Month: October 2024

With the impacts of the hurricanes wearing off, initial jobless claims plunged last week to 216k (from 228k) – the lowest since April…

Source: Bloomberg

North Carolina has retraced all of its job losses from Helene and Florida is starting to recover from the claims spike after Milton…

Source: Bloomberg

Continuing Claims also fell, from 1.888mm Americans to 1.862mm Americans (but remains near its highest since Dec 2022…

Source: Bloomberg

So jobless claims at their lowest in six months – not exactly the kind of data that The Fed doves want to see to justify another rate-cut (we guess it all depends on who wins next week whether we get a cut or not?)

The Fed’s favorite inflation indicator – Core PCE – printed hotter than expected in September  (+2.7% vs +2.6% exp), flat with August’s 2.7% rise…

Source: Bloomberg

The headline PCE rose 0.2% MoM, which dragged down YoY PCE to +2.1% – its lowest since Feb 2021…

Source: Bloomberg

On a MoM basis, PCE appears to be accelerating with Durable Goods and Services costs picking up…

Source: Bloomberg

And finally, the so-called SuperCore PCE (Services Ex-Shelter) rose 0.3% MoM leaving the YoY cange ‘sticky’ at around 3.2%…

Source: Bloomberg

Personal Incomes rose 0.3% MoM (as expected) but Spending rose by more (+0.5% vs 0.4% exp)…

Source: Bloomberg

But on a YoY basis, bond spending and income growth is slowing…

Source: Bloomberg

On the income side, Private wage growth 6.4% in Sept, unch while Government wage growth 6.7% in Sept, down from 6.9%, and well below record high 7.9% in March…

Source: Bloomberg

Finally, acyclical inflation is awkwardly stuck extremely high while the cyclical segment of inflation has reverted to normal…

Source: Bloomberg

Not exactly the kind of data that enshrines The Fed with a god-given right to cut rates.

Futures fell ahead of the busiest day of the earnings season, dragged down by META and MSFT which are both down about 4% following last night’s earnings releases. As of 8:00am ET S&P futures are down 0.6%, but off session lows; Nasdaq futures retreat about 0.7% after Microsoft and Meta growth outlooks fail to impress investors, with the pair together representing half of the losses in Nasdaq futures. The rest of Mag7 is also lower: AMZN, GOOG, NVDA are all down 1% – 1.4%. AAPL, which had been used as a funding source is -33bps. Bond yields are flat to down 1bps; the USD is flat. Cmdtys are getting hit with the global risk-off tone, but WTI is higher while Brent is lower. The macro data focus today is on ECI, Income/Spending, jobless claims, and the monthly PCE numbers. Mag7 earnings conclude (ex-NVDA which is Nov 20) with AAPL and AMZN.

In premarket trading, Microsoft shares dropped 3.6% after the software giant forecast slower quarterly cloud revenue growth. Morgan Stanley notes that supply constraints are continuing to limit growth in the GenAI-related businesses. Meta Platforms shares fall 2.6% after the Facebook parent reported third-quarter results. Analysts are broadly positive, but note that capital expenditure plans did raise concerns. Among other premarket stock movers, Uber slumped following a muted holiday forecast for the ride-hail service. Estee Lauder Cos. Inc. tumbled 18% after the cosmetics maker pulled its guidance for the year. EBay Inc. dropped after missing revenue forecasts. Comcast Corp. jumped after a profit beat. Here are all the notable premarket movers:

• US-listed shares Arm Holdings (ARM) fell 4.47% after Bernstein lowered its view on the chip-design company — one of the biggest winners of this year’s artificial intelligence spending boom.
• Biogen (BIIB) shares slip 1.2% after Morgan Stanley downgraded the drugmaker to equalweight from overweight saying the launch of its Alzheimer’s drug, Leqembi “has tracked below our expectations.”
• Carvana (CVNA) shares soar 20% after the used car retailer reported another strong quarter as sales growth coupled with cost-cutting measures helped boost profits. Analysts note strong retail unit sales growth and encouraging earnings trends.
• Coinbase (COIN) shares fall 2.7% after the cryptocurrency platform operator’s earnings fell short of expectations, with analysts pointing to an impact from weaker crypto asset prices during the quarter. The update prompted some brokers to question Coinbase’s competitive advantage going forward.
• DoorDash (DASH) shares rise 3.5% after the food delivery company reported earnings that surpassed analyst expectations and issued strong guidance for the fourth quarter as its market share grows. Brokers said the update bodes well for next year and profitability going forward.
• EBay (EBAY) shares drop 7.9% after the e-commerce company’s projections for the fourth quarter fell short of analyst expectations. Baird said the outlook reflected the decision to move to a no-fee model in the UK for consumer-to-consumer (C2C) transactions.
• Etsy (ETSY) rises 5.2% after the retailer reported third-quarter results in which revenue, and marketplace revenue, beat estimates. Analysts are generally positive on take rate and profitability but see guidance as mixed
• Estée Lauder (EL) shares fell 20% after the beauty company pulled its guidance for the year, citing uncertainty over a new chief executive and weak demand in China.
• Meta Platforms (META) shares fall 2.6% after the Facebook parent reported third-quarter results. Analysts are broadly positive, but note that capital expenditure plans did raise concerns.
• Merck & Co. (MRK) fell 1.3% after the company lowered the top end of its full-year sales guidance after demand for its HPV vaccine fell for a second straight quarter in China.
• Microsoft (MSFT) shares drop 3.6% after the software giant forecast slower quarterly cloud revenue growth. Morgan Stanley notes that supply constraints are continuing to limit growth in the GenAI-related businesses.
• Robinhood (HOOD) shares fall 11% after failing to meet high revenue expectations. While analysts point to disappointing key metrics for 3Q, they are generally encouraged by management commentary and October trading conditions.
• Root (ROOT) shares soar 81% after the auto insurance platform said it reached net income profitability for the first time as third-quarter revenue topped estimates.
• Starbucks (SBUX) rose 0.4% after the coffee chain reported fourth-quarter earnings. Since the company preannounced the results last week, analysts were focused on strategic changes that were laid out by new CEO Brian Niccol. Morgan Stanley said Niccol’s vision was “aspirational, like the Starbucks brand when at its best,” while TD Cowen said Niccol had succeeded in diagnosing the challenges faced by the company.
• Twilio (TWLO) shares jump 13% after the cloud communications firm showed continued improvement in its operating margins, spurring Morgan Stanley and JPMorgan to raise their price targets on the stock. Twilio also upgraded its organic revenue growth guidance for the full year.

The disappointing set of results from Microsoft and Meta was hurting sentiment, said Marija Veitmane, a senior multi-asset strategist at State Street Global Markets. Investors are questioning whether the companies can sustain profit growth while ramping up spending on artificial intelligence and cloud services.

“The market is concerned with the continued increase in investments, and that is likely to weigh on stocks in the short term,” she said. “In the medium term, however, we still see weakness in tech stocks as a buying opportunity. It’s a very crowded position, so it is getting sold on any sign of disappointment, but we always see investors coming back as there’s no other alternative if you want quality.”

The dollar and treasuries were steady (more below) , with the two-year Treasury yield, which is most sensitive to interest-rate moves, hovering at a three-month high. In addition to the resilient US economy, investors are worried that a resurgence in inflation after the US election may delay or prevent interest-rate cuts.

“Who becomes president changes the perspective of the investment cycle,” Daniel Yoo, head of asset allocation, Yuanta Securities, said on Bloomberg Television, highlighting the potential effects of higher tariffs and lower corporate taxes under a potential Donald Trump presidency. “That will probably accelerate the process of inflation pressure and therefore the lowering of interest rates may be taken at a slower pace or not even happen.”

In Europe, the Stoxx 600 retreated for a third day after its worst day since September and on track for its biggest monthly decline in a year. French lender BNP Paribas SA was the biggest drag on the index, plunging more than 7% after reporting third-quarter earnings. Peers BBVA SA, Banco Sabadell SA and ING Groep NV also dropped after their results. Societe Generale SA stood out among lenders, soaring 11% after beating estimates. Here are some of the biggest movers on Thursday:

• SocGen shares advanced as much as 11%, most since March 2022, after beating 3Q estimates on the back of higher trading income and a rebound in the French retail business.
• Jeronimo Martins shares rise as much as 10% after the operator of Polish grocery chain Biedronka reported a third-quarter earnings beat, providing signs of recovery in sales and margins.
• Geberit shares jumped as much as 7.1%, most in nearly a year, after the Swiss maker of building materials boosted its guidance for the full year as management expects more robust development in the renovations business.
• Erste shares gain as much as 5.8% to the highest level since 2007 after the bank raised its forecast for net interest income growth this year.
• Airbus gains as much as 3.8%, the most since Oct. 17, after the planemaker reported third-quarter results that topped analysts’ expectations.
• Maersk shares rise as much as 3.3% after the Danish shipping company’s results showed improvement in the logistics division, while the ocean division’s higher rates drove revenue and Ebitda.
• Stellantis shares rise as much as 1.6% as analysts say the carmaker’s European revenue helped offset woes in North America, thanks to stronger-than-expected mix.
• SoftwareOne shares tumbled as much as 28%, to a new record low after the Swiss IT service provider cut its margin guidance for the full year – the second downgrade in the space of a few months.
• Smith & Nephew shares plunge as much as 14%, after the medical devices company reported results for the third quarter that disappointed analysts and cut its outlook for the year.
• BNP shares fall as much as 7.5% with analysts pointing to disappointment in the lender’s retail banking trends, especially in France and Belgium, while its capital was weak.
• AB InBev slides as much as 4.5% after reporting a sharper drop in organic volumes than anticipated in the last quarter, leading to sales and Ebitda growing less than expected.
• AXA shares fall as much as 2.2% after nine-month results, with the French insurer’s solvency ratio a small disappointment for analysts.

Earlier in the session, shares in Japan, Australia and South Korea declined, weighing on an index of the region’s equities, which headed for its worst monthly performance since August 2023. Mainland Chinese shares were mixed and those in Hong Kong rose, after a report showing monthly Chinese manufacturing data registered its first expansionary reading since April. Kospi drops almost 1% after Samsung chip profit disappoints. Hang Seng climbs 0.5% and mainland indexes advance after Chinese factory activity unexpectedly expands. The BOJ kept its benchmark interest rate unchanged after uncertainties increased over the outlook of the economy and the stability of the government after the ruling coalition suffered its worst electoral result since 2009. The yen strengthened below 153 per dollar.

In rates, treasuries advance across the curve in a moderate bull-flattening move, with 5s30s spread back to tightest level since July. US yields richer by as much as 3bp across the curve with 2s10s, 5s30s spreads flatter by 1bp and 2bp on the day; 10-year near 4.28% is ~2.5bp richer on the day with UK 10-year underperforming by around 8bp. European bonds dipped after data showed euro-area inflation accelerated more than expected in October — matching the ECB’s target and boosting arguments for interest rates to be lowered gradually. Treasuries also sharply outperform gilts as UK financial markets absorb Labour government’s plans for increased borrowing and fiscal stimulus. UK front-end yields are up about 10bp in an aggressive bear-flattening move as money markets unwind the extent of Bank of England interest-rate cuts expected in 2025. UK 10-year yields rose another 6 bps to 4.41% – the highest since November 2023. Bunds also fall, albeit to a lesser extent. German 10-year yields rise 2 bp to 2.40% with little reaction to an upside surprise in euro-area headline and core inflation for October.  US session includes employment cost index, weekly jobless claims and PCE price indexes.

In FX, the dollar slipped, though it remains on pace for its best month in more than two years as investors trimmed bets on Fed policy easing after robust economic-growth and jobs data Wednesday. One-week implied volatility on the Bloomberg Dollar Spot Index rose to the highest since December 2022, indicating that traders expect wild swings in the greenback over the US presidential election. The Japanese yen topped the G-10 FX leader board, rising 0.7% against the greenback after the BOJ left rates on hold and maintained it’s on track to achieve its inflation target.

In commodities, oil edged higher, extending its gains from the previous session; WTI rose 0.7% to $69.10. Gold dropped after touching a fresh record in the prior session; spot traded down $6 to $2,781/oz. Demand for the precious metal was partly supported by the uncertainty posed by next week’s vote.

Looking at today’s calendar, US economic data calendar includes October Challenger job cuts (7:30am), 3Q employment cost index, September personal income and spending with embedded PCE price indexes, jobless claims (8:30am) and October MNI Chicago PMI (9:45am, several minutes earlier to subscribers). Fed officials are in self-imposed quiet period ahead of Nov. 7 policy announcement.

Market Snapshot

• S&P 500 futures down 0.8% to 5,803.75
• STOXX Europe 600 down 0.6% to 508.62
• MXAP down 0.2% to 186.49
• MXAPJ down 0.4% to 591.63
• Nikkei down 0.5% to 39,081.25
• Topix down 0.3% to 2,695.51
• Hang Seng Index down 0.3% to 20,317.33
• Shanghai Composite up 0.4% to 3,279.82
• Sensex down 0.7% to 79,416.69
• Australia S&P/ASX 200 down 0.2% to 8,160.03
• Kospi down 1.5% to 2,556.15
• German 10Y yield little changed at 2.40%
• Euro little changed at $1.0857
• Brent Futures down 0.2% to $72.38/bbl
• Gold spot down 0.3% to $2,778.56
• US Dollar Index little changed at 103.96

Top Overnight News

• China’s NBS manufacturing PMI for Oct came in at 50.1, above the Street’s 49.9 forecast, up from 49.8 in Sept, and higher than the 50 expansion/contraction demarcation point for the first time in 6 months as the government’s stimulus measures show signs of bolstering activity. China’s NBS non-manufacturing PMI for Oct came in at 50.2, up from 50 in Sept but a tiny bit below the consensus forecast of 50.3  RTRS
• China tells its auto makers to halt major investments in Eurozone countries that support higher EV tariffs. RTRS  
• The yen climbed after BOJ Governor Kazuo Ueda said currency movements are having a major impact on the economy and price trends. Policymakers kept rates unchanged, as expected, and signaled the central bank’s on track for further rate hikes. BBG
• France’s CPI for Oct came in at +1.5%, up 10bp from Sept and inline w/the Street (the +1.5% remains far below the ECB’s 2% target). BBG
• Lebanon’s PM said Israel and Hezbollah could agree to a ceasefire agreement within days. RTRS
• OPEC+ could delay its planned production hike beyond Dec as it looks to bolster oil prices. RTRS  
• BNP shares dropped as its largest operating business continued to suffer headwinds including ill-timed hedges. BBG
• Uber fell premarket after it reported weaker-than-expected ride bookings and issued a middling forecast for the holiday quarter. BBG
• Microsoft shares fell premarket after a disappointing forecast for its Azure cloud-computing business, though Bloomberg Intelligence sees growth picking up in the second half. Meta also declined after warning of worsening AI losses. BBG

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mixed albeit with most major indices subdued following the negative handover from the US and heading into month-end, while participants also digested a slew of data releases including somewhat mixed Chinese PMIs. ASX 200 declined amid losses in utilities and consumer stocks with retailer Coles pressured after its quarterly update. Nikkei 225 briefly dipped beneath the 39,000 level after mixed data and cautiousness heading into the BoJ announcement which lacked any major fireworks as the central bank kept rates unchanged as expected and refrained from any fresh policy clues. Hang Seng and Shanghai Comp were underpinned with earnings in focus and strength in Chinese banks after the Big 4 registered profit growth,  although the upside was limited in the mainland after the mixed PMI data which showed manufacturing activity topped estimates and printed at a surprise expansion although non-manufacturing missed forecasts.

BOJ/Top Asian News

• BoJ kept its short-term policy rate unchanged at 0.25%, as expected, through a unanimous decision and said it will conduct monetary policy from perspective of sustainably and stably achieving the 2% price target, while it stated given that real interest rates are at very low levels, the BoJ will continue to raise the policy rate if the economy and prices move in line with its forecast. BoJ said Japan’s economy is recovering moderately although some weaknesses are observed and underlying consumer inflation is likely to be at a level generally consistent with the 2% target in the second half of the projection period through fiscal 2026. BoJ also stated that risks to prices are skewed to the upside for FY 2025 and noted uncertainty surrounding Japan’s economy and prices remains high. Furthermore, it must be vigilant to financial and FX market moves and their impact on the economy and prices, as well as scrutinise US and overseas economic developments, while it added that financial conditions remain accommodative and it mostly maintained its forecasts in the Outlook Report.
• BoJ’s Ueda says the domestic economy is recovering moderately, though some weak moves are seen. Did not need to use the language at this meeting that they can afford to spend time scrutinising risks. Uncertainties remain but markets have slowly regains stability. Can’t currently say how much wages would need to increase for them to hike further; if wage hikes are similar to this year’s Spring negotiations that would be a “positive development”, but that does not mean we decide to hike with only that

European bourses, Stoxx 600 (-0.7%) began the European session entirely in the red, and continued to traverse worse levels throughout the morning. European sectors hold a strong negative bias; Construction & Materials takes the top spot whilst Retail is found at the foot of the pile. US Equity Futures (ES -0.8% NQ -1.1% RTY -0.4%) are entirely in the red, with sentiment hit following post-earning losses tech heavyweights Meta (-3.8%) and Microsoft (-3.8%).

Top European News

• UK Chancellor Reeves says there will be more plans to boost growth. Is not going to come back for more money in the spring. Commenting on yesterday’s budget, says “will not have to do anything like that ever again”.
• ECB President Lagarde said the inflation goal is in sight but cannot say inflation is completely under control, while they will base the size and order of cuts on economic data. Lagarde added that no Euro area recession is expected in 2024-2026 and she reaffirmed commitment to a continued interest rate reduction, according to Le Monde.
• German engineering orders -8% Y/Y in September (Domestic -15%; Foreign Orders -5%); Jun-Sept-4% Y/Y (Domestic -16%, Foreign Orders Unch.), according to VDMA.
• ECB’s Panetta says rates need to come down; inflation is easing and need to pay attention to weakness of the economy. ECB needs to avoid the risk of pushing inflation below target.

Earnings

• Meta Platforms Inc (META) Q3 2024 (USD): EPS 6.03 (exp. 5.24), Revenue 40.59bln (exp. 40.27bln). Expects Q4 total revenue to be in the range of USD 45bln-48bln (exp. 46.3bln). Co. shares were lower by 3.1% after-hours with some desks questioning the Co.’s growth outlook amid potential AI-related losses
• Microsoft Corp (MSFT) Q1 2025 (USD): EPS 3.30 (exp. 3.10), Revenue 65.6bln (exp. 64.51bln). Microsoft Cloud revenue 38.9bln (exp. 38.11bln). Co. shares were lower by 3.7% after-hours following its disappointing cloud growth forecast
• Amgen Inc (AMGN) Q3 2024 (USD): Adj. EPS 5.58 (exp. 5.11), Revenue 8.50bln (exp. 8.52bln)
• Shell (SHEL LN) Q3 (USD): Adj. Profit 6.03bln (exp. 5.39bln), Adj. EBITDA 16bln (exp. 15.40bln); plans a share buyback program of USD 3.5bln; Cuts FY24 Capex “less than” 22bln (prev. guided 22-25bln). Shares +1.1%
• Stellantis (STLAM IM/STLAP FP) Q3 (EUR) Revenue 33bln (exp. 33.1bln); notes it is clear the Chinese rivals are coming into Europe and taking a “very aggressive stance”; affirms guidance. Shares +2.4%
• STMicroelectronics (STM FP) Q3 (USD): EPS 0.37 (exp. 0.33), Revenue 3.25bln (exp. 3.22bln). Guides Q4 Revenue 3.32bln (exp. 3.38bln). Trims FY24 revenue 13.3bln (exp. 13.3bln, prev. guided 13.2-13.7bln). Launches new company-wide program to restore manufacturing footprint; “based on our current customer order backlog and demand visibility, we anticipate a revenue decline between Q4’24 and Q1’25 well above seasonality.”(Newswires) Shares -2.4%
• TotalEnergies (TTE FP) Q3 (USD): adj. Net Income 4.07bln (exp. 4.27bln), adj. EBITDA 10bln (exp. 10.06bln); confirms investment guidance for 2024; interim dividend of EUR 0.79/shr for FY, +7% Y/Y; to execute a USD 2bln share buyback in Q4. Shares -7.2%
• Maersk (MAERSKB DC) Q3 (USD): Revenue 15.7bln (exp. 14.78bln), PBT 3.25bln (exp. 2.3bln), EBIT 3.3bln (exp. 2.99bln), EBITDA 4.8bln (exp. 4.4bln), EPS 193 (ex. 178). Lifted guidance. Shares +2.1%

FX

• DXY is lower as JPY strength acts as a drag on the index. Today sees core PCE metrics and weekly jobless claims, ahead of NFP on Friday. DXY is currently just below the 104 mark after briefly dipping below Wednesday’s trough at 103.97.
• Little follow-through for the EUR from above-expected EZ CPI given that regional releases had suggested such an outcome. EUR/USD is currently in close proximity to its 200DMA at 1.0869 and yesterday’s high at 1.0871.
• GBP is attempting to claw back Wednesday’s post-budget losses, whereby concerns around borrowing forecasts from the OBR have subsequently embedded more of a fiscal risk premium into the GBP. Cable has been unable to make its way back onto a 1.30 handle and is currently stuck below its 100DMA at 1.2976.
• JPY has strengthened in the wake of the BoJ policy decision. The announcement itself provided little in the way of surprises. However, the JPY began to pick up steam as Governor Ueda spoke and downplayed concerns over financial stability risks acting as an impediment to further policy tightening. USD/JPY briefly made its way onto a 151 handle but has since stabilised around the 152.50 mark.
• Antipodeans are both broadly steady vs. the USD. No real follow through seen for AUD from mixed Australian Retail Sales, nor mixed Chinese PMI metrics.

Fixed Income

• Gilts gapped lower from Wednesday’s 94.92 close, briefly stabilised and attempted a rebound but remained around 24 ticks shy of that mark at best. Benchmark down to a 94.05 base, 28 ticks below Wednesday’s trough and at a fresh contract low; UK paper then lifted off worst levels after a relatively strong Green 2053 outing.
• Bunds were weighed on, in-fitting with Gilts into Flash HICP for October. The pan-EZ figure came in hotter-than-expected, but given the skew from data earlier in the week this had no real impact. Bunds down to 131.32 at worst this morning, since picked up modestly and erring back towards opening levels but remain well into the red overall.
• USTs are softer as Gilts weigh on the complex generally and as we look ahead to today’s monthly PCE number before tomorrow’s NFP print, a payrolls report which has the potential to print sub-zero. At a 110-14 trough, half a tick below Wednesday’s base.
• UK sells GBP 2.25bln 1.50% 2053 Green: b/c 3.15x (prev. 3.26x), average yield 4.831% (prev. 4.545%), tail 0.5bps (prev. 0.6bps)

Commodities

• Crude is in the green but only modestly so. Action which comes amidst a soft USD and as the geopolitical environment remains tense. Brent Jan’25 currently holding around USD 72.50/bbl.
• Spot gold is softer while the correlation has broken down, ongoing UK-led yield upside is likely weighing. The yellow metal awaits key US data today and tomorrow, currently towards session lows around USD 2773/oz.
• Base metals are mixed. LME Copper essentially unchanged as we await key US events over the next few days/week which will help determine the near/medium-term macro direction. Furthermore, leads from China were mixed with Manufacturing PMI making its way just back into expansionary territory though non-manufacturing missed consensus slightly.
• Energy Intel’s Bakr says, re. recent OPEC+ source reports, that “they didn’t even talk about this yet”.

Geopolitics: Middle East

• Lebanon’s Prime Minister said they hope for a ceasefire with Israel in the coming hours or days.
• Cypriot President said he is optimistic that a ceasefire in Lebanon could be reached in the next 1-2 weeks.
• Israeli military said it attacked fuel reservoirs in Lebanon’s Bekaa region located in military complexes of Hezbollah’s logistical empowerment unit, while it added that Iran is behind supplying Hezbollah with fuel as part of its military support and it targeted oil depots belonging to Hezbollah’s 4400 Logistics Armament Unit in the Bekaa.
• Hezbollah bombed gatherings of Israeli enemy soldiers in the settlement of Kiryat Shmona with a rocket barrage.
• CNN cited a senior source familiar with Iran’s intentions who stated that the Israeli attack would be met with a “decisive and painful response”, while the source did not provide a date but said it would “likely take place before the US election”.
• Israel Broadcasting Corporation reported that Tel Aviv is considering launching a large-scale pre-emptive attack against Iran, according to Sky News Arabia.
• White House said the US will support Israel if Iran does respond.

Geopolitics: Other

• North Korea launched a ballistic missile towards the East Sea which set a new record, while North Korean leader Kim said the missile test was appropriate military activity as their enemies’ dangerous moves have emphasised the need to strengthen the nuclear force and North Korea will never change its stance of strengthening its nuclear arsenal, via KCNA.
• South Korea’s National Security Council plans to designate new sanctions on North Korea and South Korea’s military said the US is to respond to North Korea’s missile test by deploying strategic assets for drills, according to Yonhap.
• South Korean Defence Minister said Russia could aid North Korea with technology for tactical nuclear weapons and ICBMs in exchange for North Korean troops.
• White House said the US condemns North Korea’s intercontinental ballistic missile test, but noted North Korea’s intercontinental ballistic missile test did not pose an immediate threat to US personnel, territory, or its allies.
• Japanese PM Ishiba will hold a national security council meeting and Defence Minister Nakatani said they will closely cooperate with the US and South Korea over North Korea’s missile launch.

US Event Calendar

• 07:30: Oct. Challenger Job Cuts YoY 50.9%, prior 53.4%
• 08:30: Oct. Initial Jobless Claims, est. 230,000, prior 227,000
  • Oct. Continuing Claims, est. 1.88m, prior 1.9m
• 08:30: Sept. Personal Income, est. 0.3%, prior 0.2%
  • Sept. Personal Spending, est. 0.4%, prior 0.2%
  • Sept. Real Personal Spending, est. 0.3%, prior 0.1%
  • Sept. PCE Price Index MoM, est. 0.2%, prior 0.1%
  • Sept. PCE Price Index YoY, est. 2.1%, prior 2.2%
  • Sept. Core PCE Price Index MoM, est. 0.3%, prior 0.1%
  • Sept. Core PCE Price Index YoY, est. 2.6%, prior 2.7%
• 08:30: 3Q Employment Cost Index, est. 0.9%, prior 0.9%
• 09:45: Oct. MNI Chicago PMI, est. 47.0, prior 46.6

DB’s Jim Reid concludes the overnight wrap

Happy Halloween to you all. If you want to be scared I’m going to a Halloween themed fancy dress party tomorrow night as Marilyn Manson. The PVC trousers have arrived from Amazon and my wife is licking her lips at applying make-up to me! There’s been lots of tricks and treats for markets over the last 24 hours with some of the highlights being a -22.3% drop for the Trump Media and Technology group, a 10-13bps rise in 2yr European yields and a 15bps climb in Gilt yields off the lows for the day across the curve after the budget. Just as it looked like US moves were going to be tame by comparison a late sell-off encouraged US 2yr yields +8.6bps on the day. It’s a big day today with US PCE inflation, a continuation of European inflation numbers that helped move markets yesterday, and Apple and Amazon reporting after the closing bell.

The big move in Trump’s media group was partly down to fresh CNN polls which showed Harris with sizeable +5pt and +6pt leads in the swing states of Michigan and Wisconsin, although still tied with Trump in Pennsylvania. These stronger polls saw the FiveThirtyEight model’s probability of a Trump victory decline to 51% from 54% the day before, while the odds on Polymarket fell from 67% to 64%. To be fair, much of the decline in Trump Media may have reflected its sharp recent rise (+324% from the low in late September), with a large correction always possible after such a run up in a short space of time. The reversal in other Trump proxy trades was more modest, with Bitcoin down -1.14%.

Over in Europe, the big moves followed stronger-than-expected GDP and inflation data. The first showed euro area GDP growing by a solid +0.4% quarter-on-quarter in Q3 (vs. +0.2% expected), with upside surprises in Germany (+0.2% vs -0.1% expected), France (+0.4% vs +0.3%) and Spain (+0.8% vs +0.6%) outweighing the downside in Italy (0.0% vs. +0.2% expected). On the inflation side, Germany’s flash inflation print for October saw the harmonised HICP measure come in at +2.4% yoy (vs. +2.1% expected). Following this upside surprise, our European economists see today’s euro area release tracking at 1.96% yoy for headline HICP and 2.69% yoy for core, nearly a tenth higher than they expected prior to yesterday.

The stronger data saw hawkish-leaning ECB officials speak in favour of only gradual easing, with Schnabel saying that “a gradual approach to removing policy restriction remains appropriate”, while Nagel commented that “my advice is to remain cautious and not to rush”. Market pricing of a 50bps rate cut by the ECB in December fell from 41% to 20% yesterday, with -11.2bps of cuts priced out over the next three meetings in total. 2yr bund yields (+11.5bps) posted their largest increase in over three weeks, with OATs (+11.0bps) and BTPs (+12.5bps) seeing similar moves. At the long-end, 10yr bund yields (+5.1bps) rose to their highest in three months at 2.39%, while 10yr BTPs (+7.5bps) underperformed after the weak GDP data there.

Stronger data also helped to put upward pressure on US yields, albeit after an initial false start. 2yr and 10yr Treasury yields ended the day +8.6bps and +4.6bps higher, respectively, with the 10yr reaching 4.30% for the first time since early July. It’s dipped back to 4.276% this morning in Asia. The highlight of the data was a strong rise in the ADP employment survey (+233k vs +111k expected) ahead of Friday’s payrolls release. We also had Q3 GDP, which came in a touch beneath expectations (+2.9% vs +2.8%) but with strong growth in personal consumption (+3.7% vs +3.3% expected), and the September pending home sales print, which saw the strongest monthly jump since the first post-Covid lockdown rebound in summer 2020 (+7.4% vs. +1.9% expected).

Here in the UK, gilts actually outperformed the euro area and the US with yields ‘only’ 3-5bps higher across the curve. That was mostly thanks to a decline early in the day before the budget announcement. However, 2yr yields then rose as much as 24bps off the lows at one point, with long-end yields rising only slightly less. This came as the market digested a post-budget announcement from the UK Debt Management Office that gross financing needs for 2024/25 would be GBP 23bn higher than projected back in April, with a further GBP 145bn cumulative increase over the following 4 years. Yields settled back down 5 to 10bps from the highs before the close but it was certainly a volatile session. In terms of implications for the BoE, the market takeaway was that it would likely keep rates higher for longer with the June 2025 pricing rising by +15.9bps on the day.

Our UK economist Sanjay Raja notes that this is very much a historic budget in its scale, with announced net spending measures adding up to GBP 70bn a year on average over the next five years, partially offset by GBP 36bn a year in net tax increases. All up, this marks one of the largest fiscal loosening of any UK fiscal event in decades. See Sanjay’s full reaction piece here.

Equities had a relatively challenging session, amid a rout for chipmakers that saw the Philadelphia semiconductor index fall by -3.35%. That had some specific drivers, with Advanced Micro Devices falling -10.62% after its underwhelming results the previous evening, while server maker Super Micro Computer fell by -32.7% after its auditor resigned from its role, citing “integrity” concerns. The NASDAQ fell by -0.56%, though the Mag-7 (-0.02%) was essentially unchanged, helped by Alphabet’s +2.82% rise after its results. And US equities did not fare too badly otherwise, with 49% of the S&P 500 stocks higher on the day, as financials (+0.42%) and real estate (+0.39%) outperformed amid the stronger data. Over in Europe, tech losses led more substantial declines, with the Stoxx 600 (-1.25%) seeing its weakest session in over a month as all of its 25 industry groups fell on the day.

After the US market close, earnings reports from Microsoft and Meta added to the more negative tech mood. Microsoft delivered an upbeat Q3 performance, but announced a weaker forecast for cloud revenue growth, while Meta’s narrow beat was overshadowed by its warning of still rising losses from its Reality Labs division that focuses on AI and augmented reality. Both stocks fell by between -3% and -4% in after-hours trading. This morning, the Nasdaq 100 futures are -0.71%, underperforming S&P 500 (-0.50%).

In the commodity space oil prices rose by more than 2% yesterday following a Reuters report that OPEC+ could delay the oil output hike planned for December and EIA data showing a decline in US stockpiles of crude and refined products.

Overnight in Asia, most main equity indices are struggling with the Nikkei 225 (-0.43%) and the Kospi (-1.16%) trailing Chinese markets as the CSI 300 (-0.03%) and the Hang Seng (+0.15%) manage to slightly outperform. In terms of macro events, there was a hold from the BoJ overnight, with the yen subsequently strengthening, as well as an upbeat official manufacturing PMI print from China, with the gauge moving back above 50 (50.1 vs 49.9 expected) for the first time since April, while the non-manufacturing index showed a small miss (50.2 vs 50.3 expected).

Looking to the day ahead, in terms of US data we will have the personal income and spending data for September, including the PCE inflation print, as well as the Q3 employment cost indicator and the weekly jobless claims. In Europe, we get the October inflation prints for France, Italy and the euro area, while ECB’s Panetta and BoE’s Breeden are due to speak. In earnings, Apple and Amazon will round off this week’s Mag-7 releases, with Mastercard, Uber, Merck and Intel other highlights in the US. In Europe, earnings include AB Inbev, TotalEnergies and AP Moller – Maersk.

Authored by Lee Smith via RealClearPolitics,

The propaganda campaign labeling Donald Trump as an aspiring dictator determined to use the military and national security apparatus against his political opponents is designed not to affect the upcoming election but rather to shape the post-election environment. It is the central piece of a narrative that, by characterizing Trump as a tyrant (indeed likening him to Hitler), establishes the conditions for violence — not just another attempt on Trump’s life, but political violence on a massive scale intended to destabilize the country. 

As I write in my forthcoming book Disappearing the President, Democratic Party research and media reports show that many senior party officials and operatives are preparing for the possibility of a Trump victory. Accordingly, planning is focused on undermining the incoming president with enough violence to rock his administration. Prominent post-election scenarios forecast such widespread rioting that the newly elected president would be compelled to invoke the Insurrection Act. With some senior military officials refusing to follow Trump’s orders, according to the scenarios, the U.S. Armed Forces would split, leaving America on the edge of the abyss. 

By vilifying Trump as a despotic madman who must be stopped before he can commence his reign of terror, the regime’s propaganda apparatus not only slanders Trump but also pre-emptively threatens the reputation, as well as the livelihood and perhaps the liberty, of current military personnel. The point is to push the military against Trump: When the time comes to act, will you stand for democracy or side with a tyrant who sees the military only as an instrument to advance his personal interests? 

For instance, last week the Atlantic’s editor-in-chief, Jeffrey Goldberg, quoted former Trump administration officials claiming that the Republican candidate is contemptuous of America’s armed forces and, according to Trump’s former chief of staff, John Kelly, wishes he could command the same respect that Hitler commanded from his general officers. 

This is not the first time that Trump has been compared to Hitler or that Kelly, a retired Marine general, turned on his former commander-in-chief. Kelly was the key source for a story published before the 2020 election, also in the Atlantic and also by Jeffrey Goldberg, that alleged Trump had called American WWII soldiers buried in French cemeteries “suckers and losers.” 

The veracity of Kelly’s latest revelation that Trump admires Hitler must of course be judged against the fact that he waited five years to disclose it, even if it is unlikely to have much effect on the current election cycle. The military, and veterans of the Global War on Terror in particular, overwhelmingly support the candidate opposed to waging endless and strategically pointless foreign wars. Moreover, Trump has weathered far more damaging fabrications — like the false allegations that he had been compromised by Russian intelligence — that only galvanized support for him.

The purpose of the Hitler narrative is not to alter the electoral preferences of left-wing media audiences already solidly in the anti-Trump column, but rather to justify taking extreme measures against the Republican candidate and the America First movement and ensure that the bulk of the military sides with the anti-Trump plot. Thus, it is best understood in the context of recent accounts promising, or urging, violence after the November vote. 

For example, last week the New York Times published a long interview with a scholar of fascism who declared that Trump is a fascist. The paper of record followed up with another long article by two Harvard professors calling for mass mobilization in the event of a Trump victory. The proposal suggests that private industry join civil society organizations to ostracize Trump and his supporters and engage in large public protests to provoke a crisis. Kamala Harris herself, commenting on Kelly’s allegations in the Atlantic story, claimed that her opponent “is a fascist” during a CNN town hall.

These stories are only the latest in an ongoing series of media reports warning of a Trump dictatorship. Beltway insider Robert Kagan was out of the gate early, writing even before Trump wrapped up the nomination that, without mounting resistance against the Republican candidate, America is “a few short steps, and a matter of months, away from the possibility of dictatorship.” A January story from NBC claimed that Trump was exploring ways to use the military to assassinate political rivals. 

The propaganda meant to establish a predicate to employ violence to stop Trump has been reinforced at the highest levels of the Democratic Party.   

When Joe Biden was asked by a reporter if he was confident that there would be a peaceful transfer of power after the 2024 election, he answered, “If Trump wins, no I’m not confident at all.” Then, seemingly correcting himself, the president said, “I mean if Trump loses, I’m not confident at all. He means what he says, we don’t take him seriously. He means it, all the stuff about, ‘If we lose there will be a bloodbath.’”

Biden was referring to a comment Trump made in March about Chinese efforts to build auto manufacturing plants in Mexico. The export of those cars to America, Trump said, would result in a “bloodbath” for the U.S. auto industry. Naturally, the Biden campaign used the figure of speech to accuse Trump of inciting “political violence.”

Rep. Jamie Raskin (D-MD) advertised a more specific scenario leading to violence when he promised that Congress will remove Trump by invoking Section 3 of the Fourteenth Amendment, which prohibits anyone “engaged in insurrection or rebellion” from holding federal office. “It’s going to be up to us on January 6, 2025, to tell the rampaging Trump mobs that he’s disqualified,” Raskin has said. “And then we need bodyguards for everybody in civil war conditions.”

But the most significant post-election scenarios were drafted by Rosa Brooks, a former Obama Pentagon official whose 2020 wargaming with the Transition Integrity Project (TIP) has been credited by the left-wing press for its “accuracy.” 

Ahead of the last election, Brooks and TIP, according to the Guardian, “imagined the then far-fetched idea that Trump might refuse to concede defeat, and, by claiming widespread fraud in mail-in ballots, unleash dark forces culminating in violence. Every implausible detail of the simulations came to pass in the lead-up to the U.S. Capitol attack on 6 January 2021.” 

That’s a fanciful way of obscuring the truth. TIP anticipated that Trump would contest the results because party operatives knew beforehand that election irregularities resulting from new voting procedures, like mass mail-in voting, designed to facilitate fraud would be glaringly obvious. Thus, because of Brooks’s past performance and her central role in a network comprising the media and current and former defense officials, her work is widely acknowledged as the Left’s roadmap for post-election contingency planning. 

For the 2024 election, Brooks teamed up with journalist Barton Gellman to run a series of wargames in May and June under the auspices of the Democracy Futures Project (DFP), part of the Brennan Center for Justice at New York University. 

As with the 2020 wargames, the two opposing teams were staffed by former government officials from the Republican as well as the Democrat establishment. The results were announced with a mid-summer media rollout to ready other officials and operatives for likely post-election operations. Four articles were published the same day, July 30 — in the New Republic; the Guardian; the Washington Post, which ran a piece by Gellman; and Brooks herself writing for the Bulwark — showing that Brooks and Gellman’s scenarios, at least those disclosed, assume a Trump victory. The play then is to block.

Disruption, destabilization, and violence are legitimized by a narrative driven by self-congratulatory mirror-imaging and projection in which the so-called defenders of democracy face down an authoritarian Trump. 

Brooks and her cohort ignore the evidence of Biden and Harris’s abuse of power and assert that it is Trump who will who use the federal government against his opponents. It is Trump’s CIA and DOJ, according to the wargamers, that will cashier national security officials for “raising concerns about the politicization of intelligence and the pressure to launch ideologically motivated investigations.” It is Trump who will use the IRS to go after nonprofits. It is at Trump’s behest that journalists will be targeted and Democrat-aligned media outlets investigated as the FCC revokes broadcast licenses. And, writes Brooks, the Trump administration will force out top military officials on account of their “objecting to Trump’s cozy relationship with Russia.” 

The forecasts read like paranoid fantasy, but they’re carefully scripted inversions of reality meant to to rewrite history and obscure the crimes of the Left that have shaken the pillars of the republic. 

The most alarming scenario involves political and military officials “resisting efforts to federalize their national guard units and send them to quell anti-Trump protests in major U.S. cities.” That is, the post-election playbook calls for (or takes for granted) widespread violence so intense that the president invokes the Insurrection Act. The forecast posits a split in the senior ranks of the U.S. military after Trump replaces the chiefs of staff with officers who comply with his order and deploy forces to put down the riots. 

This is where the political violence cultivated by the destructive Left is leading: blood-soaked streets and a divided military. The purpose of the Hitler narrative is to force members of the military to turn against Trump. After all, loyalty to the constitution means fighting Hitler, not obeying his orders. 

With the two recent attempts on Trump’s life, we’ve seen how the regime’s narratives simultaneously create the conditions for violence and explain it away. When Trump was shot at a rally in Butler, PA, Democratic Party officials and the media not only denied any connection between the shooting and their inflammatory rhetoric but even blamed Trump himself. After all, he and his aspiring assassin were cut from the same cloth: “The gunman and Trump, at their opposite ends of a bullet’s trajectory, are nonetheless joined together as common enemies of law and democracy,” wrote David Frum in, of all places, the Atlantic. 

On this view, Trump has polarized the country so profoundly that he is ultimately responsible for the attempt on his own life. But that is another inversion of reality, tailored to suit the bloodlust of a dark regime. It is the logic of terror: It is only the violence of our victims that drove us to slaughter them. 

This self-serving logic not only gets the Left off the hook for past depredations; it serves as the pretext for future violence against Trump, his aides, and his supporters. After November 5, this weaponized narrative could be expanded to justify violence on a mass scale designed to break the republic.

Lee Smith is a bestselling author whose new book, “Disappearing the President: Trump, Truth Social, and the Fight for the Republic,” was published October 22. This article was first published at TomKlingenstein.com.

Authored by Charles de Quinsonas via BondVigilantes.com,

With the US Treasury curve yielding above 4%, high yield (HY) bonds still offer mid-single digit yields.

As of the end of September, US high yield, European high yield and emerging markets (EM) corporate high yield bonds were offering 7.0%, 6.1% and 7.4% respectively.

Credit spreads, however, have plummeted to multi-year lows and the eternal debate between all-in yield vs credit spreads continues.

Source: M&G, BofA Global Research, as at 30 September 2024

Credit spreads matter because, at an index level, they need to overcompensate for future defaults.

Otherwise, there would be no reason to invest in high yield bonds, as adjusted for default loss, high yield returns would be in line with the risk-free rate (or worse, if default losses were greater than credit spreads).

Therefore, credit spreads have two main components:

(i) default-implied spreads, which provide a forward-looking view on future defaults and recovery, and

(ii) excess spreads, which, simply put, represent the overcompensation of default risk.

Active management will aim to reduce default loss and increase excess spread.

To calculate the actual excess spreads across the US, European, and emerging markets high yield markets, one can subtract from credit spreads the realised subsequent twelve month default rate (adjusted by recovery value).

For example, the US high yield market had credit spreads of 440bps in September 2014. The subsequent 12 months (to Sep-2015) saw a 3% default rate with a recovery rate of 40%, leading to a default loss of 1.83%.

Therefore, investors who bought US high yield in September 2014 enjoyed an actual excess spread of 257bps (440bps minus 183bps of default loss).

Source: M&G, as at 30 September 2024

The results over time are surprising.

While the excess spread in the European high yield market consistently overcompensates for default risk, US high yield and emerging markets corporate high yield excess spreads were negative during some periods, i.e. realised one-year default losses were greater than credit spreads a year earlier.

However, this can be explained by one-off events, namely COVID-19 for US high yield and the Russia/Ukraine conflict for emerging markets high yield.

With that in mind, we believe median numbers are more representative.

Between January 2014 and September 2023, the median excess spreads of US, European and emerging markets high yield were remarkably similar, ranging from 280 to 310bps.

Taking today’s historically tight high yield credit spreads and using 300bps as our base case excess spread, we can derive the implied default loss expectation of the market for the next 12 months. As of end of September 2024, the implied default loss expectations were 0.1% for US high yield, 1.4% for European high yield, and 0.9% for emerging markets high yield. This compares to broker research expectations of 2.5-3% default rates for 2025, across the US, European and emerging markets high yield markets.

Even when adjusted for recovery rates, next year’s default losses are expected to be greater than what current credit spreads are pricing in.

Which will prevail in the next 12 months: excess optimism or excess spreads?

After hitting a record high in 2023, U.S. consumer spending for Halloween items like candy, decorations and costumes is expected to drop by $600 million to $11.6 billion, according to data from the industry group National Retail Federation (NRF).

Despite the decrease, Statista’s Florian Zandt notes that this still marks the second-highest expected spending in the past decade.

You will find more infographics at Statista

While the coronavirus pandemic was responsible for the most recent drop before the 2024 Halloween season, growth had been stagnant before the Chinese virus’ impact on public and social life around the world.

For example, after consumer spending increased by $2.2 billion between 2015 and 2017, 2018 and 2019 saw drops of $100 million and $200 million, respectively, compared to the previous year.

So while the implementation of social distancing rules was certainly one cause for the drop of $800 million or ten percent in comparison with 2019, the industry had been bracing for decline for some time before the pandemic.

Zooming in on what U.S. residents are spending their money on shows most will go towards costumes and decorations.

Additional NRF data indicates that overall consumers in the United States will allocate $3.8 billion each in both categories, with candy coming in second at $3.5 billion.

The greeting card industry, however, will hardly profit from Halloween, with approximately $500 million spent on this specific type of Halloween item.

Authored by Jennifer Kabbany via The College Fix,

A Harvard Memorial Church student program is slated to host a “Reading Taylor Swift as a Sacred Text” tonight.

The Tuesday evening event is organized by the Memorial Church Student Program Coordinator & Multifaith Engagement fellow.

“What can reading the texts that matter to us as sacred tell us about ourselves and our lives? Discover a new way to engage with the Taylor Swift canon that honors the important emotional and spiritual role her work plays in many peoples’ lives. Bring your favorite Taylor Swift song and we’ll bring the sacred reading practices,” the event description states.

The RSVP page also states the gathering is “open to people from all religious, ethical, and spiritual backgrounds.”

“We will be using Lectio Divina, an ancient Christian monastic reading practice, but the insights you gain from this practice will not necessarily be connected to the Christian tradition or ‘religious’ in nature. Students are invited and encouraged to bring insights and wisdom from their own lives, traditions, and backgrounds.”

Harvard is no stranger to Swift adoration.

It offered a class dedicated to the pop star last spring.

That class even hosted an all-nighter to review the release of her new album “The Tortured Poets Department.”

As The College Fix previously reported, the University of Florida’s Honors Program offered a course on Swift last semester.

As it relates to the intersection between Swift and religion, The Fix reported in July about a class at Duke University that involved Swift and the occult:

At Duke University, a first-year writing course called “Radical Magic,” will analyze why magic and the supernatural “have been coded as feminine, irrational, and sinister.” Students also will discuss why people accuse Taylor Swift of witchcraft.

Course instructor Cheryl Spinner told The Fix via email [at the time] her class will look at footage of Swift’s Eras Tour and “use gender and feminist studies to parse out what’s really going on with these accusations.”

Spinner said she had productive discussions in previous classes about the pop star, including the lyrics from one of her songs: “I leap from the gallows and I levitate down your street,” which Swift sings on a moving stage that appears to make her float.

The class also will examine the literacy quality of tarot cards, spells, and incantations. Their final project will be to create a grimoire, or spellbook that records “magical insights and oral traditions that might otherwise be forgotten,” according to Spinner.

An entire academic conference has also been dedicated to Swift in the past, zeroing in on topics such as gender, capitalism and feminism. 

Authored by Tsvetana Paraskova via OilPrice.com,

• Saudi Arabia aims to maintain its position as a major oil producer, ensuring global energy security.

• The country plans to increase its oil production capacity by 1.1 million bpd by 2027.

• Simultaneously, Saudi Arabia is committed to its renewable energy goals, targeting 44 GW of renewable energy capacity by 2030.

As Saudi Arabia prepares to tender 44 gigawatts (GW) of renewable energy projects, it will continue to maintain its oil-producing potential to ensure global energy security, officials from the Kingdom said at the annual investment forum in Riyadh on Tuesday.

Saudi Arabia, the world’s biggest crude oil exporter, will keep its maximum sustainable capacity of 12.3 million barrels per day (bpd) going forward.

By 2027, the Kingdom will have more than 1.1 million bpd of production of oilfields currently under development, which are expected to offset the natural decline of legacy fields.

Saudi Aramco, the state oil giant, plans to boost the production capacity of its Marjan, Berri, and Zuluf oilfields and add more supply from the Dammam crude oil development in 2027, according to a presentation at the Future Investment Initiative summit in Riyadh.

At the same time, Saudi Arabia plans to have tendered a total of 44 GW of renewable energy projects by the end of this year.

By 2030, it expects to have 130 GW of renewable energy projects, based on demand growth.

Even with the ambitious program to boost renewables and power grids, Saudi Arabia is not abandoning its pre-eminence in the global oil markets.

While the world is moving towards an energy transition, all forms of energy would be absolutely needed to ensure global energy security, Saudi Arabia’s Energy Minister, Prince Abdulaziz Bin Salman, said at the forum, as quoted by Amena Bakr, Senior Research Analyst at Energy Intelligence.

The Kingdom will “continue monetizing its energy resources while attending to climate change,” said the Saudi minister, the most influential minister in OPEC and OPEC+.

Earlier this month, Saudi Aramco’s chief executive Amin Nasser called for what he dubbed a reset in the transition plans for developing countries, citing strong projected growth in oil demand for the Global South.

The Dusseldorf-based German arms manufacturer Rheinmetall this week announced that it has completed delivery of twenty more 20 Marder 1A3 infantry fighting vehicles (IFVs) to Ukraine.

But its relationship with Kiev has gone much further, becoming among the very first major European arms companies to open a factory in Ukraine. This has provoked outrage among Kremlin officials, who are now warning that military action could be taken against the Rheinmetall plant.

Kremlin Spokesman Dmitry Peskov has told reporters in a briefing that “A plant of Rheinmetall, a German arms manufacturer, launched in Ukraine, is a legitimate military target for the Russian Armed Forces.”

“Certainly it is,” he emphasized in response to a question on whether the factory is now a target by being established inside Ukraine.

Not only is the German company going to produce armored vehicles, and maintain and repair them from inside the war-ravaged country, but it is even seeking to develop a local gunpowder and munitions plan.

TASS notes that Rheinmetall is NATO member Germany’s largest defense contractor. “It substantially profits from the Ukrainian conflict and anticipates further increased revenues. In 2023, its turnover went up by 12%, to 7.1 bln euros, with its net income growing by 9%, up to 0.6 bln euros,” the report reviews.

Rheinmetall has indicated it eventually plans to open no less than four military production installations inside Ukraine, with the ammo side expected to begin within the next two years.

The company downplayed the Tuesday threat from Peskov, saying the “production of weapons in Ukraine is well protected and this is not the first time they have heard threats from the Kremlin.” It plans to move forward despite the threats.

Among Russia’s key rationales for the February 2022 invasion was to ‘demilitarize’ Ukraine amid accusations that NATO is building up its military infrastructure inside the country which shares a large border with Russia. But now it appears the Western military alliance is rushing to do just that.

CEO of Rheinmetall AG, Armin Papperger, issued the following statement earlier this week: “Things are progressing. The first plant is already ready. The second one is on the way. And now I insist on speeding up all of this work, because we don’t have much time, we shouldn’t waste it.”

Papperger added, “We are fully committed to supporting Ukraine’s defense industry, ensuring that essential equipment can be produced and maintained within the country.”

Pro-Russian pundits have underscored that this makes peaceful settlement more & more unlikely:

No one doubts this. I hope that Russia will not be satisfied with such a “peace” with Ukraine.

“Ukraine will continue to arm itself, increasing its stockpiles of ammunition and equipment, even in the event of a peaceful settlement of the conflict,” Armin Papperger, head of the… pic.twitter.com/KfK982IQax

— Victor vicktop55 (@vicktop55) October 26, 2024

This past summer US intelligence officials made an astounding claim, later denied by Russia:

U.S. intelligence discovered that Russia planned to assassinate the chief executive of German arms manufacturer Rheinmetall which has been producing artillery shells and military vehicles for Ukraine, CNN and the New York Times reported on Thursday.

The plot to kill Rheinmetall CEO Armin Papperger was one of a series of Russian government plans to assassinate defense industry executives across Europe who were supporting Ukraine’s war effort, CNN reported, citing five unidentified U.S. and Western officials as saying the plot was discovered earlier this year.

Ukrainian officials and media have hailed the strong support from the German arms giant, saying of factory development in the country, “One down, three to go.” It remains uncertain what NATO would do in the event its factories are actually targeted, given this could induce Brussels to invoke Article 5.

Chinese billionaires have lost massive wealth due to the property market downturn and turmoil in the world’s second-largest economy. In response, Beijing has rolled out yet another stimulus package, this time on Tuesday, as the Communist Party of China seeks to appear more proactive in supporting the economy amid a decades-long, investment-driven growth model that has hit stumbling blocks over the last several years.

The multi-year economic downturn has roiled the billionaire class in China, with many losing their billionaire status and being downgraded to centi-millionaire. 

Financial Times cites new data from research group Hurun, which shows the number of dollar billionaires plunged by over one-third in the last three years. The destruction of the billionaire class has been met with a barrage of stimulus measures to address underlying structural problems (debt, fertility crisis, deflation, property market woes, ect…), crushing the economy into a slow growth regime.

Hurun data shows that at the 2021 peak, there were 1,185 dollar billionaires in China. By the second half of 2024, that number plunged to 753, or about a 36% plunge, surpassing a 10% drop in the renminbi’s value against the dollar over the same period. This year alone, the number of dollar billionaires in China tumbled 16%, when the renminbi only depreciated by 2.5% against the dollar. 

China’s decades-long investment-led growth boom in the property market minted billionaires upon billionaires. However, the downturn has wiped out many entrepreneurs with huge fortunes tied to property developer firms. 

Rupert Hoogewerf, chair of the Hurun Report, commented on the billionaire list, indicating it “has shrunk for an unprecedented third year running, as China’s economy and stock markets had a difficult year.”  

Topping the list is ByteDance founder Zhang Yiming. He surged to the top, beating out “bottled water king” Zhong Shanshan, with a net worth of $49.3 billion. 

The Hurun report said that newly minted billionaires represent a “new generation of entrepreneurs in China that is much more international than their predecessors.” 

As we explained early Tuesday following the announcement of yet another Chinese stimulus package, the 10 trillion yuan package may be insufficient to kickstart the economy … and explained in “Why China’s Rally Won’t Have Legs” … is that China’s peak credit impulse – the all-important reflationary variable that propagates across the global economy – has dwindled, and so has the boost to growth.

In other words, to achieve the same stimulus level as a % of GDP, China would need to inject tens of trillions more. And since it can’t do that, at least not without its middle class kicking and screaming (literally), China’s house price will continue to slide, having recently tumbled by a record YoY amount…

What does this mean for the Chinese billionaires tied to the housing market? Well, the pain train will continue until Beijing unleashes a real stimulus bazooka.