Connect with us


Futures Flat Ahead Of Closely Watched Jobs Report

Futures Flat Ahead Of Closely Watched Jobs Report

US equity futures struggled to maintain gains on Friday as traders awaited the December…



Futures Flat Ahead Of Closely Watched Jobs Report

US equity futures struggled to maintain gains on Friday as traders awaited the December jobs report that will help chart the path forward for Fed monetary tightening. Contracts on the Nasdaq 100 and the S&P 500 were unchanged at 7:15am ET, erasing earlier gains sparked by a report that China was planning to relax restrictions on developer borrowing, and dial its stringent “three red lines” policy that exacerbated one of the biggest real estate meltdowns in the country’s history. US equities dropped on Thursday as separate data showed the labor market remained strong. European markets were steady as data showed euro-area inflation returned to single digits for the first time since August. Treasury 10-year yields steadied after climbing for the first time this week on Thursday following comments from Fed officials, while a  measure of dollar strength climbed for a second day, as the yen fell to levels not seen in a week, after the Bank of Japan unveiled further unscheduled bond buying to control its yield curve.

Among notable movers in premarket trading, Tesla tumbled as the electric-car maker made another round of price cuts on its Model 3 and Y electric vehicles in China. Bed Bath & Beyond dropped after the home furnishings retailer began preparing for a bankruptcy filing, also weighing on shares of other retail trader favorites. Here are other notable premarket movers:

  • Apple is little changed as Morgan Stanley says the stock could fall further on worries over wilting demand and production snags.
  • Alvotech & Teva Pharmaceuticals say the U.S.  Food and Drug Administration has accepted for review a Biologics License Application for AVT04, Alvotech’s proposed biosimilar to Stelara, which is prescribed to treat a variety of inflammatory conditions. Alvo shares gain 6.4%, Teva rises 0.4% in light trading.
  • Atai Life Sciences (ATAI) says it may explore steps including strategic partnership options after its Phase 2a trial of PCN-101 (R-ketamine) for treatment-resistant depression missed its primary endpoint. Shares sink 45%.
  • Bed Bath & Beyond (BBBY) slumps 13% after the home furnishings retailer began preparing for a bankruptcy filing, also weighing on shares of other retail trader favorites.
  • CytomX (CTMX) surges 64% as analysts raised their price targets on the biotech after reporting a research collaboration agreement with Moderna, which brokers said demonstrated the strength of CytomX’s platform. Separately, CytomX gave an update on a phase 2 study for its CX-2029 treatment, which brokers said was mixed.
  • Fate Therapeutics (FATE) tumbles 53% after the biotech company terminated a collaboration deal with Janssen Biotech and said it would discontinue its FT596 product candidate. Several analysts slashed their share price targets, with Cantor Fitzgerald describing Fate’s moves as major setbacks.
  • Graphite Bio Inc. (GRPH) plunges 50% as it pauses a study of its experimental gene therapy for sickle cell disease after the first patient had a serious adverse event, prompting at least two analysts to downgrade the stock.
  • Molson Coors (TAP) upgraded to outperform at Cowen with the group seen on a strong footing for 2023, while peer Constellation Brands is cut to market perform on downtrading challenges. TAP gains 1.4% in light trading.
  • Novocure (NVCR) shares fall 6.4% as Wells Fargo cuts the stock to equal- weight from overweight with its positive thesis on the oncology firm now played out.
  • Sight Sciences Inc. (SGHT) shares are up 2.8% after Stifel upgraded the medical device company to buy from hold, seeing a positive near-term setup for the stock.
  • Tesla (TSLA) shares fall 6% as the electric-car maker makes another round of price cuts on its Model 3 and Y electric vehicles in China.
  • World Wrestling Entertainment (WWE) shares rise 10% after controlling shareholder and former CEO Vince McMahon sought to return to the company and is proposing a possible sale of the business.
  • Zynex (ZYXI) is upgraded to overweight from neutral at Piper Sandler, which notes strong execution from the medical device maker and sees room for possible multiple expansion. Shares gain 1.5%.

After their worst annual drop since 2008 and a record underperformance against European stocks in the fourth quarter, US equities began the new year with further declines amid signals from the Fed that it remains staunchly hawkish until inflation cools further. The next clue will in today's December jobs report, with Bloomberg Economics expecting a more subdued increase in employment. Estimates for US nonfarm payroll numbers peg a decline in new jobs added, indicating a cooling in the labor market that would in turn reduce the need for higher interest rates. Median estimate for December nonfarm payrolls change is 202k (vs crowd-sourced whisper number 243k), while average hourly earnings are expected to increase 0.4% vs 0.6% in November. However, private payrolls figures out on Thursday surpassed estimates and a surprise drop in new claims for unemployment benefits underscored a robust jobs market. Our full preview can be found here.

“Investors are still highly sensitive to the direction of monetary policy and this has potential to cause fresh headwinds for valuations,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown. Any indications of resilience in the labor market or stubborn inflation “are likely to send fresh jitters through stocks,” she said.

The Fed has remained “extremely hawkish” to avoid unintentionally easing financial conditions, said Craig Erlam, senior market analyst at Oanda. “But another strong jobs report today would further justify such a hawkish approach and perhaps send risk assets into a bit of a tailspin as the prospect of a higher terminal rate increases alongside recession risks,” he wrote in a note.

Overnight, Citi strategists led by Robert Buckland cut US shares to underweight on the grounds that earnings expectations are still too optimistic. Meanwhile, the latest EPFR fund flows data showed investors continued to flock to cash and out of equities in the week through Jan. 4. Inflows into money market funds were at $112 billion for the week - the most since April 2020, when the pandemic was spreading globally - as equity fund outflows continued.

Market pricing for US interest rates to peak in June rose to above 5% following comments from Atlanta Fed President Raphael Bostic, who said the central bank still has “much work to do” to tame inflation. St. Louis Fed President James Bullard, who is no longer a voting member of the Federal Open Market Committee, said rates were approaching a sufficiently restrictive zone and that inflation expectations had retreated, offering investors some optimism.

In Europe, energy and miners outperformed while financial services and autos lag. The Euro Stoxx 50 was steady with FTSE MIB outperforming peers, adding 0.4%. Here are some of the biggest European movers today:

  • Shell shares gain after the oil and gas group reported higher gas trading in 4Q, though analysts said its update looks “mixed.” Shares rise as much as 1.3%.
  • Nel shares gain as much as 5.9% in Oslo after agreeing with HH2E for FEED (Front End Engineering and Design) study and Letter of Intent for two 60 MW electrolyser plants.
  • Small-cap UK stock Nanoco rises a record 69% in London, after the company said it had settled its litigation with Samsung ahead of a trial that was due to start today.
  • Shares in British shipping company Clarkson rise as much as 9.2%, with Liberum anticipating “strong” 2022 results that will be ahead of current market expectations, including at least £98m profit before tax.
  • Standard Chartered shares fall as much as 2.8% after analysts said they consider a takeover of the London-listed lender as unlikely given the “deal complexity,” with JPMorgan analyst noting that such a transaction would require “a number of regulatory approvals.”
  • Sodexo shares lost as much as 3% after the French catering and services group reported fiscal first- quarter revenue that beat the average analyst estimate but left limited upside after the stock rallied close to 50% in 2H 2022.
  • Rentokil Initial shares drop as much as 5.2% after Exane BNP Paribas initiated coverage with a recommendation of underperform.
  • Danone shares fall as much as 2.8% after Morgan Stanley makes a number of changes to its order of preference within the sector, including a lower rating on Diageo to equal- weight, Danone to underweight.

Earlier in the session, Asia stocks rose in the first week of trading in 2023 amid optimism over China’s reopening and a potential bottoming out of earnings in the chip sector. The MSCI Asia Pacific Index advanced as much as 0.8% Friday before paring gains to 0.1%, led by South Korea. Samsung’s worst profit fall in more than a decade cemented expectations of capex cuts and a price boost from reduced chip supplies, supporting sentiment for the sector. China’s CSI 300 Index rose for a fifth day while Hong Kong stocks retreated after a recent rally. The nation is set to reopen its borders to international travelers on Sunday. It’s also planning to relax restrictions on developer borrowing, dialing back the stringent “three red lines” policy that exacerbated its real estate meltdown. China’s Consumer Sentiment Rebounds as Economy Reopens: Chart The Asian stock benchmark is on track for its longest winning streak since September 2021. The gains came ahead of the US nonfarm payroll report due later Friday. Private payrolls data released Thursday surpassed estimates, underscoring a robust jobs market. “Even though the US Fed is expected to remain hawkish, the US economy is most likely to be resilient on the back of strong consumption,” said Daniel Yoo, head of global asset allocation at Yuanta Securities Korea. “This is a positive for Asian exporters in the medium to long term.”

Japanese equities erased their morning losses to close higher, as the weakening yen boosted exporting companies.  The Topix Index rose 0.4% to 1,875.76 as of market close Tokyo time, while the Nikkei advanced 0.6% to 25,973.85. Sony Group Corp. contributed the most to the Topix Index gain, increasing 2.4% as analysts were positive on announcements at the Consumer Electronics Show on new products including its self-driving electric vehicle with Honda as well as PlayStation sales. Out of 2,162 stocks in the index, 1,273 rose and 768 fell, while 121 were unchanged. “The ADP jobs data exceeded market expectations, with investor worries that the Fed would continue to be hawkish, which strengthened the dollar and weakened the yen slightly in the foreign exchange market,” said Kiyoshi Ishigane chief fund manager at Mitsubishi UFJ Kokusai Asset Management. “The slightly weaker yen has softened the downside from the fall in US stocks.”

In FX, the dollar climbs 0.2% to session high ahead of the jobs report, pulling all G-10 FX lower. The yen was the biggest underperformer, falling to its lowest level against the dollar since Dec. 20, trading at ~134.26 per dollar. The Bloomberg Dollar Spot Index rose 0.2%; for the week, the gauge is up 1.2% in what’s set to be its biggest rally since the week ended Sept. 23.

  • The Yen extended losses after a Bloomberg report that Bank of Japan officials see little need to rush to make another adjustment to its yield-curve control policy. USD/JPY rose as much as 0.9% to 134.59; The move came as Japan reported that real earnings declined 3.8% in November from a year earlier, the most since May 2014. “Most significant and marginally yen-negative news out of Japan was the weaker-than-expected cash and real earnings data which serves to reinforce the notion that a formal YCC policy change is far from imminent,” said NAB’s Attrill. “We don’t expect one at least until 2H 2023.”
  • EUR/USD fell as much as 0.2% to 1.0497 before paring part of that drop; Data showed that euro-area inflation returned to single digits for the first time since August. While the headline inflation figure fell to 9.2%, below economists’ 9.5% forecast, a measure that strips out energy and food edged up to a record 5.2%
  • The Norwegian krone is set to be the biggest loser of the week vs. dollar, down 4.4%, its worst week since April

In rates, this week’s sharp flattening move extends into early US session with long-end yields slightly richer on the day and front-end lagging, guided by wider bull-flattening move seen in the German curve following euro-zone CPI data. US yields are cheaper by up to 2bp across front-end and belly of the curve with 10-year trading around 3.725%, cheaper by 0.5bp vs Thursday’s close and lagging bunds by 3bp in the sector; bunds and UST 10-year yields are little changed, trading within Thursday’s range; comparable gilts yields underperform by about a basis point.

In commodities, oil stabilized after a string of declines that wiped nearly 10% from the price of crude. WTI up 0.8% to below $75. Gold climbed after retreating Thursday from a six-month high reached earlier in the week. Spot gold rose ~$3 to near $1,836/oz. Most base metals trade in the green.

Looking to the day ahead now, and the main data highlight will be the US jobs report for December. Otherwise in the US we’ll get the ISM services index for December and factory orders for November, whilst in Europe there’s the flash Euro Area CPI reading for December, along with German factory orders and retail sales for November. Meanwhile from central banks, we’ll hear from the Fed’s Bostic, Cook, Barkin and George, as well as the ECB’s Centeno and Lane.

Market Snapshot

  • S&P 500 futures little changed at 3,825.75
  • STOXX Europe 600 little changed at 438.97
  • MXAP little changed at 157.70
  • MXAPJ little changed at 520.71
  • Nikkei up 0.6% to 25,973.85
  • Topix up 0.4% to 1,875.76
  • Hang Seng Index down 0.3% to 20,991.64
  • Shanghai Composite little changed at 3,157.64
  • Sensex down 0.8% to 59,867.28
  • Australia S&P/ASX 200 up 0.7% to 7,109.59
  • Kospi up 1.1% to 2,289.97
  • German 10Y yield little changed at 2.31%
  • Euro little changed at $1.0512
  • Brent Futures little changed at $78.70/bbl
  • Gold spot up 0.2% to $1,835.99
  • U.S. Dollar Index up 0.34% to 105.40

Top Overnight News from Bloomberg

  • China is planning to relax restrictions on developer borrowing, dialing back the stringent “three red lines” policy that exacerbated one of the biggest real-estate meltdowns in the country’s history
  • The European Central Bank should complete its interest-rate increases “by the summer” and then be prepared to hold for a potentially sustained period to tame inflation that remains too high, Governing Council member Francois Villeroy de Galhau said
  • Japanese workers’ real wages fell by the most in eight years, suggesting that there’s still some way to go before the central bank can achieve its wage-growth accompanied price goal. The Bank of Japan resumed additional bond buying operation after a new benchmark bond yield touched its 0.5% ceiling
  • Japan wants the Group of Seven advanced economies to take a coordinated approach this year aimed at preventing the “economic coercion” that China has applied to some of its trading partners
  • Mexico’s Finance Ministry nominated Banxico adviser Omar Mejia Castelazo to the central bank’s board, an unexpected choice to replace its most dovish member Gerardo Esquivel
  • China’s trade restrictions on Australian wine, lobsters and other commodities could be the next to ease amid a warming of diplomatic ties and expectations that Beijing will soon resume imports of coal
  • The US House adjourned as Kevin McCarthy’s allies tried to strike a deal with members of the group who’ve blocked the California Republican from being elected speaker in a historic 11 rounds of voting

A more detailed look at global markets courtesy of Newsquawk

Asia-Pac stocks traded mostly with cautious gains despite a negative lead from Wall Street, and ahead of the US labour market data. ASX 200 saw gains across the Metals, Mining and Resources names, but the upside was capped by the Healthcare and Tech sectors. Nikkei 225 briefly topped the 26k level whilst the banking sector underperformed after Thursday’s sectoral outperformance. Hang Seng and Shanghai Comp were firmer with the former initially bolstered by property names, with source reports from Bloomberg flagging further housing market easing measures, although the earlier gains faded throughout the session.

Top Asian News

  • BoJ reportedly sees little need to rush major yield adjustments, according to Bloomberg sources
  • BoJ to conduct emergency bond buying for 5yr and 10yr maturities, according to Reuters.
  • China could ease "three red lines" property rules in a major shift, according to Bloomberg sources. It will allow some property firms to add more leverage, and it pushes back the grace period for meeting debt targets, whilst deadlines may be extended by at least six months.
  • PBoC drained a net CNY 1.6tln for the week via OMO - the largest weekly net cash withdrawal on record, according to Reuters.
  • PBoC injected CNY 2bln via 7-day reverse repos with the rate maintained at 2.00%; daily net drain CNY 384bln
  • Samsung Electronics (005930 KS) Prelim Q4 (KRW): Revenue 70tln (exp. 71tln), Operating Profit 4.3tln (exp. 5.9tln, BBG exp. 6.65tln); Memory chip demand fell more than expected in Q4 amid clients' concerns on consumer sentiment. Smartphone sales fell in Q4 due to demand weakness from macro issues. Price of memory chips fell continuously in Q4 due to chipmakers' increased inventory, according to Reuters.
  • China has released the 10th edition of COVID prevention and control protocols, will further optimise clinical catergorisation and treatment method. Adds positive antigen tests as a diagnostic standard.
  • Evergrande (3333 HK) to hold a meeting with offshore bondholders on Wednesday, to discuss debt restructuring proposals, via Reuters citing sources.

European bourses are little changed overall but do feature a slim positive skew, Euro Stoxx 50 +0.1%, pre-NFP. US futures are similarly contained with modest divergence around the unchanged mark, ES +0.1%, with attention on the NFP print, subsequent ISM Services PMI and Fed speak thereafter. Tesla (TSLA) to cut Model 3 & Y prices in China, Japan and South Korea according to reports. Subsequent Reuters sources state price cuts outside of China are being done with a view to support plant output. Citi (C) equity updates: cuts US to Underweight, raises continental-Europe to Overweight, raises Australia to Neutral.

Top European News

  • German Chancellor Scholz to invite the auto industry for talks on Tuesday, to discuss supply chains, mobility and climate.
  • Lufthansa to Revive Aging A340s Amid Dearth of First Class Seats
  • UK House Prices May Decline by 8% This Year, Halifax Says
  • German Factory Orders Plummet as Manufacturers Under Siege
  • Stellantis May Shut More Plants as Electrification Costs Bite


  • DXY maintains its recovery momentum ahead of the US agenda with the index up to a 105.52 peak at best.
  • Though, it has slipped a touch from this in wake of hotter-than-expected core EZ inflation, sending EUR/USD more comfortably above 1.05, though shy of initial best levels.
  • JPY has taken the brunt of the USD's resurgence amid reports that the BoJ sees little need for further hasty YCC tweaks, with USD/JPY surpassing 134.50.
  • More broadly, peers are down across the board vs the USD, though to varying degrees with the overall tone somewhat tentative pre-NFP.
  • PBoC set USD/CNY mid-point at 6.8912 vs exp. 6.8914 (prev. 6.8926)

Fixed Income

  • Bunds experienced modest but ultimately fleeting downside in wake of the hot core/super-core EZ inflation print, sending the German benchmark to a 135.74 low.
  • Albeit, the move pared back in short order with EGBs and USTs lower to the tune of around 10/15 and 5 ticks respectively ahead of the PM agenda.
  • Australian government cuts FY22/23 bond issuance by AUD 10bln vs original plans, according to reports.


  • Crude benchmarks are firmer, but have been subject to two-way price action throughout the morning which has been directionally in-fitting with but slightly more pronounced than equity action.
  • Currently, WTI Feb’23 and Brent Mar’23 are posting gains just shy of 1.0% as the upside stalled a touch around USD 0.30/bbl shy of the USD 75/bbl and USD 80/bbl handles respectively.
  • China Energy has reportedly placed an order for Australian coal - among the first deals since the 2020 unofficial ban, according to Reuters sources.
  • Spot gold is modestly firmer though is yet to recoup all of the marked downside seen in yesterday’s session, which saw the yellow metal surrender the USD 1850/oz handle.


  • US and Japan to hold security talks in Washington on January 11th, according to Bloomberg.
  • Russian State TV says the ceasefire has come into force along the entire front in Ukraine; in-fitting with the order from President Putin.
  • Turkish Defence Minister says Greece is carrying out acts of incitement against us, and we did not get a positive response from them regarding the establishment of a dialogue, via AJ Breaking.

US Event Calendar

  • 08:30: Dec. Change in Nonfarm Payrolls, est. 202,000, prior 263,000
    • Change in Private Payrolls, est. 182,000, prior 221,000
    • Change in Manufact. Payrolls, est. 8,000, prior 14,000
    • Unemployment Rate, est. 3.7%, prior 3.7%
    • Labor Force Participation Rate, est. 62.2%, prior 62.1%
    • Underemployment Rate, prior 6.7%
    • Average Weekly Hours All Emplo, est. 34.4, prior 34.4
    • Average Hourly Earnings MoM, est. 0.4%, prior 0.6%
    • Average Hourly Earnings YoY, est. 5.0%, prior 5.1%
  • 10:00: Nov. Factory Orders, est. -1.0%, prior 1.0%
  • 10:00: Nov. Durable Goods Orders, est. -2.1%, prior -2.1%;
    • Less Transportation, prior 0.2%
    • Nov. Cap Goods Ship Nondef Ex Air, prior -0.1%
    • Nov. Cap Goods Orders Nondef Ex Air, prior 0.2%
    • Nov. Factory Orders Ex Trans, prior 0.8%
  • 10:00: Dec. ISM Services Index, est. 55.0, prior 56.5

Central Bank Speakers

  • 11:15: Fed’s Cook Takes Part in Panel Discussion on Inflation
  • 11:15: Fed’s Bostic and ECB’s Lane Discuss the Global Economic...
  • 12:15: Fed’s Barkin Speaks on the Economic Outlook
  • 13:00: Fed’s George Discusses the Economic Outlook
  • 15:30: Fed’s Bostic Discusses Lessons From the Pandemic

DB's Jim Reid concludes the overnight wrap

Following a strong start to 2023, markets finally fell back yesterday after strong US data and hawkish remarks from Fed officials led investors to price in more rate hikes over the months ahead. The initial catalyst came from the ADP’s report of private payrolls, which showed an unexpectedly strong gain in December of +235k (vs. +150k expected), whilst the previous month was also revised up to +182k (vs. +127k previously). Treasury yields began to rise immediately after that release, which was then followed up by the jobless claims data, which showed that initial claims had fallen to a 3-month low of just 204k in the last week of 2022 (vs. 225k expected). So further evidence pointing to a tight labour market, particularly when you consider the JOLTS report for November from the previous day. Claims likely showed some seasonal distortion but there is little doubting the still strong labour market.

That focus on the labour market will continue today, since we’ll get the US jobs report for December at 13:30 London time. In terms of what to expect, our US economists are looking for nonfarm payrolls to have grown by +175k in December, which should keep the unemployment rate steady at 3.7%. Keep an eye on average hourly earnings growth as well, particularly given the Fed’s focus on wage inflation. Our economists are expecting that to step down to +0.3%, having come in at a 10-month high of +0.6% last month.

In the meantime, these signs of strength in the labour market data led investors to price in a more aggressive path of rate hikes from the Fed yesterday. For instance, the chances they’ll continue hiking by 50bps at the next meeting in February now stand at 44.2% according to futures, which is up from 32% the previous day. And looking further out, the terminal rate priced in for June hit a 6-week high of 5.03% (cycle high 5.146% - Nov 3rd), with the year-end rate for December also up +13.6 bps to 4.67%.

Those views on the future policy path were given added support by the latest speakers from the FOMC. For instance, Kansas City Fed President George said that the Fed should keep rates above 5% into 2024, and Atlanta Fed President Bostic said that inflation was still “way too high”. St. Louis Fed President Bullard last night spoke a little more dovishly when he said that “the policy rate is not yet in a zone that may be considered sufficiently restrictive, but it is getting closer.” In a presentation, Bullard cited the recent FOMC dot plot showing the median projection of 5.1% as being adequately restrictive.

Notwithstanding Bullard, the overall backdrop yesterday meant that the sovereign bond rally so far this year came to a halt, with yields on 10yr Treasuries up by +3.5bps to 3.718%. That was echoed in Europe, where yields on 10yr bunds (+4.4bps), OATs (+4.5bps) and BTPs (+5.4bps) all moved higher on the day as well. The moves were driven by higher real yields, with the US 10yr real yield up +1.0bps to 1.49%, whilst the German 10yr real yield was up +10.4bps. Yields on 10yr USTs are fairly stable in the Asian session as we go to press.

For equities it was a similarly downbeat picture, with the S&P 500 (-1.16%) moving back into negative territory for 2023, with losses for both the NASDAQ (-1.47%) and the Dow Jones (-1.02%) as well. The main exception to that pattern were energy stocks (+1.99%), which were aided by the rebound in oil prices yesterday that saw WTI (+1.14%) back at $73.67/bbl. This morning, oil prices continue to build on their previous gains with Brent futures (+1.02%) trading just below $80/bbl and WTI (+1.06%) at $74.45/bbl. Otherwise it was a poor performance across the board however, and Europe’s STOXX 600 (-0.20%) lost ground for the first time this year, even as it continued its relative outperformance against the US indices with a c.5pp gap opening up in the first few days of the year.

Asian stock markets are generally trading higher this morning, but Chinese related equities have gone from positive to slightly negative as I finish this off. Elsewhere, the Nikkei (+0.42%) and the KOSPI (+0.66%) are losing a bit of momentum after a much more positive first half of the session. Outside of Asia, US stock futures are indicating a positive start with contracts on the S&P 500 (+0.31%) and the NASDAQ 100 (+0.27%) edging higher ahead of the December jobs report, but again off their highs.

Early morning data showed that real wages in Japan (-3.8% y/y) fell by the most in eight years and declined for the eighth consecutive month in November (v/s -2.8% expected). It followed the prior month’s revised drop of -2.9%. At the same time, cash earnings (+0.5% y/y) were also disappointing in November (v/s +1.7% expected) against a downwardly revised +1.4% rise in October. In addition, Japan’s services sector activity remained in expansion territory as the final au Jibun Bank services PMI advanced to 51.1 in December following a reading of 50.3 in November.

For a third straight day, the US House of Representatives was not able to vote in a new speaker. GOP leader Kevin McCarthy was not able to get Republicans to coalesce around him through another 5 ballots yesterday, taking the overall failed ballot count to 11. This is now the most ballots it has taken in order to elect a new Speaker since 1860. McCarthy had reportedly offered the holdouts one of their bigger demands – allowing any single member to bring forward a motion to vote on ousting the speaker, currently it takes half of the chamber. It would still take 50% of the chamber to remove the speaker, but it raises the risks of disorder around important votes. There continues to be a group of 6 or so Republicans who have declared themselves “Never-Kevin”, which complicates matters as the Republican leader can only afford 5 defections. Some McCarthy supporters have acknowledged that this process could extend into the weekend or longer if the party must find a new consensus candidate.

Otherwise on the geopolitical side, yesterday brought an announcement from Russia that there would be an unexpected ceasefire in Ukraine for 36 hours over today and tomorrow. The move coincides with Russian Orthodox Christmas and Putin asked Ukraine to reciprocate, but the request was rejected and Ukrainian presidential aide Mikhailo Podolyak said that Russia “must leave the occupied territories – only then will it have a “temporary truce”.”

Finally on the data side, Italian CPI fell to +12.3% in December on the EU-harmonised measure, which was in line with expectations but down from +12.6% in November. That comes ahead of the flash CPI release for the entire Euro Area today, where economists are widely expecting the year-on-year measure will decline for a second consecutive month.

To the day ahead now, and the main data highlight will be the US jobs report for December. Otherwise in the US we’ll get the ISM services index for December and factory orders for November, whilst in Europe there’s the flash Euro Area CPI reading for December, along with German factory orders and retail sales for November. Meanwhile from central banks, we’ll hear from the Fed’s Bostic, Cook, Barkin and George, as well as the ECB’s Centeno and Lane.

Tyler Durden Fri, 01/06/2023 - 08:02

Read More

Continue Reading


Economic Death Spiral

Economic Death Spiral

Authored by Robert Stark via Substack,

Fed Trap: Financial Collapse or Hyper Inflation?

With this banking crisis,…



Economic Death Spiral

Authored by Robert Stark via Substack,

Fed Trap: Financial Collapse or Hyper Inflation?

With this banking crisis, which has serious Lehman vibes, it is a good time to revisit my article, Is This The End of The End of History, from March of last year. The article dealt with the theme of collapse vs stagnation, and historical cycles, in light of the Ukraine war, the post-pandemic climate, the onset of inflation, and speculation about economic collapse. A point of mine, that has especially been vindicated, is that “a delay in the Fed raising interest rates, could cause a short term rally in stocks, further expanding the bubble. The bigger the bubble, the worse inflation gets, and the longer the Fed keeps delaying raising rates, the worse the crash will be down the road.” For the most part, most of my geopolitical and economic forecasts have come true, though I actually predicted an economic collapse to occur sooner, which actually vindicates that point, that kicking the can down the road will just create a much worse crisis.

Despite countless signs of economic volatility, the recent bank failures, with shockwaves to the entire financial system, are a turning point, where it is clear that there is going to be a severe economic downturn. For instance, Elon Musk recently said, lot of current year similarities to 1929, and Moody’s cut the outlook on the entire U.S. banking system to negative from stable, citing a "rapidly deteriorating operating environment." Even the perma bulls, mainstream media, and financial “experts,” can no longer deny the obvious signs of economic peril. However, the bullish propaganda was still strong as recently as January, which was really the bulls’ last gasp, with the monkey rally, in response to the Fed only raising interest rates by .25 points, plus economic data showing record low unemployment plus a dip in inflation.

It is important to emphasize that the same figures in media, banking, and government, who were recently shilling a soft landing or mild recession, were previously saying that inflation is transitory. It is especially laughable to think that there are people who take someone like CNBC’s, Jim Cramer, seriously, who in 2008 told his audience don’t be silly on Bear Stearns, right before it crashed, and more recently shilled for Silicon Valley Bank, and is still predicting a soft landing. A lot of the recent propaganda is practically identical to right before the 08 crash, as well as during stagflation in the 70s, and even before the Great Depression, as the media has vested economic and political interests in propping up the markets. The financial YouTuber, Maverick of Wall Street, brilliantly uses this “self-love” gif of  Jack Nicholson, from the film, One Flew Over the Cuckoo’s Nest, as a metaphor for whenever perma-bulls see any data that may signify a Fed pivot, causing stocks to rally. As the desperation really kicks in, expect further talk of a soft landing, as well as more rallies in stocks, as we saw in response to the bailouts, as well as desperate investors switching back and forth between the NASDAQ and S&P500, which happened in 08. So any return to bullish sentiment is actually a sign of greater economic catastrophe. The stock market rallying over bad economy news, as a sign of a potential pivot, just further shows that the markets are not a good metric for the health of the economy. Not to mention that the top 1% own over half of all stocks.

It has always been the case with bubbles, that the greater the size of the bubble, the more copes to deny reality, and the more vested interests there are in preventing the inevitable crash. Certainly many corporations and banks have made economic decisions based upon an assumption of a soft landing or Fed pivot. This also explains the gaslighting to justify that the 2010s economic boom, especially in tech, was based upon productivity and innovation, when it was primary due to Fed monetary policy, plus data mining in the case of Big Tech. While it is silly for conservatives to blame wokeness as the primary culprit of bank failures, wokeness and bullshit DEI jobs, are a symptom of the corruption that Fed policy enabled. 

Fed Balance Sheet: Return to QE


The current banking crisis is triggering more stock buybacks, and a return to Quantitative Easing with the bank bailouts, including plans to inject another $2 Trillion into the banking system, on top of the $300 billion increase in the Fed’s Balance Sheet, in just the last week. This seems counter intuitive, as QE caused inflation, but the economy is so addicted to the “Cocaine,” that is  cheap money. So basically quantitative tightening is being implemented and interest rates raised  to stop inflation, but as soon as the first major economic disruption of raising rates is felt, then a return to financial policies to further prop up the bubble, causing more inflation. Now the Fed is trapped with two bad options, raise rates or pivot, both of which will lead to inevitable economic doom.

Populists can talk about nationalizing the banks into public debt free banking, and Austrian School libertarians can call for ending the Fed, and returning to a gold standard. While it is true that the Federal Reserve is a corrupt system, that is quasi private in how private banks own shares, the reality is that we are stuck with this system of relying upon the Fed’s interest rates, for the incoming economic crisis. If the Fed continues raising rates, there will be a liquidity crisis, with more bank failures. While interest rates were close to zero, banks used uninsured deposits to both invest in securities and purchase bonds, and thanks to fractional reserve banking, banks are only required to hold a fraction of deposits. So when rates rose, bonds fell in value and unrealized losses surged, so the banks were not able to pay off their depositors.


Regional banks make up about half of all US banking, so any contagion in the banking system, as people and businesses move their deposits to mega banks, deemed “too big to fail,” could trigger a Depression. One of the main reasons that the economy has not crashed sooner is because more people have been tapping into their savings and maxing out their credit cards. However, high interest rates will cause many people to default on their credit card debt, which will exacerbate the banking crisis. Not to mention Auto loans defaults wiping out credit unions, and the potential for another mortgage crisis, due to rising mortgage rates. There is a ripple effect, as far as rising interest rates being felt by debt holders, and now is just the tip of the iceberg. This could end up being a multifaceted debt crisis, in banking, corporate debt, personal debt, and government debt.

Besides the Fed likely pivoting soon due to the banking crisis, higher rates will make interest payments on the National Debt too expensive to pay off, risking a default on government debt. Overall levels of debt, both public and private, are much worse than when Fed Chair, Volcker, raised rates very high to successfully quell inflation. Any freeze in Federal spending or a default on the national debt, in response to the debt ceiling, will crash the economy, and any major extension in the debt ceiling will accelerate inflation. There is a good chance that inflation will be tolerated, with the dollar greatly devalued, to make government debt cheaper so that creditors eat the costs.

Source: Peter G. Peterson Foundation

A tight labor market is the main case that the bulls make to prove a strong economy. However, the official BLS jobs numbers are “baked” to exclude those who have given up on seeking employment, as well as counting 2nd or 3rd jobs. Not to mention that the BLS numbers were exposed by the Fed as overstating 1 million jobs during 2022. Even if one accepts the “baked” numbers, layoffs have a lagging effect on unemployment, including by industry (eg. tech layoffs before service sector). Now new jobless claims have grown at the fastest pace since Lehman'. It is also noteworthy that just about every recession has been preceded by low unemployment numbers. The increase in layoffs will put further pressure on the Fed to pivot, which on top of increased unemployment benefits, will cause inflation to surge again. This creates another doom loop, as inflation leads to more unemployment, as consumers are forced to cut back on spending.

Source: ZeroHedge

While bulls can say that this time is different from past crashes, all of the signs are pointing to this crisis being much worse than previous crashes. For instance, the economic recovery, after Volcker was done raising rates to fight inflation, was possible because of lower levels of debt, but the US has never entered a recession with debt/GDP at 125% and deficit/GDP at 7% in at least 85 years. Also the fallout of the 2008 crash was mitigated by a strong dollar, which also minimized the effects of inflation last year, but inflation will surge if the dollar is weakened. Despite signs of a pivot, the Fed has been moving much faster to fight inflation, then in the past, even with Volker. This crisis is also unique in that rates are being raised while entering a severe recession, and inflation could coincide mass layoffs. While the general assumption is that severe economic downturns are deflationary, financial commentator, Peter Schiff, makes a compelling case as for why an Inflationary Depression is a likelihood. Under this nightmare scenario, which would be much worse than even the Great Depression, inflation will negate any of the remedies that ended past crises, such as the New Deal, quantitative easing in 08, and the covid stimulus. Other signs of economic peril include, the steepest yield curve inversion since the early 80s recession, which is a barometer that has predicted just about every single recession, a major decline in ISM manufacturing sales, a big decline in savings rates, and Americans’ credit card debt approaching a record $1 Trillion.


This is the perfect storm with inflation, stagflation, recession, a potential debt crisis, as well as energy and supply chain issues. With this bubble to end all bubbles or too big to fail on steroids, the Fed has two choices, cause a liquidity crisis by shrinking the money supply, or letting inflation rip. While raising rates appears to be the least bad of these two options, further rate hikes are futile with the return of QE. A combo of QE plus interest rates having to remain high, is what could lead to that scenario of inflationary financial collapse, that Peter Schiff warned about. Though most likely it will either be long term stagflation or a deflationary Depression. This is not a hyperbole, nor clickbait, but a Depression is a very real possibility, especially if policy makers continue to kick the can down the road, to prop up the bubble.

*  *  *

Subscribe to Robert Stark's Newsletter

Tyler Durden Tue, 03/21/2023 - 17:25

Read More

Continue Reading


Three Years To Slow The Spread: COVID Hysteria & The Creation Of A Never-Ending Crisis

Three Years To Slow The Spread: COVID Hysteria & The Creation Of A Never-Ending Crisis

Authored by Jordan Schachtel via ‘The Dossier’…



Three Years To Slow The Spread: COVID Hysteria & The Creation Of A Never-Ending Crisis

Authored by Jordan Schachtel via 'The Dossier' Substack,

Last Thursday marked the three year anniversary of the infamous “15 Days To Slow The Spread” campaign.

By March 16, yours truly was already pretty fed up with both the governmental and societal “response” to what was being baselessly categorized as the worst pandemic in 100 years, despite zero statistical data supporting such a serious claim.

I was living in the Washington, D.C. Beltway at the time, and it was pretty much impossible to find a like-minded person within 50 miles who also wasn’t taking the bait. After I read about the news coming out of Wuhan in January, I spent much of the next couple weeks catching up to speed and reading about what a modern pandemic response was supposed to look like.

What surprised me most was that none of “the measures” were mentioned, and that these designated “experts” were nothing more than failed mathematicians, government doctors, and college professors who were more interested in policy via shoddy academic forecasting than observing reality.

Within days of continually hearing their yapping at White House pressers, It quickly became clear that the Deborah Birx’s and Anthony Fauci’s of the world were engaging in nothing more than a giant experiment. There was no an evidence-based approach to managing Covid whatsoever. These figures were leaning into the collective hysteria, and brandishing their credentials as Public Health Experts to demand top-down approaches to stamping out the WuFlu.

To put it bluntly, these longtime government bureaucrats had no idea what the f—k they were doing. Fauci and his cohorts were not established or reputable scientists, but authoritarians, charlatans, who had a decades-long track record of hackery and corruption. This Coronavirus Task Force did not have the collective intellect nor the wisdom to be making these broad brush decisions.

Back then, there were only literally a handful of people who attempted to raise awareness about the wave of tyranny, hysteria, and anti-science policies that were coming our way. There were so few of us back in March in 2020 that it was impossible to form any kind of significant structured resistance to the madness that was unfolding before us. These structures would later form, but not until the infrastructure for the highway to Covid hysteria hell had already been cemented.

Making matters worse was the reality that the vast majority of the population — friends, colleagues, peers and family included — agreed that dissenters were nothing more than reckless extremists, bioterrorists, Covid deniers, anti-science rabble rousers, and the like.

Yet we were right, and we had the evidence and data to prove it. There was no evidence to ever support such a heavy-handed series of government initiatives to “slow the spread.”

By March 16, 2020, data had already accumulated indicating that this contagion would be no more lethal than an influenza outbreak.

The February, 2020 outbreak on the Diamond Princess cruise ship provided a clear signal that the hysteria models provided by Bill Gates-funded and managed organizations were incredibly off base. Of the 3,711 people aboard the Diamond Princess, about 20% tested positive with Covid. The majority of those who tested positive had zero symptoms. By the time all passengers had disembarked from the vessel, there were 7 reported deaths on the ship, with the average age of this cohort being in the mid 80s, and it wasn’t even clear if these passengers died from or with Covid.

Despite the strange photos and videos coming out of Wuhan, China, there was no objective evidence of a once in a century disease approaching America’s shores, and the Diamond Princess outbreak made that clear.

Of course, it wasn’t the viral contagion that became the problem.

It was the hysteria contagion that brought out the worst qualities of much of the global ruling class, letting world leaders take off their proverbial masks in unison and reveal their true nature as power drunk madmen.

And even the more decent world leaders were swept up in the fear and mayhem, turning over the keys of government control to the supposed all-knowing Public Health Experts.

They quickly shuttered billions of lives and livelihoods, wreaking exponentially more havoc than a novel coronavirus ever could.

In the United States, 15 Days to Slow The Spread quickly became 30 Days To Slow The Spread. Somewhere along the way, the end date for “the measures” was removed from the equation entirely.

3 years later, there still isn’t an end date…

Anthony Fauci appeared on MSNBC Thursday morning and declared that Americans would need annual Covid boosters to compliment their Flu shots.

So much of the Covid hysteria era was driven by pseudoscience and outright nonsense, and yet, very few if any world leaders took it upon themselves to restore sanity in their domains. Now, unsurprisingly, so many elected officials who were complicit in this multi-billion person human tragedy won’t dare to reflect upon it.

In a 1775 letter from John Adams to his wife, Abigail, the American Founding Father wrote:

“Liberty once lost is lost forever. When the People once surrender their share in the Legislature, and their Right of defending the Limitations upon the Government, and of resisting every Encroachment upon them, they can never regain it.”

Covid hysteria and the 3 year anniversary of 15 Days To Slow The Spread serves as the beginning period of a permanent scar resulting from government power grabs and federal overreach.

While life is back to normal in most of the country, the Overton window of acceptable policy has slid even further in the direction of push-button tyranny. Hopefully, much of the world has awakened to the reality that most of the people in charge aren’t actually doing what’s best for their respective populations.

Tyler Durden Tue, 03/21/2023 - 18:05

Read More

Continue Reading


From the bed sheets to the TV remote, a microbiologist reveals the shocking truth about dirt and germs in hotel rooms

The filthy secrets of hotel rooms and why you might want to pack disinfectant on your next trip.




Relaxing in filth? Pexels/Cottonbro studio

For most of us, staying in a hotel room is either something of a necessity – think business travel – or something to look forward to as part of a holiday or wider excursion.

But what if I told you there’s a large chance your hotel room, despite how it might appear to the naked eye, isn’t that clean. And even if it’s an expensive room, that doesn’t necessarily mean it’s any less dirty.

Indeed, whoever has stayed in your room prior to you will have deposited bacteria, fungi and viruses all over the furniture, carpets, curtains and surfaces. What remains of these germ deposits depends on how efficiently your room is cleaned by hotel staff. And let’s face it, what is considered clean by a hotel might be different to what you consider clean.

Typically, assessment of hotel room cleanliness is based on sight and smell observations –- not on the invisible microbiology of the space, which is where the infection risks reside. So let’s take a deep dive into the world of germs, bugs and viruses to find out what might be lurking where.

It starts at the lift

Before you even enter your room, think of the hotel lift buttons as germ hotspots. They are being pressed all the time by many different people, which can transfer microorganisms onto the button surface, as well back onto the presser’s fingers.

Communal door handles can be similar in terms of germ presence unless sanitised regularly. Wash your hands or use a hand sanitiser after using a handle before you next touch your face or eat or drink.

The most common infections people pick up from hotel rooms are tummy bugs – diarrhoea and vomiting – along with respiratory viruses, such as colds and pneumonia, as well as COVID-19, of course.

Hotel door opening.
Welcome to germ paradise. Pexels/Pixabay

Toilets and bathrooms tend to be cleaned more thoroughly than the rest of a hotel room and are often the least bacteriologically colonised environments.

Though if the drinking glass in the bathroom is not disposable, wash it before use (body wash or shampoo are effective dishwashers), as you can never be sure if they’ve been cleaned properly. Bathroom door handles may also be colonised by pathogens from unwashed hands or dirty washcloths.

Beware the remote

The bed, sheets and pillows can also be home to some unwanted visitors. A 2020 study found that after a pre-symptomatic COVID-19 patient occupied a hotel room there was significant viral contamination of many surfaces, with levels being particularly high within the sheets, pillow case and quilt cover.

While sheets and pillowcases may be more likely to be changed between occupants, bedspreads may not, meaning these fabrics may become invisible reservoirs for pathogens – as much as a toilet seat. Though in some cases sheets aren’t always changed between guests, so it may be better to just bring your own.

Less thought about is what lives on the hotel room desk, bedside table, telephone, kettle, coffee machine, light switch or TV remote – as these surfaces aren’t always sanitised between occupancies.

TV remote lying on pink bedding.
Handle with care: the TV remote is often one of the dirtiest items in a hotel room. Pexels/Karolina grabowska

Viruses such as the norovirus can live in an infectious form for days on hard surfaces, as can COVID-19 – and the typical time interval between room changeovers is often less than 12 hours.

Soft fabric furnishings such as cushions, chairs, curtains and blinds are also difficult to clean and may not be sanitised other than to remove stains between guests, so washing your hands after touching them might be a good idea.

Uninvited guests

If all those germs and dirty surfaces aren’t enough to contend with, there are also bedbugs to think about. These bloodsucking insects are experts at secreting themselves into narrow, small spaces, remaining dormant without feeding for months.

Small spaces include the cracks and crevices of luggage, mattresses and bedding. Bed bugs are widespread throughout Europe, Africa, the US and Asia – and are often found in hotels. And just because a room looks and smells clean, doesn’t mean there may not be bed bugs lurking.

Woman making bed in hoteroom.
Get those cushions off the bed straightaway. Pexels/Cottonbro studio

Fortunately, bed bug bites are unlikely to give you a transmissible disease, but the bite areas can become inflamed and infected. For the detection of bedbugs, reddish skin bites and blood spots on sheets are signs of an active infestation (use an antiseptic cream on the bites).

Other signs can be found on your mattress, behind the headboard and inside drawers and the wardrobe: brown spots could be remains of faeces, bed bug skins are brownish-silvery looking and live bed bugs are brown coloured and typically one to seven millimetres in length.

Inform the hotel if you think there are bed bugs in your room. And to avoid taking them with you when you checkout, carefully clean your luggage and clothes before opening them at home.

As higher-status hotels tend to have more frequent room usage, a more expensive room at a five-star hotel does not necessarily mean greater cleanliness, as room cleaning costs reduce profit margins. So wherever you’re staying, take with you a pack of antiseptic wipes and use them on the hard surfaces in your hotel room.

Also, wash or sanitise your hands often – especially before you eat or drink anything. And take slippers or thick socks with you so you can avoid walking barefoot on hotel carpets – known to be another dirt hotspot. And after all that, enjoy your stay.

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

Read More

Continue Reading