Month: August 2024

Coming off yesterday’s lowest volume (full) session of the year (and Monday was the 2nd lowest), the low level of liquidity was very apparent in today’s anxiety-filled session as traders puked back gains ahead of “the most important earnings announcement ever”.

Nasdaq was clubbed like a baby seal, but all the majors saw two big legs down intraday. That, of course, was met with a wave of BTFDing as the last hour began

Mag7 stocks were dumped for the fifth day in a row…

Source: Bloomberg

Also, ‘most shorted’ stocks were dumped, erasing all the post-Powell euphoria…

Source: Bloomberg

1-Day-VIX soared higher ahead of tonight’s earnings news (higher than VIX)…

Source: Bloomberg

Treasury yields were higher across the curve by 1-2bps on the day with the long-end very modestly underperforming…

Source: Bloomberg

The dollar extended its rebound gains, erasing 75% of the post-Powell plunge…

Source: Bloomberg

Bitcoin was battered today with a big puke shortly after yesterday’s equity cash market closed. The cryptocurrency found support at $58,000 and tested back up to $60,000…

Source: Bloomberg

Gold also tumbled on the day, only to find support at $2500…

Source: Bloomberg

Oil prices dipped for the second day with WTI holding above $74…

Source: Bloomberg

Finally, is it time for stocks to catch back down to bonds’ reality?

Source: Bloomberg

…and will NVDA be the trigger?

Last March, when the world was just learning about the AI crazy that would send markets to bubbly, nosebleed levels, we quoted a report by Goldman’s chief economist Jan Hatzius who used data on occupational tasks in both the US and Europe, to find that “roughly two-thirds of current jobs are exposed to some degree of AI automation, and that generative AI could substitute up to one-fourth of current work. Extrapolating our estimates globally suggests that generative AI could expose the equivalent of 300 million full-time jobs to automation” as up to “two thirds of occupations could be partially automated by AI.”

Translation: one-third of a billion layoffs (at least) in the US and Europe, or as we put it, “Think of it as the robotization of the service sector.“

Well, it may not be 300 million – yet – but the first 1,200 job losses to take place exclusively thanks to artificial intelligence are now in the books, as a result of mass layoffs taking place at Swedish fintech giant Klarna which has already fired well over 1,000 of its workers and plans to axe almost half of its 5,000 workers thanks to AI, as the lossmaking Swedish buy now, pay later company gears up for a stock market flotation.

As the FT reported, CEO Sebastian Siemiatkowski heralded the benefits of AI in Klarna’s second-quarter results on Tuesday, which showed a significant narrowing of its net loss from SKr854mn ($84mn) a year earlier to SKr10mn.

The Swedish fintech has already cut its workforce from 5,000 to 3,800 in the past year, and Siemiatkowski said that Klarna could employ as few as 2,000 employees in the coming years as it uses AI in tasks such as customer service and marketing.

“Not only can we do more with less, but we can do much more with less. Internally, we speak directionally about 2,000 [employees]. We don’t want to put a specific deadline on that,” he added.

Separately, Klarna has imposed a hiring freeze on workers apart from engineers and is using natural attrition rather than lay-offs to shrink its workforce.

Not surprisingly, Siemiatkowski has become one of the most outspoken European tech bosses about the benefits of AI, even if it leads to lower employment, arguing that is an issue for governments to worry about. Translation: UBI is coming, and with its massive stimulus, QE, YCC and so on, because over the next decade hundreds of millions of well-paid services jobs will quietly go into that good night.

There is another reason behind Klarna’s impetus to push for massive cost-savings. The Stockholm-based group is lining up financial advisers for its long-anticipated initial public offering due as early as the first half of next year, with Morgan Stanley, JPMorgan Chase and Goldman Sachs in lead positions to secure top roles, the FT reported.

Siemiatkowski said that Klarna had boosted its average annual revenue per employee from about $400,000 a year 12 months ago to  $700,000 now, due to cutting its workforce and reducing expenses through AI.

The benefits of AI are likely to be a key selling point for any Klarna IPO. Once the darling of the European tech scene valued at $46bn in 2021, the Swedish group saw its valuation plummet as low as $6.7bn a year later because of rising interest rates and falling stock prices. Bankers and investors in Klarna now believe it may be able to achieve a valuation of between $15bn and $20bn when it lists, assuming it manages to fire many more employees.

Then again, Klarna has other problems: credit losses at Klarna increased 22% to SKr1.1bn in the second quarter compared with a year earlier, even as revenues increased 25% to SKr6.9bn.

Klarna had been consistently profitable from its founding in 2005 until 2019 when its rapid expansion in the US caused it to make huge losses. Last year, it made its first quarterly net profit in more than four years, and Siemiatkowski said it would not go back to making losses, arguing that AI was boosting its gross margins.

“If I can get to a superior revenue per employee that will allow us to pay top class for the best talent, the people who are currently deep-diving and learning AI . . . The very strong message to our employees is: less total labour cost, higher cost per individual. I’m very happy about seeing that this is paying off,” Siemiatkowski said.

Here the punchline: if Klarna is successful at keeping its productivity and output with 50% fewer workers, other service companies will immediately take the plunge and do the same. And if X/Twitter is any indication, with the company successfully dumping up to 80% of its pre-Musk acquisition bloat, the next decade will see a veritable carnage of layoffs across every single industry, putting Goldman’s forecast of “only” 300 million layoffs in the dust.

Authored by Bill Pan via The Epoch Times,

A federal appeals court has allowed Florida to enforce a ban on hormone replacement therapy for children while the legal challenge against the ban proceeds.

In the Aug. 26 decision, a three-judge panel of the 11th U.S. Circuit Court of Appeals sided with Florida, reversing a district judge’s order that put the ban on hold while the matter is appealed. The court also approved expedited proceedings in the appeal.

“The district court itself recognized that there were ‘legitimate concerns’ about some of the treatments’ effects, as well as a ’risk of misdiagnosis,‘ ’risks attendant to treatment,‘ and the potential for ’additional medical risks,’” the panel’s 2–1 majority, Judges Britt Grant and Robert Luck, wrote in the unsigned opinion.

The defendants, including Florida Surgeon General Joseph Ladapo and the Florida Board of Medicine, have made “a strong showing that they are likely to succeed on the merits,” the judges concluded.

At the center of the legal battle is a 2023 law that prohibits doctors and nurses from performing sex-reassignment surgeries or prescribing medication such as cross-sex hormones and puberty blockers to anyone under the age of 18, regardless of parental consent. Children who were already taking those medications when the law was passed may continue, but surgeries are no longer permitted.

The law also places restrictions on adults seeking gender transition treatment, requiring that adult patients receive such treatment exclusively from a physician and sign the consent form in person, effectively preventing them from seeking the treatment from nurses or telehealth services.

In June, Judge Robert Hinkle of the Northern District of Florida ruled in favor of those challenging the restrictions, including the parents of a 10-year-old boy diagnosed with gender dysphoria. The judge stated that while Florida may regulate treatments, it should not deny “safe and effective medical treatment” to people identifying as transgender.

The state appealed Hinkle’s ruling and asked the judge to allow it to enforce the law while waiting for the appellate hearing. Without a stay, the state argued, it would not be able to ensure those treatments meet appropriate medical standards.

“That is simply not true. The state has in place abundant means of ensuring that health care professionals adhere to the prevailing standards of care,” Hinkle wrote in his denial of a stay.

“The state allowed and even paid for gender-affirming care for many years before enacting the statute and rules at issue in a wave of anti-transgender bias.”

Grant and Luck disagreed with Hinkle. They concluded that the harm the state would suffer from not being able to enforce the will of the Legislature and the need to “avoid irreversible health risks to its children” outweighs the potential harm to individual plaintiffs.

“As to harm to others, even with the law in effect, physicians may continue to prescribe and administer puberty blockers and hormones to adults. And minors who were already receiving them may continue to do so,” they wrote in the Aug. 26 opinion.

Judge Charles Wilson dissented, arguing that there is “sufficient record evidence” to back the claim that the 2023 law was based on “invidious discrimination against transgender minors and adults.”

“On balance, evidence in the record demonstrates that the plaintiffs and class-members would suffer if the stay were granted—withholding access to gender-affirming care would cause needless suffering,” he wrote.

“This matter is a medical issue, where patients are best left to make decisions alongside health professionals, with access to complete, unbiased information, as needed.”

The National Center for Lesbian Rights, one of the pro-LGBT advocacy groups litigating the case, said it was “deeply disappointed” by the decision.

“Allowing these discriminatory restrictions to go back into effect will deny transgender adults and adolescents lifesaving care, and prevent Florida parents from making medical decisions that are right for their children,” the group said in a statement.

Florida’s Department of Health didn’t respond to a request for comment by publication time.

Today in “the unending successes of migration” news, a Venezuelan migrant working for Amazon drove his truck into a Florida mother who was pushing her 4 month old child, and then fled the scene of the crime, according to a new report by the NY Post.

The hit and run caused the mother “catastrophic” injuries and the child was thrown into the street, the report says. Home surveillance video showed the mother being “dragged onto the front of the car”. 

The mother, whose identity has not been revealed, was walking with her infant and the family dog in Ives Estates near Miami when they were allegedly hit by Sarahy Parra-Ovalles.

Parra-Ovalles entered the U.S. on a tourist visa in 2019, which expired in 2021, according to Homeland Security sources. She was granted Temporary Protected Status that same year, allowing her to apply for a work permit.

The driver briefly stopped to upright the stroller and place the baby back in its seat before fleeing the scene.

The Post report says that a few days after the incident, the mother was recovering at home from severe injuries, including a brain injury, a fractured skull, and a brain bleed, Rosen said.

Over the weekend, she had to pump breast milk from her ICU bed, which her husband took home to the baby, who was fortunately uninjured, family lawyer Judd Rosen added.

“This is one of the worst and most graphic videos as a parent that I have ever seen,” he said. 

Parra-Ovalles was released on bond after being arrested, the report says. “She was run down in broad daylight and left for dead, and within 24 hours of getting arrested, [the suspect is] back on the streets, potentially driving around. Where is the justice system when you need them?” Rosen asked. 

A spokesperson for Amazon said: “This is a terrible incident and our thoughts are with this family. We’re looking into the matter and will support law enforcement as they investigate.”

“They’ve sacrificed their safety and standards to increase the speed of delivery. And I’ve seen over the last months and years that the drivers they’re hiring are less and less qualified,” Rosen concluded. 

Video of the incident is available at the report. 

Authored by Aldgra Fredly via The Epoch Times (emphasis ours),

Mexican President Andres Manuel Lopez Obrador has announced a halt in relations with the U.S. and Canadian embassies after their ambassadors raised concerns over his judicial reform proposal.

Lopez Obrador said on Tuesday that the embassies will have to be respectful of Mexico’s sovereignty for relations to be reestablished. He did not elaborate on the potential effect of the pause.

“They have to learn to respect Mexico’s sovereignty,” Lopez Obrador said during a press conference on Tuesday. He noted that the pause was with the embassies and not with the countries.

The U.S. and Canadian embassies in Mexico didn’t reply to The Epoch Times’ requests for comment by publication time.

The Mexican president’s remarks came a day after lawmakers in Mexico’s lower house of Congress passed the judicial reform proposal, paving the way for it to be approved when the newly elected Congress takes office in September.

The reform proposal includes a provision requiring judges to be elected by popular vote. The Mexican president has said that the reform is needed to combat judicial corruption.

Lopez Obrador earlier accused U.S. Ambassador to Mexico Ken Salazar of interfering in his country’s internal affairs after Salazar said that the reform poses “a major risk” to Mexico’s democracy.

Salazar said in an Aug. 22 statement that the changes would allow drug cartels to exploit the Mexican judiciary and put U.S.–Mexican trade relations in jeopardy, which he said “relies on investors’ confidence in Mexico’s legal framework.”

The U.S. envoy said the judicial branch in Mexico needs “capable judges” to handle complex litigation for extraditions, trade disputes, and other issues.

But the reform proposal will remove the necessary qualifications for judges, allowing those with only a few years of legal experience to become judges through popular vote, he noted.

Salazar subsequently stated on X that he was open to engaging in dialogue with the Mexican government and exchanging views on different judicial models. He also said he has “the utmost respect for Mexico’s sovereignty.”

Canadian Ambassador to Mexico Graeme Clark said last week that Mexico’s judicial reform proposal has sparked concerns among investors.

“My investors are concerned, they want stability, they want a judicial system that works if there are problems,” Clark said at an event last week.

Judges and magistrates in Mexico have launched a strike to protest the proposal. They argued that the reform would end merit-based career paths and make the judiciary more vulnerable to outside influence.

Lopez Obrador said the strike will not result in any changes. His term as president is set to end next month, when he will be succeeded by Claudia Sheinbaum.

Reuters contributed to this report.

A power line battle is unfolding across the Mason–Dixon, a demarcation line separating Pennsylvania and Maryland, as 10,000 Marylanders in a Facebook group are raising hell about failed ‘green’ energy policies by far-left Annapolis lawmakers. These policies now lead to the rising probability that eminent domain will be used to seize small farms to construct and expand transmission cables to increase load capacity to power new artificial intelligence data centers.

Developer Public Service Enterprise Group, or PSEG, is seeking to install 70 miles of new high-voltage power lines that zigzag through Baltimore, Carroll, and Frederick Counties in a project called the “Maryland Piedmont Reliability Project.” The upgraded transmission lines will increase load capacity in the state by importing power from surrounding states, such as Pennsylvania, to power AI data centers in Frederick. 

PSEG recently spoke with Fox Baltimore about their willingness to work with small farms to reach a mutual agreement on acquiring property rights. However, PSEG is prepared to invoke eminent domain if an agreement cannot be reached.

According to a recent note by ESG Legal Solutions, Maryland consumes about 40% more electricity than it generates. The note adds that “apocalyptic environmentalism” has led to the retirement of fossil fuel power generation and the reliance on increasing power imports from surrounding states. 

“Solar energy, wind, and biomass are increasing but will not at any reasonable time replace that capacity or energy density; so, the state will import more electricity,” ESG Legal Solutions said, adding the state “cannot import its way out of this predicament with ever-increasing electricity demand.” 

As a result of failed green policies and rising power demand, power bills in the region are set to skyrocket. Goldman notes…

Meanwhile, nearly 10,000 Facebook “STOP MPRP Community Group” members are fed up with Annapolis lawmakers over flawed green policies that are backfiring and morphing into an energy crisis in the state. Just remember that developing new NatGas generation down the street from the AI data centers could quickly solve the state’s power problem and save the farms.

Members of the group are beginning to fight back. They plan to launch a demonstration on Thursday at the Maryland Data Center Summit at Frederick Community College. The goal is a show of force to the politicians and industry insiders attending the summit.  

The flyer for the demonstration notes, “Remember: data centers = power lines.” And how it should be expanded: “Remember: data centers = power lines = eminent domain.” 

What’s happening in Maryland is also happening in other states.

After yesterday’s solid 2Y auction, moments ago the US Treasury sold $70BN in 5 year notes, in an auction which saw yields tumble 46.8bps, to 3.642% – the lowest since April 2024 – from 4.110%. However, unlike yesterday’s stopping through 2Y auction, today’s sale tailed the When Issued 3.642% by 0.3bps, which was the 4th tail in the past 5 auctions.

The bid to cover of 2.41 was effectively unchanged from last month’s 2.40% and just above the six-auction average of 2.38%.

The internals were stronger, with Indirects awarded 70.5%, the highest since March, and up from 67.25% in July. And with Directs taking 16.3%, or the least since May and below the recent average of 17.9%, Dealers were left holding 13.2%, down from 14.0% last quarter and also below the recent average of 15.2%.

Overall, this was a mediocre, tailing auction if one looks at the superficial metrics, yet a quick look deeper reveals more solid demand than yesterday’s stopping through 2Y. Of course, nobody ever accused the market of digging deeper in anything, ever, and so yields are pushing out to session highs with 10Y rising above 3.84% for the first time today.

Via The Cradle

Crypto exchange platform Binance has seized the accounts of numerous Palestinian users at the request of the Israeli government for allegedly being linked to “illicit funds” and “terrorist organizations.”

“Cryptocurrencies transferred by a declared terrorist organization … and cryptocurrency wallets to which said property was transferred constitute property that was directly used to commit a serious terrorist offense… as defined in the Anti-Terrorism Law,” reads a letter circulated by Binance from the Israeli Ministry of Defense and signed by the head of its National Bureau for Counter-Terror Financing, Paul Landes.

The letter continues: “…and therefore in accordance with the provisions the law allows the Minister of Defense to order their seizure by administrative order in preparation for their confiscation.” 

According to Ray Youssef, co-founder of crypto marketplace Paxful, Binance has “[refused] to return the funds. All appeals denied.”

“All Palestinians are affected, and judging by the way things are going, all Lebanese and Syrians will get the same treatment. Not your keys, not your coins,” Youssef added.

“Only a limited number of user accounts linked to illicit funds were blocked from transacting. There have been some incorrect statements about this,” Binance CEO Richard Teng said on 28 August.

“As a global crypto exchange, we comply with internationally accepted anti-money laundering legislation, just like any other financial institution,” he added.

Binance has yet to provide details on the number of affected users and when the restrictions were enforced.

BREAKING: Cryptocurrency exchange Binance has seized all Palestinian assets at Israel’s request pic.twitter.com/rxXQQaYrCC

— Sulaiman Ahmed (@ShaykhSulaiman) August 27, 2024

“Palestine is a minor market for Binance, with Palestine’s traffic share amounting to roughly 0.05 [percent] of Binance’s visits over the past year,” Cointelegraph reports, citing data from website analytics source SimilarWeb.

Nevertheless, Palestine’s traffic on Binance has reportedly surged more than 80 percent since August 2023.

Let’s start here. 

Earlier this year, NPR’s Code Switch, Gene Demby and NPR reporter Huo Jingnan discussed, “The conspiracy theory alleges that a shadowy global elite conspires to control the world’s population, in part by forcing them to eat insects.” 

Well, do we have news for them…  

This leaves us with a new report from The Telegraph titled “Public will get the bug for eating insects under Government-backed drive.” 

Here’s more from the British paper: 

A research centre backed by the Government will work to get insects and other meat alternatives onto supermarket shelves and make them more palatable to the public.

Innovation in meat alternatives has risen in recent years amid growing recognition of the environmental impact of animal agriculture, which accounts for around 80 per cent of greenhouse gas emissions from food production globally.

Mince created from crickets harvested in Cambridge and pet food made of chicken cultivated from egg cells are two of the products recently launched by British-based companies which it is hoped will become more widely available.

The National Alternative Protein Innovation Centre (NAPIC) will look at how to cut red tape and ensure food safety, while also exploring ways to sell meat alternatives to shoppers through focus groups and surveys.

Prof Anwesha Sarkar, from the University of Leeds, the research center that will ensure bugs are safe for human consumption, noted, “We want to make alternative proteins mainstream for a more sustainable planet.”

In addition to insects, Bill Gates has backed a lab-grown meat company called UPSIDE Foods, while the World Economic Forum has pushed lab-grown meat propaganda.

Meanwhile, Western governments are locked in a concerted effort to reset the food supply chain towards sustainability. That means weaponizing climate policies to bankrupt small and medium-sized farms, ensuring a complete mega-corporate takeover of the food supply chain, and eventually, the long game is to transition the world onto an insect and fake meat diet.

However, there is great news: former President Trump and RFK Jr. have come out against this diabolical food reset plan by supporting small farms.

Read our note titled “RFK Jr. & Trump Will End War On Small Farms To Save Nation’s Food Supply Chain.” 

Seriously, we’re running out of conspiracy theories…

Just remember what Henry Kissinger once famously said, “Who controls the food supply controls the people; who controls the energy can control whole continents; who controls money can control the world.”

To save a nation, the control of the food supply chain must be handed back to small farms. 

Via Middle East Eye,

The US Pentagon has warned that an oil tanker attacked by Yemen’s Houthis last week is still on fire and could be leaking oil into the Red Sea, threatening an ecological disaster.

Last week the group targeted the Greek-flagged crude oil tanker Sounion with three projectiles, sparking a fire and disabling the engine. 

The Sounion’s crew were rescued by a French naval vessel on Thursday after drifting for a day 77 nautical miles west of the port of Hodeidah.

On Friday the group, which controls most of Yemen and says its attacks are in solidarity with Palestinians in Gaza, posted a video purporting to show them setting the ship alight.

The EU’s Aspides task force, an international naval force, said in a statement on X that there was no sign of fire on board the ship when the crew were rescued.

The tanker is carrying more than 150,000 tonnes of crude oil. Should a spill occur, it could be among the largest from a ship in recorded history.  

The US State Department warned in a statement on Saturday that the potential spill could be four times the size of the 1989 Exxon Valdez disaster, when 257,000 barrels of oil leaked off the coast of Alaska.

According to Aspides, the EU military task force against the Houthis, the wreckage risks a “severe ecological disaster.“

Pentagon spokesperson Air Force Maj Gen Patrick Ryder said on Tuesday that a third party had sent two tugboats to salvage the wreck but had been deterred by Houthi threats to attack them.

Ryder condemned the attacks as “reckless acts of terrorism” which “imperil the vibrant maritime ecosystem in the Red Sea and Gulf of Aden, the Houthis’ own back yard,” adding that the US military was working with partners in the region to mitigate any environmental impact.

Yemen’s Ansar Allah group, known as the Houthis, started targeting any ship they deemed Israel-linked traversing the Red Sea in October 2023, vowing not to stop until Israel ends its war on Gaza.

Some ships with no relation to Israel have also been targeted over recent months.

While the group has so far sunk two ships – the Rubymar attacked in February and the Greek-flagged Tutor, which was targeted in June – the Sounion attack marks the first time the fighters have intentionally blown up an abandoned ship.

*   *   * 

“As the current focus is on a possible oil leak from the Sounion, attention needs to be given to the challenges that will complicate salvage operations, and how navy forces can assist with that. At least two past ship attacks showed that the Houthis can return to the scene of a stricken commercial vessel to prevent or obstruct salvage operations. In the case of the Sounion, navy forces in the region may need to assist in preventing the Houthis from returning back to further damage the tanker,” Maritime expert Noam Raydan, and author of The Chokepoint, pointed out. 

Here’s the latest positioning of US military maritime assets in the Middle East. 

*   *   *