Connect with us

US Futures Dip From Record As Chinese Stocks Soar

US Futures Dip From Record As Chinese Stocks Soar

US equity futures slipped from record highs, European stocks held steady at the start of a new week and Chinese stocks soared the most in five weeks, as investors awaited a fresh round of…

Published

on

US Futures Dip From Record As Chinese Stocks Soar

US equity futures slipped from record highs, European stocks held steady at the start of a new week and Chinese stocks soared the most in five weeks, as investors awaited a fresh round of corporate earnings with global shares sitting at record highs. The dollar slid following the crypto rout over the weekend. Gold rose and oil was flat.

At 07:30 a.m. ET, Dow E-minis were down 81points, or 0.24%, S&P 500 E-minis were down 10.75 points, or 0.26%, and Nasdaq 100 E-minis were down 46points, or 0.3% after briefly rising above Friday’s close during the European morning. Notable movers included Activision Blizzard and PayPal which fell in premarket trading. Tesla slid 1.6% following a deadly crash involving a 2019 Model S that no one appeared to be driving. IBM and United Airlines are due to report.

Looking at global markets, the MSCI world equity index climbed to a new peak, up 0.2% despite the weakness in US futures. Blockbuster economic data from China and the US last week pushed the MSCI All-Country World Index to another record despite concerns surrounding the spread of Covid-19 variants. New infections in the past week surpassed 5.2 million, the most since the pandemic began, with emerging markets (i.e. India, Brazil) getting hit the hardest.

A pullback in 10-year bond yield from 14-month highs in April has also eased worries about higher borrowing costs, renewing interest in richly valued technology stocks. As Goldman explained over the weekend, the risk of another destabilizing increase in borrowing costs has also subsided, as bond yields have pulled back from recent highs amid rising investor concerns that the peak of the stimulus surge is now behind us. This week traders will look for further confirmation of the private sector’s recovery from the pandemic as the earnings season gathers pace.

And speaking of economic data, it takes a back seat this week to earnings as 79 S&P 500 companies report results this week including Johnson & Johnson, Netflix Inc, Intel Corp, Honeywell and Schlumberger.

"Our current view is that with short-term interest rates set to remain low for the medium term and our expectation that earnings will continue to increase, it is unlikely that the increase in long-term interest rates will trigger an equity market fall," Russel Chesler, head of investments and capital markets at VanEck Australia, said in a note.

Europe’s STOXX 600 rose to a record high before easing some gains, and was flat at last check erasing earlier gains. Here are some of the biggest European movers today:

  • Juventus shares rise as much as 14%, the most in a year after the Italian soccer club joins some of the game’s wealthiest teams in announcing plans for a new “super league” that could transform revenue streams at the top level of the sport.
  • Arjo shares rise as much as 9.6% to a record high, as Swedish business daily Dagens Industri reiterates its recommendation to buy the shares of the medical-equipment maker.
  • Danone shares rise 1.2% after Bernstein notes that a sector rotation from consumer staples to those benefiting from economic reopening appears to be finished. The firm also raises the price target for the French food-processing company.
  • L’Oreal shares rise 1.3%. The company’s progress with e-commerce will help margins in the years to come, according to Goldman Sachs, which boosts the French beauty-products maker’s PT to a Street high while adding the stock to its “Conviction List.”
  • Pantheon Resources shares fall as much as 54%, the most since April 2018, after saying that the Kuparuk formation in Alaska was more “geologically complex” than expected.
  • Piraeus shares fall 30% to a record low as it resumes trading after reverse split and par value adjustment, with EU4.784 adjusted opening price.

Matthias Scheiber, global head of portfolio management at Wells Fargo Asset Management cited low interest rates, the rollout of COVID-19 vaccines and the fiscal stimulus package in the United States as reasons for his bullish stance on equities.

“Risk is coming down, volatility is coming down … we see the slow reopening of global economies, the rollout of the vaccine and the huge catch-up in demand so from that perspective it should be positive for economic growth. We had a strong rally in cyclical and value stocks since the start of this year - we would like to see confirmation in the earnings.”

Earlier in the session, Asian stocks rose after a dip in early trading, led by Chinese stocks that had their best day in five weeks. The MSCI Asia Pacific Index is set to climb for the fifth straight session, its longest winning streak in more than two months, amid lower longer-term U.S. Treasury yields. Health care and materials led gains for the gauge, which was up as much as 0.5%.

China’s CSI 300 Index closed 2.4% higher to become the region’s best performing major national benchmark amid easing concerns about the health of state enterprise China Huarong Asset Management, the country's iconic distressed-debt manager which itself is so distressed  many speculated Beijing will let if fail. China’s financial regulator on Friday said Huarong had ample liquidity, the first official comments since the company missed a deadline to report earnings. Ebbing fears of contagion drove a rally in Huarong bonds.

Also in China, shares of automakers jumped on Huawei’s plan to invest in car technologies, while electronics firms rose ahead of Apple’s first product unveiling of 2021. Japan’s Topix ended the day down 0.2% as the governors of Tokyo and Osaka considered declaring another virus emergency as infections surge. The country posted a double-digit gain in exports for the first time in more than three years in March, official data showed Monday. India’s Sensex index slid 1.8%, the worst performer in Asia, as daily new coronavirus infections continue to top previous highs.

Wells Fargo Asset Management’s Matthias Scheiber said “We believe we are in the ‘buy the dip’ environment at this moment given that both fiscal and monetary policy are very supportive, so if we would see a correction … we would probably increase the equity position.”

In rates, the benchmark U.S. Treasury yield, which dropped as low as 1.528% last Thursday, was at 1.5782%. Yields were lower by less than 1bp across the curve within spreads likewise little changed; 10-year TSY outperforming bunds by ~2bp while broadly keeping pace with gilts. Treasuries held small gains with S&P 500 futures under pressure despite strong gains for Chinese stocks. Options activity picked up during Asia session, including large trades in 5- and 10-year tenors.  Overnight UST options activity included large bearish block trade via Jun21 10-year put spread and 5-year blocks re-jigging a big short position. Another heavy corporate new-issue slate is expected this week, a possible source of hedging flows.

In FX, the greenback fell against all of its G10 peers while the euro rose beyond $1.2030, the highest since March 4, amid news that Pfizer and BioNTech will supply the EU with an additional 100 million vaccine doses this year; Treasuries gained, outperforming bunds. The pound rose for a sixth straight session against the U.S. dollar, as the U.K.’s swift vaccination program and reopening schedule continued to bolster investor confidence. The yen also advanced as renewed tensions between U.S. and Russia spurred demand for haven assets; China rejected criticism from U.S. and Japanese leaders, adding to the risk-off sentiment. Australia’s dollar erased a drop as a rally in iron-ore prices offset weakness fueled by rising U.S.-China tensions.

“We have been highlighting over the past two months that USD could bottom out, in contrast to consensus, and believed that this would be a tactical problem for EM and for certain commodity trades,” wrote JP Morgan’s head of global and European equity strategy, Mislav Matejka, in a note to clients. “We think the risk of a firmer USD, through rising US-Europe interest rate differential, is not finished.”

Matejka also said that, although there is the technical potential for a correction in equities, he would not cut stocks exposure on the six- to nine-month horizon: “We think that it is more likely that we will be raising our year-end targets, rather than reducing them, as we move through the summer,” he said.

In commodities, oil prices fell as rising COVID-19 infections in India prompted concern than stronger measures to contain the pandemic would hurt economic activity. A recent surge in COVID-19 cases could see major parts of Japan slide back into states of emergency, with authorities in Tokyo and Osaka looking at renewed curbs.

Bitcoin was up 1% at around $56,850, nursing losses from Sunday, when it plunged as much as 14% to $51,541.

Looking at the week's events, economic data is sparse and no Fed speakers scheduled ahead of April 28 FOMC meeting. Instead attention will be on earnings from IBM which are due later in the session. Netflix reports on Tuesday. Later in the week, American Airlines and Southwest will be the first major post-COVID cyclicals to post results. The European Central Bank meeting on Thursday will also be in focus this week. ECB President Christine Lagarde said last week that the euro zone economy is still standing on the “two crutches” of monetary and fiscal stimulus and these cannot be taken away until it makes a full recovery.

Market Snapshot

  • S&P 500 futures down 0.1% to 4,172.00
  • MXAP up 0.3% to 209.28
  • MXAPJ up 0.3% to 697.59
  • Nikkei little changed at 29,685.37
  • Topix down 0.2% to 1,956.56
  • Hang Seng Index up 0.5% to 29,106.15
  • Shanghai Composite up 1.5% to 3,477.55
  • Sensex down 1.7% to 47,982.83
  • Australia S&P/ASX 200 little changed at 7,065.64
  • Kospi little changed at 3,198.84
  • German 10Y yield fell 0.6bps to -0.268%
  • Euro up 0.3% to 1.2024
  • Brent Futures down 0.1% to $66.70/bbl
  • Gold spot up 0.5% to $1,785.97
  • U.S. Dollar Index down 0.40% to 91.19

Top Overnight News from Bloomberg

  • Markus Soeder’s bid to lead Angela Merkel’s conservative bloc into September’s German election is gathering pace, with Monday’s imminent announcement by the Greens of their chancellor candidate adding to pressure to end the deadlock
  • Russia hit back defiantly after the U.S. warned of “consequences” if jailed opposition leader Alexey Navalny dies on hunger strike, deepening the conflict over the dissident who’s already survived an alleged assassination attempt
  • China sought to allay fears it wants to topple the dollar as the world’s main reserve currency as Beijing makes bigger strides in creating its own digital yuan
  • Deutsche Bank AG is replacing its global pricing engine for emerging-market currencies in London with one in Singapore, drawn by surging trading in Asia and the increasing importance of the Chinese yuan
  • The mania that drove crypto assets to records as Coinbase Global Inc. went public last week turned on itself on the weekend, sending Bitcoin tumbling the most since February
  • U.K. house prices surged to a record this month with a tax break on purchases and rock-bottom interest rates prompting a “buying frenzy,” the property website Rightmove said
  • The unprecedented oil inventory glut that amassed during the coronavirus pandemic is almost gone, underpinning a price recovery that’s rescuing producers but vexing consumers.

A quick look at global markets courtesy of Newsquawk

Asian equity markets began the week with mostly cautious gains and US equity futures marginally pulled back from record highs with participants tentative ahead of further earning updates this week, and as COVID-19 uncertainty lingered after the number of global cases last week increased by over 5.2mln, which was a record despite the ongoing vaccination drive. However, there were comments from NIH's Dr Fauci that a decision on whether to resume administering the Johnson & Johnson COVID-19 vaccine could occur as soon as Friday and that he would not be surprised if it is resumed in some form. ASX 200 (+0.2%) was positive with the kept afloat by outperformance in mining-related sectors and with M&A developments providing encouragement following news of a merger between Galaxy Resources and Orocobre, as well as reports that Crown Resorts received an unsolicited proposal on behalf of funds managed by Oaktree Capital. Nikkei 225 (+0.2%) initially swung between gains and losses as pressure from currency inflows was offset by stronger than expected trade data - including the largest increase in exports since November 2017 - and although Japanese stocks eventually improved, Toshiba shares were left in the lurch after CVC was said to plan a delay in submitting a formal proposal to acquire the Co. Hang Seng (+0.8%) and Shanghai Comp. (+1.3%) shrugged off the flat open and the continued US-China verbal jousting, to outperform their regional peers with the Hang Seng extending above the 29k level and strength seen in Chinese automakers after Huawei unveiled its intelligent driving system. There were also constructive comments regarding China Huarong Asset Management in which the CBIRC Vice Head stated the Co. is currently operating normally with ample liquidity and Chinese regulators were also said to have asked some banks not to withhold loans to the Co., while India's NIFTY (-2.4%) was heavily pressured amid ongoing rampant COVID-19 cases which hit a fresh record high and with the capital of New Delhi said to have less than 100 ICU beds available in the entire city. Finally, 10yr JGBs were slightly higher amid the mild gains in T-notes and a relatively tepid BoJ purchase announcement totalling JPY 500bln mostly concentrated in 3yr-5yr maturities, while Aussie yields were also relatively unmoved after the RBA announcement to purchase AUD 2bln of government bonds.

Top Asian News

  • Packer Gets Crown Exit Path With $2.3 Billion Oaktree Offer
  • China Stocks Book Best Day in 5 Weeks as Tech, Car Firms Gain
  • Top India Homebuilder Drops in Debut After Decade-Long IPO Wait
  • Chinese Travel Site Trip.com Rises 4.6% in Hong Kong Debut

European equities kick off the trading week with another mixed/directionless session thus far (Euro Stoxx 50 -0.1%) despite the positive APAC handover, and amidst a lack of fresh catalysts as participants continue to ponder over the rising COVID cases globally alongside the broader recovery with the vast fiscal and monetary support present. US equity futures meanwhile are somewhat varied and have a negative bias, with the ES and NQ flat whilst the cyclically-driven RTY narrowly lags. Analysts at JPM noted that some technical and sentiment indicators are becoming stretched after the recent run higher across stocks. That being said, the analysts say they would not be reducing stocks exposure on a six-to-nine month horizon whilst acknowledging the potential for a technical correction - JPM continue to see dips as buys. Back to Europe, cash markets see no major outlier in terms of performance whilst sectors are similarly mixed, with outperformance seen Travel & Leisure whilst the early gains in the Auto sector, following the 2021 Shanghai Motor Show, faded with the sector now the laggard. Overall the sectors do now portray and over-arching theme. In terms of individual movers, ABN AMRO (+1.4%) trades firmer after the Co. has accepted the payment of EUR 480mln to settle an anti-money laundering investigation. Bayer (+1.4%) is also supported as the US FDA granted Orphan Drug status for Co's Aliqopa for chronic lymphocytic leukaemia and small lymphocytic lymphoma. Conversely, CNH Industrial (-5.1%) sits at the foot of the Stoxx after it terminated discussions with FAW Jiefang around the On-Highway business, but will still continue with plans to spin-off the unit from 2022 onwards.

Top European News

  • HSBC Top Staff to Hot Desk After Scrapping Executive Floor
  • Juventus Stock Jumps Most in a Year Amid Super League Plan
  • Pfizer, BioNTech to Supply EU With 100M Additional Doses in 2021
  • Piraeus Bank Falls 30% After Share Capital Increase Terms

In FX, the Dollar and index have extended declines across the board as US Treasury yields maintain a mild bull-flattening bias, but also on increasingly bearish technical momentum as several Buck/major pairings breach key and psychological levels and the DXY itself breaches 91.500 to probe support around 91.300 within a 91.748-125 band. However, the index and Greenback in general may benefit from underlying bids into 91.000 given that the 100 DMA is in very close proximity at 91.019 today.

  • JPY/NZD/AUD - Better than expected Japanese trade data could be helping the Yen compound gains vs its US counterpart, and at this stage 108.00 appears far more achievable than a rebound towards 108.50 where the base of decent option expiry interest resides (1.9 bn from the half round number up to 109.65 to be precise). Meanwhile, the Kiwi and Aussie are taking advantage of their US peer’s predicament to form firmer bases above 0.7150 and 0.7750 respectively ahead of RBA minutes and NZ Q1 CPI on Tuesday.
  • CHF/EUR/GBP/CAD - Little sign of Franc buyers getting twitchy about a relatively big rise in Swiss sight deposit balances at domestic banks, as Usd/Chf tests 0.9150 and Eur/Chf eyes 1.1000 even though the single currency has made light work of breaching supposed option barriers at 1.2000 against the Dollar. Elsewhere, Cable is approaching 1.3900 after holding just above the big figure below and the Pound is starting the new week in a much better position vs the Euro after the cross reached circa 0.8719 last Friday, with Eur/Gbp now pivoting 0.8650. Similarly, the Loonie has turned the tables on its US rival to regain 1.2500+ status in advance of Canada’s first Federal Budget since 2019 then CPI and the BoC on Wednesday.
  • SCANDI/EM/PM - The Nok and Sek have picked up where they left off last week, on the front foot, with the former outperforming through 10.0000 vs the Eur and latter straddling 10.1000, while most EM currencies are benefiting from Usd weakness bar the Rub that remains below 76.0000 amidst ongoing investor jitters about Russia’s deteriorating international relations and stand-off with Ukraine. Turning to commodities, Xau has taken a bit of a breather before continuing its march to just over Usd 1788/oz with bullish chart impulses embellished by China reportedly allowing banks to import some 150 tonnes of Gold this month and in May.

In commodities, yet another choppy European morning for WTI and Brent front-month futures and within relatively tight ranges as markets await a concrete fundamental catalyst to latch onto. Participants in the interim will continue to balance the geopolitics with vaccination hurdles and rising COVID cases across some economies - with India and Canada recently telegraphing a worsening situation, with the former cancelling UK PM Johnson's visit whilst its capital New Delhi announce fresh lockdown measures alongside some speculation pointing to India being put on the UK's travel red list. Note that this comes ahead of next week's JMMC/OPEC+ meeting in which eyes will be on any need to alter the output quotas set through July, with production set to steadily increase amid a projected rise in summer demand. The geopolitical landscape meanwhile remains mixed but fluid as ever, with sanguine rhetoric initially emanating from the Iranian JCPOA talks, although Tehran later suggested that negotiations still remain difficult. Elsewhere, developments regarding Russia have been abundant with Kremlin-critic Navalny now seemingly attended to by doctors after US has warned Russia there will be "consequences" if the opposition activist Alexei Navalny dies in jail, whilst EU expressed concern regarding Navalny's health. Further, Russia is reportedly bolstering its warship presence in the Black Sea amid ongoing tensions with Ukraine and Moscow is also poised to announce a US sanctions list. WTI trades on either side of USD 63/bbl (62.67-63.42/bbl range) whilst its Brent counterpart holds its head above USD 66.50/bbl (66.17-95/bbl range). Spot gold and silver meanwhile glean support from the deteriorating Buck with the former now north of USD 1,775/oz (vs low 1,773/oz) whilst spot silver reclaimed USD 26/oz. In terms of base metals, LME copper has been bolstered further above USD 9,000/t amid the softer Buck, reaching a current peak of USD 9,430/t. Overnight, Singapore iron ore futures surged overnight with traders citing demand from the Chinese steel sector.

US Event Calendar

  • Nothing major scheduled

DB's Jim Reid concludes the overnight wrap

It’s quite a strange feeling of pride that I feel today given I’m going to get my first Covid jab this afternoon. Maybe its pride at the human achievement, maybe its pride at doing my civic duty. I’m not 100% sure. By tomorrow morning when I’m likely feeling really groggy I’m sure that pride will fade. I nearly became a vaccine refuser as I tried to drive my car yesterday only to find the battery was dead. A call to the breakdown service has fixed this but its a consequence of lockdown as I’ve hardly used my car for 13 months. Thankfully I needed to make rare use of it yesterday or I wouldn’t have discovered the battery problem until just before my 20 mile drive to the vaccination centre. Anyway lets hope I’ll be well enough to be on EMR duties tomorrow.

In terms of markets a more successful vaccination campaign in Europe over the last couple of week has certainty helped the Goldilocks theme for now and the continent looks on surer footing now. In terms of wider markets even risk parity type trades have seemingly made a comeback of late. Indeed Bloomberg data suggests that the S&P 500 and 30yr Treasuries have now both rallied for a fourth week together for the first time since August 2008. So markets are back to being a bit dull for now but pretty buoyant. However positioning is becoming more stretched which should be watched. Our equity strategists reported over the weekend (link here) that their composite measure of US equity positioning is close to record highs (98th percentile). There remains a notable divide between the positioning of discretionary investors, which has moved up to a new peak (100th percentile), while systematic strategies exposure has also risen, but remains near historical median levels (46th percentile). A reminder that they think there is likely to be a 6-10% pull back (link here) when growth peaks which they think will occur over the next 3 months.

While we wait for such excitement we can all live vicariously through the big moves in Bitcoin over the weekend. After being as high as $64,869.78 this past Wednesday it traded as low as $51,707.51 yesterday down around 15% from Friday’s close. As we type its now at $56,987. It’s difficult to work out exactly why the sudden reversal occurred but the online chatter is linking it to speculation that the US Treasury may soon crack down on money laundering that uses digital assets. The market remains in a frenzy though as Dogecoin rose over 110% on Friday. Remember this coin was set up as a joke and was worth more than $50bn at one point over the weekend.

Asian markets have started the week on the front foot with the Nikkei (+0.24%), Hang Seng (+0.80%), Shanghai Comp (+1.30%) and Kospi (+0.26%) all up. Futures on the S&P 500 are down -0.14% while those on the Nasdaq are up +0.11% benefitting form a decline in 10y UST yields (-1.3bps) this morning. In Fx, the Russian rouble (-0.61%) is under fresh pressure this morning after the US warned Russia of “consequences” if jailed opposition leader Alexey Navalny dies. Indeed the geopolitical risks from the Russia story last week did seep into wider markets a little so certainly one to watch

There’s a reasonably eventful calendar for markets this week, with the highlights including Thursday’s ECB meeting and Friday’s release of the April flash PMIs from around the world. Investors will also be paying attention to the latest earnings releases, with a further 80 S&P 500 companies reporting, as well as the continued path of the pandemic as a number of places such as India have faced a big surge in cases. There have been around 5.1mn cases reported across the globe over the past 7 days, the highest weekly increase since the pandemic began. India contributed north of 1.4mn cases to this increase which is also its largest weekly gain and continues to remain the current epicentre of the virus. Elsewhere both Osaka and Tokyo may go into fresh state of emergency conduction as soon as today. On a more positive note, Dr Fauci has said that he expects a decision on how to resume vaccinating Americans with the J&J COVID-19 vaccine will probably come by Friday and added that “I doubt very seriously if they just cancel” the J&J vaccine. We are also expecting that the European Medicines Agency will issue their recommendation on the J&J vaccine over the week ahead.

From central banks, this week’s highlight will be the latest ECB decision on Thursday, along with President Lagarde’s subsequent press conference. In their preview (link here), our European economists write that a change in the policy stance is unlikely, and that a decision on whether or not to maintain the new faster pace of PEPP purchases will be made after a joint assessment of financing conditions and the inflation outlook at the Governing Council’s next monetary policy meeting in June. However, at this point it’s unclear whether they will maintain that higher pace beyond June. Our economists say that although a latent recovery is building and ‘net-net’ issuance (net issuance, net of ECB purchases) ought to turn favourable for rates markets following the Q1 spike, the ECB consensus is cautious and determined to avoid a premature tightening in financing conditions.

Staying on Europe, another important event will take place in Germany today, as the Green party present their first chancellor candidate in the 41-year history of their party. This is an important one to look out for, as the CDU/CSU’s slump in the polls has put them only a few points ahead of the second-place Greens, so it’s no longer implausible that the next German chancellor could come from the Greens following September’s federal election. Our German economists’ full preview can be found here, but their view is that the odds appear slightly tilted towards co-leader Annalena Baerbock being selected. In terms of the election result, our economists still see a CDU-CSU/Green coalition as their baseline scenario, as they expect the Conservatives to regain polling momentum. Talking of which, it’s also possible that the CDU/CSU will agree on who will be their candidate over the next day as Armin Laschet and Markus Soeder have been having behind close door discussions since Friday to hammer out which of them will be on the ticket come September. Overnight, the headlines have leaned more favourably towards Markus Soeder with CDU lawmaker Christian von Stetten suggesting in an interview yesterday that Laschet’s leadership bid would be rejected by the CDU/CSU caucus in a vote on Tuesday if the issue isn’t resolved before then.

On the data front, it’s a lighter week ahead, with the main highlight likely to be at the end of the week with the flash PMIs for April. This will give us an initial indication of how global economic performance has fared at the start of Q2, and there’ll be particular attention on the price gauges as well as investors stay attuned to any signs of growing inflationary pressures. In terms of central banks, there are a few other decisions alongside the ECB, with Canada, Russia and Indonesia all deciding on rates. However, there won’t be any Fed speakers as they’re now in a blackout period ahead of their own meeting the week after.

Earnings season kicks up another gear this week, as 80 companies from the S&P 500 report along with a further 54 from the STOXX 600. Among the highlights include Coca-Cola and IBM today, before tomorrow sees reports from Johnson & Johnson, Procter & Gamble, Netflix, Abbott Laboratories, Philip Morris International and Lockheed Martin. Then on Wednesday we’ll hear from ASML, Verizon, NextEra Energy, and Thursday sees releases from Intel, AT&T, Danaher, Union Pacific and Credit Suisse. Finally on Friday, there’s Honeywell International, American Express and Daimler.

To quickly recap last week, risk markets in Europe and the US continued to set new records as US government yields fell but Europe’s mostly rose possibly due to being past peak European pessimism now vaccine deployment is accelerating. The S&P 500 rose +1.37% on the week (+0.36% Friday), finishing at yet another record high. The index has risen for four straight weeks, the first time that has happened since August. The weekly move was broad based as sectors such as materials, healthcare, and real estate all led gains while technology shares also continued to improve as the NASDAQ rose +1.01% on the week. The tech-concentrated index is within a third of a per cent of its all-time highs. Market volatility has calmed over the last few weeks and this past week the VIX volatility index fell -0.4pts to 16.3 – the lowest levels since the pandemic started. European stocks rose to their own record highs as the STOXX 600 gained +1.20% over the week, with the CAC (+1.91%) and FTSE 100 (+1.50%) outperforming other bourses.

US 10yr yields finished the week -7.9bps lower (+0.4bps Friday) at 1.580% - the third weekly drop in yields over the last four weeks. 30yrs are four in four as discussed at their top. The week’s move was driven by the drop in real yields (-12.4bps) which overcame the increase in inflation expectations (+4.5bps). European rates were more mixed with 10yr bund yields gaining +4.1bps last week and UK gilts falling -1.0bps. There was also a tightening of peripheral spreads in parts of southern Europe as Italian BTPs (-2.1bps) and Spanish bonds (-2.5bps) tightened against 10yr bunds, while Portuguese bonds (+7.9bps) widened.

In terms of economic data from Friday, US housing starts in March was ahead of schedule with 1.739mn (vs 1.613mn expected) new construction after 1.457mn recorded in February. The preliminary University of Michigan consumer sentiment index for April showed a less-than-expected rise to 86.5pts (vs. 89.0pts expected) from 84.9pts. Meanwhile in Europe, new EU car registrations for March was up +87.3% after being down -19.3% in February. The final Euro Area CPI reading for February was +0.9% m/m and +1.3% y/y in-line with earlier estimates.

Tyler Durden Mon, 04/19/2021 - 08:01

Read More

Continue Reading

International

Four Years Ago This Week, Freedom Was Torched

Four Years Ago This Week, Freedom Was Torched

Authored by Jeffrey Tucker via The Brownstone Institute,

"Beware the Ides of March,” Shakespeare…

Published

on

Four Years Ago This Week, Freedom Was Torched

Authored by Jeffrey Tucker via The Brownstone Institute,

"Beware the Ides of March,” Shakespeare quotes the soothsayer’s warning Julius Caesar about what turned out to be an impending assassination on March 15. The death of American liberty happened around the same time four years ago, when the orders went out from all levels of government to close all indoor and outdoor venues where people gather. 

It was not quite a law and it was never voted on by anyone. Seemingly out of nowhere, people who the public had largely ignored, the public health bureaucrats, all united to tell the executives in charge – mayors, governors, and the president – that the only way to deal with a respiratory virus was to scrap freedom and the Bill of Rights. 

And they did, not only in the US but all over the world. 

The forced closures in the US began on March 6 when the mayor of Austin, Texas, announced the shutdown of the technology and arts festival South by Southwest. Hundreds of thousands of contracts, of attendees and vendors, were instantly scrapped. The mayor said he was acting on the advice of his health experts and they in turn pointed to the CDC, which in turn pointed to the World Health Organization, which in turn pointed to member states and so on. 

There was no record of Covid in Austin, Texas, that day but they were sure they were doing their part to stop the spread. It was the first deployment of the “Zero Covid” strategy that became, for a time, official US policy, just as in China. 

It was never clear precisely who to blame or who would take responsibility, legal or otherwise. 

This Friday evening press conference in Austin was just the beginning. By the next Thursday evening, the lockdown mania reached a full crescendo. Donald Trump went on nationwide television to announce that everything was under control but that he was stopping all travel in and out of US borders, from Europe, the UK, Australia, and New Zealand. American citizens would need to return by Monday or be stuck. 

Americans abroad panicked while spending on tickets home and crowded into international airports with waits up to 8 hours standing shoulder to shoulder. It was the first clear sign: there would be no consistency in the deployment of these edicts. 

There is no historical record of any American president ever issuing global travel restrictions like this without a declaration of war. Until then, and since the age of travel began, every American had taken it for granted that he could buy a ticket and board a plane. That was no longer possible. Very quickly it became even difficult to travel state to state, as most states eventually implemented a two-week quarantine rule. 

The next day, Friday March 13, Broadway closed and New York City began to empty out as any residents who could went to summer homes or out of state. 

On that day, the Trump administration declared the national emergency by invoking the Stafford Act which triggers new powers and resources to the Federal Emergency Management Administration. 

In addition, the Department of Health and Human Services issued a classified document, only to be released to the public months later. The document initiated the lockdowns. It still does not exist on any government website.

The White House Coronavirus Response Task Force, led by the Vice President, will coordinate a whole-of-government approach, including governors, state and local officials, and members of Congress, to develop the best options for the safety, well-being, and health of the American people. HHS is the LFA [Lead Federal Agency] for coordinating the federal response to COVID-19.

Closures were guaranteed:

Recommend significantly limiting public gatherings and cancellation of almost all sporting events, performances, and public and private meetings that cannot be convened by phone. Consider school closures. Issue widespread ‘stay at home’ directives for public and private organizations, with nearly 100% telework for some, although critical public services and infrastructure may need to retain skeleton crews. Law enforcement could shift to focus more on crime prevention, as routine monitoring of storefronts could be important.

In this vision of turnkey totalitarian control of society, the vaccine was pre-approved: “Partner with pharmaceutical industry to produce anti-virals and vaccine.”

The National Security Council was put in charge of policy making. The CDC was just the marketing operation. That’s why it felt like martial law. Without using those words, that’s what was being declared. It even urged information management, with censorship strongly implied.

The timing here is fascinating. This document came out on a Friday. But according to every autobiographical account – from Mike Pence and Scott Gottlieb to Deborah Birx and Jared Kushner – the gathered team did not meet with Trump himself until the weekend of the 14th and 15th, Saturday and Sunday. 

According to their account, this was his first real encounter with the urge that he lock down the whole country. He reluctantly agreed to 15 days to flatten the curve. He announced this on Monday the 16th with the famous line: “All public and private venues where people gather should be closed.”

This makes no sense. The decision had already been made and all enabling documents were already in circulation. 

There are only two possibilities. 

One: the Department of Homeland Security issued this March 13 HHS document without Trump’s knowledge or authority. That seems unlikely. 

Two: Kushner, Birx, Pence, and Gottlieb are lying. They decided on a story and they are sticking to it. 

Trump himself has never explained the timeline or precisely when he decided to greenlight the lockdowns. To this day, he avoids the issue beyond his constant claim that he doesn’t get enough credit for his handling of the pandemic.

With Nixon, the famous question was always what did he know and when did he know it? When it comes to Trump and insofar as concerns Covid lockdowns – unlike the fake allegations of collusion with Russia – we have no investigations. To this day, no one in the corporate media seems even slightly interested in why, how, or when human rights got abolished by bureaucratic edict. 

As part of the lockdowns, the Cybersecurity and Infrastructure Security Agency, which was and is part of the Department of Homeland Security, as set up in 2018, broke the entire American labor force into essential and nonessential.

They also set up and enforced censorship protocols, which is why it seemed like so few objected. In addition, CISA was tasked with overseeing mail-in ballots. 

Only 8 days into the 15, Trump announced that he wanted to open the country by Easter, which was on April 12. His announcement on March 24 was treated as outrageous and irresponsible by the national press but keep in mind: Easter would already take us beyond the initial two-week lockdown. What seemed to be an opening was an extension of closing. 

This announcement by Trump encouraged Birx and Fauci to ask for an additional 30 days of lockdown, which Trump granted. Even on April 23, Trump told Georgia and Florida, which had made noises about reopening, that “It’s too soon.” He publicly fought with the governor of Georgia, who was first to open his state. 

Before the 15 days was over, Congress passed and the president signed the 880-page CARES Act, which authorized the distribution of $2 trillion to states, businesses, and individuals, thus guaranteeing that lockdowns would continue for the duration. 

There was never a stated exit plan beyond Birx’s public statements that she wanted zero cases of Covid in the country. That was never going to happen. It is very likely that the virus had already been circulating in the US and Canada from October 2019. A famous seroprevalence study by Jay Bhattacharya came out in May 2020 discerning that infections and immunity were already widespread in the California county they examined. 

What that implied was two crucial points: there was zero hope for the Zero Covid mission and this pandemic would end as they all did, through endemicity via exposure, not from a vaccine as such. That was certainly not the message that was being broadcast from Washington. The growing sense at the time was that we all had to sit tight and just wait for the inoculation on which pharmaceutical companies were working. 

By summer 2020, you recall what happened. A restless generation of kids fed up with this stay-at-home nonsense seized on the opportunity to protest racial injustice in the killing of George Floyd. Public health officials approved of these gatherings – unlike protests against lockdowns – on grounds that racism was a virus even more serious than Covid. Some of these protests got out of hand and became violent and destructive. 

Meanwhile, substance abuse rage – the liquor and weed stores never closed – and immune systems were being degraded by lack of normal exposure, exactly as the Bakersfield doctors had predicted. Millions of small businesses had closed. The learning losses from school closures were mounting, as it turned out that Zoom school was near worthless. 

It was about this time that Trump seemed to figure out – thanks to the wise council of Dr. Scott Atlas – that he had been played and started urging states to reopen. But it was strange: he seemed to be less in the position of being a president in charge and more of a public pundit, Tweeting out his wishes until his account was banned. He was unable to put the worms back in the can that he had approved opening. 

By that time, and by all accounts, Trump was convinced that the whole effort was a mistake, that he had been trolled into wrecking the country he promised to make great. It was too late. Mail-in ballots had been widely approved, the country was in shambles, the media and public health bureaucrats were ruling the airwaves, and his final months of the campaign failed even to come to grips with the reality on the ground. 

At the time, many people had predicted that once Biden took office and the vaccine was released, Covid would be declared to have been beaten. But that didn’t happen and mainly for one reason: resistance to the vaccine was more intense than anyone had predicted. The Biden administration attempted to impose mandates on the entire US workforce. Thanks to a Supreme Court ruling, that effort was thwarted but not before HR departments around the country had already implemented them. 

As the months rolled on – and four major cities closed all public accommodations to the unvaccinated, who were being demonized for prolonging the pandemic – it became clear that the vaccine could not and would not stop infection or transmission, which means that this shot could not be classified as a public health benefit. Even as a private benefit, the evidence was mixed. Any protection it provided was short-lived and reports of vaccine injury began to mount. Even now, we cannot gain full clarity on the scale of the problem because essential data and documentation remains classified. 

After four years, we find ourselves in a strange position. We still do not know precisely what unfolded in mid-March 2020: who made what decisions, when, and why. There has been no serious attempt at any high level to provide a clear accounting much less assign blame. 

Not even Tucker Carlson, who reportedly played a crucial role in getting Trump to panic over the virus, will tell us the source of his own information or what his source told him. There have been a series of valuable hearings in the House and Senate but they have received little to no press attention, and none have focus on the lockdown orders themselves. 

The prevailing attitude in public life is just to forget the whole thing. And yet we live now in a country very different from the one we inhabited five years ago. Our media is captured. Social media is widely censored in violation of the First Amendment, a problem being taken up by the Supreme Court this month with no certainty of the outcome. The administrative state that seized control has not given up power. Crime has been normalized. Art and music institutions are on the rocks. Public trust in all official institutions is at rock bottom. We don’t even know if we can trust the elections anymore. 

In the early days of lockdown, Henry Kissinger warned that if the mitigation plan does not go well, the world will find itself set “on fire.” He died in 2023. Meanwhile, the world is indeed on fire. The essential struggle in every country on earth today concerns the battle between the authority and power of permanent administration apparatus of the state – the very one that took total control in lockdowns – and the enlightenment ideal of a government that is responsible to the will of the people and the moral demand for freedom and rights. 

How this struggle turns out is the essential story of our times. 

CODA: I’m embedding a copy of PanCAP Adapted, as annotated by Debbie Lerman. You might need to download the whole thing to see the annotations. If you can help with research, please do.

*  *  *

Jeffrey Tucker is the author of the excellent new book 'Life After Lock-Down'

Tyler Durden Mon, 03/11/2024 - 23:40

Read More

Continue Reading

Government

CDC Warns Thousands Of Children Sent To ER After Taking Common Sleep Aid

CDC Warns Thousands Of Children Sent To ER After Taking Common Sleep Aid

Authored by Jack Phillips via The Epoch Times (emphasis ours),

A…

Published

on

CDC Warns Thousands Of Children Sent To ER After Taking Common Sleep Aid

Authored by Jack Phillips via The Epoch Times (emphasis ours),

A U.S. Centers for Disease Control (CDC) paper released Thursday found that thousands of young children have been taken to the emergency room over the past several years after taking the very common sleep-aid supplement melatonin.

The Centers for Disease Control and Prevention (CDC) headquarters in Atlanta, Georgia, on April 23, 2020. (Tami Chappell/AFP via Getty Images)

The agency said that melatonin, which can come in gummies that are meant for adults, was implicated in about 7 percent of all emergency room visits for young children and infants “for unsupervised medication ingestions,” adding that many incidents were linked to the ingestion of gummy formulations that were flavored. Those incidents occurred between the years 2019 and 2022.

Melatonin is a hormone produced by the human body to regulate its sleep cycle. Supplements, which are sold in a number of different formulas, are generally taken before falling asleep and are popular among people suffering from insomnia, jet lag, chronic pain, or other problems.

The supplement isn’t regulated by the U.S. Food and Drug Administration and does not require child-resistant packaging. However, a number of supplement companies include caps or lids that are difficult for children to open.

The CDC report said that a significant number of melatonin-ingestion cases among young children were due to the children opening bottles that had not been properly closed or were within their reach. Thursday’s report, the agency said, “highlights the importance of educating parents and other caregivers about keeping all medications and supplements (including gummies) out of children’s reach and sight,” including melatonin.

The approximately 11,000 emergency department visits for unsupervised melatonin ingestions by infants and young children during 2019–2022 highlight the importance of educating parents and other caregivers about keeping all medications and supplements (including gummies) out of children’s reach and sight.

The CDC notes that melatonin use among Americans has increased five-fold over the past 25 years or so. That has coincided with a 530 percent increase in poison center calls for melatonin exposures to children between 2012 and 2021, it said, as well as a 420 percent increase in emergency visits for unsupervised melatonin ingestion by young children or infants between 2009 and 2020.

Some health officials advise that children under the age of 3 should avoid taking melatonin unless a doctor says otherwise. Side effects include drowsiness, headaches, agitation, dizziness, and bed wetting.

Other symptoms of too much melatonin include nausea, diarrhea, joint pain, anxiety, and irritability. The supplement can also impact blood pressure.

However, there is no established threshold for a melatonin overdose, officials have said. Most adult melatonin supplements contain a maximum of 10 milligrams of melatonin per serving, and some contain less.

Many people can tolerate even relatively large doses of melatonin without significant harm, officials say. But there is no antidote for an overdose. In cases of a child accidentally ingesting melatonin, doctors often ask a reliable adult to monitor them at home.

Dr. Cora Collette Breuner, with the Seattle Children’s Hospital at the University of Washington, told CNN that parents should speak with a doctor before giving their children the supplement.

“I also tell families, this is not something your child should take forever. Nobody knows what the long-term effects of taking this is on your child’s growth and development,” she told the outlet. “Taking away blue-light-emitting smartphones, tablets, laptops, and television at least two hours before bed will keep melatonin production humming along, as will reading or listening to bedtime stories in a softly lit room, taking a warm bath, or doing light stretches.”

In 2022, researchers found that in 2021, U.S. poison control centers received more than 52,000 calls about children consuming worrisome amounts of the dietary supplement. That’s a six-fold increase from about a decade earlier. Most such calls are about young children who accidentally got into bottles of melatonin, some of which come in the form of gummies for kids, the report said.

Dr. Karima Lelak, an emergency physician at Children’s Hospital of Michigan and the lead author of the study published in 2022 by the CDC, found that in about 83 percent of those calls, the children did not show any symptoms.

However, other children had vomiting, altered breathing, or other symptoms. Over the 10 years studied, more than 4,000 children were hospitalized, five were put on machines to help them breathe, and two children under the age of two died. Most of the hospitalized children were teenagers, and many of those ingestions were thought to be suicide attempts.

Those researchers also suggested that COVID-19 lockdowns and virtual learning forced more children to be at home all day, meaning there were more opportunities for kids to access melatonin. Also, those restrictions may have caused sleep-disrupting stress and anxiety, leading more families to consider melatonin, they suggested.

The Associated Press contributed to this report.

Tyler Durden Mon, 03/11/2024 - 21:40

Read More

Continue Reading

International

Red Candle In The Wind

Red Candle In The Wind

By Benjamin PIcton of Rabobank

February non-farm payrolls superficially exceeded market expectations on Friday by…

Published

on

Red Candle In The Wind

By Benjamin PIcton of Rabobank

February non-farm payrolls superficially exceeded market expectations on Friday by printing at 275,000 against a consensus call of 200,000. We say superficially, because the downward revisions to prior months totalled 167,000 for December and January, taking the total change in employed persons well below the implied forecast, and helping the unemployment rate to pop two-ticks to 3.9%. The U6 underemployment rate also rose from 7.2% to 7.3%, while average hourly earnings growth fell to 0.2% m-o-m and average weekly hours worked languished at 34.3, equalling pre-pandemic lows.

Undeterred by the devil in the detail, the algos sprang into action once exchanges opened. Market darling NVIDIA hit a new intraday high of $974 before (presumably) the humans took over and sold the stock down more than 10% to close at $875.28. If our suspicions are correct that it was the AIs buying before the humans started selling (no doubt triggering trailing stops on the way down), the irony is not lost on us.

The 1-day chart for NVIDIA now makes for interesting viewing, because the red candle posted on Friday presents quite a strong bearish engulfing signal. Volume traded on the day was almost double the 15-day simple moving average, and similar price action is observable on the 1-day charts for both Intel and AMD. Regular readers will be aware that we have expressed incredulity in the past about the durability the AI thematic melt-up, so it will be interesting to see whether Friday’s sell off is just a profit-taking blip, or a genuine trend reversal.

AI equities aside, this week ought to be important for markets because the BTFP program expires today. That means that the Fed will no longer be loaning cash to the banking system in exchange for collateral pledged at-par. The KBW Regional Banking index has so far taken this in its stride and is trading 30% above the lows established during the mini banking crisis of this time last year, but the Fed’s liquidity facility was effectively an exercise in can-kicking that makes regional banks a sector of the market worth paying attention to in the weeks ahead. Even here in Sydney, regulators are warning of external risks posed to the banking sector from scheduled refinancing of commercial real estate loans following sharp falls in valuations.

Markets are sending signals in other sectors, too. Gold closed at a new record-high of $2178/oz on Friday after trading above $2200/oz briefly. Gold has been going ballistic since the Friday before last, posting gains even on days where 2-year Treasury yields have risen. Gold bugs are buying as real yields fall from the October highs and inflation breakevens creep higher. This is particularly interesting as gold ETFs have been recording net outflows; suggesting that price gains aren’t being driven by a retail pile-in. Are gold buyers now betting on a stagflationary outcome where the Fed cuts without inflation being anchored at the 2% target? The price action around the US CPI release tomorrow ought to be illuminating.

Leaving the day-to-day movements to one side, we are also seeing further signs of structural change at the macro level. The UK budget last week included a provision for the creation of a British ISA. That is, an Individual Savings Account that provides tax breaks to savers who invest their money in the stock of British companies. This follows moves last year to encourage pension funds to head up the risk curve by allocating 5% of their capital to unlisted investments.

As a Hail Mary option for a government cruising toward an electoral drubbing it’s a curious choice, but it’s worth highlighting as cash-strapped governments increasingly see private savings pools as a funding solution for their spending priorities.

Of course, the UK is not alone in making creeping moves towards financial repression. In contrast to announcements today of increased trade liberalisation, Australian Treasurer Jim Chalmers has in the recent past flagged his interest in tapping private pension savings to fund state spending priorities, including defence, public housing and renewable energy projects. Both the UK and Australia appear intent on finding ways to open up the lungs of their economies, but government wants more say in directing private capital flows for state goals.

So, how far is the blurring of the lines between free markets and state planning likely to go? Given the immense and varied budgetary (and security) pressures that governments are facing, could we see a re-up of WWII-era Victory bonds, where private investors are encouraged to do their patriotic duty by directly financing government at negative real rates?

That would really light a fire under the gold market.

Tyler Durden Mon, 03/11/2024 - 19:00

Read More

Continue Reading

Trending