Month: September 2024

Global equities began September on the back foot as investors prepared for what’s typically the worst month for stocks in general, and tech in particular.

After the S&P 500 came close to an all-time high on Friday, US equity futures were fractionally in the red ahead of today’s holiday closure in the cash session thanks to the Labor Day holiday. The Treasury market was also closed while the dollar was steady.

September has traditionally been a very ugly month for stocks over the past four years, while the dollar typically outperforms. The VIX has risen every September since 2021, a month which has proven to be the ugliest for the S&P over the past decade.

And if this Friday’s job report is ugly, the trend will likely continue, although now that nearly 1 million jobs have been “revised” away, it is much more likely that the payrolls print will come in well stronger than expected: after all, the BLS has to make sure it generates enough fake data to ensure that the deep state’s chosen candidate wins. Meanwhile, traders are pricing the US easing cycle will begin this month, with a roughly one-in-four chance of a 50 basis-point cut.

“I think the market is pretty well versed with what it thinks is going to happen — there will be some kind of cut,” Fiona Boal, global head of equities at S&P Dow Jones Indices, told Bloomberg Television. “As we move through autumn, we will see the VIX move more to thinking about the markets, thinking about political issues.”

Ahead of the Friday payrolls report we will get the latest figures on July job vacancies in Wednesday’s JOLTS report. The number of open positions, a measure of labor demand, is seen easing to a three-month low of 8.1 million — just above a more than three-year low.

Meanwhile, reprising the role of JPM’s favorite now-departed uber bear Marko Kolanovic, another Croat at the world’s largest bank, Mislav Matejka, wrote that the equity-market rally may stall even if the Fed starts its rate-cutting cycle as any policy easing would be in response to slowing growth, while the seasonal trend for September would be another impediment.  “We are not out of the woods yet,” Matejka said, reiterating his preference for defensive sectors against the backdrop of a pullback in bond yields. “Sentiment and positioning indicators look far from attractive, political and geopolitical uncertainty is elevated, and seasonals are more challenging.”

Elsewhere, as reported over the weekend, German Chancellor Olaf Scholz’s ruling coalition was punished in two regional elections on Sunday, with the far right clinching its first triumph in a state ballot since World War II. Still, political parties moved to block the Alternative for Germany from power in the eastern states of Thuringia and Saxony.

Taking a look at markets that are actually open, Europe’s Stoxx 600 fell 0.4% from Friday’s record high, with the automotive and consumer goods sectors particularly affected. This downturn followed data showing a fourth consecutive month of contraction in Chinese manufacturing activity, alongside a deepening slump in the country’s residential property market. Europe’s mining giants such as Rio Tinto and BHP Group slumped after iron ore prices dropped. In London, Rightmove surged more than 20% after Rupert Murdoch’s REA Group Ltd. said it’s exploring a possible cash and share offer.

Earlier in the session, most Asian stock markets started the new month under pressure following weak Chinese data over the weekend. Hang Seng dropped about 1.8% and H shares tumble almost 2%. Chinese equities had rallied on Friday after Bloomberg reported that the government is considering allowing homeowners to refinance as much as $5.4 trillion of mortgages to lower borrowing costs. But the benchmark gauge fell 1.7% on Monday, wiping out all of Friday’s gain, and tumbling to a seven-month low, helping to push the emerging-market benchmark lower for the fourth time in five days, as data showing weakness in the world’s second-biggest economy stoked concern Beijing’s stimulus plan isn’t working.

The Shanghai Shenzhen CSI 300 Index dropped to lowest level since Feb. 5, as mainland stocks that have erased $1.12 trillion since May extend losses.

Weekend releases showed factory activity contracted for fourth straight month, value of new-home sales fell almost 27% from year earlier and disappointing earnings from companies including China Vanke also soured sentiment.  With consumer demand already weak, data show industry also slowing, raising urgency for further stimulus.

“I think there’s a huge problem — by now everybody recognizes that,” Hao Ong, chief economist at Grow Investment Group, told Bloomberg’s David Ingles and Yvonne Man in an interview. “The government needs to do substantially more.”

Elsewhere in Asia, Japanese indexes reversed opening gains while those in Taiwan and Australia weaken.

In FX, the Bloomberg Dollar Spot Index is slightly higher in a quiet session while the yen resumes its plunge, and was last trading 147/USD while kiwi dollar underperforms G-10 peers.

In rates, TSY futures consolidate around 113-18 with cash Treasuries closed for US holiday. Australian yields rise 3-4bps across the curve. JGB futures remain better offered ahead of this week’s long-end supply.

In commodities, oil steadied as traders weigh a planned production increase from OPEC+ next month against currently lower output in Libya, while staying mindful of economic headwinds in China.

Top Overnight News

• China has threatened severe economic retaliation against Japan if Tokyo further restricts sales and servicing of chipmaking equipment to Chinese firms, complicating US-led efforts to cut the world’s second-largest economy off from advanced technology.
• Political parties in two eastern regions moved to block the Alternative for Germany from power after the far-right party won Sunday’s election in Thuringia and came a close second in neighboring Saxony.
• Israel’s largest labor union led a nationwide strike on Monday in protest over the government’s failure to secure a hostage-release deal, after the killing by Hamas of six hostages in captivity spurred one of the largest mass demonstrations since the Oct. 7 attack that started the war in Gaza: WSJ
• Super Micro Computer (SMCI) said it filed a non-timely 10-k with US SEC. Parties working diligently to complete review. Does not anticipate form 10-k NT will contain any material changes to results for FY and quarter ended June 30th, 2024.
• Microsoft backed OpenAI is considering changes to its corporate structure amid latest funding talks. OpenAI named political veteran Chris Lehane as head of global policy, according to NYT.
• Intel CEO is to present a plan to the board to sell off assets, according to Reuters source. CEO and executives will present plans at the mid-September board meeting, and plans could include selling Altera programmable chip unit, sources say. Sources added capital spending cuts may include a German factory which is expected to cost USD 32bln, but Intel has no current plans to sell its manufacturing business.
• Hospitality union Unite Here said about 10k hotel workers across US are on strike at 24 hotels in eight cities: Reuters.
• The equity market rally may stall near record highs even if the Federal Reserve starts a highly anticipated rate-cutting cycle: JPMorgan
• China’s remaining growth engines are showing signs of sputtering while the property market continues to drag on the economy, highlighting the urgency of government intervention to keep an increasingly unlikely growth target in sight: BBG
• September has traditionally been a terrible month for traders and risks being even harder to navigate in 2024 given lingering questions about the Federal Reserve’s anticipated interest-rate cut: BBG

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mostly lower despite the gains seen on Wall Street on Friday, with the mood in the APAC region dampened by the continued decline in Chinese NBS Manufacturing PMI whilst traders look ahead to key risks this week including the US jobs report amid the Fed’s shifted focus on employment. ASX 200 opened with modest gains but quickly fell into the red, with the gold miners seeing the deepest losses following the USD-induced losses in the yellow metal on Friday. Nikkei 225 initially outperformed and was underpinned by the weaker JPY, although gains gradually faded throughout the session. Hang Seng and Shanghai Comp fell in which Hong Kong was the regional laggard with property name New World slumping double-digit percentages after it said on Friday it is to post its first annual loss in two decades. Furthermore, auto stocks are slipping after earnings. Meanwhile, the mainland was lower after seeing mixed PMI data in which the NBS manufacturing fell to a six-month low whilst the Caixin Manufacturing saw a revision to above 50.0.

Top Asian News

• China reportedly warns Japan of retaliation over new potential new chip curbs, according to Bloomberg.
• China’s Global Times, on the Caixin Manufacturing PMI, says “The data indicates a pickup in demand, steady employment levels, and improving business confidence.”
• PBoC injected CNY 3.5bln via 7-day Reverse Repo at maintained rate of 1.70%.

FX

• DXY resided in a tight 101.64-79 range after Friday’s rise from 101.24 lows to 101.78 highs, with the next level to the upside the 21 DMA (102.02).
• EUR/USD was trading in tandem with the USD in a 1.1040-55 range vs Friday’s 1.1043-94 parameter, with the pair finding support near its 21 DMA (1.1042)
• GBP/USD saw movement in-fitting with Dollar action, with the pair caged in a 1.3117-38 parameter and well within Friday’s bounds between 1.3106-1.3199.
• USD/JPY experiencing modest upside as APAC traders react to Friday’s USD and bond movement. Little reaction was seen to Japanese data which included higher-than-prior Q2 Capex and a revision higher in August manufacturing PMI. USD/JPY resided in a 145.89-146.59 range after rising above its 21 DMA (145.97) on Friday
• Antipodeans eventually fell with the NZD lagging and giving back some of last week’s gains, whilst the AUD fell in tandem with base metals but recovered off worst levels.
• Yuan was weaker following the Chinese NBS Manufacturing figure over the weekend, with little reaction seen to the Caixin metric.
• PBoC sets USD/CNY mid-point at 7.1027 vs exp. 7.1030 (prev. 7.1124); strongest CNY fixing since May 16th

Fixed Income

• 10yr UST futures experienced uneventful trade after Friday’s selloff, with price action today likely to be limited amid the absence of US traders on account of the Labor Day holiday.
• Bund futures was slightly softer and catching up to some of the UST losses on Friday, with sentiment across German bonds also somewhat dampened by German regional elections in which the AfD’s projected win in Thuringia “would mark the first time since the defeat of Nazi Germany in World War II that a far-right party has won a statewide election in the country”, dpa said.
• 10yr JGB futures was subdued following price action in USTs on Friday with the contract in a 144.51-76 range thus far vs Friday’s 144.49-80 parameter.

Commodities

• Crude futures traded lower amid a lack of major geopolitical escalations over the weekend coupled with the Chinese NBS Manufacturing PMI data falling to a six-month low, not boding well for the China-related demand side of the equation. Furthermore, APAC players reacted to OPEC sources from Friday which suggested OPEC+ is likely to proceed with a planned gradual oil production increase from October.
• Spot gold gradually edged lower in-fitting with broader price action across commodities and dipped under the USD 2,500/oz mark.
• Copper futures were subdued with upside capped by the disappointing Chinese NBS Manufacturing data which showed a decline to a six-month low.
• Baker Hughes Rig Count: Oil unchanged at 483, Natgas -2 at 95, Total -2 at 583.
• Libya’s NOC said recent oilfields closures have caused loss of approximately 63% of total oil production.
• Iraq to offer 10 gas exploration blocks for US firms, according to the Iraqi oil minister.
• Russian President Putin says preparatory works on construction of Russia’s gas pipeline to China via Mongolia are proceeding as scheduled, according to Reuters.

Geopolitics: Middle East

• US President Biden is considering presenting Israel and Hamas a final proposal for a hostage-release and ceasefire in Gaza deal later this week, according to Axios sources.
• Israel recovered the bodies of six hostages from a tunnel in Gaza, according to Sky News.
• Israeli PM Netanyahu, following the weekend death of six hostages in Gaza, said Israel will not rest until it reaches those in Hamas who murdered the hostages. He added that he and his government are committed to achieving a deal to release remaining hostages and ensure Israel’s security, according to a statement.
• Hamas official blamed Israel for the death of hostages, and said Israel is unwilling to reach a deal, according to Reuters.
• Yemen’s Houthis said they targeted MV Groton vessel in Gulf of Aden for second time, according to Reuters.
• UKMTO said it has received report of an incident 70NM northwest of Yemen’s Saleef, according to Reuters.
• “US official: Washington will hold intensive contacts in the coming hours to see the possibility of reaching an agreement”, according to Sky News Arabia.
• Israel union calls for general strike as protesters across country demand Gaza hostage deal, according to BBC.

Geopolitics: Ukraine

• Russia will make changes to its nuclear doctrine, according to TASS citing the Deputy Foreign Minister.
• A fire caused by an drone strike at the Moscow Oil Refinery has been contained, according to TASS.
• Several blasts heard in Ukraine capital Kyiv, according to Reuters witnesses. “A series of explosions in Kyiv… as Russians attacked with a combination of cruise missiles, ballistic missiles and kamikaze drones.”, according to KyivPost.
• Poland activated its aircraft to ensure airspace security, Polish Armed Forces said, following Russia’s air attack on Ukraine.

Geopolitics: Other

• A China Coast Guard vessel deliberately collided three times with a Philippine Coast Guard vessel exercising its freedom of navigation in the Philippines, according to US State Department.

US Event Calendar

• Labor Day holiday closure

DB’s Jim Reid concludes the overnight wrap

Welcome to September. Although given the track record of recent years, perhaps we should say beware rather than welcome. For what it’s worth, the S&P 500 and the STOXX 600 have lost ground in each of the last 4 Septembers. And if you’re hoping for respite in fixed income, there hasn’t been any there either. In fact, Bloomberg’s global bond aggregate is down in each of the last 7 Septembers. So if we do manage to get some positivity this month, that would fly in the face of a succession of negative performances.

Given it’s the start of the month, we’ve also just released our monthly performance review for August. Despite the turmoil at the start, which led to sharp losses across global markets, August was actually a pretty decent month overall in performance terms. For instance, both the S&P 500 and US Treasuries advanced for a 4th consecutive month. That said, there were points of weakness, and the Dollar index had its worst month since last November as investors priced in more aggressive rate cuts from the Fed.

Speaking of the Fed, all roads this week lead to the US jobs report on Friday, which is going to be pivotal in terms of how much they cut rates by at their next meeting. As it stands, futures still see a 25bp move as more likely, but a 50bp move is being priced with a 31% probability this morning, so it’s in the balance as far as markets are concerned. And as we found out last month, an underwhelming jobs report can quickly shift expectations.

In terms of what to expect this time around, DB’s US economists are forecasting that nonfarm payrolls will come in at +150k in August. That assumes a rebound from potential weather-related disruptions in the July report, and they also see the unemployment rate ticking down a tenth to 4.2%. Of course, much of the focus will be on how Fed officials react, although they won’t have long to discuss the data, as the blackout period ahead of the September meeting begins the day after the jobs report.
Although last month’s jobs report was underwhelming, it’s also worth noting that much of the data since then has looked more positive. The weekly initial jobless claims have fallen from their levels in late-July, the latest retail sales print was very strong as well, and the revisions to Q2 GDP growth saw it adjusted up to an annualised pace of +3.0%, which isn’t consistent with a recession. Moreover, Friday saw the Atlanta Fed’s GDPNow estimate for Q3 move up to +2.5%, so again pointing away from a recession. This week we should get some more details on the August picture, as we’ll get the ISM manufacturing and services prints, which are coming out on Tuesday and Thursday respectively. The JOLTS report on Wednesday will also be worth looking at, although that’s a bit more backward-looking as it’s the July reading.

Aside from the US data, it’s a fairly subdued calendar this week, and US markets are themselves closed today for the Labor Day holiday. One thing we will get though is the Bank of Canada’s latest policy decision on Wednesday, where they’re widely expected to cut rates by 25bps for a third consecutive meeting, which would take their policy rate down to 4.25%.

As the week begins, markets in Asia have got off to a weak start. In part, that’s been driven by concerns about the Chinese economy, and the official manufacturing PMI that came out on Saturday fell to a 6-month low of 49.1 in August (vs. 49.5 expected). The non-manufacturing PMI did pick up to 50.3 (vs. 50.1 expected), but this was barely above the 50.2 reading from the previous month, which had marked the lowest print so far this year. In light of this, Chinese equities have fallen back this morning, including the CSI 300 (-1.21%) and the Shanghai Comp (-0.62%). Elsewhere, things are a bit stronger though, with Japan’s Nikkei (+0.03%) seeing little change, while the KOSPI is up by +0.26%.

Meanwhile over the weekend, there were important political developments in Germany, where state elections took place in the eastern states of Thuringia and Saxony. In Thuringia, the far-right AfD came in first place with 32.8% of the vote on the preliminary results, which is the first time that the party have come first in a German state election. And in Saxony, the AfD were in second place on 30.6% of the vote, not far behind the CDU on 31.9%. At the same time, the results were poor for the three parties in the federal coalition, with Chancellor Scholz’s SPD scoring just 6.1% in Thuringia and 7.3% in Saxony. The Greens were even further behind, on just 3.2% in Thuringia and 5.1% in Saxony. And the FDP was on just 1.1% in Thuringia and 0.9% in Saxony. The next state election is taking place in Brandenburg on September 22.

Recapping last week now, markets put in a decent performance overall, with the S&P 500 climbing +0.24% last week (+1.01% Friday). That was its 3rd consecutive weekly gain, and it now leaves the index just -0.33% beneath its all-time high from mid-July. However, the index was held back by the Magnificent 7, which fell -1.89% over the week (+1.57% Friday), including a -7.73% decline for Nvidia (+1.51% Friday) amidst its latest earnings announcement. Aside from the weakness in US tech stocks though, several indices hit all-time records by Friday, including the equal-weighted S&P 500 and the Dow Jones. Meanwhile in Europe, the STOXX 600 closed at an all-time high as well, having posted a +1.34% gain last week (+0.09% Friday).

On Friday itself, the main development came from the latest US PCE inflation data for July, which is the measure the Fed officially target. That showed core PCE coming in at a monthly pace of +0.16%, which brought down the 3m annualised rate falling to +1.7%. The year-on-year rate also remained at +2.6% for a third consecutive month (vs. +2.7% expected). So the report was seen as confirming that the Fed would still be able to cut rates next month, and there were also some positive details in the components For instance, the core services ex housing measure, which Powell has cited in the past, fell to just +2.0% on a 3m annualised basis, which is the lowest it’s been since November 2020.

Friday also brought some inflation data from the Euro Area, where the flash CPI release for August came in at +2.2% as expected. That’s the lowest inflation for the Euro Area since July 2021, so that was seen as keeping the path open to another ECB rate cut at the September meeting. In addition, core inflation fell to +2.8% as expected.

With all that data in hand, investors remained confident that central banks would be delivering substantial rate cuts over the months ahead. In the US, they slightly dialled back the cuts priced in, with the chance of a 50bp move in September falling from 35% to 32% over the week. Similarly, the number of cuts priced in by December’s meeting fell back a bit from 103bps to 100bps. In response, the 2yr Treasury yield was little changed over the week, up just +0.1bp to 3.92%, whilst the 10yr yield saw a larger +10.5bps move to 3.90%. Meanwhile in Europe, yields on 10yr bunds ended the week up +7.4bps at 2.30%.

Authored by Jeffrey Tucker via The Brownstone Institute,

Consider Mark Zuckerberg’s revelation and its implications for our understanding of the last four years, and what it means for the future. 

On many subjects important to public life today, vast numbers of people know the truth, and yet the official channels of information sharing are reluctant to admit it. The Fed admits no fault in inflation and neither do most members of Congress. The food companies don’t admit the harm of the mainstream American diet. The pharmaceutical companies are loath to admit any injury. Media companies deny any bias. So on it goes. 

And yet everyone else does know, already and more and more so.

This is why the admission of Facebook’s Mark Zuckerberg was so startling. It’s not what he admitted. We already knew what he revealed. What’s new is that he admitted it. We are simply used to living in a world swimming in lies. It rattles us when a major figure tells us what is true or even partially or slightly true. We almost cannot believe it, and we wonder what the motivation might be. 

In his letter to Congressional investigators, he flat-out said what everyone else has been saying for years now. 

In 2021, senior officials from the Biden Administration, including the White House, repeatedly pressured our teams for months to censor certain COVID-19 content, including humor and satire, and expressed a lot of frustration with our teams when we didn’t agree….I believe the government pressure was wrong, and I regret that we were not more outspoken about it. I also think we made some choices that, with the benefit of hindsight and new information, we wouldn’t make today. Like I said to our teams at the time, I feel strongly that we should not compromise our content standards due to pressure from any Administration in either direction – and we’re ready to push back if something like this happens again.

A few clarifications. The censorship began much earlier than that, from March 2020 at the very least if not earlier. We all experienced it, almost immediately following lockdowns. 

After a few weeks, using that platform to get the word out proved impossible. Facebook once made a mistake and let my piece on Woodstock and the 1969 flu go through but they would never make that mistake again. For the most part, every single opponent of the terrible policies was deplatformed at all levels. 

The implications are far more significant than the bloodless letter of Zuckerberg suggests. People consistently underestimate the power that Facebook has over the public mind. This was especially true in the 2020 and 2022 election cycles. 

The difference in having an article unthrottled much less amplified by Facebook in these years was in the millionfold. When my article went through, I experienced a level of traffic that I had never seen in my career. It was mind-boggling. When the article was shut down some two weeks later – after focused troll accounts alerted Facebook that the algorithms had made a mistake – traffic fell to the usual trickle. 

Again, in my entire career of closely following internet traffic patterns, I had never seen anything like this. 

Facebook as an information source offers power like we’ve never seen before, especially because so many people, especially among the voting public, believe that the information they are seeing is from their friends and family and sources they trust. The experience of Facebook and other platforms framed the reality that people believed existed outside of themselves. 

Every dissident, and every normal person who had some sense that something odd was going on, was made to feel like some sort of crazy cretin who held nutty and probably dangerous views that were completely out of touch with the mainstream. 

What does it mean that Zuckerberg now openly admits that he excluded from view anything that contradicted government wishes? It means that any opinions on lockdowns, masks, or vaccine mandates – and all that is associated with that including church and school closures plus vaccine harms – were not part of the public debate. 

We had lived through and were living through the most significant far-reaching attacks on our rights and liberties in our lifetimes, or, arguably, on the history record in terms of scale and reach, and it was not part of any serious public debate. Zuckerberg played an enormous role in this. 

People like me had come to believe that average people were simply cowards or stupid not to object. Now we know that this might not have been true at all! The people who objected were simply silenced! 

During two election cycles, the Covid response was not really in play as a public controversy. This helps account for why. It also means that any candidate who attempted to make this an issue was automatically downgraded in terms of reach. 

How many candidates are we talking about here? Considering all the US elections at the federal, state, and local levels, we are talking about several thousand at least. In every case, the candidate who was speaking out about the most egregious attacks on liberty came to be effectively silenced. 

A good example is the Minnesota governor’s race in 2022 that was won by Tim Walz, now running as VP with Kamala Harris. The election pitted Walz against a knowledgeable and highly credentialed medical expert, Dr. Scott Jensen, who made the Covid response a campaign issue. Here is how the vote totals lined up.

Of course, Dr. Jensen could get no traction at all on Facebook, which was enormously influential in this election and which just admitted that it was following government guidelines in censoring posts. In fact, Facebook banned him from advertising completely. It reduced his reach by 90% and likely lost him the election. 

You can listen to Jensen’s account here: 

IMPOTENT PAWNS – Joe Biden conspired with Facebook to reduce Americans to impotent pawns! pic.twitter.com/k5SxQknNRL

— Scott Jensen (@drscottjensen) August 27, 2024

Consider how many other elections were affected. It’s astonishing to think of the implications of this. It means that quite possibly an entire generation of elected leaders in this country was not legitimately elected, if by legitimate we mean a well-informed public that is given a choice concerning the issues that affect their lives. 

Zuckerberg’s censorship – and this pertains to Google, Instagram, Microsoft’s LinkedIn, and Twitter 1.0 – denied the public a choice on the central matter of lockdowns, masking, and shot mandates, the very issues that have fundamentally roiled the whole of civilization and set the path of history on a dark course. 

And it is not just the US. These are all global companies, meaning that elections in every other country, all over the globe, were similarly affected. It was a global shutdown of all opposition to radical, egregious, unworkable, and deeply damaging policies. 

When you think about it this way, this is not just some minor error in judgment. This was an earth-shattering decision that goes way beyond managerial cowardice. It goes beyond even election manipulation. It is an outright coup that overthrew an entire generation of leaders who stood up for freedom and replaced them with a generation of leaders who acquiesced to power exactly at the time it mattered the most. 

Why did Zuckerberg choose now to make this announcement and publicly reveal the inside play? He was obviously unnerved by the assassination attempt on Trump’s life, as he said. 

WATCH: Facebook @Meta CEO Mark Zuckerberg said seeing President Trump get up and pump his fist after being shot in the face at his rally in Pennsylvania is “one of the most badass things” he’s ever seen.

Looks like Zuck is trying to say nice things to avoid all responsibility… pic.twitter.com/wKnOFGYZCA

— Laura Loomer (@LauraLoomer) July 19, 2024

Then also you have the French arrest of Telegram founder and CEO Pavel Durov, an event which surely rattles any major CEO of a communication platform. You have the arrest and incarceration of other dissidents like Steve Bannon and many others. 

You also have the litigation over free speech back in play now that RFK, Jr has been cleared as having standing, kicking the case of Missouri v. Biden back to the Supreme Court, which wrongly decided last time to deny standing to other plaintiffs. 

Zuckerberg of all people knows the stakes. He understands the implications and the scale of the problem, as well as the depths of the corruption and deception at play in the US, EU, UK, and all over the world. He may figure that everything is going to come out at some point, so he might as well get ahead of the curve. 

Of all the companies in the world that would have a real handle on the state of public opinion right now, it would be Facebook. They see the scale of the support for Trump. And Trump has said on multiple occasions, including in a new book coming out in early September, that he believes Zuckerberg should be prosecuted for his role in manipulating election outcomes. What if, for example, his own internal data is showing 10 to 1 support for Trump over Kamala, completely contradicting the polls which are not credible anyway? That alone could account for his change of heart. 

It becomes especially pressing since the person who did the censoring at the Biden White House, Rob Flaherty, now serves as Digital Communications Strategist for the Harris/Walz campaign. There can be no question that the DNC intends to deploy all the same tools, many times over and far more powerful, should they take back the White House. 

“Under Rob’s leadership,” said Biden upon Flaherty’s resignation, “we’ve built the largest Office of Digital Strategy in history and, with it, a digital strategy and culture that brought people together instead of dividing them.”

At this point, it’s safe to assume that even the most well-informed outsider knows about 0.5% of the whole of the manipulation, deception, and backroom machinations that have taken place over the past five or so years. Investigators on the case have said that there are hundreds of thousands of pages of evidence that are not classified but have yet to be revealed to the public. Maybe all of this will pour forth starting in the new year. 

Therefore, the Zuckerberg admission has much larger implications than anyone has yet admitted.

It provides a first official and confirmed peek into the greatest scandal of our times, the global silencing of critics at all levels of society, resulting in manipulating election outcomes, a distorted public culture, the marginalization of dissent, the overriding of all free speech protections, and gaslighting as a way of life of government in our times. 

In 2022, an estimated 292 million people worldwide were using illegal drugs, with 60 million consuming opioids such as morphine, codeine, or heroin, according to the latest United Nations World Drug Report. This makes opioids the second most widely used class of illicit drugs, trailing behind cannabis, which has approximately 228 million users.

While cannabis use is more widespread and carries a relatively low risk of addiction, it does not result in overdose deaths. The same cannot be said for the far more potent and dangerous class of opioids. As highlighted in the latest data from the Centers for Disease Control and Prevention (CDC), synthetic opioids like fentanyl have become the leading cause of the rising number of drug overdose deaths.

Of the nearly 108,000 recorded overdose deaths in 2022, almost 74,000 were directly linked to synthetic opioids, with fentanyl being the most prevalent. Fentanyl is said to be 50 times more potent than heroin and has become a preferred choice for illegal drug manufacturers due to its ease of production and low cost, unlike traditional opioids that rely on crop cultivation. The impact is even more severe among younger populations. In the 15 to 24 age group, 81 percent of the 6,696 overdose deaths in 2022 were attributed to synthetic opioids, with related fatalities increasing fivefold from 2015 to 2022.

On a global scale, opioid use has remained relatively stable since 2019, with reported users even decreasing slightly from 62 million in the year before the coronavirus pandemic. According to data from the United Nations Office on Drugs and Crime (UNODC), the global prevalence rate of opioid use was 1.2% in 2022. However, certain regions reported significantly higher rates: 3.2% in the Near and Middle East/South-West Asia, 2.7% in North America, and 2.0% in Australia and New Zealand.

While cannabis use continues to dominate in terms of sheer numbers, the stark difference in overdose risks highlights the urgency in addressing the ongoing opioid crisis, particularly the lethal threat posed by synthetic variants like fentanyl.

As visualized by Statista:

Authored by Steve Watson via Modernity.news,

Almost 1.7 million foreigners residing in the U.K. are out of work or “economically inactive,” costing taxpayers an estimated £8.5 billion per year according to a new report.

An analysis of government figures by the Centre for Immigration Control shows that the current levels are the highest ever, surpassing a previous high of 1,628,000, recorded in 2012.

The £8.5 billion estimate doesn’t even include the costs of asylum seekers, who are routinely placed into four star hotels, as well as foreign students, meaning the actual cost to a British taxpayers is probably much higher.

In addition, the Institute for Fiscal Studies (IFS) has revealed that the Home Office spent a staggering £7.9 billion in just three years on asylum, border, and visa management when its budget was just £320 million.

They went £7.6 BILLION over budget.

‘Woeful budgeting’ at the Home Office caused repeated overspends on asylum, says watchdog https://t.co/YmME83HdM0

— LBC (@LBC) August 28, 2024

IFS research economist Max Warner told the BBC “When there is a one-off unexpected spike in costs or demand, spending more than was budgeted is entirely understandable. But when it is happening year after year, something is going wrong with the budgeting process.”

Robert Bates, of the Centre for Migration Control research director, told The Daily Mail that “For all the talk of a fiscal ‘black hole’, the Labour Government seem to be missing the glaringly obvious fact that mass migration is causing economic pandemonium.”

“There is no reason for us to continue handing out so many long-term visas when we are currently having to bail out over a million migrants who are already in Britain but not working,” Bates further noted.

Record numbers of migrants living in Britain are jobless with more than 1.6 million unemployed or ‘economically inactive’ people costing taxpayers an estimated £8billion https://t.co/xhbMpRJOVT pic.twitter.com/LmNfchWRjE

— Daily Mail Online (@MailOnline) August 30, 2024

“This is the very definition of a Ponzi scheme, and we will only compound the problem if we do not change course soon,” he urged.

“Our elderly are facing a potentially deadly winter as Keir Starmer cancels the lifeline of the winter fuel allowance, but at the same time he is doing nothing to clamp down on workless migrants,” Bates emphasised.

In response to the report, Reform UK leader Nigel Farage commented “The economic arguments for mass migration are over.”

The economic arguments for mass migration are over. https://t.co/gyv1MrMG6n

— Nigel Farage MP (@Nigel_Farage) August 30, 2024

Farage previously addressed the loophole of foreign students in the UK being given visas for their entire families, urging that they shouldn’t be able to “bring mum” to university.

*  *  *

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.

Authored by Pete Menzies via The Epoch Times,

We need to talk about Julie Sweeney.

She’s a 53-year-old English woman who used to live in Church Lawton, Cheshire, and she once had a Facebook account. Today, she’s in prison, serving a 15-month sentence after being convicted under new Criminal Code provisions in the United Kingdom’s Online Safety Act.

From all available accounts, Ms. Sweeney had—at least until this summer—lived without causing any trouble or having any negative interactions with the local constabulary. Then, on Aug. 3, she lost her temper during the height of the British riots that ensued following the murders of little girls in a Taylor Swift dance class and wrote something really nasty on a local community group Facebook page.

“Don’t protect the mosques,” she posted to the 5,100-member group. “Blow the mosque up with the adults in it.”

That’s a very ugly thing to say and within hours one individual who read it complained to the police, who promptly arrested Ms. Sweeney. According to the Crown prosecutor, upon being taken into custody, Ms. Sweeney told officers, “I’m not being rude but there are a lot of people saying it.”

 

That’s not good. But it is important to note that while there was indeed violence directed towards the mosque, Ms. Sweeney’s comments related to the aftermath. There is no evidence which I can find in the coverage of the case that her post inspired anyone to do harm to the building, to anyone in or around it, or that it became a rallying cry of any kind. Nor was there any proof offered that she seriously wished for the mosque “with the adults in it” to be blown up.

We can all agree that it was a truly dreadful thing to say. And we should all acknowledge that, other than writing and hitting “send,” Ms. Sweeney’s crime is entirely about something hideous that she said—in a post later deleted—not something she did or inspired someone to do.

She admitted in court that the post was made in anger, that it was unacceptable, and that she didn’t intend to inspire fear which, if you were a regular attendee at the mosque, you likely would have felt if you read it.

People can debate whether statements of that nature should be censured by civil society through shaming, shunning, and blocking or through the intervention of the state.

What really catches the eye in this case, though, is the intensity with which the presiding judge punished her upon accepting her guilty plea.

According to the Daily Mail, her lawyer had told the court that Ms. Sweeney “accepts it was stupid.”

“This was a single comment on a single day,” he said.

“She lives a quiet, sheltered life in Cheshire and has not troubled the courts in her long life. Her character references show she lives a kind and compassionate lifestyle. She has been primary carer for her husband since 2015.”

The judge said he took Sweeney’s good character and what he termed a “heart-rending” letter from her husband into account but that “even people like you need to go to prison because a message must go out that, if you do these terrible acts, the court will say to you, “You must go to prison.”

Really? Even if one thinks speech should be a matter for the Criminal Code, wouldn’t it seem more appropriate for the outcome to be something along the lines of a summary conviction or a suspended sentence with a ban on using social media?

Sending Ms. Sweeney to prison, particularly when the UK’s prisons are so overcrowded the government was already preparing to release thousands of criminals early, really speaks to the mindset of the Crown and the judge when it comes to cracking down on online speech.

Clearly this sort of speech has, in their view, become a more serious matter than common physical assault, the sentence for which is a maximum of six months, which can be elevated up to two years if motivated by race or religion.

Why should Canadians care? Because Ms. Sweeney and her nation’s Online Safety Act may very well be the canaries in our coalmine.

Justice Minister Araf Virani, architect of Canada’s Online Harms Act, has already cited the UK experience as something that has informed his approach. To be fair, he hasn’t said he agrees with it all, but he is the man who has been appointing the judges who will be sentencing people convicted of Bill C-63’s new offences once they become law. He will also be in charge of hiring the Human Rights Commissioner, big job given it will be tasked with managing thousands of complaints from people made to feel uncomfortable by something someone posts online.

When that’s done, he’ll be looking for someone to fill the role of Digital Safety Commissioner to patrol how social media companies in Canada manage speech deemed to be problematic.

If those appointees see the world the same way Ms. Sweeney’s judge does—that speech is more harmful than action—some very interesting times are just around Canada’s corner.

*  *  *

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

August 30 marked the International Day of the Victims of Enforced Disappearances. Enforced disappearances are the arrest or abduction of a person by or on behalf of the state, followed by that same authorities’ refusal to acknowledge it. The move is used as a means to silence opposition and to spread terror.

The following chart, via Statista’s Anna Fleck, looks specifically at the number of media workers that have disappeared over the past 24 years. According to the Reporters Without Borders (RSF) database, at least 217 media workers have disappeared since the year 2000. This includes those who are victims of enforced disappearance as well as those who have disappeared at the hands of non-state related groups.

You will find more infographics at Statista

Mexico is the country from which the highest number of media professionals have disappeared in this time frame, counting 37 in total. Of these, 31 are listed as “ongoing” cases. According to RSF, an additional 152 media professionals have been verified as killed in Mexico between 2000 and 2024, three of whom died in 2024.

Commenting on the global pattern of disappearances, RSF secretary-general Christophe Deloire said:

“China invented the ‘enforced vacation,’ Syria developed mass disappearances and Africa copied South America, which sadly pioneered enforced disappearance.”

“Instead of decreasing, this barbaric practice is diversifying, spreading all over the world and creating more and more victims among journalists and bloggers every year. We deplore the impunity usually enjoyed by the perpetrators of these crimes and the lack of commitment by democratic governments to bring them to an end.”

With 35 cases, Syria is the country with the second highest number of media professionals who have disappeared worldwide between 2000 and 2024. While the majority of these (26) disappeared between 2011 and 2014, five people were recorded as having disappeared as recently as 2019.

According to estimates of the Syrian Network for Human Rights, there have been at least 65,000 victims of enforced disappearances in Syria since 2011.

It must officially be fall in the United States…after all, what’s more American than leaves falling, sweatshirt weather, pumpkin spice lattes…and massive brawls outside of high school football games?

That’s exactly what took place in Norristown, just miles outside of Philadelphia, where a fight at the Norristown Area High School’s football stadium caused a game to be cancelled. 

During the annual “Battle of the Bridge” varsity football game between Norristown and Upper Merion, no issues occurred inside the stadium. However, a “series of altercations” erupted in the parking lot at halftime on the 1900 block of Eagle Drive.

Five juveniles from Norristown Area High School were taken into custody, according to ABC News 6.

“That’s a shame because it is a small group of individuals that went out into the parking lot and started to fight. So I mean people have to act responsible and parents have to be responsible,” said West Norriton Police Chief Michael Kelly. 

“We want to emphasize that these incidents were not as a result of any conflict between Norristown Area High School and Upper Merion Area High School,” a statement said.

“Both schools share a commitment to sportsmanship and respect, and the actions of a few individuals do not reflect the values of our student-athletes and supporters,” the statement continued.

The ABC News 6 report says that the game will continue on Saturday at 10 a.m. without any spectators and will be live-streamed, officials announced. Both school districts will meet with their police departments to discuss future football game security.

This isn’t the first season with issues. Last year, a Cheltenham student brought a gun to the Abington-Cheltenham game, causing its suspension. This year, Abington has chosen not to play that game.

Submitted by QTR’s Fringe Finance

What an interesting way to end the third quarter of 2024.

The yen carry trade chaos looked like it was going to break markets permanently a couple of weeks ago, and now here we are, back near highs with “the world‘s most important stock” (and my top contender for a black swan) Nvidia, once again beating earnings expectations yesterday and giving a positive outlook for 2025.

We are also one market review further into 5.5% interest rates, and despite assurances that we will see a rate cut in the coming month, a lot of questions remain up in the air about whether or not it will have an impact. I wanted to offer my updated thoughts on the market on my blog commented on some of the 27 individual stocks that I’ve been watching throughout the year.

For now, let’s stick to overall feel of markets. As a gold and gold miner investor, I’m extremely encouraged by the fact that we are heading into Fed rate cuts with gold at all-time highs. There aren’t too many historical precedents for what I believe will take place at that point.

I think the Fed is going to try to start cutting 25 basis points at a time and be measured. Despite Powell confirming the pivot at Jackson Hole, commentary from several Fed governors over the last week, including Raphael Bostic last Wednesday, indicates that they are still in no rush to cut and are interested in incoming data—but I think this will be short-lived.

*FED’S BOSTIC: STILL AWAITING DATA TO BE SURE IT’S TIME TO CUT

*BOSTIC PREFERS WAITING LONGER, EVEN IF IT MEANS BEING CAUTIOUS

A 25 basis point cut has been priced in now for over six months. This market is trading as though significantly lower rates, like those in the 2% or 1% range, are imminent. They’re not.

No one is going to get cash from home equity re-fis changing their mortgage rate from 7% to 6.75%. No one is going to see their credit cards lower interest rates. A 25 basis point cut is going to do precisely nothing to unjam the gears of the economy. As I have been saying for a while now, I would not be surprised to see a major market crash after the first rate cut takes place. It could wind up being the ultimate “sell the news” event, the first rate cut.

 

And it seems to me the market’s mood since Jackson Hole last Friday has been indicating that this news could already be priced in. The market was up after Powell’s speech, but not significantly, and it looked tired.

 

Similarly, yesterday, the market had a lot of trouble keeping a bid under Nvidia which puked to session lows quickly with about 2 hours left in trading, despite the fact that the company beat its earnings report. It bought back some of those gains on Friday.  

All over social media and trading desks that I follow, people were talking about the fact that the company didn’t beat the whisper numbers. This means that market expectations are so high for the company that everybody expects a beat, and the stock really only “beats” when it beats the number above the expected beat number.

To quote Dark Helmet: “Everybody got that?”

Putting aside short-term skews, overall, the market simply feels extremely exhausted to me. And make no doubt about it, we cannot go on for an infinite number of days, weeks, and months with interest rates where they are right now and not suffer consequences. I have been late, for sure, in my prognostication that these high rates would eventually crash the market. However, if rates stay here, I know for sure I won’t be proven wrong—just wrong on timing.

Last week’s revision in the jobs numbers was just one of multiple indicators that prove this economy isn’t nearly as healthy as it seems. Job growth in the United States over much of the past year was considerably weaker than initially reported. The Bureau of Labor Statistics’ preliminary annual benchmark revision indicated that there were 818,000 fewer jobs in March than originally estimated. This preliminary revision represents the largest downward adjustment since 2009.

Even when we gear the CPI number with hedonic adjustments and pump the jobs number with government jobs while overpaying for stocks using leverage and paying off household expenses using credit cards, there is only so much runway left for the American economy, the American consumer and the psychology of the American investor. As I said at the beginning of the year, I continue to believe that staple stocks, utilities, miners, commodities, and energy are all going to be safe havens to play in when it comes to buying dips and owning stocks for the time being.

The market is extremely overvalued no matter how you slice it. I still believe my prediction from 2022 will hold true and that we will eventually see massive outsized moves in gold when the Fed fully lets off the quantitative tightening gas and reverts back to the inevitable quantitative easing. Gold was $1,820/oz. when I first wrote that and now sits comfortably over $2,500/oz — $200 oz. higher than my last market review just 2 months ago.

In addition to monetary mayhem, we have numerous additional catalysts coming up with an election where one candidate seems hell-bent on trying to ruin the economy and drive as much money out of the stock market and the country as possible. Oh and then there’s still that pesky fiscal situation in the U.S. that is completely untenable (listen to this interview with James Lavish and read this report from Mark Spiegel to understand).

On top of the election itself and the communist policies that I believe would be extraordinarily dangerous coming from Kamala Harris, the world remains up in arms with each other. The Ukraine-Russia conflict has not ended yet, the conflict in the Middle East continues to boil, and China continues to conduct defense drills around Taiwan. Put simply, the Biden administration has done nothing to quell geopolitical tensions, and we likely won’t see any profound shift until after the election.

If it’s not the yen carry trade blowing up or geopolitics that sets off alarms, it’s going to be commercial real estate, retail bowing out, or massive fraud or unreported liabilities popping up at a company that nobody expects. There are a number of black swan catalysts that could set off selling in addition to good old-fashioned lack of liquidity and a significant change in sentiment—both of which I think are coming. 

This time isn’t different. For the individual stocks I like and more detail, read my full September 2024 portfolio review here. 

QTR’s Disclaimer: Please read my full legal disclaimer on my About page here. This post represents my opinions only. In addition, please understand I am an idiot and often get things wrong and lose money. I may own or transact in any names mentioned in this piece at any time without warning. Contributor posts and aggregated posts have been hand selected by me, have not been fact checked and are the opinions of their authors. They are either submitted to QTR by their author, reprinted under a Creative Commons license with my best effort to uphold what the license asks, or with the permission of the author. This is not a recommendation to buy or sell any stocks or securities, just my opinions. I often lose money on positions I trade/invest in. I may add any name mentioned in this article and sell any name mentioned in this piece at any time, without further warning. None of this is a solicitation to buy or sell securities. I may or may not own names I write about and are watching. Sometimes I’m bullish without owning things, sometimes I’m bearish and do own things. Just assume my positions could be exactly the opposite of what you think they are just in case. All positions can change immediately as soon as I publish this, with or without notice and at any point I can be long, short or neutral on any position. You are on your own. Do not make decisions based on my blog. I exist on the fringe. The publisher does not guarantee the accuracy or completeness of the information provided in this page. These are not the opinions of any of my employers, partners, or associates. I did my best to be honest about my disclosures but can’t guarantee I am right; I write these posts after a couple beers sometimes. I edit after my posts are published because I’m impatient and lazy, so if you see a typo, check back in a half hour. Also, I just straight up get shit wrong a lot. I mention it twice because it’s that important.

 

By Peter Tchir of Academy Securities

I could be extremely lazy this weekend and just repost (with an updated chart) the Heads I’m Smart, Tails I’m Stupid report as the market continued to flip-flop around. On Friday alone, the Nasdaq 100 rose 1.2%, gave it all back, and then ended up 1.2% (with a good chunk of the gain coming in the last 10 minutes of trading). And that was somewhat “mellow” compared to the price action after some earnings reports. I continue to remain concerned that liquidity is abysmal, though maybe that will improve as we enter September.

But I won’t be totally lazy, though we will try to keep this weekend’s note short.

My First Wargame

Two weeks ago, I had the pleasure of attending and speaking at the Naval War College. I learned a lot about wargames, both from a historical perspective and regarding their current application. I did not know that Fleet Admiral Nimitz credited much of the success in the Pacific to the time they had spent wargaming (and that the main thing they had not prepared for was Kamikaze pilots).

Our wargame was centered on a theoretical blockade of Taiwan by China in 2027. It was very interesting to watch how the teams responded and how easy it was for miscommunication to occur, even in a small room, with no separation in time zones. I was part of the China team (almost as though the organizer had read a lot of T-Reports and felt that was fitting). Despite what seemed like efforts to deescalate, it was eye-opening to see how easy it was to slip into escalation as one nation’s “deterrence” was another’s “provocation.” The organizers of the wargame did admit that earlier in the month they had run the same wargame, mostly with economists, and it very rapidly descended into calling in aircraft carriers (the one I participated in had a mix of people, including many veterans).

There were a few recurring themes, none of which were a major surprise, but still warrant just a couple of moments:

• Military competition with China. From ships, where China is rapidly outbuilding the U.S., to “efficient systems” (expensive missiles vs. drones), to technologies that we’ve “shelved” (like hypersonic weapons to some extent), adversaries have advanced significantly, and there were a lot of warnings. Not necessarily alarming, but certainly a potential “wakeup call” if we continue on the current path of increased competition.
• Chips. The importance of chips and manufacturing technology came up over and over again, and it was touched on during every part of the symposium. The most informative part of the symposium (for me) was that one of the heads of the “foundry” effort for a major U.S. chip company spoke. The scale and size of what “we” need to do is enormous – the CHIPS Act is just a starting point in terms of funding. It is encouraging that there is support from D.C. for the chip industry that seems highly likely to remain in place regardless of who wins the election. On a personal note, I did get some confirmation of Academy’s theory that the “traditional industrial areas” of the U.S. will benefit as we get more serious about reshoring manufacturing.
• Water. The availability of water for any type of manufacturing activity is likely to be key, and much of the traditional manufacturing base has an abundance of water (as well as students graduating from technical programs). Companies need to be thinking about the possibility that at least some portion of the demographic shift that we’ve seen over the last decade will slow (if not reverse) as we re-industrialize the nation. Maybe the rising inventory in homes for sale in Floria and Texas is a sign that this “pet theory” is starting to occur?

Whether we need a “Man on the Moon” or “Manhattan Project” type of moment to rapidly grow our capabilities remains unclear. That sort of “national agenda” might not be necessary, but it would go a long way and seems to create a lot of potential for the next president to act.

The Fog of War and the Economy

The “Fog of War” describes uncertainty (and to some extent confusion) in military planning and decision making. It seems to apply incredibly well to the economy (and markets) at the moment.

• Inflation. We are done arguing that inflation is coming down and that the spike in the first quarter was a statistical anomaly. We continue to stick to our simple “COVID Bump” model where goods had a sharp spike that has largely declined already, and that the services sector took longer to ramp up to “peak” inflation, but is also coming down. The real question now (since so many seem to finally have given up on inflation resurgence fears) is what is the floor on inflation? We have argued that Geopolitical Inflation will provide a floor on how low inflation can go. The process of “securing” supply chains, in a variety of forms, will be inflationary. The geopolitical risks to commodities will provide a floor to inflation. I’m starting to question that assumption, as the efforts so far to reshore, reindustrialize, and expand both traditional and nontraditional energy sources have been slower than I’ve expected. While I’m not there yet, I’m starting to think that the 2.5% crowd (which I’ve been in) might be too high and that we could see further reductions in inflation as more products become deflationary.
• The Consumer. The consumer will have a great say in the inflation story, but it is incredibly difficult to figure out where the consumer stands. For every good data point on the consumer, I’m pretty sure that we can come up with a weak data point. The data has been mixed. The consumer credit side of things seems the weakest. The current spending seems the strongest. I’m still leaning towards a slowdown in consumer spending, largely based on the view that the recent sales pulled forward demand and this caused the strong spending so far this summer, which will slow as we enter the autumn.
• Jobs. What to do with Friday’s NFP? One of the favorite activities of the T-Report (and hopefully a useful one) is examining the data for consistency. Are headline numbers consistent with the internal details? What things (like birth/death) seem off?
  

  57% of all YTD jobs are statistical fakes, thanks only to the Birth/Death adjustment pic.twitter.com/utYosI0k7S

  — zerohedge (@zerohedge) August 2, 2024

  Are we seeing consistencies between a variety of metrics, all purporting to measure the same thing, like JOLTS, AFP, and the Household and Establishment surveys (let alone the “employment components” of various other surveys)? The market is going to have to digest the preponderance of evidence on jobs this week! Will the market still react to the headline NFP data on Friday? Sure (and I will be on Yahoo Finance with a longtime friend and excellent economist to give our instant reaction), but for how long? Not only has the bias been towards downward revisions on a monthly basis, but also the annual revisions were quite high. The estimates (on Bloomberg) ran from a high of 208k to a low of 100k (ignoring 2 “outliers” the low is 125k). The average is 162k, with a median of 165k. But how do we react to a number when the “doubters” (I won’t call us conspiracy theorists) turned out to have a valid case? My order of importance on jobs this month will be:

  • Unemployment Rate. While this number is fraught with so many issues, it will likely be the biggest driver. If it improves, does that take the Fed off the table, and maybe reduce the flood of “Sahm Rule” hot takes? If it gets worse, but only due to an increase in labor participation, is it that bad? Not my favorite metric by any stretch of the imagination, but probably the most important.
  • JOLTS Quit and Hires rate. To some extent, I view this as “crowdsourcing” the labor market. People have a good sense of how easy it is to find a job and how likely their company is to let them go (long before the company lets them go). So given all of the uncertainty, I will overweight the importance of this data in my analysis on jobs.
  • ADP. I often wonder, given their dominance in the payroll business, why their data isn’t the “gold standard,” but it just isn’t (or hasn’t been). The fact that they didn’t publish for a period of time while changing their methodology isn’t particularly helpful either. But, I will spend more time than usual on ADP and suspect that the market will react more than usual as well (jobs are clearly the main Fed concern) and with the big revisions to NFP, more people will look to this data than usual.
• Don’t chart any economic data from January 2020 until September 2023. That is probably a bit extreme, but I find ignoring economic data from January 2020 until at least December 2022 is quite useful. We had a reasonably “normal” economy in 2018 and 2019. I want data that goes back at least a year (hence September 2023, though we could go back as far as January 2023). This analysis gives me a better comparison between “steady states” and is more helpful than including data that includes COVID and all the COVID responses/repercussions. It also makes smaller moves in the current data stand out more, as they aren’t dwarfed by the moves in 2020.

Understanding the current state of the economy is difficult enough with the data we have, let alone when we really start to question the accuracy and timeliness of the data.

Given all the uncertainties, I’m still in the “bumpy” landing camp. Not a hard landing, but an economy where the data, over time, shows that both the job market and the consumer are slowing. Not necessarily to recession levels, but to levels that make current valuations questionable.

Bottom Line

8 rate cuts in 8 meetings is too aggressive, unless the data slips to worse than “bumpy.”

• “Normal Yield” curves. I have to assume that every major news outlet has their finger hovering above the send button on a story about how the yield curve is no longer inverted, and I expect they will get to use that soon. 2s vs 10s closed at -2 bps on Friday, and I think that should drift towards 20 as we near the election (if not sooner). The 10-year yield has remained stubbornly below 4%, but the fact that we sold off on Friday, despite good inflation data and the normal “month-end extension” that typically helps bonds, means we can see that get back above 4%.

“Rotation” trades should continue in the equity space. The setup seems similar to last November where we developed consistent outperformance rather than the “crazy” moves we had for a couple of days last month.

Credit. I remain comfortable with credit as my concerns are far more about “valuations” than they are about any deep cuts to earnings and growth (bumpy isn’t the same as recession).

Liquidity remains my number one fear and I think it continues to create asymmetric risk, where moves to the upside are bigger than normal, and moves to the downside will be bigger than normal on steroids!

Normally, we’d be welcoming everyone back to “normality” after a “slow summer,” but this summer was anything but slow.

Trust but verify might be the best motto for all data in the coming weeks!

Former President Donald Trump says he supports a public ban on smoking marijuana, but that people shouldn’t be criminalized for carrying “small amounts” of weed.

“In Florida, like so many other States that have already given their approval, personal amounts of marijuana will be legalized for adults with Amendment 3,” Trump wrote Saturday on Truth Social. “Whether people like it or not, this will happen through the approval of the Voters, so it should be done correctly.”

Florida’s Amendment 3, titled Recreational Marijuana, would allow adults who are at least 21 years of age have up to 3 ounces of marijuana (a ‘small amount’?) and up to 5 grams of marijuana concentrate. At present, the state only allows medical patients with qualifying conditions to legally buy and possess cannabis.

If the measure passes, Florida would become the 25th state in the US to legalize weed for personal use.

That’s cool with Trump, as long as the state prohibits public use “so we do not smell marijuana everywhere we go.”

“At the same time, someone should not be a criminal in Florida, when this is legal in so many other States,” Trump continued. “We do not need to ruin lives & waste Taxpayer Dollars arresting adults with personal amounts of it on them, and no one should grieve a loved one because they died from fentanyl laced marijuana.”

As the Epoch Times notes further, Florida state Sen. Joe Gruters, a former state Republican Party chairman, cheered Trump’s stance on Amendment 3.

“I am incredibly proud to have President Trump stand alongside us in our effort to end needless arrests and incarcerations of adults for simple possession of marijuana and to give Floridians the same individual freedom to choose safe, tested products that more than half the country already enjoys,” Gruters wrote on X.

Gruters has pledged to push legislation to make sure public spaces remain smoke-free if voters approve the ballot measure in November, a proposal that now has Trump’s backing.

“President Trump’s call for smart implementation is exactly why I filed a bill to prevent smoking in public,” the Gruters said. “Marijuana should be consumed at home, and I will work alongside my colleagues in the legislature to ensure Florida does this right.”

The ballot measure faces opposition from Gov. Ron DeSantis, other state Republican leaders, and police groups including the Florida Sheriffs Association. Critics of Amendment 3 say it will go beyond decriminalizing personal use of marijuana and lower the Sunshine State’s overall quality of life.

“It’s basically a license to have it anywhere you want,” the governor said in April at a press conference. “So no time, place, and manner restrictions. This state will start to smell like marijuana in our cities and towns.”

The Florida Sheriffs Association issued more severe warnings, arguing that the legalization would increase criminal activity, illegal use among adolescents, traffic accidents, homelessness, and hospitalizations.
“Marijuana legalization advocates have argued that legalization will reduce overall crime, but in ‘legal’ states, marijuana crime rates have risen at a faster rate than other states across the country,” the group stated in a resolution opposing Amendment 3.

To help defeat Amendment 3, DeSantis has launched Florida Freedom Fund, a political spending committee chaired by James Uthmeier, his chief of staff who served as his campaign manager during the unsuccessful bid to win Republican nomination for White House. The group is also devoted to stopping Amendment 4, which would establish a constitutional right to abortion before fetal viability.

The measures need approval from at least 60 percent of voters to become part of the state’s governing document.