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Futures Jump As Dollar Slide Accelerates

Futures Jump As Dollar Slide Accelerates

It appears that Goldman’s trading desk was right again. Just days after the vampire squid’s sellside…

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Futures Jump As Dollar Slide Accelerates

It appears that Goldman's trading desk was right again. Just days after the vampire squid's sellside researchers were warning that the market has not yet bottomed, the bank's far more accurate flow traders said that "The Pain Trade Is Now Up, The CPI Doesn't Matter At All, And The Q4 Chase Starts Early", and on Monday morning it was all engines go in global stock markets, with US equities poised to extend their brisk rally from last week as investors braced for the final CPI before the Federal Reserve’s September decision. Futures for the S&P 500 and Nasdaq 100 both rose 0.5% each at 715 a.m. in New York, extending above their Friday session highs, putting the underlying gauges on track for a fourth day of gains, while Europe's Stoxx 600 index climbed for a third day, and Asia was almost all green.

Treasury yields dropped and the dollar retreated further as traders bet inflation is near peaking even as Fed talking heads ramped up hawkish rhetoric (it's ok, the Fed is always 9-12 months behind the curve). And as the USD slumps, the euro is extending gains, rising the most in six months against the dollar, as hawkish commentary from ECB policy makers continue.  Crude oil and industrial metals gained as the greenback’s descent countered demand concerns, while speculation grows that China will ease on covid-zero policies after the coming plenum.

In US premarket trading, cryptocurrency-exposed stocks including Riot Blockchain and Coinbase edged higher as Bitcoin added to last week’s gains, rising above the $22,000 level. Meanwhile, Apple rose, with analysts positive on the company as pre-order data for the latest versions of its iPhone point to strong interest and demand. Here are some other notable premarket movers:

  • Bristol Myers Squibb (BMY US) rises 6% in premarket trading after deucravatinib received approval from the US Food and Drug Administration for the treatment of moderate-to-severe psoriasis with no “black box” warnings.
  • Watch Cable One (CABO US) after it was downgraded to equal-weight at Wells Fargo, which took less positive stance on the sector, even as the stock remains “the best house in the cable neighborhood.”
  • Keep an eye on Bill.com Holdings (BILL US) as the stock was initiated with an overweight rating at Morgan Stanley, which cites multiple growth drivers for the infrastructure software firm.
  • US railroad stocks may be in focus as tens of thousands of industry workers could be on strike by the end of this week. Keep an eye on CSX (CSX US), Norfolk Southern (NSC US) and Union Pacific (UNP US).
  • US chipmakers could be in focus after Reuters reports the Biden administration plans to broaden curbs on US shipments of semiconductors for artificial intelligence and chipmaking tools to China. Watch Lam Research (LRCX US), Applied Materials (AMAT US), KLA (KLAC US), Nvidia (NVDA US) and AMD (AMD US).
  • Keep an eye on CoStar Group (CSGP US) as it was initiated at market perform by BMO Capital Markets, which sees the commercial real estate information provider as a “poster child” for the info services sector, but finds it hard to justify an outperform recommendation.

Stocks have rebounded amid more speculation of oversold systematic funds and another short squeeze - conditions similar to the mid-June bounce. Now, traders are preparing for tomorrow's inflation data which are expected to show an 8% increase in the overall August consumer price index from the same month last year, down from 8.5% in July yet still historically elevated, and to cement the point that peak inflation has been hit. The outcome will be significant for the Fed’s decision next week and could sway equities in either direction, although the worst case scenario is now fully priced in: traders almost fully expect another jumbo-sized Fed hike next week, following two 75-basis-point increases, and forward guidance by Fed officials in the run-up to the policy meeting has supported that view. Any easing in the Fed's tightening resolve would be seen a very dovish and send stocks surging even more.

“It seems policy makers were keen to reinforce their hawkish position ahead of the blackout period -- which we’re now in -- potentially with an eye on that data point,” said Craig Erlam, a senior market analyst at Oanda. “There was perhaps a feeling that a softer reading could see market expectations slip which they clearly want to avoid. It will be interesting to see how traders now respond as we’ve seen how keen they were to hop aboard the ‘dovish pivot’ train before.”

Indeed, on Friday, Fed Governor Christopher Waller said he favors “another significant” increase in interest rates when the central bank meets later this month, signaling his backing for a 75 basis-point move. Fed Bank of St. Louis President James Bullard said he was leaning “more strongly” toward a third straight boost of that magnitude, while his Kansas City counterpart Esther George noted officials have a “clear-cut” case for continuing to remove monetary support.

Meanwhile, thanks to receding inflation fears, markets are pricing in little prospect of a recession, according to Tatjana Puhan, deputy chief investment officer at Tobam SAS. Risk assets are buying into the narrative of a soft landing even though a hard landing is more likely, she said. "We should be ready for a significant impact on the economy,” Puhan told Bloomberg Television. “I can easily see markets going down another 20%,"she said, echoing Guggneheim's Scott Minerd.

Markets also have to digest the implications of Ukraine’s counter-offensive, after its forces continued their rapid advance in the Kharkiv region, exploiting a retreat of Russian defenses. 

In Europe, the Stoxx 50 rallied 1.4% climbing for a third day, with retailers leading the advance amid optimism plans to curb energy bills will provide some relief for consumers squeezed by a cost-of-living crisis. The FTSE MIB outperforms, adding 1.8%, Stoxx 600 lags, adding 0.9%. Retailers, miners and autos are the strongest-performing sectors. Here are some of the biggest European movers today:

  • Mining stocks outperform the broader European market again on Monday as metals rise on increased demand amid China’s peak construction season, a weaker dollar and risks to supply
  • Ferrexpo and shares in other companies with operations in Ukraine surge in European trading Monday as the country’s military continued a rapid advance in the Kharkiv region at the weekend
  • Atos shares jump for a second day, as much as 6.9%, as minority shareholder Sycomore Asset Management called for the chairman to resign during an interview with Reuters
  • Pernod Ricard shares rise after declining as much as 1.2% after Deutsche Bank cut the recommendation to hold on macro headwinds and lagging advertising & promotional/sales
  • Thule shares drop as much as 16% after a profit warning from the Swedish bike, car and outdoor equipment manufacturer. Handelsbanken says “considerable 2023 uncertainty remains”
  • Tate & Lyle falls as much as 7.1% after Jefferies downgrades to hold from buy on increasing cost pressures in Europe, saying is now more exposed to “tricky” European market
  • Electrolux shares fall as much as 6.8% as the Swedish appliance producer expects 3Q earnings to decline sharply. Handelsbanken says “significant cuts” to 2022-2023 estimates are needed
  • HelloFresh shares fall as much as 6.7% on Monday after the USDA warned of possible E. coli contamination for some ground beef packages in HelloFresh meal kits shipped in July
  • Orpea slumps as much as 21% as the company warns that profit will be lower than expected, citing rising energy and salary costs, with analysts noting there are still downside risks to shares

According to another group of Goldman Sachs strategists - the ones who are pretty much always wrong - said US firms that do most of their business at home will fare better than those exposed to Europe, where a recession is all but guaranteed. A team led by David Kostin say that while the path of US growth may be “uncertain,” the economic situation in Europe is dire. Translation: buy European stocks.

Earlier in the session, Asian stocks began the week by heading for a third straight daily advance, bolstered by the weakening of the dollar and oil prices. The MSCI Asia Pacific Index climbed as much as 0.8% on Monday, poised for its highest close in nearly two weeks, as tech and materials shares rallied. TSMC rose 2.4%, boosting Taiwan’s gauge, after the firm said August sales rose 59% from a year ago and Reuters reported that the US plans to broaden curbs on chip shipments to China. Markets were closed for holidays in China, Hong Kong and South Korea. Benchmarks in the Philippines, Taiwan, Japan and Australia were all up. India’s S&P BSE Sensex Index also rose ahead of the nation’s retail inflation data for August, while Thailand’s main gauge was higher for a fifth-straight day to erase this year’s decline amid optimism the economic recovery has momentum.  The dollar and oil prices weakened ahead of a much-awaited US inflation report on Tuesday, with investors preparing for super-sized interest-rate hikes in the US. Investors are also watching for Russia’s response after reports overnight of the advance of Ukraine forces in Kharkiv region.

Japanese stocks advanced for a third day, driven by gains in electronics makers, while reopening plays rallied on reports of reduced restrictions for inbound tourists. The Topix rose 0.7% to 1,980.22 as of 3:02 p.m. Tokyo time, while the Nikkei advanced 1.2% to 28,542.11. The yen resumed weakening after regaining more than 1% against the dollar Friday. Keyence Corp. contributed the most to the Topix gain, increasing 1.9%. Out of 2,169 shares in the index, 1,449 rose and 596 fell, while 124 were unchanged.

“On many measures, positioning continues to appear quite extreme to us and thus there is a possibility that a lower than expected m-m core CPI print may lead to a knee-jerk positive reaction in stocks,” Chetan Seth, Asia Pacific equity strategist at Nomura wrote in a note. On Ukraine, he said that “it’s too early to extrapolate this event for the market,” and that the supply of some key commodities will likely take time to increase. The pause in the dollar’s rally has given Asian stocks some breathing room, with the MSCI measure up about 3% from a trough last week. But with many signals indicating more dollar strength and China’s lockdowns continuing, flows into the region are likely to remain under pressure.

In FX, the Bloomberg Dollar Spot Index extended declines, with all G-10 FX rising, barring the yen, which trades at around 142.75/USD. Some more details:

  • The BBDXY Index was set for its biggest two-day drop in a month as the greenback weakened against all of its Group-of-10 peers apart from the yen.
  • The euro rose as much as 1.6% against the greenback on Monday to trade just shy of the 1.02 handle. Bunds, Italian bonds fell across the curve and money markets rose ECB tightening bets after Bundesbank President Joachim Nagel said the central bank must take further clear steps if the inflation picture stays the same. ECB Executive Board member Frank Elderson said more hikes will come as “it’s very important that the expectations that the people have on how the inflation will develop in the medium to long term will not become deanchored”
  • The pound rose against a broadly weaker dollar though trailed the euro and other European currencies. Data show the UK economy recovered more slowly than expected from a slump triggered by an extra bank holiday in June, with industrial production and construction both shrinking
  • Sweden’s krona was the best-performing G-10 currency as the nation is on the cusp of a power shift, casting aside the ruling Social Democrats in favor of a center-right opposition bloc as vote counting nears the finish line
  • The yen resumed its downtrend after jumping more than 1% on Friday as players adjusted positions before US inflation figures due on Tuesday. JGBs followed Treasuries lower. On Sunday, Deputy Chief Cabinet Secretary Seiji Kihara said during a TV program that Japan has “to take necessary steps while closely monitoring developments including excessive, one-sided moves in the exchange rate”

In rates, US Treasuries edged higher with gains led by front-end of the curve, steepening spreads slightly while the dollar retreats. US yields were richer by up to 2.5bp across front-end of the curve with 2s10s, 5s30s spreads steeper by 0.5bp and 1.5bp on the day; 10-year yields around 3.29%, trading 1bp cheaper vs. bunds and slightly outperforming gilts in the sector. A US double auction of 3- and 10-year notes imposes an obstacle for further Treasuries advance. The US double auction kicks off at 11:30am with $41b 3-year note sale, followed by $32b 10-year reopening at 1pm.  3-year WI around 3.567% is above auction stops since 2007 and ~36.5bp cheaper than August stop-out which traded 0.3bp through the WI level. Auctions conclude Tuesday with $18b 30-year bond reopening.

In commodities, WTI crude jumps 1% to around $87.63; spot gold rises roughly $9 to trade near $1,726/oz. Natural gas prices fall as the market awaits details of the European Union’s intervention plan.

Bitcoin has risen above USD 22k amid the broader risk appetite, whilst Ethereum topped USD 1,750 in early trade.

Looking at today's calendar, we have Japan's August machine tool orders, UK July monthly GDP, construction output, industrial and manufacturing production, index of services, trade balance, Germany July current account balance, Italy July industrial production. There is nothing on the US calendar.

Market Snapshot

  • S&P 500 futures up 0.5% to 4,087.25
  • STOXX Europe 600 up 0.8% to 423.90
  • MXAP up 0.7% to 155.35
  • MXAPJ up 0.8% to 509.68
  • Nikkei up 1.2% to 28,542.11
  • Topix up 0.7% to 1,980.22
  • Hang Seng Index up 2.7% to 19,362.25
  • Shanghai Composite up 0.8% to 3,262.05
  • Sensex up 0.7% to 60,217.05
  • Australia S&P/ASX 200 up 1.0% to 6,964.46
  • Kospi up 0.3% to 2,384.28
  • Gold spot up 0.5% to $1,724.64
  • U.S. Dollar Index down 1.05% to 107.86
  • German 10Y yield little changed at 1.71%
  • Euro up 1.5% to $1.0188

Top Overnight News from Bloomberg

  • The Biden administration plans to broaden curbs on US shipments of semiconductors for artificial intelligence and chipmaking tools to China, Reuters reported, citing unidentified people familiar with the matter
  • The ECB’s jumbo increase in interest rates last week was designed to keep inflation expectations anchored, according to Vice President Luis de Guindos
  • German inflation will only peak in the first quarter of 2023 as surging energy costs trickle down to consumers, weighing on purchasing power and tipping the country into recession during the winter months, according to the Ifo institute
  • French Finance Minister Bruno Le Maire said the government will cut a levy on industrial production at a slower pace than initially planned as it seeks to meet deficit reduction targets despite lower economic growth
  • Natural gas prices fell as the market awaits details of the European Union’s plan to intervene in an unprecedented energy crisis that is already destroying demand for the fuel
  • Russia hit power plants deep behind Ukrainian lines, causing blackouts across the northeast of the country as Kyiv’s forces pressed a lightning offensive that’s reversed months of Moscow’s advances

A more detailed look at global markets courtesy of Newsquawk

Asia-Pac stocks took impetus from last Friday’s gains on Wall Street in a holiday-thinned start to the week. ASX 200 traded higher with the mining-related sectors and tech resuming their recent outperformance, while the top-weighted financials sector was also kept afloat as the major banks increased mortgage rates after last week’s RBA rate hike. Nikkei 225 rose above 28,500 as Japan mulls steps to open its borders including scrapping its daily limit of 50k arrivals of overseas visitors by October and waiving visa requirements. Hang Seng, Shanghai Comp and KOSPI were closed for the Mid-Autumn Festival.

Top Asian News

  • US is reportedly planning to broaden curbs on sales to China of semiconductors used for AI and chipmaking tools, according to Reuters sources.
  • Chinese President Xi will visit Central Asia and meet with Russian President Putin in his first trip outside of China since the pandemic began, according to Reuters.
  • PBoC called for efforts to facilitate the broader use of the digital yuan, according to Xinhua.
  • Japanese Deputy Chief Cabinet Secretary Kihara said the government must take steps as needed against excessive, one-sided currency moves. Kihara also said they won’t rule out issuing government bonds to fund an expected increase in defence costs and they are ready to consider steps in the not-so-distant future to further open Japan’s borders to overseas visitors including scrapping its daily limit of 50k arrivals of overseas visitors by October, according to Nikkei.
  • Japan is eyeing allowing foreign visitors to travel freely without travel agency bookings and waiving visa requirements, with PM Kishida to make the decision as early as this week, according to FNN.

European bourses extend on the upside seen at the open despite a lack of news catalysts during the European morning. European sectors are mostly firmer, with Autos & Parts outperforming closely followed by Banks, Retail, and Basic Resource, whilst the flip side sees defensive sectors, with Healthcare, Food & Beverages, and Telecoms in the red. Stateside, US equity futures are posting gains, with marginal outperformance seen in the NQ vs peers.

Top European News

  • EU offers to reduce Northern Ireland border controls, with EU's Sefcovic encouraged by the UK's intention for a negotiated settlement on trade, while the EU could cut customs checks across the Irish Sea to just a few lorries a day. Furthermore, Sefcovic said the border would be 'invisible' under European Commission plans provided that the UK gave the EU real-time data on trade movements, according to FT. However, Senior UK officials are reportedly downplaying EU's offer on Brexit this weekend, with one reason being that the offer does not go far enough, according to Eurasia's Rahman.
  • ECB's de Guindos said the 75bps hike last week was aimed at anchoring inflation expectations; higher rates may also weigh on economic growth, via Bloomberg. ECB's de Guindos said he does not know how much rates will climb.
  • Orpea Slumps 21% After Suprise Profit Warning
  • Bulgaria Says in Talks to Double Gas Supplies From Azerbaijan
  • Russia Strikes Power Plants as Ukrainian Forces Extend Advances
  • Euro Climbs Most in Five Months as Traders Eye Hawkish ECB Speak

FX

  • DXY recoiled further from 108.860 at best, through 108.500 and 108.00, to 107.800 and its lowest level since late August.
  • EUR/USD saw a boost to levels close to 1.0200 from a 1.0061 low on a combination of factors, including hawkish ECB rhetoric and reports that Russian troops withdrew from key areas in Eastern Ukraine following a counterattack over the weekend.
  • The JPY sits as the G10 laggard following hefty recovery gains on Friday, whilst Deputy Chief Cabinet Secretary Kihara was the latest to join the Japanese verbal intervention.

Fixed Income

  • Recovery momentum is building towards a breach of big figures in the major contracts, with no major catalyst for the upside.
  • Bunds, Gilts and the 10 year T-note recently topped out at 144.01, 105.87 and 115-30 respectively.

Commodities

  • WTI and Brent futures are once again choppy as prices initially fell at the resumption of electronic trade, before recovering as European players entered the fray.
  • Spot gold is firmer amid the softer Dollar, and eyes its 21 and 50 DMAs to the upside at USD 1,733.70/oz and USD 1,741.62/oz.
  • Base metals in general are boosted by the weaker Dollar; 3M LME copper eyes USD 8,000/t to the upside.
  • Russian official reiterates that some aspects of the grain deal need to be reviewed, via Interfax.

US Event Calendar

  • Nothing on deck

DB's Jim Reid concludes the overnight wrap

Keep an eye out for the monthly survey results published soon after this email arrives this morning. It's fair to say that respondents are pretty bearish. Overall the whole report, which is in presentation form for the first time, should be a good guide to current sentiment.

One bit of potentially positive news over the weekend was that a Ukrainian counter offensive operation in the north-east of the country seems to have led to it successfully claiming back land. Although this will be greeted well by markets, the surprise success does increase the chances of a more aggressive response from Russia. In market terms, actual war developments have been relatively quiet of late with most of the focus on Russian gas (or lack of it) into Europe. So this brings the military progress back in some focus. So all eyes back on the next step from both sides.

For the rest of the week, there's only one focal point and that's the US CPI report tomorrow, the last before the Fed's September 21st meeting. The Fed are now in their blackout period so that will reduce the central bank chatter somewhat this week. Our economists last week raised their forecast to a 75bps hike at next week's meeting while keeping the terminal rate at 4.1% for early next year. They believe the risks are on the upside. See here for more on their latest thinking. Importantly for the Fed, on Friday, we will also get inflation expectations from the University of Michigan consumer survey. US Retail sales data on Thursday will also be closely watched too but is unlikely to move the dial for the Fed.

For US inflation, our economists expect a slight decline in the headline CPI number (-0.09% MoM) but an acceleration of +0.30% in core, which would continue the pattern from July's reading (unchanged and +0.3%, respectively) which came in lower than expected. They believe the YoY headline CPI should fall five-tenths to 8.0%, while core should tick up a tenth to 6.0%.

The recent slump in commodities, with WTI firmly below $100 per barrel throughout the month, is likely to put downward pressure on the headline number as are gas prices being down -12% over the month. However, the resilience of the labour market is among the forces that could propel the core gauge higher. Expect a fair amount of attention on what now seems to be sharp falls in used cars after runaway price rises during covid. On the flip side our models suggest rents should continue to climb for a few more months before falling. So they'll likely be a few opposing forces in the release.

Speaking of the consumer, we will get retail sales data for August on Thursday and our US economists expect a +0.6% MoM reading, up from last month's flat print. As gasoline prices continue their downward trend, whether this assuages the inflationary pressures on consumer spending will be important. US PPI (Wednesday), business inventories and industrial production data (both Thursday) will provide more insight into supply-side pressures.

Turning to Europe now, and the BoE planned meeting has been postponed a week due to the period of mourning following the Queen's death. However the UK will remain in the spotlight when it comes to economic data, with inflation (Wednesday), monthly GDP (today), retail sales (Friday) and labour market data (tomorrow) all due. For the record headline UK CPI is expected to stay at 10.1% YoY. Elsewhere in the region, we will also get the ZEW survey for Germany and the Eurozone tomorrow. Late on Friday our economists updated their GDP forecasts and with the NS1 gas shut off now looking terminal they expect 2023 GDP to fall -3 to -4%. To be fair their zero gas scenario earlier in the summer suggested -5 to -6% growth for 2023 but the impressive gas build over the intervening period means the worse case isn’t quite as bad as feared. Lots of moving parts though. See here for their update.

At the end of the week, an array of economic activity indicators will be out in China, in their usual monthly data dump, including industrial production, retail sales, new home prices and property investment (Friday). The gauges will follow this week's downside surprises in trade data and inflation, so markets will be parsing the numbers to assess the magnitude of the economic softness. Our Chief China economist overviews the impact of China's covid policy on its economy and mobility here and the team has downgraded their Q3 GDP forecast to 2.5% YoY (previously 3.5%).

Overnight in Asia equity markets have kicked off higher building on Friday’s broad-based rally on Wall Street amid thin trading this morning. As I type, the Nikkei (+1.11%) is trading higher while the S&P/ASX 200 (+1.09%) is also trading in positive territory on improved risk sentiment. Elsewhere, in mainland China, Hong Kong and South Korea markets are closed for a holiday.

In overnight trading, US stock futures are flat with contracts on the S&P 500 (-0.07%) and NASDAQ 100 (-0.06%) just below flat, so not much market reaction to the news out of Ukraine in the earliest hours of the week. Meanwhile, yields on the 10yr USTs (3.32%) are less than a basis point higher in Asia.

Over the weekend, Seiji Kihara a senior Japanese government official, expressed concerns about the yen’s slide by opining that the government must take necessary steps to counter excessive declines in the Japanese yen as the currency has weakened to a 24-year low versus the US dollar.

Crude oil prices are trading lower at the start of the week in early Asian trade as the imposition of strict COVID-19 restrictions in China is dampening the commodity’s demand outlook from the world’s second largest economy. As we go to print, Brent futures are down -1.41% at $91.53/bbl with the WTI futures (-1.47%) lower trading at $85.51/bbl.

Looking back at last week now and the magic number was 75, with the ECB and BoC delivering 75bp hikes, and pricing moving closer to certainty that the Fed would do the same at their September meeting next week. In line sovereign yields legged higher in advanced economies. Notably, risk sentiment held in though, driving equities up on the week.

Starting with bonds, the ECB raised rates +75bps, with President Lagarde hinting more rate hikes were still forthcoming, noting inflation was “far too high” and policy rates were “far away” from adequate levels to bring inflation down. The entire bund curve shifted higher, albeit with some flattening, given the stricter stance in policy. 2yr bunds climbed +22.6bps (-0.7bps Friday) and 10yr bunds were +17.3bps higher (-1.9bps Friday) on the week. 10yr BTPs kept the pace, increasing +17.6bps over the week (+4.4bps Friday).

EU energy ministers met Friday, agreeing a comprehensive plan was necessary to combat the current gas crisis. While specifics weren’t agreed upon (as expected), they noted a wide suite of tools – including gas price caps, emergency liquidity for utilities, and further demand reduction plans – would be leveraged. In the first trading week since the announcement that Nord Stream 1 flows would not resume due to a “leak”, European natural gas futures prices actually fell -3.53% on the week (-6.10% Friday). Part of that was probably from the tough talk from energy and fiscal ministers, but there was probably also an element of taking out risk premium; NS1 flows can’t go below zero so we are possibly getting closer to peak bad news. However as my CoTD (link here) showed on Friday, next winter could also be pretty tough for gas supplies in Europe. But I suppose at least we should know that by now. The lack of upward follow through in gas prices contributed to better risk sentiment over the week with the STOXX 600 climbing +1.06% (+1.52% Friday), and the DAX scraping out a modest +0.29%, helped by a +1.43% bump on Friday.

In the US, Chair Powell took his last opportunity before the September meeting blackout period to express a steadfast resolve in the fight against inflation, which left the market pricing +72.7bps of tightening at the September meeting, so pretty close to a full +75bp hike priced in, and pricing of terminal rates breaching 4% early next year, finally catching up closing to the long standing house view. Treasury yields sold off and the curve flattened like their European counterparts. 2yr Treasuries were +16.9bps higher (+5.3bps Friday) and 10yrs increased +12.0bps (-0.7bps Friday), leaving the 2s10s curve at -25.3bps. The S&P 500 was strong, increasing +3.65% (+1.53% Friday), while the interest rate sensitive NASDAQ was very resilient in the face of tighter Fed policy and up +4.14% (+2.11% Friday).

Tyler Durden Mon, 09/12/2022 - 07:49

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Climate-Change Lockdowns? Yup, They Are Actually Going There…

Climate-Change Lockdowns? Yup, They Are Actually Going There…

Authored by Michael Snyder via The End of The American Dream blog,

I suppose…

Published

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Climate-Change Lockdowns? Yup, They Are Actually Going There...

Authored by Michael Snyder via The End of The American Dream blog,

I suppose that we should have known that this was inevitable.  After establishing a precedent during the pandemic, now the elite apparently intend to impose lockdowns for other reasons as well.  What I have detailed in this article is extremely alarming, and I hope that you will share it with everyone that you can.  Climate change lockdowns are here, and if people don’t respond very strongly to this it is likely that we will soon see similar measures implemented all over the western world.  The elite have always promised to do “whatever it takes” to fight climate change, and now we are finding out that they weren’t kidding.

Over in the UK, residents of Oxfordshire will now need a special permit to go from one “zone” of the city to another.  But even if you have the permit, you will still only be allowed to go from one zone to another “a maximum of 100 days per year”

Oxfordshire County Council yesterday approved plans to lock residents into one of six zones to ‘save the planet’ from global warming. The latest stage in the ’15 minute city’ agenda is to place electronic gates on key roads in and out of the city, confining residents to their own neighbourhoods.

Under the new scheme if residents want to leave their zone they will need permission from the Council who gets to decide who is worthy of freedom and who isn’t. Under the new scheme residents will be allowed to leave their zone a maximum of 100 days per year, but in order to even gain this every resident will have to register their car details with the council who will then track their movements via smart cameras round the city.

Are residents of Oxfordshire actually going to put up with this?

[ZH: Paul Joseph Watson notes that the local authorities in Oxford tried to ‘fact check’ the article claiming they’re imposing de facto ‘climate lockdowns’, but ended basically admitting that’s exactly what they’re doing...]

I never thought that we would actually see this sort of a thing get implemented in the western world, but here we are.

Of course there are a few people that are loudly objecting to this new plan, but one Oxfordshire official is pledging that “the controversial plan would go ahead whether people liked it or not”.

Ouch.

Meanwhile, France has decided to completely ban certain short-haul flights in an attempt to reduce carbon emissions…

France can now make you train rather than plane.

The European Commission (EC) has given French officials the green light to ban select domestic flights if the route in question can be completed via train in under two and a half hours.

The plan was first proposed in 2021 as a means to reduce carbon emissions. It originally called for a ban on eight short-haul flights, but the EC has only agreed to nix three that have quick, easy rail alternatives with several direct connections each way every day.

This is nuts.

But if the French public accepts these new restrictions, similar bans will inevitably be coming to other EU nations.

In the Netherlands, the government is actually going to be buying and shutting down approximately 3,000 farms in order to “reduce its nitrogen pollution”

The Dutch government is planning to purchase and then close down up to 3,000 farms in an effort to comply with a European Union environmental mandate to slash emissions, according to reports.

Farmers in the Netherlands will be offered “well over” the worth of their farm in an effort to take up the offer voluntarily, The Telegraph reported. The country is attempting to reduce its nitrogen pollution and will make the purchases if not enough farmers accept buyouts.

“There is no better offer coming,” Christianne van der Wal, nitrogen minister, told the Dutch parliament on Friday.

This is literally suicidal.

We are in the beginning stages of an unprecedented global food crisis, and the Dutch government has decided that now is the time to shut down thousands of farms?

I don’t even have the words to describe how foolish this is.

Speaking of suicide, Canada has found a way to get people to stop emitting any carbon at all once their usefulness is over.  Assisted suicide has become quite popular among the Canadians, and the number of people choosing that option keeps setting new records year after year

Last year, more than 10,000 people in Canada – astonishingly that’s over three percent of all deaths there – ended their lives via euthanasia, an increase of a third on the previous year. And it’s likely to keep rising: next year, Canada is set to allow people to die exclusively for mental health reasons.

If you are feeling depressed, Canada has a solution for that.

And if you are physically disabled, Canada has a solution for that too

Only last week, a jaw-dropping story emerged of how, five years into an infuriating battle to obtain a stairlift for her home, Canadian army veteran and Paralympian Christine Gauthier was offered an extraordinary alternative.

A Canadian official told her in 2019 that if her life was so difficult and she so ‘desperate’, the government would help her to kill herself. ‘I have a letter saying that if you’re so desperate, madam, we can offer you MAiD, medical assistance in dying,’ the paraplegic ex-army corporal testified to Canadian MPs.

“Medical assistance in dying” sounds so clinical.

But ultimately it is the greatest lockdown of all.

Because once you stop breathing, you won’t be able to commit any more “climate sins”.

All over the western world, authoritarianism is growing at a pace that is absolutely breathtaking.

If they can severely restrict travel and shut down farms today, what sort of tyranny will we see in the future?

Sadly, most people in the general population still do not understand what is happening.

Hopefully they will wake up before it is too late.

*  *  *

It is finally here! Michael’s new book entitled “End Times” is now available in paperback and for the Kindle on Amazon.

Tyler Durden Fri, 12/09/2022 - 06:30

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Futures Jump Above Key CTA Trigger Level Ahead Of PPI Data

Futures Jump Above Key CTA Trigger Level Ahead Of PPI Data

After sliding 8 of the previous 9 days, US stock futures extended yesterday’s…

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Futures Jump Above Key CTA Trigger Level Ahead Of PPI Data

After sliding 8 of the previous 9 days, US stock futures extended yesterday’s gains as investors awaited today's PPI data (ahead of next week's critical CPI print) and the Fed's final meeting for 2022 next week. Contracts on the Nasdaq 100 were up 0.6% as of 7:30 a.m. in New York, while S&P 500 futures rose 0.5%; more importantly spoos were back above the critical and closely watched medium-term CTA trigger of 3976. Treasury yields were little changed, with the 10-year rate just below 3.5%. The Bloomberg dollar index dropped.

And maybe even notable is that in its latest market commentary, Goldman's trading desk warned that "L/Os I speak with telling me they are bumping up against their cash ceilings." Are we about to see a flood of year-end buying as there is just too much cash on the sidelines as funds continue to dump assets. Underlying indexes rallied on Thursday after almost 9 straight days of losses, and are still on track to post a weekly decline amid fears of a hawkish-for-longer central bank and the risk of a recession in 2023.

Among notable moves in premarket trading, Activision Blizzard fell after the US Federal Trade Commission sought to block Microsoft’s $69 billion acquisition of the videogame publisher, saying the deal would harm competition. DocuSign Inc. jumped after the e-signature company reported third-quarter billings that were stronger than expected. Analysts noted that results were boosted by early renewals. Piper Sandler upgraded to neutral from underweight. Here are some other notable premarket movers:

  • Coinbase drops 2.8% in US premarket trading, after Mizuho Securities downgraded its rating on the cryptocurrency exchange to underperform from neutral. Analysts say that consensus expectations are “too optimistic” for the company’s 2023 revenue.
  • Netflix rises 2.3% after the streaming company is upgraded to overweight from equal-weight at Wells Fargo, with analysts seeing a path of positive catalysts in 2023 driven by lower churn and stable subscribers. Separately, Cowen names Netflix as its top large- cap stock pick for 2023.
  • Lululemon slides 6.8% in light volumes as lower-than-expected profitability raised concerns about a pileup of inventory, while the the yogawear maker’s full-year sales forecast disappointed Wall Street.
  • Pharvaris drops 14%, erasing some of yesterday’s gains, when the stock more than quadrupled in price. The surge followed the firm’s announcement that the RAPIDe-1 Phase 2 clinical study of PHVS416, an oral on-demand treatment for angioedema attacks, met primary endpoint and all secondary endpoints.
  • Take-Two Interactive has “bright” long-term prospects through owning iconic IPs such as Grand Theft Auto and a track record of successful releases, though Citi starts coverage on the video game developer on the sidelines on the expectation of consensus FY24 estimates falling.
  • Rally in Chinese stocks listed in the US continued, with major internet stocks making fresh gains in premarket trading on Friday as steps to relax pandemic curbs gain momentum.
  • Apple analysts are trimming their sales estimates for the iPhone maker’s fiscal first quarter as disruptions at its factories in China are expected to hit sales. With delivery times for iPhone recovering over the past week, analysts note that demand for the top-end smartphone models is still holding up and expect the backlog to benefit subsequent quarters. Shares gained about 1%.
  • Broadcom shares are up 4% after the semiconductor device company reported fourth-quarter results that beat expectations and gave a revenue forecast that was ahead of consensus. Analysts were positive about the company’s consistent execution amid a tough macro environment.
  • Carvana Co. slumps 6% after Needham cut its recommendation on the stock to hold from buy saying “confidence is low on the path forward.” The latest downgrade follows similar moves from at least five other brokerages in recent months, including Wedbush, William Blair and Cowen.
  • Chewy’s fiscal 3Q results look strong, though its conservative guidance may disappoint some investors, analysts say. Chewy shares fell 1.1%.
  • Erasca is 2.9% lower after its stock offering priced via JPMorgan and Goldman Sachs.

Focus this morning will be on US producer prices data amid optimism that inflation peaked earlier this year. The Fed has signaled it’s ready to start slowing the pace of rate hikes at its meeting next week, and investors will look for clues about its policy outlook for next year. CMC Markets market analyst Michael Hewson said “the big question” from hereon is whether the trend of cooling prices “can be maintained against a US central bank that doesn’t want to be seen as going soft on inflation, and services and wages data that points to a US economy that is slightly more resilient than originally thought.”

“Traders will be closely watching today’s PPI data, with S&P 500 options markets pricing the largest potential move around any PPI release this year,” said Hugo Bernaldo, senior cross-asset trader at Optiver. “Investors will also be looking for clues in today’s data of how Tuesday’s more important CPI figures will come in.”

A Bloomberg News survey showed fund managers are optimistic about a stock recovery next year, expecting low double-digit gains, although they cite a strong recession and stubborn inflation as the biggest risks. Top market strategists are more cautious, saying equities are likely in for a rough ride in the first half of the year as they price in a possible economic contraction. Bank of America Corp. strategists also warned that investors betting on a rally after the Fed’s last rate hike could be in for disappointment due to the impact of higher inflation. Their note, citing EPFR Global data, showed outflows of $5.7 billion from global equity funds in the week through Dec. 7.

Fed officials are leery of fanning stock rallies that ease financial conditions too much and thwart their inflation-fighting mission. Strategists have lined up to warn investors against piling back into risk on hopes the Fed is getting close to pivoting to easier policy. “Central banks will rather be on the safe side when it comes to future inflation after having underestimated inflationary pressures last year,” Karsten Junius, chief economist at Bank J. Safra Sarasin Ltd., wrote in a note to clients, adding that a pause in rate hikes is some way off.

European stocks also rose: travel, media and construction are the strongest-performing equity sectors. Euro Stoxx 50 rises 0.2%. FTSE MIB is flat but underperforms peers. Here are the most notable European movers:

  • BICO Group shares jump as much as 75% after the Swedish biotech issued shares to Germany’s Sartorius and agreed on a strategic collaboration with the lab-equipment group.
  • Man Group shares rose as much as 6.5% after the UK investment group announced a new share buyback program of up to $125m.
  • ABN Amro shares rise as much as 4.2% after it was upgraded to outperform at Credit Suisse
  • Credit Suisse shares rise 3.7% after the troubled lender completed its 4 billion-franc capital increase, giving the bank the funds needed to go ahead with its restructuring.
  • Pendragon shares drop as much as 28% after the auto dealer says Hedin Group no longer intends to make a bid for the company due to challenging market conditions and the uncertain economic outlook.
  • Carl Zeiss Meditec shares drop as much as 11%, the most intraday since October 2019, after the medical optical manufacturer said its first quarter 2022/23 Ebit margin is expected to fall significantly year-on-year amid higher costs and China’s Covid lockdowns.
  • Ipsen falls as much as 7.0%, the most since Oct. 27, after a phase III trial evaluating its Cabometyx in combination with another drug failed to meet its primary endpoint of overall survival in non-small cell lung cancer.
  • Worldline falls as much as 6.0% after it was cut to neutral from overweight at JPMorgan, with the broker saying a key pillar of its bullish view on the stock is deteriorating.
  • TotalEnergies shares retreated as much as 2.0% after the French energy group said it would take a $3.7 billion impairment hit in its fourth-quarter results following a decision to no longer consolidate its 19.4% stake in Russia’s Novatek.

Asian equities also gained Friday as most regional markets followed US shares higher, while reopening moves in China kept overall sentiment upbeat. The MSCI Asia Pacific Index rose as much as 1.4%, heading for a sixth-straight week of gains, lifted by technology shares. Hong Kong’s Hang Seng Index climbed more than 2%, leading gains in the region, while gauges in Japan and Taiwan advanced more than 1%. Shares of Chinese developers led the advance in Hong Kong as expectations grew for more policy support. Macau casino shares also rallied as the city followed the mainland to relax some of its Covid restrictions.  Read: China Stocks Cap Another Week of Hefty Gains on Reopening Moves

“A significant easing of Covid measures could happen in the second half of the year after gradual, piecemeal measures in the first quarter,” said Iris Pang, chief economist for Greater China at ING Groep NV. Still, “there are likely downside risks associated with the higher number of Covid cases.”  The Asian stock benchmark was on track for its longest weekly run of gains in two years, amid expectations for China’s reopening and the Federal Reserve’s pivot from its aggressive tightening. The gauge has risen more than 18% from its October low, on the cusp of entering a technical bull market. Traders are focusing on US producer prices data due later in the day, which may offer cues on the Fed’s tightening path

Japanese equities climbed, tracking a rebound in the S&P 500 Index, as investors awaited US inflation data for clues on the Federal Reserve’s tightening path.  The Topix rose 1% to 1,961.56 as of the 3 p.m. market close in Tokyo, while the Nikkei 225 advanced 1.2% to 27,901.01. Sony Group contributed the most to the Topix’s gain, increasing 2.3%. Asian gaming stocks rose as the US Federal Trade Commission seeks to block Microsoft’s $69 billion acquisition of Activision Blizzard.  Out of 2,164 stocks in the index, 1,633 rose and 420 fell, while 111 were unchanged. “The immediate focus of market participants is on PPI, CPI and the FOMC,” said Shogo Maekawa, chief global strategist at JPMorgan Asset Management.

Australian stocks gained as miners advance, tracking Asian peers. Australia’s key equity benchmark index rose 0.5%, boosted by miners and consumer staples shares, as regional stocks followed Wall Street higher. The S&P/ASX 200 closed at 7,213.20 on Friday but declined 1.2% for the week In New Zealand, the S&P/NZX 50 index fell 0.2% to 11,596.03.

Indian stocks were an outlier on Friday, among the biggest decliners in Asia on Friday,  with key gauges falling more than 1% as as tech shares dropped and investors booked some profits ahead of the year-end with economic growth expected to be under pressure. The S&P BSE Sensex fell 0.6% to 62,181.67 as of 3:45 p.m. in Mumbai, while the NSE Nifty 50 Index slipped by a similar magnitude. Both gauges fell 1.1% for the week, their biggest declines since late September. Tech shares contributed the most to Friday’s falls after management of HCL Technologies said fiscal 2023’s revenue growth will be at the lower end of the 13.5% to 14.5% band, triggering concerns about the industry’s prospects next year. Infosys was the biggest drag on the Sensex, with the company dropping 3.1%.

In FX, the dollar trims some of its earlier losses, though still lower on the day; CHF and JPY outperform in G-10 FX. The Bloomberg dollar index fell as much as 0.3% before paring much of that drop; it’s closed lower for the past two sessions.

  • The euro was little changed at 1.056 while the pound gained 0.2%, leaving it unchanged on the week at about $1.226
  • USD/JPY fell 0.5% to around 136; spot dollar was sold for the daily Tokyo fixing but Japanese banks continued after the event and in large amounts, according to Asia-based FX traders
  • Asian currencies “are buoyed on the back of overall risk on, a softer USD and China cheer” on re-opening hopes, said Vishnu Varathan, head of economics & strategy at Mizuho Bank Ltd. in Singapore. “This is at least partly owed to the fact that markets as of now are ignoring the ‘for longer’ threat embedded in the Fed’s rate hike dial-back,” he said

In rates, Treasuries outperform bunds and gilts at the 10-year mark. Treasury 10-year little changed around 3.475% with front-end richer and long-end cheaper; bunds lag by additional 5bp on the 10-year sector vs Treasuries, gilts by 3bp. The TSY curve was near steepest levels of the day heading into early US session with 2s10s, 5s30s spreads wider by 3bp and almost 4bp as long-end underperforms. Bigger losses across long-end of the German curve weigh on Treasuries, while US front-end recovered some of Thursday’s losses during Asia session. European bonds fell, led by Italy; 10-year German yield heads 4 basis points higher to 1.86%. Peripheral spreads widen to Germany with 10y BTP/Bund adding 4.3bps to 191.5bps.

In commodities, WTI trades within Thursday’s range, adding 1.4% to near $72.49. Spot gold rises roughly $5 to trade near $1,795/oz. Most base metals trade in the green.

To the day ahead now, and it’s a quiet one on the calendar, although data releases include the US PPI reading for November, as well as the University of Michigan’s preliminary consumer sentiment index for December.

Market Snapshot

  • S&P 500 futures up 0.6% to 3,989.75
  • STOXX Europe 600 up 0.2% to 436.37
  • MXAP up 1.2% to 159.01
  • MXAPJ up 1.2% to 518.83
  • Nikkei up 1.2% to 27,901.01
  • Topix up 1.0% to 1,961.56
  • Hang Seng Index up 2.3% to 19,900.87
  • Shanghai Composite up 0.3% to 3,206.95
  • Sensex down 0.7% to 62,154.01
  • Australia S&P/ASX 200 up 0.5% to 7,213.18
  • Kospi up 0.8% to 2,389.04
  • German 10Y yield up 2.1% to 1.86%
  • Euro little changed at $1.0550
  • Brent Futures up 0.9% to $76.80/bbl
  • Gold spot up 0.1% to $1,791.17
  • US Dollar Index little changed at 104.83

Top Overnight News from Bloomberg

  • The dollar is seen staying in defensive mode versus its major peers next year, according to analysts. Options traders remain bullish on its prospects yet topside bets continue to lose traction.
  • Three-month Euribor extends its advance as traders wager the European Central Bank will raise interest rates for a fourth successive meeting to a 13-year high at 2% next week.
  • The Bank of England said the expectations that British consumers have about where inflation is headed drifted further above its 2% target, and more people were dissatisfied with the way the central bank is doing its job.
  • The Riksbank may be near a peak level for borrowing costs after a string of key rate hikes, Riksbank Deputy Governor Per Jansson said.
  • China faces a daunting task after abruptly giving up on Covid Zero, with infections set to surge and deaths predicted to top 2 million.
  • China will sell 750 billion yuan ($108 billion) worth of special sovereign bonds next Monday to “support economic and social” development, the Ministry of Finance said in a statement late on Friday.

A more detailed summary of markets courtesy of Newsquawk

Asia-Pacific stocks traded mostly higher as the region took impetus from the gains on Wall St where the major indices found some relief during a quiet session ahead of next week's key risk events. ASX 200 was marginally positive with the index led higher by strength in the mining sector, but with gains capped by weakness in defensives and the top-weighted financial industry. Nikkei 225 moved closer to the 28,000 level amid the momentum from the US and after PM Kishida denied they were planning to increase the income tax for defence spending, although a separate report noted that Japan is considering raising corporate tax instead to fund the defence spending. Hang Seng and Shanghai Comp were indecisive in which the Hong Kong benchmark whipsawed and the mainland was lacklustre as participants digested the latest inflation data which showed a slowing pace of CPI growth and slightly narrower-than-expected fall in producer prices, while property names were underpinned on reports that China is mulling further property market easing measures at next week's economic meeting.

Top Asian News

  • Chinese Premier Li said inflation remains high in some countries and that the world economy faces grim challenges with the risk of a global recession increasing. Li also noted that the domestic economy is currently in a stable state after reversing the Q3 economic decline and said China is to further smooth logistics, while he added that China cannot stop opening up and will continue at a high level.
  • Canadian police suspended a contract with a China-linked firm amid concerns regarding potential Chinese access to Canadian police communications, according to SCMP.
  • Japan is considering raising corporate taxes to fund defence spending, according to Yomiuri.
  • Iron Ore Climbs to Four-Month High on Optimism Over China Policy
  • Xi Visit to Saudi Arabia Brings Pledge of More Oil Trade
  • SoftBank Group Cuts SenseTime Stake to 17.97% From 18.02%

Equities in Europe trade with no firm direction in what has been a quiet morning session thus far in holiday-thinned volumes, with little follow-through experienced from the gains in APAC. In Europe, sectors are mostly firmer with no overall bias and again with a narrow market breadth. Stateside, action is in-fitting with European peers as macro catalysts are light ahead of next week's blockbuster docket. China November vehicle sales fell 7.9% Y/YY vs prev. increase of 6.9% in October, according to the industry association, while CAAM suggests an extension of purchase tax cut on combustion engine vehicles to 2023. CAAM forecasts China 2023 vehicles sales +3% YY, large scale COVID infections will have an adverse influence in 2023. Tesla (TSLA) is to suspend Model Y production at Shanghai Plant between December 25th and January 1st; to reduce output in December by around 30% from November for Model Y, according to an internal memo cited by Reuters

Top European News

  • UK Treasury publishes the 'Edinburgh reforms': to reform short selling regulation. To consult on removing rules for capital deduction at banks. To review senior manager certification rules. Click here for more detail.
  • BoE/ Ipsos Inflation Attitudes Survey - November 2022: median public inflation expectation for the coming year at 4.8% in Nov (prev. 4.9% in Aug); 1-2yr inflation 3.4% (prev. 3.2%), 5yr 3.3% (prev. 3.1%).
  • UK Sets Out Post-Brexit Finance Plan to Spur City of London
  • Two More ECB Rate Hikes Seen Before QT Goes Live Early Next Year
  • Arnault’s Son Antoine Takes Wider Role at LVMH Luxury Empire

FX

  • DXY managed to derive some support after losing 104.50 in early trade, currently the index is lower but in proximity to the 104.86 peak.
  • Peers are generally fairly contained with modest outperformance in safe-haven JPY and CHF as US yields slip slightly.
  • Petro-FX continues to lag as the broader complex is once again consolidating with minor gains in the context of recent price action.
  • NOK knocked on soft CPI ahead of the Norges Bank while NZD was underpinned overnight despite mixed domestic data.
  • PBoC set USD/CNY mid-point at 6.9588 vs exp. 6.9604 (prev. 6.9606)

Fixed Income

  • EGBs and USTs continue to diverge, though overall action has been limited given a lack of drivers and thin volumes.
  • EZ periphery is cognisant of the looming TLTRO.III repayment publication, though the impact may not be felt until the January window.
  • Stateside, yields are modestly softer across the curve, with action slightly more evident at the short-end.

Commodities

  • WTI Jan and Brent Feb remain firmer intraday but in the grander scheme are consolidating with modest gains, the former around USD 72.50/bbl (vs low 71.32/bbl), and the latter just above the USD 77/bbl mark (vs low 75.95/bbl).
  • Kuwait set January KEC crude OSP for Asia at Oman/Dubai + USD 2.10/bbl, according to Reuters.
  • Russia is to decide on whether to increase oil production after Q1 following the introduction of the price cap, via Tass citing an official.
  • China's Securities Regulatory Commission is to allow overseas investors in DCE soybean, soybean meal and soybean oil futures and options from December 26th.
  • Canada to review regulatory framework for critical mineral mines and other cleans growth projects to make them faster and more predictable; seeking regulatory harmonization opportunities with the US in a new critical mineral strategy.
  • Spot gold remains capped by USD 1800/oz while base metals are off best levels after deriving modest support overnight.

Geopolitics

  • US is preparing to send a USD 275mln military aid package to Ukraine, according to AJA Breaking.
  • Lithuanian PM Simonyte says Russian President Putin wants a break in the Ukrainian invasion, in order to regroup.
  • US is to sanction entities from China and Russia related to human rights abuses, according to WSJ.

US Event Calendar

  • 08:30: Nov. PPI Final Demand MoM, est. 0.2%, prior 0.2%; YoY, est. 7.2%, prior 8.0%
    • PPI Ex Food, Energy, Trade MoM, est. 0.1%, prior 0.2%; YoY, est. 4.7%, prior 5.4%
    • PPI Ex Food and Energy MoM, est. 0.2%, prior 0%; YoY, est. 5.9%, prior 6.7%
  • 10:00: Oct. Wholesale Trade Sales MoM, est. 0.3%, prior 0.4%
  • 10:00: Dec. U. of Mich. Sentiment, est. 57.0, prior 56.8
    • U. of Mich. Expectations, est. 54.5, prior 55.6
    • U. of Mich. Current Conditions, est. 58.8, prior 58.8
    • U. of Mich. 1 Yr Inflation, est. 4.9%, prior 4.9%
    • U. of Mich. 5-10 Yr Inflation, est. 3.0%, prior 3.0%
  • 10:00: Oct. Wholesale Inventories MoM, est. 0.8%, prior 0.8%
  • 12:00: 3Q US Household Change in Net Wor, prior -$6.1t

DB's Jim Reid concludes the overnight wrap

Risk appetite returned to markets over the last 24 hours, with the S&P 500 snapping a run of 5 consecutive losses to advance +0.75%, whilst bond yields moved higher as well. That came in spite of fresh jitters about the state of the US economy, with the latest data on continuing jobless claims showing a further increase to 1.671m in the week ending November 26 (vs. 1.618m expected). That’s their highest level since early February, and follows a noticeable increase over recent weeks that’s seen them rise by nearly a quarter since mid-September.

With growing concern about a potential recession, attention today will turn to another couple of data points that may give a steer on how aggressively the Fed will lift rates over the coming months. The first is the US PPI inflation reading for November at 13:30 London time. Usually the producer price release gets less market attention compared to consumer prices, but in part that’s because the CPI number is normally out first. This month however, PPI is out first, so should offer a signal on inflation in November ahead of the all-important CPI release on Tuesday. Our economists forecast that both headline and core PPI will come in at +0.2% on a monthly basis, in line with consensus.

The second data point will be the preliminary reading on the University of Michigan’s consumer sentiment index for December. That fell back in November after having risen for the 4 previous months, so the question will be whether that was just a blip or the start of a more pronounced downturn. We’ll also get their measure of longer-term inflation expectations that is closely watched. That’s begun to tick back up over the last couple of months, so any further rises would be concerning from the Fed’s point of view, who thus far have been reassured by the fact that longer-term expectations have remained anchored.

Ahead of those releases, we got some fresh signs of elevated US inflation pressures from the Atlanta Fed’s wage growth tracker, with the main measure of median hourly wage growth remaining unchanged at 6.4% in November. That’s a bit beneath the peak of 6.7% between June and August, but isn’t suggesting a meaningful deceleration in wage inflation as we move deeper into Q4, and this data is normally highly correlated with the Employment Cost Index.

With upcoming data providing the main focus today, markets remained in something of a holding pattern as investors looked forward to the packed calendar of events next week, including the Fed and ECB decisions. For instance, expectations of the Fed’s terminal rate continued to hover around the 5% mark, where they’ve been for nearly a couple of months now. Sovereign bond yields did see a noticeable bounceback yesterday, but that was coming off from their lowest levels in a couple of months, with 10yr Treasury yields up +6.5bps on the day to 3.48%. The 2s10s curve also moved to become slightly less inverted with a +1.3bps move to -83.0bps, but again that was coming off a multi-decade low for the curve the previous day.

Elsewhere yesterday, the downward trajectory in oil prices continued, with Brent crude falling a further -1.32% to $76.15/bbl. That left it at its lowest levels of the year so far, despite a brief surge in prices intraday after the Keystone oil pipeline was shut following a leak. WTI similarly pared back its brief gains to close -0.76% lower at $71.46/bbl. These lower prices are flowing through to the real economy as well, with US gasoline prices now down by just over a third from their peak in mid-June, currently at $3.329/gallon. Furthermore, the energy price declines were seen in European natural gas futures as well, which fell -6.94% on the day to €139 per megawatt-hour.

For US equities, there was a decent bounceback yesterday, with the S&P 500 up +0.75% as technology stocks led the advance. For instance, the NASDAQ was up a larger +1.13%, and the FANG+ index of megacap tech stocks rose +2.51%. Over in Europe, the tone was much more subdued for equities, with the STOXX 600 (-0.17%) losing ground for a 5th consecutive day. However, sovereign bonds traded more in line with their US counterparts, with yields on 10yr bunds (+3.7bps), OATs (+4.5bps) and BTPs (+8.6bps) all moving higher on the day.

Overnight in Asia, the major equity indices have mostly followed the US higher, with gains for the Nikkei (+1.27%), the Hang Seng (+1.64%), the CSI 300 (+0.24%), the Shanghai Comp (+0.05%) and the Kospi (+0.47%). The moves came as Chinese inflation remained subdued in November, with year-on-year CPI down to +1.6% as expected, down from +2.1% in October, which was seen as offering policymakers more space to stimulate the economy if required. That continued to be driven by food prices, which were up +3.7%, compared to non-food prices which only rose +1.1%. Elsewhere, the PPI reading was slightly higher than expected, but was still at a deflationary -1.3% over the last year (vs. -1.5% expected).

To the day ahead now, and it’s a quiet one on the calendar, although data releases include the US PPI reading for November, as well as the University of Michigan’s preliminary consumer sentiment index for December.

Tyler Durden Fri, 12/09/2022 - 08:11

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First-ever social responsibility report of Chinese enterprises in Saudi Arabia incorporates BGI Genomics projects

On December 1, 2022, the Social Responsibility Report of Chinese Companies in Saudi Arabia was officially launched, which is the first such report released…

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On December 1, 2022, the Social Responsibility Report of Chinese Companies in Saudi Arabia was officially launched, which is the first such report released by the Contact Office of Chinese Companies in Saudi Arabia. BGI Genomics projects in the Kingdom have been incorporated into this report.

Credit: BGI Genomics

On December 1, 2022, the Social Responsibility Report of Chinese Companies in Saudi Arabia was officially launched, which is the first such report released by the Contact Office of Chinese Companies in Saudi Arabia. BGI Genomics projects in the Kingdom have been incorporated into this report.

This event was attended by around 150 representatives of Chinese and Saudi enterprises, Saudi government officials, experts in the field of sustainable development, CCTV, Xinhua News Agency, Saudi Press Agency, Arab News and other media professionals. This Report presents the key projects and best practices of Chinese enterprises to fulfil their social and environmental responsibilities while advancing the Kingdom’s industry development.

Chen Weiqing, the Chinese ambassador to Saudi Arabia, said in his video speech that the Report highlighted Chinese enterprises’ best practices in serving the local community, safe production, green and low-carbon development and promoting local employment. The release of the Report helps Chinese enterprises in the Kingdom to strengthen communication with the local community, laying a stronger foundation for future collaboration.

Epidemic control and accelerating post-COVID 19 recovery

BGI Genomics has been fulfilling its corporate social responsibilities and worked with the Saudi people to fight the COVID-19 epidemic.

In March 2020, Saudi Arabia was hit by the pandemic. The Saudi government decided to adopt BGI Genomics’ Huo-Yan laboratory solution in April 2020. At the forefront of the fight against the epidemic, the company has built six laboratories in Riyadh, Makkah, Madinah, Dammam and Asir within two months, with a total area of nearly 5,000 square meters and a maximum daily testing throughput of 50,000 samples.

By the end of December 2021, BGI Genomics had sent 14 groups of experts, engineers and laboratory technicians to Saudi Arabia, amounting to over 700 people, and tested more than 16 million virus samples, accounting for more than half of the tests conducted during this period. The company has successfully trained over 400 qualified Saudi technicians, and all laboratories have been transferred to local authorities for the operation.

In the post-epidemic era, the Huo-Yan laboratories can continue to make positive contributions to public health, working with local medical institutions and the public health system to make breakthroughs in areas such as reproductive health, tumour prevention and control, and prevention.

Enhancing genomic technology localization and testing capabilities

In July 2022, BGI Almanahil and Tibbiyah Holdings, a wholly owned subsidiary of the Saudi Faisaliah Group, announced a joint venture (JV) to establish an integrated, trans-omics medical testing company specializing in genetic testing.

This JV company will help improve Saudi Arabia’s local clinical and public health testing and manufacturing capabilities, promote the localization of strategic products that have long been imported, contribute to the implementation and realization of the Kingdom’s Vision 2030 roadmap, and significantly enhance local capacity for third-party medical testing services as well as local production of critical medical supplies.

BGI Genomics attaches great importance to fulfilling its corporate social responsibility and has released its social responsibility report for four consecutive years since 2017. Since its establishment, the company has always been guided by the goal of enhancing health outcomes for all, relying on its autonomous multi-omics platform to accelerate technological innovation, promote reproductive health, strengthen tumour prevention and control, and accurately cure infections, and is committed to becoming a global leader in precision medicine and covering the entire public health industry chain.

The company will continue to work together with all stakeholders to contribute to the Kingdom’s Vision 2030 and the Belt and Road Initiative and looks forward to growing with our partners.

 

About BGI Genomics

BGI Genomics, headquartered in Shenzhen China, is the world’s leading integrated solutions provider of precision medicine. Our services cover over 100 countries and regions, involving more than 2,300 medical institutions. In July 2017, as a subsidiary of BGI Group, BGI Genomics (300676.SZ) was officially listed on the Shenzhen Stock Exchange.

 


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