Tag: news

Politicians Are Still Stuck on Prohibition


evhistorypix025953

Few explanations about the ultimate pointlessness of Prohibition are better than the one found in the 1969 Creedence Clearwater Revival song, Bootleg: “Take you a glass of water, make it against the law. See how good the water tastes when you can’t have any at all. Bootleg, bootleg, bootleg, howl.”

That’s a howling good way of saying that when the government bans stuff, people still want it—and they’ll do almost anything to get it. If you don’t believe the CCR lyricists, then you haven’t watched enough Netflix shows about the Mexican narcotics trade, which show how drug-eradication efforts boost demand, corrupt officials, and reward the most ruthless suppliers.

We’ve long known these lessons. Eighty-eight years ago last Sunday, two hard-drinking states, Pennsylvania and Ohio, and one tee-totaling one, Utah, approved the 21st Amendment to the Constitution repealing the 18th Amendment’s Prohibition on the manufacturing, sales, and transportation of intoxicating beverages. It ended a 14-year experiment in insanity.

“By the 1930s, it was clear that Prohibition had become a public policy failure,” History.com noted. Passed against a backdrop of progressive do-gooding, the ban “had done little to curb” drinking and a lot to create modern organized-crime syndicates. Stuck in the Depression, “money trumped morals, and the federal government turned to alcohol to quench its thirst for desperately needed tax money.”

By then, the only groups supporting Prohibition were “Baptists and bootleggers”—the former for religious reasons and the latter because it protected their turf. There’s nothing a cartel hates more (even more than G-men) than legal competition, where disputes are settled by taking competitors to court rather than dangling their corpses from bridges.

Cutting government in on profits often protects an industry—in a similar way that paying “protection money” to mobsters allows a business to continue. In California, however, the government has gotten too greedy in dealing with its emerging cannabis industry, thus defeating the purpose of legalization.

Californians passed the Proposition 64 weed-legalization measure in 2016. Its proponents made the proper conceptual argument—that legalization would extinguish the black market and provide revenues that fund government programs. The revenues have been far less than predicted.

The “legal weed industry has struggled in the face of high taxes, local government opposition, and burdensome regulation,” the libertarian Cato Institute explained. “As a result, much of the market remains underground….(E)stimates from 2018 suggest legal sales account for only 20-25 percent of total sales.”

The problem isn’t legalization, which is a wise policy that lessens the cost and injustice of prosecuting people for victimless “crimes.” The problem is the continuation of Prohibitionist restrictions, which keep the underground economy flourishing. At least Proposition 64 attempted to further legalize a product.

What explains California’s efforts to impose new prohibitions on highly addictive products that currently are legal? Gov. Gavin Newsom last year signed Senate Bill 793, which banned the sale of flavored tobacco products. It’s on hold pending a referendum next November.

This is full-fledged Prohibition and will have the totally foreseen consequences that accompany government bans. The law targets menthol cigarettes, as well as vaping and various smokeless tobacco products such as Swedish snus.

There’s little question tobacco companies targeted African Americans in marketing menthol, but an outright sales ban will lead to black markets—such as the peddling of “loosies” on the streets of inner-city neighborhoods (and all the potentially dangerous police encounters that will take place as a result).

“Economic studies demonstrate that cigarettes and e-cigarettes are substitutes for each other,” wrote public-health professor Kenneth Warner in the Washington Post. “(I)f e-cigarette prices rise relative to cigarette prices…some people will smoke cigarettes who would otherwise have used e-cigarettes.”

He was referring to the Biden administration’s misguided attempt to raise taxes on alternative nicotine products that are, per the top British health agency, 95 percent safer than cigarettes. Imagine how many smokers will return to their deadly habit if California prohibits their sale—or how many underground entrepreneurs will find ways to smuggle them into the state.

In terms of alcohol policy, California regulators have done a decent job learning Prohibition’s lessons, given that alcohol sales aren’t hobbled here by many prudish regulations that are common in more conservative states. I recently visited Pennsylvania, which mandates that hard liquor is sold through state-run stores with the choice and ambiance one expects in a DMV office.

Prohibition doesn’t only apply to “sin” products and services such as booze, drugs and prostitution. As these editorial pages have frequently detailed, California prohibits honest work through Assembly Bill 5’s limits on independent contracting—and through occupational-licensing rules that turn handymen into scofflaws. Instead of legalizing honest work, the state is punishing “economic crimes.”

Like tobacco and other addictive substances, work is a lot like water. People will do whatever they have to do to find it. The only real beneficiaries of all prohibitions are bootleggers.

This column was first published in The Orange County Register.

The post Politicians Are Still Stuck on Prohibition appeared first on Reason.com.

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JPMorgan Predicts The End Of COVID, A Strong Economy, And $125 Oil

JPMorgan Predicts The End Of COVID, A Strong Economy, And $125 Oil

By Tsvetana Paraskova of OilPrice.com

Next year could lay the foundation for “a far more vibrant economic environment” and COVID transitioning from a pandemic to an endemic disease, JP Morgan said in its Outlook 2022, titled ‘Preparing for a vibrant cycle.’

According to the investment bank, household net worth is at all-time highs in many developed countries, and excess savings are elevated. Consumption will likely be strong for years amid strong labor market conditions and the capacity to take on more debt, JP Morgan’s strategists said in the report for 2022.

“Although we see clear potential for a more vibrant economic cycle, the environment is also fraught with cross-currents. We are confident the economic expansion will continue through 2022, but its strength will likely be determined by the monetary response to inflation, the relative success of Chinese policymakers in rebalancing their economy, and the pace of the transition from a pandemic to an endemic disease,” the bank noted.

A vibrant economy means robust demand for oil, and JP Morgan even said last week that crude oil prices could soar to $125 per barrel in 2022 and $150 in 2023 due to OPEC’s limited capacity to boost production.

The Omicron variant that has spooked markets over the past two weeks could be the beginning of the end of the pandemic, JP Morgan strategists Marko Kolanovic and Bram Kaplan wrote in a note last week, as carried by Bloomberg.

If the new variant turns out to be less deadly, it would fit the historical patterns of virus evolution. This would be bullish for risk markets as it could suggest the end of the pandemic is in sight, the strategists said.

Bill Gates also expressed optimism that the end of the pandemic could be in sight at some point next year.

“I am hopeful, though, that the end is finally in sight. It might be foolish to make another prediction, but I think the acute phase of the pandemic will come to a close some time in 2022,” Gates wrote in his ‘Year in Review’ blog post on Tuesday.

Tyler Durden
Fri, 12/10/2021 – 08:21

via ZeroHedge News https://ift.tt/3rOrvkK Tyler Durden

Reflections on President Biden’s Supreme Court Commission

vvAs Ilya noted, earlier this week President Biden’s Commission on the Supreme Court issued its final report on various reform proposals. I was a member of that Commission, and now that a couple days have gone by, I’m finally free to talk about the matters that we considered.

So I have posted working paper up called Reflections of a Supreme Court Commissioner.

Here is an excerpt from Part I:

As I see it, there are two ways to approach Supreme Court reform. One is to look for reforms that would be good regardless of whether one agrees with the Court’s current decisions. Such an approach benefits from bipartisan expertise. The other approach is to look for reforms that will make the Supreme Court’s decisions better. Such an approach is unlikely to be bipartisan given polarization about legal issues, but it is not trying to be.

In my view both approaches to reform are valid. . . . But much mischief and frustration comes from confusing these two. There is no point in having a bipartisan commission of experts to consider reforms designed to influence the Court’s decisions. The Court’s decisions are supported by experts on one side or another. If the experts do not agree on whether the decisions are bad, there will be no common ground for reform. And activists who think the Court’s decisions are a threat to freedom or democracy will not be swayed by the lack of a consensus among those who lack their commitments. In my view both methods of analysis and advocacy are valid, so long as we do not have illusions about what we are trying to do.

And on the question of whether it matters whether outcome-motivated court-packing is constitutional:

Does it matter whether there are any legal limits?

I don’t know, but it might.

. . . imagine a moderate lawmaker (even a President …) who opposes court-packing as a matter of policy. He believes it would be imprudent, unwise, or at least premature. But he is receiving great pressure from those on his left to support it anyway. If his only objections are matters of policy, it is simply a political question whether to succumb to that pressure.  But if he were to believe that it is unconstitutional, then his constitutional oath leaves him no choice but to do the right thing.

And here is the final part, Part VI:

I have great respect for my talented colleagues on the commission. I’m sure some of them would disagree with some of the points above, and some of them might have persuasive counterarguments that would change my mind on some points. Unfortunately, the law and structure of the commission made it very difficult for us to have the kind of deliberations and discussions that the country deserved.

The biggest problem was the Federal Advisory Committee Act, a statue I had never thought much about, which required that all of the collective deliberations of the commission be done in public. Public meetings are both cumbersome and politically fraught, so to many people the more attractive alternative is to accomplish as much as possible through working groups, one-on-one conversations, and other interactions that fall outside of the statute. By necessity, these interactions are not visible to most commissioners. That is part of what makes them lawful. Thus, the ironic effect of a statute designed to promote the transparency of the commission to outsiders was to instead dramatically reduce the transparency of the commission, even to its own members.

This was exacerbated by other factors – the size of the commission, the distribution of different views across different leadership roles, Zoom, and other operational constraints – and I fear that the result was to squander the overflowing amounts of intellectual ability and political judgment that filled the commission.

At the same time, whatever the constraints, there would have been no escaping the fact that the commission found itself operating in two different modes – an intellectual one and a more political one. Those two modes produce a natural tension. A political problem can be solved through omitting, watering down, or waffling on the controversial parts. But doing so cuts against making an intellectual contribution. And vice versa: concrete intellectual claims can be unpalatable, especially to a committee.

Perhaps under better circumstances the commission could have navigated those two modes in a way that made a real contribution. But I guess we will never know.

Download the whole thing here.

I’ve also recorded a podcast episode of Divided Argument with Dan Epps, who testified as a witness in front of the commission, where we go back and forth about the process and some of my personal proposals for reform.

It’s here:

Out of Whack

We’ve been waiting for months to bring you this one: we can finally talk about the President’s Supreme Court Commission, which just finalized its report this week. We also briefly talk about the recent argument in Dobbs and try to predict what the Court might do.

 

 

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Video: “Fighting Antisemitism by Protecting Religious Liberty”

In November, I co-authored a new backgrounder for the Heritage Foundation, titled “Fighting Antisemitism by Protecting Religious Liberty.” I am proud to partner with my colleagues at the Jewish Coalition for Religious Liberty, Howard Slugh and Rabbi Mitchell Rocklin.

This week, the Heritage Foundation hosted a virtual discussion of the paper. I was pleased to be joined by Sarah Perry of Heritage and Ryan Bangert of ADF. You can watch it here:

I hope our paper stimulates a new dialogue about the relationship between religious liberty and antisemitism.

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Politicians Are Still Stuck on Prohibition


evhistorypix025953

Few explanations about the ultimate pointlessness of Prohibition are better than the one found in the 1969 Creedence Clearwater Revival song, Bootleg: “Take you a glass of water, make it against the law. See how good the water tastes when you can’t have any at all. Bootleg, bootleg, bootleg, howl.”

That’s a howling good way of saying that when the government bans stuff, people still want it—and they’ll do almost anything to get it. If you don’t believe the CCR lyricists, then you haven’t watched enough Netflix shows about the Mexican narcotics trade, which show how drug-eradication efforts boost demand, corrupt officials, and reward the most ruthless suppliers.

We’ve long known these lessons. Eighty-eight years ago last Sunday, two hard-drinking states, Pennsylvania and Ohio, and one tee-totaling one, Utah, approved the 21st Amendment to the Constitution repealing the 18th Amendment’s Prohibition on the manufacturing, sales, and transportation of intoxicating beverages. It ended a 14-year experiment in insanity.

“By the 1930s, it was clear that Prohibition had become a public policy failure,” History.com noted. Passed against a backdrop of progressive do-gooding, the ban “had done little to curb” drinking and a lot to create modern organized-crime syndicates. Stuck in the Depression, “money trumped morals, and the federal government turned to alcohol to quench its thirst for desperately needed tax money.”

By then, the only groups supporting Prohibition were “Baptists and bootleggers”—the former for religious reasons and the latter because it protected their turf. There’s nothing a cartel hates more (even more than G-men) than legal competition, where disputes are settled by taking competitors to court rather than dangling their corpses from bridges.

Cutting government in on profits often protects an industry—in a similar way that paying “protection money” to mobsters allows a business to continue. In California, however, the government has gotten too greedy in dealing with its emerging cannabis industry, thus defeating the purpose of legalization.

Californians passed the Proposition 64 weed-legalization measure in 2016. Its proponents made the proper conceptual argument—that legalization would extinguish the black market and provide revenues that fund government programs. The revenues have been far less than predicted.

The “legal weed industry has struggled in the face of high taxes, local government opposition, and burdensome regulation,” the libertarian Cato Institute explained. “As a result, much of the market remains underground….(E)stimates from 2018 suggest legal sales account for only 20-25 percent of total sales.”

The problem isn’t legalization, which is a wise policy that lessens the cost and injustice of prosecuting people for victimless “crimes.” The problem is the continuation of Prohibitionist restrictions, which keep the underground economy flourishing. At least Proposition 64 attempted to further legalize a product.

What explains California’s efforts to impose new prohibitions on highly addictive products that currently are legal? Gov. Gavin Newsom last year signed Senate Bill 793, which banned the sale of flavored tobacco products. It’s on hold pending a referendum next November.

This is full-fledged Prohibition and will have the totally foreseen consequences that accompany government bans. The law targets menthol cigarettes, as well as vaping and various smokeless tobacco products such as Swedish snus.

There’s little question tobacco companies targeted African Americans in marketing menthol, but an outright sales ban will lead to black markets—such as the peddling of “loosies” on the streets of inner-city neighborhoods (and all the potentially dangerous police encounters that will take place as a result).

“Economic studies demonstrate that cigarettes and e-cigarettes are substitutes for each other,” wrote public-health professor Kenneth Warner in the Washington Post. “(I)f e-cigarette prices rise relative to cigarette prices…some people will smoke cigarettes who would otherwise have used e-cigarettes.”

He was referring to the Biden administration’s misguided attempt to raise taxes on alternative nicotine products that are, per the top British health agency, 95 percent safer than cigarettes. Imagine how many smokers will return to their deadly habit if California prohibits their sale—or how many underground entrepreneurs will find ways to smuggle them into the state.

In terms of alcohol policy, California regulators have done a decent job learning Prohibition’s lessons, given that alcohol sales aren’t hobbled here by many prudish regulations that are common in more conservative states. I recently visited Pennsylvania, which mandates that hard liquor is sold through state-run stores with the choice and ambiance one expects in a DMV office.

Prohibition doesn’t only apply to “sin” products and services such as booze, drugs and prostitution. As these editorial pages have frequently detailed, California prohibits honest work through Assembly Bill 5’s limits on independent contracting—and through occupational-licensing rules that turn handymen into scofflaws. Instead of legalizing honest work, the state is punishing “economic crimes.”

Like tobacco and other addictive substances, work is a lot like water. People will do whatever they have to do to find it. The only real beneficiaries of all prohibitions are bootleggers.

This column was first published in The Orange County Register.

The post Politicians Are Still Stuck on Prohibition appeared first on Reason.com.

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53 Dead After Tractor-Trailer Of Migrants Headed To US Crashes In Mexico

53 Dead After Tractor-Trailer Of Migrants Headed To US Crashes In Mexico

On Thursday afternoon, a tractor-trailer carrying more than 100 Central American migrants crashed into a bridge over a highway in southern Mexico, killing 53 people. 

Luis Manuel García Moreno, head of civil protection in Chiapas, said the truck was carrying 107 people when it crashed. He said 53 died on impact, and 40 were injured and taken to regional hospitals.

“According to survivors, the majority appeared to be citizens of Guatemala,” Morena said in a television interview with Foro TV.

Central American migrants travel in caravans and are often hidden in tractor-trailers like the one that crashed to avoid Mexico’s National Guard and immigration authorities as they head north to the US border. Smugglers charge migrants upwards of $10k for the journey. 

The migrant caravan was presumably headed to the US border. The US has recorded historic numbers of border crossings and arrests this year as the Biden administration fails to secure the border. In 2021, the US Border Patrol agents arrested 1.7 million illegal immigrants — the second-highest total ever. 

Republican lawmakers have continuously called the chaos on the Mexico-US border and waves of migrant caravans headed to the US the fault of the Biden administration. 

“Joe Biden’s failed border policies have created the worst crisis at our southern border in 30 years. These policies are now incentivizing mass caravans of illegals to head to our southern border,” House GOP Conference Chair Elise Stefanik (R-NY) recently said. 

“Instead of addressing the root cause of our border crisis, the Biden Administration is doubling down on their failed policies. It is past time for the Biden Administration to take action to secure our southern border and our nation,” Stefanik said. 

The Biden administration has welcomed undocumented migrants arrested at the border and disturbed them to shelters across the US. 

If it weren’t for the Biden administration’s relaxed border policies — maybe waves of caravans would avoid making the journey, and possibly the accident on Thursday could’ve been avoided. 

Tyler Durden
Fri, 12/10/2021 – 08:07

via ZeroHedge News https://ift.tt/3IGLVC3 Tyler Durden

Futures Rebound Ahead Of Critical CPI Print

Futures Rebound Ahead Of Critical CPI Print

US futures rebounded on Friday from Thursday’s selloff as traders waited with bated breath for an inflation report that could strengthen the case for an aggressive policy tightening by the Federal Reserve, while Oracle Corp jumped on an upbeat third-quarter outlook. At 730 a.m. ET, Dow e-minis were up 109 points, or 0.30%, S&P 500 e-minis were up 16.25 points, or 0.35%, and Nasdaq 100 e-minis were up 53.50 points, or 0.4%. Europe’s Stoxx 600 Index pared an earlier decline, while a Bloomberg gauge of Asian airlines fell. In China, Evergrande chairman Hui Ka Yan sold just over a 2% stake in the company, in the same week the property developer was officially labeled a defaulter for the first time. The dollar, Treasury yields and oil advanced.

Shares of Oracle gained 11.2% in premarket trading after posting forecast-beating results for the second quarter, helped by higher technology spending from businesses looking to support hybrid work.  Broadcom Inc rose 7.0% as the semiconductor firm sees first-quarter revenue above Wall Street expectations and announced a $10 billion share buyback plan.

So far this week, the Nasdaq and the S&P advanced over 2.8% each and the Dow rallied 3.4%. The S&P is now down 1.6% from its all-time peak. The S&P 500 dropped 5.2% from a record high hit on Nov. 22 as investors digested Jerome Powell’s renomination as the Fed’s chair, his hawkish commentary to tackle. Meanwhile, the U.S. Senate on Thursday passed and sent to President Joe Biden the first of two bills needed to raise the federal government’s $28.9 trillion debt limit and avert an unprecedented default. In other news, the U.S. government moved a step closer to prosecuting Julian Assange on espionage charges, after London judges accepted that the WikiLeaks chief can be safely sent to America.

With headline CPI expected to print at 6.8% Y/Y this morning – in what would be its highest level since 1982 – with whisper numbers are high as the low 8% after Biden said that this month’s number won’t show the drop in gasoline prices (which is certainly transitory now that oil price are on track for the biggest weekly gain since August), it is very likely that the CPI number will miss and we will see a major relief rally. On the other hand, any upside surprise on the reading will likely bolster the case for a faster tapering of bond purchases and bring forward expectations for interest rate hikes ahead of the U.S. central bank’s policy meeting next week.

“Various FOMC participants, including Chair Powell, have signaled a hawkish shift in their policy stance, catalyzed by increasing discomfort with elevated inflation against a backdrop of robust growth and ongoing strengthening in labor markets conditions,” Morgan Stanley economists and strategists including Ellen Zentner, wrote in a note Thursday. “We revise our Fed call and now expect the FOMC to begin raising rates in Sept. 2022 — two quarters earlier than our prior forecast.”

Discussing today’s key event, the CPI print, DB’s Jim Reid writes that “our US economists are anticipating that headline CPI will rise to +6.9%, which would be the fastest annual pace since 1982. And they see core inflation heading up to +5.1%, which would be the highest since 1990. Bear in mind as well that this is the last big release ahead of next Wednesday’s Federal Reserve decision, where our economists are expecting they’ll double the pace of tapering. Chair Powell himself reinforced those expectations in recent testimony, stopping just shy of unilaterally announcing the faster taper. Crucially, he noted this CPI print and the evolution of the virus were potential roadblocks to a faster taper next week. That said, the bar is extremely high for today’s data print to alter their course, especially with the Covid outlook having not deteriorated markedly since his testimony. By the close last night, Fed funds futures were fully pricing in a rate hike by the June meeting, alongside more than 70% chance of one by the May meeting.”

A reminder that last month saw another bumper print, with the monthly price gain actually at its fastest pace since July 2008, which sent the annual gain up to its highest since 1990, at +6.2%. It also marked the 6th time in the last 8 months that the monthly headline print had been above the consensus estimate on Bloomberg, and in another blow for team transitory, the drivers of inflation were increasingly broad-based, rather than just in a few categories affected by the pandemic. It may have been the death knell for team transitory, with Chair Powell taking pains to retire the term in the aforementioned testimony before Congress.

In Europe, stocks fell slightly as a rise in coronavirus infections, with the Stoxx 600 dropping 0.3%, weighed down the most by tech, health care and utilities. DAX -0.2%, and FTSE 100 little changed, both off worst levels. Meanwhile, an epidemiologist has said that the omicron strain may be spreading faster in England than in South Africa, with U.K. cases possibly exceeding 60,000 a day by Christmas. Banks in the U.K. have already started telling staff to work from home in response to the government’s guidance.  Daimler AG’s trucks division gained in its first trading day as the storied German manufacturer completed a historic spinoff to better face sweeping changes in the auto industry. Polish retailer LPP rose to a record.

Asian stocks fell on worries over the global spread of the omicron virus strain and after China Evergrande and Kaisa Group officially defaulted on their dollar debt. The MSCI Asia Pacific Index lost as much as 0.9%, with healthcare, technology and consumer discretionary sectors being the worst performers. Benchmarks slid in China and Hong Kong after Fitch Ratings cut Evergrande and Kaisa to “restricted default,” with the Hang Seng Index being the region’s biggest loser. Investors remain concerned that the omicron virus strain may crimp the economic rebound. South Korea brought forward the timing for Covid-19 booster shots to just three months after the second dose, as one of Asia’s most-vaccinated countries grapples with its worst ever virus surge. The Kospi snapped a seven-day winning run. Meanwhile, the U.S. appears to be headed for a holiday crisis as virus cases and hospital admissions climb, while London firms started telling thousands of staff to work from home.

“In Europe, restrictions are being put in place, not just in the U.K. but also in other countries, due to the spread of the omicron variant, spurring worry over the impact on the economy,” said Nobuhiko Kuramochi, a market strategist at Mizuho Securities. “If work-from-home practices are prolonged, consumption will become lackluster, delaying any recovery.” Still, the Asian benchmark is up 1.2% from Dec. 3, poised for its best weekly advance in about two months. That’s owing to gains earlier in the week after China’s move to boost liquidity helped restore investor confidence. Traders are now turning focus to U.S. inflation data due later in the day for clues on the pace of anticipated tapering.

China’s central bank took further steps to limit the yuan’s strength — setting the weakest reference rate relative to estimates compiled by Bloomberg since 2018 — a day after policy makers raised the foreign currency reserve requirement ratio for banks a second time this year.

In rates, the Treasury curve bear flattened with 5s30s printing sub-60bps ahead of today’s November CPI data. Bunds and gilts are quiet; Italy leads a broader tightening of peripheral spreads.

In FX, the Bloomberg Dollar Spot Index rises 0.2%, building on modest strength during the Asian session. AUD leads G-10 peers; NZD and SEK are weakest, although ranges are narrow. Demand for euro downside exposure waned this week as investors now focus on the upcoming decisions by the Federal Reserve and the European Central Bank. China’s central bank took further steps to limit the yuan’s strength

In commodities, brent crude is slightly higher on the day, hovering around the $74-level, while WTI climbs 0.6% to $71-a-barrel. Base metals are mixed. LME aluminum and copper rise, while zinc and lead declines. Spot gold drops $4 to $1,771/oz.

Looking at the day ahead now, and the main data highlight will be the aforementioned US CPI reading for November. In addition, there’s the University of Michigan’s preliminary consumer sentiment index for December, UK GDP for October and Italian industrial production for October. Central bank speakers include ECB President Lagarde, along with the ECB’s Weidmann, Villeroy, Panetta and Elderson.

Market Snapshot

  • S&P 500 futures up 0.2% to 4,677.75
  • STOXX Europe 600 down 0.4% to 474.88
  • MXAP down 0.8% to 193.90
  • MXAPJ down 0.8% to 632.63
  • Nikkei down 1.0% to 28,437.77
  • Topix down 0.8% to 1,975.48
  • Hang Seng Index down 1.1% to 23,995.72
  • Shanghai Composite down 0.2% to 3,666.35
  • Sensex little changed at 58,799.05
  • Australia S&P/ASX 200 down 0.4% to 7,353.51
  • Kospi down 0.6% to 3,010.23
  • Brent Futures up 0.4% to $74.69/bbl
  • Gold spot down 0.3% to $1,770.81
  • U.S. Dollar Index little changed at 96.32
  • German 10Y yield little changed at -0.34%
  • Euro down 0.1% to $1.1281

Top Overnight News from Bloomberg

  • Already fighting economic fires on a number of fronts, China is rushing to clamp down on speculation in its strengthening currency before it gets out of control
  • The arrival of the omicron variant has triggered a global rush for booster shots, but questions remain over whether it is the right strategy against omicron
  • The Biden administration aims to sign what could prove a “very powerful” economic framework agreement with Asian nations — focusing on areas including coordination on supply chains, export controls and standards for artificial intelligence — next year, Commerce Secretary Gina Raimondo said
  • A mouse bite is at the center of an investigation into a possible new Covid-19 outbreak in Taiwan, after a worker at a high-security laboratory was confirmed as the island’s first local case in more than a month

A more detailed look at global markets courtesy of Newsquawk

Asia-Pac stocks were on the back foot as the region took its cue from the weak performance in the US, where the major indices reversed recent upside in the run-up to today’s US CPI metric. The ASX 200 (-0.4%) was led lower by the underperformance in energy and tech after a retreat in oil prices and similar weakness of their counterpart sectors in US. The Nikkei 225 (-1.0%) remained lacklustre as it succumbed to the recent inflows into the currency, although the downside was stemmed as participants digested a record increase in wholesale prices. The Hang Seng (-1.0%) and Shanghai Comp. (-0.2%) were hindered by several headwinds including lower-than-expected lending and aggregate financing data, as well as China’s latest internet crackdown in which it removed 106 apps from app stores. However, losses were contained by a softer currency after China’s efforts to curb RMB strength including the PBoC’s 200bps FX RRR hike yesterday and its overnight weakening of the reference rate by the widest margin against estimates on record. Finally, 10yr JGBs were quiet after the mixed performance in US fixed income markets and with the risk-averse mood counterbalanced by the lack of BoJ purchases in the market today, although later saw a bout of selling on a breakdown of support at the key 152.00 level.

Top Asian News

  • Evergrande’s Hui Forced to Sell Part of Stake in Defaulted Firm
  • Hui Has 277.8m Evergrande Shares Sold Under Enforced Disposal
  • Asia Stocks Fall on Renewed Concerns Over Evergrande and Omicron
  • Gold Heads for Worst Weekly Run Since 2019 Before Inflation Data

Cash bourses in Europe kicked off the session with modest losses across the board, but the region has been clambering off worst levels since (Euro Stoxx 50 -0.3%; Stoxx 600 -0.3%) as traders gear up for the US CPI release (full preview available on the Newsquawk headline feed). US equity futures meanwhile post modest broad-based gains across the ES (+0.3%), NQ (+0.3%), RTY (+0.4) and YM (+0.2%). Back to Europe, cash markets see broad but contained downside. Sectors are mixed with no overarching theme or bias. Tech resides at the foot of the bunch with heavyweight SAP (-0.2%) failing to garner impetus from Oracle’s (+11% pre-market) blockbuster earnings after beating expectations on the top and bottom lines and announcing a new USD 10bln stock-repurchase authorisation. The upside meanwhile sees some of the more inflation-related sectors, including Oil & Gas, auto, Goods, Foods, and Beverages. In terms of individual movers, Bayer (+1.8%) is firmer after the Co. won a second consecutive trial in California regarding its Roundup weed killer. Daimler (-15%) sits at the foot of the Stoxx 600 after spinning off its Daimler Trucks unit (+4%) – considered to be a market listing rather than a full initial public offering.

Top European News

  • Heathrow Offers Bleak Outlook as Omicron Halts Long-Haul Rebound
  • HSBC, JPMorgan, Deutsche Bank Tell London Staff to Stay Home
  • SocGen CEO Takes Over Compliance After $2.6 Billion Fines
  • Santander AM Names Utrera as Head of Equities as Montero Exits

In FX, not a lot of deviation from recent ranges, but the Greenback is grinding higher ahead of US inflation data and Treasuries are bear-steepening to suggest hedging or positioning for an upside surprise following pointers from President Biden and NEC Director Deese to that effect (both advising that recent declines in prices, including energy, will not be reflected in November’s metrics). The index is back above the 96.000 level that has been very pivotal so far this week and hovering near the upper end of a 96.429-157 range, while the benchmark 10 year T-note yield is holding above 1.50% after a so-so long bond auction to wrap up the latest refunding remit.

  • NZD/JPY/GBP – It’s marginal, but the Kiwi, Yen and Pound are lagging behind in the G10 stakes, with Nzd/Usd back below 0.6800 and perhaps taking note of a marked slowdown in the manufacturing PMI to 50.6 in November from 54.3, while Usd/Jpy is straddling 113.50 and eyeing DMAs either side of the half round number and Cable remains choppy around 1.3200 in wake of UK GDP, ip and output all missing consensus.
  • AUD/CAD/EUR/CHF – All a tad more narrowly divergent vs the Buck, and the Aussie managing to keep tabs on 0.7150 after outperformance post-RBA on mainly external and technical impulses. Elsewhere, the Loonie has limited losses through 1.2700 with some assistance from hawkish sounding commentary from BoC Deputy Governor Gravelle rather than choppy crude prices as WTI swings around Usd 71/brl. To recap, he said that concerns over inflation are heightened on the upside much more than usual and the BoC is likely to react a little bit more readily to the upside risk given that inflation is already above the control range. Elsewhere, the Euro continues to fade on advances beyond 1.1300 and hit resistance at or near the 21 DMA and the Franc is more attuned to yields than risk sentiment at present, like the Yen, though is outpacing the Euro, as Eur/Chf veers towards 1.0400 again and Usd/Chf sits closer to 0.9250 vs 0.9200.

In commodities, WTI and Brent front-month futures have been edging higher in early European trade following a choppy APAC session and in the run-up today’s main event, the US inflation data. Currently, WTI Jan trades just under USD 71.50/bbl (vs low USD 70.32/bbl) while Brent Feb resides north of USD 74.50/bbl (vs low USD 73.80/bbl), with news flow also on the lighter side ahead of the tier 1 data. In terms of other macro events, sources suggested Iran is willing to work from the basis of texts created in June on nuclear discussions, which will now be put to the test in upcoming days, via a European diplomatic source. This would mark somewhat of a shift from reports last week which suggested that Iran took a tougher stance than it had back in June. Western diplomats last week suggested that Tehran ramped up their conditions, which resulted in talks stalling last Friday. Aside from that, relevant news flow has been light for the complex. Elsewhere, spot gold and silver are drifting lower in tandem gains in the Dollar – spot gold has dipped under USD 1,770/oz, with the current YTD low at 1,676/oz. LME copper holds its head above USD 9,500/t but within a tight range amid the overall indecisive mood across the markets.

US Event Calendar

  • 8:30am: Nov. CPI YoY, est. 6.8%, prior 6.2%; MoM, est. 0.7%, prior 0.9%
  • 8:30am: Nov. CPI Ex Food and Energy YoY, est. 4.9%, prior 4.6%; MoM, est. 0.5%, prior 0.6%
  • 8:30am: Nov. Real Avg Hourly Earning YoY, prior -1.2%, revised -1.3%
    • Real Avg Weekly Earnings YoY, prior -1.6%
  • 10am: Dec. U. of Mich. 1 Yr Inflation, est. 5.0%, prior 4.9%; 5-10 Yr Inflation, prior 3.0%
    • Sentiment, est. 68.0, prior 67.4
    • Expectations, est. 62.5, prior 63.5
  • Current Conditions, est. 73.5, prior 73.6

DB’s Jim Reid concludes the overnight wrap

I’m sure if anyone had said to you at the start of 2021 that US CPI would end the year around 7% YoY then there may have been some sleepless nights about how to position your portfolio. The reality is that as inflation has risen, the market has managed to go through denial, transitory, elongated transitory, and now the retirement of transitory, all without much fuss. I’ve said this before but I doubt there is anyone in the world that predicted we’d end the year at near 7% whilst at the same time having 10yr UST yields still at around 1.5%.

Today our US economists are anticipating that headline CPI will rise to +6.9%, which would be the fastest annual pace since 1982. And they see core inflation heading up to +5.1%, which would be the highest since 1990. Bear in mind as well that this is the last big release ahead of next Wednesday’s Federal Reserve decision, where our economists are expecting they’ll double the pace of tapering. Chair Powell himself reinforced those expectations in recent testimony, stopping just shy of unilaterally announcing the faster taper. Crucially, he noted this CPI print and the evolution of the virus were potential roadblocks to a faster taper next week. That said, the bar is extremely high for today’s data print to alter their course, especially with the Covid outlook having not deteriorated markedly since his testimony. By the close last night, Fed funds futures were fully pricing in a rate hike by the June meeting, alongside more than 70% chance of one by the May meeting.

A reminder that last month saw another bumper print, with the monthly price gain actually at its fastest pace since July 2008, which sent the annual gain up to its highest since 1990, at +6.2%. It also marked the 6th time in the last 8 months that the monthly headline print had been above the consensus estimate on Bloomberg, and in another blow for team transitory, the drivers of inflation were increasingly broad-based, rather than just in a few categories affected by the pandemic. It may have been the death knell for team transitory, with Chair Powell taking pains to retire the term in the aforementioned testimony before Congress.

Ahead of this, markets were in slightly subdued mood yesterday as the reality of the new Omicron restrictions in various places soured the mood. Even as the news on Omicron’s severity has remained positive, concern is still elevated that this good news on severity could be outweighed by a rise in transmissibility, which ultimately would lead to a higher absolute number of both infections and hospitalisations. Even if it doesn’t, it seems restrictions are mounting while we wait and see.

In response, US equities and oil prices fell back for the first time this week, as did 10yr Treasury yields. The S&P 500 (-0.72%) and the STOXX 600 (-0.08%) fell, whilst the VIX index of volatility ticked back up +1.73pts to move above the 20 mark again. Tech stocks underperformed in a reversal of the previous session, with the NASDAQ down -1.71%, and the small-cap Russell 2000 seeing a hefty -2.27% decline, as it moved lower throughout the day. Other risk assets saw similar declines too, with Brent crude (-1.85%) and WTI (-1.96%) oil prices both paring back their gains of the week so far.

The move out of risk benefited safe havens, with sovereign bond yields moving lower across the curve, with those on 10yr Treasuries down -2.2bps to 1.50%. Those moves were echoed in Europe, where yields on 10yr bunds (-4.3bps), OATs (-4.5bps) and BTPs (-2.9bps) fell back as well. That came against the backdrop of a Reuters report saying ECB governors would discuss a temporary increase in the Asset Purchase Programme at their meeting next week, albeit one that would still leave bond purchases significantly beneath their current levels once the Pandemic Emergency Purchase Programme ends in March.

Bitcoin fell -5.21% to $47,997 and is now more than -29% below its all-time highs reached a month ago. Marion Laboure from my team published a piece analysing the interaction between Bitcoin and the environment given its huge energy consumption. You can find the piece here.

Ahead of today’s US CPI, there was another round of robust labour market data, with the US weekly initial jobless claims down to 184k (vs. 220k expected) in the week through December 4, marking their lowest level since 1969. The 4-week moving average was also down to a fresh post-pandemic low of 218.75k, having fallen for 9 consecutive weeks now. So with the labour market becoming increasingly tight and price pressures continuing to remain strong, it’s no surprise that markets have moved over the last year from pricing no hikes at all in 2022 to almost 3.

Overnight in Asia, equities are all trading in the red with the Shanghai Composite (-0.32%), Hang Seng (-0.50%), Nikkei (-0.58%), CSI (-0.62%) and KOSPI (-0.67%) tracking the weaker US close last night after a three day rally. This comes after Chinese real-estate firms Evergrande Group and Kaisa Group were downgraded to restricted default by Fitch Ratings. Elsewhere in Japan, November’s PPI reading came in at the highest level since 1980 at +9.0% year-on-year against +8.5% consensus due largely to rising energy prices. Our Japan economist expects CPI rising above 1% next year to be one of the ten key events to watch in 2022. You can read more here. Staying on Japan, the ruling party today will unveil a set of tax policy measures aimed at incentivising businesses to raise wages as Prime Minister Fumio Kishida aims to deliver on campaigning promises. Futures are pointing to a slightly more positive start in the US with S&P 500 futures (+0.10%) trading higher but with DAX futures (-0.24%) catching down to the weaker US close.

Out of DC, the Senate approved a one-time procedural measure that will allow them to raise the debt ceiling with a simple majority vote, ostensibly in the coming days, and hopefully for a longer period than the last six-week suspension. Yields on potentially at-risk Treasury bills are at similar levels to neighboring maturities.

In terms of the latest on the pandemic, yesterday didn’t see any news of major significance, with the indicators mainly confirming what we already knew. In particular, the EU’s ECDC continued to say that among the 402 confirmed Omicron cases in the EU/EEA, all the cases with known severity were either asymptomatic or mild, with no deaths reported. So positive news for now, although it’ll be very important to keep an eye with what happens with hospitalisations in South Africa, which are continuing to rise, and the country also reported another 22,391 cases yesterday, which is once again the highest number since the Omicron variant was first reported. Separately, the US FDA moved yesterday to expand the eligibility of the Pfizer-BioNTech booster to 16 and 17 year olds.

To the day ahead now, and the main data highlight will be the aforementioned US CPI reading for November. In addition, there’s the University of Michigan’s preliminary consumer sentiment index for December, UK GDP for October and Italian industrial production for October. Central bank speakers include ECB President Lagarde, along with the ECB’s Weidmann, Villeroy, Panetta and Elderson.

Tyler Durden
Fri, 12/10/2021 – 07:50

via ZeroHedge News https://ift.tt/31JoOpz Tyler Durden

Elon Musk Tweets He’s “Thinking Of Quitting His Jobs”

Elon Musk Tweets He’s “Thinking Of Quitting His Jobs”

While many would say that Elon Musk’s behavior on Twitter could be written off as trolling or joking, we’d like to remind you that the CEO just sold about $10 billion worth of stock in a month’s time after the unofficial results of a Twitter poll suggested that he do so.

Which is why we can’t help but at least pay a little attention to the fact that Musk Tweeted last night that he was “thinking of quitting” his jobs to “become a full time influencer”. 

[What do you think?], Musk asked his followers after suggesting the idea.

Musk currently holds leadership positions at Tesla, SpaceX, Neuralink and The Boring Company. 

Reuters notes that earlier this year, Musk also alluded to the potential idea of stepping down from his role(s). Musk also recently announced that he wouldn’t be appearing on Tesla conference calls all the time. 

“It would be nice to have a bit more free time on my hands as opposed to just working day and night, from when I wake up to when I go to sleep 7 days a week. Pretty intense,” he said on a January conference call. 

Later in the evening on Thursday night into Friday morning, Musk also Tweeted “no violins4me” and “i cum in peace”. 

It must have been some night at the Musk household…

Tyler Durden
Fri, 12/10/2021 – 05:47

via ZeroHedge News https://ift.tt/3GrFVey Tyler Durden