Month: November 2024

Authored by Connor O’Keefe via The Mises Institute,

Election day is finally here. Polls show that the race between Kamala Harris and Donald Trump stands at a virtual tie, and that has many worried about the possibility of a contested election. 

Sixty-eight percent of Americans are concerned people will resort to violence if they are unhappy with the outcome.

Contributing to those fears are recent findings that nineteen percent of Republicans and twelve percent of Democrats say that, if their candidate loses, he or she should declare the results invalid and “do whatever it takes to assume office.”

Those numbers are not surprising to anyone who consumes a lot of political media. Tune into the establishment-friendly press and you’ll be inundated with stories about voter suppression in red states, recaps of the most dramatic skirmishes that happened outside the Capitol on January 6, and warnings about how Trump and his allies could actually take power after losing the upcoming election.

The fear, from the establishment’s perspective, is that after losing, Trump will successfully pressure Republican legislators in battleground states to appoint “alternate” electors that will keep Harris below the 270 electoral votes needed to win, which would send the election to the likely Republican-controlled House.

Without very explicit evidence of decisive voter fraud that the political class outright ignores, it’s hard to see a scheme like this working—considering that Trump isn’t already in power, Democrats have passed laws in recent years making it harder to appoint alternate electors, and many of the Republican legislators Trump would rely on have shown a reluctance to go along with the former president absent strong pressure from their constituents. But that hasn’t stopped the fear-mongering.

On the other side, the Trump-friendly alternative media is full of stories about local and state officials overturning election security laws, deleting drop box surveillance footage, actively registering non-citizens to vote, losing entire trays of mail-in ballots, and other tales of vote manipulation and even outright fraud.

Pair these stories with all the left’s freakouts about “voter suppression” in red states and the various assertions of foreign influence operations and it’s easy to see how so many voters became convinced that a victory by the other side would be illegitimate. Now add the establishment panic about a MAGA plot to overturn the election if they lose and the right’s awareness of the political establishment’s preparations to do the exact same thing had they lost in 2020 and it becomes clear why many are worried about what awaits us after election day.

The collapse of the public’s trust in elections mirrors the collapse in trust in several other institutions, like the federal judicial system, public health authorities, and the news media.

While uncomfortable, the public losing trust in untrustworthy institutions is a good thing. It’s a necessary first step if the country is ever going to get on a better path.

The federal justice system has been used to go after the establishment’s political enemies since the beginning, public health authorities demolished any credibility they may have had with their deadly, totalitarian response to COVID-19, and the American news media has been actively misinforming the public in politically-expedient ways for essentially it’s entire history. 

In the past decade or so, the American public has developed a much healthier level of skepticism toward these institutions. It is perfectly reasonable for that skepticism to carry over to federal elections.

After all, the political class—which includes politically-connected businesses—is making trillions of dollars in revenue thanks to various wars, innumerable regulations that protect them from competition, easy money from the Fed, and other lucrative government programs. It is not much of a jump to assume that, if able, the very people who have repeatedly lied us into unnecessary wars to line their pockets would be willing to use whatever means necessary to expand and protect their power and profits.

Together with the establishment-friendly media, the political class has placed a very high social cost on questioning the security of our elections in every instance except when it conveniently places the blame on a foreign government that Washington wants to demonize. Questioning the legitimacy of elections is “dangerous” unless you’re accusing Russia or Iran.

And whenever someone with a big enough voice casts doubt on past elections in an “unacceptable” way, the establishment is quick to shout them down with the same meaningless denunciation that there is no evidence of “widespread” election fraud.

Of course, if there were to be a conspiracy to either foment or permit voter fraud in a way that successfully flipped a national election, it would not be “widespread,” it would be targeted. Elections like this one come down to a handful of precincts—most of which are toss-up suburban and rural areas that surround blue cities in swing states. A conspiracy to commit or allow “widespread” voter fraud would be pointless and all but guarantee its discovery.

This is not to say you should accept every claim made about voter fraud or even that there is definitive proof that any previous elections were stolen in this fashion. And it’s certainly not to say that violence is an appropriate or productive response if the upcoming election appears like it was stolen.

Only that it would be healthy for more members of the American public to start questioning whether our system really works the way we learned it did in elementary school—where the president represents our collective will and acts as we would act to address the problems we face at home and abroad.

That simple story is an illusion that conveniently frames whatever the government is doing to us as an embodiment of everyone’s wishes and any opposition as a selfish stand against what everybody else wants. Many Americans are appropriately questioning a lot of what they’ve previously accepted as true. They ought to question this too.

Authored by Tom Ozimek via The Epoch Times,

The U.S. Supreme Court has agreed to review a key deadline affecting some noncitizens, specifically, illegal immigrants who seek protection from deportation to countries where they say they fear persecution or torture.

The decision could resolve conflicting interpretations among lower courts on how strictly the timing of deportation appeals should be enforced.

The high court agreed on Nov. 4 to hear a case brought by Pierre Riley, a Jamaican national who overstayed his visa to the United States in 1995.

In 2006, he was sentenced to 25 years in prison for possessing and intending to distribute more than 2,000 pounds of marijuana, as well as for possessing a firearm related to the drug offense.

After receiving compassionate release in 2021, Riley was taken into custody by immigration officials. The Department of Homeland Security (DHS) promptly issued a deportation order, known as a final administrative removal order, based on Riley’s aggravated felony conviction.

Saying he feared violence if returned to Jamaica, Riley applied for relief from the removal order under the Convention Against Torture (CAT), citing a credible fear of persecution or torture at the hands of a criminal who had already harmed members of his family.

Although an initial review by an asylum officer found that Riley had not shown a reasonable fear, an immigration judge later granted him protection under the CAT, deferring his deportation. DHS appealed the immigration judge’s decision to the Board of Immigration Appeals (BIA), which overturned the immigration judge’s order in May 2022 and ordered Riley’s removal to Jamaica.

Riley then appealed the BIA’s decision to the U.S. Court of Appeals for the Fourth Circuit. However, the appeals court dismissed his petition, citing lack of jurisdiction and concluding that Riley had missed the 30-day deadline mandated by immigration law. The Fourth Circuit held that the 30-day clock began with the original final administrative removal order issued in January 2021, not with the later BIA decision.

Under the Fourth Circuit’s interpretation, only the original removal order triggers the 30-day appeal period. This decision prompted Riley to appeal to the Supreme Court.

In his appeal to the high court, filed on May 31, Riley’s attorneys highlighted a split among federal circuits on two key issues.

The first is about when the 30-day deadline begins.

Some circuits, including the Fourth Circuit, require appeals to be filed within 30 days of the initial removal order. Other circuits permit illegal immigrants and other noncitizens to appeal within 30 days of the BIA’s final decision, especially when that decision is the last step in the administrative process.

The second question before the Supreme Court is whether the 30-day deadline is a strict, jurisdictional requirement, or merely a procedural “claims-processing” rule that can be interpreted flexibly under certain circumstances. If the deadline is jurisdictional, courts lack the authority to hear late appeals, but if it’s deemed to be a claims-processing rule, exceptions may be possible in some cases.

The Supreme Court’s Nov. 4 docket entry confirms that the justices will limit their review to these two questions, as framed by the Department of Justice, which is representing the government in the case.

The docket entry reads:

“The petition for a writ of certiorari is granted limited to the questions presented by the respondent’s brief.

1. Whether the 30-day deadline in 8 U.S.C. 1252(b)(1) for filing a petition for review of an order of removal is jurisdictional.

2. Whether a noncitizen satisfies the deadline in Section 1252(b)(1) by filing a petition for review challenging an agency order denying withholding of removal or protection under the Convention Against Torture within 30 days of the issuance of that order.”

It’s unclear when the Supreme Court will finalize its review.

The outcome of the case has the potential to set a nationwide standard for deportation appeals, influencing how cases involving claims of risk of harm resulting from deportation are handled across federal courts.

A decision by the Supreme Court to treat the 30-day deadline as nonjurisdictional would provide flexibility in deportation appeals, allowing some cases to be heard even if the deadline was missed.

Conversely, if the high court rules that the 30-day period is strictly jurisdictional, illegal immigrants and some other types of noncitizens facing deportation—such as those who have been granted asylum or refugee status but committed crimes that make them deportable—would face limits in accessing judicial review.

A CNN panel looked shocked after guest Marc Lotter suggested a significant shortfall in Democrat early voting vs. 2020 portends a bad time for Kamala Harris.

“The math doesn’t work. The Democrats are down 1.7 million early votes in the battleground states in urban areas,” said Lotter. “They are down 1.4 million votes in the battleground states among women voters.”

“Rural voters have overperformed early by 300,000,” he continued, noting that “Democrats have to win their races early. Republicans generally win them on election day.”

“The margins don’t add up right now for the Democrats in any of these battleground states.”

“The math doesn’t work. The Democrats are down 1.7 million early votes in the battleground states in urban areas.”

“They are down 1.4 million votes in the battleground states among women voters.”

“Rural voters have overperformed early by 300,000.”

“Democrats have to win their… pic.twitter.com/zarBQ7RY7o

— Kyle Becker (@kylenabecker) November 5, 2024

h/t Kyle Becker

Lotter’s comments come after the Trump campaign touted bullish data showing Republicans gaining ground with the early vote in battleground states vs. the 2020 election cycle.

According to the campaign, new and infrequent voters are leaning more Republican than Democrat based on the latest indications from Arizona, North Carolina, Nevada and Pennsylvania, the NY Post reports, citing a source in the camp.

“In those states, Democrats have more than 1.4 million voters who voted before Election Day in 2020 or 2022 but have not voted yet” — despite early voting being closed in nearly every state — “and many not having even requested a mail ballot,” the source said, suggesting that Democrat turnout might not be as strong this time around.

According to the Post, here’s some of the data that allies of the campaign have been privately touting – mixed with early-voter information:

Arizona

Returned mail and early-vote party registration: Republicans up 8 points.

Relative to 2020: Republicans are up 9 points.

Early voting in the Grand Canyon State closed Nov. 1. Men comprised about 50% of the votes for Republicans and 40% for Democrats, according to the data shared with The Post.

Other groups have reported apparent advantages for Republicans here, too. For instance, there have been 924,524 GOP ballot returns, relative to 736,569 for Democrats, according to early-vote data compiled by UpLift Campaigns.

Georgia

The Peach State doesn’t have voter registration information for its early votes.

Looking at data from Democratic analyst Tom Bonier, the African American early vote and mail turnout dipped 7% relative to 2020.

Early voting in Georgia stopped Nov. 1. Its turnout soared to 4,004,588 both through early voting and absentee voting by mail this year, compared to the 2,697,822 early voters four years ago, according to data from the Georgia Secretary of State’s office.

Michigan

The Wolverine State similarly lacks voter registration information for its early votes.

But the Trump campaign is touting data suggesting that in-person early voters represent about 32% of the pre-Election Day votes cast and that its supporters typically favor in-person voting. In-person early voting is new in Michigan.

More than 2.58 million of the over 7 million people registered to vote in Michigan have cast early votes, according to data from the Michigan Secretary of State’s Office.

North Carolina

Returned mail and early-vote party registration: Republicans up 1 point.

Relative to 2020: Republicans are up 9 points.

This appears to be the first time Republicans have ever clinched the early vote in North Carolina.

Data from Bonier suggests that African American mail and early-vote returns have sunk 22% relative to 2020 here. Men comprised about 37% of the Democratic support and 49% of Republican support.

In-person early voting in the Old North State stopped Nov. 2.

There have been about 4.4 million early votes cast out of the roughly 7.8 million registered voters in North Carolina, including 1,478,496 for Republicans, 1,436,861 for Democrats and 1,524,094 without a party registration, according to data from the University of Florida’s Election Lab.

Nevada

Returned mail and early-vote party registration: Republicans up 4 points.

Relative to 2020: Republicans are up 8 points.

Early in-person voting was closed off Nov. 1. Roughly 42% of Democratic votes came from men and 52% from Republicans.

Across the board, Nevada saw about 1,077,441 voters turn out early, including 406,705 from Republicans and 363,595 from Democrats, according to data.

Pennsylvania

Returned mail and early-vote party registration: Democrats up 23 points

Relative to 2020: Republicans are faring 22 points better.

The Trump campaign believes that Democrats’ early-vote advantage in the Keystone State has slipped from past elections, with total absentee ballots plummeting about 29% relative to the 2020 cycle.

There have been at least 1,739,606 early votes cast in Pennsylvania, including 971,615 from Democrats and 571,725 from Democrats, per the University of Florida’s Election Lab data.

Wisconsin

The Badger State lacks voter registration information for its early votes.

Still, the Trump campaign believes that early votes and mail-in ballots have slipped 23% since 2020 and that mail-in ballot requests are down 52% from 2020.

There have been at least 1,338,728 early votes cast in Wisconsin, according to data from the University of Florida’s Election Lab. There are more than 4.7 million registered voters there.

Approximately 76 million early votes have been cast across the country, per the University of Florida’s Election Lab vs. 252 million in the 2020 election, in which early voting generally favored Democrats, while in-person voting leaned Republican. 

Authored by Michael Wishburn via The Epoch Times,

Witnesses to the May 2023 incident in which Marine Daniel Penny placed Jordan Neely, a homeless man with a history of mental illness, into a chokehold on a Manhattan-bound subway train and caused his death, testified in a Manhattan courtroom on Nov. 4 about what they saw and heard that day.

One witness, Yvette Rosario, said the incident made her far more frightened than anything else she had experienced on the subway in her 10 years of living in New York City. Jurors watched a portion of a video of the incident and its aftermath taken with Rosario’s cellphone.

After seating a full jury last week, the trial got into full swing on Nov. 1 in Judge Maxwell Wiley’s courtroom in the criminal court building at 100 Centre St. in lower Manhattan.

When the trial, which the judge said is likely to last about six weeks, comes to an end, the jurors will be asked to decide whether to convict Penny on charges of manslaughter and criminally negligent homicide. At the heart of the case is whether Neely was simply a desperate person who wanted attention and help, as prosecutors maintain, or posed an immediate danger to others on the Manhattan-bound F train, as Penny’s defense insists.

In a brief initial phase on the morning of Nov. 4, Penny’s lawyers sought to persuade the judge that the prosecution’s opening statement depicting Neely as the kind of ordinary homeless person whom urban residents encounter daily was wrong and prejudicial to the jury.

Given Neely’s documented history of mental health problems and violent incidents leading up to, and earlier on the day of, the fatal encounter, such a characterization “creates a very false narrative for the jury,” Thomas Kenniff, a lawyer for Penny, said.

Wiley said he did not think that the prosecution had in any way hampered the defense from making whatever arguments it pleased but said he would take the defense’s motion under advisement.

The courtroom then heard from Rosario, 19, who was on the train with a friend when the incident occurred. Under direct examination from government lawyers, Rosario, who is from the Dominican Republic, said she took the subway almost every day to travel to and from school.

On May 1, 2023, Rosario was on the F train heading toward her destination, at the stop at Broadway-Lafayette, where SoHo borders Greenwich Village. At the Second Avenue station, she said, the doors had almost closed when a man whom she identified as Neely stuck his hand in to prevent the doors from closing and then came inside.

“Once he came in, he took off his sweater, and while he was taking off his sweater, he stated how he was homeless, he didn’t have any money, and he didn’t care about going back to jail,” Rosario said.

She recalled Neely throwing his sweater hard onto the ground and moving quickly up to one of the poles in the subway car. Rosario said Neely’s tone frightened her.

“I was very nervous and was telling my friend I was going to pass out. … I got scared by the tone of how he was saying it,” Rosario stated. “I have seen situations, but not like that.”

She recalled putting her head on her friend’s chest and wishing the train’s doors would open again so she could get off. She said the next thing she remembered was the sound of someone falling to the floor, and then looking up to see Penny and Neely struggling.

“I saw them both on the floor, and then he was holding him, the white guy; he had him like this,” Rosario said, approximating a chokehold with her arms and hands.

Under cross-examination from Kenniff, Rosario repeated much of her account and emphasized that the incident stood out from other tense and unpleasant things that she had seen on the subway in the past.

The testimony of another passenger, Juan Alberto Vazquez, who spoke through an interpreter, confirmed much of Rosario’s testimony.

Vazquez said he had witnessed some of the encounter and heard other parts of it from his position sitting behind a couple riding the train.

The trial resumes on Nov. 7 with more witness testimony.

With ‘hard data’ exploding higher, ‘soft’ survey data is not playing along so far (on the Manufacturing side). On the Services side of the economy, S&P Global’s PMI slipped lower (to 55.0 from 55.2 vs expectations of a small rise to 55.3) in October equaling its lowest since July (having gone nowhere in six months).

ISM’s Services PMI was expected to decline from 54.9 to 53.8, but instead it jumped significantly higher to 56.0 – the highest since July 2022…

Source: Bloomberg

S&P Global sees new orders rising (though some international demand weakness is evident) and output prices rising at their slowest pace in four and a half years (despite a further sharp increase in input prices)..

ISM’s survey saw employment surge back into expansion (so no hurricane impact there?) while new orders and prices paid dipped…

Source: Bloomberg

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence :

“The US service sector notched up another strong performance in October, helping offset the current weakness of the manufacturing sector to drive a solid pace of overall economic growth again at the start of the fourth quarter.

“The services economy’s consistently impressive growth in recent months has helped the US outperform all other major developed economies. October’s strong performance is consistent with GDP continuing to rise at an annualized rate in excess of 2%.”

On the inflation side, some good news:

“Particularly welcome news comes from the cooling inflation picture. Average prices charged for services rose at a sharply reduced rate in October, showing one of the smallest increases seen for over four years, as competition intensified in the services economy.

Hope remains…

“Firms’ expectations for the coming year have meanwhile perked up from a slump in September, though much uncertainty persists in relation to the business climate after the election, causing many firms to pause hiring until the political landscape becomes more settled.”

How much will all this ‘survey’ data change after this week?

Authored by Pawel Styrna via the Federation for American Immigration Reform,

The harmful impact of mass illegal migration is felt in every state and at every level of society, from the national to the most local. Rather than attempting to solve or at least acknowledge the problem, pro-open-borders officials prefer to silence criticism. Parents in Northern Virginia’s Loudoun County saw a demonstration of this reality earlier in October. The county school board chose to shut down public discussion about an alleged illegal alien MS-13 gang member in the county’s school system.

For mass-illegal-migration apologists on the school board, the real problem is not that illegal immigration is bringing gangs and crime into our classrooms, but that Americans notice it and dare speak out against it.

On October 8, Loudoun County parents were raising concerns about the presence of an (unnamed) alleged illegal alien student who is also an alleged member of the brutal Central American gang, MS-13. According to ABC 7 News, the student “now attends Loudoun Valley High School despite being caught carrying a gun in May 2023 and making the threat to kill a Blue Ridge Middle School student.” Several parents spoke, with one asking “Where’s the protection and the safety for our children who are in school with other children who have [made] known threats, who have been arrested, and who are back in the school, and my daughter is terrified to go to school with him [?].”

In each case, Loudoun County School Board Chair Melinda Mansfield cut the concerned parents off, her only concern being that the Loudoun County residents might potentially reveal personal information about the alleged illegal alien gang member. Eventually, Mansfield closed the public comment portion of the meeting. (More recently, the parents responded by suing LCSB for violating their First Amendment rights.)

The problem of alien gang members in schools is by no means limited to one alleged gang member in one county. Back in September, in Harford and Baltimore Counties, Maryland, Fox 45 broke a story about an MS-13 gang member and murder suspect being allowed to enroll in not just one, but two public high schools, sparking outrage among parents who were kept in the dark about such a dangerous individual attending school along with their children. In fact, MS-13 has been a threatening presence throughout the Maryland and Virginia counties and suburbs surrounding the nation’s capital for the past decade due to mass illegal migration from MS-13’s countries of origin.

What is a more recent feature of Biden-Harris-era mass migration is the arrival of the no less brutal and violent Venezuelan gang Tren de Aragua on American soil. Having taken over residential properties in Aurora, Colorado, and more recently a complex in San Antonio, Texas, they now appear interested in taking over schools. In early October, police in Texas arrested 32-year-old Jorgenys Robertson Cova for recruiting middle school children in the Houston area to join Tren de Aragua. The Venezuelan illegal alien had arrived in the U.S. two years ago and managed to rack up a record that included a series of thefts. Cova was scheduled to attend an asylum hearing on the day of his arrest. This routine abuse of humanitarian asylum and refugee law has been another major driver of illegal immigration, resulting in these associated pathologies.

The case of our public schools demonstrates the degree to which mass illegal migration and all its problems affects Americans at a personal, local, and direct – not just abstract or theoretical – level. In addition to much-needed school resources being diverted to the costly education of the children of illegal aliens, our schoolchildren also find themselves forced to attend school with migrant children carrying such potentially infectious and deadly illnesses as latent tuberculosis. And, if that were not enough, illegal alien gang members are either attending our schools or attempting to recruit new members in them. This situation poses a real physical threat to school staff and students and is not acceptable. Our children deserve better.

Ferrari shares are sliding in premarket trading in New York as third-quarter shipments of its luxury supercars to China plummeted, with the industry-wide downturn finally catching up to the Italian automaker. The broader luxury downturn has shown signs of stress, with industry fashion giants LVMH Moët Hennessy Louis Vuitton and Gucci’s parent company Kering cautioning about a slowdown in China and other top markets in the world. 

The Italian luxury sports car maker reported a third-quarter profit that was slightly better than expected versus analysts tracked by Bloomberg.

Shipments were a major focus. The Italian manufacturer was battered by a 29% plunge in shipments to the China region and a 2.4% decline in deliveries to the US. 

Here’s a snapshot of quarterly results:

• Adjusted Ebitda EU638 million, +7.2% y/y, estimate EU633.8 million (Bloomberg Consensus)

• Adjusted Ebit EU467 million, +10% y/y, estimate EU463.3 million

• Adjusted Ebit margin 28.4% vs. 27.4% y/y, estimate 28%

• Revenue EU1.64 billion, +6.5% y/y, estimate EU1.64 billion

• Cars and spare parts revenue EU1.40 billion, +5.3% y/y, estimate EU1.42 billion

• Sponsorship, commercial and brand revenue EU174 million, +20% y/y, estimate EU161.7 million

• Adjusted net income EU375 million, +13% y/y, estimate EU369.8 million

• Adjusted diluted EPS EU2.08 vs. EU1.82 y/y, estimate EU2.03

• Industrial free cash flow EU364 million, estimate EU342.7 million

Deliveries 3,383, -2.2% y/y, estimate 3,469

• EMEA deliveries 1,426 units, +2% y/y, estimate 1,486

• Americas Deliveries 1,070 units, -2.4% y/y, estimate 1,097

• Mainland China, Hong Kong and Taiwan 281 units, -29% y/y, estimate 348.4

• Rest of APAC deliveries 606 units, +6.3% y/y, estimate 582.27

Ferrari noted that despite lower shipments in the quarter, increased client customization requests helped drive additional revenue. 

“The third quarter once again shows growing results for Ferrari, driven by a strong product mix and increased personalization,” Benedetto Vigna, CEO of Ferrari wrote in a statement. 

Vigna said, “It confirms our commitment to deliver on the promises we made at our Capital Markets Day in 2022, along with the exceptional order book visibility well into 2026 …” 

Vigna’s comments renewed confidence in guidance that the company upgraded in August, which it plans to hit. 

In markets, Ferrari shares in New York slid 4%. On the year, shares have bucked the luxury slowdown, up nearly 41% (as of Monday’s close). 

Goldman’s George Galliers and Sian Keegan pointed out to clients this morning:

Guidance reiterated a potential source of disappointment – Ferrari has raised guidance at 3Q every year since 2016, with the exception of 2018. Hence, the lack of a raise today may be seen as disappointing. Ferrari reiterated its FY24 guide, adding that it had even greater confidence despite persistent cost inflation. Cons EBITDA/EBIT estimates presently sit c.2.5%/2.6% ahead of the low end of Ferrari’s guide, meanwhile, the low end also implies 4Q adj. EBIT cuts of c.11%. As per prior years, we expect that Ferrari’s guidance remains conservative. Ferrari commented that its order book stretches into 2026 and that the new F80 is fully allocated.

The analysts maintained a “Neutral” rating on the stock with a 12-month price target of €470/$508.

The slowdown in luxury spending is very concerning because it signals weakness and uncertainty in consumer confidence, especially among high-net-worth individuals who typically drive demand in these high-end markets. Maybe that’s why Senator Elizabeth Warren called for the Federal Reserve to deliver a 50 basis point cut later this week… 

Via SchiffGold.com,

Earlier this week, Peter joined Mark Mitchell on his podcast for a conversation on economics and monetary policy. They dive into the economic challenges facing the United States, focusing on structural issues like inflation, debt, and currency devaluation. Peter draws attention to the overlooked surge in gold prices, contrasting it with Bitcoin’s media spotlight, and discusses unrealistic promises by politicians on both sides regarding tariffs, tax cuts, and economic growth.

To start, Peter and Mark point out the Fed’s plan to reduce long-term interest rates has backfired, leading said rates to rise even higher:

“I thought that the catalyst for the next move up in long-term rates would be the Fed reducing short-term rates. Part of the reason for this reduction in short-term rates was to try to bring down longer-term rates, particularly mortgage rates, because people are having a hard time paying these inflated home prices with normal mortgage rates. … But it backfired. As we’re talking this morning, the yield on a 10-year treasury is now at 4.3%, which is 60 basis points higher than it was when the Fed cut rates by 50 basis points.”

Even 4.3% isn’t high enough to flush out decades of malinvestment. Just like a fever burns out a virus, the economy needs high interest rates to properly allocate investment:

“Artificially low interest rates are part of the problem underlying the economy, and they are having very negative effects on the allocation of resources– malinvestments. This is doing damage. We’re not saving enough; we’re borrowing and spending too much. Part of the solution to fixing what’s broken in the economy is to let interest rates go up. They actually need to be higher than they are right now. But the problem is, we have so much debt that we can’t afford it.”

Recent jobs numbers are not optimistic, even though most government statistics probably understate the problems facing the economy. Peter explains that he looks at the year-over-year increase to the national debt, a metric he finds more reliable than headline statistics:

“The CPI is a lie. The unemployment rate is a lie. All these government numbers are designed to create a false picture of prosperity that does not exist. They understate inflation, overstate growth, understate unemployment, understate the deficits. You can’t believe the information that comes out of the government.”

The government ignores bad data, and the media ignores gold’s record-setting year, choosing instead to focus on Bitcoin’s mediocre performance:

“They completely ignore it [gold]. Maybe because it’s making a record high almost every day, so there’s nothing new about it. But when gold is doing this, it’s very significant. It’s sending a clear signal that the Fed is making a mistake, that the rate cuts are a mistake, that inflation is going to be a lot higher. … I’ll be watching financial news as gold hits a new high, and not only will they not discuss gold’s significant new high, they’ll go on and on about Bitcoin making a one-month high.”

Peter hopes Donald Trump wins the rapidly approaching election, but urges realistic expectations about his policies, especially because of the incentives politicians face on the campaign trail:

“That’s what he’s promising. ‘Just elect me, and everything’s going to be great. Immediately, we’re all going to be so rich; it’s going to be crazy. And I’m going to collect trillions from the Chinese, and, you know, it’s all going to be great.’ But it’s not all going to be great—that’s the problem. And that’s going to be a problem for the administration because they set the bar so high, the expectations are so high. You kind of want to under-promise and over-deliver, but it’s hard to do that when you’re running for office.”

How would we really make America great again? Start by slashing wasteful spending, then abolish the income tax:

“We can’t go back to the system we had before the income tax unless we dismantle all the programs that we now have because of the income tax, which I’m all for. Get rid of Social Security, get rid of Medicare, get rid of Obamacare, shrink the government back down to its pre-1913 size. And that would really make America great again!”

Hon Hai Precision Industry, also known as Foxconn, which makes most of the world’s Apple iPhones, reported Tuesday the slowest monthly sales growth since February, stoking major concerns the upgrade cycle for new AI-enabled iPhones underwhelms. 

Per the Bloomberg report: 

Hon Hai, also a key server assembly partner to Nvidia Corp., on Tuesday reported sales of NT$804.9 billion ($25.2 billion) for October, up 8.6%. Analysts expect the company to grow its sales by 15% to NT$2.13 trillion in the current quarter. The iPhone assembler’s tepid sales growth appeared to reinforce Apple’s weak forecast for the holiday quarter.

Foxconn is Apple’s primary manufacturing partner, assembling most of its iPhones. This tight relationship implies Hon Hai’s revenue and growth are closely tied to Apple’s performance. 

Last week, Apple earnings revealed Apple Intelligence was a dud and did not spark a massive new iPhone upgrade supercycle Wall Street analysts were hoping for. Sales in China slid for the fifth consecutive quarter as Hawuei continued taking market share. 

Hon Hai’s earnings merely reflect Apple’s slowing iPhone sales, thus making it a proxy for the world’s most valuable company’s performance. 

Meanwhile, Warren Buffett’s Berkshire Hathaway continued dumping Apple shares last quarter. 

All this combined is not the best news for Apple investors.

Moar buybacks, please, Tim Cook.

Futures are higher led by tech as voting gets underway in a very tight presidential race between Donald Trump and Kamala Harris (full election day guide here). As of 8:00am S&P futures are up 0.1%, off session highs; Nasdaq futures are 0.3% higher with Mag7 names mostly higher as Semis also have a bid. DJT is +6% pre-mkt; BA is +2% after the company secured a labor deal ending an 8 week strike. Palantir surged 13% on record profit and high demand for its artificial intelligence software. The dollar was steady, while 10-year Treasury yields advanced four basis points to 4.32%. The commodity complex is stronger today led by Energy and Base Metals; brent trades aroun $75.50. The macro data focus is on ISM Services and the Election, although we may have to wait for the results: in 2016, Trump was declared winner early Weds but in 2020, Biden was declared winner on Sat.

In premarket trading, Boeing shares rose 1.9% after workers voted to accept a new labor contract and end a strike that’s crippled jetliner production for 53 days, clearing a major obstacle for the US planemaker to restore its operations and finances. Celanese shares plunged 16% after the chemical manufacturer’s fourth-quarter profit guidance disappoints following “severely constrained demand” in the third-quarter. Here are some other notable premarket movers:

• Archer-Daniels-Midland (ADM US) shares drop 6.0% after the agricultural trading giant reported preliminary adjusted earnings per share for the third quarter that missed the average analyst estimate.
• Astera Labs (ALAB US) shares surge 24% after the company reported adjusted earnings per share for the third quarter that beat the average analyst estimate.
• Hims & Hers (HIMS US) shares jump 8.2% after the telehealth platform reported third-quarter revenue that came ahead of estimates. Additionally, the company also increased its full-year adjusted Ebitda forecast.
• Lattice Semi (LSCC US) shares tumble 18% after the chipmaker’s forecast for the fourth quarter came in below the average analyst estimate. Analysts note weakness in the industrial and auto end markets.
• Marqeta (MQ US) shares plunge 41% after the payments platform and card provider’s fourth-quarter net revenue growth forecast disappointed analysts and threw into doubt its prospects for next year.
• NXP Semi (NXPI US) shares fall 5.6% after the semiconductor device company’s fourth quarter revenue forecast missed the average analyst estimate. Analysts note end-demand weakness for its industrial/Internet of Things (IoT) products.
• Palantir (PLTR US) shares rise 13% after the data-analysis software company reported third-quarter results that beat expectations and raised its full-year forecast. Analysts note strong demand for AI applications from enterprise clients.
• QuinStreet (QNST US) shares rise 34% after the company reported first quarter revenue that beat the average analyst estimate. It also boosted its revenue guidance for the full year.
• Vimeo (VMEO US) shares soar 16% after the video-software company’s fourth-quarter revenue forecast came ahead of analyst expectations. Meanwhile, the company reported third-quarter earnings per share that also beat consensus.
• Wynn Resorts (WYNN US) shares slump 4.5% after the casino operator reported adjusted earnings per share for the third quarter that missed the average analyst estimate.

Traders are taking a cautious approach after one of the most tumultuous and dramatic presidential campaigns in modern history. With polls suggesting a photo-finish result, the likelihood of a disputed result means that the vote count could eventually drag on for days or even weeks.

“What you can see across markets now is that no one is ready to take clear investment positions on the election,” said Alexandre Hezez, chief investment officer at Groupe Banque Richelieu in Paris. “The uncertainty is palpable across all asset classes. There’s such a massive gap between the program of the two candidates that caution is of the essence.”

Options data suggests stock traders are pricing in a 1.8% move in either direction for the S&P 500 on Wednesday, according to Citi. The swings will likely be most obvious in individual stocks and sectors, as has been the case so far this election season. “A tough count will increase uncertainty on the markets, a scenario that produces not many winners,” said Guillermo Hernandez Sampere, head of trading at asset manager MPPM.

Some hedge funds are favoring currency options that will gain from a weaker dollar should Harris win the presidency. Close polling in especially Iowa jolted leveraged funds to re-evaluate who will emerge victorious, with some unwinding bullish greenback bets on Monday.

There are additional catalysts likely to move the market this week. Election Day will quickly be followed by Thursday’s Federal Reserve’s decision and Jerome Powell’s press conference, where he’ll give details on the central bank’s interest-rate path. A big chunk of US firms are due to report earnings.

In Europe, the benchmark Stoxx 600 was little changed, with volumes tracking about two-thirds of the 20-day average. Miners and utilities the leading outperformers, while consumer products and chemicals stocks are the biggest laggards. Here are the biggest movers Tuesday:

• Associated British Foods shares gain as much as 6.2% after the company beat earnings estimates following a better-than-expected performance from Primark and announcement of a share buyback
• Syensqo shares rise as much as 9% after the Belgian maker of chemicals and aircraft materials, reported better-than-expected third-quarter results and narrowed its guidance range for full-year earnings
• Carrefour shares in Europe jump as much as 4.3%, the most since February, as they followed the rise in the company’s ADRs overnight after they closed 7.6% higher in New York
• UK water stocks, Pennon, Severn Trent and United Utilities gain on Tuesday, with Citi and JPMorgan seeing a positive set-up for the sector ahead of regulator Ofwat’s Final Determination proposals expected next month
• Vestas Wind Systems shares drop as much as 12% to hit their lowest level in over four years after warning its adjusted Ebit margin will be at the low end of its guidance range and third-quarter earnings missed expectations
• Deutsche Post shares fall as much as 3.8%, the most since an Oct. 30 profit warning, after the German firm posted results that Citi said were in line with that release
• Schroders shares plummet at much as 14% to their lowest in over four years. The asset manager flagged key headwinds that will weigh on results in the final quarter, which analysts at Panmure Liberum expect to be negative for consensus estimates
• Coloplast shares drop as much as 4.4% after the medical products maker posted adjusted Ebit and margin for the fourth quarter that was weaker than what analysts had expected
• Ambu A/S shares sink as much as 15% after the Danish medical equipment company reported earnings that missed analyst expectations and wrote down its gastroenterology endoscopy business
• Aramco shares decline by as much as 0.7%, most since Oct. 15, after Saudi oil giant posted lower 3Q net income that also missed estimates. The company maintained its quarterly dividend at $31 billion, cushioning investors against crude volatility
• Ryanair shares fall as much as 2.8% after a downgrade at Peel Hunt. Analysts see a “tricky” fourth quarter and a difficult year-on-year comparable for Europe’s largest low-cost carrier, and little upside from the broker’s current target price
• Hugo Boss shares give up earlier gains to trade as much as 6.5% lower, as analysts debate the German high-end apparel maker’s results
• Zalando shares decline as much as 4.2% after the online clothing retailer reported third-quarter results, snapping two sessions of gains

Earlier in the session, Asian stocks climbed, buoyed by a jump in Chinese equities amid expectations for more stimulus and encouraging economic data. The MSCI Asia Pacific Index gained as much as 0.5%, with TSMC, Sony Group and Toyota Motor among the biggest contributors to the advance. Chinese gauges were the best performers in the region, with the onshore benchmark CSI 300 Index up as much as 2%, on track to cap its best day in more than two weeks. Sentiment in China was helped by a proposal to lift local governments’ debt ceiling to swap out their hidden debt. Signs that consumer demand may be on the mend also boosted the mood after a private survey showed China’s service activity expanded at the fastest pace since July. The rally is “more driven by the PMI,” though the debt proposal is good news and will boost the expectation of other measures, said Kenny Wen, head of investment strategy at KGI Asia Ltd. Stocks rebounded in Japan as markets reopened after a holiday. Investors are also on guard as the first day of extended trading hours at the Tokyo Stock Exchange has the potential to cause volatility toward the close.

Overnight, the RBA kept the Cash Rate unchanged at 4.35%, as expected, while it stated the board will continue to rely upon the data and evolving assessment of risks, as well as noted that inflation remains too high and is not expected to return sustainably to the midpoint of the target until 2026. RBA said policy will need to be sufficiently restrictive until the board is confident that inflation is moving sustainably towards the target range and the board is not ruling anything in or out. Furthermore, the SoMP stated that core inflation remains elevated with service inflation expected to decline only gradually and that policy in Australia is not as restrictive as in most peer countries, even after recent rate cuts abroad, while RBA lowered its GDP, household consumption, trimmed CPI and core inflation forecasts.

In FX, the Bloomberg Dollar Spot Index falls 0.1% even as 10Y US Treasury yield rose 4 basis points to 4.33%. “The unwinding of the Trump trade can only go so far given how close the race is,” Maybank analyst Saktiandi Supaat writes in a note. “The DXY index has found support around 103.60 while topside is seen at around 104.60. We see consolidation within this range until a winner is called” USD/JPY was up as much as 0.3% to 152.54 earlier after Democratic Party for the People leader Yuichiro Tamaki said Bank of Japan monetary policy should stay on hold a while longer. Chinese stocks rise after higher-than-expected PMI data in the world’s second largest economy, also promoting a move higher in the Aussie dollar, which outperformed G-10 currencies.

In rates, treasuries are weaker amid bigger declines for European bonds after UK 10-year bond sale drew weakest demand in almost a year, a sign of lingering investor anxiety over last week’s fiscally expansive budget.  US yields are 3bps cheaper across a slightly steeper curve; 10-year around 4.33% is ~4bps higher with bunds and gilts underperforming by 1.5bp and 1bp in the sector. The Treasury’s $42 billion 10-year refunding auction follows soft demand for Monday’s 3-year note sale. US 10-year WI yield is around 4.31% ahead of the auction at 1pm New York time, about 24bp cheaper than last October’s, which tailed by 0.4bp

In commodities, oil prices advancd, with WTI rising 0.4% to $71.70 a barrel. Spot gold is steady around $2,738/oz.

To the day ahead now, and of course the main highlight will be the US election. On the data side, US releases include the ISM services for October and the trade balance for September. In Europe, there’s French industrial production for September and the final UK services and composite PMIs for October. From central banks, we’ll hear from the ECB’s Vujcic and Schnabel.

Market Snapshot

• S&P 500 futures up 0.2% to 5,754.25
• STOXX Europe 600 up 0.3% to 510.56
• MXAP up 0.8% to 187.83
• MXAPJ up 0.9% to 601.25
• Nikkei up 1.1% to 38,474.90
• Topix up 0.8% to 2,664.26
• Hang Seng Index up 2.1% to 21,006.97
• Shanghai Composite up 2.3% to 3,386.99
• Sensex up 0.9% to 79,495.14
• Australia S&P/ASX 200 down 0.4% to 8,131.83
• Kospi down 0.5% to 2,576.88
• German 10Y yield up 1.5 bps at 2.41%
• Euro up 0.1% to $1.0894
• Brent Futures up 0.7% to $75.57/bbl
• Gold spot up 0.2% to $2,742.29
• US Dollar Index down 0.13% to 103.75

Top Overnight News

• China’s Caixin services PMI for Oct comes in solidly ahead of expectations at 52 (up from 50.3 in Sept and above the consensus forecast of 50.5), the latest sign of improving economic conditions in the country. BBG
• Chinese Premier Li Qiang expressed confidence that his government can pull off an economic recovery. “The Chinese government has the ability to drive sustained economic improvement,” Li said in a speech Tuesday at the opening of the China International Import Expo in Shanghai. He added that officials had “ample space for fiscal policy and monetary policy,” and reiterated that China would hit its economic growth target of around 5%. BBG
• The Bank of Japan is likely to raise interest rates in coming months with January emerging as the most likely timing, when there will be more clarity on political and market developments, former BOJ board member Makoto Sakurai said on Tuesday. Reuters
• Watch out for an especially volatile Japanese currency while votes are being counted during Asian trading hours. One-week implied volatility in the dollar-yen has jumped to the highest level since early August. BBG
• Ukraine said it has attacked North Korean troops in Kursk while Russia is being accused of plotting to detonate bombs on cargo planes according to the WSJ. WSJ
• BAC (Bank America)’s CEO expects the US economy to maintain stable growth of ~2% next year as both consumers and businesses are in good shape, but he called on Washington to take additional steps to address elevated levels of gov’t debt (Nikkei)
• After a bruising campaign, polls showed Donald Trump and Kamala Harris deadlocked both nationally and across swing states. Early results are due shortly after 6 p.m. ET, though the final outcome may not be known for days. In Dixville Notch, New Hampshire, midnight voting ended in a tie at three votes apiece. BBG
• Boeing workers voted to accept a new labor contract and end a strike that crippled production for 53 days. Hourly workers can start returning to factories as soon as tomorrow. The shares rose premarket. BBG
• Apple is studying smart glasses currently available as it considers entering the market, people familiar said. Separately, the company is said to have proposed investing almost $10 million in Indonesia in a bid to have the ban on iPhone 16 sales there lifted. BBG
• Looking at the 2008-2020 election cycles, volumes historically dip the day before the election and on election day as investors await the election outcome. We are already seeing this, S&P Futures top of book liquidity has dropped by ~50% since mid-October: Goldman

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were ultimately mixed with most major indices in the green after further encouraging Chinese PMI data although some of the gains were capped as cautiousness lingered heading into the US Presidential Election coin toss. ASX 200 was dragged lower amid weakness across all sectors and underperformance in the top-weighted financial industry, while the RBA decision provided little surprise and the SoMP included a reduction in GDP and household consumption forecasts. Nikkei 225 rallied on return from the long weekend with some encouragement from earnings and strength in exporters. Hang Seng and Shanghai Comp benefitted following the better-than-expected Chinese Caixin Services PMI data, while Premier Li suggested a favourable outlook and optimism regarding economic prospects during his keynote speech at the CIIE.

Top Asian news

• Chinese Premier Li said unilateralism is on the rise and globalisation is impacted by volatility which they must guard against with further opening up, while he added China will upgrade free trade zones and explore free trade and investment agreements with other countries. Li said China will continue to open telecommunications, internet, healthcare, and other sectors for investment, as well as noted that many positive developments in China’s economy indicate a favourable outlook. Furthermore, he said China has fiscal and monetary tools at its disposal and he is confident of meeting this year’s growth target and optimistic about economic prospects in the coming years.
• Former BoJ member Sakurai says the BoJ could hold until January given political and market uncertainty. A renewed JPY fall could spark a hike as soon as December 2024. BoJ will raise rates again in the coming months, with January emerging as the most likely. BoJ will aim to raise short-term rates to 1.5% or 2.0% by the end of Ueda’s term, early in 2028. Debt issuance could prevent a QT acceleration.
• Foxconn (2317 TW) October Revenue +8.59% Y/Y (September +10.9% Y/Y). Looking to Q4, operations are anticipated to show quarterly and yearly growth.

European bourses, Stoxx 600 (+0.2%) opened on a weaker footing, but sentiment did begin to improve into the European morning to display a more mixed picture across Europe. European sectors began the European session on a mixed footing, and with the breadth of the market fairly narrow; sentiment has since improved with sectors now holding a positive bias. Basic Resources leads whilst Energy lags. US Equity Futures (ES +0.1%, NQ +0.2%, RTY U/C) are mixed, with very modest outperformance in the NQ, attempting to pare back some of the losses seen in the prior session. Focus almost entirely on the US election.

Top European news

• Barclaycard stated UK October consumer spending rose 0.7% Y/Y vs Prev. 1.2% Y/Y increase in September.
• UK OBR Chair says gilt market response to the budget was in part due to higher volumes, and also front-loading of spending; OBR had expected the gilt market to be surprised by the market; gilt yields have settled broadly in line with OBR expectations.

FX

• USD is softer vs. peers on election day with price action for DXY dictated at the start of the week by a lowering in the odds of a Trump victory and a scaling back in “Trump trades”. In terms of the order of play for the election, results won’t start filtering out until the early hours of Wednesday (UK time) with the eventual outcome of the election potentially set to drag on for several days depending on how close the race is. DXY is currently sandwiched between Monday’s low at 103.57 and the 200DMA at 103.83.
• EUR is a touch firmer vs. the USD but unable to make its way back onto a 1.09 handle after venturing as high as 1.0914 on Monday.
• GBP gains vs. the USD but with Cable still unable to make its way back onto a 1.30 handle after topping out yesterday at 1.2998.
• JPY is steady vs. the USD with macro drivers for the JPY on the quiet side. Direction for the pair this week will most likely be driven by the USD leg of the equation given events in the US with a Harris victory likely to be viewed as a negative for USD/JPY. USD/JPY is currently contained within a 152.10-55 range.
• Antipodeans both remain underpinned by the slight decline in odds of a Trump Presidency and the potential ramifications for the Chinese economy. On which, China reported encouraging Services PMI data overnight. Furthermore, AUD has also digested the RBA rate decision overnight, which further underscored its position as one of the more hawkish players in G10 FX.
• PBoC set USD/CNY mid-point at 7.1016 vs exp. 7.1019 (prev. 7.1203).

RBA

• RBA kept the Cash Rate unchanged at 4.35%, as expected, while it stated the board will continue to rely upon the data and evolving assessment of risks, as well as noted that inflation remains too high and is not expected to return sustainably to the midpoint of the target until 2026. RBA said policy will need to be sufficiently restrictive until the board is confident that inflation is moving sustainably towards the target range and the board is not ruling anything in or out. Furthermore, the SoMP stated that core inflation remains elevated with service inflation expected to decline only gradually and that policy in Australia is not as restrictive as in most peer countries, even after recent rate cuts abroad, while RBA lowered its GDP, household consumption, trimmed CPI and core inflation forecasts.
• RBA Governor Bullock said in the post-meeting press conference that the last part of bringing inflation down is not easy and rates need to stay restrictive for the time being, while she thinks there are still risks on the upside for inflation and will be ready to act if the economy turns down more than expected but also noted they have the right settings at the moment. Bullock said there were no discussions on specific scenarios for rate changes and the current Cash Rate path priced by the market is as good as any.
• RBNZ Financial Stability Review said financial systems remain resilient amidst economic downturn and that risks to New Zealand’s financial system remain contained, while debt servicing costs are nearing their peak and starting to decline with advertised mortgage rates falling over the last 6 months. RBNZ noted that domestic economic challenges remain and many households and businesses are feeling financial pressure with rising unemployment posing challenges for some borrowers. RBNZ Governor Orr later commented that the real economy is lagging a reduction in interest rates which is a concern and climate change is an existential threat.

Fixed Income

• USTs are essentially unchanged on US election day, yields are under very modest pressure and still within a few bps of the lows from Monday when the Trump Trade was unwinding after weekend updates. Aside from the election, ISM Services is scheduled and a 10yr Note auction is due. Holding at the 110-12 mark in a slim eight tick range which is entirely within Monday’s 110-07 to 110-21+ band.
• Bunds are pressured and slumped at the European cash open though this seems coincidental with the cause of pressure seemingly a breach of support at 131.50 after a handful of overnight lows gave way. After slipping to a 131.33 trough the move ran out of steam and Bunds have since bounced back to 131.50, but remain lower on the session.
• Gilts are underperforming, gapped lower by 26 ticks and continued to slip ahead of the region’s auction. Today’s 2034 tap was fairly robust, but demand was the weakest since Dec’23, taking Gilts back towards the earlier 93.53 trough. Traders now look towards the BoE on Thursday.
• UK sells GBP 3.75bln 4.25% 2034 Gilt Auction: b/c 2.81x (prev. 3.25x), avg yield 4.475% (prev. 4.17%) & tail 0.8bps (prev. 0.9bps)

Commodities

• Mild upward bias across the crude complex as prices hold onto yesterday’s gain which was facilitated by the delay of the OPEC+ output increase. Constructive Chinese Services PMIs and reports that Israel is considering a pre-emptive strike on Iran has helped to prop up the complex. Brent Jan sits in a USD 74.80-75.60/bbl parameter.
• Precious metals are holding an upward bias amid the softer Dollar on the eve of the US Presidential Election coin toss. Spot gold trades in a USD 2,724.76-2,745.06/oz range.
• Base metals are firmer across the board, following the better-than-expected Chinese Caixin Services PMI data, while Premier Li suggested a favourable outlook and optimism regarding economic prospects during his keynote speech at the CIIE. 3M LME copper sits in a 9,666.50-9,760.50/t range.
• Iran approved a plan to increase oil production by 250k BPD, according to the Iranian Oil Ministry website.
• Citi expects copper to rally temporarily to USD 10k/ton over the coming week on the back of China easing, Fed easing and US election outcomes.

Geopolitics: Middle East

• Israel’s Channel 14 reports that “Authorities are considering the possibility of a pre-emptive attack against Iran or waiting for US elections”, via Sky News Arabia; “Indications are growing that Iran may soon attack Israel, perhaps on US election day”.
• Israel’s Channel 12 reports that Iran is likely to attack from several arenas, not just from its territory, via Al Jazeera.
• “Tel Aviv is considering a pre-emptive strike on Iran if there are signs of imminent attack”, according to Cairo News.
• “Prime Minister Benjamin Netanyhu will convene his national security cabinet on Thursday at 7:00 p.m. (17:00GMT) at the Kirya IDF headquarters in Tel Aviv”, according to Times of Israel Berman.
• “The IDF is gradually completing the objectives set for it in ground operations in Lebanon, and Israel is already preparing for the day after the arrangement”, according to N12.
• “Iranian Foreign Minister: We will respond to Israeli attacks in a timely and appropriate manner”, according to Cairo News
• Iranian Foreign Minister said their response to Israel will be appropriate without emotional decisions and that the result of the US elections will not affect their policy, according to Asharq News.
• Hezbollah said it targeted with a rocket barrage a gathering of Israeli enemy forces on the southwestern outskirts of the town of Maroun al-Ras, according to Al Jazeera.
• US Secretary of State Blinken and Israeli Defence Minister Gallant discussed the dire humanitarian conditions in Gaza, while Blinken urged further actions by Israel to increase and sustain humanitarian aid, according to the State Department
• US Secretary of State Blinken said Hamas once again refused to release a limited number of hostages to secure a ceasefire and relief for the people of Gaza, according to Sky News Arabia. It was also reported that Blinken discussed with his Egyptian counterpart the importance of establishing a post-war path that provides governance, security, and reconstruction in Gaza, as well as discussed efforts to promote a diplomatic solution in Lebanon that would enable civilians on both sides of the border to return home.

Geopolitics: Other

• North Korea fired what was thought to be a ballistic missile which appeared to have landed outside of Japan’s EEZ, while Japanese Defence Minister Nakatani said North Korea fired at least 7 missiles which flew to an altitude of 100km and covered a range of 400km.
• Russia’s Defence Ministry says Ukraine has no technical potential to make nuclear weapons but is able to make a ‘dirty bomb’, according to IFAX.

US Event Calendar

• 08:30: Sept. Trade Balance, est. -$84b, prior -$70.4b
• 09:45: Oct. S&P Global US Services PMI, est. 55.3, prior 55.3
• 09:45: Oct. S&P Global US Composite PMI, est. 54.3, prior 54.3
• 10:00: Oct. ISM Services Index, est. 53.8, prior 54.9

DB’s Jim Reid concludes the overnight wrap

To encourage readers to stay until the end of today’s EMR I will unveil my prediction for what might happen in today’s US election below the day ahead para. No early scrolling please.

As we reach one of the more important and consequential days we will have in our careers, according to the very latest polls it’s a statistical toss-up with 0.1pp separating the two candidates in the popular vote according to RealClearPolitics averages. As I showed in my CoTD yesterday this could easily be the tightest election on record on this measure with the 1880 and 1960 elections the only ones with a less than 0.5pp gap. Trump leads the battleground states by 0.8pp in the RealClearPolitics polling averages but the “best pollster in politics“ according to FiveThirtyEight threw a curveball over the weekend by suggesting that Iowa leans towards Harris by 3pp even though other recent polls in the State have Trump up by around 8pp.

Another thing to consider is that in 2016 and 2020, the polls underestimated Trump, so plenty have argued they might do so again. But then again, the pollsters have made strenuous efforts to correct for that, so lots have argued the reverse might be true this time around, and Trump’s margins were generally overestimated in the Republican primaries earlier this year. Given this, the major forecasting models are completely torn. For instance, FiveThirtyEight gives Trump a 52% chance of winning. That’s largely echoed in prediction and betting markets. Polymarket put Trump’s victory chances at 59% as we hit the last few hours before polls open. This did tick up a bit as yesterday went on, rising from a low of 54% over the weekend. Showing how important the battleground states are though, Polymarket have Harris at 72% to win the popular vote.

For those watching tonight, the excitement will kick off from 7pm ET/midnight London when polls close statewide across six states. Critically, that will include the battleground state of Georgia, which is a state that flipped from Trump to Biden in 2020, and had the closest margin of any state last time at 0.2pts. Then at 7:30pm ET, polls will close in North Carolina, which is another battleground state on the east coast. Bear in mind that both Georgia and North Carolina are basically must-wins for Trump on his path to 270 electoral votes. So if Harris were doing well in both of those, it would be difficult to see a winning path for Trump, unless he also managed to seriously outperform in the Midwest. Remember as well that polling errors are likely to be correlated across the country, so once the first battleground states come in, that should offer us a good clue about where the rest of the night might go.

At 8pm ET, we’ll then get another big round of polls closing, including in Pennsylvania. That’s the most important battleground state in many forecasts, as there’s a decent chance it’s the tipping point state that gives either candidate 270 electoral votes. So if there’s one state you’d want to know the result of, it’s Pennsylvania. Then at 9pm, polls will close in the other Midwestern battlegrounds of Wisconsin and Michigan, as well as Arizona. At this point, if Trump were running strongly in the midwestern trio of Wisconsin, Michigan and Pennsylvania, that would be a very good sign for his campaign, as those are the three states he took in 2016 that pushed him over the winning line.

Depending how close the race is, a winner might be coming into view at some point after this. So in 2012, the Associated Press called the race for Obama at 23:38 ET (04:48 London). In 2016, when things were a bit tighter, AP didn’t call the race until 02:29 ET (07:29 London). And then last time, there were lots of delays with mail-in ballots, and an AP declaration wasn’t made until 11:26 ET on the Saturday. But remember that in every example here, the eventual winner was apparent some time before they cleared the threshold of 270 electoral college votes, so if the major battlegrounds are going the same way, we may well have a good sense before one candidate crosses the winning line.

Whilst the presidential race is in focus, don’t forget that elections to the House of Representatives and the Senate are also happening, which will be crucial for the new President’s ability to enact their agenda. In the Senate, the Republicans are heavily favoured by forecasting models and prediction markets, as only a third of the seats are up for grabs, and most are currently held by the Democrats. So there’s more opportunity for the Republicans to gain seats, and they have plausible pick-up opportunities in West Virginia and Montana. In the current Congress, the Democrats have a 51-49 Senate majority, and the Vice President has the casting vote in the event of a tie, so the Republicans only need to gain one seat if Trump wins, and two if he doesn’t. As it stands, FiveThirtyEight’s forecast gives the Republicans a 92% chance of controlling the Senate.

Over in the House of Representatives it’s a similar toss-up as in the presidential race, with FiveThirtyEight’s model giving the Republicans a 49% chance of victory. In reality, given the correlation of polling errors, it’s likely to go the same way as the presidency. So if a divided government scenario does happen, the most likely permutation would be that the Republicans take control of the Senate, but the Democrats win the Presidency and the House. That would be important as the Senate doesn’t just have a role in passing legislation, but is also the chamber that approves cabinet appointments, Supreme Court justices, and Federal Reserve Governors. In modern times, every President since Bill Clinton has begun their presidency with both chambers of Congress in their party’s control, but there’s no guarantee of that, and last time the Democrats only narrowly ended up with the Senate thanks to the Georgia run-off elections in January.

In terms of the market reaction, there’s been a clear unwinding of the Trump trade over the last 24 hours, which follows a few polls over the weekend that were more favourable to Kamala Harris. In particular, the 10yr Treasury yield fell -9.9bps to 4.29%. They did pull back slightly after trading -12bps lower at one point, but this is still the biggest daily decline since the bad jobs report in early August that kicked off the summer market turmoil. The logic for the Treasury rally is that under a divided government scenario, we’re less likely to see fiscal stimulus, so that’s better news for Treasuries, and with less fiscal stimulus we’re more likely to get rate cuts from the Fed. Clearly the next moves are going to depend on who wins the election and the outcomes in Congress, but for a trip down memory lane, Henry published a note yesterday (link here) running through how markets reacted after each election since 2000.

The unwinding of the Trump trade was reflected among several assets. The dollar index fell by -0.38%, after having fallen as much -0.7% intra-day, whilst the Mexican Peso strengthened +0.93%. And when it came to equities, there were gains among solar energy companies given the perception they’ll do better under a Democratic administration.

Equity moves were more moderate yesterday but showed some investor nervousness ahead of the election. The S&P 500 retreated by -0.28%, with Tesla (-2.47%) leading a -0.92% decline for the Mag-7. Energy stocks were the strongest outperformer in the S&P as oil prices bounced back after OPEC+ pushed back its planned December production increase by one month (Brent +2.71% to $75.08/bbl). Over in Europe it was a similar story of modest losses, with the STOXX 600 down -0.33%. Volatility remained pretty elevated, with the VIX index inching up +0.10pts to 21.98pts.

Here in the UK, it wasn’t noticed much given the US election backdrop, but the spread of 10yr gilt yields over bunds ticked up another +2.5bps yesterday to 207bps. That’s the widest they’ve been since October 2022, back when Liz Truss was still PM, and the 10yr gilt yield (+1.4bps) was also up to a one-year high of 4.46%. Elsewhere in Europe however, yields fell back, with those on 10yr bunds (-1.2bps), OATs (-2.4bps) and BTPs (-1.7bps) all falling.

Asian equity markets are generally on the rise this morning, driven by a series of positive developments from China that have boosted risk sentiment. The CSI (+1.99%), Shanghai Composite (+1.80%), and the Hang Seng (+1.24%) are leading the gains after the fastest expansion in China’s service activity since July. Further support came from the premier’s remarks highlighting the country’s significant policy flexibility. Following a public holiday, Japan’s Nikkei 225 (+1.27%) is also trading notably higher. Elsewhere, the KOSPI (-0.22%) and the S&P/ASX 200 (-0.32%) are seeing minor losses. US equity futures are fairly flat as we hit the big day and 10yr USTs are +1bps higher at 4.30% as we go to print.

Turning our attention back to China, the Caixin/S&P Global services PMI rose to 52 in October, up from 50.3 in September, indicating stronger demand following new stimulus measures from Beijing. However, this contrasts with the official PMI data released last week, which showed a slowdown in non-manufacturing activity in October. Elsewhere, Australia’s Judo Bank services PMI came in at 51.0 in October, higher than last month’s figure of 50.5 as improvements in demand led to new business expanding at the fastest pace in almost two and a half years.

In monetary policy action the Reserve Bank of Australia (RBA) left its key interest rate unchanged at 4.35% for an eighth meeting in a row as it awaits more evidence inflation will soon return to its preferred target range. The press conference has just started as I type this.

To the day ahead now, and of course the main highlight will be the US election. On the data side, US releases include the ISM services for October and the trade balance for September. Meanwhile in Europe, there’s French industrial production for September and the final UK services and composite PMIs for October. From central banks, we’ll hear from the ECB’s Vujcic and Schnabel.

The prediction…….

….. I have absolutely no idea who is going to win. I have high conviction in this view.