Category: zerohedge

While the Fed refuses to acknowledge that the US has an inflation problem, most emerging market countries have no such luxury and just days after the Bank of Canada tapered its QE for the second time, this morning Russia became the latest country to surprise markets when it unexpectedly hiked its key rate by 50 basis points – more than the 25 expected by consensus – and signaled more tightening as ruble volatility amid a deepening standoff with the West contributed to rising inflation risks.

The Bank of Russia raised the benchmark rate to 5% on Friday, a move expected by just thirteen economists out of 41 analysts while 28 expected a smaller cut.

“The Bank of Russia will consider the necessity of further increases in the key rate at its upcoming meetings,” according to the central bank statement. The bank also raised its year-end estimate for inflation to 4.7%-5.2% from 3.7%-4.2% and warned that price growth continues to develop above forecast, indicating that more tightening is forthcoming. Indeed, central bank governor Elvira Nabiullina left little doubt the hawkish approach to counter inflation will continue, and said future hikes could also be higher than 25 basis points.

And while Nabiullina hardly touched on it in her presser, the market has taken a breath of relief as geopolitical tensions have eased recently, after Putin refrained from escalating the standoff with Ukraine during his Wednesday nationwide address, with jailed Russian opposition leader Alexey Navalny ending his hunger strike and Russia reducing the number of troops it placed on Ukraine’s border

As Bloomberg notes, the ruble has been hit by a series of geopolitical shocks since Bank of Russia Governor Elvira Nabiullina pushed through a surprise 25 basis-point rate hike last month, adding to inflationary pressures. A faster-than-expected economic recovery from the pandemic is adding to price growth, the central bank said on Friday. Even with the recent rate hikes, the central bank hinted that normality is still far out on the horizon, saying the key rate will only average the neutral range of 5%-6% in 2023, according to its new medium-range forecast.

The ruble extended gains versus the dollar, trading at the strongest in a month, and 10-year local bonds pared Friday’s decline.

 

Federal investigators are still in the midst of gathering new “information” in an ongoing probe of last week’s fatal Houston wreck that left two men dead, Reuters reported late Thursday. 

U.S. Transportation Secretary Pete Buttigieg said late in the day: “We are following this very closely,” before telling reporters that the National Highway Traffic Safety Administration (NHTSA) special crash investigation team “is still gathering facts and information” and is in touch with Tesla and police.

Police, NHTSA and the National Transportation Safety Board are investigating the crash, the report noted.

Recall yesterday we noted that Consumer Reports dropped a bombshell, independently corroborating the notion that Tesla Model Ys can drive themselves with no one in the drivers seat.

Consumer Reports said it could “easily get the car to drive even with no one in the driver’s seat,” according to CNBC. The auto reviewer said it was able to trick the system by putting a weighted chain on the steering wheel and keeping the seatbelt buckled. 

Consumer Reports’ senior director of auto testing, Jake Fisher, told CNBC: “In our test, the system not only failed to make sure the driver was paying attention — it couldn’t even tell if there was a driver there at all.”

 

Consumer Reports also said that Tesla’s Autopilot can operate where there is no lane lines, which was the case in the Houston wreck. 

“Any system that looks at lane lines can be tricked. They may see something as a lane line that is not, like a car strip, a curb may be interpreted as landline and so on.” Fisher continued: “Tesla is falling behind other automakers like GM and Ford that use technology to make sure the driver is looking at the road on models with advanced driver assist systems.”

Additionally on Thursday, Bloomberg reported that several Senators had “raised questions about Tesla safety” in a new letter to the NHTSA. Senators Blumenthal and Markey expressed concerns about a “possible emerging pattern” of safety concerns – to which we reply: where have you been the last 2 years?

Recall, on Wednesday we noted that one of the men who died in the fiery Houston Tesla wreck that we have been reporting on over the last few days has been identified as 59-year-old Dr. William Varner. Varner was a doctor at the local Memorial Hermann Health System.

Mark Herman, Harris County Constable Precinct 4, told Reuters earlier in the week that the police will serve search warrants on Tesla to secure data from the wreck.

He was responding to a tweet by Tesla CEO Elon Musk, who said, “Data logs recovered so far show Autopilot was not enabled.” Herman appeared quite skeptical: “If he is tweeting that out, if he has already pulled the data, he hasn’t told us that” Herman told Reuters. “We will eagerly wait for that data.”

“We have witness statements from people that said they left to test drive the vehicle without a driver and to show the friend how it can drive itself,” Herman said according to the Reuters report.

Recall, the Tesla slammed into a tree near Hammock Dunes Place in the Houston Area, a local NBC affiliate reported. The wreck was in the “Carlton Woods subdivision near the Woodlands,” the report says. According to authorities, “the vehicle failed to negotiate a cul-de-sac turn, ran off the road and hit the tree.”

Of the two occupants, one was seated in the passenger seat of the front of the car while the other was seated in the passenger seat of the back of the car.  

Authored by Mimi Nguyen Li via The Epoch Times,

The Arizona Democratic Party filed a lawsuit on Thursday seeking to stop the state’s Senate from carrying out an audit of the 2020 election results in Maricopa County.

The complaint (pdf), filed in Maricopa County Superior Court, comes just before the audit is set to begin on Friday. In preparation, 2.1 million ballots, as well as voting equipment that includes 385 tabulators, were delivered to the Veterans Memorial Coliseum in Phoenix, the site of the planned audit.

An emergency court hearing has been scheduled for the case, CV2021-006646, at 11 a.m. on Friday.

The Arizona Democratic Party and Steve Gallardo, the sole Democrat on the five-member Maricopa County Board of Supervisors, argue in the lawsuit that the planned audit is in violation of “various statutory and Election Procedures Manual provisions.” They allege that the planned audit lacks various safeguards and requirements are lacking to perform a secure and reliable audit, and as such, the planned audit “undermines the integrity and security” of the state’s elections and voter information.

Plaintiffs are seeking a restraining order and a preliminary and permanent injunction to stop the audit requested by the Republican-majority Senate leadership.

The lawsuit comes as Republicans introduced a bill late January to address legal issues outlined in the Democrats’ lawsuit. The bill is currently with the House after passing the state Senate in February.

The latest auditing efforts come after the Senate leadership issued subpoenas in mid-January to the Maricopa County Board of Supervisors seeking materials for a full audit of the 2020 general election. In response, county officials asked a court to declare that the subpoenas were unlawful and unenforceable. Maricopa County Superior Court Judge Timothy Thomason ruled in February that the subpoenas are valid, and that the Senate has “broad constitutional” oversight powers that allow it to carry out whatever election review it chooses.

Fight Over Disclosure

Democrats in the latest lawsuit argued that the private auditors and their agents “are not authorized to review confidential voter registration records” and “are not authorized to gain possession or control of voted early ballots,” citing state law.

In particular, the complaint notes that “certain parts of a voter’s registration records, including date of birth, signature, and country of birth, may not be viewed, accessed, reproduced, or disclosed to a member of the public who is not an authorized government official.” It also notes that “only election officials, postal workers, and certain family members and other authorized individuals may ‘gain possession or control’ of voted early ballots.”

The Democrats also allege that the private auditors “have not been appointed in writing or taken an oath required under [Elections Procedures Manual Chapter 10 Section 1A (pdf)] and thus are not authorized to touch any ballot, computer, or counting device.” They also allege that the private auditors “are not properly trained in signature verification.”

In a brief comment, Arizona Senate President Karen Fann, a Republican, said that the ballots are protected by bonded and certified 24-hour security forces, kept in locked cages and a public live stream is on 24 hours a day, reported The Associated Press.

The Democrat’s lawsuit comes at the same time that Republicans are trying to pass a bill that would address similar legal issues surrounding confidentiality and disclosure to facilitate the elections auditing process.

On Feb. 18, the state Senate passed a bill that would amend a portion of the state law such that county election equipment, systems and records, and other information that is under the control of county personnel “may not be deemed privileged information, confidential information, or other information protected from disclosure.”

It also subjects such records to a subpoena and stipulates that they “must be produced” and the legislature’s authority to conduct related probes “may not be infringed by any other law.”

The bill is currently held in the state House.

Back and Forth Allegations

Maricopa County Supervisor Gallardo wrote on Twitter late Thursday, “The sole reason for this lawsuit and injunctions is to protect the sanctity of the ballots, and more importantly, to preserve voters’ privacy from a sham audit that has been corrupted by agitators and conspiracy theorists.

“This corrupted process will not be transparent, dark money influencers have handed picked the folks to observe and witness the ‘audit’ that will be conducted by an uncertified and unqualified group,” Gallardo alleged.

The Arizona Senate Democrats released a statement in support of the suit. “It’s clear that this audit is no more than a temper tantrum from those still upset that they lost the election and it is deeply damaging to the integrity of our elections and our democracy,” their statement reads, in part.

President Joe Biden was the first Democratic presidential nominee to win Maricopa County, where Phoenix is located, in decades.

Kelli Ward, Chair of the Arizona Republican Party, questioned the Democrats’ move in a statement on Thursday. “The Democrats are STILL trying to stop the Maricopa County audit and defy the AZ Senate subpoena. What are they hiding? Hearing tomorrow on this ridiculous temporary restraining order,” she wrote on Twitter.

The Epoch Times has reached out to Senate President Fann for comment. Last month, she asserted that the audit would reassure voters that the 2020 results were accurate.

Need for Senate Audit?

Two separate forensic audits of the 2020 general election have been conducted by the Maricopa County Board of Supervisors. But Arizona state Sen. Warren Peterson, the Republican Chair of the Judiciary Committee, told Fox 10 in January that the county’s audit “will not prevent the Senate from doing their own audit.”

“My concern with the county audit is that the scope of the audit is an inch deep. With the limited scope they have asked to be audited, they are guaranteed to find nothing,” he said.

The Arizona Senate has hired four out-of-state firms to carry out the audit, which are Wake Technology Services, CyFIR, Digital Discovery, and Cyber Ninjas. Cyber Ninjas, a Florida-based cybersecurity company, was arranged to lead the audit.

The Arizona Senate said that its “broad and detailed” audit “will validate every area of the voting process” and includes, but is not limited to, scanning all the ballots, a full hand recount, auditing the voter registration and votes cast, the vote counts, and the electronic voting system.

The Senate said that its leadership will not be directly involved in the audit process to maintain integrity and transparency. A report of all the findings is expected after about 60 days.

The Maricopa County Board of Supervisors had previously resisted the Senate subpoenas and repeatedly maintained that there were no issues with the conduct of the 2020 election.

The GOP concerns come after controversy in December 2020, when former state Senate Judiciary Committee Chair Eddie Farnsworth, a Republican, issued two subpoenas after former President Donald Trump’s team presented allegations of fraud and other irregularities before members of the Arizona Legislature at an election integrity hearing on Nov. 30, 2020. One major allegation on the day came from Maricopa County GOP chairwoman Linda Brickman, who alleged that she personally observed votes for Trump being tallied as votes for Biden when input into the voting machines.

Farnworth’s subpoenas called for a scanned ballot audit and a full forensic audit of voting equipment and software used in the 2020 general election. The Maricopa County Board of Supervisors days later voted to file a complaint over the subpoenas.

The court later found the dispute was moot in light of the fact that the 2020 subpoenas were no longer enforceable. But the latest auditing efforts came as a result of new subpoenas issued in mid-January by Petersen and Fann.

Just days after Alexei Navalny’s legal team warned that the Russian political dissident could die at any moment, prompting western media outlets like Time Magazine to shriek about how the Russian regime was trying to kill Navalny in plain sight, the Kremllin critic has decided to end a 24-day Hunger strike, according to a post on his Instagram account.

In his statement, Navalny (or whoever was writing the post with Navalny in prison) started with a reference to “Alice in Wonderland”, before claiming that a team of doctors had recommended that he end the strike, which he agreed to do, reasoning that he had accomplished enough (after inspiring a wave of protest rallies in Russia that were closely followed by Western media outlets). Navalny was reportedly examined at a civilian hospital on Tuesday. And as we reported, five physicians affiliated with Navalny urged him to consider that medical care as sufficient for ending the hunger strike, according to a story published by Russia’s independent Mediazona news outlet. He said in his Instagram post that he has now been examined twice by a panel of civilian doctors. He initially started the hunger strike in March because he said his jailers weren’t meeting his demands for medical attention.

As Alice from “Wonderland” said: here you have to run to stay put. And to get somewhere, you have to run twice as fast.

I ran, tried, fell, went on a hunger strike, but all the same, without your help, I just broke my forehead.

With the tremendous support of good people across the country and around the world, we have made tremendous progress. Two months ago, they smirked at my requests for medical assistance, they did not give any medicines and did not allow them to be transferred. A month ago, they laughed in my face at phrases like: “Can I find out my diagnosis?” and “Can I see my own medical record?”

Thank you – now I have been examined twice by a council of civilian doctors. The last time was right before the rally. They do research and analyzes and give me the results and conclusions.

Doctors, whom I fully trust, issued a statement yesterday that you and I had achieved enough for me to lift the hunger strike. Well, and – I will say frankly – their words that the analyzes show: “in a minimum time there will be no one to treat” … mmm … seem to me worthy of attention.

Readers can find the post, published in Russian, below:

 

 

 

 

View this post on Instagram

 

 

 

 

 

 

 

 

 

 

 

A post shared by Алексей Навальный (@navalny)

Navalny ally Leonid Volkov wrote in a social media post that the protests were what drove the authorities to seek an outside exam for Navalny and then provide the results to his medical team. Tatiana Moskalkova, the Kremlin’s human rights ombudsman, said Wednesday that Navalny’s life isn’t at risk and that he’s getting all necessary care including an intravenous drip after Russian authorities transferred him to a prison hospital in Vladimir, a city 180 kilometers (110 miles) east of Moscow, back on April 18

Russia’s treatment of Navalny has angered the Biden administration, which threatened “consequences” for the Kremlin if Navalny were to die in prison. However, that didn’t stop Russian President Vladimir Putin from being welcomed to Biden’s international virtual climate summit, which entered its second day on Friday.

The Advisory Committee on Immunization Practices – the agency that advises the FDA and CDC on vaccines, and will ultimately decide the fate of the Johnson & Johnson COVID-19 jab – is set to meet Friday to decide whether to recommend that the halt on the J&J be lifted, or left in place for now.

While public-health authorities insist the societal benefits of the vaccine outweigh potentially deadly (but extremely rare) side effects like cerebral blood clots, the J&J jab has remained on halt for more than a week, despite assurances from Dr. Anthony Fauci that the halt would be lifted in a few days. At any rate, supplies of the J&J jab dried up shortly before the halt began thanks to a factory accident in Baltimore that spoiled 15M doses.

According to WSJ, a significant issue that the ACIP might consider on Friday is how the clot risk among J&J jab recipients measures up against the risk of clots that come with COVID-19 Blood clotting all over the body is one complication of severe forms of the disease. About 15% to 20% of Covid-19 patients who are admitted to intensive-care units develop blood clots.

A recommendation to lift the pause could prompt the FDA and CDC to put the vaccine back in circulation as early as this weekend, because millions of doses have already been distributed to vaccine sites.

The lifting of the pause could be accompanied by restrictions limiting the vaccine’s use to older adults, as well as possible warnings about the potential clot risk, according to people familiar with the matter.

The ACIP meeting is scheduled to begin at 1100ET, with a potential vote by 1700ET. It will be the ACIP’s second emergency meeting in 10 days to discuss the J&J vaccine. The committee, which advises the CDC, met April 14, one day after use of J&J’s vaccine was paused. But the committee, meeting online, deferred voting on a recommendation because members wanted more information about the vaccine’s risks and benefits.

After EU regulators highlighted a possible link between the J&J (and AstraZeneca-Oxford) jab and rare blood clots, J&J promised to update its packaging information to include a warning about possible clots. Nordic countries remain wary of the adenovirus-vector jabs (which includes not just AstraZeneca and J&J, but Russia’s Sputnik V), and on Friday, Sweden’s public health agency decided to recommend against using the J&J jab for patients under 65.

US regulators abruptly halted use of the J&J jab earlier this month after determining that at least six women experienced blood clots that were tied to the vaccine. At least one of those cases was fatal. The blood-clot risks are believed to be highest in patients with low blood platelet counts. The FDA initially authorized the J&J jab for use in the US in late February, making it the third jab – and first adenovirus-vector jab – approved in the US.

Authored by Steve Watson via Summit News,

President Trump slammed NBA star Lebron James Thursday night for tweeting out a photo of the Ohio cop who shot and killed Ma’Khia Bryant as she attempted to stab two other women and captioning it ‘YOU’RE NEXT’.

In a statement released by his office, Trump said that Lebron’s “RACIST rants are divisive, nasty, insulting, and demeaning.”

“He may be a great basketball player, but he is doing nothing to bring our Country together!” The Statement continued.

Trump added that “LeBron James should focus on basketball rather than presiding over the destruction of the NBA, which has just recorded the lowest television RATINGS, by far, in the long and distinguished history of the League.”

BREAKING: Former President Trump released a statement on LeBron James: pic.twitter.com/VxucrJ1Ceg

— Benny (@bennyjohnson) April 23, 2021

.@KingJames, with his vast resources & influence, should educate himself and, frankly, has a responsibility to do so, on the facts before weighing in. This is disgraceful & extremely reckless.

The officer saved a young girl’s life. No amount of gaslighting will change that fact. pic.twitter.com/GTHn1VAAlf

— National Fraternal Order of Police (FOP) (@GLFOP) April 21, 2021

Lebron James is inciting violence against an Ohio police officer.

This is disgraceful and dangerous.

Is the NBA okay with this? Is Twitter?

— Tom Cotton (@TomCottonAR) April 21, 2021

People like LeBron James and his friends on the left are driving good people away from careers in law enforcement.

This is the exact OPPOSITE of how to improve policing.

— Representative Mike Loychik (@MikeLoychik) April 21, 2021

Leftists claimed Thursday that the police shooting of 16-year-old Bryant was unjustified because the girl was merely involved in a “knife fight,” despite footage showing only she had a knife as she tried to stab two victims.

In addition, NBC News was caught editing the 911 call to omit the reference to the fact that Bryant was engaged in a stabbing attack, as well as failing to broadcast the footage which showed her carrying a knife.

Now new footage has emerged from a security camera across the street from where the incident took place, in which Bryant is heard screaming, “I’m gonna stab the f*ck out of you, bitch!” while attempting to stab the two unarmed people.

Can see officer attempted to de-escalate as soon as he walked up

— Peace Promoter Poso (@JackPosobiec) April 22, 2021

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US equity futures rebounded Friday following Thursday’s 1% selloff as investors digested a proposal for higher capital gains taxes and realized that i) it is nothing new compared to previous media reports and ii) the most likely outcome is a compromise tax rate (Goldman expects a final number no higher than 28%).  Still, both the S&P 500 and Dow are on course for weekly declines, after four straight weeks of gains. At 730 a.m. ET, Dow e-minis were up 38 points, or 0.11%, S&P 500 e-minis were up 9 points, or 0.22%, and Nasdaq 100 e-minis were up 18.5 points, or 0.14%.

Some key premarket moves:

• Cryptocurrency and blockchain-related stocks including Riot Blockchain and Marathon Digital dropped 6.6% and 7.1% after bitcoin tumbled overnight below $50,000 on fears plans to raise capital gains taxes would curb investment in digital assets. Bitcoin was last trading just above $50K.
• Intel shares fall 2.7% in U.S. premarket trading. The chipmaker’s 1Q update shows a drop in data-center revenue that offset strong PC chip sales. Analysts are divided on the results with some seeing the data-center slump as a blip, but others less convinced it is so.
• Oil companies, mainly Chevron Corp, Marathon Petroleum, Exxon Mobil Corp and Occidental Petroleum, gained between 0.2% and 1.1% as oil prices rose.

On Thursday, Bloomberg sparked a selloff after it reported that Biden’s administration is seeking an increase in the capital gains tax to near 40% for wealthy individuals, almost double the current rate.

“The devil is always going to be in the detail,” said Ned Rumpeltin, European head of currency strategy at TD Securities, adding that the Democrats’ narrow majority could make the proposals hard to pass. Goldman agreed, and said that the compromise rate would be 28% and that the proposal would most likely be effected on Jan 1, 2022.

“We don’t think it derails the equity market recovery,” said Nupur Gupta, portfolio manager at Eastspring Investments, said of the tax proposal on Bloomberg TV. “Equity sentiment does appear to be stretched, which is why any negative news that you get can lead to a consolidation in markets in the short term.”

The pan-European STOXX 600 dropped 0.4% and was on course for a 1% weekly drop, with a surge in global coronavirus cases also weighing. The euro zone economy will grow more slowly this year than earlier thought and a temporary gain in inflation is likely to exceed a previous projection, a European Central Bank survey showed on Friday, a day after the bank left policy unchanged. However, IHS Markit’s flash Composite Purchasing Managers’ Index for the euro zone, seen as a good guide to economic health, rose to a nine-month high of 53.7 in April, confounding expectations in a Reuters poll for a dip to 52.8. Anything above 50 indicates growth. The US PMI data is due out at 945am ET.

“The euro zone has enjoyed a record manufacturing boom this month as the continent sees its early stages of the recovery efforts reaping rewards,” said Sun Global Investments CEO Mihir Kapadia in a client note. “We could expect some hiccups along the way, but sentiment should remain higher for some time.”

Here are some of the biggest European movers today:

• FirstGroup shares rise as much as 19%, the most in five months, after the U.K. transport firm sells its North American student and transit units for $4.6 billion and says it expects FY21 earnings to exceed previous expectations.
• Tod’s gains as much as 16% after LVMH boosts its stake in the Italian shoemaker to 10%, a move that’s likely to reignite takeover speculation on the stock, according to Jefferies.
• SEB climbs as much as 8% to their highest in more than three years after the French home- appliances maker reported 1Q sales that beat consensus expectations, prompting a Societe Generale upgrade.
• Wartsila rises as much as 7.8%, extending a surge after Thursday’s first- quarter report showed orders beating estimates.
• Dometic advances as much as 6.5% after 1Q organic revenue growth of 22% was slighter better than expected, the main surprise being the company’s record margin, according to Jefferies.
• Moncler falls as much as 7.1%, the most since March 2020, after 1Q results. RBC highlights that revenue recovery at the Italian maker of puffer jackets is good, but says the company is “not firing on all cylinders” compared to several peers that exceeded expectations.
• Carnival Plc drops as much as 4.4% in London, the worst performer in Europe’s Stoxx 600 Travel & Leisure Index, after Morgan Stanley stays cautious on cruise lines despite improving newsflow.

Asian stocks were set for their worst weekly loss in a month as the region’s virus cases surged and a U.S. tax proposal hurt sentiment. Thai shares were the biggest decliners in Asia on Friday, with the SET Index down 0.9% as the country became the latest to report an unprecedented daily surge in Covid cases. Elsewhere, the Topix index closed 0.4% lower as Japan is set to declare a state of emergency in Tokyo, Osaka and two other prefectures from Sunday. Japan’s weakness was offset by Chinese stocks, which notched the biggest weekly gain since they peaked at a 13-year high in mid-February. The benchmark CSI 300 index closed 0.9% higher on Friday, taking this week’s rally to 3.4%. Gains were driven by shares of companies that reported big jumps in first-quarter earnings. The MSCI Asia Pacific Index erased losses of as much as 0.5% on Friday to climb 0.3%. Information technology shares gained, while materials slumped. The regional gauge is on pace to fall 0.3% this week. Stephen Innes, chief global market strategist with Axicorp Financial Services wrote in a note that the biggest problem from the much talked-about U.S. tax proposal “might be a near-term liquidity drain as active traders and hedge funds pull back on a high-frequency activity to reevaluate strategy.”

India’s Sensex, the benchmark equity index, completed a third consecutive week of decline as a deadly wave of coronavirus infections raised concerns over business recovery amid lockdown-like curbs. The S&P BSE Sensex fell 0.4% to 47,878.45 in Mumbai, taking its weekly drop to 2%. The NSE Nifty 50 Index also declined by a similar magnitude. Both measures capped their longest run of weekly losses since May 22. “Domestic equities do not look to be inspiring at the moment,” said Binod Modi, head of strategy at Reliance Securities Ltd. “The sharp rise in Covid-19 cases across the country and enhanced mobility restrictions imposed by a number of states are expected to remain as key overhangs for the market.” The Sensex has retreated more than 8% from its recent peak on Feb. 15, nearing the 10% loss threshold viewed as a technical correction. India added a record 332,730 cases in the last 24 hours, taking the total number of cases to 16.26 million, the second-highest in the world. Fourteen of the 19 sector sub-indexes compiled by BSE Ltd. fell, led by a gauge of telecom companies

In rates, the 10Y TSY yield was steady at 1.55%; Germany’s 10-year government bond yield, the benchmark of the euro area, was also flat.

In FX, the Bloomberg Dollar Spot Index fell again as its G-10 peers rallied led by risk-sensitive currencies. The yen was little changed after climbing to its highest level in seven weeks in the Asia session amid haven demand as Japan is set to declare a new state of emergency in some areas amid a surge in virus cases. The euro advanced from the beginning of the European session and got an extra boost after preliminary French manufacturing and services PMIs came in higher than expected, signaling a faster economic recovery; German bonds reacted to the data by giving up early gains, before rebounding. The pound rose, breaking a three-day losing streak, after better-than-expected retail sales for March and high- frequency data showed a continued uptick in spending; gilts briefly erased early gains posted on the DMO reducing this year’s debt sales.

China’s yuan posted its biggest weekly gain since January against the dollar. The Chinese currency also jumped the most in seven weeks against a basket of its trading partners. USD/CNY little changed at 6.4919; poised to fall 0.5% this week, most since Jan. 31. The Bloomberg CFETS RMB Index Tracker steady at 96.78, up 0.4% this week, most since March 5. “We expect CFETS strengthening to resume,” Citigroup strategists including Dirk Willer write in a note, adding that “we keep a bullish bias on CNY.”

In commodities, oil prices were steady, with support from the European economic recovery countered by persisting coronavirus concerns as infections surged to record levels in India. US crude edged up 0.1% to $61.50 a barrel and global benchmark Brent crude was flat at $65.35 per barrel. Spot gold was little changed at $1,785 per ounce but was still set for a weekly rise on soft Treasury yields and a subdued dollar

Bitcoin briefly dropped as low as $48,000, its lowest level in nearly seven weeks, before recovering some ground to trade back over $50,000. Ethereum was trading at $2,300 after dropping as low as $2,100.

With the first-quarter corporate earnings season under way, focus will be on results from Honeywell International Inc, Schlumberger N.V. and American Express Co. IHS Markit’s flash reading at 9:45 a.m ET is likely to show business activity in the manufacturing and services sectors improved in April from the prior month.

Market Snapshot

• S&P 500 futures up 0.2% to 4,136.25
• STOXX Europe 600 down 0.33% to 438.19
• MXAP up 0.3% to 208.01
• MXAPJ up 0.7% to 697.44
• Nikkei down 0.6% to 29,020.63
• Topix down 0.4% to 1,914.98
• Hang Seng Index up 1.1% to 29,078.75
• Shanghai Composite up 0.3% to 3,474.17
• Sensex down 0.1% to 48,018.05
• Australia S&P/ASX 200 little changed at 7,060.71
• Kospi up 0.3% to 3,186.10
• Brent Futures up 0.09% to $65.46/bbl
• Gold spot up 0.11% to $1,785.98
• U.S. Dollar Index down 0.33% to 91.033
• German 10Y yield fell 1.7 bps to -0.269%
• Euro up 0.33% to $1.2055

Top Overnight News from Bloomberg

• The euro area’s economic recovery got fully underway in April with services returning to growth and manufacturing expanding at a record pace. Price pressures mounted as companies faced unprecedented delivery delays
• Russia said it began pulling thousands of troops back from areas near the Ukrainian border Friday, in a move that could ease tensions that have spiked in recent weeks
• Bitcoin declined for the seventh time in eight days, falling below $50,000, after President Joe Biden was said to propose almost doubling the capital-gains tax for the wealthy

A quick look at global markets courtesy of Newsquawk

Asia-Pac stocks head into the weekend mixed after the region partially shrugged off the early headwinds from the US where sentiment was spooked by reports that President Biden plans to hike capital gains tax to as much as 43.4% from the current top rate of 23.8%, which pressured the major indices and dragged all sectors in the red. Asian bourses suffered from early spillover selling although losses in the ASX 200 (+0.1%) were stemmed as telecoms remained afloat following the outcome of the 5G spectrum auction in which the top 3 telcos spent over AUD 600mln and with the largest-weighted financials sector cushioned by gains in AMP on plans for a demerger and listing of AMP Capital’s private markets investment management business. Nikkei 225 (-0.6%) underperformed due to recent currency inflows and as participants brace for a return to a state of emergency with the government seeking an emergency declaration for Tokyo, Osaka, Kyoto and Hyogo between April 25th-May 11th and wants to significantly reduce the flow of people with stricter measures such as asking certain businesses to close including establishments that serve alcohol. Hang Seng (+1.1%) and Shanghai Comp. (+0.3%) were positive amid strength in Chinese tech names and with focus shifting to earnings whereby Ping An Insurance benefitted from profit growth for Q1, while CNOOC was less decisive despite a 4.7% Y/Y increase in its Q1 total net production. Finally, 10yr JGBs mirrored the choppy price action in T-note futures despite the underperformance of Japanese stocks and with demand also hampered by the lack of BoJ purchases in the market today, while the Australian 2024 bond auction had little effect on the 3yr yield which was relatively flat although both Aussie and Kiwi 10yr yields edged higher by around 3bps.

Top Asian News

• Xiaomi Said to Mull Investing in AI Chipmaker Black Sesame
• Carlyle Is Said to Weigh Stake Sale in Satellite Firm AsiaSat
• Bridgestone Nearing U.S. Deal, Narrows List to a Few Candidates
• Bain Sets Up First Japan Fund With $1 Billion Commitments

A lacklustre Friday session thus far for European majors (Euro Stoxx 50 -0.3%) with downbeat vibes seeping from Wall Street’s tax-induced losses, and after an indecisive APAC Friday as fresh catalysts remain light. US equity futures meanwhile consolidate with modest gains, although the cyclically-driven RTY (+0.7%) outperforms. Back to Europe, broad-based losses are seen across the bourses with no particular standout performer. Sectors are mostly in negative territory with Basic Resources topping the charts as base metals continue to rise, whilst Real Estate and Oil & Gas reside as the laggards, albeit the breath remains relatively narrow. Overall the sectors do not portray a theme nor a risk bias. Autos are buoyed as Daimler (+1%) underpins the sector following its earnings, in which it noted that unit sales, revenue, and EBIT expected to be significantly higher in 2021 than in the previous year while it raised its FY21 margin targets due to the firm Q1 performance. That being said, the group expects some potential further impact on Q2 production from the global chip shortage. In terms of individual movers, Tod’s (+11%) is bolstered amid reports LVMH (-0.1%) upped its stake in the Co. to 10%. Meanwhile, earnings-related movers include: Vinci (+1%), Vivendi (+3%), Moncler (-6.5%) and Saab (+8%).

Top European News

• Daimler Raises Margin Outlook for Mercedes-Benz Division
• A $120 Billion Danish Pension Manager Loses Faith in Bonds
• Allfunds Surges After $2.3 Billion IPO Boosts Amsterdam’s Clout
• Euro-Area Recovery Kicks In as Services Return to Growth

In FX, the Aussie may have received a boost from stronger preliminary PMIs overnight, but its firm rebound vs the Greenback seems more technical following yet another successful defence of 0.7700 or thereabouts. However, 0.7750 is proving tough to reclaim as Aud/Usd remains hampered by the ongoing rift with China over tariffs that has prompted Australia to cancel its Silk Road accord, while news of a 3-day lockdown in Perth may also offset some positivity surrounding constructive trade talks with the UK. However, the Aud/Nzd cross has bounced from around 1.0750 again as the Kiwi lags below 0.7200 against its US rival irrespective of a rebound in NZ credit card spending. Elsewhere, better than expected flash Eurozone PMIs, and especially from France appear to be keeping the Euro aloft after its sharp pull back in wake of a broadly uneventful ECB policy meeting to retest bids/support around 1.2000. Note also, Eur/Usd may be underpinned by decent option expiry interest just below the round number between 1.1990-80 (1.5 bn) as it holds just above 1.2050, while the Loonie should also be bolstered by expiries at the 1.2500 strike (1 bn) as it maintains post-BoC momentum, albeit after several wobbles and setbacks. Nevertheless, resistance looms at the new Usd/Cad 2021 low circa 1.2459 and then 1.2450 may be protected by 1.7 bn expiries extending to 1.2440. Meanwhile, Sterling continues to straddle 1.3850 vs the Buck following the loss of another big figure on Thursday and regardless of bumper UK retail sales data or better than anticipated preliminary PMIs, as Cable lags amidst renewed upside in Eur/Gbp towards 0.8700 on ongoing Oxford/Astra vaccine issues in part.

• DXY/CHF/JPY – In keeping with several G10 counterparts, the Dollar may be drawing some comfort from the fact that dip buying has stemmed further depreciation, and in index terms the 91.000 level is becoming something of a line in the sand, although the Greenback remains under pressure and in bearish mode with the DXY easing into a lower 91.294-003 range ahead of Markit’s US PMIs and new home sales. Hence, fellow ‘safe-havens’ such as the Franc and Yen are taking advantage against the backdrop of consolidation in US Treasury and other global bond yields, as Usd/Chf and Usd/Jpy trade near the base of tight 0.9171-51 and 108.00-107.80 bands respectively. For the record, little reaction to in line Japanese CPI or broadly firmer PMIs as Tokyo and 3 other cities head back into emergency COVID-19 status.
• EM – Risk sentiment has been rattled to an extent by US President Biden’s proposal to double the CGT rate, but most EM currencies are benefiting from ongoing Usd weakness, bar the Try for specific negative Turkish factors, but the Rub is also clawing back more of its heavy losses on perceptions that tensions between Russia and Ukraine are dissipating ahead of the upcoming CBR policy meeting which saw a larger than expected hike to 5.00% and further RUB upside.

In commodities, WTI and Brent front month futures are yet again undergoing choppy trade with some recent pressure experienced in lockstep with a dip across stocks. As mentioned throughout the week, the supply/demand dynamics remain ever-so-fluid as OPEC+ gears up for its technical meeting next week. At this point, it is still unclear whether members will convene for a decision meeting ministerial meeting following the technical JMMC confab. The latest sources via EnergyIntel suggested both will go ahead on the 28th of April, although other reports put more emphasis on the “monitoring” aspect whilst playing down the likelihood of a tweak to the last set quotas through to July. For any changes to occur, the ministerial meeting will have to go ahead. Meanwhile, The latest move by Russia to withdraw troops following military drills, perceived as a de-escalation, alongside seemingly construction JCPOA discussion, have unwound some geopolitical premia baked into prices in recent days. WTI is now flat on the day around USD 61.50/bbl (vs high USD 62.10/bbl), while its Brent counterpart dipped below USD 65.60/bbl (vs high 65.96/bbl). Elsewhere, spot gold and silver are relatively uneventful around recent ranges above USD 1,775/oz and USD 26/oz respectively. In terms of base metals, LME copper eclipsed 9,500/t as it’s on track for its third straight week of gains amid a softer Buck and firm demand prospects. Dalian iron ore prices meanwhile were bolstered by a rise in steel prices with some citing strengthening global demand for the alloy.

US Event Calendar

• 9:45am: April Markit US Services PMI, est. 61.5, prior 60.4; Manufacturing PMI, est. 61.0, prior 59.1; Composite PMI, prior 59.7
• 10am: March New Home Sales MoM, est. 14.2%, prior -18.2%; New Home Sales, est. 885,000, prior 775,000

DB’s Jim Reid concludes the overnight wrap

I kissed my wife goodnight at 930pm last night and left her happy and well watching Masterchef. 4 hours later and I get woken up by chattering teeth and a weary demand that I need to keep her warm as she is feeling awful and has the shivers running through all her body. Yes she had her first covid jab yesterday. This was very predictable as she’s like this every year from the flu jab. All I could think of was that I’d have to look after the kids all alone this weekend. That started to break me out in a cold sweat.

So the virus still plays a big part in all our lives and markets and it was a pretty mixed session yesterday, with multiple asset classes fluctuating between gains and losses as they weighed up a variety of competing risks on the horizon. On the one hand, the rise in global Covid cases continued to accelerate, reaching its fastest pace of the pandemic so far and raising concerns about potential new restrictions on mobility.Yet a pullback in Russian troops from the Ukrainian border helped to reduce some of the geopolitical risk premium of late, while decent US labour market data bolstered sentiment around the economic recovery. However bearish sentiment got the last word yesterday as just after trading closed in Europe, reports circulated of the Biden administration proposing to nearly double the capital gains tax on the wealthiest individuals.

The new marginal tax rate would rise to 39.6% on investments, compared to the current base rate of 20%, while the current 3.8% surtax on investment income that helps fund Obamacare would also be kept in place. This would see taxes on investment returns become higher than those on labour, which has been a long standing provision of the tax code. White House Press Secretary Psaki noted that nothing is for certain just yet and that the administration is “still finalizing what the pay-fors look like” as the White House looks for ways to fund its spending initiatives. The S&P 500 fell -1.3% from its intraday highs before settling down -0.92% on the day, which leaves it just over 1% off its all-time closing high last week. The NASDAQ was down a slightly greater -0.94% yesterday, while the small cap Russell 2000 index outperformed slightly (-0.31%) but after a -1.8% intraday pullback on the tax headline. The losses were widespread with 70% of S&P 500 members lower and 21 of 24 industry groups losing ground. The turn in sentiment was seen in yields as well, with 10yr US Treasuries higher on day as yields fell -1.7bps to 1.538% after been as high as 1.5856% before the news.

Looking ahead, today’s main highlight will be the flash PMIs from around the world, which will give us an initial indication of how the global economy has fared moving into Q2. Overnight, we’ve already had the results from Australia and Japan, which showed improvements in manufacturing PMIs with Japan at 53.3 (vs. 52.7 last month) and Australia at 59.6 (vs. 56.8 expected). Japan’s services reading was flat at 48.3 compared to last month while Australia’s printed at 58.6 (vs. 55.5 last month). For the European figures out this morning, our economists are expecting a modest reversal after the strong March improvement, as many countries face increased restrictions in response to the latest wave of the virus.

Asia markets are trading mixed this morning with the Hang Seng (+0.90%) up, the Shanghai Comp (+0.05%) and Kospi (+0.03%) broadly flat and the Nikkei (-0.75%) down. Futures on the S&P 500 are back up +0.21% but European ones pointing to a weaker open as markets here try to catch up with the late move in US equities. Yields on 10y USTs are back up +1.9bps though. Elsewhere, Bitcoin is down -3.07% this morning to trade at $49,968, marking the 7th loss in the last 8 days. The crypto currency came under fresh pressure on the Biden tax headlines. In terms of data, Japan’s March CPI printed in line with expectations at -0.2% yoy while core CPI came in at -0.1% yoy (vs. -0.2% yoy expected).

Back to yesterday and the major focal point was the latest ECB meeting, but in reality there isn’t a massive amount to discuss as policy was left unchanged as expected. Instead, the meeting served as more of a placeholder ahead of the June decision, when the Governing Council will decide whether to maintain the new faster pace of PEPP purchases. President Lagarde didn’t provide any clues on that decision either, saying that the pace of purchases would be data-dependent, rather than time-dependent, and that it was “premature” to discuss a reduction in purchases. In terms of the other headlines, Lagarde said that the ECB wouldn’t move policy in tandem with the Fed, though that wasn’t exactly a great surprise, while she confirmed that the results of the ECB’s strategy review would be presented in the autumn. Our European economists remain confident of a strong recovery around mid-year. However, it’s unclear whether there will be sufficient data by the June meeting to provide the case for a deceleration in PEPP purchases. For more, see their ECB recap here.

Though sovereign bond yields in Europe had moved lower after the press conference, they ended the day little changed, with those on 10yr bunds (+1.0bps), OATs (+1.0bps) and BTPs (+0.2bps) seeing little movement. European equities had a much stronger session however, with the STOXX 600 (+0.68%), the DAX (+0.82%) and the CAC 40 (+0.91%) all recording solid gains.

The tax headlines in the US hampered sentiment after Europe went home and offset decent US labour market data, with the weekly initial jobless claims for the week through April 17 falling to a post-pandemic low of 547k (vs. 610k expected). This was beneath even the lowest estimate on Bloomberg, and sends the 4-week moving average down to its own post-pandemic low of 651k. Other measures similarly surprised to the upside, with the Chicago Fed’s national activity index up to +1.71 in March (vs. +1.25 expected), while the Kansas City Fed’s manufacturing index seeing the composite measure rise to 31 (vs. 28 expected), which is the strongest monthly composite reading since the survey began.

As mentioned at the top, the news on the pandemic has continued to deteriorate at a global level as numerous countries face a surge in cases. To put India’s rising case load in perspective, in mid-February they were running at around 10k new cases per day. This edged up to c.25k in early March but has now hit over 300k per day this week. Incredible numbers.Yesterday saw Japanese PM Suga recommend that the Tokyo, Osaka, Kyoto and Hyogo regions be placed under a new state of emergency. The number of new infections reported in Tokyo yesterday was its highest since late January, and comes just 3 months before the city is scheduled to host the Olympic Games. Meanwhile in Sweden, PM Lofven said that the easing of restrictions that had been planned for the start of May wouldn’t take place because of the high rates of transmission still being observed. However in France, Prime Minister Castex said the country will begin a “cautious” reopening in mid-May. First there will be a gradual easing of domestic travel restrictions beginning on May 3. This comes as Italy is expected to ease some lockdown rules itself this upcoming Monday and Germany is reportedly planning to ease some restrictions for those who have been vaccinated. Elsewhere, Bloomberg reported that China is likely to approve the BioNTech vaccine by July and will relax its requirement that inbound travelers have a jab made by a Chinese company.

Another major development yesterday came from Russia, where the defence minister said that troops which had been deployed near the Ukranian border would return to their bases. In response, Russian assets moved sharply higher, with the MOEX Russia index ending the day up +1.17%, while the Russian Ruble also strengthened significantly, rising +1.55% against the US Dollar. Ukranian President Zelensky welcomed the move in a tweet, saying that “The reduction of troops on our border proportionally reduces tension.”

Turning back to the US, there were some notable developments at President Biden’s climate summit, with the US announcing a new target for the US to reduce greenhouse gas pollution by 50-52% in 2030 compared to 2005 levels. This is on top of the administration’s existing goal of a net-zero emissions economy by 2050, and follows their move to re-join the Paris Climate Change agreement earlier in the year, which the US withdrew from under the Trump administration. This comes amidst a range of fresh targets lately from world leaders, with Japan’s Prime Minister yesterday announcing an increase in their own target, so that emissions would be down 46% from 2013 levels, up from a 26% target at present.

In terms of yesterday’s other data, existing home sales in the US fell to an annualised rate of 6.01m in March (vs. 6.11m expected), which is their lowest level in 7 months. Separately in the Euro Area, the European Commission’s advance consumer confidence reading for April came in at -8.1 (vs. -11.0 expected), which is its strongest reading since the pandemic began.

To the day ahead now, and the main highlight will likely be the aforementioned flash PMI readings for April. Otherwise, we’ll also get March data on UK retail sales and US new home sales. Earnings releases out today include Honeywell International and American Express, while the Central Bank of Russia will be making its latest monetary policy decision.

After coming within inches of $65,000 last week, Bitcoin has suffered two significant ‘liquidation’ events and broke back below $50,000 overnight for the first time since March 8th…

Source: Bloomberg

Various factors were being pitched as the impetus for the latest round of price losses, these including CME futures now trading below spot price as bearishness enters, as well as a negative Coinbase premium.

Bitcoin is down around 27% from its highs as traders were unsure if Biden’s newly-leaked capital gains tax increases were a trigger for selling, or a positive for the crypto-lending business and implicitly supportive of bitcoin.

“There is a lot of new capital that has entered the market, some investors are still on edge and unverified negative news can cause a lot of short-term damage. That is what we are seeing,” Charles Storry, head of growth at DeFi index provider Phuture, told Decrypt. 

However, the plunge in price has merely  recentered Bitcoin’s price to its stock-to-flow model (in a similar manner to what occurred in January).

Source

As CoinTelegraph notes, this means bitcoin is no longer “front-running” stock-to-flow, which is traditionally a highly accurate price forecasting tool. 

“I am sort of relieved btc price is now under s2f model value again,” he wrote in a conversation with “The Bitcoin Standard” author Saifedean Ammous, who called its predictions “astonishing.”

“For a moment I thought that people were front running the model and that the supercycle had started. Now we are back to normal .. like clockwork.”

The longer-term trend remains in place…

Source

Ethereum also took a pounding, tumbling from fresh record highs above $2600 to $2100 overnight before dip-buyers stepped back in this morning…

Source: Bloomberg

ETH continues to hold above February’s relative BTC highs, at its strongest relative to bitcoin since Aug 2018…

Source: Bloomberg

Of course, as CoinTelegraph reports, notorious gold bug and crypto-skeptic, Peter Schiiff, was also quick to comment on the market action, poking fun at Bitcoin proponent Anthony Pompliano.

Now that #Bitcoin is back below $50k I think it’s time for @APompliano to tweet out $1k milestones on the way down the way he did on the way up.

— Peter Schiff (@PeterSchiff) April 23, 2021

Pompliano responded: “Bitcoin is up 600% in last year. Gold is up 3% in last year. No more tweeting until gold can beat inflation, Peter!” 

Twitter-user “Fintwit” also replied to Schiff, noting that “gold is up 0% since 2011.”

The battle continues.

Japanese stocks tumbled on Friday, dragging down stock indexes across the region to cap off Asian equities biggest weekly drop in a month, as Prime Minister Yoshihide Suga declared a state of emergency in Tokyo, Osaka, Kyoyo and Hyogo in the hopes of tamping down the country’s worst COVID-19 outbreak yet. The lockdowns rules will take effect Sunday and continue through May 11.

Notably, the state of emergency will coincide with the Golden Week holiday.

The state of emergency, covering roughly a quarter of Japan’s population of 126 million and about one-third of the country’s economy, is being imposed just three months before the Tokyo Olympics are slated to begin.

Suga is set to finalize the decision at a COVID-19 task force meeting Friday evening.

Under the emergency, large events will effectively be banned from having an audience, while fewer buses and trains will operate on weekends and holidays, according to a draft plan seen by Nikkei. Tougher restrictions such as asking establishments serving alcohol to temporarily close and shutting down major commercial facilities are expected to be in place from Sunday through May 11. Commercial centers including department stores and shopping malls will be asked to shut, with the exception of floor space to sell daily necessities. The state of emergency will be imposed on top of a quasi-state of emergency covering 10 prefectures whereby bars and restaurants are asked to close by 2000 local time. But these restrictions failed to surpass 5,000 for a second straight day on Thursday.

“We will take targeted steps around the holiday period to stop the spread of infections by all means,” Suga said Thursday after meeting with members of his Cabinet including health minister Norihisa Tamura and Yasutoshi Nishimura, minister in charge of the government’s coronavirus response.

A Ministry of Health, Labor and Welfare panel estimated that mutant strains have driven about 80% of all new cases in Osaka and Hyogo, and are rapidly growing in Tokyo. 

Across Japan, more than 5,500 new cases of COVID were reported on Friday.

Source: Johns Hopkins

The upcoming state of emergency will be the country’s third, and while Suga insists that it won’t impact the Olympics, public opinion polls show growing public dissatisfaction with the plan, with a plurality saying the Games should be cancelled. Next month, a top official from the IOC will visit Tokyo for the purposes of making a safety assessment. And although President Joe Biden has given his blessings for the Games to continue, he’s not expected to attend.

SpaceX launched its third crewed mission to the International Space Station (ISS) early Friday morning under darkness. 

A SpaceX Crew Dragon aboard a Falcon 9 rocket carrying four astronauts blasted towards low Earth orbit around 0549 ET from Cape Canaveral, Florida. The Dragon capsule should dock at the ISS around 0510 ET Saturday. 

Here’s the liftoff of Falcon 9 and Dragon.

Liftoff of Falcon 9 and Dragon! pic.twitter.com/g6Oi8qwU2Y

— SpaceX (@SpaceX) April 23, 2021

“Main engine cutoff and stage separation confirmed. Second stage engine burn underway,” SpaceX tweeted. 

Main engine cutoff and stage separation confirmed. Second stage engine burn underway pic.twitter.com/dyvxICjavF

— SpaceX (@SpaceX) April 23, 2021

Dragon capsule has separated from the Falcon 9 rocket and is on the way to ISS. 

Dragon has separated from Falcon 9’s second stage and is on its way to the @space_station! Autonomous docking tomorrow at ~5:10 a.m. EDT pic.twitter.com/rg1QjZEl9u

— SpaceX (@SpaceX) April 23, 2021

The astronauts are two Americans, one Japanese and one French. They will continue efforts aboard the 21-year-old ISS, which orbits about 250 miles above the ground. This week, we noted that Russia would withdraw from the aging ISS by 2025 to build a space station of its own. 

Once the astronauts arrive at the ISS early Saturday morning, they will join seven other astronauts and cosmonauts. According to Axios, four crewmembers of the ISS will fly back to Earth next week. 

The latest SpaceX mission comes one week after NASA awarded SpaceX $2.9 billion to develop a lunar landing system to shuttle astronauts to the moon and back.