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Dollar Slumps

Overview:  While equities and bonds are firmer, it is the dollar’s sell-off that stands out today.  The greenback has retreated broadly.    The euro is trading above the previous week’s high for the first time in over a month, and the dollar was pushed…

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Overview:  While equities and bonds are firmer, it is the dollar's sell-off that stands out today.  The greenback has retreated broadly.    The euro is trading above the previous week's high for the first time in over a month, and the dollar was pushed back below JPY114.00 in early European turnover. The Chinese yuan is at four-month highs. The Antipodean and Scandi currencies are leading the move against the dollar among the major currencies. The JP Morgan Emerging Market Currency Index is near two-week highs and fraying the 20-day moving average for the first time in a month.  The risk-on mood, helped by the anticipation of robust earnings, is lifting equities.  The MSCI Asia Pacific Index is up for the fourth time in five sessions, led by more than 1% gains in Hong Kong and Taiwan.  Among the large bourses in the area, Australia and India were the exceptions and slipped marginally lower. Europe's Dow Jones Stoxx 600 is struggling to maintain its early upside momentum.  Utilities, energy, and materials are the strongest sectors today, while health care and staples lag.  US futures are around 0.25% higher.  Benchmark 10-year yields are mostly softer, leaving the US Treasury hovering below 1.60%.  European yields have edged higher.  A weaker dollar and softer Treasury yields have propelled gold higher.  It approached resistance near $1785.  Oil is firm.  The November WTI contract is knocking on yesterday's high (almost $83.90), while the US natgas futures contract is steady after falling nearly 7.8% yesterday (and pulled back almost 5% before the weekend). Tight supplies continue to underpin copper prices, which are firm near yesterday's high and within striking distance of the year's high set in May.   China's coal futures initially rallied strongly to new record highs but reversed in the last few minutes of trading, falling 5.5%, though still managed to eke out a 0.4% gain. 

Asia Pacific

Japan's new prime minister Kishida is still trying to find his voice as he prepares to lead the LDP into the October 31 lower house election.  His references to a new type of capitalism are vague, and his interest in redistribution lacks specifics.  A Yomiuri survey out of the weekend showed the LDP the favorite by a nearly 4:1 margin.  Kishida's own approval rate slipped four percentage points to 52%.  While he has retreated from his initial overture to raise taxes on securities transactions, he defended the controversial 10% sales tax as necessary to pay for social security.  On the other hand, he favors a debt-financed stimulus budget to help strengthen the recovery.  

Japan will report September trade figures first thing tomorrow.  In the popular consciousness, Japan is mercantilist and runs a trade surplus.  This may have been true, but not for several years.  In fact, this is the first year in four that Japan is recording a trade surplus through the first eight months of the year.  Indeed through August, Japan's cumulative trade surplus of almost $7 bln is smaller than any month of the German trade surplus since the pandemic shutdown in April and May last year.  There are very strong seasonal patterns in Japan's trade flows.  For example, in the past 20 years, there was only once (2014) that the September trade balance did not represent an improvement from August.  In August 2021, the trade balance was in deficit by JPY637 bln.  The shortfall is expected to have been reduced by around JPY100 bln. 

The slippage in US yields has weighed on the dollar against the Japanese yen.  After stalling near JPY114.45 in the past two sessions, the greenback has been sold below JPY114.00 in the European morning.  It has the feel of consolidation.  Initial support is around JPY113.65, and a break of JPY113.00-JPY113.20 would be important from a technical perspective. The minutes from the recent RBA meeting did not deter the market from positioning for a rate hike around the middle of next year and extending the Australian dollar's recovery.  After snapping a three-day advance yesterday, the Aussie has surged to its best level in over a month, near $0.7475.  Last month's high was slightly below $0.7500. Above there, the next important technical area is seen around  $0.7555-$0.7565. The PBOC set the dollar's reference rate tightly against expectations (CNY6.4307 vs. CNY6.4308), suggesting that last week's wider fix was not a protest after all.  The dollar fell for a third session against the yuan, and the decline of about 0.55% is the largest since early January.  It is also the first time since mid-June that the greenback is below CNY6.40.   

Europe

The pipeline capacity auction disappointed those who thought Russia's Putin was signaling a relief to Europe's gas market.  Reports indicate that Gazprom did not book additional volumes through its pipelines through Ukraine and took about a third of the additional capacity of the pipeline network that runs through Poland for next month.  There was little change from Gazprom's October bookings.  Gas prices jumped 15%-18% in the UK and continental Europe after the auction.  The International Energy Association estimates that Gazprom could boost gas exports to Europe by 15%.  Russia seems to want two things.  First, it wants to use the controversial Nord Stream 2 pipeline, which has been completed and now awaits certification by German authorities.  Second, it wants long-term agreements, whereas Europeans trade short-term contracts.  Press accounts acknowledge that Russia has fulfilled its obligations under the long-term contracts but is not offering short-term "top-up" supply as it has in the past.   

Hungary's central bank meets today.  It is the first of three central banks in eastern and central Europe that meet this week.   Recall that last month, Hungary raised the overnight deposit rate by 15 bp instead of the expected 25 bp.  It had previously hiked the policy rate by 30 bp in June and again in July.  The forint had been offered against the euro and dollar before the decision and continued to sell-off. Still, it is hard to separate causes and the hawkish Fed signal the day after the last Hungarian central bank meeting last month.  The median forecast in the Bloomberg survey is for another 15 bp hike to 1.80%.  Of note of the top two forecasters in the survey, one looks for 1.80%, and the other is the highest at 1.95%.  Recall that Hungary's September year-over-year inflation accelerated to 5.5% from 4.9%, though the month-over-month increases have been 0.2% for the past two months.  

Turkey's central bank meets on Thursday.   Despite the acceleration of headline and core inflation in September, and the roughly 4.6% currency depreciation to new record lows this month (after the president dismissed three central bank officials), another 100 bp cut in the one-week repo rate is widely anticipated.  It would bring it to 17%, just above the core rate (16.98%), which the Governor has emphasized lately.  The September headline rate stood at 19.58%.   However, it would seem that a 50 bp move would stretch out the easing for longer and maybe more to Erdogan's liking.  Russia's central bank meets Friday.  It also delivered a smaller than expected move last month, raising its key rate by 25 bp to 6.75% rather than a 50 bp hike the market expected.  Its September CPI accelerated to 7.4% from 6.7%, and the core rate rose to 7.6% from 7.1%.  The top four forecasters in the Bloomberg survey are split between a 25 and 50 bp move this week. A 50 bp move would likely be seen as a sign that the central bank will pause, while a 25 bp hike would leave the door more open.  

The euro recovered from a three-day low yesterday (~$1.1570) to trade at a new high for the month near $1.1665 today.  It appears to have taken out the downtrend line drawn off last month's highs. The $1.1670 area corresponds to the (38.2%) retracement objective of the decline since the September 3 high above $1.1900.  The euro is also above the 20-day moving average (~$1.1620) for the first time since mid-September.  The next important chart area is found around $1.1700-$1.1720.  Sterling is butting against $1.38, which it has not seen since September 17.  Resistance is seen in the $1.3830-$1.3850 area, which holds the (50%) retracement objective of the losses since the early June high (~$1.4250) and the 200-day moving average. Finally, we note that sterling's advance today is coming as the December short-sterling futures contract rallies (decline in the implied yield) by the most this year (four basis points).  

America

Following yesterday's disappointing Chinese Q3 GDP, the US reported a significant miss of its own.  Industrial production, which the median forecast in Bloomberg's survey anticipated a 0.1% gain, instead tumbled 1.3%, its largest decline since February.   And, adding insult to injury, the 0.4% gain reported in August was revised to -0.1%.  Weakness was especially pronounced in manufacturing, where supply chain issues continue to be disruptive.  Manufacturing fell 0.7% in September, and the August series was revised to a 0.4% loss from a 0.2% gain.  We note that both the manufacturing PMI and ISM advanced in September.  Next week, the US reports its first estimate of Q3 GDP.  Forecasts have been scaled back.  The current median in Bloomberg's survey sees 3% growth.  The Atlanta Fed's GDP tracker puts it at 1.2% as of October 15. 

The economic calendar today features the housing starts and permits.  Neither is expected to build on August's 3.9% and 6.0% gain, respectively.  Four Fed officials speak today (Daly, Barkin, Bostic, and Waller).  A report yesterday suggesting Chair Powell sold a large amount of equity funds last year has injected a new note of uncertainty in whether he will be reappointed. Meanwhile, the $480 bln that the debt ceiling was lifted by is rapidly being exhausted, and Treasury Secretary Yellen warned that extraordinary measures will be resorted to again.  These measures could buy time.  Amid great uncertainty, some project it could last until mid-December, while others see the limit biting in early January.  The uncertainty appears to be skewing the T-bill market.

Canada and Mexico have light economic calendars today.   After nesting for the past couple of sessions, the US dollar is taking another leg lower against the Canadian dollar.   It is probing CAD1.2320 as the objective of the head and shoulders pattern we have been tracking (CAD1.2300) comes into view.  Note that the lower Bollinger Band is found near CAD1.2290 today.  A convincing break targets the CAD1.2230.  The greenback is near yesterday's low against the Mexican peso (~MXN20.3090), which is the month's low.  A break of MXN20.25, where a $300 mln option expires today, could signal a test on the 200-day moving average near MXN20.1660.  The Brazilian real may also benefit from the broader setback in the US dollar.  Initial support for the dollar may be in the BRL5.43 area.  


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Health Officials: Man Dies From Bubonic Plague In New Mexico

Health Officials: Man Dies From Bubonic Plague In New Mexico

Authored by Jack Phillips via The Epoch Times (emphasis ours),

Officials in…

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March 13, 2024

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Health Officials: Man Dies From Bubonic Plague In New Mexico

Authored by Jack Phillips via The Epoch Times (emphasis ours),

Officials in New Mexico confirmed that a resident died from the plague in the United States’ first fatal case in several years.

A bubonic plague smear, prepared from a lymph removed from an adenopathic lymph node, or bubo, of a plague patient, demonstrates the presence of the Yersinia pestis bacteria that causes the plague in this undated photo. (Centers for Disease Control and Prevention/Getty Images)

The New Mexico Department of Health, in a statement, said that a man in Lincoln County “succumbed to the plague.” The man, who was not identified, was hospitalized before his death, officials said.

They further noted that it is the first human case of plague in New Mexico since 2021 and also the first death since 2020, according to the statement. No other details were provided, including how the disease spread to the man.

The agency is now doing outreach in Lincoln County, while “an environmental assessment will also be conducted in the community to look for ongoing risk,” the statement continued.

“This tragic incident serves as a clear reminder of the threat posed by this ancient disease and emphasizes the need for heightened community awareness and proactive measures to prevent its spread,” the agency said.

A bacterial disease that spreads via rodents, it is generally spread to people through the bites of infected fleas. The plague, known as the black death or the bubonic plague, can spread by contact with infected animals such as rodents, pets, or wildlife.

The New Mexico Health Department statement said that pets such as dogs and cats that roam and hunt can bring infected fleas back into homes and put residents at risk.

Officials warned people in the area to “avoid sick or dead rodents and rabbits, and their nests and burrows” and to “prevent pets from roaming and hunting.”

“Talk to your veterinarian about using an appropriate flea control product on your pets as not all products are safe for cats, dogs or your children” and “have sick pets examined promptly by a veterinarian,” it added.

“See your doctor about any unexplained illness involving a sudden and severe fever, the statement continued, adding that locals should clean areas around their home that could house rodents like wood piles, junk piles, old vehicles, and brush piles.

The plague, which is spread by the bacteria Yersinia pestis, famously caused the deaths of an estimated hundreds of millions of Europeans in the 14th and 15th centuries following the Mongol invasions. In that pandemic, the bacteria spread via fleas on black rats, which historians say was not known by the people at the time.

Other outbreaks of the plague, such as the Plague of Justinian in the 6th century, are also believed to have killed about one-fifth of the population of the Byzantine Empire, according to historical records and accounts. In 2013, researchers said the Justinian plague was also caused by the Yersinia pestis bacteria.

But in the United States, it is considered a rare disease and usually occurs only in several countries worldwide. Generally, according to the Mayo Clinic, the bacteria affects only a few people in U.S. rural areas in Western states.

Recent cases have occurred mainly in Africa, Asia, and Latin America. Countries with frequent plague cases include Madagascar, the Democratic Republic of Congo, and Peru, the clinic says. There were multiple cases of plague reported in Inner Mongolia, China, in recent years, too.

Symptoms

Symptoms of a bubonic plague infection include headache, chills, fever, and weakness. Health officials say it can usually cause a painful swelling of lymph nodes in the groin, armpit, or neck areas. The swelling usually occurs within about two to eight days.

The disease can generally be treated with antibiotics, but it is usually deadly when not treated, the Mayo Clinic website says.

“Plague is considered a potential bioweapon. The U.S. government has plans and treatments in place if the disease is used as a weapon,” the website also says.

According to data from the U.S. Centers for Disease Control and Prevention, the last time that plague deaths were reported in the United States was in 2020 when two people died.

Tyler Durden Wed, 03/13/2024 - 21:40

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Riley Gaines Explains How Women’s Sports Are Rigged To Promote The Trans Agenda

Riley Gaines Explains How Women’s Sports Are Rigged To Promote The Trans Agenda

Is there a light forming when it comes to the long, dark and…

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March 13, 2024

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Riley Gaines Explains How Women's Sports Are Rigged To Promote The Trans Agenda

Is there a light forming when it comes to the long, dark and bewildering tunnel of social justice cultism?  Global events have been so frenetic that many people might not remember, but only a couple years ago Big Tech companies and numerous governments were openly aligned in favor of mass censorship.  Not just to prevent the public from investigating the facts surrounding the pandemic farce, but to silence anyone questioning the validity of woke concepts like trans ideology. 

From 2020-2022 was the closest the west has come in a long time to a complete erasure of freedom of speech.  Even today there are still countries and Europe and places like Canada or Australia that are charging forward with draconian speech laws.  The phrase "radical speech" is starting to circulate within pro-censorship circles in reference to any platform where people are allowed to talk critically.  What is radical speech?  Basically, it's any discussion that runs contrary to the beliefs of the political left.

Open hatred of moderate or conservative ideals is perfectly acceptable, but don't ever shine a negative light on woke activism, or you might be a terrorist.

Riley Gaines has experienced this double standard first hand.  She was even assaulted and taken hostage at an event in 2023 at San Francisco State University when leftists protester tried to trap her in a room and demanded she "pay them to let her go."  Campus police allegedly witnessed the incident but charges were never filed and surveillance footage from the college was never released.  

It's probably the last thing a champion female swimmer ever expects, but her head-on collision with the trans movement and the institutional conspiracy to push it on the public forced her to become a counter-culture voice of reason rather than just an athlete.

For years the independent media argued that no matter how much we expose the insanity of men posing as women to compete and dominate women's sports, nothing will really change until the real female athletes speak up and fight back.  Riley Gaines and those like her represent that necessary rebellion and a desperately needed return to common sense and reason.

In a recent interview on the Joe Rogan Podcast, Gaines related some interesting information on the inner workings of the NCAA and the subversive schemes surrounding trans athletes.  Not only were women participants essentially strong-armed by colleges and officials into quietly going along with the program, there was also a concerted propaganda effort.  Competition ceremonies were rigged as vehicles for promoting trans athletes over everyone else. 

The bottom line?  The competitions didn't matter.  The real women and their achievements didn't matter.  The only thing that mattered to officials were the photo ops; dudes pretending to be chicks posing with awards for the gushing corporate media.  The agenda took precedence.

Lia Thomas, formerly known as William Thomas, was more than an activist invading female sports, he was also apparently a science project fostered and protected by the athletic establishment.  It's important to understand that the political left does not care about female athletes.  They do not care about women's sports.  They don't care about the integrity of the environments they co-opt.  Their only goal is to identify viable platforms with social impact and take control of them.  Women's sports are seen as a vehicle for public indoctrination, nothing more.

The reasons why they covet women's sports are varied, but a primary motive is the desire to assert the fallacy that men and women are "the same" psychologically as well as physically.  They want the deconstruction of biological sex and identity as nothing more than "social constructs" subject to personal preference.  If they can destroy what it means to be a man or a woman, they can destroy the very foundations of relationships, families and even procreation.  

For now it seems as though the trans agenda is hitting a wall with much of the public aware of it and less afraid to criticize it.  Social media companies might be able to silence some people, but they can't silence everyone.  However, there is still a significant threat as the movement continues to target children through the public education system and women's sports are not out of the woods yet.   

The ultimate solution is for women athletes around the world to organize and widely refuse to participate in any competitions in which biological men are allowed.  The only way to save women's sports is for women to be willing to end them, at least until institutions that put doctrine ahead of logic are made irrelevant.          

Tyler Durden Wed, 03/13/2024 - 17:20

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Congress’ failure so far to deliver on promise of tens of billions in new research spending threatens America’s long-term economic competitiveness

A deal that avoided a shutdown also slashed spending for the National Science Foundation, putting it billions below a congressional target intended to…

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March 13, 2024

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Science is again on the chopping block on Capitol Hill. AP Photo/Sait Serkan Gurbuz

Federal spending on fundamental scientific research is pivotal to America’s long-term economic competitiveness and growth. But less than two years after agreeing the U.S. needed to invest tens of billions of dollars more in basic research than it had been, Congress is already seriously scaling back its plans.

A package of funding bills recently passed by Congress and signed by President Joe Biden on March 9, 2024, cuts the current fiscal year budget for the National Science Foundation, America’s premier basic science research agency, by over 8% relative to last year. That puts the NSF’s current allocation US$6.6 billion below targets Congress set in 2022.

And the president’s budget blueprint for the next fiscal year, released on March 11, doesn’t look much better. Even assuming his request for the NSF is fully funded, it would still, based on my calculations, leave the agency a total of $15 billion behind the plan Congress laid out to help the U.S. keep up with countries such as China that are rapidly increasing their science budgets.

I am a sociologist who studies how research universities contribute to the public good. I’m also the executive director of the Institute for Research on Innovation and Science, a national university consortium whose members share data that helps us understand, explain and work to amplify those benefits.

Our data shows how underfunding basic research, especially in high-priority areas, poses a real threat to the United States’ role as a leader in critical technology areas, forestalls innovation and makes it harder to recruit the skilled workers that high-tech companies need to succeed.

A promised investment

Less than two years ago, in August 2022, university researchers like me had reason to celebrate.

Congress had just passed the bipartisan CHIPS and Science Act. The science part of the law promised one of the biggest federal investments in the National Science Foundation in its 74-year history.

The CHIPS act authorized US$81 billion for the agency, promised to double its budget by 2027 and directed it to “address societal, national, and geostrategic challenges for the benefit of all Americans” by investing in research.

But there was one very big snag. The money still has to be appropriated by Congress every year. Lawmakers haven’t been good at doing that recently. As lawmakers struggle to keep the lights on, fundamental research is quickly becoming a casualty of political dysfunction.

Research’s critical impact

That’s bad because fundamental research matters in more ways than you might expect.

For instance, the basic discoveries that made the COVID-19 vaccine possible stretch back to the early 1960s. Such research investments contribute to the health, wealth and well-being of society, support jobs and regional economies and are vital to the U.S. economy and national security.

Lagging research investment will hurt U.S. leadership in critical technologies such as artificial intelligence, advanced communications, clean energy and biotechnology. Less support means less new research work gets done, fewer new researchers are trained and important new discoveries are made elsewhere.

But disrupting federal research funding also directly affects people’s jobs, lives and the economy.

Businesses nationwide thrive by selling the goods and services – everything from pipettes and biological specimens to notebooks and plane tickets – that are necessary for research. Those vendors include high-tech startups, manufacturers, contractors and even Main Street businesses like your local hardware store. They employ your neighbors and friends and contribute to the economic health of your hometown and the nation.

Nearly a third of the $10 billion in federal research funds that 26 of the universities in our consortium used in 2022 directly supported U.S. employers, including:

  • A Detroit welding shop that sells gases many labs use in experiments funded by the National Institutes of Health, National Science Foundation, Department of Defense and Department of Energy.

  • A Dallas-based construction company that is building an advanced vaccine and drug development facility paid for by the Department of Health and Human Services.

  • More than a dozen Utah businesses, including surveyors, engineers and construction and trucking companies, working on a Department of Energy project to develop breakthroughs in geothermal energy.

When Congress shortchanges basic research, it also damages businesses like these and people you might not usually associate with academic science and engineering. Construction and manufacturing companies earn more than $2 billion each year from federally funded research done by our consortium’s members.

A lag or cut in federal research funding would harm U.S. competitiveness in critical advanced technologies such as artificial intelligence and robotics. Hispanolistic/E+ via Getty Images

Jobs and innovation

Disrupting or decreasing research funding also slows the flow of STEM – science, technology, engineering and math – talent from universities to American businesses. Highly trained people are essential to corporate innovation and to U.S. leadership in key fields, such as AI, where companies depend on hiring to secure research expertise.

In 2022, federal research grants paid wages for about 122,500 people at universities that shared data with my institute. More than half of them were students or trainees. Our data shows that they go on to many types of jobs but are particularly important for leading tech companies such as Google, Amazon, Apple, Facebook and Intel.

That same data lets me estimate that over 300,000 people who worked at U.S. universities in 2022 were paid by federal research funds. Threats to federal research investments put academic jobs at risk. They also hurt private sector innovation because even the most successful companies need to hire people with expert research skills. Most people learn those skills by working on university research projects, and most of those projects are federally funded.

High stakes

If Congress doesn’t move to fund fundamental science research to meet CHIPS and Science Act targets – and make up for the $11.6 billion it’s already behind schedule – the long-term consequences for American competitiveness could be serious.

Over time, companies would see fewer skilled job candidates, and academic and corporate researchers would produce fewer discoveries. Fewer high-tech startups would mean slower economic growth. America would become less competitive in the age of AI. This would turn one of the fears that led lawmakers to pass the CHIPS and Science Act into a reality.

Ultimately, it’s up to lawmakers to decide whether to fulfill their promise to invest more in the research that supports jobs across the economy and in American innovation, competitiveness and economic growth. So far, that promise is looking pretty fragile.

This is an updated version of an article originally published on Jan. 16, 2024.

Jason Owen-Smith receives research support from the National Science Foundation, the National Institutes of Health, the Alfred P. Sloan Foundation and Wellcome Leap.

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