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US equity futures are weak (but not terribly so) ahead of the open despite many on “tail risk” watch with the news out of Afghanistan.

There is a window here for volatility to expand, primarily around OPEX and Fed hedging. The Afghanistan events certainly introduce uncertainty if nothing else, and maybe that is enough to allow volatility to make a real push. As SpotGamma notes, if “risk off” manifests we still mark 4430 as a major downside inflection point into 8/20 expiration.

Gamma starts off at a rather high level, and as you can see below from SpotGamma’s vanna chart, dealer resistance builds into 4500.

4500 is also our SPX Call Wall and the top of our range, but its important to note the SPY Call Wall is at 445. Therefore we think the 4465 SPX level is where the big resistance starts, and that seems to lower the odds of a 4500 test in the next few sessions. We think its unlikely 4500 is broken before 8/20 expiration.

However, SpotGamma warns that the main issue here is that gamma deteriorates rather quickly to the downside.

The official gamma flip line is at 4420, but we see 4439 support as critical. A break of 4439 likely invokes a quick test of 4400 due to dealer gamma selling.

There is a decent amount of gamma positioned at 4400, and we think that is sticky for this session.

By Michael Every of Rabobank

Kabul Market

US stocks narrowly closed at another record high on Friday. It didn’t matter that the Michigan consumer sentiment index collapsed back from 84.5 to 77.9, and the sub-readings for purchases of homes and vehicles both plummeted further. It didn’t matter that the apparent reason for the drop was the Covid Delta variant, which led Bloomberg –the barometer of the market’s lizard brain– to write a weekend piece bewailing “The World May Never Reach Herd Immunity Against Covid-19”. (The body of established science that said you can’t ‘one-and-done’ vaccinate against a mutating coronavirus, just as you can’t against ‘flu, never reached the ‘scientists’ on Wall Street who, as we have also established re: Marxism, never read.) The odds are therefore that US stocks may find a way to elevate again today. After all, this bull market seems resistant to both data and science, so it will probably also be resistant to events transpiring in Kabul.

The US Beltway experts who six weeks ago said the Taliban could not establish an Islamic Emirate for at least a year, and then suddenly revised that down to six weeks, and then to 72 hours, still got it wrong: it happened on Sunday evening. The Afghan president has fled, along with his artificial $88bn “army”, but the actual weapons are now in the hands of the Taliban. Crowds of desperate Afghans are flooding the runway of Kabul airport –requisitioned by the US Army because it surrendered Bagram airbase without warning weeks ago, and the Taliban now control it– in scenes that look like Saigon in 1975. Or, tragically, like the Khmer Rouge entering Phnom Penh in ‘The Killing Fields’ (in Cambodia, a few years later); and there seems a very real risk the comparison won’t stop there.

Yes, markets will try to brush this geopolitical earthquake off: It’s just Afghanistan; It’s a long way away; We never wanted to go on holiday there anyway; They don’t even buy much cheese. There will probably be attempts to talk of a ‘New Taliban’, as we did with New Labour in the UK, brushing over the fact that the latter ‘New’ was vs. 1970’s socialism, and the former is vs. 7th century fundamentalism. Indeed, the Taliban seem to now realize which Western memes make it look more palatable, and are promising to be “inclusive”. They may only need to throw in “diverse”, “equity”, “green”, and “sustainability” for Wall Street to perk up and ask “Are you in favour of free trade and QE?”, and for EU foreign policy representatives to sit next to them.

But what to do? Michael Bloomberg has already penned an editorial that says “The US Can’t Walk Away From Afghanistan”, which is correct: the US *ran* away in the eyes of Afghans. He then Bloombergs that: “Words are easy. Solutions are hard,” and suggests the US continue to fund the Afghan government and army as long as viable (too late!), help people to flee (where?), and use airstrikes and special forces to keep terrorism at bay, which will involve “Cajoling neighbouring countries for intelligence support and basing rights.” (Neighbours like China; Turkmenistan; Tajikistan; Uzbekistan; Iran; and Pakistan.) Hey, words *are* easy! And solutions hard.

Yet Bloomberg is right in that this geopolitical nightmare is almost certainly only just beginning. As noted here on Friday, if you don’t see this US policy debacle increases the risks of ‘red-line’ incidents in the Asia/Indo-Pacific, perhaps you should look for a desk job at the CIA.

The US now looks like it is flailing around like a social-media influencer discovering not just a micro-aggression, or that life contains people who don’t agree with you, but that there are people who aren’t even on Twitter that can punch you in the face and break your nose and teeth (and far, far worse). Geopolitically, opportunists of all stripes may now be considering if they may not be able to earn theirs, so to speak, by kicking the US while it is down. And yet the US is clearly swinging most of what is still the world’s most formidable military muscle squarely towards the Asia/Indo-Pacific region, and will almost certainly not want to be seen to ‘do a Kabul’ in that jurisdiction too. Or a Nord-Stream 2. Or an Iran.

(The above list of concessions rather underlines the credibility problem the US is facing. Indeed, allow me to quote a Tweet from a MENA Lecturer at John Hopkins University that echoes the “Comfortably Dumb” Daily from Friday: “If nobody gets sacked due to this nightmarish fiasco then we are truly lost in the careerist phony baloney land. Do you feel comfortable in your comfy jobs as people suffer from your made up nonsense?”)

Particularly if DC heads don’t roll, and there seems little sign that they will, then this backdrop is a growing fat tail risk of the kind that was ignored by everyone doing business in and with Kabul until yesterday afternoon: and now they are on the runway with their families, screaming for help, and praying they can get a seat on any plane leaving.  

So by all means, ignore Kabul and focus on just ‘bull’ – for now. After all, the ludicrous liquidity being thrown at markets by the Fed is enough to pay for a fake Afghan army with real weapons every month with money to spare. (Question: Why did the US not just do that to begin with – QE bribes of billions to key leaders as the solution to all foreign policy problems? Answer: It did – just to the wrong people/contractors!) However, be aware that when/if the penny drops, it will be you, your portfolio, and/or your supply chain on that Kabul airport tarmac, metaphorically. And a year from now can become six weeks can become 72 hours can become Sunday afternoon. When markets are closed.

This is, perhaps, one of the saddest images I’ve seen from #Afghanistan. A people who are desperate and abandoned. No aid agencies, no UN, no government. Nothing. pic.twitter.com/LCeDEOR3lR

— Nicola Careem (@NicolaCareem) August 16, 2021

And as we all rely on QE to solve all structural problems, consider that 20 years ago, the US rolled into the Greater Middle East guns blazing with plans to remake it in its own image; today it is retreating with socio-economic polarization, cronyism, populism, and “careerist phony baloney land” starting to make *it* look Middle Eastern; and if the current trend is projected forward 20 years, some doomsters wonder if the US may not by then be retreating from parts of itself.

But, remember: It’s just Afghanistan; It’s a long way away; We never wanted to go on holiday there anyway; They don’t even buy much cheese. And stock indices might go up a fraction of a percent today, bond yields might move a few basis points, and the US dollar may shift a fraction. Focus on the important stuff!

While the Fed’s tapering plans may hold secondary importance this morning when the world – if not so much markets – focus on the calamity in Afghanistan, this morning the WSJ’s Fed whisperer Nick Timiraos (who replaced Jon Hilsenrath as the preferred mouthpiece for the central bank) writes that Fed officials are nearing agreement on scaling back their easy money policies in about three months if the economic recovery continues, with some pushing to end their asset-purchase program by the middle of next year.

At their July 27-28 meeting, FOMC members deliberated on two important questions: when to start paring their monthly purchases of $80 billion in Treasury securities and $40 billion in mortgage securities, and how quickly to reduce, or taper, them. The Fed is set to release on Wednesday minutes of the meeting that could provide further clues about those discussions.

Citing several Fed officials, recent interviews and public statements, Timiraos notes that several Fed officials have advocated for this accelerated timetable, which would enable them to raise interest rates sooner than currently anticipated if the economy makes rapid progress toward their goals. Last December, the Fed said it would continue the current pace of bond purchases until officials concluded they had achieved “substantial further progress” toward their goals of 2% average inflation and robust employment. More recently, Powell made it clear that the key hurdle is employment with the Fed willing to red inflation run red hot.

Here are key highlights from the original article (link):

• Boston Fed President Eric Rosengren said in an interview he expected to see by the Sept. 21-22 meeting enough job growth to meet the criteria for reducing bond purchases. “That would set up some time this fall a possible tapering that is dependent on the Delta variant and other variants not slowing down the labor market substantially,“ he said in an interview last week.

• Rosengren said he hopes that if strong economic growth continues, “we’re done with the tapering program…towards the middle of next year.”

• “If you can’t get housing materials and you can’t get construction workers to come back on site, but we do increase demand for housing, then it doesn’t do much for our employment mandate — but it does increase housing prices more than it otherwise would,” he said.

• Dallas Fed President Robert Kaplan agreed. “These purchases are very well designed to stimulate demand, but we don’t have a demand problem,” he said in an interview. “In the aftermath of the Great Recession, we did. So I don’t want to use the playbook from 2009 to 2013.”

• Kaplan said by reducing asset purchases sooner, the Fed might be able to wait longer before it has to raise interest rates. “By getting a more appropriate stance of monetary policy now or soon, it might actually allow you to be more flexible and be more patient on how you adjust the federal-funds rate down the road.”

• San Francisco Fed President Mary Daly also said in an interview last week she thinks the economy should support “beginning to taper later this year, or maybe next.” Labor markets are “really strong — getting stronger.”

• St. Louis Fed President James Bullard said he wants to start paring assets in October and conclude the program by March, reducing the purchases of Treasurys by $20 billion a month and mortgage bonds by $10 billion a month.

• “I don’t want to have to move too rapidly [to raise rates] because it can be very disruptive, so I think that the pace I’m suggesting would give us a lot more optionality in 2022 if we needed to use it.

At the same time, other officials have argued for more patience. Fed governor and the rumored replacement of Powell, Lael Brainard, indicated last month she wanted to see September hiring data, which won’t be available until early October, before deciding. That would hold off any tapering until no sooner than the Fed’s Nov. 2-3 meeting. Chicago Fed President Charles Evans and resident uberdove didn’t say how soon he thought the Fed would need to wind down its purchases. He expects inflation to fall back to 2% by the end of next year, which would argue for less urgency to withdraw monetary stimulus.

“My own outlook is, we’re gonna be more challenged in getting inflation to confidently stay up in the 2% or 2.1% or 2.2%” range, he said. “If others had more confidence that inflation was going to be higher on a sustainable basis, then that…quicker tapering could be the right path.”

Back in 2013, the Fed wound down its previous bond-buying program very gradually, reducing its purchases over the course of 10 months. That said, when it announced that it would soon start that process, the economy was weaker, with higher unemployment and low inflation.

Officials had another reason for caution back then because they were stunned by a surge in long-term Treasury yields, the so-called “taper tantrum,” that occurred in the middle of 2013, after then-Chair Ben Bernanke suggested they might soon reduce their asset purchases.

According to Timiraos, “this time is different” as the Fed now finds itself in a very different position. The economy is growing rapidly. Unemployment is much lower, at 5.4% in July. Inflation is much hotter. And bond yields have tumbled this year even as the central bank has discussed plans to reduce bond purchases.

In a note from Morgan Stanley’s chief economist Ellen Zentner, the bank said it expects the Fed to reduce the pace of its asset purchases beginning in Jan-22 by $10bn UST/$5bn MBS per meeting, but mused on the possibility that it is wrong and had its strategists explore the market implications of variations on this baseline and recommend trading strategies under each scenario (more on this in a latter post). As the table below shows, MS – like most other banks – expect that it will take the Fed about 10 month to fully taper its $120BN in combined TSY/MBS purchases per month to zero.

For what it’s worth, the market expectations of the first full rate hike have barely budged, with the first rate hike – which is expected to come well after tapering is concluded – still expected not before the start of 2022.

Finally, we can’t help but remind readers of what BofA said two months ago when it correctly predicted that the Fed taper will stop the moment the S&P drops 10%, which explains the full-scale campaign to make it appear as if the taper is not only priced in but will be bullish for the market.

After Friday’s historic collapse in UMich Consumer Sentiment, the Empire Manufacturing Survey crashed in August from an all-time-high of 43 to 18.3 (massively missing expectations of a drop to 28.5)…

Source: Bloomberg

Outside of last March and April’s collapse, this is the biggest drop in the Empire Manufacturing sentiment ever.

The NYFed bank’s index of prices received climbed 6.6 points to 46, while a measure of prices paid for materials eased slightly to a still-elevated 76.1. The figures suggest inflationary pressures remain anything but transitory.

The survey was conducted Aug. 2-9, so we suspect things will have gotten even worse since then.

On Monday, the press reported shocking scenes of thousands of “utterly desperate” Afghan civilians fleeing their homes and mobbing the Kabul international airport tarmac in the wake of the rapid Taliban takeover of Kabul.

According to WSJ and other English-language media outlets, at least three people have died Monday during the frenzied struggle to leave. A group of 60 nations has asked the Taliban to allow any refugees who desire to leave the country to do so without inflicting harm on them or their families.

American troops are now attempting to secure and provide order at Karzai International Airport as military airlifts of American personnel continue. Shots have been fired as American troops arrive to find the security situation spiraling out of control, potentially making safe airport operations – including flights in and out – next to impossible if it’s not brought under order.

Insane. Don’t have any other words.

The Kabul Airport.

pic.twitter.com/ylraJsDyme

— Ragıp Soylu (@ragipsoylu) August 16, 2021

Thousands of Afghans who haven’t received permission to emigrate are fleeing to the airport anyway, believing it may be their only chance for survival amid rumors that flights are now taking whoever can force their way aboard. As desperate Afghans rushed packed passenger planes, some soldiers fired warning shots as hundreds of Afghans who breached the perimeter and then rushed to board an idling C-17 transport aircraft, a Western military official said. At certain points, American troops fired lethal rounds into the air to try and force the crowds to disperse. Military personnel were forced to try and clear the runways with low-flying helicopters, from which they tossed smoke grenades and fired live ammo. The city fell to the Taliban on Sunday, after fighters massed outside the city, eventually the Taliban leadership took over the presidential palace.

“U.S. forces fired in the air at Kabul’s airport on Monday to prevent hundreds of civilians running onto the tarmac, a U.S. official said,” according to Reuters.

“The firing was done to defuse the chaos,” the official added. Hundreds of Afghans reportedly rushed at idling C-17 US transport aircraft, resulting in US troops firing repeatedly into the air.

Rumors spread claiming the airline was allowing people to board even without a ticket.

New video from #Kabul Monday morning of people rushing towards Kabul airport with gunfire in background. #Afghanistan pic.twitter.com/JvgoWuEZPA

— Jason Brodsky (@JasonMBrodsky) August 16, 2021

Per WSJ, the chaotic rush of people desperate to get out hindered evacuation efforts: “Hundreds of Afghan civilians were seen close to the runway and around parked planes Monday morning, with some hanging from boarding ramps as they scrambled to get into the aircraft, hindering evacuation efforts,” the report describes.

So, how much of Afghanistan is now in Taliban hands? Practically the entire country, according to the BBC.

Apache gunships were called in by US forces to help clear the runway, seen doing low strafing runs…

NOW – U.S. Army Apache combat helicopters clearing panicking Afghan civilians from the tarmac at #Kabul airport so that a C-17 plane can take off.pic.twitter.com/YzHm0B4gL8

— Disclose.tv 🚨 (@disclosetv) August 16, 2021

In one particularly grisly scene, footage showed three men who had attempted to hold on to aircraft landing gears as the plane lifted off ended up plunging to their deaths.

Oh my God.

Desperate Afghans are hanging on the plane tires and falling from the sky near the Kabul airport pic.twitter.com/OhIscfDNWd

— Ragıp Soylu (@ragipsoylu) August 16, 2021

Witnesses reported seeing the “prone, bloodied bodies lying on the ground just outside the terminal building,” according to the WSJ.

Some have reported being “trapped” in the airport, also while the terminal and other buildings were being looted. There are now said to be thousands of US troops at the Kabul airport, with a total of 6K troops expected to arrive in the form of reinforcements being sent in from Kuwait

Airport in #Kabul… Listen .. #kabulairport #Afghanistan pic.twitter.com/0hsDWNqOFS

— Natalie Amiri (@NatalieAmiri) August 16, 2021

Additionally the WSJ described the following surreal scene in its report: 

“Afghans with small children sat dazed next to European special-forces operators with their sniper rifles and high-tech helmets equipped with night vision and infrared tags. Outside, the engines of helicopters and transport planes provided a steady, almost lulling, hum. Once in a while, groups of evacuees—the staff of the Indian embassy, or Bulgarian security contractors—donned helmets and body armor and set off toward their plane.”

It is chaos at Kabul airport. Planes are taking off and landing and people are running across the runway. pic.twitter.com/kKrg667AQB

— Sowaibah Hanifie (@SowaibahH) August 16, 2021

The chaos is expected to worsen in the coming days as the Taliban cements its control of the capital city.

They are literally ON a plane pic.twitter.com/jwOrPrfhfv

— FinTwit 🚀 (@FinTwit__) August 16, 2021

Meanwhile, Afghans aren’t the only people being trapped at the airport: at least some foreigners have also told the press that they feel trapped. The Taliban claims it’s allowing a “safe exit” to any foreigners.

A Reuters Pentagon correspondent is reporting that “The United States military has temporarily halted all evacuation flights from Kabul to try and clear the airfield, which has filled up with people, US official says.” It’s unclear how long this halt in airport operations will last, but it clearly comes as things get increasingly desperate.

Back in Washington, President Biden’s press secretary Jen Psaki is reportedly embarking on a week-long vacation between Aug. 15 and Aug. 22. Now that the war is over, why not?

US equity index futures fell and the dollar rose after the latest Chinese data missed expectations and confirmed a sharp slowdown in the 2nd largest economy, while the spread of the coronavirus delta variant sparked worries the global economic rebound is faltering. Investors also awaited a town hall by Federal Reserve chair Jerome Powell on Tuesday for clues on policy following a report from the WSJ that the Fed was weighing ending taper by mid-2022. As of 730am S&P eminis were down 12.50 or 0.28% to 4,450 after hitting an all time high on Friday; Dow Jones futures were down 101 points or 0.28% and Nasdaq futures were 42.75 lower. Commodities declined after Chinese retail sales and industrial output data showed activity slowed. Alibaba slid in premarket trading again after China’s state media criticized the online-game industry.

Alibaba lost 1.9% in early New York trading. China should tighten regulations of online games to ensure they don’t misrepresent history, state media reported. Here are some of the other notabl U.S. movers today:

• Cryptocurrency-exposed stocks rise with Bitcoin edging higher and holding on to recent gains. Riot Blockchain (RIOT) gains 2.5% and Bit Digital (BTBT) jumps 5.8%, while Marathon Digital (MARA) climbs 3.1% and Coinbase (COIN) advances 2%.
• Enlivex Therapeutics (ENLV) soars 22% after obtaining authorization from Israel’s ministry of health to initiate a clinical trial evaluating the safety and effectiveness of its Allocetra therapy on Covid-19 patients.
• Sonos (SONO) shares rally 13% in premarket trading after the home speakers maker won the first round of its patent case against Google and with Jefferies upgrading the stock to buy.
• Chinese large cap stocks listed in the U.S. fall in premarket trading on Monday amid another round of criticism from state media over online games. Alibaba (BABA) falls 2.1% and JD.com (JD) slides 3.1%, while Baidu (BIDU) slips 1.8% and Didi Global (DID) loses 2.2%.

While the world is transfixed by the chaos in Afghanistan, the biggest economic report overnight came out of China, where factory output and retail sales growth slowed sharply and missed expectations in July, as new COVID-19 outbreaks and floods disrupted business operations, adding to signs the economic recovery is losing momentum. Industrial production in the world’s second largest economy increased 6.4% year-on-year in July, data from the National Bureau of Statistics (NBS) showed on Monday. Analysts had expected output to rise 7.8% after growing 8.3% in June. Retail sales increased 8.5% in July from a year ago, far lower than the forecast 11.5% rise and June’s 12.1% uptick.

According to Goldman, “the weakness reflects a combination of factors including the impact of past policy tightening, slower export growth, and a series of idiosyncratic shocks in July including a typhoon and major flooding in Henan province and the onset of the widest Covid outbreak in the mainland since early 2020.”

China’s economy had rebounded to its pre-pandemic growth levels, but the expansion is losing steam as businesses grapple with higher costs and supply bottlenecks. New COVID-19 infections in July also led to fresh restrictions, disrupting the country’s factory output already hit by severe weather this summer. Consumption, industrial production and investment could all slow further in August, analysts from Nomura said in a note, due to COVID-19 controls and tightening measures in the property sector and high-polluting industries. Production controls sent crude steel output to the lowest monthly level since April 2020 in July.

Meanwhile China tightened social restrictions to fight its latest COVID-19 outbreak in several cities, hitting the services sector, especially travel and hospitality in the country. “Given China’s ‘zero tolerance’ approach to Covid, future outbreaks will continue to pose significant risk to the outlook, even though around 60% of the population is now vaccinated,” said Louis Kuijs, head of Asia economics at Oxford Economics, in a note.

With Asian economies under stress from a resurgent pandemic and U.S. consumer sentiment near a decade low, investors are turning to signals from the Federal Reserve to sustain market momentum. A town hall by Chair Jerome Powell on Tuesday may act as a precursor to the Fed’s Jackson Hole symposium in late August, providing clues on whether a recent string of strong U.S. data qualified as adequate progress for the central bank to consider tapering stimulus.

“Shares remain vulnerable to a short-term correction with possible triggers being the upswing in global coronavirus cases, the inflation scare and U.S. taper talk,” said Shane Oliver, head of investment strategy and chief economist at AMP Capital.

In Europe, the benchmark Stoxx Europe 600 Index broke a 10-day streak of new record highs, with energy and commodity stocks the biggest drags on the gauge. Faurecia SE shares jumped 9.4% after the French auto supplier agreed to take over Hella GmbH in a deal that would create the world’s seventh-largest cap-parts maker. Mining stocks underperformed with metals prices coming under pressure from disappointing Chinese data. Stoxx 600 Basic Resources index down as much as 2.1% and hitting the lowest since July 28; Stoxx 600 benchmark down 0.6%. Heavyweights Rio Tinto, Glencore, Anglo American and BHP all lower and weighing on the index; steel company ArcelorMittal also falling. Antofagasta, Boliden and KGHM all lower as copper falls after Chinese industrial output data missed expectations. Here are some of the biggest European movers today:

• Faurecia shares gain as much as 11% after it agreed to buy auto- parts supplier Hella. Analysts note a smaller-than-expected equity raise and strong cash optimization among the positive characteristics of the deal.
• Ultra Electronics shares jump as much as 8.2% after Cobham made a firm offer to acquire the U.K. defense firm in a deal valuing Ultra at around GBP2.57b.
• LondonMetric shares rise as much as 2.2% to a record high after the U.K. REIT sold a Primark distribution warehouse in Northamptonshire for GBP102m.
• Naspers shares slump as much as 7.2% in Johannesburg, while Prosus drops as much as 5.6% in Amsterdam, following a slide in Chinese tech giant Tencent’s shares amid fresh worries over a regulatory crackdown.
• Lufthansa shares fall as much as 4.9% after Germany’s WSF stabilization fund said it would start to sell up to a 5% stake in the airline starting today.
• Orsted shares delcline as much as 2.6%. The wind farm operator is cut to neutral at Goldman

Earlier in the session, Asian stocks declined on Monday, with investor sentiment dampened by concern over the coronavirus and China’s disappointing economic data. The MSCI Asia Pacific Index fell as much as 0.8%, with Japan’s benchmarks leading the drop after the country extended states of emergency across six prefectures and amid an appreciating yen. The Hang Seng Tech Index slumped as much as 3% after China’s state media called for strengthened oversight of online games. Market sentiment continues to be weighed on by fear that the delta variant coronavirus spread will delay countries’ reopening plans. Figures released Monday by China’s government showed economic activity slowed more than expected in July, with fresh virus outbreaks adding risks to a recovery already hit by floods and faltering global demand. “The argument of ‘if people get vaccinated, everything will be alright’ is now wavering. If that falters, then it becomes harder to see when the economy might recover,” said Tetsuo Seshimo, a fund manager at Saison Asset Management Co. Mainland shares ended lower after the data releases, that included retail sales and factory output, while Philippine stocks were Asia’s top performers after a recent rout and Malaysia’s key index declined as the country’s prime minister resigned. South Korea’s stock market was closed for a national holiday.

Japanese stocks also fell, with the Topix dropping by the most in eight weeks, as coronavirus infection rates in Tokyo worsened and after the yen strengthened against the dollar. Electronics makers were the biggest drag on the benchmark, which fell 1.6%, with all but two of its 33 industry groups in the red. Fast Retailing and Recruit were the largest contributors to a 1.6% loss in the Nikkei 225. The yen extended its gain against the dollar after jumping 0.7% Friday. Tokyo Governor Yuriko Koike warned Friday that the virus situation in the capital was at disaster level as cases jumped to a record of 5,773, more than quadrupling in just three weeks. Japanese Prime Minister Yoshihide Suga is poised to expand and extend for about another two weeks a virus state of emergency in Tokyo now set to expire at the end of August, the Sankei newspaper said. “Investors had expected that vaccines would help the outlook, but now things are uncertain,” said Tetsuo Seshimo, a fund manager at Saison Asset Management Co. “Even with vaccines, people are restricted in their activities, and it’s clouding the outlook for investors,” he said, adding that the Afghanistan situation is a global risk-off factor. Data on Monday morning showed Japan’s economy returned to growth, with GDP expanding an annualized 1.3% from the prior quarter, as consumer and business spending proved resilient

India bucked the trend, with its key equity indexes advancing to fresh peaks, led by Reliance Industries Ltd., as Saudi Aramco closed in on an all-stock deal to acquire a stake in the Indian company’s oil refining and chemicals business. The S&P BSE Sensex rose 0.3% to 55,582.58 in Mumbai, while the NSE Nifty 50 Index advanced 0.2% to 16,563.05. Reliance Industries Ltd rose as much as 2.7% and was the biggest contributor to gains for both indexes, driving them to new highs. Out of 30 shares in the Sensex, 14 rose, while 16 fell. The Saudi Arabian firm is discussing the purchase of a roughly 20% stake in the Reliance unit for about $20 billion to $25 billion-worth of Aramco shares, according to people with knowledge of the matter. The quarterly earning season for companies ended on Friday, with 29 of the 50 Nifty companies missing estimates. Of the remaining, 19 exceeded consensus, while two reported results in line with expectations

In FX, the Bloomberg Dollar Spot Index inched higher and the yen and the Swiss franc led an advance among Group-of-10 peers while resource-based currencies such as the Australian dollar and Norwegian krone weakened. The Swiss National Bank appears to have intervened in the currency market to weaken the franc, with the amount of cash commercial lenders hold at the institution increasing by more than a billion francs for a second week running. Australia’s bonds gained and the Aussie dollar slid toward an almost one-month low after surging Covid cases led the NSW government to put the entire state into a weeklong lockdown; offshore sentiment was further weighed down by falling stocks and commodity prices. Japan’s sovereign bonds gained with the yen as a slump in U.S. consumer sentiment and weaker-than-expected Chinese data clouded the global economic outlook. The euro inched lower to around $1.1780 after rallying to a one-week high Friday; options traders are betting volatility in the euro will stay low and ranges will tighten further into year-end even amid the possibility of monetary policy divergence materializing between the Federal Reserve and the European Central Bank. The pound traded little changed against the dollar and the euro ahead of inflation, labor market and retail sales releases later this week; leveraged funds increased bullish bets on the British currency, according to data from the Commodity Futures Trading Commission for the week through Aug. 10

In rates, treasuries were little changed in early U.S. trading after erasing gains that sent yields to lowest levels in at least a week, tracking similar reversals in German and U.K. yields, and rebounding U.S. equity index futures. Yields were mixed across the curve, within 1bp of Friday’s closing levels, the 10-year was flat at 1.277% after erasing a 3.2bp drop to 1.245%, lowest since Aug. 6.  Coupon auctions ahead this week include $27b 20-year new issue Wednesday, $8b 30Y TIPS reopening Thursday.

Bitcoin traded around $47,400. Its second-day gain helped crypto stocks to rise in premarket deals. Riot Blockchain added 2.5%. Crude oil dropped for a third day as the resurgent pandemic hurt prospects for global demand.

There is little on today’s calendar with the Empire Manufacturing Fed due at 830am, and the latest TIC data after the close.

Market Snapshot

• S&P 500 futures down 0.2% to 4,454.00
• STOXX Europe 600 down 0.5% to 473.46
• MXAP down 0.7% to 198.50
• MXAPJ down 0.5% to 653.16
• Nikkei down 1.6% to 27,523.19
• Topix down 1.6% to 1,924.98
• Hang Seng Index down 0.8% to 26,181.46
• Shanghai Composite little changed at 3,517.35
• Sensex up 0.3% to 55,617.10
• Australia S&P/ASX 200 down 0.6% to 7,582.46
• Kospi down 1.2% to 3,171.29
• Brent Futures down 1.5% to $69.53/bbl
• Gold spot down 0.2% to $1,776.21
• U.S. Dollar Index little changed at 92.56
• German 10Y yield rose 0.6 bps to -0.470%
• Euro little changed at $1.1787

Top Overnight News from Bloomberg

• China’s economic activity slowed more than expected in July, with fresh virus outbreaks adding new risks to a recovery already hit by floods and faltering global demand.
• Italy and Spain are set to record the fastest pace of economic expansion this year in more than four decades, a strong rebound that will help the countries overcome last year’s deep recession. Spain’s gross domestic product will expand 6.2% in 2021, while Italy will record a rate of 5.6%, according to a Bloomberg survey of economists
• Democrats are betting Republicans will blink and agree to raise the debt ceiling before it expires, a risky wager after a weeks-long standoff that threatens the health of the financial markets and continued U.S. government operations
• Bank of England policy makers are being overly-alarmist on their outlook for inflation, economists’ forecasts suggest, casting doubt on the need for a significant tightening in policy in the years ahead.
• Desperate scenes played out at Kabul’s international airport on Monday as thousands rushed to exit Afghanistan after Taliban fighters took control of the capital, with Reuters reporting at least five people were killed as people tried to forcibly enter planes leaving the country
• JPMorgan Chase & Co. says its decision to add the ESG tag to derivatives is part of a strategy to link sustainability to all forms of finance. The bank intends to replicate a novel cross-currency swap with Italian energy company Enel SpA, in which both parties need to meet specific ESG targets or face additional costs
• The thinking was that the pandemic would ebb and then mostly fade once a chunk of the population, possibly 60% to 70%, was vaccinated or had resistance through a previous infection. But new variants like delta, which are more transmissible and been shown to evade these protections in some cases, are moving the bar for herd immunity near impossibly high levels
• BNP Paribas requests traders to almost fully return to the office from October, Les Echos reported on Monday, without saying where it got the information
• Malaysian Prime Minister Muhyiddin Yassin and his cabinet resigned after more than 17 months in power, fueling a crisis of leadership in a country beset by a weakened economy and a surge in coronavirus cases

A more detailed look at global markets courtesy of Newsquawk

Asia-Pac stocks traded mostly subdued and US equity futures also pulled back from record levels due to ongoing COVID concerns and as participants digested disappointing activity data from China, while weekend newsflow was dominated by Afghanistan-related headlines after the Taliban effectively took control of Kabul which prompted a mass exodus of foreigners and embassy personnel from the city. ASX 200 (-0.6%) was led lower by weakness in energy and financials with the worst performers having recently announced their full-year results, while sentiment was also pressured by the ongoing COVID-19 situation that has forced an extension of lockdowns across several state capitals. Nikkei 225 (-1.6%) was the worst performer amid detrimental currency flows and with Japan likely to extend the state of emergency to additional prefectures as soon as this week after COVID-19 cases recently topped the 20k level for the first time which overshadowed the better-than-expected GDP data. Hang Seng (-0.8%) and Shanghai Comp. (+0.1%) traded mixed after Chinese Industrial Production and Retail Sales data both missed expectations with the stats bureau noting that the recovery remains uneven citing sporadic virus outbreaks and natural disasters. In addition, the PBoC announced a CNY 600bln MLF operation and although this was lower than the CNY 700bln of maturing MLF loans, the central bank noted that the liquidity released in last month’s RRR cut can partially repay the MLF, while the KOSPI remained closed in observance of Liberation Day. Finally, 10yr JGBs were higher amid the underperformance of Japanese stocks and similar gains in T-note futures as the US 10yr yield declined by around 5bps to breach the 1.2500% level. However, upside was capped for Japanese bonds after better-than-expected GDP data, while Economic Minister Nishimura stated that they are ready to take flexible action on the economy by tapping into JPY 4tln in reserves and will conduct flexible macroeconomic policy without hesitation to achieve sustained economic growth.

Top Asian News

• Chinese Stocks Listed in U.S. Drop Amid Online Games Criticism
• Asia Stocks Decline, Hurt by China Data Miss, Japan Selloff
• Afghanistan-Related Asian Stocks Drop as Taliban Retake Kabul
• China’s Faltering Economic Recovery Adds to Global Growth Risks

European equities (Eurostoxx 50 -0.7%) have kicked the week off on the backfoot in the wake of lacklustre Chinese data and ongoing COVID concerns. Chinese Industrial Production and Retail Sales data both missed expectations with the stats bureau noting that the recovery remains uneven, citing sporadic virus outbreaks and natural disasters. In Australia, sentiment was also pressured by the ongoing COVID-19 situation that has forced an extension of lockdowns across several state capitals, whilst Japan is likely to extend the state of emergency to additional prefectures as soon as this week. A lot of newsflow has centred around events in Afghanistan whereby the Taliban has taken control of Kabul which prompted a mass exodus of foreigners and embassy personnel from the city. However, the market implications at this stage remain unclear as the West ponders its response to events, if any. In terms of market commentary, JP Morgan notes, that Q1 and Q2 European reporting seasons have produced significant positive surprises, to the tune of 24% and 16%, respectively. Since January, consensus projected European EPS for the year has been revised higher by 16%, the strongest move on record. As such, JPM has set out new index targets, “looking for a further 4-7% upside into year end, with SX5E at 4500, on top of the already very strong 19% Eurozone equity return delivered ytd, ex dividends.” Sectors in Europe are mostly in the red with underperformance in Basic Resources, Travel & Leisure and Retail. Retail names are lagging post-Chinese Retail Sales with Kering (who account for nearly 30% of the Stoxx 600 retail index) lower to the tune of 1.8%, whilst LVMH is down 2.5% and Burberry sits at the foot of the FTSE 100 with losses of 2.6%. To the upside, Real Estate and Telecoms are the only sectors in positive territory. The notable individual outperformer is Faurecia (+8.7%) after agreeing to acquire the Hueck Family’s controlling stake in Hella (-3.0%) in a deal valued at EUR 6.7bln. Elsewhere, Deutsche Lufthansa (-3.2%) are lower on the session after the German Economic Stabilisation Fund said it will be selling a maximum 5% stake in Lufthansa over the next few weeks, accounting for around 25% of its total stake.

Top European News

• Turmoil in Afghanistan Adds to Geopolitical Risks Facing Markets
• EU Gas Climbs to Record as Flows Via Key Russian Pipe Fall Again
• Faurecia Gains as $8 Billion Hella Deal Reduces Engine Exposure
• Danske Senior Dealer Joins Fixed Income at AkademikerPension

In FX, safe haven flows see the DXY and JPY retaining their underlying bids caught since the deterioration in the APAC mood. Sentiment weakened as Chinese retail sales and IP missed the mark – and thus backed the notion of a slowdown in the world’s second-largest economy’s growth momentum. Further, geopolitical developments in Afghanistan have dominated the news, but it is too early to assess any near-term market implications. Meanwhile, the Yen may also see some tailwinds from the above-forecast Q2 GDP growth metric, although it’s worth noting the data may be stale as the COVID situation in Japan has worsened since the Tokyo Olympics – which kicked off at the start of Q3. The DXY sees mild gains after finding a floor around Friday’s 92.470 low and looks ahead to the NY Fed Manufacturing – which would mark the first August data point, whilst traders also keep tomorrow’s Fed Chair Powell appearance and Wednesday’s FOMC minutes in mind. USD/JPY has declined further below 110.00 and whilst taking out its 100 DMA (109.35) to the downside. The pair eyes mild support at 109.19 (2nd Aug low) ahead of the psychological 109.00. The CNH meanwhile has remained somewhat stabilised after overnight choppiness on the back of further evidence pointing to slowing economic growth momentum, but some observers expect China to negate these effects with looser policy. However, CNH bulls felt some reprieve after the PBoC conducted the MLF at a maintained rate of 2.95%, which adds to the likelihood of the LPRs being maintained later this week. That being said, reports last week suggested that any form of easing will likely take place in the RRR and interest rate. USD/CNH resides under just 6.4800 within a 6.4750-4815 range, with the 200DMA.

• AUD, NZD, CAD – The non-US dollars are all softer with the common denominator being risk sentiment. The AUD is the marked underperformer amid the disappointing Chinese data overnight, coupled with the ever-deteriorating Aussie COVID picture. That being said, the AUD/USD currently remains within the ranges seen in the past two sessions, with the 0.7333 proving to be formidable support. Some have been flagging AUD/JPY – a key APAC risk gauge – as the cross inches closer to 80.00 to the downside, dipping below 80.25 from today’s 80.87 peak. NZD/USD meanwhile is in the red but losses are cushioned in anticipation of an RBNZ rate hike later this week. Thus, the AUD/NZD cross has dipped below 1.0450 and continues to print fresh YTD lows as the cross eyes 1.0418 (2nd Dec 2020 low) ahead of 1.0400. The Loonie remains on the backfoot amid headwinds from COVID-suppressed oil prices, whilst the weekend saw Canadian PM Trudeau calling a snap summer general election on September 20th, some two years ahead of schedule – although a rebound in polls could pave the way for Trudeau to secure a majority government from the current minority. USD/CAD inches higher towards 1.2550 and its 200 DMA at 1.2565 as the Loonie looks ahead to July inflation data this week.
• EUR, GBP – Both the Single Currency and Sterling trade flat vs the Buck and against each other. EUR/USD tested but failed to breach 1.1800 to the upside whilst GBP/USD recovered from a 1.3837 base and once again makes its way to the 50 DMA around 1.3882. Analysts at ING note of a downside bias for the EUR amid a lack of firm bullish catalysts, with ECB-Fed policy divergence and summer trading conditions posing tail risks for the EUR/USD pair – “we could see the pair moving back to the lower half of the 1.1700/1.1800 range”, says the Dutch Bank. GBP meanwhile eyes a plethora of data including retail sales, employment and inflation, with traders eyeing indications to back the BoE’s upbeat outlook. EUR/GBP remains flat on either side of 0.8500.

In commodities, WTI and Brent front month futures remain subdued as the complex keeps an eye on the global COVID situation alongside the growth momentum slowdown experienced in the second-largest economy. Meanwhile, the situation in Afghanistan has grabbed all the headlines today as the Taliban overthrew the government, but from a market standpoint, the direct impact at the moment is too early to tell – but it’s worth keeping in mind that Russia, China and Iran have signalled an acceptance of the new government. Aside from this, traders will also be cognizant of the start of Hurricane season near the Gulf of Mexico (GoM), with Tropical Storm Fred set to make landfall around the Florida panhandle, whilst Grace reawakened to a Tropical Depression with the trajectory pointing towards the west of the GoM. WTI resides just north of USD 67/bbl after briefly losing the level (vs high 68.12/bbl), whilst Brent trades around USD 69.50/bbl (vs high USD 70.45/bbl). Elsewhere, spot gold trades with modest losses around USD 1,775/oz, but in a USD 10/oz range as the yellow metal balances a firmer Buck and softer yields. Base metals meanwhile are mostly lower across the board, with LME copper back under USD 9,500/t as the overnight Chinese data backs the notion of growth momentum slowing in the world’s largest copper consumer.

US Event Calendar

• 8:30am: Aug. Empire Manufacturing, est. 28.5, prior 43.0
• 4pm: June Total Net TIC Flows, prior $105.3b
• 4pm: June Net Foreign Security Purchases, prior -$30.2b

DB’s Henry Allen concludes the overnight wrap

Having just got back from two weeks away, I’ll be taking up the EMR from Jim over the next two as he departs on his own break of rollercoaster rides and golf courses. Like Jim, we opted to remain in the UK this year given the travel restrictions and spent a week in Cornwall, actually within walking distance of the recent G7 summit in Carbis Bay, which the geek in me was very excited to see. However, I was sadly the victim of multiple seagull attacks, the worst of which saw them steal an entire scoop of ice cream and leave a scratch behind my ear. Thankfully, the pharmacist said this wasn’t going to cause an infection, but to add insult to injury, the seagulls made a decent attempt at taking the replacement scoop as well. It seems as though capitalist notions of private property are yet to reach them.

Markets have faced no such obstacles while I’ve been away, with global equities ascending to a series of fresh records as investors gear up for next week’s all-important Jackson Hole symposium. Indeed, Europe’s STOXX 600 is up for 10 days in a row now, marking its longest run of consecutive gains since 2006, while an 11th advance today would make it the longest run since 1999.

Over the weekend however, the main news was in the geopolitical sphere as the Taliban reached the Afghan capital of Kabul and President Ashraf Ghani left the country. This follows a 3-week offensive by the Taliban that’s seen a major redrawing of the balance of power within the country, which leaves the Taliban set to take control two decades after their removal following the 9/11 terrorist attacks. On Saturday, President Biden said in a statement that he was increasing the total number of US troops in support of the evacuation of US personnel and the Afghans who assisted them to 5,000, and on Sunday multiple press outlets reported a US defence official saying that a further 1,000 on top of that would also be sent in. However, Biden’s statement also reiterated that he “was the fourth President to preside over an American troop presence in Afghanistan” and that he “would not, and will not, pass this war onto a fifth.”

For Biden, the developments in Afghanistan have created some unwelcome headlines just as further progress was being made on his economic agenda, with the Senate passage of the infrastructure bill with bipartisan support last week. Nevertheless, there was some potentially significant news on Friday as 9 moderate House Democrats threatened to withhold support from the $3.5tn budget resolution (which includes much of Biden’s proposals on social programs and climate change), unless the infrastructure bill were passed by the House and signed into law first. This is the reverse of what those on the progressive wing have said, which is that they won’t support the infrastructure bill without the budget resolution, which poses difficulties for the Democrats since their narrow margin of control means they can only afford to lose 3 votes in the House from their own side. In turn, Speaker Pelosi said yesterday in a letter to Democratic colleagues that she had requested that the Rules Committee “explore the possibility of a rule that advances both the budget resolution and the bipartisan infrastructure package”, so potentially moving them forward simultaneously. Since the Democrats’ control of the Senate as well is reliant on Vice President Harris’ tie-breaking vote, the decisions of individual members in both chambers over the coming days could be crucial as to the overall amount of spending that’s passed.

Overnight in Asia, the main news has been the release of Chinese economic data for July, which came in below expectations across the board. Retail sales grew by just +8.5% yoy (vs. +10.9% expected) while industrial production growth similarly underwhelmed at +6.4% yoy (vs. +7.9% yoy expected). Furthermore, fixed asset investment was up +10.3% yoy in the first seven months of the year (vs. 11.3% yoy expected), and the unemployment rate ticked up to +5.1% (vs. +5.0% expected). This downturn in the data comes on the back of recent Covid outbreaks that have led to further lockdowns and restrictions, and as a reminder DB’s chief China economist downgraded our GDP forecast for China in a piece out on Friday (link here), with the latest projections now seeing year-on-year growth of +5.5% in Q3 and +4.5% in Q4.

Amidst the weak data out of China, rising geopolitical risks and the continued spread of the delta variant, Asian markets are mostly trading lower this morning with the Nikkei (-1.89%), Hang Seng (-0.79%), Kospi (-1.16%) and Asx (-0.39%) all losing ground. Chinese bourses have fared somewhat better however, with the CSI 300 (+0.23%), Shanghai Comp (+0.37%) and Shenzhen Comp (-0.15%) holding their ground thanks to support from an overnight operation by the PBoC that saw the central bank roll over much of its medium-term policy loans coming due. Elsewhere, S&P 500 futures are down -0.25% this morning while yields on 10y USTs are down -3.0bps to 1.247%. Meanwhile there was somewhat stronger data from Japan, where their preliminary Q2 GDP came in at an annualised rate of +1.3% qoq (vs. +0.5% qoq expected), rebounding from an upwardly revised up -3.7% qoq in the previous quarter.

Looking forward now, the events calendar is relatively quiet over the week ahead as markets await the Jackson Hole symposium next week and Fed Chair Powell’s speech there for any signs on how the Fed might begin to taper their asset purchases. However, we will get the release of the FOMC minutes from their meeting in late July, which our US economists expect will provide more insights into the technical discussions around tapering strategies, and potentially some further clues as to which data releases officials will be focusing on as they assess progress towards their goals. We’ll also hear from Chair Powell in a virtual town hall with educators and students tomorrow, but that hasn’t traditionally been a forum for market communications.

Staying on the US, this week’s data releases will feature an increasing amount of hard data for July, including retail sales, industrial production, housing starts and building permits. On the retail sales release, our economists are expecting that auto sales will weigh on the headline number, and see a -0.6% decline this month. But they’re expecting a more mixed view on the factory and housing data mixed, with the manufacturing releases still pointing to strong production, whilst the housing sector continues to normalise around pre-covid levels of activity.

Turning to inflation, the coming week’s data should also add some further details on global price pressures after the US headline CPI print remained at +5.4% in July. The UK’s CPI reading for July will be in focus on Wednesday, particularly after the last couple of releases surprised to the upside and the Bank of England said at their latest meeting that “some modest tightening of monetary policy … is likely to be necessary” in order to meet their inflation target. Our UK economist projects that CPI will fall to +2.4% in July (vs. +2.5% in June), but still sees it peaking at closer to 4% before settling back down to target later next year. Separately in the Euro Area, there’s the final CPI print for July on Wednesday as well, and on Friday we’ll get the German PPI release for July, where the Bloomberg consensus is looking for a further increase after June’s +8.5% reading that marked the fastest rise in producer prices since January 1982.

On the earnings front, it’s nearly the end of the current season now, with over 90% of the S&P 500 having reported. Nevertheless, we’ve still got a few highlights over the week ahead, with tomorrow seeing reports from Walmart, Home Depot, BHP, and Agilent Technologies, before Wednesday sees releases from Tencent, Nvidia, Cisco, Lowe’s, and Target. Towards the end of the week, there’s also Applied Materials, Estee Lauder, Ross Stores, and Adyen on Thursday, before Friday sees Deere & Co release.

The pandemic will remain in focus over the week ahead, particularly given that cases have been rising at the global level for 8 consecutive weeks now, according to John Hopkins University data. In the US, the New York Times reported over the weekend that the Biden administration was drawing up a plan to offer booster shots as early as the autumn, with the story saying that priority would be given to care home residents, healthcare workers and the elderly. Meanwhile from today in England, those who’ve been fully vaccinated for two weeks won’t be required to self-isolate if they’ve been in contact with someone who’s tested positive for Covid.

Back to last week now, and global equity markets continued to inch up to new highs even as the daily moves became smaller. The S&P 500 rose +0.71% on the week (+0.16% Friday) with cyclicals such as banks (+2.15%) continuing to outperform, unlike technology and growth stocks as the NASDAQ lost ground (-0.09%) to finish just off the index’s record high. The S&P 500 finished at yet another record, its 48th this year, which is the most at this point of the year since 1995, whilst the VIX index of volatility fell -0.7pts to 15.5, having only closed lower on one occasion since the pandemic began. Amidst the cyclical outperformance, European equities rose to their own record close on Friday – its tenth in a row – as the STOXX 600 ended the week (+1.25%) higher.

Sovereign bonds gained slightly last week with US 10yr Treasuries rallying on the week following a -8.2bps decline in yields Friday that took the overall week’s move to a -2.0bps drop, leaving yields at 1.277%. Friday’s gains for Treasuries were due to the University of Michigan’s sentiment survey falling -11.0pts to 70.2 (81.2 expected), the lowest reading since December 2011 as inflation worries and concerns of the delta variant weighed on consumers. European sovereign bonds similarly gained on a weekly basis, with yields on 10yr bunds just -0.7bps lower whilst those OATs (-1.0bps), BTPs (-2.2bps) and gilts (-3.8bps) also fell.

After what has felt like eons of inaction while Teslas all over the country unintendedly accelerate into inanimate objects, it looks like regulators in the United States have finally come to their senses.

This morning it was announced that the U.S. had opened a formal investigation into the company’s Autopilot feature, according to Bloomberg.

*U.S. OPENS FORMAL INVESTIGATION OF TESLA AUTOPILOT: AP

*TESLA FALLS TO PREMARKET LOW ON AUTOPILOT INVESTIGATION REPORT

*U.S. NATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION OPENS PROBE OF TESLA AUTOPILOT IN 2014-2021 MODELS Y, X, S, AND 3 — AGENCY

Tesla shares quickly sunk toward $700, down about 2%, in pre-market trading.  

The U.S. National Highway Traffic Safety Administration (NHTSA) said it is opening a probe into Tesla’s Model X, S and 3 for model years 2014-2021. The broad range of models and model years means that this could be the broad investigation that skeptics have been requesting for years. 

The NHTSA says the investigation will assess technologies, methods “used to monitor, assist, and enforce the driver’s engagement” during autopilot operation, according to Bloomberg.

The investigation looks to finally have been prompted by Teslas on various highways slamming into parked emergency vehicles – many cases of which we have highlighted here on Zero Hedge. Since January 2018, the NHTSA says it has identified 11 crashes where Tesla models have  “Have encountered first responder scenes and subsequently struck one or more vehicles involved with those scenes”

Authored by Isabel van brugen via The Epoch Times,

The Texas Supreme Court on Sunday granted an emergency stay to Gov. Greg Abbott over his ban on mask mandates.

It overrides lower court rulings that allowed Dallas and Bexar counties to temporarily enable the mask mandate locally, despite the Republican governor’s order that barred government entities and officials from doing so.

Abbott said at the time that Texans, not government, should decide their best health practices.

Local officials in Dallas and Bexar counties, including San Antonio, meanwhile cited strains on hospitals amid a surge in cases linked to the Delta COVID-19 variant, as justifications for keeping the mask requirements in place.

Dallas County Judge Clay Jenkins said requiring face masks would help to curb the transmission of COVID-19, the disease caused by the CCP (Chinese Communist Party) virus.

The emergency stay is temporary, and the case will continue to be heard in lower courts. A hearing for Bexar County has been scheduled on Monday, and for Dallas County, a hearing has been set for Aug. 24.

“Today, SCOTEX has ordered Dallas Co and Dallas ISD to follow Exec. Order GA-38. Local mask mandates are illegal under GA-38,” state Attorney General Ken Paxton said in a statement on Twitter following Sunday’s ruling. “Let this ruling serve as a reminder to all ISDs and local officials that the Governor’s order stands.”

Meanwhile, local officials from the Dallas Independent School District and City of San Antonio and Bexar County have said that they plan to continue with mask mandates, reported the Texas Tribune.

“The Tex Supreme Court did not strike down my face mask order,” Jenkins said in a Twitter post.

“Rather they removed the stay on the GA 38. Unless I receive a ruling requiring otherwise, I will amend my order to remove the possibility of fines on non-compliant businesses but otherwise leave the order in effect.”

The City of San Antonio separately said in a statement that the ruling did not stop it from moving forward with presenting its case to the court on Monday, and that its mask mandate remains in effect.

“The City of San Antonio and Bexar County’s response to the Texas Supreme Court continues to emphasize that the governor cannot use his emergency powers to suspend laws that provide local entities the needed flexibility to act in an emergency,” City Attorney Andy Segovia said in a statement.

Last week, Paxton in a statement called government officials reinstating mask mandates and the judges who granted their temporary restraining orders against the Abbott’s mask ban “attention-grabbing judges” and “activist characters.”

“This isn’t the first time we have dealt with activist characters. It’s deja vu all over again,” Paxton said.

“Attention-grabbing judges and mayors have defied executive orders before, when the pandemic first started, and the courts ruled on our side—the law. I’m confident the outcomes to any suits will side with liberty and individual choice, not mandates and government overreach.”

Abbott and Paxton said in a joint statement that “any school district, public university, or local government official that decides to defy the order will be taken to court.”

The pair argued that the governor has the authority to decide how Texas responds to state emergencies under the Texas Disaster Act.

The Epoch Times has reached out to Abbott’s office for comment.