Tag: finance

At 1pm the Treasury concluded the weekly trifecta of record-sized coupon auctions, when after the sale of the biggest ever 2Y and 5Y Treasurys, moments ago the largest-ever 7Y auction also hit the market with the sale of $53BN in paper, $3BN more than last month.

The similarities however end there, because while the week’s previous two auctions priced at or near record low yields, today’s sale on the belly of the curve was ugly to say the least, pricing at 0.600%, a big, 1.2bps tail to the 0.588% When Issued, and sharply higher than the 0.462% high yield in September.

The bid to cover was even uglier, tumbling to 2.24, sharply below last month’s 2.423 and the lowest since August 2019.

The internals were just as deplorable, with Indirects taking down 60.9%, the lowest since January, and well below the 6-auction average of 64.6%. And with Directs taking down 14.3%, Dealers were left with 24.9% of the auction, which they will surely flip to the Fed at first opportunity.

Overall, an ugly, tailing auction with disappointing bidside demand, and when news of the results hit, the 10Y yield which was already pushing far higher on the day, spiked to the HOD of 0.82%, nearly 5bps higher on the day.

And while we await next month’s 10Y auction for confirmation, maybe there is such a thing as too much supply and the death of the 60/40 model.

Emerson Polling just came out with their October National Poll, which concludes that Joe Biden has a five-point lead over President Trump.

One of the questions asked was “Who do you think is more of a patriot, Joe Biden or Donald Trump?” The results revealed that 51.9% of respondents picked Biden vs. 48.1% for Trump, a difference of 3.8%.

Newsweek – the beleaguered outlet that was raided by the IRS in 2018 in a fraud probe for which a former owner pleaded guilty, and subsequently fired dozens of editors, has taken to stumping for Joe Biden with a very misleading headline about the aforementioned Emerson poll (the latest in our ‘misleading poll‘ coverage this election cycle).

Except, said ‘majority’ was actually a slim advantage of just 3.8% (which they admit within the article is a ‘slight edge’) – while the poll had a margin of error of +/- 2.8%. But wait, there’s more.

Emerson oversampled Democrats – as the mix of party affiliations consisted of 30% independents, 37% Democrats and 33% Republicans – or 4% more Democrats than Republicans. Between the margin of error and the oversample we deem Biden’s ‘more of a patriot’ headline egregiously misleading.

Also notable is that 43.8% of those polled voted for Hillary Clinton in 2016, while 41.8% voted for Trump, yet 41.7% expect President Trump to win, vs. 40.9% who expect Biden to win.

So in a poll that oversampled Democrats, more of people think Trump will win the election, and Newsweek‘s headline was completely misleading just days from the election.

Emerson Polling just came out with their October National Poll, which concludes that Joe Biden has a five-point lead over President Trump.

One of the questions asked was “Who do you think is more of a patriot, Joe Biden or Donald Trump?” The results revealed that 51.9% of respondents picked Biden vs. 48.1% for Trump, a difference of 3.8%.

Newsweek – the beleaguered outlet that was raided by the IRS in 2018 in a fraud probe for which a former owner pleaded guilty, and subsequently fired dozens of editors, has taken to stumping for Joe Biden with a very misleading headline about the aforementioned Emerson poll (the latest in our ‘misleading poll‘ coverage this election cycle).

Except, said ‘majority’ was actually a slim advantage of just 3.8% (which they admit within the article is a ‘slight edge’) – while the poll had a margin of error of +/- 2.8%. But wait, there’s more.

Emerson oversampled Democrats – as the mix of party affiliations consisted of 30% independents, 37% Democrats and 33% Republicans – or 4% more Democrats than Republicans. Between the margin of error and the oversample we deem Biden’s ‘more of a patriot’ headline egregiously misleading.

Also notable is that 43.8% of those polled voted for Hillary Clinton in 2016, while 41.8% voted for Trump, yet 41.7% expect President Trump to win, vs. 40.9% who expect Biden to win.

So in a poll that oversampled Democrats, more of people think Trump will win the election, and Newsweek‘s headline was completely misleading just days from the election.

By Eric Kulisch of American Shipper,

Peak season e-commerce sales, turbocharged by an accelerated shift to online buying as consumers shy away from crowded stores during a pandemic, are expected to hit all-time highs this year, putting additional pressure on express delivery networks.

Retail and logistics analysts say the unprecedented level of digital commerce has pulled forward 10 years of expected growth in the span of six months. 

The flood of new orders, especially early in the coronavirus crisis when so many stores were closed, impacted express carriers’ delivery times, leading them to eliminate on-time guarantees, implement package surcharges and throttle volume available to some retailers.

The current gap between demand and supply is about 2.6 million packages a day, for a seven-day week, which will rise to 7.2 million during the upcoming peak season, according to data from Pittsburgh-based ShipMatrix. 

“It doesn’t mean those packages won’t get moved, but they will be affected in terms of the number of days for transit. So, the on-time performance will be challenging for the carriers because they are operating way beyond their capacity,” said Satish Jindel, president of the parcel analytics and benchmarking company.

“Even though the parcel delivery companies will add temporary drivers and warehouse personnel, the demand will increase in the meantime,” he said in an interview. 

On-time performance for ground services during the week of Oct. 4 -10 was 95.2% for FedEx (NYSE: FDX) and 98% for UPS (NYSE: UPS). He attributed the difference to the fact that FedEx Ground is also delivering its SmartPost packages, whereas UPS relies on the U.S. Postal Service for final delivery of about two-thirds of its SurePost economy ground service — freeing up resources for other deliveries.

The ground performance figures for both express carriers, as well as Amazon (NASDQ: AMZN) and the Postal Service, have improved since earlier this year, when they were first hit by the surge in e-commerce demand. 

Jindel noted that express services, which have time-definite standards, have a lower on-time performance. 

Insatiable demand

On Monday, DHL Express said it expects e-commerce shipments to grow more than 50% from last year’s peak leading up to the holidays, with a similar spike in inbound volumes to the Americas — most of it in the U.S.

Mexico is DHL’s second-largest growth market after the U.S., followed by Canada.

The international parcel carrier, part of integrated logistics provider Deutsche Post DHL (LSE: DPDHL), said e-commerce volumes in its network are already up 35% this year over 2019 and predicted online sales will increase further with popular blowout shopping days such as Black Friday and Cyber Monday in November, and ongoing gift-buying for Christmas.

Online sales from late November to Christmas are also expected to generate more than 20% greater outbound volume in the region, with the U.S. alone exporting about 30% more parcels, DHL said.

The U.S. Department of Commerce reported that second-quarter domestic e-commerce sales grew by almost a third from the previous quarter and 44.5% from the same period a year ago.

eMarketer forecasts U.S. e-commerce sales will jump 36% to $190.5 billion during the holiday season, while brick-and-mortar retail will decline 4.7% to $823 billion. The research firm estimates Cyber Monday sales will increase 38% to $12.9 billion. It expects e-tail to represent 18.8% of total retail sales, up from 15.9% in 2017. 

Prior to the pandemic, analysts projected holiday e-commerce sales to increase 13% to $155.5 billion, roughly on par with the compound annual growth of the past three holiday seasons. In a recent report, Berkeley Research Group said it believes digital sales could go even higher, to $200 billion. 

The coronavirus pandemic has created a number of conditions that are driving people to shop online, including a desire to avoid potential infection in stores, local laws and health guidelines limiting indoor capacity, and stay-at-home precautions that are leading to more purchases for home offices and recreation rather than spending on services that involve more person-to-person contact. The research groups said the relatively short calendar between Thanksgiving and Christmas and store closures stemming from bankruptcies will also affect holiday shopping dynamics. 

Online deliveries during the holidays will also be boosted by large retailers shifting sales promotions online, where shoppers may find better deals than in physical stores, said Michiel Greeven, executive vice president of global sales for DHL. 

DHL’s peak plan

DHL Express said it is prepared for the surge in volume, thanks to regular investments of about $1 billion per year in its network. For 2020, it has hired more than 10,000 permanent employees, including 3,000 in the U.S. A third of those positions are at DHL’s hub at Cincinnati/Northern Kentucky International Airport (CVG), with 500 others taking customer service roles and 1,500 jobs for ground pickup and delivery couriers around the country.

DHL has increased daily cargo flights this year to handle the extra demand for e-commerce and COVID medical supplies, partially alleviating ongoing transport shortages associated with the grounding of passenger flights.

It also has added four Boeing 777 freighters to its fleet and said two more will join next month. The six additional aircraft enable the company to carry out more than 3,000 additional intercontinental flights per year.

Earlier in 2020, DHL began a new Hong Kong-Los Angeles-Miami flight five times per week with 45 tons of capacity per flight and a daily flight from the Americas hub to Singapore with space for 55 tons of goods. It also added a weekly freighter flight from Los Angeles to East Midlands, U.K https://www.freightwaves.com/news/dhl-adds-flight-from-la-to-uk-hub.

DHL Express said it has invested about $20 million in several projects to expand U.S. facilities, including the addition of about 80,000 square feet of warehouse space at service centers in Ohio, Pennsylvania and New York. The Los Angeles, CVG and New York gateways also received a combined $3.7 million for ground support equipment. 

The company is also moving into a larger facility at Atlanta Hartsfield-Jackson International Airport so it can bring goods directly from Asia and Europe, instead of transshipping them at CVG or New York’s JFK airport, according to reporting by Cathy Roberson, who runs a logistics market research firm. The direct flights are expected to begin a year from now. 

DHL has invested $58 million in the CVG hub during the past two years.

For people who want to fly but are worried about contracting COVID-19, United Airlines is offering rapid virus testing for transatlantic flights starting next month. 

United announced Thursday morning that from Nov. 16 to Dec. 11, “rapid tests to every passenger over two years old and crew members onboard select flights from Newark Liberty International Airport (EWR) to London Heathrow (LHR), free of charge.” 

So here’s the kicker, anyone who refuses to be tested “will be placed on another flight,” read the press release. 

“We believe the ability to provide fast, same-day COVID-19 testing will play a vital role in safely reopening travel around the world and navigating quarantines and travel restrictions, particularly to key international destinations like London,” said Toby Enqvist, chief customer officer for United.

Enqvist continued: “Through this pilot program, we’ll guarantee that everyone* onboard has tested negative for COVID-19, adding another element to our layered approach to safety. United will continue to lead on testing, while at the same time exploring new solutions that contribute to the safest travel experience possible.” 

United has required all passengers to wear masks, disinfected airplanes and cabins between flights, and upgraded planes’ air filtration systems with hospital-grade HEPA filters, resulting in lower probabilities of spreading and contracting the virus, even on a packed flight. 

Rapid testing is just one more layer of defense for passengers, a move that could hopefully restore confidence among people to fly once more, comes at a time when the entire airlines and travel and tourism industries remain in financial ruin.  

United said the test would be administered on United Flight 14 (EWR to LHR), departing at 7:15 p.m., Mondays, Wednesdays, and Fridays. 

According to Bloomberg, United will use Abbott Laboratories ID Now rapid molecular tests for the program, noting the carrier will also offer these tests for passengers in San Francisco for flights to Hawaii.  

The next big push to resurrect the airline industry is for carriers and airports to rush out pre-flight virus testing. 

While many passengers are still objecting to wearing masks on planes, what makes you think people will allow carriers to test them for a virus? Also, bear in mind, this is the same rapid-test as was used by The White House…

… there will be uproar. 

By Michael Msika and Jan-Patrick Barnert, Bloomberg market commentators

The mood in the market is decidedly anxious. Worries are mounting that risks from tightening restrictions in Europe to U.S. election uncertainty will snowball, pushing stocks over the edge in a repeat of February’s selloff. Strong gains at the start of October have given way to losses, and previous winners such as tech shares are signaling a shift in sentiment.

The Stoxx 600 has already lost 2.7% this week and futures are signally another sharp drop today. After months of going nowhere, the momentum in the market is now to the downside. The proportion of stocks with MACD sell signal has been rising steadily this month and is highest since August.

Instead of the V-shaped economic revival many had hoped for, the final months of the year may bring more turmoil. New lockdowns are threatening Europe’s nascent recovery, U.S. election uncertainty is reaching fever pitch and the country’s fiscal stimulus talks are dragging on. Meanwhile, the ongoing earnings season has brought little relief.

For the first time since June, technology isn’t the leading industry in Europe this year. While the sector had faced challenges in recent weeks, SAP’s dismal outlook was the final blow that triggered Monday’s worst slump since March. All Stoxx 600 sector gauges are in the red for 2020, with the exception of the personal care, drug and grocery stores index.

“If this situation remains, investors are likely to increase their trading exposure towards safe havens like the yen, the dollar, or even treasuries while equities will continue their bearish correction,” says ActivTrades technical analyst Pierre Veyret. Technically, Euro Stoxx 50 futures look vulnerable, with the June low support being tested.

The earnings season will offer clues on corporate health. Sectors such as tech carry the load of high expectations, and therefore bigger potential for disappointment, while the value part of the market has so far fared better than expected, with positive updates from banks and energy stocks.

Germany’s DAX Index, which had outperformed the broader Stoxx 600 and even the U.S. S&P 500 in the market rebound, was hammered on Monday because of the rout in SAP, which has an almost 10% weight in the benchmark. “Investors have been caught on the wrong foot,” says Comdirect Bank strategist Andreas Lipkow. Tech stocks were seen as a safe bet, he says, but now investors and analysts alike need to adjust their projections.

“The sell-off looks like a downshift in the cyclical rally sparked by developments in Europe,” says Nomura quantitative strategist Masanari Takada, noting that the “unbroken rally” in cyclicals in the U.S. and Europe since late June may have finally run out of steam. The strategist says the rally may not get going again unless a catalyst triggers a pick-up in economic growth.

Takada sees the recent downtrend in sentiment as a “reversion to reality” after “overdone optimism,” driven by the drop in the economic surprise indexes for major economies. Additional selling pressure on cyclicals may have arisen from hedge funds liquidated their long positions on European stocks, he said.

“To some extent, October feels like February all over again as the solid growth picture could once more be derailed by lockdown measures,” says Florian Ielpo, Head of Macroeconomic Research and Multi-Asset Portfolio Manager at Unigestion, raising the odds of a “W” recovery scenario. While it’s so far limited to Europe, a similar situation extending to the U.S. would be a game changer, he says.

It may sound unbelievable that just seven years ago Exxon was the world’s largest company.

Of course, all that changed with the advent of the FAAMGs and the Fed blowing the biggest tech bubble in history which together with the plunge in the price of oil, meant the market cap of Exxon has tumbled to just $136BN, below that of Zoom. Yes, we have gotten to the point in the bubble where a video chat with no barriers to entry, zero infrastructure and barely any profit is more valuable than a company that has invested tens of billions of dollars in creating the world’s biggest oil exploration and production infrastructure.

ZOOM vs EXXON:

Revenue (LTM): $1.34BN vs $214BN
Employees: 3,427 vs 75,000
Market Cap: $141BN vs $136BN

— zerohedge (@zerohedge) October 29, 2020

 

In an attempt to recover some of its former glory, last night Exxon announced that it would be keeping its precious 87 cent/share dividend, which many had expected would be cut amid the ongoing devastation in the oil sector. Keeping the dividend, however, meant that Exxon would have to trim fat and/or muscle elsewhere, and on Thursday Exxon unveiled the latest unprecedented cost-cutting measure when it said it slash its global workforce by a record 15% over the next two years, an unprecedented culling by North America’s biggest oil explorer as it struggles to preserve dividends. According to Bloomberg, the cuts include 1,900 U.S. jobs, mostly in Houston, as well as an undisclosed number of positions around the world.

“These actions will improve the company’s long-term cost competitiveness and ensure the company manages through the current unprecedented market conditions,” the company said in a statement on Thursday.

Exxon spokesman Case Norton told Bloomberg that total reductions will affect about 14,000 people, split between employees and contractors. The figure includes the U.S. job cuts, as well as layoffs and retirements previously announced in Europe and Australia, and future reductions in Canada and elsewhere.

Exxon is not alone in picking dividends over workers, with other Big Oil giants also cutting thousands of jobs in response to the pandemic-induced demand slump. BP plans to slash 10,000 jobs, Royal Dutch Shell Plc will cut as many as 9,000 roles and Chevron Corp. has announced around 6,000 reductions.

Ironically, Exxon’s move is smaller both in absolute terms and as a proportion of its larger workforce, which stood at 74,900 people as of Dec. 31, according to data compiled by Bloomberg. However, as Bloomberg notes, “the fact that it’s cutting at all is a sign of its weakened financial position compared to its former status as the S&P 500 Index’s biggest company less than a decade ago and a profit powerhouse used to riding out oil-price cycles.”

This year’s downturn has been particularly painful because it affected refining, usually a cushion in times of low oil prices, and because it came at a time when Exxon was already increasing borrowing to fund a large expansion program. The company was forced to retreat on these plans in April, reducing capital spending by $10 billion and delaying or scaling back most of major projects.

The stock has plunged 54% this year, making it less valuable than Zoom as noted above. A chart showing the ridiculous price/book ratio of the two companies is shown below.

Exxon’s dividend yield is now more than 10%, indicating that investors are anticipating a cut yet management is fighting tooth and nail to avoid one, and is hoping that the price of oil rebounds in the near future.

Despite maintainingd its quarterly payout, Exxon is expected to post its third consecutive quarterly loss when it reports earnings tomorrow.

Former Department of Homeland Security chief of staff Miles Taylor, a recent CNN hire, has been branded a “two-faced liar” after coming out as Anonymous – the supposedly “senior official in the Trump administration” behind a damning New York Times opinion piece and best selling book.

His 2018 article – promoted as if written by Mike Pence himself – claimed there was a resistance movement within the Trump administration which was actively working to undermine the president.

After Taylor revealed himself as the author on Twitter Wednesday afternoon before an interview with CNN‘s Jake Tapper, critics on both sides slammed the former low-level staffer (who wasn’t yet DHS Chief of Staff when he wrote the anti-Trump screeds) – with liberals salty that a grifter got rich by masquerading as a high-level official, and conservatives generally laughing over yet another failed scheme against the president.

“This is everything people hate about Washington — two-faced liars who push their own agendas at the expense of the People,” wrote White House Press Secretary Kayleigh McEnany over Twitter. “This is the epitome of the swamp!”

PROOF: Miles Taylor, who now admits to being “Anonymous,” once told us he was NOT Anonymous. He LIED!

This is everything people hate about Washington — two-faced liars who push their own agendas at the expense of the People. This is the epitome of the swamp! ⬇️ https://t.co/cNz1Fgpz5g

— Kayleigh McEnany (@PressSec) October 28, 2020

“How many other “senior officials” who we’ve been reading about for years are just mid-level douche bags who think they’re Spartacus?” tweeted Breitbart EIC Alex Marlow.

How many other “senior officials” who we’ve been reading about for years are just mid-level douche bags who think they’re Spartacus?

Embarrassing for the idiot behind it, but even more embarrassing for the NYT. https://t.co/451ynfLE5b

— Alex Marlow (@AlexMarlow) October 28, 2020

“Anonymous was another media hoax!” tweeted former acting Director of National Intelligence, Richard Grenell.

Anonymous was another media hoax!

— Richard Grenell (@RichardGrenell) October 28, 2020

Former Hillary Clinton staffer Yashar Ali suggested that the left was “pissed because he remained anonymous for so long” and that “The book and cable news deal also pisses people off.”

I am not speaking on behalf of anyone….but my sense is that people are pissed because he remained anonymous for so long. They would not be as angry had he come out while stuff was happening and testified before Congress. The book and cable news deal also pisses people off. https://t.co/mZnpiwRGi5

— Yashar Ali 🐘 (@yashar) October 28, 2020

Also hilarious is the full-throated defense of Anonymous’s surely impeccable credentials by CNN‘s Chris Cillizza when the Op-Ed came out.

“In short: If some midlevel bureaucrat in the Trump administration came to the Times — or has an intermediary reach out to the Times — asking to write a piece like that one without their name attached to it, the answer would be an immediate “no.” Contrary to what Trump says on his Twitter feed, media organizations are very wary of giving anyone and everyone anonymity to make attacks.” -Chris Cillizza

Here’s what @CillizzaCNN wrote about the NYT anonymous op-ed writer in 2018. Chris, do you want to admit now that the NYT is a trash tabloid or nah? pic.twitter.com/MfSkhKNCda

— Eddie Zipperer (@EddieZipperer) October 28, 2020

CNN, meanwhile, is keeping Taylor on staff despite the fact that he repeatedly lied on air about being Anonymous.

Update (1130ET): Twitter says part of the thread from Mohamad violates its rules on glorifying violence.. no shit!

Why is he not banned permanently for this kind of genocidal encouragement?

*  *  *

As Summit News’ Paul Joseph Watson reported earlier, the former Prime Minister of Malaysia reacted to a series of Islamic terror attacks in France by tweeting, “Muslims have a right to be angry and to kill millions of French people for the massacres of the past.”

Yes, really.

Three people were killed and several injured near a church in the Notre-Dame area of Nice this morning, including one 70-year-old woman who was decapitated. The culprit was a jihadist who yelled “Allahu Akbar” throughout the attack.

Meanwhile, in Avignon, a man wielding a knife while also shouting “Allahu Akbar” was shot dead after trying to attack police officers who were patrolling the street.

In Jeddah, Saudi Arabia, a French guard at the French consulate was also wounded by an attacker.

The attacks followed the beheading of school teacher Samuel Paty in Paris earlier this month by a Chechen jihadist who sought revenge for Paty showing cartoons of the Prophet Muhammad to pupils in his class.

Mahathir bin Mohamad, who served twice as the Prime Minister of Malaysia from 1981 to 2003, and again from 2018 to 2020, reacted to the attacks by suggesting that they were completely justified because of France’s colonial past.

“Muslims have a right to be angry and to kill millions of French people for the massacres of the past,” tweeted Mohamad.

The former PM also tweeted, that killing “is not an act that as a Muslim I would approve,” but by suggesting the brutal attacks on innocents in Nice and Paris were somehow understandable, Mohamad is totally excusing them.

“While I believe in the freedom of expression, I do not think it includes insulting other people. You cannot go up to a man and curse him simply because you believe in freedom of speech,” said Mohamad.

2. The killing is not an act that as a Muslim I would approve. But while I believe in the freedom of expression, I do not think it includes insulting other people. You cannot go up to a man and curse him simply because you believe in freedom of speech.

— Dr Mahathir Mohamad (@chedetofficial) October 29, 2020

This is an interesting remark because it basically mirrors what the Pope said after jihadists slaughtered Charlie Hebdo cartoonists in 2015.

Instead of completely condemning the attack, Pope Francis semi-justified the atrocity by commenting, “If my good friend Dr Gasparri says a curse word against my mother, he can expect a punch.”

He added: “It’s normal. You cannot provoke. You cannot insult the faith of others. You cannot make fun of the faith of others.”

*  *  *

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In the aftermath of the widespread blowback amid Apollo clients, many of whom have frozen their new capital allocations to the private equity giant in response to recent reports that co-founder Leon Black had paid “suicided” pedophile Jeffrey Epstein $50 million after he was released from jail, during a conference call on Thursday morning discussing Apollo’s third-quarter results, Black said he regretted doing business with sex offender Jeffrey Epstein, even though other prominent people had done the same.

“Like many people I respected, I decided to give Epstein a second chance,” Black said Thursday during a conference call to discuss Apollo’s third-quarter results.

“This was a terrible mistake”, the former Drexel banker added pointing out the obvious, although it still remains unclear just what “second chance” services Epstein provided to Black that was worth a whopping $50 million in compensation, but we are confident we will find out soon enough.

And in what may be the greatest example of “whataboutism” in modern history, Black said that Epstein worked with many prominent individuals after he was released from jail, and that “the distinguished reputations of these individuals gave me misplaced comfort.”

Laughably, Black – who is surrounded by the most brilliant financial minds of his generation 24/7 – has said he sought advice from Epstein for matters such as taxes, estate planning and philanthropy.

Apollo hired law firm Dechert LLP to conduct a review that’s expected to take 60 to 90 days, according to people familiar with the matter.

That said, we doubt their reputations will be just as “distinguished” once it emerges just what “services” underage girls Epstein was providing them.

Also on the call we learned that despite the posturing, Apollo’s clients were not really turned off by the ongoing scandal, and the PE giant raised another $4 billion in the third quarter even though it expects fundraising to slow, co-founder Joshua Harris said on the call.