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Key Events This Extremely Busy Week: Fed, Treasury Refunding, Jobs, JOLTS, ISM And Tons Of Earnings

April 29, 2024 - 10:40am

Key Events This Extremely Busy Week: Fed, Treasury Refunding, Jobs, JOLTS, ISM And Tons Of Earnings

As DB's Jim Reid notes, with just two days left in a rollercoaster April for markets - and FX - last week actually saw the best week for the S&P 500 (+2.67%) and NASDAQ (+4.23%) since November, following several weeks of declines, as earnings gave markets a boost even if the US inflation data was on net worrying. And while the month is almost over, the new week is just starting and as Reid notes, it's shaping up an exceptionally busy week of important events.

The FOMC on Wednesday is the obvious highlight of the week, but we also have payrolls on Friday to look forward to. DB expect a more hawkish-leaning Fed this week. While our economists expect the Committee will maintain an easing bias, they do expect the statement and press conference to echo Chair Powell’s view that firmer inflation prints suggest it will take longer to gain confidence about disinflation. The press conference will be fascinating to see the nuances in Powell’s responses as he justifies a likely unchanged easing bias, even if the rhetoric is more hawkish, in the face of rising inflation.

In terms of the jobs report on Friday, our US economists see payrolls gaining +240k in April (consensus +250k), down from +303k in March. The consensus expects the unemployment rate and the hourly earnings growth rate to stay at 3.8% and +0.3% MoM, respectively, although DB expects the former to tick up a tenth. Overall the market sees a solid report.

Finally in the US, earnings season maintains its peak pace as 174 report in the S&P versus 180 last week with Amazon (Tuesday) and Apple (Thursday) the obvious highlights. Meanwhile, 66 Stoxx 600 companies will report this week.

In Europe, preliminary CPI reports for Germany and Spain today, and the Eurozone tomorrow will have a lot of significance for the June ECB meeting and whether we will see the first cut. Our European economists preview the release here. For the Eurozone, they expect the headline HICP to fall one-tenth to 2.31% yoy, its lowest value since August 2021 and see core inflation slowing further to 2.45% yoy, 0.50pp lower than in March 2024. Staying in Europe the latest GDP data for Germany, France, Italy and the Eurozone are due tomorrow. In Asia, various China PMIs (tomorrow) will be a big focus and in Japan, several key economic indicators are also due, including industrial production and labour market data tomorrow.

Day-by-day calendar of events:

Monday April 29

Data : US April Dallas Fed manufacturing activity, Germany April CPI, Eurozone April services, industrial and economic confidence
Earnings : PetroChina, China Construction Bank, BYD, NXP Semiconductors, Domino's Pizza, Paramount Global
Auctions : US Treasury borrowing estimates

Tuesday April 30

Data : US Q1 employment cost index, February FHFA house price index, April MNI Chicago PMI, Dallas Fed services activity, Conference Board consumer confidence, UK March net consumer credit, mortgage approvals, M4, April Lloyds business barometer, China April official PMIs, Caixin manufacturing PMI, Japan March retail sales, job-to-applicant ratio, jobless rate, industrial production, housing starts, Italy Q1 GDP, March hourly wages, April CPI, Germany Q1 GDP, April unemployment claims rate, France Q1 GDP, March PPI, consumer spending, April CPI, Eurozone Q1 GDP, April CPI, Canada February GDP, New Zealand Q1 jobs report , Denmark March unemployment rate
Central banks : BoE's APF report
Earnings : Amazon, Eli Lilly & Co, Samsung, Coca-Cola, AMD, McDonald's, Stryker, Starbucks, Mondelez, Mercedes-Benz Group, Volkswagen, PayPal, adidas, Diamondback Energy, Restaurant Brands, Pinterest, Vonovia, Covestro, Caesars Entertainment

Wednesday May 1

Data : US March JOLTS report, construction spending, April total vehicle sales, ISM index, ADP report, Canada April manufacturing PMI
Central banks : Fed's decision
Earnings : Mastercard, Qualcomm, Pfizer, KKR, GSK, Marriott, Estee Lauder, DoorDash, Corteva, Haleon, Devon Energy, Barrick Gold, eBay, Albemarle, Etsy
Auctions : US quarterly refunding announcement

Thursday May 2

Data : US Q1 unit labor costs, nonfarm productivity, March trade balance, factory orders, initial jobless claims, Japan April monetary base, consumer confidence index, Italy March PPI, April manufacturing PMI, new car registrations, budget balance, Canada March international merchandise trade, Switzerland April CPI
Central banks : BoJ minutes of the March meeting
Earnings : Apple, Novo Nordisk, Shell, Linde, ConocoPhillips, Booking, Cigna, Regeneron, Apollo, Pioneer, Universal Music Group, Block, Ares, Moderna, Blue Owl, Vestas, AP Moller - Maersk, Orsted, ArcelorMittal, Live Nation Entertainment, DraftKings
Other : UK local elections, OECD economic outlook

Friday May 3

Data : US April jobs report, ISM services, UK April official reserves changes, Italy March unemployment rate, France March industrial production, budget balance, Eurozone March unemployment rate, Canada April services PMI, Norway April unemployment rate
Earnings : Hershey, Daimler Truck, Cheniere Energy

* * *

Looking at just the US, Goldman writes that the key economic data releases this week are the Employment Cost Index on Tuesday, ISM manufacturing and JOLTS job openings on Wednesday, and the employment report on Friday. The May FOMC meeting is on Wednesday. The post-meeting statement will be released at 2:00 PM ET, followed by Chair Powell’s press conference at 2:30 PM. Treasury will release its Q2 financing estimates on Monday and the Quarterly Refunding Statement on Wednesday.

Monday, April 29

10:30 AM Dallas Fed manufacturing activity, April (consensus -11.3, last -14.4)

Tuesday, April 30

08:30 AM Employment cost index, Q1 (GS +0.9%, consensus +1.0%, last +0.9%): We estimate the employment cost index rose by 0.9% in Q1 (qoq sa), which would lower the year-on-year rate by two tenths to 4.0% (nsa yoy). Our forecast reflects deceleration in the Atlanta Fed wage tracker and in average hourly earnings of production and nonsupervisory workers. We also expect a slower pace of ECI growth among unionized workers, following the 1.7% spike in Q4 (SA by GS, not annualized). On the positive side, we assume ECI benefit growth picks back up to 0.9% (vs. 0.7% in Q4), reflecting expanded benefit offerings at the start of the year.
09:00 AM FHFA house price index, February (consensus +0.1%, last -0.1%)
09:00 AM S&P Case-Shiller 20-city home price index, February (GS +0.07%, consensus +0.10%, last +0.14%)
09:45 AM Chicago PMI, April (GS 46.4, consensus 45.0, last 41.4): We estimate that the Chicago PMI rose by 5pt to 46.4 in April, reflecting the rebound in global manufacturing activity.
10:00 AM Conference Board consumer confidence, April (GS 104.3, consensus 104.0, last 104.7

Wednesday, May 1

08:15 AM ADP employment change, April (GS +185k, consensus +180k, last +184k): We estimate a 185k rise in ADP payroll employment in April, reflecting a solid underlying pace of job growth and a possible boost from residual seasonality: the ADP measure has picked up in April relative to Q1 in four of the last six years excluding 2020.
09:45 AM S&P Global US manufacturing PMI, April final (consensus 49.9, last 49.9)
10:00 AM Construction spending, March (GS +0.8%, consensus +0.3%, last -0.3%)
10:00 AM JOLTS job openings, March (GS 8,650k, consensus 8,680k, last 8,756k): We estimate that JOLTS job openings fell by 0.1mn to 8.65mn in March, reflecting the pullback in online job postings.
10:00 AM ISM manufacturing index, April (GS 50.8, consensus 50.1, last 50.3): We estimate the ISM manufacturing index rose by 0.5pt to 50.8 in April, reflecting the rebound in global manufacturing activity. Our manufacturing tracker rose 1.5pt to 49.9.
02:00 PM FOMC statement, April 30-May 1 meeting: As discussed in our FOMC preview, the upside inflation surprise over the last three months has delayed the first cut and narrowed the path for the FOMC to cut at all this year. We have not changed our big picture inflation view because the surprises look idiosyncratic, the categories that are still hot reflect lagged catch-up rather than current cost pressures, and the key pillars of the disinflation narrative remain intact. We expect the next few inflation reports to be softer and have therefore stuck with our forecast of cuts in July and November, but even moderate upside surprises could delay cuts further.
05:00 PM Lightweight motor vehicle sales, April (GS 15.8mn, consensus 15.7mn, last 15.5mn)

Thursday, May 2

08:30 AM Trade balance, March (GS -$69.0bn, consensus -$69.2bn, last -$68.9bn)
08:30 AM Nonfarm productivity, Q1 preliminary (GS +0.8%, consensus +0.8%, last +3.2%); Unit labor costs, Q1 preliminary (GS +3.5%, consensus +3.3%, last +0.4%): We expect nonfarm productivity growth of +0.8% (qoq saar) in the Q1 preliminary reading. We expect unit labor costs—compensation per hour divided by output per hour—to grow 3.5% in the Q1 preliminary reading, which would increase the year-over-year rate to +4.2%.
08:30 AM Initial jobless claims, week ended April 27 (GS 215k, consensus 210k, last 207k): Continuing jobless claims, week ended April 20 (consensus 1,798k, last 1,781k)
10:00 AM Factory orders, March (GS +1.6%, consensus +1.6%, last +1.4%); Durable goods orders, March final (consensus +2.6%, last +2.6%); Durable goods orders ex-transportation, March final (last +0.2%); Core capital goods orders, March final (last +0.2%);Core capital goods shipments, March final (last +0.2%)

Friday, May 3

08:30 AM Nonfarm payroll employment, April (GS +275k, consensus +250k, last +303k); Private payroll employment, April (GS +225k, consensus +198k, last +232k); Average hourly earnings (mom), April (GS +0.20%, consensus +0.3%, last +0.3%); Average hourly earnings (yoy), April (GS +3.95%, consensus +4.0%, last +4.1%); Unemployment rate, April (GS 3.8%, consensus 3.8%, last 3.8%); Labor force participation rate, April (GS 62.7%, consensus 62.7%, last 62.7%): We estimate nonfarm payrolls rose by 275k in April (mom sa), reflecting a favorable evolution in the April seasonal factors and a continued boost from above-normal immigration. Big Data measures were mixed but generally indicate a solid or strong pace of job gains, and our layoff tracker continues to indicate that the pace of layoffs is low. We estimate that the unemployment rate edged down but was unchanged on a rounded basis at 3.8%, reflecting a rise in household employment and flat-to-up labor force participation (at 62.7%). Foreign-born unemployment normalized in March, falling sharply by 261k (SA by GS) and limiting the scope for further declines in April. We estimate average hourly earnings rose 0.20% (mom sa), which would lower the year-on-year rate from 4.14% to 3.95%. Our forecast reflects waning wage pressures and a nearly 10bp drag from calendar effects (mom sa).
09:45 AM S&P Global US services PMI, April final (consensus 50.9, last 50.9)
10:00 AM ISM services index, April (GS 52.1, consensus 52.0, last 51.4): We estimate that the ISM services index rose 0.7pt to 52.1 in April. Our non-manufacturing survey tracker edged up 0.3pt to 52.1.
07:45 PM Chicago Fed President Goolsbee (FOMC non-voter) speaks: Chicago Fed President Austan Goolsbee will participate in a panel discussion at the Hoover Institution. A Q&A is expected. On April 19, Goolsbee said, "Right now, it makes sense to wait and get more clarity before moving [rates]." He added, "So far in 2024, that progress on inflation has stalled. You never want to make too much of one month’s data, especially inflation, which is a noisy series, but after three months of this, it can’t be dismissed."
08:15 PM New York Fed President Williams (FOMC voter) speaks: New York Fed President John Williams will speak in a panel discussion at the Hoover Institution. Speech text and a Q&A are expected. On April 18, Williams said, "I definitely don’t feel urgency to cut interest rates...I think interest rates will need to be lower at some point, but the timing of that is driven by the economy." He added, "We have a strong economy… which means that the rates we have haven’t caused the economy to slow too much."

Source: DB, Goldman

Tyler Durden Mon, 04/29/2024 - 10:40

Biden Embraces G20-Proposed 2% Wealth Tax To Battle 'Racial Wealth Inequality'

April 29, 2024 - 10:20am

Biden Embraces G20-Proposed 2% Wealth Tax To Battle 'Racial Wealth Inequality'

Authored by Mike Shedlock via MishTalk.com,

Biden and Yellen support a global minimum tax on corporations. And a new wealth tax scheme is now in the works...

Watch Out for a Global Wealth Tax

The Wall Street Journal says Watch Out for a Global Wealth Tax

In our new socialist age, the demand to tax and redistribute income is insatiable. The latest brainstorm arrives in a proposal by four countries in the G-20 group of nations to impose a 2% wealth tax on the world’s billionaires.

“The tax could be designed as a minimum levy equivalent to 2% of the wealth of the super-rich,” write economic ministers of Germany, Spain, Brazil and South Africa in the Guardian. They say the levy would raise about $250 billion a year from some 3,000 billionaires and “would boost social justice and increase trust in the effectiveness of fiscal redistribution.” The countries plan to float this at the next G-20 meeting in June.

Presumably, the plan is to have the G-20 endorse the idea, including President Biden and Treasury Secretary Janet Yellen. Then negotiate a global tax deal that would wait until Democrats control all of the U.S. government to approve it, even if that takes many years.

That’s more or less what Ms. Yellen has done with her global minimum tax on corporations, and the four ministers are candid in saying this is their model. The wealth tax “is a necessary third pillar that complements the negotiations on the taxation of the digital economy and on a minimum corporate tax of 15% for multinationals,” the ministers write.

Ms. Yellen went along with the first two pillars, though as we’ve written they subject American companies to foreign tax raids of the kind the U.S. government has long opposed. An architect of the wealth tax idea is French socialist Gabriel Zucman, who was also behind Ms. Yellen’s global minimum tax. Once a global wealth tax is in place, you can be sure that billionaires won’t be the last target.

The Biden Administration is run by liberal internationalists who are happy to cede more power to multilateral institutions. President Biden is also campaigning on a wealth tax of his own that would impose the highest tax rates on Americans since before the Reagan tax reform. For this crowd, taxing American billionaires to redistribute income around the world is all too imaginable.

I used to dismiss ideas like this. Not anymore.

Letting the G-20 set US tax rates would be unconstitutional, but since when does Biden give a damn?

Besides, if Democrats get control of the Senate, House and White House they may try to pack the courts.

President Biden and Treasury Secretary Janet Yellen embrace a massive wealth tax redistribution scheme including taxes on unrealized gains in their Fiscal Year 2025 proposal.

Advancing Equity Through Tax Reform

Please consider Fiscal Year 2025 Revenue Proposals on Racial Wealth Inequality

The revenue proposals in the Administration’s Fiscal Year 2025 Budget (U.S. Treasury, 2024) would raise revenues, help ensure the wealthy and large corporations pay their fair share, expand tax credits for working families, and improve tax administration and compliance.

Research has demonstrated that wealth gaps are one of the primary “mechanisms for
perpetuating racial economic inequality”.

The millions of African Americans who left the southern United States to escape Jim Crow laws faced formal and informal employment, educational, and housing discrimination in destination cities in the North and West, including discriminatory “redlining” policies that started in the 1930s. In addition to funneling Black households into neighborhoods with lower home values, research has illustrated the extent to which redlining introduced place-based policies that affected the employment, education, and health of residents in those neighborhoods, all of which are directly related to income and wealth accumulation.

Biden’s Wealth Tax Remedy

A minimum tax of 25 percent on total income, generally inclusive of unrealized capital gains, for all taxpayers with wealth greater than $100 million.
Requiring the wealthiest taxpayers to pay at least 25% of their total income in taxes will reduce economic disparities among Americans and raise needed revenue
Inheritance Taxes: In 2019, thirty percent of White families received an inheritance compared to 10 percent of Black families and 7 percent of Hispanic families. The Administration’s Fiscal Year 2025 Budget would limit the duration of the GST [Generation Skipping Trust] tax exemption.
The Budget would tax long-term capital gains and dividends at ordinary rates for taxpayers with more than $1 million in income, curtailing a tax expenditure the benefits of which accrue disproportionately to White families. It would also treat transfers of appreciated property as realization events and impose a minimum tax on the wealthiest families, while expanding tax credits that improve equity.

Biden Explanations

There’s still more if you dive into General Explanations of the Administration’s Fiscal Year 2025 Revenue Proposals

The explanations are 256 pages long. The following points do not represent all of the ways the administration is coming after you.

I have a 15-point synopsis at the end for those just wishing to see general ideas.

Here are some details.

The child tax credit would be expanded through 2025, would permanently be made fully refundable, determined monthly, and paid out in advance. Reforms to the delivery of the credit would facilitate take-up. The earned income tax credit would also be expanded to cover more workers without children. The premium tax credit expansion first enacted in the American Rescue Plan Act of 2021 and extended in the Inflation Reduction Act of 2022 would be made permanent, making health insurance more affordable for millions of families.
Raising the corporate income tax rate is an administratively simple way to raise revenue to pay for the Administration’s fiscal priorities.
The proposal would increase the tax rate for C corporations from 21 percent to 28 percent. The effective global intangible low-taxed income (GILTI) rate would increase to 14 percent under the proposal.
The proposal Revise the Global Minimum Tax Regime, Limit Inversions, and Make Related Reforms described later in this text would further increase the effective GILTI rate to 21 percent.
A new 25- percent minimum income tax would be imposed on extremely wealthy taxpayers. For high income taxpayers, gaps in the law that allow some pass-through business owners to avoid Medicare taxes would be eliminated and Medicare tax rates would be increased. Additional loopholes, including the carried interest preference and the like-kind exchange real estate preference, would be eliminated for those with the highest incomes. Together these reforms would sharply curtail tax preferences that allow the wealthy to pay lower tax rates on their investment income and exacerbate income and wealth disparities, including by gender, geography, race, and ethnicity.
The child tax credit would be expanded through 2025, would permanently be made fully refundable, determined monthly, and paid out in advance. Reforms to the delivery of the credit would facilitate take-up. The earned income tax credit would also be expanded to cover more workers without children.
The proposal would increase the tax rate on corporate stock repurchases to 4 percent.
The Secretary would be granted authority to promulgate any regulations necessary to carry out the purposes of the proposal, including (a) coordinating the application of the proposal with other interest deductibility rules, (b) defining interest and financial services entities, (c) permitting financial reporting groups to apply the proportionate share approach using the group’s net interest expense for U.S. tax purposes rather than net interest expense reported in the group’s financial statements, (d) providing for the treatment of pass-through entities, (e) providing adjustments to the application of the proposal to address differences in functional currency of members, (f) if a U.S. subgroup has multiple U.S. entities that are not all members of a single U.S. consolidated group for U.S. tax purposes, providing for the allocation of the U.S.
The proposal would repeal: (a) the enhanced oil recovery credit for eligible costs attributable to a qualified enhanced oil recovery project; (b) the credit for oil and gas produced from marginal wells; (c) the expensing of intangible drilling costs; (d) the deduction for costs paid or incurred for any qualified tertiary injectant used as part of a tertiary recovery method; (e) the exception to passive loss limitations provided to working interests in oil and natural gas properties; (f) the use of percentage depletion with respect to oil and gas wells; (g) two year amortization of geological and geophysical expenditures by independent producers, instead allowing amortization over the seven-year period used by major integrated oil companies; (h) expensing of exploration and development costs; (i) percentage depletion for hard mineral fossil fuels; (j) capital gains treatment for royalties; (k) the exemption from the corporate income tax for publicly traded partnerships with qualifying income and gains from activities relating to fossil fuels; (l) the OSTLF and Superfund excise tax exemption for crude oil derived from bitumen and kerogenrich rock; and (m) accelerated amortization for air pollution control facilities.
The eligibility of the petroleum taxes dedicated to the OSLTF and Superfund for drawback would be eliminated.
An excise tax on electricity usage by digital asset miners could reduce mining activity along with its associated environmental impacts and other harms. Any firm using computing resources, whether owned by the firm or leased from others, to mine digital assets would be subject to an excise tax equal to 30 percent of the costs of electricity used in digital asset mining.
The proposal would expand the NIIT base to ensure that all pass-through business income of high-income taxpayers is subject to either the NIIT or SECA tax.
The proposal would increase the additional Medicare tax rate by 1.2 percentage points for taxpayers with more than $400,000 of earnings. When combined with current-law tax rates, this would bring the marginal Medicare tax rate up to 5 percent for earnings above the threshold. The threshold would be indexed for inflation.
The proposal would increase the top marginal tax rate to 39.6 percent. The top marginal tax rate would apply to taxable income over $450,000 for married individuals filing a joint return and surviving spouses, $400,000 for unmarried individuals (other than surviving spouses and head of household filers), $425,000 for head of household filers, and $225,000 for married individuals filing a separate return. After 2024, the thresholds would be indexed for inflation using the CPI-U, which is used for all current thresholds in the tax rate tables.
Under the proposal, the donor or deceased owner of an appreciated asset would realize a capital gain at the time of the transfer. The use of capital losses and carry-forwards from transfers at death would be allowed against capital gains and up to $3,000 of ordinary income on the decedent’s final income tax return, and the tax imposed on gains deemed realized at death would be deductible on the estate tax return of the decedent’s estate (if any). Gain on unrealized appreciation also would be recognized by a trust, partnership, or other noncorporate entity that is the owner of property if that property has not been the subject of a recognition event within the prior 90 years.
Preferential treatment for unrealized gains disproportionately benefits high-wealth taxpayers and provides many high-wealth taxpayers with a lower effective tax rate than many low- and middle-income taxpayers. Preferential treatment for unrealized gains also exacerbates income and wealth disparities, including by gender, geography, race, and ethnicity. The proposal would impose a minimum tax of 25 percent on total income, generally inclusive of unrealized capital gains, for all taxpayers with wealth (that is, the difference obtained by subtracting liabilities from assets) greater than $100 million.
The proposal would require a high-income taxpayer with an aggregate vested account balance under tax-favored retirement arrangements that exceeded $10 million as of the last day of the preceding calendar year to distribute a minimum of 50 percent of that excess.
The provision would prohibit a rollover to a Roth IRA of an amount distributed from an account in an employer-sponsored eligible retirement plan that is not a designated Roth account (or of an amount distributed from an IRA other than a Roth IRA) for a high-income taxpayer.
Increase the maximum credit per child to $3,600 for qualifying children under age 6 and to $3,000 for all other qualifying children. Increase the maximum age to qualify for the CTC from 16 to 17. The proposal would make the CTC fully refundable, regardless of earned income.
The first-time homebuyer credit would be equal to ten percent of the purchase price of a home, up to a maximum credit of $10,000. For multiple individuals who purchase a home together, the maximum credit would be allocated proportionally to ownership interest in the purchased home or in a manner determined by the Secretary in published guidance. The credit allocated to a married individual filing a separate return would not exceed $5,000. The home must be in the United States.
Upon disposition, any measured gain on an item of section 1250 property held for more than one year would be treated as ordinary income to the extent of the cumulative depreciation deductions taken after the effective date of the provision. Depreciation deductions taken on section 1250 property prior to the effective date would continue to be subject to current rules and recaptured as ordinary income only to the extent that such depreciation exceeds the cumulative allowances determined under the straight-line method. Any gain recognized on the disposition of section 1250 property in excess of recaptured depreciation would be treated as section 1231 gain. Any unrecaptured gain on section 1250 property would continue to be taxed to noncorporate taxpayers at a maximum 25 percent rate.
In general, no Federal income tax is imposed concurrently on a policyholder with respect to the earnings credited under a life insurance or endowment contract. Furthermore, amounts received under a life insurance contract by reason of the death of the insured generally are excluded from the gross income of the recipient. The proposal would limit the tax benefits for private placement life insurance and annuity contracts.
The proposal would expand the regulatory authority under which the Secretary may require taxpayers to furnish information relating to the verification and computation of the FTC [Foreign Tax Credit].
A separate proposal would first raise the top ordinary rate to 39.6 percent (43.4 percent including the net investment income tax). An additional proposal would increase the net investment income tax rate by 1.2 percentage points above $400,000, bringing the marginal net investment income tax rate to 5 percent for investment income above the $400,000 threshold. Together, the proposals would increase the top marginal rate on long-term capital gains and qualified dividends to 44.6 percent.

Massive Wealth Distribution Scheme.

The administration went after anything and everything from wealth taxes, huge jumps in marginal rates, REIT, Roth IRA conversions, etc.

Here are the key changes, and I may have missed some.

Fifteen Key Points

The top marginal rate on long-term capital gains jumps to 44.6 percent.
Deductions for oil and gas companied eliminated.
30 percent tax on electricity used in mining cryptos
Restrictions on conversions to Roth IRA
Forced acceleration of IRA withdrawals
Taxes on insurance policies
Expanded Child Tax Credits
Earned Income Tax Credits to include those with no kids.
Restrictions on trusts to avoid inheritance taxes
Corporate minimum taxes
Homebuyer tax credits
Minimum 25 percent tax on unrealized stock gains for wealthy individuals
Marginal Medicare tax rate upped to 5 percent
Tax rate for C corporations goes to 28 percent from 21 percent. The effective global intangible low-taxed income (GILTI) rate would increase to 14 percent.
If there is anything ambiguous, the Secretary of the Treasury gets to determine what the law is.

If you have any money or assets, Biden is coming after you. He is also going after oil and gas companies, corporations, and Bitcoin to fund massive wealth distribution schemes.

This is on grounds “Research has demonstrated that wealth gaps are one of the primary mechanisms for perpetuating racial economic inequality“.

Tyler Durden Mon, 04/29/2024 - 10:20

Biden Looks To Prevent Future President From Ending Ukraine War With 10-Year Agreement

April 29, 2024 - 10:00am

Biden Looks To Prevent Future President From Ending Ukraine War With 10-Year Agreement

Soon on the heels of President Biden last week signing into law a $61 billion aid package for Ukraine's defense, President Volodymyr Zelensky on Sunday indicated that he's working with Washington on a bilateral security agreement which would last ten years.

"We are already working on a specific text," Zelensky said in his nightly video address. "Our goal is to make this agreement the strongest of all."

Ukrainian Presidential Press Office via AP

"We are discussing the specific foundations of our security and cooperation. We are also working on fixing specific levels of support for this year and the next 10 years."

He indicated it will likely include agreements on long-term support centering on military hardware and joint arms production, as well as continuing reconstruction aid. "The agreement should be truly exemplary and reflect the strength of American leadership," Zelensky added.

But ultimately a key purpose in locking such a long-term deal in would be to keep it immune from potential interference by a future Trump administration.

Below is what The Wall Street Journal spelled out last year:

The goal is to make sure Ukraine will be strong enough in the future to deter Russia from attacking it again. More immediately, Ukraine’s Western allies hope to discourage the Kremlin from thinking it can wait out the Biden administration for a potentially more sympathetic successor in the White House.

Western officials are looking for ways to lock in pledges of support and limit future governments’ abilities to backtrack, amid fears in European capitals that Donald Trump, if he recaptures the White House, would seek to scale back aid. Trump has a wide lead in early polling in the Republican presidential primary field, but soundly lost the 2020 election to President Biden and has been indicted in four criminal cases in state and federal courts.

We and others have previously underscored that NATO and G7 countries are desperately trying to "Trump-proof" future aid to Ukraine and the effort to counter Russia.

As for its first new weapons package in the wake of the $61 billion being authorized, the Biden administration has announced new arms packages totaling $7 billion. The US has vowed to rush the weapons to Kiev, given that by all indicators its forces are not doing well on the frontlines.

"We are still waiting for the supplies promised to Ukraine – we expect exactly the volume and content of supplies that can change the situation on the battlefield in the interests of Ukraine," Zelensky had said over the weekend. "And it is important that every agreement we have reached is implemented – everything that will yield practical results on the battlefield and boost the morale of everyone on the frontline. In a conversation with Mr. Jeffries, I emphasized the need for Patriot systems, they are needed as soon as possible."

Zelensky announces that Ukraine is working on a security agreement with the U.S. that will fix levels of support for the next 10 years. The $61 billion was just the beginning. The next two U.S. presidents won’t be able to switch it off. pic.twitter.com/q1RWCxf93m
— David Sacks (@DavidSacks) April 28, 2024

But all of this means the war will be prolonged, and this puts negotiations much further away on the horizon, despite what are now daily acknowledgements of Ukraine forces being beaten back. Currently the governments of Greece and Spain are being pressured by EU and NATO leadership to hand over what few Patriot systems they possess to Kiev. The rationale is that they don't need them as urgently as Ukraine does.

Tyler Durden Mon, 04/29/2024 - 10:00

Intervention Or Not, Yen Bears Will Stay Confident

April 29, 2024 - 9:45am

Intervention Or Not, Yen Bears Will Stay Confident

By Vassilis Karamanis, Bloomberg Markets Live reporter and FX strategist

Unless Japanese authorities show their hand with conviction when it comes to intervening in the spot market, the yen is bound to stay under pressure over the medium-term.

The currency’s sharp rally this morning certainly looks like an intervention — it’s not often that we get a 500-pip move seemingly out of nowhere. But thin liquidity due to a public holiday in Japan that forced algorithmic trading to take over as trailing stops were triggered could be what’s driven the market. The fact that traders aren’t sure this is an official hand supporting the yen is telling. Masato Kanda, the nation’s top currency official, said no comment when asked about the moves.

The market has been testing Japanese authorities’ patience — or determination — when it comes to yen weakness for some time now. And it will keep on doing so for as long as intervention threats are seen as a clumsily-played bluff.

The yen kept breaching through one big level after the other on Friday against the dollar and everyone’s question was whether we would finally have official yen buying before a long weekend in Japan. The answer was an emphatic no.

Did price action Friday actually give Japanese authorities the green light to intervene in the spot market?

The yen fell by the most since October on an intraday basis, for a two standard-deviation move; one-week realized volatility touched a one-month high

It was down 3.5% on a ten-day basis; Kanda said that a 4% move over two weeks doesn’t reflect fundamentals and is unusual
Over one month, the dollar was up by around seven big figures against the Japanese currency; Kanda has said that a 10-yen move over such a time period is considered rapid.

So in nominal terms, we could argue it was justified that no intervention took place, given a simple rates-check during a Japan holiday could actually do the trick. But in real terms, no one would blame Japanese authorities if they went beyond their official guidelines to step in the spot market. It’s not just about the 350-pip day range that took place. It’s the starting point that also matters. Fresh 34-year lows were hit Thursday.

Traders could see lack of official yen buying as an attempt to find excuses in order to stay pat. After all, a weaker currency in theory accelerates inflationary dynamics that will eventually support the Bank of Japan as to signal a more-aggressive-than priced in tightening bias — which could really be a game changing moment for the currency, especially if at the same time the Federal Reserve will indeed be close to easing its own policy.

And as long as credibility comes to the question, the more confident traders will be to re-add dollar longs in case the Ministry of Finance does decide to intervene. There was some speculation during the weekend that Japan is waiting for the Fed meeting and the release of the next US jobs report due this week before deciding to press the button. To me, it doesn’t matter so much if this is credible thinking, but the mere fact traders are discussing it shows the ball is moving away from officials’ court.

It’s not easy going against a central bank. In poker terms, policymakers always start the game with a pair of aces. But the flop did no favors to them and their raise on the turn looks miscalculated. Maybe the upcoming river will see traders winning this hand despite Monday’s retreat for the dollar that at the time of writing has no official confirmation it was down to spot intervention.

Tyler Durden Mon, 04/29/2024 - 09:45

Futures Rise, Yen Downgraded To Banana Republic Currency After Another Rollercoaster Session

April 29, 2024 - 8:23am

Futures Rise, Yen Downgraded To Banana Republic Currency After Another Rollercoaster Session

US equity futures swung between gains and losses and traded near session highs as US traders walked to their desks on Monday morning after a rollercoaster day for the Japanese yen, which increasingly looks like some 3rd world banana republic currency instead of belonging to the world's 3rd largest economy, and which first plunged below 160 vs the USD - the lowest level since 1990 amid dismal volumes thanks to the Japanese market holiday on Monday - only to soar more than 500 pips in what is now the first confirmed BOJ intervention since 2022. Futures were buoyed by rising earnings optimism as traders looked ahead to another very busy week for company results, and as of 7:40am, S&P futures gained 0.2% with Nasdaq futures rising 0.3%, boosted by another surge in Tesla shares. 10Y Treasury yields fell four basis points to 4.62% ahead of today's announcement by the Treasury of its funding needs for the coming quarter, while the dollar weakened. Oil retreated, with Brent first trading below $89 a barrel, only to rebound higher amid the endless speculation that a peace deal between Israel and Hamas is coming that would reduce geopolitical tensions in the Middle East (spoiler alert: there will be no deal). Gold rose and bitcoin fell.

In premarket trading, Tesla surged 11%, slamming the recent pile up of shorts (the biggest in two years) as Elon Musk’s quick visit to China paid immediate dividends, with Tesla receiving in-principle approval from government officials to deploy its driver-assistance system in the world’s biggest auto market.

Here are some other premarket movers:

Here Altimmune drops 4% after Guggenheim downgraded the stock, saying a partnership for the biotech’s lead asset pemvidutide look “increasingly unlikely.”
Apple climbs 2% after Bernstein upgraded its rating, calling issues in China “more cyclical than structural” and highlighting that the tech giant’s business in the country has tended to be more volatile than the wider company.
AT&T rises 1% as Barclays upgrades to overweight, noting the wireless carrier’s “steadier execution story.”
Paramount Global jumps 5% after Bloomberg reported that the Redstone family and Skydance Media CEO David Ellison have both offered concessions to make a possible change in control at the media company more appealing to other investors.
Shopify advances 3% after Citi raises the e-commerce company to buy, expecting solid first-quarter results following recent industry conferences and channel checks.
SoFi Technologies gains 2% after the company boosted its adjusted Ebitda guidance for the full year.
Southwest Airlines declines 1.2% after Jefferies downgraded the carrier to underperform, noting that optimization plans are languishing as delays at Boeing reduce fleets.
Tandem Diabetes rises 4% after Wells Fargo upgraded the medical device manufacturer, saying a survey indicates stable growth in insulin pumps.

The big overnight market event was the rollercoaster move in the Japanese yen which again took center stage with dramatic moves that fueled speculation over whether the government had intervened to support its beleaguered currency. In holiday-thinned trading, the yen swung wildly, rallying more than 2% on Monday after earlier dropping as much as 1.2% to 160.17 per dollar.

While analysts suggested the size and speed of the jump smacked of intervention, some traders questioned that conclusion and said Japanese banks sold dollars for customers as it rallied. Japan’s top currency official, Masato Kanda, chose to keep investors guessing by declining to comment. Dow Jones reported authorities stepped in to support the yen, citing people familiar with the matter.

It is a busy week: the Fed meeting on Wednesday and US jobs report on Friday will also be critical for markets this week. The last time Fed Chair Jerome Powell spoke, he signaled that policymakers were likely to keep borrowing costs high for longer than previously anticipated, pointing to the lack of further progress on bringing inflation down, and to enduring strength in the labor market. Meanwhile, with Apple and Amazon.scheduled to report in the next few days, investors will be hoping for more evidence that big technology profits can keep propelling stocks.

Echoing Goldman Sachs, Morgan Stanley’s in house permabear Michael Wilson said the pressure from higher Treasury yields is taking the shine off an upbeat earnings season; that's even as Bloomberg data showed that 81% of S&P 500 firms have beaten first-quarter profit estimates so far. Still, as we noted over the weekend, the average stock price has barely outperformed the benchmark index on the day of results — the worst scorecard since the fourth quarter of 2020, the figures showed.

European stocks are higher, the Stoxx 600 rising 0.3% to 509.7, with Dutch medtech Philips the biggest stand-out performer, rising the most on record after striking a settlement related to a device recall; Deutsche Bank was the biggest decliner after making €1.3 billion of provisions, with its country peer Porsche falling too, following its latest earnings. Here are the biggest movers Monday:

Philips gains as much as 37%, the most on record, after the Dutch medical equipment manufacturer agreed to pay $1.1 billion to settle US claims related to the 2021 recall of sleep apnea devices
Alfen surges as much as 14% after it agreed with Dutch grid operator Liander on a new production method to avoid moisture in its Pacto transformer substations, with KBC raising the firm to buy
Anglo American shares gain as much as 4.1% after Bloomberg News reported over the weekend that BHP is considering making an improved proposal after its $39b initial offer was rejected
Unicaja Banco jumped as much as 8% to the highest level since 2018, after the Spanish lender delivered revenue ahead of expectations in the first quarter
Douglas jumps as much as 5.3% after several brokerages initiated the German perfume retailer at buy, including Citi, which called the stock a “scarce asset” in a growing category
Bravida rises as much as 6% after an internal investigation which revealed previously reported overinvoicing at the Swedish real estate services firm was very limited
Atos shares jump as much as 20%, to the highest in almost three weeks, after the IT firm got a non-binding letter of intent from the French state to acquire some parts of the business
Deutsche Bank declines 5.7%, the sharpest drop since 2023, after the German lender’s announcement that it is setting aside as much as €1.3b in legal provisions in a blow to profitability
Porsche AG shares fall as much as 4.6% after the German firm saw a “challenging” first quarter, according to analysts, who note the automaker’s headline earnings miss
Morphosys falls as much as 2.4% after a report flagged a potential issue related to experimental drug pelabresib, an issue which could complicate the planned acquisition by Novartis
Siltronic shares fall as much as 3.4% after the German wafer maker was downgraded to hold by Hauck & Aufhaeuser following a profit warning issued last week

Meanwhile, Asian equities climbed for a second straight day, as benchmarks for mainland and Hong Kong stocks looked set to enter a bull market. The MSCI Asia Pacific Index climbed as much as 0.3%, with AIA Group and TSMC among the top contributors to the gains. The MSCI China Index and Hong Kong’s Hang Seng Index were both on track to close more than 20% higher than their January lows, helped by a surge in property shares after a major Chinese developer reached a solution with bondholders for its liquidity issues.

“China may continue to outperform especially in a scenario where global risk sentiment remains cautious,” Nomura strategists including Chetan Seth wrote in a note. “Fundamentals remain tepid” and economic data in the next couple of months are important to avoid a reversal of recent gains, they added. Benchmarks in Taiwan, the Philippines and South Korea also advanced on Monday. Markets in Japan and Vietnam were closed for holidays.

In FX, the yen rallied to a 155 handle versus the dollar, having earlier weakened past 160 for the first time since 1990. The abrupt swing prompted speculation authorities may have intervened, although Japan’s top currency official has declined to comment even as Dow confirmed intervention. The Bloomberg Dollar Spot Index is down 0.3% as the greenback loses ground versus all its G-10 rivals.

In rates, treasuries climbed with US 10-year yields falling 4bps to 4.62%, with gains supported by euro-zone bond markets, particularly France’s, outperforming after Moody’s and Fitch affirmed the sovereign’s rating Friday. April inflation numbers from Germany and Spain were taken in stride. US yields richer by 2bp to 4bp across the curve with long-end-led gains flattening 2s10s, 5s30s spreads by 1.5bp and 0.5bp on the day; 10-year remains near session low around 4.625% with bunds outperforming by around 1.5bp in the sector, French 10-year by ~3bp. On Wednesday, Treasury announces quarterly refunding, expected to follow through on its January guidance of holding off on further increases

Oil prices are lower as the US pushes to broker a peace deal between Israel and Hamas. WTI falls 0.2% to trade near $83.70. Spot gold is little changed around $2,338/oz.

Monday’s US session has few calendar events. US economic data slate includes April Dallas Fed manufacturing activity at 10:30am New York time; ahead this week are consumer confidence, ADP employment change, manufacturing PMI, ISM manufacturing, factory orders and April jobs report. Fed members are in self-imposed quiet period ahead of May 1 policy announcement.

Market Snapshot

S&P 500 futures up 0.2% to 5,142.75
STOXX Europe 600 up 0.3% to 509.67
MXAP up 0.9% to 173.90
MXAPJ up 0.9% to 540.54
Nikkei up 0.8% to 37,934.76
Topix up 0.9% to 2,686.48
Hang Seng Index up 0.5% to 17,746.91
Shanghai Composite up 0.8% to 3,113.04
Sensex up 1.2% to 74,584.25
Australia S&P/ASX 200 up 0.8% to 7,637.38
Kospi up 1.2% to 2,687.44
German 10Y yield little changed at 2.55%
Euro up 0.2% to $1.0719
Brent Futures down 0.6% to $88.94/bbl
Gold spot up 0.1% to $2,339.61
US Dollar Index down 0.31% to 105.61

Top Overnight News

Tesla CEO Musk made a surprise visit to Beijing with media reports saying he aims to discuss enabling autonomous driving mode on Tesla cars in China. Later, it was reported Tesla is to partner with Baidu for China self-driving approval, according to Bloomberg. (BBC/Bloomberg) Separately, two US Senators say NHTSA should require Tesla to restrict autopilot use to certain roads.
White House said President Biden approved the Kansas disaster declaration and ordered federal assistance to supplement recovery efforts in areas affected by severe winter storm from January 8th-16th.
Apple intensified talks with OpenAI for iPhone generative AI features in which they are discussing the terms of a possible agreement and how the OpenAI features would be integrated into Apple’s iOS 18, according to Bloomberg. EU says that Apple's (AAPL) iPad operating system has been designated as a gatekeeper under the EU DMA; apple has six months to comply with EU tech rules.
Paramount is reportedly preparing to fire CEO Bakish, via FT citing sources; additionally, sources add that the Co. is expected to receive a counterbid from Sony and Apollo this week to the offer from Skydance Media. (FT)
China's industrial profits fell in March and slowed gains for the quarter compared to the first two months, raising doubts about the strength of a recovery for the world's second-biggest economy. Cumulative profits of China's industrial firms rose 4.3% to 1.5 trillion yuan ($207.0 billion) in the first quarter from a year earlier, NBS data showed, slower than a 10.2% rise in the first two months. RTRS
China’s banking regulator warns the country’s regional banks to stop piling into long-term government bonds as they could be hit with heavy losses if rates rise. FT
Japan's currency surged as much as 5 yen against the dollar on Monday, with traders citing heavy dollar-selling intervention by Japanese banks for the first time in 18 months after the yen hit fresh 34-year lows earlier in the day. RTRS
Russia is expected to launch a new large-scale offensive in May or June (although the influx of American weapons will make Ukraine better positioned to withstand the onslaught). FT
Ukraine isn’t expected to regain offensive momentum until 2025 at the earliest and has no clear military path to recapturing the ~20% of the country stolen by Russia. WaPo
BHP is considering an improved bid for Anglo American, people familiar said. The miner may need to find over $9 billion in cost savings from the tie-up to raise the offer, which may be a stretch. BBG
Apple’s iPad was hit by the EU rules aimed at stopping potential competition abuses before they take hold. Apple now has six months to make sure its tablet ecosystem complies with preemptive measures. BBG
AAPL has renewed negotiations w/OpenAI and remains in talks w/Google about incorporating AI-linked technology into the next version of iOS (investors expect to hear a lot more about Apple’s plans at the upcoming WWDC). BBG

A more detailed look at global markets courtesy of Newsquawk

APAC stocks began the week on the front foot after the tech-led surge last Friday on Wall St and amid increased optimism regarding a Gaza truce with negotiators set for talks in Cairo on Monday, although Japan was on holiday and ahead of this week's key risk events. ASX 200 was led higher by real estate, tech and telecoms owing to softer yields. Hang Seng and Shanghai Comp. gained with the former entering into bull market territory after climbing over 20% from its January lows, while participants digested a slew of earnings and the mainland also shrugged off the slowdown in March Industrial Profits.

Top Asian News

China's MOFCOM said export control measures proposed by Japan on semiconductors will seriously affect the normal trade between Chinese and Japanese enterprises, as well as undermine the stability of the global supply chain. Furthermore, it stated that China urges the Japanese side to rectify its 'erroneous practices' in a timely manner and China will take necessary measures to firmly safeguard the legitimate rights and interests of Chinese enterprises, according to Reuters.
US and Taiwan are to hold in-person negotiation talks on trade beginning on April 29th, according to Reuters.
Japanese PM Kishida said they will promote union policies for wage increases, according to Reuters.
PBoC has reportedly expanded a warning on bond investments to regional banks, via Bloomberg citing sources.
Agricultural Bank of China (1288 HK) Q1 (CNY): Net Income 70.839bln (exp. 73.578bln), NII 144.535bln (exp. 137.021bln).
PetroChina (857 HK) Q1 (CNY): Revenue 812.184bln (exp. 833.77bln), Net +5% Y/Y, EPS 0.25 (exp. 0.24).
Japanese Top Currency Diplomat Kanda offers no comments on whether there was FX intervention; will continue to take appropriate action against excessive FX moves; does not have a specific FX level in mind. Speculative, rapid, abnormal FX moves have bad impact on the economy, so unacceptable. Ready to respond 24 hours, 365 days, when asked whether Japan was ready to take action in FX. Will disclose at the end of May if there way intervention.

European bourses, Stoxx600 (+0.3%) are almost entirely in the green, taking the lead from a positive APAC session overnight. Trade has been rangebound since the open, though has just been coming off best levels in recent trade. Basic Resources is found towards the top of the pile, benefiting from modestly firmer base metal prices and after further takeover reports regarding BHP/Anglo American. Retail marginally underperforms. US Equity Futures (ES +0.2%, NQ +0.3%, RTY +0.3%) are entirely in the green, posting modest gains in tandem with European peers. In terms of pre-market movers; Apple (+1.5%) gains on reports that it has resumed talks with OpenAI. And Tesla (+6.5%) benefits from news that the Co. has received tentative approval for its self-driving service.

Top European News

ECB's Wunsch (interview from 20th April) said ECB should be cautious regarding a July cut, should be cautious regarding a larger-than-25bps cut in June. Base case it as least two cuts, "but if we only do two or even three cuts, then we shouldn't communicate that we're going to cut at every meeting". Don't think ECB has sufficient data to have confidence on 100bps of cuts throughout the year. On what could get in the way of a June cut, Wunsch said "really bad news", "two bad readings on the inflation front or other major developments."
Spanish PM says he has decided to stay on as Prime Minister.
Scotland's First Minister Humza Yousaf is set to step down after coming to the conclusion that is position is no longer tenable, according to The Sunday Times.
Fitch affirmed France at AA-; Outlook Stable and affirmed Switzerland at AAA; Outlook Stable, while it affirmed Sweden at AAA; Outlook Stable.

USD is softer vs. peers in the wake of aggressive USD/JPY selling overnight and into the European morning. From a technical perspective, DXY has been as low as 105.46 but is respecting Friday's 105.41 base.
JPY was volatile overnight and initially surged above 160.00 with no obvious catalysts and with Japanese participants away from the market. The pair later saw a sharper drop and breached 156.00 to the downside in the absence of any obvious drivers; some have speculated potential intervention. Since, USD/JPY has continued to bleed, going as low as 154.54 (currently 155.80).
EUR is firmer vs. USD (as is the case for all major peers). Focus in the Eurozone today is on the German national CPI at 13:00BST, with regional releases thus far broadly showing increases on a M/M and Y/Y basis, though initial reaction dovish as the core numbers continue to moderate. 1.0733 is the high thus far and yet to approach Friday's best of 1.0753.
Antipodeans are benefitting from the broadly softer USD. AUD/USD is now up for a 6th consecutive session with focus on a test of 0.66 after printing a session high of 0.6586.
Japan's Top currency diplomat Kanda said will not comment now, when asked about whether Japan intervened in the currency market.
PBoC set USD/CNY mid-point at 7.1066 vs exp. 7.2759 (prev. 7.1056).

Fixed Income

USTs are bid with specifics light so far and direction drawn from EGB action after the regions core inflation numbers from Spain & German. Currently at the top-end of a 107-18+ to 107-27+ range with the 10yr yield below 4.65% but in familiar ranges.
Bunds are firmer with markets focussing on the continued moderation in core Spanish and German state CPI into the 13:00BST nationwide German number. Bunds peaked at 130.87 having pared knee-jerk pressure of around 20 ticks on the German headline numbers; now off best levels.
Gilts are a touch firmer but yet to move significantly from the unchanged mark in a narrow circa-20 tick range with specifics light and direction for today and this week broadly likely to come from European and US events. Currently at 96.25 shy of Friday's 96.33 best and then 96.67 from Wednesday thereafter.
Italy sells EUR 6.75bln vs exp. EUR 5.75-6.75bln 3.35% 2029, 3.85% 2034 BTP and EUR 3.5bln vs exp. EUR 3-3.5bln CCTeu.
EU sells EUR vs exp. EUR 2.5bln 3.125% 2028 and EUR 2.5bln 2.75% 2033 EU Bond.

Commodities

A subdued day for the crude complex despite the weaker Dollar, but amid the lack of geopolitical escalation over the weekend and amid more sanguine atmosphere surrounding the latest Israel-Gaza ceasefire talks. Brent counterpart slipped from USD 89.25/bbl to USD 88.43/bbl.
Mixed trade across precious metals with only spot silver benefiting from the slide in the Dollar, whilst spot gold sees its upside capped by the lack of geopolitical escalation and ahead of FOMC later this week. XAU clambered off its USD 2,319.84/oz intraday low but is yet to reach highs seen on Friday at USD 2,352.64/oz.
Base metals are mixed with some of the market benefiting from the softer Dollar, albeit modestly; 3M LME copper trades on either side of USD 10,000/t.
TotalEnergies (TTE FP) CEO said the Co. is expected to complete the first phase of the solar power project in Iraq within the next year, while the Co. is to complete the first stage of utilising the by-produced gas from Iraq’s project during 2025 with a production capacity of 50mln cubic feet, according to Reuters.
Turkey is in talks with ExxonMobil (XOM) over a multi-billion dollar LNG deal, according to FT.

Geopolitics: Middle East

"Al-Arabiya sources: An Israeli delegation will head to Cairo tomorrow and the plan is indirect negotiations with Hamas"
UKMTO said it has receives a report of an incident 54NM Northwest of Yemen's Mokha
Egypt offered a new proposal for a truce between Israel and Hamas in which some Israeli hostages would be exchanged for Palestinian prisoners and a three-week ceasefire, while Egyptian officials said Israel helped create the proposal and would enter longer-term discussions once Hamas releases the first group of 20 hostages over the truce period, according to WSJ.
Hamas said it received Israel’s official response to its position over ceasefire talks and will study the proposal before submitting its response. It was later reported that a Hamas official told AFP that there were no major issues in the group’s remarks on the truce proposal, while it was separately reported that a Hamas delegation is to visit Cairo on Monday for ceasefire talks, according to an official cited by Reuters.
Israel’s Foreign Minister said Israel will suspend the planned operation in Rafah if Hamas agrees to a hostage deal and stated the release of hostages is their top priority. It was also reported that the Israeli military said the amount of aid going into Gaza will scale up in the coming days.
Palestinian President Abbas said Israel will go into Rafah in the next few days and the US is the only country that can stop Israel from attacking Rafah, while he is worried that Israel will try to push Palestinians out of the West Bank after it is done with Gaza, according to Reuters.
Medical official said at least 13 Palestinians were killed in Israeli airstrikes on three houses in Rafah in southern Gaza, according to Reuters.
US President Biden spoke with Israeli PM Netanyahu on Sunday and reaffirmed his ironclad commitment to Israel’s security, as well as stressed the need for progress in aid deliveries to be sustained and enhanced in full coordination with humanitarian organisations. Furthermore, they discussed Rafah and Biden reiterated his clear position, according to the White House cited by Reuters.
White House national security spokesperson Kirby said Israel assured the US that they won’t go into Rafah until the US has a chance to share its perspectives and concerns, while he added Israelis have started to meet the aid commitments that US President Biden asked them to meet. It was separately reported that US Secretary of State Blinken will travel to Jordan and Israel following Saudi Arabia, according to Reuters.
France’s Foreign Minister said to make proposals in Lebanon to stabilise the zone and prevent a war between Hezbollah and Israel, according to Reuters.
UKMTO said it received reports of an incident 177 nautical miles southeast of the Port of Nashtoon located in eastern Yemen on Saturday night which involved a small boat that approached a ship, although there was no harm or damage and the ship carried on its journey, according to IRNA.

OTHER

US intelligence found that Russian President Putin did not directly order Navalny’s death in February, according to WSJ. US intelligence report does not dispute Putin’s culpability for the death of Navalny but believes he probably did not order it at that moment, while a Kremlin spokesperson called the intelligence report empty speculation.
Russian Foreign Ministry said there will be a severe response if Russian assets are touched and it is a pity that some in the West do not understand it, while it was also reported that Russia’s Kremlin said there will be endless legal challenges if Russian assets are seized.
Russia’s Kremlin said there are no grounds to hold any peace talks with Ukraine given Kyiv’s official refusal to conduct such talks with Russia.
Kyiv’s top general said fighting on the eastern front worsened and Ukrainian troops had fallen back in three places.
North Korea’s Foreign Ministry said it will make stern and decisive choices in response to the US using human rights for anti-North Korean behaviour, while it added that the US envoy on North Korean human rights is motivated politically and is considered political provocation, according to KCNA.

US Event Calendar

10:30: April Dallas Fed Manf. Activity, est. -11.3, prior -14.4

DB's Jim Reid concludes the overnight wrap

I wrote some of this while supervising my three kids doing their homework this weekend. The 6yr old twins had fractions and adverbs, with the latter being pretty challenging. They had a whole story where they had to insert missing adverbs. It was incredibly, astonishingly, extremely, exceedingly, enormously, supremely, difficult. So if you see a few stray adverbs below it's because I've been swimming in them this weekend.

With just two days left of a difficult April for markets, last week actually saw the best week for the S&P 500 (+2.67%) and NASDAQ (+4.23%) since November as earnings generally gave markets a boost even if the US inflation data was net net worrying. You’ll see our full recap of last week towards at the end but looking forward first it's an exceptionally busy week of important events.

The FOMC conclusion on Wednesday is the obvious highlight (full preview below) but we also have payrolls on Friday to look forward to. DB expect a more hawkish-leaning Fed this week. While our economists expect the Committee will maintain an easing bias (preview here), they do expect the statement and press conference to echo Chair Powell’s view that firmer inflation prints suggest it will take longer to gain confidence about disinflation. The press conference will be fascinating to see the nuances in Powell’s responses as he justifies a likely unchanged easing bias, even if the rhetoric is more hawkish, in the face of rising inflation.

Other key data in the US includes consumer confidence tomorrow, the manufacturing ISM, JOLTS, and ADP on Wednesday, and the services ISM on Friday. We also see the latest US Treasury quarterly refunding announcement on Wednesday, after the borrowing estimate is due today. This was a big pivot point for global markets back in August (negative) and October (positive) but since then a commitment not to increase auction sizes has reduced its importance. Our strategists preview the event and detail their estimates here. Finally in the US, earnings season maintains its peak pace as 174 report in the S&P versus 180 last week with Amazon (Tuesday) and Apple (Thursday) the obvious highlights. Meanwhile, 66 Stoxx 600 companies will report this week.

The day-by-day calendar at the end as usual gives a more detailed diary of the main events this coming week.

Asian equity markets have started the week on a positive note extending Friday’s rally on Wall Street. Chinese stocks are the best performers across the region with the Hang Seng (+1.93%) leading gains followed by the CSI (+1.63%) and the Shanghai Composite (+0.94%), buoyed by a rally in property stocks after embattled property developer CIFI Holdings reached a solution with bondholders on a plan to restructure its offshore debt. Elsewhere, the KOSPI (+0.91%) is also trading higher while stock markets in Japan are closed for a public holiday, also meaning no cash Treasury trading as yet. S&P 500 (+0.25%) and NASDAQ 100 (+0.34%) futures are edging higher.

In FX, the Japanese yen remained under pressure as it weakened past 160 earlier (from just below 158 at the open), its weakest level since 1990. This was in thin holiday trading and it's subsequently bounced back to below 156. So some astonishing moves this morning!

Over the weekend, China’s industrial profits fell -3.5% in March (YoY) and have now risen + 4.3% y/y in the first quarter, significantly down from a +10.2% expansion in the January-February period, thus still pointing to challenges for China even with a better outlook of late.

Recapping last week now, the US March PCE inflation came in line with expectations on Friday at +0.3% month-on-month, allowing markets to breathe a slight sigh of relief compared to the strong Q1 PCE deflator in the GDP data the day before. In year-on-year terms, the March PCE release came in just above expectations at +2.7% (vs 2.6% expected). The month-on-month core print was also in line with consensus at +0.3%, and at +2.8% year-on-year (vs 2.7% expected). The March data also pointed to a still vibrant US consumer, with real personal spending up +0.5% on the month (vs +0.3% expected).

With the PCE print largely in line with expectations, US equities rallied, with the S&P 500 rising +1.02% on Friday. A strong performance by the tech giants following strong Q1 results from Alphabet (+10.22%) and Microsoft (+1.82%) the previous evening saw the Magnificent Seven post their best day in two months (+3.27%). After three weeks of consecutive losses, both the S&P 500 (+2.67%) and the NASDAQ (+4.23%) saw their largest weekly gains since last November. Even as technology spearheaded the rally, the gains were broad-based, as the Russell 2000 index rose +2.79% (and +1.05% on Friday). European equities also advanced, with the STOXX 600 up +1.74% last week (and +1.11% on Friday). The FTSE 100 hit another record high after gaining +3.09% (and +0.75% on Friday).

Friday’s PCE print did little to reverse expectations for fewer Fed rate cuts this year. The number of cuts anticipated by the December meeting was unchanged on Friday (+0.1bps) but down -4.9bps over the week to 34bps, with the decline coming on Thursday following the inflation data within the Q1 GDP release. US Treasuries did see a moderate rally on Friday, as the 2yr and 10yr yields fell -0.3bps and -4.0bps respectively. However, this was insufficient to erase earlier losses with Treasury yields seeing their highest weekly close year-to-date, up +0.9bps to 4.996% for 2yrs and +4.3bps to 4.665% for 10yrs. The story was similar in Europe, as investors dialled back their expectations of ECB rate cuts by -2.2bps on the week to 72bps. This saw 10yr bund yields rise +7.5bps on the week to 2.57%, despite a sizeable recovery on Friday (-5.5bps).

Meanwhile in Asia, the major story last week was the weakening of the Japanese yen. With the Bank of Japan leaving interest rates on hold, alongside restrained commentary on the exchange rate by policymakers, the yen fell -2.33% (and -1.78% on Friday) to 158.33 per dollar, its weakest level since 1990. Against this backdrop, the Nikkei 225 rose +2.34% (and +0.81% on Friday).

Finally in commodities, copper secured its fifth consecutive week of gains after rising +1.48% (and +1.03% on Friday) on the back of growing demand for clean transition metals and tight supply. On the other hand, gold ended its five-week streak of consecutive gains, falling -2.26% (+0.39% on Friday) amid easing geopolitical fears.

Tyler Durden Mon, 04/29/2024 - 08:23

After Overnight Collapse To 34-Year-Lows, Yen Surges In Apparent 'Intervention'

April 29, 2024 - 8:05am

After Overnight Collapse To 34-Year-Lows, Yen Surges In Apparent 'Intervention'

The Japanese Yen strengthened sharply overnight after crashing to its lowest level since April 1990, breaking 160/USD.

The FT reports that traders in Hong Kong, Australia and London said it was “highly likely” that the recovery was due to Japan’s finance ministry selling dollar reserves and purchasing the Japanese currency for the first time since late 2022.

While analysts suggested the size and speed of the jump smacked of intervention, some traders questioned that conclusion and said Japanese banks sold dollars for customers as it rallied.

Japan’s top currency official, Masato Kanda, chose to keep investors guessing by declining to comment.

"It is difficult to ignore the bad effects that these violent and abnormal movements [in currencies] will cause for the nation's economy," Kanda told reporters on Monday.

Dow Jones reported authorities stepped in to support the yen, citing people familiar with the matter.

It is unlikely to be the last time Japan intervenes in the currency market this year, given that U.S. interest rates are likely to remain high, said Alvin Tan, head of Asia foreign-exchange strategy at RBC Capital Markets.

"We will have a tug of war going forward between Tokyo and the market," he said.

* * *

The yen crashed in early Asia trading, tumbling to match is exact lows from April 1990 in what is being blamed on a 'fat finger' trade or multiple barrier-option trades being triggered, by sources that have literally no idea.

The plunge extended Friday's big drop which followed BoJ Governor Ueda's apparent lack of interest in doing anything about the yen's decline, claiming it had 'no impact' on the currency's inflation picture.

“Currency rates is not a target of monetary policy to directly control,” he said.

“But currency volatility could be an important factor in impacting the economy and prices. If the impact on underlying inflation becomes too big to ignore, it may be a reason to adjust monetary policy.”

In fact, policymakers have repeatedly warned that depreciation won’t be tolerated if it goes too far too fast.

Finance Minister Shunichi Suzuki reiterated after the BoJ meeting that the government will respond appropriately to foreign exchange moves.

Potential triggers for interventions are public holidays in Japan on Monday and Friday next week, which bring the risk of volatility amid thin trading.

“Should the yen fall further from here, like after the BOJ decision in September 2022, the possibility of intervention will increase,” said Hirofumi Suzuki, chief currency strategist at Sumitomo Mitsui Banking Corp.

“It is not the level but it’s the speed that will trigger the action.”

Well currency volatility is what he has now...

Source: Bloomberg

The sudden drop pushed USDJPY perfectly to its April 1990 highs to the tick...

Source: Bloomberg

The currency pain was all focused in the Japanese market as EUR and GBP strengthened against the USD...

Source: Bloomberg

Perhaps even more notably, the yen puked relative to the Chinese yuan, hitting 22 for the first time since 1992 and putting further pressure on Beijing to potentially do something...

Source: Bloomberg

The question is, of course, what will Japan's MoF/BoJ do now - if anything as their recent excuses about 'velocity' or some such spin are now out of the window after a 6-handle standalone surge in their currency in a few short days (when the rest of the world's currencies are not).

“Authorities may say they don’t target levels per se, but they do pay close attention to the trend and the rate of change and current levels suggest they have to act soon or risk facing a credibility crisis,” said Chris Weston, head of research at Pepperstone Group Ltd.

“The FX market is almost taking them on like the bond vigilantes of old.”

Specifically as SocGen's FX strategist Kit Juckes noted on Friday, the yen's decline is becoming disorderly, which points to a final, potentially sharp, decline before it finds a floor.

However, as we detailed last week, the problem with intervention is that once the genie is out of the bottle… it’s hard to put it back in.

In other words, the onus should be on the BOJ to step in with a much more hawkish move than the market expects.

As Viraj Patel from Vanda Research goes on to note that "we’re at a stage where MoF/BoJ have no choice but to intervene. The best way would be for BoJ to hike 25bps this week. It’s not about the macro anymore (BoJ should’ve normalized policy faster last year)."

Instead, what is going on is that Japan's disastrous handling of its currency has evolved into a game between speculators and officials: Specs are short yen for good fundamental reasons (carry). At this stage, a “surprise” hike to send a signal to markets that they are concerned about ongoing FX weakness (and don’t test us) would be less costly to the economy vs. a further devaluation in the yen. It also adds an additional level of uncertainty to the BoJ/MoF reaction function - which speculators (long carry trades) don’t like.

Meanwhile, FX intervention - which unfortunately looks to be the MoF/BoJ’s preferred route based on recent history - is not even a short-term fix anymore. USD/JPY dips would be quickly bought into based on recent market chatter. A hike goes a bit further towards solving the root cause of yen weakness - even it’s only a marginally better option.

However, not everyone is convinced intervention is imminent.

In a note late last week, Deutsche Bank says the currency's decline is warranted and finally marks the day where the market realizes that Japan is following a policy of benign neglect for the yen.

We have long argued that FX intervention is not credible and the toning down of verbal jawboning from the finance minister overnight is on balance a positive from a credibility perspective. The possibility of intervention can't be ruled out if the market turns disorderly, but it is also notable that Governor Ueda played down the importance of the yen in his press conference today as well as signalling no urgency to hike rates. We would frame the ongoing yen collapse around the following points.

Yen weakness is simply not that bad for Japan. The tourism sector is booming, profit margins on the Nikkei are soaring and exporter competitiveness is increasing. True, the cost of imported items is going up. But growth is fine, the government is helping offset some of the cost via subsidies and core inflation is not accelerating. Most importantly, the Japanese are huge foreign asset owners via Japan’s positive net international investment position. Yen weakness therefore leads to huge capital gains on foreign bonds and equities, most easily summarized in the observation that the government pension fund (GPIF) has roughly made more profits over the last two years than the last twenty years combined.

There simply isn't an inflation problem. Japan's core CPI is around 2% and has been decelerating in recent months. The Tokyo CPI overnight was 1.7% excluding one-off effects. To be sure, inflation may well accelerate again helped by FX weakness and high wage growth. But the starting point of inflation is entirely different to the post-COVID hiking cycles of the Fed and ECB. By extension, the inflation pain is far less and the urgency to hike far less too. No where is this more obvious than the fact that Japanese consumer confidence are close to their cycle highs.

Negative real rates are great. There is a huge attraction to running negative real rates for the consolidated government balance sheet. As we demonstrated last year, it creates fiscal space via a $20 trillion carry trade while also generating asset gains for Japan's wealthy voting base. This encourages the persistent domestic capital outflows we have been highlighting as a key driver of yen weakness over the last year and that have pushed Japan's broad basic balance to being one of the weakest in the world. It is not speculators that are weakening the yen but the Japanese themselves.

The bottom line, Deutscxhe concludes, is that for the JPY to turn stronger the Japanese need to unwind their carry trade. But for this to make sense the Bank of Japan needs to engineer an expedited hiking cycle similar to the post-COVID experiences of other central banks. Time will tell if the BoJ is moving too slow and generating a policy mistake. A shift in BoJ inflation forecasts to well above 2% over their forecast horizon would be the clearest signal of a shift in reaction function. But this isn’t happening now.

The Japanese are enjoying the ride.

Finally, it goes without saying that the only true circuit-breaker for yen weakness is lower US yields/weak US macro, which is unlikely until the election if, as so many now speculate, there has been a directive by the Biden admin to make the economy look as good as possible ahead of the elections, even if that means manipulating the data to a grotesque degree.

One added complexity for MoF/BoJ is that their two options for tackling yen weakness indirectly adds upward pressure to global rates/yields. They’re caught between a rock and a hard place… and speculators know (enjoy) this.

And finally there is China: the longer BOJ/MoF does nothing to curb the collapse of the yen, a move which is seen a pumping up the country's exporting base at the expense of other mercantilist nations such as China, the higher the probability Beijing will retaliate against Tokyo by devaluing its own currency. At which point all hell will break loose.

But, one way or another, as Goldman noted, it's crunch time for USDJPY.

Tyler Durden Mon, 04/29/2024 - 08:05

Who Has Savings In This Economy?

April 29, 2024 - 6:55am

Who Has Savings In This Economy?

Two full years of inflation have taken their toll on American households. In 2023, the country’s collective credit card debt crossed $1 trillion for the first time. So who is managing to save money in the current economic environment?

Visual Capitalist's Pallavi Rao visualizes the percentage of respondents to the statement “I have money leftover at the end of the month” categorized by age and education qualifications. Data is sourced from a National Endowment for Financial Education (NEFE) report, published last month.

The survey for NEFE was conducted from January 12-14, 2024, by the National Opinion Research Center at the University of Chicago. It involved 1,222 adults aged 18+ and aimed to be representative of the U.S. population.

Older Americans Save More Than Their Younger Counterparts

General trends from this dataset indicate that as respondents get older, a higher percentage of them are able to save.

Note: Percentages are rounded and may not sum to 100.

Perhaps not surprisingly, those aged 60+ are the age group with the highest percentage saying they have leftover money at the end of the month. This age group spent the most time making peak earnings in their careers, are more likely to have investments, and are more likely to have paid off major expenses like a mortgage or raising a family.

The Impact of Higher Education on Earnings and Savings

Based on this survey, higher education dramatically improves one’s ability to save. Shown in the table below, those with a bachelor’s degree or higher are three times more likely to have leftover money than those without a high school diploma.

Note: Percentages are rounded and may not sum to 100.

As the Bureau of Labor Statistics notes, earnings improve with every level of education completed.

For example, those with a high school diploma made 25% more than those without in 2022. And as the qualifications increase, the effects keep stacking.

Meanwhile, a Federal Reserve study also found that those with more education tended to make financial decisions that contributed to building wealth, of which the first step is to save.

Tyler Durden Mon, 04/29/2024 - 06:55

EU Begins 'Tank Of Future' Development After Russia Annihilates Leopard 2 Tanks In Ukraine

April 29, 2024 - 5:45am

EU Begins 'Tank Of Future' Development After Russia Annihilates Leopard 2 Tanks In Ukraine

German Defense Minister Boris Pistorius and his French counterpart, Sebastien Lecornu, announced Friday the two countries will produce the next-generation battle tank to replace Germany's Leopard 2 tank that will land on modern battlefields in the late 2030s or early 2040s.

"It's not about making a Leopard 3 or 4; it's about designing something brand new," German defense minister Pistorius said, as quoted by Euronews.

Pistorius said the next-gen main battle tanks will be equipped with artificial intelligence and will not require "human pilots."

French defense ministry Lecornu said KNDS, Rheinmetall, Thales, and other defense manufacturers will begin work on the 'tank of the future'—formally known as the Main Ground Combat System (MGCS).

Developing a next-generation tank comes as there have been countless reports that Russian armed forces have destroyed Leopard 2 tanks operated by the Ukranian Army.

Confirmed: Russians Just Destroyed Their First Leopard 2 Tank, Bradley Fighting Vehicles

And this...

Ukraine's Leopard 2 Tanks Are Nearly All Destroyed Or Broken

Germany and France are also pushing to build the next-generation fighter jet, called the Future Combat Air System, which is set to enter service in 2040, along with integrated drone fleets.

The trend is that a world emerging into a multi-polar state has sparked a surge in military spending worldwide.

A new Stockholm International Peace Research Institute report detailed how global military expenditures hit a record high of $2.44 trillion in 2023.

We've diligently noted that the defense sector is in a bull market:

Global defense stocks, tacked by MSCI, have surged to record highs.

The chaos in the world is not going away. Everything is up for grabs.

Tyler Durden Mon, 04/29/2024 - 05:45

A Compound Discovered On Easter Island Extends Life, Combats Alzheimer’s

April 29, 2024 - 5:00am

A Compound Discovered On Easter Island Extends Life, Combats Alzheimer’s

Authored by Flora Zhao via The Epoch Times (emphasis ours),

Scientists are still uncovering the secrets of a compound discovered 50 years ago on Easter Island. Produced by bacteria there, rapamycin appears to be a powerful life-extender and may be a transformative treatment for age-related diseases.

(Illustration by The Epoch Times)

In 2009, the National Institute on Aging Interventions Testing Program (ITP) published a groundbreaking study indicating that rapamycin extended the lifespan of mice by 9 percent to 14 percent. Experiments conducted by various research institutions worldwide have further corroborated these findings or have found the compound to have significantly greater life-extending effects.

The drug also exhibits rejuvenating effects. For example, it can stimulate hair regrowth and prevent hair loss in a short period. It reduces proteins related to aging in the skin and increases collagen. The drug has even shown positive effects in treating age-related diseases such as Alzheimer’s disease, as well as diabetes and heart and muscle conditions.

While the drug label for rapamycin currently does not claim to “extend human life,” some people with a strong desire for longevity have already sought this medication from their doctors and take it regularly in small doses.

A study published in 2023 in GeroScience employed a questionnaire to survey 333 adults taking rapamycin off-label, most under the supervision of a physician. The vast majority (95 percent) reported taking rapamycin for “healthy longevity/anti-aging” reasons, almost 19 percent for preventing dementia, and a few for “cardiovascular disease” or “cancer.” However, no one reported taking the drug for its original approved use: prevention of organ transplant rejection.

Easter Island’s Hidden Treasure

“Rapamycin was not made in a laboratory. It is not a synthetic molecule. It is actually from nature,” Dr. Robert Lufkin, adjunct clinical professor at the University of Southern California Keck School of Medicine, told The Epoch Times.

In December 1964, upon hearing about the Chilean government’s plans to build an international airport on Easter Island, a team of 40 people led by Canadian scientists arrived on the island and stayed for three months. Their objective was to explore the island’s population and natural environment before it became exposed to the outside world.

During this period, they observed that the local indigenous people—who walked barefoot—never contracted tetanus, leading the researchers to suspect that some substance in the soil provided protection. Subsequently, in the laboratory, scientists found just that. This substance was a metabolite of Streptomyces hygroscopicus that possessed antibacterial properties.

Rapamycin was extracted from soil collected on Easter Island. Easter Island is called Rapa Nui in the native Polynesian language. (Pablo Cozzaglio/AFP via Getty Images)

This substance starves fungi and things around them and prevents the organisms from growing, Arlan Richardson, professor of biochemistry and physiology at the University of Oklahoma Health Sciences Center, told The Epoch Times.

In the local indigenous language, Easter Island is called Rapa Nui. Therefore, the substance discovered in the island’s soil was named “rapamycin.”

Early Uses

In addition to rapamycin’s antibacterial properties, scientists observed that it could also inhibit the growth of animal cells. Rapamycin’s specific target is a cellular protein essential to living organisms called TOR, which acts as a “switch” for cell growth.

“It (TOR) is arguably one of the most important biological molecules ever known,” said Dr. Lufkin, as it fundamentally affects metabolism. It is worth mentioning that TOR derives its name directly from rapamycin. TOR stands for “target of rapamycin,” while mTOR, used in many studies, stands for the “mechanistic target of rapamycin.”

Illustration of the immunosuppressant drug rapamycin (red), also known as sirolimus. It is an inhibitor of mTOR (blue). (Juan Gaertner/Science Photo Library/Getty Images)

TOR essentially does one thing: It senses the presence of nutrients. When nutrients are available, TOR signals for cell growth. Conversely, when nutrients are scarce, cells stop growing and initiate repair. “And both of those modes are healthy and necessary for life,” explained Dr. Lufkin.

Rapamycin was initially used as an immunosuppressant. Higher doses of rapamycin (3 milligrams per day) were found to reduce the activity of immune cells, thereby suppressing the immune system’s rejection of foreign organs. In 1999, the U.S. Food and Drug Administration (FDA) approved rapamycin for kidney transplant patients.

Due to its ability to inhibit cell growth, rapamycin was later used as an anti-cancer drug. In 2007, the rapamycin analog temsirolimus was first approved for treating kidney cancer. Dr. Lufkin noted that rapamycin is effective against multiple types of cancer, with the FDA having approved rapamycin for use as a primary or adjunct therapy for eight types.

There is a connection between the immunosuppressive and anti-cancer effects of rapamycin. “It appears to have a positive effect on cancer control in patients who have transplants—for example, heart transplants,” said Dr. Lufkin. Due to immune suppression, “the most common cause of death after the transplant is not organ rejection, but it is actually a cancer.”

Mayo Clinic researchers conducted a controlled trial, tracking over 500 heart transplant recipients for 10 years. They found that patients using rapamycin for anti-rejection had a 66 percent lower risk of developing malignant tumors than those using another anti-rejection medication (calcineurin inhibitor).

Rapamycin’s Longevity Effects

Rapamycin’s primary action is to inhibit mTOR, which can induce a fasting-like state in cells, triggering autophagy. This mechanism may contribute to its effects on longevity.

In simple terms, autophagy is the process by which cells recycle and remove their own waste and foreign materials, conserving energy for survival.

Mr. Richardson explained that mTOR sends growth signals to cells, which are crucial for children and young animals, aiding in bone growth, brain maturation, and other developmental processes. However, this signaling pathway may adversely affect older adults and mature animals. With age, mTOR can become overactive due to disease or oxidative stress—similar to constantly pressing the gas pedal while driving a car. This renders cells hyperfunctional, contributing to age-related diseases and even cancer.

'Environmental Pollutant' - How A Key Climate Agenda Tool Harms Endangered Species

April 29, 2024 - 3:30am

'Environmental Pollutant' - How A Key Climate Agenda Tool Harms Endangered Species

Authored by Donna Anderson via The Epoch Times (emphasis ours),

As the Biden administration expands its offshore wind projects as part of its goal to reach a carbon-free energy system, whales and other marine life may become collateral damage, according to new research.

(Illustration by The Epoch Times, Shutterstock, Getty Images)

Two independent studies measuring ocean wind turbine construction noise found that the sound emitted by vessels mapping the seafloor was significantly louder than estimated, and that noise protection for whales and other sea creatures during wind turbine pile driving doesn’t work.

Intense noise causes hearing loss in whales, other marine mammals, turtles, and fish, compromising their ability to navigate, avoid danger, detect predators, and find prey, according to scientific studies.

Robert Rand, an acoustics consultant with 44 years of experience, took underwater readings of the sonar survey vessel Miss Emma McCall off the coast of New Jersey. He also recorded acoustic readings of pile driving for Vineyards Wind 1, an offshore wind farm project under construction 15 miles south of Martha’s Vineyard.

In his pile-driving report, published March 28, Mr. Rand found that even the most advanced sound-dampening technologies didn’t adequately control harmful noise. The pounding was just as loud as seismic air gun arrays used for oil and gas exploration, long known to cause injury, hearing loss, and behavioral changes in fish and marine mammals.

Furthermore, the noise made by the construction vessel itself, which is not monitored, was almost as loud as the pile driving. Mr. Rand found that the standard formula used by the National Marine Fisheries Service to calculate how noise, over a period of time, affects a mammal’s hearing, significantly underestimates the sound levels experienced by dolphins and whales.

“These are real data,” Mr. Rand, who testified at a Congressional field hearing on January 20, told The Epoch Times. “I measured it. This is not a computer model. This is not a political press release. These are data.”

Many environmentalists fear that noise related to ocean wind farm construction is contributing to “unusual mortality events” affecting whales. From 2016 through April this year, 220 humpback whales have died, according to data collected by the National Oceanic and Atmospheric Administration (NOAA).

“Elevated humpback whale mortalities have occurred along the Atlantic coast from Maine through Florida,” since 2016, the NOAA states.

The NOAA also reported an “unusual mortality event” for North Atlantic right whales, in which 126 have died since 2017.

“The numbers have been decreasing, especially since 2017, when offshore operations really swung into gear,” Mr. Rand said.

“From my experience in noise control, that’s not a coincidence. Noise is an environmental pollutant. In human terms, it’s measured in life years lost.”

The North Atlantic Right Whale Consortium estimates 350 North Atlantic right whales exist in the world’s oceans today.

Pile-Driving Noise

On Nov. 2, 2023, Mr. Rand went out on a 29-foot sport fishing boat to the Vineyard Wind 1 construction site.

The completed wind farm project will comprise 62 wind turbines in the Atlantic Ocean, spaced one nautical mile apart. The project is estimated to provide power to more than 400,000 homes and businesses.

Giant wind turbine blades for the Vineyard Winds project are stacked on large racks in the harbor, in New Bedford, Mass., on July 11, 2023. At left is the Palmer Island Lighthouse. (Charles Krupa/AP Photo)

The offshore wind farm is owned by Copenhagen Infrastructure Partners of Denmark and Avangrid Renewables, part of the Spanish company, Iberdrola.

At the construction site in November 2023, Mr. Rand said an 874-foot crane ship called the Orion was using a massive hammer to pound a monopile foundation for a wind turbine into the seabed.

The monopile is a steel pipe 31 feet in diameter, 279 feet long, and weighs 1,895 tons, according to the manufacturer, EEW Special Pipe Constructions.

Vineyard Wind 1 implemented two sets of noise controls. The first is a “hydro sound damper,” which Mr. Rand said, is a vertical net in the water around the monopile that’s covered with foam or rubber blocks and balls.

The second is a “double bubble” curtain. These are two weighted hoses lying on the seafloor in concentric circles around the monopile. The radius is roughly 492 to 656 feet.

The hoses have holes in them, and compressed air from a support vessel is forced through the hoses, causing bubbles to rise to the surface. The bubbles are supposed to mitigate the sound pressure created by the pile driving.

“These are advanced techniques,” Mr. Rand said. “They aren’t used anywhere else.”

Unfortunately, the noise mitigation techniques don’t work, he said.

Mr. Rand dropped a research-grade, omnidirectional hydrophone into the water at six locations, starting at 4.10 nautical miles from the pile driving and moving closer to 0.57 nautical miles.

Analyzing the data, Mr. Rand found that even with sophisticated noise mitigation in place, the pile driving is as loud as multiple seismic air guns.

“People have been protesting and the government has been rigorously regulating seismic air gun arrays for years, if not decades, because of their sonic intensity and hazard for endangered species—for whales and other marine species,” Mr. Rand said.

“This pile driving is as loud as an array of air guns.”

Who's In Favor Of A Potential TikTok Ban?

April 29, 2024 - 2:45am

Who's In Favor Of A Potential TikTok Ban?

As part of a larger national security and foreign aid package, President Joe Biden on Wednesday signed into law legislation that forces TikTok parent ByteDance to divest the U.S. arm of its popular social media platform within 270 days or be banned from operating in the United States. The “Protecting Americans from Foreign Adversary Controlled Applications Act” seeks to cut any ties between TikTok, its current parent company and the Chinese government, which allegedly abuses the platform to “surveil and influence the American public” in a way that poses a threat to national security.

As Statista's Felix Richter reports, compared to an earlier standalone bill that had passed the House in March but then failed to gain traction in the Senate, the newly passed bill extends the time given to ByteDance from 180 to 270 days, with the possibility of a 90-day extension if the president finds that significant progress towards a “qualified divesture” has been made. This means that TikTok’s Chinese owner now has until after the U.S. presidential election to find a suitable buyer, turning the question of whether or not TikTok should be divested or banned into a potential election issue.

Sure enough, former president Donald Trump told young voters to remember that “crooked Joe Biden is responsible for banning TikTok,” when they vote in November, omitting the fact that he tried to ban TikTok himself during his time in office.

And while Trump was right in his view that young Americans would be more likely to oppose legislation against TikTok, he ignored the fact that the vast majority of Republican voters is in favor of a potential ban. According to a recent YouGov/The Economist survey, two thirds of Republicans strongly or somewhat approve the forced divesture/potential ban of TikTok versus just 20 percent who oppose such legislation. Democratic voters are almost evenly split on the issue, with 40 percent of respondents in favor of legislative action against TikTok and its parent company.

Looking at different age groups, the trend is clear: the younger the respondents the more likely they are to oppose a potential TikTok ban, which is easily explained by the fact that young people are much more likely to be TikTok users.

You will find more infographics at Statista

So what happens next?

If ByteDance fails to find a suitable buyer within the given timeframe, it would be unlawful for app stores and web hosting companies to distribute the app in the United States.

Finding a buyer will be hard though, as any company with an interest and deep-enough pockets to acquire a platform of TikTok's stature will almost certainly face intense scrutiny from the FTC for antitrust reasons.

It's also unlikely that ByteDance will go down without a fight.

"Rest assured, we aren't going anywhere," TikTok CEO Shou Chew said in a video posted on Wednesday, claiming that the ultimate goal of the legislation is to ban TikTok, not sell it.

"We are confident and we will keep fighting for your rights in the courts," he said, addressing the platform's 170 million U.S. users directly.

Tyler Durden Mon, 04/29/2024 - 02:45

Ukraine's Top Five Challenges Are Unsolvable

April 29, 2024 - 2:00am

Ukraine's Top Five Challenges Are Unsolvable

Authored by Andrew Korybko via Substack,

It’s beginning to dawn on most Westerners that the US’ long-delayed aid to Ukraine isn’t all that it was hyped up to be and will only at most temporarily slow down the pace of Russia’s increasingly rapid advances. The conflict’s tempo has gradually intensified as Russia exploited Ukraine’s disastrous counteroffensive to regain the military-strategic initiative. Ukraine’s problems are immense and multifaceted, but they’re all connected one way or another to the five following factors:

1. Russia’s Military-Industrial Complex Continues Outproducing NATO’s

Russia won the “race of logistics”/“war of attrition” with NATO long ago and that’s why it continued gaining ground over the past 18 months. The sanctions failed to bankrupt the Kremlin, required resources for production remain readily available, and sabotage had no impact on the assembly lines. Not only has NATO been unable to stop Russia’s military-industrial complex, but it couldn’t ramp up its own during this time either, thus creating an unbridgeable gap that weakens Ukraine more by the week.

2. Ukraine Is Struggling To Replenish Its Depleted Military Ranks

NATO’s loss in the abovementioned military-industrial competition with Russia, the consequent failure of Ukraine’s counteroffensive, and Russia’s subsequent on-the-ground gains combined to scare Ukrainian men away from joining the armed forces and helping to replenish their depleted ranks. Without enough soldiers, Ukraine can’t confidently hold off Russia’s advances, thus risking an impending collapse along the front. At the end of the day, it’s just a numbers game, and Ukraine’s continue trending downward.

3. Less Equipment & Troops Mean More Difficulty Building New Defenses

The pace with which Russia has recently gained ground in Donbass is stressing Ukraine’s existing defensive lines like never before, thus compelling it to build newer ones further behind the front lines. Although Zelensky demanded this be done late last year, little progress has been made due to the lack of equipment and troops for holding off the Russian advance while simultaneously accomplishing this task. The breakthrough that the Ukrainian Intelligence Committee warned about is now more likely than ever.

4. Political Instability Is Still A Damocles’ Sword Hanging Over Ukraine

The Committee also warned in their same message from February that political unrest might explode next month around the time that Zelensky’s term expires on 21 May. They of course claimed that Russia would be behind it, which he also preconditioned his partners to falsely believe late last year, but this would actually be a genuine response to growing problems. Authoritarianism, corruption, forcible conscription, serious economic troubles, and the lack of a realistic endgame all enrage Ukrainians.

5. Ukraine Continues Thinking That It Knows Better Than The US

The Washington Post’s two-part post-mortem report on last summer’s failed counteroffensive revealed that one of the reasons why it flopped was because Ukraine refused to listen to the US’ advice. This problem is attributable to Zelensky and most recently took the form of him ordering his forces to attack Russian energy infrastructure in defiance of the US at the expense of more tactically significant targets. It’s actually the US’ own fault, though, since their media convinced him that he was a “god among men”.

* * *

These unsolvable challenges have converged to create a full-fledged crisis for Ukraine that Commander-in-Chief Syrsky is unable to resolve, which is why he candidly informed Ukraine’s partners that “the difficult operational and strategic situation…has a tendency to get worse.” Unless Ukraine agrees to demilitarize the regions still under its control east of the Dnieper and turn them into a buffer zone, the front might collapse by summertime, which could either lead to capitulation or a NATO intervention.

Tyler Durden Mon, 04/29/2024 - 02:00

US Space Force General Says China's Military Developing Space Assets At "Breathtaking Speed"

April 29, 2024 - 12:05am

US Space Force General Says China's Military Developing Space Assets At "Breathtaking Speed"

Authored by Frank Fang via The Epoch Times,

Gen. Stephen Whiting, commander of U.S. Space Command, recently warned about China’s “breathtakingly fast” development of space military capabilities, following his trips to South Korea and Japan.

“We are seriously focused at U.S. Space Command on our pacing challenge, which is the People’s Republic of China,” Gen. Whiting told reporters during a call from Japan on April 24.

“The People’s Republic of China is moving at breathtaking speed in space, and they are rapidly developing a range of counter-space weapons to hold at risk our space capabilities,” he added.

“They’re also using space to make their terrestrial forces—their army, their navy, their marine corps, their air force—more precise, more lethal, and more far-ranging.”

Gen. Whiting was on his first Indo-Pacific trip after becoming the head of U.S. Space Command in January, succeeding Army Gen. James Dickinson. During his trip, he met with top military leaders from South Korea and Japan, including Adm. Kim Myung-Soo, chairman of South Korea’s Joint Chiefs of Staff, and Japanese Defense Minister Minoru Kihara.

One particular concern was the number of Chinese satellites in orbit, Gen. Whiting said.

“Over the last six years, they have tripled the number of intelligent surveillance and reconnaissance satellites on orbit, and they have used their space capabilities to improve the lethality, the precision, and the range of their terrestrial forces,” he said.

“And so that obviously is a cause for concern and something that we are watching a very, very closely.”

China’s satellite fleet stood at 359 systems as of January, according to his prepared remarks for a hearing of the Senate Armed Service Committee in February. He also noted that Beijing is developing hypersonic glide vehicles along with other advanced space weaponry to “overcome U.S. traditional missile warning and ballistic missile defense systems.”

China’s ambitions with regard to the Moon are also among Space Command’s concerns.

“We’ve seen the announcements of China’s ambitions to go to the Moon. And those appear to be exploratory and scientific on the surface, but the Chinese aren’t very transparent with what they do in space,” he said.

“And so we hope there’s not a military component to that, but we would certainly welcome more transparency.”

A U.S. military report published in January warned that China and Russia are putting up dual-use satellites in space while hiding their military applications. One example is a Chinese satellite equipped with a giant robotic arm, which could be used to grapple other satellites in the future.

China is aiming to put its astronauts on the moon by 2030. Pakistan, South Africa, Belarus, and Nicaragua are among a group of nations that have signed up for a planned moon base led by China and Russia. The moon project is officially known as the International Lunar Research Station.

Gen. Whiting said he visited Japan’s Space Operations Group and emphasized the importance of the two nations working together in space.

“Their focus on space domain awareness along with ours to keep track of those threats in space that we see—and many of those are emanating from China—has put an impetus on us developing improved space domain awareness capability,” he said.

Japan is working to bring on board a deep-space radar, Gen. Whiting said, adding that the radar will benefit both nations once it archives initial operational capability.

“We expect that will provide both of our countries an enhanced understanding of what China is doing in space,” he said.

Japan and the United States are also partners in launching new satellites that will be used to conduct space domain awareness missions, according to Gen. Whiting.

In November last year, the United States, Japan, and South Korea agreed on a mechanism to share missile warning data to better track North Korea’s missile launches. The mechanism went into effect in December.

“We need to continue the excellent work in the trilateral agreement between the United States, the Republic of Korea, and Japan to share missile warning information so that that all three countries fully understand anytime North Korea launches a missile where that missile is headed, and we can provide warning to our national leadership, to our military forces, and to our populations,” Gen. Whiting said.

Tyler Durden Mon, 04/29/2024 - 00:05

Relentless Chinese Bond Rally Hints at Yuan Challenge Ahead

April 28, 2024 - 11:40pm

Relentless Chinese Bond Rally Hints at Yuan Challenge Ahead

By Charlie Zhu and Helen Sun, Bloomberg Markets Live reporters and strategists

Three things we learned last week:

1. China’s bond rally seems unstoppable amid a shortage of quality assets for investments. From government bonds to corporate debentures, traders keep hunting for yields in all maturities.

After pushing the yield on 30-year sovereign debt to the lowest since 2005, investors flocked to the notes issued by local government financing vehicles, once deemed as the riskiest instrument in Asia. That helped to drive LGFV companies’ borrowing costs to record lows.
In light of a decline in mortgage loans, long-term sovereign bonds become a good alternative for banks as long-term assets and provides support to the bond rally until the trend changes, said Becky Liu, head of Greater China macro strategy at Standard Chartered Plc.
As the central bank warned the market again about the potential risks in long-term bonds and pointed to signs of stabilizing economic growth, funds rotated out of the back-end of the curve. The yield on two-year sovereign notes slid to the lowest level since mid-2020. That widened its gap with US Treasury to about 317 basis points, the biggest ever.

2. Market speculation about a devaluation of the yuan emerged. To investors onshore, this is an unlikely scenario given the authorities’ emphasis on maintaining stability, but some offshore traders see signs that the pressure is building.

In addition to the record interest rate gap, China’s stockpiling of commodities including gold and copper has prompted conjecture that policymakers may weaken the yuan in a one-off move.
The central bank has been using the daily reference rate to limit the depreciation of the yuan, effectively making it one of the best-performing emerging-market currencies this month. However, the steady fixing kept the spot exchange rate remain close to the 2% daily limit on the weaker side, spurring concerns over the sustainability of the strategy.

3. The US decision on TikTok may bring headwinds to stabilizing relations between Beijing and Washington. President Joe Biden has signed a bill forcing TikTok to find a new owner within a year or face a ban. The move, designed to cut off China’s access to the video app used by 170 million Americans, raised concerns that US firms with large exposure to China’s market, including Apple Inc. and Tesla Inc., may be retaliation targets.

While China’s response was rather restrained compared with last year, Foreign Minister Wang Yi warned his US counterpart Antony Blinken Friday that “negative factors” were rising between the world’s biggest economies.

Tyler Durden Sun, 04/28/2024 - 23:40

Stablecoin Volumes Are Tracking A Record $15 Trillion On Ethereum Alone

April 28, 2024 - 10:40pm

Stablecoin Volumes Are Tracking A Record $15 Trillion On Ethereum Alone

By Marcel Kasumovich, Deputy CIO of Coinbase Asset Management

Crypto sparked a renaissance in real-time payments. Sleepy you say? Time for a wake-up call – payment solutions are at the cutting edge of crypto’s integration into the mainstream, and it has plenty of competition.

“You’re probably used to crypto transactions, expecting me to bring out another guest for an eight-minute commentary while we wait for confirmation. But that’s old crypto. Are you ready for the new crypto world? Watch very closely…don’t blink…and that’s it,” John Collison exclaimed while illustrating a transaction on crypto rails with Stripe, a leading payment network that he co-founded. It was a seamless user experience, unlike the company’s initial foray into bitcoin in 2014.

Both PayPal and Stripe are now harnessing the power of stablecoins into their familiar user interfaces. This strategic move effortlessly brings users onto the blockchain – point, click, and it’s done. It’s the new trend, too. Traditional companies are bringing users onchain. There’s the crypto we see in noisy headlines and those working quietly to monetize the technology, like PayPal and Stripe. And they combine for a staggering 62% share of online payment software processing.

Digital payments may not seem like the exciting promise of the future. Yet, they are at the cutting edge. Digital payments are taking a rising share of a rapidly growing market as the world moves away from cash. Global payments are measured in the hundreds of trillions, and the digital payment market has risen from a modest $10 billion in 2017 to a projected $200 billion in 2030. We all live it, and the bulk of the transactions are small value, a coffee here, a donut there.

The process is so seamless that we seldom pause to consider how it actually works. Poorly, as it happens. Users expect to be able to pay whenever it’s convenient. Settling your restaurant bill, you don’t care that it’s outside of banking hours. You just want a simple form of payment – and that’s not cash. During the time between you tapping your card and accounts being settled, a middleman provides credit to make sure it all clears. And it’s expensive at 2.3% of transaction value.

One man’s profit margin is another’s invitation to disrupt. The typical narrative of disruption involves a wildly successful company losing its innovation edge, and missing market inflection points. Polaroid made the first instant camera in 1948 and dominated markets from floppy disks to film. Revenue peaked in 1991 and the company was unable to pivot to the new digital era, declaring bankruptcy ten years later. Learning from such histories, companies are now more adaptive.

We see this clearly in payments. Efficiency is precisely what brought PayPal and Stripe back to crypto. Transaction speeds have improved exponentially, now clocking at milliseconds, and costs have plunged to fractions of a cent. It helps that crypto tech fails fast – revealing resilience and weakness quickly. For instance, the resilience of USDC is now supporting its entry into the mainstream while Bored Apes Yacht Club weakness persists, down 90% off previous cycle highs.

Why now? Why not! Stablecoins are demonstrating their prowess as payment tools. Transaction volumes are tracking new highs this month, running at ~$15 trillion annualized on Ethereum alone (Figure 1). The efficiency gain is clear – instant and final settlements mean that your late-night coffee and donut purchases bypass the need for credit intermediaries. The middleman is dead, although living vibrantly through tools like Stripe that deliver users a familiar experience.

Users don’t care that it’s crypto. They want a great experience. Businesses don’t care, either. They are optimizing operating efficiency for profit. As crypto matures, so too does its value proposition. Crypto is the protagonist of real time payments and like any great innovation, it fosters competition. What’s unique with payments is that the competition comes from both private and government organizations, with regulatory stagnation working in favor of both.

Look beyond regions traditionally seen as leaders in innovation. The United States remains a beacon of creative talent behind innovation. But users are moving slowly, lagging in fintech adoption. After all, US users are accustomed to fees, don’t mind the service, and paying for points on expensive intermediation is a pastime. Real-time settlement systems adopted, like FedNow, are for business applications, not for consumers. It’s new players like India at the cutting edge.

The Unified Payment Interface (UPI), India’s real-time payment solution, was developed by the central bank in 2016. It integrates peer-to-peer real-time payments, directly competing with crypto technologies. Last year, UPI integrated 522 commercial banks covering 300 million active users and 117 billion transactions. Different from developed regions, intermediaries were not disrupted as these are largely new users. Cash was disrupted at the expense of the central bank.

Payments stand at the cutting edge of crypto’s future. User experience is paramount. Integrating into the regulatory mainstream will accelerate users onchain, just as service providers did for the internet. Crypto unlocked the real-time settlement innovation, but will face competition. It is a world that argues for being chain-agnostic. The data between Ethereum, Bitcoin and UPI will integrate to the highest of standards and security. That’s the road to making onchain the new online.

Tyler Durden Sun, 04/28/2024 - 22:40

Is 10% The New 1%

April 28, 2024 - 6:05pm

Is 10% The New 1%

By Peter Tchir of Academy Securities

I’ve been thinking a lot about one of the first lessons I was taught as a junior trader. We were warned that when something happens, say a piece of economic data comes out, and the market doesn’t respond as you expected, to cut positions and be very careful. It is a sign that “something” is wrong in how you are thinking.

On Friday, Treasuries rallied strongly on data that didn’t seem that great for rates. But the reality is (or so I believe) that Thursday’s sell-off was overdone, the “whisper” number was much worse than what came out, there are no longer term Treasury auctions, and the month-end index “extension” is usually good for bonds. So that doesn’t bother me much. What bothers me is that we had:

NVDA, a $2.2 trillion market cap company, drop 10% last Friday.
TSLA, a $500 billion market cap company, rise 10% on Wednesday.
META, a $1.1 trillion market cap company, drop 10% on Thursday.
GOOG, a $2.1 trillion market cap company, rise 10% on Friday.

Four "megacap" companies moved around 10% (or more) in a day!

I understand small cap companies do that. I understand that periodically something happens that is highly unusual – M&A, a scientific breakthrough, FDA approval, fraud, or something so unusual (but so profound) that a well-followed company gaps by that much. This was “just” earnings. Maybe I’m being overly dramatic? Maybe I haven’t adjusted my thought process to how large companies really are (probably part of the issue)? In any case it feels completely strange (even unnatural) for such large companies to move so much in a single session (let alone seeing it occur 4 times in 6 days)!

I am willing to believe that this is just my perception, and maybe it is more common than I perceive, but it is so different than how I’ve been thinking, that I have to respect it. As a “macro” strategist, I think about broad indices. Normally that is quite “macro,” but when some of the largest components of these indices (and associated ETFs) move so much more than I tend to think they can, then I need to question if it is still macro.

I can hear my first boss telling me that it is time to cut, sit back with less risk on the table, and think about what is going on. Maybe it is nothing. Maybe it is the new norm? Maybe 10% is the new 1%? Maybe moves close to 10% have always happened with market leaders and I just failed to notice that? I find it hard to believe, but knowing the T-Report audience, someone will likely send me a chart showing how common it is and that I need to “get over it.”

But I don’t think in terms of megacaps moving like that. To me, it reduces the macro, and is highly relevant as we have some other megacaps reporting this week. Should I assume 10% in either direction is a valid range? MSFT, for example, followed a more “normal” pattern. Some wild swings post-earnings in the after-market and pre-market. Stops getting triggered. Options at play. Digesting the first headlines, reading the details, listening to the call. All things that have conditioned me to see reasonably large moves in after-hours sometimes continuing into the next day of trading, typically ending with a meaningful change, but not a 10% change – especially for megacaps.

If this T-Report sounds like a broken record fixating on something that maybe isn’t important, I apologize, but it is bothering me a lot.

China

For the past 3 months, the CSI 300 (one measure of Chinese stocks) is up 8.5% versus 3.5% for the S&P 500 and 2% for the Nasdaq Composite.

One could look at this and say that:

The Chinese economy has turned the corner, helping stocks.
If China is doing better, it should help the global economy and sales into China, which should be good for all markets.

I remain firmly in the camp that:

Investors were too pessimistic on the Chinese market and positioning was too underweight or short. The unwind of structured notes sold to retail (that had leverage) was happening, but that has slowed.
It hasn’t taken much on the economic side to help the stock market (and there are some direct intervention techniques being used to help the stock market, without doing much for the economy). Less about the market.
Some of this is also linked to the performance of Chinese companies. Some are selling more products (Huawei phones in China, for example).

Since I think:

The reasons for the Chinese market rise have little to do with the economy (and I have recommended to clients to cut exposure here to FXI/KWEB).
The Threat of Made By China 2025 is real, so any rebound in China is not going to benefit global companies as much as it would have in prior years.

I have to caution against betting on global stocks because of what we are seeing in China.

Geopolitics

The pressure from global leaders calling on Israel to be cautious is mounting.

Iran, assuming they had hoped for a modicum of success with their 300+ missile and drone strike, is unlikely to do anything while they figure out why their attack was such a failure. See my base case in Should I Stay or Should I Go.

It would be a surprise if a geopolitical event caused problems for the markets this week, but then that is often the case. It is interesting that last weekend’s question of “Should I Stay or Should I Go” is as relevant as before, with some new factors added to the mix.

Bottom Line

Rates.

I am most comfortable with my view on rates.

We will get some “soft” data and Powell won’t be hawkish enough to convince the market that we are only going to get 1 cut (basically what is currently priced in). I do not see how we get to 0 and think that we could see the case for 2 to 3 (what the dots had, depending on whether you use median or average). Buy 2s at 5% (or 4.98% as the case may be).
While I expect fears of the deficit, supply, etc. to push us higher at some point, I like owning 10s above 4.6% and think that 4.45% is a reasonable near-term target. As mentioned earlier, there are a number of factors that could take us there as early as this week.

Equities

Since I’m bullish on Treasuries, should I in theory be bullish on equities? Maybe, but that correlation has been weak to nonexistent of late. We’ve addressed this in Changing Times Impacting Signals and Correlations and Rorschach Test. I’m hesitant to be bearish stocks, but bullish on Treasuries. More importantly, I’m reluctant to be too committed in any direction until I can make better sense of these large, single day moves for megacaps. When something is bothering me and I should have a better idea of what is going on (but I don’t), then it is prudent to be cautious.

So, I will remain bearish on equities and expect us to break the lows set on April 19th. It briefly looked like that was possible as recently as Thursday morning, but it seems less realistic now as the S&P gained 2.7% and the Nasdaq rallied 4.2%. I just cannot be too aggressive on this because I could easily see some additional 10% moves, which I’ve never really accounted for. Those moves could go in either direction.

The one thing that does make some sense about 10% moves is that if we really are on the cusp of a viable revolution in technology, the entire market seems cheap. But, if the cost/benefit ratio is not great right now (less than revolutionary improvements at rapidly rising prices), then we could move down rapidly. So maybe 10% moves, even in megacaps, is normal when we are at an inflection point in technology and potential valuations? That is plausible, though I’m not sure how to incorporate that into my framework, other than moving more and more into options to express long and short bets.

Credit.

Yawn. Not a lot of room to tighten. Can widen a bit more, but primarily as a function of stocks going down than any obvious change in fundamentals. With supply likely slowing, relative to cash earmarked for new issues, I’m biased to be mildly bullish credit spreads, even while moderately bearish equities.

May the stocks you own all go up 10% every day. I don’t completely understand it, but cannot ignore it, and might as well hope people benefit!

Tyler Durden Sun, 04/28/2024 - 18:05

The Struggle For The Soul Of The GOP

April 28, 2024 - 5:30pm

The Struggle For The Soul Of The GOP

Authored by Kevin Roberts via The Epoch Times,

The Republican establishment doesn’t know it yet, but last weekend was a watershed moment for their party.

On April 20, House Republican leadership facilitated passage of a foreign-aid package that sends roughly $60 billion to Ukraine, $26 billion to Israel and Gaza, $8 billion to Taiwan, and exactly zero dollars to the southern border. The bill has since passed the Democrat-led Senate and was signed by President Joe Biden.

The vote will be remembered for the choice Republican leadership made to brazenly reject its own voters in favor of the “uniparty” in Washington, DC.

In a move that can only be described as “McConnell-esque,” House Republican leadership teamed up with Democrats to overrule the position of their own conference, their voters, and the will of the American people. Democrats on the House Rules Committee made an unprecedented move by crossing the party line and overruling Republican opposition in committee, signaling an end to the typically Democrat versus Republican battle and the beginning of the conservative versus “uniparty” war.

The disconnect between the Swamp and small-town America could not be more profound. How can a political party be so tone-deaf to the plight of the everyday American suffering under inflation, crime, and societal rot? How can a Republican-led House prioritize the borders of another country over our own border, even as American citizens are killed by illegal immigrants? How can so-called fiscally responsible Republicans sign off on what is now $174 billion in direct Ukraine aid with a national debt of $34 trillion, more than $250,000 for every American household? And how can House Speaker Mike Johnson, who had pledged repeatedly that no foreign-aid legislation would advance without first securing the border, so quickly be steamrolled by the Establishment?

In their desire to send billions of dollars to a conflict that our commander-in-chief has still, to this day, offered no plan for winning, the GOP’s leadership not only spurned their party’s own supporters but overlooked an opportunity to appeal to independent Americans frustrated by both political parties.

According to recent polling that The Heritage Foundation conducted with RMG Research, an overwhelming three out of four swing voters opposed sending any additional aid to Ukraine without also allocating funds for our own border. A majority (56 percent) of swing voters in key battleground states thought that the $113 billion the United States had already committed to Ukraine was too much.

The entire Heritage enterprise fought for over a year and half on this issue. Heritage Action engaged our millions of grassroots members to voice their concerns to their representatives. Scholars at The Heritage Foundation presented a national security alternative package that included limited military aid to Ukraine but made border security the central focus. In an unprecedented move, we even issued a “key vote” on our legislative scorecard against Speaker Johnson’s convoluted rule, which was a gimmick that lowered the threshold to a simple majority (not a supermajority under suspension) and provided political cover for members to vote against individual pieces without jeopardizing the package.

Powerful interests were aligned against us, however, and we lost on the day. Though we lost this battle, all signs indicate that we are winning the war for the soul of the GOP. A majority (112) of Republicans voted against Ukraine aid on April 20. Younger and newer members are particularly fed up with leadership’s conciliatory approach and manipulative tactics that have led us to this point. The average age of the Senate Republicans who voted “nay” is 59, while the average age of those who voted “yea” is 66. The average “nay” vote has been in office since just 2016, while the average “yea” vote has been in Washington since 2010. The same dynamic was true with the recent $1.2 trillion omnibus spending bill.

This generational shift can be ignored by the “uniparty,” but it’s not going away. Newer, younger representatives want a choice, not an echo, and increasingly they’re adopting a populist form of conservatism that champions “government of the people, by the people, and for the people” above all else. In other words, they want a GOP that puts America first, something a government in any healthy republic would do. They want a GOP that acknowledges the reality that America is a nation in decline but is not yet too late to save.

As Ronald Reagan said in his 1980 address accepting the presidential nomination at the Republican National Convention, “For those who have abandoned hope, we'll restore hope and we’ll welcome them into a great national crusade to make America great again!”

And that brings us to the importance of this year’s election.

In 2016, despite staunch opposition from the GOP leadership, Donald Trump rejected the Washington consensus and initiated a generational realignment in American politics. If the conservative movement leans into the politics and policies President Trump made successful, the American people will again have the opportunity this fall to accelerate a new consensus in Washington, DC. This is why I remain optimistic about the future of our great nation.

The GOP establishment’s actions this past week portend the end of the GOP establishment, not its survival. Conservatives will win the soul of the GOP and with it the hearts of the American people.

Views expressed in this article are opinions of the author and do not necessarily reflect the views of The Epoch Times or ZeroHedge.

Tyler Durden Sun, 04/28/2024 - 17:30

NY Home Depot Hires Guards And Dogs To Combat Aggressive Parking Lot Migrants

April 28, 2024 - 4:55pm

NY Home Depot Hires Guards And Dogs To Combat Aggressive Parking Lot Migrants

A Home Depot in New York has hired armed security guards and K-9 units to protect shoppers from aggressive migrants and thieves in the parking lots, the NY Post reports.

According to City COuncilwoman Kristy Marmorato, "Everybody is well aware of the culture here at Home Depot, that we have day laborers just trying to make an honest living, and they just started to feel like it just started to become a little more aggressive."

"Where people are walking from the store with stuff in their cart, individuals were coming up to them and literally taking stuff out of their carts to help them and they just felt very concerned, very unsafe."

Two men wearing MSA Security caps and bulletproof vests with a German shepherd in tow patrolled the Home Depot in New Rochelle on Tuesday.

“It’s more about omnipresence,” one guard said, explaining that the company was contracted a few weeks ago. “It’s not like we let them go bite anyone or anything.”

The guard said the store hired them for a number of reasons.

“It’s not just because of [migrants], but because of a myriad of other things too, like people breaking into cars, that kind of stuff,” he said. -NY Post

A reporter for the Post observed at least 30 male migrants hovering near the doors of the Throggs Neck, Bronx location - with several day laborers aggressively confronting shoppers, trying to sell them fake Apple Airpods or trying to earn unsolicited tips for lifting items from shopping carts into cars.

"You come out and you’re a woman by yourself, they literally leech onto your wagon, and you’re like, ‘No, I don’t need any help,'" said one employee. "And when they’re following you to your car, it’s unnerving."

The employee said that a female supervisor saw one of the men washing his dick and balls with a water bottle in the lot, and that several women have called Home Depot customer service to complain of being robbed by migrants.

"I came to work one day and there had to be 100 guys out here," she told the Post. "And I’m like, ‘Oh, my God!'"

A regular customer at the store, who asked to be identified only as Cheryl, said she and her husband had a frightening encounter last month.

A man “practically runs over and he goes to point like, ‘Can I take the stuff,’ and my husband said, ‘No, thank you,'” she recalled, noting that they only had a couple of boxes and a paint scraper.

“He’s still keeps following, like on top of us,” she said. “I said, ‘No, thank you.'”

When her husband turned around to open the car door, the man “put his hand” on one of the boxes in their cart. “My husband said, ‘Don’t touch anything.'”

But the man didn’t stop. -NY Post

"It’s come to the point where they’re invading personal space, touching people’s belongings, just harassing," said Home Depot customer service employee, LaurieAnn Masciocco. "I get it, you’re trying to make a buck. But when it becomes aggressive and harassing, there’s a major issue."

Tyler Durden Sun, 04/28/2024 - 16:55

NY Judge Claims '2nd Amendment Doesn't Exist In Her Courtroom' In Case Against Gunsmith

April 28, 2024 - 3:45pm

NY Judge Claims '2nd Amendment Doesn't Exist In Her Courtroom' In Case Against Gunsmith

Dexter Taylor, a software engineer and resident of Brooklyn, NY, took on gunsmithing as a hobby during the Covid-19 lockdowns. He was already familiar with machining and found himself fascinated by the project, so he set out to learn the skills needed. Taylor researched ATF rules regarding the building of firearms and wanted to follow them carefully. Sadly, however, the state of New York has its own laws which leftist governments believe supersede federal law and the Constitution.

Because Taylor was apparently not officially licensed as a gunsmith in NY, authorities decided to raid his home and arrest him for possession of gun parts (including 80% lowers) which are legal federally but require a smithing certificate in the state (a legal gray area which is being contested). Taylor was easy to find because he purchased all the parts with his own credit cards thinking he was protected under ATF rules.

ATF rules state that the building of guns for personal use including 80% lowers and related parts is legal as long as the person does not build those weapons to sell.

Taylor's lawyer, Vinoo Varghese, noted that the case is a difficult one in New York, hinting at the leftist bias within NY courtrooms when it comes to the 2nd Amendment. In fact, Varghese suggested that when Judge Abena Darkeh took over the case she was oddly hostile towards the defense. He mentions that she interrupted his opening statements multiple times, claiming that he could not use 2nd Amendment arguments in her courtroom:

"She told us, ‘Do not bring the Second Amendment into this courtroom. It doesn’t exist here. So you can’t argue Second Amendment. This is New York.'"

Of course, the 2nd Amendment and the Bill of Rights surpasses the authority of the State of New York and the courtroom of Judge Abena Darkeh. New York progressives might like to think their state is a separate country from the US with its own rules, but it's not. It's clear that this is a situation in which an activist judge is seeking to make an example out of a law abiding citizen with no previous criminal record. The goal is to send a message that blue states are going to fabricate their own rules when it comes to gun rights regardless of constitutional precedent.

Varghese hints in a recent interview that the Judge is married to the "biggest fundraiser" for the Brooklyn DA, which may present a conflict of interest. Also, Joe Biden has made the issue of "Ghost Guns" a primary target for his administration the past few years. To date, the use of ghost guns in criminal acts in the US is statistically negligible. It's simply not a problem that needs the attention of the White House.

NEW: Brooklyn man convicted over his gunsmithing hobby after the judge says that the 2nd Amendment 'doesn't exist in this courtroom'

‘Do not bring the Second Amendment into this courtroom. It doesn’t exist here. So you can’t argue Second Amendment. This is New York.' - Judge… pic.twitter.com/cgfPO4ANnm
— Unlimited L's (@unlimited_ls) April 23, 2024

The defense also asserted that the Judge pressured the jury to come back with a guilty verdict, which they did, convicting Taylor of a list of offenses including:

Second-degree criminal possession of a loaded weapon, four counts of third-degree criminal possession of a weapon, five counts of criminal possession of a firearm, second-degree criminal possession of five or more firearms, unlawful possession of pistol ammunition, violation of certificate of registration, prohibition on unfinished frames or receivers. Two lesser charges, including third-degree criminal possession of three or more firearms and third-degree possession of a weapon, were not voted on.

Keep in mind that in the vast majority of states in the US all of these charges sound ridiculous. Possession of a loaded weapon? Unlawful possession of pistol ammunition? What?

Taylor now faces 10-18 years in prison and he awaits sentencing in Rikers Island, one of the worst prisons in the country. The case is expected to be appealed to the Supreme Court, where a number of gun cases involving 80% lowers are awaiting decision. New York's habit of punishing good people while letting criminals go free is becoming an epidemic, and it's likely a primary reason why the state is now suffering a net loss of hundreds of thousands of residents every year.

Tyler Durden Sun, 04/28/2024 - 15:45

The Gloves Will Come Off In A Second Biden Term

April 28, 2024 - 2:00pm

The Gloves Will Come Off In A Second Biden Term

Authored by David Keltz via American Greatness,

If you believe, correctly, that the entirety of Joe Biden’s presidency has been one unmitigated disaster after another - not only for the American citizenry, but for the United States’ standing on the world stage and for our allies around the globe who have embraced the cause of freedom and religious liberty - fasten your seatbelts, because you haven’t seen anything yet.

If you believe, correctly, that under Biden we are no longer a country that has any interest in securing our border, curbing inflationary spending and excessive taxation, bringing down the price of energy, ridding our institutions of disastrous DEI initiatives, and returning our education standards to one that embraces merit, respect for our Founding Fathers, and our Constitution - brace yourselves, because we may be nearing the point of no return if we aren’t already there.

If you believe, correctly, that in the first three and a half years of Biden’s presidency we have turned our back on America’s greatest ally in the Middle East, failed to come anywhere close to holding the Mullahs accountable for their belligerent behavior towards the U.S. and the Jewish state, and have done next to nothing to instill any sort of fear or deterrence to the nefarious grand visions of Vladimir Putin and Xi Jinping - just wait, because the current chaos we’re seeing across the world will seem rather tame for what may be in store in the not so distant future.

If, God forbid, Biden finds a way to end up back in the Oval Office come high noon on January 20, 2025, the gloves will be completely ripped off.

It’s hard to imagine that anyone who didn’t hate our country would deliberately continue to take us even further towards the path of self destruction.

But make no mistake: a potential second Biden administration, freed from the burden of having to win another election without having to pathetically pander to moderate and independent voters or pretending to support Israel and throwing a bone to leftist Jews every now and then, will not only double down on its ruinous policies that will have deleterious effects for years to come, but a potential second Biden administration will do so with impunity, without any regard for the consequences that the American people will be forced to reconcile with.

Take the border crisis.

Since Biden took office, there have been 9.2 million encounters with illegal immigrants nationwide—including more than 7.6 million encounters at the Southwest border. Nationwide encounters have now increased by 28 percent compared to March 2021. And this past March, it was reported that there were 107,298 border encounters by the Office of Field Operations (OFO), specifically at ports of entry—an increase of 375 percent compared to March of Fiscal Year (FY) 2021.

This includes 113,742 encounters with single adults at the Southwest border. So no, contrary to the leftist myth, it is not merely mothers and children who are entering our country.

And as if those figures are not horrific enough, so far in FY24, 24,376 Chinese nationals have already tried to enter the country at the Southwest border. Encounters of Chinese nationals in March 2024 have now increased by a whopping 8,500 percent compared to March 2021, surpassing all of last fiscal year—just six months into FY24.

We do not know who these people are. We do not know if they have good intentions or not. We do not know if they love our country or if they want to assimilate. We do not know if they wish to cause harm to American citizens. What we do know is that they broke the law to come here and are overwhelming public resources across the country at taxpayers’ expense. We cannot afford to accommodate them, nor should we.

As horrendous as these border crossing numbers are now, in a second Biden term, these figures will only further be exacerbated as the Democrat Party looks to import millions of likely new voters without a care in the world for what it will do to our cities. The lack of respect that Biden and the Democrat Party have for the citizens of this country knows no bounds.

How about inflationary spending?

During Biden’s first three years, his administration has already accumulated $6.32 trillion in debt, including by spending $391 million on Green New Deal initiatives that will do virtually nothing to stop so-called “climate change” but will dramatically raise the cost of energy. Prices are now up by 19.4 percent since Biden took office. Gas is up more than 50 percent since January 2021, and inflation has been at or above 3 percent for 36 straight months.

But don’t expect Biden to change his drunken spending habits with our money anytime soon. The best we can do is stop complaining about the price at the pump and buy an electric vehicle, says Pete Buttigieg.

The Congressional Budget Office estimates that in the final year of his first term, Biden will rack up another $1.582 trillion in debt, meaning our total debt will reach $7.902 trillion by the end of his first four years in office. Only President Barack Obama, who oversaw a debt increase of more than $9.5 trillion during his two terms, dug us into a deeper hole.

In a second Biden term, without any constraints towards continuing to deceive the public about the illusion of fiscal sanity, Biden will likely blow Obama’s figures out of the water as he looks to fully enact his progressive wish list—so that his favorite historians can compare him to Franklin Delano Roosevelt.

How about Biden’s proposed tax plan for his second term?

If implemented, it would impose a corporate tax burden on businesses that would be among the highest in the world. This includes a $5.5 trillion tax increase on the wealthy and corporations, while spending $7.3 trillion on defense and much of the rest on federal entitlement programs, including affordable housing and student debt cancellation.

If Biden returns to the White House, he intends to let the Trump Tax Cuts and Jobs Act (TCJA) expire at the end of 2025. This would cause a family of five earning $90,000 to see its marginal tax rate jump from 12 percent to 15 percent and would cause its $6,000 in tax credits to fall to $3,000 under the Biden plan.

A second Biden term will not only constitute a tax increase for the rich; it will apply to the middle class as well. But the concerns of working class families are no longer of any importance to Biden or the Democrat Party—and they haven’t been for quite some time.

Look at Biden and the left’s support for DEI.

If he serves a second term, he will continue his war against white America—including when he unconstitutionally chose to exclude billions of dollars from white business owners and farmers regardless of need. Never mind that a federal appellate court and the United States Supreme Court already issued an injunction against the measure—but that won’t stop Biden from trying to enact similar discriminatory policies in the future, because, as we have already learned, he is the divider in chief.

Finally, look at Biden’s betrayal of Israel. Biden and his ilk, including Chuck Schumer and Nancy Pelosi, keep prefacing every public comment with the hollow perfunctory statement that the Jewish state has a right to defend itself, and yet, apparently killing Hamas terrorists, who seek its destruction and use its citizens as human shields, is crossing a line—so they’re calling for Benjamin Netanyahu, the Democratically elected leader of Israel, to be ousted. Never mind that 62 percent of the Israeli public supports Netanyahu’s plan for achieving victory in Gaza, while just 16 percent oppose his plan.

If Biden really supported Israel, he would keep his mouth shut and allow Netanyahu to do his job - and he wouldn’t keep funding the terrorist Iranian regime. Just wait and see what happens in a second Biden term, when the Jewish vote no longer matters to Biden.

Instead of Biden working on strengthening our relationship with our strongest allies, he undermines them. Meanwhile, China and Russia are watching closely because they know we have a weak president who is unlikely to make good on any of his threats in response to continued acts of aggression towards our allies, including when he repeatedly tells Iran, “Don’t.” A second Biden term will only further embolden our enemies to do whatever they want.

So what can be done?

To all those who decided to vote for Biden the first go around because they wrongly believed that he would resemble a “return to normalcy” and would supposedly govern as a moderate, what more evidence do you need in order to not vote for him? How many more catastrophes and physical and mental gaffes need to happen before people connect the dots and say this man cannot and should not serve again?

We are led by unserious people who cannot even keep the peace and figure out how to protect Jewish students on college campuses - but these are the people who could be dictating our foreign and domestic policy for the next five years.

Unless, of course, the American people have finally decided that, come November 5, enough is enough.

Tyler Durden Sun, 04/28/2024 - 14:00

Zero Hedge

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