Futures Slide Amid Renewed Recession Fears After China Doubles Down On "Covid Zero" One day after futures ramped overnight (if only to crater during the regular session) on hopes China was easing its highly politicized  Zero Covid policy after it cut the time of quarantine lockdowns, this morning futures slumped early on after China's President Xi Jinping made clear that Covid Zero isn't going anywhere and remains the most “economic and effective” policy for China during a symbolic visit to the virus ground zero in Wuhan, in which he cast the strategy as proof of the superiority of the country’s political system. That coupled with renewed recession worries (market is again pricing in a rate cut in Q1 2023) even as monetary policy tightens in much of the world to fight supply-side inflation, sent US futures and global markets lower. S&P futures dropped 0.2% and Nasdaq 100 futures were down 0.4% after the underlying index slumped on 3.1% on Tuesday. The dollar was steady after rising the most in over a week while WTI crude climbed above $112 a barrel, set for a fourth session of gains. In cryptocurrencies, Bitcoin dipped below the closely watched $20,000 level on news crypto hedge fund 3 Arrows Capital was ordered to liquidate. The Nasdaq's Tuesday’s slump added to what was already one of the worst years in terms of big daily selloffs in US stocks. The S&P 500 Index has fallen 2% or more on 14 occasions, putting 2022 in the top 10 list, according to Bloomberg data. Not helping the tech sector, on Wednesday morning JPMorgan cut its earnings estimates across the sector, especially for companies exposed to online advertising, citing macroeconomic pressures, forex and company-specific dynamics. One of the chief drivers for overnight weakness, China's Xi said during a trip Tuesday to Wuhan where the virus first emerged in late 2019 that relaxing Covid controls would risk too many lives in the world’s most populous country. China would rather endure some temporary impact on economic development than let the virus hurt people’s safety and health, he said, in remarks reported Wednesday by state media. As a result, China’s CSI 300 Index extended loss to 1.4% after the headline, while the yuan drops as much as 0.2% to trade 6.7132 against the dollar in the offshore market. Among key premarket movers, Tesla slipped in US premarket trading. The electric-vehicle maker laid off hundreds of workers on its Autopilot team as it shuttered a California facility, according to people familiar with the matter. Carnival slumped as Morgan Stanley analysts warned that the London and New York-listed cruise vacation company’s shares could lose all their value in the event of another demand shock. Pinterest gained 3.7% as the company’s co- founder and CEO Ben Silbermann quit and handed the reins to Google and PayPal veteran Bill Ready in a sign the social-media company will focus more on e-commerce. Also, despite the pervasive weakness, the Energy Select Sector SPDR Fund ETF (XLE) rebounded off key support (50% Fibonacci) relative to the SPDR S&P 500 ETF (SPY). That said, energy was alone and most other notable movers were down in the premarket: Carnival (CCL US) shares fall 8% premarket as Morgan Stanley analysts warned that the cruise vacation firm’s shares could lose all their value in the event of another demand shock. Nio (NIO US) shares drop 8.2% after short-seller Grizzly Research published a report on Tuesday alleging that the electric carmaker used battery sales to a related party to inflate revenue and boost net income margins. The company rejected the claims. Upstart Holdings (UPST US) shares slump about 9% after Morgan Stanley downgraded the consumer finance company to underweight from equal-weight amid rising cyclical headwinds. Ormat Technologies (ORA US) rallies as much as 5% after the renewable energy company is set to be included in the S&P Midcap 400 Index. 2U (TWOU US) shares rise 16% premarket. Indian online-education provider Byju’s has offered to buy the company in a cash deal that values the US-listed edtech firm at more than $1 billion, a person familiar with the matter said. Watch Amazon (AMZN US) shares as Redburn initiated coverage of the stock with a buy recommendation and set a Street-high price target, saying “there is a clear path toward a $3 trillion value for AWS alone.” Shares in data center REITs could be active later in the trading session after short-seller Jim Chanos said in an FT interview that he’s betting against “legacy” data centers. Watch Digital Realty (DLR US) and Equinix (EQIX US), as well as data center operators Cyxtera Technologies (CYXT US) and Iron Mountain (IRM US) Investors are growing increasingly skeptical that the Fed can avoid a bruising economic downturn amid sharp interest-rate hikes. Evaporating consumer confidence is feeding into concerns that the US might tip into a recession. Naturally, Fed officials sought to play down recession risk. New York Fed President John Williams and San Francisco’s Mary Daly both acknowledged they had to cool inflation, but insisted that a soft landing was still possible. “It seems the market is in this tug of war between on the one hand the hope that we are close to the peak in inflation and rates, and on the other hand the challenge of a slowing economy and potential recession,” Emmanuel Cau, head of European equity strategy at Barclays Bank Plc, said in an interview with Bloomberg TV. “Central banks are walking a very tight line and to a certain extent dictate the mood in the markets.” European equities snapped three days of gains, trading poorly but off worst levels with sentiment also hurt by China remaining committed to its zero-Covid approach. Spanish inflation unexpectedly surged to a record, dashing hopes that inflation in the euro zone’s fourth-biggest economy had peaked, and emboldening European Central Bank policy makers pushing for big increases in interest rates. The ECB should consider raising interest rates by twice the planned amount next month if the inflation outlook deteriorates, according to Governing Council member Gediminas Simkus, as calls not to exclude an outsized initial move grow. German benchmark bonds rose, while 10-year Treasury yields slipped to 3.16%. DAX lags, dropping as much as 1.8%. Real estate, autos and miners are the worst performing sectors. In notable moves in European stocks, Hennes & Mauritz (H&M) gained after the Swedish low-cost retailer’s earnings beat analyst estimates. Just Eat Takeaway.com NV tumbled to a record low after Berenberg analysts rated the stock sell, saying the food delivery firm’s UK business will remain under pressure. Here are some of the biggest European movers today: Just Eat Takeaway shares plunge as much as 21% after Berenberg initiated coverage with a sell rating, saying the firm’s UK business will remain under pressure and a sale of its Grubhub unit is unlikely to satisfy the bulls. Carnival stocks slumped over 12% in London as Morgan Stanley analysts warned that the cruise vacation firm’s shares could lose all their value in the event of another demand shock. Pearson drops as much as 6.1% after the education company was cut to sell at UBS, which reduced forecasts to reflect a weak outlook for 2022 college enrollments. Grifols shares plunge as much as 13% on a media report the Spanish plasma firm is weighing a capital raise of as much as EU2b to cut its debt. Diageo shares fall after downgrades for the spirits group from Deutsche Bank and Kepler Cheuvreux, while Pernod Ricard also dips on a rating cut from the latter. Diageo declines as much as 4.2%, Pernod Ricard -3.7% Fluidra shares fall as much as 8.4% after Santander cut its rating on the Spanish swimming pools company. The bank’s analyst Alejandro Conde cut the recommendation to neutral from outperform. H&M shares rise as much as 6.8% after the Swedish apparel retailer reported 2Q earnings that beat estimates. Jefferies said the margin beat in particular was reassuring, while Morgan Stanley said it was a “positive surprise” overall. Ipsen shares rise as much as 3.1% after UBS analyst Michael Leuchten said that accepting palovarotene refiling priority review should be a net present value and confidence boost. Asian stocks fell, halting a four-day gain, as renewed angst over the outlook for global economic growth and inflation help drive a selloff across most of the region’s equity markets. The MSCI Asia Pacific Index dropped as much as 1.5%, led by consumer discretionary and information sectors. Chinese equities in particular took a hit, as the CSI 300 Index fell 1.5% Wednesday after Xi Jinping reiterated his firm stance on Covid zero. Tech-heavy indexes in markets such as South Korea and Taiwan took the brunt of Wednesday’s drop amid lingering concerns that monetary tightening in much of the world to fight inflation will cause an economic slowdown. While Federal Reserve members have played down the risk of a US recession, gloomy data such as US consumer confidence have damped investor sentiment. “Volatility is going to be the enduring feature of the market, I suspect, for the next couple of quarters at least until we get a firm sense that peak inflation has passed,” John Woods, Credit Suisse Group AG’s Asia-Pacific chief investment officer, said in an interview with Bloomberg TV. “Markets, I think, have aggressively priced in quite a serious or steep recession.”  China’s four-day winning streak came to a halt, putting its advance toward a bull market on hold.  “We will continue to see a risk of targeted lockdowns, and that spoils the initial euphoria seen in the markets from the announcement on relaxation of quarantine requirements,” said Charu Chanana, market strategist at Saxo Capital Markets. “Still, economic growth will likely be prioritized as this is a politically important year for China.”  Japanese equities decline as investors digested data that showed a drop in US consumer confidence over inflation worries and increased concerns of an economic downturn.  The Topix Index fell 0.7% to 1,893.57 in Tokyo on Wednesday, while the Nikkei declined 0.9% to 26,804.60. Toyota Motor Corp. contributed the most to the Topix’s decline, decreasing 1.8%. Out of 2,170 shares in the index, 1,114 fell, 984 rose and 72 were unchanged. “There are concerns about stagflation,” said Hideyuki Suzuki a general manager at SBI Securities. “The consumer sentiment from the University of Michigan, which provides one of the fastest data points, has already shown poor figures.” Stocks in India tracked their Asian peers lower as brent rose to the highest level in two weeks, while high inflation and slowing global growth continued to dampen risk-appetite for global equities. The S&P BSE Sensex fell 0.3% to 53,026.97 in Mumbai, while the NSE Nifty 50 Index declined by an equal measure. Both gauges have lost more than 4% in June and are set for their third consecutive month of declines. The main indexes have dropped for all but one month this year. Twelve of the 19 sub-sector gauges compiled by BSE Ltd. eased, led by banking companies while power producers were the top performers.   Investors will also be watching the expiry of monthly derivative contracts on Thursday, which may lead to some volatility in the markets.  Hindustan Unilever was the biggest contributor to the Sensex’s decline, decreasing 3.5%. Out of 30 shares in the Sensex, 10 rose and 20 fell. The Bloomberg Dollar Spot Index inched up modestly as the greenback traded mixed against its Group-of-10 peers; the Swiss franc led gains while Antipodean currencies were the worst performers and the euro traded in a narrow range around $1.05. The relative cost to own optionality in the euro heading into the July meetings of the ECB and the Federal Reserve was too low for investors to ignore and has become less and less underpriced. The yen strengthened and US and Japanese bond yields fell. In rates, fixed income has a choppy start. Bund futures initially surged just shy of 200 ticks on a soft regional German CPI print before fading the entire move over the course of the morning as Spanish data hit the tape, delivering a surprise record 10% reading for June and more hawkish ECB comments crossed the wires. Treasuries and gilts followed with curves eventually fading a bull-steepening move. Long-end gilts underperform, cheapening ~4bps near 2.75%. Peripheral spreads are tighter to core.  Treasuries are slightly higher as US trading day begins, off the session lows reached as bund futures jumped after the first monthly drop since November in a German regional CPI gauge. Yields are lower across the curve, by 1bp-2bp for tenors out to the 10-year with long-end yields little changed; 10-year declined as much as 5.3bp vs as much as 8.2bp for German 10- year, which remains lower by ~3bp. Focal points for the US session include a final revision of 1Q GDP, comments by Fed Chair Powell, and anticipation of quarter-end flows favoring bonds. Quarter-end is anticipated to cause rebalancing flows into bonds; Wells Fargo estimated that $5b will be added to bonds, with most of the flows occurring Wednesday and Thursday. In commodities, crude futures advance. WTI drifts 0.3% higher to trade near $112.13. Base metals are mixed; LME tin falls 5.6% while LME zinc gains 0.4%. Spot gold falls roughly $5 to trade near $1,815/oz Looking ahead, the highlight will be the panel at the ECB Forum that includes Fed Chair Powell, ECB President Lagarde and BoE Governor Bailey. We’ll also be hearing from ECB Vice President de Guindos, the ECB’s Schnabel, the Fed’s Mester and Bullard, and the BoE’s Dhingra. On the data side, releases include German CPI for June, Euro Area money supply for May, and the final Euro Area consumer confidence reading for June. From the US, we’ll also get the third reading of Q1 GDP. Market Snapshot S&P 500 futures little changed at 3,829.00 STOXX Europe 600 down 0.8% to 412.69 MXAP down 1.3% to 159.96 MXAPJ down 1.6% to 531.04 Nikkei down 0.9% to 26,804.60 Topix down 0.7% to 1,893.57 Hang Seng Index down 1.9% to 21,996.89 Shanghai Composite down 1.4% to 3,361.52 Sensex little changed at 53,204.17 Australia S&P/ASX 200 down 0.9% to 6,700.23 Kospi down 1.8% to 2,377.99 German 10Y yield little changed at 1.59% Euro little changed at $1.0510 Brent Futures down 0.4% to $117.46/bbl Gold spot down 0.2% to $1,816.09 U.S. Dollar Index little changed at 104.55 Top Overnight News from Bloomberg The Fed’s Loretta Mester said she wants to see the benchmark lending rate reach 3% to 3.5% this year and “a little bit above 4% next year” to rein in price pressures even if that tips the economy into a recession The ECB should consider raising interest rates by twice the planned amount next month if the inflation outlook deteriorates, according to Governing Council member Gediminas Simkus, as calls not to exclude an outsized initial move grow ECB has “ample room” to hike in 25bps-50bps steps to “whatever rate we think, we consider reasonable,” Governing Council member Robert Holzmann said in interview with CNBC Swedish consumers are gloomier than they have been since the mid-1990s, as prices surge on everything from fuel to food and furniture China’s President Xi Jinping declared Covid Zero the most “economic and effective” policy for the nation, during a symbolic visit to Wuhan in which he cast the strategy as proof of the superiority of the country’s political system NATO moved one step closer to bolstering its eastern front with Russia after Turkey dropped its opposition to Swedish and Finnish bids to join the military alliance A more detailed look at markets courtesy of Newsquawk Asia-Pac stocks were pressured amid headwinds from the US where disappointing Consumer Confidence data added to the growth concerns. ASX 200 failed to benefit from better than expected Retail Sales and was dragged lower by weakness in miners and tech. Nikkei 225 fell beneath the 27,000 level as industries remained pressured by the ongoing power crunch. Hang Seng and Shanghai Comp. conformed to the negative picture in the region although losses in the mainland were initially stemmed after China cut its quarantine requirements which the National Health Commission caveated was not a relaxation but an optimization to make it more scientific and precise. Top Asian News Chinese President Xi said China's COVID prevention control and strategy is correct and effective and must stick with it, via state media. Shanghai will gradually reopen museums and scenic sports from July 1st, state media reports. US Deputy Commerce Secretary Graves said the US will take a balanced approach on Chinese tariffs and that a clear response on China tariffs is coming soon, according to Bloomberg. China State Council's Taiwan Affairs Office said it firmly opposes the US signing any agreement that has sovereign connotations with Taiwan, according to Global Times. BoJ Governor Kuroda said Japanese Core CPI reached 2.1% in April and May which is almost fully due to international energy prices and Japan's economy has not been affected much by the global inflationary trend so monetary policy will stay accommodative, according to Reuters. Japanese govt to issue power supply shortage warning for a fourth consecutive day on Thursday, according to a statement. European bourses are on the backfoot as the region plays catch-up to the losses on Wall Street yesterday. Sectors are mostly lower (ex-Energy) with a defensive tilt as Healthcare, Consumer Products, Food & Beverages, and Utilities are more cushioned than their cyclical peers. Stateside, US equity futures trade on either side of the unchanged mark with no stand-out performers thus far, with the contracts awaiting the next catalyst. Top European News UK expects defence spending to reach 2.3% of GDP and said PM Johnson will announce new military commitments to NATO, according to Reuters. UK Weighs Capping Maximum Stake in Online Casinos at £5 Europe Is the Only Region Where Earnings Estimates Are Rising European Gas Prices Rise as Supply Risks Add to Storage Concerns Gold Steady as Traders Weigh Fed Comments on US Recession Risks Choppy Start for Euro-Area Bonds on Mixed Inflation FX Dollar mostly bid otherwise as rebalancing demand underpins - DXY pivots 104.500 within 104.700-350 confines. Franc outperforms on rate and risk considerations - Usd/Chf breaches 0.9550 and Eur/Chf approaches parity. Euro erratic in line with conflicting inflation data - Eur/Usd rotates around 1.0500. Aussie and Kiwi undermined by downturn in sentiment - Aud/Usd loses 0.6900+ status, Nzd/Usd wanes from just over 0.6250. Yen rangy following firmer than forecast Japanese retail sales and BoJ Governor Kuroda reaffirming intent to remain accommodative - Usd/Jpy straddles 136.00. Nokkie welcomes oil worker wage agreement with unions to avert strike action, but Sekkie hampered by softer Swedish macro releases pre-Riksbank policy call tomorrow - Eur/Nok probes 10.3000, Eur/Sek hovers around 10.6800. Rand rattled by decline in Gold and ongoing SA power supply problems, but Rouble rallies irrespective of CBR and Russian Economy Ministry divergence over deflation. Central Banks ECB's Lane said there are two-way inflation risks: "on the one side, there could be forces that keep inflation higher than expected for longer. On the other side, we do have the risk of a slowdown in the economy, which would reduce inflationary pressure", via ECB. ECB's Holzmann said "We will have to make an assessment where the economic development is going and where inflation stands and afterwards there’s ample room to hike in 0.25 and 0.5 levels to whatever rate we think, we consider reasonable" via CNBC. ECB's Simkus said if data worsens, then he wants a 50bps July hike as an option, 50bps hike is very likely in September; ECB's fragmentation tool should serve as a deterrent, via Bloomberg. ECB's Herodotou said EZ inflation will peak this year, via CNBC. ECB's Wunsch said government aid may spell more rate hikes, via Bloomberg; 150bps of hikes by March 2023 is reasonable ECB is said to be weighting whether or not they should announce the size and duration of their upcoming bond-buying scheme, according to Reuters sources. Fed's Mester (2022, 2024 voter) said on a path towards restrictive interest rates; July debate between 50bps and 75bps hike, via CNBC. Mester said if inflation expectations become unanchored, monetary policy would have to act more forcefully; current inflation situation is a very challenging one, via Reuters. SARB Governor said a 50bps hike is "not off the table", Via Bloomberg CBR Governor said she does not see risks of deflation; sees room to cut rates; sticking to policy of floating RUB exchange rate. PBoC will step up implementation of prudent monetary policy, will keep liquidity reasonably ample. Fixed Income Bunds unwind all and a bit more of their hefty post-NRW CPI gains as other German states show smaller inflation slowdowns and Spanish HICP soars. Gilts suffer more pronounced fall from grace in relative terms and US Treasuries slip from overnight peaks in sympathy. UK debt and STIRs also await testimony from MPC member elect to see if newbie leans dovish, hawkish or middle of the road 10 year benchmarks settle off worst levels within 147.37-145.14, 112.66-11.85 and 117-12+/116-27 respective ranges awaiting comments from ECB, Fed and BoE heads at Sintra Forum. Commodities WTI and Brent front-month futures traded with no firm direction in early European hours before picking up modestly in recent trade. US Private Inventory (bbls): Crude -3.8mln (exp. -0.6mln), Cushing -0.7mln, Distillate +2.6mln (exp. -0.2mln) and Gasoline +2.9mln (exp. -0.1mln). Norway's Industri Energi and SAFE labour unions agreed a wage deal for oil drilling workers and will not go on strike, according to Reuters. OPEC to start today at 12:00BST/07:00EDT; JMMC on Thursday at 12:00BST/07:00EDT followed by OPEC+ at 12:30BST/07:30EDT, via EnergyIntel. Libya's NOC suspends oil exports from Es Sider port. Spot gold is under some mild pressure as the Buck and Bond yields picked up, with the yellow metal back to near-two-week lows Base metals are mixed but off best levels after President Xi reaffirmed China's COVID stance – LME copper fell back under USD 8,500/t US Event Calendar 07:00: June MBA Mortgage Applications, prior 4.2% 08:30: 1Q PCE Core QoQ, est. 5.1%, prior 5.1% 08:30: 1Q GDP Price Index, est. 8.1%, prior 8.1% 08:30: 1Q Personal Consumption, est. 3.1%, prior 3.1% 08:30: 1Q GDP Annualized QoQ, est. -1.5%, prior -1.5% Central Banks 09:00: Powell Takes Part in Panel Discussion at ECB Forum in Sintra 09:00: Lagarde, Powell, Bailey, Carstens Speak in Sintra 11:30: Fed’s Mester Speaks on Panel at ECB Forum in Sintra 13:05: Fed’s Bullard Makes Introductory Remarks DB's Jim Reid concludes the overnight wrap I'm finishing this off in a taxi on the way to the Eurostar this morning and I made the mistake of telling the driver I was slightly pressed for time. He seems to be taking the racing line everywhere and my motion sickness is kicking in. A little like this car journey, it's been another volatile 24 hours in markets, with a succession of weak data releases raising further questions about how close the US and Europe might be to a recession. That saw equities give up their initial gains to post a decent decline on the day, whilst there was little respite from central bankers either, with sovereign bonds selling off further as multiple speakers doubled down on their hawkish rhetoric. That comes ahead of another eventful day ahead on the calendar, with investors primarily focused on a panel featuring Fed Chair Powell, ECB President Lagarde and BoE Governor Bailey, as well as the flash German CPI print for June, who are the first G7 economy to release their inflation print for the month, which will provide some further clues on how fast central banks will need to move on rate hikes. Just as we go to print the NRW region of Germany has seen CPI print at 7.5% YoY, way below last month's 8.1%. This region is around a quarter of GDP so it could imply the national numbers will be notably softer when we get them later. The energy tax cuts were always going to come through in June so some respite was always possible but at first glance this seems materially below what might have been expected. This comes after a significant sovereign bond selloff in Europe once again yesterday as President Lagarde reiterated the central bank’s determination to bring down inflation, and described inflation pressures that were “broadening and intensifying”. And although Lagarde stuck to the existing script about the ECB raising rates by 25bps at the next meeting, we also heard from Latvia’s Kazaks who said that “front-loading the increase would be a reasonable choice” in the event that the situation with inflation or inflation expectations deteriorates. Lagarde did nod to this in part, saying that if the ECB was “to see higher inflation threatening to de-anchor inflation expectations, or signs of a more permanent loss of economic potential that limits resources availability, we would need to withdraw accommodation more promptly to stamp out the risk of a self-fulfilling spiral.” Separately on fragmentation, Lagarde said that they could “use flexibility in reinvesting redemptions” from PEPP starting July 1 in order to deal with the issue. For now, overnight index swaps are only pricing in a +31.3bps move in July from the ECB, so still closer to 25 than 50 for the time being. Meanwhile the rate priced in by year-end rose also by +7.9bps as investors interpreted the comments in a hawkish light. That supported a further rise in yields, with those on 10yr bunds up another +8.1bps yesterday, following on from their +10.7bps move in the previous session. That’s now almost reversed the -21.9ps move over the previous week, which itself was the third-largest weekly decline in bund yields for a decade, and brought the 10yr yield back up to 1.63%, so not far off its multi-year high of 1.77% seen last week. A similar pattern was seen elsewhere, with 10yr yields on 10yr OATs (+9.6bps), BTPs (+4.2bps) and gilts (+7.2bps) all moving higher too. Things turned near the European close with some poor US data releases piling on to some lacklustre confidence figures in Europe. Earlier in the day the GfK consumer confidence reading from Germany fell to -27.4 (vs. -27.3 expected), taking it to another record low. Separately in France, consumer confidence fell to 82 on the INSEE’s measure (vs. 84 expected), which we haven’t seen since 2013. Then in the US, the Conference Board’s measure fell to 98.7 (vs. 100.0 expected), which is the lowest since February 2021. The Conference Board’s one-year ahead inflation expectations hit a record high of 8.0%, surpassing the June 2008 record of 7.7%, adding to the pessimism. Along with waning confidence, the Richmond Fed’s Manufacturing Index registered a -19, its lowest since the peak onset of the pandemic, versus expectations of -7 and a prior of -9, showing that production data has weakened as well. This put a serious damper on risk sentiment which drove Treasury yields and equities lower intraday during the New York session. 10yr Treasury yields ended down -2.8bps after trading as much as +5.5bps higher during the European session. They are down another -4bps this morning. Concerningly as well, there was a fresh flattening in the Fed’s preferred yield curve indicator (which is 18m3m – 3m), which came down another -9.1bps to 165bps, which is the flattest its been since early March. With that succession of bad news helping to dampen risk appetite, US equities gave up their opening gains to leave the S&P 500 down -2.01% on the day. Tech stocks saw the worst losses, with the NASDAQ (-2.98%) and the FANG+ (-3.74%) seeing even larger declines. And whilst there was a stronger performance in Europe, the STOXX 600 ended the day up just +0.27%, having been as high as +0.95% in the couple of hours before the close. We didn’t hear so much from the Fed ahead of Chair Powell’s appearance today, although New York Fed President Williams said that at the upcoming July meeting “I think 50 to 75 is clearly going to be the debate”. Markets are continuing to price something in between the two, although since the last Fed meeting futures have been consistently closer to 75 than 50, with 69.0 bps right now. Those sharp losses in US equities are echoing across Asia this morning. The Hang Seng (-1.86%) is leading the losses followed by the Kospi (-1.82%), the Nikkei (-1.07%) and the ASX 200 (-1.06%). Over in mainland China, the Shanghai Composite (-0.77%) and the CSI (-0.80%) are slightly out-performing after yesterday’s surprise move by China to slash the quarantine period for inbound travellers (more on this below). Looking ahead, US stock index futures point to a positive opening with contracts on the S&P 500 (+0.18%) and NASDAQ 100 (+0.19%) mildly higher. Earlier today, data released showed that Japan’s retail sales advanced for the third consecutive month in May (+3.6% y/y) but lower than the consensus of +4.0%, but with the previous month's data revised up to +3.1% (vs +2.9% preliminary). Meanwhile, South Korea’s consumer sentiment index (CSI) fell sharply to 96.4 in June (vs 102.6 in May), sliding below the long-term average of 100 for the first time since Feb 2021. Separately, Australia’s retail sales put in another strong performance as it climbed +0.9% m/m in May, surpassing analyst estimates of a +0.4% increase. Oil has fallen back slightly overnight after three sessions of gains with Brent futures down -0.84% at $116.99 and WTI futures (-0.64%) at $111.04/bbl as I type. Just after we went to press yesterday, it was also announced that China would be shortening the required quarantine period for inbound travellers to one week from two. So although China is still very-much committed to a Covid-zero strategy for the time being, this step towards loosening rather than tightening restrictions is an interesting development that helped support Chinese equities in yesterday’s session towards the close which filtered through into early northern hemisphere risk performance. In terms of other data yesterday, there were signs that US house price growth might finally be slowing somewhat, with the S&P CoreLogic Case-Shiller index up by +20.4% in April, which is down slightly from the +20.6% gain in March. So still a long way from an absolute decline, but that marks a reversal in the trend after the previous 4 months of rises in the year-on-year measure. To the day ahead now, and the highlight will likely be the panel at the ECB Forum that includes Fed Chair Powell, ECB President Lagarde and BoE Governor Bailey. We’ll also be hearing from ECB Vice President de Guindos, the ECB’s Schnabel, the Fed’s Mester and Bullard, and the BoE’s Dhingra. On the data side, releases include German CPI for June, Euro Area money supply for May, and the final Euro Area consumer confidence reading for June. From the US, we’ll also get the third reading of Q1 GDP. Tyler Durden Wed, 06/29/2022 - 08:00.....»»

"We"ve Been Here Before": Bitcoin Breaks Below $20,000 As FundStrat Suggests "Final Washout".....»»

Tesla Lays Off 200 Autopilot Workers, Shutters Its San Mateo Office It looks as though not quite everything may be copacetic in the world of Tesla's Autopilot feature.  That's because yesterday, in the midst of a now weeks-long period of silence for Elon Musk on Twitter, it was reported that Tesla was laying off about 200 jobs related to Autopilot and closing its San Mateo office, where Autopilot was the focus.  Two employees told CNBC that they knew the company's lease was heading toward its end on the office.  The CNBC report said that the jobs were likely "data annotation" jobs, which "involves identifying and describing objects in short clips that were captured by cameras and sensors on Tesla vehicles", in addition to labeling data. Data labelers are also responsible for logging overlapping objects and their effectiveness as employees is rated on how many clips they can annotate over short periods of time.  An employee told CNBC they expected to be moved to Palo Alto, but not to lose their job. In a audio recording of a Tesla meeting, a manager tells employees “You knew our lease was ending here in San Mateo,” before telling them the company has put a "restructure in place" and that their "positions were impacted".  Employees were told that June 28 would be their last day.  Meanwhile, the loss of employees in the Autopilot division comes just days after we reported that Teslas on Autopilot were found to crash more than competitors. The National Highway Traffic Safety Administration has been gathering the data for about a year. It said two weeks ago that it had documented more than 200 crashes involving Teslas on some form of automated driving system. The data will "single out" Tesla for a "disproportionately high number" of crashes, AP wrote last week.   The data showed that Tesla's crash rate per 1,000 vehicles was "substantially higher" than other automakers. The data was being collected as part of a NHTSA investigation looking into Tesla vehicles' mysterious penchants for crashing into stopped vehicles and emergency vehicles on roadways - a disturbing trend we have been documenting for the better part of the last several years.  Remember, we wrote back in February that the NHTSA was looking at over 416,000 Teslas over "phantom braking".  The agency had opened a formal investigation into 416,000 Model 3 and Model Y vehicles over reports of unexpected brake activation at high speeds when driver-assistance system Autopilot is engaged.  NHTSA said the investigation was being opened after it received 354 complaints about "rapid deceleration can occur without warning, at random, and often repeatedly in a single drive cycle." No crashes or injuries have stemmed from the braking issue.  Tyler Durden Wed, 06/29/2022 - 08:25.....»»

US Q1 GDP Revisions Scream Stagflation The third look at Q1 GDP appears to confirm the worsening picture of the US economy that is now evident in sentiment surveys nationwide. Growth was revised even lower to -1.6% Annualized QoQ (from -1.5%)... Personal Consumption growth collapsed from +3.1% to just +1.8% - weakest since the COVID lockdown collapse... And finally, inflation - GDP Price Index - rose from +8.1% to +8.2% - the highest since June 1981... So - stagflation it is... not exactly what The Fed wants to see. Tyler Durden Wed, 06/29/2022 - 08:38.....»»

The Best Early Recession Indicator As we approach the end of the first half, it’s safe to say that how the second progresses will likely be determined by whether the US moves into recession or not (and how soon). In regards to this key question, Deutsche Bank's Jim Reid writes that those readers looking for lead indicators, the bank's economists have long believed that continuing claims are the best signal for an imminent slide into recession. In a recent piece, they show how an +11.5% rise above the minimum level over the previous year provides the most accurate and timely signal of recession risks since the data becomes available in the 1960s. It works for each recession and normally leads by around 2 months. In this cycle, the current low was 1306k hit on May 20th 2022. So far it’s up less than 1% to 1315k and would need to hit 1456k for the 2-month recessionary countdown clock to start ticking. However, as one can can see from the chart below, this isn’t a big pick-up in historical terms so although we’re not trending there at the moment, it wouldn’t take too much to change the picture. Indeed one concern is that initial jobless claims are up from a trough of 166k in March to 229k last week. Over time, Reid writes, these two series are very well correlated so this is a big enough move to confirm an imminent recession if continuing claims catch up. However this series is seasonally adjusted and non-seasonally adjusted claims are still bumping along the bottom and DB economist Matt Luzzetti thinks there may be some issues with seasonally adjusting so he wouldn’t yet read anything too significant into the pick-up in SA claims. In any case, Thursday 8:30am EST when the weekly claims data is released, is "showtime" each week for the foreseeable future according to Reid. Separately, DB's asset allocation team put out an excellent piece last week (available to professional subscribers) looking at what all the short, medium and long-range US recession indicators are currently telling us. In brief, most that turn down early (6-14 months before a recession) are flashing red, most that warn 1-5 months out are mixed, whereas those that turn late are still mostly showing no signs of recession, however these can often turn only in real time. More in the full note available to pro subs. Tyler Durden Wed, 06/29/2022 - 08:44.....»»

Oil Extends Gains After Indirect US-Iran Nuclear Talks Fail In Qatar High hopes had been placed on the indirect talks set to be held in Qatar starting Tuesday between Iran and the United States, which involved the European Union mediating between the two; however after the second day the Iranian side is reporting that talks have already ended without an agreement or any breakthrough.  "Indirect talks between the United States and Iran to revive a 2015 nuclear agreement have ended in Qatar without a result, Iran's semi-official Tasnim news agency reported on Wednesday," Reuters reports. Underscoring the importance of the Qatar-hosted talks as a restored nuclear deal still hangs from a thread, and is looking more unlikely than ever at this point, EU foreign policy chief Josep Borrell traveled to Doha to help mediate, after days prior meeting with Iranian officials in Tehran. Most crucially from the viewpoint of the West, lack of progress in these last ditch efforts further means there's no full-scale return of Iranian oil to international markets on the horizon... Crude prices rose steadily throughout the morning, after edging higher since the start of the week and the G7 summit's pledge of 'tougher' action against Russia and Vladimir Putin, also as they continue mulling plans for imposing a price cap on Russian energy as part of exploring ways to ensure the Kremlin's war machine doesn't benefit from soaring energy prices. The Biden administration has been scrambling to tap heretofore inaccessible supplies of crude, including from Venezuela, also as the Saudis appear cool on Washington efforts to get them to pump more. Al Jazeera reviews of where things stand in the indefinitely stalled efforts at a restored JCPOA, which earlier centered on the Vienna process: After several rounds of talks interspersed with pauses, negotiators seemed to be on the verge of an agreement in March, but it never came about. Since then, Iran and the US have been exchanging messages, but have failed to clinch an agreement. How far the US will go in lifting the sanctions has been the major point of disagreement between the two – the status of Iran’s elite Islamic Revolutionary Guard Corps is a major stumbling block, with the US unwilling to remove the military branch from its foreign terrorist organisation list. Meanwhile, the Iranians have remained insistent that it is only the US side holding things up, and that essentially the ball is still in Washington's court, and it is for the Biden administration to act, perhaps also with an understanding that Russia-Ukraine events add pressure to the White House stance vis-a-vis Iran. Via Reuters Iranian Foreign Minister Hossein Amirabdollahian said Tueday: "I believe that if the American side is in possession of serious resolve and acts realistically, an agreement is within reach at this stage and at this round of the negotiations." He added: "We are serious and would, under no circumstances, cross our redlines," which have been drawn in line with the objective of "meeting the country’s national interests to the maximum," state media quoted him as saying. "The agenda is clear." Tyler Durden Wed, 06/29/2022 - 08:45.....»»

German Inflation Unexpectedly Eases In June, But... German inflation unexpectedly slowed in June, with harmonized CPI slowing from +8.7% YoY to +8.2% YoY, dramatically below expectations of a rise to +8.8% YoY. Notably, we have seen these 'dips' in inflation before on this surge, so let's not get too excited... Source: Bloomberg As Bloomberg reports, the easing of inflationary pressures is largely due to temporary government relief measures - lower fuel taxes and discounted public-transport costs. Germany’s slowdown could extend into next month, when a renewable-energy charge on electricity prices is abolished, but underlying price pressures are likely to stay elevated, according to Berenberg economist Salomon Fiedler. However, inflation-fighters and transitory-supporters should not celebrate yet as Bloomberg notes that Governing Council member Pierre Wunsch warned Wednesday in an interview that the ECB may need to raise rates by more than it wants if inflation prompts governments to spend ever-increasing amounts on shielding households. Additionally, The ECB is unlikely to back off its tightening plans as inflation pressure remains intense elsewhere in the 19-member euro zone: Spain earlier reported a surprise jump to an all-time high of 10%, defying politicians’ efforts to curb it. Of course, there is the question of whether The ECB is easing at all... *ECB PEPP REINVESTMENTS DON'T HAVE TARGETS, THRESHOLDS FOR NOW *ECB PEPP REINVESTMENTS WON'T ALLOW FRONT-LOADING PURCHASES Translation: ECB is praying it never has to define what its "QE during QT" means as market will crush it — zerohedge (@zerohedge) June 29, 2022 Smoke and Mirrors it is... Tyler Durden Wed, 06/29/2022 - 08:59.....»»

Central Bankers Galore: Watch Powell, Lagarde, And Bailey Live From ECB Forum Today's main event, the ECB Forum panel featuring Fed Chair Powell, ECB President Lagarde, BoE Governor Bailey as well as BIS head Agustin Carstens, has started in Sintra Portugal. As Academy Securites' strategist Peter Tchir writes, he will be looking closely at Powell "to see whether he reverts to super hawk, or lets his nervousness on the economy and dovishness out? Given the political rhetoric seemed to change last week, and he was front in center, I am taking his comments as far more seriously than any other Fed Speakers (for now)." Ahead of the meeting, the Fed's Loretta Mester weighed in, telling CNBC she'd advocate for a 75-basis point hike in July. Watch it live below. Tyler Durden Wed, 06/29/2022 - 09:11.....»»

Optimism Among US Business Leaders Drops To New Low Amid Rising Inflation, Supply Issues, Labor Shortages Authored by Katabella Roberts via The Epoch Times (emphasis ours) Optimism among business leaders regarding the outlook of the U.S. economy has drastically declined in the past year, according to JPMorgan’s 2022 Business Leaders Outlook Pulse, released Monday. A man shops at a Safeway grocery store in Annapolis, Maryland, on May 16, 2022. (Jim Watson/AFP via Getty Images) More than 1,500 midsize business leaders participated in the survey (pdf), which was conducted between May 25 and June 10 across executives of midsize companies in the United States that have annual revenues from $20 million to $500 million. It found that just one in five business leaders, or 19 percent, said they were optimistic about the national economy for the year ahead, representing the lowest percentage recorded in the 12 years that the survey has been conducted by JPMorgan. That figure is also down significantly from 75 percent one year ago. Amid the decline in optimism, the survey showed that pessimism around the national economy jumped to 51 percent from 10 percent a year ago amid soaring inflation and interest rates and ongoing supply chain issues and labor shortages. Meanwhile, just 9 percent of business leaders expressed optimism over the global economy. Among those surveyed, 99 percent reported that their costs of doing business have increased in the past year, with 71 percent stating that their top challenge is rising costs, including inflation. Labor issues, including recruiting, hiring, and retaining employees and labor shortages, came in at 70 percent, while 86 percent of respondents said that they believe inflation is worse than it was six months ago, along with interest rates at 65 percent. Passing Costs Onto Customers Inflation is currently sitting at a 40-year high in the United States, which has forced many businesses to pass those higher costs onto customers. Of those surveyed by JPMorgan, more than three-quarters of businesses (76 percent) said they are raising prices, with 42 percent stating they have passed at least half of their increased costs to consumers via increased prices. That trend is unlikely to disappear any time soon, according to the survey, which found that 81 percent of respondents are likely to keep raising prices in an effort to offset higher costs. Despite the gloomy outlook, 73 percent of those surveyed said they expect increased revenue or sales for the year ahead, while 71 percent are optimistic about their company’s performance. The survey comes shortly after a poll by Morning Consult found that optimism about the future of the United States is waning among adults. Read the rest here... Tyler Durden Wed, 06/29/2022 - 09:21.....»»

Morning Wood: ARKK Founder Admits She Got Inflation Wrong, Says She'll Continue Her Strategy Anyway Cathie Wood finally offered up somewhat of a mea culpa - at least for her previous calls on inflation, though not quite so much for the underperformance of her flagship fund and her previous call that the market had bottomed back in January - on Tuesday of this week.  After being bludgeoned in the face with data that was perpetually proving her prognostications incorrect, Wood told CNBC on Tuesday: “We were wrong on one thing, and that was inflation being as sustained as it has been.” But what would that mea culpa be without immediately falling back on her greatest hits, including once again predicting deflation? According to Bloomberg, Wood then added: “Supply chain -- I can’t believe it’s taken more than two years, and Russia’s invasion of Ukraine, of course we couldn’t have seen that. So inflation has been a bigger problem. But I think that it has set us up for deflation.” Wood also did a decent job pointing out the state of both the high end and the low end consumer in the U.S., stating: “The consumer is railing against these price increases,” Wood said. “Many people think, ‘oh, the heavy spenders will keep this thing going.’ Consumer sentiment in the highest-income groups is lower than in the lowest-income groups, and the latter group is being tormented by food and energy prices, which are really a regressive tax increase.” Wood also continued to defend her strategy of picking "innovation" stocks, despite the fact that her ARKK fund has been decimated so far in 2022, falling about 53%. She said: “The most important thing we need to do is stick to our knitting. The worst thing that could happen is style drift." “When people invest in Ark, they know they’re getting truly disruptive transformative innovation. That’s what we offer, and we don’t pretend to offer anything else,” she continued. Because why let the facts change your investing outlook, right? As Bloomberg dryly noted on Tuesday, "Wood joins Treasury Secretary Janet Yellen in admitting incorrect inflation projections." If the two of them didn't make up 12 hours of a 13 hour day of financial news programming, it almost wouldn't be an issue, right? Tyler Durden Wed, 06/29/2022 - 09:40.....»»

US Officials Doubt Ukraine Can Take Back Territory, White House "Losing Confidence".....»»

Naval Mine Found At Russia's CPC's Black Sea Terminal A naval mine was found near the second mooring area of the Caspian Pipeline Consortium's (CPC) Black Sea terminal, according to Bloomberg, citing the facility's press office and a statement from the port city of Novorossiysk, located on the Black Sea in southern Russia. The discovery of the sea mine near CPC's second mooring didn't shutter operations at the terminal. CPC's third mooring will continue to operate. Reuters said CPC accounts for "around 1% of global oil trade," and any disruption at the facility could impact crude oil prices.  Bloomberg vessel-tracking data shows crude oil tanker "Prometheus Energy" is moored at the terminal.  Following the discovery of the mine, Novorossiysk has declared a state of emergency in some areas of the Black Sea. It's believed the mine is from World War II and is expected to be disposed of in the coming days.  CPC said on June 15 that minesweeping operations at the terminal would begin -- there's no further information on the device's origins. Tyler Durden Wed, 06/29/2022 - 04:15.....»»

More Than 900 Cases Of Hepatitis Of Unknown Origin Reported In Children, WHO Says Authored by Lorenz Duchamps via The Epoch Times (emphasis ours), Health officials across 33 countries have received reports of 920 probable cases of severe acute hepatitis of unknown origin in young children, according to the World Health Organization (WHO). A woman looking through a microscope on May 19, 2008. (David Davies/PA Media) In a press release on Friday, the health agency said the latest update on the outbreak is an increase of 270 cases since it published data last month that revealed 650 cases of severe acute hepatitis were diagnosed in children between April 5 and May 26. The majority of the cases are in Europe, totaling 460, with 267 from the United Kingdom alone. About one-third of the probable cases are reported in the United States. The outbreak was first reported in Britain in April and has since then hit dozens of other countries. Of the 422 cases in which gender and age-related information are available, close to half occurred in males, with most of them under 6 years of age, according to the report. The WHO said 45 children with acute hepatitis have required liver transplants, and there have been 18 deaths, most of them occurring in the Americas region. Researchers have been scrambling to determine the cause of the mysterious rise in severe cases of hepatitis—or liver inflammation—in young children. They have also theorized about a possible link to COVID-19. In a June 24 risk assessment, the WHO said acute hepatitis at a global level is “currently assessed as moderate,” citing several factors. The etiology of this severe acute hepatitis remains unknown and is being investigated; Limited epidemiological, laboratory, histopathological and clinical information are currently available to WHO; The actual number of cases and the geographical distribution may be underestimated, in part due to the limited enhanced surveillance schemes in place; The possible mode of transmission of the etiologic agent(s) has not been determined; Although there are no available reports of healthcare-associated infections, human-to-human transmission cannot be ruled out as there have been a few reports of epidemiologically-linked cases. A firefighter from the Marseille Naval Fire Battalion administers a nasal swab to a child at a testing site for COVID-19 in Marseille, France, on Sept. 17, 2020. (Eric Gaillard/Reuters) Probable Causes Health officials in the United States said infection with adenovirus, a common childhood virus called F41, could be the leading hypothesis for most probable cases. Adenovirus, a viral infection that usually causes the common cold, was detected in 75 percent of confirmed cases tested in the UK in April, according to the UK Health Security Agency (UKHSA). “The leading hypotheses remain those which involve adenovirus; however, we continue to investigate the potential role of SARS-CoV-2 and work on ruling out any toxicological component,” the UKHSA stated at the time. The WHO said preliminary reports indicate that adenovirus remains the most frequently detected pathogen among cases with available data. In the United States, adenovirus infection was detected in 45 percent of cases, while in European regions, it was found in more than half of cases with available results. Researchers studying a probable link to the CCP virus detected COVID-19 in 15 percent of hepatitis cases of unknown origin in European regions and 10 percent in the United States, according to the WHO report. Health officials with the CDC and WHO have previously said they do not believe COVID-19 vaccines appear to be linked to the hepatitis cases as many of the children who have developed the condition haven’t received the vaccine. They have also ruled out COVID-19 itself as a cause. Hepatitis is a term that refers to inflammation of the liver and is generally caused by a viral infection. The viruses hepatitis A, B, and C are commonly associated with the condition, although officials say that liver inflammation can also be caused by long-term or heavy alcohol usage, drug overdoses, prescription drugs, over-the-counter drugs like acetaminophen, and toxins. Symptoms of hepatitis include jaundice, or the yellowing of the skin or whites of the eyes, as well as nausea, vomiting, diarrhea, dark-colored urine, joint pain, a loss of appetite, fever, and fatigue, according to the Mayo Clinic and other health officials. Tyler Durden Wed, 06/29/2022 - 05:00.....»»

93% Of Working Americans Have A "Side Hustle", 51% Are Considering It Due To Inflation, New Study Finds Believe it or not, with inflation nearing 9%, it turns out that one job simply isn't good enough to cut it anymore. At least that was the findings of a new study from Insuranks, that found that 93% of working Americans today have a side hustle. Popular side hustles include Uber, Etsy, DoorDash, and Depop, the report says.  The study found that 50% of people who had a side hustle were women and 49% were men. It surveyed 1,006 full-time and part-time Americans workers about their side hustles and income, and respondents were 49% female, 49% male, and 2% transgender/non-binary. The age range was 18 to 84, with an average age of 37 years old, the report said.  The study also found that just as many Americans are working two side hustles as they are one. More than 10% of people included in the study said that they had three side hustles, with some participants even disclosing 4 or 5 different side hustles.  The study found that taking online surveys and selling items online were the two most popular side hustles. It also found that most Americans are working extra "for something to do and a bit of extra cash". 44% said they are doing it to make ends meet and cover bills. The study found that men make about $596/month on average from their side jobs, and women make about $378 on average. 90% of those responded say they enjoy it and 41% said they like it more than their full time job.  Tellingly, 51% of people surveyed said they are considering taking up an additional side hustle due to inflation: The study concluded: Working Americans are dedicating an extra 13 hours per week on average to their side hustle. That’s an average hourly wage of $37. 35% have worked a side hustle for more than three years. 20% have worked their side hustle for two years, and 16% have worked their side hustle for over one year. 26% have had their side hustle for less than a year. Tyler Durden Wed, 06/29/2022 - 05:45.....»»

Supreme Court Reinstates Louisiana Election Map Disputed By Democrats Authored by Matthew Vadum via The Epoch Times, The Supreme Court granted an emergency Republican application to reinstate a disputed election map in Louisiana late in the day on June 28, a move that allows the map to remain in place for the next elections. In the process, the high court also stayed two lower court rulings that found that the redrawn congressional district boundaries in the map probably violated the federal Voting Rights Act by diluting the power of black voters. The court said in the brief unsigned order (pdf) that it would hold off on considering the merits of the case until after it hears and decides a similar dispute from Alabama that is expected to be argued in the court’s new term that begins in October. The map was approved by Louisiana state lawmakers in March after they overrode Democratic Gov. John Bel Edwards’s veto. According to a CNN summary, the map kept Republicans’ advantage in five of the Pelican State’s six congressional districts. This left only the 2nd district, which runs all the way from New Orleans to Baton Rouge, as the state’s only majority black district and the sole district to favor Democrats. Reportedly, 33 percent of all Louisianans are black. The ruling came in Ardoin v. Robinson, court file 21A814. Kyle Ardoin is Louisiana’s Republican secretary of state. The emergency application to revive the electoral map was filed with Justice Samuel Alito, who referred the case to the full court. The court’s liberal members - Justices Stephen Breyer, Sonia Sotomayor, and Elena Kagan - dissented from the new decision but did not provide reasons explaining why. Read more here... Tyler Durden Tue, 06/28/2022 - 22:05.....»»

BofA Accuses Bed Bath & Beyond Of Cutting AC To Save Money Bank of American has accused struggling retailer Bed Bath & Beyond of cutting off air conditioning in stores in order to quickly lower expenses amid a slump in sales. Bed Bath & Beyond in Port Chester on Jan. 6 before closing (Mark Vergari / The Journal News) The company hit back, however, telling CNN that any changes in store temperature didn't come from corporate. "We've been contacted about this report, and to be clear, no Bed Bath & Beyond stores were directed to adjust their air conditioning and there have been no corporate policy changes in regard to utilities usage," a spokesperson said. After conducting in-person store visits, however, BofA analysts reported "mounting concerns" over significant cuts in employee hours, scaled back utilities, reduced operating hours, and remodeling projects which have been canceled. What's more, the company's rewards program has been scaled back and replaced. All of this has led the Bank of America analysts to predict that Bed Bath & Beyon will soon announce more closures, as well as a halt to its Buy Buy Baby stores. Meanwhile, analysts at Riley Securities noted that sales promotions have also fallen flat, along with a decrease in store traffic - causing them to reduce their price target from $17 to $7. The changes come ahead of the homegoods retailer's first quarter report, set to be released this week, and follow a devastating report last quarter when sales plunged 22%. Bed Bath & Beyond's CEO Mark Tritton said the unavailability of certain products caused by supply chain kinks resulted in about $175 million of lost sales during the period. Bank of America analysts believe sales will drop another 20% this quarter.   "The company has been underperforming the industry and we think consensus estimates [of an 18% drop in sales] may be optimistic," they wrote. -CNN According to Zacks Equity Research Concensus Estimate for the retailer, Bed Bath & Beyond is expected to report a loss of $1.28 per share, a decline of 2,660% vs. last year. Tyler Durden Tue, 06/28/2022 - 22:25.....»»

Exxon CEO Warns That Consumers Will Pay For Hasty Energy Transition Authored by Tsvetana Paraskova via OilPrice.com, Exxon CEO Woods: consumers foot the bill of rushed energy transition. Exxon CEO: All new cars sold in the U.S. will be electric in 2040. Several years of low investment in supply have made energy markets vulnerable to price shocks. ExxonMobil expects all new cars sold two decades from now to be electric vehicles. But the U.S. supermajor also believes that people will “pay a high price” in this rush to renewables without providing the energy the society currently needs, Exxon’s chief executive Darren Woods told CNBC’s David Faber in an interview last week.  Exxon joins many other oil producers who say that governments and policymakers need to balance the drive to lower carbon emissions with the people’s current need for affordable energy. The recent underinvestment in traditional energy sources is a blow to energy supplies, which leads to high prices and record-high gasoline prices, Exxon’s CEO told CNBC. That’s the latest warning from the oil industry that policymakers should look at the short-term energy needs while planning for a low-carbon future.   Sure, it’s not unheard of for a large oil corporation to warn against a rushed transition. Still, the current global energy crisis with record-high gasoline prices vindicates all those executives and officials from Middle East’s oil-producing countries who have been warning for over a year that reduced investment in oil and gas would come back to bite consumers and governments.  After the first COVID lockdowns, many industry analysts predicted that this was the end of the global oil demand growth and that we would never again see oil demand as high as it was in 2019. But people did return to travel, and demand is on track to exceed pre-COVID levels next year, analysts say. Even the International Energy Agency (IEA), which said last year that no investment in new supply should be made if the world wants to reach net-zero by 2050, predicted in its latest monthly report that global demand would average a record 101.6 million barrels per day (bpd) and exceed pre-COVID levels in 2023. Moreover, the market turmoil due to the Russian invasion of Ukraine could even lead to supply struggling to keep pace with demand next year, as sanctions on Russia would curtail more supply when they officially enter into force at the end of this year.  The industry says the supply struggle is not only the result of the forever-changed global oil market with the Russian war in Ukraine and the Western sanctions against Russia’s oil exports. It’s also the result of several years of low investment in supply, and this is Exxon’s view, too.  The record-high gasoline prices in America are a source of renewed confrontation between the U.S. Administration and the oil industry.  Earlier this month, President Joe Biden called out Exxon and other oil companies for making excessive profits, saying that “Exxon made more money than God this year.” President Biden wants companies to produce more gasoline and lower gasoline bills for American consumers. “At a time of war, refinery profit margins well above normal being passed directly onto American families are not acceptable,” President Biden said in a letter to the industry.  Exxon said in response to the letter that in the short term, the U.S. government could enact measures often used in emergencies following hurricanes or other supply disruptions, such as waivers of Jones Act provisions and some fuel specifications to increase supplies.  “Longer term, government can promote investment through clear and consistent policy that supports U.S. resource development, such as regular and predictable lease sales, as well as streamlined regulatory approval and support for infrastructure such as pipelines,” the U.S. supermajor said.  Michael Wirth, CEO at the other supermajor in America, Chevron, replied to President Biden’s letter saying that notwithstanding Chevron’s efforts to boost oil and gas production over the past year, “your Administration has largely sought to criticize, and at times vilify, our industry. These actions are not beneficial to meeting the challenges we face and are not what the American people deserve.”  Looking beyond the short-term challenges—which the industry says could be avoided in future if the U.S. Administration changed tack and stopped pointing the finger at oil firms and choking its willingness and ability to invest in supply—even Exxon thinks all new car sales in 2040 would be EVs. This, however, is not expected to significantly hit Exxon’s business as chemicals and industrial fuels will be primary drivers of oil demand going forward, Exxon’s Woods told CNBC.    Referring to the advance of EVs, Woods said, “That change is going to come at some pace but that’s not going to make or break this business or this industry quite frankly.”   Tyler Durden Tue, 06/28/2022 - 13:45.....»»

Goldman Finally Admits "Large Cuts To Earnings" Are Imminent After months of pretending that it was not wrong all along in the past year with its overly optimistic economic forecasts (based on catastrophically wrong "transitory inflation" models) and its ridiculous S&P price target (as high as 5,100 just a few months ago) distributed by the bank's head of US equity research coverage David Kostin (whose work product is not to be confused with Goldman's far more credible and accurate flow desk research which is only available to ZH professional subs), Goldman finally threw in the towel and after tongue-in-cheek "suggesting" that the S&P would drop to 3,150 in case of a recession as a result of collapsing forward multiples - which of course, will never happen, you see, it's just a hypothetical because Goldman's entire ultra-bullish narrative would come crashing down and make a mockery of all Goldman forecasts, including this one... ... Overnight Goldman also folded on forward earnings, echoing what Morgan Stanley's Michael Wilson has been saying for months, with Goldman strategist Ben Snider writing that consensus forecasts for S&P 500 earnings and margins for 2023 "seem too optimistic and could further pressure equity prices as the 'E' falls, suggesting current P/E multiples are actually higher than they appear." In "Consensus profit margin forecasts have further to fall" Snider reveals that finally, Goldman's model points to a 70bps EBIT margin decline next year for the typical S&P 500 company in the bank's non-recessionary base case... ... and a 130 bps compression in a recession scenario... ... even as all other analyst estimates show the median stock's EBIT margin expanding by 60 bps to a new record high next year. What could pressure margins? "Tightening financial conditions, persistent input cost pressures, and slowing revenue growth", etc, etc. What does this mean? While the answer is pretty clear, Goldman's Chris Hussey narrates as follows, "If our model proves to be correct, we may see large cuts to earnings ahead. Assuming no change in expected revenues, margin compression alone could reduce the median stock's expected 2023 EPS growth from +10% to 0%." Finally, here is how Goldman suggests you position for the coming earnings crash: " We continue to recommend investors focus on stocks where they can be relatively confident in the forward trajectory of earnings, including firms with stable growth and the Health Care sector, which has grown earnings in each of the last several recessions." Translation: buy energy until such time as the Biden admin sends the US into the 2nd great depression with oil rising above $200, at which point all bets are off. While there is more in the full Goldman note, we won't bore readers with it - it should be pretty obvious for those who have been reading this website... Inflation Is No Longer A Positive For Earnings Growth... Or Stocks Earnings Recession Coming As Fed Hikes Rates A Profit Recession Is Brewing That'll Be The "Worst In 50 Years" It's Official: Nomura Is First Bank To Call For 2022 Recession Did The Recession Start Three Months Ago? ... but those hell bent on reading it can find it in the usual place (for professional subscribers). Tyler Durden Tue, 06/28/2022 - 14:11.....»»

Pharmacies Rationing Purchases Of Emergency Contraception Pills Amid Soaring Demand Post-Roe Authored by Katabella Roberts via The Epoch Times, Retail giants CVS Health Corp. and Walmart Inc. have announced that they will be limiting the number of purchases of emergency contraceptive pills amid increased demand following the Supreme Court decision to overturn Roe v. Wade. Drugstore chain Rite Aid Corp. is also limiting purchases of the “Plan B One-Step” morning-after pill, which is typically taken within 72 hours after a woman engages in unprotected sex or after birth control failure. Plan B works by temporarily delaying ovulation or the release of an egg from the ovary, effectively preventing a pregnancy from happening. The pills are not the same as medication abortion pills, which require a prescription and involve administering the medicines mifepristone and misoprostol to terminate a pregnancy. CVS was limiting purchases of over-the-counter emergency contraceptives to three per customer, while Walmart limited pills available to four or six per customer, The Wall Street Journal reported. “Walmart had some pills available without limits, but only in cases where they wouldn’t ship until next month,” according to The Wall Street Journal. A CVS spokesperson told The Epoch Times: “We have ample supply of Plan B and Aftera across all of our CVS Pharmacy stores and CVS.com. To ensure equitable access and consistent supply on store shelves, we’ve implemented a temporary purchase limit of three on these products.” A Rite Aid spokesperson told Bloomberg that it is limiting purchases of Plan B to three per customer due to increased demand. The Epoch Times has contacted Walmart and Rite Aid for comment. Growing Demand Walgreens Boots Alliance, the holding company that owns the Walgreens drugstore chain, initially had a limit in place for the pills on its website too, according to The Wall Street Journal, but a spokesperson said the restriction was an error and would be corrected while an investigation is being conducted into why and how that happened. Limits on the amount that can be purchased come as the pills were in short supply or out of stock the morning of June 27 across major retailer websites amid an uptick in purchases following the Supreme Court decision to overturn the 1973 precedent that legalized abortion in the United States. The court, in a 6–3 ruling, upheld a Mississippi law that bans abortion after 15 weeks of pregnancy and overturned Roe v. Wade, handing the power back down to states when it comes to making the rules around abortion laws. Following the ruling, abortion bans in Arkansas, Kentucky, Louisiana, Missouri, Oklahoma, South Dakota, Utah, and Alabama went into immediate effect, and more states are expected to ban or severely restrict abortions in the near future. The Supreme Court decision caused mixed reactions across the country, with proponents, including South Dakota Gov. Kristi Noem, Texas Attorney General Ken Paxton, Louisiana Attorney General Jeff Landry, and former Vice President Mike Pence praising the move. However, pro-abortion demonstrations quickly formed across the country, including outside the homes of the Supreme Court justices. Planned Parenthood Federation of America, which has filed lawsuits in Idaho, Utah, and Kentucky to block those states’ total abortion bans, has urged women not to stockpile emergency contraception. “Keep in mind that stockpiling or hoarding emergency contraception can limit the ability of people in your community” to get it, Planned Parenthood spokeswoman Megan N. Freeland told The New York Times. Tyler Durden Tue, 06/28/2022 - 14:30.....»»

Ghislaine Maxwell Sentenced To 20 Years In Prison Update : Judge Nathan has sentenced Ghislaine Maxwell to 20 years in prison. "A sentence of 240 months is sufficient and no graver than necessary." The sentence is less than the 30-50 years prosecutors asked for, but more than the 6 year sentence the defense thought was appropriate. While preparing to deliver the sentence, Nathan said that "Ms Maxwell directly and repeatedly and over the course of many years participated in a horrific scheme" to traffic and abuse girls, and that "Ms Maxwell worked with Epstein to select young victims who were vulnerable." As such, a "substantial sentence" is warranted, which - if not released early, means Maxwell will be 80-years-old when she gets out. And somehow not a single Epstein client was named... *  *   * Judge Alison J Nathan said on Tuesday that Ghislaine Maxwell's criminal activity was "extensive," and that she's enhancing her sentence due to the fact that she was at least 10 years older than her victims, and exercised "undue influence" on them. That said, Nathan said that the calculation for sentencing will hinge on whether evidence showed criminal conduct after Nov. 1, 2004 - and that there isn't evidence to support the higher-recommended guidelines of 30 - 50 years. This means Maxwell will likely receive the more lenient guidelines calculation, which would result in less than 20 years in prison. *  *  * Jeffrey Epstein 'Madam' and partner in crime, Ghislaine Maxwell, is set to be sentenced today after being found guilty of participating in a decade-long scheme to lure and groom underage girls for sexual exploitation by Epstein and his associates - at times participating in the abuse herself, according to Bloomberg. The 60-year-old former socialite, who was arrested two years ago at a New Hampshire hideaway, was convicted in December in what accusers have called long-overdue justice for Epstein's victims. Prosecutors have recommended 30 to 55 years behind bars - likely a life sentence, while Maxwell has asked for less than six years - arguing that she and her siblings were mentally and physically abused by their father, UK publishing tycoon and suspected Israeli spy, Robert Maxwell. She also argued that she shouldn't bear the brunt of the punishment for Epstein's crimes, since he's dead. Several victims who weren't part of Maxwell's trial will be allowed to speak during Tuesday's sentencing in a Manhattan courtroom in front of US Circuit Judge Alison Nathan. Maxwell will also be afforded the opportunity to speak, should she so choose. One of the victims expected to appear is Virginia Giuffre, who accused Prince Andrew of sexually abusing her. Giuffre and Andrew reached a settlement in a civil suit earlier this year, after she claimed Epstein "lent" her out for sexual abuse, a claim Andrew has denied. "She made the choice to conspire with Epstein for years, working as partners in crime and causing devastating harm to vulnerable victims," argued prosecutor Maurene Comey in the government's sentencing memo. "She should be held accountable for her disturbing role in an extensive child exploitation scheme." According to former UBS AG banker Justin Paperny, who served 18 months for securities fraud, Maxwell's arguments for leniency will likely fall on deaf ears, especially with several accusers testifying on Tuesday. "The first thing judges want to know if you plead guilty is if you identify with your victims," he said, adding "In this case, Maxwell said ‘Yeah, there are victims but I didn’t create it. I didn’t do anything wrong. It’s just because I was friends with Epstein. If anything, I’m the victim,’” Paperny said. That attitude “doesn’t sit well with a sentencing judge when there are victims whose lives have been torn and ripped apart by her pedophile friend." Stay tuned for more... Tyler Durden Tue, 06/28/2022 - 14:32.....»»