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Gold futures tally a gain of 1.1% for the week

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Category: topSource: marketwatchJan 14th, 2022

Gold futures end lower for the week, climb for the month

Gold futures fell on Friday to tally a loss for the week, but prices for the precious metal posted a gain for the month following a loss of more than 3% in September. Gold will "start to form a range" ahead of Wednesday's Federal Reserve monetary policy decision, said Edward Moya, senior market analyst at Oanda. "A dovish taper announcement would be the best case scenario for gold prices," he said. "If inflation continues to run wild, gold prices will eventually see strong inflows as growth concerns trigger safe-haven positioning." December gold fell $18.70, or 1%, to settle at $1,783.90 an ounce. Prices for the most-active contract finished about 0.7% lower for the week, but climbed by 1.5% for the month, according to FactSet data.Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news......»»

Category: topSource: marketwatchOct 29th, 2021

Futures Slide On Stagflation Fears As 10Y Yields Spike

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

Category: blogSource: zerohedgeOct 21st, 2021

Futures Surge As Banks Report Stellar Earnings; PPI On Deck

Futures Surge As Banks Report Stellar Earnings; PPI On Deck US equity futures, already sharply higher overnight, jumped this morning as a risk-on mood inspired by stellar bank earnings, overshadowed concern that supply snarls. a China property crunch, a tapering Fed and stagflation will weigh on the global recovery. Nasdaq futures jumped 1%, just ahead of the S&P 500 which was up 0.9%. 10-year Treasury yields ticked lower to about 1.5%, and with the dollar lower as well, oil jumped. Bitcoin and the broader crypto space continued to rise. Shares in Morgan Stanley, Citi and Bank of America jumped as their deal-making units rode a record wave of M&A. On the other end, Boeing shares fell more than 1% after a Dow Jones report said the plane maker is dealing with a new defect on its 787 Dreamliner. Here are some of the biggest other U.S. movers today: Occidental (OXY US) rises 1.6% in U.S. premarket trading after it agreed to sell its interests in two Ghana offshore fields for $750m to Kosmos Energy and Ghana National Petroleum Plug Power (PLUG US) rises 3.3% premarket, extending gains from Wednesday, when it announced partnership with Airbus SE and Phillips 66 to find ways to harness hydrogen to power airplanes, vehicles and industry Esports Entertainment (GMBL US) shares rise 16% in U.S. premarket trading after the online gambling company reported its FY21 results and reaffirmed its FY22 guidance Perrigo  (PRGO US) gains 2.8% in premarket trading after Raymond James upgrades to outperform following acquisition of HRA Pharma and recent settlement of Irish tax dispute AT&T (T US) ticks higher in premarket trading after KeyBanc writes upgrades to sector weight from underweight, saying it seems harder to justify further downside from here Avis Budget (CAR US) may be active after getting its only negative rating among analysts as Morgan Stanley cuts to underweight with risk/reward seen pointing toward downside OrthoPediatrics (KIDS US) dipped 2% Wednesday postmarket after it said 3Q revenue was hurt by the surge in cases of Covid-19 delta variant and RSV within children’s hospitals combined with staff shortage Investors continue to evaluate the resilience of economic reopening to supply chain disruptions, a jump in energy prices and the prospect of reduced central bank support. In the earnings season so far, executives at S&P 500 companies mentioned the phrase “supply chain” about 3,000 times on investor calls as of Tuesday -- far higher than last year’s then-record figure. “Our constructive outlook for growth means that our asset allocation remains broadly pro-risk and we continue to be modestly overweight global equities,” according to Michael Grady, head of investment strategy and chief economist at Aviva Investors. “However, we have scaled back that position marginally because of growing pains which could impact sales and margins.” Europe's Stoxx 600 index reached its highest level in almost three weeks, boosted by gains in tech shares and miners. The Euro Stoxx 50 rose over 1% to best levels for the week. FTSE 100 rises 0.75%, underperforming at the margin. Miners and tech names are the strongest sectors with only healthcare stocks in small negative territory. Here are some of the biggest European movers today: THG shares advance as much as 10%, snapping a four-day losing streak, after a non-executive director bought stock while analysts at Goldman Sachs and Liberum defended their buy recommendations. Steico gains as much as 9.9%, the most since Jan., after the insulation manufacturer reported record quarterly revenue, which Warburg says “leaves no doubt” about underlying market momentum. Banco BPM climbs as much as 3.6% and is the day’s best performer on the FTSE MIB benchmark index; bank initiated at buy at Jefferies as broker says opportunity to internalize insurance business offers 9%-16% possible upside to 2023 consensus EPS and is not priced in by the market. Hays rises as much as 4.3% after the recruiter posted a jump in comparable net fees for the first quarter. Publicis jumps as much as 3.7%, the stock’s best day since July, with JPMorgan saying the advertising company’s results show a “strong” third quarter, though there are risks ahead. Kesko shares rise as much as 6.1%. The timing of this year’s third guidance upgrade was a surprise, Inderes says. Ubisoft shares fall as much as 5.5% after JPMorgan Cazenove (overweight) opened a negative catalyst watch, citing short-term downside risk to earnings ahead of results. Earlier in the session, Asian stocks advanced, boosted by a rebound in technology shares as traders focused on the ongoing earnings season and assessed economic-reopening prospects in the region. The MSCI Asia Pacific Index gained as much as 0.7%, as a sub-gauge of tech stocks rose, halting a three-day slide. Tokyo Electron contributed the most to the measure’s climb, while Taiwan Semiconductor Manufacturing Co. closed up 0.4% ahead of its earnings release. India’s tech stocks rose following better-than-expected earnings for three leading firms in the sector. Philippine stocks were among Asia’s best performers as Manila began easing virus restrictions, which will allow more businesses in the capital to reopen this weekend. Indonesia’s stock benchmark rallied for a third-straight day, as the government prepared to reopen Bali to tourists. READ: Commodities Boom, Tourism Hopes Fuel Southeast Asia Stock Rally Ilya Spivak, head of Greater Asia at DailyFX, said FOMC minutes released overnight provided Asian markets with little direction, which may offer some opportunity for recouping recent losses. The report showed officials broadly agreed last month they should start reducing pandemic-era stimulus in mid-November or mid-December. U.S. 10-year Treasury yields stayed below 1.6%, providing support for tech stocks.  “Markets seemed to conclude the near-term narrative is on pause until further evidence,” Spivak said. Shares in mainland China fell as the country reported factory-gate prices grew at the fastest pace in almost 26 years in September. Singapore’s stock benchmark pared initial losses as the country’s central bank unexpectedly tightened policy. Hong Kong’s equity market was closed for a holiday In rates, Treasuries were steady to a tad higher, underperforming Bunds which advanced, led by the long end.  Fixed income is mixed: gilts bull steepen with short dates richening ~2.5bps, offering only a muted reaction to dovish commentary from BOE’s Tenreyro. Bunds rise with 10y futures breaching 169. USTs are relatively quiet with 5s30s unable to crack 100bps to the upside. Peripheral spreads widen slightly. In FX, the Turkish lira was again the overnight standout as it weakened to a record low after President Recep Tayyip Erdogan fired three central bankers. The Bloomberg Dollar Spot Index fell and the greenback slipped against all of its Group-of-10 peers apart from the yen, with risk-sensitive and resource-based currencies leading gains; the euro rose to trade above $1.16 for the first time in a week.  The pound rose to more than a two-week high amid dollar weakness as traders wait for a raft of Bank of England policy makers to speak. Sweden’s krona temporarily came off an almost eight-month high against the euro after inflation fell short of estimates. The euro dropped to the lowest since November against the Swiss franc as banks targeted large option barriers and leveraged sell-stops under 1.0700, traders said; Currency traders are responding to stagflation risks by turning to the Swiss franc. The Aussie advanced to a five-week high versus the greenback even as a monthly jobs report showed employment fell in September; the jobless rate rose less than economists forecast. The kiwi was a among the top performers; RBNZ Deputy Governor Geoff Bascand said inflation pressures were becoming more persistent China’s yuan declined from a four-month high after the central bank signaled discomfort with recent gains by setting a weaker-than-expected reference rate. In commodities, crude futures extend Asia’s gains with WTI up ~$1 before stalling near $81.50. Brent regains a $84-handle. Spot gold drifts through Wednesday’s highs, adding $4 to print just shy of the $1,800/oz mark. Base metals are well bid with LME copper and aluminum gaining as much as 3%.  Looking at the day ahead, we’ve got central bank speakers including the Fed’s Bullard, Bostic, Barkin, Daly and Harker, the ECB’s Elderson and Knot, along with the BoE’s Deputy Governor Cunliffe, Tenreyro and Mann. Data releases from the US include the September PPI reading along with the weekly initial jobless claims. Lastly, earnings releases will include UnitedHealth, Bank of America, Wells Fargo, Morgan Stanley, Citigroup, US Bancorp and Walgreens Boots Alliance. Market Snapshot S&P 500 futures up 0.6% to 4,382.50 STOXX Europe 600 up 0.9% to 464.38 MXAP up 0.7% to 196.12 MXAPJ up 0.6% to 642.66 Nikkei up 1.5% to 28,550.93 Topix up 0.7% to 1,986.97 Hang Seng Index down 1.4% to 24,962.59 Shanghai Composite little changed at 3,558.28 Sensex up 0.7% to 61,190.63 Australia S&P/ASX 200 up 0.5% to 7,311.73 Kospi up 1.5% to 2,988.64 Brent Futures up 1.0% to $83.98/bbl Gold spot up 0.2% to $1,796.13 U.S. Dollar Index down 0.25% to 93.84 German 10Y yield fell 1.5 bps to -0.143% Euro little changed at $1.1615 Brent Futures up 1.0% to $84.13/bbl Top Overnight News from Bloomberg A flattening Treasury yield curve signals increasing concern Federal Reserve efforts to keep inflation in check will derail the recovery in the world’s largest economy China’s factory-gate prices grew at the fastest pace in almost 26 years in September, potentially adding to global inflation pressure if local businesses start passing on higher costs to consumers. Turkish President Recep Tayyip Erdogan fired monetary policy makers wary of cutting interest rates further, driving the lira to record lows against the dollar with his midnight decree Singapore’s central bank unexpectedly tightened its monetary policy settings, strengthening the local dollar, as the city-state joins policymakers globally concerned about risks of persistent inflation Shortages of natural gas in Europe and Asia are boosting demand for oil, deepening what was already a sizable supply deficit in crude markets, the International Energy Agency said A tropical storm that’s lashing southern China mixed with Covid-related supply chain snarls is causing a ship backlog from Shenzhen to Singapore, intensifying fears retail shelves may look rather empty come Christmas A more detailed look at global markets courtesy of Newsquawk A constructive mood was seen across Asia-Pac stocks with the region building on the mild positive bias stateside where the Nasdaq outperformed as tech and growth stocks benefitted from the curve flattening, with global risk appetite unfazed by the firmer US CPI data and FOMC Minutes that suggested the start of tapering in either mid-November of mid-December. The ASX 200 (+0.5%) traded higher as tech stocks found inspiration from the outperformance of US counterparts and with the mining sector buoyed by gains in underlying commodity prices. The Nikkei 225 (+1.5%) was the biggest gainer amid currency-related tailwinds and with the latest securities flow data showing a substantial shift by foreign investors to net purchases of Japanese stocks during the prior week. The KOSPI (+1.5%) conformed to the brightening picture amid signs of a slowdown in weekly infections, while the Singapore’s Straits Times Index (+0.3%) lagged for most of the session following weaker than expected Q3 GDP data, and after the MAS surprisingly tightened its FX-based policy by slightly raising the slope of the SGD nominal effective exchange rate (NEER). The Shanghai Comp. (U/C) was initially kept afloat but with gains capped after slightly softer than expected loans and financing data from China and with participants digesting mixed inflation numbers in which CPI printed below estimates but PPI topped forecasts for a record increase in factory gate prices, while there was also an absence of Stock Connect flows with participants in Hong Kong away for holiday. Finally, 10yr JGBs were higher after the recent curve flattening stateside and rebound in T-notes with the US longer-end also helped by a solid 30yr auction, although gains for JGBs were capped amid the outperformance in Tokyo stocks and mostly weaker metrics at the 5yr JGB auction. Top Asian News Chinese Developer Shares Fall on Debt Crisis: Evergrande Update Japan’s Yamagiwa Says Abenomics Fell Short at Spreading Wealth China Seen Rolling Over Policy Loans to Keep Liquidity Abundant Malaysia’s 2020 Fertility Rate Falls to Lowest in Four Decades Bourses in Europe have modestly extended on the upside seen at the European cash open (Euro Stoxx 50 +1.1%; Stoxx 600 +0.9%) in a continuation of the firm sentiment experienced overnight. US equity futures have also conformed to the broader upbeat tone, with gains seen across the ES (+0.7%), NQ (+0.8%), RTY (+0.8%) and YM (+0.7%). The upside comes despite a lack of overly pertinent newsflow, with participants looking ahead to a plethora of central bank speakers. The major indices in Europe also see a broad-based performance, but the periphery narrowly outperforms, whilst the SMI (Unch) lags amid the sectorial underperformance seen in Healthcare. Overall, the sectors portray somewhat of a cyclical tilt. The Basic Resources sector is the clear winner and is closely followed by Tech and Financial Services. Individual moves are scarce as price action is largely dictated by the macro picture, but the tech sector is led higher by gains in chip names after the world's largest contract chipmaker TSMC (+3.1% pre-market) reported strong earnings and upgraded its revenue guidance. Top European News German 2021 Economic Growth Forecast Slashed on Supply Crunch U.K. Gas Shipper Stops Supplies in Another Blow to Power Firms Christmas Toy Shortages Loom as Cargo Clogs a Major U.K. Port Putin Is Back to Building Financial Fortress as Reserves Grow In FX, the Dollar and index by default have retreated further from Tuesday’s 2021 peak for the latter as US Treasury yields continue to soften and the curve realign in wake of yesterday’s broadly in line CPI data and FOMC minutes that set the schedule for tapering, but maintained a clear differential between scaling down the pace of asset purchases and the timing of rate normalisation. Hence, the Buck is losing bullish momentum with the DXY now eying bids and downside technical support under 94.000 having slipped beneath an early October low (93.804 from the 5th of the month vs 93.675 a day earlier) and the 21 DMA that comes in at 93.770 today between 94.090-93.754 parameters before the next IJC update, PPI data and a heavy slate of Fed speakers. NZD/AUD - No real surprise that the Kiwi has been given a new lease of life given that the RBNZ has already taken its first tightening step and put physical distance between the OCR and the US FFR, not to mention that the move sparked a major ‘sell fact’ after ‘buy rumour’ reaction. However, Nzd/Usd is back on the 0.7000 handle with additional impetus via favourable tailwinds down under as the Aud/Nzd cross is now nearer 1.0550 than 1.0600 even though the Aussie is also taking advantage of the Greenback’s fall from grace to reclaim 0.7400+ status. Note, Aud/Usd may be lagging somewhat on the back of a somewhat labour report overnight as the employment tally fell slightly short of expectations and participation dipped, but the jobless rate fell and full time jobs rose. Moreover, RBA Deputy Governor Debelle repeated that circumstances are different for Australia compared to countries where policy is tightening, adding that employment is positive overall, but there is not much improvement on the wage front. CAD/GBP/CHF - The next best majors in terms of reclaiming losses vs their US counterpart, with the Loonie also encouraged by a firm bounce in oil prices and other commodities in keeping with a general recovery in risk appetite. Usd/Cad is under 1.2400, while Cable is now over 1.3700 having clearly breached Fib resistance around 1.3663 and the Franc is probing 0.9200 for a big figure-plus turnaround from recent lows irrespective of mixed Swiss import and producer prices. EUR/JPY - Relative laggards, but the Euro has finally hurdled chart obstacles standing in the way of 1.1600 and gradually gathering impetus to pull away from decent option expiry interest at the round number and just above (1.5 bn and 1 bn 1.1610-20), and the Yen regrouping around the 113.50 axis regardless of dovish BoJ rhetoric. In short, board member Noguchi conceded that the Bank may have little choice but to extend pandemic relief support unless it becomes clear that the economy has returned to a pre-pandemic state, adding that more easing may be necessary if the jobs market does not improve from pent-up demand, though he doesn't see and immediate need to top up stimulus or big stagflation risk. In commodities, WTI and Brent front month futures are continuing the grind higher seen since the European close yesterday as the risk tone remains supportive and in the aftermath of an overall bullish IEA oil market report. The IEA upgraded its 2021 and 2022 oil demand forecasts by 170k and 210k BPD respectively, which contrasts the EIA STEO and the OPEC MOMR – with the former upping its 2021 but cutting 2022 forecast, whilst the OPEC MOMR saw the 2021 demand forecast cut and 2022 was maintained. The IEA report however noted that the ongoing energy crisis could boost oil demand by 500k BPD, and oil demand could exceed pre-pandemic levels in 2022. On this, China has asked Russia to double electricity supply between November-December. The morning saw commentary from various energy ministers, but perhaps the most telling from the Russian Deputy PM Novak who suggested Russia will produce 9.9mln BPD of oil in October (in-line with the quota), but that Russia has no problem in increasing oil output which can go to 11.3mln BPD (Russia’s capacity) and even more than that, but output will depend on market situation. Long story short, Russia can ramp up output but is currently caged by the OPEC+ pact. WTI Nov extended on gain about USD 81/bbl to a current high of USD 81.41/bbl (vs 80.41/bbl low) while its Brent counter topped USD 84.00/bbl to a USD 84.24/bbl high (vs 83.18/bbl low). As a reminder, the weekly DoEs will be released at 16:00BST/11:00EDT on account of the Columbus Day holiday. Gas prices have also moved higher in intraday, with the UK Nat Gas future +5.5% at the time of writing. Returning to the Russian Deputy PM Novak who noted that Nord Stream 2 will be ready for work in the next few days, still expects certification to occur and commercial supplies of gas via Nord Stream 2 could start following certification. Elsewhere, spot gold and silver have been drifting higher as the Buck wanes, with spot gold topping its 200 DMA (1,7995/oz) and in striking distance of its 100 DMA (1,799/oz) ahead of the USD 1,800/oz mark. Over to base metals, LME copper is again on a firmer footing, owing to the overall constructive tone across the market. Dalian iron ore meanwhile fell for a second straight day in a continuation of the downside seen as Beijing imposed tougher steel output controls for winter. World Steel Association also cut its global steel demand forecast to +4.5% in 2021 (prev. forecast +5.8%); +2.2% in 2022 (prev. forecast 2.7%). US Event Calendar 8:30am: Sept. PPI Final Demand MoM, est. 0.6%, prior 0.7%; YoY, est. 8.6%, prior 8.3% 8:30am: Sept. PPI Ex Food and Energy MoM, est. 0.5%, prior 0.6%; YoY, est. 7.1%, prior 6.7% 8:30am: Sept. PPI Ex Food, Energy, Trade MoM, est. 0.4%, prior 0.3%; YoY, est. 6.5%, prior 6.3% 8:30am: Oct. Initial Jobless Claims, est. 320,000, prior 326,000; Continuing Claims, est. 2.67m, prior 2.71m 9:45am: Oct. Langer Consumer Comfort, prior 53.4 Central Banks 8:35am: Fed’s Bullard Takes Part in Virtual Discussion 9:45am: Fed’s Bostic Takes Part in Panel on Inclusive Growth 12pm: New York Fed’s Logan Gives Speech on Policy Implementation 1pm: Fed’s Barkin Gives Speech 1pm: Fed’s Daly Speaks at Conference on Small Business Credit 6pm: Fed’s Harker Discusses the Economic Outlook DB's Jim Reid concludes the overnight wrap Inflation dominated the conversation yet again for markets yesterday, after another upside surprise from the US CPI data led to the increasing realisation that we’ll still be talking about the topic for some time yet. Equities were pretty subdued as they looked forward to the upcoming earnings season, but investor jitters were evident as the classic inflation hedge of gold (+1.87%) posted its strongest daily performance since March, whilst the US dollar (-0.46%) ended the session as the worst performer among the G10 currencies. Running through the details of that release, headline US consumer prices were up by +0.4% on a monthly basis in September (vs. +0.3% expected), marking the 5th time in the last 7 months that the figure has come in above the median estimate on Bloomberg, though core prices were in line with consensus at +0.2% month-over-month. There were a number of drivers behind the faster pace, but food inflation (+0.93%) saw its biggest monthly increase since April 2020. Whilst some pandemic-sensitive sectors registered soft readings, housing-related prices were much firmer. Rent of primary residence grew +0.45%, its fastest pace since May 2001 and owners’ equivalent rent increased +0.43%, its strongest since June 2006. These housing gauges are something that Fed officials have signposted as having the potential to provide more durable upward pressure on inflation. The CPI release only added to speculation that the Fed would be forced to hike rates earlier than previously anticipated, and investors are now pricing in almost 4 hikes by the end of 2023, which is over a full hike more than they were pricing in just a month earlier. In response, the Treasury yield curve continued the previous day’s flattening, with the prospect of tighter monetary policy seeing the 2yr yield up +2.0bps to a post-pandemic high of 0.358%, whilst the 10yr decreased -4.0bps to 1.537%. That move lower in the 10yr yield was entirely down to lower real rates, however, which were down -7.4bps, suggesting investors were increasingly concerned about long-term growth prospects, whereas the 10yr inflation breakeven was up +3.3bps to 2.525%, its highest level since May. Meanwhile in Europe, 10yr sovereign bond yields took a turn lower alongside Treasuries, with those on bunds (-4.2bps), OATs (-4.0bps) and BTPs (-2.3bps) all falling. Recent inflation dynamics and issues on the supply-side are something that politicians have become increasingly attuned to, and President Biden gave remarks last night where he outlined efforts to address the supply-chain bottlenecks. This followed headlines earlier in the session that major ports in southern California would move to a 24/7 schedule to unclog delivery backlogs, and Mr. Biden also used the opportunity to push for the passage of the infrastructure plan. That comes as it’s also been reported by Reuters that the White House has been speaking with US oil and gas producers to see how prices can be brought lower. We should hear from Mr. Biden again today, who’s due to give an update on the Covid-19 response. On the topic of institutions that care about inflation, the September FOMC minutes suggested staff still remained optimistic that inflationary pressures would prove transitory, although Committee members themselves were predictably more split on the matter. Several participants pointed out that pandemic-sensitive prices were driving most of the gains, while some expressed concerns that high rates of inflation would feed into longer-term inflation expectations. Otherwise, the minutes all but confirmed DB’s US economists’ call for a November taper announcement, with monthly reductions in the pace of asset purchases of $10 billion for Treasuries and $5 billion for MBS. Markets took the news in their stride immediately following the release, reflecting how the build-up to this move has been gradually telegraphed through the year. Turning to equities, the S&P 500 managed to end its 3-day losing streak, gaining +0.30% by the close. Megacap technology stocks led the way, with the FANG+ index up +1.13% as the NASDAQ added +0.73%. On the other hand, cyclicals such as financials (-0.64%) lagged behind the broader index following flatter yield curve, and JPMorgan Chase (-2.64%) sold off as the company’s Q3 earnings release showed muted loan growth. Separately, Delta Air Lines (-5.76%) also sold off along with the broader S&P 500 airlines index (-3.51%), as they warned that rising fuel costs would threaten earnings over the current quarter. European indices posted a more solid performance than the US, with the STOXX 600 up +0.71%, though the sectoral balance was similar with tech stocks outperforming whilst the STOXX Banks index (-2.05%) fell back from its 2-year high the previous session. Overnight in Asia equities have put in a mixed performance, with the KOSPI (+1.17%) and the Nikkei (+1.01%) moving higher whilst the Shanghai Composite (-0.25%) and the CSI (-0.62%) have lost ground. Those moves follow the release of Chinese inflation data for September, which showed producer price inflation hit its highest in nearly 26 years, at +10.7% (vs. +10.5% expected), driven mostly by higher coal prices and energy-sensitive categories. On the other hand, the CPI measure for September came in slightly below consensus at +0.7% (vs. +0.8% expected), indicating that higher factory gate prices have not yet translated into consumer prices. Meanwhile, equity markets in the US are pointing to a positive start later on with S&P 500 futures up +0.32%. Of course, one of the drivers behind the renewal of inflation jitters has been the recent surge in commodity prices across the board, and we’ve seen further gains yesterday and this morning that will only add to the concerns about inflation readings yet to come. Oil prices have advanced yet again, with Brent Crude up +0.69% this morning to be on track to close at a 3-year high as it stands. That comes in spite of OPEC’s monthly oil market report revising down their forecast for world oil demand this year to 5.8mb/d, having been at 5.96mb/d last month. Elsewhere, European natural gas prices were up +9.24% as they continued to pare back some of the declines from last week, and a further two energy suppliers in the UK collapsed, Pure Planet and Colorado Energy, who supply quarter of a million customers between them. Otherwise, copper (+4.4x%) hit a 2-month high yesterday, and it up a further +1.01% this morning, Turning to Brexit, yesterday saw the European Commission put forward a set of adjustments to the Northern Ireland Protocol, which is a part of the Brexit deal that’s caused a significant dispute between the UK and the EU. The proposals from Commission Vice President Šefčovič would see an 80% reduction in checks on animal and plant-based products, as well as a 50% reduction in paperwork by reducing the documentation needed for goods moving between Great Britain and Northern Ireland. It follows a speech by the UK’s David Frost on Tuesday, in which he said that Article 16 of the Protocol, which allows either side to take unilateral safeguard measures, could be used “if necessary”. Mr. Frost is due to meet with Šefčovič in Brussels tomorrow. Running through yesterday’s other data, UK GDP grew by +0.4% in August (vs. +0.5% expected), and the July number was revised down to show a -0.1% contraction (vs. +0.1% growth previously). The release means that GDP in August was still -0.8% beneath its pre-pandemic level back in February 2020. To the day ahead now, and on the calendar we’ve got central bank speakers including the Fed’s Bullard, Bostic, Barkin, Daly and Harker, the ECB’s Elderson and Knot, along with the BoE’s Deputy Governor Cunliffe, Tenreyro and Mann. Data releases from the US include the September PPI reading along with the weekly initial jobless claims. Lastly, earnings releases will include UnitedHealth, Bank of America, Wells Fargo, Morgan Stanley, Citigroup, US Bancorp and Walgreens Boots Alliance. Tyler Durden Thu, 10/14/2021 - 08:29.....»»

Category: blogSource: zerohedgeOct 14th, 2021

Gold futures end modestly higher for the session, posting a gain for the week

Gold futures ended with a modest gain on Friday, to tally a climb of about 0.4% for the week. Prices for the precious metal, which is often used as a hedge against inflation, rose after a reading on the cost of goods and services showed a sharp rise for August and left the rate of U.S. inflation at a 30-year high. December gold rose $1.40, or nearly 0.1%, to settle at $1,758.40 an ounce. Prices, based on the most-active contract, settled at $1,751.70 a week ago, FactSet data show. Gold futures posted a loss of 3.4% for September. Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news......»»

Category: topSource: marketwatchOct 1st, 2021

Futures Rebound As Yields Drop

Futures Rebound As Yields Drop U.S. index futures rebounded on Tuesday from Monday's stagflation-fear driven rout as an increase in Treasury yields abated and the greenback dropped from a 10 month high while Brent crude dropped from a 3 year high of $80/barrel after API showed a surprise stockpile build across all products. One day after one of Wall Street’s worst selloff of this year which saw the S&P's biggest one-day drop since May, dip buyers made yet another another triumphal return to global markets, with Nasdaq 100 futures climbing 130 points or 0.9% after the tech-heavy index tumbled the most since March on Tuesday as U.S. Treasury yields rose on tapering and stagflationconcerns. S&P 500 futures rose 28 points or 0.6% after the underlying gauge also slumped amid mounting concern over the debt-ceiling impasse in Washington. A key catalyst for today's easing in financial conditions was the 10-year yield shedding four basis points and the five-year rate falling below 1%. In the past five sessions, the 10Y yield rose by a whopping 25 basis point, a fast enough move to trigger VaR shocks across risk parity investors. "We think (10-year treasury yields) are likely to around 1.5% to 1.75%, so they obviously still have room to go," said Daniel Lam, senior cross-asset strategist at Standard Chartered, who added that the rise in yields was driven by the fact that the United States was almost definitely going to start tapering its massive asset purchases by the end of this year, and that this would drive a shift from growth stocks into value names. Shares of FAAMG gigatechs rose between 1% and 1.3% in premarket trading as the surge in yields eased. Oil firms and supermajors like Exxon and Chevron dipped as a rally in crude prices petered out. The S&P energy sector has gained 3.9% so far this week and is on track for its best monthly performance since February. Among stocks, Boeing rose 2.5% after it said 737 MAX test flight for China’s aviation regulator last month was successful and the planemaker hopes a two-year grounding will be lifted this year. Cybersecurity firm Fortinet Inc. led premarket gains among S&P 500 Index companies. Here are some of the other big movers this morning: Micron (MU US) shares down more than 3% in U.S. premarket trading after the chipmaker’s forecast came in well below analyst expectations. Co. was hurt by slowing demand from personal-computer makers Lucid (LCID US) shares rise 9.7% in U.S. premarket trading after the electric-vehicle company said it has started production on its debut consumer car EQT Corp. (EQT US) shares fell 4.8% in Tuesday postmarket trading after co. reports offering by certain shareholders who received shares as a part of its acquisition of Alta Resources Development’s upstream and midstream units PTK Acquisition (PTK US) rises in U.S. premarket trading after the blank-check company’s shareholders approved its combination with the Israel-based semiconductor company Valens Cal-Maine (CALM US) shares rose 4.4% postmarket Tuesday after it reported net sales for the first quarter that beat the average analyst estimate as well as a narrower-than-estimated loss Sherwin-Williams (SHW US) dropped 3.5% in Tuesday postmarket trading after its forecasted adjusted earnings per share for the third quarter missed the average analyst estimate Boeing (BA US) and Spirit Aerosystems (SPR US) climb as much as 3% after being upgraded to outperform by Bernstein on travel finally heading to inflection point The S&P 500 is set to break its seven-month winning streak as fears about non-transitory inflation, China Evergrande’s default, potential higher corporate taxes and a sooner-than expected tapering of monetary support by the Federal Reserve clouded investor sentiment in what is usually a seasonally weak month. Meanwhile, Senate Democrats are seeking a vote Wednesday on a stopgap funding bill to avert a government shutdown, but without a provision to increase the federal debt limit. On Tuesday, Jamie Dimon said a U.S. default would be “potentially catastrophic” event, in other words yet another multibillion bailout for his bank. “Many things are in flux: the pandemic is not over, the supply chain bottlenecks we are seeing are affecting all sorts of prices and we’ll need to see how it plays out because the results are not clear in terms of inflation,” Belita Ong, Dalton Investments chairman, said on Bloomberg Television. Europe’s Stoxx 600 gauge rebounded from a two-month low, rising 0.9% and reversing half of yesterday's losses. Semiconductor-equipment company ASM International posted the biggest increase on the index amid positive comments by analysts on its growth outlook. A sharp rebound during the European session marked a turnaround from the downbeat Asian session, when equities extended losses amid concerns over stagflation and China Evergrande Group’s debt crisis. Sentiment improved as a steady flow of buyers emerged in the Treasury market, ranging from foreign and domestic funds to leveraged accounts.  Here are some of the biggest European movers today: Academedia shares rise as much as 6.9% in Stockholm, the most since June 1, after the company said the number of participants for its higher vocational education has increased 25% y/y. ASM International jumps as much as 7.3%, rebounding from a three-day sell-off, boosted by supportive analyst comments and easing bond yields. GEA Group gains as much as 4.7% after the company published new financial targets through 2026, which Citigroup says are above analysts’ consensus and an encouraging signal. DSV bounces as much as 4.4% as JPMorgan upgrades to overweight, saying the recent pullback in the shares presents an opportunity. Genova Property Group falls as much as 10% in Stockholm trading after the real estate services company placed shares at a discount to the last close. ITM Power drops as much as 6.4% after JPMorgan downgrades to neutral from overweight on relative valuation, with a more mixed near-term outlook making risk/reward seem less compelling. Royal Mail slides as much as 6.2% after UBS cuts its rating to sell from buy, expecting U.K. labor shortages and wage inflation pressures to hurt the parcel service company’s profit margins. Earlier in the session, Asian equities slumped in delayed response to the US rout. MSCI's broadest index of Asia-Pacific shares outside Japan fell 1.43% with Australia off 1.5%, and South Korea falling 2.06%. The Hong Kong benchmark shed 1.2% and Chinese blue chips were 1.1% lower. Japan's Nikkei shed 2.35% hurt by the general mood as the country's ruling party votes for a new leader who will almost certainly become the next prime minister ahead of a general election due in weeks.  Also on traders' minds was cash-strapped China Evergrande whose shares rose as much as 12% after it said it plans to sell a 9.99 billion yuan ($1.5 billion) stake it owns in Shengjing Bank. Evergrande is due to make a $47.5 million bond interest payment on its 9.5% March 2024 dollar bond, having missed a similar payment last week, but it said in the stock exchange filing the proceeds of the sale should be used to settle its financial liabilities due to Shengjing Bank. Chinese real estate company Fantasia Holdings Group is struggling to avoid falling deeper into distress, just as the crisis at China Evergrande flags broader risks to other heavily indebted developers. In Japan, the country's PGIF, or Government Pension Investment Fund, the world’s largest pension fund, said it won’t include yuan- denominated Chinese sovereign debt in its portfolio. In rates, as noted above, Treasuries lead global bonds higher, paring large portion of Tuesday’s losses with gains led by intermediates out to long-end of the curve. Treasury yields richer by up to 4bp across long-end of the curve with 10s at around 1.50%, outperforming bunds and gilts both by 2bp; front-end of the curve just marginally richer, flattening 2s10s spread by 3.2bp with 5s30s tighter by 0.5bp. Futures volumes remain elevated amid evidence of dip buyers emerging Tuesday and continuing over Wednesday’s Asia hours. Session highlights include a number of Fed speakers, including Chair Powell.     In FX, the Bloomberg Dollar Spot Index was little changed after earlier advancing, and the dollar slipped versus most of its Group-of-10 peers. The yen was the best G-10 performer as it whipsawed after earlier dropping to 111.68 per dollar, its weakest level since March 2020. The Australian dollar also advanced amid optimism over easing of Covid-related restrictions while the New Zealand dollar was the worst performer amid rising infections. The euro dropped to an 11-month low while the pound touched its weakest level since January against the greenback amid a bout of dollar strength as the London session kicked off. Confidence in the euro-area economy unexpectedly rose in September as consumers turned more optimistic about the outlook and construction companies saw employment prospects improve. The yen climbed from an 18-month low as a decline in stocks around the world helps boost demand for the currency as a haven. Japanese bonds also gained. In commodities, oil prices dropped after touching a near three-year high the day before. Brent crude fell 0.83% to $78.25 per barrel after topping $80 yesterday; WTI dipped 1.09% to $74.47 a barrel. Gold edged higher with the spot price at $1,735.6 an ounce, up 0.1% from the seven-week low hit the day before as higher yields hurt demand for the non interest bearing asset. Base metals are under pressure with LME aluminum and copper lagging. Looking at the day ahead, the biggest highlight will be a policy panel at the ECB forum on central banking featuring ECB President Lagarde, Fed Chair Powell, BoJ Governor Kuroda and BoE Governor Bailey. Other central bank speakers include ECB Vice President de Guindos, the ECB’s Centeno, Stournaras, Makhlouf, Elderson and Lane, as well as the Fed’s Harker, Daly and Bostic. Meanwhile, data releases include UK mortgage approvals for August, the final Euro Area consumer confidence reading for September, and US pending home sales for August. Market Snapshot S&P 500 futures up 0.7% to 4,371.75 STOXX Europe 600 up 0.8% to 455.97 MXAP down 1.2% to 197.38 MXAPJ down 0.7% to 635.17 Nikkei down 2.1% to 29,544.29 Topix down 2.1% to 2,038.29 Hang Seng Index up 0.7% to 24,663.50 Shanghai Composite down 1.8% to 3,536.29 Sensex down 0.4% to 59,445.57 Australia S&P/ASX 200 down 1.1% to 7,196.71 Kospi down 1.2% to 3,060.27 Brent Futures down 0.7% to $78.53/bbl Gold spot up 0.4% to $1,740.79 U.S. Dollar Index little changed at 93.81 German 10Y yield fell 1.1 bps to -0.210% Euro down 0.2% to $1.1664 Top Overnight News from Bloomberg China’s central bank governor said quantitative easing implemented by global peers can be damaging over the long term and vowed to keep policy normal for as long as possible China’s central bank injected liquidity into the financial system for a ninth day in the longest run since December as it sought to meet a surge in seasonal demand for cash China stepped in to buy a stake in a struggling regional bank from China Evergrande Group as it seeks to limit contagion in the financial sector from the embattled property developer The Chinese government is considering raising power prices for industrial consumers to help ease a growing supply crunch Japan’s Government Pension Investment Fund, the world’s largest pension fund, said it won’t include yuan-denominated Chinese sovereign debt in its portfolio. The decision comes as FTSE Russell is set to start adding Chinese debt to its benchmark global bond index, which the GPIF follows, from October Fumio Kishida is set to become Japan’s prime minister, after the ex-foreign minister overcame popular reformer Taro Kono to win leadership of the country’s ruling party, leaving stock traders feeling optimistic ECB Governing Council member Gabriel Makhlouf said policy makers must be ready to respond to persistently higher inflation that could result from lasting supply bottlenecks Inflation accelerated in Spain to the fastest pace in 13 years, evidence of how surging energy costs are feeding through to citizens around the euro-zone economy Sterling-debt sales by corporates exceeded 2020’s annual tally as borrowers rushed to secure ultra-cheap funding costs while they still can. Offerings will top 70 billion pounds ($95 billion) through Wednesday, beating last year’s total sales by at least 600 million pounds, according to data compiled by Bloomberg A more detailed look at global markets courtesy of Newsquawk Asian equity markets were pressured on spillover selling from global peers which saw the S&P 500 suffer its worst day since May after tech losses were magnified as yields climbed and with sentiment also dampened by weak data in the form of US Consumer Confidence and Richmond Fed indexes. ASX 200 (-1.1%) was heavily pressured by tech and with mining-related stocks dragged lower by weakness in underlying commodity prices, with the mood also clouded by reports that Queensland is on alert for a potential lockdown and that Australia will wind down emergency pandemic support payments within weeks. Nikkei 225 (-2.1%) underperformed amid the broad sell-off and as participants awaited the outcome of the LDP leadership vote which saw no candidate win a majority (as expected), triggering a runoff between vaccine minister Kono and former foreign minister Kishida to face off in a second round vote in which Kishida was named the new PM. KOSPI (-1.2%) was heavily pressured by the tech woes and after North Korea confirmed that yesterday’s launch was a new type of hypersonic missile. Hang Seng (+0.7%) and Shanghai Comp. (-1.8%) conformed to the broad risk aversion with tech stocks hit in Hong Kong, although the losses were milder compared to regional peers with Evergrande shares boosted after it sold CNY 10bln of shares in Shengjing Bank that will be used to pay the developer’s debt owed to Shengjing Bank, which is the Co.’s first asset sale amid the current collapse concerns although it still faces another USD 45.2mln in interest payments due today. In addition, the PBoC continued with its liquidity efforts and there was also the absence of Stock Connect flows to Hong Kong with Southbound trading already closed through to the National Holidays. Finally, 10yr JGBs were slightly higher as risk assets took a hit from the tech sell-off and with T-notes finding some reprieve overnight. Furthermore, the BoJ were also in the market for nearly JPY 1tln of JGBs mostly in 3yr-10yr maturities and there were notable comments from Japan’s GPIF that it is to avoid investments in Chinese government bonds due to concerns over China market. Top Asian News L&T Is Said in Talks to Merge Power Unit With Sembcorp India Prosecutors Seek Two Years Jail for Ghosn’s Alleged Accomplice Japan to Start Process to Sell $8.5 Billion Postal Stake Gold Climbs From Seven Week Low as Yields Retreat, Dollar Pauses Bourses in Europe are attempting to claw back some ground lost in the prior session’s global stocks rout (Euro Stoxx 50 +0.9%; Stoxx 600 +0.8%). The upside momentum seen at the cash open has somewhat stabilised amid a lack of news flow and with a busy agenda ahead from a central bank standpoint, with traders also cognizant of potential month-end influence. US equity futures have also been gradually drifting higher since the reopen of electronic trade. As things stand, the NQ (+1.0%) narrowly outperforms the ES (+0.7%), RTY (+0.8%) and YM (+0.6%) following the tech tumble in the prior session, and with yields easing off best levels. Back to European cash, major regional bourses see broad-based gains with no standout performers. Sectors are mostly in the green; Oil & Gas resides at the foot of the bunch as crude prices drift lower and following two consecutive sessions of outperformance. On the flip side, Tech resides among today’s winners in what is seemingly a reversal of yesterday’s sector configuration, although ASML (+1.3%) may be offering some tailwinds after upping its long-term outlook whilst suggesting ASML and its supply chain partners are actively adding and improving capacity to meet this future customer demand – potentially alleviating some concerns in the Auto sector which is outperforming at the time of writing. Retail also stands strong as Next (+3.0%) upped its guidance whilst suggesting the longer-term outlook for the Co. looks more positive than it had been for many years. In terms of individual movers, Unilever (+1.0%) is underpinned by source reports that the Co. has compiled a shortlist of at least four bidders for its PG Tips and Lipton Iced Tea brands for some GBP 4bln. HeidelbergCement (-1.4%) is pressured after acquiring a 45% stake in the software firm Command Alko. Elsewhere, Morrisons (+1.3%) is on the front foot as the takeover of the Co. is to be decided via an auction process as touted earlier in the month. Top European News Makhlouf Says ECB Must Be Ready to Act If Inflation Entrenched ASML to Ride Decade-Long Sales Boom After Chip Supply Crunch Spanish Inflation at 13-Year High in Foretaste of Regional Spike U.K. Mortgage Approvals Fall to 74,453 in Aug. Vs. Est. 73,000 In FX, the yield and risk backdrop is not as constructive for the Dollar directly, but the index has posted another marginal new y-t-d best, at 93.891 compared to 93.805 yesterday with ongoing bullish momentum and the bulk of the US Treasury curve remaining above key or psychological levels, in contrast to other global bond benchmarks. Hence, the Buck is still elevated and on an upward trajectory approaching month end on Thursday, aside from the fact that hedge rebalancing flows are moderately positive and stronger vs the Yen. Indeed, the Euro is the latest domino to fall and slip to a fresh 2021 low around 1.1656, not far from big barriers at 1.1650 and further away from decent option expiry interest at the 1.1700 strike (1 bn), and it may only be a matter of time before Sterling succumbs to the same fate. Cable is currently hovering precariously above 1.3500 and shy of the January 18 base (1.3520) that formed the last pillar of support for the Pound before the trough set a week earlier (circa 1.3451), and ostensibly supportive UK data in the form of BoE mortgage lending and approvals has not provided much relief. AUD/JPY - A rather odd couple in many ways given their contrasting characteristics as a high beta or activity currency vs traditional safe haven, but both are benefiting from an element of corrective trade, consolidation and short covering relative to their US counterpart. Aud/Usd is clinging to 0.7250 in advance of Aussie building approvals on Thursday and Usd/Jpy is retracing from its new 111.68 y-t-d pinnacle amidst the less rampant yield environment and weighing up the implications of ex-Foreign Minister Kishida’s run-off win in the LDP leadership contest and the PM-in-waiting’s pledge to put together a Yen tens of trillion COVID-19 stimulus package before year end. CHF/CAD/NZD - All relatively confined vs their US rival, as the Franc continues to fend off assaults on the 0.9300 level with some impetus from a significant improvement in Swiss investor sentiment, while the Loonie is striving to keep its head above 1.2700 ahead of Canadian ppi data and absent the recent prop of galloping oil prices with WTI back under Usd 75/brl from Usd 76.67 at best on Tuesday. Elsewhere, the Kiwi is pivoting 0.6950 pre-NZ building consents and still being buffeted by strong Aud/Nzd headwinds. SCANDI/EM - Not much purchase for the Sek via upgrades to Swedish GDP and inflation forecast upgrades by NIER as sentiment indices slipped across the board, but some respite for the Try given cheaper crude and an uptick in Turkish economic confidence. Conversely, the Cnh and Cny have not received their customary fillip even though the PBoC added liquidity for the ninth day in a row overnight and China’s currency regulator has tightened control over interbank trade and asked market makers to narrow the bid/ask spread, according to sources. In commodities, WTI and Brent front month futures have been trimming overnight losses in early European trade. Losses overnight were seemingly a function of profit-taking alongside the bearish Private Inventory Report – which showed a surprise build in weekly crude stocks of 4.1mln bbls vs exp. -1.7mln bbls, whilst the headline DoE looks for a draw of 1.652mln bbls. Further, there have been growing calls for OPEC+ to further open the taps beyond the monthly 400k BPD hike, with details also light on the White House’s deliberations with OPEC ahead of the decision-making meeting next week. Despite these calls, it’s worth bearing in mind that OPEC’s latest MOMR stated, “increased risk of COVID-19 cases primarily fuelled by the Delta variant is clouding oil demand prospects going into the final quarter of the year, resulting in downward adjustments to 4Q21 estimates. As a result, 2H21 oil demand has been adjusted slightly lower, partially delaying the oil demand recovery into 1H22.” Brent Dec dipped back under USD 78/bbl (vs low 763.77/bbl) after testing USD 80/bbl yesterday, whilst WTI Nov lost the USD 75/bbl handle (vs low USD 73.37/bbl). Over to metals, spot gold and silver have seen somewhat of divergence as real yields negate some effects of the new YTD peak printed by the Dollar index, whilst spot silver succumbs to the Buck. Over to base metals, LME copper trade is lacklustre as the firmer dollar weighs on the red metal. Shanghai stainless steel meanwhile extended on losses, notching the fourth session of overnight losses with desks citing dampened demand from the Chinese power crunch. US Event Calendar 7am: Sept. MBA Mortgage Applications, prior 4.9% 10am: Aug. Pending Home Sales YoY, est. -13.8%, prior -9.5% 10am: Aug. Pending Home Sales (MoM), est. 1.3%, prior -1.8% Central Bank speakers 9am: Fed’s Harker Discusses Economic Outlook 11:45am: Powell Takes Part in ECB Forum on Central Banking 11:45am: Bailey, Kuroda, Lagarde, Powell on ECB Forum Panel 1pm: Fed’s Daly Gives Speech to UCLA 2pm: Fed’s Bostic Gives Remarks at Chicago Fed Payments DB's Jim Reid concludes the overnight wrap The main story of the last 24 hours has been a big enough rise in yields to cause a major risk-off move, with 10yr Treasury yields up another +5.0bps to 1.537% yesterday, and this morning only seeing a slight -0.3bps pullback to 1.534%. At the intraday peak yesterday, they did climb as high as 1.565% earlier in the session, but this accelerated the risk off and sent yields somewhat lower intraday as a result, which impacted the European bond closes as we’ll see below. All told, US yields closed at their highest level in 3 months and up nearly +24bps since last Wednesday’s close, shortly after the FOMC meeting. That’s the largest 4-day jump in US yields since March 2020, at the outset of the pandemic and shortly after the Fed announced their latest round of QE. This all led to the worst day for the S&P 500 (-2.04%) since mid-May and the worst for the NASDAQ (-2.83%) since mid-March. The S&P 500 is down -4.06% from the highs now – trading just below the Evergrande (remember that?) lows from last week. So the index still has not seen a -5% sell-off on a closing basis for 228 days and counting. If we make it to Halloween it will be a full calendar year. Regardless, the S&P and STOXX 600 remain on track for their worst monthly performances so far this year. Those moves have continued this morning in Asia, where the KOSPI (-2.05%), Nikkei (-1.64%), Hang Seng (-0.60%), and the Shanghai Comp (-1.79%) are all trading lower. The power crisis in China is further dampening sentiment there, and this morning Bloomberg have reported that the government are considering raising prices for industrial users to ease the shortage. Separately, we heard that Evergrande would be selling its stake in a regional bank at 10 billion yuan ($1.55bn) as a step to resolve its debt crisis, and Fitch Ratings also downgraded Evergrande overnight from CC to C. However, US equity futures are pointing to some stabilisation later, with those on the S&P 500 up +0.49%. Running through yesterday’s moves in more depth, 23 of the 24 industry groups in the S&P 500 fell back yesterday with the lone exception being energy stocks (+0.46%), which gained despite the late pullback in oil prices. In fact only 53 S&P constituents gained on the day. The largest losses were in high-growth sectors like semiconductors (-3.82%), media (-3.08%) and software (-3.05%), whilst the FANG+ index was down -2.52% as 9 of the 10 index members lost ground – Alibaba’s +1.47% gain was the sole exception. Over in Europe it was much the same story, with the STOXX 600 (-2.18%) falling to its worst daily performance since July as bourses across the continent fell back, including the German DAX (-2.09%) and France’s CAC 40 (-2.17%). Back to bonds and the rise in 10yr Treasury yields yesterday was primarily led by higher real rates (+2.1bps), which hit a 3-month high of their own, whilst rising inflation breakevens (+2.3bps) also offered support. In turn, higher yields supported the US dollar, which strengthened +0.41% to its highest level since November last year, though precious metals including gold (-0.92%) fell back as investors had less need for the zero-interest safe haven. Over in Europe the sell-off was more muted as bonds rallied into the close before selling off again after. Yields on 10yr bunds (+2.4bps), OATs (+3.0bps) and BTPs (+6.1bps) all moved higher but were well off the peaks for the day. 10yr Gilts closed up +4.2bps but that was -6.6bps off the high print. And staying with the UK, sterling (-1.18%) saw its worst day this year and fell to its lowest level since January 11 as sentiment has increasingly been knocked by the optics of the fuel crisis here. Given this and the hawkish BoE last week many are now talking up the stagflation risk. On the petrol crisis it’s hard to know how much is real and how much is like an old fashion bank run fuelled mostly by wild speculation. Regardless it doesn’t look good to investors for now. All this came against the backdrop of yet further milestones on inflation expectations, as the German 10yr breakeven hit a fresh 8-year high of 1.690%, just as the Euro Area 5y5y forward inflation swap hit a 4-year high of its own at 1.789%. Meanwhile 10yr UK breakevens pulled back some, finishing -6bps lower on the day after initially spiking up nearly +5bps in the opening hours of trading. This highlights the uncertainty as to the implications of a more hawkish BoE last week. As we’ve discussed over recent days, part of the renewed concerns about inflation have come from a fresh spike in energy prices, and yesterday saw Brent crude move above $80/bbl in regards intraday trading for the first time since 2018. Furthermore, natural gas prices continued to hit fresh highs yesterday, with European futures up +2.69% to a fresh high of €78.56 megawatt-hours. That said, oil prices did pare back their gains later in the session as the equity selloff got underway, with Brent crude (-0.55%) and WTI (-0.21%) both closing lower on the day, and this morning they’ve fallen a further -1.49% and -1.54% respectively. Yesterday, Fed Chair Powell and his predecessor Treasury Secretary Yellen appeared jointly before the Senate Banking Committee. The most notable moment came from Senator Warren who criticized Chair Powell for his track record on regulation, saying he was a “dangerous man” and then saying on the record that the she would not support his re-nomination ahead of his term ending in February. Many senators, mostly Republicans, voiced concerns over inflationary pressures, but both Yellen and Powell maintained their stances that the current high level of inflation was temporary and due to the supply chain issues from Covid-19 that they expect to be resolved in time. Lastly, both Powell and Yellen warned the Senators that a potential US default would be “catastrophic” and Treasury Secretary Yellen said in a letter to Congress that the Treasury Department now estimated the US would hit the debt ceiling on October 18. So we’ve got an important few days and weeks coming up. Last night, Senate Majority Leader Schumer tried to pass a vote that would drop the threshold from 60 to a simple majority to suspend the debt limit, but GOP Senator Cruz amongst others blocked this and went forward with forcing Democrats to use the budget reconciliation measure instead. Some Democrats have pushed back saying that the budget process would take too long and increases the risk of a default. While this is all going on we’re now less than 48 hours from a US government shutdown as it stands, though there seems to be an agreement on the funding measure if it were to be raised as clean bill without the debt ceiling provisions. There is also other business in Washington due tomorrow, with the bipartisan infrastructure bill with $550bn of new spending up for a vote. While the funding bill is the higher short-term priority, there was news yesterday that progressive members of the House of Representatives may try and block the infrastructure bill if it comes up ahead of the budget reconciliation vote. That was according to Congressional Progressive Caucus Chair Jayapal who said “Progressives will vote for both bills, but a majority of our members will only vote for the infrastructure bill after the President’s visionary Build Back Better Act passes.” The infrastructure bill could be tabled once again as there is no real urgency to get it voted on until the more pressing debt ceiling and funding bill issues are resolved. Democratic leadership is trying to thread a needle and the key sticking point appears to be if the moderate and progressive wing can agree on the budget quickly enough to beat the clock on the US defaulting on its debt. Shifting back to central bankers, ECB President Lagarde warned against withdrawing stimulus too rapidly as a response to inflationary pressures. She contested that there are “no signs that this increase in inflation is becoming broad-based across the economy,” and continued that the “key challenge is to ensure that we do not overreact to transitory supply shocks that have no bearing on the medium term.” Similar to her US counterpart, Lagarde cited higher energy prices and supply-chain breakdowns as the root cause for the current high inflation data and argued these would recede in due time. The ECB continues to strike a more dovish tone than the Fed and BoE. Speaking of inflation, DB’s chief European economist, Mark Wall, has just put out a podcast where he discusses the ECB, inflation and the value of a flexible asset purchase programme. He and his team have a baseline assumption that the ECB will double the pace of their asset purchases to €40bn per month to smooth the exit from the Pandemic Emergency Purchase Programme, but the upward momentum in the inflation outlook and the latest uncertainty from recent supply shocks puts a premium on policy flexibility. You can listen to the podcast "Focus Europe: Podcast: ECB, inflation and the value of a flexible APP" here. In Germany, there weren’t a great deal of developments regarding the election and coalition negotiations yesterday, but NTV reported that CSU leader Markus Söder had told a regional group meeting of the party that he expected the next government would be a traffic-light coalition of the SPD, the Greens and the FDP. Speaking to reporters later in the day, he went onto say that the SPD’s Olaf Scholz had the best chance of becoming chancellor, and that the SPD had the right to begin coalition negotiations. Running through yesterday’s data, the Conference Board’s consumer confidence reading in the US for September fell to 109.3 (vs. 115.0 expected), which marks the third consecutive decline in the reading and the lowest it’s been since February. Meanwhile house prices continued to rise, with the FHFA’s house price index for July up +1.4% (vs. +1.5% expected), just as the S&P CoreLogic Case-Shiller index saw a record +19.7% increase in July as well. To the day ahead now, and the biggest highlight will be a policy panel at the ECB forum on central banking featuring ECB President Lagarde, Fed Chair Powell, BoJ Governor Kuroda and BoE Governor Bailey. Other central bank speakers include ECB Vice President de Guindos, the ECB’s Centeno, Stournaras, Makhlouf, Elderson and Lane, as well as the Fed’s Harker, Daly and Bostic. Meanwhile, data releases include UK mortgage approvals for August, the final Euro Area consumer confidence reading for September, and US pending home sales for August. Tyler Durden Wed, 09/29/2021 - 07:42.....»»

Category: blogSource: zerohedgeSep 29th, 2021

Gold futures tally a second straight gain

Gold futures settled with a slight gain on Monday, as Treasury yields eased back from their highest levels of the session. "Bearish elements," such as the hawkish comments from the Federal Reserve last week and expectations for interest rate hikes, have been predominant, said Carlo Alberto De Casa, analyst at Kinesis Money. For now, investors do not seem to be too worried about the risk of a domino effect from China property giant Evergrande's debt woes, he said. December gold rose 30 cents, or 0.02%, to settle at $1,752 an ounce. Prices posted a climb of 0.1% on Friday.Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news......»»

Category: topSource: marketwatchSep 27th, 2021

Gold settles higher, up over 1% for the week

Gold futures settled with a gain on Friday to tally a rise of more than 1% for the week. "We saw a recovery bounce in oil prices...and a setback in [U.S. Treasury] yields, so that is good for gold," said James Hatzigiannis, chief market strategist .....»»

Category: topSource: marketwatchMar 19th, 2021

Metals Stocks: Gold falls on dollar strength, but looks to post a monthly gain

A decline in gold futures Friday on the back of further strength in the dollar pushes the metal down for the week, but prices are still on track to tally a second straight monthly gain......»»

Category: topSource: marketwatchNov 30th, 2018

Fear And Panic As Bitcoin Crashes 50% From All Time High

Fear And Panic As Bitcoin Crashes 50% From All Time High Just two months after cryptos hit an all time high amid widespread euphoria that the newly launched bitcoin ETF would lead to even more substantial upside, the two largest tokens have lost half of their value, with the broader crypto sector suffering more than $1 trillion in losses amid an accelerating liquidation panic that the Fed's tightening cycle will lead to another crypto winter.  Such is the volatility in the sector where, as Bloomberg put it overnight, there has been just one constant recently: "decline after decline after decline." Of course, for veteran hodlers, Bloomberg hyperbole seems trivial in a world where 80% drawdowns are the norm and the current drop may have a ways to go before it hits a bottom, before a new all time high is hit. Where Bloomberg is right however, is that superlatives for the latest carnage have been easy to come by: Friday’s decline led to the liquidation of more than $1.1 billion in crypto futures positions and overall more than $1 trillion in market value has been destroyed since the last peak. In other words, "the meltdown is pouring salt on an already-deep wound." After the latest furious puke that pushed Bitcoin RSI's indicator to the most oversold level since the covid crash in March of 2020... ... Bitcoin, which lost more than 12% on Friday, saw its price drop just above $34,000 with Ethereum sliding as low as $2,400, as the two largest digital assets now trade at a 50% discount from their all time highs and are back to levels last seen in late July, early August. Other digital currencies have suffered just as much, if not more, most meme coins mired in similar drawdowns. While the selling has been relentless for the past two months, it accelerated in the past three weeks, after the latest Fed minutes - published in early January - showed its intention to not only hike rates but to accelerate the unwind of its balance sheet, which has sent all "bubble baskets" plunging, with bitcoin getting hit especially hard amid the carnage. And while there have been much larger percentage drawdowns for both Bitcoin and the aggregate market, according to Bespoke,  this marks the second-largest ever decline in dollar terms for both. “It gives an idea of the scale of value destruction that percentage declines can mask,” wrote Bespoke analysts in a note. “Crypto is, of course, vulnerable to these sorts of selloffs given its naturally higher volatility historically, but given how large market caps have gotten, the volatility is worth thinking about both in raw dollar terms as well as in percentage terms.” Another fact that Bloomberg gets right, is that over the past year, cryptos have transformed from relatively uncorrelated assets providing diversification during market turbulence, into what is effectively a high beta stock. This is easily seen in the following chart showing the 60d correlation between cryptos and stocks. One can thank institutional adoption for that, because the same institutions that are now facing margin calls on their tech holdings, are also dumping cryptos to provide much needed liquidity. “Crypto is reacting to the same kind of dynamics that are weighing on risk-assets globally,” said Stephane Ouellette, chief executive and co-founder of institutional crypto-platform FRNT Financial. “Unfortunately for some of the mature projects like BTC, there is so much cross-correlation within the crypto asset class it’s almost a certainty that it falls, at least temporarily in a broader alt-coin valuation contraction.” Antoni Trenchev,, co-founder of Nexo, cites Bitcoin’s correlation to the tech-heavy Nasdaq 100, which right now is near the highest in a decade. “Bitcoin is being battered by a wave of risk-off sentiment. For further cues, keep an eye on traditional markets,” he said. “Fear and unease among investors is palpable.” According to  Art Hogan, chief market strategist at National Securities, it’s useful to think of cryptocurrencies as living in the same space as other speculative sectors, including special-purpose acquisition companies and electric-vehicle makers. “When we’re in an environment where all of those riskier assets are selling off, crypto is going to find itself doing the same,” Hogan said. “When the Nasdaq 100 or any of the other more-speculative, rapid-growth, momentum-type asset classes start to gain some traction, so will cryptocurrencies.” Unfortunately for Bitcoin longs, one place where the token's correlation is especially high is that to such market naplam as Cathie Wood’s sinking ARK Innovation ETF, a pandemic poster-child of speculative risk-taking. That correlation stands at around 60% year-to-date, versus about 14% for the price of gold, according to Katie Stockton, founder and managing partner of Fairlead Strategies, a research firm focused on technical analysis. It’s “reminding us to categorize Bitcoin and altcoins as risk assets rather than safe havens,” she said. Perhaps unaware what "hodling" means, data from Coinglass shows that more than 342,000 traders had their positions closed over the past 24 hours, with liquidations totaling roughly $1.1 billion. “Digital-currency markets in total have been challenged this month,” said Jonathan Padilla, co-founder of Snickerdoodle Labs, a blockchain company focused on data privacy. “There’s definitely some pain there.” Though liquidations have spiked, the numbers are rather muted when compared to previous declines, according to Noelle Acheson, head of market insights at Genesis Global Trading. Acheson points out that Bitcoin’s one-week skew, which compares the cost of bearish options to bullish ones, spiked to almost 15% on Wednesday compared to an average of about 6% in the past seven days. “This flagged a jump in bearish sentiment, in line with overall market jitters given the current macro uncertainty,” she said. Amid the pain, some of bitcoin's most faithful are professing patience... HODLing #Bitcoin is painful. If you survive the journey, you will truly know what HODL means. — Dan Held (@danheld) January 21, 2022 ... while others are starting to wonder out loud at what point the battering might end. Famed crypto investor and (former?) billionaire Mike Novogratz mused on Twitter that “this will be a year where people realize being an investor is a difficult job.” 2600 $Eth would be the next support. Hoping and thinking it holds. Unfortunately Russel has like 14 percent more to go before it bottoms. Won’t be a straight line down. This will be a year where people realize being an investor is a difficult job. — Mike Novogratz (@novogratz) January 21, 2022 Unfortunately for Novogratz, 2600 did not hold and Eth is now trading below 2,400. Still, many point out that like on all previous occasions when cryptos crashed, they eventually rebounded to new all time highs. At some point, sellers will become exhausted and the market could see some capitulation soon, said Matt Maley, chief market strategist for Miller Tabak + Co. “When that happens, the institutions will come back in in a meaningful way,” he said. “Once the asset class becomes more washed-out, they’ll have a lot more confidence to come back in and buy them. They know that cryptos are not going away, so they’ll have to move back into them before long.” But it's not just central bank tightening fears and liquidation technicals that have depressed cryptos: one can also throw in a relentless news cycle, where just in recent days, regulators from Russia, the U.K., Singapore and Spain all announced interventions that could undermine crypto companies looking to grow in those regions. Meanwhile, the Biden administration is preparing to release an initial government-wide strategy for digital assets as soon as next month and task federal agencies with assessing the risks and opportunities that they pose, Bloomberg reported late on Friday. Testing the resilience and patience of the faithful, so far the sharp drop below the psychological level of $40,000 has failed to serve as an upward inflection point. Crypto proponents say heavy liquidations often serve to cut out the froth in easy-win asset speculation, helping to solidify new bottoms in the market. Ultimately, the real support will come from none other than the Fed, which will soon realize that it is hiking into a slowing economy... Tightening into a slowdown… Déjà vu? pic.twitter.com/pczXzMVSxb — Julien Bittel, CFA (@BittelJulien) January 22, 2022 ... and will be forced to be far more dovish during this week's FOMC meeting, a reversal which should serve to send risk assets sharply higher. “Fear and unease among investors is palpable,” Nexo's Trenchev,said. “If we see a bigger selloff in equities, expect the Fed to verbally intervene to calm nerves and that’s when Bitcoin and other cryptos will bounce.” In other words, the more the Fed tightens - or the more the Fed scares markets into believing it will tighten - the bigger the market selloff, and the worse the economic slowdown, until eventually Powell will be forced to ease, a key point brought up by  Bank of America CIO Michael Hartnett yesterday. Incidentally, it also means that the faster markets crash, the faster the Fed panics, and is forced to stabilize stocks because even if the new and improved Powell Put is well below previous levels, the Fed can't risk a market crash just to appease Biden's demands for an inflationary slowdown so Democrats aren't destroyed in the midterms. And incidentally, this weekend's ongoing selloff in cryptos means that while stocks are currently mercifully not trading, Monday should be another bloodbath, as Jim Bianco reminds us. The BTC/SPX correlation is "significant" Or as @jeffdorsman says, crypto is a 24/7 VIX. See the table, as of this writing, Crypto is down another 10% since Friday's NYSE Close. If this hold, no-coiners have about 36 more hours to gloat before it is their turn. pic.twitter.com/JpWeMJZbAf — Jim Bianco biancoresearch.eth (@biancoresearch) January 22, 2022 One thing is certain: several more 2% drops in the Nasdaq, and Powell - who two years ago crossed the Fed's final rubicon and bought corporate bonds to halt a catastrophic collapse - will be making emergency phone calls to put an end to the carnage. As such, a continuation of the meltdown may just be the best thing that the bitcoin faithful can hope for. Tyler Durden Sat, 01/22/2022 - 13:04.....»»

Category: dealsSource: nytJan 22nd, 2022

Oil Traders Will "Break The Fed" And "Make Jerome Powell Cry Uncle"

Oil Traders Will "Break The Fed" And "Make Jerome Powell Cry Uncle" Submitted by QTR's Fringe Finance This is Part 2 of an interview with Harris Kupperman, founder of Praetorian Capital, a hedge fund focused on using macro trends to guide stock selection. Mr. Kupperman is also the chief adventurer at Adventures in Capitalism, a website that details his investments and travels. Part 1 of this interview will be found here. Harris is one of my favorite Twitter follows and I find his opinions - especially on macro and commodities - to be extremely resourceful. I’m certain my readers will find the same. I was excited to get the chance to ask him about anything I wanted, which I did last week. Q; What one sector of the equities market would you dive into now if you had to pick only one - and why? It’s not an equity, but if there was one asset to focus on, it would be long-dated OTM oil futures options. They’re the purest way to get long inflation and they’re mispriced compared to the potential upside. All sorts of right-tail assets seem mispriced, but the IV on oil futures options seem particularly mispriced as it is so cheap compared to the parabolic upside potential. In terms of equities themselves, I think offshore oil services are about to really inflect. With Brent at $86, demand for offshore production will come back in a major way. Especially because many Western governments are making it so painful to explore and produce oil domestically. As a result, the incremental supply will come from places that need the oil revenue—much of this will be offshore. Meanwhile, much of this offshore equipment trades at tiny fractions of replacement cost. At the top of the cycle, these companies often trade for a few times replacement cost. I think we’re about to a surprising move in the price of oil, and these equities are the fulcrum security in the oil sector—but since most have restructured in bankruptcy, they have clean balance sheets and minimal risk if I’m wrong and the sector doesn’t inflect. Oil is about to surprise people—offshore hasn’t moved yet. That’s where I’d be focusing my time, but buying the 2025, $100 strike oil call just seems like a more elegant way to play this with a lot less operational risk and a whole lot greater upside potential.   What's your broader view on markets in 2022? Will they stabilize? Full on crash? Rotation from growth to value? I think the market will have a lot of volatility, but sort of go nowhere. Instead, I expect a huge sector rotation from Ponzi and high-multiple growth to industrials and commodities. A lot of these “old economy” businesses trade at low single-digit multiples on cash flow and fractions of replacement cost. They’ve been ignored for years, they’ve cut costs, consolidated and not invested much in capacity. We’re at the part of the cycle where they finally earn huge returns. That’s where you want to be. Meanwhile, as the Fed raises rates and tightens liquidity, the high-multiple stuff will get bludgeoned. It’s amazing how many multi-billion market cap stocks are down 75% from the highs last year, yet they still seem ludicrously expensive. This will eventually get corrected and corrected with a lot more pain. What fiat currencies do you prefer to own, assuming you have to own one? And why? I think crypto has had its bubble. It now needs to consolidate. There’s far too much speculative interest for me. I sold out of my Bitcoin last spring for a 6x from where I bought it in 2020. Longer term, I’m quite partial to Monero and own a few. It’s what everyone thinks Bitcoin is, while Bitcoin is actually something VERY different. The privacy aspect, along with negligible transaction costs will make Monero viable. It’s out of consensus, but adoption continues to accelerate. During the coming wash-out in risk assets, I intend to pick up some more Monero. Is the Fed still firmly in control of the bond market. Is there any chance "bond vigilantes" take over at some point? Oil traders are the new bond vigilantes. They’ll be the ones that break the Fed and force JPOW to cry uncle. The Fed hasn’t lost control yet, but when oil breaks $100, they’ll go into panic mode. I worry that they’ll eventually crush everything with a CUSIP while trying to stop oil from going parabolic. Naturally, they’ll fail at this because they have little to do with the price of oil, but that won’t stop them from trying. What's one lesson you've learned in your investing career that you want to pass on and think is important in 2022? Leverage is dangerous. We’re entering a much more volatile period. I think the overall market will continue going much higher because they’ll keep stimulating, but there will be periods where they panic and stop stimulating. Equities can literally trade at any price. Make sure that on these sharp and steep pullbacks, you aren’t the one forced to sell at the lows. Instead, you want to be the one who buys when others get margin calls. Play with less leverage, keep extra liquidity and expect that there will be huge opportunities coming up. What's your outlook on how the world thinks about Covid in the coming year? Covid is a bad cold that has evolved into a mental disorder. You really need to separate the two. Left alone, Covid the virus will evolve to be less dangerous to humans. Unfortunately, governments like to tinker and convince voters that they’re doing something useful. Vaccinating a huge percentage of the population, with multiple boosters, is likely to change how the virus would naturally evolve. We’re already seeing this with Omicron. The triple vax’d are more susceptible than the double vax’d, and the unvax’d are almost immune to it. This is an adjusted evolutionary path and governments should be terrified of the data. This is a warning that is getting ignored. Most scientists have always known that vaccinating against a coronavirus is a mistake—it’s the reason that they don’t vaccinate livestock against coronaviruses. They’ve already tried that and know it doesn’t work, with the added risk that the virus can evolve to be more dangerous. What we should have done is gone for herd immunity, protected the at-risk, and gotten on with life. Unfortunately, Covid has evolved into this mental disorder where people walk around with cloth diapers on their faces and scrub their hands with alcohol all day. There’s this whole neurosis to it, with people lecturing others on if they’re going through the motions correctly. Governments have been quick to realize that a large portion of the population is mentally unstable and easily manipulated. They’ve prayed upon this to gain power and tell these people that their mental disorder is now normal. Eventually, most people will get bored of role-playing “pandemic,” and they’ll push back against government-created inconveniences. We’ll return to sanity, while a lunatic fringe will continue with their new neuroses. I finally believe we’re now past peak-stupid, but I’ve thought that a few times and then governments have once again tried to flex their powers and scare people into acting insane. Fortunately, people are starting to wake up to all of this. In another few quarters, Covid, the mental disorder, will hopefully mostly be over with—though we’ll have the residual question about long-term health risks from these experimental mRNA vaccines—which is still quite a wild-card. You have to remember that governments are just a collection of politicians trying to guess which way the mob is trending. As the mob adjusts, the smarter politicians will follow the voters and hopefully this thing ends. Here in Florida, no one has worn a mask in 18-months, yet you have these tourists with 2 masks on at the beach. It’s quite hilarious. But then after a few days in Florida, they attune culturally and no longer fear germs as much. This process will happen everywhere as people realize that this is all just a bad cold. They’ll see others going on with their lives without dying. People will adjust and the more astute politicians will try to stay in front of this trend. Until then, we just have to wait it out and watch this crazy psychological experiment unfold... Part 1 of this interview can be found here.  Now read: Capitalism And Common Sense Will End Vaccine Mandates In 2022 Oil Is Now "Out Of OPEC's Hands" And Is "Going Higher" Short The Whole F*cking Vaccine Thing -- ZeroHedge readers always get 20% off a subscription to my blog using this link: GET 20% OFF FOR LIFE DISCLAIMER:  All content is Harris Kupperman’s opinion. I own physical silver, GLD, GDX, GDXJ, PAAS, PSLV and a number of other metals/miners/gold/silver equities as well as numerous companies with exposure to oil and uranium. Readers should assume Harris also has positions in all trends/equities/etc. mentioned in this interview - as do I. We will likely stand to benefit if prices of commodities rise and/or our prognostications come true. None of this is a solicitation to buy or sell securities. It is only a look into personal opinions and personal portfolios. Positions can change immediately as soon as I publish this, with or without notice. These are not the opinions of any of my employers, partners, or associates. I get shit wrong a lot. I’m not a financial advisor, I hold no licenses or registrations and am not qualified to give advice on anything, let alone finance or medicine. Talk to your doctor, talk to your financial advisor or your therapist. You are on your own. Do not make decisions based on my blog. I exist on the fringe. Tyler Durden Sat, 01/22/2022 - 13:30.....»»

Category: dealsSource: nytJan 22nd, 2022

Gold futures fall for the session, but post a second straight week gain

Gold futures fell on Friday amid declines in most asset classes, but still tallied a gain for a second straight week after settling Wednesday at their highest in two months. "While the precious metal markets are likely overbought from significant gains earlier this week, and due some corrective action, we blame big picture risk off psychology," analyst at Zaner wrote in a daily report Friday. "Not only has the tensions between Russia and the rest of the world undermined sentiment, but U.S. corporate earnings seem to have lost their ability to lift equities and highflying crude oil prices have corrected sharply." February gold fell $10.80, or 0.6%, to settle at $1,831.80 an ounce. For the week, however, most-active gold futures rose 0.8%, up a second week in a row, according to FactSet data.Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news......»»

Category: topSource: marketwatchJan 21st, 2022

Gold futures tally a gain of 1.1% for the week

This is a Real-time headline. These are breaking news, delivered the minute it happens, delivered ticker-tape style. Visit www.marketwatch.com or the quote page for more information about this breaking news......»»

Category: topSource: marketwatchJan 14th, 2022

Metals Stocks: Gold prices settle lower, but tally a gain for the week

Gold futures end with a loss on Friday, but notch their fifth weekly gain in six weeks......»»

Category: topSource: marketwatchJan 14th, 2022

Futures Slide After Disappointing JPMorgan Earnings, Tech Rout Worsens

Futures Slide After Disappointing JPMorgan Earnings, Tech Rout Worsens After trading flat for much of the overnight session, S&P futures slumped to session lows shortly after JPM reported earnings that disappointed the market (see our full write up here) and were last trading down 30 points or 0.64%, with Dow futures down 0.3% and Nasdaq futures taking on even more water as the "sell tech" trade was back with a bang. Treasury yields rose 3bps to 1.74% and the dollar reversed an overnight loss. The VIX jumped above 20 and was last seen around 21. The Nasdaq 100 fell to the lowest in almost three months yesterday as tech came under pressure after Fed Governor Lael Brainard said officials could boost rates as early as March. It looks like the selling will continue today. “Market sentiment has been shaken by concerns over the prospect of imminent Fed tightening along with record global Covid-19 infection rates, but we don’t expect either of these factors to end the equity rally,” said UBS Wealth Management CIO Mark Haefele in a note. “The fourth-quarter U.S. earnings season, which started this week, could turn investor attention back to strong fundamentals.” JPMorgan shares dropped in premarket trading after revenues and EPS beat thanks to a $1.8 billion reserve release while FICC trading revenue missed expectations even as its dealmakers posted their best quarter ever and Chief Executive Officer Jamie Dimon gave an upbeat assessment of prospects for growth. Wells Fargo advanced after reporting higher-than-estimated revenue. BlackRock Inc. became the first public asset manager to hit $10 trillion in assets, propelled by a surge in fourth-quarter flows into its exchange-traded funds. Here are some of the other notable pre-movers today: U.S.-listed casino stocks with operations in Macau rise after the announcement of much-anticipated changes to the local casino law aimed at tightening government oversight on the world’s largest gaming market. Las Vegas Sands (LVS US) +6.6%; Melco Resorts (MLCO US) +5.5%; Wynn Resorts (WYNN US) +5.6%. Apple (AAPL US) shares are up in U.S. premarket trading after Piper Sandler raises its target for the stock, saying that Apple’s set-up for 2022 is favorable. Broker adds that the tech giant’s venture into health-care and automotive markets are the next catalysts to drive the stock to a $4 trillion market cap and beyond. NextPlay Technologies (NXTP US) shares jump 19% in U.S. premarket trading after giving an update for fiscal 3Q 2022 late yesterday. Domino’s Pizza (DPZ US) is cut to equal-weight from overweight at Morgan Stanley, while Chipotle is upgraded to overweight from equal-weight amid a “mixed” view on restaurant stocks into 2022. Amicus Therapeutics (FOLD US) advanced in postmarket trading after being upgraded to outperform from market perform at SVB Leerink, which cited the potential of a treatment for Pompe disease, should it be approved. Spirit Realty dropped 4% postmarket after launching a share sale via Morgan Stanley and BofA Securities. European equities traded poorly and followed the drop in Asia, with most sectors trading lower, weighed down once again by a soft tech sector. Euro Stoxx 50 is down 0.8%, most major indexes dropped over 1% before rising off the lows. Oil & gas is the best Stoxx 600 performer with crude trading well. European technology stocks as well as pandemic winners are leading declines after a U.S. selloff in tech shares resumed Thursday as Federal Reserve officials signaled their intention to combat inflation aggressively.  European chipmakers are down in early trading Friday: ASM International -3.5% at 9.17 a.m. CET, Infineon -0.9%, ASML -2.9%, STMicroelectronics -2.3%. Meanwhile, energy and automakers outperformed. Utilities were also in focus as French nuclear energy producer Electricite de France SA (EDF) plunged by a record as the French government confirmed plans to force it to sell more power at a steep discount to protect households from surging wholesale electricity prices, a move that could cost the state-controlled utility 7.7 billion euros ($8.8 billion) at Thursday’s market prices. There was some good news: a majority of strategists still see the rally in European equities continuing this year. The Stoxx Europe 600 Index will rise about 5.2% to 511 index points by the end of 2022 from Wednesday’s close, according to the average of 19 forecasts in a Bloomberg survey. Equity funds once more led inflows among asset classes in the week through Jan. 12, as investors reduced cash holdings, according to BofA and EPFR Global data. Earlier in the session, Asian stocks slid as investors offloaded technology shares on growing speculation the Federal Reserve will raise interest rates in March.  The MSCI Asia Pacific Index fell as much as 1.3% before paring losses to 0.7% in afternoon trading. Alibaba, Keyence and Sony Group were among the largest contributors to the benchmark’s slide. The Hang Seng Tech Index, which tracks China’s biggest tech firms, closed down 0.5%. Electronics makers also dragged down indexes in Japan and South Korea, with benchmarks in both nations leading the region’s drop. China’s CSI 300 Index closed at its lowest since November 2020. Asian stocks have been whipsawed this year by remarks from Fed officials as investors try to gauge the timing and scope of the anticipated interest rate hikes. The renewed weakness on Friday was triggered by comments from Fed Governor Lael Brainard, who said officials could boost rates as early as March to ensure that price pressures are brought under control. “This kind of hawkishness and a rush for rate hikes is, of course, a minus for share prices,” said Ayako Sera, a market strategist at Sumitomo Mitsui Trust Bank in Tokyo. If the Fed were to increase rates in March, “investors will want to make sure the economy remains strong despite the monetary tightening before making their move,” Sera added.  With Friday’s moves, Asia’s benchmark is set to pare its weekly gain to about 1.6%, which would still be its best weekly performance since October.    In Japan, sentiment worsened as Tokyo raised its Covid alert to the second-highest of four levels as virus cases surged. South Korea’s Kospi was also weighed down as the central bank increased its policy rate for the third time in just five months In rates, Treasuries pared declines with stock index futures under pressure as U.S. day begins. Yields beyond the 2-year reached session highs inside Thursday’s ranges amid a global government bond selloff. Treasury yields are cheaper by 3bp to 4bp across the curve with 10- year yields around 1.7274%, fading a bigger loss earlier and slightly underperforming bunds and gilts. Asia session featured speculation about tighter global monetary policy. IG dollar issuance slate empty so far and expected to remain light ahead of U.S. holiday weekend with markets closed Monday; four names priced $3.8b Thursday. In FX, the Bloomberg dollar spot is little changed around worst levels for the week, while NOK, JPY and CAD top the G-10 scoreboard. The yen advanced, and is set for its largest weekly advance in more than a year as speculation about a shift in the Bank of Japan’s policy spurred a further unwinding of dollar longs. The five-year Japanese government bond yield climbed to a six-year high. The volatility term structure in dollar-yen shifted higher Friday and inverted. The euro was little changed around $1.1460 and European sovereign bond yields rose, with the core underperforming the periphery. Norway’s krone and the Canadian dollar advanced as oil prices rose, with Brent trading above $85 per barrel, while the Australian and New Zealand dollars were the worst performers. The pound extended its longest winning streak in nearly two months as the U.K. economy surpassed its pre-pandemic size in November for the first time. Sweden’s krona inched down, shrugging off data showing that the nation’s inflation rate rose to the highest level in 28 years In commodities, crude futures rally with WTI recovering to Wednesday’s best levels near $83 and Brent putting in fresh highs near $85.40. Spot gold is little changed a brief retest of the week’s highs, trading near $1,823/oz. Base metals are mixed: LME nickel adds about 2% extending its recent surge; copper holds a narrow range in the red Looking at the day ahead now, data releases include US retail sales, industrial production and capacity utilisation for December, along with the University of Michigan’s preliminary consumer sentiment index for January and the UK’s GDP for November. Central bank speakers include ECB President Lagarde and New York Fed President Williams. Lastly, earnings releases include Citigroup, JPMorgan Chase, Wells Fargo and BlackRock. Market Snapshot S&P 500 futures up 0.3% to 4,667.00 STOXX Europe 600 down 0.5% to 483.71 MXAP down 0.8% to 195.28 MXAPJ down 0.5% to 639.13 Nikkei down 1.3% to 28,124.28 Topix down 1.4% to 1,977.66 Hang Seng Index down 0.2% to 24,383.32 Shanghai Composite down 1.0% to 3,521.26 Sensex up 0.1% to 61,320.31 Australia S&P/ASX 200 down 1.1% to 7,393.86 Kospi down 1.4% to 2,921.92 German 10Y yield little changed at -0.08% Euro up 0.1% to $1.1467 Brent Futures up 0.8% to $85.16/bbl Gold spot up 0.1% to $1,823.97 U.S. Dollar Index little changed at 94.73 Top Overnight News from Bloomberg Federal Reserve Governor Christopher Waller said that three interest-rate increases this year was a “good baseline” but there may be fewer or even as many as five moves, depending on inflation The U.K. and the European Union agreed to intensify post-Brexit negotiations over Northern Ireland, as Foreign Secretary Liz Truss led the British side for the first time in a meeting at her official country residence Germany’s economy contracted by as much as 1% in the final quarter of 2021 as the emergence of the coronavirus’s omicron strain added to drags on output from supply snarls and the fastest inflation in three decades Japan’s Government Pension Investment Fund, the world’s largest, may mull investing in Chinese government bonds if the market situation improves, GPIF President Masataka Miyazono says at a press conference in Tokyo Ukraine said a cyberattack brought down the websites of several government agencies for hours. Authorities didn’t immediately comment on the source of the outage, which comes as tensions with Russia surge over its troop buildup near the border Russia won’t wait “endlessly” for a security deal with NATO and progress depends on the U.S., Foreign Minister Sergei Lavrov said Friday, keeping up pressure after a week of high-level talks with the West failed to yield noticeable progress Turkey’s newly appointed finance chief said the country’s inflation will peak months earlier and at a level far lower than predicted by top Wall Street banks The global pressures driving inflation higher represent a “major change in trends” and will keep price growth high for the foreseeable future, Bank of Russia Governor Elvira Nabiullina said North Korea appears to have fired two ballistic missiles into waters off its east coast-- in what could be its third rocket-volley test in less than 10 days -- hours after issuing a fresh warning to the Biden administration A more detailed look at global markets courtesy of Newsquawk Asian equity markets weakened amid headwinds from the US where all major indices declined led by losses in tech and consumer discretionary amid a slew of hawkish Fed speak, while mixed Chinese trade data added to the cautiousness in the region. ASX 200 (-1.1%) traded lower as tech and consumer stocks mirrored the underperformance of stateside peers and with nearly all industries on the back foot aside from utilities and gold miners. Nikkei 225 (-1.3%) briefly gave up the 28k level amid a firmer currency and source reports that BoJ policy makers are said to debate how soon they can begin signalling a rate hike. In terms of the notable movers, Fast Retailing was the biggest gainer after it reported a record Q1 net, followed by Seven & I Holdings which also benefitted post-earnings, while Hitachi Construction was at the other end of the spectrum after news that parent Hitachi will offload half its majority stake. KOSPI (-1.4%) eventually underperformed after the Bank of Korea hiked rates by 25bps for a third time in the current tightening cycle to 1.25%, as expected. BoK also noted that CPI is to stay in the 3% range for a while and BoK Governor Lee made it clear that rates will continue to be adjusted which has fuelled speculation of similar action at next month’s meeting. Hang Seng (-0.2%) and Shanghai Comp. (-1.0%) were also pressured with participants digesting the latest trade figures which showed weaker than expected Imports although Exports topped estimates. Nonetheless, the downside was somewhat limited amid ongoing expectations for PBoC easing to support the economy as the Fed moves closer towards a rate lift off and with some encouragement after Evergrande averted its first onshore debt default whereby bondholders approved a six-month postponement of bond redemption and coupon payments. Finally, 10yr JGBs retreated beneath the 151.00 level following the source report that suggested debate within the BoJ on how soon a rate increase can be signalled which could occur ahead of the 2% price target, while this coincided with an increase in the 5yr yield to a 6-year high and a weaker than previous 20yr JGB auction. Top Asian News Chinese Developer R&F Downgraded to Restricted Default by Fitch Macau Cuts Casino License Tenure, Caps Float as Controls Tighten Inflation Irks Asia as Japan Yields Hit Six-Year High, BOK Hikes China Builders’ Dollar Bonds Slump Further; Logan, KWG Lead The major cash equity indices in Europe remain subdued but off worst levels (Euro Stoxx 50 -0.7%; Stoxx 600 -0.6%) as the downbeat APAC mood reverberated into the region amid a slew of hawkish Fed speak, while the mixed Chinese trade data added to the concerns of a slowdown ahead of next week’s GDP metrics. Newsflow had overall been quiet during the European session ahead of the start of US earnings season, but geopolitical tensions remain hot on the radar after North Korea fired its third missile of the year (albeit landing outside Japan’s EEZ), whilst Russia closed all communication channels with the EU and exerted some time-pressure on Washington with regards to Moscow’s security demands. Back to trade, a divergence is seen between Europe and the US as the former catches up to the late accelerated sell-off on Wall Street yesterday; US equity futures have been consolidating with mild broad-based gains seen across the ES (+0.2%), YM (+0.2%), NQ (+0.2%) whilst the RTY (Unch) narrowly lags. Delving into Europe, the UK’s FTSE 100 (-0.1%) is cushioned by gains across its Oil & Gas and Financial sectors as crude oil prices and yields clamber off intraday lows, whilst the SMI (-0.3%) sees some losses countered by its heavyweight healthcare sector. Sectors in Europe are mostly in the red with a slight defensive tilt, although Oil & Gas stands as the top gainer and the only sector in the green. The downside meanwhile sees Tech following a similar sectorial underperformance seen on Wall Street and APAC overnight. In terms of individual movers, DAX-heavyweight SAP (-0.3%) conforms to the losses across tech after initially rising as a result of upgraded guidance and the announcement of a share buyback programme of up to EUR 1bln. The most notable mover of the day has been EDF (-17.5%) as the Co. withdrew guidance after noting the impact of new French price cap measures is forecast to be around EUR 8.4bln on FY22 EBITDA. Top European News EDF Slumps by Most on Record on Hit From Price Cap U.K. Economy Surpasses Pre-Pandemic Size With November Surge German Recovery Lags Rest of Europe on Supply Snarls, Inflation HSBC Markets Chief Georges Elhedery To Take Six-Month Sabbatical In FX, another lower low off a lower high does not bode well for the index and Buck more broadly, but some technicians will be encouraged by the fact that chart supports in the form of a Fib retracement and 100 DMA have only been breached briefly. Meanwhile, Friday may provide the Greenback with a prop via pre-weekend position squaring and US data could lend a hand if upbeat or better than expected at the very least. For now, the DXY is restrained between 94.887-626 confines, with the upside capped by a major trendline that falls just below 95.000 around 94.980, and the Dollar also hampered by pressure emanating outside the basket from the likes of the Yuan, crude oil and other commodities. CAD/JPY/GBP - The Loonie has reclaimed 1.2500+ status in line with a rebound in WTI towards Usd 83/brl, but still faces stiff trendline resistance vs its US counterpart at 1.2451 and probably conscious that several multi-billion option expiries roll off either side of the 1.2500 level today. Conversely, the Yen has cleared the psychological 114.00 hurdle with some fundamental impetus coming from hawkish BoJ source reports contending that policy-setters are contemplating how soon the Bank can telegraph a rate hike that is likely to be delivered prior to inflation reaching its 2% target. Elsewhere, Sterling remains elevated above 1.3700, though unable to scale 1.3750 even with tailwinds from stronger than forecast UK GDP and IP or a narrower than feared trade gap amidst ongoing political uncertainty. CHF/EUR/NZD/AUD - All narrowly divergent and contained against their US rival, with the Franc straddling 0.9100 and Euro holding within a 1.1483-51 range and immersed in hefty option expiry interest spanning 1.1395 to 1.1485 (see 7.01GMT post on the Headline Feed for details). On the flip-side, the Aussie and Kiwi have both lost a bit more momentum after probing 0.7300 and approaching 0.6900 respectively yesterday, and Aud/Usd appears to have shrugged off robust housing finance data in the run up to China’s trade balance revealing sub-consensus imports. SCANDI/EM - Firmer than anticipated Swedish CPI and CPIF metrics have not offered the Sek much support, as the stripped down core ex-energy print was in line and bang on the Riksbank’s own projection. However, the Huf has been underpinned by hot Hungarian inflation and the Cnh/Cny in wake of the aforementioned Chinese trade data showing a record surplus for December and 2021 overall. In Turkey, the Try is flattish following the latest CBRT survey that predicts a weaker year-end Lira from current levels, but above record lows and still well above target CPI, while in Russia the Rub is benefiting from Brent’s rise above Usd 85.50/brl (in keeping with the Nok) against the backdrop of geopolitical and diplomatic strains as the country’s Foreign Minister declares that all lines of communication with the EU have ended. In commodities, WTI and Brent front-month futures have been on an upward trajectory since the Wall Street close, with the former now above USD 83/bbl (vs 81.58/bbl low) and the latter north of USD 85.50/bbl (vs 83.99/bbl low) in European hours. Overall market sentiment has been a non-committal one amid a lack of fresh macro catalysts, however, geopolitical updates have been abundant: namely with Russia’s punchy rhetoric surrounding its security demand from NATO and Washington, whilst North Korea fired what is said to be ballistic missiles which landed just outside Japan’s Exclusive Economic Zone (EEZ). On the demand side of the equation, eyes remain on China’s economic and COVID situations, with the import figures indicating China's annual crude oil imports drop for the first time in 20 years, whilst the nation grounded further flights between the US due to its zero-COVID policy. On the supply side, reports suggested that China will release oil stockpiles in the run-up to the Lunar New Year (dubbed as the largest human migration). The release is part of a coordinated plan with the US and other major consumers, according to the reports, which cited sources suggesting China will likely ramp up its releases if prices top USD 85/bbl. Turning to metals, spot gold is trading sideways and prices waned after again hitting the resistance zone around USD 1,830/oz flagged earlier this week. LME copper meanwhile remains under USD 10,000/t – subdued by the sharp slowdown in Chinese imports suggesting weaker demand, albeit annual imports of copper concentrate hit a historic high in 2021. The trade data also indicated a fall in iron ore imports as a factor of the steel production curbs imposed last year to tackle pollution and high iron ore prices. US Event Calendar 8:30am: Dec. Import Price Index YoY, est. 10.8%, prior 11.7%; MoM, est. 0.2%, prior 0.7% Export Price Index YoY, est. 16.0%, prior 18.2%; MoM, est. 0.3%, prior 1.0% 8:30am: Dec. Retail Sales Advance MoM, est. -0.1%, prior 0.3% Dec. Retail Sales Ex Auto MoM, est. 0.1%, prior 0.3% Dec. Retail Sales Ex Auto and Gas, est. -0.2%, prior 0.2% Dec. Retail Sales Control Group, est. 0%, prior -0.1% 9:15am: Dec. Industrial Production MoM, est. 0.2%, prior 0.5% Capacity Utilization, est. 77.0%, prior 76.8% Manufacturing (SIC) Production, est. 0.3%, prior 0.7% 10am: Nov. Business Inventories, est. 1.3%, prior 1.2% 10am: Jan. U. of Mich. Sentiment, est. 70.0, prior 70.6; Expectations, est. 67.0, prior 68.3; Current Conditions, est. 73.8, prior 74.2 U. of Mich. 1 Yr Inflation, est. 4.8%, prior 4.8%; 5-10 Yr Inflation, prior 2.9% DB's Jim Reid concludes the overnight wrap There was no rest for markets either yesterday as the tech sell-off resumed in earnest, which came as fed funds futures moved to price in a 93% chance of a March rate hike, the highest closing probability to date. At the same time, however, the US dollar continued to weaken and has now put in its worst 3-day performance in over a year, having shed -1.25% in that time. And all this is coming just as earnings season is about to ramp up, with a number of US financials scheduled to report today ahead of an array of companies over the next few weeks. Starting with sovereign bonds, yields on 10yr Treasuries fell a further -3.9bps yesterday, their biggest decline since mid-December, to their lowest closing level in a week, at 1.704%, with most of the price action again happening during the New York afternoon. Lower inflation breakevens helped drive the decline, with the 10yr breakeven down -3.4bps after the producer price inflation data for December came in softer than expected. Indeed, the monthly gain of +0.2% (vs. +0.4% expected) was the slowest since November 2020, and in turn that left the year-on-year measure at +9.7% (vs. +9.8% expected), which is actually a modest decline from the upwardly revised +9.8% in November. As with the previous day’s CPI reading though, there was a more inflationary interpretation for those after one, as the core PPI measure came in at a monthly +0.5% as expected, leaving the year-on-year change at an above-expected +8.3% (vs. +8.0% expected). So something for everyone but no massive surprises either way. The latest inflation data came as numerous Fed speakers continued to match the recent hawkish tone, which helped strengthen investor conviction in the odds of a March hike as mentioned at the top. Philadelphia Fed President Harker said at an event that “My forecast is that we would have a 25 basis-point increase in March, barring any changes in the data”, and that he had 3 hikes pencilled in but “could be convinced of a fourth if inflation is not getting under control.” Separately, we heard from Governor Brainard, who appeared before the Senate Banking Committee as part of her nomination hearing to become Fed Vice Chair. She signalled that she would be open to a March hike as well, saying that they would be in a position to hike “as soon as asset purchases are terminated”, which they’re currently on course to do in March. Even President Evans, one of the most dovish members of Fed leadership, said a March rate hike and multiple hikes this year were a possibility. As it happens, today is the last we’ll hear from various Fed speakers for a while, as tomorrow they’ll be entering their blackout period ahead of the next FOMC announcement later in the month. Staying on the Fed, Bloomberg reported overnight that President Biden has picked three nominees for the vacant slots. They include Sarah Bloom Raskin, previously Deputy Secretary of the Treasury, who’s reportedly going to be nominated to become the Vice Chair of supervision, as well as Lisa Cook and Philip Jefferson, who’d become governors. Cook is an economics professor at Michigan State University, and Jefferson is an economics professor at Davidson College in North Carolina. All 3 would require Senate confirmation, and bear in mind those choices haven’t been officially confirmed as of yet. Over on the equity side, the main story was a further tech sell-off that sent both the NASDAQ (-2.51%) and the FANG+ index (-3.72%) lower for the first time this week, and taking the former to a 3-month low. That weakness dragged the S&P 500 (-1.5%) lower, though despite the stark headline numbers, it was only just over half of the shares in the index that were in the red on the day. Meanwhile in Europe, the STOXX 600 (-0.03%) also saw a modest decline, though the STOXX Banks (+1.10%) hit a fresh 3-year high after advancing for the 8th time in the last 9 sessions. Sovereign bond yields echoed the declines in the US too, with those on 10yr bunds (-3.1bps), OATs (-3.3bps) and BTPs (-4.6bps) all moving lower. Following that tech-driven fall overnight on Wall Street on the back of those hawkish comments, Asian stock markets are trading lower this morning. Japan's Nikkei (-1.42%) extended the previous session’s losses while briefly falling over -2%, as the Japanese Yen found a renewed bid amid the risk-off mood. Additionally, the Kospi (-1.37%) widened its losses, after the BOK lifted borrowing costs by 25bps to 1.25% amidst rising concerns about inflationary pressure. That takes the benchmark rate back to pre-pandemic levels after the central bank's 25bps rate increase in August and November last year. Meanwhile, the Korean government unveiled a supplementary budget worth 14 trillion won in size to continue providing support to the economy. Elsewhere, the Hang Seng index (-0.86%), CSI (-0.60%) and Shanghai Composite (-0.53%) have all moved lower as well. Data released in China showed that exports went up +20.9% y/y in December (vs +20.0% market expectations) albeit imports in December rose +19.5% y/y less than +28.5% as anticipated. That meant that they posted a trade surplus of $94.46bn last month, above the consensus forecast for a $74.50bn surplus. Looking ahead, futures on both the S&P 500 (-0.19%) and DAX (-0.79%) are pointing to further losses later on. Elsewhere in markets, yesterday saw another surge in European natural gas futures (+13.71%), albeit still at levels which are less than half of the peaks seen in mid-December. The latest moves came as Russia’s deputy foreign minister Sergei Ryabkov said that talks with the US had reached a “dead end”, amidst strong tensions between the two sides with Russia rejecting any further expansion of NATO as well as calls to pull back its forces from near Ukraine’s border. In response, the Russian ruble weakened -2.31% against the US dollar yesterday, whilst the MOEX stock index (-4.05%) suffered its worst daily performance since April 2020. Turning to the Covid-19 pandemic, the decline in UK cases continued to accelerate yesterday, with the number of cases over the past week now down -24% relative to the previous 7-day period. Looking at England specifically, the total number of Covid-19 patients in hospital is now down for a 3rd day running, and in London the total number in hospital is down to its lowest level since New Year’s Eve. To the day ahead now, and data releases include US retail sales, industrial production and capacity utilisation for December, along with the University of Michigan’s preliminary consumer sentiment index for January and the UK’s GDP for November. Central bank speakers include ECB President Lagarde and New York Fed President Williams. Lastly, earnings releases include Citigroup, JPMorgan Chase, Wells Fargo and BlackRock. Tyler Durden Fri, 01/14/2022 - 08:13.....»»

Category: dealsSource: nytJan 14th, 2022

Futures Flat Ahead Of Another Scorching PPI Print

Futures Flat Ahead Of Another Scorching PPI Print US futures were little changed on Thursday one day after the highest CPI print since 1982 and just minutes before another red hot PPI print is expected (9.8%, up from 9.6%), as investors tried to gauge the timing and pace of monetary tightening. S&P 500, Dow and Nasdaq 100 futures were up 0.1% as investors waited for the next trading signal. 10Y yields were flat around 1.74%, and the dollar edged lower as a growing tide of investors bet the world’s reserve currency has reached a peak with rate hikes largely priced-in to the market with Fed tightening likely to lead to an economic slowdown. “Markets in 2022 have been volatile as the reality of inflation set in, and this reaction mainly reflects relief that the print did not exceed already lofty expectations,” Geir Lode, head of global equities at the international business of Federated Hermes, said in an email. Inflation hitting 7% could force a quicker move by the Federal Reserve, with the market now pricing four rate hikes this year starting no later than March, according to technical analyst Pierre Veyret at ActivTrades in London. “Investors still struggle with one crucial question: how will the Fed manage to tackle rising price pressure without derailing the fragile post-pandemic economic recovery?” Sure enough, San Francisco Fed President Mary Daly and her Philadelphia peer Patrick Harker added their voices to the chorus in interviews published yesterday evening and this morning, calling for a rate hike as soon as March when odds of a rate hike have hit a new high of 90%. Attention today will be on the confirmation hearing of Lael Brainard in the Senate. The vice-chair nominee, who last publicly commented on the economic outlook in September, said in prepared remarks that tackling inflation is the bank’s “most important task.” In premarket trading, shares in Delta Air Lines rose more than 2% even though the carrier missed revenue and EPS expectations, after the company said the omicron variant won’t derail its expectation to remain profitable for the rest of the year, as it released fourth-quarter financial results. Here are some of the biggest U.S. movers today: U.S. chip stocks are mixed in premarket trading after sector bellwether TSMC gave a 1Q sales outlook that beat estimates and raised its projected annual capex versus last year. Equipment stock Applied Materials (AMAT US) +2% premarket, while TSMC customers are mixed with Apple (AAPL US) -0.1%, Nvidia (NVDA US) +0.7% and AMD (AMD US) +0.6%. Puma Biotechnology (PBYI US) shares surge 13% in U.S. premarket trading, after the company said that its Nerlynx treatment was included in the National Comprehensive Cancer Network’s (NCCN) clinical practice guidelines in oncology for the treatment of breast cancer. KB Home (KBH US) shares rise 6.2% in premarket trading after the homebuilder’s 4Q EPS beat estimates, with Wells Fargo calling the results and guidance “solid.” Planet Labs (PL US) shares rise 1.6% in U.S. premarket trading, after the satellite data provider said that it plans to launch 44 SuperDove satellites on Thursday on SpaceX’s Falcon 9 rocket. Adagio Therapeutics (ADGI US) said ADG20 has neutralization activity against omicron and cites recent findings from three publications on ADG20. Shares jumped 30% in post-market trading. Discussing yesterday's scorching CPI print, DB's Jim Reid writes that "if you did an MRI scan of US inflation yesterday you’d find things to support both sides of the debate which is surprising when it hit 7% YoY and the highest since 1982 when Fed Funds were more than 13% rather than close to zero as they are today. So a slightly different real rate to back then. In fact the real rate is through any level seen in the 1970s and is only comparable to WWII levels. Back to CPI and the YoY number was in line with expectations, but core and MoM figures were all a bit firmer than expected. However, the beats were small enough that the data didn’t significantly change the outlook for monetary policy, with Fed funds futures still pricing in an 89% chance of a March hike, which is roughly around where it’d been over the preceding days." In Europe, the Stoxx Europe 600 Index paused after a two-day advance, erasing early declines of as much as 0.3% to trade little changed, with technology and automotive shares offsetting losses in consumer products and health care. CAC 40 underperforms, dropping as much as 0.6%. The Stoxx Europe 600 Technology sub-index is up 1.1%, getting a boost from chip stocks which gained after sector bellwether TSMC gave a 1Q sales outlook that beat estimates and raised its projected annual capex versus last year. Geberit dropped as much as 4.5% to a seven-month low after the Swiss producer of sanitary installations reported fourth-quarter sales. Bloomberg Dollar Spot dips into the red pushing most majors to best levels of the session. NZD, AUD and GBP are the best G-10 performers. Crude futures maintain a relatively narrow range. WTI is flat near $82.70, Brent stalls near $84.84. Spot gold dips before finding support near $1,820/oz. Most base metals are in the red with LME zinc lagging peers.  Asian stocks were little changed after capping their biggest rally in a year, with health-care and software-technology names retreating while financials advanced. The MSCI Asia Pacific Index fluctuated between a drop of 0.3% and a gain of 0.2% on Thursday. Hong Kong’s Hang Seng Tech Index lost 1.8% after rising the most in three months in the previous session. Benchmarks in China and Japan were the day’s worst performers, while the Philippines and Australia outperformed.   “The market rose a bit too much yesterday,” said Mamoru Shimode, chief strategist at Resona Asset Management in Tokyo. “Investors keep shifting back and forth from value stocks to growth names and vise versa. It’s because we don’t know yet where U.S. long-term yields will end up settling around.”  The Asian stock measure jumped 1.9% Wednesday on views that the Federal Reserve’s anticipated rate hikes will help curb inflation and allow the global recovery to chug along. U.S. inflation readings overnight, at an almost four-decade high, were in line with expectations and helped investors keep previous bets Japanese stocks fell after Tokyo raised its Covid-19 alert to the second-highest level on a four-tier system. The Topix dropped 0.7% to 2,005.58 at the 3 p.m. close in Tokyo, while the Nikkei 225 declined 1% to 28,489.13. Recruit Holdings Co. contributed the most to the Topix’s decline, decreasing 4%. Out of 2,181 shares in the index, 500 rose and 1,604 fell, while 77 were unchanged. HIS, Japan Airlines and other travel shares fell. Tokyo’s daily cases jumped more than fivefold on Wednesday to 2,198 compared with 390 a week earlier. India’s benchmark equity index eeked out gains to complete its longest string of advances since mid-October, buoyed by the nation’s top two IT firms after their earnings reports. The S&P BSE Sensex rose for a fifth day, adding 0.1% to close at 61,235.30 in Mumbai, while the NSE Nifty 50 Index climbed 0.3%. Infosys and Tata Consultancy Services were among the biggest boosts to both measures. Of the 30 shares in the Sensex index, 19 rose and 11 fell. Thirteen of the 19 sector sub-indexes compiled by BSE Ltd. advanced, led by a gauge of metal companies.  Infosys’ quarterly earnings beat and bellwether Tata Consultancy Services’s better-than-expected sales offer some hope that the rally in India’s technology sector has further room to run, according to analysts. Still, Wipro sank the most in a year after its profit missed estimates Fixed income is relatively quiet, with changes across major curves limited to less than a basis point so far. The 10-year yield stalled around 1.75%, slightly cheaper on the day, and broadly in line with bunds and gilts. Eurodollar futures bear steepen a touch after a round of hawkish Fedspeak during Asian hours. Treasuries were steady with yields broadly within a basis point of Wednesday’s close.  Eurodollars are slightly lower across green- and blue-pack contracts after Fed’s Daly and Harker sounded hawkish tones during Asia hours. Across front-end, eurodollar strip steepens out to blue-pack contracts (Mar25-Dec25), which are lower by up to 4bp. 30-year bond reopening at 1pm ET concludes this week’s coupon auction cycle.$22b 30-year reopening at 1pm ET follows 0.3bp tail in Wednesday’s 10-year auction, and large tails in last two 30-year sales. The WI 30-year yield at ~2.095% is above auction stops since June and ~20bp cheaper than last month’s, which tailed the WI by 3.2bp. In FX, the pound advanced to its highest level since Oct. 29 amid calls for U.K. Prime Minister Boris Johnson to resign over a “bring your own bottle” party at the height of a lockdown meant to stem the first wave of coronavirus infections in 2020. The Bloomberg Dollar Spot Index held a two-month low as the greenback weakened against all of its Group-of-10 peers, and the euro rallied a third day as it approached the $1.15 handle. Implied volatility in the major currencies over the two- week tenor, that now captures the next Fed meeting, comes in line with the roll yet investors are choosing sides. The Australian dollar extended its overnight gain as the greenback declined following as-expected U.S. inflation. Iron ore supply concern also supported the currency. The yen hovered near a two-week high as long dollar positions were unwound. Japanese government bonds traded in narrow ranges. In commodities, cude futures maintain a relatively narrow range. WTI is flat near $82.70, Brent stalls near $84.50. Spot gold dips before finding support near $1,820/oz. Most base metals are in the red with LME zinc lagging peers. Bitcoin traded around $44,000 as the inflation numbers rekindled the debate about whether the cryptocurrency is a hedge against rising consumer prices. Expected data on Thursday include producer prices, an early indicator of inflationary trends, and unemployment claims. Market Snapshot S&P 500 futures little changed at 4,715.50 STOXX Europe 600 down 0.1% to 485.67 MXAP little changed at 196.79 MXAPJ up 0.1% to 643.93 Nikkei down 1.0% to 28,489.13 Topix down 0.7% to 2,005.58 Hang Seng Index up 0.1% to 24,429.77 Shanghai Composite down 1.2% to 3,555.26 Sensex up 0.1% to 61,220.38 Australia S&P/ASX 200 up 0.5% to 7,474.36 Kospi down 0.3% to 2,962.09 German 10Y yield little changed at -0.04% Euro up 0.2% to $1.1465 Brent Futures down 0.1% to $84.58/bbl Gold spot down 0.3% to $1,820.68 U.S. Dollar Index little changed at 94.83 Top Overnight News from Bloomberg Federal Reserve Bank of San Francisco President Mary Daly and her Philadelphia Fed peer Patrick Harker joined the ranks of officials publicly discussing an interest-rate increase as early as March as the central bank seeks to combat the hottest inflation in a generation Global central banks will diverge on the way they respond to inflation this year, creating risks to economies everywhere, Bank of England policy maker Catherine Mann said Norway’s race to appoint a new central bank governor is reaching a finale mired in controversy at the prospect of a political ally and friend of Prime Minister Jonas Gahr Store getting the job Italy’s government is working on a spending package that won’t require revising its budget to expand the deficit, people familiar with the matter said Several of China’s largest banks have become more selective about funding real estate projects by local government financing vehicles, concerned that some are taking on too much risk after they replaced private developers as key buyers of land, people familiar with the matter said A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks traded mixed following the choppy session in the US where major indices eked mild gains as markets digested CPI data in which headline annual inflation printed at 7.0%. ASX 200 (+0.5%) was underpinned as the energy and mining related sectors continued to benefit from the recent upside in underlying commodity prices, while Crown Resorts shares outperformed after Blackstone raised its cash proposal for Crown Resorts following due diligence inquiries. Nikkei 225 (-1.0%) declined with the index hampered by unfavourable currency flows and with Tokyo raising its COVID-19 alert to the second-highest level. Hang Seng (+0.1%) and Shanghai Comp. (-1.1%) were initially subdued, but did diverge later, after the slight miss on loans and aggregate financing data, while there is a slew of upcoming key releases from China in the days ahead including trade figures tomorrow, as well as GDP and activity data on Monday. In addition, the biggest movers were headline driven including developer Sunac China which dropped by a double-digit percentage after it priced a 452mln-share sale at a 15% discount to repay loans and cruise operator Genting Hong Kong wiped out around half its value on resumption of trade after it warned of defaults due to insolvency of its German shipbuilding business. Finally, 10yr JGBs traded rangebound and were stuck near the 151.00 level following the indecisive mood in T-notes which was not helped by an uninspiring 10yr auction stateside, while the lack of BoJ purchases in the market also added to the humdrum tone. Top Asian News Asia Stocks Steady After Best Rally in a Year; Financials Gain Country Garden Selloff Shows Chinese Developer Worries Spreading China Banks Curb Property Loans to Local Government Firms China’s True Unemployment Pain Masked by Official Data Bourses in Europe now see a mixed picture with the breadth of the price action also narrow (Euro Stoxx 50 Unch; Stoxx 600 -0.10%). The region initially opened with a modest downside bias following on from a mostly negative APAC handover after Wall Street eked mild gains. US equity futures have since been choppy within a tight range and exhibit a relatively broad-based performance with no real standout performers. Back in Europe, sectors are mixed and lack an overarching theme. Tech remains the outperformer since the morning with some follow-through seen from contract-chip manufacturer TSMC (ADR +4.3% pre-market), who beat on net and revenue whilst upping its 2022 Capex to USD 40bln-44bln from around USD 30bln the prior year, whilst the CEO expects capacity to remain tight throughout 2022. Tech is closely followed by Autos and Parts and Travel & Leisure, whilst the other end of the spectrum sees Healthcare, Oil & Gas, Retail and Personal & Household goods among the straddlers – with Tesco (-1.5%) and Marks & Spencer (-5.3%) weighing on the latter two following trading updates. In terms of other individual movers, BT (+0.5%) trades in the green amid reports DAZN is nearing a deal to buy BT Sport for around USD 800mln, a could be reached as soon as this month but has not been finalized. Turning to analyst commentary: Morgan Stanley’s clients have aligned themselves to the view that European equities will likely perform better than US counterparts. 45% of respondents see Financials as the top-performing sector this year, 14% preferred Tech which would be the lowest score in over six years. Top European News Johnson Buys Time With Apology But U.K. Tory Rage Simmers U.K. Retailers Slide as Updates Show Lingering Impact of Virus Wood Group Plans Sale of Built Environment Unit Next Quarter Just Eat Advisers Pitching Grubhub Sale or Take-Private: Sources In FX, the Dollar has weakened further in wake of Wednesday’s US inflation data as ‘buy rumour sell fact’ dynamics are compounded by more position paring and increasingly bearish technical impulses to outweigh fundamental factors that seem supportive, on paper or in theory. Indeed, the index only mustered enough recovery momentum to reach 95.022 on the back of hawkish Fed commentary and some short covering before retreating through the psychological level, then yesterday’s 94.903 low and another trough from late 2021 at 94.824 (November 11 base) to 94.710, thus far and leaving little bar the 100 DMA, at 94.675 today, in terms of support ahead of 94.500. However, the flagging Greenback could get a fillip via PPI and/or IJC, if not the next round of Fed speakers and final leg of this week’s auction remit in the form of Usd 22 bn long bonds. NZD/AUD - A change in the running order down under where the Kiwi has overtaken the Aussie irrespective of bullish calls on the Aud/Nzd cross from MS, with Nzd/Usd breaching the 50 DMA around 0.6860 on the way to 0.6884 and Aud/Usd scaling the 100 DMA at 0.7288 then 0.7300 before fading at 0.7314. GBP/EUR/CHF/CAD/JPY - Also extracting more impetus at the expense of the Buck, but to varying degrees as Sterling continues to shrug aside ongoing Tory party turmoil to attain 1.3700+ status and surpass the 200 DMA that stands at 1.3737, while the Euro has overcome Fib resistance around 1.1440, plus any semi-psychological reticence at 1.1450 to reach 1.1478 and the Franc is now closer to 0.9100 than 0.9150. Elsewhere, crude is still providing the Loonie with an incentive to climb and Usd/Cad has recoiled even further from early 2022 peaks beneath 1.2500 as a result, and the Yen is around 114.50 with scope for a stronger retracement to test the 55 DMA, at 114.22. SCANDI/EM - Some signs of fatigue as the Nok stalls on the edge of 9.9000 against the Eur in tandem with Brent just a few cents over Usd 85/brl, but the Czk has recorded fresh decade-plus highs vs the single currency following remarks from CNB chief Rusnok on the need to keep tightening and acknowledging that this may culminate in Koruna appreciation. The Cnh and Cny are firmer vs the Usd pre-Chinese trade and GDP data either side of the weekend, but the Rub is lagging again as the Kremlin concludes that there was no progress in talks between Russia and the West, but the Try is underperforming again with headwinds from elevated oil prices and regardless of a marked pick up in Turkish ip. In commodities, WTI and Brent front-month contracts have conformed to the indecisive mood across the markets, although the benchmarks received a mild uplift as the Dollar receded in early European hours. As it stands, the WTI Feb and Brent Mar contract both reside within USD 0.80/bbl ranges near USD 82.50/bbl and USD 84.50/bbl respectively. News flow for the complex has been quiet and participants are on the lookout for the next catalyst, potentially in the form of US jobless claims/PPI amid multiple speakers, although the rise in APAC COVID cases remains a continuous headwind on demand for now – particularly in China. On the geopolitical front, Russian-backed troops have reportedly begun pulling out of the 1.6mln BPD Kazakh territory, but Moscow’s tensions with the West do not seem to abate. Russia's Kremlin suggested talks with the West were "unsuccessful" – which comes after NATO’s Secretary-General yesterday suggested there is a real risk of a new armed conflict in Europe. Elsewhere, spot gold has drifted off best levels as the DXY found a floor, for now – with the closest support yesterday’s USD 1,813/oz low ahead of the 50 and 21 DMAs at USD 1,807/oz and USD 1,806.50/oz respectively. LME copper has also pulled back from yesterday’s best levels to levels under USD 10,000/t as the mood remains cautious, although, copper prices in Shanghai rose to over a two-month high as it played catch-up to LME yesterday. US Event Calendar 8:30am: Dec. PPI Final Demand YoY, est. 9.8%, prior 9.6%; MoM, est. 0.4%, prior 0.8% 8:30am: Dec. PPI Ex Food and Energy YoY, est. 8.0%, prior 7.7%; MoM, est. 0.5%, prior 0.7% 8:30am: Jan. Continuing Claims, est. 1.73m, prior 1.75m 8:30am: Jan. Initial Jobless Claims, est. 200,000, prior 207,000 DB's Jim Reid concludes the overnight wrap Today I have a first. I have two MRI scans. A fresh one on my back and one on my right knee which gave way as I was rehabbing (squats and lunges) the left knee after recent surgery. In my fifth decade of playing sport averagely, but vigorously, it’s all catching up with me very quickly. I’ve exhausted all strengthening exercise routines and injections on my back and the pain gets worse. My surgeon does not want to operate but we will see if he changes his mind after today. If he says play less golf I will walk out mid-meeting even if he may be medically correct. In contrast my knee surgeon is an avid skier and he keeps on doing things to prolong my skiing career even though I’ve said to him that I just really care about golf. So I’ll soon be looking for an avid golfer who just happens to be a back surgeon. Talking of confirmation bias, if you did an MRI scan of US inflation yesterday you’d find things to support both sides of the debate which is surprising when it hit 7% YoY and the highest since 1982 when Fed Funds were more than 13% rather than close to zero as they are today. So a slightly different real rate to back then. In fact the real rate is through any level seen in the 1970s and is only comparable to WWII levels. Back to CPI and the YoY number was in line with expectations, but core and MoM figures were all a bit firmer than expected. However, the beats were small enough that the data didn’t significantly change the outlook for monetary policy, with Fed funds futures still pricing in an 89% chance of a March hike, which is roughly around where it’d been over the preceding days. Looking at the details of the release, (our US econ team’s full wrap here) headline month-on-month number came in at +0.5% in December (vs. +0.4% expected), which is the 8thtime in the last 10 months that the print has come in above the consensus expectations on Bloomberg. However, that does still mark a deceleration from the +0.9% and +0.8% monthly growth in October and November respectively. The core CPI reading was also a touch stronger than anticipated, with the monthly print at +0.6% (vs. +0.5% expected), thus sending the annual core CPI measure up to +5.5% (vs. +5.4% expected) and its highest since 1991. Diving into some of the key sub-components, Covid-era favorite used cars and trucks grew +3.5% MoM. More concerning for policymakers, is the continued growth in persistent measures such as shelter, with primary and owners’ equivalent rent both increasing +0.4% MoM. If you were expecting Omicron to slow down American holiday travel, think again, lodging away from home and airfares both posted large increases, +1.2% and +2.7%, respectively. Most forecasters think the peak for inflation is sometime soon, but the pace of the glide path is open to debate. This is a topic we covered in yesterday’s CoTD, found here. Even though Treasuries had rallied strongly in the immediate aftermath of the report, with the 10yr yield falling back to 1.709% at the intraday low, yields pared back those losses to end the session basically unchanged at 1.74% (+0.7bps). CPI was expected to be bad and therefore the ability to shock was relatively low. However this tame overall move masked a divergence between a sharp bounceback in the 10yr real yield (+7.5bps) and a decline in inflation breakevens (-7.5bps) as the worst fears from the report weren’t realised. Over in Europe however, there was a more sustained rally, with yields on 10yr bunds down -3.2bps to -0.06%, having come very close in recent days to moving back into positive territory for the first time since May 2019. Furthermore, there was a continued divergence between the two regions at the front end of the curve, with the gap between 2yr yields on Treasuries and bunds widening to 153bps yesterday, which is the biggest since the pandemic began. Staying with bonds, our US econ and Rates strategy team published a joint piece last night outlining their early expectations for QT, here. For equities, the lack of an inflation surprise meant that they got a continued reprieve following last week’s selloff, with the S&P 500 (+0.28%) advancing for a 2nd day running for the first time this year, whilst in Europe the STOXX 600 (+0.65%) posted an even stronger advance. Megacap tech stocks were a noticeable outperformer, with the FANG+ index gaining +1.25%, whilst in Europe the STOXX Banks index (+1.22%) hit a fresh 3-year high. On the topic of inflationary pressures, one asset that continued its upward march was oil yesterday, with Brent Crude (+1.13%), just missing its first close above $85/bbl since October yesterday. Bear in mind it was only 6 weeks earlier that Brent hit its post-Omicron closing low, just beneath $69/bbl, so it’s now up by more than $16/bbl over that period. WTI (+1.75%) saw a similar increase yesterday, which won’t be welcome news to those who’d hoped the recent decline in energy prices late last year would offer some relief on the inflation front. That said, WTI oil is making a great case to be the top-performing major asset for a second year running at the minute, having advanced by over +10% since the start of the year.. This morning, Asian markets are mostly trading lower. The Nikkei (-0.91%) is leading losses in the region, followed by the CSI (-0.55%), Shanghai Composite (-0.31% ) and Kospi (-0.19%). Elsewhere, Hong Kong's Hang Seng index (+0.07%) is swinging between gains and losses. In stock news, Cruise operator Genting Hong Kong Ltd nosedived by a record 56%, after it resumed trading today following last week's suspension as the company indicated the possibility of default. Looking forward, US equity futures are indicating a weak start with the S&P 500 (-0.15%), Nasdaq (-0.26%) and Dow Jones (-0.11%) contracts trading in the red. On the Covid front, there was further good news from the UK as the latest wave showed further signs of ebbing. For the UK as a whole, the total number of reported cases over the last 7 days is now down -19% compared with the previous 7 day period, whilst in England the number of Covid patients in a mechanical ventilation bed has dropped to its lowest in almost 3 months, before we’d even heard of the Omicron variant. For those following credit, our colleagues in the European Leveraged Finance Research team have just published their quarterly top trade ideas. You can find the report here. Looking at yesterday’s other data, Euro Area industrial production grew by +2.3% in November (vs. +0.3% expected), although the October reading was revised down to show a -1.3% contraction. To the day ahead now, and one of the highlights will be Fed Governor Brainard’s nomination hearing at the Senate Banking committee to become Fed Vice Chair. Other central bank speakers include the Fed’s Barkin and Evans, ECB Vice President de Guindos and the ECB’s Elderson, along with the BoE’s Mann. Separately, data releases from the US include December’s PPI and the weekly initial jobless claims, whilst there’s also Italy’s industrial production for November. Tyler Durden Thu, 01/13/2022 - 08:00.....»»

Category: blogSource: zerohedgeJan 13th, 2022

Futures Tread Water With Traders Spooked By Spike In Yields

Futures Tread Water With Traders Spooked By Spike In Yields After futures rose to a new all time high during the Tuesday overnight session, the mood has been decided more muted after yesterday's sharp rates-driven tech selloff, and on Wednesday U.S. futures were mixed and Nasdaq contracts slumped as investors once again contemplated the effect of expected rate hikes on tech stocks with lofty valuations while waiting for the release of Federal Reserve minutes at 2pm today. At 730am, Nasdaq 100 futures traded 0.3% lower amid caution over the impact of higher yields on equity valuations, S&P 500 Index futures were down 0.1%, while Europe’s Stoxx 600 gauge traded near a record high. The dollar weakened, as did bitcoin, while Brent crude rose back over $80. “The sharp rise in U.S. yields this week has sparked a move from growth to value,” said Jeffrey Halley, senior market analyst at Oanda Asia Pacific. “Wall Street went looking for the winners in an inflationary environment and as a result, loaded up on the Dow Jones at the expense of the Nasdaq.” Concerns related to the pandemic deepened as Hong Kong restricted dining-in, closed bars and gyms and banned flights from eight countries including the U.S. and the U.K. to slow the spread of the omicron variant. Meanwhile, a selloff in technology stocks extended to Asia, where the Hang Seng Tech Index tumbled as much as 4.2%, sending the gauge toward a six-year low. Traders are now caught in a quandary over deepening fears on global growth combined with a faster tightening by the Federal Reserve. “Earlier we thought that rate hikes wouldn’t be on the table until mid-2022 but the Fed seems to have worked up a consensus to taper faster and hike sooner rather than later,” Steve Englander, head of global G-10 FX research at Standard Chartered, said in a note. “But we don’t think inflation dynamics will support continued hiking. We suspect the biggest driver of asset markets will be when inflation and Covid fears begin to ebb.” Data on Tuesday showed mixed signs on U.S. inflation. Prices paid by manufacturers in December came in sharply lower than expected. However, figures showing a faster U.S. job quit rate added to concerns over wage inflation. With 4.5 million Americans leaving their jobs in November, compared with 10.6 million available positions, the odds increased the Fed will struggle to influence the employment numbers increasingly dictated by social reasons. The data came before Friday’s monthly report from the Labor Department, currently forecast to show 420,000 job additions in December. In premarket trading, tech giants Tesla, Nvidia and Advanced Micro Devices were among the worst performers. Pfizer advanced in New York premarket trading after BofA Global Research recommended the stock. Shares of Chinese companies listed in the U.S. extended their decline after Tencent cut its stake in gaming and e-commerce company Sea, triggering concerns of similar actions at other firms amid Beijing’s regulatory crackdown on the technology sector. Alibaba (BABA US) falls 1.2%, Didi (DIDI US) -1.8%. Here are the other notable premarket movers: Shares in electric vehicle makers fall in U.S. premarket trading, set to extend Tuesday’s losses, amid signs of deepening competition in the sector. Tesla (TSLA US) slips 1.1%, Rivian (RIVN US) -0.6%. Beyond Meat (BYND US) shares jump 8.9% premarket following a CNBC report that Yum! Brands’ KFC will launch fried chicken made with the company’s meat substitute. Recent selloff in Pinterest (PINS US) shares presents an attractive risk/reward, with opportunities for the social media company largely unchanged, Piper Sandler writes in note as it upgrades to overweight. Stock gains 2.3% in premarket trading. Senseonics Holdings (SENS US) shares rise 15% premarket after the medical technology company said it expects a U.S. Food and Drug Administration decision in weeks on an updated diabetes- monitoring system. MillerKnoll (MLKN US) shares were down 3.1% in postmarket trading Tuesday after reporting fiscal 2Q top and bottom line results that missed analysts’ estimates. Annexon (ANNX US) was down 23% postmarket Tuesday after results were released from an experimental therapy for a fatal movement disorder called Huntington’s disease. Three patients in the 28- person trial discontinued treatment due to drug-related side- effects. Wejo Group (WEJO US) shares are up 34% premarket after the company said it’s developing the Wejo Neural Edge platform to enable intelligent handling of data from vehicles at scale. Smart Global (SGH US) falls 6% postmarket Tuesday after the computing memory maker forecast earnings per share for the second quarter. The low end of that forecast missed the average analyst estimate. Beyond Meat (BYND) shares surge premarket after CNBC KFC launch report UBS cut the recommendation on Adobe Inc. (ADBE US) to neutral from buy, citing concerns over the software company’s 2022 growth prospects. Shares down 2% in premarket trading. Oncternal Therapeutics (ONCT US) shares climb 5.1% premarket after saying it reached consensus with the FDA on the design and major details of the phase 3 superiority study ZILO-301 to treat mantle cell lymphoma. In Europe, the energy, chemicals and car industries led the Stoxx Europe 600 Index up 0.2% to near an all-time high set on Tuesday. The Euro Stoxx 50 rises as much as 0.6%, DAX outperforms. FTSE 100 lags but rises off the lows to trade up 0.2%. Nestle dropped 2.4%, slipping from a record, after Jefferies cut the Swiss food giant to underperform. Utilities were the worst-performing sector in Europe on Wednesday as cyclical areas of the market are favored over defensives, while Uniper and Fortum fall following news of a loan agreement.  Other decliners include RWE (-2.4%), Endesa (2.1%), Verbund (-1.3%), NatGrid (-1.2%), Centrica (-1.2%). Earlier in the session, technology shares led a decline in Asian equity markets, with investors concerned about the prospects of higher interest rates and Tencent’s continued sale of assets. The MSCI Asia Pacific Index fell as much as 0.6%, the most in two weeks, dragged down by Tencent and Meituan. The rout in U.S. tech spilled over to Asia, where the Hang Seng Tech Index plunged 4.6%, the most since July, following Tencent’s stake cut in Singapore’s Sea. Declines in tech and other sectors in Hong Kong widened after the city tightened rules to curb the spread of the omicron variant. Most Asian indexes fell on Wednesday, with Japan an exception among major markets as automakers offered support. The outlook for tighter monetary policy in the U.S. and higher Treasury yields weighed on the region’s technology shares, prompting a rotation from growth to value stocks.   Read: China Tech Selloff Deepens as Tencent Sale Spooks Traders Asian equities have underperformed U.S. and European peers amid slower recoveries and vaccination rates in the past year. With omicron rapidly gaining a foothold in Asia, there is a risk of “any further restriction measures, which could cloud the services sector outlook, along with disruption to supply chains,” said Jun Rong Yeap, a strategist at IG Asia Pte.  Philippine stocks gained as trading resumed following a one-day halt due to a systems glitch. North Korea appeared to have launched its first ballistic missile in about two months, just days after leader Kim Jong Un indicated that returning to stalled nuclear talks with the U.S. was a low priority for him in the coming year. India’s key equity gauges posted their longest run of advances in more than two moths, driven by a rally in financial stocks on hopes of revival in lending on the back of capex spending in the country. The S&P BSE Sensex rose 0.6% to 60,223.15 in Mumbai, its highest since Nov. 16, while the NSE Nifty 50 Index advanced 0.7%. Both benchmarks stretched their winning run to a fourth day, the longest since Oct. 18. All but six of the 19 sector sub-indexes compiled by BSE Ltd. climbed, led by a gauge of banking firms. “I believe from an uncertain, volatile environment, the Nifty is now headed for a directional move,” Sahaj Agrawal, a head of derivative research at Kotak Securities, writes in a note. The Nifty 50 crossed a significant barrier of the 17,800 level and is now expected to trade at 19,000-19,500 level in the medium term, Agrawal added. HDFC Bank contributed the most to the Sensex’s gain, increasing 2.4%. Out of 30 shares in the Sensex, 18 rose, while 12 fell In FX, Bloomberg Dollar Spot index slpped 0.2% back toward Tuesday’s lows, falling as the greenback was weaker against most of its Group-of-10 peers, SEK and JPY are the best performers in G-10, CAD underperforms. Scandinavian currencies and the yen led gains, though most G-10 currencies were trading in narrow ranges. Australia’s dollar reversed an Asia-session loss in European trading. The yen rebounded from a five-year low as investors trimmed short positions on the haven currency and amid a decline in Asian stock markets. Treasuries were generally flat in overnight trading, with the curve flatter into early U.S. session as long-end outperforms, partially unwinding a two-day selloff to start the year with Tuesday witnessing a late block sale in ultra-bond futures. 10-year yields traded as high as 1.650% ahead of the US open after being mostly flat around 1.645%; yields were richer by up to 2bp across long-end of the curve while little change from front-end out to belly, flattening 2s10s, 5s30s spreads by 0.5bp and 1.8bp; gilts outperformed in the sector by half basis point. Focus expected to continue on IG issuance, which has impacted the market in the past couple of days, and in U.S. afternoon session FOMC minutes will be released. IG dollar issuance slate includes EIB $5B 5-year SOFR and Reliance Ind. 10Y/30Y/40Y; thirteen borrowers priced $23.1b across 30 tranches Tuesday, making it the largest single day volume for U.S. high-grade corporate bonds since first week of September. European peripheral spreads widen to core. 30y Italy lags peers, widening ~2bps to Germany with order books above EU43b at the long 30y syndication. Ten-year yields shot up 8bps in New Zealand as its markets reopened following the New Year holiday. Aussie yields advanced 4bps. A 10-year sale in Japan drew a bid-cover ratio of 3.46. In commodities, crude futures were range-bound with WTI near just below $77, Brent nearer $80 after OPEC+ agreed to revive more halted production as the outlook for global oil markets improved, with demand largely withstanding the new coronavirus variant. Spot gold puts in a small upside move out of Asia’s tight range to trade near $1,820/oz. Base metals are mixed. LME nickel lags, dropping over 2%; LME aluminum and lead are up ~0.8%.  Looking at the day ahead, data releases include the December services and composite PMIs from the Euro Area, Italy, France, Germany and the US. On top of that, there’s the ADP’s December report of private payrolls from the US, the preliminary December CPI report from Italy, and December’s consumer confidence reading from France. Separately from the Federal Reserve, we’ll get the minutes of the December FOMC meeting. Market Snapshot S&P 500 futures little changed at 4,783.25 MXAP down 0.4% to 193.71 MXAPJ down 0.9% to 626.67 Nikkei up 0.1% to 29,332.16 Topix up 0.4% to 2,039.27 Hang Seng Index down 1.6% to 22,907.25 Shanghai Composite down 1.0% to 3,595.18 Sensex up 0.7% to 60,300.47 Australia S&P/ASX 200 down 0.3% to 7,565.85 Kospi down 1.2% to 2,953.97 STOXX Europe 600 up 0.1% to 494.52 German 10Y yield little changed at -0.09% Euro up 0.2% to $1.1304 Brent Futures down 0.4% to $79.72/bbl Gold spot up 0.3% to $1,819.73 U.S. Dollar Index down 0.13% to 96.13 Top Overnight News from Bloomberg The U.S. yield curve’s most dramatic steepening in more than three months has little to do with traders turning more optimistic on the economy or betting on a more aggressive timetable for raising interest rates The surge in euro-area inflation that surprised policy makers in recent months is close to its peak, according to European Central Bank Governing Council member Francois Villeroy de Galhau Some Bank of Japan officials say it’s likely the central bank will discuss the possible ditching of a long-held view that price risks are mainly on the downward side at a policy meeting this month, according to people familiar with the matter Turkish authorities are keeping tabs on investors who are buying large amounts of foreign currency and asked banks to deter their clients from using the spot market for hedging-related trades as they struggle to contain the lira’s slide Italy is trying to lock in historically low financing costs at the start of a year where inflationary and political pressures could spell an end to super easy borrowing conditions North Korea appears to have launched its first ballistic missile in about two months, after leader Kim Jong Un indicated he was more interested in bolstering his arsenal than returning to stalled nuclear talks with the U.S. A More detailed breakdown of overnight news from Newsquawk Asia-Pac equities traded mostly in the red following the mixed handover from Wall Street, where the US majors maintained a cyclical bias and the NDX bore the brunt of another sizeable Treasury curve bear-steepener. Overnight, US equity futures resumed trade with mild losses and have since been subdued, with participants now gearing up for the FOMC minutes (full Newsquawk preview available in the Research Suite) ahead of Friday’s US jobs report and several scheduled Fed speakers. In APAC, the ASX 200 (-0.3%) was pressured by its tech sector, although the upside in financials cushioned some losses. The Nikkei 225 (+0.1%) was kept afloat by the recent JPY weakness, whilst Sony Group rose some 4% after its chairman announced EV ambitions. The KOSPI (-1.2%) was dealt a blow as North Korea fired a projectile that appeared to be a ballistic missile, but this landed outside of Japan’s Exclusive Economic Zone (EEZ). The Hang Seng (-1.6%) saw its losses accelerate with the Hang Seng Tech Index tumbling over 4% as the sector tackled headwinds from Wall Street alongside domestic crackdowns. China Huarong Asset Management slumped over 50% as it resumed trade following a nine-month halt after its financial failure. The Shanghai Comp. (-1.0%) conformed to the mostly negative tone after again seeing a hefty liquidity drain by the PBoC. In the debt complex, the US T-note futures held a mild upside bias since the resumption of trade, and the US curve was somewhat steady. Participants also highlighted large short-covering heading into yesterday’s US close ahead of the FOMC minutes. Top Asian News Asian Stocks Slide as Surging Yields Squeeze Technology Sector China’s Growth Forecast Cut by CICC Amid Covid Outbreaks BOJ Is Said to Discuss Changing Long-Held View on Price Risks Gold Holds Gain With Fed Rate Hikes and Treasury Yields in Focus European equities (Stoxx 600 +0.1%) trade mixed in what has been a relatively quiet session thus far with the final readings of Eurozone services and composite PMIs providing little in the way of fresh impetus for prices. The handover from the APAC region was predominantly a soft one with Chinese bourses lagging once again with the Hang Seng Tech Index tumbling over 4% as the sector tackled headwinds from Wall Street alongside domestic crackdowns. Meanwhile, the Shanghai Comp. (-1%) conformed to the mostly negative tone after again seeing a hefty liquidity drain by the PBoC. Stateside, the ES and RTY are flat whilst the NQ lags once again after yesterday bearing the brunt of another sizeable treasury curve bear-steepener. In terms of house views, analysts at Barclays expect “2022 to be a more normal yet positive year for equities, looking for high single-digit upside and a broader leadership”. Barclays adds that it remains “pro-cyclical (Industrials, Autos, Leisure, reopening plays and Energy OW), and prefer Value to Growth”. Elsewhere, analysts at Citi stated that “monetary tightening may push up longer-dated nominal/real bond yields, threatening highly rated sectors such as IT or Luxury Goods. Alternatively, higher yields could help traditional value trades such as UK equities and Pan-European Financials”. Sectors in Europe are mostly higher, with auto names leading as Renault (+3.4%) sits at the top of the CAC, whilst Stellantis (+0.6%) has seen some support following the announcement that it is planning for a full battery-electric portfolio by 2028. Elsewhere, support has also been seen for Chemicals, Oil & Gas and Banking names with the latter continuing to be supported by the current favourable yield environment. To the downside, Food and Beverage is the clear laggard amid losses in Nestle (-2.6%) following a broker downgrade at Jefferies. Ocado (+5.5%) sits at the top of the Stoxx 600 after being upgraded to buy at Berenberg with analysts expecting the Co. to sign further deals with new and existing grocery e-commerce partners this year. Finally, Uniper (-2.4%) sits near the bottom of the Stoxx 600 after securing credit facilities totalling EUR 10bln from Fortum and KfW. Top European News U.K. Weighs Dropping Covid Test Mandate for Arriving Travelers German Energy Giant Uniper Gets $11 Billion for Margin Calls European Gas Extends Rally as Russian Shipments Remain Curbed Italian Inflation Hits Highest in More Than a Decade on Energy In FX, notwithstanding Tuesday’s somewhat mixed US manufacturing ISM survey and relatively hawkish remarks from Fed’s Kashkari, the week (and year) in terms of data and events really begins today with the release of ADP as a guide for NFP and minutes of the December FOMC that confirmed a faster pace of tapering and more hawkish dot plots. As such, it may not be surprising to see the Buck meandering broadly and index settling into a range inside yesterday’s parameters with less impetus from Treasuries that have flipped from a severe if not extreme bear-steepening incline. Looking at DXY price action in more detail, 96.337 marks the top and 96.053 the bottom at present, and from a purely technical perspective, 96.098 remains significant as a key Fib retracement level. JPY/EUR/AUD/GBP/NZD - All taking advantage of the aforementioned Greenback fade, and with the Yen more eager than others to claw back lost ground given recent underperformance. Hence, Usd/Jpy has retreated further from multi-year highs and through 116.00 to expose more downside potential irrespective of latest reports via newswire sources suggesting the BoJ is expected to slightly revise higher its inflation forecast for the next fiscal year and downgrade the GDP outlook for the year ending in March. Similarly, the Euro is having another look above 1.1300 even though EZ services and composite PMIs were mostly below consensus or preliminary readings and German new car registrations fell sharply, while the Aussie is retesting resistance around 0.7250 and its 50 DMA with some assistance from firm copper prices, Cable remains underpinned near 1.3550 and the 100 DMA and the Kiwi is holding mainly above 0.6800 in the face of stronger Aud/Nzd headwinds. Indeed, the cross is approaching 1.0650 in contrast to Eur/Gbp that is showing signs of changing course following several bounces off circa 0.8333 that equates to 1.2000 as a reciprocal. CHF/CAD - The Franc and Loonie appear a bit less eager to pounce on their US peer’s retrenchment, as the former pivots 0.9150 and latter straddles 1.2700 amidst a downturn in crude pre-Canadian building permits and new house prices. SCANDI/EM - Little sign of any fallout from a slowdown in Sweden’s services PMI as overall risk sentiment remains supportive for the Sek either side of 10.2600 vs the Eur, but the Nok is veering back down towards 10.0000 in line with slippage in Brent from Usd 80+/brl peaks reached on Tuesday. Elsewhere, the Zar is shrugging off a sub-50 SA PMI as Gold strengthens its grip on the Usd 1800/oz handle and the Cnh/Cny are still underpinned after another PBoC liquidity drain and firmer than previous midpoint fix on hopes that cash injections might be forthcoming through open market operations into the banking system from the second half of January to meet rising demand for cash, according to China's Securities Journal. Conversely, the Try has not derived any real comfort from comments by Turkey’s Finance Minister underscoring its shift away from orthodox policies, or insistence that budget discipline will not be compromised. In commodities, crude benchmarks are currently little changed but have been somewhat choppy within a range shy of USD 1/bbl in European hours, in-spite of limited fresh newsflow occurring. For reference, WTI and Brent reside within USD 77.26-76.53/bbl and USD 80.25-79.56/bbl parameters respectively. Updates for the complex so far include Cascade data reporting that gas flows via the Russian Yamal-Europe pipeline in an eastward direction have reduced. As a reminder, the pipeline drew scrutiny in the run up to the holiday period given reverse mode action, an undertaking the Kremlin described as ‘operational’ and due to a lack of requests being placed. Separately, last nights private inventories were a larger than expected draw, however, the internals all printed builds which surpassed expectations. Today’s EIA release is similar expected to show a headline draw and builds amongst the internals. Elsewhere, and more broadly, geopolitics remain in focus with Reuters sources reporting that a rocket attack has hit a military base in proximity to the Baghdad airport which hosts US forces. Moving to metals, spot gold and silver are once again fairly contained though the yellow metal retains the upside it derived around this point yesterday, hovering just below the USD 1820/oz mark. US Event Calendar 7am: Dec. MBA Mortgage Applications -5.6%, prior -0.6% 8:15am: Dec. ADP Employment Change, est. 410,000, prior 534,000 9:45am: Dec. Markit US Composite PMI, prior 56.9 9:45am: Dec. Markit US Services PMI, est. 57.5, prior 57.5 2pm: Dec. FOMC Meeting Minutes DB's Jim Reid concludes the overnight wrap As you may have seen from my CoTD yesterday all I got for Xmas this year was Omicron, alongside my wife and two of our three kids (we didn’t test Bronte). On Xmas Day I was cooking a late Xmas dinner and I suddenly started to have a slightly lumpy throat and felt a bit tired. Given I’d had a couple of glasses of red wine I thought it might be a case of Bordeaux-2015. However a LFT and PCR test the next day confirmed Covid-19. I had a couple of days of being a bit tired, sneezing and being sniffly. After that I was 100% physically (outside a of bad back, knee and shoulder but I can’t blame that on covid) but am still sniffly today. I’m also still testing positive on a LFT even if I’m out of isolation which tells me testing to get out of isolation early only likely works if you’re completely asymptomatic. My wife was similar to me symptom wise. Maybe slightly worse but she gets flu badly when it arrives and this was nothing like that. The two kids had no real symptoms unless being extremely annoying is one. Indeed spending 10 days cooped up with them in very wet conditions (ie garden activity limited) was very challenging. Although I came out of isolation straight to my home office that was still a very welcome change of scenery yesterday. The covid numbers are absolutely incredible and beyond my wildest imagination a month ago. Yesterday the UK reported c.219k new cases, France c.272k and the US 1.08 million. While these are alarming numbers it’s equally impressive that where the data is available, patients on mechanical ventilation have hardly budged and hospitalisations, while rising, are so far a decent level below precious peaks. Omicron has seen big enough case numbers now for long enough that even though we’ve had another big boost in cases these past few days, there’s nothing to suggest that the central thesis shouldn’t be anything other than a major decoupling between cases and fatalities. See the chart immediately below of global cases for the exponential recent rise but the still subdued levels of deaths. Clearly there is a lag but enough time has passed that suggests the decoupling will continue to be sizeable. It seems the main problem over the next few weeks is the huge number of people self isolating as the variant rips through populations. This will massively burden health services and likely various other industries. However hopefully this latest wave can accelerate the end game for the pandemic and move us towards endemicity faster. Famous last words perhaps but this variant is likely milder, is outcompeting all the others, and our defences are much, much better than they have been (vaccines, immunity, boosters, other therapeutic treatments). Indeed, President Biden directed his team to double the amount of Pfizer’s anti-covid pill Paxlovid they order; he called the pill a game changer. So a difficult few weeks ahead undoubtedly but hopefully light at the end of the tunnel for many countries. Prime Minister Boris Johnson noted yesterday that Britain can ride out the current Omicron wave without implementing any stricter measures, suggesting that learning to live with the virus is becoming the official policy stance in the UK. The head scratcher is what countries with zero-covid strategies will do faced with the current set up. If we’ve learnt anything from the last two years of covid it is that there is almost no way of avoiding it. Will a milder variant change such a stance? Markets seem to have started the year with covid concerns on the back burner as day 2 of 2022 was a lighter version of the buoyant day 1 even if US equities dipped a little led by a big under-performance from the NASDAQ (-1.33%), as tech stocks got hit by higher discount rates with the long end continuing to sell off to start the year. Elsewhere the Dow Jones (+0.59%) and Europe’s STOXX 600 (+0.82%) both climbed to new records, with cyclical sectors generally outperforming once again. Interestingly the STOXX Travel & Leisure index rose a further +3.11% yesterday, having already surpassed its pre-Omicron level. As discussed the notable exception to yesterday’s rally were tech stocks, with a number of megacap tech stocks significantly underperforming amidst a continued rise in Treasury yields, and the rotation towards cyclical stocks as investors take the message we’ll be living with rather than attempting to defeat Covid. The weakness among that group meant that the FANG+ index fell -1.68% yesterday, with every one of the 10 companies in the index moving lower, and that weakness in turn meant that the S&P 500 (-0.06%) came slightly off its record high from the previous session. Showing the tech imbalance though was the fact that the equal weight S&P 500 was +0.82% and 335 of the index rose on the day. So it was a reflation day overall. Staying with the theme, the significant rise in treasury yields we saw on Monday extended further yesterday, with the 10yr yield up another +1.9bps to 1.65%. That means the 10yr yield is up by +13.7bps over the last 2 sessions, marking its biggest increase over 2 consecutive sessions since last September. Those moves have also coincided with a notable steepening in the yield curve, which is good news if you value it as a recessionary indicator, with the 2s10s curve +11.3bps to +88.7bps over the last 2 sessions, again marking its biggest 2-day steepening since last September Those moves higher for Treasury yields were entirely driven by a rise in real yields, with the 10yr real yield moving back above the -1% mark. Conversely, inflation breakevens fell back across the board, with the 10yr breakeven declining more than -7.0bps from an intraday peak of 2.67%, the highest level in more than six weeks, which tempered some of the increase in nominal yields. The decline in breakevens was aided by the release of the ISM manufacturing reading for December, since the prices paid reading fell to 68.2, some way beneath the 79.3 reading that the consensus had been expecting. In fact, that’s the biggest monthly drop in the prices paid measure in over a decade, and leaves it at its lowest level since November 2020. Otherwise, the headline reading did disappoint relative to the consensus at 58.7 (vs. 60.0 expected), but the employment component was above expectations at 54.2 (vs. 53.6 expected), which is its highest level in 8 months and some promising news ahead of this Friday’s jobs report. Staying with US employment, the number of US job openings fell to 10.562m in November (vs. 11.079m expected), but the number of people quitting their job hit a record high of 4.5m. That pushed the quits rate back to its record of 3.0% and just shows that the labour market continues to remain very tight with employees struggling to hire the staff needed. This has been our favourite indicator of the labour market over the last few quarters and it continues to keep to the same trend. Back to bonds and Europe saw a much more subdued movement in sovereign bond yields, although gilts were the exception as the 10yr yield surged +11.7bps as it caught up following the previous day’s public holiday in the UK. Elsewhere however, yields on bunds (-0.2bps), OATs (-1.1bps) and BTPs (+0.9bps) all saw fairly modest moves. Also of interest ahead of tonight’s Fed minutes, there was a story from the Wall Street Journal late yesterday that said Fed officials are considering whether to reduce their bond holdings, and thus beginning QT, in short order. Last cycle, the Fed kept the size of its balance sheet flat for three years after the end of QE by reinvesting maturing proceeds before starting QT. This iteration of QE is set to end in March, so any move towards balance sheet rolloff would be a much quicker tightening than last cycle, which the article suggested was a real possibility. As this cycle has taught us time and again, it is moving much faster than historical precedent, so don’t rely on prior timelines. Balance sheet policy and the timing of any QT will be a major focus in tonight’s minutes, along with any signals for the timing of liftoff and path of subsequent rate hikes. Overnight in Asia markets are trading mostly lower with the KOSPI (-1.45%), Hang Seng (-0.85%), Shanghai Composite (-0.81%) and CSI (-0.67%) dragged down largely by IT stocks while the Nikkei (+0.07%) is holding up better. In China, Tencent cut its stake in a Singapore based company yesterday by selling $ 4 billion worth shares amidst China's regulatory crackdown with investors concerned they will do more. This has helped push the Hang Seng Tech Index towards its lowest close since its inception in July 2020 with Tencent and companies it invested in losing heavily. Moving on, Japan is bringing forward booster doses for the elderly while maintaining border controls in an effort to contain Omicron. Futures are indicating a weaker start in DM markets with the S&P 500 (-0.25%) and DAX (-0.11%) both tracking their Asian peers. Oil prices continued their ascent yesterday, with Brent Crude (+1.20%) hitting its highest level since the Omicron variant first emerged on the scene. Those moves came as the OPEC+ group agreed that they would go ahead with the increase in output in February of 400k barrels per day. And the strength we saw in commodities more broadly last year has also continued to persist into 2022, with copper prices (+1.12%) hitting a 2-month high, whilst soybean prices (+2.49%) hit a 4-month high. Looking at yesterday’s other data, German unemployment fell by -23k in December (vs. -15k expected), leaving the level of unemployment at a post-pandemic low of 2.405m in December. Finally, the preliminary French CPI reading for December came in slightly beneath expectations on the EU-harmomised measure, at 3.4% (vs. 3.5% expected). To the day ahead now, and data releases include the December services and composite PMIs from the Euro Area, Italy, France, Germany and the US. On top of that, there’s the ADP’s December report of private payrolls from the US, the preliminary December CPI report from Italy, and December’s consumer confidence reading from France. Separately from the Federal Reserve, we’ll get the minutes of the December FOMC meeting. Tyler Durden Wed, 01/05/2022 - 08:07.....»»

Category: blogSource: zerohedgeJan 5th, 2022

Futures Surge To A Record Above 4,800 As Euphoria Grips Global Markets

Futures Surge To A Record Above 4,800 As Euphoria Grips Global Markets US stock futures, European bourses and Asian markets all rose, extending the blistering start to 2022 (just as Goldman predicted in its $125 billion January inflow case), with more strategists cementing their bullish projections as investors shrugged off worries Omicron could choke the global economic recovery as data on U.S. manufacturing and job openings due today will further show the world’s largest economy is resilient against the spread of omicron. Nasdaq 100 futures rose 0.4% and contracts on the S&P 500 climbed 0.3% to a new all time high above 4,800 after the underlying gauge closed at a record on Monday. European stocks also gained. Waning demand for haven assets pushed the yen to a five-year low, while oil fluctuated ahead of an OPEC+ meeting. The dollar and U.S. treasury yields extended their surge - with the 10Y last yielding 1.6630% - after Monday’s worst start to a year since 2009. JPMorgan Chase & Co. strategists advised staying bullish on global stocks, saying positive catalysts are not exhausted, while Credit Suisse reiterated a bullish view on U.S. stocks. In premarket trading, Apple shares rose as much as 0.5%, putting the iPhone maker on track to reclaim $3 trillion in market cap as appetite for risk returns. Meanwhile, Jowell Global plunged 11% after a volatile trading session for the Chinese e-commerce stock on Monday that saw it plunge 59%. Travel stocks rallied for a second day even as the U.S. reported a record of over 1 million Covid cases, amid growing evidence that the omicron variant leads to milder infections. The S&P Supercomposite Airlines Index rose 3.3% Monday to the highest since Nov. 24 and appears set for further gains Tuesday. Most airline companies rose about 1% in premarket trading, while cruise lines were also higher with Carnival +1.8%, Royal Caribbean +1%, Norwegian +1.4%. General Electric rose after the stock was raised to outperform at Credit Suisse and Hewlett Packard Enterprise climbed with an overweight rating from Barclays. Here are some other notable pre-market movers today: Coca-Cola (KO US) sits in a stronger position following a transition year in 2021, Guggenheim Securities writes in note upgrading to buy after almost exactly a year with a neutral stance. Shares up 1% in premarket. Stryker (SYK US) and Globus Medical (GMED US) both upgraded to overweight at Piper Sandler, which says in a note that the two stocks have momentum to continue delivering above-average share performance this year. Stryker up 1.4% premarket. Tiny U.S. biotech stocks gain in high premarket volume amid a broader return of risk appetite and following positive updates on studies. Oragenics (OGEN US) +23%, Indaptus Therapeutics (INDP US) +7%. Intra-Cellular Therapies (ITCI US) falls 7% in premarket after launching a $400 million share sale. AFC Gamma (AFCG US) falls 11% premarket after launching a stock offering. Core & Main (CNM US) dropped 7.6% postmarket after holders offered a stake. In Europe, the Euro STOXX 600 gained as much as 0.9% in early trading, pushing beyond its all-time high of 489.99 points scaled a day earlier, with the FTSE 100 and CAC 40 up over 1.25%. Travel and leisure stocks jumped 2.7%, with Ryanair adding 8% and British Airways-owner IAG gaining over 9%, reflecting expectations Omicron's impact on the industry would be less severe than initially feared. Euro Stoxx 50 added as much as 1% with travel, autos and banks the best performing sectors so far. Investors have set aside worries about the highly infectious omicron variant as they continue to trade on the economic recovery from the pandemic which may soon be ending thanks to Omicron which could make covid endemic. “Globally, there is a lot of news regarding the rising omicron cases, but there is also a lot of news that the cases are not as deadly as the previous variants of Covid,” Ipek Ozkardeskaya, a senior analyst at Swissquote, wrote in a note. “And investors prefer focusing on a glass half full rather than a glass half empty at the start of the year.” "The chief reason behind the return of investor confidence is Omicron," said Jeffrey Halley, an analyst at Oanda. Yes, the virus variant is much more contagious, but it is not leading to a proportionally larger number of hospital admissions... (so) it won't stop the global economic recovery." This, incidentally, is precisely what we said over a month ago. That said, markets anticipate an uptick in volatility as they navigate through the omicron variant, supply-chain disruptions and more central banks winding back pandemic stimulus. More than one million people in the U.S. were diagnosed with Covid-19 on Monday, a new global daily record, and yet markets barely winced. Asian stocks gained behind rallies in Japan and Australia on their first trading sessions of 2022, with much of the region tracking the strong performance in the U.S. as investors maintained growth optimism despite a worsening pandemic.  The MSCI Asia Pacific Index rose as much as 1%, the most in two weeks, lifted by technology and financial shares. Metals and mining stocks gave the Australian benchmark gauge a boost, while a weaker yen allowed exporters to provide support for Japan’s Topix. Chinese stocks bucked the regional trend to suffer their weakest start to a year since 2019. The CSI 300 Index fell 0.5% as some investors took profit and assessed developments in the property sector while renewable energy and health-care firms paced declines. Also souring the mood, the People Bank of China cut its net injection of short-term cash to the markets, prompting concerns over support for the financial system. Tuesday’s activities in Asia also showed some traders setting aside their worries over the rapid spread of omicron strain for now to bet on resilience in the global economy.  While the omicron variant will be a negative factor in the short term, Chinese equities will likely help drive emerging markets higher in 2022 as monetary and fiscal stimulus spur economic growth, said Kristina Hooper, chief global market strategist at Invesco.  The Philippine Stock Exchange had to cancel trading following a system glitch, according to a statement by bourse President Ramon Monzon Japanese equities rose in their first trading session of the year, helped by the yen’s drop to a five-year low and a tailwind from U.S. peers’ climb to fresh all-time highs. Electronics and auto makers were the biggest boosts to the Topix, which gained 1.9%, the most in four weeks. All industry groups advanced except papermakers and energy explorers. Tokyo Electron and Advantest were the largest contributors to a 1.8% rise in the Nikkei 225.  The S&P 500 rose to a record and Treasury yields climbed Monday as traders braced for the start of a potentially volatile year and three expected rate hikes from the Federal Reserve. The White House is likely to nominate economist Philip Jefferson for a seat on the Fed board of governors, according to people familiar with the matter. “It’s gradually coming to light who will be the new members of the FRB and it looks like they will be those with quite a dovish stance, which very supportive factor for stocks,” said Hiroshi Matsumoto, senior client portfolio manager at Pictet Asset Management in Tokyo.  Australian stocks jumped themost in over a year, with fresh records in sight. The S&P/ASX 200 index rose 2% to 7,589.80, marking its best session since October 2020. The benchmark closed about 40 points away from the all-time high it reached in August as all sectors gained. Pilbara Minerals was among the top performers, jumping to a record. St. Barbara was among the worst performers after giving an update on its Simberi mine. In New Zealand, the market was closed for a holiday. India’s Sensex rallied for a third day as the outlook for lenders improved on the back of a continued recovery in the economy.  The S&P BSE Sensex rose 1.1% to 59,855.93 in Mumbai, while the NSE Nifty 50 Index rallied 1%. All but three of the 19 sector sub-indexes compiled by BSE Ltd. climbed, led by a gauge of power companies. The S&P BSE Bankex added 1.3% to stretch its rally to a fourth day, its longest streak of gains since Oct. 26.   Financial stocks in India offer an attractive entry point after foreign funds sold more than $3 billion of sector stocks over Nov.-Dec., Jefferies analyst Prakhar Sharma wrote in a note. He expects improved growth, stable asset quality and manageable omicron impact to aid a re-rating of the sector. “Markets are currently following their global counterparts while the domestic factors are showing mixed indications,” Religare Broking analyst Ajit Mishra said in a note.  Reliance Industries contributed the most to the Sensex’s gain on Tuesday, increasing 2.2%. Out of 30 shares in the index, 25 rose and five fell. In FX, Bloomberg Dollar Spot Index trades notably higher for the second day in a row, with AUD and CHF top the G-10 leader board, while the JPY lags pushing through Asia’s worst levels near 116.31/USD.  The euro was confined in a narrow range around $1.13 while the greenback weakened versus all of its Group-of-10 peers apart from the yen and risk-sensitive currencies were the best performers. The pound edged higher, continuing its ascent over the holiday period that was based on firmer global risk sentiment and bets the U.K. economy won’t be derailed by omicron. Gilts slumped as traders caught up with Monday’s jump in U.S. and euro-area yields after the U.K. was closed for a holiday. Australia’s government bonds and the nation’s currency both rose amid speculation the global economic recovery will weather the surge in omicron infections. New Zealand’s markets remained shut for New Year holidays. Purchasing managers’ index for the Australia’s manufacturing sector declined for the first time in four months in December, Markit data showed. The yen dropped to a five-year, with the USDJPY rising above 116 as speculation the global economic recovery will weather omicron saps demand for haven assets. Japanese bonds declined before debt auctions later this week. Options pricing suggests there may be more gains for the dollar in a rally against the yen that’s already taken it to the strongest since 2017. In rates, 10-year Treasury yield spiked to 1.66% after surging 12 basis points on Monday, the biggest jump to start a year since 2009. The two-year rate was at 0.77%. Treasury yields were cheaper by up to 1.5bp across front- and belly of the curve with long-end yields slightly richer vs. Monday close. IG dollar issuance includes a number of bank names headed by NAB 5-part offering. Three-month dollar Libor +0.69bp at 0.21600%. Bunds richen 1.5bps across the belly with a mixed peripheral complex with expectations for a busy issuance slate ahead. Gilts underperform, playing catch up to Monday’s move in bunds and treasuries, cheapening as much as 10bps across the curve with 10s near 1.07%. Looking beyond the current risk-on momentum, traders expect Fed tightening to further boost yields and reset equity valuations. This week’s U.S. December payroll data and minutes from the Fed’s meeting last month may throw more light on the pace of such shift. “We expect 2022 to be far more challenging from an investment perspective,” Heather Wald, vice president at Bel Air Investment Advisors, said in an emailed note. “Rarely has a market delivered three consecutive years of double-digit returns, as we have seen from 2019-2021. With the Federal Reserve set to accelerate tightening and a fairly valued stock market, we anticipate more muted returns for the S&P next year but still expect equities to remain attractive versus other liquid asset classes.” In commodities, crude futures flip a short-lived dip to rise ~0.7%. WTI trades near best levels of the session close to $76.70, Brent near $79.50 ahead of today’s OPEC+ gathering. Spot gold trades a tight range, holding above $1,800/oz. Base metals are mixed, LME copper underperforms. U.S. economic data slate includes the December ISM manufacturing survey, which will show the early impact of the variant on supply chains, while the JOLTS data will show the balance between job openings and unemployment numbers; also this week brings ADP employment change, durable goods orders and December jobs report. Market Snapshot S&P 500 futures up 0.3% to 4,799 STOXX Europe 600 up 0.5% to 492.53 German 10Y yield little changed at -0.13% Euro little changed at $1.1307 MXAP up 0.9% to 194.72 MXAPJ up 0.6% to 633.00 Nikkei up 1.8% to 29,301.79 Topix up 1.9% to 2,030.22 Hang Seng Index little changed at 23,289.84 Shanghai Composite down 0.2% to 3,632.33 Sensex up 1.1% to 59,815.19 Australia S&P/ASX 200 up 1.9% to 7,589.76 Kospi little changed at 2,989.24 Brent Futures up 0.4% to $79.26/bbl Gold spot up 0.3% to $1,806.40 U.S. Dollar Index little changed at 96.18 Top Overnight News from Bloomberg Treasury traders are betting the rapid spread of omicron will increase inflationary pressures in the U.S. economy, rather than weaken them Global central banks are set to spend 2022 diverging, as some take on the menace of inflation and others stay focused on boosting economic growth French inflation stabilized in December, indicating price pressures may be near a peak in the euro area after surging on energy costs in the past few months OPEC and its allies are poised to revive more halted oil production when they meet on Tuesday after predicting a tighter outlook for global markets A more detailed breakdown of global markets courtesy of Newsquawk Asia-Pac stocks eventually traded mixed on the first trading session of the year for most bourses, with the region catching some tailwinds from the positive Eurozone and US sessions on Monday. On Wall Street, the Nasdaq outpaced with gains of 1.2% as Apple became the first-ever public company to reach USD 3tln in market value, whilst Tesla shares were catapulted 13.5% after beating Q4 delivery expectations despite the chip shortage and in spite of last week's mass recall. US equity futures overnight resumed trade with a mild positive bias and thereafter drifted higher - with the US ISM Manufacturing PMI, FOMC Minutes, US labour market report and Fed speakers all on this week’s docket. The ASX 200 (+2.0%) saw gains across its Energy, Mining, Tech and Financial sectors. The Nikkei 225 (+1.8%) briefly dipped under 29k before rising to session highs – with Autos among the top gainers amid a similar performance Stateside, whilst the softer JPY underpinned the index. The KOSPI (U/C) was flat in early trade but thereafter swung between gains and losses. In China, the Shanghai Comp (-0.2%) gave up early gains on its first trading day of 2022 following a CNY 260bln daily liquidity drain by the PBoC, whilst reports also suggested that China is facing USD 708mln cash demand this month, +18% Y/Y according to calculations, amid maturing debt and seasonal demand for cash ahead of the Lunar New Year on 1st February. The Hang Seng (+0.1%) kicked off its second day of trade the year in the green after Monday’s losses. China Evergrande shares resumed trade with gains of 5% after it yesterday suspended its Hong Kong shares in a bid to raise cash and following the order to demolish 39 buildings. Meanwhile, Hong Kong-listed and US-blacklisted AI firm SenseTime shares rose another 20% to almost triple its IPO price. In fixed income, US 10yr Mar'22 futures saw some light buying in early trade, with some suggested regional Asia demand following the heavy cheapening on Monday, albeit this early mild upside faded. Top Asian News Amazon Plays Down Reports It’s Pulling Kindle From China H.K. Finds One Prelim. Local Case With Unknown Source: HK01 China High-Yield Dollar Bonds Fall 1-2 Cents; Developers Lead China South City USD Bonds Slump; Firm Denies Debt-Swap Report European equities trade on a firmer footing with the Stoxx 600 (+0.8%) once again at a record high. The FTSE 100 leads the charge within the region; however, this is largely on account of a catch-up play from yesterday’s bank holiday. Initially to the downside resided the SMI (+0.1%) as the only major bourse in the red amid losses in index-heavyweight Roche (-1.4%); however, this has abated modestly throughout the morning. The lead from the APAC region was a mixed one as the Nikkei 225 (+1.8%) benefited from a softer JPY, the ASX 200 (+1.95%) was lifted by gains in Energy, Mining, Tech and Financial sectors, whilst Chinese bourses (Hang Seng +0.1%, Shanghai Comp. -0.2%) were kept subdued by a PBoC liquidity drain and unable to benefit from an unexpected expansion in the December Chinese Caixin Manufacturing PMI. Stateside, futures are modestly firmer across the board (ES +0.4%, NQ +0.4%, RTY +0.5%) after yesterday’s session which was characterised by Nasdaq outperformance, +1.2%, as Apple became the first-ever public company to reach USD 3tln in market value, whilst Tesla shares were catapulted 13.5% after beating Q4 delivery expectations. In a recent note, analysts at JP Morgan stated they are of the view that there is further upside for stocks as the Omicron variant appears to be milder than previous strains and the impact on mobility is more manageable than previous ones. Furthermore, the bank suggests that there are signs that constraints in supply chains are passing their peak and power prices are easing. Sectors in Europe are mostly firmer with Travel & Leisure names clearly top of the pile UK as airline names benefit from ongoing optimism about the Omicron variant’s impact on mobility and a December passenger update from Wizz Air which has sent its shares higher by 10.1%. Of note for the European banks (which are also a notable gainer on the session), Citigroup is “overweight” on the sector for the upcoming year, citing profit growth, interest rate hikes and potential for capital returns. In terms of specific names, BNP Paribas, Lloyds and UBS were flagged as top picks. Elsewhere, other cyclically-led sectors such as Autos, Oil & Gas and Basic Resources are also trading on a firmer footing. To the downside, Healthcare names sit in the red amid aforementioned losses in Roche, whilst Sanofi (-0.7%) are also seen lower after flagging that Q4 2021 vaccine sales are expected to be lower on a Y/Y basis. Finally, Rolls-Royce (+3.6%) is seen higher on the session after concluding the sale of Bergen Engines. Top European News Italy Starts Search for New President With Draghi as Contender U.K. Mortgage Approvals Fall to 66,964 in Nov. Vs. Est. 66,000 Ukraine Says Russia Reinforced Military Units in Occupied Donbas European Gas Prices Jump a Second Day as Russian Shipments Drop In FX, the Dollar index looks comfortable enough above 96.000 within a 96.336-146 range after eclipsing yesterday’s best (96.328) marginally, but the technical backdrop remains less constructive given its failure to end last week (and 2021) above a key chart level at 96.098. Nevertheless, the most recent spike in US Treasury yields has given the Greenback sufficient impetus to claw back losses, and in DXY terms fresh incentive to rebound firmly or extend gains against funding currencies in particular ahead of the manufacturing ISM and the remainder of a hectic first week of the new year that culminates in NFP and a trio of scheduled Fed speakers, but also comprises minutes of the December FOMC taper and more hawkishly aligned tightening policy meeting. JPY/AUD - As noted above, low yielders are underperforming or lagging in the current environment, and the Yen is also succumbing to the increasingly divergent BoJ vs Fed trajectory that is exacerbating technical forces behind the rally in Usd/Jpy to new 5 year highs just shy of 115.90. Stops are said to have been triggered during the latest leg up and there is little of significance in terms of resistance ahead of 116.00, while option expiry interest is relatively light until 1.13 bn at the half round number above. Conversely, the Aussie has been boosted by higher coal prices overnight and an unexpected return to growth from contraction in China’s Caixin manufacturing PMI, with Aud/Usd trying to establish a base around 0.7200 in wake of an upward revision to the final manufacturing PMI. GBP/NZD/EUR/CHF/CAD - The Pound is next best major, but mainly due to Gilts playing catch-up following Monday’s UK Bank Holiday and only in part on the back of an upgrade to the final manufacturing PMI allied to better than forecast BoE data including consumer credit, mortgage lending and approvals. Cable is probing 1.3500 and Eur/Gbp is edging towards 0.8360 even though the Euro has regained some poise against the Buck to retest 1.1300 with some traction gleaned from stronger than anticipated German retail sales and jobs metrics. Back down under, the Kiwi is trying to keep tabs on 0.6800 in the face of Aud/Nzd headwinds as the cross climbs over 1.0600, while the Franc is holding above 0.9200 post-Swiss CPI that was close to consensus and the Loonie is meandering between 1.2755-23 parameters pre-Canadian PPI and Markit’s manufacturing PMI against the backdrop of firmer crude prices. In commodities, WTI and Brent are firmer this morning and have been grinding towards fresh highs throughout the European session after slightly choppy APAC trade; currently, the peaks are USD 76.82/bbl and USD 79.67/bbl respectively. Newsflow has been fairly slow throughout the morning with catch-up action occurring for participants. Today’s focal point for the space is very much the OPEC+ gathering; albeit, this is expected to result in a continuation of the existing quota adjustments of 400k BPD/month. Thus far, the JTC has reviewed market fundamentals and other developments determining that the Omicron variant’s impact is expected to be both mild and short-term. For reference, today’s timings are 12:00GMT/07:00EST for the JMMC and 13:00GMT/08:00EST for OPEC+ - though, as always with OPEC, these serve only as guidance. While the main decision is expected to be a straightforward one, there is the possibility that underproduction by certain members could cause some tension. Elsewhere, spot gold and silver are contained with a modest positive-bias but are yet to stray too far from the unchanged mark with spot gold, for instance, in a sub-USD 10/oz range just above USD 1800/oz. Separately, coal futures were notable bid in China following reports that Indonesia, a large supplier to China, has banned exports for the month, given domestic power concerns. US Event Calendar 10am: Nov. JOLTs Job Openings, est. 11.1m, prior 11m 10am: Dec. ISM Employment, est. 53.6, prior 53.3 ISM New Orders, est. 60.4, prior 61.5 ISM Prices Paid, est. 79.2, prior 82.4 ISM Manufacturing, est. 60.0, prior 61.1         Tyler Durden Tue, 01/04/2022 - 07:59.....»»

Category: blogSource: zerohedgeJan 4th, 2022

Futures, Global Markets Start 2022 With A Bang

Futures, Global Markets Start 2022 With A Bang If 2021 ended with a whimper, then 2022 is starting off with a bang, as futures on all major U.S. equity indexes rise on the first trading day of the year amid light volumes with markets including the U.K., Japan China, Australia and New Zealand closed for holidays. Europe’s Stoxx 600 rose 0.6%. In Hong Kong, property shares dropped and China Evergrande Group halted trading without an explanation. The dollar rose, as did bond yields and bitcoin, while oil erased earlier gains.  At 745am, emini S&P futures traded 29 points, or 0.61% higher, and rising as high as 4,790, just inches away from all time highs of 4,799.75; Dow futs were 172 points or 0.48% higher and the Nasdaq was also in the green by 29 points or 0.6%. Investors continue to weigh the impact of the rapid spread of the omicron Covid-19 variant on the economic recovery, even as it appears less severe than earlier strains. Investors are also focusing on the policy trajectory of the Federal Reserve and other central banks into 2022, particularly as inflation continues to present a challenge. In premarket moves, Tesla’s shares climbed 6.8% in U.S. premarket trading after the company reported record quarterly deliveries.  Alibaba ADRs dropped in premarket trading with shares listed in Hong Kong on concern that some investors may pare stakes amid data showing the conversion of company’s ADRs into Hong Kong shares has picked up pace. And with the new year, broad, sweeping assessments are hitting the tape, such as this one from Jefferies strategist Sean Darby who wrote that last year “was simply a period of ‘risk on,’” adding that “peering into 2022, we expect volatility to rise, meaning that the return per unit of risk comes to the forefront." European equities rose on the first day of trading in 2022 and headed for a record on bets that the global economy can weather the impact of the omicron coronavirus variant. The Stoxx Europe 600 Index rose 0.5% to 490.47, above the record closing level set in November, led by gains by automakers and chemical sector companies. Meanwhile, the Euro Stoxx 50 climbed 0.9%. U.K. markets were closed for a holiday on Monday. European stocks had climbed 22% last year and have posted seven consecutive quarters of gains -- the longest winning streak since 1998. Most strategists expect this year’s returns to be more muted, with an average target of 506 index points for the Stoxx 600. Among individual movers, Vestas Wind Systems A/S dropped after the company announced details of its fourth-quarter order intake. Sydbank AS said the order tally was “weak.” Asian stocks were mixed on their first trading session of 2022, with Hong Kong’s benchmark gauge dropping on concerns over the spread of the omicron variant and the financial health of China’s real estate sector.    The MSCI Asia Pacific Index was little changed after rising as much as 0.3%, weighed down by consumer discretionary and health-care firms. Hong Kong’s Hang Seng Index slid 0.5%, with Chinese developers tumbling on media reports that China Evergrande Group has been ordered to tear down apartment blocks in Hainan province. Read: Property Stocks Sink After Demolition Order: Evergrande Update Shares in Hong Kong also dropped amid a fresh wave of infections tied to an outbreak at a local restaurant. The city administered more than 7,000 initial injections on both Saturday and Sunday, the most since the end of November. “Any further restrictions to curb virus spreads remain a key risk to watch, and more clarity will be sought from economic data over the coming weeks to validate the resilience of the economy” of the U.S., said Jun Rong Yeap, a strategist at IG Asia Pte in Singapore. Malaysia’s stock index was the region’s worst performer, dropping 1.2%, while South Korea and Taiwan equities rose. Markets in mainland China, Japan, Australia and New Zealand were closed for holidays. Asia’s stock benchmark capped an annual loss of 3.4% in 2021 in its worst performance since 2018, lagging behind the U.S. and Europe. India’s key equity gauges posted their best gain in nearly four weeks, led by a rally in banking and software stocks as investors shift focus to the upcoming corporate earnings season for the latest quarter.  The S&P BSE Sensex rose 1.6% to 59,183.22 in Mumbai, the most since Dec. 8. The benchmark also posted its biggest advance on the first trading day of a new year since 2009. The NSE Nifty 50 Index gained by a similar magnitude on Monday. All of the 19 sector sub-indexes compiled by BSE Ltd. climbed, led by gauges of banking and financial companies. The corporate earnings season for the December quarter will start with Infosys and Tata Consultancy Services announcing results on Jan. 12. Investors will be focusing on the software exporters’ commentary on demand amid rising cost pressures. HDFC Bank contributed the most to the index gain, increasing 2.7%. Out of 30 shares in the Sensex index, 25 rose and five fell With much of Europe including the U.K. on bank holiday, Treasuries reopen around 7am ET with yields cheaper by 2bp to 4bp across the curve and losses led by belly.  U.S. 10-year yields around 1.535%, cheaper by ~2bp vs Friday’s close, while 5-year yields are higher by more than 3bp; 5s30s is flatter by ~1bp. Gains for most European stock benchmarks add to cheapening pressure on yields, as S&P 500 futures trade above Friday’s high.  Ahead of the cash open Treasury futures edged lower during Asia session European morning on light volume as S&P 500 futures advanced toward last week’s record highs. In FX, the Bloomberg Dollar Spot Index inched up and the dollar traded mixed against its Group-of-10 peers in thin trading, with Japan, Australia and New Zealand markets shut for holidays. The Canadian dollar was the worst performer while the New Zealand dollar climbed against all of its Group-of-10 peers. The euro slipped to trade around $1.1350 and Bund yields rose, led by shorter maturities, while European peripheral spreads narrowed. In commodities, in early trading oil rose towards $79 a barrel on Monday supported by tight supply and hopes of further demand recovery in 2022 spurred in part by a view that the Omicron coronavirus variant is unlikely to significantly dampen the outlook. Libyan oil output will be cut by 200,000 barrels per day for a week due to pipeline maintenance. OPEC and its allies, known as OPEC+, are expected to stick to a plan to raise output gradually at a meeting on Tuesday. Brent crude rose 95 cents, or 1.2%, to $78.73 a barrel. West Texas Intermediate crude added $1.03 or 1.4%, to $76.24. Last year, Brent rose 50%, spurred by the global recovery from the COVID-19 pandemic and OPEC+ supply cuts, even as infections reached record highs worldwide. "Infection rates are on the rise globally, restrictions are being introduced in several countries, the air travel sector, amongst others, is suffering, yet investors' optimism is tangible," said Tamas Varga of oil broker PVM. "It seems that the current strain produces less severe symptoms than its predecessors, which might just help us to struggle through the fourth wave of the pandemic." Some see more gains in 20222: "Crude and oil product prices should benefit from oil demand moving above 2019 levels," said a report from UBS analysts including Giovanni Staunovo. "We expect Brent to rise into a $80–90 range in 2022." Key U.S. events this week include minutes of the December FOMC meeting and non-farm payrolls; on deck today is the Flash Markit Manufacturing PMI read for December as well as the November construction spending data. Market Snapshot S&P 500 futures up 0.5% to 4,781.25 STOXX Europe 600 up 0.5% to 490.21 MXAP little changed at 193.17 MXAPJ little changed at 630.24 Nikkei down 0.4% to 28,791.71 Topix down 0.3% to 1,992.33 Hang Seng Index down 0.5% to 23,274.75 Shanghai Composite up 0.6% to 3,639.78 Sensex up 1.6% to 59,208.86 Australia S&P/ASX 200 down 0.9% to 7,444.64 Kospi up 0.4% to 2,988.77 Brent futures up 1.6% to $78.99/bbl Gold spot down 0.1% to $1,827.19 U.S. Dollar Index up 0.1% to 95.80 German 10Y yield little changed at -0.18% Brent futures up 1.4% to $78.83/bbl Top Overnight News from Bloomberg Senate Majority Leader Chuck Schumer is vowing to bring a revised version of the $2 trillion tax, climate and spending package to the floor for a vote as soon as this month, despite unresolved differences within his party that have stalled the legislation President Joe Biden reaffirmed U.S. support for Ukraine’s sovereignty on Sunday in a call with the country’s president, Volodymyr Zelenskiy Germany’s Finance Minister Christian Lindner said the new government is working on tax relief measures of more than 30 billion euros ($34 billion) Turkish inflation surged to a 19-year high in December, propelled by a slump in the lira and President Recep Tayyip Erdogan’s push for cheaper borrowing Asia’s factory activity continued its expansion in December, lifted by resilient demand and easing supply-chain bottlenecks as the omicron strain begins to spread in the region Top Asian News North Korean Defector Likely Crossed DMZ Twice, Seoul Says Property Stocks Sink After Demolition Order: Evergrande Update Alibaba Drops on Concern Over Conversion of ADRs to H.K. Shares Hong Kong’s Stock Benchmark Marks Its Worst Start in Three Years Star China Stock Fund Manager Suffers a Disastrous 2021 Tokyo Finds 103 New Covid Cases, Most in Nearly Three Months Top European News Nordea Analysts Who Wrote Retracted Report to Leave Bank Iveco Valued at $4.4 Billion in Spinoff to Navigate Truck Shift Germany Heads Toward New Pandemic Measures as Omicron Threatens US Event Calendar 9:45am: Dec. Markit US Manufacturing PMI, est. 57.7, prior 57.8 10am: Nov. Construction Spending MoM, est. 0.7%, prior 0.2% Tyler Durden Mon, 01/03/2022 - 08:02.....»»

Category: blogSource: zerohedgeJan 3rd, 2022

Futures Ramp Above 4,700 On Growing Omicron Optimism

Futures Ramp Above 4,700 On Growing Omicron Optimism If you had gone to bed on Thanksgiving after eating a little too much tryptophan and only woken up today, roughly one month later, you would have completely avoided a rollercoaster move in global markets, and much of the omicron panic, with the S&P now trading precisely where it was the night before scattered reports of Omicron in South Africa sparked a global selloff. As of 730am, e-mini S&P futures were trading at exactly 4,700, up 14 points or 0.3% - and once again less than 1% from all time highs - on rising hopes the omicron variant won’t impact global growth even as officials remain cautious about its spread, after studies showed it’s less severe than other strains; Dow Jones futures also rose 0.3% while Nasdaq 100 futures were 0.2% higher. US Treasury yields rose, the 10Y trading at 1.475%, while the USD index traded flat. The  pound rose as traders stepped up bets on a Bank of England rate hike. Soaraing European natural gas prices plunged more than 20% as this year’s rally attracted a flotilla of U.S. cargoes, helping offset lower flows from Russia. U.S. stocks reversed a sharp drop earlier in the week, advancing over the past two days amid signs the omicron variant won’t thwart growth, with consumer confidence rising by more than expected in December. Pfizer Inc.’s Covid-19 pill gained clearance for emergency use in the U.S. on Wednesday and three studies showed omicron appears less likely to land patients in the hospital than the delta strain, fueling optimism.  Adding to the positive newsflow on omicron, lab results indicated a third dose of AstraZeneca Plc’s vaccine significantly boosted antibodies against the strain, and Pfizer Inc.’s Covid-19 pill gained clearance for emergency use in the U.S. “Markets hate uncertainty and not knowing, and when omicron hit the markets, we didn’t know,” Carol Schleif, BMO Family Office deputy chief investment officer, said on Bloomberg Television. “But it seems like it’s edging toward something more positive.” A gauge of global stocks is up more than 2% so far this month, leaving the index 15% higher for the year and on course to surpass 2020’s gain. In U.S. premarket trading, Tesla Inc. shares rose after Chief Executive Officer Elon Musk sold down more of his stake. Nikola gained after the electric-vehicle startup said that more deliveries were to come. Here are some other notable premarket movers today: Novavax (NVAX US) shares jump 5% in U.S. premarket after the biotech firm said that both a vaccine booster dose as well as an omicron-specific shot may be beneficial in helping to protect against the Covid-19 variant. Nikola (NKLA US) rises 3.5% in U.S. premarket trading after the electric-vehicle startup said on Twitter that more deliveries were to come, posting photos of a previous event. Tesla (TSLA US) shares gain 1.1% in U.S. premarket trading after CEO Elon Musk sells down more of his stake, drawing nearer to his pledge of cutting his stake in the EV maker by 10%. JD.com’s (JD US) ADRs slump 9.2% in U.S. premarket trading after Tencent said it plans to hand out more than $16 billion of JD.com shares to its investors as a one-time dividend. SciPlay (SCPL US) the maker of mobile and web games such as Jackpot Party Casino, falls 17% in premarket after ending talks to sell out to majority owner Scientific Games. Shares in tiny biotech stocks soar in U.S. premarket trading in strong volume, amid broad risk-on appetite thanks to positive omicron variant studies, ahead of the holiday period. “Our outlook for the global economy remains positive, but we have preference on developed markets,” Janet Mui, director of investment at Brewin Dolphin Limited, said in an interview with Bloomberg TV. “The economic recovery will continue in the major economies like the U.S., U.K. and the Euro area, thanks to the very high vaccination rates and ongoing rollout of the booster jabs.” Elsewhere, European shares advanced for a third day, with travel shares leading gains. The Euro Stoxx 50 rose 0.6%; travel is the strongest sector with recent studies showing omicron appears less likely to land patients in the hospital than the delta strain. IBEX leads with a 1% gain. Travel and leisure was the top-performing sector in Europe on Thursday amid optimism of fewer hospitalizations linked to the omicron variant of Covid-19. Airlines shruged off a profit warning from Ryanair (+1.1%) that was first reported late in the trading session on Wednesday. British Airways-owner IAG adds 3.7%, Wizz +3.3%, hotelier Whitbread +2.6%, Deutsche Lufthansa +2%, caterer Sodexo +0.8%. Stoxx travel and leisure index also helped by Flutter (+3%) which gains following M&A news Earlier in the session, Asian stocks were on track to gain for a third straight day, bolstered by signs the omicron strain is less severe than previous variants. Tech and communication services sectors led the advance. The MSCI Asia Pacific Index climbed as much as 0.9%, with Tencent as the biggest contributor to gains after a 4.2% rally in Hong Kong. The Chinese internet giant declared a one-time dividend in the form of JD.com’s shares worth more than $16 billion, causing the latter’s stock to plunge intraday by the most on record. Sentiment in Asia improved as a trio of studies found that the omicron variant led to lower hospitalization risk than the delta strain, and Pfizer Inc.’s Covid-19 pill gained clearance for emergency use in the U.S. Separately, lab results indicated a third dose of AstraZeneca’s vaccine significantly boosted antibodies against the strain though another study released late in the Asia day found that three doses of Sinovac’s vaccine weren’t enough to protect against it. “We expect Asian equities to improve their relative performance in 2022 given less demanding valuations and prospects for solid earnings growth,” said Tai Hui, Asia chief market strategist at JPMorgan Asset Management. “Reflation and economic reopening could help to boost earnings expectations for cyclical sectors, especially those focusing on domestic demand.” The MSCI Asia Pacific Index is down almost 4% for the year compared with a 25% gain in the S&P 500 Index, which is trading close to a record high.  Equity benchmarks in the Philippines, Malaysia and Thailand were among the top gainers amid a broad advance in the region Thursday even as trading volumes were thin ahead of the Christmas holidays. Japan stocks also rose as the country looks set to unveil another record annual budget this week. Shares in China also rose even as the country locked down the western city of Xi’an to stamp out a persistent virus outbreak. Equities slumped in Vietnam as Covid-19 cases continued to rise. In rates, fixed income is thin with only ~100k bund futures contracts trading as of 10:50am London. Cash space is under small pressure: bunds and USTs bear steepen, gilts bear flatten with short dates ~5bps cheaper. 10-year TSY yields were around 1.47%, with gilts notably underperforming and are cheaper by around 3bp in the sector vs. Treasuries; curves are steady with U.S. cash spreads broadly within a basis point of Wednesday close. Treasuries drifted lower into early U.S. session as S&P futures grind higher. 10-year futures remained inside Wednesday session lows with yields cheaper by up to 2bp across long-end of the curve. Thursday’s highlights include a packed data slate, and cash markets are due for an early 2pm ET close ahead of Friday’s full closure. In FX, tge Bloomberg dollar index chopped either side of flat. The pound was the stand out mover in London hours, topping the G-10 leaderboard with cable regaining a 1.34 handle. USD/JPY was little changed as it holds above 114. Aussie dollar drifts back towards 0.72 against the greenback. Bloomberg Dollar Spot Index is steady after falling for three days. In commodities, crude futures are little changed; WTI trades near $72.70. Spot gold is rangebound, holding just above $1,800/oz. Most base metals are in the green, drifting higher in quiet trade. LME copper and tin lag. European natural gas prices plunged more than 20% as this year’s rally attracted a flotilla of U.S. cargoes, helping offset lower flows from Russia. Looking at today's calendar, we get personal spending and income as well as a new look at inflation data, including the Fed’s preferred price measure -- the change in the core personal consumption expenditures price index -- and jobless claims. We also get the latest Durable goods orders, UMichigan sentiment and new home sales prints. Market Snapshot S&P 500 futures up 0.1% to 4,692.00 STOXX Europe 600 up 0.4% to 480.16 German 10Y yield little changed at -0.28% Euro little changed at $1.1317 MXAP up 0.9% to 192.23 MXAPJ up 0.8% to 623.33 Nikkei up 0.8% to 28,798.37 Topix up 0.9% to 1,989.43 Hang Seng Index up 0.4% to 23,193.64 Shanghai Composite up 0.6% to 3,643.34 Sensex up 0.7% to 57,350.50 Australia S&P/ASX 200 up 0.3% to 7,387.57 Kospi up 0.5% to 2,998.17 Brent Futures down 0.4% to $74.99/bbl Gold spot up 0.2% to $1,807.61 U.S. Dollar Index little changed at 96.16 Top Overnight News from Bloomberg The highly-mutated omicron variant appears less likely to land patients in the hospital with Covid-19 than the delta strain, according to preliminary data from a trio of studies France reported a jump in Covid-19 infections as the fast-spreading omicron variant tightens its grip on Europe The Chinese yuan is having a greater impact on its emerging-market counterparts than ever before and may play a crucial role in determining their performance in the coming year New Prime Minister Fumio Kishida’s rhetoric of distributing wealth more equally appears to signal a change of priorities for post-pandemic Japan that may run counter to plans to improve the country’s presence as an international financial hub Oil settled at the highest level in nearly a month after U.S. crude stockpiles decreased and economic data pushed equities higher A more detailed look at global markets courtesy of Newsquawk Asia-Pac equities traded modestly higher amid some tailwinds from Wall Street in holiday-thinned trade and the absence of fresh catalysts. The US majors closed in the green across the board, with the S&P 500 and Nasdaq propelled higher by Tesla shares which jumped 7.5% to regain USD 1tln market cap. US equity futures resumed trade relatively flat with an upside bias. In APAC, the ASX 200 (+0.3%) was supported by its gold miners following the recent gains in the yellow metal. Japan’s Nikkei 225 (+0.6%) was underpinned by its mining names, while South Korea’s KOSPI (+0.2%) saw gains in Tech mostly offset by losses in Autos. The Hang Seng (+0.3%) and Shanghai Comp (+0.2%) quickly dipped at the open into modest negative territory but later recovered. The overnight focus was on Tencent declaring an interim dividend payable in JD.com shares – which would reduce Tencent's holding of JD to about 2.3% vs prev. nearly 17% reported earlier this month. JD.com shares extended downside in early trade to losses of over 10%, whilst Tencent rose over 3%. US 10yr Treasury futures traded with no firm direction overnight despite the mild positivity seen across APAC stocks, with the debt now looking ahead to the November PCE report. Top Asian News Asian Stocks Head for Third Day of Gains as Tencent Shares Rally Alibaba-Backed RoboSense Said to Pick JPMorgan for Hong Kong IPO Foreigners Haven’t Finished Selling India Stocks: Street Wrap Asia Traders Are Most Bullish Stocks, Europe Least: Markets Live European bourses are firmer in very thin trading conditions, with a distinct holiday-feel setting in. News flow has been minimal, and remains focused on the familiar themes of Omicron and geopolitics. The Euro Stoxx 50 trades around +0.5%, after a constructive handover from Asia, although there are some very modest regional discrepancies. Sectors are predominantly in the green, with the likes of Travel & Leisure, Oil & Gas, and Autos benefitting from the generally constructive tone of news flow around Omicron. US futures are firmer, though the magnitude is limited, and benchmarks have essentially been in a holding pattern since the US cash close on Wednesday. Top European News Spain Revises GDP Growth Sharply Higher After Data Doubts Traders Ramp Up BOE Bets to See Key Rate at 1.25% Next Year U.K. PM Not Expected to Announce Post-Xmas Curbs This Week: Sky Pound Reaches One-Month High After BOE Rate Hike Bets Increase In FX, in stark contrast to this time yesterday, the Dollar index is trying to grind higher from a fractionally firmer base between 96.018-199 parameters, though well below Tuesday’s range amidst an ongoing improvement in overall risk sentiment based on the latest Omicron analysis. In short, studies continue to find lower hospital admissions and generally less acute symptoms even though the mutation is more virulent, while the current batch of vaccines provide varying degrees of protection and new drugs designed specifically for the new strain are in the pipeline. On the fundamental front, the final full trading day before the Xmas break contains some potential market-moving US data, including the Fed’s preferred inflation measure, core PCE, plus jobless claims, new home sales and the often volatile durable goods. NZD/GBP/AUD - The Kiwi, Pound and Aussie have all picked up where they left off on Wednesday, with impetus from the aforementioned positive market tone allied to increasingly bullish technical impulses. Indeed, Nzd/Usd didn’t encounter much in the way of psychological resistance at 0.6800, while Sterling has breached 1.3350 more emphatically to expose/probe 1.3400 and Aud/Usd overcame any sentimentality that might have hampered its progress beyond 0.7200. Cable has also advanced with the aid of Eur/Gbp tailwinds as the cross approaches 0.8450 following sell orders above, and an element of relief after reports suggesting that UK PM Johnson is now likely to hold off from making any further decisions on pandemic measures until after Xmas. Back down under, some good news for the Aussie via a pickup in private sector credit and loans for housing. CAD/EUR - Both narrowly mixed vs their US counterpart, but the Loonie has extended its rebound towards 1.2800 in advance of Canadian monthly GDP and average weekly earnings, while the Euro is forming a firmer base on the 1.1300 handle as EGBs continue to underperform/outperform in futures and cash terms respectively. However, Eur/Usd topped out around 1.1341/2 again and may be wary of decent option expiry interest between 1.1330-40 in 1.3 bn as much as 1.6 bn rolling off at 1.1300-05. CHF/JPY - The Franc and Yen are still lagging on risk factors and their carry characteristics, with the former unable to sustain advances through 0.9200 against the Buck and the latter failing to overcome offers/resistance into 114.00. Hence, Usd/Jpy remains poised for more attempts to scale the next Fib retracement at 114.38 in the run up to Japanese inflation data and post-remarks from BoJ Kuroda who adhered to pretty standard lines on currency matters. To recap, he repeated that FX rates must move in a stable fashion and reflect economic fundamentals, while the negative impact of a weak Jpy on Japanese household income may be increasing, though the benefits outweigh the demerits. In commodities, crude benchmarks continue to see modest pressure that crept in during APAC trade; Brent is pivoting USD 75.00/bbl, with losses of circa USD 0.30/bbl. News flow has been minimal. Russia’s President Putin is making some geopolitical noises, although he is largely reiterating familiar themes. Elsewhere, Exxon’s (XOM) Baytown complex (560k BPD capacity) in Texas reported a fire at a gasoline component processing unit; reports thus far indicate no facility impact from this incident. Moving to metals, spot gold and silver remain contained as the yellow metal holds onto the USD 1800/oz mark it reclaimed amid USD weakness in APAC hours. While base metals are firmer but again within familiar ranges. Russian President Putin says Russia meets gas supply obligations under long-term deals, prior to providing gas to spot markets; adds that Gazprom has not booked gas via the Yamal-Europe line due to a lack of requests, pipeline in reverse mode. Europe has created its own gas problems, should resolve this themselves; are prepared to assist.Germany is selling Russian gas to Poland, think it ends up in Ukraine. Exxon (XOM) Baytown complex (560k BPD capacity) in Texas has reported a fire at the facility, according to the community alert system; Some injuries have been reported following a 'major industrial accident' at the Exxon (XOM) Baytown complex (560k BPD capacity) in Texas, via the Harris County Sheriff - No reports to evacuate/shelter in place after the fire. Based on current information, no adverse impact. US Event Calendar 8:30am: Dec. Initial Jobless Claims, est. 205,000, prior 206,000; Continuing Claims, est. 1.84m, prior 1.85m 8:30am: Nov. Personal Income, est. 0.4%, prior 0.5% Personal Spending, est. 0.6%, prior 1.3% 8:30am: Nov. PCE Deflator MoM, est. 0.6%, prior 0.6%; YoY, est. 5.7%, prior 5.0% PCE Core Deflator MoM, est. 0.4%, prior 0.4%; YoY, est. 4.5%, prior 4.1% 8:30am: Nov. Durable Goods Orders, est. 1.8%, prior -0.4% Durables-Less Transportation, est. 0.6%, prior 0.5% Cap Goods Orders Nondef Ex Air, est. 0.7%, prior 0.7% Cap Goods Ship Nondef Ex Air, est. 0.6%, prior 0.4% 10am: Nov. New Home Sales MoM, est. 3.3%, prior 0.4% 10am: Dec. U. of Mich. Sentiment, est. 70.4, prior 70.4 Current Conditions, prior 74.6 Expectations, prior 67.8 1 Yr Inflation, est. 4.9%, prior 4.9%; 5-10 Yr Inflation, prior 3.0%; 10am: Nov. New Home Sales, est. 770,000, prior 745,000 Tyler Durden Thu, 12/23/2021 - 08:06.....»»

Category: blogSource: zerohedgeDec 23rd, 2021

Stocks, Futures, Oil Tumble On Omicron Lockdowns, Manchin Shockwave

Stocks, Futures, Oil Tumble On Omicron Lockdowns, Manchin Shockwave Global stocks and US equity futures are sharply lower to start the otherwise very quiet holiday week, dragged lower by Manchin's shock decision to kill Biden's economic agenda (which Goldman said would cut US Q1 GDP from 3% to 2%), accelerating government measures to counter the fast-spreading omicron variant and fears over the growth outlook amid a tightening Fed. US equity futures tumbled almost 100 points from their Friday close (and more than 200 points from Thursday's all time high before paring some losses buoyed by optimism from news that Moderna’s booster vaccine increases antibodies 37-fold against omicron. Treasury yields also pared a sharp drop as low as 1.35% and the dollar held a jump from Friday, while crude oil slid on worries that mobility curbs to tackle the strain will hurt demand. As of 730am S&P 500 futures were down down 1.1%, Nasdaq 100 -1.3%, and Dow -1.0%. Global stocks have retreated from record highs in recent weeks amid concerns about Covid-19 hurting the economic recovery and as central banks pivot toward fighting inflation. Federal Reserve Governor Christopher Waller said a faster wind-down of the central bank’s bond-buying program puts it in a position to start lifting interest rates as early as March. “In our view, markets can look through omicron concerns, and the gradual pace of monetary tightening won’t bring the equity rally to an end,” UBS Global Wealth Management wrote in a note. “Overall, the latest news does not change our outlook for equities.” Luke Hickmore, investment director at Standard Life Investments, also recommended buying the dip. “The prospects for growth will improve rapidly from here,” he said. “The market will likely see a recovery in the new year when liquidity returns.” In the weekend's biggest news, senator Joe Manchin blindsided the White House on Sunday by rejecting Biden’s $1.75 trillion tax-and-spending package, prompting a sharply critical statement from the White House which called Manchin’s decision a “sudden and inexplicable reversal.”  Biden and top Democrats must now regroup to see if a scaled-back version remains possible with little more than 10 months before midterm elections that will decide control of Congress. As noted late last night, Goldman Sachs Group Inc. cut its forecast for U.S. economic growth for next year after Manchin’s move (more below). On Monday, Chuck Schumer said the Senate will still vote “very early” in 2022 on Biden’s economic agenda, although it was unclear just what the new plan will look like now that Build Back Better is dead. Not helping matters were the latest development in the Omicron front where the biggest European countries are introducing more curbs, with U.K. officials keeping open the possiblity of stronger measures before Christmas and the Netherlands returning to lockdown, even as Biden’s chief medical advisor said further U.S. lockdowns are unlikely. In some "good" news, said a third dose of its Covid-19 vaccine saw a 37-fold increase in neutralizing antibodies against omicron. Ironically. While investors remain on edge over the outlook for economic activity, there remains little evidence that the new variant causes illness as severe as the delta variant, especially among those already vaccinated. “The main reason behind the market sell off today is the rejection of Biden’s $2 trillion tax-and-spending package, which will lead to a reduction in U.S. economic growth forecasts,” said Michel Keusch, a portfolio manager at Bellevue Asset Management. “With trading volumes getting thinner and thinner into the year end, this is the catalyst creating some short-term nervousness.”  Then there are tightening concerns: the Federal Reserve’s decision to increase the pace of tapering last week is also adding to investor nerves about the outlook for 2022. And now, without either fiscal or monetary support, economists see a policy-induced slowdown in the economy where Goldman on Sunday cut its real GDP forecast for 2022: 2% in Q1 (vs. 3% prior), 3% in Q2 (vs. 3.5% prior), and 2.75% in Q3 (vs. 3% prior). One place which is convinced the Fed will not meet its targets it the bond market where traders of eurodollar futures price rates much lower than FOMC targets for the end of 2023 and 2024. Finally, as Bloomberg notes, there is also the issue of divergent global monetary policy to contend with, as the People’s Bank of China stepped up easing overnight with the first rate cut in 20 months. Looking at the premarket, travel stocks fell the most with United Airlines down 3.4% leading declines among major U.S. carriers, while a 4% slide in Royal Caribbean Cruises led the fall among cruise operators. Energy and industrial bellwethers also declined, with Chevron, 3M and Caterpillar falling over 2% each. Major U.S. tech and internet stocks slumped hitting shares in most highly valued names, as well as in cyclicals. Apple fell as much as 2.1% premarket while fellow large- cap tech names also drop, with Facebook-owner Meta Platforms down 1.9%, Alphabet -1.2%, Amazon.com -1.7%, Twitter -2.1%, Microsoft -1.6%. Here are some of the other big U.S. movers today: Major U.S. tech and internet stocks drop in premarket trading as risk appetite sours globally amid worries over further pandemic- related restrictions, hitting shares in most highly valued names, as well as in cyclicals. Shares in U.S. renewables firms drop in premarket after U.S. Senator Joe Manchin’s surprise rejection of President Joe Biden’s $2 trillion package. Moderna (MRNA US) rises 6% in U.S. premarket after the company said that a booster dose of its Covid-19 vaccine increased antibody levels against the omicron variant. Society Pass (SOPA US) surges 22% in premarket after the loyalty platform operator said in a statement it has been added to the Russell 2000 Index. Boston Beer (SAM US) upgraded to hold at Jefferies following pullback of more than 60% in the shares related to “massive” reset in expectations for hard seltzers, removing the only negative rating on the stock. Shares up 0.3% on low volume in premarket. "After battling endless headwinds in recent weeks, markets have finally been knocked over as the rapid spread of Omicron finally reaches panic mode," Russ Mould, investment director at AJ Bell, wrote in a client note. Europe's Stoxx 600 also stumbled, now down about 1.4% after falling as much as 2.6%, weighed down the most by travel and insurance. All sectors are in red. FTSE 100 recovers slightly as energy gets a leg up, but is still off by 1.2%. Dax -2%. Germany’s new coalition government picked Joachim Nagel, a Bank for International Settlements official, as the central bank’s next president. Earlier in the session, Asian stocks were set for the biggest drop since March, as the spread of the omicron variant and a surprising setback to U.S. President Joe Biden’s economic agenda forced traders to take bets off the table. The MSCI Asia Pacific Index sank as much as 2%, headed for its lowest close since November 2020, with tech and consumer shares the biggest drags. Relatively thin trading ahead of the year-end exacerbated declines in the region, as investors grapple with fresh outbreaks of Covid-19 and monetary policy tightening globally. The MSCI Asia Pacific Index is down about 15% from a peak in February, compared with an 18% gain in the S&P 500. “Omicron’s spread over the festive holidays and Manchin” are driving the risk-off mood, said Wai Ho Leong, strategist at Modular Asset Management (Singapore). “But most of all, it is the lack of liquidity in all markets.” India was the worst performer around the region, with its benchmark index poised to enter a correction amid the spread of the omicron variant. Chinese stocks also dropped despite a cut to bank borrowing costs for the first time in 20 months In FX, the dollar reversed gains and was little changed. The pound fell in line with other risk- sensitive currencies as global market sentiment soured; gilts advanced. Hedging the major currencies over the next month comes at a similar cost, yet the pound turns expensive further out as it holds a higher beta on monetary policy divergence. The Australian and New Zealand dollars followed a broader move lower in commodity FX amid a slide in oil and stocks. The yen advanced with Japanese government bonds. The lira tumbled to another record low after Turkish President Recep Tayyip Erdogan pledged to continue cutting interest rates. In rates, Treasury yields fell by ~3bp in 5-year sector, steepening 5s30s spread by 3bp on the day as long-end yields were little changed; 10-year yields 1bp lower around 1.39%, outperforming bunds and gilts. Treasuries drifted higher Monday as global stocks extended losses. Gains were led by front- and belly of the curve, while eurodollars advanced and the amount of Federal Reserve rate-hike premium for 2024 and 2024 eased. Long-end lagged the move ahead of a 20-year bond auction Tuesday.  Bund and gilt curves are mixed. Italy lags in the peripheral complex, widening ~2bps to Germany. In commodities, Brent crude extends dropped to trade down as much as 5.3%, trading as low as $69.60/bbl before paring some losses, with Brent down 3% to $71 per barrel, and WTI -4% to around the $68-handle. Spot gold drifts below the $1,800-handle. Base metals complex under pressure; LME aluminum and nickel decline the most.  There is nothing on the economic calendar today except that Nov. Leading Index, which is estimated to print at  0.9%. Market Snapshot S&P 500 futures down 1.6% to 4,535.75 MXAP down 1.8% to 187.95 MXAPJ down 1.8% to 607.98 Nikkei down 2.1% to 27,937.81 Topix down 2.2% to 1,941.33 Hang Seng Index down 1.9% to 22,744.86 Shanghai Composite down 1.1% to 3,593.60 Sensex down 2.0% to 55,848.23 Australia S&P/ASX 200 down 0.2% to 7,292.16 Kospi down 1.8% to 2,963.00 STOXX Europe 600 down 2.2% to 463.29 German 10Y yield little changed at -0.40% Euro up 0.2% to $1.1259 Brent Futures down 3.9% to $70.67/bbl Gold spot up 0.1% to $1,800.19 U.S. Dollar Index little changed at 96.61 Top Overnight News from Bloomberg President Joe Biden faces the unexpected task of quickly rewriting his policy agenda in a crucial election year after a key Senate Democrat abruptly rejected his signature $1.75 trillion economic plan Germany’s new coalition government picked Joachim Nagel, a former Bundesbank senior official, as the central bank’s next chief, according to a person with knowledge of the matter The ECB will not raise interest rates in 2022 if inflation behaves as expected, governing council member Pablo Hernandez de Cos told Expansion newspaper in an interview Europe’s biggest countries are introducing more curbs to fight a surge in Covid-19 infections, from another lockdown in the Netherlands to stricter travel restrictions at the height of the holiday period Chinese property stocks tumbled close to a fresh five-year low after a series of asset sales underscored concern that equity investors will bear the brunt of losses as developers offload projects to repay debt Chinese banks lowered borrowing costs for the first time in 20 months, foreshadowing more monetary support to an economy showing strain from a property slump, weak private consumption and sporadic virus outbreaks A more detail look at global markets courtesy of Newsquawk Asia-Pac equities traded mostly lower following the volatile session on Wall Street on Friday, which saw the Dow Jones, S&P 500 and the Nasdaq all posting varying degrees of losses, whilst the Russell 2000 outperformed with decent gains. Overnight, US equity futures opened with a mild upside bias, albeit the optimism faded in early trade as risk aversion materialised, with the ES Mar 2022 contract falling below its 50 DMA (4,596) whilst the NQ and RTY saw losses of over 1% apiece. Sentiment was hit by the slew of concerning COVID headlines over the weekend, whilst Friday saw further hawkish rhetoric from Fed officials - with Fed’s Waller suggesting the whole point of accelerating the bond taper was to make the March Fed meeting a live meeting for the first hike, and under his base case March is very likely for lift-off, although it could be pushed back to May. The ASX 200 (-0.3%) was pressured by some large-cap miners and banks, whilst the Nikkei 225 (-2.1%) and KOSPI (-1.8%) conformed to the downbeat tone, with upside in the former also capped by recent JPY strength. The Hang Seng (-1.9%) and Shanghai Comp (-1.1%) initially saw shallower losses after the PBoC opted to cut the 1yr Loan Prime Rate by 5bps, whilst the 5yr rate was maintained, although the property sector faced more woes after S&P downgraded Evergrande to Selective Default, whilst Kaisa shares slumped after trade resumed following a two-week hiatus, with the Co. in discussions regarding a debt restructuring plan. The Hang Seng dipped below 23,000 for the first time since May 2020. Elsewhere, US 10yr futures continued edging higher as APAC risk aversion supported the haven, whilst Goldman Sachs also cut its US real GDP Growth forecasts on the Build Back Better blockade. Top Asian News Coal India Defends Quality Level of Shipments After Complaints Hong Kong Eyes New Security Law After Electing Loyalist Council Asian Stocks Drop to Lowest in 13 Months on Virus Woes, Manchin Best Way for China to Lower Market Rates is to Sell Yuan: Nomura European bourses commenced the week on the backfoot, continuing the broad pressure seen in APAC trade, as focus is firmly fixed on the Omicron variant. The downside in APAC hours was also a feature of the choppy trade in the US on Friday, and amid non-COVID catalysts such as US Senator Manchin presenting a stumbling block to BBB which effectively ends the chances it can be passed this year, while hawkish central banks is also a theme traders are cognizant of for next year. Euro Stoxx 50 -1.4%, benchmarks are lower across the board as further COVID-19 restrictions are imposed/touted; thus far, the most stringent has seen the Netherlands return to lockdowns, while the likes of the UK and Germany are mulling measures. Vaccine producer Moderna (+5.5% in premarket trade) released preliminary booster data vs Omicron, which saw a modest paring of the risk-off conditions; the vaccine boosts neutralising antibody levels by 37-fold vs pre-boost levels. All sectors remain in the red however, with underperformance in those most exposed to COVID restrictions, such as Travel & Leisure, Oil & Gas and Autos. Individual movers were predominantly dictated by the broader price action; however, THG (+12.5%) is the morning’s outperformer following reports that a notable short on the name has removed its position. Meanwhile, US futures are softer across the board (ES -1.3%) ahead of a very sparse docket where focus will, as it is in European hours, centre around the fiscal narrative and COVID. On the latter, President Biden is due to speak on the situation on Tuesday, calling for individuals to get vaccinated. Top European News Johnson Appoints Truss to Key Brexit Role After Torrid Week Germany Picks Bundesbank Veteran Nagel as Central Bank Chief Czech Billionaire Family Faces Final Showdown Over Bank Merger Flashpoints That May Heal or Deepen the Lira’s Pain in 2022 In FX, the Dollar is mixed across the board, but retaining an upward bias overall amidst greater gains vs high beta, activity and cyclical currencies compared to losses against safer havens as broad risk sentiment sours on a number of factors, but mainly COVID-19. Hence, the index is holding quite firmly above 96.500 within a 96.504-680 range even though US Treasury yields are soft and the curve is marginally flatter, with traction or the Greenback coming via hawkish comments in wake of last week’s FOMC from Fed’s Waller who would not object to lifting rates as soon as tapering is done next March. Ahead, a very sparse Monday agenda only comprises November’s leading index. JPY/EUR/CHF/XAU - As noted above, risk-off positioning due to the ongoing spread of Omicron has prompted demand for the Yen, the Euro, with added momentum from bullish Eur/Gbp cross flows, plus the Franc and Gold to lesser extents. Usd/Jpy is tethered around 113.50 in response, though unhindered by imposing option expiries in contrast to last Friday and the headline pair capped by technical resistance in the form of 21 and 50 DMAs that come in at 113.77 and 113.83 respectively today. Meanwhile, Eur/Usd is back above 1.1250 amidst mixed ECB vibes as de Cos underscores guidance for no hikes in 2022, but sources say that GC hawks wanted explicit recognition of upside inflation risks and were shouted down by chief economist Lane. However, Eur/Gbp has bounced even more firmly from sub-0.8500 lows on what looks like a combination of early year end demand or RHS orders and Pound underperformance on pandemic, political and Brexit-related factors. Elsewhere, Usd/Chf is hovering mostly sub-0.9250 and Eur/Chf is pivoting 1.0400 with latest weekly Swiss sight deposits showing no sign of intervention and Gold is rotating around Usd 1800/oz after a false upside breach of Usd 1810, but not quite enough follow-through buying to scale another upside target circa Usd 1815. GBP/AUD/NZD/CAD - The major fall guys, as Sterling loses 1.3200+ status yet again on all the aforementioned negatives, and also feels some contagion from weakness in Brent, while the Aussie is straddling 0.7100, the Kiwi is trying to keep its head above 0.6700 and the Loonie contain declines through 1.2900 alongside the latest retracement in WTI. In commodities, WTI and Brent are also risk-off, moving in tandem with the equity action, on the COVID-19 narrative and implementation/prospect of further restrictions hitting the demand-side of the equation. WTI relinquishes USD 67.00/bbl and Brent gave up the USD 70.00/bbl level. In fitting the broader market move, some easing of the initial downside was seen post-Moderna’s update. Elsewhere, in crude specifics, Libya’s NOC confirmed reports that the Petroleum Facilities Guard was blocking several fields in the region; some suggest production of oil has dropped to 950k BPD due to losses of production at El Sharara field (estimated at 280k BPD). Elsewhere, OPEC+ compliance has reportedly increased marginally in November, in-fitting with the assessments in earlier sourced reports. In metals, spot gold and silver are contained on the session with little evidence of risk-off making its self-known at this point in time, with the yellow metal pivoting USD 1800/oz. Elsewhere, copper is impacted on the risk tone but offset somewhat by Chile’s President-elect Boric saying he will oppose the Dominga copper-iron mine project. US Event Calendar 10am: Nov. Leading Index, est. 0.9%, prior 0.9% DB's Jim Reid concludes the overnight wrap As we arrive at the final week before Christmas, there’s plenty of newsflow from the weekend for markets to digest this morning. In particular, there was the announcement from the US that Senator Joe Manchin of West Virginia wouldn’t be able to support the Build Back Better Bill, which has been the subject of intense negotiations over recent weeks and marks a significant blow for President Biden’s economic agenda. Meanwhile on the Covid front, there was a further ratcheting up of concerns about the Omicron variant, with the Netherlands becoming the latest European country to go back into lockdown as of yesterday, as cases continue to spread elsewhere. But otherwise, the events calendar is looking fairly quiet for now in this holiday-shortened week, with just a few lower-tier data releases and the occasional central bank speaker. We’ll start with Omicron, since that remains one of the biggest issues for markets right now and has significantly clouded the outlook moving into year-end. In a nutshell, the news over the weekend from Europe has only pointed in the direction of further restrictions across multiple countries, with the Netherlands being the most severe as a full lockdown was announced by the Prime Minister on Saturday that leaves just supermarkets and essential shops open, with even schools shut. When it comes to socialising, people will not be allowed to receive more than 2 visitors aged 13 and over per day, although over 24-26 December, New Year’s Eve and New Year’s Day, this will be raised to 4 people. Elsewhere in Europe there was a similar pattern towards tougher measures, with the Irish PM announcing on Friday evening that there would be an 8pm closing time for bars, restaurants and theatres, among others, which would last from today until January 30. Over in Spain, Prime Minister Sánchez said in a televised address yesterday that he’d be meeting with regional leaders virtually on Wednesday to look at measures for the weeks ahead. In Italy, it’s been widely reported that the government is looking at further measures to contain the spread as well, and they’re set to meet on Thursday to discuss these, whilst here in the UK, Health Secretary Javid was not ruling out further restrictions this side of Christmas. Separately in the US, President Biden is set to deliver a speech tomorrow about Covid and the steps that the administration will be taking, with Press Secretary Jen Psaki tweeting that Biden would also be “issuing a stark warning of what the winter will look like for Americans that choose to remain unvaccinated.” For those after a bit more optimism ahead of Christmas, then a couple of DB research notes out on Friday about the new variant will definitely be of interest. The first by FX Strategist Shreyas Gopal (link here) looks at London, which is the epicentre of Omicron infections in the UK, and tracks cases there against those in the South African province of Gauteng a couple of weeks back. The good news is that if the relationship is similar, then that does suggest a peak in cases soon. The other note comes from our head of rates research Francis Yared (link here) who shows that although deaths are starting to increase in South Africa, they’re currently on a much lower trajectory relative to cases compared to previous waves. An important question for markets is whether these patterns from South Africa can be extrapolated over to the advanced economies, which have much higher vaccination rates on the one hand, but also much older populations on the other, so there are factors that could push in either direction. Keep an eye out on these leading indicators from South Africa, as well as London, since they’ll have implications for what could occur in the coming weeks elsewhere. Away from Covid, the other main piece of news over the weekend came from the US, where the moderate Democratic senator Joe Manchin said that he couldn’t support the Build Back Better package that forms a key part of President Biden’s economic agenda, with much of his proposals on social programs and climate change. The news broke in an interview from Manchin on Fox News Sunday, when Manchin said “I can’t get there” when it comes to supporting the package, and follows direct negotiations that he’d been having with the president. Manchin’s support is crucial for the bill’s passage, since the Senate is split 50-50 between the Democrats and Republicans, with the Democrats having control only by virtue of Vice President Harris’ casting vote. So with zero Republican support for the package, that required every single Democratic senator on board with the proposals, giving Manchin enormous influence. A statement from White House Press Secretary Jen Psaki in response to Manchin did not sound impressed, saying that his comments “are at odds with his discussions this week with the President, with White House staff, and with his own public utterances.” It went on to say that “we will continue to press him to see if he will reverse his position yet again, to honor his prior commitments and be true to his word.” Nevertheless, Manchin’s own written statement wasn’t using the language of compromise, saying that his “Democratic colleagues in Washington are determined to dramatically reshape our society in a way that leaves our country even more vulnerable to the threats we face.” So the implication from Manchin is that Build Back Better won’t be happening this side of the mid-terms in its current form, and would require a fundamental rethink and meaningful slimming down were it to have any chance of passing. Those twin factors of further Omicron restrictions and Manchin’s announcement have weighed heavily on Asian equities overnight, with the Nikkei (-2.17%), KOSPI (-1.66%), Hang Seng (-1.44%), CSI (-0.98%) and Shanghai Composite (-0.75%) all moving lower. In India, the benchmark NIFTY is also down 10% from its peak in October, putting the index in correction territory. However, we did get a policy easing in China, with banks lowering the 1yr prime rate by -5bps to 3.8%. That move came alongside separate remarks from Bank of Japan Governor Kuroda, who said it was too early to think about policy normalisation, and that discussion should take place once inflation is closer to the 2% target. European and US equities are set to follow Asia lower later on, with futures on both the S&P 500 (-0.97%) and the DAX (-1.63%) both pointing lower this morning. And oil prices been struggling overnight as well in light of the recent virus news, with Brent Crude down -3.02% to $71.30/bbl at time of writing. Recapping last week now, and the main events were the array of central bank meetings ahead of the holidays. In the US, the Fed doubled the pace of their tapering as expected, which would bring net asset purchases to an end in mid-March, and the median dot now expects three rate hikes in 2022. By the close on Friday, Fed funds futures were pricing in a 55% chance of an initial hike by the March meeting, and an 87% chance of one by the May meeting. The ECB was then up next, and started a wind down of net PEPP purchases that are also set to finish in March next year. The ECB is cushioning the landing though, having moved to increase APP purchases until October next year after PEPP ends, following which they’ll maintain a pace of €20bn a month until shortly before liftoff. The ECB maintained some policy optionality through flexibility on PEPP reinvestments, which our Europe economists read as a commitment to smoothing the transmission of monetary policy. In the UK, the BoE hiked Bank Rate by +15bps to 0.25%. The MPC noted the decision was finely balanced due to Covid uncertainty, but the vote was still 8-1 in favour of a hike. Over in Japan, the BoJ rounded out the major DM central bank meetings, keeping rates unchanged and announcing a slow reduction in corporate debt holdings. At the same time, they extended a special covid loans program targeted at small and medium-sized firms to September 2022. When all was said and done, many sovereign bond yields actually ended the week lower, even with the hawkish pivot from the various central banks. 10yr yields on Treasuries (-8.2bps) and bunds (-3.1bps) both declined, although those on gilts did post a small +1.7bps gain over the week. Meanwhile growing Covid pessimism served to dampen risk appetite and send global equity indices lower last week. By Friday the S&P 500 (-1.94%) had fallen for the 3rd week out of the last 4, hampered by an underperformance from tech stocks that saw the NASDAQ (-2.95%) and the FANG+ index (-4.53%) both lose significant ground. Over in Europe the moves were smaller, albeit still lower, and the STOXX 600 ended the week -0.35%.   Tyler Durden Mon, 12/20/2021 - 08:02.....»»

Category: blogSource: zerohedgeDec 20th, 2021