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Over-Promise, Under-Deliver: Brussels, Banks, & Battery Day

Over-Promise, Under-Deliver: Brussels, Banks, & Battery Day



Over-Promise, Under-Deliver: Brussels, Banks, & Battery Day Tyler Durden Wed, 09/23/2020 - 08:35

Authored by Bill Blain via,

“I would worry less about the gods and more about the fury of a patient man.”

As the market sort of rallies on the back of Fed Head Jerome Powell suggesting the lack of US stimulus might be a problem, thereby anticipating a new stimulus will come – for that is the way markets think. Meanwhile, there are a number of themes discernible amongst the noise that is the Market this morning...

Follow the money: Ragnar acts…. 

The Norwegians are pivoting their $1.15 trillion pension fund away from European stocks towards US equites. The FT says the Nogs are going to cut Europe from 33% to 26.5% while raising US allocations to 48%.Better represents the distribution of value creation” said the Minister of Finance. It makes sense: US stocks represent some 65.5% of global market cap. Europe? Not so much. Yet Europe was 50% of Norway’s equity allocation as recently as 2012.

The timing is significant. There is much talk about how overvalued US stocks look and how Federal government stimulus, over-easy policy by the Fed, and Donald Trump’s constant talking-up of US Stocks and tax-handouts, have boosted US valuations and driven the continuation of a 11-year bull market. On the other hand, it’s been NIRP (Negative interest rates), QE Infinity and “do-what-ever-it-takes” that’s stopped European stocks and sovereign debt tumbling into the abyss these last few years. 

The US has posted positive growth. Europe… less so.

Whatever, it’s an “Ouch” moment for Europe. The announcement was wrapped up in diplomatic flannel, but it’s clear the Nogs don’t have much faith in European recovery prospects, or believe Europe is relatively undervalued compared to the US – a common investment theme in European Investment Bank “research”in recent months... 

Interesting fact – during the last unpleasantness with Germany, the Norwegian Government based itself in Edinburgh, at Riccarton which is now Heriot-Watt University’s campus. As a result my student days involved carousing with lots of wild Nog students – they are brilliantly bad and funny people. Celebrating their national day was something on an eco-hazard. I called one of my Norwegian chums to ask his view on the portfolio shift. (He’s a banker.. but definitely would have been a Viking in a former life.) 

He told me the “team” (the fund and politicians) are concerned about the Norwegian economy being too closely aligned with the faceless bureaucracy of Brussels the reality of the Japanification of Europe and low growth prospects. They need growth to continue the shift of their economy towards a more global and sustainable perspective. Politically they remain neutral. 

It’s fascinating to get an outsider’s view. There are three problems in Europe likely to lead to continued underperformance relative to the US and Asia: 

i) The inability of EU member states to reconcile domestic policy agendas with real fiscal union hampers effective recovery at the regional level. There are serious issues in terms of delivering regional policy goals – including endemic corruption in parts of East and South Europe. These need strong domestic government, rather than centralised power projection from Brussels. 

ii) The ECB’s ineffectual and unreliable tinkering with increasingly ineffective monetary stimulus is doing little to address long-term growth and employment outside Germany. Its simply sustaining what is broken, rather than replacing it. The current debate about ending QE Infinity early sums up the lack of direction and clear objectives within the ECB. 

iii) While Europe is sinking, there are more attractive relative opportunities elsewhere. It makes sense to move. 

There is a fourth issue, which is apparently causing concern at the political level. Some Norwegian politicians are increasingly “unhappy” at the way Norway is increasingly painted as some kind of vassal state by Brussels in terms of being “subject” to EU laws and paying for the privilege of access. They see the EU’s domestic leaders as distracted and focused internally on issues like the pandemic, immigration and employment, while the EU is effectively run by an unelected clique of officals in Brussels focused on the preservation of the union – which isn’t reflecting tensions building up between the states and the union. The way the relationship with Norway has been used to justify the EU’s position re Brexit negotiations has particularly jarred some politicians in Oslo.  

While one Norwegian banker is not representative of the entire nation – he makes a lot of sense. It’s a single perspective, but the Norwegians have faith in the global economy, but not so much in Europe. 

European Banks

10 years ago I wrote that HSBC was my “banker stock”. It was then the European bank we’d always be able to rely on and the one European financial institution I was confident of getting my money back from. I invested heavily in deeply discounted HSBC pref notes at the depth of the 2008/09 banking crisis – confident they wouldn’t need a bail-out. It was a great trade.

Today, HSBC heads my list of stocks to avoid – utterly. It’s facing an irrecoverable multiple whammy of irreconcilable issues:

  • It’s going to take massive Pandemic bad-loan provisions – the $11 bln it was talking about earlier this year are going to look a massive underestimate. 

  • It’s a tech dinosaur plagued by legacy systems that need replacement and reinvention and internal bureaucracy – while new nimble digitally based Fintechs are set to eat it’s lunch. 

  • It’s got the looming political crisis in Hong Kong, the source of the bulk of its profits that have subsidised its lacklustre global efforts for years. It’s likely to suffer massive disruption if the HK$ currency peg breaks, trigger massive corporate defaults. Its corporate reputation is tarnished as a result of the China trap. 

  • It’s top of the Chinese government sh*t list as the easy name to hit. It’s likely to be put on the new “unreliable entity list” for perceived collusion with the US over Huawei and as a bargaining chip.

What makes me smile is HSBC’s claim to be the best bank to advise clients on ESG (Environmental, Social and Governance issues.) That’s a bad joke. ESG is not just about the environment – it’s about how firms treat people, customers and staff. HSBC is the only major UK bank that is taking advantage of the UK pensions act 2011 to reduce contracted staff pensions via clawbacks. It’s shaping up to be an enormous “Social” ESG failure – a bank that apparently is willing to inflict harm and damage on its own staff at the end of their careers doesn’t care much for stakeholder society. And it’s a reason HSBC service is so appalling – staff morale has collapsed in the face of redundancies and the pensions issue. Clients looking for ESG advice should be looking at HSBC as a warning… not a teacher. 

As for Governance, that’s another terrible black mark. For the last 12 years HSBC has been walking on regulatory tenterhooks – terrified if it made another mistake on money laundering then it would attract the full ire of the SEC and other regulators. In the noughties it made the mistake of assuming putting the Hexagon logo on some newly acquired Mexican banks somehow made them pristine. Nope. They simply legitimised drugs money. For the next decade their board was compromised by the fear of another mistake. It caused management paralysis from the top – culminating in a serious of mistakes like the appointment of the short-lived John Flint as CEO and the disastrous continuation of internal appointments to senior roles. The genetics of HSBC’s management remain about as diverse as a family of one-eyed hillbillies – but considerably less talented. 

And now… it turns out HSBC “multi-year journey” to cleaning up its act re money laundering and other nefarious banking practices were equally dire. As the BBC highlighted on Panorama earlier this week – it deals with some shady characters. 

HSBC remains a massive sell for the reasons listed above. It’s not a recovery stock. It’s not going to be a bargain – because every single one of these issues is going to get worse. Not better. It’s a massive short. 

Tesla Battery Day

I don’t need to say much about Tesla’s much anticipated battery day. As we all know Elon Musk is a master of the “Overpromise and Underdeliver” school of stock-market hype. His preferred mode is to make the same promise again and again, state the downright obvious as if was some deep insight, and keep saying these things again and again in the hope investors don’t notice and think it done. 

Yesterday’s battery day saw Tesla announce they will make batteries cheaper and better. They will launch a $25,000 affordable car! Fantastic. What stunning insights into Tesla’s path to riches. 

Darn… I can’t just leave it like that. Tesla admitted it doesn’t actually have new battery designs or a new manufacturing process to make them. Musk said “We do not have an affordable car. That’s something we will have in the future. We’ve got to get the costs of batteries down.”

Tesla is a serial underdeliverer. Three years might be thirty in Musk-speak. The stock crashed 6% following battery day. Wake me up when it is down 80%. At that point I’m a buyer. 

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Analyst reviews Apple stock price target amid challenges

Here’s what could happen to Apple shares next.



They said it was bound to happen.

It was Jan. 11, 2024 when software giant Microsoft  (MSFT)  briefly passed Apple  (AAPL)  as the most valuable company in the world.

Microsoft's stock closed 0.5% higher, giving it a market valuation of $2.859 trillion. 

It rose as much as 2% during the session and the company was briefly worth $2.903 trillion. Apple closed 0.3% lower, giving the company a market capitalization of $2.886 trillion. 

"It was inevitable that Microsoft would overtake Apple since Microsoft is growing faster and has more to benefit from the generative AI revolution," D.A. Davidson analyst Gil Luria said at the time, according to Reuters.

The two tech titans have jostled for top spot over the years and Microsoft was ahead at last check, with a market cap of $3.085 trillion, compared with Apple's value of $2.684 trillion.

Analysts noted that Apple had been dealing with weakening demand, including for the iPhone, the company’s main source of revenue. 

Demand in China, a major market, has slumped as the country's economy makes a slow recovery from the pandemic and competition from Huawei.

Sales in China of Apple's iPhone fell by 24% in the first six weeks of 2024 compared with a year earlier, according to research firm Counterpoint, as the company contended with stiff competition from a resurgent Huawei "while getting squeezed in the middle on aggressive pricing from the likes of OPPO, vivo and Xiaomi," said senior Analyst Mengmeng Zhang.

“Although the iPhone 15 is a great device, it has no significant upgrades from the previous version, so consumers feel fine holding on to the older-generation iPhones for now," he said.

A man scrolling through Netflix on an Apple iPad Pro. Photo by Phil Barker/Future Publishing via Getty Images.

Future Publishing/Getty Images

Big plans for China

Counterpoint said that the first six weeks of 2023 saw abnormally high numbers with significant unit sales being deferred from December 2022 due to production issues.

Apple is planning to open its eighth store in Shanghai – and its 47th across China – on March 21.

Related: Tech News Now: OpenAI says Musk contract 'never existed', Xiaomi's EV, and more

The company also plans to expand its research centre in Shanghai to support all of its product lines and open a new lab in southern tech hub Shenzhen later this year, according to the South China Morning Post.

Meanwhile, over in Europe, Apple announced changes to comply with the European Union's Digital Markets Act (DMA), which went into effect last week, Reuters reported on March 12.

Beginning this spring, software developers operating in Europe will be able to distribute apps to EU customers directly from their own websites instead of through the App Store.

"To reflect the DMA’s changes, users in the EU can install apps from alternative app marketplaces in iOS 17.4 and later," Apple said on its website, referring to the software platform that runs iPhones and iPads. 

"Users will be able to download an alternative marketplace app from the marketplace developer’s website," the company said.

Apple has also said it will appeal a $2 billion EU antitrust fine for thwarting competition from Spotify  (SPOT)  and other music streaming rivals via restrictions on the App Store.

The company's shares have suffered amid all this upheaval, but some analysts still see good things in Apple's future.

Bank of America Securities confirmed its positive stance on Apple, maintaining a buy rating with a steady price target of $225, according to

The firm's analysis highlighted Apple's pricing strategy evolution since the introduction of the first iPhone in 2007, with initial prices set at $499 for the 4GB model and $599 for the 8GB model.

BofA said that Apple has consistently launched new iPhone models, including the Pro/Pro Max versions, to target the premium market. 

Analyst says Apple selloff 'overdone'

Concurrently, prices for previous models are typically reduced by about $100 with each new release. 

This strategy, coupled with installment plans from Apple and carriers, has contributed to the iPhone's installed base reaching a record 1.2 billion in 2023, the firm said.

More Tech Stocks:

Apple has effectively shifted its sales mix toward higher-value units despite experiencing slower unit sales, BofA said.

This trend is expected to persist and could help mitigate potential unit sales weaknesses, particularly in China. 

BofA also noted Apple's dominance in the high-end market, maintaining a market share of over 90% in the $1,000 and above price band for the past three years.

The firm also cited the anticipation of a multi-year iPhone cycle propelled by next-generation AI technology, robust services growth, and the potential for margin expansion.

On Monday, Evercore ISI analysts said they believed that the sell-off in the iPhone maker’s shares may be “overdone.”

The firm said that investors' growing preference for AI-focused stocks like Nvidia  (NVDA)  has led to a reallocation of funds away from Apple. 

In addition, Evercore said concerns over weakening demand in China, where Apple may be losing market share in the smartphone segment, have affected investor sentiment.

And then ongoing regulatory issues continue to have an impact on investor confidence in the world's second-biggest company.

“We think the sell-off is rather overdone, while we suspect there is strong valuation support at current levels to down 10%, there are three distinct drivers that could unlock upside on the stock from here – a) Cap allocation, b) AI inferencing, and c) Risk-off/defensive shift," the firm said in a research note.

Related: Veteran fund manager picks favorite stocks for 2024

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Major typhoid fever surveillance study in sub-Saharan Africa indicates need for the introduction of typhoid conjugate vaccines in endemic countries

There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high…



There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high burden combined with the threat of typhoid strains resistant to antibiotic treatment calls for stronger prevention strategies, including the use and implementation of typhoid conjugate vaccines (TCVs) in endemic settings along with improvements in access to safe water, sanitation, and hygiene.

Credit: IVI

There is a high burden of typhoid fever in sub-Saharan African countries, according to a new study published today in The Lancet Global Health. This high burden combined with the threat of typhoid strains resistant to antibiotic treatment calls for stronger prevention strategies, including the use and implementation of typhoid conjugate vaccines (TCVs) in endemic settings along with improvements in access to safe water, sanitation, and hygiene.


The findings from this 4-year study, the Severe Typhoid in Africa (SETA) program, offers new typhoid fever burden estimates from six countries: Burkina Faso, Democratic Republic of the Congo (DRC), Ethiopia, Ghana, Madagascar, and Nigeria, with four countries recording more than 100 cases for every 100,000 person-years of observation, which is considered a high burden. The highest incidence of typhoid was found in DRC with 315 cases per 100,000 people while children between 2-14 years of age were shown to be at highest risk across all 25 study sites.


There are an estimated 12.5 to 16.3 million cases of typhoid every year with 140,000 deaths. However, with generic symptoms such as fever, fatigue, and abdominal pain, and the need for blood culture sampling to make a definitive diagnosis, it is difficult for governments to capture the true burden of typhoid in their countries.


“Our goal through SETA was to address these gaps in typhoid disease burden data,” said lead author Dr. Florian Marks, Deputy Director General of the International Vaccine Institute (IVI). “Our estimates indicate that introduction of TCV in endemic settings would go to lengths in protecting communities, especially school-aged children, against this potentially deadly—but preventable—disease.”


In addition to disease incidence, this study also showed that the emergence of antimicrobial resistance (AMR) in Salmonella Typhi, the bacteria that causes typhoid fever, has led to more reliance beyond the traditional first line of antibiotic treatment. If left untreated, severe cases of the disease can lead to intestinal perforation and even death. This suggests that prevention through vaccination may play a critical role in not only protecting against typhoid fever but reducing the spread of drug-resistant strains of the bacteria.


There are two TCVs prequalified by the World Health Organization (WHO) and available through Gavi, the Vaccine Alliance. In February 2024, IVI and SK bioscience announced that a third TCV, SKYTyphoid™, also achieved WHO PQ, paving the way for public procurement and increasing the global supply.


Alongside the SETA disease burden study, IVI has been working with colleagues in three African countries to show the real-world impact of TCV vaccination. These studies include a cluster-randomized trial in Agogo, Ghana and two effectiveness studies following mass vaccination in Kisantu, DRC and Imerintsiatosika, Madagascar.


Dr. Birkneh Tilahun Tadesse, Associate Director General at IVI and Head of the Real-World Evidence Department, explains, “Through these vaccine effectiveness studies, we aim to show the full public health value of TCV in settings that are directly impacted by a high burden of typhoid fever.” He adds, “Our final objective of course is to eliminate typhoid or to at least reduce the burden to low incidence levels, and that’s what we are attempting in Fiji with an island-wide vaccination campaign.”


As more countries in typhoid endemic countries, namely in sub-Saharan Africa and South Asia, consider TCV in national immunization programs, these data will help inform evidence-based policy decisions around typhoid prevention and control.




About the International Vaccine Institute (IVI)
The International Vaccine Institute (IVI) is a non-profit international organization established in 1997 at the initiative of the United Nations Development Programme with a mission to discover, develop, and deliver safe, effective, and affordable vaccines for global health.

IVI’s current portfolio includes vaccines at all stages of pre-clinical and clinical development for infectious diseases that disproportionately affect low- and middle-income countries, such as cholera, typhoid, chikungunya, shigella, salmonella, schistosomiasis, hepatitis E, HPV, COVID-19, and more. IVI developed the world’s first low-cost oral cholera vaccine, pre-qualified by the World Health Organization (WHO) and developed a new-generation typhoid conjugate vaccine that is recently pre-qualified by WHO.

IVI is headquartered in Seoul, Republic of Korea with a Europe Regional Office in Sweden, a Country Office in Austria, and Collaborating Centers in Ghana, Ethiopia, and Madagascar. 39 countries and the WHO are members of IVI, and the governments of the Republic of Korea, Sweden, India, Finland, and Thailand provide state funding. For more information, please visit



Aerie Em, Global Communications & Advocacy Manager
+82 2 881 1386 |

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US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever… And Debt Explodes

US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever… And Debt Explodes

Earlier today, CNBC’s…



US Spent More Than Double What It Collected In February, As 2024 Deficit Is Second Highest Ever... And Debt Explodes

Earlier today, CNBC's Brian Sullivan took a horse dose of Red Pills when, about six months after our readers, he learned that the US is issuing $1 trillion in debt every 100 days, which prompted him to rage tweet, (or rageX, not sure what the proper term is here) the following:

We’ve added 60% to national debt since 2018. Germany - a country with major economic woes - added ‘just’ 32%.   

Maybe it will never matter.   Maybe MMT is real.   Maybe we just cancel or inflate it out. Maybe career real estate borrowers or career politicians aren’t the answer.

I have no idea.  Only time will tell.   But it’s going to be fascinating to watch it play out.

He is right: it will be fascinating, and the latest budget deficit data simply confirmed that the day of reckoning will come very soon, certainly sooner than the two years that One River's Eric Peters predicted this weekend for the coming "US debt sustainability crisis."

According to the US Treasury, in February, the US collected $271 billion in various tax receipts, and spent $567 billion, more than double what it collected.

The two charts below show the divergence in US tax receipts which have flatlined (on a trailing 6M basis) since the covid pandemic in 2020 (with occasional stimmy-driven surges)...

... and spending which is about 50% higher compared to where it was in 2020.

The end result is that in February, the budget deficit rose to $296.3 billion, up 12.9% from a year prior, and the second highest February deficit on record.

And the punchline: on a cumulative basis, the budget deficit in fiscal 2024 which began on October 1, 2023 is now $828 billion, the second largest cumulative deficit through February on record, surpassed only by the peak covid year of 2021.

But wait there's more: because in a world where the US is spending more than twice what it is collecting, the endgame is clear: debt collapse, and while it won't be tomorrow, or the week after, it is coming... and it's also why the US is now selling $1 trillion in debt every 100 days just to keep operating (and absorbing all those millions of illegal immigrants who will keep voting democrat to preserve the socialist system of the US, so beloved by the Soros clan).

And it gets even worse, because we are now in the ponzi finance stage of the Minsky cycle, with total interest on the debt annualizing well above $1 trillion, and rising every day

... having already surpassed total US defense spending and soon to surpass total health spending and, finally all social security spending, the largest spending category of all, which means that US debt will now rise exponentially higher until the inevitable moment when the US dollar loses its reserve status and it all comes crashing down.

We conclude with another observation by CNBC's Brian Sullivan, who quotes an email by a DC strategist...

.. which lays out the proposed Biden budget as follows:

The budget deficit will growth another $16 TRILLION over next 10 years. Thats *with* the proposed massive tax hikes.

Without them the deficit will grow $19 trillion.

That's why you will hear the "deficit is being reduced by $3 trillion" over the decade.

No family budget or business could exist with this kind of math.

Of course, in the long run, neither can the US... and since neither party will ever cut the spending which everyone by now is so addicted to, the best anyone can do is start planning for the endgame.

Tyler Durden Tue, 03/12/2024 - 18:40

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