Month: March 2024

In the past several months, we had been shocked by how much digital ink was spilled to praise Japan’s “stock market revival”, which according to very serious economists was based on strong fundamentals and was justified by the economy (which recently slumped into recession)…

… when in reality the entire move was driven by the relentless collapse and premeditated destruction of Japan’s currency at the hands of the Bank of Japan. So much so that long USDJPY was – together with long Treasuries – the most consensus trade of 2024.

And then overnight we got a reminder of just how little Japanese stock performance is fundamentally driven, and how it is entirely a function of the weak yen, when the latest counter-trend surge in the yen sent the Topix and Nikkei225 both plunging as much as 3%, the biggest drop since October 4, amid growing speculation the Bank of Japan will raise interest rates lifted the yen and hurt exporters, while a report in local press claimed that the BOJ could end Yield Curve Control – which has defined Japan’s bond market for the past decade and kept yields from exploding – as soon as this month.

Automakers and banks were among sectors leading the drop on the Topix which closed 2.2% lower at 2,666.83 in Tokyo, with 31 of 33 sub-sectors dropping, after a powerful buying thrust in the last 30 minutes prevented a LOD close. The exporter-heavy Nikkei 225 declined 2.2% to 38,820.49, leading losses in Asia. Tech shares slumped, following US peers lower, as investors took profit from some of the top performers over the past year.

Automobile companies such as Toyota Motor Corp. contributed the most to the Topix’s decline, decreasing 3.1%. Out of 2,150 stocks in the index, 302 rose and 1,807 fell, while 41 were unchanged. Semiconductor companies including Renesas Electronics Corp. dropped after Nvidia Corp. and other US tech stocks fell amid profit-taking. The Philadelphia Semiconductor index tumbled 4% on Friday.

The catalyst for the drop was the surge in the yen which strengthened as much as 0.4% to 146.54 vs the dollar, putting the trade we suggested to our premium subs one month ago deep in the money.

The surge in the yen quickly freaked out all those who said Japanese stocks were rising purely on fundamentals, because… well, the recent record high had absolutely nothing to do with fundamentals.

“Until we see the results of the BOJ’s policy next week, it will be difficult to buy in the stock market due to concerns about the yen’s strength,” Shoji Hirakawa, strategist at Tokai Tokyo. “There are no signs of a USDJPY rally in the currency markets.”

But… but… what does USDJPY have to do with stock markets? Guess the answer is… everything, just ask the Weimar Republic.

Expectations the BOJ will tweak policy at the March 18-19 meeting were further fueled by a report in local Jiji that the bank is considering scrapping its yield curve control program, and that a rising number of policymakers are leaning toward ending negative rates due to expected larger wage increases this year. Data Monday showing the economy avoided falling into a recession at the end of last year also bolstered the case for the BOJ to raise rates for the first time since 2007.

“Today’s sell-off reflects the realization that after many false dawns, the Bank of Japan’s exit from the Negative Interest Rate Policy is now likely just over one week away,” said Tony Sycamore, a market analyst at IG Australia Pty Ltd. “This means that investment decisions made over many years are hastily being re-evaluated to reflect a reality many were thinking was still months away.”

Guess “investing” is a little bit more difficult when the central bank isn’t doing it for you with endless currency debasement,huh?

The Nikkei recently hit the key 40,000 level for the first time after reclaiming its 1989 peak earlier this year but has since slumped, following the plunge in USDJPY.

The yen edged higher to 146.98 per dollar Monday, after four days of gains. The Nikkei recently hit the key 40,000 level for the first time after reclaiming its 1989 peak earlier this year. Foreign investors had been buying into Japan’s biggest companies on improving shareholder returns and the weak yen.

The yen looks poised to test the 145 level per dollar level and a break of that may prompt a quick move toward 140, said Amir Anvarzadeh, a strategist at Asymmetric Advisors Pte who said that “the market’s reaction to this seems to suggest that a lot has been riding on weak yen to continue to support multinationals rather than bets on changing corporate governance etc. which has been the trigger behind the more positive Japan narrative.”

Just as we have said all along.

Investors will be on the watch for whether the BOJ will buy exchange-traded funds after the Topix fell more than 2%. The last time the central bank purchased ETFs was in October of last year when the index dropped by a similar amount in the morning trading session. That follows an unwritten rule that only a drop of at least 2% in the benchmark gauge in the morning triggers BOJ buying of the funds.

The drop in stocks – and the USDJPY – may now become self-reinforcing because contrary to expectations for the BOJ to step in and save Mrs Watanabe, the Bank of Japan did not buy ETFs during the rout despite the Topix index falling more than 2%, a level widely seen as having been the central bank’s trigger for purchasing the instruments.

Realizing that the yen-devaluation driven party is over, Morgan Stanley strategist Gilbert Wong said that Japan’s momentum trade is at risk of unwinding – because that’s really all it is, one giant momentum trade – and the bank is “closely monitoring” the US unwinding in the last week because “historically US Momentum stocks have been highly correlated with Japan Momentum stocks.”

While Japan’s momentum stocks are still on the rise, with the 6-months rolling factor return approaching extreme territory
MS expects “the seasonality around the Japan dividend ex-date might keep it running into month-end, but the reversal risk in April could be high”, Wong cautioned.

By Daniel Munch of Farm Bureau

Between 2017 and 2022, the number of farms in the U.S. declined by 141,733 or 7%, according to USDA’s 2022 Census of Agriculture, released on Feb. 13. Acres operated by farm operations during the same timeframe declined by 20.1 million (2.2%), a loss equivalent to an area about the size of Maine. Only 1.88% of acres operated and 1% of farm operations were classified under a non-family corporate farm structure.

Conducted every five years, the Census of Agriculture collects data on land use and ownership, producer characteristics, production practices, income and expenditures. USDA defines a farm as an operation that produced and sold, or normally would have sold, $1,000 or more of agricultural products during the census year.

While the number of farm operations and acres operated declined, the value of agricultural production increased, rising from $389 billion in 2017 to $533 billion in 2022 (40% nominally and 17% adjusted for inflation). These updated numbers highlight the continuing trend of fewer operations farming fewer acres of land but producing more each year.

In addition to Ag Census data, USDA releases survey-based estimates on farm numbers once every year. Using this annual survey data dating back to 1950, the trend of fewer operations farming fewer acres becomes even more obvious. Since 1950, the number of farm operations has declined by 3.75 million (66%) and the number of acres farmed declined by 323 million (27%) – slightly less than twice the size of Texas. Technological advancements that have increased productivity, such as feed conversion ratios in livestock and yield per acre in crops, have allowed farmers and ranchers to produce more with less even as the U.S. population more than doubled, going from 159 million in 1950 to 340 million in 2023, and the global population more than tripled (2.5 billion to 8 billion) during the same period.

Farm Operations

Between 2017 and 2022 all states but five (Alaska, Delaware, Iowa, Maryland, New Jersey and Rhode Island) lost farms. Texas had the largest numerical loss – nearly 18,000 farm operations – followed by Oklahoma (-8,153) and Missouri (-7,433). Iowa gained the most farm operations (+807) followed distantly by Alaska (+183). In terms of percentage loss of farm operations, New Mexico experienced the largest decline (-16.2%) followed by Arizona (-12.5%) and Wyoming (-11.7%). Alaska’s 183-farm gain was the largest percent increase at 18.5%. Though the presence of regional trends in farm operation losses appears limited, drought conditions that battered much of the West in 2021 and 2022 may be responsible, in part, for higher farm loss percentages in those states. Across states that gained farms, most were within the category of earning over $1 million in sales except in Alaska where the biggest gains were in farms earning between $5,000 and $50,000.

Area Operated

The 2022 census also indicates a decline of just over 20 million acres (2.2% of total) in acreage operated. Colorado led in terms of numerical decline, with 1.6 million fewer acres being farmed in 2022 compared to 2017, followed by Texas (-1.56 million), and Oklahoma (-1.26 million). Only three states, Alabama, Alaska and Rhode Island, had increases in operated area. By percent decline, the map of operated acreage looks quite different. Hawaii leads with a loss of 7.2% of operated area followed by Virginia and Maine both experiencing a loss of 6.3% and Washington experiencing a loss of 5.6% between 2017 and 2022. Counties in the West had the largest swings in acreage operated, likely linked to the sheer size of counties with a significant proportion of open and undeveloped land.

Even minor declines in farmed area can have a significant impact on the rural identity of states with smaller acreage and higher rates of commercial and residential development. The more land shifted out of agriculture production, the harder it is to return those acres to farming. Diminished production capacity within specific states and regions heightens dependence on purchases from other states or countries. For instance, Hawaii faces a unique situation with only enough production and food storage capacity to sustain itself for seven days, exacerbated by a 7% loss in actively farmed land over the past five years. In New England, on a weight basis, farmers produce only about 21% as much food as the states consume (with a portion of that going to outside buyers). Researchers have estimated that in order to reach 30% self-food-sufficiency, the six New England states would have to maximize the use of 401,000 existing underutilized acres and clear an additional 588,000 acres of land. Instead, acres operated in New England dropped by 145,000 between 2017 and 2022. Local regulatory dynamics, land use pressures and costs, and variations in cultural interests contribute to the shifting landscape of farming, often pushing it farther away from population centers.

Economic Class

New Ag Census data also allows analyses of farm numbers and area operated by economic class and the market value of agricultural products sold. Economic sales classes are defined by summing the sales of agricultural products and government program payments; and the market value of agricultural products sold represents the gross market value before taxes and production expenses of all agricultural products sold or removed from an operation in 2022. Between 2017 and 2022 the number of farms in the $0 – $4,999 economic class dropped the most, by 120,970 (13%), followed by the $5,000 – $49,000 category, which lost 32,215 operations (5%). The category of farms in an economic class over a million grew by 28,566 operations (36%). The number of farms in lower economic classes shrunk at a faster rate than those in higher economic classes. That said, most ag production is generated by farms in higher economic classes. In 2017, 69% of the value of agricultural products sold was products by farms in the million-dollar-plus economic class. In 2022 this increased to 79% (Figure 8).

Farmers and ranchers currently face the highest production expenses on record, in addition to increasingly complex local, state and federal regulations and growing competition from lower-cost foreign markets. These dynamics shrink margins for producers and often more significantly impact farms in lower economic classes. Farms that are able often expand in size to capitalize on economies of scale, a concept rooted in the efficiency often gained as production increases. Larger farms can benefit from reduced per-unit costs due to bulk input purchasing, streamlined operations and enhanced bargaining power with suppliers. Mechanization and modern technology, which often come with substantial upfront costs, are more economically justifiable for larger operations, further boosting productivity. Unsurprisingly, the latest census data underscores that farms making such investments tend to fare better. Notably, farms in the $0 -$4,999 and $5,000 -$49,999 economic classes, constituting over 70% of total farms, often rely on alternative income sources. Those in the $0 – $4,999 economic class, especially, are more likely to be operations participating in agriculture for leisure or personal interest as opposed to income reliance. Declines in operations in these categories may be linked to the cost associated with supporting a side business that may no longer be sustainable but has limited impacts on total domestic food production.

Farm Typology

USDA also reports the number of farms and acres operated by farm type. This section of the report captures the different ownership structures of farming operations and includes: family-held corporations, family and individual filings, partnerships, corporations (excluding family held) and “other” which includes institutional, research, reservations and other owner entities. Family and individual filings, partnerships and family-held corporations represented 97% (1.884 million) of all farms in 2022 (down from 97.2% in 2017). Corporations other than family held made up 1% (18,960) of all farms and the “other” category made up the remaining 2.2% (37,480) farms.

Analyzing in terms of acreage managed by these operation types provides a better understanding of the proportion of agricultural production in the category. In 2022, family and individual filings, partnerships and family-held corporations represented 91% (801 million) of all acres operated in the U.S. Family and individual filings represented 58% of operated acreage alone (down slightly from 60% in 2017). Non-family-held corporations represented 2% (16.6 million) of acreage operated, up from 1.4% in 2017. “Other” entities operated 7.1% (62.4 million) of acres in 2022, much of which was concentrated in Western states with substantial land in American Indian reservations. The overwhelming majority of farmland in the U.S. continues to be operated by family-based ownership structures. By state, Hawaii had the highest percentage of acres operated by non-family-held corporations (28.5%), followed by Rhode Island (17.3%) and Florida (7%). In Alaska and New Hampshire no farm acreage was managed by non-family-held corporations.

Conclusion

The 2022 Census of Agriculture provides an in-depth look at the U.S. farm landscape over the past five years. With a loss of 141,733 farm operations, representing a 7% decline, and reduction of 20.1 million acres under cultivation, equivalent to the size of Maine, the agriculture sector has faced significant shifts. Though the data shows an ongoing consolidation of farms into fewer, larger operations, it also highlights the adaptability of farmers and ranchers. Despite fewer farms and reduced acreage, the value of agricultural production has increased by 40% (17% in inflation-adjusted dollars), reaching $543 billion in 2022. This increase in productivity underscores the impact of technological advancements and efficiency gains, allowing farmers to produce more with fewer resources. The magnitude of changes is not uniform across states, with the Southwest experiencing a much higher percentage loss in farms than states east of the Mississippi. The challenges faced by farms of all sizes has raised calls for a robust and comprehensive farm bill that could provide support to the operations most at risk and to those providing the lion’s share of the American food supply, helping both to navigate economic uncertainties and regulatory complexities, to undertake innovative and sustainable practices, and to promote the long-term viability of a diverse agricultural landscape across the nation. The Census of Agriculture paints the picture of what we have lost, and of what more could be lost without firm support.

A New York Fire Department (FDNY)’s top official has vowed to “hunt down” pro-Trump staffers who were caught on video booing New York Attorney General Letitia James during a Thursday ceremony.

“BITS is investigating this, so they will figure out who the members are,” FDNY Chief of Department John Hodges warned employees via email, referring to the department’s Bureau of Investigation.

“I recommend they come forward. I have been told by the commissioner it will be better for them if they come forward and we don’t have to hunt them down,” the email continues, according to the Daily Caller.

“The [deputy chiefs] shall direct the captain of the company to make a list of those who come forward and send it directly to [FDNY operations]. I realize members might not come forward but they should know that there is clear video of the entire incident and they will be contacted by BITS if they don’t,” Hodges wrote.

A video posted on X shows a crowd chanting “Trump” during James’ speech. As X user End Wokeness notes (@EndWokeness), memos and emails allagedly from the Uniformed Fire Officer Association (UFOA) and Uniformed Firefighters Association slammed the pro-Trump staffers – stating that the chanting was inappropritate “on the job’s time,” and that the offenders “must do better.”

The FDNY firefighters who booed NY AG Letitia James will be punished and face reeducation.

FDNY firefighters are now being asked to turn themselves in or risk being hunted down.

Memos and emails from the Uniformed Fire Officers Association (UFOA) & Uniformed Firefighters… pic.twitter.com/pBq8DccGf8

— End Wokeness (@EndWokeness) March 9, 2024

“It was a political stunt for the city to have the AG there. When it backfired, they sent their fascist pit bulls after guys for exercising their First Amendment rights,” one unidentified FDNY retiree told the NY Post, adding “Most were off-duty and not in FDNY uniform.“

Famed constitutional and criminal law attorney Alan Dershowitz blasted the FDNY’s hunt down.

“Firefighters have an absolute constitutional right to boo the attorney general, and the government  has no power to punish them for it,” Dershowitz told The Post. “So efforts to get the names of the booers is an effort by the government to chill free speech and is unconstitutional.”  

The Uniformed Fire Officers Association sent out a message to its members on Saturday warning them of the directive and that the department is in “possession of video footage of the event.”

“As part of this discussion, questions may be asked to specific UFOA members over their actions or their recollections,” the message said. -NY Post

James was immediately booed on Thursday as she walked the the podium at the Christian Cultural Center’s Brooklyn Campus in Starrett City, on her way past the families of captains, battalion chiefs and civilians up for promotion, as well as the firefighters who work beside them.

Authored by Ven Ram, Bloomberg cross-asset strategist,

Gold is still hovering near a nominal record, but the scope for further gains from here may be limited.

Bullion approached $2,200 an ounce last week, annexing a new record, though stated in real terms, gold is still shy of its previous peak set more than a decade ago. Even at current levels, an investor who bought gold at the end of 2012, when it was trading around $1,675 an ounce, would still be sitting on losses of more than 3% after adjusting for the corrosive effect of inflation on the dollar.

Gold’s recent ebullience stems in no small measure from interest-rate pricing in the US, where traders have revived bets for deeper rate cuts after Chair Jerome Powell indicated last week that the Fed isn’t far from the level of confidence need to start loosening policy.

The markets are now pricing some 95 basis points of rate cuts from the Fed this year. A dovish dot plot this month – one I define as staying with the three reductions already indicated – may embolden traders to price in five full rate cuts this year.

That will further engender a bid toward bullion, which will mean that it will eclipse its previous inflation-adjusted record of $2,250.

A hawkish dot plot would temper pricing for rate cuts and sap enthusiasm toward bullion, spurring a correction that may be well due in the short term.

Over the longer term, as the Fed actually starts cutting rates, bullion has potential, given that declining rates would enhance the allure of a non-yielding asset and its promise of high risk-adjusted return.

US equity futures are poised to open lower on Monday, extending Friday’s slide into this data-heavy week after pulling back from all-time highs at the end of last week, with technology shares leading declines in the wake of data giving mixed signals about the strength of the job market. Ahead of tomorrow’s CPI print, S&P futures were down 0.2% at 7:50am, but off the worst levels of the session.

Nasdaq futures dropped 0.3% with Nvidia fluctuating wildly in the pre-market after its huge 10% intraday reversal on Friday, which followed a weaker than expected jobs report (and actually quite catastrophic NFP print if one actually reads the details).

The overnight session also saw the Nikkei 225 tumble 2.2%, and the drop was far worse earlier before a sharp ramp in the last 30 minutes of trading, as growing speculation the Bank of Japan will end Yield Curve Control and/or raise interest rates lifted the yen and hurt exporters

Bitcoin briefly topped $72,000 for the first time, advancing for a sixth straight day and taking this year’s rally to almost 70% on the back of massive inflows into US exchange-traded funds; a tacit endorsement by Donald Trump who will be the next president in November, also helped push the crypto currency higher

Elsewhere, bond yields were mixed with 10Y yield rising 1bp to 4.08%; the USD is flat following its worst performing week of the year. Commodities are mixed with strength in Energy but weakness in Ags/Metals; base metals are underperforming precious metals with iron ore plunging 7%. CPI is the macro focus this week but there are several bond auctions to watch esp. with the potential for BOJ to tweak YCC/ZIRP next week.

In premarket trading, cryptocurrency-linked companies rally as Bitcoin extends gains to an all-time high, surpassing the $71,000 mark. Among movers Coinbase Global (COIN) +7.2%, Riot Platforms (RIOT) +5.7%. Boeing dropped 1.4% after a weekend of negative headlines, which included the DOJ opening a criminal investigation into the incident on an Alaska Airlines-operated 737 Max 9 jet in January, and also another mid-air incident, this time involving a Boeing 787. Here are some other notable premarket movers.

• Choice Hotels gains 3.3% after the company ends attempts to combine with Wyndham Hotels & Resorts (WH). Wyndham falls 5.3%.
• EQT falls 3.7% after agreeing to buy back its former unit Equitrans Midstream Corp. (ETRN)  in an all-stock transaction valued at about $5.2 billion, the latest in a flurry of deals in the oil and gas industry. Equitrans rises 8.7%.
• Lexicon Pharmaceuticals gains 11% after the placement of $250 million of equity securities.
• The company also posted quarterly results.
• Revance Therapeutics advances 6.5% after the biopharmaceutical company reported to the SEC on Friday that CEO Mark Foley purchased 30,000 shares valued at $209,400.
• Staar Surgical rises 4.6% after Stifel raised its rating on the implantable eye lens company to buy, citing a favorable entry point and potential upside to first-quarter sales.

Looking at this week’s main economic event, Tuesday’s CPI report, BBG calls it “a key piece of the puzzle” toward completing the backdrop for the Fed to start cutting rates in the middle of the year. While comments from policy makers last week appeared very dovish, and swaps traders see a June rate cut as a virtual lock, a stronger-than-anticipated jump in consumer prices could derail rallies in stocks and bonds fueled by confidence that the Fed is on the verge of pulling inflation back to its target. That was the case last month, when the CPI data triggered a market selloff. The impact may be stronger this time because it’s the last major piece of economic data before the Fed’s March 20 meeting.

“The bottom line is that loads of folk are preoccupied trying to predict or front-run a first Fed rate cut,” said Mark Dowding, the CIO at RBC BlueBay Asset Management. “I still see this as some months away.”

Further moderation in US prices would support the disinflation narrative that broadly remains intact, despite a pullback in the number of Fed rate cuts expected this year. Core prices in the consumer price index are expected to tick 0.3% higher in February from a month earlier, and 3.7% on a year-over-year basis — which would be the smallest annual rise since April 2021. Recent comments from policy makers have supported the case for easing. The S&P 500 rallied 1% Thursday when Powell said in his testimony before the Senate that the central bank is “not far” from being ready to cut interest rates. The same day, Powell’s European counterpart Christine Lagarde said the European Central Bank could start reducing rates as soon as June, sending the Stoxx Europe 600 Index up 1.3%.

“A lack of a second-half growth inflection could serve as a headwind for economically sensitive areas of the market, particularly if the Fed holds off on cutting rates longer than expected,” according to Morgan Stanley’s chief US equity strategist Michael Wilson, one of the most prominent bearish voices on Wall Street. His 2024 target for the S&P 500 is 4,500, implying a roughly 12% drop from Friday’s close.

European stocks fell for the first time in four sessions, with the Stoxx 600 down 0.6% as basic resources led declines after iron ore slumped on slackening demand from China. Tech stocks are also underperforming, as they did on Wall Street on Friday.  Here are the biggest movers Monday:

• LEG Immobilien climbs as much as 4.4%, lifted by a better-than-expected dividend proposal from the German residential property firm and expectations of stabilization in real estate prices
• HelloFresh shares rise as much as 5.7%, rebounding slightly after Friday’s profit warning sent the meal-kit firm tumbling 42%, with some analysts defending the firm, while other cut their price targets
• Admiral gains as much as 4.4% as Berenberg sees “plenty of reasons to be very optimistic” about the UK car insurance company’s outlook and hikes estimates for the next two years
• Darktrace shares gain as much as 10% as the cybersecurity firm extends a post-earnings rally, with Numis upgrading its forecasts for adjusted Ebitda margin for FY24 through FY26
• Enel shares rise as much as 1.4% after Italy’s biggest utility said Saturday that it will sell a majority stake in its electricity distribution activities in the Milan region to competitor A2A
• European chip stocks see wide losses following Friday’s drop among US peers. BE Semiconductor leads declines, sliding for a second day amid concerns over the adoption of its hybrid bonding technology
• Telecom Italia falls as much as 9.9% as investors remained skeptical over the firm’s attempt to reassure the markets that a planned €22b sale of its network later this year will allow it to meet debt targets
• Currys shares fall as much as 12% to trade below the initial proposed offer from Elliott, after the US firm said it is not in an “informed position” to make an improved offer for the retailer
• Raiffeisen falls as much as 12% in Vienna on news the Austrian lender had a meeting last week with US government representatives over the matter of sanctions with Russia
• JDE Peet’s drops as much as 4.9% after the coffee company announced late Friday that its CEO Fabien Simon would be departing the firm. ING said the change “can’t come soon enough”
• Italian lenders drop after the Bank of Italy said it plans to introduce a capital buffer to cover systemic risks equal to 1.0% of domestic exposures weighted for credit and counterparty credit risks

Earlier in the session,  Asian stocks fell for the first time in four days, dragged lower by a pullback in high-flying semi shares and a selloff in Japanese equities. The MSCI Asia Pacific Index declined as much as 1.2% and was headed for its biggest drop since Jan. 17. The region’s chip stocks, which rallied alongside US peers last week on optimism that generative artificial intelligence will boost demand, slumped on Monday after worries over lofty valuations triggered Nvidia Corp.’s worst slump since May. TSMC was the biggest drag on the Asian benchmark, followed by Japan’s Toyota.

The Nikkei 225 Index lost more than 2% and slumped below 39,000 as growing speculation the Bank of Japan will raise interest rates boosted the yen and hurt exporter shares. Stocks in Hong Kong and China bucked the broad regional downtrend after data on Saturday showed Chinese consumer prices rose for the first time since August, easing some concerns over deflation. Bilibili led a rally in tech stocks in Hong Kong after JPMorgan upgraded the stock on strong guidance.

In FX, the Bloomberg Dollar Spot Index slipped 0.1%, extending losses into a seventh day, its longest losing streak in almost four years. The yen tops the G-10 FX pile, rising 0.3% versus the greenback as speculation swirls around the Bank of Japan meeting next week – the BOJ did refrain from ETF buying today even after the Topix fell 2.3% by midday local time.

In rates, treasuries are narrowly mixed with front-end of the curve underperforming slightly; 2-year yields cheaper by around 2bp on the day. US 10-year yields around 4.08%, marginally cheaper on the day with bunds lagging by around 0.5bp and gilts outperforming by 1.5bp in the sector; front-end underperformance in the US flattens 2s10s spread by 1.2bp on the day and 5s30s by 1.5bp. Moves across core European rates also muted, with bunds marginally flatter. The US session includes a wave of supply, with heavy corporate issuance expected alongside an auction of 3-year Treasury notes. Tuesday brings CPI data, and 10- and 30-year debt auctions are slated for the first half of this week. US auctions kick-off at 1pm New York with $56b 3-year note sale, followed by $10b 10-year and $22b 30-year on Tuesday and Wednesday, respectively. 

In commodities, oil held a loss ahead of reports from OPEC and the IEA this week that may provide clues on the demand outlook. WTI traded near $78. Spot gold is also little changed around $2,178/oz, trading at an all time high.

In crypto, Bitcoin briefly topped $72,000 for the first time, advancing for a sixth straight day and taking this year’s rally to almost 70% on the back of massive inflows into US exchange-traded funds; a tacit endorsement by Donald Trump who will be the next president in November, also helped push the crypto currency higher; Ethereum soared past 4k and is also approaching its all time high. LSE said it will accept applications for the admission of Bitcoin (BTC) and Ethereum (ETH) crypto ETNs in Q2 2024. Indian cryptocurrency investment platform Mudrex is now offering US spot-Bitcoin (BTC) exchange-traded funds (ETFs) to Indian investors, according to CoinDesk.

On the economic data calendar today we have the February New York Fed 1-year inflation expectations; main events this week includes CPI, retail sales, PPI, Empire manufacturing, industrial production and University of Michigan sentiment. No scheduled Fed speakers due before March 20 policy decision

Market Snapshot

• S&P 500 futures down 0.1% to 5,122.25
• STOXX Europe 600 down 0.3% to 501.77
• MXAP down 0.8% to 176.35
• MXAPJ little changed at 536.84
• Nikkei down 2.2% to 38,820.49
• Topix down 2.2% to 2,666.83
• Hang Seng Index up 1.4% to 16,587.57
• Shanghai Composite up 0.7% to 3,068.46
• Sensex down 0.5% to 73,765.19
• Australia S&P/ASX 200 down 1.8% to 7,704.22
• Kospi down 0.8% to 2,659.84
• German 10Y yield little changed at 2.26%
• Euro little changed at $1.0942
• Brent Futures up 0.1% to $82.18/bbl
• Gold spot up 0.0% to $2,179.85
• US Dollar Index little changed at 102.70

Top Overnight News

• European stocks fell along with US equity futures at the start of a data-heavy week that will test the market’s conviction that Federal Reserve Chair Jerome Powell and his colleagues are moving closer to dialing back their inflation fight: BBG
• Japan’s economy avoided falling into a recession at the end of last year, helped by robust spending by businesses, an outcome that improves the optics for the central bank as it mulls the timing of its first interest rate hike since 2007: BBG
• China’s CPI overshoots expectations in Feb (+0.7%, up from -0.8% in Jan and ahead of the Street’s +0.3% forecast) while PPI deflation worsened (-2.7%, down from -2.5% in Jan and below the Street’s -2.5% forecast). SCMP
• Since touching a five-year low in February, China’s benchmark CSI 300 index has climbed 14%. But traders and analysts say those searing gains have been driven chiefly by China’s so-called “national team” of state-run institutions buying in tandem with the CSRC’s punitive actions. There is little renewed appetite among either local or foreign investors, many of whom want to see much more monetary and fiscal stimulus from Beijing. And strategists point to a rally in Chinese government bonds that they say reflects persistent concerns over slowing growth. FT
• Iron ore slumped 7% — dropping below the $110 a ton mark — after disappointing demand in China left the market lumbered with swelling inventories. The plunge in the steelmaking ingredient was the most since mid-2022 on an intraday basis, and it was headed for the lowest close since August last year. BBG
• Apple and Tesla cracked China, but now the two largest US consumer companies in the country are experiencing cracks in their own strategies as domestic rivals gain ground and patriotic buying often trumps their allure. Falling market share and sales figures reported this month indicate the two groups face rising competition and the whiplash of US-China geopolitical tensions. Both have turned to discounting to try to maintain their appeal. FT
• BOE comes under growing pressure to ease policy as the UK jobs market reveals cracks (the latest Recruitment and Employment Confederation/KPMG report showed starting salary growth falling to the lowest level in nearly 3 years). London Times  
• Ukraine could begin flying Western F16 fighter jets as soon as July, although there won’t be many of them initially. NYT
• President Biden signed a $460 billion spending package on Saturday to avert a shutdown of critical federal departments even as lawmakers continue to wrestle over a financing blueprint for many other agencies more than halfway into the current fiscal year. NYT
• IRS says it can deliver an expanded Child Tax Credit (CTC) automatically to families without any extra work (meaning Congress isn’t facing a deadline of April to pass the needed legislation as the IRS can remit the cash automatically regardless of whether a family has filed taxes). WaPo
• OpenAI said that Mr. Altman, who returned to OpenAI just five days after he was pushed out in November, did not do anything that justified his removal and would regain the one role at the company that still eluded him: a seat on the company’s board of directors. NYT

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded with a downbeat mood with most major indices pressured after Friday’s tech-led declines in the US, while participants also digested last week’s hawkish BoJ source reports and Japanese GDP. ASX 200 slumped in which the mining and resources industries led the declines across all sectors. Nikkei 225 fell beneath the 39,000 level following recent source reports that suggested a potential exit from NIRP this month and after Japan’s revised Q4 GDP data missed expectations but showed the economy averted a technical recession. Hang Seng and Shanghai Comp. bucked the trend with the former boosted by tech strength and with Hong Kong’s top market regulator seeking an expansion of the Stock Connect and lower the asset threshold for mainland China investors to CNY 100k. Conversely, the mainland was much less decisive after mixed Chinese inflation data which showed a return to acceleration in consumer prices.

Top Asian News

• China’s Housing Minister said they should let some property developers go bankrupt or restructure according to legal and market-based rules, while the official stated that commercial banks have approved over CNY 200bln of loans for housing projects as of February under the coordinated mechanism. The minister said home sales will improve in an orderly and forceful way and China is to improve the supply of government-supported affordable housing, while they will work with the top financial regulator to guide cities to set up the property funding coordination mechanism. Furthermore, it was also stated that the priorities this year are work on construction kick-offs, housing quality and construction security.
• China’s Human Resources Minister said overall employment pressure has not eased and structural problems remain in the jobs market, while the minister added that they are confident they can keep stable employment and that demand for jobs is high in AI and big data sectors, according to Reuters.
• Chinese regulators held meetings with financial firms to discuss China Vanke (2202 HK) debt, while regulators asked large Vanke lenders to enhance financing support and asked private debt holders to discuss maturity extension, according to Reuters sources.
• US President Biden’s administration is weighing sanctions on several tech companies including memory chipmaker ChangXin Memory Technologies, according to Bloomberg.
• Hong Kong’s top market regulator called for an expansion of the Stock Connect and is seeking to lower the asset threshold for mainland China investors to CNY 100k, according to Bloomberg.
• Japan’s Keidanren Chair says they are feeling greater momentum for wage hikes at this year’s spring labour talks vs the prior year. High possibility the BoJ will normalise monetary policy in the near future, do not know if this will occur in March. Likelihood of achieving inflation around 2% is increasing. Prolonged monetary easing as a “shot in the arm” for the economy is not healthy.
• Japanese PM Kishida is to hold a three-way meeting between the government, labour and corporate management on March 13th to strengthen momentum for higher wages.
• BoJ makes no ETF purchases on Monday, “despite morning decline in TOPIX”, Bloomberg says.
• China is said to be studying lower down payment ratio for cars, according to Chinese Premier Li cited by Bloomberg

European bourses, Stoxx600 (-0.4%), are entirely in the red, with the Eurostoxx50 (-0.7%) hampered by significant losses in chip-maker ASML (-3.3%). European sectors hold a strong negative tilt; Real Estate is propped up by Leg Immobilien (+5.5%), post-earnings; Tech is weighed on by negative sentiment permeating within the semi-conductor industry. US equity futures (ES -0.1%, NQ -0.1%, RTY +0.1%) are mixed and are trading on either side of the unchanged mark; earlier, the NQ posted heftier losses, hampered by Nvidia (+1.6% pre-market), which was initially lower by as much as 2% in the pre-market, though has since reversed course. Newsflow around NVDA includes a lawsuit regarding NeMo AI and a WSJ profile article.

Top European News

• ECB’s Kazimir saw the ECB should wait until June with the first rate cut; rushing a move is not smart or beneficial. Upside risks to inflation are “alive and kicking”. Need more hard evidence and only in June will confidence threshold be reached. Discussions on easing should already start, ECB will use weeks ahead of that. Prefers “smooth and steady” cycle of policy easing.
• UK PM Sunak is reportedly mulling curbs to welfare spending to fund the government’s ambition of further tax reductions, according to The Sunday Times.
• Exit polls suggest Portugal’s centre-right coalition is on course to narrowly defeat the incumbent socialists but fall well short of a majority in Sunday’s closely fought snap general election, according to The Guardian. It was later reported that Portugal’s socialist leader Pedro Nuno Santos conceded defeat and the leader of the centre-right democratic alliance Luis Montenegro claimed victory.
• Polish Central Bank projections: Scenario of extended anti-inflation measures, sees 2024 CPI at 3.0%, 2025 at 3.4% and 2026 at 2.9%; If not extended then sees 2024 CPI at 5.7%, 2025 at 3.5% and 2026 at 2.7%.
• UBS expects the BoE to start cutting rates in August vs May expected earlier.

FX

• DXY is flat but the USD is showing varied performance vs. peers. 102.63 low print for the session is above Friday’s NFP-induced trough at 102.35. Conviction on USD-related moves likely to be low today given CPI on Tuesday.
• Steady trade for EUR/USD in quiet newsflow within tight parameters of 1.0933-47 and respecting Friday’s 1.0918-81 range.
• JPY’s recent strong run vs. the USD has continued with the currency receiving a boost from GDP figures which showed Japan did not enter a technical recession at the end of last year. USD/JPY has been as low as 146.54 but is yet to crack Friday’s trough at 146.48.
• Antipodeans are both softer vs. the USD but AUD more so after being hampered by Iron ore futures falling over 7% in Singapore. AUD/USD is just about maintaining 0.66 status.
• NOK is weaker in the wake of softer-than-expected Norwegian inflation metrics but well within recent ranges vs. the EUR.

Fixed Income

• Overall trade for Bunds have been contained; benchmarks derived a modest bid alongside a dip in broader risk sentiment, with the ‘haven’ move taking Bunds to a 134.04 peak before paring. A move which stopped shy of Friday’s 134.15 best. Hawkish sentiment from ECB’s Kazimir sparked modest pressure in the Bunds, though ultimately proved fleeting as his remarks echoed recent sources which favour a June cut.
• UST price action is following EGBs but with the magnitude of moves even more limited; currently trading towards the mid-point of narrow 111-23 to 111-31 bounds. Fed blackout underway and no Tier 1 data due today as we await US CPI on Tuesday and 3yr supply this evening.
• Gilts once again the relative outperformers, but directionally in-fitting with peers. High of 99.99 is just a handful of ticks shy of last week’s 100.03 peak, which also marks the contract high. As above, the docket ahead remains light.

Commodities

• Crude is modestly firmer, having spent the majority of the European morning flat despite ongoing geopolitical tensions and after reports that Saudi is to reduce Arab heavy crude supply next month, due to oil field maintenance; Brent holds just shy of USD 82.50/bbl.
• Precious metals are holding mild upward biases amid a steady/caged Dollar, with newsflow light this morning and the calendar sparse; XAU sits in a USD 2,175-2,189.12/oz range.
• Base metals are flat/mixed amid a steady Dollar and little in terms of fresh fundamental newsflow to drive price action. That being said, Iron ore slumped in APAC hours despite a clear driver, but with some suggesting sub-par stimulus for the Chinese Real Estate market.
• Saudi Arabia plans to reduce Arab heavy crude supply to term customers in Asia next month due to oil field maintenance, according to Reuters sources.
• Saudi Aramco CEO said FY saw lower crude oil prices and lower volumes sold but noted that 2023 saw global oil demand reach record levels despite geopolitical tensions and they expect the global oil market to remain healthy this year, while he considers supply and demand to be in reasonable balance. Saudi Aramco CEO said they are ready and able to react to market opportunities and can increase maximum capacity if needed. Furthermore, they are interested in LNG in the US and are looking at further opportunities to invest in China, as well as see significant growth in oil demand in China and Asia, according to Reuters.
• Qatar set April marine crude OSP at Oman/Dubai + USD 0.25/bbl and land crude OSP at Oman/Dubai + USD 0.05/bbl, according to a pricing document cited by Reuters.

Geopolitics: Middle East

• US President Biden said it is always possible that there could be a Gaza ceasefire before Ramadan and he was not giving up, while he said he believes Israeli PM Netanyahu is “hurting Israel more than helping Israel” with his approach to the war against Hamas in Gaza and must pay more attention to the innocent lives being lost. Furthermore, Biden warned that an assault on Rafah is a “red line” but added that he is not going to cut off weapons to Israel and didn’t specify what the “red line” meant, in an MSNBC interview.
• Israeli PM Netanyahu said he intends to push ahead with an invasion of Rafah and insisted his priority is to prevent another terror attack like the October 7th Hamas raid, according to POLITICO.
• Israel conducted a raid targeting agricultural land near the Egyptian-Palestinian border in the Al Salam neighbourhood in Rafah, according to a correspondent cited by Al Jazeera.
• Five civilians were killed and nine were injured in an Israeli strike on a border village in southern Lebanon, according to Reuters.
• US Central Command said US Army vessel General Frank S. Besson departed for the eastern Mediterranean to provide humanitarian aid to Gaza by sea and is carrying the first equipment to establish a temporary pier vital for humanitarian supplies, according to Reuters.
• US Central Command said US Navy vessels and aircraft along with multiple coalition navy ships and aircraft shot down 15 one-way attack UAVs, while it was later reported that the US military downed a total of at least 28 uncrewed aerial vehicles in the Red Sea on Saturday, according to Reuters.
• UK Defence Minister said HMS Richmond shot down two drones on Friday night to repel a Houthi attack, while it was also reported that the French military destroyed four combat drones heading towards the European naval mission in the Gulf of Aden.
• “Israeli reports: Hamas deputy head Marwan Issa killed in shelling of Nuseirat camp”, according to Sky News Arabia.

Geopolitics: Other

• German Foreign Minister Baerbock is open to a missile swap with the UK to arm Ukraine, according to dpa.
• US and Japan are considering defence cooperation which could help Ukraine with the two sides looking at an arms arrangement ahead of a summit next month, according to Yomiuri.
• Iran, Russia and China are to hold joint naval drills on March 12th, via MEHR.

US Event Calendar

• 11:00: Feb. NY Fed 1-Yr Inflation Expectat, prior 3.00%

DB’s Jim Reid concludes the overnight wrap

A very good late afternoon from a hot Sydney where it’s been nice to be back after a decade, even if the trip has caused havoc with my body clock. I’d also forgotten how crushingly mind-numbing a 24-hour flight is. However, this weekend the alternative was a sleepover at home for five so I still may have been dealt the better hand.

Last night, I published a new chartbook that I thoroughly enjoyed researching with my team, entitled “Geopolitics: 2000 years of long-term charts”. The pack shows how the global geopolitical situation got to where it is today in the form of long-term charts and maps. It also tries to understand the likely paths going forward. Geopolitics is heavily linked to the changing nature of economic, military and demographic power across the world. These tectonic plates can grind against each other for years or decades, before shifting dramatically and causing a major upheaval in the global balance of power. Perhaps the biggest lesson from the pack and from history is that in the world of geopolitics and international relations, there are few permanent fixtures, only constant change. See the pack here.

In 2000 years I’m not sure if $250bn has ever been wiped off a stock in 3 hours before. That’s what happened to Nvidia on Friday as the stock went from being around +5% up to -6.5% down intraday before closing -5.55%. Then in after-hours trading on Friday, it was down almost another -3%. Remarkably it was still up +6.38% on the week, +21.3% in March so far, and has still posted a tenth week of consecutive gains. That said, the sell-off late in the week meant the S&P 500 (-0.65% Friday) was down -0.26% for the week, and just missed out on advancing for 17 of 19 weeks for the first time since 1964. The macro world is still in hock to the Mag-7 so keep an eye out for what happens next, but this week the macro world will have its own things to focus on with US CPI tomorrow.

On that, with 10yr US yields around -10bps lower, and the S&P 500 around +2% higher than where they were just before last month’s higher-than-expected CPI, it’s fair to say that markets have shrugged off this upside print alongside the high PPI and core PCE prints that followed. Before we preview the US CPI (tomorrow) and PPI (Thursday), the other main US highlights are the NY Fed 1-yr inflation expectations survey (today), retail sales (Thursday) and UoM consumer sentiment (Friday). There are also 3-, 10- and 30-yr UST auctions today through Wednesday.

In Europe, the monthly UK GDP for January on Wednesday and labour market indicators tomorrow come a week before the next BoE meeting. In Asia, we have China’s 1-yr MLF rate where our economists think we will see a 15bps cut. In Japan, the 1st survey results from the important shunto wage negotiations will be released on Friday, which will be key ahead of the BoJ meeting a week tomorrow where speculation mounts that negative rates will end. These are the main highlights but see the full week ahead at the end for all the week’s key global events.

Now expanding on the main event. With gas prices up around 4.1% from January, our economists expect headline CPI (+0.41% forecast, consensus +0.4%, vs. +0.31% previously) to grow faster than core (+0.30%, consensus +0.3%, vs. +0.39% previously). This would bring YoY core CPI two-tenths lower to 3.7%, with headline flat at 3.1%. Of some concern would be the three-month annualised rate ‘only’ ticking down a tenth to 3.9% while the six-month annualised rate would rise a tenth to 3.7%. See our economists preview and post-print webinar registration details here.

For Thursday’s PPI, the main interest will be the sub components that feed into core PCE forecasts. As our economists point out, one of the more important will be the PPI for portfolio management and investment advice, which tends to follow equity prices with a one-month lag. We’ve seen a further equity rally since last month so it could be firm again. This remarkably added about 8bps to the January core PCE print despite only being about 1.6% of the basket. Our economists will also be scrutinising the PPI for selected health care industries, as this category currently has the highest weight in core PCE.

Overnight in Asia, Japanese equities are leading the slump, with the TOPIX (-3.03%) and the Nikkei (-2.87%) both experiencing sharp declines. In fact for the TOPIX, that currently leaves it on track for its worst daily performance since February 2021. The moves follow an upgrade to Japan’s GDP in Q4, with the latest release pointing to an annualised +0.4% expansion, rather than the -0.4% contraction that was first reported. In turn, that’s added to expectations that the Bank of Japan is set to adjust its negative interest rate policy as soon as the March meeting next week, with markets pricing in a 74% prospect of a shift. That’s also meant the J apanese Yen has strengthened further this morning, up +0.08% against the US Dollar, whilst the 2yr government bond yield (+0.7bps) is at its highest level since 2011 this morning.

That downbeat tone has been echoed elsewhere, with futures for the S&P 500 down -0.20% this morning. In Australia, equity markets have also slumped, with the S&P/ASX 200 down -1.82%. However, Chinese equities have been the exception to that pattern, with the CSI 300 (+0.59%) and the Shanghai Comp (+0.08%) both advancing, whilst the Hang Seng is up by a larger +1.29%. That comes after China’s February inflation data was released over the weekend, which showed CPI up by +0.7% year-on-year (vs. +0.3% expected). It also marks the fastest pace of inflation since March last year. However, PPI remained in deflationary territory, with a -2.7% decline in February (vs. -2.5% expected).

Looking back on last week, we had another payrolls Friday, which beat expectations after rising by 275k (vs 200k expected). Meanwhile, the unemployment rate rose to 3.9% (vs 3.7%), its highest level since December 2021, while average hourly earnings slowed to +0.1% (vs +0.2% expected). These headline moves were supportive of a soft landing narrative, but there were also some weaker details, notably a -124k downward revision to January’s payrolls. So a mixed release, suggestive of a cooler if still resilient US labour market.

Off the back of this, markets increased the amount of rate cuts expected this year. The amount of Fed cuts expected by the December meeting increased by +2.8bps on Friday (and +3.6bps on the week) to 95bps, though this did retreat after pricing in as much as 103bps shortly after the payrolls release. The first 25bps cut is nearly fully priced by June at 92% (vs 96% the day before and last week).

The data flow combined with slightly dovish central bank commentary sent sovereign bond yields lower last week. Yields on 2yr Treasuries fell -5.6bps (and -2.6bps on Friday), while 10yr yields fell -10.6bps to 4.08%, their lowest level in over a month (-0.9bps on Friday). Over in Europe, yields moved lower following the ECB decision last Thursday, with 10yr bund yields falling -14.6bps (and -3.9bps on Friday).

For equities, the S&P 500 had a soft end to the week, falling -0.65% on Friday. This left the index down -0.26% on the week, so as we mentioned at the top, narrowly missing out on recording 17 out of 19 weekly gains for the first time since 1964. Friday’s reversal was led by tech stocks, with NASDAQ down -1.16% (and -1.17% on the week) and the Magnificent 7 down -1.68% (-1.23% on the week). The tech stock volatility was exemplified by Nvidia, which closed -5.55% lower on Friday (and >10% down from its intra-day peak), but was still up +6.38% on the week to post a tenth week of consecutive gains. The equity optimism was more stable elsewhere, with the equal-weighted version of the S&P 500 up +0.91% on the week (-0.17% Friday), while in Europe the STOXX 600 gained +1.14% (+0.02% on Friday), hitting another record.

Finally in commodities, gold hit an all-time high in nominal terms of $2179/oz after rising +4.61% (and +0.96% on Friday). Bitcoin hit another all-time high last week, briefly trading above $70,000 for the first time early on Friday before ending the European session at $68,463 (up +10.57% on the week).

Authored by Andrew Thornebrooke via The Epoch Times (emphasis ours),

President Joe Biden is expressing support for a bipartisan proposal that could ban the video-sharing app TikTok from the United States on national security grounds.

The president told reporters outside Air Force One that he would sign the Protecting Americans from Foreign Adversary Controlled Applications Act if Congress approves the bill.

“If they pass it, I’ll sign it,” President Biden said.

The House Committee on Energy and Commerce unanimously approved the measure on a 50–0 vote on March 7.

Should it become law, it would grant the president the authority to force the divestiture of social media companies operating in the United States that are more than 20 percent controlled by one of four covered nations or their related entities.

Those nations are China, Iran, North Korea, and Russia.

Foremost among those companies, and named explicitly in the bill, is TikTok, which is owned by the China-based ByteDance.

Security experts have long warned that TikTok is a weaponized application that could be used to promote Chinese Communist Party (CCP) propaganda or feed Americans’ data directly to the regime.

Notably, TikTok officials previously acknowledged suppressing and “heating” content at the regime’s request, but claim that is no longer the company’s practice. Meanwhile, the U.S. government is investigating ByteDance for allegedly using TikTok geolocation data to stalk and harass U.S. journalists who reported about the company’s links to the CCP.

Energy and Commerce Committee Chair Cathy McMorris Rodgers (R-Wash.) said the effort is essential to ending the CCP’s efforts to “target, surveil, and manipulate Americans.”

“We have given TikTok a clear choice: Divest from your parent company, which is beholden to the Chinese Communist Party, and remain in operation in the United States, or side with the Chinese Communist Party and face a ban,” she said.

“Companies controlled by a foreign adversary like the CCP will never embrace American values, virtues of our society and culture like freedom of speech, human rights, the rule of law, a free press, and others.”

President Biden’s reelection campaign joined TikTok last month, even as the app is banned on government devices due to national security concerns. That decision has led some in Congress to question the president’s sincerity regarding a willingness to sign the legislation.

Rep. Ralph Norman (R-S.C.) suggested that the Biden administration isn’t really serious about passing the TikTok bill as it’s made its way through Congress.

“The Biden administration says one thing and does another,” he told The Epoch Times’ sister media outlet NTD. “You don’t open up an account of anything that you say you want to abolish.

“We’ve got to get completely separated from China as best we can. And the process starts by not letting them infiltrate the minds of young people and adults.”

Luis Martinez contributed to this report.

Two weeks ago, we described how, after two or so months since House Democrats abandoned the Biden administration’s propaganda campaign to sell the American people on disastrous “Bidenomics,” the White House would pivot to a new messaging strategy of “shrinkflation.” 

The latest Google search of “shrinkflation” news stories shows what appears to be a flood of them across corporate media outlets. 

It appears Biden’s PR team hired the Cookie Monster from Sesame Street… How much did that cost?

Me hate shrinkflation! Me cookies are getting smaller. 😔

— Cookie Monster (@MeCookieMonster) March 4, 2024

According to Bloomberg data, the story count of news stories featuring “shrinkflation” surged this week to 1,365, up from 332 the week before. The first spike in shrinkflation headlines was a trial balloon by the White House around the Super Bowl. 

Democrats and the White House have scrambled for a new messaging strategy after the Bidenomics PR campaign ended in disaster, failing to lift the president’s polling data. 

On Thursday night, Biden attacked companies at the State of the Union address. 

During his State of the Union address, President Joe Biden calls on Congress to crack down on “shrinkflation”:

“The snack companies think you won’t notice if they change the size of the bag and put a hell of a lot fewer … chips in it.” pic.twitter.com/olsxl8uofb

— PBS NewsHour (@NewsHour) March 8, 2024

Biden’s messaging strategies have failed so far because voters don’t trust the elderly president, who has ruined the financial health of working poor households with rampant inflation. 

The Biden administration has given up on blaming Putin for inflation. 

Perhaps out-of-control government spending, $1 trillion every three months, is driving inflation.

Hedge Fund Manager: The US Issues $1 Trillion In Debt Ever 100 Days, Just Imagine The Pace Of Deficit Spending In A Deep Recession https://t.co/oNpU9C4JzH

— zerohedge (@zerohedge) March 4, 2024

But don’t tell Biden’s 70-person social media team that…

Following a series of incidents involving Boeing aircraft in the US last week, a South American LATAM Airlines 787-9 Dreamliner en route from Sydney, Australia, to Auckland, New Zealand, encountered a “technical event” that led to significant turbulence, which injured at least 50 passengers. 

LATAM told AP News that Flight LA800, involving a 787-9 Dreamliner, experienced a “technical event during the flight which caused a strong movement” but did not elaborate further on the incident. The local newspaper, the New Zealand Herald, explained that the plane suddenly lost altitude. 

🚨🇳🇿UPDATE: 50 INJURED ON LATAM BOEING FLIGHT

Emergency services in New Zealand treated 50 people for injuries after passengers and crew were thrown into the ceiling, with one person in a serious condition.

Source: NZ Herald https://t.co/qPP0CriFSl pic.twitter.com/fgKbT7tFow

— Mario Nawfal (@MarioNawfal) March 11, 2024

After the 787-9 Dreamliner landed, local ambulance services in Auckland treated 50 people for mild injuries, and 13 were taken to local area hospitals. 

LATAM said in a statement to the New Zealand Herald: “As a result of the incident, some passengers and cabin crew were affected. They received immediate assistance and were evaluated or treated by medical staff at the airport as needed.”

The statement continued: “LATAM regrets the inconvenience and injury this situation may have caused its passengers and reiterates its commitment to safety as a priority within the framework of its operational standards.”

Via Greg Hunter’s USAWatchdog.com.

Analyst and financial writer John Rubino warned nearly four months ago of a “U.S. Financial Death Spiral.”  

This past week, Bank of America caught up to Rubino and issued a warning about a “US dollar death spiral” because the federal government was going deeper in the red by creating “$1 trillion in new debt every 100 days.”  

Maybe this is why gold and Bitcoin have been hitting new all-time highs day after day.  Rubino says, “When a building was worth $200 million and someone sells it for $48 million, that means there is a loss that someone has to take.  Those losses are mostly on the books of regional and local banks.  So, they are in big trouble financially…“

“You will get these massive bank runs that the government will have to step in and bail out.  This is one of many things that will happen in the not-so-distant future.  This will impact government finances in a scary way that will send people’s attention to the currency.  In other words, if we have another $3 trillion bailout on top of everything else that’s going on . . .what is that going to do to the dollar?

…Currencies are being inflated away with all these bailouts, deficits, wars and all these things that are going on that are bad for the currency.  So, people start selling government bonds, which push up interest rates and blows up even more bad real estate and paper . . . until you get a debt spiral, a real live financial death spiral than cannot be fixed…

I was talking to a real estate guy the other day, and he said this is not just inevitable, it is imminent.  It is happening now.  It is happening quickly, and it is going to hit the headlines…

In this case, what is inevitable in commercial real estate is also looking imminent.”

Rubino goes on to say, “The numbers are not lost on the guys running the big investment banks and the big media outlets.  They are sitting around, and they are thinking we have to say something about this because this is obviously a very big financial story.  So, we have to report on it.  Finally, the numbers have gotten big enough with the deficits and government interest costs…“

“…that this is a story that cannot be ignored anymore.  It’s got to be pretty far along before they reach that point because they really don’t want to report on this.  To report on this is seen as a betrayal of the establishment, and they are part of the establishment.  They are playing on that team.  The debt numbers are finally big enough that they can’t be ignored anymore, and that implies that we are getting near the end of the road.”

Gold and Bitcoin both hit all-time new highs this past week.  What does it mean?  Rubino explains,

“This means the market is speaking, and it’s concluding these currencies have a problem.  Capital is flowing into the alternatives.  It’s flowing into the old kind of money that has held up for thousands of years like gold or the possible new kind of money like Bitcoin that has come on relatively recently (when compared to gold)…

In either case, it is a vote against the dollar.  When gold and Bitcoin are both spiking, it is a big vote of no confidence in the dollar.”

In closing, Rubino says, “There is no way to know how this plays out in the next six months, but this should terrify the central banks.”

”  By the way, the big central banks are behaving as if they are terrified because they are aggressively buying gold.  They have bought about 1,000 tons of gold in each of the last two years.  1,000 tons is a fourth of the gold that comes out of all the gold mines in a given year.  So, that is a major purchase, and they take the gold off the market.  They don’t turn around and sell it.  They put it away as a reserve asset.  The gold is effectively disappearing.  This makes the market even tighter, and this is also part of the reason why gold is going up.”

There is much more in the 42-minute interview.

Join Greg Hunter as he goes One-on-One with financial writer John Rubino and his new enterprise called Rubino.Substack.com for 3.9.24.

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John Rubino is a prolific financial writer, and you can see some of his work for free at Rubino.Substack.com.  There is even more cutting-edge original information and analysis if you subscribe.

Authored by Christopher Roach via American Greatness,

Donald Trump resumed his role as the “wise fool” in recent, off-the-cuff remarks about NATO. He suggested that free-riding NATO members who do not pay their fair share might have to fight Russia on their own. National security hawks and Trump’s media enemies responded with lots of pious talk about our sacred NATO obligations. Joe Biden even said Trump was “un-American.”

Trump is not the first to suggest NATO partners should pay their fair share. But unlike his predecessors, he is willing to employ some leverage to make it happen. The real dirty secret here, as evidenced by how long this situation has gone on, is that enabling the Europeans to neglect their own defense is a feature and not a bug of America’s dominance over the NATO organization.

The weaker our European partners are militarily, the more they need the United States. With the destruction of the Nord Stream 2 pipeline and imposition of severe sanctions against Russia, Europe is even more dependent on the United States for energy supplies than it was before the war began.

One disturbing and Machiavellian implication of American policy is that the official reasons for the war, such as deterring “unprovoked Russian aggression” or protecting democracy in Ukraine, are just fig leaves to conceal the real function of the campaign. Namely, the United States may be cynically funding the war to weaken Russia and Europe at the same time.

If that were true, this conflict would not merely be an expression of misguided idealism but proof of American indifference to the welfare of its vassal states in Europe. It would also demonstrate the perfidy of European leaders, who have not admitted they are hurting their own countries’ welfare in exchange for personal power.

Whether an intentional outgrowth of American policy or otherwise, the Russia-Ukraine War has put the European economies into freefall because they were built on cheap natural gas from Russia.

Does NATO Enhance the Security of Member States?

With the recent proliferation of maudlin pro-NATO rhetoric, important and controversial first principles have not been explored, such as: Why are we in NATO? Why didn’t NATO dissolve after 1991? And how much “peace in Europe” has NATO really secured?

NATO’s defenders say that it has kept the peace in Europe “since World War II.” This justification falls apart under minimal scrutiny. After World War II, the European countries that made up NATO had common interests, low levels of nationalism, and few border disputes. During the Cold War, they were united because they faced a common threat from the Soviet Union and the Warsaw Pact. They would have had this unity regardless of any formal treaty structure.

By contrast, after the end of the Cold War, NATO’s contribution to European collective security and world peace has been less impressive.

First, all of the European partners have significantly shrunk their militaries. This has made the protection of their collective sovereignty all the more dependent on nuclear weapons, of which the United States is the chief possessor.

The dependence on the American security umbrella has both costs and benefits for us. On the cost side, other NATO countries can do little to assist the United States, and we spend an unsustainable amount on defense. But, on the benefit side, this arrangement does make Europe more dependent on trade with the United States. It “keeps the peace,” but it also impairs European nations’ sovereignty, independence, and self-respect.

Twenty years ago, France meaningfully opposed American ambitions in Iraq and otherwise voiced its own national interests. It is hard to imagine an Emmanuel Macron or an Olaf Scholz doing so today. The latter didn’t even protest his country’s natural gas lifeline being blown up. Like other welfare cases, their nations are parasitical and weaken the host, but they do not forget who is boss.

Second, NATO did little to stop the violence during the wars in the former Yugoslavia in the immediate aftermath of the Cold War. A military structure in search of a mission, President Clinton turned to NATO when the United Nations rejected American regime change proposals in Serbia. Under the NATO banner, the United States initiated a shameful attack on Serbia to assist Kosovar separatists in 1999.

The Kosovo War revealed NATO as the very opposite of a defensive alliance, but rather a meddlesome and bellicose gang whose hypocrisy had become hard to deny. This was all the more apparent when NATO conducted a similar unprovoked war on spurious humanitarian grounds against Libya in 2011.

Third, NATO’s expansion towards the borders of the former Soviet Union and then to the former Soviet Baltic states served as a massive and needless provocation. By then, Russia was a non-communist, non-ideological, and non-expansionist nation, shaking off the dreadful economic conditions and national humiliation of the Yeltsin years.

Even as George W. Bush claimed he saw into Putin’s soul, the United States and NATO did not change course. Our national security apparatus expanded the alliance to Russia’s borders, suggested Ukraine and Georgia would soon become members, placed ballistic missile defense systems in Eastern Europe, and even supported jihadist rebels in Chechnya. Combined, this all made Russia rather predictably fearful and hostile.

These policies also worked at cross purposes with American interests in other parts of the world. By encouraging a de facto alliance between Russia, China, and other emerging powers, our policy strengthens our adversaries and renders the continuation of “sole superpower” status less and less tenable.

How Would We React If Someone Treated Us Like We Treat Russia?

The possibility of adding Ukraine to NATO has not been fulfilled, but it has resulted in a massive, unfortunate, and avoidable war between Russia and Ukraine. While not a formal belligerent, NATO has openly and dangerously provided intelligence and reconnaissance support to the Ukrainians, in addition to massive financial and military aid.

Russia has so far avoided targeting American Global Hawk drones and RC-135 aircraft patrolling its borders—both of which are undoubtedly providing information Ukraine uses to attack and kill Russian forces. But imagine for a moment how the American public would react in the reverse scenario.

We know this because of the public reaction to fake intelligence that said Russia put out bounties to encourage the killing of American troops in Afghanistan. Some members of the intelligence community leaked this falsehood as a political attack on Trump during the final days of the 2020 election, and it made a lot of people understandably angry. It was, like so many of these stories, later disavowed. It is still important, though, because it reveals the incompetence and politicization of our intelligence services.

Even at the time, this always struck me as a ridiculous claim considering Russia’s permission of overflights allowing troops and equipment to reach Afghanistan. But illogic has never been a strong deterrent to lurid tall tales about Russian intrigue.

The neocons have cultivated a pervasive, unthinking, and mostly fact-free anti-Russian ideology ever since that country became more capable and assertive following Putin’s rise to power in 2000.

The Other Cold War Treaty: SEATO

Alliances are supposed to make nations stronger, not weaker. They are supposed to be mutually beneficial, and hopefully, they serve to prevent wars.

Alliances can also weaken their members by exposing them to conflicts that would otherwise only implicate a subset of their members. Alliances also make their members weaker if things go “kinetic” and member nations fail to meet their commitments. In such a case, the fair-weather friends lose their credibility, and their allies lose that nation’s help.

Sometimes alliances can make their members both stronger and weaker. Shortly after NATO came into being in 1959, the United States entered into a similar treaty called SEATO, the Southeast Asia Treaty Organization. SEATO’s members included Australia, the Philippines, France, Great Britain, and the United States. SEATO was one of the foundations for our country’s military commitments to South Vietnam.

The United States stuck to these obligations for nearly two decades, using logic similar to our current involvement in Ukraine, including the importance of maintaining credibility. But the Vietnam War proved very costly, and, over time, the American public lost confidence in the mission.

After cobbling together a peace treaty between North and South Vietnam, we skedaddled in 1973 and failed to honor our treaty obligations and other commitments to South Vietnam. This all culminated in the successful North Vietnamese offensive of 1975. When South Vietnam fell, it became clear that the loss of so much life, treasure, and credibility was a worse outcome for the United States than not having been in such an alliance in the first place.

The United States is about to learn this lesson again in Ukraine. We have no treaty obligation to Ukraine, but Biden has put our prestige on the line by repeatedly committing to stay “as long as it takes.” Since Ukraine is going to lose and the front has already started to collapse, the ultimate failure of the mission will further undermine our credibility as an ally. It will also discredit the deterrence value of America’s own military capabilities since so much of the war was fought with American equipment, American money, and American tactics.

While the credibility hit is unavoidable, America should end its involvement not only with Ukraine but with NATO before things come to a head. It seems very likely the disunited American public would renege on our treaty obligations if it meant World War III to resolve a border dispute in Romania or Estonia. There is nothing sacred about NATO; our connections to Europe have been weakened by diversity, and spending hundreds of billions of dollars on hopeless border wars in Europe is not in the American interest.

For the American NATO withdrawal to happen, Europe must rearm itself, and the United States must accept that Europe will no longer be in the position of vassals, whose inferiority is reinforced by enabling their neglect of their own collective self-defense. The current arrangement only gives the illusion of power and stability, but it is fragile and also stokes resentment and dependency among our allies.

This is to say, an American withdrawal from NATO would be good for both Europe and the United States. It would tamp down current European hostility toward Russia—because they would need to be more circumspect—while giving Russia a sense of safety that it currently lacks. It would also restore America’s strongest attribute, which is the “soft power” that we once possessed because of our rejection of colonial empire building. Our international prestige has always been inseparable from this aspect of American idealism, but it has also declined as America behaved more and more like the displaced European imperial powers in the post-Cold War era.

Outside of the NATO treaty structure, America could still care about European civilization, maintain strong commercial ties, and involve itself where its friends are threatened without having an ironclad treaty obligation to do so. This would reduce tensions and restore American flexibility. It would also be consistent with broader principles of justice that enhance our prestige and “soft power.”

This is the way counseled by George Washington, and such a posture would honor and protect American sovereignty and independence.

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Views expressed in this article are opinions of the author and do not necessarily reflect the views of ZeroHedge.