Month: October 2024

Authored by Jonathan Turley,

With the end of the Biden Administration in sight, liberal pundits seem to be striving to prove that the only difference between a lawbreaker and a law-abiding citizen is the ability to get away with the crime. Popular figures on the left from Michael Moore to Keith Olbermann are calling on President Joe Biden to commit overtly unlawful acts in his final 100 days in office, including targeting his political opponents. In one of the few statements of Moore with which I agree, he stated that this is “no joke.” It certainly is not.

It is the same logic used by looters that they have a license for illegality. However, this constitutional looting would endanger not just the Constitution but the country as a whole if Biden were to heed this advice.

In a posting on Substack, Moore told Biden that it was time to yield to temptation and check off a liberal 13-item “bucket list” of demands, tossing aside questions of legality or constitutionality in the process.

“You’re not done. You’ve still got 100 days left in office! And the Supreme Court has just granted you super powers — AND immunity! You don’t answer to anyone. For the first time in over 50 years, you don’t have to campaign for anything…“You have full immunity! No kidding! No joke! That’s not hyperbole! You can get away with anything! And what if anything means everything to the people?”

The list includes emptying death row, canceling all student and medical debt, halting weapons shipments to Israel, ending the death penalty, declaring the Equal Rights Amendment a constitutional amendment, and granting clemency to nonviolent drug offenders.

Other pundits have pushed Biden and Democrats to take some of the actions on Moore’s list before the end of the administration.

Many of these items could only be fulfilled by knowingly gutting the Constitution and assuming the powers of a monarch. That includes just canceling all student and medical debt in defiance of both the courts and Congress.

As discussed in my most recent column, others have added to that bucket list.

Take Olbermann who, while insisting that he is fighting to “save democracy,” has called upon Biden to target political opponents like Elon Musk with deportation: “If we can’t do that by conventional means, President Biden, you have presidential immunity. Get Elon Musk the F out of our country and do it now.”

These calls come in the midst of a counter-constitutional movement led by law professors. Moreover, the disregard for such legal authority has been voiced by liberal academics like Harvard Professor Lawrence Tribe. Indeed, his past “just do it” approach was not dissimilar in advice to Biden.

For example, the Biden administration was found to have violated the Constitution in its imposition of a nationwide eviction moratorium through the Centers for Disease Control and Prevention (CDC).  Biden admitted that his White House counsel and most legal experts told him the move was unconstitutional. But he ignored their advice and went with that of Harvard University Professor Laurence Tribe, the one person who would tell him what he wanted to hear. It was, of course, then quickly found to be unconstitutional.

The false premise of the recent calls is that the Court removed all limits on the presidency in its recent ruling on presidential immunity. The fact that law professors are repeating this clearly erroneous claim is a measure of the triumph of rage over reason today.

As I have previously written, I am not someone who has favored expansive presidential powers. As a Madisonian scholar, I favor Congress in most disputes with presidents. However, I saw good-faith arguments on both sides of this case and the Court adopted a middle road on immunity — rejecting the extreme positions of both the Trump team and the lower court.

As I previously wrote, the Court followed a familiar approach:

The Court found that there was absolute immunity for actions that fall within their “exclusive sphere of constitutional authority” while they enjoy presumptive immunity for other official acts. They do not enjoy immunity for unofficial, or private, actions.

The Court has often adopted tiered approaches in balancing the powers of the branches. For example, in his famous concurrence to Youngstown Sheet & Tube Co. v. Sawyer, 343 U.S. 579 (1952), Justice Robert Jackson broke down the line of authority between Congress and the White House into three groups where the President is acting with express or implied authority from Congress; where Congress is silent (“the zone of twilight” area); and where the President is acting in defiance of Congress.

The Court separated cases into actions taken in core areas of executive authority, official actions taken outside those core areas, and unofficial actions.  Actions deemed personal or unofficial are not protected under this ruling.

It is certainly true that the case affords considerable immunity, including for conversations with subordinates. However, as Chief Justice John Roberts lays out in the majority opinion, there has long been robust protections afforded to presidents.

There are also a host of checks and balances on executive authority in our constitutional system. This includes judicial intervention to prevent violations of the law as well as impeachment for high crimes and misdemeanors.

What is interesting is not just what is stated but implied. Courts would quickly enjoin such efforts, but figures like Moore suggest that it would not matter. If so, Biden would not only flagrantly violate the Constitution, but then defy the authority of the federal courts. That includes unilaterally declaring an unratified amendment as ratified based on a meritless claim by the far left.

So President Biden would violate the Constitution, refuse to yield to the courts, and pursue his “bucket list” of priorities without any legal restraints. All would be done in defense of democracy. It shows how the line between tyranny and democracy can be lost in an age of rage.

*  *  *

Jonathan Turley is the Shapiro Professor of Public Interest Law at George Washington University and the author of “The Indispensable Right: Free Speech in an Age of Rage.”

Having disappointed the market with a lack of detail on its big stimulus, it appears Chinese authorities have resorted to the usual western practice of leaking details (strawmen) to the press in an effort to measure the market’s reaction function.

As we detailed over the weekend, Saturday’s much-anticipated press conference by China’s Ministry of Finance, where many China watchers were expecting another major stimulus announcement with some hoping for a number as large as 10 trillion rmb, was a dud.

“The policy to support consumption sounds quite weak,” said Jacqueline Rong, chief China economist at BNP Paribas SA.

“It is still too early to call an imminent significant turnaround in deflationary pressure or a bottoming-out of the property market, which are the two key issues faced by the Chinese economy.”

Investors and analysts expected China to deploy about 2 trillion yuan ($283 billion) in fresh fiscal stimulus (and as much as 11 trillion yuan on the high end), including potential subsidies, consumption vouchers and financial support for families with children.

But, in response to the question of just how big the stimmy package will be, MoF’s Lan responded that “regarding the specific RMB amount you asked, we will disclose promptly to the general society after the proper legal procedures have been passed.”

Investors were displeased with this lack of response and so it appears Beijing has reached out to its media mouthpieces to test the waters.

Caixin Global reports that, according to multiple sources with knowledge of the matter, China may raise 6 trillion yuan from ultra-long special treasury bonds over three years as part of its efforts to buttress the slowing economy through fiscal stimulus.

The funds will be partly used to help local governments resolve their off-the-books debts, according to the sources.

The 6 trillion yuan number sits right in the middle of the range of analysts’ expectations, but presumably this ‘leak’ will be used by authorities to judge what the market demands.

Liu Shijin, a former member of the country’s top political advisory body, recently advocated for a stimulus package of more than 10 trillion yuan – roughly one-tenth of the nation’s annual GDP – to be implemented over the coming one to two years.

He said the amount is appropriate for an economy as big as China’s. A bigger tool is needed to pry a bigger stone, he told Caixin, comparing his plan to China’s 4-trillion-yuan stimulus package during the global financial crisis in 2008.

Of course, what this massive debt-financed stimulus will produce initially is higher rates – something that will crush the very markets (housing) that the CCP is trying to bailout.

What does that mean? Simple… China QE is inevitable to tamp down any adverse bond-market reaction.

And, as we detailed previously, that is exactly what the markets are hoping for.

Goldman: to escape deflation and for the rally to be sustainable, China’s M1 has to overtake its M2. For that to happen, China will need to unleash a historic credit impulse (record new debt creation, launch QE) and global inflationary shockwave. https://t.co/suSRIU8wJ5 pic.twitter.com/OCW6CjBM5S

— zerohedge (@zerohedge) October 6, 2024

The current equity market exuberance will only be sustained by a resurgence in excess liquidity.

Of course, if Beijing doesn’t unleash QE, M1 will fail to grow faster than M2, and the government “will spread the monetary crowding out to more weak borrowers in the economy”, since the winners (successful corporates and rich households) will save the impulse and kill the multiplier, resulting in an even bigger hole for China 12-18 months from now, and global deflationary destruction.

On the other hand, if China does do QE, oil will soar, and bitcoin and gold will be orders of magnitude higher once Beijing triggers then next global reflationary tsunami.

Pick your poison.

By Peter Tchir of Academy Securities

There are three main reasons why I don’t have a lot of “new” things to say:

• We’ve said and done a lot of things in the past week or two that I want to highlight, and I don’t want to risk those views getting lost in the shuffle.
• It seems like any day now we might have to “rip up the script” as the risk of escalation and expansion in the Middle East seems terribly high! Also, we are starting to enter earnings season, and I don’t have a strong opinion other than that the leaders are going to have to deliver extremely good quarters and equally rosy outlooks.
• Finally, it has been a long week! It started early with Bloomberg TV on Friday at 5:30 am. However, Why The Fed Will Cut 25 in November isn’t quite the label they gave the segment (their label was a bit more aggressive). We covered the Fed, China, and the Middle East from a military standpoint (leaning heavily on the work done by our Geopolitical Intelligence Group). That followed a very successful (inaugural) Geopolitical/Credit Roundtable in New York City on Thursday night and rolled straight into a weekend of college football! We happened to pick Tennessee vs. Florida this year, which was one heck of a game in Neyland Stadium, and after another Vanderbilt win, I took a lot of ribbing for not wearing a Vandy hat on TV on Friday (it isn’t very often that you can proudly wear Vandy gear during the college football season). Also, Army and Navy are undefeated and ranked in the AP Top 25! That is the first time since 1960 that they’ve been nationally ranked at the same time! Finally, somehow with all that is going on, Academy was quoted in an interesting article about Hedged-Up Wall Street Traders Still Haunted by August Meltdown.

Reminder on China Stimulus

The Chinese stimulus (which was “officially unveiled” on Saturday) was vague and continues to be at the smaller end of expectations. As discussed in China Stimulus Simplified, we expect this to be an iterative process. They will add/tweak to try to accomplish their goals – which are primarily to drive domestic consumption of domestic brands. We think the somewhat predictable sell-off on Tuesday after the Chinese market ended a weeklong holiday offered a buying opportunity for Chinese stocks and that the trade is just getting underway (despite a 35% increase in FXI since September 18th).

Inflation and the Neutral Rate

Last weekend’s T-Report focused on the three topics in the title – War, Inflation, and the Neutral Rate.

We’ve discussed the war in the Middle East a lot at Academy, and the Risk of Further Escalation Webinar from early October is still highly relevant.

But my focus is on trying to get some attention back on inflation. We wrote about it again on Thursday (post-CPI) in More on Inflation. Rates have been moving in our direction, with the 10-year at 4.1% (it is getting more difficult to remain bearish on rates here) and rate cut expectations have been hammered down to levels where we can almost get on board (have to go out to July before 5 cuts are priced in and the “terminal rate” seems to “only” get down to 3.26% in early 2026).

We are hearing more and more about the neutral rate, or terminal rate (I view them as somewhat interchangeable), as the Fed’s policy discussion shifts from starting to cut to how many cuts. 3.5%, which is my view of the bottom end of the range for the neutral rate, seemed almost preposterous a couple of weeks ago, but is now being mentioned by some important Fed speakers as being in their view of possible ranges!

The Election

It is getting more difficult to ignore the election as we are less than a month away, but I will manage to do it for this report. It is close, but “gridlock” still seems to be the base case and that is really what the markets are looking for. But, as we get more data from polls and betting markets, we can start realistically assessing what policies are pure campaign fantasy, versus things that have a chance of getting implemented (Schoolhouse Rock’s Today I Am Still Just a Bill is playing in the background as I type this section).

Bottom Line

It is very difficult to remain bearish on Treasuries here. 4% seemed high as a target on 10s and 4.2% seemed off the radar screen not too long ago. While it seems treacherous to be bearish here, there are a few things that are making it very hard to turn bullish:

• Inflation and the neutral rate are not helping bonds and both topics, if we are correct, could put pressure on bonds.
• We finished auctions of 10s and 30s, which should have been a good opportunity for markets to reverse course, but they didn’t. That seems peculiar and is probably what concerns me the most. We’ve argued that the debt ceiling and the election (actually, the realization that no matter what happens with the election, the deficit will rise consequentially) could weigh on Treasury yields. I am having flashbacks to the Autumn of 2023, when yields went higher virtually every day, marching from 4% to 5% without any “appropriate” reaction to data as it came in. While I don’t think we are in that sort of a world right now (the Fed has cut after all), there is something troubling about not getting a decent rally after the auctions.
• I’ve been wedded to the idea of 25 bps on 2s vs 10s, and while that is back to 14, it could still break through 25.

At best, I can maybe get to “neutral” on rates but think that when push comes to shove, higher yields are likely going to be the pain trade (which means we will probably get it).

Still extremely comfortable with credit. Will pound the table at the front end of the curve for higher quality credits. Anyone who is able should be heavily overweight credit versus Treasuries/T-Bills. At the back end, private credit and the need for banks to grow NIM will mean competition for lending to companies up and down the credit spectrum, which will help corporate bond spreads do well.

Equities. Another 1% up week for the major indices, with just a touch of weakness on Monday and some other intraday/overnight weakness that wound up being bought as the week closed out. I really like energy, China, and am eyeing small caps and value as the Russell 2000 did a little better than the S&P 500 and Nasdaq 100. Semiconductors did great, while utilities did poorly (more due to rates than questions about data center energy use, but those two sectors have been strange bedfellows this year). Banks have been doing well, but maybe it is time to bet heavily on CRE again?

Enjoy the holiday and thanks for all the time and support that you provide Academy Securities. And while it could be seen as a cop-out not to produce much new this weekend, I believe that it would be time well spent reviewing (or reading for the first time) the 3 reports highlighted in today’s T-Report!

This week kicks off with a partial US holiday (Columbus Day) today where bond markets will be closed but with equity markets remaining open. The main news over the weekend has been from China where the highly anticipated Ministry of Finance press conference on Saturday was a dud, light on specifics of immediate stimulus measures, even as it yet another “strong forward commitment” and the announcement of a large-scale local government debt swap, suggesting it could mark a multi-year turning point in China’s fiscal policy framework. DB, like Goldman, raised their 2024 GDP forecast to 4.9% (from 4.7%), based on already announced measures and are expecting more concrete measures to now appear at the upcoming NPCSC in late October.

Also over the weekend, data revealed that China’s September CPI rose by +0.4% year-on-year, the slowest in three months, compared to a +0.6% rise in August and below market expectations of a +0.6% increase. PPI fell by -2.8% year-on-year, the fastest decline in six months, compared to a -1.8% drop in the previous month and below the expected -2.6% decline. So weaker prices than expected all round, but with the subsequent stimulus announcement markets should be comfortable excusing recent data for now.

In terms of this week, the key events will likely be on Thursday with US retail sales and jobless claims, alongside the latest ECB meeting. Outside of this, US earnings season starts to accelerate after last Friday’s unofficial start and there are plenty of central bank speakers to digest as well. Before we dig into these, the other main global highlights this week are the NY Fed 1yr inflation expectations (today), UK employment, German/European ZEW survey, ECB bank lending survey, Eurozone IP and Canadian CPI (tomorrow), UK inflation (Wednesday), US IP and NAHB housing index (Thursday) and US housing starts/building permits, China’s monthly data dump (including Q3 GDP, retail sales, IP, and property data), alongside Japanese CPI to round out the week on Friday.

Digging a bit more into that week ahead now, of all the Fedspeak, Waller today may be the most interesting given he’s traditionally a hawk and is a voter. In his last outing, Waller suggested that another 50bp reduction in an upcoming meeting was a possibility if the labor market weakened further or if inflation continued to come in softer than expected. Since then the opposite has seemingly occurred so will he revert back to more hawkish form?

Skipping to Thursday, September US retail sales will be a swing factor in putting together final Q3 GDP forecasts but jobless claims could spike a significant amount higher (DB forecast 270k vs. 258k last week) and to 3-year highs due to the latest storm. We were surprised that the market zoned in on the spike last week as much as it did as you have to assume for now that most, if not all, of the increase was storm related. The impact of the storm will also feed into this month’s payroll data so there will be a lot of difficulty in assessing employment trends in the next several weeks. Even retail sales might spike up a little this week as storm preparation in Florida may have boosted sales at the end of September.

The highlight of the week in Europe will be the ECB decision on Thursday. DB economists expect a 25bps rate cut following recent lower-than-expected inflation prints as well as weaker growth. The central bank will also release its bank lending survey on Tuesday and the survey of professional forecasters on Friday. The lending survey is a good guage to see whether we’re past the peak impact of the monetary transmission mechanism. In recent quarterly surveys, lending has improved with future expectations improving too so things have been looking up. Elsewhere in Europe keep an eye for the budget in Italy tomorrow, ahead of the EU deadline. Fitch and S&P are likely to opine on Italy’s rating after the close on Friday. The former could influence the latter to some degree. Indeed, late on Friday Fitch placed France on negative outlook after its budget announcement last week saying that “Fiscal policy risks have increased since our last review.” Over in Asia, the focus outside of China will be on the Japanese national CPI due on Friday.

In terms of earnings, we’ll start to see some momentum with the highlights including key semiconductor firms TSMC (Thursday) and ASML (Wednesday). Otherwise, US bank results will continue to come in with Bank of America, Citigroup and Goldman Sachs (all tomorrow) the highlights, alongside large cap healthcare names including UnitedHealth, Johnson & Johnson (both tomorrow) and Abbott (Wednesday). Other notable names include Netflix and Blackstone on Thursday and Procter & Gamble on Friday.

Here is a day-by-day calendar of events

Monday October 14

• Data: US September NY Fed 1-yr inflation expectations, China September trade balance
• Central banks: Fed’s Kashkari and Waller speak, ECB’s Villeroy speaks, BoE’s Dhingra speaks

Tuesday October 15

• Data: US October Empire manufacturing index, UK August average weekly earnings, unemployment rate, September jobless claims change, Japan August capacity utilisation, Germany and Eurozone October Zew survey, Germany September wholesale price index, Eurozone August industrial production, Italy August general government debt, Canada September CPI, existing home sales, New Zealand Q3 CPI
• Central banks: Fed’s Daly and Kugler speak, ECB’s bank lending survey, Nagel speaks
• Earnings: UnitedHealth, Johnson & Johnson, Bank of America, Goldman Sachs, Citigroup

Wednesday October 16

• Data: US October New York Fed services business activity, September import price index, export price index, UK September CPI, RPI, PPI, August house price index, Japan August core machine orders, Canada August manufacturing sales, September housing starts
• Central banks: ECB’s Lagarde speaks, BoJ’s Adachi speaks
• Earnings: ASML, Abbott, Morgan Stanley, Prologis, CSX, Kinder Morgan

Thursday October 17

• Data: US September retail sales, industrial production, capacity utilisation, October Philadelphia Fed business outlook, NAHB housing market index, August business inventories, total net TIC flows, initial jobless claims, Japan September trade balance, August Tertiary industry index, Italy and Eurozone August trade balance, Canada August international securities transactions
• Central banks: ECB decision, Fed’s Goolsbee speaks, BoE’s Woods speaks
• Earnings: TSMC, Netflix, Blackstone, Intuitive Surgical

Friday October 18

• Data: US September housing starts, building permits, China Q3 GDP, September new home prices, retail sales, industrial production, property investment, UK September retail sales, Japan September national CPI, Italy August current account balance, ECB August current account, Eurozone August construction output
• Central banks: Fed’s Kashkari and Waller speak, ECB’s survey of professional forecasters
• Earnings: Procter & Gamble, American Express, Schlumberger, Volvo

* * *

Finally turning to the US, Goldman writes that the key economic data release this week is the retail sales report on Thursday. There are several speaking engagements by Fed officials this week, including events with Governors Waller on Monday and Friday and Governor Kugler on Tuesday.

Monday, October 14

There are no major economic data releases scheduled.

• 09:00 AM Minneapolis Fed President Kashkari (FOMC non-voter) speaks: Minneapolis Fed president Neel Kashkari will participate in a panel discussion at the Central Bank of Argentina’s Money and Banking Conference. Speech text and a livestream of the discussion are expected. On October 3, Kashkari said “the economy is changing. We still have a strong labor market, and inflation is coming down. We’re not where we want to get to yet on inflation, but we’re making progress, and the labor market is still strong, though it’s softening.” Kashkari’s remarks predated the release of the stronger-than-expected September employment report.
• 03:00 PM Fed Governor Waller speaks: Federal Reserve Governor Christopher Waller will speak on the economic outlook at an event in Stanford, CA. Speech text and a Q&A are expected.
• 05:00 PM Minneapolis Fed President Kashkari (FOMC non-voter) speaks: Minneapolis Fed president Neel Kashkari will speak on the current state of US monetary policy at an event hosted by the Department of Economics of Torcuato di Tella University. A Q&A and livestream are expected.

Tuesday, October 15

• 08:30 AM Empire State manufacturing survey, October (consensus +3.6, last +11.5)
• 11:30 AM San Francisco Fed President Daly (FOMC voter) speaks: San Francisco Fed President Mary Daly will give keynote remarks followed by a moderated conversation at an event hosted by the NYU Stern School of Business. Speech text and a Q&A are expected. On October 11, Daly said “I think that two more cuts this year, or one more cut this year, really spans the range of what is likely in my mind, given my projection for the economy.”
• 02:00 PM Fed Governor Kugler speaks: Fed Governor Adriana Kugler will participate in a moderated discussion on career opportunities and diversity in economics. A Q&A and livestream are expected. On October 8, Kugler said “while I believe the focus should remain on continuing to bring inflation to 2 percent, I support shifting attention to the maximum employment side of the FOMC’s dual mandate… We don’t want a drastic slowdown in the labor market.” She went on to say, “we don’t want the labor market to weaken so much that it’s going to cause undue pain, when at the same time we have been seeing a serious reduction in terms of inflation, [which] is moving back to target.”

Wednesday, October 16

• 08:30 AM Import price index, September (consensus -0.3%, last -0.3%); Export price index, September (consensus -0.6%, last -0.7%)

Thursday, October 17

• 08:30 AM Retail sales, September (GS +0.5%, consensus +0.3%, last +0.1%); Retail sales ex-auto, September (GS +0.2%, consensus +0.2%, last +0.1%); Retail sales ex-auto & gas, September (GS +0.4%, consensus +0.3%, last +0.2%); Core retail sales, September (GS +0.4%, consensus +0.4%, last +0.3%): We estimate core retail sales expanded 0.4% in September (ex-autos, gasoline, and building materials; month-over-month SA), reflecting healthy growth in measures of card spending. We estimate a 0.5% increase in headline retail sales, reflecting lower gasoline prices but higher auto sales.
• 08:30 AM Philadelphia Fed manufacturing index, October (GS 2.0, consensus 3.5, last 1.7): We estimate that the Philadelphia Fed manufacturing index was roughly unchanged at 2.0 in October, reflecting mixed global manufacturing indicators.
• 08:30 AM Initial jobless claims, week ended October 12 (GS 250k, consensus 253k, last 258k): Continuing jobless claims, week ended October 5 (consensus 1,888k, last 1,861k)
• 09:15 AM Industrial production, September (GS -0.1%, consensus -0.1%, last +0.8%): Manufacturing production, September (GS flat, consensus -0.2%, last +0.9%); Capacity utilization, September (GS 77.9%, consensus 77.8%, last 78.0%):  We estimate industrial production declined 0.1%, as weak natural gas production outweighed strong electricity and mining production. We estimate capacity utilization declined to 77.9%.
• 10:00 AM Business inventories, August (consensus +0.3%, last +0.4%)
• 10:00 AM NAHB housing market index, October (consensus 43, last 41)
• 11:00 AM Chicago Fed President Goolsbee (FOMC non-voter) speaks: Chicago Fed president Austan Goolsbee will deliver opening remarks at the Chicago Fed Exploring Career Pathways event. A livestream is expected. On October 11, Goolsbee said “taking the long view, inflation is way down while on the job market side, it’s cooled from overly heated to something like steady state full employment… So if that’s normal, the interest rate, in my view, is still well above where the steady state is.” Goolsbee also mentioned that “rates will ultimately, over the next 12 to 18 months, go down to something like 2.5% to 3.5%, and we’re way above that now.”

Friday, October 18

• 08:30 AM Housing starts, September (GS +2.0%, consensus -0.4%, last +9.6%); Building permits, September (consensus -1.0%, last +4.6%)
• 10:00 AM Minneapolis Fed President Kashkari (FOMC non-voter) speaks: Minneapolis Fed President Neel Kashkari will moderate a keynote policy panel at the Macroeconomic Policy Perspectives conference series hosted by the Minneapolis Fed, the University of Chicago, and Stanford University. A livestream is expected.
• 12:10 PM Fed Governor Waller speaks: Fed Governor Christopher Waller will speak on decentralized finance at the Nineteenth Annual Vienna Macroeconomics Workshop. Speech text and a livestream are expected.

d

The U.S. poverty rate stands at 12%, affecting about 41 million people across the country. At the state level, this rate ranges from 7% to 18%, depending on local economic conditions. But how does poverty differ when examined through the lens of racial demographics?

This chart, via Visual Capitalist’s Pallavi Rao, visualizes the percentage and number of Americans living below the poverty threshold, categorized by race, based on data from the American Community Survey 2022 conducted by the Census Bureau. It focuses on respondents who selected a single race.

ℹ️ The Census Bureau sets poverty thresholds based on family size and composition. For families with incomes below these thresholds, every individual in the family is considered in poverty.

Racial Disparities in Poverty

The data reveals distinct differences in poverty rates among racial groups, reflecting the complex social and economic dynamics that have evolved over generations.

*Hispanic/Latino populations usually select “other race” in census surveys. Figures rounded.

While poverty exists across all racial groups, there are some significant variations in both the rates and total numbers. These disparities reflect a combination of historical factors, structural inequalities, and ongoing challenges unique to different communities.

Native and Black Americans Face Higher Poverty Rates

Both Native Americans and Black Americans have the highest poverty rates, with about one in five individuals from these groups living below the poverty line. These groups are considered “overrepresented” in poverty statistics, meaning their share in poverty exceeds their proportion of the total U.S. population.

Long-standing issues have created cycles of poverty that, despite some progress, remain challenging to overcome in the face of ongoing systemic inequalities.

Other racial groups also grapple with poverty as well. There are 19.5 million white Americans below the poverty line. Although the rate is lower, about one-in-ten, the absolute number of people below the poverty threshold is the largest of all groups.

The U.S. also falls behind its peers when it comes to government support to help socio-economic mobility. Check out Hours of Work Needed to Escape Poverty to see how it measures up against other high income economies.

On Monday China has launched large military drills encircling the self-governing island of Taiwan, which Taipei has blasted as an “unreasonable provocation”. China’s PLA military deployed warships and fighter jets to send a “stern warning” against “separatist acts of Taiwan independence forces”.

The PLA Eastern Theater Command deployed joint operations of the army, navy, air force and rocket force. These assets have been largely concentrated in the Taiwan Strait, as well as surrounding Taiwan. “The joint drills focused on sea and air combat readiness, blockading key Taiwanese ports and areas, and assaults on maritime and ground targets,” described the eastern theatre command’s spokesperson, senior captain Li Xi.

“The drill also serves as a stern warning to the separatist acts of ‘Taiwan independence’ forces,” Li added. The last drills of this size occurred just after the May 20th inauguration of Taiwan’s new president Lai Ching-te.

Just before these fresh drills, China’s military issued and circulated a propaganda video entitled “prepared for battle” on vairous social media accounts. The about one-minute video features fighter jets, warships and amphibious assault vessels taking to the air and sea near Taiwan. Mobile rocket launchers are also seen being maneuvered and made ready for attacks. Text associated with the video said Chinese forces are “prepared for battle at all times and can fight anytime.”

The day prior, on Sunday, Taiwan’s Defense Ministry confirmed that the Chinese aircraft carrier Liaoning entered waters near the strategic Bashi Channel south of Taiwan.

Importantly, China’s Defense Ministry has also forewarned that PLA military actions will be “pushed further with each provocation of Taiwan independence until the issue is entirely resolved.” So there is likely more ahead in the coming months.

Watch the propaganda video released by the PLA Eastern Theatre Command:

This propaganda video was posted by PLA’s Eastern Theater Command, which covers Taiwan. The video shows, Chinese soldiers sailors & pilots in war mode ready to “Conquer” Taiwan in the blink of an eye! 1/3 @MalayaIrredenta pic.twitter.com/3y64LcZmjZ

— wanjiru kamanu (@WanjiruKamanu) October 14, 2024

CNN cited analysts who describe that Monday’s drills “appeared less intense than earlier versions but were part of general strategy of both keeping Taiwan under pressure and normalizing regular war games.”

Beijing is presenting these new drills as a necessary response to a speech last Thursday by Taiwan’s president Lai on the occasion of National Day. He emphasized that the People’s Republic of China “has no right to represent Taiwan”.

Polymarket: Will China invade Taiwan in 2024?

On Monday in response to the drills Taiwan’s presidential office called on China to “cease military provocations that undermine regional peace and stability, and stop threatening Taiwan’s democracy and freedom.”

President Lai has convened national security meetings to monitor and address the provocative war exercises. “In the face of external threats, I would like to reassure my compatriots that the government will continue to defend the democratic and free constitutional system, protect democratic Taiwan, and safeguard national security,” Lai stated on social media.

As expected, China announces PLA Joint Sword-2024B exercises (1st map). China Coast Guard exercises as well (2nd map). https://t.co/OSaC8uikOghttps://t.co/eZa2wheu77 pic.twitter.com/H8LKSzX6JJ

— Brian Hart (@BrianTHart) October 14, 2024

Taiwan’s Mainland Affairs Council also slammed the “blatant provocations” which harm regional peace and stability.  Taiwan’s military has in response deployed its own warships and fighter aircraft, as well as land-based radar systems. However, none of this is likely to deter continuing support from the United States and Western partners, something which also constantly angers China.

Authored by Jonathan Turley,

This week, Elton John publicly renounced the Rocket Man – no, not the 1972 song, but Elon Musk, whom he called an “a**hole” in an awards ceremony.

Sir Elton, 77, is only the latest among celebrities and pundits to denounce Musk for his support of former president Donald Trump and his opposition to censorship. Musk-mania is so overwhelming that some are calling for his arrest, deportation and debarment from federal contracts.

This week, the California Coastal Commission rejected a request from the Air Force for additional launches from Vandenberg Air Force Base. It is not because the military agency did not need the launches. It was not because the nation and the community would not benefit from them. Rather, it was reportedly because, according to one commissioner, Musk has “aggressively injected himself into the presidential race.”

By a 6-4 vote, the California Coastal Commission rejected the military’s plan to let SpaceX launch up to 50 rockets per year from the base in Santa Barbara County.

Musk’s SpaceX is becoming a critical part of national security programs. It will even be launching a rescue mission for two astronauts stranded in space. The advances of SpaceX under Musk are legendary. The Air Force wanted to waive the requirement for separate permits for SpaceX in carrying out these critical missions.

To the disappointment of many, SpaceX is now valued at over $200 billion and just signed a new $1 billion contract with NASA. Yet neither the national security value nor the demands for SpaceX services appear to hold much interest for officials like Commissioner Gretchen Newsom (no relation to California’s governor, Gavin Newsom): “Elon Musk is hopping about the country, spewing and tweeting political falsehoods and attacking FEMA while claiming his desire to help the hurricane victims with free Starlink access to the internet.”

Newsom is the former political director for the International Brotherhood of Electrical Workers (IBEW) Local 569. It did not seem to matter to her that increased launches meant more work for electrical workers and others. Rather, it’s all about politics.

Commission Chair Caryl Hart added “here we’re dealing with a company, the head of which has aggressively injected himself into the presidential race and he’s managed a company in a way that was just described by Commissioner Newsom that I find to be very disturbing.”

In my book “The Indispensable Right: Free Speech in an Age of Rage,” I discuss how Musk became persona non grata when he bought Twitter and announced that he was dismantling the company’s massive censorship apparatus.

He then outraged many on the left by releasing the Twitter Files, showing the extensive coordination of the company with the government in a censorship system described by a federal court as “Orwellian.”

After the purchase, former Democratic presidential nominee Hillary Clinton called upon Europeans to force Musk to censor her fellow Americans under the notorious Digital Services Act. Clinton has even suggested the arrest of those responsible for views that she considers disinformation.

Silicon Valley investor Roger McNamee called for Musk’s arrest and said that, as a condition of getting government contracts, officials should “require him to moderate his speech in the interest of national security.”

Former Clinton Secretary of Labor Robert Reich wants Musk arrested for simply refusing to censor other people.

Former MSNBC host Keith Olbermann called for Musk to be deported and all federal contracts cancelled with this company. As with many in the “Save Democracy” movement, Olbermann was unconcerned with the denial of free speech or constitutional protections. “If we can’t do that by conventional means, President Biden, you have presidential immunity. Get Elon Musk the F out of our country and do it now.”

Of course, none of these figures are even slightly bothered about other business leaders with political opinions, so long as, like McNamee, they are supporting Harris or at least denouncing Trump. Musk has failed to yield to a movement infamous for cancel campaigns and coercion. The usual alliance of media, academia, government and corporate forces hit Musk, his companies and even advertisers on X.

Other corporate officials collapsed like a house of cards to demands for censorship — see, for example, Facebook’s Mark Zuckerberg. Musk, in contrast, responded by courageously releasing the Twitter Files and exposing the largest censorship system in our history.

That is why I describe Musk as arguably the single most important figure in this generation in defense of free speech. The intense hatred for Musk is due to the fact that he was the immovable object in the path of their formerly unstoppable force.

The left will now kill jobs, cancel national security programs and gut the Constitution in its unrelenting campaign to get Musk. His very existence undermines the power of the anti-free speech movement. In a culture of groupthink, Musk is viewed as a type of free-thought contagion that must be eliminated.

Their frustration became anger, which became rage. As Elton John put it in “Rocket Man,” he was supposed to be “burning out his fuse up here alone.”

Yet, here he remains.

George Bernard Shaw once said “a reasonable man adjusts himself to the world. An unreasonable man expects the world to adjust itself to him. Therefore, all progress is made by unreasonable people.”

With all of his idiosyncrasies and eccentricities, Elon Musk just might be that brilliantly unreasonable person.

*  *  *

Jonathan Turley is the Shapiro Professor of Public Interest Law at George Washington University and the author of “The Indispensable Right: Free Speech in an Age of Rage.”

While US bonds may be closed for the Columbus Day holiday, stocks are open and merrily melting up on pace for their 46th record high of 2024. As of 8:00am, S&P futures are higher by around 0.2% on the day, trading above Friday’s range, and at new all time highs while futures on the Nasdaq 100 rose 0.2% with NVDA, AAPL, and GOOG leading in MegaCap Tech as investors geared up for the latest round of corporate earnings and increasingly turned their focus toward the US election where a pro-market Trump victory looks increasingly more likely. In China, the CSI 300 Index closer ~2% higher after a choppy session where markets pumped, then dumped, then rebounded once the National Team stepped in as traders digested the latest disappointing pledges from Beijing to support the economy. Europe’s Estoxx 50 is marginally lower over early London session. US cash bond markets are closed today. The Bloomberg Dollar index is higher. Commodities are mixed: oil prices are -2.3% lower, base metals are higher, and precious metals show mixed movements. This week, we will have a busy earnings calendar, along with Retail Sales release on Thursday.

In premarket trading, cryptocurrency-linked stocks were lifted by gains in Bitcoin as traders bet Beijing’s latest stimulus efforts would keep speculators chasing crypto rather than Chinese stocks. MicroStrategy led gains in cryptocurrency-linked companies. Boeing fell again as the beleaguered planemaker plans to cut its global workforce by about 10% and announced $5 billion in charges. SentinelOne Inc. shares rose 4.2% as Piper Sandler upgraded the cybersecurity software company saying current estimates of its market share gains are too low. Meanwhile, US-listed casino stocks tumbled after the election of a new Macau leader, who has warned against the influence of the gambling industry in the city. Here are some other notable premarket movers:

• B. Riley rises 20% after the embattled broker-dealer and investment firm reached a deal with funds managed by Oaktree Capital Management LP for a partnership in Great American Holdings.
• Boeing slips 2% as the beleaguered planemaker plans to cut its global workforce by about 10% and announced $5 billion in charges across its commercial airplanes and defense businesses.
• Caterpillar drops 2% after being downgraded to underweight by Morgan Stanley as analysts view construction firms cautiously, flagging a disconnect between fundamentals and share price.
• FanDuel parent Flutter Entertainment rises 4% as analysts mostly played down the likelihood of heavy new taxes for the industry amid a report on Friday that the UK is considering a tax of up to £3 billion on the gambling sector.
• Longboard Pharmaceuticals gains 50% after agreeing to be acquired by Danish pharmaceutical company H. Lundbeck A/S in a deal with an equity value of $2.6 billion.

A newly accommodative Federal Reserve is providing fresh fodder for bulls — but they’re also fighting against lofty valuations. The S&P 500’s 20% gain through September has been its strongest performance for the first nine months of a year since 1997, according to National Bank of Canada economists including Stefane Marion. That’s pushed earnings-based valuations pushed to rich levels across industries.

“It remains uncertain whether the market will finish the year as strongly as it began and whether this easing cycle will provide substantial momentum for equities,” the economists wrote in a note to clients. “The current easing cycle is unfolding in an environment of unusually high valuations.”

Meanwhile, with just weeks to go until the election showdown between Kamala Harris and Donald Trump, odds are increasing shifting in favor of the latter but it’s “still too close to call,” according to Jefferies strategist Mohit Kumar. “A Trump victory would likely be positive for risk sentiment, though more for US assets at the expense of Europe and rest of the world,” Kumar said. “In our view, the environment remains broadly positive for risky assets.”

Corporate earnings are the next test. Results from Citi, Goldman and Bank of America are due Tuesday, where the banks will provide an early verdict on the impact of interest rate cuts on their bottom lines. JPMorgan, Wells Fargo and Bank of New York Mellon all topped estimates Friday. In Europe, profits are anticipated to come in lower due to anemic economic growth and a stunted recovery in China, which is likely to drag down luxury goods makers like LVMH.

And speaking of Europe, stocks are flat with the Stoxx 600 little changed on the day with consumer products and travel & leisure shares the worst laggards, while technology and telecommunications stocks fared best ahead of the European Central Bank decision on Thursday, where another rate cut now seems likely. Here are the biggest movers Monday:

• UK gambling stocks slumped on Monday following a report that Chancellor Rachel Reeves may be weighing proposals to increase taxes on the industry by as much as £3 billion ($3.9 billion).
• Adidas advances as much as 2.3% after both TD Cowen and UBS raised their price targets on the sportswear company ahead of its third-quarter results on October 29
• Bunzl shares rise as much as 2.3% after the distributor was upgraded by analysts at JP Morgan, which have lifted their medium-term underlying margin forecasts to reflect greater confidence in the firm’s positive trajectory
• Ashmore gains as much as 13%, the most since Nov. 2022, after the emerging markets specialist fund house delivered a first-quarter performance that Morgan Stanley says shows an “improving path”
• TI Fluid Systems soars as much as 22%, reaching their highest level in more than two years, after management at the UK automotive components supplier said they would be “minded to recommend” the latest takeover offer from ABC Technologies if it is made firm
• BASF shares drop as much as 1.5% after UBS cuts its recommendation on the German chemicals firm to neutral from buy, saying that the next 12 months are likely to be challenging amid slowing global economic growth
• Munters shares fall as much as 8.5% after Carnegie downraded on the Swedish industrial air and ventilation firm to sell from hold, noting that the lack of large order announcements in the key data center segment in 3Q represents a downside risk to sales estimates
• Aker BP shares slip as much as 1.5% after the Norwegian oil company revealed a revenue miss, driven by production falling below the contracted volumes
• Ipsen shares drop as much as 2.4% after the pharmaceutical company was downgraded by analysts at Kepler Cheuvreux, citing a more cautious outlook
• Bossard shares drop as much as 9.2% after the Swiss industrial company’s outlook disappointed analysts who were expecting a recovery in the market. They see lower consensus estimates as a result
• Pagegroup shares drop as much as 0.9% after the recruitment company conceded market conditions remain challenging as it reported a sharp drop in profit during the latest quarter

Asian equities reversed early losses to eke out small gains after Chinese stocks rebounded on Beijing’s commitment to shore up the economy. The MSCI Asia Pacific excluding Japan index rose as much as 0.4%, erasing an earlier drop of as much as 0.8%. Financial and technology shares were among the top gainers. Stocks also rose in South Korea, Taiwan and Australia. Markets in Japan and Thailand were closed for a holiday.

Mainland Chinese stocks closed higher after a volatile session as investors await more details on fiscal measures. Gauges in Hong Kong pared declines. Despite promises of more support for the struggling property sector and hinting at greater government borrowing, a briefing by China’s Finance Minister Lan Fo’an on the weekend didn’t produce the headline dollar figure for fresh fiscal stimulus that the markets had sought. Still, after an initial swoon, China’s main CSI 300 Index finished 1.9% higher in volatile trading Monday, after capping its worst week since late July as Beijing’s latest efforts to jumpstart growth disappoint those seeking more details on incentives. That said, don’t expect the bounce to last.

“While some investors may be disappointed, it seems to us that the policy pivot has occurred, we should see continued momentum in the coming weeks,” BofA Securities’ strategist Winnie Wu wrote in a note. “Be long-term greedy, short-term cautious” on China equities, she said.

In FX, the Bloomberg Dollar Spot Index rises 0.1%. The Norwegian krone is the weakest of the G-10 currencies, falling 0.4% against the greenback.

In rates, treasury futures are marginally lower on the day, following losses seen in core European rates led by long-end end gilts, where UK 30-year yields are cheaper by 3bp on the day. Cash Treasuries trading is closed Monday for the Columbus Day holiday, the session does include scheduled Fed speakers from both Kashkari and Waller. No US data is scheduled. Treasury 10-year note futures are lower by around 10 ticks on the day, trading on lows at 111-29+ and edging below Friday session lows but remaining inside last week’s trading range. German government bonds are also steady with little economic data to dictate otherwise The France-Germany 10-year yield spread has barely budged despite Fitch putting France on negative outlook on Friday just a day after the government presented its 2025 budget.

In crypto, bitcoin climbed to the highest level in two weeks as investors took disappointment over China as good news for cryptocurrencies which are seen as potential beneficiaries of China stock outflows.

In commodities, oil prices declined, with Brent crude futures falling 2.1% to $77.40 a barrel, and as OPEC cut its global oil demand growth forecast for the third consecutive month. Spot gold rose $5 to $2,661/oz, trading at all time highs.

Looking at today’s calendar, there are no US events scheduled due to the Columbus Day holiday. This week includes retail sales, industrial production and housing starts. Fed speakers scheduled include Kashkari (9am, 3pm) and Waller (3pm)

Market Snapshot

• S&P 500 futures up 0.2% at 5,870.00
• STOXX Europe 600 little changed at 521.61
• MXAP little changed at 192.57
• MXAPJ little changed at 614.03
• Nikkei up 0.6% to 39,605.80
• Topix down 0.2% to 2,706.20
• Hang Seng Index down 0.7% to 21,092.87
• Shanghai Composite up 2.1% to 3,284.32
• Sensex up 0.8% to 81,995.12
• Australia S&P/ASX 200 up 0.5% to 8,252.81
• Kospi up 1.0% to 2,623.29
• German 10Y yield little changed at 2.27%
• Euro little changed at $1.0929
• Brent Futures down 1.6% to $77.78/bbl
• Gold spot up 0.1% to $2,659.77
• US Dollar Index up 0.13% to 103.03

Top Overnight News

• China promises incremental stimulus actions, but finance minister’s press briefing lacks numerical specificity (the government could unveil precise figures later this month after the standing committee meets). WSJ
• China’s inflation undershoots the consensus in Sept, with PPI coming in -2.8% Y/Y (vs. -1.8% in Aug and vs. the Street -2.6%) while the CPI rose 0.4% (down from +0.6% in Aug and vs. the Street +0.6%). FT
• China’s trade numbers for Sept came in below expectations, with exports rising 2.4% Y/Y (vs. the Street +6%) and imports inching higher by +0.3% (vs. the Street +0.8%). China auto sales rise 4.5% Y/Y in Sept, reversing 5 months of declines, thanks to aggressive pricing and government stimulus initiatives. SCMP / WSJ
• The Eurozone’s weak economic growth and sluggish consumer price rises have raised concerns that the European Central Bank may be facing the threat of too little rather than too much inflation, economists have warned. Monetary policymakers will meet this Thursday and are widely expected to reduce rates. Having previously not anticipated a cut until December, investors now view a quarter-point reduction to 3.25 per cent as a given. FT
• US to send a THAAD missile defense system to Israel, along w/100 American troops to operate it, to help defend the country. NYT
• Harris and Trump are tied nationally at 48% according to a fresh NBC poll (this represents a sharp rebound for Trump, who was down 5 points in the last NBC reading). NBC
• A top economic adviser to Donald Trump dismissed concerns that the former president would weaken the dollar or cut trade if re-elected, insisting he wants the US to remain the world’s reserve currency and uses tariffs as a negotiating tactic. The comments from Scott Bessent, a 62-year-old hedge fund manager who made a windfall betting on the Japanese yen and British pound for George Soros, are relevant because he has emerged as a top Trump adviser on the economy and finance in recent years. FT
• Boeing after the Fri close preannounced a shortfall on Q3 EPS/revenue (op. cash flow wasn’t as bad as feared) and the company said it would cut its workforce by 10%. WSJ
• Apple developers aren’t building apps for the Vision Pro at a rapid rate, which is hurting the device’s utility and weighing on sales. WSJ
• US Energy Secretary Granholm said about 75% of power was restored across Florida and the vast majority of power in Florida is expected to be restored by the end of Tuesday.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were predominantly higher but with the upside capped amid the Japanese holiday closure, soft Chinese inflation and lack of China stimulus details, while participants await Chinese trade data. ASX 200 was underpinned amid strength in mining stocks despite a pullback in commodity prices. Hang Seng and Shanghai Comp traded mixed in which the former initially slipped back beneath the 21,000 level with notable weakness in tech and consumer stocks after the Chinese Ministry of Finance’s press briefing omitted an actual stimulus size. Conversely, the mainland ultimately shrugged off the lack of stimulus details and softer inflation data, while other government departments also pledged support efforts, picking up further throughout the session.

Top Asian News

• Golden Credit (China state-owned rating agency) expects the incremental size of the lastest set of fiscal policy to be no less than CNY 4tln in size, which will lift Q4 GDP growth above 5.0%.
• China’s Finance Minister Lan Foan said local governments have CNY 2.3tln in local funds to spend in the last three months of the year which includes debt quotas and unused funds. Lan stated that the central government has relatively large room to issue debt and increase the budget deficit, while they will better use policy measures to support the economy. Furthermore, they will implement fiscal and tax reforms in a step-by-step way and will roll out some reforms over 2024 and 2025 but did not announce the size of the stimulus.
• China’s Vice Finance Minister said they will take measures to promote stability in the property market, while they will expand the scope of usage for local government debt and will complete the issuance of CNY 1tln in special treasury bonds in 2024. Furthermore, the official said it is necessary to support large state banks to increase first-tier core capital and will support large banks’ operations and profitability to support the economy.
• China’s MIIT said China will launch another batch of specific initiatives in Q4 to promote consumption and expand domestic demand and noted there are currently about 36,000 projects under construction in the industrial field which started during the year and are expected to pull investment of more than CNY 11tln in the next three years. It was also reported that China’s Industrial Ministry official said China will roll out supportive measures for equipment upgrades and consumer trade-ins in Q4, while China’s financial regulator official said they will lower financing costs of small and mid-sized enterprises.
• China’s upcoming local government hidden debt swap could be over CNY 2.2tln, according to Xinhua citing a state think tank.
• China’s MOFCOM said there are still major differences between both sides in China-EU tariff negotiations and a mutually acceptable solution has not been reached so far, while the Chinese side officially invited the European side to send a technical team to China ASAP to continue face-to-face negotiations. Furthermore, MOFCOM said Chinese companies have authorised the China Chamber of Commerce for Machinery and Electronics to propose a price commitment plan that represents the overall position of the industry, and it warned against the European side conducting separate price commitment negotiations with some companies.
• China’s MOFCOM said Taiwan’s Democratic Progressive Party has not taken any practical measures to lift trade restrictions on the mainland, while it added relevant departments are studying further measures based on the conclusions of the ministry’s investigation into trade barriers by Taiwan against the mainland.
• Monetary Authority of Singapore maintained the width, centre and slope of the SGD NEER policy band, as expected. MAS said Singapore’s economy is currently forecast to expand at close to its potential rate and it expects GDP growth to come in around the upper end of the 2–3% forecast range for the year. MAS said core inflation has stepped down and is anticipated to decline further to around 2% by the end of 2024, while based on its outlook, the MAS assesses that the monetary policy settings are for now still consistent with medium-term price stability.
• Golden Credit (China state-owned rating agency) expects the incremental size of the lastest set of fiscal policy to be no less than CNY 4tln in size, which will lift Q4 GDP growth above 5.0%.

European bourses, Stoxx 600 (U/C) began the session on a modestly firmer footing, but now display a more mixed picture. Indices dipped off best levels following softer-than-expected trade data from China, with particular weakness in Chinese exports. European sectors are mixed. Travel & Leisure underperforms amid news that the UK is considering a tax raid on gambling firms, whilst Consumer Products is weighed on by Luxury names after China reported weak inflation metrics. US Equity Futures (ES +0.1% NQ +0.1% RTY +0.2%) are modestly mixed, taking a breather from the strong session seen on Friday.

Top European News

• UK PM Starmer is to ask the competition watchdog to soften its approach as he vows to rip out bureaucracy to make the UK more attractive for investments, according to FT.
• UK Business and Trade Secretary Reynolds added to speculation that the government is planning to increase payroll taxes for businesses by raising their national insurance contributions as he insisted that the Labour government’s manifesto had only promised not to hike the contributions for employees, according to an interview with Sky News cited by Bloomberg.
• Fitch Ratings has downgraded France’s outlook to negative from stable, while maintaining France’s credit rating at “AA-“, citing increased fiscal deficits and political risks; the agency expects government debt to rise to 118.5% of GDP by 2028, following the announcement of the 2025 budget.
• German Economy Ministry in monthly report says current economic indicators point to continued weakness in the German economy in the past quarter.

FX

• DXY is flat and trading within a very tight 102.96-103.10 range; the high for today is a little shy of its 100 DMA at 103.23. The docket for today is fairly thin, with only Fed’s Kashkari and Waller due to speak.
• EUR is modestly lower and sits in a 1.0916-34 range, in what has been a catalyst-thin session thus far; markets digest Fitch’s recent outlook change on France, moving it to negative from stable, whilst maintaining its AA- rating.
• GBP is flat vs the Dollar given the lack of UK-specific newsflow, but as traders remain very mindful of the looming UK Budget on October 30th.
• JPY is slightly softer and trading within a 149.09-46 range. Price action overnight was fairly rangebound, but USD/JPY did edge higher into the European morning, but with no clear catalyst.
• The Antipodeans are the worst G10 performers thus far, largely attributed to the weak Chinese inflation metrics and after the lack of stimulus details from China’s MoF on Saturday.
• PBoC set USD/CNY mid-point at 7.0723 vs exp. 7.0722 (prev. 7.0731).

Fixed Income

• USTs are holding above 112-00, in familiar and very tight ranges, given the lack of cash trade on account of Columbus Day. The main update thus far was the weekend unveiling of China stimulus; however, the somewhat limited details meant the market reaction was fairly muted initially
• Bunds are firmer but with European specifics light so far and action somewhat thinner than normal owing to the lack of Japanese trade and no US cash trade due to Columbus Day. Bunds at the mid-point of a relatively slim 133.17-41 band, which is entirely within Friday’s 132.92-133.57 range.
• OATs are in focus but trading broadly in-line with Bunds after Fitch cut its outlook on France following the draft unveiling of the 2025 budget. Despite this, the OAT-Bund 10yr yield spread remains steady around 76 bps, in familiar ranges.
• Gilts are flat but with specifics light as we await the commencement of the UK’s investment summit ahead of the end-October budget.

Commodities

• Crude is in the red after coming under pressure in APAC trade from the disappointing Chinese inflation data and lack of specifics from the MOF update. Into the European morning, the complex picked up off worst levels but has since slipped back towards session lows. Brent’Dec currently sits around USD 77.20/bbl.
• Spot gold is incrementally firmer, benefitting from the initially somewhat muted reaction to China’s latest stimulus efforts. XAU came off best levels of USD 2667/oz as mainland China reacted more strongly to the efforts.
• Base metals are under pressure, despite the latest China stimulus efforts and subsequent upgrades to China’s GDP view by some desks. Efforts which have been overshadowed by the lack of detail from the MOF on the weekend and since by disappointing inflation and trade data from the region.
• OPEC MOMR to be released at 12:25BST/07:25ET.

Geopolitics – Middle East

• US President Biden said he is sending THAAD missile defence to defend Israel, according to WSJ.
• US Secretary of Defence Austin expressed deep concern over reports that Israeli forces fired on UN peacekeeping positions in Lebanon and called for the safety and security of UNIFIL forces and Lebanese armed forces during a call with Israel’s Defence Minister Gallant.
• Israeli PM Netanyahu urged UN Secretary-General Guterres to remove UNIFIL forces from combat areas in Lebanon, while it was also reported that Israel’s Foreign Minister declared UN chief Guterres persona non grata over his Iran stance, according to Reuters.
• Israel’s military said an IDF tank that was trying to evacuate injured soldiers backed several meters into a UNIFIL post in southern Lebanon and once enemy fire had stopped and following the evacuation of injured soldiers, the tank left the post. Furthermore, the Israeli military said no danger was posed to UNIFIL soldiers by IDF activity throughout the entire incident, according to Reuters.
• UN spokesperson said UNIFIL peacekeepers in Lebanon remain in all positions and UNIFIL is taking all possible measures to ensure the protection of its peacekeepers, while the spokesperson added that the UN Secretary-General called on all parties including the Israeli military to refrain from any actions that put peacekeepers at risk, according to Reuters.
• Israel’s military ordered the residents of 22 villages in southern Lebanon to evacuate north of the Awali River, while the Israeli military declared areas around a number of towns in northern Israel as closed to the public, according to Reuters. Furthermore, the Israeli army said Hezbollah fired 25 rockets from nearby positions of UNIFIL forces towards IDF positions and Israeli towns.
• Lebanon’s Hezbollah said it attacked a Golani Brigade camp in northern Israel with a swarm of drones which was reported to have injured more than 60 people and it warned Israeli settlers against staying near army bases in northern Israel until further notice, according to Reuters. It was separately reported that Hezbollah said it shelled with rockets enemy forces in the settlement of Al-Manara for a fifth time.
• Hezbollah promises Israel that what it witnessed in southern Haifa is nothing compared to what awaits it if it decides to continue its aggression against their people, according to AFP News Agency.
• Iran’s Foreign Minister commented on X that they have no red lines in defending their people and interests.
• Iran’s Revolutionary Guards aerospace commander Hajizadeh said Tehran is ready to respond to any misstep by Israel, according to Tasnim.
• French President Macron urged Iranian President Pezeshkian to support a general de-escalation in the Middle East during a conversation, while Macron stressed in another discussion with Lebanon’s caretaker PM Mikati the ‘absolute necessity’ to obtain a ceasefire without further delay, according to the Presidential Office.
• Turkish President Erdogan said Israel is a concrete threat to regional and global peace, while he said it is essential for Russia, Iran and Syria to take effective measures when asked about Israel’s strike on Damascus.
• Pentagon said US forces conducted a series of strikes against multiple Islamic State camps in Syria.

Geopolitics – Other

• Ukrainian President Zelensky said Russian forces tried to push back Ukrainian troops in Russia’s Kursk region, while he added that Ukraine is holding out positions.
• Ukraine’s air force said on Sunday morning that Russia launched 68 drones and four missiles that targeted Ukraine.
• Russian and Chinese warships conducted joint drills to repel a missile attack in the Pacific.
• Taiwan’s Defence Ministry said a Chinese aircraft carrier group entered the Bashi channel on Sunday and will probably be operating in the western Pacific, while it was later reported that China’s military announced the PLA Eastern Theatre Command will dispatch its troops from the army, navy, air force, and rocket force to conduct joint military drills code-named “Joint Sword-2024B” in the Taiwan Strait and areas around Taiwan.
• Taiwan’s Defence Ministry said it strongly condemns China’s irrational and provocative act, as well as announced that it has dispatched forces to respond to China’s drills. It later updated that aircraft and ships have been responding to the hostile situation in accordance with the rules of engagement and will not escalate conflict in their response.
• US President Biden’s administration official said they are monitoring the PLA exercise and urge the PRC to avoid any further actions that may jeopardize peace and stability across the Taiwan Strait and in the broader region, while it added there is no justification for military exercises and pressure campaigns in response to a routine annual speech.
• North Korea said it ordered artillery corps near the border to fully prepare to shoot after it threatened a “horrible disaster” over the alleged flight of drones over its capital, according to Yonhap.

US Event Calendar

• Nothing scheduled

DB’s Jim Reid concludes the overnight wrap

This week kicks off with a partial US holiday (Columbus Day) today where bond markets will be closed but with equity markets remaining open. The main news over the weekend has been from China where the highly anticipated Ministry of Finance press conference on Saturday was light on specifics of immediate stimulus measures but provided strong forward commitment and the announcement of a large-scale local government debt swap that exceeded our economists’ expectations, with them suggesting it could mark a multi-year turning point in China’s fiscal policy framework. They have raised their 2024 GDP forecast to 4.9% (from 4.7%), based on already announced measures and are expecting more concrete measures to now appear at the upcoming NPCSC in late October.

Overnight Chinese markets opened firm, fell back just below zero, but are now back close to their opening highs. Currently, the Shanghai Composite is up by +1.66%. Oil is -1.2% lower after the China briefing but that could be as much due to taking out some weekend geopolitical risk premium with no Israeli retaliation seen as yet. Elsewhere, the KOSPI has gained +1.02% and the S&P/ASX 200 is up by +0.42%. However, the Hang Seng is -0.42% lower. S&P 500 (-0.06%) and NASDAQ (-0.21%) futures are also on the softer side. Japanese markets are closed for a holiday.

Also over the weekend, data revealed that China’s September CPI rose by +0.4% year-on-year, the slowest in three months, compared to a +0.6% rise in August and below market expectations of a +0.6% increase. PPI fell by -2.8% year-on-year, the fastest decline in six months, compared to a -1.8% drop in the previous month and below the expected -2.6% decline. So weaker prices than expected all round, but with the subsequent stimulus announcement markets should be comfortable excusing recent data for now.

In terms of this week, the key events will likely be on Thursday with US retail sales and jobless claims, alongside the latest ECB meeting. Outside of this, US earnings season starts to accelerate after last Friday’s unofficial start and there are plenty of central bank speakers to digest as well. Before we dig into these, the other main global highlights this week are the NY Fed 1yr inflation expectations (today), UK employment, German/European ZEW survey, ECB bank lending survey, Eurozone IP and Canadian CPI (tomorrow), UK inflation (Wednesday), US IP and NAHB housing index (Thursday) and US housing starts/building permits, China’s monthly data dump (including Q3 GDP, retail sales, IP, and property data), alongside Japanese CPI to round out the week on Friday.

Digging a bit more into that week ahead now, of all the Fedspeak, Waller today may be the most interesting given he’s traditionally a hawk and is a voter. In his last outing, Waller suggested that another 50bp reduction in an upcoming meeting was a possibility if the labour market weakened further or if inflation continued to come in softer than expected. Since then the opposite has seemingly occurred so will he revert back to more hawkish form?

Skipping to Thursday, September US retail sales will be a swing factor in putting together final Q3 GDP forecasts but jobless claims could spike a significant amount higher (DB forecast 270k vs. 258k last week) and to 3-year highs due to the latest storm. We were surprised that the market zoned in on the spike last week as much as it did as you have to assume for now that most, if not all, of the increase was storm related. The impact of the storm will also feed into this month’s payroll data so there will be a lot of difficulty in assessing employment trends in the next several weeks. Even retail sales might spike up a little this week as storm preparation in Florida may have boosted sales at the end of September.

The highlight of the week in Europe will be the ECB decision on Thursday. Our European economists expect a 25bps rate cut following recent lower-than-expected inflation prints as well as weaker growth (see their full preview here). The central bank will also release its bank lending survey on Tuesday and the survey of professional forecasters on Friday. The lending survey is a good guage to see whether we’re past the peak impact of the monetary transmission mechanism. In recent quarterly surveys, lending has improved with future expectations improving too so things have been looking up. Elsewhere in Europe keep an eye for the budget in Italy tomorrow, ahead of the EU deadline. Fitch and S&P are likely to opine on Italy’s rating after the close on Friday. The former could influence the latter to some degree. Indeed, late on Friday Fitch placed France on negative outlook after its budget announcement last week saying that “Fiscal policy risks have increased since our last review.” Over in Asia, the focus outside of China will be on the Japanese national CPI due on Friday.

In terms of earnings, we’ll start to see some momentum with the highlights including key semiconductor firms TSMC (Thursday) and ASML (Wednesday). Otherwise, US bank results will continue to come in with Bank of America, Citigroup and Goldman Sachs (all tomorrow) the highlights, alongside large cap healthcare names including UnitedHealth, Johnson & Johnson (both tomorrow) and Abbott (Wednesday). Other notable names include Netflix and Blackstone on Thursday and Procter & Gamble on Friday.

Looking back at last week now, risk assets put in a decent performance and looked through ambiguous data. The S&P 500 ended up advancing +1.11% (+0.61% Friday) and posted a 5th consecutive weekly gain, with Friday seeing its 45th record high of 2024 so far. Banks saw a particularly strong performance after the start of earnings season, with the KBW Bank Index ending the week up +3.98% (+3.04% Friday) at its highest level since April 2022. Europe also saw gains, with the STOXX 600 up +0.66% (+0.55% Friday), but in China the Shanghai Comp fell -3.56% (-2.55% Friday) amidst disappointment at the lack of detail around China’s stimulus.

Whilst equities were mostly advancing, sovereign bonds lost ground in general following on from the post payrolls trend the previous Friday. Inflation risk was also back in the spotlight though, particularly after the US CPI reading was stronger than expected last week. Indeed, the US 2yr inflation swap picked up another +13.9bps last week to 2.48%, its highest level in over three months. In turn, that meant investors slightly dialled back their expectations for rate cuts, with the rate priced in by the Fed’s December 2025 meeting up +4.9bps over the week to 3.34%. So when it came to sovereign bonds themselves, yields on 10yr Treasuries were up +13.3bps (+3.8bps Friday) to 4.10%, and those on 10yr bunds were up +5.6bps (+0.9bps Friday) to 2.26%.

Finally, oil prices ended the week modestly higher, although only after paring back their strong gains from earlier in the week. Indeed at one point, Brent crude reached an intraday peak above $81/bbl, but by the close on Friday, it was only up +1.27% (-0.45% Friday) to $79.04/bbl. That came alongside a modest increase in gold prices, which ended up posting a weekly gain of +0.11% thanks to stronger gains towards the end of the week (+1.42% Friday) as inflation risks came back into focus.

Starbucks CEO Brian Niccol is ready to move forward with an ambitious turnaround plan for the coffee chain. WSJ reported that the chief executive has “quietly reduced the frenzy of discounts” on menu items. This means the era of special discounts and rewards at the world’s biggest coffee chain is ending—say goodbye to those half-off grande Caramel Frappuccinos. 

Like many other fast-food chains (such as MCD), Starbucks boosted menu prices in recent years because of rampant inflation. In recent quarters, the coffee chain and many other quick-serve restaurants have had to introduce meal deals and drink specials in a bid to retain customer market share as low/mid-tier consumers pulled back on spending. 

Here’s more about Niccol’s move to scale back discounts: 

Starbucks is pivoting away from discounts as Niccol emphasizes the company’s hallmarks of selling handcrafted, premium coffee. Starbucks for years eschewed discounting and promotions, but recently stepped up offers through its app as its cafe traffic sagged and customers complained of high prices and long wait times.

…

Starbucks isn’t planning to run broad offers during the holiday season, and instead aims to promote seasonal drinks through advertising, the company said during an early-October strategy update for store leaders. -WSJ 

Niccol took over as CEO about a month ago, following his successful tenure as CEO of Chipotle Mexican Grill, where he led a major turnaround.

Meanwhile, activist shareholders circled the stock. In August, the company’s board terminated Laxman Narasimhan, the previous CEO. It appears Niccol was brought on board to push a turnaround of the coffee chain that has suffered in top markets, including the US and China this year. 

In September, during an internal company forum viewed by WSJ reporters, the CEO said, “The strategy is, simply put, just making a couple of powerful choices, and then we’ve got to execute like crazy.” 

For years, Starbucks has had very little discounting and rewards as it boasted itself as a premium brand. Howard Schultz, the former CEO, previously warned about excessive promotions.

Starbucks’ traffic has slowed since last year. The previous CEO, Narasimhan, called the current consumer environment “complex” and “challenging.” 

Cyclical macro issues are the root cause of a consumer slowdown. The company’s response has been to boost discounts and rewards to boost sales, yet customer traffic has yet to fully return. Perhaps the excessive discounts were diluting the premium brand. It remains to be seen if the new CEO can create a successful turnaround in this challenging environment.

Authored by Joseph Lord via The Epoch Times,

Thousands turned out to the Bayfront Convention Center on Sept. 29 to hear former President Donald Trump speak. Hundreds more gathered outside the convention center to watch Trump’s speech on a jumbo display, while nearby stands were set up to register voters, hawk mail-in ballots, and hand out Trump-Vance yard signs and bumper stickers.

There’s a reason for that: Erie County, which hosts the city of Erie, is a strong indicator of who will win Pennsylvania. Since 1980, with the exception of 1988, the county has backed the winner of statewide presidential races.

While it doesn’t rise to the level of a national bellwether—it’s often backed candidates who went on to lose the general election—since 2008, it’s ultimately backed the candidate who won Pennsylvania.

That makes it a crucial county in 2024, when the winner of Pennsylvania is highly expected by pundits to win the entire election.

As recently as 2008 and 2012, the Democratic Party was king in the county: In his election and reelection bid, President Barack Obama won the county by 20 points and 16.9 points respectively. But in 2016, Trump shifted the county by 18.5 points in Republicans’ favor, and won the county by 1.6 percent.

In 2020, reflecting the razor-thin margins of the election in the state and nationwide, President Joe Biden carried the county by just 1 percent, or 1,417 votes.

The changing politics can be attributed in part to the area’s cultural and demographic background.

A few hours’ drive north of Pittsburgh, Erie County sits at the northwestern end of Pennsylvania, bordering the Great Lake of the same name, upstate New York, and Ohio.

The city of Erie, home to large immigrant and university student populations, is Pennsylvania’s fifth most populous, lying at the northern edge of the county. Beyond that, the area has several suburban areas and developments. The southern half of the county is largely rural, home to several scattered, small townships.

The county’s Rust Belt origins are on full display in Erie, with defunct factories and industrial centers dotting the city and its environs.

An Oct. 2 photo of one of the many former industrial centers in Erie County that have long been shuttered. Joseph Lord/The Epoch Times

Demographics

In many ways, the county, with its mix of urban, suburban, and rural voters, reflects larger voter distributions in Pennsylvania.

“I try to explain it this way: if you take all of Pennsylvania … and you shrink it down, it’s Erie, because we’ve got large industry, we’ve got tool and die … the small mom and pop places. The southern part of the county is all rural, strictly agriculture. You’ve got diversity,” Tom Eddy, chairman of the Erie County GOP, told The Epoch Times.

According to the Census Bureau, the county is home to around 271,000 people.

Around 83 percent of them are white. At an average household income of around $60,663, many voters in the area fall squarely into the white working class, a key electorate for both parties.

This demographic has trended toward Republicans since Trump entered politics. In 2008, about 55 percent of them backed Obama. In 2016, Trump’s first presidential campaign, 62 percent of the white working class voted for him. In 2020, their support dipped to 59 percent.

For Democrats, the goal is to largely hold onto their minority share of the demographic, while expanding among suburban, white collar, and Erie city voters—all demographics more favorable to the party in recent years.

Erie County Democratic Party Chairman Sam Talarico—a former schoolteacher who’s been involved in Democratic politics since 2000—acknowledged that in Erie and across the country, Democrats are increasingly struggling with the white working class.

On the other hand, he noted that suburban areas—such as Fairview Township and Harborcreek, which border the city center to the east and west—are shifting in Democrats’ favor.

“Fairview is our most affluent community, and it used to be a Republican stronghold. It’s about 50/50, right now, possibly a little more blue, and it’s turning bluer,” Talarico said.

Democrats are also striving to keep their substantial lead in the city itself, a lead aided by the city’s vast student and immigrant population—two demographics that also favor the Democratic Party.

Trump and the Republicans, meanwhile, are seeking to expand their lead among the white working class—which makes up a substantial swath of the Pennsylvania electorate—and to win over independents.

Signs along a major roadway show support for former President Donald Trump, Sen. JD Vance (R-Ohio), and Senate contender Dave McCormick in Erie County, Pa., on Sept. 30. Joseph Lord/The Epoch Times

Eddy noted that Democrats do maintain a slight advantage in voter registration in the county, with about 10,000 more registered Democrats than registered Republicans. But the most crucial bloc for both parties is the county’s 35,000 independents.

“I think the big swing is going to be the independent voter,” Eddy said. “They’re the ones that make the difference.”

Speaking about the closing gap between registered Republicans and Democrats in recent years, Talarico said, “I’m not going to say it isn’t concerning. It is.”

But like Eddy, Talarico said the real “X factor” will be the independents.

And many of those independents, he noted, are young people—a demographic that tends to favor Democrats, particularly young women.

For Republicans and Democrats on the ground, the stakes are clear: As goes Erie, so goes Pennsylvania; and as goes Pennsylvania, so goes the election.

Republican Enthusiasm

With just about a month left until the election, Erie County appears more politically active than ever: Bumper stickers, billboards, and yard signs expressing support for one candidate or the other litter the area, with a noticeably stronger showing of “Trump/Vance” signs.

There are strong indicators of Republican enthusiasm.

At GOP headquarters in Erie—a small office space in a strip mall just outside the city center—county residents stopped by in droves.

Republicans’ base of operations in Erie County, Pa., on Oct. 1. Joseph Lord/The Epoch Times

Almost every 10 minutes, a new person came into the office requesting voter registration forms, mail-in ballots, or apparel to show their support for Trump. Many offered $20 donations in exchange for a dwindling supply of Trump shirts. Several purchased apparel for their children.

The office is filling yellow file envelopes with voter registrations and mail-in ballots almost every day—including many who have never voted before. Often, the Republicans run out of apparel to offer voters due to the high demand.

“The energy level is extremely high. That’s what I’ve noticed more than I’ve noticed in any of the other elections,” Eddy said.

The Erie County Democratic headquarters is a few miles away in downtown Erie, comprising a large office space a few dozen blocks from the city center.

Compared to Republican headquarters, the energy level is noticeably muted and less chaotic. Volunteers could be seen talking, watching television, and taking calls in the office’s large backroom area. A handful of other volunteers and voters circled through to collect party apparel, yard signs, or bumper stickers.

While it’s harder to access the building by vehicle, with only a limited number of meter-based parking spots outside, the subdued atmosphere reflects the uncertain position Democrats find themselves in.

Democrats’ headquarters in Erie, Pa., on Oct. 2, 2024. Joseph Lord/The Epoch Times

While Talarico noted that “on paper” his party’s prospects look bleak, Talarico told The Epoch Times that he still sees reason for optimism.

“The most compelling thing I’ve seen is enthusiasm,” he said.

Before Biden’s departure, Democrats had just 60 or so volunteers; since Harris took over the ticket, that number has jumped to 320. Around 250 people attended a vice presidential debate watch party hosted by the county party.

Talarico also noted that Democrats have seen vast success in the county in recent nonpresidential elections.

That’s true. In 2022, Sen. John Fetterman (D-Pa.) handily defeated Republican Mehmet Oz in Erie County, winning 53 percent of the vote to Oz’s 44 percent. Democratic Gov. Josh Shapiro enjoyed greater success the same year, defeating his Republican opponent by a landslide 22-point margin in Erie County.

Thus, Talarico said, Democrats’ position might not be “as dire as it looks on paper.”

‘Trump Factories’

It’s not just the Erie County Republican Party that’s hard at work trying to flip the county back to Trump’s camp.

Leo Williard, a small business owner, has set up what he calls “Trump factories” in two auto dealerships owned by his friend and located just outside downtown Erie.

While still managing his own business, Williard told The Epoch Times that he spends hours every week talking to and converting Democratic voters to Trump’s side.

Williard said he was inspired to do so by the city of Erie’s Democratic leanings: While the rural and suburban areas are more evenly divided, the city itself votes overwhelmingly for Democrats.

Many of those who come into the dealership are from the city, he said.

“And we started talking to those people, and I have a table set up in the corner of his office up there that I call the ‘Trump corner.’ I call this whole process the ‘Trump factory,’” Williard said, adding that he was bringing as many as five to 15 Democrats a day over to Trump’s side.

“You can’t believe the people we are turning from Democrat to Trump.”

For many, financial concerns—particularly inflation—are the most pressing issue, Williard said, agreeing that inflation could be described as “the No. 1 issue” in the county right now. The modest income of many residents makes the hit harder than it might be in more affluent areas, Williard said.

Williard said that Democrats’ decision to nominate Vice President Kamala Harris did energize the Democratic base in the city, but he is confident.

“I still think that Erie County, based on the work I see being done and the enthusiasm I see, will go red. I think it will turn the state red,” Williard said.

Republicans have seen strong signs for optimism—but recent Democratic victories in the county still undercut any sort of certainty.