Oscars Ratings Crash To Record Lows

Oscars Ratings Crash To Record Lows

Last night’s Oscars was a complete debacle – as 13.75 million fewer viewers watched vs. last year, a decline of 58.3%.

More via Variety:

Per Nielsen Live+Same Day preliminary national numbers, an average of 9.85 million viewers tuned in on Sunday evening to watch a more intimate and stripped-down version of the Oscars in the midst of a pandemic. That’s a 58.3%, 13.75 million viewer drop-off from last year. The Academy’s third host-less show in a row scored a 1.9 rating among adults 18-49 in the fast national ratings, a 64.2% dip from 2020.

For comparison, last year’s ceremony garnered a 5.3 rating in the key demographic and 23.6 million viewers per the night’s time-zone adjusted fast national charts. The Oscars in 2019 delivered a 7.7 rating in adults 18-49 and 29.6 million viewers. While up 12% from 2018, that viewership figure represented the second-smallest audience ever for an Academy Awards telecast at the time. 2018 delivered the previous smallest viewership tally with 26.5 million viewers.

You know it’s bad when Chuck Schumer starts shilling for the Academy.

According to producer Steven Soderbergh – director of “Traffic” and “Eric Brockovich,” the event got “1 star.”

“The night was nearly non-stop drudgery, zero humor and a format that tried even the most resolute of attention spans,” he said, according to the NY Post.

Of course, thanks to the pandemic, Hollywood has been plagued with production setbacks and a dead box-office for the better part of a year.

We can’t exactly put our finger on what was missing this year…

Tyler Durden
Mon, 04/26/2021 – 14:20

via ZeroHedge News https://ift.tt/2QwYHwR Tyler Durden

“What Are The Symptoms Of Chlamydia” Most Googled Sex Question As STDs Soar

“What Are The Symptoms Of Chlamydia” Most Googled Sex Question As STDs Soar

Authored by Paul Joseph Watson via Summit News,

As STD rates soar in America, new data has revealed that the most popular sex question over the last year was, “What are the symptoms of chlamydia?”

Disgusting.

Research by health clinic From Mars finds that the search term racked up more than 2 million hits in 2020 while searches for “STD testing near me” also quadrupled between April 2020 and the end of the year.

“Search queries are an X-ray into the public psyche, and when it comes to sex and relationships, we may have some issues,” reports Axios.

As we highlighted last week, the search data correlates with the continuing rise of STD cases in America.

Sexually transmitted diseases hit a record high for the sixth straight year, with CDC researchers finding a 30 per cent increase in STDs from 2015 to 2019.

According to the latest data, 2.5 million Americans had either chlamydia, gonorrhea or syphilis infections in 2019, with chlamydia cases rising 61 per cent and gonorrhea cases spiking 42 per cent among young people aged 15 to 24.

Meanwhile, early data on searches for 2021 indicates that more relationships are breaking down, with queries for “What is ghosting?” having doubled between November 2020 and February this year.

Maybe all that promiscuous, STD riddled, sexual degeneracy has got something to do with it.

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Tyler Durden
Mon, 04/26/2021 – 14:03

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“Buckle Up! Inflation Is Here!”

“Buckle Up! Inflation Is Here!”

Last Wednesday, we reported that based on recent earnings calls, “Companies Are Freaking Out About Soaring Costs” and today we got more confirmation of this in a Bank of America report…

… which warns that Inflation is “arguably the biggest topic during this earnings season, with a broad array of sectors (Consumer/Industrials/Materials) citing inflation pressures.”

Exhibit A: the chart below showing the number of mentions of “inflation” during earnings calls which exploded, more than tripling YoY per company so far, the and the biggest jump in history since BofA started keeping records in 2004.

Why is this a problem? Because the number of mentions has historically led CPI by a quarter with 52% correlation and points to explosive higher inflation ahead.

Similar to what we did, BofA has also picked up key inflation commentaries from earnings calls, which noted that raw materials, transportation, labor, etc. were cited as sources of inflation and many plan to (or have already) raise prices to pass through higher costs.

  • FAST (Industrials): “we are experiencing significant material cost inflation, particularly for steel, fuel and transportation costs.”
  • GIS (Staples): “Looking ahead, as we experienced higher inflationary environment, our first line of defense will continue to be our strong holistic margin management cost savings program. In addition, we are taking actions now and in the coming months […] to drive net price realization that will benefit our FY2022. “
  • CAG (Staples): “we’re seeing input cost inflation accelerate in many of our categories and across the industry.”
  • LW (Staples): “while the pandemic-related effects on our supply chain were the primary drivers of our cost increases, we also realized higher costs due to input cost inflation in the low single-digits. We expect that rate will begin to tick up in the coming quarters as edible oil and transportation costs continue to increase.”
  • STZ (Staples): “similar to previous years, we’re expecting substantial inflation headwinds in the low to mid-single-digit increase range, largely related to glass and other packaging materials, raw materials, transportation and labor costs in Mexico. “
  • PPG (Materials): “we experienced a significant acceleration of raw material and logistics cost inflation during the quarter. Coming into the year, we were expecting an inflationary environment and had prioritized selling price increases across all of our businesses. This has helped us achieve solid price increases year-to-date. With a higher inflation backdrop, we have already secured further selling price increases and are in the process of executing additional ones during the second quarter. “
  • DOV (Industrials): “What we are going to fight against between now and the end of the year […] is inflationary input costs between raw materials, labor, and price/cost. […] the way it’s looking we may have to intervene on price again in certain of the businesses over the balance of the year.”
  • TEL (Tech): “I would expect our margins to modestly improve as we work our way forward here into the third and fourth quarter based on some of the actions that are underway and our ability to combat some of the inflationary pressures out there. […] Certainly, we’re feeling the biggest inflation right now is on the freight side. The freight inflation has been significant. And as we battled through there and there’s a variety of reasons for that including higher air freight and so forth in terms of that. And that’s not unique to TE. Certainly, I think that’s been as well publicized across the overall supply chain. […] labor cost is not a major issue on the inflation side, but labor availability in certain places that are still being more impacted by COVID continues to drive some inefficiencies.”
  • CMG (Consumer Discretionary): “So, all of that is very, very manageable and we feel like if there is going to be significant increased inflation because of market-driven or because of federal minimum wage, we think everybody in the restaurant industry is going to have to pass those costs along to the customer.”
  • ALLE (Industrials): “This guide incorporates pricing actions to offset direct material inflation, as well as reflecting our supply chain capability to mitigate industry challenges on supply and electronic component shortages. We anticipate that these challenges will persist for the balance of the year, and we will continue to monitor and adapt to changing market conditions.”
  • WHR (Consumer Discretionary): “The global material cost inflation in particular in steel and resins will negatively impact our business by about $1 billion. We expect cost increases to peak in the third quarter.”
  • PNR (Industrials): “All inflation remains high. We have instituted a number of selling price increases across the portfolio that we expect to help mitigate inflation in the second half of the year.”
  • TSCO (Consumer Discretionary): “Compared to our initial outlook for the year, our forecast does reflect higher transportation costs and product inflation. We experienced increasing pressures from these factors during the first quarter and expect them to continue to be a headwind throughout 2021.”

So between BofA’s latest observations, and our post from last week which have created a self-fulfilling prophecy of inflation becoming the primary topic of discussion, it’s no surprise that companies have been discussing rising costs on 1Q earnings calls. In the chart below, Morgan Stanley does a similar exercise as BofA, and shows the number of “cost pressure” mentions from US corporates over time. It’s interesting to note that the series shown are inflecting higher in the current period—a trend worth watching as earnings season progresses.

Along the same lines, the next chart shows that prices paid indices from regional Fed manufacturing surveys are surging higher.

Confirming this point, below are several comments from the recent release of the Kansas City Fed’s April Manufacturing Survey which illustrate the breadth of cost increases that companies are currently facing. Labor shortages stand out prominently among this list of quotes.

  • “It is very difficult to handle the increased business with supply chain issues across all materials and finding anyone who wants to work. The federal government has incentivized people to stay home and not be productive.”
  • “Stimulus and increased unemployment money are wrecking the labor pool. Lower level employees are quitting to make just as much not working.”
  • “Unemployed workers have no incentive to return to work given the COVID bonus payments.”
  • “Entry level pay will need to be increased. This will create pressure on all other positions.”
  • “We believe the shortage of workers is not an impact from the 2nd stimulus as much as a systematic problem of the gig economy and simply not enough workers for unskilled and critical skill positions. We are focused on retention.”
  • “We are facing significant supply chain problems due to COVID-19 issues, tariff issues, and the weather problems in Texas earlier this year.”
  • “Steel market needs to become stable. Steel producers recording record profits, while downstream suffers margin erosion.”
  • “Largest raw material provider is refusing to deliver previously accepted purchased orders at accepted prices – demanding 18% price increase to fill previously accepted orders of flat rolled USA stainless steel.”
  • “We could greatly grow our business if it were not for steel and labor issues. We could get more orders and employ more people. Supply chains are a mess and we cannot get people to apply. We pay upwards of $20 or more per hour with full benefits.”
  • “Liquidity is the BIGGEST issue. Ramp up of production is stressing cash more than usual since we depleted cash during the downturn more than what would have been typical.”
  • “The labor shortage is driving up the price of most proteins in food manufacturing.”

Tyler Durden
Mon, 04/26/2021 – 13:40

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Trump Expects “Startling Results” As Arizona Legislators Take Possession Of All Ballots, Voting Machines From Maricopa County

Trump Expects “Startling Results” As Arizona Legislators Take Possession Of All Ballots, Voting Machines From Maricopa County

Authored by Jenny Goldsberry via SaraACarter.com,

Almost six months have passed since President Donald Trump faced defeat, but that isn’t stopping Arizona state senators from investigating the election results in Maricopa County.

Senate leadership subpoenaed the county’s 2.1 million ballots and the voting machines they came from. From there it will all be handled by Cyber Ninja, a Florida-based cybersecurity company. Legislators hired the auditor for $150,000.

The audit is expected to scan and recount all ballots, examine the registration of votes cast, and the electronic voting system itself according to a press release.

Trump predicted from the beginning that there would be further investigations into the 2020 election.

“Thank you State Senators and others in Arizona for commencing this full forensic audit,” the former president said.

“I predict the results will be startling!”

Cyber Ninja’s owner Doug Logan expressed his mixed feelings about the election results.

“There’s a lot of Americans here, myself included, that are really bothered by the way our country is being ripped apart right now,” Logan said.

“We want a transparent audit to be in place so that people can trust the results and can get everyone on the same page.”

Legislators expect to have the results of the audit within 60 days.

Read the full article on The Washington Times here.

Tyler Durden
Mon, 04/26/2021 – 13:19

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Solid 5Y Auction Prints On The Screws, Easing Concerns Ahead Of Tomorrow’s 7Y

Solid 5Y Auction Prints On The Screws, Easing Concerns Ahead Of Tomorrow’s 7Y

Following this morning’s disappointing 2Y Auction, moments ago the Treasury concluded the day’s second coupon sale, this time comprising of $61BN in 5Y paper, and amid expectations of a poor auction the final prints were actually not too bad.

The auction priced at a high yield of 0.849%, which was not only on the screws with the When Issued, but was 0.1bps below the 0.850% high yield from March.

Like in the 2Y auction 90 minutes ago, the Bid to Cover did drop, but not nearly as much sliding to 2.31 from 2.36, which was just below the 2.35 six auction average, but above the 2.24 hit in February.

The internals were more solid, with Indirects taking down 57.9%, just below last month’s 58.1% and under the recent average of 58.5%. Directs taking down 17.5%, up from 16.6% last month and the highest since 18.1% in December meant Dealers were left holding just 24.6%, the lowest since October, and obviously well below the six auction average of 26.2%.

Overall, a solid auction if hardly spectacular, without any secondary market reaction to the results, however certainly strong enough to ease concerns that tomorrow’s 7Y auction could be an ugly replay of what we saw at the end of February.

Tyler Durden
Mon, 04/26/2021 – 13:14

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Here’s What Analysts Are Expecting From Tesla Earnings

Here’s What Analysts Are Expecting From Tesla Earnings

Tesla earnings are slated to be released after the bell today, with investors likely paying close attention not only to the “usual” metrics – like what kind of “profit” the company can turn in the absence of EV credits – but also to the ongoing tension in China, where both media and the government appear to be less than amused with Elon Musk. 

While Tesla is all of a sudden grappling with a regulatory investigation in the U.S. as a result of a recent fatal wreck in Houston, and calls for a regulatory intervention in China, the company began April with decent delivery number momentum, as we reported back in early April. Tesla reported 184,800 vehicles delivered for Q1 2021, coming in head of the average analyst estimate of 168,000 vehicles.

Analyst estimates for deliveries ranged from 145,000 to 188,000 for the quarter, CNBC noted. The most pronounced change in the data heading into 2021 was the lack of deliveries of Model S and Model X models, which as you can see in the chart below, only accounted for 2,020 of the company’s Q1 deliveries. Tesla has since announced it would be delaying its Model S and Model X production refreshes, as we commented earlier this month. 

The remaining 182,780 vehicles that Tesla delivered were either Model 3 or Model Ys. The company said its production was negatively affected by a fire at its Fremont plant, temporary closures due to parts shortages and the broader semiconductor shortage that the entire industry is dealing with. 

Last year, Tesla delivered 88,400 vehicles in the same quarter. 

And Tesla CFO Zach Kirkhorn did address the low contribution percentage of the company’s Model S and X for the quarter in Tesla’s most recent earnings call. He also said that Q1 numbers would have the benefit of Tesla’s Shanghai plant spooling up: “Specifically for Q1, our volumes will have the benefit of early Model Y ramp in Shanghai. However, S and X production will be low due to the transition to the newly re-architected products.”

We’ll see if that is still the case, given the CCP’s apparent new tone with the company. 

All eyes also remain on the scorching hot traction that legacy automakers have begun to get with their EV plans – including Ford’s recent Q1 where it sold over 6,000 Mustang Mach E crossovers. Analysts are looking to see if these EV sales will eventually cut into Tesla’s marketshare. 

And so, heading into earnings tonight, here is what analysts are expecting, courtesy of a Monday morning wrap-up by Bloomberg:

Morgan Stanley (overweight):

  • Expects the EV maker to frame its expansion along product lines and assembly plants as the narrative for remainder of the year
  • Raises FY21 delivery forecast by 3% to 809k units in a note dated April 22; Also lifts PT to $900 from $880
  • Says Tesla’s immediate priority is to expand capacity and industrialize its EV “hegemony” before the market gets crowded
  • Believes the company needs to address any number of issues around sustainably sourced battery manufacturing and supply chain to establish its position as the apex player during the phaseout of fossil fuels

Wedbush (outperform):

  • Expects Tesla to report earnings with upside across the board, driving the stock “much higher over the coming months”
  • Believes the company could exceed 850k deliveries for 2021 despite the chip shortage and various supply chain constraints
  • Says pent-up demand in China and Europe was robust this quarter; sees inflection in demand to come in the U.S. once the EV tax credit ceiling gets lifted
  • Besides Tesla’s annual delivery trajectory, will also focus on Musk’s comments on the timing of Berlin factory, chip shortage, Model Y trajectory, Cybertruck build-out timetable, and autopilot/FSD safety

Cowen (market perform):

  • Recent commitments and advancements from automakers such as Volkswagen and GM suggest that Tesla has achieved peak market share within the EV category
  • However, Tesla’s investment in battery technology and electrical efficiency can make then tough to chase in the short term
  • Strong deliveries in 1Q and quick ramp-up at the China facility shows the company is able to refine its process, making deliveries less lumpy and back-end loaded

Bloomberg Intelligence:

  • Tesla delivered 185,000 vehicles globally in 1Q, exceeding the 180,000 mark in consecutive quarters, while price reductions in various markets suggest demand remains tenuous
  • Installed capacity stands at 1.05 million units, implying 1Q utilization below 80%, with additional plants under construction in Austin, Texas, and Berlin
  • Tesla’s lead in global EV sales slipped 100 bps to 24% in 2020 vs. 2019, whereas the share of the VW Group rose to 9% from 4% in 2019, on track to overtake Tesla in 2023
  • Tesla earned $1.6 billion in regulatory credits from its peers in fiscal 2020 — allowing for a positive bottom line — a task now more complicated as legacy manufacturers become self-reliant

Jeffrey Osborne, an analyst at Cowen said in early April: “We acknowledge Tesla has shaken up the auto industry, but recent commitments and advancements from incumbent automakers such as Volkswagen and General Motors suggest to us that Tesla has achieved peak market share within the EV category,”

On Thursday, Morgan Stanley’s Adam Jonas commented: “Tesla sees itself as the apex player during the most formative phase of the industrialization of sustainable propulsion and transition off of fossil fuels.”

Bloomberg Intelligence analyst Kevin Tynan commented: “Even in its first profitable year of 2020, adjusted pretax income was less than the earnings from selling credits to automakers that can’t build pickups and SUVs fast enough. The irony is that despite all the EV hype, legacy automakers are making so much money from selling internal combustion pickup trucks and SUVs that it has made Tesla look profitable.”

The options market is pricing in a move of 7.2% for tonight’s report, according to Bloomberg.

Tyler Durden
Mon, 04/26/2021 – 13:00

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Sen. Paul: White House Mask “Theater” Is “Discouraging People” From Getting Vaccinated

Sen. Paul: White House Mask “Theater” Is “Discouraging People” From Getting Vaccinated

Authored by Jack Phillips via The Epoch Times,

Sen. Rand Paul (R-Ky.) said federal government officials’ insistence on wearing masks in public appearances has discouraged people from getting the COVID-19 vaccine, suggesting that it’s not necessary for fully vaccinated individuals to keep wearing masks around in public.

Describing the move as “theater,” Paul said that it would harm efforts to get people vaccinated if the public doesn’t believe the shot has an impact in curbing the spread of the virus. He was referring to an online meeting between world leaders, in which President Joe Biden was the only official wearing a mask.

Biden forgot that “this theater was so ridiculous that people would call him out on it,” he added. Last week, others had questioned why the president would wear a mask in such a setting. All the other world leaders, including German Chancellor Angela Merkel, Russian President Vladimir Putin, and Canadian Prime Minister Justin Trudeau were not wearing masks.

“If I want to go visit the White House, Republicans, and Democrats who go visit, even though they’ve all been vaccinated or had the disease, they’re being tested with a deep sinus test,” Paul told Fox News over the weekend,

“And they’re being told that wear the N95 masks to go in the White House, even though they’ve all been vaccinated,” he added.

“So, there is no science behind any of this. It’s fear-mongering. But it also has a deleterious effect, in that it’s discouraging people from getting the vaccine because they’re saying, well, if the vaccine doesn’t mean anything, it doesn’t seem to have any protective benefit, you get no benefit.

If people cannot “quit wearing the mask,” some have asked why they should get vaccinated at all, Paul said.

“I think that’s the wrong attitude,” the Kentucky Republican added.

“But this is what’s coming from Biden and the so-called scientists that he’s putting forward.”

It comes as the Centers for Disease Control and Prevention (CDC)’s director, Rochelle Walenksy, said the agency is looking into revising its mask provision for people who are outside.

“We’ll be looking at the outdoor masking question, but also in the context of the fact that we still have people who are dying of COVID-19,” she told “Today” last week.

COVID-19 is the disease caused by the CCP (Chinese Communist Party) virus, otherwise known as the novel coronavirus.

The current CDC guidelines say that “masks may not be necessary when you are outside by yourself away from others, or with people who live in your household.”

The Epoch Times has contacted the White House for comment.

Tyler Durden
Mon, 04/26/2021 – 12:49

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‘Zarif-Gate’ Leaked Audio Scandal: Iran FM Gives Embarrassingly Frank Assessment Of Iran’s Decision-Making

‘Zarif-Gate’ Leaked Audio Scandal: Iran FM Gives Embarrassingly Frank Assessment Of Iran’s Decision-Making

Deeply embarrassing leaked audio has surfaced which has sparked a crisis in Iran and which may negatively impact ongoing nuclear talks in Vienna. Iranian Foreign Minister Javad Zarif was heard in audio confirmed by The New York Times as authentic saying that the Islamic Revolutionary Guard Corps (IRGC) overrules many government decisions, strongly suggesting it’s the military that’s actually fully in control of the country. While this may be to some degree stating the obvious, it’s hugely unexpected for Iran’s top civilian diplomat to actually candidly admit as much. One state media newspaper has already emphasized it’s a major “scandal” for the country.

Zarif is typically very guarded, but in the tapes that surfaced Sunday (it’s unclear at this point the origin of the leak) he’s heard discussing slain Guard Gen. Qassem Soleimani and how the elite commander undermined him in a variety of ways, noting he often went against Iran’s interests. The audio interview took place over two months ago, reports say, and was intended as a classified “oral history” project covering President Rouhani’s two terms in office from Zarif’s perspective. 

“In the Islamic Republic the military field rules,” Zarif is heard telling a pro-government journalist.”I have sacrificed diplomacy for the military field rather than the field servicing diplomacy.” He goes so far as to say that Soleimani would often task himself as Iran’s top diplomat with “requirements”. 

It involves three hours of audio with the pro-government journalist as well as economist Saeed Leylaz which Zarif apparently believed would never see the light of day, or at least wouldn’t be released for years to come. But it was leaked to media outside Iran on Sunday, with much of it quickly translated.

The NY Times describes that “A copy was leaked to the London-based Persian news channel Iran International, which first reported on the recording and shared it with The New York Times.”

“On it, Zarif confirms what many have long suspected: that his role as the representative of the Islamic Republic on the world stage is severely constricted. Decisions, he said, are dictated by the supreme leader or, frequently, the Revolutionary Guard,” the NY Times emphasizes.

“The structure of our foreign ministry is mostly security oriented,” Zarif is heard saying, while also painting a picture of being left in the dark on many major policy decisions. For example he blamed the late Soleimani, who was killed in a US drone strike at Baghdad airport, for seeking to torpedo the nuclear deal (JCPOA) – as Islamic hardliners in Iran have long been against striking a deal with the US. He also described that Russia was on board with this.

This internal decision-making struggle also appeared to have huge consequences in terms of handling major crises. The BBC reports on one very notable instance as follows, based on the audio:

Mr Zarif complains that the Revolutionary Guards sidelined him on many occasions.

He mentions the early hours of 8 January 2020, when Iran attacked an Iraqi military base housing US forces with more than a dozen ballistic missiles in retaliation for the killing of Qasem Soleimani. He says he only found out about the missile attack two hours after it happened.

Later that day, he adds, when a Revolutionary Guards air defence unit shot down, apparently by mistake, a Ukrainian passenger airliner that had just taken off from Tehran, killing all 176 people on board, commanders only wanted him to deny Iranian culpability.

And then there’s Syria… 

He recalls how Soleimani wanted him to take particular positions in meetings with the Russian foreign minister, and says the general effectively took Iran into the war in Syria because Russian President Vladimir Putin wanted Iranian forces on the ground to complement the Russian air campaign in support of the Syrian government.

Zarif is also heard to complain than Gen. Soleimani at times used Iranian civilian airliners, specifically Iran Air, for military purposes, which opened up the country to sanctions and other reputational damage, and further put civilians at risk. This confirmation comes after it’s long been suspected that Iran used civilian aircraft for gun-running to Hezbollah and other regional allies. 

On Monday the Iranian Foreign Ministry insisted the remarks have been taken “out of context” from a classified interview, which was “cherry-picked”. A government spokesman said “what Zarif has said should be seen as a whole and not cherry-picked.”

The recording “was by no means an interview from the beginning, nor was it supposed to be an interview… it was a part of a routine and confidential dialogue that takes place within the administration,” the spokesman added, seeking to dispel any assertions that the contents represent the positions of the Iranian government. 

Tyler Durden
Mon, 04/26/2021 – 12:22

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El-Erian: Fed Should Start Tapering Now… But It Won’t

El-Erian: Fed Should Start Tapering Now… But It Won’t

Authored by Mohamed Al-Erian, op-ed via Bloomberg.com,

I suspect that Federal Reserve officials are not the only ones looking for an uneventful policy meeting this week. The majority of market participants are also expecting an undramatic event that will include an upgrade of the economic outlook, a reiteration of uncertainties and the signaling of nothing new on policies. Unfortunately, it’s an outcome that kicks the policy can further down the road when the central bank should be thinking now about scaling back its extraordinary measures.

Although Fed officials raised their growth estimates significantly at their last meeting, they will most likely upgrade their economic outlook for 2021 again after the recent string of  strong economic data. This will be accompanied by the usual Covid-related qualifications when accelerating vaccine deployment continues to race against growing infections and the threat of new variants of the virus.

The further improvement in the economic outlook is unlikely to change the Fed’s policy guidance, however.

Rather than follow the lead of the Bank of Canada, which last week  began cutting back on bond purchases and signaled a quicker time frame for the next interest rate increase, the Fed will most likely take an approach similar to the one the European Central Bank conveyed last Thursday.

It will maintain policy as is, remind markets that it is willing to do even more should downside risks materialize and play down the risk of inflation and other overheating as transitory.

Markets have validated this policy attitude over the past month. After spiking to 1.76% in reaction to the improved economic outlook and inflation concerns, the yield on 10-year government bonds has declined, closing 20 basis points lower last week. Despite some small wobbles, risk-taking in the equity markets has remained robust. And all this has come in the context of reassuring statements from top Fed officials – not just playing down the significance of the coming increase in inflation but also indicating that there is no need to worry about risks to financial stability.

Such a policy approach does have the attractiveness of repressing financial volatility at a time of economic, policy and institutional transitions. The Fed does not want to be a source of financial instability, especially when President Joe Biden’s administration faces challenges in Congress on its infrastructure proposal, the economy is picking up steam and the long-overdue handoff away from excessive reliance on monetary policy is materializing.

It is also an approach that papers over the growing inconsistency between ultra-loose financial conditions on the one hand and a strongly recovering economy, rising inflationary pressures and yet more evidence of pockets of excessive and, at times, irresponsible risk-taking on the other.

The attractiveness of short-term calm comes at the risk of more significant policy challenges down the road.

Rather than do what it is most likely to do this week — that is, accompany the ECB in stoking ultra-loose financial conditions even though the U.S. economic outlook is brighter than Europe’s — the Fed should seriously consider following the Bank of Canada’s example by initiating a gradual and careful retreat. The longer it takes to do so, the harder it will be to pull off an eventual normalization without risking both significant market volatility and damaging what should and must be a durable and inclusive economic recovery.

Tyler Durden
Mon, 04/26/2021 – 12:00

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Ugly, Tailing 2Y Auction Is Ill Omen As Bid-To-Cover; Indirect Bid Both Plunge

Ugly, Tailing 2Y Auction Is Ill Omen As Bid-To-Cover; Indirect Bid Both Plunge

With the FOMC scheduled to take place on Wednesday, it means that we have an abbreviated Treasury auction schedule this week and with coupon sales all expected to fit before Wednesday, we have the 2Y and 5Y auctions today, the first of which just concluded in a surprisingly ugly sale of $60BN in 2-year paper.

The 2Y note tailed the When Issued 0.171% by 0.4bps, pricing at a high yield of 0.175%, which was the highest since Jun 2020, and well above both March’s 0.152% and the recent six-auction average of 0.142%.

The bid to cover was even uglier: at 2.339, it slumped from 2.542 last month an the 2.54 recent average, and was the lowest since March 2020.

Finally, the internals were a mess, with Indirects plunging to just 43.56%, the lowest since July 2019, and with Directs at 18.5%, or just above last month’s 17.58% and the highest since Jan 2020, Dealers were left holding 37.9% of the final allocation.

Overall, a surprisingly ugly 2Y auction, which may have unpleasant consequences for today’s 2nd auction – the sale of 5Y coupons at 1pm – and especially tomorrow’s 7Y belly buster. As a reminder, it was the woeful 7Y auction sale in February that launched a rout in the Treasury market and sent yields sharply higher and stocks reeling.

Tyler Durden
Mon, 04/26/2021 – 11:48

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