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Futures Rise Ahead Of Critical CPI Print

Futures Rise Ahead Of Critical CPI Print

After yesterday’s cryptoquake shook all capital markets, sending global stocks tumbling, on Thursday…

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Futures Rise Ahead Of Critical CPI Print

After yesterday's cryptoquake shook all capital markets, sending global stocks tumbling, on Thursday morning US equity futures are steady as traders brace for an inflation print which will determine not only the December Fed rate hike but set the pace for Fed tightening over the next quarter. Nasdaq 100 and S&P 500 futures both edged modestly higher, rising 0.2% at 7:30 a.m. ET after underlying indexes plunged on Wednesday as the sweeping Republican Congressional victories that Wall Street traders bet on failed to materialize. Treasuries fell, with yield curves bear-flattening. The dollar advanced, while oil extended its slide to a fourth day.

In premarket trading, Coinbase led cryptocurrency-exposed stocks higher as Bitcoin rallied following Wednesday’s rout fueled by the withdrawal of Binance’s offer to buy FTX.com. Gen Digital Inc. jumped as its earnings matched estimates. Here are the other notable premarket movers:

  • Rivian shares gained 6.7% in US premarket trading after the electric-vehicle maker confirmed its guidance and a plan to build 25,000 EVs this year, even in the face of supply- chain issues weighing on its manufacturing operations. Analysts welcomed its third-quarter results as positive.
  • Coupang shares jump as much as 14% in US premarket trading after the South Korean e-commerce firm reported earnings that exceeded expectations, with Morgan Stanley calling it a “breakthrough” quarter.
  • Altria Group drops 1.9% in premarket trading as UBS downgrades it to a sell from neutral, saying in a note that the market appears to be pricing in too favorable an outlook for the company as consumers go for cheaper products.
  • Coinbase shares gain ~2% in premarket trading as Bitcoin rose following Wednesday’s rout fueled by the withdrawal of Binance’s offer to buy FTX.com.
  • Digital Turbine shares surged as much as 24% in US premarket trading, putting the stock on track for its biggest gain since August 2020, after the mobile phone software maker posted 2Q profit and adjusted Ebitda that beat estimates.
  • RingCentral’s guidance on improving margins addresses a key investor concern and will be welcomed, analysts say. Shares in the cloud communications software firm rose 13% in extended trading.
  • Bumble’s quarterly results and guidance are disappointing and will leave investors with concerns over its underlying performance and execution, analysts say. The stock fell 15% in after-hours trading after the report.

As we previewed earlier, the CPI for October is expected to have climbed 7.9% from a year ago, only a slight slowing from the 8.2% recorded in September. Investors will be closely assessing whether the Fed’s interest-rate increases are reining in prices and what a potential miss or beat would mean for the US central bank’s policy. A preview by a Goldman trader shared the following trading framework:

  • >8.2% S&P loses 3+%
  • 8 – 8.2% S&P loses 1-2%
  • 7.8 – 7.9% S&P gains 0 - 1%

Meanwhile, according to a scenario analysis by JPMorgan, the S&P 500 could rally more than 5% if the reading falls to 7.6% or below, but a higher-than-estimated figure would spark a 6% slump.

“The consumer price index is the center of attention,” Stephen Innes, managing partner at SPI Asset Management, wrote in a note. “An upside surprise could be temporarily painful given the current risk-off momentum. Investors are still incredibly jittery due to the crypto train wreck, US election bets that failed to materialize, and the seemingly never-ending Covid malaise in China.”

"We expect the Fed will continue to increase interest rates and we see peak rates in March 2023, reaching 5.25%," Frederique Carrier, head of investment strategy at RBC Wealth Management, said on Bloomberg TV. “The Fed seems to be standing out from other central banks in terms of its hawkishness. Having said that, the labor market is starting to show some cracks and we think that while the Fed is being quite hawkish now, it might reverse path quite quickly.”

Among midterm updates, Republicans are inching toward control of the House. Still, Democrats delivered a better-than-expected performance in the elections, defying predictions of a conservative red wave sweeping the nation. Wall Street was looking forward to a period of divided government, promising to prevent any major policy changes that could worsen inflation or just make the economic or corporate outlook more uncertain. It will still get it but in a more modest version.

European stocks pared losses with risk sentiment recovering slightly ahead of key US inflation data later. Euro Stoxx 50 falls 0.2%. FTSE MIB outperforms peers, adding 0.2%, CAC 40 lags, dropping 0.6%. Real estate, retail and miners lag while utilities and healthcare outperform. Here are some of the biggest movers in Europe:

  • AstraZeneca shares rise as much as 2.5% as the pharmaceuticals firm raises guidance after a 3Q beat helped by strong performance for key drugs such as Calquence and Imfinzi.
  • Allianz gains as much as 2.6% after 3Q earnings showed a stronger-than- expected capital position, modestly uplifted earnings guidance and the German insurer announced a EU1b buyback, according to Jefferies.
  • Engie rises as much as 6.1%, hitting the highest since February, with analysts saying the French energy group’s new guidance is comfortably ahead of expectations.
  • Delivery Hero jumps as much as 12% after the food delivery firm increased its Ebitda margin target, despite guiding gross merchandise value for the year to the lower end of its outlook range. The results offer “more to cheer than fear,” according to Jefferies.
  • Teleperformance tumbles as much as 38% as Colombia’s Ministry of Labor started an investigation into the French call center operator. The probe is related to “alleged union-busting, traumatic working conditions and low pay,” according to a Time Magazine report on Wednesday.
  • B&M drops as much as 7.8% after the UK discount retailer reported 1H adjusted Ebitda fell 18% from a year earlier. RBC expects FY24 consensus estimates to be cut, given that margins are likely to come under more pressure from the stronger dollar and more discounting.
  • ALK-Abello falls as much as 13% after slowing sales for the Danish allergy drugmaker’s key tablet products cast doubt on the company’s growth going ahead, analysts say.
  • Luxury stocks including Italian brand Moncler, Danish jeweler Pandora and Cartier-owner Richemont slip after China stepped up Covid-related restrictions across some of its biggest cities, including Beijing.

Earlier in the session, Asian equities dropped for a second day, as the turmoil in the crypto market and China’s Covid restrictions prompted a selloff ahead of key US Inflation data. The MSCI Asia Pacific Index fell more than 1%, with gauges in Hong Kong among the biggest decliners in the region. Consumer discretionary and tech shares fell the most. Shares linked to the crypto industry fell after Binance dropped its bid for FTX.com, while China’s heavyweights face dwindling Singles Day sales.  Risk-off sentiment prevailed in Asia trading on Thursday as investors awaited data on price increases in the US to gauge the Fed’s next policy move. Chinese stocks dropped as the nation strengthened Covid restrictions to curb an outbreak in a key manufacturing hub, dampening hopes of a reopening that triggered a rally this month. 

“I believe weak sentiment from the US and crypto is spilling over into Asia today with broad regional declines,” said Marvin Chen, a Bloomberg Intelligence strategist. “We expect volatility to continue until we get a catalyst on policy direction, which may be coming as attention turns to 2023.” Vietnam stocks tumbled as leveraged traders exited positions on concerns about liquidity shortages spreading in the property sector. The Asia benchmark is still poised for back-to-back weekly gains as traders piled into beaten-down Chinese shares on Monday. But with optimism over a potential China reopening losing momentum and the jury out on US inflation, investors remain on edge

Japanese stocks declined for a second day following US peers lower, as risk appetite decreased.  A deepening slump in cryptocurrencies hurt sentiment, as investors also parsed US midterm election results ahead of key inflation data due later Thursday. The Topix fell 0.7% to close at 1,936.66, while the Nikkei declined 1% to 27,446.10. Toyota Motor Corp. contributed the most to the Topix decline, decreasing 2.9%. Out of 2,165 stocks in the index, 708 rose and 1,347 fell, while 110 were unchanged. “If the CPI numbers come out higher than estimates, the Fed will likely tighten further,” said Tomo Kinoshita, a global market strategist at Invesco Asset Management. “This is a risk factor that might cause Japanese stocks to decline further.”

Australian stocks halted a four-day winning streak, weighed by declines in mining and financial shares. The S&P/ASX 200 index fell 0.5% to close at 6,964.00 with Origin Energy the top performer, surging 35% after it received a takeover offer from a group led by Canadian private equity giant Brookfield. Xero was among the worst decliners after the enterprise software firm’s EBITDA result missed analyst estimates, according to Jefferies.   In New Zealand, the S&P/NZX 50 index fell 0.5% to 11,091.93

In FX, the Bloomberg Dollar Spot Index advanced 0.3%, adding to the 0.6% advance on Wednesday, and the greenback strengthened against most of its Group-of-10 peers. The euro was among the worst performers and fell to a low of $0.9937. Treasuries bear- flattened, with yields rising by 1-4bps. Bunds fell in line with Treasuries while Italian bonds underperformed. The pound was the best G-10 performer, after dropping 1.6% against the dollar on Wednesday. Options have been bearish the euro ever since the US warned in early February that Russia could take offensive military action or attempt to spark a conflict inside Ukraine. A soft US CPI print could be the stimulus for a new era in its volatility skew. Gilts slipped, sending yields up by around 4bps across the curve. The yen was steady within recent narrow ranges against the greenback while implied volatility rose across the curve, led by shorter-term tenors, as investors geared up for upcoming US inflation data.

In rates, Treasuries were narrowly mixed across the curve into early US session with front-end and belly yields higher, flattening 2s10s, 5s30s spreads from Wednesday’s highs. Yields were cheaper by ~2bp across front-end of the curve with 2s10s, 5s30s spreads flatter by ~3bp and ~1bp on the day; 10- year yields around 4.095% are little changed vs Wednesday’s close with gilts outperforming by ~2bp in the sector.  Price action muted ahead of October CPI data, 30-year bond auction and several Fed speakers. Fed speaker slate follows early comments from Minneapolis Fed’s Kashkari, who said that any talk of a Fed pivot is “entirely premature”; Harker, Logan, Daly, Mester and George are scheduled to speak during the US session. US auction cycle concludes with $21b 30- year bond sale at 1pm; Wednesday’s 10-year tailed by 3.4bp. WI 30- year yield at 4.23% is above auction stops since 2011 and ~30bp cheaper than October’s, which tailed by 1bp. Bunds 10-year yields rise about 1.5bps, each within Wednesday’s range; gilts underperform, with the 10-year yield adding 5bps to above 3.5%.

WTI drifts 0.5% lower to trade around $85 intraday as the mood remains cautious and the Dollar picks up. Base metals are also lower across the board amid the cautious risk tone and firmer Dollar, with 3M LME copper back under USD 8,000/t (vs high USD 8,100/t). Spot gold has adopted a mild downside bias as the Dollar gained in recent trade, with the 100 DMA at USD 1,714.55/oz and yesterday’s low at USD 1,701.20/oz.

Bitcoin extended gains, advancing about 6% after earlier hitting a fresh low for the year at $15,574.

FTX's downfall was rooted in poorly performing investments made during the crypto rout and the FTX owner used customer deposits to partially finance his trading firm earlier this year, according to Reuters sources. It was also separately reported that FTX is seeking emergency funding to meet withdrawal requests and without funding would result in bankruptcy, according to Bloomberg.

To the day ahead now, and the main highlight will be the US CPI release for October. Other data releases include the US weekly initial jobless claims and Italian industrial production for September. From central banks, speakers include the Fed’s Waller, Harker, Daly, Mester and George, as well as the ECB’s Schnabel, Kazimir, Vasle and de Cos, along with the BoE’s Ramsden.

Market Snapshot

  • S&P 500 futures up 0.3% to 3,766.25
  • STOXX Europe 600 down 0.1% to 419.75
  • MXAP down 1.2% to 141.77
  • MXAPJ down 1.4% to 455.83
  • Nikkei down 1.0% to 27,446.10
  • Topix down 0.7% to 1,936.66
  • Hang Seng Index down 1.7% to 16,081.04
  • Shanghai Composite down 0.4% to 3,036.13
  • Sensex down 0.7% to 60,593.48
  • Australia S&P/ASX 200 down 0.5% to 6,964.02
  • Kospi down 0.9% to 2,402.23
  • German 10Y yield up 0.6% at 2.19%
  • Euro down 0.5% to $0.9966
  • Brent Futures down 0.2% at $92.45/bbl
  • Gold spot up 0.1% to $1,707.72
  • U.S. Dollar Index little changed at 110.63

Top Overnight News from Bloomberg

  • While an expected fall in US CPI will likely be welcomed by investors, Friday’s University of Michigan 5-10 year inflation expectations will resonate with Federal Reserve officials fearful of price rises becoming entrenched
  • Federal Reserve Bank of Minneapolis President Neel Kashkari said policymakers were trying hard to achieve a soft landing for the US economy but will not flinch from curbing high inflation
  • The ECB has increased the amount of securities that central banks in the euro area can lend out against cash collateral, a bid to satisfy demand for high-quality liquid assets around year-end
  • Norway’s inflation unexpectedly accelerated to 7.5% in October, the fastest pace since 1987, while economists in a Bloomberg survey had expected an increase to 7.1%. Price growth in Denmark rose to 10.1% in September -- a 40-year high
  • Japan is enjoying some success in its battle with speculators targeting the enfeebled yen and the central bank’s stubborn grip on yields, but more tests lie ahead

A more detailed look at global markets courtesy of newsquawk

APAC stocks traded negatively as the region followed suit to the losses stateside where the major indices were pressured amid a firmer dollar and contagion from further crypto turmoil as Binance pulled out of the FTX buyout deal. ASX 200 was subdued by underperformance in the tech and commodity-related sectors although losses in the index were cushioned by M&A-related news with Origin Energy shares up by more than 30% following a buyout offer from a Brookfield consortium and with Perpetual underpinned after it rejected a revised non-binding indicative proposal. Nikkei 225 declined as participants digested a slew of earnings releases and with Honda amongst the worst performers after its H1 net fell and cut its vehicle sales forecast due to the chip shortage. Hang Seng and Shanghai Comp retreated amid ongoing COVID woes in China after Guangzhou locked down another district on Wednesday, while two districts in Chongqing also raised COVID restrictions and halted schools.

Top Asian News

  • US President Biden said he is not willing to make any fundamental concessions when he meets with Chinese President Xi and he wants them to lay out what each of their red lines are when they meet. Biden added that they will discuss Taiwan and will discuss fair trade with Xi, as well as relationships with other countries, according to Reuters.
  • China Politburo Standing Committee hosted its first meeting; top leadership was urged to stick with COVID zero policy, state media reports; urges more precise COVID control, stressed the need to minimise impacts on economy.
  • Two districts in China's Chongqing were said to have raised COVID restrictions and halted schools.
  • BoJ Governor Kuroda said they are not at the stage where they can debate an exit and that raising interest rates now would hurt the economy still in the midst of recovering from the pandemic's impact, so is undesirable. BoJ Governor Kuroda said they will maintain easy monetary policy to sustainably and stably achieve 2% inflation accompanied by wage growth, while he also stated that deepening the negative rate is among the policy options if needed, according to Reuters.
  • RBA Deputy Governor Bullock said they are seeing more broad-based CPI pressure in the economy and need to raise interest rates to influence demand, although she separately commented that they are getting closer to the point where they might be able to pause and take a look, while she is hoping demand in the economy is slowing but needs more evidence, according to Reuters.
  • BoJ Governor Kuroda said he told PM Kishida that the BoJ will continue with monetary easing to achieve the price target in tandem with wage growth, via Reuters.
  • Japanese government has asked residents to stay at home in the event that localities request stronger measures during a future COVID wave, according to NHK.

Major bourses mostly hold a downward bias following weak handovers from Wall Street and then APAC in the run-up to US CPI later today. Sectors in Europe are mostly in the red, although to a lesser extent than at the cash open, with no overarching theme aside from earnings. US equity futures are trading sideways with modest gains and relatively broad-based performance thus far.

Top European News

  • UK Chancellor Hunt is reportedly looking to cut the surcharge on UK bank profits to 3% from 8% which would effectively shield UK banks from the bulk of a corporate tax rise, according to Bloomberg.
  • What to Expect in UK Chancellor’s Plan to Fix Fiscal Hole
  • UK Has Frozen Over £18 Billion in Russian Assets On Sanctions
  • Paris, London Commuters Hit by Strike Chaos on Thursday
  • Teleperformance Slumps 38% on Report of Colombian Labor Probe
  • Inflation Jump in Norway, Denmark Adds Woes for Nordic Economies
  • Credit Agricole ‘Very Confident’ on Banco BPM Talks

FX

  • DXY managed to fend off further downside pressure and form a base just above 110.000 before rebounding towards 111.00.
  • AUD, NZD, CHF, and EUR are the major laggards as the Buck bounced and sentiment soured.
  • GBP stands as the g10 outperformer as Cable held around 1.1350 and above the 50 DMA.

Fixed Income

  • Bonds appear to have hit the buffers for little apparent reason other than corrective price action and positioning for US CPI.
  • US Treasuries touched 110-25+ overnight compared to its 109-14 w-t-d trough.
  • Gilts peaked at 103.70 on Liffe yesterday vs 99.92 the day before.
  • Bunds reached 138.74 earlier having been down at 135.76 at one stage on Tuesday.

Commodities

  • WTI and Brent futures trade with mild losses intraday as the mood remains cautious and the Dollar picks up.
  • Spot gold has adopted a mild downside bias as the Dollar gained in recent trade, with the 100 DMA at USD 1,714.55/oz and yesterday’s low at USD 1,701.20/oz.
  • Base metals are also lower across the board amid the cautious risk tone and firmer Dollar, with 3M LME copper back under USD 8,000/t (vs high USD 8,100/t).

Geopolitics

  • US President Biden said Russia's evacuation of Kherson shows that they have real problems and he hopes that Russian President Putin will discuss more seriously a prisoner exchange for Brittney Griner.
  • US will not give advanced drones to Ukraine to avoid escalation with Russia, according to WSJ.
  • Top US general sees a relatively static front line in Ukraine during the winter and said opportunities to negotiate must be seized, according to Reuters.
  • Indonesian government confirmed that Russian President Putin will not attend the G20 summit in Bali but said he is scheduled to participate in one session at the G20 summit virtually, while Russia is to send Foreign Minister Lavrov instead, according to Reuters.
  • Russia's Kremlin said Foreign Minister Sergei Lavrov will represent Russia at the G20 summit in Indonesia, according to Al Jazeera.

US Event Calendar

  • 08:30: Oct. CPI MoM, est. 0.6%, prior 0.4%
    • CPI YoY, est. 7.9%, prior 8.2%
    • CPI Ex Food and Energy YoY, est. 6.5%, prior 6.6%
    • CPI Ex Food and Energy MoM, est. 0.5%, prior 0.6%
    • Real Avg Hourly Earning YoY, prior -3.0%
  • 08:30: Nov. Initial Jobless Claims, est. 220,000, prior 217,000
    • Continuing Claims, est. 1.49m, prior 1.49m
  • 08:30: Oct. Real Avg Weekly Earnings YoY, prior -3.8%
  • 14:00: Oct. Monthly Budget Statement, est. -$90b, prior -$165.1b

Central bank speakers

  • 09:00: Fed’s Harker Discusses The Economic Outlook
  • 09:35: Fed’s Logan Speaks at Energy and the Economy Conference
  • 11:00: Fed’s Daly Speaks with European Economics & Financial Center
  • 12:30: Fed’s Mester Discusses the Economic Outlook
  • 13:30: Fed’s George Speaks at Energy and the Economy Conference

DB's Jim Reid concludes the overnight wrap

As we wake up two days after the midterm elections, we still don’t have much more certainty to offer you this morning on which party has won either chamber of Congress. Based on the results we have so far, the most likely outcome appears to be that the Republicans will retake the House with a narrow majority, and the Democrats will maintain control of the Senate narrowly as well. But we should caveat that there’s still a margin of error around both those outcomes, with a non-zero chance that the Republicans could still end up with a majority in the Senate, or that the Democrats end up just about maintaining their control of the House.

Ultimately, the outcome is going to hinge on a small handful of tight races, which could take days or even weeks to resolve. That’s particularly the case in the Senate, where the CNN count now stands at 49 seats for the Republicans and 48 for the Democrats, with 3 races still outstanding. Both sides need to pick up 2 of those 3 to win the chamber, since in the event of a 50-50 split, it would go to the Democrats with Vice President Harris’ tie-breaking vote. One of those 3 outstanding races is in Georgia, which is heading to a runoff election on December 6, as no candidate received the 50% necessary to win under state law. That means that if the other two races in Nevada and Arizona aren’t won by the same party, control of the entire Senate will hinge on that runoff result next month, just as happened two years ago.

When it comes to the House of Representatives, CNN’s count is now at 209 for the Republicans and 191 for the Democrats, with 218 needed for the majority. So far, the Republicans have gained a net 12 seats from the Democrats, which is above the net gain of 5 they require to retake the House. There are still some outstanding races, but as it stands the Republicans are ahead in the vote count in enough seats to just about give them a majority, albeit a very narrow one.

Whilst the range of outcomes is still open, the results we have make clear it was a much better outcome for the Democrats than generally expected beforehand. Indeed, whereas the Republicans lost -42 House seats in 2018 at President Trump’s first midterm election, and the Democrats lost -63 House seats in 2010 at President Obama’s first midterm election, today’s vote count suggests that the Democrat’s House losses could be in the single-digits, if you look at who’s ahead in each district as it stands. One Republican who did perform strongly however was Florida’s Governor Ron DeSantis, who won re-election by nearly 20 points and strengthened his position as a potential challenger for the Republican presidential nomination in 2024.

US equities have historically done very well in the year following the midterm elections, but day one got off to a bad start yesterday, with the S&P 500 (-2.08%) ending its run of three consecutive gains with a sharp move lower. That was driven by losses among the more cyclical sectors, with tech stocks in particular suffering losses, which left the NASDAQ (-2.48%) and the FANG+ Index (-3.44%) noticeably lower on the day. Weak earnings didn’t help matters either, with Disney (-13.16%) ending up as the worst performer in the entire S&P after falling short of analysts’ estimates.

That decline in risk appetite comes ahead of the latest US CPI data for October, which is out at 13:30 London time. This is one of the most important variables for the Fed as they consider whether to slow down their pace of rate hikes next month, although it’s worth bearing in mind that there’s still another CPI report after this one before their next meeting. In terms of what to expect, our US economists see energy boosting the monthly headline CPI print to +0.62%, which would be the fastest pace since June. However, they see core CPI stepping down a bit to +0.46%, and think that should draw the most focus, especially given the upside surprise in that measure last month. In turn, those monthly numbers should see the year-on-year CPI tick down to +8.0%, whilst year-on-year core CPI should also see a modest fall to +6.5%.

Ahead of the CPI release, investors moved to take out some of the monetary tightening they’d been expecting over the months ahead, with the futures-implied rate for December 2023 down -7.5bps to 4.70%. In turn, that helped Treasuries at the front-end of the curve to rally, with the 2yr yield coming down -7.1bps to 4.58%, while 10yr yields fell -3.1bps to 4.09%. That downward trend in yields has continued in overnight trading, with 10yr yields (-3.0 bps) trading at 4.06% as we go to print.

Whilst US assets struggled, European ones put in a relatively better performance yesterday, aided by the news that Russia had ordered its troops to leave the city of Kherson in Ukraine. To date, markets have generally taken news of Russian losses as a positive, as it’s seen as raising the chances of them negotiating, even if recent months haven’t exactly borne out that thesis. Nevertheless, sovereign bonds in Europe rallied on the back of the news, with yields on 10yr bunds (-11.2bps), OATs (-10.9bps) and gilts (-9.7bps) all ending the day lower. When it came to equities, the major indices did decline, although significantly less than their US counterparts, with the STOXX 600 down -0.30%.

Those losses for US equities have been echoed in Asia this morning, with indices including the Hang Seng (-1.77%), Nikkei (-0.96%), the CSI (-1.09%), the Shanghai Composite (-0.59%) and the KOSPI (-0.61%) all trading in negative territory. In the meantime, there’ve also been sharp losses in crypto markets, with Bitcoin slumping -15.87% yesterday to $15,731, which is its lowest closing level in nearly two years, although this morning it’s since rebounded +5.80% to $16,644. That came as Binance walked away from plans to acquire the FTX.com exchange. Bloomberg reported that FTX’s CEO told investors yesterday that the company would need to file for bankruptcy without a cash injection. Looking forward however, US equity futures are pointing to a modest rebound today, with those on the S&P 500 (+0.23%) and the NASDAQ 100 (+0.43%) moving higher.

To the day ahead now, and the main highlight will be the US CPI release for October. Other data releases include the US weekly initial jobless claims and Italian industrial production for September. From central banks, speakers include the Fed’s Waller, Harker, Daly, Mester and George, as well as the ECB’s Schnabel, Kazimir, Vasle and de Cos, along with the BoE’s Ramsden.

Tyler Durden Thu, 11/10/2022 - 08:07

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Aging | Clearance of p16Ink4a+ cells: limited effects on β-cell mass and proliferation in mice

“[…] we set out to explore the effects of removing p16Ink4a+ senescent cells on the proliferative capacity and mass of β-cells […].” Credit: 2023…

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“[…] we set out to explore the effects of removing p16Ink4a+ senescent cells on the proliferative capacity and mass of β-cells […].”

Credit: 2023 Bahour et al.

“[…] we set out to explore the effects of removing p16Ink4a+ senescent cells on the proliferative capacity and mass of β-cells […].”

BUFFALO, NY- January 31, 2023 – A new research paper was published on the cover of Aging (listed as “Aging (Albany NY)” by Medline/PubMed and “Aging-US” by Web of Science) Volume 15, Issue 2, entitled, “Clearance of p16Ink4a-positive cells in a mouse transgenic model does not change β-cell mass and has limited effects on their proliferative capacity.”

Type 2 diabetes is partly characterized by decreased β-cell mass and function which have been linked to cellular senescence. Despite a low basal proliferative rate of adult β-cells, they can respond to growth stimuli, but this proliferative capacity decreases with age and correlates with increased expression of senescence effector, p16Ink4a

In a new study, researchers Nadine Bahour, Lucia Bleichmar, Cristian Abarca, Emeline Wilmann, Stephanie Sanjines, and Cristina Aguayo-Mazzucato from the Joslin Diabetes Center at Harvard Medical School hypothesized that selective deletion of p16Ink4a-positive cells would enhance the proliferative capacity of the remaining β-cells due to the elimination of the local senescence-associated secretory phenotype (SASP). 

“We aimed to investigate the effects of p16Ink4a-positive cell removal on the mass and proliferative capacity of remaining β-cells using INK-ATTAC mice as a transgenic model of senolysis.”

Clearance of p16Ink4a-positive subpopulation was tested in mice of different ages, males and females, and with two different insulin resistance models: high-fat diet (HFD) and insulin receptor antagonist (S961). Clearance of p16Ink4a-positive cells did not affect the overall β-cell mass. β-cell proliferative capacity negatively correlated with cellular senescence load and clearance of p16Ink4a positive cells in 1-year-old HFD mice improved β-cell function and increased proliferative capacity in a subset of animals. Single-cell sequencing revealed that the targeted p16Ink4a subpopulation of β-cells is non-proliferative and non-SASP producing whereas additional senescent subpopulations remained contributing to continued local SASP secretion. 

“In conclusion, deletion of p16Ink4a cells did not negatively impact beta-cell mass and blood glucose under basal and HFD conditions and proliferation was restored in a subset of HFD mice opening further therapeutic targets in the treatment of diabetes.”

 

DOI: https://doi.org/10.18632/aging.204483 

Corresponding Author: Cristina Aguayo-Mazzucato cristina.aguayo-mazzucato@joslin.harvard.edu 

Keywords: beta cells, mass, proliferation, senolysis, senescence

Sign up for free Altmetric alerts about this article:  https://aging.altmetric.com/details/email_updates?id=10.18632%2Faging.204483

 

About Aging-US:

Launched in 2009, Aging (Aging-US) publishes papers of general interest and biological significance in all fields of aging research and age-related diseases, including cancer—and now, with a special focus on COVID-19 vulnerability as an age-dependent syndrome. Topics in Aging go beyond traditional gerontology, including, but not limited to, cellular and molecular biology, human age-related diseases, pathology in model organisms, signal transduction pathways (e.g., p53, sirtuins, and PI-3K/AKT/mTOR, among others), and approaches to modulating these signaling pathways.

Please visit our website at www.Aging-US.com​​ and connect with us:

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Las Vegas December 2022: Visitor Traffic Down 4.6% Compared to 2019; Convention Traffic Down 38.2%

Note: I like using Las Vegas as a measure of recovery for both leisure (visitors) and business (conventions).From the Las Vegas Visitor Authority: December 2022 Las Vegas Visitor StatisticsFrom the initial shadow of the omicron variant to record‐shatte…

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Note: I like using Las Vegas as a measure of recovery for both leisure (visitors) and business (conventions).

From the Las Vegas Visitor Authority: December 2022 Las Vegas Visitor Statistics
From the initial shadow of the omicron variant to record‐shattering room rates later in the year, Las Vegas enjoyed a robust recovery trajectory across core tourism indicators in 2022. With December 2022 visitation just 4.6% shy of December 2019, the year closed out with 38.8M annual visitors, 20.5% ahead of 2021 and ‐8.7% under 2019's tally.

Convention attendance for the year approached 5.0M attendees, dramatically ahead of pandemic‐suppressed volumes of 2021 and recovering to about three‐quarters of 2019's tally of 6.6M convention attendees.

Overall hotel occupancy reached 79.2% for the year , +12.4 pts YoY and down ‐9.7 pts vs. 2019. For the year, Weekend occupancy reached 89.3%, +8.0 pts over 2021 and ‐5.6 pts vs. 2019, while Midweek occupancy reached 74.7%, up 14.2 pts vs. 2021 but down ‐11.6 pts vs. 2019.

Strong room rates continued throughout 2022 as annual ADR reached $171, +24.5% higher than 2021 and +28.9% ahead of 2019 while RevPAR reached approx. $135 for the year, +47.6% YoY and +14.9% over 2019.
Click on graph for larger image.

The first graph shows visitor traffic for 2019 (dark blue), 2020 (light blue), 2021 (yellow) and 2022 (red)

Visitor traffic was down 4.6% compared to the same month in 2019.

Visitor traffic was up 10.1% compared to last December.

The second graph shows convention traffic.

Las Vegas Visitor Traffic
Convention traffic was down 38.2% compared to December 2019.

Note: There was almost no convention traffic from April 2020 through May 2021.

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US Job Opening Far Lower Than Reported By Department Of Labor, UBS Finds

US Job Opening Far Lower Than Reported By Department Of Labor, UBS Finds

When it comes to labor market data (or rather "data"), Biden’s labor…

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US Job Opening Far Lower Than Reported By Department Of Labor, UBS Finds

When it comes to labor market data (or rather "data"), Biden's labor department is a study in contrasts (and pats on shoulders). One day we get a contraction in PMI employment (both manufacturing and services), the other we get a major beat in employment. Then, one day the Household survey shows a plunge in employment (in fact, there has almost been no employment gain in the past 9 months) and a record in multiple jobholders and part-time workers, and the same day the Establishment Survey signals a spike in payrolls (mostly among waiters and bartenders). Or the day the JOLTS report shows an unexpected jump in job openings even as actual hiring slides to a two year low. Or the straw the breaks the latest trend in the labor market's back, is when the jobs report finally cracks and shows the fewest jobs added in over a year, and yet initial jobless claims tumble and reverse all recent increases despite daily news of mass layoffs across all tech companies, as the relentless barrage of conflicting data out of the Bureau of Labor Statistics (which is the principal "fact-finding" agency for the Biden Administration and a core pillar of the Dept of Labor) just won't stop, almost as if to make a very political point.

But while one can certainly appreciate Biden's desire to paint the glass of US jobs as always half full, reality is starting to make a mockery of the president's gaslighting ambitions, as one by one core pillars of the administration's "strong jobs" fabulation collapse. First it was the Philadelphia Fed shockingly stating that contrary to the BLS "goalseeking" of 1.1 million jobs in Q2 2022, the US actually only added a paltry 10,000 jobs (just as the Fed unleashed an unprecedented spree of 75bps rate hikes).

Then, it was Goldman's turn to make a mockery of the "curiously" low initial jobless claims, by comparing them to directly reported state-level WARN notices (mandatory under the Worker Adjustment and Retraining Notification (WARN) Act) which no low-level bureaucrat and Biden lackey can "seasonally adjust" because there they are: cold, hard, fact, immutable and truly representative of the underlying economic truth, and what they show is that - as the Goldman chart below confirms - layoffs are rising far faster than what the DOL's Initial Claims indicates.

More importantly, Goldman also found that WARN notices also track the JOLTS layoff rate: WARN notice counts remained elevated in late 2020 even as the layoff rate declined, but this likely reflects unusual reporting delays during the pandemic and the exclusion of layoffs at closing establishments in the JOLTS survey, which WARN notices capture provided firms remain in business. Not surprisingly, Goldman's tracking estimate based on December and January WARN notices for the large states covered not only shows that the recent drop in initial claims is unlikely, but that it is also consistent with a layoff rate of around 1.1%, higher than the 0.9% in the November JOLTS report.

And now, another core pillar of the US labor market is being dismantled, and it has to do with the Fed's favorite labor market indicator: the JOLTS report of job openings.

As UBS economist Pablo Villaneuva writes in a recent report by the bank's Evidence Lab group, Job openings in the JOLTS survey have not declined much since the March peak. Indeed, the BLS reports that openings were only 12% below the March 2022 peak in November and remain 48% above the pre-pandemic, 2019 average. This slight move downward has, as we noted recently, led to only a small decline in the vacancies-to-unemployment ratio, from 1.99 in March to 1.74 in November, still well above the 2019 average of 1.19.

Of course, such a high level of job openings is alarming to the Fed for the simple reason that it means Powell has failed at his mission at cooling off what appears to be a red hot jobs market; no wonder the Fed Chair has frequently flagged the high level of job openings as a sign of ongoing strength in the labor market. The bottom line, as UBS notes, is that "the BLS measure, although it has declined, remains historically high."

However, as in the abovementioned case of unexpectedly low jobless claims, there may be more here than meets the eye. According to Villanueva, "a range of other measures of job openings suggest normalization in the labor market—softening much more convincingly, often to pre-pandemic levels" - translation: whether on purpose or accidentally, the BLS is fabricating data. Also, the UBS economist flags, job openings are not a great indicator of current labor market conditions—they lagged the last two downturns in the labor market.

So what's the real story?

Well, as usual there is BLS "data" and everyone else... and as UBS cautions, other measures of openings tell a very different story: "Our UBS Evidence Lab data on job listings is weekly and more timely than the BLS series. The last datapoint is for the week of December 31. It shows openings down 30% from the March 2022 peak and only 25% higher than the 2019 average."

While BLS bureaucrats and Biden sycophants can argue UBS data is inaccurate, other longer dated series also indicate weaker openings. Take for example the NFIB Small Business Survey includes labor market measures that have correlated strongly with the JOLTS data over time but have weakened more sharply than the JOLTS measure in recent months. The percentage of small firms unable to fill open positions has a correlation of 0.95 with JOLTS openings since 2000. This series has declined 20% relative to the peak in May 2022 and is only 13% above the 2019 average. The NFIB series on percentage of firms with few or no qualified applicants tells a similar story.

Finally, the "Opportunity Insights" measure of openings (see here) is also below pre-pandemic levels.

So what's going on here?

As the UBS economist puts it, "in short, other surveys of job openings generally suggest that the BLS measure may be overstating labor market tightness. One reason to think the accuracy of the JOLTS data may have declined is that the sample shrank noticeably at the start of the pandemic. In 2019, the survey response rate was 60%. In December, it was 30%."

Or perhaps it's not gross BLS incompetence (or propaganda): maybe it's just a data quirk at key economic inflection points. As UBS observed in August, job openings tend to lag other labor market indicators. Ahead of the 2001 recession, the private sector job openings rate was still rising as private employment peaked and started printing negative. Again in 2007, as job openings were peaking, payroll employment in the revised data had slowed considerably, and job openings remained near their peak as employment was beginning to contract outright.

Whatever the reason for the discrepancy in this latest labor series, the bigger picture is getting troubling.

  1. We already knew that the employment as measured by the Household survey has been flat since March even as the Establishment survey signaled 2.7 million job gains since then. Shortly thereafter the Philadelphia Fed found that contrary to the BLS "goalseeking" of 1.1 million jobs in Q2 2022, the US actually only added a paltry 10,000 jobs in the second quarter of 2022. As such, the validity and credibility of the US nonfarm payrolls report is suspect at best.
  2. A few weeks ago, Goldman also put the credibility of DOL's weekly jobless claims report under question, when it found that initial claims as measured at the state level without seasonal adjustments or other "fudge factors" were running far higher than what the DOL reports every week.
  3. And now, we can also stick a fork in the JOLTS report, whose accuracy has just been steamrolled by UBS with its finding that job openings - a critical component of the US labor market and the Fed's preferred labor market indiator - are far lower than what the Dept of Labor suggests.

Bottom line: while it is obvious why the Biden admin would try hard to put as much lipstick as it can on US jobs data, the same data when measured with alternative measures shows a far uglier picture, one of a US labor market on the verge of cracking and hardly one meriting consistent rate hikes by the Fed.

Which, considering that in less than 24 hours the Fed will hike rates by another 25 bps, is extremely important, and we wish that we weren't the only media outlet to lay out the facts as the negative impact of continued policy error and tightening by the Fed will impact tens of millions Americans, not to mention the continued errors - whether premeditated or accidental - by the US Department of Labor. Alas, as so often happens, since nobody else in the "independent US press" is willing to touch the story of manipulated jobs data with a ten foot pole, it is again up to us to explain what is really going on.

The full UBS report available to pro subs.

Tyler Durden Tue, 01/31/2023 - 15:43

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