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U.S. gave no assurances to Taiwan"s TSMC for a license to sell to Huawei: official

The United States has not given any assurances to Taiwan Semiconduc.....»»

Category: topSource: reutersMay 15th, 2020

Futures, Oil Tumble As Attention Turns To Coming Recession, Powell Senate Testimony

Futures, Oil Tumble As Attention Turns To Coming Recession, Powell Senate Testimony Tuesday's euphoric market mood has U-turned into sheer despair with most of yesterday's gains gone overnight as attention turns to the coming US recession (now made official by Bill "The Fed Should Crush Donald Trump" Dudley who just published an Op-Ed "The US Economy Is Headed for a Hard Landing") and as traders await Jerome Powell before Senate testimony. S&P 500 futures declined 1.2%, down 45 points to 3,722 while Nasdaq 100 futures were down 1.5% by 715 a.m. in New York, indicating more declines for heavyweight technology stocks, which have already been hammered by rising rates.  Treasury yields and oil both slumped while the broader commodity sector tipped back toward pre-war levels, as traders increasingly price in a recession. Optimism evaporated that policy makers can achieve a soft landing as they navigate a course of aggressive monetary tightening to tame inflation. Fed Chair Jerome Powell is expected to reinforce the commitment to fighting price pressures when he speaks in front of US lawmakers Wednesday even as a growing number of banks warn that the Fed chair is pushing Biden's economy into a recession. Previewing Powell's appearance before the Senate Banking Committee as part of the Fed’s semiannual Monetary Policy Report, DB economists write that they expect him to reiterate the same themes he gave at his post-meeting press conference last week, where he signaled that they’d likely be deciding between 50bps and 75bps at the July meeting. Fed funds futures are currently implying that another 75bps move is more likely, with +71.8bps currently priced in, but don’t forget that there’s still plenty yet to happen ahead of that meeting in just over a month, including the subsequent CPI release and jobs report for June, and as we found out at the last meeting, it’s not implausible that unexpected data releases throw the previous guidance off course. “Overall, we have a very cautious outlook for equity markets and we would be sellers of all rallies,” said Marija Veitmane, senior strategist at State Street Global Markets. “We continue to see strong inflation and central banks determined to crush it, even if the price for that is economic slowdown.” Meanwhile, fears about the economy spread to commodities, putting oil in line for a monthly loss: “Markets are flip-flopping between recession fears and inflation fears,” UBS Wealth Mgmt chief economist Paul Donovan said in a note. “Today it is recession fears.” In premarket trading, major US technology and internet stocks were lower in premarket trading, poised to snap the two-session rising streak amid mounting concerns of a global recession. Stocks related to cryptocurrencies fell as the price of Bitcoin briefly slipped below $20,000 after rebounding strongly on Tuesday. Alibaba and other US-listed Chinese stocks pare losses in premarket trading after a Bloomberg News report that Jack Ma’s Ant may apply to become a financial holding company as soon as this month. Other notable premarket movers: La-Z-Boy’s (LZB US) shares jumped as much as 8.9% with KeyBanc saying that the furniture maker’s sales and EPS remain strong. The company reported adjusted earnings per share for the fourth quarter that beat the average analyst estimate. Precision BioSciences (DTIL US) shares jump as much as 40% in US premarket trading amid a collaboration and license agreement with Novartis effective June 15. Ormat Technologies (ORA US) shares fell 4.6% in postmarket trading on Tuesday after the company said it will offer $350 million aggregate principal amount of Green Convertible Senior Notes due 2027 in a private offering to institutional buyers. Equity Residential (EQR US) stock may be in focus as it was raised to outperform from sector perform at RBC on the view that the apartment owner is well placed to weather a downturn. Keep an eye on Cigna (CI US) shares as Morgan Stanley upgraded the stock to overweight from equal-weight. The brokerage also downgraded Anthem to equal-weight from overweight. Watch Scotts Miracle-Gro (SMG US) shares as they were downgraded to equal-weight from overweight at Wells Fargo, which said there’s “just not much to get excited about” for the stock in the second half of the year. US equities have been roiled in the past few months amid worries that aggressive monetary tightening by the Fed would spark an economic recession. The S&P 500 is in a bear market after a rout that erased almost $2 trillion from the benchmark last week, and is tracking declines of nearly 9% in June alone. Fed Bank of Richmond President Thomas Barkin said the central bank should raise rates as fast as it can without causing undue harm to financial markets or the economy.  Elsewhere, Joe Biden plans call on Congress to enact a gasoline tax holiday to cool soaring pump prices and alleviate the pressure on consumers. The move is expected to do nothing at all for gas prices. In Europe, the Stoxx 600 Index was down 1.6% after rallying for three days in a row; the Euro Stoxx 50 dropped as much as 2.3%, Italy’s FTSE MIB underperforms.  The FTSE 100 outperformed as the pound weakened after UK inflation rose to a fresh four-decade high in May after broad increases in the cost of everything from fuel and electricity to food and beverages. Risk assets slumped with most European cash equity indexes erasing the week’s gains as recession fears, hot inflation data and energy concerns weigh on sentiment. Miners, energy and autos lead broad losses across all Stoxx 600 sectors. Here are the biggest European movers: European mining stocks sink as a selloff in iron ore worsened amid signs of weakening global demand, while steel shares were pressured by downgrades from JPMorgan. Rio Tinto dropped as much as 3.6%, Glencore -6.1%, Salzgitter -15%, ArcelorMittal -8.2%, Voestalpine -11% Umicore shares plunged as much as 17% after the materials technology company announced plans to spend EU5b by 2026, “meaningfully” higher capital expenditure than Jefferies had expected. Saipem shares tumble as much as 19% after the company set terms for a EU2b capital hike, offering about 2 billion new shares at EU1.013. The subscription period will run from June 27 through July 11, with the final results to be announced on July 15, according to terms seen by Bloomberg. Samhallsbyggnadsbolaget i Norden and Swedish real estate peers added to months of declines as European equities resumed their selloff, with fresh concerns about the possibility of recession. SBB falls as much as 13%, Sagax -6%, Fabege -4%, Castellum -3.7% Kone shares drop as much as 7.5% after the Finnish elevator manufacturer was downgraded at Goldman Sachs and Berenberg, which both cited headwinds from China and the impact of slowing economic growth. Energy stocks are among the worst-performing sectors as oil slumps amid concerns about the US economy, while the Biden administration is set to step up its fight against higher gasoline prices. Shell declines as much as 4.6%, TotalEnergies -4.6%, Repsol -5.1% Accor shares drop as much as 3.8% after the hospitality company said it entered into exclusive negotiations to sell a 10.8% stake in Ennismore for EU185m. JD Sports shares gain as much as 5.2%. The company reported FY results that are in line overall with consensus expectations, and the market should be reassured that the sneaker seller’s recent performance is still on track, according to RBC. NatWest shares gain as much as 4% after the stock was raised to buy from hold at Jefferies, which said its re-rating potential is now more obvious. The UK government also extended its plan to sell more of its stake in the group by a year. Earlier in the session, Asian stocks resumed their slide Wednesday as renewed fears of a crackdown hit Chinese technology shares. The MSCI Asia Pacific Index slipped as much as 1.7%, cutting short a rebound in the previous session. TSMC, Alibaba and Tencent were the biggest drags, with a gauge of Chinese tech firms in Hong Kong falling more than 4%. Shares of online drug sellers slumped on a report that Beijing may ban third-party platforms from offering medicines over the internet. Elsewhere, a sub-gauge on the region’s information tech companies headed for the lowest close since September 2020 amid growing worries over a global recession. South Korea’s benchmark slumped 2.7% as the tech-heavy market continued to face selling pressure amid foreign outflows. The Asian stock benchmark is hovering near a two-year low as the prospect of a slowdown in the US driven by aggressive interest-rate hikes unsettle investors. Tesla Inc. Chief Executive Officer Elon Musk said Tuesday that a recession in the US looks likely in the near future, adding to the growing drumbeat of warnings. “Markets are still looking for the catalyst for a more sustained rebound as headwinds surrounding tightening financial conditions,” said Jun Rong Yeap, a market strategist at IG Asia Pte, adding that gains from any technical rebound may be capped by some wait-and-see sentiments. After falling more than 18% this year, a technical indicator is suggesting the MSCI’s Asian benchmark has reached oversold levels and may be poised for a reprieve. Investors will now shift their focus to Federal Reserve Chair Jerome Powell’s testimony on monetary policy to Congress later Wednesday, which may provide further clues on inflation and rates outlook.  Indian markets snapped a two-day advance as growing concerns of slowing global growth potentially leading to a recession dragged down world equity markets.  The S&P BSE Sensex dropped 1.4% to 51,822.53 in Mumbai, while NSE Nifty 50 Index fell by an equal measure. Reliance Industries, a major drag on both the key gauges, declined 3%, its biggest plunge since May 9.  All of the 19 sectoral indexes compiled by BSE Ltd. slipped, led by a measure of metal companies. All but four of 30 companies in the Sensex declined.  All major stock markets, including Asia, traded lower as investors fear that aggressive monetary tightening moves by global central banks could lead to an economic downturn. “Traders are advised to keep a hedge position, while investors should focus on stock selection,” according to Religare Broking analyst Ajit Mishra. The monsoon’s progress, a correction in oil prices and currency movements will be important factors to watch for the Indian stock market’s outlook, he said.  In rates, havens were re underpinned with major yield curves bull-steepening. A Treasury rally was led by the front-end of the curve, following wider gains across gilts after UK May inflation matches median estimates, trimming expectations for more aggressive BOE rate hikes. US yields richer by 10bp-6bp across the curve with front-end-led advance steepening 2s10s by ~2bp, 5s30s by ~4bp; 10-year yields around 3.20%, richer by nearly 8bp on the day, while gilts outperform by additional 6bp in the sector. Short-dated gilts outperform, richening ~13bps in 2s after another hot inflation print. Gilts lead bunds, Treasuries higher, with traders pulling back from wagers on three 50 basis-points hikes by year end after UK inflation accelerated in line with estimates in May. MPC-dated OIS rates pare back some of the more aggressive pricing seen in recent days. German 10y yields fall 10bps to near 1.67%, Treasury 10-year yield eases ~6bps to near 3.22% ahead of Fed Chair Powell’s semi-annual testimony on monetary policy. Peripheral spreads widen, with long-dated BTPs underperforming.  In FX, early in the session we saw a push toward the dollar, which subsequently was partly faded, but in any case it snapped two days of losses to rise by around 0.2% and the greenback advanced versus all of its Group-of-10 peers apart from the yen. JPY and CHF were the strongest performers in G-10 FX, NZD and AUD underperform. Antipodean currencies and the Norwegian krone were the worst performers and each of them fell by more than 1% against the greenback. The euro traded near $1.05 after dropping to a day low of 1.0469 in early European trading. The yen rebounded after making a fresh multi-decade low versus the greenback. The yen not only held the lead in short-term realized volatility, but traders also bet that it won’t lose its crown any time soon. Demand for low-delta exposure in the Japanese currency is by far the highest among the Group-of-10 peers, with Antipodean and Scandinavian currencies trailing. In commodities, West Texas Intermediate tumbled to $104 a barrel, with prices falling alongside other raw materials including copper. WTI sunk as much as 5.7% before recovering back above $104. Base metals trade poorly; LME tin falls 4.9%, underperforming peers. Spot gold falls roughly $8 to trade near $1,825/oz. Concerns about a broad economic slowdown are eclipsing the fallout from the war in Ukraine and signs of still-tight supply.  Bitcoin is pressured and briefly dipped again below the USD 20k mark, to a trough of USD 19.95k. Though, it remains someway from last week's USD 17.5k low. Looking at the day ahead now, and the main highlight will be Fed Chair Powell’s testimony before the Senate Banking Committee. Other central bank speakers include the Fed’s Barkin, Evans and Harker, as well as BoE Deputy Governor Cunliffe. Otherwise, data releases include UK and Canadian CPI for May, as well as the European Commission’s preliminary consumer confidence indicator for the Euro Area in June. Market Snapshot S&P 500 futures down 1.7% to 3,702.50 STOXX Europe 600 down 1.6% to 401.86 MXAP down 1.7% to 156.08 MXAPJ down 2.3% to 517.35 Nikkei down 0.4% to 26,149.55 Topix down 0.2% to 1,852.65 Hang Seng Index down 2.6% to 21,008.34 Shanghai Composite down 1.2% to 3,267.20 Sensex down 1.2% to 51,918.86 Australia S&P/ASX 200 down 0.2% to 6,508.54 Kospi down 2.7% to 2,342.81 German 10Y yield little changed at 1.69% Euro down 0.2% to $1.0509 Brent Futures down 3.8% to $110.24/bbl Brent Futures down 3.9% to $110.18/bbl Gold spot down 0.4% to $1,825.23 U.S. Dollar Index up 0.23% to 104.67 Top Overnight News from Bloomberg   A more detailed summary of Global Markets courtesy of Newsquawk Asia-Pac stocks were subdued after the risk-on mood from Wall Street waned overnight amid pressure in commodities and with global markets lacking any fresh macro catalysts. ASX 200 pared early gains as resilience in energy and defensives was offset by losses in tech and financials. Nikkei 225 was indecisive after the Japanese currency bounced off its weakest level since 1998. Hang Seng and Shanghai Comp. were subdued amid ongoing COVID woes as Macau closed most public services through to Friday and with the Chinese city of Zhuhai also shutting entertainment venues in some areas, while there was some encouragement for the property sector with Chinese property developers planning to meet with banks regarding relief measures in July. Top Asian News Chinese property developers are planning to meet with banks regarding relief measures in July, according to Shanghai Securities News. Chinese Premier Li Keqiang’s struggle to revive China’s economy under the zero-Covid policy championed by President Xi Jinping has spurred rumours of rifts between the country’s top two leaders and considerable speculation over succession plans, according to SGH Macro Advisors. BoJ April meeting minutes stated board members agreed on no change in the BoJ's stance of taking additional easing steps as needed and a member noted that rising raw material costs would hurt the economy so they must keep powerful monetary easing. Furthermore, it was stated that Japan's monetary policy challenge is to address too-low inflation, unlike in western economies, while a member said it is inappropriate to change the monetary policy stance as Russia's invasion of Ukraine added to the downside risks for Japan's economy. European bourses are subdued, Euro Stoxx 50 -1.9%, as Tuesday's positivity waned in the APAC session as commodities slipped in relatively limited newsflow. Unsurprisingly given this dynamic, the Basic Resources and Energy sectors are the European laggards, amid broader cyclical pressure. Stateside, futures are in-fitting with the above action, ES -1.4%, where participants are awaiting the first session of testimony from Chair Powell, newsquawk primer available here. Ant Group is reportedly to apply, as soon as this month, for a key financial license, via Bloomberg citing sources. Toyota (7203 JT) expects global vehicle production in July to be around 800k. China's CPCA says domestic car rales rose 39% in the week to June 13th Y/Y, +55% M/M, via Reuters. Top European News UK PM Johnson is of the view that the government must win its battle with the rail unions and is prepared for the stand-off to last months, according to The Times. Italy is reportedly preparing EUR 3bln of aid to curb energy bills, according to la Repubblica Italian Foreign Minister Di Maio quit the 5-Star Movement (5SM) to set up a new group, according to Reuters. FX Dollar regains bullish momentum on risk dynamics ahead of Fed testimony; DXY on a firmer footing, but capped ahead of 105.000 within 104.950-430 range. Yen also in demand as a safe haven as sentiment sours, USD/JPY reverses course from around 136.71 to sub-136.00 at one stage. Kiwi and Aussie undermined by risk-off mood, with latter also hampered by heavy decline in iron ore; NZD/USD hovers above 0.6250 and well below 1bln option expiries at 0.6300, AUD/USD capped around 0.6900. Loonie, Nokkie and Peso ruffled by collapse in WTI and Brent crude, USD/CAD rebounds towards 1.3000, EUR/NOK tests 10.5000 and USD/MXN straddles 20.1800. Euro holds around 1.0500 and 10 DMA close by amidst hawkish ECB vibe, Pound pivots 1.2200 after somewhat mixed UK inflation data. Central Banks ECB's de Guindos says he expects inflation to ease after the summer but stay near current levels in the coming months; Governing Council is yet to discuss details of the anti-fragmentation tool. New tool should be different from the prior OMT tool as the circumstances are different, will also differ from APP and PEPP. Norwegian Gov't names Paal Longva as Deputy Norges Bank chief. Fixed Income Bonds bounce firmly as risk sentiment turns bearish again on global inflation and recession concerns. Bunds up to 144.87 before fading after a reasonable 2038 German auction. Gilts top out at 111.89 and largely ignored mixed UK inflation metrics vs consensus. 10 year T-note hovers closer to 116-19 overnight peak than 115-28+ trough pre-Fed chair Powell and 20 year supply plus other Fed speakers. Commodities WTI and Brent are, alongside broader commodities, pressured with fresh catalysts somewhat thin and focused on known themes. Currently, they are lower by over 4% on the session and ahead of Biden's announcement on gas prices; though, if implemented, such measures could serve to push demand and ultimately prices higher. US President Biden will deliver remarks on gas prices at around 14:00EDT/19:00BST on Wednesday and will call on Congress to implement a suspension to the federal fuel tax. Subsequently, multiple Democratic sources said that the effort to to suspend the federal gas tax for three months stands almost no chance of passing, according to Politico. IEA warns Europe to prepare for a complete shutdown of Russian gas exports and that governments should keep ageing nuclear plants open and take other contingency measures, according to FT. World Steel says global steel output -3.5% Y/Y in May at 162.7mln tonnes (prev. -5.1% Y/Y in April); China crude steel output -3.5% Y/Y to 96.6mln tonnes (prev. -5.2% Y/Y in April). Spot gold is softer in-line with other metals, though the magnitude is more contained given its haven allure; broader action that sees LME Copper clipped despite the expected commencement of Chile strike action. US Event Calendar 07:00: June MBA Mortgage Applications, prior 6.6% Central Bank Speakers 09:00: Fed’s Barkin Speaks to West Virginia Chamber of Commerce 09:30: Powell Delivers Semi-Annual Testimony Before Senate Panel 12:00: Fed’s Barkin Speaks to the Federal City Council 12:50: Fed’s Evans Discusses Economic Outlook 13:30: Fed’s Harker and Barkin Discuss the Economic Outlook DB's Jim Reid concludes the overnight wrap Whilst the question of whether we’re about to face a recession is still dominating markets, risk assets posted a sharp rebound yesterday as the US got back from holiday. In fact by the close of trade, the S&P 500 (+2.45%) had put in its strongest daily performance in nearly a month, with every sector higher on the day and energy (+5.13%) doing most of the legwork. Even though the chart book showed that before yesterday the S&P was on course for the worst H1 since 1932 we did show in the CoTD (link here) that the top 5 H1 declines over the last 90 years were all followed by strong H2 performance. Before you think it's safe to come out from behind the sofa, S&P futures are around -1% lower this morning as the recession narrative makes a bit of a comeback. European futures are indicating that yesterday's gains (STOXX 600 +0.35%) will be eradicated which could end a three day winning streak. Oil prices are lower overnight with Brent Crude futures weakening -3.23% to $110.95/bbl while WTI futures are down -4.69% at $105.46/bbl amid a push by US President Joe Biden to bring down soaring fuel costs by calling for a temporary suspension of the 18.4-cents a gallon federal tax on gasoline. The demand destruction narrative is making a comeback in Asia as well. Today's big event is Fed Chair Powell's appearance before the Senate Banking Committee as part of the Fed’s semiannual Monetary Policy Report that they deliver to Congress. According to our US economists, they expect him to reiterate the same themes he gave at his post-meeting press conference last week, where he signalled that they’d likely be deciding between 50bps and 75bps at the July meeting. Fed funds futures are currently implying that another 75bps move is more likely, with +71.8bps currently priced in, but don’t forget that there’s still plenty yet to happen ahead of that meeting in just over a month, including the subsequent CPI release and jobs report for June, and as we found out at the last meeting, it’s not implausible that unexpected data releases throw the previous guidance off course. With all that to look forward to, Treasuries built on their selloff from last week, with the 10yr yield up +4.9bps to 3.27% as it echoed the higher yields we’d seen in Europe the previous day. In Asia, US 10yr yields (-1.89 bps) have dipped back down to 3.25%. They haven't had much in the way of Fedspeak to go off over the last 24 hours, although Richmond Fed President Barkin (a non-voter this year) said he “didn’t have a problem” with Powell’s guidance for the decision next month, and that he was in favour of the 75bps hike they did. Those moves in Treasuries also led to a steepening in the curve, with the 2s10s slope up +3.4bps to 7.2bps as they edged slightly further away from the inversion territory that they’ve briefly fallen into twice this year now. In Europe there was more of a divergence between core and peripheral yields however, and those on 10yr bunds (+2.2bps) closing at a post-2014 high, just as those on BTPs fell by -1.2bps. Some of the most significant news over the last 24 hours has been on the FX front, where the Japanese Yen fell to a fresh low for the 21st century of 136.71 per US Dollar this morning before bouncing back to 136.20 as I type. You’ve got to go all the way back to 1998 for the last time the currency was trading at a weaker level though. Prime Minister Fumio Kishida did not seem too concerned about BoJ monetary policy divergence and the impact on weakening the yen, saying in a debate policy needed to remain easy, perhaps lending more political support to the BoJ’s policies. Stocks across Asian markets are trading lower this morning, with the Kospi (-1.89%) the largest underperformer followed by the Hang Seng (-1.26%) after a two-day winning streak earlier this week. Markets in mainland China are also sliding with the Shanghai Composite (-0.33%) and CSI (-0.62%) both weak. Elsewhere, the Nikkei (+0.04%) gave up its early gains, hovering just above the flatline as I type. Bitcoin is at $20,332 in Asian trading. Here in the UK, gilts underperformed their counterparts elsewhere in Europe following remarks from BoE Chief Economist Pill that they would act “more aggressively” if required. In response, 10yr gilt yields rose +5.0bps to reach a fresh post-2014 high of 2.65%. Overnight index swaps are continuing to price in 50bp moves by the BoE at the next 3 meetings, with a path that would leave Bank Rate above 3% by year-end. There were also reports that former Italian Prime Minister Giuseppe Conte was considering leaving Mario Draghi’s coalition. While Draghi’s party would still likely retain a majority in both chambers of Parliament, it would leave a very narrow path to push through legislation to fix the economy or to resist dissent from coalition members – a theme all too familiar to Senate Democrats in the US. There wasn’t much in the way of data yesterday, although US existing home sales fell broadly as expected to an annualised rate of 5.41m in May (vs. 5.40m expected), which is their lowest level since June 2020 as the numbers were recovering after the initial wave of the pandemic. To the day ahead now, and the main highlight will be Fed Chair Powell’s testimony before the Senate Banking Committee. Other central bank speakers include the Fed’s Barkin, Evans and Harker, as well as BoE Deputy Governor Cunliffe. Otherwise, data releases include UK and Canadian CPI for May, as well as the European Commission’s preliminary consumer confidence indicator for the Euro Area in June. Tyler Durden Wed, 06/22/2022 - 07:52.....»»

Category: worldSource: nytJun 22nd, 2022

Futures Slide Before Fed Minutes, Dollar Jumps As China Lockdown Fears Return

Futures Slide Before Fed Minutes, Dollar Jumps As China Lockdown Fears Return Another day, another failure by markets to hold on to even the smallest overnight gains: US futures erased earlier profits and dipped as traders prepared for potential volatility surrounding the release of the Federal Reserve’s minutes which may provide insight into the central bank’s tightening path, while fears over Chinese lockdowns returned as Beijing recorded more Covid cases and the nearby port city of Tianjin locked down a city-center district. Contracts on the Nasdaq 100 and the S&P 500 were each down 0.5% at 7:30 a.m. in New York after gaining as much as 1% earlier, signaling an extension to Tuesday’s slide that followed a profit warning from Snap. In premarket trading, Nordstrom jumped 10% after raising its forecast for earnings and revenue for the coming year suggesting that the luxury consumer is doing quite fine even as most of the middle class has tapped out; analysts highlighted the department store’s exposure to higher-end customers.Meanwhile, Wendy’s surged 12% after shareholder Trian Fund Management, billionaire Nelson Peltz' investment vehicle, said it will explore a transaction that could give it control of the fast-food chain. Here are the most notable premarket movers in the US: Urban Outfitters (URBN US) shares rose as much as 5.7% in premarket trading after Nordstrom’s annual forecasts provided some relief for the beaten down retail sector. Shares rallied even as Urban Outfitters reported lower-than-expected profit and sales for the 1Q. Best Buy (BBY US) shares could be in focus as Citi cuts its price target on electronics retailer to a new Street-low of $65 from $80, saying that there continues to be “significant risk” to 2H estimates. Dick’s Sporting Goods (DKS US) sinks as much as 20% premarket after the retailer cut its year adjusted earnings per share and comparable sales guidance for the full year. Peers including Big 5 Sporting Goods, Hibbett and Foot Locker also fell after the DKS earnings release 2U Inc. (TWOU US) shares drop as much as 4.3% in US premarket trading after Piper Sandler downgraded the online educational services provider to underweight from neutral, with broker flagging growing regulatory risk. Verrica Pharma (VRCA US) shares slump as much as 61% in US premarket trading after the drug developer received an FDA Complete Response Letter for its VP-102 molluscum treatment. Shopify’s (SHOP US) U.S.-listed shares fell 0.7% in premarket trading after a second prominent shareholder advisory firm ISS joined its peer Glass Lewis to oppose the Canadian company’s plan to give CEO Tobi Lutke a special “founder share” that will preserve his voting power. Cazoo (CZOO US) shares declined 3.3% in premarket trading as Goldman Sachs initiated coverage of the stock with a neutral recommendation, saying the company is well positioned to capture the significant growth in online used car sales. CME Group (CME US Equity) may be in focus as its stock was upgraded to outperform from market perform at Oppenheimer on attractive valuation and an “appealing” dividend policy. US stocks have slumped this year, with the S&P 500 flirting with a bear market on Friday, as investors fear that the Fed’s active monetary tightening will plunge the economy into a recession: as Bloomberg notes, amid surging inflation, lackluster earnings and bleak company guidance have added to market concerns. The tech sector has been particularly in focus amid higher rates, which mean a bigger discount for the present value of future profits. The Nasdaq 100 index has tumbled to the lowest since November 2020 and its 12-month forward price-to-earnings ratio of 19.7 is the lowest since the start of the pandemic and below its 10-year average. “The consumer in the US is still showing really good signs of strength,” said Michael Metcalfe, global head of macro strategy at State Street Global Markets. “Even if there is a slowdown it’s going to be quite mild,” he said in an interview with Bloomberg Television. Meanwhile, Barclays Plc strategists including Emmanuel Cau see scope for stocks to fall further if outflows from mutual funds pick up, unless recession fears are alleviated. Retail investors have also not yet fully capitulated and “still look to be buying dips in old favorites in tech/growth,” the strategists said. "Our central scenario remains that a recession can be avoided and that geopolitical risks will moderate over the course of the year, allowing equities to move higher,” said Mark Haefele,  chief investment officer at UBS Global Wealth Management. “But recent market falls have underlined the importance of being selective and considering strategies that mitigate volatility." The Fed raised interest rates by 50 basis points earlier this month -- to a target range of 0.75% to 1% -- and Chair Jerome Powell has signaled it was on track to make similar-sized moves at its meetings in June and July. Investors are now awaiting the release of the May 3-4 meeting minutes later on Wednesday to evaluate the future path of rate hikes. However, in recent days, traders have dialed back the expected pace of Fed interest-rate increases over worse-than-expected economic data and the selloff in equities. Sales of new US homes fell more in April than economists forecast, and the Richmond Fed’s measure of business activity dropped to a two-year low. The yield on the 10-year Treasury slipped for a second day to 2.73%. “Given the risks to growth and our view that positive real rates will be unmanageable for any significant length of time, we expect the Fed to deliver less tightening in 2022 overall than it and markets currently expect,” Salman Ahmed, global head of macro and strategic asset allocation at Fidelity International, wrote in a note. In Europe, stocks pared an earlier advance but hold in the green while the dollar rallies. The Stoxx 600 gave back most of the morning’s gains with autos, financial services and travel weighing while miners and utilities outperformed. The euro slid as comments by European Central Bank officials indicated policy normalization will be gradual. The ECB is in the midst of a debate over how aggressive it should act to rein in inflation. Here are some of the most notable European movers today: SSE shares rise as much as 6.3% after strong guidance and amid reports that electricity generators are likely to escape windfall taxes being considered by the U.K. government. Air France-KLM jumps as much as 13% in Paris after falling 21% on Tuesday as the airline kicked off a EU2.26 billion rights offering. Mining and energy stocks outperform the broader market in Europe as iron ore rebounded, while oil rose after a report that showed a decline in US gasoline stockpiles. Rio Tinto gains as much as 2.3%, Anglo American +2.6%, TotalEnergies +2.8%, Equinor +3.7% Elekta rises as much as 9.3% after releasing a 4Q earnings report that beat analysts’ expectations. Torm climbs as much as 12% after Pareto initiates coverage at buy and says the company may pay out dividends equal to 40% of its market value over the next 3 years. Mercell rises as much as 104% to NOK6.13/share after recommending a NOK6.3/share offer from Spring Cayman Bidco. Luxury stocks traded lower amid rekindled Covid-19 worries in China as Beijing continued to report new infections while nearby Tianjin locked down its city center. LVMH declines as much as 1.4%, Burberry -2.6% and Hermes -1.7% Sodexo falls as much as 5.7% after the French caterer decided not to open up the capital of its benefits & rewards unit to a partner following a review of the business. Ocado slumps as much as 8% after its grocery joint venture with Marks & Spencer slashed its forecast for FY22 sales growth to low single digits, rather than around 10% guided previously. Earlier in the session, Asian stocks were steady as traders continued to gauge growth concerns and fears of a US recession. The MSCI Asia Pacific Index rose 0.1%, paring an earlier increase of as much as 0.5%, as gains in the financial sector were offset by losses in consumer names. New Zealand equities dipped on Wednesday after the central bank delivered an expected half-point interest rate hike to combat inflation. Chinese shares stabilized after the central bank and banking regulator urged lenders to boost loans as the nation grapples with ongoing Covid outbreaks. The benchmark CSI 300 Index snapped a two-day losing streak to close 0.6% higher. Asian equities have been trading sideways as the prospect of slower growth amid tighter monetary conditions, as well as China’s strict Covid policy and supply-chain disruptions, remain key overhangs for the market. In China, the country’s strict Covid policy is outweighing broad measures to support growth and keeping investors wary. Its commitment to Covid Zero means it’s all but certain to miss its economic growth target by a large margin for the first time ever. The nation’s central bank and banking regulator urged lenders to boost loans in the latest effort to shore up the battered economy. “The valuation is still nowhere near attractive and you have a number of leading indicators, whether its credit, liquidity or growth, which are not yet indicating that we want to take more risks on the market,” Frank Benzimra, head of Asia equity strategy at Societe Generale, said in a Bloomberg TV interview. He added that the preferred strategy in equities will focus on defensive plays like resources and income. Investors will get further clues on the Federal Reserve’s interest-rate policies with the release in Washington of minutes from the latest meeting on Wednesday. Concerns that the Fed’s tightening will plunge the nation into recession had spurred a sharp selloff in US shares recently. Japanese stocks ended a bumpy day lower as investors awaited minutes from the latest Federal Reserve meeting and continued to gauge the impact of China’s rising Covid cases. The Topix fell 0.1% to close at 1,876.58, while the Nikkei declined 0.3% to 26,677.80. Nintendo Co. contributed the most to the Topix Index decline, decreasing 4.3%. Out of 2,171 shares in the index, 793 rose and 1,257 fell, while 121 were unchanged. Meanwhile, Australian stocks bounced with the S&P/ASX 200 index rising 0.4% to close at 7,155.20, with banks and miners contributing the most to its move. Costa Group was the top performer after reaffirming its operating capex guidance. Chalice Mining dropped after an equity raising. In New Zealand, the S&P/NZX 50 index fell 0.7% to 11,173.37 after the RBNZ’s policy decision. The central bank raised interest rates by half a percentage point for a second straight meeting and forecast further aggressive hikes to come to tame inflation. India’s key equity indexes fell for the third consecutive session, dragged by losses in software makers as worries grow over companies’ spending on technology amid a clouded growth outlook. The S&P BSE Sensex slipped 0.6% to 53,749.26 in Mumbai, while the NSE Nifty 50 Index dropped 0.6%. The benchmark has retreated for all but four sessions this month, slipping 5.8%, dragged by Infosys, Tata Consultancy and Reliance Industries. All but two of the 19 sector sub-indexes compiled by BSE Ltd. fell on Wednesday, led by information technology stocks. Out of 30 shares in the Sensex index, 12 rose and 18 fell. The S&P BSE IT Index has lost nearly 26% this year and is trading at its lowest level since June.  In FX, the Bloomberg dollar spot index resumed rising, up 0.3% with all G-10 FX in the red against the dollar. The euro slipped and Italian bonds extended gains after comments from ECB officials. Executive board member Fabio Panetta said the ECB shouldn’t seek to raise its interest rates too far as long as the euro-area economy displays continuing signs of fragility. Board Member Olli Rehn said the ECB should raise rates to zero in autumn. The pound was steady against the dollar and gained versus the euro, paring some of its losses from Tuesday. Focus is on the long-awaited report into lockdown parties at No. 10. The BOE needs to tighten policy further to fight rising inflation, but it’s also wary of acting too quickly and risking pushing the UK into recession, according to Chief Economist Huw Pill. Sweden’s krona slumped on the back of a stronger dollar and amid data showing that consumer confidence fell to the lowest level since the global financial crisis. Yen eased as Treasury yields steadied in Asia from an overnight plunge.  China’s offshore yuan weakened for the first time in five days as Beijing recorded more Covid cases and the nearby port city of Tianjin locked down a city-center district. New Zealand dollar and sovereign yields rose after the RBNZ hiked rates by 50 basis points for a second straight meeting and forecast more aggressive tightening, with the cash rate seen peaking at 3.95% in 2023. Most emerging-market currencies also weakened against a stronger dollar as investors await minutes from the Federal Reserve’s last meeting for clues on the pace of US rate hikes.  The ruble extended its recent rally in Moscow even as Russia’s central bank moved up the date of its next interest-rate meeting by more than two weeks to stem gains in the currency with more monetary easing. Russia has been pushed closer to a potential default. US banks and individuals are barred from accepting bond payments from Russia’s government since 12:01 a.m. New York time on Wednesday, when a license that had allowed the cash to flow ended. The lira lagged most of its peers, weakening for a fourth day amid expectations that Turkey’s central bank will keep rates unchanged on Thursday even after consumer prices rose an annual 70% in April. In rates, Treasuries were steady with yields slightly richer across long-end of the curve as S&P 500 futures edge lower, holding small losses. US 10-year yields around 2.745% are slightly richer vs Tuesday’s close; long-end outperformance tightens 5s30s spread by 1.4bp on the day with 30-year yields lower by ~1bp. Bunds outperform by 2bp in 10-year sector while gilts lag slightly with no major catalyst. Focal points of US session include durable goods orders data, 5-year note auction and minutes of May 3-4 FOMC meeting. The US auction cycle resumes at 1pm ET with $48b 5-year note sale, concludes Thursday with $42b 7-year notes; Tuesday’s 2-year auction stopped through despite strong rally into bidding deadline. The WI 5-year yield at ~2.740% is ~4.5bp richer than April auction, which tailed by 0.9bp. In commodities, WTI pushed higher, heading back toward best levels of the week near $111.60. Most base metals trade in the red; LME aluminum falls 2.3%, underperforming peers. Spot gold falls roughly $10 to trade around $1,856/oz. Spot silver loses 1.1% to around. Bitcoin trades on either side of USD 30k with no real direction. Looking to the day ahead now, and central bank publications include the FOMC minutes from their May meeting and the ECB’s Financial Stability Review. Separately, we’ll hear from ECB President Lagarde, the ECB’s Rehn, Panetta, Holzmann, de Cos and Lane, BoJ Governor Kuroda, Fed Vice Chair Brainard and the BoE’s Tenreyro. Otherwise, data releases from the US include preliminary April data on durable goods orders and core capital goods orders. Market Snapshot S&P 500 futures little changed at 3,942.75 STOXX Europe 600 up 0.4% to 433.41 MXAP little changed at 163.41 MXAPJ up 0.3% to 531.42 Nikkei down 0.3% to 26,677.80 Topix little changed at 1,876.58 Hang Seng Index up 0.3% to 20,171.27 Shanghai Composite up 1.2% to 3,107.46 Sensex down 0.5% to 53,763.20 Australia S&P/ASX 200 up 0.4% to 7,155.24 Kospi up 0.4% to 2,617.22 German 10Y yield little changed at 0.94% Euro down 0.5% to $1.0677 Brent Futures up 1.0% to $114.69/bbl Gold spot down 0.5% to $1,856.22 U.S. Dollar Index up 0.30% to 102.16 Top Overnight News from Bloomberg New Zealand dollar and sovereign yields rose after the RBNZ hiked rates by 50 basis points and forecast more aggressive tightening, with the cash rate seen peaking at 3.95% in 2023 The euro slipped and Italian bonds extended gains after comments from ECB officials. Executive board member Fabio Panetta said the ECB shouldn’t seek to raise its interest rates too far as long as the euro-area economy displays continuing signs of fragility. Board Member Olli Rehn said the ECB should raise rates to zero in autumn The pound was steady against the dollar and gained versus the euro, paring some of its losses from Tuesday. Focus is on the long-awaited report into lockdown parties at No. 10 The BOE needs to tighten policy further to fight rising inflation, but it’s also wary of acting too quickly and risking pushing the UK into recession, according to Chief Economist Huw Pill Sweden’s krona slumped on the back of a stronger dollar and amid data showing that consumer confidence fell to the lowest level since the global financial crisis Yen eased as Treasury yields steadied in Asia from an overnight plunge A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were mostly positive but with gains capped and price action choppy after a lacklustre lead from global counterparts as poor data from the US and Europe stoked growth concerns, while the region also reflected on the latest provocations by North Korea and the RBNZ’s rate increase. ASX 200 was led higher by commodity-related stocks despite the surprise contraction in Construction Work. Nikkei 225 remained subdued after recent currency inflows and with sentiment clouded by geopolitical tensions. Hang Seng and Shanghai Comp were marginally higher following further support efforts by the PBoC and CBIRC which have explored increasing loans with major institutions and with the central bank to boost credit support, although the upside is contained amid the ongoing COVID concerns and with Beijing said to tighten restrictions among essential workers. Top Asian News US SEC official said significant issues remain in reaching a deal with China over audit inspections and even if US and China reach a deal on proceeding with inspections, they would still have a long way to go, according to Bloomberg. China will be seeing a Pacific Island Agreement when Senior Diplomat Wang Yi visits the region next week, according to documents cited by Reuters. North Korea Fires Suspected ICBM as Biden Wraps Up Asia Tour Luxury Stocks Slip Again as China Covid-19 Worries Persist Asia Firms Keep SPAC Dream Alive Despite Poor Returns: ECM Watch Powerlong 2022 Dollar Bonds Fall Further, Poised for Worst Week In Europe the early optimism across the equity complex faded in early trading. Major European indices post mild broad-based gains with no real standouts. Sectors initially opened with an anti-defensive bias but have since reconfigured to a more pro-defensive one. Stateside, US equity futures have trimmed earlier gains, with relatively broad-based gains seen across the contracts; ES (+0.1%). Top European News Aiming ECB Rate at Neutral Risks Hurting Economy, Panetta Says M&S Says Russia Exit, Inflation to Prevent Profit Growth Prudential Names Citi Veteran Wadhwani as Insurer’s Next CEO EU’s Gentiloni Eyes Deal on Russian Oil Embargo: Davos Update UK’s Poorest to See Inflation Hit Near Double Pace of the Rich FX Buck builds a base before Fed speak, FOMC minutes and US data - DXY tops 102.250 compared to low of 101.640 on Tuesday. Kiwi holds up well after RBNZ hike, higher OCR outlook and Governor Orr outlining the need to tighten well beyond neutral - Nzd/Usd hovers above 0.6450 and Aud/Nzd around 1.0950. Euro pulls back sharply as ECB’s Panetta counters aggressive rate guidance with gradualism to avoid a normalisation tantrum - Eur/Usd sub-1.0700 and Eur/Gbp under 0.8550. Aussie undermined by flagging risk sentiment and contraction in Q1 construction work completed - Aud/Usd retreats through 0.7100. Loonie and Nokkie glean some underlying traction from oil returning to boiling point - Usd/Cad capped into 1.2850, Eur/Nok pivots 10.2500. Franc, Yen and Sterling all make way for Greenback revival - Usd/Chf bounces through 0.9600, Usd/Jpy over 127.00 and Cable close to 1.2500. Fixed Income Choppy trade in bonds amidst fluid risk backdrop and ongoing flood of global Central Bank rhetoric, Bunds and Gilts fade just above 154.00 and 119.00. Eurozone periphery outperforming as ECB's Panetta urges gradualism to avoid a normalisation tantrum and Knot backs President Lagarde on ZIRP by end Q3 rather than going 50 bp in one hit. US Treasuries flat-line before US data, Fed's Brainard, FOMC minutes and 5-year supply - 10 year T-note midway between 120-21/09+ parameters. Commodities WTI and Brent July futures are firmer intraday with little newsflow throughout the European morning. US Energy Inventory Data (bbls): Crude +0.6mln (exp. -0.7mln), Gasoline -4.2mln (exp. -0.6mln), Distillates -0.9mln (exp. +0.9mln), Cushing -0.7mln. Spot gold is pressured by the recovery in the Dollar but found some support at its 21 DMA. Base metals are pressured by the turn in the risk tone this morning. US Event Calendar 07:00: May MBA Mortgage Applications -1.2%, prior -11.0% 08:30: April Durable Goods Orders, est. 0.6%, prior 1.1% -Less Transportation, est. 0.5%, prior 1.4% 08:30: April Cap Goods Ship Nondef Ex Air, est. 0.5%, prior 0.4% 08:30: April Cap Goods Orders Nondef Ex Air, est. 0.5%, prior 1.3% Central Banks 12:15: Fed’s Brainard Delivers Commencement Address 14:00: May FOMC Meeting Minutes DB's Jim Reid concludes the overnight wrap This morning we’ve launched our latest monthly survey. In it we try to ask questions that aren’t easy to derive from market pricing. For example we ask whether you think a recession is a price worth paying to tame inflation back to target. We also ask whether you think the Fed will think the same. We ask whether you think bubbles are still in markets and whether the bottom is in for equities. We also ask you the best hedge against inflation from a small list of mainstream assets. Hopefully it will be of use and the more people that fill it in the more useful it might be so all help welcome. The link is here. Talking of inflation I had a huge shock yesterday. The first quote of three came back from builders for what I hope will be our last ever renovation project as we upgrade a dilapidated old outbuilding. Given the job I do I'd like to think I'm fully aware of commodity price effects and labour shortages pushing up costs but nothing could have prepared me for a quote 250% higher than what I expected. We have two quotes to come but if they don't come in nearer to my expectations then we're either going to shelve/postpone the project after a couple of years of planning or my work output might reduce as I learn how to lay bricks, plumb, tile, make and install windows and plaster amongst other things. Maybe I could sell the rights of my journey from banker to builder to Netflix to make up for lost earnings. Rather like my building quote expectations, markets came back down to earth yesterday, only avoiding a fresh closing one-year low in the S&P 500 via a late-day rally that sent the market from intra-day lows of -2.48% earlier in the session to -0.81% at the close and giving back just under half the gains from the best Monday since January. Having said that S&P futures are up +0.6% this morning so we've had a big swing from the lows yesterday afternoon. The blame for the weak market yesterday was put on weak economic data alongside negative corporate news. US tech stocks saw the biggest losses as the NASDAQ (-2.35%) hit its lowest level in over 18 months following Snap’s move to cut its profit forecasts that we mentioned in yesterday’s edition. The stock itself fell -43.08%. Indeed, the NASDAQ just barely avoided closing more than -30% (-29.85%) from its all-time high reached back in November. The S&P 500's closing loss leaves it +1.03% week to date as it tries to avoid an 8th consecutive weekly decline for just the third time since our data starts in 1928. Typical defensive sectors Utilities (+2.01%), staples (+1.66%), and real estate (+1.21%) drove the intraday recovery, so even with the broad index off the day’s lows, the decomposition points to continued growth fears. Investors had already been braced for a more difficult day following the Monday night news from Snap, but further fuel was then added to the fire after US data releases significantly underwhelmed shortly after the open. First, the flash composite PMI for May fell to 53.8 (vs. 55.7 expected), marking a second consecutive decline in that measure. And then the new home sales data for April massively underperformed with the number falling to an annualised 591k (vs. 749k expected), whilst the March reading was also revised down to an annualised 709k (vs. 763k previously). That 591k reading left new home sales at their lowest since April 2020 during the Covid shutdowns, and comes against the backdrop of a sharp rise in mortgage rates as the Fed have tightened policy, with the 30-year fixed rate reported by Freddie Mac rising from 3.11% at the end of 2021 to 5.25% in the latest reading last week. The strong defensive rotation in the S&P 500 and continued fears of a recession saw investors pour into Treasuries, which have been supported by speculation that the Fed might not be able to get far above neutral if those growth risks do materialise. Yields on 10yr Treasuries ended the day down -10.1bps at 2.75%, and the latest decline in the 10yr inflation breakeven to 2.58% leaves it at its lowest closing level since late-February, just after Russia began its invasion of Ukraine that led to a spike in global commodity prices. And with investors growing more worried about growth and less worried about inflation, Fed funds futures took out -11.5bps of expected tightening by the December meeting, and saw terminal fed funds futures pricing next year close below 3.00% for the first time in two weeks. 10 year US yields are back up a basis point this morning. Over in Europe there was much the same pattern of equity losses and advances for sovereign bonds. However, the decline in yields was more muted after there was further chatter about a potential 50bp hike from the ECB. Austrian central bank governor Holzmann said that “A bigger step at the start of our rate-hike cycle would make sense”, and Latvian central bank governor Kazaks also said that a 50bp hike was “certainly one thing that we could discuss”. Along with Dutch central bank governor Knot, that’s now 3 members of the Governing Council who’ve openly discussed the potential they could move by 50bps as the Fed has done, and markets seem to be increasingly pricing in a chance of that, with the amount of hikes priced in by the July meeting closing at a fresh high of 32.5bps yesterday. In spite of the growing talk about a 50bp move at a single meeting, the broader risk-off tone yesterday led to a decline in sovereign bond yields across the continent, with those on 10yr bunds (-4.9bps), OATs (-4.3bps) and BTPs (-5.9bps) all falling back. Equities struggled alongside their US counterparts, and the STOXX 600 (-1.14%) ended the day lower, as did the DAX (-1.80%) and the CAC 40 (-1.66%). The flash PMIs were also somewhat underwhelming at the margins, with the Euro Area composite PMI falling a bit more than expected to 54.9 (vs. 55.1 expected). Over in the UK there were even larger moves after the country’s flash PMIs significantly underperformed expectations. The composite PMI fell to 51.8 (vs. 56.5 expected), which is the lowest reading since February 2021 when the country was still in lockdown. In turn, that saw sterling weaken against the other major currencies as investors dialled back the amount of expected tightening from the Bank of England, with a fall of -0.44% against the US dollar. That also led to a relative outperformance in gilts, with 10yr yields down -8.3bps. And on top of that, there were signs of further issues on the cost of living down the tracks, with the CEO of the UK’s energy regulator Ofgem saying that the energy price cap was set to increase to a record £2,800 in October, an increase of more than 40% from its current level. Asian equity markets are mostly trading higher this morning with the Hang Seng (+0.64%), Shanghai Composite (+0.58%), CSI (+0.17%) and Kospi (+0.80%) trading in positive territory with the Nikkei (-0.03%) trading fractionally lower. Earlier today, the Reserve Bank of New Zealand (RBNZ), in a widely anticipated move, hiked the official cash rate (OCR) by 50bps to 2.0%, its fifth-rate hike in a row in a bid to get on top of inflation which is currently running at a 31-year high. The central bank has significantly increased its forecast of how high the OCR might rise in the coming years with the cash rate jumping to about 3.4% by the end of this year and peaking at 3.95% in the third quarter of 2023. Additionally, it forecasts the OCR to start falling towards the end of 2024. Following the release of the statement, the New Zealand dollar hit a three-week high of 0.65 against the US dollar. Elsewhere, as we mentioned last week, today marks the expiration of the US Treasury Department’s temporary waiver that allowed Russia to make sovereign debt payments to US creditors. US investors will no longer be able to receive such payments, pushing Russia closer to default on its outstanding sovereign debt. To the day ahead now, and central bank publications include the FOMC minutes from their May meeting and the ECB’s Financial Stability Review. Separately, we’ll hear from ECB President Lagarde, the ECB’s Rehn, Panetta, Holzmann, de Cos and Lane, BoJ Governor Kuroda, Fed Vice Chair Brainard and the BoE’s Tenreyro. Otherwise, data releases from the US include preliminary April data on durable goods orders and core capital goods orders. Tyler Durden Wed, 05/25/2022 - 08:00.....»»

Category: blogSource: zerohedgeMay 25th, 2022

The Dystopian Vision Of The Health-Information Police

The Dystopian Vision Of The Health-Information Police Authored by Laura Powell via The Brownstone Institute, When Assemblymember Evan Low, the principal author of California Assembly Bill 2098, told the California Senate Committee that his bill was “really straightforward, very straightforward,” many of us in the gallery failed to restrain ourselves from expressing our incredulity.  He delivered this statement at the conclusion of a hearing that had lasted over an hour, during which it seemed no two Senators on the committee had the same idea of how the law would operate. Assemblymember Low had struggled to respond to questions from the committee and had often resorted to simply reading the text of the bill. That June 26 hearing presented the only time any legislators questioned the bill during its entire passage through the legislative process. Assembly Bill 2098 would empower the Medical Board of California to go after the licenses of physicians who disseminate “misinformation” or “disinformation” regarding Covid-19. The bill in its latest iteration defines misinformation as “false information that is contradicted by contemporary scientific consensus contrary to the standard of care.” The inscrutability of this definition lies at the core of the bill’s opponents concerns.  No clear scientific consensus exists with respect to this novel virus, and even if it did, it may be proven incorrect later. Without clear guidance regarding what would constitute “misinformation,” physicians can only guess if they risk losing their licenses for expressing their good-faith disagreements with positions of public health officials. Even if in practice, the Medical Board only applied the law to speech that the First Amendment does not protect, the law’s vagueness would render it unconstitutional, because it would tend to cause doctors to censor themselves. The million-dollar question remains unanswered: Who would be targeted by Assembly Bill 2098? On one hand, the California Medical Association, the bill’s sponsor, cites the example of doctors who call “into question public health efforts such as masking” as creating the need for this bill. Likewise, the taxpayer-funded lobbying group County Health Executives Association of California decries “a small minority of medical professionals” who have led some Californians to “reject public health measures such as masking and physical distancing.”  The analysis of the bill from the Senate committee, in discussing the need for this bill, cited the example of the state of Florida refusing to take action against the license of Florida Surgeon General for, among other things, “question[ing] the value of face masks in preventing the spread of the pandemic.” The idea that the effectiveness of masks in preventing the spread of Covid is part of the “contemporary scientific consensus” confirms physicians’ fears that they would risk discipline for questioning any edict from public health on Covid. On the other hand, when critics of Assembly Bill 2098 argue that questioning the effectiveness of masks falls well within the bounds of legitimate difference of opinions, proponents poo-poo their concerns about the law being applied in an overly broad way and insist that the law would only be used against truly “bad doctors.” But imbuing bureaucrats with power while trusting they will not exercise it would be incredibly foolish.  Some, such as Assemblymember Low, bill co-author Assemblymember Akilah Weber, and a representative of the California Medical Association, imply that this bill would only apply in cases of intentional harm. There is nothing in the letter of the law that limits the bill’s reach to situations where someone was harmed or where the information was disseminated knowing it was false. (Intentionally misleading would fall under the definition of “disinformation” as opposed to “misinformation.” An earlier draft of the bill mentioned harm to a patient as a factor for the Medical Board to consider.)  Members of the Medical Board of California itself have expressed confusion about how the law would be applied and withheld its support initially. MBC President Kristina Lawson, an attorney who has been a driving force behind this bill, claims to have clarity about how it would be applied but apparently is only willing to discuss the matter in private.  While most proponents say as little as possible regarding Assembly Bill 2098’s implications, one group is more vocal and less guarded in its statements. Two self-described “frontline” California doctors, Nick Sawyer and Taylor Nichols, formed No License for Disinformation (NLFD) in September 2021.  As its name suggests, the organization’s purpose is to promote policies that use the threat of medical license revocation to discourage doctors from spreading information it believes to be false. Sawyer has twice testified before legislative committees in favor of Assembly Bill 2098. NLFD’s prolific tweets and other public statements paint a dystopian picture that reflects opponents’ worst fears of the type of authoritarian regime proponents wish to impose.  NLFD pushes the idea that there is, as Sawyer described it his testimony before the Assembly committee on April 19, a “well-coordinated and well-funded network of doctors” who promote “anti-vaccine conspiracy theories, sow distrust in the Centers for Disease Control and Prevention, the federal government, and ultimately the Covid-19 vaccines.”  At the outset, note the irony that NLFD frequently criticizes “conspiracy theorists” while promoting its own conspiracy theories. And NLFD not only wants to silence those who undermine faith in public health measures, but anyone who “sows distrust” in the government. Let that sink in. NLFD’s tweets elaborate on its conspiracy theories, which are, like most conspiracy theories, built on weak evidence that magnify tenuous connections. A recent tweet shared a long thread posted by one of its founders that purports to uncover a web of right-wing “disinformation” purveyors funded by oil money. It implicates, among others, anyone associated with the Great Barrington Declaration or Brownstone Institute and specifically names UCSF professor and doctor Vinay Prasad, journalist and author David Zweig, and Johns Hopkins epidemiologist Stefan Baral as part of this cabal.  An August 13, 2022 tweet promotes a Substack article, written by NLFD “Research Consultant” Allison Neitzel, which calls America’s Frontline Physicians, Front Line COVID-19 Critical Care Alliance, the authors of the Great Barrington Declaration, and The Unity Project the “Big 4” responsible for a “physician-led attack on public health.” NLFD has often identified these four as its primary targets, sometimes adding the American Association of Physicians and Surgeons and Urgency of Normal to its hit list. NLFD asserts, without any basis, that these groups work together.  Some of NLFD’s targets, such as the Urgency of Normal’s leadership, are mainstream physicians. NLFD dismisses them as ranging from “formerly well respected immunologists to outright frauds.” It links to a long thread from one of its founders that accuses Urgency of Normal of being part of a right-wing operation to promote an “anti-mask narrative.”  It complains that CNN gave Dr. Jeanne Noble, Associate Professor at UCSF, a platform. It retweeted a tweet calling for Dr. Lucy McBride to be reported to the medical board for opposing mask mandates in schools and responded with a link directing the public on how to do so. It dismissed every doctor who participated in a roundtable hosted by Florida Governor DeSantis, which included Dr. Tracy Høeg, as “Covid deniers” and “disinformation doctors” and warned that no one should accept medical advice from any of them. These attacks contradict any claim that NLFD claims only wants to silence doctors who peddle dangerously false medical advice rather than those who have good-faith disagreements with official Covid policy. The inclusion of the authors of the Great Barrington Declaration—Sunetra Gupta, Martin Kulldorff, and Jay Bhattacharya—at the top of NLFD’s hit list is puzzling. Not only does the declaration espouse a conventional viewpoint, none of the Great Barrington Declaration’s authors is a practicing physician and therefore law like Assembly Bill 2098 would not affect them.  NLFD has called out the Great Barrington Declaration around a dozen times and frequently targets Stanford professor Bhattacharya in particular (he earned a medical degree but does not practice medicine or hold a medical license). NLFD doesn’t just accuse Bhattacharya of being wrong, it accuses him of intentionally lying, calling him a “disinformation doctor” and a “prominent purveyor of Covid-19 disinformation,” accusing him of telling lies that have killed people (along with Vinay Prasad), and insinuating he should be reported for perjury. In addition to its direct attacks, NLFD has retweeted dozens of criticisms of Bhattacharya and seemed to delight in a journalist getting Twitter to temporarily suspend his account for a minor oversight. NLFD’s messaging has an unquestionably partisan slant, despite claiming to be nonpartisan. It has posted dozens of tweets critical of the Republican Party. Some of these criticisms do not clearly relate to the organization’s mission of combating misinformation.  For example, this August 8, 2022 thread attacks Republican lawmakers for opposing a drug pricing control provision in a bill. The same day, another tweet alleges that the GOP Doctors Caucus is allied with “Pharma Bro” Martin Shkreli. They attempt to tie this issue in with their mission by asserting that Republicans in general are “affiliated with licensed physicians” spreading Covid misinformation.  In another recent example, NLFD posted a clip from 2017 accusing Rand Paul of being in cahoots with Putin. It had previously suggested that Paul should be reported to the medical board for reasons it doesn’t identify. NLFD has even branched out to opine on political issues totally unrelated to the practice of medicine, encouraging the public to report “harassment, intimidation, and threats of violence” against school board members or staff to the FBI. NLFD has numerous posts elaborating on its idea of a right-wing, Republican-led conspiracy to spread disinformation. It uses the phrase “disinformation pipeline” to describe an alleged process by which Republicans in state legislatures deliberately harm public health by “institutionalizing disinformation” through, for example, passing laws that shield doctors from discipline for controversial Covid treatments. It claims that the overall Republican agenda is to “create fear/animosity/victimhood amongst supporters, whipping up anti-science/anti-government sentiment making them more likely to take up arms against the government.” It has asserted that “[a]ll COVID disinformation doctors are inextricably tied to Trump.”  Many of NLFD’s conspiracy theories are quite dark and disturbing. It recently retweeted a thread from its own Nick Sawyer, which argues that the United States is currently in the midst of a civil war, which goes unrecognized because it is an information war. Another recent tweet exhorts: “This is an information war, a battle for the truth, and [every] American is a soldier. Get up to speed and start fighting for evidence based reality. No one is going to do this for us.”  NLFD’s primary weapon in this imagined information war is censorship, but it also advocates for criminal prosecution for expressing the wrong ideas. It frequently encourages its followers to report physicians to their medical boards, even if they have no relationship with them. It also frequently calls on Twitter to deplatform accounts it feels say things that are untrue. But it goes even further, tagging the FBI and posting a link to the FBI tip line, asking its followers to report people for alleged misinformation.  It tags the United States Department of Justice’s Criminal Division in its tweets. It calls its targets a “threat to national security.” NLFD erroneously claims that under current California law, a physician can be criminally prosecuted for any untrue statement. NLFD wants to go far beyond having medical boards discipline licensed physicians—they want to see their enemies in jail. Against this backdrop of NLFD’s other public statements, it’s hard to imagine how Sawyer managed to sound sincere when he told the Senate committee: “This bill is not supposed to cause problems with physicians’ free speech around academic discussion. This bill will allow the medical board to discipline doctors who say things like the vaccines cause AIDS or that the vaccines are killing more patients than Covid, using manipulated data or that the vaccines are implanting microchips so the government can track you. I’m all for academic debate—in fact, we wouldn’t be where we are today without robust academic debate, but that’s not what this is about.” Make no mistake—Assembly Bill 2098 is not just about protecting patient safety. That is why one member of the Medical Board of California warned that the bill would be counterproductive to the Board’s mission. Assembly Bill 2098 was not the brainchild of Assemblymember Low or any other California lawmakers. It’s part of an effort to enact similar policies around the country, sparked in large part by a declaration from the Federation of State Medical Boards in July 2021.  California is often described as a bellwether: “As California goes, so goes the nation.” That saying rings especially true with respect to Assembly Bill 2098, given that this is a test case for a national movement and that Governor Gavin Newsom has obvious presidential aspirations.  The bill will become law on January 1 unless the governor vetoes by September 30, and even then, the Democrats who voted for the bill have sufficient numbers to override a veto. Then we will discover whether our high courts still uphold the principle of free speech or whether they will allow themselves to be co-opted by the soldiers fighting to be the arbiters of Truth. Tyler Durden Mon, 09/26/2022 - 22:20.....»»

Category: blogSource: zerohedge3 hr. 12 min. ago

Futures, Bitcoin Crater As Yields And Dollar Surge

Futures, Bitcoin Crater As Yields And Dollar Surge After a dismal week for risk assets, which saw equities drop the most since June 17, global markets and US equity futures are tumbling in another extremely illiquid session (Japan and UK are both closed, the latter for the state funeral of QE2) as the realization sparked by Fedex that the world is in a global recession, is starting to finally seep through. Add to that Wednesday's 75bps rate hike by the Fed (which however is more than priced in by now) as well as the previously discussed start of the buyback blackout period, and CTAs and pensions becoming forced sellers with investor sentiment that can at best be described as pervasive record doom and gloom, and it becomes clear why this week could be an even bigger bloodbath for stocks. And sure enough, Nasdaq contracts have tumbled 1.2% as S&P futures are down 1.0%... ...the dollar is back into record territory, with rumors of a new imminent plaza accord growing louder by the day... ... 10Y yields are just shy of 3.50%, hitting a new post-2011 high this morning... ... which in turn is hammering European and Asian markets, as oil plunges in response to the fresh highs in the dollar. In permarket trading, tech shares are lower and poised to extend last week’s decline, as investors expect the Fed to deliver a 75bps rate hike when it meets on Wednesday, putting pressure on pricier growth stocks. Tesla (TSLA US) -1.4%, Google (GOOGL US) -1.2%. Here are some other notable premarket movers: Marathon Digital (MARA US) plunged as much as 8.4% in premarket trading on Monday alongside other cryptocurrency- related stocks, after Bitcoin dropped toward the lowest level since 2020 on monetary tightening concerns. US-listed Chinese stocks edged lower in premarket trading Monday after Chinese stocks listed in Hong Kong dropped, putting them on track to enter bear-market territory. Alibaba (BABA US) -1.5%, Nio (NIO US) -1.6%. FOXO Technologies (FOXO US) surges in premarket trading after tumbling 52% on its debut on Friday via its combination with special purpose acquisition company Delwinds Insurance Acquisition Corp. Take-Two Interactive Software Inc. (TTWO US) falls 6.5% in US premarket trading Monday after a hacker published pre-release footage from development of Grand Theft Auto VI, its most anticipated video game. In addition to the startling FedEx warning which sent the stock crashing by the most on record, investors also face potential volatility from policy decisions this week by the Bank of England, the Bank of Japan and a host of other central banks. The British pound sank to its weakest level against the dollar since 1985 on Friday and the yen remains under pressure, though it has backed off from just below the key 145 level versus the dollar. “The aggressive tightening of policy in the coming 4-6 months, not just in the US but globally, increases the risk of a recession next year,” said Maria Landeborn, a senior strategist at Danske Bank A/S. “We expect uncertainty will remain high surrounding inflation, rates and the overall economy, which is negative for market sentiment and risk assets.” With the Fed poised to hike 75bps (and perhaps even 100bps) and keep rising until it hits 4.50%, top Wall Street strategists see mounting risks for US earnings and equity valuations. Both Morgan Stanley’s Michael J. Wilson and Goldman Sachs Group Inc.’s David J. Kostin said headwinds to profitability are building, highlighting tighter monetary policy and pressure on company margins. In Europe, the Stoxx 50 fell 0.9% with Spain' IBEX outperforming, dropping just 0.3%, CAC 40 lags, dropping 1.1%. Energy, financial services and real estate are the worst performing sectors. Rate-sensitive European real estate shares are among the worst-performing in Europe in Monday trading, with the region’s equity market dropping further after seeing the biggest weekly decline in three months, as investors await a Federal Reserve monetary policy meeting this week.  Here are some of the biggest European movers today: Porsche Automobil Holding advances; Volkswagen AG said it’s looking to raise as much as EU9.4 billion from the IPO of its sports-car maker in what could be Europe’s largest listing in more than a decade European energy stocks fall, making them the worst-performing sector in Europe on Monday, as oil prices dipped, erasing earlier gains, with the Stoxx 600 Energy index declining 1.8% European real estate shares are among the worst- performing in Europe in Monday trading, with the region’s equity market dropping as investors await a Federal Reserve monetary policy meeting this week TF1 and M6 slumped after the French TV companies called off a planned combination because of objections from the country’s antitrust regulator; also today, Oddo cut TF1 to neutral Valneva falls as much as 16% after the French vaccines maker said it will terminate a Covid-19 vaccine collaboration with IDT Biologika, agreeing to pay as much as EU36.2 million in cash. Earlier in the session, Asian equities fell, poised for a fifth session of decline, as the dollar strengthened ahead of the Federal Reserve’s meeting this week. The MSCI Asia Pacific ex-Japan index erased early gains and fell as much as 0.8%, dragged by consumer discretionary and tech shares. Benchmarks in Hong Kong and South Korea were among the worst performers in the region. Japan’s market was shut for a holiday. The dollar’s gains put pressure on regional currencies, and stocks tumbled in the Philippines, Malaysia and Vietnam. Traders are watching the Federal Open Market Committee’s interest-rate decision on Wednesday for signals on further policy tightening, pricing in a 75-basis-point hike. The Hang Seng China Enterprises Index fell more than 1%, taking its losses from a June 28 peak to just short of 20%, which will mark the start of a bear market. Mainland China stocks traded little changed Monday as megacity Chengdu exited a lockdown. MSCI’s broadest Asia Pacific stock gauge has clocked five consecutive weeks of losses as investors factor in higher US interest rates and a strong dollar. Optimism over any easing of China’s Covid-Zero stance after the party congress in October is also waning. “Unless the Fed is done with rate hikes, the US dollar bull market is not over yet,” Lim Say Boon, chief investment strategist at CGS-CIMB Securities wrote in a note. In Australia, The t&P/ASX 200 index fell 0.3% to close at 6,719.90, the lowest since July 19, dragged by losses in health care and energy shares.  In New Zealand, the S&P/NZX 50 index fell 0.4% to 11,531.99. The nation’s economic outlook is sound, despite increasing domestic and international turbulence, S&P said in a statement Stocks in India snapped three days of declines, helped by a rally in consumer and auto firms on expectations of a boost in demand during the upcoming festive season. The S&P BSE Sensex rose 0.5% to 59,141.23 in Mumbai, while the NSE Nifty 50 Index also gained by a similar magnitude. Out of 30 shares in the Sensex index, 20 rose and 10 fell. A gauge of fast-moving consumer-goods makers was the best performer among 19 sectoral sub-indexes compiled by BSE Ltd. Most stocks across Asia declined ahead of key rate decisions by various central banks, including the US Federal Reserve. A higher-than-expected inflation in the US has raised expectations of another 75-basis-point hike when Fed policymakers meet on Wednesday. Housing Development Finance Corp contributed the most to the Sensex’s gains, increasing 1.5%.  In rates, Treasuries re-opened with yields cheaper by up to 5.5bp across front end of the curve in a bear flattening move. Into the weakness 10-year yields top at 3.506% and cheapest levels since June 2011. Cash market was closed overnight as UK observes a day of mourning for Queen Elizabeth II and Japan is out on holiday. Treasury yields 3.5bp to 5.5bp cheaper across the curve with long end outperforming slightly, flattening 2s10s, 5s30s spreads by 0.5bp and 1bp on the day. IG dollar issuance slate empty so far; up to $20b expected for the week with Monday and Tuesday potentially busy ahead of Wednesday FOMC. Latest CFTC positioning data shows hedge fund net short in two-year note futures, biggest since June 2021. Bund yields climb some 3bps across the curve. Australia’s bonds rose for the first time in four days. Yields fell 3-5bps across the curve. In FX, the dollar strengthens against all FX majors; euro trades below parity while cable trades at around 1.13/USD and the yen slides near 143.43/USD. UK observes a day of mourning for Queen Elizabeth II. Some more details: The Bloomberg Dollar Spot Index advanced 0.3% as the greenback strengthened against all Group-of-10 peers. Risk-sensitive Scandinavian and Antipodean currencies were the worst performers. Treasury futures eased, sending yields a few basis points higher The euro gave up an Asia session gain to drop for the first time in four days, yet momentum in options is less bearish across all tenors compared to a week ago. German bonds inched lower, with yields rising 3-4 bps, ahead of ECB speakers today The Swiss franc and the yen held up best against wide dollar gains. Hedge funds ramped up bearish yen bets to a three-month high on expectations Japan would languish in a world where developed market peers are racing to hike interest rates The yuan fell even as the People’s Bank of China fixed the currency at 6.9396 per dollar, 647 pips stronger than the average estimate in a Bloomberg survey of analysts and traders, the widest difference on record since Bloomberg started the survey in 2018 In commodities, WTI drifts 1.3% lower to trade near $83.98. Oil futures have resumed the sell-off, in part amid the cautious risk tone/firmer Dollar. Nord Stream AG says it cannot confirm nominations for the Nord Stream 1 gas pipeline on Monday. Kuwait produces more than 2.8mln bpd and has plans to increase oil output whenever the market needs it, while Kuwait currently produces 650mln cubic feet of gas per day and plans to raise it to 1bln cubic feet, according to Kuwaiti Petroleum Corporation’s CEO, cited by Reuters. Spot gold falls roughly $10 to trade near $1,665/oz. European natural gas futures fall again to their lowest level in almost two months. Bitcoin extends decline to $18k-level as broad crypto selloff continues. Bitcoin remained under pressure sub-USD 18,500. Ethereum extended on losses under USD 1,300. It's a busy week on the macro front, but Monday will be quiet with just the September NAHB housing market index on deck in the US. We also get the Eurozone July construction output, Canada August industrial product and raw materials prices. Market Snapshot S&P 500 futures down 0.8% to 3,861.00 STOXX Europe 600 down 0.7% MXAP down 0.5% to 149.48 MXAPJ down 0.6% to 487.97 Nikkei down 1.1% to 27,567.65 Topix down 0.6% to 1,938.56 Hang Seng Index down 1.0% to 18,565.97 Shanghai Composite down 0.3% to 3,115.60 Sensex up 0.6% to 59,203.12 Australia S&P/ASX 200 down 0.3% to 6,719.92 Kospi down 1.1% to 2,355.66 German 10Y yield up 3 bps to 1.78% Euro down 0.4% to $0.9978 Brent futures down 0.9% to $90.53/bbl Gold spot down 0.7% to $1,663.72 U.S. Dollar Index up 0.3% to 110.05 Top Overnight News from Bloomberg Federal Reserve officials are on track to raise interest rates by 75 basis points for the third consecutive meeting this week and signal they’re heading above 4% and will then go on hold Investors bracing for another jumbo Federal Reserve interest-rate hike are focused on a few key trades: betting on deeper inversion in the US yield curve, further losses in stocks and a stronger dollar The risk of a euro-area recession has reached its highest level since July 2020 as concerns grow that a winter energy squeeze will cause a slump in economic activity. Economists polled by Bloomberg now put the probability of two straight quarters of contraction at 80% in the next 12 months, up from 60% in a previous survey European Central Bank interest rates will need to rise a lot more to get inflation under control, Bundesbank President Joachim Nagel said over the weekend The Chinese megacity of Chengdu exited its lockdown on Monday, with 21 million people allowed to leave their homes and resume most aspects of normal life for the first time since Sept. 1, provided they’re tested regularly for Covid-19 A more detailed look at global markets courtesy of Newsquawk APAC stocks were mostly subdued with the region lacking firm direction amid holiday-quietened conditions and with participants cautious ahead of this week’s slew of central bank policy decisions including from the FOMC, BoE and BoJ. ASX 200 was indecisive after gains in the mining industry were offset by underperformance in tech and defensives, with risk appetite also contained amid further calls for the RBA to hike by 50bps next month. Nikkei 225 was closed due to a domestic holiday. Hang Seng and Shanghai Comp declined with the Hong Kong benchmark pressured by losses in tech and pharmaceuticals, while the mainland was also subdued despite the cities of Chengdu and Dalian lifting lockdowns and the PBoC conducting 14-day reverse repos for the first time since January at a lower rate. Nonetheless, the injection was likely due to the upcoming National Day holidays and the rate cut was not much of a surprise after a similar cut in the 7-day reverse repo rate last month, while geopolitical concerns also lingered following comments from US President Biden that US forces would defend Taiwan in the event of a Chinese invasion. Top Asian News China’s Chengdu lifted the lockdown for the entire city and Dalian will also lift the citywide lockdown effective this Monday, according to Bloomberg. China NDRC is seeking to promote an acceleration of the recovery in domestic consumption and speed up the injection of funds to start project construction ASAP. NDRC said the foundation of the economic recovery is still weak despite positive changes in main economic indicators and that external environment for utilising foreign capital is increasingly complex and severe, while it added there remains some factors affecting foreign investment confidence. UBS cut its China 2022 GDP growth forecast to 2.7% from 3.0% due to a weak Q3 recovery, according to Bloomberg. China’s Global Times stated that economists urged US regulators to serve market fairness and not let their work be trained with political factors as they are about to begin reviewing audit files of Chinese companies. US tsunami warning system issued a tsunami threat in Taiwan on Sunday morning following a magnitude 7.2 earthquake. Japan’s weather agency issued a special typhoon warning for the Kagoshima prefecture in southern Japan on Saturday, according to Reuters. It was later reported that the typhoon made landfall and millions were told to evacuate homes, according to FT. The subdued tone seen across a holiday-thinned APAC session reverberated into Europe, with UK markets closed due to the funeral of Queen Elizabeth II. European cash bourses are lower across the board but off worst levels. European sectors are mostly lower with no overarching theme. US equity futures are softer in tandem with their European counterparts with relatively broad-based losses seen across the main December contracts. Top European News UK PM Truss will conduct a bilateral meeting with US President Biden at the UN General Assembly on Wednesday instead of meeting in Downing Street on Sunday, according to a statement cited by Reuters. UK PM Truss agreed with Irish PM Martin that an opportunity exists for the UK and the EU for a negotiated Brexit resolution to the Northern Ireland protocol, according to RTE. UK PM Truss’s chief of staff Fullbrook said he is cooperating with the FBI regarding an investigation into a Conservative Party donor charged with illegally providing campaign donations to a former Puerto Rico governor, although Fullbrook denied any wrongdoing, according to FT. ECB’s Lane said there will probably be several more rate hikes this year and early next year, while he noted signs that inflation will come down but not just yet and said that a recession cannot be ruled out, according to Reuters. ECB’s Nagel said the ECB are ‘a good way off’ from where rates should be and rates will need to rise a lot more to get inflation under control, although is confident that inflation rates will fall after a tough winter, according to Bloomberg. EU is set to withhold EUR 7.5bln of funding from Hungary due to rule of law violations regarding corruption in awarding public contracts, according to FT. EU may ask companies to expand or repurpose production lines, according to European Commission emergency powers to avert supply crisis Geopolitics US President Biden warned Russian President Putin against changing the face of the war by using tactical nuclear or chemical weapons in Ukraine, while he also stated that Ukraine is not losing the war and is making progress in some areas, according to an interview on CBS’s 60 Minutes. Furthermore, President Biden said he warned Chinese President Xi of an investment chill and that it would be a gigantic mistake if China violates sanctions on Russia but noted that there has been no indication that Beijing has provided weapons to Moscow for its invasion of Ukraine. US Joint Chief of Staff chairman General Milley said during a visit to a military base in Poland that it is still unclear how Russia will react to the battlefield setbacks in Ukraine and now is the time for increased vigilance and preparedness, according to Reuters. IAEA said one of the Zaporizhzhia nuclear power plant’s regular external power lines has been repaired and the plant is receiving electricity directly from the national grid, while it added that although there has not been any recent shelling at or near the plant, it continues to occur in the wider area, according to Reuters. Russia and China have agreed on further cooperating on defence with a focus on joint exercises, according to Interfax cited Russian Security Council. US President Biden said US forces would defend Taiwan in the event of a Chinese invasion, according to Reuters. Taiwan said China continued its military activities around the island and that it detected 20 Chinese aircraft and 5 Chinese ships operating around Taiwan on Saturday, according to Reuters. FX The Dollar regrouped and regained a bid on a combination of technical and positional factors; DXY topped 110.00 but remains shy of Friday's best. EUR/USD retreated back under parity, GBP/USD under 1.1400 from a 1.1442 peak. USD/JPY grinds upwards and briefly topped 143.50, whilst antipodeans are the G10 laggards. Fixed Income Bonds have extended to the downside after waning from best levels earlier or overnight. Bunds are off a deeper 142.43 Eurex trough and the US 10-year T-note is nearer the base of its 114-12+/114-25+ range. Commodities WTI and Brent futures have resumed the sell-off, in part amid the cautious risk tone/firmer Dollar. Nord Stream AG says it cannot confirm nominations for the Nord Stream 1 gas pipeline on Monday. Kuwait produces more than 2.8mln bpd and has plans to increase oil output whenever the market needs it, while Kuwait currently produces 650mln cubic feet of gas per day and plans to raise it to 1bln cubic feet, according to Kuwaiti Petroleum Corporation’s CEO, cited by Reuters. Spot gold has been under pressure as the Dollar gained traction, whilst CME copper is softer amid the risk tone Chinese copper tycoon He Jinbi’s Maike Metals International is reportedly suffering a liquidity crisis that threatens his empire which handles one of every four tons of copper imported into China, according to Bloomberg. US Event Calendar 10:00: Sept. NAHB Housing Market Index, est. 47, prior 49 DB's Jim Reid concludes the overnight wrap A packed week will kick off with a quiet, solemn, start, as the UK is closed for the Queen’s funeral. Japan is also out on holiday. Looking forward, the postponed BoE meeting will nudge its way into an already packed central bank meeting schedule which includes the BoJ, SNB, Riksbank, Norgesbank, and of course, the Fed. Suffice to say, monetary policy will be in focus this week. On the Fed, market pricing glided toward Matt Luzzetti’s expectations (full FOMC preview here) that the Fed will deliver a 75bp hike next week, having decayed from last week’s peaks after the stronger than expected CPI data. Much closer to consensus PPI and University of Michigan inflation expectations data helped bring pricing back from the peaks, let alone no press reports seemingly confirming pricing one way or another (finishing the week at 79.8bps priced). Regardless, some premium of a 100bp move will probably stay priced in for Wednesday, either on the off chance of some late blackout-period guidance. Beyond the rate move itself, the new SEP should show unemployment ticking higher, moving farther from a soft-landing forecast. Luzzetti and co. expect the dots will show unemployment ratcheting to 4.5%. The September FOMC also adds another year to the SEP, so we will get figures for 2025, showing how steep a hiking cycle, how deep any recession, and how quick the subsequent recovery policymakers are expecting if their preferred policy path is realized. On the BoE, our economists expect (full preview here) the MPC to vote for a second consecutive 50bp hike, albeit along divisive lines, with dissents favouring both a 25bp and a 75bp move likely surfacing. On the balance sheet, the MPC should confirm the start of gilt sales from later on this month, totaling GBP 10bn per quarter. Our economists expect the BoE’s terminal rate will be 4%, reached in May of next year, which is a 150bp upgrade over their old forecast. The Bank of Japan also meets, where our economist expects (full preview here) the BoJ to remain the DM outlier by maintaining an easy policy stance, while agreeing to end their special pandemic funds-supplying operation as scheduled at the end of the month. The policy divergence will continue to weigh on a yen which is around its weakest levels versus the dollar since the early 90s, but our economists do not expect that augurs intervention, as fundamentals are driving the weakening and reduce the chance any intervention is effective. Geopolitical risks will remain in focus, where the Ukraine war is most front-and-center. Elsewhere, a few conflagrations have broken out in former USSR states which individually may not be macro moving events, but are something to keep an eye on if symptomatic of something broader. Finally, an ever-looming potential issue, President Biden said in an interview with 60 minutes that the US would defend Taiwan if invaded, even as he downplayed the claim as not official US policy. Overnight in Asia equity markets are trading in negative territory at the start of the week after the US equities ended in the red on Friday. The Kospi (-0.98%) is the largest underperformer across the region followed by the Hang Seng (-0.88%). Over in mainland China, the Shanghai Composite (-0.22%) is trading lower while the CSI (-0.11%) is swinging between gains and losses. Elsewhere, as mentioned, markets in Japan are closed for a holiday with no trading in Treasuries until the US session. In overnight trading, US stock futures are pointing to further losses with contracts on the S&P 500 (-0.27%) and NASDAQ 100 (-0.50%) both edging lower. A quick recap of last week, which was a reliable microcosm of the major macro stories over the year, namely the war in Ukraine and the central bank battle over inflation. Ukraine’s successful counter-offensive stoked some optimism early in the week, optimism which faded from risk assets (along with the tightening in global policy paths, more below) as the pathway to peace and an end to the war were not any clearer. That was ossified on Friday with President Putin giving a press conference where he warned about escalating the conflict in so many words. Global equity indices retreated over the week, with the STOXX 600 down -2.89% (-1.58% Friday), the DAX -2.65% lower (-1.66% Friday), and the CAC down -2.17% (-1.31% Friday). Banks proved one bright spot in European equities given the rate selloff, with the Euro Banks index gaining +2.90% despite pulling back -1.88% on Friday. US equities underperformed given the salience of steeper Fed policy post CPI, with the S&P 500 pulling back -4.77% (-0.72% Friday) and the NASDAQ down -5.48% (-0.90% Friday), the worst weekly return for both since mid-June. The EU’s unveiling of measures to curtail energy price pressures, combined with some national-level efforts, drove European natural gas futures -9.82% lower to close the week at EUR 186.75, the first time they’ve ended a week below EUR 200 since the end of July. For rates, the main event was the above-consensus US CPI data, which saw a repricing of global policy paths steeper, with 2yr Treasuries gaining +31.1bps (+0.3bps Friday) and 2yr Bunds +20.6bps higher (-0.7bps Friday). Curves flattened in both jurisdictions given the harder-landing implications of such a steep policy path, with 10yr Treasuries up +14.0bps (flat Friday) and Bunds up +5.8bps (-1.4bps Friday). It also coincided with terminal rates pricing higher, where the market is expecting fed funds rates to get up just shy of 4.4% in the spring of next year, albeit below our revised in-house call of terminal closer to 5%. Tyler Durden Mon, 09/19/2022 - 07:32.....»»

Category: personnelSource: nytSep 19th, 2022

Anthony Fauci: From AIDS To COVID-19, A Pharma Love Story

Anthony Fauci: From AIDS To COVID-19, A Pharma Love Story Opinion authored by Lorenzo Puertas via The Epoch Times (emphasis ours), After forty-eight years of leading the U.S. government’s responses to infectious diseases, Dr. Anthony Fauci recently announced his plans to retire at the end of the year. His story warrants a closer look for what it tells us about American politics, business, and health care. For decades before his recent fame, Fauci has been a medical researcher credited with important new understandings of the human immune response, particularly in HIV and AIDS. He also helped develop therapies for several previously fatal diseases, including a treatment of vasculitis which turned a 98 percent mortality rate into a 93 percent survival rate. For most of his career, he has been the world’s most-cited researcher on AIDS and infectious diseases. He has received many awards, including the Presidential Medal of Freedom. Ironically, Fauci has also presided over a decades-long decline in the overall health of American citizens. During his time in public health, a great number of chronic illnesses have become commonplace. Food allergies, autoimmune diseases, and cancer now affect more than half of American children. Autism, once rare, now affects 1 in 44 children. National Institute of Allergy and Infectious Diseases Director Dr. Anthony Fauci testifies during a Senate Appropriations Subcommittee on Labor, Health, and Human Services, Education, and Related Agencies hearing, on Capitol Hill in Washington on May 17, 2022. (Shawn Thew/Pool/AFP via Getty Images) A Lifetime in Public Health Anthony Fauci was born in Brooklyn in 1940, the son of a pharmacist. Pharmacy was the family business, and both his mother and sister worked in his father’s shop beneath their apartment. As a young man, Fauci studied medicine at Cornell University, graduating first in his class. After his residency in 1966, he took a research job at the National Institutes of Health (NIH), and he has worked for the U.S. government ever since. In his five decades in public health, Fauci has advised every President since Ronald Reagan. Since 1984 he has been the head of the National Institute for Allergies and Infectious Disease (NIAID), one of 27 institutes within the NIH, given the mission of researching and preventing infectious, immunologic, and allergic diseases. For many Americans, Fauci has been the trusted face of the U.S. government response to the pandemic. It was his confident explanations, both to the public and to policymakers, which led to the use of lockdowns, business closures, masking, and vaccines as the response to the virus. His many critics see a different Anthony Fauci—a bureaucrat who seems to have made a career of putting politics and corporate profits above public health. “Dr. Fauci has shaped the American medical world,” said Mary Holland, President of Children’s Health Defense, in an interview with The Epoch Times. “He’s moved American health institutions, NIH in particular, to a very intertwined relationship with the pharmaceutical industry.” Holland’s nonprofit organization, chaired by Robert F. Kennedy, Jr., has been a prominent critic of Dr. Fauci’s policies—particularly the mass vaccination of American citizens. Censorship and Control “Dr. Fauci and his NIAID have played a very dark role in COVID,” Holland said. “The level of propaganda we have lived through in the last two years is unprecedented in my lifetime. I lived in the Soviet Union after law school, fighting for human rights and working against government propaganda and censorship. And now we are living through that in the United States.” According to Holland, Fauci is the key player in the U.S. government’s efforts to control all information relating to the pandemic and the virus. “The documents are coming out that show that the government has been censoring us, suppressing factual information that relate to this virus and the pandemic.” Even criticism of Fauci has been censored, says Holland. “Robert Kennedy’s new book, ‘The Real Anthony Fauci’ has been suppressed at every turn,” she said. The 2021 book takes a hard look at Fauci’s career and his handling of the COVID-19 pandemic. Kennedy has found it almost impossible to promote his book. “No major publication in the country would review the book,” said Holland. “The New York Times would not include it on their bestseller list, and he [Kennedy] was not invited on any major media platform, except for Tucker Carlson and The Epoch Times. The level of censorship has been astonishing.” Kennedy isn’t the only one censored. For two years, mainstream media outlets have ignored the scientists who have questioned Fauci’s views. These scientists have seen their ideas rejected (or later retracted) by medical journals, denounced by government officials, and censored by social media platforms. Fauci has been candid about his suppression of dissent. “Attacks on me, quite frankly, are attacks on science,” Fauci told CNBC in a June 2021 interview. In May, the attorneys general for Missouri and Louisiana filed a lawsuit against President Joe Biden and other White House officials, accusing them of violating the First Amendment by colluding with social media giants to suppress information about the pandemic. According to recently released court documents, the Biden administration worked so closely with social media that Facebook head Mark Zuckerberg gave Fauci his personal phone number when the crackdown on COVID-19 information began. But why this need for control? What information needed to be covered up? According to Holland, it’s the role that Fauci may have played in creating, and prolonging, this pandemic. The P4 laboratory (L) on the campus of the Wuhan Institute of Virology in Wuhan, Hubei Province, China, on May 27, 2020. (Hector Retamal/AFP via Getty Images) “By all appearances they have tried to cover up their role in funding lethal gain of function research in China,” said Holland. “They have also suppressed the use of lifesaving early treatments like ivermectin and hydroxycholoroquine, and they have suppressed valuable research into preventive measures that could have saved countless lives.” The result, says Holland and other critics, is a dark period in American history. Fauci’s Pandemic? Starting in early 2020, Americans faced unprecedented government intrusion in their lives. Business and school closures, lockdowns, mask mandates—and the man behind these government policies has been Anthony Fauci. In countless interviews and press conferences, Fauci positioned himself as the one true source of correct COVID-19 information and guidance. Emergency orders at the federal, state, and local levels were based on Fauci’s opinions. Fauci himself took credit for the policy of lockdowns, saying in October 2020, “I recommended to the president that we shut the country down. That was a very difficult decision because I knew it would have very serious economic consequences.” “Anthony Fauci is clearly at the very center of all things COVID,” Holland said. “And he has been in charge of controlling the information about the pandemic.” “From the very beginning, when many scientists were pointing to a lab origin for this virus,” said Holland, “Anthony Fauci put a stop to that important debate.” Despite the discovery of NIAID’s funding of gain-of-function research on coronaviruses at the Wuhan Institute of Virology, Fauci continues to say that the virus likely has a natural origin. A similar thing happened with scientific opposition to Fauci’s policies. The Great Barrington Declaration, written in October 2020 and signed by over 60,000 doctors and scientists, opposed lockdowns and advocated a new policy of protecting only the most vulnerable populations while allowing the rest to live freely and develop natural immunity. Fauci called the Declaration “ridiculous” and “very dangerous,” and led a campaign to attack the authors and signatories, instead of their ideas. “It has been remarkable,” Holland said, “to see one of the most influential figures in American life purposely suppressing truthful information—about a lab leak, about scientists who said there should be no lockdowns, about the value of masks and the risks of vaccines.” “In the COVID response we saw extraordinary corruption,” said Holland. “The origin of the virus was covered up. Important treatments were suppressed. And vaccines were authorized, and mandated, on inadequate science.” Ivermectin tablets packaged for human use. (Natasha Holt/The Epoch Times) Suppression of Cures One of the most astonishing aspects of Fauci’s leadership during the pandemic has been his strong opposition to any potential treatment. In two years, neither Fauci nor any U.S. government agency has published a single treatment protocol for COVID-19 patients. In contrast, China had a treatment protocol online by mid-March of 2020. The result of an organized collection of data from hundreds of hospitals treating thousands of patients, the Chinese protocol included simple solutions like saline nasal lavage and antiseptic mouthwash to reduce viral loads, and cheap drugs like zinc, Pepcid, chloroquine, and antibiotics. As of this writing, the United States still has no official treatment protocol. And no protocols have been proposed by any major American university or research hospital. Yet every American doctor who has tried to publish one has been quickly censored and ridiculed. Dr. Peter McCullough knows this firsthand. The author of the protocol that became the most downloaded medical paper of 2020, McCullough was among the first American doctors to develop, test, and publish a successful treatment protocol, resulting in an 85 percent reduction in hospitalizations and death among his patients. A medical doctor and author of over 600 peer-reviewed research articles, McCullough at first had no thought of developing his own treatment plan. But he soon became alarmed at the government’s failure to provide treatment advice to America’s doctors. By May 2020, McCullough began taking action. He quickly set up a network of doctors to share information about effective treatments—something Fauci never did. For his efforts, he found himself sued by Baylor University, had his Wikipedia page re-written to label him a source of “COVID misinformation”, and had his reputation attacked in print and online. All while major medical institutions did nothing to find a treatment. “They didn’t even try,” McCullough is quoted as saying in “The Real Anthony Fauci.” “Harvard, John Hopkins, Duke, you name it. There wasn’t an ounce of original research coming out of America to fight COVID—other than vaccines.” Across the country, Dr. Pierre Kory was fighting the same battle. The co-founder of the Front Line COVID-19 Critical Care Alliance (FLCCC), Kory and a team of doctors were quickly developing their own protocol and putting it online. Like McCullough, Kory had discovered the effectiveness of ivermectin, hydroxycholoroquine, and a number of other inexpensive and easily available drugs. Kory testified twice to the U.S. Senate explaining the success of his treatment protocol. He also submitted a formal paper to the NIH, which quickly dismissed the results as “insufficient data” lacking proper clinical trials. Another research paper explaining the protocol was retracted by the journal Frontiers in Pharmacology due to “unsupported claims”. “The efficacy of some of these drugs… is almost miraculous. We could have stopped the pandemic in its tracks in the Spring of 2020,” said Kory. “Yet Dr. Fauci refused to promote any of these interventions. It’s not just that he made no effort to find effective off-the-shelf cures—he aggressively suppressed them.” “You had Birx, Fauci, and Redfield doing press conferences every day,” Kory said in an interview. “And not one of them ever treated a COVID patient or worked in an emergency room or ICU. They knew nothing.” “Dr. Fauci’s suppression of early treatments,” said Kory, “will go down in history as having caused the death of half a million Americans.” But why would Anthony Fauci suppress effective treatments? Why attack doctors trying to find a solution? According to Robert Kennedy, it might be because safe and effective treatments for COVID-19 would make the new vaccines unnecessary. Successful treatments aren’t just a marketing challenge for the vaccine manufacturers—they’re a legal obstacle, too. Once a successful treatment for COVID-19 is established, it becomes much less likely that the FDA will grant Emergency Use Authorization (EUA) to new vaccines and new drugs. Under federal law, there must be no approved alternative way of treating or preventing a disease before authorizing an EUA. The EUA under which the experimental vaccines were given to millions of Americans would never have been granted if COVID-19 was known to be an easily treatable disease. In “The Real Anthony Fauci”, Robert Kennedy writes, “His bizarre and inexplicable actions give credence to the suspicions held by many Americans that Dr. Fauci is working to prolong the epidemic in order to impose expensive patented drugs and vaccines on a captive population.” AIDS COVID-19 isn’t the first time that Anthony Fauci has been accused of using public policy to benefit big pharma corporations. Forty years ago, at the height of the AIDS crisis in America, many AIDS activists called Anthony Fauci a sellout to the drug companies. “You are responsible for all government funded AIDS treatment research,” said activist Larry Kramer in an open letter to Fauci in the San Francsico Examiner in 1988. “You are part of a government bureaucracy that values thriving pharmaceutical company entrepreneurism over the health of people with HIV.” Kramer’s criticism: instead of focusing on improving patients’ health, Fauci’s only answer to AIDS was the development of new drugs. “How long will it take you to start focusing on the immune system, how to boost it and how to prevent the opportunistic infections that are killing people with AIDS? Still, you give your blessing to clinical trials of highly profitable toxins…” “You are a pill-pushing pimp that cooperates with drug companies in forcing dangerous concoctions down the throats of a desperate community,” wrote Kramer. “AIDS drugs are not sold to help people, they are sold to make a profit.” White House Chief Medical Adviser on Covid-19 Dr. Anthony Fauci at the National Institutes of Health (NIH) in Bethesda, Md., on Feb. 11, 2021. (Saul Loeb/AFP via Getty Images) Conflicts of Interest Despite the criticism Fauci endured, the AIDS crisis produced the most important opportunity of his career: using NIAID to develop, and profit from, new drugs. His collaboration with pharmaceutical companies quickly grew into a billion-dollar business. The 1980 Bayh-Dole Act allowed NIAID and government scientists like Fauci to directly profit from drug development. Under the law, NIAID was now allowed to file patents on the new drugs that their research was creating, and then license those drug patents back to pharmaceutical companies. Individual government scientists could also put their names on patents and collect royalties. This created a new income stream for Anthony Fauci: royalties on the sales of all drugs developed through NIAID-funded research. Drug development very quickly became the focus of Fauci’s NIAID, and millions of dollars in royalties started to pour in. According to a 2006 investigation by the Associated Press, NIH and NIAID were concealing millions of dollars in royalties paid not just to the agencies, but to individual officials including Fauci, with little regard for the ethical and legal conflicts of interest. This information was not made public until the Associated Press obtained the information under the Freedom of Information Act. In early 2022, OpenTheBooks.com, a government watchdog nonprofit, reported over 22,0000 royalty payments totaling nearly $134 million in royalty payments from pharma companies to the NIH and directly to over 1,600 NIH scientists. These payments occurred between 2009 and 2014. Data from 2015 onward is not yet available. As a co-owner of drug and vaccine patents, Fauci himself receives royalty payments, including from the development of the Moderna COVID-19 vaccine. The amount of these payments has not been made public. It is perhaps no coincidence then, that the Biden administration’s COVID-19 plan, “The Path out of the Pandemic”, consists of only one strategy: more government vaccination mandates. “Think about it,” said Children’s Health Defense president Mary Holland. “NIAID is a joint venture partner with Moderna! How can the government be a joint venture partner with a for-profit corporation? And then set public policy to force the use of that product? The conflict of interest is astounding.” Experiments in New York Drug development for AIDS created a little-known episode in Fauci’s career. Starting in 1985, the NIAID provided funding for clinical drug trials on HIV-positive children, studies which included children in the New York foster care system. According to a 2009 report by the Vera Institute of Justice, 25 of the children involved in these experiments died, though there is no evidence that they died as a direct result of the experiments. “NIAID under Fauci exploited the most vulnerable in our society to develop new drugs,” said Holland. “These were poor children, without parents, many of whom were already very sick. Episodes like this, make one genuinely recall other medical atrocities in history, experiments conducted on vulnerable people without proper informed consent.” Experiments in Africa Experimentation on humans has been a key part of Fauci’s role in new drug and vaccine development, especially in Africa in the search for a solution to AIDS. Since the mid-1990s Fauci has been the chief promoter of the quest for an HIV vaccine. Under Fauci’s advice, every American president since Clinton has pledged billions of taxpayer dollars to this project—foreign aid diverted away from food and infrastructure to vaccine manufacturers and their research projects, in the name of eradicating AIDS in Africa. In early 2000, Fauci and Bill Gates formed a unique partnership to control this flow of money. By leveraging the research funding available through Fauci’s NIAID, Bill Gates’ celebrity philanthropy, the tragedy of AIDS, and the massive wealth of pharmaceutical companies, Fauci and Gates acquired tremendous influence over health policy around the world. This Fauci-Gates partnership is detailed in a 2008 report in the Journal of European Molecular Biology, provocatively titled “The Gates Foundation: How Sixty Billion Dollars and One Famous Person Can Affect Spending and Research Focus of Public Agencies”. As many human rights organizations have pointed out, Fauci and Gates have spent decades profiting from the use of Africans as test subjects for experimental drugs that often do great harm. And there still is no vaccine for HIV. Read more here... Tyler Durden Wed, 09/14/2022 - 20:20.....»»

Category: smallbizSource: nytSep 14th, 2022

They Were Told They’d Find Good Tech Jobs. Now They’re Being Hounded for Thousands of Dollars

Tech boot camps dangled the prospect of well-paid jobs in tech, 'debt-free.' Students were left owing thousands instead The very idea that she, a Black person living in Alabama, could make $75,000 a year in the tech industry after just a 10-week boot camp is what drew Aaryn Johnson into Flockjay. The ad for the boot camp specializing in tech sales followed her around social media: “This is the bullet train you don’t want to miss! It’s recession-proof even in the midst of a Global Pandemic.” Even better, according to the company’s promotional material, students didn’t have to pay a cent in tuition to Flockjay until they landed a job that paid at least $40,000 a year. [time-brightcove not-tgx=”true”] It seemed too good to be true. Johnson assumed the scheme was fake until one day she saw on Twitter that Black celebrities like Serena Williams and Will Smith had invested in Flockjay—and that the Walnut, California–based startup pledged to help people from underrepresented backgrounds get into the tech industry. When Johnson started an application and then abandoned it, a Flockjay sales rep called her and made it sound like the program was exclusive, she says, but that she had a good shot at getting in, because she’d worked in sales in the past. “They said, ‘You’re going to kill it; you’re going to make so much money.’ ” When she learned that Flockjay was about to close admissions for the class, Johnson completed her application, signed an enrollment agreement, and began the program in August 2021. Flockjay delivered on little of what it promised, Johnson says. The curriculum was so easy that her 7-year-old nephew could have done it, she says. Students were taught how to make posts on LinkedIn—something most all of them knew—including a homework assignment to post about how much they were enjoying Flockjay’s program. Classes had them act out selling tech products to one another, much in the same way children pretend to sell things at a grocery store, with no simulation as to what it would actually be like in the real world. Within Johnson’s first two weeks of the program, the representative who had urged her to join was laid off, along with half of Flockjay’s staff. The result was that the one-on-one coaching students were promised was effectively removed from the program. Johnson had entered the lawless arena of tech boot camps; These camps are among thousands of unaccredited schools that pitch their services to students through heavy marketing spends and often don’t deliver on the promises made in their advertising pitches. Unaccredited schools have long flourished in the U.S., but this new wave of schools does something different: attracting students by offering a relatively new funding model called an income share agreement (ISA). They pitch these ISAs as a way to access education without taking out a loan, but students like Johnson soon find out that these agreements can leave them owing a lot of money without the good career prospects they were promised. Nor are these students eligible for any of the Biden Administration’s planned federal loan forgiveness programs, because ISAs are offered not by the U.S. government but by private companies. Now, a year after enrolling, Johnson is getting hounded by Meratas, the company responsible for collecting on her Flockjay tuition, despite the fact that Johnson says she did not receive the education Flockjay promised. She finished the course, since the company had pledged to match her with hiring partners once she graduated, but after waiting for weeks to be connected with a company, she hustled and found her own job in sales. She never mentioned Flockjay to her new employer. She doesn’t make anywhere near the $75,000 salary the company mentioned in its promotions. Her sales job, while technically in the technology industry, is basically telemarketing, she says: “This is literally the most soul-sucking job I’ve had in my entire life.” Flockjay was cited in October of 2020 by California’s Bureau for Private Postsecondary Education for operating without approval, Johnson has since learned, and ordered to cease advertising to students and enrolling them. The company has not complied. Blair, the company that gave Johnson the money for her tuition, no longer works with Flockjay; they have turned over her financial debt to Meratas. “Their shtick was that it was about getting Black people into tech—but over the 10 weeks, they didn’t train us for any real-life situation,” says Johnson. “There were so many people who tried to get jobs after and could not.” Boot-camp boom In the turbulent economy of the pandemic era, few industries seem as attractive as the tech sector, where people can earn high salaries, work remotely, and feel with some degree of certainty that they’re in a growing field. But tech can also seem opaque to outsiders. After all, it’s much harder to understand what tech employees do all day than it is to picture what happens in a car factory. Boot camps like Flockjay attract students by promising to demystify tech and get students high-paying jobs without having to take on the debt of attending a four-year college. Business has been booming. Around 100,000 people were enrolled in tech boot camps in 2021, according to the research firm HolonIQ, a fivefold increase since 2015. These businesses generated $1.2 billion in revenue in 2020, six times what they did in 2015. Boot camps like Flockjay have flourished over the last few years in part because they partner with companies that offer ISAs, which give students upfront money for tuition if they agree to repay the money once they’re earning a certain wage. Students can either fork over a certain percentage of their salary or a dedicated lump sum every month until they’ve paid back the amount they’ve borrowed—or more, depending on the agreement. ISAs have been used at accredited schools, like Purdue University, but they’re especially popular for nonaccredited schools like boot camps, which often promote these financing arrangements in their sales pitches, since their students cannot access federal student loan dollars. On the surface, the symbiotic relationship between boot camps and ISA providers seems like a smart way to get people into technology. Boot camps are expensive, with tuition ranging from $3,000 to $15,000, and ISAs enable students to pay that tuition without taking out private student loans, which usually have high interest rates and fees. ISAs often behave as servicers, providing students the money that allow boot camps to operate, and then handling the details of repayment so that schools can focus on education. ISAs have better terms than private loans, but not as much flexibility as federal student loans. If boot camps didn’t exist, ISAs might struggle to find a market. “There was a lot of hope that this new emerging high-tech world would save us.” ISA proponents say the financial product allies students, the school, and the ISA provider, since each has a vested interest in a student graduating and making a good salary. “Because a Flockjay education can be financed via an income share agreement, the incentives of the school and the student are highly aligned—Flockjay is a blueprint for College 2.0,” Romeen Sheth, a Flockjay investor, wrote on Medium in 2019, explaining why he had invested in the company. (Sheth did not respond to a request for comment for this story.) But groups that advocate on behalf of students say ISAs are not the cure-all solution that proponents say they are, even as the companies continue to sell students the promise of a swanky future in the high-flying world of tech. The example of Flockjay, showered with praise and funding by venture capitalists and celebrities, even as students say the company ultimately took their money and delivered little in return, shows the risk of allowing both ISAs and for-profit tech schools to operate without regulation. “There was a lot of hope that this new emerging high-tech world would save us,” says Ben Kaufman, director of research and investigations at the Student Borrower Protection Center, which advocates for students, and which provided support to Flockjay students who had complaints about the company. “But there’s a long history of fly-by-night con men setting up for-profit educational enterprises, and then finding ever more exotic and dangerous forms of credit to facilitate them.” Flockjay isn’t the only company that has produced crops of angry students. Three students sued the coding boot camp Lambda School in 2021, alleging that the school misrepresented its job-placement rates and how its ISA worked. They reached a confidential settlement in July, but a fourth such claim remains in court. A lawsuit filed this summer in Atlanta alleges that an online programming boot camp called Clever Programmer charged students tens of thousands of dollars for services it did not deliver. And Washington State filed a lawsuit against tech sales camp Prehired, saying its ISAs are invalid because the company operated without a license, and that the company misled students about its programs. Prehired has denied the allegations in the complaint. Boot camps and ISAs are arguably creating a new generation of debtors, even as the nation grapples with how to handle its existing student debt crisis. President Biden said last month that he planned to wipe away up to $20,000 in federal student loan debt for some borrowers, and earlier this year, the Department of Education said it would forgive billions worth of loans given to students who attended schools like Corinthian Colleges Inc. that it found had misrepresented borrower’s employment prospects. But these boot camps and the ISAs that enable them may be creating some of the same problems—and debt burdens—that the Biden administration is seeking to solve. There’s not a whole lot that Flockjay alums like Johnson can do about their complaints. Some students filed a notice with California’s Workforce and Development Agency in July, suggesting they would file a lawsuit against Flockjay if the agency does not take action. Many more students are like Johnson—embarrassed that they signed up for Flockjay, and just wanting to move on. “This was a scam, but you feel stupid because you fell for it,” she says. Flockjay did not respond to questions for this story, but the company did provide a statement, attributed to Bryant Lau, its head of demand. “We stand by the success our hundreds of graduates have had and the incredibly hard work of our staff when we ran our sales academy,” it says. Meratas did not respond to a request for comment. Not all boot-camp students have stories like Johnson’s. There are many boot camps that do provide a solid tech-focused education, and that have helped students get high-paying tech jobs. These often teach specific skills, such as programming languages like Python, or computer-science skills like encryption and system architecture. Educational programs that are not accredited can still provide students useful skills that will prepare them for the job market. But research indicates that students with industry-recognized credentials like a certificate and degree—credentials that Flockjay and many other tech sales boot camps don’t offer—are most useful for preparing students for the job market. The lure of ‘debt-free’ college To say there’s a student debt crisis in America is a vast understatement. Income-sharing agreements have sprung up as an alternative to taking on this debt. The pitch: ISAs shift the risks of poor workforce outcomes from students to lenders, since lenders only get repaid if the students find a good-paying job. “This is true ‘debt-free’ college,” former Indiana governor Mitch Daniels wrote in 2015, when pitching ISAs as a solution to the student debt crisis. Daniels launched one of the first and most high-profile ISAs at Purdue University, where he was then president, in 2016. The program, called “Back a Boiler,” gave students a portion of their tuition in exchange for the students’ agreeing to pay back a percentage of their future income for a period of time after they graduated. The program partnered with a startup called Vemo Education, which in 2017 raised $7.4 million from venture-capital firms. (In 2022, Purdue suspended its Back a Boiler program amid complaints that it had misled students about how much money they’d owe after graduating. Daniels also announced in June that he was stepping down as Purdue’s president.) ISAs have long been popular at private universities in Europe and Latin America, and U.S. entrepreneurs began founding ISA companies as early as 2012 to fill the gap between federal student loans and private loans, which often have high interest rates and inflexible payback terms. Many of the earliest ISA companies, including Upstart and Pave, have since switched to offering traditional loans. In 2019, $250 million in income-share agreements were created, and 40 colleges and boot camps either offered or were developing ISA programs, according to Edly, an education lending platform, which estimated before the pandemic began that $500 million would be generated in 2020. Flockjay talked about the potential merits of ISAs as part of its funding pitch to investors. The angle paid off; in 2019, Flockjay received funding from startup accelerator Y Combinator; Dreamers VC, the venture capital fund co-founded by Will Smith; and Serena Williams’ investment firm Serena Ventures, which Williams has recently said she plans to focus on when she retires from professional tennis. (Serena Ventures did not respond to requests for comment. A Dreamers VC representative says that Flockjay was one of the few boot camps proactively engaging in communication with California regulators.) “It’s really smoke and mirrors they use to trap people in expensive debt that lasts longer than they think it will.” Advocates like the Student Borrower Protection Center (SBPC) say the way ISAs and boot camps became popular—by marketing themselves as a debt-free alternative to college—was misleading. “THIS IS NOT A LOAN,” a Flockjay deferred-tuition agreement seen by TIME says, and other ISAs clearly state that they are not loans. But ISAs behave very much like loans, with similar terms and fees, and sometimes require borrowers to pay back much more money than they’ve originally borrowed. ISAs often have payment caps that limit the amount a student has to repay, but these can be three times as high as the amount borrowed, according to the SBPC. In some cases, if borrowers want to pay off their ISA early, they have to pay the amount of the payment cap as a penalty, rather than the initial tuition amount—as was the case with a Purdue student who took out an ISA for $15,000 and was told she’d have to pay $37,500 if she wanted to close her contract, according to the Indianapolis Star. “The products have this facial element of seeming really simple and elegant,” says Kaufman, of the SBPC, “but it’s really smoke and mirrors they use to trap people in expensive debt that lasts longer than they think it will.” And while student-borrower advocates agree that ISAs are probably a better alternative than private student loans, they say that any product pitched as a money-making operation to investors won’t be a good deal for students. Federal student loans do not earn the government profits. “The whole premise is that this will generate a profit for somebody, whether it’s an investor or a boot camp,” says Jessica Thompson, a vice president at the Institute for College Access and Success. “Since when does anybody think that students are going to come out on the better end of that deal?” Neither ISAs nor unaccredited boot camps are closely regulated, and that’s created many of the problems students like Johnson have encountered. Students can take out ISAs for schools that don’t offer a good educational product and mislead them about student outcomes—allegations made in numerous lawsuits against boot camps—and then still be required to pay them back. Flockjay, for instance, told students in promotional materials that the average full-time job offer from companies on its platform was $75,000. Yet according to the company’s own 2021 enrollment agreement, out of 114 students who began the program in 2019, only 52 were eligible for graduation, and of those 52, just 22 were in jobs making between $45,000 and $50,000. The rest were making less than $45,000 or didn’t report their salary information. Students like Johnson and Brianna Kirby, a Black woman who started the program in June 2021, say there were many more discrepancies between what Flockjay initially promised and what it delivered. Though these complaints are more focused on the quality of Flockjay’s educational product than the terms of its deferred tuition agreement they signed with Blair (now enforced by Meratas), students say they agreed to the tuition terms because they were told they would make good money after graduation. They say they are now saddled with debt without the benefits they expected. Courtesy Brianna KirbyBrianna Kirby started the Flockjay program in June 2021. Flockjay’s enrollment agreement said the company would give students coaching for interviews and perfecting their résumés, and that its career-services team would act as a liaison between hiring partners and graduates, but after the August 2021 layoffs, most of the career-services team was gone. The enrollment agreement required students to schedule mock interviews with the career-service team, but after the layoff, students would sign in to scheduled mock interviews and no Flockjay staff would ever show up, according to online messages TIME has viewed between Kirby and other students. The enrollment agreement prohibited students from looking for jobs on their own for a set period of time after graduation, so that Flockjay could match them with hiring partners, who paid the company a fee, but when those hiring partners didn’t materialize, students were stuck with no permitted way to find work. The résumé coach assigned to Kirby frequently entered spelling and other errors into her résumé. When students were sent assignments to perfect their résumés, these often weren’t graded on time, Kirby says, even though this significantly slowed down the job -search process. And students were asked to complete a “Capstone Project” to promote Flockjay and recruit new students, even though Flockjay was supposed to be teaching students business-to-business, not business-to-consumer sales; the winning students received an a $100 prize, according to graduates who talked to the Student Borrower Protection Center. After the August layoffs, students in Kirby’s and Johnson’s classes began to discuss the lax student services on Slack, wondering if they could take legal action. “I’ll be honest with you, if I wasn’t financially obligated I could care less about this whole ordeal,” one student wrote in the Slack channel. “However, I am stuck $7k.” After talking with other students about how they felt let down by Flockjay, Kirby and Johnson both closed down the bank accounts to which they had given the company access. (California law says that a note of debt for an educational program is not enforceable if the institution did not have approval to operate when that note was executed; it’s unclear how this would affect the debt of students who live in other states.) Like many other students, Kirby ended up finding a job on her own after graduation, without the help of Flockjay. She does not make anywhere near $75,000. Meratas has been sending her so many emails that she’s started marking them as spam. “Flockjay didn’t make good on their contract with us; they target vulnerable marginalized communities, and left us in the wings with no transparency or communication,” she says. “Now we’re stuck making full payments despite feeling shorted.” One former Flockjay worker says she thinks the company’s focus on increasing its student base is what led to its problems. Lynn Meadors was hired as a Flockjay résumé writer in early 2021. When she began, Flockjay had six classes of graduates, each around 25 students, but each month, the classes got bigger and bigger, she says. By the time she left, in November 2021, the classes were about four times the size they’d been in the beginning. That’s despite the company’s having about half the staff it had before August of that year. Meadors believes Flockjay was trying to add as many students as possible to increase its revenue. “Students were being recruited primarily because they could check a box or fill a seat in the class,” she says, “rather than because they had the potential to be successful.” When students didn’t complete assignments, staff would be encouraged to graduate them anyway. Because Flockjay’s “partner companies” had to pay them a fee whenever the companies hired a student Flockjay had introduced to them, students were told not to seek jobs on their own, so Flockjay could get the commission. “I do think there were a lot of predatory aspects of Flockjay,” Meadors says. “They made it sound like if you went through Flockjay, you were almost guaranteed to find employment, but I know many students who have not found work or who have had to accept jobs in totally different fields and are still now paying Flockjay.” Most of the students were people of color, Meadors says, and Flockjay’s model of getting current students to recruit new ones was successful at making people feel comfortable signing up, even if class quality was declining. Students told her they’d joined because they saw friends or friends of family members posting about their experience, or saw ads from alumni of color that said how successful they’d become in tech. “The thought that any person who entered the program could have a successful tech career is flawed,” Meadors says. “In reality, the majority of people were not successful.” Previous Flockjay students have reported better experiences with the program. Brenna Redpath’s son went through Flockjay in 2020, and she says he flourished in the program. He’s now working in tech sales and makes $80,000, she says, a path that motivated Redpath to enroll in Flockjay in August 2021. Her son’s class was about one-third the size that hers was, she says. Her son had a career coach dedicated to helping him find a job; Redpath says most of the career counselors who were supposed to be available to her had been laid off, with only about two for every 100 students. Redpath, who is 56, had a few interviews after graduating from Flockjay, but she did not find a tech job. She has since found work at a nonprofit that has nothing to do with the tech industry. But since she is making more than $40,000, she and her husband have been anxiously eyeing their bank account, which they did not close down because it’s linked to many of their other monthly payments. She worries Meratas will start collecting soon on her ISA. “I believe in the mission of Flockjay,” says Redpath, “but I watched them not deliver for people who could use it.” Policing a new financial product Since they’re structured differently from loans, ISAs have been difficult for regulators to handle. Regulations often require that lenders disclose the amount of interest a loan has accrued, for example—something ISA providers say would be difficult to calculate. Until the Consumer Financial Protection Bureau entered into a consent order with Better Future Forward, a nonprofit ISA provider, in 2021, some ISA providers weren’t even certain they had to adhere to the Truth in Lending Act, which governs which disclosures student loan borrowers receive. Since the consent order requiring the nonprofit to follow the Truth in Lending Act and the Consumer Financial Protection Act only addresses Better Future Forward and its ISAs, many providers say they still don’t know what federal regulations apply to their own ISAs. Since 2014, Sen. Marco Rubio (R-FL) has introduced numerous Congressional bills that would regulate ISAs, but they have never gone anywhere. This year is no exception—in July, Rubio and three colleagues introduced a bipartisan bill they say would help regulate ISAs. The bill would prevent ISA contracts from being longer than 20 years, and would allow students making below a certain income to be exempt from making payments toward their ISA. The bill is endorsed by Better Future Forward’s CEO Kevin James and Purdue’s president, ISA champion Daniels. But SBPC’s Kaufman says it would “enshrine into law all the worst aspects of ISAs,” and allow providers to continue to claim that these agreements aren’t loans. It may be difficult for the industry to grow until policymakers create a system of regulatory oversight that prevents abuse of ISAs, says James, of Better Future Forward. He argues that used correctly, ISAs can be a powerful tool. Better Future Forward, for instance, offers ISAs only to certain students who attend certain handpicked accredited universities in Minnesota, Wisconsin, and Illinois. The company has worked with regulators in an attempt to create new laws that would make sure that ISAs could be discharged in bankruptcy, unlike student loans, and that students don’t have to repay if they make below a certain income. The U.S. higher educational system needs programs that expand access to financial support and that are built around students’ success, James says. Without access to ISAs, students could further become trapped in debt, since the current loans system is broken, he says. The loan-forgiveness programs the Biden Administration is offering “are patches on a broken system—doing little to ensure history won’t repeat itself,” James wrote in a June 2022 paper laying out his preferred regulatory approach. Since there is little meaningful federal regulation, ISA companies have to comply with different regulations from 50 different states, making it even harder for them to operate, according to the CEO of one company that has recently stopped providing ISAs, and which is not authorized to speak on the record because of pending litigation. The startups that offer ISAs don’t have a lot of capital, and can either spend their money on ensuring they comply with every state-level regulation, or they can spend it on its educational product, or on marketing. “Clear rules would have probably been the best thing that could have happened to us,” the CEO says. A lack of regulation has forced many ISA companies to pivot to other business models, which leaves students with few options other than private loans, which have extremely high interest rates. Indeed, many of the companies that have tried to offer ISAs in the past decade have since left the market because of a lack of regulation. Flockjay itself has since pivoted from tech boot camps, and says it is now focused on helping its graduates and other tech sales workers get better at the jobs they already have. The company is now pitching this as a new service to former students, even though students say they were told they’d receive ongoing alumni support for life as part of the program they had already paid for. The example of Flockjay students indicates that the state regulation is not particularly effective. Though California’s Bureau for Private and Postsecondary Education (BPPE) fined Flockjay $15,000 in October of 2020 for operating without state approval, a year later the BPPE lowered the fine to $10,000—roughly equivalent to the tuition of 1.25 students. The BPPE did not take any further regulatory action against Flockjay. The school still does not have approval to operate in the state of California. California’s Department of Consumer Affairs, which oversees the BPPE, said in a statement that Flockjay appealed its citation for operating without approval; when its appeal was denied, the school submitted evidence in November 2021 that it was no longer operating. The regulator does not confirm, discuss, or comment on investigations, the statement said. BPPE refers matters related to financing to the Department of Financial Protection and Innovation (DFPI.). In a statement, DFPI said: “It is the DFPI’s stance that ISAs issued by schools not licensed or registered with BPPE are unenforceable and cannot be serviced. In August 2021, Meratas, which took over servicing Flockjay’s ISAs in June, entered into a consent order with the DFPI. The consent order states that Meratas will not service any ISAs “that have been determined or declared unenforceable or void by the DFPI or any regulatory agency.” But students including Kirby, Johnson, and Redpath say they are getting emails from Meratas trying to collect on their Flockjay ISAs. They say they’ve also been offered “discounted tuition” offers, in which their debts will be wiped out if they pay $6,000 right away. In August, Redpath emailed Flockjay asking to speak to someone “who can have a conversation about the contractual problem of Flockjay holding teaching for my batch while legally being banned from doing so by the Department of Education.” She noted in the email that many students were unhappy about the lack of career support services, and that their class was three times bigger than previous classes had been. She received an email back the next day. “You can continue to defer your tuition payments until you get a job exceeding $40,000/annually,” a Flockjay customer-success manager wrote. “Per the DTA [deferred tuition agreement] this is only deferred until you get any job.” —With reporting by Simmone Shah.....»»

Category: topSource: timeSep 8th, 2022

Futures Flat In Muted End To Turbulent Week With All Eyes On Payrolls

Futures Flat In Muted End To Turbulent Week With All Eyes On Payrolls US futures dropped on Friday, ending a third straight week of declines, as investors eyed a key jobs report that will be pivotal for this month’s Fed rate hike decision. S&P futures fell 0.2% at 730 a.m. ET, with the underlying cash index down 2.2% this week. Nasdaq 100 futures fell 0.3%, with the tech-heavy index down 2.6% in the previous four days. The dollar index slipped from a record high and the euro strengthened. 10Y yield traded slightly lower, at 3.25%, following yesterday's spike. In pre-market trading, Lululemon jumped 10% after raising its full-year outlook. Meanwhile, Bed Bath & Beyond fell as much as 6%, putting the home-goods retailer on track for a weekly loss following its survival plan earlier in the week.  Analysts raise PTs on the stock, though some flag higher inventory levels as a note of bearishness. Here are other notable movers: Procept BioRobotics (PRCT US) initiated at overweight by Wells Fargo, highlighting the potential of the company’s AquaBeam Robotic System, a therapy for prostate gland enlargement JPMorgan cuts its ratings on Dow and LyondellBasell (LYB US) to neutral from overweight, saying the petrochemicals companies are “probably not the best places to put new money to work.” Shares in Addentax (ATXG US), a Chinese garment-maker, drop as much as 40% in US premarket trading, set to extend yesterday’s 95% plunge into a second day. US semiconductor- related stocks could be active on Friday after Broadcom gave a robust sales forecast for the current quarter, calming worries that spending on infrastructure is slowing The outlook for stocks has soured since mid-August after traders ramped up bets that the Fed will continue its aggressive monetary tightening, hurting the economy in the process. The S&P 500 has erased $2 trillion in market capitalization in the past five days, and has given up half of its gains made in the summer rally. Meanwhile, tech stocks have succumbed to rising rates, which are a headwind to the expensive growth sector. “We don’t have a lot of reasons to be bullish in this type of environment for the next couple of weeks and months,” Meera Pandit, global market strategist at JPMorgan Asset Management, said on Bloomberg Television. “Yet when we think about the longer term perspective and the longer term investor, these are the types of level that can be fruitful in the long run.” US stocks had outflows of $6.1 billion in the week to Aug. 31 - the biggest exodus in 10 weeks - according to a Bank of America's Michael Hartnett, adding that investors expect  “fast inflation shock, slow recession shock” as nominal growth continues to be boosted by surging consumer prices, fiscal stimulus, large household savings and the impact of the war in Ukraine. Next up on investor minds is the August jobs report in under an hour, which is expected to show healthy payrolls growth following a stronger-than-expected US manufacturing report. This is how Goldman traders framed what to expect (full preview here): "we are still in a bad is good and vice versa set up for US stocks as Fed has made it clear that they want to see some froth exit the labor market in tandem with cooling inflation: i) Strong print here will clearly make 75bps much more likely on 9/21; ii) Inline print of 300k(ish) will keep pressure on this tape...anything close to last month’s shocking print of 528k would lead to real risk unwind into the wknd (I think at least a 200bp sell off). iii) Sweet spot for stocks tomorrow is a 0 – 100k headline reading...should get a 100+bp rally for S&P in this scenario after this recent drawdown. If we happen to get a negative number an even sharper rally", and the pivot will be right back on the Q1 calendar. “The risk of having another additional 75-basis-points hike is high and also to have a big rally on the real rates” depending on the outcome of the jobs report, said Claudia Panseri, a global equity strategist at UBS Global Wealth Management. “Volatility in the equity market will remain quite high until the picture on inflation becomes more clear than it is right now,” she told Bloomberg Television. In Europe, the Euro 50 rose 0.9%, with Germany's DAX outperforming peers, adding 1.5%, IBEX lags, rising 0.2%. Autos, financial services and energy are the strongest-performing sectors. Here are the biggest Europen movers: Nokia shares are up as much as 1.4% on Friday, adding to a weekly gain and outperforming the wider markets decline as the communications company will join the Euro Stoxx 50 benchmark Ashmore shares gain as much as 5.5%, reversing a small decline at the open, with Panmure Gordon upgrading the emerging markets fund manager to buy from hold following its FY results Smith & Nephew rises as much as 4.9%, extending a weekly gain. RBC says investors are viewing stock’s “historically low valuation” against orthopedic peers as a “buying opportunity.” Segro and Tritax Big Box gain 2.5% and 2.2%, respectively, after Shore Capital upgrades the REITs, saying downside risks for Segro are “fairly priced,” and the risk- reward balance for Tritax is more even UK homebuilders fall and are among the worst performers in the Stoxx 600 after HSBC cut its ratings on seven stocks, saying the UK is on the “cusp of a housing downturn” Sectra shares are down as much as 6.6% after the Swedish medical technology company presented its latest earnings, which included a drop in operating profit Alliance Pharma falls as much 11%, most since July, as the UK’s competition watchdog seeks to disqualify seven of the firm’s directors, including CEO Peter Butterfield Proximus falls to fresh record low, declining as much as 4.3% after Morgan Stanley resumes at underweight in note citing structural market headwinds and an unsupportive valuation Kofola CeskoSlovensko shares drop 2.5% after rising costs prompted the Czech producer of soft beverages to reduce its dividend proposal and rein in guidance Compleo Charging Solutions falls as much as 4% after Berenberg downgrades to hold and lowers its price target by 80%, citing resignation of the company’s co-founder Checrallah Kachouh Earlier in the session, Asian stocks fell, on course for their worst week in more than two months, as the dollar hit a new high amid worries about the Federal Reserve’s aggressive rate-hike path and as lockdowns continued in China.  The MSCI Asia Pacific Index declined as much as 0.7%, set for a weekly loss of nearly 4%. TSMC and other tech stocks contributed the most to the benchmark’s drop as Treasury yields climbed, sending the Bloomberg Dollar Spot Index to a record high.  Equity gauges in Hong Kong led declines in the region, dragged by the banking and tech sectors. Meanwhile, shares in Japan fell as the yen slipped to a 24-year-low against the dollar.  Fresh lockdowns in China are also weighing on sentiment, putting the Asian stock benchmark on track for its third-straight weekly decline. The sell-off reflects broad concerns of an economic slowdown amid weaker manufacturing data in the region’s major tech exporters. “Dollar momentum sees no sign of breaking,” Saxo Capital Markets strategists including Redmond Wong wrote in a note. “Fresh Covid lockdowns in China, in particular, the full lockdown of Chengdu and extended restriction in Shenzhen, have caused some demand concerns.”  Investors will keep a keen eye on the US August jobs report due later Friday to gauge the Fed’s next move in its September meeting.  While weak sentiment has kept Asian shares hovering near their two-year lows, hedge-fund giant Man Group said Asian stocks are set to outshine peers next year. The investment firm is betting on defensive stocks in India and Southeast Asia, Andrew Swan, Man GLG’s head of Asia ex-Japan equities, said in an interview Japanese stocks fell as investors awaited key US employment figures and assessed the yen’s decline to a 24-year low against the dollar. The Topix Index dropped 0.3% to 1,930.17 as of the market close in Tokyo, while the Nikkei 225 was virtually unchanged at 27,650.84. Sony Group contributed the most to the Topix’s decline, decreasing 1.1%. Out of 2,169 stocks in the index, 738 rose and 1,307 fell, while 124 were unchanged. “The US jobs report won’t be very positive no matter what’s out,” said Tatsushi Maeno, a senior strategist at Okasan Asset Management. “If it’s strong, the FOMC will lean toward a 0.75% rate hike and on the other hand, if it’s weak, there could be talk of a recession." India’s benchmark equities index closed slightly higher, after swinging between gains and losses several times throughout the session, as investors tried to gauge the impact of the US Federal Reserve’s hawkish stance in a week marked by volatility.     The S&P BSE Sensex rose 0.1% to 58,803.33 in Mumbai, but ended lower for a second consecutive week. The NSE Nifty 50 Index was little change on Friday. Housing Development Finance Corp and HDFC Bank provided the biggest support to the Sensex, which saw 19 of its 30 member stocks ending lower.  Thirteen of the 19 sector indexes compiled by BSE Ltd. declined, led by a measure of oil and gas companies.  “The effect of Jackson Hole is still revolving across financial markets, with a soaring dollar and falling equities as the main themes,” Prashanth Tapse, an analyst at Mehta Securities, wrote in a note.  In FX, the greenback fell against all of its Group-of-10 peers except the yen. The euro rose a fourth day in five against the greenback, to edge above parity. The pound languished near the lowest since March 2020 versus the dollar. Investors awaited the results of a vote to choose the country’s next prime minister on Monday, with expected winner Liz Truss aiming to cut taxes and increase borrowing. The Norwegian krone outperformed, and rebounded from a six-week low versus the greenback, amid a recovery in oil prices before an OPEC+ meeting on supply at which Saudi Arabia could push for output cuts. The yen weakened past 140 per dollar after a slight rally in Asian trading faded. In rates, treasuries were little changed while European bonds slipped. The 10-year Treasury yield held steady near 3.26%; while gilts 10-year yield is up 2.6bps around 2.90% and bunds 10-year yield is up 2bps to 1.58%. In commodities, WTI crude futures rebound 3% to around $89, within Thursday’s range; oil pared gains after news that the Group of Seven most industrialized countries is poised to agree to introduce a price cap for global purchases of Russian oil, while Russia looks set to resume gas supplies through its key pipeline. Gold rose $6 to around $1,704.  Meanwhile, zinc headed for its biggest weekly loss in over a decade on concern Chinese demand will be hamstrung by new virus restrictions. Bitcoin has reclaimed the USD 20k mark but the upward move is yet to gain any real traction amid the broader contained price action. Looking to the day ahead now, the main highlight will be the US jobs report for August. Otherwise on the data side, there’s US factory orders for July and Euro Area PPI for July. Market Snapshot S&P 500 futures little changed at 3,969.25 Gold spot up 0.4% to $1,704.52 MXAP down 0.5% to 154.28 MXAPJ down 0.5% to 506.44 Nikkei little changed at 27,650.84 Topix down 0.3% to 1,930.17 Hang Seng Index down 0.7% to 19,452.09 Shanghai Composite little changed at 3,186.48 Sensex up 0.4% to 59,025.66 Australia S&P/ASX 200 down 0.2% to 6,828.71 Kospi down 0.3% to 2,409.41 STOXX Europe 600 up 0.7% to 410.47 German 10Y yield little changed at 1.58% Euro up 0.3% to $0.9980 U.S. Dollar Index down 0.25% to 109.42 Top Overnight News from Bloomberg Under pressure from central bankers determined to quash inflation even at the cost of a recession, global bonds slumped into their first bear market in a generation. The Bloomberg Global Aggregate Total Return Index of government and investment-grade corporate bonds has fallen more than 20% from its 2021 peak, the biggest drawdown since its inception in 1990 The ECB remains behind the curve on tackling record euro- zone inflation and will have to act more forcefully than previously envisaged to wrest control of prices, according to a survey of economists Consumers’ expectations for inflation in three years rose to 3% in July from 2.8% in June, European Central Bank says in statement summarizing the results of its monthly survey. Russia looks set to resume gas supplies through its key pipeline to Europe, a relief for markets even as fears persist about more halts this winter. Grid data indicate that flows will resume on Saturday at 20% of capacity as planned German exports and imports both fell in July as surging prices and the war in Ukraine threaten to send Europe’s largest economy into a recession. The trade surplus shrank to 5.4 billion euros ($5.4 billion) from 6.2 billion euros in June, as exports dropped by 2.1% and imports by 1.5% A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were indecisive with price action relatively rangebound after the mixed lead from the US and with the region lacking firm commitment as participants await the upcoming US NFP jobs data. ASX 200 was lacklustre as earnings releases quietened and with strength in financials offset by losses across the commodity-related sectors. Nikkei 225 traded subdued amid underperformance in large industrials although losses in the index were stemmed by retailers after several reported strong August sales. Hang Seng and Shanghai Comp were mixed as Hong Kong underperformed amid notable losses in developers and with the mainland choppy but ultimately kept afloat after the PBoC recently cut rates on its Standing Lending Facility by 10bps from August 15th and after several officials pledged measures. Top Asian News PBoC official Ruan said monetary policy is to further improve cross-cyclical adjustments and maintain stable and moderate credit development, while they will keep liquidity reasonably ample. PBoC will also better coordinate structural and aggregate policy tools but will avoid flood-like stimulus and keep prices stable. Furthermore, the PBoC said China has not taken excessive monetary policy stimulus since the pandemic, leaving room for subsequent policy adjustments and that balanced consumer prices also create favourable conditions for monetary policy adjustments, according to Reuters. PBoC adviser Wang said banks need to increase financial support for infrastructure and that infrastructure is restricted by local government debt levels, while Wang added that they need to ensure property companies' financing needs are met, according to Reuters. China's securities regulator official said they will promote new legislation for overseas listings and will implement the China-US audit agreement, as well as continue strengthening communication with foreign institutional investors, according to Reuters. China's banking regulator official said they will steadily resolve the risks faced by small and medium-sized financial institutions, while they will improve monitoring and disposal of debt risks of large companies, according to Reuters. Japanese Finance Minister Suzuki said it is important for currencies to move stably reflecting economic fundamentals, while he noted that recent FX moves are big and they will take appropriate action on FX if necessary. Suzuki also stated that they are watching FX with a sense of urgency and will brief the media after the G7 finance ministers meeting tonight. European bourses are firmer across the board as hawkish yield action in the EZ has eased from yesterday's recent peaks, Euro Stoxx 50 +0.8%. Stateside, futures are contained and flat with all focus on the NFP report. Alphabet's Google (GOOG) is planning to accept the use of third-party payment services on its smartphone app in national such as Japan and India but not the US, according to the Nikkei Top European News British Chambers of Commerce said the UK is already in the midst of a recession and it expects the UK economy to decline for two more periods following the contraction in Q2, while it also sees inflation to reach 14% later this year EU warned UK Foreign Secretary Truss against triggering Article 16 and said they will refuse to engage in serious talks on reforms to the post-Brexit deal unless she takes the “loaded gun” of unilateral legislation off the table German Economy Gets Another Growth Warning as Trade Volumes Drop Russian Gas Link Set to Restart as Traders Weigh Further Halts ECB Says Consumers Now See Inflation in Three Years at 3% A Hot Jobs Report Could Send Bitcoin to $15,000, Hedge Fund Says Citi Favors Bets on 75Bps Hikes at Each of Next Two ECB Meetings FX DXY's overnight pullback has picked up pace in early European hours. The EUR stands as the best performer alongside reports that Nord Stream 1 flows are expected to resume on Saturday. Non-US dollars are all modestly firmer to varying degrees, whilst JPY fails to benefit from the dollar weakness. Yuan shrugged off another notably firmer-than-expected CNY fixing overnight. Fixed Income Comparably contained session overall thus far though Bunds are holding at the lower end of a 85 tick range in limited newsflow pre-NFP. Currently, the Bund low is circa. 10 ticks above 147.00, with yesterday’s 146.78 trough in focus and then 145.97/87 thereafter. Gilts and USTs are very similar thus far in that both benchmarks are essentially unchanged. Commodities WTI Oct and Brent Nov futures are firmer on the day amid a softer Dollar and narrowing prospects of an imminent Iranian Nuclear deal. Spot gold edges higher as the Dollar remains weak, with the yellow metal back on a 1,700/oz+. Base metals are mixed LME copper softer around the USD 7,500/t. US Event Calendar 08:30: Aug. Change in Nonfarm Payrolls, est. 298,000, prior 528,000 Change in Private Payrolls, est. 300,000, prior 471,000 Change in Manufact. Payrolls, est. 15,000, prior 30,000 Unemployment Rate, est. 3.5%, prior 3.5% Labor Force Participation Rate, est. 62.2%, prior 62.1% Underemployment Rate, prior 6.7% Average Hourly Earnings YoY, est. 5.3%, prior 5.2% Average Hourly Earnings MoM, est. 0.4%, prior 0.5% Average Weekly Hours All Emplo, est. 34.6, prior 34.6 10:00: July Durable Goods Orders, est. 0%, prior 0%; July -Less Transportation, est. 0.3%, prior 0.3% 10:00: July Factory Orders, est. 0.2%, prior 2.0% 10:00: July Cap Goods Orders Nondef Ex Air, prior 0.4% 10:00: July Factory Orders Ex Trans, est. 0.4%, prior 1.4% DB's Jim Reid concludes the overnight wrap If I'm not here on Monday it's not impossible that I've been eaten by a snake or a small crocodile, or poisoned by a tarantula. For our twins' 5th birthday party this weekend we've hired a professional reptile handler to come round and show 30-40 overexcitable kids some interesting animals. If I'm not eaten or bitten I'm a bit worried he won't do the full register on the way out and I'll be left with a huge lizard hiding in my bed. All I can say is that for my 5th birthday party we just had pin the tail on the donkey and a few stale sandwiches. Life was so much simpler then. Markets are pretty complicated at the moment with investors not being quite able to decide whether the newsflow was bad or good yesterday for risk assets. We went to both extremes with the US rallying back into positive territory by the close (S&P 500 +0.30% having been -1.23% just after Europe logged off). As the US starts it's day a bit later we'll have a fresh payroll print to throw into the mix which could be the swing factor between 50 and 75bps at the September Fed meeting. Last month’s strong print ratcheted up expectations that the Fed could hike by 75bps for a third meeting in a row, and markets are still pricing that as the more likely outcome than 50bps, with futures now pricing in +67.7bps worth of hikes. In terms of what to expect today, our US economists are looking for +300k growth in nonfarm payrolls, which should be enough to keep the unemployment rate at its current 3.5%. Ahead of that, the US labour market data we got yesterday was pretty good, continuing the run of decent releases over recent days. Initial jobless claims for the week through August 27 unexpectedly fell back to 232k (vs. 248k expected), and the previous week was also revised down by -6k. That’s the third week in a row that the jobless claims have fallen, marking a change from the mostly upward trend we’ve seen since late March. On top of that, the ISM manufacturing release also surpassed expectations, remaining at 52.8 (vs. 51.9 expected), with the employment component at a 5-month high of 54.2 (vs. 49.5 expected). Treasuries lost significant ground on the day, even before the data, with the 2yr yield rising +1bps to hit another post-2007 high of 3.50%, whilst the 10yr yield rose +6bps to 3.25%. The moves were driven by higher real yields across the curve, with the 5yr real yield hitting a 3-year high of 0.849%. It was a similar story in Europe too, where yields on 10yr bunds (+2.2bps), OATs (+2.5bps) and BTPs (+3.3bps) rose. Those European moves came as investors grew increasingly confident that the ECB would hike by 75bps at some point this year, which was aided by the latest data that showed Euro Area unemployment fell to a new low of 6.6% in July. That’s the lowest level since the single currency’s formation, and means that the latest data is showing that the Euro Area simultaneously has the highest inflation and the lowest unemployment of its existence. As discussed at the top, US equities turned round late in the session with the Nasdaq nearly making it back into the green (-0.26%) as well as the S&P after being -2.28% at 6pm London time. This was too late to save the European session as the STOXX 600 (-1.80%) took a significant hit. Sentiment was pretty downbeat from the outset after the lockdown of the Chinese city of Chengdu (population 21m) risked further disruption to supply chains and global economic demand. That said, the energy situation continued to develop in a positive direction, with German power prices for next year coming down by a further -9.11% to €523.40 per megawatt-hour. In fact they have halved since their intraday peak on Monday when they hit €1050, which just shows how amazingly volatile this market is right now. The EU is considering various interventions to deal with the current turmoil, including price caps and windfall taxes, and Commission President Von der Leyen is set to outline the measures in her State of the Union address on September 14. Staying on commodities, the decline in oil prices continued yesterday thanks to fears of further Chinese lockdowns and hawkish central banks. Brent crude was down -4.28% to $92.36/bbl, which is a substantial decline since its closing level on Monday of $105.09/bbl. As we go to print, crude oil prices are showing some recovery with Brent futures +1.91% higher at $94.12/bbl. There was a similar negative pattern among industrial metals, with copper (-2.96%) down for a 5th day running on the back of those same fears about demand. Meanwhile in the precious metal space, gold (-0.79%) slipped below $1700/oz, while hitting its lowest since July intraday as markets priced higher interest rates, thus raising the opportunity cost of holding a non-interest-bearing asset. Over in the FX space, a number of new milestones were reached yesterday, most notably a rise in the dollar index (+0.91%) to levels not seen since 2002. The greenback was supported yesterday by the strong data that added to expectations the Fed would keep hiking into next year, although the reverse picture was that the Euro fell back beneath parity against the dollar, and the Japanese yen fell to 140 per dollar for the first time since 1998. In Asia’ morning trade, the Japanese yen further weakened, touching 140.26 per US dollar. Here in the UK, sterling also fell just beneath the $1.15 mark in trading for the first time since March 2020. In Asia this morning, the Nikkei (-0.21%), the Hang Seng (-0.58%), and the CSI (-0.20%) are trading lower with the Shanghai Composite (+0.28%) bucking the trend. Elsewhere, the Kospi (+0.04%) is struggling to gain traction after South Korea’s headline inflation slowed after six months of accelerating (more below). Moving ahead, US stock futures are fairly flat with contracts on the S&P 500 (-0.08%) and NASDAQ 100 (-0.04%) treading water. Early morning data showed that Korea’s inflation eased to +5.7% y/y in August (v/s +6.1% expected) from +6.3% in July as energy prices eased. MoM prices dropped -0.1% in August (v/s +0.3% expected) after rising +0.5% in the prior month thus providing some comfort to the Bank of Korea (BoK) in its yearlong tightening cycle. Rounding off yesterday's data, there was plenty to digest from the global manufacturing PMIs, although they mostly confirmed the picture from the flash readings we’d already got. In the Euro Area, the reading came in at 49.6 (vs. flash 49.7), and the US had a 51.5 reading (vs. flash 51.3). The UK had a stronger revision up to 47.3 (vs. flash 46), but it was still in contractionary territory and the lowest since May 2020. Elsewhere, German retail sales grew by +1.9% (vs. -0.1% expected). To the day ahead now, and the main highlight will be the US jobs report for August. Otherwise on the data side, there’s US factory orders for July and Euro Area PPI for July.   Tyler Durden Fri, 09/02/2022 - 07:52.....»»

Category: blogSource: zerohedgeSep 2nd, 2022

Futures Head For Another Monthly Drop, As Oil Slumps, Yields And Dollar Rise

Futures Head For Another Monthly Drop, As Oil Slumps, Yields And Dollar Rise After three days of steep declines, S&P futures traded between modest gains and losses as global markets headed for the third consecutive weekly decline and another monthly drop on concerns that aggressive central bank tightening will push the global economy into a hard recession. At 7:15am ET, futures were up 0.2% and Nasdaq futures rose 0.7%, after trading both higher and lower earlier in the session. The dollar rose, Treasury yields jumped after another record CPI print in Europe, while the bizarre oil slump extended. In premarket trading, Bed Bath& Beyond plunged after the home-goods retailer filed a form to sell an unspecified number of shares. HP also fell 6.8% after the company reported quarterly sales that missed estimates and cut its annual profit forecast as demand for personal computers and printers slowed. Analysts noted that the PC maker will need a couple of quarters to correct its inventory. Here are other notable premarket movers: Robinhood (HOOD US) falls 2.3% as Barclays cut its rating to underweight from equal weight ChargePoint (CHPT US) shares rose as much as 2.1% in US premarket trading, after the electric vehicle charging network operator’s second-quarter revenue came in ahead of estimates, with analysts positive on the company’s gross margin performance amid supply-chain woes HP Enterprise (HPE US) narrowed its full-year adjusted earnings per share forecast and reported in-line revenue for the third quarter. Analysts were bracing for the worst, after Dell’s disappointing outlook last week. Shares fall 1% in premarket trading PayPal shares rise 2.9% in premarket trading after Bank of America upgraded its rating on the payments stock to buy from neutral previously Morgan Stanley resumes coverage of Welltower (WELL US) at overweight and a $90 PT with the broker bullish on a recovery for the US senior housing market “What’s clear is that predicting this market is not clean cut,” Angeline Newman, a managing director at UBS Global Wealth Management, said on Bloomberg Television. “We are living in a world where conflicting economic signals are making the path of monetary policy very difficult to determine.” Market bets on a shallower trajectory for Federal Reserve tightening are receding, raising the prospect of more losses for stocks and bonds in an already difficult year. Investors are scouring incoming data for clues on the policy path, with August US jobs figures on Friday the next key report. European shares reversed earlier gains to trade at the lowest level in more than six weeks, after Euro-area inflation accelerated to another all-time high, strengthening the case for the European Central Bank to consider a jumbo interest-rate hike when it meets next week. ECB Governing Council member Joachim Nagel urged a “strong” reaction, hinting at a 75bps hike just as Europe braces for an energy disaster with winter coming. Paradoxically this pushed the EUR to session lows. In Europe, the Stoxx 50 fell 0.7%, with the FTSE 100 lagging, dropping 1%. Energy and autos slump while utilities is the worst-performing sub-index in the European gauge on Wednesday, extending their selloff to a fourth session as investors fret over Russian gas supplies at the start of a three-day halt of the key Nord Stream pipeline. Slump is lead by Drax (-4.3%), National Grid (-4%), Italy’s Terna (-2.3%), Germany’s Uniper (-4%) and Fortum (-3%). Some renewables also take a hit, including Orsted (-2.4%) and Verbund (-1.4%). Citi says utilities had to put up more than EUR100b of additional collateral versus 2020 levels because of record levels of future power and gas prices. Here are the biggest European movers: ASML rises as much as 3.4%. It is among the “most attractive names” in the current uncertain macro environment, UBS says in a note upgrading the semiconductor-equipment company to buy from neutral. Stadler Rail shares climb as much as 6% after reporting mixed results, with 1H sales beating estimates and a strong order intake, offset by more cautious comments on margins and a negative currency impact, according to analysts. CFE shares surge as much as 23% after the Belgian construction and development company’s 1H results, with Degroof raising its estimates. Ackermans & van Haaren rises as much as 7.5% after KBC upgrades its rating on the industrial holding company to buy from hold following first-half results, which the broker describes as “resilient” in tough times. Lundbergforetagen shares rise as much as 5.5%, the most since May, after DNB reiterated its buy recommendation for the Swedish real estate investment firm, while trimming its PT to SEK485 from SEK530. Utilities are among the worst-performing sub-index in the European gauge on Wednesday, extending their selloff to a fourth session as investors fret over Russian gas supplies at the start of a three-day halt of the key Nord Stream pipeline. European energy stocks underperform for a second day after oil erased initial gains on Wednesday to head for a third monthly decline as rate hikes by major central banks and China’s Covid Zero strategy increase the likelihood of a global economic slowdown. Brunello Cucinelli shares fall as much as 7.2% after the Italian luxury fashion company reported 1H results; Deutsche Bank says the update is “largely as expected” with guidance appearing “relatively conservative.” Europe's weakness was sparked by the ongoing rout in oil, which headed for a third monthly drop - the longest losing run in more than two years - hampered by the likelihood of slower global growth, yet which as Goldman says is now the best asset to own having priced in a recession more than any other asset class. European natural gas advanced after a two-day slump, with traders weighing risks to Russian supplies against the continent’s drastic efforts to curb the energy crisis. Earlier in the session, Asian equities climbed in a mixed day that saw tech shares advance but Japan’s bourses retreat as traders digested China’s weak economic data while technology stocks rebounded. BYD Co. plunged in Hong Kong after Warren Buffett’s Berkshire Hathaway Inc. trimmed its stake in the electric vehicle maker. The MSCI Asia Pacific Index erased an earlier loss to trade up as much as 0.6%. Chinese benchmarks underperformed the region after factory activity contracted on power shortages spurred by a historic drought. Stocks were also weak in Hong Kong as Warren Buffett’s sale of shares in BYD Co. fueled general risk-off sentiment, countered by advances in the city’s tech shares. Traders also weighed US job and consumer confidence numbers, which were seen backing the Federal Reserve’s rate-hike plans. “The dented risk sentiment from tighter-for-longer central bank policies is likely to weigh on sentiment in the region,” Jun Rong Yeap, a market strategist at IG Asia Pte, wrote in a note. He added that further headwinds including Covid lockdowns may weigh on Chinese equities. Taiwanese stocks rose, even amid a potential escalation of cross-strait tensions, while South Korean shares also advanced on gains in tech names. Indian and Malaysian markets were closed for holidays. Investors are also contending with mounting friction between Beijing and Taipei after Taiwanese soldiers fired shots to ward off civilian drones and evaluating the latest Chinese data, which indicated factory activity shrank for a second month. Power shortages, a property sector crisis and Covid outbreaks all took a toll. In Japan, stock dropped amid concerns over the potential for Federal Reserve tightening and data that showed weak factory activity in China.  The Topix fell 0.3% to 1,963.16 as of the market close Tokyo time, while the Nikkei 225 declined 0.4% to 28,091.53. Sony Group Corp. contributed the most to the Topix’s decline, decreasing 1.7%. Out of 2,169 stocks in the index, 683 rose and 1,381 fell, while 105 were unchanged. “US stocks, which plummeted on the Jackson Hole meeting last week, have fallen further and Japan stocks are matching that,” said Kiyoshi Ishigane, a chief fund manager at Mitsubishi UFJ Kokusai Asset Management. In Australia, the S&P/ASX 200 index fell 0.2% to close at at 6,986.80, weighed by losses in mining and energy shares.  Asia-Pacific energy-related stocks fell as oil headed for its third straight monthly decline, the longest losing run in more than two years, on prospects for slower global growth. In New Zealand, the S&P/NZX 50 index fell 0.4% to 11,601.10 In FX, the Bloomberg dollar spot index rose again, up 0.2%, as it reversed a loss as the greenback rebounded, with most Group-of-10 peers swinging to a loss in the European session. AUD and JPY are the strongest performers in G-10 FX, NOK and CHF underperform. The euro fell to a session low of $0.9974 as euro-area inflation accelerated to another all-time high of 9.1% from a year ago, exceeding the 9% median estimate in a Bloomberg survey. Norway’s krone plunged by 1% against the euro and even more versus the dollar after news that the nation’s central bank will ramp up its purchases of foreign currency to 3.5 billion kroner ($350 million) a day in September from 1.5 billion in August as it deposits energy revenue into the $1.2 trillion sovereign wealth fund. The pound neared the lowest since March 2020 against the greenback that was touched yesterday, yet options suggest a short-squeeze could be due. The Australian and New Zealand dollars held up well amid month-end demand after earlier gains in US stock futures following China PMI data. The yen was steady. Board member Junko Nakagawa said that the Bank of Japan’s forward guidance for interest rates isn’t necessarily directly linked with its Covid funding program. In rates, Treasuries are off session lows as US trading gets under way Wednesday, selloff paced by gilts with UK yields higher by 9bp-13bp. US 2Y barely exceeded Tuesday’s multiyear high. US yields are higher by 3bp-5bp, 2- year rose as much as 5.3bp to 3.275%, Treasury 10-year yield adds 4bps to around 3.14%.  Curve spreads are little changed, inverted 5s30s around -5.7bp, near lowest level since mid June; month-end index rebalancing at 4pm New York time will extend the duration of Bloomberg Treasury index by an estimated 0.12 year. European bonds slide across the curve, led by gilts, after hotter-than-expected euro-area inflation data. Gilts 10-year yield is up 11 bps to 2.82%, while German 10-year yield rises 3.6bps to 1.55%. Peripheral spreads widen to Germany with 10y BTP/Bund adding 2.2bps to 233.4bps. Bitcoin has managed to reclaim USD 20k after slipping to a USD 19.7k low, overall the crypto remains in fairly tight sub-1k parameters. In commodities, crude futures extend declines. WTI drifts 2.6% lower to trade near $89, while Brent falls 3% to the $96 level. Base metals are mixed; LME tin falls 2.5% while LME nickel gains 1.4%. Spot gold falls roughly $10 to trade near $1,714/oz. Spot silver loses 1.5% near $18. Looking to the day ahead now, data releases include the flash CPI reading for the Euro Area in August, as well as the country readings for France and Italy. On top of that, there’s the ADP’s new report of private payrolls for August and the MNI Chicago PMI for August. Finally, central bank speakers include the Fed’s Mester and Bostic. Market Snapshot S&P 500 futures little changed at 3,986.25 STOXX Europe 600 down 0.6% to 417.39 MXAP up 0.2% to 158.39 MXAPJ up 0.3% to 519.46 Nikkei down 0.4% to 28,091.53 Topix down 0.3% to 1,963.16 Hang Seng Index little changed at 19,954.39 Shanghai Composite down 0.8% to 3,202.14 Sensex up 2.7% to 59,537.07 Australia S&P/ASX 200 down 0.2% to 6,986.76 Kospi up 0.9% to 2,472.05 German 10Y yield little changed at 1.54% Euro down 0.1% to $1.0003 Gold spot down 0.5% to $1,715.78 U.S. Dollar Index up 0.14% to 108.92 Top Overnight News from Bloomberg Forget about a soft landing. Federal Reserve Chair Jerome Powell is now aiming for something much more painful for the economy to put an end to elevated inflation. The trouble is, even that may not be enough. It’s known to economists by the paradoxical name of a “growth recession.” France said the nation’s natural gas storage will be full in about two weeks, enabling the country to ride out the coming winter even as Russia turns the screw on deliveries of the fuel UK statisticians decided that a £400 ($466) government grant to help households with energy won’t lower headline inflation numbers, a move that will protect the returns of some bond holders but increase payments made by both the Treasury and consumers Sweden’s Riksbank hopes to be able to avoid a recession as it is prepared to do what is necessary to bring soaring inflation back to the central bank’s 2% target, deputy governor Anna Breman said The People’s Bank of China set stronger-than-expected yuan fixings for six sessions to Wednesday and people familiar with the matter said at least two local banks pushed back against the weakness when submitting data for the reference rate. Traders still expect it to weaken past the psychological 7 per dollar level, even if the moves slowed the decline China’s retail activity flatlined in August with e-commerce demand especially weak, according to satellite data, suggesting that consumer caution due to the ongoing Covid Zero policy and elevated unemployment remain major drags on the world’s second-largest economy Russia’s seaborne crude shipments to Asia have fallen by more than 500,000 barrels a day in the past three months, with flows to the region hitting their lowest levels since late March A more detailed look at global markets courtesy of Newsquawk Asia-Pacific stocks were mostly negative following the losses across global counterparts owing to recent hawkish central bank rhetoric and with geopolitical concerns stoked after Taiwan fired warning shots at a Chinese drone. ASX 200 was subdued by weakness in commodity-related stocks with the energy sector the worst hit after the recent slump in oil prices, while a surprise contraction in Construction Work added to the headwinds and feeds into next week’s GDP release. Nikkei 225 declined but held above 28k after encouraging Industrial Production and Retail Sales. Hang Seng and Shanghai Comp were pressured amid a heavy slate of earnings releases and with US regulators said to have selected a number of US-listed Chinese companies for audit inspections including Alibaba, while participants also reacted to the Chinese PMI data in which the headline Manufacturing PMI topped estimates but remained in contraction territory. Top Asian News Japanese PM Kishida said he has fully recovered from COVID-19 and returned to normal duty. Kishida added that they will begin administering Omicron variant targeted vaccines earlier than planned, while he announced to increase the daily upper limit of entrants to Japan to 50k on September 7th and will look into further loosening of border controls. South Korean vice-Finance Minister says they received "positive signs" during talks with FTSE Russell, FX environment has not emerged as a hurdle in discussions. Possibility is high for S. Korea's inclusion to the FTSE's WGBI watch-list in September Chinese NBS Manufacturing PMI (Aug) 49.4 vs. Exp. 49.2 (Prev. 49.0); Non-Manufacturing PMI (Aug) 52.6 vs Exp. 52.2 (Prev. 53.8) Chinese Composite PMI (Aug) 51.7 (Prev. 52.5) Japanese Industrial Production Prelim. (Jul P) 1.0% vs. Exp. -0.5% (Prev. 9.2%); Retail Sales YY (Jul) 2.4% vs. Exp. 1.9% (Prev. 1.5%) Australian Construction Work Done (Q2) -3.8% vs. Exp. 0.9% (Prev. -0.9%) Initial upside in Europe faded as broader price action took another hawkish turn amid inflation data, Euro Stoxx 50 -1.0%. Stateside, futures are mixed around the unchanged mark, ES -0.2%, though are similarly well off best levels with data and Fed speak due. Top European News UK's ONS rules that energy bill rebate does not directly affect inflation statistics directly; "concluded that payments under the scheme should be classified as a current transfer paid by central government to the households sector." i.e. the payment is being treated as a fiscal transfer as opposed to a price adjustment. UK government could reportedly fast-track nuclear power projects to help ease the energy crisis, according to The Telegraph. UK government is considering caps on rent to protect social housing tenants as part of a wider effort to ease the soaring costs of living, according to FT. Former UK Chancellor Sunak warned that Foreign Secretary Truss's campaign promises could increase inflation and borrowing costs, according to FT. German Economy Minister Habeck said they would reject the idea of 'capping' energy prices; Finance Minister Lindner says the hurdle to an excess profit tax is high (re. energy); Chancellor Scholz says the early steps on energy means we will get through the winter period, will take measures to ensure energy prices "do not go through the roof". FX A session of gains for the DXY with upside spurred by haven bids, as the broader market sentiment deteriorated shortly after the European cash open. EUR/USD sits as one of the laggards with minimal immediate reaction seen in wake of hotter-than-expected August flash CPI for the EZ, although the upside for the pair may be capped by Nord Stream 1 jitters. The antipodeans are mixed as AUD leads the gains as the outperforming G10 peer on the back of better-than-expected Chinese official PMI metrics; Petro-currencies are softer as the slide in crude oil resumes. The JPY remains somewhat resilient in the face of the USD strength, likely amid the risk aversion across the market. Fixed Income Core benchmarks experienced a fairly contained start to the session, though this proved to be shortlived and pronounced action occurred on inflation release. Bunds remain sub-147.50, though off worst, as initial French-CPI induced upside was reversed following hot Italian and subsequent EZ-wide Flash August HICP; market pricing for 75bp remains just above 50%. Gilts are the standout laggard as on the ONS treats the Energy Support as a fiscal transfer, thus Ofgem Energy adj. will be fully reflecting in CPI; Gilts sub-130 ticks in wake. USTs are directionally downbeat but comparably contained in terms of magnitudes, ADP and Fed's Bostic/Mester due. Commodities WTI and Brent futures resumed selling off in tandem with the broader risk-mood. Dutch TTF futures are on a firmer footing today following yesterday’s near-10% slump. Spot gold is pressured by the firmer Dollar and approaches USD 1,700/oz to the downside. 3M LME copper has been extending on gains with a boost from the above-forecast Chinese PMI metrics, but the contract remains under USD 8,000/t. OPEC+ JTC upgrades 2022 oil market surplus forecast by 100k BPD to 900k BPD, according to a report via Reuters; sees market surplus rising to 1.4mln BPD in November from 0.6mln BPD in October. OPEC+ JTC report says rising energy costs "may lead to a more significant reduction in consumptions towards year-end", via Reuters. US Private Inventory Data (bbls): Crude +0.6mln (exp. -1.5mln), Cushing -0.6mln, Gasoline -3.4mln (exp. -1.2mln), Distillates -1.7mln (exp. -1.0mln). Oman crude OSP calculated at USD 97.00bbl for October vs. USD 103.21bbl in September, according to DME data. Central Banks BoJ's Nakagawa says the central bank decided to maintain easy policy bias in July, and hopes to discuss at the September meeting whether it should continue doing so based on data. Must remain vigilant to downward economic pressure from pandemic. BoJ is to conduct fixed-rate purchase operations for the cheapest-to-deliver 357th JGB notes for an extended period of time as of September 1st. ECB's Rehn says the economic outlook has darkened, normalisation of monetary policy progressing consistently. Rates will increase in September, will be necessary to hike further at future gatherings. Riksbank's Bremen says it is of the utmost importance to defend the inflation target as anchor for price setting and wage formation; adds inflation is too high. Inflation outcomes have been higher than expected recently, inflation risks are on the upside. Does not rule out a 50bps or 75bps hike at the 20th September meeting. Norges Bank Currency Purchases (Sep) NOK 3.5bln (prev. NOK 1.5bln) US Event Calendar 07:00: Aug. MBA Mortgage Applications -3.7%, prior -1.2% 08:15: ADP resumes publication of jobs report with new methodology 08:15: Aug. ADP Employment Change, est. 300,000 09:45: Aug. MNI Chicago PMI, est. 52.1, prior 52.1 Central Banks 08:00: Fed’s Mester Discusses Economic Outlook 18:00: Dallas Fed Holds Event to Introduce New President Lorie Logan 18:30: Fed’s Bostic speaks on role of fintech in financial inclusion DB's Henry Allen concludes the overnight wrap Was back in the office yesterday after a two-week break but needed an extra day recovery before I started the EMR again as Monday was the twin's 5th birthday. To say they were excited would be an understatement. More is to come as they have their birthday party and 30-40 kids coming round our house on Sunday. After another dry spell Sunday brings rain again apparently! We're used to this adversity as the first day of our Cornwall holiday saw a dramatic storm and the first rain for 2-3 months. A few days of typically chilly, breezy, and slightly wet UK beach weather followed. In my second week off back home I played 5 rounds of golf so that was the proper holiday. My handicap is now the lowest it's ever been so there's life in the multiple operated on old dog yet! Back to the real world now though and not only has the world got darker since I've been off but so have work hours. I always take these two weeks off every year and it always marks a depressing reality that winter is coming. Before I go away it's just about light when I get up. However, by the time I get back from holiday it's firmly dark waking up for the EMR. It'll be a good 7-8 months before I see light again on the early EMR shift. The dark mirrors the mood in markets which has seen a rapid deterioration since Jackson Hole, with the S&P 500 shedding a further -1.10% yesterday to move back beneath the 4000 mark. The index is now -7.85% below its mid-August intra-day highs and -5.08% since last Thursday's pre Jackson Hole close. We're still +8.71% above the June lows though. Ironically, strong US data releases prompted the latest sell-off, as they showed that consumer confidence was more resilient and the labour market was tighter than expected. But in today’s high-inflation environment, good economic news is enabling the Fed to be even more aggressive on rate hikes, and the market developments yesterday were very much in keeping with that theme. We actually reached an important milestone yesterday too, as the futures-implied Fed funds rate for December ticked up +3.0bps to 3.73%, which surpasses the previous high of 3.72% seen back in June after the bumper CPI report for May came in. So for 2022 at least, markets are pricing in their most aggressive pace of hikes to date which makes a lot more sense than where we were a few weeks ago. In terms of the specifics of those data releases, an important one was the JOLTS data, which showed that job openings unexpectedly rose to 11.239m in July (vs. 10.375m expected). That marked a break in the trend of 3 consecutive declines, and shows that the Fed still have significant work to do if they want to bring labour demand and labour supply back into balance. Another indicator we’ve been tracking is the number of job openings per unemployed worker. That also bounced back up to 1.98 in July, which is just shy of its record high of 1.99 in March. So even with 225bps of Fed hikes by the July meeting, that measure of labour market tightness has barely budged. Then we got the Conference Board’s consumer confidence data for August, which came in at a 3-month high of 103.2 (vs. 98.0 expected), with rises for both the expectations and the present situation indicators. This positive news on the economy gave investors growing confidence that the Fed are set to keep hiking into 2023, and sent yields on 2yr Treasuries up +1.8bps to 3.44%. That’s their highest closing level since the GFC, and on an intraday basis they even hit 3.49% at one point. Longer-dated yields also increased, albeit to a lesser extent, with those on 10yr Treasuries flat. FOMC Vice Chair and New York Fed President Williams emphasised the point, saying that rates will need to stay in restrictive territory “for some time”, so the days of pricing rate cuts early next year are over for now. The fed funds futures curve currently has policy rates peaking around 3.90% in the second quarter of next year, with the first full -25bp cut from those highs not until November of next year, as of last night's close. The trend towards increasing hawkishness was echoed at the ECB as well yesterday, where the prospect of a 75bps move next week is being increasingly discussed by officials. In the last 24 hours alone, we heard from Estonia’s Muller, who said that “75 basis points should be among the options for September given that the inflation outlook has not improved”. Furthermore, Slovenia’s Vasle said that he favoured a hike “that could exceed 50 basis points”. Germany’s Nagel echoed the ECB chatter from last week, that they should not delay rate hikes just for fear of recession, instead arguing the call for earlier rate hikes to prevent later pain. Further, Pierre Wunsch of Belgium argued the current bout of inflation had structural roots, which called for a quick move to restrictive policy. While neither Nagel nor Wunsch explicitly endorsed a 75bp hike, their comments don't push back on it. So overall it’s clear that officials are contemplating a larger hike, and overnight index swaps continue to price a 75bps move as more likely than 50bps for the September decision, closing yesterday pricing +65.8bps worth of hiking for next week’s meeting. It's set to be a big one! We should get some additional clues on how fast the ECB might hike with the release of the flash CPI data for the Euro Area this morning. But there weren’t any big surprises in either direction from the country readings ahead of that yesterday. In Germany, the EU-harmonised reading rose to a fresh high of +8.8%, but that was as expected, and it was a similar story in Spain where the harmonised reading fell back to +10.3% as expected. A complicating factor for the ECB relative to the Fed is the stagflationary impulse coming from the ongoing energy shock, where prices have soared to new records in the last week. However, the last 24 hours brought some further declines that built on Monday’s moves lower, with natural gas futures coming down -7.21% to €253 per megawatt-hour. German power prices for next year came down by an even bigger -21.05%, on top of the -22.84% decline on Monday, although even that -39.09% total decline hasn’t erased the previous week’s gains. One other thing to keep an eye out for from today will be the start of maintenance on the Nord Stream pipeline, which is set to last for 3 days if you take the statement at face value. But as with the shutdown in July, there are concerns that gas flows won’t resume again afterwards, so that’s definitely one to watch. Oil futures took a big slide, with brent futures down -4.79% and WTI down -5.54%. The proximate cause appeared to be unsubstantiated rumours that the US and Iran had reached a deal to reinstate the nuclear deal. However, a US State Department spokesperson later denied the rumours, and we’ve already heard from OPEC+ that any supply increase from Iran would be offset by supply cuts among the cartel. So if oil prices stay around these levels, perhaps the market is pricing in more global demand slowdown than unmitigated supply expansion. For sovereign bond yields, the more hawkish noises from the ECB outweighed the effect of falling energy prices yesterday, with the 2yr German yield up +6.1bps. Similarly to the US, the increases in yields were concentrated at the more policy-sensitive front end of the curve, with longer-dated yields seeing smaller moves, including those on 10yr bunds (+0.8bps), OATs (+0.7bps) and BTPs (+1.7bps). On the equity side, the risk-off tone took the major indices lower on both sides of the Atlantic, with the S&P 500 (-1.10%) experiencing a 3rd consecutive decline. The more cyclical sectors led the moves lower, and the more interest-sensitive megacap tech stocks continued to struggle, with the FANG+ index down a further -2.04%. In Europe, the STOXX 600 was down -0.67% yesterday, although that decline was somewhat exaggerated by the fact that London equities were returning after Monday’s declines. Indeed, the DAX actually ended the day up +0.53%, although that was the exception as the CAC 40 (-0.19%) and the FTSE MIB (-0.08%) both posted modest declines. The more negative mood of the last few days has continued into today’s Asian session, with the Nikkei (-0.40%), Hang Seng (-0.39%) and the Shanghai composite (-1.18%) all losing ground this morning despite earlier better-than-expected economic data from China and Japan. Starting with the former, both manufacturing (49.4 vs 49.2 expected) and non-manufacturing PMI (52.6 vs 52.3 expected) were ahead of estimates but the manufacturing gauge stayed in contraction territory. In Japan, we got strong beats for industrial production (+1.0% vs -0.5% expected, MoM) and retail sales (+0.8% vs +0.3% expected, MoM). US Treasury yields are up across the curve, with the 2y yield (+2.1bps) gains ahead of 10y ones (+0.9bps). To the day ahead now, and data releases include the flash CPI reading for the Euro Area in August, as well as the country readings for France and Italy. On top of that, there’s German unemployment for August, Canada’s GDP for Q2, and in the US there’s the ADP’s report of private payrolls for August and the MNI Chicago PMI for August. Finally, central bank speakers include the Fed’s Mester and Bostic. Tyler Durden Wed, 08/31/2022 - 07:44.....»»

Category: blogSource: zerohedgeAug 31st, 2022

Cops Shut Down 8-Year-Old Girl"s Lemonade Stand To Protect Society From Unlicensed Lemonade

Cops Shut Down 8-Year-Old Girl's Lemonade Stand To Protect Society From Unlicensed Lemonade Authored by Matt Agorist via TheFreeThoughtProject.com, Police were dispatched to an Ohio city, not for a robbery or murder, but for an 8=year-old girl selling lemonade without a permit... Asa Baker is an 8-year-old girl from Ohio with an overwhelming entrepreneurial spirit. Over the hot summer, rather than spend the days inside watching TV, Asa would set up a lemonade stand in her front yard to make some cash. “It’s fun and you get lots of people,” Asa told FOX 8 news in an interview, adding that lots of truckers stop buy and pay more than the $1 per cup that she charges. “Especially on a country road, I get a lot of people,” she said. Unfortunately for Asa, however, her summer of entrepreneurial spirit would come to a grinding halt when police shut down her stand for the crime of selling lemonade without a permit. Earlier this month, Asa had her first experience with the state's iron fist when she set up her stand at her father's business downtown. Everything was cleared with the property owner and she had permission to be there during the town's annual Rib and Food Festival. Asa was in an alleyway about a half block from the festival and business was good — until police showed up. Asa says when she saw a police officer walking up to her stand she thought he was going to buy a cup of lemonade. But that was not his mission. Instead of encouraging the little girl's business acumen in the lemonade realm, he was there to shut her down. Asa had not paid the government for the privilege of selling lemonade from private property and it was this cop's job to enforce this law. Highlighting the sentiment behind the "just doing my job" mentality, this officer actually had a conscience and was upset that he had to shut down Asa's stand. But he still shut it down. “Well, they were really sad that they had to shut me down but they gave me $20 to try and pay for it,” said Asa. “I could definitely tell he did not want to shut her down, but, I mean, you get a call, he has to do it. He definitely did the right thing, you know, in the situation he was put in,” said Katrina Moore, Asa’s mother. “We looked it up and it was pretty much anywhere in Ohio. You have to have a license and I’ve never heard of that,” said Kyle Clark, Asa’s Dad. FOX 8 reached out to the city who stated that the police department is obligated to enforce the city's ordinances — apparently, even if it means quashing an 8-year-old girl's spirit. In the codified ordinances of the city of Alliance, it clearly states that any vendor must procure a license before opening. There are no exceptions. Not even for a child’s lemonade stand. The law is so vague, that the family has no idea what permit to buy — especially for an 8-year-old girl. “In order to get a food vendors license, it only lasts for five days and its $40 for five days so that’s kind of out of the picture. If she wants to sell on the street, she has to get a street permit. If she sells in front of a business, we have to get a solicitors permit,” said Moore. The good news is that Asa was unphased and a week later, she was back out on the street, selling lemonade. After the negative press on social media, this time, police said they were going to leave her alone — a win for civil disobedience.  Tyler Durden Wed, 08/24/2022 - 19:00.....»»

Category: blogSource: zerohedgeAug 24th, 2022

Futures Tumble As Market Braces For Jackson Hole Hawk-ano

Futures Tumble As Market Braces For Jackson Hole Hawk-ano The staggering "most hated rally" melt-up, which we warned back in June would steamroll shorts, and which ended up being one of the biggest summery rallies on record, is officially over... ... with BofA superstar strategist Michael Hartnett proven correct again this morning, as stocks retreated further from the bear market peak he called at 4,328 last week, with US equity futures sliding more than 1% on Monday along with stocks in Europe as a risk-off mood took hold at the start of a critical week for global markets when central bankers gather at their annual Jackson Hole symposium starting on Thursday.  Both S&P and Nasdaq futures slumped more than 1.1%, with spoos down 50 points to 4,180, as 10-year Treasury yields are little changed after briefly kissing 3.0%, while two-year yields rose about six basis points, deepening the yield-curve inversion that’s seen as a harbinger of a recession. The dollar spot index climbed to a five-week high, while gold and bitcoin slumped. In China, banks lowered the one-year and five-year loan prime rates on Monday in the aftermath of a decision by the nation’s central bank last week to cut a key policy rate. The Chinese demand outlook has weighed on oil, which briefly sank below $90 a barrel in New York before rebounding and turning green. Traders are monitoring Iran nuclear talks that could lead to more supplies. In premarket trading, GameStop and Bed Bath & Beyond led the declines in meme stocks as the latest frenzy in the cohort loses steam. GameStop -5.6%, Bed Bath & Beyond -8.6%; Fellow retail trading favorite AMC Entertainment Holdings was also down as the cinema theater operator’s preferred stock will start trading on the New York Stock Exchange under the ticker “APE” on Monday. Here are some of the biggest U.S. movers today: Signify Health (SGFY US) jumps 35% in premarket trading after reports of UnitedHealth (UNH US), Amazon.com (AMZN US), CVS (CVS US) and Option Care Health (OPCH US) vying to buy the health- care technology provider. Tesla (TSLA US) and fellow electric-vehicle makers fall amid worries over a hawkish Fed ahead of Jackson Hole symposium this week, and following data showing China EV registrations declined in July. Tesla drops as much as 2.7%; Rivian (RIVN US) -2.3%, Nikola (NKLA US) -2.8%. CFRA cut its recommendation on Netflix (NFLX US) to sell from hold, saying the stock may underperform the S&P 500 Index for the rest of the year after rallying 40% from mid-July lows. Netflix falls 2.2% amid a decline for Nasdaq futures. GigaCloud (GCT US) shares rally as much as 40%, before paring gains to trade around 12% higher. The Chinese e-commerce firm is on course for its third session of straight gains following its Nasdaq debut last week. A huge squeeze in global shares from June’s bear-market lows, stoked by the market’s expectations for a pivot to slower rate hikes, is rapidly fizzling after repeated Fed policy makers warned that interest rates are going higher. This weekend's Jackson Hole symposium gives Jerome Powell a platform to reset those bets, which are vulnerable to the possibility of persistently elevated price pressures even as economic growth stumbles. Investors are also waking up to the looming acceleration of the Fed’s balance-sheet reduction: quantitative tightening kicks into top gear next month, and will add to pressure on riskier assets which have benefited from ample liquidity. “It is likely central bankers, including Fed Chair Powell, will remain hawkish in dealing with inflation albeit with a bit of caution creeping in given the emerging economic downturn,” Shane Oliver, head of investment strategy at AMP Services Ltd., wrote in a note. Of course, the irony would be if markets melt up again next week just as hedge funds aggressively reset shorts: “The expectation is still that Powell will reaffirm what he and his colleagues have been saying in public recently,” said Craig Erlam, a senior market analyst at Oanda. “The risk is that he says something dovish -- intentionally or otherwise -- after investors position for the opposite and triggers another risk-on rally in the markets.” The selling also accelerate in Europe, where the Stoxx 600 index dropped to its lowest level in more than three weeks, with autos, chemicals and tech the worst-performing industries as all sectors fall.  The DAX lags, dropping 2%. S&P futures slide 1.3%, Nasdaq contracts tumble 1.6%. Here are some of the biggest European movers today: Fresenius SE shares rose as much as 7.1% after the company said Fresenius Kabi CEO Michael Sen will replace CEO Stephan Sturm. Berenberg says the choice is sensible and expected EVS Broadcast Equipment shares jumped as much as 4% after the company announced a 10-year, $50m contract with a US-based broadcast and media production company on Friday Scandinavian Tobacco Group shares fell as much as 19% after the Danish cigar and pipe tobacco manufacturer published its preliminary 2Q numbers and lowered its FY22 guidance Deliveroo shares dropped as much as 6.8% amid a broader decline among European food delivery stocks. FY23 growth expectations for Deliveroo seem “stretched,” according to Morgan Stanley B&S Group shares slid as much as 13%, dropping to the lowest since April 2020, after the company reported interim results ING described as a “weak set” of numbers Intrum shares fell as much as 7.5%, their biggest decline since early May, after the board of the credit management firm replaced CEO Anders Engdahl with immediate effect Covestro fell as much as 5.9%, hitting lowest since May 2020, after Stifel slashed its price target to EU34 from EU53,  citing “shaky prospects” for the company Dassault Aviation shares were down as much as 4.7% after French Transport Minister Clement Beaune said he wanted to regulate private jet use, according to an interview with Le Parisien newspaper Earlier in the session, Asian stocks fell to more than a two week low as investors braced for a hawkish stance by US officials at the upcoming Jackson Hole symposium. The MSCI Asia Pacific Index declined as much as 0.7%, with the region’s tech giants TSMC and Tencent Holdings dragging down the measure the most. MSCI Inc.’s Asia-Pacific share index fell for a third day with losses evident in most major markets except for some gains in China, where a move by banks to trimlending rates aided property developers. Philippine stocks were the region’s biggest losers, sinking more than 2% as the central bank there signaled more hikes. Chinese equities advanced.  Jerome Powell’s Friday speech at the central bankers’ gathering will be the highlight of the week, with markets expecting the Fed chair to reaffirm his determination to get inflation under control. Traders have already been paring back risky bets after Richmond Fed President Thomas Barkin said Friday that the central bank was resolved to curb red-hot inflation even at the risk of a recession. “The bear market rally seems to be fading ahead of the Jackson Hole symposium this week, which may see the Fed pushing back further on easing expectations for next year,” said Charu Chanana, a senior strategist at Saxo Capital Markets.   Equities in mainland China posted rare gains in the region after the nation’s banks lowered their borrowing costs in a bid to stabilize the property market. That gave a positive boost, said Banny Lam, head of research at Ceb International Inv Corp. But markets are still on a bumpy ride as the dollar’s rise extends the outflow of liquidity from Asian assets, he added.  Other key issues on the radar include corporate earnings results. More than 340 members of the MSCI Asia Pacific Index, including battery heavyweight Contemporary Amperex Technology and e-commerce giant JD.com, are expected to release their financial results this week. Japanese stocks fell as hawkish comments from a Federal Reserve official put investors on edge ahead of the Jackson Hole symposium later this week.  The Topix Index fell 0.1% to 1,992.59 in Tokyo on Monday, while the Nikkei declined 0.5% to 28,794.50. Keyence Corp. contributed the most to the Topix’s decline, as the producer of sensors and scanners decreased 1.3%. Out of 2,170 stocks in the index, 1,123 fell, 924 rose and 123 were unchanged. “There is a bit of hawkishness coming out from the Fed as its seen trying to correct the direction of the market,” said Naoki Fujiwara, a chief fund manager at Shinkin Asset Management. “In the end, it’s profit taking as the market has gone up so far.”  Indian stocks fell for a second session on concerns the US Federal Reserve may remain committed to tightening monetary policy, which could impact foreign inflows to local equities. The S&P BSE Sensex declined 1.5%, its biggest drop since June 16, to 58,773.87 in Mumbai. The NSE Nifty 50 Index fell by a similar magnitude. Of the 30 member stocks of the Sensex, all but two declined. ICICI Bank Ltd. slipped 2.1% and was the biggest drag on the index. All 19 sectoral sub-indexes compiled by BSE Ltd. dropped, with a gauge of metal companies the worst performer. “While a correction was overdue for sometime after the recent upsurge, fresh concerns of a likely hawkish stance by the US Fed in its September meet and strengthening dollar index turned investors jittery and triggered a massive fall in banking, IT, metal & realty stocks,” Shrikant Chouhan, head of equity research at Kotak Securities Ltd., wrote in a note.   Overseas investment into local stocks totaled $6.3 billion from end-June through Aug. 18, after record outflows since October. The Fed’s symposium at Jackson Hole, Wyoming this week will be key for markets for clues on how the central bank plans to tackle price pressures.  In Australia, the S&P/ASX 200 index fell 1% to close at 7,046.90, tracking Friday’s losses on Wall Street as investors weighed the Fed’s next steps. The benchmark posted its worst session since July 11 as all sectors declined in Australia. Adbri was the biggest laggard after reporting a drop in 1H underlying Npat and trimming its interim dividend. EML Payments gained after announcing a buyback. In New Zealand, the S&P/NZX 50 index rose 0.7% to 11,763.95. In FX, the Bloomberg Dollar Spot Index advanced for a fourth consecutive day, to the highest level since July 18, while the greenback advanced versus most of its Group-of-10 peers. The euro fell to a seven-year low against the Swiss franc, extending losses as concerns about a global economic slowdown prompted demand for the safe-haven Swiss currency.  Australia’s dollar gained for the first time in six days after Chinese banks cut their loan prime rates in an effort to bolster the struggling property sector. Aussie bonds extended opening declines. The yen slipped to its lowest level in nearly a month as higher US yields amid growing bets for a hawkish Federal Reserve stance weighed on sentiment. Bonds fell, tracking US Treasuries. In rates, Treasuries were cheaper, the 10- year US yield rising as much as three basis points to 2.9997%, adding to Friday’s climb, before falling back. 2-year yields rose by around 5bps, inverting the curve further with losses led by front-end of the curve where two-year yields trade 6bp higher versus Friday’s close. Further out the curve, bunds and gilts both lag with notable bear steepening move seen across UK curve. US yields cheaper by 6bp to 1bp across the curve in bear flattening move which sees 2s10s, 5s30s spreads trade tighter by 6bp and 1.5bp on the day; 10-year yields around 2.98% after peaking at 2.9997% in early Asia session. Focus this week is on US auctions which kick-off Tuesday with $44b two-year note sale, followed by $45b five-year Wednesday and $37b seven-year Thursday. IG dollar issuance slate empty so far; issuance expectations are low for the week and dependent on market conditions with the Federal Reserve’s annual symposium in Jackson Hole, Wyoming, due to commence Thursday. Bunds and Italian bonds snapped four- day sliding streaks, with German debt gains led by the belly and Italy’s yield curve bull flattening as stock futures drop. Belgium sells five- and 10-year notes. In commodities, WTI trades within Friday’s range, first falling as much as 1% before spiking and recovering all losses, with Brent jumping from a session low of $94.50 to a high of $96.90. Most base metals are in the red; LME copper falls 1%, underperforming peers. Spot gold falls roughly $15 to trade near $1,732/oz. It's a busy week for the calendar, but we kick off on a day quiet note, with the day at hand featuring the Chicago Fed’s national activity index and earnings from Zoom and Palo Alto Networks. Market Snapshot S&P 500 futures down 1.1% to 4,183.75 STOXX Europe 600 down 1.1% to 432.35 MXAP down 0.6% to 159.83 MXAPJ down 0.9% to 518.65 Nikkei down 0.5% to 28,794.50 Topix little changed at 1,992.59 Hang Seng Index down 0.6% to 19,656.98 Shanghai Composite up 0.6% to 3,277.79 Sensex down 1.2% to 58,934.14 Australia S&P/ASX 200 down 0.9% to 7,046.88 Kospi down 1.2% to 2,462.50 Gold spot down 0.7% to $1,735.45 U.S. Dollar Index up 0.18% to 108.36 German 10Y yield little changed at 1.20% Euro down 0.3% to $1.0006 Top Overnight News from Bloomberg European gas prices surged after Moscow’s move to shut a major pipeline ramped up fears of a prolonged supply halt, leaving Germany once again guessing as to how much Russian fuel it can count on this winter About 2,000 dockers at the Port of Felixstowe began an eight-day walkout on Sunday, halting the flow of goods through the UK’s largest gateway for containerized imports and exports Federal Reserve Chair Jerome Powell will have a chance -- if he wants to take it -- to reset expectations in financial markets when central bankers gather this week at their annual Jackson Hole retreat A sober warning for Wall Street and beyond: The Federal Reserve is still on a collision course with financial markets. Stocks and bonds are set to tumble once more even though inflation has likely peaked, according to the latest MLIV Pulse survey, as rate hikes reawaken the great 2022 selloff New Zealand’s central bank is open to the possibility of raising its benchmark rate as high as 4.25% amid uncertainty over the amount of tightening needed to regain control of inflation, Deputy Governor Christian Hawkesby said Swedish kronor bonds tied to environmental, social and governance goals are helping keep the country’s waning issuance market afloat this year A more detailed look at global markets courtesy of Newsquawk Asia-Pacific stocks were mostly lower after last Friday’s declines in stocks and bonds across global markets in the aftermath of red-hot PPI data from Germany which rose by a new record high and stoked inflationary concerns, while the region also digests the PBoC’s latest actions on its benchmark lending rates. ASX 200 was pressured with all sectors subdued and as the influx of earnings continued. Nikkei 225 declined at the open as it took its cue from global peers and following reports that PM Kishida tested positive for COVID-19, although the index clawed back around half of the losses with help from a weak currency. Hang Seng and Shanghai Comp were mixed with early indecision as participants reflected on the PBoC’s rate actions in which it cut the 1-Year LPR by 5bps to 3.65% and reduced the 5-Year LPR by 15bps to 4.30% vs expectations for a 10bps cut to both, while the reduction in the 5-Year LPR which is the reference for mortgages, also followed recent measures to support the construction and delivery of unfinished residential projects through special loan schemes from policy banks. This provided some early support for developers although the broader sentiment was restricted amid the extension of factory power cuts in Sichuan. Top Asian News China’s Sichuan extended its factory power cuts to August 25th, according to Caixin. Japanese PM Kishida tested positive for COVID-19 and is recuperating at his official residence, according to NHK. Singapore PM Lee announced to reduce mask requirements as the COVID-19 situation stabilises with masks to only be required for public transport and healthcare settings with everywhere else optional. PM Lee also confirmed that Deputy PM Wong has been chosen to be the next leader and said authorities will soon announce new initiatives to attract talent, according to Reuters Aluminum Up as China’s Worsening Power Shortages Tighten Supply Debt Audit, Constitution Change on Angolan Opposition’s Agenda Shanghai United Imaging Jumps 65% in Debut Post $1.6 Billion IPO China Province Extends Power Cuts on Worst Drought Since ‘61 European bourses are under pressure, Euro Stoxx 50 -1.8%, amid Nord Stream 1 maintenance. Updates that sparked a continuation of Friday's downbeat price action and has caused particular downside for the likes of Uniper (-10%) while defenisve sectors outperform slightly. S futures are in-fitting both in terms of direction and magnitude, ES -1.3%, amid global recession and inflation fears. Panasonic (6752 JT) is to increase prices on 17 products from September 1st due to increasing material and manufacturing costs, hike will range between 2-33%. Top European News Cineworld Says It Considers Filing for Bankruptcy in the US Vodafone Agrees to Sell Hungary Unit for 1.8 Billion Euros (1) Borealis Curbs Fertilizer Output for Economic Reasons UK Trial Lawyers Vote to Strike Indefinitely Over Fees Biggest Rate Hike in Decades Is in Play in Israel: Day Guide FX DXY sees a firm start to the week as the index extends gains above 108.00, topping Friday’s peak. EUR/USD has again dipped under parity amid jitters over a potential supply disruption as Russia is to shut the Nord Stream 1 pipeline. The Antipodeans are the relative outperformers but have waned off best levels amid the broader deterioration in sentiment. The JPY has climbed its way up the ranks having experienced mild losses in APAC trade owing to widening yield differentials alongside losses in broad APAC FX. Turkey’s Central Bank revised rules for Lira government bond collateral for FX deposits in which it raised the RRR for credit from 20% to 30% for bond collateral, according to Reuters. Fixed Income A session of pronounced two-way action for fixed benchmarks as energy and inflation vie for the limelight. Initial upside (Bunds tested 152.85 Fib of Friday) occurred as sentiment deteriorate on Nord Stream 1's unscheduled maintenance announcement. However, this then swiftly retraced with core benchmarks modestly negative at worst, perhaps as attention pivoted to the associated inflation implications. Stateside, USTs have been moving in tandem though the move lower was somewhat more contained as participants look to Jackson Hole at the tail-end of the week. Commodities WTI and Brent October contracts have continued trending downwards in a resumption of Friday’s action. The main focus of this morning has been on European gas prices surging on news that Russia’s Gazprom will shut down the Nord Stream 1 pipeline for three days. Dutch TTF October surged over 18% whilst European coal for the next year rose over 5% to a new record. Metals markets are hit by the firmer Dollar with spot gold losing further ground under USD 1,750/oz while LME copper eyes USD 8,000/t to the downside Libya’s NOC said oil production was running at 1.211mln bpd, while the Waha Oil Co said gas output from the Faragh field increased to 149mcfd on Sunday from 95mcfd on Saturday, according to Reuters. Caspian Pipeline Consortium suspended oil loadings from two of three single mooring points at its Black Sea terminal for inspection, while CPC exports continue from the third mooring point and August loadings are currently unaffected, according to Reuters sources. Subsequently confirmed Turkey has increased its imports of Russian oil to over 200k BPD so far this year (vs 98k BPD in the same period last year), according to Refinitiv data. Norway Prelim. July production: Oil 1.646mln BPD (vs 1.298mln BPD in June); gas 10.9bcm (vs 10.0bcm in June), according to the Norway Oil Directorate. US Event Calendar 08:30: July Chicago Fed Nat Activity Index, est. -0.25, prior -0.19 DB's Tim Wessel concludes the overnight wrap The annual plenary of the global central bank cognoscenti kicks off in Jackson Hole this week. The main macro dish of the deep dog days of summer – where this year’s theme is “Reassessing Constraints on the Economy and Policy” – will be highlighted by Chair Powell’s remarks due on Friday morning. Global production data will serve as suitable hors d’oeuvres throughout the week, while US PCE data on Friday will be a side dish commanding ample attention. Elsewhere, we receive the second estimate of 2Q US GDP; will the poor aftertaste of two consecutive quarterly retractions continue to overwhelm the otherwise supportive ingredients that comprise near-term growth? Back to Jackson Hole, as the market looks for direction on the uncertain economic outlook and Fed reaction function, Chair Powell’s remarks are one of the key events that can jolt US policy expectations from their recent range, along with inflation and employment data preceding the September FOMC. Indeed, since the day of the July CPI print, 2yr Treasury yields are on net less than a basis point lower, while pricing of the September rate hike has oscillated in a narrow range that effectively has placed equal probabilities on a 50 or 75bp hike, as conviction around the terminal rate and intervening path of policy is low until the market can assess which way inflation (and the Fed) is breaking. The Chair will likely strike an imposing tone against the inflationary scourge, all the more given his remarks last year noted the bout of inflationary pressure was likely to be a transitory phenomenon (important to keep in mind how much the policy outlook can evolve over a 12-month time frame, let alone when uncertainty is this high here). While the Fed has taken to emphasizing two-way risks around the tightening cycle, most visibly in the minutes at the July meeting, the easing of financial conditions since the July meeting may force the Chair to re-orient expectations away from the balance of risks back toward the primary objective of bringing inflation lower. Executive Board member Schnabel will be the highest profile ECB speaker at the gathering, where focus is on calibrating the ECB’s next policy action, which our team takes careful measure of, here, preserving another 50bp hike as their base case. Before Schnabel, due on a panel Saturday, the ECB’s account of the July meeting’s 50bp hike will provide yet more detail into the super-sized kickoff to the ECB’s tightening cycle. Elsewhere in Europe, the looming energy crisis will remain top of mind. German Chancellor Scholz and Vice Chancellor Habeck are in Canada to try and plug the energy gap left by dwindling Russian gas supplies. Along with alternative imports, the government is still weighing whether to extend the life of heretofore condemned nuclear facilities if sufficient supplies cannot be secured. Asian equity markets are trading in negative territory at the start of the week amid a broad strength in the US dollar coupled with a potentially tighter Fed policy path. The Kospi (-0.78%) is the biggest underperformer across the region followed by the Nikkei (-0.46%) and the Hang Seng (-0.45%). Over in mainland China, markets are reclaiming earlier losses, with the Shanghai Composite (+0.43%) and CSI (+0.60%) both in the green after the People’s Bank of China (PBOC) surprisingly slashed its benchmark lending rates yet again to shore up an economy battered by a worsening property slump and a resurgence of Covid-19 cases. The PBOC slashed the one-year loan prime rate (LPR) by -5bps to 3.65%, the first reduction since January while the five-year LPR (a reference for mortgages) was cut by -15 bps to 4.3% at the central bank’s monthly fixing. This move comes after a raft of data released last week indicated that the world’s second largest economy slowed in July. US stock futures point to continued losses after ending last week on the downbeat, with the S&P 500 (-0.38%) and NASDAQ 100 (-0.51%) edging lower. Elsewhere, crude oil prices are trading lower in Asia trading hours with Brent futures -0.98% down at $95.77/bbl. Turning to a brief wrap of last week, the S&P 500 retreated -1.29% on Friday to bring the index -1.21% lower on the week, its first weekly decline in a month. The sharp decline Friday came absent any material data or policy developments; instead, it appeared programmatic selling and large options expiries concocted headwinds that were too hard for the index to overcome, where health care (+0.27%) and energy (+0.02%) were the only sectors to escape the day in the green, and only just. The STOXX 600 also fell over the week, retreating -0.80% (-0.77% Friday). In rates, 10yr Treasuries gained +14.1bps over the week, +9.0bps of which came on Friday, though, as mentioned, the net move in 2yr Treasury yields was smaller, having fallen -0.08bps over the week (+3.6bps Friday) as we await further direction from the Fed or from the data. 10yr bund yields increased each of the last four days of the week to end +24.3bps higher (+12.8bps Friday), as the inflationary impact of the energy crisis gripped markets. For their part, OATs climbed +26.1bps (+12.8bps Friday) and BTPs were +43.0bps higher (+17.1bps Friday). Of course, European energy prices from natural gas (+18.65%, +1.47% Friday) to German power (+21.42%, +4.02% Friday) rose to record highs as crisis binds the continent. The week kicks off on a day quiet note, with the day at hand featuring the Chicago Fed’s national activity index and earnings from Zoom and Palo Alto Networks. Tyler Durden Mon, 08/22/2022 - 08:01.....»»

Category: blogSource: zerohedgeAug 22nd, 2022

Geopolitics: The World Is Splitting In Two

Geopolitics: The World Is Splitting In Two Authored by Alasdair Macleod via GoldMoney.com, While we are being distracted by Ukraine, President Putin has advanced his geopolitical goals materially. Aided and abetted by President Xi, Putin is taking the Asian continent into his control. That mission is well on its way to being achieved. He now awaits the winter months to finally force the EU to reject America’s hegemony. Only then, will the western end of the Eurasian continent be truly free of American interference. This article explains how he is achieving his strategic goals. It examines the geopolitics of the Asian landmass and the nations tied to it, which are commercially and financially turning their backs on the US-led western alliance. I look at geopolitics from President Putin of Russia’s viewpoint, since he is the only national leader who seems to have a clear grasp of his long-term objectives. His active strategy conforms closely with Halford Mackinder’s predictive analysis of nearly 120 years ago. Mackinder is regarded by many experts as the founder of geopolitics. Putin is determined to remove the American threat to his Western borders by squeezing the EU to that end. But he is also building political relationships based on control of global fossil-fuel supplies — a pathway opened for him by American and European obsessions over climate change. In partnership with China, the consolidation of his power over the Eurasian landmass has progressed rapidly in recent weeks. For the Western Alliance, financially and economically his timing is particularly awkward, coinciding with the end of a 40-year period of declining interest rates, rising consumer price inflation, and a deepening recession driven by contracting bank credit.  It is the continuation of a financial war by other means, and it looks like Putin has an unbeatable hand. He is on course to push our fragile fiat currency based financial system over the edge. Mackinder’s legacy In a paper presented to the Royal Geographic Society in 1904, the father of geopolitics, Halford Mackinder, effectively predicted what is happening today. In his presentation, he asked:  “Is not the pivot region of the world’s politics that vast area of Euro-Asia which is inaccessible to ships, but in antiquity lay open to the horse-riding nomads, and today is about to be covered with a network of railways?  “Outside the pivot area, in a great inner crescent, are Germany, Austria, Turkey, India, and China. And in an outer crescent, Britain, South Africa, Australia, the United States, Canada, and Japan.” This is shown in Figure 1, taken from the original paper presented to the Society. In 1919 after the First World War, in his Democratic Ideals and Reality he summarised his theory in slightly different language thus: “Who rules East Europe commands the Heartland; Who rules the Heartland commands the World-Island; Who rules the World-Island commands the world.” This is Putin’s destiny. In conjunction with China (rather than a united Germany, which is what worried politicians such as Balfour before the First World War), Russia appears to be successfully pursuing her goal of control of Mackinder’s World Island. Today, we can expand on the inner crescent concept to include Iran, the Middle East, as well as the new nations spun out of the old Soviet Union. Of Mackinder’s original inner crescent, only Germany and Austria are omitted today. Austria was the centre of the Hapsburg Empire at that time and so is no longer geopolitically important. Of the outer circle, we can now include most of Africa and some of South America, which are increasingly dependent on the World-Island for demand for their commodities. Without the West’s media and public seeming to realise it, there has been and continues to be an extension of Russian power through Asian partnerships which now eclipses America’s in terms of the global population covered. And if we add in China’s diaspora in South-East Asia, America and her NATO allies look like a somewhat isolated minority. As well as political power ebbing away from the West, economic power is as well. Hampered by increasingly expensive and anti-capitalist democratic socialism, their economies are struggling under the burden of their governments. And as the West declines, the World-Island is enjoying its own industrial revolution. The network of railways, to which Mackinder referred in 1904, has expanded from the trans-Siberian railway to China’s new overland silk roads, linking China with Western Europe and the great nations south of the original silk road. Russia and its ex-Soviet satellites occupy half the Eurasian continent. The Eurasian continent is 21 million square miles, or more than three times the size of all North America. Central and North America together measure some 9 million square miles, more than twice the area of Europe. Even without its ex-Soviet satellites, Russia is still by far the largest nation by land area. And together with China, Russia is nearly three times the size of the United States. Russia is the world’s largest single source of energy, commodities, and raw materials and as we now see can control the prices the West pays for them. As a consequence of recent sanctions, the west is paying top-rouble, while Russia’s Asian allies have energy and commodities offered at a discount payable in their own currencies, undermining the West’s relative economic position even more. As to whether Putin has studied Mackinder, this must be supposition. But there is no doubt that if he is not so guided, Putin is following the same predicted course. As Russia’s undisputed leader, he has played the geopolitical game masterfully. He does not fall into the traps which bedevil Western socialism. He follows foreign guidelines in the mould of the British at the time of Lord Liverpool’s Prime Ministership two hundred years ago, when the policy was not to interfere in the domestic affairs of foreign nations, except to the extent that they affected British interests. It is a fact of life for Putin that his allies include some very unpleasant regimes. But this does not concern him — their domestic affairs are not his business. His business is Russia’s interests, and like the British in the 1820s, he pursues them single-mindedly. The rationale behind Ukraine Ukraine was an unusual instance of Putin taking the initiative in acting against the American-led NATO alliance. But in the run-up to Ukraine, he had seen Britain leave the EU. Britain was America’s vicar on the EU’s earth, so Brexit represented a significant decline in the US’s ability to influence Brussels. Following Brexit, President Biden precipitously exited Afghanistan, taking the rest of NATO with him. Therefore, America was on the run from the Heartland. The way was open for Putin to push further and expel America from Russia’s western borders. To do this, he needed to confront NATO. And there is little doubt this was on Putin’s mind when he escalated his “special military operation” against Ukraine. He must have anticipated NATO’s reaction to impose sanctions, from which Russia has profited greatly. At the same time, it is the EU which has been badly crushed, a squeeze which he can intensify at will. The drama is still playing out. He needs to keep up some pressure on Ukraine to keep the squeeze going. He is not ready to compromise. Winter in the EU will be tougher still, with energy and food shortages likely to lead to increasing riots by the EU’s citizens. Putin will only stop when the Europeans realise that America is sacrificing them in the pursuit of its hegemony. Zelensky is little more than a puppet in this drama. With respect to the war on the ground, Russia has already secured its access from the Black Sea by cultivating her relationship with Turkey. As a NATO member, Turkey is hedging its bets. The Black Sea is vital to her economic interests. For this reason, Turkey is maintaining her relationship with Russia, while cooling down her antipathy to Israel (President Herzog visited Ankara in March) and mending her fences with the UAE — it's all part of the World Island coming together. For the US, Erdogan is an unreliable NATO partner. Allegedly, the US tried to remove him by instigating a failed coup attempt in 2016, when he was tipped off by Russian intelligence and the coup failed. While he owes a favour to Putin, Turkey’s NATO membership leads him to be cautious. And as a born-again Sunni, he appears keen to extend Turkish influence into the Moslem nations in Central Asia, dreaming perhaps of the glory days of the Ottoman Empire. To further Russia’s power over energy sources upon which the Western belligerents depend, Putin has cultivated Iran, and has also made welcoming overtures to Saudi Arabia and the UAE. Sergei Lavrov, Putin’s foreign minister, took care to fully brief members of the Arab league of Russia’s energy policy in Cairo last month. The argument is simple: the West has turned its back on fossil fuels, planning to phase them out entirely in a decade or so. As producers of oil and gas, their future is to stick together with Mackinder’s World Island and its Inner Crescent. This is so obviously the case, that even Saudi Arabia is said to be seeking an association through the BRICS group. Whatever the merits of climate change driven policies, with respect to energy the West seems to be hell-bent on a suicide mission. But Russia’s message to its partners is that you can have oil and natural gas at a discount to what Europe has to pay. Putin is offering to release them fully from the West’s climate change ideology.  With the pressure he is applying on Western Europe, Putin almost certainly assumes European politicians will be driven from supporting US sanctions to a more neutral position. And Russia probably expects that non-aligned nations suffering from grain shortages will also pressure the West to bring sanctions to an end. But before Putin relinquishes the pressure on EU nations, he is still likely to insist that American influence from Western Europe is withdrawn, or at the least it is withdrawn from Russia’s western borders. Phase 1 has concluded. Let Phase 2 begin We must now turn from Putin’s supposed megalomania to the conditions faced by his Western enemies, particularly the nations in Europe and the Eurozone. Figure 2, which is of a basket of commodities and raw materials priced in euros, shows that  after a significant rise, for Europe prices have eased in recent months. For the beleaguered Europeans, the pause in a substantial rise in commodity prices since the Fed’s introduction of zero interest rates in March 2020 has given them temporary and minor relief from an escalating inflation headache. Perhaps it is premature, but investors in western markets are taking the pullback in commodity prices as evidence that the commodity squeeze is probably over, and that with it the problem of consumer price inflation will diminish as well.  Indeed, in his 1 August report for Credit Suisse, Zoltan Pozsar reported that he had visited 150 investment managers in eight European cities recently, and the consensus was just that: they think inflation is licked, recession is due, and therefore interest rates will shortly decline. But so long as he holds the pricing reins for energy, Putin can play with the euro to his heart’s desire. By manipulating his quasi-monopoly on energy, grains, and fertilisers he can increase pressure on the EU’s leaders to reject US hegemony. And to fully appreciate the power in Putin’s hands, it is important to understand the true relationship between fiat currencies and commodities. The evidence is that the volatility of commodity prices is in the fiat currency they are priced in, and not the commodities themselves. Figure 3 shows this relationship, by comparing the price of oil measured in legal money (gold) and the fiat euro currency. The most the price of oil in gold has varied on the upside is double at the time of the Lehman failure, whereas in euros at that time it was sixteen times. So far this year, it has been even more volatile when the price in gold fell to 70% of the 1950 price, while in euros it hit 15 — that’s 21 times as volatile. This finding turns all energy pricing assumptions upside-down. The chart shows that what was true before the ending of Bretton Woods was no longer true after 1971. [The euro only commencing in 2000, the currency taken before then was the German mark]. Since oil prices are wholly determined in markets whose participants all assume price volatility is in the commodity, the entire basis of price forecasting becomes undermined. That being so, if an analyst gets a forecast half right it is more by luck than judgement. This is the whole point behind sound money. With sound money, dealers in commodities and all other goods justifiably assume that the intermediating medium is a constant. They assume that when they receive payment, its utility is invariable. But with unbacked fiat it is different. For individual transactions, while we still assume a dollar is a dollar and a euro is a euro we all know that a currency’s utility varies. Why, then, for analytical purposes do forecasters always assume it does not? Why do analysts never take this into account in their forecasts? Figure 3 above proves that conventional approaches to pricing and economic forecasts involving them are nonsensical. The same is demonstrably true for all other commodities, not just oil. In current circumstances, the basis for an incorrect analysis is being used to support expectations that prices are beginning to reflect an increasing prospect of recession, which to a Keynesian or monetarist mind, means falling demand for commodities and energy leads to lower prices. But the fact remains that overnight, Putin can put the squeeze on the EU again. And armed with the knowledge that price volatility is in the currency, we know that the falling euro will do most of his work for him. As we approach Europe’s winter, it will not take much to drive energy prices in euros considerably higher. Putin is unlikely to make the mistake of being seen to do this deliberately. But in all probability, he need not take any significant action at all to see Western currency prices for energy and food rise again as winter approaches. There is a further misjudgement common to Western capital markets: this time over interest rates. In almost every piece of analysis forecasting recession, the underlying assumption is that with economies turning down demand for goods, services and credit will diminish. For these reasons, interest rate pressures are expected to decline.  This misunderstands the nature of credit. Almost all circulating media is commercial bank credit. Consequently, GDP is simply the sum of all bank credit used for qualifying transactions. Therefore, nominal GDP is set by the availability of bank credit, and not, as commonly supposed driven by a slowdown in economic activity. When the banking cohort contracts its collective balance sheet, interest rates initially rise because of a shortage of credit. These conditions are now faced by financial markets. Commercial banks are bound to seek ways to protect themselves in uncertain times. They are already looking to reduce the ratio of their assets to equity before bad debts really escalate. Banks in the Eurozone are not alone with this change in outlook. The so-called global recession is not being driven much by other economic factors, but mainly by the tendency for bank credit to be withdrawn from both financial and non-financial economic sectors. It is a problem poorly understood and never mentioned by analysts in their economic forecasts. But in the current economic and financial environment, the consequences lead to a conclusion about interest rates the opposite of that commonly supposed.  We can see from the foregoing that contrary to expectations expressed everywhere by western governments and their central banks along with the whole investment establishment, the inflation and interest rate problem is not going away. Because interest rates had been suppressed and could go no lower and for no longer, there has been a fundamental shift from a long-term decline in them, to what is increasingly sure to turn out to be a long-term trend for interest rates to rise. As it is elsewhere, the bank lending environment in Europe is deteriorating for obvious reasons. Furthermore, it comes at a time when bank balance sheet leverage is at record levels, leaving banks badly exposed to the change.  A severe contraction in bank credit is only in its initial stages. A second phase in the economic and financial war against Putin’s Russia will shortly emerge. Currently, we appear to be in a summer pause after the first, indicated by consolidating commodity prices. Government bond yields have declined from earlier highs. Stock markets have rallied. Bitcoin has rallied. Gold, which is the only legal money from which to escape from all this, has declined. It all indicates a false optimism, vulnerable to the rudest of shocks. China may be Putin’s only wildccard With its economy based on commodities whose values are aligned with gold and so long as the current geopolitical situation does not escalate into a wider military conflict, Russia appears to be in a strengthening economic position while her adversaries are in decline. If there is a threat to its position, it probably comes from her alliance with China, which is exposed to the West’s follies through trade. China has some wildcard problems. Since the death of Mao, in its rapid development China has relied on the expansion of credit through state owned banks. Bank executives are state functionaries, instead of managers on behalf of profit-seeking shareholders. It is this difference which has insulated the domestic economy from the cycles of bank credit which have plagued the West’s economic model with repetitive credit crises. While this lack of destructive cyclicality might be seen as a good thing, it has allowed malinvestments to build up uninterruptedly over recent decades. So, while the Chinese authorities still exercise significant control over lending, the degree of economic distortion has become a threat to further progress. This is being manifest in a growing property crisis, with developers going to the wall in droves. It’s not that there is unlikely to be demand for commercial and residential properties in the future: the savers are there to buy, the middle classes are growing in number, and the economy has some way to go in its development. The problem is that the property market has got ahead of itself. As a sector, property and related activities make up an estimated one-third of China’s economic activity. Developers have suspended completions of pre-sold properties, which citizens have bought on a pre-payment basis. Consequently, mortgage payments are being suspended by angry purchasers. Private banks have been affected, with bank runs against some of them. Some thirty real estate companies have missed foreign debt payments, with Evergrande being the most high-profile defaulter on $300bn of debt. Problems in property were and are still being compounded by Beijing’s zero tolerance covid policy. More so than in other jurisdictions, strictly enforced clampdowns have hit production and undermined logistics, factors that have inevitably undermined economic performance. While exports to other nations have held up well — mostly due to foreign governments’ spending deficits escalating and not being matched by increased personal savings — China’s exporters’ profits are bound to become squeezed by the West’s deepening recession. Unless, that is, China’s foreign exchange policy is to deliberately weaken the yuan against western currencies. But that will only end up destabilising the domestic economy as consumer price increases accelerate. And lastly, if Beijing follows up on its threats to annex Taiwan — if only to detract from domestic economic failures — a train of events is likely to be set in motion which could escalate tensions with America and its defence allies to the detriment of everyone. But despite the headlines from China’s property crisis, it is too early to assume China is descending into much deeper trouble. It must abandon macroeconomic policies driven purely by statistics and ensure its citizens and their business have a stable currency. Whether this is understood in Beijing is not clear. The fundamental difference from its Russian partner is its greater economic dependence on consumption of commodities as opposed to their production. The consequences of western economic policies set to undermine their own currencies’ purchasing power will be felt more by China than Russia. Nevertheless, an increasingly likely banking and currency crisis in the West can be weathered by China with the correct economic approach. The era of the dollar is ending While Putin appears to be gaining control of the World Island, leaving a few nations on its fringes adhering to the US and its currency’s hegemony, much of what he has achieved is through the abject failure of the West in playing this greatest of great geopolitical games. A notable feature of the West’s decline is in its embrace of anti-capitalistic and woke cultures. In this article, it would lose our focus if we drifted into the climate change debate, other than to point out that by seeking to eliminate fossil fuels in the next decade or so, the West is on a course of economic self-destruction relative to Russia’s partners, who are being offered discounted oil, gas, and coal for the foreseeable future. When President Nixon turned the dollar into an entirely fiat currency in August 1971, he set off a train of events which is now ending. From establishing the dollar as the world’s reserve currency, and his agreement with Saudi Arabia which led to the creation of the petrodollar, global fiat currency instability commenced as shown in Figure 3 to this article. But the fiat dollar gave both the US Government and the American banking system enormous power. That was effectively wielded, forcing recalcitrant nations to kowtow to the mighty dollar. The power was not used judiciously, leading to an alliance between Russia and China to protect themselves from US actions. The lessons they learned from American imperialism were not lost. Despite earlier promises to Russia not to do so, the US military directly threatened her western border. For China, though her economic and industrial revolution having been initially praised, she began to be seen as a threat to the American interests. This imperialism has made America few friends and many latent enemies. With repeated failures in US foreign policy in the Middle East, North Africa, Ukraine, and most recently Afghanistan, the US can now count on nations representing only about 19% of the world’s population of 8 billion people, compared with 54% allied to the World Island. This is shown in Figure 4. While allocating nations into these categories is somewhat subjective, it gives an approximation of the relative power of the World Island partnership compared with that of US/NATO. As the US-led partnership’s grip slackens, vested interests are sure to drive non-aligned nations towards the World Island camp, particularly when they have commodities to sell. Before Russia’s invasion of Ukraine and the sanctions that followed, none of the 170 nations in the table could do without the dollar. Russia has been forced to find alternative settlement currencies and its close allies in the Eurasian Economic Union are planning a new trade settlement currency to cut out the dollar. But the international pricing of commodities and raw materials in dollars is impossible to overcome, even for Russia. The World Island cannot side-line the dollar completely — it is too entrenched. While the dollar’s power is declining, the destruction of its virtual monopoly in international trade will have to come from US monetary policy itself, a process that is arguably under way. Since the financialisation of Western economies in the mid-eighties, the dollar has retained its credibility as the world’s reserve currency. It was achieved by ensuring a ready supply for international use, as forecast by Robert Triffin by his description of the dollar’s dilemma in the late fifties. The demand side was bolstered by the development of regulated and unregulated derivative markets, which forced foreigners to purchase dollars in order to purchase derivatives. Essentially, it was synthetic dollar demand created to satisfy speculator demand for commodities, including precious metals, by creating synthetic supply. When this concept is grasped, the importance of the ending of the long-term trend of interest rate suppression becomes better understood. The suppression of commodity prices by increasing synthetic supply became part and parcel of interest rate declines. Interest rates are no longer declining but rising. There will be unexpected consequences for commodity prices, which we will come to in a moment. There are two immediate consequences for bank lending: their lending margins improve, and the incidents of bad and doubtful debts increases. Consequently, overleveraged bank balance sheets are being cut back by banks no longer having to work them so hard to maintain bottom-line profits. And with lending risk escalating, this is a further reason to contract bank credit overall. Credit is going to be in increasingly short supply. There are the consequences for financial markets, including synthetic commodity supply, to be considered as well. Under the new Basel 3 regulations which were recently introduced, trading and market-making in derivatives is an inefficient use of balance sheet capacity, so these activities are bound to be reduced over time under pressure from banks’ treasury departments. In effect, the conditions that allowed banks to expand credit to finance the increase of derivative trading activities between 1985 and 2021 are being reversed.  According to the Bank for International Settlements, the notional value of global regulated futures totalled $40. 7 trillion last March, and in options totalled a further $54 trillion. To this must be added over $610 trillion in over-the-counter derivatives. For now, it is variations in this synthetic supply which drive pricing relationships between fiat currencies and commodities. But the impact of contracting bank credit will almost certainly lead to higher commodity prices, as this synthetic supply dries up and is increasingly withdrawn. Furthermore, contracting bank credit invariably leads to banking failures. And with the Eurozone’s and Japanese global systemically important banks leveraged over 20 times on average, the scale of banking failures is likely to be significantly larger than that of Lehman when it failed fourteen years ago next month. And finally, as insurance against a widespread fiat currency catastrophe, both Russia and China have stockpiled physical bullion. Russia is known to have about 12,000 tonnes, of which 2,300 tonnes are held as monetary reserves. It mines 330 tonnes annually, which it is now adding to its hoard. Having accumulated the bulk of its hoard before permitting the Chinese public to buy gold, China’s state probably has over 30,000 tonnes, of which only 1,776 tonnes are declared official reserves. Since its inception in 2002, China’s citizens have taken delivery of a further 20,000 tonnes from the Shanghai Gold Exchange, some of which will have returned as scrap. Therefore, the Russian and Chinese states between them command over 40,000 tonnes, which compares with America’s reserves, officially listed as 8,133 tonnes. As nations, they are also the two largest gold miners by output.  There can be no doubt that both China and Russia have a better understanding than western central banks of the relationship between money, which legally and in actuality is gold, and credit. They can only have built their reserves and mining capacity in anticipation that their currencies will need, one day, protection from a fiat currency crisis. First it was China, which accumulated most of her stash during the 1980-2002 bear market at prices as low as $275, before letting her citizens buy gold. With Russia, the accumulation has been more recent, undoubtedly seen by Putin as an essential part of his geopolitical ambitions. Both countries have concealed their true gold position, presumably so as to not threaten the dollar’s hegemony directly and to allow them to secretly add to their hoards. In the event of a fiat currency crisis for the dollar, both the rouble and yuan have more monetary projection backing them than in any of the currencies of their adversaries. And while the jury might be out with respect to President Xi’s geopolitical nous, there can be little doubt that Putin will do whatever it takes to protect Russia, the rouble, and his geostrategic plans from any crisis which might envelop the West. Tyler Durden Mon, 08/22/2022 - 02:00.....»»

Category: blogSource: zerohedgeAug 22nd, 2022

When There’s Talk of Gun Control, Gunmakers Play the Jobs Card. They’re Often Bluffing

Gunmakers are convincing elected officials they have to choose between gun-control laws and manufacturing jobs and benefiting richly. At first he thought it was an umbrella. But when the shotgun that was pointed at John Seymour went off, hitting him in the back and the wrist, he thought he was going to die in his own barbershop. He fell to the floor and played dead as the gunman shot three of his customers, killing two of them. Then the gunman, a former customer, killed two men in a nearby oil-change shop and holed up in an abandoned restaurant, where he later died in a shootout with police. Nearly 10 years later, Seymour thinks constantly about the shooting. “To this day, anything goes, Bang bang! and I jump. What do you expect? I had a guy die on top of me at my barbershop,” says Seymour, 76, who is known locally as John the barber. “​​We never thought we’d be a mass-murder part of the country.” [time-brightcove not-tgx=”true”] But like just about everyone else in Ilion, N.Y, a small town in New York’s Herkimer County about 80 miles northwest of Albany, Seymour has a soft spot for Remington Arms, the gun manufacturer that has been located here since Eliphalet Remington started making firearms in 1816. Remington’s imposing redbrick factory looms over Main Street. Walk around downtown, past the vape shops, the peeling multifamily homes, and the Remington Federal Credit Union, and you can hear the clinking of steel being cut as the factory churns out orders. Jason Koxvold for TIMEJohn Seymour in his barber shop where he survived a mass shooting nearly a decade ago. People here don’t talk about how Remington’s version of an AR-15—made in Ilion—was used in the Sandy Hook Elementary School shooting less than 200 miles away, or that the company filed for bankruptcy twice between 2018 and 2020, because of financial engineering by the private equity firm that bought the company in 2007. They also don’t talk about how the company regularly threatens to leave New York and move somewhere cheaper, or periodically lays off hundreds of workers, leaving some in limbo for months or years. What they do talk about is Remington’s proud history of making arms for America when the country needed them the most, like during World Wars I and II—when workers had to carpool to the factory because the parking lot couldn’t fit everyone’s cars—and the affinity they have for a company that employed most of their fathers, and their father’s fathers. “They help the little village of Ilion and its 7,500 people,” says Seymour, who when he isn’t plying his trade as a barber moonlights as a wedding and event singer. His father worked at Remington for 43 years, beginning in 1932, and Seymour’s brother and brother-in-law also worked there. “They pay taxes on that building, and we give them a little break on everything.” Remington, on the other hand, has not been very kind to the village of Ilion in recent years. After decades of threatening to relocate to the South, where gun laws are friendlier and labor is cheaper, the company went so far as to move two lines of manufacturing to Alabama in 2014, after that state offered nearly $70 million and factory space rent-free. That endeavor ultimately failed, leaving the Alabama factory shuttered, and some of the equipment moved back to Ilion. When the Remington Outdoor Company filed for bankruptcy in 2020, it owed hundreds of thousands of dollars to local suppliers and utility providers, including the local shoe store, the hardware store, and Ilion’s treasurer, police department, water commission, and the roughly 609 workers it had abruptly laid off without the health care benefits or severance pay promised in their contract. Despite these slights, many Ilion residents remain unfailingly loyal to the company. “I would say that we bleed green—Remington green,” says Frank “Rusty” Brown, who has worked at the factory since 1995 and was one of the workers who protested outside the factory in 40-degree weather in October 2020, after Remington filed for bankruptcy and fired all its Ilion manufacturing workers. “This is our living; it’s how our parents made a living. I’m dedicated to the place.” Remington’s Ilion and Tennessee properties, as well as its long-gun, shotgun, and pistols businesses, were bought out of bankruptcy in 2020 by a company called the Roundhill Group LLC, which now operates Remington through a holding company called RemArms. Roundhill appears to have been created solely to purchase Remington’s assets from its bankruptcy proceedings; Richmond Italia, a paintball entrepreneur who is one of Roundhill’s two partners, said in court filings that he was approached by Ken D’Arcy, a professional race-car driver and manufacturing executive who was appointed CEO of Remington in 2019. D’Arcy suggested that Italia buy Remington’s firearms assets. (The two men knew each other because they had both served as CEOs and then sat on the board of GI Sportz, a paintball company that filed for bankruptcy in October 2020, shortly after Roundhill purchased Remington.) In November 2021, D’Arcy, who is still CEO of Remington, announced that RemArms was moving to LaGrange, Ga. Ilion officials scurried to give RemArms incentives to stay, offering a 50% discount on property taxes, but Remington seemed uninterested in negotiating. Some residents began to imagine a town without Remington; others, like Brown, remained skeptical that the factory would shut down. After all, RemArms had started calling workers like him who’d been laid off in 2020 back to the factory in April 2021 to restart manufacturing, and the company is now negotiating with the United Mine Workers of America, the union representing workers when Remington filed for bankruptcy, to ink a new contract for Ilion. The Roundhill Group did not respond to calls and emails seeking comment for this story. “Remington has been going to move elsewhere since my parents worked there,” says Brown, whose wife, two daughters, and son-in-law still work at the plant. “You hear it so many times over the years, you become numb to it.” Jason Koxvold for TIMEFrank “Rusty” Brown has worked at the Remington Arms factory since 1995. Remington’s hot-and-cold relationship with Ilion is not a rare case among American gunmakers. It may seem reasonable to assume, in light of recent state laws and lawsuits filed against them, that gun companies are under siege, their bottom lines threatened by regulations and shifting public attitudes toward firearms. But today more than ever, gun manufacturers like Remington (now RemArms), Smith & Wesson, and Colt are pulling the strings, convincing elected officials they have to choose between gun-control laws and manufacturing jobs. States in the South and West are offering millions in incentives to gun companies and loosening laws around gun ownership to show their fealty to gun culture, even as gunmakers have raked in $3 billion in profits since the pandemic began. Profits for gunmakers have been strong for the last decade, with both Smith & Wesson and Sturm Ruger & Co., the country’s two biggest gunmakers, surpassing $100 million in profit every year. That’s putting pressure on states like New York to loosen recently passed gun-control laws, to convince manufacturers to stay—even though often those manufacturers are just adding new locations in other states and not actually leaving their original homes. The gunmakers’ leverage makes sense in a country where manufacturing is still seen as the backbone of the country, even though jobs in the sector make up less than 10% of U.S. employment, down from one-quarter of employment half a century ago. Politicians and voters on the right and left often romanticize factory jobs that make products marketed as all-American, such as trucks, tractors, and guns, particularly if they’re set to remain on American soil. (In the case of guns, many buyers don’t want something manufactured in a foreign country where safety standards are perceived to be lower). As America has become more polarized, gun manufacturers have been able to orchestrate complicated political theater, threatening to move factories—and jobs—when gun-control legislation is passed in certain states. They are garnering millions of dollars in incentives from states and local economic development boards rolling out the red carpet to demonstrate their gun-friendly credentials. Despite evidence that giving incentives to factories isn’t a cost-effective way to create jobs, and often they actually lose money—as in the case of electronics maker Foxconn’s deal in Wisconsin—states know that attracting manufacturers is popular with voters. Remington is a master at this game. In 1995, the company announced that it was moving its headquarters to North Carolina, receiving $150,000 from the state to do so. In the end, no manufacturing jobs were moved to the state. Then, after private equity firm Cerberus Capital Management purchased Remington in 2007 and rumors swirled that manufacturing would be moved overseas to save money, the State of New York gave Remington $3 million to expand its Ilion plant, and then $2.5 million more in 2010 to add 100 jobs. Just three years later, in 2013, New York passed sweeping gun-control legislation the SAFE Act, which banned some assault-style weapons, began requiring background checks for nearly all gun sales, and prohibited people who’d committed certain offenses from possessing guns. Ilion politicians used the law’s passage to criticize state Democrats for driving Remington away, and indeed, Remington soon announced that it was being courted by five other states. Six elected officials from the Ilion area pledged assistance should Remington build a new manufacturing plant in the area, warning in a public letter that “the clock is ticking on an inevitable exit by Remington from the state.” Read more: How Gunmakers May Benefit From Mass Shootings In 2014, Remington announced it was moving two production lines to Huntsville, Ala., a decision the company’s CEO George Kollitides blamed on New York gun laws, citing “Alabama’s rich tradition of defending freedom,” as a “major deciding factor” in the move. At the time, a company spokesperson said the move was “a strategic business decision” to consolidate plants. But while the announcement provided a platform for conservatives to lambast New York’s gun laws, the Ilion plant continued to operate with around 1,300 employees. The jobs that moved to Alabama were from other Remington plants in conservative states like Montana, Utah, and North Carolina. Alabama’s play for Remington did not look so smart by 2020, when Remington filed for bankruptcy and owed $12.5 million to Huntsville, because it had not met the hiring numbers it had agreed to in its $70 million incentive deal with the city. The company appeared to be drawing from the same playbook when it announced it was moving its headquarters to LaGrange in 2021. “The decision to locate in Georgia is very simple: the state of Georgia is not only a business-friendly state; it’s a firearms-friendly state,” RemArms CEO Ken D’Arcy said at the time. RemArms secured $6 million in incentives from Georgia, and pledged to build a $100 million research and development center in LaGrange. According to T. Scott Malone, president of the Development Authority of LaGrange, RemArms has set up shop in an 80,000-sq.-ft. temporary facility, and recently started producing its first guns. RemArms specifically attributed its decision to move to a New York law passed in 2021 that would bypass blanket immunity provided to gunmakers under federal law, and make it easier to bring civil lawsuits against gun companies. “Unfortunately, if a law like that is passed in New York State, we would have to reconsider our options for the future and our plans to expand our New York operations,” Italia, the managing partner for Roundhill Group said in an email to Utica’s Times Telegram in July 2021. But the law applies to all gunmakers that sell guns in New York, which would include RemArms wherever it has its plants. But despite all the headlines, the company has told New York stakeholders that it now has no plans to close the Ilion facility. “Nobody’s moving to Georgia—in fact, they’re adding employees here,” says John Piseck, CEO of the Herkimer County Industrial Development Agency, a public-benefit corporation that can offer tax breaks to local businesses. RemArms has called back nearly all of the 609 workers Remington laid off when it filed for bankruptcy in 2020, according to Jamie Rudwall, president of the United Mine Workers of America. He notes that only 300 have actually returned, the rest having either found new jobs or retrained for new careers. Business is good. Because gun sales are soaring in the U.S., and manufacturers need to expand operations to keep up with demand, gunmakers can combine business decisions with lobbying, announcing that they’re opening a new factory in Georgia or North Carolina to meet demand while complaining about gun-control laws elsewhere. Retailers performed 21 million background checks associated with the sale of a firearm in 2020, a 62% increase from 2019, and twice as many as 2010, according to data from the National Instant Criminal Background Check System (NICS) that is used as a rough proxy for gun sales. The figures don’t include background checks for other purposes, like concealed carry permits. For workers like Brown, the constant push and pull is more of a nuisance than a threat to their livelihoods. Brown—whose wife, two daughters, and soon-to-be son-in-law work at the Ilion plant—says the company should know by now that it won’t find workers anywhere as skilled, dedicated, or patient with the company as those in Ilion. “It’s always, ‘We’re going to move to where there’s cheaper labor. We’re going to move to where there’s this law or that law.’ After so many years, you become immune to it,” Brown says. “And then to see them fail miserably in Alabama, it’s like, ‘I told you so.’ ” To this day, both Georgia and New York officials are still pulling for RemArms to bring some more good news to their communities, even though RemArms’ future looks a little shaky. Tax collectors in Alabama are already trying to foreclose on some of Roundhill’s recently purchased assets because they weren’t removed from the state in a timely fashion, according to bankruptcy documents. The firearms economy When Brown was growing up, there were lots of manufacturing jobs in upstate New York, but Remington was the place he wanted to be. “It was so hard to get in there, because it was the greatest job ever,” he says. Both his parents had worked there, so he knew: health care didn’t cost anything; he got a pension and a good wage; and he didn’t have to bother with college. By the time he was laid off in 2020, he was making $26.87 an hour—more if he worked nights or overtime. Brown is one of thousands of people in the U.S. Northeast who make a living manufacturing firearms. The area around western Massachusetts and Connecticut, nicknamed Gun Valley, has been a gunmaking hub since George Washington set up an armory in Springfield, Mass., in the late 18th century to keep weapons out of reach of the British Navy. In 1986, 47% of guns manufactured in the U.S. were made in Connecticut, 24% in Massachusetts, and 12% in New York, according to Jürgen Brauer, the chief economist with nonpartisan research group Small Arms Analytics, who analyzed historical data from the Bureau of Alcohol, Tobacco, and Firearms (ATF). But in recent years, amid rising political polarization, states in the South and West, desperate to attract jobs in the aftermath of the Great Recession, have attempted to lure manufacturers from Gun Valley. Their pitch: gun companies should move to places where people like guns. The sunset of the federal assault-weapons ban in 2004, and subsequent attempts by states to pass laws either loosening or tightening rules on gun ownership, signaled where gunmakers would be welcome. Some states even started to designate official state guns alongside their state flowers and fish. “We’re all here to show our support for the Second Amendment to our neighbors and communities,” Nebraska Governor Pete Ricketts said earlier this year, onstage with five other governors at the trade show of the National Sports Shooting Foundation (NSSF), which now spends more on lobbying than the National Rifle Association. (Around 10,000 guns were made in Nebraska in 2020, less than 1% of all guns made in the U.S.) Jason Koxvold for TIMEJamie Rudwall, president of the United Mine Workers of America. “There’s a trend of companies that have picked up and moved, and it’s really been accelerating as of late,“ says Mark Oliva, managing director of public affairs at the NSSF. The NSSF keeps a running list of gunmakers that it says have migrated from the Northeast to the South, including Kimber, Sturm Ruger & Co., and Beretta. But the NSSF’s list is misleading. Though some gunmakers have picked up and moved their factories south from states like Connecticut, the far more common occurrence is that they move only their headquarters to Southern states, but keep manufacturing in the state in which that factory already exists. Such a move can secure juicy incentives such as tax breaks and free facilities, and generate headlines about liberal states losing manufacturing, while sparing gunmakers the hassle of moving millions of dollars of equipment and hiring and training new workers. Indeed, most of the companies on the NSSF’s list of “gun industry migration” still have manufacturing in the northeast. The devil is in the details. According to Brauer’s analysis of ATF data, by 2020 just 1.42% of guns were made in Connecticut, and less than 1% in New York, while states like Georgia, North Carolina, and South Carolina accounted for 9%, 6%, and 5%, of firearm manufacturing, respectively. The two top states for gunmaking in 2020, according to the data, were Missouri and New Hampshire. However, those figures only show where guns are distributed, rather than manufactured, deceptively counting Smith & Wesson—the biggest producer of guns in 2020—as a Missouri company, even though its guns in 2020 were made in Massachusetts, not Missouri. The company generated headlines in 2017 when it announced it was moving to Missouri, receiving a 50% tax break over 10 years. But at the time, it only moved about 20 jobs from its Massachusetts headquarters. The data shows that Massachusetts made 21% of all firearms in 2015 and just 0.49% in 2020—but that’s because Smith & Wesson established a distribution center in Missouri, not because it moved its manufacturing, Small Arms Analytics’ Brauer says. And in October 2021, Smith & Wesson said it would be relocating its headquarters to Tennessee from Springfield, Mass., its home for 165 years, after a bill was introduced in the Massachusetts legislature that would have banned the manufacture of assault weapons for civilian use. (The bill has gone nowhere.) At the time, Smith & Wesson said it decided to move because “We are under attack.” What it did not make clear was that its manufacturing operations—accounting for about 1,000 jobs—would stay in Springfield, and that what it was moving to Tennessee was assembly and distribution of firearms. One-quarter of the jobs being moved to Tennessee are currently located in Missouri and Connecticut, not Massachusetts. The Missouri warehouse the company had received an incentive for just a few years before would be closed, Smith & Wesson said. The company received $9 million from the state of Tennessee and made a deal with the local economic development agency that gives it a 60% tax break for seven years. Its CEO, Mark Smith, thanked Tennessee’s governor and legislature for their “unwavering support of the 2nd Amendment and for creating a welcoming, business friendly environment.” Smith & Wesson did not respond to requests for comment for this story. Gunmakers are increasingly turning to this playbook. Kahr Arms, which said it was moving out of New York in 2013 because of “stricter gun control,” moved its headquarters to Pennsylvania, which also has relatively strict gun-control laws, and kept its manufacturing in Massachusetts. Meanwhile, Colt, which threatened to move after Connecticut considered gun control laws in 2008 and passed them in 2013, decided to remain and then received a $10 million loan from the state of Connecticut in 2017. Colt made 158,501 guns in Connecticut 2020 and was recently bought by Czech company Česká zbrojovka Group (CZG), which itself received incentives in 2019, including 73 acres of free land by the state of Arkansas to build a gunmaking plant there. That Little Rock, Ark. plant has been put on hold, and the company says it has no plans to move Colt out of state. “Once situated in one state, it is exceedingly rare for a firearms manufacturer to move its entire operation to another state,” says Brauer. His research has found that gunmakers that say they’re leaving a Northeast state because of its gun-control policies usually keep a substantial presence there, and that they leave not because of the political climate but because they can find nonunionized, lower-paid workers in the South—and get millions of dollars in incentives. In 2010, for example, Olin Corp., owner of a Winchester ammunition factory, moved 1,000 jobs from Illinois to Mississippi after union workers in Illinois rejected a contract that would have reduced their pay. And a Remington executive told the New York Times in 2019 that in Ilion, the union “had them by the balls,” one reason the company moved some operations to Alabama from New York. Oliva, of the National Sports Shooting Foundation, says that moving operations is not a decision gunmakers take lightly, but that Smith & Wesson and other companies have to consider “the survival of a business” when states like Massachusetts talk of banning the manufacturing of some assault weapons to anyone but police and the military. The companies keep some manufacturing in the places where they were founded, out of loyalty to workers, he says, but “it is clear that many of these manufacturers are expanding to other states which are more friendly business environments and more friendly to gun rights.” For RemArms worker Brown, one of the ironies of the company’s indicating it will move to a state friendlier to gun owners is that Ilion is a place where people love guns. Ilion residents will offer to show strangers their gun collections, or wax lyrical about their favorite hunting rifle. Ask them about gun-control legislation, and they’ll blame Democrats, or politicians in Albany, for punishing the law-abiding citizens who want to own guns to hunt or to protect themselves. (Herkimer County voted for Donald Trump over Joe Biden in 2020 by a 2-to-1 margin.) Even “barber John” Seymour—still widely recognized locally as a mass-shooting survivor—is skeptical about the effectiveness of gun-control laws. “It’s tough for me to see the stuff that goes on in places like Uvalde,” he says. “But that guy would have gotten a gun no matter what—he was on a mission.” He points to the difficulties of assessing someone’s mental health when deciding whether they should be allowed to purchase a gun. In Seymour’s own case, the man who shot him, Kurt Myers, was mostly known locally as a loner who kept to himself, but authorities never found a motive for why he’d shot six people. It’s laws like New York’s SAFE Act that have most riled people in Ilion. “The climate changes when you say, ‘Big bad Remington is making this big mean gun in the middle of our state,’ ” says Rudwall, the union rep. “Look at the comments these politicians made: they demonize the tool, not the dude that did it.” When Remington threatens to leave, locals often blame state politicians for driving gunmakers out of the state. New York Republican Congresswoman Claudia Tenney has seized on that sentiment, campaigning to overturn the SAFE Act, lambasting former New York Governor Andrew Cuomo for what she has called “failed economic and anti–Second Amendment policies in New York,” and using her positions on guns to shore up her connection with Donald Trump. At a fundraiser Trump held for Tenney in 2018, he warned attendees: “They want to end your Second Amendment and they’re putting a big move on it … Cuomo wants to end your Second Amendment more than anybody.” In 2020, when Remington filed for bankruptcy, Tenney said she’d contacted President Trump and would get the factory reopened, and that it would “eventually employ a workforce significantly larger than the plant’s previous head count.” (It’s unclear whether Trump intervened.) A week later, Tenney was re-elected in one of the most expensive House races in the country, by 109 votes. Jason Koxvold for TIMERemington Arms has told New York stakeholders that it now has no plans to close the Ilion facility. Gunmakers’ threats to leave states in the Northeast have helped to stoke fear among some employees. As soon as renderings of the LaGrange RemArms headquarters started showing up online, Brown says his daughters and other workers on the factory floor began to express concern that they would lose their jobs. The pictures emerged just as the union was in the middle of negotiations with RemArms over wages and benefits, and people around the plant started hinting that the union should take whatever deal it could, says union representative Rudwall. Negotiations are still ongoing. “My daughter says, ‘Daddy, look at this brand-new facility, they’re not going to stay here,’ ” Brown says. “So when Jamie [Rudwall] comes back with a contract, whether they like it or not, they say, ‘Yes,’ because we want to keep working.” There are other jobs in Ilion; in this economy, there are other jobs just about anywhere. They’re just not manufacturing jobs. The county’s largest employer is now Tractor Supply, which is a distribution center. Verizon has a presence in the area, and Amazon is opening a warehouse nearby too. But some of the laid-off Remington workers who missed their chance to go back to the factory say they’d go back if given the opportunity. Allen Harrington worked at the Remington factory in Ilion for eight years. In October 2020, a few months after Remington filed for bankruptcy, the company laid off nearly all of its Ilion workers. Harrington was on the factory floor at the time, until a supervisor came in and said they had to shut everything down, and that everyone was terminated, and that health care, severance, and other benefits would be gone at the end of the month. Harrington eventually found a job making $13 an hour in a warehouse, down from the $25 he had made at Remington. He kicks himself for not going back to school after being laid off, but he felt too old—and he felt sure that the factory would re-open and he could work in manufacturing again. It’s hard to let go. “I loved that job,” Harrington says. “I know it’s uncertain there, but I’d go back in a heartbeat.”.....»»

Category: topSource: timeAug 19th, 2022

Trials, pardons, prison time: How Trump"s legal woes could play out and what it means for 2024

Now that we know Trump is the target of an active criminal investigation, what comes next, and how might this end for the former president? Former President Donald Trump.Scott Olson/Getty Images The FBI waded into uncharted waters when it executed a search warrant at Mar-a-Lago. Trump is the target of an active criminal probe. What comes next, and how might it end for him? The inquiry could wrap without charges, Trump could cut a deal to avoid indictment, or he could end up behind bars — but still be able to run in 2024. The FBI waded into uncharted territory when it executed a search warrant last week at former President Donald Trump's Mar-a-Lago club and personal residence in Palm Beach, Florida.According to the unsealed warrant and an accompanying FBI manifest of items seized, the feds recovered 20 boxes from Mar-a-Lago and at least 11 sets of classified documents, including some that were marked top-secret. The warrant also indicated that the Justice Department is investigating if Trump violated three federal laws, including the Espionage Act, related to the handling of national security information.The raid — and its continued fallout — sparked a national firestorm as the public grappled with the reality that there is an active criminal investigation into the former president of the United States.It also opened up a slew of questions given the unprecedented nature of the probe. Chief among them: what happens next, and how might this end for Trump?Here are some potential scenarios:The investigation concludes with no charges filedIn the US's 250-year history, no ex-commander-in-chief has ever faced criminal charges. And while the FBI's raid indicates that its investigation has entered an aggressive phase, the inquiry could very well wrap without an indictment against the former president. For a somewhat similar example of this option playing out (albeit not involving a former president), look to Trump's ex-personal defense attorney Rudy Giuliani. The FBI raided Giuliani's home and office last year and seized more than a dozen of his electronic devices as part of a criminal investigation into whether Giuliani broke foreign lobbying laws.Former New York City Mayor Rudy Giuliani speaks during a news conference in Miami in July 2021.Matias J. Ocner/Miami Herald/Tribune News ServiceBut earlier this month, the feds returned Giuliani's devices to him and The New York Times reported that he's unlikely to face criminal charges related to his work in Ukraine.Daniel Richman, a former federal prosecutor from the Southern District of New York, also cautioned against assuming that the Mar-a-Lago raid will lead to an indictment and said it's possible the Justice Department only wanted to recover the sensitive records Trump had at his Florida property."I think that's one aspect of what's going on and perhaps the dominant aspect," Richman told Insider's Camila DeChalus.In this scenario, Trump would have a clear path to running for president in 2024 — as he's repeatedly indicated he'll do — and landing in the White House again.Trump agrees not to seek public office to avoid an indictmentOn the other end of the spectrum, prosecutors could pursue criminal charges against the 45th president in connection to his handling of official government records. If they do, it could go one of several ways.One option with some historical precedent: A deal in which Trump would agree not to seek public office to avoid being indicted.In 2001, on his last day in office, then President Bill Clinton cut a deal with the Whitewater special prosecutor Robert Ray: give up his license to practice law in his home state of Arkansas for five years and the Whitewater team wouldn't pursue criminal charges against him for lying under oath about his sexual relationship with the former White House intern Monica Lewinsky.Whitewater investigators also imposed a $250,000 fine on Clinton, which he paid, and the Supreme Court suspended him from arguing cases before it. The court gave Clinton 40 days to explain why he shouldn't be disbarred after the Arkansas Bar Association suspended him, but rather than face disbarment, Clinton resigned his membership on the Supreme Court bar.Monica Lewinsky worked as a White House intern under former President Bill Clinton.Getty ImagesAlthough the Justice Department's investigation into Trump's handling of government records is the most public-facing since the FBI's raid, it isn't the only ongoing federal probe connected to him. The department is also conducting a wide-ranging investigation into the January 6, 2021, Capitol riot, and several former high-ranking White House officials were subpoenaed in recent weeks as at least two grand juries investigate events leading up to the attack.Prosecutors are said to be zeroing in on Trump's actions surrounding the riot and his lawyers have reportedly grown more concerned about Trump's legal exposure as the attorney general publicly emphasizes that "no person is above the law."Then there's Congress' separate investigation into January 6, which so far has highlighted five federal laws lawmakers think Trump may have broken in connection to the riot.Trump's defense lawyer, Alina Habba, recently appeared to allude to the possibility of him agreeing not to seek office again in exchange for avoiding criminal charges."I've sat across from him every time he gets frustrated and I say to him, 'Mr. President, if you would like me to resolve all your litigation, you should announce that you are not running for office, and all of this will stop,'" Habba said on Real America's Voice.Trump is indicted, convicted, and ends up behind bars — but he can still run for presidentIf Trump is charged with a crime — or crimes — but forgoes a plea deal, the case would proceed to a criminal trial. According to the FBI's search warrant, prosecutors are looking into whether Trump violated three federal laws:18 USC § 793, a key facet of the Espionage Act relating to the removal of information pertaining to the US's national defense. Conviction on this count carries a maximum penalty of 10 years in prison.18 USC § 2071, which bars the concealment, removal, or mutilation generally of government records. Conviction on this count carries a maximum penalty of three years and disqualification from holding public office.18 USC § 1519, which prohibits the destruction, alteration, or falsification of records. Conviction on this count carries a maximum penalty of 20 years in prison.In all, the former president would be looking at potentially being incarcerated for 33 years, according to legal experts.If Trump is in prison, can he still run for president in 2024? The short answer: yes, and it's been done before.As Insider previously reported, there's nothing in the Constitution that blocks someone from mounting a presidential run if they're behind bars. The socialist candidate Eugene Debs had been convicted of treason under the Espionage Act when he ran for president in 1920. And Lyndon LaRouche, who was convicted of mail fraud in 1988 and imprisoned, ran for president in 1992.If he's convicted for violating two of the three laws mentioned above, Trump could theoretically launch a 2024 presidential campaign even if he's incarcerated. If he's convicted for violating 18 USC § 2071, however, he would be disqualified from holding office again.AP PhotoBiden grants Trump executive clemencyPresident Joe Biden could elect to grant Trump executive clemency — in the form of a pardon, commutation, amnesty, or reprieve — if Trump gets indicted, convicted, or even if he's under threat of indictment while Biden is in office. The most famous historical example of this was when President Gerald Ford pardoned his predecessor, Richard Nixon, after Nixon resigned from office amid the Watergate scandal.Congress dropped its impeachment investigation into Nixon following his resignation but he still faced the risk of criminal prosecution on both a state and federal level. In September 1974, Ford granted Nixon a full and unconditional pardon for any crimes he may have committed while president.While the move was seen as a step towards helping the country heal in the wake of Watergate, it's also widely believed to be one of the main reasons Ford lost his own bid to serve a full term in the 1980 election against Jimmy Carter.Now, more than four decades later, legal experts suggest it's highly likely Biden would grant Trump a pardon or a commutation if he's convicted, indicted or under threat of indictment in order to avoid further inflaming political divisions in the country."My 100% is really that there is no way that a former POTUS is going to spend time in jail, or that Biden (or any normal POTUS) would allow that," Asha Rangappa, a former FBI agent and a dean at Yale Law School, tweeted.Aziz Huq, a law professor at the University of Chicago, made a similar point.A narrow pardon for offenses related to the mishandling of classified information, as opposed to a blanket pardon like the one Ford granted Nixon, "might minimize damage to the rule of law, while shoring up our democratic norms," Huq wrote in Politico. "While hardly perfect, it might well be the least bad option to protect our constitutional democracy."But it's worth noting that a presidential pardon wouldn't shield Trump from possible state charges.The Fulton County district attorney's office is currently investigating if Trump and his allies violated Georgia laws in their quest to nullify Biden's election victory in the state — and some legal experts say this investigation is a bigger risk to Trump than the DOJ's. The inquiry kicked into high gear this week, when prosecutors informed Giuliani, who spearheaded Trump's legal effort to overturn the election results, that he is a target of the probe.Local prosecutors in Georgia have targeted Rudy Giuliani in their investigation into efforts by Donald Trump and his allies to overturn the state's 2020 election results.Spencer Platt/Getty ImagesGiuliani appeared before the special grand jury investigating the matter on Wednesday. If Trump himself becomes a target of the investigation and faces state criminal charges, his only hope for clemency upon conviction would be from a Georgia pardons and parole board.Trump gets indicted and acquitted following a trialIt's also possible that Trump could be criminally charged and opt not to cut a deal, and that Biden wouldn't step in with a clemency grant. If the case goes to trial, a 12-person jury would have to reach a unanimous decision in order to convict, and Trump would be off the hook if just one juror broke from the others.If he does sidestep the legal minefield he's currently in and makes it back into the White House in 2024, Trump and his allies have made clear that they intend to exact revenge on the Justice Department and the FBI.It wouldn't be the first time Trump has interfered with the department's work.He made headlines during his presidency for wondering why he couldn't have "my guys" at the "Trump Justice Department" do his bidding. He famously fired James Comey, the FBI director in charge of the investigation into the Trump campaign's links to Russia. Then he ordered the firing of the special counsel appointed to investigate Comey's firing (and only backed off when the White House counsel threatened to quit).When he lost the 2020 election, Trump tried to enlist the Justice Department to overturn Biden's victory and attempted to oust the acting attorney general before backing off when top DOJ officials threatened to resign en masse.On Wednesday, the former president took to Truth Social to post a Wall Street Journal op-ed by the pro-Trump columnist Kimberly Strassel titled, "The Payback for Mar-a-Lago Will Be Brutal.""What went around [last week] will come around hard for the Democrats when Republicans control the Justice Department and FBI," Strassel wrote, before speculating about how the rule of law will hold up "when a future Republican Justice Department starts raiding the homes of Joe Biden, Hillary Clinton, Barack Obama, Eric Holder, James Comey and John Brennan."Michael Caputo, the former top communications aide at the Department of Health and Human Services and one of Trump's most loyal lieutenants, also alluded to what could come next if Trump is reelected."At the end of this thing the FBI is going to be four different departments spread across the federal government like seeds to the wind and probably based in Wichita," he told Insider in an interview.Read the original article on Business Insider.....»»

Category: personnelSource: nytAug 17th, 2022

Futures Tumble After UK Double-Digit Inflation Shock Sparks Surge In Yields

Futures Tumble After UK Double-Digit Inflation Shock Sparks Surge In Yields Futures were grinding gingerly higher, perhaps celebrating the end of the Cheney family's presence in Congress, and looked set to re-test Michael Hartnett bearish target of 4,328 on the S&P (which marked the peak of yesterday's meltup before a waterfall slide lower when spoos got to within half a point of the bogey), when algos and the few remaining carbon-based traders got a stark reminder that central banks will keep hammering risk assets after the UK reported a blistering CPI print, which at a double digit 10.1% was not only higher than the highest forecast, but was the highest in 40 years. The print appeared to shock markets out of their month-long levitating complacency, and yields - both in the UK and the US - spiked... ... and with yields surging, futures had no choice but to notice and after trading at session highs just before the UK CPI print, they have since tumbled more than 40 points and were last down 0.85% or 37 points to 4,271. Nasdaq 100 futures retreated 0.9% signaling a selloff in technology names will continue. The dollar rose as investors awaited the minutes of the Fed’s last policy meeting for clues on policy makers’ sensitivity to weaker economic data. In US premarket trading, retail giant Target slumped 4% after reporting earnings that missed expectations despite still predicting a rebound. Applied Materials and PayPal dropped at least 1.3%. Tech stocks are the forefront of the growing pessimism over equity valuations on the back of Fed rate increases. The S&P 500 had posted a small gain on Tuesday, aided by earnings reports from retailers Walmart Inc. and Home Depot. Here are some of the other biggest U.S. movers today: Manchester United (MANU US) rises as much as 17% in US premarket trading before trimming most of the gains, after Tesla CEO Elon Musk said he was buying the English football club but later added that he was joking. Hill International (HIL US) shares rise 61% in premarket trading hours after it announced Global Infrastructure Solutions will commence an all-cash tender offer for $2.85/share in cash, representing a premium of 63% to the last closing price. BioNTech (BNTX US) was initiated with a market perform recommendation at Cowen, which expects demand for Covid-19 vaccines to mirror annual flu trends as the pandemic enters its endemic phase. Bed Bath & Beyond (BBBY US) shares surge 20% in premarket trading, putting the stock on track for its sixth day of gains. The home-goods company has helped reinvigorate a wave of meme stock buying Agilent (A US) saw its price target boosted at brokers as analysts say the scientific testing equipment maker’s results were strong thanks to growth in biopharma and a recovery in China, while the company’s guidance was on the conservative side. Shares rose . Jefferies initiated coverage of Waldencast Plc (WALD US) class A with a buy recommendation as analyst Stephanie Wissink sees 29% upside potential. Sea Ltd. (SE US) ADRs slipped as much as 2.1% in US premarket trading, extending Tuesday’s declines, as Morgan Stanley cut its PT on expectations of slowing growth at the Shopee owner’s e-commerce business in the third quarter. Weber (WEBR US) downgraded to sell from neutral at Citi, which says there are too many concerns to remain on the sidelines, including a decline in point-of-sale traffic and macro factors like inflation weighing on consumer demand In the past two months, US stocks rallied on signs of peaking inflation and an earnings-reporting season that saw four out of five companies meeting or beating estimates. Boosted by relentless systematic (CTA) buying and retail-driven short squeezes, as well as a surge in buybacks, stocks recovered more than 50% of the bear market retracement. Yet, continuing rate hikes and the likelihood of a recession in the world’s largest economy are weighing on sentiment. Meanwhile, concern is growing that Fed rate setters will remain focused on the fight against inflation rather than supporting growth. “We expect the FOMC minutes to have a hawkish tilt,” Carol Kong, strategist at Commonwealth Bank of Australia Ltd., wrote in a note. “We would not be surprised if the minutes show the FOMC considered a 100 basis-point increase in July.” In Europe, the Stoxx 600 fell after a strong start amid signs the continent’s energy crisis is worsening. Benchmark natural-gas futures jumped as much as 5.1% on expectations the hot weather will boost demand for cooling. In the UK, consumer-price growth jumped to 10.1%, sending gilts tumbling. Real estate, retailers and miners are the worst performing sectors. The Stoxx 600 Real Estate Index declined 2%, making it the worst-performing sector in the wider European market, as focus turned to UK inflation that soared to double digits for the first time in four decades and also to today's FOMC minutes. German and Swedish names almost exclusively account for the 10 biggest decliners. TAG Immobilien drops 5.4%, Wallenstam is down 4.7%, Castellum falls 4% and LEG Immobilien declines 3.3%. The sector tumbles on rising bond yields, with 10y Bund yield up 11bps, and dwindling demand for Swedish real estate amid rising rates. Earlier on Wednesday, stocks rose in Asia amid speculation that China may deploy more stimulus to shore up its ailing economy while Japanese exporters were boosted by a weaker yen. After a string of weak data driven by a property-sector slump and Covid curbs, China’s Premier Li Keqiang asked local officials from six key provinces that account for 40% of the economy to bolster pro-growth measures. The MSCI Asia Pacific Index advanced as much as 0.8%, with consumer-discretionary and industrial stocks such as Japanese automakers Toyota and Honda among the leaders on Wednesday. The benchmark Topix erased its year-to-date loss. Chinese food-delivery platform Meituan also rebounded after dropping more than 9% in the previous session on a Reuters report that Tencent may divest its stake in the firm. Chinese stocks erased declines early in the day, as investors hoped for more economic stimulus after a surprise rate cut on Monday failed to excite the market. Premier Li Keqiang has asked local officials from six key provinces that account for about 40% of the country’s economy to bolster pro-growth measures. “I believe policymakers have the tools to prevent a hard landing if needed,” Kristina Hooper, chief global market strategist at Invesco, said in a note. “I find investors are overly pessimistic about Chinese stocks -- which means there is the potential for positive surprise.” Asia’s stock benchmark is trading at mid-June levels as traders attempt to determine the trajectory of interest-rate hikes and economic growth globally -- as well as the impact of China’s property crisis and Covid policies. Meanwhile, minutes of the US Federal Reserve’s July policy meeting, out later Wednesday, will be carefully parsed. New Zealand stocks closed little changed as the country’s central bank raised interest rates by a half percentage point for a fourth-straight meeting. Australia's S&P/ASX 200 index rose 0.3% to close at 7,127.70, supported by materials and consumer discretionary stocks. South Korea’s benchmark missed out on the rally across Asian equities, as losses by large-cap exporters weighed on the measure In FX, the Bloomberg Dollar Spot Index rose as the dollar gained versus most of its Group-of-10 peers. The pound was the best G-10 performer while gilts slumped, led by the short end and sending 2-year yields to their highest level since 2008, after UK inflation accelerated more than expected in July. The yield curve inverted the most since the financial crisis as traders ratcheted up bets on BOE rate hikes in money markets, wagering on 200 more basis points of hikes by May. The euro traded in a narrow range against the dollar while the region’s bonds slumped, led by the front end. Scandinavian currencies recovered some early European session losses while the aussie, kiwi and yen extended their slide in thin trading. EUR/NOK one-day volatility touched a 15.12% high before paring ahead of Norges Bank’s meeting Thursday where it may have to raise rates by a bigger margin than indicated in June given Norway’s inflation exceeded forecasts for a fourth straight month, hitting a new 34-year high. Consumer sentiment in Norway fell to the lowest level since data began in 1992, according to Finance Norway. New Zealand’s dollar and bond yields both rose in response to the Reserve Bank hiking rates by 50bps, while flagging concern about labor market pressures and consequent wage inflation; the currency subsequently gave up gains in early European trading. The Aussie slumped after data showing the nation’s wages advanced at less than half the pace of inflation in the three months through June, backing the Reserve Bank’s move to give itself more flexibility on interest rates. In rates, treasuries held losses incurred during European morning as gilt yields climbed after UK inflation rose more than forecast. US 10-year around 2.87% is 6.5bp cheaper on the day vs ~13bp for UK 10-year; UK curve aggressively bear-flattened following inflation data, with long-end yields rising about 10bp. Front-end UK yields remain cheaper by ~20bp, off session highs, leading a global government bond selloff. US yields are higher on the day by by 4bp-7bp; focal points of US session are 20-year bond auction and FOMC minutes release an hour later. Treasury auctions resume with $15b 20-year bond sale at 1pm ET; WI 20-year yield at around 3.35% is ~7bp richer than July’s sale, which stopped 2.7bp through the WI level. In commodities, oil fluctuated between gains and losses, and was in sight of a more than six-month low -- reflecting lingering worries about a tough economic outlook amid high inflation and tightening monetary policy.  Spot gold is little changed at $1,774/oz Looking at the day ahead, the FOMC minutes from July will be the main highlight, and the other central bank speaker will be Fed Governor Bowman. Otherwise, earnings releases include Target, Lowe’s and Cisco Systems, and data releases include US retail sales and UK CPI for July. Market Snapshot S&P 500 futures down 0.3% to 4,293.00 STOXX Europe 600 little changed at 443.30 MXAP up 0.5% to 163.48 MXAPJ up 0.2% to 530.38 Nikkei up 1.2% to 29,222.77 Topix up 1.3% to 2,006.99 Hang Seng Index up 0.5% to 19,922.45 Shanghai Composite up 0.4% to 3,292.53 Sensex up 0.5% to 60,168.83 Australia S&P/ASX 200 up 0.3% to 7,127.68 Kospi down 0.7% to 2,516.47 German 10Y yield little changed at 1.06% Euro little changed at $1.0178 Gold spot down 0.0% to $1,775.21 U.S. Dollar Index little changed at 106.50 Top Overnight News from Bloomberg More market prognosticators are alighting on the idea of benchmark Treasury yields sliding to 2% if the US succumbs to a recession. That’s an out-of-consensus call, compared with Bloomberg estimates of about a 3% level by the end of this year and similar levels through 2023. But it’s a sign of how growth worries are forcing a rethink in some quarters The euro-area economy grew slightly less than initially estimated in the second quarter as signs continue to emerge that momentum is unraveling. Output rose 0.6% from the previous three months between April and June, compared with a preliminary reading of 0.7%, Eurostat said Wednesday Egypt became a prime destination for hot money by tethering its currency and boasting the world’s highest interest rates when adjusted for inflation Norway’s $1.3 trillion sovereign wealth fund, the world’s largest, posted its biggest loss since the pandemic as rate hikes, surging inflation and Russia’s invasion of Ukraine spurred volatility. It lost an equivalent of $174 billion in the six months through June, or 14.4% A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks just about shrugged off the choppy lead from the US where markets were tentative amid mixed data signals and strong retailer earnings, but with gains capped overnight ahead of the FOMC Minutes and as participants digested another 50bps rate hike by the RBNZ. ASX 200 swung between gains and losses with the index indecisive amid a slew of earnings and with strength in the consumer sectors offset by underperformance in tech, energy and healthcare. Nikkei 225 climbed above the 29,000 level with the index unfazed by mixed data releases in which Machinery Orders disappointed although both Exports and Imports topped forecasts. Hang Seng and Shanghai Comp were somewhat varied with Hong Kong led higher by tech amid plenty of attention on Meituan after reports its largest shareholder Tencent could reduce all or the bulk of its shares in the Co. which a Tencent executive later refuted, while the mainland was less decisive amid headwinds from the ongoing COVID situation and with power restrictions disrupting activity in Sichuan, although reports also noted that Chinese Premier Li told top provincial officials that they must have a sense of urgency to consolidate the economic recovery and reiterated to step up macro policies. Top Asian News RBNZ hiked the OCR by 50bps to 3.00%, as expected, while it stated that conditions need to continue to tighten and they agreed that maintaining the current pace of tightening remains the best means. RBNZ also agreed that further increases in the OCR were required to meet the remit objective and that domestic inflationary pressures had increased since May. Furthermore, the RBNZ raised its projections for the OCR and inflation with the OCR seen at 3.69% in Dec. 2022 (prev. 3.41%) and at 4.1% for both Sept. 2023 and Dec. 2023 (prev. 3.95%), while it sees annual CPI at 4.1% by Sept. 2023 (prev. 3.0%). RBNZ Governor Orr stated at the press conference that they are not forecasting a recession but expected below-potential growth amid subdued consumer spending. Governor Orr also stated that they did not discuss a 75bps rate hike today and that 50bps moves have been orderly and sufficient, while he added that getting rates to 4% would buy comfort for the policy committee and that a Cash Rate of around 4% is unambiguously above neutral and sufficient to meet the inflation mandate. Chongqing, China is to curb power use for eight days for industry. China’s Infrastructure Boom Gets Swamped by Property Woes Tencent 2Q Revenue Misses Estimates Hong Kong Denies Democracy Advocates Security Law Jury Trial UN Expert Says Xinjiang Forced Labor Claims ‘Reasonable’ Singapore’s COE Category B Bidding Hits New Record Delayed Deals Add to Floundering Singapore IPO Market: ECM Watch European bourses have dipped from initial mixed/flat performance and are modestly into negative territory, Euro Stoxx 50 -0.5%. Stateside, futures are under similar pressure awaiting fresh corporate updates and the July FOMC Minutes, ES -0.6%. Fresh drivers relatively limited throughout the session with known themes in play and focus on upcoming risk events; stocks also suffering on further hawkish yield action. Lowe's Companies Inc (LOW) Q1 2023 (USD): EPS 4.68 (exp. 4.58), Revenue 27.47 (exp. 28.12bln); expect FY22 total & comp. sales at bottom-end of outlook range, Operating Income and Diluted EPS at top-end. Target Corp (TGT) Q1 2023 (USD): EPS 0.39 (exp. 0.72), Revenue 26.0bln (exp. 26.04bln); current trends support prior guidance. Top European News German Gas to Last Less Than 3 Months if Russia Cuts Supply European Gas Surges Again as Higher Demand Compounds Supply Pain Entain Falls; Citi Views Fine Negatively but Notes Steps by Firm UK Inflation Hits Double Digits for the First Time in 40 Years Crypto.com Receives Registration as UK Cryptoasset Provider FX Greenback underpinned ahead of US retail sales data and FOMC minutes, DXY holds tight around 106.500. Pound pegged back after spike in wake of stronger than expected UK inflation metrics, Cable hovers circa 1.2100 after fade into 1.2150. Kiwi retreats following knee jerk rise on the back of hawkish RBNZ hike, NZD/USD near 0.6300 from 0.6380+ overnight peak. Aussie undermined by marginally softer than anticipated wage prices and lower RBA tightening bets in response, AUD/USD well under 0.7000 vs 0.7026 at one stage. Yen weaker as yield differentials widen again, but Euro cushioned by more pronounced EGB reversal vs USTs, USD/JPY probes 21 DMA just below 135.00, EUR/USD bounces from around 1.0150 towards 1.0200. Loonie and Nokkie soft amidst latest slippage in oil, USD/CAD closer to 1.2900 than 1.2800, EUR/NOK nudging 9.8600 within 9.8215-9.8740 range. Fixed Income Debt retracement ongoing and gathering pace ahead of Wednesday's key risk events. Bunds now closer to 154.00 than 156.00 and 157.00 only yesterday, Gilts not far from 114.50 vs almost 116.00 and 117.00+ earlier this week and T-note sub-119-00 vs 119-31 at best on Monday. Sonia strip hit hardest as markets price in aggressive BoE hikes in response to UK inflation data toppy already elevated expectations. Commodities Crude benchmarks are currently little changed overall, having recovered from a bout of initial pressure; newsflow thin awaiting fresh JCPOA developments Spot gold is little changed overall but with a slight negative bias as the USD remains resilient and outpaces the yellow metal as the haven of choice. Aluminium is the clear outperformer amid updates from Norsk Hydro that they are shutting production at their Slovalco site (175k/T year) by end-September, due to elevated energy prices. OPEC Sec Gen says he sees a likelihood of an oil-supply squeeze this year, open for dialogue with the US. Still bullish on oil demand for 2022. Too soon to call the outcome of the September 5th gathering. Spare capacity at around the 2-3mln BPD mark, "running on thin ice". US Private Inventory Data (bbls): Crude -0.4mln (exp. -0.3mln), Cushing +0.3mln, Gasoline -4.5mln (exp. -1.1mln), Distillates -0.8mln (exp. +0.4mln). Shell (SHEL LN) announced it is to shut its Gulf of Mexico Odyssey and Delta crude pipelines for two weeks in September for maintenance, according to Reuters. Uniper (UN01 GY) says the energy supply situation in Europe is far from easing and gas supply in winter remains "extremely challenging". China sets the second batch of the 2022 rare earth mining output quota at 109.2k/T, via Industry Ministry; smelting/separation quota 104.8k/T. Geopolitics China's military is to partake in a military exercise in Russia, their participation has nothing to do with the international situation. Taiwan's Defence Ministry says they have detected 21 Chinese aircraft and five ships around Taiwan on Wednesday, via Reuters. Iran is calling on the US to free jailed Iranian's, says they are prepared for prisoner swaps, via Fars. US Event Calendar 07:00: Aug. MBA Mortgage Applications, prior 0.2% 08:30: July Retail Sales Advance MoM, est. 0.1%, prior 1.0% 08:30: July Retail Sales Ex Auto MoM, est. -0.1%, prior 1.0% 08:30: July Retail Sales Control Group, est. 0.6%, prior 0.8% 10:00: June Business Inventories, est. 1.4%, prior 1.4% 14:00: July FOMC Meeting Minutes DB's Tim Wessel concludes the overnight wrap Starting in Europe, where the looming energy crisis remains at the forefront. An update from our team, who just published the fourth edition of their indispensable gas monitor (link here), where they note the surprisingly fast rebuild of German gas storage, driven by reductions in industrial activity, reduces the risk that rationing may become reality this winter. Many more insights within, so do read the full piece for analysis spanning scenarios. Keep in mind, that while gas may be available, it is set to come at a higher clearing price, which manifest itself in markets yesterday where European natural gas futures rose a further +2.64% to €226 per megawatt-hour, just shy of their closing record at €227 in March. But, that’s still well beneath their intraday high from March, where at one point they traded at €345. Further, one-year German power futures increased +6.30%, breaching €500 for the first time, closing at €507. Germany is weighing consumer relief measures in light of climbing consumer prices and also announced that planned nuclear facility closures would be “temporarily” postponed. The upward energy price pressure and attenuated (albeit, not eliminated) risk of rationing pushed European sovereign yields higher. 10yr German bunds climbed +7.1bps to 0.97%, while 10yr OATs kept the pace, increasing +7.4bps. 10yr BTPs increased +15.9bps, widening sovereign spreads, while high yield crossover spreads widened +10.2bps in the credit space. Equities were resilient, however, with the STOXX 600 posting a +0.16% gain after flitting around a narrow range all day. Regional indices were also robust to climbing energy prices, with the DAX up +0.68% and the CAC +0.34% higher. In the States the S&P 500 registered a modest +0.19% gain, with the NASDAQ mirroring the index, falling -0.19%. Retail shares drove the S&P on the day, with the two consumer sectors both gaining more than +1%, following strong earnings reports from Wal Mart and Home Depot. Treasury yields also climbed, but the story was the further flattening in the curve. 2yr yields were +7.5bps higher while 10yr yields managed to increase just +1.6bps, leaving 2s10s at its second most negative close of the cycle at -46bps. 10yr yields are another basis point higher this morning. A hodgepodge of data painted a mixed picture. Housing permits beat expectations (+1674k vs. +1640k) while starts (+1446k vs. +1527k) fell to their slowest pace since February 2021. However, under the hood, even permits weren’t necessarily as strong as first glance, as single family permits fell -4.3% with gains in multifamily pushing the aggregate higher. Indeed, year-over-year, single family permits have now fallen -11.7% while multifamily permits are +23.5% higher. So the single family housing market continues to feel the impact of Fed tightening. Meanwhile, industrial production climbed +0.6% month-over-month (vs. +0.3%), with capacity utilization hitting its highest level since 2008 at 80.3%. Drifting north of the border, Canadian inflation slowed to 7.6% YoY in July in line with estimates, while the average of core measures climbed to a record 5.3%. Bank of Canada Governor Macklem penned an opinion piece saying that while it looks like inflation may have peaked, “the bad news is that inflation will likely remain too high for some time.” In turn, Canadian OIS rates by December climbed +16.2bps. In other data, the expectations component of the German ZEW survey fell to -55.3, its lowest level since October 2008 at the depths of the GFC. In the UK, regular pay (excluding bonuses) fell by -3.0% in real terms over the year to April-June 2022, its fastest decline on record. On the Iranian nuclear deal, EU negotiators reportedly found Iran’s response constructive, though Iran still had some concerns. Notably, Iran is looking for guarantees that if a future US administration withdraws from the JCPOA the US will "have to pay a price”, seeking insulation from the vagaries of representative democracy. Asian equity markets are trading higher after Wall Street’s solid performance overnight. The Nikkei (+0.76%) is leading gains across the region with the Hang Seng (+0.57%), the Shanghai Composite (+0.23%) and the CSI (+0.51%) all rebounding from its opening losses this morning. US futures are struggling to gain traction this morning with the S&P 500 (-0.02%) and NASDAQ 100 (-0.09%) trading just below flat. The Reserve Bank of New Zealand lifted its official cash rate (OCR) for the fourth consecutive time by an expected +50bps to 3%, a seven-year high, while bringing forward the estimate of future rate increases. The central bank expects the OCR will reach 3.69% at the end of this year and expects it to peak at 4.1% in March 2023, higher and sooner than previously forecast. Early morning data coming out from Japan showed that exports rose +19.0% y/y in July (v/s +17.6% expected) posting 17 straight months of gains while imports advanced +47.2% (v/s +45.5% expected) driven by global fuel inflation and a weakening yen. With the imports outweighing exports, the nation reported trade deficit for the 14th consecutive month, swelling to -2.13 trillion yen in July (v/s -1.91 trillion yen expected) compared to a revised deficit of -1.95 trillion yen in June. In terms of the day ahead, the FOMC minutes from July will be the main highlight, and the other central bank speaker will be Fed Governor Bowman. Otherwise, earnings releases include Target, Lowe’s and Cisco Systems, and data releases include US retail sales and UK CPI for July. Tyler Durden Wed, 08/17/2022 - 07:55.....»»

Category: dealsSource: nytAug 17th, 2022

Crypto Lender Hodlnaut Pauses Withdrawals As U.S. Blacklists Tornado Cash

The hits keep on coming for the crypto market as the bitcoin price tumbled back below $24,000. The hits keep on coming for the crypto market as the bitcoin price tumbled back below $24,000. Crypto analyst Will Clemente suggested that bitcoin could consolidate at around $23,000 or below for multiple days, causing it to print a lower-high as it failed to reach its previous high of $24,700. He drew attention to Coinbase’s orderbook, which shows bitcoin bids stacked from $17,000 to $10,000, demonstrating significant demand from investors who want to buy the cryptocurrency at lower prices. In an email on Tuesday morning, GlobalBlock noted that the last time the crypto exchange’s orderbook was skewed to the buyside in March 2020, a generational buying opportunity ensued. That drove the bitcoin price from $3,000 to $65,000 in a little over 12 months for a return of more than 2,000%. However, for now, crypto-related companies continue to languish amid the widespread uncertainty in the crypto market. Treasury Blacklists Crypto-Mixing Service Tornado Cash CoinDesk reported that the U.S. Treasury had banned Americans from using the crypto-mixing service Tornado Cash. The Office of Foreign Assets Control, a watchdog that aims to prevent violations of sanctions, added Tornado Cash to its list of Specially Designated Nationals. That list contains all blacklisted entities, people and crypto addresses. Being added to the list means all U.S. entities and people are banned from interacting with the company or any of the Ethereum wallet addresses tied to its protocol. Those who ignore the ban could face criminal charges. The Treasury Department said the North Korean hacker group known as the Lazarus Group has been using Tornado Cash, including in its $625 million hack of Axie Infinity’s Ronin Network in March. After analyzing the applicable blockchain, officials learned that tens of millions of dollars in crypto take from Ronin flowed through Tornado Cash, which is designed to hide the source of funds. A Treasury official described Tornado Cash as “the go-to mixer for cybercriminals looking to launder the proceeds of crime” and “helping to enable hackers… to launder the proceeds of their cybercrimes by covering up the origin and transfer of this illicit virtual currency.” Another Crypto Lender Freezes Withdrawals Meanwhile, the lender Hodlnaut has joined the list of crypto-related companies freezing withdrawals. In a statement on Monday, the Singapore-based company cited “difficult market conditions” for the move. Hodlnaut aims to stabilize its liquidity and preserve its assets as it develops a long-term solution. The company also withdrew its application for a license in Singapore even though the Monetary Authority gave it in-principal approval earlier this year. Hodlnaut joins a growing list of crypto lenders that have collapsed under the plummeting crypto prices this year. Voyager Digital and Celsius Network have both already filed for bankruptcy protection. The market capitalization of the global crypto market has shrunk from over $3 trillion in November to approximately $1 trillion today. Aside from the plunging crypto prices, the collapse of crypto hedge fund Three Arrows Capital has also played a role in the bankruptcy filings of some crypto lenders. However, Hodlnaut said in June that it didn’t have any “exposure or loans” with the hedge fund. The crypto lender plans to update its position on Aug. 19. This article originally appeared on ValueWalk Sponsored: Tips for Investing A financial advisor can help you understand the advantages and disadvantages of investment properties. Finding a qualified financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three financial advisors who serve your area, and you can interview your advisor matches at no cost to decide which one is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now. Investing in real estate can diversify your portfolio. But expanding your horizons may add additional costs. If you’re an investor looking to minimize expenses, consider checking out online brokerages. They often offer low investment fees, helping you maximize your profit......»»

Category: blogSource: 247wallstAug 9th, 2022

Marilyn Monroe collector reveals why late Hollywood legend is more valuable 60 years after her death

Hollywood actress Marilyn Monroe, also known as America's most famous sex symbol, had a reported net worth of $800,000 at the time of her tragic death in 1962. Marilyn Monroe’s market value is still shining brightly 60 years after her death. The Hollywood actress, also known as America’s most famous sex symbol, died in August 1962 at age 36. According to reports, the star had a net worth of $800K at the time of her death, which is nearly $8 million in today's money. Monroe’s net worth in 2022 is a reported $10 million. In 2020, she ranked No. 13 on Forbes’ list of highest-paid dead celebrities due to her image and name being used by nearly 100 brands globally. A fictionalized version of the star is the subject of an upcoming Netflix film, "Blonde," which has received an NC-17 rating. Scott Fortner, a lifelong fan, is determined to keep Monroe’s legacy alive by preserving some of her most prized possessions. Fortner, who is considered an authority on Monroe, assists major auction companies in authenticating and verifying memorabilia.  ANDY WARHOL'S MARILYN MONROE PORTRAIT SELLS FOR RECORD $195M He owns the world’s largest private collection of Monroe’s personal property and archives, which he shares on both his website and social media.  This year, he’ll be celebrating her life at several events at TCL Chinese Theatre in Hollywood, California. Fortner spoke to FOX Business about how he became a sought-after collector and why Monroe is more valuable than ever and offered his advice for fans eager to obtain an authentic piece of history. FOX Business: How did you end up becoming a Marilyn Monroe memorabilia collector?Scott Fortner: Like anyone, you’re just taken by someone or find yourself very interested in a particular figure. That’s what happened to me when I was probably 12 or 13. I was really fascinated by Marilyn Monroe. I started collecting books and magazines as I read and learned more about her. This continued through adulthood. Then, in 1999, her entire estate was put up for auction at Christie’s in New York. That auction really set the stage for celebrity auctions. I acquired the catalog from the auction, which became another book for my collection. But then I started to see some items from the 1999 sale that were being resold online on eBay and at other auction houses.  I thought to myself, "Why am I collecting books and magazines when I could be collecting items that Marilyn owned?" That’s how it started over two decades ago. … This isn’t an organization or a company investing in these items for business purposes or other concepts. I just happen to be a fan who’s lucky enough to collect. CLICK HERE TO READ MORE ON FOX BUSINESS FOX Business: Do your items ever get loaned out to museums or is it strictly private?Fortner: As someone lucky enough to obtain these items, I feel a bit of an obligation and a duty to share them with the rest of the world and give other fans an opportunity to see Marilyn through her objects in the same way that I do.  I loan my collection for exhibitions. It’s been on exhibit around the world. I’ve often participated in opportunities to raise money for charitable causes. For example, some items have been on display to raise money for the actual orphanage where Marilyn lived as a child, which is still in business today. FOX Business: What’s your process like in finding authentic memorabilia?Fortner: When I first started, I didn’t know much about the auction business as we know it today. Over the years, I’ve come to learn more about the auction industry. I’m now connected with most of the major auction companies around the world, such as Christie’s, Julien’s Auctions and Heritage. Those are your top auction companies for entertainment memorabilia. I’m also pretty well known in the collecting community. A lot of times people will reach out to me privately to see if I might be interested in purchasing something that they may have. I believe networking and learning are really important if you want to expand your collection. And I’m always looking for the next thing to add to my collection. GET FOX BUSINESS ON THE GO BY CLICKING HERE FOX Business: How many items do you currently own?Fortner: I don’t have an exact number anymore. I stopped counting. But it’s in the several hundreds. FOX Business: What would you say is your crown jewel?Fortner: The item that I get asked the most about is Marilyn’s personal Pucci blouse. During the last few years of her life, she wore Pucci quite a lot. It was an Italian designer that she discovered, which shifted her look away from the ‘50s, such as the tight skirts and sweaters. It was a more modern, easier look. She had several Pucci items in her closet. She was also buried in a green Pucci dress. So the brand has become synonymous with Marilyn. The blouse I own happens to be the blouse she was wearing in the photos taken on the weekend before she passed away, the last photos ever taken of her alive. It’s the item I get frequently asked about in terms of selling. It’s not for sale. I’m a collector, not a dealer. The most recent item I’ve added to my collection is something I’ve wanted for quite some time. It’s a pair of Marilyn’s Ferragamo high heels. The white Ferragamo high heel was a go-to look for her. There are countless photos of Marilyn wearing them throughout the ‘50s and ‘60s. It’s a new staple in my collection that I added just last month. MARILYN MONROE’S FIGURE-HUGGING GOWN BECOMES TOP SELLER AT AUCTION: SHE’S ‘STILL TURNING HEADS TO THIS DAY’ FOX Business: Which item was the hardest for you to obtain?Fortner: Marilyn attended a benefit for the Actor’s Studio. She was an usherette. People would come into the theater, and Marilyn would escort them to their seats and hand them a program. I’m sure that must have been quite the experience to be escorted by Marilyn. She wore an ensemble that consisted of an evening dress and a matching cape. That item came up for auction several years ago. I bid on the item and was told that I had won. It turned out that it didn’t make the minimum bid or the reserve. A lot of times, a seller will say, "If it doesn’t reach this certain amount, I’m not going to sell the item." I found out after the auction and I went through the grueling process of attempting to negotiate with the seller. I bought it privately after the fact. It took several months for that to happen. But I was fortunate because it’s probably one of Marilyn’s most well-known public events. Now I have that cape as part of my collection. FOX Business: Marilyn passed away 60 years ago. Why do you believe she’s more valuable than ever?Fortner: For starters, she’s an icon. And I think people relate to her in so many ways today. Some people just enjoy her photos. Others enjoy her films. Some people relate to the personal struggles that she endured throughout her life. What I often find is that people feel a connection to her. There’s a sense of wanting to protect her. I think her appeal is very broad. And it’s not just in the United States — it’s worldwide. I’ve connected with other collectors and fans around the world, so her reach is very extensive and long-lasting. She’s an icon of beauty, for fashion and a legend of the silver screen. FOX Business: How difficult is it to find and buy authentic Marilyn memorabilia today?Fortner: What I’m seeing now is that people are very much holding onto their collectibles and memorabilia because it is increasing in value as time goes by. So whenever there is an auction, the number of pieces available can be very limiting. And Marilyn is one of those people whose value doesn’t decrease. She holds value and increases in value. So people aren’t as quick to put up their items for auction. Therefore, the availability is getting harder. MARILYN MONROE'S DRESSES FROM POPULAR MOVIES UP FOR AUCTION FOX Business: How can one determine whether an item is authentic or not? What are some tell-tale signs you look out for?Fortner: One of the first things you want to do is ensure you’re verifying authenticity. Where did the item come from? Did it come from that 1999 Christie’s sale or another auction sale, such as from Julien’s? You want to make sure it came from a major auction company and verify the year it was originally sold. Also, is there a photo that can be matched with the item? Is there a photo of Marilyn wearing the item, whether it was at home or a public event? Many items from my collection are photographed with Marilyn. What I tell people to avoid is what I call second- or third-generation items, such as a seller saying, "Marilyn gave this to me." Those items usually come with a letter or certificate of authenticity. Those items are very risky purchases and, usually, they’re not authentic. There’s a huge market today, particularly on eBay, where people will create certificates of authenticity claiming this is an authentic item when, in reality, it was probably something acquired from a secondhand store. They’ll just purchase the item, create a letter of authenticity, and then sell it for thousands of dollars on eBay. Unfortunately, many people tend to believe an item is real just because it comes with a certificate claiming it came from Marilyn’s makeup artist or hairstylist. Usually, that’s not the case. I’m so often contacted by people who say, "I’ve got this item for sale, and here’s the letter of authenticity for it." I’m in the position of having to tell them, "This item is not real, and here’s how I know that." A perfect example involves Marilyn’s foster sister, Bebe Goddard. Marilyn lived with the Goddard family for some time. [Later on], Bebe worked with a memorabilia dealer to create items that he sold for her, which were fake pieces. They even went as far as to spray Chanel No. 5 on those items. After she passed away, it was verified through her documents that these items were sold to people. Just because it was someone who was a part of Marilyn’s life, people believed they were real. And these items came with a certificate of authenticity claiming they were real. Today, people continue to create these fake letters of authenticity. And it’s not only with Marilyn items. It’s with all kinds of celebrity memorabilia. There are a few real items on eBay that are authentic. I would advise people to stick with the major auction companies.  NYC APARTMENT OF HOLLYWOOD LEGEND GRETA GARBO HITS MARKET FOR $7.25M: ‘CINEMATIC VIEWS' Also, autographs are very easy to forge. Today’s printers are so good. You can easily take a check, even an authentic Marilyn-owned check, and do a photocopy on the front and back. Then you’ll frame that item in a display case. A lot of times, people will do that. And, of course, many will think it’s real when, in reality, it’s just a copy. There are many other ways people forge signatures, even in autograph books and photographs. You have to do your homework and make sure that the item you’re purchasing is truly authentic. FOX Business: What about if you’re a Marilyn fan and want to own something that once belonged to her? What’s the first piece of advice you would give them?Fortner: My first piece of advice is to make sure this is something you’re going to have interest in the long-term, not just a spur-of-the-moment purchase. You don’t want to have buyer’s remorse. Also, set a budget. Auctions can get very emotional. It’s also very competitive. For some people, they just want to win. You want to make sure you set a budget and try not to go over it. People also tend to forget there are premiums that the auction companies apply as part of selling an item, as well as taxes. I have come across people who don’t realize that, after winning an auction, there’s a certain percentage on top of that for the premium and then another percentage on top of that for state taxes. It does add up. I would also stick to the major auction companies, especially if you’re starting. FOX Business: Every year, Marilyn continues to be one of the top-earning dead celebrities. How is she earning top dollar today?Fortner: Marilyn’s estate is owned by Authentic Brands Group, which is a company that owns the rights, licenses, marketing, advertising and branding for many deceased celebrities. They license Marilyn’s name and image to people who want to promote certain products. She’s still very much in demand, which is why Marilyn is one of the highest-earning dead celebrities today. .....»»

Category: topSource: foxnewsAug 4th, 2022

Futures Jump, Bonds Slump As Taiwan Tensions Ease

Futures Jump, Bonds Slump As Taiwan Tensions Ease If yesterday morning markets were losing their mind over the potential risk of World War 3 ahead of Nancy Pelosi's arrival in Taiwan, this morning it has been a mirror image, with risk assets rising and fears unclenching as investor anxiety over tense US-China ties eased after Pelosi left Taiwan less than 24 hours after arriving after pledging solidarity and hailing its democracy, leaving a trail of Chinese anger over her brief visit to the self-ruled island that Beijing claims as its own. Meanwhile, despite all the jawboning, China's response to Pelosi's Taiwan visit fell short of more aggressive expectations raised by nationalists like Hu Xijin, the former editor-in-chief of the Global Times, giving markets a breather. Among them: Trade: Beijing added boycotts to fish and fruit imports from Taiwan and banned natural sand exports. It also prohibited dealings with some Taiwanese companies including Hyweb. Markets: China's potential to weaponize its almost $1 trillion pile of US bonds became a source of chatter after yesterday's surge in Treasury yields. On the ground: Pelosi flew off after vowing the US wouldn't abandon Taiwan as she met with President Tsai Ing-wen. She was expected to meet with TSMC's chairman. As a result, both S&P 500 and Nasdaq 100 futures rose by about 0.5%. In New York premarket trading, while Treasuries extended a slide sparked by hawkish Federal Reserve comments (and the lack of world war). The dollar fell against most G-10 peers, gold fluctuated and oil was lower ahead of an OPEC+ meeting where some report output may be boosted by a modest 100kb/d  (or less jet-fuel than Biden consumed flying on Air Force One to Jedda last month) as Saudis "appease"the president. In premarket trading, Airbnb fell after the home-rental company missed estimates on bookings. Match Group fell after the parent to dating appsincluding Tinder gave a weak revenue forecast. PayPal Holdings jumped after the payments giant said activist investor Elliott Investment Management is now among its biggest shareholders. Robinhood slumped after saying it'll cut 23% of its workforce and shut two offices amid a reorganization. MicroStrategy's Michael Saylor is stepped aside as CEO to focus on Bitcoin after the token's plunge prompted a $1 billion loss. CVS beat and raised guidance. Under Armour,and Moderna are up next. Lucid and eBay are after hours. While an immediate concern around US-China tensions may be fading Wednesday, investors still face a host of worries including inflation and how the policy response by central banks to surging prices could hobble global growth. Equities trading doesn’t reflect the headwinds confronting the market, according to Goldman Sachs strategist Sharon Bell. Additionally, it remains to be seen what China's delayed response to Pelosi's visit will be. Here is a summary of the key overnight Taiwan/Pelosi linked headlines: US House Speaker Pelosi has concluded her Taiwan visit, has now departed on SPAR19 US House Speaker Pelosi said there is bilateral support for Taiwan in the US and that her visit is a reminder of the bedrock promise America to always stand with Taiwan, while she added that the delegation came to Taiwan to make it unequivocally clear that they will not abandon Taiwan. Pelosi also said they explored deepening trade ties with Taiwan and a trade agreement may be imminent, according to Bloomberg and Reuters. Taiwan President Tsai told Pelosi she is one of Taiwan's most devoted friends and the visit shows firm US support for Taiwan, while she thanked Pelosi for her unwavering support of Taiwan on the international stage. President Tsai also said Taiwan will not back down in facing deliberately heightened military threats and Taiwan will do whatever it takes to strengthen its self-defence. White House National Security Council Coordinator for Strategic Communications Kirby said the US is monitoring Pelosi's travel and has taken measures to ensure her safety, while he added that China has positioned itself to take further steps and the White House expects China to react beyond Pelosi's trip including by scheduling live fire exercises, while other steps by China could include economic coercion, according to Reuters. Taiwan Defence Ministry said Chinese drills have invaded Taiwan's territorial space and they will counter any move that violates Taiwan's territorial sovereignty, while it added that Chinese drills violate UN rules and amount to a blockade of Taiwan's air and sea space, according to Reuters. China's Taiwan Affairs Office said it will take disciplinary actions against two Taiwan foundations which will be banned from financially cooperating with mainland firms and individuals. China also announced a stoppage of certain fruit and fish imports from Taiwan and halted exports of natural sands to Taiwan which is a key component used in chip-making, according to Bloomberg. Furthermore, China will adopt criminal penalties regarding Taiwan separatists and vowed criminal punishments for Taiwan-independence diehards, according to Xinhua. China's Vice Foreign Minister Xie lodged representations regarding Pelosi's Taiwan visit, according to Xinhua. Taiwan is negotiating alternative aviation routes with Japan and the Philippines, according to Taiwanese press. Meanwhile, comments from Fed officials including Mary Daly, Loretta Mester and Charles Evans served to highlight a challenging backdrop of rising borrowing costs, price pressures and slowing economic growth.  San Francisco Fed President Daly said the Fed has “a long way to go” on reaching price stability around a 2% inflation target. Cleveland counterpart Mester said she wants to see “very compelling evidence” that month-to-month price increases are moderating. In crypto, Senate Democrats want to expand CFTC oversight to include trading in the largest digital assets. New legislation will be unveiled today amid questions over whether the derivatives regulator or the SEC is best placed to oversee the industry. Also of note: Thousands of Solana wallets were hacked overnight, and at least $8 million appears to have been stolen Europe’s Stoxx 600 was little changed as traders assessed the latest company earnings. BMW AG sank as the carmaker flagged softening demand, while Societe Generale SA rallied after the French lender outlined new revenue targets. Here are the biggest European movers: Infineon rises as much as 3.7% after the chipmaker lifts full- year sales and margin guidance, marking the third straight quarter with an outlook boost. Citi says better margins provide some relief to concerns that the company may not be willing or able to price as aggressively as peers. Just Eat Takeaway’s shares gain as much as 6.1% in Amsterdam after swinging between gains and losses. The food delivery firm’s top-line growth and profit metrics missed consensus estimates but the report reassures investors that the firm is on track to reach positive adjusted Ebitda in FY23, according to analysts. Avast shares jump as much as 43%, the most on record, after the UK’s Competition and Markets Authority provisionally cleared its acquisition by NortonLifeLock, seen as a welcome surprise by analysts. Auto1 shares jump as much as 19% with analysts highlighting a strong quarterly revenue performance from the digital auto platform. JDE Peet’s shares rise as much as 12% after reporting 1H results which Citi called reassuring, noting that both adjusted Ebit and organic sales growth beat consensus expectations. Taylor Wimpey shares rise as much as 4.9%, second-best performer in FTSE 100 Index, after the UK homebuilder released 1H results and forecast FY operating profit around the top end of current market estimates. Citi called it an “encouraging” performance. Rolls- Royce shares gain as much as 4.1% in London after the UK company said that the Spanish government has approved the sale of ITP Aero to a consortium of investors led by Bain Capital Private Equity. Siemens Healthineers shares fell as much as 9.1%, the most ever since 2018 IPO, after the company reported weaker- than-expected earnings as supply chain snarl-ups and pandemic lockdowns in China hurt profits. BMW drops as much as 6.2% in Frankfurt trading despite a beat on second-quarter results; Citi notes that a downgrade to full-year free cash flow forecast “points to growing pressures” in 2H. Oddo BHF says the FY outlook update is likely to disappoint, highlighting a cut to the FCF outlook. Bank of Ireland shares drop as much as 5.9%, with Morgan Stanley saying weaker revenue drove a miss on the bottom line for the lender. Man Group shares fall as much as 5.6% on Wednesday, dropping for a third consecutive day as Barclays cuts its AUM estimate following weaker flow momentum in 2Q. Earlier in the session, Asian stocks pared losses as investors monitored China’s response to US House Speaker Nancy Pelosi’s Taiwan trip along with the latest corporate results.  MSCI Inc.’s Asia-Pacific equity index slipped 0.2% in a mixed day after falling as much as 0.8% earlier. Japanese megabank MUFG was among the biggest drags as it reported a profit decline the previous day. Alibaba was among the biggest gainers and also lifted Hong Kong shares ahead of its earnings report on Thursday.  Key equity gauges in Hong Kong and Taiwan fluctuated before closing slightly higher while equities in mainland China declined. Pelosi reaffirmed US support for the democratically elected government in Taipei. Beijing halted some trade with Taiwan and planned military drills around the island.  “Further deterioration of diplomatic relations between the two countries could hurt manufacturing and supply chains, stoking inflationary pressures,” said Manish Bhargava, a fund manager at Straits Investment Holdings in Singapore.  Heightened US-China tensions have renewed pressure on Asian stocks, which capped their best month this year in July. The regional benchmark has underperformed US and European peers in 2022 amid worries about inflation, rising interest rates as well as China’s property crisis and Covid curbs. Japanese stocks climbed as traders looked past an escalation in US-China tensions and a weaker yen boosted the outlook for exporters’ earnings. The Topix Index rose 0.3% to 1,930.77 as of the close in Tokyo, while the Nikkei advanced 0.5% to 27,741.90. Sony Group Corp. contributed the most to the Topix’s gain as it advanced 2%. Out of 2,170 shares in the index, 756 rose and 1,294 fell, while 120 were unchanged. “While NY stocks fell yesterday, Japan factored in tensions over US House Speaker Pelosi’s visit to Taiwan first,” said Hideyuki Suzuki, general manager at SBI Securities. Australia's S&P/ASX 200 index fell 0.3% to close at 6,975.90, dragged by weakness in banks as well as consumer discretionary and staples stocks. Nine of the 11 sub-gauges finished lower, with only mining and technology shares advancing.  In New Zealand, the S&P/NZX 50 index rose 1.5% to 11,705.03. The nation’s unemployment rate unexpectedly rose from a record low in the second quarter but wages climbed at the fastest pace in 14 years, suggesting the central bank may need to keep raising interest rates aggressively to tame inflation Key Indian equity gauges also rose, capping a rally that’s brought benchmarks back to levels at the start of the year, as foreign inflows and a drop in crude oil prices supported appetite for riskier assets.   The S&P BSE Sensex climbed for a sixth-straight session, rising 0.4% to 58,350.53, its highest level since April 12. The gauge fell as much as 0.6% earlier in the session. The NSE Nifty 50 Index rose 0.3%. Both indexes have gained at least 5.5% over the past six sessions. The rally has been helped by a resumption of inflows from foreign funds, which purchased a net $1.5 billion of local stocks in the quarter through August 1.  “A perceived pivot in the US Fed’s tightening cycle and cooling off of crude oil prices have made the macro environment more favorable for India, which has outperformed emerging markets and Asian peers by 6% in the last week,” S. Hariharan, head of sales trading at Emkay Global Financial Services wrote in a note.  Price of Brent crude, a major import for India, fell below $100 a barrel as part of a drop by about 9% in the week.   All but three of the 19 sector sub-indexes compiled by BSE Ltd. fell Wednesday, led by telecom companies, which were down amid worries over operators’ massive commitment for 5G expansion. A measure of IT companies was the best performer and climbed 1.3%, with heavyweight Infosys giving the Sensex its biggest boost. European yield curves flatten after PMIs reaffirmed economic weakness in Europe, on the heels of hawkish remarks from Fed speakers. Euro Stoxx 50 rises 0.3%. IBEX outperforms peers, adding 0.4%, FTSE 100 is flat but underperforms peers. Travel, tech and insurance are the strongest performing sectors. S&P futures rise 0.2%. Nasdaq contracts are steady. Treasury curve inversion deepens with 2s10s widening 1.8bps. Bund and gilt curves bear-flatten. Bloomberg dollar spot index is slightly down but has steadied since Thursday’s climb. CHF and NZD are the weakest performers in G-10 FX, AUD and CAD outperform. WTI trades within Tuesday’s range, falling 0.5% to around $94. Spot gold rises roughly $7 to trade near $1,767/oz. Most base metals trade in the red; LME tin falls 1.4%, underperforming peers In FX, the Bloomberg dollar spot index fell 0.1% erasing a bigger drop earlier. CHF and NZD are the weakest performers in G-10 FX, AUD and CAD outperform. The yen swung between gains and losses as traders assessed rising US yields and China’s sanctions against Taiwan following US Speaker Nancy Pelosi’s visit to the island. USD/JPY is largely unchanged on the day after snapping four days of losses on Tuesday. The dollar’s better performance followed comments by Fed officials that pushed back against the narrative that policy makers will slow down on rate hikes.  EUR/USD gained as much as 0.3%; still, with more comments from Fed officials expected on Wednesday, “any fresh hawkishness could easily push EUR/USD back to parity,” ING Groep NV strategists wrote in a note. GBP/USD rose 0.2% to 1.2194; UBS analysts see the pound falling to $1.15 this quarter and staying around that level until the end of the year. In rates, the two-year Treasury yield added to its advance beyond 3% following a selloff in bonds on Tuesday sparked by Fed officials indicating the central bank has some way to go to curb inflation, leading traders to trim wagers on policy easing in 2023. Treasuries traded near session lows into early US session, following wider selloff across core European rates which underperform with stocks marginally higher. Yields cheaper by up to 4bp across front-end and belly of the curve, flattening 5s30s, 10s30s spreads by 1bp and 1.5bp; 10- year yields around 2.785%, cheaper by 3.5bp on the day and outperforming bunds by ~4bp. Treasury quarterly refunding announcement is due at 8:30am, where dealers forecast more cuts to issuance with particular emphasis on the 20-year sector. The market is awaiting ISM’s gauge of services in the US: “A reading below 50 might administer a strong shock to markets -- challenging yesterday’s jump in US Treasury yields and sharp fall in the Japanese yen,” according to Saxo Bank strategists. European yield curves flattened after PMIs reaffirmed economic weakness in Europe, on the heels of hawkish remarks from Fed speakers. In commodities, WTI trades within Tuesday’s range, falling 0.5% to around $94. Spot gold rises roughly $7 to trade near $1,767/oz. Most base metals trade in the red; LME tin falls 1.4%, underperforming peers. Bitcoin continues to firm after eclipsing the USD 23k handle from an initial USD 22.6k trough. Looking at today’s economic data, we get July ISM services index and June factory orders for the US, with the focus on signs of economic weakness. A line-up of Fed speakers includes Bullard, Harker, Barkin and Kashkari. In Europe, trade balance will be due for Germany, along with Italy’s July services PMI and June retail sales, UK’s July official reserves changes, and Eurozone’s June PPI and retail sales. Corporate earnings will feature AXA, Maersk, CVS Health, Just Eat, Regeneron, Nintendo, BMW, Vonovia, Moderna, Booking, Fortinet, eBay, Telecom Italia and Robinhood. All eyes will also be on Taiwan. Market Snapshot S&P 500 futures up 0.2% to 4,101.50 MXAP down 0.2% to 159.38 MXAPJ little changed at 517.86 Nikkei up 0.5% to 27,741.90 Topix up 0.3% to 1,930.77 Hang Seng Index up 0.4% to 19,767.09 Shanghai Composite down 0.7% to 3,163.67 Sensex down 0.2% to 58,041.78 Australia S&P/ASX 200 down 0.3% to 6,975.95 Kospi up 0.9% to 2,461.45 STOXX Europe 600 little changed at 435.72 German 10Y yield little changed at 0.85% Euro up 0.2% to $1.0186 Brent Futures down 1.1% to $99.47/bbl Brent Futures down 1.1% to $99.48/bbl Gold spot up 0.4% to $1,766.57 U.S. Dollar Index little changed at 106.15 Top Overnight News from Bloomberg China Warns Airlines to Avoid ‘Danger Zones’ Around Taiwan World’s Food Supply Faces Threat as India Rice Crop Falters Fed Pushes Back Against Pivot Idea, With Inflation Yet to Slow China Hits Taiwan With Trade Curbs Amid Tensions Over Pelosi Pelosi Hints Gender Is Real Reason China Is Mad at Taiwan Trip Pelosi Vows US Won’t Abandon Taiwan in Face of China Threats Oil Swings as OPEC+ Decision on Production Takes Center Stage Taiwan Turmoil Prompts Detours, Delays for Global Shipping Pelosi Knocks Out China’s Weibo as Millions Track Taiwan Trip Pelosi Visit Highlights TSMC and Taiwan’s Global Tech Import ‘Burn Pit’ Bill Passes Senate After Jon Stewart Assails GOP China Disappointment Over Taiwan Response Puts Pressure on Xi Twitter Subpoenas Musk Deal Investors, Digs Into Andreessen, VCs Apollo Said Nearing $3.2 Billion Takeover of Atlas Air Worldwide JPMorgan’s China Calls Show Market Timing Is Tough: Tech Watch Fed Pushes Back Against Pivot Idea, With Inflation Yet to Slow Microsoft Investor Targets Donations to Anti-Abortion GOP Groups A more detailed look at global markets courtesy of Newsquawk Asia-Pacific stocks were mostly kept afloat with markets somewhat relieved following US House Speaker Pelosi’s safe arrival in Taiwan but with upside capped given China’s response including the announcement of military drills and bans on trading certain items with Taiwan. ASX 200 was dragged lower by weakness in consumer-related sectors despite better-than-expected Retail Sales. Nikkei 225 gained amid earnings updates and with exporters underpinned after yesterday’s resumption of the currency depreciation. Hang Seng and Shanghai Comp rebounded from recent losses but with the recovery contained by the geopolitical concerns and mixed Chinese Caixin Services and Composite PMI data in which both remained in expansion territory albeit with a slowdown in the latter. Top Asian News Chinese city of Yiwu imposed COVID restrictions and locked down some areas, according to Reuters. Nomura’s 97% Profit Drop Adds Urgency to Shift Away From Trading Billion-Dollar IPOs Keep Coming to Mainland China: ECM Watch Blinken Doesn’t Plan to Meet China’s Wang, Lavrov in Cambodia S. Korea Presidential Office Says Pelosi-Yoon Meeting Unlikely Nomura to Review Retail Costs as Business Trails Daiwa Again Turkish Inflation Approached 80% in July and Has Yet to Peak Stand By Me: The Bloomberg Close, Asia Edition Nintendo Expects Switch Output to Improve From Late Summer European bourses are mixed but with a modest positive underlying bias emerging as the session progresses ahead of key risk events, Euro Stoxx 50 +0.4%. Note, the FTSE 100 -0.1% is the morning's clear laggard owing to its high energy exposure as the broader crude complex comes under pressure. Stateside, futures are firmer across the board, ES +0.4%, moving directionally with their European peers and eyeing US/China/Taiwan, ISM Services and Fed speak. Top European News EDF to Curb Nuclear Output as French Energy Crisis Worsens UK July Composite PMI 52.1 vs Flash Reading 52.8 Ukraine Latest: US Blacklists Former Gymnast Linked to Putin Avast Jumps on UK Regulator’s NortonLifeLock Deal Clearance Vonovia Results Show Resilience, Upside Potential: Analysts Danish Gas Field Delays Restart, Raising Stakes in Energy Crisis FX Buck wanes after decent bounce on hawkish Fed vibes and marked rebound in US Treasury yields, DXY nearer 106.000 than 106.550 recovery high. Aussie pares some post-RBA losses as Kiwi labours in wake of sub-forecast NZ jobs data, AUD/USD back on 0.6900 handle, AUD/NZD just under 1.1100 and NZD/USD hovering around 0.6250. Yen attempts to stabilise following sharp retreat, USD/JPY circa 133.00 between 132.28-133.90 band and sub-130.50 low on Tuesday. Euro derives some support from broadly better than expected Eurozone PMIs, but faces hefty option expiries vs Dollar between 1.0195-1.0200 (1.84bln). Franc lags after fractionally softer anticipated headline YY Swiss CPI, but Lira remains pressured as Turkish inflation metrics rise further, USD/CHF approaching 0.9600 and USD/TRY elevated around 17.9500. Sterling cautious ahead of BoE on Thursday with analysts and markets split on 25/50bp hike verdict, Cable pivots 1.2150 and EUR/GBP straddles 0.8350. Fixed Income Bond reversal extends with Bunds sub-157.00 vs 159.70 at best yesterday, Gilts under 118.00 from almost 120.00 on Tuesday and 10 year T-note just shy of 120-00 compared to 122-02. 2038 German supply lacklustre as demand dips and retention rises. Debt still feeling the after-effects of hawkish Fed commentary and eyeing further speeches in pm session. Commodities Benchmarks have been moving lower as we head into today's JMMC and OPEC+ events, sources thus far suggest production will be maintained or subject to a small increase - newsquawk preview available here. US Private Inventory Data (bbls): Crude +2.2mln (exp. -0.6mln), Cushing +0.7, Distillates -0.2mn (exp. +1.0mln) and Gasoline -0.4mln (exp. -1.6mln). Kazakhstan's Energy Minister says OPEC+ nations are to discuss the fate of the deal after 2022 at Wednesday's meeting. Current prices of USD 100/bbl are above the preferred USD 60-80/bbl corridor; OPEC+ needs to look at prices so they become more realistic. Three OPEC+ sources state that they see "very little chance" for an oil output increase at today's meeting, according to Reuters. OPEC Sec Gen says OPEC expects demand to continue to recover albeit at a slower pace than earlier this year and 2021, according to Algerian TV; Challenges to the supply of US shale is impacting global supply and demand. Three ships may leave Ukrainian ports daily vs one per day following the first ships successful departure, via a Senior Turkish Official. Spot gold is firmer as the USD pulls-back further, but the yellow metal remains well within yesterdays and recent parameters; base metals are mixed owing to broader uncertainty. US Event Calendar 07:00: July MBA Mortgage Applications, prior -1.8% 09:45: July S&P Global US Services PMI, est. 47.0, prior 47.0 09:45: July S&P Global US Composite PMI, prior 47.5 10:00: June Durable Goods Orders, est. 1.9%, prior 1.9%; -Less Transportation, est. 0.3%, prior 0.3% 10:00: June Factory Orders, est. 1.2%, prior 1.6%; Factory Orders Ex Trans, prior 1.7% 10:00: June Cap Goods Ship Nondef Ex Air, prior 0.7% 10:00: June Cap Goods Orders Nondef Ex Air, prior 0.5% 10:00: July ISM Services Index, est. 53.5, prior 55.3 Fed Speakers 07:30: St. Louis Fed President James Bullard speaks on CNBC 10:30: Fed’s Harker speaks on fintech at Philadelphia Fed conference 11:15: Fed’s Daly speaks in Reuters Twitter Space event 11:45: Fed’s Barkin gives speech on inflation 14:30: Fed’s Kashkari speaks in fireside chat DB's Jim Reid concludes the overnight wrap I’m trying not to get too distracted by markets during the day for the next couple of weeks until I have to start work on the EMR as I’m trying to write my annual long-term study before holidays in the second half of the month. However, I couldn’t resist engaging in the bizarre spectacle of tracking and then watching a US politician’s plane land yesterday afternoon US time. It seems like the entire market was also watching if you look at the reaction. Yields sold off and US equities moved back into positive territory as US House leader Pelosi's plane landed in Taiwan without incident at 3:43pm BST yesterday. The last time I watched a plane tracker was when Liverpool tried to sign a player on transfer deadline day. To be fair yields had already moved a lot higher earlier as hawkish Fed speak cast some doubt on the (dubious) Fed pivot narrative that's been developing since the FOMC. Anyway, we’ll move onto a big sell-off in yields in a bit but first more on Speaker Pelosi. In response to Pelosi's visit, China announced a series of military tests and drills from August 4th (tomorrow) to August 7th that will encircle Taiwan. These drills are said to be the most significant since 1995. So things will undoubtedly be tense for a few days. Additionally, China has imposed a series of punitive economic moves, including suspending exports of natural sand to Taiwan and banning various food imports from the Island. 10-year US yields had already climbed 10bps before Speaker Pelosi's safe landing, mostly in the hour or so before the plane landed on comments from San Fran Fed President Daly who said the Fed’s work was “nowhere near” done on fighting inflation. Chicago Evans’ comments didn’t really move the market but Mester highlighted that “monthly inflation hasn’t even stabilized yet”. 2 and 10yr yields eventually closed up +19.7bps and +18.6bps, respectively, and thus inverted the curve back a bit to around cycle lows of -30.6bps. In fact, this move has wiped out the post FOMC dovish pivot interpretation. Indeed, looking at swaps pricing, last Tuesday (pre-FOMC) the terminal rate peaked at 3.40% for the December meeting, in contrast to yesterday’s close that sees it around 3.44% in February. Both dipped to the low 3.20s after the strange interpretation of the FOMC. Speaking after the bell, St. Louis Federal Reserve President James Bullard also gave a hawkish message by expressing confidence in the US economy stating that the economy can avoid a recession, even though he expects the Fed will need to keep hiking rates to control inflation. In fact, the 10yr US move yesterday was the 4th biggest in the last 5 years behind 2 Covid days and the WSJ leaked 75bps story just before the June FOMC last month. The 2yr move was the 4th biggest in the last decade with 9 of the top 10 happening so far in 2022 with one just after the Covid lows. So we're still seeing big volatility in markets. As we go to print, yields on the 10yr USTs are -4.18bps lower, currently at 2.71%. We did highlight that one of the reasons that August is usually bullish for bonds is that corporate issuance is light and thus leaving investors having to park money in government bonds. However, the surprise of the first two days of August is how much US corporate supply there has been. Bloomberg reported that we're already seeing supply estimates for the entire month surpassed already. So maybe some money rolled out of Treasuries yesterday that was loosely parked there. US stocks were originally chiefly preoccupied by geopolitics before the spike in yields gathered momentum, with major benchmarks recouping earlier losses as Speaker Pelosi landed in Taiwan only to dive back into the red again after headlines of China’s missile tests came through shortly after. Dragged lower by the risk sentiment and then ever higher yields, the Nasdaq (-0.16%) outpaced the S&P 500 (-0.67%), although both ended the day way off the intraday highs. As the risk-off mood took over by the close, 76% of the index constituents ended the day lower, with no sector in the green for the day. Most pain came from real estate (-1.30%), financials (-1.07%) and industrials (-1.05%). On the other end of the performance spectrum were communications (-0.18%), energy (-0.21%) and utilities (-0.22%) stocks as investors looked for more stable names. Some dispersion in price action also came from earnings, which provided a boost to sentiment earlier in the day after solid results from Uber and Lyft. Yet, Caterpillar’s results and earnings call sent a gloomy message for capital-intensive stocks by pointing to sticky costs and supply-chain issues. Speaking of the latter, it was a tailwind for Maersk that raised its guidance by expecting full-year EBIT of $31bn (up from $24bn) and the company will report its earnings this morning. It was a more cheerful day for oil firms as well, with BP rounding up oil majors’ reporting season yesterday by raising dividend and boosting buybacks. The five firms have squirreled $62bn in income in the last quarter amid elevated oil prices that helped trading firm Vitol report record profits as well. But with crude prices struggling in recent weeks, the meeting of OPEC+ today will be in focus. Oil prices were up by +0.31% for WTI and +0.08% for Brent yesterday but WTI is around -0.48% lower this morning. European yields were also lifted by the hawkish tone in the US, especially in the front end. Yields on bunds rose +3.9bps, ahead of the +0.9bps rise in breakevens. The 2y (+7.8bps) raced ahead in a bear flattening. A similar picture but with larger magnitudes in moves was seen in France (OATS +5.9bps and front end +17.5bps) and Italy’s (BTPs +6.8bps and front end +8.0bps) markets. Higher yields weighed on stock markets in the region as the STOXX 600 declined by -0.32%. IT (-1.45%) and discretionary (-1.10%) stocks were the main drivers, and only four sectors managed to cling to gains on the day, led by energy (+0.57%) and utilities (+0.51%). So Spain’s IBEX (+0.15%) and the FTSE 100 (-0.06%) were the relative outperformers in the region. Back to yesterday and markets got a brief reprieve from geopolitical headlines when the JOLTS data dropped early in the US session. Going through the numbers, the headline figure fell by more than the median estimate on Bloomberg (10.7m vs 11m) from May’s 11.25m in a sign of some easing in the labour market. In fact, it was the first miss since January. However, this is still relative to 7.2m job openings in January 2020 so it’s all relative. Metrics like private quits (unchanged at 3.1%) and the vacancy yield at 0.56 continued to point to historical tightness despite the miss in openings. In line with warnings we received from US retailers in the recent weeks, retail (-343k) and wholesale trade (-82k) saw the largest decreases in openings. Overall the data is consistent with a historically very tight labour market, albeit one where some of this pressure is loosening. Asian equity markets are mostly trading higher this morning after stumbling earlier following China stepping up the rhetoric with Speaker Pelosi's Taiwan visit. As I type, the Hang Seng (+0.60%) is trading higher led by a rebound in Chinese listed technology stocks whilst the Nikkei (+0.53%) and the Kospi (+0.50%) are also up. Over in Mainland China, markets are mixed with the Shanghai Composite (+0.40%) in the green while the CSI (-0.04%) has been oscillating between gains and losses in early trade. Further, US stock futures are fluctuating in Asia with contracts on the S&P 500 (+0.13%) higher while NASDAQ 100 futures (-0.04%) are just below the flat line. Early morning data showed that Japan’s service sector activity nearly stagnated in July as the final au Jibun Bank Japan Services dropped to a seasonally adjusted 50.3, marking the lowest reading since March. Today’s economic data releases will include July ISM services index and June factory orders for the US, with the focus on signs of economic weakness. A line-up of Fed speakers includes Bullard, Harker, Barkin and Kashkari. In Europe, trade balance will be due for Germany, along with Italy’s July services PMI and June retail sales, UK’s July official reserves changes, and Eurozone’s June PPI and retail sales. Corporate earnings will feature AXA, Maersk, CVS Health, Just Eat, Regeneron, Nintendo, BMW, Vonovia, Moderna, Booking, Fortinet, eBay, Telecom Italia and Robinhood. All eyes will also be on Taiwan. Tyler Durden Wed, 08/03/2022 - 08:05.....»»

Category: blogSource: zerohedgeAug 3rd, 2022

Tesla-powered flying car doesn"t require a license

The Jetson One is a 63-mph flying vehicle designed for a single passenger. However, it requires no license to operate. The Jetson One is a flying vehicle designed for a single passenger. It has a maximum speed of 63 mph, and its Tesla battery cells give it a flight time of 20 minutes. However, because it's classified as an ultralight aircraft, it requires no license to operate. Narrator: This flying vehicle could be the future of air travel. Known as the Jetson One, the vehicle's eight electric motors give it a top speed of 63 miles per hour, and its Tesla battery cells allow for a flight time of up to 20 minutes. The vehicle can reach an altitude of 1,500 feet above ground level and support a pilot weighing up to 210 pounds.It's known as an eVTOL, or electric vertical take-off and landing aircraft, the same design already used for many flying-car concepts. But with a weight of only 190 pounds, it's been categorized as ultralight, meaning you don't need a driver's or pilot's license to operate it. Swedish company Jetson designed the vehicle.Tomasz Patan: The Jetson One is actually based on US regulations. It's FAA Part 103. I mean, there are some countries that maybe flying the Jetson One is still not regulated. 85% of our clients are based in the US.It took us a few prototypes. The first proof of concept we finished back in 2018. There was a very successful flight just after one month. Surprisingly, it took us only a few weeks to finish the first prototype.Narrator: The official Jetson One was revealed in 2021.Tomasz: It's extremely easy to operate because we have a flight computer onboard and all steering is a fly-by-wire system. That means you have just two joysticks. You can learn how to fly it in literally five minutes.Narrator: Its flight-stabilization system includes lidar sensors that help it steer clear of power lines, trees, and buildings. And, if you cut the throttle to zero, the vehicle can land itself.In June, company cofounder Tomasz Patan released a video of himself using the aircraft for a quick three-minute commute from his home to his office. According to Patan, the flight decreased his commute time, normally by car and on public roads, by 88%.Still, current laws don't allow people to use it for inner-city commutes. Under US rules, this type of aircraft is not permitted to fly near airports or densely populated areas.Tomasz: There is a mandatory training for our customers. It's a two-day training. It's a very short training. And during that training you'll learn how to operate the Jetson One. And also, you'll learn about the regulations and how to fly it in compliance to those regulations.Narrator: However, none of this has slowed buyers from getting in line for the aircraft. Jetson's entire production of the One for 2022 is already sold out. The company is now only accepting orders for production in 2023.Tomasz: We were amazed by the amount of interest. We hoped we were going to sell maybe 25 units during the year after the release of the first movie. But it turned out we sold those 25 within a week. So far, we've sold over 400 units. Eventually, we do plan to manufacture a few thousand that will be delivered within three years time. We will also, with time, increase the battery capacity to allow for a longer flight time.Right now we have started working on the next generation of the Jetson flying vehicle. In general, the mission for the company, our vision, we would like to solve the transportation problem and move the ground-based transportation up to the air, making cities a better place to live. Read the original article on Business Insider.....»»

Category: topSource: businessinsiderAug 1st, 2022

Gold & The Upcoming Recession

Gold & The Upcoming Recession Authored by Alasdair Macleod via GoldMoney.com, We are now seeing the initial stages of a currency, credit, and banking crisis develop. Driving it are an inflation of prices, contraction of bank credit and a pathological fear of recession. One can imagine that the major central banks almost wish a mild recession upon us so that they can keep interest rates suppressed and bond yields low. The key to understanding the course of events is that the cycle of bank credit is turning down, and this time the factors driving contraction are greater than anything we have experienced since the 1930s, and possibly in all modern monetary history. This article joins the dots between inflation and recession and puts the relationship between money (that is only gold), currencies, credit, and commodity prices into their proper perspective. The bank credit downturn… It is increasingly obvious that the economic cost of sanctioning Russia is immense, and there’s now growing evidence of all major economies facing a downturn in economic activity. And we don’t have to rely on GDP forecasts to know why. Intuitively, if food and energy shortages impact us all, higher prices for these items alone will affect our spending on less important items and services. That’s reasonable enough for sensible citizens. But financial analysts insist on quantifying it with their models. Their principal measure is the total value of all recorded transactions, comprised of GDP. They proceed seemingly unaware of the difference between the value of economic activity to the advancement of the human condition, which can’t be measured, and a meaningless total comprised of only currency and credit, which can. Consequently, all they end up recording is changes in the quantity of currency and credit deployed in the economy. Of course, there is a broad point that if the quantity of currency and credit contracts, GDP falls. And if it is severe, economic activity tends to fall as well. But to equate the two to the point that a variation of less than a per cent or so from modelled forecasts means anything is nonsense. A proper assessment of the economic condition gets lost. Instead, an awareness of the role of bank credit is called for. Banks create credit, which feeds into the GDP total when they are optimistic about the outlook for lending. And when they deem the outlook to be deteriorating, they withdraw credit which reduces the GDP total. It leads to a repetitive cycle of boom and bust. We are now entering a period where, at the margin, banks are trying to reduce their exposure to credit going sour. Therefore, GDP will contract And we can assess where it will contract. It really is that simple. The best thing to do is to stand back and let the excesses of lending and the support for malinvestments  wash themselves out of the system. The last time this was done was the brief but very sharp recession of 1920—1921 in the US. The government of the day understood it was not its business to intervene, and anyway, it was not capable of improving thngs. But increasingly since, monetary policy has become run by central banks which steer their economies through rear view mirrors, reacting to information rather than anticipating. But even if they could anticipate economic trends they lack the commercial nous to manage it. Instead, their stock reaction to declining GDP will be to “stimulate”. Not only do they have a mandate to maintain full employment, but they have a Keynesian belief that a decline in GDP is entirely due to falling demand. Falling demand, they say, leads to lower prices, so the inflation figures in the CPI will fall. Producer prices will fall. All commodity prices will fall. The chart below feeds this line of hopeful thinking. This basket of commodities has fallen in value by 17% in a month. Panic over. Even wheat and soya prices have fallen. Dr Copper is down. Grasping at these straws, central banks are undoubtedly relieved that inflation might be turning transient after all. Or so they think. There is no doubt that we are experiencing enormous price volatility. If it was entirely due to consumers deciding not to spend because prices are too high for them, that is one thing. But if it is because banks are withdrawing credit, the consequences are materially different. A central bank’s concern to maintain consumer spending might discourage banks from contracting credit for consumers, at least initially. Furthermore, their risk models show that while individually consumers using credit are often high risk the magic of securitisation turns these risks collectively into low risk. It becomes a numbers game. So, credit card and other consumer faced lending divisions with very high credit margins are not the first to be targeted. And anyway, that would put the bank’s executives at odds with the central bank. Instead, in the initial stages of a credit downturn, banks withdraw credit principally from business borrowers who use overdraft facilities. A business that frequently resorts to overdraft facilities is high risk in any bank’s assessment. Weaker businesses are first to succumb to the credit downturn for this reason. Other early victims of credit contraction are financial speculators because their collateral is easily realised. We have seen the decline of US stock indices so far being accompanied by a $200bn reduction in margin lending. There’s still much more to go. As the economist Irving Fisher pointed out in the 1930s, calling in loans to reduce bank credit can become a self-feeding destruction of value. The bit he failed to understand is that in a serious downturn it can’t be helped, because it is the other side of earlier credit expansion, and it is the unwinding of unsound lending. Both an understanding of what drives periodic contractions of bank credit and the empirical evidence that it has repeated in one form or another approximately every decade since records began, inform us that it should not be stopped but allowed to proceed. Compare the brief 1920—1921 slump in the US with the prolonged 1930s slump, the latter managed by first Presidents Herbert Hoover and then Franklin Roosevelt. We should also know from understanding that bank credit is a cycle, that the height of the recent expansionary phase measured by the ratio of total bank balance sheet assets to their shareholders’ capital indicates the likely severity of the subsequent credit contraction. It reflects deposit liabilities to a bank’s customers relative to its shareholders assets. Traditionally, asset to equity ratios of more than eight to ten times were deemed risky. Some major banks, particularly in the EU and Japan, are now at over twenty times. While the US banks are less geared, the systemic risks to them from other national banking systems in this financially interconnected world are the highest they have ever been. For the immediate future we can discern two things. First is that production of goods and services is likely to be more limited than consumption due to an absence of bank credit, knocking on the head the Keynesian misconception that it is a problem of insufficient demand. That is just an initial phase. And following it, the contraction of bank credit can be expected to become more severe, as banks draw their horns in to protect their shareholders from an Irving Fisher style slump. In this subsequent second phase both producers and consumers will face enormous financial difficulties. Without aggressive intervention by central banks, the correction from excessive over-lending taking bank balance sheets beyond dangerous levels of leverage will simply fuel a GDP slump. Central banks will intervene, not just to deliver on the full employment mandate, but to finance government budget deficits which will soar under these developing circumstances. Prices in a slump The last real slump, when the forces driving bank credit contraction were arguably less severe, was in the 1930s following the Wall Street crash. At that time, the dollar and sterling, together the world’s major international currencies, were both on gold standards. Prices of commodities, raw materials and agricultural products collapsed, effectively measured in gold through these two currencies. The political strains led to Britain abandoning its bullion standard in 1932, and the US gold coin standard was suspended for US citizens in 1933, followed by a 40% dollar-devaluation in January 1934. The effect of the collapse of bank credit was to make circulating media in dollars and sterling scarce, thereby raising their purchasing power. To this extent, gold’s purchasing power also rose, because it was tied to the currencies. While gold gave credibility to the dollar and sterling, it was the contraction of bank credit that drove the slump in prices, while gold got the blame. We know that priced in gold, over time commodity, raw materials, and agricultural product prices are remarkably stable. Disruption in the price relationship does not come from gold. The following chart of the WTI oil price rebased to 1950 illustrates prices in sterling, dollars, and euros where there are huge variations in prices. Contrast that with gold (the yellow line), where the price today is down about 30% from 1950 with minimal volatility along the way. Our next chart makes the point with base metals, fuel and non-cyclical agriculture raw materials all rebased in gold. Since 1992, which is the earliest common date we have for these series, an unweighted average gold value for them has fallen a net 19% (the black line). Fuel has been the most volatile at up to 2.5 times the 1992 price, but from the previous chart we can see that it was up a net 12 times in US dollars in 2007/08 from 1992. Priced in gold, the relatively little volatility we see in these commodity groups is as close as we can get to free market values in sound money. And even then, we know that gold prices are manipulated in the markets. We can also assume that the origin of this volatility does not come from gold, but from the violent price changes in fiat currencies, their interest rates, and their distortions with respect to demand for commodities. These findings overturn conventional opinions on price formation. The evidence is that it is not true that fiat currencies are purely objective in their relationship with commodity prices. Forecasters of commodity prices incorrectly assume there is no change from the currency side. But clearly, the fluctuations overwhelmingly emanate from the currencies themselves.  This brings us to the likely effect of an economic slump on prices. Initially in our analysis, we will assume there is little change in the public’s desire to hold fiat currencies relative to the range of commodities and consumer goods. That being the case, we can see that it will be variations in the quantity of currency and credit in circulation driving prices. A contraction in this quantity will tend to lower prices. And Keynesian economists might conclude that precious metals being commodities will also fall in price against fiat currencies, given that fiat currencies are no longer tied to gold. The flaw in this argument is that there are indeed other factors involved, and the consequences for the quantity of currency and credit in a slump must be taken into account. Irrespective of changes in monetary policy, in socialised economies government budget deficits soar and will need financing by expansion of the currency if bank credit is not forthcoming. In other words, despite the tendency for banks to contract bank credit to the private sector and even if central banks do not amend monetary policies, it will be more than offset by an expansion of currency passed into the economy through the government’s books. Furthermore, under these circumstances monetary policy will change as well. Following the initial withdrawal of overdraft credit from businesses and bank loans for financial speculation, there is likely to be a softening of consumer demand as lending standards tighten and financial insecurity for consumers escalates. Central banks will notice the tendency for the withdrawal of bank credit to lead to a slump in consumer demand. They will almost certainly reduce interest rates and reintroduce quantitative easing to replace contracting bank credit to stimulate flagging economic activity. They have eased and stimulated in every bank credit cycle at this point since the 1930s, and there’s no reason to think they will do otherwise today. An increase in currency and credit, not emanating from the commercial banks but from the central bank, with increasing budget deficits will continue to debase the currency in gold terms. The currency will also be debased against commodities. But with some volatility imparted from the currency side, we can see that the general relationship between commodities and gold can be expected to remain intact. A systemic failure is on the cards All this assumes that within the context of the bank credit cycle there is not a significant systemic failure. Given that the forces behind credit contraction today are greater than any time since the 1930s, and possibly for all modern monetary history, that is a vain hope. Last week I pointed out the looming catastrophe for the euro system and the euro. A similar tale can be told about the Japanese yen. And sterling is just a poor man’s version of the dollar without its hegemony status. In the event of a systemic crisis, the role of central banks will be to underwrite their entire commercial banking system. The consequences of letting Lehman go bankrupt on the last cycle of bank credit contraction did not serve as a warning to profligate bankers. Instead, it had us all staring into a systemic abyss, and that mistake will not be repeated. In a systemic crisis today, it will take unprecedented currency and credit creation by the central banks to save the financial world. And it’s that debasement that will end up collapsing fiat currencies.  Meanwhile, we can expect central banks to milk the transitory inflation story for all its worth. Forget the CPI rising at 8%+ they will say. It will soon return to the 2% target as recession bites. But that’s another excuse to ease policy. It might buy just a little more time before the crisis hits. But don’t bank on it. Manipulation becomes official Earlier this month, three JPMorgan Chase traders faced a federal trial in Chicago, accused of masterminding a massive eight-year scheme to manipulate international markets for precious metals by spoofing, including gold and silver. JPMorgan had already been fined $920m in 2020.  Coincidently, Peter Hambro who was a gold trader in London in the early days of the derivatives market described how the bullion banks created unallocated gold accounts. One of Hambros’ more interesting comments was about the role of the authorities:  “Disinformation for many years has kept the lid on this tinderbox and since 2018 the Financial Stability Desks at the world’s central banks have followed the Bank of International Settlements’ instruction to hide the perception of inflation by rigging the gold market.” Perhaps it’s not too great a leap of the imagination to suggest that the three JPMorgan Chase traders facing criminal charges in Chicago are being hung out to dry, when all they were doing the BIS’s and other central banks’ bidding. What appears to have got Hambro commenting was a chart released by the US Office of the Comptroller of the Currency in its quarterly derivatives report, replicated with notes below. Over the previous quarter, 2022 Q1 shows a 520% increase in precious metal derivatives over 2021 Q4. As the note explains, this is due to a reclassification of gold derivatives from exchange rates to precious metals. What it does not say is that the effect is to increase the supervisory factor from 4% to 18%.  The following definition of supervisory factors is taken from the OCC’s Bulletin 2020-7: “The Basel Committee standard uses supervisory factors that reflect the volatilities observed in the derivatives markets during the financial crisis. The supervisory factors reflect the potential variability of the primary risk factor of the derivative contract over a one-year horizon.” In the context of this article, the reason for the reclassification of legal money (for that is gold) from exchange rate derivatives to commodities is that after significant back-testing they found gold correlated more with commodities than currencies. Bravo! That is what the earlier charts in this article, of the steadiness of commodity prices over time measured in gold, point out. The mistake made by regulators is to think price volatility is in commodities, when in fact it is in fiat currencies. What they should be doing is giving gold a zero supervisory factor, commodities a 4% factor, and currencies 18%. But as Peter Hambro points out, the BIS, which supervises Basel banking regulations, has run a secret campaign with the major central banks to suppress the price of gold. While the manipulators at the BIS might think that declassifying gold from currency is a further nail in gold’s coffin, the measure could backfire. Following this ruling, to maintain substantial derivative positions chews up balance sheet, and bank treasurers are likely to seek restraint on outstanding positions, given their mandate to reduce balance sheet leverage. This observation is a segway to another consideration. The markets for over the counter and regulated derivatives have increased along with the financialisation of banking activities since the mid-eighties. For nearly forty years, the dollar has acted as the backbone of financialisation with the big New York banks acting as its recycler. Two events are calling an end to this period. First, the long-term decline of interest rates has come to an end as the purchasing power of the dollar declines at an accelerating pace. And secondly, sanctions against Russia have backfired badly on dollar hegemony. If anything, it heralds a new era of Asian currencies reflecting, or being tied to commodities. Indeed, a trade settlement currency for the Eurasian Economic Union (EAEU) with a major commodity element in it is planned. It may not see the light of day, but commodities, not financial activities, are central to pan-Asian trade and the dollar’s successors are likely to reflect it. Even Saudi Arabia has shown interest in aligning with the BRICS group, which in turn is aligning with the Shanghai Cooperation Organisation, which has in its membership all the EAEU nations. Saudi Arabia is important, because it was the Kingdom’s agreement with President Nixon which created the petrodollar. So, Mohammed bin Salman who now rules the kingdom politically, appears to be turning his back on the Nixon agreement to only accept payment in dollars for oil. That is the death knell for the petrodollar. And then there are the balance sheet considerations in the financially centric banking system. Rising interest rates are collapsing the availability of bank credit for maintaining the bull market in stock and bond prices. Just as a long-term bull market on the back of an enduring decline in interest rates has driven the expansion of derivatives, the end of that bull market is bound to lead to a contraction. And as commercial bank treasurers prioritise balance sheet reductions, those having a high supervisory factor, such as precious metal and commodity derivatives will attract their attention. The BIS scheme for suppressing gold prices will be unwound while global currency debasement accelerates. It looks like a double-whammy is about to undermine global fiat currency world credibility. For now, it is the dollar that reflects the upcoming storm, like the weird fall in sea levels ahead of a tsunami. The collapse in the yen, euro, and pound, together with an increasing list of minor currencies collapsing, is like an approaching tsunami, when the sea level initially drops. The same happened in the last bank credit crisis, when Lehman failed, and every other US bank was rescued by the Fed. There was an initial flight into the dollar which saw gold prices fall. The problem facing risk-averse Keynesian-educated investors is their accounting of profits and losses is in fiat currencies. They must sell risky investments for cash in their currencies of account. And internationally, that is predominantly dollars which is why the dollar is usually a safe haven in the initial stages of a systemic crisis. After the initial rush, dollars and other currencies are then sold for real money, which is and always has been gold. Tyler Durden Wed, 07/27/2022 - 07:20.....»»

Category: blogSource: zerohedgeJul 27th, 2022