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Mid-Market Update: No transitory signs yet, Buy Apple (products), Port of LA goes 24/7, JPMorgan’s solid results

Just like William Shatner, US stocks went on a wild this morning.  Wall Street took a brief break to watch Star Trek’s William Shatner, a 90-year old legend set a record in space with a Blue Origin spaceflight. The S&P 500 index declined after…

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Just like William Shatner, US stocks went on a wild this morning.  Wall Street took a brief break to watch Star Trek’s William Shatner, a 90-year old legend set a record in space with a Blue Origin spaceflight.

The S&P 500 index declined after the latest inflation report  showed no signs of being transitory, prompting Treasury markets to anticipate a September Fed rate hike next year.  The Nasdaq was initially dragged down after reports that Apple could cut their iPhone 13 production targets for 2021 by as many as 10 million units.   Short-dated Treasuries jumped after the inflation report, while the 10-year and 30-year declined.

Despite above trend growth for 2022, stocks may struggle over the short-term on rising interest rate expectations from inflation fears, poor inventories for the holidays, and elevated energy prices.  A decline in long-end rates and expectations that Apple’s revenue shortfall in Q4 will just go to Q1 helped the Nasdaq post a modest gain.  Earnings took a backseat to the inflation report and reset of Fed rate hike expectations.  JPMorgan posted solid results, Delta warned Q4 might not be profitable given the surge in fuel prices, and BlackRock delivered robust results.

CPI

Rising food prices, energy costs, utilities, and new vehicles all confirmed what every American already knows… Inflation remains elevated. Core inflation mostly steadied but that was weighed down again over weakness in travel.  The transitory argument is weakening and that trend will continue to move forward Fed rate hike expectations.

Supply Chain

The White House announced that the Port of Los Angeles will switch to a 24/7 schedule to help ease the bottleneck issues.  Walmart, Fedex, UPS, Target, Samsung, Home Depot and more are expected to embrace the nonstop schedule.  The White House wants to make sure Americans are pleased with Biden’s agenda going into midterm elections next year and exceedingly high gas prices and backordered holiday presents will not bode well.

Apple

It seems semiconductor manufacturers Broadcom and Texas Instruments can’t meet Apple’s iPhone 13 demand, a sign that the chip shortage is nowhere near over and that the iPhone supercycle is alive and well.  Holiday shoppers that want to give the gift of iPhone 13 need to buy now.  Apple shares fell on the Bloomberg report that this year’s iPhone target might fall 10 million phones short due to supply chain issues.  Apple will still remain a favorite mega-cap tech stock as this only delays revenue from the fourth quarter to the next quarter.

JP Morgan

A solid earnings report from JPMorgan kicked off earnings season.  There was a lot of gold nuggets in this report, but lackluster loan growth and slowing trading revenue is why share prices are not higher.  Earnings impressed at $3.74, but when you exclude the reserve release it was only a six cent beat at $3.03.  Third quarter recovery of credit losses was the number everyone is focusing on, an impressive $1.53 billion improvement, significantly better than the consensus estimate of $17.9 million.

Adjusted revenue of $30.44 billion was a beat of the $29.86 billion estimate, led by better-than-expected results in investment banking, equities sales & trading, and a 7% increase in corporate & investing.  With no changes to the full-year outlook, the bank looks like it hasn’t seen any radical shifts to the outlook as the country comes out of the pandemic.  JPMorgan’s exposure to China’s property sector and fintech’s encroachment to Wall Street banking does not seem to pose that big of a risk just yet.

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Bond Market Crash Will Surprise Only The Uninformed

Bond Market Crash Will Surprise Only The Uninformed

By Bloomberg macro commentator and analyst Tommi Utoslahti

A global bond market meltdown is only a matter of time. One fine morning, traders will wake up to find all benchmark yields sharpl

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Bond Market Crash Will Surprise Only The Uninformed

By Bloomberg macro commentator and analyst Tommi Utoslahti

A global bond market meltdown is only a matter of time. One fine morning, traders will wake up to find all benchmark yields sharply higher, 10 to 20 basis points or more, and no buyers around.

Bond price indicators are flashing deep red right now, from decade-high inflation expectations to waning auction demand and whispers of depressed liquidity. Last week, the U.S. 5-year breakeven rate briefly topped 3% for the first time since the maturity was restarted in 2004
Bloomberg’s U.S. Treasury index is on track for its worst annual loss since 2009, and that’s only the beginning. Expect the Treasury 10-year yield to top 2%, Bunds to end their two-year trek in the sub-zero wilderness and Gilts to continue pushing higher toward levels last seen in 2018.

It’s not a taper tantrum. The time for that passed months ago, and the Fed’s well-telegraphed intention to start slowing its $120 billion monthly bond purchases at next week’s meeting is all baked in.

Bonds will collapse on investors’ delayed realization that inflation is here to stay, and won’t be tamed without serious policy tightening.

Equally serious concern stems from the fact that a big part of the recent inflation spike is supply-shock driven. Conventional policy tightening would do little to resolve supply-chain problems, leaving policy makers unable to directly influence rising prices.

If all that sounds unrealistic, or just a mere tail risk scenario, consider this: wagers for Bank of England rate hikes over the next year have been ramped up to more than 100 basis points in only a few weeks. A Hundred basis points! Saying that aloud would have been seen as a joke as recently as early September.

Perma-bulls often point out that yields fell following the 2013 taper tantrum. That is correct, but it only happened after the Treasury 10-year yield had surged about 140 basis points in four months and took well over a year to return to where it was before the selloff. A similar move now from August lows would take Treasuries above 2.5%.

The biggest difference is in the macro backdrop. In 2013, the headline U.S. inflation rate was well below 2% -- it’s been over 5% for five months now. The ISM index of prices paid for inputs is hitting levels not seen for a decade and the inflation expectations of the University of Michigan consumer survey are the highest since 2008.

Everyday consumer items are only about to get more expensive amid stubborn supply-chain disruptions. There’s an energy crunch brewing in many of the developed economies and crude oil appears more likely to hit $100 than fall back toward $50.

Fed Chair Powell on Friday said that “risks are clearly now to longer and more persistent bottlenecks”. Other Fed officials have earlier acknowledged that “transitory” has become a dirty word. And the global financial commentariat is now more often talking about “policy error.”

Treasury yields are now almost exactly where they were just before the 2013 taper tantrum or the 2016 reflation trade following Trump’s election victory. In both cases, yields eventually topped 3%.

Portfolio holders suddenly find themselves bracing for potentially massive losses. Duration hedging will only work to drive bond prices lower. The dollar should benefit from the dual tailwind of higher U.S. yields and haven demand.

Risk assets won’t be able to ignore severe bond market carnage. Earlier this year, when 10-year Treasuries were testing 1.70%, the S&P 500 index retreated about 5% before resuming its rally. Investors shouldn’t count on such a benign reaction this time. Wall Street near records and the VIX at its lowest since the pandemic started show that stocks are hopelessly unprepared for tighter funding conditions.

It’s not all gloom. Previous cycles have shown that the world economy can handle higher borrowing costs. Equities may even see firmer yields as a sign of a strong economy. But there’s no denying recalibration to higher yields after years of ultra-low rates will be a painful exercise for those not ready for it.

Tyler Durden Tue, 10/26/2021 - 09:50

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Trump Media SPAC Slides After Unveiling Plans For Paid Streaming Service

Trump Media SPAC Slides After Unveiling Plans For Paid Streaming Service

It has been a wild week of trading for the SPAC presently known as DWAC after traders were blindsided last week by the announcement of a deal between the obscure SPAC…

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Trump Media SPAC Slides After Unveiling Plans For Paid Streaming Service

It has been a wild week of trading for the SPAC presently known as DWAC after traders were blindsided last week by the announcement of a deal between the obscure SPAC and President Trump's nascent "Trump Media and Technology Group", meaning the combined company will become the home of Trump's "TRUTH" social network.

But as demand for the SPAC's richly valued shares (with a TTM multiple of 0 since neither firm has any revenue or sales, just projections) has waned after a meme-stockian retail-driven runup (which saw some institutional investors miss out on one of the biggest trades of the year) saw the market cap of the company explode into the billions, it looks like President Trump - who stands to benefit the most financially from this project give his massive ownership stake - is doing everything he can to pump up the valuation once again.

In a statement released Tuesday, Trump announced that the combined company is preparing to launch a paid streaming service (alongside other businesses that have been bandied about) in an effort to "explain more about what I am doing and why." He added that "this endeavor is about much more than politics...this is about saving our country."

Right now, censorship on social media platforms is rampant, with not just political content, but content from scientists, philosophers and other 'unorthodox' thinkers - or anything that goes to far to cross the SJWs' ideological boundaries - being reflexively censored.

Because of this corruption, Trump feels compelled to act.

The corruption of these platforms cannot be ignored. We have fallen far down the “slippery slope” of censorship in our country, and the topics that Americans are increasingly forbidden to debate are among the most important issues of our day. This wildly aggressive censorship and “cancel-culture” is not only un-American—it has direct, real-world consequences. Most obvious are the many catastrophes unfolding under the current administration: the calamitous Afghanistan withdrawal, the disaster at the Southern Border, runaway inflation, and the multi-trillion-dollar socialist spending nightmare, just to name a few.

These "silencing and cancellation" effects are more subtle but equally destructive to our society. An obvious consequence of this is polls show that Americans have little trust in or respect for the media.

Yet the silencing and cancellation also affects our country in more subtle, but equally destructive, ways. How many Americans no longer trust a word they hear from their leaders, media, or public health officials, because the one thing they know for certain is that they are not getting the full story? How many ordinary citizens have sadly come to resent their neighbors, feeling that they now live in two entirely different realities? And how many millions of Americans silently oppose so much of the nonsense being inflicted on us, but see the heavy hand of the cancelers, and conclude that their voice can make no difference, or that the cost of speaking up is just too high? The new age of censorship is a disaster for our country. Things were far better in the days when we had our debates fiercely and openly, and then we could move forward together, as Americans, with both sides knowing that their voice, and their best arguments, had been heard.

The announcement sent shares of DWAC moving higher, but as the cash markets opened, DWAC is sliding...

Read the full statement from Trump below:

Last week, I announced the creation of a major new company that will challenge the dominance of the Big Tech giants and Big Media bosses. Today I want to explain more about what I am doing and why. For me, this endeavor is about much more than politics. This is about saving our country.

America has always been a nation of smart, spirited, and independent people who take pride in thinking for themselves. We admire those who aren’t afraid to speak their minds, or go against the tide. Yet suddenly, we find ourselves being censored and dictated to by a small group of self-righteous scolds and self-appointed arbiters of what everyone else is allowed to think, say, share, and do.

Nowhere is this censorship more dangerous and brazen than on social media, the public square of our times. We have seen renowned medical doctors being banned from platforms for contradicting “health authorities” or questioning the political narrative of the moment. We’ve seen scientists blacklisted for sharing evidence that the pandemic began in a Chinese lab. We’ve seen vital reporting about Joe and Hunter Biden’s foreign business dealings—information that voters needed and deserved to hear—ruthlessly suppressed and erased from the internet just weeks before a presidential election. And as everyone knows, we’ve seen a sitting president of the United States effectively silenced by a small oligarchy of tech titans and “mainstream” media corporations.

The corruption of these platforms cannot be ignored. We have fallen far down the “slippery slope” of censorship in our country, and the topics that Americans are increasingly forbidden to debate are among the most important issues of our day.

This wildly aggressive censorship and “cancel-culture” is not only un-American—it has direct, real-world consequences. Most obvious are the many catastrophes unfolding under the current administration: the calamitous Afghanistan withdrawal, the disaster at the Southern Border, runaway inflation, and the multi-trillion-dollar socialist spending nightmare, just to name a few. In a country that had free speech and a free flow of information, none of this would ever have happened—and no one understands that better than the people doing the censoring.

Yet the silencing and cancellation also affects our country in more subtle, but equally destructive, ways. How many Americans no longer trust a word they hear from their leaders, media, or public health officials, because the one thing they know for certain is that they are not getting the full story? How many ordinary citizens have sadly come to resent their neighbors, feeling that they now live in two entirely different realities? And how many millions of Americans silently oppose so much of the nonsense being inflicted on us, but see the heavy hand of the cancelers, and conclude that their voice can make no difference, or that the cost of speaking up is just too high?

The new age of censorship is a disaster for our country. Things were far better in the days when we had our debates fiercely and openly, and then we could move forward together, as Americans, with both sides knowing that their voice, and their best arguments, had been heard.

The more I looked into this problem, the more I realized that to restore free speech, a major new platform would have to enter the market, with an ironclad commitment to protecting vigorous debate from all sides. But since it is both hard and expensive to build a new platform totally independent of Big Tech’s infrastructure, it would have to be an extremely well-funded, multi-year undertaking. In addition, such a platform would need the ability to rapidly attract millions of users, welcoming not only Republicans to join, but Independents and Democrats as well.

It’s a tremendously difficult set of challenges—and I realized I might be the only person in America with the megaphone, the resources, the experience, and the desire to make it all happen.

* * *

Source: Telegram

Tyler Durden Tue, 10/26/2021 - 10:00

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CDC Director: Unvaccinated Police, Government Workers To Be Sent For “Education And Counseling”

CDC Director: Unvaccinated Police, Government Workers To Be Sent For "Education And Counseling"

Authored by Steve Watson via Summit News,

Appearing on Fox News Sunday, the CDC Director Rochelle Walensky declared that the Biden regime is…

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CDC Director: Unvaccinated Police, Government Workers To Be Sent For "Education And Counseling"

Authored by Steve Watson via Summit News,

Appearing on Fox News Sunday, the CDC Director Rochelle Walensky declared that the Biden regime is planning to provide vaccine hesitant police and other government workers with “education and counseling” to make them “comfortable” about taking the shots.

Walensky told Chris Wallace that “We have seen that these mandates are getting more and more people vaccinated.”

“What we know from the police workforce is there have been more deaths from the coronavirus over the last year and a half than all other causes of death for that workforce combined,” she claimed, adding “So we believe it is very important to get these people vaccinated.”

Then came the kicker.

“There is a plan, should these people not want to be vaccinated, towards education and counseling to get people the information they need so that they are feeling comfortable in getting vaccinated,” Walensky declared.

Watch:

As we have continually noted, police and firefighters all over the U.S. have formed resistance groups against the vaccine mandates, and many officers have made videos of themselves signing off after being forced to resign.

Washington State trooper Robert LaMay, who infamously signed off after 22 years in the job by telling Democrat Governor Jay Inslee to “kiss my ass”, has warned that the Biden administration has “awoke the sleeping giant,” and that “extreme” numbers of police are walking off the job.

Watch:

Former Cincinnati and Detroit police chief James Craig told Tucker Carlson last week that “This is all by design. It’s not by accident,” further declaring that Democrats forcing good cops out of their jobs is a continuation of the “utterly ridiculous defund the police” agenda.

Watch:

Watch the latest video at foxnews.com

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Tyler Durden Tue, 10/26/2021 - 09:15

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