Month: February 2023

After Philly’s Fed business outlook survey collapsed, the string of regional ‘soft data’ has continued to weaken.

Chicago’s PMI disappointed, printing 43.6 (weakest since Nov), down from 44.3, and below expectations of a rebound to 45.5 with employment falling at a faster rate, new orders contracting, production’s slowdown accelerating, and prices still rising.

This is the 6th straight month of contraction (sub-50) for the Chicago PMI.

The Richmond Fed Manufacturing survey notably missed expectations, tumbling from -11 to -16 (vs expectations of a rebound to -5) with shipments tumbling, new orders deep in contraction, number of employees and wages weakened, and capacity utilization weakening.

Additionally prices paid were flat while prices received slowed, signaling margin pressures and/or an inability pass on costs to consumers. We do note that Richmond Fed Services did pick up in Feb but remains in contraction for the 12th straight month.

Finally, The Dallas Fed Services Sector outlook improved modestly but remains in contraction for a 10th straight month.

Perceptions of broader business conditions continued to worsen in January, though pessimism waned. The general business activity index posted an eighth consecutive negative reading but moved up six points to -15.0. The company outlook index also improved from -11.0 to -8.3, while the outlook uncertainty index remained elevated at 20.0, above its series average of 13.4.

Price and wage pressures remained elevated, though there was some moderation in input price growth.

Respondents had some interesting things to say…

• “The constant speculation of a recession is becoming a psychologically self-fulfilling prophecy.”

• “The labor market is still very tight.”

• “With the rising interest rates, cost of goods and inflation, our business has experienced a fall in revenue.”

• “Interest rates and inflation are killing us.”

• “The feckless leadership from the White House, the damaging energy policies and the electrical vehicle push are causing unneeded chaos in all parts of the economy. What will happen to the automobile manufacturers that have totally remade themselves if electrical vehicles are proven not to be the answer? And what about all the battery-making facilities that won’t be needed?”

• “[We are] not really seeing any business activity pickup.”

• “All our costs have increased significantly. Yet, selling prices have dropped significantly.”

• “Retail activity is slowing at an accelerated pace.”

Mission Accomplished, Mr.Powell?

By Peter Tchir, head of strategy at Academy Securities

I was created or “born” this morning! I will expire or “die” at 4:00pm ET today. My lifespan isn’t quite as long as your mayfly (and they’ve been following this schedule for 100 million years), so I can’t complain. As opposed to the mayfly, it’s unlikely that procreation is in my future (but one can dream), and I still have a lot to do in my 8 hours!

I was lucky to be born as the February 27, 401 SPY Call.

It is too early for trading to begin, but S&P futures are higher and SPY is trading around 398.5 in the pre-market, up from Friday’s close of 396.4. Additionally, I am hearing throughout the ward that Mondays are typically good for calls! I’m excited because I should be very popular today!

Maybe that is why one of my siblings (the SPY 390 Put) looks so despondent. But, I think I’d prefer spending the time ahead of the open (when they unleash us on the world) with 390P (I’ll use our code names, since saying the expiration date over and over is redundant, and quite frankly, a bit depressing). Anyways, let’s move on.

BTW, I’m already annoyed by 400C. Literally it is out there strutting around knowing that it will probably be the most popular one of us right out of the gates. It’s almost embarrassing, at least to me, that there is literally an entourage of 0DTE hanging around 400C sharing in its spotlight!

The waiting for the open is getting a bit tedious!

Also, I’ve got to admit, I’m getting a little freaked out by some of the noises coming from the next room. We don’t know for sure, but supposedly there are some things called “weekly” options being born over there! I’m more scared than jealous because who wants to live a week in obscurity, which most of them will do, when you can have it all in one glorious day! I’m really getting excited for my potential today!

There are rumblings that something called a TSLA March 3rd 200 Call is a real bully! Pushing and shoving the rest of the weekly’s out of the way along with their little gang of 200 Puts/210 Calls (which apparently hang out in every new generation). The only group over there that even seems willing to stand up to the TSLA gang, at least consistently, is the VIX Call group. I’m not even sure what a VIX Call is or does (it isn’t a stock ticker that I know of), but supposedly it could provide some stiff competition for me – though mostly on down days and today looks like an up day!

Ding, ding, ding!

There is the bell, we are off and running!

Hmmm, a disappointing start for me. Seeing a bunch of puts crop up in the “most active” section to start the day. 390P is actually the second most active contract out there. Wow, good thing I was friendly before the open! It is also very early and I am seeing things like XLE and even HYG high on the list. Whatever you think about the high yield bond market, HYG is NOT likely to stay that active (especially since it contains longer-dated options) and the 0DTE family will rule the day!

Take that!

I’m up to the number 10 most traded! Yeehaw, I’m POPULAR!

Yeah, yeah, “Mr. Fancy Pants” 400C is number one, but what can I do about that! You know what seems crazy is that option, which started this morning around 50 cents, is already worth $1.3! What a return! And open interest is only 13,500 contracts compared to a traded volume of 77,000. On Bloomberg you can find vega, delta, and other “Greeks” for this option, which is cute, but largely irrelevant! Theta, or “time decay” is 0, since we expire today! Kind of funny to see N.A. beside such an important option metric, but we are more like betting chits than options!

Ugh, don’t look now, but looks like someone just bought a lot of 0DTE puts!

The 390P is now trading at 1 cent, down from 23 cents! But, let’s be honest, who is buying or selling that here? Yet it is now the 2nd most active contract.

Are the put buyers going to drag down the market or is an upside gamma squeeze still in the cards?

It’s 11am ET, right around the time everyone gets excited about how the market will behave when “Europe goes home”.
The top 8 options traded, by volume, are all SPY Puts and Calls. I’m sitting at number 4, and anything could happen. The “leaderboard” is 399P, 400P, 400C (it would be better for markets if this was leading, but I really don’t like this 0DTE for some reason – must have been the pre-market arrogance), 401C (yours truly!), 402C, 398P, 403C, and 397P.

Yawn.

Things have stagnated (bouncing back and forth) so let’s do a “family portrait”!

My nemesis is at the top of the leader board, but I’m 5th and am convinced that I can make a run for it. If anything, I’d watch that sneaky little 401C because something tells me that one is a “gamer” and could make a strong charge at the end. Also, poor little 390P has all but disappeared.

Personally, I’m a little miffed that AMC, QQQ, and a couple of “tomorrow options” are in there! Seriously, “tomorrow” options, are they just showing off? Ooh, look at me, you are gone today, but I’ll still be here tomorrow and might even move overnight! Ugh, such jerks.

Rumor Has It

Apparently, there are a lot of questions about us and our impact.

• Did it make the spike starting at 9:45am ET bigger than it should have been?

• Did we help drag the market down after that spike (whether or not the spike had anything to do with us)?

• Are we leading the market? Are we following the market? Are we coinciding with it?

• Do we drive stock market volumes?

The answer to any and all of these questions seems to be yes, no, or maybe, depending on who you talk to (except for the volume question which seems to be an unequivocal yes). Maybe if we stuck around for a few days, we’d have a better sense, but that defeats the purpose!

I’ll let you in on a little secret. There is a club right next door that plays Sweet Dreams on a perma-loop:

Some of them want to use you.

Some of them want to get used by you.

Some of them want to abuse you.

Some of them want to be abused.

Maybe that should be our theme song? Or maybe our “walk on” song! Right as the bell rings and we start our lives, they should play that chorus! If nothing else, it should add some intrigue to our lives!

Fade into the Close?

Just a few minutes ago it looked like the 3pm ET ramp was in play. Now I fade into the close?

Poof I’m Gone

Well, looks like I (and most of my brothers and sisters) expired worthless, as usual.

Have no fear, an entire new clan of 0DTE will be created tomorrow, and we can do it all again

By Michael Every of Rabobank

There are only a few good Marxist jokes: that he had a sister called Onya who invented the starting pistol; that he didn’t like Earl Grey because all proper tea is theft; that Liverpool’s defending against Real Madrid had him smiling in his grave because it was so classless; and that Marx jokes are only funny if everyone gets them. (Get it?)

Not so funny is the US culture war over ‘neo-Marxism’ which we will hear more about as the 2024 Republican candidates emerge. This has market implications as big corporations, big tech, big banks, big universities, and Mickey Mouse are all dragged in.

Not funny either is the first day of the new House Select Committee on Strategic Competition between the United States and the Chinese Communist Party. The 7pm D.C. hearing’s witnesses today include former Trump national security adviser H.R. McMaster; former Trump deputy national security adviser Matt Pottinger; the secretary to a prominent Chinese dissident; and the president of the Alliance for American Manufacturing. Expect to hear, “Are you now or have you ever been doing business with China?” The temperature was not helped by the US saying Covid-19 escaped from a lab (remember Covid?) The risk of a ban on TikTok still lingers, as the US government forces its removal from official phones, as does Canada.

That said, Politico is suggesting President Biden will walk back planned aggressive actions on US capital controls vis-à-vis China and technology: instead of a blanket ban, he may force American businesses to register what they are doing. That will infuriate bipartisan Congressional China hawks, who might respond with their own legislation. However, perhaps that executive order isn’t as ineffective as it sounds against a morally outraged D.C. backdrop: as an analogy, if the government made you officially register to use pornography, might its usage decline?

Meanwhile, China’s 14th National People’s Congress kicks off this weekend. It’s flagged to see a new Financial Work Commission to centralise CCP control of banking, securities, and insurance, and a new Internal Affairs Commission to centralise CCP control of public security and counterintelligence. All Wall Street-friendly stuff, apparently, and even if hedge funds are not buying it, Xinhua says, ‘More US, China financial cooperation expected by industry insiders’. Expect them to be hauled before Congress if so. More so, as Ernst and Young in Beijing are told to wear CCP pin.

Globally, there is huge focus on labor vs. capital, the sine qua non of a real Marxist view of the world. Elon Musk, anti-Marxist in the culture war, is now the world’s richest man again, says Bloomberg. However, that reflects the collapse in his rivals’ wealth rather than any new capital accumulation, or rather *fictitious* capital accumulation, on his part. Indeed, markets remain nervous about low unemployment and higher rates making their fictional wealth more science fictional. Yesterday’s Financial Times headline that ‘US companies say it is easier to hire despite low jobless rate’ is the first that suggests we might be able to get rid of both Marx’s ‘reserve army of labor’ and high wage inflation. Crack open the champagne if so, oh bourgeois brothers!

Then again, the 8.1% m-o-m rise in US pending home sales speaks to asset price inflation, and a wealth effect, and more consumer spending on services, and so high inflation for longer, and so higher rates for longer; and it would also have grabbed the eye of Treasury Secretary Yellen too if she wasn’t in Kyiv talking to President Zelenskiy.

Worse, Japanese retail sales were +1.9% m-o-m in January vs. 0.4% expected, and 6.3% y-o-y, well ahead of inflation; and Aussie retail sales were also +1.9% m-o-m vs. 1.5% consensus, with takeaway food/restaurant/café spending +26% y-o-y, department store sales +17%, and clothing and footwear +17.5%. Somebody in central banking needs to crush those proletarians’ spirits pronto!

Given the incredibly important and political-economy nature of labour vs. capital, one has to grant old-school Marxists their ability to think about such issues seriously. Just look at these recent tweets from @NathanTankus: “If you are a Post-Keynesian you should not be reasoning from ex post profits to sales ratios to market power. I don’t care what Kalecki said about the “degree of monopoly”, the profits equation tells us these must vary economy wide independently of pricing decisions. In fact, this is especially frustrating because there’s a very strong argument to be made that Post-Keynesian economics was **founded** on clarifying the logical flaws with such reasoning in Alfred Eichner’s correspondence with Joan Robinson. Eichner clarified that the target profit margin (or “corporate levy”) involved in setting prices is an ex ante propensity to save while Joan Robinson emphasized the Kalecki profits equation determining ex post profit margins. Learn your history people!!” Unlike neo-Marxist babble, and babble about neo-Marxism, there are some important arguments there markets would benefit from grasping.

By contrast, most market commentary on labour vs. capital is so shallow it doesn’t even know it’s making a Marxist argument as the reason why wage growth stalls, inflation falls, long bonds rally, and stock and stonks soar: ‘Things just work out the way that works for markets’. Well, the House Select Committee on Strategic Competition between the United States and the Chinese Communist Party might have something to say about that. So would Marx. So would the Fed, which might get things to where market commentators want – but the very hard way.

It also appears some Marxists do have a sense of humor. I don’t mean Mark Thomas in the UK, or Zero Mostel in the US (go watch the original ‘The Producers’ and the Cohen brothers’ ‘Hail, Caesar!’), but rather ‘A Marxist guide to investing in the American stock market’ by Alex Lo. He shares a few “salient points about American capitalism and its ill-effects on the rest of society, perhaps the world at large. And it’s in those areas of dysfunction, malice, extreme inequality, and violence where profit opportunities exist.” You don’t have to agree, but it’s more intelligent than ‘An American guide to investing in the Marxist Chinese stock market’. Indeed, the joke that a socialist, a nihilist, and Marxist all walk into a bar, and the owner says, “Sorry, you have to be over 21 to be served here,” inverts the core stupidity of the two camps in some key respects.

Meanwhile, we just got an environmental crack-down on output at the Chinese ‘lithium capital’ of Yichun, with the price of that green metal jumping as 8-13% of global supply is halted: remember how supply chains were healing? We also saw Hong Kong’s exports dropped the most in 70 years (-36.7% y-o-y,) with imports -30.2%: remember how China was reopening? CNY is also heading back towards 7: remember when that rally was supposed to have further to run ‘because weak dollar’?

More positively, UK PM Sunak won his own culture war, and the EU has won its war against its lack of common sense, to both be able to strike a compromise deal over Northern Ireland creating a new ‘green lane’ for traders: “The sausages must flow!” – and now can, along with pork pies, Cornish pasties, and medicines, etc. That is genuinely good supply-chain news, even if the reasons for it happening are domestic political-economy (i.e., the weak UK and Tory positions) and international political-economy (i.e., the weak UK and EU positions).

To conclude, on multiple fronts, it’s time to mark to Marxist (again).

Analysts expected The Conference Board’s Confidence survey to improve marginally in February with the present situation holding remarkably strong given the chaos seen everywhere else in the US economy. The actual print disappointed significantly (102.9 vs 108.5 exp), hurt by a big drop in Expectations (from a revised 76.0 to 69.7) while the Present Situation continued to rise (from 151.1 to 152.8). The Present Situation is at the highest since April 2022…

Source: Bloomberg

The Conference Board’s gauge of one-year inflation expectations tumbled (after a rebound in January) to its lowest since April 2021…

Source: Bloomberg

Additionally, buying plans are tumbling…

The Conference Board’s sentiment remains notably decoupled from UMich’s sentiment measure…

Finally, the Conference Board’s measure of labor market tightness improved for the third month in a row (more jobs plentiful vs hard to get) in February…

Source: Bloomberg

That’s not what Mr.Powell wants to see.

By Tsvetana Paraskova of OilPrice.com

Chevron will raise its targeted annual share buyback rate to $17.5 billion, up from $15 billion, as it looks to grow shareholder distribution, the U.S. supermajor said on Tuesday.

High-return production growth supports growing shareholder distributions, Chevron said at its annual investor meeting today. At $60 a barrel Brent price, the company expects its annual free cash flow to grow by more than 10%. It is raising its share buyback guidance range to $10 billion to $20 billion per year and will raise its targeted annual share buyback rate to $17.5 billion starting in the second quarter.

In January, Chevron’s Board authorized a new $75 billion share repurchase program without a fixed expiration date, which immediately drew criticism from the White House.

White House Assistant Press Secretary Abdullah Hasan said, commenting on the news, “For a company that claimed not too long ago that it was ‘working hard’ to increase oil production, handing out $75 billion to executives and wealthy shareholders sure is an odd way to show it.”

[ZH: As a reminder, no lesser mortal than Warren Buffett recently opined that “when you are told that all repurchases are harmful to shareholders or to the country, or particularly beneficial to CEOs, you are listening to either an economic illiterate or a silver-tongued demagogue (characters that are not mutually exclusive).“]

In late January, Chevron reported its highest annual profit ever as its adjusted earnings for last year more than doubled from 2021 to hit $36.5 billion on the back of higher oil and gas prices and record U.S. production.

Chevron, the first of Big Oil to report fourth-quarter and full-year 2022 profits this earnings season, said that its 2022 adjusted earnings surged to $36.5 billion from earnings of $15.6 billion for 2021. Apart from record earnings, Chevron booked record annual cash flow from operations, at $49.6 billion, and free cash flow of $37.6 billion in 2022. The U.S. supermajor also saw its annual U.S. oil and gas production hit a record high.

Commenting on today’s announcement of increased annual buyback rates, Chevron’s CFO Pierre Breber said, “We have the capital discipline and balance sheet strength to offer a differentiated value proposition.”

“We’re winning back investors with consistent and growing cash returned to shareholders across the commodity price cycle.”  

Authored by Lance Roberts via RealInvestmentAdvice.com,

“Profit margins are probably the most mean-reverting series in finance. And if profit margins do not mean-revert, then something has gone badly wrong with capitalism.” – Jeremy Grantham

While there are certainly many complaints that “capitalism” is broken, such is not the case. Yes, there are problems with economic inequalities, the majority of which can be directly traced to monetary and fiscal policies and a rise in “corporatism.” However, that is a discussion for another article.

In the economy today, capitalism is alive and well. The reason we know this is due to both the surge in inflation and corporate profitability since 2020. If “capitalism” was broken, as the economy was flooded with $5 Trillion in fiscal stimulus, inflation would not have resulted. Such was a point previously discussed in“Corporations Are Causing Inflation.”To wit:

“The following economic illustration shows such taught in every ‘Econ 101’ class. Unsurprisingly, inflation is the consequence if supply is restricted and demand increases by providing ‘stimulus’ checks.”

With the economy shut down and an inorganic surge in demand due to “free money,” the selling prices of a restricted supply of goods rose. The basic economic function of supply and demand proves capitalism is functioning properly. Furthermore, as shown, corporate profits surged with labor costs greatly reduced due to the shutdown and higher prices due to artificially stimulated demand.

“Notably, this has nothing to do with giant corporations taking advantage of consumers. It is just the economic consequence of ‘too much money chasing too few goods.”’ – RIA

Lastly, if “capitalism was broken,” as many suggest, stock market prices would not have chased higher corporate profits. In a capitalistic market environment, investors should place a higher valuation on companies with increased profits. Such is precisely what we saw in 2020 and 2021 as investors began to overpay for current profits. As is always the case, “greed” is a byproduct of capitalism.

However, corporate profits must also fall if capitalism has not become broken.

What Are You Going To Do For Me Now

Let’s revisit how we got that massive surge in corporate profits.

1. Shut down the economy leading to a massive surge in unemployment.

2. Start sending $5 Trillion in monetary stimulus directly to households.

3. Have the Federal Reserve cut interest rates to zero.

4. Begin the most aggressive Quantitative Easing program in history

5. Put moratoriums on various debt obligations giving households more discretionary savings to spend.

Not surprisingly, with labor costs sharply reduced and households flush with cash to spend and nothing else to do, combined with an inventory shortfall to meet demand, the result was a sharp increase in profitability. The data from the NFIB small business survey confirms that as labor costs continue to rise, corporate profits will fall.

“This points to economy-wide profit margins continuing to fall – potentially quite sharply – through the year.” – Simon White from Bloomberg

So, suppose the combination of a shuttered economy, no supply, and massive rounds of fiscal stimulus got us here. What is going to be the catalyst to support record profits in the future?

Over the next few years, the environment looks markedly different than in the past.

1. The economy is returning to a slow growth environment with a risk of recession.

2. Inflation is falling, meaning less pricing power for corporations.

3. No artificial stimulus to support demand.

4. Over the last two years, the pull forward of consumption will now drag on future demand.

5. Interest rates are substantially higher impacting consumption.

6. Consumers have sharply reduced savings and higher debt.

7. Previous inventory droughts are now surpluses.

If you agree with that premise, you must agree that “capitalism HAS NOT become broken.” Therefore, corporate profits, and by extension earnings, must revert to accommodate slower economic growth. The current near-record deviation of corporate earnings from the long-term exponential growth trend remains problematic for bullish investors currently.

Capitalism Remains Detached

It is certainly understandable why people think capitalism has become broken. They feel unfairly treated as the labor providers to the capital providers. The chart below of profits to wages makes the argument.

However, the very definition of capitalism is that chart:

“Capitalism is an economic system in which private individuals or businesses own capital goods. At the same time, business owners (capitalists) employ workers (labor) who only receive wages; labor does not own the means of production but only uses them on behalf of the owners of capital.” – Investopedia

In other words, if you are feeling slighted by the current economy, then you have three choices:

1. Be a laborer, or

2. Become a provider of the means of production, or

3. Invest in public companies through the stock market

The problem is that corporate profitability and the market remain detached from the underlying economy due to the massive interventions over the last decade. Such makes forward returns on providing the means of production and market investments more problematic.

Historically, such deviations don’t work out well for overly “bullish” investors. The correlation is more evident when looking at the market versus the ratio of corporate profits to GDP. Why profits? Because for IRS tax purposes, corporations report “profits,” which are much less subject to manipulation than “earnings.”

With correlations at 90%, the relationship between economic growth, earnings, and corporate profits should be evident. Hence, neither should the eventual reversion in both series. Currently, the S&P index is trading well above its historical trend in earnings. As corporate profits decline, the current earnings estimates will also decrease.

The detachment of the stock market from underlying profitability guarantees poor future outcomes for investors. But, as has always been the case, Wall Street is always late in catching up with economic realities.

No. Capitalism has not become broken. However, the detachment of the stock market from underlying profitability guarantees poor future outcomes for investors. But, as has always been the case, Wall Street is always late in catching up with economic realities.

Such is particularly the case of surging stocks against a weakening economy, reduced global liquidity, and rising inflation. While investors cling to the “hope” the Fed has everything under control, there is more than a reasonable chance they don’t.

Russia has come under attack by multiple drones on Tuesday, with one of those drones reportedly causing a fire at an oil depot in the southern part of the country, and another hitting outside Moscow.

The attack on the oil facility happened in Tuapse, which lies about 150 miles southeast of the Crimean peninsula, with Reuters citing local media to report, “Emergency services put out a fire at an oil depot in southern Russia overnight after a drone was spotted flying overhead, the RIA news agency said on Tuesday.” Crucially, Tuapse is about 500 kilometers from the nearest Ukrainian-held territory, which exhibits significant reach assuming the UAV was launched by the Ukrainians.

The fires which started at the facility at about 2:30am were extinguished after they spread to an area of some 200 square meters. “The oil tanks were not affected. There was no spill of oil products. No injuries,” a local official, Sergei Boyko, described.

Another drone crashed in the Moscow region on the same day, with Governor Andrei Vorobyov saying it was likely an operation to target civilian infrastructure.

“This happened near the village of Gubastovo, the target was probably a civilian infrastructure facility, it was not damaged. There are no casualties or destruction on the ground,” Vorobyov said on his Telegram channel, as translated by the Moscow Times.

“The FSB and other competent authorities are dealing with the situation, nothing threatens the safety of residents,” he added. The Moscow Times notes that unverified reports said the drone was a Ukrainian UJ-22 Airborne manufactured by Ukrjet.

The Russian defense ministry in a statement made mention of another drone attack in southern Russia, close in time to the attack on the oil facility which it says was intercepted:

The attacks — in the Krasnodar and Adygea regions — had been “suppressed” and failed to inflict any damage, it said.

But it followed reports by Russian state news agencies of a fire at an oil depot in Krasnodar, around 240km south-east of the Crimean peninsula, after a drone was spotted flying overhead.

The Russian defense ministry stated that “The Kyiv regime attempted to use unmanned aerial vehicles to attack civilian infrastructure in the Krasnodar region and the Adygea Republic.” It claimed further,  “The UAVs were neutralized by electronic warfare units.”

🧵 Air raid sirens & alerts all over Western #Russia including the #Moscow region appeared on TV and radio. “Attention! Attention! Air Raid Alert declared! Everyone must immediately seek shelter! …Risk of a rocket strike!” pic.twitter.com/e0EPkz7XIp

— Igor Sushko (@igorsushko) February 28, 2023

There may have additionally been a drone incident in the border area of the Belgorod region. The Daily Beast described it as a night of chaos for Russians:

The strikes were part of what local media described as a “mass drone attack” that appears to have intensified in the last 24 hours.

On Monday morning, residents of an apartment building in the Belgorod region, near the border with Ukraine, were forced to evacuate in the middle of the night after one of four drones crashed into the building, according to Baza. Another drone landed on the roof of a supermarket and exploded, scorching the premises.

⚡️Drones filled with explosives attacked the Rosneft oil depot in the Krasnodar Territory — Baza. pic.twitter.com/fustSjPUEj

— War Monitor (@WarMonitors) February 28, 2023

And possibly another attempted attack in St. Petersburg: 

Hours later, St. Petersburg’s Pulkovo Airport came to a standstill as authorities shut down the surrounding airspace, reportedly in response to an “unidentified flying object” spotted in the area.

⚡️Ukrainian source Tpyxa claims this is a video of the drone that was over St.Petersburg.

Looks a bit like an RQ-4 pic.twitter.com/mkvmzPp9dQ

— War Monitor (@WarMonitors) February 28, 2023

Amid all the local reports coming out of Russia, there were in total possibly half-a-dozen to a dozen or more inbound drones which had been sent against various Russian cities overnight into Tuesday.

This comes after a past year which witnessed a number of sporadic drone and alleged sabotage attacks on sensitive Russian facilities, including military bases, as Ukraine and its backers grow more emboldened. 

One December investigative report written by a US special forces veteran said the CIA was behind many of the covert sabotage operations happening with increasing frequency on Russian soil. President Putin has recently said he sees the conflict in Ukraine and West-backed proxy war there as a fight for the survival of the Russian people, alluding to it as an ‘existential threat’ in fresh comments.

The timing of these fresh, brazen attacks on Russian appears significant, given that just within the last few days there’s been some actual international momentum toward getting serious about an eventual brokered peace – this after China unveiled its 12-point plan for negotiated ceasefire on Friday. Will efforts at peace be sabotaged before a process can ever hope to get off the ground? If Russian soil keeps getting attacked, it’s very unlikely the two sides will even come close to seriously contemplating negotiations.

National home prices fell for 6 straight months up to December (the latest data from S&P Global’s Case-Shiller index), dropping more than expected (-0.51% MoM vs -0.40% MoM exp). This slowed the annual growth of prices to the weakest since July 2020…

Source: Bloomberg

The headline national home price index is at it lowest since March 2022…

Source: Bloomberg

“The prospect of stable, or higher, interest rates means that mortgage financing remains a headwind for home prices, while economic weakness, including the possibility of a recession, may also constrain potential buyers,” Craig J. Lazzara, managing director at S&P Dow Jones Indices, said in statement.

“Given these prospects for a challenging macroeconomic environment, home prices may well continue to weaken.”

Asking rents are now tracking home prices lower…

Miami, Tampa, and Atlanta reported the highest year-over-year gains among the 20 cities surveyed (although every city is seeing price growth slow)…

…but San Francisco prices are plummeting the fastest with prices down  -4.2% YoY, the biggest annual drop since March 2012 to the lowest since July 2021…

Source: Bloomberg

Bear in mind that these prices are extremely lagged (December) which is where mortgage rates began to flatten before turning up dramatically in February…

Source: Bloomberg

Do not expect any pause in home prices yet… and besides, that is not what The Fed wants.