GM Reports “Solid” Demand For High Margin Vehicles, Tweaks Guidance Higher

GM Reports “Solid” Demand For High Margin Vehicles, Tweaks Guidance Higher

Slow and steady is often the best case when you’re operating a low margin legacy auto business, and for now General Motors looks to be on course, despite the softening overall trend in autos.

The company reported “solid” U.S. demand for high margin vehicles and posted better than expected results this morning, tweaking its full year guidance higher in the process, according to Bloomberg.

On Tuesday, GM raised its 2024 adjusted earnings forecast to at least $14 billion, up from $13 billion. While competitors cut prices to clear inventory, GM maintained strong profits from high-demand models like the GMC Yukon and Chevy Silverado, offsetting losses in its EV segment and struggles in China.

Source: Bloomberg

Chief Financial Officer Paul Jacobson said on Tuesday morning: “Our year-over-year performance has been very strong. We’ve been able to grow retail share with above average prices, below average incentives and well managed inventory. This has put us in a position to update guidance once again.”

The Bloomberg report said US new vehicle sales have declined for two consecutive quarters, dropping 1.9% in the latest period, as high prices and financing costs deter buyers. However, GM preserved margins through price discipline and inventory management.

For the quarter ending Sept. 30, GM reported flat net income of $3 billion, with adjusted earnings rising to $2.96 per share, beating analyst expectations of $2.45.

GM raised its 2024 adjusted automotive cash flow forecast to $12.5-$13.5 billion, up from a previous high of $11.5 billion, and ramped up stock buybacks, repurchasing nearly 250 million shares in the past year.

CEO Mary Barra commented on the upcoming election: “We’ll continue to engage constructively with the policy making process regardless of the election outcome. We’ll make adjustments to the extent that we can to continue to drive growth and profitability.”

This drove its per-share earnings beat, though GM slightly trimmed its full-year net income outlook by $300 million to $11.1 billion. Despite increasing EV production, the company continues to lose money on electric models, with CEO Mary Barra pledging to achieve profitability in the segment “as quickly as possible.”

Tyler Durden
Tue, 10/22/2024 – 12:45

via ZeroHedge News https://ift.tt/Wb38peI Tyler Durden

A Look At The Legal Issues Surrounding The 2024 Election

A Look At The Legal Issues Surrounding The 2024 Election

Authored by Sam Dorman via The Epoch Times (emphasis ours),

The run-up to the 2024 election has seen a number of consequential court cases and rulings related to how voters cast their ballots and how governments process the election results.

Some of the cases remain ongoing, and if 2024 is anything like 2020, the nation could see a flurry of lawsuits after Election Day with candidates also challenging the outcomes.

Illustration by The Epoch Times, Getty Images, Shutterstock

It is, however, unclear how far any legal case will go, with experts doubting that a Supreme Court case will result from the ongoing slate of legal challenges.

Judges throughout the country … are loath to be perceived as disenfranchising individuals,” Landmark Legal Vice President of Legal Affairs Mike O’Neill told The Epoch Times.

“If they have an exit ramp to either dismiss a case or a procedural exit ramp to dismiss a case, they’re going to take [it]—even despite the fact that there might be evidence of either some sort of failure to follow proper procedures or failure to follow necessary registration procedures.”

Here are some legal issues to watch heading into November.

Mail-In or Absentee Ballots

Perhaps the most contentious election issue in 2020 was the widespread use of mail-in ballots, brought on by the government response to the COVID-19 pandemic.

survey from the U.S. Election Assistance Commission, a federal body established by Congress, showed that the number of mail-in ballots increased by 20 percent between 2016 and 2020.

“Because we’re no longer in the COVID situation, we’re not going to see the same level of court-driven outcomes in our elections,” Public Interest Legal Foundation President J. Christian Adams told The Epoch Times. “I think that’s the big difference between now and 2020.”

recent lawsuit in Pennsylvania, one of the more hotly contested states in 2020, dealt with how to process mail-in ballots that lack proper dates and other information. A practice known as ballot curing allows voters to correct deficiencies in their ballots after submitting them.

Ballots come in, they take quite a bit more processing, making sure that it’s the person who voted to send him in all those things, and so it’s just a slower process,” Honest Elections Project Vice President Chad Ennis told The Epoch Times.

Earlier this month, the state supreme court declined to hear Republicans’ challenge to the state notifying voters of deficiencies in their ballots.

In Nevada and Mississippi, similar challenges surround ballots received after Election Day.

Voters make their selections at voting booths inside an early voting site in Hendersonville, N.C., on Oct. 17, 2024. Melissa Sue Gerrits/Getty Images

The issue reached the U.S. Court of Appeals for the Fifth Circuit, which heard arguments in September over the Republican National Committee’s (RNC’s) claim that Mississippi should not count those ballots—even if properly postmarked.

Texas passed an omnibus election security package in 2021 with provisions that were halted by a district court judge this month.

More specifically, Judge Xavier Rodriguez blocked Texas from preventing compensation for assisting voters with their mail-in ballots.

He also enjoined a restriction on compensation for vote harvesting services, which the law defined as “in-person interaction with one or more voters, in the physical presence of an official ballot or a ballot voted by mail, intended to deliver votes for a specific candidate or measure.”

Both provisions violated the Voting Rights Act, according to Rodriguez.

In Michigan, North Carolina, and Pennsylvania, Republicans have also filed lawsuits challenging ballots submitted from individuals who are overseas.

A law known as the Uniformed and Overseas Citizens Absentee Voting Act requires states to allow ballots from Americans who live overseas, but Republicans have argued that state officials in North Carolina and Pennsylvania are illegally exempting overseas Americans from verification requirements.

They similarly argued that Michigan officials have registered people who don’t reside in the state.

Certification

Fulton County Superior Court Judge Robert McBurney heard arguments on Oct. 1 over Democrats’ challenge to Georgia state election board policies surrounding certification.

One of the rules requires officials to make a “reasonable inquiry” before certifying the results while another allows officials to review documentation “created during the conduct of elections.”

Georgia’s State Election Board members discuss proposals on election rule changes at the state capitol in Atlanta on Sept. 20, 2024. Mike Stewart/AP Photo

McBurney seemed inclined to uphold the rules but with clarification of the reasonable inquiry rule, which he said was “vague.”

On Oct. 15, he issuedruling stating that election superintendents couldn’t refuse to certify election results or abstain from doing so, even under Georgia’s new rule.

He added that delays in election officials receiving information related to the election was “not a basis for refusing to certify the election results or abstaining from doing so.”

Another ruling by McBurney, on Oct. 15, held that the Georgia election board had acted too closely to an election when it tried to impose a rule requiring ballots be counted by hand.

The following day, Superior Court Judge Thomas Cox issued a ruling invalidating that rule and six others from the state election board—including the one requiring election officials to conduct a “reasonable inquiry.” The RNC quickly appealed the decision.

Fulton County Superior Judge Robert McBurney in Atlanta on May 2, 2022. Ben Gray/AP Photo

Voter Rolls

The Department of Justice has sued both Alabama and Virginia over their attempts to clean up their state’s voter rolls prior to the election.

On Oct. 16, a federal judge in Alabama halted the state’s program with a preliminary injunction.

Both lawsuits cite something known as the “Quiet Period Provision” of the National Voter Registration Act, which says: “A state shall complete, not later than 90 days prior to the date of a primary or general election for Federal office, any program the purpose of which is to systematically remove the names of ineligible voters from the official lists of eligible voters.”

Multiple disputes over election rolls have emerged in Arizona, where election officials found that nearly 100,000 voters were able to vote despite not providing proof of citizenship.

The U.S. Supreme Court intervened in August by halting the effects of a lower court decision that blocked Arizona’s law requiring officials to reject state voter registration forms that lacked proof of citizenship.

More recently, a federal judge ruled against an Arizona group’s legal effort to force county officials to investigate ahead of the upcoming general election whether more than 40,000 registered voters are U.S. citizens.

The RNC has raised other allegations about noncitizen voting in Maine as well as Nevada, where the RNC and the Trump campaign sued the secretary of state.

Hearings in the Fifth Circuit and Georgia have also raised questions about the Purcell principle, which comes from the U.S. Supreme Court’s 2006 decision in Purcell v. Gonzalez.

It generally cautions against election policy changes just before voters head to the polls.

The court’s opinion didn’t set out a specific timetable for allowable changes to election procedures. Instead, it reversed an appeals court decision striking down Arizona’s voter ID law.

Read the rest here…

Tyler Durden
Tue, 10/22/2024 – 11:05

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Abercrombie & Fitch Ex-CEO Arrested In Florida On Sex Trafficking Charges 

Abercrombie & Fitch Ex-CEO Arrested In Florida On Sex Trafficking Charges 

The ex-CEO of Abercrombie & Fitch was arrested in South Florida on Tuesday morning and faces sex trafficking-related charges brought by federal prosecutors in New York, NBC News reported. This comes one year after former A&F CEO Mike Jeffries was accused of running a giant sex-trafficking ring that exploited young men who wanted to become models for the brand. 

NBC said Jeffries’ associates, Matthew Smith of West Palm Beach, Florida, and James Jacobson of Wisconsin, were also charged in connection with the sex trafficking case. This news comes hours before federal prosecutors in Brooklyn plan to hold a press conference to announce the arrests of a “former CEO of a major company” and two others in a “sex trafficking and interstate prostitution case.”

In October 2023, A&F and the former CEO were sued. Court documents at the time depicted a horror story wherein Jeffries, the once-celebrated architect of the brand’s provocative image, was accused of masterminding the despicable sex trafficking operation. 

A BBC investigation in the fall of 2023 also revealed systematic abuse involving Jeffries’ partner Matthew Smith, and associate James Jacobson, under the pretense of offering modeling gigs. 

The BBC’s two-year investigation involved 12 witnesses. It showed a systematic operation spanning from the 1990s through 2015, where Jeffries, aided by Smith and James Jacobson, allegedly lured young men into an abusive quagmire. The promise of lucrative modeling contracts with A&F baited the trap, often leading to coercive sexual encounters at various luxury locations worldwide, from New York to Marrakesh.

Attorney Brittany Henderson of Edwards Henderson, the law firm representing the plaintiff in the case, stated to CNBC: 

“Today’s arrests are monumental for the aspiring male models who were victimized by these individuals.”

“Their fight for justice does not end here. We look forward to holding Abercrombie and Fitch liable for facilitating this terrible conduct and ensuring that this cannot happen again.” 

There’s no word if Jeffries or associates had any connections with Sean “Diddy” Combs, who was arrested in New York last month and charged with sex trafficking, racketeering, and transportation to engage in prostitution. 

Separately, in recent years, Jeffrey Epstein’s trafficking scheme of minors to politically connected and financially powerful people was unveiled for the world to see; but again, there is no apparent link between Jeffries and Epstein either… for now.

Tyler Durden
Tue, 10/22/2024 – 10:10

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“The Risks Are Building To The Downside”: IMF Cuts Global Growth Forecast After Warning Global Debt To Hit $100 Trillion

“The Risks Are Building To The Downside”: IMF Cuts Global Growth Forecast After Warning Global Debt To Hit $100 Trillion

The International Monetary Fund lowered its global growth forecast for next year and warned of accelerating risks from surging debt, to global wars to trade protectionism, even as it credited central banks for taming inflation without sending nations into recession.

In its World Economic Outlook report published on Tuesday morning, the IMF forecast global output will expand 3.2%, 0.1 percentage point slower than a July estimate It left the projection for this year unchanged at 3.2%.

In terms of next year’s outlook, the IMF forecast for the euro area was downgraded to 1.2%, 0.3% lower than in July, due to persistent weakness in manufacturing in Germany and Italy. On the other end, the US forecast for 2024 and 2025 was upgraded to 2.8% and 2.2%, up by 0.2% and 0.3% respectively, due to stronger consumption, but really because of the endless Biden-admin stimulus in the form of a wartime-level budget deficit which is now at 6% of GDP, and which has led to an exponential surge in US debt issuance.

The projection for Mexico was cut for this year by the most among major economies, as well as for next year, based on the impact of monetary policy tightening. China’s growth outlook for this year was cut to 4.8% from 5% previously on weakness in the real estate sector and low consumer confidence, with the 2025 forecast maintained at 4.5%.

The IMF now forecasts that global inflation will slow to 4.3% next year from 5.8% in 2024, both estimates reduced by 0.1% from July. At the same time the IMF slashed its global import and export forecasts for advanced economies for 2024 and 2025, by 0.3% and 0.2% respectively, while boosting expectations for emerging markets.

The fund has been cautioning for years that the world economy is likely to expand at its current mediocre level in the medium term — too little to give nations the resources they need to reduce poverty and confront climate change.

“The risks are building up to the downside, and there is a growing uncertainty in the global economy,” Chief Economist Pierre-Olivier Gourinchas said in a briefing. “There is geopolitical risk, with the potential for escalation of regional conflicts,” that could affect commodity markets, he said. “There is a rise of protectionism, protectionist policies, disruptions in trade that could also affect global activity.”

Bloomberg also notes that while the IMF forecast doesn’t explicitly mention the US election, the November 5 main event looms over annual meetings that will see finance ministers and central bankers from almost 200 nations gather at the IMF and World Bank headquarters in Washington, just three blocks from the White House. Bloomberg recently found that Donald Trump’s vow to impose 60% tariffs on imports from China and 10% duties on those from the rest of the world would likely spur inflation and pressure the Federal Reserve to raise interest rates. The analysis also completely ignored that Trump may simply be using the threat of tariffs as a negotiating tactic meant to spark more beneficial terms of trade.

The global growth forecast comes one week after the IMF flagged its mounting concern about global public debt, which is expects to reach $100 trillion, or 93% of world gross domestic product, by the end of this year. The surge is driven by the US and China, of course.

The fund is urging governments to make tough decisions to stabilize borrowing. With little political appetite to cut spending amid pressures to fund cleaner energy, support aging populations and bolster security, the “risks to the debt outlook are heavily tilted to the upside,” the IMF said.

The IMF applauded central banks for slowing inflation without tipping economies into recession, which Gourinchas called “a major accomplishment” based on expectations for the necessary steps expected a couple of years ago to achieve disinflation.

Still, the world faces risks from monetary policy hitting growth more than intended, worsening sovereign debt pressures in emerging and developing economies, and renewed spikes in food and energy prices due to climate shocks, war and geopolitical tensions, the IMF said.

Tyler Durden
Tue, 10/22/2024 – 09:55

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Escobar: Date With Destiny – BRICS Offers Hope In A Time Of War

Escobar: Date With Destiny – BRICS Offers Hope In A Time Of War

Authored by Pepe Escobar,

This is it. A date with destiny. All set for the most crucial geopolitical/geoeconomic gathering of the year and arguably the decade: the BRICS Summit under the Russian presidency in Kazan, capital of Tatarstan, where Sunni Tatars coexist in perfect harmony with Orthodox Christians.

All the excruciating work by sherpas and analysts throughout 2024 – supervised by the lead Russian diplomat in charge of BRICS, Deputy Foreign Minister Sergey Ryabkov – converged to three final, separate key meetings in Moscow before the summit, grouping BRICS finance ministers and central bank governors, working groups, and the Business Council.

All that in a context that is now familiar for the Global Majority. The combined GDP of the current BRICS nations is over $60 trillion, way ahead of the G7; their average growth rate by the end of this year is projected to be 4%, higher than the 3.2% global average; and the bulk of economic growth for the near future will come from BRICS member-nations.

Even before the meeting of finance ministers and central bank governors, Russian Finance Minister Anton Siluanov was stressing that BRICS is keen to bypass “politicized” Western platforms – a subtle reference to the sanctions tsunami and the weaponization of the US dollar – as BRICS work to create their own, Global Majority-friendly international payments system.

The context for what will be decided in Kazan this week is no less than incandescent, as the uncontrolled chaos of the Hegemon’s Forever Wars – from Ukraine to West Asia – has even materially affected the heavy work of BRICS and the necessity to build a new international system of geoeconomic relations practically from scratch.

A credible war escalation scenario may have been thwarted by the leak of secret high-level intel to the Five Eyes on the preparations by Israel-US to strike Iran. The strike will eventually happen – with dire consequences – but probably not this week, when it could have been timed to explicitly, and completely, disrupt the summit in Kazan and expel it from global headlines.

The joint statement by the BRICS finance ministers and central bank governors may not sound too adventurous, but the constraints reflect not only caution when facing a dangerous, cornered Hegemon, but internal contradictions among BRICS members.

The statement recognizes “the need for a comprehensive reform of the global financial architecture to enhance the voice of developing countries and their representation.” Yet it remains clear the US has less than zero interest in a profound reform of the IMF, the World Bank and the Bretton Woods system. Russia and China, especially, are fully aware that what is needed is a post-Bretton Woods.

The statement is more forceful on the BRICS Cross-Border Payments Initiative, dubbed BCBPI, welcoming “the use of local currencies in international trade” and “the strengthening of banking networks” to enable them. Yet everything for the moment is only “voluntary and non-binding.” Kazan is expected to give the process some edge.

‘Not an Anti-Western Group, Just a Non-Western Group’

In his speech at the BRICS Business Council last Friday and in a subsequent roundtable with heads of media groups of BRICS members, President Putin in fact summed up all the major dossiers. Here are the highlights.

On the role of the Shanghai-based NDB, the BRICS bank: Russia “will expand the capabilities of the NDB”; the bank should become the main investor in major technological and infrastructure projects for BRICS members and the wider Global South. That makes total sense, with the NDB financing infrastructure development and commercially involved with local, private companies. Incidentally, the next president of the NDB will be Russian; the top candidate is Aleksei Mozhin, who was previously at the IMF.

On creating a single digital infrastructure for BRICS: already on. Russia is working on “the use of digital currencies in investment processes in the interests of other developing economies.” That ties up with BRICS work on their own version of SWIFT for international financial transactions. And also ties up with BRICS Pay – a debit card whose first trial run happened during the Business Council last week, not dissimilar to AliPay in China, and soon to be rolled out across BRICS members.

A BRICS single currency:

“Not being considered yet, this issue is not ripe yet.”

De-dollarization, Putin stressed, is proceeding step by step:

“We’re taking individual steps, one after another. As regards finance, we did not drop the dollar. The dollar is the universal currency. But it wasn’t us – we were banned and barred from [using] it. And now 95% of all the external trade of Russia is denominated in national currencies. They did it themselves with their own hands. They thought we would collapse.”

The challenge for a unified BRICS currency: That “requires thorough economic integration (…) Apart from high level of integration among BRICS members, the introduction of a single BRICS currency would involve comparable monetary quality and volume (…) Otherwise, we will face even bigger issues than those that occurred in the EU.” Putin recalled that when the euro was introduced in the EU, their economies were neither comparable nor equal.

Putin will have at least 17 bilateral meetings in Kazan. He emphasized, once again, that “BRICS is not an anti-Western group, it’s just a non-Western group.”

And he named the key economic drivers in the near future: Southeast Asia and Africa. Development “will objectively take place primarily in BRICS member countries. This is the Global South. This is Southeast Asia. This is Africa. Positive growth will exist in powerful countries such as China, India, Russia, and Saudi Arabia, but the countries of Southeast Asia and Africa will show faster growth for several reasons.”

He also highlighted the top infrastructure development projects among BRICS and the Global South: the Northern Sea Route – which the Chinese define as the Arctic Silk Road – and the International North-South Transportation Corridor (INSTC), with the BRICS triad Russia-Iran-India as the key partners. On the Northern Sea Route, Putin highlighted how “we are building an icebreaker fleet that has no peers in the world. It’s going to be a unique fleet, seven nuclear icebreakers and 34 diesel-propelled, high-class, heavy-duty icebreakers.”

On the Russia-China strategic partnership: it’s one of the key factors of stability in the world; in the relations between the two, “there are no elders or youngers.”

On the Great Chessboard, “Russia does not interfere in relations between the USA and China,” even as “Europeans have been dragged into Asia through NATO. Nobody is asking the Europeans whether they want to spoil their relationship with China, whether they want to use NATO entities to enter Asia and to create a situation that would cause concern for the region, for China specifically. Still, they are dragged like puppies.”

Forever Wars Target BRICS

There will be a special session on Palestine in Kazan with BRICS members plus BRICS Outreach – as in partners (Turkiye is included). Putin believes that “dissolving the Middle East Quartet was a mistake.” The Quartet included Russia, US, UN, and EU. In theory, it should have mediated the Israel-Palestine peace process. In practice, it didn’t.

The notorious warmonger Tony Blair was part of the Quartet. Diplomatically, Putin said, “I do not intend to accuse the United States in every aspect here, but unfortunately it was a wrong thing to do to disband the four [the Quartet].”

He re-emphasized that “Russia has consistently maintained the view that the United Nations Security Council’s decision to establish two states – Israel and Palestine – should be implemented.” And, significantly, he added that “Russia is in ongoing contact with both Israel and Palestine.”

That may be interpreted as strategic mediation, and serious back-channel exchanges. Yet he did not venture head on into the fire, just saying he hopes the “endless exchange of blows” between Israel and Iran will stop, while adding that “searching for a compromise in the Arab-Israeli conflict is possible, but this is a very delicate area.”

All of the above is highly significant for the BRICS context because the Forever Wars in West Asia have been seriously interfering with the work within BRICS. And on top of it, the Forever Wars, cold, hybrid, and hot, are in fact essentially directed against three BRICS members, Russia, Iran and China – not by accident described as the Top Three existential threats to the Hegemon.

And that inevitably brings us to Ukraine. Putin emphasized, “the Russian army has become one of the most combat effective and high-tech armies in the world (…) When NATO will get tired of waging this war against us, just ask them. We were ready to continue fighting, to continue the struggle, and we will have the upper hand.”

Confirming what crack military analyst Andrei Martyanov has been studying for years, Putin explained how modern warfare is the war of mathematicians – something that totally escapes NATO armchair warriors: “I have heard from the people that fight on the ground that today’s war is the war of mathematicians. Radio-jamming devices would be effective against certain delivery vehicles and they would suppress them. The other side has, for example, calculated and reckoned what is the counterforce and reprograms the software of its striking assets in a week or three weeks.”

As for the battleground, with the “rules-based international order” meeting its humiliating demise in the black soil of Novorossiya, Putin could not be more emphatic on the “Nuclear Ukraine” gambit: “It is a dangerous provocation because any step in this direction will face a response (…) I will say it outright Russia will not allow this to happen no matter what.”

The stakes in Kazan could not be higher. By the end of the week, the Global Majority will know whether Kazan will go down in history as the landmark of a new, emerging system of international relations, or if crass divide and rule tactics will keep postponing the inexorable demise of the Old Order.

Tyler Durden
Tue, 10/22/2024 – 09:05

via ZeroHedge News https://ift.tt/TaMundz Tyler Durden

Senior US Energy Official Urges Need To “Tighten Screws” As Russian LNG Flows Continue 

Senior US Energy Official Urges Need To “Tighten Screws” As Russian LNG Flows Continue 

Following Russia’s invasion of Ukraine in early 2022, the US, Europe, and other G7 nations imposed the most extensive sanctions and trade restrictions on Moscow to paralyze, then collapse, President Vladimir Putin’s oil/gas industry that funds the war machine. However, over two years later, these Western sanctions have royally and embarrassingly backfired, with Russia’s economy steadily growing. 

On Tuesday, US Assistant Secretary for Energy Resources Geoffrey Pyatt told Bloomberg Television’s Haslinda Amin that Washington will “drive down the down the revenues which Russia enjoys from its oil and gas resources, which go to pay for a brutal and unprovoked invasion against Ukraine. Our price cap policy was designed to avoid disruptions of global crude oil supply, which would cause a spike in prices, which would mean that Russia would get even more revenue for its oil exports. So we’re looking to ensure stability in global supplies while at the same time driving down Russia’s revenues.” 

Pyatt continued:

India has been an excellent partner in the implementation of that policy, specifically through the work that India has done in order to encourage its companies, its purchasers of Russian crude oil, to do so within the framework of the price cap rules.

As Minister Puri says, and he said this directly to me, this the tougher you Americans are on the enforcement of the price cap, working with your G7 colleagues, the better the price I will get for the crude oil that I need to buy to drive the Indian economy. So our goals are convergent. I would also note in this regard the very clear messages that Minister Puri and the Indian government have delivered on the question of Russian gas exports, which is the other side of the equation.

And a lot of the work that my team has led on the enforcement of our sanctions against future Russian energy products, projects like Arctic LNG two where Minister Puri and the Indian Government have been clear that they are not going to engage in that market either.”

Bloomberg’s Amin asked: “We have India buying Russian oil, we have China buying sanctioned Russian LNG … Are you considering retaliatory measures perhaps on China on the back of that?” 

Pyatt responded: 

So let me talk about the LNG sanctions in particular, because I think it’s important to understand what’s happening here. Our goal on our LNG sanctions is to ensure that Novatek in particular is not able to take the gas that Gazprom used to send to Europe through pipeline exports and requesting that gas to global markets.

We’ve been particularly focused on the Kremlin’s flagship project, which is Arctic LNG two …  you’ve seen a very aggressive program of Western sanctions against Arctic LNG two … against ships that load from Arctic LNG to against the technology providers that are provided equipment to facilitate that project.

So far, and I haven’t checked this morning’s news, but as of yesterday, not one cargo loaded by Arctic LNG two has found an international market. So our policy is working. It’s working because we’re coordinating very, very closely with our partners across the G7 and in ports that are potential destinations for those cargoes.

I can’t speculate on future sanctions actions, but what I can tell you is that we’re paying very, very close attention to where sanctioned Russian cargoes are heading. And you can be assured that the Biden administration is going to continue to tighten the screws against Russia’s LNG exports because that is a key source of the revenues that Putin uses to carry forward his war.

Here’s the interview:

In markets, European NatGas prices edged above €40 a megawatt-hour on near-term supply risks from tensions in the Middle East to production outages in Norway. 

Western elites are tightening the screws on a nuclear power in an attempt to cause an economic collapse in Moscow. What could possibly go wrong here?

Tyler Durden
Tue, 10/22/2024 – 08:45

via ZeroHedge News https://ift.tt/XuIqaE5 Tyler Durden

Futures Slide As Global Yields Surge

Futures Slide As Global Yields Surge

US futures are lower, extending yesterday’s losses, as treasuries extended their recent rout sending 10Y yields surging briefly above 4.22% before retracing some of the move as traders priced in the growing probability of a red sweep. The Treasury rout has gone global, pushing interest rates across the world higher. As of 8am ET, S&P 500 futures dropped 0.3%, pointing to the first back-to-back decline in about 30 sessions for the gauge. Nasdaq 100  futures underperformed, dropping 0.4%, as tech stocks start to groan against the weight of surging rates; megacap tech all showed declines: TSLA -0.8%, GOOG -0.5%, AMZN -0.5%. The yield on 10-year Treasuries added one basis point to 4.21% after an 11 basis-point surge at the start of the week; the USD is flattish after reversing a modest earlier loss. Commodities are mixed: Oil added 0.5%, base metals are lower, and precious metals are higher: silver rises +1% to $34.5, a new 12 year high. The only macro today are the October Philly Fed and Richmond Fed reports.

In premarket trading, Philip Morris rises 2% after lifting its profit outlook amid strong sales of tobacco alternatives such as Zyn and IQOS. 3M climbed 4% after increasing the low end of its 2024 profit forecast and reporting 3Q earnings that topped analyst estimates as a push to boost productivity gained traction. Polaris tumbled 7% after the automaker lowered its full-year earnings per share and sales guidance. Here are some of the biggest US movers today:

  • Cheesecake Factory (CAKE) gains 3% following a report that activist investor JCP Investment Management has built a stake in the restaurant chain.
  • Danaher (DHR) rises 2% after the life-sciences firm reported 3Q profit and sales that topped the average analyst estimate.
  • General Electric (GE) drops 4% as sales fell short of Wall Street’s expectations last quarter, tempering enthusiasm for its improved profit outlook as the jet engine maker grapples with supply-chain limitations that are weighing on deliveries.
  • General Motors (GM) ticks 1% higher after signaling solid US demand for its highest-margin vehicles even as the broader market softens, posting better-than-expected results for the latest quarter.
  • IRhythm (IRTC) jump 20% after the company said it received FDA 510(k) clearance for design updates to its Zio AT device.
  • Medpace (MEDP) drops 12% after the health care services company cut its revenue forecast for the full year.
  • Zions (ZION) rises 2% as 3Q earnings per share beat estimates.

Investors further pared paring back their expectations for Fed rate cuts after central bank officials indicated a preference for reducing rates at a slower pace after recent resilient economic data. The inflationary impact of a possible Donald Trump presidential win is also weighing, given his promised tax cuts and trade tariffs could ultimately entail higher rates.

“This is very clearly linked to trading a victory of the Republicans — and therefore to an agenda which would be much more inflationist than that of the Democrats. We’re in a market that is betting on Trump,” said Christopher Dembik, senior investment adviser at Pictet Asset Management. “The rise in yields is starting to threaten equity markets.” (see more here “Wall Street Going “All-In On Trump“.”)

Elsewhere, exposure to the S&P 500 has reached levels that were followed by a 10% slump in the past, Citigroup Inc. strategists said. Still, despite the mounting risks, the current winning streak for US stocks ranks among the very best since 1928, according to data compiled by SentimenTrader. And even though US equities are expensive, going underweight is a tough call for investors in the environment where S&P 500 reached 47 record highs this year starting from January, said Vera Fehling, DWS Europe chief investment officer.

“If you said then: ‘things are looking quite stretched’ — you would have massively underperformed,” she added. “It’s difficult to explain going into the end of such a year with a significant underweight in US equities.”

European equities appear cheap by comparison and got even cheaper on Tuesday after the Stoxx 600 benchmark declined 0.8%, led by real estate and utilities sectors, which suffer when the cost of borrowing money rises. Major markets are all lower (UKX -0.6%, SX5E -0.4%, SXXP -0.7%, DAX -0.1%.) with Spain lagging. SAP is driving the tech sector to outperform after the German software giant delivered a beat on several key metrics in the third quarter and boosted some elements of its guidance for the full year. ING shares slip as Barclays downgraded the bank to equal-weight from overweight. Here are the most notable European movers:

  • SAP shares gain as much as 5.9%, reaching a record high, after the software giant delivered a beat on several key metrics in 3Q and boosted some elements of its guidance for the full year.
  • DNB Bank shares advance as much as 5.1% after Norway’s largest lender reported what Citi says were “impressive” quarterly results, with revenue beating estimates amid the best 3Q for fees.
  • ING shares decline as much as 1.7%, the worst-performing stock on the Stoxx 600 Banks Index, as Barclays cut the recommendation on the lender to equal-weight from overweight.
  • Traton shares rise as much as 5.4% after the truck maker issued preliminary third-quarter results ahead of expectations, with its International and Scania units driving the beat.
  • Logitech shares gain as much as 4.2% after the Swiss maker of computer accessories boosted its operating income expectations for the full year.
  • Saab shares advance as much as 5.9%, the most since June, as analysts praise the Swedish defense firm’s third-quarter order intake and cash flow.
  • Boliden shares climb as much as 7.5%, after the miner reported 3Q revenue that beat the average analyst estimate, with Morgan Stanley noting mines and smelter-production volumes came in higher than expected.
  • Randstad shares rise as much as 5.1% after the Dutch staffing company said that it has seen stable volumes in the first weeks of October, adding that it expects to benefit from easier 4Q comparables.
  • Morgan Sindall shares rise as much as 11% after the construction and regeneration group said its annual results will be significantly ahead of expectations, driven by its Fit Out division that designs, builds and refurbishes commercial and office spaces.
  • IHG shares drop as much as 2.8% after the hotel operator reported third-quarter revenue per available room that Morgan Stanley said missed consensus estimates.
  • Eurofins Scientific shares drop as much as 12% after the laboratory-testing company reported third-quarter revenue that missed estimates.
  • Hunting shares plunge as much as 19%, the most in over two years, after the energy services provider cut its annual earnings guidance due to challenges within its US onshore division that caused its Titan unit to disappoint, according to analysts.

So far about 47% of MSCI Europe companies reported results below expectations while only 27% delivered beats, according to data compiled by Bloomberg Intelligence. L’Oreal is set to report earnings later today, with analysts watching the impact of Chinese economic weakness on the stock.

Earlier in the session, Asian stocks fell on Tuesday, dragged by weakness in the technology and financial sectors, amid lower expectations for Federal Reserve interest-rate cuts. The MSCI Asia Pacific Index fell as much as 1.1%, with TSMC and Commonwealth Bank of Australia among the biggest drags. The decline follows comments from some US central bank officials signaling they favor a slower pace of rate reductions. Australian and Korean benchmarks were among the biggest decliners. Japanese stocks slid as uncertainty surrounding the Oct. 27 general election weighed on local markets. Stocks in India were also lower, led by automakers amid lackluster trading debut for Hyundai Motor Co.’s local unit. Stocks gained in Hong Kong after declining on Monday. China’s commitment to delivering stimulus is an ongoing focal point for traders in addition to the US presidential vote, which is about two weeks away. Focus is also turning to earnings performance this results season, which could help determine the near-term path for the MSCI Asia gauge.

In FX, the Bloomberg Dollar Spot Index was flat after rallying 0.4% on Monday. One-month implied volatility in BBDXY stands above 9.61, fresh cycle high; risk reversals on the tenor steady around 0.5 vol The Australian and New Zealand dollars outperformed their Group-of-10 peers as higher bond yields and gains in Chinese equities boosted sentiment.

In rates, treasuries fell for a second day, adding to Monday’s steep selloff as Fed officials indicated a preference for reducing rates at a slower pace. US 10-year yields rise 2 bps, topping 4.2% for the first time since July. Oil also continues to rise, adding to upward pressure on yields from shifting Fed policy outlook and focus on next month’s US presidential election and fiscal outlook. European government bond are also lower, with UK and German 10-year borrowing costs rising 3 bps and 4 bps respectively. Italy 10-year is ~3bp cheaper vs Treasuries, underperforming amid 7- and 30-year bond syndication. Treasury auctions this week include Wednesday’s $13b 20-year bond reopening and a $24b 5-year TIPS sale Thursday.

In commodities, oil prices reversed course, with WTI now up 0.5% at $71 a barrel. Spot gold rises $13 to just below Monday’s record high. Gold rose – approaching Monday’s record high – with haven demand coming from traders focused on the conflict in the Middle East and the looming US vote. Silver jumped 1% to hit $34.50, a new 12 year high.

US economic data calendar includes October Philadelphia Fed non-manufacturing activity (8:30am) and Richmond Fed manufacturing index (10am); Fed’s Harker is scheduled to speak at 10am

Market Snapshot

S&P 500 futures down 0.3% to 5,877.00
Brent Futures down 0.5% to $73.95/bbl
Gold spot up 0.6% to $2,736.07
US Dollar Index down 0.10% to 103.90

Top Overnight News

  • Share buybacks on mainland China’s biggest exchanges have soared to a record high this year as Beijing pushes for companies to return cash to shareholders as part of its efforts to revive a flagging stock market. There have been Rmb235bn ($33bn) in buybacks across mainland-listed shares so far in 2024, more than double last year’s total and far surpassing the previous record of Rmb133bn in 2022, according to Chinese financial data provider Wind. FT
  • U.S. rules that will ban certain U.S. investments in artificial intelligence in China are under final review, according to a government posting, suggesting the restrictions are coming soon. RTRS
  • China’s youth unemployment rate dips in Sept to 17.6%, down 120bp from 18.8% in August. CNBC
  • HSBC’s cost-cutting shakeup intensified. The lender said it will combine its global commercial and institutional banking operations, and create a new International Wealth and Premier Banking business. Pam Kaur was named as CFO. BBG
  • Israel is apparently considering an Egyptian proposal for a 2-week ceasefire in with Hamas in Gaza that could potentially build into a more permanent deal. NBC News
  • Federal Reserve Bank of San Francisco President Mary Daly said she expected the US central bank would continue cutting interest rates to guard against further weakening in the labor market. BBG
  • The US Securities and Exchange Commission’s examiners will step up scrutiny of financial firms’ use of artificial intelligence next year, the latest sign of regulators’ growing concerns about the emerging technologies. BBG
  • US drinkers are continuing to cut back on their vodka, whisky and tequila intake in a sign that, despite the improved economic environment, consumers are finding higher prices hard to swallow. FT
  • GM shares jumped premarket after signaling solid US demand for its highest-margin vehicles, and raising the low end of its profit forecast. GE Aerospace reported a profit jump and raised its full-year guidance as the jet-engine maker capitalizes on its strong order book. BBG
  • Fed’s Daly (2024 voter) said the Fed will continue to adjust policy and a 50bps cut was to right-size policy, while she expects additional cuts going forward. Daly said the recent Fed rate cut was a close call and she came down strongly in favour of a 50bps cut, as well as noted that a 50bps cut was needed and they didn’t want to find out they had overtightened and taken jobs from people. She also said they will be data-dependent for the Fed’s November meeting and haven’t seen anything so far that would suggest they would not continue to cut rates, while she noted policy is absolutely still tight and would want to be open-minded to continue to ease policy if inflation is falling, even if the economy is strong.
  • Fed’s Schmid (2025 voter) called for a cautious, gradual and deliberate approach to rate cuts, while he prefers to avoid outsized rate cuts and noted that they are seeing a normalisation of the labour market, not a deterioration. Furthermore, Schmid said current policy is restrictive, but not very restrictive, as well as noted the balance sheet is probably influencing longer-term rates and that they should be normalising the Fed’s balance sheet on both size and duration.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mixed with participants somewhat cautious following the mostly negative bias stateside amid a lack of major catalysts, ongoing geopolitical tensions in the Middle East and a higher yield environment. ASX 200 retreated from the open with Real Estate and Healthcare leading the broad downturn seen across sectors. Nikkei 225 was pressured following its recent failure to hold on to the 39,000 level despite a weaker currency. Hang Seng and Shanghai Comp shrugged off early weakness to trade in the green albeit with price action choppy as the attention turned to earnings updates, while the PBoC conducted its first swap operation involving securities brokerages, funds and insurance companies worth CNY 50bln on Monday.

Top Asian News

  • Chow Tai Fook Jewellery (1929 HK) reports same store sales down 24.3%; HY revenue decreases by 18%; HY Net profit decreases by 42%.
  • China’s FX regulator said the Yuan exchange is basically stable at reasonable and balanced levels, while it added that cross-border capital turned to inflows in the first three quarters of this year and cross-border capital flow has been balanced since the start of 2024. Furthermore, it stated the FX market shows relatively strong resilience and market expectations and trading are in order overall.
  • FT article suggests that there is no sign yet of determined Chinese reforms or spending to spur more household consumption, despite many agreeing that President Xi’s thinking on stimulus has changed. Focus is reportedly still largely on repairing local governments’ and banks’ balance sheets.
  • China State Planner say China will continue to issue ultra long term special government bonds in 2025; and further optimise their allocation next year.

European bourses, Stoxx 600 (-0.2%) began the session mostly, but modestly on the backfoot, (ex-DAX 40 & Euro Stoxx 50; benefiting from post-earning strength in SAP) and have traded in a busy range throughout the morning; in recent trade, indicies are now broadly in the red, due to geopolitical updates out of Israel. European sectors hold a strong negative bias; Tech is by far and away the clear outperformer, lifted by post-earning strength in SAP (+5.4%). Real Estate is towards the foot of the pile, given the relatively higher yield environment. US Equity Futures (ES -0.1%, NQ -0.2%, RTY -0.4%) are modestly in the red to varying degrees and with slight underperformance in the RTY, which was subject to hefty selling pressure in the prior session. ASML (ASML NA) CEO says 2025 will be a growth year, the long term will still see growth. “Not everyone is surfing the AI wave”. “What we have seen in the last few months is people beginning to push the breaks”. “China demand is for mainstream chips, older generations of technology”. “Normal Chinese demand is for 20-25% of ASML’s sales, expect it to return to those levels”. “China may be able to produce some 5 or 3 nanometre chips, but few, using older tech”. It is clear the US will push for more export restrictions to China. “The Netherlands and Europe will start to discuss with China export restrictions make sense”

Top European News

  • UK Shadow Chancellor Hunt warned Chancellor Reeves against hiking business taxes ahead of next week’s Budget, according to FT.
  • Italy’s budget deficit seen at 3.9% of GDP in 2024 (exp. 3.8%); GDP expected to grow 0.8% in 2024 (exp. 0.9%) and 0.9% in 2025 (est. 1.1%)

FX

  • USD is broadly slightly softer vs. peers and to varying degrees. That being said, DXY remains in close proximity to Monday’s 104.01 peak and above its 200DMA at 103.72.
  • EUR is marginally firmer vs. the USD but unable to scale back much of the downside from yesterday which saw the pair match last week’s multi-month low at 1.0810. Docket ahead sees a slew of ECB speakers.
  • Cable is continuing to pivot around the 1.30 mark within a 1.2980-1.3014 range. Focus today will be on today’s trio of BoE speakers with Governor Bailey being the obvious highlight, with focus on if he echoes his recent dovish rhetoric.
  • JPY is unable to claw back any of the losses vs. the USD seen during yesterday’s session which brought the pair above its 100DMA at 150.73 and breifly onto a 151 handle. If upside resumes, technicians flag the 200DMA at 151.34.
  • Antipodeans are both firmer vs. the USD and attempting to atone for recent losses. Overnight, AUD/USD printed a fresh low for the month at 0.6652 before paring losses (no clear fundamental driver was behind the move). NZD/USD has endured similar price action after recovering from a 0.6022 base overnight.
  • Goldman Sachs says the EUR could drop as much as 10% under Trump tariff and domestic tax cuts.

Fixed Income

  • Bunds are under pressure in a continuation of the action seen on Monday which was primarily a function of supply and energy upside. Bunds are around a 132.69 trough, having faded from Monday’s 133.06 low. The complex was fairly unreactive to a new German 2026 auction.
  • USTs are in-fitting with the above, and in a continuation of the “Trump trade” seen in the prior session. Region awaits its own supply which comes on Wednesday with a 20yr tap, but before that, Fed’s Harker.
  • Gilts are pressured in-fitting with the above and roughly in-line with peers. Docket ahead sees a Bank of England trio of Governor Bailey, Breeden and Greene. Currently just off a 96.67 base and erring back towards opening levels of 96.88.
  • Orders for Italy’s new seven-year over EUR 70bln (spread at 7bps) whilst 30-year BTP tap demand is in excess of EUR 80bln (spread at 9bps), according to Reuters.
  • UK sells GBP 900mln 0.625% 2045 I/L Gilt: b/c 3.57x (prev. 3.44x) & real yield 1.328% (prev. 1.20%).
  • Germany sells EUR 4.162bln vs exp. EUR 5.0bln 2.00% 2026 Schatz: b/c 2.61x, average yield 2.16%, and retention 16.76%.

Commodities

  • Crude oil is subdued following a firmer session on Monday despite a lack of fresh drivers but as markets still await Israel’s attack on Iran. The complex then lifted off worst levels amid reports that Israeli PM Netanyahu will hold consultations tonight with a specific number of his cabinet ministers at the headquarters of the Ministry of Defense in Tel Aviv, via Al Jazeera. Thereafer, reports that Iran was involved in the assassination attempt on Netanyahu, crude soared to session highs of USD 75.06/bbl.
  • Spot gold is firmer intraday with the complex buoyed by the aforementioned geopolitics, ahead of US elections, and with extra momentum after notching fresh all-time highs. XAU resides in a current USD 2,719-2,738.50/oz range.
  • Base metals are mostly firmer trade in the complex with gains in most industrial metals pinned on hopes of Chinese stimulus, although iron ore prices retreated with desks citing concerns of softening steel demand.
  • US is reportedly in talks with Southeast Asian nations to deploy small modular nuclear reactors, according to Bloomberg.
  • China crude steel output -6.1% Y/Y to 77.1mln tonnes in September 2024; global steel output -4.7% Y/Y to 143.6mln tonnes, according to worldsteel.

Geopolitics: Middle East

  • Israeli PM Netanyahu will hold consultations tonight with a specific number of his cabinet ministers at the headquarters of the Ministry of Defense in Tel Aviv, via Al Jazeera citing Israeli media.
  • “Officials at the Iranian embassy in Beirut are involved in the assassination attempt on PM Netanyahu. The Israeli investigation shows Iranian involvement in launching the drone towards Netanyahu’s house”, via Kans’ Kai on X citing Saudi Al-Hadath channel
  • “Al-Arabiya correspondent: Netanyahu meets today with security leaders in Tel Aviv after meeting with Blinken”, according to Al Arabiya
  • Israeli Home Front said sirens sounded in Haifa, its Gulf and dozens of cities and sites in northern Israel, while it was later reported that Israeli media and military announced sirens sounded in central Israel’s Samaria area, West Bank settlements, Acre and areas in upper Galilee.
  • Israel’s Channel 14 reported that the homes of senior officials in Iran were added as possible targets for Israeli attack and the Air Force will know the exact target of the attack shortly before implementation, according to Al Jazeera. Furthermore, Israel’s Channel 14 cited Israeli sources that stated plans for the strike against Iran were presented by the military leadership and the Mossad to the Prime Minister and Minister of Defence, according to Sky News Arabia.
  • US Secretary of State Blinken said he is heading to Israel and other stations in the region to discuss ending the war in Gaza, returning the hostages and alleviating the suffering of the Palestinians, according to Al Jazeera.

Geopolitics: Other

  • UK is to lend Ukraine an additional GBP 2.26bln for weapons to fight Russia with the loans to be repaid using interest generated from USD 300bln of Russian frozen assets, according to The Guardian.

US Event Calendar

  • 08:30: Oct. Philadelphia Fed Non-Manufactu, est. 4.1, prior -6.1
  • 10:00: Oct. Richmond Fed Business Conditio, prior -3
  • 10:00: Oct. Richmond Fed Index, est. -17, prior -21

Central Bank Speakers

  • 09:00: ECB’s Centeno Speaks in Washington
  • 10:00: Fed’s Harker Speaks at Fintech Conference
  • 10:00: Fed’s Harker Gives Opening Remarks

DB’s Jim Reid concludes the overnight wrap

Only two weeks until the big day. One that I’ve been looking forward to for what seems an exceptionally long time. Yes, the kids will go back to school after an extended 2-week half-term. As predicted last week my wife was already fed up with them last night after one day of holiday yesterday. The twins are so noisy! I’m off to Center Parcs with them all for a long weekend on Friday so I won’t be spared.

With two weeks to go today until the election, markets have started the week a bit more nervously than during the last 6 where the the S&P 500 has gone up each week for only the second time since the pandemic. Yesterday it started the week -0.18% but with bigger sell-offs elsewhere and extending into the Asian session this morning. The sell-off was much more pronounced among sovereign bonds though, with the 10yr Treasury yield (+11.3bps) reaching its highest level (4.20%) since late July, shortly before the weak payroll report, the Japanese mini-crash and the associated brief market turmoil. Moreover, the move was primarily driven by higher real yields, with the 10yr real yield (+10.2bps) moving up to 1.88%, which is its highest level since the end of July. Overnight, 10yr USTs are another +1.4bps higher as we go to print.

There were several factors behind the move but none that particularly dominated yesterday. In the background there has been a rising concern about debts and deficits, particularly ahead of the US election. Indeed, the IMF pointed out in their recent Fiscal Monitor that global public debt is forecast to exceed $100 trillion this year, and rise further in the medium term, so this is a growing issue as policymakers gather for the IMF/World Bank Annual Meetings in Washington this week. Moreover, our US economists have pointed out that irrespective of who wins the presidency or congress, they could see deficits in the 7-9% area over 2026-28, which is a level unprecedented outside of major wars or massive economic shocks like the GFC and Covid-19.

In addition to the long-end moves, expectations of Fed easing continue to drift lower, with Fed funds pricing for next March (+8.0bps to 4.05%) moving back above 4% for the first time since the start of August, after having fallen to below 3.4% in late September. This came as Fed speakers continued to express preference for gradual easing moving forward, with Kansas City President Schmid favouring “modest” reductions while Minneapolis Fed President Kashkari was “forecasting some more modest cuts”.
Another factor behind the bond selloff were growing inflation risks, and yesterday saw Brent crude oil prices (+1.68%) pick up again to $74.29/bbl. That comes amidst growing focus on Israel’s expected retaliation against Iran’s missile strikes earlier this month, which is still yet to materialise. But oil prices were reacting to several weekend developments, including the drone strike on the private home of Israeli PM Netanyahu that we mentioned yesterday. Indeed, foreign minister Israel Katz said over the weekend that there was “no doubt that another red line has been crossed here”. Meanwhile, although the classic safe haven of gold (-0.06%) closed marginally lower, after posting four consecutive session ATHs, this morning its +0.43% higher as I type and back at what would be record closing levels again.

Over in Europe, the bond selloff was even more aggressive, with yields on 10yr bunds (+9.9bps), OATs (+12.1bps) and BTPs (+15.3bps) all seeing large moves higher. In part, that’s because investors have pared back their expectations for a larger 50bp rate cut at the ECB’s December meeting, and we had a lot of commentary from several officials to digest as well. For instance, Lithuania’s Simkus said that he didn’t see the need for cuts bigger than 25bps, and Slovakia’s Kazimir said that the December meeting was “wide open”.

Back to the US election, the general consensus across polls, betting averages and forecasting models is that Trump has gained ground on Harris, but the race is still within the margin of error across the key battleground states. Now clearly that could change, but from a market perspective, the Trump bump has meant that beneficiaries of the “Trump trade” have continued to do well in recent sessions. Most notably, Trump Media & Technology Group (+5.81%) was up to its highest since July yesterday just after Biden pulled out of the Presidential race.

Returning to yesterday, equities struggled, particularly as bond yields kept on rising. The S&P 500 (-0.18%) posted a modest decline, but it was a broad-based one, with the equal weighted version of the index seeing its worst day in more than six weeks (-0.85%). Small-caps struggled in particular as the Russell 2000 (-1.60%) saw its worst day since early September. Information technology (+0.93%) was the only major sector within the S&P 500 to post a gain. The Mag-7 (+0.64%) advanced as Nvidia (+4.14%) hit a new record high, while the NASDAQ (+0.27%) moved to within half a percent of its all-time high from July. Over in Europe, markets closed around the intra-day lows of the US session, with the STOXX 600 (-0.66%) and the DAX (-1.00%) both losing significant ground.

Whilst there were several short-term catalysts for the selloff, it’s also worth bearing in mind that the market performance has been pretty incredible over recent months. Only last week, we saw US IG credit spreads reach their tightest level since 2005, and the S&P 500 is up for 37 of the last 51 weeks, which is a joint record back to 1989. This means that traditional valuation metrics are now looking increasingly stretched by historic standards, at a time when geopolitical risks are elevated and the soft landing is now increasingly priced in as the likely outcome, so it should in theory get harder from here. Henry took a look at some of these reasons for caution yesterday here.

Asian equity markets are mostly lower this morning. The S&P/ASX 200 (-1.68%) is the biggest underperformer in the region, followed by the Nikkei (-1.43%), the Topix (-1.14%), and the KOSPI (-1.17%). However, Chinese equities are defying the regional trend, with the Hang Seng (+0.41%) and the CSI 300 (+0.47%) posting gains. S&P 500 (-0.18%) and NASDAQ 100 (-0.26%) futures are edging lower. Aussie 10yr yields are +14.5bps with JGBs +2.6bps.

Early morning data showed that South Korea’s producer prices declined by -0.2% in September, matching the decline from the previous month.

There was very little data to speak of yesterday, although we did get the Conference Board’s leading index from the US. That showed a decline of -0.5% in September (vs. -0.3% expected). In level terms, that also left the index at its lowest level since May 2016. The monthly reading hasn’t been positive since February 2022 so the release has lost some of its shock value recently given how well growth as performed over the last few quarters. Separately in Germany, producer prices remained in deflationary territory in September, at -1.4% year-on-year (vs. -1.1% expected).

To the day ahead now, and central bank speakers include ECB President Lagarde, the ECB’s Centeno, Knot, Holzmann, Villeroy, Rehn and Panetta, the Fed’s Harker, BoE Governor Bailey, and the BoE’s Greene and Breeden. Otherwise, earnings releases include General Electric, General Motors and Verizon.

Tyler Durden
Tue, 10/22/2024 – 08:17

via ZeroHedge News https://ift.tt/stkcyIu Tyler Durden

“In Crisis Mode”: EU Automakers Slide Into First Sales Slump In Two Years 

“In Crisis Mode”: EU Automakers Slide Into First Sales Slump In Two Years 

The downturn in the European auto market is accelerating.

Volkswagen, Mercedes, Aston Martin, and BMW have all cut their financial forecasts in response to the deteriorating conditions. A recently leaked memo from a senior Stellantis executive highlighted increasing concerns over the deepening auto slump. Bloomberg’s latest data shows the downturn continues to worsen. 

New figures from the European Automobile Manufacturers’ Association show that new car registrations across Europe in September declined 4.2% compared with the same month one year ago, to 1.12 million units. This was the second consecutive month of declines since mid-summer 2022. Data showed that gains in electric vehicles could not offset the weakness in combustion-engine models. 

Source: Bloomberg

Constantin Gall, the managing partner at EY for Western European markets, wrote in a note to clients that the European auto market “remains in crisis mode,” adding, “There is no positive impetus towards the end of the year — the economy is weakening, the considerable geopolitical tensions are not easing and are causing uncertainty among both private and commercial customers.”

European consumers balked at expensive EVs in September. Instead, they gravitated towards affordable ones. 

Sales of EVs bounced back in September, a welcome sign for the industry that’s seen demand for fully electric cars decline after governments pulled subsidies last year. EV deliveries jumped 24% in the UK, where carmakers are heavily discounting to try to comply with the government’s zero-emissions vehicle sales mandate. In Germany, where the government is discussing the potential of new incentives, EV sales increased 8.7%. -BBG

Regarding each automaker’s performance in September, Stellantis nosedived, recording the steepest decline in new car sales, about 26%. 

Source: Bloomberg

We have extensively covered the automaker downturn:

In markets, the MSCI Europe Automobiles and Components Index has made four attempts at new all-time highs in the last decade, the first in March 2015, and has since failed three other times, with the latest in April. On the year, the index is down about 10%. 

The MSCI World Automobiles Index is another index that shows, more broadly, global automakers are under pressure.

Heading into 2025, auto companies will continue to face many challenges. Interest rates remain high, and vehicle prices are elevated, driving some of the worst affordability for consumers in a generation. This problem also persists in the US.

Tyler Durden
Tue, 10/22/2024 – 07:45

via ZeroHedge News https://ift.tt/2pF9hXB Tyler Durden

Two Weeks Before The Meltdown Begins

Two Weeks Before The Meltdown Begins

Authored by Frank Miele via RealClearPolitics,

I wouldn’t be much of a political pundit if I weren’t willing to share my prediction for what will happen in 15 days when one of the most important presidential elections in history is decided.

So here goes: Donald Trump will win, and he will win convincingly. But that doesn’t mean the progressive left won’t have a meltdown. Just as in 2016, when Trump was first elected president, the media will be dismayed, the Democrats will be shocked, and there will be protests in the streets, possibly violent. Congressional Democrats such as Jamie Raskin will try to prevent Trump from being sworn in by declaring him an insurrectionist.

Seven so-called battleground states are supposed to decide the election: Pennsylvania, Michigan, Wisconsin, North Carolina, Georgia, Nevada, and Arizona. But even more important will be the experience of the American people, who in large measure have come to regret the election that put Joe Biden in the White House four years ago.

That is the underlying story that the media will never acknowledge. Polling within the last year shows that less than one-third of Republicans believe Biden is the legitimate president, and 36% of all Americans have doubts about the 2020 election. That is only a feeling, not a fact, but feelings decide presidential elections, and the almost gleeful anti-American thrust of Biden’s presidency has given more than 60% of potential voters a feeling that we are on the wrong track as a nation.

Five days before the 2020 election, I published a spoof that proved modestly prophetic as a warning about the pitfalls of a Democratic victory. Called “The Short Happy Presidency of Joe Biden,” it predicted that Kamala Harris would invoke the 25th Amendment immediately after Biden’s inauguration in order to seize power in a bureaucratic coup.

It didn’t quite happened that way, of course, but 3½ disastrous years later, Kamala along with Chuck Schumer and Nancy Pelosi seemingly used the specter of the 25th Amendment to force Biden to end his reelection bid. Life imitating art.

In my pastiche, President Trump had appeared close to sealing his victory in the 2020 election, thanks to late mail-in votes in Pennsylvania. But “in an emergency session, the Pennsylvania Supreme Court convenes and reverses its earlier ruling that late votes could be counted for up to three days. The new ruling asserts that late voting amounts to election interference ‘on account of Trump winning,’ thus handing the state and the Electoral College victory to Biden.”

Exaggerated, yes, but prescient in regard to how courts across the country would eventually rule in Biden’s favor on almost every issue, refusing to look at the evidence of fraud or unconstitutional irregularities.

Perhaps the most prophetic aspect of my column four years ago was how I depicted the reaction of Trump to losing a disputed election. Just two days after the inauguration of first Biden and then Harris:

Former President Donald Trump announces that he is running for re-election in 2024 after taking a four-year rest to catch up on his golf and make a few billion dollars. Trump says his new role model will be Grover Cleveland, the only president to serve non-consecutive terms. “If it’s good enough for Grover, it’s good enough for me!” Trump also tries out a new campaign slogan, as he takes a swing at Biden voters with a red, white and blue cap inscribed with “TUSA,” short for “Told U So America!”

When you think about it, that really is the underlying message that Trump has been sharing for the past four years. And Americans got the message – because it matched their lived experience. They saw with their own eyes that the wide-open Biden border was being called secure by Biden, Harris, and Homeland Security Secretary Alejandro Mayorkas. They saw that Biden’s Supreme Court nominee couldn’t say for sure what makes a woman a woman, and then they watched as boys began to dominate girls’ sports. They watched prices on the rise and safety in decline. Worst of all, they stood helpless as the world seemed to be rushing headlong toward World War III, first in Ukraine, then the Middle East, all the while as China has been threatening to cripple the world economy by attacking Taiwan.

So, yes, Trump will be elected as the 47th president of the United States, and the liberal talking heads will melt down just as they did in 2016. But what matters most is what happens after the election, and whether the experience of Americans will reflect renewed prosperity, a safer world, and respect for tradition and common sense. Many will try to prevent that, but making America great again should be a unifying goal. “Ask not what your country can do for you – ask what you can do for your country.”

And if I am wrong and Kamala Harris becomes the 47th president, I pray that divine providence takes hold of her and guides her to protect, defend, and strengthen these United States and their Constitution. Seems like a long shot, but without Trump, prayer is all we got.

Frank Miele, the retired editor of the Daily Inter Lake in Kalispell, Mont., is a columnist for RealClearPolitics. His book “The Media Matrix: What If Everything You Know Is Fake” is available from his Amazon author page. Visit him at HeartlandDiaryUSA.com or follow him on Facebook @HeartlandDiaryUSA and on X/Gettr @HeartlandDiary.

Tyler Durden
Tue, 10/22/2024 – 07:20

via ZeroHedge News https://ift.tt/9B2MS7U Tyler Durden

17 Indicators Of Global Recession Are Clanging

17 Indicators Of Global Recession Are Clanging

Authored by Charles Hugh Smith via OfTwoMinds blog,

The smart money is selling, of course, for the clanging indicators are the dinner bell announcing the banquet of consequences has been served, and Nemesis doesn’t want the meal to get cold.

Correspondent Wilson R. Logan kindly shared his list of 17 indicators of globally synchronized recession. In my view, each is an alarm bell clanging loudly. As Wilson put it, “recessions have vey clear indicators. We’ve all known it was coming and we’ve all had a long time to think about it.”

For context, recall that the global economy is a tightly bound, highly integrated system, which means disruptions in one subsystem quickly ripple though the entire system. Disruptions tend to amplify one another, creating a cascading effect much like an avalanche: everything looks perfectly stable until the entire mountainside gives way.

This isn’t presented as a complete list of indicators; there are a multitude of others. But this is certainly a comprehensive start.

Here are Logan’s 17 indicators of global recession:

1) Tighter credit conditions. Banks see the recession coming and start to build a cash cushion, hoard liquidity, de-risk portfolios (the lessons of Bear Sterns).

2) Increasing REPO fails.

3) Volatility in the Japanese Bills market.

4) Near Term Forward Spread inversion.

5) Swap Spread Compression.

6) Term SOFR & EURIBOR calendar spread inversion.

7) 2-10 yield curve inversion.

8) Hours worked, total compensation falling.

9) Falling oil prices.

10) Factory gate prices falling.

11) ISM survey negative sentiment.

12) UofM consumer sentiment survey negative.

13) Increasing credit card debt.

14) Contango in the WTI Futures curve.

15) Falling value of loans to non-financial corporations (NFCs) (see 1).

16) Diverging GDP & GNI.

17) Labor hoarding.

(CHS note: for example, in Japan, if you want to quit your wretched, low-pay, abusive-boss job, you have to find a replacement first: ‘They refused to let me go’: Japanese workers turn to resignation agencies to quit jobs.)

Thank you, Wilson, for sharing your comprehensive list of global recession indicators. For additional context, let’s turn to two charts.

The first is my inverted pyramid of debt and disposable earnings. This relationship between the cost of servicing debt and how much money is left after paying essential expenses (food, utilities, shelter, etc. or the costs of production) is scale-invariant, meaning it works the same for individuals, households, small businesses, global corporations and nation-states.

If the earnings left after paying essential expenses declines while the debt and cost of servicing the debt rise, the entity goes bust and collapses in a heap. For households, as inflation stripmines the purchasing power of their earnings, they increasingly turn to debt to fill the gap between the cash that’s available to spend and what they desire to spend.

When interest rates are falling or near-zero, adding debt appears sustainable. But should interest rates rise, the debt quickly become untenable.

So-called Zombie Corporations have one neat trick to stay alive despite their decaying financials: they roll over their higher-interest debt into a larger, lower-interest debt. Since the sum needed to service the debt remains the same, they can go on their merry way until the next refinancing replenishes their cash-burn.

This is all very jolly until banks refuse to loan them more money, and interest rates rise. Again, this is scale-invariant: as long as the consumer can tap another credit card, the corporation can roll over its debt at lower rates, nations can sell more Treasury bonds, then all is well.

But once credit tightens and rates rise, the dynamic reverses, and bankruptcy is the only “solution” left. Insolvency and writing off all debt is a solution for the borrower/debtor, of course, but a catastrophe for the lender / investor, who receives pennies on the dollar, the rest being a complete and total loss of assets / wealth.

Next, let’s turn to the “impossible,” i.e. bubbles popping with extreme prejudice. How do we know a bubble is a bubble? If the deflation of the bubble is declared “impossible.” For example, today’s global Everything Bubble. Yes, yes, the Everything Bubble cannot possibly pop with extreme prejudice, it will expand forever because (insert Fed Put, AI, Martian Central Bank quatloos, etc.).

History has a peculiar, disconcerting disregard for “likes,” opinions and projections of infinite growth, and so it’s clear that all bubbles pop. Bubbles pop with an eerie symmetry, falling at roughly the same time scale and rate as their ascent. Thus we can project the collapse of the Everything Bubble with some certitude.

Or we can dismiss the 17 indicators clanging loudly and base our confidence on eternal expansion of everything on the Fed Put, AI, or Martian Central Bank quatloos. Pretty much anything will do; all that matters is that a permanently high plateau of overvaluation and financial fantasy is presented as inevitable.

The smart money is selling, of course, for the clanging indicators are the dinner bell announcing the banquet of consequences has been served, and Nemesis doesn’t want the meal to get cold.

*  *  *

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Tyler Durden
Tue, 10/22/2024 – 06:30

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