Month: September 2024

By Ryan Morgan of Epoch Times

The leaders of the Indo-Pacific Quadrilateral partnership (Quad) – the United States, Australia, Japan, and India – announced new efforts on Sept. 21 to boost their shared maritime security capabilities and expand other areas of regional cooperation.

President Joe Biden hosted the fourth in-person Quad Leaders Summit in Wilmington, Delaware, on Saturday to discuss a range of topics concerning the four nations, including ways to enforce international law in the waterways of the Indo-Pacific.

Ahead of the summit, the White House announced the Quad partners will soon begin their first joint coastguard exercises that will become a rotational training effort. The United States will lead the first round of the joint training, with Australian, Japanese, and Indian personnel coming aboard a U.S. Coast Guard vessel to pick up and exchange skills.

The White House announced the Quad will also expand its existing Indo-Pacific Partnership for Maritime Domain Awareness (IPMDA) initiative. The IPMDA aims to increase transparency about maritime activity in the region and how nations may be asserting their various claims in the Indo-Pacific waterways, providing awareness not only to the Quad members but also other regional partner nations.

The four-way Quad partnership has the potential to serve as a check on the expansionist pursuits of the Chinese Communist Party, but its members have avoided announcing any quadrilateral military alliance that could one day face war with the communist party if it moves to enforce its model of governance in the region. The United States has instead pursued separate bilateral alliances and security partnerships more specifically positioned to respond to hostilities in the region.

US–Australia

Biden met with Australian Prime Minister Anthony Albanese on Friday evening for a bilateral discussion ahead of the main Quad meeting. In their post-meeting readouts, Biden and Albanese both emphasized the centrality of the shared values of the U.S.–Australia alliance to relations between their two countries. They both alluded to a “depth of cooperation” on defense and security, economic ties, and climate and clean energy initiatives.

According to the White House readout, the two leaders discussed their support for maintaining peace throughout the Taiwan Strait. The Taiwanese people govern themselves independently of the Chinese mainland. But the People’s Republic of China considers the island, also known as the Republic of China, as part of its territory despite there being no formal peace treaty to end the Chinese civil war in 1949. Since the 1970s, the United States has favored a strategically ambiguous status quo on the question of who should control Taiwan.

“The leaders discussed their respective diplomacy with the People’s Republic of China (PRC) and their shared concerns about the PRC’s coercive and destabilizing activities, including in the South China Sea,” the White House readout of the Biden–Albanese meeting states.

US–Japan

Biden next met with his Japanese counterpart, Prime Minister Fumio Kishida, on Saturday afternoon for a second bilateral discussion.

“The President praised the Prime Minister’s visionary and courageous leadership over the past three years, which has fundamentally enhanced Japan’s defense capabilities and transformed its role in the world,” a White House readout states. “He thanked the Prime Minister for his resolute support for strengthening Alliance defense cooperation, including on command and control, defense industrial cooperation, and enhanced exercises and training, and for advancing a free and open Indo-Pacific region.”

The White House said Biden and Kishida “reiterated their resolve to maintain peace and stability across the Taiwan Strait and underscored their opposition to any attempts to change the status quo by force.”

Biden also thanked Kishida for being willing to grow ties between his nation and South Korea, allowing for an expanding trilateral partnership that could prove useful in reinforcing the regional status quo.

The United States and Japanese leaders also discussed shared efforts to develop and protect critical technologies like semiconductors and artificial intelligence, two areas of growing competition with communist China.

US–India

The White House published a joint fact sheet with Indian Prime Minister Narendra Modi’s administration on Saturday, highlighting existing U.S.–India cooperation on a range of issues, including defense technology and space exploration. The fact sheet noted India’s plans to procure MQ-9 Reaper drones, and a U.S.–Indian partnership to help maintain India’s fleet of C-130J Super Hercules military cargo aircraft.

The White House also published a roadmap laying out a U.S.–Indian clean energy initiative. The roadmap describes a plan to expand manufacturing of solar and wind energy components.

The roadmap calls for directing about $1 billion in new multilateral financing through the International Bank for Reconstruction and Development to help expand India’s domestic clean energy supply chain.

Continue reading at the Epoch Times.

Authored by Paul Joseph Watson via Modernity.news,

ABC News highlighted how significantly Kamala Harris is underperforming amongst Hispanic voters when compared to both Joe Biden and Hillary Clinton’s percentage share in 2016 and 2020.

The news network pointed out that Biden had a 33 per cent advantage over Trump in exit polls back in 2020.

Hillary Clinton enjoyed an even bigger lead over Trump amongst Hispanics back in 2016, beating him by 40 per cent, and still went on to lose the election.

Compare that to Kamala Harris’ current lead over Trump amongst Latinos, according to an ABC News/Ipsos poll, which stands at just 17 per cent.

ABC News highlighted how significantly Kamala Harris is underperforming amongst Hispanic voters when compared to both Joe Biden and Hillary Clinton’s percentage share in 2016 and 2020. The news network pointed out that Biden had a 33 per cent advantage over Trump in exit polls back in 2020. Hillary Clinton enjoyed an even bigger lead over Trump amongst Hispanics back in 2016, beating him by 40 per cent, and still went on to lose the election. Compare that to Kamala Harris’ current lead over Trump amongst Latinos, according to an ABC News/Ipsos poll, which stands at just 17 per cent. In other words, Kamala is doing worse than Hillary Clinton by a whopping 23 percentage points. ADVERTISING ABC News acknowledged that Harris has some “issues” with Latino voters that she needs to address. Meanwhile, Donald Trump campaign chief pollster Tony Fabrizio expressed confidence that Trump’s soaring popularity amongst Hispanics, especially in swing states, could win him the election. “In the target states and particularly in Arizona and Nevada, which have the largest Hispanic population of the “battleground states that we looked at,” Fabrizio said, “President Trump is either leading or basically tied with Kamala Harris.” 36.2 million Hispanics are eligible to vote this year, up from 2020’s 32.3 million, with many of them having gone “sour” on the economy, according to Fabrizio. Hispanics are becoming more aligned with the Republican party because many of them are second or third generation and have a “higher socioeconomic status,” said the pollster. ADVERTISING Trump could even capture more of the Hispanic vote than Harris in states like Arizona and Nevada, where Latinos make up around a third of the population. “So what we’re seeing is the combination of the economic climate, the combination of personal-security concerns and their desire to achieve the American dream is driving them to the Republican Party,” said Fabrizio. Your support is crucial in helping us defeat mass censorship. Please consider donating via Locals or check out our unique merch. Follow us on X @ModernityNews.

In other words, Kamala is doing worse than Hillary Clinton by a whopping 23 percentage points.

ABC News acknowledged that Harris has some “issues” with Latino voters that she needs to address.

Meanwhile, Donald Trump campaign chief pollster Tony Fabrizio expressed confidence that Trump’s soaring popularity amongst Hispanics, especially in swing states, could win him the election.

“In the target states and particularly in Arizona and Nevada, which have the largest Hispanic population of the “battleground states that we looked at,” Fabrizio said, “President Trump is either leading or basically tied with Kamala Harris.”

36.2 million Hispanics are eligible to vote this year, up from 2020’s 32.3 million, with many of them having gone “sour” on the economy, according to Fabrizio.

Hispanics are becoming more aligned with the Republican party because many of them are second or third generation and have a “higher socioeconomic status,” said the pollster.

Trump could even capture more of the Hispanic vote than Harris in states like Arizona and Nevada, where Latinos make up around a third of the population.

“So what we’re seeing is the combination of the economic climate, the combination of personal-security concerns and their desire to achieve the American dream is driving them to the Republican Party,” said Fabrizio.

*  *  *

Your support is crucial in helping us defeat mass censorship. Please consider donating via Locals or check out our unique merch. Follow us on X @ModernityNews.

Just days after a Wall Street Journal report suggested that chip giant Qualcomm floated a takeover of struggling chipmaker Intel, a new report says Apollo Global Management has proposed a multibillion-dollar investment to support Intel’s turnaround efforts. 

Bloomberg reported, citing sources familiar with the matter, that Apollo recently proposed an equity-like investment of up to $5 billion to Intel’s management. The people said Intel execs were mulling over the proposal. There were no definites, as the investment could change or fall apart. 

On Monday morning, Evercore’s Roger Altman told CNBC that he couldn’t comment on Intel, which suggests his involvement on the advisory side of the deal (or representing another client). In other words, Evercore is representing a potential buyer.

Intel’s fall from grace has been nothing short of spectacular. If you can believe it, the chipmaker was once the world’s most valuable chip company. As of Friday’s close, its shares had fallen 56.5% so far this year. Shares of Intel are up nearly 4% in premarket trading in New York on the Apollo news.

Left behind in the AI boom…

Intel CEO Pat Gelsinger made a series of announcements last week to accelerate the turnaround strategy, including a multibillion-dollar deal with Amazon Web Services. 

The wagons are certainly circling around struggling Intel.

“And when he had opened the fourth seal, I heard the voice of the fourth beast say, Come and see. And I looked, and behold a pale horse: and his name that sat on him was Death, and Hell followed with him.” Revelation 6:7 https://t.co/MxEE6P2YJq

— zerohedge (@zerohedge) September 20, 2024

And maybe Gelsinger’s prayers are being answered. 

The Euro area composite flash PMI plunged by 2.1pt to 48.9 in September, notably below expectations. The deceleration in the composite index was driven by the services sector, where the index fell (by 2.4pt) to 50.5, with manufacturing output contracting, printing at 44.5.

• Euro Area Composite PMI (Sep, Flash): 48.9, GS 50.6, consensus 50.5, last 51.0.

  • Euro Area Manufacturing PMI (Sep, Flash): 44.8, GS 45.8, consensus 45.7, last 45.8.

  • Euro Area Services PMI (Sep, Flash): 50.5, GS 52.4, consensus 52.3, last 52.9.

This was driven not only by a big pay-back out of France, reflecting the post-Olympics adjustment, but also by pronounced weakness in Germany, and a slowing periphery.

The composition of the September report showed a decline in new orders and new export orders, with employment falling further below 50, mostly driven by a notably weak reading out of Germany, where the employment index posted a sizeable month-on-month decline.

This was mostly driven by the manufacturing sector, and “this comes as several major automotive suppliers have announced significant job reductions”.

Business confidence continued to decline in September, dropping for the fourth consecutive month to its lowest value this year. Turning to price pressures, the input price components edged down notably in September, driven by both sectors, and the output price index declined as well, across both sectors, with “a weakening demand environment contributing to softer inflationary pressures in September”.

Across Euro area regions:

• France: The French composite flash PMI fell by 5.7pt to 47.4 in September, notably below consensus and our expectations. The decline was mostly driven by the services sectors, with the index falling (by 6.7pt) to 58.3, reversing the Olympics-related August strength and falling even lower than the July reading, and by manufacturing, where the output index fell (by 1.0pt) to 42.8

• Germany: The German composite flash PMI decreased by 1.2pt to 47.2 in September, below consensus and our expectations. The deceleration was broad-based across sectors, skewed towards manufacturing, where the output index fell (by 2.3pt) to 40.5, its 12-month low.

• Periphery: The periphery composite PMI decreased by 0.7pt to 51.1, driven by a broad-based deceleration across sectors.

Goldman Sachs sees several main takeaways from today’s data.

First, we see a notable downside surprise in the Euro area driven not only by a big pay-back out of France, reflecting the post-Olympics adjustment, but also by pronounced weakness in Germany, and a slowing periphery. While the services sector drove the decline, manufacturing remains subdued, with Germany and France leading the area-wide deceleration in the manufacturing output.

Second, the employment numbers in the Euro area seem to exhibit continued weakness, with employment contracting for the second month in a row. We would thus watch closely the upcoming labour market releases: unemployment rate for Germany (Friday, September 27th) and the Euro area (Wednesday, October 2).

Third, the PMI price components showed benign developments this month in the Euro area, with cost pressures and prices charged declining, driven by “weakening demand”. Lastly, in the UK, despite a slight decline in the indices, activity picture remains firm, while price developments are mixed in September.

Overall, deteriorating activity in Northern Europe adds pressure on the ECB to recalibrate to easier policy, though with the cautious tone from Lagarde and others recently, the base case remains for a hold at the October meeting, with consecutive 25bp cuts thereafter.

On the Euro, after a sharp move lower in EUR/USD on today’s release, Goldman’s recently updated forecasts imply some room for further downside into year-end.

Futures are higher with both tech and small-caps outperforming as a record $9 billion surge in dealer gamma stabilizes markets and buoys the ongoing meltup despite the start of buyback blackout.

As of 8:00am, S&P futures are up 0.1%, hovering near record highs after the Fed’s jumbo rate cut last week, and erasing an earlier slide that was sparked by the latest recessionary set of European PMI numbers; Nasdaq futures rise 0.2% with semis higher, NVDA up +40bps and INTC +4% on a report Apollo is considering a $5 billion investment in Intel, and follows news that Qualcomm is in discussions to acquire the company. Bond yields are slightly higher as the yield curve twists steeper; USD is stronger but off its best levels of the day. Commodities are higher led by Ags and Energy while Metals are weaker. Post-Fed, we have a somewhat quieter macro data week that will be dominated by Fedspeak but also updates on Flash PMIs, regional activity indicators, Q2 GDP, Personal Income, and Consumer Confidence. One of the market narratives will be the presence/absence of negative seasonality (the 2nd half of September is historically the worst period for the market).

In premarket trading, Intel rose 4% after Apollo Global Management Inc. offered to make a multibillion-dollar investment, according to people familiar with the matter, in a move that would be a vote of confidence in the chipmaker’s turnaround strategy. General Motors declined 2% as Bernstein cut the recommendation on the automaker’s stock to market perform, saying data suggests that there might be rising earnings headwinds.Here are some other notable premarket movers:

• Ciena rises 3% as Citi upgraded the communications equipment firm to buy, saying the overhang from excess inventory and weak demand is gradually lifting.
• Constellation Energy gains 3% as Morgan Stanley raised its price target for the stock, pointing to the company’s plan to invest $1.6 billion to revive its Three Mile Island plant.
• Keurig Dr Pepper ticks 1% higher after an upgrade at Citi, which predicts volume improvement in the US coffee unit in the second half.
• Moody’s and S&P Global (SPGI) slip about 1% as Raymond James cut its recommendations on both, seeing risks to their estimates.
• Palantir slips 1% as Raymond James downgraded its recommendation on the data-analysis software company, saying the stock’s recent strong performance and rich valuation leave little room for error.
• Pinterest gains 2% on a buy-rating initiation from Deutsche Bank, which said the Internet platform is able to attract an “affluent, high purchase-intent user base.”

The overnight session was busy in Europe, where weak PMI data for France and Germany on Monday was followed by numbers that showed the euro-area’s private-sector economy shrank for the first time since March. The composite Purchasing Managers’ Index by S&P Global dropped to 48.9 in September from 51 the previous month — below the 50 threshold separating growth from contraction. Analysts had expected the measure to slip only marginally, to 50.5. As a result, investors are increasingly wary of European assets as the region’s manufacturing downturn deepens and political turmoil in France continues.

“The market is almost demanding a more aggressive rate cut, especially after what we have seen the Fed has done,” Marija Veitmane, senior multi-asset strategist at State Street, said on Bloomberg TV. The ECB “is definitely behind the curve,” she said.

A key segment of the German yield curve disinverted as traders bet the ECB will need to accelerate the pace of interest-rate cuts after the euro-area private-sector economy shrank for the first time since March.  The rate on two-year bunds fell below the 10-year equivalent on Monday, bringing the spread between the two tenors above zero for the first time since November 2022. It’s a phenomenon already seen in the US and UK, as the Federal Reserve and Bank of England also loosen monetary policy.

A slate of Fed speakers later Monday including regional presidents Raphael Bostic and Austan Goolsbee may give fresh insight on the pace and scope of easing. Further out, the Fed’s preferred price metric and data on US personal spending will be in focus on Friday.

European stocks were little changed with defensive plays in the food, telecoms, real estate and utilities sectors faring best, while real estate and utilities outperform as banks drag with Commerzbank among the biggest laggards after German government said it wouldn’t sell any more shares in the lender.  Here are the biggest movers Monday:

• Rightmove shares rise as much as 5.3% after Australia’s REA Group made a third cash and share offer for the UK property portal, with analysts noting the offer may still be too low
• Barry Callebaut gains as much as 3% after Stifel raised its target for the world’s largest bulk chocolate maker, citing a recent drop in cocoa bean prices and encouraging harvest signs
• Zalando shares rise as much as 2.3% to hit their highest level since April after analysts at RBC and Stifel nudged-up their price targets on the clothing retailer
• Paradox Interactive shares rise as much as 8.4%, before paring gains, after the Swedish game publisher was named ‘stock of the week’ by local business newspaper DI
• Commerzbank declines as much as 6.2% after Germany said it won’t sell any more shares in the lender, in a move that demonstrates its opposition to a takeover by Italian rival UniCredit
• LVMH shares drop as much as 1.6% while shares in Kering decline as much as 2.9% after both stocks were downgraded to neutral at Bank of America on concerns of a luxury slowdown
• Alphawave IP shares slump as much as 43% to a record low after the Canadian semiconductor firm booked an Ebitda loss in the first half and reduced outlook for the full year
• Genmab falls as much as 4.3%, the most in a month, as Nordea cut its fair price target on the Danish biotechnology firm, saying it needs “significant investment” to advance its drug pipeline
• 11 Bit Studios tumbles as much as 39%, the most on record, after the disappointing release of its Frostpunk 2 strategy-survival game, with Santander and Ipopema both cutting their rating on its stock

Investors are increasingly wary of European assets as the region’s manufacturing downturn deepens and political turmoil in France continues. Weak PMI data for France and Germany on Monday was followed by numbers that showed the euro-area’s private-sector economy shrank for the first time since March. Meanwhile, the widening yield gap between France and Germany shows investors remain on edge over France’s political and fiscal challenges since President Emmanuel Macron called a surprise election in June.

A new French cabinet named late Saturday is a patchwork of conservatives and centrists who haven’t always worked smoothly together, and opposition blocs in parliament are threatening no-confidence votes that could topple the government. Investors are concerned that were the government to collapse, it would jeopardize the administration’s ability to pass a budget through parliament over the coming weeks.

Elsewhere, Asian markets were lifted by speculation China is close to announcing fresh stimulus, after a cut to a short-term policy rate and a rare economic briefing scheduled for Tuesday. The MSCI Asia Pacific Excluding Japan Index rose as much as 0.3%, extending gains for a third session. Top contributors to the advance include TSMC, SK Hynix, Xiaomi and Hon Hai Precision Industry. The benchmark in the Philippines closed in bull-market territory, while shares in South Korea and Taiwan also rose. Markets in Japan were closed for a holiday.

China’s CSI 300 Index finished the day 0.4% higher, helped by the central bank’s cut in a short-term policy rate. Several regulators are also scheduled to hold a briefing Tuesday on financial support for economic development, fueling speculation officials are preparing to ramp up efforts to revive growth. Chinese stocks listed in Hong Kong capped their seventh day of gains, the longest winning streak since Jan. 2019.

 

“The start of the Fed easing cycle should lead to more stimulus from China, particularly as the 5% growth target seems difficult to achieve,” Mohit Kumar, chief strategist and economist for Europe at Jefferies International Ltd., wrote in a note. The “stimulus measures should also be beneficial for Europe.”

In FX, the Bloomberg Dollar Spot Index rose 0.3% and the yield on 10-year Treasuries was little changed at 3.73%. The euro fell, weakening 0.5% against the greenback and toward the bottom of the G-10 FX leader board. Only the Swedish krona has seen a larger decline. The pound drops 0.3% after UK PMI also fell short of expectations, albeit to a lesser extent. Australia’s dollar appreciated on China stimulus hopes.

In rates, treasuries extended yield-curve steepening trend led by German bond market, where 2s10s spread turned positive for the first time since November 2022 after a gauge of private-sector activity shrank for the first time since March. US front-end yields are richer by ~2bp with longer-dated yields slightly cheaper on the day, steepening 2s10s spread by nearly 3bp; 10-year around 3.75% is little changed on the day, trailing German 10-year by ~5bp. A key segment of the German yield curve normalized as traders bet the European Central Bank will need to accelerate the pace of interest-rate cuts after the euro-area private-sector economy shrank for the first time since March. German two-year yields fall 7 bps to 2.16%, below the 10-year equivalent as the curve bull-steepened sharply after the PMI data, widening 2s10s by 3.2bp, 5s30s by 4bp

In commodities, oil prices pared an earlier gain to trade little changed, with WTI near $71.10 a barrel. Spot gold reversed course to fall $3 after earlier touching a record high as the worsening strife in the Middle East fueled wagers on further price gains in the metal due to its haven status.

Bitcoin edges higher and climbs above USD 63.5k, with Ethereum also gaining and holding above USD 2.6k.

The US economic data calendar includes August Chicago Fed national activity index (8:30am) and September S&P Global manufacturing and services PMIs (9:45am); ahead this week are consumer confidence, new home sales, 2Q GDP revision, durable goods orders, personal income and spending and University of Michigan sentiment. Fed speakers scheduled include Bostic (8am), Goolsbee (10:15am) and Kashkari (1pm); Bowman, Kugler, Collins, Powell, Williams, Barr, Cook and Kashkari are slated later this week

Market Snapshot

• S&P 500 futures little changed at 5,763.50
• STOXX Europe 600 up 0.2% to 515.04
• MXAP up 0.2% to 186.88
• MXAPJ little changed at 584.36
• Nikkei up 1.5% to 37,723.91
• Topix up 1.0% to 2,642.35
• Hang Seng Index little changed at 18,247.11
• Shanghai Composite up 0.4% to 2,748.92
• Sensex up 0.3% to 84,801.54
• Australia S&P/ASX 200 down 0.7% to 8,152.95
• Kospi up 0.3% to 2,602.01
• German 10Y yield little changed at 2.15%
• Euro down 0.6% to $1.1094
• Brent Futures down 0.3% to $74.30/bbl
• Gold spot down 0.2% to $2,617.77
• US Dollar Index up 0.44% to 101.16

Top Overnight News

• Today the U.S. Commerce Department is expected to propose prohibiting Chinese software and hardware in connected and autonomous vehicles on American roads due to national security concerns. RTRS
• China cut its 14-day reverse repo rate by 10bp (from 1.95% to 1.85%) and injected ~CNY75B worth of liquidity via the policy tool; China’s PBOC tomorrow will hold a briefing on providing support for the economy, a move sparking speculation of further stimulus steps. WSJ
• Eurozone flash PMIs for Sept slump below expectations as growth cools, with manufacturing coming in at 44.8 (down from 45.8 in Aug and vs. the Street 45.7) and services at 50.5 (down from 52.9 in Aug and vs. the Street 52.3). S&P
• Oyo, the India-based hotel firm, is buying Motel 6 from Blackstone in a deal worth $525MM (the transaction will be a part of Oyo’s US expansion plans). WSJ
• Russia’s red lines have been shredded and its nuclear threats are repeatedly ignored, forcing Putin to search for new sources of deterrence. WaPo
• Israel and Hezbollah exchange flurry of fire over the weekend as fighting continues to dramatically escalate between the two sides. Israeli strike in Lebanon on Friday didn’t just take out a senior military commander (Ibrahim Aqil), but an entire class of senior leaders, part of a deliberate plan to eliminate those most critical to the terror group’s ability to fight a war. WSJ / CNN
• Israel warns Lebanese civilians to evacuate from villages where Hezbollah is storing weapons as the IDF intensifies air strikes. Israel stepped up air strikes against Hezbollah in southern Lebanon this morning, urging civilians to move out of the area. The IDF struck multiple targets as the two sides move closer to an all-out war. NYT / BBG
• Kamala Harris is expected to release new economic proposals this week with the proposals aimed at middle-class wealth-building and the economic incentives for business to facilitate that, according to Reuters sources. It was also reported that Harris accepted a CNN debate invitation and challenged former President Trump to a debate although Trump rejected the offer and said it was ‘too late’ for another debate.
• US House Republicans unveil three-month stopgap bill to avert a government shutdown which would fund the government through December 20th and omits changes to voter registration that Trump had called for.
• Apollo offered to invest as much as $5 billion in Intel, a person familiar said, just days after Qualcomm was said to have floated a friendly takeover. The chipmaker is considering Apollo’s proposal. BBG

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mostly positive albeit with gains capped amid a lack of fresh macro drivers and as weekend newsflow was dominated by geopolitical-related headlines, while Japanese participants were away for the Autumnal Equinox holiday. ASX 200 was led lower by the consumer-related sectors and with sentiment also not helped by a deterioration in the latest flash PMIs. Hang Seng and Shanghai Comp gained after the PBoC cut the 14-day reverse repo rate ahead of next week’s National Day holiday although this was not much of a surprise given that it was the first such operation since the PBoC’s short-term funding rate cuts in July, while automakers were mixed after reports the Biden administration is to propose barring Chinese software and hardware in connected vehicles.

Top Asian News

• PBoC injected CNY 160.1bln via 7-day reverse repos with the rate maintained at 1.70% and injected CNY 74.5bln via 14-day reverse repos with the rate lowered by 10bps to 1.85% from 1.95%, which follows the cuts to other funding rates in July.
• PBoC Governor Pan says will continue to maintain an accommodative monetary policy stance and enhance precision of monetary policy adjustments.
• US President Biden said his view is that Chinese President Xi is looking to buy diplomatic space to aggressively pursue China’s interests and is trying to minimise turbulence in diplomatic relations. Biden said that China continues to behave aggressively in the South China Sea and Taiwan Straits, while he noted the US sees engagement with China as important for conflict prevention and crisis management, according to Reuters.
• US President Biden’s administration is to propose barring Chinese software and hardware in connected vehicles on US roads with the Commerce Department expected to propose making prohibitions on software effective in the 2027 model year and prohibitions on hardware would be in January 2029, according to Reuters sources.
• US President Biden and Japanese PM Kishida reaffirmed a commitment to developing and protecting technologies like AI and semiconductors while increasing resilience to economic coercion, while they also discussed diplomacy with China and destabilising activities including in the South China Sea during a meeting on Saturday.

European bourses, Stoxx 600 (+0.3%) began the session on a tentative footing, trading on either side of the unchanged mark. Indices then took a dip lower ahead of the French PMI metrics, in-fitting with a broader risk-off mood; a move which has since stabilised, with indices now generally sitting in positive territory. Today’s slew of PMI metrics had little impact on the complex. European sectors hold a slight positive bias vs opening mixed, though the breadth of the market remains thin; Utilities takes the top spot alongside Telecoms. Banks lag given the takeover related weakness in Commerzbank (-3.6%). Consumer Products is also towards the foot of the pile, after several companies within the sector received downgrades at Bank of America. US Equity Futures (ES +0.1% NQ +0.1% RTY +0.1%) are flat/very modestly firmer, taking impetus from a tentative session seen in Europe thus far. Today’s US-specific data docket remains light, with focus only on the US PMI release; there are a few Fed speakers today, including Goolsbee, Kashkari and Bostic. “Speculation mounts over potential discontinuation of Nvidia’s (NVDA) H20 chip as US export review approaches”, according to Digitimes

Top European News

• French PM Barnier did not rule out a tax hike for the rich and is open to changes in pension reform with input from employers and unions, while he said they must protect France’s credibility with investors and the government will take pragmatic measures to limit immigration.
• French President’s Chief of Staff said Antoine Armand was named as Finance Minister and Jean-Noel Barrot was named as Foreign Minister, while Bruno Retailleau was named as Interior Minister.
• German Chancellor Scholz’s SPD narrowly beat the far-right AfD in elections in the eastern state of Brandenburg as exit polls showed the SPD at 31%-32% vs AfD at 29%-30%, according to BBC.
• Fitch affirmed Portugal at A- and revised the outlook to Positive.
• ECB’s Kazaks says services inflation is a concern, as is slow growth; direction for rates is downward.
• Spain’s Economy Minister says the Gov’t is lifting its 2024 GDP forecast to 2.7% (prev. 2.4%)

FX

• DXY is boosted by the post-PMI softness in the EUR. DXY has moved back onto a 101 handle and eclipsed last Friday’s high at 101.01. The next target comes via the 19th September high at 101.47, which could be tested following the US PMI metrics.
• EUR is the clear laggard across the majors after a raft of EZ-wide PMI data underscored the region’s soft growth outlook as the boost from the French Olympics proved to be short-lived. EUR/USD had been as high as 1.1167 overnight but has since slipped onto a 1.10 handle.
• GBP is lower vs. the USD but firmer vs. the EUR given the EZ’s awful PMI metrics. Cable was already on the backfoot in the run up to UK PMI metrics with USD boosted by the soft EUR. UK PMI data showed misses across the board but failed to add to Cable’s downside.
• JPY was initially softer vs. the USD and what looked to be an extension of Friday’s price action, but JPY has been able to claw back some gains vs. the USD. USD/JPY had been as high as 144.45, stopping just shy of Friday’s 144.49 peak.
• AUD has trimmed its opening gains vs. the USD but is just about holding above the 0.68 mark. NZD/USD is currently contained within Friday’s 0.6210-60 range.

Fixed Income

• USTs are little changed overall but toward 114-26+ highs given the bullish-bias from the morning’s European data points (discussed below). US PMIs are on the docket today, with a few Fed speakers dotted across the day, including Bostic, Goolsbee and Kashkari.
• A session of gains for EGBs, bolstered by a particularly poor set of Flash PMIs from France & Germany, with the nowcast for the latter pointing to a “0.2% decrease compared to the quarter before”. French number lifted Bunds to a 134.64 peak, before taking another leg higher following the German and EZ-wide figures to a session peak of 134.82; currently, Bunds sit around 134.55 and German yields are lower across the curve but with the short-end under more pressure than the long end.
• OATs are also firmer, with the bulk of action driven by aforementioned data points. Additionally, there is renewed focus on the French political backdrop into the fast approaching constitutional deadline to put forward a budget on October 1st.
• Gilts are propped up by the region’s own PMI release, which dropped from the prior by more than expected but remain indicative of a soft landing for the UK with services. The data took Gilts to a fleeting 100.00 peak, with resistance above at 100.09 from Friday and thereafter 100.39 from Thursday.

Commodities

• A choppy session for the crude complex this morning as the APAC geopolitical gains in the complex were wiped out amid risk aversion in European hours – not helped by the slew of dismal flash PMI data from the region, with the metrics overall endorsing the dovish bias. Brent’Nov in a USD 74.18-75.13/bbl parameter.
• Lower trade across precious metals but spot gold is slightly more cushioned than its peers, with spot silver and spot palladium posting losses of over 2% as the Dollar strengthened. Spot gold resides in a USD 2,613.89-2,631.41/oz range.
• Base metals are lower across the board as a function of the stronger Dollar and risk aversion, with little solace felt from the PBoC’s unscheduled 14-day reverse repo rate cut, although this was not much of a surprise. 3M LME copper has fallen back under USD 9,500/t.
• Chinese Government to revamp tax rebates for fuel oil imports, with change likely effective from October, via Reuters citing sources; would raise import costs for independent refiners and curb fuel oil imports

Geopolitics: Middle East

• “Renewed Israeli raids on southern Lebanon”, according to Sky News Arabia
• Israeli PM Netanyahu said that they inflicted a series of blows on Hezbollah in the past few days that it never imagined.
• Israel Defence Forces said during the weekend that it struck Hezbollah targets in Lebanon after over 100 rockets were fired towards northern Israel by the military group, while it added that strikes would continue and intensify against Hezbollah, according to Reuters. It was separately reported that IDF announced on Monday that it conducted widespread strikes on Hezbollah targets in Lebanon.
• Israel’s Defence Minister said Hezbollah is beginning to feel some of Israel’s military capabilities and Israel will continue its operations against the group until northern Israel residents can return home safely, according to Reuters.
• Israel’s military chief said operations against Hezbollah are a message to anyone in the Middle East looking to harm Israeli citizens, while he added that Hezbollah will keep getting hit until it understands that Israel will return its citizens to their homes safely. Furthermore, he said Israel is well-prepared for the next stages planned in the coming days, according to Reuters.
• IDF spokesman said they have monitored preparations by Hezbollah to launch attacks on Israel and Hezbollah has turned southern Lebanon into a confrontation arena, while the spokesman added that they will hit Hezbollah hard and will work to reduce its power and keep it away from the border. Furthermore, Israeli media stated that warplanes attacked deep into Lebanon 120 km from the border, as well as noted that Hezbollah is preparing to carry out intensive attacks in the coming hours, while the IDF spokesman responded that the army will do whatever it takes to restore security to northern Israel when asked about the possibility of a ground incursion into Lebanon.
• Hezbollah said it targeted Ramat David Airbase with dozens of missiles in response to repeated Israeli attacks on Lebanon, according to a statement. Hezbollah also stated its top commander Ahmed Wahbi was killed during Israel’s strike on Beirut suburbs.
• Hezbollah’s Deputy Leader said the confrontation with Israel entered a new phase of an open-ended battle of reckoning.
• Islamic Resistance in Iraq launched cruise missiles and explosive drones towards Israel’s north and south, while it said it targeted with drones a military post in northern Israel on Sunday morning and launched a drone attack on a target in Jordan Valley in ‘occupied territories’.
• Iran’s Supreme leader Khamenei said Israel is committing “shameless crimes” against children, not combatants, while he called for inner strength among Muslims to eliminate the ‘malignant cancerous tumour’ from Palestine.
• Iran’s Revolutionary Guards said they arrested 12 operatives collaborating with Israel and planning actions against Iran’s security, according to SNN.
• US directly warned Israel against a full-blown war with Hezbollah, according to the FT. It was separately reported that the UN special coordinator in Lebanon said with the region on the brink of imminent catastrophe, it cannot be overstated enough that there is no military solution that will make either side safer, according to Reuters.
• Qatari Al Jazeera TV said Israeli forces stormed its bureau in West Bank’s Ramallah with a military order to close it for 45 days.
• A bomb explosion killed a police officer in the security details of foreign ambassadors in northwest Pakistan, while all foreign diplomats were safe and were reported to travel back to the capital of Islamabad.

OTHER

• Ukrainian President Zelensky thanked the military for a new attack on Russian arsenal and said the end of the war against Russia depends on the decisiveness of Ukraine’s partners, as well as noted that Ukraine’s defences would be better if its partners provided the needed weapons and permission to use them.
• Russian Defence Ministry said Russia hit Ukrainian energy facilities with high-precision weapons and drones, according to agencies.
• Russian Foreign Ministry said Moscow will take no part in the follow-up to the Swiss-organised peace summit.
• US official said Quad leaders expressed concern about the Russian-North Korean relationship, as well as about the South China Sea and maritime disputes.

US Event Calendar

• 08:30: Aug. Chicago Fed Nat Activity Index, est. -0.20, prior -0.34
• 09:45: Sept. S&P Global US Services PMI, est. 55.2, prior 55.7
• 09:45: Sept. S&P Global US Manufacturing PM, est. 48.6, prior 47.9
• 09:45: Sept. S&P Global US Composite PMI, est. 54.3, prior 54.6

Central bank speakers

• 08:00: Fed’s Bostic Gives Speech on Economic Outlook
• 10:15: Fed’s Goolsbee Speaks in Fireside Chat
• 13:00: Fed’s Kashkari Participates in Q&A on Childcare

DB’s Jim Reid concludes the overnight wrap

As the dust settles on the FOMC last week, the main highlights for this coming week are likely to be the core US PCE reading on Friday, an abundance of Fedspeak giving insight into last week’s surprise 50bps cut, the flash global PMIs today, flash CPIs in France and Spain alongside Tokyo CPI on Friday, and central bank decisions from Australia (tomorrow, no change expected), Sweden (Wednesday, -25bps expected) and Switzerland (Thursday, DB expect -50bps).

Fedspeak will probably dominate the week until we reach that core PCE number with Bostic (voter – dovish) opening up proceedings today, followed by Goolsbee (non-voter – dovish) who may give indications that he is looking for a continuation of large rate reductions. Tomorrow and Thursday, Bowman will tell us why she was the first governor to dissent at an FOMC since 2005. Kugler (voter – neutral) speaks on Wednesday and then takes part in a fireside with Collins (non-voter – dovish) on Thursday. Also on Thursday we have the 10th annual US Treasury Market Conference. Powell opens it up with pre-recorded remarks with Williams (voter – dovish) and Barr (voter – dovish) also speaking. So a busy array of speakers and plenty of focus of all of them.

In terms of data, Thursday’s final reading of US Q2 real GDP (expected to be unchanged at 3.0%), and the personal income and consumption report which contains the core PCE will be the main highlights. DB expect core PCE to post a +0.18% gain in August, helping the YoY rate tick up a tenth to 2.7%. The GDP report includes 5 years of revisions up to Q1 2024 so that will be an interesting curiosity that could slightly reshape how we think about this cycle. Elsewhere in the US, tomorrow’s consumer confidence, Wednesday’s new home sales, Thursday’s durable goods orders and Friday’s advance goods trade balance round out the week. The full day-by-day week ahead appears at the end as usual.

Over the weekend Olaf Scholz’s SPD party has narrowly held onto first place in Brandenburg, pipping far right AfD with around 30.9% of the votes to the latter’s 29.2%. This has been an SPD stronghold since unification in 1990 and the popular regional premier did distance himself from the federal government during the campaign so there is less of a read through to national politics than could be thought at first glance. There will also be some concern that this is the third regional election in a row where the AfD has come first or second with around 30% of the votes. Perhaps some tactical voting stopped them winning over the weekend? However no main party will power-share with them so at the moment there is limited implications of their current poll standings, but their rise continues to be on a broadly upward path.

Asian equity markets are mostly trading higher this morning but with trading volumes light due to a holiday in Japan. As I check my screens, the Hang Seng (+0.82%) is leading gains with the CSI (+0.64%) and the Shanghai Composite (+0.73%) also higher. Overnight, the People’s Bank of China (PBOC) have cut its 14-day reverse repo rate (RRR) to 1.85% from 1.95% and have announced a press conference for tomorrow hosted by the top three financial market regulators on “financial support for economic development” according to the official release.

Elsewhere, the KOSPI (+0.30%) is also seeing small gains, reversing course from a negative opening. S&P 500 (+0.33%) and NASDAQ 100 (+0.65%) futures are firm but with US Treasuries not open yet due to a holiday in Japan.

Looking back at last week now, risk assets put in a strong performance, as the Fed delivered a 50bp rate cut and US data continued to point away from a downturn. That combination of the Fed easing into a soft landing has historically proved to be a very favourable one for US equities, and last week was no different, with the S&P 500 up by +1.36% over the week (-0.19% Friday). Moreover, the index hit another all-time high on Thursday, surpassing its previous record from mid-July and marking its 39th all-time high of 2024 so far.

That equity advance was supported by a strong advance for the Magnificent 7, which were up +2.63% over the week (despite -0.40% on Friday). Notwithstanding the slight softening on Friday, there was also an outperformance for banks on both sides of the Atlantic, with the S&P 500 banks index up +4.33% (-0.35% Friday), and the STOXX Banks up +2.67% (-0.10% Friday). Over in Asia, there were solid advances as well, with the Nikkei up +3.12% (+1.53% Friday). However, Europe didn’t share in these gains as the STOXX 600 was down -0.33% over the week after a -1.42% decline on Friday.

Other risk assets responded more positively, and US HY spreads came down -21bps over the week (+3bps Friday), whilst IG spreads were down -5bps (no change Friday). Similarly, Brent crude oil prices were up +4.02% over the week (-0.52% Friday), marking their strongest weekly performance since February. And with the Fed cutting rates by 50bps, there was a bit more concern about inflation again, which pushed gold prices up to a new all-time high in nominal terms of $2,622/oz, having risen by +1.71% over the week (+1.16% Friday).

Meanwhile for sovereign bonds, there was a more mixed performance, but a clear pattern was a curve steepening on both sides of the Atlantic. For instance, the US 2s10s yield curve ended the week at 14.6bps, which is its steepest level since June 2022, just before it became apparent that the Fed would accelerate their rate hikes up to a 75bp pace. That came as the 10yr yield rose +8.9bps (+2.7bps Friday) to 3.74%. Meanwhile in Germany, yields on 10yr bunds were up +5.9bps (+1.0bps Friday) to 2.21%.

 

Ukrainian President Volodymyr Zelenskyy has a packed schedule this week in the Northeast and Mid-Atlantic US. On Sunday, he toured an ammunition factory in Scranton, PA. He is set to address the UN General Assembly’s annual gathering in New York on Tuesday and Wednesday, followed by a meeting in Washington, DC, with the Biden administration, where he will likely unveil a “victory plan.” 

Zelenskyy’s PR team published a recap of the president’s visit to the General Dynamics Ordnance and Tactical Systems Scranton Operations factory. This massive 495,000-square-foot government-owned facility manufactures 155mm artillery shells.

“During my visit to the Scranton Army Ammunition Plant, where components for artillery and mortar shells are produced, including 155 mm shells for Ukraine, I emphasized the dedication of the workers, which is truly inspiring—they are helping Ukraine stand strong in our fight for freedom,” Zelenskyy said.

He continued, “I am grateful to the people of Scranton, Pennsylvania, and all the states where Americans are building this incredible arsenal of global freedom. Together, we are strengthening the defense of liberty and democracy.” 

During my visit to the Scranton Army Ammunition Plant, where components for artillery and mortar shells are produced, including 155 mm shells for Ukraine, I emphasized the dedication of the workers, which is truly inspiring—they are helping Ukraine stand strong in our fight for… pic.twitter.com/rs0vLZRlVU

— Volodymyr Zelenskyy / Володимир Зеленський (@ZelenskyyUa) September 23, 2024

Zelenskyy’s week in America is critical to present Kyiv’s plan to end the two-and-a-half-year ‘meat grinder’ between Ukraine and Russia. On Tuesday and Wednesday, Zelenskyy will speak at the the UN General Assembly’s annual gathering in New York.

A recent Wall Street Journal report said the war has left approximately one million on both sides dead or injured…

A confidential Ukrainian estimate from earlier this year put the number of dead Ukrainian troops at 80,000 and the wounded at 400,000, according to people familiar with the matter. Western intelligence estimates of Russian casualties vary, with some putting the number of dead as high as nearly 200,000 and wounded at around 400,000.

The Guardian noted, “The visit comes after a summer of intense fighting, with Moscow advancing fast in eastern Ukraine and Kyiv holding on to swathes of Russia’s Kursk region. Kyiv has for weeks pressed the west to allow it to use delivered long-range weapons to strike targets deep inside Russia – so far to no avail,” adding Zelenskyy will likely unveil a “victory plan” with President Biden on Thursday. 

On X, as the president was heading to the US on Sunday, his PR team pushed out:

This fall will determine the future of this war. Together with our partners, we can strengthen our positions as needed for our victory—a shared victory for a truly just peace.

Right now, the legacy of the current generation of world leaders is being shaped—those in the highest offices. In the coming days, we will have meetings with leaders from the Global South, G7, Europe, and heads of international organizations— with many who are helping to consolidate the world.

We will also have important meetings with representatives of the United States. True peace and a true victory for Ukraine and international law—this is what we need.

This fall will determine the future of this war. Together with our partners, we can strengthen our positions as needed for our victory—a shared victory for a truly just peace.

Right now, the legacy of the current generation of world leaders is being shaped—those in the highest… pic.twitter.com/ji2dZ6cAgR

— Volodymyr Zelenskyy / Володимир Зеленський (@ZelenskyyUa) September 22, 2024

The Kremlin said once the “victory plan” is made public, its analysts will study it.

Zelenskyy’s visit to the US is another attempt to secure billions more from US taxpayers ahead of the uncertainty surrounding US presidential elections in November. 

Authored by Adam Sharp via DailyReckoning.com,

Oops. Last week the SEC accidentally published internal commentary along with a speech by Chair Gary Gensler.

Here’s one of the comments which was mistakenly included.

I strongly recommend that a sentence be placed here (or somewhere [sic] in the first part of the speech) to reassure markets that you are not making the speech because you think there is an imminent crisis.

These internal comms were quickly deleted from SEC.gov, but not before the page was archived for posterity. The slip-up reveals anxiety among regulators over messaging.

Mr. Gensler’s speech addressed financial crises, bank restructurings, and the importance of public disclosures. In it, the SEC Chair rightly argued that depositors need transparency to make good decisions.

If a large financial institution is restructured, the market’s need for disclosure doesn’t go away. Indeed, I believe the market’s need for robust disclosure becomes all the more critical. First, it is the best way to ensure that investors, counterparties, and depositors will have sufficient confidence to remain with the firm.

It’s a solid point, transparency does need to improve. But there’s something else missing here that we need to discuss.

Back in June, Daily Reckoning’s Jim Rickards warned that the banking crisis may still have legs.

Investors are relaxed because they believe the banking crisis is over. That’s a huge mistake. History shows that major financial crises unfold in stages and have a quiet period between the initial stage and the critical stage.

In the article, Mr. Rickards pointed out a key flaw with Mr. Gensler’s argument that transparency should allow depositors to make wise decisions. That flaw is the speed at which money moves in today’s world.

On the other hand, this crisis could reach the acute stage faster. That’s because of technology that makes a bank run move at the speed of light. With an iPhone, you can initiate a $1 billion wire transfer from a failing bank while you’re waiting in line at McDonald’s. No need to line up around the block in the rain waiting your turn.

When a crisis hits, rational analysis is often the first casualty. In this world where money moves in a blink, if you hear about potential issues at your bank, most of us aren’t going to pull up its financial filings, spend hours analyzing them, and then make a decision. We’re going to move it to a safer bank (or a mattress, or into gold) ASAP.

So while it is good to hear that the SEC Chair favors more transparency, it doesn’t do much to allay our concerns. More disclosure could actually accelerate a crisis due to the velocity of information and money today. If a crisis hits, things can happen fast.

Why The ‘Imminent’ Concern?

Let’s get back to those accidentally-published internal comments. An SEC staffer was concerned that Mr. Gensler’s speech might give the impression of an “imminent crisis”. Whenever regulators discuss the solvency of financial institutions there’s a risk that it is interpreted negatively by markets. It’s a valid worry.

Unfortunately, in this market, there are some excellent reasons to interpret the remarks in a cautious light. Let’s start with the latest data on unrealized losses at banks.

Remember when this chart was making the rounds in 2022 and 2023?

The updated FDIC data continues to show an unprecedented and sustained rise in unrealized losses at banks. Notice how small the losses during the global financial crisis appear in comparison.

These are unrealized losses on banks’ bond portfolios, primarily caused by the Fed’s rapid interest rate hikes. When rates rise, the value of existing bonds (with lower yields than new bonds) falls. This is what caused the failure of Silicon Valley Bank.

Unrealized losses stand at $512 billion as reported by the FDIC, down from a peak of around $655 billion. The data has improved a bit, but bank balance sheets remain stressed at historic levels.

Ongoing interest rate cuts should help stem the unrealized bleeding at banks. As rates fall, the price of bonds will rise. But lower rates should also mean lower profitability for the lending side of the business, so it’s somewhat of a double-edged sword for banks.

Even if the unrealized loss situation gets resolved, there are other potential black swans to monitor. After all, why is the Fed planning to cut rates, apparently with haste? Are they simply trying to get ahead of bank losses and soaring debt servicing costs? Or do they potentially see a recession or financial crisis in the near future?

Let’s review our situation.

The Fed is preparing for economic turbulence. Gold is trying to tell us something as it powers to new all-time highs. Job growth for the year was recently revised sharply downward. And now regulators are making speeches about restructuring large financial institutions.

It sure feels like something’s brewing. If you want to be proactive and check your bank’s unrealized loss ratio, you can use this free tool by Florida Atlantic University. This screener isn’t perfect and doesn’t tell you everything about a bank’s health, but it’s a start.

Besides moving to a better bank, gold and silver remain an excellent way to prepare for potential calamities.

You knew it was coming… 

A new chatbot-powered exchange-traded fund (ETF) aimed at replicating the investment prowess of Wall Street titans has been launched by Minneapolis-based Intelligent Alpha. The Intelligent Livermore ETF (LIVR) is built around portfolio decisions generated by three prominent large language models (LLMs); ChatGPT, Gemini, and Claude – dubbed the fund’s “investment committee.”

According to the fund, the ETF will emulate the thinking of legendary investors like Warren Buffett, Stanley Druckenmiller, and David Tepper, among others – yet, the portfolio won’t necessarily reflect their real-life holdings. Instead, it will draw inspiration from the strategies and investment philosophies associated with said investors, spanning sectors like healthcare, renewables, and emerging markets, Bloomberg reports.

A Wall Street First: AI as the Investment Brain

According to the report, Clinton’s firm will feed specific instructions to the chatbots, directing them to create portfolios based on the personas of these financial icons.

The firm, with roots in engineering and emerging technologies, will instruct the large language models (LLMs) to emulate the investors’ personalities. The trio of chatbots will spit out 60 to 90 global firms that span a number of sectors, themes and geographies, including health care, renewables and Latin America, to name just a few.

The list of personas targeted by the ETF — besides Buffett, Druckenmiller and Tepper — will include Dan Loeb, Paul Singer and others, though the fund’s holdings may not necessarily reflect the real-life bets by those investors. -Bloomberg

“If you think about the hedge-fund world today, that has pods that each focus on specific areas of expertise,” explained Doug Clinton, CEO and founder of Intelligent Alpha. “In a sense, we’re recreating the very basics of that structure where we have these different inspirations for investors we really respect.“

Uncharted Territory

While the concept of an AI-managed ETF is bold, it’s not entirely new. Several hedge funds and ETFs have begun experimenting with AI to streamline investment processes. AI has been praised for its ability to process massive datasets quickly, eliminating the need for human analysts to perform tedious tasks. However, its ability to consistently outperform traditional strategies remains unproven.

Of the 16 AI-focused ETFs tracked by Bloomberg Intelligence in the U.S., only one, the Franklin Intelligent Machines ETF (IQM), is currently outperforming the S&P 500 in 2024, with a 19% return compared to the stock index’s 18%. Meanwhile, only two AI-centered ETFs have seen significant inflows: the Global X Artificial Intelligence & Technology ETF (AIQ), which brought in over $1 billion this year, and the Roundhill Generative AI & Technology ETF (CHAT), which attracted $117 million. The rest have either seen minimal inflows or experienced outflows.

What sets Intelligent Alpha’s ETF apart is its use of LLMs rather than traditional machine learning models. According to Clinton, most AI ETFs rely on older techniques, which limits their strategies to crowded quantitative insights. By leveraging LLMs, Intelligent Alpha aims to break through these limitations and create portfolios with a different kind of edge.

From Experiment to Product

The idea for the Intelligent Livermore ETF took root last year when Clinton began experimenting with ChatGPT to generate investment portfolios. After seeing success in creating strategies that outperformed the S&P 500, he expanded his testing to 40 different investment strategies. These trials ultimately led to the founding of Intelligent Alpha, which is affiliated with Deepwater Asset Management, a Minneapolis-based firm managing approximately $400 million in venture capital and public equity funds.

Though the Intelligent Livermore ETF is Intelligent Alpha’s debut product, the company has plans to launch a suite of AI-driven offerings, including custom portfolios and hedge funds aimed at both retail and institutional investors. Clinton and his team have already filed for additional ETFs and hope to lead the charge in the AI-powered investment space.

The new ETF pays tribute to Jesse Livermore, one of the most famous stock traders of the early 20th century. LIVR has a management fee of 0.69%.

In order to prevent ‘hallucination’ – in which a LLM either fabricates information or misinterprets input, a human the fund does have final human oversight.

“Just to make sure there’s not some sort of a hallucination in the portfolio, like a company that committed fraud or some egregious issue,” said Clinton. “And also that the portfolio will meet any regulatory or compliance constraints that we might know about that the AIs may not be thinking about when they create the portfolio.”

Authored by Jan Nieuwenhuijs via MoneyMetals.com

In July, the Central Bank of Argentina (BCRA) shipped another 3 tonnes of gold to the U.K. to swap for foreign exchange. A month prior, BCRA also transported 3 tonnes to the U.K. BCRA is now estimated to have 37 tonnes (60% of Argentina’s gold reserves) on swap in the London Bullion Market.

Argentina Is Leveraging Its Physical Gold

Argentine newspaper Clarín reported in 2017 that BCRA moved 11 tonnes of its monetary gold to London, according to their research, to be swapped out for Japanese yen. “We are already doing this with all the gold we have in London, because by placing it in that financial center, we can expand its use,” the central bank told to Clarín at the time.

El País reported in July of 2024 that BCRA was again transporting gold abroad. After rumors were making rounds about how much gold was shipped out and to where, President Milei hinted that the gold was used overseas as collateral for a loan (this is how a swap typically works). Argentina appears to be in need of foreign currency to pay interest or to pay off debt.

Argentina Sends More Gold to London

A few weeks back, I was able to confirm BCRA had sent $150 million worth of gold (3 tonnes) to the U.K. in June, based on cross-border trade statistics. Because officials had confessed that part of the Argentinian monetary gold was sent abroad, and for the first time ever the U.K.—home of the largest gold market globally—recorded to have imported 3 tonnes from Argentina that month, I was confident this batch could be assigned to BCRA.

Monetary gold can cross borders outside the scope of customs statistics, which apparently happened in 2017. However, if a central bank lets a bullion bank take care of the shipping, the bullion bank has to deal with customs, and the gold will show up in trade data (as was the case with the secret purchases by Saudi Arabia’s central bank in recent years).

In the same spirit, new trade data from the UK shows another import of 3 tonnes from Argentina for July. It looks like BCRA is sending more and more gold to London in a desperate need for foreign exchange.

Most of Argentina’s Gold Is Now Held in London

Bloomberg recently wrote that, according to its sources: “before the move, about half of Argentina’s gold was in domestic vaults with the other half in London.” Bloomberg speculated there was only one shipment of gold to Europe, which would be the one in June.

So, before June, half of BCRA’s total gold reserves (62 tonnes) were in London. Adding 6 tonnes transferred in June and July means there are now 37 tonnes abroad, which equals 60% of Argentina’s monetary metal.

If Milei succeeds in getting Argentina’s finances in order, international debt can be repaid and foreign exchange obtained through trade can be used to unwind the swaps. If not, BCRA could default on its swap obligations and thereby surrender ownership of 36 tonnes of precious metal.

Authored by Austin Alonzo via The Epoch Times (emphasis ours),

More Americans than ever are turning to the so-called gig economy—providing services ranging from taxi services to grocery deliveries, often through digital platforms—either on the side or as a career.

The marketplace, however, is no longer the “subsidized fantasy land” it once was, one former gig worker says. An analyst described pursuing gig work as a career as “the biggest mistake of your life.”

Several app-based drivers say the pay now is barely worth the effort. Others say there are issues such as lack of transparency around net pay.

Sergio Avedian, 57, a part-time driver in the Los Angeles area, told The Epoch Times workers are told they are making a certain hourly wage, but the amount is often misleading.

In reality, workers are paid only for time spent with a passenger or package in the car. So if gig workers spend an average of 15 minutes fulfilling a task and the rest of the hour either looking for or driving to a job, they are paid only for a quarter of the time they actually work.

Eddie Doyle, 36, a writer and content creator in the Philadelphia area who is mostly retired from driving for Uber and Lyft, said that on balance, most workers whose gig involves driving are probably actually losing money due to fuel expenses and the deterioration of their vehicles.

Doyle, who began driving in 2015, said pay used to be better. These days, Doyle said Uber or Lyft drivers in a major American city likely need to work 60 to 80 hours a week—splitting driving time among multiple apps—to earn a decent wage.

“I think the vast majority of [gig workers] are struggling,” Pedro Santiago, 42, a driver based near St. Louis who splits his working time among five app-based gig jobs, told The Epoch Times.

Sizing Up the Gig Economy

The world of employment was revolutionized with the launch of Uber Technologies Inc. in 2010. The smartphone application offered a new competitor to the taxicab industry by linking a paying passenger with a private driver using his or her own car.

Uber’s meteoric rise bred dozens of other applications, bringing the gig work concept to other business areas. Today’s smartphone-powered gig economy includes everything from odd jobs around the house to legal work.

The largest services are still focused on transportation. Uber and Lyft Inc. dominate the on-demand ride business, while DoorDash Inc. and Maplebear Inc., better known as Instacart, lead the way on delivery services for food and other goods. Uber has branched out into food and grocery delivery too. DoorDash, Instacart, Lyft, and Uber are now publicly traded.

Massive retailers like Walmart and Amazon joined in with their own on-demand platforms: Spark Driver and Amazon Flex.

Gig workers are recruited with the promise of flexible hours to earn additional income. However, as independent contractors, gig workers are not entitled to traditional employment benefits like health insurance, and they must take on additional occupational risks, equipment costs, and tax burdens.

The U.S. Department of Labor doesn’t measure the number of people working gig jobs. But its Bureau of Labor Statistics does keep track of the number of people working multiple jobs.

According to the BLS’s September Employment Situation Summary, about 8.3 million Americans worked multiple jobs in August 2024. That was an increase from about 7.8 million in August 2023. In both years, most workers with two jobs had a full-time job and a part-time job.

In a 2024 economic impact report, Flex, a federal lobbying association supported by DoorDash, Grubhub, HopSkipDrive, Instacart, Lyft, Shipt, and Uber, estimated there were about 7.3 million “active drivers and delivery partners on major rideshare and delivery platforms” in 2022.

Representatives of Flex did not respond to a request for comment from The Epoch Times.

Other estimates said the number of gig workers is much higher.

A 2022 report published by the consultancy McKinsey & Co. surveyed workers and estimated as many as 58 million Americans, or 36 percent of the U.S. workforce, did some gig work that year.

According to the McKinsey survey, gig workers are most likely Latinos between 18 and 24 with less than a high school education, making less than $25,000 per year.

Santiago said the sheer number of people doing gig work demonstrates the struggles of most Americans.

“Most people come to [gig work] because they either lost a job, or the inflation of their rent and groceries has just gotten too out of hand where they’ve got to make an extra $200 a week,” Santiago said.

Struggling to Make a Living

Some gig workers say they are being left behind. They complain of low pay, unreliable job offerings, and a lack of benefits.

In an email, Rafael Espinal, executive director and president of the Freelancers Union, said many freelancers and gig workers in the United States say their lack of job stability and benefits “prevents them from reaching key life milestones.”

“Inconsistent income and the high cost of health care and housing make it difficult for them to save for retirement, buy a home, or start a family,” Espinal said. “This economic uncertainty affects not only their day-to-day lives but their long-term goals as well.”

Espinal said the Freelancers Union represents more than 700,000 members across the country. It provides access to insurance, legal services, and financial planning for its members. He said many of its members work multiple part-time jobs “to make ends meet.”

Avedian, a Wall Street veteran and a senior contributor to the industry analysis and advice website The Rideshare Guy, said gig work is designed as a so-called side hustle and cannot replace a full-time job for most people.

“If you’ve chosen gig work as a career, you have made the biggest mistake of your life,” Avedian told The Epoch Times.

Both Doyle and Avedian said they believe the active-hour pay structure is misleading to gig workers. Doyle said gig work companies succeed by taking advantage of workers’ ignorance of the risks and costs inherent in gig work.

Espinal said gig workers tell him they are frustrated with their lack of bargaining power as independent contractors even though gig economy companies hold “significant control over their working conditions.”

In its Securities and Exchange Commission filings, Uber describes the classification of its drivers as “employees, workers, or quasi-employees” as an “operational risk” to its business. The same document details the various legal and political challenges involved in maintaining independent contractor status.

Uber’s latest quarterly filing, published in August, said that if drivers win the reclassification through legal means or the passage of new laws, the company would incur significant expenses for compensating drivers and would pass its elevated costs onto riders. Uber also argues reclassification would limit its ability to find workers due to a loss of flexibility.

The second-quarter reports filed by DoorDash, Instacart, and Lyft make nearly identical statements about classification and describe similar legal and political challenges to gig workers’ contractor status.

Profitability and the Future

The gig economy shows no signs of slowing down. Americans are used to the on-demand goods and services provided by gig workers, and corporations are eager to cut labor costs by expanding their use of independent contractors.

The latest earnings statements show Uber, Lyft, and Instacart all turned a profit in the second quarter of 2024.

According to their SEC filings, Uber collected $361 million in profits during the first six months of 2024, while DoorDash reported $191 million in profits. During the same period, Lyft lost about $26.5 million, while DoorDash lost $180 million.

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