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All Aboard the FOMO Train to Buy Everything

All Aboard the FOMO Train to Buy Everything

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3 years ago

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Mixed US data sends conflicting signals

The buy everything trade powered ahead with a vengeance overnight, equities, oil and precious metals rising, with the US sell-off gathering pace also. Data releases overnight sent conflicting signals which makes the moves even more confusing. US ADP Employment severely underperformed, whiles US Services PMI rose, even as US Non-Manufacturing PMI eased.

European Services PMIs also disappointed, but the fall in the euro was short-lived as the “FOMO-nista’s” happily bought the dip. US short end yields actually rose overnight, which should have been dollar supportive, as the US Treasury announced a higher borrowing issuance. There is a considerable amount of irony there, as it should have been a surprise to precisely nobody. The US was running trillion-dollar deficits before the pandemic, and they will be running much larger ones now.

On top of this, the follow-on US fiscal stimulus talks remain deadlocked mostly because the Democrats want an actual stimulus package. In contrast, the Republicans want what would effectively be a pay cut package. I am ambivalent regarding either position, content in the knowledge that with an election on the horizon, a deal of some sort will be done.

With so many conflicting signals, there was a certain desperation in the air to find facts that fitted the price action. Something that is all too common these days as “data” has all the answers to everything, allegedly.

The answer, in my view, is very much more straightforward. Financial markets went back to their happy place, with the “FOMO-nistas” catching the first express train out of momentum station. The headless chicken follows the herd price action on show overnight is causing me some concerns today though. Although I believe that US monetary policy is driving a secular rotation out of US dollars and into equities, G-10 and emerging markets currencies, and most notably, precious metals, things may have got a little out of hand overnight.

Tomorrow’s Non-Farm Payroll’s data now looms as an acute short-term adverse risk, given the momentum displayed by the buy everything trade in the last 24 hours. The ADP Employment hints that tomorrow’s number could be well short of the 1.6 million job increase the markets expect. That reckoning could even come sooner if tonight’s US Initial and Continuing Claims disappoints. The risks are rising quickly, that tomorrow’s Non-Farm Payrolls could dish out some aggressive hard love to the legions of recent passengers aboard the buy everything express. Watch out for potential signal failures and train derailments.

Asia’s data release schedule is modest today, with the highlight being the Bank of India rate decision at 1415 SGT. The RBI is likely to bow to the pressure finally, and shave 25 basis points of the reference rate to 3.75%. A weaker US dollar, in general, has not flowed through to a much stronger rupee, as economic activity suffers from one of the world’s highest Covid-19 totals.

India’s economic outlook was not particularly upbeat before the pandemic, and is much worse now, making it one of Asia’s worst performers. The non-bank financial sector, in particular, continues to be a concern, as does a weaker rupee. India is also suffering price rises in crucial goods, even as growth shrinks, leaving the RBI in an almost stagflationary quandary. The RBI will cut today, but India itself will likely remain an underperformer in the greater Asia region.

The Bank of England announces its rate decision this afternoon at 1400 SGT. With the British pound a stronger out-performer in recent times, the risks are that the BOE mentions something about negative interest rates. I expect rates to remain unchanged at 0.10%, with the GBP 745 billion QE target also unchanged. My views on negative rates are well known; it is an ineffective policy. However, if the BOE Committee isn’t listening to me, comments on negative rates could spark a short and sharp retreat by the pound.

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GBP/USD slips on strong US retail sales

GBP/USD down over half a percent US retail sales higher than expected UK inflation projected to decline on Wednesday The British pound has declined 0.56%…

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34 mins ago

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October 17, 2023

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  • GBP/USD down over half a percent
  • US retail sales higher than expected
  • UK inflation projected to decline on Wednesday

The British pound has declined 0.56% against the US dollar on Wednesday, wiping out yesterday’s gains. In the North American session, GBP/USD is trading at 1.2158, down 0.48%. The pound’s downswing was driven by a higher-than-expected US retail sales report.

US retail sales jump in September

Retail sales in the US surprised on the upside with a gain of 3.8% y/y in September. This beat the upwardly revised 2.9% rise in August and crushed the market estimate of 1.5%. On a monthly basis, retail sales rose 0.7%, compared to an upwardly revised 0.8% in August and well above the market estimate of 0.3%. Core retail sales, which exclude automobiles and gasoline, rose by 0.6% m/m, down from an upwardly revised 0.9% in August but easily beating the market estimate of 0.2%.

The better-than-expected retail sales report indicates that consumer spending remains robust despite the challenging economic picture, which includes high inflation and elevated borrowing costs. Consumer spending likely accelerated in the third quarter and that will be reflected in the consumer spending component of GDP.

The UK releases inflation on Wednesday. September CPI is expected to tick lower to 6.6% after a 6.7% reading in August. Inflation is at its lowest level since February 2022 but remains more than three times above the Bank of England’s 2% target. The core rate, which excludes food and energy is closely monitored by the BoE, is expected to dip to 6.0%, compared to 6.2% in August.

If inflation falls as expected or even further, it will provide support for the BoE to pause for a second straight time at the November 2nd meeting and the pound could react with losses. The Bank’s decision to hold rates at the October meeting was a narrow 5-4 vote and Governor Bailey said yesterday that he expected upcoming rate decisions to be tight as well.

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GBP/USD Technical

  • GBP/USD has pushed below support at 1.2202. Below, there is support at 1.2104
  • There is resistance at 1.2281 and 1.2343

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International

Psychedelic Research Pioneer Roland Griffiths Passes At Age 77

A sad day in the psychedelics community today as news filters out that leading industry neuroscientist, Dr. Roland Griffiths, Ph.D., has passed. The esteemed…

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35 mins ago

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October 17, 2023

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A sad day in the psychedelics community today as news filters out that leading industry neuroscientist, Dr. Roland Griffiths, Ph.D., has passed. The esteemed Johns Hopkins University psychopharmacologist is described as the man who brought psilocybin back into the field of medical research for the first time in decades—notably by conducting his first clinical trial with psilocybin in 1999.

Over the years, Dr. Griffiths work has garnered substantial support through grants from the National Institute of Health, and he boasts a prolific publication record, with more than 400 journal articles and book chapters to his name. Additionally, Dr. Griffiths has played a pivotal role in training over 50 postdoctoral research fellows.

His influence extends far beyond academia, as he has served as a consultant to the NIH and lent his expertise to numerous pharmaceutical companies, aiding in the development of new psychotropic drugs. Furthermore, Dr. Griffiths has contributed as a member of the Expert Advisory Panel on Drug Dependence for the World Health Organization.

Dr. Roland Griffiths: Among The Greatest Psychedelic Researchers Of The Modern Age

NameFieldNotable ContributionsDate of BirthDate of Death
Albert HofmannChemistrySynthesized LSD, discovered its psychoactive properties, and conducted early research on the substanceJanuary 11, 1906April 29, 2008
Timothy LearyPsychologyConducted early research on LSD and became a prominent advocate for the use of psychedelics in therapy and personal growthOctober 22, 1920May 31, 1996
Stanislav GrofPsychiatryConducted research on the use of LSD in psychotherapy and developed a framework for understanding non-ordinary states of consciousnessJuly 1, 1931—
Terence McKennaEthnobotanyDeveloped theories on the use of psychedelics in human evolution and consciousness expansionNovember 16, 1946April 3, 2000
Alexander ShulginChemistrySynthesized and tested hundreds of novel psychoactive compounds, including MDMAJune 17, 1925June 2, 2014
Rick StrassmanPsychiatryConducted research on the effects of DMT, a potent psychedelic, on human subjectsFebruary 8, 1952—
James FadimanPsychologyConducted research on the use of microdosing LSD for personal growth and creative enhancementMay 27, 1939—
Roland GriffithsPsychiatryConducted research on the use of psilocybin, the active ingredient in magic mushrooms, for treating depression, anxiety, and addictionJuly 19, 1946October 16, 2023
William RichardsPsychiatryConducted research on the use of psilocybin in end-of-life care and spiritual experiences——
David NuttPsychiatryConducted research on the safety and potential benefits of various psychoactive substances, including LSD and psilocybinApril 16, 195

Dr. Griffiths’ research portfolio encompasses a wide array of substances, including sedative-hypnotics, caffeine, and novel mood-altering drugs. In 1999, he embarked on an ambitious research program delving into the effects of the classic psychedelic psilocybin. This initiative encompasses studies involving healthy volunteers, individuals beginning their meditation journeys, and seasoned religious leaders.

Notably, therapeutic studies with psilocybin have explored its potential in alleviating psychological distress in cancer patients, aiding in smoking cessation, and even treating major depression.

Beyond psilocybin, Dr. Griffiths’ investigations have ventured into substances like salvinorin A, dextromethorphan, and ketamine, all of which induce altered states of consciousness sharing certain similarities with psilocybin. His research also delves into the intricate domain of drug interactions and employs advanced brain imaging techniques, such as fMRI and PET, to dissect the pharmacological and neural mechanisms underlying these effects.

Within the confines of the Hopkins laboratory, a series of internet surveys have cast light on diverse psychedelic experiences, including those associated with acute and enduring adverse effects, mystical encounters, entity and God-encounter phenomena, as well as reported positive shifts in mental health. These positive changes encompass reductions in depression, anxiety, substance abuse, and improvements in overall well-being.

Although Dr. Griffiths will not be around to see all the fruits of his labor, his influence of his legacy will reverberate well beyond his passing. One of the psychedelic industry’s true shining lights.

Notable Research Papers

Notable Media Appearances

The post Psychedelic Research Pioneer Roland Griffiths Passes At Age 77 appeared first on The Dales Report.

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Chip Stocks Tumble After US Restricts Sale Of Made-For-China Chips

Chip Stocks Tumble After US Restricts Sale Of Made-For-China Chips

Chip stocks tumbled pre-market, led by shares of Nvidia, after a US official…

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35 mins ago

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October 17, 2023

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Chip Stocks Tumble After US Restricts Sale Of Made-For-China Chips

Chip stocks tumbled pre-market, led by shares of Nvidia, after a US official confirmed that exports of the company's A800 and H800 chips will be restricted for sale to China, Bloomberg reports. The chips were specifically created for export to China following restrictions introduced by the Biden administration in October of 2022.

The rules restrict exports of chips to foreign arms of companies headquartered in China, Macau and other regions - however chips designed for consumer applications such as gaming, smartphones or laptops are not subject to the requirement.

According to report, the US Treasury Secretary, Commerce Secretary and National Security Advisor all notified China that the update to the Oct 2022 rule on chips and chip tools would impact exports of said newer chips.

The new rules also require companies to notify the US government before selling chips that fall below the controlled threshold, as Bloomberg reported earlier. Top-of-the-line chips are best for powering artificial intelligence models, a senior administration official said. But with a lot of money and a little jury-rigging, a whole class of slightly inferior chips could also be used for AI and supercomputing and therefore pose a national security risk, the official said.

The US wants to monitor that so-called gray zone activity, the official added, while declining to comment on the specific parameters of which chips will be affected. The administration will review company notifications within 25 days, the official said, to determine whether firms need a license to sell those chips to China. -Bloomberg

NVidia was down as much as 12% pre-market following the announcement, and as much as 7.2% during regular trade.

"It’s difficult to draw a bright line between military and commercial technology," said US Commerce Secretary Gina Raimondo ahead of the decision. "There are often dual-use technologies — and the same technologies that fuel commercial exchange, unfortunately, sometimes can also allow our competitors to modernize their military, surveil their citizens and solidify oppression."

Semis are not happy in general:

Will history rhyme?

As we noted on Friday, Reuters reported that the Biden administration was targeting a loophole that has allowed developers in China to purchase chips from the infamous Huaqiangbei electronics area in Shenzhen, a city in southern China.

The sources reportedly claim that the additional rules on AI chips will come out this month and will apply restrictions previously applied only to the U.S.’s top players like Nvidia and AMD but more broadly to all companies producing similar materials in the market.

Over the summer, the U.S. government applied additional rules to its largest chip makers, including Nvidia, which currently leads the market in chip manufacturing. It asked the companies to curb exports of their high-level semiconductor chips to “some” Middle Eastern countries, among other small details.

The majority of Nvidia’s revenue comes from the U.S., China and Taiwan, while less than 14% comes from all other countries combined.

Reuters' sources have said that the Biden administration is also trying to troubleshoot a loophole that allows Chinese parties access to U.S. cloud service providers like Amazon Web Services (AWS). According to the report, those solutions seem “less clear.”

In July, U.S. officials reportedly began their considerations on restrictions on access to cloud computing services such as AWS by Chinese companies in an effort to safeguard the country’s advanced technology.

The U.S. implemented its initial export controls on its most powerful semiconductor chip technology in October 2022.

On Monday, Chinese Foreign Ministry spokeswoman Mao Ning said during a regular press briefing in Beijing that China opposed "the US politicizing, instrumentalizing and weaponizing trade and tech issues."

Tyler Durden Tue, 10/17/2023 - 09:03

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