LGBTQ+ Activist Once-Featured In Apple Ad Indicted For Grand Larceny After Looting Nonprofit

LGBTQ+ Activist Once-Featured In Apple Ad Indicted For Grand Larceny After Looting Nonprofit

A far-left LGBTQ+ activist was indicted for grand larceny and falsifying business records in New York after being accused of looting $100,000 from a woke Brooklyn nonprofit while serving as the head of the organization.

The former executive director, Dominique Morgan, of the OKRA Project, a nonprofit used to pay bail funds for the Black trans community, siphoned money from the nonprofit and splurged it on Mercedes-Benz payments, home renovations, luxury clothing purchases, and restaurant meals

Brooklyn District Attorney Eric Gonzalez wrote in a statement that Morgan, a Black trans person, was charged with one count of second-degree grand larceny and 23 counts of first-degree falsifying business records. Morgan was released without bail and ordered to return to court in mid-December. If convicted of the top count, the defendant faces five to 15 years in prison

“It is alleged that between July 14, 2022, and July 27, 2022, the defendant had approximately $99,000 transferred to her personal account in order to purportedly use those funds to pay for bail. Instead, she used the money on a $19,000 California Closet renovation, car payments for a Mercedes Benz, purchases at apparel stores and other expenses including meals,” DA Gonzalez wrote in a statement.  

Gonzalez continued, “When asked by OKRA for proof of the payments toward bail, she allegedly submitted purported bail receipts for 23 individuals who were supposedly arrested in Fulton County, Georgia, and Douglas County, Nebraska. An audit by OKRA revealed that those receipts were fraudulent and that no such persons were arrested in those counties at the time.”

In 2021, Apple was incredibly proud to promote rainbow iWatches, featuring Morgan, the trans activist, in a press release… 

GLSEN board member and LGBTQ+ advocate, artist, and leader Dominique Morgan wears the new Pride Edition Braided Solo Loop. Source: Apple

Morgan also worked with these brands

Apple was most likely boosting its DEI score with an ad featuring Morgan. Great job, Apple. 

Tyler Durden
Fri, 11/01/2024 – 15:40

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Zelensky Hints Poland Is Cowardly, Claims “They Didn’t Even Dare” Shoot Down Russian Missiles

Zelensky Hints Poland Is Cowardly, Claims “They Didn’t Even Dare” Shoot Down Russian Missiles

By Remix News

Volodymyr Zelensky accused Poland of finding more reasons not to help Ukraine on key issues, including refusing to shoot down Russian missiles or hand over MiG fighter jets to Kyiv. His choice of words, which hints at cowardice on Poland’s part, is likely to further inflame tensions between the two countries, which have been steadily growing apart.

The Ukrainian leader used words like “scared” while speaking about Poland and other NATO countries during a meeting with the heads of the territorial communities and oblasts of Zakarpattia. In addition, he singled out Poland, saying they “didn’t even dare” shoot down Russian missiles.

“NATO countries are afraid to make decisions on their own. We have good relations with Poland – Polish citizens support us. However, we have been constantly asking them to shoot down missiles heading towards Poland. We have gas storage facilities near Stryi, on which our lives depend, especially in winter. We asked for protection of these storage facilities because we do not have enough air defense systems,” said Volodymyr Zelensky.

According to Zelensky, the authorities in Warsaw expressed their readiness to shoot down Russian missiles provided they received support from NATO.

“I agreed with NATO Secretary General [Jens] Stoltenberg that Poland would receive a police mission, i.e., NATO aircraft. We really wanted to receive MiGs from Poland, but they couldn’t give them to us because they didn’t have enough of them. So, we agreed with NATO that they would provide us with a police mission. Did Poland give us aircraft after that? No. They found another reason,” he continued.

Zelensky stressed that by not delivering the planes to Kyiv, “the Poles did not even dare to shoot down the missiles themselves.”

Recently, relations between Kyiv and Warsaw have not been the best. Even an extremely pro-Ukrainian politician such as President Andrzej Duda has admitted this.

When asked whether Kyiv — after receiving everything it could from Poland in terms of military supplies — had stopped taking Poland into account, he replied that “in a sense it may look like that.”

“We gave what we could give and we gave it quickly, when it was needed and that is our great pride, only two years have passed since then. I have to say with regret that ‘life is brutal,’” said the president on Radio Zet.

Tyler Durden
Fri, 11/01/2024 – 14:40

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Behind The Bond Sell-Off

Behind The Bond Sell-Off

Authored by Louis-Vincent Gave via Evergreen Gavekal blog,

TLT.US, the long-dated US treasury ETF, is back trading below its 200-day moving average, and on current form is looking at its fourth year running of negative price returns.

Not that this sell-off reflects any lack of retail investor enthusiasm for US bonds. Quite the contrary.

As US treasuries pulled back, flows into TLT.US went parabolic – and the ETF’s market cap rose from US$10bn in 2019 to US$60bn today.

But long-dated bonds continue to sell off. And like successes, sell-offs usually have many fathers.

When it comes to today’s bond bear market, it’s possible to point to four main explanations.

1) Essentially, the market is slowly realizing that the post-2008 “new normal” era of depressed nominal growth is well and truly over. The real estate bubbles have been digested, while bank and consumer balance sheets have been repaired.

Consequently, the world’s major central banks will not push interest rates back to zero any time soon. Zero rates were a historical aberration that need not be repeated. In this case, why own long bonds that yield less than short-term bills? Giving up today’s higher T-bill yields for the hopes of lower treasury note yields down the road makes little sense. This explanation for the sell-off is by far the likeliest. Incidentally, this means that we could now see a little bit of a rally in the oversold bond markets, as data to be published in the coming weeks looks to come in soft. Following Hurricanes Helene and Milton, jobless claims are likely to pick up, while production numbers may show some temporary softness on the back of short-term supply chain disruptions.

2) It’s the issuance. Any debate about how to tackle the US government’s runaway budget deficit has been notably absent from the US electoral campaign. The deficit did not feature in either the presidential or vice presidential debates. And when challenged on the topic, the presidential candidates have typically fallen back on worn-out tropes like “slashing inefficiencies” or “getting the rich to pay their fair share.” Meanwhile, the outstanding stock of US government debt continues to grow. According to the International Monetary Fund, US government spending will hit US$13trn a year by 2029 (compared with US$2.5trn when Bill Clinton left office). And these forecasts do not factor in proposed additional spending by Donald Trump or Kamala Harris.

Against this backdrop, in the past few weeks an assortment of legendary investors—Paul Tudor Jones, Stanley Druckenmiller, Leon Cooperman— have taken to the airwaves to warn about the unsustainability of the current fiscal path. This illustrates how the zeitgeist surrounding the US fiscal situation may be changing. In the new zeitgeist, investors are more likely to sell rallies in bonds than to buy dips.

3) It’s the inflation. One of the more interesting developments in the past year is how resilient inflation has proved to be. Sure, inflation rolled over hard from its 2022-23 highs. But given easier year-on-year comparisons, the balance-sheet recession in China, the pull-back in oil prices and much lower prices for wheat, corn and other foods, you might have expected inflation absolutely to collapse. Yet the consumer inflation rate has remained above 2.4%.

That is the past. What happens now that the world’s major central banks, except the Bank of Japan, are cutting interest rates? Now that oil inventories are severely depleted? Now that the US and EU seem set to embrace higher tariffs and reject China’s cheap industrial goods? In the shorter term, it also appears that Helene and Milton might also prove inflationary, with higher used car prices, and higher car and house insurance premiums.

4) It’s the shifting geopolitical environment. Last week saw both the IMF meeting in Washington and the Brics summit in Kazan in Russia. The timing clash was probably not an accident. Clearly, Brics leaders such as Vladimir Putin and Xi Jinping, and perhaps even Narendra Modi, are keen to underscore that there is an “old” Western world and a “resurgent” Global South. And this Global South is keen to dedollarize its trade, create new settlement systems not reliant on Swift, and diversify its central bank holdings. Given these aims, perhaps it should be no surprise that precious metals have climbed to new highs while long-dated US treasuries have sold off.

Putting this all together leaves investors with some fairly straightforward questions.

  • Will global growth roll over from here? In the short term, US data could soften in the aftermath of the two recent hurricanes. But in the longer term, an easing of fiscal policy seems to be on the cards regardless who wins the US presidential election. Meanwhile in China, the government is pushing most of its stimulative buttons. So the two largest contributors to global growth over recent years seem likely to add more growth in 2025 than they did in 2024.

  • Will the US government tighten its belt and take it easy on debt issuance? This seems highly unlikely.

  • Will inflation continue to decelerate? Given the growing belief that trade tariffs are the answer to the world’s ills, this also seems unlikely.

  • Will the geopolitical environment brighten? Perhaps. Donald Trump is promising to put an end to the Ukraine war if he’s elected, and may even seek some kind of deal with China. But for now, betting in line with the underlying trend of ever more decoupling would seem to make sense

Tyler Durden
Fri, 11/01/2024 – 13:20

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Nissan Cutting Production Of U.S. Models By 30%, Putting 2024 Global Sales Target At Risk

Nissan Cutting Production Of U.S. Models By 30%, Putting 2024 Global Sales Target At Risk

In continuing signs that the U.S. consumer is tapped, Nissan is planning on cutting production of its main U.S. models by 30%, according to a new report from Nikkei, which says the cuts could jeopardize the automaker’s 2024 global sales targets. 

Nissan forecasts a 99% drop in quarterly operating profit to 995 million yen ($6.52 million) and a 12% decline to 500 billion yen for the year, citing weakening U.S. market earnings, the report says.

The company’s target of 3.65 million vehicles sold for 2024 is now at risk, it says. 

Nikkei reports that Since September, Nissan has gradually reduced production, notifying dealerships and suppliers. Its North American unit confirmed inventory adjustments for key models. 

Production of the Rogue SUV, accounting for 30% of U.S. sales, and the Frontier pickup (10%) is being cut. The Rogue is manufactured in Smyrna, Tennessee, and the Frontier in Canton, Mississippi. Those two plants collectively reduced output by 40,000 vehicles in September and October. Initially planned through October, these cuts now extend to December.

In the July-September quarter, Nissan’s U.S. sales dipped 2%, with gasoline-only Rogue sales dropping 20%. September U.S. production fell 24% year-over-year, impacting Rogue units built both in the U.S. and Fukuoka, Japan.

With electric vehicle demand softening but hybrid interest rising, Nissan faces competitive pressure from Toyota and Honda, both of which offer hybrids in the U.S. Inventory days have ballooned to 100 days for Nissan, compared to Toyota’s 30 and Honda’s 50, prompting Nissan to increase sales incentives, adding 30% above industry averages.

Nissan aimed to stabilize inventories by September and cut costs with new models, yet sales for April-September fell 4% globally, totaling 1.59 million vehicles.

The ongoing U.S. market decline suggests Nissan may need to revise its full-year forecast again. North American struggles include slow EV rollout and stalled plans for new EV production at the Canton plant, which has been postponed indefinitely, the report concluded

Tyler Durden
Fri, 11/01/2024 – 13:00

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After Halloween, The Economy Could Get Spooky

After Halloween, The Economy Could Get Spooky

Via SchiffGold.com,

The presidential election is on November 5th, and radical economic promises abound. The very next day, the Fed will meet to decide on more interest rate cuts. Gold and silver are holding all-time highs. With all these factors and more, after Halloween, we will see just how spooky things can get for the US economy.

Markets are trying to figure out who will win the election.

  • “Trump Trade” advocates think that a second Trump administration is coming, and a bullish indicator as his promises for deregulation and lower corporate taxes come to fruition.

  • Contrasted with Kamala Harris’s constitutionally questionable plan to give handouts to African-Americans as her support with the demographic wanes, markets appear to prefer the former

but as Peter Schiff recently pointed out on his podcast, bullish market sentiment doesn’t mean the economy is in good shape. 

It’s in big trouble regardless of who wins. While Trump is more likely to reduce the size of the government, neither candidate seems likely to fully reverse our staggering budget deficits. We have low interest rates and a growing economy, but a completely dead manufacturing base and a commercial real estate market that’s teetering on the brink. Trump has promised to eliminate the income tax and replace it with tariffs, but you can’t do that in a country that doesn’t produce anything. As Peter Schiff said:

“It’s not like all these companies are going to start manufacturing in America–they can’t. Because if they manufactured in America, the prices would be so high that they couldn’t sell the product. That’s why they left in the first place. They left to stay competitive. And…if they come back under the current environment, they won’t be. So we need massive deregulation.”

US Manufacturing Employees Since 1970, US Bureau of Labor Statistics

In Japan, the dovish new Japanese prime minister is reversing his previous position and signaling that Japan shouldn’t raise interest rates. The dying yen carry trade has momentarily reincarnated since imploding in August amidst tremendous yen volatility and crashing Japanese equities. However, it isn’t the prime minister’s choice to raise rates or not, and of course, politicians make all kinds of comments during election season. Japanese central bank governor Kazuo Ueda was classically vague about which direction the Bank of Japan would go in the coming months.

Even after the Fed slashed the federal funds rate, and is expected to cut further, mortgage rates are still stubbornly up. The 10-year Treasury Yield has ticked higher this month, and combined with high inflation, mortgage rates are responding. Even with a lower cost of borrowing, out of control inflation will keep getting worse with more rate cuts, as borrowing becomes more attractive even as goods and services become less and less affordable.

10-Year Treasury Yields, 2023-2024 (MacroTrends.net)

With the Fed’s interest rate-cutting bonanza and a money supply that has risen for 11 straight months, higher inflation is a guarantee for cash-strapped and over-indebted consumers who are already stretched thin — regardless of what happens to Japanese yen and in the US election.

The inflationary period in 1970 came after a two-year lag in money supply growth, portending a massive decline in the dollar’s purchasing power in the next 24 months no matter who wins this November.

The spooky economy will just keep getting spookier. And unfortunately, neither Kamala Harris’s plan to “invest” in African Americans, nor Trump’s plan to replace the income tax with tariffs overnight, are anywhere close to being viable solutions that can save it.

Tyler Durden
Fri, 11/01/2024 – 12:40

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Post-Truss Stress Disorder

Post-Truss Stress Disorder

By Stefan Koopman, Senior macro strategist at Rabobank

Imagine securing a record-breaking majority, meticulously briefing every major policy shift you want to make, doing everything economists and central bankers had once begged you to do, start thinking about spending and investment in a strategic way, pre-announcing key decisions well in advance – only to emerge as a knockoff of Liz Truss.

As we outlined in our post-Budget special, there’s a straightforward diagnostic for assessing how fiscal announcements impact bond yields and exchange rates. An uptick in yields alongside a steady currency is not a ‘spooked’ market: it’s exactly what you’d expect – and what you’d want? – from fiscal loosening. And while it’s tempting to compare a yield with Germany’s, please keep in mind here that Germany and its ultra-low bund yields are NOT the benchmark for sound fiscal policy – it’s the benchmark of fiscal masochism that damages a country long-term.

So while we initially thought the Reeves’ budget might be faring better than Truss’s with the market, yesterday’s market reaction proved otherwise. Gilt yields rose sharply across the curve, more than in other G10 economies, and the currency depreciated instead of appreciated. It seems the UK bond market is still caught in a case of “post-Truss stress disorder”. The second it’s faced with a bit of uncertainty and unfamiliar territory, investors are playing it safe: de-risk first, ask questions later. Fair enough – it’s still small beer compared to what we’ve seen in 2022, but when the correlation between yields and currency flips, it’s a red flag.

That being said, we think the sell-off is overdone. Yes, the Budget implies some fiscal loosening, but only if you compare it to the Office for Budget Responsibility’s March projections. Those projections were crafted by a government that knew it was on its way out. The unrealistically deep spending cuts, reminiscent of Osborne’s severe austerity measures, were never going to fly, but do complicate the current fiscal narrative. Consider this: the OBR forecasts that the current deficit – defined as the gap between day-to-day spending (excluding capital investment) and current revenues – will shrink from £55.5bn this year to a surplus of £10.9bn in four years. Furthermore, the £100bn increase in capital spending over the parliamentary term is merely to maintain a stable ratio of public investment to GDP. Isn’t this precisely what policymakers and economists have been advocating for?

The risk of stickier inflation is not necessarily a UK problem. My colleague Elwin de Groot notes that Eurozone inflation figures yesterday confirmed what data from several member states had already flagged the other day: that core and services inflation remain relatively sticky and that food and energy inflation were the key contributors to the rebound in headline inflation to 2% y/y in October from 1.7% in September.

Some of that rebound had been expected due to a less favorable base comparison. However, food prices did rise significantly more sharply than expected (more than 7% m/m on a seasonally-adjusted annualised basis). If this does not reverse in the next month, it could be a sign that businesses have resumed the passing-on of cost increases to consumers. This would also be consistent with a pick-up in consumer spending, a hint of which we received Wednesday with the unexpected Eurozone growth pickup in Q3.

However, it is too early draw any strong conclusions yet. The key message from yesterday’s Eurozone HICP report was above all that core inflation and in particular services sector inflation remain persistent albeit gradually losing pace. Services inflation stayed put at 3.9% y/y – which has basically been the average rate since November 2023. On an annualised basis, seasonally adjusted prices rose some 3.8% m/m. As long as the economy doesn’t fall off a cliff and growth of negotiated wages remains in the range of some 3-4% (which in a relatively tight labor market usually translates to even slightly higher growth of employee compensation), services inflation is likely to remain on a path of gentle decline.

In the past two days, the market has pared back its ECB rate cut pricing for December, although it is still pricing for some 20% chance of a 50bp cut rather than a 25bp one. Since the comment made in the October ECB meeting that “everything pointed in the right direction” [for inflation], the actual October inflation data may serve as a reality check. We maintain our view of a 25bp cut in December.

In the US, PCE inflation slowed to 2.1% year-on-year in September, marking the lowest annual rate since February 2021. Core PCE inflation, however, remained steady at 2.7% for the third consecutive month, printing on the high side with a 0.254% monthly increase. Personal spending rose by 0.5%, driven not only by income growth but also by a decline in the personal saving rate, which fell to 4.6% in September. As the labor market shows signs of cooling – with fewer job openings, slower hiring, and a decrease in voluntary quits – the sustainability of this trend of under-saving is in question.

This cooler market is also exhibiting fewer inflationary pressures. The Q3 Employment Cost Index data revealed that private sector wages and salaries grew at an annualized rate of 3.1%. With a target inflation rate of 2% and trend productivity growth somewhere between 1% and 2%, wage growth at 3.1% is not inflationary and could easily justify a ‘normal’ 25 basis point cut by the Federal Reserve next week.

Tyler Durden
Fri, 11/01/2024 – 12:00

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AOC Fakes It Again With Gibberish ‘Arabic’ Campaign Ad

AOC Fakes It Again With Gibberish ‘Arabic’ Campaign Ad

Performance artist Alexandria Ocasio-Cortez is at it again…

Let’s first review the antics of AOC. First she staged outrage at an empty parking lot to protest Donald Trump.

Then she suggested she was almost raped and/or murdered on Jan. 6 despite being nowhere near the Capitol building.

Then she faked being in handcuffs at an abortion protest.

And now, for her latest act – AOC just put out a campaign ad in “Arabic” that’s instead “Pure gibberish.”

As the Telegraph notes, “her Arabic campaign material features characters that have been placed in reverse order and are disconnected from each other – a fundamental mistake in Arabic script. The language’s letters should be in a smooth form from right to left.

According to Meir Javedanfar, a professor of Iranian studies at Reichman University, “Much like her knowledge of the Middle East, the Arabic on Alexandria Ocasio-Cortez flyers is gibberish and written backwards.”

Amazing…

 

Tyler Durden
Fri, 11/01/2024 – 11:40

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A real asset business that benefits from inflation

In the pantheon of human ingenuity, the development of iron and steel ranks up there with the discovery of fire and the invention of the wheel.

In fact, the advancement of human civilization would have been nearly impossible without iron—and the steel that it becomes.

Metallurgy (and agriculture) are ultimately what brought our ancestors out of caves and allowed them to build lasting settlements, many of which (Athens, Jerusalem, Delhi, etc.) still exist to this day.

Steel is still arguably the most important industrial commodity in the world. From railroads to skyscrapers, cars, bridges and electrical infrastructure, our modern way of life depends on steel.

This is why, when economies develop rapidly, one of the first things that happens is a surge in demand for steel, along with other essential commodities like copper, oil, and even food.

China experienced this surge in the early 2000s. India is going through it now.

This ongoing demand makes steel—and, by extension, iron—a ‘real asset’, i.e. a critical resource upon which human civilization truly depends.

We talk about real assets a lot— and they include certain commodities like steel, oil, copper, and gold, all of which serve vital functions. Agriculture and productive technology are also real assets. Water is a real asset.

And in an inflationary environment, these assets tend to perform exceptionally well.

We consistently make a very strong argument in this column that the future will likely be extremely inflationary.

After all, it seems like just yesterday that the US national debt hit $35 trillion. Yet it’s already closing in on $36 trillion. The budget deficit was $1.8 trillion last year, and the government’s own projections conservatively estimate $22 trillion in additional deficit spending over the next decade.

Technically, the situation is fixable, but it certainly doesn’t look like anyone in power is moving in that direction.

Realistically, the only “solution” will be for the central bank to print more money— potentially tens of trillions of dollars over the next decade.

As we saw during the pandemic, when the central bank expanded the money supply by $5 trillion, we got 9% inflation. How much inflation will we see if the Fed creates another $20 trillion?

No one knows for sure. But it probably won’t be zero.

Real assets, by the way, did very well during the pandemic. They also performed well during the stagflation of the 1970s.

And given that the world is looking at another major inflationary cycle, we believe that real assets are primed to outperform.

The good news is that a number of real asset producers are currently selling at absurdly cheap valuations.

We’ve said this before: while gold may be at an all-time high, many gold producers are extremely undervalued.

We think iron and steel companies are worth taking a look at as well given the importance of those commodities.

To give you an example, we wrote about one highly undervalued iron company to our subscribers of The 4th Pillar— our most exclusive premium investment research service.

This company has a unique business model because it isn’t actually a mining company; it’s a royalty company.

Owning and operating a mine involves a lot of work and risk. When the underlying commodity increases in value, the mining company generates more revenue. But inflation can also drive the costs of production higher as well.

But royalty companies don’t operate mines. They provide financing. And in exchange for providing financing, they get a cut of the revenue.

This is a unique model. Banks who provide financing receive a fixed rate of interest on their loans. Investors who provide financing receive shares in the company, i.e. a portion of the profits.

But royalty companies receive a percentage of top-line revenue… which means they will be major beneficiaries when inflation pushes up the prices for key resources like steel and iron.

This company in particular also trades at a low, single-digit price-to-earnings ratio, pays an 8% dividend, and has a solid balance sheet. We believe it has significant upside potential.

But it’s just one example of a regular theme at Schiff Sovereign: exposure to real assets can help inflation-proof your portfolio and your life.

Right now, many real assets are trading at historic lows, from gold miners to iron royalty companies to natural gas producers. Given the coming inflationary cycle, that’s probably not going to last.

Source

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US Manufacturing Survey Hits 16-Month-Lows But Prices Paid Spiked In October

US Manufacturing Survey Hits 16-Month-Lows But Prices Paid Spiked In October

Minutes after the BLS reported the biggest drop in manufacturing jobs since the COVID lockdowns, S&P Global reported its US Manufacturing PMI rose to 48.5 in October (still in contraction) from 47.3 in September (as ‘hard data’ has exploded higher this month. ISM’s Manufacturing PMI was worse than expected, dropping from 47.2 to 46.5 in October – the lowest since June 2023…

That is the fourth straight month of contraction (sub-50) for the Manufacturing PMI

Source: Bloomberg

The ISM Manufacturing Prices Index spiked back higher in October as both new orders and employment remain in contraction sub-50)…

Source: Bloomberg

Commodity prices are UP!

Stagflation, much?

The responses from ISM survey participants was a shitshow:

  • “Right-sizing continues. Contingency plans have been formulated to anticipate trade policies that will impose tariffs on key materials.” [Chemical Products]

  • Market demand has significantly decreased in the second half of 2024 and is expected to be soft through the first quarter of 2025. Although inflation has stabilized and returned to historical levels, and interest rates are decreasing, there appears to be a general pessimism in the economy that is driving customers to be more restrictive in their capital expenditures, including investment in commercial vehicles. Uncertainty in the outcome of the upcoming election has resulted in several risk analysis studies to be prepared, particularly focused on the future of the electric vehicle (EV) migration and trade restrictions/penalties.” [Transportation Equipment]

  • Sales have been very slow the past six months. Interestingly, though, inquiries are up more than 30 percent from a year ago. This indicates there is pent-up demand, but customers are skittish about national and global economic conditions. We are hearing directly from customers that they need to order equipment to satisfy their requirements but are going to keep projects as long as possible before pulling the trigger.” [Machinery]

  • Business levels remain depressed. It feels like a ‘wait and see’ environment regarding where the economy is heading; customers don’t want to commit to inventory, which is resulting in lower order levels.” [Fabricated Metal Products]

  • This has been an interesting fourth quarter already. The port strikes, hurricanes and election will all affect us in some way. Our industry is energy intensive, so our largest concern is the national and state mandates toward electrification. Electrical components were already in short supply, and with the substation and power line damages, we expect the electrical supply chain will be even worse.” [Paper Products]

Chris Williamson, Chief Business Economist at S&P Global Market Intelligence, offers some optimism…

The US manufacturing downturn extended into its fourth successive month in October, marking a disappointing start to the fourth quarter for the goods-producing sector. Although the rate of decline moderated, order books continued to deteriorate at a worryingly steep pace, and a further build-up of unsold stock hints at further production cuts at factories in the coming months unless demand revives.

“The survey does, however, provide some encouragement that the current soft patch could prove short-lived. Hurricanes have been blamed for supply disruptions, which should therefore ease in November, and manufacturers are feeling more positive about the outlook than at any time since May, hoping that demand will pick up once the uncertainty generated by the Presidential Election clears.

“It’s notable that orders for investment goods such as plant and machinery have fallen especially sharply in recent months. Headcounts have also been cut for a third straight month, underscoring the reluctance among firms to expand in the face of heightened geopolitical uncertainty, with firms citing tensions around the US election as well as intensifying international conflicts. There is therefore some potential upside to the manufacturing sector if the political environment becomes more conducive to spending and investment after the election.”

Hope springs eternal!! But The fed will cut 25bps next week because jobs/ISM and ignore the surge in Prices Paid and Core PCE?

Tyler Durden
Fri, 11/01/2024 – 10:06

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‘An Ugly Report’

‘An Ugly Report’

Authored by Peter Tchir via Academy Securties,

Such an ugly report – at least on the surface!

Not only were only 12k jobs created, all of the jobs were in the public sector (government). Private payrolls dropped 28k.

What impact did hurricanes play?

I admit, this is outside of my NFP skillset. Presumably the hurricanes had an impact, but why didn’t the hurricanes affect ADP which came in at 233k with upward revisions to the prior month?

Also, we had downward revisions of 112k which isn’t good, but seems impossible to be hurricane related.

Nothing good about the headline NFP data.

Having said that, hours worked ticked up – one good sign.

The unemployment rate kind of stayed the same at 4.1% (down from 4.3% back in July). It was actually 4.145% versus 4.051%, about as close to a 0.1% increase as you can get without it showing up when displayed as 1 decimal place (but the Fed will notice this). The Household survey added 150k jobs, but the main reason the unemployment rate didn’t rise to 4.2% (asides from rounding) was that the labor participation rate dropped 0.1% to 62.6%.

While not alarming on the surface, the Fed will have to think about this as at least a 0.1% move if not 0.2% move in the wrong direction on the unemployment rate when they meet next week.

The “good” news (for workers) is that monthly earnings “stayed” at 0.4% – they were originally reported as 0.4% last month, but that too, has been revised lower.

Not to scare anyone, (Halloween was yesterday, after all), but the birth/death model ADDED 368k to the jobs report. I believe this is before seasonal adjustments are applied, but how miserable would jobs have been without this plug?

As one example, it claims 8k were added in manufacturing and 26k in construction – but the establishment survey reports -46k this month and -6k last month (I find it difficult to believe a lot of new businesses were created in areas that are losing jobs, but who knows).

The one chart I keep coming back to from all the jobs data.

The quit rate in JOLTS didn’t get this low until almost midway through 2008. The NBER, I think said the recession started in December 2007 (though they didn’t tell us until much later).

I like the QUIT rate as I believe it has an element of “crowd sourcing”. Every individual has a decent idea of how easy it is for them to leave and get a similar or better job, and without a doubt, individuals are telling us the job prospects don’t seem great to them.

I expect part of this fits our “covid inflation model” quite well, where we believe we are well past peak “services inflation/usage” and that is showing up in the jobs data.

Bumpy Landing

I’ve been argued that we will see a “bumpy” landing. Not recession, but not necessarily smooth. While to some extent today’s data fits that nicely, it is worse than I thought. I’m far more inclined to think about a really bumpy landing, than I am to dismiss the data.

With the hurricanes, and some other data not as negative (though the QUIT rate is screaming at me), I will not be in fear mode (after all, we were bumpy, not soft), but the market certainly has to rethink soft!

Bottom Line

Fed cuts 25 next week.

That has been our base case and see absolutely no reason to change it (even with some inflation data ticking higher).

This should help bond yields rally, for a bit, especially at the front end, but I’d use the rally to start setting shorts again, especially at the longer end of the curve:

  • Will this data influence the election? There has been a lot of early voting, but this is not the sort of report incumbents want to see (the arguments about hurricane effects could easily get lost).

  • Nothing about the rising deficit changes with today’s numbers and I think that along with positioning has been a bigger driver of the rate move (see Who Will Win and What Does it Mean?)

Equities. Maybe this helps equities recover from yesterday’s shellacking, but stocks moving on lower yields for the wrong reasons has not been sustainable. Stocks will likely face pressure as we start to think about all the possible election permutations (anything from landslide victories, to dead heats, to aggressively contested results, are on the table). Earnings will be a factor and there were just enough good ones last night post the close to help stock futures bounce overnight, but all too often in the past week we’ve seen opening strength deteriorate over the course of the day.

Maybe yesterday was the dip to be bought, but I’m not participating in that, think we have more downside in the coming days.

Good luck and can we all agree that turning back our clocks this weekend and  losing daylight at the end of the day, is just bad idea?

Tyler Durden
Fri, 11/01/2024 – 09:45

via ZeroHedge News https://ift.tt/cMLb5Za Tyler Durden