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Massive Saharan Dust Plume Over Atlantic, Headed For US By Weekend 

Massive Saharan Dust Plume Over Atlantic, Headed For US By Weekend .....»»

Category: smallbizSource: nytMay 18th, 2022

Futures Rise As Dip Buyers Emerge To Cap Best Week Since Mid-March

Futures Rise As Dip Buyers Emerge To Cap Best Week Since Mid-March Unless stocks crater today, and the S&P tumbles by 4.3%, the streak of seven consecutive weekly declines in the S&P is about to end... ... as US stock futures rose again on Friday, their third consecutive gain, setting up the underlying indexes for the first strong weekly finish since late March on signs consumers remain resilient despite inflationary pressures, as upbeat earnings from Alibaba and Baidu eased some fears on the economic impact of China’s Covid lockdowns, and as investors (mostly retail) have staged a cautious return to the market hoping that the selloff earlier this month left valuations at bargain levels. Nasdaq 100 contracts rose 0.5% by 7:15 a.m. in New York, while S&P 500 futures were up 0.4%. Still, even after the recent rout, upside may be limited as the S&P 500’s 12-month fwd P/E ratio is now near its 10-year average. Among notable moves in premarket trading, Gap Inc. shares sank as much as 17% as analysts after analysts said that the retailer’s guidance cut was worse than expected, prompting brokers to lower their targets and downgrade the stock given a worsening macroeconomic environment could trigger further bad news. China's Uber, Didi Chuxing, jumped after a Bloomberg News report that state-owned automaker China FAW Group is considering acquiring a significant stake in the ride-hailing company. Zscaler Inc. rose after the security software company reported results above expectations.  Here are some other notable premarket movers: Gap (GPS US) shares dropped as much as 17% in US premarket trading with analysts saying that the retailer’s guidance cut was more than expected, prompting brokers to lower their targets and downgrade the stock given a worsening macroeconomic environment could trigger further bad news. Costco (COST US) shares dropped 2.1% in US after-hours trading on Thursday. While Costco’s margins disappointed analysts, brokers were generally positive on how the wholesale retailer is navigating an environment with rising inflation by controlling expenses. Zscaler (ZS US) shares rose 2% in extended trading on Thursday, after the security software company reported third- quarter results that beat expectations and raised its full-year forecast. Analysts lauded strength in multi-product deals. Marvell Technology (MRVL US) shares climbed 3.4% in US postmarket trading after results. Analysts highlighted that the semiconductor maker is seeing strength across key markets, in particular across data center and carrier infrastructure. 23andMe Holding Co. (ME US) dropped 8.3% in postmarket trading Thursday. It is in a “tough spot,” Citi says in note after the consumer genetics firm gave a fiscal 2023 revenue forecast that missed expectations. Workday (WDAY US) shares fell 9% in extended trading on Thursday, after the software company reported adjusted first-quarter earnings that missed expectations. Analysts noted that software deals were pushed out of the quarter and cut their price targets as they factored in the increased global uncertainty. The latest round of retail earnings have restored some confidence in consumer demand, lifting appetite for risk assets, while speculation is growing that the Federal Reserve will pause its rate hikes later this year as inflation shows signs of peaking. Still, Citigroup strategists on Friday cut their recommendation on US stocks to neutral on the risk of a recession, joining an increasing number of banks in warning of a growth slowdown. The path for the Federal Reserve to successfully bring inflation down while keeping the rate of economic growth above zero is narrow, according to Mark Haefele, chief investment officer at UBS Global Wealth Management. “If Fed policymakers underestimate the strength of the US economy, we face an extended period of above-target inflation. If they overestimate it, we face a recession. And we can’t know with great conviction which path we’re on,” he wrote in a note. Global stock funds saw their biggest inflows in 10 weeks, led by US stocks, according to EPFR data, as cheaper valuations lured buyers after a steep selloff on recession fears. The selloff made valuations attractive and enticed investors back into a market still shadowed by worries about inflation and higher interest rates, China’s downbeat economic outlook and the war in Ukraine. “We may see a little bit more stability here because we have repriced the stocks so much already,” Anastasia Amoroso, iCapital chief investment strategist, said on Bloomberg Television. “In the next three to six months it’s still going to be a constrained market environment.” Meanwhile, China-US tensions are once again being played out after direct comments from Secretary of State Antony Blinken aimed at Chinese President Xi Jinping. And in a fresh challenge to Beijing, the US and Taiwan are planning to announce negotiations to deepen economic ties. And elseshwere, as the Russins war in Ukraine approaches 100 days, the US may announce a new package of aid for Kyiv as soon as next week that would include long-range rocket systems and other advanced weapons. Boris Johnson urged further military support for Ukraine, including sending it more offensive weapons such as Multiple Launch Rocket Systems that can strike targets from much further away. Russia’s efforts to avoid its first foreign default in a century are back in focus on Friday, when investors are supposed to receive about $100 million in interest on Russian debt. Turning back to markets, consumer and technology sectors led gains in Europe’s Stoxx 600 which rose 0.9%, and was headed for its best weekly advance since mid-March, while utilities and energy shared lagged after the UK government announced windfall tax plans on oil and gas companies on Thursday. BP Plc said it will look again at its plans in the country. Here are some of the more notable movers in Europe: Cantargia gains as much as 23%, the largest intraday rise since December, after releasing three research updates late Thursday. The interim readout for the company’s nadunolimab (CAN04), used in combination with gemcitabine and nab-paclitaxel as a first line treatment of PDAC, a type of pancreatic cancer, was the most interesting of the data releases, according Kempen. FirstGroup shares jump as much as 9.8%, extending the gains from yesterday’s confirmation that the public transport operator received an unsolicited takeover approach from I Squared. Richemont shares rise as much as 8.3%, heading for their best weekly advance since November, pushing the Swiss Market Index higher as dip buyers returned more broadly this week. European miners advance for a third day, outperforming all other sectors on the Stoxx 600 on Friday as iron ore futures climb and metals posted broad gains. Hapag-Lloyd falls as much as 7.1% after Citi cut the recommendation to neutral from buy due to valuation versus peers. In note on European shipping, broker says it expects the supply and demand dynamics to remain favorable in the near term. Rieter Holding falls as much as 5.4% as Baader Helvea downgrades its recommendation to reduce from add after the manufacturer of chemical fiber systems said that it’s seeing a challenging first half. Earlier in the session, Asian stocks also advanced as upbeat earnings from Alibaba and Baidu eased some fears on the economic impact of China’s Covid lockdowns and fueled risk-on sentiment. The MSCI Asia Pacific Index rose 1.6%, poised for its first gain in four sessions, led by consumer discretionary and technology shares. Most markets in the region were up, led by Hong Kong.  Alibaba and Baidu both delivered better-than-expected quarterly sales growth, providing investors with some relief after Tencent’s recent lackluster report and amid concerns over China’s virus measure and regulatory crackdowns. The Hang Seng Tech Index, which tracks the nation’s tech giants listed in Hong Kong, surged 3.8%. Asian equities have gained about 0.7% this week, set for a back-to-back weekly advance as dip buyers emerged. The regional MSCI benchmark is still down about 14% this year amid ongoing market concerns over global inflation and higher US interest rates, China’s economic outlook and the war in Ukraine. “The risk of a bull trap cannot be dismissed,” Vishnu Varathan, the head of economics and strategy at Mizuho Bank, wrote in a note. “Bear markets are famous for the pockets of relief rallies,” and increasing strains on liquidity in the coming quarters “may not pass without pain.” Japan’s stocks likewise advanced as the nation prepared to reopen to foreign tourists and China’s tech shares jumped.    The Topix rose 0.5% to 1,887.30 as of the 3pm close in Tokyo, while the Nikkei 225 advanced 0.7% to 26,781.68. Tokyo Electron Ltd. contributed the most to the Topix’s gain, increasing 3.2%. Out of 2,171 shares in the index, 1,480 rose and 615 fell, while 76 were unchanged In Australia, the S&P/ASX 200 index rose 1.1% to close at 7,182.70, the highest level since May 6, led by energy and consumer discretionary shares. Woodside Energy Group was among the biggest gainers as US crude and gasoline stockpiles showed signs of continuing decline ahead of the summer driving season. Appen was the top decliner after saying that Telus revoked its indicative proposal for a takeover. In New Zealand, the S&P/NZX 50 index fell 0.3% to 11,065.15 In FX, the Bloomberg Dollar Spot Index slumped as the dollar was steady to weaker against all of its Group-of-10 peers. Treasuries were steady across the curve. The euro inched up to touch a fresh one- month high of 1.0765 before paring. The bund yield curve bull- flattened slightly, drawing the 10-year yield away from 1%. Risk- sensitive Antipodean and Scandinavian currencies led gains. The Australian dollar climbed as a decent retail sales print brightened the outlook and a drop in the greenback triggered buy-stops. Benchmark bonds slipped. Australian retail sales rose 0.9% m/m in April vs estimate +1% and prior +1.6%. The pound ticked higher, touching its highest level in a month against the dollar, while gilts advanced. Chancellor of the Exchequer Rishi Sunak said that his package of support for the UK economy will have a “minimal” impact on inflation. The yen advanced for a second day as lower Treasury yields weighed on the dollar. Japanese bonds rise after being sold off on Thursday In rates, Treasuries were steady, following gains in European markets where bull-flattening was observed across bunds and gilts. Yields were richer by 1bp-3bp across the curve, the 10-year yield dropped by ~2bp to 2.72%, underperforming bunds by 1.5bp, gilts by ~3bp. IG dollar issuance slate still blank in what has so far been the slowest week of the year for new deals; next week’s calendar is expected to total $25b- $30b. Focal points for US session include several economic data releases including April personal income/spending with PCE deflator. Sifma recommended 2pm close of trading for dollar-denominated fixed income ahead of US holiday weekend.    In commodities, WTI drifts 0.7% higher to trade below $115. Spot gold rises roughly $7 to trade at $1,858/oz. Most base metals are in the green; LME nickel rises 6.6%, outperforming peers. Looking to the day ahead, and data releases include US personal income and personal spending for April, as well as the preliminary wholesale inventories for that month, and the final University of Michigan consumer sentiment index for May. In the Euro Area, there’s also the M3 money supply for April. Otherwise, central bank speakers include ECB Chief Economist Lane. Market Snapshot S&P 500 futures up 0.3% to 4,068.25 STOXX Europe 600 up 0.7% to 440.64 MXAP up 1.6% to 165.89 MXAPJ up 2.1% to 542.44 Nikkei up 0.7% to 26,781.68 Topix up 0.5% to 1,887.30 Hang Seng Index up 2.9% to 20,697.36 Shanghai Composite up 0.2% to 3,130.24 Sensex up 1.2% to 54,919.92 Australia S&P/ASX 200 up 1.1% to 7,182.71 Kospi up 1.0% to 2,638.05 German 10Y yield little changed at 0.99% Euro up 0.1% to $1.0737 Brent Futures up 0.4% to $117.91/bbl Gold spot up 0.5% to $1,859.48 U.S. Dollar Index down 0.16% to 101.67 Top Overnight News from Bloomberg The path for Russia to keep sidestepping its first foreign default in a century is turning more onerous as another coupon comes due on the warring nation’s debt. Investors are supposed to receive about $100 million of interest on Russian foreign debt in their accounts by Friday, payments President Vladimir Putin’s government says it has already made China’s oil trading giant Unipec has significantly increased the number of hired tankers to ship a key crude from eastern Russia A central bank legal proposal envisages Russian eurobond issuers placing “substitute” bonds in order to ensure debt payments come through to local investors, Interfax reported The US and Taiwan are planning to announce negotiations to deepen economic ties, people familiar with the matter said, in a fresh challenge to Beijing, which has cautioned Washington on its relationship with the island. Profits at Chinese industrial firms shrank last month for the first time in two years as Covid outbreaks and lockdowns disrupted factory production, transport logistics and sales “The process of increasing interest rates should be gradual,” ECB Governing Council member Pablo Hernandez de Cos comments in op- ed in Expansion. “The aim is to avoid abrupt movements, which could be particularly damaging in a context of high uncertainty such as the current one” The RBA is poised for its first review in a generation as new Treasurer Jim Chalmers makes good on a pledge to ensure the nation’s monetary and fiscal regimes are fit for purpose The UK signed its first trade agreement with a US state, amid warnings that Prime Minister Boris Johnson’s stance on Brexit is hindering progress on a broader deal with Joe Biden’s administration A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks took impetus from the risk-on mood on Wall St where all major indices were lifted amid month-end flows and encouraging retailer earnings.  ASX 200 was led higher by outperformance in the commodity and resources industries, while consumer stocks were mixed after Retail Sales printed in line with expectations, albeit at a slowdown from the prior month. Nikkei 225 traded positively but with upside capped by a mixed currency and weakness in energy and power names after increases in international prices and with the government looking to address the tight energy market. Hang Seng and Shanghai Comp were firmer with notable outperformance in Hong Kong amid a euphoric tech sector after earnings from Alibaba and Baidu topped estimates which also inspired the NASDAQ Golden Dragon China Index during the prior US session, while advances in the mainland were moderated by the contraction in April Industrial Profits and after Premier Li’s unpublished comments from Wednesday’s emergency meeting came to light in which he warned of dire consequences for the economy. Top Asian News China’s State Council will seek specific implementation rules by May 31st regarding necessary measures at all levels of government and will dispatch inspection teams to all 31 provinces, municipalities and autonomous regions to oversee the rollout amid an urgent need for national economic mobilisation, according to SGH Macro Advisors. US is seeking to hold economic discussions with Taiwan in the latest test with China, while supply chains and agriculture are said to be among the topics, according to Bloomberg. Furthermore, reports noted that bilateral economic talks will be announced in the upcoming weeks. Evergrande (3333 HK) is reportedly considering repaying offshore bondholders in instalments, according to Reuters sources; discussing giving the option of converting part of debt into equity of property management and EV units. China's Health Official says some areas along the Jilin border report local infections without a clear source, close attention should be paid to the risk of importing the virus; COVID infections show a trend of gradual spread from border to inland areas, via Reuters European bourses are firmer, Euro Stoxx 50 +0.9%, drawing impetus from APAC strength into month-end with catalysts thin thus far. Stateside, futures are supported across the board with familiar themes in play pre-PCE Price Index for insight into the 'peak' inflation narrative; ES +0.3%. Note, the FTSE 100 Unch. is the mornings underperformer amid pressure in energy names after Chancellor Sunak's windfall tax announcement on Thursday. DiDi (DIDI) has reportedly drawn interest from FAW Group, regarding a stake purchase, according to Bloomberg. +7.5% in the pre-market Top European News UK Oil Windfall Tax Prompts BP to Review Investment Plans; UK Energy Stocks Extend Windfall Declines as Retailers Gain Richemont Leads Swiss Stocks Higher as Dip Buyers Return Hapag-Lloyd Drops; Cut to Neutral at Citi on Valuation Big Dividend Payers May Be Next After UK Windfall Tax on Energy FX Greenback grinds higher ahead of PCE inflation metrics with month end rebalancing flows providing impetus, DXY bounces from fresh WTD base just under 101.500 to 101.800. Kiwi and Aussie propped by bounce in commodities and Loonie protected by further gains in crude; NZD/USD tests Fib retracement at 0.7129, AUD/USD eyes 0.7150 and USD/CAD probes 1.2750. Big option expiries in the mix and potentially supportive for the Dollar into long US holiday weekend, +1bln rolling off at NY cut not far from spot in EUR/USD, USD/JPY, AUD/USD and USD/CAD. Rand firmer as Gold touches Usd 1860/oz after 200 DMA breach, USD/ZAR below 15.7000. Fixed Income Debt futures on a firmer footing ahead of US PCE price metrics, but some way below weekly peaks. Bunds sub-154.00, Gilts under 119.00 and 10 year T-note below 121-00. Curves a tad flatter following hot reception for 7 year US issuance. Commodities Crude benchmarks are underpinned, but off best levels, by broader sentiment and initial USD weakness going into a long US weekend with Memorial Day touted as the driving seasons commencement. WTI July and Brent August, at best, were in proximity to USD 115/bbl vs troughs of USD 113.61/bbl and USD 113.77/bbl respectively. US Treasury is reportedly expected to renew Chevron’s (CVX) license to operate in Venezuela as soon as Friday, according to Reuters citing sources. China's State Planner has approved a coal mine in the Shanxi area to bolster annual output to 12mln tonnes per annum from 8mln; investment of CNY 5.35bln, via Reuters. Spot gold is steady and holding onto the bulk of overnight upside after breaching the 21-DMA at USD 1850.80/oz; USD 1860.19/oz peak, thus far. US Event Calendar 08:30: April Advance Goods Trade Balance, est. -$114.8b, prior -$125.3b, revised -$127.1b 08:30: April Retail Inventories MoM, est. 2.0%, prior 2.0% April Wholesale Inventories MoM, est. 2.0%, prior 2.3% 08:30: April Personal Income, est. 0.5%, prior 0.5%; April Personal Spending, est. 0.8%, prior 1.1% 08:30: April PCE Deflator MoM, est. 0.2%, prior 0.9%; PCE Deflator YoY, est. 6.2%, prior 6.6% April PCE Core Deflator MoM, est. 0.3%, prior 0.3%; PCE Core Deflator YoY, est. 4.9%, prior 5.2% April Real Personal Spending, est. 0.7%, prior 0.2% 10:00: May U. of Mich. Current Conditions, est. 63.6, prior 63.6; Expectations, est. 56.3, prior 56.3; Sentiment, est. 59.1, prior 59.1 10:00: May U. of Mich. 1 Yr Inflation, est. 5.4%, prior 5.4%; 5-10 Yr Inflation, prior 3.0% DB's Jim Reid concludes the overnight wrap A reminder that it’s your last chance to answer our latest monthly survey, where we try to ask questions that aren’t easy to derive from market pricing. This time we ask if you think the Fed would be willing to push the economy into recession in order to get inflation back to target. We also ask whether you think there are still bubbles in markets and whether equities have bottomed out yet. And there’s another on which is the best asset class to hedge against inflation. The more people that fill it in the more useful so all help from readers is very welcome. The link is here. I did have tickets available for tomorrow night's Champions League final but there is a big 36 hole golf tournament at my club so I decided that at my age you never know when your body will fail next so playing sport now pips watching it live. So I'll be playing golf all day, trying to rescue my marriage for an hour when I get home, and then blaring out the final on the TV at home with a couple of glasses of wine for good measure. I can't honestly think of a better day. However I may come last and Liverpool may lose so let's see what happens! The market comeback this week is on a par with some of Madrid's remarkable ones this year and indeed it’s been another strong performance over the last 24 hours, with better-than-expected outlooks from US retailers helping to bolster sentiment, coupled with growing hopes that the Fed won’t take policy much into restrictive territory, if at all. Those developments helped the S&P 500 to post a +1.99% advance yesterday, bringing its gains for the week to +4.01%, and means we should finally be on the verge of ending a run of 7 consecutive weekly losses. Obviously it’s not impossible things could end up in negative territory given recent volatility, and it was only last week the index posted a one-day decline of more than -4%, but it would still take a massive slump today to get an 8th consecutive week in the red for only the third time since the Great Depression. That advance grew stronger as the day went on, with S&P futures having actually been negative when we went to press yesterday. But sentiment was aided by a number of positive earnings developments, with Macy’s (+19.31%) boosting its adjusted EPS guidance before the US open, whilst the discount retailers Dollar Tree (+21.87%) and Dollar General (+13.72%) both surged as well thanks to decent reports of their own. That helped consumer discretionary (+4.78%) to be the top performing sector in the S&P, and in fact Dollar Tree was the top performing company in the entire index. Cyclicals were the outperformers, but defensives also shared in the advance that saw around 90% of the index’s members move higher on the day. As well as that news on the retail side, risk appetite has been further supported by growing speculation that the Fed won’t be as aggressive in hiking rates as had been speculated just a few weeks ago. I'm not sure I agree with that conclusion but if you look at the futures-implied rate by the December 2022 meeting of 2.64%, that is some way down from its peak of 2.88% back on May 3rd, and in fact means that markets have now taken out just shy of one 25bp hike from the rate implied by year end, which makes a change from that pretty consistent move higher we’ve seen over recent months. Yesterday also brought fresh signs that this re-pricing is beginning to filter its way through to the real economy, with data from Freddie Mac showing that the average rate for a 30-year mortgage fell to 5.10% last week, down from 5.25% the week before. For reference that’s the biggest weekly decline since April 2020, and comes on the back of recent housing data that’s underwhelmed against the backdrop of higher rates. There was another report fitting that pattern yesterday too, with pending home sales for April dropping by a larger than expected -3.9% (vs. -2.1% expected). But as with the retail outlooks, the more timely data was much more positive, with the weekly initial jobless claims falling to 210k (vs. 215k expected) in the week ending May 21, whilst the Kansas City Fed’s manufacturing index for May came in at 23 (vs. 15 expected). Treasuries swung back and forth against this backdrop, but ultimately the more bullish outlook led to a small steepening in the curve, with the 2yr yield down -1.6bps as 10yr yields were essentially flat at 2.75%. In a change from recent weeks, breakevens marched higher despite the little changed headline, with the 10yr breakeven up +7.0bps to come off its two-month low the previous day. But to be fair, that came amidst a big surge in oil prices after US data showed gasoline stockpiles fell to their lowest seasonal level since 2014, with Brent Crude (+2.96%) up to a 2-month high of $117.40/bbl, whilst WTI (+3.41%) rose to $114.09/bbl. European markets followed a pretty similar pattern to the US, with the STOXX 600 advancing +0.78% on the day. However, utilities (-1.12%) were the worst-performing after the UK government moved to impose a temporary windfall tax on oil and gas firms’ profits at a rate of 25%. That came as part of a wider package of measures to help with the cost of living, adding up to £15bn in total. They included a one-off payment of £650 to 8mn households in receipt of state benefits, with separate payments of £300 to pensioner households and £150 to those receiving disability benefits. There was also a doubling in the energy bills discount from £200 to £400, whilst the requirement to pay it back over five years has been removed as well. See Sanjay Raja’s blog on it here and where he also compares the measures to similar ones seen in the big 4 EuroArea economies. With more fiscal spending in the pipeline, UK gilts underperformed their counterparts elsewhere in Europe, with 10yr yields ending the day up +5.9bps. Those on bunds (+4.6bps) and OATs (+3.2bps) also rose too, but the broader risk-on tone led to a tightening in peripheral spreads, with the gap between 10yr BTPs over bunds falling -10.4bps yesterday to 189bps. There was a similar pattern on the credit side, with iTraxx crossover coming down -23.9bps to 439bps, which was its biggest daily decline in nearly 2 months. Asian equity markets are joining in the rally this morning with the Hang Seng rising +2.93% as Chinese listed tech stocks are witnessing big gains after Alibaba (+12.21%) posted better than expected Q4 earnings yesterday. Mainland Chinese stocks are also trading higher with the Shanghai Composite (+0.52%) and CSI (+0.63%) up. Elsewhere, the Nikkei (+0.63%) and Kospi (+0.89%) are also in the green. Outside of Asia, futures contracts on the S&P 500 (-0.11%) and NASDAQ 100 (-0.14%) are seeing mild losses. Data released earlier showed that Tokyo’s core CPI rose +1.9% y/y in May versus +2.0% expected. Core core was +0.9% y/y as expected with nothing here at the moment to change the BoJ's stance. Elsewhere, China’s industrial profits (-8.5% y/y) shrank at the fastest pace in two years in April, swinging from a +12.2% gain in March. On the geopolitical front, we heard from US Secretary of State Blinken yesterday, who gave a significant speech on the Biden Administration’s China policy. Blinken zoomed out to give a view of the forest from the trees, noting that the Russia-Ukraine conflict was not as strategically important as America’s relationship with China over the long-run. He offered a three pillar strategy for managing the relationship with China that involved investing in US competitiveness, aligning strategy with allies to enhance effectiveness, and to compete with China across economic, military, and technological frontiers. He noted the countries’ two different political systems need not impair connection between its peoples, or inhibit dialogue. Staying on the US-China front but switching gears, a bi-partisan group of US senators sent a letter to President Biden urging him to keep tariffs on China, to improve the US’s negotiating position in future deals, pouring cold water on the prospects for tariff relief to provide a temporary salve to raging price pressures. To the day ahead, and data releases include US personal income and personal spending for April, as well as the preliminary wholesale inventories for that month, and the final University of Michigan consumer sentiment index for May. In the Euro Area, there’s also the M3 money supply for April. Otherwise, central bank speakers include ECB Chief Economist Lane.   Tyler Durden Fri, 05/27/2022 - 07:54.....»»

Category: blogSource: zerohedgeMay 27th, 2022

Futures Jump After China Cuts Main Lending Rate By Most On Record But $1.9 Trillion Op-Ex Looms...

Futures Jump After China Cuts Main Lending Rate By Most On Record But $1.9 Trillion Op-Ex Looms... After months of endless jawboning and almost no action, overnight China finally cut its main mortgage interest rate by the most on record since the rate was introduced in 2019, as it tries to reduce the economic impact of Covid lockdowns and a property sector slowdown. The five-year loan prime rate was lowered from 4.6% to 4.45% on Friday (even as the 1 Year LPR was unchanged at 3.70%) . The reduction in the rate, which is set by a committee of banks and published by the People’s Bank of China, will directly reduce the borrowing costs on outstanding mortgages across the country (the move wasn’t much of a shock as the central bank had kept the 1-Year MLF Rate unchanged earlier in the week and effectively cut interest rates for first-time homebuyers by 20bps on Sunday). The rate cut was long overdue for China's property market which has experienced 8 straight months of home-price reductions with developers under extreme pressure. There was more bad news for China's embattled tech sector as Canada banned Huawei Technologies and ZTE equipment from use in its 5G network. The good news is that China's easing helped push Asian stocks higher, while European markets and US stock index futures also rose on Friday as buyers returned after a selloff fueled by recession fears saw the underlying S&P 500 lose more than $1 trillion in market value this week. Contracts on the S&P 500 advanced 1.1% as of 7:15a.m. in New York suggesting the index may be able to avoid entering a bear market (which would be triggered by spoos sliding below 3,855) at least for now, although today's $1.9 trillion Option Expiration will likely lead to substantial volatility, potentially to the downside.  Even with a solid jump today, should it not reverse as most ramps in recent days, the index - which is down almost 19% from its January record - is on track for a seventh week of losses, the longest such streak since March 2001. Futures on the Nasdaq 100 and Dow Jones indexes also gained. 10Y TSY yields rebounded from yesterday's tumble while the dollar was modestly lower. Gold and bitcoin were flat. In premarket trading, shares of gigacap tech giants rose, poised to recover some of the losses they incurred this week. Nasdaq 100 futures advanced 1.7%. The tech heavy benchmark has wiped out about $1.3 trillion in market value this month. Apple (AAPL US) is up 1.3% in premarket trading on Friday, Tesla (TSLA US) +2.6%.Palo Alto Networks jumped after topping estimates. Continuing the retail rout, Ross Stores cratered after the discount retailer cut its full-year outlook and first quarter results fell short of expectations. Here are some other notable premarket movers: Chinese stocks in US look set to extend this week’s gains on Friday after Chinese banks cut the five-year loan prime rate by a record amount, an effort to boost mortgage and loan demand in an economy hampered by Covid lockdowns. Alibaba (BABA US) +2.6%, Baidu (BIDU US) +1.1%, JD.com (JD US) +2.6%. Palo Alto Networks (PANW US) rises 11% in premarket trading on Friday after forecasting adjusted earnings per share for the fourth quarter that exceeded the average of analysts’ estimates. Applied Materials (AMAT US) falls 2.1% in premarket trading after its second-quarter results missed expectations as persistent chip shortages weighed on the outlook. However, Cowen analyst Krish Sankar notes that “while the macro/consumer data points have weakened, semicap demand is still healthy.” Ross Stores Inc. (ROST US) shares sank 28% in US premarket trade on Friday after the discount retailer cut its full-year outlook and 1Q results fell short of expectations, prompting analysts to slash their price targets. Foghorn Therapeutics (FHTX US) shares plunged 26% in postmarket trading after the company said the FDA has placed the phase 1 dose escalation study of FHD-286 in relapsed and/or refractory acute myelogenous leukemia and myelodysplastic syndrome on a partial clinical hold. Wix.com (WIX US) cut to equal-weight from overweight at Morgan Stanley as investors are unlikely to “give credit to a show-me story” in the current context which limits upside catalysts in the near term, according to note. Deckers Outdoor (DECK US) jumped 13% in US postmarket trading on Thursday after providing a year sales outlook range with a midpoint that beat the average consensus estimate. VF Corp’s (VFC US) reported mixed results, with analysts noting the positive performance of the company’s North Face brand, though revenues did miss estimates amid a tricky macro backdrop. The outdoor retailer’s shares rose 2.2% in US postmarket trading on Thursday. “The ‘risk-on’ trading mood has registered a solid rebound during the last couple of hours as traders cheered the significantly dovish monetary decision from China after the PBoC cut one of the key interest rates by a record amount,” said Pierre Veyret, a technical analyst at ActivTrades. “This will provide a fresh boost to the economy, helping small businesses and mitigate the negative impacts of lockdowns in the world’s second-largest economy.” Still, the broader market will have to fend off potential risks from options expiration, which is notorious for stirring up volatility. Traders will close old positions for an estimated $1.9 trillion of derivatives while rolling out new exposures on Friday. This time round, $460 billion of derivatives across single stocks is scheduled to expire, and $855 billion of S&P 500-linked contracts will expire according to Goldman. Rebounds in risk sentiment have tended to fizzle this year. Investors continue to grapple with concerns about an economic downturn, in part as the Federal Reserve hikes interest rates to quell price pressures. Global shares are on course for an historic seventh week of declines. “The risk-on trading mood has registered a solid rebound during the last couple of hours as traders cheered the significantly dovish monetary decision from China,” said Pierre Veyret, an analyst at ActivTrades. “This move significantly contrasts with the lingering inflation and recession risks in Western economies, where an increasing number of market operators and analysts are questioning the policies of central banks.” In Europe, the Stoxx Europe 600 index added 1.5%, erasing the week’s losses. The French CAC 40 lags, rising 0.9%. Autos, travel and miners are the strongest-performing sectors, rebounding after two days of declines. Basic resources outperformed as industrial metals rallied. Consumer products was the only sector in the red as Richemont slumped after the Swiss watch and jewelry maker reported operating profit for the full year that missed the average analyst estimate and its Chairman Johann Rupert said China is going to take an economic blow and warned the Chinese economy will suffer for longer than people think. The miss sent luxury stocks plunging: Richemont -11%, Swatch -3.8%, Hermes -3.2%, LVMH -1.9%, Kering -1.7%, Hugo Boss -1.7%, etc. These are the biggest European movers: Rockwool rises as much as 10% as the market continued to digest the company’s latest earnings report, which triggered a surge in the shares, with SocGen and BNP Paribas upgrading the stock. Valeo and other European auto stocks outperformed, rebounding after two days of losses. Citi says Valeo management confirmed that auto production troughed in April and activity is improving. Sinch gained as much as 5.4% after Berenberg said peer’s quarterly results confirmed the cloud communications company’s strong positioning in a fast-growing market. Lonza shares gain as much as 4.1% after the pharmaceutical ingredients maker was raised to outperform at RBC, with the broker bullish on the long-term demand dynamics for the firm. THG shares surge as much as 32% as British entrepreneur Nick Candy considers an offer to acquire the UK online retailer, while the company separately announced it rejected a rival bid. Maersk shares rise as much as 4.6%, snapping two days of declines, as global container rates advance according to Fearnley Securities which says 2H “looks increasingly promising.” PostNL shares jump as much as 8.2% after the announcement that Vesa will acquire sole control of the Dutch postal operator. Analysts say reaction in the shares is overdone. Dermapharm shares gain as much as 6.1%, the most since March 22, with Stifel saying the pharmaceuticals maker is “significantly undervalued” and have solid growth drivers. Richemont shares tumble as much as 14%, the most in more than two years, after the luxury retailer’s FY Ebit was a “clear miss,” with cost increases in operating expenses. Luxury peers were pulled lower alongside Richemont after the company’s disappointing earnings report, in which its CEO also flagged the Chinese market will lag for longer than people assume. Instone Real Estate shares drop as much as 12% as the stock is downgraded to hold from buy at Deutsche Bank, with the broker cutting its earnings estimates for the property developer Earlier in the session, Asia-Pac stocks picked themselves up from recent losses as risk sentiment improved from the choppy US mood. ASX 200 gained with outperformance in tech and mining stocks leading the broad gains across industries. Hang Seng and Shanghai Comp strengthened with a rebound in tech setting the pace in Hong Kong and with the mainland also lifted following the PBoC’s Loan Prime Rate announcement in which it defied the consensus by maintaining the 1-Year LPR at 3.70% but cut the 5-Year LPR by 15bps to 4.45%, which is the reference for mortgages. Nonetheless, this wasn’t much of a shock as the central bank had kept the 1-Year MLF Rate unchanged earlier in the week and effectively cut interest rates for first-time homebuyers by 20bps on Sunday. Japanese stocks regain footing in the wake of Thursday’s selloff, after Chinese banks cut a key interest rate for long-term loans by a record amount. The Topix rose 0.9% to 1,877.37 at the 3 p.m. close in Tokyo, while the Nikkei 225 advanced 1.3% to 26,739.03. Toyota Motor Corp. contributed the most to the Topix’s gain, increasing 2.1%. Out of 2,171 shares in the index, 1,511 rose and 567 fell, while 93 were unchanged. In Australia, the S&P/ASX 200 index rose 1.2% to close at 7,145.60 on the eve of Australia’s national election. Technology shares and miners led sector gains. Chalice Mining climbed after getting approvals for further exploration drilling at the Hartog-Dampier targets within its Julimar project. Novonix advanced with other lithium-related shares after IGO announced its first and consistent production of battery grade lithium hydroxide from Kwinana. In New Zealand, the S&P/NZX 50 index rose 0.5% to 11,267.39 India’s benchmark stocks index rebounded from a 10-month low and completed its first weekly gain in six, boosted by an advance in Reliance Industries.  The S&P BSE Sensex jumped 2.9% to 54,326.39 in Mumbai. The NSE Nifty 50 Index also rose by a similar magnitude on Friday. Stocks across Asia advanced after Chinese banks lowered a key interest rates for long-term loans.   Reliance Industries climbed 5.8%, the largest advance since Nov. 25, and gave the biggest boost to the Sensex, which had all 30 member stocks trading higher. All 19 sector indexes compiled by BSE Ltd. advanced, led by a gauge of realty stocks.  “Stocks in Asia and US futures pushed higher today amid a bout of relative calm in markets, though worries about a darkening economic outlook and China’s Covid struggles could yet stoke more volatility,” according to a note from SMC Global Securities Ltd.  In earnings, of the 36 Nifty 50 firms that have announced results so far, 21 have either met or exceeded analyst estimates, while 15 have missed forecasts. In FX, the Bloomberg Dollar Spot Index inched higher as the greenback traded mixed against its Group-of-10 peers. Treasuries fell modestly, with yields rising 1-2bps. The euro weakened after failing to hold on to yesterday’s gains that pushed it above $1.06 for the first time in more than two weeks. Inversion returns for the term structures in the yen and the pound, yet for the euro it’s all about the next meetings by the European Central Bank and the Federal Reserve. The pound rose to a session high at the London open, coinciding with data showing UK retail sales rose more than forecast in April. Retail sales was up 1.4% m/m in April, vs est. -0.3%. Other showed a plunge in consumer confidence to the lowest in at least 48 years. The Swiss franc halted a three-day advance that had taken it to the strongest level against the greenback this month. Australia’s sovereign bonds held opening gains before a federal election Saturday amid fears of a hung parliament, which could stifle infrastructure spending. The Australian and New Zealand dollar reversed earlier losses. The offshore yuan and South Korean won paced gains in emerging Asian currencies as a rally in regional equities bolstered risk appetite. In rates, Treasuries were slightly cheaper as S&P 500 futures advanced. Yields were higher by 2bp-3bp across the Treasuries curve with 10- year around 2.865%, outperforming bunds and gilts by 1.7bp and 3.5bp on the day; curves spreads remain within 1bp of Thursday’s closing levels. Bunds and Italian bonds fell, underperforming Treasuries, as haven trades were unwound. US session has no Fed speakers or economic data slated. UK gilts 2s10s resume bear-flattening, underperforming Treasuries, after BOE’s Pill said tightening has more to run. Gilts 10y yields regain 1.90%. Bund yield curve-bear steepens. long end trades heavy with 30y yield ~6bps cheaper. Peripheral spreads widen to core with 5y Italy underperforming. Semi-core spreads tighten a touch. In commodities, WTI trades within Thursday’s range, falling 0.5% to around $111. Most base metals trade in the green; LME lead rises 2.6%, outperforming peers. LME nickel lags, dropping 1.5%. Spot gold is little changed at $1,844/oz. KEY HEADLINES: Looking at the day ahead, there is no macro news in the US. Central bank speakers include the ECB’s Müller, Kazāks, Šimkus, Centeno and De Cos, along with the BoE’s Pill. Finally, earnings releases include Deere & Company. Market Snapshot S&P 500 futures up 1.1% to 3,940.00 STOXX Europe 600 up 1.2% to 433.00 MXAP up 1.6% to 164.68 MXAPJ up 2.1% to 539.85 Nikkei up 1.3% to 26,739.03 Topix up 0.9% to 1,877.37 Hang Seng Index up 3.0% to 20,717.24 Shanghai Composite up 1.6% to 3,146.57 Sensex up 2.5% to 54,115.12 Australia S&P/ASX 200 up 1.1% to 7,145.64 Kospi up 1.8% to 2,639.29 German 10Y yield little changed at 0.97% Euro down 0.2% to $1.0567 Gold spot up 0.2% to $1,845.64 U.S. Dollar Index up 0.25% to 102.98 Brent Futures down 0.4% to $111.55/bbl Top Overnight News from Bloomberg BOE Chief Economist Huw Pill said monetary tightening has further to run in the UK because the balance of risks is tilted toward inflation surprising on the upside ECB Governing Council Member Visco says a June hike is ‘certainly’ out of the question while July is ‘perhaps’ the time to start rate hikes China’s plans to bolster growth as Covid outbreaks and lockdowns crush activity will see a whopping $5.3 trillion pumped into its economy this year Chinese banks cut a key interest rate for long- term loans by a record amount, a move that would reduce mortgage costs and may help counter weak loan demand caused by a property slump and Covid lockdowns China’s almost-trillion dollar hedge fund industry risks worsening the turmoil in its stock market as deepening portfolio losses trigger forced selling by some managers. About 2,350 stock-related hedge funds last month dropped below a threshold that typically activates clauses requiring them to slash exposures, with many headed toward a level that mandates liquidation Investors fled every major asset class in the past week, with US equities and Treasuries a rare exception to massive redemptions Ukraine’s central bank is considering a return to regular monetary policy decisions as soon as next month in a sign the country is getting its financial system back on its feet after a shock from Russia’s invasion The Group of Seven industrialized nations will agree on more than 18 billion euros ($19 billion) in aid for Ukraine to guarantee the short-term finances of the government in Kyiv, according to German Finance Minister Christian Lindner The best may already be over for the almighty dollar as growing fears of a US recession bring down Treasury yields A more detailed look at global markets courtesy of Newsquqawk Asia-Pac stocks picked themselves up from recent losses as risk sentiment improved from the choppy US mood.  ASX 200 gained with outperformance in tech and mining stocks leading the broad gains across industries. Nikkei 225 was underpinned following the BoJ’s ETF purchases yesterday and despite multi-year high inflation. Hang Seng and Shanghai Comp strengthened with a rebound in tech setting the pace in Hong Kong and with the mainland also lifted following the PBoC’s Loan Prime Rate announcement in which it defied the consensus by maintaining the 1-Year LPR at 3.70% but cut the 5-Year LPR by 15bps to 4.45%, which is the reference for mortgages. Nonetheless, this wasn’t much of a shock as the central bank had kept the 1-Year MLF Rate unchanged earlier in the week and effectively cut interest rates for first-time homebuyers by 20bps on Sunday. Top Asian News Chinese Premier Li vows efforts to aid the resumption of production, via Xinhua; will continue to build itself into a large global market and a hot spot for foreign investment, via Reuters. US and Japanese leaders are to urge China to reduce its nuclear arsenal, according to Yomiuri. It was also reported that Japanese PM Kishida is expected to announce a defence budget increase during the summit with US President Biden, according to TV Asahi. Offshore Yuan Halts Selloff With Biggest Weekly Gain Since 2017 Hong Kong Dollar Traders Brace for Rate Spike Amid Intervention Shanghai Factory Output Fell 20 Times Faster Than Rest of China Japan’s Inflation Tops 2%, Complicating BOJ Stimulus Message European indices have started the week's last trading day positively and have extended on gains in early trade. Swiss SMI (+0.5%) sees its upside capped by losses in Richemont which provided a downbeat China outlook. European sectors are almost wholly in the green with a clear pro-cyclical bias/anti-defensive bias - Healthcare, Personal & Consumer Goods, Telecoms, Food & Beverages all reside at the bottom of the chart, whilst Autos & Parts, Travel & Leisure and Retail lead the charge on the upside. US equity futures have also been trending higher since the reopening of futures trading overnight Top European News Holcim, HeidelbergCement Said to Compete for Sika US Unit Prosus Looking to Sell $6 Billion Russian Ads Business Avito European Autos Outperform in Rebound, Driven by Valeo, Faurecia Volkswagen Pitted Against Organic Farmer in Climate Court Clash FX DXY bound tightly to 103.000, but only really firm relative to Yen on renewed risk appetite. Yuan back to early May peaks after PBoC easing of 5 year LPR boosts risk sentiment - Usd/Cny and Usd/Cnh both sub-6.7000. Kiwi outperforms ahead of anticipated 50 bp RBNZ hike next week and with tailwind from Aussie cross pre-close call election result. Euro and Pound capped by resistance at round number levels irrespective of hawkish ECB commentary and surprisingly strong UK consumption data. Lira lurching after Turkish President Erdogan rejection of Swedish and Finnish NATO entry bids. Japanese PM Kishida says rapid FX moves are undesirable, via Nikkei interview; keeping close ties with overseas currency authorities, via Nikkei. Fixed Income Debt futures reverse course amidst pre-weekend risk revival, partly prompted by PBoC LPR cut. Bunds hovering above 153.00, Gilts sub-119.50 and T-note just over 119-16. UK debt also taking on board surprisingly strong retail sales metrics and EZ bonds acknowledging more hawkish ECB rhetoric. Commodities WTI and Brent July futures consolidate in early European trade in what has been another volatile week for the crude complex. Spot gold has been moving in tandem with the Buck and rose back above its 200 DMA Base metals are mostly firmer, with LME copper re-eyeing USD 9,500/t to the upside as the red metal is poised for its first weekly gain in seven weeks Russia's Gazprom continues gas shipments to Europe via Ukraine, with Friday volume at 62.4mln cubic metres (prev. 63.3mbm) Central Banks BoE Chief Economist Pill says inflation is the largest challenge faced by the MPC over the past 25 years. The MPC sees an upside skew in the risks around the inflation baseline in the latter part of the forecast period. Pill said further work needs to be done. "In my view, it would be preferable to have any such gilt sales running ‘in the background’, rather than being responsive to month-to-month data news.", via the BoE. ECB's Kazaks hopes the first ECB hike will happen in July, according to Bloomberg. ECB's Muller says focus needs to be on fighting high inflation, according to Bloomberg. ECB's Visco says the ECB can move out of negative rate territory; a June hike is "certainly" out of the question but July is perhaps the time to start Chinese Loan Prime Rate 1Y (May) 3.70% vs. Exp. 3.65% (Prev. 3.70%); Chinese Loan Prime Rate 5Y (May) 4.45% vs. Exp. 4.60% (Prev. 4.60%) Fed's Kashkari (2023 voter) said they are removing accommodation even faster than they added it at the start of COVID and have done quite a bit to remove support for the economy through forward guidance. Kashkari stated that he does not know how high rates need to go to bring inflation down and does not know the odds of pulling off a soft-landing, while he is seeing some evidence they are in a longer-term high inflation regime and if so, the Fed may need to be more aggressive, according to Reuters US Event Calendar Nothing major scheduled DB's Jim Reid concludes the overnight wrap The good thing about having all these injuries in recent years is that when it comes down to any father's football matches or sport day races I now know that no amount of competitive juices make getting involved a good idea. However my wife has not had to learn her lesson yet and tomorrow plays her first netball match for 37 years in a parents vs schoolgirls match. The mums had a practise session on Tuesday and within 3 minutes one of them had snapped their ACL. I'll be nervously watching from the sidelines. Markets were also very nervous yesterday after a torrid day for risk sentiment on Tuesday. Although equities fell again yesterday it was all fairly orderly. This morning Asia is bouncing though on fresh China stimulus, something we discussed in yesterday's CoTD here. More on that below but working through things chronologically, earlier the Stoxx 600 closed -1.37% lower, having missed a large portion of the previous day’s US selloff, but generally continues to out-perform. US equities bounced around, with the S&P 500 staging a recovery from near intraday lows after the European close, moving between red and green all day (perhaps today's option expiry is creating some additional vol) before closing down -0.58%. This sent the index to a fresh one year low and puts the week to date loss at -3.06%, having declined -18.68% since its January peak. Barring a major reversal today, the index is now on track to close lower for a 7th consecutive week for the first time since 2001. In terms of the sectoral breakdown, it was another broad-based decline yesterday, but consumer discretionary stocks (+0.13%) recovered somewhat following their significant -6.60% decline the previous day. Consumer staples, meanwhile, continued their poor run, falling -1.98%, while tech (-1.07%) was not far behind. Those losses occurred against the backdrop of a fresh round of US data releases that came in beneath expectations, which also helped the dollar index weaken -0.93% to mark its worst daily performance since March. First, there were the weekly initial jobless claims for the week through May 14, which is one of the timeliest indicators we get on the state of the economy. That rose to 218k (vs. 200k) expected, which is its highest level since January. Then there was the Philadelphia Fed’s manufacturing business outlook survey for May, which fell to a two-year low of 2.6 (vs. 15.0 expected). And finally, the number of existing home sales in April fell to its lowest level since June 2020, coming in at an annualised rate of 5.61m (vs. 5.64m expected). The broader risk-off move that created meant that sovereign bonds rallied on both sides of the Atlantic. Yields on 10yr Treasuries were down -4.7bps to 2.84%, which follows their -10.2bps decline in the previous session. We didn’t get much in the way of Fed speakers yesterday, but Kansas City Fed President George nodded to recent equity market volatility, saying that it was “not surprising”, and that whilst policy wasn’t aimed at equity markets, “it is one of the avenues through which tighter financial conditions will emerge”. So no sign yet of the Fed being unhappy about tighter financial conditions so far, and markets are continuing to fully price in two further 50bp moves from the Fed in June and July. Nobody said getting inflation back to target from such lofty levels would be easy. So if you’re looking for a Fed put, it may take a while. Later on, Minneapolis Fed President Kashkari drove that point home, saying he was not sure how high rates ultimately needed to go, but said the Fed must ensure inflation does not get embedded in expectations. Over in Europe debt moves were more significant yesterday, having not taken part in the late US rally on Wednesday. Yiields on 10yr bunds (-8.0bps), OATs (-7.4bps) and BTPs (-6.2bps) all saw a reasonable decline on the day. Over in credit as well, iTraxx Crossover widened +10.2bps to 478bps, which surpasses its recent high earlier this month and takes it to levels not seen since May 2020. We also got the account from the April ECB meeting, although there wasn’t much there in the way of fresh headlines, with hawks believing that it was “important to act without undue delay in order to demonstrate the Governing Council’s determination to achieve price stability in the medium term.” That group also said that the monetary policy stance “was no longer consistent with the inflation outlook”. But then the doves also argued that moving policy “too aggressively could prove counterproductive” since monetary policy couldn’t tackle “the immediate causes of high inflation.” Asian equity markets are trading higher this morning after the People’s Bank of China (PBOC) lowered key interest rates amid the faltering economy. They cut the 5-year loan prime rate (LPR) – which is the reference rate for home mortgages for the second time this year from 4.6% to 4.45%, the largest cut on record, as Beijing seeks to revive the ailing housing sector to prop up the economy. Meanwhile, it left the 1-year LPR unchanged at 3.7%. Across the region, the Hang Seng (+1.83%) is leading gains in early trade with the Shanghai Composite (+1.11%) and CSI (+1.41%) also trading up. Elsewhere, the Nikkei (+1.08%) and Kospi (+1.75%) are trading in positive territory. Outside of Asia, equity futures in DMs indicate a positive start with contracts on the S&P 500 (+0.75%), NASDAQ 100 (+1.01%) and DAX (+1.13%) all notably higher. In other news, Japan’s national CPI rose +2.5% y/y in April, the highest for the headline rate since October 2014 and compared to the previous month’s +1.2% increase. Oil prices are lower with Brent futures -0.77% down to $111.18/bbl, as I type. To the day ahead now, and data releases include UK retail sales and German PPI for April, as well as the advance Euro Area consumer confidence reading for May. Central bank speakers include the ECB’s Müller, Kazāks, Šimkus, Centeno and De Cos, along with the BoE’s Pill. Finally, earnings releases include Deere & Company. Tyler Durden Fri, 05/20/2022 - 08:02.....»»

Category: smallbizSource: nytMay 20th, 2022

Pain Allocation, Frog Poison, And Druckenmiller"s Secret Weapon

Pain Allocation, Frog Poison, And Druckenmiller's Secret Weapon By Alex of the MacroOps substack “My portfolio is very balanced… I have half my assets in cash and the other half is in pain…”  My brother-in-law told me that the other day and it made me chuckle. I’m guessing that pain allocation resonates with more than a few people right now.   We’re holding 68% cash in the MO port and have been carrying productive shorts (short ETHUSD, short RTY, short NVDA) so our net exposure has been low. But even with this defensive posturing, we’ve felt some pain over the past few weeks as our port has drawn down a bit from NAV highs. It obviously could be much worse. But still, drawdowns aren’t fun.  We aren’t going to talk about markets in this note. We’ll save that for Sunday. This is going to be more of a stream of consciousness, including answers to some questions a few of you have put to me recently.  We’ll cover portfolio and trade management, thinking about macro outlooks, jungle medicine, and maybe psychedelics, we’ll see.  I did my first Kambo ceremony the other day. Kambo is known in Portuguese as the “vaccine of the forest”. It’s been used amongst the indigenous cultures of the Amazon for thousands of years and is believed to be a purgative, immunity-boosting medicine.  It’s frog poison.  They first burn your skin in a few spots and then apply the poison to the burns, so it goes straight into your bloodstream.  The poison hits quick. It first races down into your chest and sends your heart beating like a John Bonham drum solo… From there it blasts into your skull causing partial blind and deafness and then disperses throughout the rest of your body sending every single one of your cells buzzing like a bee.  Your face swells, you experience dyschronometria, and you turn into a human firehose. Hence the purgative descriptor. You can watch a Youtube video of a ceremony here.  It’s not something you do for fun.  But… they say it’s good for you .  It’s too early for me to speak to its efficacy. I’ve been pretty wiped out since and have at times felt like I was getting gut-punched by Tyson over the last few days. The practitioners told me this is from the medicine clearing out parasites in my gut and that I need to complete the treatment with two more rounds this weekend. So looks like I’ve got my weekend planned :).  I realize most of you are sane and normal and you probably read about this stuff and think my elevator doesn’t travel all the way up to the top floor. I get that. Totally understandable. I don’t blame you.  Personally, I’m open to trying things like this because they pass the wisdom of time and geography filter that I discussed last year (link here). Also, I struggled with a serious chronic illness for a number of years after my last combat tour. And as a result, I was forced to get a little (read: very) experimental on the health front. Anyways, this is definitely not medical advice. I’m not a doctor, I haven’t even watched Grey’s Anatomy. And if you ever feel compelled to try Kambo, do your research and only do it with a very experienced practitioner.  Rule #1: Don’t lose money…  @jr asked me a great question in the Slack yesterday in response to this SQ chart I posted.  The question was “How do you balance the desire to 1) buy a great value zone and 2) wait for price to prove itself (in this case, confirm a support level).”  I love trade management questions like this because there is no single right answer. It’s all nuance, context, process, goal dependent, etc…  But it’s really thinking through these nuances and developing a framework, where you make the money. Picking winners are a dime a dozen. The money-making comes in the risk and trade management.  So here’s my answer to the question that doesn’t have a simple answer. My approach to trading and investing is to not lose money. Everything I do in markets stems from this single driving desire. There are a number of ways to do this. You can, for example, be a really smart calculating business analyst/value investor type with a love for 10Ks and the patience to see your thesis born true. In this approach, your risk management (how you don’t lose money), is in your analysis, your assessment of risk, and the embedded margin of safety. A critical behavioral edge for this approach is to be able to actually sit through the portfolio volatility (ie, large paper drawdowns) that inevitably come so you don’t end up puking the lows. Something that’s easier said than done...  This is a difficult path. It’s one that most punters claim to do, usually because they’re acting out a mimetic desire to be like daddy Buffett. But few are successful at this over multiple cycles (key being multiple cycles since this is an easy one in a bull market).  Here’s the main issue with this approach. You don’t get a ton of at-bats. And, as a result, your feedback loops are very long. This makes it next to impossible to know if you actually have any skill or if you’re just the beneficiary of survivorship bias who’s on borrowed time… and eventually, your patient capital becomes purgatory positioning, which inevitably ends with you getting zeroed out of the game for good. You can see more than a few examples of this playing out today.  You don’t need to look far to find a “value” fund managers that just 12-months ago was celebrated for his/her astonishing 5-year returns and sought after for interviews, raised Buku assets, were praised for their superhuman intellects, etc… and they’re now closing up shop after erasing all of their career gains in less than 6-months…  They suffered under the delusion they were in possession of God-like analytical abilities. But in reality, they were just cluelessly surfing a macro liquidity wave juiced by a growth-at-any-cost fad. This happens every cycle. Few make it to the next. We don’t play that game.  Three maxims were inscribed in the forecourt of the Temple of Apollo (the Delphic maxims). These were: “Know thyself”, “Nothing to excess”, and “Certainty brings insanity”.  My approach to not losing money is centered around these three truths.  Know thyself… this one is the most important.  We have met the enemy and he is us to quote Oliver Perry and Pogo. To make it in this game you need to be brutally honest about what your strengths are, and more importantly, where you are weak… Self-awareness is critical to long-term investing survival. For instance, I know I’m not going to win any securities analysis contest.  I’m a Generalist with a capital G. One who likes his investment ideas simple and obvious (at least to me). There’s no edge for me in trying to parse through the legalese fine print of a 10k better than the other 10 million MBA-trained super-geniuses out there doing the same. I think the market is generally pretty good at that stuff. It is mostly efficient. Except sometimes it isn’t… sometimes it’s wildly hysterical. That’s when my back of the napkin fundamental math skills can be put to work. That’s where I do have an edge.  I’m good at staying level-headed. It takes a lot to get me excited. Market moves just don’t really do that for me.  So while my weakness is my inability to analyze the esoteric minutiae. My strength is in my wiring (due to either nature or nurture) which makes me decent at playing the metagame and identifying “the point of max pessimism” as Sir John Templeton would call it. My approach is similar to what Bill Miller lays out here:  The securities we typically analyze are those that reflect the behavioral anomalies arising from largely emotional reactions to events. In the broadest sense, those securities reflect low expectations of future value creation, usually arising from either macroeconomic or microeconomic events or fears. Our research efforts are oriented toward determining whether a large gap exists between those low embedded expectations and the likely intrinsic value of the security.  I’m good at calling BS on the market. Identifying when the Narrative Pendulum has swung wildly out to one side and no longer discounts any reasonable reality. That’s one of my strengths.  Here’s the catch, though. Even when I get real bulled or beared up on something. I’m talking high conviction, stepping to the plate for my fat pitch Babe Ruth’n it kind of excitement… I stay cognizant of the fact that I could still very much have something wrong, or that I’m missing a key piece of the puzzle and my thesis could at any moment, go Jenga.  My confidence never goes above 90%. Never.  So this is where the second maxim comes in hand, Nothing in excess…  No excess of confidence, in positioning, or overcommitment.  I’m all for going Totis Porcis and betting the ranch. The thing is, I always make sure I have another ranch. There’s a balance, an indefinable sweet spot, between conviction and fallibility, aggressiveness and risk control, striking when hot and quickly adjusting when wrong…  This leads us nicely to the third maxim of “Certainty brings insanity”.  If only the LUNAtics out there had read up on their Delphic philosophy… tuition is high at Market University, best not to make it more so with an addiction to the gamble and ignis fatuus…  You know why Druckenmiller is the GOAT?  He never lost money. Like really never lost money. The guy had five down quarters over his 30-year career of managing money. Let me repeat… Druckenmiller only had FIVE DOWN QUARTERS OVER A 30-YEAR CAREER… To quote the famous figure skater Will Ferrell, that’s mind-bottling. I know traders who’ve worked with him. They say he embodies strong opinions, weakly held. He could pound the table with conviction one moment. And just as aggressively cut and run the next, if the market hit a predefined technical uncle point or a key piece of data changed. No ego. No attachment. Just ruthless money management and a focus on capping his downside…  His mental flexibility and devotion to managing risk are the skills that made him legendary.  It’s not his deep intellectual macro insights or his penetrating fundamental analysis of stocks. He’s skilled in those areas, sure. But that’s table stakes. That’s not where his genius is.  His genius is in executing a system, a holistic process, that allows him to be wrong time and time again but not lose money. This sets him up with the capital (both financial and mental) to whole hog it when the fat pitches arrive.  Man, this is becoming a long-winded roundabout way to answer the question. What was the question again?  Oh, right… “How do you balance the desire to 1) buy a great value zone and 2) wait for the price to prove itself (in this case, confirm a support level).” Okay, so let’s use our above SQ example to illustrate.  I like Block, Inc. (SQ) the company. I like their products. I’m a frequent user of their cash app. I financed a food truck business. They use SQ’s products and love it. I see SQ products everywhere now. Young millennials I talk to all use Cash app. Not Venmo/Paypal. Not Zelle. The hard data supports this. I think Jack Dorsey is one of the most underrated Founders/CEOs in tech. It seems to me that he’s built an incredibly impressive culture capable of fast innovation at scale. And he’s doing this in hardware, software, and financial services, all simultaneously. That is rare.  There remains a LOT of low-hanging margin to eat in the overregulated noninnovative financial services industry. To me, SQ is the clear leader and has the best shot at winning big in this space over the long term. They can potentially close the consumer-merchant loop and become an impenetrable fast-growing business with a massive TAM.  Because of the above and all the reasons Brandon has laid out in his excellent research pieces on the stock. I want to be a buyer of SQ when it goes on sale.  SQ is currently on sale.  Its multiples are at or near historic lows (see graph below). Meanwhile, the company’s fundamentals have never been stronger. Its path to success has never been as clear. So we want to be looking for spots to buy. Now, we already own SQ. We put on a small starter position last month. We added another small amount to that position the other day.  We want to build this position into a big one as it’s one of our higher long-term conviction plays (outside of the still ridiculously cheap commodity shitcos we own).  At the same time, our Bear Market Shock and Trend Fragility indicators peaked out at the start of this year, giving us a lead on the current action, which is why we’ve been able to sidestep the pummeling and make a little money YTD.  While our indicators suggest we’re probably at or near a short-term tradeable bottom. We still need to see major breadth thrusts confirmation and preferably a VIX spike to mark a total washout low. Until then we should expect a continuation of the sideways volatile regime at best or a bear market at worst.  Nothing in this game is a sure thing though...  We can enter an extended bear or we can soon bottom and run… Things can change, the Fed can flip, the dollar can rip, inflation can come down or shoot up… in macro environments full of noise, as this one very much is, we need to stay balanced and nimble.  We don’t want to be binary in our thinking.  You can’t be all bull or all bear in a market like this. You can have your opinions and tilt your positioning in that direction. But you want to own some stuff that would work in case you’re wrong. That way you don’t get caught flatfooted. Not to mention, staying balanced does something to the mind. It helps keep you more intellectually flexible and honest.  We very rarely go 100% cash. The last time we did was in late Feb 2020. But the writing was on the wall for that one and today is very different. Okay, so we like SQ and want to own more. But the macro picture is uncertain. We can assign roughly equal odds to a further selloff or a near-term bottom here.  We also hold lots of cash on the books. To get a bit more balanced and in line with our equal macro odds, we want to take small swings at adding to SQ — and other names we like. SQ is at long-term support. This gives us a technical inflection point. A logical uncle point in which to nest in our stops, in case we’re wrong or early.  So we’ll add a little bit here. We’ll keep the position small because the stock remains in a larger corrective phase and because the macro is messy.  If and when we get (1) broad market breadth thrusts triggering (as shown on the breadth tab of our HUD) and/or (2) SQ shows signs it has put in a base and buyers are back in control (ie, higher pivot points, consecutive bull bars, SQN in Bull regime, etc…). Then we’ll look to more aggressively build on the position.  If breadth thrusts fail to materialize and/or SQ punches through support and continues on its downtrend. We can cut our additions and go back to our small nominal starter position.  In doing so, we protect our downside (NOT LOSE MONEY) first and foremost. While also staying engaged in a stock that has incredible asymmetry over the long haul.  This creates balance. Balance keeps us honest. In markets, it helps keep us alive. It prevents us from going full Kambo and purging our pain allocation right at the lows…  Tyler Durden Mon, 05/16/2022 - 10:40.....»»

Category: blogSource: zerohedgeMay 16th, 2022

Futures Slide After China"s "Huge" Data Miss Sparks "Broad-Based Recession Talk"

Futures Slide After China's "Huge" Data Miss Sparks "Broad-Based Recession Talk" Friday's bear market rally dead-cat bounce appears to be over, and global stocks have started the new week in the red with US equity futures lower after a "huge miss", as Bloomberg put it, in Chinese data fueled concerns over the impact of a slowdown in the world’s second-largest economy. As reported last night, China’s industrial output and consumer spending hit the worst levels since the pandemic began, hurt by Covid lockdowns. And even though officials took another round of measured steps to help the economy by cutting the interest rate for new mortgages over the weekend to bolster an ailing housing market, even as they left the one-year policy loan rate was left unchanged Monday, few believe that any of these actions will have a tangible impact and most continue to expect much more from Beijing.  As such, after a weekend that saw even Goldman's perpetually optimistic equity strategists slash their S&P target (again) from 4,700 to 4,300, and amid growing fears that a recession is now inevitable, Nasdaq 100 futures slid as much as 1.2%, before paring losses to 0.4% as of 730 a.m. in New York. S&P 500 futures were down 0.3%. 10Y Treasury yields were flat at 2.91% and the dollar dipped modestly while bitcoin traded just above $30,000 dropping from $31,000 earlier in the session. Among notable moves in premarket trading, Spirit Airlines jumped as much as 21% following a report that JetBlue Airways is planning a tender offer at $30 a share in cash. Major US technology and internet stocks were down after rebounding on Friday, while Tesla shares dropped, with the electric-vehicle maker set to recall 107,293 cars in China over a potential safety risk. Twitter shares fall 3.4% in premarket trading on Monday, on course to wipe out all the gains the stock has made since billionaire Elon Musk disclosed his stake in the social media platform. Twitter fell to as low as $37.86 -- below the the April 1 close of $39.31, before Musk disclosed his stake. US stocks have been roiled this year, with the S&P 500 on tick away from a bear market as recently as last Thursday, on worries of an aggressive pace of rate hikes by the Federal Reserve at a time when macroeconomic data showed a slowdown in growth. Data from China on Monday highlighted a massive toll on the economy from Covid-19 lockdowns, with retail sales and industrial output both contracting. Although lower valuations sparked a rally in stocks on Friday, strategists including Morgan Stanley’s Michael Wilson warned of more losses ahead as equity markets also price in slower corporate earnings growth. Goldman Sachs strategists led by David Kostin cut their year-end target for the S&P 500 on Friday to 4,300 points from 4,700.  "The broad-based recession talk is the major catalyzer this Monday,” Ipek Ozkardeskaya, a senior analyst at Swissquote, wrote in a note. “Activity in US futures hint that Friday’s rebound was certainly nothing more than a dead cat bounce” just as we said at the time.  The risk of an economic downturn amid price pressures and rising borrowing costs remains the major worry for markets. Goldman Sachs Group Senior Chairman Lloyd Blankfein urged companies and consumers to gird for a US recession, saying it’s a “very, very high risk.” Traders remain wary of calling a bottom for equities despite a 17% drop in global shares this year, with Morgan Stanley warning that any bounce in US stocks would be a bear-market rally and more declines lie ahead. In Europe, the Stoxx Europe 600 index fell as much as 0.8% before paring losses, with declines for tech and travel stocks offsetting gains for basic resources as industrial metals rallied. The Euro Stoxx 50 falls 0.4%. IBEX outperforms, adding 0.3%. Tech, personal care and consumer products are the worst performing sectors. Here are some of the biggest European movers today: Basic Resources stocks outperformed with broad gains among mining and steel companies; ArcelorMittal +3.5%; SSAB +2.6%; Glencore +2.1%; Voestalpine +3.1%. Sartorius AG and Sartorius Stedim shares gain as UBS upgrades both stocks to buy following a “significant de-rating” for the lab-equipment companies, seeing supportive global trends. Carl Zeiss Meditec gains as much as 4.9% after HSBC raised its recommendation to buy from hold, saying the medical optical manufacturer is “well-equipped to deal with supply chain challenges.” Interpump rises as much as 7.6%, extending winning streak to five days, as Banca Akros upgrades the stock to buy from accumulate following Friday’s 1Q results. Casino shares jump as much 5.8% after the French grocer said it’s started a process to sell its GreenYellow renewable energy arm, confirming a Bloomberg News report from Friday. Ryanair shares decline as much as 4.3% on FY results, with analysts focusing on the low-budget carrier’s recovery outlook. They note management is cautiously optimistic about summer travel. Vantage Towers shares decline after the company posted FY23 adjusted Ebitda after leases and recurring free cash flow forecasts that missed analyst estimates at mid- points. Unilever falls after a 13-F filing from Nelson Peltz’s Trian shows no position in the company, according to Jefferies, damping speculation after press reports earlier this year that the fund had built a stake. Michelin shares fall as much as 3.7% after being downgraded to neutral from overweight at JPMorgan, which says it writes off any chance of seeing a recovery in volume production growth in FY22. Earlier in the session, Asian stocks eked out modest gains as surprisingly weak Chinese economic data spurred volatility and caused traders to reassess their outlook on the region. The MSCI Asia-Pacific Index was up 0.1%, paring an earlier advance of as much as 0.9%  on stimulus hopes. The region’s information technology index rose as much as 1.5%, with TMSC giving the biggest boost. A sub-gauge on materials shares fell the most. Equities in China led losses, as Beijing’s moves to cut the mortgage rate for first-time home buyers and ease lockdown restrictions in Shanghai failed to reverse the downbeat mood. Asian stocks were trading higher early Monday, building on Friday’s rally, only to trim or reverse gains as data showed a sharper-than-expected contraction in Chinese activity in April. Signs of an earnings recovery in China are needed for investors to come back, Arnout van Rijn, chief investment officer for APAC at Robeco Hong Kong Ltd., said on Bloomberg Television. “It looks like China is not going to meet the 15% earnings growth that people were looking for just a couple of months ago. So now we’re looking for five, 10, maybe it’s even going to fall to zero.”   Meanwhile, JPMorgan analysts, who had called China tech “uninvestable” in March, upgraded some tech heavyweights including Alibaba in a Monday report, citing less regulatory uncertainties. Benchmarks in Japan, Australia, India and Taiwan maintained gains while Hong Kong also recovered some ground later in the day. Markets in Singapore, Thailand, Malaysia and Indonesia were closed for holidays.      Japanese equities were mixed, with the Topix closing slightly lower after worse-than-expected Chinese economic data amid the impact from virus-related lockdowns. The Topix fell 0.1% to close at 1,863.26, with Honda Motor contributing the most to the decline after its forecast for the current year missed analyst expectations. The Nikkei advanced 0.5% to 26,547.05, with KDDI among the biggest boosts after announcing its results and a 200 billion yen buyback. “Though the lockdowns in China are pushing down the economy and causing supply chain difficulties, there’s a positive outlook since the weekend that there could be a gradual easing of the lockdowns as it seems that virus cases have peaked out,” said Masashi Akutsu, chief strategist at SMBC Nikko Securities. In Australia, the S&P/ASX 200 index rose 0.3% to 7,093.00, trimming an earlier advance of as much as 1.1% after soft Chinese economic data stoked concerns about global growth. Read: Aussie, Kiwi Slump After Weak China Data: Inside Australia/NZ Brambles was the top performer after confirming it’s in talks with private equity firm CVC Capital Partners on a takeover proposal. Qube also climbed after completing a A$400 million share buyback.  In New Zealand, the S&P/NZX 50 index fell 0.1% to 11,157.66. In rates, Treasuries were steady with yields within 1bp of Friday’s close. US 10-year yield near flat ~2.91% with bunds cheaper by ~5bp, gilts ~3.5bp amid heavy. German 10-year yield up 5 bps, trading narrowly below 1%. Italian 10-year bonds underperform, with the 10-year yield up 8 bps to 2.93%. Peripheral spreads are mixed to Germany; Italy and Spain widen and Portugal tightens. The Italy 10-year was cheaper by more than 6bp on the day amid renewed ECB jawboning. Core European rates are higher, pricing in ECB policy tightening. During Asia session, Chinese data showed industrial output and consumer spending at worst levels since the pandemic began. The dollar issuance slate includes CBA 3T covered SOFR; $30b expected for this week as syndicate desks seek opportunities for pent-up supply. Three-month dollar Libor +1.13bp at 1.45500%. In FX, the Bloomberg Dollar Spot Index was little changed while the greenback advanced against most of its Group-of-10 peers. Treasuries inched lower, led by the front end, and outperformed European bonds. The euro inched up against the dollar. Italian bonds dropped, leading peripheral underperformance against euro- area peers, while money markets showed increased ECB tightening wagers after policy maker Francois Villeroy de Galhau said a consensus is “clearly emerging” at the central bank on normalizing monetary policy and that June’s meeting will be “decisive.” He also signaled that the weakness of the euro is focusing the minds of ECB policy makers at a time when the currency is heading toward parity with the dollar. The euro may resume its rally versus the pound in the spot market as options traders pile up bullish wagers. The pound fell against both the dollar and euro, staying under selling pressure on concerns that high UK inflation will weigh on the economy. Markets await testimony from Bank of England Governor Andrew Bailey and other central bank officials later in the day, ahead of a reading of April inflation later in the week. Australian and New Zealand dollars fell after Chinese industrial and consumer data fanned concerns of a further slowdown in the world’s second-largest economy. In commodities, WTI drifts 0.4% lower to trade above $110. Spot gold pares some declines, down some $6, but still around $1,800/oz. Most base metals trade in the green; LME tin rises 3.4%, outperforming peers. Bitcoin falls 4.6% to trade below $30,000 Looking ahead, we get the US May Empire manufacturing index, Canada April housing starts, March manufacturing, wholesale trade sales. Central bank speakers include the Fed's Williams, ECB's Lane, Villeroy and Panetta, BOE's Bailey, Ramsden, Haskel and Saunders. We get earnings from Ryanair, Take-Two Interactive. Market Snapshot S&P 500 futures down 0.3% to 4,008.75 STOXX Europe 600 little changed at 433.33 MXAP up 0.2% to 160.34 MXAPJ up 0.2% to 523.32 Nikkei up 0.5% to 26,547.05 Topix little changed at 1,863.26 Hang Seng Index up 0.3% to 19,950.21 Shanghai Composite down 0.3% to 3,073.75 Sensex up 0.6% to 53,119.79 Australia S&P/ASX 200 up 0.3% to 7,093.03 Kospi down 0.3% to 2,596.58 German 10Y yield little changed at 0.98% Euro up 0.1% to $1.0424 Brent Futures down 1.4% to $109.98/bbl Gold spot down 0.8% to $1,797.30 US Dollar Index little changed at 104.46 Top Overnight News from Bloomberg NATO members rallied around Finland and Sweden on Sunday after they announced plans to join the alliance, marking another dramatic change in Europe’s security architecture triggered by Russia’s war in Ukraine The euro area’s pandemic recovery would almost grind to a halt, while prices would surge even more quickly if there are serious disruptions to natural-gas supplies from Russia, according to new projections from the European Commission UK energy regulator Ofgem plans to adjust its price cap every three months instead of every six. Changing the level more often would help consumers to take advantage of falling wholesale prices more quickly, it said in a statement Monday. This would also mean higher prices filter through bills quicker Boris Johnson has warned Brussels that the UK government will press ahead with unilateral changes to parts of the Brexit agreement if it does not engage in “genuine dialogue” While debt bulls on Wall Street have been crushed all year, market sentiment has shifted markedly over the past week from inflation fears to growth. That theme gathered more strength Monday, when data showing China’s economy contracted sharply in April set off fresh gains for Treasuries China’s economy is paying the price for the government’s Covid Zero policy, with industrial output and consumer spending sliding to the worst levels since the pandemic began and analysts warning of no quick recovery. Industrial output unexpectedly fell 2.9% in April from a year ago, while retail sales contracted 11.1% in the period, weaker than a projected 6.6% drop Japanese manufacturers are increasingly looking to move offshore operations to their home market, according to a Tokyo Steel Manufacturing Co. executive. The rapidly weakening yen, global supply-chain constraints, geopolitical risks and shifting wages patterns are prompting the switch, Kiyoshi Imamura, a managing director of the steelmaker, said in an interview in Tokyo last week A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks traded mixed after disappointing Chinese activity data clouded over the early momentum from Friday’s rally on Wall St. ASX 200 was higher as tech stocks were inspired by US counterparts and amid M&A related newsflow with Brambles enjoying a double-digit percentage gain after it confirmed it had talks with CVC regarding a potential takeover by the latter. Nikkei 225 kept afloat as earnings releases provided the catalysts for individual stocks but with gains capped by a choppy currency. Hang Seng and Shanghai Comp initially gained with property names underpinned after China permitted a further reduction in mortgage loan interest rates for first-time home purchases and with casino stocks also firmer in the hope of a tax reduction on gaming revenue. However, the mood was then spoiled by weak Chinese data and after the PBoC maintained its 1-year MLF rate. Top Asian News PBoC conducted a CNY 100bln in 1-year MLF with the rate kept unchanged at 2.85% and stated the MLF and Reverse Repo aim to keep liquidity reasonably ample, according to Bloomberg. Beijing extended work from home guidance in several districts and announced three additional rounds of mass COVID-19 testing in most districts including its largest district Chaoyang, according to Reuters. Shanghai will gradually start reopening businesses including shopping malls and hair salons in China's financial and manufacturing hub beginning on Monday following weeks of a strict lockdown, according to Reuters. Shanghai city official said 15 out of the 16 districts achieved zero-COVID outside quarantine areas and the city's epidemic is under control but added that risks of a rebound remain and they will need to continue to stick to controls. The official said the focus until May 21st will be to prevent risks of a rebound and many movement restrictions are to remain, while they will look to allow normal life to resume in Shanghai from June 1st and will begin to reopen supermarkets, convenience stores and pharmacies from today, according to Reuters. Chinese financial authorities permitted a further reduction in mortgage loan interest rates for some home buyers whereby commercial banks can lower the lower limit of interest rates on home loans by 20bps based on the corresponding tenor of benchmark Loan Prime Rates for purchases of first homes, according to Reuters. China's stats bureau spokesman said economic operations are expected to improve in May and that China is steadily pushing forward production resumption in COVID-hit areas, while they expect China's economic recovery and rebound in consumption to quicken but noted that exports face some pressure as the global economy slows, according to Reuters. Macau is reportedly considering a tax cut for casinos amid a decline in gaming revenue in which a cut could be as much as 5% off the current 40% levied on casino gaming revenue, according to Bloomberg. European bourses are mixed, Euro Stoxx 50 -0.6%, following a similar APAC session with impetus from Shanghai's reopening offset by activity data and geopolitics. Stateside, futures are lower across the board, ES -0.4%, with the NQ marginally lagging as yields lift; Fed's Williams due later before Powell on Tuesday. US players are focused on whether the end-week bounce is a turnaround from technical bear-market levels or not. China's market regulator says Tesla (TSLA) has recalled 107.3k Model 3 & Y vehicles, which were made in China. JetBlue (JBLU) is to launch a tender offer for Spirit Airlines (SAVE); JetBlue is to offer USD 30/shr, but prepared to pay USD 33/shr if Spirit provides JetBlue with requested data, WSJ sources say. Elon Musk tweeted that Twitter’s (TWTR) legal team called to complain that he violated their NDA by revealing the bot check sample size and he also tweeted there is some chance that over 90% of Twitter’s daily active users might be bots. Top European News UK PM Johnson is reportedly set to give the green light for a bill on the Northern Ireland protocol, according to the Guardian. UK PM Johnson said he hopes the EU changes its position on the Northern Ireland protocol and if not, he must act, while he sees a sensible landing spot for a protocol deal and will set out the next steps on the protocol in the coming days, according to Reuters. UK PM Johnson is expected to visit Northern Ireland on Monday for talks with party leaders in an effort to break the political deadlock at Stormont, according to Sky News. Irish Foreign Minister Coveney says the EU is prepared to move on reducing checks on goods coming into the region from Britain, via Politico. UK Cabinet ministers have turned on the BoE regarding rising inflation, whereby one minister warned that the Bank was failing to "get things right" and another suggested that it had failed a "big test", according to The Telegraph. Group of over 50 economists warned that the UK's post-Brexit plans to boost the competitiveness of its finance industry risk creating the sort of problems that resulted in the GFC, according to Reuters. European Commission Spring Economic Forecasts: cuts 2022 GDP forecast to 2.7% from the 4.0% projected in February. Click here for more detail. Central Banks ECB's Villeroy expects a decisive June meeting and an active summer meeting, pace of further steps will account for actual activity/inflation data with some optionality and gradualism; but, should at least move towards the neutral rate. Will carefully monitor developments in the effective FX rate, as a significant driver of imported inflation; EUR that is too weak would go against the objective of price stability.   ECB’s de Cos said the central bank will likely decide at the next meeting to end its stimulus program in July and raise rates very soon after that, while he added that they are not seeing second-round effects and are monitoring it, according to Reuters. FX Euro firmer following verbal intervention from ECB’s Villeroy and spike in EGB yields EUR/USD rebounds from sub-1.0400 to 1.0435 at best. Dollar up elsewhere as DXY pivots 104.500, but Yen resilient on risk grounds as Chinese data misses consensus by some distance; USD/JPY capped into 129.50. Franc falls across the board after IMM specs raise short bets and Swiss sight deposits show SNB remaining on the sidelines; USD/CHF above 1.0050 at one stage. However, HKMA continues to defend HKD peg amidst CNY, CNH weakness in wake of disappointing Chinese industrial production and retail sales releases. Norwegian Crown undermined by pullback in Brent and narrower trade surplus, EUR/NOK over 10.2100. SA Rand soft as Gold retreats to test support around and under Usd 1800/oz. Loonie slips with WTI ahead of Canadian housing starts, manufacturing sales and wholesale trade, Sterling dips before BoE testimony; USD/CAD 1.2900+, Cable sub-1.2250. Fixed income EGBs rattled by ECB rhetoric inferring key policy meetings kicking off in June and extending through summer. Bunds down towards 153.00 and 10 year yield back up around 1%, Gilts almost 1/2 point adrift and T-note erasing gains from 12/32+ above par at best. Eurozone periphery underperforming with added risk-off angst following much weaker than expected Chinese data. In commodities WTI and Brent are pressured, but well off lows, and torn between China's lockdown easing and poor activity data amid numerous other catalysts Specifically, the benchmarks are around USD 110/bbl and USD 111/bbl respectively, Saudi Aramco Q1 net income rose 82% Y/Y to INR 39.5bln for its highest quarterly profit since listing, according to Sky News. Saudi Energy Minister says they are going to get to 13.2-13.4mln BPD, subject to what is done in the divided zone, by end-2026/start-2027; can maintain production when there, if the market demands this. OPEC+ to continue with monthly output increases, according to Bahrain's oil minister via Reuters. Iraqi state-run North Oil Company said Kurdish armed forces took control of some oil wells in northern Kirkuk, according to Reuters. Iraq oil minister says they aim to increase oil production to 6mln BPD by end-2027, OPEC is targeting a energy market balance not a price; adding, current production capacity is 4.9mln BPD, will reach 5mln BPD before the end of 2022. China is to increase fuel prices from Tuesday, according to China's NDRC; gasoline by CNY 285/t and diesel by CNY 270/t. US Event Calendar 08:30: May Empire Manufacturing, est. 15.0, prior 24.6 16:00: March Total Net TIC Flows, prior $162.6b DB's Jim Reid concludes the overnight wrap Markets managed a big bounce on Friday but the mood has soured again in the Asian session after a weak slew of data from China as covid lockdowns had an even worse impact than expected. Industrial production (-2.9% vs +0.5% expected), retail sales (-11.1% vs -6.6% expected) and property investment (-2.7% vs -1.5% expected) all crashed through estimates by a large margin. The slump in retail sales and industrial production was the weakest since March 2020. The latter also had the lowest print on record, with the worst decline coming from auto manufacturing (-31.8%). The surveyed jobless rate (6.1% vs estimates of 6.0%) also ticked up by more than expected from 5.8% in March and is now close to the high of 6.2% in February 2020. Although the 1-year policy loan rate was left unchanged today, the PBoC did ease the rate on new mortgages this weekend. In other data releases, Japan’s April PPI (+10.0%) came in above estimates of +9.4%, the highest since 1980. Amid this, the Shanghai Composite (-0.51%) and the Hang Seng (-0.43%) are in the red, and outperformed by the KOSPI (-0.21%) and the Nikkei (+0.46%). The sentiment has soured in American markets too, with S&P 500 futures also trading lower (-0.68%) and the US 10y yield declining by -2.2bps. Oil (-1.48%) is edging lower too on growth concerns. After last week’s meltdown in crypto markets, Bitcoin is back at above $30k this morning – a jump since the lows of nearly $26k last Thursday but way short of the $38k it traded at in the beginning of the month and $68k early last November. The infamous TerraUSD, the stablecoin that fuelled the crypto slide, is at $0.18. It is supposed to trade at $1 at all times. Looking forward now and there's not a standout event to focus on this week but they'll be plenty to keep us all occupied. US retail sales (tomorrow) looks like the highlight alongside Powell's speech the same day. There will also be US housing data smattered across the week and UK and Japanese inflation on Wednesday and Friday respectively. Let's start with US retail sales as it will be a good early guide for Q2 GDP. Our US economists are anticipating a +1.7% print, up from +0.7% in March. Rebounding auto sales should help the headline number. For more on the consumer, Brett Ryan put out this chartbook last week on the US consumer (link here). US industrial production is out the same day. We have a long list of central bank speakers this week headed by Powell and Lagarde (tomorrow) and BoE Bailey today. There are many more spread across the week and you can see the list in the day by day event list at the end. We do have the last ECB meeting minutes on Thursday but the subsequent push towards a July hike might make these quite dated. US housing will be a big focus next week. It's probably too early for the highest mortgage rates since 2009 to kick in but with these rates around 220bps higher YTD, some damage will surely soon be done after the highest YoY price appreciation outside of an immediate post WWII bounce, in our 120 year plus housing database. On this we will see the NAHB housing market index (tomorrow), April’s US building permits and housing starts (Wednesday), and existing home sales (Thursday). Turning to corporate earnings, it will be another quiet week after 457 of the S&P 500 companies and 368 of the STOXX 600 companies have reported earnings this season so far. Yet, it will be an important one to gauge how the US consumer is faring amid inflation at multi-decade highs, including reports such as Walmart, Home Depot (tomorrow), Target and TJX (Wednesday). Results will also be due from China's key tech and ecommerce companies like JD.com (tomorrow), Tencent (Wednesday) and Xiaomi (Thursday). Other notable corporate reporters will include Cisco (Wednesday), Applied Materials, Palo Alto Networks (Thursday) and Deere (Friday). A quick recap of last week’s markets now. Fears that global growth would slow due to the tightening task at hand for central banks sent ripples across markets, without a clear specific catalyst. Equities declined, credit spreads widened, the dollar rallied, and sovereign yields declined. The S&P 500 fell for the sixth consecutive week for the first time since 2011, falling -13.0% over that time. Even with a +2.39% rally on Friday, it fell -2.41% last week. Large cap technology firms underperformed, with the NASDAQ falling -2.80% (+3.82% Friday), while the FANG+ index fell -3.48% (+5.45% Friday). Volatility was elevated, with the Vix closing above 30 for 6 straight days for the first time since immediately following the invasion, narrowly avoiding a 7th straight day above 30 by closing the week at 28.8. European equities outperformed, with the STOXX 600 climbing +0.83% after a banner +2.14% gain Friday. The Itraxx crossover ended the week at 446bps, its widest level since June 2020. Crypto assets sharply declined, with Bitcoin down -12.51% and Coinbase -34.58% over the week, with a number of so-called ‘stablecoins’ breaking their pledged parity, forcing some to stop trading. The growth fears drove a flight to quality. The dollar index increased +0.87% (-0.27% Friday) to its highest levels since 2002. Only the yen outperformed the US dollar in the G10 space. Sovereign yields rallied significantly, with 10yr Treasuries, bunds, and gilts falling -19.3bps (+8.5bps Friday), -23.0bps (+6.2bps Friday), and -28.7bps (+4.7bps Friday), respectively. Reports that the EU was considering softening their oil-related sanctions due to member resistance combined with growth fears to send oil prices much lower at the beginning of the week, with Brent crude futures almost breaking $100/bbl. When all was said and done, a gradual rally over the back half of the week saw Brent merely -1.04% lower (+3.82% Friday). On the back of disappointing data from China it is down -1.48% this morning. There was a lot of high-profile central bank speak to work through, as there will be this week. The main takeaways included Fed officials aligning behind a series of +50bp hikes the next few meetings, downplaying the chances of +75bp hikes until September at the earliest. Meanwhile, momentum in the ECB is growing toward a July policy rate hike, with policy rates breaching positive territory by the end of the year. In terms of data Friday, the University of Michigan survey of inflation expectations for the next five years was unchanged at 3 percent, though inflation has weighed on consumers’ perception of the current situation. Tyler Durden Mon, 05/16/2022 - 08:02.....»»

Category: blogSource: zerohedgeMay 16th, 2022

Bad To The Bone

Bad To The Bone Authored by Peter Tchir via Academy Securities, If last Friday’s price action was ugly, this Friday’s can only be described as mega-ugly! This weekend’s T-Report follows in the footsteps of The Not So Good, The Bad, and The Ugly and Welcome to Thunderdome!!! Sadly, there is a theme emerging in the tone of these T-Reports and the markets – decidedly negative. On Thursday, we asked the question Is The Worst Behind Us? We decided it was not, which seemed like a horrid decision as stocks skyrocketed ahead of Thursday’s earnings, but hasn’t looked so bad since 3:25pm on Thursday when stocks resumed their downward decent. Today, we try to figure out where markets and the economy head next and try and identify a bottom! Geopolitics Academy published Around the World on Thursday night. This month’s topics include: Update on the Russian Invasion of Ukraine. China’s Solomon Islands Partnership and Influence in the Region. Israeli / Palestinian Violence Escalates. Protests in Peru Over Inflation Crisis. General Spider Marks also discussed the latest on the war on CNN with Wolf Blitzer. Bad to the Bone With so much going on, we are going to try to address what’s next by focusing on: Markets themselves. Price action and the alleged “capitulation” so many are talking about. Earnings. What I think is playing out with earnings. Bad Actors Behaving Badly. This will touch on Russia, but go beyond that as we examine risks (that are still a low probability), but are things we should be thinking about. Inflation. This section will be brief, which is not actually the case with inflation. Food and Energy. The Fed. We get the FOMC announcement and press conference on Wednesday. This will be the first opportunity for the Fed to address the market volatility and the last FOMC meeting set the stage for a strong rally! What Are Markets Telling Us? One thing the markets are certainly telling us is that they are as illiquid as heck! The Nasdaq 100 rose 1.5% on Monday, fell almost 4% on Tuesday, started Wednesday up 2%, back to slightly negative then back to up almost 2%, only to finish the day wildly unchanged. On Thursday, it was up 4.25% and finished up 3.5%, only to finish down 4.5% the next day. It is concerning when the weekly drop of 3.7% doesn’t do justice to just how volatile and crazy the week was. This “chaotic” trading occurred in almost every market I watch. I picked the Nasdaq 100 because a few of the juggernauts in that index reported earnings this week, but you name a market and “crazy” trading patterns were evident. CDX IG had some vicious trading and closed the week at 84 bps, the highest since June 2020 (the Bloomberg Corporate Bond OAS isn’t back to mid-March levels, but a lack of liquidity is evident in credit trading as well based on all the reports I’m getting from customers). These wild oscillations bring back memories of watching the Tacoma Narrows Bridge collapse in some elementary school class. Will the market’s oscillations resolve themselves in the same way as they did with the bridge? I hope not, but that seems to be a non-zero risk. I also must be cautious about getting too bearish as the lack of liquidity is evident in both directions! Rallies like Thursday’s will be just as sharp and vicious as the declines. Last Week’s Chart - Updated We have now broken through the 12,570 line I had on the chart. We had broken it on Tuesday and stayed below on Wednesday and made a valiant attempt to bounce on Thursday, but are now below that, and are at the lowest close on the Nasdaq composite since December 2020! I am concerned that we have to fall to the next rough level of support, which is below 11,000 (just over 10% further to fall). PARA Bill Hwang was arrested this week so I felt it was appropriate to bring out this chart of PARA, which traded under a different ticker during the time that was highlighted. Based on the allegations made around the arrest, I think we can assume that at least some part of the rise can be attributed to “flows” (him buying more and more, because he could) and a substantial portion of the fall can also be attributed to “flows” (stop losses, triggering selling). In full disclosure, I own some of this right around current levels (it had been a nice contrarian dip buy for me until the recent plunge started about 2 weeks ago). The point of this chart is to really hammer home the point about how important flows are, and how illiquid things can become, as that is an important part of my current view on where markets are headed. I would like the “capitulation” story to be a little more obvious! Speculative Fund Flows I am closely watching 3 funds: The $13 billion TQQQ, which is a triple leveraged ETF on the Nasdaq 100 (so it represents over $40 billion of “QQQ” purchasing power). SQQQ, which is only $3 billion, but is a 3x short fund. ARKK, which is just under $9 billion and is invested in “disruptive” companies. Due to the leverage in the two funds and the volatility of the ARKK fund, I think these give some good insight into whether we are seeing “capitulation” or not. ARKK, which is down 50% YTD and down 29% in April, had inflows. I appreciate the buy the dip mentality and a lot of the companies in the ETF have interesting valuations here (for full disclosure I am flat as of the close on Friday and am tempted to buy). But, regarding signs of “capitulation,” I just don’t see it. But the TQQQ story is even more interesting because it got significant inflows last week! Even as the market has been selling off and getting more volatile, money poured into this triple leveraged fund, which was down 12% on the week, down 37% on the month, and down 56% year to date. From a “traditional” view where returns correlate with flows, these things wouldn’t happen. As a contrarian, I’m impressed that they are happening, but I cannot help but wonder if we aren’t nearing a breaking point? Every dollar that has come into TQQQ (and ARKK) this year is underwater, often by significant amounts. If we’d seen “real” capitulation, I would expect fund outflows, rather than inflows last week. The SQQQ finally got some inflows late last week, so that at least is a sign that we are seeing some hedges. Yes, there are all sorts of ways to determine positioning, and this sample set is really much more retail focused, but the lesson is: Capitulation may be getting talked about a lot more than it is actually occurring. In general, the bearish discussions do not seem to be getting backed up by fully bearish positioning (90% of my conversations are about dip buying and finding the bottom). The Non-Virtuous Cycle I am going to try and tie the previous charts and stories into a simple narrative. There was a group of people out there who had this happen to them during the pandemic: They worked at fun, interesting, disruptive firms and had stock prices soar or were even able to participate in their companies’ IPOs. That wealth was heavily tied to their company. When they could access this wealth, they “diversified” into: Other disruptive companies because they loved the disruptive mindset and they could relate to it, and the excitement was palpable. Big buyers of crypto. Crypto met the “disruptive” and “change the world” feelings that were often pervasive during the wild rebound post pandemic. Bitcoin hit $60k in March 2021 and then again in November, but is languishing around $40k right now. I would argue that you had a “virtuous” cycle that started after Covid and has been running out of steam. This “cycle” theory helps explain why crypto is so correlated to some volatile tech sectors (they are owned by the same people). I cannot tell if this “group” (which I completely believe exists) has managed to properly diversify themselves, or if we have another leg down? Maybe I’ve picked my charts too narrowly, but I am not getting a good “vibe” from the market itself. And I didn’t even bring up, at least not too much, that the cost of credit is rising and will be a drag on earnings. Earnings and Multiples I spend very little time on earnings, but this week was as good as any to pay attention to. What I think about earnings season, especially right now, is that: It is not so much about what was made, but what will be made. It is far more about the multiple the market is willing to pay, than about the earnings or even the outlook. Going back to January of this year, we discussed the Valuation Evaluation. This earnings season is still more about what multiple we will pay for future earnings, rather than about the future earnings themselves. We are about to embark on balance sheet reduction and that is influencing what investors will pay for future earnings. When I look at price action post-earnings, the bigger moves are related to this valuation evaluation, rather than the prospects of future earnings (though that plays a role given the global uncertainty and higher rates). So far earnings haven’t been a help for stocks (though I’d argue that is more about this valuation adjustment than the earnings themselves) and neither have some hefty buyback announcements. The buyback announcements will help over time as they are a flow that is going in the right direction for stocks. At the moment, earnings and buybacks aren’t enough to create a bounce in stocks and risk assets, but they do set the stage for a nice long rebound once we get to that stage. Bad Actors Behaving Badly People keep wondering when China will abandon Russia. I cannot think of a reason for them to do so. Yes, they need us, but we need them far more than they need us, and we’ve already shown our colors (the West that is) by continuing to buy Russian oil. Xi cares about China and their long-term needs. I’m willing to bet that China sells military equipment to Russia long before they stop buying Russian commodities. Any leader of an autocratic nation, whose behavior goes against what the U.S. stands for, has to be working to establish even better and closer relationships with China, as they have the money (and the need for resources), don’t care about internal politics, and haven’t weaponized their currency the way we did when we froze the Russian Central Bank’s dollar reserves. On Putin, I spend about 2% of my time thinking about how we come to a peaceful outcome and about 98% of my time thinking about how he can use a nuclear weapon to further his goals. The nuclear threat is there, but it seems so “binary” that it isn’t as powerful as it might be. Putin, of all people, would seem to benefit by making the threat of nuclear attacks more real! Yes, he needs to be careful with India and China to ensure their ongoing purchases in the event he does something. Yes, he has to be extremely careful about our retaliation. No, I haven’t come up with a way that seems plausible, but this is coming up in conversation after conversation. If Putin’s only option is to “win” and he is most definitely not “winning” by any true measure, what will he do to “win”? Again, no one seems to have come up with a strategy that works for him to elevate his nuclear threat to get more from the West, but we have to believe he is exploring that option. One very sobering thought that came out of some of these discussions is that from the Russian (or Soviet) perspective, the only country to ever use a nuclear weapon was the U.S. I’m not sure what to say about that, other than it is sobering and may well factor into Putin’s thoughts. On the subject of nuclear, every bad actor (most are already pursuing nuclear weapons, if they don’t already have them) will be aggressively pursuing them now, having seen what a deterrent they are. I believe they aren’t working as well as Putin would like, but there is no argument that they are working. So far, Russia has held off on a full-scale cyber assault, but that remains a risk. I do have to say that our Geopolitical Intelligence Group has been spot on with their analysis that our defenses are thwarting Russian attempts. There have been a lot more cyber attacks than we hear about because our defenses (at a national and corporate level) have been so good! A big shout-out for the good team, but vigilance is still required. We live in a world where bad actors feel more emboldened to act badly, which gets me back to my “closeness” of supply chains, which I won’t regurgitate here, but I think is crucial and the direction countries and companies are headed! Inflation High energy costs are here for some time as we need to spend to build out sustainable energy sources and we need to re-invest in traditional energy sources that in many cases suffer from underinvestment. Personally, I don’t understand why starting the Keystone Pipeline isn’t on the table, but that is a topic for another day. Food inflation is likely to be worse than energy inflation. War in Ukraine. With the war dragging on, it is almost impossible to expect much of a crop out of Ukraine. Russia may get a crop, but how will they ship it? Or even transport it within Russia as the invasion is co-opting their rail system. More problematic is this has the risk of becoming a muti-year problem. Fertilizer. Our conversations are literally filled with fertilizer. Nitrates, peat, natural gas, etc. are all working against the cost of fertilizer. That is a major problem and is still getting worse rather than better. Equipment. Like with most heavy equipment, there are supply chain issues. Farms are expensive to run. Not only is fertilizer expensive, but workers are also expensive and the fuel to power the equipment is expensive. Ukrainian refugees. Countries in Europe are finding homes for millions of refugees from Ukraine. That is straining existing supply and delivery systems. The food distribution system will adapt, but the massive displacement of people is not helping the food problem as logistics need to catch up with this shift in consumption. Since fuel and food inflation are real, I don’t see the politicians backing down on “fighting” inflation. I don’t really think that the Fed is in a great position to fight the type of inflation that we are getting. I also think that subsidies to help people purchase food and fuel are deflationary. They are potentially necessary as the poor are the hardest hit, but policies like that do more to offset the costs of inflation rather than stopping inflation. The Fed The Fed meeting is on Wednesday. The last Fed meeting sparked a big rally. There are two things that might be different this time: Everyone knows the last Fed meeting sparked a rally, so they might be holding off selling risky assets until after the Fed meeting! I know that as a bear, I am deathly afraid of a post Fed rally, which might mean we don’t get it this time. We will get balance sheet reduction and while that seems much more priced in, that could still be a scenario where we sell the news because it becomes real. I am scared of a post FOMC rally (and that could be the turning point), but it seems almost too obvious to happen again! On the bright side, I’m on the road for the next two weeks straight seeing customers, investors, and friends in person! That is the best part of this job, and I will enjoy it even if I still cannot get to the point of being bullish! I’m closer to being bullish, but not there yet! Small positions and nimble trading still seem to be the order of the day (and I don’t mind rates – the 10-year was only 3 bps higher on the week). I do hope that “Bad to the Bone” turns out to be a bad title, but that’s where I’m stuck right now. Tyler Durden Sun, 05/01/2022 - 18:40.....»»

Category: blogSource: zerohedgeMay 1st, 2022

Futures Soar On Ukraine "Positive Developments" Comment From Putin

Futures Soar On Ukraine "Positive Developments" Comment From Putin Here comes another rollercoaster of a day for markets. In a rerurn of last week's (transitory) Ukraine war "ceasefire" euphoria which fizzled almost as fast as it emerged, a little after 6am ET on Friday morning, futures which had been trading rangebound for much of the overnight session, soared 60 points in seconds after Interfax reported that according Putin told his Belarusian counterpart Alexander Lukashenko that "there are certain positive developments, as far as negotiators from our side informed me" adding that "Talks are happening almost daily." Whether this was merely an attempt to boost morale or an accurate reflection of events (doubtful since at the same time Bloomberg reports that Putin also said "Russia to Send Fighters From Middle East to Ukraine the WSJ reports that "Russian Forces Intensify Strikes on Cities in Western Ukraine") did not matter because contracts on the S&P 500 and Nasdaq 100 indexes spiked higher as much as 1.5%, while safe havens like gold tumbled and 10Y yields pushed to new session highs above 2.01% and the he dollar erased gains. Despite the positive shift in mood this morning, not everyone was on board: “our view remains that simply selling risk assets is not the best response to the war in Ukraine,” said Mark Haefele, chief investment officer at UBS Global Wealth Management. “But in this environment of heightened uncertainty, we advise investors to reduce excess equity exposure above long-term strategic benchmark allocations and add to hedges." In premarket trading, China's Didi Global fell 20% in U.S. premarket trading after people familiar with the matter said the ride-hailing giant halted a plan to list its shares in Hong Kong for failing to appease regulators’ demands about its handling of user data. DocuSign plunged 18% in early New York trading after the electronic-signature company forecast revenue for the first quarter that fell short of the average analyst estimate. In the latest Ukraine developments, the big news as noted above is that Putin said there are certain positive shift in talks with Ukraine. Here are some other notable headlines in the always changing situation: EU said it will support Ukraine in pursuing its European path and Austrian Chancellor Nehammer noted that EU leaders see Ukraine as part of the European family, while Netherlands PM Rutte said it may take years for the EU Commission to assess the Ukraine bid. A source close to Turkish President Erdogan says a meeting between Russian President Putin and Ukrainian President Zelensky could become possible in the near future, according to Sky News Arabia. US President Biden will speak regarding Russia at 10:15EST/15:15GMT today and will announce actions to continue to hold Russia accountable for its unprovoked and unjustified war on Ukraine, according to the White House. US President Biden also called for an end to Russia's preferred trade status and is to announce a trade push by the G7, US and EU this Friday, which paves the way for higher tariffs on Russian goods. US Treasury Secretary Yellen said they can do more regarding sanctions on Russia and she hasn't seen evidence of China assisting Russia with sanctions. White House Press Secretary Psaki said the US supports corporations making decisions about Russia and if Russia seizes companies' assets, it will cause further suffering. In Europe, the Stoxx Europe 600 Index rose 2.1% and was headed for its first weekly gain since the start of the Ukraine war, as investors reacted to the news of Putin's commentary as they weighed the ECB's newly found hawkishness amid the emerging stagflationary outlook. Travel and mining stocks were standout outperformers, while utilities, food and bank shares underperformed.  European stocks had their largest equity outflows on record in the week to March 9, while investors bought U.S. stocks, according to Bank of America Corp strategists citing EPFR data. Here are some of the biggest European movers today: Leonardo shares jump as much as 12% in Milan trading after results and FY22 guidance. Mediobanca notes the forecast for free operating cash flow generation came in ahead of expectations. EQT rises as much as 5.9% as Deutsche Bank initiates with a buy recommendation, saying alternative asset management is highest growth segment within the sector. EssilorLuxottica shares climb as much as 4.5% as the eyewear giant unveiled longer-term profitability goals that exceeded expectations, outweighing worries over lack of 2022 guidance. Pearson shares rise as much as 7.8%, following a so- called “uncooked” mention in a Betaville report regarding potential interest in the publishing company. Wind energy stocks resumed their rally after a dip mid-week, with Citi expecting outperformance amid record energy prices and Europe’s strive for energy independence. Lanxess shares climb as much as 7.4% in Frankfurt. The company’s guidance for adjusted Ebitda for 2022 showed outlook for “significant growth,” Jefferies says in a note to investors. Rubis shares jump as much as 10% after the French company increased its dividend, gave a positive outlook and said it has no direct exposure to Russia and Ukraine. Earlier in the session, Asian markets reflected overnight losses in the U.S. market. The MSCI index of Asian stocks capped its fourth consecutive weekly decline as a technology gauge in Hong Kong slumped more than 6% early in the session, after the U.S. identified five Chinese firms that could be delisted,before a burst of afternoon buying by China's PPT salvaged some of the plunge. Chinese stocks traded in the U.S. had their worst day since 2008 Thursday amid renewed regulatory concerns. Japanese stocks dropped following declines on Wall Street as the fastest U.S. inflation in 40 years drove bond yields higher and raised expectations for steeper interest-rate hikes.  The Topix fell 1.7% to close at 1,799.54, while the Nikkei 225 declined 2.1% to 25,162.78. Toyota Motor Corp. contributed the most to the Topix’s decline, decreasing 4.4%. Out of 2,175 shares in the index, 413 rose and 1,703 fell, while 59 were unchanged. Oil initially rebounded following news that Iran nuclear deal talks had been halted, but then then reversed following the Putin comments and was still on track for its biggest weekly loss since November. U.S. President Joe Biden is expected to call for an end to normal trade relations with Russia, clearing the way for increased tariffs on the country’s imports. Treasuries remained near session lows reached in early U.S. session after Russian President Putin cited positive developments in talks with Ukraine. Front-end yields led the curve higher, with 2-year rising more than 5bp. S&P 500 futures jumped to a weekly high. U.S. 10-year yields hover around 2% with bunds underperforming in the sector, cheaper by 1bp while gilts trade broadly in line; 2s10s curve flattens by ~2bp, 5s30s by ~1bp. IG dollar issuance slate empty so far; over $67b has so far priced this week, eighth largest on record; 5 to 6 borrowers stood down Thursday, are expected to try again Friday. In FX, the Bloomberg Dollar Spot Index rose as the greenback strengthened against all of its Group-of-10 peers apart from the Norwegian krone. The dollar advanced past 1.10 per euro in European session and Treasury yields rose by up to 2bps led by the front end while European benchmark yields were 1bp lower to 2bps higher. The pound slid to the lowest since November 2020 against the dollar amid concern that bets on interest-rate hikes may be too aggressive despite an unexpected surge in the U.K. economy. The U.K. economy surged at the strongest pace in seven months in January, surpassing levels prevailing before the coronavirus struck. GDP rose 0.8%, recovering from an 0.2% in December when the omicron variant of the virus was spreading. The yen was the worst G-10 performer and fell to a five-year low against the dollar; Australian and New Zealand dollars were also underperforming as traders cut positions before the weekend on concern fallout from the war in Ukraine will worsen in coming days. Ruble gained against dollar for a second day in onshore trading. In commodities, crude futures advance after coming down from this week’s highs. WTI drifts 2.4% higher to trade around $108. Brent rises 2.6% at the $112 level. Spot gold falls roughly $6 to trade below $1,990/oz. Most base metals trade in the green; LME tin rises 1.7%, outperforming peers. LME zinc lags, dropping 0.6% Looking at the day ahead, data releases include the UK’s GDP for January, whilst in the US there’s the University of Michigan’s preliminary consumer sentiment index for March. Otherwise, central bank speakers include the ECB’s Rehn and Centeno. Market Snapshot S&P 500 futures up 0.3% to 4,268.00 STOXX Europe 600 up 0.7% to 430.00 MXAP down 1.7% to 171.77 MXAPJ down 1.3% to 563.03 Nikkei down 2.1% to 25,162.78 Topix down 1.7% to 1,799.54 Hang Seng Index down 1.6% to 20,553.79 Shanghai Composite up 0.4% to 3,309.75 Sensex up 0.3% to 55,616.90 Australia S&P/ASX 200 down 0.9% to 7,063.60 Kospi down 0.7% to 2,661.28 Brent Futures up 1.6% to $111.03/bbl Gold spot down 0.3% to $1,990.83 U.S. Dollar Index up 0.29% to 98.80 German 10Y yield little changed at 0.26% Euro down 0.2% to $1.0963 Top Overnight News from Bloomberg President Joe Biden on Friday is set to call for an end of normal trade relations with Russia, clearing the way for increased tariffs on Russian imports, according to people familiar with the matter The Senate passed a full year $1.5 trillion federal funding bill that wards off a possible government shutdown while also providing Ukraine with aid to respond to the Russian invasion of its territory ECB Governing Council member Olli Rehn says the central bank on Thursday decided that the gradual normalization of monetary policy can continue and that the calibration of net purchases of securities will depend on data and reflect an “evolving assessment” of the outlook The ECB’s decisions on Thursday mean there’s no longer an automatic link between the end of net asset purchases and possible interest-rate increases, Bank of France Governor Francois Villeroy de Galhau says European equities broke last week’s record for outflows, while investors bought U.S. stocks, materials and gold as war rages in Ukraine, according to Bank of America strategists citing BofA and EPFR Global data Global investors are losing faith in China’s ability to navigate an increasingly complex maze of challenges. The war in Ukraine raises the specter of harsh sanctions being applied to Chinese firms should they proceed with plans to acquire stakes in Russian energy and materials producers A more detailed looka t global markets courtesy of newsquawk Asian markets reflected overnight losses in the U.S. market. The MSCI index of Asian stocks capped its fourth consecutive weekly decline as a technology gauge in Hong Kong slumped more than 6% early in the session, after the U.S. identified five Chinese firms that could be delisted,before a burst of afternoon buying by China's PPT salvaged some of the plunge. Top Asian News Didi Said to Halt Hong Kong Listing on Cybersecurity Probe China Move to Boost Yuan-Ruble Trading Meets Dire Liquidity Logan Cut Deeper into Junk; Bonds Decline: Evergrande Update China Markets in Turmoil as Russia Ties Add to List of Risks European bourses are firmer, Euro Stoxx 50 +3.0%, and were back around cash-open parameters after a choppy first-half to the session; however, President Putin's remarks have sparked further risk-on. US futures are firmer across the board and derived recent upside from the Russian President, ES +1.3%, though magnitudes are somewhat more contained amid a thin US docket. In terms of the European sectors, cyclicals are outperforming with Energy/Retail among the top performers throughout the morning. France is said to be mulling reviving plans to nationalise EDF (EDF FP), according to Bloomberg sources. UK CMA and European Commission are launching parallel probes into the "Jedi Blue" agreement between Alphabet's (GOOG) Google and Meta's (FB). Top European News European Gas Set for Record Weekly Drop on Extreme Volatility Wizz Air Leads Travel-Stock Rebound on HSBC Upgrade Pearson Shares Rise Following Betaville ‘Uncooked Alert’ Mention India is Said to Consider Rupee Payments for Trade With Russia In FX, the DXY firmer, but off highs, around 98.500 after recent steep retreat as acceleration in US CPI underpins Fed tightening expectations, but with safe-havens and USD paring amid Russia's Ukraine commentary. Yen folds amidst multiple bearish factors, including rates, risk, fiscal and technical impulses; USD/JPY probed 117.00 after breaching prior YTD twin peaks. Aussie also underperforming as RBA Governor Lowe keeps markets guessing on a 2022 rate hike, AUD/USD is back under 0.7350 and nearer round number below. Euro trying to find its feet following sharp post-ECB reversal that saw EUR/USD snap-back from 1.1100+ peaks to sub-1.1000 again; lifting to a new high of 1.1042 post-Putin. Rouble maintains and extends on recovery momentum as prospects  for a Russia/Ukraine Presidential talks persist, but Lira continues to weaken as Turkish IP falls short of expectations and CBRT survey reveals another jump in end 2022 inflation projections; USD/RUB circa 113.7500, USD/TRY on brink of 15.000. In commodities, WTI and Brent futures are firmer on the day with initial upside bolstered by a pause in Iranian talks, whilst upside pared amid constructive remarks from Russian President Putin. G7 is looking at measures to halt gas price hikes and called on oil and gas producers to increase deliveries, according to AFP. Canada is examining boosting oil pipeline flows to the US and is conducting the analysis to ramp up pipeline flows with the industry, according to Reuters citing natural resources minister Wilkinson  who expects to have an answer of what Canada can do as soon as next week. Kuwait set April KEC OSP for Asia at Oman/Dubai + USD 4.80/bbl, according to Reuters. Qatar sold May-loading Al-Shaheen and Marine crude at record premiums of USD 11-12/bbl above Dubai quotes. Spot gold fell further below USD 2,000/oz amid a Putin-induced unwind. LME copper extends gains above USD 10k/t as risk appetite buoys the red metal In fixed income, core EZ debt remains mildly divergent at the end of another bleak week, as Bunds suffer post-APP taper hangover. However, benchmarks dropped in tandem to fresh lows sending the US/German 10yr yields back to 2.0% and 0.30% respectively following Putin's update. BTPs have regrouped after pronounced ECB fallout with supply out of the way. USTs are now unchanged after initial firmer performance though the curve continues its post-supply flattening. US Event Calendar 10am: March U. of Mich. Sentiment, est. 61.0, prior 62.8 Expectations, est. 57.0, prior 59.4 Current Conditions, est. 65.8, prior 68.2 1 Yr Inflation, est. 5.0%, prior 4.9%; 5-10 Yr Inflation, prior 3.0% DB's Jim Reid concludes the overnight wrap It's a sign of the times that we have 1140 more words today until we get to a 7.9% US CPI print and also that hardly anyone cared about a 41.8% YoY Italian PPI print yesterday. The Russian/Ukraine conflict and a hawkish (relative to expectations) ECB meeting dominated the headlines. In fact it probably wasn't too far from the ECB meeting we expected before the invasion. More on this below. Asia has started on a weaker note this morning. The Hang Seng (-3.63%) is leading losses as Chinese tech stocks listed in Hong Kong slumped after the US Securities and Exchange Commission (SEC) indicated that it has put five Chinese firms on a provisional waitlist for delisting from the US exchanges. Elsewhere the Shanghai Composite (-2.16%) and CSI (-2.44%) are also trading down. Also challenging the mainland Chinese stocks are the latest covid numbers as Beijing reported 1,000 new local cases - the highest daily count in two years. Meanwhile, the Nikkei (-2.36%) and the Kospi (-1.14%) are also weak this morning. S&P 500 (-0.35%) and Nasdaq (-0.62%) futures (-0.30%) are also down. Before this, last night European Union leaders met in Versailles, but without anything materially to shift the outlook at the moment. Indeed, President Macron managed expectations by noting the summit will lead to historic decisions for Europe in the coming weeks, so more to come. What we did get from the meeting included reports that EU leaders disagreed about the desirability of paving the way to swift EU membership for Ukraine. Also out of the meeting, following reports of an updated energy strategy earlier in the week, EC President Leyen is proposing measures to reduce reliance on Russian gas and oil by 2027. When it comes to the conflict itself, markets adopted a more risk-off posture yesterday, even if the S&P 500 (-0.43%) closed well off the lows before a slight reversal again in Asia as mentioned above. The meeting of the Russian and Ukrainian foreign ministers failed to produce the progress that some had hoped for. While expectations weren’t exactly high for the talks, there had been a slight shift in Russia’s language ahead of the meeting on regime change, and Ukrainian President Zelensky himself had said the previous day that he was prepared for certain compromises, which contributed to that stronger investor optimism we saw on Wednesday. But yesterday there was a more negative tone from the meeting, with Ukraine’s foreign minister Kuleba saying of Russian foreign minister Lavrov that “The broad narrative he conveyed to me is that they will continue their aggression until Ukraine meets their demands, and the least of these demands is surrender”. So no signs of a ceasefire being instituted any time soon. Against that backdrop, there was intense focus on the ECB (see our economists' review here) as they made their first policy decision since Russia’s invasion. They adopted a more hawkish position than had been anticipated by announcing a faster reduction in their asset purchases, which led to a sharp selloff in sovereign bonds as well as a significant widening in peripheral spreads, which meant we saw another day of multi-year records. Indeed, yields on 10yr bunds were up +5.6bps yesterday, bringing their gains since the start of the week to a massive +34.3bps. Even if they’re unchanged today, that would still mark their biggest weekly increase since June 2015, when they rose +35.7bps. Furthermore, the widening in the Italian 10yr spread over bunds yesterday (+16.7bps) was the largest daily widening since April 2020. It's quite clear that the ECB won't allow Italian spreads to gap out but they also probably won't devise a policy tool to deal with it until it threatens to. So the market may need to push for it if it wants it. In terms of the decision itself, the ECB described Russia’s invasion as a “watershed for Europe”, and pledged to take “whatever action is needed to fulfil the ECB’s mandate to pursue price stability and to safeguard financial stability.” On immediate policy moves, they said that net purchases under their Asset Purchase Programme would go from €40bn in April to €30bn in May and then €20bn in June, and said that they may end purchases in Q3. That came as their inflation forecast for 2022 was upgraded to +5.1% (vs. +3.2% in December), and 2023 was upgraded to +2.1% (vs. +1.8% in December). And in another hawkish move, they also dropped the reference to interest rates potentially moving lower, only saying that rates would remain “at their present levels” until their forward guidance conditions were met, rather than “present or lower levels”. So overall it looks like the concerns about inflation (which is currently at the highest since the formation of the single currency) have dominated the uncertainties presented by the invasion of Ukraine, and overnight index swaps are now pricing in more than 40bps worth of moves this year (+7.6bps on the day) from the ECB for the first time since the conflict began. That more hawkish-than-anticipated ECB outcome along with the more negative signals from the Russia-Ukraine talks saw equities lose ground on both sides of the Atlantic, with the S&P 500 (-0.43%), after being as much as -1.59% lower intraday, and still leaving it up +2.13% over the last two days. The STOXX 600 shed -1.69% but finished at roughly the same levels as before the ECB announcement. Tech stocks led the US declines, and similarly put in a large round trip performance, with the NASDAQ as low as -2.33% intraday before finishing the session at -0.95%. Megacap stocks were the hardest hit as the FANG+ index fell -2.09%. Despite the price retreat and roundtrips, the VIX fell for a third straight day, falling -2.22ppts. Nevertheless, the VIX has now closed above 30pts for 9 straight days, the longest run since June 2020, and on 11 of the last 12 days. Despite the late pullback in oil prices (more in a second), energy was the clear outperformer, with S&P 500 energy stocks gaining +3.07%. This continues this year’s trend where not only are energy stocks the sole S&P 500 sector in the green YTD, they’re up +38.51%. Speaking of intraday volatility, oil put in another roller coaster session. Brent futures increased +6.49% in the New York morning before falling -1.63% to $109.33/bbl to end the day. Following a day where it looked like some OPEC members would break rank, the Iraqi oil minister noted that “OPEC will stay with the program”, but would make the right decision to increase production should real shortages result from the war. The discrete drop in oil prices happened when President Putin announced that Russia would honor its energy commitments, ameliorating concern that there would be shortages to contend with in the first place. European natural gas likewise fell, as the front futures contract dropped -14.68%, bringing prices -41.46% lower over the last three days. So 1140 words later, and with all those other events yesterday, the US CPI release for February took something of a back seat, not least since the numbers were exactly in line with consensus for both headline and core, meaning the direct market reaction was pretty limited. In fact US Treasuries saw their biggest shift of the day around the time of the ECB meeting and were basically unaffected by the CPI, with yields on 10yr Treasuries up +3.8bps to 1.99%, whilst the 2yr yield (+2.1bps) hit its highest level since September 2019, at 1.70%. 30 year yields increased +3.2bps to 2.37%, their highest levels for 10 months. In terms of the CPI details, the release saw year-on-year CPI rise to +7.9%, which is the highest in 40 years, and the month-on-month print rose to +0.8%, which was the fastest monthly price growth since October. Core also accelerated to +6.4% year-on-year, which was similarly a post-1982 high. I mentioned the release in my chart of the day yesterday (link here), since it means that the real Federal Funds rate has now fallen to fresh lows once again, and continues to remain beneath levels seen throughout the entirety of the inflationary 1970s. To the day ahead now, and data releases include the UK’s GDP for January, whilst in the US there’s the University of Michigan’s preliminary consumer sentiment index for March. Otherwise, central bank speakers include the ECB’s Rehn and Centeno. Tyler Durden Fri, 03/11/2022 - 07:52.....»»

Category: blogSource: zerohedgeMar 11th, 2022

Scientists Conclude Dire Climate Change Models Were Wrong, Now What?

Scientists Conclude Dire Climate Change Models Were Wrong, Now What? Authored by Mike Shedlock via MishTalk.com, Scientists admit they did not model clouds accurately and that they need a supercomputer 1000 times more powerful to accurately do that... Climate Change Modeling Meets Limits of Science  The Wall Street Journal reports Climate Scientists Encounter Limits of Computer Models, Bedeviling Policy. That is a non-paywalled, free-to-read link courtesy of the WSJ.  It's lengthy but an excellent read. I encourage everyone to take a look. The dire predictions went out the window, seemingly unanimously. But there is plenty in the article for the fearmongers and the sceptics to both say "I told you so". Italic emphasis in the snips below is mine. Introduction For almost five years, an international consortium of scientists was chasing clouds, determined to solve a problem that bedeviled climate-change forecasts for a generation: How do these wisps of water vapor affect global warming? They reworked 2.1 million lines of supercomputer code used to explore the future of climate change, adding more-intricate equations for clouds and hundreds of other improvements. They tested the equations, debugged them and tested again. The scientists would find that even the best tools at hand can’t model climates with the sureness the world needs as rising temperatures impact almost every region. Dire Forecasts Wrong When they ran the updated simulation in 2018, the conclusion jolted them: Earth’s atmosphere was much more sensitive to greenhouse gases than decades of previous models had predicted, and future temperatures could be much higher than feared—perhaps even beyond hope of practical remedy. “We thought this was really strange,” said Gokhan Danabasoglu, chief scientist for the climate-model project at the Mesa Laboratory in Boulder at the National Center for Atmospheric Research, or NCAR. “If that number was correct, that was really bad news.” The scientists soon concluded their new calculations had been thrown off kilter by the physics of clouds in a warming world, which may amplify or damp climate change. “The old way is just wrong, we know that,” said Andrew Gettelman, a physicist at NCAR who specializes in clouds and helped develop the CESM2 model. “I think our higher sensitivity is wrong too. It’s probably a consequence of other things we did by making clouds better and more realistic. You solve one problem and create another.” UN Plays Down Extreme Forecasts “We have a situation where the models are behaving strangely,” said Gavin Schmidt, director of the National Aeronautics and Space Administration’s Goddard Institute for Space Sciences, a leading center for climate modeling. “We have a conundrum.” In November 2021, as leaders met in Glasgow to negotiate limits on greenhouse gases under the auspices of the 2015 Paris Accords, there were more than 100 major global climate-change models produced by 49 different research groups, reflecting an influx of people into the field.  In its guidance to governments last year, the U.N. climate-change panel for the first time played down the most extreme forecasts. Hind Casting  Before making new climate predictions for policy makers, an independent group of scientists used a technique called “hind-casting,” testing how well the models reproduced changes that occurred during the 20th century and earlier. Only models that re-created past climate behavior accurately were deemed acceptable. Computing Clouds  Because clouds can both reflect solar radiation into space and trap heat from Earth’s surface, they are among the biggest challenges for scientists honing climate models. At any given time, clouds cover more than two-thirds of the planet. Their impact on climate depends on how reflective they are, how high they rise and whether it is day or night. They can accelerate warming or cool it down. They operate at a scale as broad as the ocean, as small as a hair’s width. Their behavior can be affected, studies show, by factors ranging from cosmic rays to ocean microbes, which emit sulfur particles that become the nuclei of water droplets or ice crystals. “If you don’t get clouds right, everything is out of whack.” said Tapio Schneider, an atmospheric scientist at the California Institute of Technology and the Climate Modeling Alliance, which is developing an experimental model. “Clouds are crucially important for regulating Earth’s energy balance.” In an independent assessment of 39 global-climate models last year, scientists found that 13 of the new models produced significantly higher estimates of the global temperatures caused by rising atmospheric levels of carbon dioxide than the older computer models—scientists called them the “wolf pack.” Weighed against historical evidence of temperature changes, those estimates were deemed unrealistic. Dr. Gettelman, who helped develop CESM2, and his colleagues in their initial upgrade added better ways to model polar ice caps and how carbon and nitrogen cycle through the environment. To make the ocean more realistic, they added wind-driven waves. They fine-tuned the physics in its algorithms and made its vintage Fortran code more efficient. Even the simplest diagnostic test is challenging. The model divides Earth into a virtual grid of 64,800 cubes, each 100 kilometers on a side, stacked in 72 layers. For each projection, the computer must calculate 4.6 million data points every 30 minutes. To test an upgrade or correction, researchers typically let the model run for 300 years of simulated computer time. In their initial analysis, scientists discovered a flaw in how CESM2 modeled the way moisture interacts with soot, dust or sea-spray particles that allow water vapor to condense into cloud droplets. It took a team of 10 climate experts almost 5 months to track it down to a flaw in their data and correct it, the scientists said. Strained Supercomputers  The NCAR scientists in Boulder would like to delve more deeply into the behavior of clouds, ice sheets and aerosols, but they already are straining their five-year-old Cheyenne supercomputer, according to NCAR officials. A climate model able to capture the subtle effects of individual cloud systems, storms, regional wildfires and ocean currents at a more detailed scale would require a thousand times more computer power, they said. Climate models need to link rising temperatures on a global scale to changing conditions in a local forest, watershed, grassland or agricultural zone, says NCAR forest ecologist Jacquelyn Shuman and NCAR scientist Gerald Meehl. “Computer models that contain both large-scale and small-scale models allow you to really do experiments that you can’t do in the real world,” she said. “You can really ramp up the temperature, dial down the precipitation or completely change the amount of fire or lightning strikes that an area is seeing, so you can really diagnose how it all works together. That’s the next step. It would be very computationally expensive.” “I think the climate models are the best tool we have to understand the future, even though they are far from perfect,” said Dr. Gettelman. “I’m not worried that the new models might be wrong. What scares me is that they might be right.” Both Sides Now  Models Will Get Better  Scientists need to keep doing what they are doing. The models surely will get better.  Despite the models being wrong, they appear to be better than I expected.  Yet, had we listened to the dire forecasts from Al Gore, globetrotting Gretta, President Biden, and media darling AOC, where would we be? Al Gore wanted to spend $90 trillion to fight climate change.     AOC "New Green Deal" Stunningly Absurd: Far More Ridiculous Than Expected Recall my February 7, 2019 post AOC "New Green Deal" Stunningly Absurd: Far More Ridiculous Than Expected Rep. Alexandria Ocasio-Cortez (AOC) released her bill for a "Green New Deal". It's stunningly absurd. AOC's Green New Deal Pricetag of $51 to $93 Trillion On February 25, 2019 I noted I compared AOC's Green New Deal Pricetag of $51 to $93 Trillion vs. Cost of Doing Nothing William Nordhaus, a co-recipient of the 2018 Nobel Prize in economics, compared AOC's Green New Deal with the cost of doing nothing and various alternatives.  Nordhaus’s model—at least as of its 2007 calibration—estimated that such a policy goal would make humanity $14 trillion poorer compared to doing nothing at all about climate change.  2007 is admittedly way out of date, yet the models then were on the dire side. AOC Says World Will End in 12 Years On January 22, 2019 I noted Ocasio-Cortez Says World Will End in 12 Years: Here's What to Do About It .@AOC on millennials and social media: "We’re, like, the world is going to end in 12 years if we don’t address climate change" pic.twitter.com/HjhbVyfFN4 — Tom Elliott (@tomselliott) January 22, 2019 AOC now says her comment was out of context, but play the video and you will see that her comments clearly weren't. Perhaps it was hyperbole, but extreme fearmongering of this kind will do nothing but raise eyebrows.  Clean Energy Now Demands We have had an endless parade of fearmongers including Al Gore, Gretta,, AOC, Senator Elizabeth Warren, President Biden, the UN, and countless others demanding "clean energy now". None of them have factored in the amount of copper, lithium, rare earth materials, etc., needed for their demands. Their demands also depend on unreliable wind and battery storage techniques that do not even exist yet. Solar energy is surprising cheap provided there is enough cheap land, there are no clouds, there is no nighttime, and the energy needs are in the desert, not New York City. Alternatively, solar needs storage technology that does not yet exist, but even if it did, we still have issues regarding need for more lithium, rare earth metals, etc., for the storage. We will get there over time, but that time is not now. Fearmongering does not help. Per Capita CO2 Emissions Per capita emissions chart courtesy of Our World in Data. The US, EU, and UK have made huge strides in emissions. China, India, and many emerging markets are headed in the opposite direction. The political reality of the matter is that actions by the US and EU will not do much unless China and India do much more, much faster. Global Net Zero Climate Change Targets are 'Pie in the Sky' Please recall my April 5, 2021 , post Global Net Zero Climate Change Targets are 'Pie in the Sky'. India lambasted the richer world's carbon cutting plans, calling long term net zero targets, "pie in the sky." In a pre-summit climate change meeting of 197 countries, China did not show up. India blasted the targets as "Pie in the Sky".  "2060 sounds good, but it is just that, it sounds good," Raj Kumar Singh, India's minister for power, told a meeting organized by the International Energy Agency (IEA). Government Action Scientists discarded 13 of 39 models, those with the most dire predictions and those that could not explain the ice age. Guess which ones the media, the politicians, and the fearmongers most quoted. Now the scientists struggle with clouds. One of my readers repeatedly challenges me to a debate on climate change. I am sure he understands the models way better than I do. But those models were wrong on the dire side. Yet, I admit the models seem better than I expected. However, my main objection to all of this has been vindicated. Anyone expecting government fearmongers to do anything sensible about climate change were, and still are wrong. Science is advancing rapidly. Clean energy, especially solar, will make a dent. But along the way, we dropped nuclear from the equation to appease the Greens.  Dropping nuclear energy was a huge mistake, especially in Europe where Germany is now using more coal and is increasingly dependent on Russia for natural gas.  That is the irony of Green demands. The Greens perpetually demand more from science than science permits, at prices the Greens don't even bother to calculate. Finally, the Greens ignore the huge political reality regarding China and India. India is talking 2060 and China 2050 on net zero.  There is no way to force countries to go along with US and EU mandates. The cost of attempting to do so via tariffs would be massive, undoubtedly resulting in a global recession, if not depression. "I've looked at clouds from both sides now"From up and down and still somehow"It's cloud's illusions I recall"I really don't know clouds at all" *  *  * Like these reports? I hope so, and if you do, please Subscribe to MishTalk Email Alerts.   Tyler Durden Mon, 02/07/2022 - 14:50.....»»

Category: worldSource: nytFeb 7th, 2022

Wall Street"s Most Bearish Analyst Warns Of "Calamitous" Collapse In First-Half Earnings

Wall Street's Most Bearish Analyst Warns Of "Calamitous" Collapse In First-Half Earnings The real groundhog day may have come and gone (with roughly 6 more weeks of winter on deck according to Punxatawney Phil) but when it comes to markets, Monday had another case of deja vu day for traders, when JPMorgan did what it does at the start of every single week when it told its clients to buy the dip (assuming they still have money left to do that), while Morgan Stanley did the exact opposite, urging investors to sell the rally and trim exposure as stocks head for the bank's base case year-end target of 4,400 (which is not that much lower from current spot price), which is nothing new... ... but what is new, is that in his latest weekly Equity Strategy note, the bank's chief equity strategist Michael Wilson picked up on what we said over the weekend (see "This Is The Worst Earnings Season Since Covid Emerged And It's About To Get Much Worse"), and warned that earnings beat rates for US stocks in the first half may fall below zero compared to current estimates, adding that earnings risk is increasing for a wider swath of the market than most investors expect as rising inventories meet waning demand. But before we dig in more into Wilson's traditional pessimism, this is what JPM's habitual permabullish equity strategist Mislav Matejka had to say today to pump up the bank's client to buy more stocks: We believe that equities still offer supportive risk-reward, and that the cycle is far from over. We look for more gains in earnings, bottoming out in China activity, after being cautious on the space last year, and expect the Fed not to turn ever more hawkish, relative to what is currently priced in, USD could be peaking. Investor sentiment has become too negative of late, as evidenced in Bull-Bear moving to lows of the range, which is typically a contrarian signal. We think it is wrong to position for a recession given still extremely favorable financing conditions, very strong labor markets, underleveraged consumer, strong corporate cash flows and banks’ strong balance sheets. The sector leadership remains risk-on, and it is not consistent with a continued slowdown. There was a very significant selloff in a number of high-multiple Growth areas, with Fintech down 35% to recent lows, non-profitable Tech down 40%, etc. The question is whether one should buy back Quality, especially if one sees a potential peak in inflation. In our view the key is the direction of bond yields – we expect them to continue moving higher, and that was always consistent with Cyclical leadership. Regionally, we reiterate our upgrade of UK to OW, after six years of a cautious stance. In short, the same old BTFD. Moving to Morgan Stanley, we first remind readers that on Saturday we observed a very ominous development in the current earnings season where 4Q consensus EPS was "tracking just 2% above where it stood on Jan 1, led by tech and financials, while revenue beats are even more precarious, tracking at just +1% versus consensus, which is far weaker than prior quarters since COVID when EPS was +11% on average vs. consensus by Week 3." So picking up on this warnings, Wilson today writes that he "continues to be more focused on what growth is going to do rather than rates and believe investors are still too optimistic, particularly as it relates to consumption." Indeed, we have long highlighted declining consumption as our biggest concern - and primary driver - behind the sharp slowdown in the US economy in Q1, and contrary to the prevailing groupthink that the slowdown is purely Omicron driven, and thus transitory, there will be no rapid rebound in Q2 from the Q1 contraction. In fact there won't be any rebound at all and instead the US economy will continue to grind into a slowdown, even as the Fed aggressively hikes into - and accelerates - the coming recession. Indeed, Wilson also agrees with this bleak view, and warns that "signs of weakness go beyond Omicron." And here's why: "Overall, 4Q earnings season has been generally in line with a typical quarter...beat rates are back to 5% which is the long term average" as we ob first noted on Saturday. However, as we also noted, this is well below the beat rates of 15-20% observed over the past 18 months, "a period of over earning" according to Wilson. The key question now for investors is whether we are going to return to "normal" or will we experience a period of under earning first--i.e. payback? Here Wilson reminds readers that he has long held the view, which just so happens is identical to ours, that "payback was coming in 1H2022 as the extraordinary fiscal stimulus faded, monetary policy tightened and supply caught up with demand in many end markets." In short, Wilson thinks the first half of this year could see beat rates fall below zero, at least relative to current estimates "and before they are managed lower." Indeed, earnings revision breadth leads and recent trends suggest we are headed in that direction, and as Wilson warns "the companies with  the greatest earnings risk remain those businesses that benefitted from the pandemic pull forward the most." One such glaring example of this kind of "over-earning" is Peloton. And while there are many potentially obvious candidates for a payback in demand over a year ago, Wilson cautions that "there is a little Peloton in everyone" and adds that over the past few weeks this view - which until recently was confined to "fringe blogs" such as Zero Hedge  - "has started to permeate the market as several leading companies like Netflix, Paypal and Facebook have disappointed with weaker than expected guidance. While Netflix may have been a more obvious one, the others were not and suggest the payback could be deeper and wider." In sum, Wilson suspects "there will be more surprises on this front and is one of the reasons we think the 1H slowdown in growth will be worse than the consensus expects." In addition to the payback for last year's over consumption, there is growing evidence that the consumer may be in a weaker position to spend even if she wants to. This, too, is a point we have been banging the table on for the past 3 months. A first warning comes from consumer confidence measures which continue to remain in recession territory, mostly due to inflation that could start to be demand destructive, particularly for discretionary items. This risk is acute for the lower income cohorts where - as even Goldman admitted recently - inflation in necessities is eating into disposable income, largely due to the expiration of the child tax credit. Bottom line, Wilson thinks the consumer spending is at risk and and it's not all due to Omicron. Instead- and here we agree 100% - it is "a combination of government transfers running as prices rise to levels of demand destruction." In other words, unless Biden wants a recession on his hands, and unless Powell wants to be hiking into a bloodbath, they better start getting the narrative/crisis for the next stimmy payment ready. * * * Here Wilson takes an aside from his regularly scheduled sermon of doom, to advise readers that the bank recently ran a survey of ~2,000 US consumers in conjunction to gauge consumer sentiment and spending intentions. It found that rising prices/inflation remains the number one concern for consumers with 56% of respondents (all-time high) citing it as one of their top concerns vs. 52% three months ago and 34% the same time last year. At the same time, consumer confidence in the economy continues to trend down, albeit at a slower rate; 33% expect the economy to get better (compared to 35% three months ago and ~43% same time last year). Not surprisingly, Consumers on the lower end of the income spectrum have a more negative outlook on their household financial situation over the next 6 months (Exhibit 3). Consumers are feeling the impacts of high inflation and are very concerned about it as evidenced by 56% of them citing it as their primary concern. The percent of lower income consumers citing it as their number one concern also rose over the past quarter (Exhibit 4).  The highest income group surveyed, those making over $150,000, saw little change in inflationary concerns and with 49% citing it as their primary concern. This is logical: inflation is particularly tough on lower income consumers as they spend a much greater percentage of their income and have little savings. Higher prices and the end of Covid related stimulus benefits is likely to continuing weighing especially hard on this group and could impact their demand for discretionary spending. Meanwhile, consumers across the income spectrum are expecting to spend more on staples categories over the next 6 months vs the last 6 months. This is likely partially a function of inflation as consumers recognize the cost of their essentials is rising. Spending on durables, consumer electronics, and travel/leisure is expected to decline for lower income cohorts. In other words, a big reason for the recent surge in retail sales and consumer spending is precisely because of runaway inflation as consumer hope to lock in prices before the next big move higher. This means that once the current reflationary period ends, and inflation expectations reset (whenever that may be), the next recession will be hammered by not just reduced economic activity but by a complete collapse of spending as consumer no longer feel an impetus to purchase ahead of even lower prices. That will be a nightmare scenario for the Fed which will then have no choice but to unleash a massive monetary stimulus (especially since after the midterms which the Dems will lose by an avalanche, there will be no more fiscal stimulus until at least 2025 at the earliest). * * * Which brings us to the last question addressed by Wilson in his weekly note: Will Rising Supply Help or Make it Worse? According to the MS strategist, coming into this year, many investors and even the Fed were expecting supply chains to loosen up and alleviate some of the inflationary pressures described above (not this website). Labor shortages have also been an issue and why wage increases are the fastest in decades. And while Friday's employment report brought some good news on that front with a nice rise in the participation rate to 62.2%, up 30bps, it did not alleviate the wage pressure as unit labor costs far exceeded expectations, coming in at 5.7% y/y. While those increases can help to offset inflation for the consumer, they haven't been keeping up. Real wage growth is deep in negative territory. Not only is this the most negative real wages have been since the Great Financial Crisis but as Wilson notes, it's also in sharp contrast to where we were a year ago. He adds that "this simply increases the odds of consumption disappointing in the first half of the year even if Omicron proves to be the last major wave of this pandemic. In other words, Wilson doesn't expect better supply of labor to alleviate the wage pressures on overall inflation metrics in the near term. "Furthermore, these wage increases are unlikely to be big enough to alleviate consumers' concern about rising prices." Another popular theme coming into the year highlighted by Wilson, was that inventory restocking would drive economic growth and help alleviate some of the inflationary pressures. Furthermore, companies that had been citing these bottlenecks as a reason for lost sales would now be able to meet that excess demand. While Wilson agrees with the premise of that argument--i.e. inventories would increase and drive economic growth and lower inflationary pressures, he remains quite skeptical it will lead a smooth "goldilocks" transition, here's why: First, on the inventory growth has not disappointed. In line with MS economists' forecast, inventory builds are driving the bulk of GDP growth. In fact, it already started to show up in the fourth quarter. 4Q real GDP grew an impressive 6.9% but final sales grew just 1.9% meaning inventories grew approximately 5% (Exhibit 7). Outside of the pandemic's initial lock downs when demand dropped off a cliff, Wilson writes that "this is the single biggest increase in inventories ever witnessed. MS is forecasting a similar build in 1Q relative to total output. While this is good for economic activity it may not translate into better revenue or earnings growth for companies. Instead, it's potentially calamitous for those companies building these inventories at the wrong time--i.e. when consumption demand is fading due to lower real incomes and prices that are too high to pay." The end result in Wilson's view, is that "we could end up with some significant discounting of inventories that were booked at much higher prices than a year ago. In short, we have the mirror image of what we experienced in 1Q21, a period of over earning. Instead, we get a few quarters during which companies under earn the performance of the economy as margins get hit." Second, the wholesale and retail inventory data shows the same dilemma and highlights something that the MS strategist has been discussing for awhile: much of the inventory shortages have been due to logistical constraints as exhibited by the large divergence between wholesale and retail inventories. But, with the largest back to back increases in retail inventory, those constraints may be loosening up which means product is now reaching the end point where it is needed. This "shadow" inventory that's been stuck in warehouses, loading docks and barges may further exacerbate the problems described above. Third and final, is the risk of double ordering. When supplies get tight, businesses tend to order more than they actually need to secure as much supply as possible. As long as these shortages persist, so does the double ordering. However, as soon as supply catches up, those orders are cancelled. After all, there generally is no penalty for putting in more orders than one needs and then cancelling later. Based on the charts above, Wilson thinks "the moment of truth on this double ordering is about to be tested" and it's one of the reasons he has been so focused on the orders-inventories components of the ISM PMIs as a means of getting ahead of this risk. As seen in exhibit 9, this breakdown already began in 4Q as inventories started to rebuild. And if that wasn't enough, Wilson warns that "it will likely get much worse when orders start to get cancelled which has yet to occur." Bottom line, 1H22 will be Icy as all of these excesses are wrung out of the supply chains and order books making the economic slowdown feel a lot worse at the company and earnings level, just like it made it feel so much better a year ago. There is much more in the full report is available to professional subs in the usual place. Tyler Durden Mon, 02/07/2022 - 13:34.....»»

Category: dealsSource: nytFeb 7th, 2022

Global Economy Heading For "Mother Of All" Supply Chain Shocks As China Locks Down Ports

Global Economy Heading For "Mother Of All" Supply Chain Shocks As China Locks Down Ports Over the past month, as Wall Street turned increasingly optimistic on US growth alongside the Fed, with consensus (shaped by the Fed's leaks and jawboning) now virtually certain of a March rate hike, we have been repeatedly warning that after a huge policy error in 2021 when the Fed erroneously said that inflation is "transitory" (it wasn't), the central bank is on pace to make another just as big policy mistake in 2022 by hiking as many as 4 times and also running off its massive balance sheet... right into a growth slowdown. The Fed is going from one huge error (inflation is transitory) to another huge error (4 rate hikes and runoff won't crash markets). — zerohedge (@zerohedge) January 11, 2022 And, as we have also discussed in recent weeks, one place where this slowdown is emerging - besides the slowdown in US consumption of course where spending is now being funded to record rates by credit cards - is China and its "covid-zero" policy in general, and its covid-locked down ports in particular. But what until recently was a minority view confined to our modest website, has since expanded and as Bloomberg writes overnight, the effects of restrictions in China as the country maintains its Covid-zero policy "are starting to hit supply chains in the region." As a result of the slow movement of goods through some of the country’s busiest and most important ports means shippers are now diverting to Shanghai, causing the types of knock-on delays at the world’s biggest container port that led to massive congestion bottlnecks last summer that eventually translated into a record number of container ships waiting off the coast of California, a glut that hasn't been cleared to this day. With sailing schedules already facing delays of about a week, freight forwarders warn of the impact on already back-logged gateways in Europe and the US and is also why HSBC economists are warning that the world economy could be headed for the “mother of all” supply chain shocks if the highly infectious omicron variant which is already swamping much of the global economy spreads across Asia, especially China, at which point disruption to manufacturing will be inevitable. "Temporary, one would hope, but hugely disruptive all the same" in the next few months, they wrote in a research note this week first noted by Bloomberg. For those who have forgotten last year's global shockwave when China locked down its ports for several days, a quick reminder: it led to an unprecedented hiccup in global logistics and shipping which hasn't been resolved to this day. That's because China is the world’s biggest trading nation and its ability to keep its factories humming through the pandemic has been crucial for global supply chains. While the outbreak of omicron in China has been small compared to other nations (if one believes China's official data, which is a big if) authorities are taking no chances, especially with China's continued "zero-covid" policy. In recent weeks scattered infections of both the delta and omicron variants have already triggered shutdowns to clothing factories and gas deliveries around one of China’s biggest seaports in Ningbo, disruptions at computer chip manufacturers in the locked-down city of Xi’an, and a second city-wide lockdown in Henan province Tuesday. Below is a brief timeline of the most recent events courtesy of Deutsche Bank: China's first Omicron outbreak was detected in the city of Tianjin over the weekend. On the morning of Jan 8, two patients in Tianjin who actively sought medical treatment were confirmed as being infected with the Omicron variant. The local government immediately locked down certain districts, restricted travel, and conducted large-scale screening. A total of 41 positive cases have been reported as of the morning of Jan 11. The source of the local cases in Tianjin is still unknown, and community transmission is possible, according to local disease control officials. All previous local Omicron cases in Tianjin belonged to the same transmission chain. However, the above cases cannot be confirmed to be in the same transmission chain as the sequences of the imported cases of the Omicron variant that have been found in Tianjin. The early confirmed cases do not have any travel history outside Tianjin either. The specific source of the local cases found in Tianjin is still unknown at this time. More alarmingly, the same Omicron virus strain has already spread to outside Tianjin. Two positive cases were found in Anyang, Henan on Jan 8, and were later confirmed to be the same Omicron variant found in Tianjin. Through contact tracing and gene sequencing, the source was identified as a college student who returned to Anyang from Tianjin on December 28, 2021, and who did not show any symptoms. 81 cases have since been confirmed in Anyang over the past few days. This suggests that (1) the Omicron virus may have been transmitted in Tianjin for almost 2 weeks; and (2) other travelers might have already carried the Omicron virus from Tianjin to elsewhere in China. Looking at the recent data, China's Covid outbreak this winter could be worse than in the previous winter - as shown in the chart below more provinces have detected Covid outbreaks this winter. Entering Q4, there are 12 provinces which have found more than 19 local cases in the past 14 days. More significantly, the total number of new cases in the past 14 days in Shann’xi has already exceeded 1500, which is a record high, except for in Hubei when Covid first occurred in early 2020, and this has happened despite China now having very high vaccination rates and strict regulations such as lockdowns. In addition, comparing the differences between months near Chinese New Year in 2021 and 2022, not only have the number of news cases been larger this year, the provinces hit by Covid outbreaks this year also tend to have higher GDP and population density. As Bloomberg adds, Henan and Guangdong, which also has an outbreak, are centers of electronics production. If cases continue rising there, it could impact the supply of iPhones and other smartphones. This also brings us to what Bloomberg calls the paradox of China’s aggressive “Covid-zero” strategy: while on one hand it helps contain the virus spread, to do so usually requires significant disruption or lockdowns as authorities limit the movement of people. The repeated mandatory testing of whole cities interrupts businessess and production, although nothing to the extent seen in places like the US, where the omicron wave caused an estimated 5 million people to stay home sick last week, leading to further economic slowdown (as discussed in "A March Rate Hike? Not So Fast") That risk of disruption for factories is already prompting companies to spread their risk by ensuring they have alternative production facilities, Stephanie Krishnan, a supply chain expert at IDC in Singapore, told Bloomberg. “We are starting to see companies mitigating risk, seeing where they can increase capabilities for production of different products in different factories so they can shift that around,” she said. Echoing what we said last night in "New Year Brings New All-Time High For Shipping's Epic Traffic Jam", Krishnan doesn’t see an end to the global supply crunch anytime soon and cautions it could take several years for the snarls to unwind. It’s a sobering outlook to start a year that many had hoped would mark the beginning of the end of the Big Crunch which dogged producers and consumers through much of last year. Clearly what happens next is critical, and how China’s control of the virus plays out will ultimately be crucial, said Deborah Elms, executive director of the Singapore-based Asian Trade Centre. Those companies whose supply chains are fully located inside China may be insulated by the country’s mitigation strategy. But that won’t apply to everyone, she said. “Lots of products in supply chains come from outside China,” Elms said. “Given challenges elsewhere, even zero Covid doesn’t solve all the issues of disruption.” * * * In its assessment of next steps, Deutsche Bank expects the government will try to contain the Omicron outbreak with more lockdowns and quarantines rather than taking a "live with Covid" approach. This will pose downside risks to near-term growth. The impact on consumption could be significant, although probably not as large as what happened in 2020. While Omicron is far less deadly than other Covid variants, it is still deadly enough to cause healthcare service shortages in China, at least in some regions. Vaccination has proven to be ineffective in preventing Omicron from spreading, and while it offers protection against hospitalization, China still has some 20% of the population who are not vaccinated and will face serious health risks if Omicron becomes widespread. As such, DB says that a containment approach is still the government's optimal choice for this winter regardless of how fast Omicron spreads in the next few weeks. It will be good news if travel restrictions, lockdowns and large-scale testing and contact tracing work in containing the outbreak. Even if outbreaks cannot be contained in some regions, these measures will still be considered necessary in flattening the curve and preventing hospitals from being overwhelmed nationwide. What is much more important for the US, global capital markets and the Fed's monetary policy - which has assumed much stronger growth in 2022 - is that China's Omicron outbreaks are significant downside risks for near-term consumption demand. Restrictions will likely be imposed nationwide to reduce travel before the Chinese New Year and encourage people to stay where they are. Cities where new cases were found will reimpose lockdowns and social distancing measures. The impact in each city will depend on local authorities. Experience from the past 2 years was that while some cities (such as Shenzhen and Shanghai) can manage outbreaks in a less disruptive way, other cities (such as Xi'an) have resorted to stricter and larger scale lockdowns, causing severe disruptions to consumption and service sector activities. Businesses such as restaurants, as well as those linked to travel, and leisure & entertainment will suffer from sharp revenue reductions or even temporary shutdowns. This may also cause temporary job and income losses and negatively impact consumer goods purchases. Retail sales growth dropped by 3ppt in Jan-Feb 2021 (in 2-year average terms). Retail sales might weaken again in Jan-Feb 2022, though the YoY growth rate might not drop much owing to the low base in 2021. Nevertheless, consumption will likely recover rapidly once lockdowns are lifted. Similar to what happened before, such negative shocks will likely be transitory and will be followed by strong recovery once lockdowns are lifted and businesses reopen. Still, the notorious bull-whip effect will emerge once again, as supply chains once again become stretched, and like in 2021 the question will be how the trade off between rising costs - as goods in transit end up stuck on a ship far longer than expected - and slowing growth will impact the Fed's view on what the optimal policy response is. While the Fed's prerogative for now is clearly to contain inflation, the reality is that much of the inflation experienced today is on the supply side, something which Brainard told the Senate in her confirmation hearing the Fed is powerless to address. Meanwhile, if we see a "surprise" drop in growth in the coming months, the Fed will have no choice but to delay or at least stagger its tightening as the last thing the Fed can afford to do is hike into another recession, which will then quickly be followed with even more easing.  Tyler Durden Thu, 01/13/2022 - 13:06.....»»

Category: dealsSource: nytJan 13th, 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

NFT Art Collectors Are Playing a Risky Game—And Winning

In Miami, the next generation of art collection showed its colors Behind the high white walls of a nondescript single-story building in Miami’s Wynwood neighborhood, past the velvet ropes and ticket-checkers, and through a hallway filled with disorienting billows of white smoke lies Aku World, the alternate universe of Aku, a young Black astronaut. The blank walls of one room were covered with moving projections of this cartoon extraterrestrial universe. At the center, a giant space helmet you could walk inside to view videos. In other rooms: traditional art from the likes of Jean-Michel Basquiat and young artists Jade Yasmeen and Floyd Strickland; a “merch” room with virtual 3D displays of branded backpacks and hoodies; and a futuristic sanctum with a massive, ovoid version of a TSA body scanner, used for 4D body-mapping. Visitors could develop and “mint” their own personalized avatars for the Aku World metaverse. A line of patrons snaked out the hallway. [time-brightcove not-tgx=”true”] One of those people on this balmy Thursday evening of Art Basel Miami was Cooper Turley. Wearing designer sneakers, a black turtleneck and a diamond chain, Turley towered over his fellow Aku fans in line, a collection of diverse young people who had managed to snag one of the exclusive tickets to the pop-up. “I’ve been following the story for six months at this point,” Turley says proudly. But Turley, 26, was more than just another Aku fan. An investor in the project, Turley is also an NFT collector and a Twitter personality known for sharing upbeat takes on the future of the emerging world of web3. Originally an avid Pokemon collector—the type of teen who spent hours searching out rare cards on eBay—Turley turned a college music business degree into a career as an angel investor and general crypto expert after becoming intrigued by the concept of so-called “smart” contracts for music, which could more effectively apportion out revenue to the many stakeholders involved in a track. These days, he holds somewhere around 400 to 500 unique NFTs, ranging from an original Crypto Kitty (his first-ever NFT purchase) to a one-of-one from Fvckrender that he bought for a hefty 10ETH (currently about $44,000). “If I were trying to get [my collection] appraised today? It would be, like, a couple million dollars,” he says, doing some quick mental math. How NFT art collecting works Just like there are famous physical world art collectors—Peggy Guggenheim, J. Paul Getty, the Broads—Turley has joined the ranks of high-end NFT art collectors, as non-fungible tokens became the talk of the crypto and art worlds this year. (NFT auction platform OpenSea has tracked over $10 billion worth of sales since it launched in 2017. The buzz peaked last spring with the much-ballyhooed $69 million auction price for a one-of-one Beeple art work.) While an NFT can be anything, the first and most visible use-case so far has been for digital art. Sometimes that means a moving image. Or an audio-visual clip. Or a “profile picture project” (PFP) like CryptoPunks or Bored Ape Yacht Club, drawings that are variations on a theme within a particular universe. (Aku World started out as a collection of Aku NFTs.) Or a physical sculpture with an NFT certificate of ownership. More and more, it also can mean tokens that provide access to exclusive events or content—also a perk, in this instance, of Aku NFT ownership. Read More: Teen Artists Are Making Millions on NFTs. How Are They Doing It? For Turley, being a collector (and investor and advisor) in this space is both a career and, it seems, a calling. His social and professional lives are deeply intertwined. In Miami, his days were a mix of attending events like Aku World and carrying on into near-dawn club adventures with fellow collectors and artists he’s befriended. “There’s one part of my collecting that’s all about patronage,” he says. “It’s my friends getting involved in the space, so I am buying their work to simply say thank you for believing in this, thank you for taking a chance and putting your art into this ecosystem.” The other part is speculation. “There’s a science to knowing which entities are going to go up and being able to flip those,” he says. After all, he’s been able to build a multimillion dollar collection off his early crypto investments and willingness to play that game. The value of community Turley’s approach—recognizing both the power of patronage and the potential of speculation—is one echoed by most collectors in these early, volatile days of the NFT market. Jake Rogers, 38, also found his professional sweet spot as a collector and speculator. Crypto—and NFT art collecting—changed his life; after going through a divorce and diving into crypto self-education via the audio hangout app Clubhouse during the pandemic, Rogers left his role as the program director of a homeless shelter in Atlanta. He’s now a full-time NFT investor based in Miami. (He’s also building out a local cafe for “cannabis, coffee, crypto and tacos,” he says happily.) But you wouldn’t know any of this from his unassuming appearance; he shows up at a low-key pool party on a residential street in downtown Miami in a faded tank top, shorts, and a Patagonia baseball cap covering his grey hair, swigging from a bottle of electric yellow Gatorade. Rogers is here to say hello to the Queens-based music artist and general hype man Artz (real name: Raymond Allende), founder of the artist collective Reject Dreams. Rogers invested in some of Artz’s audio-visual works (and NFTs), and they’re friends via Clubhouse. With boyish energy, he settles onto a couch by a dusty pool table to explain his philosophy of NFT investing. Rogers has 487 works when we talk, and wants to hit 500 by the end of the weekend, with a budget to burn of roughly $200,000. He had been dabbling in crypto since 2017, but made his first NFT purchase in spring 2020, with a reasonably-priced piece from “some brothers in Russia,” he remembers, who he discovered on Clubhouse. “I got in for the community. And then—” he pauses. After he had collected about 100 works he loved, including four Bored Apes, three of which he sold for a healthy profit, “then I got in for the money.” Read More: NFTs Are Shaking Up the Art World—But They Could Change So Much More Now he’s using what he calls “house money,” re-investing his wins. “The reality is, it’s insider trading,” he says wryly. But with a cause: he likes to support early-stage artists who need the money to live. That positive feedback loop, and the sense that he’s making a difference in someone’s life, “is like a drug.” “I came from the world of understanding my privilege and helping people that have nothing,” he says. He has a system now for deciding what’s a worthy project, based on the rarity of the pieces, his trust in the people behind the project, and whether it’s a safe bet or a risky one. Rogers knows it might look like he’s having a midlife crisis right now. But he says he’s never felt a stronger sense of purpose: to invest in the future, and be a part of supporting the paths of artists he believes in—like Artz—who wouldn’t otherwise get a chance. We say goodbye, and he jumps up, snaps a quick selfie with Artz, and heads out to the next art exhibition. “I didn’t even know what the guy looked like until a few weeks ago,” Artz says after Rogers leaves. But his early support has been meaningful in helping Artz raise his profile. Later in the weekend, Artz would perform with rapper Busta Rhymes. Is NFT art “real art”? To outsiders, the NFT art world can look like a joke, or a bunch of high rollers playing a computer game. For those inside it, it is a game—but one with real stakes. Nowhere was that more clear than at the NFTNow x Christie’s party in downtown Miami, hosted in a corporate venue transformed into an NFT art gallery and party spot. On the blacked-out walls, digital works by top-selling artists like Fvckrender, Chad Knight and Dave Krugman popped out of the darkness. The open bar seemed of less interest to most than the works themselves. Photo by Cindy Ord/Getty ImagesGuests view an NFT art piece by German artist Mario Klingemann at Art Basel Miami 2021. Turley circulated with other bigwigs in the scene: collectors like Kamiar Maleki, director of Volta Art Fairs and Colborn Bell, the tall, bearded head of the Museum of Crypto Art; artists and celebrities like Beeple, Fewocious, Jared Leto and Timbaland. The Christie’s co-sign gave this new generation an air of officiality. But at the main Art Basel fair in a cavernous event space on Miami Beach, Turley felt out of place; he admits he’s not a traditional art connoisseur. Most of the booths were hosted by galleries—and NFT artists tend to bypass gallery representation. (One booth by blockchain company Tezos was a hit, however, and 5,000 NFTs were minted there over the course of the week.) “I felt a little bit of a disconnect,” Turley says. “All the art on display was physically appealing, and it looked fantastic,” but he didn’t feel the sense of connection that he could find with NFTs. “One of the things that I like the most about NFTs is that you are not bidding on the art itself, you’re bidding on a relationship with the creator. We are in an early enough stage where that could happen. The reason that a lot of people are spending so much money on NFTs is because they really want to get connected to that artist on a personal level,” he says. Turley himself has advised artists and creators on their NFT entrances. Crypto winter is coming Of course, in an emerging, unregulated market, not all plays are wins. Collectors spoke blithely about getting “rugged” on certain NFT investments, about how easy it is for hackers to entice potential investors into fake projects, into scams that result in an empty crypto wallet before they can back out of the exchange. But more often than not, a loss just sparks the desire to try again; risk is the accepted name of the game. Back at Aku World, Turley was joined by artist Isabella Addison and fellow young collector Brett Shear. (Shear focuses on music NFT collecting.) After Turley minted his new Aku avatar, the trio—already tired after a few days of the Miami party circuit—grabbed dinner at a low-key gyro restaurant a few blocks away, then headed to an event hosted by digital music collective Poolsuite. For artists like Addison, the support of these collectors has helped buoy her to stardom. On Saturday night, she was out and about with a collector who goes by the name Seedphrase, who recently estimated his NFT collection’s value at around $12 million. At a party co-hosted by Playboy and Proof of Party, a web3-focused event series, the walls flashed with moving projections of models. Pop star Charli XCX was in the deejay booth. A few hours later, Addison would wake up to hand-paint a Bentley for an auction. She was moving into a new apartment in L.A. soon. The collectors all warned of an upcoming “crypto winter” of increased volatility, for which they’re preparing by diversifying their investments into things like metaverse properties and crypto-focused DAOs (decentralized autonomous organizations that invest as a collective). But for artists like Addison who are already reaping the rewards of their patronage, the season ahead looks bright......»»

Category: topSource: timeDec 9th, 2021

Day That Changed the World?

S&P 500 and pretty much everything apart from Treasuries and safe haven plays down precipitously, with panic hitting oil the hardest. The post Thanksgiving session turned out not so light volume one, but the fear wasn‘t sending every risk-on asset cratering by a comparable amount. What we have seen, is an overreaction to uncertainty (again, […] S&P 500 and pretty much everything apart from Treasuries and safe haven plays down precipitously, with panic hitting oil the hardest. The post Thanksgiving session turned out not so light volume one, but the fear wasn‘t sending every risk-on asset cratering by a comparable amount. What we have seen, is an overreaction to uncertainty (again, we‘re hearing contagion and fatality rate speculations – this time coupled with question mark over vaccine efficiency for this alleged variant), and the real question is the real world effect of this announcement, also as seen in the authorities‘ reactions. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Walter Schloss Series in PDF Get the entire 10-part series on Walter Schloss in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues. (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2021 hedge fund letters, conferences and more Lockdowns or semi-equivalent curbs to economic activity are clearly feared, and the focus remains on the demand side for now, but supply would inevitably suffer as well. Do you believe the Fed would sit idly as the economic data deteriorate? Only if they don‘t extend a helping hand, we are looking at a sharp selloff. Given the political realities, that‘s unlikely to happen – the inflation fighting effect of this fear-based contraction would be balanced out before it gets into a self-reinforcing loop. With the fresh stimulus checks lining up the pocket books, Child and Dependent Care Tax Credit etc., we‘re almost imperceptibly moving closer to some form of universal basic income. Again, unless the governments go the hard lockdown route over scary medical prognostications (doesn‘t seem to be the case now), such initiatives would cushion financial markets‘ selloffs. Looking at Friday‘s price action, PMs retreat shows that all won‘t be immediately well in commodities, where oil looks the most vulnerable to fresh bad news in the short run (while stocks would remain volatile, they would find footing earliest). Demand destruction fears are though overblown, but the dust looks to need more time to settle than it appeared on Friday above $72-$73: (…) New corona variant fears hit the airwaves, and markets are selling off hard. We can look forward for a light volume and volatile session today – S&P 500 downswing will likely be cushioned by the tech, but high beta plays will be very subdued. Commodities are suffering, and especially oil is spooked by looming (how far down the road and in what form, that’s anyone’s guess) economic activity curbs / reopening hits. Precious metals are acting as safe havens today (mainly gold) while the dollar is retreating – and so will yields, at least for the moment. Time for readjustment as the wide stop-loss in oil was hit overnight – it’s my view that the anticipated demand destruction taken against the supply outlook, is overrated. When the (rational / irrational) fears start getting ignored by the markets, we‘re on good track. Let‘s move right into the charts (all courtesy of www.stockcharts.com). S&P 500 and Nasdaq Outlook S&P 500 is still far out of the woods, and a good sign of better days approaching would be tech and healthcare sound performance joined by financials and energy clearly on the mend. Earliest though, HYG should turn. Credit Markets It‘s too early to call a budding reversal in credit markets – HYG needs to not merely retrace half of its daily trading decline. Money coming out of hiding in Treasuries, would be a precondition of prior trends returning. They will – they had been merely punctured. Gold, Silver and Miners Precious metals gave up opening gains, and with the hit to inflation expectations, lost the developing tailwind. It would though come back in an instant once calm minds prevail or fresh stimulus gets sniffed out. Crude Oil Crude oil had a catastrophic day – how far are we along capitulation, remains to be seen. The oil sector didn‘t decline by nearly as much, highlighting the overdone and panicky liquidation in black gold. Copper Copper decline didn‘t happen on nearly as high volume as in oil, making the red metal the likelier candidate for a rebound as the sky isn‘t falling. Bitcoin and Ethereum Bitcoin and Ethereum marching up on the weekend, were a positive omen for the above mentioned asset classes. In spite of cryptos still being subdued, the overall mood is one of catious optimism and risk very slowly returning. Summary Friday‘s rout isn‘t a one-off event probably, and S&P 500 would turn higher probably earlier than quite a few commodities. Cynically said, the variant fears let inflation to cool off temporarily, even as CPI clearly hasn‘t topped yet. As demand destruction was all the rage on Friday, supply curbs would get into focus next, helping the CRB Index higher – and that‘s the worst case scenario. Precious metals certainly don‘t look to be on the brink of a massive liquidation – the current selloff can‘t be compared to spring 2020. For now, the price recovery across the board remains the question of policy, of policy errors. Thank you for having read today‘s free analysis, which is available in full at my homesite. There, you can subscribe to the free Monica‘s Insider Club, which features real-time trade calls and intraday updates for all the five publications: Stock Trading Signals, Gold Trading Signals, Oil Trading Signals, Copper Trading Signals and Bitcoin Trading Signals. Thank you, Monica Kingsley Stock Trading Signals Gold Trading Signals Oil Trading Signals Copper Trading Signals Bitcoin Trading Signals www.monicakingsley.co mk@monicakingsley.co All essays, research and information represent analyses and opinions of Monica Kingsley that are based on available and latest data. Despite careful research and best efforts, it may prove wrong and be subject to change with or without notice. Monica Kingsley does not guarantee the accuracy or thoroughness of the data or information reported. Her content serves educational purposes and should not be relied upon as advice or construed as providing recommendations of any kind. Futures, stocks and options are financial instruments not suitable for every investor. Please be advised that you invest at your own risk. Monica Kingsley is not a Registered Securities Advisor. By reading her writings, you agree that she will not be held responsible or liable for any decisions you make. Investing, trading and speculating in financial markets may involve high risk of loss. Monica Kingsley may have a short or long position in any securities, including those mentioned in her writings, and may make additional purchases and/or sales of those securities without notice. Updated on Nov 29, 2021, 11:35 am (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkNov 29th, 2021

The Metaverse Is Big Brother In Disguise: Freedom Meted Out By Technological Tyrants

The Metaverse Is Big Brother In Disguise: Freedom Meted Out By Technological Tyrants Authored by John W. Whitehead & Nisha Whitehead via The Rutherford Institute, “The term metaverse, like the term meritocracy, was coined in a sci fi dystopia novel written as cautionary tale. Then techies took metaverse, and technocrats took meritocracy, and enthusiastically adopted what was meant to inspire horror.” - Antonio García Martínez Welcome to the Matrix (i.e. the metaverse), where reality is virtual, freedom is only as free as one’s technological overlords allow, and artificial intelligence is slowly rendering humanity unnecessary, inferior and obsolete. Mark Zuckerberg, the CEO of Facebook, sees this digital universe—the metaverse—as the next step in our evolutionary transformation from a human-driven society to a technological one. Yet while Zuckerberg’s vision for this digital frontier has been met with a certain degree of skepticism, the truth—as journalist Antonio García Martínez concludes—is that we’re already living in the metaverse. The metaverse is, in turn, a dystopian meritocracy, where freedom is a conditional construct based on one’s worthiness and compliance. In a meritocracy, rights are privileges, afforded to those who have earned them. There can be no tolerance for independence or individuality in a meritocracy, where political correctness is formalized, legalized and institutionalized. Likewise, there can be no true freedom when the ability to express oneself, move about, engage in commerce and function in society is predicated on the extent to which you’re willing to “fit in.” We are almost at that stage now. Consider that in our present virtue-signaling world where fascism disguises itself as tolerance, the only way to enjoy even a semblance of freedom is by opting to voluntarily censor yourself, comply, conform and march in lockstep with whatever prevailing views dominate. Fail to do so—by daring to espouse “dangerous” ideas or support unpopular political movements—and you will find yourself shut out of commerce, employment, and society: Facebook will ban you, Twitter will shut you down, Instagram will de-platform you, and your employer will issue ultimatums that force you to choose between your so-called freedoms and economic survival. This is exactly how Corporate America plans to groom us for a world in which “we the people” are unthinking, unresistant, slavishly obedient automatons in bondage to a Deep State policed by computer algorithms. Science fiction has become fact. Twenty-some years after the Wachowskis’ iconic film, The Matrix, introduced us to a futuristic world in which humans exist in a computer-simulated non-reality powered by authoritarian machines—a world where the choice between existing in a denial-ridden virtual dream-state or facing up to the harsh, difficult realities of life comes down to a blue pill or a red pill—we stand at the precipice of a technologically-dominated matrix of our own making. We are living the prequel to The Matrix with each passing day, falling further under the spell of technologically-driven virtual communities, virtual realities and virtual conveniences managed by artificially intelligent machines that are on a fast track to replacing human beings and eventually dominating every aspect of our lives. In The Matrix, computer programmer Thomas Anderson a.k.a. hacker Neo is wakened from a virtual slumber by Morpheus, a freedom fighter seeking to liberate humanity from a lifelong hibernation state imposed by hyper-advanced artificial intelligence machines that rely on humans as an organic power source. With their minds plugged into a perfectly crafted virtual reality, few humans ever realize they are living in an artificial dream world. Neo is given a choice: to take the red pill, wake up and join the resistance, or take the blue pill, remain asleep and serve as fodder for the powers-that-be. Most people opt for the blue pill. In our case, the blue pill—a one-way ticket to a life sentence in an electronic concentration camp—has been honey-coated to hide the bitter aftertaste, sold to us in the name of expediency and delivered by way of blazingly fast Internet, cell phone signals that never drop a call, thermostats that keep us at the perfect temperature without our having to raise a finger, and entertainment that can be simultaneously streamed to our TVs, tablets and cell phones. Yet we are not merely in thrall with these technologies that were intended to make our lives easier. We have become enslaved by them. Look around you. Everywhere you turn, people are so addicted to their internet-connected screen devices—smart phones, tablets, computers, televisions—that they can go for hours at a time submerged in a virtual world where human interaction is filtered through the medium of technology. This is not freedom. This is not even progress. This is technological tyranny and iron-fisted control delivered by way of the surveillance state, corporate giants such as Google and Facebook, and government spy agencies such as the National Security Agency. So consumed are we with availing ourselves of all the latest technologies that we have spared barely a thought for the ramifications of our heedless, headlong stumble towards a world in which our abject reliance on internet-connected gadgets and gizmos is grooming us for a future in which freedom is an illusion. Yet it’s not just freedom that hangs in the balance. Humanity itself is on the line. If ever Americans find themselves in bondage to technological tyrants, we will have only ourselves to blame for having forged the chains through our own lassitude, laziness and abject reliance on internet-connected gadgets and gizmos that render us wholly irrelevant. Indeed, we’re fast approaching Philip K. Dick’s vision of the future as depicted in the film Minority Report. There, police agencies apprehend criminals before they can commit a crime, driverless cars populate the highways, and a person’s biometrics are constantly scanned and used to track their movements, target them for advertising, and keep them under perpetual surveillance. Cue the dawning of the Age of the Internet of Things (IoT), in which internet-connected “things” monitor your home, your health and your habits in order to keep your pantry stocked, your utilities regulated and your life under control and relatively worry-free. The key word here, however, is control. In the not-too-distant future, “just about every device you have—and even products like chairs, that you don’t normally expect to see technology in—will be connected and talking to each other.” By the end of 2018, “there were an estimated 22 billion internet of things connected devices in use around the world… Forecasts suggest that by 2030 around 50 billion of these IoT devices will be in use around the world, creating a massive web of interconnected devices spanning everything from smartphones to kitchen appliances.” As the technologies powering these devices have become increasingly sophisticated, they have also become increasingly widespread, encompassing everything from toothbrushes and lightbulbs to cars, smart meters and medical equipment. It is estimated that 127 new IoT devices are connected to the web every second. This “connected” industry has become the next big societal transformation, right up there with the Industrial Revolution, a watershed moment in technology and culture. Between driverless cars that completely lacking a steering wheel, accelerator, or brake pedal, and smart pills embedded with computer chips, sensors, cameras and robots, we are poised to outpace the imaginations of science fiction writers such as Philip K. Dick and Isaac Asimov. (By the way, there is no such thing as a driverless car. Someone or something will be driving, but it won’t be you.) These Internet-connected techno gadgets include smart light bulbs that discourage burglars by making your house look occupied, smart thermostats that regulate the temperature of your home based on your activities, and smart doorbells that let you see who is at your front door without leaving the comfort of your couch. Nest, Google’s suite of smart home products, has been at the forefront of the “connected” industry, with such technologically savvy conveniences as a smart lock that tells your thermostat who is home, what temperatures they like, and when your home is unoccupied; a home phone service system that interacts with your connected devices to “learn when you come and go” and alert you if your kids don’t come home; and a sleep system that will monitor when you fall asleep, when you wake up, and keep the house noises and temperature in a sleep-conducive state. The aim of these internet-connected devices, as Nest proclaims, is to make “your house a more thoughtful and conscious home.” For example, your car can signal ahead that you’re on your way home, while Hue lights can flash on and off to get your attention if Nest Protect senses something’s wrong. Your coffeemaker, relying on data from fitness and sleep sensors, will brew a stronger pot of coffee for you if you’ve had a restless night. Yet given the speed and trajectory at which these technologies are developing, it won’t be long before these devices are operating entirely independent of their human creators, which poses a whole new set of worries. As technology expert Nicholas Carr notes, “As soon as you allow robots, or software programs, to act freely in the world, they’re going to run up against ethically fraught situations and face hard choices that can’t be resolved through statistical models. That will be true of self-driving cars, self-flying drones, and battlefield robots, just as it’s already true, on a lesser scale, with automated vacuum cleaners and lawnmowers.” For instance, just as the robotic vacuum, Roomba, “makes no distinction between a dust bunny and an insect,” weaponized drones will be incapable of distinguishing between a fleeing criminal and someone merely jogging down a street. For that matter, how do you defend yourself against a robotic cop—such as the Atlas android being developed by the Pentagon—that has been programmed to respond to any perceived threat with violence? Moreover, it’s not just our homes and personal devices that are being reordered and reimagined in this connected age: it’s our workplaces, our health systems, our government, our bodies and our innermost thoughts that are being plugged into a matrix over which we have no real control. It is expected that by 2030, we will all experience The Internet of Senses (IoS), enabled by Artificial Intelligence (AI), Virtual Reality (VR), Augmented Reality (AR), 5G, and automation. The Internet of Senses relies on connected technology interacting with our senses of sight, sound, taste, smell, and touch by way of the brain as the user interface. As journalist Susan Fourtane explains: Many predict that by 2030, the lines between thinking and doing will blur. Fifty-nine percent of consumers believe that we will be able to see map routes on VR glasses by simply thinking of a destination… By 2030, technology is set to respond to our thoughts, and even share them with others… Using the brain as an interface could mean the end of keyboards, mice, game controllers, and ultimately user interfaces for any digital device. The user needs to only think about the commands, and they will just happen. Smartphones could even function without touch screens. In other words, the IoS will rely on technology being able to access and act on your thoughts. Fourtane outlines several trends related to the IoS that are expected to become a reality by 2030: 1: Thoughts become action: using the brain as the interface, for example, users will be able to see map routes on VR glasses by simply thinking of a destination. 2: Sounds will become an extension of the devised virtual reality: users could mimic anyone's voice realistically enough to fool even family members. 3: Real food will become secondary to imagined tastes. A sensory device for your mouth could digitally enhance anything you eat, so that any food can taste like your favorite treat. 4: Smells will become a projection of this virtual reality so that virtual visits, to forests or the countryside for instance, would include experiencing all the natural smells of those places. 5: Total touch: Smartphones with screens will convey the shape and texture of the digital icons and buttons they are pressing. 6: Merged reality: VR game worlds will become indistinguishable from physical reality by 2030. This is the metaverse, wrapped up in the siren-song of convenience and sold to us as the secret to success, entertainment and happiness. It’s a false promise, a wicked trap to snare us, with a single objective: total control. George Orwell understood this. Orwell’s masterpiece, 1984, portrays a global society of total control in which people are not allowed to have thoughts that in any way disagree with the corporate state. There is no personal freedom, and advanced technology has become the driving force behind a surveillance-driven society. Snitches and cameras are everywhere. And people are subject to the Thought Police, who deal with anyone guilty of thought crimes. The government, or “Party,” is headed by Big Brother, who appears on posters everywhere with the words: “Big Brother is watching you.” As I make clear in my book Battlefield America: The War on the American People and in its fictional counterpart The Erik Blair Diaries, total control over every aspect of our lives, right down to our inner thoughts, is the objective of any totalitarian regime. The Metaverse is just Big Brother in disguise. Tyler Durden Thu, 11/11/2021 - 23:40.....»»

Category: blogSource: zerohedgeNov 12th, 2021

Futures Rise Boosted By JNJ Split As Treasuries, Dollar Slide

Futures Rise Boosted By JNJ Split As Treasuries, Dollar Slide U.S. equity index futures were slightly up at the end of a volatile week, trading in a narrow 20 point range for the second day in a row, while Treasuries resumed declines in response to the recent shock inflation data from the world’s largest economies. Contracts on the three main U.S. gauges were higher, with Johnson & Johnson rising in premarket trading after saying it will split into two companies, while tech stocks again led gains at the end of a week scarred by deepening concerns over prolonged inflation. All the major U.S. indexes were set for a more than 1% weekly drop, their first since the week ended Oct. 1, as hot inflation numbers sapped investor sentiment and halted an earnings-driven streak of record closing highs. At 7:15 a.m. ET, Dow e-minis were up 106 points, or 0.3%, S&P 500 e-minis were up 8.5 points, or 0.18%, and Nasdaq 100 e-minis were up 40.25points, or 0.25%. The same bullish sentiment that lifted US futures pushed European shares up as luxury shares gained after Cartier owner Richemont posted better-than-forecast earnings, offsetting a drop in travel stocks. Asian shares also climbed, helped by a rally in Japan. At the same time, Treasuries resumed a selloff after a trading holiday Thursday, with this week’s shock US inflation figures still reverberating through the bond market. Five-year notes led losses on concern the price pressure will force the Federal Reserve to raise rates earlier than anticipated. A gauge of the yield curve flattened to the least since March 2020. While global stocks are set for their first weekly drop since early October, their swings have been muted compared with the gyrations in the bond market. Investor focus on a strong earnings season has tempered worries about higher inflation. “Inflation could remain elevated in the coming months, and each inflation release that comes in above expectations has the potential to cause volatility in rate and equity markets, but we still don’t expect inflation to derail the equity rally,” Mark Haefele, chief investment officer at UBS Global Wealth Management, wrote in a note. In US premarket trading, Johnson & Johnson jumped 4.7% in premarket trading after the drugmaker said it is planning to break up into two companies focused on its consumer health division and the large pharmaceuticals unit. Shares of the GAMMA giga techs (fka as FAAMG) also inched up. Tesla’s boss Elon Musk sold even more shares of the electric car maker, regulatory filings showed, after offloading about $5 billion worth of stock following a poll he posted on Twitter. The sale news naturally pushed TSLA stock price higher.  A gauge of U.S.-listed Chinese stocks jumped more than 5%, helped by Alibaba’s blowout Singles’ Day shopping festival and a report that Didi is getting ready to relaunch its apps. Rivian shares gain as much as 5% in U.S. premarket trading, extending the surge for the EV maker seen since its IPO this week which has sent its market value over $100b. Rivian trading at $122.99 in at 5am in New York, compared to IPO price of $78 Rising price pressures across the globe have been a top concern for market participants, with focus now shifting towards how consumer spending would fare as the holiday shopping season approaches. “The risk-on trading stance remains,” said Pierre Veyret, a technical analyst at ActivTrades in London. “However, markets are likely to remain volatile as investors will need to have more clues on where both the economy and monetary policies are going.” In Europe, gains for consumer and retail stocks balanced out declines for mining and energy companies. The Stoxx Europe 600 Index fluctuated as Bank of America strategists predicted a fall of at least 10% for the continent’s equities by early next year. Here are some of the biggest European movers today: Richemont shares jump as much as 9.8% to a record high, with analysts seeing scope for earnings estimates to be upgraded after the company reported first-half results that Citigroup described as “stellar.” Peer Swatch also bounced. Renault shares gain as much as 4.6% after Morgan Stanley upgraded the French automaker to overweight, saying it should have a stronger 2022 if it can raise production levels from a currently low base. Deutsche Telekom rises as much as 3% with analysts highlighting a good revenue performance and upgraded earnings and cash flow guidance as key positives from its earnings. Intertrust shares surge as much as 40% after the trust and corporate-services firm entered talks to be acquired by private-equity firm CVC. AstraZeneca falls as much as 5.9% after the drugmaker’s 3Q results missed estimates, with analysts noting a big miss for cancer drug Tagrisso. Wise shares sink as much as 8.8% after the money-transfer company won’t be added to an MSCI index in the latest rejig as some investors had expected. JDE Peet’s, Atos and Investor AB also all moved after the MSCI review. Fortum shares decline as much as 3.6% after the Finnish utility’s 3Q sales missed estimates. Uniper, in which Fortum owns a 75% stake, also slid after Fortum said it stopped share purchases in the German group in July owing to high prices. Avon Protection plummet as much as 44% after it warned of testing failures for some body-armor plates ordered by the U.S. military. SimCorp shares drop as much as 7.1% after the financial software and services company’s 3Q earnings, with Handelsbanken calling the quarter “weak,” and saying it raises doubts for the 2022 outlook Earlier in the session, Asia’s regional benchmark advanced, on track for a second day of gains, after sales in the Singles’ Day shopping festival boosted optimism. The MSCI Asia Pacific Index rose as much as 0.9%, with materials and communication stocks driving the benchmark. Tencent climbed 1.6%, after it bought a Japanese game studio and sold HengTen Networks shares. JD.com gained 5.2% after it received record Singles’ Day orders. Adding to sentiment were the mandate for China’s President Xi Jinping to potentially rule for life, which may mean policy continuity and fewer regulatory surprises and Goldman Sachs’ upgrade of offshore China stocks. A report that Didi Global is getting ready to relaunch apps in China further fueled optimism. “Investors are hoping that greenshoots of a loosening of reforms are upon us,” said Justin Tang head of Asian research at United First Partners. It’s clear “tech shares got a little boost from Singles’ Day and the anointing of Xi as forever leader.” JD.com Shines in Muted Singles Day After Sales Beat: Street Wrap South Korea and Japan benchmarks posted the top gains in the region. Australia’s shares also advanced, boosted by mining stocks. Japanese equities also rose, following gains in U.S. peers, erasing virtually all of their losses from earlier in the week. Electronics makers and telecoms were the biggest boosts to the Topix, which gained 1.3%. All 33 industry groups were in the green except energy products. Tokyo Electron and SoftBank Group were the largest contributors to a 1.1% rise in the Nikkei 225. The yen has weakened more than 1% against the dollar since Tuesday. “It’s a favorable environment for risk-taking thanks to China,” said Shogo Maekawa, a strategist at JP Morgan Asset Management in Tokyo, referring to Evergrande’s latest interest payment. Rising U.S. yields and a weaker yen “may serve as a trigger for foreign investors to re-evaluate Japanese equities and shift their focus to stocks here.” Indian stocks also rose, snapping three sessions of declines, boosted by gains in software exporter Infosys. The S&P BSE Sensex climbed 1.3% to 60,686.69 to a two-week high and completed a second successive week of gains with a 1% advance. The NSE Nifty 50 Index increased 1.3% on Friday. All 19 sub-indexes compiled by BSE Ltd. rose, led by a measure of technology companies. In earnings, of the 45 Nifty 50 companies that have announced results so far, 29 have either met or exceeded consensus analyst expectations, 15 have missed estimates, while one couldn’t be compared. Oil & Natural Gas Corp. and Coal India are among those scheduled to announce results today.  Expectations of the U.S. Fed raising interest rates earlier than expected after a surge in inflation weighed on most emerging markets this week. In India, consumer prices probably quickened for the first time in five months in October, according to economists in a Bloomberg survey. The data will be released on Friday after market hours.   In FX, the Bloomberg Dollar Spot Index was little changed, even as the dollar added to gains versus most its Group-of-10 peers, and Treasury yields rose across the curve on concern that rising U.S. inflation would warrant earlier rate hikes. The euro hovered around a more than a one-year low of $1.1450. The pound extended an Asia session advance and was the best performer among G-10 peers; the currency still heads for a third week of losses, having touched its lowest level since Christmas and options suggest the move may have legs to follow. Australian and New Zealand dollars are headed for back-to-back weekly declines as rising Treasury yields stoke further demand for the greenback; A 60% drop in the price of iron ore signals a blow to the Australian government’s efforts to stabilize the fiscal position following massive spending to support the economy through the coronavirus pandemic.Meanwhile, the ruble extended its losses, tracking a decline in Brent crude, as tensions flared up between Russia and Western nations over energy supplies and migrants. The currency tumbled as much as 1.1% to 72.4375 per dollar after the U.S. sounded out its EU allies that Russia may invade Ukraine. That made the ruble the worst performing currency in emerging markets.  In rates, Treasuries were off session lows, but cheaper by 2bp-3bp across belly of the curve which underperforms as reopened cash market catches up with Thursday’s slide in futures. Treasury 10-year yields around 1.566%, cheaper by 2bp on the day, while 5-year topped at 1.262% in early Asia session; curve is flatter amid belly-led losses, with 5s30s spread tighter by ~1bp on the day after touching 63.7bp, lowest since March 2020. On the 2s5s30s fly, belly cheapened 3.5bp on the day, re-testing 2018 levels that were highest since 2008. Bunds advanced, led by the front end, while Italian bonds slid across the curve, pushing the 10-year yield above 1% for the first time since Nov. 4, as money markets held on to aggressive ECB rate-hike bets. The Asia session was relatively calm, while during the European morning, Italian bonds lagged as futures continue to price in aggressive ECB policy. Treasury options activity in U.S. session has included downside protection on 5-year sector, where yields reached YTD high.     In commodities, crude futures dip to lowest levels for the week: WTI drops 1.4% before finding support near $80, Brent dips 1% back onto a $81-handle. Spot gold drifts lower near $1,852/oz. Base metals are mixed: LME aluminum, nickel and tin post modest gains, copper and zinc lag. Looking at the day ahead, data releases from the US include the University of Michigan’s preliminary consumer sentiment index for November, as well as the JOLTS job openings for September. In the Euro Area, there’ll also be industrial production for September. From central banks, we’ll hear from New York Fed President Williams, ECB Chief Economist Lane, and the BoE’s Haskel. Market Snapshot S&P 500 futures little changed at 4,646.50 STOXX Europe 600 little changed at 485.18 MXAP up 0.8% to 199.85 MXAPJ up 0.6% to 653.35 Nikkei up 1.1% to 29,609.97 Topix up 1.3% to 2,040.60 Hang Seng Index up 0.3% to 25,327.97 Shanghai Composite up 0.2% to 3,539.10 Sensex up 1.3% to 60,697.82 Australia S&P/ASX 200 up 0.8% to 7,443.05 Kospi up 1.5% to 2,968.80 Brent Futures down 1.3% to $81.83/bbl Gold spot down 0.5% to $1,853.43 U.S. Dollar Index little changed at 95.20 German 10Y yield little changed at -0.23% Euro little changed at $1.1441 Top Overnight News From Bloomberg Inflation is soaring across the euro area, but it’s also diverging by the most in years in a further complication for the European Central Bank’s ongoing pandemic stimulus The White House is debating whether to act immediately to try to lower U.S. energy prices or hold off on dramatic measures in the hope markets settle, as President Joe Biden’s concern about inflation runs up against climate, trade and foreign policy considerations Reports U.S. is concerned that Russia may be planning to invade Ukraine are “empty and unfounded efforts to exacerbate tensions,” Kremlin spokesman Dmitry Peskov says on conference call Financial problems faced by institutions like China Evergrande Group are “controllable” and spillovers from the nation’s markets to the rest of the world are limited, a former central bank adviser said Hapag-Lloyd AG warned that a crunch in global container shipments could persist into next year, with labor negotiations, environmental pressures and disruptive weather combining to hamper goods flows Japan’s government plans to compile an economic stimulus package of more than 40 trillion yen ($350 billion) in fiscal spending, according to the Nikkei newspaper President Xi Jinping appeared more certain than ever to rule China well into the current decade, as senior Communist Party officials declared that the country had reached a new “historical starting point” under his leadership Italian President Sergio Mattarella tried to quash speculation that he could stay on for a second term, leaving Prime Minister Mario Draghi as the top contender for the role early next year A more detailed look at global markets courtesy of Newsquawk Asian equity markets traded mostly higher heading into the weekend as the region attempted to build on the somewhat mixed performance stateside, where price action was contained amid Veterans Day and with US equity futures also slightly picking up from the quasi-holiday conditions. ASX 200 (+0.8%) was lifted in which mining stocks and the tech industry spearheaded the broad gains across sectors aside from healthcare as Ramsay Health Care remained pressured after it recently announced a near-40% decline in Q1 net profit. Nikkei 225 (+1.1%) was underpinned with Japanese exporters benefitting from recent favourable currency flows and with the biggest stock movers influenced by a deluge of earnings. Hang Seng (+0.3%) and Shanghai Comp. (+0.2%) were indecisive with Hong Kong tech stocks encouraged after e-commerce retailers Alibaba and JD.com posted record Singles Day sales, despite a deceleration in revenue growth from the shopping festival to its slowest annual pace since its conception in 2009 amid a toned-down event due to Beijing’s tech crackdown and emphasis on common prosperity. Conversely, mainland bourses were indecisive following a neutral liquidity operation by the PBoC and after US President Biden recently signed the Secure Equipment Act which prevents companies deemed as security threats from receiving new equipment licences from US regulators, which comes ahead of Monday’s potential Biden-Xi virtual meeting. Finally, 10yr JGBs were lower due to a lack of momentum from US treasuries as cash bond markets were closed for the federal holiday, with demand for JGBs also hampered by the gains in stocks and lack of BoJ purchases in the government debt market. Top European News Macron and Draghi Have Plans to Fill the Void Left by Merkel Johnson Burns Through Political Capital Built Up With Tory MPs JPMorgan Hires Zahn as Head of DACH Equity Capital Markets Hapag-Lloyd CEO Says Global Shipping Crunch Could Extend in 2022 European equities (Stoxx 600 -0.1%) have seen a relatively directionless start to the session with the Stoxx 600 set to close the week out with modest gains of around 0.4%. Macro updates have been particularly sparse thus far with today’s data docket also relatively light (highlights include US JOLTS and Uni. of Michigan sentiment). The handover from the APAC region was a predominantly positive one as Japanese equities benefited from favourable currency dynamics and Chinese markets focused on the fallout from Singles Day which saw record sales for Alibaba and JD.com. Stateside, futures are also relatively directionless (ES -0.1%) ahead of aforementioned US data points and Fedspeak from NY Fed President Williams (voter), who will be speaking on heterogeneity in macroeconomics. The latest BofA Flow Show revealed USD 7.3bln of inflows for US equities, whilst tech stocks saw outflows of USD 1.6bln; the largest outflow since June. In Europe, equities saw their largest outflows in seven weeks with USD 1.7bln of selling. In a separate note, BofA projects 10+% of downside by early next year for European stocks amid weakening growth momentum and rising bond yields. Sectors in Europe are mixed with outperformance seen in Personal & Household Goods with Richemont (+8.6%) shares boosted following better-than-expected Q3 results. LVMH (+1.4%) also gained at the open following reports that the Co. could consider opening duty-free stores in China. Telecom names are firmer with Deutsche Telekom (+2.6%) one of the best performers in the DAX after posting solid results and raising guidance. To the downside, commodity-exposed names are lagging peers with Basic Resources and Oil & Gas names hampered by price action in their underlying markets. FTSE-100 heavyweight AstraZeneca (-4.4%) sits at the foot of the index after Q3 profits fell short of expectations. Finally, Renault (+4.3%) is the best performer in the CAC after being upgraded to overweight from equalweight at Morgan Stanley with MS expecting the Co. to have a better year next year. Top Asian News JPMorgan Japan Stocks Downgrade Shows Doubts Before Stimulus Japan Stimulus Package to Top 40 Trillion Yen, Nikkei Reports Hon Hai Warns Chip Shortage Will Outweigh IPhone Boost to Sales AirAsia X Gets Over 95% Support From Creditors for Revamp In FX, it would be far too premature to suggest that the Buck’s winning streak is over, but having rallied so far in relatively short order some consolidation is hardly surprising, especially on a Friday in between a semi US market holiday and the weekend. Hence, the index is hovering just above 95.000 within a 95.078-266 range after a minor extension from yesterday’s peak to set a new 2021 best, and the Dollar is on a more mixed footing vs basket components plus other G10 and EM counterparts, awaiting the return of those not in on Veteran’s Day, JOLTS, preliminary Michigan sentiment and Fed’s Williams for some fresh or additional impetus and direction. GBP/CAD - The Pound and Loonie are flanking the major ranks even though the latest retreat in Brent and WTI is pretty uniform from a change on the day in Usd terms perspective, so it seems like Sterling is getting a boost from a downturn in the Eur/Gbp cross ahead of the UK-EU showdown on Brexit and Article 16, while Usd/Cad remains bullish on technical impulses before the BoC’s Q3 Senior Loan Officer Survey. Cable has bounced from just over 1.3350 to retest 1.3400 with Eur/Gbp probing 0.8550 to the downside, but Usd/Cad is probing 1.2600 irrespective of the Greenback stalling. AUD/JPY - Both fractionally firmer as the Buck takes another breather, though the Aussie is also deriving some traction from favourable Aud/Nzd tailwinds again. Aud/Usd has pared losses sub-0.7300 as the cross hovers around 1.0400, while Usd/Jpy has retreated from around 114.30 towards 1.9 bn option expiries at the 114.00 strike amidst reports that the Japanese Government's economic stimulus package will increase to Yen 40+ tn in fiscal spending, according to the Nikkei citing sources. EUR/NZD/CHF - The Euro is still hanging in following its close below a key technical level for a second consecutive session and fall further from the psychological 1.1500 mark, especially as better than forecast Eurozone ip has not prompted any upside, However, option expiry interest at 1.1450 (1.2 bn) may keep Eur/Usd afloat if only until the NY cut. Similarly, the Kiwi has not gleaned anything via a decent pick-up in NZ’s manufacturing PMI as Nzd/Usd clings to 0.7000+ status and the Franc remains under 0.9200 regardless of an acceleration in Swiss import and producer prices. SCANDI/EM - More transitory inflation remarks from Riksbank Governor Ingves are not helping the Sek fend off another dip through 10.0000 vs the Eur. but the Nok is getting protection from weaker oil prices via unusually large option expiries spanning the same big figure given 1.2 bn at 9.7500, 1.7 bn on the round number and 1 bn at 10.2000. Conversely, the Rub is underperforming as tensions rise around the Russian/Ukraine border and the Kremlin aims blame at the feet of the US alongside NATO, while the Try only just survived the latest assault on 10.00000 against the Usd in wake of below forecast Turkish ip and CBRT survey-based CPI projections for year end rising again. Elsewhere, the Mxn is softer following confirmation of a 25 bp Banxico hike on the basis that the verdict was not unanimous and some were looking for +50 bp, but the Zar retains an underlying bid after Thursday’s supportive SA MTBS and with Eskom reporting no load shedding at present, while the Cnh and Cny are holding gains in advance of the virtual Chinese/US Presidential meeting scheduled for Monday. In commodities, WTI and Brent are pressured in the European morning, experiencing more pronounced downside after a gradual decline occurred in APAC hours. However, the magnitude of today’s performance is comparably minimal when placed against that seen earlier in the week and particularly on Wednesday; in-spite of the earlier pronounced movements, benchmarks are currently set to end the week with losses of less than USD 1.00/bbl – albeit the range is in excess of USD 5.00/bbl. Newsflow this morning has been minimal and thus yesterday’s themes remain in-focus where a firmer USD likely continues to factor but more specifically COVID-19 concerns, with Germany’s Spahn on the wires, and geopolitics via Russia drawing attention. On the latter, tensions are becoming increasingly inflamed as the US said they are concerned that Russia could attack Ukraine and in response Russia said they are not a threat to anyone, but, says US military activity is aggressive and a threat. Moving to metals, spot gold and silver are softer on the session, but remain notably firmer on the week given the CPI-induced move. On this, UBS highlights the risk of additional inflation strength next year which could stoke further gold demand. Elsewhere, base metals are, broadly speaking, marginally softer given tentative APAC performance and the aforementioned COVID concerns, particularly those pertinent for China. In terms of associated bank commentary, SocGen looks for copper to average USD 9.2k/T and USD 8.0k/T in 2021 and 2022 respectively. US Event Calendar 10am: Sept. JOLTs Job Openings, est. 10.3m, prior 10.4m 10am: Nov. U. of Mich. 1 Yr Inflation, est. 4.9%, prior 4.8%; 5-10 Yr Inflation, prior 2.9% 10am: Nov. U. of Mich. Sentiment, est. 72.5, prior 71.7; Current Conditions, est. 77.2, prior 77.7; Expectations, est. 68.8, prior 67.9 DB's Henry Allen concludes the overnight wrap there wasn’t much to speak of in markets yesterday as US bond markets were closed for Veterans Day and investors elsewhere continued to digest the bumper CPI print from the previous session. We did see a bit of residual concern at the prospect of a faster tightening in monetary policy, and implied rates on Eurodollar futures continued to climb, gaining between +4bps and +8bps on contracts maturing through 2023. However, on the whole equities were relatively unfazed on both sides of the Atlantic, and the S&P 500 (+0.06%) stabilised after 2 successive declines thanks to a bounceback among the more cyclical sectors. Looking at those moves in more depth, interest-sensitive tech stocks were a big outperformer yesterday as both the NASDSAQ (+0.52%) and the FANG+ index (+0.98%) of megacap tech stocks moved higher. Material stocks in the S&P (+0.85%) were another sectoral winner, and the VIX index of volatility (-1.07pts) ticked down from its 4-week high on Wednesday. In Europe, the advance was even more prominent, where the STOXX 600 (+0.32%), the DAX (+0.10%) and the CAC 40 (+0.20%) all reached fresh records. Indeed, for the STOXX 600, that now marks the 13th advance in the last 15 sessions, with the index having risen by over +6% in the space of a month. As mentioned, it was a quieter day for sovereign bond markets with the US not trading, but the sell-off continued in Europe as yields on 10yr bunds (+1.7bps), OATs (+1.4bps) and BTPs (+2.7bps) all moved higher. We didn’t get any fresh news on the Fed officials either given the US holiday, but a Washington Post article yesterday said that officials from the White House had stayed in touch with Governor Brainard since her meeting with President Biden last week, albeit still emphasising that no final decision had yet been made. Separately, Bloomberg reported that senior Biden advisors did not view the recent trading scandal at the Federal Reserve as disqualifying Chair Powell. US Treasury markets have reopened overnight, with 10yr yields following their European counterparts higher, moving up +1.4bps to 1.563%. That’s been driven by a +2.4bps rise in the real yield, though 10yr real yields still remain close to their all-time lows since TIPS started trading back in 1997. Otherwise in Asia, markets are mostly trading higher with the KOSPI (+1.48%), Nikkei (+1.07%) and Hang Seng (+0.22%) all advancing, though the Shanghai Composite (-0.01%) is basically unchanged whilst the CSI (-0.31%) is trading lower. Data showed further signs of inflationary pressures in the region, with South Korea’s import price index up +35.8% in October on a year-on-year basis, the highest since 2008. Elsewhere in India, Prime Minister Modi is expected to announce an opening up of the sovereign bond market to retail investors today, which comes amidst rising inflation concerns as well. Looking ahead, futures are indicating a positive start in the US and Europe with those on the S&P 500 (+0.16%) and the DAX (+0.15%) pointing higher. Turning to the geopolitical scene, it was reported by Bloomberg that US officials had briefed their counterparts in the EU about a potential Russian invasion of Ukraine. It follows a build-up in Russian forces near the Ukrainian border that have been reported more widely, and echoes a similar situation back in the spring. The Russian ruble weakened -0.57% against the US dollar yesterday in response, with the declines occurring after the report came out. This comes amidst a number of broader tensions in the region, and natural gas prices in Europe were up +6.66% yesterday after Belarus’ President Lukashenko threatened to cut the transit of gas if the EU placed additional sanctions on his regime. Meanwhile on Brexit, there were potential signs of compromise in the dispute over Northern Ireland, with the Telegraph reporting that the EU was prepared to improve its offer when it came to reducing customs checks. However, the report also said that this would be contingent on the UK ending its demands to remove the European Court of Justice’s role in overseeing the agreement. There has been growing speculation in recent days that the UK could be about to trigger Article 16 of the Northern Ireland Protocol, which allows either side to take unilateral safeguard measures if the deal was causing serious issues. This would risk EU retaliation that could in theory even led to a suspension of the entire trade deal agreed last year, which is an option that has been talked up in recent weeks. For those wanting further reading on the issue, DB’s FX strategist Shreyas Gopal put out a note on Tuesday (link here) looking at the issues surrounding Article 16 and its implications for sterling. Another important thing to keep an eye on over the coming weeks will be any further signs of deterioration in the Covid-19 situation. Cases have been ticking up at the global level for around 4 weeks now, and a number of European countries (including Germany) have seen a major surge over the last few days. In the Netherlands, they actually set a record for the entire pandemic yesterday, and Prime Minister Rutte is due to hold a press conference today where it’s been speculated he’ll announce fresh restrictions. Separately in Austria, Chancellor Schallenberg said that a lockdown for the unvaccinated was “probably unavoidable”, and said that “I don’t see why two-thirds should lose their freedom because one-third is dithering”. On the data front, the only major release was the UK’s Q3 GDP reading yesterday, which surprised on the downside with growth of +1.3% (vs. +1.5% expected), even though Covid-19 restrictions were much easier in Q3 relative to Q2. To be fair, the monthly reading for September did surprise on the upside, with growth of +0.6% (vs. +0.4% expected), but it came as July and August saw downward revisions. On a monthly basis, the September reading meant the UK economy was just -0.6% beneath its pre-pandemic size in February 2020. To the day ahead now, and data releases from the US include the University of Michigan’s preliminary consumer sentiment index for November, as well as the JOLTS job openings for September. In the Euro Area, there’ll also be industrial production for September. From central banks, we’ll hear from New York Fed President Williams, ECB Chief Economist Lane, and the BoE’s Haskel. Tyler Durden Fri, 11/12/2021 - 07:48.....»»

Category: blogSource: zerohedgeNov 12th, 2021

The Metaverse Is Big Brother in Disguise: Freedom Meted Out By Technological Tyrants

The Metaverse Is Big Brother in Disguise: Freedom Meted Out By Technological Tyrants Authored by John W. Whitehead & Nisha Whitehead via The Rutherford Institute, “The term metaverse, like the term meritocracy, was coined in a sci fi dystopia novel written as cautionary tale. Then techies took metaverse, and technocrats took meritocracy, and enthusiastically adopted what was meant to inspire horror.” - Antonio García Martínez Welcome to the Matrix (i.e. the metaverse), where reality is virtual, freedom is only as free as one’s technological overlords allow, and artificial intelligence is slowly rendering humanity unnecessary, inferior and obsolete. Mark Zuckerberg, the CEO of Facebook, sees this digital universe—the metaverse—as the next step in our evolutionary transformation from a human-driven society to a technological one. Yet while Zuckerberg’s vision for this digital frontier has been met with a certain degree of skepticism, the truth—as journalist Antonio García Martínez concludes—is that we’re already living in the metaverse. The metaverse is, in turn, a dystopian meritocracy, where freedom is a conditional construct based on one’s worthiness and compliance. In a meritocracy, rights are privileges, afforded to those who have earned them. There can be no tolerance for independence or individuality in a meritocracy, where political correctness is formalized, legalized and institutionalized. Likewise, there can be no true freedom when the ability to express oneself, move about, engage in commerce and function in society is predicated on the extent to which you’re willing to “fit in.” We are almost at that stage now. Consider that in our present virtue-signaling world where fascism disguises itself as tolerance, the only way to enjoy even a semblance of freedom is by opting to voluntarily censor yourself, comply, conform and march in lockstep with whatever prevailing views dominate. Fail to do so—by daring to espouse “dangerous” ideas or support unpopular political movements—and you will find yourself shut out of commerce, employment, and society: Facebook will ban you, Twitter will shut you down, Instagram will de-platform you, and your employer will issue ultimatums that force you to choose between your so-called freedoms and economic survival. This is exactly how Corporate America plans to groom us for a world in which “we the people” are unthinking, unresistant, slavishly obedient automatons in bondage to a Deep State policed by computer algorithms. Science fiction has become fact. Twenty-some years after the Wachowskis’ iconic film, The Matrix, introduced us to a futuristic world in which humans exist in a computer-simulated non-reality powered by authoritarian machines—a world where the choice between existing in a denial-ridden virtual dream-state or facing up to the harsh, difficult realities of life comes down to a blue pill or a red pill—we stand at the precipice of a technologically-dominated matrix of our own making. We are living the prequel to The Matrix with each passing day, falling further under the spell of technologically-driven virtual communities, virtual realities and virtual conveniences managed by artificially intelligent machines that are on a fast track to replacing human beings and eventually dominating every aspect of our lives. In The Matrix, computer programmer Thomas Anderson a.k.a. hacker Neo is wakened from a virtual slumber by Morpheus, a freedom fighter seeking to liberate humanity from a lifelong hibernation state imposed by hyper-advanced artificial intelligence machines that rely on humans as an organic power source. With their minds plugged into a perfectly crafted virtual reality, few humans ever realize they are living in an artificial dream world. Neo is given a choice: to take the red pill, wake up and join the resistance, or take the blue pill, remain asleep and serve as fodder for the powers-that-be. Most people opt for the blue pill. In our case, the blue pill—a one-way ticket to a life sentence in an electronic concentration camp—has been honey-coated to hide the bitter aftertaste, sold to us in the name of expediency and delivered by way of blazingly fast Internet, cell phone signals that never drop a call, thermostats that keep us at the perfect temperature without our having to raise a finger, and entertainment that can be simultaneously streamed to our TVs, tablets and cell phones. Yet we are not merely in thrall with these technologies that were intended to make our lives easier. We have become enslaved by them. Look around you. Everywhere you turn, people are so addicted to their internet-connected screen devices—smart phones, tablets, computers, televisions—that they can go for hours at a time submerged in a virtual world where human interaction is filtered through the medium of technology. This is not freedom. This is not even progress. This is technological tyranny and iron-fisted control delivered by way of the surveillance state, corporate giants such as Google and Facebook, and government spy agencies such as the National Security Agency. So consumed are we with availing ourselves of all the latest technologies that we have spared barely a thought for the ramifications of our heedless, headlong stumble towards a world in which our abject reliance on internet-connected gadgets and gizmos is grooming us for a future in which freedom is an illusion. Yet it’s not just freedom that hangs in the balance. Humanity itself is on the line. If ever Americans find themselves in bondage to technological tyrants, we will have only ourselves to blame for having forged the chains through our own lassitude, laziness and abject reliance on internet-connected gadgets and gizmos that render us wholly irrelevant. Indeed, we’re fast approaching Philip K. Dick’s vision of the future as depicted in the film Minority Report. There, police agencies apprehend criminals before they can commit a crime, driverless cars populate the highways, and a person’s biometrics are constantly scanned and used to track their movements, target them for advertising, and keep them under perpetual surveillance. Cue the dawning of the Age of the Internet of Things (IoT), in which internet-connected “things” monitor your home, your health and your habits in order to keep your pantry stocked, your utilities regulated and your life under control and relatively worry-free. The key word here, however, is control. In the not-too-distant future, “just about every device you have—and even products like chairs, that you don’t normally expect to see technology in—will be connected and talking to each other.” By the end of 2018, “there were an estimated 22 billion internet of things connected devices in use around the world… Forecasts suggest that by 2030 around 50 billion of these IoT devices will be in use around the world, creating a massive web of interconnected devices spanning everything from smartphones to kitchen appliances.” As the technologies powering these devices have become increasingly sophisticated, they have also become increasingly widespread, encompassing everything from toothbrushes and lightbulbs to cars, smart meters and medical equipment. It is estimated that 127 new IoT devices are connected to the web every second. This “connected” industry has become the next big societal transformation, right up there with the Industrial Revolution, a watershed moment in technology and culture. Between driverless cars that completely lacking a steering wheel, accelerator, or brake pedal, and smart pills embedded with computer chips, sensors, cameras and robots, we are poised to outpace the imaginations of science fiction writers such as Philip K. Dick and Isaac Asimov. (By the way, there is no such thing as a driverless car. Someone or something will be driving, but it won’t be you.) These Internet-connected techno gadgets include smart light bulbs that discourage burglars by making your house look occupied, smart thermostats that regulate the temperature of your home based on your activities, and smart doorbells that let you see who is at your front door without leaving the comfort of your couch. Nest, Google’s suite of smart home products, has been at the forefront of the “connected” industry, with such technologically savvy conveniences as a smart lock that tells your thermostat who is home, what temperatures they like, and when your home is unoccupied; a home phone service system that interacts with your connected devices to “learn when you come and go” and alert you if your kids don’t come home; and a sleep system that will monitor when you fall asleep, when you wake up, and keep the house noises and temperature in a sleep-conducive state. The aim of these internet-connected devices, as Nest proclaims, is to make “your house a more thoughtful and conscious home.” For example, your car can signal ahead that you’re on your way home, while Hue lights can flash on and off to get your attention if Nest Protect senses something’s wrong. Your coffeemaker, relying on data from fitness and sleep sensors, will brew a stronger pot of coffee for you if you’ve had a restless night. Yet given the speed and trajectory at which these technologies are developing, it won’t be long before these devices are operating entirely independent of their human creators, which poses a whole new set of worries. As technology expert Nicholas Carr notes, “As soon as you allow robots, or software programs, to act freely in the world, they’re going to run up against ethically fraught situations and face hard choices that can’t be resolved through statistical models. That will be true of self-driving cars, self-flying drones, and battlefield robots, just as it’s already true, on a lesser scale, with automated vacuum cleaners and lawnmowers.” For instance, just as the robotic vacuum, Roomba, “makes no distinction between a dust bunny and an insect,” weaponized drones will be incapable of distinguishing between a fleeing criminal and someone merely jogging down a street. For that matter, how do you defend yourself against a robotic cop—such as the Atlas android being developed by the Pentagon—that has been programmed to respond to any perceived threat with violence? Moreover, it’s not just our homes and personal devices that are being reordered and reimagined in this connected age: it’s our workplaces, our health systems, our government, our bodies and our innermost thoughts that are being plugged into a matrix over which we have no real control. It is expected that by 2030, we will all experience The Internet of Senses (IoS), enabled by Artificial Intelligence (AI), Virtual Reality (VR), Augmented Reality (AR), 5G, and automation. The Internet of Senses relies on connected technology interacting with our senses of sight, sound, taste, smell, and touch by way of the brain as the user interface. As journalist Susan Fourtane explains: Many predict that by 2030, the lines between thinking and doing will blur. Fifty-nine percent of consumers believe that we will be able to see map routes on VR glasses by simply thinking of a destination… By 2030, technology is set to respond to our thoughts, and even share them with others… Using the brain as an interface could mean the end of keyboards, mice, game controllers, and ultimately user interfaces for any digital device. The user needs to only think about the commands, and they will just happen. Smartphones could even function without touch screens. In other words, the IoS will rely on technology being able to access and act on your thoughts. Fourtane outlines several trends related to the IoS that are expected to become a reality by 2030: 1: Thoughts become action: using the brain as the interface, for example, users will be able to see map routes on VR glasses by simply thinking of a destination. 2: Sounds will become an extension of the devised virtual reality: users could mimic anyone's voice realistically enough to fool even family members. 3: Real food will become secondary to imagined tastes. A sensory device for your mouth could digitally enhance anything you eat, so that any food can taste like your favorite treat. 4: Smells will become a projection of this virtual reality so that virtual visits, to forests or the countryside for instance, would include experiencing all the natural smells of those places. 5: Total touch: Smartphones with screens will convey the shape and texture of the digital icons and buttons they are pressing. 6: Merged reality: VR game worlds will become indistinguishable from physical reality by 2030. This is the metaverse, wrapped up in the siren-song of convenience and sold to us as the secret to success, entertainment and happiness. It’s a false promise, a wicked trap to snare us, with a single objective: total control. George Orwell understood this. Orwell’s masterpiece, 1984, portrays a global society of total control in which people are not allowed to have thoughts that in any way disagree with the corporate state. There is no personal freedom, and advanced technology has become the driving force behind a surveillance-driven society. Snitches and cameras are everywhere. And people are subject to the Thought Police, who deal with anyone guilty of thought crimes. The government, or “Party,” is headed by Big Brother, who appears on posters everywhere with the words: “Big Brother is watching you.” As I make clear in my book Battlefield America: The War on the American People and in its fictional counterpart The Erik Blair Diaries, total control over every aspect of our lives, right down to our inner thoughts, is the objective of any totalitarian regime. The Metaverse is just Big Brother in disguise. Tyler Durden Thu, 11/11/2021 - 23:40.....»»

Category: blogSource: zerohedgeNov 12th, 2021

In 2022, "Things Aren"t Gonna Get Done" On An Absolutely Massive Scale

In 2022, "Things Aren't Gonna Get Done" On An Absolutely Massive Scale Authored by Michael Snyder via TheMostImportantNews.com, Are we about to witness one of the greatest self-inflicted economic wounds in history?  Vaccine mandate deadlines are starting to arrive, and large numbers of very qualified people are losing their jobs as a result.  Of course this comes at a very bad time, because we are already in the midst of the most epic worker shortage in U.S. history.  Despite the biggest hiring push that I have ever seen in my entire lifetime, businesses all over America are still desperate for workers.  The funny thing is that lots of available workers should theoretically be out there somewhere.  The number of Americans that are currently working is still about five million less than the peak that was hit just before the pandemic arrived.  So where did all of those missing workers go?  That is a question that we desperately need an answer for, because millions of workers seem to have evaporated from the system.  Now the vaccine mandates are going to make things far worse, because millions of Americans that are actually good at their jobs are going to be ruthlessly terminated, and finding replacements for them is going to be exceedingly difficult. For instance, you can’t just pull guys off the street and have them fly planes.  Very soon, large numbers of pilots will be sent packing on a permanent basis, and pilots for American Airlines gave us a taste of what is coming by engaging in a “sick out” over the weekend… American Airlines canceled another 634 flights on Sunday, more than 12% of its total operations for the day, the company said Sunday. The airline has now canceled more than 1,500 flights since Friday, as it deals with weather issues and staffing shortages that started last week. Of course American Airlines is trying to blame “the weather” for these canceled flights, but everyone knows what is really going on. And I greatly applaud the pilots for taking a stand. If these airlines don’t reverse their mandates, pretty soon we will have widespread air travel headaches on a permanent basis in this nation. In New York City, Friday was the deadline for municipal workers to get vaccinated, and more than 26,000 of them have refused to comply… Twenty-six percent of municipal employees in New York City were still unvaccinated following a Friday deadline that mandated workers get the COVID-19 vaccine. A significant jump in vaccinations occurred among city employees due to the deadline, the city said, according to The Associated Press, but more than 26,000 workers have not uploaded proof of their vaccination status and face unpaid leave as a result. Moving forward, all of the work that those 26,000 workers used to do simply will not get done. Already, a total of 26 fire companies have had to be completely shut down… The FDNY shuttered 26 fire companies citywide on Saturday due to staff shortages caused by the COVID-19 vaccination mandate, according to furious elected officials, who ripped the move as “unconscionable” — and warned it could have catastrophic consequences. So will this cost lives? Of course it will. In fact, a seven-year-old boy just died in an apartment fire… A seven-year-old boy died and his grandmother was seriously injured in an apartment fire in New York City as the FDNY deals with staff shortages in response to a vaccine mandate. Firefighters responded to a 1:30 a.m. call Saturday at a building in Washington Heights, where fire broke out in the building superintendent’s basement apartment. First responders quickly contained and extinguished the fire. Meanwhile, trash is starting to pile up around the city at a very alarming rate… Trash bags can be spotted all over the Midwood neighborhood of Brooklyn, where some residents said that it has been days since their trash was last picked up. A few said they realized something was off earlier in the week, as one missed pickup happens, but they started to think there was a problem after the second missed time. On both residential streets and commercial areas, the trash bags on the sidewalk are piled several feet high in some instances. One resident who has lived in the area for about 40 years said she has never seen the area as dirty as has been the past few days. So what is the city going to look and smell like in a few months once we get into the early portion of 2022? The sad thing is that none of this had to happen. The vaccine mandates are absurd, and they are going to cause enormous problems all over the country. Countless supply chain workers are going to be pulled out of our supply chains in the coming months, and we are already facing painful shortages from coast to coast… Supermarket chains are revamping their operations to navigate persistent product shortages, expanding storage space and curbing discounts to make sure they don’t run out. Companies are planning for shortages of popular brands of food and staples to continue for months and managers are trying to keep up as different products run short from week to week, industry executives said. A lot of Americans are still expecting these shortages to go away eventually, but Transportation Secretary Pete Buttigieg is now admitting that there will be supply chain problems “as long as the pandemic continues”… Transport Secretary Pete Buttigieg says the supply chain crisis will continue at least until the COVID-19 pandemic ends amid fears of shortages ahead of the winter holidays. ‘There are definitely going to continue to be issues, especially as long as the pandemic continues,’ Buttigieg told Fox News Sunday. ‘If you have, for example, the third-largest container port in the world in China shutting down because of a COVID outbreak in late summer you’ll feel that in the fall here on the West coast.’ Of course there is no end in sight for the pandemic.  The virus is constantly mutating, and any immunity to it is very temporary. So just like the common cold and the flu, COVID will be with us indefinitely. If Biden administration officials want to reverse recent polling trends, they better find a way to address our supply chain issues, because right now their numbers are really dismal.  Here is just one example… “Americans have lost their confidence in President Joe Biden and their optimism for the country.” That, according to Chuck Todd, is the top takeaway from a just-released NBC News poll out Sunday. Breaking down the numbers on Meet the Press, Todd pointed to data from the survey that he deemed “shocking.” “Just 22 percent of adults say [the U.S. is] headed in the right direction,” Todd reported. “A shocking 71 percent say we’re on the wrong track.” The only surprise from that survey is that there are 22 percent of Americans that are still gullible enough to have a positive outlook. The Democrats have cooked up a recipe for national suicide, and they are setting the stage for so many of the things that I warned about in my latest book. If Joe Biden had any sense, he would rescind all nationwide vaccine mandates immediately. But he isn’t going to do that. And major cities like New York and Los Angeles are not going to rescind their mandates either. So “things are not gonna get done” on an absolutely massive scale in 2022, and we will all suffer deeply as a result. *  *  * It is finally here! Michael’s new book entitled “7 Year Apocalypse” is now available in paperback and for the Kindle on Amazon. Tyler Durden Mon, 11/01/2021 - 17:00.....»»

Category: personnelSource: nytNov 1st, 2021

American Airlines canceled another 436 flights on Monday following its Halloween weekend chaos

The airline said it expects its flights to stabilize and that it is beefing up hiring to avoid similar situations during the upcoming holiday season. An American Airlines pilot. COOPER NEILL/AFP/Getty American Airlines kicked off the week by canceling 436 flights as of midday Monday. Since Friday, American has canceled over 2,000 flights and delayed about 1,500. American Airlines said the cancellations happened because of staff shortages and bad weather. American Airlines kicked off its Monday morning by canceling 250 flights by 4:30 a.m. Central Time, an American spokesperson told Insider. Since then, another 186 have been canceled, bringing the airline's total cancellations to 436, according to American. FlightAware pegs the cancellations at 15% of its total operations, but American told Insider it is only about 8%.Monday's cancellations came after the carrier faced a Halloween weekend full of chaos due to bad weather and staff shortages.American Airlines has canceled over 2,000 flights since Friday, including 343 flights on Friday, 548 flights on Saturday, 1,060 flights on Sunday, and 436 on Monday, bringing the total number to 2,387. American told Insider that Sunday's mass cancellations accounted for about 21% of the airline's operation, though FlightAware reported 36%. The cancellations impacted over 136,000 customers, according to a company document viewed by CNBC. There were also nearly 900 delayed flights between Friday and Sunday, with another 541 delayed as of 3:30 p.m. Central Time Monday, according to FlightAware. "We expect considerable improvement beginning today with some residual impact from the weekend," the American Airlines spokesperson told Insider on Monday morning.American's chief operating officer blamed strong winds at its massive Dallas Fort-Worth hub for a large portion of weekend cancellations, saying that because of the weather, only two runways were available for use as opposed to the usual five.The issues at Dallas Fort-Worth subsequently left employees in the wrong locations, unable to catch the correct flights.Despite the trouble, COO David Seymour on Saturday told employees in a letter seen by Insider that most fliers were being rebooked the same day. In order to avoid a similar situation as holiday travel ramps up, 1,800 flight attendants are set to return from leave on November 1, with an additional group headed back to work on December 1. The company has been requiring cabin crews to work extra shifts despite contract rules, according to a memo sent to members of American's flight attendant union, the Association of Professional Flight Attendants. "The fact that there is inadequate staffing to cover the operation as it is currently structured is not the fault of flight attendants," union leadership said in the letter.American also plans to hire 600 more employees by the end of 2021, including pilots and airport crew, Seymour said in the letter.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderNov 1st, 2021

American Airlines cancels another 250 flights on Monday following Halloween weekend chaos

The airline said it expects its flights to stabilize and that it is beefing up hiring to avoid similar situations during the upcoming holiday season. An American Airlines pilot. COOPER NEILL/AFP/Getty American Airlines kicked off the week by canceling 250 flights early Monday morning. This comes after a chaotic Halloween weekend with nearly 2,000 flights canceled due to staff shortages and bad weather. To avoid such cancelations during the upcoming holiday season, the airline is planning to hire 600 more employees including crew and pilots. American Airlines kicked off its Monday morning by canceling 250 flights by 4:30 a.m. Central Time, an American spokesperson told Insider.Monday's cancellations came after the carrier faced a Halloween weekend full of chaos due to bad weather and staff shortages. American Airlines canceled nearly 2,000 flights over the weekend, including 343 flights on Friday, 548 flights on Saturday, and 1,058 flights on Sunday, bringing the total number of cancellations to 1,949. There were also nearly 900 delayed flights between Friday and Sunday. "We expect considerable improvement beginning today with some residual impact from the weekend," the American Airlines spokesperson told Insider Monday.American's Chief Operating Officer blamed strong winds at its massive Dallas Fort-Worth hub for a large portion of weekend cancellations, saying that because of the weather, only two runways were available for use as opposed to the usual five.The issues at Dallas Fort-Worth subsequently left employees in the wrong locations, unable to catch the correct flights. Despite the trouble, COO David Seymour, on Saturday told employees in a letter, seen by Insider, that most fliers were being rebooked the same day. In order to avoid a similar situation as holiday travel ramps up, 1,800 flight attendants are set to return from leave on November 1, with an additional group headed back to work on December 1. American also plans to hire 600 more employees by the end of 2021, including pilots and airport crew, Seymour said in the letter.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderNov 1st, 2021

Spooky Halloween? Geomagnetic Storm To Dazzle Night Sky This Weekend

Spooky Halloween? Geomagnetic Storm To Dazzle Night Sky This Weekend The Space Weather Prediction Center (SWPC) under the National Oceanic and Atmospheric Administration (NOAA) has declared a "Geomagnetic Storm Watch" this weekend which could make Halloween extra spooky.  The wave of solar energy headed for Earth could dazzle the night sky on Halloween night with auroras for people to spectate across the Northeast, to the upper Midwest, and over the state of Washington.  "A G3 (Strong) geomagnetic storm watch has been issued for October 30. In response to the Coronal Mass Ejection (CME) from Region 2887 associated with the X1 flare, a G2 (Moderate) watch is in effect for October 31," NOAA said in a statement.  "We think the initial impact will happen during the daylight hours, so for aurora enthusiasts in the U.S., we are looking at overnight of the 30th into 31st for the best chance to see the aurora," said William Murtagh, director of the SWPC.  SWPC said the storm is rated as a G3 on a scale between 1 to 5 for space weather events. There's a chance that the radiation from the storm could disrupt communications systems or the operation of spacecraft and affect power grids. The watch covers the North Pole to the 50th parallel.  A Direct Hit for #Halloween! The #solarstorm launched during the X-flare today is indeed Earth-directed! NASA predictions confirm impact by early October 31. Expect #aurora to mid-latitudes, as well as #GPS reception issues and #amateur radio disruptions on Earth's nightside! pic.twitter.com/Jjk3eixWIq — Dr. Tamitha Skov (@TamithaSkov) October 28, 2021 Space weather forecaster "Suspicious0bservers" explains more on this weekend's CME impact.  Sunspot activity is an 11-year cycle. We noted last year, a new cycle began and could be very active. It's expected to peak through 2025.  An active solar cycle could be bad news for the digital economy, as disruptions sparked by solar flares could create massive economic damage. While this current storm is unlikely to cause harm to communication systems, the next big one could be lurking around the corner.  Tyler Durden Sat, 10/30/2021 - 13:00.....»»

Category: blogSource: zerohedgeOct 30th, 2021

Janet Yellen Flip-Flops, Insists Biden"s "BBB" Plan Will Actually Help Suppress Inflation

Janet Yellen Flip-Flops, Insists Biden's 'BBB' Plan Will Actually Help Suppress Inflation Before jetting off to Rome for a weekend G-20 summit in Rome, President Biden on Thursday offered his most detailed outline yet of the Dems new $1.75 trillion social spending/climate changing package, a number that was too small for progressives, who proceeded to block a Thursday vote on the president's "bipartisan" infrastructure bill. Speaking to CNBC from Rome where Yellen is attending the G-20 conference of global leaders with President Biden, the Treasury Secretary delivered her latest pitch in support of the $1.75 trillion social spending-climate agenda, covering a critical area of concern that her boss did his best to avoid during his speech yesterday. That subject? Inflation, which Biden's aides probably felt might be too dangerous for him to discuss due to his cognitive decline. And so Treasury Secretary Yellen was left to pick up the slack with a 0500ET interview on CNBC's Worldwide Exchange. The broad takeaway from her remarks: President Biden's two-party social-spending-climate plan and his "bipartisan" infrastructure plan will actually help lower inflation by reducing costs for households for key services like child-care, health care and other issues. Ultimately, she expects these pressures to subside by the second half of next year. “I don’t think that these investments will drive up inflation at all,” she told CNBC’s Sara Eisen during a live “Worldwide Exchange” interview. Months ago, Yellen was one of the first to warn about the looming inflationary beast. But now she's in charge of taming it, so of course her rhetoric has changed. Biden claimed during his White House address yesterday that "17 Nobel winning economists" had signed off on his framework, claiming it wouldn't push up inflation because it would be - more or less - be fully paid for by tax hikes while creating new economic opportunities. Right now, the bigger driver of inflation is the supply-side shocks like those unveiled by Apple during last night's earnings. "I think supply chain issues are holding our economy back somewhat...it will take a while to boost supply." @SecYellen discusses the impact of the supply chain crunch on the American and global economy, and tells @SaraEisen when to expect some relief: pic.twitter.com/yyzrsOSlmL — Worldwide Exchange (@CNBCWEX) October 29, 2021 Yellen renewed her push for White House spending plans that are unpopular with several factions of Congress and have yet to be approved. But even as the headline CPI number hits its highest level in 30 years, Yellen insisted that Biden's program would be a net benefit for workers. "It will boost the economy’s potential to grow, the economy’s supply potential, which tends to push inflation down, not up," she said. "For many American families experiencing inflation, seeing the prices of gas and other things that they buy rise, what this package will do is lower some of the most important costs, what they pay for health care, for child care. It’s anti-inflationary in that sense as well." The only problem with Yellen's worldview right now is that, as the holiday's approach, GDP is slowing because more than 100 ships are being left floating in a massive logjam making it nearly impossible for companies to obtain the goods they need ahead of the holiday season. As we noted the other day, economists from the American farm bureau warned that the US is headed for its expensive Thanksgiving ever. In effect, the reality of our current economy reflects the exact opposite of what Yellen says is coming just around the corner. "Not only has inflation risen, but growth also has decelerated. Due in large part to supply issues that have left dozens of ships stranded at U.S. ports, the pace of gross domestic product growth slowed to 2% in the third quarter, the slowest rate since the pandemic-induced recession ended in April 2020. Part of the administration’s G-20 agenda will be addressing its pet economic concerns, including the implementation of a global minimum for corporate taxes, as well as addressing climate change and the supply chain issues that have hampered growth and threaten to cut into holiday spending patterns. Yellen said she expects the supply chain issues "will be addressed over the medium term." She called the White House’s Build Back Better program "transformational" in addressing the economy’s needs as the nation seeks to emerge from the Covid-19 pandemic. She insisted that the spending plans are "fully paid for" through tax proposals primarily aimed at higher earners and corporations. "I think it really helps us invest in physical capital. That’s public infrastructure that’s important to productivity growth," she said. "There’s investment in human capital, there’s investment in research and development, the support that families will receive that will help them participate in the labor market." As we quipped on twitter just a week ago, the nabobs running American fiscal and monetary policy have been slowly moving the goalposts vis-a-vis inflation since the start of the year, when Larry Summers first warned about the risks of rising inflation - prompting his fellow academics to response with a mix of derision and mockery. Big finance experts: Q1 2021: There is inflation, but it's transitory Q3 2021: Ok, inflation isn't transitory, but there is no stagflation Q1 2022: Ok, there is stagflation, but this time is different and we are definitely not in the 1970s — zerohedge (@zerohedge) October 22, 2021 Now, Treasury Secretary Janet Yellen has revised the narrative once again: President Biden's massive spending plan won't stoke even more inflation (like other recent COVID-related stmulus plans have) because the Biden plan will help stoke economic growth by allowing more women to participate in the workforce while investing in "public infrastructure." She called the White House’s Build Back Better program “transformational” in addressing the economy’s needs as the nation seeks to emerge from the Covid-19 pandemic. She insisted that the spending plans are “fully paid for” through tax proposals primarily aimed at higher earners and corporations. “I think it really helps us invest in physical capital. That’s public infrastructure that’s important to productivity growth,” she said. “There’s investment in human capital, there’s investment in research and development, the support that families will receive that will help them participate in the labor market.” In the end, she's hopeful that economic growth will accelerate and inflation will recede. But to claim that this is a certainty is magical thinking at best. Over the past few weeks, the debate surrounding the inherent "transitoriness of inflation" has become increasingly fierce, forcing Fed Chairman Jerome Powell to tacitly signale to other senior Fed officials that the word "transitory" shouldn't be used during public remarks, even as  America's current inflationary issues, as the accelerating price pressures have already risen more quickly than the Fed had anticipated (something billionaire PTJ warned is the "biggest threat to society). Yellen said she Friday she expects inflation to ebb over time and return to its longer-run average around 2%, which tracks with the Fed's latest economic projections. The fact that it hasn't subsided as quickly as the Fed had hoped is simply a reflection of the fact that humanity is still caught in an unprecedented pandemic in a globalized world. "I think it’s still fair to use [‘transitory’] in the sense that even if it doesn’t mean a month or two, it means a little bit longer than that. I think it conveys that the pressures that we’re seeing are related to a unique shock to the economy," she said. "As the United States recovers and as vaccinations proceed globally, and the global economic activity revives, that pricing pressure will ease." To be sure, not every business has been harmed or frustrated by inflation. Take hotels, for instance, which have the luxury of re-setting their prices every night.  "If you look at the $3 trillion of incremental savings during COVID, there’s a long way to go to spend it all. Thank you Federal Reserve and the U.S. Congress for fiscal and monetary stimulus," said CEO Christopher Nassetta. But what we would like to know is why Yellen and other top officials at the Fed and elsewhere seem so blithe to throw away their reputations as sober-minded observers of the American economy. There was - not all that long ago - a time when Yellen spoke honestly about the inflationary threat. But now that this threat has apparently surpassed the Fed and Treasury's worst-case scenarios, the Bide Admin and its top economic officials have decided to return to magical thinking while Biden weighs deploying the National Guard to drive trucks laden with goods off boatss. Tyler Durden Fri, 10/29/2021 - 19:05.....»»

Category: blogSource: zerohedgeOct 29th, 2021