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Larry Kudlow: What is probably the worst part of Manchin-Schumer bill has been removed

FOX Business host Larry Kudlow provides insight on the recent jobs report, the Fed's handling of inflation and the Democrats' spending bill on "Kudlow." Some good news today, in two parts. First, more Americans are working. That is unambiguously good. Corporate payrolls up 471,000 in July, with a 5.2% year-to-year wage increase, 6.2% if you're a blue-collar worker.  The unemployment rate is down to 3.5%. The small-business oriented household survey, not quite as strong: +179K.  So, in the first half, economy was negative in recession. We'll see about Q3 after the good jobs report. We've still got a big inflation problem, although market price indicators have tailed down.  The Fed has got more work to do to drain its balance sheet and bring its Fed funds target rate above the inflation rate. I don't know where that will land, but 2.5% is still way too low. My guess is base core inflation is probably around 5 to 6%, but let us cheer that more Americans working.   BIDEN TOUTS JOBS REPORT DURING BIPARTISAN BILLS SIGNING CRACKING DOWN ON PERPETRATORS OF COVID RELIEF FRAUD  By the way, if we had decent supply-side economic policies with lower tax rates and deregulation, we would have nothing to fear from 5 to 6% wage increases, but we have a heavily overregulated economy and plenty of threats and more is coming.  Think of the right policy as tax cuts and king dollar. The former generates growth incentives, the latter holds down prices. That's the optimal policy mix. Second piece of good news: capex investment is being carved out of the Manchin-Schumer monstrosity.  Courtesy of Senator Kyrsten Sinema, probably the worst part of this dumb bill has been removed. Taxable profits will replace minimum corporate book profits, at least as far as 100% expensing of plant equipment and technology is concerned.  There is no legislative text yet so we don't know everything that we're going to need to know about this deal, but the kill shot to business investment has been removed, as far as I can tell. So, hats off to Senator Sinema. I'm sure she watches our show nightly, taking notes constantly, as she removed the most economically damaging part of this goofy bill.  Also, the carried interest provision, which taxes private equity funds on a capital gains basis with a three-year holding period, has also been removed. Of course, that still leaves the IRS DC swamp rat provision to attack small businesses and conservative groups. Also remaining are drug price controls, that by the way the CBO is actually scoring as a price hike, not a cost reduction and, of course, the war against fossil fuels — we'll call it $430 billion worth — giving the EPA new power to regulate greenhouse gases and Lord knows what else.  Then we have the social spending that includes new Obamacare subsidies. That will cost about $250 billion, on top of the $430 billion fossil fuel war, plus of course the $285 billion CHIPS+ bill.   WHITE HOUSE STANDS BY INFLATION REDUCTION ACT AFTER CBO WARNS INFLATION WON'T DROP AS A RESULT  So, if you add it up, it's close to a trillion dollars of spending. It will not be paid for. It may well boost inflation and there are assorted tax-hike cats and dogs left in this little piece of left-wing, woke utopia that we don't really know much about.  Like I say, it's a dumb, goofy bill. America doesn't need it. Only the far left wants it. It will not help the economy. It will not reduce inflation. It will create a lot more deficits and debt and, if you hadn't already guessed, it's not my cup of tea.  CLICK HERE TO GET THE FOX NEWS APP  At least there's no investment tax on small businesses. At least there's no confiscatory wealth tax and at least the capex expensing will remain a tax-free deductible. So, in the last moments of left-wing progressive woke rule in Washington, I guess I can say it could've been worse. I know the wokesters wanted it much worse, but, you know folks, this is a pathetic bill and it's a pathetic agenda and it's a pathetic Democratic Party.  Nothing to beat inflation. Nothing to grow the economy. Nothing to close the border. Nothing to solve the crime wave. Their agenda is nothing. Pathetic, but I also know the cavalry is coming and it would be great if we could save America and kill the rest of this bill.  This article is adapted from Larry Kudlow's opening commentary on the August 5, 2022, edition of "Kudlow.".....»»

Category: topSource: foxnewsAug 5th, 2022

The Bill Gurley Chronicles: Part 2

The Bill Gurley Chronicles: Part 2 By Alex of the Macro Ops Substack What if there was a way to distill all the knowledge that someone’s written over the last 25 years into one, easy-to-read document? And what if that person was a famous venture capital investor known for betting big on companies like Uber, Snapchat, Twitter, Discord, Dropbox, Instagram, and Zillow (to name a few)?  Well, that’s what I’ve done with Bill Gurley’s blog Above The Crowd.  Gurley is a legendary venture capital investor and partner at Benchmark Capital. His blog oozes valuable insights on VC investing, valuations, growth, and marketplace businesses.  This document is past two to the one-stop-shop summary of every blog post Gurley’s ever written, part 1 can be found here. February 2, 2004: The Rise Of Open-Standard Radio: Why 802.11 Is Under-Hyped (Link) Summary: WiFi will dominate wireless communications for the same reason Ethernet dominated networking and x86 dominated computing: high switching costs. This wide-scale adoption causes capital to flow into the standard as companies look to differentiate on top of the existing platform. In doing so, it further entrenches the “open-standard” incumbent.  Favorite Quote: “Open standards obtain a high “stickiness” factor with customers as a result of compatibility. Once customers invest in a standard, they are likely to purchase more and more supporting infrastructure. As their supporting infrastructure grows, their switching costs rise dramatically with respect to competitive alternate architectures. Customers are no longer tied simply to the core technology, but also to the numerous peripherals and applications on which they are now dependent. All of these things make challenging an accepted open standard a very difficult exercise.” March 24, 2004: All Things IP: The Future Of Communications In America (Link) Summary: South Korea and Japan are leading the world in broadband speed and connectivity. South Korea, for example, sports 80% broadband adoption. The US on the other hand, less than 50%. Different players battle for the future of US communication. Free services like Skype offer high-quality VoIP calls. But it’s the cable companies, with their mega-cable infrastructure, that lead the way. At the end of the day follow the money. Comcast went after Disney not because of distribution, but because of content. Favorite Quote: “Now, while voice should be free, that doesn’t mean that it will be free. The two conditions outlined above are nontrivial. First and foremost, it is not at all clear that we have enough competition in the U.S. broadband market. Innovations in the wireless market, particularly recent innovations around mesh architectures, have the opportunity to change this. As of right now, however, many users simply lack choice. Additionally, the many state municipalities around the country are eager to place their hands on VoIP. A poorly executed policy could in fact “increase” the long term pricing on voice services for all users (for example, would you really tax a free service?).” May 6, 2004: Entrepreneurialism And Protectionism Don’t Mix (Link)  Summary: Protectionism and entrepreneurialism don’t work together. One prides itself on open dissemination of ideas, talent and problems (entrepreneurialism). The other (protectionism) desires to keep what’s theirs and turn a blind eye to competition. There are seven reasons why these two ideologies don’t mix: it hurts the economy (comparative advantage), start-ups don’t receive government subsidies (that encourage protectionism), disincentivizes diversity, more start-ups start with a global presence, the hot markets are ex-US, it goes against our global open standards (WiFi, etc.) and its inconsistent with the entrepreneurial mindset.  Favorite Quote: “It is hard to imagine a successful entrepreneur arguing that he or she deserves a job over someone else that is equally skilled and willing to work for a lower wage. The entire spirit of entrepreneurialism is based on finding ways to do something better, faster, and cheaper. It is the whole nature of the game. If someone can do something better somewhere else, it simply means it’s time to innovate again – with intellect and technology, not politics.” October 19, 2004: The Revolutionary Business Of Multiplayer Gaming (Link)  Summary: Multiplayer gaming is an incredible business featuring five “Buffett-Like” business characteristics: recurring revenue (subscription pricing), competitive moats (switching costs), network effects/increasing returns, real competition with others and high brand engagement. Those that fail to realize the importance (and power) of the video game business model (40%+ operating margins) will miss a huge investment opportunity.  Favorite Quote: “Some skeptics argue that MMOG is still a “niche” business and that the same half-million users are migrating from Everquest to Ultima Online to City of Heroes. Under this theory, MMOGs will never be mass market and will never really “matter” in the $20 billion interactive entertainment business. However, with billion dollar businesses now dotting the NASDAQ, it becomes harder and harder to invoke such skepticism. And if new paradigms, architectures, and broadband speeds allow for titles that meet the needs of a wider demographic, ignoring MMOGs may be equivalent to ignoring the successor to television.” March 11, 2005: Believe It Or Not: Your State Leaders May Be Acting To Slow The Proliferation Of Broadband (Link) Summary: In 2005, rumors circulated that laws would pass eliminating a city’s right to offer telecommunications services to its citizens. Gurley suggested states should say “no way” to this offering, and opined six reasons why (straight from the post):  The primary reason for the proposition is to reduce or eliminate competition for incumbent telcos An oligopoly doesn’t make a marketplace Taking rights from municipalities will have negative overall impact on American innovation  Even if a city has no intention of deploying wireless services, it is still in that city’s best interest to retain the right to do so In 2005, isn’t it reasonable for a city to choose to offer broadband as a community service?  A founding American principle — localized government whenever possible Favorite Quote: “In what is ostensibly the cornerstone “democracy” on the planet, one would think that the citizens in each of America’s cities could simply “vote” on the services they believe make sense for their city to provide.  Running a wireless network in a city like Topeka, Kansas simply has no overriding impact on the state as a whole.  As Thomas Jefferson aptly wrote in a letter to William Jarvis in 1820, “I know of no safe depository of the ultimate powers of society but the people themselves; and if we think them not enlightened enough to exercise their control with a wholesome discretion, the remedy is not to take it from them, but to inform them.”” March 21, 2005: The State Of Texas Refuses To Block Municipal Broadband (Link) Summary: Gurley’s post before this one did its job and Texas removed the harsh language around cities offering broadband access to its citizens. According to Gurley, the battle moved to Colorado.  Favorite Quote: “This proposed bill, in its original form, would prohibit a city from helping any new carrier whatsoever get started.  It’s a pure and blatant anti-competitive move.  It’s been modified slightly, but it is still one of the harshest proposals of any state, and once again created only to help the incumbent carriers by removing competition.  Consumers do not benefit from this language.” March 24, 2005: Texas Two Step – Backwards (Link) Summary: After celebrating the removal of restrictive broadband language three days prior, Texas reinserted the notion. What’s crazy is that the member who reinserted the language, Robert Puente, serves in a district where a large telco company has its headquarters. Hmm …  Favorite Quote: “It is shocking that these local reps really don’t care if broadband deployment in America continues to fall further and further behind the rest of the world.  Just shocking.” June 2, 2005: Texas Sets Key Precedent For Other States In Refusing To Ban Municipal Wireless (Link) Summary: It’s interesting that fixed broadband incumbents in Texas are so opposed to wireless broadband. The incumbents claim wireless is a weaker form of their product. But if it’s so weak, why do they want it banned from their state? Why won’t they let natural competition run its course? If it is indeed weak, there shouldn’t be a reason to impose sanctions and restrictions.  Favorite Quote: “The reason the pro-broadband movement was successful is because they organized, they gathered the real data on the success of municipal wireless deployments, and they were able to inform the citizens about this effort by the incumbents and their key legislators to use regulation to restrict competition.  They leveraged the Internet, blogs, and mailing lists, and made a huge difference.  The tech community also played a role with the AEA, the Broadband Coalition, and TechNet all speaking out against this effort to intentional slow technical progress.  These lessons and resources are now focusing on other states to ensure the Texas outcome.” July 12, 2005: DVD Glut (Link) Summary: Gurley saw the rise of TiVo and its effect on the DVD industry. Why would people pay for DVDs when they can record their favorite movies on TV and watch them whenever they want? There is no practical use for DVDs outside nostalgia and collection.  Favorite Quote: “Could it be that people are watching Shrek 2 on Tivo and saving that on Tivo for future viewing?  Could it be that other activities, such as Internet usage, is infringing on DVD time?” July 19, 2005: Do VCs Help In Building A Technology Platform? (Link) Summary: There are two important implications for venture capital’s lack of investment in Microsoft’s .NET platform. First, VCs are investing on the Open Platform. This is likely due to (what Gurley calls) “a more benign” platform. Such a platform allows for more creativity and application. Second, VCs aren’t investing in .NET applications because Microsoft’s simply going up the software vertical (owning each spot). There is a lack of opportunity within the existing .NET framework.  Favorite Quote: “Venture Capitalists look to the public markets for clues on where to go next.  There is no point in investing in technologies that don’t lead to liquidity events.  What the article stresses is that the majority of VC money these days is being spent on top of the Open Source platform rather than the Microsoft’s .Net platform.” July 22, 2005: Wifi Nation… (Link) Summary: This article gives us an excuse to talk about Innovator’s Dilemma. Clayton Christensen coined the term in his book with the same title. Wikipedia defines the term as, “the new entrant is deep into the S-curve and providing significant value to the new product. By the time the new product becomes interesting to the incumbent’s customers it is too late for the incumbent to react to the new product.” In short, WiFi is disrupting the incumbent broadband and their end consumers. Also, WiFi isn’t built for the incumbents. It’s built for the next generation.  Favorite Quote: “What you will see, and what many continue to deny, is that Metro-scale Wifi isn’t a theory, its a reality.  The networks are live.  They perform way better than EVDO or any cellular alternative. They are cheaper to deploy.  AND, there is huge momentum around more and more networks.” Years: 2006 – 2008 April 5, 2006: Why SOX Will Lead To The Demise Of U.S. Markets (Link) Summary: Sarbanes-Oxley (SOX) killed the small and micro-cap public market spirit. Like most regulations, the creators of SOX thought their stipulations would preserve the growth of public markets. Instead it stunted growth. SOX is an expensive requirement for smaller public companies. The costs disincentivize companies from going public. In return, US capital markets offer less opportunities than global companions. Will this lead to more money flowing overseas? Favorite Quote: “Ironically, the two gentlemen that created SOX did it with the intention of “preserving” U.S. capital market leadership. Their fear was that people viewed our markets as too risky, and so they created SOX to ensure that investors would “trust” our markets.” April, 2006: As Wifi Grows, So Do The PR Attacks (Link) Summary: There will always be haters when new technology replaces old, resentful incumbents. Can you blame them? WiFi completely destroyed their business model. Of course they’re going to run sham campaigns. But that’s the beauty of the Innovator’s Dilemma. WiFi doesn’t care about fixed broadband and incumbents. It’s serving its new wave of customers who want something incumbents can’t offer. Look for this in other up-and-coming technologies.  Favorite Quote: “Better performance than EVDO at a much lower cost.  You won’t stop this with an AP article.  Are their issues?  Sure, but I drop 5 cell calls a day in Silicon Valley and that technology (cellular voice) is over 25 years old.”  April 27, 2006: MMOs (MMORPGs) Continue To Rock (Link) Summary: Gurley again emphasizes the importance of MMO video games — particularly out of Asia. In fact, he mentions that Nexon (Japanese gaming company) plans to file on the JSE. Gurley believes the JSE filing is directly correlated with Sarbanes Oxley (from the article above). Regardless, the real winners in the video game industry are coming from Asia. Winning games will be based on community and entertainment, rather than pure competition. It’s no wonder Fortnite is so popular today. Gurley gave us clues almost 20 years ago.  Favorite Quote: “Many of the rising stars of multi-player interactive entertainment are more social than interactive. They also target much broader demographics than gaming ever dreamed of hitting. Consider three sites targeted at younger children and teens that are all doing extremely well — NeoPets, HabboHotel, and GaiaOnline (Benchmark is an investor in HabboHotel).” June 19, 2008: Back To Blogging (Maybe)… (Link) Summary: Gurley returned from his writing break to mention a few of his favorite reading sources. Gurley notes that he reads each of these websites every morning:  TechCrunch GigaOm Marc Andressen’s Blog Favorite Quote: “The bottom line is I have been really busy. Busy with our investments here at Benchmark, and busy with three growing kids at home.  But in the end, I am quite fond of writing, and I have been inspired by some of the great writing of others.” June 30, 2008: Bleak VC Quarter? Why? (Link) Summary: June 2008 marked another dreary quarter for venture capital. Not one single VC-backed company went public. At first glance, this seems bad for venture capital. But looking deeper, it’s not venture capital that’s the issue. It’s the public market. Between regulations and SOX costs, small companies are opting to remain private at record numbers. As Gurley notes, fund managers want high growth and capital appreciation. But these small growth companies don’t want the issues of being a public company.  Favorite Quote: “This passionate desire to be public is completely gone in Silicon Valley. For reasons you could easily list – Sarbanes Oxley; 12b1 trading rules; shareholder litigation; option pricing scandals; personal liability on 10-Q filing signatures – it is simply not much fun being a public executive.” July 22, 2008: BAILOUT What? (Link) Summary: Fascinating how relevant this quote is for 2020. What we’ve seen from the US government during the COVID pandemic is a double-downed effort on its bailout precautions. Even going so far as to buy bond ETFs on the open market! Capitalism requires failure. It requires weak businesses to fall by the wayside in exchange for stronger competitors.  Favorite Quote: “Is our government really going to bail out equity investors in a failed business enterprise? I totally get keeping America afloat, but it is critical that failed businesses FAIL. They must FAIL. You can’t provide band-aids to equity failure. The whole system will come to a halt. Risk that pans out must result in failure. it is a crucial part of the system.” December 1, 2008: Benchmark Capital: Open For Business (Link) Summary: Gurley and the Benchmark team continued investing while the rest of their VC peers cowered in fear during the bowels of the Great Recession. Investing when others are fearful is not only a sign of a great VC firm, but any great company.  Favorite Quote: “I can’t speak for other firms, but make no mistake about…Benchmark Capital is wide open for business and we are eager to invest new capital behind great entrepreneurs.  Right now.  In this environment.  Today. You may wonder why I feel the need to make this pronouncement, and you may even consider this a stunt.  It is not.   We have made fourteen new investments this year, and are actively considering new investments each and every day.” December 5, 2008: Do VCs Help In Building A Technology Platform; Part 2 (Link) Summary: Microsoft offers three years of free software/service to startups. This is a clear signal that Microsoft understands the power of platforms and where companies choose to build their products. Otherwise, as Gurley notes, why offer it for free? This comes on the heels of three new cloud platform technologies entering the space: Facebook, Salesforce and Amazon AWS. VCs may not choose which platform wins, but they choose which platform gets capital. And to some, that’s the same thing.  Favorite Quote: “It obviously would be overstating it to suggest that VCs help “choose” the platform that wins. That said, it is a powerfully positive indicator if VCs show confidence in a new platform by shifting where they deploy their capital.” Years: 2009 – 2011 February 1, 2009: Google Stock Option Repricing: Get Over It (Link) Summary: Retail investors, bloggers, and financial pundits argued that Google’s Stock Options Repricing hurt the “common” shareholder. Gurley thinks stock options shouldn’t matter because common shareholders gave up their rights (more or less) when investing in Google shares. The fact is, Google’s founder and original shareholder shares carry 9/10ths voting power. That means minority (aka second-class citizen) shareholders get 1/10th. In other words, deal with it.  Favorite Quote: “So my reaction to anyone who owns Google stock and is sore over this decision — Get Over It.  You bought a stock where you gave up the ability to vote on such things, and if you don’t like it, sell the stock.  But you have no right to complain, as the rules were laid out from the beginning.” February 11, 2009: Picture Proof Of The Innovator’s Dilemma: SlideRocket (Link) Summary: With a team of 3 engineers and a fraction of Microsoft’s budget, SlideRocket created (arguably) a better version of PowerPoint. According to Gurley, SlideRocket is a perfect example of the Innovator’s Dilemma. PowerPoint took (probably) billions of dollars in R&D and thousands of engineers to create. SlideRocket did it with 4 orders of magnitude less resources.  Favorite Quote: “One subtlety of this is that it allows others to catch up and basically recreate the same thing for a fraction of the cost.   In SlideRocket’s case, it appears that a team of 3 engineers with primary work done by the founder, have recreated PowerPoint (leveraging Flex of course).”  February 18, 2009: Just Say No To A VC Bailout: A Green Government Venture Fund Is A Flawed Idea (Link) Summary: Some VC investors wanted a bailout from the government during the GFC. Gurley originally thought this was a far-cry from a lone complainer. Then he read an article by Thomas Friedman suggesting the same thing: a bailout for VC targeted at green-tech companies. According to Gurley, VC bailouts are flawed for six reasons: There are no lack of capital in VC VCs don’t deserve a bailout Those that need bailout are (likely) bad ideas Excess capital hurts markets Good companies don’t lack for capital Use customer subsidies instead of government-backed VC investment Favorite Quote: “Great ideas have never suffered from a lack of capital availability.  Bringing extra government dollars to the investment side will only ensure that marginal and sub-par companies get more funding dollars, which historically has had a perverse and negative effect on the overall market.” February 22, 2009: Just Say No To A VC Bailout – Part 2 (Link) Summary: Continuing the rant from the previous blog post, Gurley hits on three main criticisms with Friedman’s cry for a VC bailout. First, Friedman suggested that the US Treasury give the Top 20 VC firms up to $1B to “invest in the best VC ideas”. When you consider the 2% annual fee each year that VC’s take, you’re effectively giving these firms an additional $4B in partners’ fees. Finally, Gurley hammers home the idea that to win in green-tech you need to incentivize the customer on the demand side. Create a positive ROI proposition for the customer to use the product or service.  Favorite Quote: “The key is to create an ROI positive investment for the end customer through subsidies.  Ethanol isn’t falling to succeed because of a lack of capital — it’s a problem with customer ROI.  Invest through subsidies in making the market huge and ROI positive.  Capital alone will not solve the problem as the ethanol case proves.” February 27, 2009: Perfect Online Video Advertising Model: Choose Your Advertiser (Link) Summary: Gurley reveals his “perfect online video advertising model” in which consumers can choose their advertiser. It works like this. Before an online premium or VOD show starts, the content creators present the consumer with a list of 4-9 sponsors for the programming. Then, the consumer picks which sponsor they’d like to see when the inevitable ad runs during their program. The benefit to this is that content creators would know their customers’ interests to the tee, which would allow them to raise prices on advertising channels (read: higher revenue).  Favorite Quote: “Just because I am a male between 18-24 and watching “Lost” doesn’t mean I want an XBOX.  You are more likely to guess that i might want it, but you would be 10X better off if I chose XBOX as my sponsor at the start of the show.  Then you would KNOW I have an interest — no more guessing. Making predictions is always a dangerous game, but I am fairly certain that this will be the video ad model of the future.  It makes way too much sense not to work.” March 2, 2009: Looking For Work: Are You An Insurance Agent? (Link) Summary: One of Gurley’s investments had an unusual circumstance during the GFC: they had excess demand for work. LiveOps, a virtual SaaS call center on the cloud, leverages a network of work-from-home call center operators. At the time of writing, LiveOps had 20,000+ live call-center agents working from home assisting companies like Aegon, Colonial Penn, and American Idol.  Favorite Quote: “Their core technology is a SAAS “contact center in cloud.” Just like anyone’s call center, it is a four-9’s operation that is highly resilient. What’s different, and very unique, is that the agents on the other end don’t actually work for LiveOps – they work for themselves. So far, over 20,000 “crowd-sourced” agents are now working from home on behalf of LiveOps customers – companies like Aegon, Colonial Penn, etc. One really cool customer example is American Idol. For Idol Gives Back, AI’s charity campaign, over 4000 LiveOps agents handled over 200,000 calls in less than five hours. Only a crowd-sourced play could handle such a ramp.” March 9, 2009: How To Monetize A Social Network: MySpace And Facebook Should Follow TenCent (Link) Summary: Social networks had trouble monetizing their websites. MySpace and Facebook failed to generate revenue like Yahoo, which did $7B at the time of writing. The problem wasn’t growing the userbase (both sites had tremendous user growth). It was the dependence on advertising to generate the lion’s share of their revenues. Gurley compares MySpace and Facebook to Tencent (700.HK). The two primary drivers of revenue for Tencent are digital items and casual game packages and upgrades. These are significantly higher-margin businesses than advertising. At the end of the day, social networks are social status symbols. This means if you want to leverage your business, you need to provide users with ways to improve their social status. Favorite Quote: “If you removed the Chanel logo from them, and offered them for $50 cheaper, you could not sell a pair.  Not one.  Why?  People are buying an image that they want to project about themselves.  Without the logo, they fail to make that statement.  The same is true for watches, clothes, cars, sodas, beers, cell phones, and many more items.  People care greatly about how they are perceived and are willing to part with big bucks to achieve it.  Digital items are merely the same phenomenon online.” March 26, 2009: Note To Timothy Geithner: Do Startups & Venture Capitalists Really Need More Regulation? (Link) Summary: The US government levied Sarbanes-Oxley on all public companies after the whole Enron, WorldCom saga. The purpose? Protect investors from future frauds. While the efficacy of “Sarbox” remains in question, one thing doesn’t: the cost on small public companies. Sarbox costs ~$2-$3M to implement. This makes it nearly impossible for small companies to go public because the Sarbox costs eat away all potential operating profits. Overburdening small companies could restrict the pipeline of new public IPOs.  Favorite Quote: “And remember that the largest companies in America that were created in the last 35 years (MSFT, GOOG, AAPL, CSCO, INTC) were all small venture-backed companies at one point in time.  Do we really want to inappropriately restrain or throttle the future pipeline of such companies in America?” May 2, 2009: Swine Flu: Overreaction More Costly Than The Virus Itself? (Link) Summary: It’s amazing how relevant this blog post became during the COVID-19 pandemic. Gurley suggests that in some cases, overreacting to news (like swine flu) can have far worse consequences than the natural course of the virus itself. For example, Mexico’s economy teetering on the brink of insolvency as tourism represents a third of their economy. The argument for overreacting is that it prepares people for the worst-case scenario. Yet that decision has consequences. Consequences we can’t see, and might not see for a long time.  Favorite Quote: “Some people rationalize that this hysteria serves a noble purpose, in that it prepares us for the worse.  This, however, ignores the fact that there are tremendous real economic costs to overreaction, and that sometimes overreaction has far-reaching negative impacts which can be many times greater than that of the original problem.” May 8, 2009: Second Life: Second Most Played PC Title, #1 In Minutes/User (Link) Summary: Gurley’s investment in Linden Lab paid off big time in May 2009 when Linden’s hit game Second Life ranked as the #2 most-played PC title. The game trailed World of Warcraft in number of users, but ranked first in number of minutes played per user. Data like this further reiterates Gurley’s earlier claims that selling goods online (digital signs of social status) can make for a great business. It also shows people love distracting themselves from their everyday lives.  Favorite Quote: “The truth of the matter is that the company is quite large, it’s growing, it’s profitable,  it has hired a number of great people over this time frame, and as the data shows it’s kicking butt. Note that the data also shows SecondLife actually leads WOW in terms of minutes played per user.”   May 10, 2009: Bill Gurley’s Online Video Market Snapshot (Link) Summary: Gurley did an on Hollywood talk about the massive changes in the Online Video Market. The link has an 18-minute video where Gurley outlines five things that matter in the coming online video market battle:  Great content is super expensive Affiliate fees are a “huge fucking deal”  The Netflix Business model is widely misunderstood HBO and the NFL are incredibly well-positioned companies Wireless will not save the day  Favorite Quote: I didn’t have a favorite quote from this post as it was mainly a link to the video and slide deck. I highly recommend watching the video and scanning through the deck. It’s 18 minutes long but you can watch at 1.5-2x speed without issue.  Tyler Durden Sun, 06/19/2022 - 17:30.....»»

Category: blogSource: zerohedgeJun 19th, 2022

Previewing The Fed"s Decision To Kick Off A Record Tightening Cycle Right Into A Recession

Previewing The Fed's Decision To Kick Off A Record Tightening Cycle Right Into A Recession At the conclusion of tomorrow's FOMC meeting, consensus expects the Committee to raise the target range for the federal funds rate by 50bp to 0.75% to 1.0%, the first "double" rate hike since May 2000 (when the Fed definitively burst the dot com bubble)... ... and to announce the start of the reduction of the size of the Fed’s balance sheet, in line with the parameters set out in the March FOMC minutes, somewhere to the tune of $95BN-$100BN per month in bond maturities without active sales (for now). As shown below, while a 50bps rate hike is fully priced in (and in fact, markets are pricing in a modest probability of a 75bps rate hike), rates traders price a roughly 35% chance of a 75bps rate hike in the June meeting. Overall, markets are expecting just over 10 rate hikes by year-end and just under 11 rate hikes through February 2023, at which point the Fed is expected to halt its tightening cycle and start easing. In its FOMC preview, JPMorgan expects the most relevant part of the FOMC statement — the forward guidance on rates — to indicate an expectation that “ongoing increases” in the funds rate will be appropriate; in the post-meeting press conference the bank looks for Powell to convey the need to expeditiously return the funds rate to neutral, and the high likelihood that the funds rate will need to go into restrictive territory. Notably, JPM believes that it is possible we could see a dissent or two for a larger 75bp move, and while the bank thinks there’s an outside chance (perhaps one-in-five) that the hawks persuade their colleagues to support this bigger move, it sees most of the Committee preferring moves in 50bp increments until they finally get the desired tightening in financial conditions. Turning to the fundamentals, JPM notes that it’s pretty clear that this economy doesn’t need stimulative monetary policy. However, less clear are the speed at which this stimulus should be removed, and the reasons for choosing that speed. Whatever the reasons, almost all FOMC policymakers who spoke since the last meeting indicated varying degrees of comfort with hiking by 50bp at next week’s meeting. Notably, Bullard suggested 75bp might be more appropriate (and more “expeditious” than 50bp), though this seemed to receive little buy-in among other Fed officials. According to JPM, "the near-unanimity of this view suggests that perhaps this option has already been tacitly agreed upon, through either a conference call or bilateral calls." Indeed, the Powell Fed has displayed a strong preference to telegraph its intentions ahead of meeting day, and for that reason 50bps is the most likely outcome . But if there is a time to break from habit it’s when the Fed’s inflation credibility is being called into question 0 like right now -  and so don’t fully write off the possibility of a larger rate move. The statement’s forward guidance will be another critical channel by which to influence financial conditions. The Committee is expected to copy the guidance from the last meeting, that it “anticipates that ongoing increases in the target range will be appropriate.” If this phrase is used at meetings at which the FOMC hikes by 25bp (March) and 50bp (May, presumably), then it wouldn’t lock in expectations for a given size of future rate increases, only that more hikes are needed. The risks to this guidance skew very hawkish. However, something like “continue to expeditiously remove accommodation” might imply 50s until the funds rate gets to neutral, which may be too much for the majority of the Committee to stomach. Other changes to the FOMC statement should be fairly modest. Given the contraction in GDP in 1Q, the upbeat phrase about economic activity could be replaced with an upbeat phrase about domestic demand (more particularly about consumer and business spending). Turning to QT, the statement will almost certainly indicate the start of balance sheet reduction (QT), though most of the details of that decision will be relegated to an accompanying "implementation note." Those details will stick closely to the plan spelled out in the March FOMC meeting minutes: monthly runoff caps of $60bn for Treasuries and $35bn for mortgages, and will likely be phased in over a period of three months. As per recent public remarks, actual asset run-off will likely begin at the start of June. Fed officials have indicated that they expect the balance sheet reduction will be a set-it-and-forget-it process, although that's what Yellen said back before the previous QT and we all know how that ended. JPM thinks there is a chance in coming months that the Committee could revisit their decision to subject T-bill runoff to the monthly caps for Treasuries. That said, don’t expect to hear anything further on asset sales in the implementation note. Needless to say, QT matters: as these charts from Crossborder Capital's from Mike Howell show, the S&P 500 reacts in real time to rises and falls in the balance sheet. The Fed has already made some liquidity reductions since the turn of the year, and they coincided more or less exactly with the beginning of the trouble for the stock market: As Bloomberg's John Authers adds, a further factor is QT’s effect on collateral, or on the ability to roll over or refinance investments: it leaves less cash in markets, and make it harder to find collateral when it is needed (this is what triggered the infamous repo crash of Sept 2019 which then led to the even more infamous "NOT QE" QE episode of late 2019. Sharp QT implies a drastic tightening of conditions and the risk of financial accidents. For an analogy, Authers writes, "remember the subprime debacle. That was based on the assumption that adjustable-rate mortgages with low teaser rates could swiftly be refinanced before higher rates bit. It was when borrowers found that they couldn’t refinance, and then started to default, that the crisis set in." It is the the risk of such accidents, which will first and foremost hit the same tech stocks that benefited greatly from the Fed's balance sheet expansion in the past decade... ... that leaves many in the market still deeply skeptical that QT will happen as scheduled. The following comment from Bear Traps Report author Larry McDonald captures this reality best: The beast inside the market has Chair Powell in his sights for the 2nd time since Q 4 2018. Once again it was the Fed whispering into the ear of a journalist over the weekend: “The Fed is set to start shrinking its 9 trillion asset portfolio Their plan rhymes with the 2017-19 version. But this time will be different They’re going sooner and faster all while preparing a speedier pace of rate increases because inflation is high." WSJ Sunday. Hilarious. The Fed went to 50BN a month in September of 2018 and had to stop five minutes later in December this was after promising Wall St economists they were on Auto pilot all the way up to a 2T reduction. Now, they are going to give it a try at 90B a month in May with back to back 50 bp hikes? Who are they kidding? It's the worst start to a year for stocks in decades, consumer savings is down to the bone, GDP prints negative, and the Fed is going to kick off a record tightening cycle? It´s all a show. With conviction we see a near term top in the US dollar and another leg up for hard assets, value vs growth and emerging markets. Humor aside, JPM concludes by noting that while the statement will be agnostic as to the size of future rate moves, Powell can use the press conference to refine this message and will likely indicate that hikes of 50bp or larger are fair game in coming meetings. More generally, both JPM - and the broader market - expects a sternly hawkish tone from the Chair. That said, considering the recent negative GDP print, even a modest trace of dovishness will send risk assets soaring. Speaking of which, JPM is leaning on the dovish side, and the bank's chief economist Mike Feroli thinks the Fed will only deliver two 50bps rate hikes, well below the four 50bps rate hikes currently priced by the market; for those who agree, JPM urges putting on some long risk particularly in the Tech segment: "Our Derivatives team has seen some interest in bullish cash spreads on Nasdaq/QQQs... Separately, our Delta-One team has seen client interest in switching out of SPX/SPY hedges into something that shows more material downside if we have an extended rally that is similar to what we saw on Thursday." To be sure, JPM admits that the above is the “glass is half full” argument. What would prevent this to coming to fruition? Well, according to Andrew Tyler from JPM's flow trading desk, "the reaction to Financials and MegaCap Tech tell us that investors have a base case that the Fed will tightening us into a recession which is exacerbated by commodity-based inflation that will increasingly hurt consumption." Further, these risks are (i) magnified by China’s COVID-Zero policy, which has yet to be fully incorporated into economic forecast and could trigger another wave of earnings downgrades; and, (ii) Russia/Ukraine. The RU/UKR situation seems likely to extend longer than anticipated with the largest risks to the US coming via the Ags complex, driven by both a lack of fertilizer inducing a global redux in crop yield and reduced commodity exports from both countries. As a result, the JPM trader warns that "it may be the case that any rally will be sold until the aforementioned risks are closer to being solved. If so, then remain tactical, remain market-neutral, and consider taking some swings using derivatives if your investment style permits." In conclusion, all we can say is that what the Fed plans to do is one thing. What the market will let it do, is something else, and inflation or no inflation (expect the definition of CPI to be fully revised in a few months to exclude anything that is surging in price) we expect Powell will abort the Fed's tightening process early, just like it did in Q4 2018, with stocks cratering to drive the point home, and forcing the Fed to not only end its tightening but to fast forward to easing and even more QE. Tyler Durden Tue, 05/03/2022 - 15:05.....»»

Category: blogSource: zerohedgeMay 3rd, 2022

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

My Kids Want Plastic Toys. I Want to Go Green. Here’s the Middle Ground

Waiting in a check-out line a few days ago, my children started begging for toys and trinkets hanging on the impulse-buy racks. Rather than replying with the usual “Not today” euphemism, I found myself saying, “Maybe for Christmas.” Alas, it’s that time of year again when I cave because I want my kids’ faces to… Waiting in a check-out line a few days ago, my children started begging for toys and trinkets hanging on the impulse-buy racks. Rather than replying with the usual “Not today” euphemism, I found myself saying, “Maybe for Christmas.” Alas, it’s that time of year again when I cave because I want my kids’ faces to light up when they unwrap their gifts. Their joy brings me joy—and lessens the guilt of indulging in eco-terrible plastic junk. Parents don’t want to add to the global environmental mess that the next generation will inherit. But, especially around the holidays, they are caught between one world where Avengers action figures, LOL Surprise! dolls and LEGO sets are highly desirable play things, and another where they are plastic, plastic, and plastic (packaged in more plastic). [time-brightcove not-tgx=”true”] Plastics come in all shades of bad. Many of them are derived from fossil fuels, and the process causes significant greenhouse gas emissions. By some estimates, the emissions from the plastics industry could overtake those from coal by as soon as 2030. Plastics are also the scourge of the trash management system. They are notorious for ending up in waterways and other ecosystems, where they contaminate habitats, leach chemicals and become part of the food chain. So what’s the solution? “I don’t think there is a magic, silver bullet for the toy plastics issue,” says Katie Senft, a researcher with the U.C. Davis Tahoe Environmental Research Center. “There’s a lot of toys that aren’t going to make it a decade from now,” she says. “And our kids still want them.” Senft is one of several plastics experts I spoke with who is also a parent. It’s hard to know whether to feel reassured or terrified that people with deep knowledge of both polymers and Polly Pockets are dealing with the same challenges as the rest of us. When my children were younger, it was easier to curate their toy chest with timeless—and more environmentally friendly—wooden blocks and trains. Year by year, though, the share of those toys in our house is being eclipsed by AA-battery suckers. As children become little consumers of their own, they become more aware—and more tantalized—by the hot toys displayed in stores, advertised, and chatted up at school. It’s infuriating that companies market plastic objects to kids who don’t fully comprehend the long-term implications of those objects. It’s like walking the cereal aisle where all the chocolate and marshmallow options are at kids’ eye level and the onus is on the adult to explain why we’re opting for plain oatmeal instead. Worse, the world’s plastic problem is way more removed, insurmountable and uncontrollable than what’s for breakfast. Without interventions, the annual flow of plastic into the ocean is on track to triple by 2040 to 32 million tons per year, or the same weight as 600 Titanics, according to a 2020 study funded by Pew Charitable Trusts. Some toymakers are reducing plastic, with much of the progress to date in their packaging. Mattel is shrinking the plastic windows on boxes, or eliminating them entirely, and the company is aiming for its blister containers and cartons to be at least 30% recycled plastic in 2022. Hasbro started phasing out its plastic packaging in 2020 with the goal of being plastic-free for all new products by the end of next year. LEGO has started packaging its bricks in tree-based recycled paper pouches and will complete the transition by 2025. Courtesy HasbroHasbro’s line of Potato Head toys is one example of how some large toy companies are transitioning away from plastic packaging. These efforts shouldn’t be overlooked. Packaging is the dominant source of plastic waste, accounting for nearly half of the global total, since it gets thrown out immediately. The food and beverage industry is the worst offender in this regard. However, the toy industry uses more plastic in its actual products on a revenue basis than any other sector, according to a 2014 United Nations Environment Programme report. And at some point, plastic toys themselves will enter the waste stream as well, reuniting with the plastic containers they came in. “If we can build a circular economy of our packaging, that seems really transformative,” says Dana Gulley, a business consultant who focuses on sustainability and climate justice. “But I’m going to argue they’re still incremental changes and they’re not going to…move us from an extractive to a regenerative economy, which is what we need.” A non-cyclical life cycle During a recent cleanout of my kids’ outdoor toys, I fished out a half dozen that had broken beyond use or repair. Upon inspection, only a plastic watering can (with more holes in its bottom than its spout) featured a recycling symbol. I’d like to think that it became a pipe or a park bench or another watering can for another child to abuse to their heart’s content, unlike the broken pieces of trucks, backhoes, and water wheels that I reluctantly consigned to a landfill for the next 400 years. Municipal waste services don’t recycle toys because it is cost prohibitive to break down all the different pieces and process them individually. “Imagine that you’re cooking something, you’re taking all these materials and you’re only thinking about what’s going to make the best meal,” says Tom Szaky, the CEO and founder of TerraCycle, a company that recycles objects that can’t go in a curbside bin. “Recycling is, you’ve got to take that meal apart into its components, and then once they’re in their components, then you can melt them and reprocess them back into a usable form.” Read More: Holiday Gifts That Actually Fight Climate Change TerraCycle makes this process profitable by charging a steep price. Depending on the quantity and type of material, consumers can pay between around $100 and $500 to send the company a box of stuff. Or they can leverage a corporate program, where companies like Hasbro and VTech, which owns LeapFrog, will subsidize the bill. But even these efforts aren’t going to fix the plastic crisis, Szaky says, as the focus needs to be on lessening our reliance on plastic in the first place. That responsibility falls to both toy companies that fuel consumer demand, and the consumers who effectively vote for products whenever they open their wallets. “Whatever we buy, two more will appear tomorrow—one to replace the one we bought and one to signify the trend. And everything we didn’t buy, one less will appear,” he says. “What would you like the shelf to look like tomorrow?” On the face of it, that idea seems simple: If consumers support only the companies that are environmental superstars, we’ll get to where we want to be much faster. But it’s not easy to evaluate a company’s true waste stream, carbon emissions and social impact—particularly large companies with global supply chains—nor distinguish real environmental progress from “greenwashing,” or overselling of sustainability efforts. Even TerraCycle’s corporate partnerships programs have come under scrutiny, as critics say the recycling process isn’t transparent and consumers often have long waits or other challenges to participate, resulting in very small amounts of material that actually get accepted. A lawsuit against Terracycle and a number of its large corporate partners arose from these concerns, and, as part of a November settlement, qualifying products must not be labeled as “100% recyclable” and must include disclaimers such as “limited availability” when that is the case. Szaky says the company is happy to make this change. “It is becoming increasingly a license-to-operate to make sure that you are talking about [environmental issues] in some way,” says Gulley. “While that seems really positive, if a company is only inadvertently treating that like checkboxes, then the change won’t be enough. And I think that’s what’s at risk right now.” For companies to really make a difference, Gulley argues, corporations need to fully evaluate how their business models rely on peoples’ sacrifices, and they need to commit to repairing that harm. Playing the long(er) game Sadly, the current reality leaves adult consumers to make some tough decisions. They can, of course, spring only for toys that are featured on eco-friendly gift guides that pop up this time of year. Kids, however, don’t write their wish lists based on those guides. Some 90% of toys are made from plastic, according to an oft-cited 2011 estimate from a European plastics trade publication. It’s a dated number and hard to corroborate, but having spent a decent amount of time perusing toy departments and hopscotching landmines scattered around my house, it seems plausible. Manufacturers gravitate to plastic because it’s cheap, versatile and dependable. Those are critical qualities when making products at scale that have to meet safety standards. “One of the great things about plastic is it’s durable, but once it ends up in the environment we don’t want it to be so durable,” says Senft, the U.C. Davis researcher, who studies the growing impact of teeny tiny plastic fragments in aquatic habitats. These so-called microplastics can result from running synthetic textiles like nylon and polyester through the laundry, as well as from plastic trash that has broken apart over time into smaller and smaller bits that don’t decompose. Indeed, plastic is everywhere. As we figure out how to wean ourselves off of it, companies and consumers must work to keep that plastic out of the waste stream for as long as possible, experts say. Where toys are concerned, there are a number of efforts underway to do that. In June, LEGO announced it had developed prototype bricks from recycled PET (a type of plastic typically used for soft-drink bottles) as part of a $400 million effort to be more sustainable. It took years and hundreds of tries to produce the gray bricks—LEGO is still working out how to color them—that are durable, compatible with legacy pieces and hurt just as much underfoot. For the more flexible pieces like plants and trees, LEGO recently moved to a renewable bioplastic derived from sugarcane that has a 20% lower carbon footprint per piece. Courtesy LEGO GroupLEGO recently debuted a prototype brick made from recycled plastic Another company called Green Toys, based in San Leandro, Calif., makes products using only post-consumer HDPE (the type of plastic used in milk jugs). The process isn’t easy. The recycled plastic has to be collected, sorted, processed and tested to be sure it’s not contaminated with banned materials, making it a more expensive material than virgin plastic. To give the toys the best chance of being recycled again, the company uses no other materials, meaning that even the trucks, helicopters and vehicles with moving parts work without screws. “We face limitations that others don’t have, like we don’t do paint or external coatings,” says Green Toys president Charlie Friend. “We don’t do electronics, or any sort of additives of any kind. There are a lot of things that the design team would love to do but are not sustainable.” A major reason companies like Green Toys and LEGO can harness post-consumer materials is because their products have uniformity: their toys are molded plastic without bells or whistles (or hair fibers or polyester fill). There’s an advantage to that on the back end, too, as items made of homogenous plastic have the best chance of getting recycled additional times. But recycling shouldn’t be the go-to solution, argues Tim Brooks, LEGO’s vice president of environmental sustainability—the goal should be a product durable enough to last generations. LEGO has a program that donates used bricks to children in underprivileged communities. The process of cleaning, processing and shipping the pieces is about 80% less carbon intensive than the process to make a new brick. “We only need to recycle if it’s had millions of hours of play,” says Brooks. “The ultimate goal is we want the brick to be reused as long as possible and then have brick-to-brick recycling. But don’t miss the step of reuse.” Read More: I Tried Buying Only Used Holiday Gifts. It Changed How I Think About Shopping Charities and consignment shops often accept toys that are in working order. There are many benefits of buying used items, including cost savings and a feel-good factor. But there are challenges, too. It may mean forgoing the most desired toys of each season that just debuted and haven’t yet made it to the second-hand market (think: the Baby Yoda craze). And unlike many household objects, used toys come with certain risks, including ickiness—well-loved toys can be super gross—and potential safety issues. The responsibility is on the buyer to make sure the toy hasn’t been recalled and doesn’t contain unsafe chemicals. Eventually, though, plastic toys will start to look like the characters in Toy Story 4, straddling the line of play thing and trash thing. Dagoma, a 3D printer manufacturer in France, is aiming to give dismembered action figures a second chance through its Toy Rescue program, which helps people print spare parts to commonly broken toys if they own a 3D printer, or connect with people who have one. But beyond that, there aren’t a ton of good options for toys that are really, truly kaput. I could tell you that my kids are getting a plastic-free Christmas. But I’d be lying. The top toys on their wish lists are plastic, and, whether used condition or new, I’m going to buy them. However, in this season of overindulgence, I’m adopting other ways to stem the plastic flow, like resisting the cheap plastic stocking stuffers that my kids ask for on the checkout line. Both high-quality toys and cheaply made ones “are going to end up in the environment potentially, and they’re both going to last for a long time,” says Senft. “So I say you might as well purchase the piece of plastic that’s actually going to have a longer life cycle with its intended use, versus something from a dollar store that’s going to break after 10 seconds.” Will this little act of resistance suddenly change corporate behavior? No. Miraculously save the planet? No. Make Christmas more meaningful? Most definitely......»»

Category: topSource: timeDec 10th, 2021

Mainstream Economists Are Struggling To Hide The Incoming Economic Collapse

Mainstream Economists Are Struggling To Hide The Incoming Economic Collapse Authored by Brandon Smith via Alt-Market.us, For many years now there has been a contingent of alternative economists working diligently within the liberty movement to combat disinformation being spread by the mainstream media regarding America’s true economic condition. Our efforts have focused primarily on the continued devaluation of the dollar and the forced dependence on globalism that has outsourced and eliminated most U.S. manufacturing and production of raw materials. The problems of devaluation and stagflation have been present since 1916 when the Federal Reserve was officially formed and given power, but the true impetus for a currency collapse and the destruction of American buying power began in 2007-2008 when the Financial Crisis was used as an excuse to allow the Fed to create trillions upon trillions in stimulus dollars for well over a decade. The mainstream media’s claim has always been that the Fed “saved” the U.S. from imminent collapse and that the central bankers are “heroes.” After all, stock markets have mostly skyrocketed since quantitative easing (QE) was introduced during the credit crash, and stock markets are a measure of economic health, right? The devil’s bargain Reality isn’t a mainstream media story. The U.S. economy isn’t the stock market. All the Federal Reserve really accomplished was to forge a devil’s bargain: Trading one manageable deflationary crisis for at least one (possibly more) highly unmanageable inflationary crises down the road. Central banks kicked the can on the collapse, making it far worse in the process. The U.S. economy in particular is extremely vulnerable now. Money created from thin air by the Fed was used to support failing banks and corporations, not just here in America but also banks and companies around the world. Because the dollar has been the world reserve currency for the better part of the past century, the Fed has been able to print cash with wild abandon and mostly avoid inflationary consequences. This was especially true in the decade after the derivatives crunch of 2008. Why? The dollar’s global reserve status means dollars are likely to be held overseas in foreign banks and corporate coffers to be used in global trade. However, there is no such thing as a party that goes on forever. Eventually the punch runs out and the lights shut off. If the dollar is devalued too much, whether by endless printing of new money or by relentless inflationary pressures at home, all those overseas dollars will come flooding back into the U.S. The result is an inflationary avalanche, a massive injection of liquidity exactly when it will cause the most trouble. We are now close to this point of no return. The difference between a crisis and a real crisis As I have said for some time, when inflation becomes visible to the public and their pocketbooks take a hit, this is when the real crisis begins. A Catch-22 situation arises and the Fed must make a choice: To continue with inflationary programs and risk taking the blame for extreme price increases Taper these programs and risk an implosion of stock markets which have long been artificially inflated by stimulus Without Fed support, stock markets will die. We had a taste of this the last time the Fed flirted with tapering in 2018. My position has always been that the Federal Reserve is not a banking institution on a mission to protect American financial interests. Rather, I believe the Fed is an ideological suicide bomber waiting to blow itself up and deliberately derail or destroy the American economy at the right moment. My position has also long been that the bankers would need a cover event to hide their calculated economic attack, otherwise they would take full blame for the resulting disaster. The Covid pandemic, subsequent lockdowns and supply chain snarls have now provided that cover event. Two years after the pandemic started and the Fed has pumped out approximately $6 trillion more in stimulus (officially) and helicopter money through PPP loans and Covid checks. On top of that, Biden is ready to drop another $1 trillion in the span of the next couple years through his recently passed infrastructure bill. In my article ‘Infrastructure Bills Do Not Lead To Recovery, Only Increased Federal Control‘, published in April, I noted that: “Production of fiat money is not the same as real production within the economy… Trillions of dollars in public works programs might create more jobs, but it will also inflate prices as the dollar goes into decline. So, unless wages are adjusted constantly according to price increases, people will have jobs, but still won’t be able to afford a comfortable standard of living. This leads to stagflation, in which prices continue to rise while wages and consumption stagnate. Another Catch-22 to consider is that if inflation becomes rampant, the Federal Reserve may be compelled (or claim they are compelled) to raise interest rates significantly in a short span of time. This means an immediate slowdown in the flow of overnight loans to major banks, an immediate slowdown in loans to large and small businesses, an immediate crash in credit options for consumers, and an overall crash in consumer spending. You might recognize this as the recipe that created the 1981-1982 recession, the third-worst in the 20th century. In other words, the choice is stagflation, or deflationary depression.” It would appear that the Fed has chosen stagflation. We have now reached the stage of the game in which stagflation is becoming a household term, and it’s only going to get worse from here on. Lies, damned lies and statistics According to official consumer price index (CPI) calculations and Fed data, we are now witnessing the largest inflation surge in over 30 years, but the real story is much more concerning. CPI numbers are manipulated and have been since the 1990’s when calculation methods were changed and certain unsavory factors were removed. If we look at inflation according to the original way of calculation, it is actually double that reported by the government today. In particular, necessities like food, housing and energy have exploded in price, but we are only at the beginning. To be clear, Biden’s infrastructure bill and the pandemic stimulus are not the only culprits behind the stagflation event. This has been a long time coming; it is the culmination of many years of central bank stimulus sabotage and multiple presidents supporting multiple dollar devaluation schemes. Biden simply appears to be the president to put the final nail in the coffin of the U.S. economy (or perhaps Kamala Harris, we’ll see how long Biden maintains his mental health facade). But how bad will the situation get? “Collapse” is not too strong a word I think most alternative economists have called the situation correctly in predicting a “collapse.” This is often treated as a loaded term, but I don’t know what else you could call the scenario we are facing. The covid lockdowns and the battle over the vax mandates have perhaps distracted Americans from an even larger danger of financial instability. That fight is important and must continue, but stopping the mandates does not mean the overarching threat of economic chaos goes away, and both serve the interest of central bankers and globalists. Some of the key policies within the literature for the “Great Reset” and what the World Economic Forum calls “The 4th Industrial Revolution” includes Universal Basic Income (UBI), the “Sharing Economy” and eventually a global digital currency system using the IMF’s Special Drawing Rights basket as a foundation. Essentially, it would be a form of global technocratic communism, and if you enjoy individual freedom, being forced into total reliance on the government for your very survival does not sound appealing. To obtain such a system would require a catastrophe of epic proportions. The Covid pandemic gets the globalists part of the way there, but it’s obviously not enough. Covid has not convinced many hundreds of millions of people around the world to give up their freedoms for the sake of security. But maybe a stagflationary collapse will accomplish what Covid has not? Accelerated price spikes in necessities including housing and food will generate mass poverty and homelessness. There is no chance that wages will keep up with costs. The government might step in with more stimulus to help major corporations and businesses increase wages, but this would basically be the beginning of a universal basic income (UBI, or free money for everyone) and it would only cause more dollar devaluation and more inflation. They could try to freeze prices as many communist regimes have in the past, but this only leads to increased manufacturing shut downs because the costs of production are too high and the profit incentives too low. I suspect that the establishment will bring back regular checks (like the Covid checks) for the public now struggling to deal with ever increasing expenses and uncertainty, but with strings attached. Don’t expect a UBI check, for example, if you refuse to comply with the vax mandates. If you run a business, don’t expect stimulus aid if you hire non-compliant workers. UBI gives the government ultimate control over everything, and a stagflationary crisis gives them the perfect opportunity to introduce permanent UBI. The mainstream can no longer deny the fact that stagflation is happening and it is a threat, so hopefully those people that have not been educated on the situation will learn quickly enough to complete the preparations necessary to survive. Countering stagflation will require localized production, decentralization and a move away from reliance on the global supply chain, the institution of local currency systems, perhaps using state banks like the one in North Dakota as a model, barter markets and physical precious metals that rise in value along with inflationary pressures. There is a lot that needs to be done, and very little time to do it. At bottom, the fight against economic collapse and the “Great Reset” starts with each individual and how they prepare. Each person caught by surprise and stricken with poverty is just another person added to the hungry mob begging the establishment for draconian solutions like UBI. Each properly-prepared individual is, as always, an obstacle to authoritarianism. It’s time to choose which one you will be. *  *  * With global tensions spiking, thousands of Americans are moving their IRA or 401(k) into an IRA backed by physical gold. Now, thanks to a little-known IRS Tax Law, you can too. Learn how with a free info kit on gold from Birch Gold Group. It reveals how physical precious metals can protect your savings, and how to open a Gold IRA. Click here to get your free Info Kit on Gold. Tyler Durden Tue, 12/07/2021 - 08:16.....»»

Category: worldSource: nytDec 7th, 2021

Futures Rebound From Friday Rout As Omicron Fears Ease

Futures Rebound From Friday Rout As Omicron Fears Ease S&P futures and European stocks rebounded from Friday’s selloff while Asian shares fell, as investors took comfort in reports from South Africa which said initial data doesn’t show a surge of hospitalizations as a result of the omicron variant, a view repeated by Anthony Fauci on Sunday. Meanwhile, fears about a tighter Fed were put on the backburner. Also overnight, China’s central bank announced it will cut the RRR by 50bps releasing 1.2tn CNY in liquidity, a move that had been widely expected. The cut comes as insolvent Chinese property developer Evergrande was said to be planning to include all its offshore public bonds and private debt obligations in a restructuring plan. US equity futures rose 0.3%, fading earlier gains, and were last trading at 4,550. Nasdaq futures pared losses early in the U.S. morning, trading down 0.4%. Oil rose after Saudi Arabia boosted the prices of its crude, signaling confidence in the demand outlook, which helped lift European energy shares. The 10-year Treasury yield advanced to 1.40%, while the dollar was little changed and the yen weakened. “A wind of relief may blow the current risk-off trading stance away this week,” said Pierre Veyret, a technical analyst at U.K. brokerage ActivTrades. “Concerns related to the omicron variant may ease after South African experts didn’t register any surge in deaths or hospitalization.” As Bloromberg notes, the mood across markets was calmer on Monday after last week’s big swings in technology companies and a crash in Bitcoin over the weekend. Investors pointed to good news from South Africa that showed hospitals haven’t been overwhelmed by the latest wave of Covid cases. Initial data from South Africa are “a bit encouraging regarding the severity,” Anthony Fauci, U.S. President Joe Biden’s chief medical adviser, said on Sunday. At the same time, he cautioned that it’s too early to be definitive. Here are some of the biggest U.S. movers today: Alibaba’s (BABA US) U.S.-listed shares rise 1.9% in premarket after a 8.2% drop Friday prompted by the delisting plans of Didi Global. Alibaba said earlier it is replacing its CFO and reshuffling the heads of its commerce businesses Rivian (RIVN US) has the capabilities to compete with Tesla and take a considerable share of the electric vehicle market, Wall Street analysts said as they started coverage with overwhelmingly positive ratings. Shares rose 2.2% initially in U.S. premarket trading, but later wiped out gains to drop 0.9% Stocks tied to former President Donald Trump jump in U.S. premarket trading after his media company agreed to a $1 billion investment from a SPAC Cryptocurrency-exposed stocks tumble amid volatile trading in Bitcoin, another indication of the risk aversion sweeping across financial markets Laureate Education (LAUR US) approved the payment of a special cash distribution of $0.58 per share. Shares rose 2.8% in postmarket Friday AbCellera Biologics (ABCL US) gained 6.2% postmarket Friday after the company confirmed that its Lilly-partnered monoclonal antibody bamlanivimab, together with etesevimab, received an expanded emergency use authorization from the FDA as the first antibody therapy in Covid-19 patients under 12 European equities drifted lower after a firm open. Euro Stoxx 50 faded initial gains of as much as 0.9% to trade up 0.3%. Other cash indexes follow suit, but nonetheless remain in the green. FTSE MIB sees the largest drop from session highs. Oil & gas is the strongest sector, underpinned after Saudi Arabia raised the prices of its crude. Tech, autos and financial services lag. Companies that benefited from increased demand during pandemic-related lockdowns are underperforming in Europe on Monday as investors assess whether the omicron Covid variant will force governments into further social restrictions. Firms in focus include meal-kit firm HelloFresh (-2.3%) and online food delivery platforms Delivery Hero (-5.4%), Just Eat Takeaway (-5.6%) and Deliveroo (-8.5%). Remote access software firm TeamViewer (-3.7%) and Swedish mobile messaging company Sinch (-3.0%), gaming firm Evolution (-4.2%). Online pharmacies Zur Rose (-5.1%), Shop Apotheke (-3.5%). Online grocer Ocado (-2.2%), online apparel retailer Zalando (-1.5%). In Asia, the losses were more severe as investors remained wary over the outlook for U.S. monetary policy and the spread of the omicron variant.  The Hang Seng Tech Index closed at the lowest level since its inception. SoftBank Group Corp. fell as much as 9% in Tokyo trading as the value of its portfolio came under more pressure. The MSCI Asia Pacific Index slid as much as 0.9%, hovering above its lowest finish in about a year. Consumer discretionary firms and software technology names contributed the most to the decline, while the financial sector outperformed.  Hong Kong’s equity benchmark was among the region’s worst performers amid the selloff in tech shares. The market also slumped after the omicron variant spread among two fully vaccinated travelers across the hallway of a quarantine hotel in the city, unnerving health authorities. “People are waiting for new information on the omicron variant,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management in Tokyo. “We’re at a point where it’s difficult to buy stocks.” Separately, China’s central bank announced after the country’s stock markets closed that it will cut the amount of cash most banks must keep in reserve from Dec. 15, providing a liquidity boost to economic growth.  Futures on the Nasdaq 100 gained further in Asia late trading. The underlying gauge slumped 1.7% on Friday, after data showed U.S. job growth had its smallest gain this year and the unemployment rate fell more than forecast. Investors seem to be focusing more on the improved jobless rate, as it could back the case for an acceleration in tapering, Ichikawa said.  Asian equities have been trending lower since mid-November amid a selloff in Chinese technology giants, concern over U.S. monetary policy and the spread of omicron. The risk-off sentiment pushed shares to a one-year low last week.  Overnight, the PBoC cut the RRR by 50bps (as expected) effective 15th Dec; will release CNY 1.2tln in liquidity; RRR cut to guide banks for SMEs and will use part of funds from RRR cut to repay MLF. Will not resort to flood-like stimulus; will reduce capital costs for financial institutions by around CNY 15bln per annum. The news follows earlier reports via China Securities Daily which noted that China could reduce RRR as soon as this month, citing a brokerage firm. However, a separate Chinese press report noted that recent remarks by Chinese Premier Li on the reverse repo rate doesn't mean that there will be a policy change and an Economics Daily commentary piece suggested that views of monetary policy moves are too simplistic and could lead to misunderstandings after speculation was stoked for a RRR cut from last week's comments by Premier Li. Elsewhere, Indian stocks plunged in line with peers across Asia as investors remained uncertain about the emerging risks from the omicron variant in a busy week of monetary policy meetings.   The S&P BSE Sensex slipped 1.7% to 56,747.14, in Mumbai, dropping to its lowest level in over three months, with all 30 shares ending lower. The NSE Nifty 50 Index also declined by a similar magnitude. Infosys Ltd. was the biggest drag on both indexes and declined 2.3%.  All 19 sub-indexes compiled by BSE Ltd. declined, led by a measure of software exporters.  “If not for the new omicron variant, economic recovery was on a very strong footing,” Mohit Nigam, head of portfolio management services at Hem Securities Ltd. said in a note. “But if this virus quickly spreads in India, then we might experience some volatility for the coming few weeks unless development is seen on the vaccine side.” Major countries worldwide have detected omicron cases, even as the severity of the variant still remains unclear. Reserve Bank of Australia is scheduled to announce its rate decision on Tuesday, while the Indian central bank will release it on Dec. 8. the hawkish comments by U.S. Fed chair Jerome Powell on tackling rising inflation also weighed on the market Japanese equities declined, following U.S. peers lower, as investors considered prospects for inflation, the Federal Reserve’s hawkish tilt and the omicron virus strain. Telecommunications and services providers were the biggest drags on the Topix, which fell 0.5%. SoftBank Group and Daiichi Sankyo were the largest contributors to a 0.4% loss in the Nikkei 225. The Mothers index slid 3.8% amid the broader decline in growth stocks. A sharp selloff in large technology names dragged U.S. stocks lower Friday. U.S. job growth registered its smallest gain this year in November while the unemployment rate fell by more than forecast to 4.2%. There were some good aspects in the U.S. jobs data, said Shoji Hirakawa, chief global strategist at Tokai Tokyo Research Institute. “We’re in this contradictory situation where there’s concern over an early rate hike given the economic recovery, while at the same time there’s worry over how the omicron variant may slow the current recovery.” Australian stocks ended flat as staples jumped. The S&P/ASX 200 index closed little changed at 7,245.10, swinging between gains and losses during the session as consumer staples rose and tech stocks fell. Metcash was the top performer after saying its 1H underlying profit grew 13% y/y. Nearmap was among the worst performers after S&P Dow Jones Indices said the stock will be removed from the benchmark as a result of its quarterly review. In New Zealand, the S&P/NZX 50 index fell 0.6% to 12,597.81. In FX, the Bloomberg Dollar Spot Index gave up a modest advance as the European session got underway; the greenback traded mixed versus its Group-of-10 peers with commodity currencies among the leaders and havens among the laggards. JPY and CHF are the weakest in G-10, SEK outperforms after hawkish comments in the Riksbank’s minutes. USD/CNH drifts back to flat after a fairly well telegraphed RRR cut materialized early in the London session.  The euro fell to a day low of $1.1275 before paring. The pound strengthened against the euro and dollar, following stocks higher. Bank of England deputy governor Ben Broadbent due to speak. Market participants will be watching for his take on the impact of the omicron variant following the cautious tone of Michael Saunders’ speech on Friday. Treasury yields gapped higher at the start of the day and futures remain near lows into early U.S. session, leaving yields cheaper by 4bp to 5bp across the curve. Treasury 10-year yields around 1.395%, cheaper by 5bp vs. Friday’s close while the 2s10s curve steepens almost 2bps with front-end slightly outperforming; bunds trade 4bp richer vs. Treasuries in 10-year sector. November's mixed U.S. jobs report did little to shake market expectations of more aggressive tightening by the Federal Reserve. Italian bonds outperformed euro-area peers after Fitch upgraded the sovereign by one notch to BBB, maintaining a stable outlook. In commodities, crude futures drift around best levels during London hours. WTI rises over 1.5%, trading either side of $68; Brent stalls near $72. Spot gold trends lower in quiet trade, near $1,780/oz. Base metals are mixed: LME copper outperforms, holding in the green with lead; nickel and aluminum drop more than 1%. There is nothing on today's economic calendar. Focus this week includes U.S. auctions and CPI data, while Fed speakers enter blackout ahead of next week’s FOMC. Market Snapshot S&P 500 futures up 0.7% to 4,567.50 STOXX Europe 600 up 0.8% to 466.39 MXAP down 0.9% to 189.95 MXAPJ down 1.0% to 617.01 Nikkei down 0.4% to 27,927.37 Topix down 0.5% to 1,947.54 Hang Seng Index down 1.8% to 23,349.38 Shanghai Composite down 0.5% to 3,589.31 Sensex down 1.5% to 56,835.37 Australia S&P/ASX 200 little changed at 7,245.07 Kospi up 0.2% to 2,973.25 Brent Futures up 2.9% to $71.89/bbl Gold spot down 0.2% to $1,780.09 U.S. Dollar Index up 0.15% to 96.26 German 10Y yield little changed at -0.37% Euro down 0.2% to $1.1290 Top Overnight News from Bloomberg Speculators were caught offside in both bonds and stocks last week, increasing their bets against U.S. Treasuries and buying more equity exposure right before a bout of volatility caused the exact opposite moves Inflation pressure in Europe is still likely to be temporary, Eurogroup President Paschal Donohoe said Monday, even if it is taking longer than expected for it to slow China Evergrande Group’s stock tumbled close to a record low amid signs a long-awaited debt restructuring may be at hand, while Kaisa Group Holdings Ltd. faces a potential default this week in major tests of China’s ability to limit fallout from the embattled property sector China Evergrande Group is planning to include all its offshore public bonds and private debt obligations in a restructuring that may rank among the nation’s biggest ever, people familiar with the matter said China tech shares tumbled on Monday, with a key gauge closing at its lowest level since launch last year as concerns mount over how much more pain Beijing is willing to inflict on the sector The U.S. is poised to announce a diplomatic boycott of the Beijing Winter Olympics, CNN reported, a move that would create a new point of contention between the world’s two largest economies SNB Vice President Fritz Zurbruegg to retire at the end of July 2022, according to statement Bitcoin has markedly underperformed rivals like Ether with its weekend drop, which may underscore its increased connection with macro developments Austrians who reject mandatory coronavirus vaccinations face 600-euro ($677) fines, according to a draft law seen by the Kurier newspaper Some Riksbank board members expressed different nuances regarding the asset holdings and considered that it might become appropriate for the purchases to be tapered further next year,  the Swedish central bank says in minutes from its Nov. 24 meeting A more detailed look at global markets courtesy of Newsquawk Asian equities began the week cautiously following last Friday's negative performance stateside whereby the Russell 2000 and Nasdaq closed lower by around 2% apiece, whilst the S&P 500 and Dow Jones saw shallower losses. The Asia-Pac region was also kept tentative amid China developer default concerns and conflicting views regarding speculation of a looming RRR cut by China's PBoC. The ASX 200 (+0.1%) was initially dragged lower by a resumption of the underperformance in the tech sector, and with several stocks pressured by the announcement of their removal from the local benchmark, although losses for the index were later reversed amid optimism after Queensland brought forward the easing of state border restrictions, alongside the resilience in the defensive sectors. The Nikkei 225 (-0.4%) suffered from the currency inflows late last week but finished off worse levels. The Hang Seng (-1.8%) and Shanghai Comp. (-0.5%) were mixed with Hong Kong weighed by heavy tech selling and as default concerns added to the headwinds after Sunshine 100 Holdings defaulted on a USD 170mln bond payment, whilst Evergrande shares slumped in early trade after it received a demand for payments but noted there was no guarantee it will have the sufficient funds and with the grace period for two offshore bond payments set to expire today. Conversely, mainland China was kept afloat by hopes of a looming RRR cut after comments from Chinese Premier Li that China will cut RRR in a timely manner and a brokerage suggested this could occur before year-end. However, other reports noted the recent remarks by Chinese Premier Li on the reverse repo rate doesn't mean a policy change and that views of monetary policy moves are too simplistic which could lead to misunderstandings. Finally, 10yr JGBs were steady after having marginally extended above 152.00 and with prices helped by the lacklustre mood in Japanese stocks, while price action was tame amid the absence of BoJ purchases in the market today and attention was also on the Chinese 10yr yield which declined by more than 5bps amid speculation of a potentially looming RRR cut. Top Asian News SoftBank Slumps 9% Monday After Week of Bad Portfolio News Alibaba Shares Rise Premarket After Rout, Leadership Changes China PBOC Repeats Prudent Policy Stance With RRR Cut China Cuts Reserve Requirement Ratio as Economy Slows Bourses in Europe kicked off the new trading week higher across the board but have since drifted lower (Euro Stoxx 50 +0.1%; Stoxx 600 +0.3%) following a somewhat mixed lead from APAC. Sentiment across markets saw a fleeting boost after the Asia close as China’s central bank opted to cut the RRR by 50bps, as touted overnight and in turn releasing some CNY 1.2tln in liquidity. This saw US equity futures ticking to marginal fresh session highs, whilst the breakdown sees the RTY (+0.6%) outpacing vs the ES (Unch), YM (+0.3%) and NQ (-0.6%), with the US benchmarks eyeing this week’s US CPI as Fed speakers observe the blackout period ahead of next week’s FOMC policy decision – where policymakers are expected to discuss a quickening of the pace of QE taper. From a technical standpoint, the ESz1 and NQz1 see their 50 DMAs around 4,540 and 16,626 respectively. Back to trade, Euro-indices are off best levels with a broad-based performance. UK’s FTSE 100 (+0.8%) received a boost from base metals gaining impetus on the PBoC RRR cut, with the UK index now the outperformer, whilst gains in Oil & Gas and Banks provide further tailwinds. Sectors initially started with a clear cyclical bias but have since seen a reconfiguration whereby the defensives have made their way up the ranks. The aforementioned Oil & Gas, Banks and Basic Resources are currently the winners amid upward action in crude, yields and base metals respectively. Food & Beverages and Telecoms kicked off the session at the bottom of the bunch but now reside closer to the middle of the table. The downside meanwhile sees Travel & Tech – two sectors which were at the top of the leaderboard at the cash open – with the latter seeing more noise surrounding valuations and the former initially unreactive to UK tightening measures for those travelling into the UK. In terms of individual movers, AstraZeneca (+0.7%) is reportedly studying the listing of its new vaccine division. BT (+1.2%) holds onto gains as Discovery is reportedly in discussions regarding a partnership with BT Sport and is offering to create a JV, according to sources. Taylor Wimpey (Unch) gave up opening gains seen in wake of speculation regarding Elliott Management purchasing a small stake. Top European News Johnson Says U.K. Awaiting Advice on Omicron Risks Before Review Scholz Names Harvard Medical Expert to Oversee Pandemic Policy EU Inflation Still Seen as Temporary, Eurogroup’s Donohoe Says Saudi Crown Prince Starts Gulf Tour as Rivalries Melt Away In FX, the Buck has settled down somewhat after Friday’s relatively frenetic session when price action and market moves were hectic on the back of a rather mixed BLS report and stream of Omicron headlines, with the index holding a tight line above 96.000 ahead of a blank US agenda. The Greenback is gleaning some traction from the firmer tone in yields, especially at the front end of the curve, while also outperforming safer havens and funding currencies amidst a broad upturn in risk sentiment due to perceivably less worrying pandemic assessments of late and underpinned by the PBoC cutting 50 bp off its RRR, as widely touted and flagged by Chinese Premier Li, with effect from December 15 - see 9.00GMT post on the Headline Feed for details, analysis and the initial reaction. Back to the Dollar and index, high betas and cyclicals within the basket are doing better as the latter meanders between 96.137-379 and well inside its wide 95.944-96.451 pre-weekend extremes. AUD/GBP/CAD/NZD - A technical correction and better news on the home front regarding COVID-19 after Queensland announced an earlier date to ease border restrictions, combined to give the Aussie a lift, but Aud/Usd is tightening its grip on the 0.7000 handle with the aid of the PBoC’s timely and targeted easing in the run up to the RBA policy meeting tomorrow. Similarly, the Pound appears to have gleaned encouragement from retaining 1.3200+ status and fending off offers into 0.8550 vs the Euro rather than deriving impetus via a rise in the UK construction PMI, while the Loonie is retesting resistance around 1.2800 against the backdrop of recovering crude prices and eyeing the BoC on Wednesday to see if guidance turns more hawkish following a stellar Canadian LFS. Back down under, the Kiwi is straddling 0.6750 and 1.0400 against its Antipodean peer in wake of a pick up in ANZ’s commodity price index. CHF/JPY/EUR - Still no sign of SNB action, but the Franc has fallen anyway back below 0.9200 vs the Buck and under 1.0400 against the Euro, while the Yen is under 113.00 again and approaching 128.00 respectively, as the single currency continues to show resilience either side of 1.1300 vs its US counterpart and a Fib retracement level at 1.1290 irrespective of more poor data from Germany and a deterioration in the Eurozone Sentix index, but increases in the construction PMIs. SCANDI/EM - The aforementioned revival in risk appetite, albeit fading, rather than Riksbank minutes highlighting diverse opinion, is boosting the Sek, and the Nok is also drawing some comfort from Brent arresting its decline ahead of Usd 70/brl, but the Cnh and Cny have been capped just over 6.3700 by the PBoC’s RRR reduction and ongoing default risk in China’s property sector. Elsewhere, the Try remains under pressure irrespective of Turkey’s Foreign Minister noting that domestic exports are rising and the economy is growing significantly, via Al Jazeera or claiming that the Lira is exposed to high inflation to a degree, but this is a temporary problem, while the Rub is treading cautiously before Russian President Putin and US President Biden make a video call on Tuesday at 15.00GMT. In commodities, WTI and Brent front month futures are firmer on the day with the complex underpinned by Saudi Aramco upping its official selling prices (OSPs) to Asian and US customers, coupled with the lack of progress on the Iranian nuclear front. To elaborate on the former; Saudi Arabia set January Arab light crude oil OSP to Asia at Oman/Dubai average +USD 3.30/bbl which is an increase from this month’s premium of USD 2.70/bbl, while it set light crude OSP to North-West Europe at ICE Brent USD -1.30/bbl vs. this month’s discount of USD 0.30/bbl and set light crude OSP to the US at ASCI +USD 2.15/bbl vs this month’s premium of USD 1.75/bbl. Iranian nuclear talks meanwhile are reportedly set to resume over the coming weekend following deliberations, although the likelihood of a swift deal at this point in time seems minuscule. A modest and fleeting boost was offered to the complex by the PBoC cutting RRR in a bid to spur the economy. WTI Jan resides on either side of USD 68/bbl (vs low USD 66.72/bbl) whilst Brent Feb trades around USD 71.50/bbl (vs low 70.24/bbl). Over to metals, spot gold trades sideways with the cluster of DMAs capping gains – the 50, 200 and 100 DMAs for spot reside at USD 1,792/oz, USD 1,791.50/oz and USD 1,790/oz respectively. Base metals also saw a mild boost from the PBoC announcement – LME copper tested USD 9,500/t to the upside before waning off best levels. US Event Calendar Nothing major scheduled DB's Jim Reid concludes the overnight wrap We’re really at a fascinating crossroads in markets at the moment. The market sentiment on the virus and the policymakers at the Fed are moving in opposite directions. The greatest impact of this last week was a dramatic 21.1bps flattening of the US 2s10s curve, split almost evenly between 2yr yields rising and 10yrs yields falling. As it stands, the Fed are increasingly likely to accelerate their taper next week with a market that is worried that it’s a policy error. I don’t think it is as I think the Fed is way behind the curve. However I appreciate that until we have more certainly on Omicron then it’s going to be tough to disprove the policy error thesis. The data so far on Omicron can be fitted to either a pessimistic or optimistic view. On the former, it seems to be capable of spreading fast and reinfecting numerous people who have already had covid. Younger people are also seeing a higher proportion of admissions which could be worrying around the world given lower vaccinations levels in this cohort. On the other hand, there is some evidence in South Africa that ICU usage is lower relative to previous waves at the same stage and that those in hospital are largely unvaccinated and again with some evidence that they are requiring less oxygen than in previous waves. It really does feel like Omicron could still go both ways. It seems that it could be both more transmittable but also less severe. How that impacts the world depends on the degree of both. It could be bad news but it could also actually accelerate the end of the pandemic which would be very good news. Lots of people more qualified than me to opine on this aren’t sure yet so we will have to wait for more news and data. I lean on the optimistic side here but that’s an armchair epidemiologist’s view. Anthony Fauci (chief medical advisor to Mr Biden) said to CNN last night that, “We really gotta be careful before we make any determinations that it is less severe or really doesn’t clause any severe illness comparable to Delta, but this far the signals are a bit encouraging….. It does not look like there’s a great degree of severity to it.” Anyway, the new variant has taken a hold of the back end of the curve these past 10 days. Meanwhile the front end is taking its guidance from inflation and the Fed. On cue, could this Friday see the first 7% US CPI print since 1982? With DB’s forecasts at 6.9% for the headline (+5.1% for core) we could get close to breaking such a landmark level. With the Fed on their media blackout period now, this is and Omicron are the last hurdles to cross before the FOMC conclusion on the 15th December where DB expect them to accelerate the taper and head for a March end. While higher energy prices are going to be a big issue this month, the recent falls in the price of oil may provide some hope on the inflation side for later in 2022. However primary rents and owners’ equivalent rents (OER), which is 40% of core CPI, is starting to turn and our models have long suggested a move above 4.5% in H1 2022. In fact if we shift-F9 the model for the most recent points we’re looking like heading towards a contribution of 5.5% now given the signals from the lead indicators. So even as YoY energy prices ease and maybe covid supply issues slowly fade, we still think inflation will stay elevated for some time. As such it was a long overdue move to retire the word transitory last week from the Fed’s lexicon. Another of our favourite measures to show that the Fed is way behind the curve at the moment is the quits rate that will be contained within Wednesday’s October JOLTS report. We think the labour market is very strong in the US at the moment with the monthly employment report lagging that strength. Having said that the latest report on Friday was reasonably strong behind the headline payroll disappointment. We’ll review that later. The rest of the week ahead is published in the day by day calendar at the end but the other key events are the RBA (Tuesday) and BoC (Wednesday) after the big market disruptions post their previous meetings, Chinese CPI and PPI (Thursday), final German CPI (Friday) and the US UoM consumer confidence (Friday). Also look out for Congressional newsflow on how the year-end debt ceiling issue will get resolved and also on any progress in the Senate on the “build back better” bill which they want to get through before year-end. Mr Manchin remains the main powerbroker. In terms of Asia as we start the week, stocks are trading mixed with the CSI (+0.62%), Shanghai Composite (+0.37%) and KOSPI (+0.11%) trading higher while the Nikkei (-0.50%) and Hang Seng (-0.91%) are lower. Chinese stock indices are climbing after optimism over a RRR rate cut after Premier Li Kequiang's comments last week that it could be cut in a timely manner to support the economy. In Japan SoftBank shares fell -9% and for a sixth straight day amid the Didi delisting and after the US FTC moved to block a key sale of a company in its portfolio. Elsewhere futures are pointing a positive opening in US and Europe with S&P 500 (+0.46%) and DAX (+1.00%) futures both trading well in the green. 10yr US Treasury yields are back up c.+4.2bps with 2yrs +2.6bps. Oil is also up c.2.2% Over the weekend Bitcoin fell around 20% from Friday night into Saturday. It’s rallied back a reasonable amount since (from $42,296 at the lows) and now stands at $48,981, all after being nearly $68,000 a month ago. Turning back to last week now, and the virus and hawkish Fed communications were the major themes. Despite so many unknowns (or perhaps because of it) markets were very responsive to each incremental Omicron headline last week, which drove equity volatility to around the highest levels of the year. The VIX closed the week at 30.7, shy of the year-to-date high of 37.21 reached in January and closed above 25 for 5 of the last 6 days. The S&P 500 declined -1.22% over the week (-0.84% Friday). The Stoxx 600 fell a more modest -0.28% last week, -0.57% on Friday. To be honest both felt like they fell more but we had some powerful rallies in between. The Nasdaq had a poorer week though, falling -c.2.6%, after a -1.9% decline on Friday. The other main theme was the pivot in Fed communications toward tighter policy. Testifying to Congress, Fed Chair Powell made a forceful case for accelerating the central bank’s asset purchase taper program, citing persistent elevated inflation and an improving labour market, amid otherwise strong demand in the economy, clearing the way for rate hikes thereafter. Investors priced in higher probability of earlier rate hikes, but still have the first full Fed hike in July 2022. 2yr treasury yields were sharply higher (+9.1bps on week, -2.3bps Friday) while 10yr yields declined (-12.0bps on week, -9.1bps Friday) on the prospect of a hard landing incurred from quick Fed tightening as well as the gloomy Covid outlook. The yield curve flattened -21.1bps (-6.8bps Friday) to 75.6bps, the flattest it has been since December 2020, or three stimulus bills ago if you like (four if you think build back better is priced in). German and UK debt replicated the flattening, with 2yr yields increasing +1.3bps (-0.7bps Friday) in Germany, and +0.3bps (-6.7bps) in UK this week, with respective 10yr yields declining -5.3bps (-1.9bps Friday) and -7.8bps (-6.4bps Friday). On the bright side, Congress passed a stopgap measure to keep the government funded through February, buying lawmakers time to agree to appropriations for the full fiscal year, avoiding a disruptive shutdown. Positive momentum out of DC prompted investors to increase the odds the debt ceiling will be resolved without issue, as well, with yields on Treasury bills maturing in December declining a few basis points following the news. US data Friday was strong. Despite the headline payroll increase missing the mark (+210k v expectations of +550k), the underlying data painted a healthy labour market picture, with the unemployment rate decreasing to 4.2%, and participation increasing to 61.8%. Meanwhile, the ISM services index set another record high. Oil prices initially fell after OPEC unexpectedly announced they would proceed with planned production increases at their January meeting. They rose agin though before succumbing to the Omicron risk off. Futures prices ended the week down again, with Brent futures -3.67% lower (+0.55% Friday) and WTI futures -2.57% on the week (-0.15% Friday). Tyler Durden Mon, 12/06/2021 - 07:51.....»»

Category: smallbizSource: nytDec 6th, 2021

The 6 best air conditioners we tested in 2021

We tested 10 air conditioners for cooling, ease of use and installation, smart connectivity, and noise. Here are the best air conditioners in 2021. Table of Contents: Masthead Sticky A good air conditioner is energy efficient, runs quietly, and cools your space quickly. The Friedrich Chill Premier Smart Window Air Conditioner is our pick for the best air conditioner. It did the best in our cooling tests, features app connectivity, and is Energy Star-certified. Read more about how Insider Reviews tests home products. For those who don't have central air to cool their space, window air conditioners are the next best thing. They can fit in most windows for convenient cooling, and if you choose one that's Energy Star certified (which most of our picks are), your bills won't run up too high. Despite what you may see in the movies, window ACs are relatively easy and safe to install as long as you follow each unit's instructions, and many models come with brackets that keep the air conditioner in place and prevent potential burglars from pushing units in and getting inside your home. If you are searching for portability, we've included our top portable AC pick in this guide, but you might also want to check out our guide to the best portable air conditioners.Here are the best window air conditioners in 2021Best air conditioner overall: Friedrich CCF08A10A Chill Premier Smart Window Air Conditioner Best budget air conditioner: GE AHY08LZ EZ Mount Window Air ConditionerBest energy-efficient air conditioner: Midea MAW08V1QWT U Inverter Window Air ConditionerBest air conditioner for small rooms: Haier ESAQ406TZ Window Air ConditionerBest air conditioner for large rooms: LG LW1517IVSM Dual Inverter Smart Window Air ConditionerBest portable air conditioner: LG LP1419IVSM Dual Inverter Smart Wi-Fi Portable Air Conditioner Best air conditioner overall James Brains/Insider If you have a medium-sized room, the Friedrich CCF08A10A Chill Premier Smart Window Air Conditioner is your best option with its impressive cooling abilities, smart connectivity, and long warranty.Btu: 8,000Recommended room size: 350 square feetWindow opening requirements: 14.5 inches vertical and 23 to 36 inches wideCombined Energy Efficiency Ratio (CEER): 12Energy Star-certified: YesWarranty: 1 year + 5 years for sealed refrigerant systemSmart connectivity: YesExtras: Dehumidifying, fan, remote control, foam seals, side curtain insulation, window security brackets, smart home compatibilityAdditional Btu sizes available: 5,200, 6,000, 10,000, 12,000Pros: Did the best in our cooling tests, smart connectivity with a useful app, fits a wide array of window sizes, five-year warranty on sealed refrigerant system, Energy Star-certifiedCons: One of the loudest units in our testsOf the 10 units we tested for this guide, the Friedrich CCF08A10A Chill Premier Smart Window Air Conditioner did the best job of cooling our 650-square-foot test room. During the one-hour testing period, the temperature dropped 5.3 degrees Fahrenheit. It was also easy to install, taking only 20 minutes plus an extra 10 minutes to install and connect the smartphone app (available for iOS and Android), which lets you set schedules and control your AC from anywhere. The Friedrich Chill Premier is Energy Star-certified, and in our tests, it was in the middle of the pack in its power consumption. It used 0.4 kWh of energy while we blasted it on high for one hour. Our only complaint is that it was one of the loudest ACs in our tests, registering 56.3 decibels on high, which is a little bit louder than the average refrigerator. Even on low, our sound meter registered 54.8 decibels, which is quite noisy.  Best budget air conditioner James Brains/Insider The GE AHY08LZ EZ Mount Window Air Conditioner is your best bet if you're looking for a cheap way to cool your room, with its low-decibel output, outstanding cooling, and easy installation.Btu: 8,000Recommended room size: 250 square feetWindow opening requirements: 13-⅜ inches vertical and 26-1/16 to 39-¼ inches wideCEER: 12.1Energy Star-certified: YesWarranty: 1 yearSmart connectivity: NoExtras: Dehumidifying, fan, remote control, foam seals, side curtain insulation, window security brackets, delay on/off, clean filter indicatorAdditional Btu sizes available: N/APros: Energy Star-certified, performed well in cooling tests, easy to install, quiet operationCons: Unable to access smart features, unimpressive CEER rating, minimal warrantyThe GE 8,000 BTU Smart Window Air Conditioner (model AHY08LZ) features a relatively light weight of 54 pounds and is simple to install. I had it up and running within 20 minutes of opening the box, and it fit my slender 24-inch-wide window frame.More importantly, it's a workhorse. In our test room of 650 square feet — nearly twice what the unit is rated for — the GE was able to decrease the temperature by more than 3 degrees F in an hour. It did this while remaining fairly quiet, registering only 55 decibels on high, which makes it suitable for bedrooms and home offices.Its control panel shows the temperature in large, easy-to-read numbers and automatically dims to keep light to a minimum if you're using it in the bedroom at night. The face also features adjustable louvers that allow you to send cool air precisely where you want. The GE has Wi-Fi connectivity and can be operated remotely, but I could not get it to connect with GE's Comfort app (available for iOS and Android). After several tries, I still couldn't use any of the smart features. Based on the 2.0-star rating in the Google Play store and 1.3-star rating in the App Store, I'm not alone. I reached out to GE about the app issues, and it responded quickly. According to the company, it's a known issue for some users but it did not have a timeline for when it would be fixed. However, even without the smart features, this is an outstanding unit. Best energy-efficient air conditioner James Brains/Insider The Midea MAW08V1QWT U Inverter Window Air Conditioner features a unique U-shape design that allows you to open the window when it's installed, and it's one of only a few ACs to earn Energy Star's "Most Efficient" certification.Btu: 8,000Recommended room size: 350 square feetWindow opening requirements: 13.75 inches vertical by 22 to 36 inches wideCEER: 15Energy Star-certified: YesWarranty: 1 year + 3 years for compressor + 5 years for non-compressor sealed systemSmart connectivity: YesExtras: Dehumidifying, fan, remote control, foam seals, side curtain insulation, window security brackets, delay on/off, smart home compatibility, support bracketAdditional Btu sizes available: 10,000, 12,000Pros: Unique U-shaped design, Energy Star "Most Efficient" certification, easy to install in a wide array of windows, comes with a support bracket, quiet 48-decibel operation, smart connectivity that works wellCons: Can only change airflow direction horizontallyThe Midea MAW08V1QWT U Inverter Window Air Conditioner has a unique U-shaped design that offers more secure installation when combined with the included support bracket — hardware rarely included with AC units — and allows you to open and close the window to let in fresh air. It's the first window AC to receive the Energy Star "Most Efficient" certification, and it remains one of only four models to receive that designation — another is the LG Dual Inverter AC, our pick for the best AC for large rooms. The Midea U uses inverter technology to achieve such impressive efficiency numbers. Inverter compressors have variable-speed motors that adjust to maintain the desired temperature. This constant low-level operation is actually more efficient than cycling high output on and off like traditional units do. According to my smart plug, the Midea U consumed 9.6 kWh over a 24 hour period, which works out to 0.4 kWh each hour.Installation was quick, though the instructions could be a bit clearer. Still, I had the unit up and running within 25 minutes of opening the box. Connecting to the smart app was also quick and let me control the Midea U with my voice using Alexa.I was impressed with how quietly the AC runs. The sound meter registered 48 decibels when it was operating on its highest setting. The only reason the Midea U isn't our top overall pick is its lukewarm performance in our cooling tests. It only decreased the temperature of our 650-square-foot room by 1.7 degrees in the first hour — comparable to our budget pick.  Best air conditioner for small rooms James Brains/Insider The Haier ESAQ406TZ Window Air Conditioner is ideal for bedrooms and home offices thanks to its ultra-quiet design.Btu: 6,200Recommended room size: 250 square feetWindow opening requirements: 13-⅜ inches vertical and 26-1/16 to 39-¼ inches wideCEER: 12.1Energy Star-certified: YesWarranty: 1 yearSmart connectivity: NoExtras: Dehumidifying, fan, remote control, foam seals, side curtain insulation, window security brackets, delay on/off, clean filter indicatorAdditional Btu sizes available: N/APros: Good cooling for its size, quiet operation, easy installation, seemed to improve air quality during testing, Energy Star-certified, multi-directional vent controlCons: Requires a window width of at least 26-1/16 inches, minimal/standard warrantyThe Haier ESAQ406TZ Window Air Conditioner registered the lowest noise output of any of the units in our testing. On low, our sound meter measured 41.9 decibels, which is almost as quiet as a library. Even on high, it was only a little louder than a normal conversation at 51.4 decibels. Coupled with the low Btu output, this is the ideal unit for bedrooms and home offices.Installing the Haier AC was relatively easy and didn't require any special steps. The process took me about 25 minutes. However, I found it surprising that such a low-Btu unit would require such a wide window opening.The Haier was in the middle of the pack in cooling. It brought the room's temp down by about two degrees in one hour. This is impressive considering it was one of only two units with less than 8,000 Btu that I tested. (The other, the GE AHQ06LZ, did a much poorer job.) I like that there are multi-directional vent adjustments so you can send the cool air where you want it most.During testing, I used a handheld monitor to measure any changes to air quality, and it showed a significant reduction in VOCs and particulate matter.Lastly, it's Energy Star-certified, and that lined up with my experience with it. After an hour, it had used 0.3 kWh of electricity. It has an estimated yearly energy cost of about $52 according to government data. Best air conditioner for large rooms James Brains/Insider The LG LW1517IVSM Dual Inverter Smart Window Air Conditioner provides an impressive combination of quiet operation, outstanding performance, and energy efficiency.Btu: 14,000Recommended room size: 800 square feetWindow opening requirements: 16 inches vertical by 27 to 39 inches wideCEER: 14.7Energy Star-certified: YesWarranty: 1 yearSmart connectivity: YesExtras: Dehumidifying, fan, remote control, foam seals, side curtain insulation, window security brackets, delay on/off, smart home compatibilityAdditional Btu sizes available: 9,500, 18,000, 22,000Pros: Good performance in our cooling tests, quiet operation, certified Energy Star "Most Efficient," Wi-Fi connectivity with support for Alexa and Google Home, can be controlled remotely with a smartphone appCons: Pain to install, underwhelming one-year warranty, only works in windows at least 27-inches wideThis LG unit was one of the best in our cooling tests, dropping the temperature in a 650-square-foot room by 3.3 degrees in one hour. It was also one of the quietest, registering just 53 decibels when on high. LG was the first to use inverter technology in its air conditioners. The dual-inverter compressor of the LG LW1517IVSM Dual Inverter Smart Window Air Conditioner helped it earn the rare Energy Star "Most Efficient" certification.Home Depot's AC expert Matt Brown is a fan of this model. "LG inverter units are exciting because they offer the best smart connectivity, are much quieter than standard units, offer customers significant power and utility bill savings, and look very sleek and modern," he said.This is the main air conditioner I use on the ground floor of my home. Even on the hottest days, the LG LW1517IVSM keeps us cool. And, it remains quiet enough to facilitate normal conversation.Installation was difficult, however. It took me two hours and included steps like removing and reinstalling parts from the unit. Uninstalling it for the winter was a task. Usually, I can carry air conditioners on my own, but I had to enlist the help of my teenage son when putting it in storage.The LG can used with Amazon Alexa and Google Assistant. You can also use LG's SmartThinQ app (available for iOS and Android) to schedule the unit and perform other remote operations.Read our full review of the LG LW1517IVSM Air Conditioner here. Best portable air conditioner James Brains/Insider The LG LP1419IVSM Dual Inverter Smart Wi-Fi Portable Air Conditioner is a well-rounded, energy-saving unit that can be controlled by your phone or voice.Btu: 14,000 (advertised Btu), 10,000 (Department of Energy Btu)Recommended room size: 500 square feetWindow opening requirements: 6.5 inches by 23 to 60 inchesCEER: 7.3Energy Star-certified: NoWarranty: 1 yearSmart connectivity: YesExtras: Dehumidifying, fan, remote control and mount, foam seals, window security brackets, delay on/off, smart home compatibilityAdditional Btu sizes available: N/APros: Can be controlled and scheduled using your phone, voice control, easy to move, performed well in cooling tests, fits a wide array of window types and sizesCons: Set up took longer than others, one-year warranty, terrible energy efficiency compared to window ACs*Editor's note: This model frequently goes in and out of stock at many retailers. We'll continue to update this post with availability.Portable air conditioners have their benefits: namely portability and the ability to work with any outside opening. However, they vastly underperform compared to window ACs and no portable models are currently certified by Energy Star. While window AC units suck in hot air and vent it directly out the window, portable ACs rely on a long tube to carry air from your room to the outside. Along the way, heat radiates from the tube and stays in the room, so it takes a lot more energy (and money) to cool a room with a portable AC than a window AC. If you have a window that will accommodate it, we always recommend a window unit over a portable model. If that's not an option, however, the LG LP1419IVSM Dual Inverter Smart Wi-Fi Portable Air Conditioner is your best bet.The LG portable AC is our top pick from our guide to the best portable air conditioners because it's quieter and more efficient than most portable models due to its dual-inverter compressor. It'll take about double the time to cool a room than a window unit, but it's very easy to install and use. After an initial 30-minute installation time (including connecting to the app), it was super simple to move from room to room. It only took about a minute to reinstall it in a new room thanks to its handles, smooth casters, and a dedicated slot for the window slider when in transport. We like that it can accommodate a wider range of windows than the other units in this guide.It's Alexa-enabled and also has smart capabilities through the LG ThinQ app (available for iOS and Android), which lets you schedule when the unit runs. What else we tested James Brains/Insider We've tested 10 air conditioners over the last year, and there are several that barely missed the cut for our guide but are worth considering.What else we recommend and why:Frigidaire FHWW083WB1 Smart Window Air Conditioner: There's a lot to like about this AC, but I couldn't find a category that it was tops in. It did well in the cooling tests, the app works well, it fits a broad range of window sizes, and it seemed to improve the air quality while operating. The negatives are that it's kind of loud and wasn't particularly energy efficient.What we don't recommend and why:Windmill Smart Window Air Conditioner: This was the loudest AC I tested at 63 decibels on high. It was also among the biggest power users and isn't Energy Star-certified. Plus, you can't adjust where the air flows. Friedrich Kuhl Series KCQ08A10A Window Air Conditioner: This AC performed poorly in our cooling tests, and I spent half an hour trying to get the weird browser-based Wi-Fi connectivity to work without any success. At this price point, there are much better options out there.GE AHQ06LZ Window Air Conditioner: The only positives with this unit are it fits a wide range of window sizes and it doesn't use much power. It did the worst in our cooling tests, only has bidirectional vents, and it seemed to have a negative impact on air quality.GE PHC08LY Profile Smart Window Room Air Conditioner: This was the runner-up in our cooling test, decreasing the room temp by five degrees in an hour. However, it used a ton of power and only has left/right vent control and not up and down. Our air conditioner testing methodology James Brains/Insider To determine the best air conditioners, we tested 10 models and consulted with Matt Brown, the merchant for home comfort, air quality, and floorcare at The Home Depot, and Enesta Jones, a spokesperson for the US Environmental Protection Agency (EPA), which oversees the Energy Star program. Our guide features units that performed well in our tests, have useful features, and are energy efficient.Here are the main attributes we look for and how we test them:Cooling: I set the unit up in a 650-square-foot test room. I measure the temperature from the opposite side of the room, run the AC on high for an hour, and then compare the readings. Noise: I use a sound meter positioned six feet away from the air conditioner as it runs on high. I also adjust the fan speeds and set point temperature to see if these changes cause off-putting sounds that could startle people nearby.Extras: At a minimum, an air conditioner should come with a window installation kit, a remote control, dehumidifier and fan modes, and a delayed on and off switch. I also look for additional conveniences, like including foam to seal and insulate the openings around the AC. Wi-Fi-enabled smart capabilities are also a major plus, but I found there's a lot of room for improvement in this area.Energy efficiency: I look at whether the unit is Energy Star-certified as well as the unit's combined energy efficiency ratio (CEER). The CEER is calculated by dividing the Btu output of the unit by the energy consumed while it's operating and in standby mode. To receive Energy Star certification, most units need a CEER of at least 12 in addition to other requirements. I also perform my own tests using a smart plug to measure the power consumption while running the AC on high for an hour or more.Installation: Though installation will likely only be a small part of your relationship with your AC, it's an important one. Windows between 27 and 36 inches wide will accommodate most ACs, but if you have a 25-inch-wide window, it gets dicey. We look at what windows different models fit, how long it takes to install, if you need special tools, and how difficult it is to uninstall and reinstall it since you will likely need to do this each fall and spring.Air quality: This is a newer test that we don't weigh as heavily. We take air quality readings using a monitor to determine changes in the carbon dioxide, volatile organic compounds, and particulate matter in the room while the AC is running. The air quality didn't enter the "harmful" range while running any of the ACs. However, we did note that the air quality readings changed significantly with some units. We've noted these in the guide. How to choose the right air conditioner James Brains/Insider Matt Brown, the merchant for Home Comfort, Air Quality and Floorcare at The Home Depot says there are five primary factors to consider when shopping for an AC: Btu, room size, outlet type, window size, and extra features.The room size, outlet type, and window size are entirely dependent on your space, and the extra features are dependent on your personal preferences. One thing you can't compromise is the Btu of your air conditioner."ACs are rated by Btu (British thermal units) and range from 5,000 to 24,000 Btu, which correlates to 150 to 1,500 square feet. The larger the Btu, the larger the room it covers," Brown says. "It's critical to not get a unit too big or small for a room for maximum cooling and efficiency."The Department of Energy provides a helpful guide for determining the BTU that is right for your room size. If you get a unit that is too big for your room, it will cool too quickly without removing the moisture, which will create a cold, clammy environment. Alternatively, an AC that is too small will be overworked, which can boost your energy bills. It's common for model numbers for the same units to vary by one or two digits. This is usually to denote different Btu ratings and colors, so it's important to choose a model number that reflects the Btu rating right for your room. Air conditioner FAQs James Brains/Insider How can you use your air conditioner efficiently?According to Enesta Jones, a spokesperson for the US Environmental Protection Agency (EPA), which oversees the Energy Star program, there are several best practices:Make sure the unit is level.Don't put lamps or TVs near the AC thermostat because the extra heat will cause it to run longer.Set the thermostat temperature only as high as is comfortable to save energy and money.Set the fan speed low on humid days to remove more moisture. Use an extra fan to spread cooled air around.Remove the unit or use an appropriately sized cover at the end of the cooling season to minimize heat loss.We'd also add that you should try to install your AC in a window that is shaded for maximum efficiency.Can I use an air conditioner in a room without windows?Yes, but you need to have some way for the hot air produced by the air conditioner to leave the room. If you don't, you won't experience any of the cooling benefits of the air conditioner. Most window air conditioners vent hot air out of the back and sides of the unit, but some only produce hot air out of the back. This variety can typically be installed in an outside wall. Portable air conditioners afford you more options since you just need an opening to the outside that is as big as the ventilating hose.Which is better: a portable air conditioner or a window/room air conditioner?"In general, a room air conditioner is a more efficient choice over a portable air conditioner," says Jones. "Portable air conditioners are not part of the Energy Star program."Our testing backs this up. Our top portable air conditioner, which uses an energy-efficient inverter compressor, still used 60% more electricity than our top window air conditioner. Our top window AC also did a much better job of cooling and costs much less both upfront and to run.So, if you have a double-hung window with the right dimensions for it, we strongly recommend choosing a window air conditioner. Only opt for a portable AC in spaces where a window AC isn't an option.What should you do if your air conditioner is too powerful for your room size?Whether you made the mistake of buying an AC with too many Btu for your room or you simply moved to new digs with a smaller square footage, an air conditioner that is too powerful for your room can lead to a clammy, uncomfortable environment. This is because the AC unit cools the air faster than it can dehumidify it. If you can't afford to replace the AC, consider buying a standalone dehumidifier to remove the excess moisture. Or, you can try increasing the space you are cooling. For example, if you usually have the door to an adjacent room closed, try keeping it open.Do I need a smart air conditioner?Smart connectivity allows you to operate the unit remotely through an app on your phone. This lets you turn on the AC before you arrive home from work, or turn it off if you had forgotten before you left the house. Some units even offer voice operation via Amazon Alexa, Google Home, or Apple HomeKit.As nice as this feature may be, we've found smart ACs don't always work properly; you're better off with a remote, which is usually included with most ACs.If smart connectivity matters to you, an option is to connect the unit to a good smart plug. One of the best smart plugs we've used recently with an air conditioner is the BN-Link WiFi Smart Plug Outlet.  Glossary In the heating and cooling industry, there's a lot of jargon to wade through. What do all of those acronyms and terms even mean? Here are the definitions for a few that you'll commonly hear:Btu: This is short for British thermal units. One Btu is equal to the amount of heat needed to raise one pound of water by one degree Fahrenheit. In cooling, Btu is used to measure how much heat is removed from a room. The more Btu per hour an air conditioner is rated for, the better job it does cooling.CEER: "The CEER, or Combined Energy Efficiency Ratio, is a measure of energy efficiency for a room air conditioner," Jones says. "The higher a room air conditioner's CEER value, the more efficient the room conditioner is when comparing across models with the same cooling capacity." The CEER is measured by dividing the Btu output by the amount of energy consumed both while the unit is running and while it's in standby mode.Compressor: The compressor works to push the hot air outside so cold air can circulate in your room. The gas refrigerant within the cooling system takes on the heat from the air, and the compressor turns the hot gas refrigerant back into a liquid. It works with the condenser on the air conditioner's hot side to dissipate the heat from the refrigerant. Along with the condenser and evaporator, the compressor is one of the three main components of any air conditioning unit.Energy Star: This is a program run by the US Department of Energy and EPA to promote energy efficiency. "Any window AC model that earns the Energy Star label is independently certified to save energy, save money, and help protect the climate," says Jones. kWh: This is short for kilowatt-hour. It's a unit of energy that most electricity utilities use to measure your power use, and it's what we use to measure the energy consumption of the air conditioners we test. The best deals on air conditioners from this guide More often than not, you want cool air without thinking twice — but a good discount does sweeten the deal. Air conditioner discounts are few and far between, with most big drops populating during holidays like Presidents' Day, Memorial Day, Black Friday, and Cyber Monday. Oftentimes, the best time to buy is during the off-season; the Friedrich Chill Premier, for example, was $50 off for half of March from Amazon. There are currently no deals on our recommended air conditioners. Read more about how the Insider Reviews team evaluates deals and why you should trust us. Check out our other home heating and cooling guides James Brains/Insider The best portable air conditionersThe best space heatersThe best electric fansBest patio heaters Read the original article on Business Insider.....»»

Category: topSource: businessinsiderNov 1st, 2021

Futures Meltup To New All Time High As November Begins With A Bang

Futures Meltup To New All Time High As November Begins With A Bang US futures and European stocks rose to a new record high to start the historically stellar month of November... ... and Asian markets jumped amid positive earnings surprises and as concerns of a global stagflation and central bank policy error faded for a few hours (they will return shortly). TSLA melted up by another $35BN in market cap "because gamma." S&P 500 futures climbed 0.4% after the cash index posted the biggest monthly gain since last November. Treasury Secretary Janet Yellen expressed confidence in the continuing recovery from the pandemic, helping spur gains in equity markets. Health-care shares rallied in Europe. The dollar and Treasury yields advanced as investors awaited this week’s Federal Reserve meeting to announce the start of tapering (which will then lead to rate hikes next July according to Goldman). Oil rebounded on fresh supply concerns. In addition to the now absolutely batshit insane meltup in Tesla, which won't end until the SEC cracks down on gamma squeeze manipulation, other mega-cap technology stocks such as Google, Meta, Microsoft, Amazon.and Apple, aka oddly enough GAMMA, traded mixed. Exxon and Chevron added about 0.7% each as JP Morgan raised its price target on the oil majors following their strong quarterly results last week. Major Wall Street banks gained between 0.2% and 0.8%. The broader S&P 500 financials sector slipped last week, breaking a three-week winning streak. Lucid Group Inc. rose 4.8% in premarket, extending its advance from last week, after the new U.S. tax plan included a proposal to make EV tax credits more widely available. Harley-Davidson Inc jumped 8.2% after the European Union removed retaliatory tariffs on U.S. products including whiskey, power boats and company’s motorcycles. Here are the most notable pre-market movers: Tesla shares rise 2.3% in U.S. premarket trading after their biggest monthly gain in almost a year in October ABVC BioPharma jumps more than 700% as thelittle known biotechnology company garners attention from retail traders on social media Ocugen and Zosano (ZSAN US) are some other top gainers among retail trader stocks in premarket A largely upbeat earnings season has helped investors look past a mixed-macro economic picture, with the benchmark S&P 500 and the tech-heavy Nasdaq recording their best monthly performance since November 2020 in October. Of the 279 S&P 500 companies that have reported quarterly results, 87% have met or exceeded estimates. Among members of Europe’s Stoxx 600 index, 68% surpassed expectations. On the economic data front, readings on October factory activity data from IHS Markit and ISM are due after market open, followed by non-farm payrolls on Friday. Focus is now on the Fed’s two-day policy meeting which concludes at 2pm on Nov 3, where the central bank will announce the tapering of its $120 billion monthly bond buying program by $15 billion. With recent U.S. data showing inflation pressures building, the market has also started pricing in rate hikes next year. November and December tend to be among the strongest months for stocks and any hawkish tilt in the Fed’s message could catch equities by surprise.  Meanwhile, Biden’s economic agenda seemed to be on track as Democratic lawmakers worked to overcome their differences on a $1.75 trillion social-spending plan. “Depending on where you are looking, you are getting very different stories on the outlook for global markets,” Kerry Craig, global market strategist at JPMorgan Asset Management, said on Bloomberg Television. “If you look at equities and the rally you are seeing, you think everything is OK. If you look at the bond market and how yields are moving, there’s obviously a lot more concern around inflation and policy normalization.” European stocks hit the afterburner out of the gate with the Euro Stoxx 50 adding as much as 1% before drifting off best levels. FTSE MIB and IBEX outperform, FTSE 100 lags slightly. Banks, construction and travel are the strongest sectors; tech the sole Stoxx 600 sector in the red. Barclays Plc fell 1.5%. Chief Executive Officer Jes Staley stepped down amid a U.K. regulatory probe into how he characterized his ties to the financier and sex offender Jeffrey Epstein. Asian stocks were poised to snap a three-day decline thanks to a rally in Japanese equities, which got a boost from an election victory for the country’s ruling party and Prime Minister Fumio Kishida.  The MSCI Asia Pacific Index advanced as much as 0.6%, while Japan’s benchmark Topix and the blue-chip Nikkei 225 Stock Average each added more than 2%. Sony Group, Toyota Motor and Tokyo Electron were among the single-largest contributors to the regional measure’s rise. By sector, industrials and information-technology companies provided the biggest boosts.  Japan’s ruling Liberal Democratic Party defied worst-case scenarios to secure a majority by itself in a closely-watched election Sunday. Analysts said the outcome signals political stability, paving the way for economic stimulus to be executed as anticipated (see Street Wrap).  “Indicators of market activity show that there will be a positive market impact to the election, as although it was not greatly different than expectations, the LDP clearly surpassed some of the more dire polls of last week and there will not likely be any party shake-up in the intermediate-term,” John Vail, Tokyo-based chief global strategist at Nikko Asset Management wrote in a note.  The market is also “reacting positively” to Friday’s share-price gains in the U.S., Vail said. Futures on the S&P 500 rose during Asian trading hours after the underlying gauge added 0.2%.  Asia’s regional benchmark capped a weekly drop of 1.5%, its worst such performance since early October, as disappointing results weighed on big technology stocks. More than half of the companies on the MSCI Asia Pacific Index have reported results for the latest quarter with about 37% posting a positive surprise, according to data compiled by Bloomberg. Australia's S&P/ASX 200 index rose 0.6% to 7,370.80, recouping some losses after Friday’s 1.4% plunge. Health and consumer discretionary stocks contributed the most to the benchmark’s gain. WiseTech was among the top performers, snapping a four-day losing streak. Westpac was the worst performer after the bank delivered a smaller share buyback than some had expected. In New Zealand, the S&P/NZX 50 index fell 0.5% to 13,030.31. In rates, fixed income trades heavy with gilts leading the long end weakness. Treasuries were slightly cheaper on the long-end of the curve as S&P 500 futures exceed last week’s record highs. Yields are cheaper by 2bp to 2.5bp from belly out to long-end, with front-end slightly outperforming and steepening 2s10s spread by 1.7bp; 10-year yields around 1.58% with gilts underperforming by 1.1bp, Italian bonds by 3.5bp. Gilts and Italian bonds lag, with Bank of England rate decision due Thursday. In the U.S., weekly highlights include refunding announcement and FOMC Wednesday and Friday’s October jobs report. Bund and gilt curves bear steepen with gilts ~1bps cheaper to bunds. Peripheral spreads swing an early tightening to a broad widening to core with Italy the weakest performer. Overnight futures and options flows included block seller in 5-year note futures (3,900 at 3:09am ET) and a buyer of TY Week 1 129.00 puts at 3 on 10,000, says London trader. In FX, the Bloomberg dollar index held a narrow range. SEK and CHF top the G-10 score board, GBP lags with cable snapping below 1.3650. TRY outperforms EMFX peers. The BBDXY inched up and the greenback traded mixed against its Group-of-10 peers, with many of the risk-sensitive currencies leading gains The pound retraced some losses against the dollar, after dipping earlier in the European session. The yield on 2-year gilts hit the highest since May 2019. Financial markets are almost fully pricing in a 15-basis point increase in the Bank of England’s benchmark lending rate on Nov. 4, while economists increasingly share that view, even as they see the decision as a far closer call. A record share of U.K. businesses are expecting to increase prices, adding to the inflationary pressures confronting Bank of England policy makers ahead of their meeting on Thursday Australian bonds extended opening gains as traders positioned for the Reserve Bank’s policy decision Tuesday. The Aussie fell, tracking losses in iron ore prices following a weak China PMI, which showed signs of further weakness in October The yen fell for a second day after the ruling Liberal Democratic Party retained its outright majority in a lower-house election, reinforcing bets for fiscal stimulus and reforms. Hedge funds boosted net short positions on the yen to the most since January 2019, raising the risk of a squeeze should risk appetite deteriorate suddenly and demand for havens rise The Turkish lira edged higher after Turkish President Recep Tayyip Erdogan said he had “positive” talks with U.S. President Joe Biden In commodities, crude futures drift higher. WTI adds 40c to trade near $84; Brent rises ~1% near $84.50. Spot gold is quiet near $1,786/oz. Base metals are mixed: LME nickel and tin outperform, zinc lags. Looking at today's calendar, earnings continue on Monday with PG&E and ON Semiconductor reporting pre-market, and NXP Semiconductors post-market. We also get the latest Mfg PMI print and the October Mfg ISM print. Market Snapshot S&P 500 futures up 0.3% to 4,612.25 STOXX Europe 600 up 0.8% to 479.40 MXAP up 0.4% to 198.04 MXAPJ down 0.3% to 645.49 Nikkei up 2.6% to 29,647.08 Topix up 2.2% to 2,044.72 Hang Seng Index down 0.9% to 25,154.32 Shanghai Composite little changed at 3,544.48 Sensex up 1.3% to 60,079.40 Australia S&P/ASX 200 up 0.6% to 7,370.78 Kospi up 0.3% to 2,978.94 Brent Futures up 0.3% to $83.95/bbl Gold spot down 0.0% to $1,783.20 U.S. Dollar Index little changed at 94.14 German 10Y yield little changed at -0.091% Euro up 0.1% to $1.1571 Top Overnight News from Bloomberg House Democratic leaders are pushing hard to get Biden’s package finalized, with votes on both that bill and a smaller infrastructure plan this week -- the latest in a string of self- imposed deadlines. The Senate, which already approved the public-works bill, is likely to vote on the larger package later in the month Leaders of the Group of 20 countries agreed on a climate deal that fell well short of what some nations were pushing for, leaving it to negotiators at the COP26 summit in Glasgow this week to try to achieve a breakthrough The U.K. said it will trigger legal action against France within 48 hours unless a dispute over post-Brexit fishing rights is resolved, as the growing spat threatens to overshadow the United Nations’ climate summit Treasury Secretary Janet Yellen said she believes Federal Reserve Chair Jerome Powell has taken “significant action” in the wake of revelations over the personal investments of U.S. central-bank policy makers; Yellen dismissed recent moves in the bond market that have signaled concern about monetary policy makers squelching economic growth, and expressed confidence in the continuing recovery from the Covid-19 pandemic The U.S. and the European Union have reached a trade truce on steel and aluminum that will allow the allies to remove tariffs on more than $10 billion of their exports each year Asia-Pac bourses traded mostly higher amid tailwinds from last Friday's fresh record highs in the US where Wall St. topped off its best monthly performance YTD, but with some of the advances in the region capped as participants digested mixed Chinese PMI data and ahead of this week’s slew of key risk events including crucial central bank policy announcements from the RBA, BOE and FOMC, as well as the latest NFP jobs data. ASX 200 (+0.8%) was led higher by the consumer-related sectors amid a reopening play after Australia permitted fully vaccinated citizens to travel internationally again and with several M&A related headlines adding to the optimism including the Brookfield-led consortium acquisition of AusNet Services and Seven West Media’s takeover of Prime Media. Conversely, the largest weighted financials sector failed to join in on the spoils with Westpac shares heavily pressured following its FY results which fell short of analyst estimates despite more than doubling on its cash earnings. Nikkei 225 (+2.5%) was the biggest gainer with the index underpinned by favourable currency flows and following the general election in which the ruling LDP maintained a majority in the lower house although won fewer seats than previously for its slimmest majority since 2012, while the KOSPI (+0.4%) was kept afloat but with upside limited by slightly softer than expected trade data. Hang Seng (-1.5%) and Shanghai Comp. (+0.1%) were subdued amid a slew of earnings releases and following mixed Chinese PMI data in which the official Manufacturing and Non-Manufacturing PMIs disappointed analysts’ forecasts with the former at a second consecutive contraction, although Caixin Manufacturing PMI was more encouraging and topped market consensus. Finally, 10yr JGBs initially declined amid gains in stocks and recent pressure in T-notes due to rate hike bets with analysts at Goldman Sachs bringing forward their Fed rate hike calls to July 2022 from summer 2023 citing inflation concerns, although 10yr JGBS then recovered despite the mixed results from the 10yr JGB auction which showed a higher b/c amid lower accepted prices and wider tail in price. Top Asian News Japan’s Kishida Mulls Motegi for LDP Secretary General: Kyodo Home Sales Slump; Another Bond Deadline Looms: Evergrande Update Two Thirds of China’s Top Developers Breach a ‘Red Line’ on Debt Hedge Fund Quad Sells Memory Stocks Citing Demand Uncertainty European equities (Stoxx 600 +0.6%) have kicked the week off on the front-foot with the Stoxx 600 printing a fresh all-time-high. The handover from the APAC session was a largely constructive one with the Nikkei 225 (+2.6%) the best in class for the region amid favourable currency flows and the fallout from the Japanese general election which saw the ruling LDP party maintain a majority in the lower house. Elsewhere, performance for the Shanghai Composite (-0.1%) and Hang Seng (-0.9%) was less impressive amid a slew of earnings releases and mixed Chinese PMI data in which the official Manufacturing and Non-Manufacturing PMIs disappointed analysts’ forecasts. US equity index futures are trading on a firmer footing (ES +0.5%) ahead of Wednesday’s FOMC announcement and Friday’s NFP data. The latest reports from Washington suggest that House Democrats are hoping to pass the social spending and bipartisan infrastructure bills as soon as Tuesday. Back to Europe, a recent note from JPM stated that Q3 European earnings “are coming in well ahead of expectations in aggregate”, adding that results are healthy when considering the “trickier operating backdrop”. Sectors in the region are higher across the board with Auto names top of the leaderboard. Renault (+3.3%) sits at the top of the CAC 40 with the name potentially gaining some reprieve from agreement to resolve the US-EU steel and aluminium trade dispute (something which the Co. has previously noted as a negative). Also following the resolution, Thyssenkrupp (+2.8%) and Salzgitter (+4.5%) are both trading notably higher. Barclays (-2.0%) shares are seen lower after news that CEO Staley is to step down with immediate effect following the investigation into his relationship with sex offender Jeffrey Epstein; Barclays' Global Head of Markets, Venkatakrishnan is to take over. UK homebuilders (Persimmon -2.1%, Taylor Wimpey -1.9%, Barratt Developments -1.9%, Berkeley Group -1.7%) are softer on the session amid concerns that the sector could fall victim to higher mortgage rates given the shape of the UK yield curve. Ryanair (+1%) shares are higher post-earnings which saw the Co. continue its recovery from the pandemic, albeit still expects a loss for the year. Furthermore, the board is considering the merits of retaining its standard listing on the LSE. Finally, BT (+4.2%) is the best performer in the Stoxx 600 ahead of earnings on Thursday with press reports suggesting that the Co. could announce that its GBP 1bln cost savings target will be met a year earlier than the guided March 2023. Top European News SIG Proposed Offering for EU300m Senior Secured Notes Due 2026 Delivery Hero’s Turkey Unit CEO Nevzat Aydin to Step Down Goldman Sachs Says ‘Lost Decade’ Is Looming for 60/40 Portfolios URW Sells Stake in Paris Triangle Tower Project to AXA IM Alts In FX, the Greenback is holding above 94.000 in index terms and gradually ground higher after pausing for breath and taking some time out following its rapid resurgence last Friday to eclipse the 94.302 month end best at 94.313 before waning again. Hawkish vibes going into the FOMC are underpinning the Dollar and helping to offset external factors that are less supportive, including ongoing strength in global stock markets on solid if not stellar Q3 earnings and economic recovery from COVID-19 lockdown or restricted levels. Hence, the DXY is keeping its head above the round number and outperforming most major peers within and beyond the basket, awaiting Markit’s final manufacturing PMI, the equivalent ISM and construction spending ahead of the Fed on Wednesday and NFP on Friday. JPY/AUD - Little sign of relief for the Yen from victory by Japan’s ruling LDP part at the weekend elections as the 261 seat majority secured is down from the previous 276 and the tightest winning margin since 2012. Moreover, Security General Amari lost his constituency and new PM Kishida concedes that this reflects the public’s adverse feelings towards the Government over the last 4 years. Usd/Jpy is eyeing 114.50 as a result and the Aussie is looking precarious around 0.7500 against the backdrop of weakness in commodity prices even though perceptions for the upcoming RBA have turned markedly towards the potential for YCT to be withdrawn following firm core inflation readings and no defence of the 0.1% April 2024 bond target. NZD/EUR/CHF/CAD/GBP - All narrowly mixed vs their US counterpart, and with the Kiwi also taking advantage of the aforementioned apprehension in the Aud via the cross, while the Euro has pared declines from just under 1.1550, but still looks top-heavy into 1.1600. Elsewhere, the Franc is pivoting 0.9160 and 1.0600 against the Euro with more attention on a rise in Swiss sight deposits at domestic banks as evidence of intervention than a fractionally softer than expected manufacturing PMI, the Loonie is keeping afloat of 1.2400 ahead of Markit’s Canadian manufacturing PMI and Sterling is striving to stay above 1.3600, but underperforming vs the Euro circa 0.8470 amidst the ongoing tiff between the UK and France over fishing rights. SCANDI/EM - Robust Swedish and Norwegian manufacturing PMIs plus broad risk appetite is underpinning the Sek and Nok, in contrast to the Cnh and Cny following disappointing official Chinese PMIs vs a more respectable Caixin print, but the EM laggard is the Zar in knock-on reaction to Gold’s fall from grace on Friday, increasingly bearish technical impulses and SA energy supply issues compounded by Eskom’s load-shedding. Conversely, the Try has pared some declines irrespective of a slowdown in Turkey’s manufacturing PMI as the CBRT conducted a second repo op for Lira 27 bn funds maturing on November 11 at 16%. In commodities, WTI and Brent are firmer this morning with gains of between USD 0.50-1.00/bbl, this upside is in-spite of a lack of fundamental newsflow explicitly for the complex and is seemingly derived from broader risk sentiment, as mentioned above. Nonetheless, Energy Ministers are beginning to give commentary ahead of Thursday’s OPEC+ event and so far Angola, Kuwait and Iraq officials have voiced their support for the planned 400k BPD hike to production in December. This reiteration of existing plans is in opposition from calls from non-OPEC members such as the US and Japan that the group should look to increase production quicker than planned, in a bid to quell rising prices. Separately, Saudi Aramco reported Q3 earnings over the weekend in which its net profit doubled given strong crude prices and sales volumes improving by 12% QQ; subsequently, some analysts have highlighted the possibility for a end-2021 special dividend. Elsewhere, base metals are mixed and fairly contained in-spite of the EU and US announcing an agreement to resolve the ongoing aluminium and steel trade dispute. While spot gold and silver are modestly firmer this morning as the yellow metal remains contained after its slip from the USD 1800/oz mark in the tail-end of last week. Currently, spot gold is pivoting its 100-DMA at USD 1786 with the 50- and 200-DMAs residing either side at USD 1780/oz and USD 1791/oz respectively. US Event Calendar 9:45am: Oct. Markit US Manufacturing PMI, est. 59.2, prior 59.2 10am: Oct. ISM Manufacturing, est. 60.5, prior 61.1 10am: Sept. Construction Spending MoM, est. 0.4%, prior 0% DB's Jim Reid concludes the overnight wrap Welcome to November. I had three halloween parties over the weekend which is probably more than the entire number I went to before I had kids. I still have some spooky make up on this morning that I just couldn’t get off from last night. So there’s a reason alone to zoom into the call at 3pm today. As it’s the 1st of November Henry is about to publish our monthly performance review. It was a hectic month of higher inflation expectations and commodities, and also the best S&P 500 month of the year. Bonds underperformed across the board but these small negatives masked great volatility and stress under the surface, especially in the last week. See the report that should be out in the next 30-60mins. With all due respect to our readers in Australia, I’m going to open the market section this morning with a line I don’t think I’ve written in 27 years of market commentary and probably won’t again. And it’s not about England thrashing Australia at cricket on Saturday. Yes the most important event of the week could be the RBA meeting tomorrow. 2 year yields last week rose from 0.15% on Wednesday morning to 0.775% at the close on Friday as the RBA were conspicuous by their absence in defending the 0.1% target on the April 24 bond. I’ve absolutely zero idea what they are going to do tomorrow which should help you all tremendously but their absence again this morning gives a decent indication. I was taught economics in an era where central banks liked to keep an element of mystery and surprise. As such I’ve always disliked the forward guidance era as it encourages markets to pile on to much riskier, one way positions that a normally functioning market should naturally allow. But to go from forward guidance to silence (that rhymes) is a recipe for huge market turmoil if the facts change. It's unclear if the full implications of last week’s carnage at the global front end has yet been cleared out. There is lots of speculation about large unwinds, big stop losses etc. Liquidity was also awful last week. Much might depend on central banks this week. Make no mistake though there is considerable pain out there. The latest this morning in Aussie rates is that the 2y yield is down around -7bps while the 10y yield is down -19.0bps. So we wait with baited breath for tomorrow. Elsewhere in Asia, the Nikkei 225 (+2.42%) is charging ahead this morning as Japan’s Liberal Democratic Party kept its majority after lower house elections, thus boosting optimism about a potential fiscal stimulus. Elsewhere, the KOSPI (+0.43%) and the Shanghai composite (+0.07%) are outperforming the Hang Seng (-1.10%). In terms of data, China’s official manufacturing PMI fell from 49.6 to 49.2 (49.7 expected), not helped by commodities price rises and electricity shortages. The non-manufacturing PMI also fell to 52.4 from 53.2 (consensus 53). The Caixin manufacturing PMI did beat at 50.6 this morning (consensus 50). In terms of virus developments in the region, Shanghai Disneyland is closed amid recent COVID outbreaks, while Singapore is adding ICU beds in response to high levels of serious cases. The S&P 500 mini futures is up +0.23% this morning, the US 10y Treasury is at 1.56% (+1.2bps). It’s strange to have a likely Fed taper announcement on Wednesday be third billing for the week but the BoE on Thursday might be the next most important meeting as it’s still a finely judged call as to whether they hike this week or not. DB (preview here) think they will raise rates by 15bps with two 25bps hikes in February and May. They’ll also end QE a month earlier than planned. So over to the third billing, namely the Fed. They will announce a well flagged taper on Wednesday. In line with recent guidance, DB expect that the Fed will announce monthly reductions of $10bn and $5bn of Treasury and MBS purchases, respectively. With the first cut to purchases coming mid-November, this will bring the latest round of QE to a conclusion in June 2022. The Fed has some flexibility with this timetable but it will be interesting to hear how much Powell pushes back on markets that price in two hikes in 2022, including one almost fully priced for before the taper ends. If markets attacked the Fed in the same way they have the RBA the global financial system would have a lot of issues so it’s a fine balance for the Fed. They won’t want to push back too aggressively on market pricing given the uncertainty but they won’t want an outright attack on forward guidance. Moving on, a lowly fourth billing will be reserved for US payrolls on Friday. DB expect the headline gain (+400k forecast, consensus +425k vs. +194k previously) to modestly outperform that of private payrolls (+350k vs. +317k) and for the unemployment rate to fall by a tenth to 4.7% and average hourly earnings to post another strong gain (+0.4% vs. +0.6%) amidst still-elevated hours worked (34.8hrs vs. 34.8hrs). Outside of all this excitement, we have the COP26 which will dominate all your news outlets. The other main data highlight are the global PMIs (today and Wednesday mostly) which will give insight into how the economic recovery has progressed in the first month of Q4 with the surveys shedding light onto how inflation is affecting suppliers. There is lots more in store for us this week but see the day by day calendar at the end for the full run down The market also enters the second half of the 3Q earnings season. There are 168 S&P 500 and 85 Stoxx 600 companies reporting this week with 52% of the S&P 500 and 48% of the STOXX 600 having already reported. DB’s Binky Chadha published an update on earnings season over the weekend (link here). In the US, the size of the earnings beat has declined over the course of the season and is on track to hit 7%, well below the record 14-20% range post pandemic. Excluding the lumpy loan-loss reserve releases by banks, the beat is even lower at 5%, bringing it back in line with the historical norm. Quarterly earnings are on track to be down sequentially from Q2 to Q3 by -1.1% (qoq seasonally adjusted), the first drop since Q2 2020. The flat to down read of earnings is broad based across sector groups. Forward consensus estimates have fallen outside of the Energy sector. The S&P 500 nevertheless has seen one of the strongest earning season rallies on record. See much more in Binky’s piece. This week’s highlights include NXP Semiconductors, Zoom, and Tata Motors today before Pfizer, T-Mobile, Estee Lauder, BP, Mondelez, Activision Blizzard, and AP Moller-Maersk tomorrow. Then on Wednesday we’ll hear from Novo Nordisk, Qualcomm, CVS, Marriott, Albemarle, and MGM resorts. Thursday sees reports from Toyota, Moderna, Square, Airbnb, Uber, and Deutsche Post and then a busy Friday with Alibaba Group, Dominion Energy, Honda, and Mitsubishi. Looking back now and reviewing last week in numbers, it was a week of heightened intraday volatility within rates, as markets brought forward the expected timing of central bank policy actions across advanced economies while revising down growth expectations. Position stop outs almost certainly played a role as the magnitude of the moves were out of sync with macro developments while FX and equity markets were not nearly as volatile. Global front end rates started moving in earnest on Wednesday, following the Bank of Canada’s surprise decision to end net asset purchases, while bringing forward the timing of liftoff, which sent 2yr Canadian bonds more than +20bps higher. In the following days, the RBA opted not to defend their yield curve control target, and ECB President Lagarde did not use her press conference to provide much of a forceful pushback on recent repricing. All told, almost every DM economy saw their 2 yr bond selloff, including the US (+4.4 bps, +0.8 bps Friday), UK (+4.9 bps, +5.9 bps Friday), Germany (+5.2 bps, +3.2 bps Friday), Canada (+23bps) and Australia (+65bps). The long end went the other direction in the core countries, with many curves twist flattening over the week as negative growth sentiment weighed on the back end. Nominal 10yr yields declined -6.2 bps (-2.8 bps Friday) in the US, -11.1 bps (+2.5 bps Friday) in the UK, and were flat in Germany (+3.0 bps Friday). Unlike the rest of October, the decline in nominal yields coincided with declining inflation breakevens (albeit from historically high levels), with 10yr breakevens declining -5.2 bps (-0.6 bps Friday) in the US, -25.4 bps (-8.5 bps Friday) in the UK, and -16.3 bps (-11.5 bps Friday) in Germany. Note that outside the core there were some bond markets that moved higher in yield with 10yr bonds in Canada (+7bps), Australia (+30bps) and Italy (+19bps) all higher for different reasons. Some of the bond moves above don’t do the intra-day volatility any justice though. Elsewhere Crude oil prices dipped to close out what was otherwise another very good month, with Brent and WTI -1.34% (+0.07% Friday) and -0.23% (+0.92% Friday) lower. Meanwhile, equity markets marched to the beat of a different drum. The S&P 500 (+1.33%, +0.19% Friday), Nasdaq (+2.71%, +0.33% Friday), and DJIA (+0.40%, +.25% Friday) all set new all-time highs, while the STOXX 600 increased +0.77% (+0.07% Friday), cents below the all-time high set in August. Generally strong earnings relative to a worried market prior to the season again supported equity markets. Calls were replete with mentions of supply chain woes and labour shortages though, but companies sounded an optimistic note on end-user demand. Many big tech stocks reported, to more mixed results than the broader index. Alphabet and Microsoft beat on both revenue and earnings, Facebook and Apple missed analyst revenue estimates, while Amazon and Twitter missed revenue and earnings estimates. Ford and Caterpillar, two bellwethers particularly exposed to current supply chain and labour maladies, fared especially well. So far this season 279 companies have reported, with 206 beating on revenue and 237 beating on earnings Out of D.C., after prolonged negotiations within the Democratic Party, US President Biden unveiled a new social and climate spending framework, containing $1.75 trillion in spending measures as well as revenue-raising offsets. Once the text is finalized, it should enable a vote on the social spending package as well as the separately-negotiated bi-partisan infrastructure bill. More is likely to come this week. Tyler Durden Mon, 11/01/2021 - 07:59.....»»

Category: smallbizSource: nytNov 1st, 2021

New Evidence Reveals Facebook Censoring Conservative Content; Breitbart Traffic Hobbled

New Evidence Reveals Facebook Censoring Conservative Content; Breitbart Traffic Hobbled Authored by Yves Smith via naked capitalism (emphasis ours), The Wall Street Journal just published a detailed story substantiating what many have suspected of Facebook, that it’s been censoring right-wing content. Admittedly, this finding is in “dog bites man: terrain. Gizmodo had ascertained that through an analysis of “Trending Topics” in May 2016, meaning well before the Trump win led Democratic/establishment screeching about Russian influence and clamping down on opinion suddenly deemed responsible and necessary. However, Facebook operates on the premise that it can tell howlers to Congress and the public and large, and no one heretofore has been able to disprove its self-serving and dubious claims. So lifting the veil on Facebook’s process, such as it is, for booting content and providers from its platform serves to restrict its ability to prevaricate. It could even lead to a sensible policy or two. The Journal story relies on internal chats and focuses on Breitbart as an object of Facebook restrictions. The picture is not pretty. Facebook appears to lack any clear-cut policies, which means employees views and arguments held way too much sway. Fox also gets hated-on by Facebook staffers, but there’s no indication in this story that there’s any smoking gun as far as Fox is concerned. It’s no surprise that Facebook’s efforts at moderation are a train wreck. This tiny site has highly experienced moderators make considerable effort to keep the discussion civil and informative. Moderation does not scale. And that’s before the wee problem of Facebook having what sure sounds like unduly fuzzy objectives. I find it hard to understand, save its presumably huge legal budget, why Facebook has put itself in the position of intervening in content as much as it does. This degree of control over content makes it hard for Facebook to deny that it’s a publisher, as opposed to a platform. It’s puzzling that Facebook hasn’t attempted to stare down the thought police and banned content and sites only that peddled hate speech (as in the kind that could be successfully prosecuted) and exhortations to commit violence. Cracking down on misinformation? Seriously? After two plus years of Russiagate fabrications? As Lambert points out, the discussion among scientists on Covid aerosol transmission would have been expunged under the “misinformation” standard because both the CDC and WHO rejected it. In fact, the Journal story both points out how Breitbart and other conservative sites were down-metered, yet also suggests they were treated too timidly because revenues: In many of the documents reviewed by the Journal, employees discussed whether Facebook was enforcing its rules evenly across the political spectrum. They said the company was allowing conservative sites to skirt the company’s fact-checking rules, publish untrustworthy and offensive content and harm the tech giant’s relationship with advertisers, according to records from internal Facebook message boards. The Journal account focuses on its new trove, and hence does not step back to give context. We’ve avoided saying much about Google and Facebook censorship of supposedly right wing and left wing sites because it’s at least as much an effort to winnow the Web down to fewer, orthodox voices But the interests of the officialdom don’t fully align with those of the tech platforms. For instance: Right-wing sites are consistently among the best-performing publishers on the platform in terms of engagement, according to data from research firm NewsWhip. That is one reason Facebook also is criticized by people on the left, who say Facebook’s algorithms reward far-right content. Facebook says it enforces its rules equally and doesn’t consider politics in its decision making… Breitbart was included in News Tab, which was launched in 2019. The product contains a main tier with curated news from publishers including The Wall Street Journal, New York Times and Washington Post, which are paid for their content. Breitbart is part of a second tier of news designed to deliver news tailored to a user’s interest, and isn’t paid. Facebook said it requires sites included on News Tab to focus on quality news reporting and bars those that repeatedly share what it deems misinformation or violate its public list of community standards. One thing that is sorely missing is what exactly Breitbart was publishing that was deemed to rise to the level of “misinformation” and hate speech. There’s not a single example of a debate over a particular Breibart story and how it wound up. Instead, Facebook performed a study….we aren’t told how…and Breibart got the worst marks in terms of trust: Interestingly, around the time of the George Floyd protests, the Journal found one employee calling for using them to purge Breitbart. The response was that Facebook needed to stick to its algos: A senior researcher wrote in the chat that it would be a problem for Facebook to remove Breitbart from News Tab for the way it framed news events…because “news framing is not a standard by which we approach journalistic integrity.” He said if the company removed publishers whose trust and quality scores were going down, Breitbart might be caught in that net. But he questioned whether the company would do that for all publishers whose scores had fallen. “I can also tell you that we saw drops in trust in CNN 2 years ago: would we take the same approach for them too?” he wrote. [ZH: As Breitbart reports, Facebook's censorship suppressed their news traffic by 20%... The Wall Street Journal has published internal material from anonymous sources at Facebook revealing that the company introduced tools that suppressed the traffic of Breitbart News by 20 percent, and other conservative publishers by double-digit margins. The company introduced two tools after the 2016 election that disproportionately harmed conservative publishers. The Journal highlights internal Facebook research showing that if both tools were removed, it would increase traffic to Breitbart News by 20 percent, the Washington Times by 18 percent, Western Journal by 16 percent, and the Epoch Times by 11 percent. Facebook eventually removed one of the tools while keeping the other — but it is unclear which of them had the most impact on traffic. -Breitbart *  *  * What this article never states clearly is the elephant in the room, that Facebook’s users skew conservative, putting the more liberal moderators at odds with them. For instance, Breitbart retorts to the Journal that it is rated better among Facebook’s own readers than many mainstream media publications, which could be true. The flip side is that Facebook went so far as to insert conservative pundits into “Feed Recommendations” allegedly out of fear (I have difficultly believing the fear part, I am sure the operative reasons were mercenary). The article discusses how many advertisers tried to avoid placement on Breitbart, yet wound up there. Facebook staffers try blaming that on Breitbart machinations. Huh? This sounds like dog ate my homework. And in any event, the advertisers should have stared Facebook about paying for ads they explicitly did not want placed. There are only two news items mentioned: one a video of Trump reposting a Breitbart clip saying masks were unnecessary and touting hydroxychloroquinine, which was widely viewed across the Internet before being taken down and this one at the close of the story: ….regarding pro-Trump influencers Diamond and Silk, third-party fact-checkers rated as “false” a post on their page that said, “How the hell is allocating 25 million dollars in order to give a raised [sic] to house members, that don’t give a damn about Americans, going to help stimulate America’s economy?” When fact-checkers had rated that post “false,” a Facebook staffer involved in the partner program argued there should be no punishment, noting the publisher “has not hesitated going public about their concerns around alleged [anti-]conservative bias on Facebook.” Diamond and Silk were able to lobby the third-party fact checker to change the rating down to “Partly False” and, with the help of the managed partner escalation process, all its strikes were removed, according to the posted summary and escalation documents… The chat conversations the Journal reviewed show that inside the company, Facebook employees demanded that higher-ups explain the allegations. “We are apparently providing hate-speech-policy-consulting and consequence-mitigation services to select partners,” wrote one. “Leadership is scared of being accused of bias,” wrote another. This sort of thing is worth litigating? Seriously? First, it’s a pervasive conservative trope to accuse government officials of spending too much on themselves. Calling it hate speech is simpy hysterical. And it is true that the March 2020 Covid stimulus bill contained $25 million for “salaries and expenses” for the House. But an actual pay increase would require approval of the House Appropriations Committee, and that didn’t happen. The money instead was going for stuff like pay to furloughed food workers and funding to kit out remote connectivity. One could argue that House members should worry about their own computers just like other employees told to work at home, but that wasn’t the point made. USA Today quotes much greater exaggerations about House spending in the CARES Act from Facebook that appear to have been untouched by the moderators. Oh, and as part of the CARES Act, which Trump had to sign before it became law, how was this a clean conservative shot even if accurate? Seems like this claim would set up for an easy rejoinder from someone on the other side of the ideological divide. But apparently goodthinking liberals have already written off the deplorables as beyond redemption. In the hothouse world of the Beltway, the video bloggers Diamond and Silk matter because they are among the few black supporters of Trump, and have earned a perverse badge of honor of being booted from Fox for questioning Covid data (they are now on NewsMax). The Journal also fails to provide some key backstory, that Diamond and Silk claimed that they had been censored by Facebook and had received a message stating their content and message were “unsafe to the community.” That got them a Congressional audience. I am in no position to get to the bottom of this, but Wikipedia strongly insinuates that the Diamond and Silk claims of Facebook downranking are exaggerated if not fabricated. In other words, Diamond and Silk’s off the mark shot at the House may seem important to the likes of Media Matters, but this is a nothingburger to most Americans. And a lot of people would find it disturbing that Facebook is engaging what looks like sentence-level policing. I wish the Wall Street Journal would publish all the documents to allow for broader reading and calibration. But not surprisingly, what they’ve served up so far is true to Facebook’s unsavory brand image. Tyler Durden Mon, 10/25/2021 - 10:25.....»»

Category: blogSource: zerohedgeOct 25th, 2021

As a DACA-protected immigrant, I know just how dire the need is for a pathway to citizenship. Congress has no excuse for not taking action.

Migrant workers on H2 visas are frequently subject to abuse, separated from their families for long periods, and lack necessary protections. Migrant farm laborers with Fresh Harvest working with an H-2A visa line up for a meal in the company living quarters on April 28, 2020 in King City, California. Brent Stirton/Getty Images Workers on temporary work visas are subject to abuse and wage theft at the hands of their employers. As a DACA recipient, I'm all too familiar with living under the threat of anti-immigrant litigation. The Senate must pass a package to make permanent immigration status for all a reality. Mari Perales Sánchez is senior policy manager and Elizabeth Memorial Advocate for Migrant Worker Women at Centro de los Derechos del Migrante, Inc. This is an opinion column. The thoughts expressed are those of the author. See more stories on Insider's business page. I immigrated to the US to reunite with my family when I was 8, so I have lived most of my life as an undocumented woman. Growing up here in America, I watched my relatives and other immigrant community members work under hazardous conditions with few protections. Their drive and sacrifices have always played a motivating role in my passion for social justice.Undocumented immigrants like myself were unnerved but not defeated by the Senate parliamentarian's ruling against including a pathway to citizenship in the new budget reconciliation bill. Right now, the world is watching as lawmakers such as Sen. Bob Menendez of New Jersey prepare alternative pathways and continue to fight for a pathway to citizenship and permanent legal status for millions of immigrants. If an immigration package passes, this legislation will fundamentally improve the livelihoods of millions of members of my community.As an advocate and directly impacted person who understands the many barriers removed by being able to access a permanent immigration status, I must demand that this bill covers as many members of my community as possible - including the thousands of essential migrant workers who come to the US on temporary visas.Without additional protections, many essential migrant workers are being exploited by employers In 2017, I joined my alma mater in suing the Trump administration for rescinding the Deferred Action for Childhood Arrivals (DACA) program. While the Supreme Court sided with us and reinstated the program for thousands of immigrants, temporary status is far from enough. The same is true for the migrant workers on H-2 visas who work as farmworkers, landscapers, seafood processors, and in construction. In my role managing the policy area and gender equity projects at Centro de los Derechos del Migrante, a binational migrant workers organization, I see how H-2 workers are exposed to severe and abusive conditions every day: from extortion, coercion, and wage theft to sexual harassment and discrimination.For this group of essential workers, a pathway to citizenship would provide an urgently needed arm of defense in the many structurally flawed labor migration programs where a worker's immigration status and employment are tied to a single employer, creating a deep power-imbalance between employer and worker.During the pandemic, health and safety violations skyrocketed in seafood processing plants across the country where migrant workers worked, while the few existing legal protections ceased to be enforced. When migrant workers speak out, their employers retaliate and workers risk being fired and deported to their country of origin. I saw this happen to two Louisiana H-2B crawfish workers from Mexico, Maribel and Reyna, whose employer fired them after they sought medical treatment for COVID-19. They returned to Mexico as a result.Congress must pass an inclusive immigration package But a pathway to permanent immigration status for essential H-2 migrant workers means more than improved labor standards. Most migrant workers are practically barred from migrating with their families and children - regardless of how many years they have been coming to the US - causing unconscionable, seasons-long separations between families each year.Last spring I had an emotional conversation with a Mexican woman who is an H-2B crab picker in Maryland and the bread-winner in her family. She was terrified she would never see her children again if she caught COVID-19, or that she would infect her family if she traveled back. A dignified immigration solution, like the one we advocate for, would enable migrant workers like her to migrate with their loved ones and as part of families - preventing their separation.Adversaries may side with the parliamentarian, but they are overlooking the fact that immigrant and migrant communities will not give up. Last summer, after months of mobilization, we watched a conservative Supreme Court deliver a positive DACA decision when many presumed the worst. Now, a year later, due to extensive organizing, Senate leadership is exhausting as many avenues as possible, including returning to the parliamentarian with alternative immigration proposals.As a DACA recipient, I'm all too familiar with the alternative: living in the limbo of temporary status at best, or under the threat of anti-immigrant litigation and at the mercy of the courts at worst. We cannot tolerate this option for H-2 workers and other essential workers like those in my family. Senate Majority Leader Chuck Schumer must include them in the immigration bills.We have done our part: Immigrants' rights activists, leaders, and allies have ensured that an inclusive pathway to citizenship is on the table. Now it's time for our policymakers to stop at nothing to deliver on their promises, including a permanent immigration status for all.Read the original article on Business Insider.....»»

Category: smallbizSource: nytOct 2nd, 2021

Futures Slide On Growing Stagflation Fears As Treasury Yields Surge

Futures Slide On Growing Stagflation Fears As Treasury Yields Surge US index futures, European markets and Asian stocks all turned negative during the overnight session, surrendering earlier gains as investors turned increasingly concerned about China's looming slowdown - and outright contraction - amid a global stagflationary energy crunch, which sent 10Y TSY yields just shy of 1.50% this morning following a Goldman upgrade in its Brent price target to $90 late on Sunday. At 745 a.m. ET, S&P 500 e-minis were down 4.75 points, or 0.1% after rising as much as 0.6%, Nasdaq 100 e-minis were down 83 points, or 0.54% and Dow e-minis were up 80 points, or 0.23%. The euro slipped as Germany looked set for months of complex coalition talks. While the market appears to have moved beyond the Evergrande default, the debt crisis at China's largest developer festers (with Goldman saying it has no idea how it will end), and data due this week will show a manufacturing recovery in the world’s second-largest economy is faltering faster. A developing energy crisis threatens to crimp global growth further at a time markets are preparing for a tapering of Fed stimulus. The week could see volatile moves as traders scrutinize central bankers’ speeches, including Chair Jerome Powell’s meetings with Congressional panels. “Most bad news comes from China these days,” Ipek Ozkardeskaya, a senior analyst at Swissquote Group Holdings, wrote in a note. “The Evergrande debt crisis, the Chinese energy crackdown on missed targets and the ban on cryptocurrencies have been shaking the markets, along with the Fed’s more hawkish policy stance last week.” Oil majors Exxon Mobil and Chevron Corp rose 1.5% and 1.2% in premarket trade, respectively, tracking crude prices, while big lenders including JPMorgan, Citigroup, Morgan Stanley and Bank of America Corp gained about 0.8%.Giga-cap FAAMG growth names such as Alphabet, Microsoft, Amazon.com, Facebook and Apple all fell between 0.3% and 0.4%, as 10Y yield surged, continuing their selloff from last week, which saw the 10Y rise as high as 1.4958% and just shy of breaching the psychological 1.50% level. While growth names were hit, value names rebounded as another market rotation appears to be in place: industrials 3M Co and Caterpillar Inc, which tend to benefit the most from an economic rebound, also inched higher (although one should obviously be shorting CAT here for its China exposure). Market participants have moved into value and cyclical stocks from tech-heavy growth names after the Federal Reserve last week indicated it could begin unwinding its bond-buying program by as soon as November, and may raise interest rates in 2022. Here are some other notable premarket movers: Gores Guggenheim (GGPI US) shares rise 7.2% in U.S. premarket trading as Polestar agreed to go public with the special purpose acquisition company, in a deal valued at about $20 billion. Naked Brand (NAKD US), one of the stocks caught up in the first retail trading frenzy earlier this year, rises 11% in U.S. premarket trading, extending Friday’s gains. Among other so-called meme stocks in premarket trading: ReWalk Robotics (RWLK) +6.5%, Vinco Ventures (BBIG) +18%, Camber Energy (CEI) +2.9% Pfizer (PFE US) and Opko Health (OPK US) in focus after they said on Friday that the FDA extended the review period for the biologics license application for somatrogon. Opko fell 3.5% in post-market trading. Aspen Group (ASPU) climbed 10% in Friday postmarket trading after board member Douglas Kass buys $172,415 of shares, according to a filing with the U.S. Securities & Exchange Commission. Seaspine (SPNE US) said spine surgery procedure volumes were curtailed in many areas of the U.S. in 3Q and particularly in August. Tesla (TSLA US) and other electric- vehicle related stocks globally may be active on Monday after Germany’s election, in which the Greens had their best-ever showing and are likely to be part of any governing coalition. Europe likewise drifted lower, with the Stoxx Europe 600 Index erasing earlier gains and turning negative as investors weighed the risk to global growth from the China slowdown and the energy crunch. The benchmark was down 0.1% at last check. Subindexes for technology (-0.9%) and consumer (-0.8%) provide the main drags while value outperformed, with energy +2.4%, banks +2% and insurance +1.3%.  The DAX outperformed up 0.5%, after German election results avoided the worst-case left-wing favorable outcome.  U.S. futures. Rolls-Royce jumped 12% to the highest since March 2020 after the company was selected to provide the powerplant for the B-52 Stratofortress under the Commercial Engine Replacement Program. Here are some of the other biggest European movers today IWG rises as much as 7.5% after a report CEO Mark Dixon is exploring a multibillion-pound breakup of the flexible office-space provider AUTO1 gains as much as 6.1% after JPMorgan analyst Marcus Diebel raised the recommendation to overweight from neutral Cellnex falls as much as 4.3% to a two-month low after the tower firm is cut to sell from neutral at Citi, which says the stock is “priced for perfection in an imperfect industry” European uranium stocks fall with Yellow Cake shares losing as much as 6% and Nac Kazatomprom shares declining as much as 4.7%. Both follow their U.S. peers down following weeks of strong gains as the price of uranium ballooned For those who missed it, Sunday's closely-watched German elections concluded with the race much closer than initially expected: SPD at 25.7%, CDU/CSU at 24.1%, Greens at 14.8%, FDP at 11.5%, AfD at 10.3% Left at 4.9%, the German Federal Returning Officer announced the seat distribution from the preliminary results which were SPD at 206 seats, CDU/CSU at 196. Greens at 118, FDP at 92, AfD at 83, Left at 39 and SSW at 1. As it stands, three potential coalitions are an option, 1) SPD, Greens and FDP (traffic light), 2) CDU/CSU, Greens and FDP (Jamaica), 3) SPD and CDU/CSU (Grand Coalition but led by the SPD). Note, option 3 is seen as the least likely outcome given that the CDU/CSU would be unlikely willing to play the role of a junior partner to the SPD. Therefore, given the importance of the FDP and Greens in forming a coalition for either the SPD or CDU/CSU, leaders of the FDP and Greens have suggested that they might hold their own discussions with each other first before holding talks with either of the two larger parties. Given the political calculus involved in trying to form a coalition, the process is expected to play out over several months. From a markets perspective, the tail risk of the Left party being involved in government has now been removed due to their poor performance and as such, Bunds trade on a firmer footing. Elsewhere, EUR is relatively unfazed due to the inconclusive nature of the result. We will have more on this in a subsequent blog post. Asian stocks fell, reversing an earlier gain, as a drop in the Shanghai Composite spooked investors in the region by stoking concerns about the pace of growth in China’s economy.  The MSCI Asia Pacific Index wiped out an advance of as much as 0.7%, on pace to halt a two-day climb. Consumer discretionary names and materials firms were the biggest contributors to the late afternoon drag. Financials outperformed, helping mitigate drops in other sectors.  “Seeing Shanghai shares extending declines, investors’ sentiment has turned weak, leading to profit-taking on individual stocks or sectors that have been gaining recently,” said Shoichi Arisawa, an analyst at Iwai Cosmo Securities. “The drop in Chinese equities is reminding investors about a potential slowdown in their economy.”  The Shanghai Composite was among the region’s worst performers along with Vietnam’s VN Index. Shares of China’s electricity-intensive businesses tumbled after Beijing curbed power supplies in the country’s manufacturing hubs to cut emissions. The CSI 300 still rose, thanks to gains in heavily weighted Kweichow Moutai and other liquor makers. Asian equities started the day on a positive note as financials jumped, tracking gains in U.S. peers and following a rise in Treasury yields. Resona Holdings was among the top performers after Morgan Stanley raised its view on the stock and Japanese banks. The regional market has been calmer over the past few trading sessions after being whipsawed by concerns over any fallout from China Evergrande Group’s debt troubles. While anxiety lingers, many investors expect China will resolve the distressed property developer’s problems rather than let them spill over into an echo of 2008’s Lehman crisis. Japanese equities closed lower, erasing an earlier gain, as concerns grew over valuations following recent strength in the local market and turmoil in China. Machinery and electronics makers were the biggest drags on the Topix, which fell 0.1%. Daikin and Bandai Namco were the largest contributors to a dip of less than 0.1% in the Nikkei 225. Both gauges had climbed more 0.5% in morning trading. Meanwhile, the Shanghai Composite Index fell as much as 1.5% as industrials tumbled amid a power crunch. “Seeing Shanghai shares extending declines, investors’ sentiment has turned weak, leading to profit-taking on individual stocks or sectors that have been gaining recently,” said Shoichi Arisawa, an analyst at Iwai Cosmo Securities Co. “The drop in Chinese equities is reminding investors about a potential slowdown in their economy. That’s why marine transportation stocks, which are representative of cyclical sectors, fell sharply.” Shares of shippers, which have outperformed this year, fell as investors turned their attention to reopening plays. Travel and retail stocks gained after reports that the government is making final arrangements to lift all the coronavirus state of emergency order in the nation as scheduled at the end of this month. Australia's commodity-heavy stocks advanced as energy, banking shares climb. The S&P/ASX 200 index rose 0.6% to close at 7,384.20, led by energy stocks. Banks also posted their biggest one-day gain since Aug. 2. Travel stocks were among the top performers after the prime minister said state premiers must not keep borders closed once agreed Covid-19 vaccination targets are reached. NextDC was the worst performer after the company’s CEO sold 1.6 million shares. In New Zealand, the S&P/NZX 50 index. In FX, the U.S. dollar was up 0.1%, while the British pound, Australian dollar, and Canadian dollar lead G-10 majors, with the Swedish krona and Swiss franc lagging. •    The Bloomberg Dollar Spot Index was little changed and the greenback traded mixed versus its Group-of-10 peers o    Volatility curves in the major currencies were inverted last week due to a plethora of central bank meetings and risk-off concerns. They have since normalized as stocks stabilize and traders assess the latest forward guidance on monetary policy •    The yield on two-year U.S. Treasuries touched the highest level since April 2020, as tightening expectations continued to put pressure on front-end rates and ahead of debt sales later Monday •    The pound advanced, with analyst focus on supply chain problems as Prime Minister Boris Johnson considers bringing in army drivers to help. Bank of England Governor Andrew Bailey’s speech later will be watched after last week’s hawkish meeting •    Antipodean currencies, as well as the Norwegian krone and the Canadian dollar were among the best Group-of-10 performers amid a rise in commodity prices •    The yen pared losses after falling to its lowest level in six weeks and Japanese stocks paused their rally and amid rising Treasury yields   In rates, treasuries extended their recent drop, led by belly of the curve ahead of this week’s front-loaded auctions, which kick off Monday with 2- and 5-year note sales.  Yields were higher by up to 4bp across belly of the curve, cheapening 2s5s30s spread by 3.2bp on the day; 10-year yields sit around 1.49%, cheaper by 3.5bp and underperforming bunds, gilts by 1.5bp and 0.5bp while the front-end of the curve continues to sell off as rate-hike premium builds -- 2-year yields subsequently hit 0.284%, the highest level since April 2020. 5-year yields top at 0.988%, highest since Feb. 2020 while 2-year yields reach as high as 0.288%; in long- end, 30-year yields breach 2% for the first time since Aug. 13. Auctions conclude Tuesday with 7-year supply. Host of Fed speakers due this week, including three scheduled for Monday. In commodities, Brent futures climbed 1.4% to $79 a barrel, while WTI futures hit $75 a barrel for the first time since July, amid an escalating energy crunch across Europe and now China. Base metals are mixed: LME copper rises 0.4%, LME tin and nickel drop over 2%. Spot gold gives back Asia’s gains to trade flat near $1,750/oz In equities, Stoxx 600 is up 0.6%, led by energy and banks, and FTSE 100 rises 0.4%. Germany’s DAX climbs 1% after German elections showed a narrow victory for social democrats, with the Christian Democrats coming in a close second, according to provisional results. S&P 500 futures climb 0.3%, Dow and Nasdaq contracts hold in the green. In FX, the U.S. dollar is up 0.1%, while the British pound, Australian dollar, and Canadian dollar lead G-10 majors, with the Swedish krona and Swiss franc lagging. Base metals are mixed: LME copper rises 0.4%, LME tin and nickel drop over 2%. Spot gold gives back Asia’s gains to trade flat near $1,750/oz Investors will now watch for a raft of economic indicators, including durable goods orders and the ISM manufacturing index this week to gauge the pace of the recovery, as well as bipartisan talks over raising the $28.4 trillion debt ceiling. The U.S. Congress faces a Sept. 30 deadline to prevent the second partial government shutdown in three years, while a vote on the $1 trillion bipartisan infrastructure bill is scheduled for Thursday. On today's calendar we get the latest Euro Area M3 money supply, US preliminary August durable goods orders, core capital goods orders, September Dallas Fed manufacturing activity. We also have a bunch of Fed speakers including Williams, Brainard and Evans. Market Snapshot S&P 500 futures down 0.1% to 4,442.50 STOXX Europe 600 up 0.3% to 464.54 MXAP little changed at 200.75 MXAPJ little changed at 642.52 Nikkei little changed at 30,240.06 Topix down 0.1% to 2,087.74 Hang Seng Index little changed at 24,208.78 Shanghai Composite down 0.8% to 3,582.83 Sensex up 0.2% to 60,164.70 Australia S&P/ASX 200 up 0.6% to 7,384.17 Kospi up 0.3% to 3,133.64 German 10Y yield fell 3.1 bps to -0.221% Euro down 0.3% to $1.1689 Brent Futures up 1.2% to $79.04/bbl Gold spot little changed at $1,750.88 U.S. Dollar Index up 0.15% to 93.47 Top Overnight News from Bloomberg House Speaker Nancy Pelosi put the infrastructure bill on the schedule for Monday under pressure from moderates eager to get the bipartisan bill, which has already passed the Senate, enacted. But progressives -- whose votes are likely vital -- are insisting on progress first on the bigger social-spending bill Olaf Scholz of the center-left Social Democrats defeated Chancellor Angela Merkel’s conservatives in an extremely tight German election, setting in motion what could be months of complex coalition talks to decide who will lead Europe’s biggest economy China’s central bank pumped liquidity into the financial system after borrowing costs rose, as lingering risks posed by China Evergrande Group’s debt crisis hurt market sentiment toward its peers as well Global banks are about to get a comprehensive blueprint for how derivatives worth several hundred trillion dollars may be finally disentangled from the London Interbank Offered Rate Economists warned of lower economic growth in China as electricity shortages worsen in the country, forcing businesses to cut back on production Governor Haruhiko Kuroda says it’s necessary for the Bank of Japan to continue with large-scale monetary easing to achieve the bank’s 2% inflation target The quant revolution in fixed income is here at long last, if the latest Invesco Ltd. poll is anything to go by. With the work-from-home era fueling a boom in electronic trading, the majority of investors in a $31 trillion community say they now deploy factor strategies in bond portfolios A more detailed look at global markets courtesy of Newsquawk Asian equity markets traded somewhat mixed with the region finding encouragement from reopening headlines but with gains capped heading towards month-end, while German election results remained tight and Evergrande uncertainty continued to linger. ASX 200 (+0.6%) was led higher by outperformance in the mining related sectors including energy as oil prices continued to rally amid supply disruptions and views for a stronger recovery in demand with Goldman Sachs lifting its year-end Brent crude forecast from USD 80/bbl to USD 90/bbl. Furthermore, respectable gains in the largest weighted financial sector and details of the reopening roadmap for New South Wales, which state Premier Berijiklian sees beginning on October 11th, further added to the encouragement. Nikkei 225 (Unch) was kept afloat for most of the session after last week’s beneficial currency flows and amid reports that Japan is planning to lift emergency measures in all areas at month-end, although upside was limited ahead of the upcoming LDP leadership race which reports noted are likely to go to a run-off as neither of the two main candidates are likely to achieve a majority although a recent Kyodo poll has Kono nearly there at 47.4% of support vs. nearest contender Kishida at 22.4%. Hang Seng (+0.1%) and Shanghai Comp. (-0.8%) were varied with the mainland choppy amid several moving parts including back-to-back daily liquidity efforts by the PBoC since Sunday and with the recent release of Huawei’s CFO following a deal with US prosecutors. Conversely, Evergrande concerns persisted as Chinese cities reportedly seized its presales to block the potential misuse of funds and its EV unit suffered another double-digit percentage loss after scrapping plans for its STAR Market listing. There were also notable losses to casino names after Macau tightened COVID-19 restrictions ahead of the Golden Week holidays and crypto stocks were hit after China declared crypto activities illegal which resulted in losses to cryptoexchange Huobi which dropped more than 40% in early trade before nursing some of the losses, while there are also concerns of the impact from an ongoing energy crisis in China which prompted the Guangdong to ask people to turn off lights they don't require and use air conditioning less. Finally, 10yr JGBs were flat but have clawed back some of the after-hour losses on Friday with demand sapped overnight amid the mild gains in stocks and lack of BoJ purchases in the market. Elsewhere, T-note futures mildly rebounded off support at 132.00, while Bund futures outperformed the Treasury space amid mild reprieve from this month’s losses and with uncertainty of the composition for the next German coalition. Top Asian News Moody’s Says China to Safeguard Stability Amid Evergrande Issues China’s Tech Tycoons Pledge Allegiance to Xi’s Vision China Power Crunch Hits iPhone, Tesla Production, Nikkei Reports Top Netflix Hit ‘Squid Game’ Sparks Korean Media Stock Surge Bourses in Europe have trimmed the gains seen at the open, albeit the region remains mostly in positive territory (Euro Stoxx 50 +0.4%; Stoxx 600 +0.2%) in the aftermath of the German election and amid the looming month-end. The week also sees several risk events, including the ECB's Sintra Forum, EZ CPI, US PCE and US ISM Manufacturing – not to mention the vote on the bipartisan US infrastructure bill. The mood in Europe contrasts the mixed handover from APAC, whilst US equity futures have also seen more divergence during European trade – with the yield-sensitive NQ (-0.3%) underperforming the cyclically-influenced RTY (+0.4%). There has been no clear catalyst behind the pullback since the Cash open. Delving deeper into Europe, the DAX 40 (+0.6%) outperforms after the tail risk of the Left party being involved in government has now been removed. The SMI (-0.6%) has dipped into the red as defensive sectors remain weak, with the Healthcare sector towards to bottom of the bunch alongside Personal & Household Goods. On the flip side, the strength in the price-driven Oil & Gas and yield-induced Banks have kept the FTSE 100 (+0.2%) in green, although the upside is capped by losses in AstraZeneca (-0.4%) and heavy-weight miners, with the latter a function of declining base metal prices. The continued retreat in global bonds has also hit the Tech sector – which resides as the laggard at the time of writing. In terms of individual movers, Rolls-Royce (+8.5%) trades at the top of the FTSE 100 after winning a USD 1.9bln deal from the US Air Force. IWG (+6.5%) also extended on earlier gains following reports that founder and CEO Dixon is said to be mulling a multibillion-pound break-up of the Co. that would involve splitting it into several distinct companies. Elsewhere, it is worth being cognizant of the current power situation in China as the energy crisis spreads, with Global Times also noting that multiple semiconductor suppliers for Tesla (Unch), Apple (-0.4% pre-market) and Intel (Unch), which have manufacturing plants in the Chinese mainland, recently announced they would suspend their factories' operations to follow local electricity use policies. Top European News U.K. Relaxes Antitrust Rules, May Bring in Army as Pumps Run Dry Magnitude 5.8 Earthquake Hits Greek Island of Crete German Stocks Rally as Chances Wane for Left-Wing Coalition German Landlords Rise as Left’s Weakness Trumps Berlin Poll In FX, the Aussie is holding up relatively well on a couple of supportive factors, including a recovery in commodity prices overnight and the Premier of NSW setting out a timetable to start lifting COVID lockdown and restrictions from October 11 with an end date to completely re-open on December 1. However, Aud/Usd is off best levels against a generally firm Greenback on weakness and underperformance elsewhere having stalled around 0.7290, while the Loonie has also run out of momentum 10 pips or so from 1.2600 alongside WTI above Usd 75/brl. DXY/EUR/CHF - Although the risk backdrop is broadly buoyant and not especially supportive, the Buck is gleaning traction and making gains at the expense of others, like the Euro that is gradually weakening in wake of Sunday’s German election that culminated in narrow victory for the SPD Party over the CDU/CSU alliance, but reliant on the Greens and FDP to form a Government. Eur/Usd has lost 1.1700+ status and is holding a fraction above recent lows in the form of a double bottom at 1.1684, but the Eur/Gbp cross is looking even weaker having breached several technical levels like the 100, 21 and 50 DMAs on the way down through 0.8530. Conversely, Eur/Chf remains firm around 1.0850, and largely due to extended declines in the Franc following last week’s dovish SNB policy review rather than clear signs of intervention via the latest weekly Swiss sight deposit balances. Indeed, Usd/Chf is now approaching 0.9300 again and helping to lift the Dollar index back up towards post-FOMC peaks within a 93.494-206 range in advance of US durable goods data, several Fed speakers, the Dallas Fed manufacturing business index and a double dose of T-note supply (Usd 60 bn 2 year and Usd 61 bn 5 year offerings). GBP/NZD/JPY - As noted above, the Pound is benefiting from Eur/Gbp tailwinds, but also strength in Brent to offset potential upset due to the UK’s energy supply issues, so Cable is also bucking the broad trend and probing 1.3700. However, the Kiwi is clinging to 0.7000 in the face of Aud/Nzd headwinds that are building on a break of 1.0350, while the Yen is striving keep its head afloat of another round number at 111.00 as bond yields rebound and curves resteepen. SCANDI/EM - The Nok is also knocking on a new big figure, but to the upside vs the Eur at 10.0000 following the hawkish Norges Bank hike, while the Cnh and Cny are holding up well compared to fellow EM currencies with loads of liquidity from the PBoC and some underlying support amidst the ongoing mission to crackdown on speculators in the crypto and commodity space. In commodities, WTI and Brent front-month futures kicked the week off on a firmer footing, which saw Brent Nov eclipse the USD 79.50/bbl level (vs low 78.21/bbl) whilst its WTI counterpart hovers north of USD 75/bbl (vs low 74.16/bbl). The complex could be feeling some tailwinds from the supply crunch in Britain – which has lead petrol stations to run dry as demand outpaces the supply. Aside from that, the landscape is little changed in the run-up to the OPEC+ meeting next Monday, whereby ministers are expected to continue the planned output hikes of 400k BPD/m. On that note, there have been reports that some African nations are struggling to pump more oil amid delayed maintenance and low investments, with Angola and Nigeria said to average almost 300k BPD below their quota. On the Iranian front, IAEA said Iran permitted it to service monitoring equipment during September 20th-22nd with the exception of the centrifuge component manufacturing workshop at the Tesa Karaj facility, with no real updates present regarding the nuclear deal talks. In terms of bank commentary, Goldman Sachs raised its year-end Brent crude forecast by USD 10 to USD 90/bbl and stated that Hurricane Ida has more than offset the ramp-up in OPEC+ output since July with non-OPEC+, non-shale output continuing to disappoint, while it added that global oil demand-deficit is greater than expected with a faster than anticipated demand recovery from the Delta variant. Conversely, Citi said in the immediate aftermath of skyrocketing prices, it is logical to be bearish on crude oil and nat gas today and forward curves for later in 2022, while it added that near-term global oil inventories are low and expected to continue declining maybe through Q1 next year. Over to metals, spot gold and silver have fallen victim to the firmer Dollar, with spot gold giving up its overnight gains and meandering around USD 1,750/oz (vs high 1760/oz) while spot silver briefly dipped under USD 22.50/oz (vs high 22.73/oz). Turning to base metals, China announced another round of copper, zinc and aluminium sales from state reserves – with amounts matching the prior sales. LME copper remains within a tight range, but LME tin is the outlier as it gave up the USD 35k mark earlier in the session. Finally, the electricity crunch in China has seen thermal coal prices gain impetus amid tight domestic supply, reduced imports and increased demand. US Event Calendar 8:30am: Aug. Cap Goods Ship Nondef Ex Air, est. 0.5%, prior 0.9% 8:30am: Aug. Cap Goods Orders Nondef Ex Air, est. 0.4%, prior 0.1% 8:30am: Aug. -Less Transportation, est. 0.5%, prior 0.8% 8:30am: Aug. Durable Goods Orders, est. 0.6%, prior -0.1% 10:30am: Sept. Dallas Fed Manf. Activity, est. 11.0, prior 9.0 Central Banks 8am: Fed’s Evans Speaks at Annual NABE Conference 9am: Fed’s Williams Makes Opening Remarks at Conference on... 12pm: Fed’s Williams Discusses the Economic Outlook 12:50pm: Fed’s Brainard Discusses Economic Outlook at NABE Conference DB's Jim Reid concludes the overnight wrap Straight to the German elections this morning where unlike the Ryder Cup the race was tight. The centre-left SPD have secured a narrow lead according to provisional results, which give them 25.7% of the vote, ahead of Chancellor Merkel’s CDU/CSU bloc, which are on 24.1%. That’s a bit narrower than the final polls had suggested (Politico’s average put the SPD ahead by 25-22%), but fits with the slight narrowing we’d seen over the final week of the campaign. Behind them, the Greens are in third place, with a record score of 14.8%, which puts them in a key position when it comes to forming a majority in the new Bundestag, and the FDP are in fourth place currently on 11.5%. Although the SPD appear to be in first place the different parties will now enter coalition negotiations to try to form a governing majority. Both Olaf Scholz and the CDU’s Armin Laschet have said that they will seek to form a government, and to do that they’ll be looking to the Greens and the FDP as potential coalition partners, since those are the most realistic options given mutual policy aims. So the critical question will be whether it’s the SPD or the CDU/CSU that can convince these two to join them in coalition. On the one hand, the Greens have a stronger policy overlap with the SPD, and governed with them under Chancellor Schröder from 1998-2005, but the FDP seems more in line with the Conservatives, and were Chancellor Merkel’s junior coalition partner from 2009-13.  So it’s likely that the FDP and the Greens will talk to each other before talking to either of the two biggest parties. For those wanting more information, our research colleagues in Frankfurt have released a post-election update (link here) on the results and what they mean. An important implication of last night’s result is that (at time of writing) it looks as though a more left-wing coalition featuring the SPD, the Greens and Die Linke would not be able for form a majority in the next Bundestag. So the main options left are for the FDP and the Greens to either join the SPD in a “traffic light” coalition or instead join the CDU/CSU in a “Jamaica” coalition. The existing grand coalition of the SPD and the CDU/CSU would actually have a majority as well, but both parties have signalled that they don't intend to continue this. That said, last time in 2017, a grand coalition wasn’t expected after that result, and there were initially attempts to form a Jamaica coalition. But once those talks proved unsuccessful, discussions on another grand coalition began once again. In terms of interesting snippets, this election marks the first time the SPD have won the popular vote since 2002, which is a big turnaround given that the party were consistently polling in third place over the first half of this year. However, it’s also the worst ever result for the CDU/CSU, and also marks the lowest combined share of the vote for the two big parties in post-war Germany, which mirrors the erosion of the traditional big parties we’ve seen elsewhere in continental Europe. Interestingly, the more radical Die Linke and AfD parties on the left and the right respectively actually did worse than in 2017, so German voters have remained anchored in the centre, and there’s been no sign of a populist resurgence. This also marks a record result for the Greens, who’ve gained almost 6 percentage points relative to four years ago, but that’s still some way down on where they were polling earlier in the spring (in the mid-20s), having lost ground in the polls throughout the final weeks of the campaign. Markets in Asia have mostly started the week on a positive note, with the Hang Seng (+0.28%), Nikkei (+0.04%), and the Kospi (+0.25%) all moving higher. That said, the Shanghai Comp is down -1.30%, as materials (-5.91%) and industrials (-4.24%) in the index have significantly underperformed, which comes amidst power curbs in the country. In the US and Europe however, futures are pointing higher, with those on the S&P 500 up +0.37%, and those on the DAX up +0.51%. Moving onto another big current theme, all the talk at the moment is about supply shocks and it’s not inconceivable that things could get very messy on this front over the weeks and months ahead. However, I think the discussion on supply in isolation misses an important component and that is demand. In short we had a pandemic that effectively closed the global economy and interrupted numerous complicated supply chains. The global authorities massively stimulated demand relative to where it would have been in this environment and in some areas have created more demand than there would have been at this stage without Covid. However the supply side has not come back as rapidly. As such you’re left with demand outstripping supply. So I think it’s wrong to talk about a global supply shock in isolation. It’s not as catchy but this is a “demand is much higher than it should be in a pandemic with lockdowns, but supply hasn't been able to fully respond” world. If the authorities hadn’t responded as aggressively we would have plenty of supply for the demand and a lot of deflation. Remember negative oil prices in the early stages of the pandemic. So for me every time you hear the phrase “supply shock” remember the phenomenal demand there is relative to what the steady state might have been. This current “demand > supply” at lower levels of activity than we would have had without covid is going to cause central banks a huge headache over the coming months. Should they tighten due to what is likely to be a prolonged period of higher prices than people thought even a couple of months ago or should they look to the potential demand destruction of higher prices? The risk of a policy error is high and the problem with forward guidance is that markets demand to know now what they might do over the next few months and quarters so it leaves them exposed a little in uncertain times. This problem has crept up fast on markets with an epic shift in sentiment in the rates market after the BoE meeting Thursday lunchtime. I would say they were no more hawkish than the Fed the night before but the difference is that the Fed are still seemingly at least a year from raising rates and a lot can happen in that period whereas the BoE could now raise this year (more likely February). That has focused the minds of global investors, especially as Norway became the first central bank among the G-10 currencies to raise rates on the same day. Towards the end of this note we’ll recap the moves in markets last week including a +15bps climb in US 10yr yields in the last 48 hours of last week. One factor that will greatly influence yields over the week ahead is the ongoing US debt ceiling / government shutdown / infrastructure bill saga that is coming to a head as we hit October on Friday - the day that there could be a partial government shutdown without action by the close on Thursday. It’s a fluid situation. So far the the House of Representatives has passed a measure that would keep the government funded through December 3, but it also includes a debt ceiling suspension, so Republicans are expected to block this in the Senate if it still includes that. The coming week could also see the House of Representatives vote on the bipartisan infrastructure bill (c.$550bn) that’s already gone through the Senate, since Speaker Pelosi had previously committed to moderate House Democrats that there’d be a vote on the measure by today. She reaffirmed that yesterday although the timing may slip. However, there remain divisions among House Democrats, with some progressives not willing to support it unless the reconciliation bill also passes. In short we’ve no idea how this get resolved but most think some compromise will be reached before Friday. Pelosi yesterday said it “seems self-evident” that the reconciliation bill won’t reach the $3.5 trillion hoped for by the administration which hints at some compromise. Overall the sentiment has seemingly shifted a little more positively on there being some progress over the weekend. From politics to central banks and following a busy week of policy meetings, there are an array of speakers over the week ahead. One of the biggest highlights will be the ECB’s Forum on Central Banking, which is taking place as an online event on Tuesday and Wednesday, and the final policy panel on Wednesday will include Fed Chair Powell, ECB President Lagarde, BoE Governor Bailey and BoJ Governor Kuroda. Otherwise, Fed Chair Powell will also be testifying before the Senate Banking Committee on Tuesday, alongside Treasury Secretary Yellen, and on Monday, ECB President Lagarde will be appearing before the European Parliament’s Committee on Economic and Monetary Affairs as part of the regular Monetary Dialogue. There are lots of other Fed speakers this week and they can add nuances to the taper and dot plot debates. Finally on the data front, there’ll be further clues about the state of inflation across the key economies, as the Euro Area flash CPI estimate for September is coming out on Friday. Last month's reading showed that Euro Area inflation rose to +3.0% in August, which was its highest level in nearly a decade. Otherwise, there’s also the manufacturing PMIs from around the world on Friday given it’s the start of the month, along with the ISM reading from the US, and Tuesday will see the release of the Conference Board’s consumer confidence reading for the US as well. For the rest of the week ahead see the day-by-day calendar of events at the end. Back to last week now and the highlight was the big rise in global yields which quickly overshadowed the ongoing Evergrande story. Bonds more than reversed an early week rally as yields rose for a fifth consecutive week. US 10yr Treasury yields ended the week up +8.9bps to finish at 1.451% - its highest level since the start of July and +15bps off the Asian morning lows on Thursday. The move saw the 2y10y yield curve steepen +4.5bps, with the spread reaching its widest point since July as well. However, at the longer end of the curve the 5y30y spread ended the week largely unchanged after a volatile week. It was much flatter shortly following the FOMC and steeper following the BoE. Bond yields in Europe moved higher as well with the central bank moves again being the major impetus especially in the UK. 10yr gilt yields rose +7.9bps to +0.93% and the short end moved even more with the 2yr yield rising +9.4bps to 0.38% as the BoE’s inflation forecast and rhetoric caused investors to pull forward rate hike expectations. Yields on 10yr bunds rose +5.2bps, whilst those on the OATs (+6.3bps) and BTPs (+5.7bps) increased substantially as well, but not to the same extent as their US and UK counterparts. While sovereign debt sold off, global equity markets recovered following two consecutive weeks of declines. Although markets entered the week on the back foot following the Evergrande headlines from last weekend, risk sentiment improved at the end of the week, especially toward cyclical industries. The S&P 500 gained +0.51% last week (+0.15% Friday), nearly recouping the prior week’s loss. The equity move was primarily led by cyclicals as higher bond yields helped US banks (+3.43%) outperform, while higher commodity prices saw the energy (+4.46%) sector gain sharply. Those higher bond yields led to a slight rerating of growth stocks as the tech megacap NYFANG index fell back -0.46% on the week and the NASDAQ underperformed, finishing just better than unchanged (+0.02). Nonetheless, with four trading days left in September the S&P 500 is on track for its third losing month this year, following January and June. European equities rose moderately last week, as the STOXX 600 ended the week +0.31% higher despite Friday’s -0.90% loss. Bourses across the continent outperformed led by particularly strong performances by the IBEX (+1.28%) and CAC 40 (+1.04%). There was limited data from Friday. The Ifo's business climate indicator in Germany fell slightly from the previous month to 98.8 (99.0 expected) from 99.4 on the back a lower current assessment even though business expectations was higher than expected. In Italy, consumer confidence rose to 119.6 (115.8 expected), up just over 3pts from August and at its highest level on record (since 1995). Tyler Durden Mon, 09/27/2021 - 08:09.....»»

Category: personnelSource: nytSep 27th, 2021

Blake Masters says the GOP isn"t John McCain"s party anymore. Now, he"s taking on Arizona Sen. Mark Kelly for McCain"s old seat.

"John McCain, rest his soul," Blake Masters, the GOP Arizona Senate nominee once said. "It's not his Republican Party in Arizona anymore." Arizona Republican Senate nominee Blake Masters in Williams, AZ on July 6, 2022.Bill Clark/CQ-Roll Call via Getty Images Blake Masters won the Arizona GOP Senate primary by embracing Trump and the party's right fringe. But he now faces an uphill battle against Mark Kelly for the seat once held by John McCain. "John McCain, rest his soul," Masters once said. "It's not his Republican Party in Arizona anymore." APACHE JUNCTION, Arizona — It was 20 minutes into the monthly meeting of the Superstition Mountain Republican Club, and Blake Masters was running late. The host, a local constable named Ted Gremmel, had informed attendees in a large room at Avalon Elementary School on July 14 that the Republican Senate candidate was tied up with an interview with Fox News host Tucker Carlson. Masters, a towering, lanky figure, eventually walked in wearing a navy blue suit and what looked like a face full of TV makeup."Mark Kelly is the worst US senator. He's the single worst!" Masters began his pitch, skewering the Democratic senator whose seat he hopes to take. He went on to solicit the crowd's nominations for the title of "worst US Senator."One attendee shouted out the name of Republican Rep. Liz Cheney of Wyoming, the vice-chair of the January 6 committee."Liz Cheney's in the House, but she's pretty, pretty bad!" Masters replied, adding: "What about Bernie Sanders? Chuck Schumer? Chuck Schumer's got a heck of a face! He looks like an Ayn Rand villain, right? He just looks like an evil guy."Masters eventually made the case that Kelly, the Democratic incumbent who won his seat in a special election in 2020, was the worst US senator because he "votes just as badly as Bernie Sanders," but is, according to Masters, pretending to be a moderate.Endorsed by Trump, Masters won the GOP nomination for US Senate in Arizona last week.Over the next three months, Masters will take on Kelly for the prize of a Senate seat held for 31 years by the late Sen. John McCain, a Republican with a record of bucking his party, championing bipartisan initiatives like campaign finance reform, and drawing the ire of Trump even after his death in 2018. And even as he rejects the mantle of McCain, Masters will have to woo middle-of-the-road voters in a state that's trending purple and has generally sent moderates to the Senate.A 36-year-old first-time candidate, Masters has a history of violating political taboos, hopes to establish an "America First Caucus" in the Senate, and would represent a stark departure from a 2008 GOP presidential candidate who famously defended his opponent from Islamophobic attacks."John McCain, rest his soul," Masters said during a March interview with a New York radio station. "You know, it's not his Republican Party in Arizona anymore."But observers warn that this political positioning could come back to bite Masters in the general election, when both independent voters and the Republicans he failed to win over during the primary are up for grabs."McCain absolutely does still have sway in Arizona," said Mike Noble, an Arizona pollster who leads OH Predictive Insights. "It's one of the contributing factors as to why Trump came up short in Arizona in the last presidential election."Blake Masters speaks to the Superstition Mountain Republican Club in Apache Junction, AZ on July 14, 2022.Bryan Metzger/InsiderFrom Trumpian Thiel protege to general-election 'independent'After growing up in Tucson and getting a bachelor's and a law degree from Stanford, Masters spent the majority of his professional life working in Silicon Valley. He is a close associate of conservative tech billionaire Peter Thiel, serving as the chief operating officer of Thiel's investment firm and the president of his foundation until March of this year. Masters was a student of Thiel's at one point, taking notes on the tech entrepreneur's lectures about building startups that would eventually become their co-authored book, Zero to One. Thiel's idiosyncratic brand of politics — which have evolved from an escapist libertarian tendency toward a more populist, nationalist ideology — are now part and parcel with the "New Right," a reactionary political ideology that makes critiques of capitalism, social progressivism, and other aspects of modernity. As with JD Vance, the GOP Senate nominee in Ohio, Thiel has bankrolled Masters' bid, spending at least $15 million on a political action committee backing the candidate's campaign.But while Masters has certainly gestured towards some of the economic aspects of New Right ideology, he's leaned harder into its socially conservative cultural prescriptions, which land much more comfortably with a Republican base in line with Trump, Fox News, and other influential right-wing figures. During his appearance at the Republican club meeting in July, he launched into a speech rife with incendiary claims about the country's immigration system, pitching a symbolic impeachment of President Joe Biden over border policy while arguing that the Democratic Party is waging an assault on the nuclear family and American values. He also spent considerable time on education policy, leaning into familiar GOP complaints about critical race theory and the New York Times' 1619 Project on the history of slavery."I think what's worse than this crazy racial stuff, and this crazy fake history project, is this perverse gender ideology," he said. "The progressive left, they want to teach your 5-year-old, or your 5-year-old grandchild, that he or she can change their gender, encourage these kids to change their gender. I'm sorry, but I think that is child abuse."Masters secured Trump's endorsement — and roughly 40% of the primary vote — by fully embracing the former president's false claims of a stolen 2020 election. Masters' attendance at a screening of the Dinesh D'Souza film "2000 Mules" at Mar-a-Lago in May reportedly gave him an edge as he and other Senate candidates sought to curry favor with Trump."The power of documentary — it's on video!" Masters exclaimed before the crowd in Apache Junction, urging them to watch the broadly-debunked film that makes several false claims about the 2020 election.But Masters' intentional violation of liberal pieties and political taboos is what makes him Trumpian, and it's seemingly a consistent aspect of his personality. He's chided former GOP Sen. Martha McSally for allegedly avoiding criticizing Kelly's position on guns because Kelly's wife, former Rep. Gabby Giffords, was shot and badly wounded by a gunman in Tucson in 2011."Mark Kelly is a gun-grabber, and we need to run a candidate who's bold enough to say, like, hey, I'm sorry about what happened to your wife," Masters said on the Charlie Kirk Show in June. "Like, it's truly horrible, like his family and Gabby Giffords, a real victim of a horrible gun crime, right?" "That doesn't give you the right, though, to disarm Arizonans," he continued.Spokespeople for both Kelly and Masters declined Insider's interview requests.Masters has also described supporters of abortion rights as "demonic" and likened the practice to a "religious sacrifice" for progressives, suggested that the FBI instigated the January 6 attack on the US Capitol, described the country's political leadership as "psychopaths," tweeted out a clip of an interview in which he articulated the "great replacement" theory just hours after a mass shooter inspired by similar ideas opened fire at a Buffalo grocery store, and referred to Supreme Court Justice Ketanji Brown Jackson as the "affirmative action pick." After the New York Times reported on Masters' years-old incendiary posts on a CrossFit forum, Democratic Sen. Brian Schatz of Hawaii — one of 10 Jewish members of the body in which Masters hopes to serve — called Masters anti-Semitic.But while taking controversial and unorthodox positions may play well among GOP voters, Masters still has to convince the rest of his purple state's electorate to support him.The late Republican Sen. John McCain of Arizona at the Capitol on July 13, 2017.Chip Somodevilla/Getty Images"That'll get you the Republican nomination, but it's not going to win you a general election," said Chuck Coughlin, a long-time political consultant in Arizona who's worked primarily for Republicans. "So he's gonna have to choose on how to narrate the campaign, and I just don't see him moving. I don't see him moving away from that narrative line, I see him doubling down on it."Ryan O'Daniel, an Arizona lobbyist and campaign consultant who managed McCain's final Senate campaign in 2016, offered a more optimistic view of Masters' chances, saying that the fundamentals of the national environment may matter more than anything else. But he also warned that the so-called "pivot" to the general election, in which candidates seek to moderate their image and appeal to a broader audience, might not be so easy for Masters."There's nowhere to hide because they've spent a year on the trail, they're all over YouTube, they're all over Twitter," he said. "There's much more of a record of things now than there used to be seven years ago, 10 years ago, 20 years ago. So you almost can't pivot anymore."Masters is now attempting to make that pivot. His first TV ad since winning the primary is far less dark than some of his primary campaign ads and he's now pitching himself as "independent."But he's also continued to be combative. When Tucson Mayor Regina Romero announced a press conference highlighting several Masters' controversial statements, he responded with a press release calling her a "Low IQ Activist."A 'young and dynamic' America First caucus?When asked who he'd seek to emulate as a senator, Masters has repeatedly pointed to Republican Sen. Josh Hawley of Missouri, a man with a history of his own provocations. "Josh Hawley is calling me saying, 'give me some backup!'" Masters told attendees in Apache Junction while condemning Big Tech. "He's the only one in the US Senate who really understands this stuff."Masters talks up the idea of an "America First Caucus" made up of other "young and dynamic" senators including Hawley, Vance (if he wins his election), and curiously, Rand Paul. Perhaps intentionally on Masters' part, the proposed caucus shares the name of an ill-fated idea that Rep. Marjorie Taylor Greene of Georgia was forced to abandon last year: a caucus that would have been organized in part around "uniquely Anglo-Saxon political traditions."Asked about Masters' caucus idea at the Capitol in July, Hawley demurred."Well, I — listen, I would, first of all, I welcome more Republicans next Congress to the Senate," Hawley told Insider. "I don't want to count my chickens before they hatch."But he offered praise for the first-time Senate candidate, who he endorsed earlier this year ahead of the primary election."I think Blake is thoughtful. I think that he is a tireless worker," said Hawley. "I think that he's really smart, and we agree on the — I think where he is on the issues, I really, you know, I agree with him on much of it, I'm sure not all, but, you know, much."Republican Sen. Josh Hawley of Missouri and Ohio GOP Senate nominee JD Vance, both of whom Masters names as potential "America First" caucus-mates.Tom Williams/CQ-Roll Call via Getty ImagesBut Coughlin described Masters' politics as "dystopian" and drawing on people's sense of alienation from existing power structures. And he argued that having a more hardline, Hawley-esque senator from Arizona would be a "substantive break" from the state's history of electing moderates."I mean, if you really, truly understand Arizona's success as a state, you understand it as a cooperative relationship with the federal government," said Coughlin, pointing to both border security, water management issues, and military installations as key avenues where a more cooperative, compromising approach is needed. "So now, we're gonna send somebody to Washington, and all they want to do is take a sledgehammer to all those relationships? That's never been the case in the history of Arizona politics," he added.O'Daniel, meanwhile, suggested that Masters' penchant for speaking openly about his beliefs — even if it means calling the Unabomber an "underrated thinker" in the midst of an electoral campaign — could actually appeal to voters."That's part of what made Trump successful in 2016," said O'Daniel. "You know exactly what you're gonna get."'All he did was badmouth other people'During the question-and-answer portion of Masters' address to the Superstition Mountain Republican Club in Arizona, a 79-year old woman named Charlene Lockwood rose to decry the back-and-forth "football game" of Washington. She challenged Masters on whether he had read the US Constitution while praising the work of legislators who work across the aisle."I am proud of Senator Sinema. I am proud of Senator Manchin," she said, citing the two Democrats' opposition to removing the Senate's 60-vote filibuster, which has proven a formidable obstacle to passing Biden's agenda.Though Masters offered praise for Democratic Sen. Kyrsten Sinema's frequent spurning of her party — "give credit where it's due: we still have a country," he said — he largely avoided the substance of the question, seizing on a comment Lockwood had made about term limits for members of Congress to make his argument that "unelected bureaucrats" in Washington need term limits.After the event, Lockwood told Insider she would "never even consider voting for Masters" after what she witnessed."All he did was badmouth other people," she said, later adding that Sen. Ben Sasse of Nebraska was her favorite senator. "I don't think Blake Masters even knows what the Constitution is really, just from the way he acted."Blake Masters speaks at a campaign event on August 1, 2022 in Phoenix, Arizona.Brandon Bell/Getty ImagesSeeking to capitalize on Masters' far-right politics, Kelly rolled out a list of Republican endorsements last month. And observers generally agree that Kelly's incumbency and fundraising prowess offer him a head-start in the race, despite a national environment likely to favor Republicans. "If one could give an award for best strategy and navigation of these incredibly turbulent political waters for Democrats, Mark Kelly should get a gold medal," said Noble."He's done a really, really great job of not really being in the fire, and kind of hitting the issues most important to Arizonans, and just staying planted squarely in the middle from a perception standpoint," Noble added. "Because his voting record is obviously very different."And Democrats may have something of a wild-card opportunity in the wake of the Supreme Court overturning Roe v. Wade, particularly after voters in conservative Kansas rejected an anti-abortion constitutional amendment earlier this month. To that end, Kelly's first attack ad against Masters highlights the Republican's comments on abortion.On some level, the shape of the race will likely be determined by both the broader national environment and by Biden's approval ratings. In a statement to Insider, RNC Arizona spokesman Ben Petersen previewed the GOP's line of attack on Kelly, calling him a "lackey" for Biden while arguing that he "could be wielding a one-vote veto in the Senate right now."But in many ways, Sinema has embraced the mantle of McCain more than Kelly, publicly taking positions that put her at odds with the Democratic base — most prominently on the Senate filibuster and a party-line spending bill that Democrats recently passed —  while Kelly has largely voted with his party. As a result, Sinema's approval ratings are higher with Republicans than Democrats in Arizona. "I'd be hugging the shit out of her right now," said Coughlin.Democratic Sen. Mark Kelly of Arizona walks with Cindy McCain, the wife of the late Sen. John McCain and the current US Ambassador to the United Nations Agencies for Food and Agriculture, at the Capitol on August 4, 2021.Anna Moneymaker/Getty ImagesOne prominent Mesa Republican, outgoing speaker of the Arizona House Rusty Bowers, told Insider he's "not a fan" of Masters, citing his "lack of self awareness" and "lack of sensitivity."Bowers lost a state Senate primary to Trump-backed former Sen. David Farnsworth last week after testifying before the January 6 committee about Trump's efforts to overturn Arizona's election results.Asked directly in July how he would vote in a Kelly vs. Masters general election, Bowers stopped short of declaring his support for Kelly, but heaped praise on the incumbent Democratic senator."It's probably best to say: I'm going to vote for somebody for Senate that has got character, has got history, has got experience, who's got maturity," said Bowers. Read the original article on Business Insider.....»»

Category: smallbizSource: nyt3 hr. 49 min. ago

Republicans Say Americans Will "Fire The Democratic Majority" In Midterms For Passing Reconciliation Bill

Republicans Say Americans Will 'Fire The Democratic Majority' In Midterms For Passing Reconciliation Bill Authored by Frank Fang via The Epoch Times (emphasis ours), Senate Republicans lambasted their Democrat colleagues for passing a $740 billion health care and climate spending bill, warning the economic package will not help the sagging U.S. economy. “Democrats under Joe Biden have spent trillions, creating the worst inflation in over four decades, and now their answer to this disaster of their own making is to tax us into a recession,” Sen. Jim Inhofe (R-Okla.), ranking member of the Senate Armed Services Committee, said in a statement after voting against what he called a “radical proposal.” The U.S. Capitol in Washington on Aug. 6, 2022. (Anna Rose Layden/Getty Images) Inhofe said it is not right to tackle the spiraling inflation by raising “taxes on small business and middle-class Americans,” as well as spending money on the “Green New Deal” agenda. “This proposal could put more than 100,000 American jobs at risk and inflict a severely disproportionate economic impact on natural gas producing states, like Oklahoma,” Inhofe said. Sen. James Inhofe (R-Okla.) gives opening remarks at the confirmation hearing for Secretary of Defense nominee retired Army Gen. Lloyd Austin before the Senate Armed Services Committee at the U.S. Capitol in Washington on Jan. 19, 2021. (Greg Nash-Pool/Getty Images) On Aug. 7, the Senate passed the economic package, officially known as the “Inflation Reduction Act of 2022,” by a party-line vote of 51 to 50, with Vice President Kamala Harris casting the tie-breaking vote. Senate Democrats were able to get the legislation passed without any Republican support by resorting to a reconciliation process, which allows budget-related bills to pass on a simple majority and avoids the 60-vote filibuster threshold. Before the final passage of the bill, Democrats rejected more than 30 Republican amendments, points of order, and motions during a “vote-a-rama,” a procedure that is part of the reconciliation process when senators can introduce an unlimited number of amendments to budget-related measures. Americans for Tax Reform (ATR), a U.S. advocacy group, said the Senate bill “will drive up the cost of household energy bills,” according to a commentary published on Aug. 7. It pointed to a provision to levy a 16.4 cents-per-barrel tax on crude oil and imported petroleum products, a cost the group said will be “passed on to consumers in the forms of higher gas prices.” The bill is now being sent to the House for a vote, likely on Aug. 12, when House lawmakers reconvene briefly from summer recess. President Joe Biden has issued a statement urging the House to pass it “as soon as possible” and he looked forward to signing the bill into law. American Rescue Plan Sen. Lindsey Graham (R-S.C.), ranking member of the Senate Budget Committee, and Sen. Mike Crapo (R-Idaho), ranking member of the Senate Finance Committee, both reminded Americans where the U.S. economy is now, after Biden signed into the law the “American Rescue Plan Act of 2021” in March last year. “My Democratic colleagues who are assuring you this bill [Inflation Reduction Act of 2022] will help you are the same people who said that in 2021,” Graham stated according to a statement from his office. “The American Rescue Plan–a $1.9 trillion tax and spend proposal passed in 2021–was disaster for the American people,” Graham continued. “At the time of its passage, inflation was 2.6 percent. It is now 9.1 percent. And it’s no accident that the American Rescue Plan caused this problem.” Sen. Lindsey Graham (R-S.C.) leaves the Senate Chamber after final passage of the Inflation Reduction Act at the U.S. Capitol in Washington on Aug. 7, 2022. (Drew Angerer/Getty Images) On July 13, the U.S. Bureau of Labor Statistics announced the consumer price index (CPI) soared 9.1 percent from a year ago, reaching the highest level since November 1981. On a monthly basis, the CPI rose by 1.3 percent, higher than economists’ estimates of 1.1 percent. Food prices jumped by 10.4 percent, while energy prices surged 41.6 percent. Meanwhile, Americans’ real wages dropped 1 percent from May to June. “Republicans warned Democrats in 2021 that if you pass the massive tax and spend bill called the American Rescue Plan, you will not rescue America. You will create a recession,” Graham added. “Unfortunately, we were right then and we are right now.” “Where are we today?” Crapo asked in a statement, pointing to the state of the U.S. economy after the “American Rescue Plan” went into effect. “​​Gas prices have doubled. Economic stagnation.” Crapo added the “Inflation Reduction Act” was “mislabeled,” for it “does nothing to address the significant inflation we are facing, or to ease burdens born today by low- and middle-income Americans.” Sen. Mike Crapo (R-Idaho) questions U.S. Trade Representative Katherine Tia during a Senate Finance Committee hearing on Capitol Hill in Washington on March 31, 2022. (Drew Angerer/Getty Images) Graham and Ronna McDaniel, chairwoman of the Republican National Committee, both predicted a disaster for the Democrats in the upcoming midterm elections. “In November the American people will fire the Democratic majority who have created the chaos in their lives,” Graham said. “Every problem we had before the Inflation Reduction Act was introduced is only going to get worse because of the policies in this bill.” McDaniel said, “Democrats will pay the price in November for raising taxes on families during a recession.” ‘Wars’ Some GOP senators suggested that their Democratic colleagues are waging “wars” with their massive spending bill. Sen. John Barrasso (R-Wyo.), ranking member of the Senate Energy Committee, pointed out how Democrats voted against “commonsense Republicans” amendments to the bill, such as banning strategic petroleum crude exports to China, and expediting consideration of permits for infrastructure and energy projects. “The Democrats’ war on American energy continued today,” Barrasso added. “These proposals would have unleashed American energy and lowered costs for families.” Read more here... Tyler Durden Tue, 08/09/2022 - 18:45.....»»

Category: blogSource: zerohedgeAug 9th, 2022

Senate Republicans strip $35 insulin cap for individuals with private insurance from Democratic-led climate and health bill

In a 57-43 vote, seven Republicans joined all 50 Democrats in seeking to keep the provision in the larger bill, falling short by three votes. US Capitol in Washington DC.Kent Nishimura / Los Angeles Times via Getty Images Senate Republicans stripped a $35 insulin cap for those with private insurance from the climate and health bill. Seven Republicans joined 50 Democrats in seeking to keep the provision in the bill, falling short by three votes. The vote was held as part of a "vote-a-rama" as the reconciliation bill makes its way through the Senate. Senate Republicans on Sunday successfully removed a $35 monthly price cap on insulin for many patients as part of the Democratic-led climate, health, and tax reconciliation bill making its way through the upper chamber.The insulin cap had been a much-desired policy goal for Democrats, who aimed to have the provision apply to Medicare beneficiaries along with Americans carrying private health insurance.While GOP lawmakers didn't challenge the portion applying to Medicare patients, they were able to strip the cap for those using private insurance, after talks regarding a potential bipartisan agreement fizzled earlier this year.The Senate parliamentarian — who is tasked with analyzing reconciliation bills to ensure that they meet strict procedural rules — ruled that the cap wasn't in accordance with what is permissible under the guidelines.Republican Sen. Lindsey Graham of South Carolina, the ranking member on the Budget committee, raised a point of order on the insulin cap, arguing that it was in violation the Congressional Budget Act — and therefore would need at least 60 votes in order to stay in the larger bill.In a 57-43 vote, seven Republicans joined all 50 Democrats in seeking to keep the provision in the larger bill, falling short by three votes.Republican lawmakers who voted to keep the specific provision in the legislation included Sens. Bill Cassidy of Louisiana, Susan Collins of Maine, Josh Hawley of Missouri, Cindy Hyde-Smith of Mississippi, John Kennedy of Louisiana, and Lisa Murkowski and Dan Sullivan of Alaska.Democrats were quick to blast the move. Sen. Ron Wyden of Oregon, the chairman of the Finance committee, sharply criticized Republican resistance to capping insuling costs."Republicans have just gone on the record in favor of expensive insulin," he said in a statement shortly after the vote. "After years of tough talk about taking on insulin makers, Republicans have once against wilted in the face of heat from Big Pharma.""I think it's shameful," Sen. Tammy Duckworth of Illinois said in an interview. "I have folks who are literally choosing between whether they can afford insulin or food."He continued: "Fortunately, the $35 insulin copay cap for insulin in Medicare remains in the bill, so seniors will get relief from high insulin costs. I will continue working to deliver lower insulin costs to all Americans."Democrats, who control the evenly-divided Senate as a result of Vice President Kamala Harris' tiebreaking vote, are pursuing the party-line legislation through the reconciliation process, which would permit them to overcome a 60-vote filibuster for the larger bill.The tax and climate bill — officially called the Inflation Reduction Act of 2022 — would allow a three-year extension of subsidies for individuals to buy health insurance through the Affordable Care Act, while also providing nearly $370 billion for climate and energy programs and $300 billion to reduce the federal budget deficit.Read the original article on Business Insider.....»»

Category: smallbizSource: nytAug 7th, 2022

Futures Flat Ahead Of Much-Anticipated Jobs Report

Futures Flat Ahead Of Much-Anticipated Jobs Report Markets are muted this morning with US equity futures paring back modest gains, ahead of the much-anticipated US jobs report later Friday. S&P 500, Nasdaq 100 and Dow Jones futures are little changed as sentiment gets hit after China imposed sanctions against Pelosi and would halt military talks with the US over Pelosi trip, while European stocks slipped after a stronger Asian session. The Nasdaq has stopped just short of a 20% rebound from its June low that would meet the technical definition of a bull market. The dollar and Treasuries were steady. Oil and gold slipped and Bitcoin recouped much of yesterday's losses.   In premarket trading, US-listed Chinese stocks slipped after China said it would cancel climate and military talks with US, as part of a countermeasure package following House Speaker Nancy Pelosi’s trip to Taiwan. Among Chinese internet stocks lower were Alibaba -3.3% as investors continue to digest earnings; Nio -1%, Baidu -0.8%, Pinduoduo -2%, JD.com -1.9%, NetEase -1.8%, Li Auto -1.5%, XPeng -1.8%, Bilibili -1.6%. Here are some of the biggest U.S. premarket movers today: Warner BrosDiscovery (WBD US) shares slump 11% in premarket trading after the media company reported a net loss and sales for the second quarter that missed the average analyst estimate. The recently merged media giant recorded about $4 billion in charges related to the deal, including amortization and restructuring expenses, wiping out profits. Virgin Galactic (SPCE US) shares tumbled 13% in premarket trading after the space tourism company announced another delay to the launch of their commercial service, pushing it back to the second quarter of 2023. Amgen (AMGN US) delivered a solid set of results and the biotech giant’s acquisition of autoimmune disease drug maker Chemocentryx looks to make sense, analysts say. Kellogg (K US) raised to neutral from underweight at Piper Sandler with the broker saying a “way-too-early” sum-of-the-parts assessment of the cereal giant ahead of its planned split suggests it is fairly valued. Block (SQ US) shares fall 6.5% in premarket trading after gross payment volume for the second quarter missed the average analyst estimate. Analysts noted signs of slowdown in the Cash App business in July. Yelp (YELP US) boosted its full-year outlook on the back of better-than-expected 2Q sales, adjusted Ebitda and margin, prompting Evercore ISI and Baird to raise price targets. Analysts say the online review company’s new products are bearing fruit, with demand from advertisers still robust despite macro risks. DoorDash (DASH US) shares jumped 13% in premarket trading, after the food delivery company reported stronger-than-expected second-quarter results. Analysts were optimistic about the “stickiness” of the company’s product and noted that demand seems to be holding up despite inflationary and macro pressures. Cloudflare (NET US) shares soared as much as 23% in US premarket trading as analysts hiked their targets on the software company, highlighting that the firm was able to keep growing in a tough macroeconomic environment. Cloudflare also boosted its revenue guidance for the full year. Cryptocurrency-exposed stocks are gaining in premarket trading after Bitcoin rose as much as 4% to trade above $23,000. On Thursday, BlackRock partnered with Coinbase to make it easier for institutional investors to manage and trade Bitcoin. Doximity’s (DOCS US) guidance cut will provide fuel to bears on the online healthcare platform, analysts say. Shares in the firm fell 14% in after-hours trading on Thursday following its results. Twilio (TWLO US) shares drop 7.9% in US premarket trading after the software firm’s guidance and margins disappointed, with questions over the latter metric ongoing, analysts say. Ventas (VTR US) reported strong revenue growth in its second-quarter earnings, as expense pressure weighs on third-quarter guidance. Analysts retain a positive long-term outlook on the stock, as an aging population drives demand for Ventas’ senior housing portfolio. . A global equity index is set for a third weekly advance and near a two-month peak in a recovery from bear-market lows, helped by resilient US company profits. The durability of the bounce remains in doubt as central banks around the world speed up rate hikes, and the inversion between two-year and 10-year yields remains near the deepest since 2000, harkening imminent recession. The stock rally is being fed by speculation that runaway inflation may have peaked and the Fed can temper interest-rate increases. With US payrolls Friday data a closely-monitored Fed indicator, an above-expectation reading could provoke a negative reaction by traders because it would be seen as emboldening the US central bank to press on with outsized hikes. “The equity market in the last month has managed to turn both hawkish and dovish data into a reason for cheer, which obviously is rather self-serving and unsustainable in the medium term,” said James Athey, investment director at Abrdn. “I would continue to be a seller of equity strength given my view that the path for the economy most certainly remains down.”  Looking at today's main event, the July payrolls report at 8:30am ET is expected by economists to show job creation slowed from past year’s pace to 250k, with crowd- sourced whisper number currently 225k; unemployment rate expected to remain at 3.6%. Goldman goes even farther and predicts that a negative print would lead to a powerful stock rally: according to Goldman flow trader John Flood "we are firmly in a BAD is GOOD and vice versa tape right now." He adds that whereas Goldman estimates a +225k headline print (vs +372 prior and +250k consensus). In this context: The market "will get hit hard (-200bps) on a print north of 372k (>prior reading) as sooner than expected “fed pivot” convos will quickly be shelved." On the other hand, "a relatively inline print (150k – 300k) mkt wont react to as traders will sit on hands and wait for CPI." Finally, "if jobs are lost and we get a negative print, tape will rally 100+bps as FOMO/COVER chase will (remain) on w/ early 2023 rate cut discussions gaining more momentum." In Europe, the Stoxx 50 index fell 0.3%. DAX is flat but outperforms peers, CAC 40 lags, dropping 0.4%. Media, energy and consumer products are the worst-performing sectors. Here are the top European movers: WPP shares fall as much as 7.3%, the most since May, despite the advertising agency raising full-year sales guidance. While the company surpassed consensus estimates on organic revenue growth in the first half, Goldman Sachs says the magnitude of the beat is smaller than peers. London Stock Exchange shares rise as much as 2% to an almost four-month high, after the financial information company reported interim results and announced a £750m share buyback. Hargreaves Lansdown shares gain as much as 5.7%, the most since March, as its reported pretax for the full year fell below analysts estimates. Vestas Wind Systems rises as much as 5.5% after US Democratic senators agreed on a revised version of an ambitious tax and climate bill. Pets at Home shares gain as much as 4% to the highest intraday since April 6, after the UK retailer reported 1Q like-for-like sales growth of 6%, beating RBC’s estimate of 3%. Rheinmetall shares fall as much as 6.9% after the defense and auto manufacturer published 2Q earnings and confirmed its lowered FY sales outlook reported last week. Deutsche Post rises as much as 6.5%, the most in more than four months, after the company reported Ebit in the second quarter that beat analysts estimates and confirmed its 2022 guidance. Bpost shares rise as much as 9.2% to the highest level since Jan. 26 after what KBC says were a “very good set of result.” Pirelli gains as much as 6.4%, the most intraday since March 9, after the tiremaker reported 2Q results ahead of expectations and raised its guidance for revenue and net cash generation, with Oddo BHF noting the new outlook should reassure. Earlier in the session, Asian stocks rose, boosted by a rally in Taiwan and gains in the region’s technology shares.  The MSCI Asia Pacific Index climbed as much as 0.9%, with TSMC and Sony among the biggest contributors to its advance. Tech was also the best-performing sector on the gauge, followed by materials. Taiwan’s equity benchmark was the biggest gainer in the region, jumping 2.3%. Semiconductor and shipping stocks climbed, helping the Taiwan Stock Exchange Weighted Index recoup all the losses fueled by US House Speaker Nancy Pelosi’s visit to the island earlier this week. That’s even as China likely fired missiles over Taiwan for the first time during its biggest military drills around the island in decades. Investors will continue to assess the ongoing corporate-earnings season and the Fed’s monetary-tightening path. US payrolls data on Friday is the next key data point for global markets; Cleveland Federal Reserve Bank President Loretta Mester reiterated Thursday the US central bank’s determination to quell inflation.  “A recession with the rising inflation rates is not going to be a constructive environment for the stock market. So I still regard this as a bear-market rally,” Jeffrey Halley, senior market analyst at Oanda Asia Pacific, said in an interview with Bloomberg TV.  Stock gauges in Japan and South Korea also rose, helped by positive earnings reports. China’s Alibaba Group Holding Ltd. posted better results than many investors feared, avoiding a sharp sales contraction. Still, the stock slumped in Hong Kong after rallying for two days ahead of the earnings report. Australia's S&P/ASX 200 rose 0.6% to close at 7,015.60, driven by mining and health shares. The benchmark climbed for a third consecutive week, up 1%. Lithium stocks extended their rally on Friday as industry executives said they were inundated by bankers and brokers at the Diggers & Dealers Mining Forum this week, talking up deals to secure some of the estimated $42 billion worth of investment needed for metal producers to meet their goals. Meanwhile, Australia’s central bank lifted its inflation and wage growth forecasts while predicting unemployment will remain under 4% through mid-2024, underscoring the need for even tighter monetary policy. In New Zealand, the S&P/NZX 50 index fell 0.1% to 11,728.47. In FX, the Bloomberg Dollar Spot Index rose 0.1% in quiet trading, snapping a two-day decline. CHF and NZD are the strongest performers in G-10 FX, SEK and AUD underperform. The euro eased as much as 0.3% to 1.0219, weighed by weaker European share prices, while the yen slipped as traders unwound a recent streak of bullish bets on the currency In rates, the Treasury yield curve was barely changed, with two-year yields rising 1.9 basis points higher to 3.06%. In Thursday’s US trading session two- and 10-year yields ended down 2 basis points while the 2s10s spread remained about 37.6bps in inversion. US yields are cheaper by as much as 2bp across front-end of the curve with spreads broadly within 1bp of Thursday’s closing levels; 10-year yields around 2.70%, cheaper by 1bp on the day and outperforming bunds and gilts by ~2bp each. European bonds eased, with the two-year German Schatz yield rising 2 basis points to 0.36%, while the 10-year Bund yield rose 3.1 basis points to 0.83%. Gilt curve bull-flattens with 2s10s widening 2.5bps after BOE’s Huw Pill cautioned against assuming a 50-bps hike in September. Short-end bunds decline, with the yield on the 2-year up about 2 bps. WTI trades within Thursday’s range at around $88. Spot gold falls roughly $4 to trade at ~$1,787/oz. Most base metals trade in the green; LME nickel rises 1.8%, outperforming peers. LME lead lags, dropping 0.1%. In today’s docket of economic data, the payrolls report in the US will be in the spotlight with June consumer credit out later in the day. In Europe, we will get June industrial production for Germany, France and Italy and Q2 private sector payrolls, wages and June trade balance for France. In central banks, speakers will include Fed’s Barkin and BoE’s Pill. Market Snapshot S&P 500 futures little changed at 4,154.00 STOXX Europe 600 down 0.2% to 438.32 MXAP up 0.8% to 161.72 MXAPJ up 0.9% to 527.30 Nikkei up 0.9% to 28,175.87 Topix up 0.9% to 1,947.17 Hang Seng Index up 0.1% to 20,201.94 Shanghai Composite up 1.2% to 3,227.03 Sensex up 0.2% to 58,442.88 Australia S&P/ASX 200 up 0.6% to 7,015.56 Kospi up 0.7% to 2,490.80 German 10Y yield little changed at 0.82% Euro down 0.2% to $1.0227 Gold spot down 0.2% to $1,787.20 U.S. Dollar Index up 0.24% to 105.95 Top Overnight News from Bloomberg Stocks in Europe and US equity futures struggled for direction as investors brace for the monthly US jobs report that’s likely to enliven the recession debate. The dollar rebounded from two days of declines. China announced it would halt cooperation with the US in a number of areas following US House Speaker Nancy Pelosi’s trip to the US, including working-level talks on climate change and defense. Bond giant Pacific Investment Management Co. saw outside clients pull money for a second straight quarter amid a global bond selloff. Investors have resumed shunning global stocks in favor of bonds, according to Bank of America Corp. strategists, who say the time is right to step back from US equities after the strong rally in July. German power prices rose to a record as utilities are increasingly reducing electricity output in western Europe because of the hot weather. A more detailed look at global markets courtesy of Newsquawk Asia-Pacific stocks traded mostly positive but with gains capped amid geopolitical and growth slowdown concerns, while markets also await the upcoming US NFP jobs report. ASX 200 was lifted by strength in mining stocks after gains in underlying metal prices although the energy sector lagged due to the recent oil pressure. Nikkei 225 surpassed 28k after stronger-than-expected Household Spending and firmer wage growth. Hang Seng and Shanghai Comp lacked firm direction with Hong Kong stocks indecisive after Alibaba failed to replicate the strength in its ADRs post-earnings and with sentiment clouded by geopolitical risks Top Asian News Hong Kong to Announce Hotel Quarantine Cut as Soon as Monday Japan’s Kishida to Reshuffle Cabinet as Soon as Aug. 10: NHK Seazen Says It’s Wired Funds for $200m Dollar Bond Due Aug. 8 Indonesia’s GDP Surprise May Not Be Enough to Sway BI to Hike SpaceX Rocket Launches South Korea’s First Mission to the Moon Copper and Zinc Push Higher on Tightening Supply Backdrops European bourses are under modest pressure in wake of China taking countermeasures against "Pelosi's invasion of Taiwan", Euro Stoxx 50 -0.4%. However, as we await the key US Labour Market print (newsquawkperformance is fairly contained overall preview available) before next week's CPI. Currently US futures are lower by circa. 0.1% in narrow ranges amid thin summer conditions and a limited European schedule. Top European News German Power Climbs to Record as Plants Start to Buckle in Heat UK House Prices Fall for First Time in a Year as Crisis Bites Solvency II Plans Open Door to UK Insurance Buyback Bonanza Italian Industry Output Slumps as Election Uncertainty Mounts Vestas Surges as US Tax and Climate Bill Passes Major Hurdle WPP Shares Drop After Outlook Upgrade Fails to Live up to Peers FX DXY trades on a firmer footing and tested 106.00 as China announced sanctions against House Speaker Pelosi; CNH saw some weakness. EUR and GBP are posting mild losses vs the Buck, but the EUR sees slightly more of a downside bias vs the GBP Activity currencies hold a mild downside against the Buck, with more pronounced losses seen as reports of Chinese sanctions against Pelosi dented sentiment. Haven FX have climbed up the G10 ranks following the deterioration in sentiment. Fixed Income Pre-BoE core consolidation has dissipated and the flattening bias is back in play, albeit, only incrementally so with NFP ahead. Bunds are towards the mid point of a relatively contained 60 tick range which is capped by nearby support/resistance. OATs are in-fitting directionally but at the lower-end of ranges ahead of Fitch's review of France; currently, AA Negative Commodities Crude benchmarks are under pressure amid the mentioned countermeasures taken by China and also as Taiwan reports no/limited ships/aircraft impact from China drills WTI and Brent lower by circa. USD 0.20/bbl and towards the bottom-end of the session's parameters. China's market regulator recently carried out investigations in Shanxi, Inner Mongolia and Shaanxi, 3 major coal-producing provinces, to further supervise and regulate thermal coal prices. 18 coal companies were suspected of bidding up coal prices, accord. Spot gold is softer and incrementally losing its allure as the USD picks up while remain mixed US Event Calendar 08:30: July Change in Nonfarm Payrolls, est. 250,000, prior 372,000 Change in Private Payrolls, est. 230,000, prior 381,000 Change in Manufact. Payrolls, est. 20,000, prior 29,000 July Unemployment Rate, est. 3.6%, prior 3.6% Underemployment Rate, prior 6.7% Labor Force Participation Rate, est. 62.2%, prior 62.2% Average Hourly Earnings MoM, est. 0.3%, prior 0.3%; Average Hourly Earnings YoY, est. 4.9%, prior 5.1% July Average Weekly Hours All Emplo, est. 34.5, prior 34.5 15:00: June Consumer Credit, est. $27b, prior $22.3b DB's Jim Reid concludes the overnight wrap Welcome to another payrolls Friday which after a week of better US data on balance, probably isn’t set up with the market as worried as it could have been. There will be some concerns that continuing claims picked up last week (as released yesterday) but it’s fair to say the market is probably going into today’s print less worried about it than it was at the start of the week. Yesterday was in truth the dullest day of the month so far after three action packed days even with a well flagged 50bps hike, but with a five quarter recession call, from the BoE being the obvious highlight. US yields did rally across the curve but the moves were much smaller than we’ve seen earlier this week. The 2yr (-2.2bps) eased a touch more than the 10yr (-1.7bps). This came alongside hawkish comments from Cleveland Fed’s President Mester who stuck with her preference for rates to get above 4%, but now potentially preferring to frontload the hikes relative to her view in June’s summary of economic projections. The next edition is due at the September FOMC. It was a mixed-bag day for the S&P 500 (-0.08%). Energy (-3.60%) continued to be the worst performing sector amid gloom in oil, with WTI losing -2.78% and trading below $90 per barrel and Brent (-3.25%) also down, but it was among 3 other sectors to finish the day lower including staples (-0.79%) and healthcare (-0.49%), while discretionary (+0.54%) and IT (+0.42%) drove the index higher as earnings took over given the lack of a significant macro driver. Earnings also largely pulled the Nasdaq (+0.41%) ahead of other benchmarks as well, as the Dow Jones declined by -0.26%. Alibaba’s (+1.88%) revenue beat and a fairly optimistic take on consumer trends earlier in the session helped. Other notable movements on the day included Coinbase (+10%), which surged after news it is to partner with BlackRock to improve Bitcoin trading for institutions. But with 423 members of the S&P 500 now reported earnings for this season, the results-driven stories may fade in the coming days. As mentioned at the top there was some disappointment from the claims numbers in the US which impacted sentiment a touch. While initial claims came in line with the median Bloomberg estimate of 260k, the upside surprise in continuing claims (1416k vs 1385k expected) were notable and remember that our US economists have pointed out that this series is a better gauge when it comes to forecasting imminent recessions. This fly in the job's market soup comes after several Fed speakers have highlighted the continued tightness in the labour market this week, and with the ISM employment gauges surprising on the upside. So this puts today’s payrolls report solidly top of mind for markets from both a growth and monetary policy perspective. Our US economists expect a 250k print, down from 372k in June but enough to tip the unemployment rate lower to 3.5% from 3.6%. Consensus is also at 250k. Some softness in yields and risk assets also started around the time of the BoE’s meeting yesterday that brought a fairly gloomy set of economic projections along with the widely expected +50bps hike, the largest since 1995, and a potential roadmap for active QT. Our UK economists review the meeting here and point to three key takeaways – inflation risks outweighed growth concerns, there is less reliance on medium-run projections and fairly unconstrained forward guidance. Our economics team continue to see +50bps in September and +25bps in November, marking a peak of 2.5% for the Bank Rate. Briefly diving into the forecasts that dominated the headlines, the projections showed expectations of a prolonged contraction starting Q4 this year, with a -2.2% GDP decrease between then and Q2-24. So five quarters of recession predicted. What on earth would happen if the Fed predicted that? Inflation expectations also got a notable uptick of +200bps, and is now projected to peak at 13% in Q4 this year. While that was quite a mix for investors to digest, as our UK economists point out the Bank explicitly underscored it would assign less weight to more uncertain projections these days. That also further emphasises the importance of the next prime minister’s (results on September 5th) fiscal policy. 2s10s briefly inverted for the first time since 2019 as markets got on board with the recession story. The 2yr dropped by roughly -20bps from session’s highs at one point before closing only marginally lower (-0.5bps). The long end declined a bit more, with the 10y closing at -2.4bps, and the 2s10s finishing the day at 10bps, down -1.9bps. Nevertheless, breakevens surged by +6.2bps and the pound saw a U-turn from a nearly -1% loss in the aftermath of the meeting, recovering nearly to the level it held in early European trading. The rest of major European bond markets also saw a rally for yields but more catching up to the late previous night US rally than anything else, with those for Bunds (-7.2bps), OATs (-8.6bps) and BTPs (-8.2bps) all lower. Falling yields supported equities in the region, as the STOXX 600 (+0.18%) was propelled by materials (+1.22%), helped by Glencore’s results, IT (+1.07%) and discretionary (+0.96%) stocks. Energy (-1.34%) and real estate (-1.18%) were the main outliers on the downside and 66% of index’s members finished the day higher. Over in Asia, stock markets are trading higher this morning as markets appear to be unfazed by China’s military drills around Taiwan. As I type, the Kospi (+0.81%) is leading gains in early trade with the Nikkei (+0.71%) not far behind. Elsewhere, the Shanghai Composite (+0.28%) and the CSI (+0.37%) are also in positive territory whilst the Hang Seng (+0.06%) is swinging between gains and losses. Meanwhile, oil futures are slightly higher and reversing earlier losses as we go to print. Looking ahead, equity futures in the US point to further gains with contracts on the S&P 500 (+0.24%), and the NASDAQ 100 (+0.30%) higher. Early morning data showed that Japan’s household spending (+3.5% y/y) increased for the first time in four months in June (v/s +1.5% expected) and compared to a -0.5% decline in May. Separate data showed that real wages in Japan (-0.4% y/y) slipped for the third straight month in June (v/s -1.3% expected) as consumer prices advanced faster than nominal wages (+2.2% y/y, +1.9% consensus) which recorded its strongest growth in four years. Elsewhere, the Reserve Bank of Australia (RBA) in its monetary statement this morning upgraded its inflation and wage growth forecasts while predicting the nation’s unemployment rate would fall further by the end of this year. The central bank in its statement revealed that it sees headline inflation reaching 7.75% by the end of 2022 and assumes the key interest rate will reach 3% by December from 1.85% at present and then “decline a little” by end-2024. Additionally, it estimates the jobless rate will reach 3.25% from the 3.75% forecasted earlier in May. In today’s docket of economic data, the payrolls report in the US will be in the spotlight with June consumer credit out later in the day. In Europe, we will get June industrial production for Germany, France and Italy and Q2 private sector payrolls, wages and June trade balance for France. In central banks, speakers will include Fed’s Barkin and BoE’s Pill. Tyler Durden Fri, 08/05/2022 - 07:39.....»»

Category: worldSource: nytAug 5th, 2022

The Democrats have taken aim at the stock market"s safety net by taxing buybacks - potentially creating another headwind for investors

The Democrats plan to put a 1% tax on share buybacks, as part of a deal to rescue Joe Biden's agenda. Senator Kyrsten Sinema (second from right) agreed to move forward with Joe Biden's bill on Thursday.Kevin Dietsch/Getty Images The Democrats plan to put a 1% tax on share buybacks, as part of a deal to rescue Joe Biden's agenda. Stock buybacks have supported the market in recent years, with companies spending huge amounts on their own shares. Analysts said the tax could be a new headwind, but said companies would likely increase spending on dividends. The Democrats have agreed to introduce a 1% tax on share buybacks as part of President Joe Biden's climate and tax bill, in a move analysts said could create another headwind for equity investors.Arizona Senator Kyrsten Sinema, a moderate Democrat and former hold-out, agreed to move forward with what the party is calling the Inflation Reduction Act on Thursday night.To gain her approval, Democrats dropped a provision that would have reduced tax breaks on the profits of hedge funds and private equity firms, known as "carried interest." Instead, they inserted a 1% excise tax on the controversial practice of stock buybacks, a person familiar with the matter told Insider.Analysts said the new tax will not be welcomed by investors, just as they're grappling with rampant inflation and interest-rate hikes. They said buybacks have supported stock markets this year."Anything that touches buybacks is always a concern," Ben Laidler, global markets strategist at eToro, told Insider. "I think it's going to generate a lot of nervousness, just because buybacks are a big deal."However, Laidler said the tax is likely to push companies to increase their dividends as they reduce buybacks. He said that may be preferable to many retail investors, who prefer a steady income stream.A buyback is when a company repurchases its own shares in the marketplace. The practice returns money to investors by boosting the share price. It's also likely to reduce the number of shares outstanding, thereby boosting key performance metrics such as earnings per share.US companies have been spending colossal amounts buying back their own shares over the last couple of years, after periods of strong profits left them with spare cash. S&P 500 companies are likely to spend in the region of $1 trillion on buybacks this year, analysts say, after purchasing a record $882 billion in 2021.Derren Nathan, head of equity research at broker Hargreaves Lansdown, told Insider the Democrats' proposed 1% tax will impact companies' thinking."This move may cause board members to think twice about pulling that lever," he said. "1% might not seem huge, but with buyback programs often in the billions of dollars, the cash and earnings impact is not to be underestimated."A person familiar with the matter told Insider that the 1% buyback tax would raise considerably more money than the now-removed carried interest provision, which was expected to generate around $14 billion.The buyback tax is aimed at limiting a practice which many politicians and analysts have criticized. Opponents say buybacks enrich company shareholders and executives and discourage investments for the future in workers and machinery.Tech companies, whose stock prices have been battered in 2022 after a surge during the pandemic, are some of the biggest practitioners of buybacks. Apple announced a whopping $90 billion buyback scheme earlier this year, and Microsoft unveiled a $60 billion plan in September last year.Laidler said that although the 1% levy will not be welcomed by investors, companies are still likely to pay the same amount of money out by increasing dividends."I think the impact here is going to be more about how we cut the shareholder returns pie, rather than does it make any big changes to company investment," he said.Stock market investors and company boards have bigger concerns right now, he said. Not least surging inflation, Federal Reserve rate hikes, and the threat of recession. US markets were little changed on Friday morning, with S&P 500 futures slightly in the green.Read the original article on Business Insider.....»»

Category: smallbizSource: nytAug 5th, 2022

Sen. Kyrsten Sinema agreed to the Inflation Reduction Act but cut the carried-interest tax provision — here"s what that means for wealthy investors

Democrats and Republicans alike have advocated closing the carried-interest tax loophole but have failed to do so for years. Sen. Kyrsten Sinema announced Thursday that she would back the Inflation Reduction Act of 2022 and that one of her major concerns — a provision targeting taxes for the wealthy — had been removed.Drew Angerer/Getty Images Sen. Kyrsten Sinema reached a deal Thursday to back the Inflation Reduction Act of 2022. A carried-interest tax provision was cut from the bill. The provision sought to narrow a loophole allowing wealthy investors to pay lower taxes. Sen. Kyrsten Sinema of Arizona on Thursday agreed to back the Inflation Reduction Act of 2022, meaning the bill had gained support from all 50 Democrats in the US Senate.Her cooperation came with the removal of a carried-interest tax provision, a small portion of the bill that targeted a tax break for the wealthy."We have agreed to remove the carried-interest tax provision, protect advanced manufacturing, and boost our clean-energy economy in the Senate's budget-reconciliation legislation," Sinema said in a statement Thursday.It represents a momentary win for some of the richest Americans. The provision had targeted a loophole that can be used to reduce taxes for hedge fund managers and other people who manage money for a living. When fund managers make money for their clients through their investments, they receive a cut of those profits. They're allowed to classify that payment as capital gains, which are subject to lower tax rates than those for salary paychecks and bonuses. With the removal of the provision, fund managers have avoided restrictions that would've made it harder for them to keep to keep paying the same low tax rates on their income.Republicans and Democrats alike have advocated eliminating the tax break since it was brought to the attention of Congress in 2007 by a law professor's journal article. They have so far failed to close the loophole.A Trump-era policy added a caveat to the loophole through a three-year holding period, which means private-equity funds have to hold on to their portfolio companies for at least three years before cashing out.The Inflation Reduction Act's provision would've extended that holding period to five years — meaning that even if it had survived discussions with Sinema, it wouldn't have closed the loophole completely.A 2021 report by the financial-software company eFront found that the average length of a private-equity fund's holding period in 2020 was already 5.4 years.Still, the carried-interest tax provision was a relatively small part of the Inflation Reduction Act. Lawmakers estimated the provision would generate about $14 billion over 10 years, compared with the $790 billion they said would be produced as a result of the bill.Senate Majority Leader Sen. Chuck Schumer also reiterated Thursday that the bill would still introduce a new hard minimum on the taxes that America's largest corporations have to pay."The agreement preserves the major components of the Inflation Reduction Act, including reducing prescription drug costs, fighting climate change, closing tax loopholes exploited by big corporations and the wealthy, and reducing the deficit by $300 billion," Schumer said. The final version of the bill will be released Saturday, he added.President Joe Biden on Thursday evening praised Sinema's cooperation as "another critical step toward reducing inflation and the cost of living for America's families."Sinema's opposition to the provision had opened the possibility that either she or Sen. Joe Manchin of Virginia — who agreed to a surprise deal on the bill last week — might upend the Inflation Reduction Act because of it. Both lawmakers helped shut down President Joe Biden's Build Back Better plan.However, the pair disagrees on carried interest, a tax loophole that allows wealthy investors and hedge fund managers to pay less taxes. While closing the loophole has been a priority for Manchin, Sinema is opposed to eliminating the tax break.Sinema's announcement Thursday confirmed that her concerns for the bill prevailed and that the provision would be cut.Manchin and Sinema didn't immediately respond to requests for comment.Read the original article on Business Insider.....»»

Category: worldSource: nytAug 5th, 2022

Sen. Kyrsten Sinema agreed to the Inflation Reduction Act but cut the carried interest tax provision — here"s what that means for wealthy investors

Democrats and Republicans alike have advocated for the closing of the carried interest tax loophole, but have failed to do so for years. Sen. Kyrsten Sinema announced on Thursday that she would back the Inflation Reduction Act of 2022, and that one of her major concerns — a provision targeting taxes for the wealthy — had been removed.Drew Angerer/Getty Images Sen. Kyrsten Sinema reached a deal on Thursday to back the Inflation Reduction Act of 2022. A carried interest tax provision was cut from the bill. The provision sought to narrow a loophole that allows wealthy investors to pay lower taxes. Sen. Kyrsten Sinema of Arizona has agreed to back the Inflation Reduction Act of 2022, meaning the bill now has the support of all 50 Democrats in the US Senate.Her cooperation came with the removal of a carried interest tax provision, a small portion of the bill that targeted a tax break for the wealthy."We have agreed to remove the carried interest tax provision, protect advanced manufacturing, and boost our clean energy economy in the Senate's budget reconciliation legislation," Sinema said in a statement on Thursday. It represents a momentary win for some of America's richest individuals. The provision targets a loophole that can be used to reduce taxes for hedge fund managers and other people who manage money for a living. When fund managers make money for their clients through their investments, they receive a cut of those profits. They're allowed to classify that payment as capital gains, which are subject to lower tax rates than those for salary paychecks and bonuses. With the removal of the provision, fund managers have dodged restrictions that would have made it harder for them to keep to keep paying the same low tax rates on their income.Republicans and Democrats alike have advocated for eliminating the tax break ever since it was brought to the attention of Congress in 2007 by a law professor's journal article. They have so far failed to close the loophole.A Trump-era policy added a caveat to the loophole through a three-year holding period, which means that private equity funds have to hold on to their portfolio companies for at least three years before cashing out.The Inflation Reduction Act's provision would have extended that holding period to five years — meaning that even if it had survived discussions with Sinema, it wouldn't have closed the loophole completely.According to a 2021 report by financial software company eFront, the average length of a private-equity fund's holding period in 2020 was already 5.4 years.Still, the carried interest tax provision is a relatively small part of the Inflation Reduction Act. Lawmakers estimated the provision would generate about $14 billion over the next 10 years, compared to the total $790 billion they said would be produced as a result of the bill.Senate Majority Leader Sen. Chuck Schumer also reiterated on Thursday that the bill still involves a new hard minimum on the taxes that America's largest corporations have to pay."The agreement preserves the major components of the Inflation Reduction Act, including reducing prescription drug costs, fighting climate change, closing tax loopholes exploited by big corporations and the wealthy, and reducing the deficit by $300 billion," Schumer said. The final version of the bill will be released on Saturday, he added.President Joe Biden on Thursday evening praised Sinema's cooperation as "another critical step toward reducing inflation and the cost of living for America's families."Sinema's opposition to the provision had opened the possibility that either she or Sen. Joe Manchin of Virginia — who agreed to a surprise deal on the bill last week — might upend the Inflation Reduction Act because of it. Both lawmakers helped shut down President Joe Biden's Build Back Better plan.However, the pair disagrees on carried interest, a tax loophole that allows wealthy investors and hedge fund managers to pay less taxes. While closing the loophole has been a priority for Manchin, Sinema is opposed to eliminating the tax break.Sinema's announcement on Thursday confirmed that her concerns for the bill prevailed, and that the provision would be cut.Manchin and Sinema did not immediately respond to Insider's requests for comment.Read the original article on Business Insider.....»»

Category: personnelSource: nytAug 5th, 2022

America"s Green Transition Sparks Power Grid Instability

America's Green Transition Sparks Power Grid Instability The U.S. might want to reconsider its energy transition after a surge in decommissioning fossil fuel power plants has outpaced new clean energy generation capacity, which has sparked the worst energy crisis in nearly five decades, one that is fraught with skyrocketing electricity prices and heightened risk of grid instability.  Power grids nationwide attempted to build new clean energy power generation without investing enough in conventional sources. Decarbonization trends on the grid have jeopardized energy security.  Grid operators have warned in the sweltering summer heat that blackouts are needed to rebalance supply and demand.  WSJ noted the proposed new legislation by Democrats to substantially reduce grid emissions in a $369 billion climate bill has been pitched to stabilize the grid but could take years to come to fruition.  "By a wide margin, this legislation will be the greatest pro-climate legislation ever passed by Congress," Senate Majority Leader Chuck Schumer said. "This legislation fights the climate crisis with the urgency the situation demands and puts the U.S. on a path to roughly 40% emissions reductions by 2030, all while creating new good-paying jobs in the near and long-term." The deal would accelerate wind and solar farm projects and add large-scale batteries to the grid. Expanding green energy sources sounds great but doesn't address the current crisis.  Even though the Biden administration despises long-term fossil fuel investments, officials in the White House have pushed for short-term production increases. President Biden's policies have been designed to reallocate oil/gas investment to the green movement, making any investment in fossil fuels hard to stomach for investors.  The belief that a green transition is possible by encouraging divestments in oil/gas is the reason for the grid's unprecedented challenge.  WSJ noted the heart of the problem of the faltering transition is the ability to replace conventional fossil fuel power with renewable energy, and large-scale batteries have hit a snag.  There was a time when it also seemed like it would be relatively easy to replace many fossil-fuel plants with renewable energy and large-scale batteries that store wind and solar power for use as fossil-fuel production declines. These energy sources became much less expensive over the last decade due to more efficient production as well as government subsidies that made renewables more attractive for investors. But as U.S. power supplies tighten, developers are struggling to build these projects quickly enough to offset closures of older plants, in part because of supply-chain snarls. -WSJ Another reason: It takes longer to approve their connections to the existing electricity grid. Such new requests neared 3,500 last year compared with roughly 1,000 in 2015, according to research from the Lawrence Berkeley National Laboratory. Typical time needed to complete technical studies needed for that grid approval is now more than three years, up from less than two in 2015. -WSJ Some grid operators, such as the Midcontinent Independent System Operator Inc. (MISO), are already under strain and fear that they are swapping out on-demand coal- and gas-fired power plants for less reliable energy sources, such as solar and wind.  Greenify the power grid is impossible without a parallel system of fossil fuel generation to meet demand during peak hours.  "The transition may require some scaffolding, and that scaffolding may be some gas plants," MISO Chief Executive John Bear.  California is the perfect example of decarbonizing its power grid and has already hit a roadblock with demand exceeding supply in the 2020 heatwave that triggered blackouts.  "You had too much capacity come off the market too quickly and now all the markets are scrambling for reliability," said billionaire natural gas traderJohn Arnold.  The obsession by Democrats to push policy hellbent on destroying fossil fuel-powered grids with unreliable solar and wind has created the completely artificial energy crisis that is by design.  Perpahs it's time to revisit the debate over nuclear power. It's clean, reliable, and space-efficient compared with solar and wind.  The problem we see is an expectation that politicians can solve energy problems but have made grid stability worse and will be long-lasting.  Tyler Durden Tue, 08/02/2022 - 22:25.....»»

Category: blogSource: zerohedgeAug 2nd, 2022

Canada Unveils "Mandatory" AR-15 Buyback Program; US House Passes Assault Weapons Ban

Canada Unveils "Mandatory" AR-15 Buyback Program; US House Passes Assault Weapons Ban The Canadian government wants people's semi-automatic rifles. They unveiled a new gun buyback plan to purchase "assault-style" weapons that the federal government banned in early 2020.  Public Safety Canada released a statement last week indicating that the gun buyback program is "mandatory for individuals to participate," according to CTV News.  AR platform firearms will be bought under the mandatory buyback program for $1,337 per rifle. The price reflects what owners paid for them pre-2020. Here's a list of prohibited firearms and what the government is offering gun owners:  AR Platform firearms such as the M16, AR-10, and AR-15 rifles, and the M4 carbine: $1,337  Beretta Cx4 Storm: $1,317  CZ Scorpion EVO 3 carbine and CZ Scorpion EVO 3 pistol: $1,291  M14 Rifle: $2,612  Robinson Armament XCR rifle: $2,735  Ruger Mini-14 rifle: $1,407  SG-550 rifle and SG-551 carbine: $6,209  SIG Sauer MCX, MPX forearms such as the SIG Sauer SIG MPX carbine, and the SIG Sauer SIG MPX pistol: $2,369  Vz58 rifle: $1,139 Prime Minister Justin Trudeau's aggressive campaign to disarm Canadians hasn't stopped with prohibiting the sale and use of AR platform firearms and other types of weapons. He has proposed a countrywide "freeze" on the sale, import, and transfer of all handguns.  Trudeau appears to be following the blueprints of authoritarians: confiscate guns.  In 1959, Fidel Castro seized control of Cuba and immediately removed all guns from citizens. His communist regime went door to door to force citizens into turning over their firearms.  Totalitarianism and gun confiscation are always intertwined. The most disturbing part is that it's already happening to our neighbors in the north and could soon be coming to the US.  On Friday, the US House of Representatives passed an assault weapons ban (217-213 vote included 215 Democrats and two Republicans, with five Democrats voting against the bill). However, the bill is all optics for Democrats ahead of midterm elections in November with low probabilities of passing the Senate. The bill bans importing, selling, manufacturing, or transferring semi-automatic assault weapons.  History provides alarming proof that when regimes disarm their citizens, a slippery slope of the loss of liberties soon follows. Just look how communist Cuba turned out...  George Mason of Virginia, the father of the Bill of Rights, famously warned Americans that disarming the people is "the best and most effective way to enslave them." Readers may recall we detailed the inevitable was about to happen in a note titled "Puzzle Pieces All Laid Out" - How ATF Has Plan To Classify Semi-Automatic Rifles As "Machine Guns" .  Tyler Durden Sat, 07/30/2022 - 12:00.....»»

Category: worldSource: nytJul 30th, 2022