Month: October 2024

Authored by Bill Pan via The Epoch Times (emphasis ours),

Philip Zimbardo, the renowned psychologist whose controversial Stanford Prison Experiment explored how social situations influence individual behavior, has died at the age of 91.

Stanford University, where Zimbardo was a professor emeritus of psychology, announced his death on Oct. 18. An obituary on his personal website stated that he died peacefully at his San Francisco home on Oct. 14, surrounded by his wife and children.

During a career spanning more than five decades, Zimbardo researched a wide range of topics including why people are shy, why people choose to be bystanders in the face of wrongdoing, and how cult leaders exert mind-control over followers.

However, his Stanford Prison Experiment in 1971 was the one that brought him the most attention—and enduring scrutiny.

For $15 a day, 19 male college students were recruited to role-play as either guards or prisoners in a mock prison set up in the basement of Stanford psychology department building. Zimbardo, acting as the “prison superintendent,” and his team observed the interactions, with minimal instructions given to the participants.

Initially, the participants were expected to interact peacefully. Yet, to the shock of Zimbardo and his team, the “guards” quickly began acting in a tyrannical manner and abusing their power. “Our guards became sadistic, and our prisoners became depressed and showed signs of extreme stress,” Zimbardo recalled.

The experiment, intended to last two full weeks, was called off after six days and, over the decades since, has drawn strong criticism.

Critics have questioned many aspects of Zimbardo’s stories, noting that only a third of the “guards” exhibited sadistic behavior, and that some “prisoners” might have faked their mental breakdowns to secure early release because Zimbardo failed to make it clear that they were free to quit at any time. Zimbardo’s dual role as the “prison superintendent” and head researcher, siding with the guards, also fueled ethical concerns.

Zimbardo defended his work, which was frequently cited by scholars seeking to understand the psychology behind atrocities including the Holocaust, the Rwandan genocide, and the abuse of prisoners at Iraq’s Abu Ghraib prison. In 2018, he emphasized that the experiment should be viewed as a “cautionary tale” about “what might happen to any of us if we underestimate the extent to which the power of social roles and external pressures can influence our actions.”

While recognizing that ordinary people have the potential to commit evil that would otherwise be unthinkable, Zimbardo nevertheless proposed the opposite: that everyone has the capacity to do unthinkable good. He termed this the “banality of heroism,” a concept suggesting that we are all potential heroes, simply awaiting the moment in life when we are called upon to perform a heroic act.

“The decision to act heroically is a choice that many of us will be called upon to make at some point in time,” Zimbardo wrote in 2006. “By conceiving of heroism as a universal attribute of human nature, not as a rare feature of the few ‘heroic elect,’ heroism becomes something that seems in the range of possibilities for every person, perhaps inspiring more of us to answer that call.”

In 2010, Zimbardo established the Heroic Imagination Project, a nonprofit organization that seeks to prepare everyday people for a moment to help others in a time of need.

“If we lose the ability to imagine ourselves as heroes, and to understand the meaning of true heroism, our society will be poorer for it,” he wrote. “But if we can reconnect with these ancient ideals, and make them fresh again, we can create a connection with the hero in ourselves.”

Born on March 23, 1933, in New York City, Zimbardo grew up in poverty in the Bronx. In high school, he developed a lifelong friendship with fellow classmate Stanley Milgram, who went on to become a psychologist and conduct the famous Milgram obedience experiments, a direct inspiration of the 1971 experiment.

Zimbardo joined Stanford’s faculty in 1968 after teaching at New York University and Columbia University. He retired in 2003.

Zimbardo is survived by his wife of 52 years, Christina Maslach Zimbardo, a former graduate of his who famously persuaded him to shut down the Stanford experiment early after witnessing its disturbing effects firsthand. He is also survived by his son Adam, from his first marriage to the late Rose Zimbardo, and daughters Zara and Tanya.

Ukrainian President Volodymyr Zelensky has of late begun pushing hard new accusations that at least 10,000 North Korean troops are being sent to Ukraine where they will fight on behalf of the Russians.

South Korea’s spy agency had also backed Zelensky’s claim, chiming in on Friday to say that at least 1,500 North Korean special forces have already been sent. The spy agency says it has satellite images tracking these movements. But over the weekend the Pentagon refused to back the reports, with Secretary of Defense Lloyd Austin explaining  that he can’t confirm this narrative.

“I’ve seen those reports in the media. I can’t confirm those reports at this point in time. This is something that we will certainly continue to investigate,” Austin said Sunday.

Zelensky has been pushing the idea that the ‘enemies’ of the West have formed an axis to fight in Ukraine and ultimately push back NATO. He’s identified them as Russia, Iran, and North Korea.

He’s touted this curiously alongside desperate pleas for more urgent funding and weaponry from his Western backers. Kiev has especially sought long-range weapons for use inside Russian territory.

As an example of this, Zelensky said in a weekend video address, “Now we have clear evidence that people are being supplied to Russia from North Korea, and these are not just workers for industries, but also military personnel. And we expect a normal, honest, strong reaction from our partners to this.” He followed by emphasizing, “In fact, this is another state joining the war against Ukraine.”

But not even NATO leadership is backing these assertions. NATO Secretary-General Mark Rutte recently said there’s no evidence of an influx of North Korean troops into the conflict.

“At this moment, our official position is that we cannot confirm reports that North Koreans are actively now as soldiers engaged in the war effort,” he stated.

Some video clips of unknown context, origin or location have circulated online in the past days, purporting to show North Korean troops being outfitted by Russia’s military before battle.

Pundits have described one circulating video as showing a base in Russia’s eastern Primorye region, which shares a small border with North Korea, incredibly far away from front lines in Ukraine.

Raytheon salesman and US secretary of defence Lloyd Austin, couldn’t confirm whether North Koreans are in Ukraine fighting for Russia

But Zelenskys delusionsits in Kiev could?

Yeah right.. pic.twitter.com/CDqyjIuLFi

— Chay Bowes (@BowesChay) October 20, 2024

And yet it seems if there were such ‘proof’ – including alleged satellite imagery – then NATO and the Pentagon would vouch for it. But for now there are still official dismissals of the claim.

So far, the Western alliance is also resisting Ukraine’s demands to greenlight long-range missile strikes deep into Russian territory. Putin has warned that this would cross all ‘red lines’ and unleash major escalation.

Authored by Issues & Insights Editorial Board,

SUNNY HOSTIN: Would you have done something differently than President Biden during the past four years?

KAMALA HARRIS: There is not a thing that comes to mind in terms of — and I’ve been a part of most of the decisions that have had impact.

On Friday, the Treasury Department released a report showing the kind of impact Harris is talking about. If nothing else does, it should cost her the election.

The latest monthly Treasury report shows spending and revenues for the full fiscal year 2024, which ended in September.

Among the terrible results: The federal deficit topped $1.8 trillion in 2024 — the third highest in history and eclipsed only by the two COVID-19 panic spending years.

That’s not for lack of revenues, which were up by nearly half a trillion dollars this year. Spending under Biden-Harris this fiscal year climbed more than $617 billion – a 10% increase.

But the real shocker is the explosive growth in interest payments on the national debt.

These payments hit $882 billion in FY 2024, the Treasury report says. That’s a 35% jump from last year.

And it’s $8 billion more than we spent on National Defense.

This marks the first time in our nation’s history that interest on the debt has exceeded defense spending. And the gap is on track to rapidly widen – with the government spending $200 billion more in interest than in protecting America from her enemies by 2029.

Why the massive run-up in interest costs? Blame Harris’ tie-breaking votes (something for which she routinely brags). Because of them, Biden-Harris added trillions in new spending at a time when the economy had already fully recovered from the COVID-19 panic. That sparked a huge increase in inflation, which in turn drove up interest rates.

More debt and higher interest rates meant a sharp increase in the cost of financing that debt.

How do we know Biden and Harris are to blame? Before they took office, the Congressional Budget Office (CBO) projected net interest payments for the next decade, based on the policies that Donald Trump had in place.

The CBO said that, had Biden not spent us to the poorhouse, interest payments on the national debt this year would have been only $284 billion. (See chart above.)

In other words, Harris and her tie-breaking votes are responsible for a 210% increase in interest costs this year alone.

What would Kamala Harris do about this terrible state of affairs if she were elected president? No one has bothered to ask her.

But we do know that she wants to do exactly what she and Biden have already done: add trillions of dollars of inflationary spending, impose economically ruinous tax hikes, and pile on still more growth-killing regulations.

Harris is right about one thing. It is time to turn the page — before it’s too late.

— Written by the I&I Editorial Board

Israel on Sunday night began fresh, heavy airstrikes on Beirut’s southern suburbs as well as in the Bekka Valley in the east of Lebanon, for the first time declaring it would target banks suspected of financing Hezbollah.

“The air force will launch extensive strikes on targets in the southern suburb of Beirut, targeting Hezbollah-linked economic assets,” IDF spokesman Daniel Hagari said as strikes were underway. Buildings that belong to al-Qard al-Hassan Association are at the top of the list, identified by the Israelis as long associated with the Shia paramilitary group backed by Iran.

With at least 30 branches across Lebanon, and 15 Beirut locations in bustling neighborhood, al-Qard al-Hassan Association is also used by many Lebanese civilians.

The US-sanctioned bank has been around since the 1980’s and is focused on providing services to Lebanon’s Shiite community, which is mostly concentrated in the south.

“The purpose of the strike is to target the ability of Hezbollah to function both during the war but also afterwards to rebuild and to rearm the organization on the day after,” an Israeli military statement continued.

Some dozen large airstrikes rocked Beirut’s southern suburbs last night, including one or more which were very near Beirut International Airport, reportedly targeting the bank branches.

The bank has sought to assure its customers it has taken “all of the necessary procedures since the beginning of the war to safeguard your deposits and valuables and can confirm that you should not worry they are safe.”

A regional analyst was quoted in The Wall Street Journal as follows:

“The main loss for the people using its services will be the destruction of family gold they pawned in exchange for loans,” said Lina Khatib, director of the SOAS Middle East Institute and author of a study of Hezbollah’s influence networks.

“But for as long as Hezbollah’s external financial operations remain active, including its involvement in illicit finance internationally, and as long as Iran continues to fund it, Al-Qard Al-Hassan’s clients will expect Hezbollah to be able to compensate them for their losses,” she said.

The Lebanese Health Ministry said over the weekend that at least 2,464 Lebanese have been killed since hostilities began in Oct.2023; however, it remains unclear how many of that figure are combatants vs. civilians.

BEIRUT: Surreal video after Israeli bombardment near Beirut international airport without air, tarmac traffic being halted. 20 days into #Lebanon war and unclear how this ends: pic.twitter.com/QxPXIRFady

— Joyce Karam (@Joyce_Karam) October 21, 2024

The whole region remains on edge awaiting Israel’s retaliation against Iran, which US intelligence has said is “almost certainly” going to happen. A Bloomberg note indicates:

Oil prices bounce back from last week’s steep fall with Brent crude futures climbing 1.3% to around $74 a barrel. Traders are likely monitoring tensions in the Middle East after Israeli PM Netanyahu held a series of meetings with top security aides to discuss the next attack on Iran. Israel is discussing its attack on Iran after a Hezbollah drone exploded near Prime Minister Benjamin Netanyahu’s private home at the weekend.

Below are more regional developments via Newsquawk…

• Israeli PM Netanyahu said a drone attack which targeted his home in northern Israel was a “grave mistake”, while he and his family were not at their house when the drone attack struck on Saturday and there were no casualties.
• Israeli PM Netanyahu spoke with former US President Trump and told him that Israel considers the issues the US administration raises but will make decisions based on its national interests.
• Israel’s military said it attacked Hezbollah’s intelligence HQ and weapons storage facilities in the southern suburbs of Beirut on Saturday. It was also reported that Israel conducted a fresh raid on the southern suburbs of Beirut on Sunday, as well as targeted the city of Tyre and the towns of Bir al-Salasil and Homine al-Fawqa in southern Lebanon.
• Israeli military spokesperson had warned on Sunday that they would conduct targeted strikes on sites belonging to Hezbollah’s financial arm across Lebanon and urged Lebanese residents to evacuate areas near those facilities, while it was later reported that Israeli strikes hit branches of Hezbollah-linked bank in Beirut and Beqaa Valley, according to Times of Israel.
• Hezbollah announced it conducted a rocket barrage at Beit Hillel base, while it was separately reported that Iraqi armed factions announced the targeting of an Israeli military site in the Golan with drones.
• Israel gave the White House its demands for ending the war in Lebanon, while US President Biden’s envoy Amos Hochstein will visit Beirut on Monday to discuss a possible diplomatic solution with Lebanese officials, according to Axios. The report noted one Israeli demand is that IDF be allowed to engage in “active enforcement” to ensure Hezbollah doesn’t rearm and Israel also demands its air force have freedom of operation in Lebanese airspace, although a US official said it is highly unlikely Lebanon and the international community would agree to Israel’s conditions.
• Iran’s Supreme Leader said Hamas leader Sinwar’s death will not halt the axis of resistance and Hamas will live on.
• Iranian Foreign Minister Araghchi alluded to the US and warned that anyone who knows how and when Israel will attack Iran will be held accountable, according to Reuters.
• US House Speaker Johnson said on Sunday that there would be a classified briefing related to leaked US intelligence on Israel-Iran, according to Reuters.
• US Defence Secretary Austin said he would like to see Israel scale back on some of its strikes in and around Beirut, while he raised the issue about UNIFIL security with Israel’s Defence Minister Gallant. Furthermore, Austin reviewed the US defence posture and said he is relieved that PM Netanyahu is safe, while he said he couldn’t confirm reports that North Korean troops are in Russia and readying for combat in the Ukraine war, according to Reuters.
• UN peacekeeping force UNIFIL said an Israeli army bulldozer demolished a watchtower and fence surrounding the UN site in southern Lebanon on Sunday, according to Reuters.
• G7 defence ministers reaffirmed the importance of supporting UNIFIL and the Lebanese armed forces in their role of ensuring the stability and security of Lebanon, while they called on Iran to refrain from providing support to Hamas, Hezbollah, Houthis and other non-state actors. Furthermore, they called on Houthis to immediately cease their escalatory measures that increase regional instability and immediately release the vessel Galaxy Leader and its crew.

By Stefan Koopman of Rabobank

The U.S. presidential election is increasingly becoming the main market focus as the date inches nearer. Polls still show no clear favorite, but market sentiment seems to be shifting in favor of Donald Trump. With the Harris honeymoon officially over, the Trump trade is gaining traction again. This view holds that a Trump win, and a Red Sweep in particular, would be bad for bonds, the euro, the yen, the yuan, and the peso, but a boon for stocks, especially in sectors like financial services, oil, and cryptocurrencies, where tax cuts and deregulation would boost profitability. The thinking goes that less regulation means higher margins, and lower taxes mean more money flowing back to investors.

Trump’s campaign highlights big ideas: tax cuts, deregulation, and tariffs. Investors are zeroing in on the first two, eagerly anticipating another corporate tax windfall against a backdrop of a U.S. economy that’s already doing well. Recent data has been stellar, and the S&P 500 has surged to a fresh high of 5,864, and on top of this traders are rotating into those sectors expected to gain from a potential Red Sweep. Yet this optimism assumes Trump will deliver only the market-friendly aspects of his agenda. In reality, that “most beautiful word in the dictionary” could create significant disruptions.

Back in 2018, trade policy primarily targeted China, with some collateral damage in Europe and Mexico. This time, his proposed tariffs are far more extreme than anything he did during his first term. Unless suppliers have significant profit margins to play with, it is highly likely inflate prices across the economy. We indeed do forecast a renewed rise in US inflation to above 4% at the end of 2025, which would stop the Fed from cutting rates much sooner than the market currently prices. Note too that we’ve kept it very modest with our tariff assumptions.

Moreover, Trump’s immigration plans, which involve the deportation of millions of workers, would create severe labor shortages. In industries already struggling with tight labor markets, this would fuel wage inflation and reduce productivity, pushing prices higher and reducing potential GDP growth. Any economic gains from tax cuts and deregulation would be offset by the broader damage caused by untargeted and indiscriminate tariffs and widespread labor shortages. Trump’s idea that his tariffs will fund his tax cuts is fundamentally flawed, as tariffs mainly transfer surplus from consumers to producers, but don’t generate sustainable long-term revenues.

The deficit is also a looming issue. Trump’s proposals could increase the federal debt by up to $7.5 trillion over a decade, at a time when the U.S. economy is already running a deficit of around 7% of GDP.

This would force the government to allocate a larger share of its budget to servicing debt. Although this debt is mostly held by U.S.-based investors, it would further strain the federal budget. It also limits options for countercyclical fiscal policy, particularly in a world where interest rates are no longer pinned to zero and each new dollar of debt tends to generate less growth.

Meanwhile, the contrast between the U.S. and Europe could not be starker. While the U.S. economy powers ahead, Europe is stagnating. Friday’s ECB Survey of Professional Forecasters shows that long-term growth expectations are at an all-time low of 1.3%, with structural issues such as poor productivity, demographic decline, and over-regulation holding back economic potential. This can’t be solved with a couple of rate cuts. Europe’s growth model is broken, and without at least part of the significant investment and reforms that Draghi suggested, it will be condemned to “slow agony”. The big question remains whether Europe has the leadership, money, and willpower to make the necessary changes. If Trump is indeed re-elected, we’ll find out soon enough.

Via SchiffGold.com,

California Governor Gavin Newsom signed a bill this week that could force local refineries to stockpile fuel, a move he believes will smooth long-term gasoline prices.

“Price spikes have cost Californians billions of dollars over the years, and we’re not waiting around for the industry to do the right thing,” Newsom said.

“We’re taking action to prevent these price spikes and save consumers money at the pump.”

Once the California Energy Commission outlines the new set of rules, refineries could be fined as much as $1 million per day for non-compliance. That massive figure doesn’t alarm Newsom, who says it’s time justice is done.

“They’re screwing you; they’ve been screwing you for years,” he said of oil companies.

But, as critics have been quick to point out, forcing suppliers to hold inventory could dramatically raise operating costs. Even if the new legislation does prevent price spikes—an outcome that’s far from certain, given the unpredictability of economic shocks—consumers will pay for future lower prices with higher prices now. That’s if producers don’t simply pack up and leave.

“The uniqueness [of California regulations] on top of uniqueness on top of uniqueness has made this not the kind of environment that refiners want to continue to invest in,” said Eloy Garcia, lobbyist for industry group WSPA.

“You are further and further making this a unique refining environment when you need refiners to stay in California.”

Consistently high prices are a bigger problem than spikes, many say. Even in its ideal form, the new legislation only aggravates this immediate problem.

“Even if, in theory, it stops price spikes, it still doesn’t bring them down,” said Nicolaus Assemblyman James Gallagher.

“And the problem is the price is too damn high, right now.”

Experts estimate that creating the storage tanks required to meet the new requirements could take nearly a decade and cost “tens of millions of dollars.” That stockpile will be costly to maintain and comes with its own host of problems.

“Once you have inventory like this, it is going to be very tempting for whoever has political power to try to release that inventory when it is helpful to them to push down gasoline prices,” UC Berkeley economist Severin Borenstein said in a recent hearing.

Others have pointed out that worker safety and jobs could be at risk from the legislation. Cost-cutting measures to pay for new construction would likely involve layoffs and job cuts. Workers who are unfamiliar with the maintenance procedures and dangers of massive storage tanks could be thrown into an on-the-job crash course, leading to cut corners and errors due to inexperience.

It’s an open secret that oil stockpiling to prevent supply disruptions “works,” at least for policy purposes, on a national level. The federal government manages the world’s largest emergency petroleum reserve, commonly known as the SPR. But there’s a critical difference between that national plan and the California legislation, and that’s how much competition the rules allow. The U.S. government purchases oil from suppliers and undertakes its own inventory management and storage procedures. Newsom shifts that burden onto suppliers, forcing them to hold reserves they would prefer to sell immediately, penalizing noncompliance with fines rather than incentivizing compliance with payment.

Both policies raise oil prices for consumers, but likely by different amounts, and certainly in different ways.

The national stockpile raises prices by reducing supply, a feature of a competitive market whenever a large buyer is involved. The California stockpile raises prices by forcing operating costs to rise, a feature of a regulated market where producers are required to perform at reduced efficiency.

Hence the age-old question of economics, which so many well-meaning politicians forget to ask: Is the tradeoff worthwhile? What kind of precedent does this local regulation set for the economy as a whole?

For Newsom, the move is an unequivocal win for consumers—and it’s only the beginning of a larger plan for government intervention to force prices down, despite the best efforts of profit-seeking suppliers.

“[Gas companies] continue to lie, and they continue to manipulate,” Newsom said. “They have been raking in unprecedented profits because they can.”

Cheryl Ainoa, the Chief Technology Officer of Walmart-owned Sam’s Club, is reportedly leaving the company over a new relocation policy that would shift her from the West Coast to Arkansas.

A memo from Walmart Chief Technology Officer and Chief Development Officer Suresh Kumar, which Bloomberg first obtained, specifies a new relocation policy that forces thousands of corporate employees to headquarters in Bentonville, Arkansas. 

According to the memo, Ainoa will remain at Walmart until February. Sanjay Radhakrishnan, who has led Walmart’s technology push, will take her place as Sam’s Club’s CTO. 

“Having tech leadership closer to the business has already enhanced our partnerships with Walmart US and International teams,” Kumar said in the memo.

Ainoa’s Walmart profile states she joined the company in 2020 and most recently served as executive vice president in a unit that accelerated early-stage strategic businesses to improve the retail experience. 

The executive’s LinkedIn profile shows she is based in San Jose, California, an area controlled by mostly elitist progressives. 

What does Ainoa have against Arkansas?

In his preview of the next few days, DB’s Jim Reid has some good news for those who feel like it’s already Friday: “It doesn’t feel like its going to be the most exciting week ahead of us” although with earnings season now in full throttle and with a seemingly extremely tight US election just two weeks tomorrow there is undoubtedly plenty to think about and react to.

Having said the election is tight, Reid notes that over the last two weeks the probability markets have been shifting back towards Trump. At the start of October a Republicans sweep was a 28% probability on Polymarket.com but that’s now shifted to a 42% chance. A Democrats sweep has fallen from 21% to 14%.

Outside of the tax and spending implications, Trump last week said that “the most beautiful word in the dictionary is tariff”. So that should have reminded markets that he is serious on this matter if he gets elected. In terms of fiscal, Deutsche Bank economists believe that the deficit will be between around 7 to 9% from 2026-2028 whatever political configuration we have in the White House.

Staying on debt we do have the IMF and World Bank annual meetings in Washington from today and across the rest of the week. There is expected to be a focus on the unsustainability of global debt in these meetings but that is probably more of a medium-term concern rather than anything markets will latch on to this week. There are plenty of central bankers speaking at the various Washington events but in particular watch out for ECB President Lagarde and BoE’s Governor Bailey (both tomorrow). Ahead of that, today sees quite a bit of Fedspeak. There is also the BRICS summit held in Kazan, Russia from tomorrow to Thursday hosted by Putin. China’s President Xi and India’s Prime Minister Modi are expected to attend.

In terms of data, the main highlight is probably the round of global flash PMIs (Thursday). Walking through the data day-by-day, the other highlights are German PPI, French retail sales and the US leading index today, the US Phili Fed tomorrow, US existing home sales, the Beige book, Eurozone consumer confidence and the Bank of Canada meeting on Wednesday, US initial jobless claims on Thursday, and US durable goods, Tokyo CPI, and the German Ifo on Friday. Recent strikes and storms will likely distort US claims and durable goods so it will be tough to get a clean data read at the moment. The Beige book may give us a bit more insight into current economic momentum.

In corporate earnings, the main highlights are SAP (today), Texas Instruments, GE, and GM (tomorrow), and Tesla, IBM, and Boeing (Wednesday). We list others in the day-by-day calendar at the end.

Courtesy of DB, here is a Day-by-day calendar of events

Monday October 21

• Data: US September leading index, China 1-yr and 5-yr loan prime rates, Germany September PPI, France September retail sales
• Central banks: Fed’s Logan, Kashkari and Schmid speak, ECB’s Simkus speaks
• Earnings: SAP

Tuesday October 22

• Data: US October Philadelphia Fed non-manufacturing activity, Richmond Fed manufacturing index, business conditions, UK September public finances, EU27 September new car registrations, Canada September industrial product price index, raw materials price index
• Central banks: Fed’s Harker speaks, ECB’s Centeno, Knot, Holzmann, Villeroy and Rehn speak, BoE’s Bailey, Greene and Breeden speak
• Earnings: General Electric, Danaher, Texas Instruments, Philip Morris, Verizon, RTX, Lockheed Martin, Fiserv, Moody’s, Freeport-McMoRan, General Motors, Deutsche Boerse

Wednesday October 23

• Data: US September existing home sales, Eurozone October consumer confidence
• Central banks: Fed’s Beige Book, Bowman and Barkin speak, BoC decision, ECB’s Lagarde, Lane, Cipollone, Escriva, Knot and Centeno speak, BoE’s Bailey and Breeden speak
• Earnings: Tesla, Coca-Cola, T-Mobile US, Thermo Fisher Scientific, IBM, ServiceNow, NextEra Energy, AT&T, Boston Scientific, Lam Research, Iberdrola, Boeing, Atlas Copco, Amphenol, CME, GE Vernova, Newmont, Hilton, Heineken
• Auctions: US 20-yr Bond (reopening, $13bn)

Thursday October 24

• Data: US, UK, Japan, Germany, France and Eurozone October flash PMIs, US September Chicago Fed national activity index, new home sales, October Kansas City Fed manufacturing activity, initial jobless claims, France October manufacturing confidence
• Central banks: Fed’s Hammack speaks, ECB’s Kazaks and Lane speak, BoE’s Mann speaks
• Earnings: S&P Global, Union Pacific, Honeywell, KKR, UPS, SK Hynix, Equinor, Dassault Systemes, Keurig Dr Pepper, Nasdaq, Dow, Evolution AB, Neste Oyj, Norsk Hydro
• Auctions: US 5-yr TIPS ($24bn)

Friday October 25

• Data: US September durable goods orders, October Kansas City Fed services activity, UK October GfK consumer confidence, Japan October Tokyo CPI, September PPI services, Germany October Ifo survey, France October consumer confidence, Q3 total job seekers, Italy October consumer confidence index, manufacturing confidence, economic sentiment, Eurozone September M3, Canada August retail sales
• Central banks: ECB consumer expectations survey
• Earnings: Sanofi, HCA Healthcare, Colgate-Palmolive, Mercedes-Benz, Eni, Sika, Centene

* * *

Finally, turning to the US, Goldman writes that the key economic data release this week is the durable goods report on Friday. There are several speaking engagements from Fed officials this week.

Monday, October 21

• There are no major economic data releases scheduled.
• 08:55 AM Dallas Fed President Logan (FOMC non-voter) speaks: Dallas Fed President Lorie Logan will deliver remarks at the 2024 Securities Industry and Financial Markets Association (SIFMA) Annual Meeting. Text and moderated Q&A are expected.
• 01:00 PM Minneapolis Fed President Kashkari (FOMC non-voter) speaks: Minneapolis Fed President Neel Kashkari will take part in a townhall hosted by the Chippewa Falls Chamber of Commerce in Wisconsin. Audience and moderated Q&A are expected. On October 14th, Kashkari noted that “further modest reductions” in the fed funds rate were likely appropriate in coming quarters. Kashkari also said that “a rapid labor weakening does not appear to be imminent” and stressed that “the path ahead for policy will be driven by the actual economic, inflation, and labor market data.”
• 05:05 PM Kansas City Fed President Schmid (FOMC non-voter) speaks: Kansas City Fed President Jeffrey Schmid will deliver remarks on the economic and monetary policy outlook to the Chartered Financial Analyst (CFA) Society in Kansas City. Text and audience Q&A are expected.
• 06:40 PM San Francisco Fed President Daly (FOMC voter) speaks: San Francisco Fed President Mary Daly will take part in a moderated discussion at a Wall Street Journal Live event in California. Moderated and audience Q&A are expected. On October 15th, Daly said that “one or two cuts [this year] was a reasonable” baseline if the economy performs as expected and noted that “it’s clear … the direction of change is down.”

Tuesday, October 22

• 10:00 AM Richmond Fed manufacturing index, October (consensus -17, last -21)
• 10:00 AM Philadelphia Fed President Harker (FOMC non-voter) speaks: Philadelphia Fed President Patrick Harker will speak at the 8th Annual Fintech Conference, hosted by the Philly Fed. Text is expected.

Wednesday, October 23

• 09:00 AM Fed Governor Bowman speaks: Fed Governor Michelle Bowman will deliver opening remarks at the Philly Fed’s Fintech Conference.
• 10:00 AM Existing home sales, September (GS +2.1%, consensus +1.0%, last -2.5%)
• 12:00 PM Richmond Fed President Barkin (FOMC voter) speaks: Richmond Fed President Thomas Barkin will deliver a speech about community colleges at the 2024 Virginia Education and Workforce Conference. Text is expected. On October 10th, Barkin noted that, while he “wouldn’t declare victory” on inflation, he thought it was “definitely headed in the right direction.” Barkin said that the FOMC’s 50bp cut in September was “a recalibration toward a somewhat less restrictive stance” and noted that he “didn’t have a lot of heartburn about whether you got there in three steps or four steps or two and then one.” Barkin noted that the recent labor market data “confirms what I’m hearing … We’re in a low hiring, low firing environment.”
• 02:00 PM Beige Book, November meeting period

Thursday, October 24

• 08:30 AM Initial jobless claims, week ended October 19 (GS 245k, consensus 240k, last 241k); Continuing jobless claims, week ended October 12 (consensus 1,876k, last 1,867k): We estimate that initial claims increased to 245k in the week ended October 19th, reflecting a 5-10k incremental boost from hurricane-related filings on the back of Hurricane Milton but a slight headwind from residual seasonality.
• 08:45 AM Cleveland Fed President Hammack (FOMC non-voter) speaks: Cleveland Fed President Beth Hammack will deliver welcoming remarks at an event hosted by the Cleveland Fed’s Center for Inflation Research.
• 09:45 AM S&P Global US manufacturing PMI, October preliminary (consensus 47.5, last 47.2); S&P Global US services PMI, October preliminary (consensus 55.0, last 55.2)
• 10:00 AM New home sales, September (GS -0.5%, consensus +0.6%, last -4.7%)
• 11:00 AM Kansas City Fed manufacturing index, October (consensus -5, last -8)

Friday, October 25

• 08:30 AM Durable goods orders, September preliminary (GS -2.0%, consensus -1.0%, last flat); Durable goods orders ex-transportation, September preliminary (GS +0.1%, consensus -0.1%, last +0.5%); Core capital goods orders, September preliminary (GS +0.1%, consensus +0.1%, last +0.3%); Core capital goods shipments, September preliminary (GS +0.1%, consensus flat, last -0.1%): We estimate that durable goods orders declined 2.0% in the preliminary September report (month-over-month, seasonally adjusted), reflecting a decline in commercial aircraft orders. We forecast 0.1% increases in core capital goods orders and shipments, reflecting mixed global manufacturing data.
• 10:00 AM University of Michigan consumer sentiment, October final (GS 68.8, consensus 69.5, last 68.9): University of Michigan 5-10-year inflation expectations, October final (GS 3.1%, last 3.0%)

Source: DB, Goldman

Shares of Spirit Airlines soared in premarket trading in New York after the carrier reached an agreement with the US Bank National Association to extend a debt-refinancing deadline to the end of 2024. The budget carrier also drained a revolving credit facility for hundreds of millions of dollars, shoring up its balance sheet while delaying an imminent threat of bankruptcy.

Spirit wrote in an 8-K filing that the deadline for refinancing $1.1 billion in debt had been pushed from Monday to Dec. 31. The refinancing is critical because it will determine if its credit-card-processing agreement will be extended into 2025. 

Also, in the filing, Spirit said it drained a $300 million revolving credit facility due September 2026. This will help the carrier cover short-term needs, such as payroll, jet operations, and emergency expenses, averting a near-term bankruptcy filing. 

“Consistent with its previously provided guidance, the Company expects to end the year 2024 with over $1.0 billion of liquidity, including unrestricted cash and cash equivalents, short-term investment securities and additional liquidity initiatives, assuming that the Company is able to close those initiatives that are currently in process,” Spirit said. 

Shares jumped as much as 71% in premarket trading on the news. On the year, shares are down 91% (as of Friday’s close) after the carrier’s deal with JetBlue airways stalled.

Bloomberg data shows 33% of the float is short, equivalent to about 35.7 million shares. This leaves about 7.8 days to cover. 

Just weeks ago, The Wall Street Journal revealed that the struggling airline has been in discussions with bondholders about the possibility of a bankruptcy filing following the collapse of its merger with JetBlue Airways in March. 

Today’s news delays an imminent bankruptcy filing while stoking a squeeze in shares.