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The Dollar Turns Mixed Ahead of the Jobs Report

Overview:  The dollar is narrowly mixed and bid ahead of the jobs report. The Scandis lead advancing major currencies, while the yen and Australian dollar are the laggards. Among emerging market currencies, the Turkish lira and the Russian ruble are…



Overview:  The dollar is narrowly mixed and bid ahead of the jobs report. The Scandis lead advancing major currencies, while the yen and Australian dollar are the laggards. Among emerging market currencies, the Turkish lira and the Russian ruble are off the most (~0.45%), while the South African rand is the top performer (~0.45%).  The JP Morgan Emerging Market Currency Index has turned positive after posting declines in the previous four sessions. China's markets re-opened from the long holiday, and the CSI 300 advanced by more than 1%, as did Tokyo.  Among the large stock markets, South Korea and Taiwan's declines stand out.  Europe's Dow Jones Stoxx 600 is paring yesterday's gains, while US futures are narrowly mixed.  Bond markets are under pressure, and the US 10-year yield is hovering near 1.60%.  European benchmark yields are 2-4 bp higher.  Crude oil has extended yesterday's dramatic recovery.  November WTI is near the multi-year high set early this week, slightly below $80.  Gold is steady in a narrow range, mostly between $1750 and $1760.  Industrial metals are firmer.  The CRB Index begins today with a 1.7% gain for the week.  It would be the seventh consecutive weekly advance. 

Asia Pacific

As China's week-long holiday ended, there was a pleasant surprise in the form of a strong Caixin service PMI.  It rose from a lowly 46.7 in August to 53.4 in September.  The median forecast (Bloomberg survey) thought it would remain below the 50 boom/bust level.  Recall that Caixin's manufacturing PMI rose to 50 from 49.2, which was also stronger than expected and contrasts to the "official" measure, which slipped to 49.6 (from 50.1). Consequently, the composite Caixin PMI rose to 51.4 from 47.2.  

Japan reported a sharper than expected drop in household spending in August.  It fell for the fourth consecutive month.  The 3.9% decline reflected few purchases of food, clothing, and transportations.  Household spending was off 3% from a year ago.  On the other hand, cash wages rose by 0.7% from a year ago.  It was the sixth month that the year-over-year rate was positive.  It fell from April 2020 through February 2021.  Lastly, Japan's August current account surplus narrowed by about JPY250 bln from July, which is more than accounted for by the swing in the trade balance from a JPY622 bln surplus to a JPY372 bln deficit.  The portfolio flows show Japanese investors were large sellers of Australian bonds (fourth month of sales) and sold US Treasuries in back-to-back months for the first time since May 2020.  

The Reserve Bank of India surprised investors by suspending its version of QE, but as expected, it kept its key repo rate unchanged at 4%.  Many had anticipated the RBI to have tapered its purchases, but it ended them.  The central bank shaved this financial year's inflation forecast to 5.3% from 5.7% while maintaining the growth forecast of 9.5%.   

The Wall Street Journal reported that the US has covertly had Marines and "special forces" in Taiwan for over a year, ostensibly for training purposes.  The Journal concludes that the presence is evidence that Washington is concerned about Taiwan's tactical preparedness.  Among the first questions is whether Beijing knew?  If it did, that could help explain the escalation of China's aerial harassment of Taiwan and strengthen the hardliners successfully expanding the PLA capabilities.  If it did not know, there is a significant intelligence lapse. The US does not have a mutual defense treaty with Taiwan. It does not even have a free-trade agreement with it.  Beijing may try to determine which of three types of advisers and trainers did the US send.  Are they simply military advisers developing local tactical capability?  Are they like the advisers that the US sent to Vietnam that morphed into a military commitment and engagement?  Or are they like tripwire, for which an attack brings on the full force of the US military?  Some reports suggest that this is not the first such training mission, but when reports circulated last November in the Taiwan press, it was denied by local and US officials.  If so, what is the purpose of allowing it to become public now?  

Earlier this week, Biden told reporters, "I have spoken with Xi about Taiwan.  We agree to abide by the Taiwan agreement."  How will Beijing respond? We may get a sense over the weekend.  First, on Saturday, Xi is expected to talk about Taiwan, which he apparently has not addressed formally in a couple of years.  Beijing's position is clear:  It wishes for peaceful unification, but it will not rule out the use of force.  It is opposed to foreign forces interfering with the domestic dispute, and it is deadset against Taiwan's independence.  Sunday is the anniversary of the Wuchang Uprising, which Taiwan celebrates as its National Day.  

The dollar is pushing against JPY112. The year's high, set late last month, is closer to JPY112.10.  Last year's high, set in late February, was slightly below JPY112.25, and the 2019 high was near JPY112.40.  A break above there could signal a move into the JPY114.50 -JPY115.00 area.  Rising US yields appear to be the key driver.  The Australian dollar closed above $0.7300 for the first time since September 15, but yesterday's break was premature.  There was no follow-through buying, and that the Aussie has spent most of today below there.  There is an option for about A$1.07 bln at $0.7300 that expires today.  Support is seen in the $0.7270-$0.7280 area. A band of resistance above $0.7300 is seen from $0.7325-$0.7340.  On its return, the onshore yuan softened slightly (~0.05%).  The PBOC set the dollar's reference rate at CNY6.4604, firmer than the median bank model (Bloomberg survey) of CNY6.4589.  The central bank injected CNY10 bln of liquidity, allowing CNY330 bln in past operations to roll off.   


As the OECD gathers, Ireland acquiesced and accepted the 15% minimum corporate tax.  There are a couple more holdouts, but Ireland's acceptance is significant.  The tax applies to companies with at least 750 mln euros in annual turnover.  The Irish government estimates that the tax will impact 56 Irish companies that employ about 100k workers.  It will also apply to the 1500 foreign multinationals that employ about 400k Irish workers.  Meanwhile, the current 12.5% tax rate will still apply to the 160k Irish companies that employ around 1.8 mln.  Ireland adopted the 12.5% tax rate in 2003, which is a little less than half of the OECD average (~23%). 

The tension between Warsaw and Brussels is set to rise.  Poland's Constitutional Tribunal effectively ruled against the primacy of EU law.  The ruling puts at risk pandemic aid from Europe for the pandemic (~36 bln euros).  There are three main issues, judicial independence, freedom of the press, and LGBTQ rights, for which the Law & Justice governing party rejects the liberalism of Brussels.  The opposition party (Civic Platform) has called for demonstrations this weekend to protest the court ruling.  

Following poor factory orders and industrial production reports in recent days, Germany hits a trifecta of sorts with a sharp decline in its August trade surplus.  Economists had expected that the 18.1 bln surplus in July was not sustainable.  It was revised to 17.9, but the real shocker was that the August surplus fell to 10.7 bln euros, not the 15 bln expected.  It is the smallest surplus since May 2020.  We suspect that the disruption in the auto sector is a major culprit.  Exports, which economists had expected to rise by 0.5%, fell by 1.2%, the most this year.  Imports rose by 3.5%, roughly double the pace expected.  

The euro is trapped in a narrow trading range of about a fifth of a cent before the US jobs report.  It remains, as it did yesterday, well within the range set on Wednesday (~$1.1530-$1.1605).  There are options for 1.65 bln euros at $1.16 that roll off today.  We have noted that the $1.1490 area corresponds to the (50%) retracement of the rally from the March 2020 pandemic low to the high set on January 6.  As it has done all week, sterling continues to straddle the $1.36 area.  This week's highs are just shy of $1.3650.  The week's low set on Monday (~$1.3530) was retested on Wednesday (~$1.3545).  A break of the range may point in the direction of the next cent move.   


The disappointing August jobs report did not deter the Fed from signaling intentions to taper as early as next month.  In fact, a few more Fed officials anticipated a hike next year in September than in June.  At his press conference following the last FOMC meeting, Chair Powell explicitly said he would be watching the report closely, and that like many of his colleagues, he thought that the conditions for tapering had been met or nearly so.  Because weight is given to the cumulative nature of the improvement of the labor market, Powell said the bar was not very high for the September report.  The median forecast in Bloomberg's survey has crept up 500k.  In August, the initial figures suggest the government sector lost 8k jobs and in September is expected to have added 50k.  Excluding education jobs, state and local governments have about 400k fewer workers than before the pandemic.  Their payrolls shrank by 0.6% this year through August, while private-sector jobs have grown by almost 3.5%.   

Several million people saw their unemployment benefits end, and many hypothesize that this was holding back improvement in the labor market.  Even though the states that dropped out of the Federal program earlier did not provide evidence, some observers still expect it to be seen in today's non-farm payroll report.  It would suggest a strong rise in the labor force participation rate, which has stalled in the 61.6%-61.7% range since the end of Q1.  The median forecast (Bloomberg) does not look for a surge but for the smallest of gains to 61.8%, which would be a new high since the pandemic.   At the end of 2019, it stood at 63.3%, the highest since June 2013.  

Canada also reports September employment figures.  An overall employment gain of 60k is expected after 90k in August.  That August figure was led by a 68.5 increase in full-time positions.  It was the second month of gains after Canada shed about 176k full-time jobs in the April-June slump.  The unemployment rate is expected to dip below 7% for the first time since the pandemic stuck.  Canadian unemployment was at 5.7% at the end of 2019.  The participation rate may have ticked up last month to 65.2% from 65.1%.  It stood at 65.5% at the end of 2019.  Lastly, we note that Bank of Canada Governor Macklem's rhetoric has appeared to become more hawkish, and the June 2022 BA futures reflect it.  Since mid-September, the implied yield has risen by around 20 bp to 0.85%, the highest since mid-July.  

November WTI had begun stabilizing after yesterday's pullback from nearly $80 took it briefly below $75.  It had bounced to around $77 before US Energy Secretary Granholm denied that tapping the Strategic Petroleum Reserves was being considered to relieve pressure on prices.  It was not necessary.  When asked, she should have left it as all options are on the table and that as part of a previous budget agreement,  Congress instructed it to sell 260 mln barrels by the end of FY26.  She could have said that those sales could be made opportunistically.  Instead, the flat denial helped lift prices to new session highs (~$78.60) and further today (~$79.65).   

The US dollar is trading at its lowest level against the Canadian dollar in a month (~CAD1.2545).  We have identified a potential head and shoulders topping pattern with a neckline near CAD1.26 and a measuring objective of around CAD1.23.  The next key chart points are the 200-day moving average near CAD1.2515 and last month's low slightly below CAD1.2500.  The greenback has swung in a wide range over the past two sessions against the Mexican peso (~MXN20.4620-MXN20.8860).  The rise in CPI reported yesterday to 6% and a small acceleration in the core rate likely means that Banxico, which says it is data-dependent, will likely continue its tightening cycle when it meets again next month. Separately, Peru's central bank delivered a 50 bp hike yesterday, its third hike in as many meetings.  Its key rate stands at 1.5%, while inflation is running above 5%.  


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Visualizing The World’s Biggest Real Estate Bubbles In 2021

Visualizing The World’s Biggest Real Estate Bubbles In 2021

Identifying real estate bubbles is a tricky business. After all, as Visual Capitalist’s Nick Routley notes, even though many of us “know a bubble when we see it”, we don’t…



Visualizing The World's Biggest Real Estate Bubbles In 2021

Identifying real estate bubbles is a tricky business. After all, as Visual Capitalist's Nick Routley notes, even though many of us “know a bubble when we see it”, we don’t have tangible proof of a bubble until it actually bursts.

And by then, it’s too late.

The map above, based on data from the Real Estate Bubble Index by UBS, serves as an early warning system, evaluating 25 global cities and scoring them based on their bubble risk.

Reading the Signs

Bubbles are hard to distinguish in real-time as investors must judge whether a market’s pricing accurately reflects what will happen in the future. Even so, there are some signs to watch out for.

As one example, a decoupling of prices from local incomes and rents is a common red flag. As well, imbalances in the real economy, such as excessive construction activity and lending can signal a bubble in the making.

With this in mind, which global markets are exhibiting the most bubble risk?

The Geography of Real Estate Bubbles

Europe is home to a number of cities that have extreme bubble risk, with Frankfurt topping the list this year. Germany’s financial hub has seen real home prices rise by 10% per year on average since 2016—the highest rate of all cities evaluated.

Two Canadian cities also find themselves in bubble territory: Toronto and Vancouver. In the former, nearly 30% of purchases in 2021 went to buyers with multiple properties, showing that real estate investment is alive and well. Despite efforts to cool down these hot urban markets, Canadian markets have rebounded and continued their march upward. In fact, over the past three decades, residential home prices in Canada grew at the fastest rates in the G7.

Despite civil unrest and unease over new policies, Hong Kong still has the second highest score in this index. Meanwhile, Dubai is listed as “undervalued” and is the only city in the index with a negative score. Residential prices have trended down for the past six years and are now down nearly 40% from 2014 levels.

Note: The Real Estate Bubble Index does not currently include cities in Mainland China.

Trending Ever Upward

Overheated markets are nothing new, though the COVID-19 pandemic has changed the dynamic of real estate markets.

For years, house price appreciation in city centers was all but guaranteed as construction boomed and people were eager to live an urban lifestyle. Remote work options and office downsizing is changing the value equation for many, and as a result, housing prices in non-urban areas increased faster than in cities for the first time since the 1990s.

Even so, these changing priorities haven’t deflated the real estate market in the world’s global cities. Below are growth rates for 2021 so far, and how that compares to the last five years.

Overall, prices have been trending upward almost everywhere. All but four of the cities above—Milan, Paris, New York, and San Francisco—have had positive growth year-on-year.

Even as real estate bubbles continue to grow, there is an element of uncertainty. Debt-to-income ratios continue to rise, and lending standards, which were relaxed during the pandemic, are tightening once again. Add in the societal shifts occurring right now, and predicting the future of these markets becomes more difficult.

In the short term, we may see what UBS calls “the era of urban outperformance” come to an end.

Tyler Durden Sat, 10/23/2021 - 22:00

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The return of text is inevitable

Welcome to Startups Weekly, a fresh human-first take on this week’s startup news and trends. To get this in your inbox, subscribe here. On Equity this week, we discussed the value of the written word. You can imagine that the resulting argument is inheren



Welcome to Startups Weekly, a fresh human-first take on this week’s startup news and trends. To get this in your inbox, subscribe here.

On Equity this week, we discussed the value of the written word. You can imagine that the resulting argument is inherently biased, considering we are three journalists who have bet our livelihoods on ink; but, I promise, there’s more nuance here beyond how important a lede is.

We recently published a recent deep dive on Automattic, the commercial media company behind the WordPress publishing platform. Founded in 2005, Automattic is one of the few companies that has been able to evolve and expand its way through a graveyard of media sites. Valued at $7.5 billion, it has also convinced investors of the financial promise of its vision.

I was most struck by how text has shaped Automattic’s hiring process: The company offers a purely written interview, where potential new hires never need to reveal their face or voice to anyone through the recruitment funnel. It takes away the inherent bias that comes with a Zoom interview, which, at its core, is just a digital version of a face-to-face interview. Monica Ohara, chief marketing officer of, explained more about her thinking:

“You normally think you’ve got to talk to them; see them on video. With text only, you remove all this bias and focus on the content of what they’re saying, and also test for a style of communication that’s really important in a distributed team.

“In Silicon Valley, everyone is competing for the same people that would add diversity to your pool. Which is great for those people, but what about all the others who don’t have those opportunities because of where they were born or live? For me, I was born in the Philippines and if I hadn’t had the luck to move here, I’d be living a different life.”

Rethinking the value of text, the same way we rethink how many synchronous meetings should be on our calendar, feels like the natural next step for companies figuring out how to scale distributed work. Even in a world seemingly ruled by short-form video, words — and sound — seem to matter in a way that other formats never will.

In the rest of this newsletter, we’ll talk about PayPal’s reported new friend, the Chinese venture capital market and not at all about Facebook’s impending new rebrand. 

PayPal picks Pinterest

Image Credits: TechCrunch

We rushed to Twitter Spaces this week after rumors came out that PayPal may be buying Pinterest for a reported $45 billion. The fintech giant has been on an acquisition spree of sorts, but scooping up a social, photo-sharing platform may signal its hungry to own the content — not just the customer.

Here’s what to know: This feels nostalgic. PayPal potentially joining forces with a more content-focused e-commerce business comes more than a half-decade after it divorced from eBay. But, as Finix Chief Growth Officer Jareau Wadé pointed out, Pinterest is not a shopping destination like eBay — it’s a place where shopping begins for nearly 450 million users.

In a Substack post, Wadé makes the following argument to describe why PayPal may buy Pinterest:

At its core, Pinterest is more like Google than eBay. It’s a search engine that conducts over 5 billion searches per month for fuzzy, hard-to-describe ideas where pictures, rather than words, are often the best place to start. It also has a growing ads business that produced $613 million last quarter, up 125% YoY. With Pinterest, PayPal would be buying the top of the funnel — the awareness and interest stages — for millions of websites on the internet. PayPal would provide Pinterest with the bottom of the funnel, allowing them to see the purchases that result from shopping that began on Pinterest.

Imagine if PayPal could use their core product and the commerce assets they’ve acquired over the past five years to build a deconstructed sales funnel, not just for one website, but for the whole internet.

Put a pin in it:

China is thriving

Flag of China with pile of bitcoin

Image Credits: TechCrunch

Data from CB Insights shows us that, aside from a single outsized 2018 round, China’s third quarter of 2021 was the best three-month period for Chinese startups ever — both in deal value and deal count.

Here’s what to know: We’re surprised, too. On Equity, we discussed how the growth of China’s venture capital market contrasts in sentiment with the region’s government restrictions. It seems that regulatory impact hasn’t stopped all companies from raising, and growing, their businesses there.

Internationally speaking:

Around TC

TC Sessions: SaaS 2021 is next week! My colleagues have put together an amazing show about the sector that seemingly can’t stop attracting millions from investors. We’ll see what stopped eating the world, how hunger is turning into innovation and definitely hit a few SaaSy notes through panels with experts.

Check out the event agenda, buy your pass and come hang with us on October 27.

Across the week

Seen on TechCrunch

A massive ‘stalkerware’ leak puts the phone data of thousands at risk

What do people want in a co-founder? YC has some answers

Station F adds an online program to educate the next generation of entrepreneurs

Trump to launch his own social media platform, calling it TRUTH Social

Seen on TechCrunch+

Mission-driven ventures are growing fast during the pandemic

Dear Sophie: Any suggestions for recruiting international tech talent?

Lessons from founders raising their first round in a bull market

Udemy targets valuation of $4B in major edtech IPO

Talk soon,


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DAX index forecast ahead of the ECB meeting

European stocks rose on Friday on a surge in technology stocks; still, rising inflation became a concern for investors. European inflation was confirmed at 3.4% YoY in September, and concerns grew that the European Central Bank could change its monetary..



European stocks rose on Friday on a surge in technology stocks; still, rising inflation became a concern for investors. European inflation was confirmed at 3.4% YoY in September, and concerns grew that the European Central Bank could change its monetary policy.

European Central Bank President Christine Lagarde said that ECB would maintain its accommodative policy for as long as necessary, but this could change soon. Germany’s DAX index has advanced again above 15,500 points, but it is still trading below its recent highs.

Germany’s recovery from the pandemic has been strong so far, and the country will release the preliminary estimates of its October Inflation data and its Q3 GDP next week.

Results from many big companies provided a strong start to third-quarter earnings, and investors’ focus will remain on the third-quarter earnings season because many companies have yet to publish their reports.

Next week, Deutsche Bank, Volkswagen,  Linde, MTU Aero Engines, and Daimler are among the companies scheduled to report quarterly results.

According to the German Economic Ministry, the outlook for the industry remains positive, but the world’s supply chains crisis represents a serious problem for Germany because of its dependence on exports.

The German economy is particularly vulnerable to shortages of key parts and raw materials, and more than 40% of companies reported they had lost sales because of supply problems.

Many big companies scaled back production of some of their most profitable models, while Opel announced last month that it would shut down a factory in Eisenach until the beginning of 2022.

It is important to say that nearly half of Germany’s economic output depends on exports of cars, machine tools, and other goods, while the semiconductor shortage throttling global car production suggests more pain for the automotive industry.

Despite this, the German Economic Ministry reported that it expected this effect to be temporary while the German central bank expects that the German economy could grow 3.7% this year. The German Economic Ministry added:

Healthy order books give us reason to expect strong recovery impulses from industry, and thanks to that strong overall economic growth

The European Central Bank recently reported that exports from Eurozone would have been at least 7% higher in the first half of the year if not for supply bottlenecks. The European Central Bank will announce its decision on monetary policy next Thursday, which could significantly influence on DAX index in the near term.

15,000 points represent support

Data source:

DAX index has advanced again above 15,500 points, and if the price jumps above 15,800 points, the next target could be at 16,000 points.

On the other side, if the price falls below strong support that stands at 15,000 points, it would be a strong “sell” signal, and the next target could be around 14,500 points.


The European Central Bank will announce its decision on monetary policy next Thursday, which could significantly influence on DAX index in the near term. DAX index has advanced again above 15,500 points, and if the price jumps above 15,800 points, the next target could be at 16,000 points.

The post DAX index forecast ahead of the ECB meeting appeared first on Invezz.

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