Advertisements


La Nina To Blast Europe With Cold Snap Amid Energy Crisis  

La Nina To Blast Europe With Cold Snap Amid Energy Crisis   Energy prices in Europe are expected to increase as new weather models forecast a plunge in temperatures to begin by the late weekend.  A weather phenomenon known as La Nina will bring below-normal temperatures for continental Europe and the Nordic region by Sunday.  The region is susceptible to cold snaps, with natural gas stockpiles well below average.  On Wednesday, gas prices at the Dutch TTF hub, the benchmark for European gas, are making another attempt at the €100 per MWh mark.  Extra gas supplies by Russia have been mute so far. The Nord Stream 2 pipeline remains in limbo after German energy regulators last week suspended the certification process.  The next round of cold air is going to test energy supplies across Europe. Gas prices are likely to move higher, pushing up power prices. Already, power prices in Finland have jumped five times higher than a year ago.  North West Europe's average temperatures for the next week are expected to slide well below the 30-year mean through the mid-point of the month.  The same with Nordic areas.  North West Europe's heating degree days, a measure of heating demand, will be significantly over the 30-year average. The same is with Nordic areas. On top of the cold, weather observer Electroverse forecasts snow will blanket the continent over the next two weeks. The development of the La Nina weather pattern has meant unseasonably cold weather for Europe, boosting energy prices but declining prices in the US as weather trends stay warmer. The chart below shows US energy prices negatively diverging the UK and EU gas prices.  Soaring energy inflation and rising food prices are the makings of a 'winter of discontent' across Europe. EU politicians beware.  Tyler Durden Thu, 12/02/2021 - 04:15.....»»

Category: personnelSource: nytDec 2nd, 2021

LNG Tankers Anchored Off Boston To Capitalize On Impending Energy Crisis

LNG Tankers Anchored Off Boston To Capitalize On Impending Energy Crisis Europe's energy crisis is coming to New England as the state is one cold snap away from soaring natural gas prices. New England has refused to build the necessary pipeline infrastructure to expand gas flows from the Appalachian Basin. It has even shuttered a nuclear power plant.  New England opposed natural gas pipelines and shut down nuclear. If you live in New England, I suggest you pick up a wool blanket or two. In the war between platitudes and physics, physics is undefeated. — Doomberg (@DoombergT) December 24, 2021 Believe it or not, New England's electricity grid is extremely fragile. Instead of building pipelines to neighboring states, New England imports liquefied natural gas (LNG) overseas.  We noted Thursday, New England is behind in procuring LNG from the international market. This means that the state is now a victim of that bidding war and is facing the prospect of dramatically less LNG supply this winter and extremely high prices.  But hold up, why doesn't New England just receive LNG via tankers from terminals situated on the Gulf Coast of the U.S.? Well, for domestic cargo, they must be carried on US-flagged ships, and there are currently no U.S.-flagged LNG tankers. So that means New England must compete in international markets, meaning February delivery on New England's Algonquin Hub is around $18 per British thermal unit -- or about five times higher than the U.S. benchmark.  Weather forecast via Bloomberg data shows average temperatures in Boston are expected to slide after New Year's Eve, reaching 15 degrees Fahrenheit by Jan. 8. That's a sharp difference from today's average temperature of around 45 degrees Fahrenheit. Expecting impending doom, commodity traders have anchored two LNG tankers off Boston's coast, waiting for temperatures to dive so they can take advantage of massive arbitrage opportunities.  Spanish-flagged Cadiz Knutsen and Excelerate Energy's Belgian-flagged Exemplar arrived in Massachusetts Bay earlier this week with cargoes from Atlantic LNG in the Caribbean nation of Trinidad & Tobago. Their arrival is timed just ahead of a weekend cold blast that's expected to plunge temperatures below freezing in one of the most undersupplied and expensive U.S. gas markets. -Bloomberg  Financial publication Doomberg penned this week, "New England Is An Energy Crisis Waiting To Happen."  Tyler Durden Sun, 01/02/2022 - 22:35.....»»

Category: personnelSource: nytJan 2nd, 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

Cold Snap Sweeps Across China As Fears Of Energy Crisis Reemerge

Cold Snap Sweeps Across China As Fears Of Energy Crisis Reemerge A massive cold blast is sweeping across most parts of China, unleashing snow, mixed precipitation, and dangerous wind. China's energy crisis eased last month but could soon be ignited again by wicked winter weather.  According to the website weather.com.cn, which the China Meteorological Administration runs, more than 100 weather alerts are issued for the country as record-breaking cold temperatures spread further and further south.  The latest forecast shows a cold air mass has descended on the county.  By Sunday morning, a cold wave stretched from the west of Hebei province to the west of Henan province, causing temperature drops of between 4 C and 8 C in Shanxi province and Hebei, the center said. The Xinjiang Uygur autonomous region and parts of Gansu province also experienced temperature slumps of more than 10 C. On Monday, the cold air is expected to rapidly descend southward and affect most of the central and eastern parts of China, the center forecast. By Tuesday, the Bohai, Yellow, and East China seas will face strong winds of up to about 100 kilometers per hour, it said. The winds are expected to carry floating sand and dust to northern areas, including Beijing. Snow was forecast to hit the northeast from Sunday to Wednesday, with blizzards expected in Heilongjiang and Jilin provinces, the center said. New snow accumulation over the period is expected to reach up to 40 centimeters in Heilongjiang, adding to snow from last week. On Sunday, the Heilongjiang provincial government announced a Level II warning for weather disaster emergency response, the second-highest in a four-tier warning system. Fang Chong, the chief forecaster of the Central Meteorological Observatory, said a cold air mass is pouring into China from Siberia, Russia "This bout of cold wave will sweep across China faster than the previous one in early November because airflow is stronger under the current weather conditions," Chong said. "The weather system is more complicated than before, with blizzards, rain, sand, and dust finding their paths in North and South China." The world's No 2 economy suffers from a severe energy crunch as coal and natural gas are in short supply. The government spent the last month ramping up the production of energy supplies in anticipation of cold weather. It also intervened in energy markets to suppress prices for power plants.  Unseasonably cold weather could spark the next round of coal shortages that would have severe knock-on effects throughout supply chains.  Even though China's energy crisis has been eased, the government must continue stockpiling energy supplies to avoid electricity shortages amid rising demand.  A freezing winter could spell disaster for China's economy if it doesn't have enough energy supplies.  Tyler Durden Mon, 11/22/2021 - 18:00.....»»

Category: blogSource: zerohedgeNov 22nd, 2021

La Nina Sparks "Cold Wave" Across China As CCP Tells Households To Stockpile Food 

La Nina Sparks "Cold Wave" Across China As CCP Tells Households To Stockpile Food  China Meteorological Administration (CMA) warned Thursday of a cold blast to sweep across the country from northwestern to southeastern China due to a La Nina weather event.  Xue Jianjun, deputy director of CMA, said: "The cold air will bring a plunge in temperature nationwide compared with mid-October. The cold wave came from west Siberia which was then enhanced by cold air from the North Pole."  "Heavy snow or rain will take over the Northeast and North China and the Inner Mongolia autonomous region, and farmers there should store corns outdoors ahead of the precipitation," Jianjun said. CMA warned last month that a La Nina weather pattern would bring colder weather to the country. The timing of the cooler air is problematic amid an energy crisis that has resulted in nationwide power rationings.  Beijing understood ahead of time La Nina would bring colder weather. It ordered the country's top state-owned energy companies to secure coal supplies for this winter at all costs in September.  State-run news outlet Xinhua News Agency said, "the possibility of phased extreme and strong cooling events is high."  Bloomberg's mean temperature forecast for China shows a deep dive in temps this week. Temps will remain well under a 30-year average through mid-December.  For some context, a 2008 La Nina event unleashed a devastating blow of snow and freezing weather that caused deaths and damage to crops, affecting 20 provinces.  So it now makes sense why the Ministry of Commerce told households Monday to stock up on food in case of emergencies, mainly because it expects food shortages.  China could be in for a world of trouble as colder weather will continue to strain energy and food supplies, opening up the chance for a winter of discontent among its citizens.  On the bright side, La Nina could be good news for Beijing to host the Winter Olympics in February.   Tyler Durden Thu, 11/04/2021 - 19:45.....»»

Category: blogSource: zerohedgeNov 4th, 2021

From Bad To Worse: Another French Nuclear Reactor Cuts Output Due To Strike

From Bad To Worse: Another French Nuclear Reactor Cuts Output Due To Strike France's energy crisis worsened overnight when another nuclear power plant had to reduce electricity output. Power prices jumped as the government requested one of the largest utility companies to restart more nuclear reactors amid cold weather.  Following last week's shuttering of two nuclear power plants by Électricité de France S.A., commonly known as EDF, a French electric utility company primarily owned by the state, after safety inspections found cracks in at least one nuclear reactor, another one was closed Monday due to a worker strike.  EDF said an unplanned outage at the Bugey Nuclear Power Plant in eastern France was due to a strike. Output at reactor four was cut from 800 megawatts to 180 megawatts.  France's grid remains under pressure due to the recent nuclear power plant loss. The day-ahead power price rose to the highest level since 2009 on Sunday and was priced even higher on Monday. European natural gas climbed above 143 euros.  At least 25% of the EDF's 56 atomic reactors are offline for maintenance. For some context, this is highly unusual for this time of year, considering the Northern Hemisphere winter is about to begin. A cold spell has sent much of the country into a deep freeze as power demand soars.  Like everywhere else in Europe, the power crisis in France has worsened Monday as power prices from France to Germany are at elevated levels.  German power prices hit a record on Monday.  EUROPEAN ENERGY CRISIS: Day-ahead electricity prices across much of Europe set fresh and frightening record highs. Germany jumps to an incredible €431 per MWh. At current prices, energy-intensive industries will rather shut down and re-sell their power on the spot market pic.twitter.com/GZFaxLEJei — Javier Blas (@JavierBlas) December 20, 2021 France's Ecology Minister Barbara Pompili has called on EDF to restart some nuclear power plants to avoid blackouts.  "I asked that EDF employees work to reopen them earlier in order face any possible shortages," Pompili said. Temperatures are forecasted to hover around zero degrees Celsius in several European countries this week as the power crisis across Europe worsens.  Tyler Durden Tue, 12/21/2021 - 05:45.....»»

Category: blogSource: zerohedgeDec 21st, 2021

Blain: Is It Just Me, Or Does Omicron Sound Like A Common Cold?

Blain: Is It Just Me, Or Does Omicron Sound Like A Common Cold? Authored by Bill Blan via MorningPorridge.com, Rats and sinking ships have history – you’d think the rats would have learnt by now?” Lockdowns and travel restrictions highlight the economic damage Omicron has done to the whole European Economy. Corporate resilience will be severely tested – whatever governments decide. The likelihood of stagflation has risen, but markets are likely to benefit from buy-the-dip mentality as investors weigh-up renewed government support if/when it turns nasty! Apologies for lack of Morning Porridge last few days – I was “travelling”. What joy. There was a time I loved flying – the glamour of it all. A chance to pick up Christmas presents in duty-free, sophisticated airline lounges and luxury in the air as one jet-setted around the globe. I appreciate I have become a grumpy old man… but travel has changed, and not for the better. Pandemic flying is a scramble to complete PCR test documentation, passenger locator forms, but it’s also become an excuse for lowest common denominator service in tired uncomfortable cabins. Business class is the new economy. BA don’t even let Business Class passengers in the lounge anymore – apparently, it too small for A380 flights… Back in Blighty I was confronted with modern reality – going straight from plane to test centre. 30 minutes queuing outside to get a PCR test. In the “luxury testing centre” – in reality a swiftly repurposed bankrupt shopfront, three young girls wearing branded medical uniforms were trying to cope with a crowd of angry passengers who hadn’t got their test results back in time to fly that morning. Eventually I got in for the test I’d pre-booked. The poor girl was nearly in tears – she just did the tests and didn’t know anything about how the test process worked. As she was wearing the full gear, I asked about her medical qualifications – a 10 min training course. The uniform is all for show. Someone is milking it big on Covid Testing. (Clue: who knows who in parliament…) Back to the markets… The next few days will see 2021 markets wind down ahead of Christmas and the New Year, but it’s looking an absolutely critical week for the European economy in terms of Covid and Energy. A cold snap is approaching and there are signs the current gas price could head stratospheric – exactly as predicted in this porridge from September: The looming energy crisis: People are Going to Die this Winter. Holland has joined the list of lockdown nations. Germany has followed France in locking out British travellers – as if that might stop the spread of the new Omicron variant. The UK cabinet is riven between a new lockdown versus the economic mayhem it may cause. I was intrigued to read about calls for the UK government to update the list of symptoms people should look out for on Omicron: runny nose, headache, fatigue, sneezing and sore throat. Is it just me, or does that sound that a common cold? Meanwhile, the cascading collapse of the Boris premiership continued with the resignation of Lord Frost, Frosty the No-Man, apparently furious at dither and retreat on Europe. He will be replaced by Tank-girl Liz Truss who I frankly know little about – except she was a remainer, but is now a reborn whatever will appeal to the voters. She is, I suppose, another name to put in the successor hat. (Personally, Javid will get my vote!) Whatever happens at Christmas – and whether the Blain Clan will gather for our first family event since Mum’s funeral, (my brothers and all our immediate families) rather depends on decisions likely to be taken this week. It’s not looking good – but stuff the rules; the Blain’s shall feast! Troubles come not singly, but in mighty battalions. In addition to Energy, the bleak reality of how authorities around the globe have reacted to the Omicron variant has already ensured a stagflationary open for 2022. Restaurants, pubs, ski-slopes and high streets across Europe are empty. Multiple businesses stand on the brink of disaster – and this time there are no covid loans or furlough schemes to see them through. The damage has been done. Corporate resilience to renewed lockdown is low. They already face supply chain inflation, wage pressures, and now a collapse in demand. Omicron is shaking already tottering economies. Populations are increasingly divided. Out walking at the weekend, it’s clear many mask-wearing folk will happily jump into the traffic rather than get too close to other pedestrians. On the other hand, protestors and anti-vaxxers are proving fertile ground for the far-right. The economic multiplier effects of de-facto lockdown are going to be huge. Last week, my daughter felt fluey. She did a negative test, but called her work to say she was going to stay home with a cough and temperature – they insisted she came in. She spent two days spluttering while dealing with the Christmas orders before the inevitable positive Covid test. The company then put her on immediate “statutory sick pay” – a fraction of her salary – arguing she will be off for days. It’s pretty appalling corporate behaviour – but what’s their choice? Missing Christmas orders means the company goes bust. They don’t have the financial reserves to pay salaries of non-workers. But, losing 1/3 of her monthly wage the week before Christmas for the crime of catching Covid means my daughter will struggle to pay her rent. She’s certainly not saving for a house, her future and a pension is a complete unknown. It’s looking highly unlikely her job, or the company, will survive long into next year. A hard-nosed economist will say that’s a positive for the economy – a whole cohort of young, highly educated workers without any wage-pricing power available to fill whatever jobs emerge on the next economic reopening. A realist might say it’s a whole generation seeing the confidence in any kind of future shattered. That has enormous political, social and business consequences. Meanwhile, the market is looking interesting.  When is the best time to buy? When everyone else is selling… With a sell-off underway this morning in Asia, maybe its time to get your buying boots ready? We’ve got a very split market: the big-tech large stocks making the gains, while small caps have sold off (for all the reasons discussed above.) What are central banks going to do if the weakness deepens? If we see a slew of business closures and suddenly highly indebted young consumers find themselves jobless? How big a risk is taper and higher rates in such circumstances? The West’s flirtation with easy money looked to be coming to an end. The Bank of England acted early with last week’s 15 bp rate hike. Not a lot in the grand scheme of themes, but a curious call as the Government dithers about how to handle Omicron. The Fed will hike early next year. Bond buying programmes are closed. It looks increasingly unlikely the Biden administration will get Build Back Better spending over the line in a meaningful way. The ECB remains accommodative – trying to balance soaring inflation vs lethargic southern economies by dint of doing nothing. Meanwhile, China is going into full easing mode in the interests of “stability” as it tries to weather the unfolding property and energy shocks. There are a number of reasons to wonder about the upside market potential even as economic weakness increases. A number of market reports note the amount of cash that’s sitting on the sidelines. That seems kind of crazy when US and European inflation has risen to 30 year highs. Corporate cashpiles are earmarked for buy-backs – rather than building new factories and plants. (Corporate boards have approved record buy-back volumes in 2022 – the fact they are doing so is another indicator of how weak the real outlook is.) Basically, all that cash is waiting to buy the market. It feels like there is at least one more uptick to come. Tyler Durden Mon, 12/20/2021 - 08:17.....»»

Category: blogSource: zerohedgeDec 20th, 2021

Not Only Gold Lacks Energy – We All Do Now

First a pandemic, then inflation, and now an energy crisis. Should you buy gold when preparing for the winter? Q3 2021 hedge fund letters, conferences and more Global Energy Crisis Brace yourselves, winter is coming! And this time I’m deadly serious, as there is a global energy crisis. Not only does gold lack energy to […] First a pandemic, then inflation, and now an energy crisis. Should you buy gold when preparing for the winter? 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 Our Icahn eBook! Get our entire 10-part series on Carl Icahn and other famous investors in PDF for free! Save it to your desktop, read it on your tablet or print it! Sign up below. NO SPAM EVER (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 Global Energy Crisis Brace yourselves, winter is coming! And this time I’m deadly serious, as there is a global energy crisis. Not only does gold lack energy to fuel its rally right now, but people from all over the world lack it to fuel their operations and to heat their houses. Apparently, the coronavirus pandemic wasn’t enough, so we also have to deal with inflation, supply bottlenecks, and the energy crisis. I guess there is nothing else to do now but wait for the frogs to start falling from the sky. But let’s not give the gods ideas and focus on the energy crisis today. What is it about? A picture is worth a thousand words, so please take a look at the chart below, which presents the Dutch Title Transfer Facility, Europe’s leading benchmark for natural gas prices. As you can see, future prices for European natural gas have skyrocketed to a record level in October 2021, surging several times from their low in May 2020. The persistence and global dimension of these price spikes are unprecedented, as natural gas prices have also surged in Asia and America (although to a lesser degree). What caused such a spike? Well, as a trained economist, I cannot resist answering that it’s a matter of demand and supply! Yeah, thank you, Captain Obvious, but could you be a little more specific? Sure, so on the demand side, we have to mention a fast recovery from the epidemic and cold fall that increased the use of energy. Oh, and don’t forget about the ultra-low interest rates and the increase in the money supply that boosted spending on practically everything. The increased demand for energy is hardly surprising in such conditions. On the supply side, there were unpredictable breakdowns of gas infrastructure in Russia and Norway that decreased deliveries. The former country reduced its exports due to political reasons. What’s more, the reduction in the supply of CO2 emission rights and unfavorable weather didn’t help. The windless conditions in Europe generated little wind energy, while drought in Brazil reduced hydropower energy. More fundamentally, the decline in energy prices in response to the economic crisis of 2020 prompted many producers to stop drilling and later supply simply didn’t catch up with surging demand. You can also add here the political decisions to move away from nuclear and carbon energy in some countries. Last but not least, the butterfly’s wings flapped in China. Coal production in that country plunged this year amid a campaign against corruption and floods that deluged some mines. Middle Kingdom therefore began to buy significant amounts of natural gas, sharply increasing its prices. China’s ban on importing coal from Australia, of course, didn’t help here. Great, but what does the energy crisis imply for the global economy and the gold market? First, shortages of energy could be a drag on global GDP. The slowdown in economic growth should be positive for gold, as it would bring us closer to stagflation. Second, the energy crisis could cause discontent among citizens and strengthen the populists. People are already fed up with pandemics and high inflation, and now they have to pay much higher energy bills. Just imagine how they will cheer when blackouts occur. Third, the surge in natural gas prices could support high producer and consumer inflation. We are already observing some ripple effects in the coal and oil markets that could also translate into elevated CPI numbers. Another inflationary factor is power shortages in China, as they will add to the supply disruptions we are currently facing. All this implies more persistent high inflation, which should provide support for the yellow metal as an inflation hedge, although it also increases the odds of a more hawkish Fed, which is rather negative for gold. It’s true that a replay of the 1970s-like energy crisis is remote, as today’s economies are much less energy-consuming and dependent on fossil fuels. However, the worst is possibly yet to come. After all, winter hasn’t arrived yet – and it could be another harsh one, especially given that La Niña is expected to be present for the second year in a row. Meanwhile, gas stocks are unusually low. You can connect the dots. Implications For Gold So far, gold has rather ignored the unfolding energy crisis, but we’ve already seen that market narratives can change quickly. It’s therefore possible that prolonged supply disruption and high inflation could change investors’ attitude toward the yellow metal at some point. The weak gold’s reaction stems from the limited energy crisis in the US and from the focus on the Fed’s tightening cycle. But investors’ attention can shift, especially when the Fed starts hiking federal funds rate. Brace yourselves! Thank you for reading today’s free analysis. We hope you enjoyed it. If so, we would like to invite you to sign up for our free gold newsletter. Once you sign up, you’ll also get 7-day no-obligation trial of all our premium gold services, including our Gold & Silver Trading Alerts. Sign up today! Arkadiusz Sieron, PhD Sunshine Profits: Effective Investment through Diligence & Care. Updated on Dec 17, 2021, 10:13 am (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 17th, 2021

Flood Traps 21 People In Illegal Chinese Coal Mine As Production Hits Record

Flood Traps 21 People In Illegal Chinese Coal Mine As Production Hits Record Like many other countries worldwide, China faces an energy crisis as coal shortages and high energy costs have increased power prices, forcing local governments to implement rolling blackouts for energy-intensive industries. Beijing ramped up coal production to record levels as illegal coal mining is on the rise.  AP reports one illegal coal mine in China, located in Xiaoyi city in Shanxi province, one of the leading coal-producing regions in the country, experienced a flood on Wednesday that trapped 21 miners underground.  Water was being pumped out of the mine, and the water level was falling, the Xiaoyi government said in an update on social media. Police have detained six people and others were being sought in connection with the incident, the report said. - AP  China has cracked down on illegal mining but not hard enough as there appear to be ones still operating. A shortage of coal this year ahead of the Northern Hemisphere winter (Dec. 21) sent coal prices through the roof. A squeeze on coal has driven up prices, prompting a surge in legal and illegal mining.  In November, China's efforts to secure energy supplies resulted in record coal production. National Bureau of Statistics data reported production levels at 370.84 million tons of coal last month, compared to the previous record of 357.09 tons in October and was up 4.6% from the same period last year. Despite Beijing's climate change pledge, the world's biggest coal miner and consumer produced 3.67 billion tons for the first eleven months of the year, up 4.2% over last.  China has been blasted with cold snap after cold snap as a La Nina weather pattern forced Beijing to secure energy supplies at all costs. State-owned firms panic stockpiled coal and natural gas, used for heating and power generation.  The latest average temperature forecast in China continues to slide. Temperatures are expected to average between 45-35 Fernhight for the back half of December.  Heating degree days continue to rise. This means households and businesses will increase electricity use to heat their homes, putting pressure on power plants to increase output, thus more demand for coal.  As long as coal prices remain elevated, illegal coal mines will continue to operate.  Tyler Durden Thu, 12/16/2021 - 18:40.....»»

Category: blogSource: zerohedgeDec 16th, 2021

"Santa Rally Is Finally Here": Futures Hit All Time High Day After Powell Goes Full Jean-Claude Trichet

"Santa Rally Is Finally Here": Futures Hit All Time High Day After Powell Goes Full Jean-Claude Trichet One day before what everyone knew would be a hawkish pivot by the Fed, the mood was dour with tech names tumbling and futures hanging one for dear life. One day after, Jerome Powell confirmed he would go full Jean-Claude Trichet as the Fed would not only turbo-taper into a sharply slowing economy, ending its QE program by March but then proceed with hiking rates as many as 3 times in 2022 (more than the 2 hike consensus), with the BOE shocking markets moments ago with a surprise rate hike and even the ECB trimming its turbo QE, and futures are.... at all time highs. That's right - eminis are higher by 140 points in 24 hours because the Fed was more hawkish than consensus expected.  At 8:00 a.m. ET, Dow e-minis were up 215 points, or 0.61%, S&P 500 e-minis were up 27.25 points, or 0.57%, and Nasdaq 100 e-minis were up 100 points, or 0.61%. Treasury yields jumped alongside European bonds after the BOE became the first major central bank to raise rates since the pandemic, while the dollar fell and the pound jumped. The Euro also hit session highs after the ECB seemed to turn ever so slightly more hawkish as its monthly QE is set to shrink in the coming year. "The market likes facts it can digest. With the uncertainty now gone, it finds relief,” said Frederik Hildner, a portfolio manager at Salm-Salm & Partner. Gradual rising rates “provides more firepower for the next downturn, as it displays the ability normalize monetary policy.” On Wednesday, Jerome Powell said the U.S. economy no longer needed increasing amounts of policy support as annual inflation has been running at more than double the central bank's target in recent months, while the economy nears full employment. Recent readings on surging producer and consumer prices as well as the fast-spreading Omicron variant of the coronavirus have fueled anxiety as the benchmark S&P 500 inches closer to a record high. "Is the Santa Rally finally here? Markets certainly seem to have a spring in their step... the prospect of three interest rate hikes in 2022 would suggest the central bank has a clear plan to not let inflation get out of control," Russ Mould, investment director at AJ Bell wrote in a client note. "Equally, it isn't being too aggressive to trip up the economy. This sense of balance is exactly what investors want, and an upbeat tone from the Fed certainly seems to have rubbed off on markets" Bell said, clearly goalseeking his narrative to the market's response as just 24 hours later he would be saying just the opposite when futures were tanking of hawkish Fed fears. Big tech stocks and banks led gains in premarket trading. Shares in Tesla, Microsoft, Meta and Amazon.com rose between 0.7% and 2.4%, with the lift pushing Apple shares nearer to an historic market value of $3 trillion. Bank stocks including JPMorgan, Morgan Stanley, Bank of America, Wells Fargo and Citigroup all gained between 0.7% and 0.8%. Here are some of the biggest U.S. movers today: Apple (APPL) and other big U.S. tech stocks rise after the Federal Reserve said that it would speed up its taper, joining in with a broader relief rally across risk assets. Apple shares are up 0.6%, with the stock drawing nearer to an historic market capitalization of $3 trillion. Also Thursday, Goldman Sachs said lead times for Apple’s iPhone have declined in the latest week. Assertio (ASRT US) shares rise 4% after the company announced the $44 million acquisition of the Otrexup device from Antares Pharma. Blue Bird (BLBD US) dropped 6% after the school bus-maker provided a weaker-than-expected sales outlook. The company also offered $75m shares at $16/share in a private placement. Danimer Scientific (DNMR) falls 10% after announcing that it plans to offer $175 million of convertible senior notes. Delta Air Lines (DAL) is up 2% after saying it expects to report a profit for the fourth quarter, citing a strong demand for travel over the winter holiday period and a decline in jet fuel prices. Other airline stocks are also higher. DocuSign (DOCU) falls 2% as Morgan Stanley issued a downgrade, saying third-quarter results changed the firm’s view regarding the durability of growth through tough post-pandemic comparables. Freyr Battery (FREY) gains 14% after executing its inaugural offtake agreement for at least 31 GWh of low-carbon battery cells. IronNet (IRNT US) slumps 25% after the cybersecurity company’s results fell short of expectations, prompting a Street-low target from Jefferies. Lennar Corp. (LEN US) declined 6% after it reported a forecast for purchase contracts that was weaker than expected. Plug Power (PLUG) gains 5% after signing an agreement with Korean electric-vehicle manufacturer Edison Motors to develop an electric city bus powered by hydrogen fuel cells. Syndax Pharmaceuticals (SNDX) falls 8% after pricing 3.2 million shares at $17.50 each. Tesla (TSLA) is up 2%, rising with other electric vehicle stocks amid a broader gain in technology stocks and U.S. futures on hopes that the Federal Reserve’s policy tightening will fight high inflation without hampering economic growth. Wayfair (W) falls 2% after BofA downgraded the stock to underperform, citing weak near-term data and difficult comparisons through the first quarter of 2022 for the online furniture retailer. European equities rally with Euro Stoxx 50 up as much as 2.1% before drifting off best levels. The U.K.’s exporter-heavy FTSE 100 Index pared some gains after the BOE decision, while European dipped modestly after the European Central Bank’s meeting.  Miners, tech and autos are the best performers, utilities and media names lag. Equities have whipsawed in recent weeks as investors attempted to price in the prospect of rate hikes, while assessing risks from the spread of the omicron variant. The market’s early response to the Fed signals some relief arising from policy clarity, and optimism that the rebound from pandemic lows can weather the pivot away from ultra-loose monetary settings. “The market is breathing a sigh of relief that the FOMC meeting suggested that it is taking inflation risks in the United States more seriously,” Ann-Katrin Petersen, an investment strategist at Allianz Global Investors, said in an interview with Bloomberg TV. “The question really will be whether the Fed will dare to do even more in order to taper the inflation risk.” Asian stocks rose, halting a four-day slide, as confidence in Federal Reserve policy allowed investors to take on riskier assets. The MSCI Asia Pacific Index climbed as much as 0.8%, buoyed by energy and technology shares. Japan was Asia’s top performer, aided by a weaker yen. Hong Kong and China stocks eked out gains amid ongoing concern over U.S. sanctions. Australian equities declined for a third day. Asia’s benchmark advanced for the first time this week on hopes the Fed will effectively combat surging prices without choking off economic growth. The U.S. central bank said it will double the pace of its asset tapering program to $30 billion a month and projected three interest-rate increases in 2022. In the run-up to the Fed’s decision, Asia’s equity gauge slumped almost 2% over the past four days, keeping it below the 50-day moving average.    The short-term boost to stock market sentiment is from Fed Chair Jerome Powell’s comments about wage inflation not being the main issue for now, and expectations that there’ll be full employment next year, said Ilya Spivak, head of Greater Asia at DailyFX. However, there’s a “meaningful risk” that the Fed’s latest policy stance will trigger liquidation as Asia stock portfolios are de-risked, Spivak said. Japan’s stocks rose for a second day after the yen weakened and U.S. stocks rallied amid speculation the Federal Reserve will combat surging prices without choking off economic growth. The Topix index climbed 1.5% to close at 2,013.08 in Tokyo, while the Nikkei 225 Stock Average advanced 2.1% to 29,066.32. Keyence Corp. contributed the most to the Topix’s gain, increasing 2.5%. Out of 2,181 shares in the index, 1,674 rose and 421 fell, while 86 were unchanged. “It wouldn’t be strange to see the discount on Japanese equities narrowing following the FOMC meeting results, with market interest centered around electronics, machinery, automakers and marine transportation stocks,” said Takashi Ito, an equity market strategist at Nomura Securities. Electronics firms and automakers helped lift the Topix as the yen headed for a four-day slump against the dollar, with the currency falling 0.1% to 114.19 Australia's S&P/ASX 200 index fell 0.4% to close at 7,295.70, extending its losing streak to a third day.  CSL was the worst performer after the benchmark’s second-biggest company by weighting completed a placement to fund its Vifor acquisition. Mesoblast was the top performer after saying it plans to conduct an additional U.S. Phase 3 trial of rexlemestrocel-L in patients with chronic low back pain.  Investors also digested November jobs data. Australian employment soared last month, smashing expectations and pushing the jobless rate lower as virus restrictions eased on the east coast. In New Zealand, the S&P/NZX 50 index fell 0.7% to 12,777.54 In rates, cash USTs bull steepened, bolstered by a large curve steepener that blocked in early London. Bunds are soft at the back end, peripherals slightly wider ahead of today’s ECB meeting. Gilts bear steepen slightly, white pack sonia futures are lower by 2-3.5 ticks. In FX, the dollar slipped for a second day and oil rose; cable snapped to best levels of the week after the BOE unexpectedly hiked rates.  The Bloomberg Dollar Spot Index fell for a second day as the greenback weakened against all its Group-of-10 peers apart from the yen; Tresury yields fell, led by the belly of the curve. Commodity currencies were the best G-10 performers, led by the krone, which reversed an earlier loss after Norway’s central bank raised its interest rate for the second time this year and flagged another increase in March as officials acted to cool the rebounding economy despite renewed coronavirus concerns. The Australian and New Zealand dollars reversed earlier losses amid upbeat stock markets; the Aussie earlier weakened as RBA Governor Lowe hinted at the prospect of no rate hikes next year. The yen fell as the Federal Reserve’s decision reaffirmed yield differentials ahead of the Bank of Japan’s outcome on Friday. Bonds rose after a solid auction. Elsewhere in FX, NOK outperforms in G-10 after Norges Bank rate action, other commodity currencies are similarly well bid. In commodities, Crude futures hold a narrow range around best levels of the session. WTI is up 1.1% near $71.70, Brent near $74.70. Spot gold grinds higher, adding ~$9 near $1,786/oz. LME copper outperforms in a well-bid base metals complex To the day ahead now, and the main highlights will be the aforementioned policy decisions from the ECB and the BoE. On the data side, we’ll also get the flash PMIs for December from around the world, the Euro Area trade balance for October, and in the US there’s November data on industrial production, housing starts and building permits, as well as the weekly initial jobless claims. Finally, EU leaders will be meeting for a summit in Brussels. Market Snapshot S&P 500 futures up 0.5% to 4,734.25 STOXX Europe 600 up 1.2% to 476.39 MXAP up 0.8% to 193.11 MXAPJ up 0.5% to 623.76 Nikkei up 2.1% to 29,066.32 Topix up 1.5% to 2,013.08 Hang Seng Index up 0.2% to 23,475.50 Shanghai Composite up 0.8% to 3,675.02 Sensex up 0.1% to 57,851.57 Australia S&P/ASX 200 down 0.4% to 7,295.66 Kospi up 0.6% to 3,006.41 Brent Futures up 1.0% to $74.59/bbl Gold spot up 0.5% to $1,786.03 U.S. Dollar Index down 0.36% to 96.16 German 10Y yield little changed at -0.36% Euro up 0.2% to $1.1316 Top Overnight News from Bloomberg The greenback is set for its biggest annual gain in six years and its rally appears to be far from over, market participants say. The prime mover: a hawkish Federal Reserve that’s drawn a roadmap of interest-rate increases over the next three years, while other central banks look much more reticent to withdraw stimulus The ECB is poised to unveil a gradual withdrawal from extraordinary pandemic stimulus in the face of soaring inflation whose path is further clouded by the omicron coronavirus variant The “phenomenal pace” at which the new Covid-19 omicron strain is spreading across the U.K. will trigger a surge in hospital admissions over the holiday period, according to Boris Johnson’s top medical adviser The Swiss National Bank kept both the deposit and the policy rate at -0.75%, as widely predicted by economists. With the global economic recovery on shaky footing due to the omicron variant, President Thomas Jordan and fellow policy makers also reiterated their pledge to supplement subzero rates with currency interventions as needed France will impose tougher rules on people traveling from the U.K., including a ban on non-essential trips and a requirement to self-isolate, as it tries to slow the spread of the omicron variant IHS Markit said its index tracking output across the U.K. economy fell to 53.2 this month from 57.6 in November, reflecting weaker-than-expected growth in service industries including hotels, restaurants and travel-related businesses. Business-to-business services stalled European power prices soared to records after Electricite de France SA said that two nuclear reactors will stop unexpectedly and two will have prolonged halts -- just as the continent heads for a cold snap with already depleted gas inventories Hungary’s central bank increased the effective base interest rate for the fifth time in as many weeks to tackle the fastest inflation since 2007 and shore up the battered forint A more detailed look at global markets courtesy of Newsquawk Asian equity markets traded mixed as the region digested the FOMC meeting. The ASX 200 (-0.4%) was negative with heavy losses in the healthcare sector and as COVID infections remained rampant. There were also notable comments from RBA Governor Lowe that the board discussed tapering bond purchases in February and ending it in May or could even end purchases in February if economic progress is better than expected, although it is also open to reviewing bond buying again in May if the data disappoints. The Nikkei 225 (+2.1%) outperformed and reclaimed the 29k level after the Lower House recently passed the record extra budget stimulus and with the latest trade data showing double-digit percentage surges in Imports and Exports, despite the latter slightly missing on expectations. The Hang Seng (+0.2%) and Shanghai Comp. (+0.8%) were varied with Hong Kong pressured by losses in the big tech names amid ongoing frictions between the world’s two largest economies and as US lawmakers proposed a bill to allow the US oversight of China audits, although the mainland was kept afloat amid further speculation of a potential LPR cut this month, as well as reports that China will boost financial support for small businesses and offer more longer-term loans to manufacturers. Finally, 10yr JGBs were indecisive despite the constructive mood in Tokyo and with price action stuck near the 152.00 focal point, while demand was also sidelined amid mixed results at the 20yr JGB auction and as the BoJ kickstarts its two-day meeting. Top Asian News Indonesia Reports First Omicron Case in Jakarta Facility Asia Stocks Snap Four-Day Drop as Traders Take on Risk After Fed Shimao Group Shares Set for Best Day in Month Money Manager Vanishes With $313 Million From China Builder Equities in Europe have taken their cue from the post-FOMC rally seen across Wall Street (Euro Stoxx 50 +1.6%; Stoxx 600 +1.1%) following somewhat mixed APAC trade. As a reminder, markets saw relief with one of the major risk events out of the way, and with Chair Powell refraining from throwing hawkish curveballs. That being said, the forecast does see three rate hikes next year, whilst the Fed Board next year will also be more hawkish – at least within the rotating voters - with George, Mester and Bullard poised to vote from 2022. Nonetheless, US equity future continues grinding higher with all contracts in the green and the RTY (+1.3%) outperforming vs the NQ (+0.7%), ES (+0.6%), and YM (+0.5%). Bourses in Europe also experience broad-based gains with no real outliers, although the upside momentum somewhat waned amid some softer-than-expected PMI metrics ahead of ECB. Sectors in Europe paint a clear pro-cyclical bias. Tech outperforms following a similar sectorial performance seen on Wall Street. Basic Resources and Oil & Gas follow a close second, with Autos and Travel & Leisure also among the biggest gainers. The downside sees Personal & Household Goods, Telecoms and Food & Beverages. Healthcare meanwhile fares better than its defensive peers as Novartis (+4%) is bolstered after commencing a new USD 15bln buyback, highlighting confidence in growth and pipeline. On the flip side, EDF (-12%) shares have slipped after it narrowed FY EBITDA forecasts and highlighted some faults with some nuclear reactors amid corrosion. Top European News Britain’s Covid Resurgence Cuts Growth to Slowest Since Lockdown SNB Says Franc Is Highly Valued as Omicron Clouds Outlook Norway Delivers Rate Hike That Omicron Had Threatened to Derail Erdogan Approves Third Capital Boost for State Banks Since 2019 In FX, not much bang for the Buck fits the bill accurately as it is panning out in the FOMC aftermath even though market expectations were matched and arguably exceeded in terms of dot plots showing three hikes in 2022 vs two anticipated by most and only one previously, while the unwinding of asset purchases will occur in double quick time to end in March next year instead of June. However, there appears to be enough in the overall statement, SEP and Fed chair Powell’s post-meeting press conference to offset the initial knee-jerk spike in the Dollar and index that lifted the latter very close to its current y-t-d peak at 96.914 vs 96.938 from November 24. Indeed, the terminal rate was maintained at 2.5%, no decision has been taken about whether to take a break after tapering before tightening, and the recovery in labour market participation has been disappointing to the point that it will now take longer to return to higher levels. In response, or on further reflection, the DXY has recoiled to 96.141 and through the 21 DMA that comes in at 96.238 today. NZD/AUD/CAD/GBP/EUR/CHF - All on the rebound vs their US counterpart, with the Kiwi back on the 0.6800 handle and also encouraged by NZ GDP contracting less than feared in Q3, while the Aussie is hovering around 0.7200 in wake of a stellar jobs report only partly tempered by dovish remarks from RBA Governor Lowe who is still not in the 2022 hike camp and non-committal about ending QE next February or extending until May. Elsewhere, the Loonie has clawed back a chunk of its losses amidst recovering crude prices to regain 1.2800+ status ahead of Canadian wholesale trade that is buried between a raft of US data and survey releases, Sterling is flirting with 1.3300 in advance of the BoE that is likely to hold fire irrespective of significantly hotter than forecast UK inflation, the Euro is pivoting 1.1300 pre-ECB that is eyed for details of life after the PEPP and the Franc is somewhat mixed post-SNB that maintained rates and a highly valued assessment of the Chf with readiness to intervene as required. Note, Usd/Chf is meandering from 0.9256 to 0.9221 vs Eur/Chf more elevated within a 1.0455-30 band. JPY - The Yen is underperforming on the eve of the BoJ and looking technically weak to compound its yield and rate disadvantage after Usd/Jpy closed above a key chart level on Wednesday (at 114.03). As such, Fib resistance is now exposed at 114.38 vs the circa 114.25 high, so far, while decent option expiry interest may be influential one way or the other into the NY cut given around 1.3 bn at the 114.25 strike, 1.7 bn at 114.30 and 1.2 bn or so at 114.50. In commodities, WTI and Brent front-month futures are taking advantage of the risk appetite coupled with the softer Buck. WTI Jan trades on either side of USD 71.50/bbl (vs low USD 71.39/bbl) while Brent Feb sees itself around USD 74.50/bbl (vs low USD 74.28/bbl). Complex-specific news has again been on the quiet end, with prices working off the macro impulses for the time being, and with volumes also light heading into Christmas trade. Elsewhere spot gold and silver ebb higher – in tandem with the Dollar, with the former eyeing a group of DMAs to the upside including the 100 (1,788/oz), 21 (1,789/oz) 200 (1,794/oz) and 50 (1,796/oz). Turning to base metals, LME copper has been catapulted higher amid the risk and weaker Dollar, with prices re-testing USD 9,500/t to the upside. Meanwhile, a Chinese government consultancy has said that China's steel consumption will dip 0.7% on an annual basis in 2022 amid policies for the real estate market and uncertainties linked to COVID-19 curb demand. US event calendar 8:30am: Dec. Initial Jobless Claims, est. 200,000, prior 184,000; Continuing Claims, est. 1.94m, prior 1.99m 8:30am: Nov. Housing Starts MoM, est. 3.1%, prior -0.7% 8:30am: Nov. Housing Starts, est. 1.57m, prior 1.52m 8:30am: Nov. Building Permits MoM, est. 0.5%, prior 4.0%, revised 4.2% 8:30am: Nov. Building Permits, est. 1.66m, prior 1.65m, revised 1.65m 8:30am: Dec. Philadelphia Fed Business Outl, est. 29.6, prior 39.0 9:15am: Nov. Manufacturing (SIC) Production, est. 0.7%, prior 1.2%; Industrial Production MoM, est. 0.6%, prior 1.6% 9:45am: Dec. Markit US Manufacturing PMI, est. 58.5, prior 58.3 9:45am: Dec. Markit US Services PMI, est. 58.8, prior 58.0 DB's Jim Reid concludes the overnight wrap Yesterday’s biggest story was obviously the Fed. In line with our US economists call (their full recap here), the FOMC doubled the pace of taper to $30bn a month, which would bring an end to QE in mid-March. The new dot plot showed three rate hikes in 2022, up from the Committee being split over one hike in September. Farther out, the median dot had 3 additional hikes in 2023 and 2 hikes in 2024, bringing fed funds just below their estimate of the longer-term rate. Notably, all 18 Committee members have liftoff occurring next year, and 10 have 3 hikes penciled in, suggesting consensus behind the recent hawkish turn was strong. Short-end market pricing increased in line and now has around 2.9 hikes priced for 2022. The first hike is fully priced for the June meeting, but notably, meetings as early as March are priced as live, more on that in a bit. In the statement, the Committee admitted that inflation had exceeded target for some time (dropping ‘transitory’ completely), and that liftoff would be tied to the economy reaching full employment. By the sounds of the press conference, progress toward full employment has proceeded pretty rapidly. Chair Powell noted that while labour force participation progress has been disappointing, almost every other measure of labour market strength shows a very strong labour market, and could create upside risks to inflation should wage growth start to increase beyond productivity. It is within that context that he framed the decision to taper faster, it will leave the Fed in a position to react as needed, providing optionality. In that vein, he stressed a few times that the lag between the end of taper and liftoff need not be as long as it was in the last cycle, and that the Fed will raise rates after taper is done whenever needed, hence meetings as early as March being live. Notably on Omicron, the Chair, like the rest of us, recognises we don’t know much about the variant yet, but seemed optimistic about the economy’s ability to withstand subsequent Covid shocks, regardless of Omicron’s specifics. While Covid shocks can tighten supply chains, discourage labour participation, and reduce demand, as more people get vaccinated those impacts should dwindle over time, so his argument went. Hammering the point home, he sounded confident that the economy can handle whatever Omicron brings without any additional QE, justifying the accelerated taper path despite Covid risks. The hawkish turn had been well forecast through Fed speakers since the last meeting, not least of which the Chair himself during Congressional testimony, which served to dull the market impact. Treasury yields were slightly higher, (2yr Tsys +0.6bps and 10yr Tsys +1.5 bps) but were quite docile for an FOMC afternoon. The dollar initially strengthened on the statement release before reversing course and ending the day -0.24% lower. Stocks were the real outperformers, as the S&P 500 rallied through the FOMC events, gaining +1.63%, the best daily performance in two months, while the Nasdaq increased +2.15%. The Russell 2000 matched the S&P, gaining +1.65%. Obviously the market was anticipating the change in policy, but if doubling taper and adding three rate hikes in the next year isn’t enough to tighten financial conditions, what is? The Chair was asked about that in so many words in the press conference, where he responded by noting financial conditions could change on a dime. Indeed, they will have to tighten from historically easy levels if the Fed is to bring inflation back to target through policy. The Fed may be out of the way now, but the central bank excitement continues today as both the ECB and the BoE announce their own policy decisions later on. We’ll start with the ECB, who like the Fed have faced much higher than expected inflation lately, with the November flash estimate coming in at +4.9%, which is the highest since the formation of the single currency. Whilst Omicron has cast a shadow of uncertainty, with Commission President von der Leyen saying yesterday that it was likely to become dominant in Europe by mid-January, our European economics team doesn’t think there has been anything concrete enough to alter the ECB from their course (like the Fed). In our European economists’ preview (link here) they write the ECB appears on track to initiate a transition to a monetary policy stance based more on policy rates and rates guidance and less on liquidity provision. The ECB is set to confirm that PEPP net purchases will end in March, but will cushion the blow by working flexibility into the post-PEPP asset purchase arrangement. They are also set to make the policy framework more flexible to better respond to inflation uncertainties. One thing to keep an eye out for in particular will be the latest inflation projections, with a report from Bloomberg suggesting that they’ll show inflation beneath the 2% target in both 2023 and 2024. So if that’s true, that could offer a route to arguing against a tightening of monetary policy for the time being, since the ECB’s forward guidance has been that it won’t raise rates until it sees inflation at the target “durably for the rest of the projection horizon”. Today’s other big decision comes from the BoE, where our UK economist is expecting that there’ll be a 15bps increase in Bank Rate, taking it up to 0.25% although they suggest it’s a very close call. See here for the rationale. Ahead of that decision later on, we received a very strong UK inflation print for November, with CPI rising to +5.1% (vs. +4.8% expected), up from +4.2% in October and the fastest pace in a decade. That’s running ahead of the BoE’s own staff forecasts in the November Monetary Policy Report, which had seen inflation at just +4.5% that month, so six-tenths beneath the realised figure. We’ll get their decision at 12:00 London time, 45 minutes ahead of the ECB’s. In terms of the latest on the Omicron variant, there are continued signs of concern in South Africa, with cases coming in at a record 26,976 yesterday, whilst the number in hospital at 7,339 is up +73% compared to a week ago. Meanwhile the UK recorded their highest number of cases since the pandemic began, at 78,610. England’s Chief Medical Officer, Chris Whitty, said that a lot of Covid records would be broken in the coming weeks, and also that a majority of cases in London were now from the Omicron variant. Separately, the French government is set to hold a meeting tomorrow on Covid measures, and EU leaders will be discussing the pandemic at their summit today. When it comes to Omicron’s economic impact, we could see some light shed on that today as the December flash PMIs are released from around the world. Overnight we’ve already had the numbers out of Australia and Japan where hints of a slowdown are apparent. Japan's Manufacturing PMI came out at 54.2 (54.5 previous) and the Composite at 51.8 (53.3 previous) while Australia’s Manufacturing and Composite came in at 57.4 and 54.9 respectively (59.2 and 55.7 previous). Overnight in Asia stocks are trading mostly higher led by the Nikkei (+1.78%) followed by the Shanghai Composite (+0.28%), and KOSPI (+0.22%). However the CSI (-0.07%) and Hang Seng (-0.81%) are losing ground on concerns of US sanctions on Chinese tech companies. In Australia, the November employment report registered a strong beat by adding 366.1k jobs against 200k consensus. This is being reflected in a +12.75 bps surge in Australia's 3y bond. Elsewhere, in India wholesale inflation for November rose +14.2% year on year, levels last seen in 2000 against a consensus of +11.98% on the back of higher food and input prices. DM futures are indicating a positive start to markets today with S&P 500 (+0.19%) and DAX (+1.04%) contracts both higher as we type. Ahead of the Fed, European markets had put in a fairly steady performance yesterday, with the STOXX 600 up +0.26%. That brought an end to a run of 5 successive declines, with technology stocks in particular seeing an outperformance. Sovereign bond markets were also subdued ahead of the ECB and BoE meetings later, with yields on 10yr bunds (+0.9bps), OATs (+0.5bps) and gilts (+1.2bps) only seeing modest moves higher. In DC, despite optimistic sounding talks earlier in the week, the latest yesterday was President Biden and Senator Manchin remained far apart on the administration’s build back better bill, imperiling its chances of passing before Christmas. Elsewhere, reports suggested the President would have more nominations for the remaining Fed Board vacancies this week. Looking at yesterday’s other data, US retail sales underwhelmed in November with growth of just +0.3% (vs. +0.8% expected), and measure excluding gas and motor vehicles was also up just +0.2% (vs. +0.8% expected). Also the NAHB’s housing market index for December moved up to a 10-month high of 84, in line with expectations. To the day ahead now, and the main highlights will be the aforementioned policy decisions from the ECB and the BoE. On the data side, we’ll also get the flash PMIs for December from around the world, the Euro Area trade balance for October, and in the US there’s November data on industrial production, housing starts and building permits, as well as the weekly initial jobless claims. Finally, EU leaders will be meeting for a summit in Brussels. Tyler Durden Thu, 12/16/2021 - 08:29.....»»

Category: blogSource: zerohedgeDec 16th, 2021

EU Official Warns Of "Rolling Blackouts" As Energy Crisis Worsens 

EU Official Warns Of 'Rolling Blackouts' As Energy Crisis Worsens  Europe's energy crisis is about to get a whole lot worse as the Northern Hemisphere winter is just weeks away. New risks are emerging across the continent that households and companies might have to scale back on power use or even plan for rolling blackouts.  There is no immediate fix to the energy crisis that comes from the supply side, with Russia's Gazprom, the largest supplier of natural gas to Europe, only pumping what it has. At the same time, EU stockpiles remain well below trend. On Tuesday, Prime Minister Mario Draghi said Italy's government is ready to combat soaring energy prices for households, according to Bloomberg.  "We set aside 1.2 billion euros ($1.4 billion) in June and over 3 billion euros in September," Draghi said. "We are now taking steps in the budget and are prepared to continue doing so, with particular attention to the most vulnerable." "Given the current energy supply system, a blackout cannot be ruled out" across Europe, Minister Giancarlo Giorgetti said, adding that "it's important to neutralize the impact of increased energy bills on households and companies in the fairest way possible." Even before the winter season arrives, cold weather is driving energy prices across Europe to record highs. The massive rally in European gas prices is not diminishing anytime soon. Gas prices at the Dutch TTF hub, the benchmark gas price for Europe, jumped to €100 per MWh, adding more pressure on households who are already dealing with rapid food and shelter inflation.  Just yesterday, power prices in France jumped to the highest levels since 2012.  The long-awaited activation of Gazprom's Nord Stream 2 pipeline from Russia to Germany would ease the natural gas crunch. Still, the project continues to hit regulatory snags from German regulators who recently suspended the certification process of the pipeline. What this could mean is flows might not start until spring.  Gazprom's finance unit head, Alexander Ivannikov, pointed out in an investor call on Monday that forward natural gas contracts "do not imply a noticeable decline in prices in the coming months." He said low levels of gas injections in European gas storages and colder weather would keep a bid under prices.  What's great for Gazprom is disastrous for Europe as higher gas prices appear to be sticking around as the Northern Hemisphere winter is just three weeks away. Ahead of winter, Bloomberg's weather forecasts show average temperatures to trend below a 30-year average for the next two weeks.  Nicolas Goldberg, a senior manager in charge of energy at Colombus Consulting in Paris, laid out one scenario where a cold snap plus no wind power generation could strain the European power grid.  "If there's a deep cold snap and there's no wind, things could become tight given the lesser availability of nuclear plants and the recent closure of dispatchable generation assets using coal, Goldberg said. "If it's getting really cold and there's no wind, it may become a problem." Other energy analysts have warned of power grid woes. Jeremy Weir, chief executive officer of Trafigura Group, a Swiss commodity trading house, said rolling blackouts are possible across the EU.   "If the weather gets cold in Europe there's not going to be an easy supply solution, it's going to need a demand solution," said Adam Lewis, partner at trading house Hartree Partners LP. EU officials don't want to admit it publicly, but they need Russian gas to prevent rolling blackouts and control energy inflation. Failure to do will result in a 'winter of discontent.'  Tyler Durden Wed, 12/01/2021 - 05:45.....»»

Category: blogSource: zerohedgeDec 1st, 2021

Europeans To Save On Energy Bills As Mild Christmas Weather Forecasted

Europeans To Save On Energy Bills As Mild Christmas Weather Forecasted There's good news for the millions of Europeans paying exorbitantly high prices for power and natural gas. That is the latest cold spell is set to diminish by Dec. 1.   Natural gas and power demand should decline as the latest cold snap in northwest Europe will ease by the middle of next week. Average temperatures for this time of year through Dec. 5 will be 3-5 degrees Fahrenheit above normal, ranging between 40-45 degrees.  Days ago, we noted the heating season arrived in northwest Europe as colder weather forced German day-ahead power prices to the second-highest level ever. Now power prices are fading as heating demand forecasts are slumping.  Benchmark Dutch gas for next month also dropped more than 3.6% to 89.65 euros a megawatt-hour.   There is more good news as alternative energy power sources, such as wind, in some parts of northwest Europe, particularly the U.K., have gone from zero power generation on Nov. 23 to more than 12,000 megawatts. Additional power will help alleviate natural gas markets that have been strained due to soaring demand and limited supplies. Bloomberg data shows wind is now on par with gas at 36% of the total power supply. Maxar's Weather Desk said warmer temperatures for the U.K., France, and Germany next week, while cold to persist in central Europe, adding below temperatures expected in the Nordic region.  Weather models (subjected to change) show another dip in average temperatures for northwest Europe between Dec. 5-10. Milder temperatures could be seen through mid-December.  And there's more good news, Germany's state weather agency is forecasting very mild conditions for the second half of the month across the entire country.  A new emerging concern is the worsening COVID-19 situation. Andrew Hill, head of European gas analysis at BloombergNEF, said, "it is unclear as to exactly what this means for gas demand," since some previous lockdowns saw a "double heating effect," with both homes and offices heated simultaneously. Readers already know that European natural gas stockpiles are the lowest in nearly a decade as Russian flows have been lackluster. Last week, German regulators suspended the approval process for the Nord Stream 2 pipeline, meaning any new gas flows from the pipeline are unlikely this heating season.  So the good news is that millions of Europeans will observe warmer weather next week, but then a short-lived cold bast will give way to milder temperatures through the first half of December. This means more savings on power bills and possibly gives Europe some ability to build more natural gas stockpiles before the next cold blast.  Tyler Durden Sat, 11/27/2021 - 07:35.....»»

Category: blogSource: zerohedgeNov 27th, 2021

Futures Drift Higher In Quiet, Holiday Session

Futures Drift Higher In Quiet, Holiday Session US equity futures rose (ahead of a cash session that is closed for Thanksgiving holiday), European stocks were mixed and Asian snapped a three-day losing streak on Thursday, hurt by the U.S. dollar which continued to march higher as investors bet on interest rates rising more quickly in the United States than in other major economies such as Japan and the euro zone. Overnight Goldman (which only a few weeks ago brought forward its liftoff forecast by one year to July 2002) said that it now expects the Fed "to announce at its December meeting that it is doubling the pace of tapering to $30bn per month starting in January." That forecast, however, has not spooked futures with S&P 500 and Nasdaq eminis rising by 7 points (0.14%) and 28 points (0.17%) respectively, in a listless session - trading volumes on the MSCI’s gauge of world equities slid 18% from its 30-day average. The dollar rose again, hitting a fresh 16-month high. Remy Cointreau SA jumped 11% in Europe on an earnings beat. Base metals rallied, with nickel near the highest level in seven years. Unlike recent sharp drawdowns, on Wednesday U.S. stocks proved resilient to a slew of strong economic data and Fed minutes on Wednesday that hinted at stagflationary concerns and supported expectations for a quicker removal of stimulus by the Fed. And while inflation concerns deepened, and traders appeared in no mood to miss a year-end calendar meltup, rising bets not only for a quicker taper, but also an earlier liftoff of interest rates, suggest caution may return after Thanksgiving. “The market mood is rather OK-ish after the minutes,” Ipek Ozkardeskaya, a senior analyst at Swissquote, wrote in a note. “At this point, it makes sense to expect an earlier, and maybe a steeper rate normalization from the Fed.” European stocks traded off opening highs with Euro Stoxx 50 up as much as 0.7% before stalling and trading up 0.25% last. Utilities, tech and financial services are the strongest performers; travel remains under pressure as Covid measures are still in focus. MSCI’s global equity benchmark headed for the biggest advance since Nov. 16 as European traders shrugged off a worsening Covid-19 situation in the continent. The Stoxx 600 gauge was boosted by utilities and real estate companies. Remy Cointreau soared to a record high after the French distiller reported first-half results that Citigroup Inc. called “truly exceptional.” Earlier in the session, Asian equities were poised to snap a three-day losing streak, as traders continued to weigh the prospects of higher inflation and faster-than-expected tapering by the U.S. Federal Reserve. The MSCI Asia Pacific Index rose as much as 0.3% Thursday, with Japanese stocks among the leaders as the dollar held a three-day advance against the yen. In Hong Kong, shares of Kaisa Group Holdings Ltd's (1638.HK) rose as much as 24% on their return to trading, after the embattled Chinese developer said it was offering bondholders an option to exchange existing bonds with new bonds having an extended maturity, to improve financial stability. In India, Reliance shares returned to a price level reached prior to the scrapping of the Indian conglomerate’s deal with Saudi Aramco.  Asian stocks are hovering near a six-week low as a strong dollar remains a headwind for emerging-market equities, while higher U.S. Treasury yields have dragged down technology and other growth stocks around the region. The latest Fed minutes suggested it will accelerate the pace of tapering and rate hikes if inflation persistently stays above the targeted rate and maintains its uptrend, said Banny Lam, head of research at CEB International Investment. “Strong dollar concerns remain intact on earlier-than-expected rate hikes, intensifying the inflation of emerging markets.” South Korean stocks were among the biggest decliners after the nation’s central bank hiked its key interest rate by 25 basis points to 1%, as expected, citing faster inflation. In broad terms, "when it comes to regional equities allocation, we're watching the U.S. dollar which is making new highs and that is a headwind for emerging market equities," said Fook-Hien Yap, senior investment strategist at Standard Chartered Bank wealth management. "The market is now pricing in more than two hikes next year, but we think that is overly aggressive. We are only looking for about one hike next year," said Yap. These expectations have pushed U.S. treasury yields higher, albeit inconsistently, with benchmark 10 year notes last yielding 1.6427% having risen as high as 1.6930% on Wednesday. U.S. Treasuries will not trade on Thursday because of the Thanksgiving holiday. U.S. stock markets will also be closed and will have a shortened session on Friday. Sure enough, fixed income markets are quiet. Bund and gilt curves bull flatten a touch, cash Treasuries remain closed for Thanksgiving. In other central bank news, the Bank of Korea raised its policy interest rate by 25 basis points on Thursday, as widely expected, as concern about rising household debt and inflation offset uncertainty around a resurgence in COVID-19 cases. In FX, the Bloomberg dollar index recovered Asia’s small weakness to trade flat. SEK is the best performer in G-10 with EUR/SEK down 0.4% after the Riksbank tweaked inflation forecasts slightly and signaled that they see a case for a higher benchmark rate in 2024. NZD and AUD lag with most majors trading a narrow range. The dollar is trading near its highest in almost five years versus the Japanese currency at 115.3 yen, and nearly 18 months to the euro which was at $1.1206. In commodities, oil prices were mixed after a turbulent few days in which the United States said it would release millions of barrels of oil from strategic reserves in coordination with China, India, South Korea, Japan and Britain to try to cool oil prices after calls to OPEC+ to pump more went unheeded. However, investors laughed at the programme's effectiveness, leading to price gains. Brent crude was last at $82.14 a barrel, down 0.1%. Action continued to heat up in the base metals market. Nickel rose in London toward the highest level since May 2014 on a closing basis as shrinking inventories pointed to tight supply. Aluminum and copper extended their two-day increase to at least 2% each. Looking at the day ahead, it's a fairly quiet calendar given the Thanksgiving holiday in the US. On the central bank side however, we’ll hear from ECB President Lagarde, and the ECB’s Villeroy, Elderson and Schnabel, along with BoE Governor Bailey and the BoE’s Haskel. On top of that, the ECB will release the account of their October meeting, and data releases include the German GfK consumer confidence reading for December. A more detailed look at global markets courtesy of Newsquawk Asian equities traded mixed following on from the tentative mood in US where the major indices headed into the Thanksgiving holiday with a slight positive bias although upside was capped as participants digested a deluge of mixed data releases and hawkish leaning FOMC Minutes which suggested an increased likelihood of a taper adjustment. ASX 200 (+0.1%) was choppy as outperformance in tech and miners was counterbalanced by losses in consumer stocks, energy and the top-weighted financials sector, while mixed capex data which showed a larger than expected contraction for Q3 further added to the headwinds. Nikkei 225 (+0.7%) outperformed and reclaimed the 29,500 level after the recent favourable currency flows and stimulus optimism with Japan considering offering a JPY 5k inbound travel subsidy and is planning a JPY 22.1tln government bond sale as part of economic stimulus and extra budget. KOSPI (-0.4%) softened amid a widely expected 25bps rate hike by the BoK and with BoK Governor Lee suggesting the potential for another hike in Q1 next year. Hang Seng (+0.1%) and Shanghai Comp. (-0.1%) lacked direction amid ongoing frictions including issues related to Taiwan and after the US Commerce Department placed 12 Chinese companies/entities on its entity list due to national security concerns, while EU ambassadors approved to renew sanctions on four Chinese officials and one Chinese entity for human rights abuses. However, the downside for Chinese bourses was limited after another tepid PBoC liquidity effort and with a local press report noting that China is to use more fiscal policy to support growth. There were also reports that Chengdu city launched measures to help developers with cash problems in obtaining funds, while Kaisa Group shares saw a double-digit percentage jump on reopen from a three-week trading halt after it offered to exchange bonds for new bonds with an extended maturity in an effort to improve financial stability and remain afloat. Finally, 10yr JGBs were rangebound after the sideways price action seen in global counterparts and cautious risk tone in Asia, while the results of the latest 40yr JGB auction were also inconclusive with a weaker b/c offset by an increase in the low price. European cash equities (Euro Stoxx 50 +0.3%; Stoxx 600 +0.2%) trade on a modestly in the green but off best levels as bourses’ attempt to reclaim some of the lost ground seen throughout the week somewhat lost momentum, with the Stoxx 600 down 1.3% WTD. Macro drivers for the region remain a combination of this week’s (slightly stale) survey metrics, ECB speak and COVID angst with the latter providing a bulk of the direction for European assets this week. The handover from the APAC region was a somewhat mixed one as the Nikkei 225 (+0.6%) continued to benefit from favourable currency flows and ongoing stimulus hopes whilst Chinese stocks (Shanghai Comp -0.2%) digested a combination of US-China tensions over Taiwan, EU sanctions on China and expectations of domestic fiscal measures to support growth. Futures in the US (ahead of the early close) are currently on a mildly firmer footing (ES +0.3%) however, traders will likely not pay much credence to these moves given that the cash markets are closed today. The latest BofA flow show noted that stocks saw just their second week of outflows for the year, albeit equities have posted USD 839bln of inflows in 2021 which is more than the USD 785bln seen in the past 19 years combined. Elsewhere, SocGen is of the view that the bull market is not over for European equities and the cycle has further room to run into next year as inflation peaks and Fed-ECB policy diverges. SocGen’s end-2022 target of 520 implies a 9% upside from current levels. Sectors in Europe are mostly firmer with the Food & Beverage sector a top performer amid gains in Remy Cointreau (+11%) who sit at the top of the Stoxx 600 post-earnings which saw the Co. raise its profit outlook. In sympathy, Pernod Ricard (+2.0%), Campari (+1.1%) and Diageo (+0.8%) are all seen higher. To the downside, Travel & Leisure names lag amid ongoing losses in sector-heavyweight Evolution (-5.6%) with the latest update for the Co. noting it has contacted New Jersey regulators and launched an internal probe following accusations the company is conducting business in US blacklisted countries. Also of note for the sector, reports suggest that the EU is set to endorse a 9-month limit on COVID-19 vaccine validity in travel. Finally, Vivo Energy (+20%) is seen higher on the session after Vitol reached an agreement to purchase the Co. for USD 1.85/shr. In FX, the index sees a mild pullback in early European trade on Thanksgiving Day Holiday, after notching a fresh YTD peak yesterday at 96.938 with traders also weighing end-of-month flows. Yesterday's FOMC Minutes had little impact on the Buck, but the release stated the Fed should be prepared to adjust the pace of asset purchases and raise the target range for FFR sooner if inflation continued to run higher than levels consistent with the Fed objective. Some participants preferred a somewhat faster pace of reductions. DXY trades within a narrow 96.649-832 range. Ahead, the calendar is empty from a US standpoint. EUR, GBP - The single currency stands are the current G10 winner, albeit within narrow ranges in holiday-thinned trade. Desks suggest that light short-covering may warrant given the recent COVID-led downside. On the COVID front, reports suggested the EU is to endorse a 9-month limit on COVID-19 vaccine validity in travel. Sources earlier in the week suggested that updated EU travel guidance will likely be released today, whilst France is also today poised to provide more colour on COVID-related restrictions. EUR/USD has reclaimed a 1.1200 handle but trades within yesterday's 1.1184-1.1250 range. GBP/USD meanwhile is relatively flat within a 20-pip parameter, with not much to report aside from overnight commentary highlighting the 'substantial distance' between the UK and EU on the Northern Ireland protocol. Ahead, participants will be on the lookout for commentary from BoE governor Bailey and Haskel. Note, some participants also highlight chunky OpEx tomorrow in GBP/USD comprising of some GBP 1.3bln around 1.3400-10. AUD, NZD - Antipodeans are on the back foot, with the NZD continuing to lag post-RBNZ and following a narrower NZ trade deficit as the AUD/NZD cross inches closer towards 1.0500 after confirming support around the 1.0450 region. AUD/USD was unfazed by lower-than-expected Q3 Aussie Capex. Desks highlight support at 0.7170 (Sept 29th low) ahead of the YTD low at 0.7106. Technicians may also be cognizant of the 21 DMA (0.7346) set to cross through the 100 DMA (0.7346) and 50 DMA (0.7344). JPY - The JPY is relatively flat on the day within a 115.30-45 band, with desks suggesting bids are eye towards 115.00 and offers above 115.50. OpEx is interesting; USD/JPY sees USD 1.2bln between 115.10 and around USD 800mln at strike 115.50. SEK, HUF - The Riksbank maintained its Rate at 0.00% and asset holdings unchanged as expected and said the repo rate will be raised in the latter part of 2024 – with the Q4 2024 rate path seen averaging at 0.19%. Overall, the decision was in-line with expectations. The SEK saw some modest upside heading into the announcement, but on the largely as-expected release, EUR/SEK remained in proximity to the pre-announcement level of 10.20. Meanwhile, the Hungarian Central Bank announced a 40bps hike to its 1-week Repo Rate in an expected but unscheduled move. EUR/HUF moved from 367.25 to 365.40 on the hike. In commodities, WTI and Brent futures are choppy following the earlier softness at the start of the session, which was seemingly a function of a mild deterioration across equity markets, also coinciding with Ifax reports that the US is trying to persuade Russia to lift oil output. Sticking with OPEC+, the morning also saw commentary out of Kuwait and the UAE, who both signalled open-mindedness heading into next week’s meeting, although WSJ sources yesterday suggested the UAE does not see the need to pause current plans. WTI Jan has dipped back under USD 78/bbl (vs high USD 76.65/bbl) while Brent Feb resides just north of USD 80.50/bbl (vs high 81.40/bbl). Ahead, participants will be balancing OPEC+ sources and commentary to get a more solid idea on which route the group will likely take next week. Elsewhere, spot gold remains caged within a cluster of DMAs including the 100 (1,793), 200 (1,791) and 50 (1,789). Base metals are once again firmer with traders citing bullish commentary on Chinese infrastructure. LME copper inches closer towards USD 10k/t whilst Dalian iron ore futures overnight stretched their rally to a fifth consecutive session, spot prices topped USD 100/t. DB's Jim Reid concludes the overnight wrap A reminder that this week we published our 2022 credit strategy outlook. See here for the full report. Craig has also put out a more detailed HY 2022 strategy document here and Karthik a more detailed IG equivalent here. Basically we think spreads will widen as much as 30-40bps in IG and 120-160bps in HY due to a response to a more dramatic appreciation of the Fed being well behind the curve. This sort of move is consistent with typical mid-cycle ranges through history. We do expect this to mostly retrace in H2 as markets recover from the shock and growth remains decent and liquidity still high. Today will likely prove a quieter one in markets given the Thanksgiving holiday in the US. But ahead of that, risk assets eventually climbed a wall of worry yesterday as investors moved to dial up their hawkish bets on the Fed’s policy trajectory, just as the latest Covid wave in Europe further contributed to investor concerns. Nevertheless, after trading in the red most of the day, global equity markets just managed to finish the day in positive territory, with the S&P 500 gaining +0.23% and the STOXX 600 advancing +0.09%. First, on the hawkish Fed policy trajectory, our US economics team updated their calls to expect just that. In a note yesterday (link here), they outlined expectations for the Fed to double the pace of tapering at the December FOMC meeting following better-than-expected inflation and employment data since the November FOMC. This would bring monthly reductions in Treasury purchases to $20bn and MBS purchases to $10bn, which would bring the end of taper forward to March. In line, they’re bringing their call for liftoff forward a month to June 2022. Our econ team weren’t the only ones to adjust their outlook. San Francisco Fed President Daly, one of the biggest doves on the FOMC and a voter in December, said in an interview that, “if (strong inflation and jobs data continue) then those are the things that would say, looks like we need faster tapering”. Furthermore, she also said that “I am very open and, in fact, leaning towards that we’ll want to raise rates from the zero lower bound at the end of next year”. So if one of the Fed’s biggest doves is feeling this way, then that showcases the shift in thinking that could be taking place more broadly on the committee. Front-end US rates sold off following the comment and yesterday’s data releases, which did nothing to change the recent hawkish turn from Fed officials. In fact, by the close of trade investors were fully pricing in a hike by June, and pricing about two-thirds probability of a May hike. They are still projecting three full hikes in the next calendar year. You’ll know from the credit outlook that we continue to think the Fed is way behind the curve and that catch-up will likely cause some volatility in H1 with notably wider credit spreads. See the link at the top for more on our view. Those moves were given some fresh impetus by stronger-than-expected US data, of which plenty arrived in advance of the holiday today. First, the weekly initial jobless claims for the week through November 20 fell to 199k (vs. 260k expected), which is their lowest level since 1969 and the first time we’ve seen a reading comfortably around or beneath their levels immediately before the pandemic. Claims are always a bit all over the place around Thanksgiving due to seasonal adjustments so we may need a couple of weeks before the trend can be confirmed. Secondly, we then had the second estimate of Q3 GDP in the US, which was revised up a tenth to show an annualised growth rate of +2.1%. Third, the personal income and spending data came in above expectations in October, with personal income up +0.5%, and personal spending up +1.3%, which in both cases was three-tenths higher than expected. And finally, although the University of Michigan’s final consumer sentiment index was still at a decade low, the final measure came in at 67.4, above the preliminary reading of 66.8. Long-term inflation expectations edged back up a tenth to 3.0%, where it was in September and May this year, the joint highest readings since 2013. All that created additional momentum in front-end US rates, with the 2yr yield (+2.6bps) and the 5yr yield (+0.3bps) both rising to fresh post-pandemic highs as the prospect of faster tapering and earlier rate hikes came into view. That put further upward pressure on the dollar as well, with the index strengthening by +0.33% yesterday to hit a 16-month high, having now risen by over +6% since its low in late May just 6 months ago. Of course the flip side was that a number of currencies shifted lower vis-à-vis the dollar, and the euro dipped below the $1.12 mark at the end of the day for the first time since June 2020. Amidst the moves higher in front-end Treasury yields, another round of curve flattening saw longer-dated ones fall back yesterday, with the 10yr yield down -3.1bps to 1.63%. That flattening took the 5s30s curve down -6.9bps to its lowest level since the initial market turmoil at the start of the pandemic back in March 2020, having fallen by over 100bps since its intraday high back in February. 2s10s twisted -5.7bps flatter as well, as investors priced in near-term Fed policy action that could engender a hard landing that hurts longer term growth. It was a different picture in Europe however, where curves steepened for the most part and the moves lower in long-end rates were much more subdued. By the close, yields on 10yr bunds (-0.8bps), OATs (+0.0bps) and BTPs (+1.3bps) had seen relatively little movement, as investors continue to expect that the ECB will take a much more cautious approach to raising rates relative to the Fed. Overnight in Asia markets are again mixed but being led by the Nikkei (+0.68%) and the Hang Seng (+0.14%), while the Shanghai Composite (-0.10%), CSI (-0.31%) and KOSPI (-0.34%) are losing ground. In a widely expected move the Bank of Korea raised rates for a second time since August, taking the policy rate to 1.0%. The BOK revised its inflation outlook to 2.3% for 2021 and 2% for 2022 which was expected. Futures markets are higher with the S&P 500 (+0.28%) and DAX (+0.35%) trading in the green. Treasuries are closed. Back to yesterday, and one of the main pieces of news came from Germany, where there was finally confirmation that the centre-left SPD, the Greens and the liberal FDP had agreed a full coalition deal. In terms of the economic measures, the notable ones include a restoration of the debt brake from 2023, which has been suspended during the pandemic, as well as an increase in the minimum wage to €12 per hour. We’ll wait to see if dealing with the climate emergency is carved out to some degree from the debt brake. I suspect it will be in some form. Assuming the deal is agreed by each of the parties, who will put the agreement to internal party approval processes, that could see the SPD’s Olaf Scholz become Chancellor in the week commencing December 6, bringing an end to Chancellor Merkel’s 16-year tenure. That new coalition will be coming into office at a difficult time in light of the latest covid wave across Europe, and in his remarks yesterday, Scholz said that they would consider targeted vaccination mandates for those working with vulnerable groups. That came as the Bild newspaper reported that Chancellor Merkel asked the members of the new coalition to impose a 2-week nationwide lockdown, but this was rejected in a meeting on Tuesday evening. Overnight Germany reported 75,961 new cases, up from 66,884 on Tuesday. Other countries are also moving to ramp up restrictions across the continent, with French health minister Veran expected to announce fresh measures at a news conference today, whilst Italy approved new curbs on the unvaccinated, including entry restrictions to enter restaurants and cinemas. Elsewhere, Slovakia announced a new lockdown that will see residents only permitted to leave home for work, education, or essential activities, with the closure of restaurants and non-essential shops for two weeks. A reminder that we are adding a daily G7 plus important country new cases chart every day in this email blast and a fatalities chart in the full pdf under “view report”. The day ahead has a fairly quiet calendar given the Thanksgiving holiday in the US. On the central bank side however, we’ll hear from ECB President Lagarde, and the ECB’s Villeroy, Elderson and Schnabel, along with BoE Governor Bailey and the BoE’s Haskel. On top of that, the ECB will release the account of their October meeting, and data releases include the German GfK consumer confidence reading for December. Tyler Durden Thu, 11/25/2021 - 08:40.....»»

Category: blogSource: zerohedgeNov 25th, 2021

Moldova To Avert Energy Crisis With Payment To​​​​​​​ Gazprom

Moldova To Avert Energy Crisis With Payment To​​​​​​​ Gazprom Update (1545ET): Well, that was quick. As colder weather sweeps across Europe and Russia's Gazprom was hours away from halting natural gas flows to Moldova over non-payment, Moldova's parliament appears to have come up with the money.  Moldova's parliament will vote on Thursday to amend the state budget to transfer 1.4 billion Moldovan leu ($78.98 million) to pay its outstanding gas bill with Gazprom for October and pay an advance for November, Deputy Prime Minister Andrei Spinu said. Spinu said his government "will do everything needed" to prevent Gazprom from shutting off flows which would trigger an energy crisis.  "We considered it's more transparent to have the budget revision approved through parliament and respect all the rules. We asked the parliament to vote as soon as possible and, as far as I know, they will vote on the proposal on Thursday," he added.  It appears Moldova will keep its light on, and homes will be heated upon payment. The country is one of the poorest in Europe and struggles to pay its gas bills amid the energy that grips the continent. * * *  European natural gas prices could surge as new reports indicate Gazprom will halt all natural gas flows to Moldova, an Eastern European country, in 48 hours over non-payment for its gas consumption. The news follows Germany's energy regulator, which suspended the approval process for the Nord Stream 2 pipeline last week. Russian President Vladimir Putin continues to exert pressure on Europe with declining gas flows amid the onset of the Northern Hemisphere winter.  The crux of the issue is that Moldova has yet to pay its energy bill to Gazprom. "Today is the scheduled date of payment. Yet, there is no payment," Sergey Kupriyanov, Gazprom board chairman's spokesman, said in a statement, according to RT News. He said the company is "extremely disappointed" in Moldova's failure to fulfill its obligations on its recently extended energy contract.  Gazprom was expecting payment for Moldova's gas usage on Monday (Nov. 22). This comes after Chisinau, the capital of Moldova, struck a 5-year deal with the gas producer on Nov. 1.  Kupriyanov said Gazprom attempted to set "market gas price" for Moldova but had to then take into account the "difficult economic and financial situation" in the country and Putin's position. In the deal, he said most of Chisinau's terms were reached, including a special discounted price.  Moldova was only to pay for its current consumption, the spokesman said, adding that Chisinau is in breach of contract, forcing Gazprom to suspend gas flows. The contract extension comes as Chisinau has mounting unpaid gas bills with Gazprom.  According to RT, before the Nov. 1 deal was signed, "Chisinau was close to introducing a state of emergency in case of failed talks. The tense situation also sparked some allegations that Moscow sought to exert pressure on Chisinau to break up its deal with the EU. Gazprom repeatedly denied such claims, arguing that it simply can't afford to make a loss on the deal."  Moldova not paying its bills comes as Germany's energy regulator unexpectedly suspended a crucial step in the approval process for the Nord Stream 2 pipeline last week. Dutch month-ahead gas, the European benchmark, soared last week on the news as that Nord Stream 2 pipeline might not get approved by the expected January timeframe but more likely after the cold season.  The scarcity of gas in Europe continues to place a bid under prices as it deals with some of the lowest gas storage levels since 2013, ahead of what could be a nasty winter. As much as European officials oppose Russian gas, the continent desperately needs Gazprom to survive this winter. As for Moldova, if gas is shut off in the next 48 hours, the country might declare a state of emergency.  Tyler Durden Tue, 11/23/2021 - 15:45.....»»

Category: blogSource: zerohedgeNov 23rd, 2021

Futures Under Water As Tech Selloff Spreads, Yields Spike, Lira Implodes

Futures Under Water As Tech Selloff Spreads, Yields Spike, Lira Implodes US equity futures continued their selloff for the second day as Treasury yields spiked to 1.66%, up almost 4bps on the day, and as the selloff in tech shares spread as traders trimmed bets for a dovish-for-longer Federal Reserve after the renomination of Jerome Powell as its chair. At 8:00am ET, S&P futures were down 2.75 points or -0.05%, with Dow futures flat and Nasdaq futures extended their selloff but were off worst levels, down 41.25 points or 0.25%, after Monday’s last-hour furious rout in technology stocks. As repeatedly covered here in recent weeks, the Turkish currency crisis deepened with the lira weakening past 13 per USD, a drop of more than 10% in one day.  Oil rebounded - as expected - after a panicking Joe Biden, terrified about what soaring gas prices mean for Dems midterm changes, announced that the US, together with several other countries such as China, India and Japan, would tap up to 50 million barrels in strategic reserves, a move which was fully priced in and will now serve to bottom tick the price of oil. In premarket trading, Zoom lost 9% in premarket trading on slowing growth. For some unknown reason, investors have been reducing expectations for a deeper dovish stance by the Fed after Powell was selected for a second term (as if Powell - the man who started purchases of corporate bonds - is somehow hawkish). The chair himself sought to strike a balance in his policy approach saying the central bank would use tools at its disposal to support the economy as well as to prevent inflation from becoming entrenched. “While investors no longer have to wonder about who will be leading the Federal Reserve for the next few years, the next big dilemma the central bank faces is how to normalize monetary policy without upsetting markets,” wrote Robert Schein, chief investment officer at Blanke Schein Wealth Management. Following Powell’s renomination, “the market has unwound hedges against a more ‘dovish’ personnel shift,” Chris Weston, head of research with Pepperstone Financial Pty Ltd., wrote in a note. Not helping was Atlanta Fed President Raphael Bostic who said Monday that the Fed may need to speed up the removal of monetary stimulus and allow for an earlier-than-planned increase in interest rates European stocks dropped with market focusing on potential Covid lockdowns and policy tightening over solid PMI data. Euro Stoxx 50 shed as much as 1.7% with tech, financial services and industrial names the hardest hit. Better-than-forecast PMI numbers out of Europe’s major economies prompted money markets to resume bets that the ECB will hike the deposit rate 10 basis points as soon as December 2022, versus 2023 on Monday. As Goldman notes, the Euro area composite flash PMI increased by 1.6pt to 55.8 in November — strongly ahead of consensus expectations — in a first gain since the post-July moderation. The area-wide gain was broad-based across countries, and sectors. Supply-side issues continued to be widely reported, with input and output price pressures climbing to all-time highs. In the UK, the November flash composite PMI came in broadly as expected, and while input costs rose to a new all-time high, pass-through into output prices appears lower than usual. Forward-looking expectations remain comfortably above historical averages across Europe, although today's data are unlikely to fully reflect the covid containment measures taken in a number of European countries over recent days. Key numbers (the responses were collected between 10 and 19 November (except in the UK, where the survey response window spanned 12-19 November). Euro Area Composite PMI (Nov, Flash): 55.8, GS 53.6, consensus 53.0, last 54.2. Euro Area Manufacturing PMI (Nov, Flash): 58.6, GS 57.7, consensus 57.4, last 58.3. Euro Area Services PMI (Nov, Flash): 56.6, GS 53.9, consensus 53.5, last 54.6. Germany Composite PMI (Nov, Flash): 52.8, GS 52.1, consensus 51.0, last 52.0. France Composite PMI (Nov, Flash): 56.3, GS 54.4, consensus 53.9, last 54.7. UK Composite PMI (Nov, Flash): 57.7, GS 57.7, consensus 57.5, last 57.8. And visually: Earlier in the session, Asian stocks fell toward a three-week low as Jerome Powell’s renomination to head the Federal Reserve boosted U.S. yields, putting downward pressure on the region’s technology shares. The MSCI Asia Pacific Index declined as much as 0.5%, as the reappointment sent Treasury yields higher and buoyed the dollar amid concerns monetary stimulus will be withdrawn faster. Consumer discretionary and communication shares were the biggest drags on Asia’s benchmark, with Tencent and Alibaba slipping on worries over tighter regulations in China. “Powell’s renomination was generally expected by the market,” said Chetan Seth, an Asia-Pacific equity strategist at Nomura. The market’s reaction may be short-lived as traders turn their attention to the Fed’s meeting in December and Covid’s resurgence in Europe, he added. Asia shares have struggled to break higher as the jump in yields weighed on sentiment already damped by a lackluster earnings season and the risk of accelerating inflation. The region’s stock benchmark is down about 1% this year compared with a 16% advance in the MSCI AC World Index. Hong Kong and Taiwan were among the biggest decliners, while Australian and Indian shares bucked the downtrend, helped by miners and energy stocks. India’s benchmark stock index rose, snapping four sessions of declines, boosted by gains in Reliance Industries Ltd.   The S&P BSE Sensex climbed 0.3% to close at 58,664.33 in Mumbai, recovering after falling as much as 1.3% earlier in the session. The NSE Nifty 50 Index gained 0.5%. Of the 30 shares on the Sensex, 21 rose and 9 fell. All but one of the 19 sector sub-indexes compiled by BSE Ltd. advanced, led by a gauge of metal stocks.  Reliance Industries Ltd. gained 0.9%, after dropping the most in nearly 10 months on Monday following its decision to scrap a plan to sell a 20% stake in its oil-to-chemicals unit to Saudi Arabian Oil Co. Shares of One 97 Communications Ltd., the parent company for digital payments firm Paytm, climbed 9.9% after two days of relentless selling since its trading debut. In rates, Treasuries dropped, with the two-year rate jumping five basis points, helping to flatten the yield curve. Bunds and Treasuries bear steepened with German 10y yields ~5bps cheaper. Gilts bear flatten, cheapening 1.5bps across the short end. 10Y TSY yields rose as high as 1.67% before reversing some of the move. In FX, the Bloomberg Dollar Spot Index was little changed after earlier advancing to the highest level since September 2020 as markets moved to price in a full quarter-point rate hike by the June Fed meeting, with a good chance of two more by year-end; Treasury yields inched up across the curve apart from the front end. The Japanese yen briefly fell past 115 per dollar for the first time since 2017. The euro advanced after better-than-forecast PMI numbers out of Europe’s major economies prompted money markets to resume bets that the ECB will hike the deposit rate 10 basis points as soon as December 2022, versus 2023 on Monday. Sterling declined versus the dollar and the euro; traders are taking an increasingly negative view on the pound, betting that the decline that’s already left the currency near its lowest this year has further to run New Zealand’s dollar under-performed all G-10 peers as leveraged longs backing a 50 basis-point hike from the central bank were flushed out of the market; sales were mainly seen against the greenback and Aussie. The yuan approached its strongest level against trade partners’ currencies in a sign that traders see a low likelihood of aggressive official intervention. The Turkish lira (see above) crashed to a record low on Tuesday, soaring more than 10% and just shy of 14 vs the USD, a day after President Recep Tayyip Erdogan defended his pursuit of lower interest rates to boost economic growth and job creation. In commodities, crude futures rebounded sharply after Biden announced a coordinated, global SPR release which would see the US exchange up to 32mm barrels, or a negligible amount. Brent spiked back over $80 on the news after trading in the mid-$78s. Spot gold drops ~$8, pushing back below $1,800/oz. Base metals are well supported with LME nickel outperforming. Looking at the day ahead, the main data highlight will be the flash PMIs for November from around the world, and there’s also the Richmond Fed manufacturing index for November. Finally from central banks, we’ll hear from BoE Governor Bailey, Deputy Governor Cunliffe and the BoE’s Haskel, as well as ECB Vice President de Guindos and the ECB’s Makhlouf. Market Snapshot S&P 500 futures down 0.3% to 4,667.75 Brent Futures down 0.9% to $78.95/bbl Gold spot down 0.4% to $1,796.86 U.S. Dollar Index down 0.17% to 96.39     Top Overnight News from Bloomberg The volatility term structures in the major currencies show that next month’s meetings by monetary policy authorities are what matters most. Data galore out of the U.S. by Wednesday’s New York cut off means demand for one-day structures remains intact, yet it’s not enough to bring about term structure inversion as one-week implieds stay below recent cycle highs Lael Brainard, picked to be vice chair of the Federal Reserve, is expected to be a critical defender of its commitment to maximum employment across demographic groups at a time when other U.S. central bankers are more worried by inflation ECB Executive Board member Isabel Schnabel said there’s an increasing threat of inflation taking hold, as she played down the danger that resurgent coronavirus infections might impede the euro zone’s recovery Regarding latest pandemic restrictions, “when it comes to the impact, I would say that while it will surely have a moderating impact on economic activity, the impact on inflation will actually be more ambiguous because it might also reinforce some of the concerns we have around supply bottlenecks,” ECB Governing Council member Klaas Knot says in Bloomberg Television interview with Francine Lacqua European Union countries are pushing for an agreement on how long Covid-19 vaccinations protect people and how to manage booster shots as they try to counter the pandemic’s fourth wave and safeguard free travel Germany’s top health official reiterated a warning that the government can’t exclude any measures, including another lockdown, as it tries to check the latest wave of Covid-19 infections The State Council, China’s cabinet, released three documents in the past several days, outlining measures to help small and medium-sized enterprises weather the downturn: from encouraging local governments to roll out discounts for power usage to organizing internet companies to provide cloud and digital services to SMEs A more detailed look at global markets courtesy of Newsquawk Asia-Pac stocks traded mixed following a similar performance in the US where participants digested President Biden’s decision to nominate Fed Chair Powell for a second term and Fed’s Brainard for the Vice Chair role. This resulted in bear flattening for the US curve and underpinned the greenback, while the major indices were choppy but with late selling heading into the close in which the S&P 500 slipped beneath the 4,700 level and the Nasdaq underperformed as tech suffered the brunt of the higher yields. ASX 200 (+0.8%) was positive with sentiment encouraged after stronger PMI data and M&A developments including BHP’s signing of a binding agreement to merge its oil and gas portfolio with Woodside Petroleum to create a global top 10 independent energy company and the largest listed energy company in Australia, which spurred outperformance for the mining and energy related sectors. KOSPI (-0.5%) was lacklustre and retreated below the 3k level amid broad weakness in tech which was not helped by concerns that South Korea could take another aim at large tech through a platform bill and with the government said to be mulling strengthening social distancing measures. Hang Seng (-1.2%) and Shanghai Comp. (+0.2%) continued to diverge amid a neutral liquidity effort by the PBoC and with the Hong Kong benchmark conforming to the tech woes, while the mainland was kept afloat after the State Council pledged to strengthen assistance to smaller firms and with Global Times noting that China will likely adopt another RRR cut before year-end to cope with an economic slowdown. Finally, Japanese participants were absent from the market as they observed Labor Thanksgiving Day, while yields in Australia were higher as they tracked global counterparts and following a Treasury Indexed bond offering in the long-end. Top Asian News Tiger Global Leads $210 Million Round by India Proptech Unicorn China’s Slowdown Tests Central Bank Amid Debate Over Easing Kuaishou Defies China Crackdown as Revenue Climbs 33% Evergrande Shares Jump in Afternoon Trading as Group Units Rally Major bourses in Europe are lower across the board, but off worst levels (Euro Stoxx 50 -1.1%; Stoxx 600 -1.3%) following on from the mixed APAC performance, but with pandemic restrictions casting a shower over the region. US equity futures are mostly lower but to a lesser extent than European peers, with the YM (+0.1%) the relative outperformer vs the ES (-0.1%), NQ (-0.3%) and RTY (-0.8%). Back to Europe, the morning saw the release of Flash PMIs which failed to spur much action across market given the somewhat stale nature against the backdrop of a worsening COVID situation in Europe. Losses in the UK’s FTSE 100 (-0.1%) are more cushioned vs European counterparts, with heavyweight miners doing the heavy lifting, and as the basic resources sector outpaces and resides as the only sector in the green at the time of writing amid a surge in iron ore prices overnight. Sticking with sectors, there is no clear or overarching theme/bias. Tech resides at the foot of the pile, unaided by the intraday rise in yields. Travel and Leisure also reside towards the bottom of the bunch, but more a function of the “leisure” sub-sector as opposed to the “travel” component, with Evolution Gaming (-3.7%) and Flutter (-3.5%) on the back foot. In terms of individual movers, Thyssenkrupp (-7.0%) tumbles after the Co. announced a secondary offer by Cevian of 43mln shares. Meanwhile, Telecom Italia (-3%) is softer following yesterday’s run, whilst Vivendi (-0.5%) said the current KKR (KKR) offer does not reflect Telecom Italia's value and it has no intention of offloading its 24% stake. Top European News U.K. PMIs Show Record Inflation and ‘Green Light’ for BOE Hike Kremlin Says New U.S. Sanctions on Nord Stream 2 Are ‘Illegal’ ECB’s Knot Says New Lockdowns Won’t Delay Wind-Down of Stimulus Telefonica Drops, Berenberg Cuts on Spain Margin Problems In FX, the Buck had already eased off best levels to relieve some pressure from its rivals, but the Euro also derived encouragement from the fact that a key long term Fib held (just) at 1.1225 before getting a rather unexpected fundamental fillip in the form of stronger than forecast flash Eurozone PMIs plus hawkish-sounding comments from ECB’s Schnabel. Eur/Usd duly rebounded to 1.1275 and the Dollar index retreated to 96.308 from a fresh y-t-d peak of 96.603, while the Yen and Franc also took advantage to varying degrees against the backdrop of deteriorating risk sentiment and in thinner trading volumes for the former due to Japan’s Labor Day Thanksgiving holiday. Usd/Jpy recoiled from 115.15 to 114.49 at one stage and Usd/Chf to 0.9301 from 0.9335 before both pairs bounced with the Greenback and a rebound in US Treasury yields ahead of Markit’s preliminary PMIs and Usd 59 bn 7 year note supply. TRY - Simply no respite for the Lira via another marked pull-back in oil prices on heightened prospects of SPR taps, the aforementioned Buck breather or even a decent correction as Usd/Try extended its meteoric rise beyond 11.5000 and 12.0000 towards 12.5000 irrespective of an ally of Turkish President Erdogan urging a debate on CBRT independence. Instead, the run and capital flight continues as talks with the IMF make no progress and an EU court condemns the country for detaining 400+ judges after the coup, while the President rules out a snap election after recent calls for an earlier vote than the scheduled one in 2023 by the main opposition party. NZD/CAD/GBP/AUD - It remains to be seen whether the RBNZ maintains a 25 bp pace of OCR normalisation overnight, but weak NZ retail activity in Q3 may be a telling factor and is applying more downside pressure on the Kiwi across the board, as Nzd/Usd hovers under 0.6950 and the Aud/Nzd cross tests 1.0425 on relative Aussie strength or resilience gleaned from another spike in iron ore that is helping to keep Aud/Usd above 0.7200. Conversely, the latest downturn in crude is undermining the Loonie and the Pound hardly derived any traction from better than anticipated UK PMIs even though they should provide the BoE more justification to hike rates next month. Usd/Cad has now breached 1.2700 and only stopped a few pips short of 1.2750 before fading ahead of comments from BoC’s Beaudry, while Cable topped out just over 1.3400 awaiting BoE Governor Bailey, whilst Haskel reaffirmed his stance in the transitory inflation camp, although suggested that if the labour market remains tight the Bank Rate will have to rise. SCANDI/EM - Hardly a shock that Brent’s reversal has hit the Nok alongside broader risk-aversion that is also keeping the Sek defensive in advance of the Riksbank, but the Zar is coping well considering Gold’s loss of Usd 1800+/oz status and test of chart support at the 100 DMA only a couple of Bucks off the 200. Similarly, the Cnh and Cny are still resisting general Usd strength and other negatives, with help from China’s State Council pledging to strengthen assistance to smaller firms perhaps. In commodities, WTI and Brent Jan'22 futures remain under pressure with the former back under USD 76/bbl (vs USD 76.59/bbl high) and the latter around USD 79/bbl (vs USD 79.63/bbl high). The WTI contract is also narrowly lagging Brent by some USD 0.30/bbl at the time of writing. Participants are keeping their eyes peeled for reserve releases from the US, potentially in coordination with other nations including China, Japan, and India – with inflation concerns being the common denominator. The move also comes in reaction to OPEC+ flouting calls by large oil consumers, particularly the US, to further open the taps beyond the group’s planned 400k BPD/m hikes. A source cited by Politico caveated that a final decision is yet to be made, and US officials are hoping that the threat of an SPR release would persuade OPEC+ to double their quotas at the Dec 2nd meeting. As it stands, Energy Intel journalist Bakr noted that she has not heard anything from OPEC+ officials about changing production plans, but delegates yesterday suggested that plans may be tweaked. Click here for the full Newsquawk analysis piece. Aside from this, US President Biden is also poised to give a speech on the economy, whilst the weekly Private Inventories will also be released today. Elsewhere, spot gold and have been drifting lower in what is seemingly a function of technical, with the yellow metal dipping under USD 1,800/oz from a USD 1,812/oz current high, with a cluster of DMAs present to the downside including the 100 DMA (around USD 1,793/oz), 200 DMA (around USD 1,791/oz) and 50 DMA (around USD 1,789/oz). Turning to base metals, LME copper holds a positive bias with prices on either side of USD 9,750/t, whilst Dalian iron ore surged overnight - with reports suggesting that steel de-stockpiling accelerated last week, and analysts suggesting that the market is betting on steelmakers in December. US Event Calendar 9:45am: Nov. Markit US Composite PMI, prior 57.6 9:45am: Nov. Markit US Services PMI, est. 59.0, prior 58.7 9:45am: Nov. Markit US Manufacturing PMI, est. 59.1, prior 58.4 10am: Nov. Richmond Fed Index, est. 11, prior 12 DB's Jim Reid concludes the overnight wrap A reminder that yesterday we published our 2022 credit strategy outlook. See here for the full report. Craig has also put out a more detailed HY 2022 strategy document here and Karthik a more detail IG equivalent here. Basically we think spreads will widen as much as 30-40bps in IG and 120-160bps in HY due to a response to a more dramatic appreciation of the Fed being well behind the curve. This sort of move is consistent with typical mid-cycle ranges through history. We do expect this to mostly retrace in H2 as markets recover from the shock and growth remains decent and liquidity still high. We also published the results of our ESG issuer and investor survey where around 530 responded. Please see the results here. Today is the start of a new adventure as I’m doing my first overseas business trip in 20 months. It took me a stressful 2 hours last night to find and fill in various forms, download various apps and figure out how on earth I travel in this new world. Hopefully I’ve got it all correct or I’ll be turned back at the Eurostar gates! The interesting thing about not travelling is that I’ve filled the time doing other work stuff so productivity will suffer. So if I can do a CoTD today it’ll be done on an iPhone whilst racing through the French countryside. Actually finishing this off very early in a long taxi ride on the way to the train reminds me of how car sick I get working on my iPhone! The delights of travel are all coming flooding back. After much anticipation over recent weeks, we finally heard yesterday that President Biden would be nominating Fed Chair Powell for another four-year term at the helm of the central bank. In some ways the decision had been widely expected, and Powell was the favourite in prediction markets all along over recent months. But the Fed’s staff trading issues and reports that Governor Brainard was also being considered had led many to downgrade Powell’s chances, so there was an element of uncertainty going into the decision, even if any policy differences between the two were fairly marginal. In the end however, Biden opted for continuity at the top, with Brainard tapped to become Vice Chair instead. Powell’s nomination will require senate confirmation once again, but this isn’t expected to be an issue, not least with Powell having been confirmed in an 84-13 vote last time around. Further, Senate Banking Committee Chair Brown, viewed as a progressive himself, noted last week there should be no issue confirming Powell despite rumblings from progressive lawmakers. More important to watch out for will be who Biden selects for the remaining positions on the Fed Board of Governors, where there are still 3 vacant seats left to fill, including the position of Vice Chair for Supervision. In a statement released by the White House, it said that Biden intended to make those “beginning in early December”, so even with Powell staying on, there’s actually a reasonable amount of scope for Biden to re-shape the Fed’s leadership. A potential hint about who may be considered, President Biden noted his next appointments will “bring new diversity to the Fed.” President Biden, flanked by Powell and Brainard, held a press conference following the announcement. He noted maintaining the Fed’s independence and leadership stability informed his decision, and that Chair Powell assured the President he would focus on fighting inflation. He was apparently also assured that the Chair would work to combat climate change, perhaps an olive branch to those in his party that wanted a more progressive nominee. Powell and Brainard both followed up with remarks of their own, but didn’t stray from the recent Fed party line. In response to the decision, investors moved to bring forward their timing of the initial rate hike from the Fed, with one now just about priced by the time of their June 2022 meeting, whilst the dollar index (+0.54%) strengthened to a fresh one-year high. This reflects the perception among many investors that Brainard was someone who’d have taken the Fed on a more dovish trajectory. Inflation breakevens fell across the curve as well in response. Indeed the 4-year breakeven, which roughly coincides with the term of the next Fed chair, was down -3.8bps after yesterday’s session, with the bulk of that dive coming immediately after the confirmation of Powell’s nomination. Nevertheless, that decline in breakevens was more than outweighed by a shift higher in real rates that sent nominal yields noticeably higher. By the close, yields on 2yr (+7.8bps) and 5yr (+9.5bps) Treasuries were at their highest levels since the pandemic began, and those on 10yr Treasuries were also up +7.7bps, ending the session at 1.62%. 2yr yields were a full 14.1bps higher than the intra-day lows on Friday after the Austria lockdown news. We had similar bond moves in Europe too, with yields on 10yr bunds (+4.0bps) moving higher throughout the session thanks to a shift in real rates. Another noticeable feature in the US was the latest round of curve flattening, with the 5s30s (-4.4bps) reaching its flattest level (+64.1bps) since the initial market panic over Covid-19 back in March 2020. The S&P 500 took a sharp turn heading into the New York close after trading in positive territory for most of the day, ultimately closing down -0.32%. Sector performance was mixed, energy (+1.81%) and financials (+1.43%) were notable outperformers on climbing oil prices and yields, while big tech companies across different sectors were hit by higher discount rates. The NASDAQ (-1.26%) ended the day lower, having pared back its initial gains that earlier put it on track to reach a record of its own. The other main piece of news yesterday came on the energy front, where it’s been reported that we could have an announcement as soon as today about a release of oil from the US Strategic Petroleum Reserve, potentially as part of a joint announcement with other nations. Oil prices were fairly resilient to the news, with Brent crude (+1.03%) and WTI (+0.85%) still moving higher, although both are down from their recent peaks as speculation of such a move has mounted. This could help put some downward pressure on inflation, but as recent releases have shown, price gains have been broadening out over the last couple of months to a wider swathe of categories, so it remains to be seen how helpful this will prove, and will obviously depend on how much is released along with how the OPEC+ group react. For their part, OPEC+ members noted that the moves from the US and its allies would force them to reconsider their production plans at their meeting next week. Looking ahead now, one of the main highlights today will come from the release of the flash PMIs for November, which will give us an initial indication of how the global economy has fared into the month. As mentioned yesterday, the Euro Area PMIs have been decelerating since the summer, so keep an eye out for how they’re being affected by the latest Covid wave. It’ll also be worth noting what’s happening to price pressures, particularly with inflation running at more than double the ECB’s target right now. Overnight in Asia stocks are trading mixed with Shanghai Composite (+0.43%), CSI (+0.20%), KOSPI (-0.44%) and Hang Seng (-1.01%) diverging, while the Nikkei is closed for Labor Thanksgiving. The flash manufacturing PMI release from Australia (58.5 vs 58.2 previous) came in close to last month while both the composite (55 vs 52.1 previous) and services (55 vs 51.8 previous) accelerated. In Japan the Yen slid past an important level of 115 against the Dollar for the first time in four years after Powell was confirmed. This marks an overall slide of 10% this year making it the worst performer amongst advanced economy currencies. S&P 500 (-0.01%) and DAX futures (-0.31%) are flat to down with Europe seemingly catching up with the weak U.S. close. Before this, in Europe yesterday, equities continued to be subdued, with the STOXX 600 down -0.13% after trading in a tight range, as the continent reacted to another surge in Covid-19 cases. The move by Austria back into lockdown has raised questions as to where might be next, and Bloomberg reported that Chancellor Merkel told CDU officials yesterday that the recent surge was worse than anything seen so far, and that additional restrictions would be required. So the direction of travel all appears to be one way for the time being in terms of European restrictions, and even a number of less-affected countries are still seeing cases move in an upward direction, including France, Italy and the UK. So a key one to watch that’ll have big implications for economies and markets too. Staying on Germany, there was some interesting news on a potential coalition yesterday, with Bloomberg obtaining a preliminary list of cabinet positions that said that FDP leader Christian Lindner would become finance minister, and Green co-leader Robert Habeck would become a “super minister” with responsibility for the economy, climate protection and the energy transition. The report also said that both would become Vice Chancellors, whilst the Greens’ Annalena Baerbock would become foreign minister. It’s worth noting that’s still a preliminary list, and the coalition agreement is yet to be finalised, but it has been widely suggested that the parties are looking to reach a conclusion to the talks this week, so we could hear some more info on this relatively soon. There wasn’t much in the way of data yesterday, though the European Commission’s advance November consumer confidence reading for the Euro Area fell back by more than expected to -6.8 (vs. -5.5 expected), which is the lowest it’s been since April. Over in the US, there was October data that was somewhat more positive however, with existing home sales rising to an annualised rate of 6.34m (vs. 6.20m expected), their highest level in 9 months. Furthermore, the Chicago Fed’s national activity index was up to 0.76 (vs. 0.10 expected). To the day ahead now, and the main data highlight will be the aforementioned flash PMIs for November from around the world, and there’s also the Richmond Fed manufacturing index for November. Finally from central banks, we’ll hear from BoE Governor Bailey, Deputy Governor Cunliffe and the BoE’s Haskel, as well as ECB Vice President de Guindos and the ECB’s Makhlouf. d Tyler Durden Tue, 11/23/2021 - 08:31.....»»

Category: blogSource: zerohedgeNov 23rd, 2021

EU Gas Prices Soar On NS2 Delays, Sudden Belarus Pipeline Closure

EU Gas Prices Soar On NS2 Delays, Sudden Belarus Pipeline Closure European natural gas prices continue to soar after Nord Stream 2 pipeline delays were seen earlier this week, and now a major crude pipeline from Russia into Europe has temporarily halted flows due to "unscheduled repairs."  The newest market generated information pushing up European natgas prices to the highest levels in a month is due to a Belarus portion of the Druzhba oil pipeline system carrying Urals crude from Russia to Europe has temporarily halted flows to address "unscheduled repairs," the Russian energy export giant Transneft wrote in a statement.  "Unscheduled repairs were started on one of the branches of the Druzhba oil pipeline, limiting the flow in the direction of Poland for approximately three days, while the planned target for the month is not being revised," Transneft spokesman Igor Demin said. Gomeltransneft, the operator of the Belarusian section, said maintenance began on Nov. 16. "Starting from yesterday, Gomeltransneft has started an unplanned maintenance at one of the lines of the Druzhba pipeline, having restricted [crude] pumping towards Adamowa Zastawa [in Poland] tentatively for three days, but the plan for the month is not revised," a Transneft spokesman said.  Druzhba is one of the largest pipeline networks in the world that carries a mix of heavy sour oil of Urals and light oil of Western Siberia, where its network splits in two and pumps the crude into a northern section, Poland and Germany, and a southern area, Ukraine to Slovakia, the Czech Republic, and Hungary. The unscheduled repairs, restricting flows, come days after Belarusian leader Alexander Lukashenko threatened to cut the transit gas supply from Russia to Europe over a migrant crisis at the Belarus-Poland border. Compound that with the approval process for the Nord Stream 2 pipeline now delayed... As Katabella Roberts writes at The Epoch Times, Germany’s energy regulator the Bundesnetzagentur announced on Tuesday that it has suspended the certification process for a major new pipeline connecting the country and Russia, after ruling that its operator within Germany does not comply with conditions set by German law. The watchdog said on Tuesday it had temporarily halted the certification process because the Swiss company behind Nord Stream 2 had decided not to turn itself into a German company but had instead set up a subsidiary under German law to deal with the section of the pipeline on German territory. The Swiss-based consortium first needs to form a German subsidiary company under German law to secure an operating licence, the regulator said. “Nord Stream 2 AG, which is based in Zug (Switzerland), has decided not to transform its existing legal form but instead to found a subsidiary under German law solely to govern the German part of the pipeline. This subsidiary is to become the owner and operator of the German part of the pipeline. The subsidiary must then fulfil the requirements of an independent transmission operator as set out in the German Energy Industry Act,” the Bundesnetzagentur said in a statement. “Following a thorough examination of the documentation, the Bundesnetzagentur concluded that it would only be possible to certify an operator of the Nord Stream 2 pipeline if that operator was organised in a legal form under German law,” the German regulator said. ...and the Dutch month-ahead gas, the European benchmark, is up at least 33% this week.  For a sense of the scale of Europe's gas price crisis, the following chart puts UK, US, and EU NatGas on par with WTI Crude (per barrel of oil equivalent BTUs), As is clear, there is a huge energy disparity between gas in Europe, providing more incentives for switching again (but not helped by Belarus now shutting its oil pipeline).   The timing of the Druzhba maintenance and delay of the Nord Stream 2 certification process comes at the worst possible moment. Europe faces a massive energy crunch as natgas stockpiles are the lowest in a decade, just as Europe faces its first cold winter blast. Widespread below-average temperatures continue to plague parts of the continent, as the following chart of NW Europe Heating Degree Days shows. Meanwhile, Europe's natgas storage levels are the lowest since 2013. These unexpected delays or hiccups to crude and natgas flows from Russia to Europe are ahead of the first cold blast of the season, as energy inflation and supply chain disruptions due to the energy crisis and pandemic could metastasize into a "winter of discontent," fueling socio-economic instabilities across Europe.  Tyler Durden Wed, 11/17/2021 - 10:20.....»»

Category: personnelSource: nytNov 17th, 2021

German Regulators Suspend Nord Stream 2 Approval; European Gas Prices Surge

German Regulators Suspend Nord Stream 2 Approval; European Gas Prices Surge European natural gas prices surged as much as 12% Tuesday after Germany's energy regulator unexpectedly suspended a key steop in the approval process for the Nord Stream 2 pipeline. According to Bloomberg, the Federal Network Agency halted the Nord Stream certification process necessary to pump natgas directly from Russia into Germany. It was initially expected the certification would've been completed in early 2022, but that now appears to be unlikely.  The move comes as Nord Stream 2 AG, the operator of the pipeline, decided to set up a German subsidiary in a bid to meet European Union rules requiring gas producers to be legally separate from entities transporting the fuel. Russia’s Gazprom PJSC is the owner of Nord Stream 2. The German regulator said the entity "must then meet the requirements of the Energy Industry Act for an independent transport network operator." It added, "the certification process remains suspended."   The announcement sent benchmark European gas prices surging as traders fear the decision means Europe won’t get much needed gas to ease tight supplies this winter.  Dutch month-ahead gas, the European benchmark, soared as high as 12% to above 88 euros a megawatt-hour. “If one believes that flows could only start after certification has been completed, this means that flows via Nord Stream 2 will be further delayed, with negative implications for European gas balance over winter,” said Katja Yafimava, a senior research fellow at the Oxford Institute for Energy Studies. The timing of the suspension comes at the worst possible moment. Europe faces a massive energy crunch as natgas stockpiles are the lowest in a decade just as Europe faces its first cold winter blast. Widespread below-average temperatures continue to plague parts of the continent, as the following chart of NW Europe Heating Degree Days shows. Meanwhile, Europe's natgas storage levels are the lowest since 2013. The suspension deprives Europe of fresh supplies upwards of 55bn cubic meters of gas per year transited in an undersea pipeline across the Baltic Sea from Gazprom facilities in Russia to Germany then distributed throughout Europe, effectively bypassing pipelines running through Ukraine. James Waddell at Energy Aspects, a consultancy, told FT, "any remaining hopes that this pipeline would be available for the winter are completely dashed now."  "Increasingly, it's looking like it may not start up until the second half of next year.  "The lack of gas in storage and the lack of Russian supplies mean we essentially have to cut into industrial demand in order to preserve crucial gas supplies for the power and heat networks. Europe is having to heavily reduce industrial gas demand in a way we haven't seen in decades," Waddell said. Meanwhile, perhaps sensing that Europe's was going to make things complicated, late on Monday Goldman Sachs' Samantha Dart wrote  that "today's auction of Yamal pipeline capacity for December points to no bookings from Gazprom, vs our 45 mcm/d expected." And while "booking volumes do not guarantee flow, as illustrated by Yamal flows for October and thus far in November at 14 mcm/d and 10 mcm/d, respectively, vs bookings at just over 30 mcm/d for both months" she added that the lack of bookings "keeps supply uncertainty elevated into the end of the year."  Delaying Nord Stream 2's certification indefinitely, especially if coupled with further Russian supply cuts, could be a disaster for Europe which is now facing the first cold blast of the season, as energy inflation and supply chain disruptions due to the energy crisis and pandemic could metastasis into a "winter of discontent," fueling socio-economic instabilities. As much as European officials oppose the pipeline and want energy independence from Russia, the continent desperately needs Gazprom to survive this winter.  Tyler Durden Tue, 11/16/2021 - 07:20.....»»

Category: smallbizSource: nytNov 16th, 2021

Futures Fall, Yields And Dollar Jump Ahead Of Highest CPI In 31 Years

Futures Fall, Yields And Dollar Jump Ahead Of Highest CPI In 31 Years For the third day in a row, early weakness in futures - in this case as a result of China's soaring, record producer price inflation - reversed and spoos rose from session lows but were still down on the session as traders awaited inflation data due later on Wednesday. Treasury yields climbed and the dollar and cryptos rose. At 7:45 a.m. ET, Dow e-minis were down 47 points, or 0.12%, S&P 500 e-minis were down 10.25 points, or 0.22%, and Nasdaq 100 e-minis were down 68 points, or 0.42%. Earlier, China's Shanghai Composite fell as much as 1.7% and the Hang Seng dropped more than 1% after China’s factory inflation soared to a 26-year high. The number came just hours before today's US CPI print is expected to rise 5.8% in October, the highest level since since December 1990, after a 5.4% increase in the previous month. The report comes a day after producer prices data showed a solid rise in October and will be scrutinized for clues on the extent to which manufacturers were passing on higher costs to consumers, whose spending accounts for 70% of the U.S. economy Elevated inflationary pressures “would be the latest test for the Fed’s ‘transitory’ view and challenge the central bank’s stance on policy tightening,” Han Tan, chief market analyst at Exinity Group, said in written comments. “The worry is that such stubborn inflationary pressures could choke the recovery in global demand or hasten policy tightening by major central banks.” On Tuesday, Wall Street's main indexes ended their long streak of record closing highs on Tuesday as Tesla tumbled and as investors booked profits from the recent run-up in gains, especially in the absence of market-moving catalysts. The declines on Wednesday came after data showed Chinese factory gate prices hit a 26-year high in October, while economic advisers to the German government said they expected the current rise in inflation to continue well into 2022. It has been a busy premarket trading session with lots of movers. We start with Coinbase which fell 11% as analysts said the crypto exchange’s quarterly results were well below expectations. DoorDash shares surged as analysts raised price targets on the food-delivery firm after expectation-beating results and purchase of Finnish food-delivery startup Wolt Enterprises Oy.  Here are some other premarket movers today: DoorDash (DASH US) shares surge 19% in U.S. premarket trading, with analysts raising their price targets on the food-delivery firm after expectation-beating results and its biggest ever acquisition Chinese technology stocks listed in the U.S. rise premarket after Tencent reported 3Q profit that exceeded expectations even as revenue missed amid China’s crackdown on the tech industry Tesla (TSLA US) shares inch higher 1.9% in premarket trading, set for a positive open after a 16% slump in two days amid several negative headlines for the stock Stran & Co. (STRN US) shares jump as much as 43% in U.S. premarket trading, recovering ground after a sharp drop following the branding solutions firm’s IPO Society Pass (SOPA US) shares drop as much as 54% in U.S. pre trading hours, after the loyalty tech platform had surged following its IPO in the prior session Upstart Holdings (UPST US) plunged 19% in U.S. premarket trading after the company released 3Q earnings and 4Q forecasts; Piper Sandler ascribes share drop to “elevated investor expectations” and lack of quantification of auto opportunity Poshmark (POSH US) shares sink 29% in U.S. premarket trading with Berenberg (buy) saying the online retail platform’s 3Q results and guidance were disappointing PubMatic (PUBM US) surges 22% in U.S. premarket trading after the company’s 4Q sales forecast topped expectations and it posted 3Q results that Jefferies called “impressive” FuboTV (FUBO US) shares drop 4.3% in U.S. premarket trading as a 3Q results beat for the “sports first” streaming-video platform was overshadowed by higher costs and some weakness on its ad revenue Purple Innovation (PRPL US) slumps 31% after it cut its net revenue forecast for the full year; the guidance missed the average analyst estimate RingCentral (RNG US) rises 22% premarket, a day after the provider of cloud-based communications services forecast 4Q revenue that beat the average analyst estimate Toast (TOST US) slides after reporting financial results that included a net loss that widened compared with the same period last year Turning back to CPI, here is a lenghtier preview courtesy of DB's Jim Reid: I may have just about found it vaguely conceivable at the start of the year that on November 10th we’d see a 5.9% YoY US CPI print and the sixth month above 5%; however, I would certainly not have thought that such a number if it had materialized would be greeted with a collective market “meh” with 10yr Treasury yields 450bps below this rate. A lot is resting on this inflation being transitory. This will be the multi-trillion dollar question for 2022, that’s for sure. Last month saw yet another upside surprise that further undermined the transitory narrative, and, in fact, if you look at the last 7 monthly readings, 5 of them have come in above the median estimate on Bloomberg, with just 1 below and the other in line. In terms of what to expect, our US economists are looking for a reacceleration in the monthly prints, with a +0.47% forecast for the headline measure (+0.6% consensus), and +0.37% for core (+0.4% consensus). Their view is that the main driver is likely to be price pressures in those categories most sensitive to supply shocks, such as new and used vehicles. But they also see some downside risk from Covid-19-sensitive sectors like lodging away and airfares, where prices fell over the late summer as the delta variant slowed the recovery in travel. Look out for rental inflation too – last month we saw owners’ equivalent rent experience its strongest monthly increase since June 2006. It’s a measure that reflects underlying trend inflation, so it is important to monitor moving forward. Many models suggest it will be over 4% for much of next year, which is large given that it makes up around a third of the headline rate and c.40% of core. Shifting back to markets, we next look at Europe, where equities also recovered off opening lows with the Euro Stoxx 50 and DAX recovering to trade flat. FTSE 100 outperformed, rising as much as 0.6%. Sector gains in oil & gas, utilities and insurance names are broadly offset by losses in luxury, tech, household & personal goods and travel. Earlier in the session, Asian equities fell for a second day after data showed China’s monthly factory-gate prices grew at the fastest pace in 26 years. The MSCI Asia Pacific Index slid as much as 0.6% before paring its loss, with materials and IT the biggest drags. The CSI 300 Index slid as much as 1.9% before sharply paring its drop, after China’s producer and consumer price inflation numbers both exceeded forecasts. Commodity prices have soared globally this year amid expectations for a rebound from the pandemic, with energy getting a further boost from a supply crunch. Traders await Wednesday’s U.S. consumer-price report for further clues on monetary policy and economic growth. “Eyes are now closely watching inflation as that is the next market catalyst,” said Justin Tang, head of Asian research at United First Partners. For some Asian companies “the candle is burning on both ends -- with the supply chain crisis as a ceiling on revenues while obligations to expenses and liabilities remain.”  The Hang Seng turned higher in late trading as real estate developers climbed on a report that China’s bond-issuance policies may be loosened, while Tencent led a surge in tech stocks ahead of its earnings report. Vietnam and Taiwan showed small gains, while benchmarks in most other markets fell. Japanese equities fell, following Asian peers lower after China reported worse than expected inflation. Electronics makers and trading houses were the biggest drags on the Topix, which fell 0.5%. SoftBank Group and Tokyo Electron were the largest contributors to a 0.6% drop in the Nikkei 225. The MSCI Asia Pacific Index slid 0.5%, while China’s CSI 300 Index tumbled 1.1% after monthly factory-gate prices in Asia’s largest economy grew at the fastest pace in 26 years. U.S. consumer price data is scheduled to be reported later Wednesday. “Asia is on inflation alert, fearing future costs of inputs from goods sourced from the mainland,” Jeffrey Halley, senior market analyst at Oanda, wrote in a note. “It seems that investors are keen to lower exposure into the U.S. CPI data tonight.” Australian stocks ended lower for a third session as miners tumbled: the S&P/ASX 200 index fell 0.1% to close at 7,423.90 after a volatile session. Miners were the worst performing industry group as iron ore prices dropped, with eight of the 11 subgauges closing lower.  Bluescope was the day’s biggest laggard after iron ore plunged to a fresh 18-month low as debt troubles in China’s real-estate market deal blow after blow to prospects for steel demand. United Malt advanced after a media report said the company could be a takeover target. Australia’s central bank Governor Philip Lowe is anchoring his bet that he won’t need to raise interest rates until 2024 on a view that unemployment needs to be lower to spur wage gains. In New Zealand, the S&P/NZX 50 index fell 0.5% to 13,022.46. In FX, the Bloomberg Dollar Spot Index rose as the greenback traded higher against all of its Group-of-10 peers apart from the Canadian dollar. The euro extended an Asia session loss and traded firmly below the $1.16 handle. The pound slipped against a broadly stronger dollar, and edged higher versus the euro before a speech by the BOE’s Tenreyro; market is focused on the outlook for rate hikes and traders are also turning attention back to Brexit risks, with the European Union preparing a package of retaliatory measures in case the U.K. decides to suspend parts of a trade accord. Australia’s dollar fell to a one-month low as a slump in iron ore prices prompted short-term leveraged funds to cut long positions. The kiwi declined after a preliminary New Zealand business confidence index weakened In rates, Treasuries traded weak in the early U.S. session, following a selloff in gilts as U.K. markets start to price a higher terminal rate, bear-steepening the curve. Treasury yields are mostly cheaper by 2bp-3bp across the curve with 10-year around 1.475%; gilts lag by additional 1bp vs Treasuries while bunds outperform. During the Asian session, China’s CPI data beat expectations, adding to downside pressure in front eurodollars. Focal points for U.S. session include October CPI expected to show steep increase in y/y rate and final quarterly refunding auction, a $25b 30-year bond sale. Reduced-size U.S. refunding auctions conclude with $25b 30-year bond vs $27b in previous four; Tuesday’s 10- year sale tailed by 1.2bp after steep gains into the bidding deadline. Wednesday's WI 30-year yield around 1.85% is below 30-year stops since January and ~19bp richer than last month’s, which stopped 1.3bp below the WI level at the bidding deadline. In commodities, Crude futures drift lower: WTI drops 0.5% to trade near $83.70. Brent dips back below $85. Base metals are mixed. LME aluminum is the strongest performer; tin and lead are in negative territory. Spot gold drifts lower, losing $5 to trade near $1,826/oz To the day ahead now, and the main highlight will be the aforementioned CPI release from the US for October. Otherwise, there’ll also be Italian industrial production for September. From central banks, we’ll hear from the ECB’s Elderson and the BoE’s Tenreyro, whilst earnings releases include Disney. Market Snapshot S&P 500 futures down 0.2% to 4,669.75 STOXX Europe 600 little changed at 482.35 MXAP down 0.1% to 198.31 MXAPJ up 0.1% to 648.70 Nikkei down 0.6% to 29,106.78 Topix down 0.5% to 2,007.96 Hang Seng Index up 0.7% to 24,996.14 Shanghai Composite down 0.4% to 3,492.46 Sensex little changed at 60,399.20 Australia S&P/ASX 200 down 0.1% to 7,423.90 Kospi down 1.1% to 2,930.17 Brent Futures little changed at $84.75/bbl Gold spot down 0.3% to $1,825.71 German 10Y yield little changed at -0.29% Euro down 0.2% to $1.1574 U.S. Dollar Index up 0.18% to 94.13 Top Overnight News from Bloomberg The European Central Bank would risk exacerbating inequality if it were to raise interest rates before ceasing asset purchases, according to Executive Board member Isabel Schnabel U.S. President Joe Biden and his Chinese counterpart Xi Jinpingare are scheduled to hold a virtual summit next week, although no specific date has been set, according to people familiar with the matter A lack of top-tier intelligence on Chinese President Xi Jinping’s inner circle is frustrating senior Biden administration officials struggling to get ahead of Beijing’s next steps, according to current and former officials who have reviewed the most sensitive U.S. intelligence reports China’s inflation risks are building as producers pass on higher costs to consumers, reigniting a debate over whether the central bank has scope to ease monetary policy to support a weakening economy and potentially adding to the pressure on global consumer prices The U.K. opposition called for a parliamentary investigation into former Conservative cabinet minister Geoffrey Cox, as the scandal over sleaze and lobbying engulfing Boris Johnson’s ruling party gains momentum A more detailed look at global markets courtesy of Newsquawk Asian equity markets traded negatively after a lacklustre handover from Wall Street where the major indices took a break from recent advances and the S&P 500 snapped an eight-day win streak ahead of looming US inflation data. ASX 200 (-0.1%) was rangebound with early strength in financials gradually offset by losses in the commodity-related sectors and with the improvement in Westpac Consumer Sentiment data doing little to spur risk appetite. Nikkei 225 (-0.6%) was subdued with exporters pressured by unfavourable currency inflows and with the list of biggest movers in the index dominated by companies that recently announced their earnings, although Nissan and NTT Data Corp were among the success stories on improved results including a surprise return to quarterly profit for the automaker. Hang Seng (+0.7%) and Shanghai Comp. (-0.4%) initially underperformed amid ongoing developer default concerns as Evergrande has reportedly failed to pay coupon payments at the end of its 30-day grace period. Rating agencies have also downgraded a couple of developers and Fantasia Holdings shares fell as much as 50% on resumption from a one-month trading halt after it missed bond payments due early last month. Furthermore, tensions continued to brew on the Taiwan Strait after US lawmakers made a surprise visit to Taiwan and with China conducting combat readiness patrols in the area ahead of a potential Biden-Xi virtual meeting that could occur next week, which potentially lifted sentiment, while participants also reflected on the firmer than expected inflation data from China which showed consumer prices registered their fastest increase in more than a year and factory gate prices rose at a fresh record pace. Finally, 10yr JGBs traded marginally higher amid the lacklustre mood in stocks and presence of the BoJ in the market for over JPY 1.3tln of JGBs with 1yr-10yr maturities, although gains were capped by resistance ahead of the 152.00 focal point and a pull-back in T-notes. Top Asian News China SOEs Suggest Govt Ease Debt Rules in Property M&A: Cailian Iron Ore Gloom Deepens as China Property Woes Threaten Demand Chinese Developers Surge on Report Bond Rules May be Eased Tencent’s ‘Other Gains’ Unexpectedly Double, Helping Profit Beat European equities (Eurostoxx 50 -0.1%) have traded with little in the way of firm direction as a slew of earnings dictate the state of play amid a lack of fresh macro impulses. The handover from Asia was mostly a downbeat one with focus on firmer than expected CPI and PPI prints out of China and ongoing developer default concerns as Evergrande bond holders have reportedly not received coupon payments by the end of today's Asia-close grace period, in reference to missed coupon payments totalling USD 148.1mln. Stateside, futures are a touch softer (ES -0.2%) after cash markets saw the S&P 500 snap its eight-day winning streak during yesterday’s session. Ahead, the main event for the US will be the CPI release at 13:30GMT whilst the earnings docket continues to slow down with Disney the main standout after-hours. Back to Europe, sectors are mixed with Oil & Gas outperforming peers alongside price action in the crude complex. Banking names saw initial gains trimmed after earnings from Credit Agricole (-1.1%) and ABN AMRO (+1.9%) were unable to provide sustained support for the sector despite the former exceeding profit expectations. The retail sector has been provided a boost by Marks & Spencer (+11.4%) after the Co. reported stellar earnings and raised guidance. Elsewhere in the UK, ITV (+12.0%) sits at the top of the FTSE 100 after printing solid revenue metrics and a bullish revenue outlook. To the downside, Personal and Household goods lag in the wake of earnings from Adidas (-6.0%) which saw the Co.’s performance hampered by factory closures in Vietnam and product boycotts in China. Finally, Alstom (+9.6%) sits at the top of the CAC post-earnings with the Co. stating that supply chain shortages had no material impact on H1 sales. Top European News ECB May Aid Rich If Rates Rise Before QE Ends, Schnabel Says Merkel Advisers Urge ECB Exit Strategy as Price Pressures Rise King Sinks Impala Plan to Create World’s No. 1 Platinum Firm Alstom’s Cash Drain Is Less Than Forecast; Shares Jump In FX, the Greenback remains relatively firm in the run up to US inflation data having turned a corner of sorts on Tuesday, with the index extending beyond 94.000 following its rebound from 93.872 and inching closer to the current 94.380 w-t-d peak, at 94.221, thus far. Interestingly, the Buck has regained momentum irrespective of the benign Treasury (and global) yield backdrop, softer than forecast elements in the PPI release and most Fed officials maintaining a distance between the end of tapering and tightening. However, risk sentiment if wavering to the benefit of the Dollar more than others and the aforementioned CPI readings may be supportive if in line or above consensus. Note, initial claims are also scheduled due to tomorrow’s Veteran’s Day holiday and the final leg of supply comes via Usd 25 bn long bonds. NZD/JPY - Ironically perhaps, the Kiwi is struggling to keep sight of 0.7100 vs its US peer on the very day that COVID-19 restrictions were eased in Auckland, and a further deterioration in NZ business sentiment alongside a fall in the activity outlook may be the catalyst, while the Yen has run into resistance again above 113.00 and is now relying on decent option expiry interest between the round number and 113.05 (1.1 bn) to keep its bull run going. GBP/EUR/AUD/CHF - All softer against the Greenback, as Cable hovers below 1.3550, the Euro pivots 1.1575, Aussie meanders within a range just above 0.7350 amidst favourable Aud/Nzd crossflows and an improvement in Westpac consumer sentiment, and the Franc treads water inside 0.9150-00 parameters. However, Eur/Usd appears to be underpinned by heavier option expiries on the downside than upside rather than ostensibly hawkish ECB promptings from Germany’s Government advisors given 2.1 bn between 1.1575-65 and a further 1.2 bn from 1.1555-50 vs 1.5 bn at the 1.1600 strike. CAD - The Loonie is outperforming or holding up better than other majors near 1.2400 vs its US rival even though WTI has backed off from best levels just shy of Usd 85/brl, but Usd/Cad could still be drawn to expiry interest starting at 1.2450 and stretching some way over 1.2500 in the absence of anything Canadian specific, and pending US inflation data of course. WTI and Brent have been somewhat choppy this morning, but remain within reach of overnight ranges and well within yesterday’s parameters as fresh newsflow has been light; a performance that is similar to the morning’s directionless equity trade. Focus has been on last nights/yesterday's events after the EIA’s STEO release seemingly lessened the likelihood of a SPR release followed by the weekly private inventory report, which printed a headline draw of 2.485M against the expected build of 2.1mln – reaction was minimal. Later today, we get the DoE equivalent for which expectations remain at a headline build of 2.13mln, but the components are expected to post draws of around 1mln. Elsewhere, spot gold and silver are a touch softer on the session with the US Dollar and yields perhaps weighing, though the previous metals have once again not deviated too far from overnight parameters. On copper, prices were hampered by the Chinese inflation data though LME copper has staged a marginal recovery as the session has progressed. US Event Calendar 8:30am: Oct. CPI YoY, est. 5.9%, prior 5.4%; CPI MoM, est. 0.6%, prior 0.4% 8:30am: Oct. CPI Ex Food and Energy YoY, est. 4.3%, prior 4.0%; MoM, est. 0.4%, prior 0.2% 8:30am: Nov. Initial Jobless Claims, est. 260,000, prior 269,000 8:30am: Oct. Continuing Claims, est. 2.05m, prior 2.11m 8:30am: Oct. Real Avg Weekly Earnings YoY, prior -0.8% 8:30am: Oct. Real Avg Hourly Earning YoY, prior -0.8% 10am: Sept. Wholesale Trade Sales MoM, prior -1.1%; Wholesale Inventories MoM, est. 1.1%, prior 1.1% 2pm: Oct. Monthly Budget Statement, est. -$179b, prior - $61.5b DB's Jim Reid concludes the overnight wrap After three days in hospital in traction, little Maisie has a 3-hour hip operation this morning. Showing one benefit of the pandemic, she had a zoom call with her class at school yesterday on their big screen where they all got to ask her questions. The best one apparently was one boy who put his hand up and said “will your new wheelchair have an engine?”. I was reading last night about people with Maisie’s condition (perthes) ending up playing international sport as an adult after a long recovery as a kid, including a Danish striker who played in the semi-finals of the Euros this summer and a 132kg American football player. As long as she waits a polite time after her long recovery to beat me at golf then I’ll be very happy. Keeping my mind off things today will undoubtedly be US CPI. Given my inflationary bias views I may have just about found it vaguely conceivable at the start of the year that on November 10th we’d see a 5.9% YoY US CPI print and the sixth month above 5%; however, I would certainly not have thought that such a number if it had materialised would be greeted with a collective market “meh” with 10yr Treasury yields 450bps below this rate. A lot is resting on this inflation being transitory. This will be the multi-trillion dollar question for 2022, that’s for sure. Last month saw yet another upside surprise that further undermined the transitory narrative, and, in fact, if you look at the last 7 monthly readings, 5 of them have come in above the median estimate on Bloomberg, with just 1 below and the other in line. In terms of what to expect, our US economists are looking for a reacceleration in the monthly prints, with a +0.47% forecast for the headline measure (+0.6% consensus), and +0.37% for core (+0.4% consensus). Their view is that the main driver is likely to be price pressures in those categories most sensitive to supply shocks, such as new and used vehicles. But they also see some downside risk from Covid-19-sensitive sectors like lodging away and airfares, where prices fell over the late summer as the delta variant slowed the recovery in travel. Look out for rental inflation too – last month we saw owners’ equivalent rent experience its strongest monthly increase since June 2006. It’s a measure that reflects underlying trend inflation, so it is important to monitor moving forward. Many models suggest it will be over 4% for much of next year, which is large given that it makes up around a third of the headline rate and c.40% of core. Staying with inflation, China’s year-on-year numbers for October surprised on the upside overnight with CPI +1.5% (consensus +1.4%, last month +0.7%), the highest since September 2020. PPI +13.5% (consensus +12.3%) was also at a 26-year high. Asian stocks are trading lower with the KOSPI (-0.86%), Shanghai Composite (-1.20%), CSI (-1.40%), the Nikkei (-0.49%) and Hang Seng (-1.20%) all down after the China numbers. Futures are pointing to a weak start in the US & Europe too with S&P 500 futures (-0.4%) and DAX futures (-0.23%) both down. As investors look forward to today’s number, the long equity advance finally petered out yesterday as the S&P 500 (-0.35%) snapped a run of 8 successive gains. A 9th day in the green would have marked the longest winning streak since November 2004, but in the end it wasn’t to be.It also prevented an 18th up day out of the last 20 for the first time since September 1954.So reset your counters. Instead, we saw a broader risk-off move as equity indices moved lower on both sides of the Atlantic alongside a fresh rally and flattening in sovereign bond yields and curves. So the S&P 500 (-0.35%), the NASDAQ (-0.60%) and Europe’s STOXX 600 (-0.19%) all fell back from their record highs in the previous session although the equal weighted S&P 500 was almost flat (-0.03%) showing that there wasn’t huge breadth to the US weakness. Sector dispersion was tight in the US, with materials (+0.43%) among the leaders again along with the more typically defensive utilities sector (+0.44%). Financials (-0.55%) declined on the flatter curve story but it was discretionary stocks (-1.35%) that took the biggest hit, dragged down by Tesla declining a further -11.99% and now losing c.$200bn of market cap over two days or the equivalent of 8.5 times Ford’s market cap. The VIX index of volatility ticked up another +0.58pts to hit its highest level in nearly 4 weeks, but remains comfortably below the peaks reached during September’s 5% pullback in the S&P. By contrast, Bitcoin proved to be one of the few winners of yesterday as it increased to an all-time high of $67,734, although that was slightly down from its all-time intraday high of $68,513 earlier in the day. Meanwhile, the question of the various Federal Reserve appointments has been occupying increasing attention and impacting bond markets, but in spite of the gossip there’s been no fresh news over the last 24 hours we didn’t already know. Earlier this week, Politico cited two sources with knowledge of the process saying that a decision would be made by Thanksgiving. But for those with longer memories, it was reported by Bloomberg back in August that people familiar with the process were saying that President Biden was likely to make his choice around Labor Day in early September, and over two months have passed since. So we’ll have to see what the real deadline is. Nevertheless, the news from late Monday night in the US that Fed Governor Brainard had been interviewed for the Fed Chair position helped support US Treasuries, thanks to the perception that Brainard would be a more dovish pick. Regardless of whether Powell or Brainard is Chair come this time next year, the Board will likely become more dovish as President Biden replaces outgoing Governors (and fills empty seats should he choose to do so). By the close of trade, 10yr yields were down -5.4bps to 1.44%, and the 30yr yield was down -6.4bps to 1.82%, which was its lowest closing level since mid-September. Another striking thing was that the moves lower in Treasury yields were entirely driven by a fresh decline in real yields, with the 10yr real yield down -7.0bps to -1.20%, marking its lowest closing level since TIPS began trading in 1997. Meanwhile, there was another round of curve flattening yesterday, with the 5s30s slope down -2.8bps to 73.5bps, which is the flattest it’s been since the initial market panic over the pandemic back in March 2020. For Europe it was a similar story as yields fell across the continent, and those on 10yr bunds (-5.5bps), OATs (-5.5bps) and BTPs (-5.3bps) all saw decent moves lower. Ahead of today’s CPI, investors had the PPI numbers to digest yesterday, though there was little market reaction to speak of as they came in almost entirely in line with the consensus. The monthly reading was up by +0.6% in October, which in turn saw the year-on-year measure remain at +8.6%, with both of those in line with expectations. The core measure did come in a touch below, at +0.4% (vs. +0.5% expected), but again that left the yoy reading at +6.8% as expected. One factor that may help on the inflation front over the coming months was a major decline in natural gas prices yesterday, with both European (-8.16%) and US (-8.26%) futures witnessing substantial declines. This wasn’t reflected elsewhere in the energy complex though, with WTI (+2.71%) and Brent crude (+1.62%) oil prices seeing a further rise following reports that the US would not need to release strategic reserves due to the demand outlook, and gold prices (+0.42%) closed at their highest levels since June. There wasn’t a massive amount of other data yesterday, though the ZEW survey from Germany for November saw the expectations reading unexpectedly rise to 31.7 (vs. 20.0 expected), which is the first increase after 5 consecutive monthly declines. However, the current situation measure did fall to 12.5 (vs. 18.3 expected). Finally out of the US, the NFIB’s small business optimism index for October fell to a 7-month low of 98.2 (vs. 99.5 expected). To the day ahead now, and the main highlight will be the aforementioned CPI release from the US for October. Otherwise, there’ll also be Italian industrial production for September. From central banks, we’ll hear from the ECB’s Elderson and the BoE’s Tenreyro, whilst earnings releases include Disney. Tyler Durden Wed, 11/10/2021 - 07:56.....»»

Category: blogSource: zerohedgeNov 10th, 2021

A "Severe Blast" Of Arctic Air Could Impact US Next Week 

A "Severe Blast" Of Arctic Air Could Impact US Next Week  Weather observer Electroverse is forecasting a "severe blast" of Arctic air to encompass parts of the US Lower-48 beginning late next week.  Cap Allon, Electroverse's editor, wrote a note Tuesday which outlines how a possible Arctic air mass will pour into the U.S. from Canada beginning on Nov. 18.  Allon said, "a word of caution, though: this forecast is still in the unreliable time frame — the models could easily shift. But saying that, the GFS predicting such a widespread blast of cold and with such confidence, too, does lead me to believe that this, or something similar, is indeed about to play out — and if it does, cold-records will be threatened across almost every state." GFS 2m Temperature Anomalies (C) Nov 22 [tropicaltidbits.com]. GFS models also predict heavy snow for some parts of the country through Thanksgiving.  GFS Total Snowfall (inches) Nov 9 – Nov 25 [tropicaltidbits.com]. Colder weather could complicate things for some power plants transitioning to coal from natural gas because of high prices. The ability to source coal this winter has become extremely hard.  Last month, Ernie Thrasher, CEO of Xcoal Energy & Resources, the largest U.S. exporter of fuel, said demand for coal will remain robust well into 2022. He warned about domestic supply constraints and power companies already "discussing possible grid blackouts this winter."  A pure-play on cold weather and heightened coal demand is Peabody Energy, the largest coal company globally, which has seen earnings triple amid the global energy crunch.  So if forecasts are right about next week, expect colder weather and soaring energy costs. In the meantime, the green transition will be placed on hold this fall/winter (in terms of the percentage of power generation on the grid) as the world returns to coal.   Tyler Durden Tue, 11/09/2021 - 15:45.....»»

Category: blogSource: zerohedgeNov 9th, 2021

Europe"s Energy Crisis Better Wake America Up

Europe's Energy Crisis Better Wake America Up Authored by Peter Driessen via WattsUpWithThat.com, If it doesn’t, activists and governing classes will destroy middle class jobs, families and lives COP-26, the twenty-sixth massive climate control “conference of parties,” goes live in Glasgow, Scotland on Halloween. That’s certainly appropriate, since its primary purpose is to further terrify humanity to “take action” to prevent the “existential threat” of “manmade climate cataclysms.” Thousands of politicians and climate activists will take private jets and limos to the lecture and hector halls – to demand that “commoners” be restricted to one Basic Economy flight every three years, meatless diets, public transportation, and keeping 640-square-foot homes at 65 F all winter and 85 F all summer. Otherwise, they say, countless people will die as our planet “overheats” by up to 4.1 degrees C (7.2 F) by 2100. Real-world science and data provide no support for temperature spikes of this magnitude. But just in time for COP-26, Columbia University concocted a “new study” and “new metric” on the “mortality cost of carbon,” based on these scary computer-modeled temperature forecasts. Bloomberg News gave the death-by-global-warming fable prominent coverage. 83 million people (equivalent to the entire population of Germany) “could be killed” this century by rising planetary temperatures caused by fossil fuel use, it asserted. Nonsense. Modern housing and energy systems enable people to adapt to and survive even the most extreme heat and cold – even in Antarctica, which just experienced the coldest average winter temperatures ever recorded: -61 C (-78 F). Survival becomes far less likely, however, if climate treaties and energy policies prohibit efficient air conditioning and heating, ration them, subject them to recurrent blackouts, or make them harder to afford amid rising oil, natural gas, coal and electricity prices. Yet that is exactly what’s being advocated and implemented. Britain and various US cities and states want to ban natural gas heating and cooking – and replace them with expensive heat pumps and other electric appliances, powered by expensive, weather-dependent wind turbines and solar panels. Meanwhile, energy prices have been skyrocketing in response to Covid recovery and anti-fossil-fuel policies. Climate theory has long held that most 21st-century warming will occur in northern latitudes during winter months. But now we’re now told a warming Arctic could also be causing colder winters, which could endanger far more people than rising temperatures or more frequent heat waves. Actually, far more people die in cold weather than in hot weather or heat waves. In the United States and Canada, cold causes 45 times more deaths per year than heat: 113,000 from cold versus 2,500 from heat. Worldwide, where air conditioning is far less available, some 1,700,000 people die annually from cold versus 300,000 from heat – a ratio of almost 6:1. Energy policies that favor wind and solar over fossil fuels beget “fuel poverty” that can make adequate heating impossible, causing numerous health problems and deaths. Poor, minority, elderly and fixed-income families are most severely and inequitably affected, it found.  Cold homes bring increased risks of respiratory and circulatory problems (including asthma, bronchitis, flu, cardiovascular disease and stroke) and exacerbate existing adverse health conditions. Cold household temperatures also increase depression, anxiety and other mental health problems. Already vulnerable groups – young children, older people and those with preexisting health issues – are especially susceptible to hypothermia, more illness and death. Public Health England calculated that one-tenth of all “excess winter deaths” in England and Wales are directly attributable to fuel poverty, and 21.5% of excess winter deaths are attributable to the coldest 25% of homes. 30,000 to 40,000 people died each year in England and Wales since 1990 who would not have perished if their homes hadn’t been so cold, researchers estimated. Adjusted for population, this is equivalent to 165,000 to 220,000 excess American winter deaths per year. In 2017, Germany endured 172,000 localized blackouts; in 2019, 350,000 German families had their electricity cut off because they couldn’t pay their power bills. Coal, oil, natural gas, electricity and home heating costs have risen significantly since those studies were prepared, likely increasing the excess winter death toll markedly. In fact, 2021 European gas prices skyrocketed nearly 600% over 2020 prices, and Rotterdam coal futures soared from $60/ton in October 2020 to $265/ton in September 2021. Energy prices are still rising, affecting jobs and living costs.  Global demand for gas and coal has surged as the world recovers from Covid. British gas production has plunged by 60 % since 2000; Britain and Europe have banned fracking; Putin is playing politics over how much gas it will deliver to Europe; and President Biden has stymied leasing, drilling, fracking, pipelines, and oil and gas exports. Many coal and nuclear power plants have been shut down. Meanwhile, Europe’s heavily subsidized wind turbines generated far less electricity in 2021 due to unfavorable winds. This perfect storm of misinformed policies could bring unprecedented excess deaths as winter sets in. Schools, hospitals and clinics could also be much chillier – and deadlier. At 11¢ per kilowatt-hour (average US business rate), a 650,000-square-foot hospital would pay about $2.2 million annually for electricity. At 25¢ per kWh (UK), the annual cost jumps to $5 million; at 35¢ per kWh (Germany), to $7 million! Those soaring costs would likely result in employee layoffs, higher medical bills, reduced patient care, colder conditions, and more deaths.  Adding to these woes, Citigroup says EU natural gas prices could hit $100 per mcf (per thousand cubic feet or million Btu) if this winter is particularly cold and more Gulf of Mexico hurricanes disrupt production. News outlets report that energy companies supplying six million UK homes face collapse, and several elder care homes have warned that crippling energy bills could force closures, leaving many old and infirm people homeless. Britain’s energy minister has said a “very difficult winter” lies ahead, as gas prices soar amid fear of blackouts and food shortages. Many households “will not be able to cope.” US energy prices remain well below Europe’s, but threats to American families are also rising. The average monthly Henry Hub spot price for natural gas has shot from $1.63 in June 2020 to $5.16 in September 2021. That’s well below the highest-ever price ($13.42 in October 2005) but still ominous. One-third of American households already had difficulty six years ago adequately heating and cooling their homes – and one-fifth of households had to reduce or forego food, medicine and other necessities to pay energy bills. Even before Covid, low-income, Black, Hispanic and Native American families were spending a greater portion of their incomes on energy than average US households. Nearly half of US households that heat with natural gas will spend 22-50% more  this winter than last year, depending on how cold it gets. Families that use electricity, propane or fuel oil to heat their homes will also pay significantly more. Energy-intensive factories may have to cut back hours and production, lay people off, and move operations overseas (where they will continue to burn fossil fuels and emit greenhouse gases). Americans are also being impacted by gasoline prices that have risen more than a dollar a gallon for regular since the 2020 election and recently reached $5.00 per gallon in New York and $7.60 in one southern California town. The overall effect of these anti-fossil-fuel policies on livelihoods, living standards, health and life spans will be profoundly negative. Countless people will perish, many of them cold and jobless in the dark. Under Joe Biden, the United States is already on a trajectory to Europe’s real climate crisis: unaffordable, unreliable energy. That crisis better wake America up. Otherwise, self-righteous activists and governing classes will destroy our American middle class jobs, families – and lives. Tyler Durden Tue, 11/02/2021 - 05:00.....»»

Category: personnelSource: nytNov 2nd, 2021

China"s Energy Crisis Spreads As Gas Stations Run Out Of Diesel

China's Energy Crisis Spreads As Gas Stations Run Out Of Diesel There is one recurring problem with central planning: the greater the level of intervention, the worse and more widespread the unexpected adverse consequences. Just two days ago, when we reported that Beijing had imposed price controls on its coal rationing, we said that the problem with such explicit subsidies which create an artificially low price, is that they don't address the underlying problem (too much demand, not enough supply), but instead accelerate hoarding and lead to a run on the artificially underpriced commodity, forcing spikes in another energy commodity while resulting in an even faster drain of the commodity in question, in this case coal. In essence, it's like a giant geopolitical game of "whack a mole". Well, as we anticipated, in China's attempts to defy the laws of supply and demand when it comes to coal, the world's second-largest economy may have set its people up to relive one of the worst aspects of the 1970s stagflationary wave: gas shortages that have left many gas stations across the country running out of diesel due to supply constraints caused by the surging demand for subsidized coal.  Weeks ago, as China's energy crisis was first unfolding, analysts at Goldman showed a map disclosing the intensity of shortages across China: Unsurprisingly, as the Chinese economy aggressively reopened from the covid shutdown and as the supply of fossil fuels become scarce amid China's "green" crackdown and supply bottlenecks, demand for thermal power soared to an all time high. But while Beijing has sought to conserve coal, diesel and other critical fossil fuels, consumers and gas stations in China's Hebei Province have been left to deal with the brunt of the shortage. One told the Global Times on Friday that they had been "struggling with empty pumps for days and even a week" as a result of supply constraints posed by the booming demand for coal transportation and factories using diesel to generate electricity. And when there is gas to sell, gas station owners face heavy pressure to ration their gasoline. Here's more from the Global Times Several gas stations in North China's Hebei Province told the Global Times on Friday that pumps had been empty from days to even a week. Those who have just acquired supplies face a limited amount of diesel delivery to each customer, in addition to charging them a higher price. "Each customer can only buy a fixed amount, because there isn't enough at the moment," an employee from a gas station in Shijiazhuang, capital of Hebei, told the Global Times on Friday. Staff from another gas station said that the diesel price had increased in recent days by 0.2 yuan ($0.03) to 7.22, but they cannot say if the price will continue to rise or there will be any diesel available in the near future. "The diesel price hike is driven by demand for the booming transportation of bulk cargo, especially coal, which has now entered a peak season, while some factories have also increased their use of diesel to generate electricity to complete orders amid tight power supplies," Han Xiaoping, chief analyst at energy industry website china5e.com, told the Global Times on Friday. Since China relies on imports for 70% of its crude oil, the country's energy market is particularly vulnerable to exogenous supply shocks that can ripple across the entire Chinese economy, creating gas lines straight from 1970s America. The good news, according to Han Xiaoping, chief analyst at Chinese energy industry website china5e.com, is that while gasoline may be scarce, at the very least China will make it through what's expected to be a cold winter. "The tight situation is expected to be a temporary one that will be largely eased after the heating season this winter," Han said. Sadly, the Chinese won't be alone in that. As for the crisis energy crisis being "transitory" just ask central bankers how similar predictions have played out. Tyler Durden Fri, 10/29/2021 - 13:47.....»»

Category: blogSource: zerohedgeOct 29th, 2021