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Japan Joins Growing List Of Countries Closing Borders As More Omicron Cases Detected Globally

Japan Joins Growing List Of Countries Closing Borders As More Omicron Cases Detected Globally.....»»

Category: personnelSource: nytNov 29th, 2021

4 Funds to Buy as the Omicron COVID-19 Variant Rattles Markets

The rise in new COVID-19 cases, restrictions and various measures taken to curtail the spread might impact economic recovery again. The new omicron variant of COVID 19 has rattled markets, hampering Black Friday sales across the globe. Omicron, now a “variant of concern” according to the World Health Organization (WHO), was first detected in South Africa and is responsible for the recent spike in cases across Europe. As this highly mutated variant rampaged the reopening and economic recovery efforts, investors should invest in mutual funds that incorporate vaccine makers, gold, real estate and utilities for safety. Fidelity Select Utilities Portfolio FSUTX, Fidelity Select Health Care Portfolio FSPHX, Franklin Gold and Precious Metals Fund Class A FKRCX and Fidelity Real Estate Investment Portfolio FRESX are the funds to add to your list now.The Dow, the S&P 500 and the Nasdaq Composite declined at least 2% in the three-hour-less trading day of Nov 26. Black Friday, a day when consumers are typically shopping for bargains, marks the beginning of the holiday season. However, sales took a hit on the alarming news from public health officials. The B.1.1.529 variant, symbolized by the Greek letter omicron, has undergone numerous mutations (more than 30) to the spike protein. The WHO has already issued warnings across Europe and Central Asia. Among the European companies, Austria has imposed at least a 10-day-long national lockdown to fight the resurgence. The Czech Republic has declared a 30-day emergency and announced several new restrictions. The United Kingdom has also banned flights from South Africa and five neighboring countries like Namibia, Lesotho, Eswatini, Zimbabwe and Botswana. Japan and Israel have closed their borders for foreigners, while Australia will review its plans to reopen borders to skilled migrants and students from Dec 1.Among the rise in new COVID-19 cases, the WHO has informed that it could take "days to several weeks" to understand the severity of the variant and countries have to impose restrictions to prevent the spread. Restrictions and various measures taken to curtail the spread might impact economic recovery again. Hence, investors can limit investment to healthcare, gold, real estate and utilities mutual funds for now.4 Mutual Fund PicksGiven the dreary scenario, we have shortlisted four funds from the utility, healthcare, gold and consumer staples sectors that are considered safe bets. These mutual funds carry a Zacks Mutual Fund Rank #1 (Strong Buy) and the minimum initial investment for these funds is within $5,000.We expect these funds to outperform peers in the future. Remember, the goal of the Zacks Mutual Fund Rank is to guide investors to identify potential winners and losers. Unlike most fund-rating systems, the Zacks Mutual Fund Rank is not just focused on past performance but also the likely future success of the fund.The question here is why should investors consider mutual funds? Reduced transaction costs and portfolio diversification without several commission charges associated with stock purchases are primarily why one should be parking money in mutual funds (read more: Mutual Funds: Advantages, Disadvantages, and How They Make Investors Money).Fidelity Select Utilities Portfolio aims for capital appreciation. This non-diversified fund invests a majority of assets in common stocks of companies primarily engaged in the utilities industry and companies generating most of their revenues from utility operations.This Zacks Sector – Utilities has a history of positive total returns for more than 10 years. Specifically, Fidelity Select Utilities Portfolio has returned 9.9% and 11.4% in the past three and five-year period, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.Fidelity Select Utilities Portfolio has an annual expense ratio of 0.76%, which is below the category average of 0.94%.Fidelity Select Health Care Portfolio fund aims for capital appreciation. This non-diversified fund invests a majority of assets in common stocks of companies principally engaged in the design, manufacture or sale of products or services used for or in connection with health care or medicine.This Zacks sector – Health product has a history of positive total returns for more than 10 years. Specifically, the fund has returned 20.2% and 19.9% over the past three and five-year period, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.Fidelity Select Health Care Portfolio has an annual expense ratio of 0.69% versus the category average of 1.03%.Franklin Gold and Precious Metals Fund Class A aims for capital appreciation and current income is a secondary consideration. This non-diversified fund invests most assets in securities of gold and precious metals operation companies located globally.This Zacks sector - Precious Metal product has a history of positive total returns for more than 10 years. Specifically, Franklin Gold and Precious Metals Fund Class A has returned 30.1% and 7% over the past three and five-year periods, respectively. To see how this fund performed compared in its category, and other 1 and 2 Ranked Mutual Funds, please click here.Franklin Gold and Precious Metals Fund Class A has an annual expense ratio of 0.93%, below the category average of 1.17%.Fidelity Real Estate Investment Portfolio fund aims for above-average income and long-term capital growth, consistent with reasonable investment risk. This non-diversified fund invests primarily in common stocks. The majority of FRESX’s assets are invested in securities of companies principally engaged in the real estate industry and other real estate-related investments.This Zacks sector – Real Estate product has a history of positive total returns for more than 10 years. Specifically, Fidelity Real Estate Investment Portfolio has returned 13.1% and 9.2% over the past three and five years, respectively. To see how this fund performed compared to its category, and other 1 and 2 Ranked Mutual Funds, please click here.Fidelity Real Estate Investment Portfolio has an annual expense ratio of 0.74% versus the category average of 1.08%.Want key mutual fund info delivered straight to your inbox?Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing mutual funds, each week. Get it free >> Investor Alert: Legal Marijuana Looking for big gains? Now is the time to get in on a young industry primed to skyrocket from $13.5 billion in 2021 to an expected $70.6 billion by 2028. After a clean sweep of 6 election referendums in 5 states, pot is now legal in 36 states plus D.C. Federal legalization is expected soon and that could kick start an even greater bonanza for investors. Zacks Investment Research has recently closed pot stocks that have shot up as high as +147.0% You’re invited to immediately check out Zacks’ Marijuana Moneymakers: An Investor’s Guide. It features a timely Watch List of pot stocks and ETFs with exceptional growth potential.Today, Download Marijuana Moneymakers FREE >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Get Your Free (FSPHX): Fund Analysis Report Get Your Free (FRESX): Fund Analysis Report Get Your Free (FKRCX): Fund Analysis Report Get Your Free (FSUTX): Fund Analysis Report To read this article on Zacks.com click here. Zacks Investment Research Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report.....»»

Category: topSource: zacksNov 29th, 2021

Black Friday Turns Red On "Terrible News" - Global Markets Crater On "Nu Variant" Panic

Black Friday Turns Red On "Terrible News" - Global Markets Crater On "Nu Variant" Panic The Friday after thanksgiving is called black Friday because that's when retailers finally turn profitable for the year. Not so much for market, however, because this morning it's red as far as the eye can see. The culprit: the same one we discussed late last night - the emergence of a new coronavirus strain detected in South Africa, known as B.1.1.529, which reportedly carries an "extremely high number" of mutations and is “clearly very different” from previous incarnations, which may drive further waves of disease by evading the body’s defenses according to South African scientists, and soon, Anthony Fauci. British authorities think it is the most significant variant to date and have hurried to impose travel restrictions on southern Africa, as did Japan, the Czech Republic and Italy on Friday. The European Union also said it aimed to halt air travel from the region. "Markets have been quite complacent about the pandemic for a while, partly because economies have been able to withstand the impact of selective lockdown measures. But we can see from the new emergency brakes on air travel that there will be ramifications for the price of oil," said Chris Scicluna, head of economic research at Daiwa. As a result, what was initially just a 1% drop in US index futures, has since escalated to a plunge of as much as 2% with eminis dropping the most since September, at one point dropping below 4,600 after closing on Wednesday above 4,700 as a post-Thanksgiving selloff spread across global markets amid mounting concerns the new B.1.1.529 coronavirus variant - which today will be officially called by the Greek lettter Nu - could derail the global economic recovery.  Russell 2000 contracts sank as much as 5.4%. Technology shares may be caught in the net too as Nasdaq 100 futures slid. The VIX increased as much as 9.4 vols to 28, it's biggest jump since January. It was last seen up 7.4 points, or the biggest increase since February. Adding to the pain, there is nothing on today's macro calendar and the US market closes early which will reduce already dismal liquidity even more, exacerbating some of the moves throughout the session. Headlines are likely to center on various nations preventing travel from South Africa whilst potentially imposing more stringent COVID measures domestically, as well as which countries "find" the Nu variant. Amid the panicked flight to safety, 10Y TSY yields tumbled as traders slashed bets on monetary tightening by the Federal Reserve (just hours after Goldman predicted that the Fed would double the pace of its taper and hike 3 times in 2022, oops) ... ... as did oil amid fears new covid lockdowns will lead to a collapse in crude demand (they will also certainly force OPEC+ to put on pause their plans to keep hiking output by 400K every month). Paradoxically, even cryptos are tumbling, which is surprising since even the dumbest algos should realize by now that a new covid outbreak means more dovish central banks, no tightening, and if nothing else, more QE and more liquidity which is precisely what cryptos need to break out to new all time highs. Cruise ship operator Carnival slumped 9.1% in premarket trading and Boeing slid 5.8% as travel companies tumbled worldwide. Stay-at-home stocks such as Zoom Video rallied.  Didi Global shares fell after Chinese regulators reportedly asked the ride-hailing giant to delist from U.S. bourses. Here are some of the other big premarket movers: Airlines and other travel stocks slumped in premarket trading on growing concern about a new Covid-19 variant identified in southern Africa. The European Union is proposing to halt air travel from several countries in the area and the U.K. will temporarily ban flights from the region. United Airlines (UAL US) fell 8.9%, Delta Air (DAL US) -7.9%, American Airlines (AAL US) -6.7%; cruiseline-operator Carnival (CCL US) -12%; hotelier Marriott (MAR US) -6.1%; lodging company Airbnb (ABNB US) -6.9%. Stay-at-home stocks that benefit from higher demand in lockdowns rose in premarket, with Zoom Video (ZM US) gaining 8.5% and fitness equipment group Peloton (PTON US) +4.7%. Vaccine stocks surged in premarket, while Pfizer and BioNTech got an added boost after their coronavirus shot won European Union backing for expanded use in children. Moderna (MRNA US) rose 8.8%, Novavax (NVAX US) +6.2%, Pfizer (PFE US) +5.1%, BioNTech (BNTX US) +6.4%. Small biotech stocks gained in premarket as investors sought havens. Ocugen (OCGN US) added 22%, Vir Biotechnology (VIR US) +7.8%, Sorrento Therapeutics (SRNE US) +5%. Cryptocurrency-exposed stocks fell as Bitcoin dropped as investors dumped risk assets. Marathon Digital (MARA US) declined 9%, Riot Blockchain (RIOT US) -8.8%, Coinbase (COIN US) -4.6%. Didi Global (DIDI US) declined 6% in premarket after Chinese regulators were said to have asked the ride-hailing giant to delist from U.S. bourses. Selecta Biosciences (SELB US) dropped 13% in Wednesday’s postmarket ahead of Thursday’s Thanksgiving closure, after saying the U.S. FDA placed a clinical hold on a trial. Quotient Technology (QUOT US) gained 3.9% in Wednesday’s postmarket on news that a board member bought $150,000 of shares. What happens next will matter and so, all eyes are on the opening bell for the U.S. markets, set to return from the holiday for a shortened trading session. Tumbling futures and a soaring VIX signaled that the rout in Asia and Europe won’t spare New York equities, while lack of liquidity will only make the pain worse. The Japanese yen emerged as the main haven currency of the day, with the dollar languishing. “Every trader in New York will be rushing to the office now,” said Salm-Salm & Partner portfolio manager Frederik Hildner, adding that news of the new variant could mean the end of the inflation and tapering debate. The worsening pandemic poses a dilemma for central banks that are preparing to tighten monetary policy to curb elevated price pressures, according to Ipek Ozkardeskaya, senior analyst at Swissquote. “It’s terrible news,” Ipek Ozkardeskaya, a senior analyst at Swissquote, said in emailed comments. “The new Covid variant could hit the economic recovery, but this time, the central banks won’t have enough margin to act. They can’t fight inflation and boost growth at the same time. They have to choose.” “We now have a new Covid variant that’s ‘very’ different from the ones we knew so far, a rising inflation, and a market bubble,” she said.  “The only encouraging news is the easing oil prices, which could tame the inflationary pressures and give more time to the central banks before pulling back support.” In the meantime, the World Health Organization and scientists in South Africa were said to be working “at lightning speed” to ascertain how quickly the B.1.1.529 variant can spread and whether it’s resistant to vaccines. The new threat adds to the wall of worry investors are already contending with in the form of elevated inflation, monetary tightening and slowing growth. In Europe, the Stoxx 600 index headed for the biggest drop in 13 months plunging 2.7%; travel and banking industries led the Stoxx Europe 600 Index down as much as 3.7%, the biggest intraday drop since June 2020. Airbus slumped 8.6% in Paris and British Airways owner IAG tumbled 12% in London, while food-delivery stocks gained.  Here are some of the biggest European movers today: Stay-at-home stocks and Covid testing firms such as TeamViewer and DiaSorin are among the biggest gainers as worries over a new Covid variant send the Stoxx 600 tumbling on lockdown fears TeamViewer and DiaSorin rise as much as 6% and 7%, respectively On the down side, travel and leisure stocks plunge, with the likes of IAG, Lufthansa and Carnival posting double- digit falls IAG drops as much as 21% Software AG shares rise as much as 9.5% after Bloomberg reported that the firm is exploring strategic options, including a potential sale, with Morgan Stanley saying the company’s biggest headwinds are behind it. Evolution gains as much as 4.6%, recouping part of Thursday’s 16% plunge, with Bank of America saying the share price’s “crazy time” amounts to a good buying opportunity. Skistar rises as much as 3.7%, bucking steep declines for travel and leisure stocks, after Handelsbanken upgraded the stock, saying bookings for the Scandinavian ski resort operator are “set to surge.” Telecom Italia climbs as much as 2.8% following a Bloomberg report that private equity firms KKR and CVC are considering teaming up on a bid for the company. ING Groep falls as much as 11% after Goldman Sachs analyst Jean-Francois Neuez cut his recommendation to neutral from buy. Getlink drops as much as 6% as French fishermen start protests aimed at stepping up pressure on the U.K. in a post-Brexit fishing dispute. Earlier in the session, MSCI's index of Asian shares outside Japan fell 2.2%, its sharpest drop since August. Casino and beverage shares were hammered in Hong Kong, while travel stocks dropped in Sydney and Tokyo. Japan's Nikkei skidded 2.5% and S&P 500 futures were last down 1.8%. Giles Coghlan, chief currency analyst at HYCM, a brokerage, said the closure of the U.S. market for the Thanksgiving holiday on Thursday had exacerbated moves. "We need to see how transmissible this variant is, is it able to evade the vaccines - this is crucial," Coghlan said. "I expect this story to drag on for a few days until scientists have a better understanding of it." Indian stocks plunged as the detection of a new coronavirus strain rattled investor sentiment globally, raising concerns over a likely setback to the nascent economic recovery.  The S&P BSE Sensex lost 2.9%, the most since mid-April, to 57,107.15 in Mumbai, taking its loss this week to 4.2%, the biggest weekly drop since January. The NSE Nifty 50 Index declined by a similar magnitude on Friday. Reliance Industries was the biggest drag on both measures and declined 3.2%.  “There is fear of this new variant spreading to other countries which might again derail the global economy,” said Hemang Jani, head of equity strategy at Motilal Oswal Financial Services Ltd.   Of the 30 shares in the Sensex index, 26 fell and 4 gained. All but one of 19 sub-indexes compiled by BSE Ltd. retreated, led by a index of realty companies. The S&P BSE Healthcare index was the only sub-index to gain, surging 1.2%. While researchers are yet to determine whether the new virus variant is more transmissible or lethal than previous ones, authorities around the world have been quick to act. The European Union, U.K., Israel, and Singapore placed emergency curbs on passengers from South Africa and the surrounding region. Travel stocks were among the hardest hit. InterGlobe Aviation Ltd. fell 8.9%, Spicejet Ltd. slipped 6.7% and Indian Hotels Co. Ltd. plunged 11.2%, the most since March 2020.  “Nervousness on the new variant of coronavirus and expectations of the U.S. Fed increasing the pace of tapering have led to recent market weakness,” Amit Gupta, fund manager for portfolio management services at ICICI Securities Ltd. said. “This trend may take some time to recover as the WHO meeting on the new mutant variant impact and hospitalization rates in US and Europe will be watched by the market very closely.” Crude oil to emerging markets completed this picture of mayhem. In rates, fixed income was firmly bid as Treasuries extended their advance led by the belly of the curve, outperforming bunds, while money markets pared rate-hike bets amid fears that a new coronavirus strain may spread globally, slowing economic growth. Cash Treasuries outperformed, richening 12-14bps across the short end, with Thursday’s closure exacerbating the optics. As shown above, 10Y Treasury yields shed as much as 10 basis points while the Japanese yen jumped the most since investors’ March 2020 rush for safety. Yields across the curve are lower by more than 8bp at long end, 13bp-15bp out to the 7-year point, moves that if sustained would be the largest since at least March 2020 and in some cases since 2009. Short-term interest rate futures downgraded the odds of Fed rate increases. Gilts richened 10-11bps across the curve, outperforming bunds by 4-5bps. Peripheral and semi-core spreads widen. In FX, JPY and CHF top the G-10 scoreboard with havens typically bid. In FX, the Bloomberg Dollar Spot Index was little changed after earlier touching a fresh cycle high, and the greenback was mixed versus its Group-of-10 peers as the yen and the Swiss franc led gains while the Canadian dollar and Norwegian krone were the worst performers as commodity prices plunged. Traders pushed back the timing of a 25-basis-point rate increase by the Federal Reserve to July from June, with only one further hike expected for the remainder of 2022. It’s a similar story in the U.K. where the Bank of England is now expected to tighten policy in February instead of next month. Wagers that the ECB will raise its deposit rate by the end of next year have also been slashed, with only a six basis-point increase priced in, half of that seen earlier this week. The European Union is proposing to follow the U.K. in halting air travel from southern Africa after the new Covid-19 variant was identified there. The yen is at the epicenter of skyrocketing currency volatility as the new virus variant shakes markets. The cost of hedging against swings in the Japanese currency over the next week, which captures the release of the next U.S. payrolls report, is the most expensive in more than a year. In commodities, crude futures are hit hard. WTI drops over 7% before finding support near $73, Brent drops over 5% before recovering near $78. Spot gold grinds higher, adding $21 to trade near $1,809/oz. Base metals are sharply offered with much of the complex off as much as 3%. Looking at the otherwise quiet day ahead, data releases include French and Italian consumer confidence for November, as well as the Euro Area M3 money supply for October. Otherwise, central bank speakers include ECB President Lagarde, Vice President de Guindos, and the ECB’s Visco, Schnabel, Centeno, Panetta and Lane, and BoE chief economist Pill. Market Snapshot S&P 500 futures down 1.9% to 4,607.50 STOXX Europe 600 down 2.8% to 468.04 MXAP down 1.8% to 193.33 MXAPJ down 2.2% to 628.97 Nikkei down 2.5% to 28,751.62 Topix down 2.0% to 1,984.98 Hang Seng Index down 2.7% to 24,080.52 Shanghai Composite down 0.6% to 3,564.09 Sensex down 2.7% to 57,234.83 Australia S&P/ASX 200 down 1.7% to 7,279.35 Kospi down 1.5% to 2,936.44 Brent Futures down 5.8% to $77.46/bbl Gold spot up 0.9% to $1,805.13 U.S. Dollar Index down 0.33% to 96.46 German 10Y yield little changed at -0.31% Euro up 0.4% to $1.1259 Top Overnight News from Bloomberg The European Union is proposing to halt air travel from southern Africa over growing concern about a new Covid-19 variant that’s spreading there, as the U.K. said it will also temporarily ban flights from the region Those close to the Kremlin say the Russian president doesn’t want to start another war in Ukraine. Still, he must show he’s ready to fight if necessary in order to stop what he sees as an existential security threat: the creeping expansion of the North Atlantic Treaty Organization in a country that for centuries had been part of Russia Bitcoin tumbled 20% from record highs notched earlier this month as a new variant of the coronavirus spurred traders to dump risk assets across the globe Germany’s Greens tapped their two co- leaders to run the foreign ministry and take charge of an influential portfolio overseeing economy and climate protection in the country’s next government under Social Democrat Olaf Scholz A more detailed breakdown of global markets courtesy of Newsquawk Asian equity markets declined and US equity futures were also on the backfoot on reopen from the prior day’s Thanksgiving lull with markets spooked by new COVID variant concerns related to the B.1.1.529 variant in South Africa that was first detected in Botswana. The new variant showed a high number of mutations and was said to be the most evolved strain ever which spurred fears it could be worse than Delta and is prompting both the UK and Israel to halt flights from several African nations. ASX 200 (-1.7%) was negative with heavy losses in energy and broad underperformance in cyclicals leading the downturn across all sectors, while the much better than expected Australian Retail Sales data was largely ignored. Nikkei 225 (-2.5%) underperformed and gave up the 29k status as selling was exacerbated by detrimental currency inflows and with SoftBank shares among the worst hit on reports that China is said to have asked Didi to delist from US exchanges on security fears, which doesn't bode well for SoftBank given that its Vision Fund is the top shareholder in the Chinese ride hailing group with a stake of more than 20%. Hang Seng (-2.5%) and Shanghai Comp. (-0.7%) conformed to the risk aversion with the mood not helped by ongoing geopolitical concerns after a Chinese Defense Ministry spokesperson noted they are ready to crush Taiwan independence bid "at any time”, while China also said it opposes US sanctions on its companies and will take all necessary measures to firmly defend the rights of Chinese companies. Beijing interference further contributed to the headwinds amid the request by China for Didi to delist from US which reports stated regulators could backtrack on and with Tencent subdued after some Chinese state-run companies restricted the use of Tencent's messaging app. Top Asian News Stocks in Asia Set for Worst Day Since March on Virus Woes Mizuho CEO Steps Down After Regulator Hit on System Issues Meituan 3Q Revenue Meets Estimates Japan’s Kishida Delivers $316 billion Extra Budget for Recovery European equities are trading markedly lower (Stoxx 600 -2.9%) with losses in the Stoxx 600 extending to 3.8% WTD. Sentiment throughout the week has been hampered by various lockdown measures imposed across the region with the latest leg lower accelerated by new COVID variant concerns related to the B.1.1.529 variant in South Africa. The new variant has shown a high number of mutations and is said to be the most evolved strain so far. This has spurred fears it could be worse than Delta and has prompted multiple nations to halt flights from several African nations.The handover from the overnight session was an equally downbeat one with the Nikkei 225 (-2.5%) dealt a hammer blow by the risk environment and unfavourable currency flows. Stateside, futures are lower across the board with the RTY the clear laggard with losses of 4.2% compared to the ES -1.8%, whilst the tech-heavy NQ is faring better than peers but ultimately still lower on the session to the tune of 1.6%. Note, early closures in the US and subsequent liquidity conditions could exacerbate some of the moves throughout the session. With the macro calendar light, focus for the session is likely to centre on various nations preventing travel from South Africa whilst potentially imposing more stringent COVID measures domestically. Any further clarity on the spread of the variant and its potential to evade vaccines will be of great interest to the market and likely be the main driving force of price action today. Sectors in Europe are lower across the board with the Stoxx 600 Banking (-5.1%) sector bottom of the pile amid the declines seen in global bond yields as markets scale back expectations of central bank tightening (e.g. pricing now assigns a 63% chance of a 15bps hike by the BoE next month vs. 93% a week ago). Oil & Gas names (-4.8%) are suffering on account of the declines in the crude space with WTI crude in freefall with losses of 6.7% given the potential impact of travel restrictions on demand. Travel restrictions on South Africa (from UK, Israel, EU et al) and the potential for further announcements has crushed the Travel & Leisure sector (-5.7%) with airline names dealt a hammer blow; IAG (-13.5%), easyJet (-11%), Deutsche Lufthansa (-12%), Air France (-9.5%). Elsewhere, there are a whole raft of other laggards which are very much in-fitting with the March 2020 playbook but there are simply too many to list for the purpose of this report. Defensives and Tech are faring better than peers but ultimately still lower on the session to the tune of 1% and 1.9% respectively. Finally, for anyone wanting some positivity from today’s session, the potential for further lockdowns has proved to be beneficial for the likes of HelloFresh (+3.2%), Ocado (+2.1%) and Delivery Hero (+1.9%). Top European News Airlines Skid on South Africa Travel Bans Tied to Variant German Coalition Proposes a Combustion-Car Ban Without Saying So Putin Pushes Confrontation With NATO as Hardliners Prevail Siemens Is Said to Kick Off Sale of Postal Logistics Business In FX, the index has been under pressure in the risk-averse environment amid a slump in yields and gains in its basket components – namely the JPY, CHF, EUR (see below) – and with liquidity also thinned by Thanksgiving. From a technical perspective, the index has declined from its 96.787 overnight high, through the 96.500 mark, to a low of 96.332 – with the weekly trough at 96.035. Ahead, the US calendar is once again light, with the US also poised for an early Thanksgiving closure; thus, impulses will likely be derived from the macro environment. JPY, CHF, EUR - Haven FX JPY and CHF are the clear outperformers as a function of risk-related inflows. USD/JPY has retreated from a 115.37 peak and fell through its 21 DMA (114.15) to a base around 113.66 - with the current weekly low around 113.64. USD/CHF retreated from 0.9360 to 0.9260 – with the 50 and 100 DMAs seen at 0.9234 and 0.9219, respectively, ahead of 0.9200. EUR/USD meanwhile gains on what is seemingly an unwind of the carry trade amid a spike in volatility. EUR/USD found support near 1.1200 before rebounding to a current 1.1288 peak. AUD, NZD, CAD, GBP - The non-US Dollar risk currencies bear the brunt of the latest market downturn, with losses across industrial commodities not helping. The Loonie has taken the spot as the biggest G10 loser as hefty COVID-induced losses in the oil complex keep the currency suppressed. USD/CAD trades towards the top of a current 1.2647-2774 range. AUD is also weighed on by softer base metal prices – AUD/USD fell from a 0.7200 overnight high to a current low at 0.7110. On that note, Westpac sees AUD/USD pushed down to 0.7000 by Jun 2022 (prev. 0.7700) amid rate differentials with the US; Westpac made significant changes to its FOMC policy forecast and now expect consecutive increases in the fed funds rate in Jun, Sept, and Dec 2022. NZD/USD is slightly more cushioned amid smaller exposure to commodities, and as the AUD/NZD cross takes aim at 1.0450 to the downside. GBP, meanwhile, was initially among the losers amid its high-beta status but thereafter nursed losses in a move that coincided with EUR/GBP rejecting an upside breach of its 21 DMA at 0.8475. EM - The ZAR is the standout laggard given the new South African COVID variant - B.1.1.529 COVID-19 variant (expected to be named Nu) – which is said to be the most evolved strain so far and thus prompted several countries to halt travel to the country of origin. USD/ZAR currently trades within a 15.9375-16.3630 intraday band. Meanwhile, the downturn oil sees USD/RUB north of 75.00 and closer to 76.00 from a 74.2690 base. The Lira also feels some contagion despite the lower oil prices (Turkey being a large net oil importer) – USD/TRY is back on a 12.00 handle and within 11.92-1226 parameters at the time of writing. In commodities, the crude complex has been hit by compounding COVID fears which in turn triggered various travel restrictions and subsequently took its toll on global crude demand prospects. The new and more evolved South African variant prompted the UK, Singapore, and Israel to expand their travel red lists to include some African nations (Israel reported its first case of the new COVID-19 variant known as B.1.1.529). Japan also imposed tighter border restrictions. China’s Shanghai city see flights impacted by its own outbreak. Europe also tackles its surge in daily cases - German Green Party's Baerbock (incoming Foreign Minister) does not rule out a German lockdown, according to Spiegel. EU Commission President von der Leyen is also to propose activation of the emergency air brake, to halt travel from southern Africa due to the B.1.1.529 COVID-19 variant. Losses in oil have exacerbated - with WTI Jan and Brent Feb now under USD 74/bbl (vs high 78.65/bbl) and USD 77/bbl (vs high 80.42/bbl), -6.0% and -5.0% respectively. This comes ahead of the OPEC+ confab next week, whereby OPEC watchers have suggested that oil prices will be a large contributor to the final decision. It is difficult to see how OPEC+ will increase output to the levels the US et al. will be content with, with the latest COVID downturn building the case for a pause in planned output hikes. Elsewhere, haven demand sees spot gold extend on gains above USD 1,800/oz after topping the 100 DMA (1,792.95/oz), 200 DMA (1,791.38/oz), 50 DMA (1,790.13/oz) overnight. Base metals are softer across the board amid the risk aversion. LME copper posts losses of around 3% at the time of writing, as prices threaten a more convincing downside breach of USD 9,500/t. US Event Calendar Nothing major scheduled DB's Jim Reid concludes the overnight wrap Things have escalated on the covid front quite rapidly over the last 12 hours. Yesterday new covid variant B.1.1.529 was slowly starting to gather increasing attention but overnight it has begun to dominate markets and has caused a notable flight to quality with 10 year USTs -8bps lower. It was originally identified in Botswana and is starting to spread rapidly in Africa. The South African Health Minister has said it is "of serious concern". Almost 100 cases have already been identified in South Africa and the UK moved to put the country back (along with 5 other African nations) on a reinstated red travel list last night with others following this morning. The variant is said to be the most heavily mutated version yet and the WHO will meet today to decide if it is a variant of interest or a variant of concern. So a lot of eyes will be on how severe it is and whether it completely evades vaccines. At this stage very little is known. Mutations are often less severe so we shouldn’t jump to conclusions but there is clearly a lot of concern about this one. Also South Africa is one of the world leaders in sequencing so we are more likely to see this sort of news originate from there than many countries. Suffice to say at this stage no one in markets will have any idea which way this will go. Overnight in Asia all benchmarks are trading lower on the news with the Shanghai Composite (-0.50%), CSI (-0.64%), KOSPI (-1.27%), Hang Seng (-2.13%) and the Nikkei (-2.90%) all lower. Airlines and other travel stocks have obviously fallen heavily. Hong Kong has detected two confirmed cases of the new variant just as Hong Kong and China were considering quarantine-free travel. S&P 500 (-0.93%) and DAX (-1.82%) futures are also much weaker. Elsewhere, in Japan, CPI rose +0.5% year-on-year (+0.4% consensus and +0.1% previously), on the back of 16-month high fuel prices. With the US out on holiday for Thanksgiving, there wasn’t much going on yesterday after a very quiet day in markets. The variant news was only slowly creeping into the news flow so it hardly impacted trading. But in keeping with the theme of recent days, both inflation and the latest covid wave in Europe remained very much in the picture as jitters continue to increase that we could see further lockdowns as we move towards Christmas. Starting with the headline moves, European equities did actually show signs of stabilising yesterday, with the STOXX 600 up +0.42% thanks to a broad-based advance across the continent. In fact that’s actually the index’s best daily performance in over three weeks, although that’s not reflecting any particular strength, but instead the fact the index inched steadily but persistently towards a record high before selling off again a week ago. Other indices moved higher across the continent too, with the FTSE 100 (+0.33%), the CAC 40 (+0.48%) and the DAX (+0.25%) all posting similar advances. These will all likely reverse this morning. One piece of news we did get came from the ECB, who released the account of their monetary policy meeting for October. Something the minutes stressed was the importance that the Governing Council maintain optionality in their policy settings, with one part acknowledging the growing upside risks to inflation, but also saying “it was deemed important for the Governing Council to avoid an overreaction as well as unwarranted inaction, and to keep sufficient optionality in calibrating its monetary policy measures to address all inflation scenarios that might unfold.” Against this backdrop, 10yr bond yields moved lower across multiple countries, with those on bunds (-2.3ps), OATs (-2.3bps) and BTPs (-1.9bps) all declining. There was also a flattening in all 3 yield curves as well, with the 2s10s slope in Germany (-3.0bps), France (-3.7bps) and Italy (-2.8bps) shifting lower. And the moves also coincided with a continued widening in peripheral spreads, with both the Spanish and the Greek spreads over 10yr bund yields widening to their biggest levels in over a year. Of course, one of the biggest concerns in Europe right now remains the pandemic, and yesterday saw a number of fresh measures announced as policymakers seek to get a grip on the latest wave. In France, health minister Veran announced various measures, including the expansion of the booster rollout to all adults, and a reduction in the length of time between the initial vaccination and the booster shot to 5 months from 6. Meanwhile in the Czech Republic, the government declared a state of emergency and approved tighter social distancing measures, including the closure of restaurants and bars at 10pm. And in Finland, the government have said that bars and restaurants not using Covid certificates will not be able to serve alcohol after 5pm. All this came as the European Medicines Agency recommended that the Pfizer vaccine be approved for children aged 5-11, which follows the decision to approve the vaccine in the US. Their recommendation will now go to the European Commission for a final decision. There wasn’t much in the way of data at all yesterday, though German GDP growth in Q3 was revised down to show a +1.7% expansion (vs. +1.8% previous estimate). Looking at the details, private consumption was the only driver of growth (+6.2%), with government consumption (-2.2%), machinery and equipment (-3.7%) and construction (-2.3%) all declining over the quarter. To the day ahead now, and data releases include French and Italian consumer confidence for November, as well as the Euro Area M3 money supply for October. Otherwise, central bank speakers include ECB President Lagarde, Vice President de Guindos, and the ECB’s Visco, Schnabel, Centeno, Panetta and Lane, and BoE chief economist Pill. Tyler Durden Fri, 11/26/2021 - 08:12.....»»

Category: blogSource: zerohedgeNov 26th, 2021

Stocks, Futures, Oil Tumble On Omicron Lockdowns, Manchin Shockwave

Stocks, Futures, Oil Tumble On Omicron Lockdowns, Manchin Shockwave Global stocks and US equity futures are sharply lower to start the otherwise very quiet holiday week, dragged lower by Manchin's shock decision to kill Biden's economic agenda (which Goldman said would cut US Q1 GDP from 3% to 2%), accelerating government measures to counter the fast-spreading omicron variant and fears over the growth outlook amid a tightening Fed. US equity futures tumbled almost 100 points from their Friday close (and more than 200 points from Thursday's all time high before paring some losses buoyed by optimism from news that Moderna’s booster vaccine increases antibodies 37-fold against omicron. Treasury yields also pared a sharp drop as low as 1.35% and the dollar held a jump from Friday, while crude oil slid on worries that mobility curbs to tackle the strain will hurt demand. As of 730am S&P 500 futures were down down 1.1%, Nasdaq 100 -1.3%, and Dow -1.0%. Global stocks have retreated from record highs in recent weeks amid concerns about Covid-19 hurting the economic recovery and as central banks pivot toward fighting inflation. Federal Reserve Governor Christopher Waller said a faster wind-down of the central bank’s bond-buying program puts it in a position to start lifting interest rates as early as March. “In our view, markets can look through omicron concerns, and the gradual pace of monetary tightening won’t bring the equity rally to an end,” UBS Global Wealth Management wrote in a note. “Overall, the latest news does not change our outlook for equities.” Luke Hickmore, investment director at Standard Life Investments, also recommended buying the dip. “The prospects for growth will improve rapidly from here,” he said. “The market will likely see a recovery in the new year when liquidity returns.” In the weekend's biggest news, senator Joe Manchin blindsided the White House on Sunday by rejecting Biden’s $1.75 trillion tax-and-spending package, prompting a sharply critical statement from the White House which called Manchin’s decision a “sudden and inexplicable reversal.”  Biden and top Democrats must now regroup to see if a scaled-back version remains possible with little more than 10 months before midterm elections that will decide control of Congress. As noted late last night, Goldman Sachs Group Inc. cut its forecast for U.S. economic growth for next year after Manchin’s move (more below). On Monday, Chuck Schumer said the Senate will still vote “very early” in 2022 on Biden’s economic agenda, although it was unclear just what the new plan will look like now that Build Back Better is dead. Not helping matters were the latest development in the Omicron front where the biggest European countries are introducing more curbs, with U.K. officials keeping open the possiblity of stronger measures before Christmas and the Netherlands returning to lockdown, even as Biden’s chief medical advisor said further U.S. lockdowns are unlikely. In some "good" news, said a third dose of its Covid-19 vaccine saw a 37-fold increase in neutralizing antibodies against omicron. Ironically. While investors remain on edge over the outlook for economic activity, there remains little evidence that the new variant causes illness as severe as the delta variant, especially among those already vaccinated. “The main reason behind the market sell off today is the rejection of Biden’s $2 trillion tax-and-spending package, which will lead to a reduction in U.S. economic growth forecasts,” said Michel Keusch, a portfolio manager at Bellevue Asset Management. “With trading volumes getting thinner and thinner into the year end, this is the catalyst creating some short-term nervousness.”  Then there are tightening concerns: the Federal Reserve’s decision to increase the pace of tapering last week is also adding to investor nerves about the outlook for 2022. And now, without either fiscal or monetary support, economists see a policy-induced slowdown in the economy where Goldman on Sunday cut its real GDP forecast for 2022: 2% in Q1 (vs. 3% prior), 3% in Q2 (vs. 3.5% prior), and 2.75% in Q3 (vs. 3% prior). One place which is convinced the Fed will not meet its targets it the bond market where traders of eurodollar futures price rates much lower than FOMC targets for the end of 2023 and 2024. Finally, as Bloomberg notes, there is also the issue of divergent global monetary policy to contend with, as the People’s Bank of China stepped up easing overnight with the first rate cut in 20 months. Looking at the premarket, travel stocks fell the most with United Airlines down 3.4% leading declines among major U.S. carriers, while a 4% slide in Royal Caribbean Cruises led the fall among cruise operators. Energy and industrial bellwethers also declined, with Chevron, 3M and Caterpillar falling over 2% each. Major U.S. tech and internet stocks slumped hitting shares in most highly valued names, as well as in cyclicals. Apple fell as much as 2.1% premarket while fellow large- cap tech names also drop, with Facebook-owner Meta Platforms down 1.9%, Alphabet -1.2%, Amazon.com -1.7%, Twitter -2.1%, Microsoft -1.6%. Here are some of the other big U.S. movers today: Major U.S. tech and internet stocks drop in premarket trading as risk appetite sours globally amid worries over further pandemic- related restrictions, hitting shares in most highly valued names, as well as in cyclicals. Shares in U.S. renewables firms drop in premarket after U.S. Senator Joe Manchin’s surprise rejection of President Joe Biden’s $2 trillion package. Moderna (MRNA US) rises 6% in U.S. premarket after the company said that a booster dose of its Covid-19 vaccine increased antibody levels against the omicron variant. Society Pass (SOPA US) surges 22% in premarket after the loyalty platform operator said in a statement it has been added to the Russell 2000 Index. Boston Beer (SAM US) upgraded to hold at Jefferies following pullback of more than 60% in the shares related to “massive” reset in expectations for hard seltzers, removing the only negative rating on the stock. Shares up 0.3% on low volume in premarket. "After battling endless headwinds in recent weeks, markets have finally been knocked over as the rapid spread of Omicron finally reaches panic mode," Russ Mould, investment director at AJ Bell, wrote in a client note. Europe's Stoxx 600 also stumbled, now down about 1.4% after falling as much as 2.6%, weighed down the most by travel and insurance. All sectors are in red. FTSE 100 recovers slightly as energy gets a leg up, but is still off by 1.2%. Dax -2%. Germany’s new coalition government picked Joachim Nagel, a Bank for International Settlements official, as the central bank’s next president. Earlier in the session, Asian stocks were set for the biggest drop since March, as the spread of the omicron variant and a surprising setback to U.S. President Joe Biden’s economic agenda forced traders to take bets off the table. The MSCI Asia Pacific Index sank as much as 2%, headed for its lowest close since November 2020, with tech and consumer shares the biggest drags. Relatively thin trading ahead of the year-end exacerbated declines in the region, as investors grapple with fresh outbreaks of Covid-19 and monetary policy tightening globally. The MSCI Asia Pacific Index is down about 15% from a peak in February, compared with an 18% gain in the S&P 500. “Omicron’s spread over the festive holidays and Manchin” are driving the risk-off mood, said Wai Ho Leong, strategist at Modular Asset Management (Singapore). “But most of all, it is the lack of liquidity in all markets.” India was the worst performer around the region, with its benchmark index poised to enter a correction amid the spread of the omicron variant. Chinese stocks also dropped despite a cut to bank borrowing costs for the first time in 20 months In FX, the dollar reversed gains and was little changed. The pound fell in line with other risk- sensitive currencies as global market sentiment soured; gilts advanced. Hedging the major currencies over the next month comes at a similar cost, yet the pound turns expensive further out as it holds a higher beta on monetary policy divergence. The Australian and New Zealand dollars followed a broader move lower in commodity FX amid a slide in oil and stocks. The yen advanced with Japanese government bonds. The lira tumbled to another record low after Turkish President Recep Tayyip Erdogan pledged to continue cutting interest rates. In rates, Treasury yields fell by ~3bp in 5-year sector, steepening 5s30s spread by 3bp on the day as long-end yields were little changed; 10-year yields 1bp lower around 1.39%, outperforming bunds and gilts. Treasuries drifted higher Monday as global stocks extended losses. Gains were led by front- and belly of the curve, while eurodollars advanced and the amount of Federal Reserve rate-hike premium for 2024 and 2024 eased. Long-end lagged the move ahead of a 20-year bond auction Tuesday.  Bund and gilt curves are mixed. Italy lags in the peripheral complex, widening ~2bps to Germany. In commodities, Brent crude extends dropped to trade down as much as 5.3%, trading as low as $69.60/bbl before paring some losses, with Brent down 3% to $71 per barrel, and WTI -4% to around the $68-handle. Spot gold drifts below the $1,800-handle. Base metals complex under pressure; LME aluminum and nickel decline the most.  There is nothing on the economic calendar today except that Nov. Leading Index, which is estimated to print at  0.9%. Market Snapshot S&P 500 futures down 1.6% to 4,535.75 MXAP down 1.8% to 187.95 MXAPJ down 1.8% to 607.98 Nikkei down 2.1% to 27,937.81 Topix down 2.2% to 1,941.33 Hang Seng Index down 1.9% to 22,744.86 Shanghai Composite down 1.1% to 3,593.60 Sensex down 2.0% to 55,848.23 Australia S&P/ASX 200 down 0.2% to 7,292.16 Kospi down 1.8% to 2,963.00 STOXX Europe 600 down 2.2% to 463.29 German 10Y yield little changed at -0.40% Euro up 0.2% to $1.1259 Brent Futures down 3.9% to $70.67/bbl Gold spot up 0.1% to $1,800.19 U.S. Dollar Index little changed at 96.61 Top Overnight News from Bloomberg President Joe Biden faces the unexpected task of quickly rewriting his policy agenda in a crucial election year after a key Senate Democrat abruptly rejected his signature $1.75 trillion economic plan Germany’s new coalition government picked Joachim Nagel, a former Bundesbank senior official, as the central bank’s next chief, according to a person with knowledge of the matter The ECB will not raise interest rates in 2022 if inflation behaves as expected, governing council member Pablo Hernandez de Cos told Expansion newspaper in an interview Europe’s biggest countries are introducing more curbs to fight a surge in Covid-19 infections, from another lockdown in the Netherlands to stricter travel restrictions at the height of the holiday period Chinese property stocks tumbled close to a fresh five-year low after a series of asset sales underscored concern that equity investors will bear the brunt of losses as developers offload projects to repay debt Chinese banks lowered borrowing costs for the first time in 20 months, foreshadowing more monetary support to an economy showing strain from a property slump, weak private consumption and sporadic virus outbreaks A more detail look at global markets courtesy of Newsquawk Asia-Pac equities traded mostly lower following the volatile session on Wall Street on Friday, which saw the Dow Jones, S&P 500 and the Nasdaq all posting varying degrees of losses, whilst the Russell 2000 outperformed with decent gains. Overnight, US equity futures opened with a mild upside bias, albeit the optimism faded in early trade as risk aversion materialised, with the ES Mar 2022 contract falling below its 50 DMA (4,596) whilst the NQ and RTY saw losses of over 1% apiece. Sentiment was hit by the slew of concerning COVID headlines over the weekend, whilst Friday saw further hawkish rhetoric from Fed officials - with Fed’s Waller suggesting the whole point of accelerating the bond taper was to make the March Fed meeting a live meeting for the first hike, and under his base case March is very likely for lift-off, although it could be pushed back to May. The ASX 200 (-0.3%) was pressured by some large-cap miners and banks, whilst the Nikkei 225 (-2.1%) and KOSPI (-1.8%) conformed to the downbeat tone, with upside in the former also capped by recent JPY strength. The Hang Seng (-1.9%) and Shanghai Comp (-1.1%) initially saw shallower losses after the PBoC opted to cut the 1yr Loan Prime Rate by 5bps, whilst the 5yr rate was maintained, although the property sector faced more woes after S&P downgraded Evergrande to Selective Default, whilst Kaisa shares slumped after trade resumed following a two-week hiatus, with the Co. in discussions regarding a debt restructuring plan. The Hang Seng dipped below 23,000 for the first time since May 2020. Elsewhere, US 10yr futures continued edging higher as APAC risk aversion supported the haven, whilst Goldman Sachs also cut its US real GDP Growth forecasts on the Build Back Better blockade. Top Asian News Coal India Defends Quality Level of Shipments After Complaints Hong Kong Eyes New Security Law After Electing Loyalist Council Asian Stocks Drop to Lowest in 13 Months on Virus Woes, Manchin Best Way for China to Lower Market Rates is to Sell Yuan: Nomura European bourses commenced the week on the backfoot, continuing the broad pressure seen in APAC trade, as focus is firmly fixed on the Omicron variant. The downside in APAC hours was also a feature of the choppy trade in the US on Friday, and amid non-COVID catalysts such as US Senator Manchin presenting a stumbling block to BBB which effectively ends the chances it can be passed this year, while hawkish central banks is also a theme traders are cognizant of for next year. Euro Stoxx 50 -1.4%, benchmarks are lower across the board as further COVID-19 restrictions are imposed/touted; thus far, the most stringent has seen the Netherlands return to lockdowns, while the likes of the UK and Germany are mulling measures. Vaccine producer Moderna (+5.5% in premarket trade) released preliminary booster data vs Omicron, which saw a modest paring of the risk-off conditions; the vaccine boosts neutralising antibody levels by 37-fold vs pre-boost levels. All sectors remain in the red however, with underperformance in those most exposed to COVID restrictions, such as Travel & Leisure, Oil & Gas and Autos. Individual movers were predominantly dictated by the broader price action; however, THG (+12.5%) is the morning’s outperformer following reports that a notable short on the name has removed its position. Meanwhile, US futures are softer across the board (ES -1.3%) ahead of a very sparse docket where focus will, as it is in European hours, centre around the fiscal narrative and COVID. On the latter, President Biden is due to speak on the situation on Tuesday, calling for individuals to get vaccinated. Top European News Johnson Appoints Truss to Key Brexit Role After Torrid Week Germany Picks Bundesbank Veteran Nagel as Central Bank Chief Czech Billionaire Family Faces Final Showdown Over Bank Merger Flashpoints That May Heal or Deepen the Lira’s Pain in 2022 In FX, the Dollar is mixed across the board, but retaining an upward bias overall amidst greater gains vs high beta, activity and cyclical currencies compared to losses against safer havens as broad risk sentiment sours on a number of factors, but mainly COVID-19. Hence, the index is holding quite firmly above 96.500 within a 96.504-680 range even though US Treasury yields are soft and the curve is marginally flatter, with traction or the Greenback coming via hawkish comments in wake of last week’s FOMC from Fed’s Waller who would not object to lifting rates as soon as tapering is done next March. Ahead, a very sparse Monday agenda only comprises November’s leading index. JPY/EUR/CHF/XAU - As noted above, risk-off positioning due to the ongoing spread of Omicron has prompted demand for the Yen, the Euro, with added momentum from bullish Eur/Gbp cross flows, plus the Franc and Gold to lesser extents. Usd/Jpy is tethered around 113.50 in response, though unhindered by imposing option expiries in contrast to last Friday and the headline pair capped by technical resistance in the form of 21 and 50 DMAs that come in at 113.77 and 113.83 respectively today. Meanwhile, Eur/Usd is back above 1.1250 amidst mixed ECB vibes as de Cos underscores guidance for no hikes in 2022, but sources say that GC hawks wanted explicit recognition of upside inflation risks and were shouted down by chief economist Lane. However, Eur/Gbp has bounced even more firmly from sub-0.8500 lows on what looks like a combination of early year end demand or RHS orders and Pound underperformance on pandemic, political and Brexit-related factors. Elsewhere, Usd/Chf is hovering mostly sub-0.9250 and Eur/Chf is pivoting 1.0400 with latest weekly Swiss sight deposits showing no sign of intervention and Gold is rotating around Usd 1800/oz after a false upside breach of Usd 1810, but not quite enough follow-through buying to scale another upside target circa Usd 1815. GBP/AUD/NZD/CAD - The major fall guys, as Sterling loses 1.3200+ status yet again on all the aforementioned negatives, and also feels some contagion from weakness in Brent, while the Aussie is straddling 0.7100, the Kiwi is trying to keep its head above 0.6700 and the Loonie contain declines through 1.2900 alongside the latest retracement in WTI. In commodities, WTI and Brent are also risk-off, moving in tandem with the equity action, on the COVID-19 narrative and implementation/prospect of further restrictions hitting the demand-side of the equation. WTI relinquishes USD 67.00/bbl and Brent gave up the USD 70.00/bbl level. In fitting the broader market move, some easing of the initial downside was seen post-Moderna’s update. Elsewhere, in crude specifics, Libya’s NOC confirmed reports that the Petroleum Facilities Guard was blocking several fields in the region; some suggest production of oil has dropped to 950k BPD due to losses of production at El Sharara field (estimated at 280k BPD). Elsewhere, OPEC+ compliance has reportedly increased marginally in November, in-fitting with the assessments in earlier sourced reports. In metals, spot gold and silver are contained on the session with little evidence of risk-off making its self-known at this point in time, with the yellow metal pivoting USD 1800/oz. Elsewhere, copper is impacted on the risk tone but offset somewhat by Chile’s President-elect Boric saying he will oppose the Dominga copper-iron mine project. US Event Calendar 10am: Nov. Leading Index, est. 0.9%, prior 0.9% DB's Jim Reid concludes the overnight wrap As we arrive at the final week before Christmas, there’s plenty of newsflow from the weekend for markets to digest this morning. In particular, there was the announcement from the US that Senator Joe Manchin of West Virginia wouldn’t be able to support the Build Back Better Bill, which has been the subject of intense negotiations over recent weeks and marks a significant blow for President Biden’s economic agenda. Meanwhile on the Covid front, there was a further ratcheting up of concerns about the Omicron variant, with the Netherlands becoming the latest European country to go back into lockdown as of yesterday, as cases continue to spread elsewhere. But otherwise, the events calendar is looking fairly quiet for now in this holiday-shortened week, with just a few lower-tier data releases and the occasional central bank speaker. We’ll start with Omicron, since that remains one of the biggest issues for markets right now and has significantly clouded the outlook moving into year-end. In a nutshell, the news over the weekend from Europe has only pointed in the direction of further restrictions across multiple countries, with the Netherlands being the most severe as a full lockdown was announced by the Prime Minister on Saturday that leaves just supermarkets and essential shops open, with even schools shut. When it comes to socialising, people will not be allowed to receive more than 2 visitors aged 13 and over per day, although over 24-26 December, New Year’s Eve and New Year’s Day, this will be raised to 4 people. Elsewhere in Europe there was a similar pattern towards tougher measures, with the Irish PM announcing on Friday evening that there would be an 8pm closing time for bars, restaurants and theatres, among others, which would last from today until January 30. Over in Spain, Prime Minister Sánchez said in a televised address yesterday that he’d be meeting with regional leaders virtually on Wednesday to look at measures for the weeks ahead. In Italy, it’s been widely reported that the government is looking at further measures to contain the spread as well, and they’re set to meet on Thursday to discuss these, whilst here in the UK, Health Secretary Javid was not ruling out further restrictions this side of Christmas. Separately in the US, President Biden is set to deliver a speech tomorrow about Covid and the steps that the administration will be taking, with Press Secretary Jen Psaki tweeting that Biden would also be “issuing a stark warning of what the winter will look like for Americans that choose to remain unvaccinated.” For those after a bit more optimism ahead of Christmas, then a couple of DB research notes out on Friday about the new variant will definitely be of interest. The first by FX Strategist Shreyas Gopal (link here) looks at London, which is the epicentre of Omicron infections in the UK, and tracks cases there against those in the South African province of Gauteng a couple of weeks back. The good news is that if the relationship is similar, then that does suggest a peak in cases soon. The other note comes from our head of rates research Francis Yared (link here) who shows that although deaths are starting to increase in South Africa, they’re currently on a much lower trajectory relative to cases compared to previous waves. An important question for markets is whether these patterns from South Africa can be extrapolated over to the advanced economies, which have much higher vaccination rates on the one hand, but also much older populations on the other, so there are factors that could push in either direction. Keep an eye out on these leading indicators from South Africa, as well as London, since they’ll have implications for what could occur in the coming weeks elsewhere. Away from Covid, the other main piece of news over the weekend came from the US, where the moderate Democratic senator Joe Manchin said that he couldn’t support the Build Back Better package that forms a key part of President Biden’s economic agenda, with much of his proposals on social programs and climate change. The news broke in an interview from Manchin on Fox News Sunday, when Manchin said “I can’t get there” when it comes to supporting the package, and follows direct negotiations that he’d been having with the president. Manchin’s support is crucial for the bill’s passage, since the Senate is split 50-50 between the Democrats and Republicans, with the Democrats having control only by virtue of Vice President Harris’ casting vote. So with zero Republican support for the package, that required every single Democratic senator on board with the proposals, giving Manchin enormous influence. A statement from White House Press Secretary Jen Psaki in response to Manchin did not sound impressed, saying that his comments “are at odds with his discussions this week with the President, with White House staff, and with his own public utterances.” It went on to say that “we will continue to press him to see if he will reverse his position yet again, to honor his prior commitments and be true to his word.” Nevertheless, Manchin’s own written statement wasn’t using the language of compromise, saying that his “Democratic colleagues in Washington are determined to dramatically reshape our society in a way that leaves our country even more vulnerable to the threats we face.” So the implication from Manchin is that Build Back Better won’t be happening this side of the mid-terms in its current form, and would require a fundamental rethink and meaningful slimming down were it to have any chance of passing. Those twin factors of further Omicron restrictions and Manchin’s announcement have weighed heavily on Asian equities overnight, with the Nikkei (-2.17%), KOSPI (-1.66%), Hang Seng (-1.44%), CSI (-0.98%) and Shanghai Composite (-0.75%) all moving lower. In India, the benchmark NIFTY is also down 10% from its peak in October, putting the index in correction territory. However, we did get a policy easing in China, with banks lowering the 1yr prime rate by -5bps to 3.8%. That move came alongside separate remarks from Bank of Japan Governor Kuroda, who said it was too early to think about policy normalisation, and that discussion should take place once inflation is closer to the 2% target. European and US equities are set to follow Asia lower later on, with futures on both the S&P 500 (-0.97%) and the DAX (-1.63%) both pointing lower this morning. And oil prices been struggling overnight as well in light of the recent virus news, with Brent Crude down -3.02% to $71.30/bbl at time of writing. Recapping last week now, and the main events were the array of central bank meetings ahead of the holidays. In the US, the Fed doubled the pace of their tapering as expected, which would bring net asset purchases to an end in mid-March, and the median dot now expects three rate hikes in 2022. By the close on Friday, Fed funds futures were pricing in a 55% chance of an initial hike by the March meeting, and an 87% chance of one by the May meeting. The ECB was then up next, and started a wind down of net PEPP purchases that are also set to finish in March next year. The ECB is cushioning the landing though, having moved to increase APP purchases until October next year after PEPP ends, following which they’ll maintain a pace of €20bn a month until shortly before liftoff. The ECB maintained some policy optionality through flexibility on PEPP reinvestments, which our Europe economists read as a commitment to smoothing the transmission of monetary policy. In the UK, the BoE hiked Bank Rate by +15bps to 0.25%. The MPC noted the decision was finely balanced due to Covid uncertainty, but the vote was still 8-1 in favour of a hike. Over in Japan, the BoJ rounded out the major DM central bank meetings, keeping rates unchanged and announcing a slow reduction in corporate debt holdings. At the same time, they extended a special covid loans program targeted at small and medium-sized firms to September 2022. When all was said and done, many sovereign bond yields actually ended the week lower, even with the hawkish pivot from the various central banks. 10yr yields on Treasuries (-8.2bps) and bunds (-3.1bps) both declined, although those on gilts did post a small +1.7bps gain over the week. Meanwhile growing Covid pessimism served to dampen risk appetite and send global equity indices lower last week. By Friday the S&P 500 (-1.94%) had fallen for the 3rd week out of the last 4, hampered by an underperformance from tech stocks that saw the NASDAQ (-2.95%) and the FANG+ index (-4.53%) both lose significant ground. Over in Europe the moves were smaller, albeit still lower, and the STOXX 600 ended the week -0.35%.   Tyler Durden Mon, 12/20/2021 - 08:02.....»»

Category: blogSource: zerohedgeDec 20th, 2021

Futures Ramp On China Stimulus Hopes Ahead Of Central Bank Barrage

Futures Ramp On China Stimulus Hopes Ahead Of Central Bank Barrage U.S. futures rose again, starting the Santa rally predicted over the weekend by Goldman, after the underlying index surged to a record on Friday with risk appetite returning ahead of this week’s barrage of central bank meetings including the Fed on Wednesday, followed by the Bank of England and ECB. Nasdaq 100 futures climbed 0.4% as major technology and internet stocks rose in premarket trading with Apple inching closer to a $3 trillion market valuation; S&P 500 futures rose 11 points or 0.2%; with Dow Jones futures also rising 0.2%. Chinese developers’ bonds and shares experienced a wave of selling after the sudden plunge in Shimao Group's notes restarted concern over the health of the sector 10-year Treasury yields inched lower to 1.4684% and the dollar pushed higher. Bitcoin extended losses toward $48,000 as Binance bailed on plans for a Singapore exchange. Traders pared bets that the BOE will raise rates next year as concerns over fresh Covid restrictions outweighed inflation fears. Risk sentiment got a boost from predictions China will start adding fiscal stimulus in early 2022, said Ipek Ozkardeskaya, a senior analyst at Swissquote. “The chances of a massive hawkish surprise are limited, and the actual expectation doesn’t interfere with equity investors’ craving for a Santa rally to close a record-breaking year with one last record,” she wrote. Indeed, as we have been expecting for much of the past 6 months, China’s top decision makers last week signaled policies may become more supportive of growth next year. Economists predict China will start adding fiscal stimulus in early 2022. US stocks close Friday at a new record after in-line inflation data did not surprise to the upside for the first time in months and spurred bets that the Federal Reserve won’t have to accelerate plans to tighten monetary policy. That came amid a backdrop of uncertainty from the omicron coronavirus variant, a factor that traders are likely to also monitor closely as the week starts. Volatility should remain high as several central banks will decide on interest rates this week, Pierre Veyret, a technical analyst at ActivTrades, said in written comments. The “policies should set the trading tone, providing investors with more clues on next year’s investing environment.” The Federal Reserve on Wednesday is expected to speed up stimulus withdrawal and perhaps open the door to earlier interest-rate hikes in 2022 if price pressures stay near a four-decade peak. After repeated jawboning, it would be a major surprise if the bank doesn't announce a faster tapering, and the bond market will have to adapt to the new approach. “Global equities had a solid run last week and we’ll see if the goodwill lasts into what is a behemoth when it comes to event risk,” Chris Weston, head of research with Pepperstone Financial Pty Ltd., wrote in a note. Omicron and the Fed should dictate sentiment, he added. Meanwhile, in the world of covid, at least 30 U.S. states have reported omicron cases, with Anthony Fauci of course stepping up calls for boosters to increase protection and making pharma CEOs even richer. That said, all cases for which there's available information were asymptomatic or mild, European health chiefs said. That did not stop Boris Johnson from warning that the U.K. faces a tidal wave of infections and set a year-end deadline for its booster program. South Africa's Cyril Ramaphosa tested positive. Here are some of the biggest U.S. movers today: Arena Pharmaceuticals soars after Pfizer agrees to buy it for $100/Shr in Cash Apple shares rose 1%, leaving the stock close to hitting $3t market capitalization if the move holds. Airbnb, Lucid, Zscaler and Datadog shares all rise in U.S. premarket trading with the companies set to be added to the Nasdaq 100 index later this month. Peloton Interactive shares gain after the home-exercise firm put out an advert responding to a scene in the TV show “And Just Like That...” where a character dies using its product. The stock closed 5.4% lower on Friday, the day after the episode aired. TherapeuticsMD fell 25% in premarket trading after the FDA said it couldn’t approve revisions to some manufacturing testing limits for the Annovera birth-control ring requested by the company through a supplemental new drug application. European stocks also advanced, led by technology and mining stocks. The Euro Stoxx 50 rose as much as 1%, DAX outperforming at the margin.  In the U.K., traders are paring back bets on Bank of England rate hikes over the next year as concerns over fresh Covid restrictions outweigh inflation fears. Asian stocks erased an early advance as deepening losses in shares of Chinese property developers and persistent concerns over the omicron coronavirus variant soured sentiment. The MSCI Asia Pacific Index was down 0.2% after having climbed as much as 0.8%. Equity benchmarks in India and South Korea led regional declines. While stocks in China and Hong Kong rallied in morning trade on signals policies may become more pro-growth next year, the Hang Seng Index erased a gain of as much as 1.6%. That was owing to a selloff in real estate names after a plunge in the bonds and shares of Shimao Group sparked renewed concern over the health of the sector. Monday’s trading in Asia also highlighted investor caution as markets confront potential economic risks from omicron’s spread and a series of central bank meetings this week, including the Federal Reserve. The Fed on Wednesday is expected to speed up stimulus withdrawal and perhaps open the door to earlier interest-rate hikes in 2022 if price pressures stay near a four-decade peak. “We are in the last three weeks of the year -- no investor is going to place new bets and are more likely to be taking profits off the table,” said Justin Tang, head of Asian research at United First Partners. “Any negative news will be taken as a reason to press the sell button.” Meanwhile, China’s stocks climbed for the fourth day in five after the nation’s annual economic conference ended Friday with a vow to ensure “stability” and “front load” policies. Foreign investors on Monday added to record purchases of mainland shares last week. Focus now shifts to data due later in the week, including industrial production, retail sales and fixed-asset investment. India’s benchmark stock index dropped, with a fall in Reliance Industries Ltd. weighing on the market. The S&P BSE Sensex slipped 0.9% to close at 58,283.42 in Mumbai, reversing gains of as much as 0.7%. The index had posted its best weekly performance since mid-October on Friday. The NSE Nifty 50 Index also fell 0.8% on Monday. Still, a measure of small-cap companies gained 0.2%. Reliance, the nation’s most valuable company, dropped 2%. Out of 30 shares in the Sensex, 23 fell and seven rose. All but one of the 19 sector sub-indexes compiled by BSE Ltd. declined, led by a gauge of energy companies. “Selling is more evident in benchmark indices as overseas investors are booking at least a part of their profits ahead of the U.S. Fed’s rate-setting meeting that is likely to speed up the policy normalization process,” Abhay Agarwal, founder of Mumbai-based Piper Serica Advisors Pvt., an investment management company with assets of 5 billion rupees under management, said by phone.  The Fed.’s policy announcement is due Wednesday, where it is expected to speed up stimulus withdrawal and perhaps open the door to earlier interest-rate hikes in 2022. “Post-event, we expect to see a reallocation, though at a slower pace as FPIs will factor in the possible hike in interest rates, apart from the tapering of stimulus,” Agarwal said. Locally, the government will release its consumer inflation print for the month of November later on Monday. Inflation likely rose to 5.1% year-on-year in November from 4.5% in the previous month, according to a Bloomberg survey. Fixed income drifts higher with bund and UST curves bull flattening. Treasury yields were lower as the U.S. trading day begins, with the 10Y sliding to 1.46% and short-term little changed, prolonging the curve-flattening trend. With no U.S. economic data slated and Fed speakers silent ahead of Wednesday’s policy meeting, supply is a focal point, and Fed is slated to buy long-end sectors with no coupon supply until next week’s 20-year reopening. 10- to 30-year yields lower by about 1bp-2bp, 10-year by 1.5b at ~1.468%; 2- to 5-year yields little changed, narrowing 2s10s and 5s30s by 1bp-2bp.Peripheral spreads tighten slightly with short-dated BTPs leading a cautious move higher. Gilts bull steepen, trading ~2.5bps richer across the short end as money markets continue to price out hikes in light of the latest Covid restrictions. In FX, Bloomberg Dollar index drifts 0.3% higher, erasing Friday’s decline and rallying against all its peers with the focus on Wednesday’s Federal Reserve meeting amid speculation officials might accelerate the pace of policy normalization. Flows in the spot market are running at 70% of the recent average, a Europe-based trader told Bloomberg. Volatility term structures in the major currencies remain inverted as the market awaits forward guidance that could shape trading for the better part of 2022 U.S. inflation data in line with expectations on Friday “almost certainly won’t change the balance-of-risk assessment for the Fed, and the communications of late expressing concern over inflation risks remain valid,” says MUFG’s Derek Halpenny. “The week starts quietly in terms of data today but it remains likely that the dollar will remain supported into the FOMC on Wednesday with anticipation high of some hawkish rhetoric to accompany the decision to speed up QE tapering.” GBP/USD fell 0.2% to 1.3244 after gaining 0.5% over the previous two sessions. The Bank of England is set to opt for caution over Covid rather than worries about inflation, pushing back its first rate increase since the pandemic into 2022, according to economists. U.K. Health Secretary Sajid Javid said there’s no certainty the government will be able to keep schools in England open, as it battles to contain the spread of the omicron Covid-19 variant.  “This week is interesting for GBP as markets scrutinize labor-market report tomorrow ahead of BOE,” said Christopher Wong, senior foreign-exchange strategist at Malayan Banking Bhd. in Singapore. “There are concerns unemployment will spike if workers are made redundant or if people cannot find jobs, and this labor report will provide the first assessment.” The Yen outperformed amid broad dollar strength; USD/JPY still up 0.2% at 113.69. AUD and NOK are the weakest in G-10.  Turkish lira crashed again, plunging to a new record low in early London trade with USD/TRY initially rallying over 6% to highs of 14.7590, before fading some of the move after another intervention from the Turkish central bank. In commodities, crude futures give back Asia’s gains; WTI is little changed near $71.78, Brent dips below $75.50. Spot gold holds a narrow range near $1,785/oz. Most base metals are in the green with LME aluminum outperforming.  Bitcoin once again failed to rise above $50,000, extending losses toward $48,000 as Binance bailed on plans for a Singapore exchange There are no major economic developments on today's calendar, but it's a busy week with about 20 central banks making monetary policy announcements, including the Fed, the BOE and ECB, and the divergence of their paths will be evident. Jerome Powell may turn more hawkish as he fights rising inflation, while the ECB joins China in leaning dovish and playing down soaring prices. Market Snapshot S&P 500 futures up 0.4% to 4,728.00 STOXX Europe 600 up 0.7% to 478.82 MXAP down 0.2% to 193.62 MXAPJ down 0.3% to 630.93 Nikkei up 0.7% to 28,640.49 Topix up 0.1% to 1,978.13 Hang Seng Index down 0.2% to 23,954.58 Shanghai Composite up 0.4% to 3,681.08 Sensex down 0.9% to 58,278.65 Australia S&P/ASX 200 up 0.4% to 7,379.26 Kospi down 0.3% to 3,001.66 Brent Futures up 0.8% to $75.74/bbl Gold spot up 0.1% to $1,784.20 U.S. Dollar Index up 0.34% to 96.42 German 10Y yield little changed at -0.36% Euro down 0.4% to $1.1265 Top Overnight News from Bloomberg Almost 20 central banks meet this week, including the world’s biggest. No surprise that volatility term structures in the major currencies remain inverted as the market awaits forward guidance that could shape trading for the better part of 2022 The Bank of Japan offered to buy 2 trillion yen ($17.6 billion) of government bonds under repurchase agreements after repo rates jumped to a two-year high Turkey’s central bank intervened in the market by selling FX after the lira tumbled past 14 to the dollar for the first time, piling pressure on a central bank that’s forecast to keep cutting interest rates this week despite rising inflation. The decline came after S&P Global Ratings lowered the outlook on the nation’s sovereign credit rating to negative on Friday, citing risks from the “extreme currency volatility” The ECB’s biggest decision this week is to decide if it can still call the current inflation spike “transitory.” The answer will have a huge bearing on the euro-area economy, which is already dealing with resurgent coronavirus infections, new restrictions and lockdowns, and uncertainty about the omicron variant ECB Vice President Luis de Guindos is self-isolating after testing positive for Covid-19 on Saturday, the ECB said in a statement posted on its website. Guindos hasn’t been in close contact with ECB President Christine Lagarde over the past week, according to the statement. The Spaniard, who is double- vaccinated and has very mild symptoms, will work from home until further notice Two doses of the Pfizer Inc. and AstraZeneca Plc. vaccines induced lower levels of antibodies against the omicron variant, increasing the risk of Covid infection, according to researchers from the University of Oxford. A more detailed breakdown of overnight news from Newsquawk Asia-Pac equity markets took their cues from last Friday’s gains on Wall Street where the S&P 500 notched a fresh record close and its best weekly performance since February, with markets now bracing for a risk-packed week including a busy schedule of central bank meetings. The ASX 200 (+0.4%) traded higher with risk appetite supported by the reopening of Australia’s borders to international students and skilled workers from Wednesday, while the government will also partially underwrite up to AUD 7bln in new loans for small businesses impacted by lockdowns. The Nikkei 225 (+0.7%) benefitted from the mild outflows from the JPY, with the index unphased by mixed Tankan and Machinery Orders data in which the Tankan Large Manufacturers Index and Outlook missed expectations but sentiment among Large Non-Manufacturers and Small Manufacturers improved for the sixth consecutive quarter. The Hang Seng (-0.2%) and Shanghai Comp. (+0.4%) predominantly conformed to the upbeat mood amid economists' expectations for China to add fiscal stimulus from early next year following last week’s conclusion to the Central Economic Work Conference, which noted that China's economy faces shrinking demand, supply shock, and weakening expectations but added that economic operations are to be kept within a reasonable range. Alibaba shares were among the biggest gainers in Hong Kong as it extended its rebound from YTD lows. Finally, 10yr JGBs were rangebound with March futures contained by resistance at the key 152.00 level and amid the positive mood across riskier assets, although JGBs were off the lows seen late last week where there were source reports that the BoJ is likely to scale back its pandemic relief programs in March with a potential announcement as early as this week’s meeting. Top Asian News Shriram Units Merge to Form Largest India Retail Financier Intel to Spend $7 Billion on Big Malaysia Chipmaking Expansion Shimao Group Appoints Xie Kun as Executive Director Daimler Reveals Chinese Partner BAIC Raised Stake to Almost 10% Stocks in Europe have continued to gain since the cash open (Euro Stoxx 50 +1.0%; Stoxx 600 +0.5%) as the APAC sentiment reverberates through the region following a fleeting blip lower in early European trade. US equity futures are also firmer but to a lesser magnitude – with the RTY (+0.3%) narrowly outpacing the ES (+0.%), NQ (+0.4%) and YM (+0.2%). Focus this week will be on the slew of central bank updates which kicks off with the FOMC on Wednesday, followed by the BoE and ECB on Thursday - with Flash PMIs, Christmas liquidity and Quad Witching also part of this week’s concoction. Add to that the potential tail-risk from geopolitics and headline risk from COVID. Nonetheless, European cash markets at the moment seem unfazed by what’s ahead. Sectors are pro-cyclical with Basic Resources and Autos topping the charts, whilst the defensive Healthcare, Telecoms and Personal & Household goods reside at the bottom. A recent Citi note suggests that rising earnings should keep European stocks moving higher and offset expansive valuations and tightening monetary policy in the US. Citi targets some 9% upside for the Stoxx 600 next year, with a target of 520 (vs current c.477), whilst 12% upside is targeted in the FTSE 100 to 8,200 (vs current c. 7,303). Citi leans in favour of cyclicals vs defensives - with overweights in Banks, Insurance, Basic Resources, Industrials, Media, Luxury Goods and Chemicals. Citi is underweight Utilities, Telecoms, Food & Beverages, Personal Care, Travel, Autos and Financial Services. The bank has also added to its focus list: AstraZeneca (+0.1%), Aviva (+0.7%), Capgemini (+1.2%), Faurecia (+0.9%), Iberdrola (-0.3%), Lloyds (-0.7%), Prosus (+1.5%), Royal Mail (+1.6%), Sanofi (Unch), Tesco (+0.4%), UBS (+0.2%), Vodafone (Unch), Volvo (+1.1%). Separately, Goldman Sachs sees muted returns for global stocks next year amid negative real rates coupled with high equity risk premia and in the absence of a growth shock. GS suggests that risks are growing in the US on a relative basis and sees a maximum drawdown of between -5 to -10% over the next 12 months. Top European News European Gas, Power Prices Surge on Nord Stream 2 Worries U.K. Says Can’t Rule Out Shutting Schools as Omicron Spreads UBS Global Wealth Management Discontinues USDTRY Coverage Vivendi Has ‘Never Been a Threat’ to Lagardere: Arnaud Lagardere In FX, the Greenback has clawed back all and a bit more of its post-US inflation data losses, partly on reflection perhaps that the CPI prints were broadly in line, and actually a tad above consensus in terms of the m/m headline rate, so highly unlikely to derail the Fed from upping the pace of QE tapering this week and probably won’t deter the more hawkish FOMC members from pencilling in a steeper lift-off. Hence, having ended Friday’s session fractionally below a Fib retracement level (96.098), the index subsequently eclipsed the intraday peak (96.429) to turn what was a bearish technical close into a constructive start to the new week within a 96.080-450 range and a ‘close’ above 96.500 would be deemed positive, if not bullish. CHF/EUR/AUD - Very little traction from latest signs of building inflation pressure in the Eurozone via German wholesale prices reaching a record high 16.6% y/y in November, but the Euro has held above 1.0400 against the Franc in wake of latest weekly Swiss sight deposits showing a rise in domestic bank balances. Meanwhile, the single currency has absorbed some stops triggered on a breach of 1.1265 vs the Buck and could derive underlying support from decent option expiry interest at 1.1250 (1.5 bn) at the base of a band extending to 1.1320 (2 bn) through 1.1270-1.1300 (1.1 bn), and Usd/Chf is hovering around 0.9250 at the upper end of a 0.9257-00 band ahead of producer/import prices on Tuesday. Elsewhere, the Aussie has not been able to benefit from good news in the form of Australia opening its borders to international students and skilled workers from Wednesday, Government plans to partially underwrite up to Aud 7 bn new loans for small businesses impacted by lockdowns, or buoyant risk appetite, as it straddles 0.7150 against its US counterpart. JPY/NZD/CAD/GBP - Also conceding ground to their US peer, with the Yen back below 113.50 and hardly helped by mixed Japanese macro releases including December’s Tankan survey and October machinery orders, while the Kiwi is back under 0.6800 even though NZ PM Ardern said the COVID-19 alert level for Auckland is to be eased on December 30 and the next review is scheduled for January 17. The Loonie is slipping alongside WTI between 1.2753-06 parameters and Cable has tested Fib support into 1.3200 at 1.3200 amidst ongoing UK political furore over Conservative Party transgressions during lockdown last year and heightened Omicron restrictions to prevent a tidal wave of infections. In commodities, WTI and Brent front-month futures have been drifting lower since the European morning after the former tested USD 73/bbl to the upside and the latter briefly topped USD 76/bbl. Newsflow for the complex has been light but there have been further positive omens regarding the Iranian nuclear talks - Iran’s top nuclear negotiator said good progress was made in nuclear talks and can quickly pave the way for serious negotiations, whilst Russia's Deputy Foreign Minister said they have reason to anticipate some progress. That being said, we are yet to hear from some of the western nations. Meanwhile, on the OPEC front, Iraq’s Oil Minister said he expects OPEC to maintain its current policy of gradual monthly increases of 400k BPD at the next meeting – slated for early January. On the COVID front, the UK opted not to further tighten restrictions over the weekend but instead boosted the booster programme, whilst reports surrounding the Omicron variant have all highlighted a mild illness. The geopolitical space may require some more attention as tensions remain high on the Ukraine/Russia and Taiwan/China front, with the US involved in both. Russian Deputy Foreign Minister, according to reports this morning, said if the US and NATO do not provide them with guarantees around security, it may lead to confrontation – and emphasised that the lack of progress on this would lead to a military response. Further, there were reports that Saudi Arabia and Iran held security talks. Ahead, the monthly OPEC oil market report is due to be released, but focus this week will likely remain on the slew of central bank meetings. Elsewhere, spot gold and silver are constrained to recent ranges ahead of a risk-packed week, with the former still in a purgatory zone below its 50 DMA (1,789/oz), 200 DMA (1,793/oz) and 100 DMA (1,795/oz). Meanwhile, LME copper is firmer on the mild market optimism but has receded south of the USD 9,500/t mark. US Event Calendar Nothing major scheduled DB's Jim Reid concludes the overnight wrap We had our first Xmas lunch yesterday with my golf club hosting Santa (arriving on a golf buggy up the 18th fairway) and welcoming kids to the dinning room. I spent the whole lunch worrying their behaviour would get me black balled and banned from golf. Before we went my wife and I took lateral flow tests and Maisie asked if this was to stop Santa getting the virus? She then asked who would deliver all the presents if he had to self isolate. I must admit that I thought this was a very good question, especially as she’s starting to slowly question his existence. I said it was likely ok as Santa had just got his booster as he is over 50. I remember when the third week of December was one long string of Xmas client lunches that you desperately tried the leave as early as you could politely do so even if that was 8pm. This week they’ll be no time for lunches and we’ll be glued to our screens with just the eight G20 central banks deciding on monetary policy. The Fed’s decision on Wednesday will be key of course, with anticipation that they might accelerate the tapering of their asset purchases, but there’s also the ECB and Bank of England meetings to watch out for as well. All of them are very much “live” meetings. Elsewhere the flash PMIs for December (Thursday) could give us an initial indication as to how increased restrictions have begun to affect economic activity. US retail sales and UK CPI (both Wednesday) might be other interesting data points. Reviewing the main highlights in more details now. The Fed’s decision on Wednesday will be the focal point of the week. In terms of what to expect, our US economists write in their preview (link here) that they anticipate a doubling in the pace of tapering, which would bring the monthly drawdown of Treasury and MBS to $20bn and $10bn per month respectively. That would see the process of tapering conclude in March, giving them greater optionality for an earlier liftoff. Bear in mind that this meeting will also see the release of the latest dot plot, as well as the projections for inflation, growth and unemployment. On that, our economists see the median dot in 2022 likely showing two rate hikes, with risks of more, up from September when only half the dots saw any hikes by the end of 2022. The ECB’s decision will then follow on Thursday. In our European economists’ preview (link here) they write that until the arrival of the Omicron variant, the ECB appeared on track to initiate a transition to a monetary policy stance based more on policy rates and rates guidance and less on liquidity provision. They were also set to create a policy framework with more optionality to better respond to inflation uncertainties. The Omicron variant reinforces the need for optionality, but until there’s greater clarity on what it means for the pandemic and the recovery, the ECB may stall the expected decisions in part or in whole until early 2022. As with the Fed, it’ll be interesting to see the December staff forecasts on inflation, which could influence the market view on lift-off timing. The Bank of England’s decision will then take place on Thursday, and our UK economist expects the MPC will raise Bank Rate by +15bps to 0.25%. In the preview (link here) it argues that news of the Omicron variant has changed little on the medium-term economic outlook, with the labour market remaining as tight as it has been in recent memory, and inflation continuing to outpace staff forecasts. Nevertheless, the risks to this view are finely balanced, and risk management considerations may lead them to delay a rate hike, as they instead opt to find out more information on Omicron’s impact. Finally on the central bank front, the Bank of Japan will be holding their final monetary policy meeting of the year on Friday. In our economist’s preview (link here), it says that although there had been an expectation that the bank would revise their special pandemic corporate financing support program at this meeting, the emergence of the Omicron variant has changed the situation. Given the next meeting is only a month later, the view is now that they’ll maintain a wait-and-see stance in this meeting and adjust the policy in January, although a revision remains possible this week if more positive evidence is found on the new variant. Moving on to the data, the main highlight will be the flash PMIs for December from around the world on Thursday which will offer an initial indication as to whether there’s been any economic reaction yet to rise in restrictions and the emergence of the Omicron variant. There’ll also be an increasing amount of hard data out of the US for November, including retail sales (Wednesday), industrial production, housing starts and building permits (all Thursday). In China, Wednesday will see the release of their own retail sales and industrial production data for November, and in Germany on Friday there’s the Ifo’s business climate indicator for December. Finally on the inflation side, releases will include the US PPI data for November tomorrow, along with the UK and Canadian CPI readings for November on Wednesday. Late on Friday the UK released a paper looking at vaccine effectiveness against the Omicron variant. The good news is it suggested those who’d been boosted at least a couple of weeks ago still had decent protection, with 3 doses of Pfizer offering 75.5% effectiveness against symptomatic disease, and those who’d had two doses of AstraZeneca followed by a Pfizer booster had 71.4% effectiveness. Those are both lower than the 90+% effectiveness against delta with a booster, but is still much better than some of the worst outcomes had feared. Furthermore, if the past variants are anything to go by, then the protection against severe disease and hospitalisation could be even higher. However, the bad news is it indicated those who’ve been double-jabbed for some months now have significantly waning protection against this new variant from a purely symptomatic basis without a booster, so this will only encourage governments to ramp up their booster campaigns. The UK last night accelerated their plans to get all over 18s offered a booster. It’s now by the end of the year which will be a Herculean task. This follows PM Johnson last night telling the nation that there’s a tidal wave of Omicron cases coming. The government expects it to become the dominant strain very soon in what will be an incredibly short space of time. Overnight in Asia, markets are trading notably higher with the CSI (+1.31%), Hang Seng (+1.01%), Shanghai Composite (+1.00%), the Nikkei (+0.89%) and KOSPI (+0.28%) all strong after China's policymakers' hinted at more stimulus at the end of annual Central Economic Work Conference on Friday. Indeed our economists suggest that this is the decisive policy shift that markets have been waiting for and believe it’s a big deal. See their report on it here. This optimism is being reflected in the near 6% jump in Iron Ore trading overnight. DM futures are indicating a positive start to markets in the US and Europe with S&P 500 (+0.37%) and DAX (+0.44%) futures both in the green. Looking back at last week now and the focus remained squarely on Omicron, where the lack of any concrete bad news lent a more optimistic tone. This modestly improved risk sentiment sent equities and yields higher, and pushed volatility lower with the VIX ending the week -11.88 ppts lower at 18.79. The S&P 500 and Stoxx 600 gained +3.82% and +2.76% over the week (+0.95% and -0.30% Friday respectively). Cyclical sectors and tech stocks led the gains in the US. The small cap Russell 2000 advanced +2.43% (-0.38% Friday) while the Nasdaq climbed +3.61% (+0.73% Friday). The optimism also pushed yields higher and yield curves slightly steeper, with the 10yr treasury gaining +14.1bps this week after a poor close the previous week (-1.5bps Friday) and 10yr bunds climbing +5.1bps (+0.7bps Friday). The 2s10s treasury curve steepened +7.2bps (+1.6bps Friday). Ahead of the Fed’s meeting this week, the market is pricing the first full Fed rate hike by June. In the world of central banking, the Bank of Canada kept policy on hold and reinforced expectations for their inflation target to be sustainably achieved in the middle of 2022, enabling policy rate hikes. Like most DM central banks, they are focused on persistently elevated inflation, which they ascribe to supply constraints that will take time to alleviate. The Reserve Bank of Australia also left its benchmark interest rate unchanged while cautioning that price pressures remain subdued, in contrast to the rest of the DM space. In China, the PBoC cut the required reserve ratio by -50bps to support the economy, while FX reserve ratio was lifted +2.0% to lean against an appreciating renminbi. Property developers Evergrande and Kaisa defaulted on dollar debt. Chinese officials asserted the defaults would be dealt with “in a market-oriented way”. Geopolitical rumblings out of Europe also garnered focus. Presidents Biden and Putin held a phone call to discuss tensions following the build-up of Russian forces on the Ukrainian border. The readouts following the call offered few details but signalled both sides would follow up. President Biden has cautioned severe economic sanctions would be levied should Russia invade Ukraine, including sanctions on Putin’s inner circle, energy companies, and banks. The US would also consider severing Russian access to the US-run international payments system, SWIFT. On Friday, US CPI increased 0.8% and core US CPI increased 0.5% month-over-month in November, with the headline reading a tenth ahead of expectations. Commensurate year-over-year readings were 6.8% and 4.9%, the highest readings since 1982 and 1991, respectively. Measures of underlying and trend inflation continued to move higher, suggesting the Fed’s recent hawkish pivot will continue to be embraced by policymakers. Tyler Durden Mon, 12/13/2021 - 07:56.....»»

Category: blogSource: zerohedgeDec 13th, 2021

Futures Drift Lower In Illiquid Session As Virus Fears Resurface

Futures Drift Lower In Illiquid Session As Virus Fears Resurface After three days of torrid gains, US futures and European markets fell as concerns about economic risks from restrictions to control the new variant outweighed optimism about the efficacy of vaccines after a study from Japan found that the omicron variant is 4.2 times more transmissible (as largely expected) in its early stage than delta. Both S&P 500 and Nasdaq futures dropped around -0.4% as traders awaited earnings from Broadcom, Oracle and Costco after the market close and tomorrow's key CPI print, while European equities drifted lower in quiet trade with little fresh news flow to drive price action. Uncertainty about monetary policy could keep stocks “significantly volatile,” according to Pierre Veyret, a technical analyst at ActivTrades in London. “Investors are likely to remain cautious and keep on monitoring the macro outlook, especially today’s U.S. initial jobless claims, in order to gather more clues on what and when could be the Fed’s next move,” said Veyret. In Asia, China Evergrande Group and Kaisa Group Holdings Ltd. officially defaulted on their dollar debt, while the People’s Bank of China raised its foreign currency reserve requirement ratio for a second time this year after the yuan climbed to the highest since 2018. Among individual moves, CVS Health Corp. jumped in pre-market trading after saying it would buy back shares and raise dividends. Drugmakers including Pfizer rose, while travel companies and airlines declined. European stocks erased gains of as much as 0.3% with the Stoxx 600 trading -0.1% in the red as investors weigh new economic restrictions prompted by the omicron variant against earlier optimism. The real estate subgroup was best performer, up 0.7%; energy company shares lead declines with a drop of 1.2%. The Euro Stoxx 50 is down 0.25%, reversing a modest push into the green at the open. Other cash indexes trade either side of flat. Oil & gas and retail names are the weakest sectors. UniCredit SpA rose after saying it will return at least 16 billion euros ($18.1 billion) to shareholders by 2024. Meanwhile, Electricite de France SA fell with the government considering a cap on regulated power tariffs to help curb soaring electricity prices. Here are some of the biggest European movers today: LPP shares rose as much as 12% after its 3Q earnings beat expectations. The figures confirm a rebound of sales in traditional stores and stronger margins, according to analysts. UniCredit shares gain as much as 8.4%, the most since November 2020, after the Italian lender unveiled its new strategic plan that includes the distribution of at least EU16b to shareholders by 2024. Société Marseillaise du Tunnel Prado Carénage (SMTPC) shares rise as much as 5.5% after Vinci Concessions and Eiffage said they reached a pact to act in concert for a tender offer at EU27/share. Zur Rose drops as much as 7.3% in Zurich after an offering of 650,000 shares priced at CHF290 apiece, representing a 12% discount to the last close. Neste Oyj shares slid as much as 5.7% as investors digested the unexpected resignation of Chief Executive Officer Peter Vanacker from the helm of the world’s biggest maker of renewable diesel. FirstGroup shares fall as much as 5.9% after 1H results, with Chairman David Martin saying the U.K.’s work-from- home edict will “clearly have an impact” on commuter trips. There are potential downside risks to estimates in the short term, if Covid restrictions tighten, according to Liberum (buy). Dr. Martens released solid 1H results, but there’s “nothing material to flag” and unlikely to be upgrades to FY Ebitda estimates, Morgan Stanley says in a note. Shares drop as much as 5.2% after initially gaining 8.9%. Electricite de France shares fall as much as 5.1% after Le Figaro said the French government is considering taking additional steps to keep electricity prices from rising too much amid a spike in energy costs. The global equity rally will be tested as traders expect volatility until there’s more clarity on omicron’s threat to the economy, and ahead of U.S. consumer inflation numbers this week and a Federal Reserve meeting next week that may provide clues on the pace of tapering and interest rate increases. “We are looking to potentially have a rise in volatility even if the market continues higher around those events next week,” said Frances Stacy, Optimal Capital portfolio strategist, on Bloomberg Television. “Many of the catalysts that gave us this boom out of Covid are slowing. And then you have the Fed potentially tapering into a decelerating economy.” Geopolitical tensions are also adding to investor concerns. Germany’s new foreign minister Annalena Baerbock doubled down on warnings from western politicians to Russia over Ukraine, saying that Moscow would pay a high price if it went ahead with an invasion of its neighbor. Separately, the U.S. said it will place SenseTime Group Inc. on an investment blacklist Friday, accusing the artificial intelligence startup of enabling human rights abuses. That’s after the U.S. House of Representatives on Wednesday passed legislation designed to punish China for its treatment of Uyghur Muslims in the country’s Xinjiang province. Asian stocks rose for a third day as investors reassessed concerns over the new virus strain and factored in the possibility that the Federal Reserve will accelerate the end of its quantitative easing.  The MSCI Asia Pacific Index added as much as 0.5%, extending its advance since Tuesday to almost 3%. Information technology and communication services were the sectors providing the biggest support to the climb, with benchmarks in China and Hong Kong among the region’s best performers. The CSI 300 Index gained 1.7% as consumer stocks rallied.   “The market had been initially wary of the Fed’s hawkish tilt in their stance, and a change in how they view inflation, but investors don’t seem too worried about it anymore,” said Tetsuo Seshimo, a fund manager at Saison Asset Management Co. “But this isn’t a theme that’s going away in the short term.”  Asia’s benchmark headed for its highest since Nov. 25, set to erase losses since the omicron variant was detected during the U.S. Thanksgiving holidays, but still in negative territory for 2021. The S&P 500 Index is up 25% this year, after gaining Wednesday on announcements by Pfizer Inc. and BioNTech SE that early lab studies showed a third dose of their Covid-19 vaccine neutralizes the omicron variant. “Funds are flowing into growth stocks with high estimated profit growth and ROE levels, a continuation of moves seen from yesterday,” said Takashi Ito, an equity market strategist at Nomura Securities in Tokyo. “But there could be some profit taking after the market rose for a few consecutive sessions.” Japanese stocks fell, cooling off after a two-day rally as investors weighed the potential impact of the omicron variant on the global economy. Electronics and auto makers were the biggest drags on the Topix, which fell 0.6%. Fanuc and Tokyo Electron were the largest contributors to a 0.5% loss in the Nikkei 225 Indian stocks ended higher, after swinging between gains and losses several times through the session, as traders shifted their focus to key economic data globally and at home in the days ahead.  The S&P BSE Sensex rose 0.3% to close at 58,807.13 in Mumbai, after falling as much as 0.5% earlier in the day. The gauge has gained 3.6% in the last three sessions, its biggest three-day advance in over a seven-month period, on optimism the economic recovery will be resilient despite the spread of the new Covid variant, with the RBI continuing its policy support intact.  The NSE Nifty 50 Index also advanced by similar magnitude on Thursday. Reliance Industries Ltd. contributed the most to the Sensex gain, rising 1.6%. Out of 30 shares in the Sensex index, equal number of stocks rose and fell. Fifteen of 19 sectoral indexes compiled by BSE Ltd. gained, led by a gauge of capital goods companies. The Reserve Bank of India kept borrowing costs at a record-low on Wednesday and voted 5-1 to retain its accommodative policy stance for as long as is necessary, reflecting its bias to support economic growth. The RBI expects the economy to expand 9.5% expansion in the year ending March, one of the fastest paces among the major growing world economies.  Markets’ focus will now shift to U.S. inflation data this week and a Federal Reserve meeting next week, which may provide clues on the pace of tapering and policy tightening. India will release its factory output data on Friday and consumer-price inflation on Monday.  “All eyes will be on crucial macro data (CPI & IIP) outcome which may further provide some direction to the markets,” Ajit Mishra, vice-president research at Religare Broking Ltd., wrote in a note. “The focus will remain on the global cues and updates regarding the new variant. We reiterate our cautious yet positive stance on the markets and suggest traders to focus on managing risk.” Australian stocks edged lower as miners, consumer shares retreated. The S&P/ASX 200 Index fell 0.3% to close at 7,384.50, snapping a four-day winning streak. Miners and consumer discretionary shares contributed the most to the benchmark’s decline. Redbubble was the worst performer, dropping the most since Oct. 14. Sydney Airport was among the top performers after regulators cleared a proposed takeover of the company. The stock also joined a global rally in travel shares after Pfizer and BioNTech said initial lab studies show a third dose of their Covid-19 vaccine may be effective at neutralizing the omicron variant. In New Zealand, the S&P/NZX 50 index fell 0.8% to 12,771.83 In rates, Treasury yields were mostly lower, led by the long end of the curve, while underperforming German bunds. 10Y TSY yields are lower by ~2bp at 1.4973%, trailing declines of 3bp-5bp for most European 10-year yields but remaining above 200-DMA, which it closed above Wednesday for first time since Nov. 29. Treasury futures trade near session highs, with cash yields lower by 3bp-4bp from the 5-year sector to the long end, inside Wednesday’s bear-steepening ranges. European bond markets lead the move, led by Ireland which cut 2022 issuance plans, as virus concerns weighed on most equity markets. U.S. auction cycle concludes with $22b 30-year reopening at 1pm ET, following two Fed purchase operations. Wednesday’s 10Y reopening auction drew 1.518%, tailing by about 0.4bp; Tuesday’s 3Y, which drew 1.000%, also trades at a profit, yielding 0.989% The WI 30Y yield 1.865% is below auction stops since January as sector has benefited from expectations that Fed rate increases beginning next year may strain the economy, as well as from strong equity-market performance driving increased allocation to bonds In FX, the Bloomberg Dollar Spot Index resumed its ascent, climbing 0.2% as the dollar advanced versus all Group-of-10 peers apart from the yen. TRY and ZAR are the weakest in EMFX.  The euro retreated, nearing the $1.13 handle and after touching a one-week high yesterday. One-week volatility for euro and sterling has risen to multi-month highs, with meetings by the Federal Reserve, the European Central Bank and the Bank of England in focus. The British pound fell as Goldman Sachs Group Inc. pushed back its forecast for a U.K. rate hike and business groups called for government support after Prime Minister Boris Johnson announced restrictions to curb the spread of the variant, which Bloomberg Economics estimates could cost the economy as much as 2 billion pounds ($2.6 billion) a month. A study found omicron is 4.2 times more transmissible than the delta variant in its early stages.   The pound hovered near its lowest level in more than a year against the dollar as fresh coronavirus restrictions weighed on the U.K.’s economic outlook. Expectations that the Bank of England will raise interest rates next Thursday continue to wane, with markets pricing less than six basis points of hikes. Goldman pushed back its forecast for a U.K. rate hike and business groups called for government support after Prime Minister Boris Johnson announced restrictions to curb the spread of the variant, which Bloomberg Economics estimates could cost the economy as much as 2 billion pounds ($2.6 billion) a month. A study found omicron is 4.2 times more transmissible than the delta variant in its early stages. Norway’s krone led losses among G-10 currencies as it snapped a three-day rally that had taken it to an almost three-week high against the greenback. In commodities, Crude futures drift lower. WTI slips back near $72 having stalled near $73 during Asian trade. Brent dips 0.5%, finding support just above $75. Spot gold trades flat near $1,782/oz Looking at the day ahead now, and it’s a quiet one on the calendar, with data releases including the US weekly initial jobless claims, as well as the German trade balance for October. Market Snapshot S&P 500 futures down 0.2% to 4,691.00 STOXX Europe 600 up 0.2% to 478.52 MXAP up 0.4% to 195.63 MXAPJ up 0.7% to 638.47 Nikkei down 0.5% to 28,725.47 Topix down 0.6% to 1,990.79 Hang Seng Index up 1.1% to 24,254.86 Shanghai Composite up 1.0% to 3,673.04 Sensex up 0.3% to 58,839.03 Australia S&P/ASX 200 down 0.3% to 7,384.46 Kospi up 0.9% to 3,029.57 Brent Futures down 0.3% to $75.58/bbl Gold spot up 0.0% to $1,783.15 U.S. Dollar Index up 0.20% to 96.09 German 10Y yield little changed at -0.34% Euro down 0.2% to $1.1318 Top Overnight News from Bloomberg European Central Bank governors are to discuss a temporary increase in the Asset Purchase Program with limits on the size and time of the commitment at a Dec. 16 meeting, Reuters reports, citing six people familiar with the matter Hungary raised interest rates for a fifth time in less than a month as policy makers try to rein in the fastest inflation in 14 years. The central bank hiked the one-week deposit rate by 20 basis points on Thursday to 3.3%, broadly matching the median estimate in a Bloomberg survey China’s central bank has signaled a limit to its tolerance for the yuan’s recent advance by setting its reference rate at a weaker-than-expected level China Evergrande Group and Kaisa Group Holdings were downgraded to restricted default by Fitch Ratings, which cited missed dollar bond interest payments in Evergrande’s case and failure to repay a $400 million dollar bond in Kaisa’s. Evergrande Group’s inability to meet its obligations will be dealt with in a market-oriented way, the head of the nation’s central bank said PBOC is exploring interlinking the e-CNY, as the digital yuan is known, system into the Faster Payment System in Hong Kong, says Mu Changchun, head of the Chinese central bank’s Digital Currency Institute Money managers have shown some tentative signs that they may be willing to start buying more Chinese dollar bonds again, after demand for the securities plunged to a 27-month low in November Greece plans to early repay the total amount of IMF’s bailout loan to the country in the first quarter of 2022, Finance Minister Christos Staikouras says in a Parapolitika radio interview The omicron variant of Covid-19 is 4.2 times more transmissible in its early stage than delta, according to a study by a Japanese scientist who advises the country’s health ministry, a finding likely to confirm fears about the new strain’s contagiousness Pfizer will have data telling how well its vaccine prevents infections with the omicron variant before the end of the year A detailed look at global markets courtesy of newsquawk Asian equity markets eventually traded mixed as the early tailwinds from the US gradually waned despite the recent encouragement on the vaccine front. All major US indices were underpinned in which the S&P 500 reclaimed the 4,700 level and approached closer to its ATHs, while Apple extended on record levels and moved closer to USD 3tln valuation. The ASX 200 (-0.3%) was initially kept afloat by resilience in defensives, although upside was restricted amid weakness in tech alongside concerns of a further deterioration in ties with China after Australia’s decision to boycott the Beijing Winter Olympics. The Nikkei 225 (-0.5%) was rangebound with the Japanese benchmark stalled by resistance ahead of the 29k level, although the downside was cushioned by recent currency weakness and a modest improvement in the Business Survey Index. The Hang Seng (+1.1%) and Shanghai Comp. (+1.0%) outperformed after China’s NDRC pledged support measures to boost consumption in rural areas and with some chatter regarding the possibility of another RRR cut in Q1 next year according SGH Macro citing a senior Chinese official. Furthermore, participants digested mixed inflation data from China including firmer than expected factory gate prices. CPI Y/Y was softer than forecast but it still registered the fastest pace of increase since August last year. Finally, 10yr JGBs briefly declined below the 152.00 level following the bear steepening stateside in which T-notes tested 130.00 to the downside and following a somewhat tepid US 10yr offering in which the b/c increased from prior but remained short of the six-auction average, while the results of the 5yr JGB auction were mixed and failed to spur prices with higher accepted prices offset by a weaker b/c. Top Asian News Evergrande Declared in Default as Massive Restructuring Looms China Dollar Junk Bonds Up After Fitch Move on Kaisa, Evergrande Gold Steady as Traders Assess Virus Risk Before Inflation Data China’s Credit Growth Rebounds After Slowing for Almost a Year Stocks in Europe trade have drifted lower in recent trade, giving up the modest gains seen at the open (Euro Stoxx 50 -0.5%, Stoxx 600 -0.2%), and following the mixed lead from APAC and amidst a lack of fresh fundamental catalysts. US equity futures are also subdued, with a relatively broad-based performance seen across the ES (-0.3%), NQ (-0.4%), YM (-0.3%) alongside some mild underperformance in the RTY (-0.6%). Markets are awaiting tomorrow’s US CPI metrics, but more importantly, are gearing up for next week’s blockbuster FOMC confab. Desks have attributed this week’s rebound to several factors working in unison, including a milder Omicron variant (thus far), Chinese policy easing, FOMO, buybacks/upbeat corporate commentary alongside the widely telegraphed hawkish Fed pivot. On the last note, it’s also worth keeping in mind that the rotating voters next year on the FOMC will be more hawkish with the addition of George, Mester and Bullard as voters, albeit some empty spots remain – namely Brainard’s spot as she takes over the Vice-Chair position. Back to Europe, sectors are mostly in the green but portray a defensive bias – with Healthcare, Telecoms, Food & Beverages and Personal & Household Goods at the top of the bunch, whilst Oil & Gas, Retail and Travel & Leisure resides on the other end of the spectrum. In terms of individual moves, UniCredit (+7.8%) shot up to the top of the Stoxx 600 after unveiling its 2024 targets – with the Co. looking to return at least EUR 16bln via dividend and buybacks between 2021-24. Sticking with banks, Deutsche Bank (-2.1%) is pressured after the US DoJ reportedly told Deutsche Bank it may have violated a criminal settlement, due to failures in alerting authorities about internal complaints at its asset management unit, according to sources. Elsewhere, AstraZeneca (+1.0%) is supported as its long-acting antibody combination received emergency use authorisation in the US for COVID-19 prevention in some individuals. Finally, Rolls-Royce (-3.7%) slipped despite an overall positive trading update. Top European News Rolls-Royce Sinks as Omicron Clouds Outlook for 2022 Comeback Harbour Energy Plans Dividend But Pushes Back Tolmount Again Toxic U.K. Tory Press Is Flashing Warning Sign for Boris Johnson Credit Suisse Chairman Horta-Osorio Broke Quarantine Rules In FX, the Greenback remains rangy amidst undulating US Treasury yields and a fluid flow of Omicron related headlines that are filling the void until this week’s main macro release arrives tomorrow in the form of CPI data. However, the index is drifting down in almost ever decreasing circles having retreated a bit further from peaks to a marginally deeper sub-96.000 trough on Wednesday, at 95.848, and forming a fractionally firmer base currently to stay within contact of the psychological level within a narrow 96.154-95.941 band, thus far. Ahead, latest jobless claims updates and the last refunding leg comprising Usd 22 bn long bonds after a reasonable 10 year outing, overall. CHF/EUR/CAD - No obvious reaction to Swiss SECO forecasts even though supply bottlenecks and stricter COVID-19 measures are putting a strain on the economy internationally in winter 2021/22, according to the Government affiliated body. Similarly, ECB sources reporting that views on the GC are converging on a limited, temporary increase of the APP at December’s policy meeting, via an envelope or time specified increase with more frequent reviews, hardly impacted the Euro, as Eur/Usd remained towards the bottom of a 1.1346-16 range and Usd/Chf continued to straddle 0.9200, albeit mostly on the weaker side. Meanwhile, the Loonie has also slipped to the back of the major ranks following yesterday’s largely non BoC event against the backdrop of softer crude prices and an indifferent risk tone, with Usd/Cad hovering mainly above 1.2650 between 1.2645-80 parameters. JPY/GBP/NZD/AUD - All sticking to tight confines against their US peer, as the Yen rotates around 113.50 again and Pound pivots 1.3200 in limbo awaiting top tier UK data on Friday that might shed more light on what is gearing up to be another tight BoE rate call next week. Moreover, Usd/Jpy looks pretty well and heavily flanked by option expiry interest either side and in between its 113.81-35 extremes given large amounts running off at the NY cut - see 6.59GMT post on the Headline Feed for full details. Elsewhere, the pendulum has swung down under in favour of the hitherto underperforming Kiwi, as Nzd/Usd popped over 0.6800 and Aud/Nzd stalled ahead of 1.0550 alongside a pull back in Aud/Usd from 0.7185+ at best to test support into 0.7150 in wake of comments by RBA’s Harker and the RBNZ rebalancing its TWI. In short, the former said Australia’s economy can run hot while dodging the runaway inflation that’s plaguing much of the world, signaling monetary policy will stay ultra-loose for some time yet, while the latter culminated in a bigger Cny contribution at 27% from 23.5%. SCANDI/EM - Another day and more appreciation for the Cnh and Cny, at least in early hours, with validation via the PBoC setting a sub-6.3500 midpoint fix for the onshore Yuan vs Buck. However, the offshore then re-weakened past 6.3500 per Dollar after the Chinese central bank opted to raise the FX RRR by 2ppts - effective 15th Dec. Meanwhile, the Nok gives back after midweek gains as Brent slips with WTI to the detriment of the Rub and Mxn as well. Conversely, the Huf has a further 20 bp 1 week repo hike from the NBH to lean on and the Brl got a boost from 150 bp tightening on top of the BCB signalling the same again when COPOM delivers its next SELIC rate call. In commodities, WTI and Brent front month futures have drifted lower from their best levels printed overnight, which saw WTI Jan briefly mount USD 73.00/bbl and Brent Feb eclipse 76.50/bbl. The complex was unfazed by WSJ source reports suggesting the Biden administration is said to be moving to tighten enforcement of sanctions against Iran, whilst US officials say if there is no progress in the nuclear talks. This comes ahead of the resumption of nuclear talks today, albeit the US delegation will only travel to Vienne over the weekend. With the likelihood of an imminent deal somewhat slim, participants will be eyeing any further deterioration in relations alongside additional demand/sanctions. Aside from that, price action will likely be dictated by the overall market tone in the absence of macro catalysts. Elsewhere, reports suggested the Marathon pipeline has been shut due to a crude oil leak estimated to be around 10 barrels from the 20-inch diameter Illinois pipeline, but again the headlines failed to spur the oil complex. Over to metals, spot gold trades sideways and remains under that cluster of DMAs which today sees the 100 at 1,790/oz, 200 and 1,792.50/oz and 50 and 1,795/oz. LME copper meanwhile has been drifting lower since the end of APAC trade, but the contract remains north of USD 9,500/t. US Event Calendar 8:30am: Dec. Initial Jobless Claims, est. 220,000, prior 222,000; Continuing Claims, est. 1.91m, prior 1.96m 9:45am: Dec. Langer Consumer Comfort, prior 51.0 10am: Oct. Wholesale Inventories MoM, est. 2.2%, prior 2.2%; Wholesale Trade Sales MoM, est. 1.0%, prior 1.1% 12pm: 3Q US Household Change in Net Wor, prior $5.85t DB's Jim Reid concludes the overnight wrap On the theme of advertising, here’s a final reminder about our special monthly survey for 2022, which will be closing today at 1pm London time. We ask about rates, equities, and the path of Covid-19 in 2022, amongst other things, and also return to a festive question we asked in 2019, namely your favourite ever Christmas songs. The link is here and it’s your last chance to complete. All help filling in very much appreciated. Following the strongest 2-day equity performance so far this year, yesterday saw the rally begin to peter out amidst growing concern that another round of restrictions over the coming weeks could set back the economic recovery. Ultimately the issue from a health perspective is that even if Omicron does prove to be less severe, which the initial indications so far have pointed to, a rise in transmissibility could offset that, and ultimately mean that more people are in hospital as a much bigger number of people would actually get Covid-19, even if a lower proportion of them are severely affected. We’ll start with the good news, and one new piece of information yesterday was that Pfizer and BioNTech announced the results from an initial study showing that three doses of their vaccine neutralised the Omicron variant of Covid-19. President Biden tweeted that the new data was “encouraging” and said it reinforced the point that boosters offer the highest protection, whilst Pfizer’s chief executive said that the final verdict would be the real-world efficacy data, which they expect to see toward the end of this year. We also had an update from the EU’s ECDC, who said that of the 337 Omicron cases reported in the EU/EEA so far, all of them were either asymptomatic or mild where severity was available, and that no deaths had yet been reported. Obviously, these sample sizes aren’t big enough to come to concrete conclusions yet, but if things continue this way that’s clearly a promising sign. On the other hand, the spread of infections has continued in South Africa, and the country reported 19,482 cases, which is the highest number since Omicron was first reported. That comes as a study from a Japanese scientist advising the health ministry in Japan said that Omicron was 4.2 times more transmissible than delta in its early stage. That hasn’t been peer-reviewed yet but would certainly back up all the other indications that this is a much more transmissible variant than seen before. These growing warning signs have led governments to keep toughening up restrictions, and here in the UK, the government announced they’d be moving to “Plan B” in England, which will see the reintroduction of guidance to work from home from Monday, and an extension of face masks to most public indoor venues. They will also be making Covid-19 passes mandatory for nightclubs and venues with large crowds, though a negative test will also be sufficient. That comes as cases have continued to rise, with the 7-day average now above 48,000 and at its highest level since January. Separately in Denmark, the government said that schools would close early for the Christmas break, amongst other restrictions. Equities struggled against this backdrop, with Europe’s STOXX 600 down -0.59%, although the S&P 500 managed to pare back its earlier losses to eke out a +0.31% gain. Cyclicals underperformed, but we did see volatility continue to subside, with the VIX down to its lowest closing level since Omicron emerged, at 19.9pts. In addition, there was an outperformance from tech stocks, with the NASDAQ (+0.64%) and the FANG+ index (+0.62%) seeing solid gains. The increasing risk-off tone didn’t bother oil prices either, with Brent crude (+0.50%) and WTI (+0.43%) continuing their run of gains this week, including further gains overnight, whilst European natural gas futures (+5.86%) closed above €100 per megawatt-hour for the first time in nearly 2 months. Over in sovereign bond markets, yields moved higher on both sides of the Atlantic for the most part, with those on 10yr Treasuries up +4.8bps to 1.52%, though this morning they’re down by -1.2bps. That’s the first time they’ve closed back above 1.5% since the session just before Thanksgiving, ahead of the news emerging about the Omicron variant. In Europe, there was an even bigger sell-off, with yields on 10yr bunds (+6.3bps), OATs (+6.9bps) and BTPs (+10.4bps) all moving higher, alongside a further widening in peripheral spreads. This more mixed performance has continued overnight in Asia, with a number of indices trading higher including the CSI (+1.76%), the Shanghai Composite (+1.03%), Hang Seng (+0.89%), and the KOSPI (+0.37%). However, both the Nikkei (-0.27%) and Australia’s ASX 200 (-0.28%) lost ground. On the data front, China’s inflation numbers this morning showed that CPI rose to +2.3% year-on-year in November, slightly lower than forecast +2.5%, albeit still the highest since last August. The PPI readings remained much stronger, but did fall back from a 26-year high last month to +12.9% year-on-year (vs. +12.1% forecast). Looking ahead, futures are indicating a mixed start in the US & Europe with S&P 500 (-0.13%) and DAX (+0.12%) seeing modest moves in either direction. Overnight we also heard from President Biden on Russia, who said that he hoped to announce high-level talks by tomorrow where they would discuss Russian concerns about NATO, and that this would include at least four major NATO allies. President Biden said the meeting was an explicit attempt to “bring down the temperature along the eastern front” that’s ramped up over recent days and weeks. Nevertheless, President Biden reinforced that the US was ready to implement severe economic sanctions should Russia invade Ukraine, telling reporters that he said to Putin there would be “economic consequences like none he’s ever seen”. Back to yesterday, and the Bank of Canada kept policy on hold at their meeting, as was expected. The bank reinforced their expectation for the 2 percent inflation target to be sustainably achieved in the “middle quarters of 2022”. Like other DM central banks, they are focused on persistently elevated inflation, which they tied to supply constraints that will take some time to alleviate. We had some rate hikes elsewhere, however, yesterday with Brazil’s central bank taking rates up by 150bps to 9.25%, whilst Poland’s hiked rates by +50bps to 1.75%. The main data of note yesterday were the US job openings for October, which rose to 11.033m (vs. 10.469m expected) after 2 successive monthly declines. Notably the quits rate, which is a good indicator of labour market tightness, saw its first monthly decline since May as it came down to 2.8%, from an all-time record of 3.0%. To the day ahead now, and it’s a quiet one on the calendar, with data releases including the US weekly initial jobless claims, as well as the German trade balance for October. Tyler Durden Thu, 12/09/2021 - 07:55.....»»

Category: dealsSource: nytDec 9th, 2021

Futures Rebound From Friday Rout As Omicron Fears Ease

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

Category: smallbizSource: nytDec 6th, 2021

Ferguson: Omicron Sounds The Death Knell For Globalization 2.0

Ferguson: Omicron Sounds The Death Knell For Globalization 2.0 Authored by Niall Ferguson, op-ed via Bloomberg.com, On top of an intensifying cold war between the U.S. and China and other seismic changes, the rapid spread of Covid-19’s newest variant could finish off our most recent phase of global integration. “Somewhere out there,” I wrote here two weeks ago, “may lurk what I grimly call the ‘omega variant’ of SARS-CoV-2: vaccine-evading, even more contagious than delta, equally or more deadly. According to the medical scientists I read and talk to … the probability of this nightmare scenario is very low, but it is not zero.” Indeed. Little did I know, but even as I wrote those words something that appears to fit this description was spreading rapidly in South Africa’s Gauteng province: not the omega variant, but the omicron variant. As I write today, major uncertainties remain, but what we know so far is not good. People are emotionally predisposed to look on the bright side — we are all sick of this pandemic and want it to be over — so it pains me to write this. Nevertheless, I’ll stick to my policy of applying history to the best available data, even if it means telling you what you really don’t want to hear. First the data: South African cases were up 39% on Friday, to 16,055. The test positivity rate rose from 22.4% to 24.3%, suggesting that the true case number is rising even faster. A Lancet paper suggests that Omicron is likely by far the most transmissible variant yet. There are three possible explanations for this: A higher intrinsic reproduction number (R0), An advantage in “immune escape” to reinfect recovered people or evade vaccines, or Both of the above. An important preprint published on Dec. 2 pointed to immune escape. South Africa’s National Institute for Communicable Diseases has individualized data on all its 2.7 million confirmed cases of Covid-19 in the pandemic. From these, it identified 35,670 suspected reinfections. (Reinfection is defined as an individual testing positive for Covid-19 twice, at least 90 days apart.) Since mid-November, the daily number of reinfections in South Africa has jumped far faster than in any previous wave. In November, the hazard ratio was 2.39 for reinfection versus primary infection, meaning that recovered individuals were getting Covid at more than twice the rate of people who had never had Covid before. And this was when omicron made up less than a quarter of confirmed cases. By contrast, the same study found no statistically significant evidence that the beta and delta variants were capable of reinfection. And, crucially, at least some of these new infections are leading to serious illness. On Thursday, the number of Gauteng patients in intensive care for Covid almost doubled from 63 to 106. Data from a private hospital network in South Africa that has over 240 patients hospitalized with Covid indicate that 32% of the hospitalized patients were fully vaccinated. Note that around three-quarters of the vaccinated in South Africa received the Pfizer Inc.-BioNTech SE vaccine. The rest got the Johnson & Johnson vaccine. Yet these are not the data that worried me the most last week. Those had to do with children. Between Nov. 14 and 28, 455 people were admitted to hospital with Covid-19 in Tshwane metro area, one of the largest hospital systems in Gauteng. Seventy (15%) of those hospitalized were under the age of five; 117 (25%) were under 20. And this is not just a story of precautionary hospitalizations. Twenty of the 70 hospitalized toddlers progressed to “severe” Covid. Up until Oct. 23, before experts estimate omicron began circulating, under-fives represented only 1.8% of cumulative Covid hospital admissions in South Africa. As of Nov. 29, 10% of those now hospitalized in Tshwane were under the age of two. If this trend holds as omicron spreads to advanced economies — and it is spreading very fast, confirming omicron’s high transmissibility — the market impact could be much bigger than is currently priced in. Unlike with the delta wave, many schools would return to hybrid instruction, parents would withdraw from the labor force to provide childcare and consumption patterns would again shift away from retail, hospitality and face-to-face services. Hospital systems would also face shortages of pediatric intensive care beds, which have not been much needed in prior Covid waves. South Africa’s top medical advisor Waasila Jassat noted on Dec. 3 that hospitalizations on average are less severe than in previous waves and hospital stays are shorter. But she also noted a “sharp” increase in hospital admissions of under-fives. Children under 10 represent 11% of all hospital admissions reported since Dec. 1. Here’s what we don’t know yet. We do not know how far prior infection and vaccination will protect against severe disease and death in northern hemisphere countries, where adult vaccination rates are much higher than in South Africa (just 24%). And we do not know if omicron will prove as aggressive toward children in those countries, especially the very young children we have not previously contemplated vaccinating. (Because South Africa has limited testing capacity, we do not know the total number of under-fives infected with omicron in Gauteng, so we do not know what percentage of children are falling sick.) We may not know these things for another week, possibly longer. So panic is not yet warranted. Nor, however, is wishful thinking. It may prove a huge wave of mild illness, signaling the final phase of the transition from pandemic to endemic. But we don’t know that yet. Now the history. First, it makes all the difference in the world whether or not children fall gravely ill in a pandemic. Covid has so far spared the very young to an extent rarely seen in the recorded history of respiratory disease pandemics. (The exception seems to be the 1889-90 “Russian flu,” which modern researchers suspect was in fact a coronavirus pandemic.) The great influenza pandemics of 1918-19 and 1957-58 killed the very young as well as the very old. The former also carried off young adults in the prime of life. The latter caused significant excess mortality among teenagers. Up until this point, Covid was the social Darwinist disease: It disproportionately killed the old, the sick and the gullible (the vulnerable people who allowed themselves to be persuaded that the vaccine was more dangerous than the virus). A hundred years ago, many experts would have hailed such a disease for the same reasons they promoted eugenics. We think differently now. However, emotionally and rationally, we still dread the deaths of children much more than the old, the sick and the foolish. The moment children become seriously ill — as has already happened in Gauteng — the nature of the pandemic fundamentally alters. Risk aversion will be far higher in the Ferguson family, for example, if its youngest members are vulnerable for the first time. The second historical point is that this may be how our age of globalization ends — in a very different way from its first incarnation just over a century ago. The first age of globalization, from the 1860s until 1914, ended with a bang, not a whimper, with the outbreak of World War I. Within a remarkably short space of time, that conflict halted trade, capital flows and migration between the combatant empires. Moreover, the war and its economic aftershocks strengthened and ultimately empowered new political movements, notably Bolshevism and fascism, that fundamentally repudiated free trade and free capital movements in favor of state control of the economy and autarky. By 1933, the outlook for liberal economic policies seemed so utterly hopeless that, in a lecture he gave in Dublin, even John Maynard Keynes threw in the towel and embraced economic self-sufficiency. Now, there is an argument (made by my Bloomberg colleague and occasional editor James Gibney) that the pandemic will not kill globalization. I am not so sure. Defined too broadly, to include any kind cross-border interaction, the word loses its usefulness. Yes, there were all kinds of “transnational networks in science, health, entertainment,” as well as increasingly ambitious international agencies between the wars. But the fact that (for example) the Pan European movement was founded by Richard von Coudenhove-Kalergi in the 1920s does not mean that the subsequent decades were a triumph of European integration. There was a great deal of international cooperation and cross-border activity between 1939 and 1945, too. That does not mean that the 1940s were a time of globalization. For the word to be meaningful, globalization must refer to relatively higher volumes of trade, capital flows, migration flows and perhaps also cultural integration on a global scale.   On that basis, globalization peaked — or maybe “maxed out” would be more accurate — in around 2007. Calculate it how you like: Whether the ratio of global exports to GDP, the ratio of gross foreign assets to GDP, global or national migrant flows in relation to total population, they all tell the same story of a sustained rise of globalization hitting a peak around 14 years ago. The economic historian Alan M. Taylor has long argued that we should measure globalization by looking at current account imbalances, which tell us when a lot of trade and lending are happening. On that basis, too, globalization peaked in 2007. Even Before Covid, Trade and Lending Were Trending Down Source: Our World in Data from Maurice Obstfeld and Alan M. Taylor, "Global Capital Markets: Integration, Crisis, and Growth," Japan–US Center UFJ Bank Monographs on International Financial Markets; and International Monetary Fund, World Economic Outlook Database. Note: The data shown is the average absolute current account balance (as a percentage of GDP) for 15 countries in five-year blocks. The countries in the sample are Argentina, Australia, Canada, Denmark, Finland, France, Germany, Italy, Japan, Netherlands, Norway, Spain, Sweden, U.K., U.S.. Since the financial crisis of 2008-9, however, the volume of world trade has flatlined relative to the volume of industrial production. The U.S. current account deficit peaked in the third quarter of 2006 at -6.3% of GDP. The latest read? -3.3%. The same story emerges when one turns to migration. The foreign-born share of the U.S. population rose rapidly from its nadir in 1970 (4.7%) to a peak of 13.7% in 2019. But the rate of growth clearly slowed after 2012. It remains below its historic peak of 14.7%, back in 1890. Data for net migration similarly point to peaks prior to the financial crisis. Net emigration from South Asia peaked in 2007, for example. So did net immigration to the United Kingdom. Not-So-Open Borders Source: United Nations Population Division What about cultural globalization? My guess is that peaked in 2012, which was the last year that imported films earned more at the Chinese box office than domestic productions. The highest-grossing movie in the history of the People’s Republic is this year’s “Battle of Lake Changjin,” a Korean War drama in which heroic Chinese troops take on the might of the U.S. Army—and win. (Watch the trailer. Then tell me globalization is going to be fine.) What has caused globalization to recede? Let me offer a six-part answer. First, global economic convergence. This may come as a surprise. An influential story over the past two decades was Branco Milanovic’s thesis that globalization had increased inequality. In particular, Milanovic argued in 2016 that “large real income gains [had] been made by people around the median of the global income distribution and by those in the global top 1%. However, there [had] been an absence of real income growth for people around the 80-85th percentiles of the global distribution.” He illustrated this argument with a famous “elephant chart” of cumulative income growth between 1988 and 2008 at each percentile of the global income distribution. On closer inspection, the elephant was a statistical artifact. Strip out the data for Japan, the former Soviet Union and China, and the elephant vanishes. The story Milanovic’s chart told was of the decline of ex-Soviet and Japanese middle-class incomes following the collapse of the USSR and the bursting of Tokyo’s bubble in 1989-90, and the surge of Chinese middle-class incomes, especially after China’s entry into the World Trade Organization in 2001. The real story of globalization turns out to be a sustained reduction in global inequality as Chinese incomes caught up rapidly with those in the rest of the world, combined with big increases in national inequality as the “one percent” in some (not all) countries got a whole lot richer. At the heart of globalization was what Moritz Schularick and I called “Chimerica”—the symbiosis between the Chinese and American economies that allowed American capital to take advantage of low-cost Chinese labor (offshoring or outsourcing), American borrowers to take advantage of abundant Chinese savings, and American consumers to take advantage of cheap Chinese manufactures. It could not last. In 2003 Chinese unit labor costs were around a third of those in the U.S. By 2018 the two were essentially on a par. In that sense, the glory days of globalization were bound to be numbered. For as Chinese incomes rose, the rationale for relocating production to China was bound to become weaker. Secondly, and at the same time, new technologies — robotics, three-dimensional printing, artificial intelligence — were rapidly reducing the importance of human labor in manufacturing. With the surge of online commerce and digital services, globalization entered a new phase in which data rather than goods and people crossed borders, even if the Great Firewall of China partly cordoned off China’s internet from the rest of the world’s. Chimerica, as Schularick and I argued back in 2007, was in many ways a chimera — a monstrous creature with the potential to precipitate a crisis, not least by artificially depressing U.S. interest rates and inflating a real estate bubble. When that crisis struck in 2008-9, it was the third blow to globalization. For those who suffered the heaviest losses in the United States and elsewhere, it was not illogical to blame free trade and immigration. A 2015 study by the McKinsey Global Institute showed clearly that people in the U.S., U.K. and France who saw themselves as “not advancing and not hopeful about the future” were much more likely than more optimistic groups to blame “legal immigrants,” “the influx of foreign goods and services,” and “cheaper foreign labor” for, respectively, “ruining the culture and cohesiveness in our society,” “leading to domestic job losses” and “creating unfair competition to domestic businesses.” The only surprising thing was that these feelings took as long as seven years to manifest themselves as an organized political backlash against globalization, in the form of Britain’s vote to exit the European Union and America’s vote for Donald Trump. Dani Rodrik’s famous trilemma — which postulated that you could have any two of globalization, democracy and sovereignty — was emphatically answered in 2016: Voters chose democracy and sovereignty over globalization. This was the fourth strike against “the globalists,” a term invented by the populists to give globalization a more easily hateable human face. The financial crisis and the populist backlash didn’t sound the death knell for globalization. They merely dialed it back — hence the plateau in trade relative to manufacturing and the modest decline (not collapse) of international capital flows and migration. The fifth blow was the outbreak of Cold War II, which should probably be dated from Vice President Mike Pence’s October 2018 Hudson Institute speech, the first time the Trump administration had taken its anti-Chinese policy beyond the confines of the president’s quixotic trade war (which only modestly reduced the bilateral U.S.-Chinese trade deficit). Not everyone has come to terms with this new cold war. Joseph Nye (and the administration of President Joe Biden) would still like to believe that the U.S. and China are frenemies engaged in “coopetition.” But Hal Brands and John Lewis Gaddis, John Mearsheimer and Matt Turpin have all come round to my view that this is a cold war — not identical to the last one, but as similar to it as World War II was to World War I. The only question worth debating is whether or not, as in 1950, cold war turns hot. There is no Thucydidean law that says this is inevitable, as Graham Allison has shown. But I agree with Mearsheimer: The risk of a hot war in Cold War II may actually be higher than in Cold War I. Nothing would kill globalization faster than the outbreak of a superpower war over Taiwan. (And “The Battle of Lake Changjin” is blatantly psyching Chinese cinemagoers up for such a conflict.) The decoupling of the U.S. and Chinese economies would almost certainly have continued even if the sixth blow — the Covid pandemic — had not struck. It has been astounding how little the Biden administration has changed of its predecessor’s China strategy. However, the pandemic has delivered the coup de grace — “a brutal end to the second age of globalization,” as Nicholas Eberstadt put it last year. True, the volume of merchandise trade has recovered even more rapidly in 2021 than the World Trade Organization anticipated back in March. But the emergence of a new, contagious and lethal coronavirus has caused a collapse of international travel and tourism. The number of passengers carried by the global airline industry plunged by 60% in 2020. It will be not much better than 50% of its pre-pandemic level this year. International tourist arrivals are down by even more this year than last year — close to 80% below their 2019 level. In Asia, international tourism has all but ceased to exist this year. Meanwhile, both the U.S. and the Chinese governments keep devising new ways to discourage their nationals from investing in the rival superpower. Didi Global Inc., the Chinese Uber, just announced it is delisting its shares from the New York Stock Exchange. And the pressure mounts on Wall Street financiers — as Bridgewater Associates founder Ray Dalio discovered last week — to wind up their “long China” trade and stop turning a blind eye to genocide in Xinjiang and other human rights abuses. Next up: the campaign to boycott the 2022 Winter Olympics in Beijing. Strikingly, a growing number of Western sports stars and organizations such as the Women’s Tennis Association are already willing to defy Beijing — in the case of the WTA by suspending tournaments in China in response to the disappearance of the tennis star Peng Shuai, who accused a senior Communist Party official of sexually assaulting her. China’s leaders should be even more worried by a recent Chicago Council of World Affairs poll, which showed that just over half of Americans (52%) favor using U.S. troops to defend Taiwan if China invades the island — the highest share ever recorded in surveys dating back to 1982. Last month I asked a leading American lawmaker how he explained the marked growth in public hostility toward the Chinese government. His answer was simple: “People blame China for Covid.” And not without reason, as Matt Ridley’s new book “Viral” makes clear. For the avoidance of doubt, I do not foresee as complete a collapse of globalization as happened after 1914. Globalization 2.0 seems to be going out with a whimper — or perhaps a persistent cough — rather than with a bang. Income convergence and technological change were bound to reduce its utility. Having overshot by 2007, globalization settled at a lower level after the financial crisis and was less damaged by populist policies like tariffs than might have been anticipated. But the advent of Cold War II and Covid-19 struck two severe blows. How far globalization is rolled back depends on how far the two phenomena persist or worsen. Maybe — let us pray — the alarming data from Gauteng will not imply a major new wave of illness and death in the wider world. Maybe the omicron variant will not, after all, be that nightmare variant I have feared: more infectious, more lethal, vaccine-evading, not ageist. But omicron is only the 15th letter in the Greek alphabet. In all of Africa only 7.3% of the population are fully vaccinated and there are countless immunocompromised individuals with HIV. Even if omicron turns out to be, like delta, a variant we can live with, there is still some non-zero chance that at some point we get my “omega variant.” In that scenario, the pandemic does not oblige us, weary as we are of it, by ending, but recurs in a succession of waves extending for years. One begins to wonder if China will ever lift its stringent restrictions on foreign visitors. Under such circumstances, I see little chance of Cold War II reaching the détente phase earlier than Cold War I.   In addition to applying history, I have come to believe that we should also apply science fiction, on the principle that its authors are professionally incentivized to envision plausibly the impact of social, technological and other changes on the future. (Fact: an Italian sci-film called “Omicron,” in which an alien takes over a human body, was released in 1963.) No living author is better at this kind of thing than Neal Stephenson, whose “Snow Crash” coined the word “metaverse,” and whom I got to know — appropriately via Zoom — through my friends at the Santa Fe Institute. When Stephenson and I met for a late-night Scotch at a bar in Seattle a few weeks back, we swiftly found common ground. Never have I seen a longer list of wines and spirits: We could have scrolled down on the iPad the server handed us for an hour and still not reached the end. Eventually, we found the malt whisky. And immediately we agreed: Laphroaig — the standard 10-year-old version. Stephenson’s latest novel is “Termination Shock.” Buy it. You will be catapulted into a future Texas of intolerable heat, man-eating hogs, and other nightmares, the effect of which will be to make your present circumstances seem quite tolerable. Part of Stephenson’s genius is his use of the throwaway detail. “RVs,” he writes, were “already at a premium because of Covid-19, Covid-23 and Covid-27.” It’s not really part of the plot, but it stopped my eyeballs in their tracks. And remember: He predicted the metaverse. In 1992. Tyler Durden Mon, 12/06/2021 - 05:00.....»»

Category: worldSource: nytDec 6th, 2021

BTFDers Unleashed: Futures, Yields, Oil Jump As Omicron Panic Eases

BTFDers Unleashed: Futures, Yields, Oil Jump As Omicron Panic Eases As expected over the weekend, and as we first noted shortly after electronic markets reopened for trading on Sunday, S&P futures have maintained their overnight gains and have rebounded 0.7% while Nasdaq contracts jumped as much as 1.3% after risk sentiment stabilized following Friday’s carnage and as investors settled in for a few weeks of uncertainty on whether the Omicron variant would derail economic recoveries and the tightening plans of some central banks. Japan led declines in the Asian equity session (which was catching down to Friday's US losses) after the government shut borders to visitors. The region’s reopening stocks such as restaurants, department stores, train operators and travel shares also suffered some losses.  Oil prices bounced $3 a barrel to recoup some of Friday's rout, while the safe haven yen, Swiss franc and 10Y Treasury took a breather after its run higher. Moderna shares jumped as much as 12% in pre-market trading after Chief Medical Officer Paul Burton said he suspects the new omicron coronavirus variant may elude current vaccines, and if so, a reformulated shot could be available early in the new year. Which he would obviously say as his company makes money from making vaccines, even if they are not very efficient. Here are some of the other notable premarket movers today: BioNTech (BNTX US) advanced 5% after it said it’s starting with the first steps of developing a new adapted vaccine, according to statement sent by text. Merck & Co. (MRK US) declined 1.6% after it was downgraded to neutral from buy at Citi, which also opens a negative catalyst watch, with “high probability” the drugmaker will abandon development of its HIV treatment. A selection of small biotechs rise again in U.S. premarket trading amid discussion of the companies in StockTwits and after these names outperformed during Friday’s market rout. Palatin Tech (PTN US) +37%, Biofrontera (BFRI US) +22%, 180 Life Sciences (ATNF US) +19%. Bonds gave back some of their gains, with Treasury futures were down 11 ticks. Like other safe havens, the market had rallied sharply as investors priced in the risk of a slower start to rate hikes from the U.S. Federal Reserve, and less tightening by some other central banks. Needless to say, Omicron is all anyone can talk about: on one hand, authorities have already orchestrated a lot of global panic: Britain called an urgent meeting of G7 health ministers on Monday to discuss developments on the virus, even though the South African doctor who discovered the strain and treated cases said symptoms of Omicron were so far mild. The new variant of concern was found as far afield as Canada and Australia as more countries such as Japan imposed travel restriction to try to seal themselves off. Summarizing the fearmongering dynamic observed, overnight South African health experts - including those who discovered the Omicron variant, said it appears to cause mild symptoms, while the Chinese lapdog organization, WHO, said the variant’s risk is “extremely high”. Investors are trying to work out if the omicron flareup will a relatively brief scare that markets rebound from, or a bigger blow to the global economic recovery. Much remains unanswered about the new strain: South African scientists suggested it’s presenting with mild symptoms so far, though it appears to be more transmissible, but the World Health Organization warned it could fuel future surges of Covid-19 with severe consequences. "There is a lot we don't know about Omicron, but markets have been forced to reassess the global growth outlook until we know more," said Rodrigo Catril, a market strategist at NAB. "Pfizer expects to know within two weeks if Omicron is resistant to its current vaccine, others suggest it may take several weeks. Until then markets are likely to remain jittery." "Despite the irresistible pull of buying-the-dip on tenuous early information on omicron, we are just one negative omicron headline away from going back to where we started,” Jeffrey Halley, a senior market analyst at Oanda, wrote in a note. “Expect plenty of headline-driven whipsaw price action this week.” The emergence of the omicron strain is also complicating monetary policy. Traders have already pushed back the expected timing of a first 25-basis-point rate hike by the Federal Reserve to July from June. Fed Bank of Atlanta President Raphael Bostic played down economic risks from a new variant, saying he’s open to a quicker paring of asset purchases to curb inflation. Fed Chair Jerome Powell and Treasury Secretary Janet Yellen speak before Congress on Tuesday and Wednesday. “We know that central banks can quickly switch to dovish if they need to,” Mahjabeen Zaman, Citigroup senior investment specialist, said on Bloomberg Television. “The liquidity playbook that we have in play right now will continue to support the market.” European stocks rallied their worst drop in more than a year on Friday, with travel and energy stocks leading the advance. The Stoxx 600 rose 0.9% while FTSE 100 futures gain more than 1%, aided by a report that Reliance may bid for BT Group which jumped as much as 9.5% following a report that India’s Reliance Industries may offer to buy U.K. phone company, though it pared the gain after Reliance denied it’s considering a bid. European Central Bank President Christine Lagarde put a brave face on the latest virus scare, saying the euro zone was better equipped to face the economic impact of a new wave of COVID-19 infections or the Omicron variant Japanese shares lead Asian indexes lower after Premier Kishida announces entry ban of all new foreign visitors. Hong Kong’s benchmark Hang Seng Index closed down 0.9% at the lowest level since October 2020, led by Galaxy Entertainment and Meituan. The index followed regional peers lower amid worries about the new Covid variant Omicron. Amid the big movers, Galaxy Entertainment was down 5.4% after police arrested Macau’s junket king, while Meituan falls 7.1% after reporting earnings. In FX, currency markets are stabilizing as the week kicks off yet investors are betting on the possibility of further volatility. The South African rand climbed against the greenback though most emerging-market peers declined along with developing-nation stocks. Turkey’s lira slumped more than 2% after a report at the weekend that President Recep Tayyip Erdogan ordered a probe into foreign currency trades. The Swiss franc, euro and yen retreat while loonie and Aussie top G-10 leaderboard after WTI crude futures rally more than 4%. The Bloomberg Dollar Spot Index hovered after Friday’s drop, and the greenback traded mixed against its Group-of-10 peers; commodity currencies led gains. The euro slipped back below $1.13 and Bunds sold off, yet outperformed Treasuries. The pound was steady against the dollar and rallied against the euro. Australian sovereign bonds pared an opening jump as Treasuries trimmed Friday’s spike amid continuing uncertainty over the fallout from the omicron variant. The Aussie rallied with oil and iron ore. The yen erased an earlier decline as a government announcement on planned border closures starting Tuesday spurred a drop in local equities. The rand strengthens as South African health experts call omicron variant “mild.” In rates, Treasuries were cheaper by 4bp-7bp across the curve in belly-led losses, reversing a portion of Friday’s sharp safe-haven rally as potential economic impact of omicron coronavirus strain continues to be assessed. The Treasury curve bear- steepened and the benchmark 10-year Treasury yield jumped as much as 7 basis points to 1.54%; that unwound some of Friday’s 16 basis-point plunge -- the steepest since March 2020.  Focal points include month-end on Tuesday, November jobs report Friday, and Fed Chair Powell is scheduled to speak Monday afternoon. Treasuries broadly steady since yields gapped higher when Asia session began, leaving 10-year around 1.54%, cheaper by almost 7bp on the day; front-end outperformance steepens 2s10s by ~3bp. Long-end may draw support from potential for month-end buying; Bloomberg Treasury index rebalancing was projected to extend duration by 0.11yr as of Nov. 22 In commodities, oil prices bounced after suffering their largest one-day drop since April 2020 on Friday. "The move all but guarantees the OPEC+ alliance will suspend its scheduled increase for January at its meeting on 2 December," wrote analyst at ANZ in a note. "Such headwinds are the reason it's been only gradually raising output in recent months, despite demand rebounding strongly." Brent rebounded 3.9% to $75.57 a barrel, while U.S. crude rose 4.5% to $71.24. Gold has so far found little in the way of safe haven demand, leaving it stuck at $1,791 an ounce . SGX iron ore rises almost 8% to recoup Friday’s losses. Bitcoin rallied after falling below $54,000 on Friday. Looking at today's calendar, we get October pending home sales, and November Dallas Fed manufacturing activity. We also get a bunch of Fed speakers including Williams, Powell making remarks at the New York Fed innovation event, Fed’s Hassan moderating a panel and Fed’s Bowman discussing central bank and indigenous economies. Market Snapshot S&P 500 futures up 0.6% to 4,625.00 MXAP down 0.9% to 191.79 MXAPJ down 0.4% to 625.06 Nikkei down 1.6% to 28,283.92 Topix down 1.8% to 1,948.48 Hang Seng Index down 0.9% to 23,852.24 Shanghai Composite little changed at 3,562.70 Sensex up 0.4% to 57,307.46 Australia S&P/ASX 200 down 0.5% to 7,239.82 Kospi down 0.9% to 2,909.32 STOXX Europe 600 up 0.7% to 467.47 German 10Y yield little changed at -0.31% Euro down 0.3% to $1.1283 Brent Futures up 3.8% to $75.49/bbl Gold spot up 0.3% to $1,797.11 U.S. Dollar Index up 0.13% to 96.22 Top Overnight News from Bloomberg The omicron variant of Covid-19, first identified in South Africa, has been detected in locations from Australia to the U.K. and Canada, showing the difficulties of curtailing new strains While health experts in South Africa, where omicron was first detected, said it appeared to cause only mild symptoms, the Geneva-based WHO assessed the variant’s risk as “extremely high” and called on member states to test widely. Understanding the new strain will take several days or weeks, the agency said All travelers arriving in the U.K. starting at 4 a.m. on Nov. 30 must take a PCR coronavirus test on or before the second day of their stay and isolate until they receive a negative result. Face coverings will again be mandatory in shops and other indoor settings and on public transport. Booster shots may also be approved for more age groups within days, according to Health Secretary Sajid Javid The economic effects of the successive waves of the Covid pandemic have been less and less damaging, Bank of France Governor Francois Villeroy de Galhau says Italian bonds advance for a third day, as investors shrug off new coronavirus developments over the weekend and stock futures advance, while bunds are little changed ahead of German inflation numbers and a raft of ECB speakers including President Christine Lagarde A European Commission sentiment index fell to 117.5 in November from 118.6 the previous month, data released Monday showed Spanish inflation accelerated to the fastest in nearly three decades in November on rising food prices, underscoring the lingering consequences of supply-chain bottlenecks across Europe. Consumer prices jumped 5.6% Energy prices in Europe surged on Monday after weather forecasts showed colder temperatures for the next two weeks that will lift demand for heating ECB Executive Board member Isabel Schnabel took to the airwaves to reassure her fellow Germans that inflation will slow again, hours before data set to show the fastest pace of price increases since the early 1990s Russia’s ambassador to Washington said more than 50 diplomats and their family members will have to leave the U.S. by mid-2022, in the latest sign of tensions between the former Cold War enemies China sent the biggest sortie of warplanes toward Taiwan in more than seven weeks after a U.S. lawmaker defied a Chinese demand that she abandon a trip to the island A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks traded cautiously and US equity futures rebounded from Friday’s hefty selling (S&P 500 -2.3%) as all focus remained on the Omicron variant after several countries announced restrictions and their first cases of the new variant, although markets took solace from reports that all cases so far from South Africa have been mild. Furthermore, NIH Director Collins was optimistic that current vaccines are likely to protect against the Omicron variant but also noted it was too early to know the answers, while Goldman Sachs doesn’t think the new variant is a sufficient reason to adjust its portfolio citing comments from South Africa’s NICD that the mutation is unlikely to be more malicious and existing vaccines will most likely remain effective at preventing hospitalizations and deaths. ASX 200 (-0.5%) is subdued after Australia registered its first cases of the Omicron variant which involved two people that arrived in Sydney from southern Africa and with the government reviewing its border reopening plans. Nikkei 225 (-1.6%) whipsawed whereby it initially slumped at the open due to the virus fears and currency-related headwinds but then recouped its losses and briefly returned flat as the mood gradually improved, before succumbing to a bout of late selling, and with mixed Retail Sales data adding to the indecision. Hang Seng (-1.0%) and Shanghai Comp. (Unch) weakened with Meituan the worst performer in Hong Kong after posting a quarterly loss and with casino names pressured by a crackdown in which police detained Suncity Group CEO and others after admitting to accusations including illegal cross border gambling. However, the losses in the mainland were cushioned after firm Industrial Profits data over the weekend and with local press noting expectations for China to adopt a more proactive macro policy next year. Finally, 10yr JGBs shrugged off the pullback seen in T-note and Bund futures, with price action kept afloat amid the cautious mood in stocks and the BoJ’s presence in the market for over JPY 900bln of JGBs mostly concentrated in 3yr-10yr maturities. Top Asian News Hong Kong Stocks Slide to 13-Month Low on Fresh Virus Woes Li Auto Loss Narrows as EV Maker Rides Out Supply-Chain Snarls Singapore Adds to Its Gold Pile for the First Time in Decades China Growth Stocks Look Like Havens as Markets Confront Omicron Bourses in Europe are experiencing a mild broad-based rebound (Euro Stoxx 50 +1.0%; Stoxx 600 +0.9%) following Friday's hefty COVID-induced losses. Desks over the weekend have been framing Friday's losses as somewhat overstretched in holiday-thinned liquidity, given how little is known about the Omicron variant itself. The strain will likely remain the market theme as scientists and policymakers factor in this new variant, whilst data from this point forth – including Friday's US labour market report - will likely be passed off as somewhat stale, and headline risk will likely be abundant. Thus far, symptoms from Omicron are seemingly milder than some of its predecessors, although governments and central banks will likely continue to express caution in this period of uncertainty. Back to price action, the momentum of the rebound has lost steam; US equity futures have also been drifting lower since the European cash open – with the RTY (+0.9%) was the laggard in early European trade vs the ES (+0.8%), NQ (+1.0%) and YM (+0.7%). European cash bourses have also been waning off best levels but remain in positive territory. Sectors are mostly in the green, but the breadth of the market has narrowed since the cash open. Travel & Leisure retains the top spot in what seems to be more a reversal of Friday's exaggerated underperformance as opposed to a fundamentally driven rebound – with more nations announcing travel restrictions to stem the spread of the variant. Oil & Gas has also trimmed some of Friday's losses as oil prices see a modest rebound relative to Friday's slump. On the other end of the spectrum, Healthcare sees mild losses as COVID-related names take a mild breather, although Moderna (+9.1% pre-market) gains ahead of the US open after its Chief Medical Officer suggested a new vaccine for the variant could be ready early next year. Meanwhile, Autos & Parts reside as the current laggard amid several bearish updates, including a Y/Y drop in German car exports - due to the chip shortage and supply bottlenecks – factors which the Daimler Truck CEO suggested will lead to billions of Euros in losses. Furthermore, auto supbt.aplier provider Faurecia (-5.9%) trades at the foot of the Stoxx 600 after slashing guidance – again a function of the chip shortage. In terms of Monday M&A, BT (+4.7%) shares opened higher by almost 10% following source reports in Indian press suggesting Reliance Industries is gearing up for a takeover approach of BT – reports that were subsequently rebuffed. Top European News U.K. Mortgage Approvals Fall to 67,199 in Oct. Vs. Est. 70,000 Johnson Matthey Rises on Report of Battery Talks With Tata Gazprom Reports Record Third-Quarter Profit Amid Gas Surge Omicron’s Spread Fuels Search for Answers as WHO Sounds Warning In FX, the Buck has bounced from Friday’s pullback lows on a mixture of short covering, consolidation and a somewhat more hopeful prognosis of SA’s new coronavirus strand compared to very early perceptions prompted by reports that the latest mutation would be even worse than the Delta variant. In DXY terms, a base above 96.000 is forming within a 93.366-144 band amidst a rebound in US Treasury yields and re-steepening along the curve following comments from Fed’s Bostic indicating a willingness to back faster QE tapering. Ahead, pending home sales and Dallas Fed business manufacturing along with more Fed rhetoric from Williams and chair Powell on the eve of month end. AUD/CAD/NZD - No surprise to see the high beta and risk sensitive currencies take advantage of the somewhat calmer conditions plus a recovery in crude and other commodities that were decimated by the prospect of depressed demand due to the aforementioned Omicron outbreak. The Aussie is back over 0.7150 vs its US counterpart, the Loonie has pared back losses from sub-1.2750 with assistance from WTI’s recovery to top Usd 72/brl vs a Usd 67.40 trough on November 26 and the Kiwi is hovering above 0.6800 even though RBNZ chief economist Ha has warned that a pause in OCR tightening could occur if the fresh COVID-19 wave proves to be a ‘game-changer’. JPY/EUR - The major laggards as sentiment stabilses, with the Yen midway between 112.99-113.88 parameters and hardly helped by mixed Japanese retail sales data, while the Euro has retreated below 1.1300 where 1.7 bn option expiry interest resides and a key Fib level just under the round number irrespective of strong German state inflation reports and encouraging pan Eurozone sentiment indicators, as more nations batten down the hatches to stem the spread of SA’s virus that has shown up in parts of the bloc. GBP/CHF - Both narrowly divergent vs the Dollar, as Cable retains 1.3300+ status against the backdrop of retreating Gilt and Short Sterling futures even though UK consumer credit, mortgage lending and approvals are rather conflicting, while the Franc pivots 0.9250 and meanders from 1.0426 to 1.0453 against the Euro after the latest weekly update on Swiss bank sight deposits showing no sign of official intervention. However, Usd/Chf may veer towards 1.1 bn option expiries at the 0.9275 strike if risk appetite continues to improve ahead of KoF on Tuesday and monthly reserves data. SCANDI/EM - Although Brent has bounced to the benefit of the Nok, Sek outperformance has ensued in wake of an upgrade to final Swedish Q3 GDP, while the Cnh and Cny are deriving support via a rise in Chinese industrial profits on a y/y basis and the Zar is breathing a sigh of relief on the aforementioned ‘better’ virus updates/assessments from SA on balance. Conversely, the Try is back under pressure post-a deterioration in Turkish economic sentiment vs smaller trade deficit as investors look forward to CPI at the end of the week. Meanwhile, Turkish President Erdogan provides no reprieve for the Lira as he once again defending his unorthodox view that higher interest rates lead to higher inflation. In commodities, WTI and Brent front-month futures consolidate following an overnight rebound – with WTI Jan back on a USD 71/bbl handle and Brent Feb just under USD 75/bbl – albeit still some way off from Friday's best levels which saw the former's high above USD 78/bbl and the latter's best north of USD 81/bbl. The week is packed with risks to the oil complex, including the resumption of Iranian nuclear talks (slated at 13:00GMT/08:00EST today) and the OPEC+ monthly confab. In terms of the former, little is expected in terms of progress unless the US agrees to adhere to Tehran's demand – which at this point seems unlikely. Tehran continues to seek the removal of US sanctions alongside assurances that the US will not withdraw from the deal. "The assertion that the US must 'change its approach if it wants progress' sets a challenging tone", Citi's analysts said, and the bank also expects parties to demand full access to Iranian nuclear facilities for verification of compliance. Further, the IAEA Chief met with Iranian officials last week; although concrete progress was sparse, the overall tone of the meeting was one of progress. "We remain of the opinion that additional Iranian supplies are unlikely to reach the market before the second half of 2022 at the earliest," Citi said. Meanwhile, reports suggested the US and allies have been debating a "Plan B" if talks were to collapse. NBC News – citing European diplomats, former US officials and experts – suggested that options included: 1) a skinny nuclear deal, 2) ramp up sanctions, 3) Launching operations to sabotage Iranian nuclear advances, 4) Military strikes, 5) persuading China to halt Iranian oil imports, albeit Iran and China recently signed a 25yr deal. Over to OPEC+, a rescheduling (in light of the Omicron variant) sees the OPEC and JTC meeting now on the 1st December, followed by the JMMC and OPEC+ on the 2nd. Sources on Friday suggested that members are leaning towards a pause in the planned monthly output, although Russian Deputy PM Novak hit the wires today and suggested there is no need for urgent measures in the oil market. Markets will likely be tested, and expectations massaged with several sources heading into the meeting later this week. Elsewhere, spot gold trades sideways just under the USD 1,800/oz and above a cluster of DMAs, including the 50 (1,790.60/oz), 200 (1,791.30/oz) and 100 (1,792.80/oz) awaiting the next catalyst. Over to base metals, LME copper recoups some of Friday's lost ground, with traders also citing the underlying demand emanating from the EV revolution. US Event Calendar 10am: Oct. Pending Home Sales YoY, prior -7.2% 10am: Oct. Pending Home Sales (MoM), est. 0.8%, prior -2.3% 10:30am: Nov. Dallas Fed Manf. Activity, est. 17.0, prior 14.6 Central Bank speakers: 3pm: Fed’s Williams gives opening remarks at NY Innovation Center 3:05pm: Powell Makes Opening Remarks at New York Fed Innovation Event 3:15pm: Fed’s Hassan moderates panel introducing NY Innovation Center 5:05pm: Fed’s Bowman Discusses Central bank and Indigenous Economies DB's Jim Reid concludes the overnight wrap Last night Henry in my team put out a Q&A looking at what we know about Omicron (link here) as many risk assets put in their worst performance of the year on Friday after it exploded into view. The main reason for the widespread concern is the incredibly high number of mutations, with 32 on the spike protein specifically, which is the part of the virus that allows it to enter human cells. That’s much more than we’ve seen for previous variants, and raises the prospect it could be a more transmissible version of the virus, although scientists are still assessing this. South Africa is clearly where it has been discovered (not necessarily originated from) and where it has been spreading most. The fact that’s it’s become the dominant strain there in just two weeks hints at its higher level of contagiousness. However the read through to elsewhere is tough as the country has only fully vaccinated 24% of its population, relative to at least 68% in most of the larger developed countries bar the US which languishes at 58%. It could still prove less deadly (as virus variants over time mostly are) but if it is more contagious that could offset this and it could still cause similar healthcare issues, especially if vaccines are less protective. On the other hand the South African doctor who first alerted authorities to the unusual symptoms that have now been found to have been caused by Omicron, was on numerous media platforms over the weekend suggesting that the patients she has seen with it were exhausted but generally had mild symptoms. However she also said her patients were from a healthy cohort so we can’t relax too much on this. However as South African cases rise we will get a lot of clues from hospitalisation data even if only 6% of the country is over 65s. My personal view is that we’ll get a lot of information quite quickly around how bad this variant is. The reports over the weekend that numerous cases of Omicron have already been discovered around the world, suggests it’s probably more widespread than people think already. So we will likely soon learn whether these patients present with more severe illness and we’ll also learn of their vaccination status before any official study is out. The only caveat would be that until elderly patients have been exposed in enough scale we won’t be able to rule out the more negative scenarios. Before all that the level of restrictions have been significantly ramped up over the weekend in many countries. Henry discusses this in his note but one very significant one is that ALL travellers coming into (or back to) the UK will have to self isolate until they get a negative PCR test. This sort of thing will dramatically reduce travel, especially short business trips. Overnight Japan have effectively banned ALL foreign visitors. I appreciate its dangerous to be positive on covid at the moment but you only have to look at the UK for signs that boosters are doing a great job. Cases in the elderly population continue to collapse as the roll out progresses well and overall deaths have dropped nearly 20% over the last week to 121 (7-day average) - a tenth of where they were at the peak even though cases have recently been 80-90% of their peak levels. If Europe are just lagging the UK on boosters rather than anything more structural, most countries should be able to control the current wave all things being equal. However Omicron could make things less equal but it would be a huge surprise if vaccines made no impact. Stocks in Asia are trading cautiously but remember that the US and Europe sold off more aggressively after Asia closed on Friday. So the lack of major damage is insightful. The Nikkei (-0.02%), Shanghai Composite (-0.14%), CSI (-0.22%), KOSPI (-0.47%) and Hang Seng (-0.68%) are only slightly lower. Treasury yields, oil, and equity futures are all rising in Asia. US treasury yields are up 4-6bps across the curve, Oil is c.+4.5% higher, while the ZAR is +1.31%. Equity futures are trading higher with the S&P 500 (+0.71%) and DAX (+0.84%) futures in the green. In terms of looking ahead, we may be heading into December this week but there’s still an incredibly eventful period ahead on the market calendar even outside of Omicron. We have payrolls on Friday which could still have a big impact on what the Fed do at their important December 15 FOMC and especially on whether they accelerate the taper. Wednesday (Manufacturing) and Friday (Services) see the latest global PMIs which will as ever be closely watched even if people will suggest that the latest virus surge and now Omicron variant may make it backward looking. Elsewhere in the Euro Area, we’ll get the flash CPI estimate for November tomorrow (France and Italy on the same day with Germany today), and we’ll hear from Fed Chair Powell as he testifies (with Mrs Yellen) before congressional committees tomorrow and Wednesday. There’s lots of other Fed speakers this week (ahead of their blackout from this coming weekend) and last week there was a definite shift towards a faster taper bias, even amongst the doves on the committee with Daly being the most important potential convert. Fed speakers this week might though have to balance the emergence of the new variant with the obvious point that without it the Fed is a fair bit behind the curve. Importantly but lurking in the background, Friday is also the US funding deadline before another government shutdown. History would suggest a tense last minute deal but it’s tough to predict. Recapping last week now and the emergence of the new variant reshaped the whole week even if ahead of this, continued case growth across Europe prompted renewed lockdown measures and travel bans across the continent. Risk sentiment clearly plummeted on Friday. The S&P 500 fell -2.27%, the biggest drop since October 2020, while the Stoxx 600 fell -3.67%, the biggest one-day decline since the original Covid-induced risk off in March 2020. The S&P 500 was -2.20% lower last week, while the Stoxx 600 was down -4.53% on the week. 10yr treasury, bund, and gilt yields declined -16.1bps, -8.7bps, and -14.5bps, undoing the inflation and policy response-driven selloff from earlier in the week. The drop in 10yr treasury and gilt yields were the biggest one-day declines since the original Covid-driven rally in March 2020, while the drop in bund yields was the largest since April 2020. 10yr treasury, bund, and gilt yields ended the week -7.3bps lower, +0.7bps higher, and -5.4bps lower, respectively. Measures of inflation compensation declined due to the anticipated hit to global demand, with 10yr breakevens in the US and Germany -6.8bps and -8.8bps lower Friday, along with Brent and WTI futures declining -11.55% and -13.06%, respectively. Investors pushed back the anticipated timing of rate hikes. As it stands, the first full Fed hike is just about priced for July, and 2 hikes are priced for 2022. This follows a hawkish tone from even the most dovish FOMC members and the November FOMC minutes last week. The prevailing sentiment was the FOMC was preparing to accelerate their asset purchase taper at the December meeting to enable inflation-fighting rate hikes earlier in 2022. Understanding the impact of the new variant will be crucial for interpreting the Fed’s reaction function, though. The impact may not be so obvious; while a new variant would certainly hurt global demand and portend more policy accommodation, it will also likely prompt more virus-avoiding behaviour in the labour market, preventing workers from returning to pre-Covid levels. Whether the Fed decides to accommodate these sidelined workers for longer, or to re-think what constitutes full employment in a Covid world should inform your view on whether they accelerate tapering in December. It feels like a lifetime ago but last week also saw President Biden nominate Chair Powell to head the Fed for another term, and for Governor Brainard to serve as Vice Chair. The announcement led to a selloff in rates as the more dovish Brainard did not land the head job. In Germany, the center-left SPD, Greens, and liberal FDP agreed to a full coalition deal. The traffic-light coalition agreed to restore the debt break in 2023, after being suspended during the pandemic, and to raise the minimum wage to €12 per hour. The SPD’s Olaf Scholz will assume the Chancellorship. The US, China, India, Japan, South Korea, and UK announced releases of strategic petroleum reserves. Oil prices were higher following the announcement, in part because releases were smaller than anticipated but, as mentioned, prices dropped precipitously on Friday on the global demand impact of the new Covid variant. The ECB released the minutes of the October Governing Council meeting, where officials stressed the need to maintain optionality in their policy setting. They acknowledged growing upside risks to inflation but stressed the importance of not overreacting in setting policy as they see how inflation scenarios might unfold. Tyler Durden Mon, 11/29/2021 - 08:01.....»»

Category: dealsSource: nytNov 29th, 2021

Abbott (ABT) Scales to a 52-Week High: What"s Driving It?

Strong performance by the Diabetes Care and Diagnostics businesses is driving the top line for Abbott (ABT). Abbott Laboratories ABT scaled a new 52-week high of $130.20 on Nov 15, before closing the session marginally lower at $129.44.The company’s shares have charted a solid trajectory in recent times, appreciating 13.9% over the past year versus the 1.3% decline of the industry it belongs to and 30.6% surge of the S&P 500 composite.Over the past five years, the company registered earnings growth of 10.5%, which is way ahead of the industry’s 7.3% rise and the S&P 500’s 2.8% increase. The company’s long-term expected growth rate of 12% compares with the industry’s growth projection of 16.4% and the S&P 500’s projected 11.7% increase.Abbott delivered an outstanding performance in the third quarter of 2021 with strong organic sales growth across each operating segment, barring Neuromodulation. The Diabetes Care business registered robust performance in the quarter led by its continuous glucose monitoring system, FreeStyle Libre. Greater uptake of rapid testing in Diagnostics business buoys optimism.Image Source: Zacks Investment ResearchLet’s delve deeper.Key DriversQ3 Upsides: Abbott posted better-than-expected earnings and revenue numbers for the third quarter of 2021. Overall, year-over-year improvements were robust. Excluding COVID-19 testing-related sales, which totaled $1.9 billion in the quarter, organic sales increased 12% year over year. The company registered strong growth in its more consumer-facing businesses like nutrition, established pharmaceuticals and diabetes care in the reported quarter. In Adult Nutrition, the company reported robust global demand for Ensure and Glucerna. In Pediatric Nutrition, strong growth was seen in the United States from continued share gains in infant formula and toddler portfolios. Meanwhile, within Medical Device, sales grew nearly 13%, led by double-digit growth in Rhythm Management, Structural Heart, Heart Failure and Diabetes Care.Diagnostics Grows Amid Pandemic: The market is upbeat about Abbott’s Diagnostics business that increased more than 45% (up 12.5% excluding COVID-19 testing-related sales) in the third quarter. With the spike in Delta variant cases, particularly in the United States, demand for testing increased significantly, most notably for rapid tests. In the reported quarter, the company sold more than 225 million COVID-19 tests globally and shipped more than1 billion tests since the start of the pandemic. Over the past several months, Abbott has established a global leadership position in rapid testing, including a supply capacity of more than 100 million tests per month.EPD Business Gains Momentum: Abbott’s Established Pharmaceuticals Division (EPD) business operates solely in emerging geographies, with leading positions in many of the largest and fastest-growing pharmaceutical markets for branded generics globally, including India, Russia, China and Latin America. Within EPD, growth in the third quarter was led by strong execution and a steady cadence of new product introductions. Strong sales performance in the quarter was broad-based across several countries, including double-digit growth in China, Russia and India, which led to overall sales growth of 18% in key emerging markets.Progress With Diabetes Business: The Diabetes Care business achieved growth of 30.6% in the third quarter of 2021, led by strong growth in FreeStyle Libre and Libre Sense. FreeStyle Libre sales were nearly $1 billion in the reported quarter. Further, the company added more than 200,000 new users, reaching the total global user base for Libre to well over 3.5 million users. In a relatively short span, Libre has achieved global leadership among CGM systems for both Type 1 and Type 2 users, raising our optimism.DownsidesProminent Coronavirus Impact: Abbott noted modest impacts on its base business with a spike in new COVID-19 case count through the third quarter. Further, the company’s Neuromodulation arm reported an 8.3% year-over-year decline on an organic basis in the reported quarter. Abbott noted that being extremely elective, the Neuromodulation business is having a hard time in terms of post-COVID recovery.Foreign Exchange Translation Impacts Sales: Foreign exchange is a major headwind for Abbott as a considerable percentage of its revenues come from outside the United States. The strengthening of the Euro and some other developed market currencies has constantly been hampering the company’s performance in international markets.Zacks Rank and Key PicksCurrently, Abbott carries a Zacks Rank #3 (Hold).A few better-ranked stocks in the broader medical space are Chemed Corporation CHE, National Vision Holdings, Inc. EYE and West Pharmaceutical Services, Inc. WST, each carrying a Zacks Rank #2 (Buy).Chemed has a long-term earnings growth rate of 7.7%. The company surpassed earnings estimates in three of the trailing four quarters and missed in one, delivering a surprise of 5.6%, on average.Chemed has outperformed its industry over the past year. CHE has gained 3.1% against a 35.6% industry decline. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.National Vision has a long-term earnings growth rate of 23%. The company surpassed earnings estimates in the trailing four quarters, delivering an average surprise of 113.1%.National Vision has outperformed the industry it belongs to in the past year. EYE has gained 14.7% versus the industry’s 1.4% decline.West Pharmaceutical has a long-term earnings growth rate of 27.6%. The company surpassed earnings estimates in the trailing four quarters, delivering an average surprise of 29.4%.West Pharmaceutical has outperformed the industry it belongs to in the past year. WST has gained 44.7% versus the industry’s 16.5% growth. Zacks' Top Picks to Cash in on Artificial Intelligence In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Abbott Laboratories (ABT): Free Stock Analysis Report West Pharmaceutical Services, Inc. (WST): Free Stock Analysis Report Chemed Corporation (CHE): Free Stock Analysis Report National Vision Holdings, Inc. (EYE): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksNov 16th, 2021

Green Energy: A Bubble In Unrealistic Expectations

Green Energy: A Bubble In Unrealistic Expectations Authored by David Hay via Everegreen Gavekal blog, “You see what is happening in Europe. There is hysteria and some confusion in the markets. Why?…Some people are speculating on climate change issues, some people are underestimating some things, some are starting to cut back on investments in the extractive industries. There needs to be a smooth transition.” - Vladimir Putin (someone with whom this author rarely agrees) “By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of its citizens.” – John Maynard Keynes (an interesting observation for all the modern day Keynesians to consider given their support of current inflationary US policies, including energy-related) Introduction This week’s EVA provides another sneak preview into David Hay’s book-in-process, “Bubble 3.0” discussing what he thinks is the crucial topic of “greenflation.”  This is a term he coined referring to the rising price for metals and minerals that are essential for solar and wind power, electric cars, and other renewable technologies. It also centers on the reality that as global policymakers have turned against the fossil fuel industry, energy producers are for the first time in history not responding to dramatically higher prices by increasing production.  Consequently, there is a difficult tradeoff that arises as the world pushes harder to combat climate change, driving up energy costs to painful levels, especially for lower income individuals.  What we are currently seeing in Europe is a vivid example of this dilemma.  While it may be the case that governments welcome higher oil and natural gas prices to discourage their use, energy consumers are likely to have a much different reaction. Summary BlackRock’s CEO recently admitted that, despite what many are opining, the green energy transition is nearly certain to be inflationary. Even though it’s early in the year, energy prices are already experiencing unprecedented spikes in Europe and Asia, but most Americans are unaware of the severity. To that point, many British residents being faced with the fact that they may need to ration heat and could be faced with the chilling reality that lives could be lost if this winter is as cold as forecasters are predicting. Because of the huge increase in energy prices, inflation in the eurozone recently hit a 13-year high, heavily driven by natural gas prices on the Continent that are the equivalent of $200 oil. It used to be that the cure for extreme prices was extreme prices, but these days I’m not so sure.  Oil and gas producers are very wary of making long-term investments to develop new resources given the hostility to their industry and shareholder pressure to minimize outlays. I expect global supply to peak sometime next year and a major supply deficit looks inevitable as global demand returns to normal. In Norway, almost 2/3 of all new vehicle sales are of the electric variety (EVs) – a huge increase in just over a decade. Meanwhile, in the US, it’s only about 2%. Still, given Norway’s penchant for the plug-in auto, the demand for oil has not declined. China, despite being the largest market by far for electric vehicles, is still projected to consume an enormous and rising amount of oil in the future. About 70% of China’s electricity is generated by coal, which has major environmental ramifications in regards to electric vehicles. Because of enormous energy demand in China this year, coal prices have experienced a massive boom. Its usage was up 15% in the first half of this year, and the Chinese government has instructed power providers to obtain all baseload energy sources, regardless of cost.  The massive migration to electric vehicles – and the fact that they use six times the amount of critical minerals as their gasoline-powered counterparts –means demand for these precious resources is expected to skyrocket. This extreme need for rare minerals, combined with rapid demand growth, is a recipe for a major spike in prices. Massively expanding the US electrical grid has several daunting challenges– chief among them the fact that the American public is extremely reluctant to have new transmission lines installed in their area. The state of California continues to blaze the trail for green energy in terms of both scope and speed. How the rest of the country responds to their aggressive take on renewables remains to be seen. It appears we are entering a very odd reality: governments are expending resources they do not have on weakly concentrated energy. And the result may be very detrimental for today’s modern economy. If the trend in energy continues, what looks nearly certain to be the Third Energy crisis of the last half-century may linger for years.  Green energy: A bubble in unrealistic expectations? As I have written in past EVAs, it amazes me how little of the intense inflation debate in 2021 centered on the inflationary implications of the Green Energy transition.  Perhaps it is because there is a built-in assumption that using more renewables should lower energy costs since the sun and the wind provide “free power”.  However, we will soon see that’s not the case, at least not anytime soon; in fact, it’s my contention that it will likely be the opposite for years to come and I’ve got some powerful company.  Larry Fink, CEO of BlackRock, a very pro-ESG* organization, is one of the few members of Wall Street’s elite who admitted this in the summer of 2021.  The story, however, received minimal press coverage and was quickly forgotten (though, obviously, not be me!).  This EVA will outline myriad reasons why I think Mr. Fink was telling it like it is…despite the political heat that could bring down upon him.  First, though, I will avoid any discussion of whether humanity is the leading cause of global warming.  For purposes of this analysis, let’s make the high-odds assumption that for now a high-speed green energy transition will continue to occur.  (For those who would like a well-researched and clearly articulated overview of the climate debate, I highly recommend the book “Unsettled”; it’s by a former top energy expert and scientist from the Obama administration, Dr. Steven Koonin.) The reason I italicized “for now” is that in my view it’s extremely probable that voters in many Western countries are going to become highly retaliatory toward energy policies that are already creating extreme hardship.  Even though it’s only early autumn as I write these words, energy prices are experiencing unprecedented increases in Europe.  Because it’s “over there”, most Americans are only vaguely aware of the severity of the situation.  But the facts are shocking…  Presently, natural gas is going for $29 per million British Thermal Units (BTUs) in Europe, a quadruple compared to the same time in 2020, versus “just” $5 in the US, which is a mere doubling.  As a consequence, wholesale energy cost in Great Britain rose an unheard of 60% even before summer ended.  Reportedly, nine UK energy companies are on the brink of failure at this time due to their inability to fully pass on the enormous cost increases.  As a result, the British government is reportedly on the verge of nationalizing some of these entities—supposedly, temporarily—to prevent them from collapsing.  (CNBC reported on Wednesday that UK natural gas prices are now up 800% this year; in the US, nat gas rose 20% on Tuesday alone, before giving back a bit more than half of that the next day.) Serious food shortages are expected after exorbitant natural gas costs forced most of England’s commercial production of CO2 to shut down.  (CO2 is used both for stunning animals prior to slaughter and also in food packaging.)  Additionally, ballistic natural gas prices have forced the closure of two big US fertilizer plants due to a potential shortfall of ammonium nitrate of which “nat gas” is a key feedstock.  *ESG stands for Environmental, Social, Governance; in 2021, Blackrock’s assets under management approximated $9 ½ trillion, about one-third of the total US federal debt. With the winter of 2021 approaching, British households are being told they may need to ration heat.  There are even growing concerns about the widespread loss of life if this winter turns out to be a cold one, as 2020 was in Europe.  Weather forecasters are indicating that’s a distinct possibility.   In Spain, consumers are paying 40% more for electricity compared to the prior year.  The Spanish government has begun resorting to price controls to soften the impact of these rapidly escalating costs. (The history of price controls is that they often exacerbate shortages.) Naturally, spiking power prices hit the poorest hardest, which is typical of inflation whether it is of the energy variety or of generalized price increases.  Due to these massive energy price increases, eurozone inflation recently hit a 13-year high, heavily driven by natural gas prices that are the equivalent of $200 per barrel oil.  This is consistent with what I warned about in several EVAs earlier this year and I think there is much more of this looming in the years to come. In Asia, which also had a brutally cold winter in 2020 – 2021, there are severe energy shortages being disclosed, as well.  China has instructed its power providers to secure all the coal they can in preparation for a repeat of frigid conditions and acute deficits even before winter arrives.  The government has also instructed its energy distributors to acquire all the liquified natural gas (LNG) they can, regardless of cost.  LNG recently hit $35 per million British Thermal Units in Asia, up sevenfold in the past year.  China is also rationing power to its heavy industries, further exacerbating the worldwide shortages of almost everything, with notable inflationary implications. In India, where burning coal provides about 70% of electricity generation (as it does in China), utilities are being urged to import coal even though that country has the world’s fourth largest coal reserves.  Several Indian power plants are close to exhausting their coal supplies as power usage rips higher. Normally, I’d say that the cure for such extreme prices, was extreme prices—to slightly paraphrase the old axiom.  But these days, I’m not so sure; in fact, I’m downright dubious.  After all, the enormously influential International Energy Agency has recommended no new fossil fuel development after 2021—“no new”, as in zero.  It’s because of pressure such as this that, even though US natural gas prices have done a Virgin Galactic to $5 this year, the natural gas drilling rig count has stayed flat.  The last time prices were this high there were three times as many working rigs.  It is the same story with oil production.  Most Americans don’t seem to realize it but the US has provided 90% of the planet’s petroleum output growth over the past decade.  In other words, without America’s extraordinary shale oil production boom—which raised total oil output from around 5 million barrels per day in 2008 to 13 million barrels per day in 2019—the world long ago would have had an acute shortage.  (Excluding the Covid-wracked year of 2020, oil demand grows every year—strictly as a function of the developing world, including China, by the way.) Unquestionably, US oil companies could substantially increase output, particularly in the Permian Basin, arguably (but not much) the most prolific oil-producing region in the world.  However, with the Fed being pressured by Congress to punish banks that lend to any fossil fuel operator, and the overall extreme hostility toward domestic energy producers, why would they?  There is also tremendous pressure from Wall Street on these companies to be ESG compliant.  This means reducing their carbon footprint.  That’s tough to do while expanding their volume of oil and gas.  Further, investors, whether on Wall Street or on London’s equivalent, Lombard Street, or in pretty much any Western financial center, are against US energy companies increasing production.  They would much rather see them buy back stock and pay out lush dividends.  The companies are embracing that message.  One leading oil and gas company CEO publicly mused to the effect that buying back his own shares at the prevailing extremely depressed valuations was a much better use of capital than drilling for oil—even at $75 a barrel. As reported by Morgan Stanley, in the summer of 2021, an US institutional broker conceded that of his 400 clients, only one would consider investing in an energy company!  Consequently, the fact that the industry is so detested means that its shares are stunningly undervalued.  How stunningly?  A myriad of US oil and gas producers are trading at free cash flow* yields of 10% to 15% and, in some cases, as high as 25%. In Europe, where the same pressures apply, one of its biggest energy companies is generating a 16% free cash flow yield.  Moreover, that is based up an estimate of $60 per barrel oil, not the prevailing price of $80 on the Continent. *Free cash flow is the excess of gross cash flow over and above the capital spending needed to sustain a business.  Many market professionals consider it more meaningful than earnings.  Therefore, due to the intense antipathy toward Western energy producers they aren’t very inclined to explore for new resources.  Another much overlooked fact about the ultra-critical US shale industry that, as noted, has been nearly the only source of worldwide output growth for the past 13 years, is its rapid decline nature.  Most oil wells see their production taper off at just 4% or 5% per year.  But with shale, that decline rate is 80% after only two years.  (Because of the collapse in exploration activities in 2020 due to Covid, there are far fewer new wells coming on-line; thus, the production base is made up of older wells with slower decline rates but it is still a much steeper cliff than with traditional wells.)  As a result, the US, the world’s most important swing producer, has to come up with about 1.5 million barrels per day (bpd) of new output just to stay even.  (This was formerly about a 3 million bpd number due to both the factor mentioned above and the 2 million bpd drop in total US oil production, from 13 million bpd to around 11 million bpd since 2019).  Please recall that total US oil production in 2008 was only around 5 million bpd.  Thus, 1.5 million barrels per day is a lot of oil and requires considerable drilling and exploration activities.  Again, this is merely to stay steady-state, much less grow.  The foregoing is why I wrote on multiple occasions in EVAs during 2020, when the futures price for oil went below zero*, that crude would have a spectacular price recovery later that year and, especially, in 2021.  In my view, to go out on my familiar creaky limb, you ain’t seen nothin’ yet!  With supply extremely challenged for the above reasons and demand marching back, I believe 2022 could see $100 crude, possibly even higher.  *Physical oil, or real vs paper traded, bottomed in the upper teens when the futures contract for delivery in April, 2020, went deeply negative.  Mike Rothman of Cornerstone Analytics has one of the best oil price forecasting records on Wall Street.  Like me, he was vehemently bullish on oil after the Covid crash in the spring of 2020 (admittedly, his well-reasoned optimism was a key factor in my up-beat outlook).  Here’s what he wrote late this summer:  “Our forecast for ’22 looks to see global oil production capacity exhausted late in the year and our balance suggests OPEC (and OPEC + participants) will face pressures to completely remove any quotas.”  My expectation is that global supply will likely max out sometime next year, barring a powerful negative growth shock (like a Covid variant even more vaccine resistant than Delta).  A significant supply deficit looks inevitable as global demand recovers and exceeds its pre-Covid level.  This is a view also shared by Goldman Sachs and Raymond James, among others; hence, my forecast of triple-digit prices next year.  Raymond James pointed out that in June the oil market was undersupplied by 2.5 mill bpd.  Meanwhile, global petroleum demand was rapidly rising with expectations of nearly pre-Covid consumption by year-end.  Mike Rothman ran this chart in a webcast on 9/10/2021 revealing how far below the seven-year average oil inventories had fallen.  This supply deficit is very likely to become more acute as the calendar flips to 2022. In fact, despite oil prices pushing toward $80, total US crude output now projected to actually decline this year.  This is an unprecedented development.  However, as the very pro-renewables Financial Times (the UK’s equivalent of the Wall Street Journal) explained in an August 11th, 2021, article:  “Energy companies are in a bind.  The old solution would be to invest more in raising gas production.  But with most developed countries adopting plans to be ‘net zero’ on carbon emissions by 2050 or earlier, the appetite for throwing billions at long-term gas projects is diminished.” The author, David Sheppard, went on to opine: “In the oil industry there are those who think a period of plus $100-a-barrel oil is on the horizon, as companies scale back investments in future supplies, while demand is expected to keep rising for most of this decade at a minimum.”  (Emphasis mine)  To which I say, precisely!  Thus, if he’s right about rising demand, as I believe he is, there is quite a collision looming between that reality and the high probability of long-term constrained supplies.  One of the most relevant and fascinating Wall Street research reports I read as I was researching the topic of what I have been referring to as “Greenflation” is from Morgan Stanley.  Its title asked the provocative question:  “With 64% of New Cars Now Electric, Why is Norway Still Using so Much Oil?”  While almost two-thirds of Norway’s new vehicle sales are EVs, a remarkable market share gain in just over a decade, the number in the US is an ultra-modest 2%.   Yet, per the Morgan Stanley piece, despite this extraordinary push into EVs, oil consumption in Norway has been stubbornly stable.  Coincidentally, that’s been the experience of the overall developed world over the past 10 years, as well; petroleum consumption has largely flatlined.  Where demand hasn’t gone horizontal is in the developing world which includes China.  As you can see from the following Cornerstone Analytics chart, China’s oil demand has vaulted by about 6 million barrels per day (bpd) since 2010 while its domestic crude output has, if anything, slightly contracted. Another coincidence is that this 6 million bpd surge in China’s appetite for oil, almost exactly matched the increase in US oil production.  Once again, think where oil prices would be today without America’s shale oil boom. This is unlikely to change over the next decade.  By 2031, there are an estimated one billion Asian consumers moving up into the middle class.  History is clear that more income means more energy consumption.  Unquestionably, renewables will provide much of that power but oil and natural gas are just as unquestionably going to play a critical role.  Underscoring that point, despite the exponential growth of renewables over the last 10 years, every fossil fuel category has seen increased usage.  Thus, even if China gets up to Norway’s 64% EV market share of new car sales over the next decade, its oil usage is likely to continue to swell.  Please be aware that China has become the world’s largest market for EVs—by far.  Despite that, the above chart vividly displays an immense increase in oil demand.  Here’s a similar factoid that I ran in our December 4th EVA, “Totally Toxic”, in which I made a strong bullish case for energy stocks (the main energy ETF is up 35% from then, by the way):  “(There was) a study by the UN and the US government based on the Model for the Assessment of Greenhouse Gasses Induced Climate Change (MAGICC).  The model predicted that ‘the complete elimination of all fossil fuels in the US immediately would only restrict any increase in world temperature by less than one tenth of one degree Celsius by 2050, and by less than one fifth of one degree Celsius by 2100.’  Say again?  If the world’s biggest carbon emitter on a per capita basis causes minimal improvement by going cold turkey on fossil fuels, are we making the right moves by allocating tens of trillions of dollars that we don’t have toward the currently in-vogue green energy solutions?” China's voracious power appetite increase has been true with all of its energy sources.  On the environmentally-friendly front, that includes renewables; on the environmentally-unfriendly side, it also includes coal.  In 2020, China added three times more coal-based power generation than all other countries combined.  This was the equivalent of an additional coal planet each week.  Globally, there was a reduction last year of 17 gigawatts in coal-fired power output; in China, the increase was 29.8 gigawatts, far more than offsetting the rest of the world’s progress in reducing the dirtiest energy source.  (A gigawatt can power a city with a population of roughly 700,000.) Overall, 70% of China’s electricity is coal-generated. This has significant environmental implications as far as electric vehicles (EVs) are concerned.  Because EVs are charged off a grid that is primarily coal- powered, carbon emissions actually rise as the number of such vehicles proliferate. As you can see in the following charts from Reuters’ energy expert John Kemp, Asia’s coal-fired generation has risen drastically in the last 20 years, even as it has receded in the rest of the world.  (The flattening recently is almost certainly due to Covid, with a sharp upward resumption nearly a given.) The worst part is that burning coal not only emits CO2—which is not a pollutant and is essential for life—it also releases vast quantities of nitrous oxide (N20), especially on the scale of coal usage seen in Asia today. N20 is unquestionably a pollutant and a greenhouse gas that is hundreds of times more potent than CO2.  (An interesting footnote is that over the last 550 million years, there have been very few times when the CO2 level has been as low, or lower, than it is today.)  Some scientists believe that one reason for the shrinkage of Arctic sea ice in recent decades is due to the prevailing winds blowing black carbon soot over from Asia.  This is a separate issue from N20 which is a colorless gas.  As the black soot covers the snow and ice fields in Northern Canada, they become more absorbent of the sun’s radiation, thus causing increased melting.  (Source:  “Weathering Climate Change” by Hugh Ross) Due to exploding energy needs in China this year, coal prices have experienced an unprecedented surge.  Despite this stunning rise, Chinese authorities have instructed its power providers to obtain coal, and other baseload energy sources, such as liquified natural gas (LNG), regardless of cost.  Notwithstanding how pricey coal has become, its usage in China was up 15% in the first half of this year vs the first half of 2019 (which was obviously not Covid impacted). Despite the polluting impact of heavy coal utilization, China is unlikely to turn away from it due to its high energy density (unlike renewables), its low cost (usually) and its abundance within its own borders (though its demand is so great that it still needs to import vast amounts).  Regarding oil, as we saw in last week’s final image, it is currently importing roughly 11 million barrels per day (bpd) to satisfy its 15 million bpd consumption (about 15% of total global demand).  In other words, crude imports amount to almost three-quarter of its needs.  At $80 oil, this totals $880 million per day or approximately $320 billion per year.  Imagine what China’s trade surplus would look like without its oil import bill! Ironically, given the current hostility between the world’s superpowers, China has an affinity for US oil because of its light and easy-to-refine nature.  China’s refineries tend to be low-grade and unable to efficiently process heavier grades of crude, unlike the US refining complex which is highly sophisticated and prefers heavy oil such as from Canada and Venezuela—back when the latter actually produced oil. Thus, China favors EVs because they can be de facto coal-powered, lessening its dangerous reliance on imported oil.  It also likes them due to the fact it controls 80% of the lithium ion battery supply and 60% of the planet’s rare earth minerals, both of which are essential to power EVs.     However, even for China, mining enough lithium, cobalt, nickel, copper, aluminum and the other essential minerals/metals to meet the ambitious goals of largely electrifying new vehicle volumes is going to be extremely daunting.  This is in addition to mass construction of wind farms and enormously expanded solar panel manufacturing. As one of the planet’s leading energy authorities Daniel Yergin writes: “With the move to electric cars, demand for critical minerals will skyrocket (lithium up 4300%, cobalt and nickel up 2500%), with an electric vehicle using 6 times more minerals than a conventional car and a wind turbine using 9 times more minerals than a gas-fueled power plant.  The resources needed for the ‘mineral-intensive energy system’ of the future are also highly concentrated in relatively few countries. Whereas the top 3 oil producers in the world are responsible for about 30 percent of total liquids production, the top 3 lithium producers control more than 80% of supply. China controls 60% of rare earths output needed for wind towers; the Democratic Republic of the Congo, 70% of the cobalt required for EV batteries.” As many have noted, the environmental impact of immensely ramping up the mining of these materials is undoubtedly going to be severe.  Michael Shellenberger, a life-long environmental activist, has been particularly vociferous in his condemnation of the dominant view that only renewables can solve the global energy needs.  He’s especially critical of how his fellow environmentalists resorted to repetitive deception, in his view, to undercut nuclear power in past decades.  By leaving nuke energy out of the solution set, he foresees a disastrous impact on the planet due to the massive scale (he’d opine, impossibly massive) of resource mining that needs to occur.  (His book, “Apocalypse Never”, is also one I highly recommend; like Dr. Koonin, he hails from the left end of the political spectrum.) Putting aside the environmental ravages of developing rare earth minerals, when you have such high and rapidly rising demand colliding with limited supply, prices are likely to go vertical.  This will be another inflationary “forcing”, a favorite term of climate scientists, caused by the Great Green Energy Transition. Moreover, EVs are very semiconductor intensive.  With semis already in seriously short supply, this is going to make a gnarly situation even gnarlier.  It’s logical to expect that there will be recurring shortages of chips over the next decade for this reason alone (not to mention the acute need for semis as the “internet of things” moves into primetime).  In several of the newsletters I’ve written in recent years, I’ve pointed out the present vulnerability of the US electric grid.  Yet, it will be essential not just to keep it from breaking down under its current load; it must be drastically enhanced, a Herculean task. For one thing, it is excruciatingly hard to install new power lines. As J.P. Morgan’s Michael Cembalest has written: “Grid expansion can be a hornet’s nest of cost, complexity and NIMBYism*, particularly in the US.”  The grid’s frailty, even under today’s demands (i.e., much less than what lies ahead as millions of EVs plug into it) is particularly obvious in California.  However, severe winter weather in 2021 exposed the grid weakness even in energy-rich Texas, which also has a generally welcoming attitude toward infrastructure upgrading and expansion. Yet it’s the Golden State, home to 40 million Americans and the fifth largest economy in the world, if it was its own country (which it occasionally acts like it wants to be), that is leading the charge to EVs and seeking to eliminate internal combustion engines (ICEs) as quickly as possible.  Even now, blackouts and brownouts are becoming increasingly common.  Seemingly convinced it must be a role model for the planet, it’s trying desperately to reduce its emissions, which are less than 1%, of the global total, at the expense of rendering its energy system more similar to a developing country.  In addition to very high electricity costs per kilowatt hour (its mild climate helps offset those), it also has gasoline prices that are 77% above the national average.  *NIMBY stands for Not In My Back Yard. While California has been a magnet for millions seeking a better life for 150 years, the cost of living is turning the tide the other way.  Unreliable and increasingly expensive energy is likely to intensify that trend.  Combined with home prices that are more than double the US median–$800,000!–California is no longer the land of milk and honey, unless, to slightly paraphrase Woody Guthrie about LA, even back in the 1940s, you’ve got a whole lot of scratch.  More and more people, seem to be scratching California off their list of livable venues.  Voters in the reliably blue state of California may become extremely restive, particularly as they look to Asia and see new coal plants being built at a fever pitch.  The data will become clear that as America keeps decarbonizing–as it has done for 30 years mostly due to the displacement of coal by gas in the US electrical system—Asia will continue to go the other way.  (By the way, electricity represents the largest share of CO2 emission at roughly 25%.)  California has always seemed to lead social trends in this country, as it is doing again with its green energy transition.  The objective is noble though, extremely ambitious, especially the timeline.  As it brings its power paradigm to the rest of America, especially its frail grid, it will be interesting to see how voters react in other states as the cost of power leaps higher and its dependability heads lower.  It’s reasonable to speculate we may be on the verge of witnessing the Californication of the US energy system.  Lest you think I’m being hyperbolic, please be aware the IEA (International Energy Agency) has estimated it will cost the planet $5 trillion per year to achieve Net Zero emissions.  This is compared to global GDP of roughly $85 trillion. According to BloombergNEF, the price tag over 30 years, could be as high as $173 trillion.  Frankly, based on the history of gigantic cost overruns on most government-sponsored major infrastructure projects, I’m inclined to take the over—way over—on these estimates. Moreover, energy consulting firm T2 and Associates, has guesstimated electrifying just the US to the extent necessary to eliminate the direct consumption of fuel (i.e., gasoline, natural gas, coal, etc.) would cost between $18 trillion and $29 trillion.  Again, taking into account how these ambitious efforts have played out in the past, I suspect $29 trillion is light.  Regardless, even $18 trillion is a stunner, despite the reality we have all gotten numb to numbers with trillions attached to them.  For perspective, the total, already terrifying, level of US federal debt is $28 trillion. Regardless, as noted last week, the probabilities of the Great Green Energy Transition happening are extremely high.  Relatedly, I believe the likelihood of the Great Greenflation is right up there with them.  As Gavekal’s Didier Darcet wrote in mid-August:  ““Nowadays, and this is a great first in history, governments will commit considerable financial resources they do not have in the extraction of very weakly concentrated energy.” ( i.e., less efficient)  “The bet is very risky, and if it fails, what next?  The modern economy would not withstand expensive energy, or worse, lack of energy.”  While I agree this an historical first, it’s definitely not great (with apologies for all the “greats”).  This is particularly not great for keeping inflation subdued, as well as for attempting to break out of the growth quagmire the Western world has been in for the last two decades.  What we are seeing in Europe right now is an extremely cautionary case study in just how disastrous the war on fossil fuels can be (shortly we will see who or what has been a behind-the-scenes participant in this conflict). Essentially, I believe, as I’ve written in past EVAs, we are entering the third energy crisis of the last 50 years.  If I’m right, it will be characterized by recurring bouts of triple-digit oil prices in the years to come.  Along with Richard Nixon taking the US off the gold standard in 1971, the high inflation of the 1970s was caused by the first two energy crises (the 1973 Arab Oil Embargo and the 1979 Iranian Revolution).  If I’m correct about this being the third, it’s coming at a most inopportune time with the US in hyper-MMT* mode. Frankly, I believe many in the corridors of power would like to see oil trade into the $100s, and natural gas into the teens, as it will help catalyze the shift to renewable energy.  But consumers are likely to have a much different reaction—potentially, a violently different reaction, as I noted last week.  The experience of the Yellow Vest protests in France (referring to the color of the vest protestors wore), are instructive in this regard.  France is a generally left-leaning country.  Despite that, a proposed fuel surtax in November 2018 to fund a renewable energy transition triggered such widespread civil unrest that French president Emmanuel Macron rescinded it the following month. *MMT stands for Modern Monetary Theory.  It holds that a government, like the US, which issues debt in its own currency can spend without concern about budgetary constraints.  If there are not enough buyers of its bonds at acceptable interest rates, that nation’s central bank (the Fed, in our case) simply acquires them with money it creates from its digital printing press.  This is what is happening today in the US.  Many economists consider this highly inflationary. The sharp and politically uncomfortable rise in US gas pump prices this summer caused the Biden administration to plead with OPEC to lift its volume quotas.  The ironic implication of that exhortation was glaringly obvious, as was the inefficiency and pollution consequences of shipping oil thousands of miles across the Atlantic.  (Oil tankers are a significant source of emissions.)  This is as opposed to utilizing domestic oil output, as well as crude from Canada (which is actually generally better suited to the US refining complex).  Beyond the pollution aspect, imported oil obviously worsens America’s massive trade deficit (which would be far more massive without the six million barrels per day of domestic oil volumes that the shale revolution has provided) and costs our nation high-paying jobs. Further, one of my other big fears is that the West is engaging in unilateral energy disarmament.  Russia and China are likely the major beneficiaries of this dangerous scenario.  Per my earlier comment about a stealth combatant in the war on fossil fuels, it may surprise you that a past NATO Secretary General* has accused Russian intelligence of avidly supporting the anti-fracking movements in Western Europe.  Russian TV has railed against fracking for years, even comparing it to pedophilia (certainly, a most bizarre analogy!).  The success of the anti-fracking movement on the Continent has essentially prevented a European version of America’s shale miracles (the UK has the potential to be a major shale gas producer).  Consequently, the European Union’s domestic natural gas production has been in a rapid decline phase for years.  Banning fracking has, of course, made Europe heavily reliant on Russian gas shipments with more than 40% of its supplies coming from Russia. This is in graphic contrast to the shale output boom in the US that has not only made us natural gas self-sufficient but also an export powerhouse of liquified natural gas (LNG).  In 2011, the Nord Stream system of pipelines running under the Baltic Sea from northern Russia began delivering gas west from northern Russia to the German coastal city of Greifswald.  For years, the Russians sought to build a parallel system with the inventive name of Nord Stream 2.  The US government opposed its approval on security grounds but the Biden administration has dropped its opposition.  It now appears Nord Stream 2 will happen, leaving Europe even more exposed to Russian coercion.  Is it possible the Russian government and the Chinese Communist Party have been secretly and aggressively supporting the anti-fossil fuel movements in America?  In my mind, it seems not only possible but probable.  In fact, I believe it is naïve not to come that conclusion.  After all, wouldn’t it be in both of their geopolitical interests to see the US once again caught in a cycle of debilitating inflation, ensnared by the twin traps of MMT and the third energy crisis? *Per former NATO Secretary General, Anders Fogh Rasumssen:  Russia has “engaged actively with so-called non-governmental organizations—environmental organizations working against shale gas—to maintain Europe’s dependence on imported Russian gas”. Along these lines, I was shocked to listen to a recent podcast by the New Yorker magazine on the topic of “intelligent sabotage”.  This segment was an interview between the magazine’s David Remnick and a Swedish professor, Adreas Malm.  Mr. Malm is the author of a new book with the literally explosive title “How To Blow Up A Pipeline”.   Just as it sounds, he advocates detonating pipelines to inhibit fossil fuel distribution.  Mr. Remnick was clearly sympathetic to his guest but he did ask him about the impact on the poor of driving energy prices up drastically which would be the obvious ramification if his sabotage recommendations were widely followed.  Mr. Malm’s reaction was a verbal shrug of the shoulders and words to the effect that this was the price to pay to save the planet. Frankly, I am appalled that the venerable New Yorker would provide a platform for such a radical and unlawful suggestion.  In an era when people are de-platformed for often innocuous comments, it’s incredible to me this was posted and has not been pulled down.  In my mind, this reflects just how tolerant the media is of attacks on the fossil fuel industry, regardless of the deleterious impact on consumers and the global economy. Surely, there is a far better way of coping with the harmful aspects of fossil fuel-based energy than this scorched earth (literally, in the case of Mr. Malm) approach, which includes efforts to block new pipelines, shut existing ones, and severely restrict US energy production.  In America’s case, the result will be forcing us to unnecessarily and increasingly rely on overseas imports.  (For example, per the Wall Street Journal, drilling permits on federal land have crashed to 171 in August from 671 in April.  Further, the contentious $3.5 trillion “infrastructure” plan would raise royalties and fees high enough on US energy producers that it would render them globally uncompetitive.) Such actions would only aggravate what is already a severe energy shock, one that may be worse than the 1970s twin energy crises.  America has it easy compared to Europe, though, given current US policy trends, we might be in their same heavily listing energy boat soon. Solutions include fast-tracking small modular nuclear plants; encouraging the further switch from burning coal to natural gas (a trend that is, unfortunately, going the other way now, as noted above); utilizing and enhancing carbon and methane capture at the point of emission (including improving tail pipe effluent-reduction technology); enhancing pipeline integrity to inhibit methane leaks; among many other mitigation techniques that recognize the reality the global economy will be reliant on fossil fuels for many years, if not decades, to come.  If the climate change movement fails to recognize the essential nature of fossil fuels, it will almost certainly trigger a backlash that will undermine the positive change it is trying to bring about.  This is similar to what it did via its relentless assault on nuclear power which produced a frenzy of coal plant construction in the 1980s and 1990s.  On this point, it’s interesting to see how quickly Europe is re-embracing coal power to alleviate the energy poverty and rationing occurring over there right now - even before winter sets in.  When the choice is between supporting climate change initiatives on one hand and being able to heat your home and provide for your family on the other, is there really any doubt about which option the majority of voters will select? Tyler Durden Tue, 10/26/2021 - 19:30.....»»

Category: worldSource: nytOct 26th, 2021

China"s march to global tech dominance is hitting some serious stumbling blocks

"The Digital Silk Road: China's Quest to Wire the World and Win the Future" shows China's global technology takeover isn't all it's cracked up to be. A staff member introduces intelligent bionic hands at the Care And Rehabilitation Expo China 2021 on Beijing, China. Chen Xiaogen/VCG/Getty Images Experts have deemed China's takeover of the world's tech all but inevitable. A new book, "The Digital Silk Road: China's Quest to Wire the World and Win the Future," also argues China is on the rise. But the book accidentally reveals the problems with this narrative and the weakness of Beijing's plans. Jonathan A. Knee is Professor of Professional Practice at Columbia Business School and a Senior Advisor at Evercore. This is an opinion column. The thoughts expressed are those of the author. When I first visited Beijing as a student in the 1980s, just before the Tiananmen Square massacre,there were only a couple of ring roads surrounding the city. The second of these loops ran for 20 miles near where the city walls once stood and enclosed a population of around six million. Fast forward to today and the sixth ring road, completed in 2010 and well over a hundred miles long, now encircles a booming metropolis of over 20 million inhabitants. But for all the changes, much about China has remained the same. On my first trip into the center of the capital city I sat next to a student on a crowded bus who was eager to engage me in order to practice his English. As we passed what looked like a new Western-style hotel along the way, I observed that the parking lot was empty. The student moved in closer and explained in hushed tones that the building had been a signature government project but that an engineer had miscalculated the correct pitch of the elevator shaft. Due to the miscalculation, the elevator could not reach the revolving restaurant that sat atop the modern empty structure. The engineer, according to the student, had been executed.I was reminded of this chance encounter as I read Jonathan Hillman's engrossing account of China's digital aspirations, "The Digital Silk Road: China's Quest to Wire the World and Win the Future." During that first trip in the 80s, it would never have occurred to me that the combination of grand ambition, central control and ruthless determination - even when sometimes paired with comical inefficiency - would ultimately succeed in turning China into the economic powerhouse it has become. That rise has also gotten the notice of many democracies, who view China's growing stature and authoritarian nature as a threat. Hillman's book is meant to echo those concerns and serve as a call to democracies around the world to actively thwart inevitable Chinese digital dominance. But Hillman's own thorough reporting suggests that the threat may not be as dire as his far-reaching policy proposals imply. An empty threatThe Digital Silk Road is the technology arm of China's Belt and Road Initiative, a massive project launched in 2013. The idea is to build physical and digital infrastructure in countries around the world, connecting them to China and driving President Xi Jinping's bid to become a global superpower by 2050. Hillman weaves together academic research with on-the-ground journalism to paint a vivid picture of China's Digital Silk Road efforts to dominate a number of hardware businesses critical to global communications infrastructure.There are many cautionary tales: the story of how the once giant Nortel partnered with the Chinese government to gain access to its gigantic market only to end up bankrupt with its intellectual property in the hands of its Chinese competitors' is reminiscent of Circuit City and Borders who partnered with Amazon to execute their digital strategies to the same deadly effect. But many of the cases that Hillman describes sound like high tech versions of the white elephant hotel story I heard thirty years ago: undersea cables that carry no traffic, building smart cities in rural Africa that attract no investment, a succession of failed satellite launches. And in many of the critical technologies of the future like cloud computing and low earth orbital (LEO) satellite deployment, China is so far behind that it has no reasonable prospect of catching up.Hillman's core argument seems to be that by giving China free reign to undertake money losing projects in developing countries, democracies are mortgaging their future. As these countries being wooed by China represent an increasing percentage of global GDP, democratic nations will be left out from this booming segment of the world. However, everything about the highly transactional nature of these governments described in "The Digital Silk Road" suggests that they will be happy to abandon China in the future if something better and cheaper comes along. And it sure feels like in the not too distant future Western-owned LEO satellites will provide that cheaper and better thing. Many of Hillman's policy proposals seem animated by legitimate concerns regarding the growing digital divide not just globally but in rural America. These deserve serious consideration, but not primarily because of the China threat.The failure of China to make more headway along the Digital Silk Road is a function of both its insistence on total control at home and its nefarious activities abroad. Despite its mixed record in technology hardware, China is home to two of the largest companies in the world: Tencent and Alibaba. Why the same factors that have constrained China's growth on the technology hardware side have apparently not hampered its ability to nurture these leaders in consumer internet services, is a topic oddly ignored in "The Digital Silk Road." So too are the many policy questions beyond those related purely to technology infrastructure that the extraordinary success of these increasingly global internet giants raise.Sixty years ago, Joseph Heller observed in Catch 22 that "just because you're paranoid doesn't mean they aren't after you." The Digital Silk Road certainly demonstrates the legitimate basis for American paranoia about China's intentions. Hillman's call to establish a multilateral Coalition of Open and Resilient Economies to address these dangers, however, faces a long list of practical obstacles. As he points out, these countries have very different objectives and America's own credibility to influence such a group has rarely been lower. That doesn't mean we shouldn't try, just that expectations should be modest. In light of these limitations, the best news contained in "The Digital Silk Road" may unintentionally simply be how surprisingly ineffective China's massive efforts to control the global communications networks outside of its borders have actually been. Jonathan A. Knee is Professor of Professional Practice at Columbia Business School and a Senior Advisor at Evercore. His most recent book, "The Platform Delusion: Who Wins and Who Loses in the Age of Tech Titans," was released last month. Read the original article on Business Insider.....»»

Category: personnelSource: nytOct 19th, 2021

Sabre (SABR) Adds Travel Restriction Tracking in SafePoint

Sabre (SABR) expands its travel risk management solutions portfolio, SafePoint, by adding global travel restriction tracking capability and ensuring increased traveler safety. Sabre Corporation SABR recently announced that it has included global travel restriction tracking capability to its travel risk management product — SafePoint.Introduced in 2016, Sabre’s SafePoint portfolio provides travel risk management solutions to corporate travel agencies worldwide. SafePoint automates the process of monitoring global events, alerting corporations of impacted travelers, and communicating with them. Thus, it enhances traveler safety by offering increased accuracy in identifying affected travelers and reducing the response time.Setting up of SafePoint is a hassle-free process as it does not require any hardware installation. SafePoint is a web-based product accessible from any network-connected device like laptop, desktop or mobile device. It helps travel agencies and corporate customers to make more informed decisions at any stage of their itinerary.With a surge in COVID-19 cases all over the world, particularly the new Omicron variant, the travel industry has been once again riddled with restrictions. Despite increased vaccination efforts and manageable caseloads, global travelers are still unable to hit the roads or take to the skies as countries close their borders. Sabre’s duty-of-care tool, SafePoint, will help travelers receive information about the spread of COVID 19, emerging new variants, entry restricted destinations and requirements of masks, vaccinations, health documentation and quarantine.During the third quarter of fiscal 2021, the company’s Travel Solutions segment revenues amounted to $390 million compared with $237 million in the year-ago quarter. This was primarily driven by a gradual recovery in global air and other bookings while the travel industry rebounded from pandemic blues.Sabre has its customer base spread over 160 nations with more than 425,000 agency partners globally. It is one of the largest marketplaces in the world that manages approximately $260 billion worth of global travel spending annually.Sabre Corporation Price and Consensus Sabre Corporation price-consensus-chart | Sabre Corporation QuoteSabre has been winning consecutive deals from major global airlines, hoteliers and travel agencies of late. Recently, it entered into a multi-year preferred Global Distribution System (“GDS”) agreement with one of the largest travel agencies in Colombia, Aviatur, to support its growth plans, transform its business, and increase efficiencies.In December 2021, Belgrade-based Air Serbia implemented the company’s Dynamic Availability software to actively respond to evolving conditions with optimized pricing information. Prior to that, Sabre signed a partnership with Gran Colombia de Aviación (GCA Airlines) to power the carrier’s future revenue growth while reaching new market segments.In the same month, the tech company entered a long-term, multi-faceted strategic partnership with American Express Global Business Travel focused on developing technologies that will enable the future of corporate travel distribution.In November, it inked a long-term partnership with the Hanover, Germany-based TUI Group to globally distribute the latter’s own hotel brands, including TUI Blue, Robinson and TUI Magic Life. Prior to that, it entered a distribution partnership with Calafia Airlines to enable the distribution of flights and services to travel agencies in the United States through its travel marketplace, thus helping the airline accelerate revenue growth and expand its market reach.Earlier in November 2021, it partnered with Japan-based Hotel Keihan Chain to create tourism opportunities in the country. Separately, it entered a distribution agreement with the second-largest hotel group in China, Huazhu Group, to expand global reach for its upscale and luxury hotel brands and support the latter’s global growth strategy.Zacks Rank & Stocks to ConsiderSabre currently carries a Zacks Rank #3 (Hold).Some better-ranked stocks from the broader computer and technology sector include the largest global Customer Relationship Management vendor Salesforce CRM and Hewlett Packard Enterprise HPE, both flaunting a Zacks Rank #1 (Strong Buy), and Advanced Micro Devices AMD carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Salesforce’s fourth-quarter fiscal 2022 earnings has been revised downward by 7.6% to 73 cents per share over the past 60 days. For fiscal 2022, earnings estimates have moved upward by 0.43% to $4.68 per share in the last 60 days.Salesforce’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 44.2%. CRM stock has appreciated 9% in the past year.The Zacks Consensus Estimate for HPE’s first-quarter fiscal 2022 earnings has been revised downward by 6.1% to 46 cents per share over the past 60 days. For fiscal 2022, earnings estimates have moved north by 1.5% to $2.03 per share in the past 90 days.HPE’s earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 14.4%. Shares of HPE have rallied 40.4% in the past year.The Zacks Consensus Estimate for Advanced Micro Devices’ fourth-quarter 2021 earnings has been revised upward by 7 cents to 75 cents per share over the past 90 days. For 2021, earnings estimates have moved north by 0.38% to $2.65 per share in the last 30 days.Advanced Micro Devices’ earnings beat the Zacks Consensus Estimate in each of the preceding four quarters, the average surprise being 14%. Shares of AMD have rallied 44% in the past year. Breakout Biotech Stocks with Triple-Digit Profit Potential The biotech sector is projected to surge beyond $2.4 trillion by 2028 as scientists develop treatments for thousands of diseases. They’re also finding ways to edit the human genome to literally erase our vulnerability to these diseases. Zacks has just released Century of Biology: 7 Biotech Stocks to Buy Right Now to help investors profit from 7 stocks poised for outperformance. Recommendations from previous editions of this report have produced gains of +205%, +258% and +477%. The stocks in this report could perform even better.See these 7 breakthrough stocks now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Advanced Micro Devices, Inc. (AMD): Free Stock Analysis Report salesforce.com, inc. (CRM): Free Stock Analysis Report Sabre Corporation (SABR): Free Stock Analysis Report Hewlett Packard Enterprise Company (HPE): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksJan 13th, 2022

Omicron Absenteeism Poses Fresh Test to U.S. Economic Strength

Several economists began the new year by downgrading their first-quarter forecasts With the omicron wave of the pandemic rapidly spreading across the U.S., the robust economic recovery is facing a new threat that policymakers have little control over: people calling in sick. What started as a series of holiday flight cancellations as pilots and other staff fell ill or were forced into quarantine is becoming a reality in factories, grocery stores and ports and again testing supply chains. The widespread absenteeism is already constraining output, and several economists began the new year by downgrading their first-quarter forecasts. Even if the hit is temporary, as most anticipate, the disruptions and closures are likely to slow the fragile rebound in some sectors and weigh on businesses’ future plans. [time-brightcove not-tgx=”true”] “You just don’t know when it’s going to hit you,” said James Beall, chief executive officer of the Washington, D.C.-area Ledo Pizza chain. On any given day last week, at least three of the company’s 110 locations were closed and as many as five were operating on reduced hours. “Our new normal is turning into another new normal.” Just how bad or enduring the omicron toll will be may take weeks to determine. The December jobs report released Friday, showing an unemployment rate at a fresh pandemic low of 3.9%, relied on data gathered mostly before the variant spread. Even the January numbers, due Feb. 4, are unlikely to reflect the entirety of the impact, which is more likely to be measured in lost output due to sick days than lost jobs. Nick Bunker, chief economist at online job-listing firm Indeed Inc., likens the impact of omicron to the blizzard of 1978, which dumped as much as four feet of snow on his native New England in less than 36 hours and yielded weeks of disruption but also a rapid recovery. Only unlike the blizzard and even previous waves of Covid-19, the variant has quickly become a national event, with new cases reaching as many as 1 million a day last week. That means “this big, very, very large sharp shock to the economy and the labor market specifically. But then the hope is that, like a storm, it ends and then there’s a return to prior trends,” Bunker said. “Things are only likely to get worse in the near term,” he wrote in a note to clients. Moreover, “the conventional wisdom that omicron presents no threat to the economy may prove too sanguine.” ‘Unprecedented’ Sick Days Staff shortages have continued to disrupt airlines, with Alaska Airlines saying that an “unprecedented” number of workers calling in sick caused it to cancel 10% of its flights for the rest of January. The real question for the industry is whether it will cause carriers to slow planned 2022 growth if it continues into February and beyond, said Conor Cunningham, an analyst with MKM Partners. “My expectation has been that other airlines will need to slow growth,” Cunningham said. Some hospitals are at a breaking point, dealing with more sick or exposed workers than at the worst of the pandemic. “We’ve had more staff out because they’ve tested positive and have contracted Covid than we did at the very beginning,” said Lynda Shrock, vice president of human resources at Logansport Memorial Hospital in Logansport, Indiana. Store Closures On Rodeo Drive in Beverly Hills, luxury retailers Gucci, Hermes, and Louis Vuitton have all reported cases among staff, according to Los Angeles County’s public list of workplace outbreaks. Walmart Inc. has closed at least 60 of its U.S. stores for deep cleanings. Apple Inc. locations have been shut temporarily in dozens of places from Alabama to Florida and New York. At West Coast ports, already facing logjams of imports, 160 longshoremen tested positive on Wednesday alone, said James McKenna, president of the Pacific Maritime Association, which negotiates labor agreements for 70 companies at 29 ports on the coast. That number understates the disruption. Hundreds more dock workers are staying home due to contact tracing, or awaiting tests, McKenna said. The backlogs of ships off the ports of Los Angeles and Long Beach, the nation’s busiest, are growing again, McKenna said. “This new variant is so transmittable that it has changed the game,” he said. In the auto sector, union officials and company representatives said the increase in sick days hasn’t affected production at General Motors Co., Ford Motor Co. and Stellantis NV, owner of the Jeep and Ram brands. It may just be a matter time. In a call with reporters on Friday, Scott Keogh, chief executive officer of Volkswagen AG’s U.S. unit, said he was “100%” certain that the industry was about to face production disruptions due to omicron. “There is no flexible new normal” for assembling a car. While economists and investors expect the impact to be short-lived, its magnitude may be sizable. Mark Zandi, chief economist for Moody’s Analytics, cut his first-quarter prediction for annualized gross domestic production to close to 2%, down from about 5%. But he also raised his forecast for the second quarter, saying businesses and the economy are better prepared to face this new wave. “I don’t expect the virus to sustainably subtract from economic growth on net this year,” Zandi said. Though omicron could, he said, affect how the Federal Reserve views the recovery and when it acts to raise rates. Restaurants Struggle The variant is another blow to industries like hospitality that were struggling to come back to pre-pandemic employment levels, said Jerry Nickelsburg, faculty director of UCLA Anderson Forecast. That in turn will have a longer effect on growth because “those sectors will not recover as fast as we previously thought”. Marshall Weston, president and chief executive officer of the Restaurant Association of Maryland, said he had spent the week fielding calls from members who were closing their doors for good. “The recovery for restaurants appears to be going in reverse rather than moving forward,” Weston said. At Ledo Pizza in the D.C. area, CEO Beall is determined to keep a company his grandfather started in 1955 alive. He employs 1,300 fewer people than before Covid-19 and has adapted by using more automated online systems to field takeout orders and by simplifying the menu to ease the burden of kitchen staff. He’s also dealing with staff shortages at suppliers that have only gotten worse with omicron. That means getting smaller amounts of ingredients like mozzarella sticks and waiting longer to get them. “We’ve seen a lot of in 66 years,” Beall said. “But this is definitely different.” –With assistance from Joe Deaux, Leslie Patton, Gabrielle Coppola, Deena Shanker, Carey Goldberg, Justin Bachman, John Tozzi, David Welch, Keith Naughton and Augusta Saraiva......»»

Category: topSource: timeJan 13th, 2022

2021 Greatest Hits: The Most Popular Articles Of The Past Year And A Look Ahead

2021 Greatest Hits: The Most Popular Articles Of The Past Year And A Look Ahead One year ago, when looking at the 20 most popular stories of 2020, we said that the year would be a very tough act to follow as there "could not have been more regime shifts, volatility moments, and memes than 2020." And yet despite the exceedingly high bar for 2021, the year did not disappoint and proved to be a successful contender, and if judging by the sheer breadth of narratives, stories, surprises, plot twists and unexpected developments, 2021 was even more memorable and event-filled than 2020. Where does one start? While covid was the story of 2020, the pandemic that emerged out of a (Fauci-funded) genetic lab team in Wuhan, China dominated newsflow, politics and capital markets for the second year in a row. And while the biggest plot twist of 2020 was Biden's victory over Trump in the presidential election (it took the pandemic lockdowns and mail-in ballots to hand the outcome to Biden), largely thanks to Covid, Biden failed to hold to his biggest presidential promise of defeating covid, and not only did he admit in late 2021 that there is "no Federal solution" to covid waving a white flag of surrender less than a year into his presidency, but following the recent emergence of the Xi, pardon Omicron variant, the number of covid cases in the US has just shattered all records. The silver lining is not only that deaths and hospitalizations have failed to follow the number of cases, but that the scaremongering narrative itself is starting to melt in response to growing grassroots discontent with vaccine after vaccine and booster after booster, which by now it is clear, do nothing to contain the pandemic. And now that it is clear that omicron is about as mild as a moderate case of the flu, the hope has finally emerged that this latest strain will finally kill off the pandemic as it becomes the dominant, rapidly-spreading variant, leading to worldwide herd immunity thanks to the immune system's natural response. Yes, it may mean billions less in revenue for Pfizer and Moderna, but it will be a colossal victory for the entire world. The second biggest story of 2021 was undoubtedly the scourge of soaring inflation, which contrary to macrotourist predictions that it would prove "transitory", refused to do so and kept rising, and rising, and rising, until it hit levels not seen since the Volcker galloping inflation days of the 1980s. The only difference of course is that back then, the Fed Funds rate hit 20%. Now it is at 0%, and any attempts to hike aggressively will lead to a horrific market crash, something the Fed knows very well. Whether this was due to supply-chain blockages and a lack of goods and services pushing prices higher, or due to massive stimulus pushing demand for goods - and also prices - higher, or simply the result of a record injection of central bank liquidity into the system, is irrelevant but what does matter is that it got so bad that even Biden, facing a mauling for his Democratic party in next year's midterm elections, freaked out about soaring prices and pushed hard to lower the price of gasoline, ordering releases from the US Strategic Petroleum Reserve and vowing to punish energy companies that dare to make a profit, while ordering Powell to contain the surge in prices even if means the market is hit. Unfortunately for Biden, the market will be hit even as inflation still remain red hot for much of the coming year. And speaking of markets, while 2022 may be a year when the piper finally gets paid, 2021 was yet another blockbuster year for risk assets, largely on the back of the continued global response to the 2020 covid pandemic, when as we wrote last year, we saw "the official arrival of global Helicopter Money, tens of trillions in fiscal and monetary stimulus, an overhaul of the global economy punctuated by an unprecedented explosion in world debt, an Orwellian crackdown on civil liberties by governments everywhere, and ultimately set the scene for what even the World Economic Forum called simply "The Great Reset." Yes, the staggering liquidity injections that started in 2020, continued throughout 2021 and the final tally is that after $3 trillion in emergency liquidity injections in the immediate aftermath of the pandemic to stabilize the world, the Fed injected almost $2 trillion in the subsequent period, of which $1.5 trillion in 2021, a year where economists were "puzzled" why inflation was soaring. This, of course, excludes the tens of trillions of monetary stimulus injected by other central banks as well as the boundless fiscal stimulus that was greenlighted with the launch of helicopter money (i.e., MMT) in 2020. It's also why with inflation running red hot and real rates the lowest they have ever been, everyone was forced to rush into the "safety" of stocks (or stonks as they came to be known among GenZ), and why after last year's torrid stock market returns, the S&P rose another 27% in 2021 and up a staggering 114% from the March 2020 lows, in the process trouncing all previous mega-rallies (including those in 1929, 1938, 1974 and 2009)... ... making this the third consecutive year of double-digit returns. This reminds us of something we said last year: "it's almost as if the world's richest asset owners requested the covid pandemic." A year later, we got confirmation for this rhetorical statement, when we calculated that in the 18 months since the covid pandemic, the richest 1% of US society have seen their net worth increase by over $30 trillion. As a result, the US is now officially a banana republic where the middle 60% of US households by income - a measure economists use as a definition of the middle class - saw their combined assets drop from 26.7% to 26.6% of national wealth as of June, the lowest in Federal Reserve data, while for the first time the super rich had a bigger share, at 27%. Yes, the 1% now own more wealth than the entire US middle class, a definition traditionally reserve for kleptocracies and despotic African banana republics. It wasn't just the rich, however: politicians the world over would benefit from the transition from QE to outright helicopter money and MMT which made the over monetization of deficits widely accepted in the blink of an eye. The common theme here is simple: no matter what happens, capital markets can never again be allowed to drop, regardless of the cost or how much more debt has to be incurred. Indeed, as we look back at the news barrage over the past year, and past decade for that matter, the one thing that becomes especially clear amid the constant din of markets, of politics, of social upheaval and geopolitical strife - and now pandemics -  in fact a world that is so flooded with constant conflicting newsflow and changing storylines that many now say it has become virtually impossible to even try to predict the future, is that despite the people's desire for change, for something original and untried, the world's established forces will not allow it and will fight to preserve the broken status quo at any price - even global coordinated shutdowns - which is perhaps why it always boils down to one thing - capital markets, that bedrock of Western capitalism and the "modern way of life", where control, even if it means central planning the likes of which have not been seen since the days of the USSR, and an upward trajectory must be preserved at all costs, as the alternative is a global, socio-economic collapse. And since it is the daily gyrations of stocks that sway popular moods the interplay between capital markets and politics has never been more profound or more consequential. The more powerful message here is the implicit realization and admission by politicians, not just Trump who had a penchant of tweeting about the S&P every time it rose, but also his peers on both sides of the aisle, that the stock market is now seen as the consummate barometer of one's political achievements and approval. Which is also why capital markets are now, more than ever, a political tool whose purpose is no longer to distribute capital efficiently and discount the future, but to manipulate voter sentiments far more efficiently than any fake Russian election interference attempt ever could. Which brings us back to 2021 and the past decade, which was best summarized by a recent Bill Blain article who said that "the last 10-years has been a story of massive central banking distortion to address the 2008 crisis. Now central banks face the consequences and are trapped. The distortion can’t go uncorrected indefinitely." He is right: the distortion will eventually collapse especially if the Fed follows through with its attempt rate hikes some time in mid-2020, but so far the establishment and the "top 1%" have been successful - perhaps the correct word is lucky - in preserving the value of risk assets: on the back of the Fed's firehose of liquidity the S&P500 returned an impressive 27% in 2021, following a 15.5% return in 2020 and 28.50% in 2019. It did so by staging the greatest rally off all time from the March lows, surpassing all of the 4 greatest rallies off the lows of the past century (1929,1938, 1974, and 2009). Yet this continued can-kicking by the establishment - all of which was made possible by the covid pandemic and lockdowns which served as an all too convenient scapegoat for the unprecedented response that served to propel risk assets (and fiat alternatives such as gold and bitcoin) to all time highs - has come with a price... and an increasingly higher price in fact. As even Bank of America CIO Michael Hartnett admits, Fed's response to the the pandemic "worsened inequality" as the value of financial assets - Wall Street -  relative to economy - Main Street - hit all-time high of 6.3x. And while the Fed was the dynamo that has propelled markets higher ever since the Lehman collapse, last year certainly had its share of breakout moments. Here is a sampling. Gamestop and the emergence of meme stonks and the daytrading apes: In January markets were hypnotized by the massive trading volumes, rolling short squeezes and surging share prices of unremarkable established companies such as consoles retailer GameStop and cinema chain AMC and various other micro and midcap names. What began as a discussion on untapped value at GameStop on Reddit months earlier by Keith Gill, better known as Roaring Kitty, morphed into a hedge fund-orchestrated, crowdsourced effort to squeeze out the short position held by a hedge fund, Melvin Capital. The momentum flooded through the retail market, where daytraders shunned stocks and bought massive out of the money calls, sparking rampant "gamma squeezes" in the process forcing some brokers to curb trading. Robinhood, a popular broker for day traders and Citadel's most lucrative "subsidiary", required a cash injection to withstand the demands placed on it by its clearing house. The company IPOed later in the year only to see its shares collapse as it emerged its business model was disappointing hollow absent constant retail euphoria. Ultimately, the market received a crash course in the power of retail investors on a mission. Ultimately, "retail favorite" stocks ended the year on a subdued note as the trading frenzy from earlier in the year petered out, but despite underperforming the S&P500, retail traders still outperformed hedge funds by more than 100%. Failed seven-year Treasury auction:  Whereas auctions of seven-year US government debt generally spark interest only among specialists, on on February 25 2021, one such typically boring event sparked shockwaves across financial markets, as the weakest demand on record hit prices across the whole spectrum of Treasury bonds. The five-, seven- and 10-year notes all fell sharply in price. Researchers at the Federal Reserve called it a “flash event”; we called it a "catastrophic, tailing" auction, the closest thing the US has had to a failed Trasury auction. The flare-up, as the FT put it, reflects one of the most pressing investor concerns of the year: inflation. At the time, fund managers were just starting to realize that consumer price rises were back with a vengeance — a huge threat to the bond market which still remembers the dire days of the Volcker Fed when inflation was about as high as it is today but the 30Y was trading around 15%. The February auaction also illustrated that the world’s most important market was far less liquid and not as structurally robust as investors had hoped. It was an extreme example of a long-running issue: since the financial crisis the traditional providers of liquidity, a group of 24 Wall Street banks, have pulled back because of higher costs associated with post-2008 capital requirements, while leaving liquidity provision to the Fed. Those banks, in their reduced role, as well as the hedge funds and high-frequency traders that have stepped into their place, have tended to withdraw in moments of market volatility. Needless to say, with the Fed now tapering its record QE, we expect many more such "flash" episodes in the bond market in the year ahead. The arch ego of Archegos: In March 2021 several banks received a brutal reminder that some of family offices, which manage some $6 trillion in wealth of successful billionaires and entrepreneurs and which have minimal reporting requirements, take risks that would make the most serrated hedge fund manager wince, when Bill Hwang’s Archegos Capital Management imploded in spectacular style. As we learned in late March when several high-flying stocks suddenly collapsed, Hwang - a former protege of fabled hedge fund group Tiger Management - had built up a vast pile of leverage using opaque Total Return Swaps with a handful of banks to boost bets on a small number of stocks (the same banks were quite happy to help despite Hwang’s having been barred from US markets in 2013 over allegations of an insider-trading scheme, as he paid generously for the privilege of borrowing the banks' balance sheet). When one of Archegos more recent bets, ViacomCBS, suddenly tumbled it set off a liquidation cascade that left banks including Credit Suisse and Nomura with billions of dollars in losses. Conveniently, as the FT noted, the damage was contained to the banks rather than leaking across financial markets, but the episode sparked a rethink among banks over how to treat these clients and how much leverage to extend. The second coming of cryptos: After hitting an all time high in late 2017 and subsequently slumping into a "crypto winter", cryptocurrencies enjoyed a huge rebound in early 2021 which sent their prices soaring amid fears of galloping inflation (as shown below, and contrary to some financial speculation, the crypto space has traditionally been a hedge either to too much liquidity or a hedge to too much inflation). As a result, Bitcoin rose to a series of new record highs that culminated at just below $62,000, nearly three times higher than their previous all time high. But the smooth ride came to a halt in May when China’s crackdown on the cryptocurrency and its production, or “mining”, sparked the first serious crash of 2021. The price of bitcoin then collapsed as much as 30% on May 19, hitting a low of $30,000 amid a liquidation of levered positions in chaotic trading conditions following a warning from Chinese authorities of tighter curbs ahead. A public acceptance by Tesla chief and crypto cheerleader Elon Musk of the industry’s environmental impact added to the declines. However, as with all previous crypto crashes, this one too proved transitory, and prices resumed their upward trajectory in late September when investors started to price in the launch of futures-based bitcoin exchange traded funds in the US. The launch of these contracts subsequently pushed bitcoin to a new all-time high in early November before prices stumbled again in early December, this time due to a rise in institutional ownership when an overall drop in the market dragged down cryptos as well. That demonstrated the growing linkage between Wall Street and cryptocurrencies, due to the growing sway of large investors in digital markets. China's common prosperity crash: China’s education and tech sectors were one of the perennial Wall Street darlings. Companies such as New Oriental, TAL Education as well as Alibaba and Didi had come to be worth billions of dollars after highly publicized US stock market flotations. So when Beijing effectively outlawed swaths of the country’s for-profit education industry in July 2021, followed by draconian anti-trust regulations on the country's fintech names (where Xi Jinping also meant to teach the country's billionaire class a lesson who is truly in charge), the short-term market impact was brutal. Beijing’s initial measures emerged as part of a wider effort to make education more affordable as part of president Xi Jinping’s drive for "common prosperity" but that quickly raised questions over whether growth prospects across corporate China are countered by the capacity of the government to overhaul entire business models overnight. Sure enough, volatility stemming from the education sector was soon overshadowed by another set of government reforms related to common prosperity, a crackdown on leverage across the real estate sector where the biggest casualty was Evergrande, the world’s most indebted developer. The company, whose boss was not long ago China's 2nd richest man, was engulfed by a liquidity crisis in the summer that eventually resulted in a default in early December. Still, as the FT notes, China continues to draw in huge amounts of foreign capital, pushing the Chinese yuan to end 2021 at the strongest level since May 2018, a major hurdle to China's attempts to kickstart its slowing economy, and surely a precursor to even more monetary easing. Natgas hyperinflation: Natural gas supplanted crude oil as the world’s most important commodity in October and December as prices exploded to unprecedented levels and the world scrambled for scarce supplies amid the developed world's catastrophic transition to "green" energy. The crunch was particularly acute in Europe, which has become increasingly reliant on imports. Futures linked to TTF, the region’s wholesale gas price, hit a record €137 per megawatt hour in early October, rising more than 75%. In Asia, spot liquefied natural gas prices briefly passed the equivalent of more than $320 a barrel of oil in October. (At the time, Brent crude was trading at $80). A number of factors contributed, including rising demand as pandemic restrictions eased, supply disruptions in the LNG market and weather-induced shortfalls in renewable energy. In Europe, this was aggravated by plunging export volumes from Gazprom, Russia’s state-backed monopoly pipeline supplier, amid a bitter political fight over the launch of the Nordstream 2 pipeline. And with delays to the Nord Stream 2 gas pipeline from Russia to Germany, analysts say the European gas market - where storage is only 66% full - a cold snap or supply disruption away from another price spike Turkey's (latest) currency crisis:  As the FT's Jonathan Wheatley writes, Recep Tayyip Erdogan was once a source of strength for the Turkish lira, and in his first five years in power from 2003, the currency rallied from TL1.6 per US dollar to near parity at TL1.2. But those days are long gone, as Erdogan's bizarre fascination with unorthodox economics, namely the theory that lower rates lead to lower inflation also known as "Erdoganomics", has sparked a historic collapse in the: having traded at about TL7 to the dollar in February, it has since fallen beyond TL17, making it the worst performing currency of 2021. The lira’s defining moment in 2021 came on November 18 when the central bank, in spite of soaring inflation, cut its policy rate for the third time since September, at Erdogan’s behest (any central banker in Turkey who disagrees with "Erdoganomics" is promptly fired and replaced with an ideological puppet). The lira recovered some of its losses in late December when Erdogan came up with the "brilliant" idea of erecting the infamous "doom loop" which ties Turkey's balance sheet to its currency. It has worked for now (the lira surged from TL18 against the dollar to TL12, but this particular band aid solution will only last so long). The lira’s problems are not only Erdogan’s doing. A strengthening dollar, rising oil prices, the relentless covid pandemic and weak growth in developing economies have been bad for other emerging market currencies, too, but as long as Erdogan is in charge, shorting the lira remains the best trade entering 2022. While these, and many more, stories provided a diversion from the boring existence of centrally-planned markets, we are confident that the trends observed in recent years will continue: coming years will be marked by even bigger government (because only more government can "fix" problems created by government), higher stock prices and dollar debasement (because only more Fed intervention can "fix" the problems created by the Fed), and a policy flip from monetary and QE to fiscal & MMT, all of which will keep inflation at scorching levels, much to the persistent confusion of economists everywhere. Of course, we said much of this last year as well, but while we got most trends right, we were wrong about one thing: we were confident that China's aggressive roll out of the digital yuan would be a bang - or as we put it "it is very likely that while 2020 was an insane year, it may prove to be just an appetizer to the shockwaves that will be unleashed in 2021 when we see the first stage of the most historic overhaul of the fiat payment system in history" - however it turned out to be a whimper. A big reason for that was that the initial reception of the "revolutionary" currency was nothing short of disastrous, with Chinese admitting they were "not at all excited" about the prospect of yet one more surveillance mechanism for Beijing, because that's really what digital currencies are: a way for central banks everywhere to micromanage and scrutinize every single transaction, allowing the powers that be to demonetize any one person - or whole groups - with the flick of a switch. Then again, while digital money may not have made its triumphant arrival in 2021, we are confident that the launch date has merely been pushed back to 2022 when the rollout of the next monetary revolution is expected to begin in earnest. Here we should again note one thing: in a world undergoing historic transformations, any free press must be throttled and controlled, and over the past year we have seen unprecedented efforts by legacy media and its corporate owners, as well as the new "social media" overlords do everything in their power to stifle independent thought. For us it had been especially "personal" on more than one occasions. Last January, Twitter suspended our account because we dared to challenge the conventional narrative about the source of the Wuhan virus. It was only six months later that Twitter apologized, and set us free, admitting it had made a mistake. Yet barely had twitter readmitted us, when something even more unprecedented happened: for the first time ever (to our knowledge) Google - the world's largest online ad provider and monopoly - demonetized our website not because of any complaints about our writing but because of the contents of our comment section. It then held us hostage until we agreed to implement some prerequisite screening and moderation of the comments section. Google's action was followed by the likes of PayPal, Amazon, and many other financial and ad platforms, who rushed to demonetize and suspend us simply because they disagreed with what we had to say. This was a stark lesson in how quickly an ad-funded business can disintegrate in this world which resembles the dystopia of 1984 more and more each day, and we have since taken measures. One year ago, for the first time in our 13 year history, we launched a paid version of our website, which is entirely ad and moderation free, and offers readers a variety of premium content. It wasn't our intention to make this transformation but unfortunately we know which way the wind is blowing and it is only a matter of time before the gatekeepers of online ad spending block us again. As such, if we are to have any hope in continuing it will come directly from you, our readers. We will keep the free website running for as long as possible, but we are certain that it is only a matter of time before the hammer falls as the censorship bandwagon rolls out much more aggressively in the coming year. That said, whether the story of 2022, and the next decade for that matter, is one of helicopter or digital money, of (hyper)inflation or deflation: what is key, and what we learned in the past decade, is that the status quo will throw anything at the problem to kick the can, it will certainly not let any crisis go to waste... even the deadliest pandemic in over a century. And while many already knew that, the events of 2021 made it clear to a fault that not even a modest market correction can be tolerated going forward. After all, if central banks aim to punish all selling, then the logical outcome is to buy everything, and investors, traders and speculators did just that armed with the clearest backstop guarantee from the Fed, which in the deapths of the covid crash crossed the Rubicon when it formally nationalized the bond market as it started buying both investment grade bonds and junk bond ETFs in the open market. As such it is no longer even a debatable issue if the Fed will buy stocks after the next crash - the only question is when. Meanwhile, for all those lamenting the relentless coverage of politics in a financial blog, why finance appears to have taken a secondary role, and why the political "narrative" has taken a dominant role for financial analysts, the past year showed vividly why that is the case: in a world where markets gyrated, and "rotated" from value stocks to growth and vice versa, purely on speculation of how big the next stimulus out of Washington will be, the narrative over Biden's trillions proved to be one of the biggest market moving events for much of the year. And with the Biden stimulus plan off the table for now, the Fed will find it very difficult to tighten financial conditions, especially if it does so just as the economy is slowing. Here we like to remind readers of one of our favorite charts: every financial crisis is the result of Fed tightening. As for predictions about the future, as the past two years so vividly showed, when it comes to actual surprises and all true "black swans", it won't be what anyone had expected. And so while many themes, both in the political and financial realm, did get some accelerated closure courtesy of China's covid pandemic, dramatic changes in 2021 persisted, and will continue to manifest themselves in often violent and unexpected ways - from the ongoing record polarization in the US political arena, to "populist" upheavals around the developed world, to the gradual transition to a global Universal Basic (i.e., socialized) Income regime, to China's ongoing fight with preserving stability in its gargantuan financial system which is now two and a half times the size of the US. As always, we thank all of our readers for making this website - which has never seen one dollar of outside funding (and despite amusing recurring allegations, has certainly never seen a ruble from the KGB either, although now that the entire Russian hysteria episode is over, those allegations have finally quieted down), and has never spent one dollar on marketing - a small (or not so small) part of your daily routine. Which also brings us to another critical topic: that of fake news, and something we - and others who do not comply with the established narrative - have been accused of. While we find the narrative of fake news laughable, after all every single article in this website is backed by facts and links to outside sources, it is clearly a dangerous development, and a very slippery slope that the entire developed world is pushing for what is, when stripped of fancy jargon, internet censorship under the guise of protecting the average person from "dangerous, fake information." It's also why we are preparing for the next onslaught against independent thought and why we had no choice but to roll out a premium version of this website. In addition to the other themes noted above, we expect the crackdown on free speech to accelerate in the coming year when key midterm elections will be held, especially as the following list of Top 20 articles for 2021 reveals, many of the most popular articles in the past year were precisely those which the conventional media would not touch out of fear of repercussions, which in turn allowed the alternative media to continue to flourish in an orchestrated information vacuum and take significant market share from the established outlets by covering topics which the public relations arm of established media outlets refused to do, in the process earning itself the derogatory "fake news" condemnation. We are grateful that our readers - who hit a new record high in 2021 - have realized it is incumbent upon them to decide what is, and isn't "fake news." * * * And so, before we get into the details of what has now become an annual tradition for the last day of the year, those who wish to jog down memory lane, can refresh our most popular articles for every year during our no longer that brief, almost 11-year existence, starting with 2009 and continuing with 2010, 2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018, 2019 and 2020. So without further ado, here are the articles that you, our readers, found to be the most engaging, interesting and popular based on the number of hits, during the past year. In 20th spot with 600,000 reads, was an article that touched on one of the most defining features of the market: the reflation theme the sparked a massive rally at the start of the year courtesy of the surprise outcome in the Georgia Senate race, where Democrats ended up wining both seats up for grabs, effectively giving the Dems a majority in both the House and the Senate, where despite the even, 50-seat split, Kamala Harris would cast the winning tie-breaker vote to pursue a historic fiscal stimulus. And sure enough, as we described in "Bitcoin Surges To Record High, Stocks & Bonds Battered As Dems Look Set To Take Both Georgia Senate Seats", with trillions in "stimmies" flooding both the economy and the market, not only did retail traders enjoy unprecedented returns when trading meme "stonks" and forcing short squeezes that crippled numerous hedge funds, but expectations of sharply higher inflation also helped push bitcoin and the entire crypto sector to new all time highs, which in turn legitimized the product across institutional investors and helped it reach a market cap north of $3 trillion.  In 19th spot, over 613,000 readers were thrilled to read at the start of September that "Biden Unveils Most Severe COVID Actions Yet: Mandates Vax For All Federal Workers, Contractors, & Large Private Companies." Of course, just a few weeks later much of Biden's mandate would be struck down in courts, where it is now headed to a decision by SCOTUS, while the constantly shifting "scientific" goal posts mean that just a few months later the latest set of CDC regulations have seen regulators and officials reverse the constant drone of fearmongering and are now even seeking to cut back on the duration of quarantine and other lockdown measures amid a public mood that is growing increasingly hostile to the government response. One of the defining political events of 2021 was the so-called "Jan 6 Insurrection", which the for America's conservatives was blown wildly out of proportion yet which the leftist media and Democrats in Congress have been periodically trying to push to the front pages in hopes of distracting from the growing list of failures of the Obama admin. Yet as we asked back in January, "Why Was Founder Of Far-Left BLM Group Filming Inside Capitol As Police Shot Protester?" No less than 614,000 readers found this question worthy of a response. Since then many more questions have emerged surrounding this event, many of which focus on what role the FBI had in organizing and encouraging this event, including the use of various informants and instigators. For now, a response will have to wait at least until the mid-term elections of 2022 when Republicans are expected to sweep one if not both chambers. Linked to the above, the 17th most read article of 2021 with 617,000 views, was an article we published on the very same day, which detailed that "Armed Protesters Begin To Arrive At State Capitols Around The Nation." At the end of the day, it was much ado about nothing and all protests concluded peacefully and without incident: perhaps the FBI was simply spread too thin? 2021 was a year defined by various waves of the covid pandemic which hammered poor Americans forced to hunker down at home and missing on pay, and crippled countless small mom and pop businesses. And yet, it was also a bonanza for a handful of pharma companies such as Pfizer and Moderna which made billions from the sale of "vaccines" which we now know do little if anything to halt the spread of the virus, and are instead now being pitched as palliatives, preventing a far worse clinical outcome. The same pharma companies also benefited from an unconditional indemnity, which surely would come in useful when the full side-effects of their mRNA-based therapies became apparent. One such condition to emerge was myocarditis among a subset of the vaxxed. And while the vaccines continue to be broadly rolled out across most developed nations, one place that said enough was Sweden. As over 620,000 readers found out in "Sweden Suspends Moderna Shot Indefinitely After Vaxxed Patients Develop Crippling Heart Condition", not every country was willing to use its citizens as experimental guniea pigs. This was enough to make the article the 16th most read on these pages, but perhaps in light of the (lack of) debate over the pros and cons of the covid vaccines, this should have been the most read article this year? Moving on to the 15th most popular article, 628,000 readers were shocked to learn that "Chase Bank Cancels General Mike Flynn's Credit Cards." The action, which was taken by the largest US bank due to "reputational risk" echoed a broad push by tech giants to deplatform and silence dissenting voices by literally freezing them out of the financial system. In the end, following widespread blowback from millions of Americans, JPMorgan reversed, and reactivated Flynn's cards saying the action was made in error, but unfortunately this is just one example of how those in power can lock out any dissenters with the flick of a switch. And while democrats cheer such deplatforming today, the political winds are fickle, and we doubt they will be as excited once they find themselves on the receiving end of such actions. And speaking of censorship and media blackouts, few terms sparked greater response from those in power than the term Ivermectin. Viewed by millions as a cheap, effective alternative to offerings from the pharmaceutical complex, social networks did everything in their power to silence any mention of a drug which the Journal of Antibiotics said in 2017 was an "enigmatic multifaceted ‘wonder’ drug which continues to surprise and exceed expectations." Nowhere was this more obvious than in the discussion of how widespread use of Ivermectin beat Covid in India, the topic of the 14th most popular article of 2021 "India's Ivermectin Blackout" which was read by over 653,000 readers. Unfortunately, while vaccines continue to fail upward and now some countries are now pushing with a 4th, 5th and even 6th vaccine, Ivermectin remains a dirty word. There was more covid coverage in the 13th most popular article of 2021, "Surprise Surprise - Fauci Lied Again": Rand Paul Reacts To Wuhan Bombshell" which was viewed no less than 725,000 times. Paul's reaction came following a report which revealed that Anthony Fauci's NIAID and its parent, the NIH, funded Gain-of-Function research in Wuhan, China, strongly hinting that the emergence of covid was the result of illicit US funding. Not that long ago, Fauci had called Paul a 'liar' for accusing him of funding the risky research, in which viruses are genetically modified or otherwise altered to make them more transmissible to humans. And while we could say that Paul got the last laugh, Fauci still remains Biden's top covid advisor, which may explain why one year after Biden vowed he would shut down the pandemic, the number of new cases just hit a new all time high. One hope we have for 2022 is that people will finally open their eyes... 2021 was not just about covid - soaring prices and relentless inflation were one of the most poignant topics. It got so bad that Biden's approval rating - and that of Democrats in general - tumbled toward the end of the year, putting their mid-term ambitions in jeopardy, as the public mood soured dramatically in response to the explosion in prices. And while one can debate whether it was due to supply-issues, such as the collapse in trans-pacific supply chains and the chronic lack of labor to grow the US infrastructure, or due to roaring demand sparked by trillions in fiscal stimulus, but when the "Big Short" Michael Burry warned that hyperinflation is coming, the people listened, and with over 731,000 reads, the 12th most popular article of 2021 was "Michael Burry Warns Weimar Hyperinflation Is Coming."  Of course, Burry did not say anything we haven't warned about for the past 12 years, but at least he got the people's attention, and even mainstream names such as Twitter founder Jack Dorsey agreed with him, predicting that bitcoin will be what is left after the dollar has collapsed. While hyperinflation may will be the endgame, the question remains: when. For the 11th most read article of 2021, we go back to a topic touched upon moments ago when we addressed the full-blown media campaign seeking to discredit Ivermectin, in this case via the D-grade liberal tabloid Rolling Stone (whose modern incarnation is sadly a pale shadow of the legend that house Hunter S. Thompson's unforgettable dispatches) which published the very definition of fake news when it called Ivermectin a "horse dewormer" and claimed that, according to a hospital employee, people were overdosing on it. Just a few hours later, the article was retracted as we explained in "Rolling Stone Issues 'Update' After Horse Dewormer Hit-Piece Debunked" and over 812,000 readers found out that pretty much everything had been a fabrication. But of course, by then it was too late, and the reputation of Ivermectin as a potential covid cure had been further tarnished, much to the relief of the pharma giants who had a carte blanche to sell their experimental wares. The 10th most popular article of 2021 brings us to another issue that had split America down the middle, namely the story surrounding Kyle Rittenhouse and the full-blown media campaign that declared the teenager guilty, even when eventually proven innocent. Just days before the dramatic acquittal, we learned that "FBI Sat On Bombshell Footage From Kyle Rittenhouse Shooting", which was read by over 822,000 readers. It was unfortunate to learn that once again the scandal-plagued FBI stood at the center of yet another attempt at mass misinformation, and we can only hope that one day this "deep state" agency will be overhauled from its core, or better yet, shut down completely. As for Kyle, he will have the last laugh: according to unconfirmed rumors, his numerous legal settlements with various media outlets will be in the tens if not hundreds of millions of dollars.  And from the great US social schism, we again go back to Covid for the 9th most popular article of 2021, which described the terrifying details of one of the most draconian responses to covid in the entire world: that of Australia. Over 900,000 readers were stunned to read that the "Australian Army Begins Transferring COVID-Positive Cases, Contacts To Quarantine Camps." Alas, the latest surge in Australian cases to nosebleed, record highs merely confirms that this unprecedented government lockdown - including masks and vaccines - is nothing more than an exercise in how far government can treat its population as a herd of sheep without provoking a violent response.  The 8th most popular article of 2021 looks at the market insanity of early 2021 when, at the end of January, we saw some of the most-shorted, "meme" stocks explode higher as the Reddit daytrading horde fixed their sights on a handful of hedge funds and spent billions in stimmies in an attempt to force unprecedented ramps. That was the case with "GME Soars 75% After-Hours, Erases Losses After Liquidity-Constrained Robinhood Lifts Trading Ban", which profiled the daytrading craze that gave an entire generation the feeling that it too could win in these manipulated capital markets. Then again, judging by the waning retail interest, it is possible that the excitement of the daytrading army is fading as rapidly as it first emerged, and that absent more "stimmies" markets will remain the playground of the rich and central banks. Kyle Rittenhouse may soon be a very rich man after the ordeal he went through, but the media's mission of further polarizing US society succeeded, and millions of Americans will never accept that the teenager was innocent. It's also why with just over 1 million reads, the 7th most read article on Zero Hedge this year was that "Portland Rittenhouse Protest Escalates Into Riot." Luckily, this is not a mid-term election year and there were no moneyed interests seeking to prolong this particular riot, unlike what happened in the summer of 2020... and what we are very much afraid will again happen next year when very critical elections are on deck.  With just over 1.03 million views, the 6th most popular post focused on a viral Twitter thread on Friday from Dr Robert Laone, which laid out a disturbing trend; the most-vaccinated countries in the world are experiencing  a surge in COVID-19 cases, while the least-vaccinated countries were not. As we originally discussed in ""This Is Worrying Me Quite A Bit": mRNA Vaccine Inventor Shares Viral Thread Showing COVID Surge In Most-Vaxxed Countries", this trend has only accelerated in recent weeks with the emergence of the Omicron strain. Unfortunately, instead of engaging in a constructive discussion to see why the science keeps failing again and again, Twitter's response was chilling: with just days left in 2021, it suspended the account of Dr. Malone, one of the inventors of mRNA technology. Which brings to mind something Aaron Rogers said: "If science can't be questioned it's not science anymore it's propaganda & that's the truth." In a year that was marked a flurry of domestic fiascoes by the Biden administration, it is easy to forget that the aged president was also responsible for the biggest US foreign policy disaster since Vietnam, when the botched evacuation of Afghanistan made the US laughing stock of the world after 12 US servicemembers were killed. So it's probably not surprising that over 1.1 million readers were stunned to watch what happened next, which we profiled in the 5th most popular post of 2021, where in response to the Afghan trajedy, "Biden Delivers Surreal Press Conference, Vows To Hunt Down Isis, Blames Trump." One person watching the Biden presser was Xi Jinping, who may have once harbored doubts about reclaiming Taiwan but certainly does not any more. The 4th most popular article of 2021 again has to do with with covid, and specifically the increasingly bizarre clinical response to the disease. As we detailed in "Something Really Strange Is Happening At Hospitals All Over America" while emergency rooms were overflowing, it certainly wasn't from covid cases. Even more curiously, one of the primary ailments leading to an onslaught on ERs across the nation was heart-related issues, whether arrhytmia, cardiac incidents or general heart conditions. We hope that one day there will be a candid discussion on this topic, but until then it remains one of the topics seen as taboo by the mainstream media and the deplatforming overlords, so we'll just leave it at that. We previously discussed the anti-Ivermectin narrative that dominated the mainstream press throughout 2021 and the 3rd most popular article of the year may hold clues as to why: in late September, pharma giant Pfizer and one of the two companies to peddle an mRNA based vaccine, announced that it's launching an accelerated Phase 2/3 trial for a COVID prophylactic pill designed to ward off COVID in those may have come in contact with the disease. And, as we described in "Pfizer Launches Final Study For COVID Drug That's Suspiciously Similar To 'Horse Paste'," 1.75 million readers learned that Pfizer's drug shared at least one mechanism of action as Ivermectin - an anti-parasitic used in humans for decades, which functions as a protease inhibitor against Covid-19, which researchers speculate "could be the biophysical basis behind its antiviral efficiency." Surely, this too was just another huge coincidence. In the second most popular article of 2021, almost 2 million readers discovered (to their "shock") that Fauci and the rest of Biden's COVID advisors were proven wrong about "the science" of COVID vaccines yet again. After telling Americans that vaccines offer better protection than natural infection, a new study out of Israel suggested the opposite is true: natural infection offers a much better shield against the delta variant than vaccines, something we profiled in "This Ends The Debate' - Israeli Study Shows Natural Immunity 13x More Effective Than Vaccines At Stopping Delta." We were right about one thing: anyone who dared to suggest that natural immunity was indeed more effective than vaccines was promptly canceled and censored, and all debate almost instantly ended. Since then we have had tens of millions of "breakout" cases where vaccinated people catch covid again, while any discussion why those with natural immunity do much better remains under lock and key. It may come as a surprise to many that the most read article of 2021 was not about covid, or Biden, or inflation, or China, or even the extremely polarized US congress (and/or society), but was about one of the most long-suffering topics on these pages: precious metals and their prices. Yes, back in February the retail mania briefly targeted silver and as millions of reddit daytraders piled in in hopes of squeezing the precious metal higher, the price of silver surged higher only to tumble just as quickly as it has risen as the seller(s) once again proved more powerful than the buyers. We described this in "Silver Futures Soar 8%, Rise Above $29 As Reddit Hordes Pile In", an article which some 2.4 million gold and silver bugs read with hope, only to see their favorite precious metals slump for much of the rest of the year. And yes, the fact that both gold and silver ended the year sharply lower than where they started even though inflation hit the highest level in 40 years, remains one of the great mysteries of 2021. With all that behind us, and as we wave goodbye to another bizarre, exciting, surreal year, what lies in store for 2022, and the next decade? We don't know: as frequent and not so frequent readers are aware, we do not pretend to be able to predict the future and we don't try despite endless allegations that we constantly predict the collapse of civilization: we leave the predicting to the "smartest people in the room" who year after year have been consistently wrong about everything, and never more so than in 2021 (even the Fed admitted it is clueless when Powell said it was time to retire the term "transitory"), which destroyed the reputation of central banks, of economists, of conventional media and the professional "polling" and "strategist" class forever, not to mention all those "scientists" who made a mockery of the "expertise class" with their bungled response to the covid pandemic. We merely observe, find what is unexpected, entertaining, amusing, surprising or grotesque in an increasingly bizarre, sad, and increasingly crazy world, and then just write about it. We do know, however, that after a record $30 trillion in stimulus was conjured out of thin air by the world's central banks and politicians in the past two years, the attempt to reverse this monetary and fiscal firehose in a world addicted to trillions in newly created liquidity now that central banks are freaking out after finally getting ot the inflation they were hoping to create for so long, will end in tears. We are confident, however, that in the end it will be the very final backstoppers of the status quo regime, the central banking emperors of the New Normal, who will eventually be revealed as fully naked. When that happens and what happens after is anyone's guess. But, as we have promised - and delivered - every year for the past 13, we will be there to document every aspect of it. Finally, and as always, we wish all our readers the best of luck in 2022, with much success in trading and every other avenue of life. We bid farewell to 2021 with our traditional and unwavering year-end promise: Zero Hedge will be there each and every day - usually with a cynical smile - helping readers expose, unravel and comprehend the fallacy, fiction, fraud and farce that defines every aspect of our increasingly broken system. Tyler Durden Sun, 01/02/2022 - 03:44.....»»

Category: personnelSource: nytJan 2nd, 2022

Chaos & The Triumph Of Survival

Chaos & The Triumph Of Survival Authored by Egon von Greyerz via GoldSwitzerland.com, One of the most horrifying works of art is Bruegel’s “The Triumph of Death” painted in 1562. The painting depicts the end of life on earth. I sincerely hope that this is not what the world will literally look like in the next decade or two but metaphorically this is not an unlikely depiction of the chaos that could hit us all. For a detailed description of the grim painting see here The Black Death plague of the 14th century, which killed up to half of the world’s population, clearly had a major influence on the painter. The moral message is that when chaos hits, the destruction will affect everyone, rich and poor, young and old. No one will escape by power or devotion. The financial, economic and moral devastation which is about to hit the world will for more than 99.5% of the people come out of the blue like a flash from a clear sky. For most people, coming events will thus be like the definition of the word CHAOS: “A state of total confusion and disorder”. CHAOS NUMBER 1: COVID Talking about disorder, just like the Black Death that inspired Bruegel’s painting, the world is now facing a global pandemic. But rather than the nearer 50% of global population that perished in the mid 1300s, today we are looking at total deaths from the current pandemic of 0.06% of the world population! And even that figure might be overestimated due to the classification rules applied. For that minuscule percentage the world has now been paralysed for the third year soon. There are lockdowns, quarantines, compulsory vaccines with unlined boosters, covid passports, closed schools, closed offices, major industries like leisure haemorrhaging, airlines going bankrupt, shortages of labour, components, products, closed borders, and for the few people who dare to and can travel across borders, more bureaucracy, paperwork and tests than in a police state. At the same time money printing and credit creation have gone exponential. The politicians obviously blame the scientists for all the rules that they force upon the people. It is interesting that with almost 200 countries in the world, each country has different rules how to deal with covid. If all these rules were based on science, you would have thought that the rules would have been the same for all 200 countries. Or could it be as many observers believe that the politicians use the pandemic to their own advantage. Or is it more likely that neither the scientists nor the politicians have got a clue how to deal with a disease that creates hardly any deaths in excess of normal deaths? In Sweden for example, there has been no lockdown, no quarantine, no closed shops, no mask requirement and industry has operated normally. Covid cases and deaths are at the lower range of the European average. Hmmm – so much for all these punishing rules in most countries. We were told that the vaccines would solve the problem but two shots haven’t so far as we were promised. So now everyone needs a booster every few months. With Big Pharma being both judge and jury plus benefiting from their own advice to the extent 100s of billions of dollars, how do we know the real truth? As an example, I have a 19 year old vaccinated granddaughter who had Covid in August. Now she has got Covid for the second time, fortunately in the form of a normal cold. The government/scientist solution is clearly more vaccines at ever more frequent intervals. And still no one has properly tested the long term effects the vaccines have on our bodies. There just isn’t time for that!!? The consequences of these constant changing of rules and shutdowns will clearly have a devastating effect on an already very fragile world economy and financial system. CHAOS NUMBER 2: GLOBAL DEBT So if scientists and governments haven’t got a clue how to deal with Covid, we can at least assume that central bankers and governments have got the economy and the financial system under control. How wrong can we be? Ever since the Federal Reserve was created in 1913, central and commercial bankers have successfully been running the financial system for their own benefit. But what really gave them carte blanche to print unlimited amounts of money was in August 1971, when Nixon closed the gold window. Since then, President Thomas Jefferson’s cynical view on bankers have really come to pass. How incredibly prescient the above statement is. We must remember that the Fed is a private bank that totally controls the US financial system. And as long as the US dollar remains the reserve currency of the world, the Fed also controls major parts of the global financial system. Jefferson will also be right regarding inflation and deflation. The current financial system is now entering a phase of inflation, most probably leading to hyperinflation as I have discussed many times in my articles.  But before this financial system ends, the totally worthless debt must be destroyed through a deflationary implosion not only of the debt, but also the bubble assets financed by printed money created out of thin air. So a deflationary depression is likely to be the end of yet another failed experiment of a fiat money system which was doomed the day it was created on Jekyll island 111 years ago. Jefferson of course told us this would happen already over 200 years ago. If history teaches us anything, it is that no one learns from history and everyone thinks it is different today because we are here. Plus ça change, plus c’est la même chose – The more it changes, the more it stays the same. So back to Bruegel. An implosion of the financial system and consequently the global economy will clearly have major repercussions for life on earth. We must remember that NEVER BEFORE IN HISTORY has there been a global debt crisis of this magnitude. Never before have debt bubbles at this level in Europe, in North and South America, Asia, Africa and Oceania synchronised at the levels we are now experiencing.  Just look at the magnitude of debt which has been created since 1971. It took a few thousand years to get to a global debt of $1.5 trillion in 1971. And 29 years later debt had grown 66x to $100 trillion and since then it is up another 3x to $300T. So when the shackles were thrown off by closing the gold window in 1971, there was a free for all between bankers and governments to create unlimited amounts of money. And by golly they have succeeded! Global debt is up 200x since Nixon took away the gold backing of the dollar and all other currencies. As regards the $3 quadrillion debt in 2030, I will comment later in this article. The very final stage of this monetary era started in 2006 with the Great Financial Crisis. Tens of trillions of dollars printed, lent and guaranteed managed to patch up Humpty Dumpty temporarily. But it was very clear to me and some other observers that the patch would not last long. So back in September 2019 the financial system came under severe pressure and central banks panicked in an attempt to save the bankrupt banking system with massive liquidity. Conveniently for the banks, they had an excuse for this money printing since Covid started a few weeks later. Normally governments need to start a war to have an excuse to print serious money. But a pandemic created in a lab works even better. The world is now in totally unchartered and very precarious waters. A ship in such danger does not require more than a minor storm to be hit by irreparable damage. Nobody can forecast what will happen since we have nothing to compare with. But what is very likely is that the creature (from Jekyll Island) that has been created by bankers and governments will reach a terrible fate – a fate that only future historians can tell the world about. CHAOS NUMBER 3: DERIVATIVES Global derivatives outstanding were reported by the BIS in Basel (Bank of International Settlement) at $1.4 quadrillion in the mid 2000s. That figure was conveniently reduced by the BIS to around $600 trillion at the end of the 2000s by netting positions. Banks like Deutsche or JP Morgan have reported gross outstanding derivatives of $40-50 trillion. But all banks net the gross amounts of derivatives down to insignificant levels, arguing that these low and totally misleading amounts are their real exposures. Well, the bankers can fool some of the people some of the time but in the end we know who the real fools will be! The problem with netting is that when counterparties fail, gross risk remains gross. Derivatives have been a most incredible money spinner for banks and other financial entities. There are today so many opaque ways of creating and hiding derivatives from the official reporting that no one has a clue of the real amount outstanding. But it could easily be in the quadrillions of dollars. Remember that virtually every financial instrument created today consists of derivatives, whether it is ETF stock or bond funds, interest rate swaps, forex swaps, mortgage loans etc, etc, the list is endless. Derivatives function very well in an manipulated orderly system when there is constant demand. But when the music stops and liquidity dries up, only then will we know the real amounts outstanding. One of my very good contacts is an excellent interpreter of the risks in the system. He has created these inverse pyramids with the current financial system at the bottom resting on a small amount of gold with massive debt on top. Above that we see the known derivatives reported by the BIS of $600 trillion and on top of that the opaque financial system which is likely to be in the quadrillions of dollars. No one knows the exact amount but it could easily be $2 quadrillion and probably more. CHAOS NUMBER 4: TIMEBOMB So if we look into the next 5-10 years and paint a picture of what could happen to the financial system, the risk the world is facing is horrifying. Global debt will certainly grow from $300t to at least $500t. That figure is really a gross underestimate. We add to that global unfunded liabilities (pensions, medicare etc) which are easily $500 trillion. Finally we add the derivatives of $2 quadrillion – also probably too conservative. When counterparties fail, central banks will need to print all that money to prevent banks from failing. So if my assumptions are right, global debt will have grown from $300 trillion to $3 quadrillion in the next 5-10 years. But I will probably be wrong on many accounts, like it won’t take as long as 10 years. We know from history that hyperinflation goes very fast. Also, most of the estimates of debt and derivatives are probably much too low. Still, let’s assume that the world is now facing a timebomb of $3 quadrillion. A very frightening prospect indeed. Warren Buffett knew he was right in 2002 when he called derivatives financial instruments of MASS DESTRUCTION. Sadly, we will soon see the evidence. Since all monetary systems in history have come to an end, we have to assume that the biggest global bubble ever also will. And since this morbid system touches all corners of our lives and has led to a decadent world where moral and ethical values have virtually disappeared, the world needs a cleansing in the form of a forest fire for new green shoots to start again. PREPARE AND ACHIEVE THE TRIUMPH OF SURVIVAL As I have pointed out in this article, nobody knows exactly how things will play out. But what we do know is that risk is probably greater than any time in history. So prudence tells us to get out of bubble assets like stocks, bonds and speculative property. Once the fall starts, these assets are likely to lose 90% or more in real terms which means against gold. The majority of stock investors are likely to buy all the dips as the market falls, not realising that they will ride the fall all the way down to the bottom. And this time the market will not recover for years or probably decades. Also it is important to get out of debt except for a normal mortgage on your residential property. Own physical gold and some silver (much more volatile). That will be your insurance against a rotten financial system. We have owned and recommended physical gold for 20 years. Not once have we worried about the price. History tells us that governments and central banks destroy the value of money without fail. But for the ones who do look at the gold price, I think that the correction in gold is finished. There is always a chance of a final move down of $50-100. But that would make no difference since the next big move up is soon coming to much higher levels. Finally, we will have difficult times in the world. So helping family and friends is very important. It is everyone’s responsibility to resist the Triumph of Death and achieve the Triumph of Survival – both financial and mental – for everybody we can help. And remember that many of the best things in life are free – friendship, music, books, nature and many hobbies. I wish all our readers Merry Christmas and Happy Holidays, as well as a Healthy and Harmonious 2022 in spite of the tumultuous era we are entering! Tyler Durden Sat, 12/25/2021 - 23:45.....»»

Category: blogSource: zerohedgeDec 26th, 2021

Crocs (CROX) Stock Dives on Agreement to Acquire HEYDUDE

Crocs (CROX) to acquire privately owned competitor HEYDUDE to expand its brand portfolio, and improve revenues and profits. The acquisition is expected to conclude in first-quarter 2022. The Crocs Inc. CROX stock nosedived 11.6% on Dec 23, after witnessing consistent growth in the past year only on its decision to acquire privately-owned HEYDUDE for $2.5 billion. The company signed a deal to buy competitor HEYDUDE, which sells lightweight, casual shoes and sandals for men, women and children. With the acquisition, Crocs looks to add value to its fast-growing footwear business.Per the deal, Crocs is likely to pay $2.05 billion in cash and $400 million in the form of Crocs’ shares issued to HEYDUDE’s founder and chief executive, Alessandro Rosano. The company expects to pay the cash consideration by entering a $2-billion Term Loan B Facility and borrowing $50 million under its existing Senior Revolving Credit Facility. The company expects to conclude the transaction in first-quarter 2022, following the satisfaction of customary closing conditions and regulatory approvals.On the acquisition completion, HEYDUDE will operate as a stand-alone division. HEYDUDE’s founder and chief executive will continue to overlook the innovative product development of the brand designated as the strategic advisor and creative director.Crocs believes HEYDUDE’s consumer-insight-driven casual, comfortable and lightweight products perfectly fit its existing portfolio. The acquisition is expected to be immediately accretive to Crocs’ revenues, operating margins and earnings in 2022. The company expects to deleverage quickly through the acquisition, driven by additional cash flow generation and margin growth. Crocs notes that HEYDUDE has generated robust revenues and profits in the past few years.Moreover, the acquisition is likely to diversify Crocs’ brand portfolio and add to its digital penetration, as HEYDUDE already has a strong online presence. HEYDUDE generates about 43% of sales from its online business compared with 36.8% of Crocs’ sales coming from online in third-quarter 2021. HEYDUDE is expected to generate revenues of $570 million in 2021.Per analysts, Crocs plans to expand the HEYDUDE into a $1-billion brand by 2024, following the completion of the acquisition. This is in sync with Crocs’ plans to generate $5 billion in sales by 2026, witnessing compounded annual growth rate (CAGR) of more than 17% in the next five years. The company anticipates at least 50% of total revenues from digital channels by the end of 2026. On its October earnings call, Crocs predicted revenue growth of 62-65% for 2021 from $1.39 billion reported in 2020.What’s More?Crocs shares rallied 97.1% in the past year, driven by the increasing popularity of casual footwear during the pandemic as consumers switched from formal wear to more comfortable footwear. The Zacks Rank #3 (Hold) company’s gain significantly outpaced the industry’s growth of 7.3% in the same period. Image Source: Zacks Investment Research Sturdy consumer demand and brand strength have been contributing to Crocs’ robust growth story. The company’s focus on product innovation and marketing, digital capabilities, and tapping of growth opportunities in Asia also bode well.Crocs’ timely actions helped mitigate the impacts of factory closures in Vietnam, its major manufacturing hub, and the global supply-chain bottlenecks in the third quarter. The company took immediate action to shift production, enhance factory throughput, leverage air freight, and strategically allocate units.It remains optimistic about navigating through the tough times. Notably, it is shifting production capacity to countries, namely China, Indonesia and Bosnia. Management notified that the company can ramp up factory production due to the limited inputs and simple configuration of products. Crocs is also planning to lower its dependency on West Coast ports by adding East Coast transshipment capabilities to reach key customers in the United States.In spite of the temporary disruptions, Crocs anticipates revenues growth of more than 20% in 2022, fueled by brand strength and consumer demand globally. Wholesale orders for the first half of 2022 have been exceptionally strong. To strengthen inventory positions across all its regions for the first half of 2022, Crocs plans to invest $75 million in air freight.Stocks to WatchWe have highlighted some better-ranked stocks from the same industry, namely Delta Apparel DLA, Guess GES and Under Armour UAA.Delta Apparel, a Zacks Rank #1 (Strong Buy) stock at present, has a trailing four-quarter earnings surprise of 95.5%, on average. The DLA stock has gained 37.6% in a year’s time.You can see the complete list of today’s Zacks #1 Rank stocks here.The Zacks Consensus Estimate for Delta Apparel’s current financial-year sales and earnings per share suggests growth of 11.6% and 9.4%, respectively, from the year-ago period’s reported numbers.Guess currently carries a Zacks Rank #2 (Buy). The company has a trailing four-quarter earnings surprise of 97%, on average. Shares of GES have risen 14.1% in the past year.The Zacks Consensus Estimate for Guess’ current financial-year sales suggests growth of 38.6% and the same for earnings per share indicates substantial growth from the year-ago period’s reported figures.Under Armour currently carries a Zacks Rank #2. The company has a trailing four-quarter earnings surprise of 244.5%, on average. Shares of UAA have gained 18.4% in the past year.The Zacks Consensus Estimate for Under Armour’s current financial-year sales and earnings per share suggests growth of 25% and 396.2%, respectively, from the year-ago period’s reported numbers. UAA has an expected long-term earnings growth rate of 25%. More Stock News: This Is Bigger than the iPhone! It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 77 billion devices by 2025, creating a $1.3 trillion market. Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 4 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2022.Click here for the 4 trades >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Guess, Inc. (GES): Free Stock Analysis Report Crocs, Inc. (CROX): Free Stock Analysis Report Delta Apparel, Inc. (DLA): Free Stock Analysis Report Under Armour, Inc. (UAA): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksDec 24th, 2021

Czech Central Bank Delivers Larger Hike – OANDA

OANDA – Wall Street set for a steady open, COVID treatments purchases boost sentiment, US Data, Czech Central Bank delivers larger hike, Oil steady, Gold flat, Bitcoin struggles to recapture $50K Q3 2021 hedge fund letters, conferences and more US stocks were headed for a flat open, following efforts from the US and UK to […] OANDA – Wall Street set for a steady open, COVID treatments purchases boost sentiment, US Data, Czech Central Bank delivers larger hike, Oil steady, Gold flat, Bitcoin struggles to recapture $50K if (typeof jQuery == 'undefined') { document.write(''); } .first{clear:both;margin-left:0}.one-third{width:31.034482758621%;float:left;margin-left:3.448275862069%}.two-thirds{width:65.51724137931%;float:left}form.ebook-styles .af-element input{border:0;border-radius:0;padding:8px}form.ebook-styles .af-element{width:220px;float:left}form.ebook-styles .af-element.buttonContainer{width:115px;float:left;margin-left: 6px;}form.ebook-styles .af-element.buttonContainer input.submit{width:115px;padding:10px 6px 8px;text-transform:uppercase;border-radius:0;border:0;font-size:15px}form.ebook-styles .af-body.af-standards input.submit{width:115px}form.ebook-styles .af-element.privacyPolicy{width:100%;font-size:12px;margin:10px auto 0}form.ebook-styles .af-element.privacyPolicy p{font-size:11px;margin-bottom:0}form.ebook-styles .af-body input.text{height:40px;padding:2px 10px !important} form.ebook-styles .error, form.ebook-styles #error { color:#d00; } form.ebook-styles .formfields h1, form.ebook-styles .formfields #mg-logo, form.ebook-styles .formfields #mg-footer { display: none; } form.ebook-styles .formfields { font-size: 12px; } form.ebook-styles .formfields p { margin: 4px 0; } Get The Full Henry Singleton Series in PDF Get the entire 4-part series on Henry Singleton in PDF. Save it to your desktop, read it on your tablet, or email to your colleagues (function($) {window.fnames = new Array(); window.ftypes = new Array();fnames[0]='EMAIL';ftypes[0]='email';}(jQuery));var $mcj = jQuery.noConflict(true); Q3 2021 hedge fund letters, conferences and more US stocks were headed for a flat open, following efforts from the US and UK to secure COVID treatments. Trading volumes will continue to fall heading into the holiday weekend, but risk appetite will struggle to deliver a significant stock market rally as the Omicron variant still poses a major risk for many healthcare systems. US Treasury yields inched higher with the yield curve most likely waiting until the New Year before steepening. COVID The next battle in the war against COVID has both the US and UK rushing to secure supplies in COVID treatments.  The Biden administration is expected to acquire 4 million courses of COVID-19 treatments by the end of January, while the UK secured 1.75 million courses of Merck & Co., Inc. (NYSE:MRK)'s COVID pill and 2.5 million courses of Pfizer Inc. (NYSE:PFE)’s COVID treatment.  Omicron has shown that unvaccinated individuals are still a significant portion of the population amongst heavily vaccinated countries and that hospital capacity is rapidly disappearing.  Germany is concerned over the current surge could eventually test their healthcare capacity. In the US, a return to lockdowns seen earlier in the pandemic are unlikely, but the US consumer will be weaker as many Americans won't have the same benefits if their jobs have tentative closures. Madrid is battling a record number of daily COVID infections and could face similar restrictions announced earlier in the week in Catalonia.  China’s Xi’an reported 52 Covid cases and that will likely lead to further restrictive measures. The annual Consumer Electronic Show (CES) in Las Vegas is still going to happen, but many key players are pulling out.  The heavily anticipated event that unveils the latest innovation in tech will not see Amazon.com, Inc. (NASDAQ:AMZN), Meta Platforms Inc (NASDAQ:FB), Twitter Inc (NYSE:TWTR), and Pinterest Inc (NYSE:PINS). Earlier in the week, the World Economic Forum postponed the Davos meeting. The world wants to return to normal, but a return to convention centers and annual showcases will have to wait until after the Christmas surge is over in late January. US Data The final reading of third quarter GDP saw upside revisions across the board, with the headline revised higher from 2.1% to 2.3%.  Personal consumption improved from the preliminary 1.7% reading to 2.0%, while pricing readings edged higher.  This data was old but did confirm the narrative of growth remaining strong and pricing pressures still are approaching their peak. The Chicago Fed National Activity index declined more than expected as production and employment indicators decelerated. Czech Central Bank The Czech Central Bank (CNB) is aggressively tackling inflation after surprising FX traders with another larger-than-expected rate hike.  The benchmark rate rose 100 basis points to 3.75%, 25 basis points more than the consensus estimate.  The Czech koruna rallied against the dollar and little changed against the euro. Oil Crude prices are little changed as traders refuse to put on any major positions as too much uncertainty persists with the short-term crude demand outlook and while trading volumes continue to fall leading up to the holidays.  A force majeure from a key Nigerian export terminal and a weaker dollar have provided some support for oil prices. The omicron variant could still lead to more restrictive measures across Europe and Asia, but prices won’t break since OPEC+ can easily adjust their production levels.  Oil prices seem like they could go much higher in the New Year once the demand outlook is beyond the current omicron wave. Gold Gold prices edged higher as Wall Street remains fixated over the growing list of short-term risks.  Omicron remains the focus for most traders and that should support gold prices to remain close to the $1800 level.  The dollar should start to trade relatively flat into year end as quantitative tightening by the Fed has mostly been priced in. Gold dipped after a better-than-expected final reading of third quarter GDP, that showed slightly more inflation and economic growth. Cryptos Bitcoin and Ethereum have both entered holiday mode and continue to consolidate around key technical levels.  The headlines have not been inspiring to suggest a breakout could be imminent.  Ethereum’s micro futures contracts on the CME are off to a lackluster start.  Despite Ether being all the buzz for the next wave of crypto investors, the uptick with micro ether futures is disappointing as only 115,000 contracts traded in the two weeks to December 17th. Bitcoin continues to face a wall at the $50,000 level and until that level is breached, speculators may remain on the sidelines. Article By Edward Moya, OANDA Updated on Dec 22, 2021, 1:54 pm (function() { var sc = document.createElement("script"); sc.type = "text/javascript"; sc.async = true;sc.src = "//mixi.media/data/js/95481.js"; sc.charset = "utf-8";var s = document.getElementsByTagName("script")[0]; s.parentNode.insertBefore(sc, s); }()); window._F20 = window._F20 || []; _F20.push({container: 'F20WidgetContainer', placement: '', count: 3}); _F20.push({finish: true});.....»»

Category: blogSource: valuewalkDec 23rd, 2021

These 5 Loser Stocks of 2021 Could be Big Winners in 2022

The momentum in the equity markets is expected to stay on firm-footing in 2022. DQ, PINS, SRPT, YY and CD have a chance to outperform next year. Wall Street has had an impressive run this year with all major market indexes racking up healthy returns year to date. Barring the stock market turbulence in September, the Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite performed remarkably well before the brutal Black Friday selloff as investors braced for the Omicron variant of coronavirus triggering a fresh round of travel restrictions and lockdowns. Worries over Omicron sent ripples through the stock indexes. Notably, the Dow ended 2.5% lower on Nov 26, the worst Black Friday selloff since 1931.The indexes suffered from extreme volatility since the news of the extremely contagious Omicron variant surfaced in late November. A hawkish shift in the Federal Reserve policy also spooked investors.Nevertheless, U.S. stock markets have made an impressive comeback from the Omicron-led bloodbath. The Dow Jones, which touched an intraday all-time high of 36,565.73 on Nov 8, has gained around 14.1% year to date (as of Dec 20). The S&P 500 has also shined this year. The benchmark scaled a record high of 4,712.02 at closing on Dec 10 and is up roughly 21.6% this year. Meanwhile, the tech-heavy Nasdaq Composite Index is also up 16.2% for the year. The index touched an all-time high of 16,057.44 at closing on Nov 19. Notwithstanding the concerns surrounding rapidly rising Omicron cases, the momentum in the stock markets will likely continue through the remainder of this year and into 2022.Amid this scenario, stocks that failed to stand out in 2021 have a chance of outperforming in 2022. Stocks like Daqo New Energy Corp. DQ, Pinterest, Inc. PINS, Sarepta Therapeutics, Inc. SRPT, JOYY Inc. YY and Chindata Group Holdings Limited CD fit the bill.Markets Look Poised for Continued MomentumStock markets fired on all cylinders in 2021 despite supply chain snarls, soaring inflation and the Fed’s hawkish tilt. Global supply-chain disruptions and labor shortage contributed to a surge in inflation, which is at its 39-year high. Per the Department of Labor, the consumer price index shot up 6.8% year over year in November. This marked the fastest rise since June 1982. The imbalance between supply and demand led to the spike in prices. As widely expected, the Federal Reserve announced it will ramp up the tapering of asset purchases amid mounting inflation and a strengthening labor market. The central bank said that it will double the pace of tapering to $30 billion per month starting mid-January, which would put it on track to end the bond-buying program by March 2022, earlier than June as initially planned. Early last month, the Fed had agreed to reduce its $120 billion in bond purchases each month by $15 billion. The Fed has also pledged to keep benchmark interest rates near zero, for now, until maximum employment is achieved. The central bank's projections also signalled three interest-rate hikes next year to rein in persistently high inflation, marking a significant shift from just one rate hike it had projected in September.The expectations of a faster pace of tapering were already baked into stock prices while Fed's announcement removed a major overhang from the markets. As a result, the three major U.S. indexes ticked higher, following the Fed's announcement.  Meanwhile, December is usually a strong month for stocks and market participants are betting heavily on the Santa Claus rally. However, worries over fast-spreading Omicron may dampen investors’ sentiments. Despite the concerns, indexes are likely to finish the year on a strong note. The massive infrastructure development project is also expected to be a significant catalyst for the U.S. stock markets in 2022. On Nov 15, President Joe Biden signed the more than $1 trillion bipartisan infrastructure bill into law, following months of debate in Congress. The bill includes about $550 billion in new spending on roads, bridges, tunnels and the electric grid, as well as airports, broadband and other infrastructure improvements. The infrastructure spending will provide a boost to the U.S. economy and create more jobs.Omicron is also unlikely to derail the global economy. While the variant is spreading like wildfire and has been detected in 89 countries so far (per the World Health Organization), it is believed by scientists to be lesser virulent than the Delta variant and is unlikely to cause severe illness among vaccinated people.The U.S. economy also remains in high gear despite the supply-chain and labor crisis and accelerating inflation, aided by the progress on vaccinations. Consumer spending remains strong thanks to the vaccination drive and the massive fiscal stimulus. U.S. unemployment rate tumbled last month to a 21-month low of 4.2%. The U.S. manufacturing sector has also kept the momentum going despite the ongoing supply-chain bottlenecks, aided by strong demand for goods and an upturn in the overall economy. With strong consumer spending, rising wages and the growth in the labor market, the U.S. economy looks well set for 2022 and so do the stock markets. The Fed expects the U.S. GDP to grow 5.5% in 2021 and 4% in 2022.5 Beaten-Down Stocks Likely to Make a Comeback in 2022A strong showing for stock markets has set the stage for continued upside in 2022. With a favorable job scenario and high consumer and business spending underscoring a fundamentally sound U.S. economy, the momentum in the equity markets is expected to stay on firm-footing in 2022. As such, stocks that failed to shine in 2021 have a chance to rebound next year.However, finding stocks that are likely to outperform in 2022 can be a daunting task.Here, Zacks’ proprietary methodology comes in handy. Our research shows that stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer good investment opportunities. You can see the complete list of today’s Zacks #1 Rank stocks here.We have picked five stocks with a market capitalization of more than $1 billion that have lost more than 20% so far in 2021, but have the potential to turn around next year based on their strong fundamentals.Our PicksDaqo New Energy: China-based Daqo New Energy is a leading producer of high-purity polysilicon. Shares of this Zacks Rank #1 stock have lost 33.8% year to date.Daqo New Energy has expected earnings growth of 17.3% for 2022. The Zacks Consensus Estimate for DQ’s 2022 earnings has been revised 22.4% upward over the last 60 days.Daqo New Energy is expected to gain from higher production and sales volumes for polysilicon. Higher polysilicon average selling prices driven by strong downstream demand are also expected to boost its sales and margins. DQ’s efforts to improve its cost structure are also likely to lend support to its margins. Its energy efficiency efforts and enhanced manufacturing efficiencies are contributing to lower costs.Pinterest: California-based Pinterest, carrying a Zacks Rank #2, provides a platform to show its users (called Pinners) visual recommendations (called Pins) based on their personal taste and interests. PINS has seen its shares drop 45.8% year to date.Pinterest has expected earnings growth of 25.8% for 2022. PINS has also surpassed the Zacks Consensus Estimate in each of the trailing four quarters, the average being 50.1%.Pinterest is expected to benefit from user base expansion boosted by coronavirus-led social distancing norms. Availability of features like Today and Shop tab for Pinners are the key catalysts. Also, enhanced product offerings, new conversion insights, wider Pinner and advertiser base, simplified ad systems through Verified Merchant Program and Pinterest Partners Program for small businesses and improved advertisers’ ability to measure the effectiveness of their ad spend are expected to aid advertising revenues in the near term. The partnership with Shopify is helping smaller merchants to get on Pinterest.Sarepta Therapeutics: Massachusetts-based Sarepta Therapeutics, carrying a Zacks Rank #2, is a commercial-stage biopharmaceutical company that focuses on the discovery and development of RNA-based therapeutics targeting rare and infectious diseases. We note that the stock has lost 47.8% so far this year.Sarepta Therapeutics has expected earnings growth of 27.6% for 2022. The consensus estimate for SRPT’s 2022 earnings has been revised 24.5% upward over the last 60 days.Sarepta Therapeutics’ first Duchenne muscular dystrophy (DMD) drug, Exondys 51, posted impressive growth in the past few quarters with the trend expected to continue. The company’s two other new DMD drugs, Vyondys 53 and Amondys 45, are also seeing strong demand trends. These three drugs have the potential to treat one-third of DMD patients. Development of its promising next-generation DMD candidate is progressing well. SRPT’s focus on developing gene therapies with diversified targets, including DMD, also looks promising.JOYY: Based in Singapore, JOYY is a leading global video-based social media platform. Shares of this Zacks Rank #2 stock have lost 41.4% year to date.JOYY has expected earnings growth of 560.7% for 2022. The Zacks Consensus Estimate for YY’s 2022 earnings has been revised 16.1% upward over the last 60 days.JOYY is benefiting from Bigo Live’s robust performance. It has been riding on strong demand for user-hosted live-streaming sessions as well as user-created short-form videos. YY’s expanding partner base also allowed it to attract high-quality live streamers and content creators to its platform. It remains committed to expand the global reach of its live streaming product.Chindata Group: Beijing-based Chindata Group, carrying a Zacks Rank #2, is a leading carrier-neutral hyperscale data center solution provider. CD shares have tumbled around 73.7% so far this year.Chindata Group has expected earnings growth of 216.7% for 2022. The Zacks Consensus Estimate for CD’s 2022 earnings has been revised 8.3% upward over the last 60 days.Chindata Group is gaining from its actions on client diversification. CD is also making strong progress in overseas markets as it is advancing its hyperscale greenfield development model in the Asia Pacific. Continued build-up in R&D of core technology is supporting the export of its integrated pre-fabricated datacenter modules for overseas projects. The company recently launched a new green field project in Johor State, Malaysia, which is expected to be a built-to-suit hyperscale data center with a capacity of more than 80MW to be delivered to its anchor client in several phases, starting next year.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Sarepta Therapeutics, Inc. (SRPT): Free Stock Analysis Report JOYY Inc. Sponsored ADR (YY): Free Stock Analysis Report DAQO New Energy Corp. (DQ): Free Stock Analysis Report Pinterest, Inc. (PINS): Free Stock Analysis Report Chindata Group Holdings Limited Sponsored ADR (CD): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksDec 21st, 2021

EV Roundup: TM"s Big Electrification Bet & NIO Day Event Take Center Stage

While Toyota (TM) takes its e-mobility game a notch higher with a planned investment of 8 trillion yen by 2030, NIO generates buzz with the debut of the ET5 sedan at its annual day event. Last week, Japan-based auto biggie Toyota TM announced an extensive electrification drive in a bid to secure a solid footing in the red-hot EV space. China’s key EV player NIO Inc. NIO grabbed attention with its much-awaited annual NIO Day Event held in Suzhou in China on Dec 18, 2021, to shape the future of transportation.Meanwhile, in an attempt to cash in on the increasing investors’ appetite for EV makers, U.S. iconic motorcycle maker Harley-Davidson HOG announced plans to make its e-bike unit LiveWire public via a SPAC merger. EV startup Rivian Automotive RIVN released third-quarter 2021 results, which marked the company’s first quarterly release since it went public last month. U.S. auto giant General Motors GM also made it to the top stories of the week as its EV600 light commercial vehicle and GMC Hummer e-pickup made way to customers for first deliveries.Recap of the Week’s Important StoriesToyota announced plans to invest 4 trillion yen ($35 billion) for a line-up of 30 battery electric vehicles (BEV) by 2030. This will mark an increase in the company’s BEV count from the 15 models it had earlier planned to launch by 2025. TM also aims to expand global sales of battery electric vehicles by 3.5 million units a year by 2030. The auto giant has earmarked another 4 trillion yen for the development of other electrified vehicles, including hybrids and fuel-cell vehicles, by the end of the decade. Toyota will also take up its investment in battery development to 2 trillion yen ($18 billion) from the previously proposed 1.5 trillion yen.The big EV push is in sync with Toyota’s efforts to tap the growing market of zero-emission vehicles. By 2030, Toyota anticipates hybrids to comprise more than half of total vehicle sales in the United States, with a forecast of 15% of sales from zero-emission EV and hydrogen-powered cars. The company also aims to achieve 100% sales from BEV for its luxury brand Lexus in Europe, North America, and China by 2030 and globally by 2035.NIO unveiled a new mid-sized electric sedan, the ET5, at the NIO Day event. It also provided updates on the delivery timeline and unveiled new features of the ET7 as well as global expansion plans. ET5 will be NIO’s fifth product offering. Based on the Technology Platform 2.0 as the company’s flagship ET7 model, the ET5 sedan will be manufactured at the NEO Park facility along with the ET7. The ET5 will start retailing at RMB 328,000 ($51,000) for a 75-kWh battery pack (before the application of subsidies). The delivery of ET5 is expected to commence in September 2022.NIO also provided a starting date of Jan 20, 2022 for order confirmations of its upcoming electric sedan offering ET7. Deliveries of this upscale sedan are set to begin on Mar 28, 2022. ET7's drag coefficient has been improved to 0.208, thereby improving the EV's range to 550 km with the standard 75-kWh battery pack. The company also notified about plans to tap into Netherlands, Sweden and Denmark in 2022. It also plans to expand to more than 25 countries and regions globally by 2025.Harley-Davidson’s LiveWire unit is set to merge with AEA-Bridges Impact Corp. (“ABIC”) in a deal valuing the combined entity at $1.77 billion. With that, LiveWire will become the first publicly-traded e-bike company in the United States. The deal will be funded by $400 million in cash held by ABIC and a $100 million investment each by HOG and Taiwan-based scooter manufacturer KYMCO. Subject to satisfactory closing conditions and the approval of ABIC shareholders, the deal is scheduled for closure in first-half 2022. Upon closure, LiveWire will trade on the NYSE under the symbol “LVW”.The combined entity is expected to have an enterprise value of $1.77 billion and a post-money equity value of $2.31 billion at closing. Harley-Davidson will own a 74% stake in the new company. ABIC’s shareholders will own around 17%, and ABIC’s founders and KYMCO will hold roughly 4% each. By making its e-motorcycle unit public via a SPAC deal, LiveWire will reap net proceeds of about $545 million, which would help boost the go-to-market model and investments in new product offerings as well as bolster manufacturing and distribution capabilities.HOG currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.Rivian incurred third-quarter 2021 net loss of $1.23 billion, which fell within its previously announced expected range of $1.21-$1.28 billion. Loss per share and revenues came in at $12.21 and $1 million, respectively. Rivian expects bleak production in the coming months, with an expected shortage of “a few hundred vehicles” from its 2021 target of 1,200 vehicles. Impediments to the supply chain, coupled with challenges in hoisting production of complex batteries required to power the vehicles, are expected to hurt production.In a separate development, Rivian is looking to expand manufacturing operations with a second U.S. plant in Atlanta, GA. It is planning for a vehicle assembly and battery plant located in a carbon-conscious campus in Morgan, Atlanta and Walton Counties. With an investment of $5 billion, the Georgia plant will have an annual production capacity of 400,000 vehicles. Construction is expected to commence in the summer of 2022, with production scheduled for 2024. It is also augmenting capacity at its plant in Normal, IL, with plans to increase the workforce by second-quarter 2022.General Motors hit a major milestone toward an all-electric journey with the commencement of customer deliveries of the GMC Hummer e-pickup. This will be the first EV based on the firm’s proprietary Ultium architecture, a platform that will support GM’s upcoming green vehicles. General Motors plans to release 30 new electric vehicles globally by 2025, with Ultium being at the heart of the company’s new era of EV growth.General Motors also confirmed the first deliveries of all-electric EV600 vehicles to FedEx. The build completion of EV600 was attained by BrightDrop in a record-setting development timeline of just 20 months, being the fastest vehicle to market in General Motors’ history. This accomplishment is even more praiseworthy as it comes amid global supply-chain headwinds, which the entire auto sector is currently battling. The achievement was made possible owing to GM’s unique operations set-up, highly flexible Ultium battery platform and an agile approach to manufacturing development. Price PerformanceImage Source: Zacks Investment ResearchWhat’s Next in the Space?Stay tuned for announcements of upcoming EV models and any important updates from the red-hot industry.Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Toyota Motor Corporation (TM): Free Stock Analysis Report HarleyDavidson, Inc. (HOG): Free Stock Analysis Report General Motors Company (GM): Free Stock Analysis Report NIO Inc. (NIO): Free Stock Analysis Report Rivian Automotive, Inc. (RIVN): Get Free Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksDec 21st, 2021

5 Low-Beta High-Yielding Stocks to Buy in a Capricious Market

We have narrowed our search to five large-cap low-beta stocks whose dividend yield is higher than the current yield on the benchmark 10-Year U.S. These are: TRV, BG, DUK, CHRW and CINF. Wall Street has been suffering since Black Friday as the resurgence of coronavirus with its new variant – Omicron – has shaken market participants’ confidence across the globe. Moreover, a higher interest rate in 2022 as indicated by several major central banks, has also resulted in severe market volatility.Despite the fact that December has generally remained favorable on Wall Street, investors are uncertain about the direction of stock market movement in the final eight trading days of this year. At this stage, it will be prudent to invest in low-beta high dividend-paying stocks with a favorable Zacks Rank. Here  are five of them — The Travelers Companies Inc. TRV, Cincinnati Financial Corp. CINF, Duke Energy Corp. DUK, C.H. Robinson Worldwide Inc. CHRW and Bunge Ltd. BG.Omicron Spreads GloballyWith the coronavirus pandemic showing no signs of letting up, Wall Street continues to grapple with severe volatility, which has been plaguing it over the last three weeks. The resurgence of coronavirus either in the form of Delta or Omicron has been creating intermittent hurdles which otherwise could have been a smooth recovery of the global economy.The available data of Omicron has so far indicated that this variant may be less severe than Delta but  highly transmissible. Most of Europe is already affected by Omicron and big nations have opted for partial or full lockdown during the holiday season. Asia is also reporting increasing Omicron cases. In the United States, 25 states have already reported Omicron cases.On Dec 18, the World Health Organization (WHO) reported that 89 countries have witnessed the Omicron variant of coronavirus and the number of cases is doubling in 1.5 to 3 days in areas with community transmission. Globally, various sports and entertainment programs have been postponed or cancelled due to the spread of Omicron.Higher Interest Rate Looms LargeMarket participants are wondering whether 2022 will be marked as the year of higher interest rate globally. In the United States, on Dec 15, Fed Chairman Jerome Powell said in his post FOMC statement that the central bank will raise the tapering of the monthly bond-buy program from $15 billion per month to $30 billion per month effective January 2022. At this rate, the quantitative easing program will end in March 2022.Although, Powell refrained of commenting anything on when the Fed will raise the benchmark lending rate and at what magnitude, Fed’s dot-plot indicated that all 18 members are expecting at least one rate hike in 2022. Out of 18 Fed members, 12 are expecting three rate hikes in 2022 followed by a two more rate hikes in 2023 and 2024.On Dec 17, the Bank of England raised the benchmark interest rate to 0.25% from 0.1%. This marked the first rate hike by the British central bank in three years. On Nov 10, the European Central Bank (ECB) Governing Council member Robert Holzmann said that the ECB could stop bond-buying program by September 2022.The primary concerns of these central bankers are soaring inflation. The pandemic-led global disruption of the supply-chain system inflated input costs while growing demand is pulling up the general price level.Why Low-Beta Stocks?Wall Street is suffering from day-to-day fluctuations. In the week ended Dec 10, the Dow, the S&P 500 and the Nasdaq Composite – rallied 4%, 3.8% and 3.5%, respectively. However, for the week ended Dec 17, these three indexes tumbled 1.7%, 1.9% and 3%, respectively.Nevertheless, the fundamentals of the U.S. economy remained solid. In its latest projection on Dec 16, the Atlanta Fed reported that the U.S. economy would grow by 7.2% in fourth-quarter 2021. U.S. GDP grew 6.4%, 6.7% and 2.1%, in the first, second and third quarters of this year, respectively. Moreover, in fourth-quarter 2021, total earnings of the S&P 500 Index are expected to up 19.3% year over year on 11.4% higher revenues.At this stage, investment in low-beta stocks with a high dividend yield and a favorable Zacks Rank may be the best option. If market’s northbound journey continues, then the favorable Zacks Rank of these stocks will capture the upside potential. However, if markets take a downturn, then low-beta stocks will minimize portfolio losses and dividend payment will act as a regular income stream.Our Top PicksWe have narrowed our search to five large-cap (market capital > $10 billion) low-beta stocks whose dividend yield is higher than the current yield on the benchmark 10-Year U.S. Treasury Note. These companies have strong growth potential for the rest of 2021 and have seen positive earnings estimate revisions in the last 60 days. Each of our picks carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.The chart below shows the price performance of our five picks in the past three months.Image Source: Zacks Investment ResearchBunge Ltd. operates as an agribusiness and food company worldwide. BG has an integrated global agribusiness spanning the farm-to-consumer food chain. Bunge operates in five segments: Agribusiness, Edible Oil Products, Milling Products, Sugar and Bioenergy, and Fertilizer. Bunge processes, produces, moves, distributes and markets food in five continents.Zacks Rank #1 Bunge has an expected earnings growth rate of 44.9% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 36.1% over the last 60 days. BG has a beta of 0.64 and a current dividend yield of 2.38%.C.H. Robinson is benefiting from favorable freight market conditions, such as increased volumes and higher pricing, amid tight capacity. In the first nine months of 2021, C.H. Robinson returned around $663 million to its shareholders through dividends ($209 million) and share buybacks ($454 million).Zacks Rank #1 CHRW has an expected earnings growth rate of 69.4% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.5% over the last 30 days. C.H. Robinson has a beta of 0.72 and a current dividend yield of 2.17%.The Travelers Companies boasts a strong market presence in auto, homeowners’ insurance, commercial U.S. property-casualty insurance with solid inorganic growth. A high retention rate, increase in new business and positive renewal premium change bode well. TRV’s commercial businesses should perform well owing to market stability.The Travelers Companies remains optimistic about the personal line of business, given growth at the profitable agency auto and homeowners business. TRV expects net investment income from non-fixed income portfolio to be $420 million to $430 million quarterly in 2022. Sufficient capital boosts shareholder value.Zacks Rank #2 The Travelers Companies has an expected earnings growth rate of 19.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.5% over the last 30 days. The Travelers Companies has a beta of 0.76 and a current dividend yield of 2.23%.Cincinnati Financial continues to grow premiums through a disciplined expansion of Cincinnati Re while the division makes a nice contribution to its overall earnings. Price increases and a higher level of insured exposures are the other positives.Cincinnati Financial is focused on earning new business by appointing new agencies and believes that an agent-focused business model will drive long-term premium growth. Cincinnati Financial boasts solid capital position based on which it has returned value to its shareholders. A favorable reserve release should drive growth for CNF. Consistent cash flow and sufficient cash balances will continue to boost liquidity.Zacks Rank #2 Cincinnati Financial has an expected earnings growth rate of 69.5% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the past 30 days. CINF has a beta of 0.68 a current dividend yield of 2.23%.Duke Energy operates as an energy company in the United States. DUK operates through three segments: Electric Utilities and Infrastructure, Gas Utilities and Infrastructure, and Commercial Renewables.Duke Energy is a premier utility service provider that invests heavily in infrastructure and expansion projects. During the 2021-2025 period, it projects to spend $59 billion. DUK has lowered its carbon emissions by 40% since 2005 and aims to electrify all its light-duty vehicles by 2030.Duke Energy has an expected earnings growth rate of 2% for the current year. The Zacks Consensus Estimate for current-year earnings has improved 0.2% over the past 60 days. DUK has a beta of 0.32 a current dividend yield of 3.82%. 5 Stocks Set to Double Each was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2021. Previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%. Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Duke Energy Corporation (DUK): Free Stock Analysis Report The Travelers Companies, Inc. (TRV): Free Stock Analysis Report C.H. Robinson Worldwide, Inc. (CHRW): Free Stock Analysis Report Cincinnati Financial Corporation (CINF): Free Stock Analysis Report Bunge Limited (BG): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksDec 20th, 2021