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Futures Extend Slide, European Markets Drop On Growth, Tapering Fears

Futures Extend Slide, European Markets Drop On Growth, Tapering Fears

World stocks receded from the previous session’s record highs, European stocks were headed for the biggest decline in almost three weeks and US futures were set for a…



Futures Extend Slide, European Markets Drop On Growth, Tapering Fears

World stocks receded from the previous session’s record highs, European stocks were headed for the biggest decline in almost three weeks and US futures were set for a third straight day of losses on Wednesday with the global growth outlook coming under increasing pressure while the dollar hit one-week highs and 10Y yields dipped as investors reduced exposure to riskier assets. S&P futures briefly fell 0.5%, tipping below 4,500 before, recovering losses after the S&P 500 fell 0.34% on Tuesday, while Dow futures were flat and Nasdaq emini futs were fractionally in the red as banks from Morgan Stanley to Citigroup turned cautious on US equities.

The S&P 500 and Dow Jones indexes closed lower on Tuesday, but the Nasdaq edged up to an all-time high after shares of Apple and Netflix hit record levels. US stocks have come under increasing pressure in recent days as investors have turned increasingly cautious following Friday’s weak August payrolls data and uncertainty over tapering. 

In the premarket, cryptocurrency-exposed stocks drop as Bitcoin falls along with other digital currencies after Coinbase said it received a warning from the Securities and Exchange Commission. Future Fintech (FTFT) falls 4.1% and Coinbase (COIN) declines 2.2%, while Marathon Digital (MARA) loses 1.3%. FAAMG gigatechs such as Microsoft, Amazon, Facebook and Alphabet Inc fell between 0.1% and 0.3% in premarket trading. PayPal rose 0.7% after it said it would acquire Japanese buy now, pay later (BNPL) firm Paidy in a $2.7 billion largely cash deal. Tesla edged 0.6% higher after the China Passenger Car Association (CPCA) said the electric vehicle maker sold 44,264 China-made vehicles in August and reported a jump on local deliveries.  Here are some of the other big movers today:

  • Coty (COTY) falls 6.8% after announcing the start to offer Class A stock by KKR Rainbow Aggregator LP.
  • India Globalization Capital (IGC) jumps 18% after the company says its cannabis-based drug for Alzheimer’s was safe and well tolerated in an early-stage clinical trial on 12 patients.
  • Kadmon (KDMN) surges 78% after Sanofi’s $1.9 billion cash acquisition of the U.S. biotech.
  • Nio Inc. (NIO) slides 3.1% after announcing a $2 billion at-the-market offering postmarket Tuesday. Its peers like Li Auto (LI) and Xpeng (XPEV) also declines by 0.5% and 0.8% respectively.
  • UiPath (PATH) slips 7% after sales forecast trails some estimates.

And then there is tapering: despite the weakest jobs report in seven months on Friday, St. Louis Fed President James Bullard said in an interview with the Financial Times on Wednesday that the Fed should move forward with a plan to taper QE despite the slowdown in job growth.

"Everything is tapering, tapering, tapering. We are looking at every single central bank - when is the next one?” said Eddie Cheng, head of international multi-asset portfolio management at Wells Fargo Asset Management, though he added: “The Delta variant impact is still running like a wild card”.

MSCI’s world equity index fell 0.17% after seven consecutive days of gains.

European equities slumped, with the Euro Stoxx 50 dropping as much as 1.5%, and the Stoxx 600 gauge headed for the biggest decline in almost three week; the DAX and SMI lag. Autos, industrial and media names are the weakest sectors with travel and retail the sole sectors in the green. Britain’s FTSE 100 struck two-week lows and were down 0.56%. European traders were focused on whether the European Central Bank will this week also begin to scale back its bond purchase program.

“What is likely ahead of us is a continued but temporary deceleration of economic activity of one to three months which likely started in August,” said Sebastien Galy, senior macro strategist at Nordea Asset Management.  "Fears that central banks might start to taper their asset purchases seems to have knocked away a little confidence, particularly given tomorrow’s ECB decision where many expect we’ll begin to see the start of that process, not least with inflation there running at its highest levels in almost a decade,” Deutsche Bank analysts said in a note. 

Here are some of the biggest European movers today:

  • B&M shares gain as much as 5.9% as it says revenue in the year to date has been broadly in line with market expectations, though gross margins have been stronger than originally anticipated in the B&M U.K. fascia business.
  • Dunelm rises as much as 11% after its FY profit topped estimates and it announced a special dividend, with analysts saying the payout points to a more confident outlook for the home furnishings retailer.
  • EasyJet shares rise as much as 3.8% and Ryanair shares up by as much as 2.3% after the Telegraph reported the U.K. may scrap its Green and Amber warning lists for foreign travel next month
  • Siemens Gamesa falls by as much as 7.5% and Siemens Energy drops by as much as 6.1% after JPMorgan downgrades both stocks. Other wind- energy stocks also fell including Orsted, down as much as 3.6%, after UBS cut its rating to neutral.
  • InPost falls as much as 4.2% despite its 2Q results getting a good reception from analysts, who noted its record margins and strong growth in parcel volumes.
  • Interparfums shares sink as much as 7.8% as its sales forecast disappointed and branded fragrances maker was downgraded by both Oddo and Midcap Partners.

Earlier in the session, the MSCI Asia Pacific Index slipped 0.1% while Japan’s Topix index closed 0.8% higher, with the rally driven by Japanese Prime Minister Yoshihide Suga’s decision to effectively step down. Asian stocks retreated, led by benchmarks in Korea and Taiwan, as investors awaited fresh catalysts following an eight-day rally. The MSCI Asia Pacific Index fell as much as 0.4%, before paring much of those losses. The regional benchmark is up by more than 8% from its lowest level for this year, marked on Aug. 20. A group of materials firms declined the most, offsetting gains in utilities. Regional equities have been in recovery since late August as concern over any abrupt tapering by the U.S. Federal Reserve abated and a selloff in Chinese equities eased. Still, stocks have been whipsawed by the rise and fall of daily virus cases in some countries and attempts by China to regulate a wide range of businesses.  Chinese blue chips dropped 0.41%, weighed down by recent soft data in the world’s second-biggest economy.

“A window remains for positive equity returns before the Fed raises rates in 2023 and a counter-trend dollar rally starts,” Jefferies strategist including Darby wrote in a note. “But a lot depends on further easing by China and better S.E. Asia vaccine roll-outs. The good news is that global trade is booming and an IT spending cycle is unfolding.” Singapore’s Straits Times Index fell more than 1% after local Covid-19 infections jumped to the highest in more than a year. South Korea’s Kospi was driven lower by a plunge in Kakao and Naver, after prominent lawmakers warned internet giants against pursuing profits and abusing their market dominance.

Japan outperformed as investors continued to be cheered by prospects for a new government and a recovery from the pandemic, with the Nikkei 225 Stock Average’s rally bolstered by gains in SoftBank. The Nikkei 225 Stock Average climbed 0.9% to 30,181.21, its highest closing level since March 18. The eight-day rise marks the blue-chip gauge’s longest win streak since November. SoftBank was the largest contributor to the Nikkei 225’s advance, rising for a second day on a deal that may set up a buyback for the Japanese tech giant.  Telecommunications providers and electronics makers were the biggest boosts to the Topix, which rose 0.8% to the highest level since August 1990. Trading volume on the first section of the Tokyo Stock Exchange was 3.7 trillion yen ($33.3 billion), the most since May 27. Friday marks the expiration of options and futures contracts in the so-called “special quotation” settlement. The event often leads to speculative trading in the run-up and heavy volumes on the day, especially in quarter-ending months like September. “Investors are eying positive change in Japanese politics, but they are also looking to the major SQ on Friday -- foreign investors that had sold futures are now trying to buy back positions as the cash market has jumped,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co. “Should the Nikkei 225 exceed the SQ price Friday morning, it would indicate that the market remains firm.”

Australian stocks declined as miners, consumer staples tumble. The S&P/ASX 200 index fell 0.2% to close at 7,512.00 as materials and consumer staples stocks weighed on the benchmark. Eagers was the worst performer, retreating from a record high set Tuesday. Macquarie was among the top performers after issuing positive 1H guidance. In New Zealand, the S&P/NZX 50 index fell 1% to 13,193.01.

In rates, 10Y Yields fell to 1.3512% compared to a U.S. close of 1.371% on Tuesday, retreating from this week’s eight-week highs in a quiet session. Germany’s 10-year Bund yield also hit eight-week highs before edging lower to -0.331%. Peripheral spreads widen a touch with the belly of the Italian curve widening ~1.5bps to Germany.

In FX, USD and haven currencies are modestly bid given the weakness in stocks. The dollar hit a one-week high against the single currency and was trading at $1.1819. It also reached a one-week peak against an index of currencies, recovering from recent five-week lows. It was trading at 92.67 on the index, up 0.15%. The Bloomberg dollar index trades near best levels for the week. CAD and SEK are the weakest in G-10. Turkish lira snaps through 8.40 to lag EMFX peers. The pound weakened for a third day, its longest losing streak in a month, ahead of a Parliament vote on a government tax package that seeks to trim a U.K. budget deficit swollen by pandemic spending; Bank of England Governor Andrew Bailey’s comments will also be in focus as he faces the Treasury Select Committee on Wednesday. The Australian dollar was the worst G-10 performer while Australia’s bonds opened lower following Treasuries and held losses through the day; New Zealand peers also declined following a solid milk auction. The yen touched its weakest level in almost a month before rebounding as risk sentiment soured.

Bitcoin paused for breath after plunging 17% on Monday to a low of around $43,000 before recovering. It was last at $46,552, down 0.7%.

In commodities, crude futures pushed higher, returning toward Asia’s best levels. WTI jumped 1.38% to $69.30 a barrel and Brent crude rose 1.14% to $72.50 per barrel, with prices supported by a slow restart to production in the Gulf of Mexico after Hurricane Ida hit the region. Base metals were mixed: LME copper underperforms, snapping through $9,300/MT to trade down as much as 1.5%.  Gold gained 0.17% to $1796.90 per ounce in line with the risk-averse mood and just below the psychologically key $1,800 level which it fell through in the previous session.

Looking at the day ahead now, and data releases include US job openings and consumer credit for July, alongside Italian retail sales for July as well. From central banks, we’ll get the Bank of Canada’s latest rate decision, the Federal Reserve will be releasing their Beige Book, and speakers include the BoE’s Bailey, Broadbent, Ramsden and Tenreyro, and the Fed’s Williams and Kaplan.

Market Wrap

  • S&P 500 futures down 0.4% to 4,499.75
  • STOXX Europe 600 down 1.2% to 467.39
  • MXAP down 0.2% to 206.88
  • MXAPJ down 0.6% to 671.33
  • Nikkei up 0.9% to 30,181.21
  • Topix up 0.8% to 2,079.61
  • Hang Seng Index down 0.1% to 26,320.93
  • Shanghai Composite little changed at 3,675.19
  • Sensex down 0.3% to 58,082.81
  • Australia S&P/ASX 200 down 0.2% to 7,512.00
  • Kospi down 0.8% to 3,162.99
  • Brent Futures up 0.2% to $71.83/bbl
  • Gold spot up 0.2% to $1,798.76
  • U.S. Dollar Index up 0.20% to 92.70
  • German 10Y yield fell 1.0 bps to -0.332%
  • Euro down 0.2% to $1.1820
  • Brent Futures up 0.2% to $71.83/bbl

Top Overnight News courtesy of Bloomberg

  • “There is the possibility that we may be able to normalize monetary policy sooner than most financial market experts expect,” European Central Bank Governing Council member Robert Holzmann says in Eurofi Magazine
  • “Pandemic measures, temporary in their nature, will be phased out eventually, but the current situation still calls for monetary policy to remain highly accommodative,” European Central Bank Governing Council member Bostjan Vasle says in Eurofi Magazine
  • The Federal Reserve should press ahead with a plan to taper its massive pandemic stimulus program despite weak U.S. jobs growth last month, the Financial Times reports St. Louis Fed President James Bullard as saying in an interview
  • Jitters in the Chinese high-yield dollar bond market are prompting investors to chase quality debt in Asia, pushing down spreads on investment-grade notes to pre-pandemic levels

A more detailed look at global markets courtesy of Newsquawk

Asia-Pac equity markets followed suit from the lacklustre performance in the US where sentiment was subdued on return from the Labor Day weekend with weakness seen in cyclicals. ASX 200 (-0.2%) traded negative as the ongoing COVID-19 disruptions continued to take their toll on the nation’s stock markets and with gold miners frontrunning the declines after the precious metal recently slipped beneath the 1800/oz level, although losses for the index were stemmed with the top-weighted financial sector underpinned by the higher yield environment. Nikkei 225 (+0.9%) recovered from opening losses, helped by stronger than expected GDP revisions for Q2 and although the government is likely to extend COVID emergency measures to the end of this month, reports added that it will gradually ease COVID-19 restrictions beginning in October. Furthermore, SoftBank was the biggest gainer in the Japanese benchmark with its shares briefly higher by double-digit percentages after the recent share-swap agreement with Deutsche Telekom fuelled speculation it could lead to a share buyback. Hang Seng (-0.1%) and Shanghai Comp. (Unch) traded indecisively amid ongoing regulatory and debt concerns with reports noting that China will increase transparency of policies and will crackdown to better support companies in competition, while Evergrande shares were choppy after Fitch downgraded its credit rating from CCC+ to CC which reflects the view that a default of some type seems probable. Finally, 10yr JGBs declined following the bear steepening in US where bonds were also pressured by increased issuer activity and with demand dented by the GDP-uplifted mood in Japanese stocks, although the pressure in JGBs was cushioned by the BoJ's presence in the market for more than JPY 1tln of government bonds.

Top Asian News

  • Gold Edges Up as Bond Yields Fall After Biggest Drop in a Month
  • Tesla Delivers 44,264 China-Made Cars in Aug., up 34.3% M/m
  • China Aug. Retail Passenger Vehicle Sales Fall 14.7% Y/y: PCA
  • China Praises Hong Kong Arrests of Tiananmen Vigil Organizers

Bourses in Europe saw losses intensify shortly after the cash open and have since trickled lower and stabilised near lows. (Euro Stoxx 50 -0.7%; Stoxx 600 -0.8%). The downside across Europe also reverberated across the pond but to a lesser extent and with the effects fleeting. The ES (-0.1%) briefly dipped below 4,500, the YM (-0.1%) fell below 35k, whilst the RTY (-0.1%) initially narrowly underperformed, and the NQ (-0.1%) is cushioned by yields. There is no discernible catalyst behind the losses across equities, and as to why sentiment deteriorated from the lacklustre APAC handover. That being said, the rest of the week is packed with central bank updates, including tomorrow’s ECB (full previous in the Newsquawk Research Suite), but before that, several Fed speakers. On that note, Fed’s Bullard (2022 voter) was the first official to speak post-NFP and held onto his hawkish stance by stating the Fed should proceed with tapering despite the weak US jobs data, while he also dismissed concerns about the rebound in the labour market was faltering and said there is plenty of demand for workers – it will be interesting to see how aligned other Fed officials are to this view. Back to Europe, the majors see broad-based losses with no standout performer. Sectors are all in the red and do not portray a clear theme nor bias. Travel & Leisure is among one of the better performers, with some downside potentially alleviated by reports that the UK travel traffic light system could be tweaked under plans drawn up by ministers, which could mean the red category will still require hotel quarantine, but amber and green categories will disappear, and travel will be determined by vaccination status as opposed to country, according to the Telegraph. Further for travel, Ryanair (+1.7%) CEO noted the Co. will be operating at 90% of pre-covid volumes by the Christmas period but will have lower pricing, whilst summer 2022 is expected to be “very strong”. Ryanair also guided 90-100mln passengers for FY 2022, and added that the trend is moving towards to upper end of that range. Moving on, Auto & Parts, alongside Banks, reside at the foot of the bunch, the former weighed on by the ongoing chip shortage and Stellantis’ (-2.3%) losses after Dongfeng filed to sell a 1.15% stake in the Franco-Italian carmaker. Autos may also feel headwinds from the Chinese retail passenger vehicle sales declining almost 15% Y/Y, although Tesla (Unch pre-market) Chinese-made cars sales rose 34.3% in the period. In terms of individual movers and shakers, Smiths Group (+2.1%) resides as one of the winners after divesting Smiths Medical for USD 2.7bln.

Top European News

  • Morrison Seeks Auction to Decide Between Fortress, CD&R Bids
  • Smiths Group to Sell Medical Unit to ICU for $2.35 Billion (1)
  • Deutsche Bank Chief Blames Europe for Keeping Banks Small
  • Gold Edges Up as Bond Yields Fall After Biggest Drop in a Month

In FX, the Dollar index has extended its recovery from post-NFP lows after a shallower a brief retreat to 92.472 and is now targeting loftier upside chart levels ahead of last Wednesday’s 92.790 peak from a 92.732 high, thus far. Latest gains are broad based, but not universal as the Greenback’s main safe-haven rivals are in demand against the backdrop of deteriorating risk sentiment in equities especially. However, the Buck is also up independently or with some fundamental impetus following comments from Fed’s Bullard as the first official to respond to the disappointing headline payrolls number, and discounting the big miss on grounds that there is ample demand for staff, so tapering should go ahead. The impending JOLTS data may well back him up, while Williams and Kaplan are scheduled either side of the Beige Book.

  • JPY/CHF - As noted above, the Yen and Franc are ‘benefiting’ from risk-off positioning to a degree, as Usd/Jpy eases back towards the low 110.00 area from around 110.45 and Usd/Chf from just over 0.9200, while Eur/Jpy and Eur/Chf retreat from overnight peaks as well in classic safety flight fashion, albeit not extreme.
  • CAD/AUD - The major casualties amidst aversion and relative strength in their US peer, but the Loonie also looking increasingly nervous ahead of the BoC policy meeting that might err on the side of caution given the spread of the Delta variant. Usd/Cad is hovering near the top of a 1.2707-1.2626 range as implied volatility picks up to price in a 68 pip break-even for the event that coincides with August’s Ivey Canadian PMIs - full BoC preview available via the Research Suite and to be posted on the Headline Feed before 15.00BST. Elsewhere, the Aussie is now more than a full big figure under Tuesday's post-RBA apex against the backdrop of weak underlying commodities, but keeping its head just over 0.7350.
  • EUR/GBP/NZD - All conceding more ground as the Greenback revival gathers momentum, with the Euro currently in the bottom half of approximate 1.1800-1.1900 m-t-d extremes and looking for fresh guidance from the ECB on Thursday, while the Pound remains depressed close to 1.3750 having lost 1.3800+ status yesterday following confirmation of higher taxes to fund NHS spending from UK PM Johnson and now awaiting BoE speakers at the TSC for any fresh policy insight. Back down under, the Kiwi has Q2 NZ manufacturing sales on the radar as its pivots 0.7100 and 1.0400 vs its US and Antipodean counterparts respectively.
  • SCANDI/EM - The Nok and Sek are both softer as the general market tone sours, but the latter is holding above 10.2000 and does not seem likely to trigger decent option expiry interest at the 10.2500 strike (1 bn) against the Eur at this stage. Conversely, the Try appears in danger of further depreciation and a test of 8.5000 vs the increasingly buoyant Usd after candid remarks from the CBRT Governor who conceded that there is room for improvement in terms of Turkey’s inflation rate, reserves situation and overall risk premium, rather than his contention that policy is tight enough to reduce inflation in Q4. On that note, CPI is now 25 bp higher than the benchmark rate, at 19.25%.

In commodities, WTI and Brent front-month futures have been consolidating throughout most of the European morning following the prior session’s losses, and on balance, the benchmarks did not see much follow-through from this morning’s losses across stocks, although WTI Oct and Brent Nov have subsequently been gaining heading into the US open, with the former back above USD 69/bbl and the later inching closer towards USD 72.50/bbl. News flow for the complex has been light, but over in the Gulf of Mexico, participants are cognizant of a potential cyclone formation in the next 48 hours for a system located over the south-central GoM, just as the BSEE reports the slow resumption of oil and gas operations, with the latest metrics suggesting 79% of offshore production still shuttered (vs 84% D/D). Over to the demand side, Qatar narrowed its price differentials to Oman/Dubai for Marine Crude and Land Crude in lockstep with Saudi’s lowering of its Asia OSPs. Elsewhere, the Ryanair CEO hit the wires today and suggested its volumes will be around 90% of pre-pandemic levels around Christmas, whilst holding a robust outlook for next year, and separate reports also stated that the UK traffic light system would be tweaked whereby the “amber” and “green” categories will shift to a vaccination-based system – which in turn feeds into jet fuel demand. Ahead, the weekly Private Inventories will be released alter today on account of Monday's US Labor Day Holiday, with the DoEs released tomorrow. Over to metals, spot gold and silver trade flat and remain contained to APAC ranges in the absence of a fresh macro catalyst and ahead of a slew of central bank updates. Spot gold, during European trade, remained under USD 1,800/oz and sandwiched between its 50 and 21 DMAs at USD 1,797.70/oz and USD 1,1795/oz. Meanwhile, LME copper has remained subdued around the USD 9,250/t mark, with China’s economic slowdown and base metal crackdown cited by traders. Elsewhere, China’s coke futures and coking coal swung between gains and losses after the market regulators announced an increase in transaction fees for actively -traded contracts.

US Event Calendar

  • 1:10pm: Fed’s Williams Discusses Economic Outlook
  • 2pm: U.S. Federal Reserve Releases Beige Book
  • 6pm: Fed’s Kaplan Holds Virtual Townhall

DB's Jim Reid concludes the overnight wrap

Today the tears will be flowing at home as the kids all go back to school. Actually the twins start school officially today (Reception) after a year in the nursery. How time flies. It will be hard to judge how many of my wife’s tears will be emotional due to them starting school and how much will be an immense release of joy to be able to pass them onto someone else for a few hours a day as all three have been a big handful of late. Constantly fighting, shouting and screaming. She said she is going to get home from dropping them off today and she’s going to sit in a quiet dark room for 2 hours and close her eyes and do absolutely nothing.

As US markets got back to school themselves after Monday’s holiday, yesterday witnessed a selloff across multiple asset classes as markets took a break from record highs. In some ways the moves were surprising, since yesterday’s data releases actually surpassed expectations, whilst the global picture on the pandemic is continuing to brighten for now. However, fears that central banks might start to taper their asset purchases seems to have knocked away a little confidence, particularly given tomorrow’s ECB decision where many expect we’ll begin to see the start of that process, not least with inflation there running at its highest levels in almost a decade.

Those tapering fears were evident in sovereign bond markets, which sold off strongly on both sides of the Atlantic. Yields on 10yr Treasuries ended the session up +5.1bps at 1.37%, their highest closing level in nearly 2 months. Yields were propelled by both higher inflation expectations (+2.4bps) and real rates (+2.6), as the latter closed above -1% for the first time since mid-July. There was also a noticeable curve steepening, with the 2s10s slope up +3.7bps. Over in Europe there were similarly noticeable rises, with yields on 10yr bunds up +4.5bps to their highest levels in almost 2 months as well, whilst other 10yr yields including gilts (+4.3bps), OATs (+5.1bps) and BTPs (+6.3bps) followed suit.

Staying with yields, I did a CoTD (helped by Craig Nicol) yesterday showing that 85% of US HY now has a yield below CPI. It’s never been above 10% prior to this year. To outstrip inflation you now have to own weak single-Bs or below. Clearly inflation will likely dip from here but even at 3%, 35% of US HY will yield below inflation. See the CoTD here and if you want to be added to the daily list please email

Much like bond markets, equities fell back yesterday, with the S&P 500 (-0.34%) seeing a small but broad-based decline that saw 411 of its members lose ground on the day, whilst the Dow Jones (-0.76%) and Europe’s STOXX 600 (-0.49%) also dipped. Tech stocks were a relative outperformer, with the NASDAQ (+0.07%) managing to eke out a modest gain, though megacap tech stocks put in a strong performance, as the FANG+ index rose +1.40% to another all-time high, aided by sizeable gains for Netflix (+2.74%) and Tesla (+2.64%). On the other hand, bond proxy sectors such as utilities (-1.37%) and real estate (-1.13%) were among the worst performers in the US. Utility companies (-0.90%) also lagged in Europe, with chemical (-1.16%) and healthcare (-1.02%) stocks the other main underperformers. Meanwhile, the souring risk sentiment sent the US dollar higher for the first time in 6 sessions as the greenback added +0.52% - its largest one day gain in 3 weeks.

Overnight in Asia, the Nikkei is on course of its longest winning streak since November 2020 as it is up +0.49% marking the eighth consecutive gain. Other regional indices are generally trading weaker though with the Hang Seng -0.52%, CSI (-0.25%), Kospi (-0.86%) and Asx (-0.37%) all down. The Shanghai Comp (+0.07%) is trading broadly flat. In terms of overnight data releases, Japan’s final 2Q annualised GDP printed at +1.9% qoq vs. +1.6% qoq expected.

In other overnight news, Bloomberg reported that the Biden Administration is planning to distribute one-time $600 pandemic relief payments to US meatpacking and farm workers. The move expands an agriculture aid program which sets aside as much as $700 mn of aid, to be distributed through state agencies, tribal entities and non-profit groups. Elsewhere, yields on 10y USTs are down -1.2bps to 1.362%. Futures on the S&P 500 (-0.02%) are flattish while those on the Stoxx 50 are down -0.25%.

Turning to the German election, our colleagues in Germany put out a comprehensive slide pack yesterday (link here) looking at the election and its implications ahead of polling day on September 26. Importantly, it looks at the most likely coalition options and the policy proposals of the various parties,as well as the mechanics of the German election process. Speaking of that election, the latest Forsa poll created some fresh headlines yesterday by showing Chancellor Merkel’s CDU/CSU bloc falling to an all-time record low of 19%. Obviously it’s just one poll, but it put the SPD on 25%, ahead of the CDU/CSU on 19% and the Greens on 17%. Interestingly, given the margin of error in this specific poll is +/- 2.5%, this means the SPD’s 6-point lead exceeds the normal margin of error, and fits into the pattern of other polls over the last week putting them consistently ahead of the CDU/CSU.

Meanwhile in the UK, there were some important policy announcements, with the government announcing an increase in National Insurance (similar to a payrolls tax) by 1.25 per cent, as well as a rise in the rates of dividend tax by 1.25 per cent, in order to fund higher spending on health and social care. Furthermore, it was confirmed that the pension “triple lock” would be suspended for a year, which sees the state pension rise by whichever is the biggest of inflation, average wage increases or 2.5%. This is because the statistical bounceback in earnings following the pandemic could have led to a massive increase in the state pension, even though underlying earnings have not risen by as much. Finally on UK economic policy, it was announced that a Spending Review would take place alongside an Autumn Budget on October 27 this year. I can’t help thinking the decision on tax is the beginning of a long road ahead of global tax rises given both debt and demographics. The pandemic has likely accelerated such a move given what it’s done to public finances.

Speaking of taxes, those in El Salvador can now use Bitcoin to pay their tax bill as the cryptocurrency became legal tender in the Central American nation yesterday – the first country to make such a move. It was a volatile start, with Bitcoin selling off -17.1% at one point as the government announced it had to disconnect its Bitcoin wallet to solve glitches. President Bukele later said the nation was “buying the dip” and had added roughly $26 million of the cryptocurrency yesterday. While Bitcoin did recover off the lows, it was still down -9.85% yesterday with other major coins such as Ether (-13.58%), XRP (-21.33%), and Litecoin (-20.28%) seeing much larger drops. Bitcoin is pretty stable overnight after all the fun and games yesterday. Overall this remains an experiment that bears watching as the use of bitcoin as true legal tender is probably the largest change to the cryptocurrency market since bitcoin futures were listed in 2017.

Turning to the pandemic, it was confirmed by a White House official that President Biden will outline a plan tomorrow to boost vaccinations and stop the spread of the delta variant. Meanwhile there were also a number of vaccine milestones reached yesterday, with the US reporting that 75% of adults had now received at least a first dose, while the UK reported that 80% of the over-16 population are now fully vaccinated. Elsewhere, the Asahi newspaper reported that the Japanese government is planning to extend the state of emergency in areas including Tokyo to the end of September. The state of emergency was originally scheduled to expire on September 12.

There was some positive data from the Euro Area, where the Q2 GDP reading was revised up to show growth of +2.2% (vs. +2.0% in the flash reading), whilst German industrial production in July grew by a stronger-than-expected +1.0% (vs. +0.8% expected). That said the German ZEW survey for September saw the expectations reading fall to 26.5 (vs. 30.3 expected), which marks the lowest figure for the expectations measure since March 2020.

To the day ahead now, and data releases include US job openings and consumer credit for July, alongside Italian retail sales for July as well. From central banks, we’ll get the Bank of Canada’s latest rate decision, the Federal Reserve will be releasing their Beige Book, and speakers include the BoE’s Bailey, Broadbent, Ramsden and Tenreyro, and the Fed’s Williams and Kaplan.

Tyler Durden Wed, 09/08/2021 - 08:02

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Top 3 commercial real estate REITs to avoid amid a triple whammy

Commercial real estate REITs have been under intense pressure as the industry faces a tripple whammy of high-interest rates, work-from-home, and white-collar…



Commercial real estate REITs have been under intense pressure as the industry faces a tripple whammy of high-interest rates, work-from-home, and white-collar layoffs. On Wednesday, the Fed decided to hike interest rates by 0.25% and signaled that more rate hikes were coming.

And recent data shows that the percentage of people working from home is still sharply higher than where it was during the pandemic. Worse, many large companies like Amazon, Salesforce, and Meta Platforms are laying off thousands of employees. 

Therefore, with debt maturities coming up, there are concerns that the industry will be in trouble for a while. Further, as I wrote in this article on the SCHD ETF, REITs are now competing with cash, with short-term bonds yielding over 5%. So, these are some of the top commercial real estate REITs to avoid during the sell-off. 

Boston Properties 

Boston Properties (NYSE: BXP) stock price has been in a strong sell-off in the past few months. It is trading at $49.63, which is about 63% below the highest level in 2022. This decline is mostly because of the cities where the company operates. 

It is mostly concentrated in places like New York, Los Angeles, San Francisco, and Seattle. These are some of the most troubled cities in the commercial real estate industry. In the most recent earnings statement, the company’s CEO said:

“Many of our clients are experiencing a slowdown in growth or reductions in top line revenue and as a result are focused on cost control including moderating headcount and space use.”

Therefore, in the near term, I suspect that the Boston Properties stock price will continue falling as investors embrace the new normal of high interest rates. In the long term, investors will likely buy the dip as the dividend yield become more attractive.

Kilroy Realty Corporation

Kilroy Realty Corporation’s (NYSE: KRC) stock price has also been in a freefall. It was trading at $29 on Wednesday, sharply lower than its 2022 high of $79. As a result, its forward dividend yield to 7%. 

The stock’s collapse is mostly because of the triple whammy facing the industry and the fact that billions of dollars are coming due. And like Boston Properties, the company’s operations are concentrated in high-risk cities like San Francisco, Seattle, and Austin. 

The only benefit for Kilroy is that it has staggered debt maturities, which meaning that it has more room to adjust its books. As a result, it has no debt maturities until December 2024, as the CEO noted:

“Net debt the fourth quarter annualized EBITDA remains about six times. And we have no debt maturities until December of 2024 and limited interest rate exposure with all of our debt fixed or subject to cap.”

Vordano Realty Trust

Vornado Realty Trust (NYSE: VNO) stock price has dropped lower than most commercial real estate trust stocks. It was trading at $13.80, down by over 72% from the highest point in 2022. This performance is mostly because Vornado is highly concentrated in New York, where occupancy rate remains low. 

Like Kilroy, Vornado has no maturities this year, with the next one coming in mid-2024. Still, because of its focus on New York, Vornado stock will likely continue falling in the near term. The other commercial REIT stock we recently recommended exiting was SL Green. It stock is down by over 10% since the article went live.

The post Top 3 commercial real estate REITs to avoid amid a triple whammy appeared first on Invezz.

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How Fauci’s Wife Used NIH Position To Backstop Her Husband’s Pandemic Health Directives

How Fauci’s Wife Used NIH Position To Backstop Her Husband’s Pandemic Health Directives

Authored by Adam Andrzejewski via OpenTheBooks,




How Fauci's Wife Used NIH Position To Backstop Her Husband’s Pandemic Health Directives

Authored by Adam Andrzejewski via OpenTheBooks,

It's the Washington, D.C. power couple that cost taxpayers nearly $1 million per year.

While Dr. Anthony Fauci gave the nation its pandemic public policy prescriptions, his wife, Dr. Christine Grady, the Chief Bioethicist at Fauci’s employer, the National Institutes of Health (NIH) provided the moral framework.

The Faucis are important to the center-left, because they represent the pinnacle moment of the administrative state – top-down public policy run by an elite group of government scientists.

Conversely, to the center-right, the Faucis represent “the fatal conceit of the elites.” As Noble Laureate economist Friedrich Hayek theorized, the elites are no match for billions of free people acting in their own best interests.


While Tony Fauci was the top paid federal bureaucrat and out-earned the U.S. President at $480,654 per year, Christine Grady, as the chief bioethicist at NIH out-earned the U.S. Vice President ($243,749). When adding 35-percent in benefits, the couple cost taxpayers an estimated nearly $1 million per year.

CHART: Tracking the Fauci household net worth which increased from $7.6 million to $12.6 million between the start of 2020 and the end of 2021. Source: lawsuit production from NIH on Fauci’s financial disclosures.

It’s difficult to know where Anthony Fauci ends and Christine Grady begins. Here’s how Tony Fauci described Grady’s influence on his public policy decisions:

I've benefited greatly from this partnership of overlapping interest and common interest. So, a lot of the things that I do with regard to the development of vaccines, the development of therapies, being involved with outbreaks and pandemics, have ethical overtones to them. I can say that I am very blessed to be living with someone who is very likely, most people think, one of the most outstanding ethicists in the world. To have her in the house -- you know, as a consultant on ethical issues—is pretty advantageous.

So, the Faucis lived a conflict of interest at the breakfast table, the office, and back home around the dinner table. However, NIH has never acknowledged this.

In fact, NIH forced our organization to file two federal lawsuits with the public-interest law firm Judicial Watch as our lawyers to finally bring transparency to the Fauci/Grady job descriptions, conflict of interest documents, financial and ethics disclosures, contracts, and other documents.

Then, NIH slow-walked thousands of pages of production. Yet, no nepotism waivers were produced, no acknowledgement of conflicting interests, and no records documenting violations of federal ethics policy.

Slide developed by Dr. Anthony S. Fauci and presented by Dr. Christine Grady during her NIH presentation COVID Vaccines: Approaches to Vaccine Trial Design November 4 2020. Many of the prescriptions on this slide showed little efficacy in after-action studies. Source: FOIA

While Grady’s work during the pandemic was described as “invaluable” by then-NIH director Francis Collins, the general public knows little about her day-to-day responsibilities. 

An open records request for Grady’s job description reveals she, too, is meant to use her position to influence policy.

Screenshot from Christine Grady’s job description, received. Source: FOIA

Advocating Lockdowns

Dr. Fauci knew that his “draconian policies” on social isolation and economic lockdowns would have “collateral negative consequences,” and admitted Christine Grady was a driving force behind his hardline approach.

In a November 2021 interview with the couple, Fauci said that he gained strength from his wife’s support saying, “background and her experience in really core ethical principles [helped] me to really feel much more comfortable in what I was saying.”

In the interview, Christine Grady described how she mind-mapped national policy with her husband:

"But we've had conversations about the sort of consequences of telling people to stay home and what it would do for the economy. And there were a lot of people in those days that, and still who said, it's ruining the economy. It's much more important to just keep things going and not worry about transmitting virus…I said, that one of the messages should be, how many lives are you willing to sacrifice? And that message would be pretty stark and pretty brutal, but that's really what the trade-off was…And so we've had that kind of conversation over dinner more than once, actually.”

Fauci replied that these conversations “sharpened [his] resolve” to move forward with lockdown policies.

Social isolation was one of the individual sacrifices Grady and Fauci thought were necessary to make on behalf of “public health.”

Vaccine Development & Public Safety

Like her husband, Grady exclusively focused her attention and remarks on vaccine development rather than other potential ways to treat and combat the spread of COVID-19.

One major paper she co-authored in 2020 advocated for vaccines to be distributed under emergency use authorization (EUA), which is how the federal government ultimately proceeded.

In this paper, Grady’s advocacy for vaccines came with a troubling acknowledgement:

 “even with mandated safety monitoring after EUA distribution, it would be difficult or impossible to ascertain vaccine-induced adverse events.”

However, during most of her public presentations, she asserted that vaccines were developed in a fast, but “safe and rigorous” manner. Just one of many examples can be found here.

By November 2021, she said the risk of unknown long-term effects were “not zero” but that “there is a balance between benefiting the public health now versus waiting for all the information we might get.”

Despite these admissions, Grady often said she was “disturbed” by vaccine hesitancy, implying that safety concerns were somehow unreasonable.

Vaccine Mandates

Grady’s stance on vaccine mandates changed radically throughout the pandemic.

In June 2020, a presentation she gave suggested “immunity passports” could cause “discrimination without much overall gain.” A passport system would allow businesses to limit or deny access to those who remained unvaccinated.

Six months later, in January 2021, Grady said, “I do believe that healthcare providers, like everyone else, should have the choice” whether to take the vaccine or not.

But by early October 2021, Grady had decided the choice facing health care workers was a drastically different one: whether to get the vaccine or lose their jobs.

Later that month, she also flipped her position on vaccine passports. What once was a potential source of discrimination was recast as a way to access “social benefits” like restaurants and movie theaters.

It’s a disturbing way to describe Americans free association of movement.   

Grady went on to co-author a March 2022 report approving of social ostracization for the vaccine-hesitant and encouraging employers to pressure their workers:

“While some employers might understandably feel hesitant to pressure employees to get vaccinated, our analysis suggests that it is often ethically acceptable to inform, encourage, strongly encourage, incentivize, and subtly pressure unvaccinated people to benefit them, the organization, and other employees.”

In fewer than two years, Grady had completely altered her assessment of vaccine mandates and widespread restrictions on the behavior of unvaccinated Americans. Gone were concerns about discrimination and freedom of choice.

As Dr. Fauci pushed and pressured the public to get vaccinated for the sake of their neighbors and family members, Grady began considering it ethical to fire workers who did not comply.

Likewise, it became a “social benefit” to get a vaccine passport that would allow people to avoid government restrictions on their free movements.

Screenshot of Tweet – Dr. Fauci and Dr. Grady maskless at the Washington National baseball game in summer 2020 after Fauci threw out the first pitch.

Mask Mandates

While her husband advocated masking and double masking—even when “fully vaccinated”—Dr. Grady consistently backed his position.

In July 2020, during an InStyle interview, Grady answered questions about masking:

Interviewer: Let me ask you, Chris, as a bioethicist, what do you make of this moment we're in, when even a mask has become more of a divisive issue?

Grady: Well, I would say that masks shouldn't be divisive. It's a relatively easy way to protect one's self and others. And so for public health reasons, I think everybody should do it. From an ethical perspective there is always this tension between what you ask people to do that feels like a restriction of their liberty and what is required for public health. And in this case, it seems like a slam dunk. It's not restricting liberty much, and it's very helpful for public health.

Grady was consistent and in November 2021 spoke to the ethical balancing test of public safety versus individual freedom and never viewed mask wearing to be much of an infringement on individual rights:

“There's a classic tension between public health, and individual interests and freedoms. Where there seems to be this conflict to the things that we do to protect the public health, and to protect the population for the common good. Sometimes they are perceived to be, and sometimes they do in small ways, infringe on people's freedoms. There are principles of public health ethics that help you sort out the kinds of interventions that we should use: Things that are effective, that are proportional, where the benefits outweigh the risks that are necessary, that are least infringement possible, that are transparent, that we can publicly justify.

…What's striking to me is that, the kinds of burdens that we've asked people to undertake, like putting on a mask, don't really infringe on one's freedoms very much. They're low burden and they have an effect. They do protect the person who's wearing the mask, as well as the people that are around them.”

A recent credible study on mask wearing during the pandemic argued there is no clear impact of masking on Covid-19 infection rates.

Patients Dying in Isolation

During the pandemic, Grady revealed a default preference for government control over individual rights and responsibilities. Grady was an early proponent of one of the most heinous pandemic polices: patients dying in isolation.

For example, while uncritically accepting dying in isolation as a fact of the pandemic, Grady’s primary solution was to expand funding for health care workers to have access to therapy and other resources to heal from their “moral distress.”

As early as April 2020 Grady said:  

“Because of visiting policies and fear of contagion sometimes when somebody is really sick their family cannot visit them, they can't see them…the stress and the sadness and the isolation on families is and is going to be great.” 

In a November 2020 NIH presentation she called these “lonely” deaths “understandable:”  

"It’s a lonely kind of death, many institutions, understandably have visitor policies which either restrict the number of visitors to one or zero so sometimes people are dying without having their family nearby and that puts an additional burden on the healthcare staff.” 

In one co-authored paper urging healthcare workers to “temper these potentially dehumanizing scenarios with imaginative solutions that do not sacrifice compassion and equal respect on the altars of safety and efficiency.” 

She interrogates the tension between individual freedom and community safety in a book published April 26, 2022, as a co-author proposing a radical “solidarity model” for ethics in healthcare, stating that rather than emphasizing a respect for individuals to make decisions in their own interest:  

“We should recognize that there are times when solidarity takes precedence over individual liberties, and broadening our concept of “respect for persons” means uniting as a profession to protect all those who expect to receive care from nurses in whatever healthcare setting they find themselves.” 

She co-edited a section in the same book arguing this extends to dying in insolation: 

“The solidarity model may apply to restricted family visitation, which generated moral distress for nurses, particularly when patients died without loved ones present…”


As demonstrated by her own words, Grady’s record evinces an understanding of ethics that begs fundamental moral questions, regularly subordinates individuals beneath an amorphous “public health,” and relies on subtle but unacknowledged shifts to retain an alleged moral high ground.

While some of her observations early in the pandemic did show an interest in providing nuance to policymaking—questioning the usefulness of immunity passports and highlighting issues with long-term vaccine effects under a EUA rollout—this quickly gave way to conformity to broader political zeitgeist, painting pushback as ignorant, uncaring, and simply wrong.

By 2021 her public statements never suggested a limit to sacrifices the individual should ethically make on behalf of “public health,” from masking, to taking vaccines, to foregoing family gatherings even at the point of one’s own death.

Both Fauci and Grady made clear that they wish for ethicists like Grady to have more power and more influence over political decision-making.

As Grady remains the chief NIH bioethicist, Americans should ponder: does Grady’s philosophy advance what is “fair” and “just” in public health policy? What does her continued leadership mean for the future of American policy.

Taxpayers compensate Grady generously, and they’re owed full transparency about her role, responsibilities and influence – during the pandemic and into the future.

Note: We reached out to Dr. Christine Grady and NIH for comment. While acknowledging our requests, no statement or comment was received before publication.


Dr. Anthony Fauci: The Highest Paid Employee In The Entire U.S. Federal Government Published January 21, 2021 | Forbes

Dr. Anthony Fauci’s Little Known Biodefense Work. It’s How He Became The Highest Paid Federal Employee. Published October 20, 2021 | Forbes

No, Fauci’s Records Aren’t Available. Why Won’t NIH Immediately Release Them? Published January 12, 2022 | Forbes

Breaking: Fauci’s Net Worth Soared To $12.6 Million During The Pandemic – Up $5 Million (2019-2021). Published September 28, 2022 |

HISTORIC RELEASE: Dr. Anthony Fauci’s Official Work Calendar (November 2019 – March 2020) | Published October 20, 2022 |

ABOUT US – We believe transparency is transformational. Using forensic auditing and open records, we hold government accountable.

In the years 2021 and 2022, we filed 100,000+ FOIA requests and successfully captured $19 trillion government expenditures: nearly all federal spending; 50 state checkbooks; and 25 million public employee salary and pension records from 50,000 public bodies across America.

Our works have been featured at the BBC, Good Morning America, ABC World News Tonight, The Wall Street Journal, USA Today, C-SPAN, Chicago Tribune, The New York Times, NBC News, FOX News, Forbes, National Public Radio (NPR), Sinclair Broadcast Group, & many others.

Our organization accepts no government funding and was founded by CEO Adam Andrzejewski. Our federal oversight work was cited twice in the President's Budget To Congress FY2021. Andrzejewski's presentation, The Depth of the Swamp, at the Hillsdale College National Leadership Seminar 2020 in Naples, Florida posted on YouTube received 3.8+ million views.

Tyler Durden Wed, 03/22/2023 - 21:00

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“We Are Headed For Another Train Wreck”: Bill Ackman Blames Janet Yellen For Restarting The Bank Run

"We Are Headed For Another Train Wreck": Bill Ackman Blames Janet Yellen For Restarting The Bank Run

Yesterday morning we joked that every…



"We Are Headed For Another Train Wreck": Bill Ackman Blames Janet Yellen For Restarting The Bank Run

Yesterday morning we joked that every time Janet Yellen opens her mouth, stocks dump.

Well, it wasn't a joke, and as we repeatedly noted today, while Jerome Powell was busting his ass to prevent a violent market reaction - in either direction - to his "most important Fed decision and presser of 2023", the Treasury Secretary, with all the grace of a senile 76-year-old elephant in a China market, uttered the phrase...


... and the rest was silence... or rather selling.

Commenting on our chart, Bloomberg's Mark Cudmore noted it was Yellen who was "to blame for the stock slump", pointing out that "the pessimistic turn in US stocks began within a minute of Janet Yellen starting to speak."

The S&P 500 rose almost 1% in the first 47 minutes after the Fed decision. Powell wasn’t the problem either: the index was 0.6% higher in the first 17 minutes after his press conference started.

Why am I picking that exact timing of 2:47pm NY time? Because that is the minute Yellen started speaking at the Senate panel hearing. The high for the S&P 500 was 2:48pm NY time and it fell more than 2.5% over the subsequent 72 minutes. Good effort.

Picking up on this, Bloomberg's Mark Cranfield writes that banking stocks globally are set to underperform for longer after Janet Yellen pushed back against giving deposit insurance without working with lawmakers. He adds that "to an aggressive trader this sounds like an invitation to keep shorting bank stocks -- at least until the tone changes into broader support and is less focused on specific bank situations." Earlier, we addressed that too:

Looking ahead, Cranfield warns that US financials are likely to be the most vulnerable as they are the epicenter of the debate. Although European or Asian banking names may outperform US peers, that won’t be much consolation for investors as most financial sector indexes may be on a downward path.

The KBW bank index has tumbled from its highs seen in early February, but still has a way to go before it reaches the pandemic-nadir in 2020. Traders smell an opening for a big trade and that will fuel more downside. Probably until Yellen blinks.

And if Bill Ackman is right, she will be doing a whole lot of blinking in days if not hours.

Ackman crying in public

While we generally make fun of Ackman's self-serving hot takes on twitter, today he was right when he accused Yellen of effectively restarting the small bank depositor run which according to JPMorgan has already seen $1.1 trillion in assets withdrawn from "vulnerable" banks. This is what Ackman tweeted:

Yesterday, @SecYellen  made reassuring comments that led the market and depositors to believe that all deposits were now implicitly guaranteed. That coupled with a leak suggesting that @USTreasury, @FDICgov and @SecYellen  were looking for a way to guarantee all deposits reassured the banking sector and depositors.

This afternoon, @SecYellen walked back yesterday’s implicit support for small banks and depositors, while making it explicit that systemwide deposit guarantees were not being considered.

We have gone from implicit support for depositors to @SecYellen explicit statement today that no guarantee is being considered with rates now being raised to 5%. 5% is a threshold that makes bank deposits that much less attractive. I would be surprised if deposit outflows don’t accelerate effective immediately.

Ackman concluded by repeating his ask: a comprehensive deposit guarantee on America's $18 trillion in assets...

A temporary systemwide deposit guarantee is needed to stop the bleeding. The longer the uncertainty continues, the more permanent the damage is to the smaller banks, and the more difficult it will be to bring their customers back.

... but as we noted previously pointing out, you know, the math...

... absent bipartisan Congressional intervention - which is very much unlikely until the bank crisis gets much, much worse - this won't happen and instead the Fed will continue putting out bank fire after bank fire - even as it keeps hiking to overcompensate for its "transitory inflation" idiocy from 2021, until the entire system burns down, something which Ackman's follow-up tweet was also right about:

Consider recent events impact on the long-term cost of equity capital for non-systemically important banks where you can wake up one day as a shareholder or bondholder and your investment instantly goes to zero. When combined with the higher cost of debt and deposits due to rising rates, consider what the impact will be on lending rates and our economy.

The longer this banking crisis is allowed to continue, the greater the damage to smaller banks and their ability to access low-cost capital.

Trust and confidence are earned over many years, but can be wiped out in a few days. I fear we are heading for another a train wreck. Hopefully, our regulators will get this right.

Narrator: no, they won't.

Tyler Durden Wed, 03/22/2023 - 21:20

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