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UN Chief Pledges Diplomatic Talks To Denuclearize Kim Jong-Un"s North Korea After Meeting Seoul Leaders

United Nations Secretary-General Antonio Guterres said he fully supports South Korea's efforts to completely denuclearize Kim Jong-un's isolated nation. read more.....»»

Category: blogSource: benzingaAug 13th, 2022

Futures Surge On Beijing Market Rescue, Ukraine Ceasefire Hopes As Fed Rate Hike Looms

Futures Surge On Beijing Market Rescue, Ukraine Ceasefire Hopes As Fed Rate Hike Looms Normally, the first rate hike in more than four years meant to spark a "shallow" recession and destroy commodity demand would not be viewed positively by markets (unless it leads to another mega QE, which it will), but today is an exception with global stocks and US futures surging after the Kremlin hinted at progress in peace talks with Ukraine, adding to positive sentiment stoked by China’s vow to stabilize its battered markets which sent Hong Kong stocks soaring by the most on record. At 730am, S&P futures are up 1.3%, with Nasdaq futs +1.8% outperforming amid overnight tech action, influencing European sectors, on the back of China's jawboning stocks higher and constructive commentary from Ukraine's Zelensky and Russia's Lavrov. European bourses are also firmer across the board, Euro Stoxx 50 +3.3%, after a firmer handover from the Asia session and on geopolitical optimism.  Treasuries were steady and the dollar slipped ahead of the Federal Reserve rates decision. In FX, DXY reels amid support for EUR on yield action ahead of noted EUR/USD option interest at the NY cut. Core debt is depressed, with yields continuing to climb and the German 10yr through 38bps. WTI and Brent are consolidating and have most recently dipped into negative territory as premia unwinds. Tech companies led the US premarket gains, with Tesla rising 3.3% while U.S.-listed Chinese stocks rebounded from a steep selloff after China’s promise to boost financial markets and stimulate economic growth. ADRs of Alibaba and Baidu were both up at least 20% in premarket trading, while Didi Global Inc. jumped more than 40%. Other notable premarket movers: Electric vehicle stocks climb in premarket trading as Chinese automaker BYD follows Tesla in hiking car prices due to surging raw material costs. Lucid +3.3% (LCID US); Rivian +3.1% (RIVN US); Tesla +2.5% (TSLA US); Nikola +2.3% (NKLA US). U.S.-listed casino operators with exposure to Macau jump in premarket trading as Asian and European stocks rally after a pledge from China to keep capital markets stable. Las Vegas Sands (LVS US) +7.5%. Smartsheet (SMAR US) shares dropped 5.3% in U.S. postmarket trading on Tuesday after the software company reported its fourth-quarter results, with analysts flagging that the firm’s plans to increase investments weighed despite a robust set of earnings. CarParts.com (LOTZ US) fell 14% in extended trading Tuesday after the company said Lev Pekerwill step down as CEO and director effective on April 15. In addition to closely watching progress in talks between Ukraine and Russia, which are set to resume, all eyes today will be on the Federal Reserve’s meeting, where policy makers are widely expected to kick off a rate-hiking cycle to tackle red-hot inflation (see our preview here) John Stoltzfus, chief investment strategist at Oppenheimer Asset Management, said he expected five to six quarter-point increases this year. “The equity market is likely to digest a 25-basis point hike easily with enough market participants expecting it to temper the consumer demand that has been fueling higher prices for many goods,” he wrote in a note. “The risk of additional commodity price inflation notwithstanding, we expect the Fed to remain sensitive to the implications for U.S. economic health.” Here is a snapshot of some of the latest Russia headlines: Ukrainian President Zelensky stated that the positions of Ukraine and Russia at negotiations sound more realistic, but more time is still needed and noted that Ukraine must recognise it will not join NATO. Russian Foreign Minister Lavrov says peace talks with Ukraine are not easy but there is some hope for a compromise. Ukraine's neutral status is being seriously discussed and some formulations of agreements with Ukraine are nearing being agreed. Subsequently, Russian negotiator says that negotiations with Ukraine are slow and difficult, Russia sincerely wishes for peace soon, according to Interfax. Russia's Kremlin says the idea of creating a demilitarised Ukraine, like an Austria/Sweden model, could be seen as a compromise. In Europe, the technology, consumer and travel industries led the Stoxx Europe 600 Index up 2%. Prosus jumped a record 20% in Amsterdam. By contrast, Avast slumped 14% in London, its biggest drop in more than two years.  European tech shares lead a rebound in the broader market Wednesday, as a pledge from Beijing to stabilize financial markets and support overseas listings helps boost appetite for risk; the Stoxx Tech Index rose as much as 5%. Food delivery stocks also soared, with Just Eat +7.4%, Deliveroo +6.1%, Delivery Hero +7%, HelloFresh +6.3%. Semiconductor stocks were also higher with Soitec +6%, BE Semi +5.6%, ASM International +4.9%, ASML +4.3%. Asian stocks climbed, headed for their first gain in four sessions, as Chinese shares staged a strong rebound after the nation vowed to keep its equity market stable and support overseas share listings. The MSCI Asia Pacific Index rallied as much as 3.3%, poised for its biggest increase since 2020. A gauge of Chinese firms listed in Hong Kong jumped by the most since 2008,  while the Hang Seng Tech index added a record 20%.  Tencent, Alibaba Group and Meituan were the biggest contributors to the regional gauge’s advance, each rising at least 23%. The sharp rebound came after Chinese shares were mired in a deep selloff amid worries related to Beijing’s ties with Russia and delisting risks for Chinese stocks traded in the U.S. A comprehensive statement by the State Council addressing investors’ concerns over Beijing’s tech crackdown and property woes lifted sentiment significantly (more here). The market believes “this is a solid bottom, so many are buying back shares rapidly” following the positive signal by the regulators, said Castor Pang, head of research at Core Pacific Yamaichi. “The market was indeed oversold and irrational in the dramatic rout, so real money is back doing bottom fishing.” Asian investors also awaited the Federal Reserve’s statement after its two-day meeting, which is expected to raise interest rates for the first time in three years to cool surging prices, despite growth risks stemming from the Russia-Ukraine war. The outcome from diplomatic talks between Russia and Ukraine on Wednesday is also on the watch list In rates, treasuries beyond the front end remain slightly cheaper after paring declines during European session. Yields are higher by 1.7bp in 7-year sector, where underperformance further cheapens the 2s7s30s fly; it exceeded 0bp for first time since March 1. Thirty-year Treasury yields climbed to the highest level since mid-2019 before paring.  10-year yield, higher by 1.8bp at ~2.16%, outperforms bunds by 4bp with Euro Stoxx 50 higher by 3.6% vs 1.2% for S&P 500 futures. Focal points of U.S. session include FOMC rate decision and Chair Powell’s press conference 30 minutes later. In FX, the Bloomberg Dollar Spot Index fell a second day as the greenback weakened against all of its Group-of-10 peers apart from the yen. The euro rose above $1.10 and European benchmark yields rose, with Bunds underperforming euro- area peers. Sweden’s krona soared to more than a one-month high versus the euro after Riksbank Governor Stefan Ingves said the Swedish central bank will probably have to raise interest rates earlier than its previous timeline of 2024. The Norwegian krone, the Australian and Canadian dollars were also among the best G-10 performers, supported by China’s vows to stabilize the stock market. Hedging sterling overnight comes at the highest cost since late 2020 as war premiums meet event risks stemming from the upcoming Federal Reserve and Bank of England meetings. Australia’s bonds gained after weak second-tier data, while New Zealand’s notes fell after data showed the current- account deficit to be at its widest since 2009. The yen was little changed following a seven-day slide. Japan ran a trade deficit for a seventh month in February at 668.3 billion yen ($5.8 billion) after recording the second-largest deficit on record in January. Oil prices surged about 8.6% last month. In commodities, crude futures drift higher, WTI adds ~2%, regaining a $98-handle, Brent holds near $102.50. LME nickel dropped by the new 5% exchange limit on the resumption of trade, most other base metals trade in positive territory. Spot gold trades a narrow range near $1,920/oz. In crypto, bitcoin has recouped from overnight pressure and is holding onto the USD 40k mark once more. Japan's crypto authority could announce a relaxation of coin listing rules next week. Looking ahead at today’s data releases, retail sales, business inventories and the NAHB Housing Market Index will be due in the US. Elsewhere, CPI and wholesale trade sales will be released in Canada. Earnings include Lennar, E.ON and Inditex. But all eyes on the Fed. Market Snapshot S&P 500 futures up 0.9% to 4,302.00 STOXX Europe 600 up 2.2% to 444.48 MXAP up 3.3% to 171.08 MXAPJ up 4.2% to 554.77 Nikkei up 1.6% to 25,762.01 Topix up 1.5% to 1,853.25 Hang Seng Index up 9.1% to 20,087.50 Shanghai Composite up 3.5% to 3,170.71 Sensex up 1.4% to 56,541.13 Australia S&P/ASX 200 up 1.1% to 7,175.24 Kospi up 1.4% to 2,659.23 German 10Y yield little changed at 0.40% Euro up 0.4% to $1.1002 Brent Futures up 3.2% to $103.14/bbl Gold spot down 0.1% to $1,915.81 U.S. Dollar Index down 0.43% to 98.67 Top Overnight News from Bloomberg Ukrainian President Volodymyr Zelenskiy said Russia’s “positions in the negotiations sound more realistic” as the two sides are scheduled for another round of talks on Wednesday. Russian Foreign Minister Sergei Lavrov also said there is some hope for compromise, but progress remains difficult The Federal Reserve is poised to raise interest rates Wednesday for the first time since 2018, with investors focused on how aggressive central bankers plan to be in tackling the hottest inflation in four decades Currency speculators are looking less convinced that recent dollar strength, which has been spurred by war-related haven flows and expectations for Federal Reserve policy tightening, can run much further. Leveraged funds have cut their overall long positions against major-currency peers by more than two-thirds so far this year In the years following the financial crisis, the Bank of England stuck resolutely to easy money while fiscal policy got tough when Chancellor of the Exchequer George Osborne imposed swingeing budget cuts. But as the economy grapples with the highest inflation level in three decades and the fallout from the war in Ukraine, it’s BOE Governor Andrew Bailey who’s playing the bogeyman Russia spent years building a giant stash of gold, an asset that central banks can turn to during a crisis. But any attempt to sell it will now be a challenge just when it’s needed most The London Metal Exchange halted electronic trading in nickel minutes after it restarted, citing a technical issue with its new daily limit, as prices plunged when the market opened after a week-long suspension. A more detailed look at global markets courtesy of Newsquawk APAC stocks gained after Wall St closed at session highs amid a rally in growth stocks and retreat in oil prices below USD 100/bbl. ASX 200 was underpinned with all sectors in the green and the index led by tech following the duration bias stateside. Nikkei 225 gained amid expectations for Japanese PM Kishida to order the compilation of additional stimulus. Hang Seng and Shanghai Comp. were positive amid a rebound from the tech rout and as local press suggested continued possibility of a rate cut with gains exacerbated after China's State Council vowed to keep stock markets stable. Top Asian News Foxconn Partly Restarts Shenzhen iPhone Hub Hit by Lockdown IPhone Assembler Hon Hai Beats Estimates on Holiday Demand China CBIRC to Unveil Policies to Bolster Capital Markets China’s Strong Growth Data Questioned, Mocked on Social Media European bourses are firmer across the board, Euro Stoxx 50 +3.3%, after a firmer Wall St/APAC handover amid some constructive Russia-Ukraine commentary. In-fitting with this, sectors are all in the green with cyclicals outperforming and defensives lagging, but still positive, influenced by Tech amid APAC performance. Stateside, US futures are firmer across the board, NQ +1.9% outperforms, in-fitting with sectors, but attention does turn to the sessions' FOMC announcement. Tesla (TSLA) is suspending production at its Shanghai factory for two days, amid COVID related restrictions via Reuters citing an internal notice Top European News EQT Inks Private Equity’s Boldest Asia Move With Baring Deal MFE Bid for Mediaset Espana Is Just the Beginning: Analysts Germany’s Coalition at Odds Over Response to Energy Crisis Shell Is Said to Vie With Adani, Greenko for Actis’s Sprng In FX, Aussie regroups on multiple props including recovery in iron ore and renewed risk appetite to probe technical resistance ahead of 0.7250 vs its US rival where the 21 DMA resides. Euro retests 1.1000 against the Dollar amidst reversion to pronounced bear-steepening in EGBs, but decent option expiry interest at the round number may thwart again (1.23bln for NY cut). Loonie rebounds in advance of Canadian CPI that comes alongside US retail sales and before FOMC, USD/CAD pivoting 1.2750 and DXY drifting down from 99.000. Yen undermined by risk on flows and wider than forecast Japanese trade deficit, USD/JPY back up in proximity of circa 118.45 peak. Yuan pares recent losses as China’s State Council promises to stabilise stocks and Vice Premier pledges measures to support the economy; USD/CNH around 6.3650 vs 6.4100+ at one stage yesterday. In commodities, WTI and Brent are consolidating and have most recently dipped into negative territory amid the latest Russia- Ukraine updates removing further geopolitical-premia. A move that has seen the benchmarks dip further below USD 95.00/bbl and USD 99.00/bbl respectively. US Energy Inventory Data Expectations (bbls): Crude +3.8mln (exp. -1.4mln), Cushing +2.3mln, Gasoline -3.8mln (exp. -1.6mln), Distillate +0.9mln exp. -1.8mln) IEA OMR: lowers 2022 demand growth forecast by 950k BPD to 2.1mln BPD for an average of 99.7mln BPD, details available here. LME says that amid a system error, a small number of trades were executed below the lower daily price limit for Nickel, such trades executed on LMESelect will be cancelled; after LME Nickel resumed and hit limit down US Event Calendar 7am: March MBA Mortgage Applications, prior 8.5% 8:30am: Feb. Import Price Index YoY, est. 11.3%, prior 10.8%   8:30am: Feb. Import Price Index ex Petroleu, est. 0.8%, prior 1.4% 8:30am: Feb. Import Price Index MoM, est. 1.6%, prior 2.0% 8:30am: Feb. Retail Sales Control Group, est. 0.3%, prior 4.8% 8:30am: Feb. Retail Sales Ex Auto and Gas, est. 0.4%, prior 3.8% 8:30am: Feb. Retail Sales Ex Auto MoM, est. 0.9%, prior 3.3% 8:30am: Feb. Export Price Index YoY, est. 14.4%, prior 15.1% 8:30am: Feb. Export Price Index MoM, est. 1.2%, prior 2.9% 8:30am: Feb. Retail Sales Advance MoM, est. 0.4%, prior 3.8% 10am: Jan. Business Inventories, est. 1.1%, prior 2.1% 10am: March NAHB Housing Market Index, est. 81, prior 82 2pm: March FOMC Rate Decision DB 's Jim Reid concludes the overnight wrap   I’ve been working in financial markets for 27 years and I’ve really only seen three Fed hiking cycles so today is a big day as the Fed will likely kick off my fourth with a 25bps move. Ironically I’ll also be picking up my first pair of varifocal glasses today which means at least I’ll be able to read the small print in the release. Another sign of age to go alongside the two bad knees and bad back. Our economists expect (full preview here) the Fed to raise rates by 25bps, taking a first step in what they anticipate will be a series of rate hikes which will raise the fed funds rate by +175bps by the end of the year. On the dot plot, the team expects the median dot to show six rate hikes this year, with policy rates reaching and perhaps passing estimates of neutral by 2024. Despite the uncertainty garnered by the war in Europe, they expect Chair Powell to maintain a hawkish tone and reiterate the Fed’s commitment to fighting inflation this year. On the balance sheet, our US econ team believes the Fed will release their plans for QT at today’s meeting, which they dive into detail on with Tim Wessel from my team here). In short, they expect the Fed will start QT in June, with the balance sheet shrinking by around $3 trillion until early 2025. The Fed will be attempting to wrestle the narrative back from geopolitics, which has been and will likely be the predominant market story for a time. On that front, DB has compiled a research compendium on all things Russia-Ukraine conflict related as it enters its fourth week, link here. The piece has links to numerous DB publications on the implications and what it means for economics and various asset prices. Turning to yesterday’s news from the conflict, western countries and Russia exchanged a new set of sanctions. In particular, the EU approved its fourth package of sanctions, which notably features a ban on new investments in the energy sector in Russia and limits exports of various equipment and technology goods. Russia also submitted a request to leave the Council of Europe. However, risk sentiment was buoyed later in the New York session when a senior aide to President Zelenksy noted that Russia had softened their negotiation stance, and that talks between representatives have become “more constructive”. President Zelensky for his part noted the negotiations were difficult but signalled there was room for compromise. Meanwhile, President Biden will travel to Europe next week to meet with NATO allies at a summit of European Union leaders. The US also announced another tranche of aid for Ukraine. On commodities, Sergei Lavrov, Russian Foreign Minister, said that sanctions imposed on Russia will not prevent it from cooperating with Iran, and the US confirmed it would not sanction activity covered under a renewed nuclear deal, which was an important hurdle for progress on a deal, potentially enabling Iranian oil supply to return to market. This drove crude futures lower with WTI (-6.38%) and Brent (-6.54%) both closing below $100 even if the later has edge back above that landmark this morning. Since hitting their intraday peak last Tuesday, WTI and Brent futures are now both down -25%. In Europe, equities posted modest losses, with the STOXX 600 dropping -0.28%. Though in the US, risk sentiment pushed indices into the green, with the S&P 500 gaining +2.14% on a broad-based gain that saw 446 companies finish the day in positive territory, the third highest reading this year. Mega-cap shares did particularly well, as the FANG+ index climbed +3.13%. Only the energy sector declined in the S&P 500, falling -3.73%, on the back of falling oil prices and a recent run of outperformance. The broad rally coincided with the VIX falling below 30ppts, dropping -1.94ppts to 29.83ppts, for the first time since the last week of February. Sovereign bond yields were also less volatile than in recent sessions. European yields dropped across the board, with 10yr bund, OAT, and BTP yields falling -3.5bps, -2.8bps, and -6.5bps, respectively. Falling breakevens led the move with the large drop in oil, with 10yr German breakevens sliding -8.7bps. Treasury yields posted modest increases ahead of today’s FOMC meeting, with 10yr yields climbing +1.1bps. They are fairly flat overnight. Another story that hit the wires yesterday suggested that Saudi Arabia was considering accepting payments denominated in renminbi instead of US dollars for its oil exports to China. The news led to a renminbi appreciation against the dollar but it is still unclear what the long-term implications may be. It comes at a time when Saudi-US relations are strained, so it is not clear how much the headlines are political maneuvering versus legitimate signs of international trade and finance trying to wean itself of dollar dependence in light of the historic economic sanctions the US and allies brought to bear against Russia. After all, stories of the dollar’s demise as the pre-eminent global reserve currency have been around almost as long as the dollar has been the pre-eminent global reserve currency. More directly, Saudi Arabia maintains a dollar peg, so some level of dollar dependence will persist in the kingdom. Nevertheless, one to watch over the medium term. Overnight in Asia, equities are up after strong gains on Wall Street with the Hang Seng (+3.21%) leading the way across the region as beaten up Chinese tech stocks have rebounded. Elsewhere, the Nikkei (+1.48%) and Kospi (+0.95%) are both up while gains in mainland Chinese stocks are more muted with the Shanghai Composite (+0.04%) and CSI (+0.49%) slightly higher as the nation grapples with its most severe Covid outbreak. Shanghai state officials yesterday downplayed the possibility of implementing a full lockdown for now but urged its financial and business district workers to work from home. Moving ahead, US equity futures indicate a steady start with contracts on the S&P 500 (-0.05%) Nasdaq (+0.13%) close to unchanged. US bond yields are steady. Elsewhere, President Biden’s nomination for the Vice Chair of Supervision at the Fed, Sarah Bloom Raskin, withdrew her nomination as it became clear that she would not receive the necessary Senate votes to be confirmed. In data, US PPI that came at +0.8% vs expectations of +0.9%, while the numbers ex-food and energy increased +0.2% versus expectations of +0.6% increase. Looking ahead at today’s data releases, retail sales, business inventories and the NAHB Housing Market Index will be due in the US. Elsewhere, CPI and wholesale trade sales will be released in Canada. Earnings include Lennar, E.ON and Inditex. But all eyes on the Fed. Tyler Durden Wed, 03/16/2022 - 07:50.....»»

Category: blogSource: zerohedgeMar 16th, 2022

Live updates: Russian forces "frustrated," Zelensky refuses evacuation help, Germany sends weapons and missiles to "friends in Ukraine"

Zelensky called for allies to send help. In a major "turning point," Germany will send 1,000 anti-tank weapons and 500 Stinger missiles. Ukrainian servicemen walk by fragments of a downed aircraft in Kyiv on February 25, 2022.AP Photo/Oleksandr Ratushniak President Zelensky said during a briefing on Saturday morning that Ukraine "survived" the night. He said that government forces still control Kyiv and called for allies to send help. Germany is planning to send 1,000 anti-tank weapons and 500 Stinger missiles to Ukraine. Germany to send anti-tank weapons and missiles to Ukraine in a major policy reversalGermany is planning to send 1,000 anti-tank weapons and 500 Stinger missiles to Ukraine, according to a statement made by German Chancellor Olaf Scholz on Saturday. "The Russian attack marks a turning point," Scholz wrote in a statement shared on Twitter. "It is our duty to do our best to help Ukraine defend against the invading army of Putin. That's why we're supplying 1000 anti-tank weapons and 500 stinger missiles to our friends in Ukraine."The announcement marks a significant shift of Germany's restrictive arms export policy. The country has previously said it held "historical responsibilities" that prevented it from sending weapons and arms to conflict areas, often citing guilt for crimes committed against the Soviet Union during World War II. Read Full StoryRussian forces are 'frustrated' with lack of progress, US official saysAn unexploded Grad rocket is seen at a kindergarten playground in Kharkiv, Ukraine, February 26, 2022, in this still image obtained from a videoReuters TV via REUTERSAccording to a Reuters report, the US official, who was not named by the outlet, said Russian forces had not planned to bring enough fuel or for other basic logistics. "We know that they have not made the progress that they have wanted to make, particularly in the north. They have been frustrated by what they have seen is a very determined resistance," the official told Reuters, adding: "It has slowed them down." An unnamed US official told Fox News: "We continue to believe, based on what we've observed, that this resistance is greater than what the Russians expected." The British Defense Ministry on Saturday made similar claims, saying: "The speed of the Russian advance has temporarily slowed likely as a result of acute logistical difficulties and strong Ukrainian resistance," according to the Associated Press.Read Full StoryZelensky called on 'every friend of Ukraine' to 'please come over' and help defend against Russian invasionUkraine President Volodymyr ZelenskyUkraine President Volodymyr ZelenskyUkrainian President Volodymyr Zelensky on Saturday remained defiant in the face of Russia's invasion, confirming that government forces continued to control Kyiv and "key points around the city.""Please stop those who are lying, or trying to lie to you, or lying to us. We need to stop this war," he said during a morning briefing, The Guardian reported, lambasting disinformation about the state of the country. "We can live in peace together, globally, as humans."He continued: "Our military, our national guard, our national police, our territory defense, special service, nationals of Ukraine, please carry on. We will win. Glory to Ukraine."Read Full StoryBiden's administration is reportedly working to set up a hotline with Russia to avoid an unintended clash between their military forces in Eastern EuropeU.S. soldiers of the 82nd Airborne Division and military vehicles are seen at the temporary military base for U.S. troops established at the Arlamow Airport.Beata Zawrzel/NurPhoto via Getty ImagesSources told NBC News that the United States is working to set up backchannel communications with the Russian military to prevent a clash between the two forces near Ukraine's border.The hotline would help both parties to avoid clashing as US forces are operating near Eastern Europe, according to the report.The open line of communication would also help US and Russian aircraft and ships remain in different areas and communicate the risk of missile strikes. However, it is not yet clear if Russia will subscribe to the potential plan. Mayor of Kyiv sets curfew amid battle to hold capital, says anyone on the street after curfew will be considered an enemyKyiv Mayor Vitali Klitschko on Saturday announced a curfew from 5 p.m. to 8 a.m. to ensure a "more effective defense of the capital" and its residents, according to reports. "This curfew is introduced until the morning of February 28," Klitschko said in the translated announcement. "All civilians who will be on the street during the curfew will be considered members of the enemy's sabotage and reconnaissance groups." —Alex Ward (@alexbward) February 26, 2022The mayor added: "Please treat the situation with understanding and do not go outside."Read Full StoryUkrainian President Zelensky says Ukraine 'survived' the nightUkrainian President Volodymyr Zelenskyy addresses nation in Kyiv, Ukraine on February 25, 2022.Ukrainian Presidential Press Office via APUkraine has "survived" the night, Ukrainian President Volodymyr Zelensky said during a briefing on Saturday morning."And we are successfully fighting off the enemy attacks," he added, per The Kyiv Independent.He said that government forces still control Kyiv and "key points around the city," The Guardian reported.Ukrainian President Zelensky addressed false information that circulated online claiming he called on residents to lay down armsIn a video posted early Saturday, Ukraine's President Volodymyr Zelensky can be seen in front of the House with Chimaeras in Kyiv. —Володимир Зеленський (@ZelenskyyUa) February 26, 2022Zelensky addressed misinformation that was circulating online and reiterated that he was not standing down. "Ukrainians, it has now come to our attention that a lot of fake information has been circulating about me allegedly calling to our armed forces to lay down their arms, and talks of de-evacuation. Let's get things straight. We are here, we are not laying down any arms, we are going to defend our nation." Zelensky said. He added: "This is because our weapons are our truth, and our truth lies in the fact that this is our land, this is our country, our children, and we are going to defend all of this. So this is what I want to tell you. Glory to Ukraine!" Officials in Kyiv are telling residents to seek shelter as street fights break out against Russian forcesIn this handout photo taken from video released by Ukrainian Police Department Press Service released on Friday, Feb. 25, 2022, firefighters hose down burning burning debris in front of a damaged building following a rocket attack on the city of Kyiv, Ukraine.Ukrainian Police Department Press Service via APThe Associated Press reported that on Saturday morning, Russian troops headed toward Kyiv as explosions could be heard across the city. Officials in the Ukrainian capital warned residents to stay away from windows and take shelter indoors as fighting escalated on the streets. President Joe Biden authorized the release of $350 million for military aid to UkrainePresident Joe Biden delivers remarks during a joint news conference with German Chancellor Olaf Scholz in the East Room of the White House on February 07, 2022.Anna Moneymaker/Getty ImagesIn a memorandum to Secretary of State Anthony Blinken sent on Friday night, President Joe Biden asked the State Department to release $350 million through the Foreign Assistance Act to be sent to Ukraine as it defends itself against a Russian invasion.   'The fight is here; I need ammunition, not a ride,' Ukrainian President Zelensky said following an offer to evacuateUkrainian President Volodymyr Zelensky seen at Arlington National Cemetery on September 1, 2021.Anna Moneymaker/Getty ImagesUkrainian President Volodymyr Zelensky refused an offer from the US to evacuate the Ukrainian capital, a senior American intelligence official with direct knowledge of the conversation told the Associated Press. "The fight is here; I need ammunition, not a ride," Zelensky said in response to the offer, the official said, describing Zelensky as "upbeat," according to the AP. US Secretary of State Antony Blinken accuses Russia of "abusing its power" on the UN Security Council with its attacks on UkraineSecretary of State Antony Blinken takes part in a press conference at the end of the Quadrilateral Security Dialogue (Quad) foreign ministers meeting in Melbourne on February 11, 2022.Kevin Lamarque/Getty ImagesUS Secretary of State Antony Blinken tweeted his support for the people of Ukraine on Friday night, rebuking Russia — an "irresponsible Permanent Member of the UN Security Council" — for "abusing its power to attack its neighbor and subvert the UN and our international system.Blinken said the US will be addressing the matter in the UN General Assembly where "the nations of the world can, will, and should hold Russia accountable..."—Secretary Antony Blinken (@SecBlinken) February 26, 2022Earlier Friday, Russia vetoed a United Nations Security Council draft resolution that called on Moscow to withdraw its troops and halt the attack on Ukraine.The US Embassy in Kyiv issued a travel advisory warning US citizens remaining in the city to "know your closest shelter"US Embassy building stays empty as the diplomatic staff was ordered to leave Ukraine Kiev, Ukraine on February 23, 2022.Photo by Dominika Zarzycka/NurPhoto via Getty ImagesThe US Embassy in Kyiv issued a new travel advisory for US citizens remaining in Kyiv early Saturday morning. As Russian forces intensify their attacks against the capital city, the embassy warned US citizens to exercise increased caution due to the possibility of active combat, crime, and civil unrest."The security situation throughout Ukraine is highly volatile, and conditions may deteriorate without warning," the statement said. "US citizens should remain vigilant and take appropriate steps to increase their security awareness."The advisory urged US citizens to know the location of "your closest shelter or protected space," and seek shelter immediately in "the event of mortar and/or rocket fire." "If you feel your current location is no longer safe, you should carefully assess the potential risks involved in moving to a different location," the advisory said. US government prepared to evacuate President Zelensky, according to The Washington PostUkrainian President Volodymyr Zelensky delivers a statement during the 58th Munich Security Conference (MSC) on February 19, 2022 in Munich, Germany.Photo by Ronald Wittek - Pool/Getty ImagesThe US government is ready to help Ukrainian President Volodymyr Zelensky flee Kyiv, but the president is so far refusing to leave, according to The Washington Post.US and Ukrainian officials told the outlet that preparations have been made to help Zelensky avoid being captured or killed as Russian forces descended upon the capital city early Saturday morning.Amid increasing Russian attacks on Friday, Zelensky promised to remain at the head of Ukraine's government in Kyiv, despite the danger."According to the information we have, the enemy has marked me as target No. 1, my family as target No.2," he said in an address. "They want to destroy Ukraine politically by destroying the head of state."Insider has reached out to the White House and the State Department for comment. A senior US official told The Post that US officials in recent days have talked to Zelensky about multiple security issues, including the safest place for the president to remain to maintain the Ukrainian government. "We have been making him aware not only of the threat of Russian invasion, now a reality, but also the threat to him personally," Rep. Adam Schiff, the chairman of the House Intelligence Committee, told The Post. "We stand ready to assist him in any way."Satellite image shows 4-mile-long traffic jam along the Ukrainian-Romanian borderSatellite image of a miles-long traffic jam along the Ukraine-Romania border.Satellite image ©2022 Maxar Technologies.Satellite images from Maxar show a 4-mile (6.5 km)-long traffic jam of people, cars, and trucks attempting to leave Ukraine and cross into Romania near the Siret border crossing.Tens of thousands of Ukrainian refugees have already fled the country since Russian forces invaded early Thursday morning.New explosions heard in Kyiv as Russian forces attack the cityA view of empty streets following the curfew in the country after explosions and air raid sirens wailing again in Kyiv, Ukraine on February 26, 2022.Photo by Aytac Unal/Anadolu Agency via Getty ImagesMore than four dozen explosions were heard early Saturday morning in Kyiv as Russian troops intensified their attacks on the capital city, according to The Washington Post.Thirty minutes of ongoing shelling could be heard as the Ukrainian military fought off Russian assaults in northern Kyiv, the Kyiv Independent reported.The State Special Communications Service instructed people to seek shelter following more than 50 shots fired in a suburb near the city's center.CNN reported that heavy fighting is being reported south of Kyiv as well.—The Recount (@therecount) February 26, 2022 Ukraine's president warns that Russia will try to 'break our resistance' and topple the government before the night is overPresident of Ukraine Volodymyr Zelenskyy holds a press conference in regard of Russia's attack on Ukraine in Kiev, Ukraine on February 24, 2022.Ukrainian Presidency/Handout/Anadolu Agency via Getty ImagesUkrainian President Volodymyr Zelensky said on Friday night that the future of his country "is being decided right now," a warning that comes amid reports that Russian troops are approaching Kyiv from multiple directions."Tonight the enemy will use all the resources they have to break our resistance in a mean, cruel, and inhuman way," Zelensky said in a message to his nation, according to a translation of his remarks. "Tonight they will assault us."He added that many Ukrainian cities remain under attack."Burn down the enemy's military vehicles, using anything—anything—you can. If even the kindergartens are an admissible target for the invaders, you must not leave them any chance," he said.READ FULL STORYRussia vetoed a UN Security Council draft resolution calling on Moscow to stop Ukrainian assaultUnited Nations Security Council vote on a resolution during a meeting on Russian invasion of Ukraine, Friday Feb. 25, 2022 at U.N. headquarters.AP Photo/Seth WenigRussia vetoed on Friday a United Nations Security Council draft resolution that called on Moscow to withdraw its troops and halt the attack on Ukraine.Eleven countries on the council voted in favor, while three abstained. The countries that voted in favor of the resolution were:United StatesUnited KingdomFranceNorwayIrelandAlbaniaGabonMexicoBrazilGhanaKenyaRussia voted no.The countries that abstained from voting were: ChinaIndiaUnited Arab EmiratesThe Biden administration is seeking $6.4 billion for Ukraine aid from CongressA view of the US Capitol at sunset on January 5, 2022 in Washington, DC.Photo by Drew Angerer/Getty ImagesThe White House on Friday asked Congress for an estimated $6.4 billion in additional spending to aid Ukraine amid Russia's invasion, according to Bloomberg.The outlet reported that $2.9 billion of the requested funds would go to humanitarian and security needs in Ukraine, the Baltics, and Poland, including food aid, refugee assistance, and energy stabilization. The remaining $3.5 billion would help the US Department of Defense respond to the conflict, a Biden administration official told Bloomberg.The funds could be included in a broad government spending package Congress is aiming to pass by mid-March. The The requested money is on top of $650 million in security aid and $52 million in humanitarian aid that the US promised Ukraine last year. Spy chief humiliated by Putin on Russian TV for stammering releases new video echoing Putin's war rhetoricRussian Foreign Intelligence Service (SVR) Director Sergei Naryshkin is seen while opening of the exhibition on violations of human rights in Ukraine (2017-2020), on January 18, 2022 in Moscow, Russia.Mikhail Svetlov/Getty ImagesJust days after being humiliated in a broadcast meeting by Vladimir Putin, the head of Russia's foreign intelligence agency, Sergei Naryshkin, returned to the screen to reiterate war rhetoric."Russia cannot allow Ukraine to become a dagger raised above us in the hands of Washington," Naryshkin said in a video on state television, according to the New York Times. "The special military operation will restore peace in Ukraine within a short amount of time and prevent a potential larger conflict in Europe."Read Full StoryBiden is planning to announce new sanctions that personally target Putin, report saysRussian President Vladimir Putin ordered troops into eastern Ukraine on Monday.Alexei Nikolsky/Associated PressUS President Joe Biden is planning to announce as soon as Friday that the US will sanction Russian President Vladimir Putin, CNN reported, a provocative move of condemnation against one of the world's most powerful leaders.The move would come after the US, in coordination with its partners and allies, slapped two rounds of sanctions on Russia following its military assault on Ukraine earlier this week.Biden's reported decision to sanction Putin personally is a rare step and follows the European Union and the UK announcing sanctions against the Russian leader.Read Full StoryA California professor says he spotted Russia's invasion of Ukraine on Google Maps hours before Putin announced the attackRadar imagery showed a large Russian military unit south of Belgorod before it moved toward the border with Ukraine.Capella Space/Middlebury Institute of International StudiesA California professor and arms control expert says he noticed Russia's invasion of Ukraine on Google Maps in real time hours before Russian President Vladimir Putin announced the attack in a televised address.Jeffrey Lewis, a nonproliferation professor at the Middlebury Institute of International Studies in Monterey, California, had been monitoring Google Maps with a small team of research assistants and graduate students when they spotted a "traffic jam" on a road from Belgorod, Russia, to the Ukrainian border at around 3:15 a.m. local time in the Russian city on Thursday.Lewis told Insider on Friday that the "unusual" early morning backup started exactly where a radar image taken a day earlier showed a newly arrived "large Russian military unit with a lot of armor," such as tanks and armored personnel carriers."What was important about that image is that they were not set up in a camp — they were lined up in columns along roads, which is what you do when you're about to pounce," Lewis said.Read Full StoryThe daughter of Putin's spokesman publicly opposed Russia's invasion of Ukraine, undermining her dadElizaveta Pesokva attends a restaurant opening in January 2022Vyacheslav Prokofyev/TASS via Getty ImagesThe daughter of President Vladimir Putin's spokesman posted an anti-war slogan in her Instagram Live on Friday, according to multiple reports.Elizaveta Peskova, 24, posted "HET BOЙHE" — "no to war," against a black background on her Instagram story according to a screenshot tweeted by the Russian outlet TV Rain.This slogan is the main chant used by Russian protesters to oppose the invasions of Ukraine.Read Full StoryVideo reportedly shows Ukrainian men helping themselves to guns on a Kyiv street after all 18-60 years were urged to take up arms and fight the Russian invasionVolunteers, holding AK-47 rifles, protect a main road leading into Kyiv on February 25, 2022DANIEL LEAL/AFP via Getty ImagesThe video, which was shared on Twitter by Illia Ponomarenko, the defense correspondent at the Kyiv Independent, appears to shows civilians on a suburban street in a Kyiv suburb rummaging through boxes of firearms unloaded from trucks, as a voice off-camera says "Slava Ukraini!" (Glory to Ukraine!)."Firearms are delivered to anyone willing," Ponomarenko said in the tweet of the video.Read Full StoryUkraine's president posts defiant video with top government leaders saying 'we are all here' in the streets of besieged KyivUkraine's President Volodymyr Zelenskyy holds a press conference on Russia's military operation in Ukraine, on February 25, 2022 in Kyiv.Photo by Presidency of Ukraine/Handout/Anadolu Agency via Getty ImagesUkraine's President Volodymyr Zelensky posted a defiant video on Friday, purportedly from streets of besieged Kyiv, with top government leaders."We are all here," he said in a video posted to his Facebook page with the words: "We're in here. We are in Kiev. We defend Ukraine."Zelensky said he was with Ukraine's prime minister, presidential advisor, and head of the president's office."Our military are here, our citizens and society are here. We are all here defending our independence, our state, and this is how it's going to be," he said.Read Full StoryRussia says it will partially restrict access to Facebook, accusing it of censorship and human rights violationsRussian President Vladimir PutinAlexey Nikolsky/Getty ImagesRussia said Friday that it would partially limit access to Facebook within its borders over what it alleges is censorship of four state news outlets. In its announcement, the country's communications regulator said it asked Facebook earlier in the week to remove the restrictions and explain its reasoning for them but did not hear back.It also accused the company of various other undetailed human rights and freedoms abuses. Read Full StoryBan children of Russian oligarchs from elite British schools, UK MPs urge after invasion of UkraineHarrow School is one of the many prestigious private schools included in testimonies on Everyone's Invited.Stefan Rousseau/PA Images via Getty ImagesBoris Johnson should ban the children of Russian oligarchs from enjoying the benefits of elite British schools, Conservative MPs have said. The prime minister is coming under increasing pressure to punish Russia for its invasion of Ukraine by targeting its super-rich, many of whom have interests in the UK and mingle with its high society.Read Full StoryThe 5,000 helmets Germany offered Ukraine are finally on their way as it faces a Russian onslaught from 3 sidesGermany is sending 5,000 military helmets to Ukraine, which had requested 100,000 of them.Friso GentschThe 5,000 helmets Germany offered to Ukraine are finally on their way as the country faces Russian attacks from 3 sides. Over a month after Germany's secretary of defense promised the equipment, two trucks are bound for a handoff just outside Ukraine, according to German media company Der Spiegel.  Read Full StoryRussia's advance on Kyiv hit more resistance and is moving slower than expected, US defense official saysUkrainian servicemen ride on tanks towards the front line with Russian forces in the Lugansk region of Ukraine on February 25, 2022ANATOLII STEPANOV/AFP via Getty ImagesRussia appears to have "lost a bit of momentum" as they continue their invasion of Ukraine, a senior US defense official told reporters on Friday. The official said Russian forces are "not moving on Kyiv as fast as they anticipated they would be able to" and are "meeting more resistance than they expected," CNN reported.Read Full StoryEuropean Union freezes assets of Putin and Foreign Minister Lavrov, Latvia's foreign minister saysRussian Foreign Minister Sergei Lavrov looks on, next to Russian President Vladimir Putin, as they wait for the US-Russia summit at the Villa La Grange, in Geneva on June 16, 2021.Photo by BRENDAN SMIALOWSKI/AFP via Getty ImagesThe European Union on Friday approved freezing the assets of Russian President Vladimir Putin and Foreign Minister Sergei Lavrov, Latvia's foreign minister said."EU Foreign Affairs Council has adopted the 2nd sanctions package, asset freeze includes President of Russia and its Foreign Minister. We will prepare the 3d package," Foreign Minister Edgars Rinkēvičs said on Twitter.Read Full StoryA Russian tennis star protested the war in Ukraine in a twist of a traditional celebration in the sportTSN/TwitterRussian tennis star Andrey Rublev has a message for the world — and maybe one directed at his own country."No war please."On Friday, the 24-year-old Moscow native called for peace after besting Poland's Hubert Hurkacz for a spot in the Dubai Tennis Championships title match.As is a popular tennis tradition, Rublev wrote a note on the TV camera lens following his victory.Instead of signing his name or sketching a cheeky doodle — as is the norm in the sport — the world No. 7 penned a serious message for all to see: "No war please."Read Full StoryMonuments around the world are lighting up in blue and yellow in support of UkraineSt Georges Hall in Liverpool is lit up in yellow and blue in an expression of solidarity with Ukraine following Russia's invasion.Peter Byrne/PA Images via Getty ImagesMonuments around the world are lit up in Ukrainian flag colors following Russia's invasion.Berlin's Brandenburg Gate and Rome's Colosseum, among other landmarks, displayed blue and yellow lights.Read Full StoryUkraine praises marine for sacrificing his life to blow up bridge to try to choke off Russian tanksSkakun Vitaliy Volodymyrovich.General Staff of the Armed Forces of UkraineOfficials in Ukraine praised a marine for sacrificing his life to blow up a bridge to try to stop Russian tanks from advancing.Vitaliy Skakun Volodymyrovych was positioned at the Henichesk bridge in the Kherson region during a standoff with Russian forces, the General Staff of the Armed Forces of Ukraine said in a Friday statement.In an effort to fight off advancing Russian tanks, Ukrainian forces decided to blow up the bridge, the statement said."According to his brothers in arms, Vitaly got in touch [with them] and said he was going to blow up the bridge," the statement said. "Immediately after, an explosion rang out."Volodymyrovych died immediately, the statement said.Read Full StoryOrdinary Ukrainian citizens are taking up arms to fend off Russian forces as they close in on KyivResidents attend an open training organised for civilians by war veterans and volunteers who teach the basic weapons handling and first aid on one of Kyiv's city beachesGenya Savilov/AFP via Getty ImagesOrdinary citizens all over Kyiv are taking up arms in the fight against Russian forces as they close in on the capital city following two days of heavy attacks and hundreds of casualties.As Russian forces started making their way toward Kyiv, the Ukrainian government called on all citizens and "patriots" to take up arms in defense of the country, saying that only an ID was required and adding, "We give weapons to all patriots!""We will give weapons to anyone who wants to defend the country," Ukrainian President Volodymyr Zelensky said in a tweet. "Be ready to support Ukraine in the squares of our cities."Read Full StoryRussian state media denies its military attacked Kyiv and claims Ukraine shot down its own plane thereDamage to a building in Kyiv Ukraine, on the morning of February 25, 2022. Russia insisted it was not attacking the city.Pierre Crom/Getty ImagesOn Thursday and into Friday it was clear to most people around the world that Russia had invaded Ukraine, and moved quickly to attack its capital, Kyiv.But those receiving their news from Russia's vast array of state media outlets were given no sense of this, according to a review by Insider and other monitors.A selection of stories from the front pages of major Russian outlets in the early afternoon of Friday, the second day of hostilities around Kyiv, show the news the Russian state is promoting. They had a common theme: Russia is winning, Ukraine is planning atrocities, and there are no Russian attacks on Kyiv.Read Full StoryPeople in Kyiv describe bombardment on night 2 of invasion as Russia closes in on the capitalA building hit by a missile in Kyiv, Ukraine, seen on February 25, 2022.Wolfgang Schwan/Anadolu Agency via Getty ImagesKyiv was rocked by shelling for the second straight day on Friday morning, with Russian forces entering the outskirts of the capital by the afternoon.Speaking from Kyiv by phone on Friday, five residents told Insider of multiple explosions overnight, interspersed with air raid sirens directing people to find safety in bunkers. Alisa Obraztsova, 25, said she was rocked away by explosions at 4:20 a.m."I slept in the guest room in my apartment because I could hear the sirens from that room better," she said. Oleksii, a Kyiv resident who asked to be identified only by his first name, told Insider he was also startled awake by bombs."I woke up at around 4 a.m. because there was a massive explosion," he said. "I looked out the window, everything was a bright orange, everything was getting brighter."Read Full StoryPutin falsely describes Ukraine's government as a 'band of drug addicts and neo-Nazis' in latest propaganda blitz as Russian troops fight to take KyivRussia's President Vladimir Putin meets with members of the Delovaya Rossiya [Business Russia] All-Russian Public Organization at Moscow's Kremlin.Photo by Alexei NikolskybackslashTASS via Getty ImagesRussian President Vladimir Putin falsely described Ukraine's government as a "band of drug addicts and neo-Nazis" in a television appearance on Friday.In the speech, Putin also said Ukrainian President Volodymyr Zelensky's government "lodged itself in Kyiv and taken hostage the entire Ukrainian people," according to a translation from New York Times Moscow bureau chief Anton Troianovski and The Guardian.Read Full StoryZelensky told European leaders, "This might be the last time you see me alive," report saysPresident of Ukraine Volodymyr Zelenskyy holds a press conference in regard of Russia's attack on Ukraine in Kiev, Ukraine on February 24, 2022.Ukrainian Presidency/Handout/Anadolu Agency via Getty ImagesUkrainian President Volodymyr Zelensky on Friday told European leaders on a conference call that it "might be the last time you see me alive" as the Russian military pushes ahead with its offensive in his country. Zelensky on Thursday said in a video address he would remain in Kyiv and would keep his family in Ukraine.Zelensky added that "the enemy marked me as the number one target," with his family being number two.Read Full StoryZelensky asks Putin to 'sit down at the negotiating table' to 'stop the dying' as Russian forces strike KyivUkraine's President Volodymyr Zelenskyy holds a press conference on Russia's military operation in Ukraine, on February 25, 2022 in Kyiv.Photo by Presidency of Ukraine/Handout/Anadolu Agency via Getty ImagesUkrainian President Volodymyr Zelensky asked Russian President Vladimir Putin for negotiations to "stop the dying" as Russian forces strike the country's capital city of Kyiv."Let us sit down at the negotiating table in order to stop the dying," he said in a video address on Friday, according to a translation from The New York Times.Zelensky added: "I want to turn again to the president of the Russian Federation... Fighting is taking place across the entire territory of Ukraine."Read Full StoryMap shows Russian troop movement in Ukraine on Friday!function(){"use strict";window.addEventListener("message",(function(e){if(void 0!==e.data["datawrapper-height"]){var t=document.querySelectorAll("iframe");for(var a in e.data["datawrapper-height"])for(var r=0;r.....»»

Category: worldSource: nytFeb 26th, 2022

Liz Truss unveils plan for "revised" Northern Ireland protocol, which MPs say could be illegal

The legislation would have the "explicit power to give effect to a new revised protocol", which would "ensure parity of esteem and the protection of economic rights", Liz Truss said. British Foreign Secretary Liz Truss in Australia on January 21, 2022.Bianca De Marchi-Pool / Getty Images Liz Truss unveils plans for 'new revised protocol', with a new bill due to be introduced in weeks. The Foreign Secretary told MPs the government was "very clear this is legal in international law". Labour said such a move would cause other countries to questions to UK's ability to keep its word. Liz Truss set out plans Tuesday for a bill to create "a new revised protocol" in the next few weeks, less than three years after the UK agreed the Northern Ireland protocol with the EU. The Foreign Secretary told MPs that the UK would prefer to negotiate a new version of the protocol, but that the difficult post-pandemic economy meant that it was prepared to act alone to get a faster result."Our intention is to introduce legislation in the coming weeks to make changes to the protocol," Truss said. "Our preference remains a negotiated settlement, and we remain open to further talks if we can achieve the same outcome."She said she had invited the EU's chief negotiator, Maros Sefcovic, to London to discuss this "as soon as possible." She said that prior talks had failed to yield a solution because Brussels' mandate does not allow for the protocol to be reopened. "We are clear there is a necessity to act to ensure institutions can be restored as soon as possible," she added.  The legislation would have the "explicit power to give effect to a new revised protocol", to "ensure parity of esteem and the protection of economic rights", Truss said. But Stephen Doughty, Labour's shadow foreign affairs minister, said Truss needed to "set out clearly to the House why this doesn't break international law". He accepted the "excessive burdens" faced by businesses exporting goods from Britain to Northern Ireland, noting this risked undermining consent in the region. But he called for "calm heads and responsible leadership", saying that moving unilaterally risked causing a "downward spiral in our relationship with the EU" and could lead other countries to "question whether we can keep our end of the bargain". Doughty said: "It is deeply troubling for the Foreign Secretary to be proposing a bill that would apparently break a treaty that the government itself signed just two years ago. That will not resolve issues in Northern Ireland in the long term and rather it would undermine trust and make a breakthrough more difficult."Responding, Truss said the government was "very clear this is legal in international law and we will be setting out our legal position in due course".Insider recently revealed that Suella Braverman, the attorney general who recently told Johnson to suspend "disloyal" MPs, had given the bill her legal backing.  Colum Eastwood, leader of the Northern Ireland's SDLP, also warned about the legality of the move, saying: "It's a very simple question - how can any international partner or any citizen of the north of Ireland ever trust this government again?"Tory MPs also raised concerns about law-breaking.Simon Hoare, the chairman of the Northern Ireland committee, said it was "extraordinary" that the government needed to be reminded of the need to uphold the law.  Truss was speaking to MPs after the strategy was signed off at a Global Britain meeting earlier in the morning. She also updated the Cabinet, alongside Boris Johnson, who told ministers that "it was clear all five parties in Northern Ireland wanted changes to how the protocol was currently operating". Johnson visited Belfast on Monday to meet the main party leaders there, including those of the DUP and Sinn Fein.During his visit, Johnson gave a glimpse of some of the UK's plans, saying: "We would love this to be done in a consensual way with our friends and partners, ironing out the problems, stopping some of these barriers east-west."But to get that done, to have the insurance, we need to proceed with a legislative solution as well." DUP's leader Sir Jeffrey Donaldson, who sits in parliament as an MP, said the UK government's plans were "a welcome if well overdue step", and urged Truss to bring forward legislation "in days and weeks, not months".Read the original article on Business Insider.....»»

Category: topSource: businessinsiderMay 17th, 2022

Niall Ferguson On Misunderstanding History: "Biden Is Making A Colossal Mistake"

Niall Ferguson On Misunderstanding History: "Biden Is Making A Colossal Mistake" Authored by Niall Ferguson, op-ed via Bloomberg.com, Biden is making a colossal mistake in thinking he can bleed Russia dry, topple Putin and signal to China to keep its hands off Taiwan... “The language people speak in the corridors of power,” former Secretary of Defense Ashton Carter once observed, “is not economics or politics. It is history.” In a recent academic article, I showed how true this was after both the 9/11 terrorist attacks of 2001 and the “9/15” bankruptcy of Lehman Brothers in 2008. Policy makers used all kinds of historical analogies as they reacted. “The Pearl Harbor of the 21st century took place today,” President George W. Bush noted in his diary, late on the night of the attacks, to give just one example, though many other parallels were drawn in the succeeding days, from the Civil War to the Cold War. Seven years later, Federal Reserve Chair Ben Bernanke and New York Fed President Tim Geithner were the first members of the Federal Open Market Committee to appreciate that, without drastic measures, they risked re-running the Great Depression. What kind of history is informing today’s decisions in Washington as the war in Ukraine nears the conclusion of its first month? A few clues have emerged. “American officials are divided on how much the lessons from Cold War proxy wars, like the Soviet Union’s war in Afghanistan, can be applied to the ongoing war in Ukraine,” David Sanger reported for the New York Times on Saturday. According to Sanger, who cannot have written his piece without high-level sources, the Biden administration “seeks to help Ukraine lock Russia in a quagmire without inciting a broader conflict with a nuclear-armed adversary or cutting off potential paths to de-escalation … CIA officers are helping to ensure that crates of weapons are delivered into the hands of vetted Ukrainian military units, according to American officials. But as of now, Mr. Biden and his staff do not see the utility of an expansive covert effort to use the spy agency to ferry in arms as the United States did in Afghanistan against the Soviet Union during the 1980s.” Reading this carefully, I conclude that the U.S. intends to keep this war going. The administration will continue to supply the Ukrainians with anti-aircraft Stingers, antitank Javelins and explosive Switchblade drones. It will keep trying to persuade other North Atlantic Treaty Organization governments to supply heavier defensive weaponry. (The latest U.S. proposal is for Turkey to provide Ukraine with the sophisticated S-400 anti-aircraft system, which Ankara purchased from Moscow just a few years ago. I expect it to go the way of the scuttled plan for Polish MiG fighters.) Washington will revert to the Afghanistan-after-1979 playbook of supplying an insurgency only if the Ukrainian government loses the conventional war. I have evidence from other sources to corroborate this. “The only end game now,” a senior administration official was heard to say at a private event earlier this month, “is the end of Putin regime. Until then, all the time Putin stays, [Russia] will be a pariah state that will never be welcomed back into the community of nations. China has made a huge error in thinking Putin will get away with it. Seeing Russia get cut off will not look like a good vector and they’ll have to re-evaluate the Sino-Russia axis. All this is to say that democracy and the West may well look back on this as a pivotal strengthening moment.” I gather that senior British figures are talking in similar terms. There is a belief that “the U.K.’s No. 1 option is for the conflict to be extended and thereby bleed Putin.” Again and again, I hear such language. It helps explain, among other things, the lack of any diplomatic effort by the U.S. to secure a cease-fire.  It also explains the readiness of President Joe Biden to call Putin a war criminal. Now, I may be too pessimistic. I would very much like to share Francis Fukuyama’s optimism that “Russia is heading for an outright defeat in Ukraine.” Here is his bold prediction from March 10 (also here): The collapse of their position could be sudden and catastrophic, rather than happening slowly through a war of attrition. The army in the field will reach a point where it can neither be supplied nor withdrawn, and morale will vaporize. … Putin will not survive the defeat of his army … A Russian defeat will make possible a “new birth of freedom,” and get us out of our funk about the declining state of global democracy. The spirit of 1989 will live on, thanks to a bunch of brave Ukrainians. From his laptop to God’s ears. I can see why so many Western observers attach a high probability to this scenario. There is no question that the Russian invasion force has sustained very high casualties and losses of equipment. Incredibly, Komsomolskaya Pravda, a pro-Kremlin Russian newspaper, just published Russian Ministry of Defense numbers indicating 9,861 Russian soldiers killed in Ukraine and 16,153 wounded. (The story was quickly removed.) By comparison, 15,000 Soviet troops died and 35,000 were wounded in 10 years in Afghanistan. Moreover, there is ample evidence that their logistics is a mess, exemplified by the many supply trucks that have simply been abandoned because their tires or engines gave out. By these measures, Ukraine does seem to be winning the war, as Phillips O’Brien and Eliot A. Cohen have argued. History also provides numerous cases of authoritarian regimes that fell apart quite rapidly in the face of military reverses — think of the fates of Saddam Hussein and Moammar Al Qaddafi, or the Argentine junta that invaded the Falklands almost exactly 40 years ago. It would indeed be wonderful if the combination of attrition in Ukraine and a sanctions-induced financial crisis at home led to Putin’s downfall. Take that, China! Just you try the same trick with Taiwan — which, by the way, we care about a lot more than Ukraine because of all those amazing semiconductors they make at Taiwan Semiconductor Manufacturing Co. The fascinating thing about this strategy is the way it combines cynicism and optimism. It is, when you come to think of it, archetypal Realpolitik to allow the carnage in Ukraine to continue; to sit back and watch the heroic Ukrainians “bleed Russia dry”; to think of the conflict as a mere sub-plot in Cold War II, a struggle in which China is our real opponent. The Biden administration not only thinks it’s doing enough to sustain the Ukrainian war effort, but not so much as to provoke Putin to escalation. It also thinks it’s doing enough to satisfy public opinion, which has rallied strongly behind Ukraine, but not so much as to cost American lives, aside from a few unlucky volunteers and journalists. The optimism, however, is the assumption that allowing the war to keep going will necessarily undermine Putin’s position; and that his humiliation in turn will serve as a deterrent to China. I fear these assumptions may be badly wrong and reflect a misunderstanding of the relevant history. Prolonging the war runs the risk not just of leaving tens of thousands of Ukrainians dead and millions homeless, but also of handing Putin something that he can plausibly present at home as victory. Betting on a Russian revolution is betting on an exceedingly rare event, even if the war continues to go badly for Putin; if the war turns in his favor, there will be no palace coup. As for China, I believe the Biden administration is deeply misguided in thinking that its threats of secondary sanctions against Chinese companies will deter President Xi Jinping from providing economic assistance to Russia. Begin with the military situation, which Western analysts consistently present in too favorable a light for the Ukrainians. As I write, it is true that the Russians seem to have put on hold their planned encirclement of Kyiv, though fighting continues on the outskirts of the city. But the theaters of war to watch are in the east and the south. In the east, according to military experts whom I trust, there is a significant risk that the Ukrainian positions near the Donbas will come under serious threat in the coming weeks. In the south, a battalion-sized Chechen force is closing in on the besieged and 80%-destroyed city of Mariupol. The Ukrainian defenders lack resupply outlets and room for tactical breakout. In short, the fall of Mariupol may be just days away. That in turn will free up Russian forces to complete the envelopment of the Donbas front. The next major targets in the south lie further west: Mykolayiv, which is inland, northwest of Kherson, and then the real prize, the historic port city of Odesa. It doesn’t help the defenders that a large storm in the northern Black Sea on Friday did considerable damage to Ukrainian sea defenses by dislodging mines. Also on Friday, the Russians claim, they used a hypersonic weapon in combat for the first time: a Kinzhal air-launched missile which was used to take out an underground munitions depot at Deliatyn in western Ukraine. They could have achieved the same result with a conventional cruise missile. The point was presumably to remind Ukraine’s backers of the vastly superior firepower Russia has at its disposal. Thus far, around 1,100 missiles have struck Ukraine. There are plenty more where they came from. And, of course, Putin has the power — unlike Saddam or Qaddafi — to threaten to use nuclear weapons, though I don’t believe he needs to do more than make threats, given that the conventional war is likely to turn in his favor. The next blow will be when Belarusian forces invade western Ukraine from the north, which the Ukrainian general staff expects to happen in the coming days, and which could pose a threat to the supply of arms from Poland. In any case, Putin has other less inflammatory options if he chooses to escalate. Cyberwarfare thus far has been Sherlock Holmes’s dog that didn’t bark. On Monday the Biden administration officially warned the private sector: “Beware of the dog.” Direct physical attacks on infrastructure (e.g., the undersea cables that carry the bulk of global digital traffic) are also conceivable. I fail to see in current Western strategizing any real recognition of how badly this war could go for Ukraine in the coming weeks. The incentive for Putin is obviously to create for himself a stronger bargaining position than he currently has before entering into serious negotiations. The Ukrainians have shown their cards. They are ready to drop the idea of NATO membership; to accept neutrality; to seek security guarantees from third parties; to accept limits on their own military capability. What is less clear is where they stand on the future status of Crimea and the supposedly independent republics of Donetsk and Luhansk. It seems obvious that Putin needs more than just these to be able to claim credibly to have won his war. It seems equally obvious that, if they believe they are winning, the Ukrainians will not yield a square mile of territory. Control of the Black Sea coast would give Putin the basis from which to demand further concessions, notably a “land bridge” from Crimea to Russia. Meanwhile, the mainly financial sanctions imposed on Russia are doing their intended work, in causing something like a nationwide bank run and consumer goods shortages. Estimates vary as to the scale of the economic contraction — perhaps as much as a third, recalling the depression conditions that followed the Soviet collapse in 1991. Yet, so long as European Union countries refuse to impose an energy embargo on Russia, Putin’s regime continues to receive around $1.1 billion a day from the EU in oil and gas receipts. I remain skeptical that the sanctions as presently constituted can either halt the Russian war machine or topple Putin. Why has the ruble not fallen further and even rallied against the euro last week? Remember, both sides get to apply history. The Ukrainian President Volodymyr Zelenskiy is a master of the art, carefully tailoring his speeches to each national parliament he addresses, effectively telling one country after another: “Our history is your history. We are you.” He gave the Brits Churchill, the Germans the Berlin Wall, the Yanks Martin Luther King Jr., and the Israelis the Holocaust. Putin applies history in a diametrically opposite way. “The president has completely lost interest in the present,” the Russian journalist Mikhail Zygar argued in a recent New York Times piece. “The economy, social issues, the coronavirus pandemic, these all annoy him. Instead, he and [his adviser Yuri] Kovalchuk obsess over the past.” I can see that. Putin’s recent pseudo-scholarly writing — on the origins of World War II and “On the Historical Unity of the Russians and Ukrainians” — confirm the historical turn in his thought. I disagree with the former Russian foreign minister, Andrey Kozyrev, who told the Financial Times that, for Putin and his cronies, “the cold war never stopped.” That is not the history that interests Putin. As the Bulgarian political scientist Ivan Krastev told Der Spiegel, Putin “expressed outrage that the annexation of the Crimea had been compared with Hitler’s annexation of the Sudetenland in 1938. Putin lives in historic analogies and metaphors. Those who are enemies of eternal Russia must be Nazis.” Moreover: The hypocrisy of the West has become an obsession of his, and it is reflected in everything the Russian government does. Did you know that in parts of his declaration on the annexation of Crimea, he took passages almost verbatim from the Kosovo declaration of independence, which was supported by the West? Or that the attack on Kyiv began with the destruction of the television tower just as NATO attacked the television tower in Belgrade in 1999? Yet such recent history is less significant to Putin than the much older history of Russia’s imperial past. I have made this argument here before. Fresh evidence that Putin’s project is not the resurrection of the Soviet Union, but looks back to tsarist imperialism and Orthodoxy, was provided by his speech at the fascistic rally held on Friday at Moscow’s main football stadium. Its concluding allusion to the tsarist admiral Fyodor Ushakov, who made his reputation by winning victories in the Black Sea, struck me as ominous for Odesa. The Chinese also know how to apply history to contemporary problems, but they do it in a different way again. While Putin wants to transport post-Soviet Russia back into a mythologized tsarist past, Xi remains the heir to Mao Zedong, and one who aspires to a place alongside him in the Chinese Communist Party’s pantheon. In their two-hour call on Friday, according to the Chinese Foreign Ministry read-out, Biden told Xi: 50 years ago, the US and China made the important choice of issuing the Shanghai Communique. Fifty years on, the US-China relationship has once again come to a critical time. How this relationship develops will shape the world in the 21st century. Biden reiterated that the US does not seek a new Cold War with China; it does not aim to change China’s system; the revitalization of its alliances is not targeted at China; the US does not support “Taiwan independence”; and it has no intention to seek a conflict with China.  To judge by Xi’s response, he believes not one word of Biden’s assurances. As he replied: The China-US relationship, instead of getting out of the predicament created by the previous US administration, has encountered a growing number of challenges. … In particular … some people in the US have sent a wrong signal to “Taiwan independence” forces. This is very dangerous. Mishandling of the Taiwan question will have a disruptive impact on the bilateral ties … The direct cause for the current situation in the China-US relationship is that some people on the US side have not followed through on the important common understanding reached by the two Presidents …  Xi concluded with a Chinese saying: “He who tied the bell to the tiger must take it off.” Make of that what you will, but it didn’t strike me as very encouraging to those in Team Biden who have been pushing a hawkish line toward China. The China hawks in the administration — notably Kurt Campbell and Rush Doshi at the National Security Council — do not like the term “Cold War II.” But Doshi’s recent book “The Long Game” (which I reviewed here) is essentially a manual for the containment of China — the nearest thing we are likely to get to George Kennan’s foundational Long Telegram and “X” article in Foreign Affairs. And National Security Advisor Jake Sullivan did not make himself popular at last Monday’s marathon meeting with his Chinese counterpart, Yang Jiechi, by threatening secondary sanctions against a list of Chinese companies the U.S. will be watching for signs that they are trading with Russia. If Benn Steill and Benjamin Della Rocca of the Council on Foreign Relations are right, the Chinese have already helped Russia hide some of its foreign exchange reserves from financial sanctions. Judging by his weekend interview in the Wall Street Journal, a member of President Donald Trump’s NSC, Matthew Pottinger, is now more than content to call a cold war by its real name. I agree: The invasion of Ukraine in many ways resembles the invasion of South Korea by North Korea in 1950. I would put it like this: Cold War II is like a strange mirror-image of Cold War I. In the First Cold War, the senior partner was Russia, the junior partner was China — now the roles are reversed. In Cold War I, the first hot war was in Asia (Korea) — now it’s in Europe (Ukraine). In Cold War I, Korea was just the first of many confrontations with aggressive Soviet-backed proxies — today the crisis in Ukraine will likely be followed by crises in the Middle East (Iran) and Far East (Taiwan). But there’s one very striking contrast. In Cold War I, President Harry Truman’s administration was able to lead an international coalition with a United Nations mandate to defend South Korea; now Ukraine has to make do with just arms supplies. And the reason for that, as we have seen, is the Biden administration’s intense fear that Putin may escalate to nuclear war if U.S. support for Ukraine goes too far. That wasn’t a concern in 1950. Although the Soviets conducted their first atomic test on August 29, 1949, less than a year before the outbreak of the Korean War, they were in no way ready to retaliate if (as General Douglas MacArthur recommended) the U.S. had used atomic bombs to win the Korean War. History talks in the corridors of power. But it speaks in different voices, according to where the corridors are located. In my view — and I really would love to be wrong about this — the Biden administration is making a colossal mistake in thinking that it can protract the war in Ukraine, bleed Russia dry, topple Putin and signal to China to keep its hands off Taiwan. Every step of this strategy is based on dubious history. Ukraine is not Afghanistan in the 1980s, and even if it were, this war isn’t going to last 10 years — more like 10 weeks. Allowing Ukraine to be bombed to rubble by Putin is not smart; it creates the chance for him to achieve his goal of rendering Ukrainian independence unviable. Putin, like most Russian leaders in history, will most likely die of natural causes. And China watches all this with a growing sense of certainty that it is not up against the U.S. of Truman and Kennan. For that America — the one that so confidently waged the opening phase of Cold War I — is itself now history. Tyler Durden Thu, 03/24/2022 - 16:21.....»»

Category: blogSource: zerohedgeMar 24th, 2022

US Equity Futures Reverse Overnight Decline, Turn Positive As Oil Surges

US Equity Futures Reverse Overnight Decline, Turn Positive As Oil Surges U.S. equity futures and European bourses stocks reversed modest overnight losses and turned higher as US traders got to their desks on Monday as crude oil extended a climb and investors monitored diplomatic efforts to bring an end to Russia’s almost month-old war in Ukraine.  S&P futures rose 0.07% or 3 points after earlier sliding almost 30 points; Nasdaq futures were flat. Focus on Monday will be on a speech by Fed Chair Jerome Powell after the central bank kicked off a rate-hiking cycle last week.  Powell is set to speak at the annual meeting of the National Association for Business Economics at 12pm ET; text release and Q&A are expected. In addition to concerns about Russian crude supply, which Russia's deputy prime minister Novak said could surge to $300/bbl if Russian oil is shunned, also jumped after Saudi Arabia announced a “temporary reduction” in oil output at an Aramco facility after Yemen’s Houthi rebels launched multiple cross-border attacks on Sunday .A drone assault on the YASREF refinery, in the Yanbu Industrial City on the Red Sea, has “led to a temporary reduction in the refinery’s production, which will be compensated for from the inventory,” the energy ministry said in a statement. WTI rose as high as $108, surging $15 from prices hit last Tuesday, with Brent trading around $113. The S&P 500 last week had its biggest gain since November 2020 and European equities recouped all of their losses triggered by Russia’s invasion of Ukraine nearly a month ago as peace negotiations and the lure of cheap valuations drew investors back. But that optimism may not be justified, given the “increasingly brutal measures that Russian forces are taking,” according to  Michael Hewson, chief analyst at CMC Markets in London. “There appears to be a growing disconnect between what markets are doing and what is happening on the ground in Ukraine,” he said in a report. “Commodity markets continue to chop wildly” and “concerns about inflation are still posing awkward questions for central banks,” Hewson wrote. A key question is whether last week’s stock rebound and drop in volatility are durable. European equities have recouped all of their losses triggered by Russia’s invasion of Ukraine nearly a month ago as optimism around peace negotiations and the lure of cheapened valuations draw investors back. But a historic spike in commodity prices on supply concerns shows little sign of easing, keeping traders on high alert over inflation and shaking their faith in the Federal Reserve to douse price pressures while keeping the economic recovery on track. “The Fed comes out last week and basically tells you they have to do more -- into higher inflation but slowing growth,” Brian Weinstein, head of global fixed income at Morgan Stanley Investment Management, said in an interview with Bloomberg TV. “It certainly looks like the market is afraid of a traditional Fed goes too much, slows the economy down, and we don’t get the much-anticipated soft landing.” In premarket trading, Boeing stock tumbled 6.6% after a China Eastern Airlines Boeing 737-800NG (yes, THE 737 MAX) plane carrying 132 people crashed in southwestern China. Additionally, US-listed Chinese stocks slumped in premarket trading Monday, following their Asian peers lower, as investors were disappointed after Chinese banks left the loan prime rate unchanged despite expectations of some easing. Large-cap technology stocks are leading the decline including Alibaba -5.6%, JD.com -6%, NetEase -5.7%, Pinduoduo -5.6% and Baidu -3.4%. Among other China stocks listed in the U.S. that are lower this morning: Nio -2%, Li Auto -4.2%, XPeng -4.3%, Didi -5.9%, KE Holdings -6.4%, Lufax -3.2%, Trip.com -6.2%, Bilibili -7.6% and Tencent Music -7.5%. Other notable premarket movers: Anaplan (PLAN US) shares jump 27% in U.S. premarket after Thoma Bravo agreed to acquire U.S. enterprise software company in a deal valued at $10.7 billion, adding to a string of deals this year by cash-rich private equity firms. Nielsen Holdings (NLSN US) shares decline in U.S. premarket after it rejected an acquisition proposal from a private equity consortium, valuing the company at $25.40/share, a price that doesn’t “adequately compensate shareholders for Nielsen’s growth prospects.” Uber (UBER US) shares are slightly lower in U.S. premarket trading after price target is lowered at RBC Capital Markets, with broker less positive on the ride-hailing giant versus peer Lyft following proprietary driver supply analysis. Alleghany Corp. (Y US) shares could be active as Berkshire Hathaway Inc. is buying it for $11.6 billion in cash. In the latest developments, Ukraine rejected a Russian demand that its forces lay down their arms Monday and leave the besieged southern port of Mariupol, which has been under intense Russian bombardment. Morgan Stanley’s chief U.S. equity strategist Michael Wilson said the recent rebound in U.S. stocks is an opportunity to sell and position more defensively.  Meanwhile, U.S. President Joe Biden will speak with European leaders ahead of his trip to the continent this week. Senior U.S. officials will also meet with executives of Exxon Mobil Corp., JPMorgan Chase & Co. and other firms about the impact of the invasion and sanctions.  European equities had a subdued start to the week with most indexes opening flat. Euro Stoxx 50 and DAX rise slightly, while the FTSE MIB outperformed gaining 0.7%. Energy and mining stocks lead gains, tech and travel are in the red. Commodity-linked stocks are the biggest gainers on the Stoxx Europe 600 as prices rally with the war in Ukraine nearing the end of its first month with no conclusion in sight. The basic resources sub-index rises 1.8% as the energy sub-index gains 1.5%. Rio Tinto, Glencore and Anglo American are among the miners rising while Shell, BP and Equinor lead gains among energy stocks. Meanwhile, Europe’s formerly “unstoppable” luxury stocks are facing a swath of new challenges, from rising rates, war in Ukraine and China risks, leaving investors and analysts divided on whether valuations have fallen far enough yet. The MSCI Europe Textiles Apparel & Luxury Goods Index is down 14% this year, following three years of outsized gains. Hermes, the maker of $10,000 Birkin bags, is among top decliners, down 21% after a whopping 75% jump last year. Louis Vuitton owner LVMH, meanwhile, recently lost its crown as Europe’s biggest company to food giant Nestle. Investors were already dumping pricey luxury stocks in favor of cheaper shares amid concerns about rate hikes, while the war in Ukraine added further uncertainty. Valuation-wise, the group now trades at about a 60% premium to the broader market, near pre-pandemic levels and below its 5-year average. Asia stocks fell after China’s lenders kept borrowing costs unchanged. The MSCI Asia Pacific Index was down 0.5% as of 3:13 p.m. in Singapore, erasing an earlier gain of 0.4%, weighed by declines in financials and communication services. The regional benchmark’s bumpy day followed its best week since February 2021. “Some may have clung to expectations for an LPR cut today, which I think will come later when they assess the growth drag from the outbreak,” said Wai Ho Leong, strategist at Modular Asset Management. “Peace talks and the Xi-Biden call also did not deliver substantive outcomes.” Stocks climbed last week as China pledged to stabilize its markets, and some traders had expected some help from banks’ loan prime rate announcement Monday. Talks between Xi Jinping and Joe Biden held Friday also failed to excite investors, although China’s top envoy to Washington pledged his country “will do everything” to de-escalate the war in Ukraine.  Hong Kong Lifts Overseas Flight Ban; Cuts Hotel Quarantine Shares slid in China and Hong Kong, erasing earlier gains. Stocks in South Korea and Malaysia led declines in the region. Japanese markets were closed for a holiday. India’s stocks took a breather on Monday after a sharp rally last week, as a drop in financial and consumer goods companies weighed on the indexes. The S&P BSE Sensex fell 1% to 57,292.49 in Mumbai, while the NSE Nifty 50 Index dropped by an equal measure. The gauges posted their biggest single-day drop since March 15. All but three of the 19 sector sub-indexes compiled by BSE Ltd fell, led by a gauge of utility companies. “Slowing rural sector is a risk even as urban consumption is showing signs of relatively better performance,” according to JM Financial analyst Dhananjay Sinha. Lower than expected growth and higher inflation are a key risk to Indian companies’ profitability, he added. Metal stocks were among gainers as Vedanta, Hindalco Industries and Coal India rose on the back of rising prices and worsening demand-supply scenario.   ICICI Bank contributed the most to Sensex’s decline, decreasing 1.3%. Out of 30 shares in the Sensex, 25 fell, while 5 declined. In FX, most FX majors are range-bound, as the DXY hovers on 98.000 handle awaiting speeches from Fed’s Bostic and chair Powell. Loonie underpinned by strong oil prices -Usd/Cad straddling 1.2600. Franc firm ahead of SNB policy assessment as Swiss sight deposits suggest less intervention; USD/CHF near 0.9300 and EUR/CHF sub-1.0300. Euro straddles 1.1050 with hawkish ECB commentary supportive, but hefty option expiries capping the upside (almost 2.8bln at 1.1100) Aussie unwinding recent gains on technical grounds and in wake of defeat for PM Morrison’s liberal party in local election - Aud/Usd back below 0.7400. Sterling still smarting after last week’s dovish BoE hike - Cable around 1.3150 and Eur/Gbp probing 100 DMA at 0.8415. In rates, Treasuries followed wider losses across gilts while front-end leads the move lower, flattening the curve.  2Y-5Y yields cheaper by ~4bp, flattening 5s30s spread by ~3bp; 10-year yields around 2.18%, higher by ~2bp vs ~4bp for U.K. 10- year. Bunds and gilts bear steepen, cheapening roughly 3bps across the back end. Cash USTs open bear flatter with short dated yields up close to 5bps. Peripheral spreads are slightly wider to core. In commodities, crude futures extend Asia’s gains; WTI adds ~4% to trade just shy of a 109-handle. Spot gold trades a narrow range in small positive territory near $1,924/oz. Base metals are mixed; LME nickel trades limit down for the fourth straight session. LME aluminum gains 3.8%, trading just off the late-Asia highs after Australia, the world’s biggest exporter of alumina, announced a ban on shipments to Russia. Bitcoin is modestly pressured but contained within last week's parameters overall, holding above USD 41k. Today's calendar is relatively quiet, with just the Chicago Fed National Activity Index on dex (exp 0.5, down from 0.69). Powell speaks at NABE at 12pm although it is unlikely he will make any monetary policy comments. Market Snapshot S&P 500 futures up 0.1% to 4,448.75 STOXX Europe 600 little changed at 455.00 MXAP down 0.5% to 177.54 MXAPJ down 0.7% to 579.14 Nikkei up 0.7% to 26,827.43 Topix up 0.5% to 1,909.27 Hang Seng Index down 0.9% to 21,221.34 Shanghai Composite little changed at 3,253.69 Sensex down 0.8% to 57,428.60 Australia S&P/ASX 200 down 0.2% to 7,278.55 Kospi down 0.8% to 2,686.05 Brent Futures up 3.8% to $112.03/bbl Gold spot up 0.2% to $1,924.77 U.S. Dollar Index little changed at 98.27 German 10Y yield little changed at 0.39% Euro little changed at $1.1048 Brent Futures up 3.8% to $112.03/bbl Top Overnight News from Bloomberg Ukraine rejected a Russian demand to surrender of the embattled southern port city of Mariupol, and an aide to President Volodymyr Zelenskiy said Russian forces are using “more destructive artillery.” More talks on ending the war are expected on Monday after Turkey said the two sides had made progress on key points Chinese banks left borrowing costs unchanged in line with expectations as the focus shifts to other possible easing measures from the central bank after top leaders pledged to boost the economy European Central Bank Vice President Luis de Guindos has yet to see any indication that soaring inflation rates are leading to higher wage demands, according to an interview with Handelsblatt Oil rose for a third day as the war in Ukraine neared the end of its first month with no end in sight, and Iranian-backed rebels attacked energy facilities in key exporter Saudi Arabia Hong Kong will lift a ban on flights from nine countries including the U.S. as of April 1, and cut the time incoming travelers need to spend in hotel quarantine in half provided they test negative, Chief Executive Carrie Lam said China and Russia’s trade relationship has become more complicated since the war started more than three weeks ago, raising questions about the future flow of energy, metals and crops between the two powerhouses A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were choppy with sentiment clouded amid the uncertain geopolitical climate and higher oil prices. ASX 200 was indecisive as outperformance in tech was offset by losses in financials and with PM Morrison’s Liberal Party defeated in South Australia's state election, raising concerns for the government ahead of the federal election in two months Nikkei 225 was closed for the Vernal Equinox holiday. Hang Seng and Shanghai Comp. swung between gains and losses with an early surge in Hong Kong tech stocks ahead of a widely speculated relaxation to COVID restrictions after the city’s daily cases fell to a threeweek low and with China’s tech hub of Shenzhen resuming normal work output. However, the gains were wiped out with the mainland hampered as Shanghai tussles with a COVID-19 outbreak, while the PBoC also kept its Loan Prime Rates unchanged, as expected. Top Asian News Indonesia Ends Quarantine Requirement for Overseas Travelers Asia Stocks Edge Down as Concerns Linger on China Policy Support Russia’s War Lifts Default Risk for Distressed Economies China Confirms Ambassador Met With Russian Defense Official European bourses are contained and haven't differed too far from the unchanged mark overall, Euro Stoxx 50 +0.1%, as we await updates on Russia-Ukraine. Developments throughout the morning have been limited, and commentary from the Kremlin is predominantly infitting with last-week's/weekend updates. US futures are pressured, ES -0.2%, awaiting geopolitical catalysts with Fed speak, including Chair Powell, ahead. China Eastern airlines passenger jet flying from Kunming to Guangzhou on Monday experienced an accident in Guangxi, via State Media; unknown injuries/deaths from the accident. Craft was a Boeing (BA) 737 . Subsequently, China's Aviation Regulator confirms the crash of the China Eastern airlines passenger jet carrying 132 people. Boeing -8.3% in the pre-market Berkshire Hathaway (BRK/B) is to purchase Alleghany Corp (Y) for USD 848.02/shr (vs. close USD 676.75 /shr) in a USD 11.6bln transaction. Top European News ECB’s Lagarde Says She’s Not Seeing Elements of Stagflation Now LSE Group to Sell BETA+ to Motive Partners, Clearlake: Sky S&T CEO’s Grosso Tech to Offer EU15.30/Shr for ~5.5m S&T Shares Julius Baer Says Sanctioned Clients in ‘Low Single Digits’ In FX, DXY hovers on 98.000 handle awaiting speeches from Fed’s Bostic and chair Powell. Loonie underpinned by strong oil prices -Usd/Cad straddling 1.2600. Franc firm ahead of SNB policy assessment as Swiss sight deposits suggest less intervention; USD/CHF near 0.9300 and EUR/CHF sub-1.0300. Euro straddles 1.1050 with hawkish ECB commentary supportive, but hefty option expiries capping the upside (almost 2.8bln at 1.1100) Aussie unwinding recent gains on technical grounds and in wake of defeat for PM Morrison’s liberal party in local election - Aud/Usd back below 0.7400. Sterling still smarting after last week’s dovish BoE hike - Cable around 1.3150 and Eur/Gbp probing 100 DMA at 0.8415. In commodities, WTI and Brent have been dipping from best-levels, but remain underpinned on the session amid weekend geopolitical premia.; albeit, the European morning's developments have been more limited. WTI May resides around USD 107/bbl (vs high ~108.20/bbl) while its Brent counterpart trades just under USD 112 /bbl (vs high ~112.75/bbl). Saudi-led coalition reported that Yemen Houthis targeted a gas station in Khamis Mushait on Saturday which resulted in material damage to civilian cars and homes but no casualties, according to the state news agency. Saudi-led coalition also said it destroyed an explosive-laden boat to thwart an attack on shipping in the Red Sea, while it was also reported that Aramco’s petroleum products distribution plant in Jeddah was attacked and production at a Saudi oil refinery in Yanbu declined momentarily after an attack by Houthis. Saudi Aramco reported FY net income USD 110.0bln vs prev. USD 49.0bln Y/Y, while the CEO expects oil demand to return to pre-pandemic levels by year-end and said they are seeing healthy demand especially in Asia. Saudi Aramco's CEO also noted that there is limited spare capacity which is declining every month with global spare capacity around 2mln bpd and that the market is very tight in terms of available barrels. US Event Calendar and Central Bank speakers 8am: Fed’s Bostic Gives Speech at NABE Conference 8:30am: Feb. Chicago Fed Nat Activity Index, est. 0.50, prior 0.69 12pm: Fed Chair Powell speaks at NABE DB's Jim Reid concludes the overnight wrap After a few weekends with some dramatic news of late, this weekend was relatively sparse in terms of new incremental news flow. The conflict and negotiations continue but without any major developments. Last week was the best for US and European equities since November 2020’s US election week; so markets are coming to terms with the current state of the conflict. Over the weekend, Ukrainian officials rejected an offer given by the Russian military for its forces and civilians to surrender the city of Mariupol as shelling continued in Kyiv. Separately, the White House announced that President Joe Biden will travel to Poland in his upcoming trip to Europe for urgent talks with NATO and European allies. Mr. Biden is also hosting a call with his counterparts in the UK, Germany and Italy today at 11am UK time. Overnight, Turkey’s Foreign Minister Mevlut Cavusoglu indicated that Ukraine and Russia are close to an agreement following progress in peace talks and is hopeful for a ceasefire if both the sides do not backtrack from their current positions. However there is no other developments on the current state of negotiations. Asian equity markets have started the week on a weaker footing with the Hang Seng (-0.69%), reversing its early morning gains after it rose more than 1%. Mainland Chinese stocks are also dipping as I type with the CSI (-0.66%) and Shanghai Composite (-0.10%) lower after the PBOC kept the one-year loan prime rate unchanged at 3.7%. Elsewhere, markets in Japan are closed for a holiday. Moving on, stock futures in the DMs are also falling, as contracts on the S&P 500 (-0.42%), Nasdaq (-0.60%) and DAX (-0.58%) are all down. Oil prices are up this morning with Brent futures advancing +3.08% to $111.25/bbl while WTI futures are up +3.23% at $108.08/bbl, as I type. Elsewhere, today's holiday in Japan means no USTs trading in Asia. One of the key events this week will be Thursday’s March flash PMIs from around the world where we’ll see the first impact of the Russia/Ukraine conflict on activity, especially in Europe. Outside of that, UK CPI data on Wednesday is going to be very interesting after the BoE warned on both growth and inflation last week in their surprisingly dovish hike. See our UK economist’s review here. There is also the Spring UK (Budget) Statement on Wednesday (preview here) where all things fiscal will be in focus. Wednesday's new home sales, Friday's pending home sales and Thursday's durable goods are the main economic releases in the US. There's plenty of Fed speak to sharpen up the message from last week's FOMC but don't expect a chorus line singing from the same song sheet. The dot plot showed the range of YE '22 Fed funds rates, as forecast by the committee, was a historically wide 1.4% to 3.1%. Boston (non-voter hawk) and Chair Powell himself are up today with the latter also on the docket on Wednesday. Williams (dove) will be on a panel tomorrow but also gives a speech on Friday. Daly (non-voter / dove) speaks tomorrow, Wednesday and Friday. Mester (voter / hawk) speaks tomorrow. Bullard (voter / hawk) is up on Wednesday and remember he was the lone 50bps dissenter last week. Kashkari (non-voter / dove), Governor Waller (hawk) and Chicago President Evans (non-voter / dove) speak on Thursday. Barkin (non-voter / hawk) concludes the Fed's business for the week on Friday. Looking back at last week now and the conflict raged on but peace negotiations between Ukraine and Russia continued, with the headlines presenting a staccato back and forth about Ukrainian and Russian leaders’ current perceptions of the negotiation outlook. Markets seemed to look through this back-and-forth and took solace that negotiations were even happening, which was a material step up from where we were but a short time ago. In particular, both sides reported common ground on Ukraine’s neutral status and lack of NATO membership as a positive. Another positive came on Friday after Presidents Biden and Xi Jinping spoke. China’s support for Russia remained a key unknown, but following the call both sides expressed aspirations for a peaceful resolution to the conflict, and for tensions to not escalate any further. Ahead of the meeting, US diplomatic officials warned that the US would impose costs on China were it to support the Russian invasion. Russian sovereign bond payments made their way to creditors via custodians, despite some uncertainty, avoiding a default. Nevertheless, S&P cut the rating on Russian sovereign debt another notch, considering it at high risk of default. However, Russia’s remaining interest repayments this month will keep investors anxious as a $447 million payment is due on March 31, followed by a $2 billion payment as a bond comes due on April 4. Dragging on sentiment were American intelligence reports that President Putin was prepared to re-engage in nuclear sabre rattling should the conflict drag on. That drove futures lower at the time of release but was not enough to drag risk negative on the week. That said it was a good week for risk with the S&P 500 and STOXX 600 gaining +6.16% (+1.17% Friday) and +5.43% (+0.91% Friday) over the week, respectively. That marked the best weekly performance for both indices since the week of the US Presidential election in November 2020. Financials and mega cap tech stocks performed even better. The S&P and STOXX bank indices gained +6.60% (-0.15% Friday) and +8.72% (+0.22% Friday), respectively, while the FANG+ gained +13.61% (+3.37%). That was the best weekly performance ever for the FANG+, which also put in its best daily performance ever on Wednesday following the Fed meeting, and more positive Chinese state support news (the index contains Baidu and Alibaba), gaining +10.19%. Speaking of the Fed, after two years at the zero lower bound, the FOMC raised policy rates by 25 basis points, with the dots projecting an additional 150 basis points of tightening this year, in line with DB expectations. Further, the Fed’s projections put policy into an explicitly restrictive stance by 2023. Despite the tightening, Chair Powell did not place particularly high risks on a recession occurring in the next year, which was apparently enough to help equities, with the S&P gaining +2.24% the day of the meeting in addition to the gangbusters day for the FANG+ index. The Fed also announced plans to start reducing their bond holdings at a coming meeting. Chair Powell noted the asset holding reductions would roughly equate to an additional 25 basis points of tightening this year and could commence as early as the FOMC’s next meeting in May. Money markets ended the week pricing around 167 basis points of additional policy rate tightening, suggesting some probability of a 50 basis point hike this year, which the Chair did not rule out. 10yr Treasury yields gained +15.8bps (-2.1bps Friday) on the week, driven entirely by real yields, which increased +22.7bps (+1.5bps Friday). The 2s10s yield curve continued its flattening, as 2yr yields gained +18.8bps (+2.2bps Friday), bringing the level to 20.5bps, the lowest since early March 2020. The Bank of England also hiked rates, raising the Bank Rate by 25 basis points in an 8-1 decision. The lone dissenter preferred to keep policy rates on hold, in contrast to the four dissenters in the February meeting which voted for a 50 basis point increase. Forward guidance added to the dovish tone, as it emphasised two-sided risks around the outlook, with downside impacts to growth featuring as prominent as upside risks to inflation, in contrast with recent advanced economy central bank communications. In line, 10yr gilt yields lagged other DM yields, gaining +0.6bps (-6.8bps Friday), as 10yr bunds increased +12.4bps (-1.2bps Friday). 2yr gilt yields priced out hikes, falling -10.9bps (-8.9bps Friday). Markets are pricing the Bank Rate to end the year at 1.87%, as opposed to 2.0% a week ago. Meanwhile, the Bank of Japan left policy unchanged, and warned of downside risks to growth stemming from the invasion of Ukraine, picking up the BoE’s dovish mantle. In line with the improvement in risk sentiment, crude oil prices fell a modest -3.97% over the week (+1.21% Friday), but still put in some large intraday swings. Prices also eased following reports that progress on the Iran nuclear deal would not be handcuffed by sanctions on Russia. European natural gas also fell -23.42% (-0.65% Friday). Given the volatility in energy markets, French President Macron warned the state may need to seize control of some energy firms. Elsewhere, sentiment was boosted by reports that China would actively introduce policies that benefit markets and take steps to avoid the most spartan lockdown measures. Tyler Durden Mon, 03/21/2022 - 07:52.....»»

Category: blogSource: zerohedgeMar 21st, 2022

Kremlin Says Ukraine Rejected Offer Of Belarus Talks

Kremlin Says Ukraine Rejected Offer Of Belarus Talks (Update 11:50am ET): While it seemed like a long shot from the beginning, the prospect of talks between Russia and Ukraine was cast into doubt as the Kremlin said Ukraine had stopped responding after rejecting Moscow’s initial offer of a meeting in Minsk, the capital of Belarus. Instead, Ukraine sought a meeting in the Polish capital, Warsaw, the Kremlin said, adding it had heard nothing further. There was no immediate word from Ukraine on the Russian comments. The diplomatic to and fro comes as fighting continues on the ground with Russian forces having entered the capital Kiyv. Of course, as Bloomberg adds, any talks would likely struggle to find common ground on the question of “neutrality” for Ukraine, which has sought to join NATO and draw closer to Europe. * * * (Update 10:20am ET): Following news that Russia is ready to send a delegation to Minsk for Ukraine talks, moments ago the Kremlin announced that Putin has agreed to organize negotiations after Zelensky said he was ready to discuss Ukraine's "neutral status" (i.e., not joining NATO). Here are the latest headlines from Reuters: KREMLIN SAYS PUTIN HAS AGREED TO ORGANISE NEGOTIATIONS AFTER ZELENSKIY SAID HE WAS READY TO DISCUSS UKRAINIAN NEUTRALITY KREMLIN SAYS WE HAVE NOTIFIED THE UKRAINIANS OF PROPOSAL TO HOLD TALKS IN MINSK KREMLIN SAYS PUTIN HAS CALLED BELARUS'S LUKASHENKO TO ORGANISE MINSK TALKS WITH UKRAINE KREMLIN SAYS PUTIN HAS AGREED TO ORGANISE NEGOTIATIONS AFTER ZELENSKIY SAID HE WAS READY TO DISCUSS UKRAINIAN NEUTRALITY The ruble and Russian stocks, as well as US and European stocks, extended gains after Putin aide Dmitry Peskov conveyed the offer of talks in Minsk, the capital of Russian ally Belarus. The Kremlin also notes that while the Ukraine initially proposed talks in Warsaw instead, it then broke off contact. Separately, the Kremlin said that Ukrainian nationalists have deployed missile systems in residential areas in big cities, a move which  the Kremlin dubbed as "very dangerous." Earlier, Russian Foreign Minister Sergei Lavrov said that Moscow will only talk if Ukraine’s army surrenders. “We’re ready for negotiations at any time, as soon as the Ukrainian armed forces respond to our president’s call, stop resistance and lay down their weapons,” Lavrov said in the Russian capital. While Zelenskiy also called for negotiations with Putin, there was no indication of Ukraine acceding to Russian demands to surrender. Nor was there any sign of a halt to the fighting. Sirens warned Kyiv residents to take shelter from early morning as Ukraine’s armed forces said their units were engaging Russian armor to the north. Zelenskiy said that Russian aircraft were attacking residential areas of the capital. Mayor Vitali Klitschko said it had “entered the defense phase,” with shots and explosions heard across the city. “The enemy is already in Kyiv,” he said. As noted earlier, Chinese President Xi Jinping told Putin in a call earlier on Friday that he supported negotiations between Russia and Ukraine, according to China Central Television. It cited Putin as saying that he was ready to conduct high-level talks. Russian Foreign Ministry spokeswoman Maria Zakharova dismissed Zelenskiy and his government as “puppets.” Putin has said that he wants to replace Ukraine’s leadership, calling it a “junta.” Despite the talks offer, the assault on Ukraine is ongoing to secure the “de-militarization” of the country, Zakharova said. In an address, Zelenskiy said that Ukraine was not afraid “to talk about neutral status,” but went on to demand security guarantees and say that the country’s fate depended on its army. Earlier, he said that his intelligence services had identified him as Russia’s top target, but that he is staying in Kyiv and his family will remain in the country. “They want to destroy Ukraine politically by destroying the head of state,” he said.  In a video call last night, the Ukraine president told EU leaders that "This might be the last time you see me alive" Axios reported adding that "they are coming for me, but I am staying" (of course, the former leader of Afghanistan Ashraf Ghani also told everyone he was staying right up until he disappeared). The Ukraine president appeared rather irritated at Italy's Prime Minister, Mario Draghi, slamming the fact the the former ECB head fact apparently undermined or criticized the fact that Zelensky did not show up at the call they agreed to have this morning. According to reports, Draghi had successfully secured a carve out for Italian luxury goods from the EU's package of economic sanctions against Nato, which an EU diplomat reportedly said 'Apparently selling Gucci loafers to oligarchs is more of a priority than hitting back at Putin." Today at 10:30 am at the entrances to Chernihiv, Hostomel and Melitopol there were heavy fighting. People died. Next time I'll try to move the war schedule to talk to #MarioDraghi at a specific time. Meanwhile, Ukraine continues to fight for its people. — Володимир Зеленський (@ZelenskyyUa) February 25, 2022 As a reminder, Italy was one of the nations (along with Germany, Hungary and Cyrpus) that refused to agree to kick Russia out of SWIFT. * * * Earlier: Russia said it was willing to hold talks with Kyiv even as its forces pressed their military advantage to close in on Ukraine’s capital and its embattled leadership. With the war in its second day, the Kremlin said that President Vladimir Putinwas ready to authorize negotiations with Ukraine on possible “neutral status” for the country. The ruble and Russian stocks extended gains after Putin aide Dmitry Peskov conveyed the offer of talks in Minsk, the capital of Russian ally Belarus. US equity futures are spiking on reports from Interfax that Russia is ready to send a delegation to Minsk for Ukraine talks. “As you know, today the President of Ukraine Zelensky announced his readiness to discuss the neutral status of Ukraine”: Interfax reports Dmitry Peskov, Russian press secretary, said earlier today. “Initially, Russian President Vladimir Putin said that the purpose of the operation was to help the LNR and the DNR, including through the demilitarization and denazification of Ukraine. And this, in fact, is an integral component of the neutral status” “In this context, in response to Zelensky’s proposal, Vladimir Putin is ready to send a Russian delegation to Minsk at the level of representatives of the Ministry of Defense, the Ministry of Foreign Affairs and the presidential administration for negotiations with the Ukrainian delegation” US equity futures reacted instantly... This move has erased all of the week's (post-Putin) losses for the Nasdaq... The Ruble is rallying, almost erasing all of the losses from the last two days... Reactions in other markets (crude, gold, bonds) are all muted for now. Tyler Durden Fri, 02/25/2022 - 10:20.....»»

Category: smallbizSource: nytFeb 25th, 2022

US intelligence suggests Russia has operatives in place for a possible false-flag operation to justify invading Ukraine

Warnings that Russia may be looking for a pretext to invade Ukraine come as talks with the US and NATO have stalled. A Russian service member is seen atop of a T-72B3 main battle tank during military drills at the Kadamovsky range in the Rostov region, Russia, on December 20, 2021.Sergey Pivovarov/Reuters US intelligence thinks Russia's preparing a false-flag operation to justify military action in Ukraine, CNN reported. White House officials suggested as much during a press briefing on Thursday. Ukraine's defense ministry also raised the possibility that Russia may be looking for a pretext to invade. US intelligence indicates that Russia has operatives trained in sabotage who are in position and preparing for a possible false-flag operation in eastern Ukraine, which Russia could use to justify military action against Ukraine. CNN first reported the news on Friday, citing an anonymous US official."We have information that indicates Russia has already pre-positioned a group of operatives to conduct a false-flag operation in eastern Ukraine," an anonymous official told The Washington Post, adding that "the operatives are trained in urban warfare and in using explosives to carry out acts of sabotage against Russia's own proxy-forces."Such acts would offer Moscow a potential justification to mobilize the 100,000 troops, as well as military equipment, it has stationed at various positions along the border with Ukraine, against its neighbor.An anonymous official told Politico that these operatives could begin carrying out operations "several weeks" before any potential offensive, noting that "we saw this playbook in 2014 with Crimea."The official's statements echo some of those made by White House National Security Advisor Jake Sullivan on Thursday."Russia is laying the groundwork to have the option of fabricating a pretext for an invasion, including through sabotage activities and information operations, by accusing Ukraine of preparing an imminent attack against Russian forces in Eastern Ukraine," Sullivan said at a press briefing.Russian Ground Forces, including hundreds of tanks, self-propelled artillery, and other military equipment, are deployed in a training area about 160 miles north of the Russia–Ukraine border, seen in a satellite image taken on Nov. 9, 2021.Satellite image ©2021 Maxar Technologies."We saw this playbook in 2014," he said, referring to the Russian invasion and annexation of Crimea. "They are preparing this playbook again."Ukraine's Ministry of Defense has also made similar suggestions, saying Friday that "the military units of the aggressor country and its satellites receive orders to prepare for such provocations," according to CNN.NATO talks have stalled and fears of a Russian invasion are growingWarnings that Russia may be looking for a pretext to invade Ukraine come as talks with the US and NATO have stalled and Russian officials say that the country has "run out of patience."There were no major breakthroughs in a series of diplomatic discussions between Russia and Western powers in Europe this week. A Russian and US delegation met Monday, followed by a meeting between Russian envoys and NATO on Wednesday, and the discussions continued at a meeting of the Organization for Security and Cooperation in Europe on Thursday.By the end of the week, both sides sounded increasingly pessimistic as Russia continued to make demands for binding security guarantees that the US and NATO have repeatedly dismissed as non-starters.After Wednesday's talks, NATO Secretary-General Jens Stoltenberg told a news conference there's a "real risk for a new armed conflict in Europe."Michael Carpenter, the US ambassador to the OSCE, said at a press briefing on Thursday that the "drumbeat of war is sounding loud, and the rhetoric has gotten rather shrill."Moscow has insisted, among other demands, that Ukraine and Georgia be barred from ever joining NATO. But the alliance has remained firm that its open-door policy is non-negotiable. Russia's top diplomat on Friday insisted that the West respond to Moscow's demands in writing by next week.The US has warned Russia that a military incursion into Ukraine would lead to massive economic consequences.Along these lines, Senate Democrats on Wednesday introduced a sanctions bill that would punish top Russian officials— including Russian President Vladimir Putin — if Russia invades. The Kremlin responded by warning that sanctioning Putin would lead to a complete rupture in US-Russia ties.The Kremlin has claimed Russia has no plans to invade Ukraine, but Western leaders have expressed extreme skepticism."It bears repeating that it was Russia that invaded Ukraine in 2014, it is Russia that continues to fuel a war in eastern Ukraine that has claimed nearly 14,000 Ukrainian lives, and now it's Russia's actions which are causing a renewed crisis not only for Ukraine, but for all of Europe and for us," Deputy Secretary of State Wendy Sherman, who led the US delegation in talks this week, said at a press briefing on Wednesday."It is Russia that has to make a stark choice: de-escalation and diplomacy or confrontation and consequences," Sherman added.Read the original article on Business Insider.....»»

Category: personnelSource: nytJan 14th, 2022

Futures Slide After Disappointing JPMorgan Earnings, Tech Rout Worsens

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

Category: dealsSource: nytJan 14th, 2022

Around The World

Around The World Via Academy Securities, In this month’s edition of Around the World with Academy Securities, our Geopolitical Intelligence Group (GIG) focuses on providing their perspective on the following geopolitical risks and potential surprises for 2022: 1. Will Russia Invade Ukraine in 2022? 2. Will there be a China | Taiwan Conflict in 2022? 3. Potential for Military Action against Iran in 2022. 4. Risk of a Major Cyber Attack in 2022. In this report, we examine the potential geopolitical surprises/risks that we could see in 2022. We open with the high likelihood of a Russian incursion into Ukraine next year. Next, we review the tension between China and Taiwan and conclude that while an invasion in 2022 is unlikely, the risks grow over the next 3-5 years. We also revisit the Iranian nuclear discussions and while a return to the old JCPOA is unlikely, the chance of a U.S. attack on Iran is low next year. However, Israeli covert activities will continue against Iran’s nuclear facilities and there is a risk of a military strike if Iran gets close to a nuclear breakout. Finally, considering the high-profile ransomware attacks that occurred in 2021, we review the chances of a more significant cyber-attack on critical infrastructure in 2022. In addition to these areas, other risks our GIG sees in 2022 include the growth of Chinese influence in Central/South America (including in Nicaragua where the government there just flipped from supporting Taiwan to China) and a possible shift of support from Taiwan to China in Honduras as well. While the U.S. stands ready to “surge” economic aide to Honduras to encourage the new government there to maintain its ties with Taiwan, the fact that China is moving into the Western hemisphere and courting countries for support is concerning. Our GIG is also worried that the withdrawal from Afghanistan and a “fractured” NATO alliance could embolden our adversaries to act against U.S interests globally in 2022. Front and Center: Will Russia Invade Ukraine in 2022? In our last ATW and recent SITREP, we addressed the recent buildup of Russian troops on the Ukrainian border. Currently, there are ~100k troops near the Ukrainian border and the concern is that Putin could be in a position to invade by January 2022. While U.S. intelligence does not believe that Putin has made a final decision on whether to invade Ukraine, preparations are being made, including moving more Russian troops to the border and establishing the supply lines that could support a larger incursion into the country. In the December 7th virtual summit with President Putin, President Biden made it clear that there would be severe economic consequences if Russia were to move forward with an invasion. While it would require getting Germany to agree, there is a high likelihood that the Nord Stream 2 would not be granted final approvals if an invasion were to occur. With the high price of energy and a frigid winter heading to Europe, this would have both political and economic implications. In addition, the G7 (Britain, Canada, France, Germany, Italy, Japan, and the U.S.) came out on December 13th with a statement that read, “Any use of force to change borders is strictly prohibited under international law…Russia should be in no doubt that further military aggression against Ukraine would have massive consequences and severe costs in response.” backslashWhile a move into Ukraine would come at a high cost, the fact that Ukraine appears to be moving away from Russia and closer to the West could be worth the risk for Putin. While not a NATO member, the U.S. has shown its support for Ukrainian independence and has supplied Ukraine with $2.5b in military support, including Javelin anti-tank systems. Putin views the collapse of the Soviet Union 30 years ago as the largest geopolitical disaster of the 20th Century. Putin is worried that the positioning of NATO missiles (pointed at Russia) in Ukraine could be an option one day and he will do everything in his power to convince the West that he is capable of mounting an invasion to bring Ukraine back into the Russian sphere of influence. To ease tensions, President Biden has been trying to organize a meeting including a few key European NATO members with Putin directly. This offer has angered some of the Eastern European NATO allies (i.e., the Baltic states). This concerns them because not only do these countries’ leaders feel that Russia should not have a say on who is included in NATO, but they also believe that Putin will use this meeting to further drive a wedge in between the West/East members of NATO. Putin has already demanded that NATO rescind the offer made in 2008 to include Ukraine and Georgia in the alliance at some point and that NATO should agree not to hold military exercises/deploy military forces to countries that border Russia. Our GIG will continue to closely monitor the situation, but chances are high that Putin takes advantage of a fractured NATO and executes a military incursion into Ukraine. In 2022, our GIG believes that there is a high chance of a Russian incursion into Ukraine after certain conditions are met and preparations are complete. “Russia has already taken parts of the Donbass region and Crimea from Ukraine. Putin wants all the previous Soviet Bloc countries back under his control. Ukraine is his biggest prize. He remains focused on intimidation, coercion, and influence operations to weaken and overthrow the Zelensky government. His approach is aimed at targeting Ukraine itself, NATO, and the EU. Expect him to continue to push on these doors and see how far he can get. I don’t see a cross-border invasion until a series of influence operations by Russia show weakness by the West. He is on that path.” - General Robert Walsh  “If we define "advance" as some number of Russian troops crossing the internationally recognized border between Ukraine and Russia, I'd say that the chances are high (with a moderate chance of a full-scale invasion in 2022). However, Russians in general absolutely hate to lose face in public. So, until someone comes up with a way for Putin to withdraw his troops from the border without losing face, the troops will remain there, and the threat of invasion will remain high.” - Captain Wendy Lawrence “Russia will continue to increase gray zone activity in Ukraine to set the conditions for Russia/Russian citizens to look like the victim and then take action to secure a portion of Ukraine, much like they did with Crimea.” - General KK Chinn “In 2022, there is more than a 50% chance (of invasion) as there is little downside from Putin’s perspective. The way this is developing is that Russia is testing the West (probing for weaknesses) and may attack if an opportunity presents itself. At the same time, Russian authorities understand that any attempt to occupy Ukrainian territory would face widespread public opposition and trigger sweeping western sanctions that could batter the Russian economy. The chaotic withdrawal from Afghanistan may embolden Putin. The situation is complicated by the fact that Ukraine is a former part of the Soviet Union and it is not a member of NATO, and therefore the U.S. has no formal defense treaty obligations with Ukraine. However, it’s important to note that the U.S. and Ukraine did sign a strategic defense framework this past August that reiterates the DoD’s continued support for Ukraine’s right to decide its own foreign policy, free from outside interference, including Ukraine’s NATO aspirations. Right now, we really don’t know if the Russian troop buildup is a warning to NATO to back down or an actual buildup to launch an invasion. Putin is an expert at brinkmanship. His economy is not big enough to gain influence on the world stage so he’s using his military strength to wield power. That’s why you see pressure growing in the West to deter Putin from taking any aggressive action. He will push the EU and U.S. right up to the brink and then may blink or press into Ukraine. I think he just may push into Ukraine using tactics that are confusing and less than a conventional invasion, but none the less, Putin will use Russian forces on Ukrainian soil.” - General David Deptula Will there be a China | Taiwan Conflict in 2022? As we discussed in our previous ATW, President Biden met virtually with President Xi and discussed a wide range of topics including Taiwan, cyber, human rights, trade, Iran, and nuclear weapons. The goal of the meeting was to keep the lines of communication open and prevent a military accident that could quickly escalate. Dozens of incursions into the Taiwanese Air Defense Identification Zone this year have caused tensions to rise between China and Taiwan and even resulted in U.S. Secretary of Defense Austin calling these incursions “rehearsals” of China’s future intentions. With the U.S. shoring up its partnerships in the region, including the “Quad” and the nuclear submarine deal with Australia and the UK, China is feeling the pressure. While the risk of a nearterm crisis over Taiwan is slim with the upcoming Winter Olympics in Beijing, China continues to speak out against what it perceives as the U.S. overstepping its boundaries. The U.S. inviting Taiwan to the December 9th Summit for Democracy and diplomatically boycotting the Winter Games over human rights concerns have further enflamed the tension. China’s Xi believes that a unification with Taiwan must be “fulfilled,” and China’s military capabilities have grown over the past few years. The August 2021 Chinese test of a hypersonic missile, their development of the DF-21D medium range ballistic anti-ship missile, and their desire to drastically expand their nuclear capabilities have demonstrated that China’s military is not anywhere near the same force that quickly backed down during the 1996 Taiwan Strait Crisis. China has also expanded their reach into the South China Sea in “plain sight”. Making the situation even more complicated, Chinese and Russian joint naval exercises were conducted in October of this year. These actions reinforced the concern that U.S. adversaries will continue to engage with one another as they see a growing threat from U.S. partnerships in the region. In addition, during a virtual meeting between Xi and Putin on December 14th, regarding the situation on the Ukrainian border, Xi supported Putin’s request for security guarantees from the West. In 2022, our GIG sees a low chance of a Chinese move on Taiwan, but the risk rises significantly by 2025. However, there is a moderate/high risk of an incident involving China and one of our allies/partners in the region next year. “In the South China Sea, China’s military is itching to demonstrate their newly developed military capabilities. However, they will not go to war in the near-term until they feel that they have a “full domination” capability which will take years to develop. Expect small and more serious confrontational events to occur where China begins to intimidate and confront the Quad countries and their partners like we are already seeing with the Philippian Navy and Marine Corps. With respect to Taiwan, I don’t see this occurring in 2022 with the Beijing Olympics and the Chinese Communist Party holding its 20th National Party Congress. The intimidation campaign will continue to keep pushing on Taiwan to weaken their resolve along with their regional partners’ willingness to come to their aid.” - General Robert Walsh “It is not in the self-interest of China to invade Taiwan and be seen as the aggressor. China will continue to work gray zone activities to set conditions for them to be viewed as the victim of aggression and over time through the democratic process, slowly gain control of Taiwan by 2049. In the interim, it is important for the U.S./its allies and partners to remain united in confronting China. However, after the Olympics, there is a strong likelihood that there will be an incident that occurs between China and a member of the Quad/smaller nations in the region. China will continue to project their image as the dominant power player in the region and that they are the primary security provider in Asia. Look for rivals to acquiesce on territorial claims and China to project power to protect oil and natural resources within their nine-dash line.” - General KK Chinn “It depends on the definition of “confrontation,” but the likelihood of ships and aircraft "playing chicken" with each other is high and I think that China will be the aggressor. With respect to Taiwan, I suspect what China is doing right now is more of a pressure campaign than an actual preparation for an invasion.” - Captain Wendy Lawrence “Taiwan is an emotional issue for the PRC. If they were smart, they would back off today and take the long view. Within the next 100-200 years, Taiwan will assimilate into the PRC. However, the PRC sees the U.S. as unlikely to respond, and even if the U.S. does, the PRC feels that they will be able to defeat them, especially if they wait 2-3 years. They know that the U.S. has plans to recapitalize and grow their forces to meet the challenges that the PRC presents, but not until the early 2030s, so they may be willing to apply maximum pressure (to include military action) against Taiwan before 2030. How the U.S. works with the Quad could be key and a form of “containment” of the PRC and may be effective if orchestrated correctly.” - General David Deptula “Every century there has been a different leading state: U.S. (20th century), Britain (19th), France (18th), Netherlands (17th), Spain (16th). Who will it be in the 21st century? China’s 100-year plan/vision (1949-2049) ends with China being the dominant power in the world. Can the U.S. with its allies and partners unite the smaller and surrounding countries around China to choose sovereignty, freedom, democracy, and make the U.S. their primary security partner or will these countries choose their biggest trading partner (China)? Our strategic center of gravity is our allies and partners, and we need to leverage them to challenge both China and Russia with overwhelming threats in all domains to lend credence to conventional deterrence. Smaller countries matter because they have a vote in multilateral organizations like the UN. However, when under China’s control, they self-censure or support China’s action or get penalized economically. We must counter China’s political and economic influence by conducting strong messaging campaigns against China, reassuring allies that December 17, 2021 Around the World with Academy Securities 5 they can count on the U.S. as part of their larger national security strategy, which includes the deterrence umbrella, and that we will fulfill our long-term security commitments. The Arctic and Antarctica will become regions of great power competition between Russia, China, and the U.S. Both regions have the strong potential for oil and rare earth minerals that China will need in the future to fuel their growing economy. In Latin America in 2021, the leftist populist regimes (Venezuela, Nicaragua, Cuba, Bolivia, Argentina, Peru) leveraged or deepened relationships with China, Russia, Iran, and other U.S. rivals. There is a strong potential for this to continue in 2022 with the potential that Honduras, Chile, Colombia, and Brazil turn to China. The region is being enabled by money from our adversaries and we need to develop a strategy or risk losing the region. China flipped Nicaragua to sever diplomatic ties with Taiwan and we can expect Honduras to be next, leaving only Guatemala and Belize in Central America maintaining diplomatic ties with Taiwan. No surprise this was announced at the same time as the Biden administration’s Summit for Democracy. The harsh reality is that countries have options today and U.S. influence has diminished significantly in the Central America region and there is the risk that El Salvador, Costa Rica, Panama, and potentially Honduras could support China in the near future.” - General KK Chinn Potential for Military Action against Iran in 2022 n our October ATW and our most recent webinar, we discussed the likelihood of re-entering a nuclear deal with Iran. On December 4th, the talks adjourned allowing representatives from the parties involved, including Russia, China, Britain, France, and Germany to brief their respective governments. However, there was little optimism in a deal being reached. This development was not surprising as the new hard line chief negotiator, Deputy Foreign Minister Ali Bagheri Kani, believes the previous deal went too far in restricting Iran’s nuclear program and wants all sanctions to be removed and for the U.S. to agree not to leave the deal again. The state of the negotiations has deteriorated to the point that it is frustrating all parties involved, including China and Russia. Earlier this year, China signed a 25-year economic agreement with Iran and continues to buy Iranian oil in defiance of U.S. sanctions. China took a larger role in the negotiations in Vienna, which means that a breakthrough is possible, or the discussions are close to falling apart. China can use their leverage to their advantage, especially when it comes to other issues of tension with the U.S. However, if these talks do fail, besides sanctions targeting the oil sales to China, covert operations (led by Israel) will likely continue in Iran utilizing the vast network its intelligence service has built. Israel used its network to execute attacks on the nuclear facility at Natanz that not only damaged the buildings in the complex, but also the centrifuge systems. In addition, the Israelis have been conducting joint training exercises with the U.S. Navy’s 5th Fleet as well as with the UAE and Bahrain. Our GIG believes there is a low/moderate chance of a military attack on Iran’s nuclear facilities in 2022, but only after all available diplomatic means have been exhausted and Iran is close to a nuclear breakout, which would force Israel to take military action. “The JCPOA is DOA (i.e., not going to happen). However, the U.S. will take no action against Iran during a Biden administration because they have no stomach for it. Biden’s entire national security team is not interested in poking the Iranian beehive. To Israel however, Iran’s nuclear threat is real and they will take whatever action is necessary to nip it in the bud. Israel’s F-35s will be key in any military action along with cyber and Special Operations Forces.” - General David Deptula “There will be a miscalculation by Iran/Iranian proxies at some point in 2022 that will lead to the U.S. conducting military action against Iran. Israel will never allow Iran to develop into a nuclear capable country and will do whatever is necessary to stop Iran from attaining the capability through either covert or overt action.” - General KK Chinn “With respect to Israel, (an attack on Iran) is less likely now that Netanyahu is no longer in charge. But like Russia under Putin, it seems to me that Israel doesn't really care what the rest of the world thinks, especially when it comes to what the country perceives as self-preservation. If Iran attacks U.S. troops or assets, the U.S. will respond. If Iran doesn't instigate, then there is a low probability of U.S. action. Regarding the JCPOA, Iran will drag out negotiations, but I think something will get done by the end of the year.” - Captain Wendy Lawrence “I don’t see an attack by the U.S. on Iran happening in 2022. Also, the U.S. initiated JCPOA negotiations will force Israel to back off their own desire to attack Iran. Israel still respects the Biden administration enough to not act unilaterally. Biden is putting his reputation on the line to solve the nuclear weapons problem diplomatically through the JCPOA negotiations and the strategy he set during his election campaign. The Biden administration wants the JCPOA too much to let details get in the way. They will move throughout 2022 towards a renewed agreement even if they must concede leverage and concessions to Iran. This same negotiating group in the Biden administration negotiated the original agreement during the Obama administration and they are determined to get back to their original plan and reverse the Trump administration’s actions.” - General Robert Walsh Risk of a Major Cyber Attack in 2022 As we reported in our July and May ATWs, a cyber-attack on U.S. critical infrastructure orchestrated by a criminal group/state sponsor came to fruition in 2021. In May, a ransomware attack by a Russian criminal gang called Darkside took down the 5,500-mile Colonial Pipeline which supplies 45% of the East Coast’s fuel. While Putin denied supporting the attack, the event highlighted the vulnerabilities of critical infrastructure. In July, the Biden administration (and European allies) took the significant step of accusing China of the massive hack of the Microsoft Exchange email system. This email system is used by some of the world’s largest companies, including many defense firms. Cyber-attacks have become a global threat to critical infrastructure and in December, Israel led a 10-country exercise (including U.S., UK, United Arab Emirates, Germany, Italy, Austria, Switzerland, the Netherlands, Thailand, the International Monetary Fund, and the World Bank) that tried to increase cooperation between different entities in protecting the global financial system. In addition, the U.S. Cyber Command/NSA led by Gen. Paul M. Nakasone is getting more involved in gathering intelligence and “imposing costs” on entities tied to ransomware attacks on critical infrastructure. Our GIG believes there is a moderate/high risk of a cyber-attack on U.S. critical infrastructure in 2022 and that probability increases in the event of a military conflict. “There is a chance of a significant attack, but a critical cyber-attack against U.S. infrastructure will most likely be held as part of the initiation of, or along with, a major conflict somewhere else to distract and degrade a U.S. response. For example, a PRC move against Taiwan in the mid-2020s.” - General David Deptula “There is a small chance of an attack across the U.S. in an integrated fashion to deny or disrupt critical infrastructure that has regional or national strategic effects. However, there is a 50% chance we could see another Colonial Pipeline ransomware type attack that is more focused on individual companies for monetary gain.” - General Robert Walsh “If you think about it, how far away are we from digital risk leading to physical casualties in the future – hospitals, etc. There will be attacks and in a perfect world we will be able to defend against them so it will not cause a massive financial upheaval in the markets.” - General KK Chinn Tyler Durden Fri, 12/17/2021 - 18:05.....»»

Category: blogSource: zerohedgeDec 17th, 2021

Futures Rebound Ahead Of Critical CPI Print

Futures Rebound Ahead Of Critical CPI Print US futures rebounded on Friday from Thursday's selloff as traders waited with bated breath for an inflation report that could strengthen the case for an aggressive policy tightening by the Federal Reserve, while Oracle Corp jumped on an upbeat third-quarter outlook. At 730 a.m. ET, Dow e-minis were up 109 points, or 0.30%, S&P 500 e-minis were up 16.25 points, or 0.35%, and Nasdaq 100 e-minis were up 53.50 points, or 0.4%. Europe’s Stoxx 600 Index pared an earlier decline, while a Bloomberg gauge of Asian airlines fell. In China, Evergrande chairman Hui Ka Yan sold just over a 2% stake in the company, in the same week the property developer was officially labeled a defaulter for the first time. The dollar, Treasury yields and oil advanced. Shares of Oracle gained 11.2% in premarket trading after posting forecast-beating results for the second quarter, helped by higher technology spending from businesses looking to support hybrid work.  Broadcom Inc rose 7.0% as the semiconductor firm sees first-quarter revenue above Wall Street expectations and announced a $10 billion share buyback plan. So far this week, the Nasdaq and the S&P advanced over 2.8% each and the Dow rallied 3.4%. The S&P is now down 1.6% from its all-time peak. The S&P 500 dropped 5.2% from a record high hit on Nov. 22 as investors digested Jerome Powell's renomination as the Fed's chair, his hawkish commentary to tackle. Meanwhile, the U.S. Senate on Thursday passed and sent to President Joe Biden the first of two bills needed to raise the federal government's $28.9 trillion debt limit and avert an unprecedented default. In other news, the U.S. government moved a step closer to prosecuting Julian Assange on espionage charges, after London judges accepted that the WikiLeaks chief can be safely sent to America. With headline CPI expected to print at 6.8% Y/Y this morning - in what would be its highest level since 1982 - with whisper numbers are high as the low 8% after Biden said that this month's number won't show the drop in gasoline prices (which is certainly transitory now that oil price are on track for the biggest weekly gain since August), it is very likely that the CPI number will miss and we will see a major relief rally. On the other hand, any upside surprise on the reading will likely bolster the case for a faster tapering of bond purchases and bring forward expectations for interest rate hikes ahead of the U.S. central bank's policy meeting next week. “Various FOMC participants, including Chair Powell, have signaled a hawkish shift in their policy stance, catalyzed by increasing discomfort with elevated inflation against a backdrop of robust growth and ongoing strengthening in labor markets conditions,” Morgan Stanley economists and strategists including Ellen Zentner, wrote in a note Thursday. “We revise our Fed call and now expect the FOMC to begin raising rates in Sept. 2022 -- two quarters earlier than our prior forecast.” Discussing today's key event, the CPI print, DB's Jim Reid writes that "our US economists are anticipating that headline CPI will rise to +6.9%, which would be the fastest annual pace since 1982. And they see core inflation heading up to +5.1%, which would be the highest since 1990. Bear in mind as well that this is the last big release ahead of next Wednesday’s Federal Reserve decision, where our economists are expecting they’ll double the pace of tapering. Chair Powell himself reinforced those expectations in recent testimony, stopping just shy of unilaterally announcing the faster taper. Crucially, he noted this CPI print and the evolution of the virus were potential roadblocks to a faster taper next week. That said, the bar is extremely high for today’s data print to alter their course, especially with the Covid outlook having not deteriorated markedly since his testimony. By the close last night, Fed funds futures were fully pricing in a rate hike by the June meeting, alongside more than 70% chance of one by the May meeting." A reminder that last month saw another bumper print, with the monthly price gain actually at its fastest pace since July 2008, which sent the annual gain up to its highest since 1990, at +6.2%. It also marked the 6th time in the last 8 months that the monthly headline print had been above the consensus estimate on Bloomberg, and in another blow for team transitory, the drivers of inflation were increasingly broad-based, rather than just in a few categories affected by the pandemic. It may have been the death knell for team transitory, with Chair Powell taking pains to retire the term in the aforementioned testimony before Congress. In Europe, stocks fell slightly as a rise in coronavirus infections, with the Stoxx 600 dropping 0.3%, weighed down the most by tech, health care and utilities. DAX -0.2%, and FTSE 100 little changed, both off worst levels. Meanwhile, an epidemiologist has said that the omicron strain may be spreading faster in England than in South Africa, with U.K. cases possibly exceeding 60,000 a day by Christmas. Banks in the U.K. have already started telling staff to work from home in response to the government’s guidance.  Daimler AG’s trucks division gained in its first trading day as the storied German manufacturer completed a historic spinoff to better face sweeping changes in the auto industry. Polish retailer LPP rose to a record. Asian stocks fell on worries over the global spread of the omicron virus strain and after China Evergrande and Kaisa Group officially defaulted on their dollar debt. The MSCI Asia Pacific Index lost as much as 0.9%, with healthcare, technology and consumer discretionary sectors being the worst performers. Benchmarks slid in China and Hong Kong after Fitch Ratings cut Evergrande and Kaisa to “restricted default,” with the Hang Seng Index being the region’s biggest loser. Investors remain concerned that the omicron virus strain may crimp the economic rebound. South Korea brought forward the timing for Covid-19 booster shots to just three months after the second dose, as one of Asia’s most-vaccinated countries grapples with its worst ever virus surge. The Kospi snapped a seven-day winning run. Meanwhile, the U.S. appears to be headed for a holiday crisis as virus cases and hospital admissions climb, while London firms started telling thousands of staff to work from home. “In Europe, restrictions are being put in place, not just in the U.K. but also in other countries, due to the spread of the omicron variant, spurring worry over the impact on the economy,” said Nobuhiko Kuramochi, a market strategist at Mizuho Securities. “If work-from-home practices are prolonged, consumption will become lackluster, delaying any recovery.” Still, the Asian benchmark is up 1.2% from Dec. 3, poised for its best weekly advance in about two months. That’s owing to gains earlier in the week after China’s move to boost liquidity helped restore investor confidence. Traders are now turning focus to U.S. inflation data due later in the day for clues on the pace of anticipated tapering. China’s central bank took further steps to limit the yuan’s strength -- setting the weakest reference rate relative to estimates compiled by Bloomberg since 2018 -- a day after policy makers raised the foreign currency reserve requirement ratio for banks a second time this year. In rates, the Treasury curve bear flattened with 5s30s printing sub-60bps ahead of today’s November CPI data. Bunds and gilts are quiet; Italy leads a broader tightening of peripheral spreads. In FX, the Bloomberg Dollar Spot Index rises 0.2%, building on modest strength during the Asian session. AUD leads G-10 peers; NZD and SEK are weakest, although ranges are narrow. Demand for euro downside exposure waned this week as investors now focus on the upcoming decisions by the Federal Reserve and the European Central Bank. China’s central bank took further steps to limit the yuan’s strength In commodities, brent crude is slightly higher on the day, hovering around the $74-level, while WTI climbs 0.6% to $71-a-barrel. Base metals are mixed. LME aluminum and copper rise, while zinc and lead declines. Spot gold drops $4 to $1,771/oz. Looking at the day ahead now, and the main data highlight will be the aforementioned US CPI reading for November. In addition, there’s the University of Michigan’s preliminary consumer sentiment index for December, UK GDP for October and Italian industrial production for October. Central bank speakers include ECB President Lagarde, along with the ECB’s Weidmann, Villeroy, Panetta and Elderson. Market Snapshot S&P 500 futures up 0.2% to 4,677.75 STOXX Europe 600 down 0.4% to 474.88 MXAP down 0.8% to 193.90 MXAPJ down 0.8% to 632.63 Nikkei down 1.0% to 28,437.77 Topix down 0.8% to 1,975.48 Hang Seng Index down 1.1% to 23,995.72 Shanghai Composite down 0.2% to 3,666.35 Sensex little changed at 58,799.05 Australia S&P/ASX 200 down 0.4% to 7,353.51 Kospi down 0.6% to 3,010.23 Brent Futures up 0.4% to $74.69/bbl Gold spot down 0.3% to $1,770.81 U.S. Dollar Index little changed at 96.32 German 10Y yield little changed at -0.34% Euro down 0.1% to $1.1281 Top Overnight News from Bloomberg Already fighting economic fires on a number of fronts, China is rushing to clamp down on speculation in its strengthening currency before it gets out of control The arrival of the omicron variant has triggered a global rush for booster shots, but questions remain over whether it is the right strategy against omicron The Biden administration aims to sign what could prove a “very powerful” economic framework agreement with Asian nations -- focusing on areas including coordination on supply chains, export controls and standards for artificial intelligence -- next year, Commerce Secretary Gina Raimondo said A mouse bite is at the center of an investigation into a possible new Covid-19 outbreak in Taiwan, after a worker at a high-security laboratory was confirmed as the island’s first local case in more than a month A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks were on the back foot as the region took its cue from the weak performance in the US, where the major indices reversed recent upside in the run-up to today’s US CPI metric. The ASX 200 (-0.4%) was led lower by the underperformance in energy and tech after a retreat in oil prices and similar weakness of their counterpart sectors in US. The Nikkei 225 (-1.0%) remained lacklustre as it succumbed to the recent inflows into the currency, although the downside was stemmed as participants digested a record increase in wholesale prices. The Hang Seng (-1.0%) and Shanghai Comp. (-0.2%) were hindered by several headwinds including lower-than-expected lending and aggregate financing data, as well as China’s latest internet crackdown in which it removed 106 apps from app stores. However, losses were contained by a softer currency after China’s efforts to curb RMB strength including the PBoC’s 200bps FX RRR hike yesterday and its overnight weakening of the reference rate by the widest margin against estimates on record. Finally, 10yr JGBs were quiet after the mixed performance in US fixed income markets and with the risk-averse mood counterbalanced by the lack of BoJ purchases in the market today, although later saw a bout of selling on a breakdown of support at the key 152.00 level. Top Asian News Evergrande’s Hui Forced to Sell Part of Stake in Defaulted Firm Hui Has 277.8m Evergrande Shares Sold Under Enforced Disposal Asia Stocks Fall on Renewed Concerns Over Evergrande and Omicron Gold Heads for Worst Weekly Run Since 2019 Before Inflation Data Cash bourses in Europe kicked off the session with modest losses across the board, but the region has been clambering off worst levels since (Euro Stoxx 50 -0.3%; Stoxx 600 -0.3%) as traders gear up for the US CPI release (full preview available on the Newsquawk headline feed). US equity futures meanwhile post modest broad-based gains across the ES (+0.3%), NQ (+0.3%), RTY (+0.4) and YM (+0.2%). Back to Europe, cash markets see broad but contained downside. Sectors are mixed with no overarching theme or bias. Tech resides at the foot of the bunch with heavyweight SAP (-0.2%) failing to garner impetus from Oracle’s (+11% pre-market) blockbuster earnings after beating expectations on the top and bottom lines and announcing a new USD 10bln stock-repurchase authorisation. The upside meanwhile sees some of the more inflation-related sectors, including Oil & Gas, auto, Goods, Foods, and Beverages. In terms of individual movers, Bayer (+1.8%) is firmer after the Co. won a second consecutive trial in California regarding its Roundup weed killer. Daimler (-15%) sits at the foot of the Stoxx 600 after spinning off its Daimler Trucks unit (+4%) - considered to be a market listing rather than a full initial public offering. Top European News Heathrow Offers Bleak Outlook as Omicron Halts Long-Haul Rebound HSBC, JPMorgan, Deutsche Bank Tell London Staff to Stay Home SocGen CEO Takes Over Compliance After $2.6 Billion Fines Santander AM Names Utrera as Head of Equities as Montero Exits In FX, not a lot of deviation from recent ranges, but the Greenback is grinding higher ahead of US inflation data and Treasuries are bear-steepening to suggest hedging or positioning for an upside surprise following pointers from President Biden and NEC Director Deese to that effect (both advising that recent declines in prices, including energy, will not be reflected in November’s metrics). The index is back above the 96.000 level that has been very pivotal so far this week and hovering near the upper end of a 96.429-157 range, while the benchmark 10 year T-note yield is holding above 1.50% after a so-so long bond auction to wrap up the latest refunding remit. NZD/JPY/GBP - It’s marginal, but the Kiwi, Yen and Pound are lagging behind in the G10 stakes, with Nzd/Usd back below 0.6800 and perhaps taking note of a marked slowdown in the manufacturing PMI to 50.6 in November from 54.3, while Usd/Jpy is straddling 113.50 and eyeing DMAs either side of the half round number and Cable remains choppy around 1.3200 in wake of UK GDP, ip and output all missing consensus. AUD/CAD/EUR/CHF - All a tad more narrowly divergent vs the Buck, and the Aussie managing to keep tabs on 0.7150 after outperformance post-RBA on mainly external and technical impulses. Elsewhere, the Loonie has limited losses through 1.2700 with some assistance from hawkish sounding commentary from BoC Deputy Governor Gravelle rather than choppy crude prices as WTI swings around Usd 71/brl. To recap, he said that concerns over inflation are heightened on the upside much more than usual and the BoC is likely to react a little bit more readily to the upside risk given that inflation is already above the control range. Elsewhere, the Euro continues to fade on advances beyond 1.1300 and hit resistance at or near the 21 DMA and the Franc is more attuned to yields than risk sentiment at present, like the Yen, though is outpacing the Euro, as Eur/Chf veers towards 1.0400 again and Usd/Chf sits closer to 0.9250 vs 0.9200. In commodities, WTI and Brent front-month futures have been edging higher in early European trade following a choppy APAC session and in the run-up today’s main event, the US inflation data. Currently, WTI Jan trades just under USD 71.50/bbl (vs low USD 70.32/bbl) while Brent Feb resides north of USD 74.50/bbl (vs low USD 73.80/bbl), with news flow also on the lighter side ahead of the tier 1 data. In terms of other macro events, sources suggested Iran is willing to work from the basis of texts created in June on nuclear discussions, which will now be put to the test in upcoming days, via a European diplomatic source. This would mark somewhat of a shift from reports last week which suggested that Iran took a tougher stance than it had back in June. Western diplomats last week suggested that Tehran ramped up their conditions, which resulted in talks stalling last Friday. Aside from that, relevant news flow has been light for the complex. Elsewhere, spot gold and silver are drifting lower in tandem gains in the Dollar – spot gold has dipped under USD 1,770/oz, with the current YTD low at 1,676/oz. LME copper holds its head above USD 9,500/t but within a tight range amid the overall indecisive mood across the markets. US Event Calendar 8:30am: Nov. CPI YoY, est. 6.8%, prior 6.2%; MoM, est. 0.7%, prior 0.9% 8:30am: Nov. CPI Ex Food and Energy YoY, est. 4.9%, prior 4.6%; MoM, est. 0.5%, prior 0.6% 8:30am: Nov. Real Avg Hourly Earning YoY, prior -1.2%, revised -1.3% Real Avg Weekly Earnings YoY, prior -1.6% 10am: Dec. U. of Mich. 1 Yr Inflation, est. 5.0%, prior 4.9%; 5-10 Yr Inflation, prior 3.0% Sentiment, est. 68.0, prior 67.4 Expectations, est. 62.5, prior 63.5 Current Conditions, est. 73.5, prior 73.6 DB's Jim Reid concludes the overnight wrap I’m sure if anyone had said to you at the start of 2021 that US CPI would end the year around 7% YoY then there may have been some sleepless nights about how to position your portfolio. The reality is that as inflation has risen, the market has managed to go through denial, transitory, elongated transitory, and now the retirement of transitory, all without much fuss. I’ve said this before but I doubt there is anyone in the world that predicted we’d end the year at near 7% whilst at the same time having 10yr UST yields still at around 1.5%. Today our US economists are anticipating that headline CPI will rise to +6.9%, which would be the fastest annual pace since 1982. And they see core inflation heading up to +5.1%, which would be the highest since 1990. Bear in mind as well that this is the last big release ahead of next Wednesday’s Federal Reserve decision, where our economists are expecting they’ll double the pace of tapering. Chair Powell himself reinforced those expectations in recent testimony, stopping just shy of unilaterally announcing the faster taper. Crucially, he noted this CPI print and the evolution of the virus were potential roadblocks to a faster taper next week. That said, the bar is extremely high for today’s data print to alter their course, especially with the Covid outlook having not deteriorated markedly since his testimony. By the close last night, Fed funds futures were fully pricing in a rate hike by the June meeting, alongside more than 70% chance of one by the May meeting. A reminder that last month saw another bumper print, with the monthly price gain actually at its fastest pace since July 2008, which sent the annual gain up to its highest since 1990, at +6.2%. It also marked the 6th time in the last 8 months that the monthly headline print had been above the consensus estimate on Bloomberg, and in another blow for team transitory, the drivers of inflation were increasingly broad-based, rather than just in a few categories affected by the pandemic. It may have been the death knell for team transitory, with Chair Powell taking pains to retire the term in the aforementioned testimony before Congress. Ahead of this, markets were in slightly subdued mood yesterday as the reality of the new Omicron restrictions in various places soured the mood. Even as the news on Omicron’s severity has remained positive, concern is still elevated that this good news on severity could be outweighed by a rise in transmissibility, which ultimately would lead to a higher absolute number of both infections and hospitalisations. Even if it doesn’t, it seems restrictions are mounting while we wait and see. In response, US equities and oil prices fell back for the first time this week, as did 10yr Treasury yields. The S&P 500 (-0.72%) and the STOXX 600 (-0.08%) fell, whilst the VIX index of volatility ticked back up +1.73pts to move above the 20 mark again. Tech stocks underperformed in a reversal of the previous session, with the NASDAQ down -1.71%, and the small-cap Russell 2000 seeing a hefty -2.27% decline, as it moved lower throughout the day. Other risk assets saw similar declines too, with Brent crude (-1.85%) and WTI (-1.96%) oil prices both paring back their gains of the week so far. The move out of risk benefited safe havens, with sovereign bond yields moving lower across the curve, with those on 10yr Treasuries down -2.2bps to 1.50%. Those moves were echoed in Europe, where yields on 10yr bunds (-4.3bps), OATs (-4.5bps) and BTPs (-2.9bps) fell back as well. That came against the backdrop of a Reuters report saying ECB governors would discuss a temporary increase in the Asset Purchase Programme at their meeting next week, albeit one that would still leave bond purchases significantly beneath their current levels once the Pandemic Emergency Purchase Programme ends in March. Bitcoin fell -5.21% to $47,997 and is now more than -29% below its all-time highs reached a month ago. Marion Laboure from my team published a piece analysing the interaction between Bitcoin and the environment given its huge energy consumption. You can find the piece here. Ahead of today’s US CPI, there was another round of robust labour market data, with the US weekly initial jobless claims down to 184k (vs. 220k expected) in the week through December 4, marking their lowest level since 1969. The 4-week moving average was also down to a fresh post-pandemic low of 218.75k, having fallen for 9 consecutive weeks now. So with the labour market becoming increasingly tight and price pressures continuing to remain strong, it’s no surprise that markets have moved over the last year from pricing no hikes at all in 2022 to almost 3. Overnight in Asia, equities are all trading in the red with the Shanghai Composite (-0.32%), Hang Seng (-0.50%), Nikkei (-0.58%), CSI (-0.62%) and KOSPI (-0.67%) tracking the weaker US close last night after a three day rally. This comes after Chinese real-estate firms Evergrande Group and Kaisa Group were downgraded to restricted default by Fitch Ratings. Elsewhere in Japan, November's PPI reading came in at the highest level since 1980 at +9.0% year-on-year against +8.5% consensus due largely to rising energy prices. Our Japan economist expects CPI rising above 1% next year to be one of the ten key events to watch in 2022. You can read more here. Staying on Japan, the ruling party today will unveil a set of tax policy measures aimed at incentivising businesses to raise wages as Prime Minister Fumio Kishida aims to deliver on campaigning promises. Futures are pointing to a slightly more positive start in the US with S&P 500 futures (+0.10%) trading higher but with DAX futures (-0.24%) catching down to the weaker US close. Out of DC, the Senate approved a one-time procedural measure that will allow them to raise the debt ceiling with a simple majority vote, ostensibly in the coming days, and hopefully for a longer period than the last six-week suspension. Yields on potentially at-risk Treasury bills are at similar levels to neighboring maturities. In terms of the latest on the pandemic, yesterday didn’t see any news of major significance, with the indicators mainly confirming what we already knew. In particular, the EU’s ECDC continued to say that among the 402 confirmed Omicron cases in the EU/EEA, all the cases with known severity were either asymptomatic or mild, with no deaths reported. So positive news for now, although it’ll be very important to keep an eye with what happens with hospitalisations in South Africa, which are continuing to rise, and the country also reported another 22,391 cases yesterday, which is once again the highest number since the Omicron variant was first reported. Separately, the US FDA moved yesterday to expand the eligibility of the Pfizer-BioNTech booster to 16 and 17 year olds. To the day ahead now, and the main data highlight will be the aforementioned US CPI reading for November. In addition, there’s the University of Michigan’s preliminary consumer sentiment index for December, UK GDP for October and Italian industrial production for October. Central bank speakers include ECB President Lagarde, along with the ECB’s Weidmann, Villeroy, Panetta and Elderson. Tyler Durden Fri, 12/10/2021 - 07:50.....»»

Category: blogSource: zerohedgeDec 10th, 2021

Futures Rebound From Friday Rout As Omicron Fears Ease

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

Category: smallbizSource: nytDec 6th, 2021

Futures Rise To 4,700 "Max Gamma" As Oil Slide Accelerates

Futures Rise To 4,700 "Max Gamma" As Oil Slide Accelerates U.S. index futures rose again, trading on top of the massive 4700 "max gamma" level despite downbeat data out of Chinese tech names, as investors awaited the latest batch of unemployment data and taking comfort from signals that central banks will stay far behind the curve and keep pledges to overlook faster inflation rather than rush into rate hikes. European stocks were steady and Asian equities fell as Chinese tech stocks tumbled after poor results from Baidu and Bilibili. Treasury yields edged higher, the dollar was little changed and gold declined. Bitcoin retreated for a fifth straight day. Oil prices skidded to a six-week low on concern about a supply overhang and the prospect of China, Japan and the United States dipping in to their fuel reserves, with Brent futures last at $79.77, more than 8% off last month's three-year high. Nasdaq futures rose 86.25 points or 0.53% outperforming S&P 500 futs which were up 11.50 points or 0.25% to 4697.75, after chip giant Nvidia jumped 7% after a sales forecast by the world’s largest chipmaker. Elsewhere in premarket trading, Cisco dropped 6.6% after the computer networking equipment group’s growth and earnings forecast fell short of expectations while Alibaba slid after reporting sales that missed analyst estimates for a second straight quarter. Some other notable premarket movers: EV makers are mixed in U.S. premarket trading, with Rivian Automotive (RIVN US), Lucid (LCID US) and Canoo (GOEV US) all declining and newly-listed Sono (SEV US) extending its bounce Nvidia (NVDA US) shares gain 7% in U.S. premarket trading, with analysts saying the chipmaker delivered a strong enough quarter to justify its punchy valuation Amtech (ASYS US) fell 22% in post-market trading after reporting fourth quarter revenue that missed estimates from two analysts. The semiconductor stock has risen 139% this year through Wednesday’s trading. Kraft Heinz (KHC US) fell 1.6% in postmarket trading on Wednesday after announcing one of its top holders was selling a portion of its stake. Victoria’s Secret (VSCO US) shares gain 13% in U.S. premarket trading as analysts highlight “better-than- feared” 3Q results for the lingerie retailer. JD.com (JD US) shares advanced 2.2% premarket after it reported net revenue for the third quarter that beat the average analyst estimate. “While companies are managing to report solid third-quarter numbers, the ability to do so is being tempered by concerns about slimmer margins,” said Michael Hewson, chief market analyst at CMC Markets in London. “One positive thing, aside from the concern over rising inflation, has been the resilience of labor markets, on both sides of the Atlantic.” The Stoxx Europe 600 Index was little changed with most cash indexes giving back early gains or losses to trade flat as travel and consumer companies gained while the energy and minings industries retreated. FTSE 100 underperformed slightly. Oil & gas was the weakest sector followed by mining stocks. European metals and mining stocks fall 0.8%, the second worst performing sub-index on the benchmark Stoxx 600, amid sinking iron ore futures and copper prices. Iron ore retreated as investors weighed a top producer’s forecasts of a balanced market next year and the impact on miners amid a price collapse in recent months. Diversified miners drop, Glencore -0.8%, Anglo American -1%, BHP -0.7%, Rio Tinto -1.1%; the four stocks account for more than 60% of the SXPP. Earlier in the session, Asian stocks fell, on track for a second day of losses, as Baidu helped lead a slump in Chinese technology giants.  The MSCI Asia Pacific Index dropped as much as 0.4%, extending its two-day slide to about 0.9%. The Hang Seng Tech Index lost about 3%, as search engine giant Baidu tumbled on worries over the advertising outlook and video-streaming firm Bilibili dropped after posting a larger-than-expected loss. Hong Kong’s Hang Seng Index and China’s CSI 300 benchmark were the worst performing national benchmarks Thursday, while Taiwan’s Taiex managed a small gain. Alibaba also fell, ahead of its highly awaited earnings report later today that may show the impact of Beijing’s regulatory curbs. Japan's Nikkei was down 0.6% in early trade. "We do seem to have stalled somewhat as we head into the year end," said Jun Bei Liu, a portfolio manager at Tribeca Investment Partners in Sydney. "Investors perhaps are just taking a bit of pause," she said, in the wake of a strong U.S. results season, but as inflation and China's slowdown loom as macroeconomic headwinds. “With a bout of earnings having been released and put behind the market, we’re in an environment where investors are inclined to take profits,” said Takashi Ito, an equity market strategist at Nomura Securities in Tokyo. “Investors are likely to cherry pick stocks that have high earnings and ROE and have strong momentum for growth.”  The region’s equities are now poised for a weekly drop after wiping out gains from earlier this week. Anxiety over global inflation has weighed on sentiment as investors search for clues on when central banks will start raising interest rates. Indonesia and the Philippines kept borrowing costs unchanged, as expected, to aid two economies that bore the brunt of Covid-19 outbreaks in Southeast Asia this year. In rates, treasuries were slightly cheaper across long-end of the curve after S&P 500 and Nasdaq 100 futures breached Wednesday’s highs. Yields are higher by ~1bp in 30-year sector, with 2s10s steeper by ~1bp, 5s30s by ~0.5bp; 10-year is ~1.60%, trailing bunds by ~2bp as traders push back on ECB rate-hike pricing. Focal points Thursday include several Fed speakers and a potentially historic 10-year TIPS auction at 1pm ET - at $14BN, the 10Y TIPS reopening is poised to draw a record low yield near -1.14%; breakeven inflation rate at ~2.71% is within 7bp of Monday’s YTD high. Elsewhere, Gilts outperformed richening ~2.5bps across the curve. Peripheral spreads tighten, semi-core widens marginally. In FX, the U.S. dollar erased an earlier modest loss and was flat, with majors mostly range-bound. Treasury yields stabilized from overnight declines; the greenback traded mixed versus its Group-of-10 peers, though most were confined to tight ranges, New Zealand’s dollar led G-10 gains after two-year ahead inflation expectations rose to 2.96% in the fourth quarter from 2.27% in the third, according to survey of businesses published by the Reserve Bank of New Zealand. Support in euro- Swiss franc at 1.0500 holds for now and consolidation for risk reversals this week suggests that a breach of the key level may not see a big follow through. The pound inched up and is on its longest winning streak in nearly seven months after this week’s jobs and inflation data fueled confidence that the Bank of England will hike rates. The Turkish lira plunged to a new all time low, with the USDTRY rising to 10.93 after the central bank cut rates by 100bps. Currency traders are also assessing a sharp downdraft in the Aussie/yen cross, often a barometer of market sentiment. It fell through its 200-day moving average on Tuesday and has lost almost 4% in a dozen sessions . "You've got the perfect storm there for bears," said Matt Simpson, senior analyst at brokerage City Index. "Fundamentally and technically Aussie/yen looks pretty good with lower oil prices." In commodities, crude futures remained in the red but bounce off worst levels as the potential for SPR releases remains center stage. WTI finds support near $77, recovering toward $78; Brent regains a $80-handle. Spot gold gives back Asia’s small gains, dropping ~$7 to trade near $1,860/oz. Base metals trade poorly, LME zinc and lead underperform. Looking at the day ahead now, and data releases from the US include the weekly initial jobless claims, the Philadelphia Fed’s business outlook for November, the Kansas City Fed’s manufacturing index for November, and the Conference Board’s leading index for October. Central bank speakers include PBoC Governor Yi Gang, the ECB’s Centeno, Panetta and Lane, and the Fed’s Bostic, Williams, Evans and Daly. There’ll also be a number of decisions from EM central banks, including Bank Indonesia, the Central Bank of Turkey and the South African Reserve Bank. Finally, earnings releases include Intuit, Applied Materials and TJX. Market Snapshot S&P 500 futures up 0.4% to 4,703.25 STOXX Europe 600 up 0.1% to 490.50 MXAP down 0.3% to 199.31 MXAPJ down 0.6% to 650.79 Nikkei down 0.3% to 29,598.66 Topix down 0.1% to 2,035.52 Hang Seng Index down 1.3% to 25,319.72 Shanghai Composite down 0.5% to 3,520.71 Sensex down 0.4% to 59,755.91 Australia S&P/ASX 200 up 0.1% to 7,379.20 Kospi down 0.5% to 2,947.38 Brent Futures down 0.1% to $80.18/bbl Gold spot down 0.2% to $1,863.45 U.S. Dollar Index little changed at 95.75 German 10Y yield little changed at -0.26% Euro little changed at $1.1327 Top Overnight News from Bloomberg More Wall Street banks are wagering that the Federal Reserve will hike rates at a faster-than-expected pace, with Citigroup Inc. joining Morgan Stanley in backing trades that will profit if the central bank does just that China is releasing some oil from its strategic reserves days after the U.S. invited it to participate in a joint sale, suggesting the world’s two biggest oil consumers are willing to work together to keep a lid on energy costs European countries are increasingly forcing reluctant companies to let employees work from home in an effort to break the rapidly spreading fourth wave of the coronavirus pandemic A more in depth look at global markets courtesy of Newsqauwk Asia-Pac stocks traded mostly negative with sentiment in the region subdued amid a lack of significant macro drivers and following the uninspired lead from the US - where the major indices finished a choppy session in the red and the DJIA gave up the 36k status. Nonetheless, the ASX 200 (+0.1%) remained afloat with notable strength in gold miners, as well as some consumer stocks, although advances in the index were limited by losses in the financial and energy sectors after similar underperformance stateside amid a decline in yields and oil prices. The Nikkei 225 (-0.3%) was initially dragged lower by unfavourable currency inflows which overshadowed reports that Japan wants to enhance tax breaks for corporations that raise wages, while shares in Eisai were hit after EU regulators placed doubts regarding the approval of Co. and Biogen’s co-developed Alzheimer’s drug and SoftBank also declined after the US regulator raised concerns regarding Nvidia’s acquisition of Arm. However, the index then briefly returned flat in late trade on reports that the Japanese stimulus package is to require JPY 55.7tln of fiscal spending which is higher than the previously speculated of around JPY 40tln. The Hang Seng (-1.3%) and Shanghai Comp. (-0.5%) weakened after another liquidity drain by the PBoC and with the declines in Hong Kong exacerbated by tech selling, while the losses in the mainland were to a lesser extent with China said to be mulling additional industrial policies aimed to support growth and SGH Macro sources suggested the US and China agreed there would be some substantial progress on trade such as the removal of some punitive tariffs by the US and increased purchases of US products by China, although the report highlighted that it was unclear if this would be from a high-profile announcement or a discrete relaxing of tariffs. Finally, 10yr JGBs were initially flat as prices failed to benefit from the subdued risk appetite in Japan and rebound in global peers, while firmer metrics at the 20yr JGB bond auction provided a mild tailwind in late trade although the support was only brief and prices were then pressured on news of the potentially larger than anticipated fiscal spending in PM Kishida's stimulus package. Top Asian News China Property Stocks Sink, $4.2 Billion Rush: Evergrande Update Japan’s Kishida Eyes Record Fiscal Firepower to Boost Recovery China Property Firm Shinsun’s Shares and Bonds Slump JD.com Sales Beat Estimates as Investments Start to Pay Off Major bourses in Europe are choppy, although sentiment picked up following a subdued APAC session but despite a distinct lack of fresh catalysts. US equity futures have also been grinding higher in early European hours, with the NQ (+0.6%) outpacing the ES (+0.3%), RTY (+0.2%) and YM (+0.2%). Back to European cash – broad-based gains are seen across the Euro bourses – which lifted the CAC, DAX and SMI to notch record intraday highs, whilst upside in the UK's FTSE 100 (-0.2%) has been hampered by hefty losses in today's lagging sectors– the Energy and Basic Resources - amid price action in the respective markets. Tech names also see a strong performance thus far as chip names cheer NVIDIA (+6% pre-market) earnings yesterday. Overall, sectors have maintained a similarly mixed picture vs the cash open, with no overarching theme. In terms of individual movers, Swatch (+2.8%) and Richemont (+0.6) piggyback on the increase in Swiss Watch Exports vs 2020 and 2019. Metro Bank (-20%) plumbed the depths after terminating takeover talks with Carlyle. Top European News Royal Mail Hands Investors $540 Million Amid Parcel Surge German Coalition Plans Stricter Rent Increase Regulation: Bild HSBC Sees ECB Sticking With Easy Stance Despite Record Inflation Astra Covid Antibody Data Shows Long-Lasting Protection In FX, the Kiwi has extended its recovery on heightened RBNZ tightening expectations prompted by significant increases in Q4 inflation projections, with some pundits now assigning a greater probability to the OCR rising 50 bp compared to the 25 bp more generally forecast and factored in. Nzd/Usd is eyeing 0.7050 and the 50 DMA just above (at 0.7054 today) having breached the 100 DMA (0.7026), while the Aud/Nzd cross is probing further below 1.0350 even though the Aussie has found some support into 0.7250 against its US rival and will be encouraged by news that COVID-19 restrictions in the state of Victoria are on the verge of being completely lifted. GBP/EUR/DXY - Notwithstanding Kiwi outperformance, the Dollar has lost a bit more of its bullish momentum to the benefit of most rivals, and several of those that compose the basket. Indeed, Cable has popped above 1.3500, while the Euro is looking more comfortable on the 1.1300 handle as the index retreats further from Wednesday’s new y-t-d peak and away from the psychological 96.000 level into a 95.840-642 range. Ahead, IJC and Philly Fed are due amidst another decent slate of Fed speakers, while Eur/Usd will also be eyeing the latest ECB orators for some direction and Eur/Gbp is back around 0.8400 where decent option expiry interest resides (1.1 bn), but perhaps more focused on latest talks between the UK and EU on the NI dispute. CHF/CAD/JPY - The Franc has pared more declines vs the Buck from sub-0.9300 and remains firm against the Euro near 1.0500 in wake of Swiss trade data showing a wider surplus and pick-up in key watch exports, but the Loonie looks a bit hampered by a more pronounced fall in the price of oil as the US calls on other countries for a concerted SPR tap and China is said to be working on the release of some crude stocks. Usd/Cad is tethered to 1.2600 and highly unlikely to threaten 1.1 bn option expiries at the 1.2500 strike in contrast to the Yen that stalled above 114.00 and could be restrained by 1.4 bn between 113.90 and the round number or 1.3 bn from 114.20-25, if not reports that Japan’s stimulus package may require Jpy 55.7 tn of fiscal spending compared to Jpy 40 tn previously speculated. In commodities, WTI and Brent front-month futures are off worst levels but still under pressure amid the prospect of looming crude reserves releases, with reports suggesting China is gearing up for its own release. There were also prior source reports that the US was said to have asked other countries to coordinate a release of strategic oil reserves and raised the oil reserve release request with Japan and China. Furthermore, the US tapping of the SPR could be either in the form of a sale and/or loan from the reserve, and the release from the reserve needs to be more than 20mln-30mln bbls to get the message to OPEC, while a source added that the US asked India, South Korea and large oil-consuming countries, but not European countries, to consider oil reserve releases after pleas to OPEC failed. This concoction of headlines guided Brent and WTI futures under USD 80/bbl and USD 78/bbl respectively with early selling also experienced as European players entered the fray. On the geopolitical front, US National security adviser Jake Sullivan raised with his Israeli counterpart the idea of an interim agreement with Iran to buy more time for nuclear negotiations, according to sources. However, two American sources familiar with the call said the officials were just "brainstorming" and that Sullivan passed along an idea put forward by a European ally. Next, participants should continue to expect jawboning from the larger economies that advocated OPEC+ to release more oil. OPEC+ is unlikely to react to prices ahead of next month's meeting (barring any shocks). Elsewhere, spot gold and silver have been choppy within a tight range. Spot gold trades under USD 1,875/oz - with technicians flagging a Fib around USD 1,876/oz. Spot silver trades on either side of USD 25/oz. Base metals are on a softer footing amid the broader performance across industrial commodities – LME copper remains subdued under the USD 9,500/t level, whilst some reports suggest companies are attempting to arbitrage the copper spread between Shanghai and London. US Event Calendar 8:30am: Nov. Initial Jobless Claims, est. 260,000, prior 267,000; Continuing Claims, est. 2.12m, prior 2.16m 8:30am: Nov. Philadelphia Fed Business Outl, est. 24.0, prior 23.8 9:45am: Nov. Langer Consumer Comfort, prior 50.3, revised 50.3 10am: Oct. Leading Index, est. 0.8%, prior 0.2% 11am: Nov. Kansas City Fed Manf. Activity, est. 28, prior 31 Central banks 8am: Fed’s Bostic Discusses Regional Outlook 9:30am: Fed’s Williams speaks on Transatlantic responses to pandemic 2pm: Fed’s Evans Takes Part in Moderated Q&A 3:30pm: Fed’s Daly takes part in Fed Listens event DB's Jim Reid concludes the overnight wrap After 9 weeks since surgery, yesterday I got the green light to play golf again from my consultant. Yippee. However he said that he’ll likely see me in 3-5 years to do a procedure called distal femoral osteotomy where he’ll break my femur and realign the leg over the good part of the knee. Basically I have a knee that is very good on the inside half and very bad on the outer lateral side. He’s patched the bad side up but it’s unlikely to last more than a few years before the arthritis becomes too painful. This operation would be aimed at delaying knee replacement for as long as possible! Sounds painful and a bit crazy! Meanwhile I also have a painful slipped disc in my back at the moment that I’m going to have an injection for to hopefully avoid surgery after years of managing it. As you might imagine from reading my posts last week I don’t get much sympathy at home at the moment for my various ailments. In terms of operations and golf I’m turning into a very very poor man’s Tiger Woods! Markets have been limping a bit over the last 24 hours too as the inflation realities seemed to be a bit more in focus. Those worries were given additional fuel from the UK CPI release for October, which followed the US and the Euro Area in delivering another upside surprise, just as a number of key agricultural prices continued to show significant strength. Oil was down notably though as we’ll discuss below. To add to the mix, the latest global Covid-19 wave has shown no sign of abating yet, even if some countries are better equipped for it than others. Starting with inflation, one of the main pieces of news arrived yesterday morning, when the UK reported that CPI came in at +4.2% year-on-year in October. That was above every economist’s estimate on Bloomberg, surpassing the +3.9% consensus expectation that was also the BoE’s staff projection in their November Monetary Policy Report. That’s the fastest UK inflation since 2011, and core inflation also surprised on the upside with a +3.4% reading (vs. +3.1% expected). In response to this, our UK economist (link here) is now expecting that CPI will peak at +5.4% in April, with the 2022 annual average CPI still at +4.2%, which is more than double the BoE’s 2% target. The release was also seen as strengthening the case for a December rate hike by the BoE, and sterling was the second best performing G10 currency after being top the day before in response, strengthening +0.45% against the US dollar. Even as inflation risks mounted however, the major equity indices demonstrated an impressive resilience, with the STOXX 600 (+0.14%) rising for the 17th time in the last 19 sessions. This is the best such streak since June this year, when the index managed to increase 18 of 20 days. We’ll see if that mark is matched today That was a better performance than the S&P 500 (-0.26%). 342 stocks were in the red today, the most in three weeks. Energy (-1.74%) and financials (-1.11%) each declined more than a percent, on lower oil prices and yields, respectively. Real estate (+0.65%) and consumer discretionary (+0.59%) led the way, driven by a +3.25% increase in Tesla. In line with the broad-based retreat, small-caps continued to put in a much weaker performance, with the Russell 2000 shedding -1.16% as it underperformed the S&P for a 4th consecutive session. Sovereign bonds also managed to advance yesterday, with yields on 10yr Treasuries (-4.5bps) posting their biggest decline in over a week, taking them to 1.59%. Declining inflation expectations drove that move, with the 10yr breakeven down -3.2bps to 2.71%, which was its biggest decline in over two weeks. For Europe it was a different story however, with yields on 10yr bunds only down -0.3bps, just as those on 10yr OATs (+0.1bps) and BTPs (+0.5bps) both moved higher. Most of the Treasury rally was after Europe closed though. Those moves came against the backdrop of a fairly divergent performance among commodities. On the one hand oil prices fell back, with WTI (-2.97%) closing beneath $80/bbl for only the second time in the last month as speculation continued that the US would tap its strategic reserves. On the other hand, there was no sign of any relenting in European natural gas prices, which rose a further +0.79% yesterday to bring their gains over the last 7 days to +31.57%. That follows the German regulator’s decision to temporarily suspend certification for Nord Stream 2, which has added to fears that Europe will face major supply issues over the winter. And while we’re discussing the factors fuelling inflation, there were some fresh moves higher in agricultural prices as well yesterday, with wheat futures (+1.48%) hitting an 8-year high, and coffee futures (+4.75%) climbing to their highest level in almost a decade. Central banks will be watching these trends closely. There’s still no word on who’s going to lead the Fed over the next 4 years, but yesterday’s news was that President Biden will make his pick by Thanksgiving. For those keeping track at home, on Tuesday the guidance was within the next four days. So, while it appears momentum toward an announcement is growing, take signaling of any particular day with a grain of salt. On the topic of the Fed, our US economists released their updated Fed outlook yesterday (link here) in which they brought forward their view of the expected liftoff to July 2022, with another rate increase following in Q4 2022. And although it’s not their base case, they acknowledge that incoming data could even push the Fed to speed up their taper and raise rates before June. They don’t see the choice of the next Fed Chair as having much impact on the broad policy trajectory, since inflation next year is likely to still be at high levels that makes most officials uncomfortable, plus the annual rotation of regional Fed presidents with an FOMC vote leans more hawkish next year. So that will constrain the extent to which a new chair could shift matters in a dovish direction, even if they wanted to. Overnight in Asia stocks are trading mostly in the red outside of a flat KOSPI (+0.01%). The Shanghai Composite (-0.13%), CSI (-0.64%), Nikkei (-0.77%) and Hang Seng (-1.35%) are being dragged down by tech after a bout of Chinese IT companies missed earnings continuing a theme of this earnings season. Elsewhere in Japan, the Nikkei reported that the new economic stimulus package could be around YEN 78.9 tn ($691 bn). Prime Minister Fumio Kishida will announce the package on Friday. Elsewhere S&P 500 (+0.08%) and DAX futures (+0.01%) both fairly flat. The House of Representatives is slated to begin debate on the Biden social and climate spending ‘build back better’ bill. Word from Congress suggested it could be tabled for a vote as soon as today, though the House has been as profligate missing self-imposed deadlines to vote on the bill as President Biden has been with the announcement of Fed Chair. In addition to the Build Back Better package, there’ll still be plenty of action in Congress over the next month, with another government shutdown looming on December 3, and then a debt ceiling deadline estimated on December 15. The House Budget Chair echoed Treasury Secretary Yellen’s exhortation, and urged Congress to raise the debt ceiling to avoid a government default. Treasury bills are pricing increasing debt ceiling uncertainty during December; yields on bills maturing from mid- to late-December are around double the yields of bills maturing in November and January. Turning to the pandemic, cases have continued to rise at the global level over recent days, as alarm grows in a number of countries about the potential extent of the winter wave. In Germany, Chancellor Merkel and Vice Chancellor Scholz are taking part in a video conference with state leaders today on the pandemic amidst a major surge in cases. And Sweden’s government said that they planned to bring in a requirement for vaccine passports at indoor events with more than 100 people. In better news however, the UK’s 7-day average of reported cases moved lower for the first time in a week yesterday. Moderna also joined Pfizer in seeking emergency use authorization from the FDA for booster jabs of its Covid vaccines for all adults. Looking at yesterday’s other data, US housing starts fell in October to an annualised rate of 1.520m (vs. 1.579m expected), whilst the previous months’ reading was also revised lower. Building permits rose by more than expected however, up to an annualised rate of 1.650m (vs. 1.630m expected). Finally, Canada’s CPI inflation reading rose to +4.7% in October as expected, marking the largest annual rise since February 2003. To the day ahead now, and data releases from the US include the weekly initial jobless claims, the Philadelphia Fed’s business outlook for November, the Kansas City Fed’s manufacturing index for November, and the Conference Board’s leading index for October. Central bank speakers include PBoC Governor Yi Gang, the ECB’s Centeno, Panetta and Lane, and the Fed’s Bostic, Williams, Evans and Daly. There’ll also be a number of decisions from EM central banks, including Bank Indonesia, the Central Bank of Turkey and the South African Reserve Bank. Finally, earnings releases include Intuit, Applied Materials and TJX. Tyler Durden Thu, 11/18/2021 - 08:05.....»»

Category: blogSource: zerohedgeNov 18th, 2021

"No Major Surprises" - Five Main Takeaways From The Xi-Biden Virtual Meeting

"No Major Surprises" - Five Main Takeaways From The Xi-Biden Virtual Meeting As noted earlier, Chinese President Xi Jinping and US President Joe Biden held a virtual meeting Monday evening US time / Tuesday evening Asia time. Public statements from the two countries were broadly consistent on what they relayed in terms of substance, but differed considerably in length and emphasis. No major deliverables were announced, consistent with expectations going into the meeting, though as Goldman economist Andrew Tilton writes, "do see the possibility of increased bilateral exchanges and some US ‘tariff exclusions’ in coming weeks or months." As BBC notes, the talks were the most substantial since Biden took office in January. Both sides emphasized the two men's personal relationship and the summit was an attempt to ease tensions. But they could not escape one of the most sensitive topics: the self-ruled island of Taiwan. China sees Taiwan as a breakaway province to be reunified with the mainland one day. While the US recognizes and has formal ties with China, it has also pledged to help Taiwan defend itself in the event of an attack. China's state-run Global Times said Xi blamed recent tensions on "repeated attempts by the Taiwan authorities to look for US support for their independence agenda as well as the intention of some Americans to use Taiwan to contain China". "Such moves are extremely dangerous, just like playing with fire. Whoever plays with fire will get burnt," it said. The White House countered by saying that Biden "strongly opposes unilateral efforts to change the status quo or undermine peace and stability across the Taiwan Strait". Despite the strong words on Taiwan, the meeting began with both leaders greeting each other warmly, with Xi saying he was happy to see his "old friend" Biden, who in turn said the two had "always communicated with one another very honestly and candidly," adding "we never walk away wondering what the other man is thinking". Xi said the two countries needed to improve "communication" and face challenges "together". "Humanity lives in a global village, and we face multiple challenges together. China and the US need to increase communication and co-operation." said Xi. What else was discussed The world's two most powerful nations do not see eye-to-eye on a number of issues, and Biden raised US concerns about human rights abuses in Hong Kong and against Uyghurs in the north-west region of Xinjiang. China accuses the US of meddling in its domestic affairs. On trade, Biden highlighted the "need to protect American workers and industries from the PRC's [People's Republic of China's] unfair trade and economic practices". Xi also appeared to have made a strong comment on the issue, with Reuters reporting that he had told Biden that the US needed to stop "abusing the concept of national security to oppress Chinese companies". Climate change was also discussed. Last week the two sprung a surprise by issuing a joint declaration to address climate change, at talks in Glasgow, Scotland. * * * This was the third time the two leaders have spoken since Biden's inauguration in January. The talks lasted three-and-a-half hours, longer than expected. Xi has not left China in nearly two years, since the outbreak of the Covid-19 pandemic. Both men are facing domestic concerns, with Biden's poll numbers slumping in the face of inflation, the threat of coronavirus and the chaotic withdrawal from Afghanistan. Xi is tackling energy shortages and a property crisis. Here are the five main takeaways from the summit, courtesy of Goldman's Tilton: Presidents Xi and Biden held a virtual meeting, the first few minutes of which were open to media. The meeting lasted for over three hours and the two countries released separate readouts (see here for the Chinese readout and here for the US readout). CNY strengthened against the USD and Chinese equity market rallied during the meeting but reversed most of the moves later in the day. There were some signs of a positive tone. Xi greeted Biden as an “old friend” (the two have met on multiple occasions over the past decade). Both sides stated the need to manage risks, with the US readout commenting that President Biden “noted the need for common-sense guardrails to ensure that competition does not veer into conflict” and the Chinese readout commenting,“non-conflict and non-confrontation is the bottom line that both countries must adhere to”. Some more challenging topics were also discussed, with Taiwan clearly receiving considerable attention. While President Biden underscored the US’s commitment to the “one China” policy, he also reiterated “the continued determination of the US to uphold commitments to the region”. The US readout commented on Xinjiang, Tibet and Hong Kong and human rights issues, whereas the Chinese readout called for the US to “implement its position of not fighting the ‘new cold war’”. On the economic front, President Xi also urged the US to“stop abusing and generalizing the concept of national security to suppress Chinese companies.” The readouts implied some potential areas for cooperation in future: - First, of course, was climate: the US readout noted “the two leaders discussed the existential nature of the climate crisis to the world and the important role that the United States and the PRC play”, while China’s readout quoted Xi as saying “Climate change can definitely become a new highlight of Sino-US cooperation.” - A second area where we might see initiatives includes “people to people” and diplomatic exchanges. The US readout indicated the two leaders “discussed ways for the two sides to continue discussions on a number of areas, with President Biden underscoring the importance of substantive and concrete conversations.” China’s readout reported that Biden said, “Our younger generation should be encouraged to get in touch with each other more and understand each other’s cultures, so as to make the world a better place.” Conceivably, these comments could open the door to adjustments in visa policies or even the eventual reopening of the Houston and Chengdu consulates, although presumably more negotiations would be required on both fronts. - A third topic was energy security – China’s readout suggested work “to jointly safeguard global energy security, strengthen cooperation in the fields of natural gas and new energy, and work with the international community to maintain the security and stability of the global industrial chain and supply chain”, while the US comment simply noted “the importance of taking measures to address global energy supplies.” There was no mention of the trade deal or tariffs in either readout, despite their major role in the US-China economic relationship at the moment, and despite the participation of both Vice Premier Liu He and Treasury Secretary Janet Yellen in the meeting. While a major breakthrough on this front was not expected, the lack of any commentary was mildly surprising. Still, targeted US “tariff exclusions” in response to requests by US companies remain a possibility in coming weeks and months. Tyler Durden Tue, 11/16/2021 - 15:41.....»»

Category: dealsSource: nytNov 16th, 2021

Israel Holds Largest-Ever Military Drill With Participation Of An Arab Gulf Nation

Israel Holds Largest-Ever Military Drill With Participation Of An Arab Gulf Nation For the first time in history, Israel and the United Arab Emirates (UAE) are conducting joint military drills this week which includes air force exercises, following the Abraham Accords Peace Agreement between the two countries brokered by the Trump administration in September 2020. Before the signing of the historic peace deal at the Trump White House, no Arab Gulf country had so much as diplomatic relations with Israel, but now an influential Gulf state within the GCC alliance is engaged in military exercises with the Jewish state. Image source: IDF The "Blue Flag" drills are being held over southern Israel's Ovda airbase, which is in the Negev Desert about 60km north of Eilat and also include multiple other countries, namely the United States, United Kingdom, France, and Germany. Some 70 fighter jets and 1,500 military personnel will participate in what the chief of Israeli air force operations Amir Lazar is calling the largest-ever international aerial drills held in Israel. Crucially it comes after weeks of Israeli leaders confirming that the country's military and intelligence have resumed "practicing" for war against Iran. Israeli media last week described "intense" drills aimed at conducting strikes on the Islamic Republic's nuclear facilities. However, given the participation of UAE and European allies, Israel has been quick to deny that this week's exercises in the Negev are focused on Iran: Amir Lazar, chief of Israeli air force operations, told reporters at the southern Ovda airbase the drills "don’t focus on Iran", but army officials have said Iran remains Israel’s top strategic threat and at the center of much of its military planning. The defense chief added this important caveat: Lazar said the visit, set for Tuesday, was "very significant" as "someday" the nations participating in the drill would be “working together” to counter the Iranian threat. Indeed the Saudi-UAE-Kuwait Gulf alliance has long quietly cooperated with Israel on intelligence operations especially connected with the decade-long war in Syria, where Assad was seen as a central power in the so-called Iran axis which includes Hezbollah. Yet more recently the Iranians and Saudis have held surprisingly positive talks in efforts at defusing proxy wars in places like Yemen, Iraq, and Syria. Tyler Durden Tue, 10/26/2021 - 19:10.....»»

Category: worldSource: nytOct 26th, 2021

Futures Rise Ahead Of Deluge Of Big Tech Earnings

Futures Rise Ahead Of Deluge Of Big Tech Earnings One day after Goldman doubled down on its call for a market meltup into year-end, futures on the Nasdaq 100 edged higher, while contracts on the S&P 500 were modestly higher on Monday, approaching record highs again as investors braced for a flood of earnings (164 of 500 S&P companies report this week) while weighing rising inflation concerns, Covid-19 risks and China’s deteriorating outlook (Goldman slashed China's 2022 GDP to 5.2% from 5.6% overnight). The FOMC enters quiet period ahead of next week's FOMC meeting, which means no Fed speakers as attention shifts to economic data and corporate earnings. At 745 a.m. ET, Dow e-minis were up 3 points, or 0.01%, S&P 500 e-minis were up 4.25 points, or 0.1%, and Nasdaq 100 e-minis were up 36.25 points, or 0.25%. Bitcoin bounced back over $63,000 after sliding below $60,000 over the weekend, the 10-year US Treasury yield rose and the dollar also rose after Federal Reserve Chair Jerome Powell flagged that inflation could stay higher for longer, fueling investor concern that sticky price increases may force policy makers to raise borrowing costs. Global markets have remained resilient despite risks from price pressures stoked by supply-chain bottlenecks and higher energy costs. On Sunday, Janet Yellen was among those counseling the inflation situation reflects temporary pain that will ease in the second half of 2022 even as Twitter CEO Jack Dorsey warned hyperinflation is coming. Investors are wary that tighter monetary policy to keep inflation in check will stir volatility “Inflation concerns will continue to dominate markets this year as the price of crude oil remains elevated,” while “the pandemic remains a central concern,” said Siobhan Redford, an analyst at FirstRand Bank Ltd. in Johannesburg. “This will add further complexity to the already difficult decisions facing policy makers around the world.” All of FAAMG - Facebook, Microsoft, Apple, Alphabet and Amazon.com - are set to report their results later this week. The companies shares, which collectively account for over 22% of the weighting in the S&P 500, were mixed in trading before the bell. Facebook shares fell in premarket trading, extending six weeks of declines, after Bloomberg reported that the social-media company is struggling to attract younger users and that employees are concerned over the spread of misinformation and hate speech on its platform. The company is scheduled to report quarterly results after the market closes. “After Snap got an Apple caught in its throat, markets will have an itchy trigger finger over the sell button if the social network says the same,” said Jeffrey Halley, senior market analyst, Asia Pacific at OANDA. “Additionally, this week, it is a FAANG-sters paradise ... that decides whether the U.S. earnings season party continues, before the FOMC (Federal Open Market Committee) reasserts its dominance next week.” PayPal jumped 6.4% as the company said it wasn’t currently pursuing an acquisition of Pinterest, ending days of speculation over a potential $45 billion deal. Shares of Pinterest plunged 12.5%. Tesla gained 2.2% in premarket trading after Morgan Stanley raised its price target for the stock by a third, citing “extraordinary” sales growth. The stock then surged to new all time highs after Bloomberg reported that Hertz placed an order for 100,000 Teslas in the first step of an ambitious plan to electrify its rental-car fleet. Oil firms including Chevron Corp and Exxon Mobil rose about 0.5% each, tracking Brent crude prices to three-year high. Cryptocurrency-exposed stocks gain in premarket trading as Bitcoin climbs back above the $63,000 per token level after slipping from its record high last week. Crypto-linked stocks that are climbing in premarket include Bakkt +6.6%, Hive Blockchain +3.9%, Hut 8 Mining +2.8%, Riot Blockchain +2.2%, MicroStrategy +2.3%, Marathon Digital +2.8%, Coinbase +1.9%, Silvergate +1.8%, Bit Digital +1.2% and Mogo +0.8% Strong earnings reports helped lift the S&P 500 and the Dow to record highs last week, with the benchmark index rising 5.5% so far in October to recoup all of the losses suffered last month.  However, market participants are looking beyond the impressive earnings numbers with a focus on how companies mitigate supply chain bottlenecks, labor shortages and inflationary pressures to sustain growth. Analysts expect S&P 500 earnings to grow 34.8% year-on-year for the third quarter, according to data from Refinitiv. On the economic data front, readings on U.S. third-quarter GDP - the Federal Reserve’s favored inflation gauge, the core PCE price index and consumer confidence data will be released later this week. In Europe, mining companies and banks gained but the telecommunications and industrial goods and services sectors declined, leaving the Stoxx 600 index little changed. Banks rose on HSBC’s bright outlook. Spain’s Banco de Sabadell SA jumped more than 5% after rejecting an offer for its U.K. unit. Telecoms and industrials were the biggest losers. Volvo Car slashed its initial public offering by a fifth, making it the latest in a string of European companies to pull back from equity markets roiled by soaring energy costs and persistent supply chain delay. Here are some of the biggest European movers today: Banca Monte dei Paschi slides as much as 9.5% after the Italian government and UniCredit ended talks over the sale of the lender. Exor shares gain as much as 5.6% in Milan trading to the highest level on record after a report that the Agnelli family’s holding co. revived talks with Covea for the sale of Exor’s reinsurance unit PartnerRe. Banco Sabadell jumps as much as 5.6% after it said it rejected an offer for its TSB Bank unit in the U.K. from Co-operative Bank. SSAB rises as much as 5.2% after the Swedish steelmaker posted 3Q earnings well above analysts expectations. Handelsbanken analyst Gustaf Schwerin said the figures were “very strong.” Weir Group rises as much as 3.7% after Exane BNP Paribas raised the stock to outperform. Analyst Bruno Gjani says the stock’s underperformance YTD provides a “compelling entry opportunity.” Darktrace drops as much as 26% after Peel Hunt initiated coverage of the cybersecurity firm with a sell rating and 473p price target that implies about 50% downside to Friday’s close. Nordic Semiconductor declines as much as 8.8% after ABG Sundal Collier downgraded to hold. German business morale deteriorated for the fourth month running in October as supply bottlenecks in manufacturing, a spike in energy prices and rising COVID-19 infections are slowing the pace of recovery in Europe’s largest economy from the pandemic. The Ifo institute said on Monday that its business climate index fell to 97.7 from an upwardly revised 98.9 in September. This was the lowest reading since April and undershot the 97.9 consensus forecast in a Reuters poll. “Supply problems are giving businesses headaches,” Ifo President Clemens Fuest said, adding that capacity utilisation in manufacturing was falling. “Sand in the wheels of the German economy is hampering recovery.” The weaker-than-expected business sentiment survey was followed by a grim outlook from Germany’s central bank, which said in its monthly report that economic growth was likely to slow sharply in the fourth quarter. The Bundesbank added that full-year growth was now likely to be “significantly” below its 3.7% prediction made in June. Earlier in Asia, stocks dipped in Japan and were mixed in China, where the central bank boosted a daily liquidity injection and officials expanded a property-tax trial. Signs that it would take at least five years before authorities impose any nationwide property tax bolstered some industrial metals.  Asia-Pac equities kicked off the week with a downside bias as the region adopted a similar lead from Friday’s Wall Street session, although sentiment marginally improved. The ASX 200 (+0.3%) was kept afloat by its energy sector as oil prices drifted higher, whilst index heavyweight Telstra was boosted after partnering with the Australian government to acquire Digicel Pacific in USD 1.6bln deal - for which Telstra contributed only USD 270mln. The Nikkei 225 (-0.7%) opened lower by around 1% with Softbank and Fast Retailing the biggest losers, although the index initially trimmed losses as the JPY remained on the backfoot. The Hang Seng (+0.1%) and Shanghai Comp (+0.8%) were mixed at the open, with the latter supported by a net PBoC injection of CNY 190bln, while the Hang Seng Mainland Properties Index (-2.9%) was pressured by reports China's State Council is to expand the property-tax reform trials to more areas. On the flip side, China Evergrande and Evergrande New Energy Vehicle opened higher after the chairman said the group is to complete its transition to the NEV industry from real estate within 10 years. Finally, 10yr JGBs trade subdued and in contrast to its US and German counterparts. In FX, the Bloomberg Dollar Spot Index was little changed after earlier inching lower to touch the weakest level since Sept. 27; the greenback was mixed against its Group-of-10 peers with commodity currencies performing best, led by the Australian dollar and Norwegian krone. The euro hovered around $1.1650 even as German business confidence took another hit in October as global supply logjams damp momentum in the manufacturing-heavy economy. Ifo business confidence fell to 97.7 in October, from 98.9 in the prior month. The pound inched up, rising alongside other risk- sensitive Group-of-10 currencies, having trailed all its peers on Friday after Brexit risks reared their head late in the London session. A quiet week for U.K. data turns focus to the upcoming government budget. The Australian dollar rose against all its Group-of-10 peers, tracking commodity gains, with market sentiment also boosted by the People’s Bank of China’s move to inject additional cash into the banking system. The yen declined after rising for three consecutive days; Economists expect the BoJ to keep its policy rate unchanged Thursday. Turkey’s lira fell to a record low as the country’s latest diplomatic spat gave traders another reason to sell the struggling currency. Day traders in Japan have started trimming their bullish wagers on the Turkish lira, with forced liquidation a growing threat as the currency tumbles. In rates, Treasuries were under pressure again, with the yield curve steeper as US trading begins Monday. They’re retracing a portion of Friday’s swift flattening, which occurred after Fed Chair Powell said rising inflation rates would draw a response from the central bank. 5s30s curve is back to ~89bp vs Friday’s low 85bp, within half a basis point of the lowest level in more than a year. Long-end yields are higher by as much as 3bp, 10-year by 2.7bp at 1.66%, widening vs most developed-market yields; yields across the curve remain inside Friday’s ranges, which included higher 2- and 5-year yields since 1Q 2020. Curve-steepening advanced after an apparent wager via futures blocks. In commodities, Brent oil rallied above $86 a barrel after Saudi Arabia urged caution in boosting supply. Gold rose for a fifth day, the longest run of gains since July, as risks around higher-for-longer inflation bolstered the metal’s appeal. Facebook will report its third quarter results after the market today, followed by Alphabet, Microsoft, Apple and Amazon later in the week.  On the economic data front, readings on U.S. third-quarter GDP - the Federal Reserve’s favored inflation gauge, the core PCE price index and consumer confidence data will be released later this week. Top Overnight News from Bloomberg S&P 500 futures up 0.1% to 4,542.25 STOXX Europe 600 little changed at 472.03 MXAP little changed at 200.13 MXAPJ up 0.1% to 661.46 Nikkei down 0.7% to 28,600.41 Topix down 0.3% to 1,995.42 Hang Seng Index little changed at 26,132.03 Shanghai Composite up 0.8% to 3,609.86 Sensex up 0.4% to 61,038.76 Australia S&P/ASX 200 up 0.3% to 7,441.00 Kospi up 0.5% to 3,020.54 Brent Futures up 0.7% to $86.14/bbl Gold spot up 0.4% to $1,800.45 U.S. Dollar Index down 0.10% to 93.55 Euro up 0.1% to $1.1655 Top Overnight News from Bloomberg U.S. Treasury Secretary Janet Yellen defended Federal Reserve Chair Jerome Powell’s record on regulating the financial system, which has been a target of criticism from progressive Democrats arguing he shouldn’t get a new term. Yellen said she expects price increases to remain high through the first half of 2022, but rejected criticism that the U.S. risks losing control of inflation. Speaker Nancy Pelosi opened the door to Democrats using a special budget tool to raise the U.S. debt ceiling without the support of Senate Republicans, whose votes would otherwise be needed to end a filibuster on the increase. President Joe Biden and fellow Democrats are racing to reach agreement on a scaled-back version of his economic agenda, with a self-imposed deadline and his departure later this week for summits in Europe intensifying pressure on negotiations. Bundesbank chief Jens Weidmann’s surprise announcement last week that he will leave on Dec. 31 has hit Berlin at a sensitive time, with Chancellor Angela Merkel currently running only a caretaker administration in the aftermath of an election whose outcome is likely to remove her CDU party from power. Some holders of an Evergrande bond on which the embattled developer had missed a coupon deadline last month received the interest before the end of a grace period Saturday, according to people familiar with the matter. A more detailed look at global markets courtesy of Newsquawk Asia-Pac equities kicked off the week with a downside bias as the region adopted a similar lead from Friday’s Wall Street session, although sentiment marginally improved with the region now mixed heading into the European open. US equity futures overnight opened trade with a mild negative tilt before drifting higher, with a broad-based performance experienced across the Stateside contracts, whilst European equity contracts are marginally firmer. Back to APAC, the ASX 200 (+0.3%) was kept afloat by its energy sector as oil prices drifted higher, whilst index heavyweight Telstra was boosted after partnering with the Australian government to acquire Digicel Pacific in USD 1.6bln deal - for which Telstra contributed only USD 270mln. The Nikkei 225 (-0.7%) opened lower by around 1% with Softbank and Fast Retailing the biggest losers, although the index initially trimmed losses as the JPY remained on the backfoot. The Hang Seng (+0.1%) and Shanghai Comp (+0.8%) were mixed at the open, with the latter supported by a net PBoC injection of CNY 190bln, whilst the Hang Seng Mainland Properties Index (-2.9%) was pressured by reports China's State Council is to expand the property-tax reform trials to more areas. On the flip side, China Evergrande and Evergrande New Energy Vehicle opened higher after the chairman said the group is to complete its transition to the NEV industry from real estate within 10 years. Finally, 10yr JGBs trade subdued and in contrast to its US and German counterparts. Top Asian News Xi Takes Veiled Swipe at U.S. as China Marks 50 Years at UN Hong Kong Convicts Second Person Under National Security Law Gold Extends Gain as Inflation Risks and Virus Concerns Persist Amnesty to Quit Hong Kong Citing Fears Under Security Law A tentative start to the week for European equities (Stoxx 600 U/C) as stocks struggle to find direction. On the macro front, the latest IFO report from Germany was mixed, with commentary from IFO downbeat, noting that Germany's economy faces an uncomfortable autumn as supply chain problems were causing trouble for companies, and production capacities were falling. The overnight session was a mixed bag with the Shanghai Composite (+0.8%) supported by a liquidity injection from the PBoC whilst the Hang Seng Mainland Properties Index (-2.9%) was pressured by reports China's State Council is to expand the property-tax reform trials to more areas. Stateside, US futures are marginally firmer with newsflow in the US in part, focused on events on Capitol Hill with CNN reporting that the goal among Democratic leaders is to have a vote Wednesday or Thursday on the infrastructure package. Note, the Fed is currently observing its blackout period ahead of the November meeting. From an earnings perspective, large-cap tech earnings dominate the slate for the week with the likes of Facebook (FB), Apple (AAPL), Microsoft (MSFT) and Amazon (AMZN) all due to report. Back to Europe, sectors are somewhat mixed as Basic Resources is the marked outperformer amid upside in underlying commodity prices. It’s been a busy morning for the Banking sector as HSBC (+1%) reported a 74% increase in Q3 earnings, whilst Credit Suisse (+0.7%) is reportedly mulling the sale of its asset management unit. Less encouragingly for the sector, UniCredit (-0.5%) and BMPS (-3.2%) shares are lower after negations on a rescue plan for BMPS have ended without an agreement. Finally, Airbus (-1.2%) and Safran (-2.3%) sit at the foot of the CAC after reports suggesting that the CEO's of Avolon and AerCap have, in recent weeks, written to the Airbus CEO expressing their concerns that the market will not support Airbus' aggressive plans to increase the pace of production; subsequently, Airbus has rejected their proposal, according to sources. Top European News The Man Behind Erdogan’s Worst Spat With the West: QuickTake Weidmann Succession Suspense May Last for Weeks on Berlin Talks Cat Rock Capital Urges Just Eat Takeaway to Sell GrubHub European Gas Jumps Most in a Week as Russian Supplies Slump In FX, the Dollar is somewhat mixed vs major counterparts and the index is jobbing around 93.500 as a result in rather aimless fashion at the start of a typically quiet start to the new week awaiting fresh impetus or clearer direction that is highly unlikely to come from September’s national activity index or October’s Dallas Fed business survey. Instead, the Greenback appears to be reliant on overall risk sentiment, US Treasury yields on an outright and relative basis along with moves elsewhere and technical impulses as the DXY roams within a 93.775-483 range. TRY - Lira losses continue to stack up, and the latest swoon to circa 9.8545 against the Buck came on the back of Turkish President Erdogan’s decision to declare 10 ambassadors persona non grata status due to their countries’ support for a jailed activist, including diplomats from the US, France and Germany. However, Usd/Try has actually pared some gains irrespective of a deterioration in manufacturing confidence and this may be partly psychological given that 10.0000 is looming with little in the way of chart resistance ahead of the big round number. AUD/NZD - Iron ore prices are helping the Aussie overcome rather mixed news on the COVID-19 front, as the state of Victoria is on course to open up further from Friday, but new cases in NSW rose by almost 300 for the second consecutive day on Sunday. Nevertheless, Aud/Usd has had another look at offers around 0.7500 and Aud/Nzd is approaching 1.0500 even though Westpac sees near term downside prospects for the cross while maintaining its 1.0600 year end projection, as Nzd/Usd continues to encounter resistance and supply into 0.7200. GBP/CAD - Sterling has regrouped after losing some of its hawkish BoE momentum and perhaps the Pound is benefiting from the latest rebound in Brent prices towards Usd 86.50/br on top of reports that the first round of talks between the UK and EU on NI Protocol were constructive, while the Loonie is up alongside WTI that has been adobe Usd 84.50 and awaiting the BoC on Wednesday. Cable is around 1.3750 after fading into 1.3800, Eur/Gbp is hovering above 0.8450 and Usd/Cad is pivoting 1.2350. EUR/JPY/CHF - The Euro has bounced from the lower half of 1.1600-1.1700 parameters and looks enshrined by a key Fib just beyond the current high (1.1670 represents a 38.2% retracement of the reversal from September peak to October trough) and decent option expiry interest under the low (1 bn between 1.1615-00), with little fundamental direction coming from a very inconclusive German Ifo survey - see 9.00BST post on the Headline Feed for the main metrics and accompanying comments from the institute. Elsewhere, the Yen is hedging bets prior to the BoJ within a 113.83-42 band against the Dollar and the Franc seems to have taken heed of another rise in weekly Swiss sight deposits at domestic banks as Usd/Chf climbs from circa 0.9150 towards 0.9200 and Eur/Chf trades nearer the top of a 1.0692-65 corridor. SCANDI/EM/PM - Firm oil prices are also underpinning the Nok, Rub and Mxn to various extents, while the Zar looks content with Gold’s advance on Usd 1800/oz and the Cnh/Cny have derived traction via a firmer onshore PBoC midpoint fix, a net Yuan 190 bn 7 day liquidity injection and the fact that China’s Evergrande has restarted work on more than 10 projects having made more interest payments on bonds in time to meet 30 day grace period deadlines. In commodities, a modestly firmer start to the week for the crude complex though action has been contained and rangebound throughout the European session after a modest grinding bid was seen in APAC hours. Currently, the benchmarks post upside of circa USD 0.30/bbl amid relatively minimal newsflow. The most pertinent update to watch stems from China, where the National Health Commission spokesperson said China's current COVID outbreak covers 11 provinces and expects the number of new cases to keep rising; additionally, the number of affected provinces could increase. Separately, but on COVID, they are some reports that the UK Government is paving the wat for ‘plan B’ measures in England, while this are primarily ‘softer’ restrictions a return of work-from-home guidance could hamper the demand-side of the equation. Note, further reports indicate this is not on the cards for this week and there are some indications that we could see, if necessary, such an announcement after the COP26 summit in Scotland ends on November 12th. Elsewhere, and commentary to keep an eye on for alterations given the above factors, Goldman Sachs writes that the persistence of the global oil demand recovery being on course to hit pre-COVID levels would present an upside risk to its end-2021 USD 90/bbl Brent price target. Moving to metals, spot gold and silver are firmer but reside within tight ranges of just over USD 10/oz in gold, for instance. In a similar vein to crude, newsflow explicitly for metals has been minimal but it is of course attentive to the COVID-19 situation while coal futures were hampered overnight as China’s State Planner announced it is to increase credit supervision in the area. US Event Calendar 8:30am: Sept. Chicago Fed Nat Activity Index, est. 0.20, prior 0.29 10:30am: Oct. Dallas Fed Manf. Activity, est. 6.2, prior 4.6 DB's Jim Reid concludes the overnight wrap Well I saw Frozen twice this weekend. Once in the flesh up in London in the musical version and once on TV on Sunday at the heart of Manchester United’s defence which was breached 5 (five) times by Liverpool without reply. Regular readers can guess which I enjoyed the most. Anyway I’ll let it go for now and prepare myself for a bumper week ahead for markets. This week we have decisions from the ECB and the Bank of Japan (both Thursday) even if the Fed will be on mute as they hit their blackout period ahead of the likely taper decision next week. Inflation will obviously remain in the spotlight too as we get the October flash estimate for the Euro Area (Friday) with some regional numbers like German (Thursday) before. In addition, the Q3 earnings season will ramp up further, with 165 companies in the S&P 500 reporting, including Facebook (today), Microsoft, and Alphabet (both tomorrow), and Apple and Amazon (Thursday). Elsewhere, the UK government will be announcing their latest budget and spending review (Wednesday), Covid will remain in the headlines in light of the growing number of cases in many countries, and we’ll get the first look at Q3 GDP growth in the US (Thursday) and the Euro Area (Friday). Starting with those central bank meetings, we’re about to enter a couple of important weeks with the ECB and BoJ meeting this week, before the Fed and the BoE follow the week after. Market anticipation is much higher for the latter two though. So by comparison, the ECB and the BoJ are likely to be somewhat quieter, and our European economists write in their preview (link here) that this Governing Council meeting is likely to be a staging ground ahead of wide-ranging policy decisions in December, and will therefore be about tone and expectations management. One thing to keep an eye on in particular will be what is said about the recent surge in natural gas prices, as well as if ECB President Lagarde challenges the market pricing on liftoff as inconsistent with their inflation forecasts and new rates guidance. 5yr5yr Euro inflation swaps hit 2% for the first time on Friday so if the market is to be believed the ECB has achieved long-term success in hitting its mandate. With regards to the meeting, we think there’ll be more action in December where our economists’ baseline is that there’ll be confirmation that PEPP purchases will end in March 2022. See the BoJ preview here. Inflation will remain heavily in focus for markets over the week ahead, with recent days having seen investor expectations of future inflation rise to fresh multi-year highs. See the week in review at the end for more details. This week one of the main highlights will be the flash Euro Area CPI reading for October, which is out on Friday. Last month, CPI rose to 3.4%, which is the highest inflation has been since 2008, and this time around our economists are expecting a further increase in the measure to 3.8%. However, their latest forecast update (link here) expects that we’ll see the peak of 3.9% in November, before inflation starts to head back down again. The other main data highlight will come from the Q3 GDP figures, with releases for both the US and the Euro Area. For the US on Thursday the Atlanta Fed tracker has now hit a low of only +0.53%. DB is at 2.3% with consensus at 2.8%. Earnings season really ramps up this week, with the highlights including some of the megacap tech firms, and a total of 165 companies in the S&P 500 will be reporting. Among the firms to watch out for include Facebook and HSBC today. Then tomorrow, we’ll hear from Microsoft, Alphabet, Visa, Eli Lilly, Novartis, Texas Instruments, UPS, General Electric, UBS and Twitter. On Wednesday, releases will include Thermo Fisher Scientific, Coca-Cola, McDonald’s, Boeing, General Motors, Santander and Ford. Thursday then sees reports from Apple, Amazon, Mastercard, Comcast, Merck, Royal Dutch Shell, Linde, Volkswagen, Starbucks, Sanofi, Caterpillar, Lloyds Banking Group and Samsung. Finally on Friday, we’ll hear from ExxonMobil, Chevron, AbbVie, Charter Communications, Daimler, BNP Paribas, Aon and NatWest Group. Here in the UK, the main highlight next week will be the government’s Autumn Budget on Wednesday, with the Office for Budget Responsibility also set to release their latest Economic and Fiscal Outlook alongside that. In addition to the budget, the government will also be outlining the latest Spending Review, which will cover public spending priorities over the next 3 years. Our UK economists have released a preview of the event (link here), where they write that 2021-22 borrowing is expected to be revised down by £60bn, and they expect day-to-day spending will follow the path set out at the Spring Budget. They’re also expecting Chancellor Sunak will outline new fiscal rules. Finally, the pandemic is gaining increasing attention from investors again, with a number of countries having moved to toughen up restrictions in light of rising cases. This week, something to look out for will be the US FDA’s advisory committee meeting tomorrow, where they’ll be discussing Pfizer’s request for an emergency use authorization for its vaccine on 5-11 year olds. The CDC’s advisory committee is then holding a meeting on November 2 and 3 the following week, and the White House have said that if it’s authorised then the vaccine would be made available at over 25,000 paediatricians’ offices and other primary care sites, as well as in pharmacies, and school and community-based clinics. The full day by day calendar is at the end as usual. Asian markets are mixed this morning so far, as the Shanghai Composite (+0.38%), Hang Seng (+0.09%) and the KOSPI (+0.30%) are edging higher, while the Nikkei (-0.85%) is down. The rise in Chinese markets comes despite the news of 38 new COVID-19 cases as well as an announcement of a lockdown affecting around 35,700 residents of a county in Inner Mongolia. As China is one of the last countries in the world to still adhere to strict containment measures, a major outbreak can deal a fresh blow to the domestic economy and further reinforce global supply chain issues. Elsewhere the Turkish Lira hit fresh record lows, and is down around -1.5% as we type after last week’s surprise interest rate cut and Saturday’s news that ambassadors from 10 countries, including the US, Germany and France, were no longer welcome in the country. S&P 500 futures (+0.06%) are around unchanged and 10yr US Treasury yields are back up c.1bp. Looking back on an eventful week now, and there was a marked increase in inflation expectations, which manifested itself in global breakevens hitting multi-year, if not all-time, highs. Starting with the all-time highs, US 5-year breakevens increased +14.9bps (-1.0bps Friday) to 2.90%, the highest level since 5-year TIPS have started trading, while 10-year breakevens increased +7.5bps (-0.7bps Friday) to 2.64%, their highest readings since 2005. 10-year breakevens in Germany increased +9.5 bps (+3.6bps Friday) to 1.91%, their highest since 2011, while in the UK 10-year breakevens increased +17.1 bps (+4.0bps Friday) to 4.19%, the highest level since 1996. Remarkable as these levels are, 5-year 5-year inflation swaps in the US, UK, and Euro Area finished the week at 2.63%, 4.00%, and 2.00%, multi-year highs for all of these measures. If you never thought you’d see the day that long term inflation expectations in Europe would hit 2% then this is a nice/nasty surprise. Overall, this suggests investors are pricing in the potential for inflation far into the future to be higher, in addition to responding to near-term stimulus and Covid reopening impacts. Crude oil prices also climbed to their highest levels since 2014, with Brent climbing +1.07% (+1.37% Friday) and WTI gaining +2.07% (+1.79% Friday). One area where there was some reprieve was in industrial metals. Copper decreased -4.81% (-1.24% Friday), but at $449.80, remains +10.10% higher month-to-date. Bitcoin also joined the all-time high club intraweek, and finished the week +2.28% higher (-3.08% Friday). It marked a seminal week for the crypto asset, which saw ETFs and options on said ETFs begin trading in the US. The inflationary sentiment coincided with market pricing of central bank rate hikes shifting earlier. 2-year yields in the US, UK, and Germany increased +5.9 bps (+0.1bps Friday), +8.0 bps (-4.7 bps Friday), and +4.0 bps (+0.9bps Friday) respectively. In fact, money markets are now placing slightly-better-than even odds that the MPC will raise Bank Rate as early as next week. Fed and ECB officials offered some push back against the aggressive policy path repricing, but BoE speakers seemed to confirm a hike next week was a legitimate possibility. Rounding out sovereign bonds, nominal 10-year yields increased +6.2 bps (-6.9bps Friday) in the US, +4.0 bps (-5.6bps Friday) in the UK, +6.2 bps (-0.3 bps Friday) in Germany, +6.0 bps (-0.1bpFriday) in France, and +8.1 bps (+0.8bps Friday) in Italy. Inflation expectations didn’t fall with the big rally in the US and U.K. but real rates rallied hard. The S&P 500 increased +1.64% over the week, but ended its 7-day winning streak after retreating on -0.11% Friday. On earnings, 117 S&P 500 companies have now reported third quarter earnings. Roughly 85% of companies have beat earnings expectations compared to the five-year average of 76%, while 74% of reporting companies have beat sales estimates. The aggregate earnings surprise is +13.05%, topping the 5-year average of +8.4%, while the sales surprise is +2.06%. Although a seemingly strong performance on the surface, our equity team, after taking a look under the hood in this note here, points out that a large part of the beats so far is due to loan-loss reserve releases by banks. Excluding those, the aggregate S&P 500 beat is running much closer to historical average, suggesting the headline beats have not been as broad based as they look at first glance. Congressional Democrats spent the week negotiating the next fiscal package, which is set to spend more than $1 trillion on social priorities key to the Biden administration. On Sunday, House Speaker Nancy Pelosi noted that 90% of the bill is agreed to and would be voted on before October was out. One of the key sticking points has been what offsetting revenue raising measures should be included in the final bill. As those details emerge, it should give us a better picture as to the ultimate additional fiscal impulse the new bill will provide. Finally, global services PMIs out last Friday expanded while manufacturing PMIs lagged. Readings across jurisdictions were consistent with supply chain issues continuing to impact activity. Tyler Durden Mon, 10/25/2021 - 08:09.....»»

Category: blogSource: zerohedgeOct 25th, 2021

Futures Surge On Debt Ceiling Reprieve, Slide In Energy Prices

Futures Surge On Debt Ceiling Reprieve, Slide In Energy Prices The nausea-inducing rollercoaster in the stock market continued on Thursday, when US index futures continued their violent Wednesday reversal - the biggest since March - and surged with Nasdaq futures up more than 1%, hitting a session high, as Chinese technology stocks rebounded from a record low, investors embraced progress on the debt-ceiling impasse in Washington, a dip in oil prices eased worries of higher inflation and concerns eased about the European energy crisis fueled a risk-on mood. At 7:30am ET, S&P futures were up 44 points or 1.00% and Dow futures were up 267 points or 0.78%. Oil tumbled as much as $2, dragging breakevens and nominal yields lower, while the dollar dipped and bitcoin traded around $54,000. Wednesday's reversal started after Mitch McConnell on Wednesday floated a plan to support an extension of the federal debt ceiling into December, potentially heading off a historic default, a proposal which Democrats have reportedly agreed to after Senate Majority Leader Chuck Schumer suggested an agreement would be in place by this morning. While the deal is good news for markets worried about an imminent default, it only kicks the can to December when the drama and brinksmanship may run again. Markets have been rocked in the past month by worries about the global energy crisis, elevated inflation, reduced stimulus and slower growth. Meanwhile, the prospect of a deal to boost the U.S. debt limit into December is easing concern over political bickering, while Friday’s payrolls report may shed light on the the Federal Reserve’s timeline to cut bond purchases. “We have several things that we are watching right now -- certainly the debt ceiling is one of them and that’s been contributing to the recent volatility,” Tracie McMillion, head of global asset allocation strategy at Wells Fargo Investment Institute, said on Bloomberg Television. “But we look for these 5% corrections to add money to the equity markets.” Tech and FAAMG stocks including Apple (AAPL US +1%), Nvidia (NVDA +2%), Microsoft (MSFT US +0.9%), Tesla (TSLA US 0.8%) led the charge in premarket trading amid a dip in 10-year Treasury yields on Thursday, helped by a slide in energy prices on the back of Putin's Wednesday announcement that Russia could ramp up nat gas deliveries to Europe, something it still has clearly not done. Perhaps sensing that not all is at Putin said, after plunging on Wednesday UK nat gas futures (NBP) from 407p/therm to a low of 209, prices have ominously started to rise again. As oil fell, energy stocks including Chevron, Exxon Mobil and APA led declines with falls between 0.6% and 2.1%. Here are some of the other big movers today: Twitter (TWTR US) shares rise 2% in U.S. premarket trading after it agreed to sell MoPub to AppLovin for $1.05 billion in cash Levi Strauss (LEVI US) rises 4% in U.S. premarket trading after it boosted its adjusted earnings per share forecast for the full year; the guidance beat the average analyst estimate NRX Pharmaceuticals (NRXP US) drops in U.S. premarket trading after Relief Therapeutics sued the company, alleging breach of a collaboration pact Osmotica Pharmaceuticals (OSMT US) declined 28% in premarket trading after launching an offering of shares Rocket Lab USA (RKLB US) shares rose in Wednesday postmarket trading after the company announced it has been selected to launch NASA’s Advanced Composite Solar Sail System, or ACS3, on the Electron launch vehicle U.S. Silica Holdings (SLCA US) rose 7% Wednesday postmarket after it started a review of strategic alternatives for its Industrial & Specialty Products segment, including a potential sale or separation Global Blood Therapeutics (GBT US) climbed 2.6% in Wednesday after hours trading while Sage Therapeutics (SAGE US) dropped 3.9% after Jefferies analyst Akash Tewari kicked off his biotech sector coverage On the geopolitical front, a senior U.S. official said President Joe Biden’s plans to meet virtually with his Chinese counterpart before the end of the year. Tensions are escalating between the two countries, with U.S. Secretary of State Antony Blinken criticizing China’s recent military maneuvers around Taiwan. European equities rebounded, with the Stoxx 600 index surging as much as 1.3% boosted by news that the European Central Bank was said to be studying a new bond-buying program as emergency programs are phased out. Also boosting sentiment on Thursday, ECB Governing Council member Yannis Stournaras said that investors shouldn’t expect premature interest-rate increases from the central bank. Here are some of the biggest European movers today: Iberdrola shares rise as much as 6.8% after an upgrade at BofA, and as Spanish utilities climbed following a report that the Ministry for Ecological Transition may suspend or modify the mechanism that reduces the income received by hydroelectric, nuclear and some renewables in relation to gas prices. Hermes shares climb as much as 3.8%, the most since February, after HSBC says “there isn’t much to worry about” from a possible slowdown in mainland China or questions over trend sustainability in the U.S. Edenred shares gain as much as 5.2%, their best day since Nov. 9, after HSBC upgrades the voucher company to buy from hold, saying that Edenred, along with Experian, offers faster recurring revenue growth than the rest of the business services sector. Valeo shares gain as much as 4.9% and is Thursday’s best performer in the Stoxx 600 Automobiles & Parts index; Citi raised to neutral from sell as broker updated its model ahead of 3Q results. Sika shares rise as much as 4.2% after company confirms 2021 guidance, which Baader said was helpful amid market concerns of sequentially declining margins due to rising raw material prices. Centrica shares rise as much as 3.6% as Morgan Stanley upgrades Centrica to overweight from equalweight, saying the utility provider will add market share as smaller U.K. companies fail due to the spike in wholesale energy prices. Earlier in the session, Asian stocks rallied, boosted by a rebound in Hong Kong-listed technology shares and optimism over the progress made toward a U.S. debt-ceiling accord. The MSCI Asia Pacific Index climbed as much as 1.3%, on track for its biggest jump since Aug. 24. Alibaba, Tencent and Meituan were among the biggest contributors to the benchmark’s advance. Equity gauges in Hong Kong and Taiwan led a broad regional gain, while Japan’s Nikkei 225 also rebounded from its longest losing run since 2009. Thursday’s rally in Asia came after U.S. stocks closed higher overnight on a possible deal to boost the debt ceiling into December. Focus now shifts to the reopening of mainland China markets on Friday following the Golden Week holiday, and also the U.S. nonfarm payrolls report due that day. READ: China Tech Gauge Posts Best Day Since August After Touching Lows “Risk off sentiment has persisted due to a number of negative factors, but worry over some of these issues has been alleviated for the near term,” said Shogo Maekawa, a strategist at JPMorgan Asset Management in Tokyo. “One is that concern over stagflation has abated, with oil prices pulling back.” Sentiment toward risks assets was also supported as a senior U.S. official said President Joe Biden plans to meet virtually with Chinese President Xi Jinping before the end of the year. Of note, holders of Evergrande-guaranteed Jumbo Fortune bonds have yet to receive payment; the holders next step would be to request payment from Evergrande. The maturity of the bond in question was Sunday October 3rd, with a Monday October 4th effective due data, though the bond does have a five-day grace period only in the event that payment failure is due to an administrative/technical error. Australia's S&P/ASX 200 index rose 0.7% to close at 7,256.70. All subgauges finished the day higher, with the exception of energy stocks as Asian peers tumbled with a retreat in crude oil prices.  Collins Foods was among the top performers after the company signed an agreement to become KFC’s corporate franchisee in the Netherlands. Whitehaven tumbled, dropping the most for a session since June 17.  In New Zealand, the S&P/NZX 50 index fell 0.5% to 13,104.61. Oil extended its decline from a seven-year high as U.S. stockpiles grew more than expected, and European natural gas prices tumbled on signals from Russia it may increase supplies to the continent. The yield on the U.S. 10-year Treasury was 1.526%, little changed on the day after erasing a 2.4bp increase; bunds outperformed by ~1.5bp, gilts by less than 1bp; long-end outperformance flattened 2s10s, 5s30s by ~0.5bp each. Treasuries pared losses during European morning as fuel prices ebbed and stocks gained. Bunds and gilts outperform while Treasuries curve flattens with long-end yields slightly richer on the day. WTI oil futures are lower after Russia’s offer to ease Europe’s energy crunch. Negotiations on a short-term increase to U.S. debt-ceiling continue.    In FX, the Bloomberg Dollar Spot Index was little changed and the greenback was weaker against most Group-of-10 peers, though moves were confined to relatively tight ranges. The U.S. jobs report Friday is the key risk for markets this week as a strong print could boost the dollar. Options traders see a strong chance that the euro manages to stay above a key technical support, at least on a closing basis. Risk sensitive currencies such as the Australian and New Zealand dollars as well as Sweden’s krona led G-10 gains, while Norway’s currency was the worst performer as European natural gas and power prices tumbled early Thursday after signals from Russia it may increase supplies to the continent. The pound gained against a broadly weaker dollar as concerns over the U.K. petrol crisis eased and focus turned to Bank of England policy. A warning shot buried deep in the BoE’s policy documents two weeks ago indicating that interest rates could rise as early as this year suddenly is becoming a more distinct possibility. Australia’s 10-year bonds rose for the first time in two weeks as sentiment was bolstered by a short-term deal involving the U.S. debt ceiling. The yen steadied amid a recovery in risk sentiment as stocks edged higher. Bond futures rose as a debt auction encouraged players to cautiously buy the dip. Looking ahead, investors will be looked forward to the release of weekly jobless claims data, likely showing 348,000 Americans filed claims for state unemployment benefits last week compared with 362,000 in the prior week. The ADP National Employment Report on Wednesday showed private payrolls increased by 568,000 jobs last month. Economists polled by Reuters had forecast a rise of 428,000 jobs. This comes ahead of the more comprehensive non-farm payrolls data due on Friday. It is expected to cement the case for the Fed’s slowing of asset purchases. We'll also get the latest August consumer credit print. From central banks, we’ll be getting the minutes from the ECB’s September meeting, and also hear from a range of speakers including the ECB’s President Lagarde, Lane, Elderson, Holzmann, Schnabel, Knot and Villeroy, along with the Fed’s Mester, BoC Governor Macklem and PBoC Governor Yi Gang. Market Snapshot S&P 500 futures up 1% to 4,395.5 STOXX Europe 600 up 1.03% to 455.96 MXAP up 1.2% to 193.71 MXAPJ up 1.8% to 633.78 Nikkei up 0.5% to 27,678.21 Topix down 0.1% to 1,939.62 Hang Seng Index up 3.1% to 24,701.73 Shanghai Composite up 0.9% to 3,568.17 Sensex up 1.2% to 59,872.01 Australia S&P/ASX 200 up 0.7% to 7,256.66 Kospi up 1.8% to 2,959.46 Brent Futures down 1.8% to $79.64/bbl Gold spot up 0.0% to $1,762.96 U.S. Dollar Index little changed at 94.19 German 10Y yield fell 0.6 bps to -0.188% Euro little changed at $1.1563 Top Overnight News from Bloomberg Democrats signaled they would take up Senate Republican leader Mitch McConnell’s offer to raise the U.S. debt ceiling into December, alleviating the immediate risk of a default but raising the prospect of another bruising political fight near the end of the year The European Central Bank is studying a new bond-buying program to prevent any market turmoil when emergency purchases get phased out next year, according to officials familiar with the matter Market expectations for interest-rate hikes “are not in accordance with our new forward guidance,” ECB Governing Council member Yannis Stournaras said in an interview with Bloomberg Television Creditors have yet to receive repayment of a dollar bond they say is guaranteed by China Evergrande Group and one of its units, in what could be the firm’s first major miss on maturing notes since regulators urged the developer to avoid a near-term default Boris Johnson’s plan to overhaul the U.K. economy is a 10-year project he wants to see out as prime minister, according to a senior official. The time frame, which has not been disclosed publicly, illustrates the scale of Johnson’s gamble that British voters will accept a long period of what he regards as shock therapy to redefine Britain The U.K.’s surge in inflation has boosted the cost of investment-grade borrowing in sterling to the most since June 2020. The average yield on the corporate notes climbed just past 2%, according to a Bloomberg index A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks traded positively as the region took impetus from the mostly positive close in the US where the major indices spent the prior session clawing back opening losses, with sentiment supported amid a potential Biden-Xi virtual meeting this year, and hopes of a compromise on the debt ceiling after Senate Republican Leader McConnell offered a short-term debt limit extension to December. The ASX 200 (+0.7%) was led higher by strength in the tech sector and with risk appetite also helped by the announcement to begin easing restrictions in New South Wales from next Monday. The Nikkei 225 (+0.5%) attempted to reclaim the 28k level with advances spearheaded by tech and amid reports Tokyo is to lower its virus warning from the current top level. The Hang Seng (+3.1%) was the biggest gainer owing to strength in tech and property stocks, with Evergrande shareholder Chinese Estates surging in Hong Kong after a proposal from Solar Bright to take it private. Reports also noted that the US and China reportedly reached an agreement in principle for a Biden-Xi virtual meeting before year-end and with yesterday’s talks in Zurich between senior officials said to be more meaningful and constructive than other recent exchanges. Finally, 10yr JGBs retraced some of the prior day’s after-hours rebound with haven demand hampered by the upside in stocks and after the recent choppy mood in T-notes, while the latest enhanced liquidity auction for longer-dated JGBs resulted in a weaker bid-to-cover. Top Asian News Vietnam Faces Worker Exodus From Factory Hub for Gap, Nike, Puma Japan’s New Finance Minister Stresses FX Stability Is Vital Korea Lures Haven Seekers With Bonds Sold at Lowest Spread Africa’s Free-Trade Area to Get $7 Billion in Support From AfDB Bourses in Europe hold onto the gains seen at the cash open (Euro Stoxx 50 +1.5%; Stoxx 600 +1.1%) following on from an upbeat APAC handover, albeit the upside momentum took a pause shortly after the cash open. US equity futures are also firmer across the board but to a slightly lesser extent, with the tech-laden NQ (+1.0%) getting a boost from a pullback in yields and outperforming its ES (+0.7%), RTY (+0.6%) and YM (+0.6%). The constructive tone comes amid some positive vibes out of the States, and on a geopolitical note, with US Senate Minority Leader McConnell offered a short-term debt ceiling extension to December whilst US and China reached an agreement in principle for a Biden-Xi virtual meeting before the end of the year. Euro-bourses portray broad-based gains whilst the UK's FTSE 100 (+1.0%) narrowly lags the Euro Stoxx benchmarks, weighed on by its heavyweight energy and healthcare sectors, which currently reside at the foot of the bunch. Further, BoE's Chief Economist Pill also hit the wires today and suggested that the balance of risks is currently shifting towards great concerns about the inflation outlook, as the current strength of inflation looks set to prove more long-lasting than originally anticipated. Broader sectors initially opened with an anti-defensive bias (ex-energy), although the configuration since then has turned into more of a mixed picture, although Basic Resource and Autos still reside towards the top. Individual movers are somewhat scarce in what is seemingly a macro-driven day thus far. Miners top the charts on the last day of the Chinese Golden Week Holiday, with base metal prices also on the front foot in anticipation of demand from the nation – with Antofagasta (+5.1%), Anglo American (+4.2%) among the top gainers, whist Teamviewer (-8.2%) is again at the foot of the Stoxx 600 in a continuation of the losses seen after its guidance cut yesterday. Ubisoft (-5.1%) are also softer, potentially on a bad reception for its latest Ghost Recon game announcement. Top European News ECB’s Stournaras Reckons Investor Rate-Hike Bets Are Unwarranted Shell Flags Financial Impact of Gas Market Swings, Hurricane Johnson’s Plans for Economy Signal Ambitions for Decade in Power U.K. Grid Bids to Calm Market Saying Winter Gas Supply Is Enough In FX, the latest upturn in broad risk sentiment as the pendulum continues to swing one way then the other on alternate days, has given the Aussie a fillip along with news that COVID-19 restrictions in NSW remain on track for being eased by October 11, according to the state’s new Premier. Aud/Usd is eyeing 0.7300 in response to the above and a softer Greenback, while the Aud/Nzd cross is securing a firmer footing above 1.0500 in wake of a slender rise in AIG’s services index and ahead of the latest RBA FSR. Conversely, the Pound is relatively contained vs the Buck having probed 1.3600 when the DXY backed off further from Wednesday’s w-t-d peak to a 94.102 low and has retreated through 0.8500 against the Euro amidst unsubstantiated reports about less hawkish leaning remarks from a member of the BoE’s MPC. In short, the word is that Broadbent has downplayed the prospects of any fireworks in November via a rate hike, but on the flip-side new chief economist Pill delivered a hawkish assessment of the inflation situation in the UK when responding to a TSC questionnaire (see 10.18BST post on the Headline Feed for bullets and a link to his answers in full). Back to the Dollar index, challenger lay-offs are due and will provide another NFP guide before claims and commentary from Fed’s Mester, while from a technical perspective there is near term support just below 94.000 and resistance a fraction shy of 94.500, at 93.983 (yesterday’s low) and the aforementioned midweek session best (94.448 vs the 94.283 intraday high, so far). NZD - Notwithstanding the negative cross flows noted above, the Kiwi is also taking advantage of more constructive external and general factors to secure a firmer grip of the 0.6900 handle vs its US counterpart, but remains rather deflated post-RBNZ on cautious guidance in terms of further tightening. EUR/CHF/CAD/JPY - All narrowly mixed against their US peer and mostly well within recent ranges as the Euro reclaims 1.1500+ status in the run up to ECB minutes, the Franc consolidates off sub-0.9300 lows following dips in Swiss jobless rates, the Loonie weighs up WTI crude’s further loss of momentum against the Greenback’s retreat between 1.2600-1.2563 parameters awaiting Canada’s Ivey PMIs and a speech from BoC Governor Macklem, and the Yen retains an underlying recovery bid within 111.53-23 confines before a raft of Japanese data. Note, little reaction to comments from Japanese Finance Minister, when asked about recent Jpy weakening, as he simply said that currency stability is important, so is closely watching FX developments, but did not comment on current levels. In commodities, WTI and Brent front month futures are on the backfoot, in part amid the post-Putin losses across the Nat Gas space, with the UK ICE future dropping some 20% in early trade. This has also provided further headwinds to the crude complex, which itself tackles its own bearish omens. WTI underperforms Brent amid reports that the US was mulling a Strategic Petroleum Reserve (SPR) release and did not rule out an export ban. Desks have offered their thoughts on the development. Goldman Sachs says a US SPR release would likely be of up to 60mln barrels, only representing a USD 3/bbl downside to the year-end USD 90/bbl Brent forecast and stated that relief would only be transitory given structural deficits the market will face from 2023 onwards. GS notes that any larger price impact that further hampers US shale activity would lead to elevated US nat gas prices in 2022, and an export ban would lead to significant disruption within the US oil market, likely bullish retail fuel price impact. RBC, meanwhile, believes that these comments were to incentivise OPEC+ to further open the taps after the producers opted to maintain a plan to hike output 400k BPD/m. On that note, sources noted that the OPEC+ decision against a larger supply hike at Monday's meeting was partly driven by concern that demand and prices could weaken – this would be in-fitting with sources back in July, which suggested that demand could weaken early 2022. The downside for crude prices was exacerbated as Brent Dec fell under USD 80/bbl to a low of near 79.00/bbl (vs 81.14/bbl), whilst WTI Nov briefly lost USD 75/bbl (vs high 77.23/bbl). Prices have trimmed some losses since. Metals in comparison have been less interesting; spot gold is flat and only modestly widened its overnight range to the current 1,756-66 range, whilst spot silver remains north of USD 22.50/bbl. Elsewhere, the risk tone has aided copper prices, with LME copper still north of USD 9,000/t, whilst some also cite supply concerns as a key mining road in Peru (second-largest copper producer) was blocked, with the indigenous community planning to continue the blockade indefinitely, according to a local leader. It is also worth noting that Chinese markets will return tomorrow from their Golden Week holiday. US Event Calendar 7:30am: Sept. Challenger Job Cuts YoY, prior -86.4% 8:30am: Oct. Initial Jobless Claims, est. 348,000, prior 362,000; Continuing Claims, est. 2.76m, prior 2.8m 9:45am: Oct. Langer Consumer Comfort, prior 54.7 11:45am: Fed’s Mester Takes Part in Panel on Inflation Dynamics 3pm: Aug. Consumer Credit, est. $17.5b, prior $17b DB's Jim Reid concludes the overnight wrap On the survey, given how fascinating markets are at the moment I think the results of this month’s edition will be especially interesting. However the irony is that when things are busy less people tend to fill it in as they are more pressed for time. So if you can try to spare 3-4 minutes your help would be much appreciated. Many thanks. It was a wild session for markets yesterday, with multiple asset classes swinging between gains and losses as investors sought to grapple with the extent of inflationary pressures and potential shock to growth. However US equities closed out in positive territory and at the highs as the news on the debt ceiling became more positive after Europe went home. Before this equities had lost ground throughout the London afternoon, with the S&P 500 down nearly -1.3% at one point with Europe’s STOXX 600 closing -1.03% lower. Cyclical sectors led the European underperformance, although it was a fairly broad-based decline. However after Europe went home – or closed their laptops in many cases – the positive debt ceiling developments saw risk sentiment improve throughout the rest of New York session. The S&P rallied to finish +0.41% and is now slightly up on the week, as defensive sectors such as utilities (+1.53%) and consumer staples (+1.00%) led the index while US cyclicals fell back like their European counterparts. Small cap stocks didn’t enjoy as much of a boost as the Russell 2000 ended the day -0.60% lower, while the megacap tech NYFANG+ index gained +0.82%. Risk sentiment improved following reports that Senate Minority Leader Mitch McConnell was willing to negotiate with Democrats to resolve the debt ceiling impasse and allow Democrats to raise the ceiling until December. This means President Biden and Congressional Democrats would be able to finish their fiscal spending package – now estimated at around $1.9-2.2 trillion – and include a further debt ceiling raise into one large reconciliation package near year-end. Senate Majority Leader Schumer has not publicly addressed the deal yet, but Democrats have signaled that they’ll accept the deal, although they’ve also indicated they’d still like to pass the longer-term debt ceiling bill under regular order in a bipartisan manner when the time came near year-end. Interestingly, if we did see the ceiling extended until December, this would put another deadline that month, since the government funding extension only went through to December 3, so we could have yet another round of multiple congressional negotiations in just a few weeks’ time. The news of a Republican offer coincided with President Biden’s virtual meeting with industry leaders, where the President implored them to join him in pressuring legislators to raise the debt limit. Treasury Secretary Yellen also attended the meeting, and re-emphasised her estimate for the so-called “drop dead date” to be October 18. Potentially at risk Treasury bills maturing shortly thereafter rallied a few basis points, signaling investors took yesterday afternoon’s debt ceiling developments as positive and credible. This was a far cry from where markets opened the London session as turmoil again gripped the gas market. UK and European natural gas futures both surged around +40% to reach an intraday high shortly after the open. However, energy markets went into reverse following comments from Russian President Putin that the country was set to supply more gas to Europe and help stabilise energy markets, with European futures erasing those earlier gains to actually end the day down -6.75%, with their UK counterpart similarly reversing course to close -6.96% too. The U.K. future traded in a stunning 255 to 408 price range on the day. We shouldn’t get ahead of ourselves here though, since even with the latest reversal, prices are still up by more than five-fold since the start of the year, and this astonishing increase over recent weeks has attracted attention from policymakers across the world as governments look to step in and protect consumers and industry. In the EU, the Energy Commissioner, Kadri Simson, said that the price shock was “hurting our citizens, in particular the most vulnerable households, weakening competitiveness and adding to inflationary pressure. … There is no question that we need to take policy measures”. However, the potential response appeared to differ across the continent. French President Macron said that more energy capacity was required, of which renewables and nuclear would be key elements, while Italian PM Draghi said that joint EU gas purchases had wide support. However, Hungarian PM Orban took the opportunity to blame the European Commission, saying that the Green Deal’s regulations were “indirect taxation”, which shows how these price spikes could create greater resistance to green measures moving forward. Elsewhere, blame was also cast on carbon speculators, with Spanish environment minister Rodriguez saying that “We don’t want to be hostages of external financial investors”, and outside the EU, Serbian President Vucic said that his country could ban power exports if there were further issues, which just shows how energy has the potential to become a big geopolitical issue this winter. Those declines in natural gas prices were echoed across the energy complex, with both Brent Crude (-1.79%) and WTI (-1.90%) oil prices subsiding from their multi-year highs the previous day, just as coal also fell -10.20%. In turn, that served to alleviate some of the concerns about building price pressures and helped measures of longer-term inflation expectations decline across the board. Indeed by the close, the 10yr breakeven in the US had come down -1.4bps, and the equivalent measures in Germany (-4.6bps), Italy (-6.1bps) and the UK (-4.2bps) had likewise seen declines of their own. In spite of those moves for inflation expectations, this proved little consolation for European sovereign bonds as higher real rates put them under continued pressure, even if yields had pared back some of their gains from the morning. Yields on 10yr bunds (+0.6bps), OATs (+0.9bps) and BTPs (+3.2bps) were all at their highest levels in 3 months, whilst those on Polish 10yr debt were up +13.7bps after the central bank there unexpectedly became the latest to raise rates, with the 40bps hike to 0.5% marking the first increase since 2012. However, for the US it was a different story, with yields on 10yr Treasuries down -0.5bps to 1.521%, having peaked at 1.57% earlier in the London morning. There was a late story in Europe that could bear watching in the coming weeks as Bloomberg reported that the ECB is studying a new bond-buying tool that could help ease market volatility if a “taper tantrum”-esque move were to happen when the PEPP purchases end in March. The plan would reportedly target purchases selectively if there were to be a larger selloff in more heavily indebted economies, which differs from the existing programs that buys debt in relation to the size of each member’s economy. Asian stocks overnight have performed strongly, with the Hang Seng (+2.28%), Nikkei (+1.68%) and KOSPI (+1.61%) all advancing after the positive news on the debt-ceiling, as well on news that US President Biden was set to meeting with Chinese President Xi by the end of the year. All the indices were lifted by the IT and consumer discretionary sectors, and the Hang Seng Tech index has rebounded by +3.29% this morning. Separately, Evergrande-related news has been subsiding in recent days, but China Estates, a company controlled by a backer of Evergrande, rose 30% after the company disclosed an offer to take it private for $245mn. Otherwise, US futures are pointing to a positive start later, with those on the S&P 500 (+0.50%) and DAX (+1.19%) both advancing. Turning to Germany, exploratory talks will be commencing today between the centre-left SPD, the Greens and the Liberal FDP, who together would make up a so-called “traffic-light” coalition. That marks a boost for the SPD, who beat the CDU/CSU bloc into first place in the September 26 election, although CDU leader Armin Laschet said that his party were “still ready to hold talks”. However, the CDU/CSU have faced internal tensions after they slumped to their worst-ever election result, whilst a Forsa poll out on Tuesday said that 53% of voters wanted a traffic-light coalition, versus just 22% who favoured the Jamaica option led by the CDU/CSU. So momentum seems clearly behind the traffic light option for now. Looking at yesterday’s data, in the US the ADP’s report at private payrolls came in at an unexpectedly strong +568k (vs. +430k expected), which is the highest in their series for 3 months and comes ahead of tomorrow’s US jobs report. However in Germany, factory orders in August fell by -7.7% (vs. -2.2% expected) amidst various supply issues. To the day ahead now, and data releases include German industrial production and Italian retail sales for August, whilst in the US we’ve got the weekly initial jobless claims and August’s consumer credit.From central banks, we’ll be getting the minutes from the ECB’s September meeting, and also hear from a range of speakers including the ECB’s President Lagarde, Lane, Elderson, Holzmann, Schnabel, Knot and Villeroy, along with the Fed’s Mester, BoC Governor Macklem and PBoC Governor Yi Gang. Tyler Durden Thu, 10/07/2021 - 07:57.....»»

Category: blogSource: zerohedgeOct 7th, 2021

Futures Slide On Evergrande, Stagflation, Energy Crisis Fears

Futures Slide On Evergrande, Stagflation, Energy Crisis Fears Stock futures ticked lower on Monday, hurt by weakening sentiment in Asia and Europe amid growing worries about economic stagflation, the global energy crisis and renewed fears about property developer China Evergrande whose stock was halted overnight in Hong Kong, while Tesla shares rose after reporting a record number of electric vehicle deliveries. At 715 a.m. ET, Dow e-minis were down 114 points, or 0.33%, S&P 500 e-minis were down 16.25 points, or 0.37%, and Nasdaq 100 e-minis were down 73.75 points, or 0.5%. “The global chip and energy shortage is getting worse, the inflation is rising, the recovery may be slowing, and that puts central banks between a rock and a hard place,” Ipek Ozkardeskaya, a senior analyst at Swissquote, wrote in a note. “The best they could do is to do nothing, or to tighten their monetary policy to avoid losing control on the economy.” The most notable overnight event was the suspension of trading in shares of debt-laden Evergrande which unsettled markets further about any fallout from its troubles even as media reports said the company would sell a stake in its property management unit for over $5 billion. Wall Street’s main indexes were battered in September, hit by worries about the U.S. debt ceiling, the fate of a massive infrastructure spending bill and the meltdown of heavily indebted China Evergrande Group. On the second trading day of October, investors took a defensive stance, with a cautious approach to riskier assets as a spreading energy crunch meets concerns over the duration of broader rising prices and the tapering of economic stimulus efforts. Investors also kept close watch on rising U.S. Treasury yields after data last week showed increased consumer spending, accelerated factory activity and elevated inflation growth, which could help push the Federal Reserve towards tightening its accommodative monetary policy sooner than expected. Among individual stocks, Merck & Co. extended its gains from Friday on the results of its experimental Covid pill. The stock climbed 2.6% premarket. 3M shares fell 1.5% after J.P. Morgan cut its rating on the industrial conglomerate’s stock to “neutral” from “overweight”.  Here are some of the other notable premarket movers today: Tesla (TSLA  US) shares climb 2.6% higher in U.S. premarket trading after the electric car maker reported record 3Q deliveries that easily beat estimates Amplify Energy (AMPY US) shares plummet 33% in premarket trading after California beaches in northern Orange County were closed and wetlands contaminated by a huge oil spill caused by a broken pipeline off the coast DHT Holdings (DHT US) shares rose as much as 3.7% in Friday extended trading after the company said it bought 1.23m of its own shares Offerpad Solutions (OPAD US) was down 3.1% Friday postmarket after registering shares for potential sale Adverum Biotechnologies (ADVM US) shares rose as much as 23% in Friday extended trading after co. reported new long-term data from the OPTIC clinical trial of ADVM-022 single, in-office intravitreal injection gene therapy Markets also awaited U.S. Joe Biden’s new plan on China trade strategy, with U.S. Trade Representative Katherine Tai set for new talks with Beijing later in the day over its failure to keep promises made in a “Phase 1” trade deal struck with former President Donald Trump. Biden's new plan follows a top-to-bottom review of import tariffs and other measures imposed by the Trump administration; reports also said that USTR will today say that China is not complying with the Phase 1 deal. Europe's Stoxx 600 Index trades flat, erasing earlier losses of as much as 0.6%, helped by gains in health care and basic resources shares. The healthcare sub index rose 0.8% after AstraZeneca’s Enhertu got a breakthrough therapy designation while basic resources sub-index up 0.3% as iron ore rallies. Euro Stoxx 50 is down 0.2% having declined as much as 1% at the open. FTSE MIB lags on the recovery; FTSE 100 trades flat. Autos, banks and travel names are the weakest sectors. Here are some of the biggest European movers today: Adler Group shares jump as much as 18%, briefly erasing the previous week’s declines, after the firm said it’s reviewing strategic options that may result in a sale of assets Wm Morrison declines as much as 3.8% after the offer terms from winning bidder CD&R disappointed investors Sainsbury rises as much as 5.9% and Tesco gains 1.7% on speculation that CD&R’s Morrison deal may drive further interest in Britain’s grocery sector at a time when cash-rich buyout funds are stalking undervalued U.K. companies; also, a report says Tesco will announce a share buyback program this week Plus500 gains as much as 6.1% after the contracts-for-difference trading firm says full-year profit will beat market expectations Bewi rises as much as 9.9% after the owner of 50% of building products company Jackon Holding accepted Bewi’s offer BT slumps as much as 7.8% to a six-month low following a Telegraph report that Sky is closing in on a broadband investment deal with Virgin Media O2, raising worries over competition Azelio falls as much as 22% after newspaper Dagens Industri raised questions about orders for the renewable energy equipment developer Aryzta tumbles as much as 13% after results, halting a four-day winning streak Frasers falls as much as 12%, the most since December. Bank of America cut the owner of the Sports Direct retail chain to underperform from buy Asia stocks also declined, with Hong Kong shares a drag, after debt-ridden China Evergrande Group’s trading was suspended while investors also sold health care-related names and appeared wary heading into the final quarter of 2021. The MSCI Asia Pacific Index slipped as much as 0.8%. Vaccine maker CanSino Biologics and Shanghai Fosun Pharmaceutical Group were the biggest decliners on the measure as Merck & Co. said its experimental Covid-19 antiviral pill cuts the risk of hospitalization and death in half. “Investors will need to take a sell-first ask-later stance given current elevated valuation levels of vaccine stocks,” said Justin Tang, head of Asian research at United First Partners. Also weighing on traders’ minds is the global energy crisis, which has spread to India and is stoking inflation concerns. Speculation about the potential restructuring of China Evergrande Group, which has suspended trading of its Hong Kong shares, is also affecting sentiment at a time liquidity is thinner. The mainland Chinese market is closed through Thursday for Golden Week holidays. Singapore’s benchmark Straits Times Index was among the top-performing gauges in Asia Pacific as the country takes steps toward further reopening. Measures across the cyclicals-heavy Southeast Asian markets also rose, while tech stocks including Alibaba and Meituan took a hit. Asian assets will be sold alongside global peers in the short term, said Tai Hui, chief Asia market strategist at JPMorgan Asset Management. “But we think cyclical sectors, especially exporters, should also perform well for the rest of the year, especially as more Asian economies are seeing a rising level of vaccination,” he added. Japanese equities fell for a sixth-straight day, as investor concerns deepened over contagion from China’s real-estate sector woes on the suspension of trading in shares of Evergrande and its property management unit. Electronics makers were the biggest drag on the Topix, which declined 0.6%, capping its worst losing streak since February 2020. Tokyo Electron and Fanuc were the largest contributors to a 1.1% drop in the Nikkei 225. “It’s possible Evergrande news flow is impacting Japan stocks, the issues surrounding the property firm aren’t resolved,” said Mamoru Shimode, chief strategist at Resona Asset Management. “It’s also important to keep in mind markets overall have been in risk-off mood since the latter half of September.” Travel and retail stocks gained, following U.S. peers higher after promising results for Merck’s experimental Covid-19 pill and amid signs of a pick-up in Japanese department-store sales. Meanwhile, Fumio Kishida was appointed prime minister by parliament Monday, and was set to reveal a new cabinet lineup as he seeks to revive support for his ruling party ahead of a general election that could likely come this month. In rates, Treasuries are near session lows, the 10Y TSY pushing on 1.50% cheaper by ~3.5bp on the day and near middle of last week’s 1.44%-1.565% range in early U.S. session after erasing gains that pushed yields to lowest levels in a week. 5s30s curve at ~111.7bp is steeper by nearly 2bp, probing 50-DMA and approaching last week’s high. Gilts led the selloff during European morning as regional stocks recovered from a weak open. Curve steepens, with long-end yields cheaper by around 4bp vs Friday’s close.  Peripheral spreads widen with long end Italy underperforming. Semi-core spreads tighten at the margin. In FX, Bloomberg dollar index is little changed; NOK, CAD and CHF are the best performers in G-10, JPY lags but trading ranges are narrow. Crude futures hold slightly in the red in choppy trade. The Bloomberg Dollar Spot Index was steady and the greenback traded in tight ranges against its Group-of-10 peers. The euro reversed a modest decline to trade above $1.16, while the pound hovered after touching its highest level in nearly a week during the Asia session. Expected volatility is now at the highest in five months. The currency fell to a year-to-date low last week amid concerns over soaring energy prices, falling business confidence and the end of the government’s furlough scheme. The Aussie dollar was flat and option markets aren’t expecting the RBA’s policy decision Tuesday to be an eventful one for spot. The yen inched lower after earlier touching a one-week high when concern over potential contagion from indebted Chinese developer Evergrande weighed on Japanese stocks. In commodities, WTI is down 0.25% near $75.70, Brent just 0.1% lower near $79.20 ahead of today’s OPEC+ virtual gathering. Spot gold drops ~$10 to test Friday’s low near $1,750/oz. Base metals trade well with LME aluminum and zinc rising over 1% to outperform peers. Bitcoin and cryptos dropped after a burst higher late on Sunday, following the China Evergrande suspension even though i) the news appears to be positive and is in relation to the latest asset sale and ii) China has banned trading in cryptos, so it wasn't exactly clear why any mainlanders would be selling to meet margin calls. On today's calendar, we get August factory orders, and the final August durable goods orders, core capital goods orders. We also get more central bank speakers including Fed's Bullard, BoE’s Ramsden, ECB Vice President de Guindos and ECB’s Makhlouf. Market Snapshot S&P 500 futures down 0.4% to 4,324.25 STOXX Europe 600 little changed at 453.24 MXAP down 0.5% to 194.02 MXAPJ down 0.3% to 629.26 Nikkei down 1.1% to 28,444.89 Topix down 0.6% to 1,973.92 Hang Seng Index down 2.2% to 24,036.37 Shanghai Composite up 0.9% to 3,568.17 Sensex up 1.1% to 59,391.71 Australia S&P/ASX 200 up 1.3% to 7,278.54 Kospi down 1.6% to 3,019.18 Brent Futures little changed at $79.22/bbl Gold spot down 0.5% to $1,752.29 U.S. Dollar Index little changed at 93.96 German 10Y yield rose 1.4 bps to -0.210% Euro up 0.1% to $1.1613 Top Overnight News from Bloomberg China Evergrande Group and its property-services arm were halted in Hong Kong stock trading amid a report that the developer agreed to sell a controlling stake in the unit to raise much- needed cash U.K. Prime Minister Boris Johnson said he won’t fall back on immigration to solve the U.K.’s truck driver shortage, as he presented supply chain troubles that have left supermarket shelves bare and gas stations dry as a “period of adjustment” in the wake of Brexit and the pandemic House Speaker Nancy Pelosi reset the clock on Saturday, giving lawmakers until Halloween to strike a deal on both the bipartisan $550 billion infrastructure deal and a broader, signature package of social spending, health care and tax measures they must pass with only Democratic votes Germany’s Social Democrats under chancellor-in-waiting Olaf Scholz signaled progress in talks with the Greens on forming a coalition government with the Free Democrats, while Angela Merkel’s bloc kept the door ajar for a conservative-led alliance Japan’s Fumio Kishida was appointed prime minister by parliament Monday, and is set to reveal a new cabinet lineup as he seeks to revive support for his ruling party ahead of a general election that could likely come this month. A more detailed look at global markets courtesy of Newsquawk Asian equity markets traded mixed as ongoing Evergrande default concerns clouded over the initial optimism following Friday’s rebound on Wall St where all major indices found some reprieve from last week’s downturn, although the S&P 500 still suffered its worst weekly performance since February and US equity futures also failed to hold on to opening gains with this week’s upcoming risk events adding to the cautiousness including the OPEC+ meeting later today, a bout of Asia-Pac central bank policy decisions from Tuesday and Friday’s NFP job data. The ASX 200 (+1.3%) outperformed, with the index unfazed by the absence of key market participants with mainland China away for Golden Week, South Korea closed due to National Foundation Day, and amid the quasi-holiday conditions in Australia as New South Wales observed Labour Day. Nonetheless, the local benchmark was propped up by the top-weighted financials sector with shares in Australia’s largest bank CBA boosted following a AUD 6.0bln off-market buyback and with reopening stocks, especially those in the travel industry, among the biggest gainers. The Nikkei 225 (-1.1%) wiped out its opening advances despite the lack of significant news catalyst for the reversal which was spearheaded by exporter names, while the focus in Japan turned to PM Kishida’s confirmation in parliament and for details of the new Cabinet members. The Hang Seng (-2.2%) was heavily pressured by losses in health and biotech stocks, while property names also suffered amid the current Evergrande fears after a USD 260mln note from Jumbo Fortune Enterprises matured on Sunday which was guaranteed by China Evergrande Group and its unit Tianji Holding Ltd, while there is no grace period for the payment but five days will be allowed for administrative or technical errors. Furthermore, shares of Evergrande, its property services unit and structured products have all been halted which reports circulating that Hopson Development is to acquire a 51% stake in Evergrande Property Services for HKD 40bln. Finally, 10yr JGBs tracked recent upside in T-notes and with support also from the negative mood in Japanese stocks, as well as the BoJ’s presence in the market for over JPY 1tln of JGBs mostly concentrated in 1yr-5yr maturities. Top Asian News Singapore Eyes More Vaccinated Travel Lanes in Cautious Reopen India Farm Protests Gather Momentum After 4 Demonstrators Killed U.S. Natural Gas Jumps Amid Strong Overseas Demand for Fuel Suzuki Takes Japan Finance Reins as Election, Stimulus Loom Major bourses in Europe have adopted somewhat of a mixed picture (Euro Stoxx 50 Unch; Stoxx 600 -0.2%), following on from the broad-based downbeat cash open seen as Europe picked up the baton from APAC. US equity futures see modest losses across the board but have again drifted off worst levels. Nonetheless, the NQ (-0.5%) remains the slight laggard vs its RTY (-0.1%), ES (-0.2%) and YM (-0.4%) counterparts. Sectors are now mixed with a slight defensive tilt, with Healthcare and Food & Beverages among the top gainers, whilst financials bear the brunt of the yield decline on Friday, with Banks at the foot of the bunch. In terms of individual movers, Morrisons (-3.8%) has accepted CD&R’s takeover offer, which has left Fortress empty-handed but has fanned speculation that the group may look towards Sainsbury’s (+5.9%), Tesco (+1.7%) or Marks & Spencer (+1.5%) as potential targets, with the former being the best suitor, according to reports. Elsewhere BT (-7%) plumbed the depths with some citing reports that Sky is to partner with Virgin Media-O2 in a move set to intensify the challenge to BT’s infrastructure builder Openreach. Top European News U.K.’s Fuel Crisis Has at Least a Week to Run as Army Steps In Adler Group Weighs Asset Sales to Cut Debt After Multiple Bids Amazon Rival Noon to Raise $2 Billion From Backers Including PIF Romanian Billionaire Petrescu Dies in Plane Crash Near Milan In FX, the broader Dollar and index remain caged to a tight range, with the latter within a narrow 93.900-94.104 band after last week printing a new YTD peak at 94.504. The Dollar remains on standby as risk events are abundant this coming week, including deliberations on Capitol Hill and Friday’s NFP. In terms of the developments in Washington, congressional leaders set a new unofficial month-end deadline to pass the infrastructure bill, and USD 3.5tln spending package, and House progressives were reported to offer to reduce spending to save the bill and are willing to compromise on the USD 3.5tln amount with limits but rejected moderate Democrat Senator Manchin’s USD 1.5tln offer. Over to the Fed and a story to keep on the radar - Fed’s Clarida (seen as the nucleus of the Fed) reportedly shifted out of a bond fund into a stock fund last year, which occurred a day prior to Fed Chair Powell issuing a statement of potential policy action due to the pandemic. A spokesperson passed this off as “pre-planned” balancing, but a similar situation led to the early resignation of Kaplan and Rosengren. Elsewhere, USTR Tai is to today unveil the China trade policy following a top-to-bottom review of the Trump admin’s tariffs and other measures. The pre-release noted that the US would begin a process to exempt certain products from tariffs on Chinese imports, with the US also seeking a meeting on Phase 1. That being said, officials noted that all tools remain on the table when asked about further tariffs. Net-net, the release was constructive and, as such, provided tailwinds to the CNH, whereby USD/CNH dipped from 6.4560 to a low of 6.4385. AUD, NZD, CAD - The non-US Dollars somewhat vary with the Loonie attached to price action in the oil complex heading into the OPEC+ meeting later today. The NZD outperforms in the G10 bunch, with the AUD on the other side of the spectrum in what is a busy central bank week for the antipodeans. The AUD/NZD cross will likely take some focus as the RBNZ is poised to hike its OCR, whilst the RBA is seen holding policy steady. AUD/NZD has made its way back towards 1.4050 from its 1.0485 overnight high. NZD/USD meanders around 0.6950 (0.6927-53 range) whilst AUD/USD hovers around the 0.7250 mark (where AUD 1bln of OpEx resides), with the 21 DMA at 0.7295 and the 50 at 0.7311. EUR, GBP - Both European majors trade relatively flat in the European morning, but Brexit rhetoric has ramped up with UK Brexit Minister Frost warning the EU that the UK is prepared to trigger Article 16 unless the EU agrees to replace the Northern Ireland Protocol. There were separate reports that ministers will be given a deadline of the end of next month to decide on whether to suspend the Northern Ireland Brexit deal unilaterally, and senior sources warned that unless the EU was prepared to engage in a “serious negotiation” during the coming weeks, the government would have no choice but to suspend the deal by December. EUR/GBP topped its 100 and 21 DMAs (both at 0.8566) after finding a floor at its 100 DMA (0.8546). EUR/USD is back above 1.1600 (vs 1.1588 base) with EUR 1bln options expiring at the figure. GBP/USD hovers mid-range between 1.3534-77. In commodities, WTI and Brent front-month futures have clambered off worst levels but remain tentative ahead of the OPEC+ confab later today (full preview in the Newsquawk Research Suite). In terms of the long and short of it, markets expect OPEC+ to stick to its plan of raising monthly oil output by +400k BPD; albeit, some look for a larger-than-planned hike. Oil journalists have said this morning that despite the noise surrounding a greater-than-planned hike, ministers expect the current plan to be maintained, although drama in the meeting cannot be omitted. Upside during the European session coincided with headlines suggesting “OPEC+ is seen keeping output policy unchanged”, citing sources, although this was poorly phrased as it incorrectly intimates production being unchanged as opposed to plans for the 400k BPD hike being unchanged. Other things to be aware of aside from OPEC, BioNTech CEO expects the virus to likely mutate and that a new vaccine formulation could be required by the middle of next year, according to the FT, whilst the Gulf of Oman has seen cyclone Shaheen hit the area, although exports are not expected to be impacted yet aside from a delay in loadings. WTI Nov resides just under 76/bbl (75.30-76.20 range) whilst Brent Dec hovers sub USD 79.50/bbl (78.75-79.50/bbl range.) Elsewhere, spot gold and silver have been drifting lower in tandem with the rise in yields seen throughout the morning, with the former briefly dipping under USD 1,750/oz whilst spot silver fell under USD 22.40/oz. Turning to base metals, LME copper posts modest gains and remains north of USD 9,000/t, with some dip-buying being cited. US Event Calendar 10am: Aug. Cap Goods Ship Nondef Ex Air, prior 0.7% 10am: Aug. Cap Goods Orders Nondef Ex Air, prior 0.5% 10am: Aug. -Less Transportation, prior 0.2% 10am: Aug. Factory Orders Ex Trans, est. 0.4%, prior 0.8% 10am: Aug. Factory Orders, est. 1.0%, prior 0.4% 10am: Aug. Durable Goods Orders, est. 1.8%, prior 1.8% 10am: Fed’s Bullard Takes Part in Panel Discussion on the Economy DB's Jim Reid concludes the overnight wrap It’s certainly an odd financial world at the moment. The negatives are obvious and revolve mostly around delta, weaker than expected growth, the energy crisis, ever higher inflation and tighter central bank policy. The positives are that the base effects with numerous lockdowns imposed in Q4 2020 to at least the start of Q3 2021 mean that it won’t be that difficult for growth to still be numerically healthy for a few more quarters. So once the disappointment of growth not being as high as was hoped at this stage fades we should still be left with decent growth. Famous last words but covid should play less and less part in our lives over the year ahead as vaccines and better treatments (eg Merck antiviral pill news on Friday) become more and more widespread. In addition, stimulus and excess savings remain high and financial conditions are still very loose. While regular readers will know I’ve long been beating the drum on higher inflation and will continue to do so, I’m not convinced that growth is rolling over enough for stagflation to be the best description of the outlook for the next 12 months. However I suppose much depends on how you define it. Whilst on the topic of the energy crisis, the world is full of pictures of the UK population queuing for petrol because of a perceived shortage of HGV drivers. We’ll never know if there was actually a shortage that would have threatened fuel supplies as when the story broke 10 days ago panic set in and we had a fuel run (not as shocking as a bank run but formed from the same cloth) as the population desperately tried to refuel. My wife decided to hold out thinking the situation would resolve itself. However by Saturday night we had 10 miles left in the tank and during the day she had passed 6-7 petrol stations with either no fuel or huge queues. As we were putting the kids to bed she announced that she was getting desperate and stressed about it and was going to go out now as she was worried she wouldn’t be able to take the kids to school this week if she didn’t go out to the local area to try to find petrol. I said she was crazy to go at peak time (partly as I didn’t want to put the kids to bed alone - tough on crutches) and urged her to go very early Sunday morning instead. She ignored me and ventured out on what I thought was a suicide mission. 20 minutes later she was back with a full tank! I’ve no idea how and I won’t ask! I apologised! Outside of all the ongoing energy and stagflation chatter, all roads this week point to payrolls Friday as unless there is a marked deterioration across the whole sweep of labour market indicators within the report, this will likely be the catalyst to cement the November taper barring an exogenous or market shock. Investors will also be increasingly focused on the US debt ceiling deadline, whilst Congress simultaneously grapples with the infrastructure bill and the reconciliation package. Elsewhere on the political scene, coalition negotiations in Germany will be important to look out for, as the parties seek to form a government after the election. Before we look ahead, markets have started the week with a risk-off tone, with Asian equities including the Hang Seng (-2.17%), Kospi (-1.62%), the Nikkei (-0.95%) all moving lower while markets in China remain closed. Stocks pared gains on the news that Evergrande’s trading had been suspended in Hong Kong, with a filing from the Hong Kong Stock Exchange saying that this was “pending the release by the Company of an announcement containing inside information about a major transaction.” Meanwhile Bloomberg reported earlier that Evergrande had guaranteed a dollar note worth $260m with an official due date of Oct 3 by Jumbo Fortune Enterprises, making the effective due date today since maturity was on a Sunday. Elsewhere in Asia, NHK reported that Japan’s incoming Prime Minister, Fumio Kishida, planned to hold a general election on October 31, and looking forward, US equity futures are also pointing lower, with those on the S&P 500 down -0.32%. Looking ahead, the US jobs report will be one of the main macro highlights this week, and follows last month’s release that strongly underwhelmed expectations, with nonfarm payrolls growth of just +235k in August being the slowest since January. So another poor release would not be welcome news even if it did reflect labour shortages. In terms of what to expect this time around, our US economists are forecasting a pickup in September, with nonfarm payrolls growing by +400k, and the unemployment rate ticking down to a post-pandemic low of 5.1%. Remember in the weak report last month, yields rose on the day as markets focused on the wage increases rather than the poor headline number. As we said at the time the bond reaction to last month’s report probably helped signal the end of the extreme positive technicals and short positioning in treasuries. Over the summer strong inflation and decent data couldn’t help treasuries sell off, indicating bullet proof technicals but the period around last month’s release seemed to turn the tide the other way a bit. The other important data release this week will be the global services and composite PMIs out tomorrow, which will give an indication of how the economy has fared into the end of Q3. That said, the flash readings we’ve already had have indicated slowing growth momentum across the major economies, so it will be interesting to see where things progress from here. Turning to the US, negotiations in Congress will be in focus as legislators face the debt ceiling deadline this month (expected to be breached around October 18th according to Treasury Secretary Yellen last week), just as the Democrats are also seeking to pass a $550bn bipartisan infrastructure bill and a reconciliation package. On Saturday, Speaker Pelosi seemed to suggest that the new deadline was October 31st for the bipartisan bill which highlights how much difference there still is between the progressives and moderates on the reconciliation package. Will they eventually find a compromise for a lower amount than the original $3.5tn (maybe around $2tn) that makes nether side happy but gets the legislation through? Staying on the political scene, there’ll also be a focus on coalition negotiations in Germany, where exploratory talks have now begun between the parties. The Greens and the liberal FDP will be key to forming a majority in the new Bundestag, with 210 seats between them, as both the centre-left SPD and the conservative CDU/CSU bloc still hope to lead the next coalition. Initial exploratory talks began with the SPD yesterday, and the FDP have also spoken to the CDU/CSU, with the Greens set to follow tomorrow. On the central bank side it’s a quieter week ahead, with the two G20 policy decisions expected from the Reserve Bank of Australia (tomorrow) and the Reserve Bank of India (Friday). In Australia, our economist is expecting no change in policy and a reaffirmation of their dovish policy outlook. And in India, our economist also expects the MPC to keep all key policy rates unchanged, with our base case remaining for a reverse repo rate liftoff starting from December. The day-by-day calendar is at the end as usual. Back to last week, and global equity markets slid for the third week out of the last four as the S&P 500 fell -2.21%, with a +1.15% increase on Friday not stopping the index from having its worst week since the end of February. The losses were primarily led by growth and technology stocks as the NASDAQ declined -3.20% on the week, while cyclicals such as banks (+1.92%) and energy (+5.78%) stocks outperformed. European equities similarly fell back, as the STOXX 600 ended the week -2.24% lower after Friday’s -0.42% loss came prior to a late US rally. Global sovereign bonds sold off for a sixth straight week, though most of that selling came in the first two days as the global risk-off tone caused investors to search for havens. US 10yr Treasury yields still ended the week up +1.1bps, despite Friday’s -2.6bp decline. Bond yields in Europe moved higher as well, with those on 10yr bunds increasing +0.4bps, to trade at their highest levels since early-July. And 10yr yields on French OATs (+1.2bps) and Italians BTPs (+3.1bps) also rose further. UK gilts underperformed them all with yields increasing +7.7bps. The major driver of the move in global yields was rising inflation expectations with US 10yr breakevens increasing +4.5bps, while 10yr bund and breakevens rose +9.3bps to reach their highest level since 2013 and gilt breakevens (+3.5bps) rose to their highest level since 2008 even though they were much higher mid-week. The US September ISM manufacturing survey rose to 61.1 from 59.9 in the prior month even as supply bottlenecks intensified. This along with strong demand readings from businesses and consumers have led to higher prices which are mostly being passed onto consumers. This was seen in the PCE deflator data from Friday which showed prices rose 4.3% (4.2% expected) y/y with the core reading increasing 3.6% (3.5% expected) y/y. The University of Michigan survey showed respondents’ inflation expectations in a year dropped slightly from the initial reading 4.6% (4.7% initial , 4.8% exp), which was in-line with last month. 5-10yr expectations remain elevated at 3.0%. Overall the sentiment reading of 72.8 (71.0 prior) was better than the initial survey but still was the fifth worst reading in a decade, with only last month and the early months of the pandemic having been lower. Separately, Euro-area inflation reached its highest level since September 2008 on Friday as the headline September CPI print registered at 3.4% y/y (3.3% expected) in September, fuelled by the cost of energy and travel. Meanwhile, in Europe the manufacturing PMI readings were largely in-line with the preliminary readings with the Euro Area print sitting at 58.6 (58.7 prior) with Germany (58.4) and France (55.0) both just under their prior readings. Tyler Durden Mon, 10/04/2021 - 07:55.....»»

Category: dealsSource: nytOct 4th, 2021

"Mass Graves" Allegation Becomes Focus Of Calls For Putin To Face War Crimes Tribunal

"Mass Graves" Allegation Becomes Focus Of Calls For Putin To Face War Crimes Tribunal Ukrainian President Volodymyr Zelensky has said his country is in talks with G-7 nations to set up a war crimes tribunal which would investigate and punish Russia and its top officials and military leaders for "war crimes" committed amid the ongoing invasion, especially after some 440 "unmarked" graves were found in Kharkiv Oblast. "This is an extremely important direction, which is important both in the context of European integration and in the context of the internal transformation of our state," Zelensky said in reference to the EU recently bestowing 'candidate status' on Ukraine. His comments came in an address to the nation Friday, just a day after EU chief Ursula von der Leyen visited the war-ravaged country and said in an interview that she wants to see Russian President Vladimir Putin face the International Criminal Court over war crimes. Widely circulating photograph of grave site in Izium, which has become focus of war crimes allegations. "That Putin must lose this war and must face up to his actions, that is important to me," she told German television's Bild. She expressed that there's "no doubt" Russian forces have committed war crimes throughout the now seven-month war. According to The Hill, "Zelensky said the proposal was made during a meeting of a group working to advance Ukraine joining the Organization for Economic Co-operation and Development (OECD), an intergovernmental association of democracies with market-based economies that work to stimulate economic growth." Currently, the United Nations said it has dispatched a forensic team of investigators to examine what Ukraine has alleged is a "mass grave" left in the wake of Russian forces' retreat from the city of Izium in the east. Zelensky in his Friday remarks has alleged "torture chambers" used against civilians were found in the formerly Russian-occupied region. Zelensky has made the claims a focus of his latest charges against Russian troops: "More than 10 torture chambers have already been found in various cities and towns liberated in Kharkiv region," he added, describing the discovery of electrical implements for torture. "That’s what the Nazis did. This is what Ruscists do. And they will be held accountable in the same way – both on the battlefield and in courtrooms," he said, using the term "Ruscists" for "Russian fascists". Like with allegations surrounding Bucha before, reports of the mass burial sites quickly took over headlines in the West.  But curiously, some of the more sensational headlines perpetuated in the mainstream press were quickly and quietly walked back. For example see the above and below Reuters headlines which came just hours apart... The discrepancies in current claims, also given there has long been a fierce 'propaganda war' raging from all sides which is typical of any war, has led a number of independent analysts to examine the circumstances surrounding Izium. For example, the analysis website Moon of Alabama concludes after a detailed look at the allegations of "mass graves" that "There is otherwise nothing unusual with that graveyard. During a war people on both sides die. Civilians suffer as much as soldiers while fighting around them is going on." "The city had been heavily defended by the Ukrainians and it took the Russian military the whole of March to take it," the report continues. "A lot of the buried casualties were likely killed by artillery fire. There is no way to tell from which side that fire had came," it adds. Below: an Associated Press photo and caption... Amid continued calls for an international inquiry into what happened at Izium and other places where Russian forces have been newly driven back amid Ukraine's counteroffensive in the east, the Kremlin has vehemently denied carrying out the alleged atrocities.  While in Uzbekistan for last week's Shanghai Cooperation Organization Summit, President Putin didn't address the allegations directly, but stressed Russia is 'not in a hurry' in terms of achieving its goals during the "special operation" in Ukraine. Tyler Durden Sun, 09/18/2022 - 12:00.....»»

Category: personnelSource: nytSep 18th, 2022

SALT NYC: From Sam Bankman-Fried to Bridgewater’s co-CIO, the world’s top experts are meeting this week. Here’s what you want to know.

Experts are convening in NYC for SALT this week. Insider's Phil Rosen caught up with correspondent Laila Maidan to get the scoop on the conference. Good morning, Opening Bell crew. Phil Rosen here. Yesterday's hotter-than-expected inflation reading throttled markets, with the Dow sinking faster than my mood when the office coffee runs out. But shaky indexes and sky-high inflation have done little to stifle optimism at SALT — a New York conference hosting some of the world's top financial leaders for wide-ranging talks on money and markets. To get a temperature-check on the convention, I caught up with Insider's Laila Maidan, our boots-on-the-ground correspondent this week. If this was forwarded to you, sign up here. Download Insider's app here.Moody's Analytics has yet to see a clear trend of distress among office-building loans, but landlords shouldn't be celebrating yet, according to a recent study from the firm. Westend61/Getty Images1. "Overall it's a pretty good event with a lot of fund managers," Maidan told me, speaking from the event at New York City's Javits Center. She added that crypto-related topics made up about half, if not more, of this year's event content, which is usually focused on traditional finance. Surely the presence of billionaire Sam Bankman-Fried could make any conference tilt toward digital assets.In a Monday panel, the FTX founder pointed to Fed policy and a strong dollar as reason for downbeat digital token markets, but he still voiced optimism about cryptocurrencies more broadly. But at least some attendees are still cautious on digital assets. "I did accidentally overhear one guest say something along the lines of the bets made on the sector are a loss and people just aren't ready to admit it," my colleague noted. Maidan also let me in on a conversation she had with fund boss Anthony Scaramucci, who just made a deal with Bankman-Fried for FTX Ventures to acquire a 30% stake in SkyBridge Capital. "It was Scaramucci's idea to tap Sam about it," Maidan said. "Scaramucci felt it was a good merge between his expertise in traditional markets and the nine bear markets he survived, and Sam's expertise in the digital asset space."Meanwhile, Bridgewater's co-chief investor Greg Jensen also spoke at SALT, but he gave a far bleaker outlook, warning that asset prices could tumble as much as 25%. "The biggest mistake right now is the belief we're going to return to essentially prices similar to the pre-COVID [period]," Jensen said in a panel on Monday. Rubbing shoulders with finance heavyweights and so-called thought leaders is one thing, but finding an adequate work station seems to be another. For reporters, working remotely from SALT's press room can mean sitting on the floor to charge your laptop or phone."There's no outlets by the tables," she said. What topics out of SALT are you on the lookout for this year? Email prosen@insider.com or tweet @philrosenn.  In other news:Samuel Corum/Getty Images2. US stock futures recovered some of their losses early Wednesday, following a sharp fall triggered by yesterday's inflation data. Meanwhile, oil prices are also recouping earlier losses, as the IEA said growth in the global oil demand would slow to a halt in the last quarter. Here are the latest market moves. 3. On the docket: Logitech S.A., Growthpoint Properties Ltd, and more all reporting.4. The manager of a market-crushing $3 billion equity income fund broke down how he zeroes in on winning stocks. Matthew Page has a strategy to bolster his portfolio while skipping out on the thousands of potential bad names. Here are his top five picks right now.5. Oil prices could find a floor near $80 per barrel with the Biden Administration weighing a refill of the Strategic Petroleum Reserve. The potential move is seen as protecting US oil-production growth by preventing crude prices from plunging further. Here's what you want to know.6. Germany is reportedly working on a new trade policy to reduce dependence on China. German Economy Minister Robert Habeck told Reuters: "We cannot allow ourselves to be blackmailed." Get the details here.7. Investors have begun pricing in odds of a 100 basis point rate hike at this month's Fed meeting. The hot inflation data has led traders to ramp up bets on another outsized interest rate move — but this time it could be even bigger than the previous 75 basis point hike. 8. The head of investment strategy at BlackRock's $2.2 trillion iShares said we're not heading toward a 2008-style housing collapse. But Gargi Pal Chaudhuri still thinks there's a growing disconnect in the market as activity cools and prices rise: "Something's gotta give."9. This batch of stocks is well-positioned to weather an earnings slowdown and a shifting economy, according to an investing veteran who's been in the business for 24 years. Tavis McCourt of Raymond James shared 15 stocks that are positioned in four underappreciated market themes — see the full list here. Markets Insider10. The Dow just saw the worst session since June 2020. On Tuesday, the major index dropped 1,276 points. However, Dow futures recovered some of that loss early Wednesday. Check out the rundown from yesterday's downbeat trading day. Keep up with the latest markets news throughout your day by checking out The Refresh from Insider, a dynamic audio news brief from the Insider newsroom. Listen here.Curated by Phil Rosen in New York. (Feedback or tips? Email prosen@insider.com or tweet @philrosenn).Edited by Max Adams (@maxradams) in New York and Hallam Bullock (@hallam_bullock) in London. Read the original article on Business Insider.....»»

Category: topSource: businessinsiderSep 14th, 2022

NATO is eager for Sweden"s air force to join the alliance, but Swedish fighter pilots aren"t happy with their bosses

Longstanding frustrations among Sweden's fighter pilots have been inflamed by a recent increase to the Swedish military's retirement age. A Swedish JAS-39 Gripen fighter jet over Sweden on February 18, 2022.US Air Force/Tech. Sgt. Corban Lundborg Sweden has applied to join NATO, and the alliance has largely welcomed its potential addition. NATO officials are especially interested in Sweden's air force, which has dozens of advanced jets. But Swedish pilots are frustrated with policy changes, and many are considering leaving service. Even as Sweden prepares to join NATO, Sweden's air force has a problem. Its most experienced fighter pilots are quitting."In the fall, around half of the Swedish Armed Forces' fighter pilots may take leave or resign altogether," Swedish broadcaster SVT reported in July.The problem is changes to the retirement system, according to the trade union representing the pilots."In the past, pilots have been able to retire at the age of 55," Jesper Tengroth, spokesman for the Swedish Association of Military Officers, told Insider. "But for those born in 1988 or later, the retirement age was raised a few years ago to 67, without any compensation."Swedish pilots on the flightline during an exercise with the US Air Force.Swedish Armed ForcesEven Swedish leaders admit there is a problem. "Overnight, they all had their retirement age raised at once," said Maj. Gen. Carl-Johan Edström, chief of the Swedish Air Force. "The fact that a number of pilots are applying for leave is almost 100% linked to the new pension agreement."Many of those pilots feel betrayed. "There are a lot of people my age who have been trained and employed under certain premises which have since been removed," one pilot told SVT.Not surprisingly, media in Russia — which is unhappy with formerly nonaligned Sweden joining NATO — is playing up the story. "In recent years, the Swedish Armed Forces have been struggling to recruit new pilots and retain existing staff," state-controlled outlet Sputnik News said.There are other reasons for the pilot exodus, Jan Kallberg, a non-resident senior fellow with the Center for European Policy Analysis, told Insider."I think this has been ongoing for a long time regarding the pilots," said Kallberg, himself a former Swedish army officer. "I think it's the tip of the iceberg. They have felt mistreated for generations."A technician next to a Swedish C-130 Hercules cargo plane during a NATO exercise in Lithuania on April 1, 2014.PETRAS MALUKAS/AFP via Getty ImagesOne issue is relatively low pay compared to the civilian sector, including commercial airlines that are hungry for pilots and willing to pay high salaries.Another is post-Cold War defense cuts that slashed the number of flying slots in the air force. "That means that instead of leaving as a pilot at 55, they're now stuck in a defense desk job" for years until they eligible to retire, Kallberg said. Sweden's government intends to ramp up defense spending in the coming years but is still debating how to do so.Unlike the US military, whose personnel receive a housing allowance, Swedish pilots pay for their own housing. Sweden's entry into NATO could result in some mothballed airbases being reactivated, which in turn would require pilots to pay for new accommodations when they transfer to the new facilities.Ironically, the question most likely to worry NATO leaders – how will a pilot shortage affect Sweden's military capability – may actually be the least difficult. Sweden has a potent air force, core of which is six squadrons comprising 96 JAS 39 C/D Gripen fighters.However, Sweden's main contribution to NATO isn't jet fighters but geography, argues Kallberg. "Sweden gives operational depth in the high north. NATO will be able to operate air wings from multiple Swedish airfields."A Swedish pilot in a JAS-39C Gripen at Nellis Air Force Base in Nevada, January 21, 2013.US Air Force/Lawrence CrespoPreviously, NATO had to rely on a few bases on the Norwegian coast to project power into the Barents Sea, which also borders sensitive military bases in northern Russia.Sweden is not only a larger nation with more strategic depth than Norway, but it also offers access to both the Barents and the Baltic seas, including bases on Baltic islands that could enable NATO to counter Russian naval and air power in the vital Baltic region."If you want to conduct deterrence — or support a fight — in the Baltic, Sweden is a natural staging area," Kallberg said.Kallberg does see problems in the Swedish military that need to be fixed. While Sweden has a long tradition of contributing troops to UN peacekeeping missions, its army — which uses conscripted troops — is unaccustomed to operating in larger formations for the sort of big-unit combat that might characterize a NATO-Russia war.But Sweden is serious about meeting its NATO commitments, Kallberg said. "They know they will have to come up with the troops and assets."Michael Peck is a defense writer whose work has appeared in Forbes, Defense News, Foreign Policy Magazine and other publications. He holds a master's in political science. Follow him on Twitter and LinkedIn.Read the original article on Business Insider.....»»

Category: dealsSource: nytAug 24th, 2022