholders and are planning to de-risk and downsize Credit Suisse’s investment banking operations. UBS also noted its strategy is unchanged in US and APAC and said that Credit Suisse is quite complementary to the wealth business in Southeast Asia. Furthermore, Colm Kelleher will be Chairman and Ralph Hamers will be Group CEO of the combined entity, while the transaction is not subject to shareholder approval and there is a material adverse change clause on the Credit Suisse deal. SNB said it is providing substantial liquidity assistance to support the UBS takeover of Credit Suisse and the takeover was made possible with the support of the Swiss federal government, FINMA and SNB, while it added that both banks have unrestricted access to the SNB’s existing facilities. There were also comments from the Swiss Finance Minister that this is a commercial solution and not a bailout, while she noted the cost of bankruptcy to the Swiss economy would have been huge. ECB said it welcomes the swift actions and decisions taken by Swiss authorities and noted that the Euro area banking sector is resilient with strong capital and liquidity positions. ECB’s Lagarde also stated that the ECB’s policy toolkit is fully equipped to provide liquidity support to the euro area financial system if needed. BoE said it welcomes the comprehensive actions by the Swiss authorities to merge UBS and Credit Suisse, while it has been engaging with international counterparts throughout preparations for the announcement. Furthermore, it stated that the UK banking system remains safe and sound and is well-capitalised and funded. Fed Chairman Powell and US Treasury Secretary Yellen said they welcome the announcements by Swiss authorities to support financial stability and noted the capital and liquidity positions of the US banking system are strong and US financial system resilience is strong. Furthermore, they have been in close contact with international counterparts to support their implementation. At least two major banks in Europe are examining scenarios of contagion potentially spreading across Europe’s banking sector and looking to the Fed and ECB to step in with stronger signals of support, according to Reuters citing executives with knowledge of the deliberations. Banking stocks and bonds plummeted after UBS Group sealed a state-backed takeover of troubled peer Credit Suisse, a deal that was shoved down Credit Suisse investors' throats - literally - in an attempt to restore confidence in a battered sector. The Federal Reserve and five other central banks announced coordinated action on Sunday to boost liquidity in US dollar swap arrangements. The Fed’s next policy decision is due later this week, with market attention on whether it may slow or pause interest-rate hikes. UBS emerged as Switzerland’s one and only global bank, a risky bet that makes the Swiss economy more dependent on a single lender. Credit Suisse told staff its wealth assets are operationally separate from UBS for now, but once they merged clients might want to consider moving some assets to another bank if concentration was a concern. The rudest shock in the rushed deal was reserved for the holders of Credit Suisse's riskiest tranche of bonds. UBS is salvaging the most value from the wreckage, says Breakingviews columnist Liam Proud. Hedge fund managers and other large investors believe it is far too soon to call an all-clear on turmoil in the global financial sector. Amid the endless turmoil, the KBW Bank Index plunged 28% over the past two weeks, with financials rattled by concerns over Credit Suisse as well the recent failures of Silicon Valley Bank and two other US lenders. Gains in tech stocks have helped support the overall market, however, as investors look for a safe haven. "The turmoil still has at least a couple of days to play out, and only the Fed can come in and calm that,” Chris Beauchamp, chief market analyst at IG Group Holdings Plc, said on Bloomberg Television. He expects the US central bank to hike rates by 25 basis points as a pause would be interpreted by markets as a sign that the stress in banks is bigger than initially thought. “Assuming these banking stresses do not evolve into something more serious, the European Central Bank and the Fed may perceive that they are at or near their objectives with current policy,” said Brad Tank, chief investment officer for fixed income at Neuberger Berman. “The Fed, in particular, is further along in its tightening cycle and should have more flexibility to pause — and markets are indeed pricing for 2023 fed funds rate cuts once again.” Meanwhile, one day after he revealed his shock that stocks remain resilient and just under 4,000 despite calling for a crah for the past 3 months, Morgan Stanley’s Michael Wilson said the stress in the banking system marks what’s likely to be the beginning of a painful and “vicious” end to the bear market in US stocks, adding that the risk of a credit crunch has increased materially. The S&P 500 will remain unattractive until equity risk premium climbs to as high as 400 basis points from the current 230 level, according to the bearish strategist who two weeks ago flip-flopped briefly to bullish before getting rugpulled by the banking crisis. European stocks are higher after reversing the negative knee-jerk reaction to the terms of the UBS takeover of Credit Suisse. The Stoxx 600 is up 0.6% as gains in utilities, miners and consumer products outweigh declines in bank stocks.  European oil stocks declined as investors’ concern about the potential for a global banking crisis spur broad risk aversion and drag crude prices lower. The Stoxx Europe 600 Energy index slid 1%; among oil majors, Shell declined 1.5%, TotalEnergies -1.3%, and BP -0.6%. Smaller producers also dropped with Harbour Energy falling 5.7% and Tullow Oil -7.7%. Here are the biggest European movers: UBS shares drop as much as 16%, the most in eight years, after a government-brokered deal for it to buy rival Credit Suisse prompted a slew of downgrades Deutsche Bank declines 11%, ING -9.6%, Commerzbank -9.6%, Standard Chartered -8.7%, BNP Paribas -9% following UBS’s agreement to buy Credit Suisse El.En shares slide as much as 9.6% after Berenberg downgrades the laser- equipment maker to hold from buy, saying the company has a “tough year ahead” JM AB falls as much as 7.7% after DNB Markets gave the Swedish construction and building management company its sole sell rating in reinstated coverage Centamin shares rise as much as 6.6%, Endeavour Mining up as much as 7.2% and Fresnillo rises as much as 4.1% as gold gains owing to haven demand amid banking concerns Earlier in the session, Asian stocks declined as the UBS takeunder failed to quell investor concerns about the health of the global financial system.  The MSCI Asia Pacific Index fell as much as 1.4%, reversing most of its gain from Friday, with tech and financial names among the biggest drags. Hong Kong gauges led losses in the region as financial stocks including HSBC and AIA Group fell due to worries over risky bond exposures.  While the takeover of Credit Suisse is seen to reduce the immediate systemic risk for the banking sector, investors are worried over further repercussions from its bonds. Traders are also focused on the Federal Reserve’s rate decision later this week. “Even with the rescue plans over the weekend, it is hard to predict what will happen in the near future,” said Ayako Sera, a market strategist at Sumitomo Mitsui Trust Bank Ltd. “The measures to restore confidence in banks and to tame inflation go in opposite directions, and the dilemma is reducing risk appetite in the stock market.” China’s onshore equity benchmark erased earlier gains even after its central bank unexpectedly cut the reserve requirement ratio late Friday.  The PBOC’s announcement timing “seems to fall in line with recent global banking jitters, which suggests that the PBOC is on high alert to provide any cushion against any knock-on impact from recent turmoil,” said Jun Rong Yeap, market strategist at IG Asia In FX, the Bloomberg Dollar Spot Index steadied, erasing a decline of as much as 0.2% earlier while the Japanese yen is the best performer among the G-10’s. The New Zealand dollar is the weakest. Australia and New Zealand’s currencies flipped to losses amid souring risk sentiment. “Traders are looking for haven assets again with bank stocks falling, and worries about CoCo bonds gaining momentum,” Mingze Wu, a foreign exchange trader at StoneX Group, said of contingent convertible bonds. “The insistence of the Swiss National Bank to make the UBS-Credit Suisse deal happen suggests the rot was deeper and greater than they might have thought, and the dollar is an obvious beneficiary of this rush to safety” In rates, the nervous start to the trading week prompted a flight to safety, with German and UK government bonds rallying. 2-year TSY yield fell as much as 21bps to 3.63%, while its 10- year peer slid to as low as 3.29%, the lowest since September; traders bet on 15bps of Fed hikes this week but eased tightening beyond by as much as 12bps, pricing 105bps of cuts from the peak in May through to year-end. Bund futures are off their best levels but still in the green with 10-year yields down 4bps while two-year yields fall 8bps. In commodities, oil prices fell again with West Texas Intermediate briefly plunging below $65 a barrel, as escalating investor concerns about a global banking crisis eroded appetite for risk assets including commodities. Gold steadied, after rising above $2,000 an ounce for the first time in a year. Bitcoin remains bid and has extended comfortably above the USD 28k handle for the first time since June, though is yet to convincingly breach USD 28.5k to the upside. There is nothing scheduled on the macro calendar today but there will be plenty of bank related newsflow. Market Snapshot S&P 500 futures down 0.1% to 3,943.50 MXAP down 1.1% to 155.86 MXAPJ down 1.4% to 498.89 Nikkei down 1.4% to 26,945.67 Topix down 1.5% to 1,929.30 Hang Seng Index down 2.7% to 19,000.71 Shanghai Composite down 0.5% to 3,234.91 Sensex down 1.3% to 57,214.31 Australia S&P/ASX 200 down 1.4% to 6,898.51 Kospi down 0.7% to 2,379.20 STOXX Europe 600 up 0.6% to 438 German 10Y yield little changed at 1.95% Euro down 0.3% to $1.0641 Brent Futures down 3.8% to $70.18/bbl Gold spot up 0.8% to $2,005.59 U.S. Dollar Index up 0.17% to 103.88 Top Overnight News from Bloomberg The Federal Reserve and five other central banks announced coordinated action Sunday to boost liquidity in US dollar swap arrangements, the latest effort by policymakers to ease growing strains in the global financial system. UBS Group AG shares slumped Monday as investors digested the news of its historic acquisition of rival Credit Suisse Group AG and began to assess the job of integrating the troubled Swiss lender. The riskiest bonds of European lenders are plunging after holders of Credit Suisse Group AG’s contingent convertible securities suffered a historic loss as part of its takeover by UBS Group AG. A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were on the back foot amid ongoing banking sector jitters despite the announcement that UBS will take over Credit Suisse in an emergency rescue valued at CHF 3bln which would wipe out CHF 16bln of additional tier 1 bonds. ASX 200 extended its retreat from a recent break beneath 7,000 with declines led by weakness in the energy, real estate,  consumer and financial sectors, although gold miners were boosted after last week’s climb in the precious metal. Nikkei 225 was pressured amid the banking sector woes and after the BoJ’s Summary of Opinions provided little in the way of new information whereby it reiterated that the BoJ must patiently maintain monetary easing. Hang Seng and Shanghai Comp. were varied with Hong Kong underperforming on broad weakness across sectors, while the mainland was kept afloat for most of the session after Friday’s surprise RRR cut by the PBoC in an effort to boost liquidity and support the economy, but opted to maintain its benchmark lending rates. Top Asian News PBoC 1-Year Loan Prime Rate (Mar) 3.65% vs. Exp. 3.65% (Prev. 3.65%); 5-Year Loan Prime Rate (Mar) 4.30% vs. Exp. 4.30% (Prev. 4.30%) PBoC warned the collapse of Silicon Valley Bank shows rapid monetary policy shifts in developed economies are having a hazardous impact on financial stability, according to Bloomberg citing comments from Deputy Governor Xuan. PBoC adviser Cai said China needs household stimulus to boost the recovery and noted that residents' incomes have not grown well in the past few years, so the recovery in consumption is not enough to support economic growth, according to Caijing. Russian President Putin said he expects total trade volume with China to exceed USD 200bln this year and it is important to increase the share of trade with China conducted in national currencies, according to Reuters. WHO advisers urged China to release all information related to the origin of the COVID-19 pandemic after new findings were briefly shared on an international database to track pathogens, while they recommended researchers in China investigate upstream sources of animals and animal products present in the Huanan Market before January 1st 2020, according to Reuters. BoJ Summary of Opinions from the March meeting stated that the BoJ must patiently maintain monetary easing until the price target is achieved and the BoJ must scrutinise without any preset idea the state of market function but must maintain easy policy at present. Furthermore, it stated the BoJ must focus on the risk of losing the chance to meet the price target with a premature policy shift, rather than the risk of being too late in shifting policy and must be mindful of the risk inflation may overshoot expectations. European bourses are mixed/flat, as marked banking-led pressure has eased throughout the morning following the initial reaction to the UBS-Credit Suisse merger. On this, Credit Suisse and UBS opened lower by over 60% and 8% respectively, but have since eased off lows with the broader SX7P index now ~2% lower vs downside of over 5% at worst. On the merger, attention is on Credit Suisse's AT1 bonds being written off; a detail which pressured such bonds in APAC trade, with HSBC for instance a notable initial laggard on this. Since, we have seen European regulators reiterate  that CET instruments are the first to absorb losses, with AT1 only required after their full use. Stateside, futures are in similar proximity to the unchanged mark given the above as participants await updates around  First Republic and look ahead to the FOMC. Top European News BoE's plans to revamp bank capital rules risk a 25% reduction in lending to small businesses which threatens jobs and economic growth, according to a study by consultants Oxera cited by FT. PoliticsHomes' Payne reminds that DUP MPs meet today to discuss their stance on Wednesday's Windsor Framework vote, expected to announce their stance on Tuesday. Moody’s affirmed Greece at Ba3; Outlook revised to Positive from Stable and affirmed Luxembourg at AAA; Outlook Stable, while S&P affirmed Belgium at AA; Outlook Stable. FX The DXY has struggled to benefit from the subdued start to the session, with the index near the mid-point of 103.68-103.96 parameters for much of the morning. Given the tone, the JPY is the standout outperformer with USD/JPY down to 130.55 vs 132.64 peak; though, given the relative pickup in equity performance USD/JPY is now holding above 131.00. Despite the subdued risk tone, CHF is the underperformer as the market's focus remains on Credit Suisse/UBS; USD/CHF above 0.93 and EUR/CHF above 0.99. Given their high-beta status, the Antipodeans are also faring poorly with RBA minutes and Kiwi trade data scheduled ahead. Elsewhere, peers are comparably more contained with EUR/USD holding above 1.0650 and Cable near 1.22. PBoC set USD/CNY mid-point at 6.8694 vs exp. 6.8701 (prev. 6.9052) Fixed Income EGBs and USTs are benefitting from marked haven demand, with Bunds over 140.00 and USTs nearing 117.00 at best, though the benchmarks have eased from highs as equity sentiment improves. Specifically, Bunds soared to a 140.30 peak vs 137.10 low, but have since pulled back to just below 140.00 as the associated 10yr yield slipped to a 1.92% intraday low. Stateside, USTs are similar in both direction and magnitude with yields lower across the curve and action more pronounced in the short-end currently; as it stands, market pricing via Reuters is leaning towards the Fed leaving rates unchanged on Wednesday, with around a 40% chance of a 25bp hike implied. Commodities WTI and Brent are lower intraday given the broader risk tone and while they are off lows, are yet to stage a 'recovery' akin to that seen in equities; currently, the benchmarks are lower by circa. USD 2/bbl just above USD 64.12/bbl and USD 70.12/bbl respective lows. Spot gold surpassed USD 2000/oz, but failed to hang onto the level as the DXY makes its way back into positive territory and broader sentiment improves slightly while base metals are moving with equity sentiment and as such are turning incrementally firmer on the session. Iraq’s Oil Minister said his country is committed to OPEC’s agreed production rates and obliged some oil companies' operations in the south to cut production to come in line with OPEC’s agreed rates, while it was also reported that Iraq and OPEC stressed the importance to coordinate to stabilise prices, according to Reuters. Iran set April Iranian light crude oil price to Asia at Oman/Dubai plus USD 2.50/bbl, according to Reuters. India plans to extend export restrictions on diesel and gasoline beyond March 31st, according to Reuters sources. TotalEnergies (TTE FP) said 34% of operational staff at its refineries and depots conducted a strike on Sunday morning in protest against the government’s move to raise the retirement age by two years, according to Reuters. Kuwait Oil Company declares a state of emergency re. an oil spill located in west Kuwait; production unaffected. Geopolitics Russian President Putin visited Crimea on the 9th anniversary of its annexation from Ukraine and also visited Mariupol in the occupied Donetsk region of Ukraine, while he also met with the top command of Russia’s military operation in Ukraine at the Rostov-on-Don command post in southern Russia, according to Reuters. Russian President Putin said the visit by Chinese President Xi confirms the special character of the Russian-Chinese partnership and Russia is pinning big hopes on the visit, while he added Russia is expecting a powerful impulse to relations and that relations are at their highest ever point. Putin also said there are no limits or forbidden subjects in relations with China and he is grateful for China’s balanced line on events in Ukraine, as well as welcomes China’s willingness to play a constructive role in solving the Ukrainian crisis. Furthermore, Putin said that they are worried about dangerous actions that could undermine global nuclear security and Russia is open to a diplomatic settlement of the Ukraine crisis but rejects ultimatums, according to Reuters. Chinese President Xi said China has always taken an objective and impartial position on the situation in Ukraine and has made efforts to promote reconciliation and peace negotiations, according to Rossiiskaya Gazeta. ICC judge issued an arrest warrant for Russian President Putin over alleged war crimes related to ‘unlawful deportation’ of Ukrainian children, according to The Guardian. It was also reported that German Chancellor Scholz said ICC is an important institution that has been given a mandate through international treaties and noted that nobody is above the law which is becoming clear now, according to Reuters. Ukrainian President Zelensky’s Chief of Staff and several top security officials including the Defence Minister held a call with US counterparts to discuss military aid for Ukraine, according to Reuters. Ukrainian Infrastructure Minister said the Black Sea grain deal has been extended for 120 days which is longer than the 60-day touted by Russia, while a UN spokesman confirmed the extension of the export deal but didn’t specify the length of the renewal, according to Reuters. EU foreign policy chief Borrell said an agreement was reached on ways to implement an EU-backed deal on normalising ties between Serbia and Kosovo, while he added that the sides agreed to implement their respective obligations in good faith. Saudi Arabia’s King Salman invited Iranian President Raisi to visit Riyadh, while it was also reported that Iran’s Foreign Minister agreed to hold a meeting at the foreign minister level with Saudi Arabia and said that Iran has declared a readiness to reopen embassies. In other news, Iraq and Iran signed a deal to tighten their border security. South Korea said that North Korea fired a short-range ballistic missile off the east coast into the sea on Sunday which flew 800km before hitting a target and is a clear violation of the UN Security Council resolution. In relevant news, G7 foreign ministers said they regret inaction by the UN Security Council regarding North Korea’s missile tests and that the March 16th ICBM launch undermines international peace, according to Reuters. North Korea confirmed it conducted exercises aimed at improving tactical nuclear capability on March 18th-19th and said the US and South Korea are expanding joint military drills aimed at North Korea involving US nuclear assets and its exercises are meant to send strong warnings against US and South Korea. Furthermore, North Korean leader Kim said the country should be ready to conduct nuclear attacks at any time in a deterrence of war, according to KCNA. US Event Calendar Nothing major scheduled DB's Jim Reid concludes the overnight wrap This weekend felt like being transported back into 2007-2008 in many respects with a race-against-time deal between UBS and Credit Suisse being put together in full view of the market. The most remarkable thing about yesterday was the huge swings in Credit Suisse AT1s on a Sunday. Clips of the $17.3bn of outstanding CS AT1 bonds seemed to trade at both ends of a mid-20s to around 70c range as the outline of the UBS deal filtered through. It was eventually a shock that the AT1s were zeroed in the deal even as UBS eventually bought CS for $3.3bn, a firmly positive number. This was however less than half what they were worth at the close on Friday and down 99% from their peak pre-GFC. The decisions to wipe out AT1 bondholders is going to be the biggest issue medium and longer-term for the European banking sector, especially when the company was bought with a positive value yesterday. It's hard to argue with the morals of it but it will likely increase the cost of capital for banks which could lead to an additional tightening of lending conditions. So that c.$17bn of debt destruction could eventually be worth multiples of that to the wider European economy and in other regions too. Selected Asian AT1 securities are trading around 5-10% down as we type and HSBC equity is around -6% in Hong Kong so this serves as a benchmark for the European banking open. The good news at the macro level is that the CS situation has been dealt with and there are no obvious European next shoes to drop at this stage. CS had been decoupled from the rest of the continents' banking sector for months now and therefore was by far and away the weakest link when the US regional banking woes began less than 2 weeks ago. So the market has now got to balance the reduction of systemic risk with the likely higher cost of some forms of bank capital. There will also be nervousness as to how easy it was to change laws and market conventions in order to get this deal done. Some risk premium will surely be factored in to the cost of capital for the sector now. Meanwhile, in a coordinated global response, the Fed in a statement along with five other central banks - including the BOE, the BOJ, the ECB and the SNB - last night announced that they would enhance dollar swap lines i.e., to increase the frequency of swap line agreements from weekly to daily, beginning March 20 and will continue “at least” through the end of next month. In doing so, the central banks indicated that the move would serve as an “important backstop” amid financial market unease, thereby helping to keep credit flowing to households and businesses. Overall, Asian equity markets have started the week on a weaker footing with the Hang Seng (-2.56%) leading losses across the region, with the Nikkei (-1.01%) and the KOSPI (-0.46%) also dipping in early trade. Elsewhere, stocks in mainland China are bucking the regional negative trend with the CSI (+0.12%) and the Shanghai Composite (+0.12%) both trading slightly higher. Note their was a 25bps RRR cut on Friday. Outside of Asia, US stock futures tied to the S&P 500 (+0.12%) and NASDAQ 100 (+0.23%) are relatively flat which helps after the weekend news but then again as you'll see from the weekly review at the end the S&P 500 was higher last week in the face of incredible turmoil elsewhere. Meanwhile, yields on 10yr US Treasuries are stable while 2yr yields (+2.92bps) briefly touched 4% before sliding back to 3.87% as we go to press. Moving forward, it's hard not to have sympathy for the Fed this week. Any criticism of their policy should probably be more directed to the actions of 2020-2021 for keeping policy excessively too loose as government spending, money supply and inflation was surging. Today they are in a catch-22 position where the excesses of those days (and earlier) are now unravelling while inflation is still way above target. Their rate decision on Wednesday will be the undoubted non-banking related highlight of the week but we will also have the BoE meeting (Thursday), UK CPI (Wednesday), Japan CPI (Thursday), flash global PMIs (Friday) which might capture a small amount of the turmoil period, and importantly Chinese President Xi Jinping will be in Moscow from today to Wednesday. After the FOMC, it will be the BoE's turn on Thursday to decide on rates. Our UK economists preview the meeting here and expect a final +25bps hike as well as likely dovish forward guidance amid concerns over overtightening risks. The decision will follow a host of UK inflation data released on Wednesday. Also on Thursday markets may follow the SNB meeting more closely than usual following this week's turmoil around Credit Suisse. Aside from several monetary policy decisions, there will also be a plenty of central bank speakers, especially from the ECB, including President Lagarde (twice), following last week's +50bps hike. In the US, aside from the PMIs investors will also get durable goods orders (DB forecast -0.5% vs -4.5% in January) on Friday and a host of regional Fed indicators throughout the week to gauge economic sentiment. Housing market data including existing home sales (tomorrow) and new home sales (Thursday) are also due. Over in Europe, other key data will include the PPI (today) and the ZEW survey (tomorrow) for Germany, Eurozone consumer confidence on Thursday and UK consumer confidence and retail sales on Friday. Moving on to Japan, the key release will be the CPI report on Thursday. Our Chief Japan Economist (full preview of the week ahead here) expects government subsidies for electricity and gas to weigh on core CPI inflation (3.2% vs +4.2% in January) but core-core CPI ex. energy to pick up 3.4% (3.2%) but reach its peak for the cycle. Looking back on a tumultuous last week now. On Friday, with market volatility already elevated from the growing concerns around the global financial system the preliminary University of Michigan sentiment survey dropped -4.6pts to 63.4. That was just the second monthly drop since last June, and the lowest reading since December. The declines pre-dated the SVB collapse. If one wanted to find a positive in the report inflation expectations were lower with 5-10yr expectations down to 2.8% (2.9% expected), while the 1yr inflation expectation was 3.8% (4.1% expected). That’s the lowest 1yr expectations have been since April 2021. That was just the last link in a chain of market moving events last week that repriced Fed futures across the curve. Expectations for a 25bps hike at the March meeting is now at just 60% with a 15.0bp hike priced in. That is down -18.3bps on the week and -4.2bps on Friday, as well as -27.8bps since Powell’s testimony before the Senate Banking Committee the week before last. At the same time, the expected terminal rate ended the week at 4.794% by the May meeting after starting the week at 5.285% at the June meeting and being as high as 5.691% at the September meeting on the prior Wednesday before the SVB news broke. Futures are also now pricing in nearly -96bps of rate cuts by year-end after starting the week with -40bps of cuts priced. 10yr Treasury yields fell back another -14.8bps on Friday and -27.0bps over the course of the week to their lowest level since early-February at 3.429%. The 2yr yield saw a much bigger move, coming down -74.9bps last week (-32.0bps on Friday) to their lowest level since September 2022. On this side of the pond, 10yr bund yields fell back -40.0bps (-18.2bps on Friday) last week to 2.108%, its lowest point since the first week of February. The 2yr bund yield fell by -71bps last week (-22.0bps Friday) in its most significant weekly down move since September 1992. While sovereign bonds outperformed last week, US equities whipsawed with a large amount of dispersion. Even though the S&P 500 closed the five days higher, US banks continued to selloff with the KBW bank index down -14.55% last week (-5.25% Friday), with major banks like JPM (-5.87%), BofA (-8.09%), Citi (-8.46%), and GS (-7.26%) outperforming while the regional bank ETF KRE was down -14.30% last week. With CS seeing pressure from a lack of depositor and investor confidence, the SNB offered the Swiss bank a 50bn franc credit line. However this was not enough to stop the stock from ending the week -25.48% lower (-8.01% Friday), while European Banks at large were down -13.40% (-2.72% Friday) leaving the index up just +1.2% YTD. The STOXX 600 was down -3.85% week-on-week (-1.21% on Friday), whilst the CAC and DAX fell -4.09% (-1.43% on Friday) and -4.28% (-1.33% on Friday) respectively. With risk markets selling off, credit spreads widened significantly on the week once again. The Euro Crossover HY CDS index was +66.7bps wider (+18.8bps wider Friday) and EUR IG CDS +18.1bps wider on the week (+3.8bps Friday). EUR HY CDS is now +18.9bps wider YTD, with EUR IG +9.9bps wider since the start of the year. US credit also significantly widened again as the US HY CDS index was +31.6bps wider (+26.8bps Friday) with IG +4.8bps wider following a +5.1bps move on Friday. The weekly widening has left USD HY CDS +45.7bps wider YTD, while US IG CDS was +5.8bps wider YTD. Finally in commodities, industrial inputs sold off as recession fears rose. Brent crude fell back -11.85% (-2.32% on Friday) and WTI was down -12.96% (-2.36% on Friday), meanwhile European natural gas futures reversed the prior week’s significant rally with energy prices falling -18.92% week-on-week (-3.35%). Copper was down -3.26% (+0.72% Friday) while the overall Bloomberg Commodity index was down -1.87% (-0.16% Friday). With the risk-off tone throughout markets, Gold was a notable outperformer with the precious metal up +6.48% on the week (+3.63% Friday) in its best weekly performance since Covid to close at its highest level in a year at $1989/oz. Tyler Durden Mon, 03/20/2023 - 08:03.....»»

Futures Tumble As SVB Implosion Spark Global Banking Turmoil; Payrolls Loom US futures and European stocks pared broader declines earlier sparked by a rush to havens amid concerns about the health of the US banking system following the collapse of Silvergate and the rout that has crushed Silicon Valley Bank, sending it shares down 40% premarket after plunging 60% on Thursday amid a spreading liquidity crisis. The collapse of the lender was sufficiently traumatic to push today's payrolls report - until yesterday the highlight of the week - off the front page. S&P 500 futures fell slightly, erasing a bigger drop that pushed eminis briefly below 3,900 setting up the underlying index to extend a rout fueled by liquidity concerns in the banking sector and as investors prepare for the monthly payrolls report.  The benchmark dropped the most in over two weeks on Thursday, with banks slumping as SVB Financial Group took steps to shore up its capital position following losses in its securities portfolio. Nasdaq 100 futures were little changed. Europe’s Stoxx 600 equity gauge dropped more than 1%, with an index of bank stocks sliding the most since June. Bond markets were also roiled by the SIVB news, sending yields plunging and reversing sharp gains earlier this week following Powell's hawkish speech. Treasuries extended gains for a second day, driving 10-year yields down by as much as 11 basis points to a three-week low, while German 10-year government borrowing costs were at one point poised for their biggest slump since early February. In premarket trading, Shares of SVB - a major lender to startup companies - dropped 46% after a record 60% plunge on Thursday after a surprise announcement from SVB that it was holding a $2.25 billion share sale after a significant loss on its portfolio, which included US Treasuries and mortgage-backed securities. Other banks including JPMorgan and Bank of America also inched lower. However, the big impact of SVB’s woes is that it has investors asking whether this be the start of a much bigger problem as attention turns to risks that may lurk in other financial institutions after the Fed’s steep rate hikes. Some market strategists said that the declines are likely to remain smaller Friday as the risk of contagion from SVB is relatively contained. Their thesis was not helped after several VC titans such as Peter Thiel’s Founders Fund and others advised portfolio businesses to withdraw their money. “The events around SVB highlight some of the additional risks of financial stress,” said Sarah Hewin, senior economist at Standard Chartered Bank in London. “There is a sense now of the bigger risks to the economy the more the Fed raises interest rates. At the margins it is raising the question of whether the Fed will indeed be able to do a 50 basis-point rate hike this month.” “I suspect there’s some comfort that SVB’s troubles are not systemic as for the majority of banks — improving interest margins due to rising rates are offsetting losses on their long-duration investment portfolios,” said Marija Veitmane, senior multi-asset strategist at State Street Global Markets. Here Are some of the other notable premarket movers: Roblox (RBLX US) shares rise 2.2% as Jefferies raises the online games designer to buy from hold, saying it expects continued growth through near-term macro and competitive pressures. Caterpillar (CAT US) shares fall 2.1% as UBS cuts the construction-machinery maker to sell from neutral, saying its growth momentum is not good enough to justify its valuation. Oracle (ORCL US) fell 4.5% after the software company reported cloud license and on-premise license revenue that was weaker than expected. Overall revenue was essentially in line with the analyst consensus, while adjusted earnings were slightly stronger. DocuSign (DOCU US) fell 13% after the e-signature company gave a first-quarter billings forecast that is weaker than expected. Analysts noted that the fourth-quarter results were strong but the company was re- investing much of its cost savings. Allbirds (BIRD US) shares slump 22% after the sneaker brand reported fourth-quarter net revenue that missed estimates. Analysts noted a lower-than- expected first-quarter outlook. Meanwhile, all eyes today are on the jobs report for February, due at 8:30 a.m. in New York. Payroll growth has topped estimates for 10 straight months in the longest streak in decades, a trend that, if extended, will boost pressure on the Fed to keep hiking rates. Median estimate for February change in nonfarm payrolls is 225k after 517k gain in January, while crowd-sourced whisper number is 250k (our full preview is here). For today's implied post-payrolls move, JPM's Bram Kaplan estimates the options market is pricing a ~1.4% S&P 500 move for NFP. The bank's chief economist, Mike Feroli, sees NFP to print around 200k vs 225k survey vs 517k prior and February Unemp rate to be same as Jan’s 3.4%, in line with consensus. “For the Fed these ripples across the financial system will be something to monitor but they are much more focused on their inflation mandate,” said Georgina Taylor, head of multi-asset at Invesco. “A strong set of data “will keep pressure on the Fed,” she added. In Europe, banks and financial services are the worst-performing stock sectors, leading the Stoxx 600 down by as much as 1.9%, while bond-proxy utilities was the only sector up. European banks stocks slid on Friday and underperformed the broader market after after US peers plunged following the collapse of Silvergate Capital and concerns around SVB Financial. The Stoxx 600 Banks index dropped as much as 4.9%, the most since June; subindex is down 3.6% at 1:03pm CET, compared to a 1.2% decline for the Stoxx 600 benchmark. Deutsche Bank was the biggest faller in the subindex, down as much as 9.8%; HSBC, Santander, BNP Paribas and ING the other major drags on the index. UBS fell as much as 5.4% to drag on the Stoxx 600 Financial Services index; private equity investors Partners Group and EQT also sink, while Credit Suisse shares plunged as much as 6.1% to hit a new record low.  Credit Suisse analyst Jon Peace says the drop for European banks, driven by worries about unrealized losses in bank bond portfolios, offers a buying opportunity (of course he would say that). Here are some of the most notable European movers: Daimler Truck drops as much as 4.8% in Frankfurt after its fourth- quarter earnings miss and a broader selloff in cyclical shares overshadowed its 2023 outlook Schroders shares fall as much as 4.3% after being cut to neutral from outperform at Credit Suisse as the broker sees the UK fund manager contending with headwinds Bachem Holding falls as much as 8.5% after an offering of 1.25m shares priced at CHF86.50 apiece, representing a 5.9% discount to Thursday’s close Kion falls as much as 6.7% after being cut to equal-weight from overweight at Morgan Stanley with the broker seeing an uncertain picture for price-volume dynamics at the forklift maker in 2023 Casino shares fall as much as 5.8% after the French grocer reported trading profit for the full year that missed the average analyst estimate Mobilezone shares decline as much as 9.3% after it announced disappointing weaker gross and Ebit margins OTP Bank shares decline as much as 1.9% after Hungary’s largest lender said 2022 profit fell after it booked a slew of charges linked to the war in Ukraine Vodafone shares rise as much as 1.7% after Bloomberg reported that the UK telecom operator is at the final stages of talks to merge its British operations with Three UK Breedon rises as much as 5% after Abicad Holding said it is acquiring about 5.3m ordinary shares at price of 75p apiece, representing a premium to the last close U-blox shares climb as much as 11% after the Swiss position-systems provider reported strong profitability and free cash flow for 2022 Leonardo gains as much as 2.9% after the Italian defense group projected profit for 2023 that was slightly ahead of estimates Earlier in the session, stocks in Asia tumbled, following US financial shares lower, after warnings from Silicon Valley bank led to concern about the broader sector, and the yen slides as the BOJ leaves policy unchanged. The Nikkei slumps 1.6% and Topix is 1.7% lower. China’s Shanghai Composite Index falls 1.2% and the CSI 300 slips 1.1%. Hong Kong shares also decline with the benchmark down 2.5% and Hang Seng Tech Index down 3.6%. Japanese stocks had their biggest drop in more than five months as shares of the nation’s major lenders tumbled after the Bank of Japan’s decision to leave policy unchanged set off a plunge in bond yields.  The Topix fell 1.9% to 2,031.58 as of the 3 p.m. close in Tokyo, having its steepest drop since Sept. 26. Mitsubishi UFJ Financial contributed the most to the decline, falling 6.1%. Out of 2,160 stocks in the index, 159 rose and 1,953 fell, while 48 were unchanged. The Nikkei 225 fell 1.7% to 28,143.97.  The Topix’s gauge for banks slid the most in three years, with Sumitomo Mitsui Financial and Mizuho Financial each falling at least 4.9%. Banks also dropped after their US peers slumped on concerns that signs of trouble at a Silicon Valley-based lender may point to broader risks for the sector. “Perhaps some investors were hoping for a review of yield curve control after the BOJ’s monetary policy meeting,” said Tomoaki Kawasaki, a senior analyst at Iwaicosmo Securities Co. “There was probably some talk about Silicon Valley in the morning, and the stock market was falling a little.” Australia's stocks slumped the most in six months: the S&P/ASX 200 index fell 2.3% to close at 7,144.70, posting its biggest decline since mid-September after concerns over a Silicon Valley-based lender sapped investor appetite. Banks were among the biggest drags on the Australian gauge, following their Wall Street peers lower as troubles at SVB Financial Group spurred concerns about the wider lending sector. Read: Asian Bank Stocks Drop to Two-Month Low on SVB Worries In New Zealand, the S&P/NZX 50 index fell 0.8% to 11,727.04. India's banking stocks posted their biggest slump in more than a month to lead declines as the nation's benchmark gauges joined a global selloff triggered by worries over the health of the US banking system.  The S&P BSE Sensex fell 1.1% to 59,135.13 in Mumbai, while the NSE Nifty 50 Index declined 1%. Friday’s selloff saw both benchmarks end the week atleast a percent lower. For the year, the measures have lost 2.8% and 3.8%, respectively. HDFC Bank contributed the most to the Sensex’s decline, with a 2.6% fall on Friday. Of the 30 shares in the Sensex index, 21 dropped and nine advanced. Fifteen of 20 sector gauges compiled by BSE Ltd. closed lower, led by the banking index which fell 1.9%, its biggest drop since Jan. 27.  Banking and financial stocks, with nearly 40% weight in the benchmarks, have been among the prominent decliners recently with higher interest rates expected to impact margins as well as hurt demand for fresh loans. The Bloomberg Dollar Spot Index inched lower for a second day and the greenback traded mixed against its Group-of-10 peers. Treasuries extended a rally across the curve as money markets eased Fed tightening bets. Euro-area and UK bonds also rallied in early trade, with short-dated debt outperforming amid demand for haven assets and amid paring of central bank hikes. The euro rose to trade around $1.06. The cost of converting euro payments into dollars using cross-currency basis swaps rises at the European open as demand for the greenback surges The pound rose, buoyed by stronger-than-forecast data on UK economic growth in January, which added to evidence of resilience in the face of a cost-of-living squeeze and widespread industrial unrest. Gilts followed moves in European bonds and Treasuries Norway’s krone slumped after data showed the headline inflation rate declined to 6.3% in February, versus the median projection of 6.8% in a Bloomberg poll of analysts that was the same as the central bank’s estimate. Underlying inflation, the measure followed by Norges Bank, also declined from an all-time high to 5.9%, matching the central bank’s view, while analysts had expected a smaller slowdown The yen reversed gains and government bonds advanced after the BOJ kept its policy settings for its negative interest rate and yield curve control program unchanged at Governor Haruhiko Kuroda’s last meeting Australian sovereign bonds extended opening gains after the BOJ left its key policy rates unchanged. Aussie dollar dips were bought into by exporters and leveraged funds squaring up before US jobs data later today Global bonds broadly rally: Treasuries are richer across the curve, extending Thursday’s sharp rally, while off session highs reached during European morning as stock futures pare losses. Yields are richer by 3bp-6bp across the curve led by intermediates, steepening 5s30s spread by 3bp on the day and adding to Thursday’s aggressive bull-steepening move; 10-year yields around 3.85%, richer by 5bp vs Thursday’s after touching 3.797%, lowest since Feb. 16. Flight-to-quality backdrop remains a theme, supporting Treasuries, amid mounting worries about contagion in US banking system from SVB Financial’s slump. Treasury yields underperform gilts and bunds across the curve as they catch up to Thursday’s action. Peripheral spreads widen to Germany. Bloomberg dollar spot index is flat. In commodities, WTI Crude continues its decline trading ~$75. Spot gold rises roughly $3 to trade near $1,834/oz. Looking to the day ahead now, the main highlight will be the aforementioned US jobs report for February. Other releases include the UK’s GDP for January. And from central banks, we’ll hear from the ECB’s Panetta. Market Snapshot S&P 500 futures down 0.2% to 3,910.75 MXAP down 1.9% to 156.95 MXAPJ down 1.8% to 502.93 Nikkei down 1.7% to 28,143.97 Topix down 1.9% to 2,031.58 Hang Seng Index down 3.0% to 19,319.92 Shanghai Composite down 1.4% to 3,230.08 Sensex down 1.1% to 59,130.19 Australia S&P/ASX 200 down 2.3% to 7,144.69 Kospi down 1.0% to 2,394.59 STOXX Europe 600 down 1.3% to 453.84 German 10Y yield little changed at 2.53% Euro up 0.2% to $1.0597 Brent Futures down 0.3% to $81.35/bbl Gold spot up 0.3% to $1,836.92 U.S. Dollar Index down 0.14% to 105.16 Top Overnight News from Bloomberg President Joe Biden and European Commission leader Ursula von der Leyen will likely make their meeting at the White House on Friday convivial, despite trade tensions and the pressure of the war in Ukraine UK GDP grew 0.3% in January, recovering part of a 0.5% decline in December when strikes halted activity, Office for National Statistics figures show. Economists forecast growth of 0.1% in January Janus Henderson’s emerging-market hard currency debt fund has a “cautious overweight” on Argentina as the bonds are cheap and there’s expectation of a change in government at the October election, Thomas Haugaard says The ECB will step up its fight against stubborn inflation by raising interest rates four more times and unwinding its €5 trillion ($5.3 trillion) bond portfolio at a quicker pace, according to a Bloomberg survey of economists Japan’s broken bond market gave Governor Haruhiko Kuroda one last salute at his final policy meeting, when one of the 10-year tenors saw its yield turn negative For the first time in years, the euro is poised to offer better returns than its Nordic counterparts. Should money-market wagers materialize, the ECB deposit rate will climb above the Norges Bank key rate for the first time ever and will surpass the Riksbank’s benchmark after five years lagging Japan’s parliament gave a green light for veteran economics professor Kazuo Ueda to take the helm of the BOJ next month in the first change of governor in a decade A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks declined amid headwinds from the banking sell-off in the US owing to contagion fears related to Silicon Valley Bank in which shares of the group dropped more than 60% during Wall St trade and resulted in the four biggest US banks shedding a total of more than USD 50bln in market cap, while SVB suffered another 20% drop after-hours as funds advised companies to pull out of the lender. ASX 200 was pressured by losses in its largest-weighted financial industry on spillover selling from stateside peers and with the index also hit by weakness in the commodity-related sectors. Nikkei 225 declined with risk sentiment dampened following mixed household spending data and with banking shares further hit after the BoJ maintained its ultra-loose policy settings. Hang Seng and Shanghai Comp. conformed to the downbeat mood with Hong Kong underperforming amid a tech rout as JD.com shares suffer a double-digit drop despite beating on the bottom line, while property stocks are also in focus as shares in developer Kaisa initially dropped around 40% post-earnings and on return from a 12-month trading halt. Top Asian News China's parliament elected Chinese President Xi for a third term as President and as Central Military Commission Chairperson, while the NPC also elected Zhao Leji as NPC Standing Committee Chairperson and Han Zheng as China's Vice President. US is working to close a loophole in the export ban related to China's Inspur (000977 CH), while it was also reported that Senator Rubio introduced legislation seeking to block tax credits for batteries produced by the planned Ford (F) plant using Chinese technology. BoJ kept policy settings unchanged, as expected, with rates held at -0.10% and QQE with yield curve control maintained to target 10yr JGB yields at around 0%, while it kept the band around the yield target at +/-50bps with the decision on YCC made by unanimous vote. BoJ also maintained its forward guidance on interest rates and said Japan's economy is picking up with the economy expected to recover as the impact of the pandemic and supply constraints fade, while it stated that core consumer inflation is moving around 4% and inflation expectations are heightening. BoJ's Kuroda: premature to debate the specifics on the exit from monetary easing, policy rate and balance sheet the main things to consider when the debate begins; exit must be conducted only when 2% inflation is sustainably and stably achieved. Japan's upper house approved the appointment of Kazuo Ueda as the next BoJ Governor, while it approved the appointment of Shinichi Uchida and Ryozo Himino as Deputy Governors, as expected. European bourses are lower across the board, Euro Stoxx 50 -1.5%, as contagion fears from SVB dents risk sentiment and weighs heavily on banks, SX7P -4.0%. As such, the Banking sector is underperforming with the exception of Utilities; aside from the above, pertinent movers on the upside are limited to Leonardo and Vodafone. Stateside, futures remain under pressure with the ES around 3900 while the NQ is the relative outperformer, and little changed overall, with yields lower amid haven action and as participants prepare for NFP. Top European News US President Biden and European Commission President von der Leyen have agreed to launch talks on critical mineral and subsidies, according to a senior US official; expects to discuss strengthening cooperation on Russian sanctions. UK PM Sunak is to unveil up to GBP 5bln additional cash for defence, according to The Times. Reuters poll showed all 60 economists surveyed unanimously forecast the ECB to hike the Deposit Rate by 50bps to 3.00% at its meeting next week, while expectations are for the Deposit Rate to peak at 3.75% in Q3 vs prev. forecast of a peak at 3.25% in Q2. 5.6 magnitude earthquake occurs in northern Colombia, via EMSC. FX The USD has failed to benefit from the broader risk tone, with the DXY underpressure though yet to test the 105.00 mark to the downside within 105.07-36 parameters. JPY is the standout laggard, with USD/JPY testing 137.00 from a 135.82 base as hawkish positioning unwound following Kuroda's last BoJ, where policy parameters were maintained. At the other end of the spectrum is GBP, with firmer-than-expected headline GDP data and technicals via EUR/GBP assisting to lift Cable above 1.20; specifically, EUR/GBP moved below the 21- & 50-DMA's of 0.8849 and 0.8838 in relatively quick succession. Elsewhere, the CHF benefits on haven-flows while peers ex-JPY are generally firmer against the USD pre-NFP; CAD, ahead of its own jobs report, is litle changed in narrow 1.3823-3861 parameters. Fixed Income Core and periphery EGBs are benefiting from the glum risk tone; though, the benchmarks have eased from initial extremes as newsflow slows pre-NFP. Specifically, Bunds are now below 133.00 within 132.37-133.82 ranges; Gilts back towards 101.16 vs 102.00+ best and USTs at 112.00 despite being 13 ticks above the mark earlier. Amidst this, yields are lower across the curve with action in US yields most pronounced in the belly. Commodities Crude and base metals are dented by the deterioration in risk sentiment, with spot gold gleaning some modest upside from this. Currently, WTI and Brent are just off initial lows within ranges of circa. USD 1/bbl while base metals are, broadly speaking, softer across the board with LME nickel particularly afflicted. For gold specifically, the yellow metal briefly surmounted its 21-DMA and yesterday's best at USD 1834/oz and USD 1835/oz respectively, but remains only modestly firmer overall. Saudi Aramco is to supply full contract volumes of oil to at least four north Asian refiners in April. Chevron's (CVX) 240k BPD Richmond California plant reports malfunctioning flaring equipment. Geopolitics North Korean leader Kim oversaw the fire assault drill on Thursday and the drill proved the capability to counter an actual war, while shells were aimed at simulated targets of enemy airport. Furthermore, North Korean leader Kim said the army should be ready to fight at any time citing 'frantic war preparation moves' by the enemy, according to KCNA. US is to hold an informal meeting of UN Security Council members next week regarding human rights abuses in North Korea, according to Reuters. Russian Deputy Foreign Minister Ryabkov says that Russia and the US remain in contact over the New START Treaty but progress is not expected from these contacts. US Event Calendar 08:30: Feb. Change in Nonfarm Payrolls, est. 225,000, prior 517,000 Change in Private Payrolls, est. 215,000, prior 443,000 Change in Manufact. Payrolls, est. 10,000, prior 19,000 Unemployment Rate, est. 3.4%, prior 3.4% Underemployment Rate, prior 6.6% Labor Force Participation Rate, est. 62.4%, prior 62.4% Average Weekly Hours All Emplo, est. 34.6, prior 34.7 Average Hourly Earnings YoY, est. 4.7%, prior 4.4% Average Hourly Earnings MoM, est. 0.3%, prior 0.3% 14:00: Feb. Monthly Budget Statement, est. -$263b, prior -$216.6b DB's Jim Reid concludes the overnight wrap What do you get when you see one of the biggest hiking cycles on record, alongside one of the most inverted yield curves in history, at the same time as seeing one of the biggest tech bubbles bursting in history, coupled with runaway growth in private markets. The answer is that you get nights like yesterday where SVB (Silicon Valley Bank) Financial Group, closed -60.41% lower on the day, wiping out $9.6bn of market value. Although this story was brewing in the background for much of the day, it wasn't until Europe went home that it exploded on the global macro stage as the S&P 500 went from around flat at that point to close -1.85%, with the KBW US bank index (-7.7%) seeing its worst day since June 2020. Rates saw a huge rally, especially at the front end as we'll see below. For background, SVB focuses on servicing emerging to middle-market growth technology companies that are usually backed by venture-capital firms. They announced that they had large losses on security sales and would be undergoing a stock offering to shore up its balance sheet. Silicon Valley Bank’s CEO pointed to the expectation of higher rates and persistent client outflows as to why the lender incurred a one-time $1.8bn loss on a security portfolio sale. Considering the client outflows are also likely driven by higher interest rates, it is not a stretch to say that this episode is emblematic of the higher-for-longer rate regime we appear to be at the start of, as well as inverted curves, and a tech venture capital industry that's been seeing much tougher times of late. The perfect storm of all the things we've been worrying about in this cycle. Sentiment across markets soured following the spreading of the SVB news. The KBW Bank index saw all of its 24 index member lower on the day with some high-profile names like JPM (-5.41%), BofA (-6.20%) and Citi (-4.10%) also much lower. The index has been down every day this week, with the 4-day performance (-12.31%) also the worst 4-day performance for US banks since June 2020. We'll have to see how this story develops but something always breaks hard during or after a Fed hiking cycle. Is this another mini wobble on this front or the start of something bigger? Tough to tell but I would be stunned if there weren’t many more casualties of this boom-and-bust cycle. Don’t forget, we haven’t been in recession yet. Imagine superimposing that on the leveraged world we live in. It's fair to say a new payrolls Friday comes at a fraught moment with today's probably up there with the most closely anticipated in recent times. This is before we see US CPI next Tuesday and what both imply for the March FOMC the following week. With such an outsized beat last month (+517k vs. 189k expected) it’s fair to say no-one has any real idea of what random number will be churned out today. Having said that, both 25bps and 50bps are in play for the FOMC and today and Tuesday will probably be swing factors with Fed Chair Powell stressing that “no decision has been made on this” earlier this week. SVB has to be thrown into the mix too. As we look forward to the jobs report, the recent momentum behind a 50bp hike actually stalled slightly yesterday even before the SVB story spread. This was driven by the latest round of weekly jobless claims data coming in beneath expectations. In terms of the specifics of the release, initial jobless claims came in at 211k over the week ending March 4 (vs. 195k expected). That’s their highest level so far in 2023, and marks an unusually large surprise on the upside as well, having come in above every economist’s estimate on Bloomberg. In absolute terms, the surprise of +16k above consensus is also the biggest weekly surprise on the upside in 9 months, so this isn’t the sort of report we see often. There was some weather distortions, with California (+10k) seeing a spike following massive snow storms and making up nearly a third of the increase in NSA claims (+35k). We will see how this evolves over the next couple of prints. And at the same time, there was a negative story from the continuing claims release as well, which came in at 1.718m over the week ending February 25 (vs. 1.660m expected). With the labour market appearing softer than otherwise expected, investors moved to dial back the amount of rate hikes priced for the months ahead. Looking on an intraday basis, expectations of the terminal rate had been at 5.67% immediately prior to the claims report, but fell to 5.61% shortly after, before ending the day -15.9bps lower at 5.515% for the July meeting after the SVB story. At the highs of the day, there was a 74% chance of a 50bp rate hike later this March, before the risk-off sentiment took the probability of a 50bp hike back down to 56% by the close. The broader sell-off across risk markets meant that the 2yr yield saw its biggest daily decline since January 6, thanks to a -20.0bps move to 4.87%. Longer-dated Treasuries also advanced, with the 10yr yield down -8.8bps to 3.90% and it even meant that the 2s10s curve steepened for the first time in a week as well, closing +11.4bps at -97.3bps. Both 2 and 10yr yields are down around another -8.5bps overnight. Back to the S&P 500, every industry group was lower and only 26 index constituents were higher. Sector performance has tilted toward defensive non-cyclicals recently with utilities (-0.84%) and consumer staples (-0.95%) selling off less yesterday than cyclical peers such as materials (-2.54%) and autos (-4.76%). Over in Europe, the STOXX 600 (-0.22%) posted a small decline as well, though trading had closed before the deeper US sell-off. The focus on the US labour market will of course be the main one today with the February jobs report. In terms of what to expect, our US economists think that nonfarm payrolls will have grown by +300k in February, in part thanks to mild weather during the survey week. That would be some way above the +225k consensus view, and would keep the unemployment rate at a 53-year low of 3.4%, with a risk it could round down to 3.3% if participation contracts slightly. This report will be very important when it comes to the Fed’s meeting on March 22, as what we’ve heard so far suggests that both 25 and 50bp hikes are still in play. Indeed, Chair Powell went out of his way while in Washington DC on Wednesday to say “I stress that no decision has been made on this”. On the topic of Washington, President Biden unveiled the administration’s initial 2023 budget proposal yesterday afternoon. The $6.9tr budget proposal is viewed as an opening bid to House GOP members, who are expected to negotiate it down in the upcoming debt ceiling negotiations. The proposal increases funding on an array of government programs, including making Medicare more solvent, lowering prescription drug prices, and trimming the deficit by $3 trillion over the next decade. The deficit cutting is mostly coming in the form of higher taxes on capital gains (25% on those making over $1mn), a new tax bracket of 39.6% on every dollar made over $400k, a minimum 25% on billionaires, and hiking the corporate tax rate from 21% to 28%. Republicans have already called the proposal a non-starter, with Speaker McCarthy saying that he does “not believe raising taxes is the answer.” There was no House budget plan yet, as Speaker McCarthy said that Republicans wanted to analyse the White House’s budget first. The opening salvo does nothing to lower expectations of a protracted debt ceiling fight. Returning to the theme of central banks, overnight the Bank of Japan (BOJ) left its key interest rate unchanged at -0.1%, while maintaining its YCC policy. In his last meeting as the BOJ’s Governor, Haruhiko Kuroda made no surprise move and lent support to the central bank’s long-standing ultra-dovish monetary policy. Following the decision, the Japanese yen lost ground, weakening as much as -0.6% against the dollar before cutting losses to trade at 136.53 per dollar as we go to press. Meanwhile, the Japan’s upper house in parliament has formally approved the appointment of Kazuo Ueda to be the next central bank chief in April. Additionally, the parliament also approved Shinichi Uchida and Ryozo Himino as the next BOJ Deputy Governors. Following a weak handover from Wall Street overnight, Asian stocks are also trading lower. Across the region, the Hang Seng (-2.46%) is sharply lower, wiping out all the YTD gains with the CSI (-1.12%), the Shanghai Composite (-1.15%), the Nikkei (-1.59%) and the KOSPI (-1.05%) also tumbling this morning amid contagion worries related to SVB. Outside of Asia, US stock futures are indicating further losses with contracts tied to the S&P 500 (-0.78%) and NASDAQ 100 (-0.54%) quite weak for an overnight session. Bitcoin dropped below the key $20,000 mark in Asia trading hours for the first time since mid-January, reversing its strong 2023 uptrend. Back in Europe yesterday, it was a fairly quiet day on the whole, with the focus now turning to next Thursday’s ECB meeting. Ahead of that, sovereign bonds rallied for the most part with very modest reductions for yields on 10yr bunds (-0.3bps) and OATs (-0.1pbs), alongside larger reductions at the front end. We will be set for a big rally this morning though given the late news last night. The only ECB official we did hear from yesterday was France’s Villeroy, who said “We will bring inflation toward 2% by the end of 2024 or beginning of 2025 – that’s a commitment, not just a forecast.” Investors have almost fully priced in a 50bps increase at the next meeting (97%), but there’s a bit more doubt over what they’ll do in May still, with 50bps considered the most likely as per our own House View, but with only a 74.7% chance of such a move. To the day ahead now, and the main highlight will be the aforementioned US jobs report for February. Other releases include the UK’s GDP for January. And from central banks, we’ll hear from the ECB’s Panetta. Tyler Durden Fri, 03/10/2023 - 08:01.....»»

The creative ways that AI can be used to enhance productivity and creativity are only just beginning to become clear The recent release of ChatGPT and Microsoft’s new AI enabled Bing search engine seems to have put the Artificial Intelligence industry into hyperdrive. The possibilities of AI are being realized today and the competition is on to see who can build the best AI enabled applications.AI, which requires more computing power than ever before, is going to make for a boon across the technology industry. The creative ways that AI can be used to enhance productivity and creativity are only just beginning to become clear. Furthermore, because of the required computing power necessary it will also boost all the computing industries surrounding it.Industries that are likely to be altered by AI include software, search, semiconductors, mobile, research, music, art, gaming and the list goes on.Of course, there are also some people who warn about the dangers this new wild west of AI can bring. Some people in the field believe there needs to be more oversight of the activities going on, for fear of birthing AI sentience or singularity.I have used some of these apps and although they are impressive, they are still very imperfect. So the singularity talks sounds a bit alarmist to me – at least for now.ChatGPT and OpenAIThe release of ChatGPT, by OpenAI was extremely exciting and very well publicized. Using it for the first time truly felt like technology was entering a new paradigm, and the use of the application exploded. ChatGPT was the fastest growing web application of all time, building a user base of 100 million people less than two months after release.With funding from Microsoft MSFT, OpenAI now functions essentially as another arm of the technology giant, and MSFT hasn’t waited to implement the technology. The AI underlying ChatGPT has been implemented into MSFT’s Bing search engine, as well as Microsoft Teams, and the reception has been very positive.MSFT seems to have the jump on other technology giants, but it is unlikely that Alphabet GOOGL, Apple AAPL, or even Meta META are going to just roll over. It will be exciting to see the creative ways they decide to implement AI into their own ecosystems.I am sure smaller start-ups will come out with exciting new technologies as well.Semiconductors“Pick and Shovel” investing is an expression that applies well to the semiconductor industry regarding AI. Pick and shovel refers to the 19th century gold rush, where pioneers traveled west in search of gold. But the people who really got rich during the rush were those selling the tools such as pick axes and shovels.Semiconductors are a logical play to benefit from the explosion in AI. Big tech and new startups will be in ruthless competition to create the best apps and technology, but predicting the winner is very challenging. Start-ups and established companies alike are all going to need to upgrade their computing power though. There is no doubt that more and regular upgrades of microchips are going to be necessary for developing AI enabled tech, as well as consumers, who want to utilize the applications.One semiconductor stock that looks very appealing is Microchip Technology MCHP. Microchip Technology currently boasts a Zacks Rank #1 (Strong Buy), indicating upward trending earnings revisions. MCHP is also one of the leading stocks in the market today, up 14% YTD.Microchip Technology is well positioned to benefit from the explosion in AI, with an extensive portfolio of microprocessors optimized for AI, and machine learning research and frameworks.Image Source: Zacks Investment ResearchMaking it an even more compelling investment is its very reasonable valuation. MCHP is trading at 14x one-year forward earnings, below its five-year median of 17x, and below the industry average 18x.Image Source: Zacks Investment ResearchWhen semiconductors come up many investors will go straight to Nvidia NVDA. After its most recent earnings, which were decent, NVDA highlighted its commitment to the AI industry and became a buzz in the industry. But I think MCHP is a much more appealing investment right now. While NVDA gets all the hype, it comes with a very premium valuation.Nvidia is trading at a one-year forward P/E of 77x, well above its median of 50x, and way higher than the industry average of 18x. There is no doubt NVDA is a phenomenal business, but this valuation is extremely rich, and there are semiconductor stocks with more appealing valuations.Image Source: Zacks Investment ResearchC3.aiC3.ai AI is an enterprise artificial intelligence software company based in California. C3.ai has created a design and development environment to enable AI developers to build enterprise ready apps for CRM, and data analysis.AI stock has done extremely poorly since its IPO, down -80% off its 2021 high, but that may be a good thing for discerning investors.Image Source: Zacks Investment ResearchC3.ai is not a profitable company, posting negative earnings for its entire time as a public company. Additionally, trading at 10x one-year forward sales, it is still quite expensive. But AI is putting together an improving financial situation and has been posting earnings beats for the last few reporting periods.Image Source: Zacks Investment ResearchAI has a Zacks Rank #3 (Hold), indicating a flat trend in earnings revision. AI is a company that has benefitted from the hype of AI, and though its valuation is maybe a bit ahead of itself, it is worth putting on the watchlist. As AI implementation into enterprise applications becomes more popular, C3.ai may be one of the first places businesses go to enhance their AI capabilities.AlphabetAlphabet, with its unfathomably large data sets, is likely to be major benefactors of the AI revolution. It seems that MSFT and GOOGL are currently in an AI arms race, and MSFT is ahead, but maybe it will work in GOOGL’s advantage. Mistakes are likely to be made in the early days, so those who can learn quickly from them and remain flexible should do well.Alphabet also has a long history of being on the cutting edge of big data, machine learning, and artificial intelligence. Though it hasn’t been releasing chat bots, these technologies have been critical in optimizing search and other products. GOOGL likely already has some of the top talent in the industry, allowing the team to quickly build on the innovations of OpenAI.GOOGL’s valuation is as appealing as it has been in a very long time. Trading at 18x one-year forward earnings is well below its five-year median of 26x and is close to its all-time low of 15x. In addition to its future AI potential, GOOGL is a beast of a company, with very strong sales and earnings growth, even as a very large and mature business.Image Source: Zacks Investment ResearchConclusionArtificial intelligence has already begun to shake industries across the spectrum. The potential capabilities of AI are hard to fathom. At the least these tools will upgrade our productivity and enhance our creative abilities. At the most, it may completely alter the way we live, and give rise to intelligent machines. 7 Best Stocks for the Next 30 Days Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops." Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.8% per year. So be sure to give these hand-picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Apple Inc. (AAPL): Free Stock Analysis Report Microsoft Corporation (MSFT): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Microchip Technology Incorporated (MCHP): Free Stock Analysis Report C3.ai, Inc. (AI): Free Stock Analysis Report Alphabet Inc. (GOOGL): Free Stock Analysis Report Meta Platforms, Inc. (META): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment Research.....»»

Futures Rebound As Yields, Dollar Drop, Fed Minutes Loom After suffering their biggest one-day drop of 2023, US futures rebounded in muted trading on Wednesday, boosted by a drop in rates (the 10Y just hit a session low of 3.92% after rising as high as 3.97%) and weakness in the dollar, even as investors awaited further clues on the direction of monetary policy from the Federal Reserve’s minutes due out at 2pm today. S&P 500 and Nasdaq futures rose 0.3% and 0.4%, respectively, at 7:45am ET; sentiment was boosted by a CNBC appearance of the Fed's "trial balloon" speaker, St Louis Fed president James Bullard, who was hawkish - saying he favors hiking rates to 5.375% as fast as possible, but not as hawkish as some had feared, leading to a sharp bounce in futures just after 7am. Yields dropped, as did the dollar, while oil, gold and crypto erased earlier losses. In premarket trading, CoStar Group led declines in US premarket trading after its annual guidance disappointed analysts and News Corp. said it’s no longer involved in discussions to sell its Move subsidiary to the real estate information and services company. Coinbase Global Inc. declined after the cryptocurrency exchange posted a $557 million loss. Here are some other notable premarket movers: Palo Alto shares rose nearly 10% after the cybersecurity company’s results beat across the board. Several analysts raised their price targets for the stock, saying the firm is managing macro pressures effectively and executing well on its strategy Keep an eye on Constellation Energy as it was cut to neutral from outperform at Credit Suisse as the broker says the green energy group’s shares now look expensive and lack near-term catalysts Watch Nordson after it was raised to overweight from sector weight at KeyBanc, with the broker saying a good entry point for the adhesives and sealants company has materialized following a post-earnings decline in its shares Morgan Stanley is constructive on US software stocks, given that the moderation in forward IT spending growth is likely to prove less severe than feared. Valuations are still near multi-year trough levels and longer-term demand trends are intact Keysight shares fell 7.1% in after-hours trading on Tuesday as the company’s results showed order weakness, and guidance will create cause for concern in the near term, analysts said, though they remain positive on the longer-term outlook for the electronic measurement services firm Meanwhile disappointing earnings projections are seen everywhere. Walmart Inc. reported a weak profit outlook that fell short of analyst estimates, signaling another rocky year for the world’s largest retailer. Home Depot Inc. also released a profit-decline forecast. Only 68% of S&P 500 companies reporting results this season have beaten estimates, compared with about 80% seen during recent quarters. Following strong business activity data on Tuesday, a classic example of "good news is bad news for markets", stocks tumbled as evidence mounted that the Fed may have to hike even more (ignoring for a second the fact that the data is manipulated "strong" for purely political reasons and will soon slump) and prompted fears the powerful stock rally since the start of the year may be coming to an end, as hot economic indicators pressure central banks to keep monetary policy tight. And while until recently investors looked as though they may be pricing in a soft landing for the economy, that may be ending said Stephanie Niven, portfolio manager at Ninety One UK Limited, and hoping strong economic conditions may cushion higher rates. “We will continue to see investors adjust their expectations,” said Niven. “We see a harsher economic cycle into the second half of this year, and we really think a harder landing is the likely outcome here.” In a relatively quiet calendar, today's main event will be the Minutes from the Fed's Jan. 31-Feb. 1 meeting, which while naturally backward looking, may shed light on the path forward. For context, officials at the meeting voted unanimously to raise rates by just 25 basis points, moderating from a half-point hike in December after four 75-bp increases. The policy statement said the “extent of future increases” will depend on a number of factors including cumulative tightening of monetary policy, wording Fed watchers viewed as a signal the central bank may stick with smaller moves. Watch the minutes for insight into whether a larger hike is still on the table, which in turn may mean the Fed’s terminal rate is higher than some expect. “Investors are waking up to a stark realization that the Fed’s work is not done, and that interest rates may have to be hiked even higher to cool hot inflation,” Susannah Streeter, the head of money and markets at Hargreaves Lansdown Plc, wrote in a note. “Waves of exuberance, which have propelled equities higher since the start of the year, have turned into tides of disappointment and apprehension about the difficulties that still may lie ahead for the mighty US economy.” A rocky geopolitical outlook has not helped. President Vladimir Putin said Russia will suspend its observation of the New START nuclear weapons treaty with the US, a decision Secretary of State Antony Blinken called “irresponsible.” President Joe Biden hit back at Putin, saying he would never win his war in Ukraine. In delayed response to yesterday's US slump, European stocks fall for a second day after disappointing corporate earnings gave investors another reason to be cautious besides the prospect of tighter monetary policy. The Stoxx 600 is down 0.9%, headed for a second-day loss, though it came off the day’s lows. Lloyds Banking Group Plc dropped, weighing on the FTSE 100 Index, after results and guidance for 2023 came in below analyst estimates, despite announcing a £2 billion ($2.4 billion) share buyback. Miner Rio Tinto Plc fell after reporting lower than expected profit and slashing its dividend due to weak demand for metals in China. Here are some of the biggest movers on Wednesday: Lloyds Banking Group shares fall as much as 3% after the lender reported fourth-quarter results and guidance that were mixed with the bank affected by competition in the mortgage market Rio Tinto shares slip as much as 3.2% after the mining conglomerate slashes dividends and reports lower-than-expected profits, hurt by weaker demand and higher costs Grifols shares fell as much as 8.2%, the most intraday in four months, after the Spanish blood plasma company said executive chairman Steven F. Mayer resigned after four months in the job Covivio shares fall as much as 5.4%, the most since December, with analysts saying the French real estate firm’s guidance is soft and that its dividend is lower than expected Korian shares fell as much as 20%, set to close at their lowest level since 2006, after the French care home operator reported 2022 full year results that came short of analysts’ expectations Siegfried shares fall as much as 11%, the most since 2015, after the Swiss pharma company delivered an outlook analysts considered cautious given its strong performance in 2022 Danone shares rise as much as 2.8% in early Paris trading, before paring gains, after reporting full-year recurring operating income that beat estimates Wolters Kluwer shares rise as much as 3.9%, the biggest intraday climb since October, after the information services company forecast organic sales growth this year will be in-line UCB gains as much as 4.9% after the Belgian pharmaceuticals firm reported better-than- expected earnings BE Semiconductor gains as much as 9.9% after reporting fourth-quarter orders that blew past analyst estimates Stellantis shares rise as much as 3.4% to the highest since March 2022 after the carmaker’s full-year results beat expectations and it announced a buyback of as much as €1.5 billion Earlier in the session, Asian stocks declined for a second day after the aforementioned jump in US Treasury yields undermined confidence in the equity market’s advance this year, with shares in Hong Kong falling to the brink of a correction. The MSCI Asia Pacific Index fell as much as 1.4% to its lowest level since Jan. 9, with TSMC and Tencent among the heaviest drags on the gauge. Shares in Australia, Japan and mainland China slipped, while losses in Hong Kong’s Hang Seng Index reached almost 10% since a Jan. 27 peak. Technology stocks dropped after Treasury yields touched new highs for the year amid growing concern the Federal Reserve will continue to raise interest rates. Investors are pricing in the federal funds rate climbing to around 5.3% in June. That compares with a perceived peak of 4.9% just three weeks ago. “We see more signs of a growth slowdown” into year end, Alexander Wolf, Asia head of investment strategy at JPMorgan Private Bank, told Bloomberg Television. Fixed income “still remains our highest conviction call, given what we’ve seen with the move up in yields, you can achieve equity-like returns.”  Read: Investors Stung by Treasuries Rout Brace for Next Fed Blow   A key MSCI gauge of Indian stocks was also on course to enter a technical correction as the selloff in Adani Group shares deepened. Indexes in Vietnam and South Korea were among the biggest decliners in the region as investors awaited the release of Fed minutes from its latest policy meeting.  Japanese equities fell, following US peers lower on concerns of further Fed hikes and after weak corporate forecasts from US retailers Walmart and Home Depot. The Topix Index fell 1.1% to 1,975.25 as of market close Tokyo time, while the Nikkei declined 1.3% to 27,104.32. Sony Group Corp. contributed the most to the Topix Index decline, decreasing 2%. Out of 2,162 stocks in the index, 431 rose and 1,636 fell, while 95 were unchanged. “Expectations for an early halt to US interest rate hikes and cuts have faded, with the landing point for a rate hike higher than what the market expected,” said Kiyoshi Ishigane chief fund manager at Mitsubishi UFJ Kokusai Asset Management.    India’s benchmark stocks gauge posted its biggest single-day slump this year as a selloff across global equity markets extended amid worries over interest rates staying higher-for-longer. Sentiment in India continued to be weighed down by the ongoing decline in Adani shares. The rout triggered by US short-seller Hindenburg Research’s report has now stretched to $144 billion, with the group’s flagship firm Adani Enterprises plunging 11% today. All 10 group stocks declined during the session.  The S&P BSE Sensex fell 1.5% to 59,744.98 in Mumbai, the most since Dec. 23 and is close to erasing its gains for February. The NSE Nifty 50 Index declined by a similar measure. “There is an increasing fear that the Fed may remain hawkish for a longer duration than expected, which may even force RBI to keep interest rates high,” Siddhartha Khemka, head of retail research at Motilal Oswal Financial, said in a note. All 20 sector sub-gauges compiled by BSE Ltd. declined, led by utilities, while 29 out of Sensex’s 30 companies closed lower In FX, the dollar slid against its Group-of-10 currencies, where Sweden’s krona was the best performer followed by the yen while the Australian dollar and British pound are the weakest among. The euro fell a third day, to touch a low of $1.0630. Bund yields were a tad higher, led by longer maturities A German expectations gauge by the Ifo institute rose to 88.5 in February from 86.4 the previous month. That was better than the 88.3 median estimate in a Bloomberg poll of economists The Swedish krona outperformed other G-10 peers against the dollar and neared 11 per euro in the wake of comments from the new Riksbank Governor Erik Thedeen, who described underlying inflation figures in January as worrying. He also said that Sweden is currently not experiencing a housing market crash The pound fell, erasing some of its Tuesday gains, as investors mulled the UK economic outlook following data that showed the nation is weathering the sharpest cost-of-living crisis in generations better than feared. The gilt yield curve bear-flattened, with yields rising 3-6bps The yen advanced as much as 0.3% to 135.06 per dollar as the nation’s benchmark bond yield climbed back above the BOJ ceiling for a second day amid a global bond selloff. BOJ Governor nominee Kazuo Ueda is due to face confirmation hearings in the parliament this week. BOJ Board Member Naoki Tamura says that any decision on conducting a policy assessment will be made by looking at wage growth, prices and the economy. A divergence in the spot and options markets for the dollar-yen pair suggests traders are looking once again to position for possible hawkish signals from BOJ officials The New Zealand dollar was little changed after earlier rising as much as 0.4% to 0.6246 even as the RBNZ hiked rates by 50 basis points as expected and forecasting that it would take longer than previously expected to reach its 5.5% peak rate The Australian dollar was the worst G-10 performer following a smaller-than-expected wages increase in the fourth quarter. Wage price index rose 0.8% q/q (estimate +1.0%) in 4Q In rates, Treasuries held on to modest gains as US trading day begins, after erasing declines that pushed yields to new YTD highs, with the exception of the new 2-year note. Shorter-term Treasuries rose more than longer-dated ones in a choppy session. The two-year rate slid 5 basis points from the highest level since early November. Its 10-year counterpart was 3 basis points lower. The 10-year reached 3.966% before dropping as low as 3.92%. Gilts have led European bonds lower as markets continue to price in higher terminal rates for the Bank of England and European Central Bank. UK two-year yields are up 8bps while the German equivalent adds 2bps. In the US, the Treasury auction cycle continues with 5-year note sale at 1pm New York time, and FOMC releases minutes of Jan. 31-Feb. 1 meeting at 2pm. WI 5-year yield 4.13%; current issue traded as high as 4.185%, still more than 30bp below last year’s multiyear high, as traders are assigning higher odds to more Fed rate increases to follow the 25bp move on Feb. 1. Since then, St. Louis Fed President Bullard — appearing on CNBC — has said he advocated for a 50bp hike and might support one in March, heightening interest in whether the minutes will reveal broader appetite for reacceleration. Oil extended its longest run of losses this year, with West Texas Intermediate contracts falling for a sixth day. The prospect of more aggressive interest-rate hikes from the Fed to quell inflation have kept a lid on prices, despite increasing evidence of a robust recovery in China following the end of Covid Zero. Crude futures decline with WTI down 0.6% to trade around $75.89, off session lows. Spot gold rose to $1,840. Looking to the day ahead. In terms of data releases, we have the German February ifo survey which came in stronger than expected, and the France February business and manufacturing confidence indicators; in the US. the latest MBA mortgage applications dropped -13.3%, following last week's -7.7% slide. For central banks, first and foremost we have the release of the Fed’s FOMC minutes, and we will also hear from the Fed’s Williams. Finally, we will have earnings releases from NVIDIA, TJX, Pioneer and eBay. Market Snapshot S&P 500 futures little changed at 4,004.75 STOXX Europe 600 down 0.9% to 459.50 MXAP down 1.3% to 160.19 MXAPJ down 1.3% to 521.69 Nikkei down 1.3% to 27,104.32 Topix down 1.1% to 1,975.25 Hang Seng Index down 0.5% to 20,423.84 Shanghai Composite down 0.5% to 3,291.15 Sensex down 1.5% to 59,790.65 Australia S&P/ASX 200 down 0.3% to 7,314.50 Kospi down 1.7% to 2,417.68 German 10Y yield little changed at 2.56% Euro little changed at $1.0643 Brent Futures down 1.1% to $82.13/bbl Gold spot down 0.1% to $1,834.10 U.S. Dollar Index little changed at 104.26 Top Overnight News Japan's 10-year government bond yield on Wednesday breached the top end of the Bank of Japan's policy band for a second straight session, prompting the central bank to step into the market with emergency bond buying and offering of loans. RTRS Two of Japan’s biggest automakers (Toyota & Honda) agreed to the biggest wage hikes in decades in an early sign of momentum in annual pay negotiations as the central bank looks for evidence of a wage-price cycle that could lead to policy change. BBG Chinese authorities have urged state-owned firms to phase out using the four biggest international accounting firms, signaling continued concerns about data security even after Beijing reached a landmark deal to allow US audit inspections on hundreds of Chinese firms listed in New York. BBG Missing Chinese investment banker Bao Fan was preparing to move some of his fortune from China and Hong Kong to Singapore in the months leading up to his disappearance, according to four people with knowledge of his plans. FT Investors increase bets on ECB lifting rates to all-time high. Buoyant service sector and wages fuel expectations of further rises in eurozone borrowing costs. FT The Fed minutes may show how many officials pushed for a larger hike and whether they saw the need to take rates higher than anticipated. Markets expect tightening to be extended after stronger economic data and some hawkish messaging, with rates peaking at 5.36% this year. The RBNZ slowed its pace with a 50-bp increase to 4.75% after mulling another move of 75 bps. The projection for peak rates was left unchanged at 5.5%, over a slightly longer timeframe. BBG Authorities accused crypto trader Avi Eisenberg of manipulating token prices on an exchange. Mr. Eisenberg countered, saying he did only what was permitted by the exchange's software code. At the core of this case is the idea held by some crypto enthusiasts that "code is king." WSJ In the hunt for Lael Brainard’s successor, the White House is “focusing in” on Harvard University professor Karen Dynan, Northwestern University finance professor Janice Eberly and Morgan Stanley Chief Global Economist Seth Carpenter. BBG JPMorgan cut staff access to ChatGPT, a person familiar said, confirming an earlier Telegraph report. The move wasn't triggered by any specific incident. BBG Consistent with the increase in leverage, demonstrated hedge fund equity market exposures have begun to rise from the extremely low levels registered late last year. Hedge funds exhibited exceptionally low betas to the equity market in 2022, reaching levels only matched during the last 20 years in 2009. Betas have rebounded in the last few weeks, driven in part by increased net length, but remain well below historical averages. GIR A more detailed look at global markets courtesy of Newsquawk Asia-Pacific stocks were subdued after the declines on Wall St where the major indices were pressured on return from holiday as strong PMI data from Europe and the US spurred hawkish central bank repricing. ASX 200 briefly dipped below 7,300 amid a slew of earnings releases although clawed back most of its losses after weak data releases including a surprise contraction in Construction Work and softer-than-expected Wage Price Index, which removes some of the hawkish impulses for the RBA. Nikkei 225 underperformed and approached closer to testing the 27,000 level to the downside. Hang Seng and Shanghai Comp. conformed to the subdued mood in which weakness in tech briefly pulled the Hong Kong benchmark into correction territory although losses were then pared after the budget announcement which included a giveaway of HKD 5,000 in consumption vouchers and a cut to salary taxes, while there was also strength in HSBC and Hang Seng Bank post-earnings. Top Asian News Hong Kong Finance Secretary Chan delivered the Budget and confirmed the government will provide HKD 5k in consumption vouchers to residents aged 18 years old and above, while they will reduce salaries tax with a ceiling of HKD 6,000 which will benefit 1.9mln taxpayers and lower government revenue by HKD 8.5bln. Chan also noted that the city is at the beginning of a recovery and that GDP contracted by 3.5% in 2022, although the government expects Hong Kong GDP growth of 3.5%-5.5% in 2023. China's top diplomat Wang Yi met with Russia's security chief and said the two sides discussed their willingness to oppose all forms of unilateral bullying and discussed ways to improve global governance. Furthermore, the two sides believe peace and stability in the Asia-Pac region should be resolutely upheld and they oppose the introduction of a cold war mentality, according to Reuters. RBNZ hiked the OCR by 50bps to 4.75%, as expected, while it maintained its view for rates to peak at 5.50% and considered hikes of 50bps and 75bps at the meeting. RBNZ stated that although there are early signs of price pressure easing, core consumer inflation remains too high and the Committee agreed it must continue to raise the OCR to return inflation to the target and to fulfil its remit. European bourses are softer across the board, Euro Stoxx 50 -0.8%, as hawkish price action remains in full swing. Sectors are lower across the board ex-Media following individual earning updates, while Basic Resources lag as underlying commodities are dented. Stateside, futures are flat/negative with the ES holding around the 4k mark having briefly and incrementally dipped below the figure in European trade. Top European News ECB's Villeroy reiterates that there is excessive volatility of the market view on the terminal rate. Already in restrictive territory with a 2.5% rate, ECB is not obliged to hike at every meeting to September, via Les Echos. Remarks which echo his commentary from last Friday. UK PM Sunak reportedly secured the backing of two key Brexiteers for the Northern Ireland trade deal with Heaton-Harris and Braverman getting behind the outline agreement, according to FT. DUP's Donaldson reportedly told an ERG meeting on Tuesday that UK PM Sunak was just halfway to meeting the DUP's seven tests re. N. Ireland Protocol, having made progress towards three or four of them, via Politico citing sources; added that progress towards the remaining DUP tests is critical, telling PM Sunak to abandon the "arbitrary deadline" of April 10th. FX The DXY remains underpinned on haven dynamics and as yields continue to climb across the board, index continues to climb above a 104.00 base with the current high at 104.33 As such, peers are generally softer across the board with the AUD lagging post-data and as the NZD clings onto gains following the hawkish RBNZ announcement; AUD around 0.6810 and NZD near 0.6210 vs USD. EUR was generally unreactive to the morning's Ifo data while dovish commentary from Villeroy prompted some pressure, but this was brief and limited given his remarks are a repeat of Friday's, EUR/USD at the lower-end of 1.0630-1.0663 parameters. JPY and CHF are rangy and narrowly mixed against the USD, after the JPY regrouped on some convergence in JGB-UST yields irrespective of BoJ buying while CHF shrugged off an upbeat domestic investor survey. GBP is giving back some of Tuesday's marked upside, with caution around N. Ireland Protocol progress perhaps weighing though the focus is firmly on BoE-related dynamics; Cable around 20 pips shy of 1.21 though off worst. EUR/SEK continues to test 11.00 with Riksbank's Thedeen assisting while the ZAR is a touch softer heading into the budget announcement from 12:00BST/07:00ET onwards. PBoC set USD/CNY mid-point at 6.8759 vs exp. 6.8776 (prev. 6.8557) Yonhap reports that as USD/KRW soared "the foreign exchange authorities called an emergency market situation inspection meeting this afternoon.". Riksbank's Thedeen says inflation is far too high; January's inflation data was a negative surprise, it is worrying. Fixed Income EGBs have experienced a modest bounce in the wake of well-received EZ & UK supply, with Bunds now back to 104.00 from the new 133.63 YTD low and Gilts firmly above 101.00 in a similar fashion. Prior to this, the complex had been under marked pressure in a continuation of recent hawkish price action with the German 10yr yield as high as 2.57%; though, pre-supply this eased following a rerun of recent dovish remarks from Villeroy. Stateside, USTs have been moving in-tandem with EGBs with specific catalysts thin ahead of FOMC minutes and a 5yr sale, as such USTs are flat within 110.30+ to 111.08 parameters. Commodities Crude benchmarks remain underpressure with specific developments limited and focus on the broader risk tone; WTI & Brent Apr at the lower end of USD 74.96-76.55/bbl and USD 81.70-83.25/bbl intraday parameters respectively. Nat Gas futures are mixed, though remain pressured vs recent levels as desks continue to cite relatively mild weather in the US and Europe. Kazakhstan may send the first batch of oil to Germany in the coming days which could possibly occur today, according to RIA citing the Energy Minister. Morgan Stanley sees Brent trading in a USD 90-100bbl range in H2 vs. its prev. view of USD 100-110bbl; raises estimate for oil demand growth to 1.9mln BPD from 1.4mln BPD. Nigeria raises March Bonny Crude OSP to +0.95/bbl vs dated Brent; Qua Iboe raise to +1.27/bbl vs dated Brent. Spot gold is little changed as any haven allure is offset by the USD's strength, while base metals are lower given the tone and with focus on commentary from Rio Tinto overnight. Ukraine could export a total of 8mln tonnes of agricultural good a month for Odesa and Mykolaiv ports; will talk to UN to extend the grain deal for another year, according to Ukrainian Deputy Minister. Geopolitics Russia reportedly conducted an ICBM test when US President Biden was recently in Ukraine although the test was said to have failed, while an official stated that Russia notified the US in advance of the launch through deconfliction lines, according to CNN. Russian PM Medvedev says Russia is ready to defend itself with any weapon, including nuclear. Russian Foreign Minister Lavrov says relations between Moscow and Beijing are developing despite the tense international situation; China's Top Diplomat says we continue to maintain close communication with Russia, via Sky News Arabia. Subsequently, Russian Kremlin says President Putin is to meet with China's Top Diplomat Wang Yi on Wednesday (as touted). US President Biden’s administration is expected to impose fresh sanctions on about 200 Russian individuals and entities this week, according to WSJ citing sources. North Korea could fire ICBMs at a normal angle and conduct its seventh nuclear test this year, according to South Korean lawmakers citing intelligence officials. US Event Calendar 07:00: Feb. MBA Mortgage Applications, prior -7.7% 14:00: Feb. FOMC Meeting Minutes 17:30: Fed’s Williams Discusses Inflation DB's Jim Reid concludes the overnight wrap I’m still in a bit of a state of shock this morning after the Liverpool / Real Madrid game last night. From wild jubilation to the end of the world within an hour. A Bit like financial markets in the last three weeks. Back before the game when there was still hope in my heart, I released my latest monthly chart book, "Waiting for the lag" that debates the themes around the near-term improvement in the global outlook versus that of the lag of monetary policy. At this stage of a normal hiking cycle, we show that markets and economies are usually fairly benign so don't confuse recent strength in data as a soft landing. It's not until year 2 onwards of the hiking cycle that pain normally starts to be felt. So the real test will be when the lag of monetary policy fully kicks in as it should do over the next few quarters. By March, the ECB will have likely hiked +350bps in 8 months and the Fed +475bps in 12 months. More hikes are likely to come too. Indeed our European economists yesterday lifted our ECB terminal rate call from 3.25% to 3.75% (more below). Until all these hikes on both sides of the Atlantic fully pass through the economy it is impossible to sound the all clear. We've always thought the first few months of the year would be positive with the problems building by year-end, but the extent of the rally in January made us shift back to neutral in credit quicker than we thought we would. Indeed, we think US credit has now passed the tights of the year. See the chart book here for much more. The skinny in markets today is that the week has sprung into action over the last 24 hours after the US holiday on Monday, as a run of better than expected flash global PMIs led to a sizeable global bond sell off (10yr USTs +13.8bps), with the S&P 500 (-2.00%) wiping out its February gains. More on markets later but while we wait for the full lag of policy, the flash PMIs continued to improve yesterday from what were quite stressed levels. Indeed the US composite PMI rose back into expansionary territory at 50.2 (vs 47.5 expected). Much of the strength originated from a strong performance in services, which surprised to the upside at 50.5 (vs 47.3 expected). There was less evidence of a similarly strong improvement in manufacturing as it modestly surprised to the upside at 47.8 (vs 47.2 expected). As we dug into the weeds of the data release, it is clear that whilst input costs rose at a softer pace in February, there was a sharper rise in private sector output charges at both manufacturing and service sector firms. This comes as the pace of increase in selling prices was the quickest it has been since October, as firms reportedly passed through these increases as costs to their customers. This increased the chatter on inflation being sticky. The immaculate disinflation story has had some big blows in the last 2-3 weeks. Markets subsequently moved to price in bets that the Fed will need to keep rates higher for longer, as expectations for the terminal rate for July’s meeting increased by 6.2bps to 5.367%. However, the increase was most evident for December’s meeting, with rate expectations for year-end increasing by 12.5bps to 5.19% since Friday’s close. With uncertainty over terminal back on the agenda, the S&P 500 fell back -2.00% in its largest down move since the day after the December FOMC meeting and erasing its February gains. It was a broad based decline for US equities with every industry group lower on the day as over 93% of index members declined. The NASDAQ retreated further, down -2.50% at the close – also its biggest downside move since December 15. In US fixed income markets, the 10yr US Treasury yield spiked up by +13.8bps to reach its highest level since the second week of November at 3.945%. The 2yr Treasury also saw large moves, as yields rose +10.6bps to 4.723%, the highest level since July 2007. All eyes will be on the release of the Fed’s minutes today, as markets look for guidance on policy going forward. However it's likely to feel a bit dated as a lot has happened in the subsequent three weeks. Over to the other side of the Atlantic, the European PMI releases fitted in with the global pattern of improving services, but limited improvement from manufacturing. The EA services PMI came in above expectations at 53 (vs 51 expected). On the other hand, we had a downward surprise with the manufacturing release which fell to 48.5 (vs 49.3 expected). Resultingly, the composite PMI rose to 52.3 (vs 50.7 expected) and into expansionary territory. Against this backdrop, markets have moved to price in +126bps of rate hikes until hitting terminal at the October meeting (3.658%), up +6.4bps yesterday. As stated near the top, our European economists yesterday lifted their ECB terminal rate call from 3.25% to 3.75%. They had previously expected a 50bp hike in March and a final 25bp in May. Now the baseline is for 50bp hikes at both the March and May meetings followed by a final hike of 25bp in June. See their note here for why a robust European economy and labour market along with hawkish ECB commentary have caused them to upgrade their call. They also explain why the heightened uncertainties make risks fairly balanced for a terminal landing zone between 3.50-4.00%. Narrowing in, the German composite PMI also beat consensus, rising into mildly expansionary territory to 51.1 (vs 50.3 expected). This strong performance largely came from services, which rose to 51.3 (vs 51 expected), whilst manufacturing surprised to the downside at 46.5 (vs 48.1 expected). These releases affirm our expectation that Germany will have a shallow technical recession over the winter half year. For a bit more colour, look at the new Germany: Economic Chartbook from our Frankfurt team for all things Germany related. The beat in German composite PMI also reflects a rosier outlook for the German economy following a warm winter (here), and a significant drop in wholesale gas prices and favourable gas storage levels. Indeed, our German economists confirm the view that they’ll be no gas supply crunch for the country for this winter nor for winter 23/24. See their latest and final European Gas monitor here. Final due to the fact that the supply issue has now been covered. Yesterday, European natural gas futures sat below €50 at €48.54/contract, down -2.67%. France’s PMI’s largely mirrored the broader Euro Area release, with the manufacturing surprising to the downside at 47.9 (vs 51 expected), and services to the upside at 52.8 (vs 49.8 expected). The overall composite PMI rose into expansionary territory to 51.6 (vs. 49.8 expected). Off the back of these upward surprises and expectations of larger rate hikes by the ECB, the 10yr bund yield rose +6.5bps to 2.529%, reaching their highest level since the end of 2022. The policy sensitive 2yr bund also rose by +5.1bps yesterday. The STOXX 600 modestly fell back -0.19%. This morning in Asia equity markets are tracking the US falls with the KOSPI (-1.46%) emerging as the biggest underperformer followed by the Nikkei (-1.30%), the CSI (-0.56%) and the Shanghai Composite (-0.25%). Meanwhile, the Hang Seng (+0.03%) is just above flat after opening lower. In overnight trading, US stock futures tied to the S&P 500 (+0.19%) and NASDAQ 100 (+0.28%) are inching higher. Early morning data showed that Japan’s producer prices index (PPI) rose +1.6% y/y in January, inline with market expectations and slightly higher than December’s increase of +1.5%. Elsewhere, Australia’s wage price index (WPI) for the final three months of 2022 rose +3.3% (+3.5% expected) from an upwardly revised +3.2% in the September quarter, thus slightly easing the RBA’s rate hike concerns. In terms of monetary policy action, the Reserve Bank of New Zealand (RBNZ) hiked interest rates by +50bps (as expected) to a more than 14-year high of 4.75% while highlighting that rates could still rise as inflation remains too high. Following the decision, the New Zealand dollar rose as high as $0.6246, reflecting the hawkishness of the statement before settling to trade at $0.6224 (+0.03%) as we go to press. Back to yesterday, and the same PMI story reverberated in the UK as the composite PMI came firmly in above expectations at 53 (vs 49 expected). There was a big jump in services, which rose to 53.3 (vs 49.2 expected). Manufacturing saw a stronger beat than over in the Continent, with UK manufacturing PMI surprising to the upside at 49.2 (vs 47.5 expected). With concerns over inflations still at large, 2yr and 10yr Gilts rose +16.3bps and +14.3bps respectively. Aside from the rush of the global flash PMIs, we had further developments in the geopolitical space yesterday, as Bloomberg reported that President Putin announced Russia was suspending (but not exiting) its participation in the New Start Treaty, a significant shift in its policy. The Treaty limited each signatory to no more than 1,550 deployed nuclear warheads and 700 deployed long-range missiles and bombers and had been renewed for five years in 2021, as reported by Reuters. We also saw Russia’s Secretary of the Security Council Patrushev meet with China’s Director of Central Commission for Foreign Affairs Wang Yi in Moscow. Yi had previously met on less than amicable terms with US Secretary of the State Blinken last weekend. President Biden reiterated NATO’s resolve at a speech in Warsaw yesterday, saying “there should be no doubt: Our support for Ukraine will not waver, NATO will not be divided, and we will not tire.” This comes alongside the $480mn arms announcement made by the Biden administration in recent days. Looking to other data releases, yesterday also saw the release of Germany’s February’s ZEW investor expectations index, which rose to 28.1 (vs 23 expected). We also had Canadian February CPI data, which decelerated to 5.9% year-on-year (vs 6.1% expected) – a rare recent positive inflation surprise. To the day ahead. In terms of data releases, we have the German February ifo survey, and the France February business and manufacturing confidence indicators. For central banks, first and foremost we have the release of the Fed’s FOMC minutes, and we will also hear from the Fed’s Williams. Finally, we will have earnings releases from NVIDIA, TJX, Pioneer and eBay. Tyler Durden Wed, 02/22/2023 - 08:07.....»»

Futures Rebound, Trade Near Session Highs Amid Global UFO Hullaballoon US index futures reversed an earlier drop and traded near session highs as traders braced for inflation data that will may support the Fed’s commitment to further policy tightening (or it may not), and as the world was transfixed by a global UFO hullaballoo(n). S&P 500 futures were up 0.3% at 8:00am ET while Nasdaq 100 futures rose 0.6% after the underlying index suffered its first weekly loss of 2023. European stocks rose to trade near session highs, lifted by construction, industrial goods and consumer stocks while energy and real estate underperformed. The dollar pushed higher, Treasuries were little changed and oil slipped after Friday’s jump; bitcoin slumped. In premarket trading, Sorrento Therapeutics slumped after the drug developer filed for Chapter 11 bankruptcy protection in Texas.  Shares of major US tech and internet companies rose premarket, meanwhile Evercore ISI upgraded Zillow Group to outperform from in line. Here are some other notable premarket movers: Advance Auto Parts Inc. is cut to neutral from buy at Roth, with the broker saying it can no longer dismiss the company’s “serial under-performance” against peers, adding its market share is “unwinding quickly.” Shares decline 0.9%. BigBear.ai and SoundHound AI (SOUN lead fellow artificial intelligence-related stocks higher. This rebound comes after several stocks faltered on Friday as caution toward AI-related shares set in.  Bigbear.ai gains 3.7%. SoundHound AI is up 2.5bbai%. Capri Holdings is downgraded to market perform from outperform at Cowen, with the broker saying it has concerns about the company’s wholesale channel and the Michael Kors brand. Shares decline 0.8%. Coinbase could ultimately benefit over the long term from the increased scrutiny that the US Securities and Exchange Commission is putting on the staking of digital assets, according to Piper Sandler. Coinbase drops 1.7%. Gracell Biotechnologies climbs 1.4% after the company says the Center for Drug Evaluation of China’s National Medical Products Administration has cleared Gracell’s Investigational New Drug application for GC012F, an autologous CAR-T therapeutic candidate, for the treatment of relapsed/refractory multiple myeloma. Immunovant Inc. gains 3.1% after Guggenheim upgraded it to buy from neutral, with analyst Yatin Suneja optimistic for its new drug candidate IMVT-1402. Microsoft shares are up 1.4% with analysts optimistic about the software company’s long-term growth potential. Ocular Therapeutix Inc. rises 14% after the company announced 10-month interim data from an early-stage study of its experimental treatment for wet age-related macular degeneration. Proto Labs Inc.shares are up 2.5% after Benchmark Co upgraded the 3D printing company to buy from hold. Zillow Group Inc. shares are up 4.4% after Evercore ISI upgraded the online real estate platform to outperform from in line. Zim Integrated Shipping Services Ltd. (ZIM) sinks 2.1% after the shipping company was cut to underweight from equal- weight at Barclays, which anticipates a global shipping down- cycle in 2023-2024 due to “significant oversupply” across the industry. Shares of China’s cross-border brokerage Futu (FUTU US) falls 0.5% in US premarket trading after Hong Kong-based Bright Smart Securities says it will suspend accounts held by mainland Chinese clients starting Feb. 16. Signa Sports United NV (SSU US) is downgraded to hold from buy at Jefferies, with the broker predicting an “uphill climb” for the online sports retailer due to the challenging macroeconomic backdrop. On Sunday, the US downed yet another flying object, the fourth so far - over Michigan yesterday, following those over northern Canada, Alaska and off the South Carolina coast - after deciding to be more cautious. The Pentagon doesn’t yet know what the most recent objects are and isn’t ruling out anything at this point. Meanwhile, China said US balloons have flown over its airspace more than 10 times since 2022. The January CPI report on Tuesday is expected to show an increase of 0.5% from a month earlier, spurred in part by higher gasoline costs. That would mark the biggest gain in three months. Excluding fuels and foods, so-called core prices — which better reflect underlying inflation — are seen rising 0.4% for a second month. The BLS changed how CPI is calculated. They changed some weightings which had the effect of showing that less progress was made on inflation than previously thought. Amid the new data, investors will be reassessing how high US interest rates will rise this year, with inflation and jobs data likely to still come in hot later this week. That has fueled bets for the Fed rate to peak at 5.2% in July, up from less than 5% a month ago. “We are certainly continuing to be very cautious on equities,” Nannette Hechler-Fayd’Herbe, chief investment officer at Credit Suisse International Wealth Management, said on Bloomberg Television. “We find at the moment there is a disconnect in valuations versus where interest rates by the Fed — but also by other central banks — are going to be for the remainder of the year.” The rally in US equities lost steam last week over concerns that the Fed will stick to its hawkish resolve amid a strong labor market and relatively elevated inflation. Traders will parse this week’s data for clues on the path of monetary policy and the impact it could have on the US economy. “We’re looking for a correction over the next few months to take us back down to the lower 3,000s area in the S&P 500,” Saed Abukarsh, chief portfolio manager at Ark Capital Management Dubai Ltd., told Bloomberg Television. “The incentive for the Fed to be hawkish is still there. There is no incentive for them to be less hawkish.” Meanwhile, Morgan Stanley's downbeat in house permabear argued that US stocks are ripe for a selloff after prematurely pricing in a pause in Fed rate hikes. “While the recent move higher in front-end rates is supportive of the notion that the Fed may remain restrictive for longer than appreciated, the equity market is refusing to accept this reality,” Michael Wilson wrote in a note (more shortly). Wilson — the top-ranked strategist in last year’s Institutional Investor survey — expects deteriorating fundamentals, along with Fed hikes that are coming at the same time as an earnings recession, to drive equities to an ultimate low this spring. “Price is about as disconnected from reality as it’s been during this bear market,” the strategists said. European stocks rose as the EU Commission lifts its growth forecast for the euro-area in 2023 while lowering estimates for inflation. The Stoxx 600 trade higher by 0.6%, rising to session highs, with outperformance seen in the industrial, construction and consumer product sectors. Here are some of the biggest movers on Monday: Kape Technologies shares rise as much as 13%, to 292.5p, and trade above the 285p offer made by majority holder Teddy Sagi to buy the remaining shares in the UK software company Smiths shares rise as much as 2.6% in early trading, Weir gains as much as 2.5% and Epiroc rises as much as 3.4%, after Goldman Sachs initiates coverage on 10 European capital goods stocks Credit Suisse shares fall as much as 3.2%, resuming their slide following a Friday bounce after Vontobel trims its price target on the Swiss lender and Kepler Chevreux downgraded its recommendation to reduce from hold. The latter also cut its price target to a level implying a 26% fall from the last price Castellum falls as much as 11%, the most since March 2020, before paring losses after the Swedish real estate group announced a SEK10 billion ($955 million) rights offering Nel shares fall as much as 4%, as Goldman Sachs cut its rating on the electrolyzer firm to neutral following recent outperformance, though the broker remains bullish on the clean hydrogen outlook Network International shares fall as much as 4.1% on Monday, after Barclays downgraded the payment firm to equal-weight from overweight, citing the sharp slowdown in the firm’s card issuing business in the fourth quarter Asian stocks fell, heading to their lowest level in about a month, as investors awaited key inflation data from the world’s largest economy.   The MSCI Asia Pacific Index declined as much as 1.2%, extending losses after a two-week rout. Tech stocks led the slump with TSMC and Tokyo Electron dragging the gauge the most. Benchmarks in South Korea, Taiwan and Singapore slid while those in Hong Kong fluctuated.  Asian stocks have declined over the past two weeks as strong US jobs data and hawkish comments by Federal Reserve officials dashed hopes of an interest-rate pivot. Investors are reassessing how high US rates will rise this year, with inflation and jobs data likely to still come in hot later this week. “Part of the reason for the overall decline goes to a lack of economic reports to offset the chorus of central bankers chanting ‘higher for longer,’” said Sam Stovall, chief investment strategist at CFRA, adding that investor nervousness may decrease after the release of US inflation figures due Tuesday.  China’s defense stocks gained after domestic news outlet The Paper reported that the nation is getting ready to take down an unidentified object flying over waters near the port city of Qingdao. Meanwhile, equities in Japan underperformed amid expectations that Kazuo Ueda, who is expected to be nominated as Japan’s central bank governor, will adopt faster policy normalization Japanese stocks fell as investors turned cautious ahead of US inflation data due Tuesday. Meanwhile, traders are awaiting the outcome of the official BOJ governor nomination, with the market weighing Kazuo Ueda’s potential policy stance.  The Topix Index fell 0.5% to 1,977.67 as of market close Tokyo time, while the Nikkei declined 0.9% to 27,427.32. Sony Group contributed the most to the Topix Index decline, decreasing 1.9%. Out of 2,163 stocks in the index, 702 rose and 1,356 fell, while 105 were unchanged. “Stocks are down partly to reflect the adjustment in US tech stocks last week and the market seems to still be digesting information regarding the potential new BOJ chief,” said Takeru Ogihara, chief strategist at Asset Management One. “Regardless of who the new governor is, BOJ seems to be moving towards monetary policy normalization, which would lead the interest rate and bank stocks to rise.” Australia's S&P/ASX 200 index fell 0.2% to 7,417.80 as investors assess earnings and brace for a critical US inflation report due this week. Consumer discretionary shares led sector losses, dragged lower by Star Entertainment after the casino operator said its Sydney trading has been hit by operating restrictions and competition from Crown. In New Zealand, the S&P/NZX 50 index fell 0.9% to 12,075.18 India stocks also declined for a second day ahead of the release of consumer-price data later on Monday which came in hotter than expected (6.52% vs exp. 6.50% and up sharply from 5.72% for December). India’s central bank remains watchful of inflation and is open to using monetary policy action to tame price pressures further.  The S&P BSE Sensex fell 0.4% to 60,431.84 in Mumbai, while the NSE Nifty 50 Index declined 0.5%. All but three of BSE Ltd.’s 20 sector gauges traded lower, led by service industry stocks. Infosys contributed the most to the Sensex’s decline, decreasing 2.5%. Out of 30 shares in the Sensex index, 11 rose and 18 fell, while 1 was unchanged. In FX, the Bloomberg Dollar Spot Index rose as much as 0.3% before reversing gains, with the greenback trading mixed against its Group-of-10 peers. The USD/JPY gained 0.9% to 132.60 as the Japanese yen underperforms its G-10 counterparts. The New Zealand dollar is the best performer, adding 0.4% versus the greenback. The euro was steady at $1.0677. Bunds and Italian bonds reversed opening losses as money markets pared ECB tightening wagers. The New Zealand dollar was the best performer and the yen was the worst. The Treasury curve twist-flattened very modestly. Data on Tuesday are expected to show US consumer price index for January increased 0.5% from a month earlier. The pound dipped against the dollar and the euro ahead of a busy week of UK data including jobs and inflation figures for January. Gilts inched lower The yen dropped as much as 1.1% 132.77 per dollar ahead of the nomination of a new BOJ governor and before the US inflation print Australian sovereign bonds slipped, following Treasuries amid mounting anxiety over how high the Federal Reserve will have to hike rates in its battle with inflation In rates, Treasuries were narrowly mixed with the curve flatter and long-end slightly richer on the day while front-end trades slightly cheaper vs Friday’s close. In Europe, gilts underperform with busy week of issuance lined-up. US 10-year yields little changed on the day at 3.735% with bunds and gilts underperforming by 1bp and 3bp in the sector; long-end outperformance on Treasury curve flattens 2s10s, 5s30s spreads by 1.7bp and 2.5bp on the day. Bund futures are in the green while Gilts are slightly lower. According to Bloomberg, the dollar issuance slate is empty so far (so no rate lock trades); preliminary estimate suggests $25 billion in new issues this week with bulk of the deals expected Monday before Tuesday’s inflation data. US session light for risk events, with price action relatively calm ahead of Tuesday’s inflation data. In commodities, crude futures reversed an earlier decline with WTI now flat just shy of $80, after sliding down almost 2% lower. Spot gold falls roughly 0.3% to trade near $1,859. In cryptos, stablecoin issuer Paxos has been directed to stop minting Binance Coin (BUSD) by the US SEC; following on from WSJ reporting over the weekend that US SEC intends to sue stablecoin issuer Paxos, which is behind the Pax Dollar (USDP) and Binance USD (BUSD) tokens, over the latter stablecoin. India’s Finance Minister said the G20 is exploring collectively regulating cryptocurrencies, according to Reuters. There is no macro on today's calendar; Bowman is the only Fed speaker at 8am ET this morning Market Snapshot S&P 500 futures little changed at 4,102.50 MXAP down 0.8% to 165.06 MXAPJ down 0.4% to 539.31 Nikkei down 0.9% to 27,427.32 Topix down 0.5% to 1,977.67 Hang Seng Index down 0.1% to 21,164.42 Shanghai Composite up 0.7% to 3,284.16 Sensex down 0.4% to 60,459.17 Australia S&P/ASX 200 down 0.2% to 7,417.75 Kospi down 0.7% to 2,452.70 STOXX Europe 600 up 0.4% to 459.84 German 10Y yield little changed at 2.36% Euro little changed at $1.0672 Brent Futures down 1.4% to $85.17/bbl Gold spot down 0.5% to $1,857.17 U.S. Dollar Index up 0.12% to 103.76 Top Overnight News The BOJ's expected next governor Kazuo Ueda likely won't rush to overhaul ultra-loose policy and will instead let economic data guide the exit timing, said Tetsuya Inoue, who was Ueda's staff secretary when he was a central bank board member. RTRS The euro-zone economy will fare better this year than previously feared as a mild winter and high levels of gas storage help to ease the energy crisis, and the labor market holds up, according to the European Commission. European Union officials in Brussels raised their forecast for growth this year, predicting a 0.9% expansion in the currency bloc, and said it would narrowly avoid a recession. They also cut their projection for consumer price growth, though it remains high at 5.6%. BBG Wagner Group founder Yevgeny Prigozhin said it could take Russia up to another two years to capture the entirety of the Donetsk and Luhansk regions, and up to three if Moscow decides to take land east of the Dnipro River. WSJ Russia lost 1140 troops on Friday, a new single-day record, bringing the total death toll to nearly 137K (and Russian casualties over the last two weeks are likely the highest of the war). Also, Russia is witnessing an historic exodus of its citizens, with 500K-1M people leaving the country since the Ukraine war began (a departure on par with the 1917 Bolshevik Revolution and the Soviet Union collapse in 1991). Insider / WA Po “No landing” scenario gains traction among economists, raising fears the Fed still has more work to do on rates before inflation is sustainably on a path to the 2% target. WSJ Americans with college degrees saw a 7.4% inflation-adjusted drop in income last year, the steepest fall since 2004 and one that erases nearly all pandemic-era gains. BBG Walmart tells suppliers "no more price hikes" as it begins worrying about the effects of inflation on its customers (Walmart can also see that input costs are falling, which means suppliers have less need for incremental price increases). RTRS Meta has delayed finalizing multiple teams’ budgets while it prepares a fresh round of job cuts (11k employees, 13% of workforce) as Mark Zuckerberg’s plan to contain costs in his “year of efficiency” causes disruption at the social media company. Also, AMZN has cut ~20% of the headcount at its Zappos subsidiary. FT / WSJ Ford is set to announce as soon as Monday it plans to build a $3.5 billion lithium iron phosphate battery plant in Michigan, sources told Reuters. Ford is expected to own and operate the plant with Chinese battery company China's Contemporary Amperex Technology Co Ltd (CATL) (300750.SZ) as a technology partner to help develop the batteries. RTRS Investors have pulled a net $31 billion from U.S. equity mutual funds and exchange-traded funds in the past six weeks, according to Refinitiv Lipper data through Wednesday. That marks the longest streak of weekly net outflows since last summer and the most money pulled in aggregate from domestic equity funds to start a year since 2016. WSJ A more detailed look at global markets courtesy of Newsquawk APAC stocks began the week mostly subdued as geopolitical tensions lingered after the US shot down a fourth flying object and with markets bracing for Tuesday's US CPI data, while the region also digested earnings releases and news that Japan's government is likely to nominate academic and former BoJ member Ueda to head the central bank. ASX 200 was lacklustre with earnings in focus and the Consumer Discretionary sector was pressured alongside a more than 20% drop in Star Entertainment shares after it flagged an impairment charge of up to AUD 1.6bln. Nikkei 225 underperformed as participants pondered over the future of the BoJ with the government likely to nominate Ueda as the next central bank chief after dovish continuation candidate and BoJ’s QE policy architect Amamiya was said to turn down the role. Hang Seng and Shanghai Comp. were mixed with Hong Kong pressured early on by weakness in property and tech, while the mainland was kept afloat after China’s recent loans and aggregate financing data topped forecasts with New Yuan Loans at a record high for January. Top Asian News PBoC and CBIRC published rules on the risk classification of banks’ financial assets which will take effect on July 1st, with the tightened management regulations aimed at assessing banks’ credit risks more accurately, reflecting lenders’ real asset quality, according to Reuters. Japan's Upper House of Parliament is to hold confirmation hearings on the government's nominations for the BoJ Governor and Deputy Governors on February 27th, according to sources cited by Reuters. BoJ's expected next chief Ueda is likely to allow the data to guide the exit timing, according to Tetsuya Inoue who was Ueda's former staff secretary during his time as a BoJ board member, according to Reuters. China's Foreign Ministry says senior diplomat Wang Yi will visit France, Italy, Russia and Hungary this month and attend the Munich Security Conference. European bourses are modestly firmer, Euro Stoxx 50 +0.5%, with fresh developments limited and the schedule relatively sparse ahead of Tuesday's key events. Sectors are predominantly in the green, featuring outperformance in Travel and Construction names while Energy and Real Estate lag on benchmark pricing and broker activity respectively. US futures are incrementally in the green with the NQ leading slightly though overall performance is contained as we look towards Tuesday's CPI with Fed's Bowman due beforehand. Turkey is reportedly considering extending its stock market closure, according to Bloomberg sources. Top European News UK PM Sunak has reportedly asked ministers and officials to draw up plans for rebuilding the UK's relations with the EU, according to Bloomberg. UK employers are expected to increase wages by the most since 2012 with median expectations for a 5% pay rise, while 55% of recruiters were planning to lift base or variable pay this year, according to a CIPD survey cited by Reuters. Germany’s CDU is set to win in the repeat election in Berlin with 28% of votes, while Chancellor Scholz’s SDP party received just 18% of votes in a blow for the party which has governed the city-state for 22 years, according to ZDF. Moody’s affirmed Germany at AAA; Outlook Stable on Friday. EU Commission Forecasts: EZ to avoid the prev. expected technical recession, 0.1% QQ growth in Q4-2022 and 0.00% QQ in Q1-2023. Click here for more detail. Ship traffic has Turkey's Bosphorus strait has been suspended amid salvage operations of a ship, according to Tribeca shipping agency. FX USD is bid though peers, ex-JPY, are generally fairly contained after Friday's DXY rebound and ahead of US Tier 1 data and Fed speak throughout the week. At best, the USD has been up to 103.84 with USD/JPY as high as 132.76 as we await confirmation of Ueda's nomination for the BoJ and after reports indicate he will be data-driven when deciding on the appropriate point to end ultra-accommodation. At the other end of the spectrum, NZD is the relative outperformer and holding above 0.6300 as it pares losses vs AUD with data due overnight for the region; AUD/USD holding near 0.6900. CHF saw some fleeting strength in wake of hot domestic CPI while both EUR and GBP were unreactive to respective Central Bank speakers; around 0.923, 1.067 and 1.204 vs USD respectively. PBoC set USD/CNY mid-point at 6.8151 vs exp. 6.8160 (prev. 6.7884) Central Banks ECB’s Visco said there is no question that the restriction of the euro area monetary stance must continue and reiterated the pace of any further rate hike will continue to be decided based on incoming data and their impact on the inflation outlook, according to Reuters. ECB's Centeno says they need to be open minded with data, via Bloomberg TV; inflation surprised the ECB to the downside. Smaller hikes would need mid-term (i.e. 2024/2025) inflation nearing 2%. Labour market is a positive surprise, no signs of second round effects re. wages. BoE's Haskel says "it is true that when we raise rates that is not good for investment. I absolutely accept that, and therefore we are potentially contributing to that very poor capital investment", according to an interview with Matthew Klein; would prefer to make policy with much more attention on the data flow over the next few months. Fixed Income EGBs have experienced a firm bounce with Bunds comfortably above 136.00 to a peak circa. 30 ticks above, with technicals and perhaps ECB speak factoring. Amidst this, Gilts are more contained as they struggle to convincingly eclipse 104.00 while USTs reside at the top-end of narrow 112.18 to 11224 intra-day parameters. As such, EGB yields are modestly softer while the US curve is flat to mixed pre-Bowman. Commodities WTI March and Brent April futures are softer and towards the bottom of intraday ranges as the complex takes a breather from last week’s gains. While today's commodity-related schedule is limited, we do have the Olso Energy Conference (14-16th Feb) and the IEA-IEF-OPEC Symposium (15th Feb) in the near term. OPEC Secretary General Haitham Al Ghais said OPEC remain committed to stabilising global oil prices and their latest forecast shows oil demand will exceed pandemic levels this year to reach nearly 102mln bpd, while oil demand is expected to reach 110mln bpd by 2025, according to Reuters. Azerbaijani oil shipments at Turkey’s Ceyhan terminal resumed after the recent earthquake, according to a (BP/ LN) representative cited by Reuters. IEA sees the power sector set for a tipping point on emissions in 2025 and for electricity demand to increase by an average 3% through to 2025 with more than 70% of the global electricity demand increase over the next 3 years to come from China, India and south-east Asia, according to FT. Russian Deputy PM Novak says Russia is looking to sell over 80% of its oil exports and 75% of its oil product exports to "friendly" nations in 2023; sees potential for increase of Russian natural gas exports to the APAC region. China's CNPC is reportedly close to sealing a long-term agreement to purchase LNG from QatarEnergy's north field expansion, via Reuters citing sources. Spot gold is slightly softer with a stronger USD factoring and pressuring the yellow metal to a test of Friday's USD 1852/oz trough at worst, while base metals are softer amid the tentative tone and USD. Geopolitics EU set to propose new Russia sanctions, potentially targeting tech exports used for military purposes, heavy vehicles and rubber, as well as dozens of listings, according to Bloomberg's Nardelli citing sources. Russian Deputy Foreign Minister said Russia is ready for negotiations with Ukraine but without preconditions and noted that any negotiations should take into account current realities on the field, according to TASS. Russia said it hit energy facilities in Ukraine on Friday, according to RIA. it was also reported that Russian troops took the village of Krasna Hora which is north of Bakhmut in Ukraine’s Donetsk region, according to Reuters. Canada’s Defence Minister announced that a fighter jet shot down an object about 100 miles from the US-Canadian border which was a small cylindrical object and had posed a reasonable threat to civilian aviation, while the Defence Minister added it is not prudent to speculate on the origin of the object, according to Reuters. US military shot down a fourth flying object over Lake Huron in Michigan which was an octagonal structure with no discernible payload, while the US did not assess the latest object to be a military threat and was shot down due to its potential surveillance capabilities after it flew in proximity to sensitive military sites, according to Reuters. China spotted a mystery flying object over the waters near the coastal city of Rizhao in the Shandong province which authorities were preparing to shoot down, according to SCMP. China's Foreign Ministry says that since last year US high-altitude balloons flew over Chinese airspace without their permission on over 10 occasions. Taiwan has observed dozens of Chinese military balloon flights in its airspace in recent years, according to FT. UK is to launch a security review related to China's spy balloons, according to The Telegraph China is reportedly contemplating tripling its stockpile of nuclear warheads to 900 by 2035, according to sources cited by Japan Times. Crypto Stablecoin issuer Paxos has been directed to stop minting Binance Coin (BUSD) by the US SEC; following on from WSJ reporting over the weekend that US SEC intends to sue stablecoin issuer Paxos, which is behind the Pax Dollar (USDP) and Binance USD (BUSD) tokens, over the latter stablecoin. India’s Finance Minister said the G20 is exploring collectively regulating cryptocurrencies, according to Reuters. Binance and TRON reached an agreement in which Binance will reduce transaction fees on the Tron network with withdrawal frees returned to previous levels, according to Reuters. US Event Calendar Nothing major scheduled Central Bank Speakers 08:00: Fed’s Bowman Speaks at Banking Conference DB's Jim Reid concludes the overnight wrap I was left alone with Maisie yesterday morning while the twins went to "Ninja Warriors" which is basically a venue aimed at making children as tired as they possibly can be to give their parents a rest later. However my wife came back more tired than the boys as she had to join in! Anyway I used the couple of hours to try to write a surprise Valentine's Day song from Maisie to her mum. However I did it slightly differently. I asked ChatGPT to come up with some song lyrics given a selection of information about the family. The results were fairly spectacular and although I didn't use it all, I used it a starting point and tweaked around it. I'm pretty sure AI will revolutionise the written word in the years ahead. So if you've forgotten a present for your loved one for tomorrow why not ask chatGPT to write a poem for and about them. What could be more romantic than letting a robot and algorithm work out the words to express your love! On the most romantic day of the year tomorrow, the pheromones in the financial community might be dictated by a pretty important US CPI print. Sadly chatGPT can't give us any guidance there. It only feels like yesterday that US inflation prints were seen as last year’s news given the recent falls. In addition, forecasts and breakevens suggested we were on a glide path to normality over the next few months and quarters. However that view has received a bit of a jolt in the last 10 days. First we had payrolls print which raised the prospect that core services ex-shelter could stay stronger for longer. Then we had lots of hawkish central bank speak that the market had previously ignored but was now slowly waking up to. Then Manheim suggested US used cars (+2.5% mom in January) climbed at their fastest rate for 14-months and finally we had US CPI revisions on Friday that have rewritten the last year of history and in turn reduced core inflation by around a tenth each month leading up to June and have increased it by an average of around a tenth in each month since August. As such the trend in core CPI hasn’t fallen as much as expected and we now haven’t seen any month less than +0.3% MoM. In addition 3m annualised core CPI ran at 4.3% in December rather than the 3.1% reported at the January 12th release. So although year on year hasn’t changed the momentum is notably different. This feeds into work done by our economists over the last few weeks suggesting that inflation is going to be edging up again before it falls. See their chart book “The rise before the fall” (link here) for more on this. For tomorrow’s reading, higher gas prices should boost headline MoM CPI (+0.42% DB forecast, consensus +0.5%). Last month this printed at -0.1% but got revised up to +0.1% on Friday. Core MoM should be stable (DB +0.36% vs. +0.4% consensus) but only because Friday’s revisions saw it edge up from 0.3% to 0.4% last month. As strong prints from this time last year edge out of the data, the YoY rates should fall around two tenths each to 6.2% and 5.5% (consensus unchanged at 5.7%), respectively. If you want to get more into the weeds see DB’s Justin Weidner’s preview here. Staying with inflation, US PPI on Thursday is also important as the medical services component feeds directly into the equivalent within the core PCE number (out Feb 24th). Elsewhere in the US we have leading indicators (LEI) on Friday which are expected to pickup, but stay in negative territory in January after an awful print for December. January retail sales on Wednesday is also expected to bounce back after a poor end to the year. There are also a couple of regional factory surveys (NY on Weds and Philli Thurs) which along with industrial production (Weds) are also all expected to bounce to varying degrees. Thursday will also see the usual jobless claims alongside housing starts and building permits (1.350 vs. 1.337k). Fed speakers will have plenty of opportunity to address the data throughout the week, with at least ten appearances scheduled so far. There are a number of appearances from ECB officials as well. See the highlights in the day by day week ahead calendar at the end as usual. Shifting to Europe, UK CPI (Weds) and labour market data (tomorrow) will be in focus following the recent more dovish BoE meeting. This week's CPI will also be calculated with new weights so our UK economists put out a note on the potential impact of the changes here. Turning to earnings now, with nearly 350 of the S&P 500 members having reported, there will still be a few notable corporates releasing results but the reality is that we are past the biggest potential market movers for the macro world. Asian equity markets are starting an important week on the back foot. The Nikkei (-0.98%) is leading losses with the KOSPI (-0.91%) and Hang Seng (-0.47%) losing ground. Elsewhere, Chinese stocks are bucking the regional trend with the CSI (+0.62%) and Shanghai Composite (+0.53%) seeing decent gains. Outside of Asia, US stock futures are indicating a negative start with contracts tied to the S&P 500 (-0.42%) and NASDAQ 100 (-0.49%) trading lower following a disappointing week on Wall Street. In FX markets, the Japanese yen (-0.57%) continues to remain volatile, trading at 132.11 to the dollar ahead of the Japanese government’s official nomination on the new BOJ Governor scheduled tomorrow. On the oil front, prices are lower this morning with Brent futures (-1.03%) trading at $85.50/bbl and WTI (-1.17%) at $78.79/bbl after a strong past week. Looking back on that week now, markets moved to price in more aggressive rate hikes from both the Fed and the ECB than had previously been expected. In the US, the fed futures market ended the week pricing a 5.188% rate for July meeting, marking the highest close of this cycle so far. That was an increase of +18.0bps on the week and +4.5bps on Friday. The prospect of more rate hikes reverberated in fixed income markets, with 10yr Treasuries yields up +7.4bps on Friday and +20.7bps over the week, reaching their highest levels since the end of December. Over in Europe, overnight index swaps similarly moved to price in a higher terminal rate for the ECB at the July meeting, increasing by +18.4bps over the week (+5.8bps on Friday) to 3.501%, the highest level since the end of December. Fixed income markets extended their hawkish shift, with 2yr German bund yields jumping to their highest since 2008, up +7.2bps on Friday. This added to earlier increases, with 2yr bunds up +21.4bps over the week. 10yr bunds also fell back, as yields jumped +17.1bps over the week (+6.1bps on Friday). Over in equity markets, last week was the worst of 2023 so far following a very strong start to the year. The S&P 500 was down -1.11% over the week (-0.22% on Friday), its largest decline in weekly terms since mid-December. The NASDAQ also saw its largest weekly loss since December, falling back -2.41% (-0.61% on Friday). The STOXX 600 also fell back, down -0.63% (-0.96% on Friday). In other news from Friday, it was widely reported that Kazuo Ueda was set to be appointed as the BoJ's next governor. Ueda is an academic economist and former policy board member of the BoJ. According to our Japanese economists (link), Ueda is not considered to be hawkish and he would be wary of lifting monetary easing too early. However, foreign exchange markets saw Ueda in a more hawkish light, with the Yen reacting positively to the news, rallying + 1.33% against the US Dollar following the news, before reversing over the course of the day. The Nikkei closed up +0.59% on the week (+0.31% on Friday) In other data releases on Friday, we had a downward surprise for UK GDP growth for December, which printed at -0.5% month-on-month (vs -0.3% expected). However, a technical recession (2 consecutive quarterly contractions) was just avoided with zero growth in Q4 as a whole, following a -0.2% contraction in Q2. Against this backdrop, the FTSE 100 was down -0.36% on Friday and fell back -0.24% on the week. Over in commodities, oil prices saw further gains on Friday following the news that Russia would be cutting output from next month. WTI was up +8.63% for the week (+2.13% on Friday) to $79.72/bbl, and Brent crude rose up +8.07% (+2.24% on Friday) to $86.39/bbl. European natural gas futures fell -6.81% over the week (+2.30% on Friday). Tyler Durden Mon, 02/13/2023 - 08:11.....»»

Billions In Stolen COVID Assistance Funds Likely Gone Forever: Rep. Smith Authored by Michael Clements via The Epoch Times, A rush to provide financial assistance to Americans forced out of their jobs in the COVID-19 pandemic resulted in a $191 billion bonanza for fraudsters, according to chairman of the House Ways and Means Committee Rep. Jason Smith (R-Mo.). “There’s no question folks needed help, which is exactly why Congress should have protected this program and those who needed it against the criminals who exploited it to commit fraud,” Smith wrote in a statement released at a hearing on Feb. 8. The Bureau of Labor Statistics reported that in April 2020, the unemployment rate reached a record high of 15 percent after lockdowns to slow the spread of the CCP (Chinese Communist Party) virus, commonly known as the novel coronavirus, closed many businesses. Between March 14, 2020, and April 18, 2020, weekly unemployment claims increased dramatically from 225,500 to 5.3 million. Cars unsold due to the autos market slowdown caused by coronavirus disease (COVID-19) are seen stored in the parking lot of the Wells Fargo Center in Philadelphia, Penn., on April 28, 2020. (Mark Makela/File Photo/Reuters) Smith said the Coronavirus Aid, Relief, and Economic Recovery Act was an attempt to help. But Congress should have done more to protect the millions of tax dollars distributed under the Act. Three expert witnesses told the committee some things could and should be done to prevent future problems. But, when it comes to recovering the billions of tax dollars lost to criminals, they held out little hope. Much of that money was lost to organized fraud rings in Nigeria, China, Russia, and other countries. “To find the overseas fraudsters could be a challenge,” said Michael Horowitz, chair of the Pandemic Response Accountability Committee for the Office of the Inspector General, Department of Justice. Most state unemployment agencies were unprepared for the crush of calls and applications that flooded their offices. Overtaxed office workers, many using 1980s-vintage technology, cut corners and bypassed safety measures to deliver benefits to the newly unemployed and underemployed. Rep. Bradley Schneider (D-Ill.) said the situation was dire from the start. “We had a five-alarm fire raging out of control, and we were fighting it with water passed in buckets, and the buckets had holes in them,” Schneider said. Rep. Gwen Moore (D-Wis.) said she was told that up to 80 percent of calls to the Wisconsin Department of Workforce Development went unanswered at the height of the pandemic. “No one was ready for this pandemic,” she told the Committee. According to the experts, many applicants were allowed to “self-certify.” In essence, when the applicant provided identifying information, such as a Social Security Number, the state took their word for it. The Social Security Administration keeps a “Death Master File Index,” a record of Social Security Numbers for people who have died. Attorney General Merrick Garland (left) looks at federal prosecutor Kevin Chambers (right) after appointing him to be the Justice Department’s chief pandemic fraud prosecutor during a meeting of the COVID-19 Fraud Enforcement Task Force at the Justice Department in Washington on March 10, 2022. The U.S. Secret Service recovered $286 million in fraudulently obtained pandemic funds to the Small Business Administration on Aug. 26, 2022. (Kevin Lamarque/Pool Photo via AP, File) However, not all agencies have access to the index, and each state handles its own unemployment insurance program. Most state systems are not compatible with other states or the federal government. Gene Dodaro, comptroller general for the Government Accountability Office (GAO), summed the situation up this way: “Using a Social Security Number is an easy way to get money. My own mother received a payment.” Dodaro said the money his mother received was from someone else using her information to file a fraudulent claim. He had her return the money but said it was an example of how easy it is to defraud the system. But Social Security numbers weren’t the only means used by fraudsters. According to the Department of Justice, 16 people in Texas either pleaded guilty for their involvement in a plan to defraud the Paycheck Protection Plan administered by the Small Business Administration. The program provided millions in forgivable loans to businesses to help them continue to make payroll during lockdowns. According to the press release, Abdul Fatani, 57, of Richmond, Texas, was part of a ring that submitted fraudulent loan applications that contained false information on their business’s number of employees and monthly payroll expenses. The co-conspirators filed over 80 fraudulent applications for $35 million in loans. Fraud Ring Stopped The group took in $500,000. They laundered the illegal proceeds by transferring them among various bank accounts. Dodaro told the Committee that such fraud is not a new problem. He said that in 2010, an official in New York warned the state that it had a serious problem. The pandemic only exacerbated that problem. Rep. Claudia Tenney (R-N.Y.) said that as a business owner, she was familiar with some of the issues. She said that while the money was taken from the government, the government was not the victim. “Our taxpayers, our employers, our employees, have all paid the price for this fraud,” she said. Rep. Nicole Malliotakis (R-N.Y.) agreed. She said New York lost at least $11 billion to fraudulent payments. That money, combined with funds from other states, paid for a $10 million villa in the Dominican Republic, a gold Rolex watch, sports cars, and other luxury items. Luxury Items Purchased “One person even received $1.5 million over ten months,” Malliotakis said. The Committee asked the witnesses what could be done to prevent future problems. Larry Turner, with the Department of Labor’s Office of the Inspector General, said data analytics is vital to the solution. And this would come from states being able to work together with federal officials. According to Turner, a central database would enable officials to catch fraudulent applications before they went too far. In his written statement to the committee, Turner said his office had been warning that unemployment insurance fraud was a problem, outlining several investigations and audits that exposed fraud in the system. Dodaro recommended a closer relationship between state auditors and federal officials. Using a uniform computer system and requiring more audits of easily defrauded programs like unemployment insurance and Medicare, Dodaro said officials could put a dent in the problem. All three witnesses said it would likely be years before the full extent of the damage is known. Horowitz noted that recovering even most of the stolen funds is highly unlikely. He told the committee that states are starting to work together, and many have updated their technology due to the crisis. “The good news is, things are improving; the bad news is, we’re not there yet,” Horowitz said. Rep. Gregory Murphy (R-N.C.) was blunt in his assessment of the problem. “Congress did not do its job. If we don’t know where (money) goes or how it’s going, we’re out of business,” he said. Tyler Durden Thu, 02/09/2023 - 19:40.....»»

Powell delivered, and didn‘t trip the bulls – S&P 500 merely tried to shake out the weak hands, but you were ready through my habitual live coverage on Twitter, as to what to expect. The premarket consolidation is neither unexpected nor concerning – and market breadth data will catch up, even if only after the […] Powell delivered, and didn‘t trip the bulls – S&P 500 merely tried to shake out the weak hands, but you were ready through my habitual live coverage on Twitter, as to what to expect. The premarket consolidation is neither unexpected nor concerning – and market breadth data will catch up, even if only after the consumer confidence data Friday. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q4 2022 hedge fund letters, conferences and more   Inflationary forces are building up, meaning that inflation would return in 2H 2023, and together with deglobalization and friendshoring, this would underpin commodities. The era of cheap labor, cheap commodities and cheap goods, is definitely over. Likewise the secular trend in bonds is for rates to rise (the decade of high inflation and high rates – the commodities and precious metals supercycle), even if these have to retreat somewhat still as the soft landing narrative gives way to the recession one. In place of a longer introductory part today, let‘s rush into the charts while commenting on related markets there – and of course, my Twitter feed is open 24/7! Keep enjoying the lively Twitter feed serving you all already in, which comes on top of getting the key daily analytics right into your mailbox. Plenty gets addressed there (or on Telegram if you prefer), but the analyses (whether short or long format, depending on market action) over email are the bedrock. So, make sure you‘re signed up for the free newsletter and that you have my Twitter profile open with notifications on so as not to miss a thing, and to benefit from extra intraday calls. Let‘s move right into the charts (all courtesy of www.stockcharts.com). Gold, Silver and Miners This is a buying opportunity, not a selling one. This dip will be bought, and the current blues won‘t last for weeks without end. Silver especially is getting ahead of itself in declining – the $22 support would hold. Bitcoin and Ethereum   Cryptos are another reason why I‘m not looking for any dramatic setback soon. Thank you for having read today‘s free analysis, which is a small part of my site‘s daily premium Monica's Trading Signals covering all the markets you're used to (stocks, bonds, gold, silver, miners, oil, copper, cryptos), and of the daily premium Monica's Stock Signals presenting stocks and bonds only. Both publications feature real-time trade calls and intraday updates. While at my site, you can subscribe to the free Monica‘s Insider Club for instant publishing notifications and other content useful for making your own trade moves. Turn notifications on, and have my Twitter profile (tweets only) opened in a fresh tab so as not to miss a thing – such as extra intraday opportunities. Thanks for all your support that makes this great ride possible! Thank you, Monica Kingsley Stock Trading Signals Gold Trading Signals Oil Trading Signals Copper Trading Signals Bitcoin Trading Signals www.monicakingsley.co mk@monicakingsley.co All essays, research and information represent analyses and opinions of Monica Kingsley that are based on available and latest data. Despite careful research and best efforts, it may prove wrong and be subject to change with or without notice. Monica Kingsley does not guarantee the accuracy or thoroughness of the data or information reported. Her content serves educational purposes and should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks and options are financial instruments not suitable for every investor. Please be advised that you invest at your own risk. Monica Kingsley is not a Registered Securities Advisor. By reading her writings, you agree that she will not be held responsible or liable for any decisions you make. Investing, trading and speculating in financial markets may involve high risk of loss. Monica Kingsley may have a short or long position in any securities, including those mentioned in her writings, and may make additional purchases and/or sales of those securities without notice......»»