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Futures Dip As Dollar Rebounds From 8 Month Low

Futures Dip As Dollar Rebounds From 8 Month Low

US equity futures dipped ahead of the MLK day holiday, while global equities were little changed…



Futures Dip As Dollar Rebounds From 8 Month Low

US equity futures dipped ahead of the MLK day holiday, while global equities were little changed after their best start to a year in a generation as investors assessed whether the recent torrid rally has gone too far given the outlook for inflation, growth and earnings. European stocks rose, while Asian stock fell, erasing earlier gains.

As of 8am, US equity futures traded around 4,010, down 0.2% from the Friday close and erasing modest earlier gains. Futures dipped as the dollar snapped a three-day losing streak and reversed an earlier drop that pushed it to an 8 month low, before gaining 0.2% against a basket of currencies, as investors await a slew of US economic data, speeches by ECB President Christine Lagarde and a policy meeting by the Bank of Japan where outgoing head Kuroda may expand the BOJ's Yield Curve Control from 0.50% to 1.00%.

The MSCI ACWI Index slipped for the first time in seven days after posting the biggest advance for the first two weeks in data going back to 1988.

While inflation in the US appears to have peaked, continued policy tightening by the Federal Reserve "just to make sure" and other central banks risks pushing the global economy into a recession that could hurt corporate profits. The World Bank last week added to the gloomy outlook, warning of “one of the sharpest slowdowns we have seen in the past five decades.”

“The fear of missing out currently represents a key driver for equities,” Credit Agricole CIB strategists led by Jean-François Paren wrote in a note. “The market is getting a bit ahead of itself right now.”

European stocks picked up where they left off last week, adding to their best start to the year on record. Stoxx 600 rises 0.2% with real estate, health care and financial services leading gains while travel and miners fall. Here are some of the biggest European movers on Monday:

  • Temenos shares rise as much as 6.4% as investors greet the Swiss software company’s CEO change as a positive; ZKB says move should help to rebuild investor confidence over time
  • Yspomed shares climb as much as 12% after Credit Suisse raised the Swiss company’s shares to outperform, saying it’s the fastest-growth European mid-cap med-tech company
  • Verbund shares rise as much as 2.8% after being raised to neutral from underperform at Credit Suisse, with the broker saying the Austrian power firm’s shares now look fairly valued
  • Sika shares rise as much as 1.3% after the Swiss construction material manufacturer agreed to sell some concrete additive assets to Ineos to win approval for its acquisition of MBCC Group
  • Covestro shares drop as much as 5.1% after preliminary results that analysts said looked weak and would likely put pressure on the chemicals company’s dividends
  • Just Eat and HelloFresh shares fall in early Monday trading after Exane BNP Paribas downgrades both stocks to neutral, taking a more cautious stance on the online food sector
  • Proximus falls as much as 6.1% after the Belgian telecom operator said it would cut its dividend by half from 2024 to reduce leverage
  • ITM Power slumped as much as 19% after issuing a profit warning, which RBC said shows there are still uncertainties related to the timing of large purchase orders and ramp-up costs
  • Tecan Group shares fall as much as 5.6% after Kepler Cheuvreux analyst Maja Pataki cut the recommendation to hold from buy, citing “limited upside nearer term”
  • AutoStore falls as much as 14% after DNB initiated coverage of the shares with a sell recommendation, calling it an “exciting company with an overly stretched valuation”
  • IQE shares plunge as much as 21% after the semiconductor wafer-products maker said that demand from existing customers could take a hit from industry-wide “some destocking”

Asian stocks edged lower as investors braced for another possible surprise from the Bank of Japan later this week, while Chinese shares continued to rally on hopes for reopening and eased regulation. The MSCI Asia Pacific Index gave up gains of as much as 0.6% to fall 0.4%, dragged by consumer discretionary and industrial shares. Japanese stocks faltered as the yen strengthened ahead of the BOJ’s policy decision Wednesday. The onshore Chinese market and the Philippines led gains around the region. China’s CSI 300 Index jumped 1.6% to an almost five-month high as overseas investors stepped up purchases of the nation’s shares amid broader optimism on border reopening. Also boosting sentiment was news that Didi Global Inc. has secured the green light to resume signing up new users, another sign that China’s tech crackdown is over.

Meanwhile, the People’s Bank of China added less cash than expected into the banking system via policy loans while keeping the rate unchanged this month, even with funding demand increasing into Lunar New Year holidays. China’s reopening rally has “more to go” and “there will be a rotation in the region, which is already playing out from India and Australia, which were the leaders in 2022, to North Asia, China, and Korea,” said Sunil Koul, Asia Pacific equity strategist at Goldman Sachs, in a Bloomberg TV interview. While Chinese stocks have been among the region’s best performers this year, Japanese shares have ranked among the worst. Investors have been cautious on Japan equity as the yen climbed with the BOJ expected to continue to move away from its years of ultra-easy monetary policy after lifting a cap on bond yields last month

In FX, the Bloomberg Dollar Index slipped its lowest level since April, before gaining 0.2% as traders weigh the prospects of slowing Fed hikes. Investors await a slew of US economic data, speeches by European Central Bank President Christine Lagarde and a policy meeting by the Bank of Japan for more clues into how much further the battered US currency can weaken. The euro edged up to 1.0874, its highest in eight months, before easing in European trade.

Selling in the greenback petered out as macro accounts picked up dollars in thin trade after the London open, two Europe-based traders say, adding that volumes were around around 70% of recent averages as US market are closed for Martin Luther King Day.

Market participants are increasingly expecting more weakness in the dollar, given growing confidence that the Federal Reserve may pause its interest rate rises in the coming months. Short-term US inflation expectations cooled in early January to the lowest level since April 2021, the University of Michigan’s preliminary survey reading showed.

“Positive risk sentiment and rising speculation of an impending Fed pause has driven the US dollar steadily lower in the past week,” Alvin Tan, strategist at RBC Capital Markets, wrote in a note. The dollar could be in for more losses this week if a raft of US economic data, including retail sales, PPI industrial production and the Fed’s Beige Book, suggest price pressures continue to ease. Focus will also be on two speeches by the ECB’s Lagarde later in the week at the World Economic Forum in Davos.

“Markets are set to pay great attention to Lagarde’s remarks following evidence that price pressure is easing in many countries worldwide and given the further EUR/USD appreciation at the start of 2023,” Unicredit analysts wrote in a note. Given its revised forecast for the ECB to raise rates more than the Fed this year, Unicredit has raised its EUR/USD targets to 1.12 for Q4 23 and 1.16 for Q4 24, compared with its previous targets for 1.07 and 1.12, respectively. “A tighter difference between the two policy rates this year and even more in 2024 calls for a higher EUR-USD,” they write.

The Bank of Japan’s rate review on Wednesday will also be a key focus, as investors remain on high alert for further policy tweaks after December’s shock decision to raise the bar on yield movements

In rates, European bonds decline with 10-year borrowing costs in Germany and the UK climbing 4bps and 5bps respectively. Treasury futures are also lower, with no cash trading today due to the Martin Luther King Jr. Day holiday

In commodities, WTI drifts 0.3% lower to trade near $79.60. Spot gold falls roughly $3 to trade near $1,917/oz.

Bitcoin slipped below $21,000 following a rebound over the weekend, when it surged amid optimism that it may have bottomed.

While US calendar is empty Monday with the US closed for MLK day, earnings will be a key catalyst moving forward as traders assess whether companies were able to navigate headwinds including higher interest rates. The busy week will also be punctuated by corporate earnings, including top banks Goldman Sachs and Morgan Stanley.

Additionally, a host of Fed officials will be speaking this week, providing more clues for investors. The World Economic Forum’s annual meeting kicks off in Davos, Switzerland, with speakers there including European Central Bank President Christine Lagarde and the International Monetary Fund’s Kristalina Georgieva.

Market Snapshot

  • S&P 500 futures down 0.4% to 4,002.25
  • STOXX Europe 600 up 0.2% to 453.40
  • MXAP down 0.3% to 165.60
  • MXAPJ up 0.3% to 545.98
  • Nikkei down 1.1% to 25,822.32
  • Topix down 0.9% to 1,886.31
  • Hang Seng Index little changed at 21,746.72
  • Shanghai Composite up 1.0% to 3,227.59
  • Sensex down 0.3% to 60,087.56
  • Australia S&P/ASX 200 up 0.8% to 7,388.18
  • Kospi up 0.6% to 2,399.86
  • German 10Y yield little changed at 2.20%
  • Euro down 0.1% to $1.0819
  • Brent Futures down 0.5% to $84.87/bbl
  • Brent Futures down 0.5% to $84.87/bbl
  • Gold spot down 0.3% to $1,915.19
  • U.S. Dollar Index up 0.16% to 102.37

Top Overnight News

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Tyler Durden Mon, 01/16/2023 - 08:36

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Wendy’s teases new $3 offer for upcoming holiday

The Daylight Savings Time promotion slashes prices on breakfast.



Daylight Savings Time, or the practice of advancing clocks an hour in the spring to maximize natural daylight, is a controversial practice because of the way it leaves many feeling off-sync and tired on the second Sunday in March when the change is made and one has one less hour to sleep in.

Despite annual "Abolish Daylight Savings Time" think pieces and online arguments that crop up with unwavering regularity, Daylight Savings in North America begins on March 10 this year.

Related: Coca-Cola has a new soda for Diet Coke fans

Tapping into some people's very vocal dislike of Daylight Savings Time, fast-food chain Wendy's  (WEN)  is launching a daylight savings promotion that is jokingly designed to make losing an hour of sleep less painful and encourage fans to order breakfast anyway.

Wendy's has recently made a big push to expand its breakfast menu.

Image source: Wendy's.

Promotion wants you to compensate for lost sleep with cheaper breakfast

As it is also meant to drive traffic to the Wendy's app, the promotion allows anyone who makes a purchase of $3 or more through the platform to get a free hot coffee, cold coffee or Frosty Cream Cold Brew.

More Food + Dining:

Available during the Wendy's breakfast hours of 6 a.m. and 10:30 a.m. (which, naturally, will feel even earlier due to Daylight Savings), the deal also allows customers to buy any of its breakfast sandwiches for $3. Items like the Sausage, Egg and Cheese Biscuit, Breakfast Baconator and Maple Bacon Chicken Croissant normally range in price between $4.50 and $7.

The choice of the latter is quite wide since, in the years following the pandemic, Wendy's has made a concerted effort to expand its breakfast menu with a range of new sandwiches with egg in them and sweet items such as the French Toast Sticks. The goal was both to stand out from competitors with a wider breakfast menu and increase traffic to its stores during early-morning hours.

Wendy's deal comes after controversy over 'dynamic pricing'

But last month, the chain known for the square shape of its burger patties ignited controversy after saying that it wanted to introduce "dynamic pricing" in which the cost of many of the items on its menu will vary depending on the time of day. In an earnings call, chief executive Kirk Tanner said that electronic billboards would allow restaurants to display various deals and promotions during slower times in the early morning and late at night.

Outcry was swift and Wendy's ended up walking back its plans with words that they were "misconstrued" as an intent to surge prices during its most popular periods.

While the company issued a statement saying that any changes were meant as "discounts and value offers" during quiet periods rather than raised prices during busy ones, the reputational damage was already done since many saw the clarification as another way to obfuscate its pricing model.

"We said these menuboards would give us more flexibility to change the display of featured items," Wendy's said in its statement. "This was misconstrued in some media reports as an intent to raise prices when demand is highest at our restaurants."

The Daylight Savings Time promotion, in turn, is also a way to demonstrate the kinds of deals Wendy's wants to promote in its stores without putting up full-sized advertising or posters for what is only relevant for a few days.

Related: Veteran fund manager picks favorite stocks for 2024

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Inside The Most Ridiculous Jobs Report In Recent History: Record 1.2 Million Immigrant Jobs Added In One Month

Inside The Most Ridiculous Jobs Report In Recent History: Record 1.2 Million Immigrant Jobs Added In One Month

Last month we though that the…



Inside The Most Ridiculous Jobs Report In Recent History: Record 1.2 Million Immigrant Jobs Added In One Month

Last month we though that the January jobs report was the "most ridiculous in recent history" but, boy, were we wrong because this morning the Biden department of goalseeked propaganda (aka BLS) published the February jobs report, and holy crap was that something else. Even Goebbels would blush. 

What happened? Let's take a closer look.

On the surface, it was (almost) another blockbuster jobs report, certainly one which nobody expected, or rather just one bank out of 76 expected. Starting at the top, the BLS reported that in February the US unexpectedly added 275K jobs, with just one research analyst (from Dai-Ichi Research) expecting a higher number.

Some context: after last month's record 4-sigma beat, today's print was "only" 3 sigma higher than estimates. Needless to say, two multiple sigma beats in a row used to only happen in the USSR... and now in the US, apparently.

Before we go any further, a quick note on what last month we said was "the most ridiculous jobs report in recent history": it appears the BLS read our comments and decided to stop beclowing itself. It did that by slashing last month's ridiculous print by over a third, and revising what was originally reported as a massive 353K beat to just 229K,  a 124K revision, which was the biggest one-month negative revision in two years!

Of course, that does not mean that this month's jobs print won't be revised lower: it will be, and not just that month but every other month until the November election because that's the only tool left in the Biden admin's box: pretend the economic and jobs are strong, then revise them sharply lower the next month, something we pointed out first last summer and which has not failed to disappoint once.

To be fair, not every aspect of the jobs report was stellar (after all, the BLS had to give it some vague credibility). Take the unemployment rate, after flatlining between 3.4% and 3.8% for two years - and thus denying expectations from Sahm's Rule that a recession may have already started - in February the unemployment rate unexpectedly jumped to 3.9%, the highest since February 2022 (with Black unemployment spiking by 0.3% to 5.6%, an indicator which the Biden admin will quickly slam as widespread economic racism or something).

And then there were average hourly earnings, which after surging 0.6% MoM in January (since revised to 0.5%) and spooking markets that wage growth is so hot, the Fed will have no choice but to delay cuts, in February the number tumbled to just 0.1%, the lowest in two years...

... for one simple reason: last month's average wage surge had nothing to do with actual wages, and everything to do with the BLS estimate of hours worked (which is the denominator in the average wage calculation) which last month tumbled to just 34.1 (we were led to believe) the lowest since the covid pandemic...

... but has since been revised higher while the February print rose even more, to 34.3, hence why the latest average wage data was once again a product not of wages going up, but of how long Americans worked in any weekly period, in this case higher from 34.1 to 34.3, an increase which has a major impact on the average calculation.

While the above data points were examples of some latent weakness in the latest report, perhaps meant to give it a sheen of veracity, it was everything else in the report that was a problem starting with the BLS's latest choice of seasonal adjustments (after last month's wholesale revision), which have gone from merely laughable to full clownshow, as the following comparison between the monthly change in BLS and ADP payrolls shows. The trend is clear: the Biden admin numbers are now clearly rising even as the impartial ADP (which directly logs employment numbers at the company level and is far more accurate), shows an accelerating slowdown.

But it's more than just the Biden admin hanging its "success" on seasonal adjustments: when one digs deeper inside the jobs report, all sorts of ugly things emerge... such as the growing unprecedented divergence between the Establishment (payrolls) survey and much more accurate Household (actual employment) survey. To wit, while in January the BLS claims 275K payrolls were added, the Household survey found that the number of actually employed workers dropped for the third straight month (and 4 in the past 5), this time by 184K (from 161.152K to 160.968K).

This means that while the Payrolls series hits new all time highs every month since December 2020 (when according to the BLS the US had its last month of payrolls losses), the level of Employment has not budged in the past year. Worse, as shown in the chart below, such a gaping divergence has opened between the two series in the past 4 years, that the number of Employed workers would need to soar by 9 million (!) to catch up to what Payrolls claims is the employment situation.

There's more: shifting from a quantitative to a qualitative assessment, reveals just how ugly the composition of "new jobs" has been. Consider this: the BLS reports that in February 2024, the US had 132.9 million full-time jobs and 27.9 million part-time jobs. Well, that's great... until you look back one year and find that in February 2023 the US had 133.2 million full-time jobs, or more than it does one year later! And yes, all the job growth since then has been in part-time jobs, which have increased by 921K since February 2023 (from 27.020 million to 27.941 million).

Here is a summary of the labor composition in the past year: all the new jobs have been part-time jobs!

But wait there's even more, because now that the primary season is over and we enter the heart of election season and political talking points will be thrown around left and right, especially in the context of the immigration crisis created intentionally by the Biden administration which is hoping to import millions of new Democratic voters (maybe the US can hold the presidential election in Honduras or Guatemala, after all it is their citizens that will be illegally casting the key votes in November), what we find is that in February, the number of native-born workers tumbled again, sliding by a massive 560K to just 129.807 million. Add to this the December data, and we get a near-record 2.4 million plunge in native-born workers in just the past 3 months (only the covid crash was worse)!

The offset? A record 1.2 million foreign-born (read immigrants, both legal and illegal but mostly illegal) workers added in February!

Said otherwise, not only has all job creation in the past 6 years has been exclusively for foreign-born workers...

Source: St Louis Fed FRED Native Born and Foreign Born

... but there has been zero job-creation for native born workers since June 2018!

This is a huge issue - especially at a time of an illegal alien flood at the southwest border...

... and is about to become a huge political scandal, because once the inevitable recession finally hits, there will be millions of furious unemployed Americans demanding a more accurate explanation for what happened - i.e., the illegal immigration floodgates that were opened by the Biden admin.

Which is also why Biden's handlers will do everything in their power to insure there is no official recession before November... and why after the election is over, all economic hell will finally break loose. Until then, however, expect the jobs numbers to get even more ridiculous.

Tyler Durden Fri, 03/08/2024 - 13:30

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Shipping company files surprise Chapter 7 bankruptcy, liquidation

While demand for trucking has increased, so have costs and competition, which have forced a number of players to close.



The U.S. economy is built on trucks.

As a nation we have relatively limited train assets, and while in recent years planes have played an expanded role in moving goods, trucks still represent the backbone of how everything — food, gasoline, commodities, and pretty much anything else — moves around the country.

Related: Fast-food chain closes more stores after Chapter 11 bankruptcy

"Trucks moved 61.1% of the tonnage and 64.9% of the value of these shipments. The average shipment by truck was 63 miles compared to an average of 640 miles by rail," according to the U.S. Bureau of Transportation Statistics 2023 numbers.

But running a trucking company has been tricky because the largest players have economies of scale that smaller operators don't. That puts any trucking company that's not a massive player very sensitive to increases in gas prices or drops in freight rates.

And that in turn has led a number of trucking companies, including Yellow Freight, the third-largest less-than-truckload operator; J.J. & Sons Logistics, Meadow Lark, and Boateng Logistics, to close while freight brokerage Convoy shut down in October.

Aside from Convoy, none of these brands are household names. but with the demand for trucking increasing, every company that goes out of business puts more pressure on those that remain, which contributes to increased prices.

Demand for trucking has continued to increase.

Image source: Shutterstock

Another freight company closes and plans to liquidate

Not every bankruptcy filing explains why a company has gone out of business. In the trucking industry, multiple recent Chapter 7 bankruptcies have been tied to lawsuits that pushed otherwise successful companies into insolvency.

In the case of TBL Logistics, a Virginia-based national freight company, its Feb. 29 bankruptcy filing in U.S. Bankruptcy Court for the Western District of Virginia appears to be death by too much debt.

"In its filing, TBL Logistics listed its assets and liabilities as between $1 million and $10 million. The company stated that it has up to 49 creditors and maintains that no funds will be available for unsecured creditors once it pays administrative fees," Freightwaves reported.

The company's owners, Christopher and Melinda Bradner, did not respond to the website's request for comment.

Before it closed, TBL Logistics specialized in refrigerated and oversized loads. The company described its business on its website.

"TBL Logistics is a non-asset-based third-party logistics freight broker company providing reliable and efficient transportation solutions, management, and storage for businesses of all sizes. With our extensive network of carriers and industry expertise, we streamline the shipping process, ensuring your goods reach their destination safely and on time."

The world has a truck-driver shortage

The covid pandemic forced companies to consider their supply chain in ways they never had to before. Increased demand showed the weakness in the trucking industry and drew attention to how difficult life for truck drivers can be.

That was an issue HBO's John Oliver highlighted on his "Last Week Tonight" show in October 2022. In the episode, the host suggested that the U.S. would basically start to starve if the trucking industry shut down for three days.

"Sorry, three days, every produce department in America would go from a fully stocked market to an all-you-can-eat raccoon buffet," he said. "So it’s no wonder trucking’s a huge industry, with more than 3.5 million people in America working as drivers, from port truckers who bring goods off ships to railyards and warehouses, to long-haul truckers who move them across the country, to 'last-mile' drivers, who take care of local delivery." 

The show highlighted how many truck drivers face low pay, difficult working conditions and, in many cases, crushing debt.

"Hundreds of thousands of people become truck drivers every year. But hundreds of thousands also quit. Job turnover for truckers averages over 100%, and at some companies it’s as high as 300%, meaning they’re hiring three people for a single job over the course of a year. And when a field this important has a level of job satisfaction that low, it sure seems like there’s a huge problem," Oliver shared.

The truck-driver shortage is not just a U.S. problem; it's a global issue, according to

"IRU’s 2023 driver shortage report has found that over three million truck driver jobs are unfilled, or 7% of total positions, in 36 countries studied," the global transportation trade association reported. 

"With the huge gap between young and old drivers growing, it will get much worse over the next five years without significant action."

Related: Veteran fund manager picks favorite stocks for 2024

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