Month: March 2024

After puking in January, pending home sales were expected to rebound modestly (+1.5% MoM) in February and it did (+1.6% MoM) with a small upward revision for Jan (from -4.9% to -4.7% MoM). However, this still left sales down 2.2% YoY…

Source: Bloomberg

That leaves pending home sales hovering just off record lows…

Source: Bloomberg

A recent report showed listings may be starting to rise, with inventory reaching its highest level for a February since 2020.

“While modest sales growth might not stir excitement, it shows slow and steady progress from the lows of late last year,” NAR Chief Economist Lawrence Yun said in a statement on Thursday.

The Midwest was the main driver of the increase in pending sales, with a 10.6% jump. Contract signings in the South, the nation’s biggest housing market, edged up 1.1%. They were little changed in the Northeast and dropped in the West.

“The high-cost regions in the Northeast and West experienced pullbacks due to affordability challenges,” Yun said.

The pending-home sales report is a leading indicator of existing-home sales given houses typically go under contract a month or two before they’re sold.

By Brayden Lindrea of CoinTelegraph

BlackRock CEO Larry Fink has been “pleasantly surprised” by the performance of his firm’s spot Bitcoin exchange-traded fund and has reiterated he’s “very bullish” on the long-term viability of Bitcoin.

“IBIT is the fastest growing ETF in the history of ETFs. Nothing has gained assets as fast as IBIT in the history of ETFs,” Larry Fink said in a March 27 interview with Fox Business.

BlackRock CEO Larry Fink says the $IBIT Spot #Bitcoin #ETF is the fastest growing ETF in history
pic.twitter.com/NOsDlFgROi

— Simon Dixon (@SimonDixonTwitt) March 27, 2024

Fink said the iShares Bitcoin Trust’s (IBIT) performance has even “surprised” him at how well it has performed over the first 11 trading weeks.

IBIT has a strong start to trading, tallying $13.5 billion in flows in the first 11 weeks, with an $849 million daily high on March 12, according to Farside Investors. IBIT averages a little over $260 million in inflows per trading day.

“We’re creating now a market that has more liquidity, more transparency and I’m pleasantly surprised. I would never have predicted it before we filed it that we were going to see this type of retail demand,” Fink said.

Asked whether IBIT would “do good, but not this good,” Fink responded: “Yes, definitely.”

“I’m very bullish on the long-term viability of Bitcoin,” the BlackRock CEO added.

IBIT currently holds $17.1 billion in Bitcoin, according to BitMEX Research, and took only two months to reach the $10 billion mark — a milestone that took the first gold ETF two years to reach.

Electric carmaker Fisker is doing everything it can to try and not wind up roadkill on the EV highway amidst industry-wide price cutting and worldwide saturation in competition. 

This week Fisker, which is rumored to be on the verge of considering bankruptcy and has seen its stock trade to pennies and be moved to the pink sheets, reduced the price of its only vehicle, the Ocean sport utility vehicle, by a stunning 39%, according to Bloomberg. 

The discount applies only to the top end “Extreme” model of the Ocean, which, post-discount, is priced at $37,499. The price cut marks a $24,000 discount to the model’s original MSRP. 

The company told Bloomberg it was positioning the vehicle as “a more affordable and compelling EV choice.” Fisker is resorting to significant markdowns in an effort to navigate through liquidity difficulties, the report said.

Earlier in the month, the company halted production and issued a warning that bankruptcy might be on the horizon if it fails to manage its debt obligations.

We can’t say we are surprised, as we have noted that the EV industry is seeing increased competition after last year’s price cuts across the world, led by Tesla, to try and capture demand. 

Just days ago we wrote that Nissan was the latest to try and slash costs by 30% just to remain competitive in EVs. Similarly, we have noted that auto companies are slashing investment in EVs, as is the case with American auto manufacturers like Ford and GM. We wrote last month that Joe Biden’s vision for EVs across America is in “full collapse”. 

As we wrote then: “…the higher costs are driving automakers away from EVs. And as battery material requirements are set to double by 2027, fulfilling these mandates will be increasingly difficult, putting Biden’s ambitious EV strategy at risk.”

Thinktanks like Brownstone have simply noted that when it comes to EVs, “the great reset didn’t work”. 

Jeffrey Tucker wrote last month: “In short, the illusions of these horrible policies have come crashing down. It was born of liberty-wrecking policies under the cover of virus control. Every special interest seized the day, including a new generation of industrialists seeking to displace the old ones by force.”

Recall, a report from Consumer Reports last year found that electric vehicles have almost 80% more problems and are “generally less reliable” than conventional internal combustion engine cars. 

Authored by Paul Joseph Watson via Modernity.news,

Baltimore leader Brandon Scott appeared on Joy Reid’s MSNBC show to assert that white conservatives “should be afraid” of the consequences of calling him the ‘DEI Mayor’ and that his “purpose in life” was to make them uncomfortable.

Yes, really.

Professional race-bator Reid angrily asserted that when right-wingers make fun of DEI, they actually mean just “black people,” claiming, “It’s the reason they complained about Critical Race Theory, it’s not fashionable to be openly racist anymore in America.”

She then welcomed Scott, who dresses and acts like a Black Lives Matter activist, to address the horrifically “racist” fact that right-wingers don’t support DEI in light of the Baltimore bridge collapse.

The mayor complained about “young black men” being demonized and treated as the “boogeymen” by racist conservatives who think that “only straight, white wealthy men” should have power.

“We know what they want to say and they don’t have the courage to say the n-word,” he ludicrously added, before appearing to make some kind of veiled threat.

“The fact that I don’t believe in their untruthful and wrong ideology and I am very proud of my heritage and who I am and where I come from scares them, because me being at my position means that their way of thinking, their way of life of being comfortable while everyone else suffers is going to be at risk and they should be afraid because that’s my purpose in life,” said Scott.

And there you have it, in his own words.

Scott’s “purpose in life” is to make white people uncomfortable and afraid.

But remember, you’re the racist for making fun of him.

Reid also said the ship was “piloted by a very heroic crew from India” and that it was also racist to criticize them despite them failing to prevent the ship from crashing into and destroying the bridge.

As we document in the video below, the group that managed the Dali cargo ship and the Maryland Port Commission both appear to have prioritized ‘diversity’ over safety before the ‘accident’ that led to the collapse of the bridge.

*  *  *

Your support is crucial in helping us defeat mass censorship. Please consider donating via Locals or check out our unique merch. Follow us on X @ModernityNews.

It’s ancient history by now, but moments ago the Biden Bureau of Economic Goalseeking Analysis reported that in its third estimate of Q4 GDP, the US was estimated to have grown by 3.4% (3.440% to be precise), above the 3.2% reported last month and above the 3.2% estimate.

The increase in the fourth quarter primarily reflected increases in consumer spending and state and local government spending that were partly offset by a decrease in inventory investment. Imports, which are a subtraction in the calculation of GDP, increased.

The update from the second estimate reflected upward revisions to consumer spending, business investment, and state and local government spending that were partly offset by downward revisions to inventory investment and exports. Imports were revised down. Here is a more detailed analysis:

• Personal Consumption contributed 2.20% to the bottom line GDP of 3.4%, or two-thirds of the total, up from 2.00% in the previous estimate and up from 1.91% in the first calculation.
• Fixed Investment added another 0.67% to the bottom line, also a solid improvement to the 0.43% previous estimate
• The change in private inventories subtracted 0.47% from the bottom line print, a deterioration to the -0.27% first revision and far below the positive +0.07% contribution in the first estimate.
• Net exports were little changed at +0.25% (consisting of 0.55% exports less 0.3% imports) vs 0.32% in the first revision (0.69% exports less 0.37% imports).
• Finally, government consumption increased modestly to 0.79% of the bottom line, up from the 0.73% estimated previously.

Here the biggest contribution was personal spending, which increased even more than initially suspected, and reflected increases in both services and goods. Within services, the leading contributors were health care (both outpatient and hospital services), other services (led by professional and other services), as well as food services and accommodations. Within goods, the leading contributors to the increase were other nondurable goods (led by pharmaceutical products) as well as recreational goods and vehicles.

Here is a visual summary:

The BLS also provided a breakdown of GDP by industry, noting that the value added of private goods-producing industries increased 7.0%, private services-producing industries increased 2.6%, and government increased 3.1 percent. Overall, 18 of 22 industry groups contributed to the fourth-quarter increase in real GDP

• Within private goods-producing industries, the largest contributors to the increase were nondurable goods (led by petroleum and coal products and chemical products), durable goods manufacturing (led by machinery), and construction.
• Within private services-producing industries, the increase was led by retail trade (led by motor vehicle and parts dealers), health care and social assistance (led by ambulatory health care services), utilities, and professional, scientific, and technical services (led by computer systems design and related services).
• The increase in government reflected an increase in state and local government as well as federal government

Turning to prices, the Q4 2023 numbers are completely irrelevant especially with the latest Feb monthly PCE data out tomorrow (when markets are closed), but here goes anyway:

• GDP prices increased 1.9% in the fourth quarter after increasing 2.9% in the third quarter. Excluding food and energy, prices increased 2.1% after increasing 2.5 percent.
• PCE prices increased 1.8% in the fourth quarter after increasing 2.6% in the third quarter. Excluding food and energy, the all-important – if extremely delayed – PCE “core” price index increased 2.0%, the same increase as in the third quarter. The core PCE came in just below expectations of a 2.1% print.

Finally, looking at corporate profits, these increased 4.1% at a quarterly rate in the fourth quarter after increasing 3.4% in the third quarter. Corporate profits also increased 5.1% in the fourth quarter from one year ago. More details:

• Profits of domestic financial corporations increased 1.3 percent after increasing 2.0 percent.
• Profits of domestic nonfinancial corporations increased 5.9 percent after increasing 4.1 percent.
• Profits from the rest of the world (net) decreased 1.7 percent after increasing 1.7 percent.

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

Facebook secretly obtained proprietary data from competitors, including Snapchat, according to newly unsealed court documents.

At the request of CEO Mark Zuckerberg, Facebook officials developed a program called In-App Action Panel (IAAP) that they deployed in 2016 and which was in use through mid-2019, according to the documents, which include internal emails.

The program utilized cyberattacks to intercept information from Snapchat, YouTube, and Amazon. The program then decrypted the information.

“Facebook’s IAAP Program used nation-state-level hacking technology developed by the company’s Onavo team, in which Facebook paid contractors (including teens) to designate Facebook a trusted ‘root’ certificate authority on their mobile devices, then generated fake digital certificates to redirect secure Snapchat analytics traffic (and later, analytics from YouTube and Amazon) from Snapchat’s servers to Onavo’s; decrypted these analytics and used them for competitive gain, including to inform Facebook’s product strategy; reencrypted them; and sent them up to Snapchat’s servers as though it came straight from Snapchat’s app, with Facebook’s Social Advertising competitor none the wiser,” lawyers said in one of the documents.

The lawyers, representing plaintiffs in a lawsuit that accuses Facebook of anti-competitive behavior, were describing emails they obtained through discovery.

In one email, Mr. Zuckerberg wrote that there was a need to receive information about Snapchat but that their traffic was encrypted. “Given how quickly they’re growing, it seems important to figure out a new way to get reliable analytics about them. Perhaps we need to do panels or write custom software. You should figure out how to do this,” he wrote.

After Facebook employees started working on figuring it out, Facebook Chief Operating Officer Javier Olivan wrote that the program could pay users to “let us install a really heavy piece of software (that could even do man in the middle, etc.).”

Man in the middle refers to a type of cyberattack where attackers secretly intercept information.

“We are going to figure out a plan for a lockdown effort during June to bring a step change to our Snapchat visibility. This is an opportunity for our team to shine,” Guy Rosen, founder of Onavo, later wrote. Onavo was started in Israel and bought by Facebook in 2013.

In a presentation on the program when it was being finalized, it was stated that there would be “’kits” that can be installed on iOS and Android that intercept traffic for specific sub-domains, allowing us to read what would otherwise be encrypted traffic so we can measure in-app usage.”

Documents and testimony obtained in the case showed the program was launched in June 2016 and continued being used through 2019.

The program initially targeted Snapchat but was later expanded to Google’s YouTube and Amazon, according to the documents.

The information gained by the program helped inform Facebook’s product designs, according to Facebook employees. Those products “hamper[ed] Snap’s ability to sell ads,” one Snap executive said in a deposition for the case.

Snap, Google, and Amazon did not return requests for comment.

Mr. Zuckerberg, in another deposition, refused to answer questions about the program. Mr. Zuckeberg indicated he might answer questions if he was given an opportunity to review the documents.

Lawyers for the plaintiffs, who are advertisers, have asked the court handling the case, the U.S. District Court in northern California, to grant them three additional hours with Mr. Zuckerberg so they can ask him more about what happened. They also asked for sanctions against Meta, which owns Facebook, because Meta did not disclose the program when initially asked for all information and data that Facebook derived from Onavo’s work.

Violation of Law?

Facebook’s actions amounted to wiretapping and violated federal law.

The Electronic Communications Privacy Act of 1986, sometimes known as the Wiretap Act, bars people from intercepting any “wire, oral, or electronic communication” and from intentionally disclosing the contents of information that was illegally intercepted.

“Facebook’s IAAP program conduct squarely meets the statutory proscriptions … within the meaning of the statute,” lawyers for the plaintiffs told the court.

Facebook’s program does not fall within exceptions outlined in the law, particularly because Snapchat did not approve the interception and decryption of its information, they said. Further, Snap’s contact with users prohibits the behaviors in which Facebook engaged.

Meta did not respond to a request for comment.

Netflix Nexus

Reed Hastings, chairman of Netflix’s board of directors, also served on Facebook’s board for years.

Plaintiffs have attempted to secure documents and a deposition from Mr. Hastings, but he has refused so far, according to other filings. The plaintiffs asked the court to force Mr. Hastings to comply with subpoenas.

The plaintiffs separately said that it asked Netflix for materials but that Netflix had only produced 54 documents, “all of which are collateral (at best) to the issues Advertisers asked for documents on, and none of which fall within the clearly defined categories of documents that Advertisers repeatedly told Netflix were at the core of what was sought for Advertisers’ case.”

Netflix and Facebook have a yearslong relationship that includes Netflix spending tens of millions of dollars on Facebook advertising and Facebook granting Netflix unique access to its data, the filings noted.

The plaintiffs asked the court to compel Netflix to produce relevant documents.

Netflix did not respond to a request for comment.

Layoff announcements continue day after day and WARNs are on the rise, but initial jobless claims continues to trend along in very smooth manner (too smooth)…

Source: Bloomberg

NSA initial claims dipped notably last week…

Source: Bloomberg

And continuing claims have been flat around 1.8mm Americans for months…

Source: Bloomberg

This data continues to confound.

Stock futures are pointing to a flat open on the last trading session of the week, month, and quarter, following a late-session spike that took the S&P 500 to yet another record as the much anticipated quarter-end pension dump (as big as $32BN according to Goldman failed to materialize, but may very well show up today). As of 7:45am ET, both Nasdaq and S&P futures were down 0.1% after Fed Governor Christopher Waller poured cold water on the path to lower interest rates, saying there’s no rush to cut rates given recent “disappointing” inflation figures.

The broadest equity index is set for a gain of 10% for the first three months of the year, with the Nasdaq 100 just short of a 9% rise. Europe’s Stoxx 600 benchmark also notched up another record as Arnaud Cayla, deputy CEO at Cholet Dupont Asset Management, said: “Investors have no reason to sell”, and sure enough, a look at either the weekly S&P candle chart which is up 19 of the past 22 weeks…

… and the monthly, up five straight months.

In premarket trading, RH shares jumed 7.8%, reversing a 10% plunge, after the furniture retailer reported fourth-quarter results. While the company missed on adjusted earnings per share for the period, its guidance update, which showed expectations of accelerating demand throughout fiscal year 2024, led to a positive reaction among analysts. Here are the other notable premarket movers:

• Akebia Therapeutics shares jump 20% after the biopharmaceutical company said the FDA approved vadadustat, an anemia medicine already available in other countries as Vafseo.
• Estee Lauder shares gain 2.0% as Bank of America upgrades the personal care products maker to buy from neutral, saying that the company’s earnings have now bottomed.
• MillerKnoll shares slide 17% after the office furniture maker issued guidance for fourth-quarter adjusted earnings per share that missed estimates. Additionally, the company reported third-quarter sales that did not meet consensus expectations.
• Snowflake shares are up 3.1% after Chief Executive Officer Sridhar Ramaswamy reported the purchase of about $5 million in shares late Wednesday.
• Sprinklr shares rise 9.5% after the application software company gave a full-year forecast that is stronger than expected. It also reported fourth-quarter results.

10Y treasury yields rose 4 basis points to 4.22% and the Bloomberg Dollar Spot Index rises 0.2% to its highest since mid-February after the Fed’s hawkish governor Christopher Waller said the Fed still needs to see lower inflation before easing monetary policy in a speech titled, “There’s Still No Rush.” As a result, Brown Brothers strategists Win Thin and Elias Haddad wrote in a note that “market easing expectations for the Fed still need to adjust.” 

Waller pointed to a strong US economy and robust hiring as further reasons the Fed has room to wait to gain confidence that inflation is on a sustained path toward the 2% target. “In my view, it is appropriate to reduce the overall number of rate cuts or push them further into the future in response to the recent data,” he said in prepared remarks Wednesday before the Economic Club of New York.

Stock markets are on cusp of closing out blockbuster gains for the quarter. MSCI’s global equity index has soared 8% in the past three months, supported by rallies in the US, Japan and the frenzy for artificial intelligence. Data on US economic growth and jobless claims are scheduled later today. The Fed’s preferred inflation gauge — the core personal consumption expenditures price index — is due on Friday, when markets will be closed.

European stocks rise to another record high and are on track for the best quarterly performance in a year. The Stoxx 600 climbed 0.3% marking a four-day winning streak, led by gains in travel, consumer product and retail shares. The rally in European stocks has broadened out this month beyond the biggest names on the benchmark such as ASML Holding NV and Novo Nordisk A/S, unlike the US where the gains remain concentrated in big tech stocks.

Earlier in the session, Asia stocks steadied as gains in China countered declines in Japan, with the regional benchmark on course for its biggest first-quarter gain in five years. The MSCI Asia Pacific Index dropped as much as 0.6% before paring most of the loss. TSMC and Toyota were among the biggest drags on the gauge, while Chinese internet stocks including Tencent rose and Taiwan’s Hon Hai Precision climbed to a record on AI expectations. Many markets will be closed for holidays on Friday.

• Hang Seng and Shanghai Comp. were underpinned by tech strength and after another firm PBoC liquidity operation, while China’s 3rd highest-ranked official Zhao Leji stated at the Boao Forum that China’s economy will provide a strong driving force for a world recovery and that China will reduce the ‘negative list’ for foreign investors.
• Nikkei 225 was pressured after the JPY bounced back from 33-year lows amid intervention risks.
• ASX 200 rose to a fresh record high with the broad-based gains in the index led by strength in the mining industry.

In FX, the Bloomberg Dollar Spot Index rises 0.2% to its highest since mid-February after Federal Reserve Governor Christopher Waller said there is no rush to lower interest rates. Meanwhile, the euro fell to a five-week low and traded below $1.08 as the dollar strengthened.

In rates, treasury futures traded off lows into early US session, although cash yields remain cheaper by up to 6bp across front-end of the curve after comments from Fed’s Waller after Wednesday’s close, who said that data warrants fewer cuts or a later start to monetary-policy easing. Treasury yields are cheaper by 6bp to 1bp across the curve in a bear flattening move, with front-end led losses flattening 2s10s, 5s30s spreads by 2.5bp and 3bp on the day; 10-year yields around 4.215%, cheaper by 2.5bp vs. Wednesday close with bunds and gilts marginally outperforming in the sector. Additional hawkish comments seen from BOE’s Haskel in early London session, who said rate cuts are a long way off, according to a Financial Times report. US session focus includes GDP, jobless claims data in a shortened trading day, with SIFMA recommending a 2pm New York cash close.

In commodities, oil prices advance, with WTI rising 0.9% to trade near $82.10. Spot gold rises another 0.7% to trade at a fresh all-time high above $2,200.

Bitcoin reversed Wednesday’s losses driven by another round of futures manipulation, and jumps 2% to around $70,500 after the latest bitcoin ETF data showed continued inflows.

The US economic data slate includes 4Q final GDP, initial jobless claims (8:30am), March MNI Chicago PMI (9:45am), February pending home sales, March University of Michigan sentiment (10am) and Kansas City Fed manufacturing activity (11am). Fed speaker slate empty for the session; Daly (11:15am) and Powell (11:30am) are scheduled to speak Friday

Market Snapshot

• S&P 500 futures little changed at 5,305.00
• STOXX Europe 600 up 0.1% to 512.47
• MXAP down 0.4% to 176.24
• MXAPJ up 0.3% to 535.76
• Nikkei down 1.5% to 40,168.07
• Topix down 1.7% to 2,750.81
• Hang Seng Index up 0.9% to 16,541.42
• Shanghai Composite up 0.6% to 3,010.66
• Sensex up 1.3% to 73,961.36
• Australia S&P/ASX 200 up 1.0% to 7,896.86
• Kospi down 0.3% to 2,745.82
• German 10Y yield little changed at 2.31%
• Euro down 0.3% to $1.0792
• Brent Futures up 0.5% to $86.54/bbl
• Gold spot down 0.0% to $2,194.58
• US Dollar Index up 0.24% to 104.59

Top Overnight News from Bloomberg

• Fed’s Waller (voter, hawk) said still no rush to cut rates in the current economy and the Fed may need to maintain the current rate target for longer than expected, while he needs to see more inflation progress before supporting a rate cut and needs at least a couple of months of data to be sure inflation is heading to 2%. Waller said he still expects the Fed to cut rates later this year but added the economy’s strength gives the Fed space to take stock of the data and data suggests fewer rate cuts possible this year.
• S&P affirmed the US at AA+; Outlook Stable, while it stated the US outlook remains stable indicating its expectation of continued economic resiliency, as well as proactive and effective monetary policy execution. S&P said the stable outlook reflects the US’s institutional checks & balances, and free flow of info contributing to stability and predictability in economic policies but added that ratings are constrained by fiscal weaknesses such as high net general government debt and deficits.
• Several board members at the BOJ called for a gradual path towards policy normalization when the central bank last week raised interest rates for the first time since 2007. “The bank would need to emphasize its cautious stance in the case of terminating the negative interest rate policy, as Japan’s economy is not in a state where rapid policy interest rate hikes are necessary,” said one board member, according to a summary of opinions at its March meeting released on Thursday. FT
• The BOE is probing how UK businesses would be hit by the reversal of a long-running private equity boom, officials said, as they escalated warnings about leverage, transparency and valuations. FT
• German retail sales fell more than expected in February, showing consumers remained cautious and a first-quarter rebound was increasingly unlikely in Europe’s largest economy. Spending on goods by German consumers fell for the fourth consecutive month, dropping 1.9% from the previous month and 2.7% from a year earlier, according to data from the federal statistics agency. Economists polled by Reuters had expected a monthly rebound of 0.3%. FT
• Christopher Waller said there’s no rush to lower US interest rates, adding that recent eco data warrants delaying or reducing the number of cuts this year. Price trends are “disappointing” and he wants to see “at least a couple months of better inflation data” before easing. BBG
• Thames Water shareholders refused to provide the first £500 million needed for a turnaround plan to tackle chronic leaks and sewage spills around London. Parent company Kemble said it will be unable to refinance or repay a £190 million loan maturing on April 30 without an extension. BBG
• Blockbuster deals more than doubled in the first quarter of this year, signaling a nascent recovery in the mergers and acquisitions market following a lengthy drought. The number of takeovers worth at least $10bn jumped in the first three months of 2024 compared with the same period last year, driven by large US deals in the energy, tech and financial sectors, according to data from the London Stock Exchange Group. Eleven such transactions, with a total value of $215bn, were struck during the quarter, up from five takeovers worth a combined $100bn in the first three months of 2023. FT
• Blackstone’s Steve Schwarzman said the private credit industry will expand further even as critics warn of a bubble. “Our default rate on these types of loans is three-tenths of 1%,” he said. The firm is also planning more retail-investment products in Japan. BBG
• Insurance payouts for the Baltimore bridge collapse may be among the largest ever in marine insurance, Lloyd’s of London CEO John Neal said. “It’s a multi-billion dollar loss.” BBG
• Sam Bankman-Fried faces a 40-to-50 year prison term in his fraud case sentencing due today. The FTX co-founder’s lawyers are asking for leniency, arguing that the crypto business was solid and the company expects to repay $8 billion in missing customer funds. BBG
• Home Depot (HD) has entered into a definitive agreement to acquire SRS Distribution for a total enterprise value (including net debt) of approximately USD 18.25bln

A more detailed look at global markets courtesy of Newsquawk

APAC stocks partially sustained the momentum from the late ramp-up on Wall St heading into quarter-end. ASX 200 rose to a fresh record high with the broad-based gains in the index led by strength in the mining industry. Nikkei 225 was pressured after the JPY bounced back from 33-year lows amid intervention risks. Hang Seng and Shanghai Comp. were underpinned by tech strength and after another firm PBoC liquidity operation, while China’s 3rd highest-ranked official Zhao Leji stated at the Boao Forum that China’s economy will provide a strong driving force for a world recovery and that China will reduce the ‘negative list’ for foreign investors.

Top Asian news

• China’s top legislator Zhao Leji said at the Boao Forum that Asian countries should inject a strong impetus for world economic growth and that China’s economy will provide a strong driving force for world recovery. Zhao also stated that they oppose trade protection and decoupling, while he added that China is willing to collaborate with other countries on tech innovation and will reduce the ‘negative list’ for foreign investors.
• China’s Commerce Minister discussed with Dutch counterpart lithography machines and strengthening semiconductor industry cooperation, while the Commerce Minister stated that China hopes the Netherlands will uphold the spirit of the contract, support companies in fulfilling their contractual obligations, and ensure the normal conduct of lithography machine trade.
• BoJ Summary of Opinions from the March 18th-19th meeting stated that a member said YCC, negative rate and other massive stimulus tools have accomplished their roles and that the BoJ must guide monetary policy using short-term rate as main policy means in accordance with economic, price and financial developments. Furthermore, a member said shifting to ‘normal’ monetary easing is possible without causing short-term shocks and may have a positive impact on the economy in the medium- and long-term perspective, while a member warned that changing policy now could delay achievement of the BoJ’s price target.
• Citi raises China 2024 GDP growth forecast to 5% (vs 4.6% reported in Jan).
• China’s Commerce Ministry is lifting anti-dumping and anti-subsidy tariffs on Australian wine as of 29th March

Mixed sentiment across Europe, Stoxx600 (+0.2%), with a modest upward bias following a mostly-firmer APAC handover; the FTSE 100 (+0.5%) benefits from the weaker Pound. European sectors hold a strong positive tilt; Travel & Leisure propped up by Evolution (+1.8%), whilst Construction & Materials is found at the foot of the pile. US Equity Futures (ES -0.1%, NQ -0.2%, RTY -0.2%) are subdued following yesterday’s late rally and ahead of the long weekend. A busy docket ahead will dictate price action today.

Top European news

 

FX

• DXY picked up strength in early European trade as participants digested hawkish remarks from the influential Waller at the Fed. DXY now at levels not seen since mid-Feb. Currently eyeing the YTD peak at 104.97. PCE tomorrow looms large.
• EUR has been dragged lower by USD strength; EUR/USD below the double-bottom at 1.0802 and the 1.08 level with a session trough at 1.0775. Next large is the 20th Feb low at 1.0761.
• GBP is outmuscled by the dollar with Cable tripping below the 1.26 level in quiet newsflow, where it eventually found support at its 200 DMA at 1.2588; since, it reclaimed 1.26, where it currently resides. Haskel remarks are hawkish but not necessarily a consensus view on the MPC.
• JPY is one of the better relative performers vs. the USD but ultimately softer. Fresh Yen-specific drivers light ahead of CPI later. Currently contained within yesterday’s 151.02-97 range.
• Antipodeans lag against the majors as the uptick in the USD saw AUD/USD trip below last week’s low at 0.6503 and the 0.65 mark, with softer Australian Retail Sales also a factor.
• PBoC set USD/CNY mid-point at 7.0948 vs exp. 7.2259 (prev. 7.0946).

Fixed Income

• USTs are pressured and dragging fixed benchmarks lower after Fed’s Waller stuck to his hawkish bias and made clear that there is no need to rush towards rate cuts.
• Bunds ticked higher on the region’s retail numbers, though proved fleeting, with Bunds now probing 133.00 to the downside conforming to the post-Waller pressure seen in Treasuries.
• Gilt price action is in-fitting with peers; specifics light after an interview from BoE’s Haskel who underscored his hawkish credentials and made clear that while he is no longer voting for further tightening he is in no rush to vote for easing. Gilts currently at 99.57 and will find support at 99.41, 27 & 16 from the last three sessions.

Commodities

• A positive day thus far for the oil complex despite the strengthening Dollar and quiet newsflow, though has been edging off best levels in recent trade. Brent reside within 86.30-60/bbl parameters.
• Precious metals vary with spot silver feeling the pressure from the firming Dollar, whilst spot gold is more resilient, potentially supported via geopols/recent BTC strength. XAU briefly printed a fresh weekly high at USD 2,200.75/oz before pulling back under USD 2,200.
• Mixed trade across base metals with copper futures relatively flat; 3M LME copper trades on either side of the unchanged mark and towards the bottom of a USD 8,830.50-8,930.50/t.
• Russia’s Kuibyshev mid-sized oil refinery is at a complete halt following a drone attack on March 23, via Reuters citing sources.

Geopolitics

• US military said it destroyed four long-range drones launched by Iranian-backed Houthis in Yemen, according to Reuters.

US Event Calendar

• 08:30: March Initial Jobless Claims, est. 212,000, prior 210,000
  • March Continuing Claims, est. 1.82m, prior 1.81m
• 08:30: 4Q GDP Annualized QoQ, est. 3.2%, prior 3.2%
  • 4Q Personal Consumption, est. 3.0%, prior 3.0%
  • 4Q Core PCE Price Index QoQ, est. 2.1%, prior 2.1%
  • 4Q GDP Price Index, est. 1.6%, prior 1.6%
• 09:45: March MNI Chicago PMI, est. 46.0, prior 44.0
• 10:00: Feb. Pending Home Sales YoY, prior -6.8%
• 10:00: March U. of Mich. Sentiment, est. 76.5, prior 76.5
  • March U. of Mich. Current Conditions, est. 79.6, prior 79.4
  • March U. of Mich. Expectations, est. 74.7, prior 74.6
  • March U. of Mich. 1 Yr Inflation, est. 3.1%, prior 3.0%
  • March U. of Mich. 5-10 Yr Inflation, est. 2.9%, prior 2.9%
• 10:00: Feb. Pending Home Sales (MoM), est. 1.5%, prior -4.9%
• 11:00: March Kansas City Fed Manf. Activity, est. -4, prior -4

DB’s Jim Reid concludes the overnight wrap

Welcome to the last business day of Q1 for a sizeable chunk of the global financial market. I’m going on holiday for a couple of weeks tomorrow so see you on the other side. Henry and Peter will be keeping the EMR in safe hands while I’m away. Tonight I’ll be doing the usual negotiating dance with my wife as to what time we start off on our 14-hour drive to the ski slopes tomorrow. I am an early person and worry about falling asleep at the wheel on the last leg of the journey where I always drive, so I’d be quite happy leaving at 5am. My wife is a night person and doesn’t want to get up too early so she’s happier leaving at around 9am. So the bid-offer is always 5-9. Before you trade I should say we have never left before 845am so that tells you all you need to know about my powers of persuasion.

As we approach the end of Q1, it’s fair to say that is has been a very good quarter for risk and less so for government bonds. In equities some highlights include (price only) the Nikkei (+20%), the DAX (+10.3%), the S&P 500 (+10.04%) and the Magnificent-7 (+17.79%) on the upside, but with the Hang Seng (-2.16%) the standout on the downside. Elsewhere 10yr USTs and Bunds are +32bps and +27bps respectively and we’ve moved from pricing in 158bps of Fed cuts by YE to c.75bps. US HY credit is -22bps tighter and WTI oil is +13.54%. All with a few hours of trading left in the quarter.

As trading floors resemble ghost towns tomorrow, we’ll see the US core PCE print. DB expects +0.27% vs. 0.42% last month. In Powell’s press conference, he remarked that the month-over-month print for core PCE could be “well below 30bps” at the end of the month. Taking him at his word does offer downside risk to our economists’ forecast. They believe upward revisions to the January healthcare services prices could square these two numbers. We’ll also see French and Italian inflation tomorrow so a busy day for a holiday!

As we await these events, yesterday was another day where technical factors related to quarter-end appeared to dominate, with a late rally leading to strong close for the S&P 500 (+0.86%) and with it to a fresh all-time high. Treasuries saw a steadier rally, with 10yr yields down -4.2bps across the day. Overnight though we’ve heard notably hawkish comments from Fed Governor Waller. He suggested that “it is appropriate to reduce the overall number of rate cuts or push them further into the future in response to the recent data”, specifically referring to the recent inflation data as “disappointing”. So expressing clearly more concern about the upside in January/February inflation than we heard from Powell last week.

After this markets have dialled back expectations of Fed cuts by -4.6bps to 74.9bps at year end adding to a 1bps decline yesterday. 2yr and 10yr yields are +3.9bp and +1.4bps higher in Asian trading. US futures haven’t responded though and are flat. On a similar note the BoE Haskel has just been quoted in the FT, as we go to print, that “wage growth remains too high” and that interest rates cuts are a “long way off”. He is a known hawk and until last week’s meeting was voting for BoE hikes.

Equity market moves had become very subdued as we moved past last week’s major central bank meetings, but some volatility has returned in the past couple of sessions. In a near mirror image of Tuesday’s close, the S&P 500 rallied more than half a percent within the final hour of trading to narrowly exceed the record level it posted last Thursday and bring the YTD gain to above 10%. The VIX index of implied equity volatility fell to a 2-month low, down -0.46 points to 12.78. Earlier in the day, European equities also saw a positive if less eventful session, with Stoxx 600 (+0.13%), Dax (+0.50%) and CAC (+0.25%) all closing at record highs.

In a sign of potential sector reweighting playing out, rate-sensitive and domestically-oriented stocks led the gains, with utilities (+2.75%) and industrials (+1.60%) outperforming within the S&P 500. This also led the Dow Jones (+1.22%) and Russell 2000 (+2.13%) to outperform, with the latter seeing its strongest day since mid-February. By contrast, tech mega caps lagged behind, with the Magnificent 7 up a marginal +0.03%. Reweighting effects may have even played out within the Magnificent Seven, with Nvidia seeing another major decline (-2.50% after -2.57% on Tuesday), while Apple (+2.12%) and Tesla (+1.22%) outperformed, having lagged YTD.

The Treasury rally yesterday was helped along by a solid 7yr auction, as $43bn of bonds were issued 0.8bps below the pre-sale yield with the indirect bidder share its highest since October. But quarter-end positioning effects may have also contributed to the bond rally – in a note earlier this week, our US rates strategists highlighted how the strong equity rally seen in Q1 pointed to potential significant quarter-end rebalancing into long-dated Treasuries. Consistent with this, long-dated Treasuries outperformed yesterday, with 30yr yields down -4.7bps. It’s a shortened session today in US bonds so expect activity to mostly grind to a halt in the European afternoon.

On the ECB side, yesterday we heard from Cipollone (one of the more dovish voices), who said that “if incoming data confirm the scenario foreseen in the March projections, we should stand ready to swiftly dial back our restrictive monetary policy stance”. The more hawkish Kazaks said he didn’t “have any objection at the moment” to market pricing of a June rate cut, while noting that “we need to be very cautious”. This backdrop saw slight dovish repricing of near-term ECB expectations, with a 25bp June cut fully priced by yesterday’s close (vs. 94% the day before), the first time this has been the case since March 8. Bonds posted a solid rally in Europe, with 10yr bund yields down -5.8bps, while OATs (-4.5bps) and BTPs (-3.7bps) saw slightly smaller moves.

In other central bank news, Sweden’s Riksbank became the latest G10 central bank to signal it’s approaching the start of rate cuts. While keeping rates on hold, it indicated that it saw “a 50% probability of a 25bps cut [at the next meeting] in May”. In large part, this was catching up to market pricing, which further inched up expectations of a May cut from 63% to 67% following the decision.

Elsewhere in Europe, we had the first taste of March inflation data, as Spanish inflation came in a touch below expectations at 3.2% (vs. 3.3% expected) on the EU-harmonized measure. We will get prints for France and Italy tomorrow, followed by Germany and the euro area aggregate next Tuesday. For more, see our European economists’ preview here. The March inflation prints are the most important remaining data points ahead of the next ECB meeting in just two weeks’ time. Similarly to the US, the euro area has seen upside surprises in domestic inflation at the start of the 2024, after a sizeable slowing in the second half of 2023. Whether this upside persists may prove crucial to whether the central banks deliver the starts of their easing cycles that they’ve increasingly signaled for Q2.

In other European data, surveys showed a continued gradual improvement in momentum in March. The European Commission’s economic sentiment picked from 95.4 to 96.3 (va. 96.2 expected), while France’s consumer confidence index rose to 91 (vs. 90 expected), its joint highest since February 2022.

Asian equity markets are seeing divergent trends this morning. The Nikkei (-1.63%) is the biggest underperformer across the region mostly on Japanese stocks going ex-dividend but perhaps a little on rising expectations of possible intervention in the FX market. Elsewhere, the KOSPI (-0.12%) is also lower while the Chinese stocks are outperforming with the Hang Seng (+1.63%), the CSI (+1.12%) and the Shanghai Composite (+1.09%) all comfortably higher. Meanwhile, the S&P/ASX 200 (+0.98%) is extending its gains for a second straight session, hitting an intraday record high of 7,901.20.

To the day ahead now, data releases include jobless claims, final March University of Michigan consumer survey, March MNI Chicago PMI, Kansas City Fed manufacturing activity, and February pending home sales in the US. In Europe we’ll have March unemployment claims and February retail sales for Germany, February money supply for the euro area and Q4 current account balance for the UK. Among central bank speakers, we have ECB’s Villleroy and Panetta.

And while the EMR and most markets are off on their Easter break, Friday will see the important February March PCE inflation print in the US, as well as March flash inflation prints in France and Italy. And we are also due to hear from Fed’s Powell and Daly.

Authored by Michael Washburn via The Epoch Times,

The long-running legal saga of Sam Bankman-Fried will come to an end on March 28 when Judge Lewis Kaplan announces the sentence of the FTX founder during a 9:30 a.m. hearing at the U.S. Courthouse in Lower Manhattan.

In November 2023, jurors decided to convict Mr. Bankman-Fried on all seven of counts of conspiracy and fraud with which government lawyers charged him.

Mr. Bankman-Fried and his attorneys have repeatedly argued that he didn’t intentionally do anything wrong and that he deserves no more than 6 1/2 years in jail. In his trial testimony in October 2023, Mr. Bankman-Fried insisted he used sophisticated analytics to try to keep track of the state of FTX’s finances and suggested that subordinates acting without his knowledge or imprimatur made costly mistakes.

But prosecutors, citing testimony from Alameda Research head Caroline Ellison, who was at times romantically involved with Mr. Bankman-Fried, vehemently disagreed with the more charitable view and are pressing for a sentence of half a century or longer.

The government’s tough stance has found support from the current CEO of FTX, John Ray III, the former chair of the recovery corporation in another high-profile insolvency: that of Enron, which imploded in December 2001. In a letter to Judge Kaplan, Mr. Ray denounced the “categorically, callously, and demonstrably false” claims that Mr. Bankman-Fried and his lawyers have put forth in the hope of getting a lighter sentence.

Occupying a middle ground between the defense position and the prosecutors, Jeffrey Hooke, a senior lecturer at Johns Hopkins Carey School of Business in Maryland and former investment banker, said that Mr. Bankman-Fried’s transgressions are serious but nowhere near on par with those of convicted fraudster Bernie Madoff, for instance, who received a 150-year sentence for his $65 billion Ponzi scheme and died in prison in 2021.

Mr. Bankman-Fried deserves a lighter sentence than either Mr. Madoff or the senior Enron executives responsible for the calamity of December 2001, Mr. Hooke said.

“Now, stuck with a guilty verdict, an appropriate sentence seems to me to be at least 10 years. The Enron guys essentially got 12 years after appealing longer sentences, and I might argue that they were truly aware of their crimes, whereas Bankman-Fried might have been somewhat less aware or deliberate,” Mr. Hooke told The Epoch Times.

Dominoes Fall

The verdict in November 2023 came exactly one year after a Nov. 2, 2022, report in the cryptocurrency publication Coindesk began to stoke wide concern about the state of FTX’s finances. The report cited a leaked balance sheet of FTX’s hedge fund trading affiliate, Alameda Research.

According to Coindesk’s analysis, a bulk of Alameda’s $14.6 billion of assets was in the form of FTX’s own crypto token, FTT, rather than a fiat currency. This not only suggested that Alameda’s wealth was potentially less fungible than many had assumed but also pointed to extensive commingling of FTX customer deposits with the hedge fund affiliate.

Whether or not Coindesk was correct to impute instability and weakness to FTX on the basis of its position in FTT, the reaction in the market was swift. On Nov. 6, 2022, Changpeng Zhao, then-CEO of Binance, one of the other leading cryptocurrency exchanges, sent out a sharply worded post on Twitter.

Mr. Zhao alluded to the fact that Binance had been distancing itself from FTX over the past year and had received the equivalent of about $2.1 billion in U.S. dollars in the form of both cash and the FTT token.

“Due to recent revelations that have come to light, we have decided to liquidate any remaining FTT on our books. We will try to do so in a way that minimizes market impact,” Mr. Zhao wrote.

Despite that assurance, Binance’s move, and forthright public announcement, immediately helped fuel a run on the bank during which customers pulled $6 billion from FTX in three days.

The exchange would never recover; some $9 billion of customer funds are still lost through the commingling of funds and Bankman-Fried’s lavish spending.

Damian Williams, US attorney for the Southern District of New York, details the indictment of Samuel Bankman-Fried in New York City, on Dec, 13, 2022. (Stephanie Keith/Getty Images)

The Feds Move In

U.S. federal prosecutors were quick to take action. On Dec. 13, 2022, the Department of Justice announced that a federal grand jury had returned an indictment charging Mr. Bankman-Fried with wire fraud, conspiracy to commit wire fraud, securities fraud, money laundering, campaign finance violations, and fraud against the Federal Election Commission.

The last allegation relates to Mr. Bankman-Fried drawing upon customer deposits to make large donations to both Democrats and Republicans with whom he wanted to curry favor.

But it was mainly Democrats who benefited from Mr. Bankman-Fried’s largesse, including a reported $5.2 million donation to then-candidate Joe Biden in 2020. According to The Wall Street Journal, this gift made Mr. Bankman-Fried second only to Michael Bloomberg among top-spending backers of President Biden.

Government lawyers briefly dropped the campaign finance charges on the technical grounds that Bahamas authorities hadn’t included them among their stated grounds for extraditing Mr. Bankman-Fried from the Bahamas to New York to face trial in December 2022. Then, in August 2023, prosecutors did an about-face and announced that Mr. Bankman-Fried was still on the hook for campaign finance violations.

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“The Justice Department has filed charges alleging that Samuel Bankman-Fried perpetrated a range of offenses in a global scheme to deceive and defraud customers and lenders of FTX and Alameda, the defendant’s crypto hedge fund, as well as a conspiracy to defraud the United States government,” Attorney General Merrick Garland said.

Michael J. Driscoll, assistant director of the FBI’s New York office, was blunt about Mr. Bankman-Fried’s misuse of FTX deposits to pay Alameda’s expenses and to make other investments.

“If you deceive and defraud your customers, the FBI will be persistent in our efforts to bring you to justice,” Mr. Driscoll said.

In this courtroom sketch, Sam Bankman-Fried watches as defense lawyer Mark Cohen makes his opening remarks in Mr. Bankman-Fried’s fraud trial over the collapse of FTX, at Federal Court in New York, on Oct. 4, 2023. (Jane Rosenberg/Reuters)

A Fatal Move

Bankman-Fried didn’t gain any sympathy from the media, the public, or prosecutors by situating himself and nine FTX colleagues in an 11,500-square-foot suite in a $35 million Bahamas mansion.

Mr. Hooke suggested that some people still may not fully appreciate the extent of the error that Mr. Bankman-Fried made in agreeing to waive his right to formal extradition hearings and undergo transfer to the United States.

“He should never have left the Bahamas. He could have dragged out the extradition request for years, and by the time he was back in New York, a lot of this controversy would have blown over, and he could cut a decent plea deal,” Mr. Hooke told The Epoch Times.

Once taken into custody in New York, Mr. Bankman-Fried underwent a lengthy ordeal, during which both a federal appeals court and Judge Kaplan repeatedly ruled against granting him pre-trial release.

Judge Kaplan said that, given the seriousness of the charges against him, Mr. Bankman-Fried posed a flight risk, and the judge overruled arguments from the defense team that his dietary needs went unmet in prison and he was unable to confer properly with his lawyers in preparation for trial.

Mr. Bankman-Fried’s personal life also became the subject of extensive media scrutiny in the weeks leading up to the trial’s commencement.

The Epoch Times reached out to Mr. Bankman-Fried’s legal team for comment but received none by press time.

Readers are well aware that the office segment of the commercial real estate sector has been in turmoil for the past year with soaring vacancy rates, a record amount of available sublease space, and rising defaults.

Cost-cutting strategies by major corporations will accelerate the office downturn. This will be in the form of lease expirations and/or the early termination of leases. 

A leaked document by Business Insider reveals that Amazon is trying to save $1.3 billion over the next three to five years. A person familiar with the new strategy said the company plans to “let certain leases naturally expire, stop the use of some office floors, and negotiate early lease terminations for some buildings.” 

The person said Amazon’s current office vacancy rate is 33.8% but expects it to drop to 25% by the end of the year and decrease to 10% over the next three to five years. According to the document, this move to shrink Amazon’s corporate footprint will save the company $1.3 billion in annual operating expense savings. 

On Tuesday, BI reported that Amazon initiated another round of layoffs, this time 160 employees from its advertising unit, extending its 18 months of job cuts. The current high office vacancy rate is a direct result of slower growth and continued layoffs. 

Like Google, Meta, and many other big tech companies, Amazon overhired in the run-up to and during Covid. Now, the hiring cycle is reversing as artificial intelligence threatens white-collar jobs. 

In an email to BI, Brad Glasser, an Amazon spokesperson, said: 

“We’re constantly evaluating our real-estate portfolio based on the dynamic and diverse needs of Amazon’s businesses by looking at trends in how employees are using our offices.

 “In some cases, employees may move buildings to increase collaboration and drive better utilization of our workspaces. In other cases, we may take on additional space where we’re currently limited or make adjustments where we have excess capacity. The changes we’ve already made are improving vacancy rates, and we expect to see further progress as we continue to learn and iterate on our portfolio.”

Amazon is one of many companies that have been shrinking its corporate footprint. Many other big tech firms have been slashing square footage as office space floods the market, pressuring tower values lower and leaving owners with a difficult decision to either refinance (if they can) or default. 

The rating agency Fitch recently warned that the sliding tower value could exceed GFC’s real estate crisis, as the bottom has yet to be found. 

One week ago, Goldman told clients that office commercial mortgage-backed securities were being extended and modified rather than refinanced, which has “helped mitigate a default wave and a sharp pick-up in losses on CRE loan portfolios.” But this only means the can is being kicked down the road until after the presidential elections.