Category: zerohedge

Democrats dominated the increase in sentiment for Americans in September, jumping from 57.6 to 68.4…

Source: Bloomberg

Overall, UMich sentiment surprised to the upside with ‘hope’ the most notable jump…

Source: Bloomberg

Buying Conditions for homes unexpectedly dropped (modestly) while cars and appliances picked up…

Source: Bloomberg

The poorest cohort of Americans did not see a large rise in sentiment but the middle range jumped dramatically…

Source: Bloomberg

Finally, a new question was added on the anticipated impact on the economy from a universal basic income, which surprisingly tilted in the opposite direction: nearly half of all consumers thought higher taxes on the wealthy would have a favorable impact on growth prospects, and nearly half thought a universal basic income would have a negative impact on the economy.

UMich notes that two non-economic issues still represent the primary sources of uncertainty and could cause volatile shifts in confidence: how and when the election is decided, and delays in obtaining and administering the vaccine.

US Factories disappointed in August with orders rising only 0.7% MoM (well down from the +6.5% MoM jump in July)…

Source: Bloomberg

This leaves YoY orders still down 5.4% as The “V” appears to be stalling…

Source: Bloomberg

Fiscal stimulus stat!!

Tesla shares are volatile after moving slightly lower Friday morning as the company reported 139,000 vehicles delivered and 145,036 vehicles produced in the third quarter. The number marks a new all time delivery record for the automaker, beating out its previous record of 112,000 vehicles. 

Production is up 50.8% year over year and deliveries were up 43.6% year over year. The numbers also mark what appears to be a return to normalcy after production was impacted during Q2 as a result of the coronavirus pandemic. 

Analysts were expecting 137,000 vehicles delivered just days after the quarterly e-mail leak that Tesla is now becoming famous for suggested that the company could have a record quarter. 

The company saw Model S/X deliveries plunge to 15,200…

…while deliveries of Model 3 – which has been coupled with the Model Y since the beginning of 2020, carried most of the weight.

The idea of grouping its models together continues to confuse analysts and seems completely unnecessary, but for obfuscation purposes. As a reminder, major car companies like GM and Ford with many multiples more models than Tesla has, usually break out their sales on a per model basis. 

Tesla has also not broken out its delivery and production numbers by region, which seems relevant now that the company is producing vehicles both in the United States and China. 

Additionally, as one skeptic pointed out, the company is going to find it difficult to make its guidance for 500,000 vehicles produced for the year:

Hey, so to hit Fraud-Boy’s 500,000-car 2020 guidance, $TSLA only has to sell around 183,000 cars this quarter, lol.

— Mark B. Spiegel (@markbspiegel) October 2, 2020

So, instead, we have to go with photographs that are being produced on social media, like this one from Serramonte, California. These vehicles are all “delivered”, are we right?:

By popular demand, a Serramonte Update…well, it would be an “update” if anything had changed much. But this is not the case…more white Model Ys coming in steady. Customers are picking up cars, but obviously at way below replacement rate. $tslaQ $TSLA #SGFreport pic.twitter.com/T0524oSVAZ

— Machine Planet (@Paul91701736) October 1, 2020

Someone just emailed me a snapshot of the “unlimited Tesla demand” at its Mount Kisco, NY location. He says he’s been observing it for a long time, and it’s the most “demand” he’s ever seen there.$TSLA pic.twitter.com/dEiYF9tl5J

— Mark B. Spiegel (@markbspiegel) September 18, 2020

Authored by Thomas Lifson via AmericanThinker.com,

California’s Governor Gavin Newsom, who is Nancy Pelosi’s nephew, is once again moving the goalposts in order to keep his state shut down, imposing irrelevant criteria to delay recovery.  He has become an economic troll.  With his state accounting for almost 15% of the national GDP, hobbling his state’s economy, even as counties are already starting to meet the criteria he set for relaxation of restrictions, depresses national output and employment statistics and thereby contributes to defeating President Trump.

Newsom, who is becoming known to Californians as Newssolini, is really stretching to find excuses to keep businesses closed and Californians unemployed and reverting to race-pandering.  Jennifer Van Laar of RedState writes:

Now that more counties are set to move out of the most restrictive tier, Newsom’s changed the game again and has added an “equity requirement” counties must also meet before they can move down a tier.

From the California Department of Public Health website:

For a county with a population of greater than 106,000, the county must:

• Equity Metric. Ensure that the test positivity rates in its most disadvantaged neighborhoods, as defined as being in the lowest quartile of the Healthy Places Index census tracts, do not significantly lag behind its overall county test positivity rate, as described in detail below.

• Targeted Investments. Submit a plan that (1) defines its disproportionately impacted populations, (2) specifies the percent of its COVID-19 cases in these populations, and (3) shows that it plans to invest Epidemiology and Laboratory Capacity for Prevention and Control of Emerging Infectious Diseases (Strategy 5: Use Laboratory Data to Enhance Investigation, Response, and Prevention) grant funds at least at that percentage to interrupt disease transmission in these populations. The targeted investments can include spending on augmenting testing, disease investigation, contact tracing, isolation/quarantine support, and education and outreach efforts for workers. Effective for the October 13th tier assignment, this plan must be submitted before a county may progress to a less restrictive tier. Due to data limitations in small populations, the equity metric described above cannot be reliably applied to smaller counties, as described below.

With Democrats enjoying absolute dominance of the state Legislature, Newsom’s unilateral dictates will not be challenged by the lawmaking branch of the state government.  And, with the state’s media at least as dominated by leftists as the national media, few voices will be heard by the public, who have been passively accepting economic strangulation in the name of safety, and now in the name of racial grievances.

There are real victims of this high-handed maneuver: businesses like restaurants that have been barely keeping their noses above water will go bankrupt and close permanently, and their employees will be jobless.  I am an investor in a restaurant that was thriving until COVID, and despite the valiant efforts of its manager to stay alive, this may be the death blow.

*  *  *

Update: There are signs of revolution against Covid restrictions if you venture beyond the populous coastal enclaves. Michael Lewis writes at Bloomberg:

[Matt] Pontes is now the county executive officer of Shasta County in Northern California and goes to work in thin socks, but another crisis has found him.

“You cannot get closer to total disobedience of any kind of law,” he said, referring to the local response to Covid-19 strictures. “What’s happening up here is full-on anarchy.”

Then he listed for me a few of the things that had happened recently: The county sheriff had announced that he wouldn’t enforce the state’s pandemic restrictions on social gatherings and businesses. People who had never before attended county board meetings were accusing local officials of treason.

The county’s health officer, who had the unhappy job of imposing the state’s Covid rules on the citizens of Shasta County, was now receiving so many threats that Pontes had brought in a new threat-assessment team; he’d also ordered the bushes cut back away from her house, installed a security system and floodlights, and ordered police patrols of her neighborhood.

“She still doesn’t feel safe out there,” he said. “At all.”

Perhaps as expected, certain Chinese state media mouthpieces have appeared gleeful and gloating upon the unprecedented news that President Trump and the First Lady have tested positive for COVID-19.

The editor-in-chief of the Chinese Community Party run Global Times, Hu Xijin, said in first reaction that the president and Melania “have paid the price” and further that it is sure to have a “negative impact” on his image and that of the United States.

The editor of the Global Times, China’s hawkish state-owned tabloid, with a little schadenfreude this morning: https://t.co/WcbVpLZR9V

— Blake News (@blakehounshell) October 2, 2020

The Global Times editor has long trolled the US over its handling of the coronavirus pandemic while simultaneously touting China’s rapid and rigorous planned response which kept its numbers low compared to the population.

Yet the US administration has long attacked leaders in Beijing for early on downplaying it to the world, and not just that but outright lying about it when the seriousness of the novel virus and airborne spread became evident to Chinese health officials late last year into early 2020.

Thus what Trump repeatedly calls the “Chinese virus” (even in the debate) or in other instances “Wuhan virus” was entirely containable if Chinese communist authorities hadn’t deceived the world during the earliest weeks and months, according to the administration.

So likely, the White House would point out that indeed it’s Trump and much of the world that has “paid the price” for Beijing’s ineptitude and deceit in not locking down borders earlier than it did.

After Joe Biden and his top aides acquiesced to Democrats urging him to campaign more aggressively by deciding to restart in-person canvassing, President Trump – Biden’s top political rival – has tested positive. And in his first remarks on Trump’s infection, Biden and his wife Jill Biden, the former second lady,

Jill and I send our thoughts to President Trump and First Lady Melania Trump for a swift recovery. We will continue to pray for the health and safety of the president and his family.

— Joe Biden (@JoeBiden) October 2, 2020

One of Biden’s aides told the press earlier that the former VP would be tested Friday morning. We’re now waiting on the results.

By MarketCrumbs

2020 has undoubtedly been the year of the special purpose acquisition company, or SPAC.

According to SPAC Insider, more than 115 initial public offerings for SPACs have brought in almost $44 billion in proceeds, which is more than the last five years combined.

Despite the popularity of SPACs so far this year, there hasn’t been an exchange-traded fund, or ETF, dedicated to SPAC investing. That all changed yesterday when the Defiance NextGen SPAC Derived ETF, which is the first ETF to track blank check companies, made its debut on the New York Stock Exchange yesterday under the ticker SPAK.

“Picking the winners of individual SPACs can be very difficult, however the ETF structure allows investors to access the most liquid SPAC IPOs in a diversified basket,” Defiance ETFs said. “SPAK allows both financial advisors and retail investors to participate in an IPO private equity style of investing, which until now was only available to large financial institutions.”

The ETF has 29 holdings which are rebalanced quarterly and has an expense ratio of 0.45%. An 80% weighting is given to IPO companies derived from SPACs while 20% is allocated to common stock of newly listed SPACs.

The ETF’s largest holding is DraftKings, which accounts for nearly 20% of the fund’s assets. The other stocks rounding out the top five holdings—which account for just over half of the ETF’s assets, are Clarivate Plc, Vertiv Holdings Co., Open Lending Corporation and Broadmark Realty Capital Inc.

Co-founder Joshua Harris of asset manager Apollo Global Management, which itself is looking to raise funds through an initial public offering for a new blank-check company, says SPACs are here to stay.

“The SPAC part of the IPO market is a part of the market that’s here to stay,” Harris said. “There’s a real need for quick, confidential capital and price certainty and for sponsorship in the markets. And most of the SPACs that have been done have been more emerging growth SPACs, less cash flow more growth. And what we see is the opportunity for sponsorship.”

With SPAC deals seemingly taking companies public on a daily basis as of late, time will tell if the launch of a dedicated SPAC ETF marked a sign of a top in the latest craze to hit Wall Street or a generational buying opportunity.

By MarketCrumbs

2020 has undoubtedly been the year of the special purpose acquisition company, or SPAC.

According to SPAC Insider, more than 115 initial public offerings for SPACs have brought in almost $44 billion in proceeds, which is more than the last five years combined.

Despite the popularity of SPACs so far this year, there hasn’t been an exchange-traded fund, or ETF, dedicated to SPAC investing. That all changed yesterday when the Defiance NextGen SPAC Derived ETF, which is the first ETF to track blank check companies, made its debut on the New York Stock Exchange yesterday under the ticker SPAK.

“Picking the winners of individual SPACs can be very difficult, however the ETF structure allows investors to access the most liquid SPAC IPOs in a diversified basket,” Defiance ETFs said. “SPAK allows both financial advisors and retail investors to participate in an IPO private equity style of investing, which until now was only available to large financial institutions.”

The ETF has 29 holdings which are rebalanced quarterly and has an expense ratio of 0.45%. An 80% weighting is given to IPO companies derived from SPACs while 20% is allocated to common stock of newly listed SPACs.

The ETF’s largest holding is DraftKings, which accounts for nearly 20% of the fund’s assets. The other stocks rounding out the top five holdings—which account for just over half of the ETF’s assets, are Clarivate Plc, Vertiv Holdings Co., Open Lending Corporation and Broadmark Realty Capital Inc.

Co-founder Joshua Harris of asset manager Apollo Global Management, which itself is looking to raise funds through an initial public offering for a new blank-check company, says SPACs are here to stay.

“The SPAC part of the IPO market is a part of the market that’s here to stay,” Harris said. “There’s a real need for quick, confidential capital and price certainty and for sponsorship in the markets. And most of the SPACs that have been done have been more emerging growth SPACs, less cash flow more growth. And what we see is the opportunity for sponsorship.”

With SPAC deals seemingly taking companies public on a daily basis as of late, time will tell if the launch of a dedicated SPAC ETF marked a sign of a top in the latest craze to hit Wall Street or a generational buying opportunity.

In a repeat of last month when the monthly payrolls came in as expected but the unemployment rate dropped far more than expected, moments ago the BLS report that in September a total of 661K jobs were added, below the 868K expected, and less than half the 1.489MM in August…

… but offsetting this disappointment was the plunge in the unemployment rate which tumbled by a whopping 50bps from 8.4% to 7.9%, with rates for both blacks and Hispanic plunging as well.

Developing

 

 

By Michael Every of Rabobank

Infections, retentions, creations, and tensions. In that order.

Here comes the first October surprise. US President Trump and the First Lady have both tested positive for Covid-19 after one his advisors, Hope Hicks, tested positive for Covid-19 and has also started showing symptoms. She travelled on Air Force One with him to Minnesota last week, and was additionally seen maskless near another presidential advisor. He tweeted:

“Tonight, @FLOTUS and I tested positive for COVID-19. We will begin our quarantine and recovery process immediately. We will get through this TOGETHER!”

To say this could potentially be a *big* deal is an understatement. Not much more can be said here at this stage, other than to do what one always does when **anyone** catches Covid – wish them a rapid and full recovery. However, one cannot help but note that Trump is very much in the age and weight category that place him in the higher risk groups, health-wise, and the market and public talk will now be of little else.

Up goes the USD as risk off? It seems that the kneejerk reaction was first to sell USD a little instead, at least until markets can work out exactly how this potentially plays out. Stock futures are certainly going down at time of writing, however. Risk is off there.

Obviously now eclipsed, but in the UK a Scottish Nationalist MP –a political party who have made a name for themselves as good stewards of public health– also started to show virus symptoms….and so decided to get on the train all the way to London; go to the House of Commons and mix with members of Parliament; and then, after a positive test result, to go all the way back to Scotland by train again. As we all know, PM Johnson has already had Covid-19 and ended up on a ventilator after boasting he had been shaking the hands of virus patients. Hopefully there won’t be any repeat for other MPs (or train passengers) now.

Apart from infections, the focus today is going to be very much on employment: both job retentions and job creations.

In the UK as one benchmark there was a report yesterday that 1 in 3 firms are preparing to fire workers imminently. Today we see the Telegraph saying unemployment is expected to reach as high as 4 million in a labour force of around 34 million. That is an entire army of people –actually the equivalent of the US and Russian and Chinese and Indian armies– all needing to be retrained as builders at once. Yet there are also reports the UK was recently looking into copying a Trump policy and building a wall around itself – on the water. This fantastical feat of engineering was apparently being considered as a way to keep the number of illegal asylum seekers arriving by boat over The Channel down. (“Welcome to day one of your builder training course everyone. Please pick up the scuba gear to your left and follow me into the pool.”) There were already some high fevers running in Westminster even before Covid re-entered the building. Does GBP float?

In the US, it will be the last monthly payrolls report before the election, if you can believe it. This will naturally be the figure that Trump will be still be able to Tweet about today, one hopes. The consensus is 875K, which would help close the gap of jobs lost to the Covid shutdown. Risks may be slightly the upside based on the ADP report this week. However, initial claims yesterday made clear yet again that we are far from back to normal. Will it move markets? Maybe not that much given the focus is now more on infection and stimulus.

Indeed, we are also not likely to get back to normal if we don’t see less tension in Washington. Markets have gyrated recently on headlines saying Mnuchin and Pelosi were close, then far, then close to a compromise stimulus deal. Well, the House Democrats just passed their own USD2.2 trillion package, which will of course be rejected by the Republican-held US Senate, so the same old games continue as everyone from the NFIB small business survey to the FOMC cries out for more stimulus, and now. The public reaction at some point may well start to echo that after the recent presidential debate: everyone loses in the most important respects even if a technical win can be claimed by both sides in others. Up went the USD – until that Trump news, which again potentially changes everything.

Meanwhile, there will be tensions in DC on another front. That is on the back of a claim from the head of a House antitrust panel that certain household-name Big Tech firms –who basically are the US economy as far as some markets are concerned– abuse their power as gatekeepers of the internet. There is apparently going to be a recommendation that legislation be passed to rein these giants in. You thought Big Tech was already involved in this election, even if they are not a topic of conversation? Well now they are trillions-of-USD deep involved.

And on another kind of tensions, the EU actually managed to agree something on joint foreign policy, which could be a headline in itself given how rare this achievement is. Targeted sanctions are now going to be put in place on Belarus, and apparently part of the quid-pro-quo of that is that the door remains open to sanctions on Turkey too if it continues to ruffle the feathers of Greece and Cyprus – which will not soothe tensions with Ankara.

Anyway, everything now takes a backseat to the latest incredible twist in this US election campaign.