Month: October 2024

Iran on Friday issued its own counterthreats in the wake of several reports saying Israel is readying a major response to the Oct.1st Iranian ballistic missile attack. The Biden administration is said to be in consultations with Israel’s security cabinet on the potential of taking out the Islamic Republic’s oil and gas sites and vital infrastructure. Nuclear sites could be on the table, but President Biden is objecting to this, at least on a public level.

“The resistance in the region will not back down even with the killing of its leaders,” Supreme Leader Ayatollah Ali Khamenei declared while leading Friday prayers in Tehran. “The brilliant action of our armed forces a couple of nights ago was completely legal and legitimate,” he said defiantly in the rare appearance.

Khamenei gave a sermon at Friday prayers in Tehran while holding a gun pic.twitter.com/wO8j9hrRl5

— Christian Henderson (@CjvHenderson) October 4, 2024

Iran will not “procrastinate nor act hastily to carry out its duty” in confronting Israel, he said. While not directly threatening Israel or the US, he was described at that moment as grasping the barrel of a rifle with his left hand.

But a much more specific threat came from Iran’s Revolutionary Guards deputy commander Ali Fadavi, who was quoted in state media as saying that any Israeli attack would be met with strikes on Israel’s own energy installations.

“If the occupiers make such a mistake, we will target all their energy sources, installations and all refineries and gas fields,” the IRGC’s Fadavi said.

After a night of the biggest airstrikes on Beirut thus far, and as the total death toll since aerial attacks began has reached 2,000 – Iran has further vowed support to its “friends” in Lebanon. 

In a surprising and risky move, Iranian Foreign Minister Abbas Araghchi actually flew into Beirut, even with the bombs falling in the area. This despite IRGC officers having recently been targeted in the stepped-up Israeli airstrikes on the Lebanese capital.

“Be sure that the Islamic Republic of Iran is and will be firmly standing by the friends in Lebanon,” Araghchi told a press gathering in the Lebanese capital.

He emphasized of the trip that “it was necessary to say this in person” – even as Israel continues to target top Hezbollah leadership. Israel has been using heavy “bunker buster” bombs to reach underground meeting places beneath buildings.

Last night’s Israeli airstrikes focused on Dahieh neighborhood of Beirut, a Hezbollah stronghold but which is also packed with civilians, were described as the biggest to date…

Israel’s defense chief Yoav Gallant characterized the ongoing air attacks as necessary to degrade and destroy Hezbollah’s command structure: “Hezbollah is receiving very severe blows, one after the other. We eliminated [Hezbollah chief Hassan] Nasrallah and we have more surprises in store, some of which have already been carried out and some of which will be carried out,” he said.

He issued the words while visiting troops positioned along the northern border, and further warned that the ground offensive will continue “until the removal of combat means” and that “we have more surprises in our arsenal.”

Thursday into Friday airstrikes have reportedly damaged and closed the main artery from Lebanon to Syria, at a moment Lebanon’s refugee crisis grows more acute, and after tens of thousands had already fled back into Syria.

Authored by Peter Tchir via Academy Securities,

Trying to break this report down on live TV was quite easy.

Everything pointed to strength.

Total jobs great!

The beat was entirely in the private sector, which is where we want to see the jobs created.

UPWARD revisions.

A substantial positive revision is good.

I think it helps confirm my view that the BLS has adjusted their models and aren’t consistently overstating jobs like they were.

I continue to believe seasonal adjustments are off.

Overstating winter jobs and understating summer jobs. This report seems consistent with that.

Upward pressure on wages, and an unemployment number of 4.052% (almost got rounded down to 4%) will give the fed some pause.

Bottom line

Higher yields.

Look for 10s to breach 4% as we head into auctions.

Higher for longer.

Fed cuts should be slower and I continue to think (and the data supports it) that the current neutral rate is well above 3% (economy chugging along on 5% yields for over a year)

I’d fade the initial joy in equity land.

Authored by Zachary Stieber via The Epoch Times,

Elon Musk said on Oct. 3 that he will attend former President Donald Trump’s upcoming rally in Butler, Pennsylvania.

“I will be there to support!” Musk wrote on X, the social media platform that he mostly owns.

Trump has a rally scheduled for Saturday at the Butler Farm Show, where he was struck by a bullet during an event in July.

Authorities say Thomas Crooks, who was shot dead by a U.S. Secret Service agent, attempted to assassinate Trump.

About 30 minutes later, Musk shared video footage of Trump rising to his feet and holding a fist up after surviving the attempted assassination. Musk said he endorsed the former president.

“I fully endorse President Trump and hope for his rapid recovery,” Musk wrote at the time. “The martyr lived. Last time America had a candidate this tough was Theodore Roosevelt,” he wrote in a follow-up post.

The business mogul, who is also CEO of Tesla and SpaceX, said in another post on Thursday that backing Trump has become “essential to saving America!”

Musk’s posts frequently support Trump and Republicans while denigrating Vice President Kamala Harris and members of the Democratic Party.

Trump welcomed Musk’s endorsement at the time and said in a September speech that, if elected, he would, on Musk’s advice, create a government efficiency commission tasked with improving government operations.

The exact security protocols in place for Trump’s next Butler rally have not been disclosed but the U.S. Secret Service says it is prepared.

A spokesman told The Epoch Times in an email that the agency has, since the attempted assassination attempt, “made comprehensive changes and enhancements to our communications capabilities, resourcing, and protective operations.” Trump, he said, is receiving heightened protection.

The agency has said previously that Trump is receiving the same level of protection as President Joe Biden and Harris in the wake of the assassination attempt by Crooks and another apparent attempt by a man at a golf course in Florida.

“Regarding the October 5th event in Butler, PA, we are coordinating closely with the Pennsylvania State Police as well as local law enforcement in and around Butler Township. We are also leveraging other federal security resources to expand personnel and technology,” the spokesman said.

“To maintain the integrity of our protective operations, we cannot go into the specifics regarding the security enhancements. Residents in the area should expect traffic delays and an increased presence of state, local, and federal law enforcement as part of our efforts to ensure a safe and secure event.”

Former President Donald Trump is surrounded by secret service agents as he is taken off the stage at a campaign event at Butler Farm Show Inc. in Butler, Pa., July 13, 2024. Photo by Rebecca Droker/AFP via Getty Images

Trump told NewsNation this week that he’s “always worried” about safety at rallies and that “we have to get better security.”

Who could have seen this coming?

Game over

Spirit Airlines Explores Bankruptcy Filing: WSJ https://t.co/TCpVkPFbVX

— zerohedge (@zerohedge) October 3, 2024

Shares of Spirit Airlines crashed in premarket trading in New York after a Wall Street Journal report revealed that the struggling airline has been in discussions with bondholders about the possibility of filing for bankruptcy following the collapse of its merger with JetBlue Airways. 

The WSJ report was published late Thursday evening.

Here’s more color:

The budget carrier has also been exploring restructuring its balance sheet through an out-of-court transaction, though recent talks have been more focused on reaching an agreement with bondholders and other creditors to support a chapter 11 filing, the people said. The timing of such a filing, should it happen, wouldn’t be imminent, they said.

Shares in the premarket are around $1.54, down a little more than 31%. Earlier shares tanked as much as 42%. These levels are a record low for Spirit in its 13 years of trading on the public markets. 

The latest Bloomberg data shows 31.6 million shares are short, equivalent to about 29.25% of the float. 

WSJ said Spirit is in dire financial straits: 

Spirit has been struggling with losses and declining revenue as it aims to address coming maturities within its $3.3 billion debt load, including more than $1.1 billion of secured bonds that are due in less than a year. Spirit also faces a deadline from its credit-card processor to refinance or extend those notes by Oct. 21.

The potential bankruptcy filing comes after Spirit’s failed merger with JetBlue Airways earlier this year. Biden’s DoJ struck down the deal because it would have reduced competition.

In August, Spirit Chief Executive Ted Christie told analysts that the airline was speaking with bondholders to address the maturities: “Because those conversations are ongoing, we are not going to go into detail or take any questions on this topic or speculate on potential outcomes. Needless to say, it is a priority and we are focused on securing the best outcome for the business as quickly as possible.”

It turns out that Powell’s “emergency” 50bps rate cut was – drumroll – another major policy mistake by the Fed.

Moments ago, the BLS reported that at a time when prevailing consensus was for jobs to continue their recent downward slide sparked by the near-record annual jobs revision and several months of downbeat jobs reports, in September the US unexpectedly added a whopping 254K jobs, the biggest monthly increase since March…

… and above the highest estimate (which as noted last night was from Jefferies at 220K). In fact, the number was a 4-sigma beat to the median estimate!

There’s more: unlike previous months where we saw repeat downward job revisions, the BLS said that both prior months were revised up, to wit: the change in total nonfarm payroll employment for July was revised up by 55,000, from +89,000 to +144,000, and the change for August was revised up by 17,000, from +142,000 to +159,000. With these revisions, employment in July and August combined is 72,000 higher than previously reported.

Some context: as UBS notes, the moving six-month average on nonfarm payrolls is 167k. The estimate is that 150k is about consistent with a return of the economy to trend growth. Which means that inflation is about to come back with a vengeance, just as the Fed launches its easing cycle.

Remarkably, while payrolls jumped by the most in half a year, the number of employed people also surged, rising by a whopping 430K, also the biggest one-month jump since March.

It wasn’t just the payrolls, however, which came in far stronger than estimates: the unemployment rate also came in stronger than expected, and thanks to the jump in employed workers coupled with the decline in unemployed workers (from 7.115MM to 6.834MM), it dropped from 4.2% to 4.1% (and down from 4.3% two months ago which spared the entire recession panic).

Among the major worker groups, the unemployment rate for adult men (3.7 percent) decreased in September. The jobless rates for adult women (3.6 percent), teenagers (14.3 percent), Whites (3.6 percent), Blacks (5.7 percent), Asians (4.1 percent), and Hispanics (5.1 percent) showed little or no change over the month.

And here is the rub, because in a vacuum the super strong jobs numbers would have been fantastic, the only issue is that the September blowout comes as the Fed launches an easing cycle and as wages are once again rising as we have warned for the past 3 months. Indeed, in September, the average hourly earnings rose 0.4% sequentially, beating the estimate of 0.3%, while on an annual basis, wage growth was 4.0%, up from an upward revised 3.9% and beating the 3.8% estimate.

One note here: the average workweek for all employees edged down by 0.1 hour to 34.2 hours in September, which means the hourly earnings increase is not “pure” but rather a function of denominator adjustments. In manufacturing, the average workweek was unchanged at 40.0 hours, and overtime edged down by 0.1 hour to 2.9 hours. The average workweek for production and nonsupervisory employees on private nonfarm payrolls remained at 33.7 hours.

 

Developing

Authored by Jesse Coghlan via CoinTelegraph.com,

The United States Justice Department and the Securities and Exchange Commission told the Supreme Court that an Nvidia investor class-action lawsuit alleging the tech company misrepresented its sales to crypto miners should be greenlit.

Nvidia and the investor group have been in a legal battle since 2018, which has now reached the top US court.

In an Oct. 2 amicus brief, US Solicitor General Elizabeth Prelogar and SEC senior lawyer Theodore Weiman argued that the suit had “sufficient details” to survive a district court dismissal, adding that the Supreme Court should greenlight its revival by an appeals court.

The two agencies said they have a “strong interest” in the case because it concerns laws designed to limit frivolous securities-related lawsuits.

“Meritorious private actions are an essential supplement to criminal prosecutions and civil enforcement actions” by the DOJ and SEC, the brief added.

Highlighted excerpt of the DOJ and SEC brief outlining their interest in backing the Nvidia investors. Source: The Supreme Court of the United States

The investor group tried to sue Nvidia in 2018, alleging it hid over $1 billion in GPU sales made to crypto miners. It claimed the chipmaker’s CEO, Jensen Huang, downplayed Nvidia’s sales to the industry.

The group alleged Nvidia’s sales were propped up by miners, which they argue was apparent when the firm’s sales collapsed alongside the crypto market in 2018.

The case was dismissed, but the group appealed the decision, which led to the Ninth Circuit appeals court reviving it last August. Nvidia then petitioned the Supreme Court to reverse it. 

Nvidia claimed the suit relied on an expert opinion that fabricated information about its business and income, but the DOJ and SEC have rebutted, saying it “is not what occurred here.”

The agencies also acknowledged the investors’ rebuttal of Nvidia’s claims, which was said to have evidence relating to accounts from ex-Nvidia executives and a Bank of Canada report claiming the firm understated its crypto revenue by $1.35 billion.

Nvidia declined to comment on the DOJ and SEC brief.

In a separate amicus brief filed the same day, 12 former SEC officials backed the investors, saying “private enforcement of the federal securities laws is vital to the integrity of US capital markets.”

They attacked Nvidia’s arguments, which they claimed would create rules “requiring plaintiffs to possess internal company documents and databases before discovery and to preclude the use of experts at the pleading stage.”

They added: “Neither is supported by the law or good policy.” 

Six additional amicus briefs supporting the investor group were filed on Oct. 2. They were from quantitative experts, legal professors, institutional investors, the American Association for Justice and the Anti-Fraud Coalition.

US futures and European stocks fluctuated ahead of today’s jobs report that will help determine the path for interest rates.  As of 8:00am, S&P futures are 0.3% higher, reversing earlier losses, with small-caps leading. Nasdaq futures rise 0.4% with AMZN and TSLA notable movers in MegaCap Tech (AMZN +1.4%; TSLA +1.2%). Bond yields are higher, extending Thursday’s treasury selloff, 10-yr yields rise 3bps higher. The Bloomberg Dollar Index was slightly lower, but still set for the biggest weekly gain in nearly six months as traders pared back expectations for aggressive US rate cuts. Commodities are mixed with oil higher, base metals lower, and precious metals slightly higher. Oil prices extended their gains after Israel carried out huge bombing raids on Hezbollah targets near Beirut airport alongside ground attacks in southern Lebanon; this followed the biggest one-day jump in oil prices in almost a year amid spiraling Middle East tensions.  Today, the key macro focus will be NFP release: Wall Street consensus expect a 150k print, with the unemployment rate unchanged at 4.2% (see our preview here).

In premarket trading, Spirit Airlines sinks 37% as the WSJ reported that the budget carrier is preparing for a bankruptcy filing. Shipping stocks globally fell after US dockworkers agreed to end a three-day strike that had paralyzed trade on the East and Gulf coasts. In US premarket trading, ZIM Integrated Shipping Services Ltd. slumped more than 7%. In Europe, A.P. Moller-Maersk A/S dropped 6.6% and Hapag-Lloyd AG fell 12%. The stocks had rallied on expectations the strike would lead to increased container rates. Here are some other notable premarket movers: 

• Align Technology (ALGN) slips 1% after CFRA downgraded the Invisalign owner to strong sell, citing industry-wide headwinds and an elevated valuation.
• Rivian (RIVN) drops 8% after the EV company cut its production guidance for the full year.
• SilverCrest Metals (SILV) gains 11% after entering a pact to be purchased by Coeur Mining.
• Summit Therapeutics (SMMT) rises 11% after the company said FDA granted fast track designation for the proposed use of its ivonescimab cancer drug in combination with platinum-based chemotherapy.

While investors keep a watchful eye over geopolitical events, they are also assessing the latest signals on the health of the US economy. Friday’s jobs report is expected to show an increase in payrolls for September, while the unemployment rate is forecast to hold steady at 4.2%.

“The slew of data that has come out from the US in the last week or two was so strong that I actually think the market could even tolerate a payrolls number that’s on the low end of the range,” said Elliot Hentov, head of macro policy research at State Street Global Advisors. “The soft landing narrative is very powerful right now and you would have to have more than one data point that’s disappointing to knock us out of that.”

According to BofA strategist Michael Hartnett, as well as Goldman Sachs, risk assets are likely to rally if the report is within the range of market expectations. The addition of between 125,000 to 175,000 jobs last month would support a soft economic landing and keep bond yields in a range, sparking a risk-on trade, Hartnett wrote in a report. A “blowout” report showing greater than 225,000 payrolls and an unemployment rate of less than 4.1% would drive the 30-year Treasury yield above 4.5%, the strategist said. Meanwhile, jobs below 75,000 alongside an unemployment rate of above 4.3% would be “recessionary.”

Traders are also bracing for extra volatility following the payrolls report. The options market is betting the S&P 500 Index will move roughly 1.15% in either direction after the data, according to Goldman Sachs. If it happens, that would be roughly in line with the past two jobs prints, and the biggest move in two weeks.

Elsewhere, oil headed for its strongest weekly increase in two years on fears that Israel may decide to strike Iranian petroleum facilities in retaliation for a missile assault on its territory. The US and its allies warned of “uncontrollable escalation” in the Middle East after Israel carried out huge bombing raids overnight near Beirut airport aimed at Hezbollah commanders and facilities.

European stocks tick higher on Friday, reversing some of the week’s losses ahead of US jobs data which could give investors better clarity about the Federal Reserve’s next move. The energy and real estate sectors lead gains while media equities are among the biggest laggers. Stoxx 600 rises 0.2% to 517.17 with 399 members up, 191 down and 10 unchanged. Here are some of the biggest movers on Friday:

• Volvo Car shares rise as much as 5.4% after a report the Swedish government will abstain in Friday’s vote regarding the EU Commission’s proposal of higher tariffs on Chinese electric vehicles.
• DSV gains as much as 9.3% to trade at the highest since January 2022, after the Danish logistics firm sold €5 billion in shares without resorting to a discount in order to finance its takeover of Deutsche Bahn’s Schenker.
• Covivio shares rise as much as 4.6% after both Barclays and Citi double-upgrade the French real estate firm.
• Scor shares rise as much as 4.7% after the reinsurance company was upgraded to buy at Berenberg, which believes the recent hurricane season was not as bad as feared and expects the balance sheet to improve.
• Recordati shares jump as much as 5.9% in Milan, the most since April 2023, after the Italian pharmaceutical company signed an agreement to acquire the global rights to the rare disease drug Enjaymo from Sanofi for up to $1.1 billion.
• Redcare Pharmacy shares rise as much as 5% as analysts highlight the company’s strong prescription sales in Germany in the third quarter.
• European shipping stocks fall as dockworkers at US East and Gulf coast ports agreed to start moving cargo again while they continue collective bargaining with their employers on a new contract.
• SSE shares drop as much as 2.2% to hit their lowest level in almost two months after the energy utility was downgraded by analysts at Jefferies, which see a more balanced risk-reward profile following the strong gains in the stock this year.

Earlier in the session, Asian stocks advanced as the rally in Hong Kong shares resumed, while traders assessed the impact of escalating tensions in the Middle East. The MSCI Asia Pacific Index rose as much as 0.6%, with Tencent and Alibaba among the biggest boosts. Chinese shares in Hong Kong advanced after retreating in the previous session, as investors pinned hopes on Golden Week holiday spending data that may give the market another leg up. The mainland Chinese market is shut through Monday.  Shares in Japan gained after the yen weakened further. South Korean stocks also advanced, while Taiwan edged lower after the market reopened following a two-day closure due to a typhoon.

“We are looking forward to how consumers have reacted in the Golden Week holiday, and how the government follows up with more fiscal support,” said Tai Hui, chief Asia market strategist at JPMorgan Asset Management, in a Bloomberg TV interview. “That would be a key factor in sustaining the rally that we have seen so far.”

In FX, the yen is the best performer among the G-10 FX, rising 0.3% to around 146.47 against the greenback. The Bloomberg Dollar Spot Index is flat ahead of the US jobs report. The pound rises 0.2%, boosted by BOE Chief Economist Pill who warned against cutting interest rates “too far or too fast.” A decent beat for UK construction PMI also helped. Both have weighed on gilts which underperform their German counterparts, with UK 10-year yields rising 5 bps to 4.07%. Treasuries are little changed across the curve.

In rates, treasuries hold small losses concentrated in short maturities as the US trading day begins, lifting yields except the 30-year toward the highest levels of the past month. Front-end and intermediate yields are higher by 1bp-2bp with long end little changed, flattening the yield curve slightly; 5-year exceeded its 50-day average level for the first time since May; 10- and 30-year yields exceeded their trendlines earlier this week. US 10-year yield at about 3.86% is 1.3bp higher on the day vs increases of 2bp-6bp for most global counterparts. US yields trail steeper increases for UK and euro-zone yields ahead of September US employment data at 8:30am New York time that may revive the case for a half-point Fed rate cut in November.

In commodities, crude oil rises for a fourth straight day and adding to the biggest one-day jump in almost a year as fears that Israel may decide to strike Iranian crude facilities keep the market on edge. WTI is up 1% at ~$74.45 a barrel, briefly exceeding $75 for the first time since Aug. 30. Spot gold is steady at $2,657/oz.

Looking at today’s calendar, the economic data calendar includes only September jobs report; median estimates in Bloomberg survey are for a 150k increase in nonfarm payrolls and a 4.2% unemployment rate, unchanged from August; crowdsourced whisper number for nonfarm payrolls change is 152k. Fed speakers scheduled include New York’s Williams (9am), and Chicago’s Goolsbee (10am, 10:30am and 4pm).

Market Snapshot

• S&P 500 futures little changed at 5,753.00
• STOXX Europe 600 up 0.2% to 517.32
• MXAP up 0.4% to 195.65
• MXAPJ up 0.3% to 624.74
• Nikkei up 0.2% to 38,635.62
• Topix up 0.4% to 2,694.07
• Hang Seng Index up 2.8% to 22,736.87
• Shanghai Composite up 8.1% to 3,336.50
• Sensex down 0.8% to 81,806.07
• Australia S&P/ASX 200 down 0.7% to 8,150.00
• Kospi up 0.3% to 2,569.71
• German 10Y yield little changed at 2.17%
• Euro little changed at $1.1022
• Brent Futures up 0.9% to $78.31/bbl
• Gold spot up 0.1% to $2,659.68
• US Dollar Index little changed at 101.92

Top Overnight News

• Dockworkers at ports along the East and Gulf Coasts agreed to suspend their strike until Jan 15 after the two sides reached a tentative agreement on compensation (wages are set to rise 62% over 6 years) and will negotiate over other outstanding issues over the coming months. ILA announced shortly after it reached a tentative agreement with USMX on wages and that all current job actions will cease and all work covered by the master contract will resume with immediate effect. WaPo
• Former US President Obama is to campaign for Democratic candidate and VP Harris in the run-up to the election, according to Washington Post.
• Japan’s new prime minister has instructed his cabinet ministers to come up with a comprehensive economic package, taking his first step toward the goal of ensuring the country manages to fully exit deflation. Shigeru Ishiba said Friday that the stimulus package will focus on easing the burden of rising living costs, boosting growth and strengthening relief and preparedness measures for natural disasters. WSJ
• Israel bombed a meeting of Hezbollah’s senior leadership around midnight on Thursday, a gathering that included Hashem Safieddine, the presumed successor of Hassan Nasrallah, the group’s longtime chief who was assassinated in an airstrike in Lebanon last week, according to three Israeli officials. NYT
• Israel does not possess the capabilities to take out Iran’s nuclear installations: only the US has the scale and weapons for such an operation. FT  
• Euro-area inflation is now very near to the European Central Bank’s 2% target for consumer-price growth, according to Governing Council member Mario Centeno. WSJ
• Investors poured the most cash into US money-market funds last quarter since the March 2023 banking crisis, pushing the sector’s total AUM to a record $6.46 trillion. BBG
• Spirit Airlines’ stock is down 40% premarket. Its efforts to restructure its debt and avoid filing for bankruptcy have hit a snag, people familiar said. BBG
• Blackstone expects the private credit market to balloon to $30 trillion, fueled by lending for infrastructure projects and greater participation from pension funds

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mixed amid light pertinent catalysts for the region heading into the weekend and the latest US NFP report. ASX 200 fell with almost all sectors in the red and miners leading the retreat although energy bucked the trend after the oil surge. Nikkei 225 traded higher owing to recent currency weakness and after PM Ishiba instructed to compile a comprehensive economic package, although the gains were limited in the absence of any major macro drivers or key data releases. Hang Seng outperformed in a rebound from yesterday’s profit-taking with the advances spearheaded by tech strength and the energy sector was also boosted by the recent surge in oil prices.

Top Asian Markets

• Japanese Chief Cabinet Secretary Hayashi said PM Ishiba instructed to compile a comprehensive economic package, while Hayashi added that they will compile a supplementary budget after the lower house election.
• Germany will reportedly vote against EU tariffs on Chinese EVs, according to sources via Reuters.

European bourses, Stoxx 600 (+0.3%) began the session on a modestly weaker footing, but has edged off lows as the morning progressed. Trade still remains tentative in the run-up to today’s key US NFP report. European sectors are mostly firmer trade with no real theme or bias. Energy resides at the top of the chart. To the downside, very mild losses seen in Technology and Media, although the breadth of the losses are modest. US Equity Futures (ES U/C, NQ +0.1%, RTY -0.1%) are trading very modestly above the unchanged mark, with traders very mindful of the looming US NFP report. DoJ and SEC back class action alleging NVIDIA (NVDA) hid crypto mining revenue, according to Cointelegraph.

Top European Markets

• “EU countries approve duties (up to 35% [additional tariffs]) on unfairly subsidized Chinese electric cars, despite Germany’s last-minute opposition”, according to Politico (as expected)
• BoE’s Chief Economist Pill said ample reason for caution in assessing the dissipation of inflation persistence; need for such caution points to a gradual withdrawal of monetary policy restrictions. Further cuts in the Bank Rate remain in prospect but it will be important to guard against the risk of cutting rates either too far or too fast. He remains concerned about the possibility of structural changes sustaining more lasting inflationary pressures. “does not think level of interest rates is having more than a marginal impact on UK business environment”

FX

• USD is mixed/flat vs. peers in the run-up to today’s eagerly anticipated NFP print. A strong release could see DXY make a more sustained breach of the 102 mark after venturing as high as 102.09 on Thursday.
• EUR is flat vs. the USD after being softer vs. the USD for the past five sessions on account of a dovish ECB repricing and as Powell guided markets towards a 25bps (as opposed to a 50bps) cut earlier in the week. For now, EUR/USD remains within yesterday’s 1.1008-49 range.
• GBP is a touch firmer vs. the USD after what was a particularly bruising session yesterday on account of comments from BoE Governor Bailey that the Bank could begin cutting rates at a faster pace. Cable has picked itself up from a 1.3093 low yesterday to a 1.3167 peak today but this is a far cry from the 1.3270 high seen on Thursday.
• JPY is attempting to claw back some losses vs. the USD which were triggered earlier in the week by comments from Japanese PM Ishiba, downplaying the possibility of a near-term rate cut. USD/JPY ventured as high as 147.23 but has since returned to a 146 handle.
• AUD/USD is steady vs. the USD but in close proximity to yesterday’s low that was triggered by the hot ISM services print which dragged the pair lower to a 0.6829 base vs. the 0.6942 YTD peak printed earlier in the week.

Fixed Income

• USTs are flat, in contrast to European peers in what appears to be an attempt to claw back some of yesterday’s ISM services-induced losses which dragged the Dec’24 contract to a 113.28+ low vs. the 114.14+ high seen earlier in the session. All focus will be on today’s US NFP report.
• Bunds have extended the pullback seen since Tuesday which saw the Dec’24 10yr print a fresh contract high at 136.20. EZ-specifics has been light so focus will be on the US employment data. The German 10yr yield has continued its upside and has been as high as 2.174% vs. the 2.011% multi-month low printed earlier in the week.
• Gilts kicked the session off on the backfoot inline with European paper and a reversal of yesterday’s upside that was driven by dovish comments from BoE Governor Bailey. Downside for the UK 10yr was added to by comments from BoE Chief Economist Pill who took a more hawkish stance than his boss.

Commodities

• Crude is holding an upward bias against the backdrop of heightened geopolitics heading into the weekend, with Israel’s response yet to come. Brent’Dec resides near its weekly best in a USD 77.39-78.42/bbl range.
• Mixed trade across precious metals ahead of the US jobs report but spot gold holds a mild upward bias on the back of the aforementioned geopolitics. Spot gold briefly topped yesterday’s high (USD 2,663/oz).
• Base metals hold a mild upward bias but largely treading water in a tentative market awaiting the US jobs report. Mainland Chinese markets remained closed overnight for Golden Week holiday.
• UAE’s ADNOC set Nov Murban crude OSP at USD 73.41/bbl (prev. USD 77.94/bbl)

Geopolitics

• Iranian Supreme leader Khamenei said will strike again if necessary. Adds “we will not delay nor rush to respond to Israel”.
• Israeli army calls on residents of 20 towns in southern Lebanon to evacuate, according to Sky News Arabia
• Hezbollah announces targeting of northern Haifa with a rocket barrage, according to Sky News Arabia.
• Israel’s military called for the immediate evacuation of specific buildings in Beirut’s southern suburbs and multiple Israeli raids were then reported in the area, while Israel also conducted a strike on the outside perimeter of Beirut Airport. Furthermore, Israel’s Channel 14 reported that Hezbollah’s Executive Council head Hashem Safieddine was the target of Israel’s attack in Beirut and Israel’s military said it killed Zahi Yasser Abdel Razak Ofi who is the head of the Hamas network in the West Bank’s Tulkarm.
• Ukraine’s military said it hit fuel storage facility in Russia’s Voronezh region
• Ukrainian drone strikes targeted a fuel depot in the Russian town of Anna in Voronezh Oblast, while the Russian emergencies ministry later announced that a fuel depot was on fire in Russia’s Perm region.
• North Korean leader Kim warned North Korea will use nuclear weapons if South Korea and the US use force, while he said enemies’ threats will not take away North Korea’s nuclear weapons and it has irreversibly secured nuclear power, as well as the system and function for using it, according to KCNA.

US Event Calendar

• 08:30: Sept. Change in Nonfarm Payrolls, est. 150,000, prior 142,000
  • Change in Private Payrolls, est. 125,000, prior 118,000
  • Change in Manufact. Payrolls, est. -8,000, prior -24,000
• 08:30: Sept. Unemployment Rate, est. 4.2%, prior 4.2%
  • Underemployment Rate, prior 7.9%
  • Labor Force Participation Rate, est. 62.7%, prior 62.7%
• 08:30: Sept. Average Hourly Earnings MoM, est. 0.3%, prior 0.4%
  • Average Hourly Earnings YoY, est. 3.8%, prior 3.8%
  • Average Weekly Hours All Emplo, est. 34.3, prior 34.3

DB’s Jim Reid concludes the overnight wrap

Markets have remained focused on the Middle East over the last 24 hours, as investors weigh up the likelihood of a fresh escalation and how Israel might respond to Iran’s missile strikes last Tuesday. That response from Israel is yet to materialise, but there was a fresh spike in oil prices after President Biden was asked whether he’d support an Israeli strike on Iran’s oil facilities, and he said “we’re discussing that”. That immediately led to a market reaction, and Brent crude (+5.03%) saw its largest daily increase since last October to $77.62/bbl. Indeed, since the news of Iran’s strikes came through, Brent crude has now seen its biggest 3-day gain in 18 months, having risen by +8.15% since Monday’s close. And broader volatility has also mounted, with the VIX index closing back above 20pts yesterday for the first time in nearly a month.

Whilst the geopolitical situation has dominated attention, yesterday also brought another strong batch of US data, which cast fresh doubt on how quickly the Fed would cut rates. In particular, the latest ISM services index for September came in at a 19-month high of 54.9 (vs. 51.7 expected), which was above every economist’s estimate on Bloomberg. So that led to more scepticism on the idea that the US was heading into a sharper downturn, and the new orders component also surged to a 19-month high of 59.4. That came alongside several other releases, including the initial jobless claims for the week ending September 28. They posted an increase to 225k (vs. 221k expected), but the 4-week moving average still fell back to its lowest level since May, at 224.25k.

Macro data will be in the spotlight again today, as we’ve got the latest US jobs report for September coming out. Bear in mind that on the day of the last two reports, the S&P 500 sold off by more than -1.7%, so this is something markets have been very reactive to, particularly given that other labour market data has been slowing down recently. In terms of what to expect, our US economists are looking for nonfarm payrolls to come in at +150k, with the unemployment rate rounding up to 4.3% on the back of a slight pick up in participation. For our economists’ full preview and to register for their post-release webinar, see here. The jobs report will be very important for the Fed’s next decision, with market pricing still in the balance between a 25bp and a 50bp cut. But there’s another jobs report on November 1 in the week before the Fed’s next decision, so we have plenty of data still to come that can influence the decision.

Ahead of the jobs report, yesterday’s strong US data led markets to dial back the chance of aggressive rate cuts over the coming months. For instance, Fed funds futures pricing for December 2025 rose by +8.9bps, closing above 3% for the first time since early September. In turn, that led to a fresh selloff for US Treasuries, with the 2yr yield (+6.3bps) up to 3.71%, whilst the 10yr yield (+6.4bps) was up to 3.85%, which is its highest closing level in a month. So we’ve seen a clear tick up in yields over recent sessions, as the solid US data has made it harder to justify the pricing of rapid cuts more normally associated with recessions. Moreover, the rise in yields coupled with higher geopolitical risks helped the dollar index (+0.31%) advance for a fourth session in a row, leaving it on course for its best week since April.

Over in Europe, sovereign bond yields saw a similar trend, with those on 10yr bunds (+5.4bps), OATs (+7.9bps) and BTPs (+6.2bps) all moving higher. The main exception was here in the UK, where the 10yr gilt yield fell -0.9bps. That followed comments from BoE Governor Bailey, who said in an interview with the Guardian that if the news on inflation remained positive, then they could become “a bit more activist” about cutting rates. The comments also contributed to a fall in sterling, which ended the day down -1.10% against the US Dollar.

For equities, geopolitical fears outweighed the more positive US data, and the major indices fell back on both sides of the Atlantic. For the S&P 500 (-0.17%) it was only a modest decline, but that still left the index at a two-week low. Small-cap stocks underperformed in particular, with the Russell 2000 (-0.68%) losing ground for a third consecutive session. And in Europe there were also sharp losses that saw the STOXX 600 fall -0.93%.

Looking forward, it’s been widely reported that EU member states will vote today on whether to impose tariffs on Chinese electric vehicles. Our European economists have published a preview of the decision (link here), where they expect EU countries to give the green light to additional tariffs. Reuters have reported that Germany will vote against the introduction of tariffs, although their reports have also said that others including France and Italy are in favour.

Overnight in Asia, the Hang Seng (+1.75%) has posted a further advance after the previous day’s losses, leaving the index on track to close at its highest level since January 2023. Markets in mainland China remain shut for a holiday, but there’ve been gains elsewhere, with the Nikkei (+0.27%) and the KOSPI (+0.62%) both posting smaller advances. Similarly, US equity futures are also pointing to modest gains, with those on the S&P 500 up +0.07%.

In terms of yesterday’s other data, we did get the final services and composite PMIs from around the world. In the Euro Area, they were a bit stronger than the flash readings, with the final composite PMI at 49.6 in September (vs. flash 48.9). However, the US composite reading came down a bit from the flash print to 54 (vs. flash 54.4).

To the day ahead now, and data releases include the US jobs report for September, along with the German and UK construction PMIs for September, and French industrial production for August. From central banks, we’ll hear from ECB Vice President de Guindos, the ECB’s Villeroy, Simkus, Kazaks, Muller, Centeno and Escriva, the Fed’s Williams and the BoE’s Pill.

Authored by Ron Paul via the Ron Paul Institute,

Many investors, businesses, and consumers cheered the Federal Reserve’s first interest rate cut since March of 2020. The Fed’s 50 basis points interest rate reduction was larger than many Fed watchers anticipated and was followed by suggestions that there are more rate cuts on the way.

A drop in borrowing costs following the Fed’s rate reduction can help make people more optimistic about the general economy and their own financial situation. The uptick in consumer sentiment could help Democratic presidential nominee Vice President Kamala Harris who has lagged behind Republican nominee former President Donald Trump on the matter of which candidate is seen as better on economic issues.

Even before the Fed’s rate cut, President Trump and pro-Trump commentators were suggesting that a rate cut would be a “September surprise” designed to boost Vice President Harris. This claim was dismissed by the “mainstream” media as a baseless “conspiracy theory.” However, anyone familiar with the Federal Reserve’s history of tailoring monetary policy to advance political goals would not have any trouble believing that the Fed would cut interest rates to help its preferred candidate.

Federal Reserve Chairman Jerome Powell has an incentive to prevent a Trump return to the Oval Office. While in the White House, President Trump regularly criticized Powell for not further lowering already historically low interest rates.

President Trump has also indicated that, if he wins, he will push Congress to give the president a direct role in monetary policy. Vice President Harris, in contrast, has promised to not interfere with the Fed’s conduct of monetary policy. It is easy to see why Powell and his Fed colleagues might want to help Harris.

Anyone who has been to a grocery store knows the Fed has not “defeated” price inflation. However, even official government data shows “softness” in the labor market. This Fed rate cut likely had more to do with concerns about increasing unemployment than the Fed’s claim that inflation will soon reach the Fed’s two percent target.

The Fed is between a rock and a hard place. If it does not lower rates, there is concern that unemployment will increase as the economy falls into a recession. On the other hand, keeping rates low runs the risk of hyperinflation and a collapse of the dollar’s value. The most likely scenario is a return of “stagflation” where rampant price inflation coexists with high unemployment.

Interest payments on the national debt will exceed one trillion dollars this year, putting more pressure on the Federal Reserve to monetize the debt, thus creating more inflation.

The Fed’s interest rate reduction may have increased Kamala Harris’s chances to win the presidency. However, the rate cut also increases the odds that the next president will face a major economic crisis. The crisis will either be caused by or result in a rejection of the dollar’s world reserve currency status.

The best thing politicians can do in the crisis is to avoid the temptation to “stimulate” the economy. Instead, they should let the recession run its course and begin dismantling the welfare-warfare state and the fiat money system.

 

According to a Pew Research Center survey conducted in the fall of 2023, compensation is the aspect of their job that most U.S. teachers are least satisfied with.

As Statista’s Florian Zandt details below, 29 percent were not too and 22 percent not at all satisfied with their pay, while all other aspects ranked significantly higher in terms of current satisfaction. Chief among them were social aspects of their work: Relationships with their peers, school administrators and the parents of their students gave the surveyed teachers the least cause for complaint.

You will find more infographics at Statista

The survey pool contained teachers from K-12 public schools, meaning educators working in primary and secondary education. Adult and tertiary education like college programs didn’t factor into the results. In terms of the share of respondents being extremely or very satisfied, most polled aspects ranked between 35 and 46 percent. The outlier was the relationship with fellow teachers, which 7 in 10 survey participants rated as extremely and very satisfactory. More than half of all respondents also said that the relationship with school administrators was either extremely or very satisfactory.

While teachers are not among the worst-paid occupations in the United States with a mean annual salary of $69,000 according to May 2023 estimates by the Bureau of Labor Statistics, there are drastic regional and seniority differences in educator pay. For example, data collected by the National Education Association, the biggest teachers’ union in the U.S. with around three million members, shows that salaries for new teachers are at around $44,500 per year. However, three in ten school districts pay freshly-graduated teachers below $40,000 per year. Only a few professions, most of them concentrated in the industry, agriculture, retail and hospitality sectors, had a mean annual wage below that figure.

Via Common Dreams

Israeli airstrikes on Lebanon killed a United States citizen earlier this week as the Biden administration faced growing backlash for failing to evacuate Americans from the country, which is under intense assault from a military armed to the teeth by the U.S.

Hajj Kamel Ahmad Jawad was killed by an Israeli strike on Tuesday in his hometown of Nabatieh in southern Lebanon, according to a statement from his family. Jawad was a resident of Dearborn, Michigan and a constituent of U.S. Rep. Rashida Tlaib (D-Mich.).

“In his last days, he chose to stay near the main hospital in Nabatieh to help the elderly, disabled, injured, and those who simply couldn’t financially afford to flee,” Jawad’s family said. “He served as their guardian, provided them with food, mattresses, and other comforts, and anonymously paid off their debts.”

The Biden White House confirmed Jawad’s death in a statement Wednesday—but did not acknowledge that an Israeli strike killed him.

“We are deeply saddened by the death of Kamel Ahmad Jawad and our hearts go out to his family and friends,” said a White House spokesperson. “His death is a tragedy, as are the deaths of many civilians in Lebanon.”

Earlier Wednesday, a spokesperson for the U.S. State Department said it is “our understanding that [Jawad] was a legal permanent resident, not an American citizen”—a statement contradicted by Jawad’s family and Tlaib’s office, which told Reuters he was a U.S. citizen.

“His life is one of over 50,000 lost at the hands of Israeli aggression across the Middle East,” Jawad’s family said. “The fact that he was an American citizen should not make his story more important than others.”

More than 1,000 people—roughly a quarter of them women and children—have been killed by Israeli attacks on Lebanon since mid-September. The U.S. has backed Israel’s assault on Lebanon and sent additional troops to the region to bolster its Israeli ally.

As Israeli forces continue to pummel Beirut and proceed with their ground invasion, the Biden administration has faced outrage for failing to swiftly evacuate U.S. citizens from Lebanon; thousands of Americans live and work in the country.

While other countries—including Germany, China, and Canada—have moved to evacuate their citizens from the country, the U.S. has been accused of lagging behind.

During a press briefing on Wednesday, U.S. State Department spokesman Matthew Miller said the administration has been working over the past several days “to make seats available or to find seats available on existing commercial flights.”

“We have been able to identify over 800 seats over that time,” said Miller. “A number of them have been used by American citizens… Not in all cases have they been filled. And then today we were able to organize a flight from Beirut to Istanbul to allow other American citizens to leave.”

In a social media post late Wednesday, Tlaib said her office has “been desperately trying to help” 148 residents from her district evacuate Lebanon. Zeteo noted that Tlaib said in an Instagram video that it is a “disgrace” that her staff has had to “beg” the Biden administration to help evacuate her constituents.

Americans in Lebanon can’t get out and are under attack by American bombs, while somehow China has managed to evacuate its citizens pic.twitter.com/BTSsIt6H4T

— Ryan Grim (@ryangrim) October 2, 2024

“One of my constituents was already killed in an Israeli airstrike,” said Tlaib, referring to Jawad. “The State Department is leaving Americans behind and failing to protect their own citizens.”

One American citizen identified as Karam told Al Jazeera that she “called the U.S. embassy in Beirut for help fleeing the violence,” but “was told to find a way out of the country by herself,” the outlet reported.

“Karam, who chose to be identified by her nickname out of fear of retaliation, drew a contrast with how the US State Department swiftly chartered special flights and a ship to evacuate American citizens in Israel after Hamas’ October 7 attack last year,” Al Jazeera noted.

“Americans of Lebanese descent have been treated as lesser U.S. citizens than Israeli U.S. citizens,” she said. “It is as if we don’t exist.” Abbas Alawieh, co-founder of the Uncommitted National Movement and a Lebanese American, said Wednesday that U.S. President Joe Biden and Vice President Kamala Harris have “repeatedly” turned down requests to meet with Americans like him who have family members in Lebanon.