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Queen Elizabeth II’s Death Slowed Action on a U.K. Economy Already in Turmoil

Queen Elizabeth II's death slowed action on a U.K. economy already in turmoil The death of Queen Elizabeth II and the period of national mourning that followed have been the latest blow to Britain’s already struggling economy, but economists and analysts say that there are glimmers of hope. Britain is at a watershed moment. The country has just completed a 10-day period of mourning, concluding with country-wide shutdowns during a public holiday to mark the late monarch’s funeral. Her death came just two days after a new prime minister, Liz Truss, took office, after the last leader was ousted by his own party for unbecoming behavior, while the U.K. faces a cost-of-living crisis unlike anything the nation has seen in decades. Inflation has soared to the highest levels since the 1980s, at around 10%, and the nation faces an energy crisis due to dwindling Russian energy exports to Europe. The British pound has been languishing around a nearly 37-year low against the dollar. And economic growth is another concern—the U.K. has now fallen behind India, a former British colony, becoming the world’s sixth largest economy. The U.K.’s central bank, the Bank of England, has warned that it risks falling into a recession that could last well into 2024. [time-brightcove not-tgx=”true”] The death of Queen Elizabeth II is the latest thing to touch Britain’s psyche. While the monarchy is often viewed as an anachronism, it is still an important part of U.K. life. It’s likely that will continue under the new monarch, King Charles III, who acceded when the Queen passed. “It really does feel like we’ve entered into a new era for the U.K. as a whole,” says Craig Erlam, a senior market analyst at multi-asset broker OANDA. “That makes for a very interesting time for the country and its place in the world.” In many ways, the monarch holds a symbolic role, not a political one. That means the change shouldn’t be too controversial, Erlam says. However, it’s a tough act to follow. “She was an incredibly loved figure,” he says. “I just wonder whether there is the same love and devotion for King Charles.” Britain’s mounting economic pressures When gross domestic product figures for the third quarter are released, it could show that the public holiday for Queen Elizabeth II’s funeral on Sept. 19 slightly depressed growth, pushing the economy into a technical recession of two back-to-back quarters of negative growth, says Steve Clayton, head of equity funds at U.K.-based Hargreaves Lansdown. That’s because of lower productivity and economic output. A similar thing happened in the second quarter, when an additional holiday was granted to celebrate the Queen’s platinum Jubilee, and the economy shrank by 0.1%, according to data provider Trading Economics. “Whatever impact there will be, it will be temporary,” he says. That’s because it won’t likely change any spending on autos, TVs, food, and other things, he says. On top of that, some food banks planned closures on the day of the funeral, meaning those in desperate need may not have been able to get basic necessities. That’s not to say spending habits haven’t changed. Clayton has noticed a retrenchment in consumer spending, likely prompted by the country’s energy crisis and recent increases in interest rates. U.K. grocery delivery retailer Ocado, which is popular with Britain’s middle class consumers, recently reported that its customers were spending less, sending the company’s shares diving. Clayton says that’s in part also the harsh reality of higher home loan costs. Many homebuyers use variable-rate mortgages to purchase properties. The Bank of England raised its benchmark lending rate to 1.5% from 0.35% last November. That’s going to have a direct impact on the many U.K. residents with adjustable mortgages. Worse still, the central bank raised the rates by 0.5% today—its seventh successive increase—cutting into many Britons’ household budgets. “That will be painful for those with large flexible-rate mortgages,” Clayton says. Then there’s the energy crisis, which threatens to plunge half of households into energy poverty. The cost of natural gas in Europe has more than tripled to €217 ($217) per Kilowatt-hour recently from around €70 a year ago, according to data from Trading Economics. The surge occurred because Russia cut its deliveries of natural gas to Europe following the invasion of Ukraine. That price jump directly feeds through to higher electricity prices and heating costs. Earlier this summer, Britons were warned that energy bills could exceed £6,000 yearly ($6,960) by April 2023, due to higher heating costs this winter. That’s close to 20% of the £31,500 average annual after-tax household income, according to government statistics. Some people will not have the money to pay their bills, experts say. Warnings have also been given that more than one-in-five U.K. companies with sales above £1 million ($1.16 million,) around 76,000, could face insolvency due to higher energy bills, according to a financial research firm Red Flag Alert. Those with high energy consumption, such as industrial companies, are more at risk. Liz Truss’s emergency economic relief plans Two days after becoming Prime Minister, Truss announced a cap on household energy bills at an annual rate of around £2,500 for the next two years, with the government paying the difference. The government has also unveiled a £40 billion ($45 billion) plan to help companies, imposing a cap on wholesale energy prices for businesses for six months. Some have criticized such measures as filling the coffers of energy companies that are expected to make bumper profits as a result of rising energy costs. The U.K.’s new Chancellor of the Exchequer, Kwasi Kwarteng, will announce the government’s urgently needed plan to address the cost of living crisis on Sept. 23. The emergency fiscal event was expected sooner, but was put on hold while Parliament was suspended over the mourning period. The so-called “mini budget” is expected to include tax relief for corporations and individuals and reductions in unnecessary regulations. “One of the most compelling stories is the U.K.’s economic policy mix,” says Marc Chandler, managing director at Bannockburn Global Forex. Specifically, that means loose fiscal policy (more spending, lower taxes) and tight monetary policy, with higher interest rates. That was the U.S. policy used in the early 1980s, which led to a period of stellar growth. Chandler also thinks the policy mix will partly help with the country’s other problem: the pound’s falling value. Sterling recently reached its lowest level against the dollar since the mid-1980s. He says the drop in the pound is largely due to the outrageous strength of the dollar. Other rich-country currencies have fallen by similar amounts, notably Europe’s single currency, the euro, and the Japanese yen. Sterling has rarely been as undervalued as it is now, Chandler says, and he expects it could start to rebound once the dollar peaks, which he predicts will be in early 2023. Truss also wants to ensure a future of stable energy supplies, says Ivo Pezzuto, professor of global economics and digital transformation at the International School of Management in Paris. Higher prices lead to lower demand, but that doesn’t fix the fact that the Kremlin cutting off natural gas deliveries is a supply problem in Europe. “They need more supply,” he says. Gone are the days of building an economy around cheap Russian oil and gas. Unlike the rest of Europe, Truss’s plan doesn’t mean levying windfall profit taxes on energy companies. She wants to encourage more drilling and has lifted the ban on hydraulic fracturing oil drilling—or fracking. There are also discussions about establishing a robust energy policy that embraces new technology, including nuclear power and renewables. “Some of this will take time before the benefits arrive,” Pezzuto says. There are other signs of hope for the economy. The unemployment rate, at 3.6%, is the lowest since the 1970s. There are now 1.3 million vacancies versus 1.5 million unemployed people. Put simply, the labor market is tight, which gives employees the power to demand higher wages, which in turn will help offset the rising cost of living. “Employers will be unlikely to hold down wages for long,” says Clayton. But there’s a caveat to the rising salaries. If the wage demands inflate too much, then the Bank of England may worry about sustained inflation. The result could be aggressively higher interest rates, says Konstantinos Venetis, director of global macro at London-based financial firm TS Lombard. If that happens, the economy could take a hit......»»

Category: topSource: timeSep 22nd, 2022

Joe Biden & The "Transformational" Presidency

Joe Biden & The "Transformational" Presidency Authored by William Anderson via The Mises Institute, Much is made of the failure of Republicans to make predicted gains in the recent midterm elections, but, as Ryan McMaken has pointed out, Congress plays a much-diminished role in national governance to the point that even had the so-called red wave actually occurred, it is doubtful that much would have changed regarding Joe Biden’s presidency. In fact, most of what Biden has done in his two years in office has been outside of congressional legislative matters. McMaken points out: This all combines to mean we should expect very little change on policies at the federal level. For example, we can expect to keep hearing plenty about the evil of fossil fuels. The administration will continue to press for less drilling for oil and gas, and the war on coal will continue. The administration will continue to issue new edicts for “fighting global warming.”  As McMaken notes, Biden has used executive orders liberally, sometimes using a twisted interpretation of federal law, and then unleashing his regulatory and law enforcement agencies to get his desired results. For example, federal banking regulators and the Securities and Exchange Commission have pressured banks and other lenders not to led to the oil and gas industry, citing the fealty to fighting climate change as the reason. Note that the administration is doing this not via congressional authorization, but rather through its own self-serving “interpretation” of existing federal law. Likewise, Biden’s infamous student loan forgiveness order was not through such relief passed by Congress, but rather using a 2003 federal law that permits the US secretary of education to employ “expansive authority to alleviate the hardship that federal student loan recipients may suffer as a result of national emergencies.” What constitutes a “national emergency” must be in the eyes of the beholder, as any reason will do—and, so far, the courts have signed off on this vast expansion of executive power. This is reminiscent of Franklin Roosevelt’s perverse interpretation of the 1917 Trading with the Enemy Act to undergird his gold seizure from Americans and devaluate the dollar. (Biden has not been the only recent president to liberally employ executive orders for questionable reasons. Donald Trump used existing law to raise tariffs against Chinese products, claiming that his actions meant that the Chinese were now helping to pay for their exports to the USA. Once upon a time—before turning over some of its authority to the executive branch—Congress had sole authority to set tax rates.) Biden’s reckless actions have come in part because progressives in the 1930s convinced Congress to give away much of its authority to the executive branch, the action well described by Paul Craig Roberts and Lawrence Stratton in their book, The Tyranny of Good Intentions. The authors described a scene in which Congress was passing bills not even yet written and acceding their authority to the president as a response to the economic calamity of the early 1930s. The New Deal, which was Franklin Roosevelt’s set of policies ostensibly to combat the Great Depression (although one easily can argue that the New Deal was the main reason the depression lasted for a decade), made FDR a “transformational” president, a title that Biden actively is seeking for himself. Encouraged by historical writers such as Jon Meacham and Doris Kearns Goodwin, Biden wants to become an icon like Roosevelt, although the “hook” today is not economic depression (yet) but rather the so-called climate emergency. Unfortunately, becoming a presidential icon requires that the executive branch impose severe economic damage to the country. Roosevelt’s New Deal, far from pulling the USA out of the Great Depression, left it mired it in what economist Robert Higgs called “regime uncertainty,” which resulted in high unemployment and a dearth of capital investment. Biden’s version of the so-called Green New Deal points the economy in the same direction. Writes Thomas Woods: In the old days, progressives claimed to be trying to improve the standard of living of the ordinary person. Everything they advocated would have had the opposite effect, but at least they claimed to be making his life better. Now they’re not even claiming that. You will be poorer, they’re telling you. Your electricity bills will be higher. The price of your car will be higher. And according to them, higher prices are in fact a good thing, because they’re supposedly a sign of a strong economy. His claims notwithstanding, Biden’s objective to have a “transformational” presidency is to make Americans worse off now in exchange for the remote possibility that the Green New Deal will allow for future generations to have better weather. Biden’s grandiose view of himself and his policies are egged on in part by Meacham’s flattery: He has been described as Joe Biden’s “historical muse”, an occasional informal adviser to the US president and contributor to some of his major speeches including the inaugural address. In March, Jon Meacham put together a meeting between Biden and a group of fellow historians at the White House that lasted more than two hours. What did he learn about the 46th president? “He’s like an upside down iceberg,” the Pulitzer prize-winning historian says by phone. “You see most of it and that’s not spin: there’s just not a lot of mystery to Joe Biden. The last four or five minutes of his press conference in the East Room [on 25 March] when he talked about democracy and autocracy, that was pretty much it.” As the average American family struggles to keep up with inflation and the Biden administration deliberately makes it more difficult for them to live a semblance of normal lives, historians such as Meacham are telling Biden to expand his reach and his authority in fundamentally changing how Americans live. Indeed, in Biden’s first two years, he has brought about fundamental change to American life, but that change has been harmful. Robert Higgs in his article “No More Great Presidents” lays out the modern historians’ standard for “greatness”: The lesson seems obvious. Any president who craves a high place in the annals of history should hasten to thrust the American people into an orgy of death and destruction. It does not matter how ill-conceived the war may be.  So far, Biden has not launched the USA into a foreign war, although he has almost single-handedly financed (with US tax dollars, of course) the proxy war between Ukraine and Russia, using the Russian invasion as his justification for doing everything he can to prolong the fighting. However, by shackling the energy industries, blaming businesses for the inflation his government created, and doing whatever he can to make daily life difficult for ordinary people, one can say that Biden is at war with people who have no means by which to fight back. Even had the red wave passed over the electorate earlier this month, it would have changed the Biden presidency very little, if at all. That is how powerful the executive branch under Biden has become. And Biden will continue to listen to the “historians” who fawn over his every word and tell him that he, too, can be a “great” president. Tyler Durden Tue, 11/22/2022 - 19:00.....»»

Category: worldSource: nytNov 22nd, 2022

Futures Reverse Losses, Hit Session HIghs Alongside Oil Despite China Covid Curbs

Futures Reverse Losses, Hit Session HIghs Alongside Oil Despite China Covid Curbs After trading in the red for much of the overnight session, US futures inched higher shortly after the European open after a volatile session in Asia marked by rising Covid cases in China, while a Fed president turned dovish and showed openness to slowing the path of rate hikes. Futures on the S&P 500 traded near session highs, up 0.4% to 3,972 by 8:00 a.m. in New York, while Nasdaq 100 futures gained 0.1% after struggling for direction.  Stocks in Hong Kong and Mainland China slipped as China’s daily virus infections climbed to near the highest on record, although a bounce in Japanese stocks pushed overall Asian markets higher. Europe’s Stoxx 600 Index rose, led by energy shares. The dollar weakened against all major currencies and Treasury yields declined. Crude oil prices rose after Saudi Arabia pushed back against reports of a potential OPEC+ production increase. Bitcoin's gradual, methodic slide continued interrupted by occasional bouts of ungradual, unmethodic panic liquidations. In premarket trading, Zoom Video dropped after the firm reported its slowest quarterly sales growth on record and trimmed full-year revenue forecasts. Chinese stocks listed in US fell after a ramp-up in Covid restrictions to curb a spike in virus cases across China. Pinduoduo -2.4%, Trip.com -0.6%, Bilibili -2.8%, Nio -2.5%, Li Auto -3.9%. Here are some other notable premarket movers: Blackstone shares fall 2.5% in US premarket trading as Credit Suisse cut its rating to underperform from neutral and said that it is awaiting a better entry point for US alternative asset manager stocks. Alibaba shares pare losses in US premarket trading after Reuters reported that Chinese authorities are set to hand down a fine of over $1 billion for Jack Ma’s Ant Group, an event market watchers see as an end to Beijing’s prolonged investigation into the fintech firm and a first step to restarting its IPO. GameStop shares swing between slight gains and losses in US premarket trading, following a Bloomberg report that billionaire investor Carl Icahn was said to hold a large short position in the video-game retailer. Dell Technologies stock slipped 2% in postmarket trading on Monday as the computer company’s revenue forecasts for the current quarter missed estimates, as economic uncertainty begins to affect information technology customers. Keep an eye on Amazon.com after its price target was cut at Piper Sandler as AWS revenue decelerates along with an industry-wide slowdown at major cloud computing firms. The brokerage notes, however, that while “industry growth ticks down, AWS leadership remains.” Watch Activision Blizzard as Baird raised the recommendation on the stock to outperform from neutral, while downgrading Airbnb, Carvana and Vroom all to neutral since these companies are exposed to pullbacks in discretionary “high ticket” purchases. Keep an eye on software stocks, including Workday and Coupa Software as Morgan Stanley cuts price targets across the sector, with analyst saying that consensus estimates for 2023 are likely too high while customer IT budgets are set to be reduced. "Market sentiment remains toneless for the second trading day of the week as most investors are still struggling to assess the short- to mid-term outlook for risky assets," said Pierre Veyret, technical analyst at ActivTrades. “Despite the market starting to price in a potential slowing in rate hikes, some Fed officials have moved to temper these anticipations by reiterating their will to tackle inflation, and that this goal was far from being achieved.” Fed officials continued to highlight the need to curb inflation but hinted that a slower pace of hikes could be possible. On Monday, San Fran Fed President Mary Daly said officials need to be mindful of the lags with which monetary policy works, while repeating that she sees interest rates rising to at least 5%. Separately, Cleveland Fed President Loretta Mester said she has no problem with slowing down the central bank’s rapid rate increases when officials meet next month. “Markets get jittery whenever the Federal Reserve is due to speak or issue important information,” said Russ Mould, investment director at AJ Bell. “With the central bank set to publish the minutes from its November meeting tomorrow, equity investors need to brace themselves for the Fed to say it is likely to keep raising rates to tame inflation, even though October’s consumer prices figure was below expectations.” After this quarter’s 10% rally in the S&P 500, Goldman strategists expressed skepticism about US stocks returns next year, setting a 4000 points target for the benchmark by Dec. 2023 as earnings growth stalls. “Zero earnings growth will match zero appreciation in the S&P 500,” strategists led by David Kostin wrote in a note on Tuesday. Then again, the same David Kostin said excatly one year ago that the S&P would close 2022 at 5,100 so expect him to be dead wrong again. In Europe,  Stoxx Europe 600 Index climbed 0.2%, with energy stocks the best-performing sector as crude advanced after Saudi Arabia denied report of discussion about OPEC+ oil-output hike. BP rose 5.3% and Repsol was 6% higher after both stocks got analyst upgrades. Hong Kong stocks slid as China’s daily virus infections climbed to near the highest on record. Covid-control restrictions now affect a fifth of China’s economy. Still, the eventual easing by China of its curbs to counter the virus are likely to mean that European profits will hold up relatively well because of the benefits to luxury and mining companies, according to strategists at Goldman Sachs. Here are some of the notable European movers: AO World shares jumped as much as 17%, to the highest since early July, after the online appliances retailer raised its FY adjusted Ebitda forecast. Verbund rose as much as 8.2% after Stifel upgraded the utility company to buy from hold, saying conditions of Austria’s price cap are “much better” than had been anticipated. Allfunds shares fell as much as 11% after a discounted share offering by holders LHC3 and BNP Paribas in the mutual-fund distributor. Shares in digital price-tag maker SES- imagotag fell as much as 6%, before paring the drop, after majority shareholder BOE Smart Retail offered 1.5 million shares at a 7.3% discount to the last close. ThyssenKrupp declined as much as 5.9% after holder Cevian offered ~23.4m shares via UBS with price guidance of €5.15 apiece, representing a 4.7% discount to last close. Vodafone shares fell as much as 3.4% after the telecoms group was double-downgraded to underperform from outperform at Credit Suisse, which cited a growing risk to the dividend and elevated costs weighing on its outlook. Earlier in the session, Asian stocks advanced as the yen’s recent weakness boosted Japanese exporters, offsetting losses in Chinese tech shares. The MSCI Asia Pacific Index gained as much as 0.7%, with Japanese firms Toyota, Sony and Mitsubishi helping lift the gauge along with Taiwan’s TSMC. Up more than 10% this month, the MSCI Asian stock benchmark has outperformed its US or European peers in November thanks to China’s rally.  Among sectors, energy and industrials advanced the most, while communication services and consumer discretionary shares edged lower. Chinese stocks in Hong Kong fell for another day, as a worsening outbreak on the mainland raised doubts as to whether authorities can hold on to their softer Covid Zero stance. A rally this month fueled by reopening hopes has now come to a halt as investors come to terms with China’s Covid reality.  “As we’ve seen in the Covid issues in China, it’s going to be stop-go sort of news flow in terms of the lockdowns et cetera and that’s going to add volatility to markets,” Lorraine Tan, director of equity research at Morningstar, said in an interview with Bloomberg TV. Japan equities climbed as the yen’s retreat over the past four days supported exporters’ shares in the face of concerns over China’s Covid Zero policy and the Federal Reserve’s hawkish stance.   The Topix rose 1.1% to 1,994.75 as of the market close in Tokyo, while the Nikkei 225 advanced 0.6% to 28,115.74. Toyota Motor contributed the most to the Topix’s gain, increasing 2.3%. Out of 2,165 stocks in the index, 1,737 rose and 366 fell, while 62 were unchanged. “There is an impression that the market will be quiet with no major selloffs ahead of the Japanese and US holidays,” said Hirokazu Kabeya, chief global strategist at Daiwa Securities. “In some aspects, it is difficult for the stock market to fall as investors find it hard to make a move.”  Stocks in Malaysia fell for a second day after Saturday’s election produced the country’s first-ever hung parliament. Australia’s equity benchmark rose to a five-month high buoyed by miners.The S&P/ASX 200 index rose 0.6% to close at 7,181.30, its highest since June 6, driven by a rebound in mining and energy shares.  In New Zealand, the S&P/NZX 50 index fell 0.2% to 11,420.42. New Zealand’s central bank is poised to raise interest rates by an unprecedented 75 basis points on Wednesday, accelerating its monetary tightening to get inflation under control. Elsewhere, markets were mixed with moderate gains or losses.  In FX, the Bloomberg Dollar Spot Index fell as the greenback fell against all of its Group-of-10 peers. Risk-sensitive Antipodean currencies and the Norwegian krone were the top performers. CFTC data showed that speculative and institutional traders turned their back to the dollar yet again last week as the currency stayed under pressure. At the same time, one-month risk reversals in the Bloomberg Dollar Spot Index rallied in favor of the topside. The euro rose versus the greenback but underperformed most of its major peers. Bunds slipped and Italian bonds inched lower. The pound rose against a broadly weaker dollar and was steady against the euro. Data showed UK government borrowing grew less than forecast in October, ahead of a testimony in Parliament by officials from the Office for Budget Responsibility. The yen rose for the first time in five days after remarks from some Federal Reserve officials solidified bets for smaller US rate hikes. Japan’s yield curve steepened a tad ahead of a local holiday. One-week risk reversals in dollar-yen traded earlier at 24 basis points in favor of the Japanese currency, which marked the least bearish sentiment for the greenback in more than a month. In rates, Treasuries ground higher leaving yields near session lows into the early US session with 10-year at around 3.79%. Bunds and gilts both lag Treasuries, trading slightly cheaper over early London session. US session focus is on Fed speakers and conclusion of this week’s auctions with a 7-year sale at 1pm.  Treasury 10-year yields outperforming bunds and gilts by ~5bp on the day. Long-end of the Treasuries curve underperforms, steepening 10s30s spread by 2.5bp on the day.  This week’s auctions conclude with $35b 7-year note sale at 1pm, follows Monday’s double auction of 2- and 5-year notes. In commodities, it has been a contained session for the crude complex after yesterday’s WSJ fake news-prompted rollercoaster, with benchmarks higher by around 1% amid further pushback to the production increase report. Kuwait Oil Minister has pushed back against reports of any discussions over OPEC+ raising production at its next meeting, according to the State news agency; Iraq's SOMO says no discussions have taken place over an increase at the next OPEC meeting. China has reportedly paused the purchase of some Russian oil, awaiting details of the price cap to see if it provides a better price. Spot gold and silver are firmer, with the yellow metal at session highs just below the USD 1750/oz mark as risk sentiment struggles to find firm direction and the USD continues to pullback. For reference, the current spot gold peak of USD 1748/oz is shy of the 10-DMA at USD 1755/oz and still some way from the 200-DMA at USD 1801/oz. Cryptocurrency prices were mixed, with investors braced for more ructions as further digital-asset sector bankruptcies loom following the demise of Sam Bankman-Fried’s FTX empire. Looking to the day ahead now, and central bank speakers include the Fed’s Mester, George and Bullard, along with the ECB’s Holzmann, Rehn and Nagel. Data releases include Euro Area consumer confidence for November, as well as the US Richmond Fed manufacturing index for November. Lastly, the OECD will be releasing their Economic Outlook. Market Snapshot S&P 500 futures up 0.2% to 3,964.00 STOXX Europe 600 up 0.6% to 435.56 MXAP up 0.4% to 151.12 MXAPJ down 0.1% to 486.08 Nikkei up 0.6% to 28,115.74 Topix up 1.1% to 1,994.75 Hang Seng Index down 1.3% to 17,424.41 Shanghai Composite up 0.1% to 3,088.94 Sensex up 0.4% to 61,380.15 Australia S&P/ASX 200 up 0.6% to 7,181.30 Kospi down 0.6% to 2,405.27 German 10Y yield little changed at 1.99% Euro up 0.3% to $1.0272 Brent Futures up 0.7% to $88.04/bbl Gold spot up 0.5% to $1,745.92 U.S. Dollar Index down 0.35% to 107.46 Top Overnight News from Bloomberg More than six years after voting to leave the EU, the UK is facing a prolonged recession, a deep cost-of-living crisis and a shortage of workers. Last week’s Autumn Statement heralded years of higher taxes and cuts to public spending The ECB needs to maintain the pace of rate increases at its next meeting on Dec. 15 to demonstrate policy makers are “serious” about taming inflation, Financial Times reports, citing an interview with Robert Holzmann, governor of the National Bank of Austria and member of the ECB’s governing council Germany will introduce a cap on gas and electricity prices for companies and households as Europe’s largest economy seeks to contain the fallout from Russia’s moves to slash energy supplies. Large parts of German industry will no longer be able to avoid production cuts if companies need to further reduce natural gas consumption, according to a survey Italy has signed off on a €35 billion ($36 billion) budget law for next year which will raise a windfall tax on energy companies in order to expand aid to families and businesses hit by higher prices Spain announced a series of steps to shield mortgage-holders on lower incomes from rising costs, stepping up efforts to cushion the economic blow from high inflation and surging interest rates The premium investors pay for German two-year bonds over equivalent swaps has dropped to levels last seen in July in recent days, down more than 40 basis points from a record high in September. It comes after the German finance agency and the European Central Bank took steps to increase the supply of debt available to borrow in repo markets An FTX Group bankruptcy filing showed that the fallen cryptocurrency exchange and a number of affiliates had a combined cash balance of $1.24 billion A new currency trading algorithm developed by a Dutch fund threatens to wrest away millions of euros of fees from investment banks if it gains traction in the pension industry China’s overnight repo rate plunged to its lowest level in nearly two years, an indication that a liquidity squeeze seen last week has eased following measures by the central bank A more detailed look at global markets courtesy of Nesquawk Asia-Pac stocks were mostly positive as the regional bourses attempted to recover from the recent China COVID woes but with price action contained amid quiet newsflow and a lack of fresh macro drivers. ASX 200 was positive amid strength in the commodity-related sectors in which energy led the advances after oil prices rebounded following Saudi’s denial that it was considering a production increase. Nikkei 225 higher and reclaimed the 28,000 level with early outperformance in Shionogi after its COVID-19 therapeutic drug was presumed effective by Japan’s PMDA. Hang Seng and Shanghai Comp traded mixed with Hong Kong pressured by weakness in the tech sector, while losses in the mainland were reversed after the latest policy support pledges by China including measures to sustain the recovery momentum of the industrial economy and with the PBoC to release CNY 200bln worth of loan support for commercial banks to ensure near-term delivery of homes. Top Asian News US Defence Secretary Austin met with Chinese Defence Minister Wei Fenghe in Cambodia, according to a US official cited by Reuters. US Defence Secretary Austin discussed the need for dialogue on reducing risk and improving communication with his Chinese counterpart, according to a Pentagon spokesperson. Furthermore, Austin raised concern about increasingly dangerous behaviour by Chinese aircraft which increases the risk of an accident and he reiterated that the US remains committed to the longstanding Once China Policy. Chinese Defence Ministry spokesman said the main reason for the current situation faced by China and the US is because the US made the wrong strategic judgement. In relevant news, Global Times' Hu Xijin tweeted that the meeting between the two defence ministers must be supported and that no matter how many frictions, China and the US cannot fight militarily which is the bottom line and the two sides’ due responsibility to the world. EU is poised to renew sanctions on Chinese officials accused of human rights violations in Xinjiang for an additional year, according to SCMP. RBA's Lowe say the Bank is not on a pre-set path and could return to 50bps increase or keep rates unchanged for a time. The Board expects to increase interest rates further over the period ahead. Understand that many people are finding the rise in interest rates difficult. It is necessary, though, to ensure that the current period of higher inflation is only temporary. Beijing City reports 634 (prev. 274) COVID infections on November 22nd as of 3pm, according to a health official, via Reuters. Subsequently, Beijing will tighten COVID testing requirements as of November 24th, according to an official; COVID tests within 48 hours will be required to enter public venues. European bourses are modestly firmer, Euro Stoxx 50 +0.2%, though fresh developments have been limited and the upside itself is tentative at best. Sectors are mixed with the likes of Energy outperforming after yesterday's noted pressure, no overarching bias present in the European morning. Stateside, US futures are near the unchanged mark but have, similar to European peers, been modestly firmer/softer throughout the morning, ES +0.1%. Samsung Electronics (005930 KS) is to jointly develop 3nm chips with five-six fabless clients for large quantity supply as soon as 2023, via Korea Economic Daily citing sources. Top European News ECB's Centeno sees conditions for rate hikes to be less than 75bps in December and said they "really have to reverse" the trend of rising inflation to have greater visibility on monetary policy, according to Bloomberg. ECB's Holzmann said he supports a 75bps hike in December and noted there are no signs that price pressures are easing, according to FT. ECB's Rehn says they will probably hike rates again, pace depends on how the economy develops. ECB's Nagel says a 50bp rate hike is "strong", rates are still "relatively far" from restrictive territory, via Reuters; calls for commencing a gradual APP unwind in Q1-2023. Italy approved a EUR 35bln budget law for next year which plans to increase an energy windfall tax, according to Bloomberg. FX Dollar loses recovery momentum as risk appetite picks up, DXY drifts between 107.810-300 bounds and retests a Fib retracement level just over 107.500 Kiwi rebounds to top 0.6150 vs Buck irrespective of worrying NZ trade data, as RBNZ looms amidst expectations of a larger 75bp hike in the OCR Aussie recovers alongside Yuan and amidst comments from RBA Governor Lowe reaffirming guidance for further tightening, AUD/USD eyes 0.6650 from around 0.6600 at the low Loonie regains poise in tandem with oil and probes 1.3400 against its US rival pre-Canadian data and remarks from BoC's Rogers Yen, Franc, Euro and Pound all take advantage of Greenback fade plus yield convergence to Treasuries as USD/JPY reverses from 142.00+ and USD/CHF from almost 0.9600, while EUR/USD eyes 1.0300 and Cable 1.1900 vs sub-1.0250 and 1.0825. Fixed Income Rangebound trade for core fixed income, though intraday boundaries have extended on both sides throughout the European morning as the complex struggles for firm direction. Bund unreactive to a well-received Bobl auction while USTs are a handful of ticks firmer ahead of the week's last US auction, with volumes currently fairly light. Note, final orders for the UK's 0.125% 2073 Gilt I/L exceed GBP 16.8bln, according to a bookrunner, with pricing set 20bp below the 2068 comparable. Commodities Comparably contained session for the crude complex after yesterday’s pronounced OPEC+ related price action; benchmarks currently firmer by around 0.5% amid further pushback to the production increase report. White House Press Secretary said President Biden is committed to further lowering gasoline prices. Kuwait Oil Minister has pushed back against reports of any discussions over OPEC+ raising production at its next meeting, according to the State news agency; Iraq's SOMO says no discussions have taken place over an increase at the next OPEC meeting. China has reportedly paused the purchase of some Russian oil, awaiting details of the price cap to see if it provides a better price, via Bloomberg citing sources. German gas price break will apply retroactively from January, via der Spiegel; reduction in gas and heat prices is not expected to take effect until March 1st. European Commission proposes to introduce a gas price correction mechanism for one-year from January 1st 2023, via Reuters citing draft legislation; proposal leaves the actual price cap blank for now. Diplomats say that EU gov'ts want the gas price cap at EUR 159-180/MWh, vs the much higher cap expected to be proposed by the Commission. UK officials visited Brazil in October to assess the regions beef standards, via Politico; a visit which has fuelled hopes in Brazil of a future trade deal. Spot gold and silver are firmer, with the yellow metal at session highs just below the USD 1750/oz mark as risk sentiment struggles to find firm direction and the USD continues to pullback For reference, the current spot gold peak of USD 1748/oz is shy of the 10-DMA at USD 1755/oz and still some way from the 200-DMA at USD 1801/oz. Geopolitics Moscow considers a search necessary for a peaceful solution to the Kurdish issue after Turkey's strikes in Syria and believes Turkey should restrain from the use of excessive military force, according to RIA citing Moscow's Syria envoy. N. Korea will take an ultra strong response to anyone that interferes with its sovereign rights, via KCNA; US will face a greater security crisis the more it insists on taking hostile actions. US Event Calendar 10am: U.S. Richmond Fed Index, Nov., est. -8, prior -10 Central bank speakers 11am: Fed’s Mester Discusses Wages and Inflation 11:45am: Bank of Canada’s Carolyn Rogers Speaks on Financial Stability 2:15pm: Fed’s George Takes Part in Policy Panel 2:45pm: Fed’s Bullard Discusses Heterogeneity in Macroeconomics DB's Jim Reid concludes the overnight wrap A decent slug of yesterday was spent debating whether England's 6-2 win at the World Cup was a performance to scare the world of football into submission or whether Iran's 20th spot in the FIFA World rankings may slightly flatter them. As ever, your opinions are welcome! Good luck to all your teams as the WC introduces a few big hitters today! I'm not sure if it was the World Cup but markets had a rather slow and lacklustre start to the week yesterday. The S&P 500 (-0.39%) fell back amidst concerns about rising Covid cases in China and ongoing fears about a US recession next year. The effects were evident across multiple asset classes, and WTI oil prices fell below their start of 2022 levels briefly intra-day (-6.24% on the day at the lows) as investors grappled with the prospect of lower Chinese demand alongside speculation about an OPEC+ output increase, which was eventually denied. WTI rallied back hard on a Saudi denial of the story to close just -0.44% lower, while Brent futures were -6.06% lower before closing down only -0.19%. In Asia trading, WTI prices (+0.74%) have climbed back above the start of week levels and are trading just above $80/bbl while Brent futures (+0.49%) are fractionally higher as we go to print. In terms of what’s coming out of China, there are growing concerns among investors that there’ll be a return to lockdowns following the weekend news that they’d had their first Covid death in six months. The overall rise in case numbers now makes this the third-largest outbreak of the pandemic so far, behind only the Shanghai lockdowns in Q2 and the Wuhan outbreak in early 2020. Beijing has increased its restrictions, and now requires arrivals to take three PCR tests within the first three days and to stay at home until they get a negative result. In the Haidian district of Beijing, schools have now switched to online learning as well. This has all served to dampen the speculation of recent weeks that China might be moving gradually away from its zero-Covid strategy, and the city of Shijiazhuang has even asked residents to stay at home for 5 days. China recorded 27,307 new local Covid cases nationally yesterday, almost close to the record high of 28k seen in March. The irony is that the China reopening story has been a big positive driver of China-related risk and overall markets over the last couple of weeks, so we are trading between feast and famine on this story. Both could of course be ultimately right. There might be many more restrictions in the near term but stronger more durable reopenings by the spring. Markets are struggling to price this at the moment though. For now, the effects were apparent among Chinese stocks listed in the US, with companies like Alibaba (-4.41%), JD.com (-6.37%) and Bilibili (-8.15%) underperforming the broader equity moves. The Chinese Yuan (-0.64%) also weakened against the US Dollar, although to be fair this was partly a function of dollar strength. Overnight in Asia, China risk has bounced a bit. The Shanghai Composite (+0.75%) and the CSI (+0.77%) are both up alongside the Nikkei (+0.72%). The Hang Seng (-0.39%) and KOSPI (-0.35%) are both lower. US equity futures are just above flat as we type. Staying with equities, the earlier plunge in oil prices was bad news for energy stocks, which were among the biggest sectoral underperformers on both sides of the Atlantic. By the close of trade, the S&P 500 was down -0.39%, with energy down -1.39%, rallying midday from -4.64% to beat out consumer discretionary shares which were -1.41% lower. A number of other cyclical industries underperformed as well, and the NASDAQ fell -1.09% on the day, whilst the small-cap Russell 2000 fell -0.57%. In Europe, the performance was marginally better, but that still wasn’t enough to stop the STOXX 600 posting a very marginal -0.06% decline, with energy (-3.02%) far and away the underperformer as shares closed near the nadir of Brent and WTI futures pricing. There clearly should be a bounce this morning. The more negative tone out of China yesterday has only added to existing fears about a US recession over the coming months, which the latest moves in the Treasury yield curve did little to dispel. The 2s10s yield curve flattened another -2.2bps to -73bps taking it beneath the 1982 low of -71.65bps to a level unseen since 1981. This came as the 10yr tracked intraday pricing in oil as well, having fallen as much as -7.1bps intraday before finishing the day more or less unchanged. This morning in Asia, 10yr UST yields (-1.12 bps) are slightly lower, trading at 3.82%. There have been a few Fed speakers over the last 24 hours to impact treasury pricing. SF Fed President Daly warned against the two-sided risks of over-tightening, but hinted that her estimate of terminal may have risen to around 5.1% since the November meeting. Meanwhile, Cleveland Fed President Mester supported downshifting to a 50bps hike in December, but noted the Fed was not “anywhere near to stopping”, echoing Chair Powell’s tone from the November FOMC presser. There's quite a bit of Fed speak today as you'll see in the day ahead at the end. Whilst it’s widely expected that the Fed will slow down the pace of hikes to 50bps in December, there’s somewhat more doubt about the ECB’s next move the following day, who it seems are still weighing up another 75bps hike or slowing down to 50bps. Yesterday, we heard from Austria’s Holzmann (a hawk), who said he’d only favour a 50bps hike if there was a “major reduction” in inflation this month. But Portugal’s Centeno (a dove) said that the conditions were in place for a hike beneath 75bps next month. Separately, Slovenia’s Vasle talked about the need for restrictive policy, saying that the ECB needs to “keep gradually raising rates, even into the territory where monetary policy won’t be just neutral, but will become more restrictive.” European sovereigns seemed unfazed by this debate, trading in line with the broader global moves. Yields on 10yr bunds (-2.1bps) and OATs (-1.8bps) moved lower, but there was an underperformance among southern European countries, with yields on Italian BTPs up +4.3bps. Interestingly, there was a notable downside surprise in the latest German PPI reading, which came in at +34.5% in October (vs. +42.1% expected). Now it’s worth noting that the decline was driven by energy, but at -4.2% on the month, that was the first monthly decline in the index since mid-2020. To the day ahead now, and central bank speakers include the Fed’s Mester, George and Bullard, along with the ECB’s Holzmann, Rehn and Nagel. Data releases include Euro Area consumer confidence for November, as well as the US Richmond Fed manufacturing index for November. Lastly, the OECD will be releasing their Economic Outlook. Tyler Durden Tue, 11/22/2022 - 08:02.....»»

Category: worldSource: nytNov 22nd, 2022

Two Largest Railroad Unions Split Over Labor Deal As Christmas Strike Looms

Two Largest Railroad Unions Split Over Labor Deal As Christmas Strike Looms Update: The votes appear to be in for the two largest railroad unions. WSJ reported Brotherhood of Locomotive Engineers and Trainmen (BLET) said 54% of members who participated in the vote would accept the five-year labor deal. However, the International Association of Sheet Metal, Air, Rail, and Transportation Workers (SMART-TD) rejected ratifying the labor agreement.  BLET and SMART-TD represent 62,000 engineers and conductors, or about half of all unionized rail workers. SMART-TD said it would head back to the negotiating table with the railroads for a revised deal with a Dec. 8 deadline. If no agreement is struck by the deadline, strikes could begin as soon as Dec. 9.  "SMART-TD members with their votes have spoken, it's now back to the bargaining table. "This can all be settled through negotiations and without a strike," said SMART-TD President Jeremy Ferguson. SMART-TD said 50.87% of members voted against the labor contract.  Peter Kennedy, director of strategic coordination research at BMWED, told Axios that he's surprised about the no vote: "This is the best pay package I've seen in my career.  "If employees are willing to vote that down because of the lack of paid sick time, that tells you something." "Our expectation is that no matter what happens, Congress is still going to need to step in," Scott Jensen, director of issue communications at the American Chemistry Council, told Axios. Any strike could damage the US economy and risk reversing multiple quarters of supply chain easement. It's why the Biden administration will try to do everything in its power to avert a strike next month.  "But whether a strike will occur is still unclear. Congress could intervene before the December deadlines by crafting legislation that would require the unions to accept the agreements, with the possibility of binding arbitration or other ways to address contentious issues," FreightWaves said.    *  *  *  Two of the largest railroad unions representing conductors and engineers will announce Monday the results of votes on a tentative contract deal with freight workers -- and a no vote could force the White House to intervene to avert a labor action that would reverse recent gains made in easing supply chains.  The Brotherhood of Locomotive Engineers and Trainmen (BLET) and the transportation division of the International Association of Sheet Metal, Air, Rail, and Transportation Workers (SMART-TD) represent 62,000 engineers and conductors or about half of all unionized rail workers are set to announce vote today, according to Reuters.  Seven of the 12 unions have voted to ratify the labor agreement with railroads, but three have voted it down, leaving BLET and SMART-TD the last to vote on the contract.  Source: Politico A no vote from either BLET or SMART-TD would increase the threat of a strike, pivoting the balance of power in the unions' favor. But even if both unions agree on the deal, potential turmoil is not over because the three unions have rejected a tentative contract agreement brokered by Labor Secretary Marty Walsh in September. Unions are unhappy with railroads because they're unwilling to adopt leave and attendance policies and paid sick days in new contracts.  Last week, the U.S. Chamber of Commerce said congressional involvement is necessary to thwart rail disruptions, warning any shutdown would be catastrophic for the economy during the holiday season.  "A rail shutdown could freeze almost 30% of U.S. cargo shipments by weight, stoke inflation, cost the American economy as much as $2 billion per day and unleash a cascade of transport woes affecting U.S. energy, agriculture, manufacturing, healthcare and retail sectors," Reuters said.  In September, the Biden administration helped avert a rail strike with last-minute contract talks between rail companies and unions at the Labor Department. If a strike does unfold, which the earliest would be as soon as Dec. 5 after the first cooling-off period ends for the unions, then all the progress in the supply chain easing since summer could evaporate overnight.  The New York Fed supply chain pressure index has reverted nearly to "normal" levels following the pandemic spike. Transportation pressures have subsided as prices for shipping containers on cargo ships to trucking rates have all slid in the back half of the year as the Federal Reserve's most aggressive interest rate hikes in four decades cool the demand side of the economy.  "Look, what a terrible Christmas gift that would be to give to the American people at this point. Right before Christmas, shutting down our supply chain," Rep. Rick Crawford (R-Ark.), the top Republican on the House subcommittee that governs railroads, told POLITICO.  Crawford added: "So we've got something prepared if necessary, but I'm hoping it's not necessary." Tyler Durden Mon, 11/21/2022 - 12:20.....»»

Category: personnelSource: nytNov 21st, 2022

Futures Slide On China Covid Curb Concerns; Disney Jumps After Chapek Fired

Futures Slide On China Covid Curb Concerns; Disney Jumps After Chapek Fired After opening modestly in the green, US equity futures have drifted steadily lower all session and were last trading near their Monday lows as concerns that China may tighten Covid curbs after China reported its first Covid-related death in almost six months and a city near Beijing rumored to be a test case for dropping all curbs enforced a slew of restrictions all weighed on growth in the world’s second-largest economy, as well as the ongoing carnage in the crypto space. At 7:30am ET, S&P futures were down 0.5% to 3,953 while Nasdaq 100 futures slumped 0.9% to session lows, below 11,600. The dollar stormed higher as investors sought shelter in the dollar; 10Y yields rose to 3.83%, while bitcoin traded around $16,000 after dumping over the weekend. Oil dipped but rebounded from session lows on concern of a weakening demand outlook from China and following a $10 price target cut to $100 for Q4 2022 from Goldman overnight. US-listed Chinese stocks including Alibaba, Baidu and JD.com fell in US premarket trading after China saw its first Covid-related death in almost six months, sparking concern that Beijing could see a return of heightened restrictions on schools, restaurants and shops amid a continuing outbreak in the capital. Worsening outbreaks across the nation are stoking concerns that authorities may again resort to harsh restrictions. A city near Beijing that was rumored to be a test case for the ending of virus restrictions has suspended schools, locked down universities and asked residents to stay at home for five days. Elsewhere in premarket moves, Walt Disney shares soared 8% after the firm fired embattled CEO Bob Iger and brought back former leader Bob Iger as chief executive officer, a surprise capitulation by the board after a string of disappointing results. Cryptocurrency-related stocks declined after the price of Bitcoin retreated amid worries over contagion from the downfall of Sam Bankman-Fried’s FTX empire. Shares in Riot Blockchain -4.5%, Marathon Digital  -3.1%, Coinbase -4.6%. Squarespace shares gained 2.2% after being upgraded to overweight from neutral at Piper Sandler, which identifies the website- building and hosting company as having the lowest risk to its 2023 numbers among e-commerce stocks. "Markets got their hopes up that the Chinese government might loosen its Covid policy, but despite the slowing economy, there is little chance of that," said Joachim Klement, head of strategy, accounting and sustainability at Liberum Capital. “This is going to be bad for commodity-related stocks as well as luxury companies and other exporters to China.” However, others like Morgan Stanley, remain hopeful and expect that China will end Covid zero in a few months; in its base case the bank sees China reopening by April as shown below. "Financial markets have caught a cold amid worries that mounting Covid cases in China and a fresh tightening of restrictions will send a fresh shiver through manufacturing output and push down demand for raw materials," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown. As Bloomberg notes, trading will be slow this week, with the US market closed Thursday for the Thanksgiving holiday and open for a half day on Friday. Meanwhile, Goldman strategists warned that the bear market had more room to run and that stocks were likely to see more declines and lower valuations in 2023. "The conditions that are typically consistent with an equity trough have not yet been reached,” strategists including Peter Oppenheimer and Sharon Bell wrote in a note on Monday. They said that a peak in interest rates and lower valuations reflecting recession are necessary before any sustained stock-market recovery can happen. After a sharp rally fueled by signs of cooling inflation, US stocks were subdued last week as Federal Reserve officials indicated they need to see a meaningful slowdown in prices before reducing the pace of their interest rate increases. The big event for the market this week comes Wednesday, when the central bank releases minutes from its latest policy meeting, possibly providing clues on when it will shift to less-aggressive rate hikes. In Europe, the Stoxx 50 index fell 0.5%, with the IBEX outperforming peers, adding 0.4%, while FTSE MIB lags, dropping 1%. Miners, tech and chemicals are the worst-performing sectors. Here are the notable European movers: Virgin Money UK shares rose as much 16%, the most in two years, after the British lender announced an extension of its share buyback program and reported earnings that analysts said could prompt upgrades in profit forecasts. Ipsen rose as much as 4.5%, to the highest since April, after JPMorgan said the stock may get a boost from clinical trial data on its Onivyde and elafibranor drugs in 2023. Rheinmetall shares jumped as much as 3.7% after Deutsche Bank upgraded the defense and automotive company to buy from hold and Berenberg raised its PT on the stock. Diploma shares gained as much as 3.3% after the seals and components distributor reported full-year revenue that beat analyst estimates. Next and Boohoo fell after they were both downgraded to hold from buy at Panmure. The broker cited inventory challenges for UK apparel retailers more broadly as demand has fallen in the UK clothing market since early October. Next fell as much as 1.9% while Boohoo dropped 7%; M&S and Asos also fell. Shares in Vallourec dropped as much as 13% in Paris trading after the steel and alloy tubing group announced third- quarter results that fell short of analyst expectations. Shares in IT services firm Bechtle fell as much as 5.4% after Exane downgraded the stock to neutral, citing concern about how margins will be affected by wage inflation and cost increases. SGS shares fell as much as 3.6%. The testing and inspection firm was cut to underweight from neutral at JPMorgan, with the broker saying shares look “mispriced.” Earlier in the session, Asian stocks also declined, with Hong Kong leading losses, as investors assessed the outlook for China’s reopening while continuing to monitor the Federal Reserve’s policy trajectory. The MSCI Asia Pacific Index dropped as much as 1.2%. Chinese technology stocks were the biggest drags on the gauge, also driving the Hang Seng Index down almost 2%, after fresh reports of Covid deaths and lockdowns in China. Malaysian shares pared losses as a deadline for party leaders to name a prime minister was extended after Saturday’s election produced the country’s first-ever hung parliament. Benchmarks across Asia Pacific also fell, while the dollar strengthened, as Federal Reserve Bank of Boston President Susan Collins reiterated the likelihood of large US interest-rate hikes, with the outlook for inflation still uncertain. US stocks had risen recently on hopes for a slower pace of tightening. “After the recent good US consumer and producer price inflation reports, it was easy to conclude that there are much better times ahead in the asset markets,” said Gary Dugan, chief executive officer at the Global CIO Office in a note. “It just won’t be that easy.” Asian stocks had been rebounding as well, gaining as much as 15% from a trough in October, helped also by hopes for reduced restrictions in China. The advance started to falter last week amid lingering doubts over China’s reopening and US rate policy India’s major stock indexes posted their biggest decline in more than a month, tracking weaker global markets and as shares of Reliance Industries and index-heavy software makers slipped.   The S&P BSE Sensex closed 0.8% lower at 61,144.84 in Mumbai, while the NSE Nifty 50 Index eased by an equal measure. Both indexes posted their biggest single-day slump since Oct. 11, with the Sensex now trading 1.3% off its recent peak. Global stocks fell amid concern that China may tighten Covid curbs after a string of reported deaths. Worsening outbreaks across the nation are stoking concerns that authorities may again resort to harsh restrictions.  All but two of the 19 sector sub-gauges compiled by BSE Ltd. traded lower, led by information technology companies. In FX, the dollar gained as fears of a return to stricter Covid containment measures in China boosted demand for havens. The Bloomberg dollar spot index rises 0.7%. CHF and CAD are the strongest performers in G-10 FX, SEK and JPY underperform. The yen plunged by more than 1% dropping as low as 142 per dollar. The Japanese currency held up well throughout most of the Asian session, but began a steep slide shortly before European session began. The euro fell by as much as 1% versus the dollar, the biggest slide this month, to touch $1.0226.  The Australian dollar and Swedish krona were also among the worst performers It’s not unusual for implied volatility to trail realized in the currency market, especially at times when key risk events like central bank policy meetings are far ahead on the calendar. When it comes to the euro-dollar pair, options are underpriced across the curve, with striking moves on the one- and six-month tenors New Zealand dollar short-dated FX option volatility advanced as pricing for a 75- basis-point hike in the official cash rate holds at 60%, two days out from the decision In rates, Treasuries were mixed with the belly of the curve underperforming, cheapening 2s5s30s fly by 3.2bp on the day. Wider losses were seen across gilts where the front-end underperforms.  Treasury yields were cheaper by 0.5bp across belly and richer by 1.5bp across long-end of the curve, flattening 5s30s spread by 1.5bp on the day -- reaching as low as -10.9bp and tightest since Nov. 7. The US 10-year yields around 3.825% and slightly richer on the day;  gilts lag by additional 1.5bp in the sector. US session focus includes double auction event for 2- and 5-year notes while Daly is expected to speak in the afternoon.  The gilts curve bear-flattens with 2s10s narrowing 2.3bps, while the Bund curve bear-steepens. Peripheral spreads are mixed to Germany; Italy widens, Spain and Portugal tighten. In commodities, WTI and Brent are lower by around USD 0.50/bbl or 0.50% on the session, but have lifted from earlier lows and as such are some way from Friday's base. The crude complex was weighed by China's COVID controls, with a stronger US dollar also impacting and adding to the broader complex's woes. Goldman Sachs cut its Q4 Brent oil outlook by USD 10/bbl to $100/bbl due to China COVID concerns, while it sees elevated oil flows from China ahead of EU curbs and a price cap; $ forecasts Brent to recovery to USD 110/bbl in 2023, expects oil demand to increase at an above trend rate of circa. 1.6mln BPD in 2023. Spot gold/silver are unable to glean any haven-related upside in wake of the USDs strength, with the yellow metal over $10/oz below the USD 1751/oz 10-DMA despite briefly surpassing the figure overnight; base metals similar dented. Cryptocurrency prices struggled in the ongoing crisis sparked by the downfall of Sam Bankman-Fried’s once powerful FTX empire. Crypto-exposed stocks fell. It's a quiet start to the holiday-shortened week, with just the October Chicago Fed national activity index due at 830am. We get earnings from Zoom; On the Fed speaker slate, Fed's Daly talks on price stability. Market Snapshot S&P 500 futures down 0.6% to 3,950.25 STOXX Europe 600 down 0.2% to 432.60 MXAP down 1.2% to 150.77 MXAPJ down 1.4% to 487.13 Nikkei up 0.2% to 27,944.79 Topix up 0.3% to 1,972.57 Hang Seng Index down 1.9% to 17,655.91 Shanghai Composite down 0.4% to 3,085.04 Sensex down 0.9% to 61,121.88 Australia S&P/ASX 200 down 0.2% to 7,139.25 Kospi down 1.0% to 2,419.50 German 10Y yield up 1% to 2.03% Euro down 0.9% to $1.0230 Brent Futures down 0.7% to $86.97/bbl Gold spot down 0.6% to $1,739.61 U.S. Dollar Index up 0.86% to 107.85 Top Overnight News from Bloomberg Asset managers are turning ever more bearish on the dollar amid bets that the Federal Reserve may be approaching the peak of its interest-rate hike cycle Investors are slowly coming to terms with the sheer size of the UK government’s borrowing needs over the next few years and it doesn’t look pretty The PBOC net drained 2b yuan ($421m) via its open-market operations on Monday for the first time since Nov. 9, as a selloff in government and corporate bonds eased China’s financial regulators have asked banks to stabilize lending to property developers and construction firms, the latest effort by policymakers to turn around the real-estate crisis and bolster economic growth More than two years of growth-squelching policies sent international investors fleeing China. It’s taken all of two weeks to lure them back Sam Bankman-Fried’s bankrupt crypto empire owes its 50 biggest unsecured creditors a total of $3.1 billion, new court papers show, with a pair of customers owed more than $200 million each A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks began the week mostly lower amid headwinds from China after several areas announced fresh virus restrictions including lockdowns and the country also reported its first COVID-19 deaths in about six months. ASX 200 was constrained by underperformance in the mining-related sectors amid a decline in commodity prices and with BHP shares pressured amid reports its chairman is considering retiring next year. Nikkei 225 lacked direction amid further political tremors in the Kishida government after Internal Affairs Minister Terada resigned due to involvement in a funding scandal and was the third cabinet member to step down in under a month. KOSPI declined amid geopolitical concerns after North Korea's recent missile launches and with sentiment subdued as data for the first 20 days of November showed exports fell 16.7% Y/Y and imports fell 5.5% Y/Y. Hang Seng and Shanghai Comp suffered losses due to the worsening COVID situation in the mainland, while the Hong Kong benchmark was the worst hit with the special administrative region said to be near to cutting non-emergency services at public hospitals amid a surge in COVID cases and its Chief Executive Lee also tested positive for COVID-19. Furthermore, the PBoC maintained its key lending rates with the 1-Year and 5-Year LPR kept at 3.65% and 4.30%, respectively, although this was widely expected. Top Asian News China reported 2,365 (prev. 2,267) new coronavirus cases in the mainland on November 20th, 24,730 (prev. 22,168) new asymptomatic cases and 2 COVID deaths, which follows its first COVID-related death in six months on Saturday. Beijing’s Chaoyang district urged residents to remain at home on Monday as cases continue to rise, according to Reuters. It was also reported that the Baiyun district in China's Guangzhou imposed a 5-day lockdown from November 21st-25th and China's Shijiazhuang city is to conduct mass coronavirus testing in certain areas. Beijing City has tightened testing requirements for travellers entering Beijing, according to an official; will now require 3 PCR tests in 3 days upon arrival, via Reuters. Hong Kong is near to cutting non-emergency services at public hospitals again amid a surge in COVID cases, according to SCMP. It was also reported that Hong Kong Chief Executive John Lee tested positive for COVID-19. Taiwan’s representative at APEC Morris Chang said he had a very happy interaction with Chinese President Xi during a brief meeting, according to Reuters. US VP Harris met with Chinese President Xi briefly at APEC and she noted to Xi that they must maintain open lines of communication to responsibly manage the competition between their countries, according to a White House official. Furthermore, Harris said that the US does not seek conflict or confrontation and welcomes competition, while she added that her Asia trip signifies the significance of the relationship between the US and its allies and partners in the region, according to Reuters. US House GOP leader McCarthy said he will form a select committee on China if he is elected as House Speaker, according to Reuters. Germany plans to tighten disclosure rules for companies exposed to China and plans to assess company disclosures to decide whether they should conduct stress tests on China risks, according to a draft document cited by Reuters. APEC leaders’ declaration affirmed the commitment to promote strong, balanced, secure sustainable and inclusive growth and stated that they are determined to uphold and further strengthen the rules-based multilateral trading system, while they welcomed progress this year in advancing the free-trade area of the Asia-Pacific. Furthermore, APEC is determined to achieve a post-COVID economic recovery and recognised that more intensive efforts are needed to address challenges such as rising inflation, food security, climate change and natural disasters, according to Reuters. Japanese PM Kishida accepted the resignation of Internal Affairs Minister Terada in order to prioritise parliamentary debate and which follows the latter’s involvement in funding scandals, while it was later reported that Japan appointed former Foreign Minister Matsumoto as the new Internal Affairs Minister, according to Reuters. European bourses are pressured across the board, Euro Stoxx 50 -0.6%, as China's COVID crackdowns weighs on sentiment in an otherwise limited European morning. Sectors feature a defensive bias with those most sensitive to renewed COVID controls posting modest underperformance. Stateside, futures are similarly pressured, ES -0.6%, given the above headwinds with the US docket slim today at the start of a holiday shortened week. Goldman Sachs equity strategy: bear market is not over, continue to think near-term path is likely to be volatile and down before reaching a final trough in 2023, via Reuters. Top European News ECB's Lane says (when questioned on the increment of upcoming hikes) "what matters is the level we're going to arrive at. The exact allocation across different meetings is a secondary issue", via ECB. Does not think December is going to be the last rate hike, "The logic of a pause for the ECB: we’re not at that point". UK PM Sunak will be urged by businesses on Monday to seek better EU relations and will face pressure from businesses to soften the impact of Brexit such as by opening doors to more immigration to fill holes in the nation's labour market, according to FT. UK was reportedly considering Swiss-style ties with the EU and the government believes that EU relations are thawing which could lead to 'frictionless' trade, according to The Times. However, UK Health Minister Barclay said he did not recognise a report that the government wants to shift to a Swiss-style relationship with the EU, according to Reuters. FX Dollar benefits from short squeeze amidst latest bout of China-related risk aversion, DXY eyes 108.000 from 106.890 low. Yen sinks alongside Yuan, towards 142.00 after breach of 100 DMA near 141.00. Euro loses 1.0300+ status as Buck bounces and overshadows hawkish-leaning ECB commentary and firm rebound in EGB yields. Aussie undermined by deteriorating Chinese COVID situation, but Kiwi holds up better in hope of hawkish RBNZ hike on Wednesday; AUD/USD hovers on 0.6600 handle, NZD/USD hangs above 0.6100. Sterling loses Fib support just over 1.1800 after failing to breach round number above convincingly. Fixed Income Despite pronounced action earlier on, core fixed benchmarks are in relative proximity to the unchanged mark with Bunds just 20 ticks lower overall. Bunds were bid on a surprising MM domestic PPI decrease; however, ECB's Lane then pushed the complex back down before the latest Beijing, China updates saw that downside dissipate to leave the benchmark only modestly softer. Stateside, USTs have been directionally in-fitting though magnitudes slightly more contained ahead of a holiday-thinned weak and with two lots of supply due later. Commodities Crude benchmarks are weighed on by China's COVID controls, with a stronger USD also impacting and adding to the broader complex's woes. Specifically, WTI and Brent are lower by around USD 0.50/bbl or 0.50% on the session, but have lifted from earlier lows and as such are some way from Friday's base. BP (BP/ LN) - Stopped production at its Rotterdam Refinery (400k BPD), been taken "completely and safely out of operation". Follows reports via Bloomberg on Friday of a serious incident re. a steam outage, via BP. Subsequently, workers will not assist in restarting operations at the Rotterdam refinery (400k BPD) unless their wage demands are met, via Union. A large explosion reportedly hit Russia’s Gazprom pipeline amid suspicions of sabotage related to Russia’s war in Ukraine, according to the Daily Mail. Kuwait’s oil revenues for FY21/22 rose 84.5% Y/Y to KWD 16.33bln, according to the Finance Ministry. US VP Harris said the US will use its APEC host year to set new ambitious sustainability goals and she proposed setting a new aggregate target for reducing carbon emissions from the power sector in APEC, while she also proposed to set a goal for reducing methane emissions and said the US will introduce a new initiative on a just energy transition, according to a White House official cited by Reuters. UN climate agency published a new COP27 cover decision draft deal text and approved a proposal covering funding arrangements loss and damage from climate change suffered by vulnerable countries. However, it was also reported that EU climate policy chief Timmermans said the deal is not enough of a step forward and that the mitigation programme agreement allows some parties to hide from their commitments, while he added that too many parties are not ready to make more progress, according to Reuters. Goldman Sachs cut its Q4 Brent oil outlook by USD 10/bbl to USD 100/bbl due to China COVID concerns, while it sees elevated oil flows from China ahead of EU curbs and a price cap; UBS forecasts Brent to recovery to USD 110/bbl in 2023, expects oil demand to increase at an above trend rate of circa. 1.6mln BPD in 2023. Russia is now the largest fertiliser supplier to India for the first time as it provides discounts, according to Reuters sources. China's NDRC is to lower retail prices of gasoline and diesel by CNY 175/tonne and CNY 165/tonnes respectively as of November 22nd. Spot gold/silver are unable to glean any haven-related upside in wake of the USDs strength, with the yellow metal over USD 10/oz below the USD 1751/oz 10-DMA despite briefly surpassing the figure overnight; base metals similar dented. Geopolitics IAEA said powerful explosions shook the area of Ukraine’s Zaporizhzhia nuclear power plant on Saturday evening and Sunday morning with more than a dozen blasts heard within a short period during the morning. It was also reported that Ukraine’s Energoatom said Russia's military shelled the Zaporizhzhia nuclear power plant on Sunday morning and that there were at least 12 hits on the plant’s infrastructure facilities, while Russia’s Defence Ministry said Ukraine fired shells at power lines supplying the nuclear power plant, according to Reuters and TASS. US Defense Secretary Austin said Russia is carrying out atrocities in Ukraine and said that ‘these aren’t just lapses’, while he added that China, like Russia, is seeking a world where ‘might makes right’. Austin said autocrats like Russian President Putin are watching the Ukraine conflict and could seek nuclear weapons, while he added autocrats could conclude obtaining ‘nuclear weapons would give them a hunting licence of their own’, according to Reuters. UK PM Sunak told Ukrainian President Zelensky that the UK will provide a GBP 50mln air defence package to Ukraine which will include 125 anti-aircraft guns and technology to counter Iranian-supplied drones, according to Reuters. Russian President Putin spokesperson says there is no discussion in the Kremlin of a fresh wave of military mobilisation, via Reuters. German Defence Ministry spokesperson says air policing is being discussed with Poland, via Reuters. US Event Calendar 08:30: Oct. Chicago Fed Nat Activity Index, est. -0.03, prior 0.10 Central Bank speakers 13:00: Fed’s Daly Talks on Price Stability A more detailed look at global markets courtesy of DB's Jim Reid This morning my new credit strategy team and I have just published our 2023 credit outlook. Our view on the terminal rate for 2023 credit spreads and peak level 2024 defaults hasn’t changed much since we last updated our spread targets in April, when we became the first bank to warn of a tough 2023 US recession. In this outlook, we slightly increase our targets and see YE ‘23 spreads for EUR and USD IG hitting 245bps and 235bps, and EUR and USD HY hitting 930bps and 860bps, respectively. This is a widening from current levels of +53bps, +100bps, +400bps and +410bps, respectively. Our full-year total return forecasts for EU IG is 1.6%, USD IG -0.2%, USD HY -3.3% and EUR HY -4.4%. A lack of near-term maturities will limit 2023 defaults, but our models highlight that leverage is 2x more important than maturity walls at explaining historical default patterns. We forecast YE'23 defaults in USD HY of 4.5%, USD Loans of 5.6%, EUR HY of 2.2%, and EUR Loans of 3.7%. But by 2H’24, we forecast peak defaults in USD HY of 9%, USD Loans of 11.3%, EUR HY of 4.3% and EUR loans of 7.1%. Indeed loans worry us more than high-yield bonds in 2023. We see USD loans returning -10.8% over FY'23 as defaults rise and CLO demand is impaired from future downgrades. In the near-term, European credit should continue to outperform US credit, as event risk in the region falls with spreads still wide to the US. Our bearishness gathers momentum later in 2023. Indeed, the major 2023 theme will be the likely US recession in H2. Whether this happens and how severe it is will make or break 2023. In some ways we feel that this has been a pretty easy US cycle to predict as it's been an old fashioned boom-and-bust cycle. Half the 66 economists who forecast the US economy on Bloomberg now predict at least two consecutive quarters of negative growth for 2023 (albeit mildly negative). Has there ever been such a large number predicting a recession from a starting point of not being in one? The worry we would have is that economists’ models seldom predict a recession. So if they now do, that speaks volumes. The risk is that if and when it arrives, it creates systemic risk from somewhere in the over-levered / illiquid financial system. Something normally breaks when the Fed hikes. So the main driver of 2023 view is the combination of still relatively high rates, a tough US recession, and what crisis that might subsequently trigger. If we’re wrong on the US recession call, or if it is mild and without systemic risk, then we will be wrong on our forecasts. We suspect most readers will hope we are. See the full report here. Hopefully this new report won't distract you from the World Cup. I've drawn Argentina and Poland in the office sweepstake which will distract me from England's likely stressful journey through the tournament, however long it lasts. The start of the World Cup coincides with Thanksgiving week so it will be the usual compressed few days of activity. The FOMC minutes (Wednesday) and the ECB's account of their last meeting (Thursday) will be the key macro events. Focus will likely be on their thinking about the terminal rate (both) and QT plans (ECB), with both now more likely to hike 50bps than 75bps in December. We will also see global flash PMIs on Wednesday. Other data will include an array of business activity indicators, including durable goods orders in the US. Indeed, Wednesday is a US data dump ahead of Thanksgiving and we will also see the final UoM consumer confidence data which includes the inflation expectations revision which is important. Claims also comes a day early. The Fed speakers last week helped prompt a big flattening of the US curve as they generally hinted towards a terminal rate of above 5%. As such before we see the FOMC minutes, tomorrow sees three Fed speakers who might add to the debate. They are all hawks (Mester, George and Bullard) though and have all spoken since the FOMC so the market should know their biases. Over the weekend, the Atlanta Fed President Raphael Bostic (non-voter) opined that he believes that the Fed can slow the pace of rate hikes and feels that the Fed's target policy rate need not rise more than 1 percentage point to tackle inflation and help ensure a soft landing. Boston Fed Collins also spoke but kept all options open. Lastly, with only around 20 S&P 500 firms left to report earnings this season, this week's results line-up will be tech-heavy and feature a number of large Chinese firms. These include Baidu (Tuesday), Xiaomi (Wednesday) and Meituan (Friday). In the US, we will hear from Zoom today and Analog Devices, Autodesk and HP tomorrow. Risk aversion has resurfaced across Asian equity markets this morning with fresh China COVID-19 fears after the nation witnessed its first Covid-related death in 6 months on Saturday with two more following on Sunday, sparking concerns that Beijing would reimpose strict Covid curbs even as they consider longer-term reopenings. As I type, the Hang Seng (-2.09%) is the largest underperformer with the Shanghai Composite (-0.81%), the CSI (-1.30%) and the KOSPI (-1.11%) all slipping. Elsewhere, the Nikkei (+0.02%) has been wavering between gains and losses. In overnight trading, stock futures in the DMs are pointing to a weak start with contracts on the S&P 500 (-0.29%), NASDAQ 100 (-0.24%) and the DAX (-0.37%) trading in the red. Meanwhile, yields on the 2 and 10yr USTs are -2.5bps and -4.1bps lower, respectively, with the curve now at -72.6bps, a fresh four decade low. Coming back to China, the People’s Bank of China (PBOC) left its benchmark lending rates unchanged for the third straight month, maintaining its one-year loan prime rate (LPR) at 3.65%, while the five-year LPR (a reference for mortgages) was kept intact at 4.30%. With the authorities recently extending more support to property developers, the possibility of additional easing seems less likely from the central bank. In energy markets, oil prices are continuing their recent decline amid China demand concerns. Brent crude futures are down -1.02% at $86.73/bbl with WTI (-1.09%) just below $80/bbl. Reviewing last week now, US yields and equities sold off while European counterparts rallied, though the moves in equities in particular were small despite another week filled with macro news. Starting on rates, Fed Vice Chair Brainard kept to the company line in outlining a likely step down to +50bp hikes starting in December, but, unlike her colleagues, did not explicitly tie the slower pace with a higher terminal rate. Regional Fed Presidents were happy to take up that mantle, however, with St. Louis Fed President Bullard continuing to lead the vanguard. Indeed, Bullard noted that policy rates may even need to get as high as 7% to fight inflation, from just under 4% today. The Taylor Rule was invoked in that speech. That sent 2yr Treasury yields +19.2bps higher on the week (+7.2bps Friday). 10yr yields lagged, climbing +1.3bps (+5.9bps Friday), which drove the 2s10s curve to its most inverted of the cycle, ending the week at -70.6bps. While curves also flattened on this side of the Atlantic, Bunds and Gilts outperformed, where 10yr Bunds fell -14.6bps (-0.6bps Friday) and Gilts were -11.9bps (+3.7bps Friday) lower. Despite continued tech layoffs, fears of a material escalation in the war after the missiles landed in Poland (for which tensions were quickly eased), and tighter expected Fed policy, equities were subdued but resilient. Indeed, the S&P 500, which fell -0.69% over the week (+0.48% Friday), had its first weekly performance that did not exceed +1% in either direction since early August, while the STOXX 600 climbed +0.25% given the move lower in European discount rates. For a truly muted performance, we highlight the Dow Jones, which was -0.01% lower (+0.59% Friday). While aggregate indices put in a lacklustre shift, regional indices in Europe outperformed, with the DAX up +1.46% (+1.16% Friday) and the CAC +0.76% (+1.04% higher), and certain sectors underperformed in the US where the Nasdaq fell -1.57% (+0.01% Friday) and the Russell 2000 was -1.75% lower (+0.58% Friday). Elsewhere, Brent crude oil pulled back -8.72% (-2.41% Friday), which was its worst weekly return since early August, coincidentally also the last week that the S&P 500 had an absolute value return below 1%. Tyler Durden Mon, 11/21/2022 - 07:57.....»»

Category: blogSource: zerohedgeNov 21st, 2022

Macleod: The Upside-Down World Of Currency

Macleod: The Upside-Down World Of Currency Authored by Alasdair Macleod via GoldMoney.com, The gap between fiat currency values and that of legal money, which is gold, has widened so that dollars retain only 2% of their pre-1970s value, and for sterling it is as little as 1%. Yet it is commonly averred that currency is money, and gold is irrelevant. As the product of statist propaganda, this is incorrect. Originally established in Roman law, legally gold is still money and the states’ debauched currencies are not — only a form of credit. As I demonstrate in this article, the major western central banks will be forced to embark on a new round of currency debasement, likely to put an end to the matter. Central to my thesis is that commercial bank credit will contract sharply in response to rising interest rates and bond yields. This retrenchment is already ending the everything bubble in financial asset values, is beginning to undermine GDP, and given record levels of balance sheet leverage makes a major banking crisis virtually impossible to avoid. Central banks which are already in a parlous state of their own will be tasked with underwriting the entire credit system. In discharging their responsibilities to the status quo, central banks will end up destroying their own currencies. So, why do we persist in pricing everything in failing currencies, when that will almost certainly change? When the difference between legal money and declining currencies is finally realised, the public will discard currencies entirely reverting to legal money. That time is being brought forward rapidly by current events.  Why do we impart value to currency and not money? A question that is not satisfactorily answered today is why is it that an unbacked fiat currency has value as a medium of exchange. Some say that it reflects faith in and the credit standing of the issuer. Others say that by requiring a nation’s subjects to pay taxes and to account for them guarantees its demand. But these replies ignore the consequences of its massive expansion while the state pretends it to be real money. Sometimes, the consequences can seem benign and at others catastrophic. As explanations for the public’s tolerance of repeated failures of currencies, these answers are insufficient. Let us do a thought experiment to highlight the depth of the problem. We know that over millennia, metallic metals, particularly gold, silver, and copper came to be used as media of exchange. And we also know that the use of their value was broadened through credit in the form of banknotes and bank deposits. The relationships between legal money, that is gold, silver, or copper and credit in its various forms were defined in Roman law in the sixth century. And we also know that this system of money and credit with the value of credit tied to that of money, despite some ups and downs, has served humanity well ever since. Now let us assume that in the absence of metallic money, in the dawn of economic time a ruler instructed his subjects to use a new currency which he and only he will issue for the public’s use. This would surely be seen as a benefit to everyone, compared with the pre-existing condition of barter. But the question in our minds must be about the durability of the ruler’s new currency. With no precedent, how is the currency to be valued in the context of the ratios between goods and services bought and sold? And how certain can one be about tomorrow’s value in that context? And what happens if the king loses his power, or dies? Clearly, without a reference to something else, the king’s new currency is a highly risky proposition and sooner or later will simply fail. And even when a new currency has been introduced and linked to an existing form of money, if the tie is then cut the currency will struggle to survive. Without going into the good reasons why this is so, the empirical evidence confirms it. Chinese merchants no longer use Kubla Khan’s paper made out of mulberry leaves, and German citizens no longer use the paper marks of the early 1920s. But they still refer to metallic money. Yet today, we impart values to paper currencies issued by our governments in defiance of these outcomes. An explanation was provided by the great Austrian economist, Ludwig von Mises in his regression theorem. He reasonably argued that we refer the value of a medium of exchange today to its value to us yesterday. In other words, we know as producers what we will receive today for our product, based on our experience in the immediate past, and in the same way we refer to our currency values as consumers. Similarly, at a previous time, we referred our experience of currency values to our prior experience. In other words, the credibility and value of currencies are based on a regression into the past. Mises’s regression theory was broadly confirmed by an earlier writer, Jean-Baptiste Say, who in his Treatise on Political Economy observed:  “Custom, therefore, and not the mandate of authority, designates the specific product that shall pass exclusively as money, whether crown pieces or any other commodity whatever.”[i] Custom is why we still think of currencies as money, even though for the last fifty-one years their link with money was abandoned. The day after President Nixon cut the umbilical cord between gold and the dollar, we all continued using dollars and all the other currencies as if nothing had happened. But this was the last step in a long process of freeing the paper dollar from being backed by gold. The habit of the public in valuing currency by regression had served the US Government well and has continued to do so. The role of a medium of exchange Being backed by no more than government fiat, to properly understand the role that currencies have assumed for themselves, we need to make some comments about why a medium of exchange is needed and its characteristics. The basis was laid out by Jean-Baptiste Say, who described the division of labour and the role of a medium of exchange. Say observed that human productivity depended on specialisation, with producers obtaining their broader consumption through the medium of exchange. The role of money (and associated credit) is to act as a commodity valued on the basis of its use in exchange. Therefore, money is simply the right, or title, to acquire some consumer satisfaction from someone else. Following on from Say’s law, when any economic quantity is exchanged for any other economic quantity, each is termed the value of the other. But when one of the quantities is money, the other quantities are given a price. Price, therefore, is always value expressed in money. For this reason, money has no price, which is confined entirely to the goods and services in an exchange. So long as currency and associated forms of credit are firmly attached to money such that there are minimal differences between their values, there should be no price for them either, other than a value difference arising from counterparty risk. A further distinction between money and currencies can arise if their users suspect that the link might break down. It was the breakdown in this relationship between gold and the dollar that led to the failure of the Bretton Woods agreement in 1971. Therefore, in all logic it is legal money that has no price. But does that mean that when its value differs from that of money, does currency have a price? Not necessarily. So long as currency operates as a medium of exchange, it has a value and not a price. We can say that a dollar is valued at 0.0005682 ounces of gold, or gold is valued at 1760 dollars. As a legacy of the dollar’s regression from the days when it was on a gold standard, we still attribute no price to the dollar, but now we attribute a price to gold. To do so is technically incorrect. Perhaps an argument for this state of affairs is that gold is subject to Gresham’s law, being hoarded rather than spent. It is the medium of exchange of last resort so rarely circulates. Nevertheless, fiat currencies have consistently lost value relative to legal money, which is gold, so much so that the dollar has lost 98% since the suspension of Bretton Woods, and sterling has lost 99%. Over fifty-one years, the process has been so gradual that users of unanchored currencies as their media of exchange have failed to notice it.  This gradual loss of purchasing power relative to gold can continue indefinitely, so long as the conditions that have permitted it to happen remain without causing undue alarm. Furthermore, for lack of a replacement it is highly inconvenient for currency users to consider that their currency might be valueless. They will hang on to the myth of its use value until its debasement can no longer be ignored. What is the purpose of interest rates? Despite the accumulating evidence that central bank management of interest rates fails to achieve their desired outcomes, monetary policy committees persist in using interest rates as their primary means of economic intervention. It was the central bankers’ economic guru himself who pointed out that interest rates correlated with the general level of prices and not the rate of price inflation. And Keynes even named it Gibson’s paradox after Arthur Gibson, who wrote about it in Banker’s Magazine in 1923 (it had actually been noted by Thomas Tooke a century before). But because he couldn’t understand why these correlations were the opposite of what he expected, Keynes ignored it and so have his epigonic central bankers ever since. As was often the case, Keynes was looking through the wrong end of the telescope. The reason interest rates rose and fell with the general price level was that price levels were not driven by interest rates, but interest rates reacted to changes in the general level of prices. Interest rates reflect the loss of purchasing power for money when the quantity of credit increases. With their interests firmly attached to time preference, savers required compensation for the debasement of credit, while borrowers — mainly businesses in production — needed to bid up for credit to pay for higher input costs. Essentially, interest rates changed as a lagging indicator, not a leading one as Keynes and his acolytes to this day still assume. In a nutshell, that is why Gibson’s paradox is not a paradox but a natural consequence of fluctuations in credit and the foreign exchanges and the public’s valuation of it relative to goods. And the way to smooth out the cyclical consequences for prices is to stop discouraging savers from saving and make them personally responsible for their future security. As demonstrated today by Japan’s relatively low CPI inflation rate, a savings driven economy sees credit stimulation fuelling savings rather than consumption, providing capital for manufacturing improvements instead of raising consumer prices. Keynes’s savings paradox — another fatal error — actually points towards the opposite of economic and price stability.  It is over interest rate management that central banks prove their worthlessness. Even if they had a Damascene conversion, bureaucrats in a government department can never impose decisions that can only be efficiently determined by market forces. It is the same fault exhibited in communist regimes, where the state tries to manage the supply of goods— and we know, unless we have forgotten, the futility of state direction of production. It is exactly the same with monetary policy. Just as the conditions that led the communists to build an iron curtain to prevent their reluctant subjects escaping from authoritarianism, there should be no monetary policy. Instead, when things don’t go their way, like the communists, bureaucrats double down on their misguided policies suppressing the evidence of their failures. It is something of a miracle that the economic consequences have not been worse. It is testament to the robustness of human action that when officialdom places mountainous hurdles in its path ordinary folk manage to find a way to get on with their lives despite the intervention. Eventually, the piper must be paid. Misguided interest rate policies led to their suppression to the zero bound, and for the euro, Japanese yen, and Swiss franc, even unnaturally negative deposit rates. Predictably, the distortions of these policies together with central bank credit inflation through quantitative easing are leading to pay-back time.  Rapidly rising commodity, producer and consumer prices, the consequences of these policy mistakes, are in turn leading to higher time preference discounts. Finally, markets have wrested currency and credit valuations out of central banks’ control, as it slowly dawns on market participants that the whole interest rate game has been an economic fallacy. Foreign creditors are no longer prepared to sit there and accept deposit rates and bond yields which do not compensate them for loss of purchasing power. Time preference is now mauling central bankers and their cherished delusions. They have lost their suppressive control over markets and now we must all face the consequences. Like the fate of the Berlin Wall that had kept Germany’s Ossies penned in, monetary policy control is being demolished. With purchasing powers for the major currencies now sinking at a more rapid rate than current levels of interest rate and bond yield compensation, the underlying trend for interest rates is now rising and has further to go. Official forecasts that inflation at the CPU level will return to the targeted 2% in a year or two are pie in the sky.  While Nero-like, central bankers fiddle commercial banks are being burned. A consequence of zero and negative rates has been that commercial bank balance sheet leverage increased stratospherically to compensate for suppressed lending margins. Commercial bankers now have an overriding imperative to claw back their credit expansion in the knowledge that in a rising interest rate environment, their unfettered involvement in non-banking financial activities comes at a cost. Losses on financial collateral are mounting, and the provision of liquidity into mainline non-financial sectors faces losses as well. And when you have a balance sheet leverage ratio of assets to equity of over twenty times (as is the case for the large Japanese and Eurozone banks), balance sheet equity is almost certain to be wiped out. The imperative for action is immediate. Any banker who does not act with the utmost urgency faces the prospect of being overwhelmed by the new interest rate trend. The chart below shows that the broadest measure of US money supply, which is substantially the counterparty of bank credit is already contracting, having declined by $236bn since March. Contracting bank credit forces up interest rates due to lower credit supply. This is a trend that cannot be bucked, a factor that has little directly to do with prices. By way of confirmation of the new trend, the following quotation is extracted from the Fed’s monthly Senior Loan Officers’ Opinion Survey for October: “Over the third quarter, significant net shares of banks reported having tightened standards on C&I [commercial and industrial] loans to firms of all sizes. Banks also reported having tightened most queried terms on C&I loans to firms of all sizes over the third quarter. Tightening was most widely reported for premiums charged on riskier loans, costs of credit lines, and spreads of loan rates over the cost of funds. In addition, significant net shares of banks reported having tightened loan covenants to large and middle-market firms, while moderate net shares of banks reported having tightened covenants to small firms. Similarly, a moderate net share of foreign banks reported having tightened standards for C&I loans. “Major net shares of banks that reported having tightened standards or terms cited a less favourable or more uncertain economic outlook, a reduced tolerance for risk, and the worsening of industry-specific problems as important reasons for doing so. Significant net shares of banks also cited decreased liquidity in the secondary market for C&I loans and less aggressive competition from other banks or nonbank lenders as important reasons for tightening lending standards and terms.” Similarly, credit is being withdrawn from financial activities. The following chart reflects collapsing credit levels being provided to speculators. In the same way that the withdrawal of bank credit undermines nominal GDP (because nearly all GDP transactions are settled in bank credit) the withdrawal of bank credit also undermines financial asset values. And just as it is a mistake to think that a contraction of GDP is driven by a decline in economic activity rather than the availability of bank credit, it is a mistake to ignore the role of bank credit in driving financial market valuations. The statistics are yet to reflect credit contraction in the Eurozone and Japan, which are the most highly leveraged of the major banking systems. This may be partly due to the rapidity with which credit conditions are deteriorating. And we should note that the advanced socialisation of credit in these two regions probably makes senior managements more beholden to their banking authorities, and less entrepreneurial in their big-picture awareness than their American counterparts. Furthermore, the principal reason for continued monetary expansion reflects both the euro-system and the Bank of Japan’s continuing balance sheet expansion, which feed directly into the commercial banking network bolstering their balance sheets. It is likely to be state-demanded credit which overwhelms the Eurozone and Japan’s statistics, masking deteriorating changes in credit supply for commercial demand.  The ECB and BOJ’s monetary policies have been to compromise their respective currencies by their continuing credit expansion, which is why their currencies have lost significant ground against the dollar while US interest rates have been rising. Adding to the tension, the US’s Fed has been jawing up its attack on price inflation, but the recent fall in the dollar on the foreign exchanges strongly suggests a pivot in this policy is in sight. The dilemma facing central banks is one their own making. Having suppressed interest rates to the zero bound and below, the reversal of this trend is now out of their control. Commercial banks will surely react in the face of this new interest rate trend and seek to contract their balance sheets as rapidly as possible. Students of Austrian business cycle theory will not be surprised at the suddenness of this development. But all GDP transactions, with very limited minor cash exceptions at the retail end of gross output are settled in bank credit. Inevitably the withdrawal of credit will cause nominal GDP to contract significantly, a collapse made more severe in real terms when the decline in a currency’s purchasing power is taken into consideration. The choice now facing bureaucratic officialdom is simple: does it prioritise rescuing financial markets and the non-financial economy from deflation, or does it ignore the economic consequences of protecting the currency instead? The ECB, BOJ and the Bank of England have decided their duty lies with supporting the economy and financial markets. Perhaps driven in part by central banking consensus, the Fed now appears to be choosing to protect the US economy and its financial markets as well.  The principal policy in the new pivot will be the same: suppress interest rates below their time preference. It is the policy mistake that the bureaucrats always make, and they will double down on their earlier failures. The extent to which they suppress interest rates will be reflected in the loss of purchasing power of their currencies, not in terms of their values against each other, but in their values with respect to energy, commodities, raw materials, foodstuffs, and precious metals. In other words, a new round of higher producer and consumer prices and therefore irresistible pressure for yet higher interest rates will emerge. The collapse of the everything bubble The flip side of interest rate trends is the value imparted to assets, both financial and non-financial. It is no accident that the biggest and most widespread global bull market in history has coincided with interest rate suppression to zero and even lower over the last four decades. Equally, a trend of rising interest rates will have the opposite effect. Unlike bull markets, bear markets are often sudden and shocking, especially where undue speculation has been previously involved. There is no better example than that of the cryptocurrency phenomenon, which has already seen bitcoin fall from a high of $68,000 to $16,000 in twelve months. And in recent days, the collapse of one of the largest crypto-exchanges, FTX, has exposed both hubris and alleged fraud, handmaidens to extreme public speculation, on an unimaginable scale. For any student of the madness of crowds, it would be surprising if the phenomenon of cryptocurrencies actually survives. Driving this volte-face into bear markets is the decline in bond values. On 20 March 2020, when the Fed reduced its fund rate to zero, the 30-year US Treasury bond yielded 1.18%. Earlier this week the yield stood at 4.06%. That’s a fall in price of over 50%. And time preference suggests that short-term rates, for example over one year, should currently discount a loss of currency’s purchasing power at double current rates, or even more. For the planners who meddle with interest rates, increases in rates and bond yields on that scale are unimaginable. Monetary policy committees, being government agencies, will think primarily about the effect on government finances. In their nightmares they can envisage tax revenues collapsing, welfare commitments soaring, and borrowing costs mounting. The increased deficit, additional to current shortfalls, would require central banks to accelerate quantitative easing without limitation. To the policy planners, the reasons to bring interest rates both lower and back firmly under control are compelling. Furthermore, officials believe that a rising stock market is necessary to maintain economic confidence. That also requires the enforcement of a new declining interest rate trend. The argument in favour of a new round of interest rate suppression becomes undeniable. But the effect on fiat currencies will accelerate their loss of purchasing power, undermining confidence in them and leading to yet higher interest rates in the future. Either way, officialdom loses. And the public will pay the price for meekly going along with these errors. Managing counterparty risk Any recovery in financial asset values, such as that currently in play, is bound to be little more than a rally in an ongoing bear market. We must not forget that commercial bankers have to reduce their balance sheets ruthlessly if they are to protect their shareholders. Consequently, as over-leveraged international banks are at a heightened risk of failing in the new interest rate environment, their counterparties face systemic risks increasing sharply. To reduce exposure to these risks, all bankers are duty bound to their shareholders to shrink their obligations to other banks, which means that the estimated $600 trillion of notional over the counter (OTC) derivatives and on the back of it the additional $50 trillion regulated futures exchange derivatives will enter their own secular bear markets. OTC and regulated derivatives are the children of falling interest rates, and with a new trend of rising interest rates their parentage is bound to be tested. We can now see a further reason why central banks will wish to suppress interest rates and support financial markets. Unless they do so, the risk of widespread market failures between derivative counterparties will threaten to collapse the entire global banking network. And that is in addition to existential risks from customer loan defaults and collapsing collateral values. Central banks will have to stand ready to rescue failing banks and underwrite the entire commercial system.  To avert this risk, they will wish to stabilise markets and prevent further increases in interest rates. And all central banks which have indulged in QE already have mark-to-market losses that have wiped out their own balance sheet equity. We now face the prospect of central banks that by any commercial measure are themselves financially broken, tasked with saving entire commercial banking networks. When the trend for interest rates was for them to fall under the influence of increasing supplies of credit, the deployment of that credit was substantially directed into financial assets and increasing speculation. For this reason, markets soared while the increase in the general level of producer and consumer prices was considerably less than the expansion of credit suggested should be the case. That is no longer so, with manufacturers facing substantial increases in their input costs. And now, when they need it most, bank credit is being withdrawn.  It is not generally realised yet, but the financial world is in transition between economies being driven by asset inflation and suppressed commodity prices, and a new environment of asset deflation while commodity prices increase. And it is in the valuations of unanchored fiat currencies where this transition will be reflected most. Physical commodities are set replace paper equivalents The expansion of derivatives when credit was expanding served to soak up demand for commodities which would otherwise have gone into physical metals and energy. In the case of precious metals, this is admitted by those involved in the expansion of London’s bullion market from the 1980s onwards to have been a deliberate policy to suppress gold as a rival to the dollar.  According to the Bank for International Settlements, at the end of last year gold OTC outstanding swaps and forwards (essentially, the London Bullion Market) stood at the equivalent of 8,968 tonnes of bullion, to which must be added the 1,594 tonnes of paper futures on Comex giving an identified 10,662 tonnes. This is considerably more than the official reserves of the US Treasury, and even its partial replacement with physical bullion will have a major impact on gold values. Silver, which is an extremely tight market, is most of the BIS’s other precious metal statistics content and faces bullion replacement of OTC paper in the order of three billion ounces, to which we must add Comex futures equivalent to a further 700 million ounces.  On the winding down of derivative markets alone, the impact on precious metal values is bound to be substantial. Furthermore, the common mistake made by almost all derivative traders is to not understand that legal money is physical gold and silver — despite what their regulating governments force them to believe. What they call prices for gold and silver are not prices, but values imparted to legal money from depreciating currencies and associated credit.  While it may be hard to grasp this seemingly upside-down concept, it is vital to understand that so-called rising prices for gold and silver are in fact falling values for currencies. Some central banks, predominantly in Asia are taking advantage of this ignorance, which is predominantly displayed in western, Keynesian-driven derivative markets. Perhaps after a currency hiatus and when market misconceptions are ironed out, we can expect legal money values to behave as they should. If a development which is clearly inflationary emerges, it should drive currency values lower relative to gold. But instead, in today’s markets we see them rise because speculators take the view that currencies relative to gold will benefit from higher interest rates. A pause for thought should expose the fallacy of this approach, where the true relationship between money and currencies is assumed away. In the wake of the suspension of the Bretton Woods agreement and when the purchasing power of currencies subsequently declined, interest rates and the value of gold rose together. In February 1972, gold was valued at $85, while the Fed funds rate was 3.3%. On 21 January 1980 gold was fixed that morning at $850, and the Fed funds rate was 13.82%. When gold increased nine-fold, the Fed’s fund rate had more than quadrupled. And it required Paul Volcker to raise the funds rate to over 19% twice subsequently to slay the inflation dragon.  In the seventies, the excessive credit-driven speculation that we now witness was absent, along with the accompanying debt leverage in the financial sectors of western economies and in their banking systems. A Volcker-style rise in interest rates today would cause widespread bankruptcies and without doubt crash the entire global banking system. While markets might take us there anyway, as a deliberate act of official policy it can be safely ruled out.  We must therefore conclude that there is another round of currency destruction in the offing. Potentially, it will be far more extensive than anything seen to date. Not only will central-bank currency and QE expansion fund government deficits and attempt to compensate for the contraction of bank credit while supporting financial markets by firmly suppressing interest rates and bond yields, but insolvent central banks will be tasked with underwriting insolvent commercial banks. At some stage, the inversion of monetary reality, where legal money is priced in fiat, will change. Instead of legal money being priced in fiat, fiat currencies will be priced in legal money. But that will be the death of the fiat swindle. Tyler Durden Sun, 11/20/2022 - 07:00.....»»

Category: smallbizSource: nytNov 20th, 2022

Futures Sink To Session Lows As Sentiment Sours

Futures Sink To Session Lows As Sentiment Sours US equity futures dropped to session lows, and surrendered earlier gains of as much as 0.2%, setting up Wall Street stocks to extend Wednesday’s weakness, with traders assessing comments from Fed officials about the path of rate hikes amid earnings reports (such as those from Target) confirming that the US consumer is hunkering down for a recession.  S&P 500 futures were 0.8% lower and those on the Nasdaq 100 dropped 0.6% at 7:30 a.m. in New York, with treasury yields bouncing after yesterday’s decline.  10-year Treasury yields rose, following indications from Fed officials on Wednesday that policy would tighten further. The dollar rallied half a percent against a basket of currencies. Traders got mixed signals from policy makers, with Fed hawk Christopher Waller saying recent data have made him more comfortable with a moderate interest-rate increase of 50 basis points next month, but left the door open to a sequence of such increases if needed to curb inflation. Meanwhile, San Francisco Fed President Mary Daly said a pause in rate hikes was “off the table,” and New York Fed President John Williams said the central bank should avoid incorporating financial stability risks into its considerations. “All this Fed talk in recent weeks starting with Powell’s press conference after the last meeting, they are indicating they are going to slow the pace of hikes,” Patrick Armstrong, CEO at Plurimi Wealth told Bloomberg TV, adding that he expected a 50 basis-point increase at the next meeting. In premarket trading, Cisco Systems rose after the communications equipment company reported first-quarter results that beat expectations and raised its full-year forecast. Nvidia was also on the rise after topping estimates, lifting semiconductor peers AMD and Marvell. NetEase shares fell as the video game maker plans to end a 14-year partnership with Blizzard Entertainment. Bath & Body Works shares jumped the company boosted its full-year profit forecast. Here are the other notable premarket movers: Ardelyx soars ~77% in premarket trading after its kidney disease therapy won the backing of a majority of a panel of FDA advisers. The response from analysts was mostly positive, with Piper Sandler upgrading the stock to overweight, saying it will be hard for the Food and Drug Administration to justify a rejection of the drug based on the advisory committee’s positive feedback. Bath & Body Works shares jump ~21% in premarket trading after boosting its full-year profit forecast due to a focus on innovation and cost control. Analysts found the results to be impressive overall, noting the print was “strong” with the company reporting beats across the top line. Elevate shares rise ~67% in premarket trading to ~$1.77 after it entered into a definitive agreement to be acquired by an affiliate of Park Cities Asset Management LLC for $1.87/share in cash, implying value of $67m. NetEase shares fall in US premarket trading as the video game maker plans to end a 14-year partnership with Blizzard Entertainment after January, suspending services to licensed games that represented low-single-digit percentage of its revenue and net income in 2021. Norwegian Cruise Line is double- downgraded to underperform from outperform at Credit Suisse, with the broker seeing downside risk to estimates and preferring the firm’s peers. Norwegian Cruise shares fall ~4% in US premarket trading. Principal Financial drops ~2.4% in premarket trading after both Evercore and Morgan Stanley downgrade the stock, citing its high valuation. Robinhood Markets shares gain ~1.4% in US premarket trading after the broker gave an operating update for October, with analysts positive on the company’s better performance during the month and early indications of stronger trading volumes for November. Sonos jumped in postmarket trading after the speaker company reported fourth-quarter revenue that beat expectations and gave a full-year revenue forecast that is ahead of the analyst consensus. US equities have marked a pause this week after the S&P 500 rallied 10.5% over the past month, while the Nasdaq 100 rose about 9.4% during the same period, with slowing inflation weighed against stronger-than-expected US economic data. “The market is likely to experience quite a few false bottoms” as seen in the IT sector at the moment, Jefferies strategists led by Sean Darby wrote in a note. “We are cognizant that each time global markets attempt to rally on the back of speculation that the end of the Fed’s tightening intentions may be in sight, FOMC officials come out with a new paragraph of hawkish narrative, to tamp down any prospect of irrational exuberance,” Simon Ballard, chief economist at First Abu Dhabi Bank, wrote in a note to investors. In Europe, the Stoxx 600 also erased gains to trade lower 0.4%. Basic resources and utilities underperformed, while food and consumer product stocks rose. The Dax outperformed while the FTSE 100 underperformed regional peers, while gilts 2-year yields rise above 3% and 10-year yields trade around 3.15%, both within Wednesday’s range. Investors braced for the release of the UK budget later in the day, while European Central Bank policy makers were said to consider a slowdown in interest-rate hikes, with only a 50 basis-point increase next month. Here are the biggest European movers" Siemens jumps as much as 8.9% on the European engineering giant’s robust order books and outlook, which Jefferies says were well ahead of expectations and mainly driven by its division that makes factory automation software. Chipmakers may be in focus after Nvidia posted quarterly sales that topped analysts’ estimates and Micron Technology said it was reducing production of chips due to weakening market conditions. ASML shares rose as much as 1.2%. Subsea 7 gains as much as 7.7%, the most since March 7, after the Norwegian offshore energy firm published better-than-expected 3Q results, driven by higher margins and solid performance, Citi says. Ocado drops as much as 9.4% after Kintbury Capital chief investment officer Chris Dale said even its bull case is for 50% downside in the stock, on expectations the UK company will struggle to finance itself. Alstom declines as much as 6.1% -- paring some of its post-earnings gains -- after Morgan Stanley slashed its price target on worries about the French rail equipment maker’s balance sheet and record-low cash-flow guidance. NN Group drops as much as 8.6%, the most since mid-August, after the insurer set new 2025 targets which Citi says may disappoint because of their “conservatism.” Bouygues falls as much as 5.2% in Paris trading as a warning on margins at the Colas constructions unit overshadowed nine-month results from the French conglomerate that beat consensus estimates for operating income. Embracer slides as much as 21%, the biggest intraday decline on record, after the Swedish video-game maker reduced its fiscal 2023 adjusted Ebit target, citing a delay in its Dead Island 2 game, a more challenging macro environment and a mixed reception to some of its key releases. Earlier in the session, Asian stocks declined amid fears that Federal Reserve’s tightening still has further go to curb inflation after strong US retail sales print.  The MSCI Asia Pacific Index declined as much as 1.3%, its biggest drop in a week before paring losses. Tech drove losses with Meituan, Samsung and Netease leading the gauge lower.   Benchmarks in Hong Kong were notable losers in the region, with the Hang Seng Tech Index sliding as much as 5.6% before reducing the loss. They were down for a second day following rapid gains that put the gauges there into bull market territory. Equities in mainland China and South Korea also dropped while those in Japan, Australia and Singapore were slightly higher.  Tencent Holdings Ltd.’s plan to pay out $20b of stock in Meituan sparked a broad selloff of Chinese internet stocks on Thursday as investors fear more divestments by the online gaming company are on the cards. The People’s Bank of China warned inflation may accelerate as overall demand in the economy picks up, suggesting it may refrain from adding more long-term stimulus. It did still doubled short-term cash injection Thursday to ease a selloff in sovereign debt. In the US, San Francisco Fed President Mary Daly said the central bank should keep hiking, while New York Fed President John Williams said it should focus on the economy rather than financial risks as it raises rates.  “The hotter-than-expected US retail sales data and hawkish leaning comments from Fed officials weighed on equities,” Saxo Capital Markets strategists including Redmond Wong wrote in a note. US retail sales posted the biggest increase in eight months in October Japanese stocks traded range-bound as investors worried about further US interest rate hikes after San Francisco Federal Reserve President Mary Daly said that “pausing is off the table.” The Topix Index rose 0.2% to 1,966.28 as of market close Tokyo time, while the Nikkei declined 0.4% to 27,930.57. Sumitomo Mitsui Financial Group Inc. contributed the most to the Topix Index gain, increasing 2.1%. Out of 2,165 stocks in the index, 1,512 rose and 551 fell, while 102 were unchanged. “The US retail sales numbers came out higher than expected, also signaling that inflationary factors remain strong,” said Takeru Ogihara, chief strategist at Asset Management One. Australian stocks snapped a 3-day losing streak as the S&P/ASX 200 index rose 0.2% to close at 7,135.70, boosted by strength in healthcare shares and banks.  Australia’s jobless rate unexpectedly fell in October as a surge in full-time employment underpinned strong hiring, reinforcing the Reserve Bank’s arguments for further interest-rate increases. In New Zealand, the S&P/NZX 50 index rose 0.6% to 11,294.52. Stocks in India declined, in line with global peers, as investors sought clarity over the Federal Reserve’s future policy moves and their impact on growth.  Expiry of weekly derivative contracts also weighed on local shares as investors continued taking profits from recent gainers such as banks after conclusion of quarterly results season.  The S&P BSE Sensex fell to close at 0.4%, its biggest drop since Nov. 10, to 61,750.60 in Mumbai, while the NSE Nifty 50 Index declined by an equal measure. For the week, the Sensex and Nifty are little changed. “With the result season now over, we expect the market to track global developments in the near term,” Motilal Oswal Financial Services analyst Siddhartha Khemka said. Mortgage lender HDFC and its banking unit provided the biggest drag to the Sensex. Out of 30 shares in the Sensex index, only eight rose and the rest fell. All but three of BSE Ltd.’s 19 sector sub-gauges closed lower, led by consumer durables stocks. In rates, 10-year yields TSY yield add 3bps to 3.7%, while bunds 10-year yields drop 2bps to below 2%. Treasuries were cheaper by as much as 2.4bp across 10-year sector, with 3.714% yield vs session high 3.74%, following a more aggressive bear-flattening move in gilts after the UK government released its latest fiscal statement. Bunds outperform by 5bp in the sector while gilts lag by 2bp. UK curve sharply bear- flattens on the day with 2-year yield cheaper by 10bp, back above 3% level. In commodities, crude benchmarks are under modest pressure given the USD recovery throughout the morning, generally softer APAC tone and a continuing deterioration to the China COVID case count weighing. Ags. in focus and pressured following a as-expected extension to the Black Sea grain deal. Currently, the yellow metal is holding around the lower-end of USD 1761-1774/oz parameters, and is thus a similar distance from the WTD peak of USD 1786/oz and the 10-DMA at USD 1738/oz. WTI falls below $85. Spot gold falls roughly $8 to trade near $1,766/oz To the day ahead now, and a key highlight will be the UK government’s autumn statement. Otherwise, data releases include US housing starts and building permits for October, the Philadelphia Fed’s business outlook index and the Kansas City Fed manufacturing index for November, and the weekly initial jobless claims. Finally, central bank speakers include the Fed’s Bullard, Bowman, Mester, Jefferson and Kashkari, the ECB’s Villeroy, and the BoE’s Pill and Tenreyro. Market Snapshot S&P 500 futures down 0.2% to 3,960.25 STOXX Europe 600 down 0.2% to 429.39 MXAP down 0.7% to 152.94 MXAPJ down 1.0% to 494.58 Nikkei down 0.3% to 27,930.57 Topix up 0.2% to 1,966.28 Hang Seng Index down 1.2% to 18,045.66 Shanghai Composite down 0.1% to 3,115.44 Sensex down 0.1% to 61,897.84 Australia S&P/ASX 200 up 0.2% to 7,135.65 Kospi down 1.4% to 2,442.90 German 10Y yield down 0.5% to 1.99% Euro down 0.2% to $1.0378 Brent Futures down 0.5% to $92.39/bbl Gold spot down 0.5% to $1,765.56 U.S. Dollar Index up 0.27% to 106.57 Top Overnight News from Bloomberg Bank customers are the most enthusiastic about using the British pound for global payments since mid-2016, around the same time the UK voted to quit the European Union President Joe Biden rejected Ukrainian President Volodymyr Zelenskiy‘s assertion that Russia fired a missile that landed in Poland — continuing efforts by the US and allies to de-escalate the deadly episode Chinese regulators asked banks to report on their ability to meet short-term obligations after a rapid selloff in bonds triggered a flood of investor withdrawals from fixed-income products, according to people familiar with the matter China will well implement agreements made by Chinese President Xi Jinping and US President Joe Biden at G-20 summit over economic policy and trade negotiations, Ministry of Commerce says Turns out Chinese President Xi Jinping’s partnership with Vladimir Putin has limits after all: He doesn’t want to follow the Russian leader into diplomatic isolation Brazil President-elect Luiz Inacio Lula da Silva will ask congress to circumvent a key fiscal safeguard by excluding the country’s most important social program from a public spending cap to pay for his campaign pledges A more detailed look at global market courtesy of Newsquawk APAC stocks traded mostly lower throughout the session following the downbeat lead from Wall Street. ASX 200 was the relative outperformer with gains lead but the Consumer Staples and IT sector, with no reaction seen in wake of the Aussie jobs data. Nikkei 225 traded on either side of the 28k mark before stabilising under the round figure, with losses modest during the session. KOSPI gave up earlier gains and drifted lower throughout the session with losses led by the chip and IT sectors, whilst sentiment in the region was soured by North Korea firing a short-range ballistic missile. Hang Seng and Shanghai Comp opened with and then extended on losses with the former seeing downside in Meituan, which fell around 6% after Tencent announced a special dividend in the form of Meituan shares, whilst People's Daily also suggested China is able to achieve COVID Zero as mainland cases roses at the fastest pace since April. Top Asian News China reported 2,388 (prev. 1,623) new confirmed coronavirus cases in the mainland on Nov 16th, via Reuters China is able to achieve COVID Zero, according to People's Daily. China has asked banks to report on liquidity following the sudden bond rout, according to Bloomberg. PBoC injected CNY 132bln via 7-day reverse repos with the rate at 2.00% for a CNY 123bln net injection. Tokyo to raise COVID alert level by one notch amid the recent rise in COVID cases, according to NTV. BoJ Governor Kuroda said it is important to continue monetary easing to support the economy. Kuroda said recent price hikes are due to cost-push factors, according to Reuters. Kuroda said BoJ will closely coordinate with the government to conduct appropriate policy. Senior BoJ official Uchida said it is too early to discuss the exit from monetary stimulus, via Reuters. Saudi Arabia signed USD 30bln worth of investment agreements with South Korean firms, covering clean energy and medical tech, according to the Saudi Investment Minister China's Commerce Ministry, on China-US economic & trade dialogue, says will implement the key consensus reached by leaders, domestic exports/imports will see greater pressure. Stocks in Europe, Eurostoxx 50 -0.2%, are on a mixed footing after scaling back opening gains with no clear fundamental catalyst driving price action thus far ahead of numerous events. Stateside, futures have similarly pared back initial upside and are near the unchanged mark/marginally lower with the ES back below the 4k figure ahead of data, Fed speak and a few corporate updates. Top European News COP27 Set for Showdown After Draft Leaves Out Fossil Fuel Pledge China’s Forgotten Covid Zero Lockdown Has Just Hit 100 Days Where European Energy Infrastructure Is Vulnerable to Attack Rusal Asks LME to Disclose Origin of All Metal, Not Russian Only European Stocks Steady as Investors Assess Policy, Growth Risks FX DXY has seen a intra-day recovery from a 106.08 low to a 106.68 peak, with G10 peers now all pressured vs initial modest upside against the Greenback. Fundamental driver(s) behind the move have been limited, with the sessions main events yet to come in the form of the UK budget and Central Bank speak thereafter. Cable has, given the USD's recovery, experienced a marked pullback from 1.1950+ best to back below the figure and almost a full point lower. Similarly, EUR has moved into the red though this is comparably more contained given its initial upside was capped by EUR/GBP action, action which is now marginally EUR-favourable. USD/CNY has reverted back to initial 7.14+ best levels after pulling back towards the figure, with the region focused on fresh COVID commentary. PBoC sets USD/CNY mid-point at 7.0655 vs exp. 7.0479 (prev. 7.0363) Fixed Income Gilts unchanged ahead of significant fiscal changes from the UK, USTs await Fed speak post-Waller. Currently, the UK benchmark resides at the lower-end of 106.32-107.17 parameters with the associated 10yr yield at 3.15%; a figure that is only 15bp above the current BoE base rate and significantly shy of the 4.632% peak seen in wake of the former PM/Chancellor’s ‘mini-Budget’. EGBs and USTs are holding in similarly contained ranges around the unchanged mark; currently, +14 and -9 ticks respectively, with focus on the hefty Central Bank docket. Italy maintains the new BTP Italia bond real annual coupon at 1.6%. Commodities Crude benchmarks are under modest pressure given the USD recovery throughout the morning, generally softer APAC tone and a continuing deterioration to the China COVID case count weighing. Ags. in focus and pressured following a as-expected extension to the Black Sea grain deal. Currently, the yellow metal is holding around the lower-end of USD 1761-1774/oz parameters, and is thus a similar distance from the WTD peak of USD 1786/oz and the 10-DMA at USD 1738/oz. TC Energy's Keystone oil pipeline issues were resolved after force majeure, but TC Energy will reduce injections for the rest of November, according to Reuters sources. Ukrainian Infrastructure Minister says the Black Sea grain initiative will be extended for 120-days, via Reuters; Russia will not cut off the Black Sea grain deal, via Tass citing the Deputy Foreign Minister. Geopolitics Chinese President Xi may visit Russia in 2023; government heads could have call in December, according to Tass. North Korea fired an unspecified ballistic missile toward East Sea, according to the South Korean military cited by Yonhap. North Korea said the recent South Korea, US, and Japan summit would lead the Korean peninsula to an even more unpredictable situation, according to KCNA. South Korean and US militaries conducted missile defence drills following the North Korean missile launch, according to the South Korean military. UK blocked Chinese takeover of Newport chip plant, ordering Chinese-owned Nexperia to sell at least 86% of the factory in order to mitigate risk to national security, according to FT. China's President Xi said China is willing to increase imports from Italy, according to CCTV. Turkish President Erdogan expects issues around the US F-16 jet purchases to resolve soon, via Reuters. US Event Calendar 08:30: Nov. Initial Jobless Claims, est. 228,000, prior 225,000 Nov. Continuing Claims, est. 1.51m, prior 1.49m 08:30: Oct. Housing Starts, est. 1.41m, prior 1.44m Oct. Housing Starts MoM, est. -2.0%, prior -8.1% Oct. Building Permits, est. 1.51m, prior 1.56m Oct. Building Permits MoM, est. -3.2%, prior 1.4% 08:30: Nov. Philadelphia Fed Business Outl, est. -6.0, prior -8.7 11:00: Nov. Kansas City Fed Manf. Activity, est. -8, prior -7 Central bank speakers 08:00: Fed’s Bullard Discussed the Economy and Monetary Policy 09:15: Fed’s Bowman Discusses Financial Literacy and Inclusion 09:40: Fed’s Mester Speaks at Financial Stability Conference 10:40: Fed’s Jefferson and Kashkari Take Part in Panel Discussion 13:45: Fed’s Kashkari Takes Part in Moderated Q&A 20:05: Powell, Williams and Daly Honor Chicago Fed’s Evans DB's Jim Reid concludes the overnight wrap After a strong rebound over recent days, the momentum behind risk assets started to peter out yesterday thanks to some hawkish comments from Fed officials, weak corporate earnings, as well as strong retail sales numbers that dampened hopes about a dovish pivot from the Fed. To be fair it wasn’t all bad news, and fears of a military escalation subsided after NATO leaders said the missile that hit Polish territory on Tuesday evening wasn’t the result of an intentional Russian attack. However, apart from specific assets like the Polish Zloty, that wasn’t enough to boost sentiment more broadly, and the S&P 500 (-0.83%) ended the day noticeably lower. Running through those specific factors, a key one behind yesterday’s market moves were some fairly hawkish comments from Fed officials. For instance, Kansas City Fed President George cautioned about prematurely ending rate hikes in a WSJ interview, saying that “the more important question for this committee, looking out over next year, is being careful not to stop too soon”. Later on we then heard from San Francisco Fed President Daly , who said that she thought that “somewhere between 4.75 and 5.25 seems a reasonable place to think about” in terms of how high rates could go. Bear in mind that the peak rate priced in by futures is still at 4.92%, so the bulk of Daly’s range is above where pricing currently is. And finally we heard from Governor Waller, who said he was “more comfortable considering stepping down to a 50 basis-point hike” based on the data of recent weeks, but also said that “we still have a ways to go” and that “policy is barely in restrictive territory today”. Those comments came against the backdrop of some decent retail sales numbers for October, with headline growth up by +1.3% (vs. +1.0% expected). That was the fastest pace of monthly growth since February, and the details looked pretty strong as well, with the measure excluding autos and gasoline up by +0.9% (vs. +0.2% expected). On one level that’s good news of course, but the report was seen as showcasing the strength of the US consumer amidst the ongoing rate hikes from the Fed, which should give them more space to keep hiking over the next few meetings. With investors pricing in a slightly more hawkish Fed on the day, the 2yr Treasury yield ticked up +1.7bps to 4.35%. However, the broader risk-off tone meant there was a large decline in longer-dated yields on both sides of the Atlantic. In the US, the 10yr yield came down -8.0bps to 3.69%, and yields on 10yr bunds (-10.9bps), OATs (-12.0bps) and gilts (-14.9bps) all saw sharp declines as well. In turn, those moves pushed several yield curves even deeper into inversion territory, with the 2s10s yield curve closing beneath -60bps for the first time since 1982, which is concerning when you consider its historic accuracy as a leading indicator of recessions. Other yield curves also inverted by even more, with the 3m10yr curve down -6.6bps to -54.2bps. And even the Fed’s preferred yield curve (18m forward 3m yield minus the spot 3m yield) has now spent a full week in inversion territory, closing yesterday at -15.3bps, which is the lowest since March 2020. Overnight in Asia, yields on 10yr USTs (+2.8bps) have slightly retraced their moves yesterday, trading at 3.72% as we go to print. Growing speculation about a recession proved bad news for equities, and the mood was further hit by a weak earnings release from Target (-13.14%), who cut their outlook and saw earnings miss expectations. By the close, that had seen the S&P 500 shed -0.83%, with the losses driven by the more cyclical sectors. Tech was impacted in particular, with the NASDAQ down -1.54% and the FANG+ index down -2.10%. For Europe it was much the same story, with the STOXX 600 (-0.98%) and the DAX (-1.00%) both losing ground on the day, and after the close we then heard a Bloomberg report that suggested ECB policymakers would slow down their rate hikes to a 50bp move next month. In more positive news, there were strong signs that a military escalation had been avoided after a missile struck Polish territory on Tuesday evening, after both NATO and Poland’s leaders said that it did not look to have resulted from an intentional Russian attack. Polish President Duda said that “most likely, this was an unfortunate accident”, and NATO Secretary General Stoltenberg said that their view was it resulted from a Ukrainian air defence missile that was fired in defence against Russian attacks. The news helped Poland’s Zloty to regain its position prior to the attack, strengthening +1.14% against the US Dollar yesterday. Looking forward now, attention will be on the UK today as the government delivers their Autumn Statement. That’s set to outline their fiscal consolidation plans for the years ahead, which is part of their plan to regain market confidence following the turmoil in late September and early October. Our UK economist published an update earlier this week on what to look out for (link here) but a key one will be the overall scale of the package, as well as how that’s distributed between spending cuts and tax rises. Keep an eye out as well on what’s announced on energy prices, since the current Energy Price Guarantee is only confirmed until the end of March. Ahead of the statement, data yesterday showed consumer price inflation surprised on the upside in October, coming in at +11.1%. That’s the highest reading since 1981, and is above the consensus estimate of +10.7%, as well as the Bank of England’s projection at +10.9%. Interestingly, the ONS said that without the government’s Energy Price Guarantee, CPI would have been around +13.8%, rather than +11.1%. Overnight in Asia, the major equity markets are trading lower this morning, including the Hang Seng (-1.49%), the Shanghai Composite (-0.63%), the CSI (-1.01%), the Nikkei (-0.35%) and the KOSPI (-1.10%). Tech stocks are under pressure again as well, with the Hang Seng Tech index (-3.48%) on track for its biggest decline in a couple of weeks. That follows an announcement from Tencent that they’d be distributing $20bn of shares in Meituan. In the meantime, Bloomberg reported that regulators in China had asked banks about their ability to meet short-term obligations, following a bond selloff that triggered investor withdrawals. Elsewhere overnight, US equity futures are pointing towards gains at today’s open with contracts on the S&P 500 (+0.21%) and NASDAQ 100 (+0.29%) both higher. And we also had an employment report from Australia showing that the unemployment rate fell to a 48-year low of 3.4% in October (vs. 3.5% expected). Back in the US, we finally got confirmation overnight that the Republicans had gained control of the House of Representatives following last week’s midterm elections. The Associated Press’ count now puts the Republicans at the 218 mark needed for the majority, whilst the Democrats have 211 seats with only 6 districts now outstanding. So that means from January the Democrats will require at least some Republican support to pass legislation. When it came to yesterday’s other data from the US, it wasn’t as strong as the retail sales numbers, with industrial production contracting by -0.1% in October (vs. +0.1% expected). We also got the latest NAHB housing market index for November, which fell to 33 (vs. 36 expected). If you exclude the pandemic month of April 2020, that’s the lowest reading for that index in over a decade. To the day ahead now, and a key highlight will be the UK government’s autumn statement. Otherwise, data releases include US housing starts and building permits for October, the Philadelphia Fed’s business outlook index and the Kansas City Fed manufacturing index for November, and the weekly initial jobless claims. Finally, central bank speakers include the Fed’s Bullard, Bowman, Mester, Jefferson and Kashkari, the ECB’s Villeroy, and the BoE’s Pill and Tenreyro. Tyler Durden Thu, 11/17/2022 - 08:02.....»»

Category: blogSource: zerohedgeNov 17th, 2022

Adults Are Spending Big on Toys and Stuffed Animals—for Themselves

Toy companies like Lego, Mattel, and even Build-a-Bear are courting the booming "kidult" market Visitors to the bustling Lego store in midtown Manhattan this holiday season may be surprised by what greets them upon their entrance. After waiting in a line so long that it requires a bouncer, they will find not only sections dedicated to Star Wars and Harry Potter, but also an area labeled “Adults Welcome.” Occupying about a third of the store’s floor space, it invites those who are young at heart, if not in body, to build. In neat stacks sit a Lego typewriter, a Lego grand piano, a Lego Colosseum, and a Lego version of the set of Friends. Some of the construction kits are eerily specific, like a Lego Real Madrid soccer stadium, a Lego Bugatti Chiron 42083, and a Lego version of the ’80s-era Nintendo NES gaming console. [time-brightcove not-tgx=”true”] Lego is far from the only toy company catering to a previously neglected sector of the market. Just a few blocks away, at FAO Schwarz, millennials crowd into the Funko Pop section, where they can buy big-headed figurines of characters like Elaine from Seinfeld and the exercise instructor Richard Simmons. In 2020, Hasbro introduced an adult version of Play-Doh perfumed with smells like “overpriced latte” and “fresh-cut grass.” In 2021, Fisher-Price brought a Bluetooth-enabled version of the vintage Chatter Phone toy—the one with a face on its dial pad—to the market for grownups. In October, McDonald’s started serving Adult Happy Meals, toys included. Mattel, meanwhile, has added alcohol to the menu at the American Girl store, and in 2020 launched an adult-oriented wing of the company called Mattel Creations that partners with celebrities and fashion designers to create limited-edition toys. Its Tesla Cybertruck retailed at $400. A Gucci collaboration with Hot Wheels sold out online in less than a minute. Build-a-Bear, whose typical customers are young children looking to customize their snuggly playthings, introduced new “After Dark” stuffed animals—including a bunny named Pawlette who wears a T-shirt that declares “It’s Wine O’Clock Somewhere” and carries a bottle of red wine—in 2019. Last year they added a “Bear Cave” section to their website that you must be over 18 to enter. Companies have long manufactured puzzles, board games, and coloring books marketed specifically to adults who need to reconnect with their inner child. And collectors have stocked their shelves with vintage Barbies. But mostly, toys have been the domain of children. Thanks to stress, COVID-19, and social media, however, the demographics of play have changed significantly in the past few years. As Richard Gottlieb, CEO of the consulting agency Global Toy Experts, explains, “Toy companies began to say, ‘We’re not in the kids business. We’re in the play business. And anyone can play.’” Read More: Meet Mattel’s Gender-Neutral Doll The pandemic was a boom time for the toy industry in general as people were stuck at home looking for things to do. After decades of single-digit annual growth, sales increased 17% in 2020 and an additional 14% in 2021. A lot of that uptick, says Juli Lennett, vice president and industry adviser for research firm NPD’s U.S. toy division, was in the “kidult” market. Technically, NPD counts anyone over 12 as a kidult, since children tend to lose interest in toys in favor of social media and video games at that age. But toy giants like Lego and Mattel have conducted marketing research that indicates that, yes, grownups are the ones dropping $850 on a 7,541-piece Star Wars Millennium Falcon Lego set or $400 on neon He-Man action figures designed by the artist MADSAKI. An NPD survey found that kidults bought 24% of all toys from June 2021 to June 2022 and represented about two-thirds of dollar growth in the toy market. “The share of toy sales for ages 12 and up has nearly doubled since 2017,” says Lennett. This isn’t some passing pandemic trend. Two years after the initial vaccine rollout, the cloud of gloom and exhaustion that descended upon adults hasn’t fully lifted. And kidults still just want to play. Catharine Parker’s home in Chandler, Ariz., is filled with toys. The 36-year-old physician’s assistant has three children—a 4-year-old and twin 2-year-olds—so piles of stuffed animals are to be expected. But increasingly, the brightly colored rotund plushies in the family’s burgeoning collection of Squishmallows actually belong to Parker. The family collectively owns about 40 of the creatures, and Parker estimates they’ve spent $500 on them. “The sweet spot for us has been an older age than a typical toy consumer,” says Jeremy Padawer, chief brand officer of Jazwares, maker of Squishmallows. “We think the 11-to-22-year-old brings it home. It’s aspirational to the younger kids in the house. Then the parent sees it and goes, ‘Wait, I kind of like this.’” Courtesy of Catharine ParkerCatharine Parker’s Squishmallow collection. The first Squishmallow entered Parker’s home in 2018, when her husband ran to the pharmacy to pick up medicine for their sick baby and threw one in the basket as a get-well gift. Another one arrived as a potty-training reward two years later. When Parker had twins, the Squishmallows proliferated. “I rationalized that they all ‘needed’ a big one to sleep with—we couldn’t leave anyone out,” Parker says. “Suddenly I was laying down on them as well and thinking maybe we could use a few to snuggle for ourselves.” Jellycat, a British brand that makes similar toys, sells not only your typical plush puppies but also cuddly kale leaves, mushrooms, and blue cheese for grownup foodies. “Stuffed animals are kind of like an adult pacifier,” says Lennett. “Adults are going back to their childhoods to forget what’s going on in the world. Maybe it’s the pandemic, maybe it’s politics, maybe it’s war.” Read More: How Cuddly Comfort Objects May Help Adults with Anxiety Cindy Derrow, 56, played with Legos with her kids when they were young but purged her New York City apartment of their toys as they grew up. In April, however, she decided to buy a bouquet from Lego’s Botanical collection. When her husband contracted COVID-19 and had to isolate, Derrow spent her evenings building. “I like things that involve following instructions. I like knitting. I like baking,” she says. “But it’s an expensive habit.” The orchid bouquet retails at $50—one of the cheaper offerings among Lego’s adult-targeted toys—and won the inaugural Grown-Up Toy of the Year prize at the Toy of the Year Awards in February. Derrow is in good company: in February, Rihanna shared a picture on Instagram of a Valentine’s Day gift—a Lego bouquet. It’s a wonder this marketing ploy took so long to arrive. But before adults would openly play with toys, many had to feel that it was socially acceptable to do so. Gottlieb argues that the pandemic hastened a generational shift. There was little time to play with toys during the Depression and World War II, he says, and although baby boomers had more opportunities than previous generations, “they were pushing up against a society that saw play as an indulgence for children.” Video games paved the way for adult play, though for a time gaming was associated with nerds glued to computers in basements. Now geeking out is cool. Fantasy series and superhero movies have come to dominate pop culture; 40-something parents turn on the Xbox to fight zombies after putting the kids to bed. Barry Kudrowitz, a professor of design and merchandising at the University of Minnesota, points to the normalization of mobile games as the moment when adult play stopped being taboo. “We play games on our phones on the train. We still play all the time,” he says. “For our parents, at a certain point they had to stop. It’s not like they could bring Scrabble on the train.” Toy companies have tried to target grownups for decades. In 2002, Lego created a program called Lego Serious Play, to be used by businesses to teach collaboration skills. Google, Procter & Gamble, and Harvard Business School have all participated. And the Danish company has spent the past few years determining how to market to a wider adult audience. “Our Adults Welcome campaign happened to coincide with the timing of the pandemic,” says Cristina Liquori, Lego’s head of U.S. marketing. Ads featuring adults finding zen with Legos aired in the U.S. in 2020. The company debuted a Lego-building competition show hosted by Will Arnett (star of The Lego Batman Movie) the same year. Mattel, too, launched its adult-targeted site during the pandemic by happenstance. It had always planned to debut Mattel Creations for the company’s 75th anniversary, in 2020. Read More: Barbie’s Got a New Body: What That Says About American Beauty Ideals But while pandemic boredom surely gave toy companies a boost, the kidult trend would not have taken off in the same way without social media. Kelly Bigley, a 31-year-old nurse in Olivehurst, Calif., noticed toy-themed videos popping up on TikTok. “I can’t afford to spend $70 on a kids’ toy for 30 minutes of entertainment, but I can binge-watch TikToks,” she says. She began collecting Mini Brands, little $5 balls that contain teeny toy versions of items like shaving cream and soy sauce bottles. “I don’t have the space to display a massive toy ambulance,” she says. “I could create my own little grocery store with these.” Squishmallows launched in 2017 but soared in popularity during the pandemic, when they became a mainstay in dorm rooms, propelled by influencers like Charli D’Amelio, who posted a photo of herself with about 30 of them in February 2021. Posts tagged #Squishmallows have garnered more than 4 billion views on TikTok, and 65% of the people who purchase the toys for themselves are ages 18 to 24. “I can remember a time when having something like a Squishmallow in your college dorm room, you would have to hide it,” says Padawer. “But now we’re in a culture where young people say, ‘This is who I am, and I like who I am, and I’m going to share that with the world.’ ” On TikTok, toys became a way to showcase one’s personality. A cynic might say defining one’s character through tangible things drives consumerism. But Mattel president and COO Richard Dickson argues toys provide much needed distraction. “The adult form of play is really about collectibility and display,” he says. “It’s conversational. It’s art. It’s levity. It’s joy. It’s fun. When you look at the world right now, we need lightheartedness.” Millennials have frequently been labeled immature or stuck in arrested development, preoccupied with totems from their childhood. Every few months a conversation on Twitter flares up criticizing “Disney Adults” who make regular sojourns to Disney World sans children, or the fans who line up at midnight for Marvel movies. Those same critics roll their eyes at the trend of collecting toys. But given that this generation has suffered through two financial collapses, a pandemic, and an ongoing climate crisis, it’s hardly surprising that they find comfort in nostalgic indulgences that hark back to seemingly simpler times. Most of Parker’s friends, in their 30s and 40s, have their own stuffed-animal collections or Legos, even if they don’t have kids. She argues that boomers also collected toys—they just looked different; model trains and baseball cards have been assigned some historic value greater than Squishmallows. Parker chafes at the label kidult, which she feels otherizes people who are just trying to find a bit of joy in dark times: “It feels very contrived.” This holiday season, toy companies are hoping to appear on kidults’ wish lists. Basic Fun is selling $100 Lite-Brite wall art, and Razor is introducing an adult version of its scooter that retails for $600. Lego is egging on adult builders with tweets like “Normalize adults scheduling Lego building play dates.” For now, the adult market continues to thrive. Gottlieb estimates that $2.4 billion worth of toys in the U.S. are sold every year to adults for their own use. A survey conducted last year by the Toy Association found that 58% of parents had bought toys and games for themselves. And after two years of double-digit growth, toy sales have slowed but are still up 3% year-over-year as of September, with the holidays ahead. Photo Illustration by Rich Morgan for TIME A Richard Simmons Funko Pop, a Build-a-Bear “After Dark” stuffed animal, and the Mattel Creations Tesla Cybertruck Companies are betting big on the future of grownup play. A consortium that includes former Disney CEO Bob Iger invested $263 million for a 25% stake in Funko this year, a major infusion for the pop-culture-themed figurines sold primarily to adults; Funko says the average age of its consumer is 36. Meanwhile, Mattel is projecting triple-digit growth for Mattel Creations over the next two years. “I don’t think it’s a trend,” says Dickson. “I think we’ve broken through, and we’re here to stay.” Lennett says, given the volatile economy, it’s hard to predict how sustainable growth in the toy market—let alone the adult sector—will be. And the major players can’t rely on fickle social media algorithms forever. She predicts some adult buyers will move on. “But a lot will stay, especially if the industry can figure out why things go viral, why they connect with this group,” she says. “I think once adults have rediscovered their love of toys, that love doesn’t go away.” Hunting down her favorite Squishmallows reminds Parker of the days when she and her mom would collect Beanie Babies. Parker’s would fill her bedroom, while her mother’s were secreted away in boxes to preserve their resale value. Parker is more lenient about mixing her Squishmallows with her daughters’, but now understands why her own mother kept a stockpile of stuffed animals. “There’s something very satisfying about collecting a whole pile of them and arranging them together like a little dragon’s hoard,” she says. “That comes across as slightly insane, but there’s no other way to put it.” —With reporting by Leslie Dickstein and Julia Zorthian.....»»

Category: topSource: timeNov 17th, 2022

Don’t Chase Walmart Higher, Wait For Extra Low Prices

Walmart shares are up on a better-than-expected report. Inventory growth slowed as well but inventories continue to rise. Guidance is favorable but strength may already be priced into this market. Walmart’s (NYSE:WMT) Q3 results are good but they are no reason to start chasing the stock higher. The market is moving up on relief as […] Walmart shares are up on a better-than-expected report. Inventory growth slowed as well but inventories continue to rise. Guidance is favorable but strength may already be priced into this market. Walmart’s (NYSE:WMT) Q3 results are good but they are no reason to start chasing the stock higher. The market is moving up on relief as much as anything else and the risks for the company remain. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2022 hedge fund letters, conferences and more   Find A Qualified Financial Advisor Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now. As with Home Depot (NYSE:HD), the Q3 period is strong but inflation remains an overshadowing issue and the inventory is still on the rise. Yes, inventory growth slowed on a YOY basis but it is still growing and at very high levels that are driving inventory-reducing actions. This is important because the busiest shopping season of the year is about to unfold and the outlook for holiday spending isn’t awesome. Deloitte forecast 7% to 9% holiday spending growth for 2022 but this is all inflation as the majority of consumers say they will cut down on the volume of gifts. This is down from a robust 14.1% in 2021 and the window of opportunity has shrunk. The survey suggests consumers will visit fewer merchants, both B&M and digital, thereby filling the wishlists almost a week quicker than last year. The takeaway is that Walmart and the retail sector are not out of the woods and the share price, which is approaching a major resistance level, will probably pull back to regroup well before the Q4 reporting season comes to pass. Walmart Has Strong Quarter, Guides Higher Walmart had a strong quarter in Q3 and was able to guide higher. The company reported $152.8 billion in revenue which is good for a gain of 8.8% over last year. This is more than 400 bps better than expected and driven by a 6% increase in ticket average. The number of tickets grew at a slower 2.1% pace with US comps up 8.2% and ahead of the Marketbeat.com consensus. eCommerce and Sam’s Club both played a significant role with eCommerce growth accelerating to 16% YOY and Sam’s Club slowing to 10% YOY. Digging a little deeper into Sam’s Club numbers, the member growth slowed to 8% which suggests growth at the store may slow further. If Costco (NYSE:COST) reports similar numbers it could help cap gains for the group including BJs Wholesale Club (NYSE:BJ). The company’s earnings were strong as well but the margin improvement was marginal. A slim decline in gross margin was offset by a slim increase in SG&A that left the operating income better than expected but up a slower 4.8% compared to the larger growth in revenue. On the bottom line, the $1.50 in adjusted EPS is great and beat by $0.18 but up an even smaller 3.4% YOY. The takeaway here is that cash flow is good, good enough to support the dividend and a new $20 billion share repurchase program, but not an awe-inspiring catalyst for share prices with the stock already trading at 23.5X its earnings. The guidance is the same, the company improved its guidance for revenue and earnings but earnings are still expected to contract versus the top-line 6.5% of organic growth. This news should help support prices in the near term but is not a reason for new highs until there is more clarity in the economy. And inventory growth? The company's inventory growth slowed to only 12.5% YOY compared to higher double-digits last quarter. Sam's Club inventory is up 35%, however, which is more bad news for the membership club group. Walmart Pops On Opioid News Another catalyst for Walmart’s post-earnings pop is an anticipated settlement over charges related to opioid distribution pertaining to the pharma industry. The company submitted a $3.1 billion proposal that has to be ratified by 43 states but is expected to pass. If so, it removes a cloud that has been hanging over the stock for many years. The chart of daily prices has the stock up more than 7.5% and possibly moving higher. The candle is long and green and is supported by the indicators so there is hope. The caveats are that resistance is just above the current levels at the $151 price point and it could be strong. Add in the fact that this move closes a large window that formed earlier in the year when inventory issues first came to light and the odds that resistance caps gains become very high. A move above $151 would be bullish but even so, the next resistance point is just a few dollars higher at the all-time high which is only 7.5% above the current price action. Should you invest $1,000 in Walmart right now? Before you consider Walmart, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and Walmart wasn't on the list. While Walmart currently has a "Moderate Buy" rating among analysts, top-rated analysts believe these five stocks are better buys. Article by Thomas Hughes, MarketBeat.....»»

Category: blogSource: valuewalkNov 15th, 2022

Futures Surge Over 4,000 As Yields And Dollar Slide On Positive US-China Sentiment, Solid Earnings

Futures Surge Over 4,000 As Yields And Dollar Slide On Positive US-China Sentiment, Solid Earnings US futures jumped from Monday's shallow dip, which in turn followed the S&P 500’s best week since June, boosted by a triple-whammy of positive news out of China, including the Xi-Biden meeting which pointed to easing tensions between Washington and Beijing, China's Covid pivot and property measures, and solid earnings from Walmart which boosted guidance and announced a new $20BN buyback. Contracts on the Nasdaq 100 extended earlier gains and were up 1.1% as of 7:1 a.m. ET while S&P 500 futures surged above 4000, rising almost 1.0%. Treasury yields and the dollar slipped while bitcoin resumed its modest rise. At 8:30am we get another inflation read in the form of the latest PPI Print, which is also expected to ease modestly. In premarket trading, chipmakers AMD, Nvidia and Intel Corp. rose between 1.3%-2% while Tesla Inc., Amazon.com Inc., Apple Inc., and Alphabet Inc. all added about 1% each. Coinbase and Marathon Digital led cryptocurrency-linked stocks higher as Bitcoin extended gains with investors waiting for more details about an industry-recovery fund promised by Binance Holdings Chief Executive Officer Changpeng ‘CZ’ Zhao. Chinese stocks listed in the US were set to rise for a fourth day, after a triple-whammy of positive news including Xi-Biden meeting, Covid pivot and property measures. Alibaba (BABA US) soared 11% in premarket trading. Lithium-exposed stocks edged lower following a selloff in Asian peers amid worries over potentially weaker demand from Chinese firms. Here are the other notable premarket movers: Getty Images (GETY US) falls 12% in US premarket trading, after the media company reported third quarter earnings that missed the average analyst estimate. Ginkgo Bioworks (DNA US) shares slip as much as 2.6% in US premarket trading as the cell-programming platform provider’s revenue beat was eclipsed by worries over how a tougher economic environment could impact prospects. Harley-Davidson (HOG US) is initiated with an underperform rating, its only sell-equivalent recommendation, and a $39 PT at Jefferies, which says the strength in the motorcycle maker’s shares is overdone. Lithium-exposed stocks edged lower in US premarket trading following a selloff in Asian peers amid worries over potentially weaker demand from Chinese firms. Nubank (NU US) shares jump 15% in premarket trading after the Brazilian digital bank’s third-quarter results. Morgan Stanley said the lender delivered a strong print, showing beats for client net adds, revenue, gross profit and adjusted net income. Shoals Technologies (SHLS US) shares soar as much as 22% in US premarket trading, on track for its biggest rise in five months, as analysts nudged their price targets higher after the solar energy products supplier narrowed its revenue forecast for the full year. Brokers said that the firm’s rising backlog and awarded orders bode well for the future and increase visibility for next year Markets have turned risk-on in recent days, trading off a softer-than-expected US data print that many reckon will allow the Fed to raise rates in 50 basis-point increment, after consecutive 75 basis-point hikes. That view was encouraged by dovish comments from Vice Chair Lael Brainard who said on Monday it would probably be “appropriate soon to move to a slower pace of increases.” “The issue the market has to wrestle with is how long is the Fed going to keep rates at that level and I think there is some positive sentiment out there that the Fed is going to pivot sometime in 2023,” Peter Kraus, Chairman and CEO at Aperture Investors, told Bloomberg Television. Sentiment also got a solid boost overnight following signs of easing tensions between the US and China (even if Xi probably does not see it that way, and instead he delivered a speech at the G20 summit in Bali, Indonesia, in which he urged against politicizing food and energy issues, and called for scrapping unilateral sanctions and restrictions on technology cooperation in this area, something which won't happen). In any case, after the meeting between Joe Biden and Xi Jinping on Monday, Washington said the two sides would resume cooperation on issues including climate change and food security, and that Biden and Xi jointly chastised the Kremlin for loose talk of nuclear war over Ukraine. Investors also remain focused on central banks: Swissquote analyst Ipek Ozkardeskaya said equity markets are in “a vicious circle” as “investors want to feel better, but the Fed can’t let them feel much better as a market rally would play against its inflation fight.” Last week’s rebound was a “flash in the pan, but the downside risks have certainly eased,” she said. Meanwhile, markets are watching growing risks to earnings following corporate America’s weakest reporting season since the first quarter of 2020, and the outlook for stock markets in 2023. “The equity market will continue to rally until the end of the year with some volatility, but once you get to 2023 there will be some realization that interest rates will actually start to slow economic activity,” said Peter Kraus, chief executive officer at Aperture Investors. “In 2023, you will have more volatility and you’ll have a decline in equity markets,” Kraus said on Bloomberg TV. The latest Bank of America’s global fund manager survey for November showed sentiment remains “uber-bearish,” with investors still crowded into the dollar and cash, while tech stocks remain unpopular. “My biggest concern is the market gets ahead of itself and we get into a situation where the Fed feels it needs to rein in, and tighten more than it otherwise would have, as markets became too frothy,” Kristina Hooper, chief global strategist at Invesco said on Bloomberg Radio. In Europe the Stoxx 600 index swung between losses and gains, though the market is close to a three-month high and Germany’s Dax index is on the cusp of a technical bull-market, having narrowly missed that milestone on Monday. The Euro Stoxx 50 rises 0.1%. CAC 40 outperforms peers, adding 0.3%, FTSE MIB lags, dropping 0.3%. Utilities, food & beverages outperformed while retail and telecoms underperform as more sectors turn negative on the day. Here are some of the biggest European movers today: Teleperformance shares rise as much as 9.4%, the third session of gains in a recovery from a recent drop suffered by the customer relationship management services firm following a report related to its content moderation business in Colombia. UK utilities and energy firms advance after reports that UK’s Chancellor Jeremy Hunt is considering a new 40% windfall tax on the “excess returns” of electricity generators. Drax rises 4.0%, Centrica +5.0% BAE Systems shares gain as much as 4.1% after a trading update from the defense contractor that analysts said shows trading momentum remains solid. Ambu falls as much as 16%, the most since May, after the Danish medical technology firm’s latest earnings and outlook disappointed, according to analysts. Ocado shares plunge as much as 13% in Tuesday morning trading, paring the 30% rally in the previous two sessions after last week’s softer-than-expected US inflation data provided a boost to growth stocks. Nexi shares fall as much as 11%, the most intraday since March 2020, after holder Intesa Sanpaolo sold its stake in the payment services firm. Vodafone shares slump as much as 9.2% and are on track for their lowest close in 25 years after the telecom operator trimmed its outlook for Ebitda after- leases to the lower end of its previous range, citing higher energy costs. Cellnex slides as much as 6.5% after a share placement of 25.6m shares at EU33.50/share. Earlier in the session, Asian stocks rallied as China led the region higher, buoyed by more property easing measures and signs of reduced US-China tensions. The MSCI Asia Pacific Index rose as much as 1.9% to a two-month high, lifted by technology shares. Chinese stocks in the sector helped pace the benchmark’s gain as investors bet the worst may be over for some of the major players. Meanwhile, Taiwan’s TSMC surged after a filing showed Warren Buffett recently bought a stake of about $5 billion in the chipmaker. China and Hong Kong benchmarks extended their recent rebounds, with the Hang Seng Index entering a bull market, gaining as much as 4.2% as regulators moved to further ease a liquidity crunch faced by real estate developers. Sentiment was also lifted by Monday’s meeting between Joe Biden and Xi Jinping that generated hopes of warmer ties between the two superpowers. That encounter offset the weak retail sales data that underscored the impact of Covid lockdowns on China’s economy. There’s “some easing of bilateral tensions from the Xi-Biden meeting,” said Marvin Chen, a Bloomberg Intelligence analyst, who added that China’s macro data, which came in below expectations, could “boost the probability of more easing measures in the near term.”  Japanese equities erased earlier losses, as investors weighed Fed comments for clues on where rate hikes might go and as improvement in US-China ties lifted sentiment across Asia.  The Topix Index rose 0.4% to 1,964.22 as of market close Tokyo time, while the Nikkei advanced 0.1% to 27,990.17. Sumitomo Mitsui Financial Group Inc. contributed the most to the Topix Index gain, increasing 4.2% as the company raised its key profit forecast and announced a share buyback plan. Out of 2,165 stocks in the index, 1,308 rose and 766 fell, while 91 were unchanged. “The financial results are almost all done as of yesterday and the stock market is running out of materials,” said Hideyuki Suzuki, general manager at SBI Securities. “All the important indicators from the FOMC, US CPI data, and earnings are over. The question is what the future holds from here.” Stocks in India advanced as easing inflation boosted investors’ sentiment while the country’s corporate earnings season ended. A rally in lenders boosted the benchmark Sensex to a new high while pushing the NSE Nifty 50 Index near its record level. The S&P BSE Sensex rose 0.4% to 61,872.99 in Mumbai, while the NSE Nifty 50 Index advanced by an similar measure. Thirteen of the 19 sector sub-indexes advanced, led by oil and gas and telecom companies.    ICICI Bank contributed the most to the index gain, increasing 1.9%. Out of 30 shares in the Sensex index, 19 rose and 10 fell, while 1 was unchanged. The consumer-price index for October rose 6.77%, easing from the 7.4% rise in September, which was the highest level in nearly two years, while the pace of wholesale inflation slowed to 8.4%, its first single digit reading in 19 months. In FX, the dollar resumed its decline, giving G-10 FX some relief. The yen trades at around the level of 139/USD, while pound rises to $1.18.  The Bloomberg Dollar Spot Index swung to a loss early in the European session as the greenback weakened against all of its Group-of-10 peers. Treasury yields fell, led by the belly of the curve. The five-year yield was down around 5bps. The euro rose to a four-month high of $1.0437. Most European bond yields fell, led by the long end of the curve; Italy’s 10-year yield fell by 10bps and Germany’s by 4bps. Germany Nov. ZEW investor expectations rise to -36.7; est. -51.0 The pound rose against both the dollar and the euro after UK wages grew at the fastest pace in more than a year. Investors will also be watching inflation data Wednesday and the UK’s fiscal announcement Thursday UK investors are facing the biggest glut of gilts in nearly a decade. Government bond sales will hit £185 billion ($217 billion) for this fiscal year to April, according to the median estimate of 10 banks surveyed by Bloomberg. The bid-to- cover on a UK 10-year gilt sale fell to its lowest level since Oct. 2019 at 2.11, according to data compiled by Bloomberg The Aussie and Kiwi touched fresh two-month highs. RBA minutes showed policy makers were prepared to return to larger rate hikes if needed. Australia’s bond curve twist-flattened. The yen rebounded on broad-based dollar weakness. The Japanese currency earlier dropped after data showed Japan’s economy unexpectedly shrank in the third quarter. In rates, Treasury and bunds 10-year yields are about 1.5bps lower, gilts 10-year yield little changed. Treasury futures topped Monday’s highs in early US trading, led by bunds after ECB’s Villeroy said a slower pace of hikes is likely after next month’s meeting. Into the move 10-year yields drop below 50-DMA for the first time since August.  The US Treasuries' advance was led by the belly, with 5-year yields richer by nearly 6bp on the day, steepening 5s30s spread by ~3bp; 10-year, lower by 4.5bp at ~3.81%, trails bunds by more than 2bp.US auctions resume Wednesday with $15b 20-year bonds, followed by $15b 10-year TIPS Thursday. In commodities, WTI crude futures ease to below $85; as benchmarks are pressured with the overarching COVID headwind weighing on the demand side and overshadowing any potential upside from the USD & G20. Currently, WTI Dec’22 and Brent Jan’23 are lower by just over USD 1/bbl and have printed fresh November troughs of USD 84.06/bbl and USD 91.52/bbl respectively. Precious metals have lost their initial shine but spot gold remains in proximity to yesterday's USD 1775/oz high. Ags. are in focus on the above reports, though initial pressure has eased a touch as Russia says it will make a decision at an appropriate time. To the day ahead now, and data releases from the US include October’s PPI reading and the Empire state manufacturing survey for November, while in Europe there’s UK employment data for October and the German ZEW survey for November. Central bank speakers include the Fed’s Harker, Cook, Barr and the ECB’s Elderson. Finally, earnings releases include Walmart and Home Depot. Market Snapshot S&P 500 futures up 0.6% to 3,990.50 STOXX Europe 600 little changed at 432.94 MXAP up 1.9% to 154.34 MXAPJ up 2.3% to 500.95 Nikkei little changed at 27,990.17 Topix up 0.4% to 1,964.22 Hang Seng Index up 4.1% to 18,343.12 Shanghai Composite up 1.6% to 3,134.08 Sensex up 0.3% to 61,785.91 Australia S&P/ASX 200 little changed at 7,141.63 Kospi up 0.2% to 2,480.33 German 10Y yield down 2.1% to 2.13% Euro up 0.6% to $1.0394 Brent Futures down 1.3% to $91.89/bbl Gold spot up 0.2% to $1,774.81 U.S. Dollar Index down 0.35% to 106.29 Top Overnight News from Bloomberg Signs of inflation peaking in the US are a relief for policy makers around the world who’ve been raising interest rates at a record pace to combat price pressures, ECB Governing Council member Francois Villeroy de Galhau said UK Chancellor Jeremy Hunt is considering a new 40% windfall tax on the “excess returns” of electricity generators as part of his sprawling package of tax rises and spending cuts this week, according to a person familiar with the proposal Oil inventories in developed nations have sunk to the lowest since 2004, leaving global markets vulnerable as sanctions on Russian exports take effect, according to the International Energy Agency Global investors reduced their holdings of China government bonds in the onshore market for a ninth-month running in October amid concerns over policy uncertainty spurred by President Xi Jinping’s consolidation of power A more detailed look at global markets courtesy of Newsquawk APAC stocks traded mixed following a weak lead from Wall Street with newsflow also quiet overnight. ASX 200 saw pressure from its Metals & Mining sector, whilst the RBA minutes provided little in terms of hints for the upcoming meeting and left all options open. Nikkei 225 saw some downside after Q3 Japanese GDP unexpectedly fell into contraction, but losses were trimmed as the JPY weakened. KOSPI was contained whilst Taiwan’s Taiex outperformed as TSMC was boosted by a Berkshire Hathaway stake in the name. Hang Seng and Shanghai Comp cheered the meeting between US President Biden and Chinese President Xi, which was telegraphed as candid, whilst Chinese stocks saw little action to the Retail Sales contraction and sub-forecast IP metrics. Top Asian News China reports 1,661 new confirmed COVID cases in mainland (prev. 1,794 a day earlier), via Reuters. PBoC injected CNY 850bln via 1yr MLF at a maintained rate of 2.75%; PBoC injected CNY 172bln via 7-day reverse repos with the rate at 2.00% for a CNY 170bln net injection. PBoC said longer-term fund injection exceeds Nov MLF maturities, according to Bloomberg. Chinese Vice President Wang said China will maintain strong policy continuity, according to Bloomberg. China's Stats Bureau said will actively expand demand, stabilise employment and prices; will consolidate the foundation of economic recovery; economic recovery slows due to COVID flare-ups, via Reuters. China's stats bureau spokesman said the property market shows some positive changes but the downward trend continues; expects China's CPI to remain benign, via Reuters. European bourses are mixed overall, Euro Stoxx 50 +0.2%, as opening gains scale back after a mostly constructive APAC session. Stateside, US futures are firmer across the board with Tech leading after strong APAC tech trade and in wake of Fed's Brainard, ES +0.7%. Home Depot Inc (HD) Q1 2023 (USD): EPS 4.24 (exp. 4.12), Revenue38.9bln (exp. 37.95bln); Comps sales +4.3% (exp. 3.1%); reaffirms FY22 guidance. Top European News UK PM Sunak will accept an official recommendation to increase the living wage from GBP 9.50 an hour to about GBP 10.40 an hour — a rise of nearly 10%, according to The Times. UK Chancellor Hunt is considering a 40% windfall tax on "excess returns" made by electricity generators as part of his Autumn Statement, according to Bloomberg sources. ECB's Villeroy said ECB will probably continue to hike rates but may do so in a more flexible and less rapid manner; jumbo hikes will not become a new habit. We are clearly approaching the normalisation range of around 2%, via Reuters. EU Parliament and member states agreed on an EU budget for 2023, according to dpa. G20 draft declaration noted that central banks will continue to appropriately calibrate the pace of monetary policy tightening, via Reuters. FX DXY continues to slip after a pronounced move which occurred prior to the European cash open, currently near sub-106.00 lows to the broad benefit of peers. USD/JPY has been touted by some as a key driver of the above move given its quick move from above-140.00 to sub 139.00. GBP benefits from the USD weakness and perhaps firm wage metrics though this was accompanied by an unexpected unemployment uptick, ahead of Wednesday's CPI and Thursday's fiscal update. Yuan remains in keen focus as it moves comparatively closer to the 7.00 handle, though proved resilient to soft overnight data with focus firmly on the broader USD move. SEK was unfased by soft-headline but hot-core vs exp. CPIF metrics, though this has prompted SEB to raise the risk of a 100bp Riksbank hike. Fixed Income BTPs are leading the fixed income complex with upside in excess of a point to a session peak of 117.26 vs trough 116.04 on supply-side dynamics. Bunds are similarly bid though to a lesser extent than periphery counterparts, having incrementally surpassed yesterday's 139.26 peak. Well-received German 7yr supply sparked limited upside while a softer UK outing caused Gilts to temporarily pullback to near-unchanged. USTs move in tandem with EGBs with yields lower as such in wake of Fed's Brainard, who backed the FOMC downshifting to a lower increment of rate hikes in December. Retail orders for the November 2028 BTP Italia reach EUR 4bln, via Reuters citing Bourse data. Commodities Crude benchmarks are pressured with the overarching COVID headwind weighing on the demand side and overshadowing any potential upside from the USD & G20. Currently, WTI Dec’22 and Brent Jan’23 are lower by just over USD 1/bbl and have printed fresh November troughs of USD 84.06/bbl and USD 91.52/bbl respectively. IEA Monthly Oil Market Report: 2023 global oil output is to grow 740k BPD to 100.7mln BPD. Demand growth will slow to 1.6 mb/d in 2023, down from 2.1 mb/d this year, as mounting economic headwinds impede gains. Russia is reportedly expected to agree to extend the Black Sea grain-export deal, via Bloomberg. Subsequently, Russia says it will announce its decision on extension of Black Sea grains deal in an appropriate time, TASS reports. Precious metals have lost their initial shine but spot gold remains in proximity to yesterday's USD 1775/oz high. Ags. are in focus on the above reports, though initial pressure has eased a touch as Russia says it will make a decision at an appropriate time. G20 Australian PM says there were positive discussions on trade embargoes levelled on Australia by China. Adds, the meeting with Chinese President Xi was another important step towards stabilising the relationship, will cooperate where possible with China. Many steps yet to take. Chinese President Xi says Sino-Australian relations have encountered difficulties in recent years and this is not what we wanted to see, according to State Media Russian Foreign Minister Lavrov says he has proposed to the G20 the removal of discriminatory barriers on energy markets; UN will deal with the removal of barriers for Russian grain and fertilizers; the G20 draft declaration has reference to an exchange of views re. Ukraine, West added phrase that many delegations condemned Russia. Russia highlighted alterative points of view. Geopolitics Chinese President Xi said China advocates a ceasefire in the Ukraine crisis and calls for peace talks, via state media. Chinese President Xi told US President Biden that China will make all efforts for peaceful "reunification" with Taiwan, according to the Chinese Foreign Minister. China upholds the "one country, two systems" proposal for Taiwan, according to Reuters Chinese President Xi told French President Macron that China and Europe should expand two-way trade and investments, via state media. US Event Calendar 08:30: Oct. PPI Final Demand YoY, est. 8.3%, prior 8.5% Oct. PPI Final Demand MoM, est. 0.4%, prior 0.4% Oct. PPI Ex Food and Energy YoY, est. 7.2%, prior 7.2% Oct. PPI Ex Food and Energy MoM, est. 0.3%, prior 0.3% Oct. PPI Ex Food, Energy, Trade YoY, est. 5.6%, prior 5.6% Oct. PPI Ex Food, Energy, Trade MoM, est. 0.3%, prior 0.4% 08:30: Nov. Empire Manufacturing, est. -6.0, prior -9.1 Central Banks 09:00: Fed’s Harker Discusses the Economic Outlook 09:00: Fed’s Cook Discusses Post-Covid Challenges Facing Women 10:00: Fed Vice Chair for Supervision Barr Speaks Before Senate Panel DB's Jim Reid concludes the overnight wrap I appreciate the EMR is often a medical bulletin as well as a market report and today's there's a new entry on the former. It looks like I'm going to have a back operation in the next few weeks. My sciatic nerve has no room to move and while I'm not in pain at the moment (unlike earlier this year) due to two injections in recent months, I have constant tingling and pins and needles down my leg. All conservative approaches have hit the end of the road and the worry is that if I leave it too long I'll do permanent damage to the nerve. If anyone wants to make a late intervention to help sway me one way or the other in terms of back surgery feel free to do so. I think my mind is made up though as I don't see an alternative. All a bit scary but all with the aim of getting me 30 more years (minimum) on the golf course and the chance to reach my goal of getting to scratch before the ageing process prevents that!! The injection of optimism inserted into the limbs of the financial market after last week's US CPI report showed some signs of fading yesterday although there's been a recovery in Asia as China continues to support the economy and the interpretation of Biden/Xi meeting yesterday is spun a bit more positively in Asia. Yields have risen across the Treasury curve to start the week as investors moved to dial back some of their more dovish post-CPI expectations for next year. In part, that was prompted by some pretty hawkish comments from Fed Governor Waller on Sunday night that we mentioned in yesterday’s edition. But that trade was then given further momentum by the New York Fed’s latest Survey of Consumer Expectations, which showed inflation expectations moving higher across all horizons, and echoes the uptick we saw in the University of Michigan’s reading last Friday as well. Consistent with that, our US economist's composite measure of inflation expectations has increased. They've published their latest series in a full update, available here. Diving into those inflation expectations from yesterday, the New York Fed’s latest survey showed the 1yr expectation moving up half a point to 5.9%, 3yr expectations rising two-tenths to 3.1%, and 5yr expectations up two-tenths as well to 2.4%. To be fair, all those measures are still below their levels as recently as Q2, but the upticks over the last couple of months will raise some fears that the longer inflation remains elevated, the more difficult it’ll be to keep expectations anchored around target levels. For now you would have to say that long-run expectations have held in remarkably well in the face of 40-yr highs in actual inflation. October's US PPI will be an important release today, especially the health care component that feeds directly into core PCE - the Fed's preferred gauge. A notable push back on the slightly more hawkish momentum to start the week were comments as Europe closed from Fed Vice Chair Brainard, who struck a far less hawkish tone than Governor Waller had the previous day. For instance, Brainard said that it would “probably be appropriate soon to move to a slower pace of increases”, which gave further support to the idea the Fed will slow down its hikes to a 50bp pace next month (fully priced now though). That wasn’t too out of line with the rest of Fed speakers since the November meeting, but where the Vice Chair did separate herself was by noting the step down in pace need not be explicitly tied to a higher terminal rate, something Chair Powell argued during his Press Conference, and she did not explicitly rule out interest rate cuts next year, which would be more of a ‘pivot’ rather than the recently communicated ‘pause’ for the Fed. That gave risk assets a bit of support, but it appears she is out of consensus from the rest of the Committee, so the gains were not sustained. With all said and done, investors ended the day expecting a slightly more aggressive Fed, with the rate priced in by Fed funds futures for end-2023 up +6.2bps to 4.46%. As a result, US Treasury yields rose across the board as trading resumed after Friday’s Veterans’ Day holiday. The 10yr yield was up +4.1bps to 3.85% (3.87% in Asia), and the more policy-sensitive 2yr yield saw an even larger move of +5.7bps to 4.39%. Those moves were driven by real yields, with the 10yr real yield up +8.4bps on the day to 1.49%. As you'll see from my CoTD yesterday, 10yr US real yields had their second largest fall since the GFC on Thursday (link here). Only the intitial covid related fall in March 2020 beats it. Against that backdrop, US equities struggled for momentum too, with the S&P 500 (-0.89%) losing ground after its massive +6.52% surge over the previous two sessions. The more cyclical sectors led the declines, and the NASDAQ (-1.12%) lost even more ground on the day. However in Europe there was a much more positive story, with the STOXX 600 up +0.14% to its highest level in over two months, alongside gains for the FTSE 100 (+0.92%), the CAC 40 (+0.22%) and the DAX (+0.62%). This European strength was evident in sovereign bond markets too, where yields on 10yr bunds (-1.5bps), OATs (-1.2bps) and BTPs (-3.0bps) all ended the day lower. Asian equity markets are mostly trading higher this morning with the Hang Seng (+3.62%) sharply higher lifted by the outperformance of the Hang Seng Tech index (+6.81%) as Chinese listed tech stocks rose significantly. Stocks in mainland China are also up with the CSI (+1.47%) and the Shanghai Composite (+1.27%) extending their previous session gains despite a slew of disappointing economic data. As discussed at the top, the Asian interpretation is that we saw a slight easing of China-US tensions following the Biden-Xi meeting on the sidelines of the G20 summit in Indonesia (more below). Elsewhere, the Nikkei (+0.10%) is modestly higher with the KOSPI (-0.11%) bucking the trend in early trade. In overnight trading, US stock futures are pointing to a positive start with contracts on the S&P 500 (+0.52%) and the NASDAQ 100 (+0.74%) both rising. Coming back to China, early morning data revealed that industrial production rose +5.0% y/y in October, lower than the market expected rise of +5.3% and much slower than September’s +6.3% increase indicating a further loss of momentum in the world’s second biggest economy. At the same time, retail sales unexpectedly contracted -0.5% y/y (v/s +0.7% expected), down from +2.5% growth in September as strict Covid restrictions along with a downturn in property markets pushed consumers to tighten their belts. Markets are largely ignoring this data as covid and property restrictions have subsequently been eased so the direction of travel should get more positive from here. Elsewhere, Japan’s economy unexpectedly shrank for the first time in four quarters as Q3 GDP fell -0.3% q/q (v/s +0.3% expected) compared to an upwardly revised growth of +1.1% in the prior quarter as inflation and the weak yen hit the country. In the geopolitical sphere, let's now recap US President Biden and Chinese President Xi's first meeting in person as the leaders of their respective countries yesterday. That took place on the sidelines of the G20 summit in Indonesia, and the White House said afterwards that US Secretary of State Blinken would visit China to follow up on the discussions, which was taken by many as a positive sign towards de-escalating tensions. However, there were some points of tension, with the White House statement saying that Biden had “raised U.S. objections to the PRC’s coercive and increasingly aggressive actions towards Taiwan, and China’s statement said that “anyone that seeks to split Taiwan from China will be violating the fundamental interests of the Chinese nation”. So something for the hawks and doves but the conclusion might be that the summit beat low expectations coming into it. Staying on politics, it’s now been a week since the midterm elections and we still don’t know which party will control the House of Representatives following the weekend confirmation that the Democrats took the Senate. It’s looking increasingly likely it will go to the Republicans, who currently have a lead in the vote count across enough of the outstanding districts to win a majority, and NBC’s forecast points to a narrow 220-215 Republican majority based on what we currently have as well. As we go to press, the current tally stands at 217 Republicans and 204 Democrats with Republicans just 1 win away from taking the House. Tonight however, attention will turn towards the 2024 presidential contest, since former President Trump has said he’ll be making an announcement at 9pm EST, and speculation has centred around a potential 2024 announcement. Normally, the presidential announcements from the top-tier contenders happen around Q1 or Q2 of the year after the midterms. But if today does mark an announcement, the rationale for going early will be to clear the field of other potential contenders, with Trump hoping that the Republican primary is effectively uncontested like normally happens for sitting presidents. As it stands, Trump’s biggest rival for the nomination is widely considered to be Florida Governor Ron DeSantis, who was re-elected Governor last week with lead of almost 20 points over his Democratic opponent. He was seen to be the Republican's big success story of the night. The crypto saga continues, but there was some stabilisation in Bitcoin prices, which retreated just -0.57% after bouncing around all day. There’s certainly still more to come on the story as it becomes clear who was exposed to failed exchanges and funds, but Marion Laboure on my team has already contextualised the episode and looks ahead about what it implies in her piece out yesterday. Link here To the day ahead now, and data releases from the US include October’s PPI reading and the Empire state manufacturing survey for November, while in Europe there’s UK employment data for October and the German ZEW survey for November. Central bank speakers include the Fed’s Harker, Cook, Barr and the ECB’s Elderson. Finally, earnings releases include Walmart and Home Depot. Tyler Durden Tue, 11/15/2022 - 07:47.....»»

Category: dealsSource: nytNov 15th, 2022

Get ready for the great American land rush — a mad scramble for space that"s going to transform the entire country

It could require hundreds of millions of acres to build all the new homes, warehouses, and wind farms the US needs. Can we make it all fit? As the population and the economy continue to grow, America will need more space for green energy projects, residential buildings, factories, and farms.Shutterstock; Rachel Mendelson/InsiderA mad scramble for space that's going to transform the entire countryThe United States of America, home of purple mountain majesties, amber waves of grain, and seas of shining … solar farms?After decades of denial, foot-dragging, and political bickering, the US is finally starting to take meaningful action to tackle the climate crisis. The Biden administration's signature legislative victory, the Inflation Reduction Act, includes $370 billion in subsidies, some of which is to accelerate the adoption of the "green grid," an array of solar panels, wind farms, and power lines to shift the nation from fossil fuels to renewable energy. Even consumers are switching their behavior: More people are installing solar panels and buying electric cars.This monumental move will not only reshape how we consume energy but change the landscape of the country. From expansive solar and wind farms to storage facilities filled to the brim with batteries, our crop of green-energy technology takes up a whole lot more space to generate the same amount of energy as our older fossil-fuel equipment. This means that a sizeable chunk of America's surface area is going to have to be transformed to fulfill the country's ambitious carbon goals and curb the devastating effects of the climate crisis. Green technology isn't competing with just itself for valuable space. As the population and the economy continue to grow, America also needs space for more residential buildings, factories, and farms. That raises a question: Do we have enough land to completely reshape our power grid? Based on the best estimates of how much space is needed, it's unlikely the US is going to run out of space anytime soon. But turning the country totally green will require tough choices about where we build this tech — and trigger some serious land battles in the process.Will we cover 75% of California with green energy tech? To get a sense of just how much land will be required to generate all our electricity from renewable resources, it's important to understand just how much electricity Americans use. The efficiency (that is, the capacity and speed) of the consumption and generation of electricity is generally measured in watts. Standard light bulbs usually have an efficiency of 60 to 100 watts, depending on the brightness. Then there's watt-hours, or Wh, the power consumed per unit of time multiplied by the total time. You use 60 Wh of electricity when you leave your 60-watt light bulb on for an hour. Electricity plants run on a much larger scale; their efficiency is typically measured in kilowatts (1,000 watts) or megawatts (1 million watts). A power plant with 100 megawatt-hours of capacity can generate 2,400 MWh of electricity when operating constantly for a day. The average American household uses about 886 kilowatt-hours a month, or just over 10 MWh a year.Compared with traditional power plants, renewable plants with the same power-generating capacity take up a lot more land: A 2017 study found that wind farms took up 70 acres per MW while solar farms required 43 acres per MW, including all the land needed for development, power generation, transportation, and storage — 3 1/2 times to five times the land needed by fossil-fuel plants, respectively, according to the analysis. And where their fossil-fuel counterparts can operate all day long, wind and solar generators can operate between 20% and 35% of the time because of the intermittent nature of the energy sources. Wind farms, for instance, take up so much space because the blades of wind turbines are as long as the wings of a Boeing 747, and wind turbines have to be placed far enough for their blades to spin without hitting each other. Less land would be needed for power generation if the wind turbines were larger and spun faster. But while a different design would generate more power with less space, it would also kill more birds. In the United States, wind turbines are thought to kill more than 500,000 birds each year. Restrictions have been imposed on the height and speed of the turbines to lower the risk of bird death.Given these existing technological limitations and regulations, the aggregate demand for land to power our future green economy is huge. Suppose the annual electricity demand in the United States remains at about 4 billion MWh in 2050 and the land requirement per MW does not decline. We would need 120,000 square miles, or 77 million acres, of land to install the wind and solar facilities for the energy transition. This is equivalent to the area of three-quarters of California, or two Floridas. But as the number of Americans grows and the country shifts more of its energy focus to renewable sources, there's good reason to think the need for land will also grow. Electricity demand is bound to rise significantly because of the electrification of the transportation sector and the electrification of home heating. A 2021 estimate by Bloomberg using data from researchers at Princeton University suggested that in the most extreme scenario — one where the country gets almost all its new energy from solar or wind power — the US would need to use as much as 267 million acres of land to complete its green-energy transition. That area is nearly 2 1/2 times the size of California or about 1 1/2 times the size of Texas. Under the least land-intensive scenario, the United States would still need to devote an area nearly the size of two North Carolinas, about 63 million acres, to wind and solar power to achieve our green-power goals.The great American land rushObviously we will not cover the vast majority of California with wind turbines or blanket Florida with solar panels — but to make the switch over to green energy and save the planet, American consumers and businesses are going to have to make some trade-offs. The lower 48 states of the US have a land area of 1.9 billion acres, some 2.9 million square miles, so even in the scenarios outlined above, energy use would make up 3% to 14% of the total land available.But, as with any new project, a company can't just slap down a new solar plant or wind farm anywhere it wants. For one thing, these sorts of projects require a specific type of land to be cost-efficient and useful. Ideal locations for green-power plants should be in a sunny or windy place, on cheap land, close to the final electricity consumers. But there's one crucial problem: a lot of people want that sort of land. This means green-power generators have a delicate balancing act, seeking locations that have plenty of power-generation potential and are close to urban consumers but far enough away that land costs are lower. From 2010 to 2020, the US's total wind-energy capacity increased from 39,000 MW to 119,000 MW. These new wind farms were primarily added to the South and the Midwest, parts of the country that have the right weather and the right land price. Texas and the Midwest jointly account for roughly two-thirds of our country's wind capacity. But a full green-energy transition requires a more even distribution of renewables.With the US projected to add 79 million residents by 2060, the demand for urban and suburban housing will further increase. While the amount of urban land is a relatively small slice of the overall pie, clocking in at just over 3.6% of our total land use based on the most recent data available, it is also the fastest-growing, with the US adding roughly 1 million acres of it per year. At current rates, the amount of newly converted urban space would equal the land area of Virginia by 2050. And projections from the US Department of Agriculture and the Environmental Protection Agency have suggested the shift to urban land could be even more drastic with as much as 8% of the country's land turning into urban sprawl by 2050, a shift of roughly 96 million acres, which the USDA notes "is larger than the state of Montana." Add this increase in urban space to the maximum potential area needed for green energy, and as much as 363 million acres may be transformed over the next 30 years — as little more than double the land area of Texas. Cities are already complaining about a lack of developable land and areas that were once exurban or even rural might be turned into prime real estate. As cities expand, rising land prices in these areas would further constrain the location options for green energy generators. The installation of large-scale wind and solar capacity would also entail an extensive conversion of rural farmland. Data from the USDA indicates that in 2012, over 50% of land was used by the agricultural sector — and the cost of this land is soaring. The average value per acre of cropland has grown to $5,050 from $2,760 in 2008, an 84% increase, while the value per acre of pastureland, which is generally cheaper, has increased by over 50%. This increase in value has led some of the country's wealthiest people, such as Bill Gates, to gobble up vast swaths of land as part of their investing strategies. This fight for land has pitted farmers against investors and green-energy suppliers, but it has also led to soaring values for some of the most desirable plots of farmland. As R. J. Jolly, a farmer and country commissioner in Cheyenne County, Colorado, told The Colorado Sun: "It's a big land rush. Everyone is jockeying to get into position. There is a lot of money on the table."  And the political battle over land will only get fiercer as green-energy capacity increases. Local residents are often annoyed by wind turbines making loud noises and solar panels making their neighborhoods less pretty. Consider California: The state has many locations where green power could be sited, but it also sports a median home price over $750,000 and is famous for NIMBY lawsuits, even going so far as to block renewable-energy projects in the name of conservation. The world's largest solar-power plant is in California's Mojave Desert, but expansion of the plant has been met with opposition from environmentalists. In other parts of the country, conversions of farmland have triggered local backlash, and several states have introduced bills to limit the ability of green-power producers to convert farmland. An analysis by researchers at Columbia University found that local governments in 31 states had passed bills limiting the creation of renewable-energy projects. These legal restrictions on how land can be used has boxed out some of these projects or made them much more expensive than they need to be.Potential solutionsThis competition for scarce land will cause new local land-use battles, but there are some ways to alleviate the strain of this great American land rush. In many big cities besides New York, most residential land is zoned for single-family housing. If cities were to upzone these areas — making it possible to develop more, denser multifamily housing — the pressure to increase city sprawl would be eased. Meanwhile, distributed solar panels could be installed on the rooftops of multifamily apartments as a complement to utility-scale green projects in rural America.Another way to reduce the need for land is to make farms more efficient, increasing the agricultural yield per acre. Agricultural productivity can increase over time because of improvements in farmer knowledge and new seeds developed through CRISPR gene-editing techniques. The need for farmland could decline also because of a shift in diet preferences. Most agricultural land is used to cultivate livestock — and a radical transition to fully plant-based diets could free up 75% of existing farmland. While that significant of a shift is unlikely to take hold, more young people are embracing diets without meat. If they retain these habits as they age, the average American will demand less meat over time.  The political backlash in rural America could be alleviated if the economic gains from green power are large enough. These land-intensive projects can boost employment in the green-energy sector. They also significantly raise local tax revenue, with each MWh of capacity installed thought to lead to an increase of more than $7,000. This revenue can be used to build more schools and renovate rural healthcare systems. The potential increase in quality of life can sway rural Americans into supporting green-electricity projects. The federal government also controls swaths of land that could be used for green-power generation, and new public/private partnerships could help private investors confidently invest in solar panels and wind turbines on plots of government-owned land. But even with these options, America's ambitious climate goals and continued growth are going to cause some serious real estate battles. As Mark Twain wrote more than a century ago: "Buy land. They're not making it anymore."Matthew E. Kahn is the Provost Professor of Economics at the University of Southern California.Robert Huang is a junior at the University of Southern California Dornsife College of Letters, Arts and Sciences.Read the original article on Business Insider.....»»

Category: dealsSource: nytNov 15th, 2022

Was There An Election This Week?

Was There An Election This Week? By Peter Tchir of Academy Securities Was There an Election this Week? There was an election this week. The results apparently suited the market. I use “apparently” because the final results are not in. I’ve lost the ability to figure out if this is due to people being extremely cautious about calling elections, the fact that the results are still too close to call because of all the remaining uncounted ballots, or because of the run-offs. Maybe you have found websites that explain the uncalled seats better than the ones that I’ve found. In any case, it looks like Republicans will win the House, which is enough to create some gridlock. There were no red, blue, or green waves. But it wasn’t the elections that drove stocks, it was mostly the inflation story! CPI sparked a massive one-day rally in spite of the Michigan data (which a few weeks ago would have been viewed negatively) and the “demise” of FTX. Technically the phrase I’m looking for is “filed for bankruptcy,” but demise seems more appropriate. Two Ways to Lose Money We will dig into inflation and the Fed, but let’s start with FTX and what happened to crypto this week. I think that it is important because Crypto Crashes Impact the Economy & Markets. We will address that, but let’s start with the two ways to lose money: You buy something that goes down in price (or short something that goes up). There are a myriad of ways to do this and 2022 has given us plenty of opportunities to lose money the “old-fashioned” way. Whether you bought bonds, stocks, or many other things (other than energy), it has been easy to lose money this year. Sometimes it is easy to figure out how you lost money (the Fed tightened a lot, earnings were weak, etc.). Sometimes you can assess “intrinsic” value (based on cash flow, property, plant, & equipment, etc.). And sometimes you just don’t have a clue! I don’t know what a Polkadot is or does, but it still has $6.5 billion of market value according to coinmarketcap.com, even with the price at $5.68 (down from a high of $52.20 on November 7th, 2021). Losing money in something where it is difficult to figure out the intrinsic value is a frustrating way to lose money. Making it even worse, it is even more difficult to figure out when people might step in and buy. You trust your money (or asset) with a counterparty that doesn’t fully pay you back. You can make good or bad investment decisions, but if you cannot get your money (or asset) back, you have lost. This, to me, is the absolute worst way to lose money, because to a large degree, it is often preventable. Some amount of due diligence can help determine the counterparty’s ability and willingness to pay you back. Some analysis of corporate structure, domicile, etc., can help identify risks. Examining the character of the individuals may also help spot risks. I will never forget (and I’ve mentioned this before) the time that the Head of Credit at Bankers Trust spoke to the trainee program (mostly a bunch of derivative nerds) about credit. It seemed like a dull topic, but it was the only part of the training program that I remember (other than betting on Series 7 scores). He emphasized that the ability to pay is the “easy” part of credit analysis, but it is the “willingness” to pay that is difficult and often the more important. In hindsight, at least for those holding assets at FTX, there should have been more soul searching given what went on with Three Arrows Capital and Celsius. I expect a lot more scrutiny in the crypto space now. When people lose money, they take measures to avoid it. On the asset side, maybe you sell to mitigate losses. Maybe you buy more to dollar cost average, which allows you to claw back a little extra money on any rebound. On the “custodial” side you can figure out a “safer” place to move your assets, assuming you decide not to sell them outright. Will there be opportunities in crypto? Could we be oversold/have we over-reacted? That is possible, but I don’t think so. Remember, Lehman was NEVER a moment, it was just one part of a story that started playing out a year before they went bankrupt and played out for another 6 months or more after their bankruptcy. FTX is just too big and too mainstream (the list of investors in their seed rounds is a literal who’s who of the private equity space) to not have knock-on effects. I expect to see crypto struggle from here. Not that there can’t be bounces, but I’m looking for bitcoin to break $10,000 before year-end (this is not a new call – see Traditional versus Disruptive Portfolio Construction). Could some entities that offer the best transparency, audited financials, and possibly even regulation be big beneficiaries of the chaos? That is possible. I certainly expect “smart” investors in the crypto space to do more to “secure” their holdings! There are some companies that purportedly are much more diligent on custodial services, have better backing, and have better internal systems than others. They should benefit, but for me, the question is if they will just get a bigger market share of a market that is dying rapidly. Does this mean anything for markets or the economy? Fortunately, it means less for MARKETS than it did even a few months ago. The “disruptive” portfolio has already had so much pain, the positioning is lower, and any use of leverage has decreased dramatically (ARKK as a metric for disruptive investing is down 57% YTD, 65% for one year, and 75% since its peak in February 2021). Crypto returns have been worse (in many cases) than that. It has been impossible to maintain leverage in the “disruptive” portfolio. More importantly (from my perspective) is that people have stopped equating disruptive stocks with crypto. Companies conduct business, have customers, cash flow, etc. These are the things that help investors put valuations on them. While some of those valuations may have been way off (many stocks are down 75% or more), at least there is a process to figure out what these companies might be worth. For the last six months or so (since the Disruptive Portfolio piece was published), investors have treated crypto very differently than stocks and that is a good thing for markets right now because crypto losses won’t have such an immediate impact on the broader stock market. I’m more worried about the ECONOMY. Many of the crypto haters are so dismissive that they don’t give crypto the credit that it is due! Cryptocurrencies grew to as much as $3 trillion and are well under $1 trillion now. This is my best estimate after taking a look at CoinMarketCap and seeing that bitcoin is down to $350 billion. That is an immense loss in a relatively short period of time! That should (must) affect some spending! At a time when people could quite literally make a living waiting for NFTs to “drop” so they could sell them, there was a lot of “free” money available to be spent. Do not underestimate the fact that much of the inflationary pressure we felt in 2021 was attributable to people making money in cryptocurrencies and NFTs. But that is only one part of the equation. The second part of the equation is the companies in the space. FTX allegedly raised over $1.5 billion in various funding rounds (the Crunchbase stories came up high enough in my searches for FTX funding rounds and seem in line with other stories I’ve read). How much of that money went into buying technology? At its heart, FTX was a technology company that presumably needed servers (not just so Sam could play Lord of Legends with minimal lag), cloud services, etc. What were they spending on ads? They got an arena in Miami named for them, but presumably that was just a small portion of their ad spending. Who knows how much was paid to promoters. How much energy were they using? FTX spent money on technology, ads, and paying people and they likely were significant users of energy. That might actually help decrease energy usage (though watching hash rates, this might not come down for a bit). In any case, companies involved in the crypto space have raised and spent a lot of money (billions) that won’t be spent going forward! In addition to the tightening of purse strings by virtually every private company that now needs to avoid funding at what they view as extremely low valuations, mega-caps like META have had several headlines related to cost cuts recently. The spending that was generated by crypto and disruptive tech was a big part of the inflationary (easy money) push post-COVID and will be greatly diminished (in fact, it is already greatly diminished). Those who benefited from the spending (often big tech of all types) could face pressure and it looks like that already happened in last quarter’s earnings for a lot of big tech companies. That could further slow spending in the economy because when one’s customers suffer, you often also have to take steps to cut costs. In the coming days and weeks, I am less worried about how crypto will affect markets, but I am EXTREMELY worried that we’ve only seen the beginning of spending cuts related to crypto wealth and crypto/disruptive companies! That will be bad for the economy and it will bleed into certain stocks if I’m correct. Five More Weeks! We have almost 5 weeks until the next FOMC meeting and presser on December 15th. Plenty of time for the Fed to Stop Seeing Dead People. There is one more jobs report and a few more inflation prints (including another CPI print). On jobs, you know that we’ve questioned the disparity between the Household and Establishment data, questioned the potential overstatement of JOLTS data (I’ve been seeing some interesting work in this space), and even questioned the birth/death model adjustments (which is something some serious economists are also questioning). Jobs may remain strong, and it is the one thing that the Fed can use to justify its hawkish stance (though it would be nice to declare victory on inflation and not force Americans into the unemployment lines.) On inflation: See Inflation Dumpster Dive and More Inflation Dumpster Diving. If you skipped the previous section, all you need to know is that I believe crypto and NFT profits and spending by disruptive companies fueled inflation (tech/semiconductors, various services, advertising, and even energy usage) and that trend has abated and may be reversing. This was a really big contributor to spending that was largely off the radar of mainstream economists (crypto deniers in particular) and is now helping the case for deflation. If you didn’t model it as inflationary before, you won’t pick it up as deflationary now, but two wrongs don’t make a right and won’t help you find inflection points! The rent calculations in CPI are absurd. Talk about two wrongs not making a right! Using data that is “knowingly” lagged (amongst other potential flaws) to determine current policy is so wrong that it continues to make my head hurt! A month ago we sent out OER Seems Crazy. The only thing that I could bring myself to send regarding Thursday’s CPI print was from the BLS Report: “The index for all items less food and energy rose 0.3 percent in October, following a 0.6-percent increase in September. The shelter index continued to increase, rising 0.8 percent in October, the largest monthly increase in that index since August 1990. The rent index rose 0.7 percent over the month, and the owners' equivalent rent index rose 0.6 percent.” Are they trying to tell me that October rents experienced the biggest monthly gain since 1990 and the second highest gain was in September? That is just unbelievable! If you told me that last summer (when we were still doing QE with rates at 0) was out of control on the rent front and the worst in 3 decades, I would have believed you, but now? On the bright side, even the erroneous data will start picking up the smaller increases that started late last year (and early this year) in the real world as opposed to the BLS world. On the commodity side (see chart below), we might see some month-on-month upticks, but the annual data will look great for many commodities! A few weeks ago, I was asked to do a yield forecast for a client (though I’m really more about figuring out the next few months or big moves). What I sent at the time seemed almost outlandish, but it feels like it has some hope now as we get more (non-inflationary) inflation data! Yes, my “base case” is “too far too fast”! The India inspired commodity boon is also an interesting possibility in 2023. While the Fed is likely to jawbone to the hawkish side, I fully expect 5 more weeks of data to weaken the case for more hikes rather dramatically! Other “Stuff” I feel obligated to discuss a few other “things” that could impact the market in the coming weeks: Seasonality. Seasonality could help the market as we head into the holiday season. Recent upward price action could be enough to chase some money off of the sidelines. My sense of “sentiment” is that it remains heavily skewed towards inflation, the Fed, and higher bond yields/lower stock prices despite some chatter about seasonality. Basically “fade the move” still dominates the “seasonality” chatter, but I think that will reverse. Russia. Our Geopolitical Intelligence Group expects little change in the war (Russia will make another push west once the rivers freeze, but Ukraine will defend itself well with all their weapons). However, there is a chance that with the midterm elections behind us and new and more severe energy related sanctions starting to approach (which will hurt the West more than Russia), we could see attempts to cobble together some sort of a deal. China also seems to be gently nudging (if not pushing) Russia in that direction. China COVID 0.1 policy. China is unlikely to back off COVID 0 until after the winter, but with our demand down (and potentially shrinking further) the inflationary supply pressures are receding anyway! Baltic Dry (one measure of international shipping costs) has been receding again and it is down 56% in the past 6 months. Bottom Line Let the “everything” rally play out a bit longer. For stocks, I think somewhere between the middle of August and the middle of September levels are a good target. On SPX, we were at 4,305 on August 16th and 4,110 on September 12th, which I guess is a complex way of saying the S&P target is 4,200. This also seems to be the right stopping point if we breach the 200-day moving average of 4,080 (causing a wave of panic buying). On rates, look for bull steepeners! All yields should come down, but the front-end should respond extremely well if I’m correct on the inflation and jobs data and what that means for the Fed. And there it is: the final curve inverted - Powell's personal favorite, the 3M-3M18M fwd. And now we go all-in steepeners pic.twitter.com/43BVckRdGM — zerohedge (@zerohedge) November 12, 2022 Credit should rip tighter here, with high yield poised to do extremely well as credit risk gets priced out of the market, even with an overhang of some big deals that banks will want to offload on any strength (ideally ahead of year-end). Don’t touch crypto, but also don’t expect weaker crypto to drag stocks down! Ultimately, I think that this all ends with risk-off trading taking us to much lower yields AND lower stock prices, but it is too early to bet on that as we first need to get through the “lower yields are good for stocks” phase! Tyler Durden Sun, 11/13/2022 - 14:00.....»»

Category: worldSource: nytNov 13th, 2022

The Decline of the West: Spengler In Today"s World

The Decline of the West: Spengler In Today's World Authored by Oscar Silva-Valladares via The Ron Paul Institute, Timelessness of thought and vision in world politics is a rare mark of grandeur. Oswald Spengler’s The Decline of the West, written a century ago, deserves this distinction as it reads like it was done yesterday. The German historian-philosopher wrote in 1922 that the centuries old West-European-American civilization was in permanent and irretrievable decline in all manifestations of life including religion, art, politics, social life, economy and science. For him, the political, social and ideological dimensions of this decline were evident in the failings of the Western political class in both sides of the Atlantic. He saw politicians, mostly based in large cities, consumed by ideology and contempt towards silent majorities and described them as “a new sort of nomad, cohering unstably in fluid masses, the parasitical city dweller, traditionless, utterly matter-of-fact, religionless, clever, unfruitful, and deeply contemptuous of the countryman.” Nowadays the Brussels-based European Union (EU) leadership, through their recurring disdain for nation sovereignty, fully befits this definition. Spengler believed that decadence in politics means predominance of ideology over action. “Men of theory commit a huge mistake in believing that their place is at the head and not in the train of great events” he wrote, unaware about how true this is today as we just saw the fall of UK Prime Minister Truss who sacrificed economics in the altar of ideology. Dogma destroying social cohesion and prosperity is also present in the wrecking of Europe’s manufacturing competitiveness as their politicians forcibly deny cheap Russian energy or when Lilliputian Lithuania picks a fight with China in defence of Taiwan’s “sovereignty.” On the face of these events the German thinker would have repeated his assertion that “the political doctrinaire … always knows what should be done, and yet his activity, once it ceases to be limited to paper, is the least successful and therefore the least valuable in history.” When we listen to the German Minister of Economic Affairs Harbeck or his Foreign Affairs counterpart Baerbock lecturing on the primacy of the green agenda or on how Ukraine military support needs to continue regardless of what voters think, we can’t help remembering the writer’s damning query: “[have they] any idea whatever of the actualities of world-politics, world-city problems, capitalism, the future of the state, the relation of technics to the course of civilization, Russia, Science?.” The “rules-based international order,” that Western axiom born out of post-Cold War euphoria and used to justify US-led hegemonism, reminds us the writer’s aphorism that “nothing is simpler than to make good poverty of ideas by founding a system”. “Even a good idea has little value when enunciated by a solemn ass” comes to mind when we hear the European Commission President von der Leyen or the EU Foreign Affairs Head Borrell repeat the same mantra. “In politics, only its necessity to life decides the eminence of any doctrine,” something that has been forgotten as Europe blindly follows the US in an economic war that is ruining the continent. On the East-West confrontation, concerning China, Spengler highlighted Western politicians’ traditional lack of understanding of the main drivers of Chinese thinking which have to do with a 4000-year view of history and of their place in the world, as compared to the Western narrow timeframe absorbed by events that took place since 1500. Western self-contained perception of history negates world’s history, he says, adding that world-history, in the Western eyes, is our world picture and not all mankind’s. American exceptionalism, the dangerous notion that US values, political system and history destines it to play the world’s leading role, was questioned when he pointed out that there are as many morals as there are Cultures, no more and no fewer, and that each Culture possesses its own standard, the validity of which begins and ends with it, a statement that explains the need for a multipolar world. As much as has become politically correct to criticize Nietzsche’s ideas after his appropriation by Nazi ideology, Spengler affirmed that Nietzsche’s basic concept of will of power is essential to Western civilization, and this is consistent with the Western belief on the superiority of its values and the need to impose them on other cultures. “Western mankind is under the influence of an immense optical illusion. Everyone demands something of the rest. We say “thou shalt” in the conviction that so-and-so in fact will, can and must be changed or fashioned or arranged conformably to the order, and our belief both in the efficacy of, and in our title to give, such orders is unshakable.” Money, politics and the press play an intimate role in Western civilization, declares Spengler. In politics, money “nurses” the democratic process particularly during elections, as is the recurring US case. The press serves him who owns it and it does not spread “free” opinion – it generates it. “What is truth? For the multitude, that which it continually reads and hears.” On freedom of the press, we are reminded that it is permitted to everyone to say what he or she pleases, but the Press is free to take notice of what he or she says or not. The Press can condemn any “truth” to death simply by not undertaking its communication to the world – “a terrible censorship of silence which is all the more potent in that the masses of newspaper readers are absolutely unaware that it exists.” Striking parallels exist between today’s poverty in US cities and his observation of Rome at the time of Crassus, who as a real-estate speculator also recalls Donald Trump. In Rome, people are portrayed as living “in appalling misery in the many-storied lodging-houses of dark suburbs”, a misfortune directly linked to the consequences of Roman military expansionism and which suggests current conditions in Detroit, Cleveland or Newark. The Decline of the West was first read as the epilogue of World War I, the war that ended all wars. Hopefully it will not be read in today’s world as the introduction of a new calamity. Tyler Durden Sat, 11/12/2022 - 22:20.....»»

Category: personnelSource: nytNov 13th, 2022

Oil Is a Compelling Reason The Sell-Off In Stocks Isn’t Over

Oil is a compelling reason why the sell-off in stocks isn’t over.  The price of WTI is being underpinned by a weakened dollar and is ready to move higher.  Inflation may have peaked but it’s still here and the FOMC is going to keep raising interest rates.  If you are wondering if this rebound in […] Oil is a compelling reason why the sell-off in stocks isn’t over.  The price of WTI is being underpinned by a weakened dollar and is ready to move higher.  Inflation may have peaked but it’s still here and the FOMC is going to keep raising interest rates.  If you are wondering if this rebound in the S&P 500 (NYSEARCA:SPY) will hold, if the selloff and bear market is over, they’re not. The CPI for October was better than expected and the market cheered, delivering a solid 5%+ move, but there is a single reason to fear another surge in inflation, another spike in FOMC activity and a sell-off in stocks is on the way. .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 Ray Dalio Series in PDF Get the entire 10-part series on Ray Dalio 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 2022 hedge fund letters, conferences and more   Find A Qualified Financial Advisor Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now. That reason is oil (NYSEARCA:USO). The reasoning is this: oil underpins the cost of everything and it is going to get more expensive over the next 3 to 6 months at least. Just look at the post-CPI action alone. The price of WTI spiked more than 3.5%, sustained the gain, and confirmed support at a key trend line, the chart will follow.  The Oil Connection Oil is a leading input cost at all levels of the economy from the basic material producers to the discretionary retailers and the consumer itself. The CPI was better than expected and caused the dollar to fall and, because oil is priced in dollars worldwide (a situation dating back to the collapse of the gold standard), oil gets more expensive. This is a classic example of good news being bad news (except for the big oil companies). If the FOMC is actually able to back off of its rate-hiking trajectory the price of oil will go up and cause another series of negative feedback loops within the economy as those price increases filter through. Looking at the chart of WTI, the price of oil has corrected over the past few months and quarters but it’s still trading at an 8-year high and showing signs of clear support. This is because the fundamentals in the oil market are tilted in favor of higher prices even without the aid of a weaker dollar. According to the latest IEA Oil Market Report, production is peaking out at around 101.2 million barrels per day with OPEC+ on track to tighten production. This is slightly less than the 101.3 MBPD in expected demand and enough of a tilt to keep oil prices supported if not moving higher.  Inflation, It Peaked? Yeah Right So, the CPI data shows the pace of inflation cooled from the previous month but it is still hot and we’ve seen this before. The pace of inflation peaked in March this year and slowed but only to 4.7% core PCE which is still quite hot, and then it accelerated. Inflation is coming down in some areas but is underpinned by housing costs which are only going up with interest rates on the rise and new homeownership slowing. The pace of home price increases is slowing, yes, but not expected to contract substantially and, if it did, that would be another major blow to the home-building industry and the economy at large.  So, the CPI was better than expected and it has peaked, again, but inflation is still high and leading the FOMC to increase interest rates, if slower than at the previous pace. The December meeting should bring a 50 basis point hike at least which is helping brighten the outlook but only relatively speaking. Like when the sun tries to shine through the fog only there is a monster lurking in the mist and its name is Higher Oil Prices.  The Technical Outlook: WTI Is Set Up To Move Higher  The price of WTI has corrected but it is also showing clear signs of support at a key level. This support is manifesting itself in the form of a Head & Shoulders Reversal Pattern (on the weekly chart) that is so tight that it is almost a Vee-Bottom. The reversal is not technically completed, it still needs to break above the 150-day EMA which is consistent with the Neckline of the pattern, but the conditions are highly favorable that it will. In this scenario, the stochastic and MACD will fire a strong, trend-following signal in tandem with each other and, if you look closely, you will see that MACD already is. So, is oil going higher? There is no way to guarantee it will but there is almost no reason to think that it won’t.  Should you invest $1,000 in United States Oil Fund right now? Before you consider United States Oil Fund, you'll want to hear this. MarketBeat keeps track of Wall Street's top-rated and best performing research analysts and the stocks they recommend to their clients on a daily basis. MarketBeat has identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market catches on... and United States Oil Fund wasn't on the list. While United States Oil Fund currently has a "N/A" rating among analysts, top-rated analysts believe these five stocks are better buys. Article by Thomas Hughes, MarketBeat.....»»

Category: blogSource: valuewalkNov 11th, 2022

War in Ukraine and weather-related disasters have disrupted climate action. Here are 6 ways the private sector can mobilize sustainable transformation.

Global weather disasters and the war in Ukraine have disrupted climate action. Here are six ways companies can mobilize sustainable transformation. Volodymyr Zelenskyy, president of Ukraine, addresses the COP27 UN Climate Change Conference, in Sharm El-Sheikh International Convention Center, Egypt on November 8, 2022.Dominika Zarzycka/NurPhoto via Getty Images War in Ukraine and a slew of weather-related disasters have slowed government progress towards climate action.  Facing economic and other pressures, government and business leaders need to hold firm to decarbonization commitments. Here are six ways the private sector can mobilize sustainable transformation.  The war in Ukraine, which upended global energy markets, as well as an unrelenting spate of extreme weather events, such as ruinous flooding in Pakistan and record droughts in the Horn of Africa and Europe, loom large over COP27 in Egypt, where world leaders have called for urgent climate action.The Ukraine conflict in particular has significantly disrupted decarbonization plans and brought into focus concerns around resilience and sovereignty when it comes to ongoing energy transition efforts.The Deloitte Center for Sustainable Progress' report, Transform to React: Climate Policy in the New World Order aims to embolden government and business leaders alike to hold onto their decarbonization ambitions within this complex geopolitical and economic landscape. The report analyzes the economic impacts of geopolitical upheaval and offers proactive next steps for organizations to continue accelerating progress, even in light of global conflict. The European Union has already taken several climate-related actions through new strategy and policy proposals, but government action alone won't be enough. The private sector has a pivotal role to play in driving the transition — and there are several key actions organizations can take to propel and enable the transformation.  1. Green the value chainThe economic sanctions and other government hardlines waged during the Russia/Ukraine war are illuminating companies' structural vulnerabilities—bringing about the need to restructure value chains as a result. By working to reduce greenhouse gas emissions as an integral part of the restructuring process—from design to production and marketing to distribution—executives can more easily unlock major synergies, such as the launch of transformative products or meeting new environmental, social, and governance (ESG) metrics requirements from stakeholders.2. Diversify energy and raw material sourcesDiversification measures should go beyond reducing reliance on fossil fuels and look to other strategic raw materials and goods. This means not only shifting to cleaner energy and feedstock sources, but also establishing expanded and reliable supply lines in new markets, which can reduce current vulnerabilities and help minimize the impact of potential future disruptions (geopolitical or otherwise).3. Innovate in line with the energy transition to build resilienceInnovation is at the heart of maintaining competitive edge as it replaces costly and inefficient processes with more effective ones. The pursuit of long-term efficiencies (such as economies of scale thanks to trends like the mass production of solar panel components) has helped in driving down prices of key renewable energy technologies and bolstered the recent acceleration of the energy transition.Industry-driven initiatives have the ability, and industry leaders have the responsibility, to catalyze and accelerate progress in renewables, electrification, renewable and low-carbon hydrogen and hydrogen derivatives, as well as in the circular economy.4. Modernize in alignment with sustainability goalsIndustries should modernize to operate and thrive in a net-zero economy. The modernization process, through initiatives such as restructuring the value chain to increase resilience, can take years, but it presents a window of opportunity to align investment decisions with long-term sustainability goals. Including ESG aspects in investments of financial market players could also make a significant contribution here.5. Leverage public-private collaboration Organizations looking to quickly roll out transformative technologies and processes need an environment that sets them up for success—ranging from the availability of these technologies to the availability of sufficient capital and skilled labor.Companies can proactively shape this environment and limit their macro and microeconomic vulnerabilities by pursuing more public-private partnership work. Such relationships can leverage incentives to accelerate the transition to a low-carbon future, creating employment and local economic benefits, while also reducing operational, permitting, and macroeconomic risks for the companies and investors.6. Set the right direction for investmentsSkyrocketing electricity, gas, and oil prices have led to high inflation rates in nearly all goods when their production requires (whether directly or indirectly) significant amounts of energy. This leaves some sections of the economy—such as automotive, transport, and chemicals—facing significantly higher costs, while others, like oil and gas companies, are generating windfall profits compared to the relatively stable markets of the pre-crisis periods.While this incentivizes expanding production capacity in fossil fuels, industry leaders must take a long-term view that such investments could result in large-scale stranded assets or lock-in effects that would obstruct the path to a low-carbon economy. These additional profits should be invested in transformative technologies and systems to generate additional benefits for growth, jobs, and social welfare.Companies have many options when it comes to how they can take action in this moment. One thing is clear—climate action cannot wait, and companies should not either. Bernhard Lorentz is the global consulting sustainability & climate strategy leader at Deloitte and the founding chair of the Deloitte Center for Sustainable Progress.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderNov 11th, 2022

6 Roth IRA Investments To Build Wealth Over Time

Retirement, the “golden years” in the ideal world, is when all Americans want to kick back in their own home, count dollars from their passive income, and get back to their hobbies. But, this dream for many remains a hyperbole due to a lack of financial planning, adequate investment, and debt. A Congressional Research Service […] Retirement, the “golden years” in the ideal world, is when all Americans want to kick back in their own home, count dollars from their passive income, and get back to their hobbies. But, this dream for many remains a hyperbole due to a lack of financial planning, adequate investment, and debt. A Congressional Research Service report issued in August 2021 found that 62.1% of households headed by someone age 65 or older held some debt in 2019. That was up dramatically from 43% in 1992. if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2022 hedge fund letters, conferences and more iFrameResize({ log: false, checkOrigin: false }, '#icb_widget') The median debt for those older households was $31,050, and the average debt was $86,797. The report said these numbers are roughly three times the 1989 amount, even when factoring in inflation. If you are nearing retirement and still have debts to pay, you might be thinking about ways to cut down on this obligation. Read ahead — in this post, we provide a comprehensive mix of tips to prevent debt from demolishing your retirement dreams. But first, let’s see why debt in retirement is such a huge concern. Why Debt in Retirement is Bad More than one-fourth of Americans claim they can’t manage their debt, according to a report from OPPLoans. Everyone lives with some financial obligations, from young adults fresh out of college to retirees in their late 60s. And given the current state of the economy, debt is necessary. For many, it is the only way to buy a house, pay for education, get a car and fulfill other wants. So, debt isn’t inherently a bad trade-off. But what’s concerning is when you get into debt without a financial plan, and your obligations keep piling up, threatening to crash into retirement, causing financial stress. The situation worsens when those obligations include bad debt. Bad debts, like credit card debts and payday loans, carry hefty interest rates that can consume a significant portion of your monthly cash flow. Thus, you’ll have less to spend on health care, travel, and leisure activities. And the worst scenario is you’ll end up drawing down retirement accounts faster than planned, run out of money, and face significant lifestyle changes to make ends meet. So, allowing bad debts to pile up is a big no-no. Good debts, or debts that allow you to increase your net worth and improve your life, do not need the same treatment as bad debts. This is because debts like a mortgage or student loans have lower interest rates that you can afford to pay down gradually, even in your retirement. However, to make the repayment without any financial strain, you must devise a plan. Isn’t it Possible to Make Minimum Monthly Payments and Let Debts Die With You? State laws vary, but creditors usually have a few months after someone dies to file a claim against the estate for what they are still owed. Usually, creditors can use your estate to pay off the debts before your heirs receive any share. Medical bills that remain unpaid at the time of your death can also be taken from your estate. And anyone who cosigned a debt or is a joint account holder will still be responsible for those debts after you die. But creditors usually won’t be able to get to accounts and assets with a named beneficiary or a “payable on death” designation. A life insurance policy is another way to ensure that your heirs get something when all your money goes to paying off your debts. In short, unless you take steps, your debt won’t go away even after your death, and your estate and heirs will be left to bear the burden. Tips to Avoid Debt From Ruining Your Retirement Prioritize and Strategize Most Americans have a mix of credit cards, student loans, mortgages, and other debts. If you are one of them and want to get into retirement debt free, it’s a high goal to achieve. But, by prioritizing and strategizing, you can significantly reduce the debt burden. Make a list of your debts in descending order starting with the one with the highest interest rate and ending with the lowest. Now strategically chalk up your budget to pay down the high-interest loans first while keeping up with minimum payments of the rest. Once you pay off a high-priority debt, you will have the extra money in your monthly budget. Instead of splurging, add the money to the monthly amount you pay on the next debt on your list. As you knock off one debt after another, keep applying this principle to everything, including your mortgage. This strategy will help you pay off your high-interest debts when you hit retirement. And, ideally, also you’re low-interest debts if you start early. Create a Budget A reasonable budget is the essence of a fulfilling financial life. Writing down your daily expenses in a notebook or creating a spreadsheet of monthly costs will give insight into where your money is going. You can then spot unnecessary expenses, cut down on them and direct that money into paying off your debt. Debt.com polled a thousand Americans, and most participants said that they are now tracking their finances, and their budgeting habit has helped them get out and stay out of debt. Downsize Maintaining a budget can help you find aspects that need to be fixed in your financial life. Ask yourself, are you spending more than you can afford? For example, if you spend $100 a week on restaurants, you can easily save that money to pay your dues by making it a habit to plan meals and grocery shopping. But don’t stop your extra spending, or you’ll risk failing to keep up with the significant change. Instead, start small and gradually work your way up. For example, take one vacation a year instead of two, or cut back on the amount of money you extend your adult child to help them out. Don’t Make Mortgage Debt A Priority Mortgage rates are usually low, and most people getting close to retirement will get more value by investing and building their emergency fund than by paying off their mortgage faster. An early mortgage payoff can also have tax implications. But it’s up to you to decide. If not having a mortgage when you retire will make you happy, do it. Here are some things you can do to pay off your mortgage faster: You can pay more than the minimum amount (if you have the money). If you make four extra payments in one year, you could cut ten years off your payoff date. Refinancing to a shorter-term mortgage with a lower interest rate is also good if your cash flow can handle the payments. If you decide to wait until you’re retired to pay off your mortgage, ensure you have enough money in your retirement savings to cover the payments. Avoid Using Your Retirement Funds Those retirement savings can be tempting if you try to get out of debt. But you need to remind yourself that those are for retirement, and raiding your funds before its time may lead to negative consequences. For example, you’ll incur penalties and taxes and withdraw more than you need to pay off the debt. In addition, you will lose out on potential earnings. Look for a Side Hustle Side hustles are an excellent way to invest your time to earn extra money that you can use to pay your dues. Here are some side hustles you can try: rent out a space you already have, provide child care, sell your service online, or become a pet sitter. Want some more inspiration? Here are 50+ Side Hustles Trending in 2022 for you to consider. Try Debt Consolidation Keeping track of it all can be stressful when you have more than one debt payment. Here, the method of debt consolidation can be helpful. It’s the process of paying off several debts with a single new loan or using a balance transfer credit card, often at a lower interest rate. For example, if you want payday loan debt relief, you can take out a single low-interest personal loan to pay off your debts and only make payments on the new loan. Some lenders offer particular loans for consolidating debt, but most personal loans can be used to do the same thing. Typically, borrowers who qualify for a balance transfer credit card get a 0% introductory APR for six months to two years. The borrower can choose which balances to transfer when opening the card, or they can move the balances after getting the card. But it’s a good idea only if you have a high credit score and several high-interest loans. You also need a strict budget and stick to a tight spending practice to get the most out of this method. Consider Debt Forgiveness Bankruptcy is often seen as bad, but sometimes it’s the only option for seniors buried in debt. Filing for bankruptcy can make it harder to get loans in the future, but this might not be as big of a deal for someone older. What could be better for seniors in debt than getting a fresh start financially while keeping their home, social security, and other retirement accounts safe? But remember that filing for bankruptcy does not eliminate student loan debt. Although if you’re having trouble paying your bills, you can turn your student loan into credit card debt and then file for bankruptcy. Debt settlement is something else you can consider. This debt reduction strategy can help you pay off a small amount of your credit card, payday loan, or medical bill balance. It’s a deal where the creditor forgives some of the debt because the debtor is having trouble paying. Leverage Government Programs Paying off debt can be a severe challenge if your income-to-spending ratio is tight. In such a case, you might be able to get help paying your Medicare premiums, deductibles, copayments, and more through state-sponsored Medicare Savings Programs. Another option is working with the Administration on Aging (AoA), supported by the U.S. Department of Health and Human Services. The AoA, which was created primarily to safeguard the welfare of senior citizens and retirees in America, provides assistance and resources for: Long-term care Health and nutrition Health insurance and medical needs Legal aid to prevent financial exploitation Keep Monitoring Your Progress Monitoring your progress will allow you to stay on the path to getting out of debt and assist you in figuring out what you can change to reach your financial goals. Ask yourself if the amount you owe isn’t going down as quickly as you hoped. Could you speed up the process by cutting costs somewhere else? Or do you need to temporarily put less money toward paying off that debt because of other expenses coming out of the blue? During the process, if you need to make changes, do so. But keep in mind the big picture as you do this. Delay Retirement You can always put off retirement if you need more time to pay off your debts. Even though it’s not the best option for retirees, it’s better than running out of money too soon. You can also ease into retirement instead of quitting all at once. For example, you can work part-time for a while before retiring. The Bottom Line When figuring out how to pay off your debt, the first step is to be clear about your needs and retirement goals, analyze your current financial situation, make a plan, start putting it into action, and keep track of how it’s going. Depending on their debt and how close they are to retirement, everyone’s plan for paying off debt will look slightly different. So, don’t just do what everyone else does. Make a plan that fits your needs. But remember, time is of the essence. If you don’t start your journey to become debt-free soon, things will worsen over time. You can ask for assistance from a financial planner or CPA if you feel overwhelmed by your debt. They can help you devise a plan to get your finances in order. Article by Lyle Solomon, Due About the Author Atty. Lyle Solomon has significant expertise in legal research and writing. He is a member of the State Bar of California and has extensive litigation experience. Solomon has helped over 6000 people become debt-free. He has also contributed articles to top-notch websites on debt, credit, consumer laws, bankruptcy, and more. Check out the nationally recognized attorney’s latest book - Think Different! Save More! on Amazon to get 48 tips to save your hard-earned money......»»

Category: blogSource: valuewalkNov 9th, 2022

Layoffs are crushing the real-estate industry, and Redfin and Opendoor are the latest victims. Here are 44 companies that have shed jobs due to the fast-cooling housing market.

Tough economic conditions are taking a toll on big public companies and tiny startups alike. See how these firms, from Compass to Zillow, have coped. A Redfin sign in front of a house for sale.Sundry Photography/Shutterstock Redfin and Opendoor are the latest real-estate firms to lay off employees. The layoffs come as demand for mortgages has reached its lowest level since 1997. Insider rounded up 44 of the firms who have cut staff amid a cooling housing market. The layoffs at Redfin and Opendoor are the latest signs of trouble for the embattled real-estate industry.Deals that were once profitable for the industry and home purchases that had been affordable for everyday people have been getting slammed by or because of the higher borrowing costs.The aggressive interest-rate hikes by the Federal Reserve and a looming recession have resulted in layoffs galore across the real-estate world, whose stormy seas have triggered worry elsewhere in the economy. The cutbacks are sobering for an industry that just a year ago was flying high with home-price appreciation, increasing rents and plentiful funding for proptechs. The downsizing began in the mortgage industry with Better's Zoom layoffs at the end of last year. That abrupt move came amid expectations for a big slowdown in 2022, and residential brokerages like Compass, Redfin, and Side followed suit as transaction volumes skid.With signs of distress spreading through the office market and among homebuilders, and rate hikes anticipated into 2023, layoffs are mounting. The Mortgage Bankers Association — the industry's largest trade group — anticipates an attrition rate as high as 30%, according to a spokesperson.Indeed, more industry jobs are likely on the line with demand for mortgages now its lowest level since 1997, per the MBA. Some of the latest and notable casualties came from real estate marketplace giant Zillow, consumer lender Finance of America, and international vacation rental company Vacasa.Insider is keeping track of where job cuts are taking place in the residential and proptech sectors, including at companies that have wielded an axe more than once. The companies with layoffs are listed below in alphabetical order.Do you know of other real estate tech or mortgage-related layoffs? Were you affected by them? email anicoll@insider.com or rdavis@insider.com.AnywellA coworking space.Dowell/Getty ImagesIsraeli proptech startup Anywell, a company that creates hybrid workspaces, announced in August that it will lay off 50% of its workforce in a restructuring. The move impacted 11 employees, primarily from Anywell's operational staff. Anywell's latest round of layoffs came just five months after it raised $10 million in a Series B round. A total of 14 employees have left the company since March. The company added that it plans to focus on software-based solutions.Apartment ListA New York City apartment building.Getty ImagesApartment listing services are facing mounting economic pressure.Mathew Woods, CEO of ApartmentList.com, announced on LinkedIn on August 31 that the company was laying off 29 people, or approximately 10% of its workforce. Woods said the company was "reacting to market conditions."BetterBetter employees at the company headquarters in New York City.BetterThe online mortgage lender Better started laying people off earlier than most of the companies on this list.In December, CEO Vishal Garg cut 900 employees via Zoom meeting, a move that made headlines around the world. Before the layoffs, Better employed about 9,000 people, 7,000 of whom were hired since the start of the pandemic.The company has since announced another wave of layoffs, cutting 3,000 more employees in March. Insider reported some employees found out they were being laid off when their bank statements received direct deposits for severance payments or when they abruptly lost access to their work computers.The company, which has said it still plans to go public this year, announced voluntary buyouts for employees in some positions and departments in April. Garg, Better, and the blank-check company trying to take the mortgage company public have received formal inquiries from the Securities and Exchange Commission about their business operations and the company's former chief operating officer's claims about corporate malfeasance.BlendNima Ghamsari, the founder and CEO of Blend.BlendBlend, the publicly traded mortgage-tech company that builds software for major mortgage lenders, laid off 200 people, or 10% of the company, in April, according to a filing with the Securities and Exchange Commission first reported by HousingWire.The company had been signaling it had hard times ahead since the end of last year, as declining loans were forecast to hit the company just as hard as its clients, who are the ones actually lending.BungalowThe Biden administration unveiled a plan to tackle the affordable housing crisis in May.E. Jason Wambsgans/Chicago Tribune/Tribune News Service via Getty ImagesBungalow, a company that turns traditional single-family homes and apartments into coliving spaces for roommates, laid off 75 people, or 35% of its workforce, in June, according to Layoffs Tracker and posts by former employees on LinkedIn.The company raised $75 million last year from a mix of investors, led by Deer Park Road Management, with Coatue, Khosla Ventures, Founders Fund, and Atomic also investing. The round valued the company at $600 million.Clear CapitalThe Good Brigade/GettyClear Capital, a real estate appraisal technology company, laid off 27% of its workforce on October 14, according to Layoffs Tracker and LinkedIn posts from former employees. The layoffs will impact 378 employees – about 27% of the company's workforce as rising interest rates result in a significant decrease in volume from its customers."Clear Capital is restructuring all company divisions to reduce expenses and support our future business strategy amidst today's housing market reality," CEO Duane Andrews told Insider.CompassA Compass sign in front of a home.Smith Collection/Gado/Getty ImagesThe residential brokerage Compass announced it laid off 10% of its workforce — about 450 employees — in June as residential transactions slowed down. The layoffs did not include real-estate agents, who are independent contractors and not directly employed by the company.Compass, which went public in April 2021 at roughly $20 a share, is down almost 80% over the past two years and trading below $5 a share. The company also plans to combine some offices and pause its plans to expand and acquire other companies.A laid-off employee talked to Insider's Zoe Rosenberg about their experience."My lingering thought is that whatever the impacts of the IPO and the impacts of our rapid expansion across the country, the impacts of the market on our futures — is just that those impacts didn't seem to be handled appropriately, or in the best manner for the associates' longevity with the company," they said.Divvy HomesDivvy Homes is a rent-to-own company headquartered in San Francisco.xeni4ka/Getty ImagesDivvy Homes, a rent-to-own real estate company, in September laid off 40 employees, representing more than 12% of its workforce, according to Layoff Tracker.The San Francisco-based company has raised more than $1.5 billion since it was founded in 2017 and is backed by large investment firms such as Andreessen Horowitz and Tiger Global Management."Although we recognized these macroeconomic challenges in late summer 2022 and took steps to substantially reduce our cost structure in response, it unfortunately was not enough," Kyle Zink, Divvy's VP of Marketing, told Insider."Realistically, the macro environment is likely to remain volatile and challenging for the foreseeable future. As a result, we needed to adjust headcount to reflect the new reality today," Zink continued.Finance of America MortgageA couple signing mortgage documents.Getty ImagesFinance of America Mortgage, a multichannel mortgage lender headquartered in Plano, Texas, laid off hundreds of employees between the second and third quarters of 2022, HousingWire reported in August. The layoffs impacted employees in the US and in the Philippines where workers performed back office tasks such as appraisal checklists, according to HousingWire. "The discontinuation of the forward mortgage originations segment will allow FOA to optimize its resources and prioritize businesses that have a distinct market opportunity and greater growth potential," FOA Interim CEO Graham Fleming said in a press release.First Guaranty Mortgage Corp.A couple signing a mortgage document.Getty ImagesFirst Guaranty Mortgage Corp., a Plano, Texas, lender, laid off 80% of its employees, The Dallas Morning News, and paused making new loans in late June, fueling speculation that the company was going to go bankrupt. The company was backed by the major asset manager Pimco.Just a few days after cutting 471 employees, the company filed for Chapter 11 bankruptcy protection, with more than $473 million in debt. The company, which originated $11 billion in mortgages last year, had projected it could originate only $5 billion to $6 billion in mortgages this year.Flagstar BankFlagstar Bank's logo.Flagstar BankFlagstar Bank, a Michigan bank, cut its mortgage staff by 20% in April. In a statement to HousingWire explaining the 420-employee layoffs, CEO Alessandro DiNello cited interest rates rising "at the fastest rate this century." In the first quarter of 2022, the company's mortgage originations were down 40% from the first quarter of 2021.FlyHomesFlyhomes cofounder and CEO Tushar Garg.FlyhomesFlyHomes, an online brokerage service, cut 20% of its staff, or about 200 people, in July. The company blamed economic headwinds and rising interest rates, GeekWire reported. The Seattle-based company has raised more than $310 million since it opened in 2016. Some of its investors include Andressen Horowitz, Camber Creek, and Spencer Rascoff, who co-founded Zillow. HomewardHomeward CEO Tim Heyl.HomewardAustin, Texas-based startup Homeward, which is pioneering the "move now sell later" transaction, laid off 20% of its workforce in August as housing transactions dropped. "We don't know how long real estate will continue to soften, so we must plan for a less active market," Tim Heyl, Homeward's CEO, wrote in an email to employees, according to a report by The Austin-American Statesman.The company has raised more than $500 million since it opened in 2018 from investors such as LiveOak, Javelin Ventures, and KeyStone Bank. Homeward raised $136 million in its Series B round, which closed in May 2021, according to Crunchbase.HomieSalt Lake City.Darwin Fan/Getty ImagesHomie, an online discount brokerage in Utah, laid off another 40 employees from its Salt Lake City location in October. The round of layoffs account for approximately 13% of its workforce, and brings the company's total cuts for the year up to 159, according to Layoff Tracker.CEO Johnny Hanna said the changing real-estate market and record-low inventory contributed to the decision to trim staff.JPMorgan ChaseThe JPMorgan Chase corporate headquarters in New York City.Mike Segar/ReutersThe layoff wave hasn't affected only smaller lenders and proptech startups.America's largest bank, JPMorgan Chase, laid off more than 1,000 mortgage employees in June, Bloomberg first reported.The layoffs were a result of "cyclical changes in the mortgage market," a bank spokesperson told Bloomberg.Juniper SquareJuniper Square is a commercial real estate software startup.Ty ColeCommercial real estate software startup Juniper Square laid off 14% of its staff in August, said Chief Marketing Officer Matt Lawson. Lawson said the move primarily impacted Juniper's sales division. Despite the round of layoffs, the company's staffing total will still likely be 20% above last year's, he added. Since opening its doors in 2014, the proptech startup has raised more than $108 million from investors that include Ribbit Capital, Zigg Capital, and Ovo Fund. The company raised more than $75 million in its Series C funding round in September 2021.KeepeKeepe provides home-repair services.Peathegee Inc/Getty ImagesKeepe, a Seattle home-repair company, cut an unspecified number of workers from its small workforce in June, GeekWire reported. (GeekWire counted a total of 36 Keepe employees on LinkedIn.)The company provides home-repair services for other businesses, such as property managers and large corporate landlords.Keller MortgageKeller Mortgage is a division of the brokerage Keller Williams.Maskot/GettyThe mortgage arm of the major brokerage Keller Williams, Keller Mortgage, laid off 150 new hires in October, then laid off many more employees in May, a round that former employees described as "big," "massive," and "huge," according to The Real Deal.The division is largely focused on purchase mortgages because of its relationship with the brokerage.KiaviKiavi offered loans to real estate investors.Daniel Grizelj/Getty ImagesSan Francisco-based startup Kiavi, which offers loans to real estate investors, has felt the impact of rising interest rates on its customers. The company laid off 14 employees in July, representing about 7% of its workforce, HousingWire reported. Kiavi grew quickly in recent years, and in May announced that it had surpassed $10 billion in loans to real estate investors since it opened in 2013.  KnockA for-sale sign in front of a house.Getty ImagesIn March, Knock, a startup that helps homeowners make an offer on a new house before selling their old one, laid off 46% of its staff, roughly 120 employees, Bloomberg reported.At the same time, it halted its plan to go public via special-purpose acquisition company in March. The company had planned to go public at a $2 billion valuation but instead raised $70 million in equity and $150 million in debt in a private funding round that included the movie director M. Night Shyamalan as one of the investors.LandingLanding rents fully-furnished apartments.Mikhaila Friel/InsiderFully-furnished apartment provider Landing announced that it laid off 110 employees on October 6 and reshuffled another 70 positions to different parts of the country, according to AL.com. The company that was founded in San Francisco moved its headquarters to Birmingham, Alabama, in 2021 with the goal of creating more than 800 full-time jobs in the state. Today, the company has a workforce of nearly 900 in the Birmingham area.Mr. CooperMortgage applications have tumbled as interest rates have risen.SAUL LOEB/Getty ImagesThe mortgage lender Mr. Cooper, formerly known as Nationstar, has had two separate rounds of layoffs this year, one of 250 employees and another of 420 employees, or roughly 5% of the company's employees, according to The Real Deal.Like other mortgage lenders, it was hit hard by rising rates, with its direct-lending business declining by 32% year over year.NotarizeBuying a home often requires a notary.Dragana991/Getty ImagesNotarize, a Boston remote-notary service, laid off one-quarter of its staff — or about 110 people — in May, TechCrunch reported.While Notarize is not a traditional real-estate company, it was boosted greatly during the pandemic by the boom in remote real-estate transactions. Many states loosened their rules about in-person notaries and other traditional closing procedures to allow transactions to continue during the early waves of COVID-19.Notarize CEO Pat Kinsel said the layoffs were a result of "the state of the economy and world events" and that it may be harder than expected to raise further investment in the company. The company has raised $213 million since its founding in 2015, most recently a $130 million Series D last year.OpendoorAn Opendoor office.Opendoor Technologies/GlassdoorOpendoor laid off 550 employees on November 2, according to a blog post on the company's website. Founded in 2015, San Francisco-based Opendoor is America's biggest home-flipping company. It's also known as an instant buyer, or iBuyer, which means it buys up single-family homes across the country, lightly renovates them, then resells them for a profit.The move impacted about 18% of Opendoor's workforce across all departments, the blog post said. Opendoor also offered laid-off employees job transition services and a severance package that includes at least 10 weeks of pay."We did not make the decision to downsize the team today lightly but did so to ensure we can accomplish our mission for years to come," Opendoor CEO Eric Wu wrote in the blog post. "And while we may be navigating a once-in-40 year market transition, it doesn't take away the difficulty, frustration, and sadness downsizing brings."OrchardProspective homebuyers and a real-estate agent.Getty Images.Orchard, a startup that helps homeowners buy a home before selling their current home, announced on LinkedIn in June that it had laid off 10% of its staff because of "mounting economic uncertainty."The company subsequently released a spreadsheet of laid-off employees' names and contact information to recruiters to help them find new roles. The spreadsheet contained the names of 46 employees as of July 18. Orchard became a unicorn last year. It was valued at $1 billion after a $100 million funding round led by Accomplice.PacasoPacaso co-founders Spencer Rascoff and Austin Allison.PacasoPacaso, a real estate investment company founded by former Zillow executive Spencer Rascoff, laid off approximately 30% of its workforce on October 11, citing concerns about a global recession, according to The Real Deal. Since its founding in October 2020, Pacaso has raised more than $1.5 billion in seven funding rounds, with more than $1.3 billion coming from debt. In September 2021, the company picked up more than $125 million in a Series C round from 11 investors, including Alumni Ventures, SoftBank's Vision Fund, and Fifth Wall.PennymacKrisanapong Detraphiphat/Getty ImagesPennymac, a California nonbank lender, laid off another 80 employees in October primarily from its Roseville, Westlake, Agoura, Moorpark, and Pasadena locations in California, according to HousingWire. The move comes after the company laid off almost 450 employees across two rounds earlier this year. The first round was announced in March, while the second was announced in May, with the layoffs occurring up to July, according to HousingWire.RealiReali sought to simplify the real estate transaction process.The Good Brigade/Getty ImagesSan Francisco Bay area company Reali shuttered its operations in August, affecting 140 employees, TechCrunch reported. The company cited rising interest rates and a bad market for raising capital as the primary reasons for the shutdown. Reali, which was founded in 2016 in Israel, sought to simplify real estate transactions by allowing customers to buy and sell homes in a single, coordinated transaction. This would have eliminated the need for contingencies and paying two mortgages at once. The company raised a $100 million Series B round in August 2021.Realtor.comFirst-time buyers are up against a market where active listings have dropped nearly 67% since 2020, according to Realtor.com.Denis Novikov / Getty ImagesRealtor.com, one of the most recognizable real estate marketplaces in the world, said in September that it was downsizing its workforce. David Doctorow, the company's CEO, cited slow sales volume and economic headwinds as catalysts for the downsizing, according to Inman.com. A spokesperson declined Insider's request to comment on the move.RedfinRedfin CEO Glenn Kelman.Courtesy of ComparablySeattle-based real-estate brokerage Redfin laid off 862 employees, or 13% of its staff, on November 9, according to a memo posted on the company's website. The move comes after the company laid off 6% of its staff of almost 6,500 in June. Overall, employment at the company has declined by 27% since April 30, the memo said. "A layoff is awful but we can't avoid it," Redfin CEO Glenn Kelman wrote. "We plan to keep increasing our share of the market, but that market in 2023 is likely to be 30% smaller than it was in 2021." The company also said on November 9 that it was shutting down its home-flipping, or iBuying, business, called RedfinNow.RhinoA for-rent sign outside a house.ejs9/Getty ImagesThe New York insurance-tech startup Rhino laid off 57 employees, or more than 20% of its staff, in February, The Real Deal reported.Rhino is one company in a growing group of proptech startups that pays renters' security deposits in exchange for small but nonrefundable monthly payments.The company is part of the Kairos portfolio, a group of related startups led by the investor Ankur Jain. The layoffs came a year after Rhino raised $95 million in a round led by 2021's most active venture investor, Tiger Global Management.RibbonRibbon is a software-as-a-service startup from New York City.Alexander Spatari/Getty ImagesNew York City-based startup Ribbon, a software-as-a-solution company for real estate agents, laid off 136 employees in July as the company seeks profitability, Inman reported. The move came after the company doubled its market footprint last year up to eight states, including Ohio, Arkansas, and Florida. Ribbon has raised more than $900 million since it was founded in 2017. Some of the company's investors include Bain Capital Ventures, Greylock, and Goldman Sachs.Rocket MortgageThe Rocket Mortgage logo.Rocket MortgageRocket Mortgage, the largest mortgage lender in the country formerly known as Quicken Loans, has avoided layoffs by offering 8% of its workforce voluntary buyouts, providing months of compensation, medical benefits, and early stock vesting, National Mortgage Professional reported. It is unclear how many employees have taken the buyout offers.SideA family talking to a real-estate agent.Getty ImagesSide, a startup that provides white-label brokerage services like marketing tools to independent brokerages, laid off 10% of the company's workforce. It cut roughly 40 people in June, Inman reported.In June, a fundraising round brought the company to a unicorn valuation and within striking distance of going public.CEO Guy Gal said in a statement provided to Inman and other outlets that the company grew too quickly to adequately onboard new employees and that leadership decided it needed to slow down growth in the face of the condition of the global economy.SonderSonder CEO Francis Davidson.Cassidy AraizaSonder, one of the multiple proptech companies to go public during a rush of SPAC deals, laid off 21% of its corporate employees and 7% of its frontline hospitality staff in June, Business Travel News reported.Sonder operates short-term rental properties in apartment buildings, including some apartment buildings that it operates entirely as hotels.CEO Francis Davidson said in a meeting, according to Business Travel News, that the layoffs were part of a plan to prepare the company for shifting market dynamics that value profitability over growth. Earlier in the month, Satyen Pandya, Side's chief technology officer, left the company, according to a Securities and Exchange Commission filing.Sprout MortgageMortgage rates have increased significantly so far this year.JenniferPhotographyImaging/Getty ImagesSprout Mortgage, which touted itself as the largest originator of nonqualified mortgages, laid off all of its more than 300 workers and shut down operations earlier this month, as HousingWire first reported.Sprout Mortgage is the latest nonqualified-mortgage lender to shutter after the closure of First Guaranty Mortgage Corp.The news prompted a class-action lawsuit from laid-off employees who said they hadn't received paychecks for their last few weeks of work.SundaeRows of suburban houses.David Jay ZimmermanSundae, a marketplace that allows homeowners to sell their homes to investors who then rent out the homes, laid off 15% of its staff, though the total number of people laid off is unclear, HousingWire reported.The layoffs were in June, when Bloomberg reported investors had begun to slow their purchases of homes across the country to rent out because of higher borrowing costs.TomoThe Tomo cofounders Greg Schwartz and Carey Armstrong.TomoTomo, a mortgage startup that focuses on lending to home purchasers, laid off 44 people, or almost one-third of its workforce, in May, Insider previously reported.Greg Schwartz, the company's CEO and cofounder, said the layoffs were a result of the "recent shift in the mortgage and venture-capital markets due to the rapid increase in interest rates."VacasaVacasa rents vacation homes like this one in Montana.Courtesy of Ryan VillinesVacation rental startup Vacasa announced it laid off 280 employees on October 21, in a move that impacted approximately 3% of its workforce, the company confirmed.The layoffs come just weeks after Rob Greyber took over as CEO. It was already trimming staff over the summer, when about 25 salespeople received pink slips.Vacasa has struggled to become profitable since going public in 2021. The company lost $2 million in adjusted earnings in the third quarter of 2022, though it was better than its projected loss of $15 million to $20 million, according to its quarterly report. "We do not take these decisions lightly, but we continuously assess our business, striving to optimize our resources and teams to be efficient and align with our priorities," a company spokesperson told Insider.Wells FargoA Wells Fargo office.Justin Sullivan/Getty ImagesWells Fargo laid off workers across its home-lending operations in April but declined to describe the size or scope of the layoffs to Insider or other outlets.That same month, the company reported that revenues within its home-lending operation were down 33% year over year. The company's chief financial officer, Mike Santomassimo, appeared to forecast further layoffs during its first-quarter earnings call."We've started to reduce expenses in response to the decline in volume and expect expenses will continue to decline throughout the year as excess capacity is removed and aligned to lower business activity," Santomassimo said.The company did not provide further updates about the scope of the layoffs on an earnings call Friday.The WingInside one of The Wing's co-working spaces.Evelyn Hockstein/For The Washington Post via Getty ImagesThe Wing, a New York-based coworking startup that made office spaces for women, shut down its operations in August, according to Layoff Tracker. The company that was founded by Audrey Gelman and Lauren Kassan in 2016 raised more than $117.5 million in funding from investors such as WeWork and Sequoia Capital.Zeus LivingZeus Living rents fully furnished homes.Courtesy of Christopher WillsonZeus Living, a furnished home rental company, laid off 64 employees on October 20 as the company continues to seek profitability and sustainable growth, according to the San Francisco Business Times. The layoffs come approximately 18 months after the startup cut more than 60% of its labor force due to business impacts resulting from COVID. "Like many companies in our industry, we are not immune to the effects of market volatility, inflation, war, and the possibility of a recession," Anni Jones, director of PR for Zeus, told Insider in an emailed statement. Zeus has raised more than $150 million from investors like Picus Capital and Y Combinator since it opened in 2015.ZillowZillow's website shows a series of price cuts on an Atlanta home.ZillowZillow laid off 300 employees as the company pivots to focus on hiring technology and engineering staff, TechCrunch reported on October 26. The layoffs primarily impacted employees in Zillow Offers, its sales team, and staff at Zillow Home Loans, the company's mortgage lending arm. The move comes nearly a year after Zillow laid off 25% of its workforce after shuttering its iBuying program known as Zillow Offers. "As part of our normal business process, we continuously evaluate and responsibly manage our resources as we create digital solutions to make it easier for people to move," a company spokesperson told Seeking Alpha. "This week, we have made the difficult — but necessary — decision to eliminate a small number of roles and will shift those resources to key growth areas around our housing super-app. We're still hiring in key technology-related roles across the company."ZumperAn apartment listed for rent in Manhattan.Bizzarro Agency LLCWhile most of the layoffs have struck the residential-purchase market, companies focused on rentals haven't escaped unscathed.In June, the rental marketplace Zumper cut 15% of its staff, mostly in the sales and customer-service departments, The Real Deal reported. It is unclear how many employees were cut.Axel Springer, Insider Inc.'s parent company, is an investor in Zumper. Read the original article on Business Insider.....»»

Category: topSource: businessinsiderNov 9th, 2022

Redfin Fires 13% Of Staff, Exits House Flipping As Downturn Accelerates

Redfin Fires 13% Of Staff, Exits House Flipping As Downturn Accelerates House prices are sliding, and sales are plunging as the Federal Reserve hits the pause button on quantitative easing this year with the most aggressive interest rate hikes in four decades to cool the red-hot housing market spurred by low interest rates and tight inventories during the pandemic. A rising rate environment has sent the average thirty-year fixed mortgage rate to highs not seen since the Dot Com collapse era over two decades ago. This abrupt surge in rates caused an affordability crisis in housing as prices remained at lofty levels this year, forcing real-estate brokerage Redfin Corp. to slash workers in June.  Now the online real-estate brokerage has announced the second round of layoffs, as well as an exit from its home-flipping business called "iBuying."  Redfin CEO Glenn Kelman sent a letter to employees, also published on the company's website, about the layoffs. He indicated 13% of staff, or about 862 people, will be fired.  We're laying off 862 brilliant, loyal people and also closing RedfinNow. We'll still need home-services employees for our concierge service to fix up brokerage customers' listings, but since that group spent most of its time renovating RedfinNow homes, it will get much smaller. Kelman explained the layoffs are equivalent to about 13% of the workforce. Since April 27, about 27% of the total workforce has been reduced -- this coincides with a rising interest rate environment and souring macroeconomic backdrop for the economy forced on by the Fed's monetary tightening. The top-level executive made a bold prediction about the 2023 housing market:  A layoff is awful but we can't avoid it. We plan to keep increasing our share of the market, but that market in 2023 is likely to be 30% smaller than it was in 2021. The June layoff was a response to our expectation that we'd sell fewer houses in 2022; this layoff assumes the downturn will last at least through 2023.  Besides reducing headcount, Redfin is also exiting iBuying, a large-scale home-flipping operation, because it's been a massive money pit for the company. Kelman said: RedfinNow Is Too Much Money and Risk: And the second problem is that iBuying is a staggering amount of money and risk for a now-uncertain benefit. We've tied up hundreds of millions of dollars in houses that you yourself wouldn't want to own right now. Even before its overhead expenses, the RedfinNow properties segment will likely lose $22 – $26 million dollars in 2022. However small our iBuying loss may be compared to others, that loss is still larger than we could afford to bear again. Redfin's troubles also come as the lagged Case-Shiller Index showed US housing prices dropped 1.3% from their June 2022 peak in August. This is the biggest monthly decline since the Lehman collapse.   The national home price index growth has slowed for five straight months (below 13% YoY for the first time since Feb 2021). The absolute drop in the growth rate of 2.62 percentage points is the largest ever... Researchers at Goldman Sachs forecast home prices could slide 5-10% from peak to trough -- with their official forecast model predicting a 7.6% decline.  Given the unprecedented explosion in mortgage rates and near-record-high prices, contributing to the worst affordability crisis ever for future homeowners, Redfin's decision to substantially reduce headcount this year and exit the home flipping industry comes as 2023 could be a year of turmoil for the housing market.  Add Redfin to the list of mounting layoffs across tech.  Layoffs This Month (% of Workers): 1. Twitter: 50% 2. Cameo: 25% 3. Robinhood: 23% 4. Intel: 20% 5. Snapchat: 20% 6. Coinbase: 18% 7. Opendoor: 18% 8. Stripe: 14% 9. Lyft: 13% 10. Shopify: 10% 11. Meta: “Thousands” 12. Apple: Hiring Freeze 13. Amazon: Hiring Freeze — The Kobeissi Letter (@KobeissiLetter) November 8, 2022 Tyler Durden Wed, 11/09/2022 - 14:25.....»»

Category: blogSource: zerohedgeNov 9th, 2022

Coronavirus tally: Chinese manufacturing hub Guangzhou latest to see lockdowns as COVID cases spread

The southern Chinese manufacturing hub Guangzhou is the latest to see lockdowns amid a surge in COVID cases, adding to financial pressure that has disrupted global supply chains and sharply slowed growth in the world's second-largest economy, the Associated Press reported. Residents in districts encompassing almost 5 million people have been ordered to stay home at least through Sunday, with one member of each family allowed out once per day to purchase necessities, local authorities said Wednesday. The order came after the densely populated city of 13 million reported more than 2,500 new cases over the previous 24 hours. In the U.S., known cases of COVID are climbing again for the first time in a few months. The daily average for new cases stood at 39,578 on Tuesday, according to a New York Times tracker, up 5% versus two weeks ago. The daily average for hospitalizations was up 3% at 27,713, while the daily average for deaths is down 14% to 308. Globally, the confirmed case tally rose above 633.5 million on Wednesday, according to data aggregated by Johns Hopkins, while the death toll is above 6.60 million with the U.S. leading the world with 97.8 million cases and 1,072,943 deaths.Market Pulse Stories are Rapid-fire, short news bursts on stocks and markets as they move. Visit MarketWatch.com for more information on this news......»»

Category: topSource: marketwatchNov 9th, 2022

Futures Rise On Expectations For A Post-Midterm Rally

Futures Rise On Expectations For A Post-Midterm Rally US equity futures rose as bond yields dipped as Americans headed to the polls on Tuesday for midterm elections where Republicans are expected to gain as many as 75 seats in the House and 11 in the Senate, while traders were also bracing for a key CPI print later this week. Nasdaq 100 futures were up 0.5% by 7:30 a.m. in New York, while S&P 500 futures rose 0.2% to trade at 3,820 and above a key CTA threshold level (as Goldman notes overnight "CTA short term momentum flipped from negative to positive w/ the close north of 3804"). The US Dollar was little changed as was the yield on the 10-year Treasury after rising for the past four days. Among notable movers in premarket trading, NVidia climbed in early New York trading as it began producing a processor for China. Bitcoin tumbled as part of a crypto selloff trigged by the growing Binance-FTX feud. Lyft plunged 20%, on track to hit their lowest level on record. The ride-sharing company’s 3Q results appear to confirm it is losing market share to rival Uber and raise questions on its outlook in 4Q and beyond, analysts say. TripAdvisor shares also cratered after the online travel agency issued a disappointing fourth-quarter forecast. Take-Two Interactive Software Inc. fell 18% and was set for its biggest drop in 13 years after the video-game developer’s results showed weakness in its mobile business, which drove a cut to its bookings guidance. Lordstown Motors, on the other hand, surged after the EV maker struck a deal to sell a $170 million stake to Foxconn and give two board seats to its manufacturing partner, boosting investor confidence over its prospects. SolarEdge shares rise 9.6% in US premarket trading after third-quarter results that analysts say were strong and indicated a further improvement in margins for the solar company in the future. Take-Two shares drop 18% in US premarket trading. The video-game developer’s results show weakness in its mobile business, which drove a cut to its bookings guidance, though analysts remain positive on its pipeline of future releases. Video-game stocks could be in focus on Tuesday after Take-Two reduced its full-year net bookings guidance, while Nintendo cut its forecast for sales of Switch consoles by 10%. Keep an eye on stocks like Electronic Arts (EA US), Roblox (RBLX US), AppLovin (APP US). Five9’s shares decline 13% in premarket trading as reduced guidance indicates a slowdown ahead for the cloud software firm against a tough macro picture, with Jefferies saying that the outlook was “worse than feared.” Still, some analysts think there may be an opportunity to buy shares on any weakness. Lyft shares drop about 18% in US premarket trading, on track to hit their lowest level on record. The ride-sharing company’s 3Q results appear to confirm it is losing market share to rival Uber and raise questions on its outlook in 4Q and beyond, analysts say. TripAdvisor shares slump 19% in premarket trading after the online travel agency reported third-quarter results. While revenue for the period came in ahead of estimates, the fourth-quarter guidance disappointed, with analysts noting that increased spending on Viator was the main reason for the soft outlook. Cryptocurrency- exposed stocks fall in US premarket trading as a selloff among digital currencies spreads to Bitcoin and Ether. Investors are paring risky bets ahead of US midterm elections and following a renewed slump in cryptocurrency exchange FTX’s token. Riot Blockchain declines 4.9%, Marathon Digital (MARA US) -4.8%, Coinbase (COIN US) -2.1%, Hut 8 Mining (HUT CN) -4.5% Watch US semiconductor stocks after peer Nvidia began making a chip for China that the company said meets a US export ban, boosting hopes that companies impacted won’t see a sizable hit to their revenues from the curbs. Keep an eye on stocks including Intel (INTC US), Qualcomm (QCOM US), Advanced Micro Devices (AMD US), Lam Research (LRCX US), Applied Materials (AMAT US), KLA (KLAC US). Investors will be closely monitoring the outcome of the midterm vote while the CPI reading will be significant in assessing the impact of Fed hikes on inflation. President Joe Biden acknowledged that Democrats face a “tougher” challenge holding the House than the US Senate. Polls pointing to Republicans winning at least one chamber of Congress provide a potential catalyst for lower bond yields and higher equity prices, according to Morgan Stanley’s Michael Wilson, who said that a "clean sweep" by the Republicans could greatly increase the chance of fiscal spending being frozen and historically high budget deficits being reduced, fueling a rally in 10-year Treasuries that can keep the equity market rising. "The US debt burden could stop the Democrats from putting in place many economic reforms that they would’ve otherwise, if Republicans are sufficiently crowded to block them moving forward," Ipek Ozkardeskaya, a senior analyst at Swissquote Bank, wrote in a note. “Hence, slowing debt under GOP could slow growth.” That said, sentiment has improved in recent days, and major equity markets aren’t likely to see “another big leg down” as a lot of the bad news seems to be priced in, according to Altaf Kassam, head of EMEA investment strategy and research at State Street Global Advisors.  The Fed is likely to shift away from rate increases after the effects of hikes start showing up, especially in the second half of next year, he said. “Equity markets have already kind of started to anticipate that, so if you are patient you might miss out on the beginning of a rally, but that’s when we think it’s going to happen,” he told Bloomberg TV. Tuesday’s two-way moves in Treasuries, however, underscored the fragile sentiment in markets where the Federal Reserve’s monetary tightening remains the biggest headwind. Thursday’s consumer-price-index data will offer the next cue for traders even as money markets are raising their peak-rate wagers.  The inflation reading is coming after the core consumer price index rose more than forecast to a 40-year high in September. Even if prices begin to moderate, the CPI is far above the Fed’s comfort zone. “Inflation is going up. It may be coming down periodically. But it’s going up,” Richard Harris, chief executive of Port Shelter Investment Management, said on Bloomberg Television. “The market is kind of uncertain -- it’s hoping for the best but really should be preparing for the worst.” In Europe, tech, telecoms and utilities are the strongest performing sectors while energy and miners lag. Euro Stoxx 50 is little changed. FTSE 100 lags peers, dropping 0.2%. Here are some of the biggest European movers today: BE Semi shares rise as much as 6.5%, hitting the highest in three months and leading gains in the Stoxx 600 Tech index, as Morgan Stanley initiates coverage with an overweight rating Pandora gains as much as 8.8%, the most since May, after 3Q net income beat estimates. The Danish jeweler said that despite macroeconomic and geopolitical uncertainty, the shopping patterns of its consumers are so far largely unchanged. AB Foods jumps as much as 6.7%, the most since March 9, after the UK company announced a £500m share buyback. The amount was bigger than Citi had expected, while RBC said the repurchase program will be well received. Coca-Cola HBC gains as much as 4.2%, among the top performers in the FTSE 100 Index, after the bottler reported third-quarter sales that beat estimates and said it now sees FY comparable Ebit in the range of €860m-€900m. Persimmon falls as much as 9.3% after the homebuilder’s trading update flagged rising cancellations, falling sales rates and prices, increased provisions for cladding remediation and changes to the capital return policy which Morgan Stanley (underweight) says points to a “meaningful decline” in the FY23 dividend. DCC drops as much as 8.7%, the most since March 2020, after 1H results that RBC says came in slightly below expectations. Bayer falls as much as 5%, the most intraday since Aug. 29, after reporting results that beat estimates while reiterating guidance given in August -- leaving limited room for any changes to consensus expectations, according to Morgan Stanley. Direct Line drops as much as 7.8%, the most intraday since July, after the insurer’s gross written premium for the third quarter was weaker than expected due to lower motor premiums. Shares of peer Admiral Group also fall. Asian stocks also rose amid investor optimism that the potential outcome of the US midterm elections could be good for equities. Chinese shares, meanwhile, pulled back after a two-day rally as pandemic concerns flared once again.  The MSCI Asia Pacific Index advanced as much as 0.8%, poised for a third day of gains, driven by technology stocks. Benchmarks in Japan, South Korea and Taiwan led gains, while Indian markets were closed for a holiday. China’s Covid cases surged by the most since April, halting a recent rally in the Hong Kong and mainland markets. Chinese shares had been rising on growing hopes for an eventual reopening even as health officials reiterated a strict adherence to Covid Zero policy. The market is also wagering that a US Congress split between Democrats and Republicans could be good for stocks. A post-election rally will provide some respite for investors amid concerns over the Federal Reserve’s monetary-policy tightening. “Gridlock cross-checks each party’s ‘worst impulses,’ and less activist fiscal policy is conducive to lower market volatility,” Stephen Innes, managing partner at SPI Asset Management, wrote in a note. “That could be particularly helpful in 2022 and 2023 to the extent it calms rates volatility.” Japanese equities climbed for a second day, following US peers higher as investors awaited the outcome of US midterm elections and further direction on Federal Reserve policy. The Topix rose 1.2% to close at 1,957.56, while the Nikkei advanced 1.3% to 27,872.11. Sony Group Corp. contributed the most to the Topix gain, increasing 3.3%. Out of 2,165 stocks in the index, 1,662 rose and 410 fell, while 93 were unchanged. “Japanese stocks followed the gain in overseas stocks,” said Naoki Fujiwara, chief fund manager at Shinkin Asset Management. “There seems to be more buybacks after the release of employment statistics that investors were originally cautious about.” In FX, the dollar consolidates and is marginally firmer against most majors; the Bloomberg Dollar Spot Index swung between gains and losses after touching a seven-week low. The greenback advanced against all of its Group-of-10 peers apart from the yen. The euro weakened to trade around parity versus the dollar. Bunds and Italian bond curves twist- flattened modestly. One trader has bought an upside strategy in Euribor calls that seeks to profit from the ECB easing policy rates significantly by the middle of 2024 The pound was among the worst performers, while gilts were steady. The Debt Management Office kicked off a 15-year syndication in a busy week for supply. UK retailers said sales growth slowed in October as a surge in prices pushed more consumers to focus on essentials instead of new clothing and household accessories. Bank of England Chief Economist Huw Pill said market turmoil in the UK in recent weeks led to some “de-anchoring” of inflation expectations, and the central bank is working hard to tamp down those views; Pill speaks twice today The Australian dollar erased a loss. It earlier slumped after the nation’s consumer sentiment tumbled to the lowest level in 2-1/2 years and business confidence also weakened as higher interest rates and surging inflation stoke concern about the nation’s economic outlook In rates, fixed income trading was fairly muted; Treasury yields are flip to slightly cheaper on the day, follow wider drop in bunds after Germany plans to more than double the 2023 net debt to €45 billion. US 10-year yields back up to around 4.22%, cheaper by less than 1bp on the day while bunds underperform by 2bp in the sector as bund futures test session lows In commodities, WTI falls 1.2% to near $90.73. Spot gold falls roughly $5 to trade near $1,671/oz.  Oil futures are softer intraday as DXY picked up overnight and in early European trade, whilst China’s COVID woes remain a grey cloud for the complex, with daily new cases in China rising to a six-month high for Sunday. Spot gold moves in tandem with the Buck and oscillates on either side of its 50 DMA at USD 1,672/oz today in the run-up to the midterms. Base metals are mixed with LME copper trading with mild gains just under the USD 8,000/t mark. To the day ahead now, and the highlight will be the US midterm elections. From central banks, we’ll hear from the ECB’s Nagel and Wunsch, as well as BoE chief economist Pill. Otherwise, data releases include Euro Area retail sales for September, and earnings releases include Disney. Market Snapshot S&P 500 futures up 0.2% to 3,821.00 STOXX Europe 600 up 0.2% to 419.27 MXAP up 0.7% to 143.54 MXAPJ up 0.4% to 461.67 Nikkei up 1.3% to 27,872.11 Topix up 1.2% to 1,957.56 Hang Seng Index down 0.2% to 16,557.31 Shanghai Composite down 0.4% to 3,064.49 Sensex up 0.4% to 61,185.15 Australia S&P/ASX 200 up 0.4% to 6,958.87 Kospi up 1.1% to 2,399.04 German 10Y yield down 0.1% at 2.34% Euro down 0.2% to $0.9999 Brent Futures down 0.9% to $97.06/bbl Gold spot down 0.3% to $1,670.56 U.S. Dollar Index up 0.20% to 110.34 Top Overnight News from Bloomberg Donald Trump said on the eve of US midterm elections that he would be making a “big announcement” next week, all but confirming his widely anticipated third White House bid that he’s been teasing for weeks The term structures in the major currencies remain inverted as US risk events, including midterm elections and a key inflation report, make the case for long gamma exposure in the front-end The ECB will start reducing its bond holdings through so-called quantitative tightening “sooner or later, for sure in 2023,” Vice President Luis de Guindos tells Politico in an interview The ECB needs to continue increasing interest rates even if that weighs on economic output, according to Bundesbank President Joachim Nagel Japan’s cabinet approved a 29.1 trillion yen ($198 billion) extra budget to fund an economic stimulus package that aims to ease the impact of inflation on people and companies A more detailed look at global markets courtesy of Newsquawk APAC stocks were mixed as the region only partially sustained the early momentum seen following the positive handover from Wall St with Chinese stocks pressured overnight as infections continued to rise. ASX 200 traded marginally higher with the index kept afloat by strength in the top-weighted financial industry and gains in consumer-related sectors. Nikkei 225 was firmer and edged closer to the 28,000 level as participants digested earnings releases and shrugged off mixed household spending data although Average Cash Earnings accelerated. Hang Seng and Shanghai Comp were subdued despite the reopening rumours which officials pushed back against, while the number of daily new infections continued to climb from 6-month highs. Top Asian News Hong Kong Chief Executive Lee dismissed calls to drop the health code for travellers and mask-wearing rules, according to SCMP. Japanese PM Kishida is to approve USD 198bln extra budget for the stimulus plan, according to Bloomberg. Furthermore, Japan's government is to add JPY 1.4tln of fiscal loans for the second extra budget and will issue JPY 20.4tln in deficit-covering bonds, according to a draft cited by Reuters. Japan's cabinet has approved a second supplementary budget with JPY 29.1tln (in-line with prior reports) for FY to fund an economic stimulus package, according to MoF. BoJ Summary of Opinions stated that Japan's consumer inflation is likely to continue accelerating as firms pass on higher costs. Furthermore, consumer inflation is likely to slow back below 2% next fiscal year due to the impact of slowing global growth but cannot rule out chances that prices will sharply overshoot forecasts. RBNZ reappointed Governor Orr as the head for another five-year term, according to Reuters. Chinese interbank market regulator is to boost support by financing to private firms, will initially support around CNY 250bln of bond financing by private firms including property developers; supported by central bank refinancing. Major bourses in Europe portray a mixed picture with no clear conviction seen heading into the US mid-term elections. Sectors are mostly firmer (vs a mostly lower open) with Tech leading the charge with additional help from declining bond yields. Energy and Basic Resources sit as the sectoral laggards amid declines in underlying commodity prices. US equity futures post mild gains but with price action contained; ES +0.1%. Top European News BoE urged lenders to do more to avoid a repeat of the pensions fund turmoil seen in September, according to FT. UK PM Sunak is expected to increase pensions and benefits in line with inflation, according to The Times. UK Chancellor Hunt is to announce a tax raid on inheritance in the Autumn statement, according to The Telegraph and FT. UK plan to review or repeal all EU laws by end-2023 suffered another setback after 1,400 additional pieces of legislation were discovered, according to FT. UK and France are reportedly in the final stage of reaching an agreement concerning illegal English Channel crossing, according to FT. ECB's de Guindos says ECB will continue raising rates to levels that ensure price stability; levels will depend on data, the evolution of inflation, economic conditions, demand, and energy prices, via Reuters. ECB's Nagel says he will do his utmost to make sure the ECB does not let up in the inflation fight, according to Reuters. SNB's Jordan says policy decisions must be based on firm commitment to price stability objective; policy decisions must not be based exclusively on inflation forecast, via Reuters. BoE Chief Economist Pill says there is a danger of self-fulfilling dynamics on wage-cost nexus. Cannot declare victory against second-round effects but is entering a recession. Pill reiterated that there is more to do, and need to raise rates to tighten monetary policy. Pill is sceptical that front-loading hikes has big expectations effect, via Reuters. UBS (UBSG SW) branches have been searched by German criminal investigators in relation to sanctioned Russian oligarch Usmanov, according to Der Spiegel; searches related to money laundering. FX DXY gleaned some traction across the board amidst a firmer rebound in Treasury yields, renewed weakness in the Yuan and general consolidation ahead of impending risk events. Yen managed to keep afloat of 147.00 and bucked the overall trend after Japan’s Cabinet approved a second supplementary budget and the BoJ’s SOO highlighted risks of a sharp price overshoot. European G10s sit as the current laggards, with EUR, GBP, and CHF towards the bottom of the bunch. Fixed Income US Treasuries were first off the block in terms of paring more losses from worst levels to turn marginally positive Gilts followed suit as books closed on a well sought after 2038 syndicated offering. Bunds remain depressed in wake of a somewhat mixed Schatz auction given a bigger retention and hefty concession needed to achieve a 1.2 cover ratio for the new 2 year benchmark. Commodities WTI and Brent futures are softer intraday as DXY picked up overnight and in early European trade, whilst China’s COVID woes remain a grey cloud for the complex, with daily new cases in China rising to a six-month high for Sunday. Spot gold moves in tandem with the Buck and oscillates on either side of its 50 DMA at USD 1,672/oz today in the run-up to the midterms. Base metals are mixed with LME copper trading with mild gains just under the USD 8,000/t mark. Chile's Codelco offers Chinese copper buyers 2023 supply at a premium USD 140/t (prev. USD 105/t; +33.3% Y/Y) according to Reuters sources. Geopolitical Ukrainian President Zelensky said it is vital to force Russia to participate in genuine peace negotiations, according to Reuters. White House Press Secretary said US President Biden has no intention of meeting Russian President Putin, while State Department spokesman Price said Russia signals that it is focused on escalation, according to Bloomberg. North Korea’s military denied exporting weapons to Russia in which it stated that it has never exported weapons or ammunition to Russia and has no plans to do so, according to Yonhap. Chinese Foreign Ministry, on President's Xi's visit to Saudi Arabia, says don't know the information referred to, according to Reuters. Chinese President Xi will comprehensively strengthen military training and preparation for any war, according to state media. China's security is increasingly unstable and uncertain. US Event Calendar 06:00: Oct. SMALL BUSINESS OPTIMISM 91.3, est. 91.4, prior 92.1 DB's Jim Reid concludes the overnight wrap It’s been a long two years, but today we’ve finally arrived at the US midterm elections, which is clearly the most important political milestone between the presidential elections. I have my own electoral success story to report as my 7-year old daughter Maisie was voted onto her school council on Friday. I asked her what platform she stood on. She said that she campaigned on having more homework and that the school should have a pet fish. In case you think she’s a swot, nothing can be further from the truth. Getting her to do homework is the most stressful part of every weekend and often brings floods of tears. Maisie cries too. How she got elected on that mandate is beyond me. Maybe the others stood on bringing back corporal punishment! On to weightier matters, as a reminder for our non-US readers, today will see every seat in the US House of Representatives (the lower chamber) up for grabs, along with a third of the seats in the Senate (the upper chamber), on top of the governorships in 36 of the 50 US states. And when it comes to markets, it’s no exaggeration to say that midterm elections are one of the best historic buy signals for equities we have. In fact, in the 19 midterm elections since WWII, the S&P 500 has always been higher one year after the vote. Whether any of those cycles had to contend with the macro tsunami that's coming in the next 12 months is a moot point but it shows the underlying technicals. Currently the Democrats control both chambers in Congress, but by the narrowest of margins. The Senate is currently split 50-50 their way thanks to the tie-breaking vote from Vice President Harris, so the Republicans only need a net gain of one to win the majority there. Meanwhile in the House of Representatives, it was split 222-213 to the Democrats in the 2020 election, meaning the Republicans only need a net gain of five seats to take control. In terms of what’s expected to happen, most forecasters think that the Republicans are likely to win control of the House of Representatives. For instance, FiveThirtyEight’s model gives them an 83% chance of the majority, and Politico’s forecast puts it as “Likely Republican”. In the Senate however, the Republicans are generally seen as having a weaker chance, with FiveThirtyEight’s model giving them a smaller 55% chance of the majority, and Politico’s forecast leaving it as a “Toss-Up”. Part of the reason why the Republicans have a much weaker chance in the Senate relative to the House is because only a third of the Senate is up for election, and most of the seats up for grabs are ones already held by the Republicans, which limits their scope to make net gains from the Democrats. If the Republicans do end up retaking control of either chamber in Congress (or both), the result will likely be legislative gridlock for the next two years, and our US economists do not see any major legislation on economic policy ahead of the 2024 election in this circumstance. Remember that President Biden will still have a veto on legislation, and the Republicans will not have the two-thirds majority in both houses required to override a veto (it’s mathematically impossible in the Senate where only a third of seats are up for grabs). If there is divided government however, one area we might see more action again is the debt ceiling, since there’s a chance that a Republican-controlled Congress use the need to raise the ceiling as leverage to get some of their policy priorities through. See Henry's piece (here) from yesterday for more on that. When it comes to the results, it could be some time before we know the full picture. In fact, for the Georgia Senate race, state law requires the candidate to win over 50% of the vote to win, so if nobody does today then the top two will go to a runoff on December 6, meaning it could theoretically be another month before we find out who controls the Senate if it does hinge on that race like last time. Even absent any runoffs, it’s also possible that it takes some days anyway. Last time at the presidential election, it wasn’t until the Saturday after the Tuesday that we had final confirmation of Biden’s victory. Whatever ends up happening today, there’ll be plenty of extrapolation onto the 2024 presidential election from the results. However, it’s important to remember that 2 years is also a very long time in politics and a number of presidents have come back from very bad midterm results to win re-election. Indeed, the last two Democrats in the White House (Presidents Obama and Clinton) both suffered major midterm losses before coming back to win re-election. So be cautious in saying anything is inevitable! Ahead of the midterms there were some familiar themes in markets, with yields on 2yr US Treasuries up +6.3bps to a post-2007 high of 4.72%, whilst the 10yr yield was up +5.5bps to 4.21% (4.23% in Asia). Those moves were driven pretty much entirely by higher inflation breakevens rather than real rates, and came as Brent crude oil prices traded closer to $100/bbl than at any point since August, intraday, before falling into the close to finish the day slightly lower at -0.66%. The trend towards higher sovereign bond yields was evident in Europe too, where yields on 10yr bunds (+4.9bps), OATs (+3.3bps) and gilts (+7.6bps) all rose on the day. Whilst there was a clear trend in rates, for equities it was a pretty choppy session, with the S&P 500 fluctuating between gains and losses to eventually post a very healthy gain of +0.97%. Cyclical stocks led the way while defensives like Utilities were stark underperformers, falling -1.94%. The Nasdaq advanced for the second straight day for the first time in November, climbing +0.85%. Meanwhile in Europe, the major indices mostly rose, with the STOXX 600 (+0.33%) hitting a 7-week high, but the FTSE 100 (-0.48%) lagged behind amidst a +1.19% rebound in sterling. Asian stock markets are mixed this morning with the Nikkei (+1.42%) sharply higher, notching an 8-week high. The KOSPI (+0.98%) is also trading in positive territory. In China, the Shanghai Composite (-0.52%) and the CSI (-0.75%) are losing ground with the Hang Seng (-0.04%) struggling to gain traction as the speculation about China’s reopening continues to add market volatility. US stock futures tied to the S&P 500 (-0.09%) and NASDAQ 100 (-0.09%) remain rangebound at the time of writing. We have data from Japan showing that household spending rose +2.3% y/y in September coming in slightly lower than market expectations of a +2.6% increase (v/s a +5.1% gain in August). However, household consumption faces increasing inflationary pressures because of a weaker yen with real wages (adjusted for inflation) falling -1.3% y/y in September (v/s -1.8% expected), its sixth-consecutive decline. This was less than August’s -1.7% drop. From the Bank of Japan, the Summary of Opinions released overnight showed that policymakers debated the future exit from ultra-low interest rates and its impact on financial markets amid rising prices. According to the summary, some board members argued that the cost-driven inflationary pressures are broadening with one member stressing that a "big overshoot of inflation cannot be ruled out”. There wasn’t much data of note yesterday, with German industrial production rising by a faster-than-expected +0.6% in September (vs. +0.1% expected). However, the previous month’s contraction was revised to show a worse performance than before. To the day ahead now, and the highlight will be the US midterm elections. From central banks, we’ll hear from the ECB’s Nagel and Wunsch, as well as BoE chief economist Pill. Otherwise, data releases include Euro Area retail sales for September, and earnings releases include Disney. Tyler Durden Tue, 11/08/2022 - 08:06.....»»

Category: dealsSource: nytNov 8th, 2022

11 Ways To Prevent Debt From Ruining Your Retirement Goals

Retirement, the “golden years” in the ideal world, is when all Americans want to kick back in their own home, count dollars from their passive income, and get back to their hobbies. But, this dream for many remains a hyperbole due to a lack of financial planning, adequate investment, and debt. A Congressional Research Service […] Retirement, the “golden years” in the ideal world, is when all Americans want to kick back in their own home, count dollars from their passive income, and get back to their hobbies. But, this dream for many remains a hyperbole due to a lack of financial planning, adequate investment, and debt. A Congressional Research Service report issued in August 2021 found that 62.1% of households headed by someone age 65 or older held some debt in 2019. That was up dramatically from 43% in 1992. 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 Our Activist Investing Case Study! Get the entire 10-part series on our in-depth study on activist investing in PDF. Save it to your desktop, read it on your tablet, or print it out to read anywhere! Sign up below! (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2022 hedge fund letters, conferences and more iFrameResize({ log: false, checkOrigin: false }, '#icb_widget') Find A Qualified Financial Advisor Finding a qualified financial advisor doesn't have to be hard. SmartAsset's free tool matches you with up to 3 fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is held to a fiduciary standard to act in your best interests. If you're ready to be matched with local advisors that can help you achieve your financial goals, get started now. The median debt for those older households was $31,050, and the average debt was $86,797. The report said these numbers are roughly three times the 1989 amount, even when factoring in inflation. If you are nearing retirement and still have debts to pay, you might be thinking about ways to cut down on this obligation. Read ahead — in this post, we provide a comprehensive mix of tips to prevent debt from demolishing your retirement dreams. But first, let’s see why debt in retirement is such a huge concern. Why Debt in Retirement is Bad More than one-fourth of Americans claim they can’t manage their debt, according to a report from OPPLoans. Everyone lives with some financial obligations, from young adults fresh out of college to retirees in their late 60s. And given the current state of the economy, debt is necessary. For many, it is the only way to buy a house, pay for education, get a car and fulfill other wants. So, debt isn’t inherently a bad trade-off. But what’s concerning is when you get into debt without a financial plan, and your obligations keep piling up, threatening to crash into retirement, causing financial stress. The situation worsens when those obligations include bad debt. Bad debts, like credit card debts and payday loans, carry hefty interest rates that can consume a significant portion of your monthly cash flow. Thus, you’ll have less to spend on health care, travel, and leisure activities. And the worst scenario is you’ll end up drawing down retirement accounts faster than planned, run out of money, and face significant lifestyle changes to make ends meet. So, allowing bad debts to pile up is a big no-no. Good debts, or debts that allow you to increase your net worth and improve your life, do not need the same treatment as bad debts. This is because debts like a mortgage or student loans have lower interest rates that you can afford to pay down gradually, even in your retirement. However, to make the repayment without any financial strain, you must devise a plan. Isn’t it Possible to Make Minimum Monthly Payments and Let Debts Die With You? State laws vary, but creditors usually have a few months after someone dies to file a claim against the estate for what they are still owed. Usually, creditors can use your estate to pay off the debts before your heirs receive any share. Medical bills that remain unpaid at the time of your death can also be taken from your estate. And anyone who cosigned a debt or is a joint account holder will still be responsible for those debts after you die. But creditors usually won’t be able to get to accounts and assets with a named beneficiary or a “payable on death” designation. A life insurance policy is another way to ensure that your heirs get something when all your money goes to paying off your debts. In short, unless you take steps, your debt won’t go away even after your death, and your estate and heirs will be left to bear the burden. Tips to Avoid Debt From Ruining Your Retirement Prioritize and Strategize Most Americans have a mix of credit cards, student loans, mortgages, and other debts. If you are one of them and want to get into retirement debt free, it’s a high goal to achieve. But, by prioritizing and strategizing, you can significantly reduce the debt burden. Make a list of your debts in descending order starting with the one with the highest interest rate and ending with the lowest. Now strategically chalk up your budget to pay down the high-interest loans first while keeping up with minimum payments of the rest. Once you pay off a high-priority debt, you will have the extra money in your monthly budget. Instead of splurging, add the money to the monthly amount you pay on the next debt on your list. As you knock off one debt after another, keep applying this principle to everything, including your mortgage. This strategy will help you pay off your high-interest debts when you hit retirement. And, ideally, also you’re low-interest debts if you start early. Create a Budget A reasonable budget is the essence of a fulfilling financial life. Writing down your daily expenses in a notebook or creating a spreadsheet of monthly costs will give insight into where your money is going. You can then spot unnecessary expenses, cut down on them and direct that money into paying off your debt. Debt.com polled a thousand Americans, and most participants said that they are now tracking their finances, and their budgeting habit has helped them get out and stay out of debt. Downsize Maintaining a budget can help you find aspects that need to be fixed in your financial life. Ask yourself, are you spending more than you can afford? For example, if you spend $100 a week on restaurants, you can easily save that money to pay your dues by making it a habit to plan meals and grocery shopping. But don’t stop your extra spending, or you’ll risk failing to keep up with the significant change. Instead, start small and gradually work your way up. For example, take one vacation a year instead of two, or cut back on the amount of money you extend your adult child to help them out. Don’t Make Mortgage Debt A Priority Mortgage rates are usually low, and most people getting close to retirement will get more value by investing and building their emergency fund than by paying off their mortgage faster. An early mortgage payoff can also have tax implications. But it’s up to you to decide. If not having a mortgage when you retire will make you happy, do it. Here are some things you can do to pay off your mortgage faster: You can pay more than the minimum amount (if you have the money). If you make four extra payments in one year, you could cut ten years off your payoff date. Refinancing to a shorter-term mortgage with a lower interest rate is also good if your cash flow can handle the payments. If you decide to wait until you’re retired to pay off your mortgage, ensure you have enough money in your retirement savings to cover the payments. Avoid Using Your Retirement Funds Those retirement savings can be tempting if you try to get out of debt. But you need to remind yourself that those are for retirement, and raiding your funds before its time may lead to negative consequences. For example, you’ll incur penalties and taxes and withdraw more than you need to pay off the debt. In addition, you will lose out on potential earnings. Look for a Side Hustle Side hustles are an excellent way to invest your time to earn extra money that you can use to pay your dues. Here are some side hustles you can try: rent out a space you already have, provide child care, sell your service online, or become a pet sitter. Want some more inspiration? Here are 50+ Side Hustles Trending in 2022 for you to consider. Try Debt Consolidation Keeping track of it all can be stressful when you have more than one debt payment. Here, the method of debt consolidation can be helpful. It’s the process of paying off several debts with a single new loan or using a balance transfer credit card, often at a lower interest rate. For example, if you want payday loan debt relief, you can take out a single low-interest personal loan to pay off your debts and only make payments on the new loan. Some lenders offer particular loans for consolidating debt, but most personal loans can be used to do the same thing. Typically, borrowers who qualify for a balance transfer credit card get a 0% introductory APR for six months to two years. The borrower can choose which balances to transfer when opening the card, or they can move the balances after getting the card. But it’s a good idea only if you have a high credit score and several high-interest loans. You also need a strict budget and stick to a tight spending practice to get the most out of this method. Consider Debt Forgiveness Bankruptcy is often seen as bad, but sometimes it’s the only option for seniors buried in debt. Filing for bankruptcy can make it harder to get loans in the future, but this might not be as big of a deal for someone older. What could be better for seniors in debt than getting a fresh start financially while keeping their home, social security, and other retirement accounts safe? But remember that filing for bankruptcy does not eliminate student loan debt. Although if you’re having trouble paying your bills, you can turn your student loan into credit card debt and then file for bankruptcy. Debt settlement is something else you can consider. This debt reduction strategy can help you pay off a small amount of your credit card, payday loan, or medical bill balance. It’s a deal where the creditor forgives some of the debt because the debtor is having trouble paying. Leverage Government Programs Paying off debt can be a severe challenge if your income-to-spending ratio is tight. In such a case, you might be able to get help paying your Medicare premiums, deductibles, copayments, and more through state-sponsored Medicare Savings Programs. Another option is working with the Administration on Aging (AoA), supported by the U.S. Department of Health and Human Services. The AoA, which was created primarily to safeguard the welfare of senior citizens and retirees in America, provides assistance and resources for: Long-term care Health and nutrition Health insurance and medical needs Legal aid to prevent financial exploitation Keep Monitoring Your Progress Monitoring your progress will allow you to stay on the path to getting out of debt and assist you in figuring out what you can change to reach your financial goals. Ask yourself if the amount you owe isn’t going down as quickly as you hoped. Could you speed up the process by cutting costs somewhere else? Or do you need to temporarily put less money toward paying off that debt because of other expenses coming out of the blue? During the process, if you need to make changes, do so. But keep in mind the big picture as you do this. Delay Retirement You can always put off retirement if you need more time to pay off your debts. Even though it’s not the best option for retirees, it’s better than running out of money too soon. You can also ease into retirement instead of quitting all at once. For example, you can work part-time for a while before retiring. The Bottom Line When figuring out how to pay off your debt, the first step is to be clear about your needs and retirement goals, analyze your current financial situation, make a plan, start putting it into action, and keep track of how it’s going. Depending on their debt and how close they are to retirement, everyone’s plan for paying off debt will look slightly different. So, don’t just do what everyone else does. Make a plan that fits your needs. But remember, time is of the essence. If you don’t start your journey to become debt-free soon, things will worsen over time. You can ask for assistance from a financial planner or CPA if you feel overwhelmed by your debt. They can help you devise a plan to get your finances in order. Article by Lyle Solomon, Due About the Author Atty. Lyle Solomon has significant expertise in legal research and writing. He is a member of the State Bar of California and has extensive litigation experience. Solomon has helped over 6000 people become debt-free. He has also contributed articles to top-notch websites on debt, credit, consumer laws, bankruptcy, and more. Check out the nationally recognized attorney’s latest book - Think Different! Save More! on Amazon to get 48 tips to save your hard-earned money......»»

Category: blogSource: valuewalkNov 7th, 2022