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Tesla Delaying Cybertruck Production To 2023

Tesla Delaying Cybertruck Production To 2023 It's official: Tesla looks as though it is delaying production of its Cybertruck to 2023. Initial production of the truck is slated to start by Q1 2023, a new report from Reuters says. Delays have occurred as a result of Tesla reportedly "changing features and functions" of the electric pickup.  Production in Q1 2023 is expected to be "limited", the report notes.  We noted yesterday that Tesla had removed its 2022 production date for the Cybertruck from the company's website.  Edmunds was first to point out that the company's website used to say “You will be able to complete your configuration as production nears in 2022” and now it states: “You will be able to complete your configuration as production nears.” Recall, last year we reported that Tesla was delaying the Cybertruck to "late 2022". Now it looks as though that schedule may still be too aggressive.  We wrote in September: Before we even opine on the details, we're going to take the "over" regarding this timeline and guess the truck doesn't happen until 2023, perhaps even later. It turns out we were right. Musk's delayed timeline for the truck was first announced last year by pro-Tesla blog electrek, who was even forced to note that even though the truck was "once seen as potentially the first to market" it is "now falling behind". Meanwhile, competitors like Ford's F-150 Lightning continue to garner significant attention and, more importantly, are actually on their way to existing. Tesla "only recently" completed the engineering design for the truck, the September 2021 report said. The report also noted that in August 2021, Tesla had confirmed it would start production in Austin after the Model Y.    Tyler Durden Fri, 01/14/2022 - 09:04.....»»

Category: worldSource: nytJan 14th, 2022

This Is How We Quit Big Oil

At the end of the first quarter of 2021, as the CEOs of the three biggest U.S. oil and gas companies presented their firms’ earnings, investors fired off a range of questions about how they were addressing climate change. The market had already come to view fossil fuels as old, dirty energy, and after oil… At the end of the first quarter of 2021, as the CEOs of the three biggest U.S. oil and gas companies presented their firms’ earnings, investors fired off a range of questions about how they were addressing climate change. The market had already come to view fossil fuels as old, dirty energy, and after oil prices cratered in 2020, owing largely to the pandemic, investors wanted to know how these companies would adapt. They asked about whether carbon capture could be an engine to grow revenue and how the companies viewed the climate-policy landscape. “We are committed to providing products to help customers reduce their emissions,” said Darren Woods, the CEO of ExxonMobil. “Across the globe we’re helping economies decarbonize.” [time-brightcove not-tgx=”true”] This year, the conversation was much different. Oil and gas are now hot commodities following the Russian invasion of Ukraine, and on first-quarter investor calls in 2022, those same CEOs announced massive profits. As investors dialed in to pepper the CEOs with questions, the topic of climate change hardly came up. Instead, investors focused on dividends and share buybacks: ways the companies can pass along their profits to shareholders. For years, activists and politicians have condemned the industry for its efforts to deny the science of climate change and delay any action to address it. But what really moves the industry—like any big industry—is financial performance. In the years leading up to the COVID-19 pandemic, energy was the worst-performing sector in the S&P 500 stock index—a reality that slowly but surely forced leaders to question their business model. Now, the financial rejuvenation of the oil and gas industry has created a complicated dynamic for those pushing the sector to align with the realities of climate change. Money talks, and right now there’s a lot of money to be made digging up and selling oil and gas. In a complete reversal from two years prior, energy is now the best performing sector of 2022 and the only industry on the S&P 500 stock index that has seen valuations rise this year. This renewed profitability has already raised alarms for many concerned about the science of climate change. In a 2021 report, the International Energy Agency laid out a pathway for the world to meet the targets set in the Paris Agreement, which calls for limiting global temperature rise to less than 2°C relative to pre-industrial levels. To do that, public- and private-sector- leaders need to pour trillions of dollars into clean energy, while also reducing financing for fossil fuels. Oil production needs to fall 75% by 2050; to get there, the world should already be ending investment in new fossil fuel production sites. “The scientists tell us that if we want to have a planet that is still livable, emissions need to come to net zero by 2050,” says Fatih Birol, the head of the IEA. “If these things happen, oil demand will go down.” These dual exigencies—an industry turning a healthy profit on its core products and the urgent need to decarbonize the global economy—have led activists around the world to ask a variation on the same question: How will the reign of oil and gas end? Another way to put it: In a free-market system where profit rules, how do you phase down a product that’s making a profit? Produced by TIME Studios and Darren Aronofsky’s Protozoa Pictures, Black Gold tells the story of the coverup of the century—a gripping documentary exposing a global conspiracy that changed the world forever. BlackGold debuts in theaters nationwide on May 11, followed by its Paramount+ docuseries debut on May 17. Click here to purchase tickets. Decades ago, before climate change entered the vernacular, oil companies studied the science of how burning fossil fuels would warm the planet and realized as early as the 1970s that addressing climate change would threaten their core business. To protect their profits, they hid the evidence and launched public relations campaigns to sow doubt with the public and obstruct appropriate regulation. In Black Gold, TIME’s new docuseries on the history of ExxonMobil’s denial of the science of climate change, viewers witness the oil and gas industry’s decades-long effort unfold as the planet warms. Scientists are silenced and shadowy dark-money groups are brought on to help shape the public conversation. The bottom line was profit. “It’s hard to imagine putting the fate of humanity at such risk in return for more money,” former Vice President Al Gore, who won the Nobel Peace Prize for his climate activism, says in the series. The efforts paid dividends. Presidential administrations committed to enacting climate policy, namely those of Bill Clinton and Barack Obama, struggled to get efforts off the ground as industry lobbying dissuaded would-be supporters. Under Republican administrations, the industry enjoyed unparalleled access, with former executives serving in key positions of authority and making government policy. Even President Biden, who campaigned on a promise to be the most climate-forward President yet, took office with climate plans largely centered on incentivizing clean energy rather than penalizing fossil fuels. Denying climate-change science and delaying action are often portrayed by activists as a moral crime. “From a human perspective, it is the gravest sin I can imagine,” says Christine Arena, a former PR executive at Edelman who quit in protest of the company’s work with oil and gas trade groups, in Black Gold. Unsurprisingly, industry leaders don’t view it that way. In a 2019 interview, I asked Shell CEO Ben van Beurden about a campaign accusing his company of knowing about climate change for decades and failing to act. Van Beurden acknowledged that “yeah, we knew” and added, “everybody knew.” He went on to argue that Shell had since publicly acknowledged the science of climate change, but society had failed to act. In other words, the blame shouldn’t fall on Shell; in a free-market economy, the role of a corporation is to make a profit, and, in that context, the company was delivering just as it was supposed to do. Indeed, when the price of oil declined and profits waned in the mid-2010s—thanks to widespread deployment of fracking and horizontal drilling—the industry all of a sudden became vulnerable to pushes for change. Protesters staged die-ins at oil company headquarters. Climate activists used reports about the industry’s decades of climate denial to make a moral case. Meanwhile, college students pushed their universities to divest from fossil fuels, winning some victories while pushing public perception to grow more antagonistic toward oil and gas. These efforts made it harder to recruit talent into the industry and left companies increasingly vulnerable to regulation. Still, nothing challenged the industry’s attitude toward climate as much as the change in tone from investors. By 2020, according to the Forum for Sustainable and Responsible Investment, some $17 trillion dollars in investment had flowed into so-called ESG -investments—short for environmental, social and governance—and executives felt the pressure to offer a positive narrative about how their companies were approaching climate. “In the world of money, everyone lives on bended knee,” Brian Thomas, a managing director at Prudential Private Capital, said at an industry conference in March. “The industry is beginning to kind of morph its behavior to reflect the concerns of its investor base, right or wrong.” Regardless of climate concerns, investors across the board fretted about the dismal financial performance of oil and gas—the industry was failing to make money and needed to be disrupted. “The basic model is in pieces, it’s fallen apart,” Tom Sanzillo, director of finance at the Institute for Energy Economics and Financial Analysis, told me at the time. “This is an industry in last place.” Fossil-fuel companies embarked on efforts to change; the approach varied by company and region, but by and large they were piecemeal and insufficient. In an October 2021 hearing, members of the House Oversight Committee asked executives from some of the world’s largest oil and gas firms about their plans to address climate change. ExxonMobil CEO Woods cited the company’s investment in natural gas as an emissions-reducing tool. The CEO of Chevron said his company would try to emit less carbon in its operations. In short, the scale of the industry’s changes doesn’t match the science. Mike Sommers, the head of the American Petroleum Institute summed it up in a January 2022 address. While offering an unequivocal declaration that his industry needs to address climate change, he made clear that the industry would not shrink voluntarily. “We reject efforts to scale back domestic production,” he said. “This is about addition, not subtraction.” Spencer LowellIn the U.S., refineries like this Chevron facility in El Segundo, Calif., process about 10.5 million barrels of oil per day. For a brief moment, the Russian invasion of Ukraine seemed to offer an opportunity for the energy industry to change course. Following the initial attacks, proponents of clean energy suggested that the moment created a unique chance for policymakers to nudge the economy off fossil fuels. After all, oil and gas paid for Vladimir Putin’s war efforts and left people around the world vulnerable to the economic consequences of higher fuel prices. The European Commission, the E.U.’s executive body, quickly produced a plan to wean the bloc off Russian gas with a dramatic proposal to ramp up the development of clean energy infrastructure. But, on the other side of the Atlantic, the policy picture has been less promising. Republicans opposed to climate legislation have used the spike in oil prices to blame the Biden Administration’s climate initiatives for hurting consumers. And the Administration has softened its climate messaging, tempering it with calls for greater oil and gas production in the short term. Still, even without government policy to serve as a nudge, the oil and gas industry could have used the moment to embrace a different course. As prices rose, companies found themselves flush with no-strings-attached cash that could have been used to finance a true pivot toward green initiatives. But so far, companies have mostly used the money to pay enormous dividends to shareholders and buy back stock, thereby inflating the stock price. ExxonMobil made $5.5 billion in the first quarter of 2022; it plans to spend $30 billion buying back stock by 2023. Chevron made more than $6 billion; it said it would buy back $10 billion by the end of the year. Shell made $9.1 billion; it plans to repurchase $8.5 billion in shares in the first half of the year alone. The dynamic has led advocates, activists, and politicians to rethink their messaging. As consumers pay more for energy, criticizing the industry for its climate failures may not have the same resonance as it once did. Recent polls have shown that while the majority of Americans remain concerned about climate change, the issue has fallen on the list of priorities. Gas prices, on the other hand, seem destined for center stage as the U.S. approaches congressional midterm elections. And so the advocates have turned their attention to the enormous profit companies are making. The companies, these advocates say, should cut the price of their product—or else face a windfall profit tax that would take that money and return it to American taxpayers. “We need an offensive narrative: we’re just saying ‘Blame Putin,’ and they’re saying ‘Blame Biden,’” says Ro Khanna, a Democratic representative from California who is chair of the House Oversight Subcommittee on the Environment. “That’s not enough. We need to be saying ‘Blame Big Oil.’” On the surface, the pivot to talking about the industry’s profit margin may seem like an unfortunate turn away from the urgent reality of pushing these companies to slow fossil-fuel production. But it cuts to the core of the challenge the oil and gas industry poses to addressing climate change. Profits drove the industry’s climate denial from the beginning; profits are driving investment decisions today. When oil is truly no longer a good investment, its reign will come to an end.—With reporting by Mariah Espada.....»»

Category: topSource: timeMay 11th, 2022

The Boeing 777X won"t be delivered to airlines until 2025. Take a look at the enormous new flagship Boeing hopes will be its redemption.

The Boeing plane is the largest twin-engine jet to ever take to the skies and will carry more passengers than its predecessor while using less fuel. The first flight of the Boeing 777X.Stephen Brashear/Getty Boeing's newest aircraft, the Boeing 777X, flew for the first time in January 2020 after lengthy delays. It's the largest twin-engine jet in the world and Boeing's latest new aircraft to fly since the grounding of the 737 Max. Boeing said in April that certification delays have pushed its first delivery back to 2025. Visit Business Insider's homepage for more stories. Boeing's latest history-making plane continues to be delayed. The Boeing 777X will not be delivered until late 2023, its manufacturer announced on Wednesday, further delaying the aircraft's debut well-beyond the planned time frame of 2020. Boeing attributed the delay to numerous factors including the pandemic, reduced demand, and new certification requirements. The twin-engine jet first graced the skies in January 2020 when it lifted off from Paine Field in Everett, Washington following a day of weather delays. A total of four test aircraft now roam the skies, pushing the limits of the aircraft in advance of its certification to fly passengers.Boeing designed the 777X to be the first next-generation variant of Boeing's popular 777 product line, which first flew in the 1990s and currently sees service with the world's leading airlines. The plane is equipped with new engines developed by General Electric and a longer pair of wings, enabling it to carry more passengers while operating more efficiently than its predecessor aircraft, effectively replacing the Boeing 747 Jumbo Jet. When it first took flight, the 777X became the largest twin-engine jet aircraft to ever fly. Though a milestone aircraft for Boeing, its 2020 aerial debut was hampered by the crash of an Ethiopian Airlines Boeing 737 Max and the subsequent worldwide grounding of the narrow-body jet due to issues with the aircraft's software stemming from its development.Take a look at the plane Boeing hopes will be its redemption.  Boeing's 777 became popular in the mid-90s as the next step up from its 767. Large twin-engine aircraft were gaining popularity due to their efficiency and changing attitudes toward their safety.A Boeing 777-200 test aircraft.Reuters/StringerSource: BoeingFast-forward to more recent days: Boeing looked back to its famous 777 to see if it could be improved using technology from its latest widebody, the smaller 787 Dreamliner.View of one of two Rolls Royce Trent 1000 engines of Boeing 787 Dreamliner during a media tour of the aircraft ahead of the Singapore Airshow in SingaporeReutersRead More: Boeing's revolutionary 787 Dreamliner has changed air travel forever. Here's how the company left competitors in the dust with a risky $8 billion bet.Source: BoeingAnd so, the 777X was born.A Boeing 777X aircraft being built by Boeing.Stephen Brashear/GettyJust like the aircraft that came before it, Boeing would create two variants, the -8 and -9.A Boeing 777X aircraft in production.Stephen Brashear/GettyThe -9 aircraft would be the first to be manufactured, with production beginning in October 2017.A Boeing 777X without paint at Paine Field.JASON REDMOND/AFP/GettySource: BoeingAt 251 feet and 9 inches in the length, the aircraft would be the largest twin-engine aircraft to roam the skies.A Boeing 777x aircraft.LINDSEY WASSON/ReutersSource: BoeingIts wingspan is almost as wide as the aircraft is long — wingtip to wingtip it spans 212 feet and 8 inches.The wingspan of a Boeing 777X.TERRAY SYLVESTER/ReutersSource: BoeingThe aircraft has two different wingspan lengths thanks to a unique feature of the aircraft: the wingtips extend flat before takeoff to improve fuel efficiency.The retractable wingtips of a Boeing 777X.TERRAY SYLVESTER/ReutersPilots activate the function via a switch in the cockpit and retract them right after landing to avoid hitting anything on the ground.A Boeing 777X with its wingtips retracted.TERRAY SYLVESTER/ReutersThe wingspan with the extended wingtips is 235 feet, nearly enough to fit two Boeing 757 aircraft back to back.A Boeing 777X preparing to take flight.LINDSEY WASSON/ReutersSource: BoeingWhile the range of the new -9 and the last generation 777-300ER are comparable, the draw to the new aircraft is its efficiency and extra carrying capacity.A Boeing 777X taxing back to its hangar.LINDSEY WASSON/ReutersSource: BoeingThe aircraft's increased efficiency and similar range to its predecessors despite the additional load are made possible thanks to General Electric Aviation's GE9X engines.A General Electric GE9X engine used exclusively on the Boeing 777X.JASON REDMOND/AFP/GettySource: BoeingThe huge engines are large enough for a Boeing 737 fuselage to fit inside.The GE Aviation GE9X engine powers the Boeing 777X.TERRAY SYLVESTER/ReutersThe fuel-efficient measures of the aircraft lead Boeing to boast that it will offer 10 percent less fuel burn, emissions, and operating costs.A Boeing 777X aircraft taxing in Washington.Stephen Brashear/Getty ImagesSource: BoeingBoeing also estimates that the -9 can carry 426 passengers in a two-cabin configuration, 30 more than the -300ER.A Boeing 777X taxing to the hangar.TERRAY SYLVESTER/ReutersSource: BoeingPassengers can look forward to larger windows, more natural light, quieter engines, and a more spacious cabin.A Boeing 777X taxing at Paine Field.JASON REDMOND/AFP/GettySource: BoeingIts first flight was scheduled for January 24, 2020, three years after production began. That flight was scrapped, however, due to bad weather in the area.A Boeing 777X taxis following a failed first flight attempt.LINDSEY WASSON/ReutersThe next day, with the sun shining, the aircraft successfully departed from Paine Field north of Seattle and away from the grounded Max aircraft at Boeing Field.The first flight of the Boeing 777X.Stephen Brashear/GettyA monumental day for Boeing, the aircraft performed routine tests before heading back to Seattle.The flight path of the Boeing 777X's first flightFlightRadar24Source: FlightRadar24But not before stopping for a photo with Mt. Rainer, a Boeing staple.The first Boeing 777X flight landing at Boeing Field.JASON REDMOND/AFP/GettyThe second 777X built by Boeing took flight on April 30, 2020, flying for just under 3 hours on its first trip to the skies.The second Boeing 777X test aircraft taking flight for the first time.BoeingSource: BoeingThe second of four flight test aircraft, this plane tested the 777X's flight handling characteristics and performance capabilities. Boeing flew the plane from its birthplace at Everett, Washington's Paine Field to Seattle's Boeing Field.The second Boeing 777X test aircraft taking flight for the first time.BoeingSource: BoeingA third aircraft took flight on August 3, 2020, departing from its home at Paine Field and heading as far south as Salem, Oregon before heading home via Spokane, Washington and a few touch-and-go maneuvers at an airport in Moses Lake, Washington.Boeing's third 777X aircraft departing on a test flight.BoeingSource: Flighradar24This test aircraft will focus on the auxiliary power unit – known as the third engine as it provides additional energy for functions such as engine start – as well as the aircraft's avionics, flight loads, and propulsion performance.Boeing's third 777X aircraft departing on a test flight.BoeingInstead of the Boeing house livery that its predecessors wear, the third aircraft's fuselage is nearly all white with the Boeing logo and other small lettering and branding providing the only color.Boeing's third 777X aircraft departing on a test flight.BoeingThe tail, however, remained the same.Boeing's third 777X aircraft departing on a test flight.BoeingThe aircraft will continue test flights until it receives certification from the world's aviation regulatory agencies. So far, Boeing has logged around 100 hours of test flying with the new type.A Boeing 777X test flight.Stephen Brashear/GettyWhen it does receive the certification, expected to be rigorous following the issues exposed with the Boeing 737 Max certification, deliveries can begin to customers, with Emirates first on the list.Emirates Boeing 777-300ER aircraft in Dubai.ReutersSource: ForbesSeven other airlines have the aircraft on order including Lufthansa, Singapore Airlines, Qatar Airways, British Airways, All Nippon Airways, Etihad Airways, and Cathay Pacific.A Boeing 777X aircraft departing Paine Field.JASON REDMOND/AFP/GettySource: BoeingAs is Boeing's custom, painted on the side of the fuselage of the first test plane are the tails of each airline that has an order in for the plane.A Boeing 777X aircraft on its first test flight.Stephen Brashear/Getty ImagesThe cost per plane stands at $442.2 million, but some airlines receive discounts for buying in bulk.A Boeing 777X aircraft preparing for takeoff.JASON REDMOND/AFP/GettySource: BoeingFor the majority of the airlines on the list, an Airbus aircraft serves as the flagship, though the 777X will likely take that spot.A Boeing 777X preparing for its first test flight amid bad weather.Stephen Brashear/GettyThe first delivery – and likely the first passenger flight – of the aircraft was expected in late 2023 following pandemic-related delays.A taxing Boeing 777 in Seatle, Washington.JASON REDMOND/AFP/GettyRead More: Boeing's Washington facilities closed indefinitely due to COVID-19. Take a look at the greatest successes and failures which were built there."This schedule, and the associated financial impact, reflect a number of factors, including an updated assessment of global certification requirements, the company's latest assessment of COVID-19 impacts on market demand, and discussions with its customers with respect to aircraft delivery timing," Boeing said in a statement at the time.A Boeing 777X test flight.Stephen Brashear/GettyIn April 2022, the company announced plans to halt production of the 777x through 2023 amid certification delays, pushing the jet's entry into service to 2025.Boeing 777X.BoeingSource: BoeingThis delay will give Boeing time to address the 777X's certification process but will incur an additional $1.5 billion in costs until the jet resumes production.Boeing 777X.BoeingUntil then Boeing will have to be satisfied with its creation of the world's largest twin-engine passenger jet.The Boeing 777X at Dubai Airshow 2021.Thomas Pallini/InsiderRead the original article on Business Insider.....»»

Category: personnelSource: nytApr 27th, 2022

Biden"s Massive SPR Release "Does Not Resolve" Upside Risks, Goldman Warns As It Hikes 2023 Oil Price Target To $115

Biden's Massive SPR Release "Does Not Resolve" Upside Risks, Goldman Warns As It Hikes 2023 Oil Price Target To $115 Update (16:00ET): The Biden administration confirmed a record large Strategic Petroleum Reserve release of 180 mb over the next six months to fight the "Putin price hike at the pump", with the potential for other countries to release 30 to 50 mb. As noted earlier,  while such a release will help trim prices in the short-term, increasing supply and commensurately reducing the amount of necessary price-induced demand destruction - the sole oil rebalancing mechanism currently available in a world devoid of inventory buffers and supply elasticity - it will lead to higher prices over the longer-term as the government's panicked, political intervention in the energy market which is obviously meant to avoid a Democrat wipeout in the midterms will discourage any rational investing in supply by US majors. Furthermore, a release of inventories is, only a temporary source of supply and in fact, as Goldman notes, lower prices in 2022 support oil demand while slowing the acceleration in shale production, leaving for now a deficit in 2023 with an eventual need to refill the SPR. As a result, in a note published late on Thursday, Goldman updates its oil supply, demand and price forecasts accordingly, in which the bank is increasing its already expected SPR release to match today’s announcement of 1.2 mb/d over six months, while delaying an expected ramp-up in Iran exports to 3Q22 given delays coming to an agreement and the lag in the required certification for exports to resume. Separately, Goldman's expectations of a 1 mb/d hit to Chinese demand due to lockdowns in 2Q remains unchanged, with OPEC+ expected to stick to its scheduled quota increases through 3Q22 consistent with today’s decision. Finally, the bank is also increasing the probability of a Moderate Russian export disruption scenario (to 50%), implying a slightly larger loss of supply in our weighted mean outcome. This leads Goldman to cut its 2H22 Brent price forecast from $135 to $125/bbl while also raising the 2023 Brent forecast from $110 to $115/bbl. In particular, the bank says it doesn't see "today’s decision as resolving oil’s structural deficit, now years in the making." This is consistent with the resilience in long-dated prices today, with Dec-23 Brent remaining the bank's preferred long-term bullish oil trade (with EU Gasoil cracks the preferred short-term oil trade). Worse, according to Goldman's commodity team, "upsides risks have not been resolved with today’s release" because: Potential logistical bottlenecks to such an unprecedentedly large and long US SPR discharge could reduce its flow rate, with potential congestion on the Gulf Coast in getting to refiners or export terminals. We see risks of a slower shale growth than the 1.1 mb/d we are expecting in 2023, due to the combined effects of rising cost inflation and binding service bottlenecks. The US policy use of an SPR release, a potential deal with Iran, extreme price volatility and the growing risk of a recession next year, are all exacerbating the uncertainty faced by producers, reducing their incentive to invest more. The bank concludes that since fundamental uncertainty is set to remain extremely high in coming weeks and months despite Biden's action, Goldman reiterates "our conviction for higher oil prices." (full note available to pro subs in the usual place) * * * Watch the President deliver remarks on "responding to Putin's Price Hike" at 1330ET: *  *  * Update (1100ET): The White House has released its fact sheet on how the Biden administration will respond to what they are calling "Putin's Price Hike" by releasing 1 million barrels/day from the Strategic Petroleum Reserve... After consultation with allies and partners, the President will announce the largest release of oil reserves in history, putting one million additional barrels on the market per day on average – every day – for the next six months. The scale of this release is unprecedented: the world has never had a release of oil reserves at this 1 million per day rate for this length of time. This record release will provide a historic amount of supply to serve as bridge until the end of the year when domestic production ramps up. Which just happens to be when the midterms are held. This move will reduce the SPR to its lowest absolute level; in 40 years and its lowest level all-time in terms of days-supply... The goal of Biden’s plan is to create a bridge for U.S. supply until the fall, when domestic production is anticipated to increase, the people said. But OPEC+’s refusal to increase its own production may dampen any effect of the U.S. release. “It is hard to overstate the scale of this intervention if it bears out,” Kevin Book, managing director of ClearView Energy Partners, said in a research note. “It would be the largest draw-down volume announced in the 45-year history of the SPR by a factor of 3.6x.” But, as Goldman warned below, such a release would therefore not resolve the structural supply deficit, years in the making... and the need for restocking will be a big demand pressure on prices A large release from America “would reduce the amount of necessary price-induced demand destruction,” Goldman Sachs Group Inc. analyst Damien Courvalin wrote in a note to clients. “This would remain, however, a release of oil inventories, not a persistent source of supply for coming years.” Additionally, Saad Rahim, Trafigura Group's Chief Economist told Bloomberg TV, that the potential SPR release will actually discourage future oil output and could drive forward prices higher, and added that the US is only capable of delivering 400,000 to 500,000 barrels a day of oil from the strategic reserve. And the modest drop in WTI prices tells you all you need to know about the market's expectations of the success of this intervention... “Energy traders see any proposal of tapping strategic reserves as a short-term fix,” said Ed Moya, senior market analyst at Oanda.  Which will barely impact gas prices for the average American... The WTI crude curve has dropped at the short-end on the immediate supply (but as Goldman warns, longer-dated crude prices are actually rising)... And just to throw some more interventionary gas on the fire, Biden urges Congress to make companies pay fees on wells from their leases that they haven’t used in years and on acres of public lands that they are hoarding without producing.  Which will also fail to achieve anything substantive because if the wells were economic, they would be running them and so companies will uncap wells only to keep them flowing at a trickle to avoid fines. Never one to miss a greening opportunity - and desperate to keep the progressive left happy, Biden threw a bone to AOC and her climate crazed crowd as he ramps up fossil fuel supply by issuing a directive, authorizing the use of the Defense Production Act to secure American production of critical materials to bolster our clean energy economy by reducing our reliance on China and other countries for the minerals and materials that will power our clean energy future. *  *  * Full statement below (link): FACT SHEET: President Biden’s Plan to Respond to Putin’s Price Hike at the Pump Americans face rising prices at the pump because of Putin’s Price Hike.  Since Putin accelerated his military build-up around Ukraine, gas prices have increased by nearly a dollar per gallon.  Because of Putin’s war of choice, less oil is getting to market, and the reduction in supply is raising prices at the pump for Americans.  President Biden is committed to doing everything in his power to help American families who are paying more out of pocket as a result.  That is why today, President Biden will announce a two-part plan to ease the pain that families are feeling by increasing the supply of oil starting immediately and achieving lasting American energy independence that reduces demand for oil and bolsters our clean energy economy.  Immediately Increasing Supply At the start of this year, gas was about $3.30 a gallon.  Today, it’s over $4.20, an increase of nearly $1.  And now, a significant amount of Russian oil is not making it to market.  The President banned the import of Russian oil – which Republicans and Democrats in Congress called for and supported.  It was the right thing to do.  But, as the President said, Russian oil coming off the global market would come with a cost, and Americans are seeing that at the pump. The first part of the President’s plan is to immediately increase supply by doing everything we can to encourage domestic production now and through a historic release from the Strategic Petroleum Reserve to serve as a bridge to greater supply in the months ahead. Increasing Domestic Production The fact is that there is nothing standing in the way of domestic oil production. The United States is already approaching record levels of oil and natural gas production. There are oil companies that are doing the right thing and committing to ramp up production now.  Right now, domestic production is expected to increase by 1 million barrels per day this year and nearly 700,000 barrels per day next year. Still, too many companies aren’t doing their part and are choosing to make extraordinary profits and without making additional investment to help with supply.  One CEO even acknowledged that, even if the price goes to $200 a barrel, they’re not going to step up production.  Right now, the oil and gas industry is sitting on more than 12 million acres of non-producing Federal land with 9,000 unused but already-approved permits for production. Today, President Biden is calling on Congress to make companies pay fees on wells from their leases that they haven’t used in years and on acres of public lands that they are hoarding without producing. Companies that are producing from their leased acres and existing wells will not face higher fees. But companies that continue to sit on non-producing acres will have to choose whether to start producing or pay a fee for each idled well and unused acre. Historic Release from the Strategic Petroleum Reserve as a Bridge Through the Crisis After consultation with allies and partners, the President will announce the largest release of oil reserves in history, putting one million additional barrels on the market per day on average – every day – for the next six months.  The scale of this release is unprecedented: the world has never had a release of oil reserves at this 1 million per day rate for this length of time. This record release will provide a historic amount of supply to serve as bridge until the end of the year when domestic production ramps up.  The Department of Energy will use the revenue from the release to restock the Strategic Petroleum Reserve in future years. This will provide a signal of future demand and help encourage domestic production today, and will ensure the continued readiness of the Strategic Petroleum Reserve to respond to future emergencies.   President Biden is coordinating this action with allies and partners around the world, and other countries are expected to join in this action, bringing the total release to well over an average 1 million barrels per day. Achieving Real American Energy Independence The United States is the largest oil producer in the world and is a net energy exporter.  Despite that, the actions of a dictator half a world away can still impact American families’ pocketbooks. The President will announce his commitment to achieving real energy independence – which centers on reducing our dependence on oil altogether. The President will call on Congress to pass his plan to speed the transition to clean energy that is made in America.  His plan will help ensure that America creates millions of good-paying union jobs in clean, cutting-edge industries for generations to come. And it will save American families money in theimmediate future – including more than $950 a year in gas savings from taking advantage of electric vehicles, and an additional $500 a year from using clean electricity like solar and heat pumps to power their homes.    And, the President will issue a directive, authorizing the use of the Defense Production Act to secure American production of critical materials to bolster our clean energy economy by reducing our reliance on China and other countries for the minerals and materials that will power our clean energy future.  Specifically, the DPA will be authorized to support the production and processing of minerals and materials used for large capacity batteries–such as lithium, nickel, cobalt, graphite, and manganese—and the Department of Defense will implement this authority using strong environmental, labor, community, and tribal consultation standards. The sectors supported by these large capacity batteries—transportation and the power sector—account for more than half of our nation’s carbon emissions.  The President is also reviewing potential further uses of DPA – in addition to minerals and materials – to secure safer, cleaner, and more resilient energy for America. This week alone, President Biden announced historic efforts to increase energy efficiency and lower costs for consumers.  The Department of Energy opened applications for more than $3 billion in new Bipartisan Infrastructure Law funding—ten times the historical funding levels of the Weatherization Assistance Program—for energy efficiency and electrification upgrades in thousands of homes that will save families hundreds of dollars on utility bills.  The Administration also advanced smart standards that will lower consumer costs, including a roadmap of 100 actions this year that will save families $100 annually through more efficient home appliances and equipment, as well as new fuel economy standards for cars and trucks to save drivers money at the pump.  And the Administration is seeking additional opportunities to ramp up the deployment of heat pumps to displace fuel burned in buildings, as well as programs to drive efficiency, electrification, and use of clean fuels in the industrial sector. *  *  * Update (0800ET): Oil prices have stabilized, down around 5% after last night's leaked rumors of the Biden admin's latest plan to save the world - and his approval rating - from soaring gas prices by releasing a gargantuan amount of reserv7es from the SPR. However, as we noted overnight, this is not a solution that provides anything other than a short-term fillip, and as Goldman's Damien Courvalin confirms, this SPR release would remain, however, a release of oil inventories, not a persistent source of supply for coming years. Such a release would therefore not resolve the structural supply deficit, years in the making. Worse still, Courvalin warns that in fact, lower prices in 2022 would support oil demand while slowing the acceleration in shale production, leaving for now a deficit in 2023 as well as the likely requirement to refill the SPR. The net supply increase would be more modest, since we had already assumed a 0.3/0.6/0.9 mb/d SPR release under our Mild/Moderate/Severe Russian export scenarios. In fact, the bank sees three potential bullish (higher oil price) risks: (1) potential logistical bottlenecks to such an unprecedentedly large and long US SPR discharge, reducing its flow. In particular, congestion on the Gulf Coast could crowd out shale's expected production growth this year. (2) We assume that OPEC+ would still accelerate its planned quota increase if Russian and Kazakhstan exports fall by 2 mb/d, which may not occur in the face of an SPR release. (3) We now see increasingly symmetrical probabilities to our Mild and Moderate disruption scenarios (of 1 and 2 mb/d respectively), implying a larger loss of supply in our weighted mean outcome than previously. Adjusting for these probabilities would, for example, bring our 2H22 forecast back to $125/bbl. And looking forward to 2023, the bank says on balance would point to prices $5/bbl above our current $110/bbl forecast, reflecting higher demand and lower shale supply exiting 2022, as well as the likely requirement to restock the SPR (we assume this is done proportionally over 2023-2025, similar to last year's release). Goldman has refrained  from adjusting any of oits crude price forecasts until details of the SPR release are reportedly revealed this afternoon at 1330ET, but the bank notes that additional measures could be announced, with a potential increase to the amount of ethanol blended into gasoline, a measure that in turn would exacerbate the already very tight outlook for grain markets. There will also be an IEA organized emergency meeting on Friday at 8:00am ET, for a potential global coordination of such a large reserve release. Additionally, OPEC+ has agreed on a 432k b/d output hike in May - as expected. Official Communiqué: Following the conclusion of the 27th OPEC and non-OPEC Ministerial Meeting, held via videoconference on March 31, it was noted that continuing oil market fundamentals and the consensus on the outlook pointed to a well-balanced market, and that current volatility is not caused by fundamentals, but by ongoing geopolitical developments. The OPEC and participating non-OPEC oil-producing countries decided to: Reaffirm the decision of the 10th OPEC and non-OPEC Ministerial meeting on 12th April 2020 and further endorsed in subsequent meetings including the 19th OPEC and non-OPEC Ministerial meeting on the 18th July 2021. Reconfirm the baseline adjustment, the production adjustment plan and the monthly production adjustment mechanism approved at the 19th OPEC and non-OPEC Ministerial Meeting and the decision to adjust upward the monthly overall production by 0.432 mb/d for the month of May 2022, as per the attached schedule. Reiterate the critical importance of adhering to full conformity and to the compensation mechanism taking advantage of the extension of the compensation period until the end of June 2022. Compensation plans should be submitted in accordance with the statement of the 15th OPEC and non-OPEC Ministerial Meeting. Hold the 28th OPEC and non-OPEC Ministerial Meeting on 5 May 2022. Delegates say the meeting wrapped up in 12 minutes, beating last month’s record for brevity. The opec plus meeting just ended it lasted 12 mins. No change in policy. #OOTT — Amena Bakr (@Amena__Bakr) March 31, 2022 That won't please Biden at all. *  *  * As we detailed last night, for those keeping score, we believe this is the third time in the last month that the Biden administration has tried to jawbone crude oil prices lower with an ever-increasing 'threat' of releases from the Strategic Petroleum Reserve. This time is different though as Bloomberg reports that, according to people familiar with the matter, the Biden administration is weighing a plan to release roughly one million barrels of oil a day for several months. The total release may be as much as 180 million barrels, the people said, which is quite a step up from the 30mm barrel release 'mulled' on March 25th (yes 5 days ago). The instant reaction from the algos was to sell, knocking WTI down around 4%... However... as much as we want lower gas prices, these actions by the administration are bordering on the insane. Of course, just like last year's SPR release, which actually sent oil prices higher as the strategy backfired spectacularly, another shot of supplies from the reserve would probably be futile. To further illustrate this point, the chart below shows that a release of 180M barrels from the reserve (which is supposed to be reserved for emergencies) would take the Strategic Petroleum Reserve to its lowest since 1984...and so far has done absolutely nothing to slow the surge in prices... In fact, this time around, it's possible - even likely - that the backlash could be even more punishing, since, when adjusted for the present level of implied demand, SPR levels are already at their lowest levels since 2002, with just 33 days of supply. But like the old saying goes: if at first you don't succeed, then try, try again. In all likelihood, President Biden and his team probably aren't all that concerned with the short-term market impact, since political decisions like these are all about optics anyway. Of course, Einstein seems to have been right: "insanity is doing the same thing over and over again and expecting different results." And when this SPR release (should it ever actually happen) fails to do much of anything to drive prices lower, how much longer until the administration resorts to the next logical steps, being 1) gas stimmies (like our European allies) before 2) price controls? Bear in mind that OPEC+ is still shunning any demands from Biden to increase production 'for the sake of global democracy....or his approval ratings or some such...' and the cartel is widely expected to ratify a production increase of 432,000 barrels a day for May. Simply put, as old saying goes, the cure for high oil (gas) prices, is high oil (gas prices), and notably, there is some evidence of demand destruction starting to happen as gas prices soar to record highs. And as we noted earlier today, the decline in implied gasoline demand is fairly concrete proof that record high prices are dampening consumption across the country. On a four-week moving average basis, demand appeared to have stalled out around 8.8 million barrels a day as levels fell behind seasonal trends. Now, it appears to have fully turned around, falling 61,000 barrels a day week on week. However, of course there is government intervention to consider, consumer subsidies may actually worsen the situation by limiting demand destruction, with California, France, Brazil and Mexico being the latest to enact policies to cut prices at the pump. We give the last words to @RufusXavierSar2 who succinctly summed up the real farce of all this desperation... That's great until the SPR is empty and we have a real oil shock — RufusXavierSarsaparilla (@RufusXavierSar2) March 31, 2022 And don't expect any short-term help from this modest drop in oil... Sadly for Biden's approval rating (and drivers across the country), the recent resurgence in crude prices suggest pump prices will soon be on the rise again. Tyler Durden Thu, 03/31/2022 - 13:30.....»»

Category: blogSource: zerohedgeMar 31st, 2022

Shale Growth Constrained By Supply Chain Bottlenecks

Shale Growth Constrained By Supply Chain Bottlenecks By Tsvetana Paraskova for Oilprice.com The U.S. shale industry is racing to ramp up production, “but it won’t be quick.” Supply chain bottlenecks are putting a cap on short term output growth. At this rate, the United States will not be able to close the global oil supply gap caused by the ban of Russian oil. All those who have hoped that the U.S. shale patch could ramp up oil production quickly to fill the gap that Russian supply is leaving in the Western oil market are in for a disappointment—at least this year.  Supply chain bottlenecks from workforce to frac sand and equipment are holding back a surge in America’s oil production, even as the White House has changed the tune in recent weeks and called on U.S. producers to increase output. Production is indeed growing, but not at a fast enough pace to offset losses of global supply elsewhere. Not even $120 a barrel oil can prompt shale producers to embark on a surge in output. That’s not only because of capital discipline, which investors demand. Constraints in the supply chain are also hindering massive growth in U.S. oil production.  So, America’s oil production—while growing—will be unable to offset an expected decline in Russian seaborne oil exports amid a “buyers’ strike” to purchase cargoes from Russia after Putin invaded Ukraine.  U.S. Production Growth Insufficient To Close Supply Gap  Rising American oil production is one of the options for closing the global supply gap, “but it won’t be quick,” Claudio Galimberti, Senior Vice President of Oil Markets, Head of Americas Research at Rystad Energy, wrote earlier this month.  “Any material change is unlikely in the country’s current growth profile in 2022, even amid extremely high oil prices. US oil production will come close to its pre-pandemic levels by growing by about 900,000 bpd from December 2021 to December 2022,” Galimberti added.  The big difference in U.S. production could be in 2023 if oil prices remain well above $100 a barrel. American production could rise then by up to 2 million bpd, far exceeding the pre-pandemic peak of 12.9 million bpd, according to Rystad.  Driven by rising oil prices, crude production in the United States is expected to rise in 2023 to a record-high on an annual-average basis of 13.0 million bpd, the EIA said in its Short-Term Energy Outlook (STEO) for March earlier this month. The current estimate is now raised from the 12.6 million bpd forecast for 2023 in the February outlook. More recently, Ryan Hassler, senior analyst at Rystad Energy, told the Financial Times, “You can’t just immediately turn on the taps.”  “It will take some time to reactivate the equipment and staff the crews and bring on the additional sand capacity,” Hassler added.    Frac sand in the biggest U.S. shale play, the Permian, is in short supply, threatening to slow drilling programs at some producers and sending sand prices skyrocketing. This adds further cost pressure to American oil producers, who are already grappling with cost inflation in equipment and labor shortages.   The U.S. oil industry cannot boost supply significantly right now, as the U.S. Administration wants.   For example, even if ConocoPhillips decided to pump more oil today, the first drop of new oil would come within eight to 12 months, CEO Ryan Lance told CNBC earlier this month.  Despite its flexibility to respond to soaring oil prices, the U.S. shale patch cannot come to the rescue of the increasingly tightening oil market in the short term, commodity intelligence firm Kpler said earlier this month. Supply Chain Bottlenecks Hinder Massive Near-Term Growth “Labor and equipment shortages, along with inflation in oil country tubular goods and shortages of key equipment and materials, will limit growth in our business and U.S. oil production. In particular, truck drivers are in critical shortage, perhaps due to competition from delivery services,” an executive at an exploration and production firm wrote in comments to the quarterly Dallas Fed Energy Survey published last week. Another executive noted: “The largest cost increase over the past 12 months for the oil and gas industry is from tubular steel. The inventory has shrunk and lead times have increased. Steel availability and pricing are also delaying quick activity ramp-up among several operators. This is impairing the ability to bring production online faster.”  Yet another comment reads: “Elevated geopolitical risk, persistent supply-chain issues, continued labor shortages, shrinking capital availability and rising inflation have impacted the ability of small upstream producers to undertake projects that they would otherwise be readily engaged in at current commodity price levels.”  Supply chain issues, continued limited sources of capital and debt, and severe workforce shortages impact growth prospects.  Several E&P executives also noted the U.S. Administration’s policies toward fossil fuels that hinder growth and weigh on both the short-term and long-term visibility, with one saying, “The regulatory environment is not friendly.”  “Washington’s immature “finger-pointing” attitude of blaming the oil industry is sickening and tiring. I wish our administration would wake up and start doing some of the right things. We could use some leadership,” another E&P executive said.  All in all, U.S. production is growing, but not as fast as the share of global oil supply that may come off the market in the coming weeks and months.    Tyler Durden Wed, 03/30/2022 - 13:28.....»»

Category: blogSource: zerohedgeMar 30th, 2022

A Preview Of The Crazy Week Ahead

A Preview Of The Crazy Week Ahead Here is just a sample of the events on deck this week: a Fed rate hike, a Russian default, a meeting between the US and China, even more sanctions against Russia, the first double-digit (10%) PPI print in decades, a big drop in retail sales, a freak surge in covid across China, oh and a $3.3 trillion notional option expiration on Friday and all happening with liquidity at record lows. Yes, this week will be insane. As DB's Jim Reid summarizes what's coming, it's a big central bank week with the Fed the obvious focal point mid-week. The BoE and the BoJ also hold meetings, along with some of their emerging markets counterparts. We'll also see CPI for Japan and Canada and a number of housing market statistics in the US and China. Earnings will include Volkswagen, FedEx and Enel, among others. Wednesday will also be a landmark day even outside of the Fed as this is the date that two Russian Eurobonds have coupon payments. These are small (c.$120bn out of c.$1.75bn of annual hard currency coupons) but will be hugely symbolic. DB strategists write over the weekend that this would likely mark the start of the 30-day grace period that issuers have before a default is officially triggered. 30-days still gives time for there to be a negotiated end to the war and therefore this probably isn't yet the moment where we see where the full stresses in the financial system might reside. There has already been a huge mark to market loss already anyway with news coming through or write downs. However this is clearly an important story to watch. Onto the Fed now and the FOMC concludes on Wednesday, with the Fed expected to raise rates for the first time since December 2018. Markets are pricing in a +25bps hike, in line with the rhetoric from Chair Powell at his congressional testimonies a couple of weeks back. Before the invasion we thought a 50bps was likely this week and the problem is that by delaying such a move they may have to do more later. The market seems to agree to some degree as at Friday's close the market was pricing in 6.7 hikes this year, the most seen in this cycle and above the post invasion intra-day lows of 4.45. This morning we are at 6.92. Goldman agrees, and does not expect the war to knock the Fed off of a 25bp-per-meeting tightening path. With inflation likely to remain uncomfortably high all year, the FOMC will probably only pause if it thinks further tightening risks pushing the economy into recession. They continue to expect seven 25bp hikes this year, followed by four quarterly hikes in 2023, for a terminal rate of 2.75-3%. The dots are likely to jump again in March, though the FOMC’s forecast is expected to be a bit less hawkish than our own. Goldman expects the median dot to show six hikes in 2022, but the risks are tilted to the downside, especially if FOMC participants view balance sheet reduction as equivalent to multiple rate hikes. The median dot is expected to show four more hikes in 2023 and a terminal rate of 2.5-2.75%, just above the FOMC’s 2.5% neutral rate estimate. With regards to QT, strategists anticipate that the Fed will use this upcoming meeting to announce caps determining the maximum monthly runoff and, in May, announce QT that would begin in June. They think we will see $800bn of runoff this year and an additional $1.1tn drawdown in 2023, a cumulative reduction which is roughly equal to between three and four rate increases. The fascinating thing is what this does to the yield curve if they are correct: nirvana for the Fed is getting to around neutral, somewhere with a 2 handle on Fed Funds and trying to ensure that 10yr yields rise enough to prevent inversion but not enough to lead to a tightening of financial conditions. So if in 12-18 months time 2 year yields are 2.25-2.5%, 10 year yields are 2.75-3% and inflation is coming back towards trend then the Fed have pulled off a masterstroke. If however, 2yr yields are above 2% and 10yr yields below this level, the inversion will likely bite. On the other hand, if the curve steepens up too much and longer end yields are notably above 3% the risk is that financial conditions tighten too much given the global debt load. So, as Reid concludes, "the Fed are trying to thread a needle and its possible inflation will give them an impossible task." Time will tell. Ahead of the Fed watch out for US PPI (Tuesday) and Retail Sales (Wednesday). They are highly unlikely to change the equation for this FOMC but will be important for the direction of the economy and inflation thereafter. We also get a plethora of US housing data to end the week with Thursday's housing starts and Friday's existing homes sales. These are going to be important for both activity and the rents component in CPI. Back to central banks and on Thursday, it will be the BoE's turn. DB economists expect a +25bps hike to 0.75%, the pre-pandemic level. Their projected terminal rate is 1.75%. Finally, on Friday, the Bank of Japan will hold a meeting as well and is expected to hold the key rate steady but there is a chance of economic assessment being downgraded. The Bank of Russia's decision on the same day will be scrutinized for the response to risks to the economy from the ongoing geopolitical turmoil. Last, and certainly not least, on Friday we see a massive $3.3tln of derivative notional expiring, not only right after the FOMC decision but also in the midst of a complex geopolitical situation. This represents some 30% of S&P open interest expires on March 18 (full preview of this week's Op-Ex can be found here). Courtesy of DB, here is a day-by-day calendar of events: Monday March 14 Data: France trade balance Other: annual review of the "shopping basket" in the UK Tuesday March 15 Data: US PPI, China property investment, industrial production, fixed assets ex. rural, retail sales, Germany ZEW survey expectations, UK jobless claims change, ILO unemployment rate 3 months, Eurozone ZEW survey expectations, industrial production, Japan trade balance, Canada housing starts, manufacturing sales Earnings: Volkswagen, RWE, Generali Wednesday March 16 Data: US retail sales, import price index, export price index, business inventories, NAHB Housing Market Index, China new home prices, Japan capacity utilization, core machine orders, Canada CPI, wholesale trade sales Central banks: Fed decision Earnings: Lennar, E.ON, Inditex Other: NATO defense ministers meet Thursday March 17 Data: US housing starts, building permits, initial jobless claims, industrial production, capacity utilisation, Japan CPI Central banks: BoE meeting, ECB's Lagarde, Lane, Schnabel, Visco speak Earnings: Accenture, Enel, FedEx, Dollar General, Verbund Friday March 18 Data: US existing home sales, leading index, Italy trade balance, Eurozone trade balance, labour costs, Canada retail sales Central Banks: BoJ meeting, Bank of Russia meeting Earnings: Vonovia Finally, when looking at just US macro data, Goldman writes that the key economic data releases this week are PPI inflation on Tuesday, retail sales on Wednesday, and Philly Fed manufacturing index on Thursday. The March FOMC meeting is this week, with the release of the statement at 2:00 PM ET on Wednesday, followed by Chair Powell’s press conference at 2:30 PM. There are several scheduled speaking engagements by Fed officials this week. Monday, March 14 There are no major economic releases scheduled. Tuesday, March 15 08:30 AM PPI final demand, February (GS +1.0%, consensus +0.9%, last +1.0%); PPI ex-food and energy, February (GS +0.7%, consensus +0.6%, last +0.8%); PPI ex-food, energy, and trade, February (GS +0.7%, consensus +0.6%, last +0.9%): We estimate a 0.7% increase for PPI ex-food and energy and PPI ex-food and energy, and trade, reflecting a continued boost from supply chain bottlenecks, labor shortages, and commodity prices. We estimate that headline PPI increased by 1.0% in February. 08:30 AM Empire State manufacturing survey, March (consensus +7.0, last +3.1) Wednesday, March 16 08:30 AM Retail sales, February (GS -0.5%, consensus +0.4%, last +3.8%); Retail sales ex-auto, February (GS flat, consensus +0.9%, last +3.3%); Retail sales ex-auto & gas, February (GS -0.3%, consensus +0.4%, last +3.8%); Core retail sales, February (GS -0.6%, consensus +0.3%, last +4.8%): We estimate a 0.6% decline in February core retail sales (ex-autos, gasoline, and building materials; mom sa). January sales were likely boosted by a low seasonal hurdle and by late shipments of some holiday orders, and we look for normalization in February—including in the nonstore category. The lapse of the child tax credit could also weigh on spending in this week’s report. On the positive side, we expect a rebound in restaurant spending as the Omicron wave subsided. We estimate a 0.5% decline in headline retail sales, reflecting lower auto sales but higher gasoline prices. 08:30 AM Import price index, February (consensus +1.6%, last +2.0%) 10:00 AM Business inventories, January (consensus +1.1%, last +2.1%) 10:00 AM NAHB housing market index, March (consensus 81, last 82) 02:00 PM FOMC statement, March 15-16 meeting: This week’s meeting will be watched mostly for clues about the pace of tightening after March in the statement, the dot plot, and the Chair’s comments about the war. We continue to seven 25bp hikes this year, followed by four quarterly hikes in 2023, for a terminal rate of 2.75-3%. We expect the FOMC will finalize and publish its balance sheet plan at the May meeting and then announce the start of balance sheet reduction at the June meeting. Thursday, March 17 08:30 AM Initial jobless claims, week ended March 12 (GS 210k, consensus 220k, last 227k); Continuing jobless claims, week ended March 5 (consensus 1,480k, last 1,494k); We estimate initial jobless claims fell to 210k in the week ended March 12. 08:30 AM Philadelphia Fed manufacturing index, March (GS 10.0, consensus 15.0, last 16.0): We estimate that the Philadelphia Fed manufacturing index declined by 6.0pt to 10.0 in March, reflecting a sentiment drag from the conflict in Ukraine. 08:30 AM Housing starts, February (GS +5.0%, consensus +3.8%, last -4.1%); Building permits, February (consensus -2.4%, last revised +0.5%): We estimate housing starts increased by 5.0% in February. Our forecast incorporates higher permits, a smaller virus drag, and mean reversion after a decline in January. 09:15 AM Industrial production, February (GS +0.1%, consensus +0.5%, last +1.4%); Manufacturing production, February (GS +0.6%, consensus +1.0%, last +0.2%): Capacity utilization, February (GS 77.6%, consensus 77.9%, last 77.6%): We estimate industrial production rose by 0.1% in February, with strong mining production offsetting weaker auto production. We estimate capacity utilization was flat at 77.6%. Friday, March 18 10:00 AM Existing home sales, February (GS -5.0%, consensus -6.2%, last +6.7%); We estimate that existing home sales decreased by 5.0% in February, following a 6.7% increase in January. 01:20 PM Richmond Fed President Barkin (FOMC non-voter) speaks: Richmond Fed President Thomas Barkin will discuss the economic outlook during an event hosted by the Maryland Bankers Association. Text and Q&A with both audience and media are expected. 02:00 PM Fed Governor Bowman (FOMC voter) speaks: Fed Governor Michelle Bowman will take part in a virtual Fed Listens event on "Helping Youth Thrive". Source: DB, Goldman, BofA Tyler Durden Mon, 03/14/2022 - 09:46.....»»

Category: blogSource: zerohedgeMar 14th, 2022

Futures Fade As Yields Soar, Oil Slides And China Stocks Crater

Futures Fade As Yields Soar, Oil Slides And China Stocks Crater US equity futures held on to modest gains overnight as the market desperately clung on to hope that the latest ceasefire talks between Russia and Ukraine which started on Monday, may yield results (clearly forgetting how the rug was pulled from under the market on Friday in an identical setup), which initially sent stocks higher especially in Europe, despite a surge in 10Y TSY yields to 2.10%, the highest since July 2019, two days ahead of the first Fed rate hike, and a complete collapse in Chinese stocks. And while U.S. index futures were still pointing to a positive open around 8am ET this gain is fading fast, with spoos now up just 0.5% after rising 1% earlier... ... as headlines from the Kremlin suggested that a ceasefire is the last thing on Putin's mind. *KREMLIN: RUSSIA WILL REALIZE ALL ITS PLANS IN UKRAINE OPERATION *KREMLIN: UKRAINE OPERATION WILL BE COMPLETED ON SCHEDULE *KREMLIN: RUSSIA DIDN'T REQUEST CHINA MILITARY AID FOR OPERATION *KREMLIN: RUSSIA HAS RESOURCES NEEDED TO COMPLETE UKRAINE ACTION And while futures would normally be deep in the red by now, and will be shortly now that AAPL is at LOD... APPLE FALLS TO SESSION LOW, DROPS 1.6% IN PREMARKET TRADING ... this morning algos are confused by the drop in oil which has emerged as an inverse barometer for peace, however the reason oil is down today is due to the unprecedented lockdown of China's Shenzhen, announced over the weekend, and which the market is worried may spread to the rest of the market and lead to another Chinese shutdown (spoiler alert: it won't, but it will cripple US-facing supply chains as the Russia-China alliance makes itself felt). Meanwhile, and as previewed last night, in addition to the latest surge in covid cases and Shenzhen lockdown, Chinese stocks listed in Hong Kong had their worst day since the global financial crisis, as concerns over Beijing’s close relationship with Russia and renewed regulatory risks sparked panic selling. The Hang Seng index dropped more than 4%, sliding below 20,000 to the lowest level since 2015... ... while the Hang Seng China Enterprises Index closed down 7.2% on Monday, the biggest drop since November 2008. The Hang Sang Tech Index tumbled 11% in its worst decline since the gauge was launched in July 2020, wiping out $2.1 trillion in value since a year-earlier peak, after the southern city of Shenzhen, a key tech hub near Hong Kong, was placed into lockdown to contain rising Covid-19 infections. The broader Hang Seng Index lost 5%. “If the U.S. decides to impose sanctions on China in total or on individual Chinese companies doing business with Russia, that would be a concern,” said Mark Mobius, who set up Mobius Capital Partners after more than three decades at Franklin Templeton Investments. “The whole story is still up in the air in this case.” In premarket trading, U.S.-listed Chinese stocks resumed a steep selloff on Monday, following an 18% rout last week, as concerns about Beijing’s close relationship with Russia added to losses spurred by a Chinese crackdown on tech giants and the growing risk of U.S. delistings. Alibaba (BABA US), JD.com (JD US) both fall 5%. U.S. casinos stocks are also lower in premarket, with multiple headwinds weighing on the sector, including inflation, while listed names with exposure to Macau face additional pressure from surging Covid cases in China’s Guangdong province and in Hong Kong. Wynn Resorts (WYNN US) -1.8%; Las Vegas Sands (LVS US) and MGM Resorts (MGM US) also down in thin trade. Meanwhile, Apple is down 1.6% after supplier Foxconn announced it was halting operations at its Shenzhen sites, one of which produces iPhones, in response to a government- imposed lockdown on the tech-hub city. Apple +0.2% in premarket. Besides all the geopolitical chaos, this week’s main focus will be on the Fed’s policy meeting, with traders expecting a quarter percentage-point rate hike. “There is little a central bank can do about commodity prices -- Fed Chair Powell can hardly dig an oil well in the middle of Washington D.C.,” said Paul Donovan, chief economist at UBS Global Wealth Management. “The concern will be about second-round effects -- prices encouraging higher wage costs.” In Europe, the Stoxx 600 was 1.7% higher with automakers and banks leading gains, while miners and energy stocks underperformed.  Tech investor Prosus falls as much as 11% in Amsterdam, the most since March 2020 and touching a record low, following a continued selloff in Chinese technology shares as concerns about Beijing’s close relationship with Russia added to worries over regulatory headwinds. Naspers, which holds a 29% stake in Chinese online giant Tencent through Prosus, slides as much as 15% in Johannesburg, the steepest plunge since November 2000. Here are some of the biggest European movers today: VW preference shares jump as much as 8.7% in Frankfurt and are among the top performers in a buoyant Stoxx 600 Automobiles & Parts Index after the carmaker pre-released results late Friday. Stifel called it a strong fourth quarter and a “surprisingly confident” outlook. Uniper gains as much as 11%; the power plant operator might benefit from the U.K. government’s potential plans to extend the life of coal-fired power plants, RBC says. Telecom Italia shares rise as much as 9.7% after the firm agreed to a deeper review of KKR’s takeover proposal and said it will ask the private equity giant for more details about its business plan. Phoenix Group shares rise as much as 3.7% after reporting full-year results, with Peel Hunt saying the insurer’s cash generation was “better than expected.” Danone rises as much as 5.6% after Bernstein says the French yogurt maker “seems to be doing everything right” under new management. The brokerage raises its recommendation on Danone and downgrades Reckitt and Unilever. Prosus shares fall as much as 11% in Amsterdam, the most since March 2020, following a continued selloff in Chinese technology shares as concerns about Beijing’s close relationship with Russia added to worries over regulatory headwinds Sanofi slumps as much as 6.2% after the French drugmaker says its mid- stage trial for amcenestrant in breast cancer didn’t meet the primary endpoint. Basic resources shares drop in Europe as commodity prices decline, underperforming the benchmark Stoxx Europe 600, which is gaining on Monday. Rio Tinto falls as much -4.2%, Glencore -4.5%, Anglo American -5.3% lead drop in the Stoxx Europe 600 basic resources sub-index. As noted above, Asian stocks plunged, led by a record 11% plunge in Chinese tech shares as a lockdown in Shenzhen added to woes including Beijing’s crackdown on the sector and mounting concerns about the economic fallout from sanctions on Russia. The MSCI Asia Pacific Index dropped as much as 1.5% to reach a low last seen September 2020, with heavyweights Alibaba and Tencent diving 11% and 9.8%, respectively. The Hang Seng Tech Index plunged 11% after the southern city of Shenzhen, a key tech hub near Hong Kong, was placed into lockdown to contain rising Covid-19 infections. The broader Hang Seng Index lost 5%. “The latest coronavirus outbreak is raising uncertainties over the Chinese economic outlook while high commodity prices are a drag for the Chinese economy no less than for many other countries, limiting the room for monetary easing,” said Aw Hsi Lien, a strategist at Tokai Tokyo Research. “There’re rising perceptions that this year’s growth target of 5.5% is becoming difficult to achieve.”    Investors also remain on edge over risks for Chinese companies stemming from U.S. actions due to Russia’s invasion of Ukraine. Sentiment was also rattled late last week as U.S. regulators identified Chinese companies that could be kicked off exchanges if they fail to open their books to U.S. auditors. While the delisting risk has been known since last year, the Securities and Exchange Commission’s list served as a “wake up call,” said Willer Chen, an analyst at Forsyth Barr Asia Ltd. “I see no way to solve the dispute” between the U.S. and China under current policies, he said.  The historic sell-off in China also drove many peer Asian equity gauges into the red. Still, shares in resource-rich Australia gained and Japan’s Topix climbed amid expected benefits for exporters from the yen’s fall to a five-year low near 118 per dollar. Japanese equities climbed, rebounding after last week’s losses, as a weaker yen bolstered the outlook for exporters and a decline in oil provided a respite amid recent inflation concerns. Auto makers and banks were the biggest boosts to the Topix, which gained 0.7%. Tokyo Electron and Advantest were the largest contributors to a 0.6% rise in the Nikkei 225. The yen approached 118 per dollar, extending its loss after weakening more than 2% last week.  The Nikkei 225 dropped 3.2% last week, its worst since November, while the Topix fell 2.5%. In addition to developments on Russia’s war in Ukraine, investors this week will be monitoring monetary-policy decisions from the Bank of Japan and Federal Reserve. “As Japan’s economy and wage growth are more subdued than in the U.S., and, thus, the BOJ will be slower to tighten than the Fed, the yen may well trend weaker, although any move beyond 120 would not be encouraged by officials,” Nikko Asset Management strategist John Vail wrote in a note. In FX, the Bloomberg Dollar Spot Index inched inched lower and the greenback traded mixed against its Group-of-10 peers. European currencies, lead by the Swedish krona and Norwegian krone, were the best performers while the Australian and New Zealand dollars, as well as the yen, fell. Sweden’s krona rallied as much as 1.8% as sentiment improved and as economists expect the country’s central bank to make a policy U-turn later this year, after inflation reached a new 28-year high last month and as price increases are seen accelerating on the fallout from Russia’s invasion of Ukraine The pound was steady after falling to November 2020 lows on Friday, while gilts slumped. Focus this week will be on the Bank of England, which is expected to raise interest rates for a third time in a bid to control inflation. The yen fell to a five-year low against the dollar as traders boosted bets on the pace of the Federal Reserve’s rate hikes this year amid accelerating U.S. inflation and as risk reversals backed a less-favorable outlook for the Japanese currency. Australia’s dollar dropped for a second day as oil and iron ore lead commodity prices lower, while sliding Chinese equities weighed on risk sentiment. In rates, as noted above, Treasuries sold off, led by the belly, following wider losses across bunds as core European rates aggressively bear-steepen. Treasuries and the 5-year Treasury yield topped 2% for the first time since May 2019 while the yield on 10-year Treasuries rose to 2.10%, the highest since July 2019, before easing back to 2.06%. The US front-end slightly outperforms, steepening 2s5s and 2s10s spreads by 1.7bp and 1.3bp. IG dollar issuance slate empty so far; volumes projected for the week are around $30b, following one of the busiest weeks on record In commodities, WTI drifts ~5% lower to trade at around $103. Brent falls more than 4% to the $107 level. Spot gold falls roughly $27 to trade near $1,962/oz. Spot silver loses 2.6% near $25. Most base metals trade in the red; LME aluminum falls 3.6%, underperforming peers. Bitcoin was initially subdued beneath USD 38,000 ahead of an EU vote on environmental sustainability standards measure that could lead to a ban on Bitcoin, but later recovered with support also seen following a tweet from Elon Musk. Elon Musk tweeted "I still own & won’t sell my Bitcoin, Ethereum or Doge fwiw". Japan demanded that cryptocurrency transactions be blocked if they are sanctions related. Besidesall that, it is a quiet start to thge week with no macro news on today's calendar. Market Snapshot S&P 500 futures up 0.5% to 4,223.50 STOXX Europe 600 up 0.4% to 433.05 German 10Y yield little changed at 0.31% Euro up 0.4% to $1.0952 MXAP down 1.4% to 168.91 MXAPJ down 2.1% to 549.22 Nikkei up 0.6% to 25,307.85 Topix up 0.7% to 1,812.28 Hang Seng Index down 5.0% to 19,531.66 Shanghai Composite down 2.6% to 3,223.53 Sensex up 1.2% to 56,207.96 Australia S&P/ASX 200 up 1.2% to 7,149.40 Kospi down 0.6% to 2,645.65 Brent Futures down 2.7% to $109.60/bbl Gold spot down 0.8% to $1,971.65 U.S. Dollar Index down 0.21% to 98.92 Top Overnight News from Bloomberg The U.S. and China plan to hold their first high-level, in- person talks since Moscow’s invasion on Monday. The meeting comes after China rejected accusations by U.S. officials that Russia had asked it for military equipment to support the invasion of Ukraine Chinese stocks listed in Hong Kong had their worst day since the global financial crisis, as concerns over Beijing’s close relationship with Russia and renewed regulatory risks sparked panic selling Global bond markets are flirting with a 10% drawdown for the first time in over a decade as surging inflation forces yields higher. The Bloomberg Global Aggregate Index, a benchmark for government and corporate debt, has fallen about 9.9% from a high in early 2021, the biggest decline from a peak since 2008, the data show Already pivoting to tightening monetary policy amid the fastest consumer price gains in four decades, Fed Chair Jerome Powell and colleagues now have to deal with the economic fallout of the war, which threatens to deliver the twin blows of weaker growth and even-quicker inflation ECB Governing Council member Martins Kazaks says “it’s very possible that the bond-buying program will end in the third quarter” Germany’s coronavirus infection rate hit a record for the third straight day on Monday, with the renewed surge prompting the country’s top health official to issue a grim warning Leveraged fund net short aggregate Treasuries bets across the curve have hit the highest in over a year, the latest CFTC data show. The U.S. Treasury market just endured one of its worst weeks of the past decade, with yields propelling toward their highest levels of the past year thanks to worsening inflation and the imminent expected shift in policy The yen’s plunge to a five-year low shows no signs of easing as surging commodity prices have worsened the outlook for Japan’s trade balance and put pressure on the currency’s haven credentials. The nation is a net importer of a long list of raw materials from crude oil and grains to metals, exposing it to higher costs as prices of all these have risen due to sanctions imposed on Russia over its invasion of Ukraine Russia has already lost access to almost half of its reserves and sees more risks to President Vladimir Putin’s war chest due to increased pressure from the West on China, said Finance Minister Anton Siluanov Nickel’s 250% price spike in little more than 24 hours plunged the industry into chaos, triggering billions of dollars in losses for traders who bet the wrong way and leading the London Metal Exchange to suspend trading for the first time in three decades. It marked the first major market failure since Russia’s invasion of Ukraine jolted global markets, showing how the removal of one of the world’s largest exporters of resources from the financial system in the space of weeks is having ripple effects across the world A more detailed look at global markets courtesy of newsquawk Asia-Pacific stocks were somewhat mixed as participants digested varied geopolitical headlines ahead of key risk events. ASX 200 was underpinned by strength in its largest-weighted financial sector and encouragement from M&A related headlines. Nikkei 225 benefitted from further currency weakness but failed to hold above the 25,500 level. Hang Seng and Shanghai Comp. were pressured amid several headwinds, including COVID-19 concerns with the technology hub of Shenzhen under a one-week lockdown, which pressured tech and weighed on Macau casino names, as well as dragged the Hong Kong benchmark beneath the 20K level for the first time since 2016 Top Asian News Developers Sink After Weak Home Mortgage Data: Evergrande Update Marcos Keeps Big Lead in Philippine Presidential Survey Funds Managing $130 Trillion Target Lobbying in Climate Plan Hang Seng China Stock Gauge Sinks 7.2%, Most Since Nov. 2008 China Locks Down Shenzhen, Entire Jilin Province as Covid Swells European bourses are firmer, Euro Stoxx 50 +2.1%, following a mixed APAC handover amid conflicting headlines as we await details of the latest Ukrainian-Russia talks. Stateside, US futures are firmer across the board but with magnitudes more contained, ES +0.9%, ahead of multiple risk events. Sectors in Europe are mostly firmer though some of the more defensive names are lagging modestly, Autos outperform post-Volkswagen Top European News European Gas Slumps as Russia, Ukraine to Hold Further Talks British Airways-Operator Comair Still Grounded in South Africa Funds Managing $130 Trillion Target Lobbying in Climate Plan ECB’s Kazaks: ‘Very Possible’ Net Bond-Buying Will End in 3Q U.S.-Listed Chinese Stocks Sink Again as China-Russia Ties Weigh In FX, Aussie bears the brunt of reversal in commodity prices; AUD/USD hovering around 0.7250 ahead of RBA minutes tomorrow. Yen extends decline on yield and BoJ policy divergence towards 118.00 vs the Dollar. Euro rebounds with risk appetite amidst hopes of constructive Russian-Ukrainian dialogue; EUR/USD finds support around 1.0900 where 1.84bln option expiries reside to trade above 1.0960. Rouble firmer on the premise that positive words will speak louder than negative actions. Yuan depreciates as Covid cases mount in China and PBoC sets a weaker than expected onshore midpoint rate, USD/CNH probes 6.3800 at one stage. Swedish Crown strong in line with latest inflation data and hawkish Riksbank rate calls from Nordea and SEB, EUR/SEK tests Fib support circa 10.5252 In commodities, WTI and Brent continue to unwind geopolitical premia amid mixed Russia-Ukraine developments and the possibility of progress soon. Currently, benchmarks lie near fresh lows of USD 103.42/bbl and USD 107.59/bbl respectively, further impeded by IEA's Birol. Iraq set April Basrah medium OSP to Asia at Oman/Dubai + USD 3.50/bbl, OSP to Europe at Dated Brent - USD 3.05/bbl and OSP to North and South America. UK PM Johnson is seeking a mega oil deal with the Saudis and is pushing for solar and nuclear energy to cut reliance on foreign oil, while the UK is also considering keeping some coal-fired power stations operational, according to Express and The Times. IEA Chief Birol says responsible producers should increase oil output. French PM Castex said the government will offer EUR 0.15/litre rebate on petrol prices from April to counter high prices with the rebate on fuel to last four months and is expected to cost around EUR 2bln. Japanese PM Kishida will look at measures for high oil prices and raw material food prices whilst watching the situation carefully, according to the Japanese ruling party secretary general; subsequently, Japanese government is to increase the petrol subsidy to around JPY 24/litre and close to the ceiling of JPY 25/litre. Gazprom says it is continuing shipping gas to Europe via Ukraine, Monday's volume is broadly unchanged at 109.5mln cubic metres; does not intend holding spot gas sale sessions on its electronic sales platform this week. China is planning to boost its coal output by as much as it imports. Spot gold and silver are pressured unwinding safe-haven appeal in-fitting with other typical havens In Fixed income, the debt rout rages on on as futures take out near term technical supports and yields reach or breach psychological levels. Curves continue to steepen on resurgent risk sentiment rather than any read respite from sharp retracement in crude prices. USTs and Gilts anticipating tightening from the Fed and BoE later this week. US Event Calendar Nothing major scheduled DB's Jim Reid concludes the overnight wrap I've tried to keep the introductory paragraphs fairly sober in recent weeks as the challenging time for the world doesn't really need my flippancy. However I have to share with you this morning that 5 minutes before I started typing this I started walking again for the first time in 6 weeks. The crutches were left by the bed and my morning coffee made without hopping between the cupboard, the sink and the fridge, and then working out how to get my coffee back upstairs while on crutches. It's amazing how good normality felt. Fingers crossed this operation will buy me a few years before knee replacement. We will see. The newsflow didn't look good late on Friday as some earlier positive signs on the conflict talks petered out. In terms of developments there was mixed news last night though as on the positive side some progress seemed to be made on talks, but on the negative side the FT reported that US officials suggested that Russia have asked China for military and economic assistance since the invasion began. The article said that the officials didn't details China's response but this came just few hours after White House officials announced that a high-level delegation from the US would meet with a top Chinese official in Rome today. On the positive side however, Ukrainian negotiator and presidential adviser Mykhailo Podolyak tweeted and posted a video online saying, "Russia is already beginning to talk constructively... ... I think that we will achieve some results literally in a matter of days,". A Russian delegate echoed the sentiment and US Deputy Secretary of State Wendy Sherman also highlighted that Russia was showing signs of willingness to engage in substantive negotiations. DM equity futures are making modest gains in Asia with contracts on the S&P 500 (+0.59%), Nasdaq (+0.35% and DAX (+0.59%) all trading higher. US Treasuries are seeing a pretty big move for an Asian session with the 5-yr yield (+6.3bps) moving above 2% for the first time since May 2019 whilst the 10-yr yield is up +5.3bps to 2.044%. Elsewhere Brent futures (-1.93%) are down to $110.50/bbl while WTI futures (-2.41%) are at $106.70/bbl. Asian equity markets are mostly trading lower though as we start the week following the broadly negative cues from Wall Street on Friday. The Hang Seng (-3.81%) is leading losses across the region with Chinese tech stocks again seeing major declines. Shares in mainland China are also weak with the Shanghai Composite (-1.30%) and CSI (-1.73%) both in negative territory after the southern Chinese tech hub Shenzhen was put under a citywide lockdown over the weekend to slow an outbreak of Covid-19. Elsewhere, the Kospi (-0.72%) is down but the Nikkei (+0.95%) is trading up this morning, reversing its previous session's losses. Coming back to the Covid news, the Chinese authorities have placed 17.5 million residents of Shenzhen under lockdown after the city reported 66 fresh Covid cases on Sunday while the nationwide official figure nearly doubled to 3,400. The lockdown and suspension of public transport will last until March 20 and will be accompanied by three rounds of mass testing of residents. At the same time, the surge in cases across China has also prompted the authorities to shut schools for students from kindergarten through middle schools next week in Shanghai. In the neighbouring Hong Kong, the health authorities reported 32,430 new Covid-cases on Sunday with city leader Carrie Lam highlighting that the outbreak has not past its peak yet despite recent number of daily cases “slightly levelling off”. Looking forward now, and as we all know it's a big central bank week with the Fed the obvious focal point mid-week. The BoE and the BoJ also hold meetings, along with some of their emerging markets counterparts. We'll also see CPI for Japan and Canada and a number of housing market statistics in the US and China. Earnings will include Volkswagen, FedEx and Enel, among others. Wednesday will also be a landmark day even outside of the Fed as this is the date that two Russian Eurobonds have coupon payments. These are small (c.$120bn out of c.$1.75bn of annual hard currency coupons) but will be hugely symbolic. Speaking to one of our EM strategists, Christian Wietoska, and one of our European economists, Peter Sidorov, over the weekend their view was that this would likely mark the start of the 30-day grace period that issuers have before a default is officially triggered. 30-days still gives time for there to be a negotiated end to the war and therefore this probably isn't yet the moment where we see where the full stresses in the financial system might reside. There has already been a huge mark to market loss already anyway with news coming through or write downs. However this is clearly an important story to watch. Onto the Fed now and the FOMC concludes on Wednesday, with the Fed expected to raise rates for the first time since December 2018. Markets are pricing in a +25bps hike, in line with the rhetoric from Chair Powell at his congressional testimonies a couple of weeks back. Before the invasion we thought a 50bps was likely this week and the problem is that by delaying such a move they may have to do more later. The market seems to agree to some degree as at Friday's close the market was pricing in 6.7 hikes this year, the most seen in this cycle and above the post invasion intra-day lows of 4.45. This morning we are at 6.92. A full preview from our US economists is available here. With regards to QT, they anticipate that the Fed will use this upcoming meeting to announce caps determining the maximum monthly runoff and, in May, announce QT that would begin in June. They think we will see $800bn of runoff this year and an additional $1.1tn drawdown in 2023, a cumulative reduction we think is roughly equal to between three and four rate increases (see "QT update: The sooner the better"). The fascinating thing for me is what this does to the yield curve if they are correct. For me nirvana for the Fed is getting to around neutral, somewhere with a 2 handle on Fed Funds and trying to ensure that 10yr yields rise enough to prevent inversion but not enough to lead to a tightening of financial conditions. So if in 12-18 months time 2 year yields are 2.25-2.5%, 10 year yields are 2.75-3% and inflation is coming back towards trend then the Fed have pulled off a masterstroke. If however, 2yr yields are above 2% and 10yr yields below this level, the inversion will likely bite. On the other hand, if the curve steepens up too much and longer end yields are notably above 3% the risk is that financial conditions tighten too much given the global debt load. So the Fed are trying to thread a needle and its possible inflation will give them an impossible task. Time will tell. Ahead of the Fed watch out for US PPI (Tuesday) and Retail Sales (Wednesday). They are highly unlikely to change the equation for this FOMC but will be important for the direction of the economy and inflation thereafter. We also get a plethora of US housing data to end the week with Thursday's housing starts and Friday's existing homes sales. These are going to be important for both activity and the rents component in CPI. Back to central banks and on Thursday, it will be the BoE's turn. Our UK economist previews the meeting here, and is expecting a +25bps hike to 0.75%, the pre-pandemic level. Their projected terminal rate is 1.75%. Finally, on Friday, the Bank of Japan will hold a meeting as well and a preview can be found here. The central bank is expected to hold the key rate steady but there is a chance of economic assessment being downgraded. The Bank of Russia's decision on the same day will be scrutinised for the response to risks to the economy from the ongoing geopolitical turmoil. Back to the week that was now. The war in Ukraine raged on, while negotiations continued to generate little tangible progress as leaders managed expectations down for any near-term resolution. However, there were various green shoots throughout the week when it appeared both Ukrainian and Russian officials left some room for compromise from their original positions. The glimmers of hope on the war front, along with a more hawkish-than-expected ECB sent sovereign bond yields higher on both sides of the Atlantic this week. Positive news about the supply of oil and gas sent futures lower on the week, despite the US and UK moving to restrict Russian imports. Oil and European natural gas prices fell -5.07% (+3.05% Friday) and -30.15% (+3.82% Friday) over the week, following a proclamation from President Putin that Russia would honor its energy export commitments, instead of unilaterally cutting off supply in retaliation to sanctions. For its part, the Iraqi oil minister noted OPEC would increase oil production were supply to reach scarcity levels. The other major story on the week was the ECB meeting, where the central bank signaled more focus on price stability than the potential downside impact to growth from the war. The governing council announced an accelerated tapering of its APP purchases, which would end in Q3, maintaining the option for increases to their policy benchmark rate sometime thereafter should the data merit. The ECB also updated their forecast for 2022 inflation to 5.1 percent and 2.1 percent for 2023. The tighter than expected policy stance gave rise to higher sovereign bond yields on both sides of the Atlantic, with 10yr bunds, OATs, gilts, and Treasuries rising +31.8bps (-2.5bps Friday), +28.9bps (-2.6bps Friday), +28.3bps (-3.2xbps Friday), and +26.1bps (+0.5bps Friday), respectively. For 10yr bunds that was the largest weekly gain since June 2015, 10yr gilts the largest weekly gain since September 2017, September 2019 for Treasuries, and March 2020 for OATs. Money markets ended the week pricing +40.5bps of ECB tightening this year, up from +24.1bps of tightening at last week’s close. European equities latched on to this week’s marginally more optimistic news, with the STOXX 600 finishing +2.23% (+0.95% Friday), the first weekly gain in a month. The DAX and CAC also finished the week +4.07% (+1.38% Friday) and +3.28% (+0.85% Friday) higher, respectively. US investors proved more pessimistic, with the S&P 500 retreating -2.88% (-1.30% Friday), with tech underperforming again, as the NASDAQ fell -3.53% (-2.18% Friday). The US indices took a leg lower Friday afternoon after Europe called it a week when Ukrainian leadership didn’t strike as optimistic a tone as Russian leaders surrounding the prospects of negotiations, as well as reports that Belarussian troops were about to join the invasion of Ukraine. University of Michigan consumer inflation expectations for the next year increased to 5.4 percent, above expectations of 5.1 percent on Friday. This followed the February US CPI data which showed headline and core measures increasing to their highest readings in four decades, which would have headlined just about any other week. In line with this, market-based measures of inflation expectations increased, with 10yr Treasury breakevens widening +27.3bps on the week. Tyler Durden Mon, 03/14/2022 - 08:15.....»»

Category: blogSource: zerohedgeMar 14th, 2022

Tesla Delaying Cybertruck Production To 2023

Tesla Delaying Cybertruck Production To 2023 It's official: Tesla looks as though it is delaying production of its Cybertruck to 2023. Initial production of the truck is slated to start by Q1 2023, a new report from Reuters says. Delays have occurred as a result of Tesla reportedly "changing features and functions" of the electric pickup.  Production in Q1 2023 is expected to be "limited", the report notes.  We noted yesterday that Tesla had removed its 2022 production date for the Cybertruck from the company's website.  Edmunds was first to point out that the company's website used to say “You will be able to complete your configuration as production nears in 2022” and now it states: “You will be able to complete your configuration as production nears.” Recall, last year we reported that Tesla was delaying the Cybertruck to "late 2022". Now it looks as though that schedule may still be too aggressive.  We wrote in September: Before we even opine on the details, we're going to take the "over" regarding this timeline and guess the truck doesn't happen until 2023, perhaps even later. It turns out we were right. Musk's delayed timeline for the truck was first announced last year by pro-Tesla blog electrek, who was even forced to note that even though the truck was "once seen as potentially the first to market" it is "now falling behind". Meanwhile, competitors like Ford's F-150 Lightning continue to garner significant attention and, more importantly, are actually on their way to existing. Tesla "only recently" completed the engineering design for the truck, the September 2021 report said. The report also noted that in August 2021, Tesla had confirmed it would start production in Austin after the Model Y.    Tyler Durden Fri, 01/14/2022 - 09:04.....»»

Category: worldSource: nytJan 14th, 2022

Tesla has pushed back initial production of its Cybertruck to early 2023 — 2 years later than Elon Musk first predicted, a report says

Tesla has delayed Cybertruck production to 2023 because the company is making changes to the vehicle's features and functions, a source told Reuters. Tesla co-founder and CEO Elon Musk stands in front of the all-electric battery-powered Tesla's Cybertruck.FREDERIC J. BROWN/AFP via Getty Images Tesla has pushed back Cybertruck production from late 2022 to 2023, a source told Reuters. The company is making changes to the Cybertruck's features and functions, the source told Reuters. Elon Musk first predicted Cybertruck production would kick off in 2021, before delaying to 2022. Tesla has delayed initial production of its Cybertruck to early 2023, two years later than CEO Elon Musk first forecast, Reuters reported on Thursday.The automaker is pushing back production of the electric pickup truck from late this year to the end of the first quarter of 2023, a person with knowledge of the matter told Reuters.The delay is down to Tesla making changes to the Cybertruck's features and components, the person told Reuters.Cybertruck production is expected to be limited in the first quarter of 2023 before output increases, the person told Reuters.Musk said during Tesla's fourth-quarter earnings call in January last year that the first Cybertrucks would ship in 2021, "if we get lucky", and he expected volume production to begin in 2022.Tesla's website for the Cybertruck in August told potential customers that they would be able to "complete your configuration" in 2022. In mid-December, the page had changed, with "as production nears" replacing the date.Tesla is expected to provide an update on its Cybertruck in its fourth-quarter earnings on January 26 after Musk said in December that a product roadmap update would happen on the next earnings call.Tesla didn't immediately respond to Insider's request for comment about the Cybertruck delay which was made outside of US operating hours.Have you placed an order for Tesla's Cybertruck? How long have you been waiting? Get in touch with this reporter via email kduffy@insider.com.Read the original article on Business Insider.....»»

Category: topSource: businessinsiderJan 14th, 2022

Tesla Removes 2022 Production Date For Cybertruck From Its Website

Tesla Removes 2022 Production Date For Cybertruck From Its Website If you were hoping for your Cybertruck in 2022, it might be time to (again) realign your expectations. Tesla has reportedly removed its 2022 production date for the Cybertruck from its website, according to multiple reports Thursday morning. Edmunds was first to point out that the company's website used to say “You will be able to complete your configuration as production nears in 2022” and now it states: “You will be able to complete your configuration as production nears.” Recall, last year we reported that Tesla was delaying the Cybertruck to "late 2022". Now it looks as though that schedule may still be too aggressive.  We wrote in September: Before we even opine on the details, we're going to take the "over" regarding this timeline and guess the truck doesn't happen until 2023, perhaps even later. Musk's delayed timeline for the truck was first announced last year by pro-Tesla blog electrek, who was even forced to note that even though the truck was "once seen as potentially the first to market" it is "now falling behind". Meanwhile, competitors like Ford's F-150 Lightning continue to garner significant attention and, more importantly, are actually on their way to existing. Tesla "only recently" completed the engineering design for the truck, the September 2021 report said. The report also noted that in August 2021, Tesla had confirmed it would start production in Austin after the Model Y.  “We are also making progress on the industrialization of Cybertruck, which is currently planned for Austin production subsequent to Model Y," the company said during an earnings report last year. But on an internal call with employees in September 2021, "Musk confirmed that Tesla doesn’t expect to start Cybertruck production until the end of 2022." Musk told employees that "that there’s so much new technology in the electric pickup truck that the production ramp-up is going to be very difficult," electrek reported. Recall, back in summer 2021, Musk Tweeted that there was "always some chance" that the product introduced almost three years ago in November 2019 to ridiculous fanfare could "flop".  This stood at obvious odds with statements Musk made in late 2020 at the company's shareholder meeting, where he said  “The orders are gigantic" about the truck. Musk claimed there were ”... well over half a million orders." He continued: "It’s a lot, basically. We stopped counting.” Recall, at the introduction of the Cybertruck, Musk had an assistant come on stage and try to break the truck's armored glass. "Normal glass shatters immediately," Musk said as his assistants, dressed like characters from The Matrix, dropped a metal ball on conventional glass, causing it to shatter. At which point another of Musk's assistants gently threw a similar metal ball at the Cybertruck parked on stage. The driver's side window promptly broke. "Oh my fucking God," Musk nervously said, live on the stream, after the front window shattered into a million pieces. Musk Tweeted: “To be frank, there is always some chance that Cybertruck will flop, because it is so unlike anything else. I don’t care. I love it so much even if others don’t. Other trucks look like copies of the same thing, but Cybertruck looks like it was made by aliens from the future.” “In end, we kept production design almost exactly same as show car. Just some small tweaks here & there to make it slightly better. No door handles. Car recognizes you & opens door. Having all four wheels steer is amazing for nimble handling & tight turns!” Musk gushed about the truck, just months before moving back his production timeline..  Tyler Durden Thu, 01/13/2022 - 09:08.....»»

Category: blogSource: zerohedgeJan 13th, 2022

Delek (DK) Hikes 2022 CapEx View, Lowers Q421 Throughput Target

Delek (DK) plans to execute minor maintenance work at Tyler in the fourth quarter of 2021, delaying the next turnaround activity until 2023. Delek US Holdings, Inc. DK has released its capital budget for 2022, with plans to invest $250-260 million the following year.DK expects to invest an additional $50 million in 2022, mostly on discretionary midstream and retail projects after initially forecasting $150 million of capital spending for 2021, which now grew to $200 million or more.Growth in 2022 will primarily focus on expanding the Delek Permian Gathering business, which has high producer demand. For midstream expansion investments, DK expects to well exceed its internal 15% target rate of return criteria. Delek is also stepping up its retail expansion plans, with four new-to-the-industry sites set to open in 2022.This Brentwood, TN-based DK chose to execute minor maintenance work at Tyler in the fourth quarter of 2021, deferring next turnaround activity until 2023. As a result, Delek's fourth-quarter refining throughput target is revised to 275-280 million barrels per day.Also, last month, Delek declared in its 2020-2021 Sustainability Report that it intends to lower its Scope 1 and Scope 2 emissions by 34% within 2030. DK aims to be a pioneer in this critical energy transition while also delivering inexpensive transportation fuels that enhance the standard of living in the areas it serves.Founded in 2001, Delek is an independent refiner, transporter and marketer of petroleum products. DK’s operations are organized into three reportable segments, namely Refining, Logistics and Retail.Zacks Rank & Key PicksDelek currently has a Zack Rank #3 (Hold). Investors interested in the energy  sector might look at the following stocks worth considering with a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.Occidental Petroleum Corporation OXY is an integrated oil and gas company with significant exploration and production exposure. OXY is also a producer of various basic chemicals, petrochemicals, polymers and specialty chemicals. As of 2020 end, OXY's preliminary worldwide proved reserves totaled 2.91 billion BOE compared with 3.9 billion BOE at the end of 2019.In the past year, shares of Occidental Petroleum have surged 99% compared with the industry's growth of 96.6%. OXY's 2021 earnings are expected to soar 151.4% from the year-ago reported figure. OXY has also witnessed eight northward estimate revisions in the past 60 days. In the third quarter, OXY achieved its divestiture target of $10 billion by inking a deal to sell off its interest in two offshore Ghana assets for $750 million.PDC Energy PDCE is an independent upstream operator dealing in exploration, development and production of natural gas, crude oil and natural gas liquids. PDCE, which reached its present status following the January 2020 merger with SRC Energy, is currently the second-largest producer in the Denver-Julesburg Basin. As of 2020 end, PDCE's total estimated proved reserves were 731,073 thousand barrels of oil equivalent.In the past year, shares of PDC Energy have gained 169% compared with the industry's growth of 108.6%. PDCE's earnings for 2021 are expected to surge 273.4% from the prior-year reported figure. In the past 60 days, the Zacks Consensus Estimate for PDC Energy's 2021 earnings has been raised 26.8%. Earnings of PDCE beat the Zacks Consensus Estimate in all the last four quarters, the average being 51.06%.Phillips 66 PSX is the leading player with respect to operations like refining, chemicals and midstream in terms of size, efficiency and strengths. PSX’s operations include processing, transportation, storing, and marketing fuels and products worldwide. PSX is currently valued at $33.9 billion and offers a quarterly dividend of 92 cents.PSX is projected to see an earnings surge of 532.6% in 2021 from the prior-year reported number. It has witnessed three upward revisions in the past 30 days. Phillips 66’s bottom line beat the Zacks Consensus Estimate thrice in the last four quarters and missed the same once. PSX currently has a Zacks Style Score of A for Value. Bitcoin, Like the Internet Itself, Could Change Everything Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities. Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly. See 3 crypto-related stocks now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Occidental Petroleum Corporation (OXY): Free Stock Analysis Report Delek US Holdings, Inc. (DK): Free Stock Analysis Report Phillips 66 (PSX): Free Stock Analysis Report PDC Energy, Inc. (PDCE): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksDec 17th, 2021

4 Solid Microchip Stocks to Buy on Soaring Global Demand

Growing demand for microchips amid supply crunch has been helping companies like NVIDIA Corporation (NVDA), Microchip Technology (MCHP), ON Semiconductor (ON) and STMicroelectronics (STM). The semiconductor industry has been on a high, with sales soaring on surging demand. However, a supply crunch has kept several other industries worried, with carmakers suffering the most. The pandemic saw massive sales of electronic goods, leading to higher demand for microchips.According to a new report form Deloitte, the crisis may continue for months. Thus, microchip demand is only going to soar, helping chipmakers like NVIDIA Corporation NVDA, Microchip Technology MCHP, ON Semiconductor ON and STMicroelectronics STM.Microchip Shortage to ContinueAccording to Deloitte’s new Technology, Media & Telecommunications (TMT) 2022 Predictions report, the global semiconductor shortage could last till early 2023.Things will start stabilizing only around late 2022 when customers will have to wait around 10 to 20 weeks after placing orders to get the supply in hand. However, the crisis doesn’t mean that customers will continue to suffer.Given the growing demand and resultant supply crisis, massive investment will be made to boost production in the coming days. The report predicts that venture capital firms will invest over $6 billion in microchip companies next year to boost production. This is thrice more than the total investment made by venture capital firms between 2000 and 2016.The report further says that the shortage is expected to last about 24 months from when it began, much like the 2008-09 microchip crisis.The ongoing shortage is severely affecting the production of automobiles and is now biting into their profits. A number of carmakers have already cut down on their production and expect sales to be down in the fourth quarter too. This is also somewhat delaying the automobile industry’s recovery after the battering it suffered due to the pandemic.Semiconductor Industry on a HighNot only automobile manufacturers, but also production of electronic goods, including laptops and smartphones,is being hampered now due to the supply crunch. That said, surging demand has been working miracles for the chipmakers, as sales are skyrocketing.According to the Semiconductor Industry Association, global semiconductors sales totaled $144.8 billion in the third quarter of 2021, jumping 27.6% year over year and 7.4% from the second quarter.  Also, the semiconductor industry achieved a milestone of shipping the highest number of semiconductor units in the market’s history during this period.The chip industry had somewhat slowed down, but the pandemic worked miracles. As more people worked and learned from home, they invested in electronic goods, computers and accessories, giving a boost to the demand for microchips anddriving sales.The trend continueswithchip sales growing every month and hitting new record highs. Semiconductor sales totaled $48.3 billion in September, jumping 27.6% year over year and 2.2% month over month.This growth is expected to continue in the coming months too.Our ChoicesGiven the rising demand for semiconductors and continuing supply crunch, the semiconductor industry is only likely to benefit in the near term. Below are five chip stocks that investors can gain from in the current scenario.NVIDIA Corporation is the worldwide leader in visual computing technologies and inventor of the graphic processing unit, GPU. Over the years, NVDA’s focus has evolved from PC graphics to AI-based solutions that now support high-performance computing, gaming and virtual reality platforms.NVIDIA’s GPU success can be attributed to its parallel processing capabilities supported by thousands of computing cores, which are necessary to run deep learning algorithms.NVIDIA’s expected earnings growth rate for the current year is 73.1%. The Zacks Consensus Estimate for current-year earnings has improved 4.8% over the past 60 days. Shares of NVDA have gained 21.7% in the past 30 days. NVIDIA’s carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.ON Semiconductor Corporation is an original equipment manufacturer of a broad range of discrete and embedded semiconductor components.ON continues to gain traction among electric vehicle manufacturers for both silicon carbide and insulated-gate bipolar transistor-based products. ON Semiconductor has a well-diversified business generating a significant percentage of revenues from each of the computing, consumer, industrial, communications and automotive end markets.ON Semiconductor’s expected earnings growth rate for the current year is more than 100%. The Zacks Consensus Estimate for current-year earnings has improved 12.4% over the past 60 days. Shares of ON have gained 9.5% in the past month. ON Semiconductors holds a Zacks Rank #2.STMicroelectronics N.V. designs, develops, manufactures and markets a broad range of semiconductor integrated circuits and discrete devices used in a wide variety of microelectronic applications, including telecommunications systems, computer systems, consumer products, automotive products and industrial automation and control systems. STM is currently witnessing very strong demand across most product lines and end markets. This is leading to strong pricing and allowing STMicroelectronicsto operate at full capacity.STMicroelectronics’expected earnings growth rate for the current year is 65.3%. The Zacks Consensus Estimate for current-year earnings has improved 4.7% over the past 60 days. Shares of STM have advanced 6.8% in the past 3 months. STMicroelectronics carries a Zacks Rank #2.Microchip Technology Incorporated develops and manufactures microcontrollers, memory, and analog and interface products for embedded control systems, which are small, low-power computers designed to perform specific tasks. MCHP reported second-quarter fiscal 2022 earnings of $1.07 per share, beating the Zacks Consensus Estimate of $1.06 per share. Microchip Technology Incorporated reported revenues of $1.65 billion for the quarter ended September 2021, surpassing the Zacks Consensus Estimate by 0.10%.Microchip Technology Incorporated’s expected earnings growth rate for the current year is more than 33.9%. The Zacks Consensus Estimate for current-year earnings has improved 4.5% over the past 60 days. Shares of MCHP have gained 6.9% in the past 30 days. Microchip Technology has a Zacks Rank #2. Zacks' Top Picks to Cash in on Artificial Intelligence In 2021, this world-changing technology is projected to generate $327.5 billion in revenue. Now Shark Tank star and billionaire investor Mark Cuban says AI will create "the world's first trillionaires." Zacks' urgent special report reveals 3 AI picks investors need to know about today.See 3 Artificial Intelligence Stocks With Extreme Upside Potential>>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report STMicroelectronics N.V. (STM): Free Stock Analysis Report NVIDIA Corporation (NVDA): Free Stock Analysis Report Microchip Technology Incorporated (MCHP): Free Stock Analysis Report ON Semiconductor Corporation (ON): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksDec 3rd, 2021

Industry Forecasts Purchase Originations to Increase 9% to Record $1.73 Trillion in 2022

The Mortgage Bankers Association (MBA) recently announced that purchase mortgage originations are expected to grow 9% to a new record of $1.73 trillion in 2022. After an anticipated 14% decline in 2021 to $2.26 trillion, MBA expects refinance originations will slow again next year, decreasing by 62% to $860 billion. MBA’s 2022 outlook was presented […] The post Industry Forecasts Purchase Originations to Increase 9% to Record $1.73 Trillion in 2022 appeared first on RISMedia. The Mortgage Bankers Association (MBA) recently announced that purchase mortgage originations are expected to grow 9% to a new record of $1.73 trillion in 2022. After an anticipated 14% decline in 2021 to $2.26 trillion, MBA expects refinance originations will slow again next year, decreasing by 62% to $860 billion. MBA’s 2022 outlook was presented at its 2021 Annual Convention & Expo by Mike Fratantoni, chief economist and senior vice president for Research and Industry Technology; Joel Kan, associate vice president of Economic and Industry Forecasting; and Marina Walsh, CMB, vice president of Industry Analysis. MBA forecasts mortgage originations to total $2.59 trillion in 2022—a 33% decline from this year. In 2023, mortgage originations are expected to decrease to $2.53 trillion. Purchase originations are forecasted to reach new successive records in 2022 and 2023, while higher mortgage rates and fewer eligible homeowners will lead to further declines in refinance volume. According to Fratantoni, MBA’s 2022 forecast assumes continued, strong economic growth amidst eventual easing of the supply chain constraints that have curbed some economic activity this year. “The economy and labor market rebounded in 2021, but overall growth fell short of expectations because of stubborn supply chain issues that fueled faster inflation, slowed consumer spending, and presented challenges in filling the record number of job openings available,” he said. “With inflation elevated and the unemployment rate dropping fast, the Federal Reserve will begin to taper its asset purchases by the end of this year and will raise short-term rates by the end of 2022.” MBA’s baseline forecast is for mortgage rates to rise, with the 30-year, fixed-rate mortgage expected to end 2021 at 3.1% before increasing to 4.0% by the end of 2022. “Mortgage lenders and borrowers should expect rising mortgage rates over the next year, as stronger economic growth pushes Treasury yields higher,” said Fratantoni. Robust homebuyer demand from millennial households, households seeking more space, and still-low mortgage rates are favorable tailwinds for the housing market in 2022 and are behind MBA’s expectations of record purchase originations over the next two years. “2022 should be another strong year for the housing market. Home builders will have more success overcoming current building material shortages and should be able to increase the pace of construction to meet the sizable demand for buying,” said Fratantoni. “More newly built homes and more homeowners listing their homes for sale should lead to some deceleration in home-price growth next year. This is good news for the many would-be buyers who are currently priced out or delaying decisions because of low supply conditions and steep home-price appreciation.” With home prices reaching record highs over the past year, and more recent new construction being larger and more expensive, average loan sizes have also grown and affordability has weakened—especially for first-time buyers. Kan does expect some of the affordability challenges to ease as for-sale inventory grows and home-price growth moderates. “Credit availability is still around 30% lower than pre-pandemic levels. Mortgage supply will need to increase modestly so that qualified buyers can get access to financing for their home purchase. This will be important for the wave of potential first-time homeowners who are approaching prime homeownership age,” added Kan. According to Walsh, the industry is moving away from the record-high, extraordinary production profits of 2020. As production volume declines and the market shifts toward fewer refinances and more purchase activity, competition will further stiffen. In this environment, lenders can only chase market share for so long before there are substantial consequences to the bottom line. “Many lenders will rely more heavily on their servicing business to achieve financial goals. Higher mortgage rates mean fewer prepayments and a longer revenue stream of servicing fees combined with higher mortgage servicing right valuations,” she said. “However, the servicing outlook is more complicated today, with the expiration of many COVID-19-related forbearances and the need to place borrowers into post-forbearance workouts. Servicing costs may rise as servicers work to meet the needs and requirements of borrowers, investors, and regulators.” “The job market should continue to improve as the pandemic is hopefully behind us, helping to get the economy to full employment by the end of this year,” added Fratantoni. “Household incomes will rise, more homes will be on the market, and home sales should meaningfully increase as a result, even in the face of somewhat higher mortgage rates.” MBA’s updated Mortgage Finance Forecast and Economic Forecast can be viewed here. The post Industry Forecasts Purchase Originations to Increase 9% to Record $1.73 Trillion in 2022 appeared first on RISMedia......»»

Category: realestateSource: rismediaOct 18th, 2021

Futures Rise On Taper, Evergrande Optimism

Futures Rise On Taper, Evergrande Optimism US index futures jumped overnight even as the Fed confirmed that a November tapering was now guaranteed and would be completed by mid-2022 with one rate hike now on deck, while maintaining the possibility to extend stimulus if necessitated by the economy. Sentiment got an additional boost from a strong showing of Evergrande stock - which closed up 17% - during the Chinese session, which peaked just after Bloomberg reported that China told Evergrande to avoid a near-term dollar bond default and which suggested that the "government wants to avoid an imminent collapse of the developer" however that quickly reversed when the WSJ reported, just one hour later, that China was making preparations for Evergrande's demise, and although that hammered stocks, the report explicitly noted that a worst-case scenario for Evergrande would mean a partial or full nationalization as "local-level government agencies and state-owned enterprises have been instructed to step in only at the last minute should Evergrande fail to manage its affairs in an orderly fashion." In other words, both reports are bullish: either foreign creditors are made whole (no default) as per BBG or the situation deteriorates and Evergrande is nationalized ("SOEs step in") as per WSJ. According to Bloomberg, confidence is building that markets can ride out a pullback in Fed stimulus, unlike 2013 when the taper tantrum triggered large losses in bonds and equities. "Investors are betting that the economic and profit recovery will be strong enough to outweigh a reduction in asset purchases, while ultra-low rates will continue to support riskier assets even as concerns linger about contagion from China’s real-estate woes." That's one view: the other is that the Fed has so broken the market's discounting ability we won't know just how bad tapering will get until it actually begins. “The Fed has got to be pleased that their communication on the longer way to tapering has avoided the dreaded fear of the tantrum,” Jeffrey Rosenberg, senior portfolio manager for systematic fixed income at BlackRock Inc., said on Bloomberg Television. “This is a very good outcome for the Fed in terms of signaling their intent to give the market information well ahead of the tapering decision.” Then there is the question of Evergrande: “With regards to Evergrande, all those people who are waiting for a Lehman moment in China will probably have to wait another turn,” said Ken Peng, an investment strategist at Citi Private Bank Asia Pacific. “So I wouldn’t treat this as completely bad, but there are definitely a lot of risks on the horizon.” In any case, today's action is a continuation of the best day in two months for both the Dow and the S&P which staged a strong recovery from two-month lows hit earlier in the week, and as of 745am ET, S&P 500 E-minis were up 25.25 points, or 0.6%, Dow E-minis were up 202 points, or 0.59%, while Nasdaq 100 E-minis were up 92.0 points, or 0.60%. In the premarket, electric vehicle startup Lucid Group rose 3.1% in U.S. premarket trading. PAVmed (PVM US) jumps 11% after its Lucid Diagnostics unit announced plans to list on the Global Market of the Nasdaq Stock Market.  Here are some of the biggest movers today: U.S.-listed Chinese stocks rise in premarket trading as fears of contagion from China Evergrande Group’s debt crisis ease. Blackberry (BB US) shares rise 8.7% in premarket after co.’s 2Q adjusted revenue beat the average of analysts’ estimates Eargo (EAR US) falls 57% in Thursday premarket after the hearing aid company revealed it was the target of a Justice Department criminal probe and withdrew its forecasts for the year Amplitude Healthcare Acquisition (AMHC US) doubled in U.S. premarket trading after the SPAC’s shareholders approved the previously announced business combination with Jasper Therapeutics Steelcase (SCS US) fell 4.8% Wednesday postmarket after the office products company reported revenue for the second quarter that missed the average analyst estimate Vertex Energy Inc. (VTNR US) gained 2.1% premarket after saying the planned acquisition of a refinery in Mobile, Alabama from Royal DutVTNR US Equitych Shell Plc is on schedule Synlogic (SYBX US) shares declined 9.7% premarket after it launched a stock offering launched without disclosing a size HB Fuller (FUL US) climbed 2.7% in postmarket trading after third quarter sales beat even the highest analyst estimate Europe's Stoxx 600 index rose 0.9%, lifted by carmakers, tech stocks and utilities, which helped it recover losses sparked earlier in the week by concerns about Evergrande and China’s crackdown on its property sector. The gauge held its gain after surveys of purchasing managers showed business activity in the euro area lost momentum and slowed broadly in September after demand peaked over the summer and supply-chain bottlenecks hurt services and manufacturers. Euro Area Composite PMI (September, Flash): 56.1, consensus 58.5, last 59.0. Euro Area Manufacturing PMI (September, Flash): 58.7, consensus 60.3, last 61.4. Euro Area Services PMI (September, Flash): 56.3, consensus 58.5, last 59.0. Germany Composite PMI (September, Flash): 55.3, consensus 59.2, last 60.0. France Composite PMI (September, Flash): 55.1, consensus 55.7, last 55.9. UK Composite PMI (September, Flash): 54.1, consensus 54.6, last 54.8. Commenting on Europe's PMIs, Goldman said that the Euro area composite PMI declined by 2.9pt to 56.1 in September, well below consensus expectations. The softening was broad-based across countries but primarily led by Germany. The peripheral composite flash PMI also weakened significantly in September but remain very high by historical standards (-2.4pt to 57.5). Across sectors, the September composite decline was also broad-based, with manufacturing output softening (-3.3pt to 55.6) to a similar extent as services (-2.7pt to 56.3). Supply-side issues and upward cost and price pressures continued to be widely reported. Expectations of future output growth declined by less than spot output on the back of delta variant worries and supply issues, remaining far above historically average levels. Earlier in the session, Asian stocks rose for the first time in four sessions, as Hong Kong helped lead a rally on hopes that troubled property firm China Evergrande Group will make progress on debt repayment. The MSCI Asia Pacific Index climbed as much as 0.5%, with Tencent and Meituan providing the biggest boosts. The Hang Seng jumped as much as 2.5%, led by real estate stocks as Evergrande surged more than 30%. Hong Kong shares later pared their gains. Asian markets were also cheered by gains in U.S. stocks overnight even as the Federal Reserve said it may begin scaling back stimulus this year. A $17 billion net liquidity injection from the People’s Bank of China also provided a lift, while the Fed and Bank of Japan downplayed Evergrande risks in comments accompanying policy decisions Wednesday. Evergrande’s stock closed 18% higher in Hong Kong, in a delayed reaction to news a unit of the developer had negotiated interest payments on yuan notes. A coupon payment on its 2022 dollar bond is due on Thursday “Investors are perhaps reassessing the tail risk of a disorderly fallout from Evergrande’s credit issues,” said Chetan Seth, a strategist at Nomura. “However, I am not sure if the fundamental issue around its sustainable deleveraging has been addressed. I suspect markets will likely remain quite volatile until we have some definite direction from authorities on the eventual resolution of Evergrande’s debt problems.” Stocks rose in most markets, with Australia, Taiwan, Singapore and India also among the day’s big winners. South Korea’s benchmark was the lone decliner, while Japan was closed for a holiday In rates, Treasuries were off session lows, with the 10Y trading a 1.34%, but remained under pressure in early U.S. session led by intermediate sectors, where 5Y yield touched highest since July 2. Wednesday’s dramatic yield-curve flattening move unleashed by Fed communications continued, compressing 5s30s spread to 93.8bp, lowest since May 2020. UK 10-year yield climbed 3.4bp to session high 0.833% following BOE rate decision (7-2 vote to keep bond-buying target unchanged); bunds outperformed slightly. Peripheral spreads tighten with long-end Italy outperforming. In FX, the Bloomberg Dollar Spot Index reversed an earlier gain and dropped 0.3% as the dollar weakened against all of its Group-of-10 peers apart from the yen amid a more positive sentiment. CAD, NOK and SEK are the strongest performers in G-10, JPY the laggard.  The euro and the pound briefly pared gains after weaker-than-forecast German and British PMIs. The pound rebounded from an eight-month low amid a return of global risk appetite as investors assessed whether the Bank of England will follow the Federal Reserve’s hawkish tone later Thursday. The yield differential between 10-year German and Italian debt narrowed to its tightest since April. Norway’s krone advanced after Norges Bank raised its policy rate in line with expectations and signaled a faster pace of tightening over the coming years. The franc whipsawed as the Swiss National Bank kept its policy rate and deposit rate at record lows, as expected, and reiterated its pledge to wage currency market interventions. The yen fell as a unit of China Evergrande said it had reached an agreement with bond holders over an interest payment, reducing demand for haven assets. Turkey’s lira slumped toa record low against the dollar after the central bank unexpectedly cut interest rates. In commodities, crude futures drifted lower after a rangebound Asia session. WTI was 0.25% lower, trading near $72; Brent dips into the red, so far holding above $76. Spot gold adds $3.5, gentle reversing Asia’s losses to trade near $1,771/oz. Base metals are well bid with LME aluminum leading gains. Bitcoin steadied just below $44,000. Looking at the day ahead, we get the weekly initial jobless claims, the Chicago Fed’s national activity index for August, and the Kansas City fed’s manufacturing activity index for September. From central banks, there’ll be a monetary policy decision from the Bank of England, while the ECB will be publishing their Economic Bulletin and the ECB’s Elderson will also speak. From emerging markets, there’ll also be monetary policy decisions from the Central Bank of Turkey and the South African Reserve Bank. Finally in Germany, there’s an election debate with the lead candidates from the Bundestag parties. Market Snapshot S&P 500 futures up 0.7% to 4,413.75 STOXX Europe 600 up 1.1% to 468.32 MXAP up 0.5% to 200.57 MXAPJ up 0.9% to 645.76 Nikkei down 0.7% to 29,639.40 Topix down 1.0% to 2,043.55 Hang Seng Index up 1.2% to 24,510.98 Shanghai Composite up 0.4% to 3,642.22 Sensex up 1.4% to 59,728.37 Australia S&P/ASX 200 up 1.0% to 7,370.22 Kospi down 0.4% to 3,127.58 German 10Y yield fell 5.6 bps to -0.306% Euro up 0.4% to $1.1728 Brent Futures up 0.3% to $76.39/bbl Gold spot up 0.0% to $1,768.25 U.S. Dollar Index down 0.33% to 93.16 Top Overnight News from Bloomberg Financial regulators in Beijing issued a broad set of instructions to China Evergrande Group, telling the embattled developer to focus on completing unfinished properties and repaying individual investors while avoiding a near-term default on dollar bonds China’s central bank net-injected the most short- term liquidity in eight months into the financial system, with markets roiled by concerns over China Evergrande Group’s debt crisis Europe’s worst energy crisis in decades could drag deep into the cold months as Russia is unlikely to boost shipments until at least November Business activity in the euro area “markedly” lost momentum in September after demand peaked over the summer and supply chain bottlenecks hurt both services and manufacturers. Surveys of purchasing managers by IHS Markit showed growth in both sectors slowing more than expected, bringing overall activity to a five-month low. Input costs, meanwhile, surged to the highest in 21 years, according to the report The U.K. private sector had its weakest month since the height of the winter lockdown and inflation pressures escalated in September, adding to evidence that the recovery is running into significant headwinds, IHS Markit said The U.K.’s record- breaking debut green bond sale has given debt chief Robert Stheeman conviction on the benefits of an environmental borrowing program. The 10 billion-pound ($13.7 billion) deal this week was the biggest-ever ethical bond sale and the country is already planning another offering next month A more detailed look at global markets courtesy of Newsquaw Asian equity markets traded mostly positive as the region took its cue from the gains in US with the improved global sentiment spurred by some easing of Evergrande concerns and with stocks also unfazed by the marginally more hawkish than anticipated FOMC announcement (detailed above). ASX 200 (+1.0%) was underpinned by outperformance in the commodity-related sectors and strength in defensives, which have more than atoned for the losses in tech and financials, as well as helped markets overlook the record daily COVID-19 infections in Victoria state. Hang Seng (+0.7%) and Shanghai Comp. (+0.6%) were also positive after another respectable liquidity operation by the PBoC and with some relief in Evergrande shares which saw early gains of more than 30% after recent reports suggested a potential restructuring by China’s government and with the Co. Chairman noting that the top priority is to help wealth investors redeem their products, although the majority of the Evergrande gains were then pared and unit China Evergrande New Energy Vehicle fully retraced the initial double-digit advances. KOSPI (-0.5%) was the laggard as it played catch up to the recent losses on its first trading day of the week and amid concerns that COVID cases could surge following the holiday period, while Japanese markets were closed in observance of the Autumnal Equinox Day. China Pumps $17 Billion Into System Amid Evergrande Concerns China Stocks From Property to Tech Jump on Evergrande Respite Philippines Holds Key Rate to Spur Growth Amid Higher Prices Taiwan’s Trade Deal Application Sets Up Showdown With China Top Asian News European equities (Stoxx 600 +0.9%) trade on the front-foot and have extended gains since the cash open with the Stoxx 600 now higher on the week after Monday’s heavy losses. From a macro perspective, price action in Europe has been undeterred by a slowdown in Eurozone PMIs which saw the composite metric slip to 56.1 from 59.0 (exp. 58.5) with IHS Markit noting “an unwelcome combination of sharply slower economic growth and steeply rising prices.” Instead, stocks in the region have taken the cue from a firmer US and Asia-Pac handover with performance in Chinese markets aided by further liquidity injections by the PBoC. Some positivity has also been observed on the Evergrande front amid mounting expectations of a potential restructuring at the company. That said, at the time of writing, it remains unclear what the company’s intentions are for repaying its USD 83.5mln onshore coupon payment. Note, ING highlights that “missing that payment today would still leave a 30-day grace period before this is registered as a default”. The most recent reports via WSJ indicate that Chinese authorities are asking local governments to begin preparations for the potential downfall of Evergrande; however, the article highlights that this is a last resort and Beijing is reluctant to step in. Nonetheless, this article has taken the shine off the mornings risk appetite, though we do remain firmer on the session. Stateside, as the dust settles on yesterday’s FOMC announcement, futures are firmer with outperformance in the RTY (+0.8% vs. ES +0.7%). Sectors in Europe are higher across the board with outperformance in Tech and Autos with the latter aided by gains in Faurecia (+4.6%) who sit at the top of the Stoxx 600 after making an unsurprising cut to its guidance, which will at least provide some clarity on the Co.’s near-term future; in sympathy, Valeo (+6.6) is also a notable gainer in the region. To the downside, Entain (+2.6%) sit at the foot of the Stoxx 600 after recent strong gains with the latest newsflow surrounding the Co. noting that MGM Resorts is considering different methods to acquire control of the BetMGM online gambling business JV, following the DraftKings offer for Entain, according to sources. The agreement between Entain and MGM gives MGM the ability to block any deal with competing businesses; MGM officials believe this grants the leverage to take full control of BetMGM without spending much. Top European News BOE Confronts Rising Prices, Slower Growth: Decision Guide La Banque Postale Eyes Retail, Asset Management M&A in Europe Activist Bluebell Raises Pressure on Glaxo CEO Walmsley Norway Delivers Rate Lift-Off With Next Hike Set for December In FX, not much bang for the Buck even though the FOMC matched the most hawkish market expectations and Fed chair Powell arguably went further by concluding in the post-meeting press conference that substantial progress on the lagging labour front is all but done. Hence, assuming the economy remains on course, tapering could start as soon as November and be completed my the middle of 2022, though he continued to play down tightening prospects irrespective of the more hawkish trajectory implied by the latest SEP dot plots that are now skewed towards at least one hike next year and a cumulative seven over the forecast horizon. However, the Greenback only managed to grind out marginally higher highs overnight, with the index reaching 93.526 vs 93.517 at best yesterday before retreating quite sharply and quickly to 93.138 in advance of jobless claims and Markit’s flash PMIs. CAD/NZD/AUD - The Loonie is leading the comeback charge in major circles and only partially assisted by WTI keeping a firm bid mostly beyond Usd 72/brl, and Usd/Cad may remain contained within 1.2796-50 ahead of Canadian retail sales given decent option expiry interest nearby and protecting the downside (1 bn between 1.2650-65 and 2.7 bn from 1.2620-00). Meanwhile, the Kiwi has secured a firmer grip on the 0.7000 handle to test 0.7050 pre-NZ trade and the Aussie is looking much more comfortable beyond 0.7250 amidst signs of improvement in the flash PMIs, albeit with the services and composite headline indices still some way short of the 50.0 mark. NOK/GBP/EUR/CHF - All firmer, and the Norwegian Crown outperforming following confirmation of the start of rate normalisation by the Norges Bank that also underscored another 25 bp hike in December and further tightening via a loftier rate path. Eur/Nok encountered some support around 10.1000 for a while, but is now below, while the Pound has rebounded against the Dollar and Euro in the run up to the BoE at midday. Cable is back up around 1.3770 and Eur/Gbp circa 0.8580 as Eur/Usd hovers in the low 1.1700 area eyeing multiple and a couple of huge option expiries (at the 1.1700 strike in 4.1 bn, 1.1730 in 1 bn, 1.1745-55 totalling 2.7 bn and 1.8 bn from 1.1790-1.1800). Note, Eurozone and UK flash PMIs did not live up to their name, but hardly impacted. Elsewhere, the Franc is lagging either side of 0.9250 vs the Buck and 1.0835 against the Euro on the back of a dovish SNB Quarterly Review that retained a high Chf valuation and necessity to maintain NIRP, with only minor change in the ordering of the language surrounding intervention. JPY - The Yen is struggling to keep its head afloat of 110.00 vs the Greenback as Treasury yields rebound and risk sentiment remains bullish pre-Japanese CPI and in thinner trading conditions due to the Autumn Equinox holiday. In commodities, WTI and Brent have been choppy throughout the morning in-spite of the broadly constructive risk appetite. Benchmarks spent much of the morning in proximity to the unchanged mark but the most recent Evergrande developments, via WSJ, have dampened sentiment and sent WTI and Brent back into negative territory for the session and printing incremental fresh lows at the time of publication. Back to crude, newsflow has once again centred around energy ministry commentary with Iraq making clear that oil exports will continue to increase. Elsewhere, gas remains at the forefront of focus particularly in the UK/Europe but developments today have been somewhat incremental. On the subject, Citi writes that Asia and Europe Nat. Gas prices could reach USD 100/MMBtu of USD 580/BOE in the winter, under their tail-risk scenario. For metals, its very much a case of more of the same with base-metals supportive, albeit off-best given Evergrande, after a robust APAC session post-FOMC. Given the gas issues, desks highlight that some companies are being forced to suspend/reduce production of items such as steel in Asian/European markets, a narrative that could become pertinent for broader prices if the situation continues. Elsewhere, spot gold and silver are both modestly firmer but remain well within the range of yesterday’s session and are yet to recovery from the pressure seen in wake of the FOMC. US Event Calendar 8:30am: Sept. Initial Jobless Claims, est. 320,000, prior 332,000; Continuing Claims, est. 2.6m, prior 2.67m 8:30am: Aug. Chicago Fed Nat Activity Index, est. 0.50, prior 0.53 9:45am: Sept. Markit US Composite PMI, prior 55.4 9:45am: Sept. Markit US Services PMI, est. 54.9, prior 55.1 9:45am: Sept. Markit US Manufacturing PMI, est. 61.0, prior 61.1 11am: Sept. Kansas City Fed Manf. Activity, est. 25, prior 29 12pm: 2Q US Household Change in Net Wor, prior $5t DB's Jim Reid concludes the overnight wrap My wife was at a parents event at school last night so I had to read three lots of bedtime stories just as the Fed were announcing their policy decision. Peppa Pig, Biff and Kipper, and somebody called Wonder Kid were interspersed with Powell’s press conference live on my phone. It’s fair to say the kids weren’t that impressed by the dot plot and just wanted to join them up. The twins (just turned 4) got their first reading book homework this week and it was a bit sad that one of them was deemed ready to have one with words whereas the other one only pictures. The latter was very upset and cried that his brother had words and he didn’t. That should create even more competitive tension! Back to the dots and yesterday’s Fed meeting was on the hawkish side in terms of the dots and also in terms of Powell’s confidence that the taper could be complete by mid-2022. Powell said that the Fed could begin tapering bond purchases as soon as the November FOMC meeting, in line with our US economists’ forecasts. He left some room for uncertainty, saying they would taper only “If the economy continues to progress broadly in line with expectations, and also the overall situation is appropriate for this.” However he made clear that “the timing and pace of the coming reduction in asset purchases will not be intended to carry a direct signal regarding the timing of interest rate liftoff.” The quarterly “dot plot” showed that the 18 FOMC officials were split on whether to start raising rates next year or not. In June, the median dot indicated no rate increases until 2023, but now 6 members see a 25bps raise next year and 3 members see two such hikes. Their inflation forecasts were also revised up and DB’s Matt Luzzetti writes in his FOMC review (link here) that “If inflation is at or below the Fed's current forecast next year of 2.3% core PCE, liftoff is likely to come in 2023, consistent with our view. However, if inflation proves to be higher with inflation expectations continuing to rise, the first rate increase could well migrate into 2022.” Markets took the overall meeting very much in its stride with the biggest impact probably being a yield curve flattening even if US 10yr Treasury yields traded in just over a 4bp range yesterday and finishing -2.2bps lower at 1.301%. The 5y30y curve flattened -6.7bps to 95.6bps, its flattest level since August 2020, while the 2y10y curve was -4.2bps flatter. So the market seems to believe the more hawkish the Fed gets the more likely they’ll control inflation and/or choke the recovery. The puzzle is that even if the dots are correct, real Fed funds should still be negative and very accommodative historically for all of the forecasting period. As such the market has a very dim view of the ability of the economy to withstand rate hikes or alternatively that the QE technicals are overpowering everything at the moment. In equities, the S&P 500 was up nearly +1.0% 15 minutes prior to the Fed, and then rallied a further 0.5% in the immediate aftermath before a late dip look it back to +0.95%. The late dip meant that the S&P still has not seen a 1% up day since July 23. The index’s rise was driven by cyclicals in particular with energy (+3.17%), semiconductors (-2.20%), and banks (+2.13%) leading the way. Asian markets are mostly trading higher this morning with the Hang Seng (+0.69%), Shanghai Comp (+0.58%), ASX (+1.03%) and India’s Nifty (+0.81%) all up. The Kospi (-0.36%) is trading lower though and is still catching up from the early week holidays. Japan’s markets are closed for a holiday today. Futures on the S&P 500 are up +0.25% while those on the Stoxx 50 are up +0.49%. There is no new news on the Evergrande debt crisis however markets participants are likely to pay attention to whether the group is able to make interest rate payment on its 5 year dollar note today after the group had said yesterday that it resolved a domestic bond coupon by negotiations which was also due today. As we highlighted in our CoTD flash poll conducted earlier this week, market participants are not too worried about a wider fallout from the Evergrande crisis and even the Hang Seng Properties index is up +3.93% this morning and is largely back at the levels before the big Monday sell-off of -6.69%. Overnight we have received flash PMIs for Australia which improved as parts of the country have eased the coronavirus restrictions. The services reading came in at 44.9 (vs. 42.9 last month) and the manufacturing print was even stronger at 57.3 (vs. 52.0 last month). Japan’s flash PMIs will be out tomorrow due to today’s holiday. Ahead of the Fed, markets had continued to rebound from their declines earlier in the week, with Europe’s STOXX 600 gaining +0.99% to narrowly put the index in positive territory for the week. This continues the theme of a relative outperformance among European equities compared to the US, with the STOXX 600 having outpaced the S&P 500 for 5 consecutive sessions now, though obviously by a slim margin yesterday. Sovereign bonds in Europe also posted gains, with yields on 10yr bunds (-0.7bps), OATs (-1.0bps) and BTPs (-3.2bps) all moving lower. Furthermore, there was another tightening in peripheral spreads, with the gap in Italian 10yr yields over bunds falling to 98.8bps yesterday, less than half a basis point away from its tightest level since early April. Moving to fiscal and with Democrats seemingly unable to pass the $3.5 trillion Biden budget plan by Monday, when the House is set to vote on the bipartisan infrastructure bill, Republican leadership is calling on their members to vote against the bipartisan bill in hopes of delaying the process further. While the there is still a high likelihood the measure will eventually get passed, time is becoming a factor. Congress now has just over a week to get a government funding bill through both chambers of congress as well as raise the debt ceiling by next month. Republicans have told Democrats to do the latter in a partisan manner and include it in the reconciliation process which could mean that a significant portion of the Biden economic agenda – mostly encapsulated in the $3.5 trillion over 10 year budget – may have to be cut down to get the entire Democratic caucus on board. Looking ahead, an event to watch out for today will be the Bank of England’s policy decision at 12:00 London time, where our economists write (link here) that they expect no change in the policy settings. However, they do expect a reaffirmation of the BoE’s updated forward guidance that some tightening will be needed over the next few years to keep inflation in check, even if it’s too early to expect a further hawkish pivot at this stage. Staying on the UK, two further energy suppliers (Avro Energy and Green Supplier) ceased trading yesterday amidst the surge in gas prices, with the two supplying 2.9% of domestic customers between them. We have actually seen a modest fall in European natural gas prices over the last couple of days, with the benchmark future down -4.81% since its close on Monday, although it’s worth noting that still leaves them up +75.90% since the start of August alone. There wasn’t much data to speak of yesterday, though US existing home sales fell to an annualised rate of 5.88 in August (vs. 5.89m expected). Separately, the European Commission’s advance consumer confidence reading for the Euro Area unexpectedly rose to -4.0 in September (vs. -5.9 expected). To the day ahead now, the data highlights include the September flash PMIs from around the world, while in the US there’s the weekly initial jobless claims, the Chicago Fed’s national activity index for August, and the Kansas City fed’s manufacturing activity index for September. From central banks, there’ll be a monetary policy decision from the Bank of England, while the ECB will be publishing their Economic Bulletin and the ECB’s Elderson will also speak. From emerging markets, there’ll also be monetary policy decisions from the Central Bank of Turkey and the South African Reserve Bank. Finally in Germany, there’s an election debate with the lead candidates from the Bundestag parties. Tyler Durden Thu, 09/23/2021 - 08:13.....»»

Category: blogSource: zerohedgeSep 23rd, 2021

Margaritaville"s first cruise ship has begun sailing out of Florida with the promise of booze and a Jimmy Buffett musical — see what it"s like onboard

Jimmy Buffett's hospitality empire turned a 30-year-old cruise ship into a floating Margaritaville resort for two-night sailings to the Bahamas. Margaritaville Margaritaville has launched Margartaville at Sea Paradise, the brand's first cruise ship. The vessel is now operating two-night sailings from Florida to the Grand Bahama island. See inside the ship, a floating paradise for fans of Jimmy Buffett and his Margaritaville empire. Parrotheads, rejoice!Brittany Chang/InsiderIf you're craving a vacation at sea with the chance to waste away (again), Jimmy Buffett's hospitality empire has you covered.Brittany Chang/InsiderMargaritaville has launched its first cruise line — appropriately named Margaritaville at Sea — as the company continues to expand its footprint both on land and at sea …Brittany Chang/InsiderSource: Insider… and it's everything you'd expect from a floating Margaritaville resort.Brittany Chang/InsiderOn May 14, the Margaritaville began passenger sailings aboard its first vessel, the Margaritaville at Sea Paradise.Brittany Chang/InsiderThe company's cruise arm may be new, but the ship is already over 30 years old.Brittany Chang/InsiderMargaritaville partnered with Florida-based Bahamas Paradise Cruise Line to create the new cruise brand.Brittany Chang/InsiderThe latter cruise brand has since adopted the Margaritaville at Sea brand …Brittany Chang/Insider… and its flagship vessel, the Grand Classica, has followed the same route.Brittany Chang/InsiderAfter undergoing a "multi-million investment and refurbishment," remnants of the cruise ship's past life have since been stripped away and replaced with …Brittany Chang/InsiderSource: Insider… a statue of a giant flip flop …Brittany Chang/Insider… lime lights …Brittany Chang/Insider… and the promise of tropical paradise at sea.Brittany Chang/InsiderThe 10-deck, 724-foot-long cruise ship is relatively small but still has all the amenities of a traditional cruise liner like restaurants, bars, a spa, and a theater.Brittany Chang/InsiderThe Margaritaville vessel can sail up to 590 crew members who will then tend to up to 1,680 passengers.Brittany Chang/InsiderTo accommodate these guests, Margaritaville at Sea Paradise has almost 660 staterooms ranging from inside and ocean view (shown below) staterooms …Brittany Chang/Insider… to junior and terrace suites.The McBride CompanyWhen you're onboard, there's no hiding from the Margaritaville brand (or, dare I say, culture).Brittany Chang/InsiderLike all of Margaritaville's hospitality offerings, the cruise ship is a goldmine of Jimmy Buffett references.Brittany Chang/InsiderAlmost every amenity aboard Margaritaville at Sea Paradise is named after a Jimmy Buffett reference or song, including Frank and Lola's Pizzeria …Brittany Chang/Insider… and the Port of Indecision Buffet.Brittany Chang/InsiderThere are also several dining concepts available at the brand's hotels and resorts, like the License to Chill and 5 o'Clock Somewhere bars.Brittany Chang/InsiderThe buffet is smaller than the ones found on today's giant modern cruise liners but it still has a variety of food and the crucial pasta and dessert bars.Brittany Chang/InsiderIf you're craving an upscale dinner you can pay a premium to eat at JWB Prime Steakhouse, a high-end concept available at some Margaritaville resorts.Brittany Chang/InsiderFor the more casual cruise goers, there's also the main dining room, a pizzeria …Brittany Chang/Insider… and the alfresco 5 o'Clock Somewhere Bar and Grill complete with literal limelights and a statue of a giant blender.Brittany Chang/InsiderAnd it certainly wouldn't be a Margaritaville cruise without the promise of endless booze.Brittany Chang/InsiderMargaritaville at Sea Paradise has several bars and lounges, including the indoor Euphoria lounge with live music …Brittany Chang/Insider… the 12 Volt Pool Bar, another open-air bar with views of a pool and ocean.Brittany Chang/InsiderFor some nighttime entertainment, the theater will host the ship's "Tales from Margaritaville: Jimmy's Ship Show," a kitschy song and dance production filled with back-to-back Jimmy Buffett hits.Brittany Chang/InsiderIf you're not into shows, there's always the casino.Brittany Chang/InsiderBut if you'd rather lounge outside, the ship has two pools, one of which is adults-only.Brittany Chang/InsiderLike most cruise ships, Margaritaville at Sea Paradise also has a spa and salon next to a small gym.Brittany Chang/InsiderBut if you're looking forward to life at sea as a Parrothead, don't expect a weeklong vacation.Brittany Chang/InsiderFor now, the brand is only operating two-night cruises from Palm Beach, Florida to the Grand Bahama island, an itinerary that'll continue through March 2023.Brittany Chang/InsiderSource: Margaritaville at SeaRead the original article on Business Insider.....»»

Category: topSource: businessinsider16 hr. 3 min. ago

Central Bankers" Narratives Are Falling Apart

Central Bankers' Narratives Are Falling Apart Authored by Alasdair Macleod via GoldMoney.com, Central bankers’ narratives are falling apart. And faced with unpopularity over rising prices, politicians are beginning to question central bank independence. Driven by the groupthink coordinated in the regular meetings at the Bank for International Settlements, they became collectively blind to the policy errors of their own making. On several occasions I have written about the fallacies behind interest rate policies. I have written about the lost link between the quantity of currency and credit in circulation and the general level of prices. I have written about the effect of changing preferences between money and goods and the effect on prices. This article gets to the heart of why central banks’ monetary policy was originally flawed. The fundamental error is to regard economic cycles as originating in the private sector when they are the consequence of fluctuations in credit, to which we can add the supposed benefits of continual price inflation. Introduction Many investors swear by cycles. Unfortunately, there is little to link these supposed cycles to economic theory, other than the link between the business cycle and the cycle of bank credit. The American economist Irving Fisher got close to it with his debt-deflation theory by attributing the collapse of bank credit to the 1930s’ depression. Fisher’s was a well-argued case by the father of modern monetarism. But any further research by mainstream economists was brushed aside by the Keynesian revolution which simply argued that recessions, depressions, or slumps were evidence of the failings of free markets requiring state intervention. Neither Fisher nor Keynes appeared to be aware of the work being done by economists of the Austrian school, principally that of von Mises and Hayek. Fisher was on the American scene probably too early to have benefited from their findings, and Keynes was, well, Keynes the statist who in common with other statists in general placed little premium on the importance of time and its effects on human behaviour. It makes sense, therefore, to build on the Austrian case, and to make the following points at the outset: It is incorrectly assumed that business cycles arise out of free markets. Instead, they are the consequence of the expansion and contraction of unsound money and credit created by the banks and the banking system. The inflation of bank credit transfers wealth from savers and those on fixed incomes to the banking sector’s favoured customers. It has become a major cause of increasing disparities between the wealthy and the poor. The credit cycle is a repetitive boom-and-bust phenomenon, which historically has been roughly ten years in duration. The bust phase is the market’s way of eliminating unsustainable debt, created through credit expansion. If the bust is not allowed to proceed, trouble accumulates for the next credit cycle. Today, economic distortions from previous credit cycles have accumulated to the point where only a small rise in interest rates will be enough to trigger the next crisis. Consequently, central banks have very little room for manoeuvre in dealing with current and future price inflation. International coordination of monetary policies has increased the potential scale of the next credit crisis, and not contained it as the central banks mistakenly believe. The unwinding of the massive credit expansion in the Eurozone following the creation of the euro is an additional risk to the global economy. Comparable excesses in the Japanese monetary system pose a similar threat. Central banks will always fail in using monetary policy as a management tool for the economy. They act for the state, and not for the productive, non-financial private sector. Modern monetary assumptions The original Keynesian policy behind monetary and fiscal stimulation was to help an economy recover from a recession by encouraging extra consumption through bank credit expansion and government deficits funded by inflationary means. Originally, Keynes did not recommend a policy of continual monetary expansion, because he presumed that a recession was the result of a temporary failure of markets which could be remedied by the application of deficit spending by the state. The error was to fail to understand that the cycle is of credit itself, the consequence being the imposition of boom and bust on what would otherwise be a non-cyclical economy, where the random action by businesses in a sound money environment allowed for an evolutionary process delivering economic progress. It was this environment which Schumpeter described as creative destruction. In a sound money regime, businesses deploy the various forms of capital at their disposal in the most productive, profitable way in a competitive environment. Competition and failure of malinvestment provide the best returns for consumers, delivering on their desires and demands. Any business not understanding that the customer is king deserves to fail. The belief in monetary and fiscal stimulation wrongly assumes, among other things, that there are no intertemporal effects. As long ago as 1730, Richard Cantillon described how the introduction of new money into an economy affected prices. He noted that when new money entered circulation, it raised the prices of the goods first purchased. Subsequent acquirers of the new money raised the prices of the goods they demanded, and so on. In this manner, the new money is gradually distributed, raising prices as it is spent, until it is fully absorbed in the economy. Consequently, maximum benefit of the purchasing power of the new money accrues to the first receivers of it, in his time being the gold and silver imported by Spain from the Americas. But today it is principally the banks that create unbacked credit out of thin air, and their preferred customers who benefit most from the expansion of bank credit. The losers are those last to receive it, typically the low-paid, the retired, the unbanked and the poor, who find that their earnings and savings buy less in consequence. There is, in effect, a wealth transfer from the poorest in society to the banks and their favoured customers. Modern central banks seem totally oblivious of this effect, and the Bank of England has even gone to some trouble to dissuade us of it, by quoting marginal changes in the Gini coefficient, which as an average tells us nothing about how individuals, or groups of individuals are affected by monetary debasement. At the very least, we should question central banking’s monetary policies on grounds of both efficacy and the morality, which by debauching the currency, transfers wealth from savers to profligate borrowers —including the government. By pursuing the same monetary policies, all the major central banks are tarred with this bush of ignorance, and they are all trapped in the firm clutch of groupthink gobbledegook. The workings of a credit cycle To understand the relationship between the cycle of credit and the consequences for economic activity, A description of a typical credit cycle is necessary, though it should be noted that individual cycles can vary significantly in the detail. We shall take the credit crisis as our starting point in this repeating cycle. Typically, a credit crisis occurs after the central bank has raised interest rates and tightened lending conditions to curb price inflation, always the predictable result of earlier monetary expansion. This is graphically illustrated in Figure 1. The severity of the crisis is set by the amount of excessive private sector debt financed by bank credit relative to the overall economy. Furthermore, the severity is increasingly exacerbated by the international integration of monetary policies. While the 2007-2008 crises in the UK, the Eurozone and Japan were to varying degrees home-grown, the excessive speculation in the American residential property market, facilitated additionally by off-balance sheet securitisation invested in by the global banking network led to the crisis in each of the other major jurisdictions being more severe than it might otherwise have been. By acting as lender of last resort to the commercial banks, the central bank tries post-crisis to stabilise the economy. By encouraging a revival in bank lending, it seeks to stimulate the economy into recovery by reducing interest rates. However, it inevitably takes some time before businesses, mindful of the crisis just past, have the confidence to invest in production. They will only respond to signals from consumers when they in turn become less cautious in their spending. Banks, who at this stage will be equally cautious over their lending, will prefer to invest in short-maturity government bonds to minimise balance sheet risk. A period then follows during which interest rates remain suppressed by the central bank below their natural rate. During this period, the central bank will monitor unemployment, surveys of business confidence, and measures of price inflation for signs of economic recovery. In the absence of bank credit expansion, the central bank is trying to stimulate the economy, principally by suppressing interest rates and more recently by quantitative easing. Eventually, suppressed interest rates begin to stimulate corporate activity, as entrepreneurs utilise a low cost of capital to acquire weaker rivals, and redeploy underutilised assets in target companies. They improve their earnings by buying in their own shares, often funded by cheapened bank credit, as well as by undertaking other financial engineering actions. Larger businesses, in which the banks have confidence, are favoured in these activities compared with SMEs, who find it generally difficult to obtain finance in the early stages of the recovery phase. To that extent, the manipulation of money and credit by central banks ends up discriminating against entrepreneurial smaller companies, delaying the recovery in employment. Consumption eventually picks up, fuelled by credit from banks and other lending institutions, which will be gradually regaining their appetite for risk. The interest cost on consumer loans for big-ticket items, such as cars and household goods, is often lowered under competitive pressures, stimulating credit-fuelled consumer demand. The first to benefit from this credit expansion tend to be the better-off creditworthy consumers, and large corporations, which are the early receivers of expanding bank credit. The central bank could be expected to raise interest rates to slow credit growth if it was effectively managing credit. However, the fall in unemployment always lags in the cycle and is likely to be above the desired target level. And price inflation will almost certainly be below target, encouraging the central bank to continue suppressing interest rates. Bear in mind the Cantillon effect: it takes time for expanding bank credit to raise prices throughout the country, time which contributes to the cyclical effect. Even if the central bank has raised interest rates by this stage, it is inevitably by too little. By now, commercial banks will begin competing for loan business from large credit-worthy corporations, cutting their margins to gain market share. So, even if the central bank has increased interest rates modestly, at first the higher cost of borrowing fails to be passed on by commercial banks. With non-financial business confidence spreading outwards from financial centres, bank lending increases further, and more and more businesses start to expand their production, based upon their return-on-equity calculations prevailing at artificially low interest rates and input prices, which are yet to reflect the increase in credit. There’s a gathering momentum to benefit from the new mood. But future price inflation for business inputs is usually underestimated. Business plans based on false information begin to be implemented, growing financial speculation is supported by freely available credit, and the conditions are in place for another crisis to develop. Since tax revenues lag in any economic recovery, government finances have yet to benefit suvstantially from an increase in tax revenues. Budget deficits not wholly financed by bond issues subscribed to by the domestic public and by non-bank corporations represents an additional monetary stimulus, fuelling the credit cycle even more at a time when credit expansion should be at least moderated. For the planners at the central banks, the economy has now stabilised, and closely followed statistics begin to show signs of recovery. At this stage of the credit cycle, the effects of earlier monetary inflation start to be reflected more widely in rising prices. This delay between credit expansion and the effect on prices is due to the Cantillon effect, and only now it is beginning to be reflected in the calculation of the broad-based consumer price indices. Therefore, prices begin to rise persistently at a higher rate than that targeted by monetary policy, and the central bank has no option but to raise interest rates and restrain demand for credit. But with prices still rising from credit expansion still in the pipeline, moderate interest rate increases have little or no effect. Consequently, they continue to be raised to the point where earlier borrowing, encouraged by cheap and easy money, begins to become uneconomic. A rise in unemployment, and potentially falling prices then becomes a growing threat. As financial intermediaries in a developing debt crisis, the banks are suddenly exposed to extensive losses of their own capital. Bankers’ greed turns to a fear of being over-leveraged for the developing business conditions. They are quick to reduce their risk-exposure by liquidating loans where they can, irrespective of their soundness, putting increasing quantities of loan collateral up for sale. Asset inflation quickly reverses, with all marketable securities falling sharply in value. The onset of the financial crisis is always swift and catches the central bank unawares. When the crisis occurs, banks with too little capital for the size of their balance sheets risk collapsing. Businesses with unproductive debt and reliant on further credit go to the wall. The crisis is cathartic and a necessary cleaning of the excesses entirely due to the human desire of bankers and their shareholders to maximise profits through balance sheet leverage. At least, that’s what should happen. Instead, a modern central bank moves to contain the crisis by committing to underwrite the banking system to stem a potential downward spiral of collateral sales, and to ensure an increase in unemployment is contained. Consequently, many earlier malinvestments will survive. Over several cycles, the debt associated with past uncleared malinvestments accumulates, making each successive crisis greater in magnitude. 2007-2008 was worse than the fall-out from the dot-com bubble in 2000, which in turn was worse than previous crises. And for this reason, the current credit crisis promises to be even greater than the last. Credit cycles are increasingly a global affair. Unfortunately, all central banks share the same misconception, that they are managing a business cycle that emanates from private sector business errors and not from their licenced banks and own policy failures. Central banks through the forum of the Bank for International Settlements or G7, G10, and G20 meetings are fully committed to coordinating monetary policies on a global basis. The consequence is credit crises are potentially greater as a result. Remember that G20 was set up after the Lehman crisis to reinforce coordination of monetary and financial policies, promoting destructive groupthink even more. Not only does the onset of a credit crisis in any one country become potentially exogenous to it, but the failure of any one of the major central banks to contain its crisis is certain to undermine everyone else. Systemic risk, the risk that banking systems will fail, is now truly global and has worsened. The introduction of the new euro distorted credit cycles for Eurozone members, and today has become a significant additional financial and systemic threat to the global banking system. After the euro was introduced, the cost of borrowing dropped substantially for many high-risk member states. Unsurprisingly, governments in these states seized the opportunity to increase their debt-financed spending. The most extreme examples were Greece, followed by Italy, Spain, and Portugal —collectively the PIGS. Consequently, the political pressures to suppress euro interest rates are overwhelming, lest these state actors’ finances collapse. Eurozone commercial banks became exceptionally highly geared with asset to equity leverage more than twenty times on average for the global systemically important banks. Credit cycles for these countries have been made considerably more dangerous by bank leverage, non-performing debt, and the TARGET2 settlement system which has become dangerously unbalanced. The task facing the ECB today to stop the banking system from descending into a credit contraction crisis is almost impossible as a result. The unwinding of malinvestments and associated debt has been successfully deferred so far, but the Eurozone remains a major and increasing source of systemic risk and a credible trigger for the next global crisis. The seeds were sown for the next credit crisis in the last When new money is fully absorbed in an economy, prices can be said to have adjusted to accommodate it. The apparent stimulation from the extra money will have reversed itself, wealth having been transferred from the late receivers to the initial beneficiaries, leaving a higher stock of currency and credit and increased prices. This always assumes there has been no change in the public’s general level of preference for holding money relative to holding goods. Changes in this preference level can have a profound effect on prices. At one extreme, a general dislike of holding any money at all will render it valueless, while a strong preference for it will drive down prices of goods and services in what economists lazily call deflation. This is what happened in 1980-81, when Paul Volcker at the Federal Reserve Board raised the Fed’s fund rate to over 19% to put an end to a developing hyperinflation of prices. It is what happened more recently in 2007/08 when the great financial crisis broke, forcing the Fed to flood financial markets with unlimited credit to stop prices falling, and to rescue the financial system from collapse. The state-induced interest rate cycle, which lags the credit cycle for the reasons described above, always results in interest rates being raised high enough to undermine economic activity. The two examples quoted in the previous paragraph were extremes, but every credit cycle ends with rates being raised by the central bank by enough to trigger a crisis. The chart above of America’s Fed funds rate is repeated from earlier in this article for ease of reference. The interest rate peaks joined by the dotted line marked the turns of the US credit cycle in January 1989, mid-2000, early 2007, and mid-2019 respectively. These points also marked the beginning of the recession in the early nineties, the post-dotcom bubble collapse, the US housing market crisis, and the repo crisis in September 2019. The average period between these peaks was exactly ten years, echoing a similar periodicity observed in Britain’s nineteenth century. The threat to the US economy and its banking system has grown with every crisis. Successive interest peaks marked an increase in severity for succeeding credit crises, and it is notable that the level of interest rates required to trigger a crisis has continually declined. Extending this trend suggests that a Fed Funds Rate of no more than 2% today will be the trigger for a new momentum in the current financial crisis. The reason this must be so is the continuing accumulation of dollar-denominated private-sector debt. And this time, prices are fuelled by record increases in the quantity of outstanding currency and credit. Conclusions The driver behind the boom-and-bust cycle of business activity is credit itself. It therefore stands to reason that the greater the level of monetary intervention, the more uncontrollable the outcome becomes. This is confirmed by both reasoned theory and empirical evidence. It is equally clear that by seeking to manage the credit cycle, central banks themselves have become the primary cause of economic instability. They exhibit institutional groupthink in the implementation of their credit policies. Therefore, the underlying attempt to boost consumption by encouraging continual price inflation to alter the allocation of resources from deferred consumption to current consumption, is overly simplistic, and ignores the negative consequences. Any economist who argues in favour of an inflation target, such as that commonly set by central banks at 2%, fails to appreciate that monetary inflation transfers wealth from most people, who are truly the engine of production and spending. By impoverishing society inflationary policies are counterproductive. Neo-Keynesian economists also fail to understand that prices of goods and services in the main do not act like those of speculative investments. People will buy an asset if the price is rising because they see a bandwagon effect. They do not normally buy goods and services because they see a trend of rising prices. Instead, they seek out value, as any observer of the falling prices of electrical and electronic products can testify. We have seen that for policymakers the room for manoeuvre on interest rates has become increasingly limited over successive credit cycles. Furthermore, the continuing accumulation of private sector debt has reduced the height of interest rates that would trigger a financial and systemic crisis. In any event, a renewed global crisis could be triggered by the Fed if it raises the funds rate to as little as 2%. This can be expected with a high degree of confidence; unless, that is, a systemic crisis originates from elsewhere —the euro system and Japan are already seeing the euro and yen respectively in the early stages of a currency collapse. It is bound to lead to increased interest rates in the euro and yen, destabilising their respective banking systems. The likelihood of their failure appears to be increasing by the day, a situation that becomes obvious when one accepts that the problem is wholly financial, the result of irresponsible credit and currency expansion in the past. An economy that works best is one where sound money permits an increase in purchasing power of that money over time, reflecting the full benefits to consumers of improvements in production and technology. In such an economy, Schumpeter’s process of “creative destruction” takes place on a random basis. Instead, consumers and businesses are corralled into acing herd-like, financed by the cyclical ebb and flow of bank credit. The creation of the credit cycle forces us all into a form of destructive behaviour that otherwise would not occur. Tyler Durden Sun, 05/22/2022 - 08:10.....»»

Category: blogSource: zerohedge16 hr. 35 min. ago

Shanghai is finally lifting its lockdown after 7 weeks. The global economy has yet to feel its full impact, experts warn.

The lockdown shuttered factories across the city and caused delays at ports. The ripple effects are being felt by Starbucks, Apple, and more. People queue for COVID-19 tests in Shanghai.Wang Gang/VCG via Getty Images. City officials in Shanghai are planning to gradually ease lockdown restrictions after seven weeks. The lockdown forced shops and factories to close and disrupted ports. The ripple effects of the lockdown have yet to be fully felt by the global economy, experts warn. Shanghai has begun to emerge from a lockdown that has constrained the global economy and created even more turmoil for supply chains.The city's deputy mayor, Zong Ming, said in an online news conference on Monday that the city would emerge from restrictions in phases, aiming to return to normal life by June 1, Reuters reported.In line with China's zero-COVID strategy, Shanghai entered a strict lockdown on March 28 to combat a rising number of Omicron cases.The tough restrictions hit businesses in the manufacturing and commercial hub of Shanghai, not to mention the broader global economy, as factories were shuttered and workers were confined to their homes. Truckers struggled to move goods in and out of the city's huge port due to restrictions on movement.But even when the restrictions lift, experts have warned that the impact of the lockdown will continue to cause ripple effects around the world.Shanghai factories will struggle to ramp up productionTesla cars in Shanghai waiting be exported to Belgium on May 15.Shen Chunchen/VCG via Getty Images.Manufacturers may ramp up production ahead of the lockdown lifting, but it might not be easy.Shops and factories have been largely closed in Shanghai and workers have struggled to commute to work under strict work-from-home rules. Tesla closed its Shanghai gigafactory entirely for three weeks and reopened operating a "closed-loop" system with workers sleeping on the factory floor, Bloomberg first reported.Despite reopening, the electric-car manufacturer said production has been slowed due to challenges with getting parts, Reuters reported, citing an internal memo. It recently delayed plans to ramp up production to pre-lockdown levels by May 16. It was facing difficulties bringing more workers back to the factory under the closed-loop conditions still required before the lockdown lifts entirely, Reuters recently reported, citing a source familiar with the situation.Tesla did not immediately respond to Insider's request for comment.Shanghai's port, the world's busiest, is facing a huge backlogA truck driver presents a negative COVID-19 test to a traffic officer in Shanghai in April 2022.Yin Liqin/China News Service via Getty Images.Shanghai is home to the world's busiest port and processes around 20% of Chinese exports.Ioana Kraft, general manager of the Shanghai Chapter at the European Union Chamber of Commerce in China, said problems with logistics at the port have been a key factor in snarls across the global supply chain.According to Project44, a supply-chain data-tracking platform, the port saw a 175% increase in container dwell time between March and April, meaning ships have been waiting longer to take on cargo, indicating issues with trucking operations on land.Truck drivers are slowed by needing different COVID permits to travel between different areas in China in a "patchwork" of regulations, the Financial Times reported.Goods will start flowing in and out of Shanghai's port as the lockdown lifts, but delays for ships and trucks are unlikely to disappear.The number of vessels waiting outside the port is increasing as factories grapple to secure the materials needed to return to full production, Project44 said, adding: "The situation is expected to remain dire for a while."US ports face a huge influx of backlogged Chinese shipmentsYangshan Deepwater Port loaded with containers on April 24, 2022.Yin Liqin/China News Service via Getty Images.The slump in production capacity in China helped to ease logjams at US ports that were created during the pandemic.But as manufacturing resumes in Shanghai and more goods are shipped out, ports across the US East and West coasts are likely to be strained again, experts told Insider."As soon as these lockdowns end and you have all this capacity actually being moved at the same time, it will definitely, I would say, create new issues, and most probably it will be issues on both sides of the US," Alex Charvalias, a supply-chain lead at the vessel-tracking site MarineTraffic, said.And with no structural changes at US ports expected in terms of truckers, workers, and port facilities, those ports won't have the capacity to deal with a sudden rise in ships arriving, experts said."If demand is not changing, backlogs will continue, because the reason for the backlogs is lack of transport inland, lack of labor and facilities to unstuff the containers," Stanley Smulders, the director of marketing and commercial at the global-shipping company Ocean Network Express, said.Starbucks and Apple warn of long-term implicationsStarbucks stores were either temporarily closed or offered delivery only.Yin Liqin/China News Service via Getty Images.China's retail sales dropped during the lockdown and may not recover in the coming months, experts have warned.Retail sales in China fell by over 11% year-over-year in April, according to recent data from China's statistics bureau."These numbers are unlikely to improve significantly in the coming months given that China is unlikely to alter its zero-COVID policy," Michael Hewson, a markets analyst, told the financial news site Sharecast on Monday.Retail and tech giants including Starbucks and Apple have said that the lockdown would have long-term implications for business. Apple predicted that ongoing chip shortages caused by supply-chain constraints would cost the company between $4 billion and $8 billion in the next quarter, while Starbucks also reported a dip in Chinese sales as a number of chains were closed. Other analysts predicted a slump in GDP. Goldman Sachs analysts reduced their forecast for China's GDP from 4.5% to 4%, adding that they do not expect to see an increase before the second quarter of 2023, CNBC reported on Wednesday.Investment in China could falterA worker in protective clothing at an edible-oil production factory in Shanghai in April.Zhang Jiansong/Xinhua via Getty Images.Officials said the pattern of strict lockdowns in China could curb foreign investment in the country.The US Chamber of Commerce warned that the lockdown could have long-term consequences on investment because of travel restrictions that will hamper projects, Reuters reported on Tuesday."Unfortunately the COVID lockdown this year and the restrictions for the last two years are going to mean three, four, five years from now, we will see investment decline, most likely," Michael Hart, the president of the American Chamber of Commerce in China, said on Monday, per Reuters."Fifty-eight percent of our members have already decreased revenue projections for 2022, while 61% have experienced supply-chain disruptions due to transportation and shipping issues. Most worryingly, members don't see any light at the end of the tunnel," Colm Rafferty, the chairman of the US Chamber of Commerce in China, added in a press release posted to the AmCham China website Tuesday.Insider has reached out to the US Chamber of Commerce in China for comment.But businesses and consumers will adapt, experts sayCommuters on the New York subway.Paul Seheult/Eye Ubiquitous/Universal Images Group via Getty Images.Manufacturers have faced a shortage of materials including semiconductors and auto parts, partially caused by the lockdown in Shanghai.Kevin Krot, the executive vice president of aerospace and defense at the global supply-chain consulting group SGS-Maine Pointe, told Insider that manufacturers across industries like automotive, aerospace, and defense could start to bring their production capacities closer to home as a result."We're definitely seeing more onshoring," Krot said, adding that the impact of this would not be noticeable for another two to three years.Krot said that constraints would push consumers to change their purchasing habits, liking keeping their phones and cars for longer."Consumers will now keep their phones six months longer," he predicted. "We're going to learn to adapt."Read the original article on Business Insider.....»»

Category: topSource: businessinsiderMay 21st, 2022

Top Research Reports for JPMorgan, Gilead Sciences & CSX

Today's Research Daily features new research reports on 16 major stocks, including JPMorgan Chase & Co. (JPM), Gilead Sciences, Inc. (GILD) and CSX Corporation (CSX). Friday, May 20, 2022The Zacks Research Daily presents the best research output of our analyst team. Today's Research Daily features new research reports on 16 major stocks, including JPMorgan Chase & Co. (JPM), Gilead Sciences, Inc. (GILD) and CSX Corp. (CSX). These research reports have been hand-picked from the roughly 70 reports published by our analyst team today. You can see all of today’s research reports here >>> JPMorgan shares have declined -24.2% in the year-to-date period against the Zacks Banks - Major Regional industry’s decline of -19.1%. The company’s first-quarter 2022 results show loan growth, the dismal performance of the capital markets business, and higher provisions. The volatile nature of the trading business is likely to make fee income growth tough. Relatively lower interest rates in the near term are expected to keep weighing on the company’s margins and interest income. Steadily rising expenses remain a key near-term headwind. However, Opening new branches, strategic acquisitions/investments, global expansion and digitization initiatives and decent investment banking (IB) pipeline are likely to keep aiding the company's financials. Its steady capital deployments look sustainable and will enhance shareholder value. (You can read the full research report on JPMorgan here >>>) Gilead Sciences shares have declined -3.7% over the past year against the Medical - Biomedical and Genetics industry’s decline of -37.7%. The Zacks analyst believes that the loss of Atripla and Truvada’s exclusivity is affecting sales. Although the CAR T cell therapy franchise, comprising Yescarta and Tecartus, is gaining traction, it has a long way to go before contributing meaningfully. Never the less, the company’s flagship HIV therapy Biktarvy continues to register growth and gains in market share. It is looking to solidify its oncology franchise. The acquisition of Immunomedics added an approved drug Trodelvy to its portfolio, and the label expansion of the drug should boost sales. Increased contribution from the COVID-19 treatment, Veklury boosted performance. The recent surge in cases in many countries might drive sales further. (You can read the full research report on Gilead Sciences here >>>) CSX shares have declined -5.5% over the past year against Transportation - Rail industry’s decline of -5.9%. The Zacks analyst believes that supply chain disruptions are hurting the company’s operations. Weakness in the merchandise segment due to lower automotive volumes is concerning. High costs, primarily due to escalating fuel expenses, pose a threat to CSX’s bottom line. The company’s high capital expenditures are also worrisome. Due to these headwinds, shares of the company have lost 17.7% in the year-to-date period. However, due to a healthy freight environment, CSX is benefiting from higher export coal volumes, domestic intermodal shipments, and favorable pricing. With the demand scenario expected to remain strong, management anticipates double-digit growth in operating income and revenues for 2022 from the respective year-ago reported figures. The company’s measures to reward shareholders are encouraging as well. In February, CSX hiked its dividend by 7.5%.(You can read the full research report on CSX here >>>) Other noteworthy reports we are featuring today include CVS Health Corp. (CVS), The Progressive Corp. (PGR), and China Petroleum & Chemical Corp. (SNP).Mark VickerySenior EditorNote: Sheraz Mian heads the Zacks Equity Research department and is a well-regarded expert of aggregate earnings. He is frequently quoted in the print and electronic media and publishes the weekly Earnings Trends and Earnings Preview reports. If you want an email notification each time Sheraz publishes a new article, please click here>>>Today's Must ReadBranch Expansion Efforts Aid JPMorgan (JPM) Amid Low RatesBiktarvy, Veklury Fuels Gilead (GILD) As Core Business SlowsHealthy Freight Demand Aids CSX Amid Supply Chain WoesFeatured ReportsCVS Health (CVS) Pharmacy Business Grows Amid Stiff RivalryThe Zacks analyst is impressed with CVS Health's growth in pharmacy revenues on higher pharmacy claims volume, rise in specialty pharmacy and brand inflation. Yet, stiff rivalry remains a concern.Progressive's (PGR) Solid Policies in Force Aid, Cat Loss AilPer the Zacks analyst, Progressive is set to grow on, solid policies in force, competitive rates and leadership position. However, cat loss exposure inducing underwriting volatility ails.Sinopec (SNP) Banks on Shengli Geological Shale Oil ReservesThe Zacks analyst is impressed by Sinopec's discovery of 458 million tons of shale oil reserves at its Shengli field, which will drive the production. Yet, rising exploration costs remain concerning.Intercontinental (ICE) Banks on Buyouts & Solid Balance Sheet Per the Zacks analyst, Intercontinental Exchange is set to grow on a number of acquisitions and cost synergies. Moreover, a solid balance sheet provides financial flexibility. Solid Investments Aid Sempra Energy (SRE), Weak Solvency WoePer the Zacks analyst, systematic investments significantly boost Sempra Energy's infrastructure and its customers reliability. However, its weak solvency position remains a concernSynopsys (SNPS) Banks on Strong Product Menu, Contract WinsPer the Zacks analyst, Synopsys' focus on strengthening its product portfolio is helping it cater to the growing demand in the EDA market. Deal wins at leading semiconductor companies is a tailwind.Ericsson (ERIC) Rides on Comprehensive 5G Portfolio StrengthPer the Zacks analyst, Ericsson is likely to benefit from its comprehensive 5G product portfolio as it focuses on structural changes to generate efficiency gains and boost cost competitiveness.New UpgradesFocus on Permian Basin, Cost Management Aid Occidental (OXY)Per the Zacks analyst Occidental's efficient cost management and expansion of its operation Permian Basin through acquisition of Anadarko will drive its performance over the long run.Nutrien (NTR) Gains on Strong Demand and Higher Prices Per the Zacks analyst, the company will gain from solid demand for fertilizers driven by the strength in global agriculture markets. Higher prices for crop nutrients will also support its margins.Marriott (MAR) Likely to Gain From Robust Expansion EffortsThe Zacks analyst believes that Marriott's efforts to expand its footprint and improving demand bode well. At the end of first-quarter 2022, Marriott's development pipeline totaled nearly 2,878 hotelsNew DowngradesWalmart (WMT) Hurt by Cost Inflation, Supply-Chain HurdlesPer the Zacks analyst, Walmart is battling supply-chain hurdles, and fuel and wage cost inflation. Walmart expects some of these woes to persist, and lowered earnings per share view for fiscal 2023.Soft Hard Seltzer Ail Boston Beer's (SAM) PerformancePer the Zacks analyst, Boston Beer has been reeling under slowed growth trends in hard seltzer for some time now. As a result, Q1 revenues declined 21.1% year over year.Declining Sales, Rising Costs Irk Align Technology (ALGN)The Zacks analyst is apprehensive about Align Technology's declining clear aligner revenues. Also, escalating operating expenses are building significant pressure on the bottom line. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report JPMorgan Chase & Co. (JPM): Free Stock Analysis Report CSX Corporation (CSX): Free Stock Analysis Report Gilead Sciences, Inc. (GILD): Free Stock Analysis Report China Petroleum & Chemical Corporation (SNP): Free Stock Analysis Report CVS Health Corporation (CVS): Free Stock Analysis Report The Progressive Corporation (PGR): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksMay 21st, 2022

Microchip (MCHP) Aids Portfolio Via New Time Measurement System

Microchip Technology (MCHP) unveils its Precise Time Scale System, which extends its offerings as a substitute to address cyber-security issues. Microchip Technology MCHP recently announced the launch of its time measurement system, which offers an alternative to Global Navigation Satellite Systems (GNSS) to deal with cyber security threats.For the operational efficiency of infrastructures, nations are increasingly dependent on the accuracy of time. GNSS is the most common and widely used technology to broadcast timing and orbital information globally. It is a network of satellites, which broadcasts timing and orbital information used for navigation and positioning measurements. These satellites transmit signals, which report where they are and at what time. This information is used to determine the people’s location on earth and at what time.However, with the emergence of AI and developing technologies, cyber-attacks on GNSS are ever-increasing. This is a matter of national security as these cyber-attacks on GNSS will disrupt a nation’s operations completely.GNSS plays a vital role in all forms of transportation, such as space stations, aviation, maritime, railroads, road and mass transit. It also plays a critical role in the proper functioning of telecommunications, agriculture, mining, finance, law enforcement, scientific research. Disruption of any of these activities due to cyber attacks will cripple a nation’s wellbeing.The role of a country’s national time scale is changing from being just a scientific measurement to a critical component of the infrastructure to keep GNSS vulnerabilities at bay.To address the growing necessity in the market for an alternate time system, Microchip launched its Precise Time Scale System (PTSS), comparable with the Universal Coordinated Time (UTC) and not dependent on GNSS. UTC is the international timing standard computed by taking the weighted average of 300 atomic clocks located at laboratories around the world. This provides nations, organizations and critical infrastructure operators complete control over the time source their infrastructure depends on.The PTSS is guaranteed by Factory Acceptance Test and offers nations the ability to independently and efficiently operate their own time scale system. At the same time, to detect and protect against possible cyber-attacks, Microchip’s atomic clocks are continuously measured against one another to generate the ensemble of time scale frequency and monitored by a built-in database to alert and report against any discrepancy.To avail this feature, users have to use Microchip's SyncServer S600/S650 and TimeProvider 4100 time servers, compatible with both Network Time Protocol (NTP) and Precision Time Protocol (PTP).Microchip Technology Incorporated Price and Consensus Microchip Technology Incorporated price-consensus-chart | Microchip Technology Incorporated QuoteMicrochip Faces Supply-Chain ConstraintsMicrochip is one of the fastest-growing providers of 8-bit, 16-bit and 32-bit microcontrollers in the world. The microcontroller business of MCHP continued to outperform the industry and enabled it to gain a significant market share.However, due to continued lockdown in China, which extended from March to May, supply-chain constraints still persist. This, in turn, disrupted operations in several factories of MCHP.Microchip anticipates supply-chain concerns to continue through 2022 and even into 2023, consequently increasing backlogs as it fails to meet increasing demand with adequate supply. To match rising demand, MCHP must improve capital spending to ramp up its production capacity.However, this is a risky maneuver for Microchip as its balance sheet is extremely leveraged. As of Mar 31, 2022, MCHP’s cash and short-term investments totaled $319.4 million, while total debt (long-term plus current portion) amounted to $7.9 billion. Due to significant debt levels, the company has to constantly generate adequate operating cash flow to service its debt.To diversify income from the microcontroller business riddled by supply-chain issues , Microchip continues to develop and introduce a wide range of innovative and proprietary new linear, mixed-signal, power, interface and timing products to spur growth for the analog business. These enable MCHP to maintain sustainable revenue growth and expand its margins.In the fourth quarter of 2022, analog net sales of $514.5 million increased 3% sequentially and 24.2% year over year. Analog contributed 27.9% to total revenues. Growth in the analog business segment offers a lucrative investment proposition for investors looking to own blue-chip stocks that promise a healthy return on investments.Microchip, currently carrying a Zacks Rank 3# (Hold), has fallen 24.2% in the year-to-date period compared with the Zacks Semiconductor - Analog and Mixed industry’s decline of 18.7%. The broader Zacks Computer and Technology sector has dropped 28.2% in the same time frame.Stocks to ConsiderWhile MCHP is a stock worth retaining in the portfolio, here are some better-ranked stocks to consider in the broader sector to gain more returns.Analog Devices ADI currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.ADI’s shares have decreased 8.4% in the year-to-date period compared with the Zacks Semiconductor - Analog and Mixed industry’s decline of 18.7%.Axcelis Technologies ACLS carries a Zacks Rank of 1 at present.ACLS’ shares have lost 23.2% in the year-to-date period compared with the Zacks Electronics - Manufacturing Machinery industry’s decline of 27.1%.Avnet AVT presently carries a Zacks Rank of 1.AVT’s shares have risen 13% in the year-to-date period against the Zacks Electronics - Parts Distributionindustry’s decline of 4.2%. Zacks Names "Single Best Pick to Double" From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all. It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time. This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.Free: See Our Top Stock and 4 Runners Up >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Analog Devices, Inc. (ADI): Free Stock Analysis Report Avnet, Inc. (AVT): Free Stock Analysis Report Microchip Technology Incorporated (MCHP): Free Stock Analysis Report Axcelis Technologies, Inc. (ACLS): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksMay 21st, 2022

Microchip (MCHP) Boosts Portfolio With New Securities Platform

Microchip Technology (MCHP) announces the launch of its new CEC1736 solution, which extends its offerings to ensure the cyber resiliency of different platforms. Microchip Technology MCHP recently announced the launch of its new CEC1736 solution that extends its offerings to ensure the cyber resiliency of different platforms.The global emergence of AI and developing technologies has created a huge demand for updating different platforms’ security as cyber-attacks are increasing. Organizations have to be extremely wary of malicious cyber threats and evolve rapidly to counter the same.In order to address the growing necessity in the market for complete cyber protection services, Microchip has launched its fully configurable microcontroller-based CRC1736 Trust Shield Family solutions. This new solution provides full end-to-end protection for data centers, telecommunications and network systems against cyber-attacks in real-time, specifically during start-up and system updates.In order to protect the systems against ongoing cyber-attacks, Microchip’s CEC1736 advanced hardware crypto cipher suite is equipped with AES-256, SHA-512, RSA-4096, ECC with key size up to 571 bits and Elliptic Curve Digital Signature Algorithm (ECDSA) with a 384-bit key length. The 384-bit hardware is a physically unclonable function, which enables a unique root key, symmetric secret, private key generation and protection. The new security solutions meet the NIST 800-193 and OCP security guidelines and intend to fulfill the customers’ needs for firmware protection.Microchip Technology Incorporated Price and Consensus Microchip Technology Incorporated price-consensus-chart | Microchip Technology Incorporated QuoteMicrochip Expects Analog Business Segment to Drive Bottom LineMicrochip is one of the fastest-growing providers of 8-bit, 16-bit and 32-bit microcontrollers in the world. The microcontroller business of the company continued to outperform the industry and enabled it to gain significant market share.However, a persistent supply chain constraint due to the lockdown in China, which extended from March to May and is still continuing, has disrupted operations in several factories of the company. Microchip anticipates supply chain constraints to continue through 2022 to 2023, consequently increasing backlogs as it fails to meet increasing demand with adequate supply. In order to meet rising demand company has to improve capital spending to increase the capacity of production.However, this is a risky maneuver for Microchip since its balance sheet is extremely leveraged. As of Mar 31, 2022, the company’s cash and short-term investments totaled $319.4 million, while total debt (long-term plus current portion) amounted to $7.9 billion. Owing to significant debt levels, the company has to constantly generate adequate operating cash flow to service its debt.In order to diversify income from the supply chain issue-riddled microcontroller business, the company continues to develop and introduce a wide range of innovative and proprietary new linear, mixed-signal, power, interface, and timing products to spur future growth of the analog business. These enable the company to maintain sustainable revenue growth and expand margins.In the fourth quarter 2022, analog net sales of $514.5 million increased 3% sequentially and 24.2% year over year. Analog contributed 27.9% to total revenues. Positive growth in the analog business segment offers a lucrative investment proposition for investors looking to own blue-chip stocks that promise a healthy return on investments.Microchip, currently carrying a Zacks Rank #3 (Hold), has fallen 24% in the year-to-date period compared with the Zacks Semiconductor - Analog and Mixed industry’s decline of 15.3%. The broader Zacks Computer and Technology sector has fallen 24.8% in the same time frame.Stocks to ConsiderWhile MCHP is a stock worth retaining in the portfolio, here are some better-ranked stocks to consider in the broader sector to gain more returns.Analog Devices ADI currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.ADI’s shares have fallen 9% in the year-to-date period compared with the Zacks Semiconductor - Analog and Mixed industry’s decline of 18.7%.Cisco Systems CSCO presently carries a Zacks Rank of 2.Cisco’s shares have decreased 21.8% in the year-to-date period compared with the Zacks Computer-Networking industry’s decline of 22.2%.Axcelis TechnologiesACLS carries a Zacks Rank 2.ACLS’ shares have fallen 23.5% in the year-to-date period compared with the Zacks Electronics - Manufacturing Machinery industry’s decline of 22.7%. 7 Best Stocks for the Next 30 Days Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops." Since 1988, the full list has beaten the market more than 2X over with an average gain of +25.4% per year. So be sure to give these hand-picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Analog Devices, Inc. (ADI): Free Stock Analysis Report Cisco Systems, Inc. (CSCO): Free Stock Analysis Report Microchip Technology Incorporated (MCHP): Free Stock Analysis Report Axcelis Technologies, Inc. (ACLS): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research.....»»

Category: topSource: zacksMay 20th, 2022

Nutrien (NTR) to Build World"s Largest Clean Ammonia Plant

Nutrien's (NTR) new clean ammonia plant would utilize low-cost natural gas to serve growing demand in agriculture, industrial and emerging energy markets. Nutrien Ltd. NTR announced that it is evaluating the construction of the world’s largest clean ammonia facility at Geismar, LA.The company will produce clean ammonia by leveraging its expertise in low-carbon ammonia production. Nutrien will utilize innovative technology to achieve at least a 90% reduction in CO2 emissions. The project is expected to move to the front-end engineering design (FEED) phase, with a final investment decision expected in 2023. The construction of the $2-billion facility is expected to start in 2024, with full production projected by 2027 on approval.The new plant would utilize low-cost natural gas, tidewater access to world markets and high-quality carbon capture and sequestration infrastructure at its current Geismar facility to serve growing demand in agriculture, industrial and emerging energy markets.The new facility is expected to have an annual production capacity of 1.2 million metric tons of clean ammonia. The plant will use auto thermal reforming technology to achieve the lowest carbon footprint of any plant at this scale and has the potential to transition to net-zero emissions with future modifications.Nutrien stated that its commitment to developing and using of low-carbon and clean ammonia is prominent in its strategy to offer solutions that will cater to the world’s decarbonization goals while sustainably addressing global food insecurity.Shares of Nutrien have rallied 69.3% in the past year compared with a 68.9% surge of the industry.Image Source: Zacks Investment ResearchIn its last earnings call, Nutrien stated that it raised its full-year 2022 adjusted EBITDA guidance and full-year adjusted net earnings per share guidance, factoring in the expectation of higher realized selling prices, higher potash sales volumes and higher Retail crop nutrients and crop protection products gross margins.The company now expects adjusted EBITDA of $14.5-$16.5 billion (up from $10-$11.2 billion) for full-year 2022. Adjusted EPS has been forecast in the band of $16.20-$18.70 (up from $10.20-$11.80). Nutrien also sees sustaining capital expenditure of $1.2-$1.3 billion in 2022.The company also now sees potash sales volumes of between 14.5 million and 15.1 million tons in 2022.  Nitrogen sales volumes are now projected in the band of 10.7-11.1 million tons for the year.Nutrien Ltd. Price and Consensus  Nutrien Ltd. price-consensus-chart | Nutrien Ltd. Quote Zacks Rank & Other Key PicksNutrien currently sports a Zacks Rank #1 (Strong Buy).Some other top-ranked stocks in the basic materials space are Allegheny Technologies Inc. ATI, Albemarle Corporation ALB and Cabot Corporation CBT.Allegheny has a projected earnings growth rate of 869.2% for the current year. The Zacks Consensus Estimate for ATI's current-year earnings has been revised 27.3% upward in the past 60 days.Allegheny’s earnings beat the Zacks Consensus Estimate in each of the last four quarters. It has a trailing four-quarter earnings surprise of roughly 128.9%, on average. ATI has gained around 19.5% in a year and currently sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.Albemarle has a projected earnings growth rate of 175% for the current year. The Zacks Consensus Estimate for ALB’s current-year earnings has been revised 85.8% upward in the past 60 days.Albemarle’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 22.5%. ALB has gained 49.4% in a year. The company flaunts a Zacks Rank #1.Cabot, currently sporting a Zacks Rank #1, has an expected earnings growth rate of 21.5% for the current year. The Zacks Consensus Estimate for CBT's earnings for the current year has been revised 5.2% upward in the past 60 days.Cabot’s earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, the average being 16.2%. CBT has gained around 13.7% over a year. 7 Best Stocks for the Next 30 Days Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops." Since 1988, the full list has beaten the market more than 2X over with an average gain of +25.4% per year. So be sure to give these hand-picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Allegheny Technologies Incorporated (ATI): Free Stock Analysis Report Albemarle Corporation (ALB): Free Stock Analysis Report Cabot Corporation (CBT): Free Stock Analysis Report Nutrien Ltd. (NTR): Free Stock Analysis Report To read this article on Zacks.com click here......»»

Category: topSource: zacksMay 20th, 2022