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Investors Brace for Fed Pause or Push for More Hikes

Last week’s stand by the stock market to close out the month of April breathed a temporary sigh of relief, but that pop in the major average applied…

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Last week’s stand by the stock market to close out the month of April breathed a temporary sigh of relief, but that pop in the major average applied primarily to investors who were long in so-called FAANG stocks, “Mr. Softie”, the S&P and Nasdaq, where these equities are heavyweight components.

Aside from mega-cap tech, consumer staples put in a strong performance, as did energy. Year-to-date of the 11 market sectors, those that rose, and their gains, were: consumer discretionary (XLY), 14.83%; industrials (XLI), 2.23%; consumer staples (XLP), 4.37%; materials (XLB), 4.14%; communication services, 25.16%, real estate (XLRE), 2.94%; and technology (XLK) 21.47%. The sectors that slid and their dips were: health care (XLV), -1.43%; energy (XLE), -1.64%, broad financials (XLF), -2.54%; and utilities, -1.44%.

As for areas of real trouble, the bank sector (KBE) is down by -18.27% and the regional bank sector has been crushed by -29.11% so far this year. For most of April, the Nasdaq has led the way on the back of a few high-tech draft horses and some other individual standouts within energy, communications and staples. However, there was a much-needed positive development when the market broadened out nicely late last week. On Friday, advancers led decliners by an 8-to-3 margin at the NYSE and a nearly 2-to-1 margin at the Nasdaq. The following indices and their performances are:

  • Nasdaq Composite: +16.8% YTD
  • S&P 500: +8.6% YTD
  • Dow Jones Industrial Average: +2.9% YTD
  • S&P Midcap 400: +2.5% YTD
  • Russell 2000: +0.4% YTD

Chart Provided by Barchart.com.

Falling market rates were another supportive factor for equities last week, as the two-year note yield fell to 4.06% and the 10-yr note yield fell to 3.45%. If nascent market breadth can build on itself, then the S&P has a real shot at breaking above key overhead resistance at 4,200 that has proved to be a good place to fade rallies. The market has priced in another quarter-point hike to be announced this Wednesday, with the hope of a policy statement that hints of a pause of further rate hikes in June and July.

The data that the Fed takes into account in its monetary policy decisions definitely points to another rate hike. The March core Personal Consumption Expenditures Price Index rose 4.6% from last year, down from the revised 4.7% recorded in February, but came in higher than the analysts’ consensus forecast of 4.5%. The core index was up 0.3% on the month, the Bureau of Economic Analysis reported, matching both last month’s pace and the analysts’ forecast. A separate report from the Labor Department showed that its closely tracked employment cost index rose 1.2% over the first quarter, higher than analysts’ 1.1% forecast. Private-employer wages were up 5.1% in March, the data indicated.

As to the topic of future rate hikes, on Sunday, Elon Musk jumped on a Twitter thread initiated by Harvard economist Larry Summers, predicting a “severe recession” if the Fed keeps raising rates. “Fed data has too much latency,” Musk commented on April 30. “Mild recession is already here.”

Musk claims to have as much real-time data on the present condition the economy as anyone with the various businesses he oversees.

Elon Musk answered questions during the Baron Funds Investment Conference last Nov. 4 in New York .

While this is one man’s opinion, Larry Summers is someone people listen to carefully, as well as Elon Musk. Both are superstars in their own spaces. Yet while Summers warns of the Fed doing more to contain inflation, Musk raises the caution flag to let the hikes in place have time to work through the economy. With that said, the economy is learning to live with 4-5% inflation. After all, the past decade was one of artificially low rates. With mortgages in the 5-7% range and lending rates above that level, the initial reaction has been negative, but the world of lending is just normalizing in my view.

The debate continues to elevate between critics of the Fed and those who believe that the current rise in prices for goods and services warrants further hikes.

The S&P Global U.S. Manufacturing PMI jumped to 50.4 in April 2023 from 49.2 in March 2023, beating forecasts of 49, and pointing to the first expansion in factory activity in six months, preliminary estimates showed. Production levels at manufacturers gained slightly in April, but at the fastest pace since May 2022 due to increased employment and a return to new order growth. New sales climbed for the first time in six months and the rate of job creation increased to its fastest pace since September 2022.

As far as prices, increases in operating expenses reached the quickest pace since last November, as selling prices rose at a sharp and historically elevated rate. Plus, optimism in the outlook for output over the coming year rose to a three-month high but was slightly below the long-run series average amid inflation worries and concerns about a shift away from goods towards services among customers, following the pandemic.

How the Fed threads its policy statement will weigh large on the near-term direction for the market as a whole. However, it is a market of stocks, and there are selective and stealth bull markets within dozens of individual stocks that are hitting new 52-week highs and all-time highs. It has been a stellar first four months for the tech sector. Now if the Fed can give its soon-to-be-11 rate hikes a chance to have their full impact on inflation, the  S&P can finally break out of its range, because it certainly acts like it wants to do so.

P.S. Come join me and my Eagle colleagues on an incredible cruise! We set sail on Dec. 4 for 16 days, embarking on a memorable journey that combines fascinating history, vibrant culture and picturesque scenery. Enjoy seminars on the days we are cruising from one destination to another, as well as dinners with members of the Eagle team. Just some of the places we’ll visit are Mexico, Belize, Panama, Ecuador and more! Click here now for all the details.

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Zelenskyy, Trudeau Honor Actual 3rd Reich Nazi With Standing Ovation

Zelenskyy, Trudeau Honor Actual 3rd Reich Nazi With Standing Ovation

Canadian Prime Minister Justin Trudeau and Ukrainian President Volodomyr…

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8 mins ago

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September 24, 2023

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Zelenskyy, Trudeau Honor Actual 3rd Reich Nazi With Standing Ovation

Canadian Prime Minister Justin Trudeau and Ukrainian President Volodomyr Zelenskyy - who commands a battalion of neo-Nazis - honored an actual WWII Nazi with a standing ovation on Friday.

Yaroslav Hunka, 98, fought in a Third Reich military formation accused of war crimes.

On Friday, he was honored during a session of Canadian parliament in which Zelenskyy addressed the lawmakers to thank them for their support since Russia invaded Ukraine, saying that Canada has always been on "the bright side of history."

Hunka stood for standing ovation and saluted, according to Canadian television.

According to the Associated Press, Hunka "fought with the First Ukrainian Division in World War II before later immigrating to Canada," another name for the 14th Waffen Grenadier Division of the SS, the Nazi party's military wing, also known as the SS Galichina.

Related:

Formed in 1943, SS Galichina was comprised of Ukrainians from the Galicia region in the western part of the country. It was armed and trained by Hitler's Nazis and commanded by German officers. The next year, the division received a visit from SS head Heinrich Himmler, who had high praise for the unit's effectiveness at slaughtering Poles.

The SS Galichina subunits were responsible for the Huta Pieniacka massacre, in which they burned 500 to 1,000 Polish villagers alive.

One of several photos on a blog by an SS Galichina veterans’ group that shows Yaroslav Hunka, the Ukrainian immigrant honored by the Canadian Parliament during a visit by Ukrainian President Volodymyr Zelenskyy. Hunka is in the front row, middle.

In fact, during the Nuremberg Trials, the Waffen-SS was declared to be a criminal organization responsible for mass atrocities.

Following the war, thousands of SS Galichina veterans were allowed to leave Germany and resettle in the West - with around 2,000 moving to Canada. By that time, they were known as the First Ukrainian Division.

A blog by an association of its veterans, called “Combatant News” in Ukrainian, includes an autobiographical entry by a Yaroslav Hunka that says he volunteered to join the division in 1943 and several photographs of him during the war. The captions say the pictures show Hunka during SS artillery training in Munich in December 1943 and in Neuhammer (now Świętoszów), Poland, the site of Himmler’s visit. 

In posts to the blog dated 2011 and 2010, Hunka describes 1941 to 1943 as the happiest years of his life and compares the veterans of his unit, who were scattered across the world, to Jews. -Forward

So, the same leftists who called Trump supporters Nazis for years are now honoring an actual Nazi - while Germany has notably locked up several concentration camp guards in their 90s for their involvement in Nazi activities.

University of Ottawa Political Scientist Ivan Katchanovski lays it out...

Meanwhile, here's Ukraine's Azov Battalion of neo-Nazis that everyone with a Ukraine flag in their bio is supporting...

Odd, they don't look like Trump supporters.

Maybe these Nazis can shed some light? Careful, "X" thinks this is sensitive material (that might redpill people?).

Meanwhile...

Tyler Durden Sun, 09/24/2023 - 14:25

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Government

Kerry Acknowledges Need For Nuclear Power As Climate Diplomacy Dominates New York City

Kerry Acknowledges Need For Nuclear Power As Climate Diplomacy Dominates New York City

Authored by Nathan Worcester via The Epoch Times,

While…

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8 mins ago

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September 24, 2023

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Kerry Acknowledges Need For Nuclear Power As Climate Diplomacy Dominates New York City

Authored by Nathan Worcester via The Epoch Times,

While addressing an Atlantic Council meeting on nuclear energy, U.S. Climate Envoy John Kerry made it clear he doesn't think wind and solar alone will be sufficient to meet global energy needs while achieving policy plans to rapidly scale back the use of hydrocarbons in the name of addressing climate change risks as outlined by the United Nations.

"You will have to have some component of nuclear—yet to be determined how big or where it'll go. That's going to be a market-based reaction," said Mr. Kerry, who served as a Democratic senator from Massachusetts before serving as Secretary of State under former President Barack Obama.

The 2004 Democratic candidate for president said that "most scientists will tell you" the goal of Net Zero 2050 cannot be achieved "unless we have a pot, a mixture of energy approaches."

"Clearly, we're going to need nuclear to be a part of that," he said on Monday.

Mr. Kerry's pro-nuclear remarks come as climate-related diplomacy and other climate-themed events overtake New York City.

Over the weekend, protesters demonstrated against fossil fuels in the streets of New York City, with Rep. Alexandria Ocasio Cortez (D-N.Y.) among the participants.

Mr. Kerry voiced support for those demonstrators in his speech to the Atlantic Council.

In addition, the U.N. will hold its inaugural Climate Ambition Summit on Sept. 20.

A U.N. statement on the event states it "will showcase leaders who are 'first movers and doers' from government, business, finance, local authorities, and civil society who have credible actions, policies and plans to keep the 1.5°C degree goal of the Paris Agreement alive and deliver climate justice to those on the front lines of the climate crisis."

The Climate Ambition Summit comes ahead of the next annual United Nations Climate Change Conference, which will begin in late November. It's taking place in Dubai, United Arab Emirates.

Even as he praised climate protesters, Mr. Kerry noted that a previous generation of environmental activists had fought hard against nuclear power, now seen as a pragmatic solution by many climate hawks.

"In my state of Massachusetts, where there was a huge fight over Seabrook Nuclear Plant in New Hampshire, we now happily get about 20 percent of all our energy from Seabrook, and nobody's complaining—maybe about the prices a little bit, because that's normal in today's world," he said.

A view of the Seabrook Nuclear Power Plant in Seabrook, N.H., on March 21, 2011. (Emmanuel Dunand/AFP via Getty Images)

"The United States is now therefore committed, based on experience and based on reality, to trying to accelerate the deployment of nuclear energy, as part of the Biden program," he added.

The diplomat, who came under fire from Republicans earlier this summer for his unwillingness to share details of his staff at a Congressional hearing, commented positively on Bill Gates' TerraPower, which plans to build the next-generation Natrium nuclear reactor in Wyoming.

He also drew attention to his recent trip to Romania, where he visited a control room simulator for a small modular reactor developed by the American firm NuScale.

Mr. Kerry took issue with the continued construction of unabated coal-fired power plants and with the existence of subsidies for fossil fuels.

An International Monetary Fund (IMF) study identified $1.3 trillion in "explicit" subsidies for fossil fuels in 2022, a stark increase from $500 billion in 2020. Such subsidies are ascribed to fossil fuel prices when they are lower than they would otherwise be if producers fully bore supply costs. The IMF authors attributed a substantial proportion of the increase to "temporary price support measures," in line with surging fossil fuel prices during that period.

Whitehouse Touts ADVANCE Act

Mr. Kerry wasn't the only high-level Democratic politician who addressed the Atlanticist forum on Monday.

In pre-recorded remarks, Sen. Sheldon Whitehouse (D-R.I.) touted the bipartisan, nuclear power-related ADVANCE Act, which passed the Senate as part of the National Defense Authorization Act (NDAA) in July. The bill has not moved ahead in the House.

"Our legislation would strengthen the Nuclear Regulatory Commission's ability to safely and efficiently review the expected influx of applications and prepare them to license HALEU [high-assay low-enriched uranium] fuels," the lawmaker said.

Russia currently dominates the production of HALEU fuels, which are key for most next-generation nuclear reactors. Uncertainty about Russian supplies of HALEU has been a worry for TerraPower and a central motivation for the Nuclear Fuel Security Act, another successful NDAA amendment.

"We spend nearly $1 billion each year on Russian uranium. Russia uses these revenues to fund its invasion of Ukraine," Sen. John Barrasso (R-Wyo.) said in the Senate as the measure was under consideration.

Sen. John Barrasso (R-Wyo.) in Washington on Dec. 1, 2020. (Bill O'Leary-Pool/Getty Images)

'Decarbonize Beyond Electricity'

Other speakers at the event expanded on how nuclear energy could be used to cut carbon emissions.

"We need to decarbonize beyond electricity," said John Wagner, director of the Idaho National Laboratory. He cited industrial heating and hydrogen production as examples of such applications for nuclear energy.

Sama Bilbao y León, director general of the World Nuclear Association, concurred.

"Yes, we need to electrify as much as we can of our economy, but it is not going to be possible to electrify everything," she said.

Ben Pickett of Nucor Corporation, which operates mills that recycle scrap steel using electric arc furnaces, explained that his company's operations require "billions and billions of kilowatt hours per year."

Earlier this year, Nucor signed a memorandum of understanding with NuScale Power. The latter could potentially develop small modular reactors for use in conjunction with Nucor's steel production facilities.

"We've got customers now that are demanding much cleaner steels," Mr. Pickett said.

He conceded that the idea of running steel production on advanced nuclear has met with a "mixed" reaction in his industry.

Tyler Durden Sun, 09/24/2023 - 15:00

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Government

Zelenskyy Asks Spirit Cooker Marina Abramovic To Be Ambassador For Ukraine, Help ‘Rebuild Schools’

Zelenskyy Asks Spirit Cooker Marina Abramovic To Be Ambassador For Ukraine, Help ‘Rebuild Schools’

Authored by Chris Menahan via Information…

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8 mins ago

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September 24, 2023

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Zelenskyy Asks Spirit Cooker Marina Abramovic To Be Ambassador For Ukraine, Help 'Rebuild Schools'

Authored by Chris Menahan via Information Liberation (emphasis ours),

Ukrainian president Volodymyr Zelensky is recruiting spirit cooker Marina Abramovic to serve as an ambassador for Ukraine and help "rebuild schools."

From The Telegraph, "Zelensky asks Marina Abramovic to be ambassador for Ukraine":

Volodymyr Zelensky has asked Marina Abramovic, the performance artist, to be an ambassador for Ukraine.

‌Ms Abramovic, a fierce critic of Vladimir Putin's illegal invasion, said the Ukrainian president had asked for her help in rebuilding schools.

[...] ‌"I have been invited by Zelensky to be an ambassador of Ukraine, to help the children affected by rebuilding schools and such."

‌She added: "I have also been invited to be a board member of the Babyn Yar organisation to continue to protect the memorial."

‌The Holocaust memorial centre to Jews murdered by Nazis in Ukraine was damaged by Russian missile attacks in March last year.

The "bombing" of the Babyn Yar memorial was confirmed to be a lie last year.

‌Ms Abramovic installed her work Crystal Wall of Crying at the memorial centre in Kyiv four months before Russia invaded Ukraine in February 2022.

‌The wall, 40 metres long and three metres high, is made of coal and has large quartz crystals sticking out of it. Visitors can touch the installation, which mirrors the western wall in Jerusalem.

Zelensky said last year his goal is to turn Ukraine into a "Greater Israel."

In Dec 2022, Zelensky made a deal with BlackRock's Larry Fink to help "rebuild" Ukraine after the war and just last week the Biden regime announced Penny Pritzker would become their Special Representative for "rebuilding" Ukraine.

Meanwhile, Abramovic's pals, the Clintons, are also salivating over helping to 'rebuild' Ukraine.

Tyler Durden Sun, 09/24/2023 - 16:10

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