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Crazy Overnight Session Ends With Another Futures Rally

Crazy Overnight Session Ends With Another Futures Rally



Crazy Overnight Session Ends With Another Futures Rally Tyler Durden Tue, 06/23/2020 - 08:14

To anyone who had tight stops heading into the overnight session: our condolences.

Futures were lazily levitating higher in the early after-hours session, when one phrase out of place prompted the fastest plunge since March, sending the ES down 60 points in minutes after Trump's trade advisor and China hawk Peter Navarro responded to a long question by Fox News interviewer Martha MacCallum asking whether aspects of the deal were “over” by saying: “It’s over. Yes", linking the breakdown in part to anger over Beijing not sounding the alarm earlier about the coronavirus outbreak. That's all the algos needed to send risk assets, the Chinese yuan and bond yields, plunging.

However, the digital ink on triggered stop loss alerts was not even dry yet, before a just a violent reversal took place, when Navarro - seeing the dire impact his words had on stocks - said the remark was taken “wildly” out of context, which was followed shortly after by Trump who tweeted that the deal was “fully intact.”

Futures then took another step higher after an across the board beat by Eurozone PMI, which further bolstered the case for a V-shaped recovery.

That result was nothing less than a stop-busting nuclear bomb which left virtually anyone who had any tight or trailing stops overnight with substantial losses.

European stocks levitated sharply higher, with banks, carmakers and technology shares leading gains, while the euro almost got above $1.13 and Italian and Spanish government debt benefitted in the bond markets.  Euro zone PMIs recovered to 47.5 from May’s 31.9 and April’s record low of 13.6. The future output index, which had been below the 50 mark that separates growth from contraction for three months, recovered to 55.7 from 46.8 too.

“PMIs are coming in much better than expected and are another bullish arrow pushing markets back to the highs of May,” said CMC Markets senior analyst Michael Hewson. “The bar for second lockdowns is going to be a lot higher as well, so a second wave (of COVID-19 infections) is not going to be nearly as damaging economically as the first wave.”

The Stoxx 600 Automobiles & Parts Index rises as much as 3.8% and was the best-performing subgroup on the wider European gauge on Tuesday amid a market rally, led by French stocks including Renault and Peugeot. SXAP +3.4% as of 12:34pm CET; best performers on the SXAP include: Renault +7.1%, PSA Group +6.7%, Faurecia +5.5%, Fiat +5.2%, Nokian Renkaat +5.3%, Valeo +4.9%, VW +3.9%

Asian stocks also gained, with Hong Kong’s Hang Seng ending up about 1.6% after the early trade deal wobbles, South Korea’s KOSPI index added 0.2% and Japan’s Nikkei climbed 0.5% Communications and consumer discretionary sector led the gains. The Topix gained 0.5%, with Yasunaga and UMC Electronics rising the most. The Shanghai Composite Index rose 0.2%, with Jiangsu Lugang Culture and Anhui Golden Seed Winery posting the biggest advances. China on Tuesday reported 22 new coronavirus cases, of which 13 were located in Beijing, and the city’s government has started to restrict people from moving to help contain the outbreak.

World stocks have rallied since hitting a low in March amid worries about the jolt to the global economy from the coronavirus-driven shutdown. Ord Minnett investment advisor John Milroy said equity market sentiment was positive despite ongoing bursts of volatility across regional markets.

"It’s worth noting our clients here have been net buyers since the depths of market despair,” Milroy told Reuters from Sydney. “I should think any pullback would be a catalyst for that pattern to resume, the conversations that I am having with clients is all about what to buy not what to sell." Maybe all of his clients are 18-year-old Robinhooders.

In rates, long-end Treasuries are cheaper by 3bp-4bp as U.S. stock futures extended Monday’s advance, with S&P 500 E-minis testing Friday’s highs. Treasury auction cycle beings at 1pm ET with 2-year note sale, followed by 5- and 7-year notes Wednesday and Thursday. Front-end yields remain little changed, steepening 2s10s by ~2bp, 5s30s by ~3bp; 10-year yields around 0.727%, cheaper by ~2bp on the day, while bunds lag by ~1bp following strong European PMIs. Today's $46BN 2-year note auction is $2b larger than last month’s, which tailed by 0.2bp; WI yield ~0.195% is ~1.7bp cheaper than May’s record low stop (0.178%).

In FX, the Bloomberg Dollar Spot Index reversed an earlier gain and the greenback fell against most of its Group-of-10 peers, as haven demand waned after President Trump said the phase one trade deal with China remained “fully intact.” Risk currencies recovered after earlier being sold aggressively after Navarro was reported as saying that the U.S. trade deal with China is “over.”

Gold, which initially rose on Navarro’s remarks, then sold off on the clarification, but has since rebounded as the dollar sang, while risk-sensitive currencies staged a recovery aided by a softer dollar.

“The saving grace for markets is liquidity, which is in abundance and will offer a backstop as the bulls and bears stage a tussle and cause market volatility,” said Vasu Menon, Singapore-based senior investment strategist at OCBC Bank Wealth Management.

Despite Trump’s assurances on Tuesday, Menon expects U.S.-China tensions to escalate in the run-up to the U.S. elections. “So expect markets to be very bumpy in second half of this year because of the double whammy from COVID-19 and U.S.-China tensions.”

In commodities, oil pared its decline from a three-month high as investors turned their attention back to improving demand and easing supply after the market was momentarily roiled by the U.S.-China trade confusion. Brent was up 30 cents at a more than three-month high of $43.33, while WTI was up above $41 a barrel.

PMIs on manufacturing and services are due, as well as data on new home sales. Scheduled earnings include IHS Markit and La-Z-Boy

Market Snapshot

  • S&P 500 futures up 0.5% to 3,127.75
  • STOXX Europe 600 up 1.5% to 367.97
  • MXAP up 0.7% to 160.27
  • MXAPJ up 1% to 518.28
  • Nikkei up 0.5% to 22,549.05
  • Topix up 0.5% to 1,587.14
  • Hang Seng Index up 1.6% to 24,907.34
  • Shanghai Composite up 0.2% to 2,970.62
  • Sensex up 1.1% to 35,277.77
  • Australia S&P/ASX 200 up 0.2% to 5,954.41
  • Kospi up 0.2% to 2,131.24
  • German 10Y yield rose 2.3 bps to -0.416%
  • Euro up 0.2% to $1.1286
  • Brent Futures up 1% to $43.52/bbl
  • Italian 10Y yield fell 6.9 bps to 1.16%
  • Spanish 10Y yield rose 0.2 bps to 0.463%
  • Brent Futures up 0.6% to $43.33/bbl
  • Gold spot unchanged at $1,754.48
  • U.S. Dollar Index down 0.2% to 96.88

Top Overnight News from Bloomberg

  • Less than 15% of funds made available by governments in Europe via banks as loan guarantees for business has been used, according to figures from seven of region’s largest economies compiled by Bloomberg News
  • Spain is weighing plans to significantly increase the size of its 100 billion-euro ($113 billion) loan-guarantee fund after the program attracted huge demand from businesses struggling to weather the coronavirus pandemic, according to people familiar with the matter
  • The June Purchasing Managers Index from IHS Markit showed an improvement at the eurozone’s manufacturers and service firms, and confidence at the highest since February. It also had plenty of reason for caution, with the headline number still signaling contraction, new orders declining and employment falling
  • Japan is aiming to conclude its current trade negotiations with the U.K. by the end of next month, according to a Japanese government official familiar with the talks
  • The Indian and Chinese militaries arrived at a mutual consensus during Lieutenant General-level talks to disengage from eastern Ladakh, Press Trust of India reported, citing people it didn’t identify

Asian equity markets traded positive overall following the tech led gains stateside where Apple shares advanced amid its Worldwide Developers Conference and the Nasdaq notched a record closing high, although gains in the broader market were limited given the rising infection rates in some US states and as US-China tensions persisted. Furthermore, risk sentiment saw a bout of volatility overnight after comments from White House Trade Adviser Navarro circulated in which the known China hawk reportedly stated that the trade deal with China is over and cited the breakdown was due to Beijing not alerting the US about the coronavirus outbreak sooner. This triggered a risk averse tone across Asian bourses and dragged the Emini S&P and DJIA futures below the 3100 and 26000 levels respectively, although the moves were then reversed after Navarro noted that his comments were taken out of context and were concerning trust, not the Phase 1 trade deal which remains in place. As such, ASX 200 (+0.2%) and Nikkei 225 (+0.5%) swung between gains and losses before recovering back from the dip amid the turbulence from Navarro’s comments on the trade deal, which President Trump also clarified was still intact and that he hopes China will live up to the terms. Elsewhere, the Hang Seng (+1.6%) and Shanghai Comp. (+0.2%) were susceptible to the erroneous trade commentary and eventually kept afloat following another firm liquidity operation by the PBoC, although upside in the mainland was limited by lingering tensions after the US designated 4 Chinese media outlets as foreign missions and US Treasury Secretary Mnuchin suggested the possibility of a future decoupling from China. Finally, 10yr JGBs were choppy as stocks whipsawed but then returned flat after the dust settled, with demand hampered by the eventual broad upbeat tone in stocks and with the BoJ only present in the market today for Treasury Discount Bills.

Top Asian News

  • Tencent Smashes Record High After Stock’s $307 Billion Rebound
  • India Urgently Seeks Russian Missile System After China Clash
  • Singapore Calls for General Elections Amid Pandemic
  • Defying Dire Predictions, China Is the Bubble That Never Pops

European stocks remain on a firmer footing early-doors [Euro Stoxx 50 +2.0%], having had seen a bout of selling overnight amid comments from White House Trade Adviser Navarro who, in his initial remarks, deemed the China trade deal “over”, before the official, alongside US President Trump, walked back on the remarks prompting a recovery in sentiment. Stocks continue grinding higher following the raft of flash PMIs for Europe, which showed sentiment among respondents less dire than expected MM, and as such the region saw a leg higher in which DAX cash (+1.9%) briefly eclipsed 12500 to the upside whilst the CAC (+1.5%) reclaimed 5000 to the upside. Broader sectors are all in the green with a more cyclical bias as defensives underperform, whilst the breakdown paints a similar picture with healthcare towards the bottom of the pile whilst Auto, Banks, Insurance and IT lead the gains, with the latter possibly propped up on Apple’s performance following its WWDC conference – Travel and Leisure however remains relatively subdued vs. the broad performance in cyclicals. In terms of individual movers, Wirecard (+15%) shares consolidate following recent hefty back-to-back losses as the scandal deepens, whilst the latest reports note of the detention of former CEO Braun amid accusations of inflating the group’s balance sheet and revenue. Meanwhile, reports of a tie-up with Deutsche Bank (+1.9%), which was swiftly terminated last year, did little to influence price action. Elsewhere, Hikma Pharmaceuticals (-7.0%) holds onto losses as shareholder Ingelheim is to exit the entirety of his 16.45% stake in the group. Bayer (+6.2%) shares opened higher after the Co. won a court ruling which blocks the state mandate for glyphosate products to carry a warning in the state of California – further upside was spuured amid reports Co. are reportedly close to a settlement agreement with glyphosate plaintiffs, board are to discuss and vote on such a settlement in the coming days, a settlement could be worth USD 8-10bln.

Top European News

  • Europe Leaves $2 Trillion on the Table in Virus Recession Fight
  • Spain Weighs Major Boost to $113 Billion Loan Guarantee Plan
  • U.K. Carmakers Seek State Aid With Pandemic Threatening Jobs
  • Wirecard’s Former CEO Braun Arrested in Accounting Scandal

In FX, GBP/EUR - The Pound and Euro tested resistance against the Dollar around 1.2500 and 1.1300 respectively in wake of preliminary UK and Eurozone PMIs, as all sectors in France returned to growth alongside UK manufacturing, while the rest comfortably exceeded forecasts to underpin economic recovery expectations. Stops are said to have been tripped in Cable above 1.2507, but not to the extent that a Fib or the 21 DMA were seriously threatened and Eur/Usd extended gains after breaching the 200 HMA (1.1261) on the way through a Fib retracement (1.1295) before fading just above the big figure. Hence, Eur/Gbp is holding within a 0.9070-20 range amidst more COVID-19 cases in Germany and the RKI warning about a potential 2nd wave given that the R value remains elevated.

  • CHF/AUD/NZD - All firmer vs the Greenback, as the DXY pivots 97.000 ahead of US Markit PMIs and new home sales data, with the Franc probing 0.9450, Aussie back on the 0.6900 handle and Kiwi hovering just shy of 0.6500 following divergent moves overnight on the back of hastily retracted or clarifies remarks made by US Trade Advisor Navarro to the effect that the Phase 1 deal with China is over. Note also, Aud/Usd is also well off lows following much improved CBA PMIs and Moody’s reaffirming the sovereign’s AAA rating with a stable outlook, but Usd/Chf has not really been impacted by comments from SNB’s Zurbruegg reiterating that there is no upper limit for the balance sheet. However, Nzd/Usd will be prone to any tweaks in RBNZ policy guidance on Wednesday as the markets are not anticipating rates to be adjusted.
  • CAD/JPY - The Loonie and Yen are lagging after Usd/Cad failed penetrate bid/support at 1.3500 and Usd/Jpy only declined to 106.75 on the aforementioned negative US-China headlines before returning to pivot 107.00 again. For the record, mixed Japanese PMIs were largely overlooked, but the upcoming BoJ Summary of Opinions may provide some independent impetus beyond broader risk sentiment.
  • SCANDI/EM - The Nok and Sek are outperforming on a combination of improved risk appetite and firm crude prices, with the former towards the upper end of a 10.8890-7360 band vs the Eur and latter edging above 10.5000 in advance of Sweden’s latest Economic Tendency Survey due on Wednesday. Similarly, most EM currencies are trading higher and even the Zar awaiting tomorrow’s SA budget review, while the Brl will be looking for direction via BCB minutes and Huf from the NBH that is seen standing pat.

In commodities, WTI and Brent crude futures wobbled overnight amid Navarro’s initial comments which prompted WTI and Brent futures below USD 40/bbl and USD 42.50/bbl respectively before the benchmarks recoiled on the rebuttal of the comments, albeit prices failed to completely reverse the move. Nonetheless, a broad improvement in EZ flash PMIs underpinned risk and sees the benchmarks approach USD 41.50/bbl and USD 44.00/bbl to the upside. On the OPEC front, some desks note that the fact OPEC+ is haggling under-complying countries for plans to make up for their poor performance does offer markets some confidence that compliance could improve, but tail risks remain given the absence of an enforcement mechanism. News flow specifically for the complex remains light early doors with eyes more so on broader macro narratives ahead of the weekly inventory data later today. On this, forecasts are looking for a headline build of 2mln BPD. Spot gold, meanwhile, has been trading in tandem with the USD post-Navarro, which saw the yellow metal print a high of USD 1760/oz ahead of its 18th May high at USD 1765/oz. Copper prices mimic the gains in stocks having had seen a blip lower on the initially Navarro headlines.

US Event Calendar

  • 9:45am: Markit US Manufacturing PMI, est. 50, prior 39.8; Services PMI, est. 48, prior 37.5; Composite PMI, prior 37
  • 10am: New Home Sales, est. 640,000, prior 623,000; New Home Sales MoM, est. 2.73%, prior 0.6%
  • 10am: Richmond Fed Manufact. Index, est. -2, prior -27

DB's Jim Reid concludes the overnight wrap

My new posh desk arrives at home today so if you’re looking for peak WFH this might be it. My office was the final room in the house to be decorated and my wife has styled it around a theme of eccentric English gentleman (I’m not sure if that’s a hint of her thoughts about her husband). Her signature calling card is a zebra in a bowler hat coming out of one of the walls. It’s not been screwed in yet but I’ll be sure to record a new research video when it has been so you can all work out whether she has lost her mind or is a design genius. I have my own suspicions.

On the last day of my cheap desk from Amazon, yesterday saw a continuation of the divergent news between the US and Europe on the coronavirus, with the US continuing to see relatively large amounts of new cases in many states just as parts of Europe achieves new lows in terms of case numbers. The total number of global confirmed cases passed 9 million yesterday. It took eight days for the most recent million, which was the fastest yet even if the percentage gap between millions gets smaller. The immense new caseloads in South America and India as well as the new hotspots in the US have caused the global improvement in case suppression to plateau. The 7-day average of daily case growth globally has evened off at roughly 1.75-2.0% per day over the last 30 days after previous steadily falling from its 12% peak in March. Don’t forget the latest case and fatality tables appear in the pdf if you click “view report” at the top.

Starting with the US and daily new cases are getting closer to their March/April peaks in absolute terms now with the 5-day average at around 30k per day - up 10k this month and only 2-3k below its spring peaks. In terms of the hotspots, in Florida the total number of cases yesterday rose above 100,000, even if the growth rate of 3% on the previous day was somewhat below the previous 7-day average growth of 3.7%. The Mayor of Miami has slowed down the city’s reopening and now mandated that everyone wears masks in public. Elsewhere in the US, Texas reported that their positivity rate for covid testing has risen to almost 9%, after being as low as 4.5% in late May. Cases in the state have risen by 4.2% in the last day and by 3.9% on average over the last week and 2.4% the week before. Governor Abbott, who has been ardent for reopening the economy up quickly said “Closing down Texas again will always be the last option”. However he has ordered state regulators to shut down bars and restaurants that are not enforcing CDC guidelines. Elsewhere California continues to have mixed news. The most populous US state recorded record daily infections over the weekend, but is not seeing large case growth everywhere. San Francisco has moved up their next phase of reopening to June 29th from what was initially mid-July, after registering very low case numbers in recent days (only one case cited in the county yesterday). Residents will make the final decision about whether the economy will truly reopen though, and the increasing case counts around the country could very well lead to lower economic activity, but this time out of personal choice rather than governmental decree.

In more positive news however, the UK announced that the number of new daily cases fell below 1,000 for the first time since the full lockdown was imposed back on March 23rd, albeit slightly flattered by weekend reporting. Today we’re expecting that Prime Minister Johnson will make a statement to the House of Commons, where he’ll outline a further easing of coronavirus restrictions. Discussion has centered round an announcement that the hospitality sector will be able to reopen from 4 July, as well as a possible relaxation in the 2m social-distancing rule. Meanwhile in the Netherlands, no new deaths were reported in the country for the first time since March 12th. As countries continue to reopen, focus continues to shift toward restarting economies. Last night, Spain was reportedly considering increasing the size of its €100bn loan guarantee fund by as much as a further €50bn after the program attracted huge demand from businesses.

Even as the narratives surrounding the virus are seemingly more worrisome for the US than Europe, US equities went back to outperforming those in Europe yesterday. Looking in more depth, the S&P 500 ended the session up +0.65%, supported by the outperformance of tech stocks, as the NASDAQ closed up +1.11%. The tech-centric index finished higher for the seventh day in a row, the longest streak since December 26 when it capped off 11 positive sessions. On the other hand Europe underperformed, with the STOXX 600 seeing a -0.76% decline, as bourses fell across the continent. Once again, Wirecard stood out, being the worst performer on the STOXX 600 for the 3rd day running thanks to another -45.98% fall, which brings the company’s losses to over -87% compared with its closing level only last Wednesday. It came after the company’s management board said in a statement on Monday morning that the €1.9bn that had gone missing might not exist.

The narrative has shifted overnight to some curious comments from White House trade advisor Peter Navarro. A few hours ago, Navarro said that the trade deal with China is “over” and he linked the breakdown in part to Washington’s anger over Beijing not sounding the alarm earlier about the coronavirus outbreak. He also said that "So I think that this election is going to be about jobs, China, and law and order." However, within an hour Navarro clarified that his comments were taken out of context and added that he was trying to make a point about ‘Trust’. Subsequently, President Trump tweeted that “The China Trade Deal is fully intact. Hopefully they will continue to live up to the terms of the Agreement!” Futures on the S&P 500 were down as much as -1.6% after the initial comment by Navarro but have fully retraced since Trump’s tweet. Elsewhere, Treasury Secretary Mnuchin told Fox Business overnight that “There may be a time when we have decoupling” of trade from China, “That’s something that the president may consider.”

Asian markets also swung around with the headlines. The Nikkei (+0.81%), Hang Seng (+0.97%), Shanghai Comp (+0.17%) and Kospi (+0.41%) are now up after all bourses dipped into the red following Navarro’s comments. In FX, the Japanese yen is down -0.27% after initially gaining on the comments. Elsewhere, WTI crude oil prices are down -0.61% to $40.48.

In other overnight news, the SCMP reported this morning that EU leaders have warned Chinese president Xi Jinping of “very negative consequences” over Beijing’s plan to introduce a national security law in Hong Kong, while pressing for progress on market access and climate change. The report further added that Ursula von der Leyen, who leads the European Commission, called on Chinese leaders to step up the political attention for the ongoing investment talks by the “end of summer” in order to clinch a treaty by year end. Separately, the SCMP also reported that China’s NPC Standing Committee might ultimately pass the HK National Security Law as early as this month.

Back to markets yesterday, and the move towards safe assets benefited sovereign bonds, and yields on 30-year German bunds traded in negative territory for the first time since late May, even though they closed just above zero by the end of the session, finishing at 0.01%. Yields on 10yr bunds also fell -2.4bps, while those on US Treasuries were up +1.5bps. Sovereign bonds in the European periphery similarly saw a decline in yields, with 10yr Spanish (-3.1bps), Italian (-6.9bps) and Portuguese (-2.1bp) yields all falling to their lowest levels since March.

Over in foreign exchange markets, sterling strengthened against the dollar yesterday following a Bloomberg op-ed by Bank of England Governor Bailey. The main takeaway was his view that “When the time comes to withdraw monetary stimulus, in my opinion it may be better to consider adjusting the level of reserves first without waiting to raise interest rates on a sustained basis.” So signalling that the BoE will keep rates lower for longer with a focus on reducing the balance sheet first. Remember that our economists’ view is that on balance more QE from the BoE this year is still likely. The other headline from FX yesterday was the dollar’s decline, seeing a -0.60% fall, while gold prices rose by +0.61% to a fresh 7-year high.

Moving on, and today the main highlight will be the flash PMIs coming out from around the world. Overnight, we’ve already had the numbers from Australia and Japan which showed notable jump in preliminary June services PMI for both. Australia’s services PMI printed at 53.2 (vs. 26.9 last month) while the manufacturing PMI came at 49.8 (vs. 44.0 last month) bringing the composite reading to 52.6 (vs. 28.1 last month). Similarly, Japan’s services PMI came in at 42.3 (vs. 26.5 last month) and the manufacturing PMI printed at 37.8 (vs. 38.4 last month) bringing the composite reading to 37.9 (vs. 27.8 last month).

As we mentioned yesterday, the consensus expectations are generally in the low-to-mid 40s, so that’s still below the 50 mark that separates expansion from contraction, even if this would represent a rebound from last month’s numbers. In fact, the only PMI where the consensus is forecasting a 50-or-above reading (just at 50.0) is for US manufacturing. That said, it’s worth being cautious with the PMIs at the moment, because they simply measure changes in activity versus the previous month, so can prove rather volatile when you have the sort of economic dislocation we’ve seen since the shutdowns. Indeed, as economies continue to reopen, it’s quite plausible that we’ll see the PMIs move well above 50 as activity returns to more “normal” levels. In fact surely the risks are on the upside for today’s numbers given the low starting base and the re-openings across the board. It’ll be difficult to read through much on such an outcome though.

There wasn’t a great deal of economic data out yesterday, though we did get existing home sales in the US, which fell to an annualised rate of 3.91m (vs. 4.09m expected), its lowest level since October 2010. On the other hand, the Chicago Fed’s national activity index rebounded to 2.61 in May (vs. -10 expected). Here in Europe, the European Commission’s June consumer confidence indicator for the Euro Area also saw a continued recovery from its low in April, now standing at -14.7.

To the day ahead now, and the aforementioned flash PMIs from around the world are likely to be the highlight. Otherwise, from the US we’ll get May’s data on new home sales and the Richmond Fed manufacturing index for June. On the central bank front, we’ll hear from the BoE’s Governor Bailey, St. Louis Fed President Bullard and the ECB’s Hernandez de Cos.

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‘The Official Truth’: The End Of Free Speech That Will End America

‘The Official Truth’: The End Of Free Speech That Will End America

Authored by J.B.Shurk via The Gatestone Institute,

If legacy news corporations…



'The Official Truth': The End Of Free Speech That Will End America

Authored by J.B.Shurk via The Gatestone Institute,

If legacy news corporations fail to report that large majorities of the American public now view their journalistic product as straight-up propaganda, does that make it any less true?

According to a survey by Rasmussen Reports, 59% of likely voters in the United States view the corporate news media as "truly the enemy of the people." This is a majority view, held regardless of race: "58% of whites, 51% of black voters, and 68% of other minorities" — all agree that the mainstream media has become their "enemy."

This scorching indictment of the Fourth Estate piggybacks similar polling from Harvard-Harris showing that Americans hold almost diametrically opposing viewpoints from those that news corporations predominantly broadcast as the official "truth."

Drawing attention to the divergence between the public's perceived reality and the news media's prevailing "narratives," independent journalist Glenn Greenwald dissected the Harvard-Harris poll to highlight just how differently some of the most important issues of the last few years have been understood. While corporate news fixated on purported Trump-Russia collusion since 2016, majorities of Americans now see this story "as a hoax and a fraud."

While the news media hid behind the Intelligence Community's claims that Hunter Biden's potentially incriminating laptop (allegedly containing evidence of his family's influence-peddling) was a product of "Russian disinformation" and consequently enforced an information blackout on the explosive story during the final weeks of the 2020 presidential election, strong majorities of Americans currently believe the laptop's contents are "real." In other words, Americans have correctly concluded that journalists and spies advanced a "fraud" on voters as part of an effort to censor a damaging story and "help Biden win." Nevertheless, The New York Times and The Washington Post have yet to return the Pulitzer Prizes they received for reporting totally discredited "fake news."

Similarly, majorities of Americans suspect that President Joe Biden has used the powers of his various offices to profit from influence-peddling schemes and that the FBI has intentionally refrained from investigating any possible Biden crimes. Huge majorities of Americans, in fact, seem not at all surprised to learn that the FBI has been caught abusing its own powers to influence elections, and are strongly convinced that "sweeping reform" is needed. Likewise, large majorities of Americans have "serious doubts about Biden's mental fitness to be president" and suspect that others behind the scenes are "puppeteers" running the nation.

Few, if any, of these poll results have been widely reported. In a seemingly-authoritarian disconnect with the American people, corporate news media continue to ignore the public's majority opinion and instead "relentlessly advocate" those viewpoints that Americans "reject." When journalists fail to investigate facts and deliberately distort stories so that they fit snugly within preconceived worldviews, reporters act as propagandists.

Constitutional law scholar Jonathan Turley recently asked, "Do we have a de facto state media?" In answering his own question, he notes that the news blackout surrounding congressional investigations into Biden family members who have allegedly received more than ten million dollars in suspicious payments from foreign entities "fits the past standards used to denounce Russian propaganda patterns and practices." After Republican members of Congress traced funds to nine Biden family members "from corrupt figures in Romania, China, and other countries," Turley writes, "The New Republic quickly ran a story headlined 'Republicans Finally Admit They Have No Incriminating Evidence on Joe Biden.'"

Excoriating the news media's penchant for mindlessly embracing stories that hurt former President Donald Trump while simultaneously ignoring stories that might damage President Biden, Turley concludes:

"Under the current approach to journalism, it is the New York Times that receives a Pulitzer for a now debunked Russian collusion story rather than the New York Post for a now proven Hunter Biden laptop story."

Americans now evidently view the major sources for their news and information as part of a larger political machine pushing particular points of view, unconstrained by any ethical obligation to report facts objectively or dispassionately seek truth. That Americans now see the news media in their country as serving a similar role as Pravda did for the Soviet Union's Communist Party is a significant departure from the country's historic embrace of free speech and traditional fondness for a skeptical, adversarial press.

Rather than taking a step back to consider the implications such a shift in public perception will have for America's future stability, some officials appear even more committed to expanding government control over what can be said and debated online. After the Department of Homeland Security (DHS), in the wake of public backlash over First Amendment concerns, halted its efforts to construct an official "disinformation governance board" last year, the question remained whether other government attempts to silence or shape online information would rear their head. The wait for that answer did not take long.

The government apparently took the public's censorship concerns so seriously that it quietly moved on from the collapse of its plans for a "disinformation governance board" within the DHS and proceeded within the space of a month to create a new "disinformation" office known as the Foreign Malign Influence Center, which now operates from within the Office of the Director of National Intelligence. Although ostensibly geared toward countering information warfare arising from "foreign" threats, one of its principal objectives is to monitor and control "public opinion and behaviors."

As independent journalist Matt Taibbi concludes of the government's resurrected Ministry of Truth:

"It's the basic rhetorical trick of the censorship age: raise a fuss about a foreign threat, using it as a battering ram to get everyone from Congress to the tech companies to submit to increased regulation and surveillance. Then, slowly, adjust your aim to domestic targets."

If it were not jarring enough to learn that the Office of the Director of National Intelligence has picked up the government's speech police baton right where the DHS set it down, there is ample evidence to suggest that officials are eager to go much further in the near future. Democrat Senator Michael Bennet has already proposed a bill that would create a Federal Digital Platform Commission with "the authority to promulgate rules, impose civil penalties, hold hearings, conduct investigations, and support research."

Filled with "disinformation" specialists empowered to create "enforceable behavioral codes" for online communication — and generously paid for by the Biden Administration with taxpayers' money — the special commission would also "designate 'systemically important digital platforms' subject to extra oversight, reporting, and regulation" requirements. Effectively, a small number of unelected commissioners would have de facto power to monitor and police online communication.

Should any particular website or platform run afoul of the government's First Amendment Star Chamber, it would immediately place itself within the commission's crosshairs for greater oversight, regulation, and punishment.

Will this new creation become an American KGB, Stasi or CCP — empowered to target half the population for disagreeing with current government policies, promoting "wrongthink," or merely going to church? Will a small secretive body decide which Americans are actually "domestic terrorists" in the making? US Attorney General Merrick Garland has gone after traditional Catholics who attend Latin mass, but why would government suspicions end with the Latin language? When small commissions exist to decide which Americans are the "enemy," there is no telling who will be designated as a "threat" and punished next.

It is not difficult to see the dangers that lie ahead. Now that the government has fully inserted itself into the news and information industry, the criminalization of free speech is a very real threat. This has always been a chief complaint against international institutions such as the World Economic Forum that spend a great deal of time, power, and money promoting the thoughts and opinions of an insular cabal of global leaders, while showing negligible respect for the personal rights and liberties of the billions of ordinary citizens they claim to represent.

WEF Chairman Klaus Schwab has gone so far as to hire hundreds of thousands of "information warriors" whose mission is to "control the Internet" by "policing social media," eliminating dissent, disrupting the public square, and "covertly seed[ing] support" for the WEF's "Great Reset." If Schwab's online army were not execrable enough, advocates for free speech must also gird themselves for the repercussions of Elon Musk's appointment of Linda Yaccarino, reportedly a "neo-liberal wokeist" with strong WEF affiliations, as the new CEO of Twitter.

Throughout much of the West, unfortunately, free speech has been only weakly protected when those with power find its defense inconvenient or messages a nuisance. It is therefore of little surprise to learn that French authorities are now prosecuting government protesters for "flipping-off" President Emmanuel Macron. It does not seem particularly astonishing that a German man has been sentenced to three years in prison for engaging in "pro-Russian" political speech regarding the war in Ukraine. It also no longer appears shocking to read that UK Technology and Science Secretary Michelle Donelan reportedly seeks to imprison social media executives who fail to censor online speech that the government might subjectively adjudge "harmful." Sadly, as Ireland continues to find new ways to punish citizens for expressing certain points of view, its movement toward criminalizing not just speech but also "hateful" thoughts should have been predictable.

From an American's perspective, these overseas encroachments against free speech — especially within the borders of closely-allied lands — have seemed sinister yet entirely foreign. Now, however, what was once observed from some distance has made its way home; it feels as if a faraway communist enemy has finally stormed America's beaches and come ashore in force.

Not a day seems to go by without some new battlefront opening up in the war on free speech and free thought. The Richard Stengel of the Council on Foreign Relations has been increasingly vocal about the importance of journalists and think tanks to act as "primary provocateurs" and "propagandists" who "have to" manipulate the American population and shape the public's perception of world events. Senator Rand Paul has alleged that the DHS uses at least 12 separate programs to "track what Americans say online," as well as to engage in social media censorship.

As part of its efforts to silence dissenting arguments, the Biden administration is pursuing a policy that would make it unlawful to use data and datasets that reflect accurate information yet lead to "discriminatory outcomes" for "protected classes." In other words, if the data is perceived to be "racist," it must be expunged. At the same time, the Department of Justice has indicted four radical black leftists for having somehow "weaponized" their free speech rights in support of Russian "disinformation." So, objective datasets can be deemed "discriminatory" against minorities, while actual discrimination against minorities' free speech is excused when that speech contradicts official government policy.

Meanwhile, the DHS has been exposed for paying tens of millions of dollars to third-party "anti-terrorism" programs that have not so coincidentally equated Christians, Republicans, and philosophical conservatives to Germany's Nazi Party. Similarly, California Governor Gavin Newsom has set up a Soviet-style "snitch line" that encourages neighbors to report on each other's public or private displays of "hate."

Finally, ABC News proudly admits that it has censored parts of Robert F. Kennedy Jr.'s interviews because some of his answers include "false claims about the COVID-19 vaccines." Essentially, the corporate news media have deemed Kennedy's viewpoints unworthy of being transmitted and heard, even though the 2024 presidential candidate is running a strong second behind Joe Biden in the Democrat primary, with around 20% support from the electorate.

Taken all together, it is clear that not only has the war on free speech come to America, but also that it is clobbering Americans in a relentless campaign of "shock and awe." And why not? In a litigation battle presently being waged over the federal government's extensive censorship programs, the Biden administration has defended its inherent authority to control Americans' thoughts as an instrumental component of "government infrastructure." What Americans think and believe is openly referred to as part of the nation's "cognitive infrastructure" — as if the Matrix movies were simply reflecting real life.

Today, America's mainstream news corporations are already viewed as processing plants that manufacture political propaganda. That is an unbelievably searing indictment of a once-vibrant free press in the United States. It is also, unfortunately, only the first heavy shoe to drop in the war against free speech. Many Chinese-Americans who survived the Cultural Revolution look around the country today and see similarities everywhere. During that totalitarian "reign of terror," everything a person did was monitored, including what was said while asleep.

In an America now plagued with the stench of official "snitch lines," censorship of certain presidential candidates, widespread online surveillance, a resurrected "disinformation governance board," and increasingly frequent criminal prosecutions targeting Americans who exercise their free speech, the question is not whether what we inaudibly think or say in our sleep will someday be used against us, but rather how soon that day will come unless we stop it. After all, with smartphones, smart TVs, "smart" appliances, video-recording doorbells, and the rise of artificial intelligence, somebody, somewhere is always listening.

Tyler Durden Sun, 05/28/2023 - 23:00

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Never Short a Dull Market; AI is Sexy, But Everyone Hates Oil

There’s an old adage of Wall Street, which says: "never short a dull market." And while AI is getting all the press these days, the oil market is about…



There's an old adage of Wall Street, which says: "never short a dull market." And while AI is getting all the press these days, the oil market is about as dull as it gets. This, of course, brings the energy sector to the top of my contrarian alert list.

This is not to say that I'm buying oil-related assets with both hands. It just means that, at this point, it makes more sense to look at energy as a value asset, as it is oversold and ripe for a move up whenever the right set of variables required to deliver such a move line up just right.

In the current world, the variables could line up just right as early as today.

There are No Oil Bulls Left

Nobody loves oil.

The level of bearishness expressed by futures traders is at least equal to where it was during the pandemic, and after the Silicon Valley Bank (SIVB) collapse. The International Energy Agency (IEA), forecasts that, of the expected $2.8 trillion in energy investments for 2023, roughly $1.7 trillion will be allocated to low carbon energy sources, including nuclear, solar, and other potential sources. Only $1.1 trillion will be invested in fossil fuels.

And according to the Financial Times, auctioneers in Texas are trying to unload two brand new fracking rigs, which together cost $70 million, for a starting combined bid of just below $17 million.

Supply is the Primary Influence on Oil Prices

Meanwhile, oil companies are quietly merging with competitors, and exploration outside the United States is continuing aggressively, with new discoveries being frequently announced. 

Simultaneously, the U.S. active rig count is slowly falling, led by natural gas. The price of gasoline is steadily rising, as the market begins to price in future supply reductions. Just in my neck of the woods, regular unleaded is up some $0.32 in the last week alone.

That doesn't sound like an industry that's planning on fading away. It sounds like an industry that's hunkering down and waiting for better times and preparing to squeeze supply in order to boost prices.

Charting the Oil Sector

The price chart for West Texas Intermediate Crude, the U.S. benchmark (WTIC), shows the depressed price picture which has led investors to walk away. And, until proven otherwise, there are plenty of sellers at the $75-$80 price area, where a sizeable Volume by Price bar highlights the point of resistance.

At first glance, there little difference in the general price behavior for Brent Crude, the European benchmark. (BRENT) where there is a resistance band defined by VBP bars between $80 and $90. A closer look reveals an uptick in Accumulation Distribution (ADI) and the semblance of some nibbling in On Balance Volume (OBV). It's subtle, but it's there.

The oil stocks are far from a bull trend. The Energy Select Sector SPDR ETF (XLE) is trading below its 200-day moving average, facing resistance put from $78 to $90 (VBP bars).

So why bother? Simply stated, OPEC has an upcoming meeting on June 3-4. The cartel is not happy about the prices and the way things are evolving. The Saudi oil minister recently warned bearish speculators to "watch out." And my gut is doing flips when I think about oil, as I see gasoline prices creep up when I drive to work.

But mostly, it's because there are no oil bulls left. This is what we saw in the technology sector a few months ago before its current rally. In early 2023, the tech sector was pronounced dead. The stories were all about the technology sector shuddering as the economy slowed. How about this one, from March 2023, which breathlessly announced a 5.2% decrease in semiconductor sales on a month to month basis and an 18.5% year to year drop?

Yet, as validated by the recent AI-fueled rally, the bad news first marked a bottom, while preceding a significant move up in tech shares.

Never short a dull market.

I've recently recommended several energy sector picks. You can have a look at them with a free trial to my service. In addition, I've posted a Special Report on the oil market which you can gain access to here.

Bond and Mortgage Roller Coaster Reverses Course

Expect negative news about the effect of rising mortgage rates on the homebuilder industry. That's because, as the chart below illustrates, there is a tight and very close correlation between rising bond yields, mortgage rates, and the homebuilder stocks (SPHB).

Moreover, the rise above 3.75% on the U.S. Ten Year Note yield (TNX) has triggered headlines about mortgage rates climbing above 7%. What the news isn't reporting is that, once bond yields roll over, which they are likely to do at some point in the future when the economy shows more signs of slowing and the Fed finally admits that they must pause, is that mortgage rates will drop and demand for new homes will once again pick up. Thus, we will see the homebuilders pick up where they left off.

As things stood last week, SPHB seems to have made a short term bottom.

For now, expect a continuation of the backing and filling in the homebuilder stocks. But, if I'm right and bond yields reverse course, the homebuilders are likely to rally again.

For an in-depth comprehensive outlook on the homebuilder sector click here.

NYAD Holds Above 200-Day Moving Average. SPX Joins NDX in Breaking Out. Liquidity is Shrinking.

The New York Stock Exchange Advance Decline line (NYAD) tested its 200-day moving average on an intra-week basis but did not break below the key technical level. On the other hand, NYAD remained below its 50-day moving average, which is still an intermediate-term negative.

Moreover, with the major indexes (see below) breaking out to new highs, we remain in a technical divergence as the market's breadth is lagging the action in the indexes. This is of some concern, given the fade in the market's liquidity, as I point out below.

The Nasdaq 100 Index (NDX) extended its recent breakout, closing the week well above 14,200. The current move is unsustainable, so some sort of pullback and consolidation are likely over the next few days to weeks. Both ADI and OBV remain encouraging.

What's more bullish is that the S&P 500 (SPX) finally broke out above the 4100–4200 trading range on 5/24/23. On Balance Volume (OBV) is perking up while the Accumulation Distribution (ADI) indicator is very encouraging.

We may be seeing a shift from a short-covering rally to a fear-of-missing-out buyer's rally.

VIX Holds Steady

The CBOE Volatility Index (VIX) remained below 20, as it has since March 2023. This remains a positive for the markets, as it shows short sellers are staying away at the moment.

When the VIX rises, stocks tend to fall, as rising put volume is a sign that market makers are selling stock index futures to hedge their put sales to the public. A fall in VIX is bullish, as it means less put option buying, and it eventually leads to call buying, which causes market makers to hedge by buying stock index futures. This raises the odds of higher stock prices.

Liquidity is Getting Squeezed

The market's liquidity is now in a downtrend. The Eurodollar Index (XED) is now below 94.5, and looks weak. A move above 95 will be a bullish development. Usually, a stable or rising XED is very bullish for stocks.

To get the latest up-to-date information on options trading, check out Options Trading for Dummies, now in its 4th Edition—Get Your Copy Now! Now also available in Audible audiobook format!

#1 New Release on Options Trading!

Good news! I've made my NYAD-Complexity - Chaos chart (featured on my YD5 videos) and a few other favorites public. You can find them here.

Joe Duarte

In The Money Options

Joe Duarte is a former money manager, an active trader, and a widely recognized independent stock market analyst since 1987. He is author of eight investment books, including the best-selling Trading Options for Dummies, rated a TOP Options Book for 2018 by and now in its third edition, plus The Everything Investing in Your 20s and 30s Book and six other trading books.

The Everything Investing in Your 20s and 30s Book is available at Amazon and Barnes and Noble. It has also been recommended as a Washington Post Color of Money Book of the Month.

To receive Joe's exclusive stock, option and ETF recommendations, in your mailbox every week visit

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Costco Tells Americans the Truth About Inflation and Price Increases

The warehouse club has seen some troubling trends but it’s also trumpeting something positive that most retailers wouldn’t share.



Costco has been a refuge for customers during both the pandemic and during the period when supply chain and inflation issues have driven prices higher. In the worst days of the covid pandemic, the membership-based warehouse club not only had the key household items people needed, it also kept selling them at fair prices.

With inflation -- no matter what the reason for it -- Costco  (COST) - Get Free Report worked aggressively to keep prices down. During that period (and really always) CFO Richard Galanti talked about how his company leaned on vendors to provide better prices while sometimes also eating some of the increase rather than passing it onto customers.

DON'T MISS: Why You May Not Want to Fly Southwest Airlines

That wasn't an altruistic move. Costco plays the long game, and it focuses on doing whatever is needed to keep its members happy in order to keep them renewing their memberships.

It's a model that has worked spectacularly well, according to Galanti.

"In terms of renewal rates, at third quarter end, our US and Canada renewal rate was 92.6%, and our worldwide rate came in at 90.5%. These figures are the same all-time high renewal rates that were achieved in the second quarter, just 12 weeks ago here," he said during the company's third-quarter earnings call.

Galanti, however, did report some news that suggests that significant problems remain in the economy.

Costco has done an incredibly good job at holding onto members.

Image source: Xinhua/Ting Shen via Getty Images

Costco Does See Some Economic Weakness

When people worry about the economy, they sometimes trade down when it comes to retailers. Walmart executives (WMT) - Get Free Report, for example, have talked about seeing more customers that earn six figures shopping in their stores.

Costco has always had a diverse customer base, but one weakness in its business may be a warning sign for its rivals like Target (TGT) - Get Free Report, Best Buy (BBY) - Get Free Report, and Amazon (AMZN) - Get Free Report. Galanti broke down some of the numbers during the call.

"Traffic or shopping frequency remains pretty good, increasing 4.8% worldwide and 3.5% in the U.S. during the quarter," he shared.

People shopped more, but they were also spending less, according to the CFO.

"Our average daily transaction or ticket was down 4.2% worldwide and down 3.5% in the U.S., impacted, in large part, from weakness in bigger-ticket nonfood discretionary items," he shared.

Now, not buying a new TV, jewelry, or other big-ticket items could just be a sign that consumers are being cautious. But, if they're not buying those items at Costco (generally the lowest-cost option) that does not bode well for other retailers.

Galanti laid out the numbers as well as how they broke down between digital and warehouse.

"You saw in the release that e-commerce was a minus 10% sales decline on a comp basis," he said. "As I discussed on our second quarter call and in our monthly sales recordings, in Q3, big-ticket discretionary departments, notably majors, home furnishings, small electrics, jewelry, and hardware, were down about 20% in e-com and made up 55% of e-com sales. These same departments were down about 17% in warehouse, but they only make up 8% in warehouse sales."

Costco's CFO Also Had Good News For Shoppers

Galanti has been very open about sharing information about the prices Costco has seen from vendors. He has shared in the past, for example, that the chain does not pass on gas price increases as fast as they happen nor does it lower prices as quick as they sometimes fall.

In the most recent call, he shared some very good news on inflation (that also puts pressure on Target, Walmart, and Amazon to lower prices).

"A few comments on inflation. Inflation continues to abate somewhat. If you go back a year ago to the fourth quarter of '22 last summer, we had estimated that year-over-year inflation at the time was up 8%. And by Q1 and Q2, it was down to 6% and 7% and then 5% and 6%," he shared. "In this quarter, we're estimating the year-over-year inflation in the 3% to 4% range."

The CFO also explained that he sees prices dropping on some very key consumer staples.

"We continue to see improvements in many items, notably food items like nuts, eggs and meat, as well as items that include, as part of their components, commodities like steel and resins on the nonfood side," he added.


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