Month: October 2024

US equity futures are weaker with small caps underperforming while Treasuries erased some of the previous day’s gains as escalating tensions in the Middle East spooked traders and sent oil sharply higher for a second day after Iran fired about 200 ballistic missiles at Israel, drawing a vow of retaliation from Prime Minister Benjamin Netanyahu and further raising the risks to crude supplies from the region. As of 8:00am ET S&P futures were down 0.2% but off the worst levels of the session following yesterday’s flight to safety; as shown in the chart below the cash index has been largely flat for the past 2 weeks. Nike shares are set to fall after the firm withdrew its guidance and KKR is weighing a takeover bid for an Asian chipmaker. Nasdaq futures were also in the red with Mag 7 names all lower ex-META. Europe’s stocks benchmark erased earlier gains. The China bid continues with HK +6.2% as property (+14%) and tech (+8%) power the region higher. Japan PM Ishiba said this morning that Japan is not in environment now for additional rate hike & will coordinate with BOJ on economy while ECB member Kazaks said an October cut was likely but warned against aggressive easing expectations.FTSE +5bps/DAX -45bps/CAC -5bps/ Shanghai closed/Hang Seng +6.2%/Nikkei -2.18%. TSLA reports sales numbers today. Bond yields are higher 3bps to 3.76% compared with a low of 3.69% on Tuesday when demand for havens fueled appetite for government bonds. The dollar was flat while commodities were well bid across all three complexes with crude the unsurprising standout as Israel focuses on delivering a ‘significant retaliation’ sending Brent crude climbed toward $76 a barrel (it was below $70 at one point yesterday) as it prices in a renewed risk premium for the world’s most important commodity, given the Middle East accounts for about a third of global supplies. Looking at today’s calendar we get the ADP private payrolls, as well as 3 Fed speakers; geopolitics will remain in focus. Vance decisively won last night’s VP Debate, but it is unclear how this will move the polls.

In premarket trading, JD Sports Fashion Plc fell after reporting results; Nike Inc. fell as much as 5.7% in premarket trading after the company scrapped its full-year sales guidance citing leadership transition later this month. Nike is facing one of its roughest patches in decades, moved to reset Wall Street’s expectations ahead of new Chief Executive Officer Elliott Hill’s arrival. Here are some of the biggest US movers today:

• Apple shares edge lower, falling 0.4% in premarket trading as JPMorgan analysts follow their peers at Barclays and Citi to trim their estimates for iPhone units.
• US-listed Chinese stocks are rallying in premarket trading on Wednesday, pointing to further gains after Beijing followed other major cities to relax home purchase rules.
• MSCI is Evercore ISI’s top pick among business services stocks as the broker initiates coverage of the sector, which analysts say includes quality businesses with high market shares.

Middle East escalations have taken center stage as Israel vowed significant retaliation after Iran fired up to +150 ballistic missiles at the country yesterday. This stood out from Axios: “Israeli officials staring down all-out regional war tell Axios Israel will launch a “significant retaliation” to Tuesday’s massive missile attack within days that could target oil production facilities inside Iran and other strategic site.”

“Clearly there is a lot of uncertainty,” Anna Rosenberg, head of geopolitics at Amundi Asset Management, told Bloomberg TV. “Nevertheless I think the market is still very much operating in the base-case expectation that it remains more or less contained and doesn’t spiral out in an all-out war. And I think right now, that is the right thing to do.” 

European stocks have pared an earlier gain to trade little changed, with the energy sector outperforming as investors assess the escalating crisis in the Middle East as well as the impact of more stimulus in China. Oil producers rise as crude prices extend gains, while real estate stocks and utilities are the biggest laggards. Here are some of the biggest movers on Wednesday:

• European oil, defense shares extend recent gains amid increased tensions in the Middle East after Iran fired about 200 ballistic missiles at Israel. Airline stocks in the region decline on similar grounds.
• Wacker Chemie shares rise as much as 8.4% after the US Commerce Department set preliminary duties on solar imports from Southeast Asia in a move that could benefit the German manufacturer of polysilicones.
• Grenke shares rise as much as 5.8%, the most in three months, after the German leasing finance provider reported strong growth in new business volumes.
• European luxury stocks rebound, even as analysts remain cautious with Deutsche Bank cutting price targets across the sector amid uncertainty over a recovery in Chinese demand for high-end goods.
• JD Sports shares drop as much as 6% after a profit beat in the first half was countered by a weak update from its major partner Nike, which reported a sharp drop in sales and withdrew its guidance overnight.
• Pirelli shares drop as much as 4.7% to the lowest level since February after shareholder Brembo sold its entire stake in the tire manufacturer.

Elsewhere, Chinese stocks listed in Hong Kong jumped the most in almost two years after Beijing followed other major cities in relaxing home purchase rules. HK surged 6.2% as property (+14%) and tech (+8%) power the region higher; property developers led the rally, with a gauge of the sector surging as much as 47%, while an index of brokerage shares jumped 35%, both record intraday moves. There’s growing optimism China’s recently announced stimulus blitz has brought an end to the three-year slide in Chinese shares that was driven by the stuttering economy and a multi-year property crisis.

In FX, the yen is the weakest of the G-10 currencies, falling 0.5% against the greenback after Bank of Japan Governor Ueda sent dovish signals regarding the policy outlook and after Japan’s Prime Minister Shigeru Ishiba said the environment doesn’t call for raising interest rates again. The Bloomberg Dollar Spot Index is little changed.

In rates, US yields are cheaper by 1.5bp to 4bp across the curve near session highs, 10-year by nearly 3bp on the day with bunds and gilts in the sector lagging by an additional 2.5bp and 4.5bp. Gilts lead a selloff in European government bonds, with UK 10-year yields rising 7 bps to 4.01%. US 10-year yields climb 3 bps to 3.76%.

In commodities, oil prices climbed for a second day after Israel vowed to retaliate against Iran after it fired ballistic missiles at Israel in a severe escalation of hostilities. WTI is up near 3% to around $71.85 a barrel. Spot gold drops ~$9, paring some of Tuesday’s safe-haven led rally.

Looking at today’s calendar, US economic data includes September ADP employment change at 8:15am. Fed speakers scheduled include Hammack (9am), Musalem (10:05am), Bowman (11am) and Barkin (12:15pm)

Market Snapshot

• S&P 500 futures little changed at 5,755.75
• STOXX Europe 600 up 0.4% to 522.86
• MXAP up 0.4% to 196.53
• MXAPJ up 1.4% to 629.24
• Nikkei down 2.2% to 37,808.76
• Topix down 1.4% to 2,651.96
• Hang Seng Index up 6.2% to 22,443.73
• Shanghai Composite up 8.1% to 3,336.50
• Sensex little changed at 84,266.29
• Australia S&P/ASX 200 down 0.1% to 8,198.19
• Kospi down 1.2% to 2,561.69
• German 10Y yield little changed at 2.09%
• Euro little changed at $1.1079
• Brent Futures up 1.9% to $74.94/bbl
• Gold spot down 0.4% to $2,652.69
• US Dollar Index little changed at 101.18

Top Overnight News

• BOJ’s Ueda sends somewhat dovish signals in highlighting the uncertain outlook for the US economy and unstable financial markets. BBG
• Chinese shares listed in Hong Kong jumped the most in almost two years on the Hang Seng’s first day open after a holiday. Stan Druckenmiller still said he’s staying away from China “as long as Xi Jinping is running” the country. BBG
• ECB’s Kazaks says the central bank will likely cut in Oct, but cautions markets against becoming too ambitious with easing expectations. BBG
• As Israel weighs how to respond to Tehran’s latest missile barrage, it could take a page from its previous playbook when, after days of deliberation, its military targeted a single Iranian military site. WSJ
• Israel has destroyed about 50% of the missiles and rockets that Hezbollah accumulated over the last ~30 years, dealing a significant blow to the terror group. NYT
• The Saudi oil minister has said that prices could drop to as low as $50 per barrel if so-called cheaters within OPEC+ don’t stick to agreed-upon production limits, according to delegates in the cartel. WSJ
• Russian forces are steadily capturing territory inside Ukraine “with speed and aggression not seen since the full invasion in 2022”. WSJ
• Barclays aims to bolster returns in its investment bank by focusing on advisory and equity capital markets while deemphasizing debt underwriting. FT
• VP nominees Tim Walz and JD Vance focused on policy and defending their running mates at the top of the ticket in a mild-toned debate. Vance, who succeeding in softening his typically aggressive delivery, won according to a CBS poll. BBG

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mixed with some cautiousness seen amid heightened tensions in the Middle East after Iran conducted a missile attack on Israel. ASX 200 was rangebound as gains in the commodity-related industries offset the losses in the tech and consumer sectors. Nikkei 225 slumped at the open and retreated beneath the 38,000 level after the prior day’s currency strength. Hang Seng resumed its China stimulus-spurred rally on return from the holiday with notable strength in tech and property.

Top Asian News

• Japan’s new Economy Minister Akazawa said a complete exit from deflation is the top priority and he wants the BoJ to share their view that an exit from deflation is the top priority, while he commented that the BoJ should be careful about raising rates as it takes time to fully exit deflation. Akazawa also stated that it is not necessarily correct that PM Ishiba is positive about further rate hikes and that Ishiba’s comment on the need for monetary policy normalisation has various conditions attached.
• BoJ Governor Ueda says “Japan’s economy is recovering moderately albeit with some weak signs”; “trend inflation, likely below 2%, is likely to accelerate”; says markets remain unstable. “Uncertainty surrounding Japan’s economy prices remain high”, “We must be vigilant to impact of markets, FX moves, an their effect on Japan’s economy”, “We must scrutinise market moves with a high sense of urgency for the time being”.
• Japan’s Finance Minister Kato says Japan is seeing signs of recovery; “We will strengthen this trend, aiming for higher growth via higher wages and investment”. “Hope that BoJ will take the appropriate policy to achieve 2% inflation target, while taking into account financial situations”. “Expect thorough communication with market when asked about BoJ monetary policy”.

European bourses, Stoxx 600 (+0.1%) opened on a tentative footing, however, sentiment gradually improved as the morning progressed, with indices now generally in positive territory to varying degrees. In recent trade, bourses have edged slightly off best levels. European sectors are mixed; Energy tops the pile, propped up by the geopolitical-induced strength in oil prices; a factor which has weighed on Travel & Leisure names. Consumer Products is also towards the top of the pile, assisted by gains in Luxury amid continued optimism surrounding China on its return from Holiday. US Equity Futures (ES -0.2%, NQ -0.2%, RTY -0.6%) are modestly lower across the board, continuing the weakness seen in the prior session with slight underperformance in the RTY.

Top European News

• Citi expects the ECB to cut by 25bps in October and December and through the beginning of 2025, to reach a deposit rate of 1.50% by September 2025.
• UBS expects the ECB to cut at the October, December, January, March, April & June meetings for a total of 150bps.
• ECB’s de Guindos says “Broadly speaking, the problems we are discussing today derive from the incompleteness of the Economic and Monetary Union” adds “risks to growth remain tilted to the downside”.
• ECB’s Lane slide deck “Expectations and Monetary Policy”
• German engineering orders +7% Y/Y in August (Domestic -7%; Orders +13%); Jun-Aug -3% Y/Y (Domestic -6%, Foreign Orders -1%), according to VDMA.

FX

• The rally in the USD has paused for breath with DXY unable to advance above yesterday’s 101.39 peak. Wednesday’s price action was driven by geopolitics and if the situation in the Middle-East escalates, this could have some bearing on today’s price action; looking at US-specifically, ADP National Employment will be in full focus ahead of the NFP on Friday.
• EUR/USD has moved back onto a 1.10 handle in the wake of Tuesday’s USD rally. For EUR-specifically, ECB’s Kazaks put his weight behind a likely rate cut this month. The Single-Currency is currently flat and trades within a 1.1055-82 range.
• After starting the week above the 1.34 mark, Cable now sits on a 1.32 handle with heavy losses yesterday triggered by the haven bid into the USD. For now, GBP/USD is holding above Tuesday’s 1.3237 low and the 21DMA at 1.3233.
• JPY is struggling vs. the USD following yesterday’s indecisive session which drew a safe haven bid into both the USD and JPY. USD/JPY is currently tucked within Tuesday’s 142.97-144.53 range.
• Antipodeans are both slightly firmer vs. the USD in an attempt to claw back yesterday’s losses. AUD/USD has returned to a 0.68 handle after topping out on Monday at a fresh YTD peak at 0.6942.

Fixed Income

• USTs are essentially flat/incrementally lower and holding at a 114-18+ base, having faded from Tuesday’s geopolitically-driven 115-00 peak. Today’s docket is packed with ADP National Employment alongside Fed speak from Barkin, Bowman, Hammack & Musalem.
• Bunds are in the red, with yields firmer across the board in Europe after the marked dovish action seen on Tuesday in the European morning and then extended in the afternoon/evening on geopols. As it stands, Bunds at a low of 135.37, fading from the 136.00 mark and above yesterday’s 136.20 peak. OATs underperform marginally, with the OAT-Bund 10yr yield spread just shy of the 80bps mark. President Macron is due to speak from 14:15BST onwards.
• Gilts are directionally in-fitting with peers which are pulling back from a combination of dovish ECB pricing and geopolitical premia. At a 98.36 trough following the Gilt auction, owning to the softer b/c and wider yield tail vs the prior outing.
• UK sells GBP 4bln 4.125% 2029 Gilt: b/c 2.93x (prev. 3.29x), average yield 3.880% (prev. 3.811%) & tail 1.2bps (prev. 0.9bps).
• Germany sells EUR 3.704bln vs exp. EUR 4.5bln 2.60% 2034 Bund: b/c 2.0x (prev. 2.1x), average yield 2.08% (prev. 2.11%), retention 17.69% (prev. 18.04%)

Commodities

• Crude is firmer intraday, and holding onto the gains seen yesterday and overnight amid the geopolitical risk premium woven into prices after Iran attacked Israel. Brent Dec resides in a USD 74.24-75.55/bbl parameter.
• Mixed trade across precious metals with upside seen in spot silver and spot palladium whilst spot gold remains subdued since early European trade following recent geopolitically-induced gains. XAU currently resides in a USD 2,644.58-2,662.88/oz range.
• Base metals are mostly firmer in European trade despite the cautious risk tone, but with some potential continued tailwinds from the Chinese stimulus efforts. 3M LME copper reclaimed USD 10k/t to the upside.
• Saudi Energy Minister reportedly warns of USD 50/bbl oil as OPEC+ members flout production curbs, according to WSJ sources; interpreted as a threat Saudi is willing to launch a price war to keep market share if other countries do not abide. Saudi reportedly singled out Iraq which overproduced by 400k BPD in August.
• US Private inventory data (bbls): Crude -1.5mln (exp. -1.3mln), Distillate -2.7mln (exp. -1.5mln), Gasoline +0.9mln (exp. -0.1mln) Cushing +0.7mln.

Geopolitics

• Israeli PM Netanyahu “is expected to hold a limited security consultation in the afternoon with several senior ministers and defense chiefs to continue discussing the response to the Iranian attack”, according to Axios’ Ravid citing sources.
• Israeli military says regular infantry and armoured units are joining the ground operation in Lebanon.
• Yemeni Houthis says they targeted military posts deep inside Israel with “Quds 5” rockets, according to a statement; will not hesitate in broadening operations against Israel. Continuous US and UK support to Israel will put their interests under fire.
• Lebanon’s Hezbollah says it targeted areas north of Haifa City in Israel, with a large missile salvo.
• “Atomic Energy Organization of Iran: Nuclear facilities have been secured against any attacks”, according to Cairo News.
• “After Israel security cabinet meet: Israel is expected to respond ‘harsh’ against Iran, with the possibility of targeting strategic sites in Iran”; according Kann’s Stein.
• “Lebanese media: Israeli army advances towards a Lebanese army checkpoint in Al-Adaisseh, southern Lebanon”, according to Sky News Arabia
• Iranian state television reported that Tehran confirmed it fired 200 missiles in its attack on Israel, according to Sky News Arabia.
• Iran’s armed forces said if Israel responds to the Iranian attack it will be met with vast destruction of its infrastructure and if Israel’s backers directly intervene against Tehran, their interests and bases in the region will face Iran’s strong attack.
• Iran’s Foreign Minister commented on X that Iran exercised self-defence under Article 51 of the UN Charter and Iran’s action is concluded unless the Israeli regime decides to invite further retaliation, while he said Israel’s enablers now have a heightened responsibility to rein in the warmongers in Tel Aviv. Iran’s Foreign Minister also commented that there is a possibility that the confrontation with Israel will continue in the coming days and forces are on standby, as well as noted that Iran told the US not to get involved following the missile attack on Israel and warned that any new action by Israel or its supporters will face a more severe response.
• Israel’s Home Front Command lifted restrictions on Israelis after the end of Iranian missile attacks and said it will defend the citizens of Israel and respond to Iranian missiles at the right time and place, according to Sky News Arabia. Israel’s Home Front Command also said it eased restrictions on large gatherings in much of Israel including Tel Aviv and Jerusalem areas.
• Israeli PM Netanyahu said Iran made a big mistake tonight and they will pay for it, while he added that the Iranian missile attack on Israel failed.
• Israel’s UN envoy said Israel will act and Iran will soon feel the consequences of their actions with the response to be painful.
• Israeli officials cited by Axios said Israel will launch a strong response within days to the major Iranian attack which could target oil production facilities inside Iran, according to Reuters and Al Jazeera.
• Israeli military said it conducted strikes on Hezbollah targets in Beirut and it issued warnings to residents of the Chiyah neighbourhood and Hadath al-Gharb in the southern suburbs of Beirut, while a correspondent reported eight Israeli raids on southern suburbs of Beirut in about two hours.
• Hezbollah said it struck Israeli artillery in Beit Hille with rockets, according to Al Jazeera. Hezbollah separately announced that it confronted an Israeli force infiltrating the Lebanese town of Adaisseh and forced it to retreat, while the Israeli army also reported heavy fighting with Hezbollah operatives in southern Lebanon.

US Event Calendar

• 07:00: Sept. MBA Mortgage Applications, prior 11.0%
• 08:15: Sept. ADP Employment Change, est. 125,000, prior 99,000

Central Banks

• 09:00: Fed’s Hammack Gives Welcome Remarks
• 10:05: Fed’s Musalem Gives Welcoming Remarks
• 11:00: Fed’s Bowman Speaks on Community Banking
• 12:15: Fed’s Barkin Speaks on Economy

DB’s Jim Reid concludes the overnight wrap

Markets got Q4 off to a turbulent start yesterday, with a sharp risk-off move after the White House said they had indications that Iran would imminently launch a ballistic missile attack against Israel, something that materialised only a few hours later. From a market perspective, the reaction was swift, and Brent Crude oil prices surged by around $3/bbl immediately after the news came out, as investors rapidly sought to understand if this could become a wider regional conflict across the Middle East. Risk assets reversed some of their sell-off later on but it was still a tough start to the quarter

The retracement of risk assets from their peak move lower came as parallels to Iran’s attack on Israel back in April, which did not lead to a broader escalation, emerged. Both instances saw similar reports come through in advance that an Iranian attack was about to happen, and this time Israel again said that it shot down most of the missiles and reported few casualties. That said, there were some indications that escalation risks might be higher this time around. The Pentagon said that this attack used around twice as many ballistic missiles as the one in April, while Iranian commentary was more ambiguous on whether the attack would be one-off. Israel’s PM Netanyahu said that Iran “made a big mistake tonight, and will pay for it”, while Iran’s Revolutionary Guard threatened a “crushing” response if Israel retaliated.

The events drove a geopolitical risk-off tone, with clear ramifications across multiple asset classes. Oil prices were most directly affected by the news, with Brent crude seeing its largest intra-day move since April 2023, trading below $70/bbl early on before peaking above $75/bbl as news of Iran’s strikes came in. It retreated slightly later on but is trading around $74.60/bbl as I type this morning. By comparison, back in April we saw oil prices hit their intraday highs for the year, at just above $92/bbl, just prior to Iran’s attack. But then oil prices began to fall back in the days that followed as the White House sought to avoid an escalation, and as tensions eased.

The risk-off backdrop weighed on equities, with the S&P 500 (-0.93%) seeing a sizeable fall from its all-time high the previous day, although it did partially recover after trading -1.4% lower. The more cyclical sectors led the declines, with the information technology sector down -2.66%. The Magnificent 7 fell -1.32%, whilst the small-cap Russell 2000 also underperformed (-1.48%). In Europe, the STOXX 600 had been up +0.51% intraday just before the headlines came out, but reversed course to close -0.38% lower. In other assets, a move towards ‘safe havens’ saw gold rise +1.09% higher to $2,663/oz.

Over on the rates side, a rally for bonds was accelerated by the Middle East headlines, though by the close Treasury yields were only slightly lower than before the news broke. On the day, 2yr yields were -3.6bps lower to 3.61% while 10yr yields were down -5.0bps to 3.73%, their sharpest daily decline in three weeks. This morning in Asia 10yr yields have edged back up to 3.74%.

Bonds had already rallied earlier in the day after the latest US data, which added to the signs that the labour market was weakening. It’s true that job openings were stronger than expected in August at 8.040m (vs. 7.693m expected), but the other details in the report generally pointed in a more negative direction. For instance, the quits rate of those voluntarily leaving their job was down to 1.9%, the lowest since June 2020, and below its pre-Covid levels. So that was a fresh sign that people’s confidence in the labour market is still weakening, and the hires rate also fell back a tenth to 3.3%, in line with its joint-lowest since the Covid-19 pandemic. That was backed up by the ISM manufacturing too, which remained at 47.2 in September (vs. 47.5 expected), whilst the employment component weakened to 43.9.

Over in Europe, the sovereign bond rally was even larger, which came as Euro Area inflation fell beneath the ECB’s 2% target for the first time since June 2021. Specifically, headline CPI was down to +1.8% in September on the flash reading, which cemented investors’ conviction that the ECB was likely to accelerate its rate cuts and move again at the October meeting. Core CPI was a little stronger at +2.7%, but that was in line with expectations, and the news helped yields fall across the continent. Indeed by the close, yields on 10yr bunds (-8.8bps) were down to 2.03%, which is their lowest closing level since January. And the 2yr German yield (-4.7bps) was down to 2.01%, which is its lowest since December 2022. The combination of lower European rates and geopolitical risk-off saw the euro post its worst day against the dollar in over three months (-0.84%).

It was France that saw the biggest sovereign bond rally, however, which came as PM Michel Barnier delivered his first speech to lawmakers. From a market standpoint, the main headline was that France would be delaying its target to get the budget deficit beneath 3% of GDP from 2027 to 2029, and that they’d aim to cut the deficit to 5% of GDP next year. In turn, yields on 10yr OATs were down -10.0bps yesterday to 2.81%, and the Franco-German 10yr spread tightened a bit to 78bps, its tightest level in a week.

Asian equity markets are mostly lower this morning with the heightened geopolitical tensions. The Nikkei is leading the declines at -1.85%, followed by the KOSPI at -0.66% and the S&P/ASX 200 at -0.09%. In contrast, the Hang Seng is up by +6.02%, reflecting continued China optimism after its public holiday on Tuesday. Markets in mainland China are closed for the Golden Week holiday and will remain shut until the 8th. S&P (-0.2%) and Nasdaq (-0.15%) futures are edging lower. A quick skim at the headlines around the US VP debate don’t seem to suggest anything that’s moved the needle in this very tight election. I can’t pretend I was awake to watch it though.

Early morning data showed that South Korea’s inflation cooled more than anticipated in September, rising +1.6% y/y (v/s +1.9% expected), marking the weakest annual increase since February 2021 amid growing expectations of an imminent policy easing. It follows an increase of +2.0% in the prior month.

To the day ahead now, and data releases include the Euro Area unemployment rate for August, and in the US there’s the ADP’s report of private payrolls for September. Central bank speakers include ECB Vice President de Guindos, and the ECB’s Kazaks, Lane, Simkus, Elderson and Schnabel, along with the Fed’s Hammack, Musalem, Bowman and Barkin.

Nike shares fell in premarket trading in New York after the sportswear company withdrew its full-year sales guidance and postponed its investor day, which was slated for November, as new leadership enters the picture in less than two weeks.

Last month, CEO John Donahoe revealed that Nike veteran Elliott Hill would succeed him on October 14. With the leadership shift less than two weeks away, the company pulled its full-year guidance and will instead provide quarterly updates for the remainder of the year. 

“This provides Elliot with the flexibility to reconnect with our employees and teams, evaluate the current strategies and business trends and develop our plans to best position the business for fiscal ’26 and beyond,” CFO Matthew Friend told Wall Street analysts on an earnings call yesterday. 

Friend said Nike will adopt a new strategy to increase market share in running shoes and clothes. 

“Nike’s a running company, Nike’s a running brand and it’s incredibly important for Nike to win with runners,” the CFO said, adding, “And so our commitment to reinvesting in those channels with those partners on the ground every day is how we’re going to change the trajectory of this business.”

He noted: “We’ve acknowledged that we’ve lost market share in the running specialty channel. More than four years ago, we pulled back on our engagement with that channel, and as a result of that, we saw market share losses….While we’ve seen tremendous success at the top of the pyramid, with innovation, with marathons and on the track, we haven’t made as much progress with everyday runners and that’s where our team’s focus and attention has been over the last year.”

Here’s more insight from a team of Goldman analysts, led by Brooke Roach and Evan Dorschner, regarding Nike’s decision to withdraw its full-year sales guidance:

FY25 outlook withdrawn: NKE withdrew its FY25 outlook given the recent CEO transition, with prior guidance for revenues to decline -MSD% (vs. GS/consensus at -5.0%/-5.4%), gross margins to expand 10-30bps Y/Y (vs. GS/consensus at 30bps/40bps expansion), and SG&A up slightly Y/Y (vs. GS/consensus +1.1%/+0.2%). That said, the company provided some additional color on their expectations for the balance of the year. NKE noted their expectations for revenue have softened since the start of the year given challenging NKE digital traffic trends, pressured retail sales trends across the industry, and Spring 2025 order books coming in slightly below expectations at ~flat Y/Y. The company is still seeing indications of a slight 2H improvement in revenue trends vs. F1H, largely as a result of scaling new product innovations. The company expects franchise management actions will remain a -MSD% headwind for the balance of the year. On margins, the company now expects gross margins to contract Y/Y and intends to tightly control SG&A costs, with investments in driving brand momentum offset by well-controlled operating costs. Separately, Nike also postponed their previously announced Investor Day.

The analysts continued:

Ahead of the quarter, our conversations with investors suggested a guidance cut was expected as a result of concerns regarding the achievability of a near-term inflection in sales growth amidst choppy China macro data. Today we did see this withdrawal of NKE’s FY guide (now moving to quarterly guidance), with commentary on key line items confirming a below-consensus run-rate for the business. NKE also postponed its previously announced Investor Day. Here, management attributed the change in both guidance philosophy and Investor Day timing to the CEO transition. We believe the company’s commentary in aggregate was weaker than expectations for both F2Q and the year, and we expect the stock to underperform peers as a result.

They added:

We lower our estimates and price target to reflect weaker margins and a slower pace of recovery in sales and profits. We acknowledge the path ahead for NKE is choppy, and the company is still in the early stages of a turnaround as it continues to work through franchise rebalancing as it scales into better innovation-led growth. However, we see a path to stronger results ahead, as we expect FY25 to mark a nadir in sales and profitability. NKE is working through its over reliance on key franchises this year, which weigh on sales and profitability, and as we enter FY25 we believe NKE is better-positioned as the company is beginning to see key greenshoots emerge in new product categories which are continuing to scale. Importantly, the company would also benefit from new leadership (incoming CEO arriving October 14), which is likely to bring opportunity for clarity of strategy, as well as benefits from a re-focused innovation pipeline.

The first-quarter earnings showed earnings per share of 70 cents, higher than the GS/FactSet consensus of 51 cents/ 52 cents. However, sales were down 10% compared with the same period last year. 

NKE reported F1Q25 EPS of $0.70, above GS/FactSet consensus at $0.51/$0.52. Sales of $11.589bn declined -10.4% Y/Y (down -9% ex-FX), better than GSe at -10.5%, but below consensus expectations at -10.1%. Within this, sales were above consensus in North America, Greater China, and APLA, although EMEA sales fell below consensus. Gross margin at 45.4% came in above GS/consensus at 44.5%, with the ~120bps of expansion driven by favorable product costs, warehousing and logistics cost tailwinds, and lapping prior year discounting. NKE’s SG&A rate was 34.9% of sales, well-controlled vs. GS/consensus at 37.1%/37.0%. Net, adjusted EBIT margin of 10.9% beat GS/consensus expectations of 7.7%/7.6%.

Whoops! 

CFO Friend told analysts: “A comeback at this scale takes time, and while there are some early wins, we have yet to turn the corner.” 

Here’s additional commentary from analysts, courtesy of Bloomberg:

BMO Capital Markets analyst Simeon Siegel (outperform, PT $92)

• Nike’s margin-driven profit beat offset the soft 1Q sales
• “With quantitative fears now addressed, we expect shares to be driven more so by qualitative imaginings of what can be”

Truist Securities analyst Joseph Civello (hold, PT cut to $83 from $85)

• Nike reported 1Q sales slightly below estimates and EPS beat “depressed expectations”
• Cautious on near-term turnaround opportunities, given the lighter wholesale orderbooks for next Spring

Piper Sandler analyst Anna Andreeva (neutral, PT $80)

• Back-to-school sales were weaker than expected, even though traffic improved in August
• The company’s move to pull the annual guide and postpone its Investor Day is “prudent”

Jefferies analyst Randal Konik (hold, PT $85)

• A lot of changes need to take place at Nike, “in the meantime market share losses are likely to continue”
• Gross margin gains will soften as promotions and discounts increase — “the EPS deck is no where near being cleared”

Bloomberg Intelligence analyst Poonam Goyal

• Nike’s underperformance when compared to the broader athleisure market may continue into fiscal second quarter
• “Fiscal 2Q gross margin may fall about 150 bps on higher discounts and channel mix shifts”

Shares in premarket trading are down around 5.5%. On the year, shares are down nearly 18% and hovering around Covid lows.

Goldman analysts rate Nike as a “Buy” for clients. Here’s why:

We are Buy rated on NKE. We update our FY25/FY26/FY27 EPS estimates to $2.81/$3.16/$3.67 from $3.24/$3.75/$4.26 prior to reflect slower global demand trends and additional margin pressures, including higher promotions, where we now expect a slower rate of revenue recovery into FY26 vs prior and a slower pace of margin recapture. We lower our 12-month price target to $97 from $105 prior as we roll forward our Q5-Q8 EV/EBITDA valuation methodology on our updated estimates, and raise our target valuation multiple to 21.0x from 19.75x prior to reflect market multiple rerating and a stronger growth outlook moving forward following what we believe to be trough demand levels, alongside increased confidence in turnaround potential from new management.

Downside risks:

Key downside risks include: (1) China macro slowdown; (2) An intensification of sportswear market competitive intensity or lack of success of new product innovation; (3) Wholesale channel pressures; (4) Inventory management and promotionality; (5) Slower recapture of transitory margin pressures.

Cancelling investor day next month was not a good look for the world’s largest sportswear company. 

This graphic, via Visual Capitalist’s Marcus Lu, tracks wealth inequality changes in various countries as measured by their Gini index values in 2008 to 2023.

Data is accessed via the UBS Global Wealth Report 2024.

ℹ️ The Gini index measures wealth inequality within a population, ranging from 0% (perfect equality) to 100% (maximum inequality).

Higher values indicate greater disparity in wealth distribution. For example, a country where one person owned all the assets and everyone else had nothing would have a Gini index of 100%.

Ranked: Countries by Wealth Disparity Changes (2008–2023)

In UBS’ list of select countries, Singapore has seen the largest growth in its Gini index, up to 70% in 2023 from 53% in 2008.

The government has enacted policies intended to attract high-net-worth individuals as well as international investment capital to Singapore.

On the flip side, policies to reduce inequality have been constructed through an economic lens, such as trying to remove structural barriers that prevent people from maximizing productivity.

Interestingly, in the same time period, Singapore’s average wealth rose by 116%, while median wealth fell by 2%.

Also in the top three, Finland and Spain join Singapore as the three countries who’ve seen a 20 percentage point increase in their Gini index values since 2008. Of the 29 countries analyzed by UBS, 18 registered rising wealth inequality.

However, wealth disparity has also reduced for several countries, some of them large economies: the U.S. (-1%), Germany (-6%), and Saudi Arabia (-13%).

A recent Federal Reserve analysis found that from 2019 to 2022, low-wealth groups in America had larger percentage gains in wealth compared to their high-wealth counterparts.

Check out Visualizing Wealth Inequality by Country (2024) for a comparison of wealth disparity in the world’s biggest economies.

Authoired by Cj Hopkins via The Consent Factory,

Guilty

So, the Berlin Appellate Court overturned my acquittal today.

I am now, officially, at least according to the New Normal German authorities, a “hate-speech” criminal.

I’m officially a “hate-speech” criminal because I compared New Normal Germany to Nazi Germany, and I challenged the official Covid narrative, and I used the cover art of my book to do it.

The New Normal German authorities didn’t like that, and were determined to punish me for doing that, and to make an example of me, in order to discourage other people from doing that. It took them two tries, but they pulled it off.

The judge in my original trial screwed up and acquitted me, but the Berlin Public Prosecutor’s office didn’t give up. They appealed the verdict — yes, they can do that in Germany — and this morning the Appellate Court overturned the verdict and declared me guilty.

I’ll report on all the ugly details of my day in court in a proper column sometime later this week, when I’ve sufficiently recovered from the hangover I am currently about to start working on.

I’ll also be resurrecting my legal defense fund and telling you about that in my next column, because the only recourse my attorney and I have left at this point is to try to get the German Constitutional Court (i.e., Germany’s supreme court) to hear the case.

In the meantime, I wanted to share my Statement to the Appellate Court. Here it is.

Statement to the Berlin Appellate Court, September 30, 2024

Ladies and Gentlemen, my name is CJ Hopkins. I am an award-winning playwright, author, and political satirist. My work is read by hundreds of thousands of people all over the world. For over thirty years, I have written and spoken out against fascism, authoritarianism, totalitarianism, and so on. Anyone can do an Internet search, find my books, reviews of my plays, my essays, and learn who I am and what my political views are in five minutes.

And yet, I am accused by the German authorities of spreading pro-Nazi propaganda. I’m accused of doing this because I posted two Tweets challenging the official Covid narrative and comparing the new, nascent form of totalitarianism it has brought into being — the so-called “New Normal” — to Nazi Germany.

Let me be clear. I did that. In August 2022, as Germany was debating whether to end its Covid mask mandates, I tweeted those two Tweets. I challenged the official Covid narrative. I compared the New Normal to Nazi Germany. I did that with the cover art of one of my books. I did what anyone is allowed to do according to German law. I did what Karl Lauterbach has done. I did what German celebrities like Jessica Berlin have done. I did what major German newspapers and magazines have done.

A few months ago, Stern and Der Spiegel published covers of their magazines featuring swastikas. Der Spiegel’s cover featured exactly the same artistic concept as my book cover and my Tweets. The only difference is, the swastika on Der Spiegel’s cover is behind a German flag, whereas the swastika on my book cover and in my Tweets is behind a medical mask. That’s it. That is the only difference.

Stern and Der Spiegel displayed swastikas on their covers in order to warn the public of the rise of a new form of totalitarianism, and that is precisely what I did. I compared the New Normal — i.e., the new nascent form of totalitarianism that came into being in 2020 — to Nazi Germany. Stern and Der Spiegel compared the AfD to Nazi Germany. That is the only difference.

I’m not a fan of the AfD. I’m not a fan of Stern and Der Spiegel. That doesn’t matter. Stern and Der Spiegel have the right to do what they did, and so do I. That right is guaranteed to us in the German constitution. We all have the right, if we see a new form of totalitarianism taking shape, to oppose it, and to compare it to historical forms of totalitarianism, including Nazi Germany.

I don’t follow German electoral politics very closely, so I don’t know exactly what the AfD has done that prompted Stern and Der Spiegel to compare them to the Nazis. But I know exactly what the German authorities did during 2020 to 2023.

In 2020, the German authorities declared a national state of emergency, for which they provided no concrete evidence, and suspended constitutional rights. Nazi Germany also did that, in March 1933. From 2020 to 2022, the German authorities forced people to wear symbols of their conformity to the official ideology and perform humiliating public-loyalty rituals. The Nazis also did that. The current German authorities banned protests against their arbitrary decrees. With the help of the media, they bombarded the German masses with lies and propaganda designed to terrorize the public into unquestioning obedience. They segregated society according to who was and wasn’t conforming to official ideology. They censored political dissent. They stripped people of their jobs because they refused to conform to official ideology and follow senseless orders. The German authorities fomented mass hatred of a “scapegoat” class of people. They demonized and persecuted critics of the government’s decrees. They dispatched police to beat them and arrest them. They have instrumentalized the law to punish political dissidents. Nazi Germany also did all these things, as have most other totalitarian systems. I documented all this in my book. I spoke out against it. I published essays about it. I tweeted about it.

My punishment for that has been … well, here I am, on trial in criminal court for the second time. The German authorities had my Tweets censored. They reported me to the Federal Criminal Police Office. They reported me to The Federal Office for the Protection of the Constitution, the German domestic Intelligence agency. My book is banned in Germany. The German authorities investigated me. They prosecuted me. They put me on trial for tweeting. After I was acquitted, that wasn’t enough, so they have put me on trial again. They defamed me. They have damaged my income and reputation as an author. They have forced me to spend thousands of Euros in legal fees to defend myself against these clearly ridiculous charges. And today, I, and my lawyer, and all the people in the gallery, have been subjected to this official show of force and treated like potential terrorists.

Why, rational people might ask, have I been subjected to this special treatment, while Der Spiegel, Stern, Die Tageszeitung, and many others who have also tweeted swastikas, have not?

This is not a mystery. Everyone knows the answer to this question.

You are not fooling anyone. Everyone understands exactly what this prosecution actually is. Every journalist that has covered my case, everyone in this courtroom, understands what this prosecution actually is. It has nothing to do with punishing people who disseminate pro-Nazi propaganda. It is about punishing political dissent, and intimidating critics into silence. I’m not here because I put a swastika on my book cover. I am here because I put it behind a “Covid” mask. I am here because I dared to criticize the German authorities. I am here because I refused to shut up and follow orders.

At my first trial, I appealed to the judge to stop this game and follow the law. She did that. She needed to publicly insult me, and then put on a “Covid” mask to display her allegiance to the “New Normal,” but she acquitted me. She followed the law. And I thanked her. But I will not appeal to this Court. I’m tired of this game. If this Court wanted to follow the law, I wouldn’t be here today. The Court would have dismissed the Prosecution’s ridiculous arguments in its motion to overturn the verdict. You didn’t do that. So I’m not going to appeal to this Court for justice. Or expect justice.

Go ahead. Do whatever you feel you need to do to me. Fine me. Send me to prison. Bankrupt me. Whatever. I will not pretend that I am guilty of anything to make your punishment stop. I will not lie for you. I will not obey you because you threaten me, because you have the power to hurt me.

You have that power. I get it. Everyone gets it. The German authorities have the power to punish those who criticize them, who expose their hypocrisy, their lies. We all get the message. But that is not how things work in democratic societies. That is how things work in totalitarian systems.

I will not cooperate with that. I refuse to live that way.

As long as the German authorities continue to claim that Germany is a democratic country, which respects the rule of law and democratic principles, I will continue to behave like that is what it is. I will not be bullied. I will insist on my constitutional rights. I will continue to respect democratic principles and fight to preserve them. The German authorities can make a mockery of those rights and the rule of law and democratic principles if they want. I will not. Not for the Berlin Prosecutor. Not for this Court. Not for the German authorities. Not for anyone.

Totalitarianism, authoritarianism, tyranny, never win. Not in the long run. History teaches us that. And it is history that will judge us all in the end.

— CJ Hopkins

New analysis by the Tax Justice Network has revealed the United Kingdom to be the biggest enabler of corporate tax dodging in the world.

As Statista’s Anna Fleck shows in the infographic below, British Overseas Territories and Crown Dependencies dominate the top eight roundup of places allowing multinationals to avoid paying tax on their profits. In total, this makes the UK responsible for about one third of global tax avoidance risk.

You will find more infographics at Statista

EU countries are also responsible for a third of corporate tax abuse risk, whereas African nations are responsible for just four percent of corporate tax abuse risks and Latin America for only three percent. Among the countries to have performed worse than before are Brazil, Poland and Mexico.

Ireland entered the top ten list for the first time in 2024 with an index value of 1,622, ranking in ninth place. It is followed by Luxembourg (1,480) and then the Bahamas, the latter of which is an independent member of the British commonwealth but not an OT or CD. In position 12 comes the Isle of Man and in 13 comes Guernsey, both Crown Dependencies. The United Kingdom places in 18th position with a value of 894.

According to the Tax Justice Network, about half a trillion dollars are lost to tax havens per year.

The index evaluates jurisdiction laws and monitors the volume of corporate financial activity entering and leaving jurisdictions. A Haven Score is determined by more than 70 questions under 18 indicators to find the extent to which a jurisdiction’s laws and regulations allow for corporate tax abuse. The outcome of these indicators are then combined with global scale weights, which are based on IMF data on foreign direct investments. The final figure is a measure of the contribution of each jurisdiction to the global problem of corporate tax abuse.

Via Remix News,

Hungary has built a fence and does not allow social (welfare) tourists to enter Europe unchecked. Hungary protects Germany and Austria from further chaos. So, what does the conglomerate of mentally ill lawbreakers in Brussels do in response? It obliges Hungary to pay a massive fine. These previous sentences were delivered by Austrian politician and commentator Gerald Grosz in a statement, but they describe the EU’s mishandling of the problem of illegal immigration so succinctly and accurately that any sane patriot could have said them. Today, the situation has become so much better that more and more people dare to take on their attitude in public, agreeing with the Hungarian position all over Europe.

Herbert Kickl, leader of the Freedom Party of Austria, celebrates with supporters, in Vienna, Austria, Sunday, Sept. 29, 2024, after polls closed in the country’s national election. (AP Photo/Andreea Alexandru)

It is no coincidence that the Freedom Party of Austria (FPÖ) won a historic victory on Sunday in the election whose central theme was illegal migration. Our neighbor has seen unbearable conditions develop in the big cities, for example, more than half of the students in Viennese schools do not know the German language. Whoever forms a government must radically change the current migrant policy, otherwise serious social conflicts may break out, the consequences of which are unforeseeable.

The situation is similar in several EU member states.

In the Czech Republic, Andrej Babiš’s party, ANO, won the Senate election by a landslide. Although their strengthening does not bring an immediate change in the Czech migrant policy, it is still a very important development.

It is no coincidence that Viktor Orbán concluded his congratulations by saying, “They can tremble in Brussels, the Patriots are coming.”

In Germany, the advance of the Alternative for Germany (AfD) in the state elections resulted in the government closing the borders in fear. The decision to close the borders, considered by many to be a sham, was more to destroy the Schengen system, which was one of the achievements that still preserved something of the union we joined at the time. This move did not even work, with the number of illegal immigrants flooding Germany not decreasing, nor have the problems they caused.

Last weekend, nine people died and almost 50 went missing not far from the Canary Islands when a boat carrying illegal migrants capsized. According to data from the Spanish Ministry of the Interior, 200,000 people have arrived in Europe via the Canary Islands in recent decades, and according to a human rights organization, almost 5,000 people have already drowned on this route. So, even the left-wing Spanish prime minister was forced to take measures to stem the tide.

The Netherlands gave the bravest response to the migration challenge when the right-wing government that was finally formed after a long tug-of-war immediately asked to be exempted from the scope of the migration pact. It is true that the European Commission led by Ursula von der Leyen immediately rejected this request, but the case still highlights that the pact is not good for anything, because it doesn’t matter what pseudonym they come up with for the distribution according to the quota, the essence is the same. These measures also do not even solve the problem of those who are already inside the union, and it certainly doesn’t stand in the way of those who are looking to come in.

In any case, following the Dutch example, Hungary will also ask to be exempted from the scope of the pact, just as we will not pay the horrible penalty that was imposed on us because we fulfill our duty and protect the southern border, which is also the external border of the European Union. These examples all prove that the eyes of European citizens are slowly but surely opening, which could bring about revolutionary changes in migrant policy in the future. So, it doesn’t hurt to prepare for these changes, because we cannot let globalist idiots screw it up one more time.

It is best to step back and do what all the decision-makers failed to do then. A distinction must be made between refugees, legal economic immigrants and border criminals. The war raging in our neighborhood showed us who the real refugees are. Helping the unfortunate people who set off on their small motorbikes to escape the fighting, and in many cases become stranded, is as natural in the first safe country as breathing — even if at first the trunks of some luxury SUVs with Ukrainian license plates were lined with millions of euros and even if most of them don’t stop here, but immediately move on to countries with a higher standard of living. However, those who have the slightest inkling of the horrors of war do not choose, do not doubt, but help as best they can with what they have.

This sentiment of kindness was also abused by those border violators who, one by one, declared themselves Syrian at the beginning of the invasion, because at that time fighting was still raging in Syria, and through this, a Bangladeshi or Tunisian vagabond could sell himself as a refugee. 

This is also why the human traffickers and the human rights defenders who have sunk to their level recommended that they throw away their identification papers on the way, because becoming unidentifiable, they will always be able to lie to the authorities about their age and country of origin. Let’s boldly say that whoever arrives like this is not a refugee, but a border-violating criminal. 

Of course, there is a version of migration that benefits both the immigrant and the receiving country. Those who are not happy in their home country and want to start a new life somewhere else, arrive at the official entry points with papers. He or she informs the appropriate office of his intention, takes up a job, learns the official language of the host country, accepts the primacy of the culture of the host country, and abides by the laws and regulations. In exchange for better conditions and more opportunities, it enriches the host country. It’s a mutually beneficial deal.

It is also important to note here that the receiving country always decides who it allows into its country, what kind of immigrant population it considers manageable, and what conditions it imposes for the sake of common life and the effectiveness of integration. 

It is clear that none of the members of the masses who receive aid from several places under pseudonyms, who do not speak the language, who do not want to work, who live according to Sharia law, and who shout for a caliphate, are economic immigrants in this sense. They arrived as border-crossing criminals and are currently parasites, but it is also possible that one day the conspiracy theory that the outposts of an invasion army arrived in Europe in this way will become a reality.

Ambitious intellectuals and scientists have repeatedly drawn attention to the fact that climate change and the population explosion in Africa may force millions of people to leave their homeland in the near future in search of a new, more livable place of residence. The idea of ​​a world without borders was born as a response to this challenge, where everyone has the basic human right to move wherever they want. This artificial world is what the wealthy of the private money empire want to impose on us, who are not interested in anything other than profit maximization.

Let us not forget that illegal immigrants buy their products and use their services from the aid they receive.

The ruined nation-states will borrow from their banks if they want to have strong provinces for the United States of Europe. This has all been well thought out.

However, we must know that there is another answer to the mentioned challenge. What the Hungarian government formulated, for example, is that the problem should not be brought here, but the solution should be brought to the place where the problem arose. It is necessary to ensure that the masses do not leave in hope of a better life, since they can be helped there as well so that they can do everything to improve their living conditions.

The first step for this must be the protection of Europe’s external borders. There is no sovereign state without borders. There is no independent politics without sovereignty. There is no community without self-determination. There is only a consumer crowd led by the nose. This is how illegal migration has become the cruelest weapon in the hands of the globalists who want to eliminate nation-states. And this is how Hungary, preserving its sovereignty, became the vanguard of the patriots fighting against them.

Now, we are no longer alone.

Read more here…

Traffic congestion costs drivers around the world hours of lost time and economic productivity.

Traffic can serve as an economic indicator, as the flow of people, goods, and services drives the demand for road travel, reflecting underlying economic activity. But when this demand surpasses the available road capacity, it leads to congestion, time lost in traffic, and often rising frustration.

This chart, via Visual Capitalist’s Kayla Zhu, shows the 15 worst cities around the world for traffic congestion in 2023, ranked by the average number of hours lost to traffic congestion per driver when driving during peak commute hours compared to driving during off-peak hours in 2023.

Data comes from the INRIX Global Traffic Scorecard 2023.

Which Cities Have The Worst Traffic?

Below, we show the 15 cities around the world with the worst rush hour traffic, as measured by hours lost to traffic congestion during peak commute hours in 2023.

In 2023, drivers in New York had it the worst. On average, drivers in The Big Apple lost 101 hours to traffic jams in 2023, costing more than $1,700 in lost time and productivity. In the U.S., traffic delays cost the typical driver more than $733 in lost time, or $70 billion nationwide in 2023 according to INRIX.

Most of the cities struggling with the worst traffic congestion are some of their respective countries’ largest economic hubs including: New York, London, Paris, Mexico City, Rome, Istanbul, and Cape Town.

These economic centers are characterized by large populations, a high density of businesses, and significant daily commuter traffic.

In 2003, the city of London introduced the Congestion Charge, which charges cars being driven within the Congestion Charge Zone in central London during specific hours £15 a day. Drivers who don’t pay the Congestion Charge are fined £160.

Last year the city of London shared the results of the Congestion Charge, with the city’s traffic congestion having fallen by 30% while boosting public transport use along with walking and cycling.

To see which cities in the U.S. had it the worst, check out this graphic that visualizes the 15 U.S. cities with the worst rush hour traffic.

By Tsvetana Paraskova of OilPrice

Germany hasn’t decided yet if it would support the EU’s plans to officially introduce tariffs on electric vehicles imported from China, the chief economic adviser of German Chancellor Olaf Scholz told Bloomberg TV on Tuesday.

The EU earlier this year imposed provisional tariffs of up to 36% on EVs imported from China, on top of the regular import duty of 10%. The EU member states are expected to vote on Friday on whether to officially impose these tariffs, after finding that China has been heavily subsiding EV manufacturers.

But Germany, Europe’s largest economy and top auto manufacturer, fears the tariffs could unleash an all-out trade war in China, in which its top carmakers would suffer the consequences.

Germany has spoken several times against the EV tariffs and has been recently joined by Spain in hinting the two large economies would abstain in the EU vote.

Germany has not decided yet how it would vote on Friday, Scholz’s chief economic adviser Jorg Kukies told Bloomberg.

German carmakers have a large market in China and as they are integrated in the global supply chain, Germany doesn’t believe tariffs are a good idea, Kukies said.

“A negotiated solution would definitely be preferable to the imposition of tariffs, no matter how calibrated they are,” the adviser told Bloomberg.

The current duties, in effect from July 5, are provisional and for a maximum period of four months. 

The tariffs led to a reaction in China, which is proceeding with anti-dumping investigations of EU imports, targeting brandy and pork imports from the bloc, likely aimed at Spain, France, the Netherlands, and Denmark.

VDA, Germany’s automakers’ association, has said that the “stated goal of ensuring fair competition conditions and protecting the domestic industry from unfair practices will not be achieved” by the anti-subsidy tariffs.

“The European anti-subsidy tariffs would not only affect Chinese manufacturers but also European companies and their joint ventures in particular,” VDA added.

Authored by Kyle Anzalone via The Libertarian Institute,

The President of the Group of Seven (G7) is seeking to finalize a $50 billion loan to Ukraine that will be repaid using interest and profits frozen Russian funds. Using Moscow’s money to pay for Kiev’s war effort will be a major escalation in the economic war Washington is waging against Russia.

European Commission Executive Vice President Valdis Dombrovskis explained, “The G7 presidency is now aiming for a political commitment on participation in this … loans initiative around the end of October, which would allow all G7 lenders sufficient time to operationalize loans by the end of this year.”

The scheme calls for giving Ukraine $50 billion, which will be dubbed a loan. However, rather than Kiev repaying the money, funds from frozen Russian assets in G7 nations will repay the loan. “The loan for Ukraine is to be serviced from profits generated by Russian assets immobilised in the West. More than two thirds of the assets, some 210 billion euros, are in the EU,” Reuters has detailed of how it will work.

The G7 includes the US, UK, France, Canada, Japan, Germany, Italy, and the European Union. The bulk of the money will come from members of the EU, $35 billion. 

Dombrovskis reports that Canada, the UK, and Japan are on board with the proposal. Washington is withholding support over unease that the EU will unfreeze the Russian funds, leaving no clear method for the loan to be repaid.

The EU is seeking to alleviate the White House’s concerns by voting to extend the freezing of the Russian funds by three years. 

Using Russian money to fund the Ukrainian army’s killing of Russian soldiers will likely be viewed as a major provocation by Moscow. Throughout the conflict, the White House has waged an economic war – alongside the proxy war – against Russia in Ukraine. 

Washington and its allies have instituted numerous rounds of sanctions and other economic penalties against Moscow aimed at slowing the Kremlin’s war machine.

However, the Russian economy has largely adapted to the sanctions, while cutting trade with Moscow has harmed some European economies. 

Authored by Andrew Korybko via Substack,

Most of the discourse surrounding the NATO-Russian proxy war in Ukraine naturally focuses on events inside that country.

This nowadays includes the improvised “war of attrition” that’s being waged by both sides within it, false flag attack scenarios against its nuclear power plants, and what would have to happen for Russia or Belarus to use nukes in this conflict.

What most commentators have forgotten about though is how NATO’s northeastern flank can stir up a lot of trouble for Russia if the order is given.

Lithuania’s failed blockade of Kaliningrad in summer 2022 and this year’s efforts to build an “EU defense line” along the Polish-Belarusian border to the Estonian-Russian one, which would de facto function as a new Iron Curtain that could expand to the Finnish-Russian border, aren’t discussed enough nowadays. That might change after the Commander of the Estonian Defense Forces spoke last week about Tallinn’s plans to close off the Gulf of Finland. Here are his exact words as reported by publicly financed ERR:   

“Maritime defense is an area where cooperation between Finland and Estonia is set to increase, and we may be able to make more concrete plans on how, if necessary, we can completely block adversary activities in the Baltic Sea, literally speaking. Militarily, this is achievable, we are ready for it, and we are moving in that direction. If there is a threat and it is necessary, we are ready to do it to protect ourselves.”

That prompted the Russian Foreign Ministry to respond as follows according to Sputnik:

“If Finland and Estonia plan to impose a complete blockade of the Gulf of Finland for Russian shipping, Russia will regard such actions as an obvious violation of international maritime laws. Its norms do not contain provisions that allow, even based on some ‘threat,’ to introduce measures to restrict shipping, much less unilateral measures of a discriminatory nature aimed at a specific state…but we proceed from the fact that in this matter they will strictly adhere to the norms of international law.”

The scenario of Estonia and Finland blockading the latter’s namesake gulf in parallel with Lithuania reimposing its own blockade on Russian access to Kaliningrad via its territory from Belarus therefore can’t be ruled out.

It might only be a response to escalating NATO-Russian tensions and not a surprise provocation, but it would still be serious enough to provoke a Cuban-like brinksmanship crisis. Russia will not allow its exclave of Kaliningrad, which is its westernmost operating base against NATO, to be cut off.

Another possibility is that Trump threatens Putin with this after the election if he wins as a “negotiating tactic” for getting him to accept whatever deal he’s offered in Ukraine on pain of that happening if he refuses.

Estonia wouldn’t talk about blockading the Gulf of Finland without prior encouragement from the US, and these same hawkish forces might either manipulate Trump into thinking this is a “good idea” or have already convinced Kamala to go through with it if she wins, which is a cause for global concern.