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Yen Slumps on Cautious BOJ

Overview:  The market took a dovish message away from
the Bank of Japan and sent the dollar above JPY136, its best level since March
10 and spurred a…



Overview:  The market took a dovish message away from the Bank of Japan and sent the dollar above JPY136, its best level since March 10 and spurred a sharp rally in JGBs. Japanese equities led the rally among the Asia Pacific markets. Europe has not been able to follow suit. It disappointed with Q1 GDP (0.1% rather than 0.2%). The Stoxx 600 is of about 0.3%, leaving it off about 1.3% this week, its first weekly loss since the middle of March. US equity futures are softer too. Bonds are ending the week on a soft note. European benchmark yields are 6-9 bp lower. The 10-year US Treasury is off five basis points to 3.47% and the 10-year JGB yield is off 7 bp to about 0.38%.

The dollar is higher against all the G10 currencies. The yen is the weakest, off around 1.5% followed by the Norwegian krone, down about 1.1%. The Swiss franc is the most resilient with less than a 0.2% decline. Among emerging market currencies, central and eastern European currencies are weakest. On the week, the JP Morgan Emerging Market Currency Index is flat. The rising dollar is offset the decline in yields to weigh on gold. It is pinned near the lower end of its recent range below $1980. June WTI is stabilized after falling to almost $74 in the middle of the week. It rose above yesterday's high to reach $75.50, where it was sold again.

Asia Pacific

Governor Ueda led the Bank of Japan to a more flexible stance, but the net take away has been a dovish slant. It did remove guidance about expecting interest rates to “remain at their present or lower levels" and dropped a dated reference to closely monitoring the impact from the pandemic. This was seen as mostly "housekeeping."  A "broad-perspective review" of monetary policy was announced, as many expected, but it may take up to 18 months to complete. Ueda warned that policy changes were possible while the review taking place. The BOJ nudged up its CPI forecast for this fiscal year to 1.8% from 1.6%, and next year's was raised to 2.0% from 1.8%. The following year, introduced for the first time, is at 1.6%. This drives home the point that inflation is not expected to sustain the 2% target. The GDP forecast was trimmed to 1.4% this year from1.7%, while next year's projection was revised to 1.2% from 1.1%. An in fiscal year 2023 growth is estimated to be 1%. 

Separately, Japan reported an unexpected jump in the March unemployment (2.8% vs. 2.6%), the highest since June 2021. The job-to-applicant ratio slipped to 1.32 from 1.34. March retail sales rose 0.6%, twice as much as the median in Bloomberg's survey projected after surging 2.1% in February (as government subsidies kicked in). Industrial production rose by 0.8%, also twice what economists expected. It follows February's 4.6% gain as it continued to recover from the 5.3% collapse in January (lunar new year related). Lastly, Tokyo's April CPI, a good indicator of the national figures that are not due for several weeks, was stronger than expected. The headline rate rose to 3.5% from 3.3%. The market expected to have been steady. The core rate (excluding fresh food) was also expected to be unchanged but instead rose to 3.5% from 3.2%. The problem lurks beyond the subsides for gas and electricity and the yen's appreciation on a trade-weighted basis. Excluding fresh food and energy, Tokyo's underlying CPI accelerated to a new cyclical high of 3.8% from 3.4%. The median forecast in Bloomberg's survey was for a 3.5% increase. The takeaway: While the labor market softened, consumption (retail sales) and output (industrial production) were stronger than expected and Tokyo's CPI warned of strengthening price pressures. 

The seemingly dovish BOJ and not the economic data, drove the dollar sharply higher. It is pushing above JPY136 in the European morning after fraying the 20-day moving average near JPY133.50 in last couple of sessions and earlier today. There is little chart resistance ahead of JPY137.00, which also is where the 200-day moving average is found. Initial support is around JPY135.50, and JPY135, which had been resistance is now important support. The Australian dollar is posting an outside down day, trading on both sides of yesterday's range. A close below yesterday's low (~$0.6595) is needed to confirm the bearish pattern. The low for the year was set on March 10 near $0.6565. It is testing $0.6580 in the European morning, and there are options for A$880 mln at $0.6550 that expire today. Below there, the charts do not see much support ahead of $0.6400. Despite the greenback's firmer tone, it made little headway against the Chinese yuan. It is trading inside yesterday's narrow range (~CNY6.9110-CNY6.9325). If it were a less managed currency, we would think the upside beckons, though the markets are closed Monday-Wednesday next week. The PBOC set the dollar's reference rate at CNY6.9240. The median projection in Bloomberg's survey was CNY6.9236.


The eurozone reported its preliminary estimate of Q1 GDP and three large members published their April inflation figures ahead of the aggregate figures due on May 2. The eurozone economy expanded by 0.1% in Q1 23 after contracted by 0.1% in Q4 22. This was slightly disappointing, largely due to Germany. The region's biggest economy was flat, and the market expected a small expansion (0.2%). France matched expectations by expanding by 0.2%. Italy surprised on the upside, reporting 0.5% growth in Q1 after a 0.1% contraction in Q4 22. The market expected 0.2%. reported a 0.2% growth. The Spanish economy also beat expectations, with 0.5% growth instead of 0.3% and Q4 22 was revised to show 0.4% growth rather than 0.2%. Details are available with the next iteration. The median forecast in Bloomberg's monthly survey sees year-over-year growth this year at 0.6% this year. The ECB puts it at 1.0%. The IMF splits the difference with a 0.8% forecast.

Typically, the eurozone's preliminary estimate of CPI is given at the very end of the month, but due to a calendar quirk, it will not be reported until May 2. Still, Germany, France, and Spain have reported their numbers today. German states have reported, and the national figure looks unchanged at 7.8% or possibly slightly lower on the EU harmonized measure. If so, on a monthly basis, Germany's CPI rose 0.8% after two months of 1.0%-1.1% increases. In the first four months of the year, German inflation has risen at an annualized rate of over 10%. France's April CPI rose 0.7% for a year-over-year pace of 6.9% after 6.7% in March. At an annualized pace, it rose a little less than 10% in the Jan-April period. Spain's CPI rose 0.5% this month, but because prices fell by 0.3% in April 2022 (after a 3.9% surge in March), the year-over-year rate accelerated to 3.8% from 3.1%, which is a little less than expected. Spain's inflation rose by about 6.3% at an annualized rate so far this year.

The euro is trading heavier, but it has held above the week's low set Tuesday near $1.0965, which is where the 20-day moving average is found today. It has not traded below its since mid-March and a break of it would provide more evidence that the upside momentum is fading. The euro settled yesterday near $1.1030 and a lower close today would be the third loss of the week. It is the most in any week since the end of February. If the 20-day moving average does break, the first target may be around $1.0875. Sterling is trading quieter. It briefly traded a little above yesterday's $1.2500 high but held below the week's high (~$1.2515). On the downside, it is holding above yesterday's low (~$1.2435). The week's low was slightly below $1.2390 and key support is seen by $1.2365. Many European centers are closed Monday.


The US Q1 GDP looked soft at 1.1% annualized. This was in line with the Atlanta's Fed's GDP tracker and the latest forecasts by economists are the recent batch of data and benchmark retail sales and inventory revisions. However, below the surface there is underlying resilience. Final sales to domestic private parties, which excludes inventories, trade, and government, rose by 2.9%. That is the largest gain since Q4 21. Inventories alone were a 2.26% drag on growth. Business investment slowed. This reflected a fall in equipment purchases and the weakest intellectual property expenditures in almost three years. Consumption was strong, rising 3.7% at annualized pace. The strongest quarter last year was a 2.3% rise in Q3. The deflators were also on the strong side. The overall deflator was up 4.0% from 3.9%. Economists (median in Bloomberg's survey) expected slippage to 3.7%. The core PCE deflator accelerated at 4.9% from 4.4%, the strongest gain since Q1 22.

Yesterday's data, which included the first decline in weekly jobless claims in three weeks, boosted the market's confidence of a quarter-point rate hike by the Fed next week. The Fed funds futures imply almost a 90% confidence. That hike would bring the upper end of the target rate to 5.25%. The Fed funds futures strip implies a year-end effective rate of 4.50%. That continues to seem improbable at best. In fact, another rate hike after next week's move seems more likely to us than the three quarter-point cuts that are discounted at the Fed's last five meetings of the year. 

March's personal income and consumption data are already in yesterday's GDP figures. The deflators may draw some attention but are really old news. The headline rate likely slowed to 4.1%-4.2% from 5.0% in February. Making some conservative assumptions, it can fall another percentage point in Q2. However, then it will become more difficult for substantial improvement in H2. As with the CPI, the core PCE deflator is likely to be above the headline rate. Some see this as a late cycle indicator. But there is also something more troubling about it. The reason that the core measure is watched so closely is not because food and energy are volatile. Nor is it because food and energy are often driven by supply rather than demand. These are among the explanations frequently touted by the popular press. The reason is that over time, the headline rate converges to the core rate, not the other way around. The core is the signal. The fact that is above the headline rate is disconcerting.

Canada reports February GDP figures. After expanding by 0.5% in January, activity is expected to have expanded by 0.2% in February. Bloomberg's latest monthly survey found a median forecast for Q1 GDP of 1.6% annualized which assumes a weak March. The median looks for the economy to stagnate here in Q2 before contracting in Q3. The median view was no change in the policy rate (4.5%) before the end of the year, while the swaps market almost an 80% chance of a cut. Mexico surprised yesterday with a $1.17 bln March trade surplus, with record exports. Economists (median in Bloomberg's survey) anticipated a $900 mln deficit. Exports are up 3.2% from a year ago, and imports rose 1.1%. Today, Mexico reports Q1 GDP. The median forecast is for 0.8% quarter-over-quarter growth after 0.5% in Q4 22. Last year, the average quarterly expansion was 0.9%. Economists in Bloomberg's monthly survey sees the Mexican economy growing by 1.5% this year, half of last year's pace. The IMF is a little more optimistic at 1.8%.

After nesting for the past two sessions, the US dollar is taking another leg higher against the Canadian dollar today. It approached CAD1.3670, a new high for the month. With today's advance, the greenback has surpassed the (61.8%) retracement of the slide from the March 10 high (~CAD1.3860) that had capped it in recent days (~CAD1.3650). There is little on the charts before CAD1.3700-30. That said, the intraday momentum indicators are over bought. Initial support will likely be found in the CAD1.3440-50 area. The US dollar reversed lower against the Mexican peso yesterday. After making a new two-week high (~MXN18.1970), the dollar was sold a little through MXN18.02. The greenback has steadied today with firmer bias that saw it rise to almost MXN18.11. While the peso continues to be resilient, it may snap a three-month gain. Last month, the US dollar settled near MXN18.0460.



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Zelenskyy, Trudeau Honor Actual 3rd Reich Nazi With Standing Ovation

Zelenskyy, Trudeau Honor Actual 3rd Reich Nazi With Standing Ovation

Canadian Prime Minister Justin Trudeau and Ukrainian President Volodomyr…



Zelenskyy, Trudeau Honor Actual 3rd Reich Nazi With Standing Ovation

Canadian Prime Minister Justin Trudeau and Ukrainian President Volodomyr Zelenskyy - who commands a battalion of neo-Nazis - honored an actual WWII Nazi with a standing ovation on Friday.

Yaroslav Hunka, 98, fought in a Third Reich military formation accused of war crimes.

On Friday, he was honored during a session of Canadian parliament in which Zelenskyy addressed the lawmakers to thank them for their support since Russia invaded Ukraine, saying that Canada has always been on "the bright side of history."

Hunka stood for standing ovation and saluted, according to Canadian television.

According to the Associated Press, Hunka "fought with the First Ukrainian Division in World War II before later immigrating to Canada," another name for the 14th Waffen Grenadier Division of the SS, the Nazi party's military wing, also known as the SS Galichina.


Formed in 1943, SS Galichina was comprised of Ukrainians from the Galicia region in the western part of the country. It was armed and trained by Hitler's Nazis and commanded by German officers. The next year, the division received a visit from SS head Heinrich Himmler, who had high praise for the unit's effectiveness at slaughtering Poles.

The SS Galichina subunits were responsible for the Huta Pieniacka massacre, in which they burned 500 to 1,000 Polish villagers alive.

One of several photos on a blog by an SS Galichina veterans’ group that shows Yaroslav Hunka, the Ukrainian immigrant honored by the Canadian Parliament during a visit by Ukrainian President Volodymyr Zelenskyy. Hunka is in the front row, middle.

In fact, during the Nuremberg Trials, the Waffen-SS was declared to be a criminal organization responsible for mass atrocities.

Following the war, thousands of SS Galichina veterans were allowed to leave Germany and resettle in the West - with around 2,000 moving to Canada. By that time, they were known as the First Ukrainian Division.

A blog by an association of its veterans, called “Combatant News” in Ukrainian, includes an autobiographical entry by a Yaroslav Hunka that says he volunteered to join the division in 1943 and several photographs of him during the war. The captions say the pictures show Hunka during SS artillery training in Munich in December 1943 and in Neuhammer (now Świętoszów), Poland, the site of Himmler’s visit. 

In posts to the blog dated 2011 and 2010, Hunka describes 1941 to 1943 as the happiest years of his life and compares the veterans of his unit, who were scattered across the world, to Jews. -Forward

So, the same leftists who called Trump supporters Nazis for years are now honoring an actual Nazi - while Germany has notably locked up several concentration camp guards in their 90s for their involvement in Nazi activities.

University of Ottawa Political Scientist Ivan Katchanovski lays it out...

Meanwhile, here's Ukraine's Azov Battalion of neo-Nazis that everyone with a Ukraine flag in their bio is supporting...

Odd, they don't look like Trump supporters.

Maybe these Nazis can shed some light? Careful, "X" thinks this is sensitive material (that might redpill people?).


Tyler Durden Sun, 09/24/2023 - 14:25

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Kerry Acknowledges Need For Nuclear Power As Climate Diplomacy Dominates New York City

Kerry Acknowledges Need For Nuclear Power As Climate Diplomacy Dominates New York City

Authored by Nathan Worcester via The Epoch Times,




Kerry Acknowledges Need For Nuclear Power As Climate Diplomacy Dominates New York City

Authored by Nathan Worcester via The Epoch Times,

While addressing an Atlantic Council meeting on nuclear energy, U.S. Climate Envoy John Kerry made it clear he doesn't think wind and solar alone will be sufficient to meet global energy needs while achieving policy plans to rapidly scale back the use of hydrocarbons in the name of addressing climate change risks as outlined by the United Nations.

"You will have to have some component of nuclear—yet to be determined how big or where it'll go. That's going to be a market-based reaction," said Mr. Kerry, who served as a Democratic senator from Massachusetts before serving as Secretary of State under former President Barack Obama.

The 2004 Democratic candidate for president said that "most scientists will tell you" the goal of Net Zero 2050 cannot be achieved "unless we have a pot, a mixture of energy approaches."

"Clearly, we're going to need nuclear to be a part of that," he said on Monday.

Mr. Kerry's pro-nuclear remarks come as climate-related diplomacy and other climate-themed events overtake New York City.

Over the weekend, protesters demonstrated against fossil fuels in the streets of New York City, with Rep. Alexandria Ocasio Cortez (D-N.Y.) among the participants.

Mr. Kerry voiced support for those demonstrators in his speech to the Atlantic Council.

In addition, the U.N. will hold its inaugural Climate Ambition Summit on Sept. 20.

U.N. statement on the event states it "will showcase leaders who are 'first movers and doers' from government, business, finance, local authorities, and civil society who have credible actions, policies and plans to keep the 1.5°C degree goal of the Paris Agreement alive and deliver climate justice to those on the front lines of the climate crisis."

The Climate Ambition Summit comes ahead of the next annual United Nations Climate Change Conference, which will begin in late November. It's taking place in Dubai, United Arab Emirates.

Even as he praised climate protesters, Mr. Kerry noted that a previous generation of environmental activists had fought hard against nuclear power, now seen as a pragmatic solution by many climate hawks.

"In my state of Massachusetts, where there was a huge fight over Seabrook Nuclear Plant in New Hampshire, we now happily get about 20 percent of all our energy from Seabrook, and nobody's complaining—maybe about the prices a little bit, because that's normal in today's world," he said.

A view of the Seabrook Nuclear Power Plant in Seabrook, N.H., on March 21, 2011. (Emmanuel Dunand/AFP via Getty Images)

"The United States is now therefore committed, based on experience and based on reality, to trying to accelerate the deployment of nuclear energy, as part of the Biden program," he added.

The diplomat, who came under fire from Republicans earlier this summer for his unwillingness to share details of his staff at a Congressional hearing, commented positively on Bill Gates' TerraPower, which plans to build the next-generation Natrium nuclear reactor in Wyoming.

He also drew attention to his recent trip to Romania, where he visited a control room simulator for a small modular reactor developed by the American firm NuScale.

Mr. Kerry took issue with the continued construction of unabated coal-fired power plants and with the existence of subsidies for fossil fuels.

An International Monetary Fund (IMF) study identified $1.3 trillion in "explicit" subsidies for fossil fuels in 2022, a stark increase from $500 billion in 2020. Such subsidies are ascribed to fossil fuel prices when they are lower than they would otherwise be if producers fully bore supply costs. The IMF authors attributed a substantial proportion of the increase to "temporary price support measures," in line with surging fossil fuel prices during that period.

Whitehouse Touts ADVANCE Act

Mr. Kerry wasn't the only high-level Democratic politician who addressed the Atlanticist forum on Monday.

In pre-recorded remarks, Sen. Sheldon Whitehouse (D-R.I.) touted the bipartisan, nuclear power-related ADVANCE Act, which passed the Senate as part of the National Defense Authorization Act (NDAA) in July. The bill has not moved ahead in the House.

"Our legislation would strengthen the Nuclear Regulatory Commission's ability to safely and efficiently review the expected influx of applications and prepare them to license HALEU [high-assay low-enriched uranium] fuels," the lawmaker said.

Russia currently dominates the production of HALEU fuels, which are key for most next-generation nuclear reactors. Uncertainty about Russian supplies of HALEU has been a worry for TerraPower and a central motivation for the Nuclear Fuel Security Act, another successful NDAA amendment.

"We spend nearly $1 billion each year on Russian uranium. Russia uses these revenues to fund its invasion of Ukraine," Sen. John Barrasso (R-Wyo.) said in the Senate as the measure was under consideration.

Sen. John Barrasso (R-Wyo.) in Washington on Dec. 1, 2020. (Bill O'Leary-Pool/Getty Images)

'Decarbonize Beyond Electricity'

Other speakers at the event expanded on how nuclear energy could be used to cut carbon emissions.

"We need to decarbonize beyond electricity," said John Wagner, director of the Idaho National Laboratory. He cited industrial heating and hydrogen production as examples of such applications for nuclear energy.

Sama Bilbao y León, director general of the World Nuclear Association, concurred.

"Yes, we need to electrify as much as we can of our economy, but it is not going to be possible to electrify everything," she said.

Ben Pickett of Nucor Corporation, which operates mills that recycle scrap steel using electric arc furnaces, explained that his company's operations require "billions and billions of kilowatt hours per year."

Earlier this year, Nucor signed a memorandum of understanding with NuScale Power. The latter could potentially develop small modular reactors for use in conjunction with Nucor's steel production facilities.

"We've got customers now that are demanding much cleaner steels," Mr. Pickett said.

He conceded that the idea of running steel production on advanced nuclear has met with a "mixed" reaction in his industry.

Tyler Durden Sun, 09/24/2023 - 15:00

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Zelenskyy Asks Spirit Cooker Marina Abramovic To Be Ambassador For Ukraine, Help ‘Rebuild Schools’

Zelenskyy Asks Spirit Cooker Marina Abramovic To Be Ambassador For Ukraine, Help ‘Rebuild Schools’

Authored by Chris Menahan via Information…



Zelenskyy Asks Spirit Cooker Marina Abramovic To Be Ambassador For Ukraine, Help 'Rebuild Schools'

Authored by Chris Menahan via Information Liberation (emphasis ours),

Ukrainian president Volodymyr Zelensky is recruiting spirit cooker Marina Abramovic to serve as an ambassador for Ukraine and help "rebuild schools."

From The Telegraph, "Zelensky asks Marina Abramovic to be ambassador for Ukraine":

Volodymyr Zelensky has asked Marina Abramovic, the performance artist, to be an ambassador for Ukraine.

‌Ms Abramovic, a fierce critic of Vladimir Putin's illegal invasion, said the Ukrainian president had asked for her help in rebuilding schools.

[...] ‌"I have been invited by Zelensky to be an ambassador of Ukraine, to help the children affected by rebuilding schools and such."

‌She added: "I have also been invited to be a board member of the Babyn Yar organisation to continue to protect the memorial."

‌The Holocaust memorial centre to Jews murdered by Nazis in Ukraine was damaged by Russian missile attacks in March last year.

The "bombing" of the Babyn Yar memorial was confirmed to be a lie last year.

‌Ms Abramovic installed her work Crystal Wall of Crying at the memorial centre in Kyiv four months before Russia invaded Ukraine in February 2022.

‌The wall, 40 metres long and three metres high, is made of coal and has large quartz crystals sticking out of it. Visitors can touch the installation, which mirrors the western wall in Jerusalem.

Zelensky said last year his goal is to turn Ukraine into a "Greater Israel."

In Dec 2022, Zelensky made a deal with BlackRock's Larry Fink to help "rebuild" Ukraine after the war and just last week the Biden regime announced Penny Pritzker would become their Special Representative for "rebuilding" Ukraine.

Meanwhile, Abramovic's pals, the Clintons, are also salivating over helping to 'rebuild' Ukraine.

Tyler Durden Sun, 09/24/2023 - 16:10

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