Month: August 2023

Anheuser-Busch InBev shares are up as much as 3% in New York during premarket trading Thursday after profit growth beat analysts’ expectations despite a slide in the US market following the Bud Light marketing fiasco with transgender social media influencer Dylan Mulvaney. 

The world’s largest brewer reported earnings for the second quarter that gained more than 20% in Brazil, China, and Colombia, which offset a massive 28% plunge in the US market. AB InBev maintained its profit guidance for the year. 

The weakness in the US market was “primarily due to the volume decline of Bud Light,” the brewer pointed out. Bud Light’s partnership in early April with Mulvaney sparked a nationwide boycott of the beer. 

AB InBev, which also manufactures Budweiser, Corona, and Stella Artois, reported revenues increasing 7.2%, beating a company-provided market consensus of 6.4%. 
“Given Bud Light’s travails this is an impressive demonstration of AB InBev’s resilience and diversification . . . we believe that the share price has overreacted to the Bud Light situation,” RBC Capital Markets analysts wrote in a note to clients. 

“We consider this to be a better result than had been feared,” wrote Investec analyst Alicia Forry. She added, “The unchanged full-year outlook is also positive.” 

Rivals have been benefiting from Bud Light’s demise. In June, Constellation Brands Inc. reported revenue that exceeded analysts’ expectations after its Modelo brand was crowned the bestselling US beer. On Tuesday, Miller Lite maker Molson Coors Beverage Co. recorded record sales. Bloomberg Intelligence analyst Duncan Fox noted that one-third of AB InBev’s profit last year was from North America. 

Moving forward, AB InBev maintains its forecast for 2023, forecasting Ebitda growth to be in line with its medium-term outlook of between 4% and 8%. The brewer also expects revenue to outpace Ebitda from a combination of volume and price. 

Royal Bank of Canada Analysts said they were “pleasantly surprised” today despite no recovery in sight for Bud Light. 

AB InBev shares were up 3% in the premarket hours. 

The earnings report highlights the importance of AB InBev’s diverse portfolio to remain resilient amid the demise of Bud Light. 

By Trucking News

Truck freight volume and spending in the second quarter of 2023 declined by the highest levels since the early days of the pandemic, the latest U.S. Bank Freight Payment Index revealed. Spending by shippers dropped 10.9% compared to the second quarter of 2022 while shipment volume dropped 9%, according to a statement from the Minneapolis-based bank.

“Trucking is in the midst of a significant slowdown,” said Bob Costello, senior vice president and chief economist at the American Trucking Associations.

“Weaker consumer demand for goods and a slowdown in manufacturing activity and housing starts are having a major impact on the industry – especially carrier operations.”

Nationwide shipment levels have now decreased for five consecutive quarters. In the second quarter, volume dropped most in the Northeast (27.1%) and Southeast (12.6%) year-over-year. The Southwest continued to be a bright spot, with shipments increasing 14.8%.

“In the spot market, we’ve been observing for a while sharp spending drops caused by lower volumes and increased capacity. This trend has now solidly penetrated the contract freight market,” said Bobby Holland, director of freight business analytics, U.S. Bank.

“Nearly every category we track – both nationwide and regionally – contracted in the second quarter.”

The Midwest region had the sharpest spending drop in the second quarter, 18.7% year-over-year. The Northeast and West also experienced double-digit spending declines, dropping 10.9% and 10.2%, respectively versus the second quarter of 2022.

The bank’s regional data found:

• West: Truck freight continued to struggle in the West region as port activity and housing starts there continued to slow. This is the lowest point for shipments in the West in three years.

• Southwest: Continuing to outperform other regions, the Southwest’s volume is benefiting from increased truck-transported trade with Mexico. The 14.8% year-over-year increase in shipments is the highest since 2018.

• Midwest: Continued slowdowns in manufacturing likely led to year-over-year shipments dropping by the largest level in the region since Q4 2021. Yearly spending also dropped by the largest amount since Q2 2020.

• Northeast: The 27.1% volume contraction is the largest in the history of the Freight Payment Index. The region faces multiple headwinds, including low housing starts. However, the contraction in household consumption likely had the biggest impact for this populated area.

• Southeast: Even though shipments contracted 12.6% year over year and slightly on a linked quarter basis, this was an improvement for the region. In the first quarter, shipments fell 16.1% year over year and 10.1% on a linked quarter basis.

Truck freight spending levels have now contracted year-over-year for two consecutive quarters. With spending at all-time high levels for the preceding six quarters, the recent drops brought spending activity back to its relatively strong levels of mid-2021.

In never-before-seen footage that was withheld by Fox News, former Capitol Police Chief Steven Sund told former Fox News host Tucker Carlson that January 6th was a complete debacle and a “cover up.”

“Everything appears to be a cover up,” Sund tells Carlson in footage obtained by the National Pulse. “Like I said, I’m not a conspiracy theorist,” he continued. “…but when you look at the information and intelligence they had, the military had, it’s all watered down. I’m not getting intelligence, I’m denied any support from National Guard in advance. I’m denied National Guard while we’re under attack, for 71 minutes…“

Beginning around 19 minutes into the conversation, Sund tells Tucker: “If I was allowed to do my job as the chief we wouldn’t be here, this didn’t have to happen,” adding that he’s “pissed off” about being “lambasted in public” over what happened that day.

The full interview has thus far been hidden from the public at the behest of Rupert Murdoch’s increasingly left-wing Fox News channel, which unceremoniously fired its prime time host Tucker Carlson allegedly as part of a private settlement with Dominion Voting Systems. -National Pulse

“It sounds like they were hiding the intelligence,” Carlson said, to which Sund responds: “Could there possibly be actually… they kind of wanted something to happen? It’s not a far stretch to begin to think that. It’s sad when you start putting everything together and thinking about the way this played out… what was their end goal?”

On the day he was fired, @TuckerCarlson was planning to air parts of our 1-hour interview and showcase my book. It was an interview he was excited about and said it “made the hair on my arm stand up.” But Fox canned both Tucker and the interview. Coincidence? pic.twitter.com/QA9jdfFjsb

— Chief Steven Sund (@ChiefSund) May 5, 2023

Last month Carlson told Russell Brand that Sund said the crowd on January 6th was ‘filled with federal agents.’

“I interviewed the chief of the Capitol Police, Steven Sund, in an interview that was never aired on Fox, by the way — I was fired before it could air, I’m gonna interview him again,” Carlson said.

“But Steven Sund was the totally non-political, worked for Nancy Pelosi, I mean, this was not some right-wing activist. He was the chief of Capitol Police on January 6, and he said, ‘Oh yeah, yeah, yeah, that crowd was filled with federal agents.’ What? ‘Yes.’ Well he would know, of course, because he was in charge of security at the site.”

“So, the more time has passed… it becomes really obvious that core claims they made about January 6 were lies,” Carlson explained.

“The amount of lying around January 6, and it was obvious in the tapes that I showed, is really distressing.”

Watch:

Tucker Carlson BLOWS The Doors Off January 6th LIES.

Reveals Fox News REFUSED To Air His J6 Interview Of Capitol Chief Of Police PROVING “The US Capitol Was FILLED With Federal Agents”

Tucker Describes Fox Execs Attacking him For J6 Report: “F**k You!”

Narrative Collapse. Wow pic.twitter.com/30UijETvNq

— Benny Johnson (@bennyjohnson) July 7, 2023

By Stefan Koopman, Senior Macro Strategist at Rabobank

While most agree the US credit downgrade by Fitch will have limited real-world impact, it did serve as a reminder of the frankly unhinged state of US fiscal policy. According to the Congressional Budget Office, the federal deficit equals 5.8% of GDP in 2023, only declining to 5.0% of GDP by 2027 before growing steadily to reach 10.0% of GDP in 2053. The clear risk that a fiscal course correction has to be made someday caused equity investors to ‘swipe left’. The European Stoxx 600 closed down 1.6% – its largest drop in a month – and the S&P 500 slid 1.4% as well. The Nasdaq tumbled by 2.2%. The July rally had forced shorts to cover and brought in some reluctant recession-fearing buyers, leaving risky assets fragile.

The sell-off makes sense as an instinctive reaction, even if the downgrade does not change the practical value of US Treasuries. It is still a reserve asset that (eventually) pays you a coupon and hands back your notional, it has an investment proposition if you see yields falling, and it is very useful collateral. Give or take a few basis points, UST yields were essentially unchanged after the Fitch slap on the wrist. Indeed, bond investors only started to swipe left after the Treasury’s quarterly refunding announcement of higher-than-expected issuance. 10-year USTs are now trading at 4.13% – some 15bps higher than earlier this week and a 2023 high. The dollar appreciated to 1.093 versus the euro reflecting yesterday’s broader risk off sentiment.

The Bank of Japan came into the market for the second time this week, sending a signal that its tolerance for higher bond yields has limits. It remains vague what exactly the Bank of Japan was attempting to signal by its change to YCC last week, but its actions make clear that it won’t tolerate a rapid move to the new 1% upper limit. The yen weakened a bit and now trades at 143.6 versus the dollar.

We explained yesterday why we tend to swipe left whenever the ADP survey shows up on our screens, but given that it was the only data release of the day and that it added to the bond sell-off, we’re going to give it the benefit of the doubt. The survey showed a higher-than-expected 324k rise in employment in July, well above the 200k consensus expectation for tomorrow’s official payroll figures. The job gains were boosted by an astonishing 201k rise in leisure and hospitality. This is also where we find the largest discrepancy between the latest couple of ADP and NFP reports, possibly due to differences in seasonal adjustment.

Now let’s make a short segue into the world of regulation (… sorry, now please don’t swipe left on me!). The UK government’s announcement to indefinitely extend the use of the EU’s CE safety marking, instead of requiring businesses to adopt the UK-specific UKCA system, again swiping left on Brexit’s core rationale. This seemingly mundane decision indicates continued alignment with EU standards, since CE compliance requires adhering to EU regulations. Even though UKCA isn’t abandoned, in practice it will mean that when a British firm only thinks about exporting something, it will seek to conform to EU standards and update these when the EU does.

The decision highlights three key implications.

1. The sudden rush to the exit and the absolutist interpretation of “sovereignty” have created real costs and real inefficiencies for UK businesses, which constrained their supply capacity and contributed to higher inflation.

2. Despite the “take back control” rhetoric, the UK finds itself forced to align with the EU in practical terms given their economic interdependence – a concept at the heart of Anu Bradford’s “Brussels Effect” theory. This was a live test of that theory, and the government has now recognized that pure sovereignty provides less control than having a seat at the table.

3. It casts doubt on the UK’s planned regulatory controls on EU agri-food imports. This is a can that reportedly will be kicked down the road once again. High food inflation and a lack of political benefit of making the life of voters even more difficult are two key reasons. Even when controls are introduced at some point in the (distant?) future, limited infrastructure and lack of political will to invest in staff, scanners and structures suggest minimal real enforcement.

Equity markets appear to finally be starting to react to the move in bonds with 10Y yields at their highest level since November 2022…

Source: Bloomberg

Most notably, the correlation of changes in the the S&P 500 relative to 10Y yields has dropped to its most negative ever…

Source: Bloomberg

And while rates have been moving higher recently, hedge fund manager Bill Ackman is still surprised that they are not a lot higher.

In his ubiquitously long tweet thread, he explains that he is short Treasuries (as both a hedge on long-duration stocks – think about the correlation above – and as a standalone bet that yields go higher, prices of bonds lower): (emphasis ours)

I have been surprised how low US long-term rates have remained in light of structural changes that are likely to lead to higher levels of long-term inflation including de-globalization, higher defense costs, the energy transition, growing entitlements, and the greater bargaining power of workers. As a result, I would be very surprised if we don’t find ourselves in a world with persistent ~3% inflation.

From a supply/demand perspective, long-term Treasurys (T) also look overbought. With $32 trillion of debt and large deficits as far as the eye can see and higher refi rates, an increasing supply of T is assured. When you couple new issuance with QT, it is hard to imagine how the market absorbs such a large increase in supply without materially higher rates.

I have also been puzzled as to why the @USTreasury hasn’t been financing our government in the longer part of the curve in light of materially lower long-term rates. This does not look like prudent term management in my opinion.

Then consider China’s (and other countries’) desire to decouple financially from the US, YCC ending in Japan increasing the relative appeal of Yen bonds vs. T for the largest foreign owner of T, and growing concerns about US governance, fiscal responsibility, and political divisiveness recently referenced in Fitch’s downgrade.

So if long-term inflation is 3% instead of 2% and history holds, then we could see the 30-year T yield = 3% + 0.5% (the real rate) + 2% (term premium) or 5.5%, and it can happen soon.

There are many times in history where the bond market reprices the long end of the curve in a matter of weeks, and this seems like one of those times.  

That’s why we are short in size the 30-year T — first as a hedge on the impact of higher LT rates on stocks, and second because we believe it is a high probability standalone bet.

There are few macro investments that still offer reasonably probable asymmetric payoffs and this is one of them.

The best hedges are the ones you would invest in anyway even if you didn’t need the hedge.  This fits that bill, and also I think we need the hedge.

We do note that Ackman later qualified his ‘short’ Treasury position is in fact in options:

We implement these hedges by purchasing options rather than shorting bonds outright. This makes it easier to sleep at night as it makes your downside finite. Our sleep-at-night test’ is a critical risk management tool.

But, on the other side of the fence, Warren Buffett came out this morning, shrugging off Fitch’s USA downgrade, confirming that Berkshire Hathaway is still buying $10 billion in Treasuries every Monday.

“There are some things people shouldn’t worry about,” he told CNBC’s Becky Quick.

“This is one.”

That’s quite cash haul…

It appears Buffett still thinks the US equity market is too expensive…

Source: Bloomberg

So to summarize – the bond-stock-relationship regime has never been this extremely decoupled; Ackman is shorting bonds as a hedge on high-flying (long duration) stocks; and Buffett is buying bonds (because stocks are too expensive still).

Does that sound like a stock market that mom-and-pop should be piling their hard-earned retirement savings into?

Authored by Jonathan Turley,

President Joe Biden has been a regular recipient of “Pinocchios” by the Washington Post for his false statements on subjects ranging from election laws to abortion protections to deficit reduction. 

Biden is undeterred and regularly repeats false stories from his life that have ranged from an invented arrest with Nelson Mandela to a zombie-like train conductor. Undeterred, this week he continued with the false claim about the “Joey, Baby” conductor.

Now, the President has a fresh set of “Four Pinocchios,” but the false claim is far more serious than inventing a conductor or rewriting the history of the Second Amendment. 

The Post is admitting that Biden has been lying about how his son Hunter never made money from China. It is the latest indication that the protective media wall surrounding Biden is beginning to crumble under the weight of new evidence in the corruption scandal.

Glenn Kessler wrote yesterday that Biden has repeatedly and categorically maintained that his son did not receive money from China.

“But now, nearly three years later, Biden’s assertions have been directly rebutted by Hunter himself. In court testimony last week, the younger Biden acknowledged that he in fact had been paid substantial sums in China — the first official confirmation that this was the case.”

What is curious is that Kessler and the Post waited for Hunter to effectively confess rather than take notice of money transfers and records released by House committees investigating the corruption scandal. The Post and most of the media have taken little observable journalistic interest in independently confirming such payments or benefits. Instead, the media has adopted a largely passive stance and waited for confessions rather than find confirmation.

Nevertheless, as with the laptop, there is some credit to be given for eventually confirming what has long been known.

Kessler noted that these dealings overlapped with the President’s travels and meetings:

“Twelve days after he flew to Beijing, Hunter Biden joined the board of a just-formed investment advisory firm known as BHR (Bohai, Harvest and Rosemont), whose partners included Chinese entities, including the man he introduced to his father. Separately, after Joe Biden left public office, Hunter Biden in 2017 inked a deal with CEFC China Energy, a Chinese energy conglomerate. The Washington Post reported last year that documents, including emails found on a Hunter Biden laptop that emerged during the final weeks of the 2020 presidential campaign, showed that over the course of 14 months, the CEFC and its executives paid $4.8 million to entities controlled by Hunter Biden and President Biden’s brother, James.”

Nevertheless, the Post emphasized that it “did not find evidence that Joe Biden personally benefited from or knew details about the transactions with CEFC.” Of course, the Post has not been known to be particularly active in independently trying to confirm such benefits . . . absent another Biden admission or confession.

As with the clearly false claims that he had no knowledge or involvement in these dealings, the question is now not whether Joe Biden has been lying but why he has been lying.

Despite Manufacturing surveys showing the sector in contraction, US Factory Orders jumped 2.3% MoM in June (as expected), the biggest MoM jump since January 2021…

Source: Bloomberg

However, despite the bounce, on a year-over-year basis, orders remain down 0.2%.

Removing the volatile Transportation sector, core factory orders rose only 0.23% MoM (though that did break a 4 month down streak)…

Source: Bloomberg

And left core factory orders down around 5% YoY – a drop we last saw at the start of the COVID lockdowns.

Soft-landing, maybe? But core looks more like more of the same decline.

As of late Wednesday (US time) the State Department ordered a partial evacuation of the American embassy in Niamey, the capital of Niger. This after European-led efforts to fly EU citizens from the capital were already well underway.

The State Department said non-emergency personnel and eligible family members would leave the country “given ongoing developments” and “out of an abundance of caution” amid the unrest following last Friday’s military coup, which saw President Mohamed Bazoum get overthrown by his own presidential guard. 

“The U.S. is committed to our relationship with the people of Niger. The embassy remains open, and our leaders are diplomatically engaged at the highest levels,” Secretary of State Antony Blinken announced. Senior officials will still be working from the embassy, which has remained functioning. 

“Commercial flight options are limited.  We updated our travel advisory to reflect this and informed U.S. citizens that we are only able to provide emergency assistance to U.S. citizens in Niger given our reduced personnel,” the statement said, also as France is leading evac flights for EU citizens seeking exit from the country.

Reportedly, hundreds of Americans have already been evacuated, and over 1,000 European Union citizens as well, as the flights out of the capital continue. France on Thursday announced the completion of its large-scale evacuations.

Meanwhile, in fresh statements President Joe Biden has urged the junta leaders to restore the democratically-elected government.

“I call for President Bazoum and his family to be immediately released, and for the preservation of Niger’s hard-earned democracy,” Biden said. “The Nigerien people have the right to choose their leaders,” the US president said. “They have expressed their will through free and fair elections — and that must be respected.”

Ironically Biden’s plea to release and restore Bazoum came on the 63rd anniversary of Niger’s independence. His words also came amid rumors of possible French military intervention. There are hundreds of Western troops in the country, especially from France and the US, who were ostensibly there for ‘counterterror’ operations.

But the presence of Western bases in Niger might not last long under the junta, given ‘anti-imperialist’ nature of coup supporters in the streets has been amply demonstrated by their waving Russian flags. Also, the Russian mercenary group Wagner is just next door in Mali. From the West’s perspective, looming large in the background is expanding Russian influence in Africa.

Just in: @PentagonPresSec confirms there are no changes to the 1,100 US troops still stationed in Niger, and the U.S. military will not take part in the ordered evacuation of embassy personnel. pic.twitter.com/BbwHODC3YK

— Lara Seligman (@laraseligman) August 3, 2023

Coup leader Gen Abdourahamane Tchiani is continuing to warned against “any interference in the internal affairs” of Niger, while alleging the now exiled government has been plotting with the French to allow some kind of intervention. This also as US Secretary of State Antony Blinken on Wednesday spoke to ousted President Mohamed Bazoum on Wednesday, and other international leaders have been in contact.