Month: August 2024

Authored by Samantha Flom via The Epoch Times,

The Republican National Committee (RNC) is suing the Election Commission for the City of Detroit, alleging that it failed to hire enough Republican poll watchers for the state’s Aug. 6 primary election.

Michigan election law requires that the Board of Elections commissioners appoint “an equal number, as nearly as possible” of election inspectors from each major political party in every precinct.

The city appointed a total of 2,337 Democratic election inspectors and 310 Republican election inspectors for the primary, according to a commission report the RNC and the Michigan Republican State Committee filed in their Aug. 21 complaint. The ratio of Democrats to Republicans was 7.5 to 1.

Of the 335 Wayne County precincts for which information was available, the RNC said 300 had inadequate numbers of Republican election inspectors.

“Even worse was the disparity with leadership positions, with chairpersons for only 32 of the 335 precincts being filled by Republicans,” the complaint states.

State law also requires that every precinct have at least one election inspector from each major party. However, the RNC found that 202 precincts did not appoint a single Republican election inspector.

The complaint notes that a list of 675 party-nominated Republicans was submitted to the chair of the commission, City Clerk Janice Winfrey, who is named as a defendant in the lawsuit. Fifty-one of those Republicans reported receiving some communication from a city official about being appointed but were not included on the city’s final list of election inspectors.

The chairs of Wayne County Republican committees are also plaintiffs in the lawsuit, which was filed in Michigan’s Third District Court. The complaint seeks a court order compelling the election commission to adopt practices to ensure the appointment of an equal number of Republican and Democrat election inspectors in the future.

“Detroit’s failure to hire Republican poll workers is the kind of bad-faith Democrat interference that drives down faith in elections,” RNC Chairman Michael Whatley and Co-chair Lara Trump said in a statement.

“The RNC is bringing suit to remedy this completely unacceptable breach of public trust, and our unprecedented election integrity campaign will continue to fight in Michigan and nationwide to protect the rights of every voter to have fair, accurate, secure, and transparent elections.”

The Epoch Times has contacted the City of Detroit Election Commission for comment.

The RNC’s latest Michigan complaint comes on the heels of its recent victory in another lawsuit in the state.

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The committee sued Michigan Secretary of State Jocelyn Benson and Director of Elections Jonathan Brater in March for recommending that election workers presume the validity of absentee ballot signatures rather than verify them.

Those recommendations were “incompatible with the Constitution and laws of the State of Michigan,” state Judge Christopher Yates ruled on June 12.

Benson and Brater had argued that their guidance did not prescribe a presumption of validity but an “initial presumption.”

“With apologies to Gertrude Stein, however, a presumption is a presumption is a presumption,” Judge Yates wrote. “Whether the guidance manual includes a gentle nudge instead of a hip check, it’s still a foul under Michigan law.”

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A third RNC lawsuit challenging Michigan’s voter roll maintenance is still ongoing.

The party has filed a slew of lawsuits across various battleground states as part of its stated mission to bolster election integrity ahead of the 2024 election.

“Honestly, I do not think this economy can withstand the ravages of what it has experienced since 2021.”

‘Four more years’ is not the message being heard from the regional Fed surveys this week as the Philly, Dallas, and Richmond business surveys all slumped deeper into contraction…

Source: Bloomberg

Actual CapEx is weak, New Orders are plunging, and the number of employees is tumbling…

Source: Bloomberg

Overall, respondents’ expectations regarding future business activity reflected waning optimism in August.

• I feel that a recession is going to hit the U.S.

• Our data supports the thesis that consumer spending is paring back materially. We will start seeing significant negative impacts to our business if spending continues to decline at the current rate through the end of the year. We are very concerned that the Federal Reserve has waited too long to trim rates and that by the time any future cuts begin impacting the economy, consumer spending will be at recession levels.

• It’s curious that news headlines say inflation is going down, but in the design and construction industry, we have not seen prices going down.

• Costs continue to rise while pressure from customers and prospects to decrease prices is continually increasing.

The consumer is hurting…

• Activity is stalled slightly due to increasing personal debt along with [interest] rate uncertainty.

• We continue to see delays in purchase decisions.

• People are out of money. They’re parking their cars and throwing their keys to the dealership or banker, as it’s car or food for the family. And worst of all, I think it has just begun.

• Customers are having difficulty coming up with funds to pay for our services.

• In my 15 years at this location, this summer has been the worst business period I have seen.

Politics came up a lot…

• The biggest issue keeping companies from doing much, in my opinion, is politics.

• Understanding that the psychology of people and the market is a major driver of the economy, the upcoming election will determine the course of American business for the next four years.

• It is increasingly looking like the U.S. has lost its position of strength in geopolitics, and the vacuum is encouraging war and violence, which pose significant risk to international trade and reduce opportunities for U.S. companies. Anti-business, tax and spend rhetoric is not conducive for long-term investments and is going to further reduce U.S. business competitiveness especially against China’s government-supported industries and firms.

• The amount of political noise is disruptive to business owners. Political ads are proliferating, providing little value and worrying business owners.

And finally, one respondent decided a limerick was the appropriate response…

One opines that interest rates a bit too high.
Many borrowers in pain and let out a sigh.
We plead with grace
Bring rates to a place
Where capital formation does not result in a cry!

Get back to work, Mr.Powell!

Authored by Charles Kennedy via OilPrice.com,

The operator of the biggest U.S. power grid has issued hot weather and maximum generation alerts for the areas in the Midwest and East it serves as a heat wave that has settled on large parts of the Midwest and parts of the South.

PJM Interconnection, which coordinates the movement of wholesale electricity and ensures power supplies for 65 million people in all or parts of 13 eastern and Midwest U.S. states and D.C., has issued a Maximum Generation Alert and Load Management Alert for August 27.

The alert was issued ahead of expected hot weather across many parts of the Eastern Interconnection, including the region PJM serves.

“PJM is issuing the alert as a precautionary measure after all PJM resources are committed and exports of electricity outside of the PJM footprint may need to be curtailed in order to maintain reserve requirements,” the grid operator said in the Monday alert, adding that no customer actions are required.

The alert is targeted at transmission and generation owners, who then determine if any maintenance or testing on any equipment can be deferred or canceled, in order to maintain the availability of all resources.

Chicago, New York City, and Philadelphia are all expected to see temperatures rise to the mid to high-90s Fahrenheit on Tuesday and Wednesday, with Chicago’s O’Hare International Airport forecast to reach 97 F today, a record-high for August 27, according to weather forecasters cited by Bloomberg.

With demand for air conditioning spiking in the heat wave, PJM’s grid could face a test of resilience.

Further south in Texas, the state used a record amount of electricity on August 20, the Electric Reliability Council has reported, noting that the data has yet to be made official after calculating meter readings.

Earlier in the year, ERCOT forecast that electricity demand in the Lone Star State could double in six years, necessitating the urgent addition of more generation capacity.

The good news in the situation is that this year ERCOT appears to have been much better prepared to handle the occasional surges in electricity demand.

By Michael Every of Rabobank

The Fed Chair’s dovish Jackson Hole speech was analysed pithily by our Fed watcher Philip Marey: “Regarding the Fed’s initial diagnosis that inflation was “transitory”, Powell tried to hide behind other economists who were also wrong: “The good ship Transitory was a crowded one, with most mainstream analysts and advanced-economy central bankers on board.” This is the classic sharing the-blame defence of failing economists, but totally inappropriate for the world’s leading central bank with the largest staff of economic researchers in the world, holding PhDs from America’s most prestigious universities. Even a modest Dutch bank could see that the Fed was going to be blindsided by inflation.

Powell has already concluded that the Fed has brought down inflation while preserving labor market strength. This may be a bit premature, given the unemployment rate is rising so fast that the Sahm rule has already been triggered, and the lagged effects of restrictive monetary policy could still materialize in the coming months. Instead, Powell was patting himself on the back. He concluded his speech with, “The limits of our knowledge –so clearly evident during the pandemic– demand humility and a questioning spirit focused on learning lessons from the past and applying them flexibly to our current challenges.” Humility? This speech reflected hubris, not humility.”

Indeed, the Fed Chair pivot to “do-everything-we-can” rate cuts, ostensibly with inflation beaten, and as a friend-of-labor –‘The Powell of the Powerless’– and markets swallowing it, makes me think of a political essay with a similar name. In 1978, just before the Fed got serious on rates under Volcker after years of crash and Burns, then Czechoslovak dissident Havel wrote ‘The Power of the Powerless’, showing how to resist an all-pervasive “post-totalitarian” system. In 2024, with a light edit on my end, Havel’s text is also a tongue-in-cheek critique of the assumption that the all-pervasive Fed won’t be resisted ahead:

“Our system is not limited in a local, geographical sense; rather, it holds sway over a huge power bloc controlled by one of the two superpowers… It commands [a] precise, logically structured, generally comprehensible and, in essence, extremely flexible ideology that, in its elaborateness and completeness, is almost a secularized religion… In an era when metaphysical and existential certainties are in a state of crisis, when people are being uprooted and alienated and are losing their sense of what this world means, this ideology inevitably has a certain hypnotic charm… [Its] mechanisms for wielding power are for the most part not established firmly, and there is considerable room for accident and for the arbitrary and unregulated application of power…

A portfolio manager places in his email the slogan: RATE CUTS! Why does he do it? What is he trying to communicate to the world? Is he genuinely enthusiastic about the idea of lower rates? Is his enthusiasm so great that he feels an irrepressible impulse to acquaint the public with his ideals? Has he really given more than a moment’s thought to how such rate cuts might occur and what they would mean?…He put RATE CUTS! into emails simply because it has been done that way for years, because everyone does it, and because that is the way it has to be. If he were to refuse, there could be trouble. He could be reproached for not having the proper decoration in his email; someone might even accuse him of disloyalty. He does it because these things must be done if one is to get along in life. It is one of the thousands of details that guarantee him a relatively tranquil life “in harmony with society,” as they say…

The slogan is really a sign, and as such it contains a subliminal but very definite message. Verbally, it might be expressed this way: “I, XY, live here and I know what I must do. I behave in the manner expected of me. I can be depended upon and am beyond reproach. I am obedient and therefore I have the right to be left in peace.” This message, of course, has an addressee: it is directed above, to his superior, and at the same time it is a shield…”

Of course, individual incentives for groupthink in markets are clear; “Stay alive ‘til 25” is a mantra for many praying for rate cuts; and the belief 2021-24 was a “long transitory” inflation aberration before a return to ZIRP and QE still holds sway with many. Yet that doesn’t mean the Fed’s ideology isn’t projecting an ideological ‘reality’ inconsistent with the facts: inflation is beaten… when over target, especially in services; the labour market was strong; now it’s suddenly cooling… yet the Fed can forecast the economy; and it cares about labour… after being prepared to see rising joblessness to cap inflation, worrying about high wage growth, and surely knowing mass low-wage, illegal immigration was underway for years.  

Havel notes a post-totalitarian system “has a natural tendency to disengage itself from reality… Because the regime is captive to its own lies, it must falsify everything. It falsifies the past. It falsifies the present, and it falsifies the future. It falsifies statistics… It pretends to fear nothing. It pretends to pretend nothing. Individuals need not believe all these mystifications, but they must behave as though they did, or they must at least tolerate them in silence, or get along well with those who work with them. For this reason, however, they must live within a lie. They need not accept the lie. It is enough for them to have accepted their life with it and in it. For by this very fact, individuals confirm the system, fulfil the system, make the system, are the system.”

In 1978, Havel’s power of the powerless was a Czechoslovak greengrocer not putting an official sign saying, “Workers of the world, unite!” in their state-run shop window. In 2024’s Western free(ish) society and free(ish) markets “there are always certain correctives that effectively prevent ideology from abandoning reality altogether.” Here’s some samizdat for those wanting to dissent:

• August payrolls are key: a weak number may see markets price a 50bp September Fed move, but would also prompt concern about corporate earnings. Yet what if we get a stronger print?
• Powell didn’t address China’s deflation and mercantilism, which help make US inflation look “transitory.” Yet were Beijing to switch to stimulus alongside Fed rate cuts, as pressure is lifted off CNY (chatter now of a $1trn inflow to China if so), global commodity prices would leap.
• High Fed rates and a strong dollar capped commodity prices too, but WTI oil rose 2.5% Friday and another 3.0% Monday – coincidence, warning, or both?
• Massive new liquidity flowing into the global system means asset price inflation: hooray – but that will create political problems as the powerless and assetless get restless.
• Then there’s (geo)politics. If Trump wins, tariffs, tax cuts, and a smaller US labor force follow, and inflation rises; Western voters seem discontent with high immigration, without which wage growth rises; the Houthis blowing up an oil tanker underline Suez isn’t coming back as a global trade conduit; Israel and Hezbollah came closer to war before the latter blinked; Libya stopped oil exports; Russia saw more refinery damage; Canada put 100% tariffs on Chinese EVs and steel; China is considering tariffs on EU autos; and its controls on and stock-piling of rare earth minerals are pushing up the prices of key inputs for vital silicon chips.
• On the downside, the IFO warned the German economy risks slipping into “crisis” ahead of September regional elections that could make it look ungovernable; France has no government, and President Macron won’t allow a left-wing one; and the new UK Prime Minister is singing “Things can only get worse before they get better”, while media say violent offenders are being let off prison sentences if they say “sorry”, while anti-immigration rioters can all find cells.
• Central banks who’d cut dovishly before Powell (i.e., the BOC, RBNZ, ECB) were already seeing their currencies rise the dollar rather than sink: are they happy about more exchange-rate deflation pressures, or worried about loss of exports if global growth slows?

If the Fed cuts, then has to hike again, the current decade, like the one fifty years before it and the one forty years before that, risks marking the failure of not just the Fed’s reputation, but our global system and its “because markets” ideology. In the 1970s, we moved past high inflation via much more debt, much more globalisation, and inflation targeting. Today, that trinity looks impossible to return to. So, what next? Nobody at the Fed, and few in markets, are willing to talk about these huge downside risks, just the apparent downside for rates ahead. Havel had a few things to say about that, as I just showed.

Yet if the Fed has to cut again more than expected, things also look ugly. A recent Kansas City Fed paper explains central banks and governments can coordinate on a ‘safe debt’ regime that insures bondholders or a ‘risky debt’ regime that insures taxpayers; monetary dominance (QE) = safe debt, fiscal dominance (and no QE) = risky debt. Tellingly, it then concludes “high-frequency evidence shows the risky debt regime is a better fit for the recent US Treasury market experience as well as the experience of other advanced economies. Large unfunded spending shocks trigger large adjustments in the valuation of the government debt portfolio, even in a well-functioning bond market.” There’s a major Fed warning about fiscal spending at a time when austerity seems impossible or improbable. Of course, the above was against a backdrop of high rates and QT as well as huge fiscal deficits, and if we were to go back to ZIRP and QE then logically we would also be back to ‘safe debt’ again (and taxpayers, shmaxpayers).

However, we wouldn’t be in a safe currency regime. Or, as a result, a safe global trade regime. Or, logically, a safe inflation regime. So, if the global system sees another major crisis, the go-to answer of ZIRP and QE just creates massive new problems, not a replay of 2008-2020.

In short, the key danger for markets is that while all they want to hear is ‘finally, Fed rate cuts!’, the FOMC Chair may yet show himself to be “The Powell of the Powerless”, in that he can’t do what he and they want.

Then the Velvet Revolution, or the Velvet Divorce, may really start.

Artificial intelligence crypto tokens have surged over the past week ahead of a highly anticipated second-quarter earnings report from tech giant Nvidia. 

As Arijit Sarkar reports via CoinTelegraph.com, the market capitalization of artificial intelligence and big data cryptocurrency projects and tokens has surged by 79.7% over the past three weeks, reflecting renewed confidence among crypto investors.

On Aug. 6, the total market cap of AI and big data crypto projects recorded a yearly low of $18.21 billion, primarily due to its indirect reliance on the underperforming price of Bitcoin and crypto markets in general. At the time, Bitcoin’s price fell sharply under $50,000, according to data from Cointelegraph Markets Pro and TradingView.

Market capitalization and volume of AI and big data tokens market. Source: CoinMarketCap

Specifically, AI-focused tokens such as Near Protocol, Artificial Superintelligence Alliance (FET), Bittensor (TAO) and Render (RENDER) have seen gains outpace the broader crypto market over the past week.

Proof-of-stake layer-1 network Near’s native token surged 35% over the past week to hit a four-week high of $5.20 on Aug. 25. 

Artificial Superintelligence Alliance — a consortium of Fetch.ai, Ocean Protocol and SingularityNET — saw even bigger gains, with its FET token surging almost 70% in a week to reach $1.39 on Aug. 26.

Onchain analytics platform Lookonchain observed the big gains and noted strange whale transaction behavior in FET in an Aug. 26 X post. 

It noted that a whale “seemed to regret selling” at a lower price before spending $2.38 million Tether  to repurchase 1.79 million FET tokens from Binance at a higher price of $1.33 on Aug. 25. 

FET price, one week chart. Source: Cointelegraph

Other AI-affiliated crypto assets outperforming at the time of writing include TAO, which has gained 26% over the past week, topping $350 on Aug. 26. 

RENDER is also up around 40% over the past seven days, climbing to $6.45 on Aug. 26, according to CoinGecko. 

Most major AI tokens have fully recovered from the market crash earlier in August. 

Nvidia described as “most important tech earnings in years”

The surge in AI-related assets comes as markets prepare for one of the year’s most significant tech firm earnings reports. On Wednesday, Aug. 28, Nvidia will release its Q2 results.

One of Wall Street’s most influential tech bulls, Wedbush Securities’ Dan Ives, told Fortune on Aug. 23 that this is “the most important tech earnings in years.”

He said he believes the tech bull market is driven by demand for new data center capacity, which is needed to power the plethora of AI chatbots that have emerged in recent years. In a note on Aug. 22, Ives wrote:

“There is one company in the world that is the foundation for the AI Revolution, and that is Nvidia.”

Mike Smith, a portfolio manager at Allspring Global Investments, told Reuters:

“Nvidia is the zeitgeist stock today,” before adding, “You can think of their earnings four times a year as the Super Bowl.”

Nvidia’s revenue jumped 18% between Q3 2023 and Q1 2024 and has surged 262% in the past year. 

Nvidia stock has skyrocketed a whopping 180% over the past 12 months, hitting an all-time high of $135 in mid-June. Its stock has recovered 30% since the market dump in August and traded at just under $130 at the close of markets on Friday. Aug. 23.

Short seller Hindenburg Research, known most recently for its long-running feud with Adani Enterprises, set its sights on a well known American target today: Super Micro Computer.

Heading into the cash open, shares are lower by about 8%. 

In a report released on its website Tuesday morning, the short seller alleged that the semiconductor/server company, which has seen its stock skyrocket over the last few years during the AI bubble, could be engaged in accounting manipulation and self dealing among family members.

Among other points, Hindenburg wrote:

• Our 3-month investigation, which included interviews with former senior employees and industry experts as well as a review of litigation records, international corporate and customs records, found glaring accounting red flags, evidence of undisclosed related party transactions, sanctions and export control failures, and customer issues.

• Less than 3 months after paying a $17.5 million SEC settlement, Super Micro began re-hiring top executives that were directly involved in the accounting scandal, per litigation records and interviews with former employees.

• A former salesperson told us: “Almost all of them are back. Almost all of the people that were let go that were the cause of this malfeasance.”

• According to a lawsuit filed in April 2024, Super Micro waited only 3 months after the SEC settlement before restarting “improper revenue recognition,” “recognizing incomplete sales,” and “circumvention of internal accounting controls”.

• Even after the SEC settlement, pressure to meet quotas pushed salespeople to stuff the channel with distributors using “partial shipments” or by shipping defective products around quarter-end, per our interviews with former employees and customers.

• One former salesperson described pushing products to distributors based on made-up demand forecasts, completing a partial shipment, then later coming up with an excuse for why the rest didn’t happen. “And now you have a problem. Accounting problem maybe.”

“Beyond fresh questions around its revenue accounting, we found that Super Micro’s relationships with both disclosed and undisclosed related parties serve as fertile ground for dubious accounting,” the report says.

“For example, disclosed related party suppliers Ablecom and Compuware, controlled by Super Micro CEO Charles Liang’s brothers, have been paid $983 million in the last 3 years. Ablecom is also partly owned by Super Micro CEO Charles Liang and his wife.”

It continues: “The relationships seem oddly circular. Super Micro provides components to the entities which assemble them and sell them back to Super Micro. They also rent warehousing and factory space to Super Micro even though it has its own sprawling factory.”

“Multiple former employees and channel partners confirmed that after-sales service is undermining Super Micro’s ability to retain customers. One former salesperson said: ‘It’s their Achilles heel. It’s just horrible.’,” Hindenburg wrote.

“All told, we believe Super Micro is a serial recidivist. It benefitted as an early mover but still faces significant accounting, governance and compliance issues and offers an inferior product and service now being eroded away by more credible competition,” the report says.

You can read the full report here. 

We’ll update this piece when and if the company responds. 

Authored by Steve Watson via modernity.news,

A new poll has found that around three quarters of Democrat voters have no clue what Kamala Harris’ positions on key political issues are.

The survey, conducted by the Media Research Center, found that over 70 percent of “registered Democrats“ as well as Independents said they “either had not heard of Harris’s position or were unsure” on ten different issues.

The poll found that 78% of voters surveyed were unaware that Harris promoted a fund that aided violent BLM agitators to be bailed out of jail during the 2020 unrest. 

EXCLUSIVE MRC POLL: Most Dem Voters Don’t Know About Harris’s Radicalism | mrcNewsBusters

“It’s 2020 all over again. As it stands now, another leftist media coverup will decide the election.”
— L. Brent Bozell III, Media Research Center founder and president

A significant new… pic.twitter.com/mIZSsI7A0d

— Owen Gregorian (@OwenGregorian) August 17, 2024

Seventy-four percent said they were unaware that Harris supported decriminalizing illegal immigration, and 72 percent had no clue that Harris “never visited a conflict zone on the border as Border Czar.”

Those surveyed stated that they get news information primarily from ABC, CBS, NBC, CNN, and MSNBC.

“This suggests that the knowledge gaps found by our poll reveal a failure of these outlets to report on radical positions once (and perhaps currently) supported by the now-Democratic nominee for President,” Media Research Center noted.

Harris has yet to do any interviews outlining her stance on key issues, instead spending her time filming fake staged exchanges with Tim Walz about their favourite music and other matters that are completely devoid of substance.

In each video they talk about ‘getting the job done’ and ‘doing the work’ without actually saying what any of those things entails.

Harris devoted large chunks of her speech at the DNC complaining about everything that is wrong with America, prompting Donald Trump to ask why she hasn’t done anything about it for the past three and a half years.

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

Home prices in America’s 20 largest cities rose for the 16th straight month in June (according to the latest data from S&P CoreLogic – Case Shiller – data today), up 0.42% MoM (hotter than expected and accelerating from May). On a YoY basis, prices rose 6.47%, but notably that is the third straight monthly slowdown in the pace of price appreciation…

Source: Bloomberg

Overall, US home prices reached a new record high in June (as median new home prices continued to tread water)…

Source: Bloomberg

Home prices continue to track Fed Reserves closely, but a turning point may come soon…

Source: Bloomberg

Given the smoothing and heavy lag in the Case-Shiller data, it’s hard to find a causal relationship between prices and mortgage rates…

Source: Bloomberg

But, with prices reaccelerating and mortgage rates already back below 7.00% – in anticipation of The Fed – WTF does Powell think is going to happen when he actually starts cutting with prices at these record highs.

Ahead of tomorrow’s Nvidia earnings fireworks, it’s another quiet session with most asset classes close to unchanged and US equity futures flat in a muted overnight session. As of 8:00am, S&P futures were unchanged after trading in a narrow range, and erasing modest earlier gains, while Nasdaq futures rose 0.1% with tech leading as NVDA/TSLA edge higher after lagging the Mag7 yesterday. Bond yields continued to rise amid a steeper curve, pushing the 10Y 3bps higher to 3.85%, while the USD is weaker and commodities are lower ex-base metals and natgas. Today’s macro data focus is on Consumer Confidence, Housing Price updates, and regional activity indicators. There is a 2Y bond auction.

In premarket trading, Paramount Global fell after Seagram’s heir Edgar Bronfman Jr. dropped out the acquisition contest for the CBS parent, with producer David Ellison’s Skydance Media set to become the new owner. Nvidia shares erased earlier gains and were last trading flat. Here are other notable premarket movers:

• Cava Group (CAVA) falls 8% after the Mediterranean restaurant chain’s largest individual shareholder and a group of executives filed to sell shares.
• Hershey (HSY) slips 1.7% after Citi downgraded the chocolate bar maker to sell, saying volume weakness and cocoa inflation presents a looming downside risk.
• JD.com (JD) gains 3% on plans to buy back as much as $5 billion of its shares in a move to appease investors worried about a potentially worsening Chinese consumer downturn.
• Leslie’s (LESL) rises 2% after the outdoor supplies and sporting goods retailer named Jason McDonell as CEO and reaffirmed its fiscal 2024 outlook.
• Eli Lilly & Co. (LLY) ticks 0.6% lower as the company is now selling Zepbound vials at 50% discount to popular shots.
• Paramount Global (PARA) drops 5% as Seagram Co. heir Edgar Bronfman Jr. dropped out of a bidding war for the media company.
• Trip.com (TCOM) jumps 8% after the Chinese online travel agency reported second-quarter revenue and earnings that beat estimates.

Slowly but surely, all eyes now turn to Nvidia, and arguably the most important earnings release of the quarter; the company has the second-biggest weighting in the S&P 500 after Apple but has far greater importance on the broader “AI narrative”, and its nosebleed valuation mean that it’s susceptible to big swings that could reverberate widely. As noted yesterday, pricing in the options market shows that traders see the potential for an almost 10% move in either direction after earnings, which would translate to roughly 160 points in the Nasdaq 100 Index, or a 0.8% move.

Nvidia’s “numbers will be good but what matters is the guidance in order to understand if the demand is still healthy,” said Alberto Tocchio, a portfolio manager at Kairos Partners. “If we get bad news, the rotation will be ever stronger as the market is still very heavy on the mega-cap.”

Investors will also hope the bull market will broaden out of big tech after fed Chair Jerome Powell signaled Friday the central bank will cut rates soon. Other policy makers echoed his dovish tone: Fed Bank of San Francisco President Mary Daly said it’s appropriate to begin cutting rates, while her Richmond counterpart Thomas Barkin said he still saw upside risks for inflation, though he supported “dialing down” policy. Economists see the core PCE index rising 0.2% in July for a second month. That would pull the three-month annualized rate of core inflation down to 2.1%, just above the central bank’s 2% goal.

“Of course, the central bank will emphasize that it has not yet made a decision and wrap that in the words ‘data dependent’,” said Volkmar Baur, a strategist at Commerzbank AG. “But 95 percent of what it needs to know for its September meeting should already be available.”

Europe’s Stoxx 600 Index rose 0.2% to their highest since mid-July amid low trading volumes, with declines for retailers offsetting gains for carmakers and miners. Major European markets are mostly higher with Italy/Spain leading and only SCXP in the red. Trading volumes were low, with activity on most European benchmarks about three-quarters of the average level from the past 30 days.   Associated British Foods declined as Deutsche Bank cut its rating on the stock to sell from hold. Ryanair led gains in European airline and travel stocks after CEO Michael O’Leary said a softening in fares experienced between April and June has levelled out. Bunzl Plc shares soared after the distribution group raised its full-year profit guidance. Here are some of the other biggest movers on Tuesday:

• Bunzl shares surge 12% to a record intraday high after the British distribution firm upgraded its 2024 margin guidance and announced a new share buyback program. Citi analysts say “strong” margin growth has been helped by acquisitions and a shift toward own brand penetration.
• Continental shares rise as much as 4.6% after the German auto parts maker gets upgraded to buy at UBS, which says that the proposed autos spin-off would unlock full potential in tires and the cash return story is not yet priced in.
• Accelleron gains as much as 4.9% after the Swiss engine parts maker reiterated its guidance and posted strong results boosted by the shipping sector, according to Vontobel.
• Harbour Energy shares jump as much as 8.4%, the most since May, after the UK oil and gas company said it had made “considerable progress” on its Wintershall Dea acquisition, which may be completed in early September, sooner than originally expected.
• Associated British Foods shares fall as much as 3.5% after the Primark owner is downgraded to sell from hold at Deutsche Bank, its first sell rating since April, according to data compiled by Bloomberg. The broker takes a more cautious view on the stock, saying that ABF’s profit recovery phase has come to an end.
• Zurich Airport shares fall as much as 6.9%, the most since 2021, after its first-half Ebitda missed analyst estimates due to higher costs. Stifel analysts also note the company slightly delayed the inauguration of its Noida airport in India.

Earlier in the session, Asian stocks fell, dragged down by major technology shares ahead of Nvidia’s earnings report on Wednesday, with disappointing results from Chinese e-commerce firm PDD also weighing on sentiment. The MSCI Asia Pacific Index dropped as much as 0.5% before paring some of the losses, with Alibaba and TSMC among the biggest drags. Shares fell in mainland China, Taiwan and South Korea. A gauge of Chinese tech names slid after PDD’s warning of slowing sales. Chip stocks followed US peers lower on renewed concerns over the sustainability of artificial intelligence demand ahead of Nvidia’s results and repositioning ahead of expected Federal Reserve rate cuts. The recent tech selloff had begun to ease, putting the Asian benchmark back on track for a fourth-straight monthly gain.

“Asian markets should benefit from the recent weakness in the US dollar,” said Gary Dugan, chief executive officer of the Global CIO Office. “A cut in interest rates should allow Asian countries to follow their own timely plans on rate cuts as their currencies will be under less pressure.”

In FX, the Bloomberg Dollar Spot Index is little changed; the pound is the best performer among the G-10 currencies, extending gains by 0.4% against the greenback to its highest since March 2022 as options show traders see upside risks for sterling into the September central bank meetings. The Japanese yen is the weakest, falling 0.2% to around 144.8 per dollar.

In rates, gilts led a selloff in European government bonds while Treasuries also fall. US 10-year yields rise 4bps to 3.85% as US trading day begins, trailing bigger declines in most European bond markets, as focus shifts to supply, pushing the 10Y yield 3bps higher to 3.85%. August’s last three Treasury coupon auctions begin with $69b 2-year note sale at 1pm New York time, and corporate bond supply historically has been heavy in early September. Yields are higher by 2bp-3bp with the curve steeper, 2s10s and 5s30s each by ~1bp; volume and liquidity “remain in summer mode,” Citi rates strategist Edward Acton says in a note. In Europe,

In commodities, oil prices decline, paring some of Monday’s rally, with WTI down to ~$76.70 a barrel. Spot gold falls $6 to around $2,511/oz.

Looking at today’s calendar, the US economic data calendar includes June FHFA house price index and S&P CoreLogic home price indexes (9am), August Conference Board consumer confidence gauges and Richmond Fed manufacturing index (10am) and August Dallas Fed services activity (10:30am)

Market Snapshot

• S&P 500 futures up 0.1% to 5,643.50
• STOXX Europe 600 up 0.3% to 519.81
• MXAP down 0.2% to 185.49
• MXAPJ down 0.3% to 575.85
• Nikkei up 0.5% to 38,288.62
• Topix up 0.7% to 2,680.80
• Hang Seng Index up 0.4% to 17,874.67
• Shanghai Composite down 0.2% to 2,848.73
• Sensex up 0.2% to 81,857.29
• Australia S&P/ASX 200 down 0.2% to 8,071.20
• Kospi down 0.3% to 2,689.25
• German 10Y yield up 2 bps at 2.27%
• Euro little changed at $1.1172
• Brent Futures down 0.3% to $81.21/bbl
• Gold spot down 0.3% to $2,510.49
• US Dollar Index little changed at 100.84

Top Overnight News

• Decision Desk HQ Presidential Forecast (8/26) Probabilities: Harris: 54.6%, Trump: 45.4%.
• Mark Zuckerberg said the Biden administration pressured Facebook to censor Covid-related posts in 2021 and that he regrets the decision to accede to the demands. BBG
• Republican Presidential Candidate Trump said he would like Tesla (TSLA) CEO Musk in Cabinet, but Musk is busy with his businesses; the time has come for a space national guard.
• Profits at China’s industrial companies rose at the fastest pace in five months in July, though weak domestic demand is calling into question whether their resilience can last. Industrial profits at large Chinese companies expanded 4.1% on year in July, after a 3.6% gain the previous month. BBG
• Chinese export controls on crucial semiconductor materials are hitting supply chains and stoking fears of shortfalls in western production of advanced chips and military optical hardware. FT
• German consumer sentiment has weakened once again, as a one-off boost from the European soccer championship in the country faded, compounding concerns that Europe’s largest economy will fail to mount a sustained recovery this year. WSJ
• The near-term risk of a broader war in the Middle East has eased somewhat after Israel and Lebanon’s Hezbollah exchanged fire without further escalation but Iran still poses a significant danger as it weighs a strike on Israel, America’s top general said on Monday (General CQ Brown). RTRS
• Goldman reduced its range for Brent prices by $5/bbl to $70-85, and the 2025 average Brent forecast to $77/bbl (vs. $82 prior), reflecting upside surprises to OECD inventories and a lower fair value estimate for long-dated prices. Cruically, the bank assumes that OPEC will raise production in Q4 as the market is potentially shifting from an equilibrium where OPEC supports spot balances and reduces volatility to a more long-run equilibrium focused on strategically disciplining non-OPEC supply and supporting cohesion: Goldman
• IPO outlook softens for the balance of 2024, as many companies defer plans to 2025 given potential volatility around the US election, Fed easing, etc. WSJ
• Apple named Kevan Parekh as CFO, replacing Luca Maestri. The company will hold its iPhone 16 launch event on Sept. 9. BBG
• Skydance is set to become the new owner of Paramount after Edgar Bronfman Jr. dropped out of the bidding. The studio expects to complete the deal in 2025. Bronfman pulled out partly because of the process’s tight deadline, a person familiar said. BBG
• Microsoft (MSFT) CEO Satya Nadella reported open market sale of 14,398 shares of Microsoft at an average price of USD 417.412/shr on Aug 23rd (vs Monday’s close of USD 413.49/shr), according to an SEC filing.
• Mexico lower house committee approves proposed judicial reform, paves way for final debate by early September, according to Reuters.
• UBS Global Wealth Management has increased odds of a US recession to 25% from 20%

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mostly lower following a mixed lead from Wall Street, which saw the tech sector lag ahead of NVIDIA earnings on Wednesday. News flow in APAC hours was quiet and catalysts light, with the overall tone of the market tentative. ASX 200 saw its early modest gains fade with the index trading flat throughout most of the APAC session, although BHP shares were lifted some 2% following earnings. Nikkei 225 opened in the red but gradually edged higher in tandem with the weakness in the JPY, with the index confined to a tight intraday range. Hang Seng and Shanghai Comp were both subdued for the entirety of the session, with the mainland overlooking an improvement in Industrial Profits, whilst Hong Kong saw its hefty losses in Alibaba and JD.com after Temu-owner PDD tumbled 28.5% after cautioning that its revenue growth will slow as competition continues to increase.

Top Asian News

• BHP (BHP AT) – FY (USD): Revenue USD 55.7bln (exp. 55.971bln). Underlying profit 13.66bln (exp. 13.49bln). Dividend 0.74, Co. expects volatility in the global commodity market in the near term.
• PBoC injected CNY 472.5bln via 7-day Reverse Repo at a maintained rate of 1.70%.
• Japanese gov’t to spend JPY 980bln to fund electricity/gas subsidies from the FY24/25 budgets reserves, via NHK.

European bourses, Stoxx 600 (+0.4%) are modestly firmer across the board, with indices slowly edging higher as the session  progressed. European sectors are mostly firmer; Basic Resources takes the top spot, benefiting from underlying strength in metals prices and after BHP earnings overnight. Retail is found near the foot of the pile. US Equity Futures (ES +0.1%, NQ +0.2%, RTY +0.2%) are modestly firmer across the board, continuing the optimism seen in early European trade. The docket for the remainder of the day is fairly thin, with focus on the Richmond Fed Index and Fed Discount Rate Minutes.

Top European News

• Macron Continues Premier Talks After Rejecting Leftist Pick
• European Stocks Gain With Focus on US Inflation, Nvidia Results
• Klarna CEO Invests in Elon Musk’s SpaceX Through Flat Capital
• Ryanair Doesn’t See Double-Digit Declines in 2Q Avg Fares: Rtrs

FX

• DXY is flat with the USD showing differing performance vs. peers. For now DXY is still unable to test 101.00 to the upside with the pre-Powell peak residing at 101.55.
• EUR is marginally firmer vs. the USD but ultimately unable to launch a retest of the 1.12 mark after briefly breaching the level yesterday. German GDP confirmed the bleak growth picture for the nation but ultimately failed to sway price action.
• Cable is back on a 1.32 handle after bottoming out around the 1.3180 mark yesterday and overnight. UK-specifics light.
• JPY is the marginal laggard across the majors in a mild extension of yesterday’s price action. 145.17 is the high thus far with the next level of note to the upside coming via the high from Friday at 146.48.
• Antipodeans are both marginally firmer vs. the USD with AUD/USD still holding below the 0.68 mark. Similar price action for NZD/USD with focus on whether it can eclipse Friday’s 0.6236 high which was the highest level since January.
• PBoC set USD/CNY mid-point at 7.1249 vs exp. 7.1245 (prev. 7.1132)
• Barclays passive month-end rebalancing model: weak USD selling against most majors and neutral against EUR and JPY.

Fixed Income

• USTs are under modest pressure but very much towards the top-end of the bullish-move that has been in-play since early-July. Docket ahead is devoid of Fed speak but does feature a handful of data points and then 2yr supply. At a 113-14+ WTD low, support comes into play at Friday’s 113-08+ and then Thursday’s 113-05+ base.
• Bunds are softer, and below the 134.00 mark which hadn’t been breached to the downside since August 8th; no real move to another set of poor German data, this time via GfK. Currently at the low-end of 133.92-134.28 bounds. Bunds were unmoved by the German Bobl auction.
• Gilts opened around 30 ticks below Friday’s 99.94 base, with the region catching up to Monday’s price action. Since, the benchmark has waned further in-line with broader fixed action and finds itself at a 99.38 trough.
• Italy sells EUR 2.5bln vs exp. EUR 2.0-2.5bln 3.10% 2026 BTP Short Term: b/c 1.54x (prev. 1.50x) & gross yield 2.89% (prev. 3.10%)
• Germany sells EUR 3.35bln vs exp. EUR 4.00bln 2.50% 2029 Bobl: b/c 2.2x (prev. 1.90x), average yield 2.17% (prev. 2.09%) & retention 16.25% (prev. 17.9%)

Commodities

• A softer start for the crude complex, with prices drifting away from the prior day’s best levels, sparked by Libya’s oilfield production halts. The complex continues to await an update from Cairo talks which were said to have begun late-Monday. Brent currently trading around USD 80.90/bbl with the magnitude of pressure increasing throughout the European morning.
• Spot gold is a touch softer with the narrative somewhat similar to that of crude as the lack of escalation means Monday’s haven premia is waning. Holding around yesterday’s USD 2508/oz base currently.
• Base metals are firmer as the LME returns from Monday’s Bank Holiday. However, upside thus far is modest in nature with 3M LME Copper only just above the USD 9.3k mark as the complex generally digests bearish commentary from BHP.
• Two oilfields in Southeast Libya have shut down whilst another has reduced production to its lowest capacity, according to engineers

Geopolitics: Middle East

• Top US general said the immediate risk of a broader war in the Middle East has eased somewhat after the Israel-Hezbollah clash, but Iran still poses significant danger as it weighs strike on Israel, according to Reuters.

Geopolitics: Ukraine

• Explosions were heard for the third time overnight in the Ukrainian capital Kyiv, according to Reuters.
• Russian Defence Ministry says Russia carried out high-precision weapon strike on Ukraine overnight, via Interfax

US Event Calendar

• 09:00: June S&P Case Shiller Composite-20 YoY, est. 6.14%, prior 6.81%
  • June S&P/Case Shiller 20 City MoM SA, est. 0.30%, prior 0.34%
  • June S&P/Case-Shiller US HPI YoY, prior 5.94%
  • June FHFA House Price Index MoM, est. 0.1%, prior 0%
• 10:00: Aug. Conf. Board Consumer Confidenc, est. 100.9, prior 100.3
  • Aug. Conf. Board Expectations, prior 78.2
  • Aug. Conf. Board Present Situation, prior 133.6
• 10:00: Aug. Richmond Fed Index est -14, prior -17,
• 10:30: Aug. Dallas Fed Services Activity, prior -0.1