Zero Hedge

Wave Goodbye To Another Set Of Freedoms With The New Digital ID

Wave Goodbye To Another Set Of Freedoms With The New Digital ID

Authored by Graham Young via The Epoch Times,

“Papers please” used to be the ostinato of totalitarian systems, at least in the movies.

With the passing of the government’s Digital ID bills, Australians will have to become used to the digital equivalent - so what does that say about present-day Australia?

A few things have surprised me over the last few years, not the least the way the famous Aussie spirit of insubordination has been subsumed into a goody-two-shoes compliance with whatever capricious orders the authorities made.

I can’t imagine our forebears accepting lockdowns and forced vaccinations, and I certainly couldn’t see them accepting an identity card linking not just government accounts but private sector ones as well.

While the first proposition is an assertion based on a gut feeling, the second is very much based on fact.

Remember the Australia Card?

In 1984, the Hawke Labor government introduced the Australia Card, and for the next three years, the government and opposition parties tussled over it to the extent that it triggered a double-dissolution election in 1987.

Objections didn’t just come from the federal Opposition either.

Queensland Labor Senator George Georges resigned from the governing party in 1986 over the issue, and in the lower house, Labor backbencher Lewis Kent said:

“Nothing can be more un-Australian than the need to provide one’s identity on the call of an official, be it a policeman or a bureaucrat. It would be more appropriate for the proposed card to be called a Hitlercard or Stalin-card.”

As a result, while the government won the 1987 election, and had the numbers to push the card through, instead, it withdrew the card when a technicality was found that could have affected its operation. One senses this was a relief.

Individual Freedom Chipped Away, One Law at a Time

Yet, apart from a few senators this time there has been little outcry in response to the Albanese government’s Digital ID, although the Liberal-National Opposition did vote against it.

A form of this ID was recommended by the Murray Inquiry into the Financial System in 2014, but the committee was careful to avoid recommending a full-blown government-issued identity card because of the Australia Card debacle.

The then-Liberal-National government acted on these recommendations, but its version of the bill was to facilitate private organisations to issue their own digital identity cards, rather than the government.

Why has the government now decided to make the card a government-issued one, when the recommendation and the draft legislation was for a competitive system?

At one level one might say it is symptomatic of this Labor government that it wants to control everything and is suspicious of both private enterprise and competition.

At another level, it has been gnawing away at the independence of the citizenry, particularly the independence of thought, so maybe there is a long-term agenda of control here.

Two pieces of draft legislation, and one draft regulation, exemplify this tendency—the proposed draft Communications Legislation Amendment (Combatting Misinformation and Disinformation) Bill 2023, the Online Safety (Relevant Electronic Services—Class 1A and Class 1B Material) Industry Standard 2024, as well as the Religious Discrimination Bill.

The combination of these is to restrict what citizens can say, teach, and whom they associate with, depending on what is approved by the government, or worse, regulators.

Recent Tragedies Reveal How Eager Authorities Are to ‘Protect’ Us

Almost as though to prove the dangers of these proposed laws, the Commonwealth “censor” eSafety Commissioner Julie Inman Grant just days ago ordered Meta and X to remove videos showing footage from the stabbing incidents at Westfield Bondi Junction shopping centre, and the Christ the Good Shepherd church at Wakely.

I’ve seen this footage, as have many other Australians, and suffice it to say, were I the eSafety commissioner, they would still be up.

When it comes to horror, the footage I have seen from Gaza and Ukraine, and reproduced in the pages and on the websites of the major news sites, is more horrific than any of this footage.

And where is the justification for censoring the information that individuals can now access for themselves?

For a moment there, we all became citizen journalists, able to view events and make our own decisions, and now the government is trying to take our accreditation away from us.

Indeed, some of these clips are uplifting as they show acts of heroism as men throw themselves between attackers and victims, or tend to the wounded.

Ms. Grant only has powers over commercial entities, so I can still, for the moment, show the videos on my blog.

But should we all have a unique identifier, known to the government and cross-referenced to every other activity that we are involved in, who knows what petty bureaucrat will hold my free will in their hands? And what else might the government interfere with?

Voluntary? Not Really

In Canada, a country that shares our democratic norms, we saw the Trudeau government bar protestors, and any supporters who donated money to their cause, from using their bank accounts.

Imagine what an interlinking record could allow them to have done.

Is it too far-fetched to think that could happen in Australia?

The government says these concerns are absurd.

The digital ID card is “voluntary” and will only link records to the person, not link them together, and records will be encrypted. It also claims that it will protect against cyber-attacks.

The voluntary aspect is laughable.

You may be able to access your Centrelink welfare benefits without it, but you will need to physically go down to the Centrelink office, even if you live in Oodnadatta—a remote outback town in South Australia—and if the office is in Perth, Western Australia.

And if you are a company director, you will need one, full-stop, because of the now-mandatory “director IDs” introduced by the Morrison government in 2021.

If “voluntary” doesn’t mean voluntary for all people and all activities, then it doesn’t mean voluntary at all.

Believe It or Not, the Slippery Slope Is Real

So why are we acquiescing to this scheme?

Perhaps it is because we’ve become too compliant—that the irreverent generation were the original immigrants and their sons and daughters, and now we are onto third, fourth, fifth generations and more, the spirit of adventure that brought people here has dissipated.

Or maybe it’s the case that the frog has been swimming in digital waters that have gradually risen in temperature.

First, we allowed social media companies to monetise us in return for the free use of their platforms, and then we allowed them to cross-reference our online activities to create profiles to then be used for other unrelated sites.

And how is that working out? They abuse their power.

We know that, come election time, they will be putting their thumbs on our scales and showing us material that they deem suitable, rather than allowing us to make our own decisions.

We also know that they work hand-in-glove with unscrupulous administrations to sell us lies like “safe and effective” and to suppress embarrassing facts, such as the high probability that viruses escape from laboratories more regularly than from pangolins in a market (particularly when the market didn’t have any pangolins for sale).

I don’t believe that governments are any more trustworthy than social media, especially if they are staffed with Bruce Lehrmanns and Brittany Higgins’s.

Democracy is meant to be government by the people, for the people. And Google’s motto was “Don’t be evil.”

But one seems to be converging on government by anyone but the people, and the other seems to have dropped the motto, maybe ashamed of their hypocrisy.

Either way, human institutions seem inexorably to head towards dissolution, so the less they know about you and can link together, the better.

So I’ll probably pass on my Digital ID.

Whoops, I’m a company director. Looks like they are closing in on me already.

Looks like I’ve already learned the true, government-approved, meaning of “voluntary.”

*  *  *

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

Tyler Durden Tue, 04/23/2024 - 19:45

Next Ukraine Package 'Larger Than Normal' As Biden Tells Zelensky Aid Coming "Quickly"

Next Ukraine Package 'Larger Than Normal' As Biden Tells Zelensky Aid Coming "Quickly"

US officials have been quoted in Politico as saying the Biden White House is preparing a "larger than normal" weapons package for Ukraine to be sent quickly once Biden signs the bill into law authorizing $61 billion in spending, following the historic weekend House vote, which was far and away the biggest hurdle.

The officials described the new "significantly larger" tranche as including Bradley Fighting Vehicles, Humvees, M113 armored personnel carriers, and missiles - which will be ready to roll out the door. Also expected included in the package will be older Humvees and M113 armored personnel carriers. Two admin officials have told Reuters that the first single new package is expected to be valued at $1 billion.

ATACMS missile, via US Army

The White House said in a readout of Biden's Monday call with Zelensky wherein the latter thanked the US for the new assistance: "President Biden shared that his administration will quickly provide significant new security assistance packages to meet Ukraine’s urgent battlefield and air defense needs as soon as the Senate passes the national security supplemental and he signs it into law."

Interestingly (and alarmingly, given the cross-border escalation with Russia soon to follow), Zelensky touted that the new bill also included provisions for Army Tactical Missile Systems (ATACMS) with a range of about 190 miles. "In the agreement on ATACMS for Ukraine, all the details are in place," Zelensky said. "Thank you, Mr. President, thank you Congress, thank you America."

The $61 billion marked for Ukraine, among a broader final package totaling $95 billion (the rest for Israel and Taiwan), is now set for a vote in the Senate on Tuesday. "The task before us is urgent. It is once again the Senate’s turn to make history," Senate Republican leader Mitch McConnell stated while previewing the vote.

Biden told Zelensky that he could expect the military assistance to arrive "quickly" - at a moment Ukrainian cities and especially energy and communications infrastructure are getting pounded. One question that remains is how much of the $61 billion is going straight to major US defense contractors, as they work speedily to prepare more military hardware to be shipped out the door.

Meanwhile, the southern port city of Odesa was pummeled overnight, and there are reports of Russian drones having been fired on the capital of Kiev as well:

At least nine people have been injured after an overnight Russian air strike on the city of Odesa, Ukrainian officials said. "As a result of Russian terror, residential buildings were damaged, and there was a fire," Ukraine’s state emergency services said on Telegram.

The day prior, stunning video emerged from Kharkiv showing a large TV tower being taken out during a Russian attack...

AFP reported that an "AFP journalist in Kharkiv, Ukraine's second-largest city, saw the red-and-white spire of the 240-meter structure toppled after local officials reported a barrage by Russian forces."

The New York Times has recently observed that "War in eastern Ukraine has killed tens of thousands of people, reduced cities to ruins and displaced millions of people. It has also all but destroyed the factories and plants that were for years an important driver of Ukraine’s economy."

As for what's expected to be rushed US aid the moment Biden signs the new package into law, there are reports saying the staging has already taken place in central and eastern Europe...

Tyler Durden Tue, 04/23/2024 - 19:25

Cannabis Use Greatest Among Lower-Income And Less Educated

Cannabis Use Greatest Among Lower-Income And Less Educated

By Dan Witters of Gallup

Nine percent of U.S. adults report that they use cannabis regularly, defined as at least 10 days of consumption per month.

Regular usage differs by education and income, with the highest rates seen among those with a high school education or less (13%) and those living in households earning less than $24,000 per year (16%). These consumption levels are about three times the rates found among those with postgraduate work or degrees (5%) and those living in households earning $180,000 or more annually (5%).

This analysis is part of the Gallup National Health and Well-Being Index. The results are based on a web survey of 6,386 U.S. adults, conducted Nov. 30-Dec. 8, 2023, as part of the Gallup Panel, a probability-based, non-opt-in panel encompassing all 50 states and the District of Columbia. To measure cannabis use, Gallup asked: “Keeping in mind that this is confidential, how many days in the last month have you used cannabis products (such as smoking marijuana, vaping liquid THC, or consuming baked goods or gummies) to alter your mood and help you relax?”

About one in five adults (19%) report using cannabis products at least once in the prior month, including 23% of those with a high school degree or less and 28% of those in households earning under $24,000 per year.

Regular Cannabis Use Diminishes With Age, Slightly Higher Among Men

In addition to education and income, other factors are associated with greater use of cannabis. Adults younger than 50, for example, are twice as likely as those aged 65 and older to be regular cannabis users (12% vs. 6%, respectively). Men (11%) are marginally more likely than women (8%) to be regular consumers, while little difference is found among White, Black and Hispanic adults.

Cannabis Use Highest in East North Central and New England Areas

Reports of regular cannabis use vary across the U.S. Census divisions. The highest rates of use (11%) are found in the Middle Atlantic (New York, Pennsylvania and New Jersey) and East North Central divisions (Wisconsin, Michigan, Illinois, Indiana and Ohio). The lowest usage rates (7%) are reported in the East South Central (Kentucky, Tennessee, Mississippi and Alabama) and the West North Central (North Dakota, Minnesota, South Dakota, Nebraska, Iowa, Kansas and Missouri) divisions. These differences are statistically meaningful.

These results generally align with political identity, with residents of politically red states having somewhat lower regular usage rates than politically blue states. While regular use is reported by 10% of Democrats and independents, it drops to 6% among Republicans.

When sorted into states that have legalized marijuana versus those that have kept it illegal, however, little differences in usage exist:

  • In states that have legalized marijuana: average of 2.9 days of cannabis consumption per month per person, with 9.7% regular users
  • In states that have not legalized marijuana: average of 2.5 days of cannabis consumption per month per person, with 8.6% regular users

Implications

In the U.S., cannabis is fully legal in 18 states and legal for medicinal purposes in 12 states. Another eight states have decriminalized marijuana, while it is fully illegal in 12 others. Legalization for recreational use was passed initially by voters in Colorado and Washington in 2012, with the commercial sale of marijuana to the general public available in both states in 2014. Nationally, 70% of adults now favor the legalization of marijuana for recreational use, an all-time high across over 50 years of measurement and up from 25% as recently as 1995. The narrow gap in cannabis consumption among residents of states where it remains illegal compared with those in states where it is legal suggests that its criminalization does little to curtail its use among American adults.

Dovetailing with broadening legalization, the percentage of U.S. adults who report that they smoke marijuana has more than doubled in the past decade, climbing from 7% in 2013 to 17% in 2023. During that same period, the percentage reporting that they have tried it at least once has climbed from 38% to 50%. (It is worth noting that respondents may have also become more comfortable admitting to its use as its legality has widened.)

How users consume cannabis has also evolved in recent years. For example, CDC BRFSS data show that among those who had consumed cannabis by any means in the prior 30 days, the proportion who primarily chose vaping to do so increased from 9.9% to 14.9% between 2017 and 2019 alone -- and has likely increased since that time, particularly among young adults.

Marijuana use can be addictive, with one study1 estimating that about three in 10 users form marijuana use disorder and a different study2 estimating that about 10% of cannabis users will become addicted. The use of marijuana during adolescence or young adulthood can affect how the brain builds connections for functions like attention and memory. Its use has also been linked to depression, anxiety and suicide. That cannabis use skews toward younger, less educated and lower-income individuals is consistent with previously existing research across an array of different substances and supports the need for early detection and intervention for at-risk individuals.

Tyler Durden Tue, 04/23/2024 - 19:05

Hezbollah Launches Deepest Attack Into Israel Since War's Start, On Passover

Hezbollah Launches Deepest Attack Into Israel Since War's Start, On Passover

Hezbollah on Tuesday conducted its deepest strikes into Israeli territory since the start of the war, launching drones at Israeli military bases on the outskirts of the Israeli city of Acre.

Israel's military said none of its facilities were hit, and videos circulating online appear to show Israeli anti-air systems intercepting at least one drone which was flying low over the Mediterranean, just off the coast where Acre is located.

The IDF subsequently confirmed it intercepted two "areal targets" off Israel's northern coast. Thus far in the conflict, Hezbollah's daily rocket and drone attacks have tended to stay within within a few kilometers inside Israel. 

However, Tuesday's attack seems to be sending a message that escalation could be imminent: 

A security source told Arab News that the attack was "a sensitive targeting." The area struck is more than 15 km from the border with Lebanon.

"This targeting took place in broad daylight while the Israelis were celebrating the Jewish Passover," the source said.

Hezbollah said it launched the drones "in response to Israeli aggression against the Lebanese town of Aadloun and the assassination of a (Hezbollah) cadre there."

While the IDF denied that there were any direct hits on military bases, Lebanese source Al-Mayadeen reported that the headquarters of the army's Golani Brigade was struck with drones.

The below video shows an IDF intercept of a Hezbollah drone...

This was based on a Hezbollah statement claiming that the air attack "targeted the headquarters of the Golani Brigade and the headquarters of Egoz Unit 621 in the Sharaga barracks, north of the occupied city of Akka (Acre), and the drones hit their targets accurately."

Last week a major war between Iran and Israel was narrowly avoided after each side launched 'limited' strikes against the other. But tensions remain high and it could be that Iran's proxies, such as Hezbollah and Yemen's Houthis, could be set to escalate, especially as the IDF has Rafah set in its sites.

Interestingly, a fresh report in The New York Times says that Israeli leaders had actually planned a much bigger attack on Iran, but ditched the larger strike option at the last minute due to White House diplomatic intervention:

Israel reportedly abandoned plans for a much more extensive counterstrike on the Islamic Republic after concerted diplomatic pressure from the United States and other foreign allies and because the brunt of an Iranian assault on Israel soil had been thwarted, according to three senior Israeli officials:

Israeli leaders originally discussed bombarding several military targets across Iran last week, including near Tehran, the Iranian capital, in retaliation for the Iranian strike on April 13, said the officials, who spoke on the condition of anonymity to describe the sensitive discussions.

Such a broad and damaging attack would have been far harder for Iran to overlook, increasing the chances of a forceful Iranian counterattack that could have brought the Middle East to the brink of a major regional conflict.

In the end — after President Biden, along with the British and German foreign ministers, urged Prime Minister Benjamin Netanyahu to prevent a wider war — Israel opted for a more limited strike on Friday that avoided significant damage, diminishing the likelihood of an escalation, at least for now.

Another angle showing a drone intercepted near Acre:

According to a note via Rabobank, Mohamed El-Erian underlines a markets/NatSec disconnect over Mid-East events. Markets say “de-escalation”, because the oil price has gone down. National security figures worry; and those saying recent attacks were telegraphed might note reports of White House panic when Iran launched missiles, and Israel planning a larger military strike at first. We have calm now, but neither side will pass on the opportunity to weaken the other; the enmity is not over.

Tyler Durden Tue, 04/23/2024 - 18:45

COVID-19 Vaccine Emails: Here’s What The CDC Hid Behind Redactions

COVID-19 Vaccine Emails: Here’s What The CDC Hid Behind Redactions

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

The U.S. Centers for Disease Control and Prevention (CDC) hid how a woman who suffered chest pain and other symptoms following COVID-19 vaccination received a shot because of a mandate at work, newly obtained documents show.

The Centers for Disease Control and Prevention (CDC) headquarters in Atlanta, Ga., on Aug. 25, 2023. (Madalina Vasiliu/The Epoch Times)

The agency also redacted how multiple children were diagnosed with Kawasaki Disease after receiving a COVID-19 vaccine, according to the documents.

The Epoch Times obtained more than 1,400 pages of emails from the CDC concerning its Clinical Immunization Safety Assessment (CISA) project, which analyzes post-vaccination problems reported by health care providers. The tranche included numerous redactions.

While redactions are allowed under the Freedom of Information Act, there were signs that too much information was being hidden.

The Epoch Times appealed some of the redactions.

The CDC agreed to remove some of them, revealing what the agency initially shielded.

In one email, a provider reports a 30-year-old woman who suffered chest pain and leg twitching following COVID-19 vaccination. The original copy of the email stated in part that she “got vaccine due to [redacted].”

In the updated copy, the CDC removed the redaction, showing that the woman received a vaccine because of a mandate at work.

Several other portions of the emails that are now unredacted show the CDC hid how multiple children, including a 2-year-old, were said to have suffered from a serious inflammatory illness called Kawasaki Disease shortly after receiving a shot.

One girl suffered inflammation around the eyes, swollen lips, high fever, and a rash, and “was admitted last week with Kawasaki,” one of the girl’s parents wrote on Dec. 5, 2021, the new documents show. She received a dose of the Pfizer-BioNTech vaccine two weeks prior.

Dr. Matthew Oster is a cardiologist who works for the CDC.

“The biggest question, of course, here, is whether this was truly [redacted] or whether this was [redacted] related to the vaccine,” Dr. Oster wrote after hearing about the case.

The cleaner copy of the email showed that the redactions covered “KD,” or Kawasaki Disease, and “MIS-C,” or multisystem inflammatory syndrome in children.

“We do now have a small number of cases like this one,” Dr. Oster said.

An email obtained by The Epoch Times shows a health care provider reporting symptoms in a woman after COVID-19 vaccination. The reason she received a vaccine was hidden by the CDC. (The Epoch Times)A cleaner copy of the same email, obtained after a successful appeal of the redactions, showed that the woman received a vaccine because of a mandate at work. (The Epoch Times)

The CDC has portrayed MIS-C as only being caused by COVID-19, but studies have found that there were MIS-C cases before the COVID-19 pandemic and that some people suffered the syndrome after vaccination without evidence of COVID-19. The CDC says on its website that the agency is “investigating reports of multisystem inflammatory syndrome in children (MIS-C) associated with coronavirus disease 2019 (COVID-19), which may present with Kawasaki disease-like features.”

Another email originally hid the age of a male child and what his doctor suspected he suffered after receipt of a second dose of Moderna’s vaccine.

The boy was 2 years old, the newly obtained documents show, when he was admitted with what a pediatric infectious disease doctor suspected was “atypical Kawasaki Disease.” The documents show that the doctor also considered MIS-C as a diagnosis in light of how the boy’s sister tested positive for COVID-19 on the same day the boy started showing symptoms of fever, although multiple COVID-19 tests on the boy returned negative.

The doctor said he had a “low suspicion” for a COVID-19 vaccine reaction but still submitted a report to the Vaccine Adverse Event Reporting System (VAERS), which the CDC helps run.

Kawasaki Disease was detected as a safety signal for the Pfizer and Moderna vaccines among children aged 5 to 11 when the CDC first ran an analysis on VAERS data in 2022, according to files previously obtained by The Epoch Times. The analysis did not include children younger than 5. Kawasaki disease after COVID-19 vaccination has been reported in the literature, although a study on patients with a history of the disease who contracted COVID-19 or were vaccinated uncovered no signs of problems.

An internal CDC message, now fully unredacted, showed that an official described there being “another CISA ‘inquiry’ about a child with atypical Kawasaki Disease.” Another official said the reports were “very rare” while a third said the normal CDC processes were sufficient to monitor for the disease post-vaccination “unless there’s a specific ask or data need.”

An email obtained by The Epoch Times shows a healthcare provider reporting symptoms in a child following receipt of a Moderna COVID-19 vaccine. The original copy included redactions. (The Epoch Times)A cleaner copy of the same email, with some redactions removed, shows the child in question was just 2 years old. (The Epoch Times)

Other removed redactions show that:

  • A person reporting symptoms after COVID-19 vaccination was reporting that the symptoms included Coxsackievirus and that he himself was the patient. The provider wrote, “I ... don’t know whether to fear another vax more or less than the risk of infection.”
  • A patient who was reported as suffering heart inflammation after a third Pfizer dose, and came back with the inflammation one year later, was 17 and a male.
  • The CISA expert who said the woman who suffered chest pain could get additional vaccine doses was Dr. Oster. Previously disclosed emails showed the program repeatedly said people with post-vaccination symptoms should receive more doses.
  • A patient with “intense malaise” and other symptoms about six months after a Pfizer shot had an elevated heart rate, per a portable electrocardiogram, and sinus tachycardia per a cardiology consultation.

Words and phrases that were redacted originally, but not any longer, include “your daughter”, “hospitalist”, “the parents”, “cardiac workup”, “a physician”, “I believe”, “patient was started on a course of Prednisone”, and “does not drink, smoke, or use any drugs.”

Every single email chain for which redactions were protested was returned with at least some redactions cleared.

The original version claimed that the redactions were appropriate under exceptions outlined in the Freedom of Information Act, including an exception that protects “personnel and medical files and similar files” if their disclosure “would constitute a clearly unwarranted invasion of personal privacy.”

A CDC official told The Epoch Times in an email that the agency, after receiving the appeal, conducted a “careful review” and removed some of the redactions. The official did not explain why the CDC wrongly redacted so much information.

The CDC “has provided modified records for the pages listed in your appeal,” an official with the U.S. Department of Health and Human Services, the CDC’s parent agency, told The Epoch Times in an email. Appeals of CDC Freedom of Information Act requests are lodged with the department.

Fits Pattern

Any person can request information through the Freedom of Infection Act (FOIA), and agencies across the government typically redact portions of responsive documents or withhold them entirely. Agencies “often use FOIA exemptions improperly, withholding records simply because they may reveal problems at the agency or just ‘paint the agency in a bad light,’” Melissa Wasser, a lawyer at the Project On Government Oversight, told senators in 2022. People “consistently receive large swaths of arbitrarily redacted information,” she added.

When presented with signs that information was improperly redacted or withheld, people primarily have two options: lodge an appeal or sue.

Both methods have worked to extract information from the CDC during the pandemic.

An Epoch Times appeal in another case, for example, returned a copy that removed significant redactions that were applied to an internal email describing what Pfizer and Moderna told them about studies that were being done regarding heart inflammation and COVID-19 vaccines.

The unredacted information showed that Moderna had not tested samples from vaccine recipients for subclinical myocarditis because it was waiting for a “specific cardiac biomarker [to] be identified.” An outside study from Switzerland later found signs of subclinical heart inflammation in about one out of 35 people.

The CDC acknowledged that the information had been wrongly redacted. It reasoned that the information “cannot be considered confidential” because it was shared before and “is readily available to the public,” although some of the details had never been made public previously.

Among other lawsuits, meanwhile, one led to the release by the CDC of answers from its V-safe surveillance survey while a second prompted the disclosure of what participants wrote in free-text fields after the CDC left off adverse events of special interest from the survey. Some of the data had never before been described publicly, while other information from the system had only been outlined in CDC-authored studies and presentations.

Tyler Durden Tue, 04/23/2024 - 18:25

There Is So Much For The Market To "Pass"/"Over" Right Now

There Is So Much For The Market To "Pass"/"Over" Right Now

By Michael Every of Rabobank

"Pass"/"Over"

There is so much for markets to try to pass over right over: and they are certainly doing so.

Niall Ferguson warns us again about an escalating global Cold War 2 using Tolkien as an analogy – real Tolkien, not the insult that was The Rings of Power season 1. Markets gave that talk of a bifurcating, antagonistic, inflationary world a pass - like everyone did with The Rings of Power.

The Financial Times admits a new CRINK (China - Russia - Iran - North Korea) “axis” at war with the West and its allies on two fronts already; markets are apparently over that revelation, and its implications, despite continuous ‘surprises’ like the TikTok divestment/ban law now likely to pass in the US appearing one after the other.

SIPRI says defence spending is $2.4 trillion globally, a new nominal high. Yet that buys far less than a few years ago and is set to soar further if we are to get back to the percentage of GDP that defence took up during the Cold War, which many agree we have to: where will those trillions come from? But markets pass over that question, it seems; SIPRI is an acronym too far for those interested in monetary wonkery.

The Polish president says he’s happy to host US nuclear weapons, if needed; Russia says it will respond in kind, if necessary. Nothing to see here and ‘get over it’ for markets, apparently.

Mohamed El-Erian underlines a markets/NatSec disconnect over Mid-East events. Markets say “de-escalation”, because the oil price has gone down. National security figures worry; and those saying recent attacks were telegraphed might note reports of White House panic when Iran launched missiles, and Israel planning a larger military strike at first. We have calm now, but neither side will pass on the opportunity to weaken the other; the enmity is not over.

Ukraine keeps attacking Russian refineries; and Russia is attacking Ukraine’s grains. As Carlos Mera points out, wheat was just up 4% as the market suddenly noticed the war isn’t over. Indeed, the looming $61bn US military aid package will see fighting escalate.

There are proposals for the EU to finally sanction Russian LNG, which it is still apparently OK to buy vs. piped gas: but let’s see how that moral stance holds up against the need to fight a war as painlessly as possible for the EU economy.

Copper needed for both green *and khaki* transitions is just shy of $10,000 (+14.8% year-to-date); aluminium, also need for both, is +12.8% y-t-d; cocoa, needed to not think about expensive transitions, is around the same price (+183.4% y-t-d); coffee, for those who don’t drink cocoa, is +35.5% y-t-d. And yet markets are focused on the over / under of when we get rate cuts.

Three Germans were just arrested for allegedly working for China (not the last three Chancellors!); markets pass that news off as BAU now.

The EU needs to forge strategic autonomy partly via remilitarisation says Mario Draghi (something we flagged in December): that could impact every aspect of the EU economy and markets. “Hard pass,” say markets who are only interested in when we get that first rate cut.

Yanis Varoufakis (‘A European War Union?’) also screams ‘PASS!’ in arguing “the main difference of opinion between pro-EU political forces concerned whether Europe’s continental consolidation ought to proceed by Hamiltonian means (debt mutualization precipitating the emergence of a proper federation) or in the original intergovernmental way (gradual market integration)” - but now it’s to be “unproductive” war. Yet Hamilton’s economic strategy was to build a US navy, and: “So vital were supplies to national security that Hamilton did not rule out government-owned arms factories. The godfather of American industrial policy realized that market forces, while they could bring many benefits, could not be relied upon for all of the country’s needs. Knowing that international trade was vital to the early republic, Hamilton advocated for a strong navy to protect American shipping when writing: “The want of a Navy to protect our external commerce, as long as it shall Continue, must render it a peculiarly precarious reliance, for the supply of essential articles, and must serve to strengthen prodigiously the arguments in favour of manufactures.””

Relatedly, the shortlist for Trump’s National Security Advisor is down to Grenell and Colby. In either case, that’s ‘Si Vis Pacem, Para Bellum’ on steroids; and an immediate shift in US arms away from Europe towards Asia. That smells like over a trillion in new annual western defence spending could come to pass, even if markets don’t have the nose for it.

Meanwhile, Columbia University sees either 1938 or 1968 style scenes, showing political polarization and volatility are domestic as well as international, and the two are linked.

All of this would have been enough for one Global Daily, but I was inspired by John Authors’ Passover-themed article yesterday to ask just one, not four questions: why is this global market cycle unlike all other global market cycles?

Let’s answer Seder style, to four different children: the wise, the wicked, the simple, and the one who doesn’t know how to ask:

  • The wise child asks: "What are the testimonies, statues, and laws of global market cycles laid down by history and different disciplinary approaches?” You can talk to them about long-run cycles, peace and war phases, and huge fiscal deficits centrality in all of this.
  • The wicked child asks: "What does this all mean to you?" Because they are too busy shilling ridiculously large Fed cut forecasts, and/or low bond yields, and/or high equities.
  • The simple child asks: "What does this mean?” To which a simple summary is: “Free markets brought us out from the bondage of authoritarianism and war; and then led us back there."
  • The child who does not know how to ask is to be told adults need to ask difficult questions about this cycle "because of what markets did for us in the West when they were free to be efficient *and* boost Western national security".

You can opt to let all this pass over you if you want. But don’t be surprised if you then look rather ‘unleavened’ compared to others who are prepared to ask, and honestly answer, difficult questions about our very troubling, far-from-BAU backdrop.

Tyler Durden Tue, 04/23/2024 - 17:45

Jan 6 Committee Chair Offers Bill To End Secret Service Protection For Convicted Felons

Jan 6 Committee Chair Offers Bill To End Secret Service Protection For Convicted Felons

In a move aimed at Donald Trump, House Democrats have introduced a bill that would remove Secret Service protection for any former executive sentenced to prison for a federal or state felony.   

The bill comes from Democratic Mississippi Rep. Bennie Thompson, who, in a fitting Deep State overlap, is not only the former Jan. 6 committee chairman but also the ranking member of the Homeland Security committee. Introduced Friday, HR 8081 has 8 cosponsors so far -- all Democrats. 

These days, nearly every bill comes with a goofy, forced acronym, and this one's no exception. Thompson has titled it the “Denying Infinite Security and Government Resources Allocated toward Convicted and Extremely Dishonorable (DISGRACED) Former Protectees Act.”

Rep. Bennie Thompson is working to pave the path for Trump prison time (Getty Images via The Hill)

The measure seeks to address an admittedly huge conundrum that would arise in the event Trump gets jail time for any of the various politically-motivated prosecutions he's facing around the country: How would Secret Service agents operate inside a prison?  

If Thompson's bill became law, they simply wouldn't. That would make possible Democrats' fever dreams of Prisoner Trump getting shivved in a prison shower, and negate their dread that a judge might choose to sentence Trump to house arrest out of mere practicality.

As Homeland Security committee Democrats wrote in a fact sheet describing the bill: 

“This bill would remove the potential for conflicting lines of authority within prisons and allow judges to weigh the sentencing of individuals without having to factor in the logistical concerns of convicts with Secret Service protection." 

Trump is currently facing four prosecutions: 

  • The scandal-plagued Georgia election interference case led by DA Fanni Willis, who was having an affair with one of her prosecutors
  • A federal election interference case 
  • Federal charges of mishandling classified documents
  • The underway New York hush money trial, which centers on alleged falsification of business records regarding payments to compensate porn actress Stormy Daniels for keeping quiet about her alleged affair with Trump  

“It is regrettable that it has come to this, but this previously unthought-of scenario could become our reality,” said Thompson -- as if he and his comrades don't want that reality more than anything on Earth. 

Tyler Durden Tue, 04/23/2024 - 17:25

Global Military Spending Hits All-Time High Of $2.4 Trillion

Global Military Spending Hits All-Time High Of $2.4 Trillion

By Tim Martin at BreakingDefense

Global military expenditure surged to a record $2.44 trillion in 2023, the largest year-on-year rise on weapons spending since 2009, according to a new Stockholm International Peace Research Institute (SIPRI) report.

The report, published today, said that the new figure is an “all time high,” equivalent to a 6.8 percent increase on spending in 2022 and marking the ninth consecutive year in which global military expenditure rose.

The report also shows that for the first time in 15 years, global defense spending increased across all five major geographical regions: Africa, Europe, the Middle East, Asia and Oceania, and the Americas.

“The unprecedented rise in military spending is a direct response to the global deterioration in peace and security,” said Nan Tian, senior researcher at SIPRI’s Military Expenditure and Arms Production Programme. “States are prioritizing military strength but they risk an action–reaction spiral in the increasingly volatile geopolitical and security landscape.”

The US remains the world’s largest defense spender, outlaying $916 billion last year, a 2.3 percent annual increase, ahead of China in second place, which spent an estimated $296 billion, a 6 percent increase over the same period. SIPRI added that Beijing’s total spending stands as the 29th consecutive spike in national military spending, year-on-year, and represents “half” of all military spending across Asia and Oceania. (China’s annual military budget is publicly recorded at $222 billion, though recently a US senator said US intelligence believes the actual budget is more than three times that much.)

Amid its invasion of Ukraine, Russia moved the needle on national military expenditure considerably too, increasing spending by 24 percent for an estimated total of $109 billion last year. The figure also accounts for 16 percent of all government money spent by the Kremlin over 2023.

Ukraine spending reached $64.8 billion, an annual leap of 51 percent. Overall, Kyiv sits as the eighth highest global military spender.

When combined, Ukraine’s spending and miliary aid of “at least” $35 billion, mainly from the US and other international partners, amounted to around 91 percent of Russian spending. Not included in SIPRI’s figures is the new $60 billion in new US assistance, including $13.8 to replenish US stockpiles, after the House passed a $95 billion supplemental on Saturday.

At a NATO level, the 31 member states from 2023 spent $1.34 trillion, equivalent to 55 percent of global military expenditure, with the US accounting for more than two thirds of the total.

Elsewhere, as tension with China heightens, both Japan and Taiwan increased their respective military spending by 11 percent, with Tokyo outlaying $50.2 billion and Taipei pitching in $16.6 billion.

SIPRI also said that “war and tensions” in the Middle East led to the largest spending increase across the region in the “past decade”: a 9 percent jump in expenditure, working out to $200 billion for the region last year.

The change was largely a result of increased spending by Israel, the second largest spender in the region behind Saudi Arabia, and which drew on $27.5 billion in 2023 — a 24 percent increase. The push for new funding from Tel Aviv was “mainly driven by Israel’s large-scale offensive in Gaza in response to the attack on southern Israel by Hamas in October 2023,” noted SIPRI.

“The large increase in military spending in the Middle East in 2023 reflected the rapidly shifting situation in the region — from the warming of diplomatic relations between Israel and several Arab countries in recent years to the outbreak of a major war in Gaza and fears of a region-wide conflict,” said Diego Lopes da Silva, senior researcher at SIPRI’s Military Expenditure and Arms Production Programme.

Full report below (pdf link)

Tyler Durden Tue, 04/23/2024 - 17:05

WTI Holds Gains After API Reports Unexpected Crude Inventory Draw

WTI Holds Gains After API Reports Unexpected Crude Inventory Draw

Oil priced ended notably higher today after recovering strongly from overnight weakness (driven by a Bloomberg report that said fresh U.S. sanctions targeting vessels and refineries handling Iranian oil shipments were having a muted impact on crude supply).

If implemented and enforced, the new sanctions could add as much as $8.40 to global prices, according to ClearView Energy Partners, a Washington-based consulting firm.

But...

“Oil traders are nonchalant because they know Biden will certainly sign whatever waivers are necessary to keep Iranian oil flowing into the market just as he is keeping Russian barrels flowing into the market,” said Jim Lucier, managing director at Capital Alpha Partners, a Washington-based research group.

And here's why!

Source: Bloomberg

The rebound in prices came as WTI tested to a $80 handle, finding support at its 50DMA ($81.25), and after dismal PMI data prompted a 'bad news is good news' bid in stocks and bonds as rate-cut hopes were revived (modestly).

Analysts expect a fifth straight week of crude inventory builds and another drawdown in product stocks at tomorrow's DOE data dump. Tonight's API preview will confirm or deny hopes...

API

  • Crude -3.23mm (+500k exp)

  • Cushing -898k

  • Gasoline -595k (-1.5mm exp)

  • Distillates +724k (-1.0mm exp)

Crude stockpiles unexpectedly drew down last week (after four straight weekly builds), but distillates stocks unexpectedly built...

Source: Bloomberg

WTI was trading around $83.30 ahead of the API data (after a roller-coaster day)...

The conflict in the Middle East has "undoubtedly exacerbated tensions in an already volatile region," Stephen Innes, managing partner at SPI Asset Management, told MarketWatch.

"While the recent attacks have been downplayed, the potential for further escalation cannot be entirely dismissed."

However, "there's a lesson to be gleaned from this situation, particularly in how swiftly demand responded to higher oil and gasoline prices, as evidenced by the increase in U.S. oil stockpiles," he said.

Tyler Durden Tue, 04/23/2024 - 16:55

2nd Democrat Congressman Sued For Defamation By Ex-Biden Associate Tony Bobulinski

2nd Democrat Congressman Sued For Defamation By Ex-Biden Associate Tony Bobulinski

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

A U.S. congressman is being sued for allegedly defaming a former associate of the Bidens who claims to have personally met with President Joe Biden. The lawsuit was filed on April 22.

Ranking member of the House Oversight Committee Rep. Jamie Raskin (D-Md.)

Tony Bobulinski is suing Rep. Jamie Raskin (D-Md.) over his claims that Mr. Bobulinski, a military veteran, is a Russian or Chinese spy, after Mr. Raskin ignored demands to retract these claims.

Mr. Bobulinski worked for years with President Biden’s son, Hunter Biden, and the president’s brother, James Biden. He has told the FBI and, more recently, members of Congress that he met with President Biden, that Hunter Biden would seek his father’s approval and advice on business deals, and that messages between himself and others indicate that President Biden, when vice president, was involved in the family’s business dealings.

“Joe Biden was more than a participant in and beneficiary of his family’s business; he was an active, aware enabler who met with business associates such as myself to further the business, despite being buffered by a complex scheme to maintain plausible deniability,” Mr. Bobulinski testified in March.

Mr. Raskin soon after appeared on MSNBC and said that Mr. Bobulinski and other witnesses that have come forward during the U.S. House of Representatives impeachment inquiry against President Biden are either a Chinese spy or Russian spy.

“And none of them has laid a glove on Joe Biden because he hasn’t done anything wrong,” Mr. Raskin said, adding later that “the only crimes we’ve identified are by their own witnesses.”

Mr. Raskin also posted a statement on social media platform X in which he called Mr. Bobulinski a “political pawn” of former President Donald Trump and said Mr. Bobulinski had been “unable to support his claims against President Biden with any evidence.”

Mr. Raskin has also accused Mr. Bobulinski of collaborating with President Trump’s campaign.

“Each of the statements is unequivocally false,” the new suit, filed in Maryland, states.

Mr. Bobulinski has paid for his own legal fees and is not affiliated with President Trump’s campaign, according to the filing. It also says he has never lied about his experience with the Biden family and has provided evidence, including emails and other messages, backing his statements.

Mr. Raskin “deliberately and maliciously made these statements, outside the scope of his employment, in an attempt to discredit Mr. Bobulinski’s testimony and to besmirch Mr. Bobulinski’s character,” the suit states. “It was a mistake for defendant to believe he was cloaked with immunity for his defamatory statements.”

A demand to retract the statements was ignored, according to the filing.

A spokesman for Mr. Raskin, the top Democrat on the House Oversight Committee, did not respond to a request for comment.

The suit seeks $20 million in damages.

Mr. Bobulinski has also recently sued Jessica Tarlov, a Fox News host, and Rep. Daniel Goldman (D-N.Y.) for defamation.

Fox has said that Ms. Tarlov appropriately issued an update in which she said she had no evidence that payments from a super political action committee for President Trump to a law firm representing Mr. Bobulinski were connected with Mr. Bobulinski’s legal fees; however, the lawsuit claims that this update was insufficient.

Ms. Tarlov “failed to retract and apologize,” it states, noting that she described the update as a clarification and not a retraction.

Mr. Goldman, meanwhile, was sued after claiming that Mr. Bobulinski’s testimony was “Russian disinformation” and that Mr. Bobulinski was a “Trump campaign plant.” Mr. Goldman does not appear to have responded to the filing.

An earlier lawsuit says that Cassidy Hutchinson, who worked for White House’s chief of staff, Mark Meadows, during the Trump administration, lied about Mr. Bobulinski in her book when she alleges he wore a ski mask while meeting with Mr. Meadows.

Ms. Hutchinson, according to the court docket, has not yet responded to the suit.

Tyler Durden Tue, 04/23/2024 - 16:40

Tesla Soars: Misses Across The Board, But Is "Accelerating" Rollout Of "More Affordable Models"

Tesla Soars: Misses Across The Board, But Is "Accelerating" Rollout Of "More Affordable Models"

As previewed earlier, today's TSLA print is likely to be ugly: the company is the only Mag7 member expected to reported negative earnings growth...

... as a result of anemic Q1 sales, where the (growing) delta between production and deliveries was 46,000+ cars. Since then, CEO Elon Musk has doubled down on his robotaxi vision and vowed to unveil said robotaxi on August 8th. He also laid off more than 10% of the workforce and lost two key executives, while over the weekend, Tesla slashed prices across its lineup yet again and also reduced the cost of Full Self-Driving, or FSD -- which despite the name requires attentive drivers to keep their hands on the wheel.

For those who missed it, this is what Wall Street is looking for, starting with the first quarter:

  • Q1 Revenue estimate $22.3 billion
  • Q1 Adjusted EPS estimate 52c
  • Automotive gross margin estimate 17.6%
  • Free cash flow estimate $651.7 million
  • Gross margin estimate 16.5%
  • Capital expenditure estimate $2.4 billion
  • Cash and cash equivalents estimate $23.24 billion

Turning to the next quarter:

  • Q2 Automotive gross margin estimate 17.9%

And the full year

  • Deliveries estimate 1.94 million
  • Automotive gross margin estimate 17.9%
  • Capital expenditure estimate $9.91 billion

Goldman cautions that while there is clearly skepticism on both TSLA and the EV market as a whole, with deliveries already announced for 1Q (stock was down 5% on this and another -14% additionally since), much of this has been priced in with short interest is at 3-year highs. Goldman thinks the key focus for investors will be

  1. Can they grow volumes in 2024? Goldman thinks investors were at +10-15% y/y to start the year and are now in the 1-2% range, and
  2. What are gross margins and how low do they need to go? Consensus looks to be 15.8% (ex-credits) and bogey seems to be below 15% for the quarter.

The one thing that everyone -- from the Wall Street giant to the retail investor -- wants from this earnings print and call, is simple: Clarity. Each group historically assigns different importance to different things and never before has the dichotomy of a robotaxi thesis vs. the pursuit of an affordable EV been so important. So Elon better give the people (investors) what they want, unless he wants to see what is already a record-matching stretch of stock price declines extend further.

Musk has also given us plenty of hints on his focus (spoiler: it’s Robotaxi). And sure enough, the call with Musk will be more important than the print itself. As Bloomberg notes, do we get an expansive, optimistic Musk who sells investors on the robotaxi? Or is he testy and curt with Wall Street analysts?

While Tesla shares closed up 1.8% ahead of the results, snapping a seven day losing streak, and joining the other mega-cap names that also rose, Tesla earnings haven’t been a happy event for investors for a long time now: shares of the company have dropped at least 9% the day after its results in each of the past four quarters. Tuesday’s announcement can also lead to a volatile reaction, with options trading implying that investors are pricing in an 8.3% move in either direction.

Meanwhile, technical strategists, who analyze moves in share prices to predict their future path, are also warning that the stock currently has little support and there’s risk that any disappointment in Tuesday’s report or Musk’s conference call could snowball into a much larger decline.

* * *

With all that in mind, here is what the company reported for the first quarter:

  • Q1 Revenue $21.3BN, down 9% YoY, and missing estimates of $22.3BN
  • Q1 Adj EPS 45c, down 47% YoY, and missing estimates of 52x
  • Q1 Operating income $1.17BN, down 56% YoY and missing estimates of $1.53BN
  • Q1 Automotive Gross Margin Ex-Regulatory Credits 16.4%, missing estimates of 17.6%
  • Q1 Free Cash Flow -$2.53BN, vs +$441MM YoY and missing estimates of +653.6MM

In short: a hot mess as summarized below:

Some more details on the results, starting with revenue which declined 9% YoY in Q1 to $21.3B. YoY. revenue was impacted by the following items:

  • - reduced vehicle average selling price (ASP) YoY (excl. FX impact), including unfavorable impact of mix
  • - decline in vehicle deliveries, partially due to the Model 3 update in the Fremont factory and Giga Berlin production disruptions
  • - negative FX impact of $0.2B1
  • + growth in other parts of the business
  • + higher FSD revenue recognition YoY due to release of Autopark feature in North America

Turning to operating income, that decreased YoY to $1.2B in Q1, resulting in a 5.5% operating margin. YoY, operating income was primarily impacted by the following items:

  • - reduced vehicle ASP due to pricing and mix- increase in operating expenses partly driven by AI, cell advancements and other R&D projects
  • - cost of Cybertruck production ramp
  • - decline in vehicle deliveries, partially due to the Model 3 update in the Fremont factory and Giga Berlin production disruptions
  • + lower cost per vehicle, including lower raw material costs, freight and duties
  • + gross profit growth in Energy Generation and Storage including IRA credit benefit
  • + higher FSD revenue recognition YoY due to release of Autopark feature in North America

The company's cash at quarter-end was $26.9B, a sequential decrease of $2.2B which was the result of negative free cash flow of $2.5B, driven by an inventory increase of $2.7B and AI infrastructure capex of $1.0B in Q1.

While we already knew the operating summary, here it is again:

Charted, the results are anything but pretty:

And while the disappointing results would likely have been enough to hammer the stock even more after hours, TSLA is soaring due to these four paragraphs in the company's "product outlook" section, which promise what everyone has been hoping for: cheaper cars are coming and sooner than expected, meaning Reuters indeed lied (it also mentions the robotaxi whose August 8 unveil Musk hinted at recently):

We have updated our future vehicle line-up to accelerate the launch of new models ahead of our previously communicated start of production in the second half of 2025.

These new vehicles, including more affordable models, will utilize aspects of the next generation platform as well as aspects of our current platforms, and will be able to be produced on the same manufacturing lines as our current vehicle line-up.

This update may result in achieving less cost reduction than previously expected but enables us to prudently grow our vehicle volumes in a more capex efficient manner during uncertain times. This would help us fully utilize our current expected maximum capacity of close to three million vehicles, enabling more than 50% growth over 2023 production before investing in new manufacturing lines.

Our purpose-built robotaxi product will continue to pursue a revolutionary “unboxed” manufacturing strategy.

An earlier launch of cheaper EVs would be a reversal of the Reuters news around a cheaper Tesla model being pushed back, which musk already pushed back on. Arguably Tesla does not need to just release a model to compete with a Toyota Camry to see further growth. BYD, for example, has dozens of models out there for consumers to choose from. Tesla, meanwhile, has opted for less model variety and that has contributed to some of the challenges they’ve faced.

Here are some other highlights from the company's Outlook section:

  • Volume: Our company is currently between two major growth waves: the first one began with the global expansion of the Model 3/Y platform and we believe the next one will be initiated by advances in autonomy and introduction of new products, including those built on our next generation vehicle platform. In 2024, our vehicle volume growth rate may be notably lower than the growth rate achieved in 2023, as our teams work on the launch of the next generation vehicle and other products. In 2024, the growth rates of energy storage deployments and revenue in our Energy Generation and Storage business should outpace the Automotive business.
  • Cash: We have sufficient liquidity to fund our product roadmap, long-term capacity expansion plans and other expenses. Furthermore, we will manage the business such that we maintain a strong balance sheet during this uncertain period.
  • Profit: While we continue to execute on innovations to reduce the cost of manufacturing and operations, over time, we expect our hardware-related profits to be accompanied by an acceleration of AI, software and fleet-based profits.

Some more details from the presentation:

  • Tesla notes (on page 7) that it produced 1,000 Cybertrucks in a single week in April. Positive ramping signs, although the Cybertrucks were recently recalled due to issues with its pedal.
  • Working capital remains a big issue: global vehicle inventory rose to 28 days, a huge jump from the 15 days at the end of the last quarter.
  • Tesla said that production at Gigafactory Shanghai was down sequentially due to seasonality and planned shutdowns around Chinese New Year in Q1. It also notes that demand typically improves throughout the year, and as it enters new markets, "such as Chile, many of them will be supplied from Gigafactory Shanghai.”
  • There was the following interesting acknowledgmenet: “Global EV sales continue to be under pressure as many carmakers prioritize hybrids over EVs. While positive for our regulatory credits business, we prefer the industry to continue pushing EV adoption, which is in-line with our mission.”

Turning to the company's battery division, Tesla deployed a record amount of energy storage for the quarter – 4,053 megawatt-hours – topping its prior record by 2%. Tesla has become a dominant force in the storage business, vying with competitors such as Fluence Energy and Sungrow Power Supply to deploy big batteries that can back up solar plants or prevent blackouts on the electric grid. That market is growing at breakneck speed, with US deployments in the fourth quarter jumping 358% compared to the same period of 2022, according to Wood Mackenzie.

Still, as Bloomberg notes, probably for the first time since it bought SolarCity, Tesla didn’t disclose its quarterly deployments of solar, instead noting the following: "In its Energy Generation and Storage business: “Revenues were up 7% YoY and gross profit was up 140% YoY, driven by increased Megapack deployments, partially offset by a decrease in solar deployments." In Q4, the company deployed 41 megawatts.

Another notable highlight: the company has previewed what ride-hailing will look like using the TSLA app. Watch out Waymo and Uber, TSLA is coming for you:

And so, with the stock having cratered in the past week, sliding for a record-matching 7 consecutive days, the market is finally happy with what Musk revealed and the stock is sharply higher after hours, surging some 6% and erasing the 4 most recent days of losses...

... although much will depend on Musk's tone during the earnings call, where TSLA's overtime fate will be decided.

Tyler Durden Tue, 04/23/2024 - 16:25

Israel Prepares Rafah Evacuation With Help From US, Egypt - New Tent City Erected

Israel Prepares Rafah Evacuation With Help From US, Egypt - New Tent City Erected

Via The Cradle

The Israeli army is closing in on completing its plans for an assault on the Gaza Strip’s southern city of Rafah, the Wall Street Journal (WSJ) reported on Tuesday. 

WSJ cites Egyptian officials as saying that Israel’s plan to evacuate civilians from the city will take two to three weeks and will be carried out in cooperation with Washington, Cairo, and other Arab states, including the UAE. 

Image: AFP

The officials say Israel is planning on gradual deployments of troops to Rafah. The troops will concentrate on specific areas where Tel Aviv believes Hamas leaders are holed up.

The entire operation – including the evacuations – is expected to take at least six weeks, according to WSJ. The attack on Rafah will have a "very tight operational plan because it’s very complex there," an Israeli security official told the outlet. "There’s a humanitarian response that’s happening at the same time."

Israel’s evacuation plan involves moving Rafah’s civilian population upwards towards the southern city of Khan Yunis, as well as other areas of the strip, the report states, adding that shelters with tents, food supplies, and medical facilities will be set up. 

Egypt has been briefed on the details of the plan. Al-Araby Al-Jadeed reported last week, citing Egyptian sources, that Egyptian forces and agencies are "at full readiness" in northern Sinai and along the Egyptian border with Gaza. The increased readiness came after "contacts from the Israeli side" relating to preparations for the operation in the southern city.

The Al-Araby Al-Jadeed report adds that the Egyptian Red Crescent has been readying camps in Khan Yunis over the past few months in preparation for the displacement of Palestinians from Rafah. Satellite images obtained by AP this week reportedly show a new tent compound near Khan Yunis.

In February, it was reported that Egypt built a security zone in the Sinai near the border with Rafah. Many speculated at the time that the security zone would aid Israeli plans to push Rafah’s population into the Sinai desert. Egypt's State Information Service said on February 17 that the zone is a logistics hub on the Egyptian side of the Rafah border, which will be used to deliver aid into Gaza.

Israeli army radio reported on Monday that Tel Aviv is now expanding a designated "humanitarian zone" that will "accommodate around one million people." It said field hospitals have also been set up in the area. Army radio added that the zone will extend from Al-Mawasi on Gaza’s southern coast towards Deir al-Balah in the central Gaza Strip. 

Israel believes Rafah is Hamas’ final stronghold and is dead set on attacking the city. Washington has repeatedly said it would not accept an operation there without a plan to properly and safely evacuate civilians and move them out of harm's way.  

The UN and several countries have warned that attacking Rafah would have catastrophic consequences and that there is no safe way to evacuate the desperately overcrowded city. 

Tyler Durden Tue, 04/23/2024 - 11:50

"Let Me Go Home, Okay?": Mistrial Declared For Arizona Rancher Accused Of Killing Illegal Immigrant On His Property

"Let Me Go Home, Okay?": Mistrial Declared For Arizona Rancher Accused Of Killing Illegal Immigrant On His Property

A mistrial was declared in the case of an Arizona rancher accused of fatally shooting an illegal immigrant on his property near the US-Mexico border, after the jury failed to reach a unanimous decision following two full days of deliberation.

George Alan Kelly, 75, was charged with second-degree murder in the Jan. 30, 2023 shooting of 48-year-old Gabriel Cuen-Buitimea, who was in the United States illegally.

"Based upon the jury's inability to reach a verdict on any count," said Arizona Superior Court Judge Thomas Fink, adding "This case is in mistrial."

According to one of Kelly's defense attorneys, Kathy Lowthorp, just one juror was voting 'guilty,' which is why their legal team pushed for deliberations to continue.

"There was one hold out for guilt, the rest were not guilty. So seven not guilty, one guilty," said Lowthorp. "We believe in our gut that there was no way the state proved beyond a reasonable doubt."

The Santa Cruz County Attorney's office can still retry Kelly for any charge, or drop the case. 

Prosecutors accused Kelly of recklessly firing nine shots from an AK-47 rifle toward a group of men who were trespassing on his cattle ranch after running from Border Patrol agents, roughly 115 yeards away. He was also accused of providing inconsistent statements throughout the investigation - initially failing to tell officials that he had fired his weapon, and then allegedly claiming that the illegal immigrants were part of a group of 10-15 people armed with AR-style rifles - and that he'd heard gunshots.

Kelly's attorney said that he had fired "warning shots."

"He does not believe that any of his warning shots could have possibly hit the person or caused the death," she said at the time. "All the shooting that Mr. Kelly did on the date of the incident was in self-defense and justified.

After Monday's ruling, Consul General Marcos Moreno Baez of the Mexican consulate in Nogales, Arizona, said he would wait with Cuen-Buitimea's two adult daughters on Monday evening to meet with prosecutors from Santa Cruz County Attorney's Office to learn about the implications of a mistrial.

"Mexico will continue to follow the case and continue to accompany the family, which wants justice." said Moreno. "We hope for a very fair outcome."

Kelly's defense attorney Brenna Larkin did not immediately respond to an emailed request for comment after the ruling was issued. Larkin had asked Fink to have jurors keep deliberating another day. -CBS News

Following the mistrial, Kelly said: "Let me go home, okay? That alright with y’all? It is what it is and it will be what it will be. I will keep fighting forever. I won’t stop."

 

Tyler Durden Tue, 04/23/2024 - 11:30

US PMIs Scream Stagflation As Manufacturing 'Contracts', Prices Rise, Heaviest Job Cuts Since GFC

US PMIs Scream Stagflation As Manufacturing 'Contracts', Prices Rise, Heaviest Job Cuts Since GFC

After a mixed bag from preliminary April European PMIs (Services strong-er, Manufacturing weaker-er, surging prices)...

“Accelerated increases in input costs, likely driven not only by higher oil prices but also, more concerningly, by higher wages, are a cause for scrutiny Concurrently service-sector companies have raised their prices at a faster rate than in March, fueling expectations that services inflation will persist. ”

and after March US PMIs exposed the end of the disinflation narrative...

"Most notable was an especially steep rise in prices charged for consumer goods, which rose at a pace not seen for 16 months, underscoring the likely bumpy path in bringing inflation down to the Fed's 2% target. ”

...S&P Global's preliminary US f°r April just dropped and they were ugly with both Manufacturing and Services disappointingly dropping further as the former    dropped back into contraction:

  • •    Flash US Services Business Activity Index at 50.9 (Exp: 52.0; March: 51.7) - 5-month low.

  • •    Flash US Manufacturing PMI at 49.9 (Exp 52.0; March: 51.9) - 4-month low.

Source: Bloomberg

Commenting on the data, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said:

“The US economic upturn lost momentum at the start of the second quarter, with the flash PMI survey respondents reporting below-trend business activity growth in April. Further pace may be lost in the coming months, as April saw inflows of new business fall for the first time in six months and firms’ future output expectations slipped to a five-month low amid heightened concern about the outlook.

“The more challenging business environment prompted companies to cut payroll numbers at a rate not seen since the global financial crisis if the early pandemic lockdown months are excluded.

After March showed accelerating prices, flash April data confirmed the trend

“Notably, the drivers of inflation have changed.

"Manufacturing has now registered the steeper rate of price increases in three of the past four months, with factory cost pressures intensifying in April amid higher raw material and fuel prices, contrasting with the wagerelated services-led price pressures seen throughout much of 2023.”

So slower growth and much faster inflation - that does not sound like a recipe for rate-cuts... in fact quite the opposite.

Tyler Durden Tue, 04/23/2024 - 10:08

Biden's America: 40% Of Renters Think They'll Never Own A Home, Up From 27% Last Year

Biden's America: 40% Of Renters Think They'll Never Own A Home, Up From 27% Last Year

Bidenomics 101: the American dream of owning a home has become the American nightmare for almost half the US population.

As housing specialist Redfin reports, rising home prices and mortgage rates "are making it harder to believe in the American dream of homeownership. Lack of affordability is the most commonly cited reason renters don’t believe they’ll ever own a home."

The details are dire: Nearly two in five (38%) U.S. renters don’t believe they’ll ever own a home, up from roughly one-quarter (27%) less than a year ago. 

This is according to a Redfin-commissioned survey of roughly 3,000 U.S. residents conducted by Qualtrics in February 2024. This report focuses on the 1,000 respondents who indicated they are renters. The relevant questions were: “Do you believe that you will ever own your own home in the future?” and “Which of the following are reasons you aren’t likely to purchase a home in the near future?” The 27% comparison is from a Redfin survey conducted in May and June 2023. 

Lack of affordability is the prevailing reason renters believe they’re unlikely to become homeowners. Nearly half (44%) of renters who don’t believe they’ll buy a home in the near future said it’s because available homes are too expensive. The next most common obstacles: Ability to save for a down payment (35%), ability to afford mortgage payments (33%) and high mortgage rates (32%). Roughly one in eight (14%) simply aren’t interested in owning a home. 

Buying a home has become increasingly out of reach for many Americans due to the one-two punch of high home prices and high mortgage rates. First-time homebuyers must earn roughly $76,000 to afford the typical U.S. starter home, up 8% from a year ago and up nearly 100% from before the pandemic, according to a recent Redfin analysis. Home prices have skyrocketed more than 40% since 2019, due to the pandemic homebuying frenzy and a shortage of homes for sale. And the current average 30-year fixed mortgage rate is 6.82%. While that’s below the 23-year-high of nearly 8% hit in October, it’s still more than double the record low rates dropped to in 2020. 

Home prices have risen 7% in the last year alone, and monthly mortgage payments have risen more than 10%, which helps explain why renters today are more likely than they were last year to say they don’t see themselves owning a home anytime soon. 

Many renters can’t fathom homeownership because they’re already struggling to afford their monthly housing costs. Nearly one-quarter (24%) of renters say they regularly struggle to afford their housing payments, and an additional 45% say they sometimes struggle to do so.

Rents have soared over the last few years because so many people moved during the pandemic, upping demand for rentals. The median U.S. asking rent is roughly $2,000, near the record high hit in 2022–but the good news for renters is that prices aren’t growing nearly as fast as they were during the pandemic, partly because an influx of apartment supply is taking some of the heat off prices. 

“Housing costs are high across the board, but renting is a more affordable and realistic option for many Americans right now–especially those who have never owned a home and aren’t able to tap into equity from a previous sale,” said Redfin Chief Economist Daryl Fairweather. “While owning a home is usually a sound longterm investment, the barriers to entry and upfront costs of buying are higher than renting. Buying typically requires a sizable down payment and approval for a mortgage–things that are difficult for many people today, when the typical down payment is near $60,000 and mortgage payments are sky-high. The sheer expense of purchasing a home is causing the American Dream of homeownership to lose some of its shine.” 

Gen Z renters are most likely to believe they’ll own a home

Broken down by generation, Gen Z renters are by far the most likely to believe they will become homeowners (maybe it's because they are also the dumbest). Just 8% of Gen Z renters believe they’ll never own a home, compared to 22% of millennials, 40% of Gen Xers and 81% of baby boomers.

Tyler Durden Tue, 04/23/2024 - 09:40

Euro Area PMI Activity Hits 11 Month High On Service Expansion As Manufacturing Recession Gets Worse

Euro Area PMI Activity Hits 11 Month High On Service Expansion As Manufacturing Recession Gets Worse

Europe's study in paradoxical contrasts continues. On the same day, ECB's de Guindos said a June rate cut looks like a set deal (unless there are surprises) with the end of inflation fight is in sight, the Euro-area's private-sector activity advanced to the highest level since May 2023, driven by a buoyant services sector and Germany's return to growth; UK firms also reported the strongest growth in almost a year

Here are the details: 

France

  • Services Flash PMI (Apr) 50.5 vs. Exp. 49.0 (Prev. 48.3);
  • Manufacturing Flash PMI (Apr) 44.9 vs. Exp. 47.0 (Prev. 46.2);
  • Composite Flash PMI (Apr) 49.9 vs. Exp. 48.8 (Prev. 48.3);
    • "Overall, our HCOB nowcast model for the second quarter points to a recovery of the French economy, driven by the services sector".

Germany

  • Manufacturing Flash PMI (Apr) 42.2 vs. Exp. 42.9 (Prev. 41.9);
  • Services Flash PMI (Apr) 53.3 vs. Exp. 50.5 (Prev. 50.1);
  • Composite Flash PMI (Apr) 50.5 vs. Exp. 48.6 (Prev. 47.7);
    • "Factoring in the PMI numbers into our GDP Nowcast, we estimate that GDP may expand by 0.2%".

UK

  • Services PMI (Apr) 54.9 vs. Exp. 53.0 (Prev. 53.1);
  • Manufacturing PMI (Apr) 48.7 vs. Exp. 50.4 (Prev. 50.3);
  • Flash Composite PMI (Apr) 54.0 vs. Exp. 52.7 (Prev. 52.8)

Euro-Area

  • Services Flash PMI (Apr) 52.9 vs. Exp. 51.8 (Prev. 51.5);
  • Manufacturing Flash PMI (Apr) 45.6 vs. Exp. 46.6 (Prev. 46.1);
  • Composite Flash PMI (Apr) 51.4 vs. Exp. 50.8 (Prev. 50.3);
    • "Considering various factors including the HCOB PMIs, our GDP forecast suggests a 0.3% expansion in the second quarter".

Putting it all together, the Euro area composite flash PMI increased by 1pt to 51.4 in April, above the 50.7 consensus estimate, in expansion (>50) for the second straight month and the highest since May 2023. As shown in the chart below, the improvement in the composite index was skewed heavily towards the services sector, where the index rose (by 1.4pt) to 52.9, while the manufacturing PMI continued to sink.

Across countries, the improvement in the area-wide index was driven by Germany - which was above that key 50 expansion mark for the first time in 10 months driven by services (even as manufacturing continued to shrink, though at a slower pace than the month before) defying analysts who had expected another sub-par reading - and France, partially offset by a slight deceleration in the periphery.

In the UK, the composite flash PMI improved notably to 54.0, above consensus expectations of a decline, on the back of a pick-up in services activity, where the index grew by 1.8pt to 54.9, which was partly offset by a slowdown in manufacturing activity.

Commenting on the results, Goldman saw three main takeaways from today's data.

  • First, there are continued improvement in the Euro area headline numbers, coupled with continued, but moderating, optimism for the upcoming year.
  • Second, the PMI price components ticked up in April, driven by both sectors, with the risks to cost inflation coming from higher wages and oil prices.
  • Lastly, the UK saw another month of expanding activity, also driven by the services sector, which should support growth momentum going forward.

While output prices ticked up only marginally in both the Euro area and the UK, it is important that firms' pricing behavior remains supportive for the disinflationary process, Goldman's economists noted.

The positive figures suggest that the euro area will probably expand by 0.3% in the second quarter, matching the rate of growth in the January-March period, said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank. That’s a more upbeat prediction than the Bloomberg consensus, which sees just 0.1% growth at the start of the year, with data due on April 30.

“It appears that the recession was predominantly concentrated within the manufacturing sector, while the broader economy may have narrowly skirted such a downturn,” de la Rubia said. “The service sector may serve as a catalyst for the overall economy.”

After contracting in the final quarter of last year, Germany was long expected to have had a shallow recession over the winter. But the Bundesbank last week said output may have grown slightly in the first three months of the year because of a pickup in industrial production, exports and construction — meaning the country would avoid such a scenario.

De la Rubia agreed, saying a Nowcast model points to economic expansion of 0.1% in the first quarter followed by 0.2% in the second. German bonds fell across the curve and money markets reduced wagers on the scope for interest-rate cuts after data for the country were published. The two-year maturity, which is sensitive to changes in monetary policy, rose as much as three basis points to 2.99%.

The overall performance was also better in France, where activity remained broadly stable after contracting for 10 months. That development was also driven by services, where rising demand resulted in the first expansion in almost a year. New orders placed with factories fell at the steepest pace since January, increasing the wedge between manufacturers and services firms.

“The French services sector is the workhorse of the economy,” said Norman Liebke, an economist at Hamburg Commercial Bank. “French manufacturing output stays subdued, but we expect it will soon follow the path of the services sector. The manufacturing sector delays the overall economy’s recovery for now, though.”

But the better momentum in both countries was flanked by stronger price pressures, which as Bloomberg notes is a potential source of concern for European Central Bank officials who are gearing up for a first interest-rate cut in June. That development was also centered on the services sector, where rising wages are playing a bigger role.  Diverging fortunes were equally visible in the labor market. While German and French services firms added workers at a quicker pace, factories shed jobs.

Overall though, the currency bloc’s top two economies couldn’t keep pace with the rest of the region, which appears to be recovering after the energy crisis that stifled its post-Covid rebound.

The rise in power costs — triggered by Russia’s war in Ukraine — also fanned inflation, though consumer-price growth has since slowed markedly. The purchasing-manager data showed that price pressures “intensified slightly” this month.

“The PMI figures are poised to test the ECB’s willingness to cut interest rates in June,” de la Rubia said. “Accelerated increases in input costs, likely driven not only by higher oil prices but also, more concerningly, by higher wages, are a cause for scrutiny. Concurrently, service-sector companies have raised their prices at a faster rate than in March, fueling expectations that services inflation will persist.”

Still, he doesn’t expect that to derail a well-telegraphed easing at the ECB’s next monetary-policy meeting. “However, we doubt that the central bank will adopt a ‘pragmatic speed,’ as suggested by Francois Villeroy de Galhau” de la Rubia said. “Instead, we expect a more cautious approach.”

As noted above, comments by ECB Vice President Luis de Guindos earlier on Tuesday reinforce that approach. “The level of uncertainty makes it very difficult to say,” he told Le Monde, according to a transcript on the ECB website. “I already mentioned June. As for what happens afterwards, I’m inclined to be very cautious.”

A separate set of data for the UK showed the economy’s recovery from recession unexpectedly gathered pace at the start of the second quarter as private-sector firms reported the strongest growth in almost a year. PMIs are closely watched by markets as they arrive early in the month and are good at revealing trends and turning points in an economy. A measure of breadth of changes in output rather than depth, business surveys can sometimes be difficult to map directly to quarterly GDP.

US figures later are set to show continued growth. Earlier numbers from Australia, India and Japan pointed to faster expansion.

Tyler Durden Tue, 04/23/2024 - 09:30

Large Structural Short Will Drive Yen Much Higher

Large Structural Short Will Drive Yen Much Higher

Authored by Simon White, Bloomberg macro strategist,

Focus has been on the growing short position in the yen. But the total size is likely to be small in the scheme of things. The real story is the lack of domestic hedging leading to a large structural short in the yen which will drive the currency much higher when it is covered.

There has been some back and forward internally about the extent of the yen short position. FX positioning is hard to get good visibility on unless you are in the flow. The go-to for most people that aren’t is the CFTC data. This certainly shows that yen short-positioning versus the dollar has risen in recent months.

The chart measures the net short versus open interest. Although the short is high, we can see it has been higher, especially in the late 1990s when USD/JPY rose to ~150.

But COT data is based on flows of FX futures, which are low compared to spot and other flows. The net short for the speculator category - which aims to catch hot flows that are more likely to be price moving on a shorter-term basis, and will mainly be CTA flows – is only about $13.4 billion, not earth shattering.

More important for the longer-term outlook is how the yen’s steadily weakening path is leading to domestic investors to allow their foreign asset positions to become underhedged. As a proxy, we can look at the behavior of life insurers, who are among the largest hedgers of their overseas positions. Their hedging ratios have slipped to under 50%.

Japan is the world’s largest net creditor, with over $3 trillion of assets held abroad. Domestic investors’ flows dominate flows of foreigners buying Japanese assets.

Thus, the large and building structural yen short of Japanese investors will be what ultimately sets the path for the currency.

When the wind changes, the yen is primed to change direction with vigor.

Tyler Durden Tue, 04/23/2024 - 09:15

Gaza War At 200 Days: IDF Pivots From Iran Threat Back To Hamas Operations

Gaza War At 200 Days: IDF Pivots From Iran Threat Back To Hamas Operations

Monday into Tuesday saw the Israel Defense Forces (IDF) intensify its operations in central and northern Gaza, following a cooling of tensions with Iran after the two almost went to war. Tuesday marks the 200th day of Israel's war in Gaza, in response to the Oct.7 Hamas terror attacks.

"Israel bombarded northern Gaza overnight in some of the heaviest shelling in weeks, panicking residents and flattening neighborhoods in an area where the Israeli army had previously drawn down its troops, residents said on Tuesday," Reuters reports.

Image via United Nations

This strongly suggests that even once the IDF has cleared an area, Hamas has the capability of moving back in - also given its capabilities utilizing Gaza's vast tunnel network.

"Tanks made a new incursion east of Beit Hanoun on the northern edge of the Gaza Strip, though they did not penetrate far into the city, residents and Hamas media said. Gunfire reached some schools where displaced residents were sheltering," Reuters continues.

Starting Sunday night, the IDF launched a 'surprise operation' in the central Gaza corridor, the military confirmed, happening over the Passover holiday: 

The IDF says the “surprise operation” that began Sunday night is aimed at “deepening the achievements” in the Netzarim corridor.

The corridor, built around a road south of Gaza City, enables the IDF to carry out raids in northern and central Gaza while allowing Israel to control access to the north for Palestinians seeking to return after fleeing south.

"The forces are carrying out targeted raids and are thwarting terror in the area," the IDF says in a statement.

The IDF confirmed the return of Hamas militants to areas which had previously been clear enough to halt operations. 

"Nahal troops spotted several gunmen amid the raid, and called in airstrikes by fighter jets against them and the buildings they were spotted operating at," an IDF statement continued.

As for Rafah in the south, so far it seems the IDF's planned offensive appears to be on pause. An estimated 1.5 million civilians are sheltering in the city, and the White House has urged the Netanyahu government not to attack it. Humanitarian aid groups currently say they don't know what to expect.

The US has urged that Israel evacuate civilians first, but these plans are anything but clear at this point. "I have no idea what the plan with the procurement of tents by the Israelis is," the head of the UN humanitarian office in Gaza, Andrea de Domenico, told Al Jazeera. Recent days have seen dozens of casualties due to shelling of some areas, but a full assault is expected to be a humanitarian nightmare for the refugees there.

Tyler Durden Tue, 04/23/2024 - 08:55

'Its The Economy, Stupid!' Black And Hispanic Voters Embrace Trump On Economics And Well-Being

'Its The Economy, Stupid!' Black And Hispanic Voters Embrace Trump On Economics And Well-Being

Authored by J.G. Collins via The Epoch Times (emphasis ours),

Epoch Times reporter Tom Ozimek recently wrote in these pages of former President Donald Trump’s encounter with Kayla Montgomery, a young Republican political consultant whose business is to “engage young, black professionals, students, and community members” in the Atlanta area. The ex-president and Ms. Montgomery met at a Chick-fil-A restaurant during an impromptu campaign stop in Atlanta. Ms. Montgomery was effusive in her praise of President Trump, saying, “I don’t care what the media tells you, President Trump—we support you!” A video of Ms. Montgomery and the former president hugging soon went viral, even as the media and Democrats quickly dismissed the interaction as “staged.”

Supporters of former President Donald Trump walk near his residence at Mar-A-Lago in Palm Beach, Fla., on Aug. 9, 2022. (Giorgio Viera/AFP via Getty Images)

Then, last week, President Trump left his trial in Manhattan to visit a bodega in Washington Heights, a mostly black and immigrant community on the Upper West Side of Manhattan and received a hero’s welcome from the working people there.

Whether the Chick-fil-A event was staged or not is open to debate. What is undeniable, though, is that polling shows Donald Trump has upended much of the black and Hispanic voting support Democrats have enjoyed since at least Lyndon Johnson’s “Great Society” and, at least in some instances, back to FDR’s New Deal.

A Wall Street Journal poll showed that President Trump’s support among black men in swing states had moved to 30 percent earlier this month compared to just 11 percent of black men nationally in 2020. Among black women, those same percentages went from 6 percent in 2020 to 11 percent in April.

‘It’s the Economy, Stupid!’

Political pundits and editorial pages all seem flummoxed by President Joe Biden’s erosion of support among the traditional Democrat coalition.

But no one seems more upset by the erosion of black support than Democrat political strategist James Carville, “the Ragin’ Cajun,” who engineered Bill Clinton’s 1988 victory over incumbent George H.W. Bush. That’s ironic, because it was Mr. Carville who added the memorable phrase “It’s the economy, stupid!” to the American political lexicon when he pinpointed President Bush’s greatest vulnerability 36 years ago.

Between January 2021, when President Biden took his oath of office, up to March of this year, average rents have increased by 20 percent. By comparison, residential rents increased just 12 percent during President Trump’s entire term. The increased costs hit blacks and Hispanics disproportionately because of the vast disparity in home ownership, as illustrated below.

Blacks and Hispanic workers also disproportionately occupy positions in production and transportation/material moving jobs at higher rates (17.8 percent and 16.7 percent, respectively) than whites (12.1 percent). But those are the jobs most vulnerable to being taken by the influx of the purported asylum seekers who typically work for less and are less likely to join unions or file complaints with the authorities against their employer. The asylum seekers have exploded since President Biden lifted U.S. border restrictions.

As Well as Crime ...

Blacks and Hispanics tend to be disproportionately affected as victims of recidivist criminals let go by criminal justice initiatives championed by leftist Democrat “progressives” in so-called “blue” states. As shown in the chart above, black victims of crime actually decreased during the Trump presidency. (The chart is from a study that has not been updated for later years.)

By the same token, black-owned businesses were among the many businesses looted and destroyed by “progressive” George Floyd rioters in 2020.

… and Education

President Trump made permanent a commitment of $255 million in annual funding for historically black colleges and universities, and he increased funding for the Federal Pell Grant program by signing the FUTURE Act.

Within the states, Republican legislators and governors have championed school choice and a “back-to-basics” approach to K-12 that even Democrats acknowledge. Jorge Elorza, the CEO of Democrats for Education Reform and its affiliate Education Reform Now, a think tank, said: ”We’ve lost our advantage on education because I think that we’ve failed to fully acknowledge that choice resonates deeply with families and with voters.”

Meanwhile, Education Week, the Left-leaning magazine for K-12 teachers, summarized President Biden’s policies as follows:

“[He] passed stricter rules for charter schools seeking federal grant funding; awarded $1 billion to boost school safety and students’ mental health; and proposed an overhaul of Title IX that would give LGBTQ+ students explicit protection under the landmark sex discrimination law and bar outright bans on transgender youth who want to join athletic teams that align with their gender identity.”

Summary

Black and Hispanic voters are moving toward President Trump for a simple reason: their pocketbook and their well-being. The viewpoints of mainstream media pundits—college educated, overwhelmingly white, and mostly liberal—have long maintained a soft bigotry of racial expectations without understanding much of the economy of people who work in blue-, pink-, and green-collar jobs. The pundits don’t understand that blacks and Hispanics, like the rest of the country, have experienced a near 20 percent cumulative erosion in the purchasing power of their dollar and rising crime. They see K-12 education policies that deny school choice and that serve teachers’ unions, special interests, and Democrat party gender identity dogma far more than children and parents.

Black and Hispanic voters have every reason to depart from their traditional voting patterns.

It’s common sense.

Tyler Durden Tue, 04/23/2024 - 08:35

Futures Extend Rebound Into Second Day Ahead Of Tesla Earnings Despite Rising Yields

Futures Extend Rebound Into Second Day Ahead Of Tesla Earnings Despite Rising Yields

US equity futures are higher for the second day, even as small-caps underperform after bond yields rise about +4bps and trade near session highs. As of 7:40am S&P and Nasdaq futures were 0.3% higher after Wall Street’s rebound from a $2 trillion selloff; European stocks also rose on broad-based strength, with only commodity-related sectors in the red; the UK’s FTSE 100 index hit a record high as a rebound that took hold on Monday gathered momentum. Ahead of Tesla's earnings today, the Mag7 are mixed with semis higher pre-mkt after the recent rout. Commodities are stronger led by Ags and Energy with a flat USD. The macro data focus is on Flash PMIs, Home Sales, Regional Mfg Activity indicators; earnings are skewed towards the Industrials sector with TSLA the first Mag7 stock set to report. We will see if the last few trading sessions sufficiently squared positions and if realized stock moves can match the implied moves, expected to be the largest in 1.5 years.

Early results Tuesday were mostly positive, with shares of United Parcel Service and General Motors rising in premarket trading after earnings beats. PepsiCo slipped after reporting falling volumes in North America. But the main event will be the “Magnificent Seven” cohort of tech megacaps, with Tesla set to be the first to report after today’s market close. Next up is Meta Platforms on Wednesday, followed by Microsoft and Alphabet on Thursday. Here are some other notable premarket movers:

  • Abeona Therapeutics shares slumped 48.1% after the biotechnology company’s drug for a rare connective tissue disorder failed to win approval from the US Food and Drug Administration.
  • Cadence Design shares drop 5.8% after the maker of semiconductor design software’s revenue and adjusted earnings per share forecast for 2Q fell short of average analyst estimates. Additionally, the company reported 1Q product and maintenance revenue that missed expectations.
  • JD Sports shares gained after the British sportswear and sneakers retailer agreed to buy Hibbett (HIBB US) for about $1.1 billion to speed up its US expansion, in a deal expected to be accretive in the first full year of ownership. Hibbett gained 19%.
  • Roblox shares rose 4.2% after the game maker was upgraded to overweight from neutral at JPMorgan, which said it sees a “compelling” entry point for a company that has bookings growth of around 20%, exiting a heavy investment cycle and ramping new revenue streams in advertising as well as commerce.
  • Sunnova Energy shares fell 2.4% after the renewable energy company is cut to sector weight from overweight by KeyBanc Capital Markets. The downgrade reflects a cautious industry-wide stance, despite Sunnova’s “undemanding valuation,” analyst Sophie Karp writes in a note.

Earnings will stay front and center of investors’ minds this week with about 180 companies — over 40% of the S&P 500 market value — report results. The focus on corporate profits comes after a rout fueled by geopolitical fears and signals the Federal Reserve will be in no rush to lower rates. "Whether markets see further consolidation from here is likely to hinge on the assessment of the sustainability of AI demand ahead following the earnings releases," said Eddie Cheung, a senior strategist at Credit Agricole CIB.

The challenge to S&P 500 returns is that companies will have to produce earnings, and outlooks, that support the already elevated multiples. Profits for the Magnificent Seven are forecast to rise 38% in the first quarter from a year ago, dwarfing the overall S&P 500’s 2.4% anticipated year-over-year earnings growth, according to Bloomberg Intelligence. But excluding Nvidia, the leading chipmaker for AI technology, expected net income growth for the group falls to 23%. Nvidia, which Goldman Sachs Group’s trading desk dubbed “the most important stock on planet Earth,” doesn’t report its earnings for another month.

“We remain focused on the current earnings season, which could re-focus investor attention on solid underlying fundamentals,” Citigroup Inc. strategists Mihir Tirodkar and Beata Manthey wrote in a note. “We would view the recent pullback as a buying opportunity."

Meanwhile, Investor positioning on megacap growth and tech stocks continues to be cut, down from the 97th percentile in early March to the 77th percentile now, according to Deutsche Bank strategists. The group is still the only sector where positioning is above historical average, even if no longer extreme, the strategists wrote, countering the self-serving and incorrect observations by JPM's Marko Kolanovic.

In Europe, the Stoxx 600 index climbed 1%, with technology and retail shares leading gains, while the mining sector lagged. SAP SE jumped more than 4% as a boom in demand for artificial intelligence fueled the German software company’s growth. Drugmaker Novartis AG added as much as 5% after lifting full-year guidance. Here are some other notable premarket movers:

  • JD Sports shares gain as much as 7.5% after the British sportswear and sneakers retailer agreed to buy Hibbett for about $1.1 billion to speed up its US expansion
  • Novartis shares advance as much as 5%, the most in more than 9 months, after the Swiss drugmaker reported results for the first quarter that impressed analysts
  • Nordnet rises as much as 9.7%, the most since October, after the digital bank reported its first-quarter results. Both Citi and Morgan Stanley highlight the company’s higher-than-expected brokerage income
  • SAP shares jump as much as 4.4% in Frankfurt after the software company reported quarter-over-quarter acceleration in the growth rate of current cloud backlog, a key indicator of cloud revenue to be booked within next 12 months
  • Akzo Nobel shares fall as much as 6.6%, to the lowest since November, after the coatings maker failed to raise its profit forecast for the year. The stock had risen in five of the six sessions leading up to Tuesday’s earnings report
  • DNB falls as much as 3.9%, the most since October, after the Norwegian lender reported a net interest income miss for the third quarter in a row, with analysts also flagging a low-quality profit beat due to it being attributable to provision income
  • Anglo American falls as much as 3.9% in London after the miner reported first-quarter earnings. Analysts noted that sales were behind production in copper and iron ore, leading to temporary inventory builds
  • Kuehne + Nagel shares drop as much as 3.9% after reporting first-quarter earnings in which pricing and cost performance were offset by lower volumes, according to Citigroup
  • Boliden declines as much as 5.9% after its first-quarter results, with analysts flagging that headline operating profit missed, but underlying operations performed reasonably well
  • OVH shares slide as much as 17%, the biggest drop since March 2023, as weaker-than-expected 2Q growth led the IT services provider to lower its forecast for growth and capex for the year

PMI data on Tuesday reinforced the positive mood in Europe. Private-sector activity advanced to the highest level in almost a year, driven by a buoyant services sector and Germany’s return to growth. And yet, barring any economic surprises, a rate cut in June is a “fait accompli,” European Central Bank Vice President Luis de Guindos said.

Earlier in the session, Asian stocks also rose for a second day as sentiment toward China continued to improve, with easing fears of a wider Middle East conflict offering additional support. The MSCI Asia Pacific Index rose as much as 0.8%, with TSMC and Tencent among the biggest boosts. Most regional markets advanced, though mainland China stocks fell for a third day and Japanese shares trimmed gains as the yen strengthened after Finance Minister Shunichi Suzuki’s comments on possible intervention. Hong Kong stocks led the region’s gains after UBS upgraded Chinese stocks to overweight, citing resilient earnings and a growing focus on shareholder returns. Investors are turning more upbeat on the nation’s assets thanks to green shoots in the economy as well as signs of improving corporate performance.

  • Hang Seng and Shanghai Comp. were mixed with outperformance in Hong Kong due to tech strength, while the mainland lagged amid the PBoC's continued tepid liquidity operations and with the US drafting sanctions that threaten to cut some Chinese banks off from the global financial system for aiding the Russian war effort.
  • Nikkei 225 traded indecisively and on both sides of 37,500 after briefly wiping out all of its opening gains.
  • ASX 200 was led by strength in real estate and tech, while the latest flash PMIs from Australia were varied.

“What makes us more positive now on earnings are the early signs of a pick-up in consumption,” UBS strategists including Sunil Tirumalai wrote in a note. “Any rebound in consumer confidence for us means the possibility of household savings flowing into consumption” and eventually markets.

 

In rates, treasuries are under modest pressure with front-end yields higher by ~2bp before a flurry of bond auctions that will test investors’ appetite after yields hit the highest in 2024: the latest weekly supply cycle (2-, 5- and 7-year auctions) is set to kick off with record $69b 2-year later today. US 10-year yields around 4.645%, higher by nearly 4bps on the day. In Europe, gilts underperform their German counterparts after the UK raised its planned gilt issuance for the fiscal year more than expected, as the government’s budget shortfall overshot forecasts; the belly of gilts curve cheapened after DMO announcement, with 5-year UK yields higher by around 2bp. Treasury coupon auctions resume at 1pm New York time with $69b 2-year, followed by 5- and 7-year notes Wednesday and Thursday. The WI 2-year yield at around 4.965% is ~37bp cheaper than last month’s, which tailed by 0.5bp

In commodities, oil prices advance, with WTI rising 0.4% to trade near $82.20. Gold extends Monday’s drop, down 1% on the day; Monday’s 2.7% drop was biggest in nearly two years. Bitcoin is modestly softer and holds around the USD 66k mark.

Looking at today's calendar, US economic data slate includes April Philadelphia Fed non-manufacturing activity (8:30am), S&P manufacturing and services PMIs (9:45am), March new home sales and April Richmond Fed manufacturing index (10am). From central banks, we’ll hear from the ECB’s Panetta and Nagel, and the BoE’s Haskel and Pill as Fed members have entered quiet period ahead of May 1 policy announcement. Finally, today’s earnings releases include Visa, Tesla, PepsiCo, General Electric, UPS and General Motors.

Market Snapshot

  • S&P 500 futures up 0.1% to 5,052.75
  • STOXX Europe 600 up 0.6% to 505.15
  • MXAP up 0.6% to 170.25
  • MXAPJ up 0.9% to 524.40
  • Nikkei up 0.3% to 37,552.16
  • Topix up 0.1% to 2,666.23
  • Hang Seng Index up 1.9% to 16,828.93
  • Shanghai Composite down 0.7% to 3,021.98
  • Sensex up 0.3% to 73,852.66
  • Australia S&P/ASX 200 up 0.4% to 7,683.51
  • Kospi down 0.2% to 2,623.02
  • Brent Futures up 1.0% to $87.85/bbl
  • Gold spot down 0.9% to $2,305.32
  • US Dollar Index down 0.14% to 105.93
  • German 10Y yield little changed at 2.50%
  • Euro up 0.2% to $1.0680

Top Overnight News

  • The U.S. is drafting sanctions that threaten to cut some Chinese banks off from the global financial system, arming Washington’s top envoy with diplomatic leverage that officials hope will stop Beijing’s commercial support of Russia’s military production, according to people familiar with the matter. WSJ
  • Chinese universities and research institutes recently obtained high-end Nvidia artificial intelligence chips through resellers, despite the U.S. widening a ban last year on the sale of such technology to China. RTRS
  • China QE drumbeat grows louder as the country’s finance minister expresses support for the PBOC to resume trading gov’t bonds (although many doubt this would lead to Fed/ECB-style QE). WSJ
  • AAPL's iPhone sales in China fell 19% during the March quarter, according to data from an independent research firm that marked the gadget’s worst performance there since Covid struck around 2020. BBG
  • Japanese Finance Minister Shunichi Suzuki said last week's meeting with his U.S. and South Korean counterparts has laid the groundwork for Tokyo to act against excessive yen moves, issuing the strongest warning to date on the chance of intervention. RTRS
  • ECB’s Luis De Guindos says a June cut is all but guaranteed, but what happens beyond that could depend on the actions of the Fed. WSJ
  • Europe’s flash PMIs for April point to firmer growth (and inflation), with the slump in manufacturing showing signs of easing while services rose to 52.9 (up from 51.5 in Mar and above the Street’s 51.8 forecast), and overall price pressures intensified slightly. S&P
  • Tesla headlines today’s earnings after seven straight days of declines. Margins, its robotaxi and the fate of its lower-cost EV will be the focus. The company is also being sued in California by a former employee who claims it failed to provide required notice for layoffs. BBG
  • MSFT launches smaller AI models that provide “good enough” capabilities for many, but at a fraction of the cost (the models don’t need high-end Nvidia chips to function). NYT

Earnings

  • Nucor Corp (NUE) Q1 2024 (USD): EPS 3.46 (exp. 3.66), Revenue 8.14bln (exp. 8.26bln). Expects earnings to decrease in Q2 vs Q1 due to decreased earnings in the steel mills segment. Average scrap and scrap substitute cost per gross ton USD 421 (exp. 399.58). Sales tons to outside customers 6.22mln (exp. 6.41mln).
  • SAP (SAP GY) Q1 24 (EUR): Adj. EPS 0.81 (exp. 0.89), adj. revenue 8.04bln (exp. 8.03bln). Adj. cloud and software revenue EUR 6.96bln (exp. 6.93bln). Adj. cloud revenue EUR 3.93bln (exp. 3.94bln). Adj. cloud revenue in constant currencies +25% (exp. +24.5%). Adj. operating profit EUR 1.53bln (exp. 1.7bln). GUIDANCE: Cloud revenue view between 17.0-17.3bln (prev. 13.66bln in 2023). Cloud and software revenue view at EUR 29.0-29.5bln (prev. 26.92bln in 2023) Adj. Operating profit view EUR 7.6-7.9bln (prev. 6.51bln in 2023). Raises 2023 dividend 7% to EUR 2.20/shr vs 2022 dividend. (Newswires) SAP ADR (SAP) rose 2.1% in the US after-hours. Index Weightings: DAX 40 (10.9% - largest), Euro Stoxx 50 (5% - third largest), Stoxx 600 (1.3%).
  • Renault (RNO FP) Q1 (EUR): Revenue 11.71bln (exp. 11.7bln). Sales +2.6% Y/Y. Strong order book in Europe, reflecting a very good start to the year. Co. is progressing well toward its target of cost reduction to lower EV costs by 40%. The EV market is a bit slower than had expected a few years ago. Talks with Geely and Aramco on the ICE powertrain JV are at an advanced stage.
  • Novartis (NOVN SW) Q1 (USD): Revenue 11.8bln (exp. 11.5bln). Core EPS 1.80 (exp. 1.73); Raises FY24 Net Sales and Core Operating Income guidance. Strong sales momentum in Entresto (+36% cc), Cosentyx (+25% cc), Kesimpta (+66% cc), Kisqali (+54% cc), Pluvicto (+47% cc) and Leqvio (+139% cc). Free cash flow 2.0bln (-24%) - declined due to a prior-year one-timer and timing of payments. Novartis proposes Dr. Giovanni Caforio as Chair of the Board of Directors at AGM 2025. Index Weightings: SMI (15.9% - second largest), Stoxx 600 (2%). Net Sales are expected to grow high-single to low double-digit digits. Core operating income is expected to grow low double-digit to mid-teens.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded with a mild positive bias after the tech-led rebound stateside. ASX 200 was led by strength in real estate and tech, while the latest flash PMIs from Australia were varied. Nikkei 225 traded indecisively and on both sides of 37,500 after briefly wiping out all of its opening gains. Hang Seng and Shanghai Comp. were mixed with outperformance in Hong Kong due to tech strength, while the mainland lagged amid the PBoC's continued tepid liquidity operations and with the US drafting sanctions that threaten to cut some Chinese banks off from the global financial system for aiding the Russian war effort.

Top Asian News

  • US is reportedly drafting sanctions that threaten to cut some Chinese banks off from the global financial system as it hopes to stop Beijing's commercial support of Russia's military production, according to WSJ.
  • BoJ Governor Ueda reiterated that monetary policy will be data dependent and will depend on the economy and inflation, while he said they don't have any pre-set idea on the timing and pace of future rate hikes and if trend inflation accelerates in line with their forecast, they will adjust the degree of monetary support through an interest rate hike. Ueda also stated if their price forecast changes, that will also be a reason to change policy but noted it is hard to say beforehand how long the BoJ should wait in gathering enough data to change policy and would like to leave some scope for adjustment by not pre-committing to a certain policy too much.
  • Japanese Finance Minister Suzuki said the government is ready to respond appropriately to excessive FX moves and is closely watching FX moves with a high sense of urgency, while they won't rule out any option and will deal appropriately with excessive FX moves. Suzuki also said he closely communicated with the US and South Korea on forex in Washington and won't deny that last week's discussions in Washington have laid the groundwork for Japan to take appropriate FX action.
  • Senior Japanese ruling party official said recent JPY falls are excessive and out of line with fundamentals; said Japanese authorities could intervene to prop up the JPY at any time
  • Japan Business Lobby Keidanren Chair Tokura said he think Government will make appropriate decision on intervention, via Kyodo

European bourses, Stoxx600 (+0.6%) began the session on a strong footing, and has remained at elevated (albeit contained) levels throughout the European morning. There was little reaction to the EZ Flash PMI data. European sectors hold a positive tilt; Tech takes the top spot, benefiting from US tech gains in the prior session, and post-earning strength in SAP (+3.9%). Basic Resources is found at the foot of the pile, amid broader weakness in metals prices. US Equity Futures (ES +0.1%, NQ +0.2%, RTY U/C) are tentative ahead of a busy earnings slate and the key US PMI data.

Top European News

  • ECB's de Guindos said a June rate cut looks like a set deal, if there are no surprises; end of inflation fight is in sight; largest remaining threat stems from services inflation. There's a clear slowdown in wage dynamics. Inclined to be very cautious what happens after June. Need to take into account what's happening in the US. What the Fed decides is crucial for the global economy. Beed to take impact of FX movements into account. Indicators point toward modest H2 Euro-area recovery.
  • BoE's Haskel said UK food price inflation is "unusually high"; UK labour market is is "extremely tight", via Bloomberg. Inflation will stay high unless the job market weakens.
  • Kantar UK Supermarket update (Apr): Grocery price inflation has fallen to 3.2% over the four weeks to 14 April, marking the fourteenth monthly drop in a row

FX

  • DXY softer having briefly dipped under 106 amid gains in the EUR. Ultimately though, the index is in consolidation mode ahead of GDP and PCE metrics later this week and FOMC on May 1st. For now, the next downside target comes via last week's low at 105.74.
  • EUR is boosted by PMI metrics which saw strong services and composite PMIs overshadow a soft outturn for the manufacturing sector. EUR/USD as high as 1.0695 with the 1.07 level not breached since 12th April; 1.0729 was the high that day.
  • GBP: After a soft session yesterday which dragged the pair to a low of 1.23, Cable is on the front foot thanks to a strong showing for services PMI. 1.2388 is the high watermark thus far.
  • JPY is steady vs. the USD but made another multi-decade high at 154.85. The closer the pair moves to 155, the louder the calls for intervention will get. For now, jawboning is providing minimal help for JPY.
  • Antipodeans are varied the USD with slight outperformance in Aussie after AUD/NZD extended above 1.0900. AUD/USD saw little follow-through from PMI data overnight with the pair lingering around yesterday's best levels after printing a YTD low on Friday.
  • PBoC set USD/CNY mid-point at 7.1059 vs exp. 7.2437 (prev. 7.1043).

Fixed Income

  • USTs initially remained in overnight ranges, though succumbed to selling pressure, sparked by EZ-PMIs, which dragged EGBs lower. USTs matched yesterday's 107.31 high earlier in the session before pulling back to circa 107.25, and further downside could bring Monday's 107.17 low into view.
  • Bunds looked as if they wanted to venture higher in early trade in an extension of yesterday's gains and with de Guindos labelling June as a done deal. However, EZ-wide and regional PMIs acted as a drag thereafter with a strong showing for the services sector, helping composite metrics to beat expectations. 131.47 was the peak before prices made a low at 130.98.
  • Gilts started the session on the back foot thanks to an unwind of yesterday's Ramsden-induced gains and higher-than-expected public borrowing figures which saw the UK DMO revise higher its 2024/25 Gilt issuance remit. Gilts down as low as 96.90 with yesterday's trough at 96.71.
  • UK DMO revises higher its 2024/25 Gilt issuance remit to GBP 277.7bln (prev. GBP 265.3bln)
  • Italy sell EUR 2.5bln vs exp. EUR 2-2.5bln 3.20% 2026 BTP Short Term and EUR 2.5bln vs exp. EUR 2-2.5bln 1.50% 2029 & 1.80% 2036 BTPei:
  • Germany sells EUR vs exp. EUR 5bln 2.90% 2026 Schatz: b/c 2.7x (prev. 2.31x) & avg. yield 2.91% (prev. 2.84%) and retention 18.6% (prev. 17.7%)

Commodities

  • Upside across the crude complex underpinned by the Flash PMIs from Europe which (although manufacturing fell short of expectations) pointed to a services-led recovery; however, prices have pulled back from best levels in recent trade. Brent June meanwhile trades in a USD 86.97-97.95/bbl range.
  • Softer trade across precious metals despite the softer Dollar as the geopolitical unwind from yesterday continues, with relatively broad-based losses seen across spot gold, silver and palladium; XAU fell under USD 2,300/oz to find current intraday support around USD 2,291/oz.
  • Base metals are lower across the board with sizeable intraday losses despite the softer Dollar and risk-on tone across the rest of the market. There has been no obvious catalyst for this pullback but some desks cite Asian investors being cautious of the recent rally driven, in part, by speculative trading.
  • Anglo American (AAL LN) Q1 Copper Production 198k tonnes (exp. 191.3k tonnes)

Geopolitics: Middle East

  • Israeli occupation forces reportedly stormed the city of Jericho in the eastern West Bank, while it was also reported that Israeli gunboats targeted the seashores in the city of Khan Younis in the southern Gaza Strip. In relevant news, sirens sounded in the town of Metulla and the Kiryat Shmona area in northern Israel on suspicion of rocket fire, according to Al Jazeera.
  • Hezbollah fired dozens of rockets into northern Israel on Monday which drew retaliatory strikes, while it said its attack was in response to recent Israeli strikes on towns and villages in southern Lebanon, according to Associated Press.
  • Israeli raids were reported on the town of Yaroun in southern Lebanon, according to Al Jazeera.
  • Hamas said it condemns the statements of US Secretary of State Blinken and his attempt to hold the group responsible for obstructing reaching an agreement, according to Sky News Arabia. Hamas said Blinken's statements contradict the fact that the movement has provided flexibility more than once to facilitate an agreement, while it added that the movement's demands are a permanent ceasefire, the withdrawal of the occupation and the return of the displaced to their homes in all areas of the Gaza Strip.
  • US defence official said the Al-Asad airbase in Iraq came under attack from an Iranian proxy group today which is the second attack on a US base in two days, according to Fox.

Geopolitics: Other

  • UK PM Sunak is to unveil an extra GBP 500mln of military funding to Ukraine and announce the largest supply of munitions to Kyiv on Tuesday as he travels to Poland and Germany, according to FT.
  • North Korean state media reported that leader Kim guided the first nuclear counterstrike drills, while it stated that the drills are a clear warning sign to enemies.

US Event calendar

  • 08:30: April Philadelphia Fed Non-Manufactu, prior -18.3
  • 09:45: April S&P Global US Composite PMI, est. 52.0, prior 52.1
  • 09:45: April S&P Global US Services PMI, est. 52.0, prior 51.7
  • 09:45: April S&P Global US Manufacturing PM, est. 52.0, prior 51.9
  • 10:00: Revisions: Retail Sales
  • 10:00: April Richmond Fed Business Conditio, prior -8
  • 10:00: April Richmond Fed Index, est. -8, prior -11
  • 10:00: March New Home Sales MoM, est. 1.1%, prior -0.3%
  • 10:00: March New Home Sales, est. 669,000, prior 662,000

DB's Jim Reid concludes the overnight wrap

It may not be saying a lot, but markets had their best performance in some time yesterday, as investors became a bit more optimistic about the near-term outlook. Equities recovered, and the S&P 500 (+0.87%) finally managed to advance after a run of 6 consecutive declines. Adding to the positive sentiment were growing hopes that a further escalation in the Middle East would be avoided, and Brent crude oil prices (-0.33%) fell back to their lowest level so far this month, at $87.00/bbl. So there were several pieces of better news for investors, but there’ll be no let-up on the calendar today, as we’ve got lots of earnings reports, including Tesla after the US close. While the Magnificent 7 were up +0.94% yesterday, Tesla was down -3.40%, extending its decline this year to -42.8% and having halved since last July. It's maybe a slight warning for the darlings of the current AI boom that things can change quickly if profits don't follow very high expectations as new technologies grow. Talking of which Nvidia bounced back from their -10.0% decline on Friday and rose +4.35% yesterday.

On top of earnings today, we’ll get an initial indication about how the global economy has performed in Q2, as the April flash PMIs are coming out for the major economies. These will be of particular interest for assessing the nascent recovery in the euro area economy. In March the composite PMI rose above the 50 level for the first time in 10 months. There will also be attention on the price components within the PMIs, especially in the US, where the composite output price index posted a 10-month high of its own last month.

We’ll have to see how those events pan out, but before all that, risk assets managed to post a strong recovery on both sides of the Atlantic. That made a change after three weeks of losses for global equities, with the major indices including the S&P 500 (+0.87%), the NASDAQ (+1.11%) and the STOXX 600 (+0.60%) all advancing. Information technology (+1.28%) and financials (+1.20%) outperformed within the S&P 500. Alongside that, the VIX index of volatility (-1.8pts) fell to 16.94pts, which is its lowest level since Iran launched their recent missile strike on Israel . And here in the UK, the FTSE 100 (+1.62%) even closed at an all-time high, aided by the weakness in sterling (-0.19%), which hit its weakest level against the US Dollar since November.

Henry did a piece yesterday (link here) looking at what happens next after the S&P 500 has seen 6 consecutive declines as we saw before last night's positive close. The subsequent 1-month and 6-month performances have mostly been positive in recent history. Moreover, if the S&P had posted a 7th consecutive decline yesterday, that would have taken us into unusual territory, as it’s something we haven’t seen since February 2020 as Covid-19 spread globally. Indeed, the examples of 7 consecutive losses for the S&P 500 (in the 21st century at least) have either been during a crisis (GFC, US debt ceiling crisis, Euro Crisis, Covid-19) or in anticipation of a pivotal event with significant uncertainty (2016 US election).

As discussed at the top, sentiment was bolstered by the lack of any further escalation in the Middle East. Indeed, yesterday saw Iran’s foreign ministry spokesman say that Israel had received the “necessary response at this stage”. The apparent easing in tensions helped oil prices fall back, and there was also a sharp move lower in gold (-2.59%), which had its biggest daily decline since June 2021. It's down another -0.90% this morning.

The more positive tone was evident across sovereign bonds too. They were supported by the drop in oil prices, which added to hopes that any spike in inflation would prove temporary, and the 1yr US inflation swap (-1.2bps) fell back for a 4th session to 2.71%. In turn, that meant investors grew a bit more hopeful about the prospect of rate cuts, and the amount of Fed rate cuts priced by the December meeting (+1.2bps) inched up to 40bps. Similarly at the ECB, the number of rate cuts priced by December’s meeting (+4.2bps) rose to 78bps.

With more rate cuts being priced in, that helped to push down yields, with those on 10yr bunds (-1.4bps), OATs (-2.7bps) and BTPs (-8.7bps) all moving lower. Admittedly, there was a decent intraday turnaround, as the 10yr bund yield had risen to 2.55% at one point, its highest level since November, before reversing course and ending the day lower at 2.48%. Meanwhile in the US, there was a decline in the 2yr Treasury yield (-1.5bps) to 4.97%, whilst the 10yr Treasury yield (-1.2bps) fell to 4.61%, as it also pared back its earlier losses, having still being above at 4.66% as Europe finished lunch.

In Asia the Hang Seng (+1.64%) is leading gains on a broker upgrade, with the Nikkei (+0.27%), the KOSPI (+0.20%) and the S&P/ASX 200 (+0.41%) seeing minor gains. Chinese stocks are the worst performers with the CSI (-0.56%) and the Shanghai Composite (-0.41%) both trading lower. US stock futures are broadly flat as I type.

Early morning data showed that key gauges of Japan’s manufacturing and service activity improved in April to its highest levels in nearly a year. The au Jibun Bank flash manufacturing PMI rose to 49.9 in April, as against a level of 48.2 in March. The services PMI advanced to 54.6 in April up from 54.1 in March indicating that the service sector continues to remain the primary driver of growth.

Elsewhere, Australia’s Judo Bank PMI data for April showed the manufacturing PMI rising to 49.9 from 47.3. Meanwhile, the service sector PMI came off slightly from 54.4 to 54.2, though still registering a decent growth environment. The composite PMI hit a 24-month high of 53.6 in April, an improvement from the previous month's 53.3.

To the day ahead now, and the main data highlight will be the April flash PMIs from Europe and the US. Elsewhere, we’ll get US new home sales for March, UK public finances for March, and the Richmond Fed’s manufacturing index for April. From central banks, we’ll hear from the ECB’s Panetta and Nagel, and the BoE’s Haskel and Pill. Finally, today’s earnings releases include Visa, Tesla, PepsiCo, General Electric, UPS and General Motors.

Tyler Durden Tue, 04/23/2024 - 08:19

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