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RBNZ Joins the Queue, while Yuan’s Advance Continues

Overview:  The decline in US rates and the doves at the ECB pushing back against the need to reduce bond purchases next month have seen European bond yields unwind most of this month’s gain.  The inability of US shares to hold on to early gains yesterday.

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Overview:  The decline in US rates and the doves at the ECB pushing back against the need to reduce bond purchases next month have seen European bond yields unwind most of this month's gain.  The inability of US shares to hold on to early gains yesterday did not deter the Asia Pacific and European equities from trading higher.  Only Australian and South Korean markets did not participate in the MSCI Asia Pacific Index's fifth consecutive advance today.  Europe's Dow Jones Stoxx 600 is also ending higher for the fifth session.  US future indices are around 0.25%.  The US 10-year is holding around 1.56% while European yields are 2-4 bp lower, and in Dutch 10-year yields have returned to negative territory.  The Reserve Bank of New Zealand was more explicitly hawkish than expected, and its 10-year bond yield jumped eight basis points and sent the currency 1%+ higher.  While it appears to help drag up the Australian dollar, the greenback is mostly steady to a little firmer against the major currencies.  Emerging market currencies are mixed.  The freely accessible ones, including South Africa, Turkey, and Mexico, are firmer, but Eastern Europe's currencies, Czech, Poland, and Hungary, leading the downside. The combination is leaving the JP Morgan Emerging Market Currency Index little changed.  With little protest, the Chinese yuan is trading at new three-year highs.  While industrial commodities, like iron ore and steel rebar, are trading lower, gold has pushed above $1900 for the first time since January.  It has only recorded losses in three sessions this month.  July WTI is in a narrow range, hovering around $66 and trying to extend its advance for the fourth consecutive session.  

Asia Pacific

The Reserve Bank of New Zealand joined the cue of central banks signaling intentions to adjust monetary policy as the crisis eases.  While leaving policy on hold, including its bond purchases, its projections for the cash rate suggest a hike in H2 22.   It published its first official forecasts of the cash rate since the pandemic broke. But, of course, it couched its outlook by noting that it is data-dependent.  The market quickly moved to price in two hikes next year.  New Zealand also reported a solid trade surplus (~NZD388 mln, the largest since last July), and Fonterra, the world's largest exporter of dairy products, forecast strong milk prices.  The Australian dollar was dragged higher by the surge in the New Zealand dollar, as some suspect the RBNZ move boosts the chances that the RBA signals an adjustment in July, with the possibility that some groundwork is laid at next week's meeting.

China took action on two fronts.  First, to contain commodity prices, the Shanghai Futures Exchange pledged to the gains in commodities.  Closer scrutiny of participants may have the desired cooling-off effect.   The banking regulator also is pressing lenders to stop selling financial products tied to commodity futures to retail investors. The China Banking and Insurance Regulatory Commission wants banks to liquidate existing positions.   Second, the local government of Inner Mongolia, home to an estimated 8% of the world's Bitcoin mining, announced eight measures yesterday that is intended to crack down on crypto mining activities.   

Talk that the PBOC may have protested the yuan's rise by ordering state-owned banks to sell yesterday seems to have been undermined by today's move.  The PBOC set the dollar's reference rate at CNY6.4099, tightly around the median forecast of Bloomberg's survey of CNY6.4101.  The seemingly neutral fix spurred buying of the yuan. As a result, the dollar fell to almost CNY6.39, its lowest level since 2018.  The 0.25% advance today takes the yuan mora little more than 2% higher for the year.  Meanwhile, the dollar is not going anywhere against the Japanese yen.  It is in a 20-pip range inside yesterday little more than half a yen range.  The greenback continues to trade within the range set last Wednesday (~JPY108.55-JPY109.35).  The Australian dollar has stalled in front of $0.7800.  Although it had closed above it earlier this month, it has offered resistance since the middle of May.  Support is seen in the $0.7740-$0.7750 area, where A$1.2 bln options will expire today.  The New Zealand dollar rose to above $0.7300 to set a new three-month high. It remains firm, but Europe has not been able to extend the move.  Initial intraday support is seen ahead of $0.7280.  

Europe

While several ECB officials have pushed against the idea that bond-buying will slow next month, Hungary's central bank confirmed last week's signal by Deputy Governor Virag, who hinted that rates could rise as early as next month.  April CPI was at a nine-year high of 5.1%, the fastest in the EU and well above the central bank's 2%-4% tolerance band.  The market appears to be pricing in around 50 bp of hikes in the remainder of the year.  The market also appears to be pricing in rate hikes from Poland and the Czech Republic in H2.  Investors are giving the high-income countries greater leeway in accepting near-term price pressures.  It is a different story for emerging markets.  

Cummings, the former top adviser to UK Prime Minister Johnson, is widely expected to make embarrassing revelations about the chaos and miscues from early in the pandemic.  It may make for titillating reading in the tabloids, but with the economy on course for a complete re-opening on June 21 and growth accelerating, it may not have much market impact. Moreover, the local elections earlier this month show that Labour is still in disarray.  

After reaching a four-month high yesterday near $1.2265, the euro is consolidating today in a narrow range.  It is holding above $1.2230.  Yesterday's low was a little below $1.2215.  A break of that would be notable, but the market does not appear to have abandoned efforts to take it higher.  Sterling is also trading inside yesterday's range and is in about a 40-pip range against the greenback. Support has been found in the last two sessions in the $1.4110-$1.4115 area.  Yesterday's push above $1.4200 was rebuffed.  It has traded above $1.4200 in three separate sessions in the past week and a half and has failed to close above it.  

America

Here is an element of the new normal.  The demand for the Federal Reserve's overnight reverse repo facility, which pays nothing, soared yesterday to $433 bln, more than a 10% rise from Monday.  These kinds of levels previously were only associated with extreme quarter-end periods.  They are now daily events, and moreover, are likely to grow. So, where is all this demand coming from?  As usual, extremes are often over-determined, which is the opposite of mono-causal explanations. One force is the Fed's continued purchases of $120 bln a month in long-term securities.  Another force is the Treasury's reduction of its cash balances at the Fed.  A third force is the aid to state and local governments.  Some observers project the use of the reverse repo facility could approach $1 trillion at the end of the quarter.  

Vice-Chair of the Federal Reserve Clarida said that the Federal Reserve may be able to begin discussing tapering at the upcoming meetings.  The market yawned.  More accurately, the 10-year yield fell to new lows (below 1.56%) since the shocking miss on April nonfarm payrolls on May 7. A few regional presidents previously said the same thing, and a news wire survey found a majority (74%) expect a formal tapering announcement in the second half of the year, with Q4 being the clear favorite. Even San Fran Fed President Daly's acknowledgment that the Fed is talking about talking about tapering was clear from the FOMC minutes and subsequent comments by her colleague. The Bank of Canada and the Bank of England, both of whom have reduced the pace of their bond-bonding, were not nearly as dramatic and draw out.    Of course, the role of the dollar and the Fed is different, but the market has not jumped from tapering to a rate hike, as some feared.  The spread between the implied yield of next month's Eurodollar futures and the December 2022 contract has narrowed to less than 25 bp, suggesting a rate hike late next year that had been more than fully discounting is not seen as such a sure thing anymore.  

The North American economic diary is light today.  US mortgage applications and the final look at Mexico's Q1 GDP (expected to have done better than a 0.4% growth initially reported) are unlikely to move the market.  The Fed's Quarles speaks twice today, but his views are known.  The US Treasury sells $26 bln two-year floating-rate notes and $61 bln five-year notes.  Yesterday's two-year note auction was well-received.  A lower rate was coupled with a higher bid cover.  It is tomorrow's sale of $62 bln seven-year notes that may be the more challenging auction.  

The US dollar remains trapped near four-year lows against the Canadian dollar, but it has stopped falling.  In fact, so far this week, it has remained within the range seen before the weekend:  roughly CAD1.2025 to CAD1.2095.   A move above CAD1.2100 signals a test on last week's high and the 20-day moving average (~CAD1.2145).  The greenback had not traded above the 20-day moving average since April 21, when the Bank of Canada announced the reduction of its bond purchases and brought forward to the second half of next week when the economic slack would be absorbed. Softer US rates have not helped the Mexican peso as much as it had seemed to previously.  The dollar continues to chop between MXN19.80 and MXN20.00.  Minutes from the meeting earlier this month are due tomorrow, and they are expected to show that the dovish stance has been abandoned.  President AMLO has already made it clear that Governor Diaz de Leon's term expires at the end of the year will not be renewed.  


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Part 1: Current State of the Housing Market; Overview for mid-March 2024

Today, in the Calculated Risk Real Estate Newsletter: Part 1: Current State of the Housing Market; Overview for mid-March 2024
A brief excerpt: This 2-part overview for mid-March provides a snapshot of the current housing market.

I always like to star…

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Today, in the Calculated Risk Real Estate Newsletter: Part 1: Current State of the Housing Market; Overview for mid-March 2024

A brief excerpt:
This 2-part overview for mid-March provides a snapshot of the current housing market.

I always like to start with inventory, since inventory usually tells the tale!
...
Here is a graph of new listing from Realtor.com’s February 2024 Monthly Housing Market Trends Report showing new listings were up 11.3% year-over-year in February. This is still well below pre-pandemic levels. From Realtor.com:

However, providing a boost to overall inventory, sellers turned out in higher numbers this February as newly listed homes were 11.3% above last year’s levels. This marked the fourth month of increasing listing activity after a 17-month streak of decline.
Note the seasonality for new listings. December and January are seasonally the weakest months of the year for new listings, followed by February and November. New listings will be up year-over-year in 2024, but we will have to wait for the March and April data to see how close new listings are to normal levels.

There are always people that need to sell due to the so-called 3 D’s: Death, Divorce, and Disease. Also, in certain times, some homeowners will need to sell due to unemployment or excessive debt (neither is much of an issue right now).

And there are homeowners who want to sell for a number of reasons: upsizing (more babies), downsizing, moving for a new job, or moving to a nicer home or location (move-up buyers). It is some of the “want to sell” group that has been locked in with the golden handcuffs over the last couple of years, since it is financially difficult to move when your current mortgage rate is around 3%, and your new mortgage rate will be in the 6 1/2% to 7% range.

But time is a factor for this “want to sell” group, and eventually some of them will take the plunge. That is probably why we are seeing more new listings now.
There is much more in the article.

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RFK Jr. Reveals Vice President Contenders

RFK Jr. Reveals Vice President Contenders

Authored by Jeff Louderback via The Epoch Times,

New York Jets quarterback Aaron Rodgers and former…

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RFK Jr. Reveals Vice President Contenders

Authored by Jeff Louderback via The Epoch Times,

New York Jets quarterback Aaron Rodgers and former Minnesota governor and professional wrestler Jesse Ventura are among the potential running mates for independent presidential candidate Robert F. Kennedy Jr., the New York Times reported on March 12.

Citing “two people familiar with the discussions,” the New York Times wrote that Mr. Kennedy “recently approached” Mr. Rodgers and Mr. Ventura about the vice president’s role, “and both have welcomed the overtures.”

Mr. Kennedy has talked to Mr. Rodgers “pretty continuously” over the last month, according to the story. The candidate has kept in touch with Mr. Ventura since the former governor introduced him at a February voter rally in Tucson, Arizona.

Stefanie Spear, who is the campaign press secretary, told The Epoch Times on March 12 that “Mr. Kennedy did share with the New York Times that he’s considering Aaron Rodgers and Jesse Ventura as running mates along with others on a short list.”

Ms. Spear added that Mr. Kennedy will name his running mate in the upcoming weeks.

Former Democrat presidential candidates Andrew Yang and Tulsi Gabbard declined the opportunity to join Mr. Kennedy’s ticket, according to the New York Times.

Mr. Kennedy has also reportedly talked to Sen. Rand Paul (R-Ky.) about becoming his running mate.

Last week, Mr. Kennedy endorsed Mr. Paul to replace Sen. Mitch McConnell (R-Ky.) as the Senate Minority Leader after Mr. McConnell announced he would step down from the post at the end of the year.

CNN reported early on March 13 that Mr. Kennedy’s shortlist also includes motivational speaker Tony Robbins, Discovery Channel Host Mike Rowe, and civil rights attorney Tricia Lindsay. The Washington Post included the aforementioned names plus former Republican Massachusetts senator and U.S. Ambassador to New Zealand and Samoa, Scott Brown.

In April 2023, Mr. Kennedy entered the Democrat presidential primary to challenge President Joe Biden for the party’s 2024 nomination. Claiming that the Democrat National Committee was “rigging the primary” to stop candidates from opposing President Biden, Mr. Kennedy said last October that he would run as an independent.

This year, Mr. Kennedy’s campaign has shifted its focus to ballot access. He currently has qualified for the ballot as an independent in New Hampshire, Utah, and Nevada.

Mr. Kennedy also qualified for the ballot in Hawaii under the “We the People” party.

In January, Mr. Kennedy’s campaign said it had filed paperwork in six states to create a political party. The move was made to get his name on the ballots with fewer voter signatures than those states require for candidates not affiliated with a party.

The “We the People” party was established in five states: California, Delaware, Hawaii, Mississippi, and North Carolina. The “Texas Independent Party” was also formed.

A statement by Mr. Kennedy’s campaign reported that filing for political party status in the six states reduced the number of signatures required for him to gain ballot access by about 330,000.

Ballot access guidelines have created a sense of urgency to name a running mate. More than 20 states require independent and third-party candidates to have a vice presidential pick before collecting and submitting signatures.

Like Mr. Kennedy, Mr. Ventura is an outspoken critic of COVID-19 vaccine mandates and safety.

Mr. Ventura, 72, gained acclaim in the 1970s and 1980s as a professional wrestler known as Jesse “the Body” Ventura. He appeared in movies and television shows before entering the Minnesota gubernatorial race as a Reform Party headliner. He was a longshot candidate but prevailed and served one term.

Former pro wrestler Jesse Ventura in Washington on Oct. 4, 2013. (Brendan Smialowski/AFP via Getty Images)

In an interview on a YouTube podcast last December, Mr. Ventura was asked if he would accept an offer to run on Mr. Kennedy’s ticket.

“I would give it serious consideration. I won’t tell you yes or no. It will depend on my personal life. Would I want to commit myself at 72 for one year of hell (campaigning) and then four years (in office)?” Mr. Ventura said with a grin.

Mr. Rodgers, who spent his entire career as a quarterback for the Green Bay Packers before joining the New York Jets last season, remains under contract with the Jets. He has not publicly commented about joining Mr. Kennedy’s ticket, but the four-time NFL MVP endorsed him earlier this year and has stumped for him on podcasts.

The 40-year-old Rodgers is still under contract with the Jets after tearing his Achilles tendon in the 2023 season opener and being sidelined the rest of the year. The Jets are owned by Woody Johnson, a prominent donor to former President Donald Trump who served as U.S. Ambassador to Britain under President Trump.

Since the COVID-19 vaccine was introduced, Mr. Rodgers has been outspoken about health issues that can result from taking the shot. He told podcaster Joe Rogan that he has lost friends and sponsorship deals because of his decision not to get vaccinated.

Quarterback Aaron Rodgers of the New York Jets talks to reporters after training camp at Atlantic Health Jets Training Center in Florham Park, N.J., on July 26, 2023. (Rich Schultz/Getty Images)

Earlier this year, Mr. Rodgers challenged Kansas City Chiefs tight end Travis Kelce and Dr. Anthony Fauci to a debate.

Mr. Rodgers referred to Mr. Kelce, who signed an endorsement deal with vaccine manufacturer Pfizer, as “Mr. Pfizer.”

Dr. Fauci served as director of the National Institute of Allergy and Infectious Diseases from 1984 to 2022 and was chief medical adviser to the president from 2021 to 2022.

When Mr. Kennedy announces his running mate, it will mark another challenge met to help gain ballot access.

“In some states, the signature gathering window is not open. New York is one of those and is one of the most difficult with ballot access requirements,” Ms. Spear told The Epoch Times.

“We need our VP pick and our electors, and we have to gather 45,000 valid signatures. That means we will collect 72,000 since we have a 60 percent buffer in every state,” she added.

The window for gathering signatures in New York opens on April 16 and closes on May 28, Ms. Spear noted.

“Mississippi, North Carolina, and Oklahoma are the next three states we will most likely check off our list,” Ms. Spear added. “We are confident that Mr. Kennedy will be on the ballot in all 50 states and the District of Columbia. We have a strategist, petitioners, attorneys, and the overall momentum of the campaign.”

Tyler Durden Wed, 03/13/2024 - 15:45

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Pharma industry reputation remains steady at a ‘new normal’ after Covid, Harris Poll finds

The pharma industry is hanging on to reputation gains notched during the Covid-19 pandemic. Positive perception of the pharma industry is steady at 45%…

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The pharma industry is hanging on to reputation gains notched during the Covid-19 pandemic. Positive perception of the pharma industry is steady at 45% of US respondents in 2023, according to the latest Harris Poll data. That’s exactly the same as the previous year.

Pharma’s highest point was in February 2021 — as Covid vaccines began to roll out — with a 62% positive US perception, and helping the industry land at an average 55% positive sentiment at the end of the year in Harris’ 2021 annual assessment of industries. The pharma industry’s reputation hit its most recent low at 32% in 2019, but it had hovered around 30% for more than a decade prior.

Rob Jekielek

“Pharma has sustained a lot of the gains, now basically one and half times higher than pre-Covid,” said Harris Poll managing director Rob Jekielek. “There is a question mark around how sustained it will be, but right now it feels like a new normal.”

The Harris survey spans 11 global markets and covers 13 industries. Pharma perception is even better abroad, with an average 58% of respondents notching favorable sentiments in 2023, just a slight slip from 60% in each of the two previous years.

Pharma’s solid global reputation puts it in the middle of the pack among international industries, ranking higher than government at 37% positive, insurance at 48%, financial services at 51% and health insurance at 52%. Pharma ranks just behind automotive (62%), manufacturing (63%) and consumer products (63%), although it lags behind leading industries like tech at 75% positive in the first spot, followed by grocery at 67%.

The bright spotlight on the pharma industry during Covid vaccine and drug development boosted its reputation, but Jekielek said there’s maybe an argument to be made that pharma is continuing to develop innovative drugs outside that spotlight.

“When you look at pharma reputation during Covid, you have clear sense of a very dynamic industry working very quickly and getting therapies and products to market. If you’re looking at things happening now, you could argue that pharma still probably doesn’t get enough credit for its advances, for example, in oncology treatments,” he said.

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