Bitcoin Tops $57,000 As ETF Inflows Soar, Ethereum Bigger Than ASML & Samsung

Bitcoin Tops $57,000 As ETF Inflows Soar, Ethereum Bigger Than ASML & Samsung

Since the launch of spot bitcoin ETFs – much to the chagrin of Gensler, Warren et al. – over $6BN of net inflows have been invested into the various vehicles (while Gold ETFs have seen almost $3BN of net outflows)…

The last few days have also seen outflows from the legacy GBTC slow to a trickle with yesterday’s net inflow over $500 million

Source: Bloomberg

Volumes have been relatively stable but we do note that volumes are switching from fund to fund. Last week we saw a surge in volumes in HODL and as Bloomberg’s ETF guru, Eric Balchunas (@EricBalchunas) points out, this week has seen a rising interesting in IBIT:

Another thing about $IBIT volume that’s notable is the amt of pre-market activity..

check this out, it’s already seen $80m traded… only 5 ETFs have seen more activity ahead of mkt open. Unprecedented for 2mo-old ETF.

$BITO in 9th place makes me think lot of arb volume going on.”

This has all helped push bitcoin back above $57,000 for the first time since Nov 2021…

Source: Bloomberg

Ethereum has actually been outperforming bitcoin in recent days but after tagging the ETF launch spike highs, its is relatively underperforming today…

Source: Bloomberg

In fact, as CoinTelegraph reports, Bitcoin short sellers are nursing millions in losses after Bitcoin rocketed upward by nearly 11% to briefly notch a new yearly high of $57,000.

According to data from crypto data platform CoinGlass, over $161 million in BTC shorts were liquidated in the last 24 hours. Traders looking to gain short exposure to Ethereum didn’t fare much better, with liquidations reaching almost $44 million within the same timeframe. More than $268 million in short positions were liquidated as Bitcoin briefly touched $57,000.

More than $270 million in short positions were liquidated in total as the market spiked upward.

In a statement to Cointelegraph, Swyftx lead analyst Pav Hundal described the crypto market as being “on fire right now.”

“We’re at average per-person trade volumes in retail that we last witnessed at the top of the last bull run in November 2021, plus institutional buying pressure is immense,” he said.

“Exchange Traded Funds alone are cannibalizing close to a quarter of the Bitcoin that is currently being produced by the network,” Hundal added.

Tyler Winklevoss, co-founder of United States-based crypto exchange Gemini, offered succinctly, “We’re so back!” while outspoken BTC bull Dan Held said today’s price action marked “the beginning of the Bitcoin bull run.”

And ethereum up near $3300 for the first time since April 2022…

Source: Bloomberg

Options traders appeared to be anticipating some upward movement in ETH…

This surge in price has pushed bitcoin above $1.1 trillion in market cap (bigger than Berkshire Hathaway and almopst as large as Meta) and ethereum

Source: 8marketcap.com

And overall, the combined value of the cryptocurrency market has jumped to around $2 trillion for the first time in almost two years on the back of the ETF-fueled rally in Bitcoin.

Source: Bloomberg

“Bullish momentum in crypto is unfolding despite an uptick in rates,” Fundstrat Global Advisors Head of Digital-Asset Strategy Sean Farrell wrote in a note.

“We do not expect a major pullback from Bitcoin given its breakout and positive intermediate-term momentum,” Katie Stockton, founder of Fairlead Strategies, wrote in a note.

Finally, SpotGamma made an interesting observation. Big BTC days appears to be correlated to positive equity returns. Here are the forward 5 day SPX returns after times where prior 1 day BTC returns are +3%…

As Bloomberg reports, the massive inflows into Bitcoin ETFs have prompted some industry watchers to warn of a looming supply squeeze as miners fail to generate enough coins to keep up with demand. Some 80% if Bitcoin’s supply hasn’t changed hands in the past six months, potentially exacerbating the squeeze and adding to the upward price pressure, according to Julius Baer digital-assets analyst Manuel Villegas.

After the token’s so-called halving in April — where the block reward for miners will shrink to 3.125 Bitcoin from 6.25 Bitcoin — overall supply will fall further and the shortage “would reach aggravated levels,” Villegas said in a note on Tuesday.

“All in all, we see a very sound fundamental backdrop for Bitcoin and believe that prices are well supported around current levels with further upside potential,” Villegas wrote.

Bitcoin has outperformed all traditional asset classes this year.

Tyler Durden
Tue, 02/27/2024 – 09:40

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Record Global Debt: A Ticking Time Bomb For The World Economy

Record Global Debt: A Ticking Time Bomb For The World Economy

Authored by Daniel Lacalle,

The relentless increase in global debt is an enormous problem for the economy. Public deficits are neither reserves for the private sector nor a tool for growth. Bloated public debt is a burden on the economy, making productivity stall, raising taxes, and crowding out financing for the private sector. With each passing year, the global debt figure climbs higher, the burdens grow heavier, and the risks loom larger. The world’s financial markets ignored the record-breaking increase in global debt levels to a staggering $313 trillion in 2023, which marked yet another worrying milestone.

In the Congressional Budget Office (CBO) projections, the United States deficit will fluctuate over the next four years, averaging an insane 5.8 percent of GDP without even considering a recession. By 2033, they still expect a 6.9 percent GDP budget hole. Unsurprisingly, the economy, even using optimistic scenarios, stalls and will show a level of real GDP growth of 1.8% between 2028 and 2033, 33% less than the 2026–2027 period, which is already 25% lower than the historical average.

Some analysts say that this whole mess can be solved by raising taxes, but reality shows that there is no revenue measure that will fill an annual financial hole of $2 trillion with additional yearly receipts. This, of course, comes with an optimistic scenario of no recession or economic impact from a higher tax burden. Deficits are always a spending problem.

Citizens are led to believe that lower growth, declining real wages, and persistent inflation are external factors that have nothing to do with governments, but this is incorrect. Deficit spending is printing money, and it erodes the purchasing power of the currency while destroying the opportunities for the private sector to invest. The entire burden of higher taxes and inflation falls on the middle class and small businesses.

Markets never react to rising risks until reality kicks in. Risk builds slowly but happens fast. This is why governments feel so comfortable adding more public debt. Politicians think that bullish markets and low bond yields are a validation of their policies, and even when interest expenses rise to alarming levels, they just pass the bburden onto the next administration. The result? Eroding potential growth, weaker productivity, and the destruction of the middle class through higher taxes and persistent inflation.

Debt crises happen; and governments never pay attention to the risks because they do not pay for the consequences. Furthermore, by the time a debt crisis happens, most governments will blame “markets” and short sellers.

The latest data from the Institute of International Finance (IIF) shows that the dangerous trend of rising debt has accelerated. A $15 trillion surge in debt over the course of a single year underscored the alarming pace at which the debt burden was escalating. To put this figure into perspective, it is worth noting that just a decade prior, the global debt tally stood at a comparatively modest $210 trillion—a stark reminder of the exponential growth trajectory that debt has embarked upon.

Developing economies are leading the path of this debt onslaught, with debt-to-GDP ratios reaching unprecedented heights. Emerging markets are following the developed nation trend, adding structural challenges and vulnerabilities as debt accumulation leads to the destruction of the local currency and diminishing confidence in the domestic monetary systems.

The implications of this debt binge are significant, including weaker economic growth and a danger to financial stability. At its core, the surge in global debt represents a fundamental imbalance—an imbalance between present consumption and future obligations, between short-term expenditure and long-term sustainability. Debt is newly created mousedused finance unproductive expenditures. Cheap government debt promises higher growth and better opportunities for citizens but only delivers weaker growth, higher instability, and an increasingly worthless currency. If you wonder why your wages are paying for fewer goods and services and why the middle class finds it increasingly difficult to thrive, blame it on money printing and public debt. It is eroding the purchasing power of your savings and wages under the false promise of growth and security that never arrives.

As debt levels swell, so do the risks of debt distress, default, and contagion. Debt is currency printing; the confidence in the purchasing power of the newly issued money slumps as debt balloons. Furthermore, a sudden loss of market confidence or a liquidity crunch in one corner of the globe can swiftly snowball into a full-blown financial crisis with far-reaching systemic implications. To think this will not happen in the United States is myopic and reckless. The interconnected nature of the modern global economy means that no nation exists in isolation, and the repercussions of a debt crisis in one area can reverberate across the entire financial ecosystem.

Beyond the immediate risks of financial instability, the long-term consequences of excessive debt accumulation are equally troubling. High debt levels function as a drag on economic growth, siphoning off resources from productive investment and stifling innovation and entrepreneurship. Moreover, the burden of servicing debt imposes a heavy toll on future generations, diverting funds away from infrastructure spending and saddling future taxpayers with a legacy of debt.

The end of the United States dollar will not come from external threats but from the irresponsible actions of its own government. Cheap debt is always exceedingly expensive.

Tyler Durden
Tue, 02/27/2024 – 09:20

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US Home Prices Rose For 11th Straight Month In December, But…

US Home Prices Rose For 11th Straight Month In December, But…

Home prices in America’s 20 largest cities rose for the 11th straight month in December (the latest data released by S&P Global Case-Shiller today), up 0.21% MoM (in line with the 0.20% MoM expected and 0.24% prior).

Source: Bloomberg

That pushed the YoY price up to +6.13% (in line with the +6.03% exp).

“While we are not experiencing the double-digit gains seen in the previous two years, above-trend growth should be well received considering the rising costs of financing home mortgages,” according to Brian D. Luke, Head of Commodities, Real & Digital Assets at S&P Dow Jones Indices.

Miami, Las Vegas, and Los Angeles saw MoM gains in their city’s prices, while the rest of the 17 majors saw declines MoM, but on a YoY basis, there was no city with lower prices for the first time since Nov 2022. While San Diego and Los Angeles are leading the price gains on a YoY basis, we note that Detroit (yes, Detroit) is seeing the 3rd fastest home price growth (+8.32% YoY)…

But, judging by the resumption of the rise of mortgage rates since the Case-Shiller data was created, we would expect prices to also resume their decline in the short-term…

Source: Bloomberg

Are prices set to shrink again (as the lag on Case-Shiller data and human’s response to rates) before re-accelerating later this year?

Tyler Durden
Tue, 02/27/2024 – 09:12

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Denmark Drops Probe Into Nord Stream Gas Pipeline Sabotage

Denmark Drops Probe Into Nord Stream Gas Pipeline Sabotage

By Tsvetana Paraskova of OilPrice.com

Denmark is dropping the investigation over what it described as a “deliberate sabotage” of the Nord Stream gas pipelines in 2022, due to insufficient grounds to pursue a criminal case, the Copenhagen police said on Monday.

Gas leaks in each of the Nord Stream 1 and 2 pipelines were discovered at the end of September 2022 from the infrastructure just outside Swedish and Danish territorial waters in the Baltic Sea.  

Nord Stream 2 was never put into operation after Germany axed the certification process following the Russian invasion of Ukraine. Russia, for its part, shut down Nord Stream 1 indefinitely in early September of 2022, claiming an inability to repair gas turbines because of the Western sanctions.  

An investigation launched by the Swedish authorities concluded that the leaks were the result of detonations, likely the result of “serious sabotage”. 

But earlier this month, Sweden’s authorities concluded a preliminary investigation into the Nord Stream blasts but found they lacked jurisdiction to continue, as the incident occurred in international waters and involved no Swedish nationals. Therefore, Sweden ended the probe in early February.

Denmark also ended its investigation on Monday, with the Copenhagen police saying in a statement that “The joint investigation conducted by the Copenhagen Police and the Danish Security and Intelligence Services (PET) into the Nord Stream explosions has been concluded.”

Throughout the investigation, the Danish authorities have cooperated with relevant foreign partners, Denmark said.

“The investigation has led the authorities to conclude that there was deliberate sabotage of the gas pipelines. However, the assessment is that there is not the sufficient grounds to pursue a criminal case in Denmark,” the police said.

Apart from Denmark and Sweden, Germany has also investigated the Nord Stream blasts, but Berlin hasn’t concluded its own investigation into the sabotage. A spokesperson for the government told Reuters earlier in February that Germany was still interested in solving the case.    

Tyler Durden
Tue, 02/27/2024 – 08:50

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US Durable Goods Orders Collapsed In January – Biggest Drop Since COVID Lockdowns

US Durable Goods Orders Collapsed In January – Biggest Drop Since COVID Lockdowns

The last few months have been volatile – to say the least – for US durable goods orders, with preliminary January data showing an enormous 6.1% MoM plunge in the headline (worse than the already bad 5% decline expected).  That is the weakest MoM print since the middle of the COVID lockdowns in April 2020, dragging year-over-year orders growth down to -0.8% – the lowest and first annual contraction since August 2020…

Source: Bloomberg

Excluding transportation equipment, orders fell 0.3%.

It appears Boeing’s doors-flying-off-our-planes issue had some impact as non-defense aircraft orders crashed 58.5% MoM (the worst since 2019 (Max…). But the numbers were helped by war spending being up 24.2% MoM…

Source: Bloomberg

Boeing reported only three orders in January, the fewest in more than three years after a near-catastrophic accident early in the month led regulators to ground some of its planes.

On the bright side, core capital goods shipments, a figure that is used to help calculate equipment investment in the government’s gross domestic product report, bounced back from contraction in December…

Source: Bloomberg

So as goes Boeing, so goes the manufacturing economy… and as goes NVDA, so goes the stock market? Fuck yeah ‘Murica!

Tyler Durden
Tue, 02/27/2024 – 08:41

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Futures Flat Ahead Of Flood Of Economic Data

Futures Flat Ahead Of Flood Of Economic Data

US equity futures pointed to modest gains, led by tech stocks – following Monday’s 38bps drop which was the worst Monday since early December and the second worst Monday since last June – as investors looked ahead to economic data and commentary from Federal Reserve speakers in coming days for clues on the outlook for interest rates. As of 8:00am ET, S&P 500 futures rose 0.1% while Nasdaq 100 contracts added 0.3%. Europe’s Stoxx 600 index was also flat, hovering near its all-time high. Two-year notes led gains as Treasuries rose, retracing some of Monday’s drop. The dollar slipped, oil dipped and bitcoin soared above $57,000. It’s a busy day for economic data, which includes January durable goods orders (8:30am), Case-Shiller home prices (9am), consumer confidence, Richmond Fed and Dallas Fed.

In premarket trading, cryptocurrency-linked stocks rise after Bitcoin’s price reached the $57,000 level for the first time since late 2021 (Cleanspark (CLSK) +16%, Coinbase (COIN) +6, Marathon Digital (MARA) +12%). Hess shares dropped premarket after Chevron said its $53BN acquisition of Hess faces potential disruption as rivals ExxonMobil and CNOOC claim pre-emptive rights over Chevron’s stake in a crucial Guyana oil project (the largest oil discovery in a decade). Discussions are ongoing, but failure to resolve this could jeopardise the Hess takeover, Chevron said.

Macy’s shares were volatile after it said it plans to close 150 unproductive locations as the department-store chain seeks to fight off a pair of activist firms seeking to buy the company. Zoom shares jumped 13% in US premarket trading after the video-conferencing software company’s guidance for adjusted earnings per share was stronger than expected. Additionally, Zoom also said its board approved a buyback program. Here are some other notable premarket movers:

  • Aaron’s slumps 25% after providing disappointing 2024 forecasts.
  • Altice USA gains 4% after Bloomberg reported that Charter Communications is exploring a takeover of the cable provider.
  • Cava rises 7% after the restaurant chain posted fourth-quarter sales that beat expectations as diners splurged on premium dishes.
  • Hims & Hers Health (HIMS) soars 18% after the telehealth group’s forecast for first-quarter revenue topped the average analyst estimate.
  • Workday shares fell 7.2% in US premarket trading after the human resources software company issued full-year subscription revenue forecast that was weaker than expected at the midpoint. The company also reported fourth-quarter results that analysts said showed less upside than usual.
  • Unity Software shares slid 17% in US premarket trading after the video-game software development company’s forecast for revenue fell short of expectations amid a portfolio review that includes exiting some businesses.
  • Lowe’s said its sales will fall further this year as consumers continue to hold off from sprucing up their homes amid higher mortgage rates and a drop in new construction projects.
  • Janux Therapeutics jumps 106% after the company reported updated clinical data.
  • PubMatic rises 27% after the advertising technology company’s fourth-quarter earnings beat expectations, with analysts highlighting a boost from new products.
  • TransMedics gains 21% after the transplant therapy biotechnology company reported fourth-quarter revenue that beat the average analyst estimate.

Readings on the US economy are in sharp focus this week, with the Fed’s favored inflation gauge due on Thursday grabbing the most attention. Markets have already dialed back expectations for early and rapid Fed easing after hotter-than-expected data on jobs and price gains, pushing out bets on a first cut to June or July.

“We have always been in the camp that the Fed is unlikely to move as quickly as the market was pricing and data for the first couple of months will only confirm that the first cut will be pushed into the third quarter,” said Matt Stucky, chief portfolio manager for equities at Northwestern Mutual Wealth Management Co.

In response to some arguments that stocks are in another tech bubble, Citigroup strategists said they don’t regard the US equity market as being in a bubble like that of 1999-2000, and suggested the rally could spread to other sectors. Valuation multiples for stocks are well below 2000 levels and, while cash flow expectations around tech companies have increased, forecasts for other industry groups aren’t stretched. That supports the case for broader equity gains.  

“We argue that ‘bubble’ is the wrong term to describe the current market setup,” the Citigroup team led by Scott Chronert wrote. “Rather, the recent rally puts pressure on fundamentals to deliver.”

Elsewhere, Bitcoin climbed, rising briefly beyond $57,000 for the first time since late 2021, supported by investor demand through exchange-traded funds as well as further purchases by MicroStrategy Inc.

European stocks were little changed, with mining and autos & parts shares leading gains, while personal care and media stocks are the biggest laggards; drinkmakers’ stocks rose as earnings from Aperol-maker Davide Campari-Milano exceed analyst forecasts. The moves followed sharp drops over the past year for beverage manufacturers amid worries about destocking and consumers turning to cheaper alternatives. Campari gained as much as 7.5% while Remy Cointreau (+2.2%), Pernod Ricard (+1.8%), Diageo (+1.6%) also rise. Here are the biggest movers Tuesday:

  • Bouygues rises as much as 5.3% after the French conglomerate reported full-year results, with Morgan Stanley saying that a beat on free cash flow was the main highlight
  • GTT shares gain as much as 9%, to touch their highest since August 2022, after the French engineering company’s guidance for 2024 Ebitda beat analysts’ consensus at the mid-point, according to data tracked by Bloomberg
  • Flutter shares gain as much as 5.7% in London as Barclays upgrades the stock to overweight from equal-weight, seeing earnings growth over several years as the gambling operator’s US market share strengthens
  • Abrdn rose as much as 7.8% after the UK asset manager reported adjusted operating profit above estimates, with analysts also drawing attention to stable net interest margins
  • SIG Group shares rise as much as 3.6%, the most since February 2023, after the Swiss carton-packaging maker’s cashflow turned positive thanks a strong 4Q, according to Vontobel
  • Puma shares advance as much as 3.9% after the sportswear brand reported full-year results. The company also said it sees weaker demand for sneakers and sports gear persisting through the first half of the year before picking up amid major sporting events
  • Eurofins Scientific shares fall as much as 12%, the most in a year. Morgan Stanley said cashflow was disappointing from the laboratory testing services company, citing the cost of higher start-up losses and more restructuring
  • Straumann shares decline as much as 7.1% after the Swiss dental equipment company reported operating profit was much weaker due to restructuring and impairment
  • Croda shares fall as much as 3.6% after the British specialty chemicals firm reported FY23 results. Citi analysts say though the figures mark the end of a difficult year
  • Rovi declines as much as 9% after the Spanish pharmaceutical company said it expects revenue to decrease by a mid-single-digit percentage in 2024. It’s the steepest drop since May last year

Earlier in the session, Asian stocks declined in the absence of fresh catalysts to drive the regional benchmark’s longest stretch of weekly gains in more than a year, with shares in Japan and Hong Kong reversing earlier advances. The MSCI Asia Pacific Index fell 0.2%, reversing a rise of as much as 0.3%, with losses in technology stocks weighing on the index. Japan’s benchmarks, reversed an early advance, while stocks also fell in Korea, Taiwan and Singapore. Mainland and Hong Kong-listed Chinese shares declined, extending Monday’s slide, as attention shifts to next week’s NPC meet. Hong Kong’s benchmark dropped ahead of the budget announcement on Wednesday.

  • Hang Seng and Shanghai Comp. were mixed with the mainland mildly positive after the PBoC injected liquidity and with China said to consider approving additional REITs to support consumption.
  • ASX 200 was choppy as strength in the consumer sector was partially offset by weakness in miners.
  • Nikkei 225 printed fresh record highs before reversing the advances as participants digested the latest CPI data.

Japan’s two-year yield climbed to the highest since 2011 after stronger-than-expected inflation data boosted bets the central bank will end its negative-interest-rate policy in coming months. Traders increased the probability of Bank of Japan exiting its negative rate policy by April to about 82%, up from 78% on Monday, according to swaps data compiled by Bloomberg. The yen strengthened against the dollar.

The inflation report “is adding to speculation that the BOJ will end negative-rate policy as early as March and is serving as a selling catalyst for bonds,” said Kazuya Fujiwara, a fixed-income strategist at Mitsubishi UFJ Morgan Stanley Securities Co. in Tokyo. The data underscores persistent inflationary pressures, he said.

In FX, the Bloomberg Dollar Spot Index drops as much as 0.2% before paring losses to 0.1%  while the yen stood atop the G-10 FX leader board, rising 0.3% versus the greenback after Japanese CPI topped estimates and pushed two-year JGB yields to the highest since 2011. The greenback also lagged the Australian dollar, though outperformed others incuding Sweden’s krona.

In rates, treasuries held small gains across the curve after being led higher by bunds and gilts after data showed inflation in UK stores slowed to the lowest level since March 2022. 10-year US TSY yields were around 4.26%, about ~2bps lower on the day, with bunds and gilts outperforming by 0.5bp and 2bp in the sector; gilts, richer by 3bp-4bp on the day, lead gains in core European rates as BOE rate cuts are more aggressively priced. Supply remains the main theme, with $42 billion 7-year note auction at 1pm and another heavy slate of new corporate bonds anticipated after $27 billion was priced Monday.  The week’s coupon issuance concludes with today’s 7-year note auction, and follows small tails for 2- and 5-year notes Monday; the WI 7-year yield near 4.30% is about 19bp cheaper than January’s, which tailed by 0.3bp. The dollar IG credit issuance slate includes a handful of deals already; 18 names priced $27b across 37 tranches Monday on order books that were three times oversubscribed according to Bloomberg, spreads compressed nearly 25bps across execution and attrition rates climbed. Another busy session is is expected Tuesday, before critical inflation data later this week.

In commodities, oil steadied after Monday’s gains as pockets of strength in physical markets supported wider sentiment; WTI trade near $77.60 while Brent was at $82.40. Iron ore gained after Monday’s hefty loss, as market watchers looked for signs China’s approaching construction season will bolster demand after costs of the raw material dropped. Spot gold is up 0.2%.

Bitcoin surged more than 4%, hitting a fresh two-year high and rose above $57,000, extending on the sharp gains seen on Monday, with the latest ETF inflows confirming that retail interest continues to surge.

Looking at today’s calendar, US economic data includes January durably goods orders (8:30am), 4Q house price purchase index, December FHFA house price index and S&P CoreLogic Case-Shiller home prices (9am), February Richmond Fed manufacturing index, consumer confidence, and Richmond Fed business conditions (10am) and Dallas Fed services activity (10:30am). Fed speakers scheduled include Barr at 9:05am.

Market Snapshot

  • S&P 500 futures up 0.1% to 5,085.50
  • STOXX Europe 600 little changed at 495.81
  • MXAP up 0.3% to 173.34
  • MXAPJ up 0.2% to 527.76
  • Nikkei little changed at 39,239.52
  • Topix up 0.2% to 2,678.46
  • Hang Seng Index up 0.9% to 16,790.80
  • Shanghai Composite up 1.3% to 3,015.48
  • Sensex up 0.5% to 73,141.23
  • Australia S&P/ASX 200 up 0.1% to 7,663.01
  • Kospi down 0.8% to 2,625.05
  • German 10Y yield little changed at 2.43%
  • Euro little changed at $1.0854
  • Brent Futures little changed at $82.57/bbl
  • Gold spot up 0.2% to $2,035.73
  • U.S. Dollar Index down 0.12% to 103.71

Top overnight news

  • Japan’s Jan CPI overshoots the Street, with headline coming in at +2.2% (vs. the Street +1.9% and vs. +2.6% in Dec) while core rises 3.5% (vs. the Street +3.3% and vs. +3.7% in Dec). BBG
  • Chinese regulators are taking measures to keep the renminbi’s dollar exchange rate stable as Beijing seeks to bolster confidence in the country’s currency and economy ahead of a key leadership summit. FT
  • China’s state-backed funds have poured more than 410 billion yuan ($57 billion) into onshore shares this year in a bid to prop up the market. Further purchases are expected. BBG
  • Samsonite is weighing its options following interest from suitors including buyout firms, people familiar said. Some PE firms are considering acquiring the company and relisting it in another market — such as the US — at a higher valuation. Shares jumped in Hong Kong. BBG
  • President Emmanuel Macron of France on Monday said “nothing should be ruled out” after he was asked about the possibility of sending Western troops to Ukraine in support of the embattled nation’s war against Russia. NYT
  • Iran reduced its stockpile of near-weapons-grade nuclear material even as it continued expanding its overall nuclear program, the United Nations’ atomic watchdog said Monday, marking a surprise step that could ease tensions with Washington. WSJ
  • President Biden said Monday that fighting in Gaza could stop as early as this coming weekend, the most detailed timeline to date from the White House on a cease-fire between Hamas and Israel in Gaza. WSJ
  • Federal Reserve Bank of Kansas City President Jeffrey R. Schmid said the US central bank should be patient in cutting interest rates with inflation above its 2% target and the job market still strong. In his first major speech since taking the job six months ago, Schmid also said he’s in no hurry to stop the ongoing reduction of the Fed’s balance sheet. BBG
  • Sixth Street wants to go big on beaten down real estate to capitalize as banks grapple with stress in their portfolios. “We don’t think this is systemic risk, but there are obviously large exposures, particularly in some of the small and regional-sized banks,” CEO Alan Waxman said. BBG

Earnings

  • Hess (HES), Chevron (CVX) – Chevron’s USD 53bln acquisition of Hess faces potential disruption as rivals ExxonMobil (XOM) and CNOOC (883 HK) claim pre-emptive rights over Chevron’s stake in a crucial Guyana oil project (the largest oil discovery in a decade). Discussions are ongoing, but failure to resolve this could jeopardise the Hess takeover, Chevron said. (Newswires) HES -2.9%, CVX -0.6% in pre-market trade
  • Puma (PUM GY) – Q4 (EUR): Revenue 1.98bln (exp. 2.094bln). EBIT 94.4mln (exp. 100mln). Net 0.8mln (exp. 28mln). Adverse currencies lead to a negative impact on sales of more than EUR 400mln. Asia/Pacific sales increased by 2.8% Y/Y, supported by strong growth in Greater China and India. The rest of Asia was softer, impacted by consumer sentiment and warm weather conditions. Sales in the Americas region decreased by 2.4% Y/Y due to the devaluation of the Argentine peso. 2024 EBIT guidance 620-700mln (exp. 663mln). “Going into 2024, we see that the market environment remains challenging.” (Puma) +0.5% in European trade
  • Lowe’s Companies Inc (LOW) Q4 2023 (USD): Adj. EPS 2.28 (exp. 1.68), Revenue 18.602bln (exp. 18.45bln) choppy pre-market
  • EU antitrust regulator says it will analyse Microsoft’s (MSFT) AI partnership with Mistral AI.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mixed after the lacklustre handover from the US as markets braced for looming risk events. ASX 200 was choppy as strength in the consumer sector was partially offset by weakness in miners. Nikkei 225 printed fresh record highs before reversing the advances as participants digested the latest CPI data. Hang Seng and Shanghai Comp. were mixed with the mainland mildly positive after the PBoC injected liquidity and with China said to consider approving additional REITs to support consumption.

Top Asian News

  • US intends to increase defence industrial cooperation with Japan, India, and other partners in the Indo-Pacific to build supply chain resilience in the face of threats like China, according to a Pentagon official cited by Nikkei.
  • China’s Commerce Minister Wang met with USTR Tai at the WTO conference in Abu Dhabi and expressed Beijing’s “solemn concerns” over US tariffs and Taiwan-related issues, according to SCMP.
  • China’s Commerce Minister Wang said China is highly concerned about the trade remedy investigation initiated by the European side on China’s EVs and other products, while he expressed strong dissatisfaction with this investigation that lacks factual basis.
  • China’s Commerce Minister Wang said China hopes Australia will pay attention to and actively promote the resolution of specific problems encountered by Chinese enterprises in Australia, as well as actively support China’s accession to CPTPP.
  • ABC News reported that it understands China is on track to lift tariffs on Australian wine at the end of next month when a review into the wine duties concludes.
  • Standard Chartered (2888 HK) suspended new subscriptions by clients in China under the QDII outbound investment programme citing “commercial reasons”, according to Reuters.
  • PBoC held a working meeting on Feb 26th; says they are to use all monetary tools in full and use them well.
  • China says it will prevent fluctuations in the housing market, according to CCTV; says localities should promote balance between supply and demand in the real estate market. All cities should accurately study and judge housing demand and improve housing supply, cities should take into account local economic and social development alongside population changes.

European bourses are modestly firmer having picked up a touch in limited newsflow after an uneventful open, Euro Stoxx 50 +0.3%. Breadth overall fairly narrow, though the likes of the DAX 40 +0.4% have begun to extend modestly higher. Sectors mixed with no clear theme or bias though Basic Resource names outperform while Morgan Stanley lifted Semiconductors to Overweight (prev. Neutral). Auto names, in Germany in particular, are modestly firmer after Monday’s pressure. Stateside, futures remain near the unchanged mark but with a slight positive bias, ES +0.1%, in-fitting with initial action in European trade but yet to experience the modest uptick seen since in European peers. Newsflow thus far limited, updates around MSFT, HES, CVX among others.

Top European News

  • UK Chancellor Hunt is considering plans to lower national insurance instead of income tax and could also announce a duty on vapes, according to reporting by The Telegraph.

FX

  • The DXY fell below Monday’s 103.71 trough to a 103.60 base amid JPY pressure post-Japanese CPI. However, USD/JPY failed to test 150.00 to the downside and has since risen a touch with the USD benefitting in-turn and towards the 103.81 peak.
  • EUR holds near the 1.0850 mark in relatively tight parameters with specifics light and no follow through from German GfK.
  • Cable is unchanged and within Monday’s range, docket ahead for the UK is headlined by BoE’s Ramsden.
  • AUD outperforms as it resides near its 100-DMA and is yet to test the 200-DMA at 0.6555 and 0.6561 respectively, Kiwi ever so slightly softer vs the USD ahead of the RBNZ.
  • PBoC set USD/CNY mid-point at 7.1057 vs exp. 7.1945 (prev. 7.1080).
  • Chinese regulators are reportedly taking measures to keep the renminbi exchange rate stable as Beijing aims to bolster confidence in China’s economy and currency ahead of the “Two Sessions” gathering set to begin March 4th, while measures include refraining from short-term interest rate cuts and keeping the CNY currency band against the dollar firm, according to FT.

Fixed Income

  • Session’s focus has been supply. Little reaction to outings from the Netherlands, UK & Germany thus far though the overall hefty docket in addition to syndication details/announcements from Slovakia, France, Italy (Valore) & UK has kept EGBs near the unchanged mark.
  • Bunds held a tick above Monday’s Monday’s 132.33 base and by extension remain above Friday’s 132.05 low; BTPs similarly contained but we await further 7yr Valore (Retail) updates after Monday’s first day of subscription saw a record EUR 6.4bln of demand.
  • Gilts not ‘stuck; to unchanged levels in the same way as BTPs as its own supply was via a I/L; most recently, no reaction to the DMO announcing it will be launching a new 30yr syndication from 11th March (week after the March budget).
  • USTs a touch firmer but someway shy of Monday’s 110-04 peak after lacklustre 2yr & 5yr sales, 7yr due later. Yields currently under modest pressure with no overt flattening/steepening bias.

Commodities

  • Crude is near unchanged but holding on to most of the prior day’s gains amid the recent Dollar softness and ongoing geopolitics, no reaction to the most recent updates which poured some cold water on Biden’s relative optimism overnight.
  • Nat gas under pressure but within familiar ranges for Dutch TTF while its US peer is essentially flat intraday.
  • Precious metals benefit from the softer USD and yield environment, but slipped from best as the DXY lifted from its low; base peers post modest gains with potential tailwinds from reports out of China around measures to support consumption.
  • Russia is to ban gasoline exports for six months with the ban to be introduced from March 1st, according to Tass.

Geopolitics: Middle East

  • Hamas received a draft Paris proposal which allows for a 40-day initial halt in all military operations and for the gradual return of displaced civilians to North Gaza, except men of military age, while it proposes all Israeli women, children under 19, elderly, and sick hostages would be released in exchange for a number of Palestinian prisoners. Furthermore, Palestinian prisoners would be exchanged for the release of Israeli hostages at a ratio of 10 to 1, according to a senior source cited by Reuters.
  • US President Biden said he hopes a ceasefire agreement between Israel and Hamas can take effect by next Monday and national security advisers told him negotiators are “close”, according to AP.
  • US President Biden said Israel has agreed not to engage in “activities” during Ramadan and has committed to enable an evacuation of significant portions of Rafah “before they go and take out remainder of Hamas”, according to NBC interview
  • US Central Command said it destroyed three unmanned surface vessels, two mobile anti-ship cruise missiles, and a one-way attack unmanned aerial vehicle in self-defence, according to Reuters.
  • Hamas official says there are still “big gaps” that need to be bridged before a ceasefire. Thereafter, Israeli political sources report that they do not know what the basis of US President Biden’s optimism regarding the imminent ceasefire is, via AJA Breaking and there is no breakthrough to announce on Gaza ceasefire, according to Qatar’s Foreign Minister; remain upbeat and optimistic on mediation talks; no agreement between Israel and Hamas on any of the main issues linked to a ceasefire.

Geopolitics: Other

  • Czech PM Fiala said about 15 countries have shown interest in the Ukraine ammunition initiative and Dutch PM Rutte noted that several other countries will also contribute to the Czech-proposed ammunition initiative, according to Reuters.
  • French President Macron said they think a Russian defeat is indispensable for Europe’s security and they will be exploring ways to mobilise third countries to buy ammunition, while he added they will join the ammunition initiative. Macron also said European countries will increase sanctions on countries helping Russia to bypass European sanctions and noted that he didn’t say France was not in favour of sending troops to Ukraine, while he stands by strategic ambiguity on the issue of sending troops to Ukraine and cannot rule it out.
  • Russia’s Kremlin, on French President Macron not ruling out sending European troops to Ukraine, says sending NATO member contingent to Ukraine is a very important new element; if this happens, talks would have to shift to the inevitability of conflict with NATO.
  • Russian Security Council Secretary Patrushev met with Cuba’s Raul Castro to discuss security cooperation, according to Ifax.

US Event Calendar

  • 08:30: Jan. Durable Goods Orders, est. -5.0%, prior 0%
    • Jan. Durables-Less Transportation, est. 0.2%, prior 0.5%
    • Jan. Cap Goods Ship Nondef Ex Air, est. 0.1%, prior 0%
    • Jan. Cap Goods Orders Nondef Ex Air, est. 0.1%, prior 0.2%
  • 09:00: Dec. S&P/Case-Shiller US HPI YoY, prior 5.14%
    • Dec. S&P/CS 20 City MoM SA, est. 0.20%, prior 0.15%
    • Dec. S&P CS Composite-20 YoY, est. 6.00%, prior 5.40%
    • Dec. FHFA House Price Index MoM, est. 0.3%, prior 0.3%
    • 4Q House Price Purchase Index QoQ, prior 2.1%
  • 10:00: Feb. Conf. Board Consumer Confidenc, est. 115.0, prior 114.8
    • Feb. Conf. Board Expectations, prior 83.8
    • Feb. Conf. Board Present Situation, prior 161.3
  • 10:00: Feb. Richmond Fed Index, est. -9, prior -15
  • 10:30: Feb. Dallas Fed Services Activity, prior -9.3

Central Bank speakers

  • 09:05: Fed’s Barr Speaks on Counterparty Credit Risk

DB’s Jim Reid concludes the overnight wrap

Its been a pretty quiet start to the week in equities but with the S&P 500 (-0.38%) seeing a late minor sell-off and with Chinese equities rising this morning on speculation that the authorities bought a notable amount of domestic shares in recent weeks. Yields rising across the board has been the main source of interest though. In the process the amount of cuts priced in by the Fed’s December meeting is now the lowest since mid-November, at 79bps, around half the amount expected at the start of the year. Meanwhile, yields on 2yr Treasuries (+2.8bps) closed at 4.72%, their highest level since the Fed’s December meeting, and overnight 2yr Japanese yields have edged up to their highest since 2011 after Japanese inflation beat expectations.

It was a similar story earlier in Europe yesterday with yields then rising steadily all day, even before ECB President Lagarde comments to the European Parliament just before the European equity close. These remarks showed ongoing patience, suggesting that the ECB “needs to be confident that [the current disinflationary process] will lead us sustainably to our 2% target”. Overall her comments were not that different to the last ECB statement and the yield rise was mostly done for the day before she spoke.

By the close 10yr bunds (+7.7bps), OATs (+8.3bps) and BTPs (+9.1bps) all posted significant yield increases, effectively reversing Friday’s rally (-7.8bps for 10yr bunds). And at the front end of the curve, the 2yr German yield (+6.9bps) closed at 2.92%, its highest level since November. The likelihood of an ECB cut by the April meeting was down 6pp to 27%, which is the lowest since late September.

Over in the US, the 10yr yield ended the day up +3.1bps at 4.28%, whilst the 2yr yield ended the day up +2.8bps at 4.72%, its highest level so far this year. Bonds reversed some of their decline late in the session, perhaps as equities dipped, with the 10yr yield having been more than 5bps higher on the day shortly after 2yr and 5yr Treasury auctions, which saw decent investor demand but with bonds being issued a touch above the pre-sale yields.

The day’s yield rises occurred alongside some decent second-order data releases, with the UK CBI’s retail sales volume survey at a 10-month high of -7 (vs. -31 expected and up from a 3-year low of -50 in January). Later the Dallas Fed’s manufacturing index was up to -11.3 in February (vs. -15.0 exp.). US new home sales came in at an annualised pace of 661k in January, below the 684k expected but their highest level in three months as December was revised down from 664k to 651k.

It’s an interesting week for equities as the recent run is starting to get into once in a couple of generation territory. The S&P 500 has now posted 15 weekly gains in the last 17 for the first time since 1989. Moreover, if we get another positive week this week, then it would be 16 out of 18 weeks for the first time since 1971, and it would also be a joint record since the index’s formation. So even though there’s been lots of positive catalysts, from lower inflation to excitement about AI, it’s actually very unusual to see the sort of sustained rally that’s occurred over the last few months. For more info, Henry put out some charts on the current rally in his Mapping Markets publication yesterday (link here).

As we started a new week equities struggled to maintain their spectacular recent momentum, with the S&P 500 -0.38% lower on Monday. The NASDAQ declined a marginal -0.13%, while the Magnificent 7 were down -0.39%, dragged lower by a -4.44% decline for Alphabet amid concerns over recent missteps with its AI model. Small-cap stocks were the strongest performers, with the Russell 2000 up +0.61%. Over in Europe the picture was more negative though, with the STOXX 600 down -0.37% as it fell back from its all-time high on Friday. Even so, it wasn’t all bad news there, as the DAX (+0.02%) eked out a new record, and Euro HY spreads reaching their tightest level in over two years.

In Asia the KOSPI (-0.42%), Hang Seng (-0.36%) and Nikkei (-0.12%) are all slightly lower. Elsewhere, Chinese stocks are bucking the trend with the CSI (+0.35%) and the Shanghai Composite (+0.51%) higher after reports on Bloomberg of state buying in recent weeks. US stock futures are slightly lower as I type.

Coming back to Japan, inflation slowed less than expected in January, rising +2.2% y/y (vs. +1.9% expected) even if down from the previous month’s +2.6%. The +2.0% increase in core consumer prices was slower than the 2.3% increase in December and a tenth above expectations. Core-core was two-tenths above expectations at 3.5% from 3.7% last month. As mentioned at the top, yields on 2yr JGBs Japanese (+1.0bps) have hit their highest level since 2011, trading at 0.165% as we go to print. As a result, The likelihood of BOJ exiting its negative rate policy by April has risen to about 81%, up from yesterday’s 78%.

To the day ahead now, and US data releases include the Conference Board’s consumer confidence for February, the Richmond Fed’s manufacturing index for February, preliminary durable goods orders for January, and the FHFA house price index for December. Meanwhile in the Euro Area, there’s the M3 money supply for January. From central banks, we’ll hear from Fed Vice Chair for Supervision Barr, the ECB’s Elderson, and BoE Deputy Governor Ramsden. Lastly in US politics, there are Republican and Democratic primaries taking place in Michigan.

Tyler Durden
Tue, 02/27/2024 – 08:19

via ZeroHedge News https://ift.tt/zYmWt4w Tyler Durden

This Is Nuts – An Entire Market Chasing One Stock

This Is Nuts – An Entire Market Chasing One Stock

Authored by Lance Roberts via RealInvestmentAdvice.com,

“When you sit down with your portfolio management team, and the first comment made is ‘this is nuts,’ it’s probably time to think about your overall portfolio risk. On Friday, that was how the investment committee both started and ended – ‘this is nuts.’”

 – January 11th, 2020.

revisited that original post a couple of weeks ago as the market approached its 5000 psychological milestone. Since then, the entire market has surged higher following last week’s earnings report from Nvidia (NVDA). The reason I say “this is nuts” is the assumption that all companies were going to grow earnings and revenue at Nvidia’s rate.

Even one of the “always bullish” media outlets took notice, which is notable.

“In a normal functioning market, Nvidia doing amazingly is bad news for competitors such as AMD and Intel. Nvidia is selling more of its chips, meaning fewer sales opportunities for rivals. Shouldn’t their stocks drop? Just because Meta owns and uses some new Nvidia chips, how is that going to positively impact its earnings and cash flow over the next four quarters? Will it at all?

‌The point is that investors are acting irrationally as Nvidia serves up eye-popping financial figures and the hype machine descends on social media. It makes sense until it doesn’t, and that is classic bubble action.” – Yahoo Finance

As Brian Sozzi notes in his article, we may be at the “this is nuts” stage of market exuberance. Such usually coincides with Wall Street analysts stretching to “justify” why paying premiums for companies is “worth it.”

We Can’t All Be Winners

Of course, that is the quintessential underpinning for a market that has reached the “this is nuts” stage. There is little doubt about Nvidia’s earnings and revenue growth rates. However, to maintain that growth pace indefinitely, particularly at 32x price-to-sales, means others like AMD and Intel must lose market share.

However, as shown, numerous companies in the S&P 1500 alone are trading well above 10x price-to-sales. (If you don’t understand why 10x price-to-sales is essential, read this.) Many companies having nothing to do with Nvidia or artificial intelligence, like Wingstop, trade at almost 22x price-to-sales.

Again, if you don’t understand why “this is nuts,” read the linked article above.

However, in the short term, this doesn’t mean the market can’t keep increasing those premiums even further. As Brian concluded in his article:

“Nothing says ‘investing bubble’ like unbridled confidence. It’s that feeling that whatever stock you buy — at whatever price and at whatever time — will only go up forever. This makes you feel like an investing genius and inclined to take on more risk.”

Looking at some current internals tells us that Brian may be correct.

This Is Nuts” Type Of Exuberance

In momentum-driven markets, exuberance and greed can take speculative actions to increasingly further extremes. As markets continue to ratchet new all-time highs, the media drives additional hype by producing commentary like the following.

“Going back to 1954, markets are always higher one year later – the only exception was 2007.”

That is a correct statement. When markets hit all-time highs, they are usually higher 12 months later due to the underlying momentum of the market. But therein lies the rub: what happened next? The table below from Warren Pies tells the tale.

As shown, markets were higher 12 months after new highs were made. However, a lot of money was lost during the next bear market or correction. Except for only four periods, those bear markets occurred within the next 24 to 48 months. Most gains from the previous highs were lost in the subsequent downturn.

Unsurprisingly, investing in the market is not a “risk-free” adventure. While there are many opportunities to make money, there is also a history of wealth devastation. Therefore, understanding the environment you are investing in can help avoid potential capital destruction.

From a technical perspective, markets are exceedingly overbought as investors have rushed back into equities following the correction in 2022. The composite index below comprises nine indicators measured using weekly data. That index is now at levels that have denoted short-term market peaks.

Unsurprisingly, speculative money is chasing the Mega-cap growth and technology stocks. The volume of call options on those stocks is at levels that have previously preceded more significant corrections.

Another way to view the current momentum-driven advance in the market is by measuring the divergence between short and long-term moving averages. Given that moving averages smooth price changes over given periods, the divergences should not deviate significantly from each other over more extended periods. However, as shown below, that changed dramatically following the stimulus-fueled surge in the markets post-pandemic. Currently, the deviation between the weekly moving averages is at levels only previously seen when the Government sent checks to households, overnight lending rates were zero, and the Fed bought $120 billion monthly in bonds. Yet, none of that is happening currently.

Unsurprisingly, with the surge in market prices, investor confidence has surged along with their allocation to equities. The most recent Schwab Survey of bullish sentiment suggests the same.

More than half of traders have a bullish outlook for the first quarter – the highest level of bullishness since 2021

Yes, quite simply, “This is nuts.”

Market Measures Advise Caution

In the short term, over the next 12 months, the market will indeed likely finish the year higher than where it started. That is what the majority of analysis tells us. However, that doesn’t mean that stocks can’t, and won’t, suffer a rather significant correction along the way. The chart below shows retail and professional traders’ 13-week average of net bullish sentiment. You will notice that high sentiment readings often precede market corrections while eventually rising to higher levels.

For example, the last time bullish sentiment was this extreme was in late 2021. Even though the market eventually rallied to all-time highs, it was 2-years before investors got back to even.

Furthermore, the compression of volatility remains a critical near-term concern. While low levels of volatility have become increasingly common since the financial crisis due to the suppression of interest rates and a flood of liquidity, the lack of volatility provides the “fuel” for a market correction.

Combining excessive bullish sentiment and low volatility into a single indicator shows that previous levels were warnings to more bullish investors. Interestingly, Fed rate cuts cause excess sentiment to unwind. This is because rate cuts have historically coincided with financial events and recessions.

While none of this should be surprising, given the current market momentum and bullish psychology, the over-confidence of investors in their decision-making has always had less than desirable outcomes.

No. The markets likely will not crash tomorrow or in the next few months. However, sentiment has reached the “this is nuts” stage. For us, as portfolio managers, such has always been an excellent time to start laying the groundwork to protect our gains.

Lean on your investing experience and all its wrinkles.” – Brian Sozzi

Tyler Durden
Tue, 02/27/2024 – 08:11

via ZeroHedge News https://ift.tt/U7n5uDI Tyler Durden

Intuitive Machines’ Moon Mission Nears End, Shares Crash Harder Than Lunar Lander

Intuitive Machines’ Moon Mission Nears End, Shares Crash Harder Than Lunar Lander

Shares of Intuitive Machines plummeted once again in premarket trading following the announcement by the space exploration company that its Odysseus moon lander is expected to lose communication capabilities today.

“Flight controllers intend to collect data until the lander’s solar panels are no longer exposed to light. Based on Earth and Moon positioning, we believe flight controllers will continue to communicate with Odysseus until Tuesday morning,” Intuitive Machines wrote in a post on social media platform X. 

Intuitive Machines posted an image of the lander on the lunar surface. While landing late last week, the lander tipped over when it touched down. This landing position means the solar array cannot be properly deployed, and antennas are pointed toward the moon’s surface, slowing communications down with operators on Earth. Without power, the lander’s heaters won’t work, so it might not survive the frigid lunar night. 

Shares are down as much as 27% in premarket trading in New York. From the high of nearly $14 a share before the landing last Thursday, shares have crashed 67%. 

“There is a lot of retail activity driving volatility in the stock right now, and probably shorting associated with that … would be helpful to get more color on the reliability of (moon lander) comms,” Canaccord Genuity analyst Austin Moeller said.

Thanks for playing the space bubble. 

Tyler Durden
Tue, 02/27/2024 – 07:45

via ZeroHedge News https://ift.tt/SV2vRJG Tyler Durden

“A House Of Cards, Supported & Backed By Blind Faith…”

“A House Of Cards, Supported & Backed By Blind Faith…”

Submitted by Claudio Grass,

Private property rights under siege

People invest in gold for many different reasons. Many do so out of concern over economic, monetary or political uncertainty. Others seek a hedge against inflation, a way to protect and preserve the real purchasing power of their savings. There are also those who simply seek some peace of mind, a dependable insurance, so that no matter what the future holds and no matter how bad the “worst case scenario” turns out to be, they would still have a solid “Plan B”.

All these are valid, sound and sensible reasons to invest in gold; at least for long-term investors, for those who truly understand the true value and the core purpose of physical precious metals.

Yet ultimately, all these concerns share a common denominator. They all emanate from the same, very well founded and clearly troubling realization that our entire sociopolitical, economic and monetary system is merely a mirage – it is a house of cards, supported and backed by nothing but blind faith. It is also designed to favor and reward recklessness, opportunism, improvidence and sheer greed and to punish and penalize prudence, restraint, patience and personal responsibility. 

This entire system, as complex and intricate as it might seem, is actually built on a very simple premise: It all relies upon the individual’s willingness to trade a promise of compliance, obedience and submission to a higher authority in exchange for security, order, protection and stability.

For those of us who have attained a meaningful understanding of history, of economics and of geopolitics, it will likely be clear that anyone tempted by this bargain is not only cowardly and dishonorable, but exceptionally foolish too. As Benjamin Franklin famously and concisely put it: “Those who would give up essential liberty to purchase a little temporary safety, deserve neither liberty nor safety.”

Still, in realistic, pragmatic, and purely cynical terms, such as those that underpin every modern, advanced, “enlightened” democracy, there remains a reasonable expectation of fairness. The citizens’ rights and (especially) their obligations are plainly laid out, but the State’s duties and limitations are also clearly defined. After all, that’s what Constitutions are for, on paper at least.

In modern democracies, those in government are supposed to be the servants of the people, not their masters. All state institutions, ministries and public offices are supposed to function as mere tools and conveniences for the average citizen, not as their whips or their shackles. In theory, both the government and the governed have distinct roles to play and there are clear, thoroughly negotiated and mutually accepted rules they must adhere to. In practice, however, this is rarely, if ever, the case. Much more often than not what actually happens deviates wildly from what was originally expected or agreed upon.

This is because those in positions of power tend to abuse said power unilaterally, surreptitiously and arbitrarily, and they bend, or even totally change, the rules in their favor. This inevitably leads to system that is fundamentally and inherently unjust, one which operates under the assumption that there are “rules for thee, not for me” and which functions under the tacit understanding that “we are all equal, but some of us are more equal than others”.

For any individual citizen, the “law of the land” is clearly laid out. It is strict and unyielding (e.g. there is no negotiation to be had or any “wiggle room” over the taxes they are compelled to pay, or over the permissions, licenses or official documents they have to obtain just in order to be able to work and earn a living, to travel or to relocate, to sell a property they own or to buy a new one, to build a business wherever and with whomever they deem fit, or even to freely speak their minds and voice their opinions and criticisms). For the governed, there is no choice but to abide by the rules, no matter how absurd or feckless they may be – if they dare oppose or defy them, swift and severe consequences will surely follow.

They could be heavily fined, they could have their bank accounts frozen, or their savings and their assets seized – as we saw over the last couple of years. Any and all of these punitive measures could leave them irreparably and irredeemably financially ruined.

Or perhaps they could be stripped of their basic civil rights, like the right to privacy, to free expression and self-determination. Maybe they could become targets for ideological zealots and all kinds of deranged lunatics on- and offline. They could be “cancelled”, they could lose their jobs, they could be banished from their social circles, shunned by their loved ones and ostracized from “polite society”. And if they were to persist and maintain their objections and if their reasons for doing so were dangerously well-founded and alarmingly compelling, they could even be physically detained and incarcerated.

Faced with such formidable opposition, that has access to and control over immense, diverse and powerful resources and that has the capability and willingness to deploy every offensive tool and weapon in its arsenal, clearly, it is easier, safer and patently more prudent for any individual citizen to simply comply, to conform and to just follow the rules. There is thus a clear guarantee that they’ll keep their side of that original deal and to deliver the compliance and obedience they promised; by force if not by will.

When it comes to the State, however, and all its ministries, branches and institutions, a very different set of rules seems to apply – a much more lenient, flexible and liberal one.

For example, the core pledge of security, protection and stability has yet to be fulfilled: no government has ever delivered on any of these promises socially, economically, geopolitically, or monetarily for any meaningful period of time. No matter how consistently and how faithfully the people keep their end of the deal, those in power always seem to have a ready excuse as to why they failed to honor their own and a confident assurance that they definitely, absolutely and unquestionably will, if you reelect them of course.

It is such an obvious and long-standing pattern. And this is why it is very hard to understand why and how any mature and rational citizen would place their trust in the next aspiring leader who embraces the very same ideas and values as everyone before them but still insists they will deliver different results. It is even harder to understand how anyone in their right mind could believe the oft-repeated commitment that politicians and State officials never tire of regurgitating: the promise to maintain order and to defend the rule of law.

How can any reasonable, cultivated, enlightened and decent person ever allow a fox to guard a henhouse? There are numerous historical and recent examples that clearly demonstrate the deep disregard that governments have toward their own laws and towards the rights of their own citizens. Those who have studied history know exactly how often and how easily those in power openly disregard and flout their own rules. Throughout history, governments have been known to renege on their promises. It might be justified by “special circumstances”, by invoking “emergency powers”, or in the name “national security”, but the result is what we’ve repeatedly witnessed over the last decades, all the violations of fundamental, constitutional, human and civil rights, of international law and of common decency.

In the last three years alone we saw too many disgraceful and truly flagitious examples: From infringing upon the individual citizen’s privacy, their financial sovereignty and individual liberties to brazenly violating their private property rights, their freedom of speech, their freedom of movement and their freedom of assembly.

Clearly, the rules don’t apply to those who make them.

Bearing in mind this bigger picture and keeping this wider context in mind, is it really surprising that the State (along with all its dependents, its agents and its cronies) routinely and consistently deceives, cheats, and exploits the very citizens it is theoretically bound to serve, defend, and protect?

For example, I recently came across a very interesting story from the US that perfectly illustrates how far governments have strayed from their constitutionally defined functions, powers and limitations. Specifically, one would expect law enforcement agencies and the individuals they employ to abide by and to adhere to the letter and the sprit of the Law, to respect the citizen they are supposedly serving, as well as their private property and their fundamental human and civil rights. 

And yet, as the Los Angeles Times recently reported, the FBI egregiously violated said rights, when it opened and “inventoried” the contents of hundreds of safe deposit boxes in Beverly Hills during a raid in March 2021. Federal agents reportedly spent days shifting through personal belongings stored in nearly 1,400 safe deposit boxes, while they also seized assets from people who had not been charged with any crimes. They confiscated  gold coins, family heirlooms, as well as piles of cash, which the total value of the seized assets exceeding $86 million. This entire operation bluntly violated the limitations of the warrant that authorized this raid, which clearly stated that it did not “authorize a criminal search or seizure of the safety deposit boxes.”

At the end of last year, a a federal appellate court ruled that “the agency’s cataloging of the contents of the privately rented boxes, without individual criminal warrants for each, violated the box holders’ 4th Amendment rights against unreasonable searches and seizures.” Court records also showed that the FBI had developed a plan to permanently confiscate everything in the boxes worth more than $5,000, as part of a wholesale forfeiture, based on an assumption that those assets were somehow tied to unknown crimes – even though there was no evidence provided to support this assumption.

No warrant was issued and no legal case was filed against the owners of said assets – they weren’t even notified of this “raid”; they only found out about this blatant violation after it was completed. Their basic constitutional rights, the very ones that every American citizen profoundly values and holds so dear, were just brazenly and flagrantly violated: their private property rights, their right against unreasonable searches and seizures, and their Sixt Amendment rights, especially their right to be informed of the nature and cause of the accusations against them and to face their accusers, their right to a speedy and public trial by an impartial jury and their right to counsel for their defense.

This case is far from unique, nor is it exclusive to the US. In Europe too, the long and multitudinous arms of the State also routinely and casually violate fundamental property, privacy and basic civil rights of innocent individual citizens. After all, what more can one expect from a system that is run by career apparatchiks and pencil pushers and principally controlled by unelected, unqualified, unremarkable, and thoroughly unaccomplished aspiring despots? 

To be sure, this is not to say that Switzerland is some kind of perfect utopia, or that it is somehow magically and completely immune to the corruption and the threats of the State. To the contrary, I am the first to recognize the dangers that our small alpine nation faces and to sound the alarm against the steps it has taken in the wrong direction in recent years. For many years, I have, still do, and will continue to ardently oppose, vociferously criticize, fervently object to and fiercely rail against all these incremental (but potentially pivotal) changes that seek to erase the identity, the culture, the mentality and the character of the Swiss.

Nevertheless, as vocal and as persistent and as relentless as I have been and always will be, I never have and never will be genuinely worried about the future of this country. As I mentioned before, Switzerland is far from perfect, but it does still have one fundamental, distinctive, extraordinary and (in practical terms, truly unique) advantage: Direct democracy. This offers an ironclad protection against State overreach, or even any attempts to this end, and against any violation of private property rights. 

Of course, the idea of direct democracy alone is no panacea. It only makes sense on a small scale and only among like-minded, enlightened and freedom-loving individuals. It must also be understood, embraced and practically implemented as a means to decentralization, as a manifestation of the principles of subsidiarity and as a tangible demonstration and as incontrovertible proof of the axiomatic, rudimental and foundational idea that every human being is born free. Their skills, their talents, their ideas, their efforts, their beliefs and their goals are theirs and theirs alone and they have the right to pursue, to express and to fulfill them in any way and to any extent they see fit  – the only limitation is the age-old adage “my freedom stops where yours begins”.

This simple, yet very rarely practiced, sentiment lies at the heart of the Swiss identity and it represents the foundation of our small, but extraordinary, nation. This deeply engrained reverence for our own individual liberty and the equally unshakable respect for that of our neighbor is part of the Swiss DNA. It is what made this country what it is today and what guarantees it will endure and continue to thrive and be defined by its own will.

Tyler Durden
Tue, 02/27/2024 – 07:20

via ZeroHedge News https://ift.tt/ISXiz3U Tyler Durden

Breaking Down $1.3T In NATO Defense Spending

Breaking Down $1.3T In NATO Defense Spending

The North Atlantic Treaty Organization (NATO) is a political and military alliance comprising 31 countries. Its primary purpose is to facilitate cooperation among member nations, ensuring mutual defense and security.

This graphic, via Visual Capitalist’s Marcus Lu, breaks down the expected defense expenditures of NATO members in 2023, using data from NATO and based on current prices and exchange rates.

U.S. Dominance of NATO’s Defense Spending

NATO defines defense expenditure as payments made by a national government, excluding regional, local, and municipal authorities, specifically to fulfill the requirements of its armed forces. It requires members to spend at least 2% of its GDP on defense.

A major component of defense expenditure includes payments for active armed forces personnel as well as retired pensioners. Expenditures for stockpiling war reserves of military equipment or supplies are also included. Additionally, it encompasses expenditures for peacekeeping and humanitarian operations, as well as the destruction of weapons.

The U.S. is by far the largest contributor to NATO’s budget. In 2023, the country accounted for $860 billion spent by the organization, representing 68% of the total expenditure. This amount is over 10 times more than that of the second-placed country, Germany.

Country 2023 Defense Spending (USD, Millions)*
🇺🇸 United States $860,000
🇩🇪 Germany $68,080
🇬🇧 United Kingdom $65,763
🇫🇷 France $56,649
🇮🇹 Italy $31,585
🇵🇱 Poland $29,105
🇨🇦 Canada $28,950
🇪🇸 Spain $19,179
🇳🇱 Netherlands $16,741
🇹🇷 Türkiye $15,842
🇳🇴 Norway $8,814
🇷🇴 Romania $8,481
🇫🇮 Finland $7,325
🇬🇷 Greece $7,125
🇧🇪 Belgium $7,076
🇩🇰 Denmark $6,775
🇭🇺 Hungary $5,036
🇨🇿 Czechia $5,033
🇵🇹 Portugal $4,167
🌐 Other $12,400

*Expected spending in 2023, based on July 2023 data from NATO.

U.S. defense spending, within the context of NATO, aims to support European allies, deter adversaries like Russia, and gain access to additional military resources, among other objectives.

In 2018, then-President Trump sent letters to NATO allies demanding that they spend more on defense to meet the 2% minimum target. In recent years, however, the U.S. has increased its spending, experiencing a 6% jump compared to 2021.

The Future of NATO

After two years since Russia’s full-scale invasion of Ukraine, NATO has mostly maintained its unity against Moscow.

The alliance has expanded with Finland’s membership in 2023 and will likely include Sweden soon.

Tyler Durden
Tue, 02/27/2024 – 06:55

via ZeroHedge News https://ift.tt/KQSfFpj Tyler Durden