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Futures Slide Ahead Of Payrolls And Six Fed Speakers

Futures Slide Ahead Of Payrolls And Six Fed Speakers

The market crash will continue until Biden’s approval rating improves.

US futures extended…

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Futures Slide Ahead Of Payrolls And Six Fed Speakers

The market crash will continue until Biden's approval rating improves.

US futures extended their slide on Friday, signaling continuation of a drop in tech stocks following the Nasdaq 100’s biggest selloff since September 2020, ahead of today's jobs report (which bulls pray comes in at around minus 1 million to put a premature end to Powell's market-crashing tightening) and ahead of no less than six Fed speakers, as investors grappled with fears of a stagflationary recession against tightening monetary policy. Nasdaq 100 futures were 0.9% lower and S&P 500 futures traded at session lows, down 0.7% as of 7:30 a.m. EDT as panicked traders sell first and don't even bother to ask questions. Ten-year U.S. Treasury yield continued to climb, trading at 3.1%, near the highest since November 2018. The dollar continued its relentless ascent, while cryptos continued to tumble. Perhaps even more concerning to traders than the jobs report is that six Fed speakers are lined up including Williams, Kashkari, Bostic, Bullard, Waller and Daly.

Stocks plunged on Thursday, completely erasing their gains from the prior session amid a broad-based selloff in risk assets. The S&P 500 Index sank 3.6% on Thursday, while the tech-heavy Nasdaq 100 Index plunged 5.1%, its biggest decline since September 2020.  Still, some investors say that concerns may be overblown. “Looking back at just the past two days, it’s not really all that dramatic,” said Mattias Isakson, head of strategy and allocation at Swedbank, adding that indexes were roughly back to where they were compared to before the Fed press conference. “The overall market outlook hasn’t changed at all: interest rates and inflation worries will continue to create volatility in the short term,” Isakson said.

On Friday, shares of US-listed Chinese firms extended losses in premarket trading amid growing concerns about the country’s economic growth prospects and continued weakness in tech shares. Peloton shares dropped premarket after the company was said to be considering selling a stake of around 20%. Meanwhile, DoorDash jumped after earnings and Tesla gained after planning to boost car production at its Shanghai plant. Here are some more details on the biggest premarket movers today:

  • Tesla (TSLA US) shares gain as much as 1.1% in U.S. premarket trading, leaving them set to bounce back following Thursday’s losses, after the electric-vehicle maker was said to be making plans to boost car production at its Shanghai plant as soon as mid-May.
  • Shares of U.S.-listed Chinese firms extend losses in premarket trading amid growing concerns about the country’s economic growth prospects and continued weakness in tech shares. Alibaba (BABA US) -1.9%, Baidu (BIDU US) -2.4%, JD.com (JD US) -2%.
  • Peloton (PTON US) shares fall as much as 1.7% in U.S. premarket trading after the maker of indoor exercise bikes was said to be considering selling a stake of around 20% as part of a turnaround.
  • Cloudflare (NET US) shares drop 9.3% in U.S. premarket despite a boosted full-year revenue guidance; analysts say the outlook implies a significant deceleration for lead metrics. At least 3 analysts cut their price targets on the stock.
  • Digital Brands Group (DBGI US) shares decline 50% in U.S. premarket trading after pricing an offering of 37.4m shares at $0.25 apiece, representing a discount of ~50% to Thursday’s close.
  • DoorDash (DASH US) shares jump as much as 6.9% in U.S. premarket trading, with analysts positive on the food-delivery firm’s first-quarter update given tough pandemic comparisons and a difficult macroeconomic environment, though some trimmed price targets amid higher investments.
  • Block Inc. (SQ US) shares rise 7% after 1Q results, with analysts upbeat on demand for the company’s Square and Cash App payment services as the fintech company displays resilience amid a challenging market.
  • Live Nation (LYV US) shares gained 4% in postmarket trading. Its leading indicators like ticket sales, show counts and committed sponsorships remain robust, according to Guggenheim analyst Curry Baker.
  • Opendoor (OPEN US) jumps as much as 16% in U.S. premarket trading after the real estate platform provider forecast revenue for the second quarter that beat the average analyst estimate.
  • Zillow (ZG US) shares decline 6.7% in U.S. premarket trading after underwhelming guidance disappoints analysts, who believe that rising mortgage rates will cool the U.S. housing market. At least 3 analysts cut their price targets with one saying he doubts the real-estate technology firm’s ability to achieve its 2025 targets.

According to BofA, the global market selloff has further to run, as every asset class saw outflows in the week prior to the Federal Reserve’s meeting this week, with real estate posting its biggest outflow on record - $2.2 billion - and investors piling into safe havens like Treasuries although one wouldn't know it judging by where yields are trading.

“The Fed is attempting to land a B52 bomber on a piece of string and most risk markets still have their fingers in their ears and their hands over their eyes,” said James Athey, a London-based investment director at abrdn. “Hope is not a strategy.”

The next key event for markets is Friday’s U.S. jobs report (full preview here), which will be closely watched for signs that rising wage costs are adding to the inflationary pressures rattling investors. Estimates by economists are looking for payrolls to expand by 380,000 in April, and the unemployment rate to fall to 3.5%, although whisper numbers are lower.

A print higher than 500,000 in non-farm payrolls will provoke U.S. dollar buying as equities and bonds sell-off, while less than 300,000 should see the reverse, says Jeffrey Halley at OANDA. “A sharp divergence, up or down, from the median forecast, should produce a very binary outcome,” he says. “It’s that sort of market.”

“Any upward pressure on the average hourly earnings could lead to another spike of U.S. yields and therefore add negative pressure on equities and especially tech stocks,” said Christophe Barraud, chief economist at Market Securities LLP in Paris.

In Europe, the Stoxx 600 Index followed the Wall Street rout and was set for its worst weekly drop in two months, with consumer, retail and travel and leisure among the biggest decliners. FTSE MIB posts the smallest decline. Retailers, consumer products and media are the worst performing sectors. Traders will be watching job data, while Cigna, Dish, NRG Energy and Under Armour are among companies reporting earnings. Here are the biggest European movers today:

  • Grifols rose as much as 9.3%, to the highest since November, after the Spanish maker of pharmaceutical products derived from blood plasma gave a business update that Citi said supports its buy rating on the stock.
  • Leonardo rose as much as 4.4% after reporting earnings. Deutsche Bank said 1Q numbers were solid, while Intesa Sanpaolo said the company delivered “a sound start” to 2022.
  • S4 Capital shares gained as much as 9.9% after the digital advertising agency released delayed FY results that showed limited audit adjustments. Revenue was ahead of analyst expectations.
  • SKF shares advanced, breaking a seven-session declining streak, after Danske Bank upgraded the shares to buy, saying they “could generate good return in the coming 3-12 months.”
  • Krones shares surged as much as 11%, the most since October 2019, after the machinery company reported 1Q Ebitda that beat estimate, with analysts noting scope for upgrades.
  • Ambu shares dropped as much as 17% after the Danish health care equipment firm cut its outlook. Handelsbanken says the new guidance may lead to a 30% drop in FY Ebit estimates.
  • Adidas shares fell more than 6% after the German sportswear maker cut its margin outlook for the year. Analysts noted the impact of lockdowns in China. Peer Puma also fell.
  • IAG fell as much as 12%, the most intraday since November. The British Airways parent posted a 1Q operating loss that Citi analysts said was worse than consensus and their own expectations.
  • JCDecaux shares slumped as much as 12% after its 2Q organic revenue growth target of more than 15% fell short of analyst expectations amid lockdowns in China.

Earlier in the session, Asian stocks were on track for five straight days of losses, as traders questioned whether the Federal Reserve’s interest rate hike was enough to tackle inflation and Chinese leaders warned against doubting their Covid-Zero stance. The MSCI Asia Pacific Index declined by as much as 1.8%, poised for its longest losing streak since January and lowest closing level since July 2020. The broad-based selloff followed steep declines in U.S. shares overnight, with benchmarks in Australia, Taiwan and Vietnam each declining more than 1.7%.

“Volatility comes from doubts whether the 50 basis-point hike can be enough to curb inflation,” said Lee Han-Young, chief fund manager at DS Asset Management, a Seoul-based hedge fund.  For market volatility to ease, CPI or other inflation-related data needs to peak or slow down, he said. “Before that, volatility seems inevitable.” Stock indexes in Hong Kong and mainland China were the worst performers in the region after the Politburo’s supreme Standing Committee reaffirmed its support for a lockdown-dependent approach on Thursday. Still, declines in Asia were less than the rout in U.S. shares, with generally smaller-sized market reactions to the Fed’s policy statement Wednesday. China’s economic slowdown and regulation of its tech industry are also playing on investors’ minds, with the Hang Seng Tech Index sliding amid a lack of concrete steps to support the industry.  Overall, tech and financial stocks were among the biggest drags on the MSCI Asia Pacific Index. The measure is on track to fall about 2.6% this week, the largest weekly slide since mid-March. Bucking the regional trend, Japanese equities rose after a three-day holiday.

India’s benchmark stocks index registered its worst weekly decline in more than five months as growing concerns over higher borrowing costs to curb inflation dented risk sentiment.  The S&P BSE Sensex declined 1.6% to 54,835.58 in Mumbai on Friday, taking its loss this week to 3.9%, the biggest five-day drop since the period ended Nov. 26. The NSE Nifty 50 Index slipped 1.6% to 16,411.25.  HDFC Bank Ltd. fell 2.6% and was the biggest drag on the Sensex, which had 24 of the 30 member stocks trading lower. All but two of 19 sectoral sub-indexes compiled by BSE Ltd. fell, led by a gauge of realty companies.  The Reserve Bank of India raised its policy rate by 40 basis points in an out-of-cycle move this week after keeping it at a record-low level of 4% for the past two years.  “This suggests that the scales of growth versus inflation is tilted towards inflation and can be leading indicator of further rate hikes in FY23,” Shibani Kurian, head of equity research at Kotak Mahindra Asset Management Co. wrote in a note. She expects market participants to focus on earnings and commentary on demand and margins from companies.  The U.S. Federal Reserve and Bank of England also raised rates to tackle rising inflation.     In earnings, of the 24 Nifty 50 firms that have announced results so far, 17 either met or exceeded analysts’ estimates, while seven missed forecasts. Reliance Industries Ltd., the nation’s largest company, is scheduled to announce its results Friday. 

In rates, Treasuries extended Thursday’s bear-steepening move, with yields cheaper by 2bp to 4bp across the curve, amid bigger losses for German bonds after ECB’s Villeroy said above-zero rates are “reasonable” by year-end, and that there are signs inflation expectations are less anchored. US 10-year yields around 3.09%, cheaper by ~3bp on the day with 2s10s steeper by ~2.5bp; front-end yields outperform, higher by ~2bp at around 2.72%. Dollar issuance slate empty so far and expected to be muted because of jobs report; four names priced $7.6b Thursday taking weekly total above $16b, shy of $20b-$25b expected range. Peripheral spreads eventually tighten slightly to core after 10y BTP/Bund briefly widening through 200bps

In FX, a gauge of the dollar’s strength was little changed as traders awaited a U.S. jobs report on Friday. Bloomberg Dollar Spot Index gained 0.2% as traders awaited the U.S. jobs report due on Friday. Ten-year Treasury yields rose 2 basis points to 3.05%. The yen underperformed most G-10 currencies as Japan’s markets reopened following a three-day holiday. Leveraged funds initiated long dollar-yen positions heading into U.S. payrolls data, according to an Asia-based FX trader

Long gamma exposure in the major currencies meets a fresh round of demand following the Bank of England’s policy decision, which is contributing to continued erratic moves in the options space into the U.S. report. Real money and hedge funds both net USD buyers, according to three Europe-based traders, with demand for USD calls in the likes of EUR, AUD and MXN.

In commodities, WTI trades within Thursday’s range, adding 1.6% to trade near $110. Spot gold rises roughly $5 to trade above $1,880/oz. Most base metals trade in the red. Bitcoin continues to slide, and was last trading below $36,000, after cracking to key support levels yesterday.

Looking at the day ahead now, the main highlight will be the aforementioned US jobs report for April. Other data releases include German industrial production and Italian retail sales for March. From central banks, we’ll hear from the ECB’s Villeroy, Nagel, Elderson and Rehn, the Fed’s Williams, Kashkari and Bostic, and the BoE’s Pill and Tenreyro.

Market Snapshot

  • S&P 500 futures little changed at 4,140.00
  • STOXX Europe 600 down 0.9% to 434.26
  • MXAP down 1.6% to 164.46
  • MXAPJ down 2.7% to 538.32
  • Nikkei up 0.7% to 27,003.56
  • Topix up 0.9% to 1,915.91
  • Hang Seng Index down 3.8% to 20,001.96
  • Shanghai Composite down 2.2% to 3,001.56
  • Sensex down 1.4% to 54,941.03
  • Australia S&P/ASX 200 down 2.2% to 7,205.64
  • Kospi down 1.2% to 2,644.51
  • German 10Y yield little changed at 1.07%
  • Euro up 0.3% to $1.0570
  • Brent Futures up 1.3% to $112.39/bbl
  • Gold spot up 0.1% to $1,879.09
  • U.S. Dollar Index down 0.31% to 103.43

Top Overnight News from Bloomberg

  • European Central Bank Governing Council member Francois Villeroy de Galhau said interest rates may be raised back above zero this year if the euro-zone economy doesn’t suffer another setback.
  • The European Union has proposed a revision to its Russia oil sanctions ban that would give Hungary and Slovakia an extra year, until the end of 2024, to comply, according to people familiar with the matter.
  • China has ordered central government agencies and state-backed corporations to replace foreign- branded personal computers with domestic alternatives within two years, marking one of Beijing’s most aggressive efforts so far to eradicate key overseas technology from within its most sensitive organs.
  • Germany is ready to support eastern European nations in their efforts to wean themselves off Russian energy to secure broader support for sanctions targeting the country’s oil and gas sector, Chancellor Olaf Scholz said Thursday
  • The cost of living in Tokyo rose at the fastest pace in almost three decades in April, as the impact of soaring energy prices became clearer, an outcome that complicates the Bank of Japan’s messaging on inflation and the need for continued stimulus
  • China’s top leaders warned against questioning Xi Jinping’s Covid Zero strategy, as pressure builds to relax virus curbs and protect the economic growth that has long been a source of Communist Party strength
  • An escalating selloff in long-end Treasuries pushed yields to fresh multi-year highs Thursday, with the benchmark 10-year rate closing above 3% for the first time since 2018 as concern over inflation rattled the bond market
  • Having plunged by the most on record in offshore trade last month, China’s yuan is now facing the threat of selling pressure from the nation’s companies
  • The Federal Reserve will need to raise short-term interest rates to at least 3.5% to bring surging inflation under control, former Vice Chairman Richard Clarida said
  • South Korea needs to act preemptively on risk factors while monitoring situations in the economy and markets, as there are concerns local financial and FX markets will react sensitively according to various factors, Vice Finance Minister Lee Eog-weon says

A more detailed look at global markets courtesy of Newsquawk

Asia-Pac stocks were mostly lower amid spillover selling from the sharp declines on Wall Street. ASX 200 was heavily pressured in which the losses in tech led the broad declines across all sectors. Nikkei 225 initially declined on return from the Golden Week holidays but then pared all its losses as currency weakness persisted with Japan also planning to introduce tax incentives, as well as ease border measures in June. Hang Seng and Shanghai Comp conformed to the downbeat mood with tech and property names dragging the Hong Kong benchmark lower, while China also remained steadfast in its "dynamic COVID clearance" policy.

Top Asian News

  • Adidas Shares Drop Amid ‘Dialed-Down’ Outlook: Street Wrap
  • JAL Sees Return to Profit as Japan Moves to Reopen Borders
  • Food Prices Hold Near Record as Ukraine War Upends Global Trade
  • Nine in 10 Central Banks Exploring Own Digital Money, BIS Says

European bourses are subdued across the board, Euro Stoxx 50 -1.1%, reacting to the late-doors pressure in Wall Street. Currently, US futures are modestly softer but relatively tentative overall going into the NFP release and subsequent Fed speak. US regulatory officials have arrived in China for "late-stage" audit deal talks, according to Reuters sources. China's auto sales in April are estimated to have plunged 48.1% y-o-y to 1.17 million units, data from CAAM revealed. The recent Omicron outbreak has disrupted the auto sector, in particular in the Yangtze River Delta region, according to Global Times.

Top European News

  • EU Plan to Ban Russian Oil Means Windfall for Hungarian Refiner
  • BNP Paribas Offers Up to EU400m Non-Dilutive Convertible Bonds
  • ECB’s Villeroy Says Above-Zero Rates ‘Reasonable’ This Year
  • Sorrell Pledges Changes After S4’s ‘Embarassing’ Results Lag

In FX

  • ECB officials ramp up hawkish rhetoric to boost Euro; EUR/USD makes round trip to high 1.0580 area from sub-1.0500.
  • Pound continues to flounder as UK election results spell trouble for already under pressure PM Johnson and Tory Party, Cable under 1.2300 at one stage and EUR/GBP cross over 0.8550.
  • Buck reverses all and more post-Fed losses pre-payrolls before Euro rebound knocks DXY back below 104.000, index down to new 103.340 low vs 104.070 peak.
  • Aussie slumps despite hawkish RBA SOMP, Yen weak regardless of firmer than forecast Tokyo inflation data and return of Japanese markets from Golden Week; AUD/USD under 0.7100 and USD/JPY over 130.00.
  • Loonie cushioned by strong crude prices ahead of Canadian LFS, USD/CAD within 1.2814-67 range and close to 1.29bln option expiries between 1.2835-40.
  • Swedish Krona rangy after Riksbank minutes highlighting divergent views; EUR/SEK straddling 10.5000.

Fixed Income

  • EZ debt downed by latest hawkish ECB guidance, Bunds below 152.00 and periphery underperforming.
  • Gilts hold up better on the 118-00 handle awaiting BoE commentary after super Thursday.
  • US Treasuries dragged down by Eurozone bonds to an extent, as 10 year T-note pivots 118-00 ahead of NFP.

Commodities

  • WTI and Brent are bid in an exacerbation of APAC price action although, specific bullish-drivers have been somewhat sparse.
  • Much of the focus has been on the potential EU Russian oil import embargo, particularly Hungary's ongoing opposition and the EU's attempts to appease them.
  • Brazilian President Bolsonaro said a fresh hike in fuel prices by Petrobras could bankrupt Brazil and urged Petrobras not to increase fuel prices again, according to Reuters.
  • PetroChina (0857 HK) says they have no plans to buy discounted Russian oil or gas, according to an executive.
  • China is to sell 341k tonnes of imported soybeans from state reserve on May 13, according to the trade centre.
  • Spot gold is bid but has failed to derive much traction above the 100- and 10-DMAs at USD 1883.08/oz and USD 1885.1/oz respectively.

Central Banks

  • ECB's Villeroy says too weak EUR would go against ECB inflation target; inflation is not only higher but broader; core inflation is firmly above target. Case for APP beyond June is not obvious. Adds, it is possible to raise rates into positive territory (i.e. above zero) by year-end.
  • ECB's Nagel says current inflation too high, confident it can get back to 2% target in the medium-term; adds, window to act is closing. Is optimistic re. a 2022 move. Does not buy the argument that policy should hold back because of the economy right now, via FAZ.
  • ECB's Holzmann said the ECB is planning to raise rates which they will discuss and probably do at the June meeting, while he added that rates will rise this year, by how much and when, will be discussed intensively in June, according to Reuters.
  • ECB's Vasle says appropriate timing to start ECB hikes is "before summer"; inflation is becoming broad-based, cannot claim that monetary policy cannot curb inflation.
  • BoE's Pill: says the BoE does not have a forex target or objective; when questioned on what would cause them to pause (re. hikes), says more evidence of factors becoming more consistent with target(s). If we don't see this, will have to act further.

Market Snapshot

  • 08:30: April Change in Nonfarm Payrolls, est. 380,000, prior 431,000
    • April Change in Private Payrolls, est. 378,000, prior 426,000
    • April Change in Manufact. Payrolls, est. 35,000, prior 38,000
    • April Unemployment Rate, est. 3.5%, prior 3.6%
    • April Underemployment Rate, prior 6.9%
    • April Labor Force Participation Rate, est. 62.5%, prior 62.4%
    • April Average Hourly Earnings YoY, est. 5.5%, prior 5.6%
    • April Average Weekly Hours All Emplo, est. 34.7, prior 34.6
    • April Average Hourly Earnings MoM, est. 0.4%, prior 0.4%
  • 15:00: March Consumer Credit, est. $25b, prior $41.8b

Fed Speakers

  • 09:15: Fed’s Williams Gives Opening Remarks
  • 11:00: Fed’s Kashkari Takes Part in Moderated Discussion
  • 15:00: Fed’s Bostic Gives Commencement Address at Georgia Tech
  • 19:15: Fed’s Bullard and Waller Speak on Hoover Institute Panel
  • 20:00: Fed’s Daly Gives Commencement Speech

DB's Jim Reid concludes the overnight wrap

What’s dangerous about yesterday’s huge market slump is that there must be an element of doubting the ability of there to be an effective "Fed Put" in this cycle following a 30-40 year period where the central bank has almost always been able to come to the market's rescue. As we know, Wednesday saw a strong post-FOMC rally (S&P 500 +2.99%) on a belief that the Fed would be relatively measured in their tightening cycle after Chair Powell pushed back against 75bp hikes. However in a remarkable turnaround yesterday (S&P 500 -3.56%) the only conclusion you can draw is that the market quickly realised that the Fed really aren't going to be able to control this cycle very easily.

As you know our view is that the Fed won't be able to achieve a soft landing and that a recession is coming. This was something we dwelt on in our recent “What’s in the Tails?” piece (link here), where we expressed surprise that our call for a US recession in late-2023 was the outlier rather than the consensus given how far inflation is from target and the tightness of the US labour market right now (more today on this in the payrolls report).

I can't help but think that a great deal of the reaction yesterday was the appreciation that whilst the Fed can make soothing pronouncements, they are starting from an extraordinary difficult starting point, and with limited flexibility to respond to market or economy concerns whilst they fight inflation.

The Bank of England couldn't have helped either, as they became the first major central bank to forecast a contraction in 2023 alongside double-digit inflation later this year.

In terms of the moves themselves, US Treasury yields soared to fresh highs for this cycle at the long end, with those on 10yr Treasuries up +10.2bps at 3.04%, after a volatile day that saw 10yr yields increase as much as +17.2bps to 3.11% intra-day, meaning the 10yr range since the FOMC has been +21bps wide. Yesterday’s increase was driven entirely by real yields, which snapped back up by +12.2bps to 0.18%, thus closing at their highest levels since the Covid-related tumult in March 2020. Real yields were also as much as +17.2bps higher intraday, showing they were a large component of yesterday’s volatility. The rise in yields came as investors retraced some of their expectations from the previous day about a shallower pace of monetary tightening, raising the expected rate at the Fed’s December meeting by +5.0bps. And there was further evidence that the Fed’s tightening cycle is already having an effect on the real economy, with Freddie Mac reporting that the average rate for a 30-year mortgage had risen to 5.27%, which is the highest its been since 2009. It also marks a +231bp increase over the last year, which is the largest annual increase in mortgage rates since 1982. Those trends have continued this morning, with yields on 10yr USTs up +1.9bps to 3.06%, and the policy rate priced for December’s meeting up a further +1.3bps.

With yields bouncing higher, US equities were hammered once again with the more interest-sensitive tech stocks leading the way. As mentioned at the top, the S&P 500 fell back by -3.56%, which would be more newsworthy were it not for the fact that Friday’s -3.63% decline was even larger! Tech and mega-cap stocks really bore the brunt of the sell-off, as the NASDAQ slumped -4.99%, the largest since June 2020, and the FANG+ index fell -6.43%, the largest since September 2020, with all those indices ending a run of 3 consecutive advances. The sharp turnaround sent the VIX +6.07pts higher, and back above 30 at 31.49. It was a somewhat better picture in Europe, but that reflected the fact they hadn’t participated in the massive US rally after the Fed. However the major indices lost ground continuously through the day, with the STOXX 600 erasing an initial gain of +1.84% immediately after the open to end the day -0.70% lower.

Yesterday’s volatility came alongside a fresh round of central bank news, with the Bank of England continuing its recent series of rate hikes. In terms of the main headlines, they hiked by 25bps as expected to take Bank Rate up to 1%, and 3 of the 9 members on the Committee were even in favour of a larger 50bps move. Nevertheless, the decision was interpreted in a very dovish light, as two members did not find it appropriate to provide guidance for more rate hikes going forward, so potentially a three-way split on the committee. Adding to the dovish interpretation, the growth forecasts produced by the BoE were significantly downgraded, and now see an annual economic contraction occurring in 2023. Furthermore, they upgraded their inflation forecasts once again, seeing CPI rising further over the rest of 2022, and averaging “slightly over 10% at its peak” in Q4. For more info on the BoE, see our economist’s full reaction note (link here).

The more downbeat news on the economy led investors to reappraise the likely path of future hikes from the BoE, and overnight index swaps took out -17bps worth of tightening by the December meeting in response. In turn, sterling was the worst-performing G10 currency yesterday, with a -2.13% move against the US Dollar, which came as investors took stock of the potential for a more gradual tightening, as well as the prospect of a UK recession. The developments also meant that gilts outperformed their counterparts elsewhere in Europe, with the 10yr yield coming down -0.3bps on the day, a big contrast to those on bunds (+7.3bps), OATs (+7.2bps) and BTPs (+8.3bps) which all moved higher. These losses were witnessed over on the credit side as well, where the iTraxx Crossover index moved up +19.3bps to 453bps, the highest its been since May 2020.

Those moves higher in Euro Area yields came as the drum beat for an ECB rate hike as soon as July continued, with Bank of Finland’s Governor Rehn endorsing a hike in July. This is a world away from the situation just after Russia’s invasion of Ukraine, when there was serious scepticism among many that the ECB would be able to hike at all this year given the growth shock. But the inflation developments have outweighed that, and overnight index swaps are still pricing in 89bps worth of hikes this year, enough to take the current -0.5% deposit rate firmly into positive territory. Remember DB is forecasting +100bps of hikes before year end.

Overnight in Asia, equities have similarly begun the day deep in negative territory, tracking those sharp overnight losses on Wall Street. Across the region, the Hang Seng (-3.67%) is the largest underperformer with tech firms among the worst hit. In mainland China, the Shanghai Composite (-2.31%) and CSI 300 (-2.59%) have also seen a large slide as COVID-19 lockdowns continue to darken the economic outlook and weigh on investor sentiment. There’ve been further signs they’ll be continuing their zero Covid strategy overnight, with state broadcaster CCTV reporting that the Politburo’s seven-member Standing Committee reaffirmed their support for the approach. The only place not seeing large slides overnight are Japanese markets, where the Nikkei is up +0.92%, but that reflects the fact they’ve come back to trade today after 3 days of holidays. Looking forward, US stock futures are pointing to a stabilization today, with contracts on the S&P 500 (-0.02%) and NASDAQ 100 (-0.02%) marginally lower.

From the perspective of the major central banks, another negative development over the last 24 hours has been the continued rise in oil prices, with Brent Crude up another +0.69% yesterday to reach $110.90/bbl. The move was driven by the news that the US Energy Department would begin the process of replenishing its oil reserves, with a process to buy 60m barrels in the autumn. That said, prices pared back their gains in the European afternoon as the more negative risk-off move took hold, with prices declining from an intraday high of $114/bbl at one point. This morning in Asian trading hours, Brent crude (+0.50%) is extending its gains again, now at $111.46/bbl.

Looking forward now, the main highlight today will likely be the US jobs report for April, which along with next Wednesday’s CPI reading will help frame the policy debate over the 6 weeks ahead of the next FOMC meeting in mid-June. In terms of what to expect, our economists think that nonfarm payrolls will have risen by +465k, which in turn will lower the unemployment rate by a tenth to 3.5%. That would be a significant milestone, since 3.5% was the pre-pandemic low in the unemployment rate.

On the data side, the US weekly initial jobless claims came in at 200k in the week through April 30 (vs. 180k expected). Elsewhere, German factory orders fell by a larger-than-expected -4.7% in March (vs. -1.1% expected).

To the day ahead now, and the main highlight will be the aforementioned US jobs report for April. Other data releases include German industrial production and Italian retail sales for March. From central banks, we’ll hear from the ECB’s Villeroy, Nagel, Elderson and Rehn, the Fed’s Williams, Kashkari and Bostic, and the BoE’s Pill and Tenreyro.

Tyler Durden Fri, 05/06/2022 - 08:01

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Steps to building a more patient-centric industry

Lack of access, strict regulations, and demanding schedules have made it extremely difficult for patients to participate in
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Lack of access, strict regulations, and demanding schedules have made it extremely difficult for patients to participate in clinical trials. A 2018 NIH survey found that patients felt clinical trial participation to be inconvenient and burdensome, and nearly half (49.0%) said it disrupted their daily routine. In 2021, a CISCRIP Perceptions and Insights Study reported more disruption to daily routines compared to previous years, citing length of visits, travel, and diagnostic tests as top burdens.

To ease this burden, the life sciences industry has been searching for ways to make clinical trials more accessible for patients and to drive participation numbers, increase participant diversity, and improve overall patient experience. For many patients, this change starts with choice.

A recent survey of clinical trial professionals found that more than two-thirds of respondents (61%) believe giving patients choice will have a positive impact on clinical research, and well over half (58%) said that their organisations plan to give patients the option to choose how they participate in clinical trials moving forward. Some examples of these choices can include video visits, phone visits, and remote monitoring.

As the industry focuses on creating a more holistic, inclusive patient experience, here are key steps to consider in order to help bridge the gap between clinical research and the patient experience.

Build a base in the community

According to the FDA’s 2020 Drug Trials Snapshot Report, only 8% of clinical trial participants are Black or African American, as compared to nearly 14% of the US population. The fact is, many minorities never learn about vital clinical trials in play, or that they’re eligible to participate. Subsequently, they are excluded, creating an evident gap in participants, and subsequently needed data on how treatments respond across different demographics of people.

Creating a broader, more inclusive patient experience starts with building a network of advocates who can help organisers meet patients where they are located and educate them about the availability and value of the trials. Initially, there needs to be a more proactive and sustained nationwide outreach effort to raise clinical trial awareness within minority communities.

It’s also important to partner with trusted people within minority communities, such as religious and government leaders that have the credibility needed to share clinical trial information to counter scepticism. If sponsors can partner with patient-advocacy groups to inform design, recruitment, follow-up, and even data collection (particularly for patient-reported outcomes), it will help to keep patients engaged longer and potentially derive higher quality data sets that can lead to better patient outcomes over the long run.

Embrace technology to expand reach

Technology – especially related to automation and the cloud – can help create a more flexible clinical trial model, thereby making it easier for patients to participate. Digital tools used in decentralised trials, remote enrolment tools, consent forms, wearables, and remote devices, as well as data capture, can help to expand overall access to clinical trials. For example, with remote monitoring, doctors and trial administrators can analyse all the data coming in and, if there’s a problem, they can act more quickly and respond back to the patient through a mobile device such as a smartphone.

Cloud platforms can open two-way communication channels for patients, doctors, and trial administrators to talk and share data, essentially in real-time. Some early examples of these capabilities were part of the US Centers for Disease Control and Prevention’s (CDC) v-safe program, developed by Oracle, which is used to track the effects of the COVID-19 vaccines through voluntary, scheduled survey prompts, and to remind people about boosters. Today, capabilities like this are being extended so that trial data from wearable devices and home-monitoring systems can be communicated directly to trial sites.

A new solution

One significant roadblock to clinical trial inclusion of minority groups has been location and transportation. Many potential participants lack transportation to and from clinical sites, and some trials are only held in large city hospitals, instead of smaller community hospitals that participants can sometimes access more easily. Thanks to decentralised trials and technology that collects data remotely, people from anywhere can participate.

One approach the industry has been exploring is to utilise community retail pharmacies as a central location for people to learn about and participate in clinical trials. By collaborating with pharmacy retailers, sponsors will have more opportunities for patient recruitment because they can offer patients the convenience and comfort of visiting familiar community sites.

For example, CVS and Walgreens have instituted flexible clinical trial models that combine patient insights, technology capabilities, and in-person and virtual-care options to engage broader and more diverse communities. The result is a much more expansive pool of participants and potentially much better information about populations where the drug is effective, and other populations where it might not be effective.

Keep it simple

There’s a notion that because the healthcare and life sciences industries are very complex, the systems that support them have to be equally complex. In fact, the opposite is true. Easier-to-use systems will increase participation rates, and we will have better outcomes as a result. With so many technology advancements at its disposal, the industry must find a way to bridge the divide between patient experience and clinical research. The patient journey must be a positive one, so that they will encourage others to participate.

Imagine, clinical research as an accessible care option to anyone. Technology has given us the opportunity to make this goal a reality. But as an industry, we must innovate to bring new experiences to market and improve the clinical research ecosystem for patients, healthcare professionals, sponsors, and regulators.

About the author

Katherine (Kathy) Vandebelt is global head of clinical innovation at Oracle Health Sciences. With over thirty years of experience in clinical research working in different geographies and across various TA, Kathy has worked with various organisations to advance their clinical operations and business processes to a better operating model. She believes patients are the most important constituent in clinical development and provide the necessary information to assess the safety and efficacy of new medicines. She strives to introduce new experiences and make the clinical research ecosystem better for patients, healthcare professionals, sponsors, and regulators using the power of technology.

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Meta ‘powering through’ with Metaverse plans despite doubts — Zuckerberg

Billions of dollars have been poured into Meta’s virtual world with little return on investment, but CEO Mark Zuckerberg says he is holding fast.

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Billions of dollars have been poured into Meta’s virtual world with little return on investment, but CEO Mark Zuckerberg says he is holding fast.

Meta CEO Mark Zuckerberg is still hopeful about the company’s Metaverse plans regardless of the billions of dollars it’s sucking up from the company, claiming “someone has to build that.”

Appearing remotely for an interview at the Nov. 30 DealBook Summit in New York, Zuckerberg was asked his thoughts on whether the tech giants’ Metaverse play was still viable given its cost and the doubts cast over the platform, answering:

“I think things look very different on a ten-year time horizon than the zone that we're in for the next few years [...] I'm still completely optimistic about all the things that we've been optimistic about.”

He added part of “seeing things through” in the longer term was “powering through” the doubts held about its ambitions.

Meta's latest earnings, released on Oct. 26, revealed the largest-ever quarterly loss in its metaverse-building arm Reality Labs dating back to the fourth quarter of 2020. Zuckerberg’s virtual reality has cost $9.44 billion in 2022, closing in on the over $10 billion in losses recorded for 2021.

On the earnings call at the time Zuckerberg was unfazed by the cost, calling its metaverse the “next computing platform.” He doubled down on this claim at DealBook:

“We're not going to be here in the 2030s communicating and using computing devices that are exactly the same as what we have today, and someone has to build that and invest in it and believe in it.”

However, Zuckerberg admitted that the plans have come at a cost, Meta had to lay off 11,000 employees on Nov. 9 and the CEO said it had “planned out massive investments,” including into hardware to support its metaverse.

He said the company “thought that the economy and the business were going to go in in a certain direction” based on positive indicators relating to e-commerce businesses during the height of the COVID-19 pandemic in 2021. “Obviously it hasn't turned out that way,” Zuckerberg added.

“Our kind of operational focus over the next few years is going to be on efficiency and discipline and rigor and kind of just operating in a much tighter environment.”

Despite the apparent focus from Meta to build its metaverse, Zuckerberg claimed 80% of company investments are funneled into its flagship social media platforms and will continue that way “for quite some time.”

Investments in Reality Labs are “less than 20%” at least “until the Metaverse becomes a larger thing” he said.

Related: The metaverse is happening without Meta's permission

Of the 20% invested in Reality Labs, Zuckerberg said 40% of it goes toward its Virtual Reality (VR) headsets with the other “half or more” building what he considers “the long-term most important form factor [...] Normal-looking glasses that can put holograms in the world.”

Zuck takes bite at Apple

Zuckerberg also took a few jabs at its peer tech company Apple regarding its restrictive App Store policies, the likes of which have placed restrictions on crypto exchanges and nonfungible token (NFT) marketplaces, saying:

“I do think Apple has sort of singled themselves out as the only company that is trying to control unilaterally what apps get on a device and I don't think that's a sustainable or good place to be.”

He pointed to other computing platforms such as Windows and Android which are not as restrictive and even allow other app markets and sideloading — the use of third-party software or apps.

He added its been Meta’s commitment to allow sideloading with its existing VR units and upcoming Augmented Reality (AR) units and hoped the future Metaverse platforms were also open in such a manner.

“I do think it is it is problematic for one company to be able to control what kind of app experiences get on the device.”

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Nifty News: Porsche 911 NFTs, BMW files Web3 trademarks, Baby Shark’s NFT game and more…

BMW and Porsche have both recently ramped up their own Web3 plays, while Baby Shark is dipping into the blockchain gaming sector, but just for kids.

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BMW and Porsche have both recently ramped up their own Web3 plays, while Baby Shark is dipping into the blockchain gaming sector, but just for kids.

Porsche to launch 7,500 NFTs for use in a ‘virtual world’

German luxury car manufacturer Porsche has suggested it will be significantly ramping up its Web3 efforts after unveiling an upcoming NFT project consisting of 7,500 customizable tokenized vehicles.

In a Nov. 29 announcement, Porsche stated that the NFTs will be launched in January, and users will be able to customize various aspects of the cars in relation to performance and appearance.

The NFT art itself is being designed by designer and 3D artist Patrick Vogel, with all pieces revolving around the famous Porsche 911 model.

Notably these virtual assets will be designed in Epic Games’ Unreal Engine 5, suggesting that gaming integrations are afoot.

NFT car designs: Porsche

The company gave a sneak peek into the project at the Art Basel conference in Miami on Nov. 30. While specific details have not been mentioned, the company noted that owners will be able to use the cars in the “virtual world,” most likely meaning some sort of Metaverse.

More broadly, Porsche suggested that it is looking to significantly ramp up its exposure to Web3 moving forward, with the announcement noting that:

“Digital art is just one aspect of Porsche’s Web3 strategy. The sports car manufacturer is working to integrate the potential of blockchain technology into existing and future processes and solutions.”

Porsche previously had a hand in launching soccer-themed NFT collectibles in June 2021 as part of a project called Fanzone, but now appears to be taking the tokenization of its cars more seriously.

BMW to get Web3 trademarks

Speaking of German luxury car manufacturers, BMW has reportedly applied to trademark its logo in relation to a host of Web3 products and services.

The move was highlighted by USPTO licensed trademark attorney Mike Kondoudis, who frequently shares news regarding Web3 trademark applications in the U.S. from major companies.

BMW outlined intentions for its logo to span across collectibles such as virtual clothing, footwear, headwear and vehicles, while also indicating plans for downloadable virtual goods such as online environments and games.

Baby Shark’s Web3 arc

Content from Pinkfong’s massively popular children’s song/music video Baby Shark is set to be tokenized as part of a family-focused blockchain game.

Pinkfong reportedly penned a licensing agreement with Toekenz Collectibles to create and issue Baby Shark characters in a child safe digital environment.

Baby Shark NFT partnership: Toekenz

Toekenz Collectibles is an NFT platform targeted at children aged 12 and under, and the focus of the game is to educate kids aged five to nine “about the trading economy of digital collectibles.”

The kids will also be able to customize the NFT art to their own liking, and even participate in a Tokenz DAO where they “can exercise democratic decision-making.”

This is not Pinkfong’s first dip into NFTs, Cointelegraph previously reported that the South Korea-based company launched a series of limited editions Baby Shark NFTs in December last year.

Related: Two Bored Apes sell for $1M each: Nifty Newsletter, Nov. 23–29

Deadmau5 rolling out music metaverse

A Web3 startup co-founded by popular crypto-friendly DJ Deadmau5 (Joel Zimmerman) is gearing up for the launch of a music and gaming focused Metaverse platform.

Announced at the Art Basel event on Nov. 29, the start-up known as Pixelynx stated that the Polygon-based platform will launch this week, and kick things off with an Augmented Reality (AR) scavenger hunt set on Miami Beach.

The firm’s CEO and co-founder Inder Phull described the AR scavenger hunt as a “Rock Band meets Pokémon Go experience,” in which virtual gaming features are merged with real locations on maps via smart devices.

Users who hold Deadmau5’s Droplet NFTs will gain early access to Pixelynx’s metaverse with the platform aiming to provide a host of virtual experiences for fans of particular musicians and artists.

More Nifty News

NFTs depicting the ongoing protests in China against the country’s tough zero-tolerance COVID-19 policy have found their way to the NFT marketplace OpenSea at the tail end of November.

On Nov. 30, decentralized exchange (DEX) Uniswap announced that users can now trade NFTs on its native protocol. The function will initially feature NFT collections for sale on platforms including OpenSea, X2Y2, LooksRare, Sudoswap, Larva Labs, X2Y2, Foundation, NFT20, and NFTX.

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