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RBA Drops “patience” to Send the Aussie Higher

Overview:  The Reserve Bank of Australia hinted that it was getting closer to a rate hike.  The Australian dollar was bid to its best level since the…



Overview:  The Reserve Bank of Australia hinted that it was getting closer to a rate hike.  The Australian dollar was bid to its best level since the middle of last year.  Australian stocks advanced in a mixed regional session while China and Hong Kong markets were closed for the local holiday.  BOJ Kuroda called the yen's recent moves "rapid."  The yen is sidelined today as the dollar weakens against other major currencies, led by the Antipodean.  In addition to the yen, the Swiss franc and euro are also among the laggards.  European equites have edged higher and the Stoxx 600 is at its best level since mid-February.  US futures have turned lower in the European morning.   The US 10-year yield is around five basis points higher at 2.45%.  European yields are mostly 5-10 bp firmer.  Gold is quiet in a $1925-$1934 range.  May WTI is extended yesterday's 4% advance to add more than 1% to probe the $105 a barrel level.  It finished last week near $99.25.  US natgas is up almost 2.7% and is approach the $6 level.  It has only fallen in one week since the Russian invasion of Ukraine.  Europe's benchmark is almost 3% lower (-0.3% yesterday) after jumping almost 12% last week.  Iron ore is higher for a third sessions, while copper is up oalmost 1% after yesterday's 2% advance to trade at new four-week highs.  May wheat is up 3.2% on top of yesterday's 2.6% gain. It fell near 10.7% last week.  

Asia Pacific

The Reserve Bank of Australia dropped its reference to being patient and this was all the encouragement the market needed.  The Australian dollar rallied, and local rates jumped.  The cash rate futures now fully imply a hike in June.  Yesterday, there was only an 80% chance discounted.  The upcoming inflation and next month's wages are still important pieces of the policy puzzle.  A move in June would come after the election which must be held by late May.  Separately, the preliminary service and composite PMI were revised lower and now show a decline from February.  The service PMI was revised to 55.1 from 571 and 57.4 in February.  The final composite PMI is at 55.6, down from 57.9 flash reading and 56.6 in February.  

While the pandemic and earthquake hobbled the Japanese economy in Q1, the groundwork for a recovery is becoming clearer.  Labor cash earnings were twice as strong as the median forecast in Bloomberg's survey projected, rising 1.2% in February and the January series was revised higher (1.1% from 0;9%).  Rising inflation meant that in real terms there were unchanged.  The median forecast looked for a 0.7% drop.  The preliminary March service PMI was revised higher from 48.7 to 49.4, while the final composite reading edged above the 50 boom/bust level (to 50.3 from 49.3 and 45.8 in February.  

Last week, the Japan's Minister of Finance suggested that impact of the yen's weakness should be reviewed.  We suggested that it was a small first step on the intervention escalation ladder. Earlier today, BOJ Governor Kuroda took another small step and characterized the recent moves as "rapid."  This reinforces our sense that the JPY125 area marks the upper end of a new range for the dollar.  Our first stab at the lower end of the range is around JPY121.00 but it might extend into the JPY119.50-JPY120 area.  

The dollar is trading quietly against the yen today, mostly within yesterday’s JPY122.25-JPY123.00 range.  We are more inclined to see the greenback trading lower in North America and re-test the lows.  The consolidative phase in Australian dollar has ended with the surge to almost $0.7640 today.  It has surpassed the $0.7610 area, which represented the (61.8%) retracement of the decline since from the February 2021 high slightly above $0.8000 to the late January low near $0.6980.  The next important chart area is in the $0.7675-$0.7700 area.  With China's mainland market still closed, the offshore yuan continues to trade quietly.  It was largely confined to yesterday's range and is virtually unchanged since the weekend.  


The final eurozone PMI readings were mixed.  There was something for everyone.  The German readings were revised higher.  The March service PMI stands at 56.1, up from the 55.0 flash reading, and an improvement for the 55.8 February report.  The composite is at 55.1 rather than 54.6, but still a little softer than the 55.6 in the prior month.  French readings were little changed.  Services were unchanged at 57.4, but the composite was revised to 56.3 from 56.2 after 55.5 in February.  Italy's service PMI was stronger than expected at 52.1 compared with 52.8 in February.  The composite was spot on with expectations at 52.1 (down from 53.6).  Spain disappointed.  The service PMI fell to 53.4 from 56.6 and the composite stands at 53.1 vs. 56.5 previously. The net result was that the aggregate service PMI stands at 55.6, up from the 54.8 flash reading and a touch better than the 55.5 February report.  The composite was revised to 54.9 from 54.5 but still a little softer than February's 55.5.  

The UK PMI was revised higher from the preliminary estimates.  The service PMI stands at a lofty 62.6.  The flash report has shown improvement to 61.0 from 60.5 in February.  The composite stands at 60.9 compared the 59.7 preliminary estimate and 59.9 in February.  It is the strongest since last June.  The details were a little disconcerting.  While output prices rose to a new record high, business optimism at a 17-month low.  Next week, the UK reports inflation and employment figures.  

The euro posted a key reversal last Thursday, turning back from a four-week high near $1.1185 and settled below the previous day's low.  Follow-through selling saw it test support near $1.0960 yesterday.  It is consolidating today in narrow quarter-cent range below $1.0990.  It takes a move above $1.1015 to stabilize the tone but regaining the $1.1050 area is important to lift the outlook.  Sterling appears to be going nowhere quickly.  It continues to trade in the range set last Wednesday (~$1.3085-$1.3185).  It is trading with a firmer bias today, but is holding below $1.3150, near where it peaked before the weekend.  Elsewhere, we note that the euro is consolidating at four-week lows against the Swiss franc.  It needs to regain a foothold above CHF1.02 to stabilize the tone.  A double top may have been carved that projects toward parity.  The rise in sight deposits reported yesterday is consistent with SNB intervention.  Lastly, with Orban securing a fourth term in Hungary, the confrontation with the EU will likely heat-up.  Orban has opposed EU sanctions on Russia but has not vetoed any of them.  Still, there are outstanding issues.  The euro carved a base last week against the forint and now appears set to appreciate against it.  We suspect there is scope of a 3%-5% advance.  


The US took another step in weaponizing the dollar to squeeze Moscow.  Russian government accounts will no longer became to make dollar payments through US financial institutions.  The chokehold gets tighter.  Moscow is forced to draw down their dollar holdings that the Russia central bank has, spend its income revenue, which is estimated to be around $1 bln a day, or default on its obligations.  

The US reports the February trade balance.  A small improvement from February should not hide the significant deterioration that is taking place.  The combined Jan-Feb deficit last year was about $132.7 bln.  If the median (Bloomberg survey) projection of a $88.5 bln shortfall is accurate, the Jan-Feb shortfall this year would be a little more than $178 bln, a 34% deterioration.  Canada reports its February goods trade balance.  If the median (Bloomberg survey) is fairly accurate, Canada's Jan-Feb surplus will be a little more than 50% greater than the year ago period.  

The final service and composite PMI and the ISM services are also on tap.  Recall that the flash reports showed unexpected gains.  The service PMI improved to 58.9 from 56.5 and the composite rose to 58.5 from 55.9.  The ISM services ae expected to have improved to 58.5 from 56.5.  Fed Governor Brainard will speak about inflation today (~10 am ET). San Francisco Fed President Daly (who seems to favor a 50 bp hike) and NY Fed President Williams also speak later today.   Recall that the NY Fed President has a permanent vote on the FOMC, and Williams seems inclined to hike by 50 bp too.  

The US dollar is trading at a four-day low against the Canadian dollar near CAD1.2460.  Last week's low, which was also the low since last November, was around CAD1.2430.  A break targets the CAD1.2380-CAD1.2400 area.  That said, we look for a bounce in early North American activity that could see the CAD1.2480-CAD1.2500 area.  Mexico has reinstated gasoline subsidies at states bordering the US after closing them because US drivers were taking advantage of the cheap gas to fill-up.  The peso needs consolidation.  Consider that coming into today, the dollar has fallen for six consecutive sessions against the peso.  Last Monday's greenback gain halted an 11-day slide, the longest in half a century.  The dollar has fallen in every session but last Monday's, beginning on March 11. The momentum indicators are stretched, and the greenback's downside momentum is slowing.  


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United Airlines adds new flights to faraway destinations

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



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

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

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

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

The Philippines has been popular among tourists in recent years.


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

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

More Travel:

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

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

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

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

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

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

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

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Walmart launches clever answer to Target’s new membership program

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



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

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

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

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

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

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

Walmart rolls out answer to Target's new membership tier

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

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

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

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

Jeff Greenberg/Getty Images

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

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

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

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

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

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

Related: Veteran fund manager picks favorite stocks for 2024

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

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

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



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

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

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

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

  • Fund Ukraine.

  • Trump is threat to democracy and America itself.

  • Abortion is good.

  • American Economy is stronger than ever.

  • Inflation wasn't Biden's fault.

  • Illegals are Americans too.

  • Republicans are responsible for the border crisis.

  • Trump is bad.

  • Biden stands with trans-children.

  • J6 was the worst insurrection since the Civil War.

(h/t @TCDMS99)

Tucker Carlson's response sums it all up perfectly:

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

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

"In a fair election, Joe Biden cannot win"

And concluded:

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

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

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

*  *  *

Watch SOTU Live here...

*   *   *

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

*  *  *

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

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

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

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

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

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

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

Sources provided more color on Biden's SOTU address: 

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

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

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

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

Maybe this is why? 

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

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

Not a very capable social media team... 

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

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

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

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

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

As well as...

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

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

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