"We Face Huge Pressure" - China's Developer Cash Crunch Spreads To Sunac By Sofia Horta e Costa, Bloomberg markets commentator and analyst, who follows up on our Friday article "The Housing Market Is Almost Frozen" - An Even Bigger Problem Emerges For China" in which we discussed the spread of Evergrande's contagion to Sunac Sunac has become the latest Chinese developer to run into liquidity issues, underscoring the challenging environment for the industry as the nation’s property slowdown deepens. The Hong Kong-listed real estate firm asked authorities in the city of Shaoxing for assistance after local housing curbs affected sales at one of the company’s projects, according to a letter from a subsidiary seen by Bloomberg. The market is almost frozen, the company said in the letter, addressing the local government. "We face huge pressure." Sunac’s plea for help shows the urgency of the cash crunch affecting the country’s indebted developers as the central government maintains rules to cut leverage in the industry and cool housing activity. China’s home prices are at risk of “meaningful downside” regardless of what happens to Evergrande, Citigroup analysts wrote in a recent note. Sunac’s dollar bonds slumped on Friday after the letter circulated among credit traders, with the 5.95% note due 2024 dropping to the lowest price on record. Sunac has the third-biggest weighting on a Bloomberg index of Chinese high yield dollar bonds, after Kaisa and a riskier note sold by ICBC this month. Sunac’s shares have slumped 50% this year, cutting the wealth of billionaire founder and chairman Sun Hongbin. He had a 44% shareholding in the company as of June, according to the data compiled by Bloomberg. The Tianjin-based business reported revenue of 230.6 billion yuan ($33 billion) in 2020. The property market fallout is hurting companies in a stronger financial position than Evergrande. Sunac, which has high speculative-grade ratings at the three global credit risk accessors, has about half the liabilities of its larger peer Evergrande. Sunac complies with two of China’s debt metrics known as the three red lines, and it’s looking to sell assets including its indoor ski parks business to raise cash. The Sunac group as a whole has “run into big hurdles and difficulties in terms of cash flow and liquidity,” it said in the letter. Tyler Durden Sun, 09/26/2021 - 23:00.....»»

Power Supply Shock Looms: "Global Markets Will Feel The Pinch Very Soon" Of China's Next Crisis Distracted by the 'grandness' of the collapse of China's property development market, many have missed the fact that China faces a crisis that could directly hit Asia's economy just as hard as a financial collapse - a nationwide power supply shock. After ramping up its coal-based power production earlier in the year, it appears Beijing has suddenly grown a conscience over its emissions and the 'average joe' could be about to feel the pain of that decision. Climate change facts: Chinese CO2 emissions are more than double those of the US, and greater than US and EU combined. pic.twitter.com/ZpJCoPaUjB — zerohedge (@zerohedge) October 6, 2020 As Bloomberg reports, the crackdown on power consumption is being driven by rising demand for electricity and surging coal and gas prices as well as strict targets from Beijing to cut emissions. It’s coming first to the country’s mammoth manufacturing industries: from aluminum smelters to textiles producers and soybean processing plants, factories are being ordered to curb activity or - in some instances - shut altogether. "With market attention now laser-focused on Evergrande and Beijing’s unprecedented curbs on the property sector, another major supply-side shock may have been underestimated or even missed,” Nomura Holding Inc. analysts including Ting Lu warned in a note, predicting China’s economy will shrink this quarter. As a reminder, China pollutes more than the US and all developed countries combined... More problematic for Greta and her pals, between the years 2000 and 2020, the amount of electricity generated by burning coal increased more than four-fold in China, hitting around 4,600 terrawatt hours in the past year. You will find more infographics at Statista As the scene below suggests, this is not the first time China has faced winter power demand surges (which prompted many to turn to diesel generators to plug the shortages of power from the electricity grid). However, this year is different. The danger is that, as Zeng Hao, chief expert at consultancy Shanxi Jinzheng Energy, warns: government policies will significantly limit the energy industry’s potential to increase production to meet the demand increase. 2021's worsening power crunch in China reflects three specific factors: 1) Extremely tight energy supply globally (that's already seen chaos engulf markets in Europe); 2) The economic rebound from COVID lockdowns that has boosted demand from households and businesses (as lower investment by miners and drillers constrains production); and 3) President Xi Jinping tries to ensure blue skies at the Winter Olympics in Beijing next February (showing the international community for the first time that he's serious about de-carbonizing the economy). Simply put, it is the third factor - which is all of its own making - that has raised the risk of a severe shortage of coal and gas - used to heat homes and power factories - this winter; and more ominously, expectations of the need to ration power to those deemed worthy. “The power curbs will ripple through and impact global markets,” Nomura’s Ting said. “Very soon the global markets will feel the pinch of a shortage of supply from textiles, toys to machine parts.” As we noted earlier in the year, China needs to shutter 600 coal plants to meet its emissions goals of net zero greenhouse emissions by 2060. If Xi's recent actions in the interests of "common prosperity" are really about forestalling social unrest, we suspect his commitment to meeting self-imposed carbon emissions targets may quickly evaporate as the Chinese people are unlikely to stand sustained black-outs for long without upheaval. Tyler Durden Sun, 09/26/2021 - 20:30.....»»

Elon Musk's collaborative tone about data security came despite China's richest tech titans being hurt by Beijing's regulatory crackdown. China is one of the most lucrative markets for Tesla. Luo Yunfei/China News Service via Getty Images Tesla is glad to see new data-security laws, Elon Musk said at China's World Internet Conference. "Data security is key to the success of intelligent and connected vehicles," he said on Sunday. Musk's collaborative tone came despite China's richest tech titans dealing with huge losses. See more stories on Insider's business page. Tesla is glad to see new laws relating to strengthening of data management, Elon Musk said at China's World Internet Conference on Sunday.Musk didn't specify that his remarks related to China's strict data protection law, but said Tesla's data centre in the country localizes all data generated for business there.Beijing has been moving to tighten regulation for several months to rein in the power of Big Tech.The nation's Personal Information Protection Law, set to be implemented on November 1, lays out rules around better user data storage and conditions under which companies can gather data, including obtaining prior consent."Data security is key to the success of intelligent and connected vehicles," Musk said in prepared remarks to the summit. "And it's not only closely linked to an individual's interests, but also matters to the whole society.""At Tesla, we are glad to see a number of laws and regulations that have been released to strengthen data management," he said."All personally identifiable information is securely stored in China without being transferred overseas," he said, referring to the company's handling of data. "Only in very rare cases, for example, spare parts, order for overseas is data approved for transfer internationally."He added that he believed data protection was not only an issue of one single company and should be a mutual effort for all industry players. "We're working with regulators on finding the best solution for data security," he said.China is one of the most lucrative markets for Tesla, contributing 30% of total sales for the EV maker in the second quarter this year. At Sunday's summit, China's Vice-Premier Liu said President Xi Jinping has promised to work with countries around the world to shape a vibrant digital economy and build on effective supervision.Other US business leaders that participated via video in the event were the recently appointed CEOs of Intel and Qualcomm, Pat Gelsinger and Cristiano Amon.Musk's collaborative tone came despite the rough patch that the tech sector in China is enduring. The country's richest tech titans, including Jack Ma and Pinduoduo's Colin Huang, have had billions wiped off their personal wealth as a result of investors reacting to Beijing's strict new rules.Read the original article on Business Insider.....»»

Elon Musk's collaborative tone about data security came despite China's richest tech titans being hurt by Beijing's regulatory crackdown. China is one of the most lucrative markets for Tesla. Luo Yunfei/China News Service via Getty Images Tesla is glad to see new data-security laws, Elon Musk said at China's World Internet Conference. "Data security is key to the success of intelligent and connected vehicles," he said on Sunday. Musk's collaborative tone came despite China's richest tech titans dealing with huge losses. See more stories on Insider's business page. Tesla is glad to see new laws relating to strengthening of data management, Elon Musk said at China's World Internet Conference on Sunday.Musk didn't specify that his remarks related to China's strict data protection law, but said Tesla's data centre in the country localizes all data generated for business there.Beijing has been moving to tighten regulation for several months to rein in the power of big tech.The nation's Personal Information Protection Law, set to be implemented on November 1, lays out a set of rules around better storage of user data and conditions under which companies can gather data, including obtaining prior consent."Data security is key to the success of intelligent and connected vehicles," Musk said in prepared remarks to the summit. "And it's not only closely linked to an individual's interests, but also matters to the whole society.""At Tesla, we are glad to see a number of laws and regulations that have been released to strengthen data management," he said."All personally identifiable information is securely stored in China without being transferred overseas," he said, about the company's handling of data. "Only in very rare cases, for example, spare parts, order for overseas is data approved for transfer internationally."He added that he believed data protection was not only an issue of one single company and should be a mutual effort for all industry players. "We're working with regulators on finding the best solution for data security," he said.China is one of the most lucrative markets for Tesla, contributing 30% of total sales for the EV maker in the second quarter this year. At Sunday's summit, China's Vice-Premier Liu said President Xi Jinping has promised to work with countries around the world to shape a vibrant digital economy and build on effective supervision.Other US business leaders that participated via video in the event were the recently appointed CEOs of Intel and Qualcomm, Pat Gelsinger and Cristiano Amon.Musk's collaborative tone came despite the rough patch that the tech sector in China is enduring. The country's richest tech titans, including Jack Ma and Pinduoduo's Colin Huang, have had billions wiped off their personal wealth as a result of investors reacting to Beijing's strict new rules.Read the original article on Business Insider.....»»

"Changes In Markets Happen Slowly... Then All At Once" Authored by Lance Roberts via RealInvestmentAdvice.com, Correction Is Over As Bulls Jump Back Into The “Risk Pool.” As noted last week, retail investors didn’t step in right away to buy the dip at the 50-dma. However, they did show up on Monday afternoon and continued to buy through the rest of the week. “With the market very oversold, a counter-trend bounce next week will not be a surprise. However, if the market fails to hold the 50-dma, the risk of a more substantial correction is likely.” Notably, two essential things occurred this week. The market regained its 50-dma and triggered our RIAPRO Money Flow “buy” signal. Both suggest that bulls have regained control, and we could see some follow-through buying next week. Over the past several weeks, in various forms, we discussed our reduction in risk by rebalancing equities, raising cash, and extending our duration in our bond portfolio. To wit: “With volatility currently at the lows of its recent range, a pick-up in volatility would not be surprising. Over the last 6-months, corrections remain range-bound to the 50-dma which is currently 3% lower than closing levels. While such a decline is well within the norms of a correction in any given market year, the low levels of volatility will make it ‘feel’ worse than it is. With money flows continuing to weaken and technical indicators setting up to produce sell signals, we reduced exposure a bit more this week by increasing cash and reducing our financial holdings. “ – August 13th. With the markets now deeply oversold on a short-term basis, we deployed some of our cash throughout the week to rebalance the portfolio toward normal allocation levels. We don’t expect a tremendous amount of upside, given the ongoing weakness of market internals, but a retest of previous highs is not out of the question. Particularly since the Fed “threaded the needle.” The Fed Threads The Needle On Taper For weeks now, the Fed has been prepping the market for “taper talk.” Stocks sold off a bit in anticipation of the announcement, effectively “pricing in” a mildly hawkish stance. Jerome Powell did not fail to deliver during his press conference by announcing taper with no timeline. With respect to progress towards taper, Powell commented, “In my own thinking, the test is all but met”. “I think if the economy continues to progress broadly in line with expectations and the overall situation is appropriate for this, we could easily move ahead [with taper] by next meeting, or not…” Again, with respect to a decision for November taper, “I don’t need to see a good employment report next month; I just need to see a decent employment report”. Powell is clearly signaling that Fed is likely to announce taper in November barring an unexpected deterioration in economic conditions. Powell commented that it may be appropriate for taper to conclude by mid-2022. As expected, Powell left a back door open in case taper doesn’t go over well. “If necessary, we can accelerate or decelerate the taper”. As we noted in our Daily Market Commentary (subscribe for pre-market delivery): “The Fed has done a decent job of telegraphing when tapering is likely to begin (most market participants believe the announcement will come this year), but more importantly it’s because the asset purchase reductions are likely to be trivial when seen in the context of how large the fixed income markets are today, and how overwhelming the demand for income has become.” – Rick Rieder, BlackRock’s CIO of Global Fixed Income From the market’s perspective, a $15 billion reduction in purchases says the Fed isn’t removing the “punch bowl.” However, as shown in the table below, taper becomes an issue in 2022. 3 Signs Of The Next Bear Market I previously warned that during the subsequent 5% correction, it would “feel” much worse than it was. However, gauging by the number of emails asking about the “crash,” why we weren’t heavily short the market, and we were crazy for “buying” the recent lows, it is clear sentiment has gotten extremely negative. The question I received the most was, “Is this the beginning of a bear market?” The answer is “no.” Currently, bullish sentiment remains high, global liquidity flows are strong, and stock buybacks are at a record. While those issues are supportive of stocks currently, they are also dependent on rising asset prices. So, for investors, there are 3-signs that will signal the next bear market or recession is approaching, requiring a more defensive investment posture. 1. Yield Curve Inversion (Not Yet) The yield curve is one of the most important indicators for determining when a recession, and a subsequent bear market, approaches. The chart below shows the percentage of yield curves that invert out of 10-possible combinations. At the moment, given there are no inversions, there is no immediate risk of a recession or “bear market. “ Historically speaking, from the time yield curves begin to invert, the span to the next recession runs roughly 9-months. However, note that yield curves are currently declining, suggesting economic growth will weaken. If this trend continues, another “inversion” would not be a surprise. Given the strong track record of predicting recessions historically, when the subsequent inversion occurs, the media will quickly dismiss it just as they did in 2019. Such would not be a wise thing to do. 2. Fed Taper (Coming) The issue of “tapering” is not as much about the Fed’s actual reduction of bond purchases as it is about psychology. “The key to navigating Quantitative Easing and Fed policy in general is to recognize that their effect on the stock market relies almost entirely on speculative investor psychology. As long as investors get inclined to speculate, they treat zero-interest money as an inferior asset, and they will chase any asset with a yield above zero (or a past record of positive returns). Valuation doesn’t matter because investors psychologically rule out the possibility of price declines in the first place.” – John Hussman In other words, “QE” is a mental formation. Therefore, the only thing that alters the effectiveness of the Fed’s monetary policy is investor psychology itself. As shown, there is a very high correlation between the expansion of the Fed’s balance sheet and asset price increases. Whether the correlation is due to liquidity moving into assets through leverage or just the “psychology” of the “Fed Put,” the result is the same. Therefore, it should also not be surprising that when the Fed starts “tapering” their bond purchases, the market tends to witness increased volatility. The grey shaded bars in the chart below show when the balance sheet is either flat or contracting. Notably, the period from the initial tapering of assets and a market correction is almost immediate. So far, the Fed is only TALKING about taper. November, however, could be a different story. 3. Fed Rate Hikes (Not Yet) The risk of a market correction rises further when the Fed is tapering its balance sheet and increasing the overnight lending rate. Currently, there is no expectation for rate hikes until late 2022. What we now know, after more than a decade of experience, is that when the Fed starts to slow or drain its monetary liquidity, the clock starts ticking to the next corrective cycle. Once the Fed begins to hike interest rates, market corrections occur quickly, generally within 2-4 quarters. However, recessions and bear markets typically take longer and have been extended due to ongoing interventions. Recent history has moved the median time frame between the first rate hike and the onset of a recession to somewhere between 24 and 36 months. Investors have several primary indicators to follow to navigate market risk and potential bear markets. While there is currently no indication of a recession or bear market, the Fed starting to “taper” its asset purchases will increase volatility. Once the Fed begins to hike rates or yield curves start to invert, the time to become much more defensive will become evident. However, such could all change quickly with the introduction of an exogenous event. In the meantime, remain invested but don’t be lulled into complacency. Changes in markets always happen slowly, then all at once. Tyler Durden Sun, 09/26/2021 - 10:00.....»»

StrategyWhy it's difficult for the average investor to know who to trust on financial TV. (ritholtz.com)On the dangers of selling a stock too soon. (humbledollar.com)Successful investing involves a willingness to let go of some control. (evidenceinvestor.com)If you want to get rich start a company, instead of becoming an investor. (philo.substack.com)CryptoChina is not messing around this time with it's crypto ban. (coindesk.com)FTX is in the process of moving its headquarters to the Bahamas. (theblockcrypto.com)Binance is facing regulatory scrutiny across the globe. (protocol.com)CompaniesWhy DraftKings's ($DKNG) bid for Entain is a big deal for the industry. (frontofficesports.com)The story of how Toast ($TOST) came to be a public company. (cnbc.com)A big profile of Twist Bioscience s($TWST) and how it is changing the industry. (alexdanco.com)What is the Petershill Partners Plc private-equity business worth as a public company. (washingtonpost.com)GlobalDoes combating climate change mean higher inflation down the road? (ft.com)Tel Aviv, Israel is being transformed by the startup boom. (wsj.com)PolicyWhy child care workers are quitting in droves. (washingtonpost.com)Why does the FDA still not have a permanent chief? (npr.org)Plenty of public companies got PPP loans and didn't pay them back. (propublica.org)No single technology can solve rural America's broadband problem. (bloomberg.com)Debt ceilingDebt ceiling debates are pointless and should just go away. (pragcap.com)How an actual debt ceiling-induced default would affect markets. (econbrowser.com)How the press should cover the debt limit issue (fallows.substack.com)EconomyInflation can show up in ways, i.e. inconvenience, than just prices. (awealthofcommonsense.com)The economic schedule for the coming week. (calculatedriskblog.com)Earlier on Abnormal ReturnsTop clicks this week on the site. (abnormalreturns.com)What you missed in our Saturday linkfest. (abnormalreturns.com)Coronavirus links: flu season. (abnormalreturns.com)Are you a financial adviser looking for some out-of-the-box thinking? Then check out our weekly e-mail newsletter. (newsletter.abnormalreturns.com)Mixed mediaThere is a big difference between data and information. (incognitomoneyscribe.com)To get more done, do less if the stuff that doesn't matter. (fs.blog)Lessons learned from a year on Substack. (niemanlab.org).....»»

Ynsect’s powdered protein is currently used in pet food, fish meal and even as an ingredient in burger patties and pasta in parts of Europe (To receive weekly emails of conversations with the world’s top CEOs and business decisionmakers, click here.)   Global food production accounts for one-third of all greenhouse-gas emissions, according to a comprehensive study published this year in the journal Nature Food that looked at every aspect of food production from transportation to packaging. Meat production alone makes up nearly 60% of that total. The study underscores the growing consensus that in order to stave off the worst impacts of climate change, the world needs a dramatic rethinking of how food is produced and consumed. Especially since the U.N. estimates that food production will have to increase by 70% by 2050 to feed the world’s growing population. [time-brightcove not-tgx=”true”] Increasingly, companies and scientists are viewing insects as an environmentally sustainable alternative source of protein. Crickets, grasshoppers and beetles are already commercially produced and processed for human and animal consumption. Ynsect, a 10-year-old French company, is focused on mealworms, the larval stage of beetles. One big advantage of mealworms, aside from their neutral taste and high degree of digestibility, is that they don’t fly or jump, which means it requires a lot less space to grow and process them compared with more mobile insects. One of Europe’s best-funded insect-farming companies (it has raised over $400 million), Ynsect currently has one highly automated vertical farm in France and plans to open a far larger production facility in the country next year. The company is also scouting locations for a major facility in the U.S. and plans to announce a Midwest location before the end of the year. It eventually plans to have farms across the world. Ynsect’s powdered protein is currently used in pet food, fish meal for commercial fish farms and other animal feed. It’s in limited consumer products in parts of Europe, including as an ingredient in burger patties and pasta. It will soon enter the sports-drink and protein-bar markets. Ynsect co-founder and CEO Antoine Hubert recently joined TIME for a video conversation on how the cultivation of insects can help mitigate the impacts of climate change and take pressure off threats to the earth’s biodiversity. (This interview has been condensed and edited for clarity.)   Was it always the humble mealworm? When we started the company, we tested several species, from beetles to flies to crickets, locusts and others. Finally, we ended up with mealworms. We worked with a small farmer who had 20 years experience in small-scale insect farming, and it was his opinion that it was the best. We also found that mealworms were super-good for great big vertical farms and able to deliver large volumes that are required for animal feed, pet food or human food—thousands of tons, not a few kilos per day. So scalability was a big factor in anointing mealworms? Exactly. This is about a product and the technology. It is not flying. Butterflies or crickets, they need a lot of space to grow. Mealworms really love to be together. What does the insect version of a vertical farm look like? It’s an automated warehouse, very similar to an Amazon warehouse, where instead of storing stuff, we are storing live insects. There is a climate-control system which is highly complex to maintain temperature and moisture from zero to 30 meters high. All operations are automated. Anything that you do on [an insect] farm is done with robots. Why is developing an alternative protein source with a smaller carbon footprint so essential, and what role is your company playing across the food chain? The two main issues the earth is facing today are climate change and biodiversity collapse. We are not far from reaching tipping points where then things get worse and it cascades and waterfalls—you can’t stop it anymore. Time is very critical. There is a huge need to reduce our consumption of beef. We should keep beef consumption, grazing, on a smaller scale with high levels of fresh products. But everything that is a processed meat should be 100% replaced at some point by alternatives. Insects will be a part of the answer. Another way is to move from existing meat to other meats with no methane emissions: chicken and fish. We help to change the way we feed chicken and fish. And our leftover insect manure is a great organic fertilizer that can fully replace chemical fertilizers. How is fish-meal production, catching fish to be ground up into fish meal to feed farmed fish, harming biodiversity? It’s about overfishing. The largest fisheries today are used for fish-meal production. One in four boats, about 25% of total fish vessels, are used to process fish meal which is going to feed animals. It’s the most overfished stock. We need to reduce the fishing of the stock to be below the renewable threshold. They say in the fishing industry, take only the interest, not your stock. The demand for fish, especially shrimp and salmon, is growing a lot faster than other meats, and they are super-dependent on fish meal. And this is why big companies are looking for alternatives. And mealworms have a fairly neutral taste? We have different products, but the main one is pretty neutral. We also have a very light color, which is exactly what companies are looking at. They don’t want a very strong taste when they do burgers or energy bars or energy drinks. Otherwise you will end up with a highly smelly product, which is something that is not desirable for consumers, which is often what small-scale crickets companies are doing … big smell and big taste, which makes it very difficult to use the product in final food products. Our process helps us to avoid smells.     Note to readers: I want to end this week’s column with a note of thanks to the readers of The Leadership Brief. Starting next week, we at TIME are embarking on a new approach that we are excited to share with you. I will continue to contribute, but going forward, the weekly newsletter will be produced by a team led by TIME’s executive editor, John Simons (John conducted the interview with Apple CEO Tim Cook last week). I want to thank all of you for your loyal readership and offer a particular expression of gratitude to those of you who have taken the time to write and share your thoughts with me. I have loved hearing from you each week and have always benefited from your insights. Eben Shapiro.....»»

The 'Great Game' Moves On Authored by Alasdair Macleod via GoldMoney.com, Following America’s withdrawal from Afghanistan, her focus has switched to the Pacific with the establishment of a joint Australian and UK naval partnership. The founder of modern geopolitical theory, Halford Mackinder, had something to say about this in his last paper, written for the Council on Foreign Relations in 1943. Mackinder anticipated this development, though the actors and their roles at that time were different. In particular, he foresaw the economic emergence of China and India and the importance of the Pacific region. This article discusses the current situation in Mackinder’s context, taking in the consequences of green energy, the importance of trade in the Pacific region, and China’s current deflationary strategy relative to that of declining western powers aggressively pursuing asset inflation. There is little doubt that the world is rebalancing as Mackinder described nearly eighty years ago. To appreciate it we must look beyond the West’s current economic and monetary difficulties and the loss of its hegemony over Asia, and particularly note the improving conditions of the Asia’s most populous nations. Introduction Following NATO’s defeat in the heart of Asia, and with Afghanistan now under the Taliban’s rule, the Chinese/Russian axis now controls the Asian continental mass. Asian nations not directly related to its joint hegemony (not being members, associates, or dialog partners of the Shanghai Cooperation Organisation) are increasingly dependent upon it for trade and technology. Sub-Saharan Africa is in its sphere of influence. The reality for America is that the total population in or associated with the SCO is 57% of the world population. And America’s grip on its European allies is slipping. NATO itself has become less relevant, with Turkey drawn towards the rival Asian axis, and its EU members are compromised through trading and energy links with Russia and China. Furthermore, France is pushing the EU towards establishing its own army independent of US-led NATO — quite what its role will be, other than political puffery for France is a mystery. It is against this background that three of the Five Eyes intelligence partnership have formed AUKUS – standing for Australia, UK, and US — and its first agreement is to give Australia a nuclear submarine capability to strengthen the partnership’s naval power in the Pacific. Other capabilities, chiefly aimed at containing the Chinese threat to Taiwan and other allies in the Pacific Ocean, will surely emerge in due course. The other two Five Eyes, Canada and New Zealand, appear to be less keen to confront China. But perhaps they will also have less obvious roles in due course beyond pure intelligence gathering. The US, under President Trump, had failed to contain China’s increasing economic dominance and its rapidly developing technological challenge to American supremacy. Trump’s one success was to peel off the UK from its Cameron/Osbourne policy of strengthening trade and financial ties with China by threatening the UK’s important role in its intelligence partnership with the US. For the UK, the challenge came at a critical time. Brexit had happened, and the UK needed global partners for its future trade and geopolitical strategies, the latter needed to cement its re-emergence onto the world stage following Brexit. Trump held out the carrot of a fast-tracked US/UK trade deal. The Swiss alternative of neutrality in international affairs is not in the UK’s DNA, so realistically the decision was a no-brainer: the UK had to recommit itself entirely to the Anglo-Saxon Five-Eyes partnership with the US, Canada, Australia, and New Zealand and turn its back on China. But gathering intelligence and building naval power in the Pacific won’t defeat the Chinese. All simulations show that the US, with or without AUKUS, cannot win a military conflict against China. But AUKUS is not a formal model on NATO lines which commits its members by treaty to aggression against a common enemy. While Taiwan remains a specific problem, the objective is almost certainly to discourage China from territorial expansion and protect and give other Pacific nations on the Asian periphery the security to be independent from the SCO behemoth. The trade benefits of closer relationships with these independent nations are also an additional reason for the UK to join the CPTPP — the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. It qualifies for membership through its sovereignty over the Pitcairn Islands. And that is why China has also applied to join. Therefore, AUKUS’s importance is in the signal sent to China and the whole Pacific region, following the abandonment of land-based operations in the Middle East and Afghanistan. The maritime threat to China is a line which must not be crossed. We are entering a new era in the Great Game, where the objective has changed from dominance to containment. Having lost its position of ultimate control in the Eurasian land mass America has selected its partners to retain control over the high seas. And the UK has found a new geopolitical purpose, re-establishing a global role now that it is independent from the EU. The French cannot join the CPTPP being bound into the common trade policies of the EU. Seeing the British escape the strictures of the EU and rapidly obtain more global influence than France could dream of has touched a raw nerve. Mackinder vindicated The father of geopolitics, Halford Mackinder, is frequently quoted and his theories are still relevant to the current situation. Much has been written about Mackinder’s prophecies. His concept of the World Island was first mentioned in his 1904 presentation to the Royal Geographic Society in London: “a pivot state, resulting in its expansion over the marginal lands of Euro-Asia”. In 1943 he updated his views in an article for the Council on Foreign Relations, adding to his heartland theory. Written during the Second World War, his commentary reflected the combatants and their positions at that time. But despite this, he made a perceptive comment relative to the situation today and AUKUS: “Were the Chinese for instance organised by the Japanese to overthrow the Russian Empire and conquer its territory they might constitute the yellow peril to the world’s freedom just because they would add an oceanic frontage to the resources of the great continent.” When Mackinder wrote his article the Japanese had already invaded Manchuria, but their subsequent defeat removed them from an active geopolitical role, and in place of a Soviet defeat China has entered a peaceful partnership with Russia that extends to all its old Central Asian soviet satellites. It is the focus on the ocean frontage that matters, upon which the maritime silk road depends. The article brings into play another aspect mentioned by Mackinder, and that is the Heartland’s tremendous natural resources, “…including enough coal in the Kuznetsk and Krasnoyarsk basins capable of supplying the requirements of the whole world for 300 years”. And: “In 1938 Russia produced more of the following food stuffs than any other country in the world: wheat, barley, oats, rye, and sugar beets. More manganese was produced in Russia than in any other country. It was bracketed with United States in the first place as regards iron and it stood second place in production of petroleum”. Through its partnership with Russia all these latent resources are available to the Chinese and Russian partnership. And the real potential for industrialisation, held back by communism and now by Russian corruption, has barely commenced. After presciently noting that one day the Sahara may become the trap for capturing direct power from the sun (foreseeing solar panels), Mackinder’s article ended on an optimistic note: “A thousand million people of ancient oriental civilisation inhabit the monsoon lands of India and China [today 3 billion, including Pakistan]. They must grow to prosperity in the same years in which Germany and Japan are being tamed to civilisation. They will then balance that other thousand million who live between the Missouri and the Yenisei [i.e., Central and Eastern America, Britain, Europe and Russia beyond the Urals]. A balanced globe of human beings and happy because balanced and thus free.” Both China and now India are rapidly industrialising, becoming part of a balanced globe of humanity. While the West tries to hang on to what it has got rather than progressing, China and India along with all of under-developed Asia are moving rapidly in the direction of individual freedom of economic choice and improvements in living conditions, to which Mackinder was referring. Obviously, there is some way for this process yet to go, displacing western hegemony in the process. America particularly has found the political challenges of change difficult, with its deep state unable to come to terms easily with the implications for its military and economic power. We must hope that Mackinder was right, and the shift of economic power is best to be regarded as the pains of geopolitical evolution rather than conditions for escalating conflict. But in pursuing its green agenda and eschewing carbon fuels, the West is unwittingly handing a gift to Mackinder’s Heartland, because despite diplomatic noises to the contrary China, India and all the SCO membership will continue to use cheap coal, gas, and oil which Asia has in abundance while Western manufacturers are forced by their governments to use expensive and less reliable green energy. Green obsessions and global trade Meanwhile, the West has gone green-crazy. Banning fossil fuels without there being adequate replacements must be a new definition of insanity, for which the current fuel crises in Europe attest. With over 95% of European logistics currently being shifted by diesel power, switching to battery power or hydrogen by 2030 by banning sales of new internal combustion engine vehicles is a hostage to fortune. While it is hardly mentioned, presumably the Western powers think that by banning carbon fuels they will take the wind out of Russia’s energy quasi-monopoly, because including gas Russia is the largest exporter of fossil fuels in the world. Instead, the West is creating an energy shortage for itself, a point driven home by Gazprom withholding gas flows through its pipelines to Europe, thereby driving up Europe’s energy costs sharply and ensuring a far more severe energy crisis this winter. Even if Russia turns on the taps tomorrow, there is insufficient gas storage in reserve for the winter months. And Europe and the UK have got ahead of themselves by decommissioning coal and gas-fired electricity. In the UK, a massive undersea gas storage facility off the Yorkshire coast has been closed, leaving precious little national storage capacity. As we have seen with the post-covid supply chain chaos, energy problems will not only become acute this winter, but are likely to persist through much of next year. And even that assumes Russia relents and moderates its energy stance to European customers. By way of contrast, though its partnership with Russia China is gifted unlimited access to all carbon fuels. She is still building coal-fired electricity power stations at an extraordinary rate — according to a BBC report there are 61 new ones being commissioned. A further 51 outside China are planned. As a sop to the West China has only said she won’t finance any more outside her territory. And India relies on coal for over two-thirds of its electrical energy. While Europe and America through their green obsessions are denying themselves the availability and technologies that go with carbon fuels, the Russian/Chinese axis will continue to reap the full benefits. The West’s response is likely to be to decry Chinese pollution and its contribution to global warming, but realistically there is little it can do. Demand for Chinese-manufactured goods will continue because China now has a quasi-monopoly on global manufacturing for export. In the unlikely event western consumers become avid savers while their governments continue to run massive budget deficits, their trade deficits will rise even more, allowing Chinese exporters to increase prices for consumers and intermediate goods without losing export sales. While there is nothing it can do about China’s production methods, AUKUS members will undoubtedly lean on other exporting CPTPP members to comply with global green policies. But they will be competing with China, and while they may pay lip service to the climate change agenda, in practice they are unlikely to implement it without holding out for unrealistic subsidies from the western nations driving the climate change agenda. Under current circumstances, it seems unlikely that China’s CPTPP application will lead to membership, given the CPTPP requirement for China’s central government to relinquish ownership of its SOEs and to permit the free flow of data across its borders. In any event, China is focused on developing its Regional Comprehensive Economic Partnership (RCEP), a free trade agreement with ratification signed so far by China, Japan, South Korea, Australia, and New Zealand. It will come into effect when ratified by ten out of the fifteen signatories, likely to be in the first half of 2022, and in terms of population will be two and a half times the size of the EU and the US/Mexico/Canada (USMCA) trade agreements combined. With four out of five of the signatories being American allies, RCEP demonstrates that the AUKUS defence partnership is an entirely separate issue from trade. While the US may not like it, if RCEP goes ahead freer trade will almost certainly undermine a belligerent stance in due course. Despite hiccups, the progression of trade dealing in the Pacific region promises to prove Mackinder right about the prospect of a more balanced world. All being well and guaranteed by a balance of naval capabilities between AUKUS and China, a free-trading Pacific region will render the European and American trade protectionist policies an anachronism. But the threat is now from another direction: financial instability, with western nations pulling in one direction and China in another. Since the Lehman collapse and the ensuing financial crisis, China has been careful to prevent financial bubbles. Figure 1 shows that the Shanghai Composite Index has risen 82% since 2008, while the S&P500 rose 430%. While the US has seen financial asset values driven by a combination of QE and investor speculation, these factors are absent and discouraged in China. Government debt to GDP is about half that of the US. It is true that industrial debt is high, like that of the US. But the difference is that in China debt is more productive while in America there has been a growing preponderance of debt zombies, only kept solvent by zero interest rate policies. China’s policy of ensuring that the expansion of bank credit is invested in production and not speculation differs fundamentally from the US approach, which is to deliberately inflate financial assets to perpetuate a wealth effect. China avoids the destabilising potential of speculative flows unwinding because it lays the economy open to the possibility that America will use financial instability to undermine China’s economy. In a speech to the Chinese Communist Party’s Central Committee in April 2015, Major-General Qiao Liang, the People’s Liberation Army strategist, identified a cycle of dollar weakness against other currencies followed by strength, which first inflated debt in foreign countries and then bankrupted them. Qiao argued it was a deliberate American policy and would be used against China. In his words, it was time for America to “harvest” China. Drawing on Chinese intelligence reports, in early 2014 he was made aware of American involvement in the “Occupy Central” movement in Hong Kong. After several delays, the Fed announced the end of QE the following September which drove the dollar higher, and “Occupy Central” protests broke out the following month. To Qiao the two events were connected. By undermining the dollar/yuan rate and provoking riots, the Americans had tried to crash China’s economy. Within six months the Shanghai stock market began to collapse with the SSE Composite Index falling from 5,160 to 3,050 between June and September 2015. One cannot know for certain if Qiao’s analysis was correct, but one can understand the Chinese leadership’s continued caution based upon it. For this and other reasons, the Chinese leadership is extremely wary of having dollar liabilities and the accumulation of unproductive, speculative money in the economy. It justifies their strict exchange control regime, whereby dollars are not permitted to circulate in China, and all inward capital flows are turned into yuan by the PBOC. Furthermore, domestic monetary policy appears deliberately different from that of America and other western nations. While everyone else has been inflating their way through covid, China has been restricting domestic credit expansion and curtailing shadow banking. The discount rate is held up at 2.9% with market rates slightly lower at 2.2%, and the only reason it is that low is because alternative dollar rates are at zero and EU and Japanese rates are negative. It is this restrictive monetary policy that has led to the current crisis in property developers, with the very public difficulties of Evergrande. Far from being a surprise event, with cautious monetary policies it could have been easily foreseen. Moreover, the government has a sensible policy of not rescuing private sector businesses in trouble, though it is likely to take steps to limit financial contagion. In their glass houses, Western critics continually throw stones at China. But at least her policy makers have attempted to avoid contributing to the global inflation cycle. With prices beginning to rise at an accelerating pace in western currencies, a new global financial crash is in the making. China and her SCO cohort would be adversely affected, but not to the same extent. The fruits of China’s policies of restricting credit expansion are showing in the commodity prices she pays, which in her own currency have increased by ten per cent less than for dollar-based competition, judging by the exchange rate movements since the Fed reduced its funds rate to the zero bound and instigated monthly QE of $120bn on 19-23 March 2020 (see Figure 2). And while both currencies have moved broadly sideways since January, there is little doubt that the fundamentals point to an even stronger yuan and weaker dollar. The domestic benefits of a relatively stronger yuan outweigh the margin compression suffered by China’s exporters. It is worth noting that as well as moderating credit demand, China is attempting to increase domestic consumer spending at the expense of the savings rate, so consumer demand will begin to matter more than exports to producers. It is in line with a long-term objective of China becoming less dependent on exports, and exporters will benefit from domestic sales growth instead. Furthermore, with China dominating global exports of intermediate and consumer goods and while western budget deficits are increasing and leading to yet greater trade deficits, Chinese exporters should be able to secure higher prices anyway. There can be little doubt that the budget deficits financed by monetary inflation in America, the EU, Japan and the UK, plus central bank stimulus packages are now undermining the purchasing power of all the major currencies. The consequences for their purchasing powers are now becoming apparent and attempts to calm markets and consumers by describing them as transient cuts little ice. In terms of their purchasing powers, these currencies are now in a race to the bottom. Not only are the costs of production rising sharply, but following a brief pause of three months, commodity and energy prices look set to rise sharply. Figure 3 shows the Invesco commodity tracker, which having almost doubled since March 2020 now appears to be attempting a break out on the upside. Since global competitiveness is no longer a priority, China would be sensible to let its yuan exchange rate rise against western currencies to help keep a lid on domestic prices and costs. It is, after all, a savings driven economy, with the sustainable characteristics of a strong currency relative to the dollar. Conclusions Having failed in their land-based military objectives, America’s undeclared tariff and financial wars against China are also coming to an end, to be replaced by a policy of maritime containment through the AUKUS partnership. Attempts to stem strategic losses in Asia have now ended with the withdrawal from Afghanistan and from other interventions.The change in geopolitical policy is not yet widely appreciated. But the parlous state of US finances, dollar market bubbles, persistent and increasing price inflation and the inevitability of interest rate increases will make a policy backstop of maritime containment the only geostrategic option left to America. By pursuing more cautious monetary policies, China is less exposed to the inevitable consequences of global monetary inflation. While yuan currency rates are managed instead of set by markets, it is now in China’s interest to see a stronger yuan to contain domestic price and cost inflation. Even though fiat currencies could be destroyed by imploding asset bubbles, these factors contribute to a set of circumstances that appear to lead to a more peaceable outcome for the world than appeared likely before America and NATO withdrew from Afghanistan. There’s many a slip between cup and lip; but it was an outcome forecast by Halford Mackinder nearly eighty years ago. Let us hope he was right. Tyler Durden Sun, 09/26/2021 - 08:10.....»»

Lee identified four factors that show why investors ought to take a long-term bullish view on stocks - perhaps even through 2038. Cindy Ord/Getty Images Trillions of dollars flowing to risk-tolerant Millennials are set to boost stock market fundamentals for years, says Fundstrat's Tom Lee. Lee identified four factors that show the scale of the generational wealth transfer underway. "I do believe that both crypto and the equity markets are going to be powered by millennials," ARK Invest's Cathie Wood said last week - having previously cited Lee's work as evidence for this theory. Sign up here for our daily newsletter, 10 Things Before the Opening Bell. Trillions of dollars flowing to risk-tolerant Millennials are set to boost stock market fundamentals for years, making it hard to be too bearish, Fundstrat's Tom Lee wrote in a note on Friday.Building on past research, Lee pointed to four factors that show the scale of the generational wealth transfer underway:$2 trillion of wealth flows from Baby Boomers to Millennials per year through inheritance, according to Fundstrat estimatesOver the next 20 years, Millennials will inherit $76 trillion from previous generationsMillennials tend to prefer higher-risk assets like stocks and cryptoBaby Boomers are becoming a smaller relative share of the pool of wealth, meaning Millennial asset preferences will fuel a structural shiftLee argued that the logical conclusion of these data points is that investors ought to take a long-term bullish view on stocks."Can one be structurally bearish on stocks if this is the case?" he said.Lee has previously offered similar arguments for permanent bullishness, pointing to other structural factors like easy monetary policy and abundant cash on the sidelines."Bull market until 2038? This is a possible base case. ... If demographics are destiny, US stocks will do very well," Lee wrote in June, pointing out that every stock market peak since 1900 has coincided with a generation's peak.It is a theory shared by ARK Invest's Cathie Wood, who has cited Lee's research as evidence."I do believe that both crypto and the equity markets are going to be powered by millennials," Wood said at a conference last week. "They're really excited about the new technologies that are evolving today - they're really at the leading edge of them and understand them and are comfortable with them."In his Friday note, Lee discussed new Federal Reserve data that showed US household wealth surging to $142 trillion in the second quarter. With just $46 trillion of that invested in US stocks, some $100 trillion could in theory still be allocated to equities, underscoring how much room stocks have left to run.He also explained why wealth inequality in America is not as severe as some of the topline numbers suggest - noting that while the top 20 richest Americans were "ridiculously wealthy," they only composed 1.2% of total US wealth."This means America has a lot of wealth, flat out, and there are just a lot of mega-rich people," said Lee.Read the original article on Business Insider.....»»

Our work-advice columnist tells a reader how to tell if they're a narcissist, plus a look inside Launch House's work-hard-play-hard culture, in Insider Weekly. Welcome back to Insider Weekly! I'm Matt Turner, co-EIC of business at Insider."Am I a covert narcissist?"That's the question at the heart of Rebecca Knight's latest work-advice column this week. Rebecca's spent her career answering these kinds of questions, most often focused on the emotional life of work. As boundaries between home and work blur in the WFH era, they're more relevant than ever.Also in this week's newsletter:Noom markets itself as an anti-diet app. Users say they count calories and receive generic advice from expensive subscriptions.Private-equity firms are locked in a power struggle with their investors, and lawyers are raking in cash no matter what.Launch House allows startup founders to live and work in mansions. Now it's facing scrutiny over safety.Let me know what you think of all our stories at mturner@insider.comSubscribe to Insider for access to all our investigations and features. New to the newsletter? Sign up here. Download our app for news on the go - click here for iOS and here for Android.From narcissism to hybrid life, our work-life columnist tackles tough questions 20th Century Fox Correspondent Rebecca Knight takes us behind the scenes of her work-life column What's Working?:What most interests me about work and careers are the people-problems. When launching my column, "What's Working?", I wanted to find a way to talk about these things and help workers through the challenges they face.Work and home have merged into one in this pandemic. There is much more of an acknowledgement and a focus on what's going on in our personal lives outside of work. The reader questions I'm getting most often are about personality clashes in the remote setup and about people reassessing what they want out of their lives and out of their jobs.My most memorable column so far was about remote-work paranoia. A reader worried: "There must be another Slack channel that everyone else is having fun on and leaving me out of." That reader tapped into something that a lot of us are feeling right now - and as a remote employee myself, I sometimes feel it, too.So that's why it's important to remember that we're all doing our best in this pandemic. Have compassion for yourself and for others. And if you need any advice, send me a question at rknight@insider.com.Read Rebecca's latest column here: 'I always thought that I was a socially anxious introvert. Now I worry I'm a narcissist. What do I do?'Noom says it offers personalized weight-loss support. Users say otherwise. Noom An industry leader in weight-loss apps, Noom has millions of dollars worth of venture-capital funding. It claims to use psychological methods and customized plans to help users lose weight - though users say they largely get cookie-cutter content. While the app sells itself on a concept of psychological reset and long-term weight control, a registered dietician said Noom advises an extremely low daily calorie goal - "It's not really an adult serving size." Here's why some clients reported feeling anxious and burnt out. Get the full story on Noom's canned advice and expensive subscription service.Private-equity firms are locked in a power struggle with their investors Samantha Lee/Insider Private-equity firms and their investors are at each other's throats with expensive demands and competing interests. Legal teams from both parties are caught in the middle, waging a secret war that investor attorneys see as "a game of holding the line." Ambiguous contractual changes between legal teams, firms, and investors muddy the water, and changes are rarely uniform across the industry. The back-and-forth often results in seven-figure legal expenses, as private-equity-firm billing rates can cost up to $1,500 per hour. But the battle, according to one attorney who works for investors, is one-sided in favor of private-equity.Read about the expensive legal war between private-equity firms and their investorsA wild party and COVID outbreak have raised safety concerns for Launch House Eray Alan Los Angeles startup Launch House, a coliving program meant for founders, threw a mismanaged house party with hundreds of guests. Police had to shut it down - but that's part of the "work hard, play hard" ethos of Launch House, according to former residents.While at times, Launch House was poorly controlled and potentially unsafe, with COVID-19 outbreaks and parties, residents also said there were many benefits. A strong community, invaluable network, and fireside chats with like-minded entrepreneurs all remain part of the culture. But the safety concerns have put the company under scrutiny.This is how Launch House plans to move forward - with the help of venture capitalists.More of this week's top reads:Better's CEO has a specific hiring philosophy that allowed him to quadruple its workforce during the pandemic.These 9 BlackRock execs are powering Aladdin, a powerful behind-the-scenes tech software the asset manager has staked its future on.Shopify beat Amazon in one important metric, as competition intensifies between the e-commerce giants.Insider correspondent Kate Taylor exposed Brandy Melville's allegations of discrimination and sexual exploitation. Here's how she got the story. Alphabet life-sciences unit Verily is planning to untangle itself from Google ahead of a potential IPO.This Stitch Fix employee quit during a fiery all-hands meeting. She says stylists are being manipulated and silenced.Investors of cannabis startup Civilized are pushing out the founders. Insider has the full memo.Compiled with help from Phil Rosen, Lisa Ryan and Jordan Erb.Read the original article on Business Insider.....»»

The housing market sits at the center of several economic battles. Building more of it can shape a more equitable America. Just look at the data. Flames from the Dixie Fire consume a home on Highway 89 south of Greenville on August 5, 2021, in Plumas County, California. AP Photo/Noah Berger Soaring home prices are contributing to the biggest economic crises of the 21st century. Climate change, birth rates, and inequality have all been slammed by the housing affordability crisis. Building more homes and denser apartments can fight a number of economic calamities, economists said. See more stories on Insider's business page. Falling birth rates. Widening inequality. The climate crisis. They have an unlikely common denominator in the housing market. Home prices have rocketed higher at record pace for three straight months. Americans' views of buying conditions are the worst since 1982. And supply remains grossly insufficient after decades of underbuilding.The price spikes started in summer 2020 as record-low mortgage rates and new flexibility around remote working sparked a wave of pandemic moves. That quickly dragged inventory to record lows. Supply has rebounded somewhat, but it remains well below the levels needed to normalize the red-hot market.The housing crisis isn't unique to the US, either. Markets in Canada, New Zealand, Australia, Russia, Brazil, and Turkey all saw home prices surge through the pandemic, and the global rally shows "little sign of stopping," JPMorgan economists said earlier in September.Famous economist Larry Summers theorized almost a decade ago that developed economies were in a phase of "secular stagnation," without enough productive investments to fuel their economies. The result is an inflated housing sector, which lingers as a reminder of greater economic dysfunctions. Look under the hood of the global housing crisis, then, and you see connections to the great economic problems of the 21st century.Equality in housing is equality everywhereOwnership of a home allows people to profit from its rising value and tap their equity in the property when they need extra cash. Failure to purchase a home doesn't just lock Americans out of those benefits, it leaves them stuck paying landowners in monthly rent.Those who own land - or have the means to invest in properties - win out as values climb, while those who've been renting are trapped paying higher rates and placed even further from owning a home.Income inequality has long been characterized as the biggest driver of economic inequity, but housing is the true culprit, researchers Fabian Pfeffer and Nora Waitkus said in an August paper. The distribution of housing equity plays the biggest role in deciding where wealth is allocated, according to the researchers.Shoring up home supply and allowing for denser construction could directly level the playing field, economists Sam Bowman and Ben Southwood wrote for the Works in Progress online magazine, with housing advocate John Myers."Increasing the supply of housing and commercial space, while ensuring that it benefits existing residents, could turn this zero-sum situation into one where everyone can be better off," they added.Forming a household requires a homeWhere affordable housing allows Americans to start families and grow their households, expensive housing can delay such plans. And the lack of affordable homes might already be affecting birth rates.Women in developed countries are having fewer children than they'd like, according to the Organization of Economic Co-operation and Development. Fertility crested in 2007 before tumbling during the Great Recession and continuing its downward slope.Although factors such as increased contraception use and climate-related fears contributed to the slide, the economy was the biggest driver by far, Insider's Hillary Hoffower reported. The lack of affordable childcare, weak wage growth, and lingering gender inequities in the workplace all dragged on women's plans to have kids. In other words, the secular stagnation forecast by Larry Summers has discouraged procreation, and it's daunting to have a child when you can't afford to house it.All else being equal, a 10% jump in home prices powers a 1.3% drop in birth rates, according to researchers at the European Bank for Reconstruction and Development.Fighting the climate crisis requires a new kind of housing marketShoring up home supply doesn't just rely on more houses in undeveloped areas. Rethinking housing in dense cities can serve as a one-two punch for fighting home inflation and climate change.Urban areas like New York City and Philadelphia account for much less carbon emissions than rural and suburban locales. Cities require shorter car trips and offer public transit alternatives."One of the most efficient ways for us to reduce our greenhouse gas emissions is by having people live close to where they work and having them take public transit," Jesse Arreguín, mayor of Berkeley, California, told Insider in a recent interview. Arreguín has been one of the biggest proponents for denser apartment development, particularly near transportation hubs.The world's housing markets have a choice to make: Either tackle these interconnected crises or stagnate.Read the original article on Business Insider.....»»

Gen Z has influencing power. Millennials have spending power. The oldest member of each generation is writing the next chapter of American life. The oldest of Gen Z is influencing the economy in a big way. Tim P. Whitby/Getty Images The oldest millennial and oldest Gen Zer are in charge right now - of spending, influence, and the economy. The 40-year-old's financial behavior is shaping huge economic markets like housing. Meanwhile, the 24-year-old is setting trends, affecting consumer behavior for everyone. See more stories on Insider's business page. The 40-year-old and the 24-year-old are the talk of the town right now. The oldest millennial, who turns 40 this year, has the most spending power. They've mostly recovered from a decade-long struggle following the 2008 financial crisis, and they're spending on the biggest purchase of their lives: houses. The oldest Gen Zer, who turns 24 this year, has more sway in consumer behavior. A decade before they replace millennials as the largest spenders, they're already seen as tastemakers, a role every generation takes on during this life stage. Everything from your buying choices to your lifestyle choices are likely being shaped by the oldest members of these generations. Meet the people shaping the world you'll live in for the next decade, or two.The 40-year-old millennial has spending powerMillennials have become the economic driving force in America. They're the largest generation, represent the biggest percentage of the country's workforce, and hold the most purchasing power. As millennials age and their incomes grow, their spending power is only set to increase. Just look at the wave of coming millennial spending power in the chart below. The 40-year-old leads the way.!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.....»»

Hedge Fund Net Leverage At All Time Highs As No Dips Are Sold Two weeks ago, JPMorgan's prime desk wrote about 2 main themes among the hedge fund community: elevated leverage levels and low exposure to cyclicals/value that tend to do better when rates are rising. However, over the past week, both of these things have come into sharper focus as US equities suffered one of their larger pullbacks in a while and rates globally jumped higher towards the end of this week.  So what has the largest bank's prime brokerage desk seen in the past week?  According to the latest weekly Positioning Intelligence report published by the bank, at a high level, it seems that HFs are not that concerned about the broader market (nor is anyone else for that matter) with the bank finding that over the past few months, there’s been limited willingness to sell dips.  In line with this, the bank saw neutral flows globally over the past week with small buying on Monday, alongside retail BTFDers, even as professional sentiment tracked by AAII turned the most bearish since last October... ... followed by small selling on Thursday.  But more generally, net flows globally have remained neutral to skewed towards buying in the past 2 weeks with Asia the only region to see some selling. Furthermore, as has been the case for much of 2011, net leverage remains near highs with little change in the past few weeks—net at 98th percentile (of all time) across All Strategies. While gross leverage has come down a little to the 76th percentile, that appears to be more derivatives related and there could be an element of Quadruple Witching that might be impacting this as the largest gross leverage reductions were among Multi-Strat funds. According to JPM, one reason why leverage and flows among HFs might be more neutral this month is that performance has held in relatively well MTD: long-short spreads have been improving over the past few months.  Looking at this month, longs are holding up well, while shorts are down in line with the market. This leaves HFs up slightly MTD, according to JPM estimates. Back to the topic of leverage, FINRA just came out with its latest statistics on Margin Debt which showed them at a new ATH. Given it is up almost 60% since the start of 2020, it begs the question Bank of America asked one month ago: should we be concerned? Not surprisingly, JPM dismisses this indicator and thinks "this alone is not something that is concerning when one breaks down the changes and behavior to account for how the market has been performing." Furthermore the JPM prime desk notes that "this appears to be very different from the peaks in 2000 and 2007 when Margin Debt rose about 50% faster than the S&P 500 over a 12-month period." Instead, to JPM the recent moves seem more reminiscent to what happened in the early 90s. At a more micro level, cyclicals / value / inflation / travel related stocks have all been doing better recently as COVID are falling once more, some travel restrictions are getting lifted, and rates are rising globally.  In line with this, JPM continued to see buying of NA Financials, something that has been noted over the past few weeks, but this week JPM saw Banks getting bought (vs. more Insurance and Div. Fins in prior weeks).  COVID recovery stocks have also been bought but there’s room for more to go as positioning and valuations remain low in many cases (especially among the US COVID – Domestic Recovery basket, JPAMCRDB).  EMEA Travel & Leisure stocks saw strong buying in the past week as the US prepares to drop its ban for transatlantic travel, and net positioning is getting a bit elevated vs. history; however, EMEA Airlines still has low positioning.  Finally, not everything cyclical is getting bought—HFs have continued to sell Energy into strength - despite the recent surge in oil and all other commodities - and have also sold Materials.  Below we share some more details on each of these core themes Main theme #1: Global Flows and Leverage: HFs Don’t Seem Too Concerned While markets have been volatile over the past week, due to the myriad concerns, HF flows remained quite calm.  The reason is that hedge funds have been reluctant to sell dips and that appeared to be the case again last Fri/this Mon as global flows were quite neutral.  However, at the same time, HFs are also not chase the rally as the JPM Prime net flows were fairly neutral on Wed and skewed towards selling on Thurs when markets rallied back. A notable observation is that there appears to be some strategy differences in the past 2 weeks as Equity L/S and Quant funds have been buyers while Multi-Strats have been net sellers across JPM prime.  The selling among Multi-Strats comes as gross and net leverage have started to pull back from peak levels.  The gross reductions among some Multi-Strat funds have been the main driver of the broader “All Strategies” gross leverage figure lower WoW.  However, net leverage was basically unchanged. Furthermore, it appears derivative positions might be driving some of the changes as notional LMV and SMV increased WoW while delta adjusted LMV and SMV fell.   Among Equity L/S funds, who have been moderate net buyers of equities most days MTD, net leverage actually rose slightly WoW and it’s now at the 93rd %-tile since Mar 2017.   #2:  US Margin Debt: New ATHs at End of Aug…Should We Be Concerned? FINRA just released the latest monthly stats on “Margin Debt” which showed a fairly large increase, following a decrease in July.  As Margin Debt is at new All-Time-Highs and is now up almost 60% since the start of 2020, it’s worth asking -as BofA did one month ago -  if this is something we should be concerned about.   In order to answer this, we’ve looked at the relationship between Margin Debt and the markets over time, augmenting the data FINRA has on it’s website with NYSE Margin Debt data that goes back to 1959.  What this shows is that while there is a very big increase recently, it is 1) in line with the markets and 2) seems to be following the general pattern of the past 60+ years.   Similar to discussions of rate-driven VaR shocks, JPM argues that it’s not so much the level of Margin Debt that one should be focused on, but rather the rate of change. On this point, the bank measured the 12M change in Margin Debt and the S&P 500 over the past ~60 years and what this shows is that there is typically a fairly strong correlation over time. In particular, this correlation has been very strong since the GFC, but there were a couple notable divergences in 2000 and 2007 when Margin Debt rose much faster than the market. In its attempt to mitigate concerns about record margin debt, JPM then notes that increases in Margin Debt (i.e. investors taking on more leverage) that exceed the market returns by a wide margin could indicate greater potential for future stress because it might suggest that investors are adding leverage at market highs, but not actually making much money while doing so. Thus, when markets start to pull back, the recent investments start to lose money more quickly than if they had been added when the markets weren’t at highs. Addressing this point, JPM notes that when looking at what’s happened in the past 2 years, we have seen Margin Debt increase faster than the markets on a 12M rolling basis with the difference reaching +28% at its recent high.  However, the recent high in the 12M difference metric was reached in January of this year (perhaps due to the fact that HFs had performed very well in 2020 and had been adding risk throughout 2H20 in particular). Thus, this difference has been falling for much of the past 7 months.  Furthermore, the recent rise follows a period when Margin Debt had generally lagged the market increases; since the start of 2018, margin debt is only up ~40% vs. the S&P up ~70% in price terms. When it looks back even further, JPM notes that there were periods in the 70s-80s when large increases in Margin debt were followed by market weakness, suggesting this isn’t only a 2000 and 2007 phenomenon (left chart below).  Furthermore, one could reasonably ask why the relatively large increase in the early 90s didn’t result in a market pullback.  While there are likely other contributing factors as well, one thing to note about Margin Debt was that it had gone through a period of relatively slower growth in the late 80s, so the rise in the early 90s was somewhat of a “catch-up” period for it.  Similarly, JPM argues that the rise into Jan of this year could also be considered a bit of a “catch-up” period, which appears to be different from 2000 and 2007 when Margin Debt was reaching new highs, even when measuring it relative to the S&P changes.   In light of the above it's hardly a surprise that JPM thinks that while there are many potential reasons one could cite for market caution, "the level and changes in Margin Debt do not appear to be setting us up for extreme market drawdowns like we saw in 2000 and 2007." #3:  Reopening/Recovery Trades Back in Focus? With COVID cases appeared to be on the decline globally, and travel restrictions getting lifted in some places, reopening/recovery themes have been more topical as they’ve started to perform better. On the HF side, JPM Prime has seen net buying over the past 2-3 weeks in both the Domestic Recovery basket (JPAMCRDB) and the International Recovery Basket (JPAMCRIB).  Positioning in both groups remains low on a YTD basis and very low on a multi-year basis for the Domestic basket.  In addition, JPM’s U.S. Equity Research Strategist, Dubravko, recently wrote about this in a recent note where he showed that the COVID Recovery – Domestic basket had seen relative valuations fall back to multi-year lows while COVID Beneficiaries were back near highs. In a similar vein, Travel & Leisure stocks have seen strong performance this week in both N. America and EMEA, along with HF buying as the US said it would remove its ban on EU travel for vaccinated passengers starting in November. The recovery in performance, relative to the market, still has more to go before getting back to  where we were earlier this year. In terms of where the recent buying and outperformance leaves HF positioning, net exposures are nearing average levels among US Travel & Leisure stocks, but are a bit closer to highs in EMEA. Where there appears to be more potential upside for positioning in EMEA is among the Airlines stocks where net exposures is still about 1z below average and JPM has yet to see shorts covered in the group, after persistent additions for the past 6 months. Among US stocks, the rise in rates was accompanied by further buying of Inflation Winners and Rising Bond Yield Winners. Despite the recent buying, net exposure to the Inflation winners remains quite low with net exposures about 1 std dev below average and for the Rising Bond Yield Winners, the net exposure is still slightly below average.   Similarly, a couple weeks ago JPM wrote about how positioning and flows in Value vs. Growth had done a “180” in the past few months as Value had underperformed. Perhaps not surprisingly, US Value seems to be getting a revival recently as the Value factor has been bought in the past 2 weeks. This is coming from both Value Longs getting bought and Value Shorts being sold/shorted.  In line with this, Growth stocks have seen some selling. #4:  Performance – HFs Holding Well in Sep With a risk-on backdrop of cyclicals outperforming defensives, small caps rallying, and rising rates this week (Rising Bond Yield Winners up +5% WTD), Hedge Funds find themselves in the rare position of outperforming broader equity market indices MTD. And with WSB's short squeeze hunts fading, shorts are not detracting from performance as they are generally down in-line with the market; whereas, longs have fared better and protected to the downside.  Among Global Equity L/S funds, net returns continue to track positively with gains of +60-70bps MTD, outperforming MSCI ACWI (which is down -1.2%). The long-short spread has continued to improve since mid-August, driven more recently by shorts selling off faster in September than the market (down -1.3% on wgtd avg basis) and longs holding up relatively well (only down -15bps MTD). Non-Equity L/S funds are also up MTD and outperforming global equity indices, up between +30-85bps. In terms of alpha, longs have outperformed shorts throughout most of September (some reversion over the past 2 days). At a regional level, N. America L/S funds are flat to slightly up MTD, up around +0-30bps and are thus outpacing the SPX. The long-short spread has continued to improve steadily since mid-August but slowed yesterday as shorts outperformed. In EMEA, net returns among L/S funds are positive MTD, gaining around +0.5-1.3% and outperforming the headline European index. Tyler Durden Sat, 09/25/2021 - 20:30.....»»

Why Is Gold Not Rising? Authored by Matthew Piepenburg via GoldSwitzerland.com, Many are asking why gold is not rising, as just about every other commodity makes new highs in the backdrop of inflationary tailwinds. That’s a very fair question. Some are even saying gold is dead, a silly and “barbarous” old relic of ancient times, ancient math and ancient common sense. Needless to say, we beg to differ, not because we are Swiss-based gold bugs, but simply…well… let’s explain. Current Price vs. Current and Future Roles For those who see history and math as guides rather than “barbarous” and outdated disciplines, their convictions regarding gold’s role, and even price trajectory, do not wane or rise simply due to the paper price of gold. To some extent, and despite Basel 3, gold remains openly manipulated by a handful of central and bullion banks who are terrified of gold’s shine for no other reason than it embarrasses currencies (and mad monetary experiments) falling deeper into discredit. But we track the movement of physical gold every day, and can say with blunt clarity that the paper trade in gold has zero to do with the those otherwise “barbarous” forces of the actual supply and demand of this precious metal. Zero. In short, the paper price of gold has become a fiction accepted as reality, which is not surprising in a financial landscape (i.e., historically over-valued stocks, negative yielding bonds and central bankers allergic to transparency) which defies every measure of honest price discovery or basic capitalism. As for the never-ending gold vs. BTC debate, it would be wrong to say Bitcoin hasn’t taken (or continue to take) some market share away from gold, but at less than $1 trillion, BTC is not going to destroy gold’s $10T market share. In short, the current gold price is a less important topic than its current and future role as historical insurance against mathematically-failing financial and economic systems around the globe. That said, we are not apologists for the falling gold prices, nor do we doubt that by the end of this decade, gold will price well above $4000 per ounce and greatly reward informed investors playing the long game rather than putting green. More on that later. Gold’s Three Roles For now, let’s consider gold’s historical role as a hedge against: 1) recession risk; 2) market volatility risk; and 3) inflation/currency risk. 1. Recession Hedging As for recessions, gold is like an emotional and mathematical barometer testing the temperature of over-heated monetary expansion. As such, it moves higher even before policy makers add more inevitable “stimulus” (i.e., mouse-click fiat currencies) into the system. By the time policy makers officially announce a recession, it’s far too late for most investors to react. Fortunately, gold acts more quickly, anticipating monetary expansion even before the money printers start churning. Long before the “COVID recession” of 2020, for example, the writing was already on the wall that markets and central bankers were getting desperate. By late 2019, debt levels were off the charts, liquidity was drying up, the repo markets were drinking hundreds of billions of Fed dollars per month and an un-official QE to the tune of $60 billion per month was in full-swing. Then came COVID in March. Markets and GDP were tanking and gold was already on course to see (in dollar terms) a 25% rise in 2020, after a 19% rise in 2019. In short, as a recession hedge, gold was ahead of the central bankers in protecting investors. By the way, the Fed’s record for calling recessions and warning investors is 0 for 10… 2. Hedging Market Volatility We all remember March of 2020, when markets puked and gold fell along with it, primarily sold-off as a liquidity source for players facing margin costs which they were forced to pay off with gold holdings. As in 2008 and 2009, gold initially followed the stock ship below the waterline—though not nearly as far as BTC… But as mentioned above, gold reacted quickly, anticipating the money printing (and hence dollar debasement) to come, rising steadily for the rest of that fiscal year. Of course, stocks rose as well, thanks to the unbelievable and historically unprecedented money creation witnessed in 2020—more QE in less than a year than all of the combined QE1-QE4 and “Operation Twist” which we saw from 2009-2015. But thankfully, gold doesn’t just follow stock markets, it hedges them, as the past shows and the future will once again confirm. Such monetary stimulus creates what von Mises would call a “crack-up boom,” and near-term such liquidity is just wonderful for stocks and bonds. As we’ve written elsewhere, COVID—and the policy measures which followed– literally saved the securities bubble and made this “boom” even bigger. But the “boom”-to-volatility to sequence to come from such risk assets reaching price levels which have absolutely nothing to do with valuation will be infinitely more painful (“crack-up”) down the road for those assets than for gold the moment when, not if, this horrific financial system implodes under its own and historically un-matched weight. In short, gold will zig when the markets zag. The anti-gold crowd, of course, will smirk and hug their bonds, reminding us all that gold is a yield-less relic while forgetting to confess that the “no yield” of gold is ironically preferrable to over $19 trillion worth of negative yielding sovereign bonds… 3. Hedging Inflation & Currency Risk Which brings us to the big question of the day, why is gold not rising when it should be ripping as a hedge against what is clearly an inflationary new normal? Fair question. We are asking this ourselves, as real rates (the ideal setting for gold) fall deeper into negative depths with each new day… …as inflation, as well as inflation expectations, are on the objective rise: Last year, for example, gold saw this inflation coming and thus its rising, double-digit price moves reflected the same. But this year, with real rates still diving and inflation rising, gold is showing single single-digit losses rather than gains. What gives? The Market Still Believes the “Transitory” Meme Our ultimate opinion boils down to this: We think the market still believes the central bank myth (i.e., propaganda) that the current inflation is indeed, only “transitory.” We’ve written ad nauseum as to why inflation is anything but “transitory,” yet we can nevertheless respect the deflationists’ argument. The Deflationists The deflation camp, for example, rightly argues that recessionary forces, if left alone, are inherently deflationist, and the signs of economic (rather than market) declines are everywhere. But the key mistake which such deflation (or dis-inflation) narratives make is that these natural forces have not, nor will be, “left alone.” In other words, deflationists are somehow ignoring the monetary and fiscal elephant in the room. That is, more, not less, unnatural monetary and fiscal liquidity is entering the system at historically unprecedented levels, levels that are more than enough to quash such otherwise natural deflationary forces. Stated even more plainly, moderation at the fiscal and monetary level died long ago. Simple Realism—Inflation as Necessity Rather than Debate Central banks are desperate to reach higher inflation to inflate their way out of debt without admitting the same. This is nothing new for fork-tongued policy makers who once “targeted” 2% inflation as a ceiling, but are now effectively “allowing” 2% inflation as the new floor. Just as Nixon said the closing of the gold window was “transitory” in 1971, or as Bernanke promised that QE would be transitory in 2009, the current lie from on high about “transitory inflation” is no less a lie in 2021 as those other lies were in 1971 or 2009. Again, we all just kina know this, right? Furthermore, we just need to be realists rather than dreamers to see the inflation reality now and ahead. Central bankers, for example, may be dishonest, but they aren’t entirely stupid, just desperate and realistic. In the U.S., for example, a staggering as well as openly embarrassing $28.5 trillion public (i.e., national) debt level quickly limits one’s options at the White House or the Eccles Building. Not Many Options Other than Inflation In this realistic light, let’s consider their options. Policy makers have four tools to address such debt, namely: raise taxes, cut spending, declare bankruptcy, or devalue their currencies through inflation. The first two are already in play in the U.S., namely political efforts to raise taxes and ‘talk’ of cutting spending, both politically difficult options. Taking bankruptcy off the table, leaves devaluing the U.S. Dollar as the favored option, which is achieved by deliberately taking real interest rates to extreme negative levels. Allowing inflation to run while keeping rates low reduces the number of dollars needed to repay the debt. This hurts regular folks, but as we’ve said so many times, the Fed is not interested in regular folks. In other words, by decreasing the value of the U.S. Dollar, the U.S. is effectively paying off its current debt with devalued money. There are no permission slips needed from Congress, nor taxpayers. Given such realism, let us be repeatedly blunt and clear: Unlike gold not rising, inflation is not, nor will it be, “transitory.” Instead, deliberate inflation is an inherently and deliberately necessary tool used by the same anti-heroes who put us in this debt hole. More Fed-Speak, Less Honesty This means the Fed will come up with whatever excuses, words, phrases and lies to justify being more dovish despite publicly flirting with hawkish talk about a Fed taper. Already, Powell is taking the Fed way beyond its mandate and talking about social and environmental activism, as these are nice phrases to justify, you guessed it: More money creation and more (not “transitory”) inflation. As for me, hearing Powell talk about “labor market inequality” after the Fed has spent years making the top 1% richer at the expense of an increasingly poorer bottom-90% is so rich in hypocrisy that it makes the eyes water. In this opaque light, the notion of “Fed independence” is a complete and utter fiction. Instead, the Fed is slowly crossing the line into becoming the direct financier to the entire nation—and the only way it can do this is via monetary expansion and deliberate (as well as much higher) inflation, which is a tax on the poor and bullet to the heart of the U.S. Dollar. Period. Full stop. It’s All About Debt Again, this all comes realistically back to debt. When there’s too much unpayable debt (be it at the zombified corporate level or the embarrassed national level), rising rates becomes fatal. The Fed has learned since 2018 that even a slight rise in rates kills the debt-saturated markets whose capital gains taxes are about all that Uncle Sam can declare as income in a nation whose GDP was sold to China years ago. And yet… and yet… the markets somehow wish to believe the fantasy (and Fed-speak) that inflation is only “transitory.” What’s Ahead? We strongly think differently. As blunt realists, we see the Fed perhaps raising rates nominally, but when adjusted by openly deliberate (yet openly denied) inflation, real rates will fall deeper as inflation rises higher. This is because the simple reality (and choice) of nations with their backs against a debt wall is always the pursuit of inflation by design, not deflation. As I recently wrote, nothing is real anymore, and all taboos are broken. The Fed, through QE and/or the Repurchase Program, will print more money as fiscal policy rises alongside—a veritable double-whammy for more “liquidity” to come. This, of course, is crazy and ends badly. The Fed, along with the White House, have tried since Greenspan to outlaw natural market forces and needed austerity in order to bloat markets, keep their jobs or win re-election. Since we can never grow or default (?) our way out of the greatest debt hole in our history, the realistic playbook ahead is negative real rates—i.e., inflation rising higher and faster than repressed Treasury yields. Once this becomes obvious rather than “debated,” gold will rise along side the money supply to levels well above it’s current, yet admittedly, low price. Slowly, but surely, the $19 trillion in negative-yielding sovereign bonds will see outflows from that discredited asset and hence inflows into the “barbarous” asset: Gold. For now, we are patient realists rather than apologists, as the market seemingly continues to price gold for only “transitory” inflation. But once inflationary reality rises above the current “transitory” fantasy, gold will not only surge in price, but serve its far more important role of hedging against undeniable inflation and the equally undeniable (i.e., destructive) impact such inflation will have on global currencies in general and the U.S. Dollar in particular. Gold: Biding Its Time Despite such signposts from math, history and Real Politik, gold is currently under attack for not “doing enough,” despite two years of double-digit rises. Gold investors, however, are not greedy, they are patient, and they hold this physical rather than paper asset for the long game, as previously described. And as for that long game, the inflation ahead, as well destruction of the currency in your pocket today and tomorrow, means today’s gold price is not nearly as relevant an issue as gold’s role in protecting far-sighted investors from what’s ahead. In the end, gold’s primary role is acting as insurance for a global financial and currency system already burning to the ground. But for those naturally asking about price, forecasting and models, as any who worked in a bank know, such models are as complex as they are useless. We keep things simpler and humbler. By just tracking monetary growth rates with certain regressions, a realistic price target for gold based upon inevitable monetary expansion suggests gold at well past $4000 by the end of this decade. That may or may not seem sexy enough for those chasing returns today, but when those returns convert into losses too hard to imagine as markets reach new highs, we must genuinely remind you that even with Fed “support,” all bubbles do the same thing: “Pop.” We are not here to tell you when, as no one can. We are simply suggesting you prepare, rather than react. Tyler Durden Sat, 09/25/2021 - 10:30.....»»

Wealthy Germans Fearing Leftist Victory In Sunday's Vote Scramble To Move Fortunes To Switzerland With Chancellor Angela Merkel's 16-year reign set to conclude following this weekend's German federal election, the broader German political landscape is about to change for the first time in two decades. And with Merkel's dynastic CDU/CSU continuing to slide in the polls, a situation that we first sketched out four weeks ago remains likely: a party that has ruled Germany for 50 of the past 70 years and began to see the chancellery as its natural birthright is now facing the real prospect of being booted out of power. The latest polls show the CDU/CSU in second place behind center-left rivals SPD. But even more concerning (particularly for the country's wealthy) are the gains being made by the greens, and a far-left party known as Die Linke, the ideological and political heir to the East German socialists who ruled over East Germany during the cold war. To the CDU/CSU, these far-leftists are just as unpalatable as the AfD, a stridently right-wing party that has been the most successful right-wing movement in terms of its representation in the Bundestag. Source: the Guardian But increasingly, the CDU's Armin Lascet, the candidate running to succeed Merkel from her own party, has pressed the Social Democrats and their candidate, Olaf Scholz, to pledge not to form a coalition government with Linke, with whom the SPD is probably closer in terms of policy than the pro-business Free Democrats, according to Reuters. Per a different Reuters report, few expect this to happen - the Linke are polling at just 6%, half the liberals' 11%, which probably wouldn't be enough to give Scholz the required parliamentary majority. But for some investors, it is a risk that should not be overlooked. "Inclusion of the Linke in a governing coalition would, in our minds, represent the single biggest wild card by far for financial markets from the German elections," said Sassan Ghahramani, chief executive of U.S.-based SGH Macro Advisors, which advises hedge funds. Still, for the wealthy and the investing class, it's a risk that shouldn't be overlooked. "Inclusion of the Linke in a governing coalition would, in our minds, represent the single biggest wild card by far for financial markets from the German elections," said Sassan Ghahramani, chief executive of U.S.-based SGH Macro Advisors, which advises hedge funds. Which is why thousands of wealthy Germans are scrambling to stash their wealth in Switzerland ahead of the Sept. 26 vote, according to Reuters. If the center-left Social Democrats, hard-left Linke and environmentalist Greens come to power, the reintroduction of a wealth tax and a tightening of inheritance tax could be on the political agenda. "For the super-rich, this is red hot," said a German-based tax lawyer with extensive Swiss operations. "Entrepreneurial families are highly alarmed." What's more, Linke policies such as a rent cap and property taxes for millionaires would be enough to spook many in Germany's business class. Specifically, the SPD wants to reintroduce a wealth tax and increase inheritance taxes, while the Greens (their most likely potential coalition partner) hope to tax Large fortunes more heavily. Although both envision raising income tax for top earners, a tax on assets would raise much more money, the tax lawyer said. Most assume that a victorious Scholz - a strait-laced finance minister and a former mayor of Hamburg - would include the Free Democrats as a moderating influence in his coalition. Both the SPD and the Greens have ruled out working with any party refusing to commit to Germany's commitments under the NATO military alliance, or Germany's EU membership. Linke has questioned both. But either way, the fear of a left-wing government, possibly one with links to Germany's Communist Past, has shown just how many wealthy Europeans still see Switzerland as a safe haven for wealth, despite the country's efforts to abolish its image as a safe haven for billionaires. No country has more offshore assets than Switzerland. Inflows accelerated in 2020, to the benefit of UBS, Credit Suisse and Julius Baer. BIS data show deposits of German households and companies at banks in Switzerland climbed almost $5 billion to $37.5 billion during Q! of 2021. Note: this does not include shares, bonds or financial products. If we had to guess, that trend has likely continued as CDU's lead in the polls has shriveled. According to Reuters, more recent data aren't available, but insiders say the inflows have continued: "I have booked an above-average amount of new money as in the past three months," said a veteran client adviser at a large Swiss bank who deals mainly with Germans. One wealthy manager described the trend thusly: "Many wealthy people, especially entrepreneurs, fear that there will be a lurch to the left in Germany - no matter how the elections turn out." Another added: "I know a number of German entrepreneurs who want to have a foothold outside Germany if things get too red there". Tyler Durden Sat, 09/25/2021 - 10:55.....»»

Insider buying can be an encouraging signal for potential investors, especially when markets are near all-time highs. The week's most notable insider buys were at two biotechs, a chemicals company and a shoemaker. Some insiders were making return trips to the buy window. read more.....»»

This week proved volatile for cryptocurrencies amid the Evergrande crisis, subsequent recovery amid a string of bullish news and the markets falling again over the news coming from China. Here's a recap of the highlights: read more.....»»

The trucking industry anticipates a shortage of 100,000 drivers by 2023, and many recruiters are hoping women will take the wheel. Ingrid Brown and her truck, named "Miss Faith." Federal Motor Carrier Safety Administration When Ingrid Brown started driving trucks 41 years ago, she only knew 5 other female truckers. Now, companies are recruiting thousands of women drivers with bonuses and scholarships amid the labor shortage. Carla Holmes quit her management job to drive long-haul with her husband - married 'teams' can make over $200,000. See more stories on Insider's business page. The Ingrid R. Brown Petro truck stop sits off the side of Oklahoma City's interstate highway, across the street from a Greyhound bus station, a Waffle House, and a beige stucco motel. After 42 years of driving trucks through 48 states and counting, Ingrid Brown chose this remote shopping center to be named in her honor after winning a prestigious award from the trucking community. "I had to," Brown said. "I didn't know what else I could give back to these people for what they had given me, and how they affected my life." One year prior, Brown and 21 other truckers drove from Michigan to Oklahoma to deliver supplies and food to families impacted by deadly wildfires. There, Brown transported materials to an 85-year-old farmer whose wife was in the hospital for smoke inhalation. They had lost half their livestock as hundreds of acres burned, but Brown said they never complained once.Meeting people like the couple in Oklahoma is why Brown has continued driving all these years, even as a grandmother of six, she told Insider. "I have met some people in the most itty bitty tiny towns that I could pick the phone up, and I can tell you that they're my friends today," Brown said. Now, she wants other women to feel empowered to do the same. Brown isn't the only one with that goal in mind - the trucking industry anticipates a shortage of 100,000 drivers by 2023, and many recruiters are hoping women will fill the empty seats. "My steering wheel doesn't know the gender that holds it, and it really doesn't care," she said. "It's just always been labeled the man's world and always been labeled a man's job." When Brown first started driving, she knew five female truckers in the entire country. They became close-knit, planning meet-ups on the road and at truck stops whenever they could. While many female drivers experience sexism and harassment, Brown said she's never experienced discrimination on the job. Now, over 200,000 long-haul truck drivers are women, approximately 6.7% of the industry. Trucking companies and retailers, facing a dire shortage of drivers, are now actively looking to recruit more women to the field.While the cost of truck driving schools can range from $3,500 to $10,000, some companies and states like New York and Oregon are offering incentives or waived tuition for women drivers. According to Brown, the best way to attract more women drivers is to avoid sugarcoating the trucker lifestyle and tell women the truth. "You're going to miss birthdays, you're going to miss loved ones, you're going to miss things happening in life," she said. "They just need to know the truth about it. Recruiters seem to paint pretty pictures." Carla Michelle Holmes, a 42-year-old mother from Yuma, Arizona, started driving long-haul with her husband last November. He began transporting oversized equipment two years ago. After much debate, Holmes decided to join him in the truck during her two-week vacation from working at a local methadone clinic. "After the two weeks were over and it was time for me to go home, I didn't really want to go home," Homes told Insider. "I wanted to stay in the truck."Over the next three months, Holmes began training for her commercial driver's license with funding from an "Arizona at Work" scholarship while she continued working part-time. As she befriended the few other women in the program, Holmes said she quickly realized many of the men weren't taking them seriously - despite the fact that they were outperforming them on exams. "It was funny because the school I went to, you get three attempts to pass, and the majority of the time, the guys would fail their first attempt," she said. "And yet the females would pass on their first try." Holmes told Insider that while many of the men trainees made "frustrating" remarks, she learned to tune them out in order to focus on studying."I'm not here to listen to whatever you have to say … I'm planning on passing my test," she said.Holmes represents the ideal candidate for truck recruiters as companies across the country offer incentives for husband-wife driving teams. Pairs can drive twice as long as solo truckers - while one drives, the other rests. The BIA group is currently offering a $10,000 bonus for team drivers, specifically advertised toward married couples. The average US Express driver team makes a combined total of $200,000, on top of a $30,000 bonus, according to the company website. Meantime, a group of bipartisan senators this year re-introduced legislation to reduce barriers for prospective women truckers. The Promoting Women in Trucking Workforce Act would establish a board to increase outreach, mentorship and training programs."Two years ago if someone told me I was going to be driving a truck, I would have told them you're crazy," Brown said. "Now, I tell women all the time ... 'you can totally do this.'"Expanded Coverage Module: what-is-the-labor-shortage-and-how-long-will-it-lastRead the original article on Business Insider.....»»

The median price for an existing home jumped nearly 15% from August 2020 to August 2021, according to the National Association of Realtors. Prospective buyers visit an open house in West Hempstead, New York. Raychel Brightman/Newsday RM via Getty Images Existing home sales fell in August, according to the National Association of Realtors. While the market seems to be cooling off, it's partly because prices are too high for many buyers. The median existing home jumped to $356,700 last month, a 14.9% increase from 2020. See more stories on Insider's business page. The housing market cooled off slightly last month, but that's not exactly good news for homebuyers. It's partly because prices remain too high for many would-be homebuyers. Existing home sales fell 2% compared to July after two straight months of increases, the National Association of Realtors said in its monthly report on Wednesday. It also showed that total sales dipped 1.5% from August 2020, from 5.97 million to 5.88 million. The dip in sales coincides with rising housing prices nationwide, which Lawrence Yun, chief economist at the NAR, said is causing many buyers to pause their search. "Potential buyers are out and about searching, but much more measured about their financial limits, and simply waiting for more inventory," Yun said. The median price for an existing home jumped to $356,700 last month, a 14.9% increase from the same period last year and the 114th month in a row of year-over-year gains.That price jump seems to have boxed many first-time homebuyers out of the market. They made up just 29% of home sales last month, a dip from 30% the month prior and 33% last year.According to a NAR survey from earlier in September, student debt may also be to blame: Nearly 30% of millennials said their debt has led them to push back their plans to buy a house. Debt, combined with houses getting more unaffordable, puts millennial buyers who don't already own a home at a disadvantage."Home prices remain our primary source of concern as affordability becomes an increasing challenge, particularly for first time home buyers who have not had the opportunity to benefit from the wealth created from recent surges in home equity," Ruben Gonzalez, chief economist at real estate firm Keller Williams, said in a statement. There are encouraging signs of a market cool-downThere is hope that the affordability crisis is getting at least a little better.Inventory is starting to bounce back, with smaller homes slowly gaining a larger share, according to Realtor.com data. That means more affordable homes may be hitting the market in certain markets.According to a recent report from the real-estate website Redfin, there's also less competition among sellers now than there was a few months ago. Homes are spending slightly longer on the market - about 16 days on average - and, for the first time in about three years, people no longer cite bidding wars as the main reason they couldn't get the home they wanted, the National Association of Home Builders said. Plus, fewer people are applying for mortgages and requesting home tours than they were in the first half of 2020. So after the buying craze of 2020, and the low inventory, soaring prices, and feverish bidding wars that followed, it seems as though the housing market may be starting to return to normal. Read the original article on Business Insider.....»»

Base pay for first-year investment banking analysts is now at least $100,000. First-year associates can get paid as much as $200,000, with Lazard leading the pack. Here's the latest investment banker pay by level at different Wall Street banks. Samantha Lee/Insider Many Wall Street firms are raising base pay for junior investment bankers. The going rate for first-year analyst base pay is now at least $100,000 at many banks. Here's a rundown of salaries at different levels across investment banking. Wall Street investment banks are competing to keep talent by raising pay. Some banks are also going on big recruiting pushes to staff up amid busy M&A and IPO activity - though headhunters say the hiring pool is nearly tapped out for junior talent. The going rate for base pay for first-year investment banking analysts is now at least $100,000 across many firms. Evercore has bumped base comp to $120,000 for first-year analysts.Higher levels are likewise seeing big hikes. Lazard is raising base pay for first and second-year associates to a whopping $200,000 and $225,000. Those raises will go into effect Oct. 14 and be retroactive to July 1.Some firms are also raising pay outside of just IB. Goldman Sachs has raised salaries for first-year analysts and some second-year analysts in markets, wealth, and research. And Bank of America's latest pay raises applied to analysts in global corporate and investment banking, global markets, and global research.And a second wave of pay hikes has emerged, with firms including Morgan Stanley telling staff about further bumps to pay that will go into effect in January 2022. Trying to keep up with the latest on pay for junior bankers on Wall Street? Here's a bank-by-bank breakdown of changes in salaries for analysts, associates, and other levels at firms like Bank of America, Goldman Sachs, JPMorgan, Morgan Stanley, and more.Bank of AmericaBank of America announced a second round of pay increases for junior investment bankers that will go into effect in the coming months.The firm is bumping salaries for analysts in global corporate and investment banking, global markets, and global research divisions, according to an internal memo sent by the bank's global banking and markets leadership team and reviewed by Insider.See all the pay details here.CitigroupAnalysts, associates, and vice presidents in Citigroup's banking, capital markets, and advisory division received base salary increases.The raises will be reflected in payments starting in August, according to an internal announcement first reported by Insider on July 2. Tyler Dickson and Manuel Falcó, co-heads of Citi's BCMA group, sent the memo, which was reviewed by Insider.Keep reading here.Credit SuisseThe firm raised salaries for people in the global capital-markets and advisory group at the director level and below, which includes vice presidents, associates, and analysts. Salary raises took effect for directors, vice presidents, and associates as early as April.See the full story here. EvercoreEvercore bumped its base compensation for junior bankers to make it among the top-paying investment banks for first- and second-year analysts. The firm is also bumping base comp for first through fourth-year associates, Insider has learned.More on the latest pay here.Goldman Sachs Goldman Sachs is bumping pay for investment banking analysts and associates, Insider first reported on August 1. The move came months after the firm's culture regarding junior bankers first came under scrutiny this spring.The firm later moved to raise salaries for first-years in markets, wealth, and research.Read the latest here. Guggenheim SecuritiesGuggenheim Securities, a division of the financial-services firm Guggenheim Partners, has raised base compensation for investment-bank analysts for a second time in a matter of months.Read the full story here. JPMorganWall Street's biggest bank is rolling out pay bumps for junior workers in its investment bank, sources familiar with the situation told Insider on June 28. More on JPMorgan raises here.LazardLazard is raising base pay for first and second, and third-year associates. These raises will go into effect Oct. 14 and be retroactive to July 1,It previously raised first-year analyst salaries to $100,000; second-years to $110,000, and third-years to $110,000. Those changed went into effect as of the Aug. 13 payroll, retroactive as of July 1.Keep reading here.Morgan StanleyMorgan Stanley is set to raise salaries for its junior traders and research analysts, as well as raising base compensation for junior investment bankers for a second time, Insider has learned.More on Morgan Stanley pay here. RBC Capital MarketsRBC raised analyst and associate base pay. The raises impacted US employees and went into effect in June.See the full story here. Raymond JamesThe firm is increasing base compensation for first-, second-, and third-year investment-bank analysts, according to an email sent by James Bunn, Raymond James' president of global equities and investment banking. The raises will take effect on Oct. 1. While Bunn said in his email that the pay bumps should put Raymond James at the "high end of analyst salaries on the Street," junior bankers may not end up taking home more total pay than before.See all the details here. UBSThe bank is raising salaries for analysts, associates, and directors within its investment bank, two people familiar with the matter told Insider on July 21. The raises were effective Aug. 1. And analysts, associates, and directors across all regions are eligible for the raise.Read the full story here. Wells Fargo Wells Fargo raised base comp for analysts and associates in its corporate and investment bank, a Wells Fargo spokesperson confirmed to Insider. These raises are retroactive to July 1. "We can confirm the adjustment of base pay in certain client-facing positions across the Corporate and Investment Bank, which ensures we remain competitive and aligned with market practices," the spokesperson said. "We are committed to offering compensation that attracts, motivates, and retains talent."See more here.William BlairWilliam Blair is raising base salaries for bankers from first-year analysts to managing directors. The raises went into effect in the Aug. 15 payroll cycle. A person familiar with the matter told Insider that the raises apply to the firm's investment bankers globally.William Blair executives earlier this year told its investment-banking analysts, associates, and vice presidents who joined the firm before Jan. 31 they would receive "a special, one-time spot bonus" in the amount of $20,000. More recent hires got smaller bonuses. The special bonuses hit accounts in the April 15 payroll cycle.Keep reading here. Read the original article on Business Insider.....»»