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Morning Update: Bitcoin Back Over $51,000

Futures Rebound From Asia Rout, Bitcoin Back Over $51,000

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This article was originally published by ZeroHedge.

Futures Rebound From Asia Rout, Bitcoin Back Over $51,000

Yesterday morning shortly after the initial liquidation puke which saw tech shares tumbles, we had some "words of comfort" for all those fearful that the Fed may hike rates in the coming months saying basically "relax, it won't"... if for no other reason than global debt is set to surpass $360 trillion by 2030 and rates simply can't rise, a point underscored as DB strategist Jim Reid who said "with debt so high and likely to go notably higher, it is likely that real yields will have to stay artificially low for a very long period of time. Any return to something close to long-term averages would have grave consequences for debt sustainability. The Fed would likely step in well before this point... Financial repression and QE will likely be alive and well for the rest of most of our careers."

It took a few hours for this message to spread, and Powell's soothing Day 1 testimony to Congress to hammer this point, before markets "unclenched" and realized that the Fed will indeed do nothing for the foreseeable futures, and as Bloomberg writes this morning, "the volatility in global bond and equity markets is easing today after Fed Chair Jerome Powell's reassuring comments to the Senate Banking Committee yesterday. He signaled that the central bank is nowhere near pulling back its economic support measures, saying there was still a long way to go to reach their inflation and employment goals."

Powell also said that the recent run-up in bond yields that has unsettled the stock market “a statement of confidence” in a robust economic outlook, and added that any Fed action would be telegraphed well in advance, which meant just one thing: no tightening for the foreseeable future, despite the market's recent freakout.

“Powell’s comments reinforce our view that the increase in inflation expectations is most likely transitory and that higher Treasury yields primarily reflect optimism over the economic recovery and the reflation trade,” wrote UBS chief investment officer for global wealth management, Mark Haefele, in a note to clients. “Investors should expect an extended period in which interest rates remain below inflation.”

Which brings us to the overnight action which was a mirror image of Tuesday, when Asia jumped only to see sentiment hammered after Europe opened, to futures initially slumping as Asian stocks got smacked down following the shock news of a higher stamp duty in Hong Kong only to reverse and trade in the green following early strength in European markets, with the ES trading up 15 points to session highs of 3,892 after sliding as low as 3851 just a few hours earlier, while Treasuries dropped again as investors took confidence from the Fed's vow to support economic growth.

The MSCI world equity index, which tracks shares in 49 countries, was down 0.3%. The reflation trade was back in full swing, with Russell 2000 futures beating the Nasdaq 100 in early trading. After crashing on Tuesday before reversing gains and closing down just 2.4%, Tesla added 3% after Ark Investment Management’s Cathie Wood's Ark Invest funds added a further $171 million worth of the company’s shares in the wake of a sharp fall in the electric carmaker’s stock.

Growth-sensitive banks, industrial and energy stocks edged higher with Bank of America, Caterpillar Inc and Chevron Corp up between 0.4% and 0.6%, while airlines and cruise operators advanced, along with oil and copper.  Lowe’s Companies rose 0.7% after it beat estimates for quarterly same-store sales, benefiting from sustained demand from people sprucing up their homes during the COVID-19 pandemic. "The reflation trades have been given a meaningful push as the Fed is not standing in the way,” said Charles Diebel, head of fixed income at Mediolanum International Fund. “Risk assets can tolerate higher yields as long as the move is gradual and slow.”

“We’re seeing a modest recovery at this point, so there’s still clearly a lot of caution,” said Craig Erlam, senior market analyst at OANDA, who said the stock market falls this week were largely a “blip”. “I think central banks are going to continue to talk down tightening prospects,” he added.

Nasdaq futures stabilized and were up 57 points or 0.5% to 13,248, outperforming the S&P, and rebounding from a Tuesday slump which dragged it briefly below its 50DMA.

In Europe, the Stoxx 600 Index gained 0.5% on bets that the vaccination drive will allow economies to reopen; but the index was still down almost 2% from the one-year high it hit last week, with the sub-index tracking construction stocks rising 1.2%. Travel shares and construction companies were among the top winners. Lloyds Banking Group Plc gained after Britain’s biggest mortgage lender beat estimates and reinstated dividends. The poundstrengthened for a fifth day, climbing above $1.41. Germany’s DAX was up 0.7%, helped by stronger-than-expected GDP gains in Europe’s largest economy. The FTSE 100 was up 0.1%. Strong exports and solid construction activity helped the German economy to grow by a stronger-than-expected 0.3% in the final quarter of last year, the Federal Statistics Office said on Wednesday, revising up an earlier estimate. Here are some of the biggest European movers today:

  • Lloyds Banking Group shares jump as much as 4.5%, hitting the highest since March 11 last year, before trimming most of the gain. Analysts say the U.K. lender finished 2020 strong and that its guidance points to upside risk to consensus.
  • Telecom Italia shares surge as much as 8% to a six-month high after fourth- quarter results, with analysts highlighting that earnings beat expectations as well as a potential boost from a tax law.
  • Nel shares gain as much as 6.2%, ITM shares up as much as 9.7% after analysts at JPMorgan wrote that a “hydrogen revolution” is gathering momentum to drive the energy transition, though investors should be wary of being over-optimistic on its adoption.
  • Ontex shares slump as much as 9.2% after the Belgian diaper maker reported 4Q like-for-like sales declining 3.7%. The “weak” results were anticipated given consensus estimates for a 3.5% drop, according to Morgan Stanley.

On the virus front, sentiment improved again; OANDA’s Craig Erlam said that market consensus is that there will be no further lockdowns in Europe and the United States after the summer.  “Markets are working on the assumption that we are at the end of the tunnel, we’re right near the end of the tunnel, and we’re not going back in,” he said. This confirms what we noted yesterday when we showed the latest computer models showing that covid cases in the US would be virtually gone by June.

Earlier in the session, Asian stocks fell, led by declines in Hong Kong and mainland China. The Hang Seng Index dropped 3%, dragged lower by Hong Kong Exchanges & Clearing after the city unveiled its first stamp-duty increase on stock trades since 1993. The city also announced consumption coupons for residents in a budget speech. In China, Kweichow Moutai continued to slide, now having lost $80 billion since onshore markets reopened after the Lunar New Year holiday. Technology heavyweights Tencent, Taiwan Semiconductor Manufacturing, SoftBank Group and shopping platform operator Meituan were among the stocks weighing most heavily on the MSCI Asia Pacific Index, which slid 1.9%. In India, the National Stock Exchange of India Ltd. shut trading in its cash and derivative segments earlier Wednesday, citing “issues” with telecom links of its two service providers, which it said impacted the system and stopped prices from updating.

But all of Asia's woes were quickly forgotten once Europen reopened and set a far more bullish stage for risk assets. Further boosting bullish sentiment was the latest BTFD bounce in Bitcoin, which soared back over $51,000 after tumbling as low as $45,000 on Tuesday.

“I suspect we are in a bubble in certain places, that stimulus cheques will provide more fire to that at some point but that risk assets are going to be constantly buffeted by the risk of higher yields and inflation regardless of whether it has any structural roots or not,” wrote Deutsche Bank strategist Jim Reid in a note to clients.

In rates, the 10-year U.S. Treasury yield rose, although it was below the one-year high it reached on Monday. Treasuries were cheaper by ~5bp across long-end as the curve continues its steepening trend. Yields are higher by 0.5bp to 5bp across the curve with 10s around 1.37%; 5s30s topped at 165.3bp, steepest since 2014. Following choppy Asia session, yields began to climb as S&P 500 futures pared then erased losses. Bond traders will keep an eye on CSPAN as Powell returns to Congress for second day of semi-annual monetary policy testimony, while Treasury holds monthly 5-year note auction. Month-end factors appear generally supportive for bonds. The benchmark 10-year German Bund was steady.

In FX, the dollar inched lower as equity and bond markets stabilized, denting haven demand; the pound extended its longest rally against the euro since mid-2015 as the rolling back of Covid-19 restrictions boosted confidence in the U.K. currency. EUR/GBP fell as much as 0.8%, biggest fall since Feb. 4, before erasing losses. GBP/USD rose as much as 0.9% to 1.4237, the highest since April 2018, before paring its advance to 1.4130. An initial surge triggered short squeeze inducing option barriers against the dollar and euro, prompting further buying, traders said. Havens Swiss franc and Japanese yen led G-10 losses against the dollar on rising global risk appetite, with sterling leading gains. The kiwi led gains in the G-10 space, rallying by as much 0.7% to $0.7393 as some traders took their cues from the RBNZ’s decision to use an “unconstrained OCR” in one of its forecasts, rather than the standard OCR, even though it said prolonged monetary stimulus remains necessary

Looking at the day ahead, the highlight will once again be from Fed Chair Powell, as he appears before the House Financial Services Committee. In addition, we’ll hear from Fed Vice Chair Clarida and the Fed’s Brainard, along with Bank of England Governor Bailey, as well as the BoE’s Broadbent, Vlieghe, Haskel and Haldane. Otherwise, data releases include US new home sales for January and the final Q4 GDP reading from Germany, while earnings releases include Nvidia, Lowe’s, Booking Holdings, TJX and Royal Bank of Canada.

Market Snapshot

  • S&P 500 futures up 0.1% to 3,883.00
  • SXXP Index up 0.3% to 412.39
  • MXAP down 1.9% to 212.61
  • MXAPJ down 1.6% to 713.94
  • Nikkei down 1.6% to 29,671.70
  • Topix down 1.8% to 1,903.07
  • Hang Seng Index down 3.0% to 29,718.24
  • Shanghai Composite down 2.0% to 3,564.08
  • Sensex up 0.5% to 50,021.71
  • Australia S&P/ASX 200 down 0.9% to 6,777.82
  • Kospi down 2.4% to 2,994.98
  • German 10Y yield little changed at -0.31%
  • Euro little changed at $1.216
  • Brent futures up 0.6% to $65.76/bbl
  • Gold spot up 0.1% to $1,806.73
  • U.S. Dollar Index down 0.1% to 90.09

Top Overnight News from Bloomberg

  • Following efforts to narrow the gap with the U.S. and Britain in a race to slow the coronavirus, the EU may be able to vaccinate 75% of its adult population by the end of August, about two months earlier than previously forecast, according to London- based research firm Airfinity Ltd
  • Germany’s economic output rose 0.3% in the fourth quarter as construction picked up and exporters benefited from stronger international demand. Consumer and government spending both dropped
  • The unprecedented $9 trillion rescue mission by central banks to haul the world economy from its coronavirus recession is being tested as rising bond yields and inflation bets threaten their ability to keep borrowing costs down
  • Hong Kong unveiled its first stamp-duty increase on stock trades since 1993, sparking a broad selloff in the $7.6 trillion market and sending shares of the city’s exchange to their biggest plunge in more than five years

A quick look at global markets courtesy of Newsquawk

Asia-Pac bourses traded lacklustre following on from the mixed performance stateside where the major US indices spent most of the session clawing back the early tech-led declines, amid dip buying and which saw the Nasdaq 100 almost fully recover from an initial 3.5% slump. ASX 200 (-0.9%) was pressured as tech and telecoms suffered a similar fate to their Wall St counterparts and with participants digesting an influx of earnings results, as well as mixed data in which Construction Work Done surprisingly contracted but wage growth topped estimates. Nikkei 225 (-1.6%) ignored a weaker currency on return from its holiday closure and retreated beneath the 30k level, while KOSPI (-2.4%) was kept afloat in early trade amid reports the government is to submit an extra budget to parliament on March 4th but then faltered in tandem with its regional peers. Hang Seng (-3.0%) and Shanghai Comp. (-2.0%) were both negative with Hong Kong dragged by speculation of a stamp duty tax increase on stock trading which the government later confirmed and resulted to double digit declines to HKEX shares despite posting a record FY net. There were lingering US-China tensions after reports suggested US senators are eyeing legislation to curb Beijing's unfair practices and tackle Chinese censorship of US companies and individuals, while Treasury Deputy nominee Adeyemo also indicated the US is open to using a Trump-era investment ban to punish China for trade violations. Finally, 10yr JGBs were subdued despite the weakness in stocks with prices stuck near the 151.00 support level but later saw mild support following stronger results at the enhanced liquidity auction for 10yr, 20yr and 30yr JGBs.

Top Asian News

  • Tencent-Backed Edtech Startup Seeks Funding at $20 Billion Value
  • Top India Exchange in Longest-Ever Outage on Telecom Fault

European stocks kicked off the mid-week session in a relatively mixed fashion, but sentiment has been erring higher since the cash open (Euro Stoxx 50 +0.4%) after futures trimmed overnight losses as European players entered the fray, and with fresh fundamental news-flow on the lighter side after Fed Chair Powell stuck to his dovish script. US equity futures also drifted off overnight lows with the NQ (+0.1%) nursing earlier losses of some 1% and the RTY (+0.7%) modestly outperforming perhaps on the inflation narrative. UK’s FTSE 100 (-0.6%) is narrowly underperforming its peers as the weight of the firmer Sterling weighs on large exporters in the index, whilst heavyweight AstraZeneca (-1.5%) acts as further headwind after an EU official said AstraZeneca is to deliver less than 90mln COVID-19 shots to the EU in Q2 which is at least 50% below its contract commitments. Meanwhile, UK housing names including Taylor Whimpey (+1.5%) and Barratt Developments (+2%) reap rewards from reports that UK Chancellor Sunak is preparing a 3-month extension to the stamp duty holiday to end-June. Conversely, the SMI (+0.9%) is pushed ahead by its financial sector alongside luxury names. That being said, the broader financial sector is pressured by HSBC (-2.6%) and Standard Charted (-1.5%) as the banks catch-up sell-off seen in their Hong Kong listings after HK announced stamp duty tax increase on stock trading - which subsequently led to Chinese traders selling a record USD 2.6bln in Hong Kong stocks. Overall, sectors in Europe are predominantly mixed and portray a reflationary bias - with Travel and Leisure again topping the charts as the global COVID situation improves. The Oil & Gas sector meanwhile remains buoyed as crude prices remain steady with WTI and Brent futures holding composure comfortably above USD 60/bbl apiece. The sectorial laggards consists of some COVID-winners, with IT still bearing the brunt of the rotation out of “stay at home” stocks. In terms of individual movers, Telecom Italia (+6.7%) resides as the clear outperformer post-earnings after it proposed a dividend whilst highlighting a sharp acceleration in ultrabroadband net addition, which rose some 171% Y/Y. Finally, Puma (-2.6%) sees itself near the foot of the Stoxx 600 after missing on net income estimates.

Top European News

  • Horta-Osorio Caps Lloyds Tenure With Profit Beat, Dividends
  • Vodafone Seeks Frankfurt Listing for Vantage Towers in March
  • Nordea’s Main Owner Sampo to ‘Materially’ Cut Stake in Bank

In FX, the Kiwi is outperforming in wake of February’s RBNZ policy meeting, albeit after some initial hesitation when dovish guidance was retained, and the Bank stated that operational work for a negative OCR has been done should the need arise. However, the RBNZ raised its CPI and NZD TWI forecasts for end Q1 next year appreciably, while noting more resilience in the labour market than anticipated, and the domestic economy as a whole implying no significant extra stimulus is required at present. In response, Nzd/Usd has rebounded from the low 0.7300 area to within single digits of the round number above and Aud/Nzd is around 1 full big figure lower circa 1.0720. Meanwhile, Sterling continues to ride on the wave of optimism surrounding the impending relaxation of COVID-19 restrictions before lockdown is lifted completely that was compounded by UK press reports suggesting that the return to normal could come sooner than June 21. Cable breached 1.4200 overnight in thinner trading conditions that exacerbated price action, while Eur/Gbp briefly ducked under 0.8550 before bouncing.

  • EUR/AUD/CAD/DXY - Hefty option expiry interest may prevent the Euro and Aussie from extending gains vs the Greenback given 1.3 bn in Eur/Usd between 1.2175-80 (bottom end bang in line with the high so far) and 1.2 bn in Aud/Usd at the 0.7910 strike (compared to circa 0.7945 at best). Moreover, the aforementioned cross flows are an impediment along with relative resilience in the Buck following Fed chair Powell’s first semi-annual testimony where he maintained caution over the economic outlook and no inclination to start unwinding accommodation anytime soon, but effectively welcomed the recent ramp in US Treasury yields as a sign of higher growth and inflation expectations. Hence, the index is still holding a tight line around 90.000 (90.152-89.973 to be precise) awaiting part 2 at the House and housing data ahead of other Fed speakers. Nevertheless, the Loonie remains supported by firm oil prices and comparatively upbeat comments from BoC Governor Macklem who expects a solid economic rebound in the short term and expressed more confidence about sustained and strong growth through H2 this year into 2022, with Usd/Cad near the base of a 1.2598- 59 range.
  • SEK/CHF/JPY - The G10 laggards as dovish Riksbank inferences, more spec long liquidation and the return from market holiday keeps the Swedish Crown, Swiss Franc and Japanese Yen pressured around 10.0900 vs the Euro, sub-0.9050 against the Dollar/under 1.1000 vs the Euro and towards the base of 105.82-17 extremes in Usd/Jpy respectively. A marked improvement in Swiss investor sentiment has not really been reflected in the Franc, but the Yen may glean some traction from option expiries at 105.70-65 (2.2 bn) if not slightly smaller size at the 105.00 strike (1.7 bn).
  • NOK/EM - Elevated crude is also underpinning the Norwegian Krona, Russian Rouble and Mexican Peso, but the Turkish Lira is still trying to arrest a sharp retreat through 7.0000 on the back of CBRT intervention via a 150 bp hike in the Try reserve remuneration rate and the SA Rand is on the defensive ahead of the Budget.

In commodities, WTI and Brent front month futures are slightly firmer but with the global benchmark narrowly outpacing its US counterpart. Considering Texas refineries have started to come back online it is not too surprising to see WTI modestly softer vs Brent. The complex opened with a slight dichotomy and is now only seeing upside amid the more constructive risk tone. Last night saw the release of bearish stockpile data in which the Private Sector Inventory report showed a surprise build for headline crude ahead of the official EIA figure later today – with the headline expected to print a draw of 5.19mln bbls. However, distortion in the data is expected given the Texan deep freeze and participants may not pay close attention to it given the fact the refineries are slowly coming back online and the OPEC+ meeting looms. Moreover, IEA said they are not expecting oil demand to return to pre-COVID levels by end of 2021. Nevertheless, the underlying narrative remains the same with the OPEC+ meeting and vaccination progress the focus, where participants are bullish on recovery and but eyes turn to whether OPEC+ members remain united. WTI resides mid USD 61/bbl (vs high USD 61.85/bbl) and Brent mid USD 65/bbl (vs high USD 65.69/bbl). Elsewhere, precious metals saw upside during early European hours amid the weaker DXY but they have since diverged with spot gold softer at USD 1,803/oz & spot silver firmer at USD 27.75/oz. Turning to base metals, LME copper is trading lower at USD 9,160/t at the time of writing as the red metal sees a mild pullback from its recent rally coupled with a downbeat session in Chinese markets. Lastly, US manufacturers are tackling steel shortages which has seen hot-rolled steel hit USD 1,176/t this month, the highest level in at least 13 years.

US Event Calendar

  • 7am: Feb. MBA Mortgage Applications -11.4%, prior -5.1%
  • 10am: Jan. New Home Sales MoM, est. 1.6%, prior 1.6%
  • 10am: Jan. New Home Sales, est. 856,000, prior 842,000
  • 10am: Fed’s Powell testifies Before House Financial Services Panel
  • 10:30am: Fed’s Brainard Discusses Maximum Employment Mandate
  • 1pm: Fed’s Clarida Discusses U.S. Economic Outlook
  • 4pm: Fed Vice Chair Richard Clarida Discusses Economy

DB's Jim Reid concludes the overnight wrap

I may have a couple of days off tomorrow and Friday as the weather is suppose to be nice. I have absolutely nothing to do but a load of leave left to take. I’m hoping to spend a few hours in the garden practising my golf chipping. Problem is when I do this Bronte cries if she doesn’t come out with me and then when she inevitable does she runs off with my golf balls and bites and ruins them. Roll on the golf courses reopening. If I stick to my plan Henry will be in charge over the next couple of days.

Anyway, welcome to the one year anniversary of the initial Covid market slump where the S&P 500 fell -3.35%, the Stoxx 600 -3.79% and 10yr Treasury yields fell -10bps on the Monday after we learnt that Italian cases had shot up over the weekend. Who would have guessed the path of both life and markets over this last 12 months. Indeed since this point the NASDAQ is actually up just over 46%, with the S&P 500 taking the scenic route to a c.20% gain. Even WTI oil, which is now c.20% higher and back over $60, traded at -$37.63 early in the pandemic. Remember that? Indeed not many of the assets we track regularly are down over the whole period now.

The path of things over the last 12 months means we should be relatively humble about our forecasts for the next 12 months. It feels like the range of outcomes are still potentially huge given the ginormous forces at work. The one thing I feel most confident of is that this isn’t going to be a dull low volatility year. I suspect we are in a bubble in certain places, that stimulus cheques will provide more fire to that at some point but that risk assets are going to be constantly buffeted by the risk of higher yields and inflation regardless of whether it has any structural roots or not. Strong growth will help in the end but the vol could be high.

Given the forces at work, our US economists yesterday upgraded their 2021/2022 forecasts yesterday (link here), which takes into account a more substantial fiscal infusion in the coming weeks. They’ve revised their baseline expectations for the next fiscal plan up from nearly $1tn to $1.6-1.7tn, with their 2021 growth forecast upgraded by 1.2 percentage points to 7.5% (q4/q4) and their inflation numbers pushed a bit higher too with risks on the upside. For the Fed, they’re still sticking to their expectation of a tapering announcement at the December meeting, and believe that a clear signal of the timeline could become evident around the Jackson Hole conference in August. They’ve also pulled forward their rates lift-off timing by a quarter, which they now expect in Q3 2023.

All eyes were on Fed Chair Powell yesterday, who was appearing before the Senate Banking Committee as he presented the central bank’s semiannual Monetary Policy Report. His opening statement mainly reiterated the messages he’d already been pushing, noting that “millions of Americans remain out of work” and that “the economic recovery remains uneven and far from complete”. In the question and answer session, Powell went on to say that rates were moving higher because of stronger confidence, but mentioned again that the economy was still 10m jobs beneath its pre-virus peak last February. He pushed back on concerns that there will be a large inflationary shock due to either the upcoming stimulus package or the uncoiling of pent-up demand from American consumers. Powell acknowledged that the Fed expects 'enthusiastic' spending to increase inflation in the short-term, but that it is not likely to be particularly large or persistent and that inflation risks are still to the downside here. Overall it was fairly predictable that he would try to calm recent market fears of higher inflation given all he has said in recent weeks.

Indeed risk markets looked set for a very ugly day before Powell’s relatively dovish comments seemed to turn the tide and helped markets recover strongly off the lows of the day. The S&P was down -1.83% within the first half hour of opening before reversing through the course of the day and finishing up +0.13%. The small gain broke a streak of 5 successive losses and was led by gains in Energy (+1.61%) and Bank (+0.88%) stocks as Powell’s comments helped sustain the reflation trade. Tech continued to be particularly spooked by concerns of higher long dated rates with the Nasdaq down as much as -3.91% early on before strongly rebounding and closing just -0.50% down on the day. European stocks matched their American counterparts with a rally from the lows as the STOXX 600 finished yesterday down -0.42%, recovering from an early -1.54% decline. One asset that was not able to recover was Bitcoin, which ended the day down -12.7% (but is up +5.09% overnight) for the cryptocurrency’s worst daily performance since January 11. Tesla closed -2.19% and is now down for the year after being +25% YTD a few weeks back. However shortly after the open it was -13.4% so a big bounce back.

As with the previous day, it was another topsy-turvy session for rates with 10yr Treasuries swinging between gains and losses, before yields settled -2.4bps lower at 1.342%. The move was driven by the drop in real yields (-3.6bps) winning the tug-of-war with breakevens which rose +1.4bps in spite of Powell’s comments. The more dovish he is now the more the risk of future inflation. However, rates edged higher at the long-end of the curve, as 30yr yields rose +0.7bps to a 1-year high of 2.18%, whilst the 5s30s yield curve steepened to its highest level in more than 6 years. For Europe it was the reverse picture however, with sovereign bond yields rising across the board, though they pared back the moves slightly towards the end of the session. By the close, yields on 10yr bunds had risen +2.4bps, as had those on OATs (+3.2bps) and BTPs (+4.7bps), while gilts (+4.0bps) continued to underperform as their spread over bunds widened to levels not seen in almost a year.

Asian markets are weaker this morning with the Hang Seng (-2.84%) leading the declines on news that the city will raise stamp duty on stock trading. Hong Kong’s Financial Secretary Paul Chan has proposed raising this stamp duty to 0.13% from 0.1% to boost revenue in his budget speech which includes counter cyclical measures such as spending vouchers of HKD 5,000 for each resident and HKD15 bn of guaranteed loans for those without jobs. Turning to other markets in the region, the Nikkei is down -1.27% as it reopened post a holiday with the Shanghai Comp (-2.04%), Kospi (-2.06%) and Asx (-0.90%) also lower. An exception to this pattern is India’s Sensex (+0.56%). Futures on the S&P 500 are trading -0.32% as we type and European equivalents are also pointing to a weaker open. In Fx, the New Zealand dollar is up +0.33% after the RBNZ said that “Prolonged monetary stimulus” remains necessary and “considerable time and patience” will be required to meet its inflation and employment targets while keeping its current monetary policy settings unchanged. The RBNZ added that it “remains prepared to provide additional monetary stimulus if necessary.” Yields on 10y USTs are flattish but those on Australia and New Zealand’s 10yrs are up by c. +5bps.

In other news, the US Budget Committee Chair Bernie Sanders has indicated that a Senate parliamentarian decision could come as soon as today on whether a proposed minimum-wage hike can be included in the fast-track bill. Meanwhile, the Senate Majority Leader Chuck Schumer has said that he expects Biden’s second, longer-term economic package “very soon” after the pandemic-aid bill.

In a sign of just how much demand is lying latent, EasyJet Plc reported that ticket sales more than quadrupled shortly after U.K. PM Johnson indicated that international travel could begin as soon as May 17. My wife spent last night booking all sorts of activities for the family for late Spring/Summer. I had to keep on interrupting with my golf tournament dates. I expect this summer to be a whirl of activity everywhere if the vaccine success continues to materialise.

That said, near-term restrictions were tightened or extended in some parts of Europe yesterday, with Brescia in Northern Italy and some municipalities of the Lombardy region imposing a hard lockdown yesterday after a sudden spike in Covid-19 cases. Germany extended their border controls against travelers from the Czech Republic as well as from some regions of Austria until at least March 3. On the easier side, in the US, Dr Fauci suggested that the CDC may issue new guidance soon on easing some public health protocols for those who have been fully vaccinated. There is also greater effort going on to increase genetic sequencing in order to detect any of the faster-spreading variants, with 14,000 cases being analysed now – well above the 250 sequences per week last month.

Looking at yesterday’s data, the Conference Board’s consumer confidence index in the US rose to a stronger-than-expected 91.3 in February (vs. 90.0 expected), its highest level in 3 months. That said, while the present situation reading increased to 92.0, the expectations reading actually fell back slightly to 90.8. Separately in the UK, the unemployment rate in the three months to December ticked up to 5.1% as expected, although it’s worth noting that figure doesn’t include workers who’ve been furloughed.

To the day ahead now, and the likely highlight will once again be from Fed Chair Powell, as he appears before the House Financial Services Committee. In addition, we’ll hear from Fed Vice Chair Clarida and the Fed’s Brainard, along with Bank of England Governor Bailey, as well as the BoE’s Broadbent, Vlieghe, Haskel and Haldane. Otherwise, data releases include US new home sales for January and the final Q4 GDP reading from Germany, while earnings releases include Nvidia, Lowe’s, Booking Holdings, TJX and Royal Bank of Canada.

Tyler Durden Wed, 02/24/2021 - 08:12

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Are Voters Recoiling Against Disorder?

Are Voters Recoiling Against Disorder?

Authored by Michael Barone via The Epoch Times (emphasis ours),

The headlines coming out of the Super…

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Are Voters Recoiling Against Disorder?

Authored by Michael Barone via The Epoch Times (emphasis ours),

The headlines coming out of the Super Tuesday primaries have got it right. Barring cataclysmic changes, Donald Trump and Joe Biden will be the Republican and Democratic nominees for president in 2024.

(Left) President Joe Biden delivers remarks on canceling student debt at Culver City Julian Dixon Library in Culver City, Calif., on Feb. 21, 2024. (Right) Republican presidential candidate and former U.S. President Donald Trump stands on stage during a campaign event at Big League Dreams Las Vegas in Las Vegas, Nev., on Jan. 27, 2024. (Mario Tama/Getty Images; David Becker/Getty Images)

With Nikki Haley’s withdrawal, there will be no more significantly contested primaries or caucuses—the earliest both parties’ races have been over since something like the current primary-dominated system was put in place in 1972.

The primary results have spotlighted some of both nominees’ weaknesses.

Donald Trump lost high-income, high-educated constituencies, including the entire metro area—aka the Swamp. Many but by no means all Haley votes there were cast by Biden Democrats. Mr. Trump can’t afford to lose too many of the others in target states like Pennsylvania and Michigan.

Majorities and large minorities of voters in overwhelmingly Latino counties in Texas’s Rio Grande Valley and some in Houston voted against Joe Biden, and even more against Senate nominee Rep. Colin Allred (D-Texas).

Returns from Hispanic precincts in New Hampshire and Massachusetts show the same thing. Mr. Biden can’t afford to lose too many Latino votes in target states like Arizona and Georgia.

When Mr. Trump rode down that escalator in 2015, commentators assumed he’d repel Latinos. Instead, Latino voters nationally, and especially the closest eyewitnesses of Biden’s open-border policy, have been trending heavily Republican.

High-income liberal Democrats may sport lawn signs proclaiming, “In this house, we believe ... no human is illegal.” The logical consequence of that belief is an open border. But modest-income folks in border counties know that flows of illegal immigrants result in disorder, disease, and crime.

There is plenty of impatience with increased disorder in election returns below the presidential level. Consider Los Angeles County, America’s largest county, with nearly 10 million people, more people than 40 of the 50 states. It voted 71 percent for Mr. Biden in 2020.

Current returns show county District Attorney George Gascon winning only 21 percent of the vote in the nonpartisan primary. He’ll apparently face Republican Nathan Hochman, a critic of his liberal policies, in November.

Gascon, elected after the May 2020 death of counterfeit-passing suspect George Floyd in Minneapolis, is one of many county prosecutors supported by billionaire George Soros. His policies include not charging juveniles as adults, not seeking higher penalties for gang membership or use of firearms, and bringing fewer misdemeanor cases.

The predictable result has been increased car thefts, burglaries, and personal robberies. Some 120 assistant district attorneys have left the office, and there’s a backlog of 10,000 unprosecuted cases.

More than a dozen other Soros-backed and similarly liberal prosecutors have faced strong opposition or have left office.

St. Louis prosecutor Kim Gardner resigned last May amid lawsuits seeking her removal, Milwaukee’s John Chisholm retired in January, and Baltimore’s Marilyn Mosby was defeated in July 2022 and convicted of perjury in September 2023. Last November, Loudoun County, Virginia, voters (62 percent Biden) ousted liberal Buta Biberaj, who declined to prosecute a transgender student for assault, and in June 2022 voters in San Francisco (85 percent Biden) recalled famed radical Chesa Boudin.

Similarly, this Tuesday, voters in San Francisco passed ballot measures strengthening police powers and requiring treatment of drug-addicted welfare recipients.

In retrospect, it appears the Floyd video, appearing after three months of COVID-19 confinement, sparked a frenzied, even crazed reaction, especially among the highly educated and articulate. One fatal incident was seen as proof that America’s “systemic racism” was worse than ever and that police forces should be defunded and perhaps abolished.

2020 was “the year America went crazy,” I wrote in January 2021, a year in which police funding was actually cut by Democrats in New York, Los Angeles, San Francisco, Seattle, and Denver. A year in which young New York Times (NYT) staffers claimed they were endangered by the publication of Sen. Tom Cotton’s (R-Ark.) opinion article advocating calling in military forces if necessary to stop rioting, as had been done in Detroit in 1967 and Los Angeles in 1992. A craven NYT publisher even fired the editorial page editor for running the article.

Evidence of visible and tangible discontent with increasing violence and its consequences—barren and locked shelves in Manhattan chain drugstores, skyrocketing carjackings in Washington, D.C.—is as unmistakable in polls and election results as it is in daily life in large metropolitan areas. Maybe 2024 will turn out to be the year even liberal America stopped acting crazy.

Chaos and disorder work against incumbents, as they did in 1968 when Democrats saw their party’s popular vote fall from 61 percent to 43 percent.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

Tyler Durden Sat, 03/09/2024 - 23:20

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Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

The…

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Veterans Affairs Kept COVID-19 Vaccine Mandate In Place Without Evidence

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

The U.S. Department of Veterans Affairs (VA) reviewed no data when deciding in 2023 to keep its COVID-19 vaccine mandate in place.

Doses of a COVID-19 vaccine in Washington in a file image. (Jacquelyn Martin/Pool/AFP via Getty Images)

VA Secretary Denis McDonough said on May 1, 2023, that the end of many other federal mandates “will not impact current policies at the Department of Veterans Affairs.”

He said the mandate was remaining for VA health care personnel “to ensure the safety of veterans and our colleagues.”

Mr. McDonough did not cite any studies or other data. A VA spokesperson declined to provide any data that was reviewed when deciding not to rescind the mandate. The Epoch Times submitted a Freedom of Information Act for “all documents outlining which data was relied upon when establishing the mandate when deciding to keep the mandate in place.”

The agency searched for such data and did not find any.

The VA does not even attempt to justify its policies with science, because it can’t,” Leslie Manookian, president and founder of the Health Freedom Defense Fund, told The Epoch Times.

“The VA just trusts that the process and cost of challenging its unfounded policies is so onerous, most people are dissuaded from even trying,” she added.

The VA’s mandate remains in place to this day.

The VA’s website claims that vaccines “help protect you from getting severe illness” and “offer good protection against most COVID-19 variants,” pointing in part to observational data from the U.S. Centers for Disease Control and Prevention (CDC) that estimate the vaccines provide poor protection against symptomatic infection and transient shielding against hospitalization.

There have also been increasing concerns among outside scientists about confirmed side effects like heart inflammation—the VA hid a safety signal it detected for the inflammation—and possible side effects such as tinnitus, which shift the benefit-risk calculus.

President Joe Biden imposed a slate of COVID-19 vaccine mandates in 2021. The VA was the first federal agency to implement a mandate.

President Biden rescinded the mandates in May 2023, citing a drop in COVID-19 cases and hospitalizations. His administration maintains the choice to require vaccines was the right one and saved lives.

“Our administration’s vaccination requirements helped ensure the safety of workers in critical workforces including those in the healthcare and education sectors, protecting themselves and the populations they serve, and strengthening their ability to provide services without disruptions to operations,” the White House said.

Some experts said requiring vaccination meant many younger people were forced to get a vaccine despite the risks potentially outweighing the benefits, leaving fewer doses for older adults.

By mandating the vaccines to younger people and those with natural immunity from having had COVID, older people in the U.S. and other countries did not have access to them, and many people might have died because of that,” Martin Kulldorff, a professor of medicine on leave from Harvard Medical School, told The Epoch Times previously.

The VA was one of just a handful of agencies to keep its mandate in place following the removal of many federal mandates.

“At this time, the vaccine requirement will remain in effect for VA health care personnel, including VA psychologists, pharmacists, social workers, nursing assistants, physical therapists, respiratory therapists, peer specialists, medical support assistants, engineers, housekeepers, and other clinical, administrative, and infrastructure support employees,” Mr. McDonough wrote to VA employees at the time.

This also includes VA volunteers and contractors. Effectively, this means that any Veterans Health Administration (VHA) employee, volunteer, or contractor who works in VHA facilities, visits VHA facilities, or provides direct care to those we serve will still be subject to the vaccine requirement at this time,” he said. “We continue to monitor and discuss this requirement, and we will provide more information about the vaccination requirements for VA health care employees soon. As always, we will process requests for vaccination exceptions in accordance with applicable laws, regulations, and policies.”

The version of the shots cleared in the fall of 2022, and available through the fall of 2023, did not have any clinical trial data supporting them.

A new version was approved in the fall of 2023 because there were indications that the shots not only offered temporary protection but also that the level of protection was lower than what was observed during earlier stages of the pandemic.

Ms. Manookian, whose group has challenged several of the federal mandates, said that the mandate “illustrates the dangers of the administrative state and how these federal agencies have become a law unto themselves.”

Tyler Durden Sat, 03/09/2024 - 22:10

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The Coming Of The Police State In America

The Coming Of The Police State In America

Authored by Jeffrey Tucker via The Epoch Times,

The National Guard and the State Police are now…

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The Coming Of The Police State In America

Authored by Jeffrey Tucker via The Epoch Times,

The National Guard and the State Police are now patrolling the New York City subway system in an attempt to do something about the explosion of crime. As part of this, there are bag checks and new surveillance of all passengers. No legislation, no debate, just an edict from the mayor.

Many citizens who rely on this system for transportation might welcome this. It’s a city of strict gun control, and no one knows for sure if they have the right to defend themselves. Merchants have been harassed and even arrested for trying to stop looting and pillaging in their own shops.

The message has been sent: Only the police can do this job. Whether they do it or not is another matter.

Things on the subway system have gotten crazy. If you know it well, you can manage to travel safely, but visitors to the city who take the wrong train at the wrong time are taking grave risks.

In actual fact, it’s guaranteed that this will only end in confiscating knives and other things that people carry in order to protect themselves while leaving the actual criminals even more free to prey on citizens.

The law-abiding will suffer and the criminals will grow more numerous. It will not end well.

When you step back from the details, what we have is the dawning of a genuine police state in the United States. It only starts in New York City. Where is the Guard going to be deployed next? Anywhere is possible.

If the crime is bad enough, citizens will welcome it. It must have been this way in most times and places that when the police state arrives, the people cheer.

We will all have our own stories of how this came to be. Some might begin with the passage of the Patriot Act and the establishment of the Department of Homeland Security in 2001. Some will focus on gun control and the taking away of citizens’ rights to defend themselves.

My own version of events is closer in time. It began four years ago this month with lockdowns. That’s what shattered the capacity of civil society to function in the United States. Everything that has happened since follows like one domino tumbling after another.

It goes like this:

1) lockdown,

2) loss of moral compass and spreading of loneliness and nihilism,

3) rioting resulting from citizen frustration, 4) police absent because of ideological hectoring,

5) a rise in uncontrolled immigration/refugees,

6) an epidemic of ill health from substance abuse and otherwise,

7) businesses flee the city

8) cities fall into decay, and that results in

9) more surveillance and police state.

The 10th stage is the sacking of liberty and civilization itself.

It doesn’t fall out this way at every point in history, but this seems like a solid outline of what happened in this case. Four years is a very short period of time to see all of this unfold. But it is a fact that New York City was more-or-less civilized only four years ago. No one could have predicted that it would come to this so quickly.

But once the lockdowns happened, all bets were off. Here we had a policy that most directly trampled on all freedoms that we had taken for granted. Schools, businesses, and churches were slammed shut, with various levels of enforcement. The entire workforce was divided between essential and nonessential, and there was widespread confusion about who precisely was in charge of designating and enforcing this.

It felt like martial law at the time, as if all normal civilian law had been displaced by something else. That something had to do with public health, but there was clearly more going on, because suddenly our social media posts were censored and we were being asked to do things that made no sense, such as mask up for a virus that evaded mask protection and walk in only one direction in grocery aisles.

Vast amounts of the white-collar workforce stayed home—and their kids, too—until it became too much to bear. The city became a ghost town. Most U.S. cities were the same.

As the months of disaster rolled on, the captives were let out of their houses for the summer in order to protest racism but no other reason. As a way of excusing this, the same public health authorities said that racism was a virus as bad as COVID-19, so therefore it was permitted.

The protests had turned to riots in many cities, and the police were being defunded and discouraged to do anything about the problem. Citizens watched in horror as downtowns burned and drug-crazed freaks took over whole sections of cities. It was like every standard of decency had been zapped out of an entire swath of the population.

Meanwhile, large checks were arriving in people’s bank accounts, defying every normal economic expectation. How could people not be working and get their bank accounts more flush with cash than ever? There was a new law that didn’t even require that people pay rent. How weird was that? Even student loans didn’t need to be paid.

By the fall, recess from lockdown was over and everyone was told to go home again. But this time they had a job to do: They were supposed to vote. Not at the polling places, because going there would only spread germs, or so the media said. When the voting results finally came in, it was the absentee ballots that swung the election in favor of the opposition party that actually wanted more lockdowns and eventually pushed vaccine mandates on the whole population.

The new party in control took note of the large population movements out of cities and states that they controlled. This would have a large effect on voting patterns in the future. But they had a plan. They would open the borders to millions of people in the guise of caring for refugees. These new warm bodies would become voters in time and certainly count on the census when it came time to reapportion political power.

Meanwhile, the native population had begun to swim in ill health from substance abuse, widespread depression, and demoralization, plus vaccine injury. This increased dependency on the very institutions that had caused the problem in the first place: the medical/scientific establishment.

The rise of crime drove the small businesses out of the city. They had barely survived the lockdowns, but they certainly could not survive the crime epidemic. This undermined the tax base of the city and allowed the criminals to take further control.

The same cities became sanctuaries for the waves of migrants sacking the country, and partisan mayors actually used tax dollars to house these invaders in high-end hotels in the name of having compassion for the stranger. Citizens were pushed out to make way for rampaging migrant hordes, as incredible as this seems.

But with that, of course, crime rose ever further, inciting citizen anger and providing a pretext to bring in the police state in the form of the National Guard, now tasked with cracking down on crime in the transportation system.

What’s the next step? It’s probably already here: mass surveillance and censorship, plus ever-expanding police power. This will be accompanied by further population movements, as those with the means to do so flee the city and even the country and leave it for everyone else to suffer.

As I tell the story, all of this seems inevitable. It is not. It could have been stopped at any point. A wise and prudent political leadership could have admitted the error from the beginning and called on the country to rediscover freedom, decency, and the difference between right and wrong. But ego and pride stopped that from happening, and we are left with the consequences.

The government grows ever bigger and civil society ever less capable of managing itself in large urban centers. Disaster is unfolding in real time, mitigated only by a rising stock market and a financial system that has yet to fall apart completely.

Are we at the middle stages of total collapse, or at the point where the population and people in leadership positions wise up and decide to put an end to the downward slide? It’s hard to know. But this much we do know: There is a growing pocket of resistance out there that is fed up and refuses to sit by and watch this great country be sacked and taken over by everything it was set up to prevent.

Tyler Durden Sat, 03/09/2024 - 16:20

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