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Blain: Apple’s Bond Was A Critical Moment – Sell Euro, Buy Dollars!

Blain: Apple’s Bond Was A Critical Moment – Sell Euro, Buy Dollars!

Authored by Bill Blain via,

“Yesterday the bird…



Blain: Apple's Bond Was A Critical Moment - Sell Euro, Buy Dollars!

Authored by Bill Blain via,

“Yesterday the bird of night did sit, even at noon-day, upon the market place – hooting and shrieking.”

In bonds there is truth: Apple’s Jumbo $5.5 bln corporate bond deal hints of a firmer market to come. A clear divide between US Recovery and European Slowdown is increasingly apparent – a weaker Euro will further add to European problems.

Of all the signs and portents that drive the machinations of markets, perhaps the most significant yesterday was Apple tapping the corporate bond market for a 4 tranche $5.5 bln raise of AAA Bonds. In bonds there is truth….

It was a moment of tactical genius from the bookrunners, persuading Apple the time was ripe for a jumbo bond deal likely to set the whole market tone. The order book was over 4 times oversubscribed – hinting a large part of the bond market has a distinctly positive bull view on the US$ bonds and interest rates.

Yesterday I was commenting on how markets traditionally snooze through the summer and reopen in early September with a post-summer bond issue deluge – but that’s apparently moved forward! Apple was not the only name in the market. There is a growing US corporate bond calendar – Bloomberg say $30 bln set to issue this week! That will a great relief to US corporate treasurers who were beginning to panic over how they would refinance debt if the corporate debt market was closed due to rising interest rates.

The Apple deal shows the corporate bond market is very much open, and that’s a massively positive signal for the whole US economic outlook. (Remember it was a seizure in corporate short-term money markets and bonds that effectively triggered the liquidity crisis of 2007 that led to the GFC the following year!)

Apple has been quite open about using the proceeds to finance its stock buyback programme and dividends, which is basically what corporates will do when interest rates are so low its more effective to retire equity with debt and leverage up while not building new plant or hiring more workers. Many less sound, non-investment grade junk borrowers will be figuring out how to borrow more to push their stock price higher! (I hate stock buybacks! They distort the workings of capitalism.)

In early July – just before my summer break – I was warning about the risks of a poorer than expected US earnings season further denting business and market sentiment. Didn’t happen. Earnings came in better than expected.

I also warned how markets could turn from bear to bull very swiftly if the right set of circumstances concurred: a stronger than expected US economy, stronger earnings and a diminishing inflation threat. Sure enough, after the Fed hiked by 75 bp, the market took it as buy signal, reinforced by Jay Powell on the wires saying we were close to the natural interest rate… for which he took considerable stick.

What we now have is a very much decorrelated global economic outlook: a potentially resurgent US market and economy, more reasons to binge on the dollar versus an increasingly dismal European outlook. It will become a negative feedback loop for energy-strapped Europe – power will get progressively more expensive as the Euro continues to weaken, and further unwinds Europe’s incomplete union.

Markets are all about the narrative – and you can’t beat down a good story. In the second half of July, a US market recovery started to come together – the story selling itself as stocks staged their best month in years! The equity-punditry came out in force calling a new bull market and new highs before year end. Classic quote from a repressed bull: “When bad news is good news, and good news is rampant, time to buy”.

Over the last few days we’ve seen the US Bull narrative successively reinforced by:

  • Economic numbers – from employment, manufacturing, to consumer spending – all come in stronger than expected, diminishing the likelihood the US is slipping into a real recession. (Technically 2 quarters of declining GDP means a recession is underway – but why look back! Officially it takes the National Bureau of Economic Research to say a recession is underway – and the market is too politically charged to accept that.)

  • 10-year bond yields have fallen from 3.10 to 2.50%, on signs the inflation shock has been absorbed in manufacturing prices (the ISM report showed declining prices) and Fed comments hinting rate rises will be more constrained.

  • An increasingly strong narrative that inflation resulting from short-term exogenous factors (energy, supply chains, etc), rather than economic fundamentals, should not be addressed solely by interest rate rises. The risks of higher interest rates trigger recession are too great.

Off course, and you knew there was a but coming… nothing is ever so simple.

The bears point to thin summer markets reflected in low volumes and wild price swings. They say there are still risks still to be unwound from over-frothed markets, and a natural rate of interest is still be found after the years of ultra-low rate distortions.

The situation in Europe is far more… frightening..

The US faces the usual series of intangible market fears, wobbles and uncertainties. Normal stuff for any market watcher….. In contrast, there is nothing uncertain about the very real economic crisis facing Europe.

The economic GDP numbers in Europe have been more positive – but largely on the back of seasonal factors, and the fact Europeans know the Euro doesn’t go so far when they go abroad, thus it’s been a bumper holiday season in Spain, Italy and France. Consumer confidence is lower than during the worst of the Covid Crisis – when at least there was the illusion the European Union was united to find a solution. Now… not so much certainty Europe will still coalesce round a common solution.

When US manufacturing ISM prices are falling, hinting lower inflation, European PMIs (purchasing manager orders, a sign of anticipated demand) have crashed to peak pandemic levels hinting massive slowdown to come.

The very real issue is energy prices. As the Russian turn down supply – gas prices have spiked. Germany could tumble off a cliff. Energy security is in tatters. Energy cost hikes are scything through the whole economy. The economy has no idea how to cope with massive swinging cuts in power expected later this year. German retail sales have fallen nearly 9% y-o-y. Germans demand the heads of Central Bankers when inflation is low single digits – now its 8.5%!

Meanwhile… Italy is Italy. France is France. And S&P say: “Eurozone manufacturing is sinking into an increasingly steep slowdown, adding to the recession risk.”

Simple call… Sell Europe, Buy US. Oh.. you already did.

Tyler Durden Tue, 08/02/2022 - 12:45

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War, peace and security: The pandemic’s impact on women and girls in Nepal and Sri Lanka

The impacts of COVID-19 must be incorporated into women, peace and security planning in order to improve the lives of women and girls in postwar countries…



Nepalese girls rest for observation after receiving the Moderna vaccine for COVID-19 in Kathmandu, Nepal. (AP Photo/Niranjan Shrestha)

Attention to the pandemic’s impacts on women has largely focused on the Global North, ignoring countries like Nepal and Sri Lanka, which continue to deal with prolonged effects of war. While the Nepalese Civil War concluded in 2006 and the Sri Lankan Civil War concluded in 2009, internal conflicts continue.

As scholars of gender and war, our work focuses on the United Nations Security Council Resolution 1325 on women, peace and security. And our recently published paper examines COVID-19’s impacts on women and girls in Nepal and Sri Lanka, looking at policy responses and their repercussions on the women, peace and security agenda.

COVID-19 has disproportionately and negatively impacted women in part because most are the primary family caregivers and the pandemic has increased women’s caring duties.

This pattern is even more pronounced in war-affected countries where the compounding factors of war and the pandemic leave women generally more vulnerable. These nations exist at the margins of the international system and suffer from what the World Bank terms “fragility, conflict and violence.”

Women, labour and gender-based violence

Gendered labour precarity is not new to Nepal or Sri Lanka and the pandemic has only eroded women’s already poor economic prospects.

Prior to COVID-19, Tharshani (pseudonym), a Sri Lankan mother of three and head of her household, was able to make ends meet. But when the pandemic hit, lockdowns prevented Tharshani from selling the chickens she raises for market. She was forced to take loans from her neighbours and her family had to skip meals.

Some 1.7 million women in Sri Lanka work in the informal sector, where no state employment protections exist and not working means no wages. COVID-19 is exacerbating women’s struggles with poverty and forcing them to take on debilitating debts.

Although Sri Lankan men also face increased labour precarity, due to gender discrimination and sexism in the job market, women are forced into the informal sector — the jobs hardest hit by the pandemic.

Two women sit in chairs, wearing face masks
Sri Lankan women chat after getting inoculated against the coronavirus in Colombo, Sri Lanka, in August 2021. (AP Photo/Eranga Jayawardena)

The pandemic has also led to women and girls facing increased gender-based violence.

In Nepal, between March 2020 and June 2021, there was an increase in cases of gender-based violence. Over 1,750 incidents were reported in the media, of which rape and sexual assault represented 82 per cent. Pandemic lockdowns also led to new vulnerabilities for women who sought out quarantine shelters — in Lamkichuha, Nepal, a woman was allegedly gang-raped at a quarantine facility.

Gender-based violence is more prevalent among women and girls of low caste in Nepal and the pandemic has made it worse. The Samata Foundation reported 90 cases of gender-based violence faced by women and girls of low caste within the first six months of the pandemic.

What’s next?

While COVID-19 recovery efforts are generally focused on preparing for future pandemics and economic recovery, the women, peace and security agenda can also address the needs of some of those most marginalized when it comes to COVID-19 recovery.

The women, peace and security agenda promotes women’s participation in peace and security matters with a focus on helping women facing violent conflict. By incorporating women’s perspectives, issues and concerns in the context of COVID-19 recovery, policies and activities can help address issues that disproportionately impact most women in war-affected countries.

These issues are: precarious gendered labor market, a surge in care work, the rising feminization of poverty and increased gender-based violence.

A girl in a face mask stares out a window
The women, peace and security agenda can help address the needs of some of those most marginalized. (AP Photo/Niranjan Shrestha)

Policies could include efforts to create living-wage jobs for women that come with state benefits, emergency funding for women heads of household (so they can avoid taking out predatory loans) and increasing the number of resources (like shelters and legal services) for women experiencing domestic gender-based violence.

The impacts of COVID-19 must be incorporated into women, peace and security planning in order to achieve the agenda’s aims of improving the lives of women and girls in postwar countries like Nepal and Sri Lanka.

Luna KC is a Postdoctoral Researcher at the Research Network-Women Peace Security, McGill University. This project is funded by the Government of Canada Mobilizing Insights in Defence and Security (MINDS) program.

Crystal Whetstone does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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Target Sets Sights on Holiday Season, Has Plan for High Inventory

Target said that it still expects spillover from inventory rightsizing to the tune of $200 million in the third quarter.



Target said that it still expects spillover from inventory rightsizing to the tune of $200 million in the third quarter.

Target's  (TGT) - Get Target Corporation Report strategy is paying off as the company's stock falls on heavy volume following its earnings release. 

Normally, a profit miss as wide as Target's, 39 cents per share vs. expectations of 72 cents per share, would result in a bigger drop than Target's, but the retailer has been prepping the market for this miss all summer. 

The inventory the company built up during the height of the pandemic, as Americans shopped more from home, needs to go, and the only way get rid of the excess product is deep discounts. 

"Back in June, we announced that our team would be undertaking a bold effort to rightsize our inventory position in the categories for which demand patterns have radically changed," CEO Brian Cornell said during the company's earnings call. "While this decision had a meaningful short-term impact on our financial results, we strongly believe it was the best path forward."

Now, looking forward the company sees some overhang for the third quarter, but expects a big holiday season ahead. 

While some fear a recession and what it might do to the economy, Target is convinced that the holiday season will be strong.

Image source: John Smith/VIEWpress.

Target Aims for Holiday Season

While Target is focused on the back-to-school season currently underway, the company expects "spillover" from its inventory issues to be present during the third quarter to the tune of $200 million. 

But the company's own checks suggest that its shoppers are excited about the holiday season. 

"The one thing that seems to be very consistent is a guest and consumer who says they want to celebrate the holiday seasons so we certainly expect that they are going to be celebrating Halloween this year and actively trick or treating and hosting parties with friends and family," Cornell said.

"We know they're looking forward to Thanksgiving and they're going to look forward to celebrating the Christmas holidays and that comes down each and every week as we survey consumers and talk to our guests so that gives us great optimism for our ability to perform during these key holiday seasons"

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Not only does Target expect a strong quarter, but the company also expects favorable comps as fourth quarter headwinds from a year ago aren't present this time around. 

"Guests already have their sights set on upcoming holidays and seasonal moments in Q3 and beyond," Cornell said.

Target's Q2 Collapse

Target said adjusted earnings for the three months ending in July were pegged at 39 cents per share, down 89% from the same period last year and well shy of the Street consensus forecast of 72 cents per share.

Group revenues, Target said, rose 3.5% to $26 billion, essentially matching analysts' estimates of a $26.04 billion tally. Target said same-store sales rose 2.6%, again shy of the Refinitiv forecast of 3.2%, while operating margins fell to 1.2%, below the group's July guidance of a 2% level. 

Earlier this summer, Target cautioned that its bigger-than-expected 35% build-up in overall inventories over the first quarter would trigger price cuts, adding that deeper discounts would be needed to shift the excess goods onto a customer base that was already pulling back on discretionary spending.

Walmart  (WMT) - Get Walmart Inc. Report, Target's larger big box rival, said Tuesday that improving spending trends, as well as actions the group has taken to shift excess inventory, will ease some of the pressures it expects to face in terms of overall profits over the back half of the year.

Walmart said adjusted earnings for the three months ended in July came in at $1.77 per share, down one penny from the same period last year but well ahead of the Street consensus forecast of $1.62 per share.

Group revenues, the company said, were tabbed at $152.9 billion, an 8.4% increase from last year that topped analysts' estimates of $150.81 billion. U.S. same-store sales rose 6.5% from last year, the company said, firmly topping the Refinitiv forecast. 

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Why Is No One at Nike Working This Week?

And will the move gain broader acceptance among American employers?



And will the move gain broader acceptance among American employers?

You go into an office, pull at the door and find that it doesn't give and nobody's there. 

It may sound like the start of the common rushing-to-the-office-on-a-Saturday nightmare but, more and more, collective time off is being embraced by employees as part of a push for a better work culture.

While professional social media platform LinkedIn  (MSFT) - Get Microsoft Corporation Report and dating app Bumble  (BMBL) - Get Bumble Inc. Report had already experimented with collective time off for workers, the corporate ripples truly began with Nike  (NKE) - Get Nike Inc. Report.

In August 2021, the activewear giant announced that it was giving the 11,000-plus employees at its Oregon headquarters the week off to "power down" and "destress" from stress brought on by the covid-19 pandemic.

"In a year (or two) unlike any other, taking time for rest and recovery is key to performing well and staying sane," Matt Marrazzos, Nike's senior manager of global marketing science, wrote to employees at the time.

Nike Is On Vacation Right Now

The experiment was, not exactly unexpectedly, very well-received — a year later, the company instituted its second annual "Well-Being Week." Both the corporate headquarters in Beaverton, Ore., and three Air Manufacturing design labs with over 1,500 employees are closed for a collective paid vacation from Aug. 15 to 19.

"We knew it would be impactful, but I was blown away by the feedback from our teammates [...]," Nike's Chief Human Resources Officer Monique Matheson wrote in a LinkedIn post.

"Because everyone was away at the same time, teammates said they could unplug – really unplug, without worrying about what was happening back at the office or getting anxiety about the emails piling up."


Of course, the time off only applies to corporate employees. To keep the stores running and online orders fulfilled but not exacerbate the differences between blue and white collar workers, Nike gave its retail and distribution employees a week's worth of paid days off that they can use as they see fit.

Nike has tied the change to its commitment to prioritize mental health. In the last year, it launched everything from a "marathon of mental health" to a podcast that discusses how exercise can be used to manage anxiety and depression.

Rippling Through the Corporate World?

But as corporations are often criticized for turning mental health into positive PR without actually doing much for employees, the collective week off was perhaps the most significant thing the company did for workers' mental health.

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The practice of set office closures has long been common practice in many European countries. In France, not only corporate offices but even restaurants and retail stores empty out over the month of August for what is culturally considered sacred vacation time. 

But as American work culture prioritizes individual choice and "keeping business going" above all else, the practice has been seen as radical by many corporate heads and particularly small businesses that may find it more difficult to have such a prolonged drop in business. 

But in many ways, the conversations mirror some companies' resistance to remote work despite the fact that one-fourth of white-collar jobs in the U.S. are expected to be fully remote by 2023

"This is the kind of perk that makes employees want to stay," industry analyst Shep Hyken wrote in a comment for RetailWire. "And knowing they can’t completely shut the entire company down, I like the way they are compensating the distribution and retail store employees."

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