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Gold and the Dollar are Sold while Stocks March Higher

Gold and the Dollar are Sold while Stocks March Higher

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Overview:   A rotation of sorts seems to be unfolding.  The euro posted its second back-to-back loss in over a month. The Canadian dollar, which has been an under-performer among the major currencies for the past six weeks, gained, while most fell.  The Dow Industrials and S&P 500 rose, the high flying NASDAQ fell for the second consecutive session for only the second time since May.  However, today, the "rotation" seems to be only impacted gold, which is off for the third consecutive session, its longest decline in three months, helped by sales from the ETFs, which have been significant buyers.  The yellow metal is off almost 2% to around $1983.  The technical target we suggested was $1950 on a break of $2000.  Equities are rallying.  Japan returned from yesterday's holiday and took the Topix up 2.5% (Nikkei 1.95%) and Hong Kong's Hang Seng tacked on 2.1%, amid optimism Beijing is preparing new tourist visas to Macau.  European shares are up for a third consecutive session, and the Dow Jones Stoxx 600 has advanced around 2.0% through the European morning.  US shares are firmer with the S&P 500, about 0.65% better.  Benchmark bond yields are a little firmer, though the European periphery bonds are more resilient (likely owing to the Eurosystem purchases).  The US 10-year yield, which had flirted with 50 bp last week, is approached 60 bp now.  September light sweet oil is confined to about a 50-cent range above $42.  US inventories are expected to have fallen again.  Key resistance is seen near the 200-day moving average (~$43.70).  



Asia Pacific

The US is continuing to ratchet pressure higher on China.  Following the latest sanctions and actions against two Chinese apps, the US has indicated that after late September, goods made in Hong Kong will be labeled "made in China" and subject to the same tariff schedule as the mainland.  This measure, like sanctioning HK Chief Executive Lam, is about signaling, as there is little real substance in terms of inflicting pain or disruption. As we have noted before, most goods the US imports from Hong Kong have been re-exported from China, and the goods actually made in Hong Kong are less than 1.5% of US imports from it.  

Meanwhile, China appears to be reining in the strong lending seen earlier this year.  Indeed, the July lending figures were weaker than expected.  New yuan loans, which is what the formal banking system generates, rose by CNY992.7 bln, and economists were looking for something closer to CNY1.2 trillion after CNY1.8 trillion in June.  Aggregate financing, which includes non-bank financial institutions (shadow banking), rose by CNY1.69 trillion, less than half of the CNY3.43 trillion in June. 

Japan reported June balance of payments and trade figures.  Japan's balance of payments in surplus (JPY167.5 bln) but considerably smaller than May's JPY1.18 bln surplus.  However, Japan continues to run a trade deficit (on BOP basis JPY77.3 bln in June after a JPY557 bln deficit in May.  Japan's broader surplus is a function of its capital account and income from dividends, royalties, licensing fees, profits, and earnings from operations abroad.  In contrast, consider German trade numbers that were out last week.  Its trade surplus drives its current account surplus (15.6 bln euro trade surplus in June and a 22.1 bln current account surplus.  

The dollar traded at new six-day highs against the yen near JPY106.20.  Last week's high was a touch below JPY106.50, and trendline resistance is seen closer to JPY106.70. The option expiring today for about $765 mln at JPY106.00 may still cause some angst if the dollar pulls back in early North American trading. Initial support is pegged near JPY105.70.  The Australian dollar is coming back bid after posting a small loss yesterday, its first back-to-back loss in a month. It has found support around $0.7140 and appears set to re-test the $0.7200-$0.7220 area.   The dollar is about 0.2% weaker against the Chinese yuan (~CNY6.9475).  The reference rate was set at CNY6.9711, compared with the median bank model collected by Bloomberg of CNY6.9693.  

Europe

The German ZEW investor survey showed minor deterioration in the assessment of the current conditions, but optimism over the future continued to improve.  The August survey showed the view of current conditions slipped to -81.3 from -80.9.  Recall it bottomed at -93.5 in May.  Expectations, on the other hand, rose to 71.5 from 59.3. This is a particularly strong reading and is the highest since 2003.  Between loan guarantees and actual spending, Germany has been more aggressive than most other European countries in responding to the pandemic.   We can't help but wonder if this lays the foundation for new divergence in the coming years, even though the EU has a recovery fund and will issue a common bond.     

The UK's employment data may spur pressure to increase the furlough program.  In Q2, employment fell by 220k, and the claimant count rose 94.4k in July.  July payrolls were about 770k lower than in March. Many people are discouraged from looking for work in current conditions, and this is helping keep the unemployment rate at 3.9% (three-months to June according to the ILO).  It has been at 3.9% all year, except in February, when it briefly rose to 4.0%.  Separately, reports suggest that the UK's try to get better terms than Japan gave to the EU is jeopardizing being able to conclude a trade agreement by the end of this month.  The issue, which the UK appears to put pride and spin ahead of substance is over blue cheese. Note that the free-trade agreement with Japan, which phases out UK tariffs on autos and auto parts, is estimated to boost UK's GDP by 0.7% over the long-term while leaving the EU costs an estimated 5% of GDP.  

The euro recorded a five-day low a little above $1.1720 before rebounding to $1.1785 in the European morning.  Yesterday's it briefly poked above $1.18, where there is an option for roughly 675 mln euros that will be cut today.  An option for 2.1 bln euros that expires tomorrow is struck at $1.1875.  The intraday technical readings are stretched, and this may encourage early North American dealers to sell into the euro's upticks.  After bottoming near $1.3055 in late Asian turnover, sterling is testing the $1.31 area, where it peaked yesterday.  The intraday technical readings are not as stretched as the euro's, but gains are likely to be capped in front of the $1.3140 area.   

America

Ahead of the review of the Phase 1 trade agreement later this week, reports suggest China is stepping up its purchases for US soy.  Six cargoes for November and December shipments apparently were bought yesterday.  Reports suggest the new soy orders may be coming at the expense of Brazil.  

President Trump opined that Q3 GDP could be 20%.  While this could simply be a case of cheerleading and aspirational, it is notable that the Atlanta Fed's GDP tracker currently puts it at 20.5%.  The NY Fed's model is at 14.6%.  Trump has said he is considering a capital gains tax cut.  While the executive branch does not have that authority, it could index capital gains to inflation, which has long been advocated by some Republicans.  

The US reports July producer prices today. They are not typically a market-mover even in the best of times.  The headline year-over-year rate will remain in deflationary territory, (-0.7% likely instead of -0.8%).  Even when energy (and food) are dropped, the core PPI is expected to have remained near zero.  Still, the week's data highlights, which include CPI, retail sales, and industrial production, lie ahead.  Canada reports July housing starts.  They may ease after jumping by more than a quarter in the May-June period.  Like the US, housing and autos, appear to be leading the Canadian recovery.  Mexico is expected to announce that the four-month slide in industrial output came to an end with a bang in June.  The median forecast in the Bloomberg survey projects a 17.1% increase in the month, as the manufacturing sector got some traction even though the pandemic continues to hit hard.   The highlight for Mexico will likely be the rate cut later in the week (from 5.0% to 4.5%).  Minutes from last week's Brazil's central bank meeting, where a 25 bp rate cut was delivered.  These may prove more important than usual as investors try to work out how much easing is left and the chances that the central bank uses its recently granted powers to buy long-term assets (government and corporate bonds).  

The US dollar has given back the gains against the Canadian dollar scored in the last two sessions.  The greenback is pushing through CAD1.33, where a $712 mln option is set to expire today.  Last week's lows were set near CAD1.3235-CAD1.3245.  That is the next target.  That said, the intraday technicals are stretched.  Resistance is seen in the CAD1.3340-CAD1.3360 area.  The US dollar is at the lower end of the five-day range (MXN22.30-MXN22.32).  While there is some scope for intraday penetration, the market does not appear to have much conviction. Here, too, the intraday technicals are a bit stretched, suggesting limited scope for follow-through dollar selling in the North American morning.  The dollar settled yesterday at its best level against the Brazil real in over a month (~BRL5.48).  Nearby resistance is seen in the BRL5.50-BRL5.53 area.  Support is pegged around BRL5.34-BRL5.35.  




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United Airlines adds new flights to faraway destinations

The airline said that it has been working hard to "find hidden gem destinations."

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Since countries started opening up after the pandemic in 2021 and 2022, airlines have been seeing demand soar not just for major global cities and popular routes but also for farther-away destinations.

Numerous reports, including a recent TripAdvisor survey of trending destinations, showed that there has been a rise in U.S. traveler interest in Asian countries such as Japan, South Korea and Vietnam as well as growing tourism traction in off-the-beaten-path European countries such as Slovenia, Estonia and Montenegro.

Related: 'No more flying for you': Travel agency sounds alarm over risk of 'carbon passports'

As a result, airlines have been looking at their networks to include more faraway destinations as well as smaller cities that are growing increasingly popular with tourists and may not be served by their competitors.

The Philippines has been popular among tourists in recent years.

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United brings back more routes, says it is committed to 'finding hidden gems'

This week, United Airlines  (UAL)  announced that it will be launching a new route from Newark Liberty International Airport (EWR) to Morocco's Marrakesh. While it is only the country's fourth-largest city, Marrakesh is a particularly popular place for tourists to seek out the sights and experiences that many associate with the country — colorful souks, gardens with ornate architecture and mosques from the Moorish period.

More Travel:

"We have consistently been ahead of the curve in finding hidden gem destinations for our customers to explore and remain committed to providing the most unique slate of travel options for their adventures abroad," United's SVP of Global Network Planning Patrick Quayle, said in a press statement.

The new route will launch on Oct. 24 and take place three times a week on a Boeing 767-300ER  (BA)  plane that is equipped with 46 Polaris business class and 22 Premium Plus seats. The plane choice was a way to reach a luxury customer customer looking to start their holiday in Marrakesh in the plane.

Along with the new Morocco route, United is also launching a flight between Houston (IAH) and Colombia's Medellín on Oct. 27 as well as a route between Tokyo and Cebu in the Philippines on July 31 — the latter is known as a "fifth freedom" flight in which the airline flies to the larger hub from the mainland U.S. and then goes on to smaller Asian city popular with tourists after some travelers get off (and others get on) in Tokyo.

United's network expansion includes new 'fifth freedom' flight

In the fall of 2023, United became the first U.S. airline to fly to the Philippines with a new Manila-San Francisco flight. It has expanded its service to Asia from different U.S. cities earlier last year. Cebu has been on its radar amid growing tourist interest in the region known for marine parks, rainforests and Spanish-style architecture.

With the summer coming up, United also announced that it plans to run its current flights to Hong Kong, Seoul, and Portugal's Porto more frequently at different points of the week and reach four weekly flights between Los Angeles and Shanghai by August 29.

"This is your normal, exciting network planning team back in action," Quayle told travel website The Points Guy of the airline's plans for the new routes.

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Walmart launches clever answer to Target’s new membership program

The retail superstore is adding a new feature to its Walmart+ plan — and customers will be happy.

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It's just been a few days since Target  (TGT)  launched its new Target Circle 360 paid membership plan. 

The plan offers free and fast shipping on many products to customers, initially for $49 a year and then $99 after the initial promotional signup period. It promises to be a success, since many Target customers are loyal to the brand and will go out of their way to shop at one instead of at its two larger peers, Walmart and Amazon.

Related: Walmart makes a major price cut that will delight customers

And stop us if this sounds familiar: Target will rely on its more than 2,000 stores to act as fulfillment hubs. 

This model is a proven winner; Walmart also uses its more than 4,600 stores as fulfillment and shipping locations to get orders to customers as soon as possible.

Sometimes, this means shipping goods from the nearest warehouse. But if a desired product is in-store and closer to a customer, it reduces miles on the road and delivery time. It's a kind of logistical magic that makes any efficiency lover's (or retail nerd's) heart go pitter patter. 

Walmart rolls out answer to Target's new membership tier

Walmart has certainly had more time than Target to develop and work out the kinks in Walmart+. It first launched the paid membership in 2020 during the height of the pandemic, when many shoppers sheltered at home but still required many staples they might ordinarily pick up at a Walmart, like cleaning supplies, personal-care products, pantry goods and, of course, toilet paper. 

It also undercut Amazon  (AMZN)  Prime, which costs customers $139 a year for free and fast shipping (plus several other benefits including access to its streaming service, Amazon Prime Video). 

Walmart+ costs $98 a year, which also gets you free and speedy delivery, plus access to a Paramount+ streaming subscription, fuel savings, and more. 

An employee at a Merida, Mexico, Walmart. (Photo by Jeffrey Greenberg/Universal Images Group via Getty Images)

Jeff Greenberg/Getty Images

If that's not enough to tempt you, however, Walmart+ just added a new benefit to its membership program, ostensibly to compete directly with something Target now has: ultrafast delivery. 

Target Circle 360 particularly attracts customers with free same-day delivery for select orders over $35 and as little as one-hour delivery on select items. Target executes this through its Shipt subsidiary.

We've seen this lightning-fast delivery speed only in snippets from Amazon, the king of delivery efficiency. Who better to take on Target, though, than Walmart, which is using a similar store-as-fulfillment-center model? 

"Walmart is stepping up to save our customers even more time with our latest delivery offering: Express On-Demand Early Morning Delivery," Walmart said in a statement, just a day after Target Circle 360 launched. "Starting at 6 a.m., earlier than ever before, customers can enjoy the convenience of On-Demand delivery."

Walmart  (WMT)  clearly sees consumers' desire for near-instant delivery, which obviously saves time and trips to the store. Rather than waiting a day for your order to show up, it might be on your doorstep when you wake up. 

Consumers also tend to spend more money when they shop online, and they remain stickier as paying annual members. So, to a growing number of retail giants, almost instant gratification like this seems like something worth striving for.

Related: Veteran fund manager picks favorite stocks for 2024

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President Biden Delivers The “Darkest, Most Un-American Speech Given By A President”

President Biden Delivers The "Darkest, Most Un-American Speech Given By A President"

Having successfully raged, ranted, lied, and yelled through…

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President Biden Delivers The "Darkest, Most Un-American Speech Given By A President"

Having successfully raged, ranted, lied, and yelled through the State of The Union, President Biden can go back to his crypt now.

Whatever 'they' gave Biden, every American man, woman, and the other should be allowed to take it - though it seems the cocktail brings out 'dark Brandon'?

Tl;dw: Biden's Speech tonight ...

  • Fund Ukraine.

  • Trump is threat to democracy and America itself.

  • Abortion is good.

  • American Economy is stronger than ever.

  • Inflation wasn't Biden's fault.

  • Illegals are Americans too.

  • Republicans are responsible for the border crisis.

  • Trump is bad.

  • Biden stands with trans-children.

  • J6 was the worst insurrection since the Civil War.

(h/t @TCDMS99)

Tucker Carlson's response sums it all up perfectly:

"that was possibly the darkest, most un-American speech given by an American president. It wasn't a speech, it was a rant..."

Carlson continued: "The true measure of a nation's greatness lies within its capacity to control borders, yet Bid refuses to do it."

"In a fair election, Joe Biden cannot win"

And concluded:

“There was not a meaningful word for the entire duration about the things that actually matter to people who live here.”

Victor Davis Hanson added some excellent color, but this was probably the best line on Biden:

"he doesn't care... he lives in an alternative reality."

*  *  *

Watch SOTU Live here...

*   *   *

Mises' Connor O'Keeffe, warns: "Be on the Lookout for These Lies in Biden's State of the Union Address." 

On Thursday evening, President Joe Biden is set to give his third State of the Union address. The political press has been buzzing with speculation over what the president will say. That speculation, however, is focused more on how Biden will perform, and which issues he will prioritize. Much of the speech is expected to be familiar.

The story Biden will tell about what he has done as president and where the country finds itself as a result will be the same dishonest story he's been telling since at least the summer.

He'll cite government statistics to say the economy is growing, unemployment is low, and inflation is down.

Something that has been frustrating Biden, his team, and his allies in the media is that the American people do not feel as economically well off as the official data says they are. Despite what the White House and establishment-friendly journalists say, the problem lies with the data, not the American people's ability to perceive their own well-being.

As I wrote back in January, the reason for the discrepancy is the lack of distinction made between private economic activity and government spending in the most frequently cited economic indicators. There is an important difference between the two:

  • Government, unlike any other entity in the economy, can simply take money and resources from others to spend on things and hire people. Whether or not the spending brings people value is irrelevant

  • It's the private sector that's responsible for producing goods and services that actually meet people's needs and wants. So, the private components of the economy have the most significant effect on people's economic well-being.

Recently, government spending and hiring has accounted for a larger than normal share of both economic activity and employment. This means the government is propping up these traditional measures, making the economy appear better than it actually is. Also, many of the jobs Biden and his allies take credit for creating will quickly go away once it becomes clear that consumers don't actually want whatever the government encouraged these companies to produce.

On top of all that, the administration is dealing with the consequences of their chosen inflation rhetoric.

Since its peak in the summer of 2022, the president's team has talked about inflation "coming back down," which can easily give the impression that it's prices that will eventually come back down.

But that's not what that phrase means. It would be more honest to say that price increases are slowing down.

Americans are finally waking up to the fact that the cost of living will not return to prepandemic levels, and they're not happy about it.

The president has made some clumsy attempts at damage control, such as a Super Bowl Sunday video attacking food companies for "shrinkflation"—selling smaller portions at the same price instead of simply raising prices.

In his speech Thursday, Biden is expected to play up his desire to crack down on the "corporate greed" he's blaming for high prices.

In the name of "bringing down costs for Americans," the administration wants to implement targeted price ceilings - something anyone who has taken even a single economics class could tell you does more harm than good. Biden would never place the blame for the dramatic price increases we've experienced during his term where it actually belongs—on all the government spending that he and President Donald Trump oversaw during the pandemic, funded by the creation of $6 trillion out of thin air - because that kind of spending is precisely what he hopes to kick back up in a second term.

If reelected, the president wants to "revive" parts of his so-called Build Back Better agenda, which he tried and failed to pass in his first year. That would bring a significant expansion of domestic spending. And Biden remains committed to the idea that Americans must be forced to continue funding the war in Ukraine. That's another topic Biden is expected to highlight in the State of the Union, likely accompanied by the lie that Ukraine spending is good for the American economy. It isn't.

It's not possible to predict all the ways President Biden will exaggerate, mislead, and outright lie in his speech on Thursday. But we can be sure of two things. The "state of the Union" is not as strong as Biden will say it is. And his policy ambitions risk making it much worse.

*  *  *

The American people will be tuning in on their smartphones, laptops, and televisions on Thursday evening to see if 'sloppy joe' 81-year-old President Joe Biden can coherently put together more than two sentences (even with a teleprompter) as he gives his third State of the Union in front of a divided Congress. 

President Biden will speak on various topics to convince voters why he shouldn't be sent to a retirement home.

According to CNN sources, here are some of the topics Biden will discuss tonight:

  • Economic issues: Biden and his team have been drafting a speech heavy on economic populism, aides said, with calls for higher taxes on corporations and the wealthy – an attempt to draw a sharp contrast with Republicans and their likely presidential nominee, Donald Trump.

  • Health care expenses: Biden will also push for lowering health care costs and discuss his efforts to go after drug manufacturers to lower the cost of prescription medications — all issues his advisers believe can help buoy what have been sagging economic approval ratings.

  • Israel's war with Hamas: Also looming large over Biden's primetime address is the ongoing Israel-Hamas war, which has consumed much of the president's time and attention over the past few months. The president's top national security advisers have been working around the clock to try to finalize a ceasefire-hostages release deal by Ramadan, the Muslim holy month that begins next week.

  • An argument for reelection: Aides view Thursday's speech as a critical opportunity for the president to tout his accomplishments in office and lay out his plans for another four years in the nation's top job. Even though viewership has declined over the years, the yearly speech reliably draws tens of millions of households.

Sources provided more color on Biden's SOTU address: 

The speech is expected to be heavy on economic populism. The president will talk about raising taxes on corporations and the wealthy. He'll highlight efforts to cut costs for the American people, including pushing Congress to help make prescription drugs more affordable.

Biden will talk about the need to preserve democracy and freedom, a cornerstone of his re-election bid. That includes protecting and bolstering reproductive rights, an issue Democrats believe will energize voters in November. Biden is also expected to promote his unity agenda, a key feature of each of his addresses to Congress while in office.

Biden is also expected to give remarks on border security while the invasion of illegals has become one of the most heated topics among American voters. A majority of voters are frustrated with radical progressives in the White House facilitating the illegal migrant invasion. 

It is probable that the president will attribute the failure of the Senate border bill to the Republicans, a claim many voters view as unfounded. This is because the White House has the option to issue an executive order to restore border security, yet opts not to do so

Maybe this is why? 

While Biden addresses the nation, the Biden administration will be armed with a social media team to pump propaganda to at least 100 million Americans. 

"The White House hosted about 70 creators, digital publishers, and influencers across three separate events" on Wednesday and Thursday, a White House official told CNN. 

Not a very capable social media team... 

The administration's move to ramp up social media operations comes as users on X are mostly free from government censorship with Elon Musk at the helm. This infuriates Democrats, who can no longer censor their political enemies on X. 

Meanwhile, Democratic lawmakers tell Axios that the president's SOTU performance will be critical as he tries to dispel voter concerns about his elderly age. The address reached as many as 27 million people in 2023. 

"We are all nervous," said one House Democrat, citing concerns about the president's "ability to speak without blowing things."

The SOTU address comes as Biden's polling data is in the dumps

BetOnline has created several money-making opportunities for gamblers tonight, such as betting on what word Biden mentions the most. 

As well as...

We will update you when Tucker Carlson's live feed of SOTU is published. 

Tyler Durden Fri, 03/08/2024 - 07:44

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