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[Markets] Dow Jones Climbs As Boeing, Apple Rally; Nasdaq Leads As Tech Stocks Rebound Key market indexes rebounded early Wednesday, with the Nasdaq leading and the Dow Jones Industrial Average up nearly 200 points. Published:9/29/2021 9:53:03 AM
[Markets] Dow Jones Dives; Schumer Makes Move As Yellen Issues Warning; Microsoft Falls, Tesla Makes Stand The Dow Jones fell hard. Chuck Schumer made a pledge as Janet Yellen issued a debt warning. Microsoft stock fell as Tesla stock fought hard. Published:9/28/2021 2:40:44 PM
[Markets] Dow Jones Drops 530 Points, Tech Dives On Rising Yields; Energy Stocks Show Strength The Dow Jones traded sharply lower in today's stock market while the Nasdaq composite also fell. Tech stocks led on the downside. Published:9/28/2021 1:16:05 PM
[Markets] US STOCKS-Wall St tumbles on weak consumer sentiment, rising bond yields The S&P 500 and the Nasdaq headed for their worst day in four months on Tuesday as weak consumer confidence data deepened concerns over slowing economic growth, while a surge in Treasury yields hit mega-cap technology stocks. At 11:53 a.m. ET, the Dow Jones Industrial Average was down 516.54 points, or 1.48%, at 34,352.83. Published:9/28/2021 11:40:18 AM
[Markets] Dow Jones Dives On Janet Yellen Warning, Stocks Sell Off As Bond Yields Rise The Dow Jones Industrial Average tumbled as stocks sold off amid Treasury Secretary Janet Yellen's default risk warning and bond yields rose. Published:9/28/2021 11:14:09 AM
[Markets] US STOCKS-Wall St tumbles on weak consumer sentiment, rising bond yields Wall Street indexes sharply dropped on Tuesday as weak consumer confidence data deepened concerns over slowing U.S. economic growth, with the Nasdaq down more than 2% as a surge in Treasury yields pressured mega-cap technology stocks. At 10:38 a.m. ET, the Dow Jones Industrial Average was down 361.68 points, or 1.04%, at 34,507.69, the S&P 500 was down 64.66 points, or 1.46%, at 4,378.45, and the Nasdaq Composite was down 321.51 points, or 2.15%, at 14,648.46. U.S. consumer confidence unexpectedly fell to its lowest since February this month, as soaring COVID-19 infections intensified concerns about the economy's near-term prospects. Published:9/28/2021 10:10:15 AM
[Markets] US STOCKS-Wall Street falls as surging bond yields hammer tech shares The Nasdaq fell the most among Wall Street indexes on Tuesday as technology heavyweights came under pressure from a surge in bond yields on expectations of higher interest rates and rising inflation. At 9:42 a.m. ET, the Dow Jones Industrial Average was down 88.89 points, or 0.25%, at 34,780.48, the S&P 500 was down 35.36 points, or 0.80%, at 4,407.75, and the Nasdaq Composite was down 209.42 points, or 1.40%, at 14,760.55. Published:9/28/2021 9:08:29 AM
[Markets] Futures Slide, Nasdaq Plunges As Yields Surge And Oil Tops $80 Futures Slide, Nasdaq Plunges As Yields Surge And Oil Tops $80

For much of 2021, a vocal contingent of market bulls had claimed that there is no way the broader market could sell off as long as the gigacap tech "general" refused to drop. Well, it looks like that day is finally upon us because this morning US equity futures are sliding again, continuing their Monday drop as yields from the US to Germany again, the 10Y TSY rising as high as 1.55%, driven to an extent by Fed tapering fears but mostly by the surge in oil which has pushed Brent above $80, the highest price since late 2018. The dollar gained amid the deteriorating global supply crunch from oil to semiconductors.

The surge in oil sparked a new round of stagflation fears, sending Nasdaq futures down 240 points or 1.3% as the yield on the benchmark 10-year U.S. Treasury climbed sharply. S&P 500 and Dow Jones futures also retreated, with spoos sliding below 4,400 as to a session low of 4,390.

Rising bond yields prompted a shift from growth to cyclical stocks in the United States, in a move that analysts expect could become more permanent after a prolonged period of supressed bond yields. The premarket selloff was led by semiconductor stocks which tracked similar falls for European peers, as a rising 10-year Treasury yield puts pressure on the tech sector. Applied Materials Inc. led a slump in chip stocks in New York premarket trading while Nvidia was down 2.6%, AMD -2.1%, Applied Materials -2.9%, Micron -1.6%. Meanwhile retail trader favorite meme stock Naked Brand Group, an underwear and swimwear retailer, rises again after having surged 40% in the past two trading sessions after Chairman Justin Davis-Rice said in a letter to shareholders that he believes the company has found a “disruptive” potential acquisition in the clean technology sector. Frequency Electronics also soared after being awarded a contract by the Office of Naval Research to develop an atomic clock. Chinese stocks listed in the U.S. were mixed and semiconductor stocks declined. Here are some of the other notable U.S. movers today:

  • iPower (IPW US) shares rise as much as 61% in U.S. premarket trading after the online hydroponics equipment retailer posted 4Q and FY21 earnings
  • Alibaba (BABA US) rises 2.5% in U.S. premarket trading after the company’s shares listed in Hong Kong rose, adding to the Hang Seng Tech Index’s gains
  • Frequency Electronics (FEIM US) soars 20% in U.S. premarket trading after being awarded a contract by the Office of Naval Research to develop an atomic clock
  • Concentrix (CNXC) jumped 5.9% in Monday after hours trading after setting its first dividend payment and buyback program since being spun off from from Synnex in December
  • Brookdale Senior Living (BKD US) shares fell in extended trading on Monday after announcing a $200 million convertible bond offering
  • Altimmune (ALT US) rose as much as 4.2% in Monday postmarket trading on plans to announce results for an early stage study of ALT-801 in overweight people on Tuesday
  • Ziopharm Oncology (ZIOP US) fell in extended trading after company said it cut about 60 positions, or a more than 50% reduction in personnel, to extend its cash runway into 1H 2023
  • Montrose Environmental Group (MEG US) was down 2.8% Monday postmarket after offering shares via JPMorgan, BofA Securities, William Blair

The main catalyst for the stock selloff was the continued drop in Treasurys which sent the 10-year Treasury rising as high as 1.55% while shorter-dated rates surged toward pre-pandemic levels.

This in turn was driven by the relentless meltup in commodities: overnight Brent roared above $80 a barrel - on its way to Goldman's revised $90 price target - on louder signs that demand is running ahead of supply and depleting inventories as the world finds itself in an unprecedented energy crisis. The international crude benchmark extended a recent run of gains to hit the highest since October 2018, while West Texas Intermediate also climbed.

Oil’s latest upswing has come with a flurry of bullish price predictions from banks and traders, forecasts for surging demand this winter, and speculation the industry isn’t investing enough to maintain supplies. The jump to $80 also is adding inflationary pressure to the global economy at a time when prices of energy commodities are soaring. European natural gas, carbon permits and power rose to fresh records Tuesday, with little sign of the rally slowing.

As Bloomberg notes, traders have begun reassessing valuations amid multiplying global risks, while Fed officials have communicated increasingly hawkish signals in recent days as supply-chain bottlenecks threaten to keep inflation elevated. China’s growth slowdown which saw Goldman lower its q/q Q3 GDP forecast to a flat 0.0%, and a debt crisis in the nation’s property market.have also fueled the risk-off shift.

"Central bankers have set out how they want to normalize monetary policy for some time,” Chris Iggo, chief investment officer for core investments at AXA Investment Managers, said in a note. “That process could start soon. The realization of this has the potential to provoke some volatility in rates and equities."

Elsewhere, European stocks also declined with the Stoxx Europe 600 dragged down most by technology shares. Europe’s Stoxx Tech Index drops as much as 2.8% to a five-week low after falling 1.5% on Monday having previously touched its highest level since 2000 earlier in the month. Single-stock downgrades also weighed. Stocks which performed particularly well this year are among the biggest fallers, with chip equipment makers BE Semi -4.6% and ASML -4.4%, and chipmaker Nordic Semi down 4.2%. Among other laggards, Logitech drops as much as 8.5% after being downgraded to underweight at Morgan Stanley.

Earlier in the session, Asian stocks fell for the first time in four days as declines in technology names overshadowed a rally in energy shares.  The MSCI Asia Pacific Index dropped as much as 0.7%, with a jump in U.S. Treasury yields weighing on richly-valued tech stocks. That’s even as the region’s oil and gas shares climbed amid signs of a global energy crunch. Chipmakers Taiwan Semiconductor Manufacturing and Samsung Electronics were the biggest drags on the Asian benchmark.

“The climb in yields led to the selling of growth stocks that have been strong, with investors rotating into names that are sensitive to business cycles - not unlike what happened in U.S. equities,” said Shutaro Yasuda, an analyst at Tokai Tokyo Research Center.  Asian equities have been recovering after being whipsawed by concerns over any fallout from China Evergrande Group’s debt troubles. As worries over the distressed property developer abate, the pace of rise in Treasury yields and global inflation data are being closely watched for clues on the U.S. Federal Reserve’s policy stance. Australia’s equity benchmark was among the biggest losers in Asia Tuesday, dragged down by losses in mining and healthcare stocks. Still, broad-based gains in oil explorers and refiners helped mitigate the Asian market’s retreat. In South Korea, importers and distributors of liquefied petroleum gas and liquefied natural gas rallied as the price of natural gas jumped.

The future of Evergrande is being forensically scrutinized by investors after the company last Friday did not meet a deadline to make an interest payment to offshore bond holders. Evergrande has 30 days to make the payment before it falls into default and Shenzen authorities are now investigating the company's wealth management unit. Without making reference to Evergrande, the People's Bank of China (PBOC) said Monday in a statement posted to its website that it would "safeguard the legitimate rights of housing consumers".

Widening power shortages in China, meanwhile, halted production at a number of factories including suppliers to Apple Inc and Tesla Inc and are expected to hit the country's manufacturing sector and associated supply chains. Analysts cautioned the ongoing blackouts could affect the country's listed industrial stocks.

"What we see in China with the developers and the blackouts is going to be a negative weight on the Asian markets," Tai Hui, JPMorgan Asset Management's Asian chief market strategist told Reuters. "Most people are trying to work out the potential contagion effect with Evergrande and how far and wide it could go. We keep monitoring the policy response and we have started to see some shift towards supporting homebuyers which is what we have been expecting."

In rates, as noted above, the selloff in Treasuries gathered pace in Asia, early Europe session leaving yields cheaper by 3.5bp to 5.5bp across the curve with 20s and 30s extending above 2% and 10-year through 1.50%. Treasury 10-year yields traded around 1.53%, cheaper by 4.5bp on the day after topping at 1.55%, highest since mid-June; in front- and belly, 2- and 5-year yields remain near cheapest levels in at least 18 months; in 10-year sector, gilts lag by 3bp vs. Treasuries while German yields are narrowly richer. Gilts underperformed further, where long-end yields are cheaper by up to 7.5bp on the day.

Treasury futures volumes over Asia, early European session were at more than twice usual levels, with most activity seen in 10-year note contract; eurodollar futures volumes were also well above recent average. With recent aggressive move higher in yields, threat of convexity hedging has exacerbated moves as rate hike premium continues to filter into the curve after last week’s FOMC. Auctions conclude Tuesday with 7-year note sale, while busy Fed speaker slate includes Fed Chair Powell.

In FX, the Bloomberg dollar index reached the highest level in more than a month as rising energy costs drove up Treasury yields for a fourth session. The dollar gained against all its peers; Japan’s currency slid for a fifth day against the greenback before a speech Tuesday from Fed Chair Jerome Powell who will say inflation is elevated and is likely to remain so in coming months, according to prepared remarks. Treasury two-year yields rose to the highest since March 2020. “Dollar-yen saw the clearest expression of Treasury yield increases and we attributed this divergence to the surge in energy prices,” says Christopher Wong, senior foreign-exchange strategist at Malayan Banking in Singapore. U.S. natural gas futures soared to their highest since February 2014 on concern over tight inventories. Brent oil topped $80 a barrel amid signs demand is outrunning supply. The euro slipped to hit its lowest level since Aug. 20, nearing the year-to-date low of $1.1664. The Treasury yield curve bear steepened; euro curves followed suit, with the yield on U.K. 10-year notes soaring past 1% for the first time since March 2020 on the prospects for Bank of England policy tightening.

In commodities, Crude futures extend Asia’s gains. WTI rises as much as 1.6% to highs of $76.67 before stalling. Brent holds above $80. Spot gold trades around last week’s lows near $1,740/oz. Base metals are mixed: LME aluminum outperforming, rising as much as 1.1%; nickel and copper are in the red.

Looking at the day ahead, one of the main highlights will be the appearance of Fed Chair Powell, and Treasury Secretary Yellen at the Senate Banking Committee. Otherwise, central bank speakers include ECB President Lagarde, Vice President de Guindos, and the ECB’s Schnabel, Panetta and Kazimir, along with the BoE’s Mann and the Fed’s Evans, Bowman and Bostic. US data highlights include the US Conference Board’s consumer confidence indicator for September and the FHFA house price index for July.

Market Snapshot

  • S&P 500 futures down 0.7% to 4,403.50
  • STOXX Europe 600 down 1.2% to 456.83
  • MXAP down 0.4% to 200.06
  • MXAPJ down 0.4% to 641.05
  • Nikkei down 0.2% to 30,183.96
  • Topix down 0.3% to 2,081.77
  • Hang Seng Index up 1.2% to 24,500.39
  • Shanghai Composite up 0.5% to 3,602.22
  • Sensex down 1.4% to 59,209.94
  • Australia S&P/ASX 200 down 1.5% to 7,275.55
  • Kospi down 1.1% to 3,097.92
  • Brent Futures up 0.8% to $80.15/bbl
  • Gold spot down 0.4% to $1,742.61
  • U.S. Dollar Index up 0.20% to 93.57
  • German 10Y yield rose 2.7 bps to -0.196%
  • Euro down 0.1% to $1.1681

Top Overnight News from Bloomberg

  • Chinese authorities are striving to signal to traders that whatever happens to China Evergrande Group, its debt crisis won’t spiral out of control or derail the economy
  • Brent oil roared above $80 a barrel, the latest milestone in a global energy crisis, on signs that demand is running ahead of supply and depleting inventories
  • As the dust settles on Germany’s election, control over the finances of Europe’s largest economy could fall to a 42-year-old former tech entrepreneur who wants to lower taxes and tighten spending
  • Wells Fargo agreed to pay $37 million in penalties and forfeiture to settle U.S. claims that it overcharged almost 800 commercial customers that used its foreign exchange services, the latest in a series of scandals at the bank

A more detailed look at global markets courtesy of Newsquawk

Asian equity markets traded mixed following on from a Wall Street lead where value outperformed growth and tech suffered as yields rose. ASX 200 (-1.5%) was the laggard with losses in healthcare, gold miners and tech frontrunning the declines which dragged the index beneath 7300. Nikkei 225 (-0.2%) was lacklustre and briefly approached 30k to the downside but then bounced off worse levels amid a softer currency, while the KOSPI (-1.1%) also declined following a suspected North Korean ballistic missile launch and with a recent South Korean court order to sell seized Mitsubishi Heavy assets as compensation for wartime forced labour, threatening a flare up of tensions between Japan and South Korea. Hang Seng (+1.2%) and Shanghai Comp. (+0.5%) were underpinned after the PBoC continued to inject liquidity ahead of the approaching National Day holidays and with Hong Kong led higher by strength in property names after the PBoC stated it will safeguard legitimate rights and interests of housing consumers which also provided Evergrande-related stocks further reprieve from their recent sell-off. Finally, 10yr JGBs retreated on spillover selling from T-notes after yields rose on the back of further Fed taper rhetoric and with prices not helped by the uninspiring 2yr and 5yr auctions stateside, while weaker results at the 40yr JGB auction also provided a headwind for prices.

Top Asian News

  • Top-Performing Global Luxury Stock Seen Cooling After 680% Gain
  • China Power Price Hike Sought Amid Supply Crunch: Energy Update
  • Macau Evacuates Airport Quarantine Hotel After Outbreak
  • Iron Ore Dips Again as China Power Crisis Adds to Steel Curbs

Bourses in Europe extended on the losses seen at the cash open and trade lower across the board (Euro Stoxx 50 -1.7%; Stoxx 600 -1.7%) as sentiment retreated from a mixed APAC handover as month-end looms alongside tier 1 data and a slew of central bank speakers. US equity futures have also succumbed to the mood in Europe alongside the surge in global yields – which takes its toll on the NQ (-1.5%) vs the ES (-0.8%), YM (-0.4%) and RTY (-0.3%). From a more technical standpoint, ESZ1 fell under its 50 DMA (4,431) and tested the 4,400 level to the downside, whilst NQZ1 briefly fell under 15k and the YMZ1 inches towards its 100 DMA (34,489). Back to Europe, the FTSE 100 (-0.4%) sees losses to a lesser extent vs its European peers as energy prices and yields keep the index oil giants and banks supported – with some of the top gainers including Shell (+2.8%), BP (+2.1%). Sectors in Europe are predominantly in the red, but Oil & Gas buck the trend. Sectors also portray more of a defensive bias, whilst the downside sees Tech, Real Estate, and Travel & Leisure at the foot of the bunch, with the former hit by the rise in yields, which sees the US 10yr further above 1.50%, the 20yr above 2.00% and the UK 10yr hitting 1.00% for the first time since March 2020. In terms of individual movers, Smiths Group (+3.8%) is at the top of the Stoxx 600 following encouraging earnings. ING (+0.3%) holds onto gains after sources noted SocGen's (-0.6%) interest in ING's retail banking arm. Finally, chip-maker ASM International (-3.5%) has succumbed to the broader tech weakness despite upping its guidance and announcing capacity expansion by early 2023.

Top European News

  • U.K. 10-Year Yield Rises Past 1% for First Time Since March 2020
  • Goldman’s Petershill Unit Valued at $5.5 Billion in U.K. IPO
  • Go-Ahead Sinks as U.K. Takes Over Southeastern Rail Franchise
  • Hedge Funds and Private Equity Are Targeting European Soccer

In FX, It took a while for the index to breach resistance ahead of 93.500, but when US Treasuries resumed their bear-steepening run and the intensity of the moves in futures and cash picked up pace the break beyond the half round number was relatively quick and decisive. Indeed, the DXY duly surpassed its post-FOMC peak (93.526) and a prior recent high from August 19 (93.587) on the way to reaching 93.619 amidst almost all round Dollar gains, as 5, 10, 20 and 30 year yields all rallied through or further above psychological levels (such as 1%, 1.5% and 2% in the case of the latter two maturities). However, petro and a few other commodity currencies are displaying varying degrees of resilience in the face of general Greenback strength that is compounded by buy signals for September 30 rebalancing on spot month, quarter and half fy end. Ahead, trade data, consumer confidence, more regional Fed surveys, speakers and the 7 year auction.

  • NZD/CHF/JPY/AUD - The Kiwi was already losing altitude above 0.7000 vs its US counterpart and 1.0400 against the Aussie on Monday, so the deeper retreat is hardly surprising to circa 0.6975 and 1.0415 awaiting some independent impetus that may come via NZ building consents tomorrow. Meanwhile, the Franc has recoiled towards 0.9300 in advance of comments from SNB’s Maechler and the Yen continues to suffer on the aforementioned rampant yield and steeper curve trajectory on top of a more pronounced 1+ sd portfolio hedge selling requirement vs the Buck, with Usd/Jpy meandering midway between 110.94-111.42 parameters irrespective of renewed risk aversion due to same bond rout dynamic. Back down under, Aud/Usd has faded from around 0.7311 to the low 0.7260 area, though holding up a bit better in wake of not quite as weak as forecast final retail sales overnight.
  • CAD/EUR/GBP - All softer against their US rival, but the Loonie putting up a decent fight with ongoing help from WTI crude that has now topped Usd 76.50/brl, and Usd/Cad also has decent option expiry interest to keep an eye on given 1.2 bn rolling off at 1.2615 and an even heftier 3 bn at 1.2675 compared to current extremes spanning 1.2693-1.2652. Elsewhere, the Euro has lost its battle to stay afloat of multiple sub-1.1700 lows even though EGBs are tumbling alongside USTs and the same goes for Sterling in relation to the 1.3700 handle irrespective of the 10 year Gilt touching 1% for the first time since March 2020.
  • SCANDI/EM - Brent’s advances on Usd 80 brl have been offset to an extent by soft Norwegian retail sales data, as the Nok pares more of its post-Norges Bank gains, while the Sek looks somewhat caught between stalls following a recovery in Swedish consumption, but big swing in trade balance from surplus to larger deficit. However, the Try is taking no delight from the costlier price of oil or remarks from Turkey’s Deputy Finance Minister contending that interest rates can move lower by reducing the current account and budget deficits, or conceding that Dollarisation is a problem and steps need to be taken to enhance confidence in the Lira. Conversely, the Cnh and Cny are still holding a firm line following another net injection of 2 week funds from the PBoC and the Governor saying that China will lengthen the period for the implementation of normal monetary policy, adding that it has conditions to keep a normal and upward yield curve, as it sees no need to purchase assets at present.

In commodities, WTI and Brent futures have extended on the gains seen during APAC hours, which saw the Brent November contract topping USD 80/bbl, albeit the volume and open interest has migrated to the December contract – which topped out just before the USD 80/bbl mark. WTI November meanwhile advanced past the USD 76/bbl mark to a current peak at USD 76.67/bbl (vs low USD 75.21/bbl). Desks have been attributing the leg higher to tight supply – with the UK fuel situation further deteriorating amid a shortage of drivers coupled with panic buying. It's worth bearing in mind that the demand side of the equation has also seen supportive, with the US announcing the lifting of international travel curbs recently alongside the economic resilience to the Delta variant heading into the winter period. Traders would also be keeping an eye on the electricity situation in China, which in theory would provide tailwinds for diesel demand via generators, although this could be offset by a slowdown in economic activity due to power outages. There has also been growing noise for OPEC+ to hike output beyond the monthly plan of 400k BPD, with some African nations also struggling to ramp up production due to maintenance issues and lack of investments. Ministers recently noted that the plan would be maintained at next week's confab. As a reminder, the OPEC World Oil Outlook is set to be released at 13:30BST/08:30EDT, although the findings may be stale given the recent developments in crude dynamics. Major banks have also provided commentary on Brent following Goldman Sachs' bullish call recently, with Barclays upping its forecast for both benchmarks due to supply deficits, whilst Morgan Stanley maintained its forecast but suggested that the USD 85/bbl Brent scenario clearly exists. MS also noted that oil inventories continue to draw at high rates and suggest that the market is more undersupplied than generally perceived; the analysts see the market undersupplied into 2022 amid its expectation for further OPEC discipline. Nat gas also remains in focus, with prices +11% at one point, whilst Russia's Kremlin said Russia remains the safeguard of natural gas to Europe and Gazprom is ready to discuss new gas supply contracts with increased volumes to meet rising European demand. It's also worth being aware of the increasing likelihood of state intervention at these levels as nations attempt to save or at least cushion consumers and company margins. Elsewhere, precious metals are under pressure as the Buck remains buoyant, with spot gold still under USD 1,750/oz as it inches closer to the 11th August low of USD 1,722/oz. Spot silver remains within recent ranges above USD 22/oz. Overnight Chinese nickel and tin prices extended losses with traders citing subdued demand, whilst coking coal and coke futures leapt on tight supply.

US Event Calendar

  • 8:30am: Aug. Advance Goods Trade Balance, est. -$87.3b, prior -$86.4b, revised -$86.8b
  • 8:30am: Aug. Retail Inventories MoM, est. 0.5%, prior 0.4%; Wholesale Inventories MoM, est. 0.8%, prior 0.6%
  • 9am: July S&P CS Composite-20 YoY, est. 20.00%, prior 19.08%
  • 9am: July S&P/CS 20 City MoM SA, est. 1.70%, prior 1.77%
  • 9am: July FHFA House Price Index MoM, est. 1.5%, prior 1.6%
  • 10am: Sept. Conf. Board Consumer Confidence, est. 115.0, prior 113.8
    • Expectations, prior 91.4
    • Present Situation, prior 147.3
  • 10am: Sept. Richmond Fed Index, est. 10, prior 9

Central Bank Speakers

  • 9am: Fed’s Evans Makes Welcome Remarks at Payments Conference
  • 10am: Powell and Yellen Appear Before Senate Banking Panel
  • 1:40pm: Fed’s Bowman Speaks at Community Bank Event
  • 3pm: Fed’s Bostic Discusses the Economic Outlook
  • 7pm: Fed’s Bullard Discusses U.S. Economy and Monetary Policy

DB's Jim Reid concludes the overnight wrap

What a difference a week makes. You hardly hear the word Evergrande now. We asked in a flash poll last week whether we would still be talking about it in a month or whether it would be a distant memory by then. Maybe we should have narrowed the time frame to a week! We’ve quickly moved on to rate hikes and rising bond yields as the topic de jour. A further rise in the Bloomberg Commodity Spot Index (+1.87%) to a fresh high for the decade helped reinforce the move.

Indeed, sovereign bond yields moved higher once again yesterday amidst a sharp rise in inflation expectations, with those on 10yr Treasury yields rising +3.6bps to 1.487%, their highest level in over 3 months. Meanwhile the 2yr yield rose +0.8bps to 0.278%, its highest level since the pandemic began, which comes on the back of last week’s Fed meeting that prompted investors to price in an initial rate hike from the Fed by the end of 2022.

The moves in Treasury yields were almost entirely driven by higher inflation breakevens, with 10yr breakevens up +3.7bps. That echoed similar moves in Europe, where the German 10yr breakeven (+4.7bps) hit a post-2013 high of 1.653%, and their Italian counterparts (+3.9bps) hit a post-2011 high. The biggest move was in the UK however, where the 10yr breakeven (+13.2bps) reached its highest level since 2008, which comes amidst a continued fuel shortage in the country, alongside another rise in UK natural gas futures, which were up +8.20% yesterday to £190/therm, exceeding the previous closing peak set a week earlier. We were waiting for the wind to blow in this country to get alternatives back on stream and boy did it blow yesterday but with no impact yet on gas prices. Lower real rates dampened the rise in yields across the continent, though yields on 10yr bunds (+0.5bps), OATs (+0.9bps), BTPs (+1.3bps) and gilts (+2.7bps) had all moved higher by the close of trade.

Those spikes in commodity prices were evident more broadly yesterday, with energy prices in particular seeing a major increase. Brent crude oil prices were up +1.84% to $79.53/bbl, marking their highest closing level since late-2018, and this morning in trading they have now exceeded the $80/bbl mark with a further +0.94% increase. It was much the same story for WTI (+1.99%), which closed at $75.45/bbl, which was its own highest closing level since 2018 too. And those pressures in UK natural gas prices we mentioned above were seen across Europe more broadly, where futures were up +8.92%.

With yields moving higher and inflationary pressures growing stronger, tech stocks struggled significantly yesterday, with the NASDAQ down -0.52%. The megacap tech FANG+ index fell -0.15% on the day, but was initially down as much as -1.7% in early trading. The NASDAQ underperformed the S&P 500, which was only down -0.28%, but that masked significant sectoral divergences, with interest-sensitive growth stocks struggling, just as cyclicals more broadly posted fresh gains. More specifically, energy (+3.43%), bank (+2.29%) and autos (+2.19%) led the S&P, while biotech (-1.65%) and software (-1.39%) shares were among the largest laggards. European equities were also pretty subdued, with the STOXX 600 down -0.19%, though the DAX was up +0.27% following the results of the German election, which removed the tail risk outcome of a more left-wing coalition featuring the SPD, the Greens and Die Linke.

Staying on the political scene, we are now less than 72 hours away from a potential US government shutdown as it stands. As was expected, Republicans in the Senate blocked the House-passed measure to fund the government for another 2 months and raise the debt ceiling for 2 years. While Democrats have not put forward their alternative strategy if Republicans refuse to vote to lift the debt ceiling, their only option would be to attach it to the budget reconciliation plan that currently makes up much of the Biden economic agenda. In an effort to keep all party members on board, Speaker Pelosi moved the vote on the $550bn bipartisan infrastructure bill to Thursday in order to give all sides more time to finish the larger budget bill and pass both together. It is a going to be a very busy Thursday, since Congress will have to also pass the funding bill that day. Republicans and Democrats already agree on a funding bill to keep the government open that does not include the debt ceiling increase so it is just a matter of how exactly the debt ceiling provision goes through without a Republican Senate vote.

Overnight in Asia, equity indices are seeing a mixed performance. On the one hand, most of the region including the Nikkei (-0.24%) and KOSPI (-0.80%) are trading lower as investors begin to price in tighter monetary policy from the Fed. However, the Hang Seng (+1.50%), Shanghai Composite (+0.53%) and CSI (0.38%) have all advanced after the People’s Bank of China said that they would ensure a “healthy property market”. Looking forward, US equity futures are pointing to little change, with those on the S&P 500 down just -0.05%, and 10yr Treasury yields have risen +1.9bps this morning to trade above 1.50% again.

Back to the German election, where the aftermath yesterday saw various party leaders assess the results and stake their claims to participate in a new coalition. As a reminder, the SPD came in first place with 25.7%, but the CDU/CSU weren’t far behind on 24.1%, making it mathematically possible for either to form a government in a coalition with the Greens and the FDP. The SPD’s chancellor candidate, Finance Minister Olaf Scholz, appealed for the Greens and FDP to join him in forming a government, and told the media that he wanted to form a coalition before Christmas. Meanwhile Green co-leader Robert Habeck said that “Of course there is a certain priority for talks with the SPD and the FDP”, but said that this didn’t mean they wouldn’t speak with the CDU/CSU either.

As the SPD were calling for an alliance, the tone sounded more negative from the CDU’s leadership, even though Armin Laschet said that he had not given up on the idea of forming a government. Notably, Laschet said that no party was able to draw a clear mandate from the result, including the SPD, and this echoed remarks from the CSU leader Markus Söder, who said that the conservatives had no mandate to form a government, though they could “make an offer out of a sense of responsibility for the country.” Meanwhile, attention will turn to the FDP and the Greens to see which way they’re leaning when it comes to forming a government. FDP leader Lindner said that he would hold preliminary talks with the Greens, after which they would be open to invitations from either the SPD or the CDU/CSU for further discussions.

Back on the UK, there was an interesting speech from BoE Governor Bailey yesterday, where he echoed the line from the MPC minutes last week, saying that “all of us believe that there will need to be some modest tightening of policy to be consistent with meeting the inflation target sustainable over the medium-term”. However, he also said that their view was that “the price pressures will be transient”, and that “monetary policy will not increase the supply of semi-conductor chips … nor will it produce more HGV drivers.” He then further added that tighter policy “could make things worse in this situation by putting more downward pressure on a weakening recovery of the economy”. So a bit of a mixed message of backing rate hike expectations but warning about its impact on growth.

Over in the US we heard from a host of Fed speakers with Governor Brainard saying that while “employment is still a bit short of the mark” of “substantial further progress”, she expects that the labour market will recover enough to start tapering asset purchases soon. Separately on the inflation debate, Minneapolis Fed President Kashkari argued that this year’s pickup in US inflation has been a byproduct of the supply disruptions associated with Covid and that policy makers should not react to it just yet. He cited the need to get US employment back up as the Fed’s “highest priority”. New York Fed President Williams agreed with his colleague, saying that “this process of adjustment may take another year or so to complete as the pandemic-related swings in supply and demand gradually recede.” And Chicago Fed President Evans is even worried about downside inflation risks, as he is " more uneasy about us not generating enough inflation in 2023 and 2024 than the possibility that we will be living with too much.”

Lastly, news came out yesterday that Boston Fed President Rosengren will retire this week due to health concerns. He was due to step down in June regardless as there is a mandatory retirement age of 65. Dallas Fed President Kaplan also announced his retirement yesterday, which will take effect October 8th. Both officials have drawn scrutiny in recent days stemming from their recent disclosure of trading activity over the last year, though the activity did not violate the Fed’s ethics code even as Fed Chair Powell announced an official review of those rules. The Boston Fed President will be a voting member on the FOMC next year, and the Dallas Fed President in 2023.

Running through yesterday’s data, the preliminary reading for US durable goods orders in August showed growth of +1.8% (vs. +0.7% expected), and the previous month was also revised up to show growth of +0.5% (vs. -0.1% previously). Meanwhile core capital goods orders grew by +0.5% (vs. +0.4% expected), and the previous month’s growth was revised up two-tenths. Finally, the Dallas Fed’s manufacturing activity index for September came in at 4.6 (vs. 11.0 expected) – its lowest reading since July 2020.

To the day ahead now, and one of the main highlights will be the appearance of Fed Chair Powell, and Treasury Secretary Yellen at the Senate Banking Committee. Otherwise, central bank speakers include ECB President Lagarde, Vice President de Guindos, and the ECB’s Schnabel, Panetta and Kazimir, along with the BoE’s Mann and the Fed’s Evans, Bowman and Bostic. US data highlights include the US Conference Board’s consumer confidence indicator for September and the FHFA house price index for July.

Tyler Durden Tue, 09/28/2021 - 07:52
Published:9/28/2021 7:05:06 AM
[Markets] Dow Jones Gains As Pelosi Makes Infrastructure Move; AMD, Energy Stock Among 4 Flashing Buy; Tesla Stock Surges The Dow Jones rose. Nancy Pelosi made an infrastructure bill move. AMD stock offered a buy point. Tesla stock gained, Apple stock fell. Published:9/27/2021 2:31:22 PM
[Markets] Dow Jones Rallies On Key Breakouts But Nasdaq Lags As Tech Stocks Come Under Pressure Key market indexes were mixed midday as several Dow Jones industrials stocks cleared buy points but the tech-heavy Nasdaq lagged. Published:9/27/2021 11:32:19 AM
[Markets] Dow Jones Rise, Techs Fall As Rising Treasury Yields, China Power Curbs Test Market Rally The Dow Jones rose slightly but techs fell as rising Treasury yields and China power curbs test a revived stock market rally. Published:9/27/2021 9:34:15 AM
[Markets] Dow Jones Rise, But Techs Tumble As Rising Treasury Yields, China Power Curbs Test Market Rally The Dow Jones rose slightly but techs fell as rising Treasury yields and China power curbs test a revived stock market rally. Published:9/27/2021 9:03:12 AM
[Markets] Dow 40000 – A Huge Disappointment Of Promises Dow 40000 – A Huge Disappointment Of Promises

Authored by Lance Roberts via RealInvestmentAdvice.com,

Dow 40000! Yes, it will eventually happen. Such should not be surprising given the massive amounts of global liquidity chasing fewer assets. But while Dow 40,000 will undoubtedly bring out the “Party Hats,” it is also a massive disappointment of the promises made to investors.

Dow Milestones

“Nothing says bull stock market like the Dow Jones Industrial Average (DJIA) crossing another thousand-point barrier. The recent rise above 34K sparked a special interest. The 1,000-point move from 33,000 to 34,000 was the third fastest on record,’ and the Dow’s move was ‘its fourth thousand-point hurdle cleared this year alone.’ – John Tobey

If price acceleration in the market is a sign of investor optimism, this chart should undoubtedly support that view.

There were only three other times in history where the Dow advanced this rapidly:

  • 1999-2000

  • 2017-2018

  • 2019-2020

Unfortunately, each of those periods ended in corrections and outright bear markets.

Maybe it’s just a coincidence.

Maybe “this time is different.”

Or, it could just be that extreme exuberance by investors tends to be a later stage event.

Dow 40,000 Is A Real Disappointment

What most investors tend to forget is the damage done by those market corrections and bear markets.

Here is a good example.

In 2019, CNBC ran an article touting the call of “Billionaire Investor Ron Baron” that the Dow would reach 650,000 in just 50-years. Of course, that was just before the 35% rout in March 2020. However, as noted in the article:

“Speaking from his annual investment conference in New York, Baron predicted the Dow Jones Industrial Average, based on historical moves over decades, will reach 650,000 in 50 years, with an over $500 trillion U.S. economy.”

If we do some quick math, that assumption requires a 6.6% annualized return on both the Dow and the U.S. economy. Such is undoubtedly in line with the economy’s long-term growth trends, and the charts below prove the point.

Of course, those returns are also what financial advisors promise clients who “buy and hold” an index-based portfolio.

Here is the problem.

It’s complete bulls*** on both counts.

Mr. Baron, as noted, was speaking at his “buy and hold” conference, and the tweet grabbed both attention and headlines.

The problem with being “bullish all the time” is that it is also perilous.

Such is particularly the case in late-stage “bull markets,” where seemingly ever-rising prices mask poor investment decisions and excessive portfolio “risk.” As a result, previously lousy investment ideas, products, and strategies tend to resurface in a different form or package. Investment strategies like “buy and hold” and “dollar cost averaging” become popular even though they are guaranteed to leave you well short of your financial objectives in the future.

The Economy No Longer Grows At 6%

Let’s start with the economy.

The economy has not attained an annualized growth rate of 6% since the 1950’s when the U.S. was the manufacturing hub of the entire world. Following WWII, the majority of Europe, and Japan following two nuclear bombs, got devastated. Today, the U.S. is no longer a manufacturing hub but a services provider for ever-lower costs. Services, as compared to manufacturing, have a very low economic multiplier effect. Given $28 Trillion in debt and climbing, attaining a sustainable 6% growth rate is not possible.

The chart below pretty much details the problem.

Many argue the U.S. economy has grown by more than 6% on average over the long term. (This is a true statement) However, it is also a very misleading statement. Average and actual growth are two very different things.

If we go back to 1901 and assume the economy grew at just 6% annualized, lower than Mr. Baron’s 6.6% suggestion, the size of the economy should be approaching $500 Trillion. Not the paltry $19 trillion at the end of 2020.

What happened?

There were many years of low or negative economic growth.

The same factors hold with the Dow.

Dow 650,000

As noted, Mr. Baron suggests the Dow will rise to 650,000 in the next 50-years. So clearly, as a young investor, you should sock all your hard-earned savings into an “index fund” and hang on.

“The stock market is literally the same thing as a high-yield savings account.” – Jim J. (names have been changed to protect the stupid.)

Here’s the thing. 

The financial media states that markets have an average annual return of 8-10%. So, assuming the Dow had compounded at just 5% since 1901, we would already be past 650,000.

But it’s not.

We are just stuck here at a “crappy ole’ 35,000.”

As with economic growth, there is a massive difference between compound returns and average returns. The historical performance of the markets since 1900, including dividends, has averaged a higher rate of return than just 5% annually. Therefore, the Dow should be much closer to 700,000 today than 650,000 in the next 50-years.

Again, it’s not.

Nope…we are just hanging out way down here at 35,000.

Why? Because crashes matter. Such is particularly the case when it comes to your financial goals and investment time horizons.

Why Crashes Matter

Think about it this way.

If “buy and hold” investing worked the way the media suggests, then why are the financial statistics of 80% of Americans so poor?

The three most significant factors are: 

  1. Destruction of capital;

  2. Lack of savings, and;

  3. Time.

While lost capital gain eventually recover, the time lost “getting back to even” cannot be. Unfortunately, we don’t live forever, and time is our ultimate enemy. Such is also why, after two major bear markets, most “boomers” are simply unprepared financially for retirement. 

Who wouldn’t love a world where everyone invests some money, the markets rise 6% annually, and everyone one’s a winner?

Markets Don’t Really Compound

Unfortunately, markets don’t work that way. A vast difference exists between an “index” that benefits from share buybacks, substitutions and market capitalization weighting versus a portfolio invested in actual dollars. Yes, a “buy and hold” portfolio will grow in the financial markets over time, but it DOES NOT compound.

Read this carefully: “Compound returns assume no principal loss, ever.”

To visualize the importance of this statement, the chart below shows $100,000, adjusted for inflation, invested in 2000 versus a 6% annual compound rate of return. The shaded area shows the difference between the portfolio value and the 6% rate of return.

As noted, due to the impact of two bear markets, the investor that started in 2000 is still well short of the rate of return promised. The investor that began in 2007 only just recently achieved their goal. However, a bear market in the future will set them back markedly.

See the problem? If you were 45 in 2000, you didn’t make your retirement goal.

With markets now back to some of the highest valuations on record, forward returns over the next 10-years will be substantially lower than they have been over the past 10-years.

That isn’t being bearish. That is just math.

Throughout history, bull market cycles are only one-half of the “full market” cycle. Such is because during every “bull market” cycle the markets, and economy, build up excesses that are “reverted” during the following “bear market.”

Reversion To The Mean

As Sir Issac Newton once stated:

“What goes up, must come down.” 

Looking beyond the very short-term overly optimistic view of “this time is different,” the coming unwinding of current speculative extremes will occur after completing the current market cycle.

When we look at 10-year trailing returns, there is sufficient historical evidence to suggest total returns will decline towards zero over the next 5-years from 12% annualized currently. (These are trailing 10-year total real returns, not forward)

A decline in the next 3-years of only 30%, the average drawdown during a recession, will likely achieve that goal.

Why will a bear market eventually happen? It is a function of time (length of market cycles), math (valuations,) and physics (price deviations for long-term means.)

When will it happen, and what will cause it? No one knows.

There is one big secret in achieving long-term investment success.

Being “right” in the first half of the market cycle is not as important as being “wrong” during the second half.”

You really should be disappointed in Dow 40,000.

Tyler Durden Mon, 09/27/2021 - 09:51
Published:9/27/2021 9:03:12 AM
[Markets] Dow Jones Gains As Pelosi Hints At Spending Bill Changes; Tesla CEO Elon Musk Touts Chips The Dow Jones struggled. Nancy Pelosi hinted at spending bill changes and Tesla CEO Elon Musk made bullish noises on chips. Snap stock surged. Published:9/24/2021 3:41:46 PM
[Markets] Dow Jones Struggles As Pelosi Hints At Spending Bill Changes; Tesla CEO Elon Musk Touts Chips The Dow Jones struggled. Nancy Pelosi hinted at spending bill changes and Tesla CEO Elon Musk made bullish noises on chips. Snap stock surged. Published:9/24/2021 2:49:53 PM
[Markets] Dow Jones Trims Early Loss Fueled By China, Nike, But This Blue Chip In Buy Range Key market indexes moved off session lows midday Friday, as the Dow Jones Industrial Average erased most of an early 117-point loss. Published:9/24/2021 11:43:51 AM
[Markets] Dow Jones Drops As Evergrande Misses Interest Payment; Bitcoin Tumbles On China Ban The Dow Jones Industrial Average fell 115 points Friday, as China Evergrande missed a key interest payment. Bitcoin dived on a Chinese crackdown. Published:9/24/2021 9:06:49 AM
[Markets] Dow Jones Futures Fall As Evergrande Misses Interest Payment; Bitcoin Tumbles On China Ban Dow Jones futures fell 150 points Friday, as China Evergrande missed a key interest payment. Bitcoin dived on a Chinese crackdown. Published:9/24/2021 8:10:07 AM
[Markets] Nike's stock drop would shave more than 50 points off the Dow's price Shares of Nike Inc. sank 5.1% in early trading Friday, enough to pace the Dow Jones Industrial Average's premarket decliners, after the athletic apparel and accessories giant reported fiscal first-quarter profit that topped expectations but revenue that came up short. The stock's implied price decline would shave about 53 points off the price of the Dow, while Dow futures were down 144 points, or 0.4%, ahead of the open. Nike's stock is on track to suffer the biggest one-day decline since June 2 Published:9/24/2021 7:40:50 AM
[Markets] Dow Jones Rallies With China Set For Evergrande Collapse; Microsoft, Nvidia Offer Entries; Meme Stock Surges The Dow Jones gained as U.S. stocks rallied, even as China prepares for the demise of Evergrande. Microsoft and Nvidia offered buy points. Published:9/23/2021 3:34:18 PM
[Markets] Dow Jones Rises Over 570 Points, Leads Market Upside; This Blue Chip Tech Stock Scores Breakout The Dow Jones extended yesterday's rally in today's stock market and led the major equity indexes on the upside. Small caps outperformed. Published:9/23/2021 2:33:15 PM
[Markets] Dow Jones Rallies 400 Points As China Prepares For Potential Evergrande Failure; Costco, Nike To Report The Dow Jones Industrial Average rallied 400 points Thursday, as China prepares for the potential failure of property developer Evergrande. Published:9/23/2021 9:06:28 AM
[Markets] Dow Jones Futures Rally As China Prepares For Potential Evergrande Failure; Costco, Nike To Report Dow Jones futures rallied 175 points Thursday, as China prepared for the potential failure of Evergrande. Apple and Tesla rose modestly. Published:9/23/2021 7:39:13 AM
[Markets] These 2 Fintech Disruptors Made Big Waves Wednesday Investors got just about exactly what they wanted to hear from the Federal Reserve's monetary policy committee, which left interest rates in a range between 0% and 0.25% and signaled a potential time frame for starting to pull back on its quantitative easing program. The Dow Jones Industrial Average (DJINDICES: ^DJI), S&P 500 (SNPINDEX: ^GSPC), and Nasdaq Composite (NASDAQINDEX: ^IXIC) were all up around 1% on the day. Both Robinhood Markets (NASDAQ: HOOD) and SoFi Technologies (NASDAQ: SOFI) have made forays into the fintech arena, and both stocks made big jumps as investors hoped for positive results from their latest initiatives. Published:9/22/2021 5:27:12 PM
[Markets] Dow Jones Rallies On Evergrande News Ahead Of Fed Decision; FedEx Dives On Earnings The Dow Jones Industrial Average rallied 200 points early Wednesday on Evergrande news ahead of the Fed policy decision. FedEx dived on earnings. Published:9/22/2021 9:04:14 AM
[Markets] Dow Jones Futures Rally On Evergrande News Ahead Of Fed Decision; FedEx Dives On Earnings Dow Jones futures were higher early Wednesday on Evergrande news ahead of the Fed policy decision. FedEx dived on earnings. Published:9/22/2021 7:29:37 AM
[Markets] Dow ends more than 600 points lower as Evergrande fears shake markets Stocks fell sharply Monday, but ended off session lows, as worries about spillover from the potential collapse of China property giant Evergrande shook up global financial markets. Investors were also jittery ahead of the start Tuesday of a two-day meeting of Federal Reserve policy makers. The Dow Jones Industrial Average fell around 614 points, or 1.8%, to close near 33,970 after dropping by more than 970 points at its session low. The S&P 500 fell around 75 points, or 1.7%, to close near 4,358 Published:9/20/2021 3:21:32 PM
[Markets] Dow Jones Dives 900 Points Amid China Fears; Nvidia Flashes Sell Signal; Tesla Crashes Lower The Dow Jones crashed lower amid growing China fears. Nvidia stock flashed a sell signal, while Tesla stock hit the skids. Apple stock fell. Published:9/20/2021 2:35:24 PM
[Markets] Dow Jones Futures Dive On China Property Fears; AMD, Apple, Nvidia, Tesla Sell Off Dow Jones futures dived 700 points Monday on China property default fears, as Apple and Tesla stock sold off sharply ahead of the open. Published:9/20/2021 8:38:03 AM
[Markets] Dow futures skid 500 points as China property fears grow U.S. stock futures fell sharply on Monday, with those for the Dow Jones Industrial Average tumbling 500 points, as Hong Kong-listed property companies came under fresh pressure. Investors also were positioning ahead of this week’s Federal Open Market Committee meeting. How are stock futures trading? Published:9/20/2021 4:42:48 AM
[Markets] Dow futures drop 300 points as China property fears grow MARKET SNAPSHOT U.S. stock futures fell sharply on Monday, with those for the Dow Jones Industrial Average tumbling 300 points, as Hong Kong-listed property companies came under fresh pressure. Investors also were positioning ahead of this week’s Federal Open Market Committee meeting. Published:9/20/2021 3:06:43 AM
[Markets] 3 Things to Watch in the Stock Market This Week Stocks dropped for a second straight week last week, as both the Dow Jones Industrial Average (DJINDICES: ^DJI) and the S&P 500 (SNPINDEX: ^GSPC) shed less than 1%. Earnings season continues with fresh earnings reports from several retailers over the next few trading days. Let's take a closer look at some highly anticipated announcements from this list, by Costco (NASDAQ: COST), Nike (NYSE: NKE), and Stitch Fix (NASDAQ: SFIX). Published:9/19/2021 6:27:22 AM
[Markets] Dow Jones, Nasdaq Close Lower, Post Weekly Losses; Auto Retailers Surge To New Highs The Dow Jones Industrial Average fell in today's stock market and closed out this week with a loss. The Nasdaq also traded lower. Published:9/17/2021 4:16:48 PM
[Markets] Stocks post weekly decline as investors await Fed policy meeting Stocks ended lower Friday, capping a losing week for major indexes as investors awaited next week's meeting of Federal Reserve officials, which may bring more clues to the timing of the Fed's plan to eventually taper its monthly asset purchases. The Dow Jones Industrial Average fell around 168 points, or 0.5%, to close near 34,583, while the S&P 500 lost around 41 points, or 0.9%, ending near 4,433. The Nasdaq Composite finished near 15,044, down 138 points, or 0.9%. Friday's losses left the Dow Published:9/17/2021 3:21:28 PM
[Markets] Dow Jones Dips As White House Raises Recession Fears; Elon Musk Praises China Rivals, Tesla Slips; Apple Falls The Dow Jones fell as Apple stock continued to dip. The White House warned of a recession. Tesla CEO Elon Musk praised its China rivals. Published:9/17/2021 2:19:35 PM
[Markets] Dow Dips As White House Raises Recession Fears; Elon Musk Praises Tesla China Rivals, Apple Dips Again The Dow Jones fell as Apple stock continued to dip. The White House warned of a recession. Tesla CEO Elon Musk praised its China rivals. Published:9/17/2021 1:29:38 PM
[Markets] Dow Jones Slides As Apple Sells Off; 4 Top Growth Stocks To Buy And Watch The Dow Jones Industrial Average fell 200 points Friday, as Apple stock sold off below a key support level in today's stock market. Published:9/17/2021 10:48:02 AM
[Markets] Dow Jones Falls As Apple Sells Off; 4 Top Growth Stocks To Buy And Watch The Dow Jones Industrial Average fell 100 points Friday, as Apple stock dropped below a key support level in today's stock market. Published:9/17/2021 9:49:06 AM
[Markets] Stocks open slightly lower, on track for modest weekly gains U.S. stocks opened slightly lower Friday, with major indexes attempting to hold on to modest weekly gains. The Dow Jones Industrial Average was down 29 points, or 0.1%, at 34,723, while the S&P 500 fell 0.2% to 4,466. The Nasdaq Composite was off 0.2% at 15,159. Through Thursday, the Dow was up 0.4%, while the S&P 500 had gained 0.3% and the Nasdaq had advanced 0.4%. Friday marks what's known as "quadruple witching," the simultaneous expiration of stock options, stock-index futures, stock-index Published:9/17/2021 8:48:24 AM
[Markets] TikTok's Army Of 'Finfluencers' Rides 'Meme Stonk' Boom To Riches TikTok's Army Of 'Finfluencers' Rides 'Meme Stonk' Boom To Riches

One of the ancillary features of the meme stonk boom has been the surge in popular 'finfluencers' who have taken to Reddit, YouTube, TikTok, Instagram, Twitter, Discord - the list goes on - to plug stocks, crypto and investment strategies, or, alternatively, break down complex financial topics for novice wannabe financiers.

The OG Internet meme stonk influencer, Keith Gill, made millions of his GME holdings while cranking out videos and commentary on YouTube and Reddit - commentary which recently left his old employer, MassMutual, stuck with a $4MM fine levied by a state regulator for "failing to oversee" Gill and his moonlighting on social media.

The silver lining of this fine is that Gill - as he revealed during testimony before the House Financial Services Committee earlier this year - is already a millionaire several times over. And he quit that job months ago.

But now, a growing army of financial micro-influencers is finding that it's easier to make money through brand deals, paid posts and sponsorships than risking it all on some long-shot stock, as Bloomberg points out in its latest report on the new generation of financial influencers.

Take Austin Hankwitz, the full-time "influencer" who was hired by Betterment, a popular robo-advisor service. After noticing a spike in signups (with 10K new users signing up in a single day), the company traced the surge in interest to Hankwitz's TikTok videos where he was showing users how to retire a millionaire by using the platform.

Once Betterment became aware of his videos, it reached out and brought him on board.

“We were, like, where is this increased activity coming from?” Betterment’s director of communications, Arielle Sobel, said of the sudden increase in customer inquiries. “It was not sponsored by us, so we had no clue.”

Users like Hankwitz are part of a new generation of online "influencers", who have stepped up to fill the enormous financial literacy gap in the US with TikToks and YouTube videos about meme stonks and crypto. And after his partnership with Betterment, more brands came calling, including the crypto startup BlockFi, the social stock-trading app Public, and advisory Fundrise. These companies are throwing thousands of dollars at him just for making posts to his following of nearly half a million. Public even offered him a monthly retainer and equity in the company to replace the Yahoo Finance stock charts he uses with theirs.

And with retail trading activity still climbing following the post-pandemic day trading "revolution", many of these "finfluencers" are now making more money than junior bankers and traders. Hankwitz confirmed he's earning more than $500K per year.

And as these products grow, they will have more capital to throw at influencers.

Betterment isn't the only roboadvisor hiring "influencers". Wealthfront, a rival roboadvisor, has recruited more than a dozen paid "influencers" including Haley Sacks, better known by her social media handle "Mrs. Dow Jones", according to Kate Wauck, the firm’s chief communications officer.

"Quite frankly, they’re just better at telling our story than we are," she said.

Before her social media fame, Sacks worked as an assistant on Letterman and was mostly interested in a career in comedy. But in her social media persona, she used her pop-culture knowledge to help explain complex financial topics to her following (even explaining bitcoin through the prism of Ben Affleck and Jennifer Lopez's rekindled relationship).

One of the influencers profiled by Bloomberg was a former JP Morgan trader named Vivian Tu.

Vivian Tu, 27, a former stocks trader at JP Morgan, believes made her account YourRichBFF blow up as soon as she launched it. She published her first video on Jan. 1, telling TikTokers that if they were looking for an account that would help them learn honest finance literacy tips, hers was it. Overnight, her video got 1 million views and within a week she’d amassed 170,000 followers.

She hasn't quit her day job, instead finding time to dedicate up to 15 hours a week to producing TikTok content, for which she is paid handsomely by her host of followers.

It wasn’t long before financial institutions took notice. Wealthfront, Credit Karma, FinTron Invest, Insurify and Tastyworks are among her approximately 10 sponsors. She has more than half a million followers on TikTok and gets paid anywhere from $3,000 to $4,000 per post. For someone with a full-time job, it’s a huge commitment, she said. Outside of her current full-time day job, she spends anywhere from 10 to 15 hours per week managing her account.

The rise of social media influencers probably couldn't have arrived at a better time for the young workers who make up Wall Street's workforce. This year, young bankers' complaints about burnout at Goldman Sachs and its rivals have made headlines. Now, how much longer until Wall Street's best and brightest are working for themselves, churning out social media content for a host of sponsors. No more missing birthday parties and weddings to work on pitchbooks.

Tyler Durden Fri, 09/17/2021 - 08:37
Published:9/17/2021 7:43:34 AM
[Markets] Dow Jones, Nasdaq Fall As Unemployment Claims Rise; These Blue Chips Receive Analysts Upgrades The Dow Jones fell in today's stock market and led the downside. The Nasdaq also traded lower as weekly jobless claims jumped. Published:9/16/2021 1:12:11 PM
[Markets] Dow Jones Falls As Jobless Claims Rise, Retail Sales Jump; Apple, Tesla Slide The Dow Jones Industrial Average lost 100 points Thursday, as jobless claims rose and retail sales jumped. Apple and Tesla slid. Published:9/16/2021 10:09:00 AM
[Markets] Dow Jones Rises As Nasdaq Rallies; Tesla Gains Despite Losing This Race; BioNTech Gets Vaccine Boost The Dow Jones moved higher. Tesla stock gained despite being beaten to a new market. BioNTech stock got a Covid vaccine boost. Published:9/15/2021 3:37:16 PM
[Markets] Dow Jones Gains As Nasdaq Rallies; Tesla Gains Despite Losing This Race; BioNTech Gets Vaccine Boost The Dow Jones moved higher. Tesla stock gained despite being beaten to a new market. BioNTech stock got a Covid vaccine boost. Published:9/15/2021 2:37:44 PM
[Markets] Dow Jones, Nasdaq Rise; Energy Stocks In Buy Zones As Oil Moves Higher The Dow Jones Industrial Average rose in today's stock market while the S&P 500 led the upside. Meanwhile, the Nasdaq also traded higher. Published:9/15/2021 1:09:10 PM
[Markets] Dow Jones Advances As Apple Falls To Key Level; Microsoft Jumps On Buyback Plan The Dow Jones Industrial Average briefly rallied 130 points Wednesday, as Apple stock dropped to a key support level in today's stock market. Published:9/15/2021 9:37:15 AM
[Markets] Dow Jones Futures Rise As Microsoft Flashes Buy Signal Amid Bearish Market Rally Trend; Chinese Economic Data Weakens Dow Jones futures rose slightly Wednesday morning, along with S&P 500 futures and Nasdaq futures, as weak Chinese economic data offset a late boost from a Microsoft stock buyback. The stock market rally on Tuesday once again opened higher but then faded, continuing a recent bearish trend. Published:9/15/2021 5:33:46 AM
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[Markets] Dow Jones Falls 325 Points, But Microsoft Stock Stands Tall; Footwear Maker Surges After Investor Day The Dow Jones fell to session lows in afternoon trading Tuesday. Microsoft outperformed, but Apple fell below its 50-day moving average. Published:9/14/2021 2:29:47 PM
[Markets] Dow Jones, Nasdaq Fall As Inflation Cools; Energy Stocks Retreat As Oil Prices Turn Lower The Dow Jones Industrial Average fell in today's stock market and led the downside among the indexes. Meanwhile, the Nasdaq traded lower. Published:9/14/2021 1:24:18 PM
[Markets] US STOCKS-Financials drag Dow, S&P lower as data shows cooling inflation The Dow Jones and S&P 500 indexes fell on Tuesday, dragged down by financial stocks, after data showing a slower-than-expected rise in U.S. inflation led to uncertainty over the U.S. Federal Reserve's timeline to taper monetary stimulus. U.S. stocks have struggled this month as investors worry about the economic recovery amid a surge in cases of COVID-19's Delta variant and the valuation of equities following a lengthy rally. Published:9/14/2021 12:27:35 PM
[Markets] Dow Jones Slides As Inflation Cools, But Still High; Apple Climbs Ahead Of IPhone 13 Debut The Dow Jones Industrial Average reversed lower, as inflation cooled off in August but remained high. The Apple iPhone 13 is set to debut. Published:9/14/2021 10:30:30 AM
[Markets] Dow Jones Reverses As Inflation Cools, But Still High; Apple Climbs Ahead Of IPhone 13 Debut The Dow Jones Industrial Average reversed lower, as inflation cooled off in August but remained high. The Apple iPhone 13 is set to debut. Published:9/14/2021 9:55:50 AM
[Markets] Dow Jones Futures Reverse Lower As Apple iPhone 13 Set To Debut Dow Jones futures were lower early Tuesday following the mixed stock market action. The Apple iPhone 13 is set to debut Tuesday. Published:9/14/2021 7:22:52 AM
[Markets] Dow Jones Futures Rally As Apple iPhone 13 Set To Debut Dow Jones futures were little changed late Monday following the mixed stock market action. The Apple iPhone 13 is set to debut Tuesday. Published:9/13/2021 5:24:23 PM
[Markets] US STOCKS-S&P 500 snaps losing streak with tax hikes, inflation data on horizon The S&P 500 closed higher on Monday, ending a five-day losing streak as investors focused on potential corporate tax hikes and upcoming economic data. The Dow Jones Industrial Average also advanced, but the Nasdaq Composite Index ended lower. "There are probably not a lot of positive surprises coming this month," said Liz Young, head of investment strategy at SoFi in New York. Published:9/13/2021 3:24:55 PM
[Markets] US STOCKS-Wall Street mixed as tax hikes, inflation data looms Wall Street stocks wavered on Monday, struggling to regain ground lost in last week's bruising sell-off, but economically sensitive shares rose as investors focused on potential corporate tax hikes and upcoming economic data. The three major U.S. indexes were mixed, with the bellwether S&P 500 index essentially flat as it flirts with the prospect of extending its five-day losing streak. But while the Dow Jones Industrial Average was green, market leading tech and tech-adjacent shares pulled the Nasdaq Composite Index into the red. Published:9/13/2021 2:02:02 PM
[Markets] Dow Jones Rallies To Buck Market Sell-Off; Growth Stocks Slip But Oil Stocks Surge Stocks were mixed midday with the Dow Jones Industrial Average rallying more than 200 points as it tries to halt a five-day losing streak. Published:9/13/2021 11:47:28 AM
[Markets] Dow Jones Rallies As Apple Rebounds, But Tesla Sells Off; Four Top Growth Stocks To Buy And Watch The Dow Jones Industrial Average rallied 285 points Monday, as Apple rebounded from Friday's sell-off. But Tesla stock sold off. Published:9/13/2021 9:49:57 AM
[Markets] These 4 Dow Stocks Can Double Your Money in 7 Years (or Less) For more than 125 years, the iconic Dow Jones Industrial Average (DJINDICES: ^DJI) has served as a barometer for the health of the U.S. stock market. Comprised of 30 profitable and time-tested companies, the Dow Jones is the perfect example of how buy-and-hold investing can make investors rich. Over the trailing 50 years, the Dow has averaged an annualized return of about 7.5%. Published:9/13/2021 5:16:03 AM
[Markets] 3 Dow Jones Stocks to Buy Hand Over Fist Right Now Economic uncertainty suggests market volatility may be on the horizon, and that means it could be a good time to focus your investing on high-quality companies rather than more speculative growth plays. The Dow Jones Industrial Average index houses 30 large, highly traded companies that operate across a wide variety of industries, which makes it a strong starting point for investors seeking dependable category leaders. With that in mind, a panel of Motley Fool contributors has identified Apple (NASDAQ: AAPL), Merck (NYSE: MRK), and Caterpillar (NYSE: CAT) as top Dow Jones stocks to buy right now. Published:9/12/2021 6:42:28 AM
[Markets] Dow Jones Dips As Apple Falls On App Store Bombshell; Roblox, EA Stock Jump; AMC Pops The Dow Jones fell as Apple stock dipped on an App Store ruling. Roblox stock and and Electronic Arts popped. AMC stock surged. Published:9/10/2021 3:54:27 PM
[Markets] Dow Jones Slips As Indexes Reverse Lower; Antitrust Ruling Hits Apple; Economic Data Points To More Inflation The Dow Jones Industrial Average moved slightly lower in today's stock market, after turning briefly positive in late afternoon trading. Published:9/10/2021 2:54:47 PM
[Markets] Apple's stock takes a dive to pace the Dow's losers after report of unfavorable court decision Shares of Apple Inc. took a 2.8% dive in midday trading Friday, enough to pace the Dow Jones Industrial Average's losers, after a reportedly unfavorable court ruling in the case between the technology behemoth nd Epic Games. The stock was trading up about 0.1% just before the reports of the court's decision surfaced, and had been up as much as 0.9% at an intraday high of $155.48 earlier in the session, then fell as much as 3.5% to a low of $148.70 before bouncing slightly. The stock's $4.25 pric Published:9/10/2021 11:30:13 AM
[Markets] Dow, S&P 500 mark longest losing skid in 12 weeks as stock market wobbles lower The Dow Jones Industrial Average and the S&P 500 marked a fourth straight loss Thursday, relinquishing earlier gains that had been partly attributed to indications President Joe Biden will expand COVID-19 vaccine mandates for federal workers. Investors sold health-care, consumer-staples real-estate stocks, weighing on the broader market, which has mostly been trading in record territory until this holiday-abbreviated week's recent slump. The Dow closed down over 150 points, or 0.4%, at 34,879, l Published:9/9/2021 3:26:29 PM
[Markets] Dow Jones Dips As Biden Drug Plan Hits Health Stocks; Warren Buffett Stock Passes Buy Point The Dow Jones fell as a Biden administration plan to cut prescription prices hit health care stocks. A Warren Buffett stock passed a buy point. Published:9/9/2021 2:57:44 PM
[Markets] US STOCKS-Wall St holds ground as jobless claims fall to near 18-month low "This jobs data is counter-intuitive to the way market are moving because it provides a reason for the Federal Reserve to pull back its asset purchases sooner, a factor that has weighed on markets recently," said Jeff Powell, managing partner at Polaris Wealth Advisory Group. The S&P 500 and the Dow Jones were little changed after gaining in early trading, hinting they were set to snap a three-day losing streak. Investor mood has been glum this week after a recent monthly jobs report showed a slowdown in U.S. hiring amid worries over a fading recovery. Published:9/9/2021 11:54:05 AM
[Markets] Dow Jones Erases Early Gains That Came On Jobs Data; Nike Leads Blue Chips Key market indexes were mildly higher midday, after trimming early gains spurred by bullish jobs data. Nike led the Dow Jones industrials. Published:9/9/2021 11:31:16 AM
[Markets] GLOBAL MARKETS-Wall Street gains, European shares reverse earlier losses Euro zone bonds were on course for their best day in months on Thursday as the European Central Bank took its first tentative step in withdrawing COVID-era stimulus, and Wall Street indexes gained after weekly jobless claims data fell to a pandemic low. The Dow Jones Industrial Average rose 41.01 points, or 0.12%, to 35,072.08, the S&P 500 gained 3.34 points, or 0.07%, to 4,517.41 and the Nasdaq Composite added 39.29 points, or 0.26%, to 15,325.93 by 11:22 a.m. EDT (1523 GMT). Europe's STOXX 600 reversed earlier losses and banking shares climbed after the ECB signaled it will only slightly reduce its emergency bond purchases over the coming quarter, in line with expectations. Published:9/9/2021 10:52:24 AM
[Markets] Stocks edge higher in early trade as jobless claims fall U.S. stocks were trading with small gains after a mixed opening Thursday, following data that showed a drop in first-time applications for jobless benefits to a pandemic low. The Dow Jones Industrial Average was up 40 points, or 0.1%, at 35,071, while the S&P 500 rose 0.1%, to 4,517. The Nasdaq Composite advanced 0.1% to 15,308. Initial jobless claims fell by 35,000 to 310,000 in the week ending Sept. 4, the lowest since the pandemic struck in March 2020. Published:9/9/2021 9:22:44 AM
[Markets] Dow Jones Component 3M Stock Could Add Bearish Exposure With Options With the Dow Jones Industrial Average pulling back to its 50-day line, traders may be looking to add some bearish exposure to their portfolios. Take 3M. Among Dow Jones industrials members, 3M stock is on the weaker side. Published:9/8/2021 1:16:03 PM
[Markets] Dow Jones Slides As Yellen Warns Congress; Apple Sells Off From Record High; Tesla Skids Amid China Sales The Dow Jones Industrial Average dropped 150 points Wednesday, as Tesla stock reversed lower amid China sales. Apple fell from record highs. Published:9/8/2021 10:47:23 AM
[Markets] Dow Jones Slides As Apple Sells Off From Record High; Tesla Reverses Amid China Sales The Dow Jones Industrial Average dropped 150 points Wednesday, as Tesla stock reversed lower amid China sales. Apple fell from record highs. Published:9/8/2021 10:11:48 AM
[Markets] Stocks open slightly lower as worries continue over delta variant Stocks opened slightly lower Wednesday, with analysts attributing weakness to continued concerns over the spread of the delta variant of the coronavirus that causes COVID-19. The Dow Jones Industrial Average was down 82 points, or 0.3%, at 35,018, while the S&P 500 was off 10 points, or 0.2%, at 4,510. The Nasdaq Composite declined 44 points, or 0.3%, to 15,330, after the tech-heavy index on Tuesday finished at a record. Published:9/8/2021 8:49:00 AM
[Markets] Futures Extend Slide, European Markets Drop On Growth, Tapering Fears Futures Extend Slide, European Markets Drop On Growth, Tapering Fears

World stocks receded from the previous session’s record highs, European stocks were headed for the biggest decline in almost three weeks and US futures were set for a third straight day of losses on Wednesday with the global growth outlook coming under increasing pressure while the dollar hit one-week highs and 10Y yields dipped as investors reduced exposure to riskier assets. S&P futures briefly fell 0.5%, tipping below 4,500 before, recovering losses after the S&P 500 fell 0.34% on Tuesday, while Dow futures were flat and Nasdaq emini futs were fractionally in the red as banks from Morgan Stanley to Citigroup turned cautious on US equities.

The S&P 500 and Dow Jones indexes closed lower on Tuesday, but the Nasdaq edged up to an all-time high after shares of Apple and Netflix hit record levels. US stocks have come under increasing pressure in recent days as investors have turned increasingly cautious following Friday’s weak August payrolls data and uncertainty over tapering. 

In the premarket, cryptocurrency-exposed stocks drop as Bitcoin falls along with other digital currencies after Coinbase said it received a warning from the Securities and Exchange Commission. Future Fintech (FTFT) falls 4.1% and Coinbase (COIN) declines 2.2%, while Marathon Digital (MARA) loses 1.3%. FAAMG gigatechs such as Microsoft, Amazon, Facebook and Alphabet Inc fell between 0.1% and 0.3% in premarket trading. PayPal rose 0.7% after it said it would acquire Japanese buy now, pay later (BNPL) firm Paidy in a $2.7 billion largely cash deal. Tesla edged 0.6% higher after the China Passenger Car Association (CPCA) said the electric vehicle maker sold 44,264 China-made vehicles in August and reported a jump on local deliveries.  Here are some of the other big movers today:

  • Coty (COTY) falls 6.8% after announcing the start to offer Class A stock by KKR Rainbow Aggregator LP.
  • India Globalization Capital (IGC) jumps 18% after the company says its cannabis-based drug for Alzheimer’s was safe and well tolerated in an early-stage clinical trial on 12 patients.
  • Kadmon (KDMN) surges 78% after Sanofi’s $1.9 billion cash acquisition of the U.S. biotech.
  • Nio Inc. (NIO) slides 3.1% after announcing a $2 billion at-the-market offering postmarket Tuesday. Its peers like Li Auto (LI) and Xpeng (XPEV) also declines by 0.5% and 0.8% respectively.
  • UiPath (PATH) slips 7% after sales forecast trails some estimates.

And then there is tapering: despite the weakest jobs report in seven months on Friday, St. Louis Fed President James Bullard said in an interview with the Financial Times on Wednesday that the Fed should move forward with a plan to taper QE despite the slowdown in job growth.

"Everything is tapering, tapering, tapering. We are looking at every single central bank - when is the next one?” said Eddie Cheng, head of international multi-asset portfolio management at Wells Fargo Asset Management, though he added: “The Delta variant impact is still running like a wild card”.

MSCI’s world equity index fell 0.17% after seven consecutive days of gains.

European equities slumped, with the Euro Stoxx 50 dropping as much as 1.5%, and the Stoxx 600 gauge headed for the biggest decline in almost three week; the DAX and SMI lag. Autos, industrial and media names are the weakest sectors with travel and retail the sole sectors in the green. Britain’s FTSE 100 struck two-week lows and were down 0.56%. European traders were focused on whether the European Central Bank will this week also begin to scale back its bond purchase program.

“What is likely ahead of us is a continued but temporary deceleration of economic activity of one to three months which likely started in August,” said Sebastien Galy, senior macro strategist at Nordea Asset Management.  "Fears that central banks might start to taper their asset purchases seems to have knocked away a little confidence, particularly given tomorrow’s ECB decision where many expect we’ll begin to see the start of that process, not least with inflation there running at its highest levels in almost a decade,” Deutsche Bank analysts said in a note. 

Here are some of the biggest European movers today:

  • B&M shares gain as much as 5.9% as it says revenue in the year to date has been broadly in line with market expectations, though gross margins have been stronger than originally anticipated in the B&M U.K. fascia business.
  • Dunelm rises as much as 11% after its FY profit topped estimates and it announced a special dividend, with analysts saying the payout points to a more confident outlook for the home furnishings retailer.
  • EasyJet shares rise as much as 3.8% and Ryanair shares up by as much as 2.3% after the Telegraph reported the U.K. may scrap its Green and Amber warning lists for foreign travel next month
  • Siemens Gamesa falls by as much as 7.5% and Siemens Energy drops by as much as 6.1% after JPMorgan downgrades both stocks. Other wind- energy stocks also fell including Orsted, down as much as 3.6%, after UBS cut its rating to neutral.
  • InPost falls as much as 4.2% despite its 2Q results getting a good reception from analysts, who noted its record margins and strong growth in parcel volumes.
  • Interparfums shares sink as much as 7.8% as its sales forecast disappointed and branded fragrances maker was downgraded by both Oddo and Midcap Partners.

Earlier in the session, the MSCI Asia Pacific Index slipped 0.1% while Japan’s Topix index closed 0.8% higher, with the rally driven by Japanese Prime Minister Yoshihide Suga’s decision to effectively step down. Asian stocks retreated, led by benchmarks in Korea and Taiwan, as investors awaited fresh catalysts following an eight-day rally. The MSCI Asia Pacific Index fell as much as 0.4%, before paring much of those losses. The regional benchmark is up by more than 8% from its lowest level for this year, marked on Aug. 20. A group of materials firms declined the most, offsetting gains in utilities. Regional equities have been in recovery since late August as concern over any abrupt tapering by the U.S. Federal Reserve abated and a selloff in Chinese equities eased. Still, stocks have been whipsawed by the rise and fall of daily virus cases in some countries and attempts by China to regulate a wide range of businesses.  Chinese blue chips dropped 0.41%, weighed down by recent soft data in the world’s second-biggest economy.

“A window remains for positive equity returns before the Fed raises rates in 2023 and a counter-trend dollar rally starts,” Jefferies strategist including Darby wrote in a note. “But a lot depends on further easing by China and better S.E. Asia vaccine roll-outs. The good news is that global trade is booming and an IT spending cycle is unfolding.” Singapore’s Straits Times Index fell more than 1% after local Covid-19 infections jumped to the highest in more than a year. South Korea’s Kospi was driven lower by a plunge in Kakao and Naver, after prominent lawmakers warned internet giants against pursuing profits and abusing their market dominance.

Japan outperformed as investors continued to be cheered by prospects for a new government and a recovery from the pandemic, with the Nikkei 225 Stock Average’s rally bolstered by gains in SoftBank. The Nikkei 225 Stock Average climbed 0.9% to 30,181.21, its highest closing level since March 18. The eight-day rise marks the blue-chip gauge’s longest win streak since November. SoftBank was the largest contributor to the Nikkei 225’s advance, rising for a second day on a deal that may set up a buyback for the Japanese tech giant.  Telecommunications providers and electronics makers were the biggest boosts to the Topix, which rose 0.8% to the highest level since August 1990. Trading volume on the first section of the Tokyo Stock Exchange was 3.7 trillion yen ($33.3 billion), the most since May 27. Friday marks the expiration of options and futures contracts in the so-called “special quotation” settlement. The event often leads to speculative trading in the run-up and heavy volumes on the day, especially in quarter-ending months like September. “Investors are eying positive change in Japanese politics, but they are also looking to the major SQ on Friday -- foreign investors that had sold futures are now trying to buy back positions as the cash market has jumped,” said Masahiro Ichikawa, chief market strategist at Sumitomo Mitsui DS Asset Management Co. “Should the Nikkei 225 exceed the SQ price Friday morning, it would indicate that the market remains firm.”

Australian stocks declined as miners, consumer staples tumble. The S&P/ASX 200 index fell 0.2% to close at 7,512.00 as materials and consumer staples stocks weighed on the benchmark. Eagers was the worst performer, retreating from a record high set Tuesday. Macquarie was among the top performers after issuing positive 1H guidance. In New Zealand, the S&P/NZX 50 index fell 1% to 13,193.01.

In rates, 10Y Yields fell to 1.3512% compared to a U.S. close of 1.371% on Tuesday, retreating from this week’s eight-week highs in a quiet session. Germany’s 10-year Bund yield also hit eight-week highs before edging lower to -0.331%. Peripheral spreads widen a touch with the belly of the Italian curve widening ~1.5bps to Germany.

In FX, USD and haven currencies are modestly bid given the weakness in stocks. The dollar hit a one-week high against the single currency and was trading at $1.1819. It also reached a one-week peak against an index of currencies, recovering from recent five-week lows. It was trading at 92.67 on the index, up 0.15%. The Bloomberg dollar index trades near best levels for the week. CAD and SEK are the weakest in G-10. Turkish lira snaps through 8.40 to lag EMFX peers. The pound weakened for a third day, its longest losing streak in a month, ahead of a Parliament vote on a government tax package that seeks to trim a U.K. budget deficit swollen by pandemic spending; Bank of England Governor Andrew Bailey’s comments will also be in focus as he faces the Treasury Select Committee on Wednesday. The Australian dollar was the worst G-10 performer while Australia’s bonds opened lower following Treasuries and held losses through the day; New Zealand peers also declined following a solid milk auction. The yen touched its weakest level in almost a month before rebounding as risk sentiment soured.

Bitcoin paused for breath after plunging 17% on Monday to a low of around $43,000 before recovering. It was last at $46,552, down 0.7%.

In commodities, crude futures pushed higher, returning toward Asia’s best levels. WTI jumped 1.38% to $69.30 a barrel and Brent crude rose 1.14% to $72.50 per barrel, with prices supported by a slow restart to production in the Gulf of Mexico after Hurricane Ida hit the region. Base metals were mixed: LME copper underperforms, snapping through $9,300/MT to trade down as much as 1.5%.  Gold gained 0.17% to $1796.90 per ounce in line with the risk-averse mood and just below the psychologically key $1,800 level which it fell through in the previous session.

Looking at the day ahead now, and data releases include US job openings and consumer credit for July, alongside Italian retail sales for July as well. From central banks, we’ll get the Bank of Canada’s latest rate decision, the Federal Reserve will be releasing their Beige Book, and speakers include the BoE’s Bailey, Broadbent, Ramsden and Tenreyro, and the Fed’s Williams and Kaplan.

Market Wrap

  • S&P 500 futures down 0.4% to 4,499.75
  • STOXX Europe 600 down 1.2% to 467.39
  • MXAP down 0.2% to 206.88
  • MXAPJ down 0.6% to 671.33
  • Nikkei up 0.9% to 30,181.21
  • Topix up 0.8% to 2,079.61
  • Hang Seng Index down 0.1% to 26,320.93
  • Shanghai Composite little changed at 3,675.19
  • Sensex down 0.3% to 58,082.81
  • Australia S&P/ASX 200 down 0.2% to 7,512.00
  • Kospi down 0.8% to 3,162.99
  • Brent Futures up 0.2% to $71.83/bbl
  • Gold spot up 0.2% to $1,798.76
  • U.S. Dollar Index up 0.20% to 92.70
  • German 10Y yield fell 1.0 bps to -0.332%
  • Euro down 0.2% to $1.1820
  • Brent Futures up 0.2% to $71.83/bbl

Top Overnight News courtesy of Bloomberg

  • “There is the possibility that we may be able to normalize monetary policy sooner than most financial market experts expect,” European Central Bank Governing Council member Robert Holzmann says in Eurofi Magazine
  • “Pandemic measures, temporary in their nature, will be phased out eventually, but the current situation still calls for monetary policy to remain highly accommodative,” European Central Bank Governing Council member Bostjan Vasle says in Eurofi Magazine
  • The Federal Reserve should press ahead with a plan to taper its massive pandemic stimulus program despite weak U.S. jobs growth last month, the Financial Times reports St. Louis Fed President James Bullard as saying in an interview
  • Jitters in the Chinese high-yield dollar bond market are prompting investors to chase quality debt in Asia, pushing down spreads on investment-grade notes to pre-pandemic levels

A more detailed look at global markets courtesy of Newsquawk

Asia-Pac equity markets followed suit from the lacklustre performance in the US where sentiment was subdued on return from the Labor Day weekend with weakness seen in cyclicals. ASX 200 (-0.2%) traded negative as the ongoing COVID-19 disruptions continued to take their toll on the nation’s stock markets and with gold miners frontrunning the declines after the precious metal recently slipped beneath the 1800/oz level, although losses for the index were stemmed with the top-weighted financial sector underpinned by the higher yield environment. Nikkei 225 (+0.9%) recovered from opening losses, helped by stronger than expected GDP revisions for Q2 and although the government is likely to extend COVID emergency measures to the end of this month, reports added that it will gradually ease COVID-19 restrictions beginning in October. Furthermore, SoftBank was the biggest gainer in the Japanese benchmark with its shares briefly higher by double-digit percentages after the recent share-swap agreement with Deutsche Telekom fuelled speculation it could lead to a share buyback. Hang Seng (-0.1%) and Shanghai Comp. (Unch) traded indecisively amid ongoing regulatory and debt concerns with reports noting that China will increase transparency of policies and will crackdown to better support companies in competition, while Evergrande shares were choppy after Fitch downgraded its credit rating from CCC+ to CC which reflects the view that a default of some type seems probable. Finally, 10yr JGBs declined following the bear steepening in US where bonds were also pressured by increased issuer activity and with demand dented by the GDP-uplifted mood in Japanese stocks, although the pressure in JGBs was cushioned by the BoJ's presence in the market for more than JPY 1tln of government bonds.

Top Asian News

  • Gold Edges Up as Bond Yields Fall After Biggest Drop in a Month
  • Tesla Delivers 44,264 China-Made Cars in Aug., up 34.3% M/m
  • China Aug. Retail Passenger Vehicle Sales Fall 14.7% Y/y: PCA
  • China Praises Hong Kong Arrests of Tiananmen Vigil Organizers

Bourses in Europe saw losses intensify shortly after the cash open and have since trickled lower and stabilised near lows. (Euro Stoxx 50 -0.7%; Stoxx 600 -0.8%). The downside across Europe also reverberated across the pond but to a lesser extent and with the effects fleeting. The ES (-0.1%) briefly dipped below 4,500, the YM (-0.1%) fell below 35k, whilst the RTY (-0.1%) initially narrowly underperformed, and the NQ (-0.1%) is cushioned by yields. There is no discernible catalyst behind the losses across equities, and as to why sentiment deteriorated from the lacklustre APAC handover. That being said, the rest of the week is packed with central bank updates, including tomorrow’s ECB (full previous in the Newsquawk Research Suite), but before that, several Fed speakers. On that note, Fed’s Bullard (2022 voter) was the first official to speak post-NFP and held onto his hawkish stance by stating the Fed should proceed with tapering despite the weak US jobs data, while he also dismissed concerns about the rebound in the labour market was faltering and said there is plenty of demand for workers – it will be interesting to see how aligned other Fed officials are to this view. Back to Europe, the majors see broad-based losses with no standout performer. Sectors are all in the red and do not portray a clear theme nor bias. Travel & Leisure is among one of the better performers, with some downside potentially alleviated by reports that the UK travel traffic light system could be tweaked under plans drawn up by ministers, which could mean the red category will still require hotel quarantine, but amber and green categories will disappear, and travel will be determined by vaccination status as opposed to country, according to the Telegraph. Further for travel, Ryanair (+1.7%) CEO noted the Co. will be operating at 90% of pre-covid volumes by the Christmas period but will have lower pricing, whilst summer 2022 is expected to be “very strong”. Ryanair also guided 90-100mln passengers for FY 2022, and added that the trend is moving towards to upper end of that range. Moving on, Auto & Parts, alongside Banks, reside at the foot of the bunch, the former weighed on by the ongoing chip shortage and Stellantis’ (-2.3%) losses after Dongfeng filed to sell a 1.15% stake in the Franco-Italian carmaker. Autos may also feel headwinds from the Chinese retail passenger vehicle sales declining almost 15% Y/Y, although Tesla (Unch pre-market) Chinese-made cars sales rose 34.3% in the period. In terms of individual movers and shakers, Smiths Group (+2.1%) resides as one of the winners after divesting Smiths Medical for USD 2.7bln.

Top European News

  • Morrison Seeks Auction to Decide Between Fortress, CD&R Bids
  • Smiths Group to Sell Medical Unit to ICU for $2.35 Billion (1)
  • Deutsche Bank Chief Blames Europe for Keeping Banks Small
  • Gold Edges Up as Bond Yields Fall After Biggest Drop in a Month

In FX, the Dollar index has extended its recovery from post-NFP lows after a shallower a brief retreat to 92.472 and is now targeting loftier upside chart levels ahead of last Wednesday’s 92.790 peak from a 92.732 high, thus far. Latest gains are broad based, but not universal as the Greenback’s main safe-haven rivals are in demand against the backdrop of deteriorating risk sentiment in equities especially. However, the Buck is also up independently or with some fundamental impetus following comments from Fed’s Bullard as the first official to respond to the disappointing headline payrolls number, and discounting the big miss on grounds that there is ample demand for staff, so tapering should go ahead. The impending JOLTS data may well back him up, while Williams and Kaplan are scheduled either side of the Beige Book.

  • JPY/CHF - As noted above, the Yen and Franc are ‘benefiting’ from risk-off positioning to a degree, as Usd/Jpy eases back towards the low 110.00 area from around 110.45 and Usd/Chf from just over 0.9200, while Eur/Jpy and Eur/Chf retreat from overnight peaks as well in classic safety flight fashion, albeit not extreme.
  • CAD/AUD - The major casualties amidst aversion and relative strength in their US peer, but the Loonie also looking increasingly nervous ahead of the BoC policy meeting that might err on the side of caution given the spread of the Delta variant. Usd/Cad is hovering near the top of a 1.2707-1.2626 range as implied volatility picks up to price in a 68 pip break-even for the event that coincides with August’s Ivey Canadian PMIs - full BoC preview available via the Research Suite and to be posted on the Headline Feed before 15.00BST. Elsewhere, the Aussie is now more than a full big figure under Tuesday's post-RBA apex against the backdrop of weak underlying commodities, but keeping its head just over 0.7350.
  • EUR/GBP/NZD - All conceding more ground as the Greenback revival gathers momentum, with the Euro currently in the bottom half of approximate 1.1800-1.1900 m-t-d extremes and looking for fresh guidance from the ECB on Thursday, while the Pound remains depressed close to 1.3750 having lost 1.3800+ status yesterday following confirmation of higher taxes to fund NHS spending from UK PM Johnson and now awaiting BoE speakers at the TSC for any fresh policy insight. Back down under, the Kiwi has Q2 NZ manufacturing sales on the radar as its pivots 0.7100 and 1.0400 vs its US and Antipodean counterparts respectively.
  • SCANDI/EM - The Nok and Sek are both softer as the general market tone sours, but the latter is holding above 10.2000 and does not seem likely to trigger decent option expiry interest at the 10.2500 strike (1 bn) against the Eur at this stage. Conversely, the Try appears in danger of further depreciation and a test of 8.5000 vs the increasingly buoyant Usd after candid remarks from the CBRT Governor who conceded that there is room for improvement in terms of Turkey’s inflation rate, reserves situation and overall risk premium, rather than his contention that policy is tight enough to reduce inflation in Q4. On that note, CPI is now 25 bp higher than the benchmark rate, at 19.25%.

In commodities, WTI and Brent front-month futures have been consolidating throughout most of the European morning following the prior session’s losses, and on balance, the benchmarks did not see much follow-through from this morning’s losses across stocks, although WTI Oct and Brent Nov have subsequently been gaining heading into the US open, with the former back above USD 69/bbl and the later inching closer towards USD 72.50/bbl. News flow for the complex has been light, but over in the Gulf of Mexico, participants are cognizant of a potential cyclone formation in the next 48 hours for a system located over the south-central GoM, just as the BSEE reports the slow resumption of oil and gas operations, with the latest metrics suggesting 79% of offshore production still shuttered (vs 84% D/D). Over to the demand side, Qatar narrowed its price differentials to Oman/Dubai for Marine Crude and Land Crude in lockstep with Saudi’s lowering of its Asia OSPs. Elsewhere, the Ryanair CEO hit the wires today and suggested its volumes will be around 90% of pre-pandemic levels around Christmas, whilst holding a robust outlook for next year, and separate reports also stated that the UK traffic light system would be tweaked whereby the “amber” and “green” categories will shift to a vaccination-based system – which in turn feeds into jet fuel demand. Ahead, the weekly Private Inventories will be released alter today on account of Monday's US Labor Day Holiday, with the DoEs released tomorrow. Over to metals, spot gold and silver trade flat and remain contained to APAC ranges in the absence of a fresh macro catalyst and ahead of a slew of central bank updates. Spot gold, during European trade, remained under USD 1,800/oz and sandwiched between its 50 and 21 DMAs at USD 1,797.70/oz and USD 1,1795/oz. Meanwhile, LME copper has remained subdued around the USD 9,250/t mark, with China’s economic slowdown and base metal crackdown cited by traders. Elsewhere, China’s coke futures and coking coal swung between gains and losses after the market regulators announced an increase in transaction fees for actively -traded contracts.

US Event Calendar

  • 1:10pm: Fed’s Williams Discusses Economic Outlook
  • 2pm: U.S. Federal Reserve Releases Beige Book
  • 6pm: Fed’s Kaplan Holds Virtual Townhall

DB's Jim Reid concludes the overnight wrap

Today the tears will be flowing at home as the kids all go back to school. Actually the twins start school officially today (Reception) after a year in the nursery. How time flies. It will be hard to judge how many of my wife’s tears will be emotional due to them starting school and how much will be an immense release of joy to be able to pass them onto someone else for a few hours a day as all three have been a big handful of late. Constantly fighting, shouting and screaming. She said she is going to get home from dropping them off today and she’s going to sit in a quiet dark room for 2 hours and close her eyes and do absolutely nothing.

As US markets got back to school themselves after Monday’s holiday, yesterday witnessed a selloff across multiple asset classes as markets took a break from record highs. In some ways the moves were surprising, since yesterday’s data releases actually surpassed expectations, whilst the global picture on the pandemic is continuing to brighten for now. However, fears that central banks might start to taper their asset purchases seems to have knocked away a little confidence, particularly given tomorrow’s ECB decision where many expect we’ll begin to see the start of that process, not least with inflation there running at its highest levels in almost a decade.

Those tapering fears were evident in sovereign bond markets, which sold off strongly on both sides of the Atlantic. Yields on 10yr Treasuries ended the session up +5.1bps at 1.37%, their highest closing level in nearly 2 months. Yields were propelled by both higher inflation expectations (+2.4bps) and real rates (+2.6), as the latter closed above -1% for the first time since mid-July. There was also a noticeable curve steepening, with the 2s10s slope up +3.7bps. Over in Europe there were similarly noticeable rises, with yields on 10yr bunds up +4.5bps to their highest levels in almost 2 months as well, whilst other 10yr yields including gilts (+4.3bps), OATs (+5.1bps) and BTPs (+6.3bps) followed suit.

Staying with yields, I did a CoTD (helped by Craig Nicol) yesterday showing that 85% of US HY now has a yield below CPI. It’s never been above 10% prior to this year. To outstrip inflation you now have to own weak single-Bs or below. Clearly inflation will likely dip from here but even at 3%, 35% of US HY will yield below inflation. See the CoTD here and if you want to be added to the daily list please email jim-reid.thematicresearch@db.com.

Much like bond markets, equities fell back yesterday, with the S&P 500 (-0.34%) seeing a small but broad-based decline that saw 411 of its members lose ground on the day, whilst the Dow Jones (-0.76%) and Europe’s STOXX 600 (-0.49%) also dipped. Tech stocks were a relative outperformer, with the NASDAQ (+0.07%) managing to eke out a modest gain, though megacap tech stocks put in a strong performance, as the FANG+ index rose +1.40% to another all-time high, aided by sizeable gains for Netflix (+2.74%) and Tesla (+2.64%). On the other hand, bond proxy sectors such as utilities (-1.37%) and real estate (-1.13%) were among the worst performers in the US. Utility companies (-0.90%) also lagged in Europe, with chemical (-1.16%) and healthcare (-1.02%) stocks the other main underperformers. Meanwhile, the souring risk sentiment sent the US dollar higher for the first time in 6 sessions as the greenback added +0.52% - its largest one day gain in 3 weeks.

Overnight in Asia, the Nikkei is on course of its longest winning streak since November 2020 as it is up +0.49% marking the eighth consecutive gain. Other regional indices are generally trading weaker though with the Hang Seng -0.52%, CSI (-0.25%), Kospi (-0.86%) and Asx (-0.37%) all down. The Shanghai Comp (+0.07%) is trading broadly flat. In terms of overnight data releases, Japan’s final 2Q annualised GDP printed at +1.9% qoq vs. +1.6% qoq expected.

In other overnight news, Bloomberg reported that the Biden Administration is planning to distribute one-time $600 pandemic relief payments to US meatpacking and farm workers. The move expands an agriculture aid program which sets aside as much as $700 mn of aid, to be distributed through state agencies, tribal entities and non-profit groups. Elsewhere, yields on 10y USTs are down -1.2bps to 1.362%. Futures on the S&P 500 (-0.02%) are flattish while those on the Stoxx 50 are down -0.25%.

Turning to the German election, our colleagues in Germany put out a comprehensive slide pack yesterday (link here) looking at the election and its implications ahead of polling day on September 26. Importantly, it looks at the most likely coalition options and the policy proposals of the various parties,as well as the mechanics of the German election process. Speaking of that election, the latest Forsa poll created some fresh headlines yesterday by showing Chancellor Merkel’s CDU/CSU bloc falling to an all-time record low of 19%. Obviously it’s just one poll, but it put the SPD on 25%, ahead of the CDU/CSU on 19% and the Greens on 17%. Interestingly, given the margin of error in this specific poll is +/- 2.5%, this means the SPD’s 6-point lead exceeds the normal margin of error, and fits into the pattern of other polls over the last week putting them consistently ahead of the CDU/CSU.

Meanwhile in the UK, there were some important policy announcements, with the government announcing an increase in National Insurance (similar to a payrolls tax) by 1.25 per cent, as well as a rise in the rates of dividend tax by 1.25 per cent, in order to fund higher spending on health and social care. Furthermore, it was confirmed that the pension “triple lock” would be suspended for a year, which sees the state pension rise by whichever is the biggest of inflation, average wage increases or 2.5%. This is because the statistical bounceback in earnings following the pandemic could have led to a massive increase in the state pension, even though underlying earnings have not risen by as much. Finally on UK economic policy, it was announced that a Spending Review would take place alongside an Autumn Budget on October 27 this year. I can’t help thinking the decision on tax is the beginning of a long road ahead of global tax rises given both debt and demographics. The pandemic has likely accelerated such a move given what it’s done to public finances.

Speaking of taxes, those in El Salvador can now use Bitcoin to pay their tax bill as the cryptocurrency became legal tender in the Central American nation yesterday – the first country to make such a move. It was a volatile start, with Bitcoin selling off -17.1% at one point as the government announced it had to disconnect its Bitcoin wallet to solve glitches. President Bukele later said the nation was “buying the dip” and had added roughly $26 million of the cryptocurrency yesterday. While Bitcoin did recover off the lows, it was still down -9.85% yesterday with other major coins such as Ether (-13.58%), XRP (-21.33%), and Litecoin (-20.28%) seeing much larger drops. Bitcoin is pretty stable overnight after all the fun and games yesterday. Overall this remains an experiment that bears watching as the use of bitcoin as true legal tender is probably the largest change to the cryptocurrency market since bitcoin futures were listed in 2017.

Turning to the pandemic, it was confirmed by a White House official that President Biden will outline a plan tomorrow to boost vaccinations and stop the spread of the delta variant. Meanwhile there were also a number of vaccine milestones reached yesterday, with the US reporting that 75% of adults had now received at least a first dose, while the UK reported that 80% of the over-16 population are now fully vaccinated. Elsewhere, the Asahi newspaper reported that the Japanese government is planning to extend the state of emergency in areas including Tokyo to the end of September. The state of emergency was originally scheduled to expire on September 12.

There was some positive data from the Euro Area, where the Q2 GDP reading was revised up to show growth of +2.2% (vs. +2.0% in the flash reading), whilst German industrial production in July grew by a stronger-than-expected +1.0% (vs. +0.8% expected). That said the German ZEW survey for September saw the expectations reading fall to 26.5 (vs. 30.3 expected), which marks the lowest figure for the expectations measure since March 2020.

To the day ahead now, and data releases include US job openings and consumer credit for July, alongside Italian retail sales for July as well. From central banks, we’ll get the Bank of Canada’s latest rate decision, the Federal Reserve will be releasing their Beige Book, and speakers include the BoE’s Bailey, Broadbent, Ramsden and Tenreyro, and the Fed’s Williams and Kaplan.

Tyler Durden Wed, 09/08/2021 - 08:02
Published:9/8/2021 7:07:40 AM
[Markets] Chinese Coal Prices Soar To Record High Ahead Of Surge In Mining Chinese Coal Prices Soar To Record High Ahead Of Surge In Mining

Remember when China vowed last year hit peak carbon emissions in 2030 and to reach carbon neutrality in 2060? Maybe it will (spoiler alert: it won't)...

... but long before we hit 2060, China plans on taking coal-based pollution to the next level.

Overnight coal futures prices a hit record level and are almost +80% higher than a year ago, signalling a desperate need for China to increase domestic production in the short term, notwithstanding the government’s plan to reduce reliance on coal in the long term. As Reuters energy analyst John Kemp writes, "electricity consumption is surging and the country is struggling to import sufficient volumes of competitively priced spot LNG, boosting the need for coal for power generation." 

Prices for the most-traded thermal coal futures contract on the Zhengzhou Commodity Exchange hit $150 a tonne on Tuesday, up from $85 a year ago, which was also the five-year average before the COVID-19 pandemic.

At the same time, coking coal on the Dalian Commodity Exchange jumped 4.3% to $448 per ton - both rose to intraday records.

As Reuters notes, surging prices are an indication of the tension between the country’s surging electricity demand and the government’s stated aim to limit coal output and reduce it over time in favor of renewable energy sources.
 
Coal production in the first seven months of the year was up at a compound annual rate of only 4.1% compared with the same period in 2019, according to the National Bureau of Statistics. But the country’s electricity generation increased at a compound annual rate of 7.4% over the same period in response to strong residential and industrial demand.


 
The fastest growth came from wind farms (+25% compound annual rate) and solar power (+24%), with slower growth from nuclear (+10%) and thermal generators (+7%) and a fall in hydroelectric output (-2%).

But both wind and solar are growing from a very low base so they have contributed only a small share of the extra generation required, with most of the extra generation coming from thermal sources, mainly coal.

In the first seven months of the year, China’s power producers generated 4,645 terawatt-hours (TWh), which was 615 more than in the same period in 2019.

But only a minority of the extra generation came from wind (+119 TWh) and solar (+36 TWh) sources, with most coming from thermal plants (+445 TWh)

While China is installing more wind and solar capacity than any other country, it is not enough to keep pace with surging electricity demand, forcing greater reliance on coal in the short term.  As a result, the country is having to run new and existing thermal power plants for more hours; the average thermal generating unit ran for 2,589 hours in the first seven months of this year, up 268 hours (+12%) from the same period in 2020, according to data compiled by the China Electricity Council.

Reflecting the tightening coal supply situation, the National Development and Reform Commission (NDRC), the country’s top economic regulator, this summer called for more coal output to help to meet peak demand for air-conditioning.

“Key coal-producing regions such as Shanxi, Shaanxi and Mongolia should take the lead in ... increasing production and supply,” the commission said in a circular issued on July 23.

The NDRC directed all areas and coal mining companies to boost output from larger and more productive mines, accelerating capacity replacement and new construction. It also ordered them to make the production of thermal coal their top priority and do everything possible to help power plants with low stocks to increase their number of days of coal storage, meaning that a deluge of domestic coal production is coming.

Indeed, Daiwa reported that thermal coal stockpiles at the port city Qinhuangdao located in the northern Hebei region, recorded a 12% decline for the week of Sept. 3 to less than 4 million tons. Chan said stockpiles of coking coal dropped 11% from last year. With coal imports sliding, China has just one option left: crank up its domestic coal-mining industry to 11.

Commenting on the soaring prices, Bloomberg echoed Reuters' observations that the ability to source coal has been challenging due to stricter safety policies imposed by the government following a series of deadly mine accidents. There have also been new measures to prevent mine flooding, which is also dwindling supplies. 

"Under current high prices, miners have been incentivized to boost production. This poses higher risk of accidents, which in turn leads to more frequent examinations," Morgan Stanley analyst Sara Chan said in a report. "Coal production is constrained as a result and this creates a circular loop for even higher prices."

The circular loop may persist for now, but it's only a matter of time before China ramps up production as the alternative is an unacceptable surge in prices. This means much more pollution emerging from China in the coming year; this is happening as 23 of the world's 25 most polluting cities are already in China.

Like other countries in Asia and Europe, China’s coal shortages and surging prices reflect the contradiction between the long-term need to move away from coal and the short-term challenge of meeting power demand. In the short term, higher coal prices are signalling the need to boost production to meet power producers’ needs and build sufficient stocks ahead of the winter heating season.

Meanwhile, demonstrating just how much of a straw man China's promises to clean up its act truly are, also on Tuesday China’s carbon price slumped to a new low even as trading volumes increased. Emission allowances traded on China's carbon market, the largest in the world, declined -0.2% Tuesday to close at 43.90 yuan ($6.80) a metric ton, the National Carbon Emissions Trading Agency said in a statement. Price is lowest since the market launched in July, with allowances closing Monday at 44 yuan a ton, signifying that virtually nobody on the mainland is actually serious about reducing the intensity of emissions generation.

Meanwhile, with everyone across the Pacific thinking coal is trash, perhaps there is some material upside opportunity as coal prices rise. Take a look at the Dow Jones U.S. Coal Index has been basing since March.

Is the index ready for an upswing on higher prices? And while we wait, we eagerly look forward to climate change messiah Greta Thunberg launching a critical tirade of China for the smog storm it is about to unleash.

Tyler Durden Tue, 09/07/2021 - 23:50
Published:9/7/2021 11:06:48 PM
[Markets] Dow Jones Slips As Apple Hits New High; Bitcoin Plunges Amid El Salvador Move; Tesla Surges The Dow Jones was lower in late trading Tuesday, but Apple was a bright spot in the blue-chip index. Tesla was a top gainer on the Nasdaq. Published:9/7/2021 2:42:36 PM
[Markets] US STOCKS-Wall Street falls on worries over slowing economic recovery The Dow Jones and S&P 500 fell on Tuesday, as worries over the slowing pace of economic recovery overshadowed hopes that the Federal Reserve would maintain its accommodative stance a little longer after a soft U.S. payrolls report. Amgen Inc and Merck & Co fell about 2.4% each as the drugmakers dragged down the Dow Jones index, after Morgan Stanley cut its rating on the stocks to "equal-weight" from "overweight". Published:9/7/2021 11:32:11 AM
[Markets] Dow Jones Sells Off As Apple Hits New High; Four Top Growth Stocks To Buy And Watch The Dow Jones Industrial Average dropped 200 points Tuesday, as Apple stock hit an all-time high in today's stock market. Published:9/7/2021 10:33:45 AM
[Markets] Nasdaq Composite marks 35th record close of 2021 but S&P 500, Dow limp lower after weak Friday jobs report U.S. stock indexes ended mixed Friday, with the Nasdaq booking its 35th record close of 2021, but the other two main bourses closing lower, heading into a three-day Labor Day weekend, after a report on monthly employment from the Labor Department came in weaker than expected, sparking fresh questions about the job market's recovery from the COVID-19 pandemic amid the spread of the delta variant. The Dow Jones Industrial Average closed down 0.2% on the session and booked a weekly decline of 0.24% Published:9/3/2021 3:35:51 PM
[Markets] Dow Jones Falls As Biden Blames Poor Jobs Report On Delta, Unvaccinated; DocuSign, MongoDB Pop The Dow Jones fell as President Joe Biden blamed a weak jobs report on the Delta variant and the unvaccinated. DocuSign and MongoDB stock jumped. Published:9/3/2021 1:05:16 PM
[Markets] The Mass Market Apple Car Is Being Planned For 2024 The Mass Market Apple Car Is Being Planned For 2024

For years, the rumors of Apple developing a mass market car were just that: rumors.

But now it is starting to feel as though we are getting closer to the rubber hitting the proverbial road, as reports surfaced this week that Apple is planning on the launch of a mass market EV by 2024. 

Apple is reportedly visiting with both Korean and Japanese car manufacturers, according to Apple Insider. The new 2024 timeline for the vehicle speeds up previous estimates, which had pinned mass market production of a vehicle by Apple closer to 2027. 

The company is in the midst of exploring the best way to produce the car amidst the ongoing semiconductor shortage. 

There have been a litany of rumors about the Apple car dating back to last year. For example, we reported in February this year that Apple was considering having Kia manufacture its EV in the U.S. 

At the time, Kia had reportedly "approached potential partners about a plan to assemble Apple Inc.'s long-awaited electric car in Georgia," according to Dow Jones

A partnership between the two companies could involve a "multibillion-dollar investment", it was reported, despite the fact that a deal had not yet been finalized. To date, no additional details have surfaced. 

Previously, we had reported on an ebb and flow of rumors that Apple was working with Hyundai as a partner in early 2021.  

Professional lagging indicator sell side analyst Dan Ives at Wedbush published a note at the beginning of the year noting that "Hyundai could be the first electric-vehicle partnership for Apple" and "that it expects the tech giant to ultimately announce electric-vehicle strategic partnership this year."

Ives said at the beginning of the year that Apple had a 35% to 40% chance of unveiling their own car by 2024 despite the "Herculean" hurdles involved, including battery technology, financial implications and regulatory red tape. He called the move to EVs a "smart" strategic move for Apple and said that a "larger strategic partnership with an established electric-vehicle player..." would be on its way.

The million dollar question remains: with who?

Tyler Durden Fri, 09/03/2021 - 10:31
Published:9/3/2021 9:47:37 AM
[Markets] Dow Jones Today, Stocks Open Lower On August Payrolls Dive; Broadcom Aces Breakout; DocuSign, Matson Rise In Buy Ranges Intel led the Dow Jones today, as stocks opened lower on Friday after disappointing August payrolls data. Published:9/3/2021 9:06:07 AM
[Markets] Dow Jones Leads Upside; S&P 500, Nasdaq Notch New Highs; Facebook, Netflix Stock Near Buy Zones The Dow Jones moved higher in today's market, but pared earlier gains. The S&P 500 and Nasdaq rose while both notched new all-time highs. Published:9/2/2021 3:46:36 PM
[Markets] Dow Jones Gains; Netflix Stock Pounces After Apple App Store Boost; 3 Stocks Pass Buy Points The Dow Jones edged higher Thursday. Netflix stock pounced on a buy point after Apple relaxed App Store rules on content subscriptions. Published:9/2/2021 2:31:57 PM
[Markets] Dow Jones Leads As S&P 500, Nasdaq Hit New Highs; Growth Stocks Rally On Earnings Stocks rose Thursday as the Dow Jones Industrial Average rallied 150 points while the S&P 500 and Nasdaq headed for record highs. Published:9/2/2021 11:22:31 AM
[Markets] GLOBAL MARKETS-Stocks charge ahead on U.S. data, dollar eases ahead MSCI's all-country world index climbed to a new peak, while the S&P 500 and Nasdaq also set new highs. MSCI's world stock index, which measures equity performance in 50 countries, rose 0.29% and was on track to post its fifth consecutive closing high. On Wall Street, the Dow Jones Industrial Average rose 0.38%, the S&P 500 added 0.32% and the Nasdaq Composite advanced 0.21%. Published:9/2/2021 10:32:44 AM
[Markets] 3 Flagging Dow Giants to Buy Today August was another great month for the stock market, with indexes hitting fresh highs. The Dow Jones Industrial Average (DJINDICES: ^DJI) has now gained roughly 16% so far in 2021 and several of its members, including Microsoft and American Express, are up over 30% so far. On the other hand, a few of the Dow's 30 components are flat or even down slightly as we approach the final quarter of the year. Published:9/2/2021 8:21:48 AM
[Markets] Futures Just Keep Ramping Higher As Bitcoin Rises Above $50,000 Futures Just Keep Ramping Higher As Bitcoin Rises Above $50,000

The financial capital of the world may be shut down after record flooding from Ida's remnants has effectively frozen mass transit in New York, but that is not preventing the algos, trading out of comfortable, air-conditioned server farms to ramp S&P futures higher and this morning spoos are up again rising by 0.2% or 8 points to 4,529 with Nasdaq and Dow Jones futures both about 0.2% higher as attention turns to today's initial claims data which is expected to print at 345K ahead of tomorrow's closely watched payrolls report. 10Y Treasury yields steadied below 1.30%. The dollar was little changed, while bitcoin rose above $50,000.

After the NYSE FANG index hit a new all time high yesterday, tech names were again broadly higher while a rise in the price of Brent crude above $72 helped move energy stocks higher after Wednesday's drubbing. Here are some other notable movers today:

  • Assembly Biosciences (ASMB) shares tumble 21% in premarket trading after the biopharmaceutical company announced plans to scrap the development of its ABI-H2158 (2158) drug for the treatment of chronic hepatitis B. William Blair downgraded its rating to market perform from outperform, citing a lack of clarity surrounding the serious adverse events induced by 2158, along with a scarcity of near-term catalysts.
  • U.S. listed shares of Chinese ride hailing firm Didi (DID) fell 1.3% after Chinese regulators summoned ride-hailing firms including Didi to discuss concerns related to the sector.
  • ChargePoint (CHPT) surges 12% with Jefferies (buy) saying the EV-charging company’s 2Q results and FY guidance look strong.
  • Chewy (CHWY) shares fall 9.4% premarket after the online pet products retailer’s sales outlook and guidance disappointed, prompting analysts to trim price targets.
  • Cryptocurrency-exposed stocks rise premarket, with Bitcoin continuing to gain and trading around the closely- watched $50,000 level. Bit Digital (BTBT) rises 5.8% and Marathon Digital (MARA) gains 4.5%, while Riot Blockchain (RIOT) advances 4%.
  • Hall of Fame (HOFV) sinks 10% after the company said it has postponed the Highway 77 Musical Festival due to an increase in Covid-19 cases throughout Ohio.
  • Focus Universal (FCUV) rallies as much as 61% after skyrocketing 278% on Wednesday.
  • Meten EdtechX (METX) tumbles 49% after the China-based English language training company’s planned share and warrants offering implied a 67% discount from Wednesday’s closing price.
  • Support.com (SPRT) rises 8.6% after slumping over the past two days, following a triple digit rally last week.

Expect a muted session today for the simple reason that many traders will be unable to leave their house: last night, the tail-end of hurricane Ida dumped a “record breaking” amount of rain over New York and New Jersey putting both areas into states of emergency. The weather triggered tornadoes, thunderstorms and torrential rain that has overwhelmed streets and forced transport services to grind to a halt. President Biden will address his administration’s response to Ida this morning.

In any case, all eyes are turning to jobs data due in 24 hours for clues on the economy and the Fed's next steps. Investors are trying to assess when the delta-Covid variant outbreak might peak and how that will play into timing of Fed bond taper plans. Global stocks are near record levels and gauges of implied financial market volatility are declining, as many remain optimistic that the Fed will never let stocks drop again the reopening from the health crisis will weather challenges. At the same time, a move into defensive havens such as mega-tech stocks are a sign traders are bracing for more negative data surprises. The latest ADP jobs data showed U.S. companies added fewer jobs than expected in August. Manufacturing expanded at a stronger-than-estimated pace but faced supply snarls.

“The market is fading Covid more as a risk in terms of really hampering economic activity,” Tracie McMillion, head of global asset allocation strategy at Wells Fargo Investment Institute, said on Bloomberg Television. “We think the Fed is going to stick with their word and they will start tapering later this year. But we don’t think they are going to be in any hurry to raise interest rates.”

Economic pessimism was underscored by Goldman Sachs strategist Zach Pandl who said that “our U.S. growth forecasts for the next two years are below other bank forecasts for the first time since the recovery began. Markets may underappreciate the coming step-down in growth momentum.”

A Reuters poll last month showed the S&P 500 is likely to end 2021 at 4,500 points, slightly lower than current levels.

The Stoxx Europe 600 Index rose 0.2%, with most industry groups posting modest gains. Swedish Orphan Biovitrum jumped 25%, the most in nine years, after private-equity firm Advent International and Singapore wealth fund GIC agreed to buy the drugmaker for the equivalent of $8 billion.

Asian stocks also edged higher, setting course for a fifth consecutive day of gains, with trading in a narrow range ahead of a report on U.S. jobs data that’s a litmus test for economic health. The MSCI Asia Pacific index swung between a gain of 0.2% and a fall of 0.3% throughout the day. A subgauge of consumer-discretionary firms including Alibaba and Sony provided the biggest support, while materials-group shares fell, weighing most on the gauge, as BHP Group and Nippon Steel dropped amid weaker iron ore prices.  The lull comes after the Asian stock benchmark capped a 2.3% gain in August, the best month since December, which helped the regional measure to trade near its highest since mid-July. The gains were preceded by two months of losses as worries over the delta virus variant and China’s tightening regulatory grip on various industries took a toll on the region’s investor sentiment.  “Investors seem undecided on how to respond to the string of U.S. data, which is what you can tell from today’s market moves,” said Shogo Maekawa, a strategist at JP Morgan Asset Management in Tokyo, noting that while ISM manufacturing data was positive, the ADP jobs report fell short of expectations. “There are also a lot of investors wanting to wait to see the key U.S. employment data.”  China’s technology stocks notched a fourth day of gains in a rally that lost some of its steam after regulators stepped up their criticism of the nation’s ride-hailing giants. Hong Kong’s Hang Seng Tech Index trimmed a rally of as much as 3.2% and closed up 1.6%, after criticism of ride-hailing firms highlighted risks from the nation’s ongoing crackdown on private industries. China’s overall market was steady, with traders assessing a central bank step to cushion the economy by helping smaller firms. Benchmarks in Thailand and India were the best performers, while those in Taiwan and South Korea retreated most. 

Japan stocks rose after mega-cap companies in the U.S. rallied to a record as traders turned to defensive shares. The Topix rose 0.1% to 1,983.57 at the 3 p.m. close in Tokyo, while the Nikkei 225 advanced 0.3% to 28,543.51. Sony Group Corp. contributed the most to the Topix’s gain, increasing 1.4%. Out of 2,186 shares in the index, 896 rose and 1,195 fell, while 95 were unchanged. Shares of West Japan Railway Co. slid 13%. Japan’s third-largest listed rail operator is seeking to sell around $2.5 billion in shares amid mounting losses as the coronavirus pandemic that’s devastated tourism drags on. 

India’s benchmark equity index rose, set for a third day of gains this week. Dr Reddy’s Laboratories advanced most. The S&P BSE SENSEX Index added 0.2% to 57,476.04 as of 9:55 a.m. in Mumbai, while the NSE Nifty 50 Index advanced by a similar magnitude. Both measures are trading near record highs after ending last month at new peaks. Of 30 shares in the Sensex, 14 rose and 16 fell. Sixteen of the 19 sector indexes on the BSE Ltd. advanced, led by a gauge of consumer durable stocks.  Low interest rates and ample liquidity are driving the buying sentiment in local stocks, which are now among the top performers in Asia. 

"The spread of the Delta variant amid still-low vaccination rates in many ASEAN economies and China's zero-tolerance Covid strategy has prompted governments to impose restrictions and order factory/port closures," warned analysts at Nomura. "Input shortages and low inventories will likely lead to production cuts and delayed shipments in Q3."

In rates, amid the jobs chatter, 10-year Treasury yields eased back to 1.29% and away from the recent top of 1.375%, while the U.S. dollar index touched a one-month low.

The Bloomberg Dollar Spot Index was set to decline a third day after reversing an earlier gain; the greenback weakened most of its G10 peers as risk-sensitive currencies rallied while the yen and the Swiss franc hovered. The euro inched up to trade near almost a one-month high amid broad dollar weakness, and the pound also inched higher; European bond yields fell. The Australian dollar led G-10 gains after climbing on Prime Minister Scott Morrison’s plans to relax curbs on movements; the nation posted a record trade surplus in July of A$12.1b vs est. A$10b. Japan’s bonds held steady after a 10-year note auction met solid demand; the yen traded in a narrow range.

The ramp in cryptos continued, sending Ethereum to the highest level since its May record, while Bitcoin was trading back over $50,000.

To the day ahead now, and data highlights from the US include July’s industrial production, factory orders and trade balance, along with the weekly initial jobless claims. From the Euro Area, we’ll also get the PPI reading for July. Otherwise, central bank speakers include the Fed’s Bostic and Daly.

Market Snapshot

  • S&P 500 futures up 0.2% to 4,531.00
  • STOXX Europe 600 up 0.2% to 473.95
  • German 10Y yield fell 1.7 bps to -0.390%
  • Euro little changed at $1.1845
  • MXAP little changed at 203.14
  • MXAPJ little changed at 668.23
  • Nikkei up 0.3% to 28,543.51
  • Topix up 0.1% to 1,983.57
  • Hang Seng Index up 0.2% to 26,090.43
  • Shanghai Composite up 0.8% to 3,597.04
  • Sensex up 0.8% to 57,770.59
  • Australia S&P/ASX 200 down 0.5% to 7,485.75
  • Kospi down 1.0% to 3,175.85
  • Brent Futures up 0.2% to $71.73/bbl
  • Gold spot up 0.1% to $1,815.27
  • U.S. Dollar Index little changed at 92.45

Top Overnight News from Bloomberg

  • The remnants of Hurricane Ida ripped through New York, New Jersey and across the Northeast early on Thursday morning, triggering tornadoes, thunderstorms, and torrential rain that inundated streets and paralyzed transport services
  • The euro-area economy’s rebound and a dramatic inflation surge has reignited the sparring among European Central Bank policy makers about when to shift the institution away from its crisis mode
  • For years, the premium paid for dollars over the euro, Japanese yen and so on in the cross-currency markets has been negative, indicating rampant demand for greenbacks. Now, these so-called cross-currency basis swaps are on the verge of turning positive in a major shift for money markets
  • Aluminum reached a fresh decade high, rallying with other metals after China ramped up financial support for small businesses and pledged better use of local government bonds as the economy showed further signs of a slowdown because of tight property controls and fresh virus outbreaks
  • After easing in the previous two months, a United Nations gauge of food costs rose 3.1% in August to near a peak set in May. The advance was driven by reduced grain production expectations, frosts that hurt sugar-cane crops in top grower Brazil and tightening oilseed supplies
  • The Bank for International Settlements will test the use of central bank digital currencies with Australia, Malaysia, Singapore and South Africa in an experiment that could lead to a more efficient global payments platform

A more detailed look at global markets courtesy of Newsquawk

Asian equity markets took their cues from a similar indecisive performance stateside where price action was choppy and the major indices finished relatively flat as participants digested varied data releases, including the disappointing ADP Employment data which precedes Friday’s NFP jobs report. ASX 200 (-0.6%) was pressured amid a continued surge of COVID-19 infections and with the declines led by mining names after the recent losses in commodity prices and fresh bout of China’s state reserve selling, with mining giant BHP the worst hit as it traded ex-dividend. Nikkei 225 (+0.3%) lacked firm direction with Japan mulling extending the COVID-19 state of emergency by two weeks and the KOSPI (-1.0%) failed to benefit from the upgrade to Q2 GDP which confirmed the fastest growth in more than a decade, as the strong economic growth data and a 9-year high CPI, added to the case for a further BoK rate hike this year. Hang Seng (+0.2%) and Shanghai Comp. (+0.8%) were kept afloat after recent soft data releases stoked calls for PBoC easing, while China's Cabinet will reportedly step up support for smaller businesses in which it will add CNY 300bln in relending quota for small firms and provide rediscount support to help ease their financing burdens. Finally, 10yr JGBs were slightly higher as they continued to nurse Tuesday’s slump and after having found support near 152.00. There were also comments from BoJ’s Kataoka who suggested the central bank should aggressively buy bonds and push yields down to prop up capex and investment, although the impact was muted given that he is a notorious dovish dissenter at BoJ meetings and with mixed results at the latest 10yr JGB auction also capping price action.

Top Asian News

  • China Ties Climate Work to Better U.S. Relations in Kerry Talks
  • Guangzhou R&F Dollar Bonds Sink to New Lows as Weakness Builds
  • Philippine BSP’s Usual Tools Not Yet Fully Used: Diokno
  • PAG-Backed $2 Billion Asia Hedge Fund to Reopen After Gains

European bourses remain just off the flat mark but have adopted more of an upside bias vs the mild downside seen across the region at the cash open following the cautious/mixed APAC handover. US equity futures have also seen some tailwinds from Europe, with broad-based performance across the ES, NQ, YM and RTY at the time of writing, and with catalysts scarce in European hours as the US jobs report looms. Sectors are predominantly in the green with no overarching theme. Travel & Leisure extends on earlier gains, led by its heaviest-weight stock Evolution (+3.5%) following reports that it has gone live in South Africa with SunBet. Healthcare also resides near the top of the bunch with AstraZeneca (+1.0%) cheering an announcement that multiple trials reinforce the efficacy of Imfinzi combinations, including with novel immunotherapies, for lung cancer patients across settings. On the downside, Basic resources are pressured as base metal prices remain subdued, albeit after taking somewhat of a breather overnight following yesterday’s selloff. However, some large-cap mining names are trading ex-divs, including the likes of Antofagasta (-0.4%), BHP (-6.3%) and Glencore (-0.6%). Banks have trundled to the foot of the bunch in sympathy with yields. In terms of individual movers, Babcock (-1.8%) continues to decline after the sale of its "nightmare" helicopter division for GBP 10mln after purchasing it for GBP 1.6bln seven years ago. The sale is part of the CEO's turnaround plan which includes GBP 400mln of disposals. In terms of the FTSE 100 reshuffle, Just Eat Takeaway (+1.0%) and Weir Group (+1.1%) are to exit the FTSE 100 and be replaced by Morrisons (+0.4%) and Meggitt (+0.2%).

Top European News

  • Sobi Shareholder AP4 Says Industrial Bidders Could Pay More
  • JPMorgan Agrees to Pay EU25M to Settle French Tax-Fraud Case
  • BNP Paribas in Talks With AgBank on Wealth Mgmt Venture: Reuters
  • Danske Bank Global Head of Primary Markets Joins SEB

In FX, the Aussie and Kiwi have both extended gains beyond half round number levels vs their US rival that were hampering further upside, with Aud/Usd and Nzd/Usd now approaching 0.7400 and 0.7100 respectively after the former cleared technical resistance in the form of the 50 DMA at 0.7376 today. Meanwhile, the Kiwi has topped its 100 DMA at 0.7083, but is still trying to make its way towards 0.7100 amidst headwinds from the Aud/Nzd cross that remains elevated above 1.0400 in wake of a 2nd consecutive record Aussie trade surplus that is shading robust NZ terms of trade marginally by virtue of the fact that it relates to July rather than Q2 and is therefore more current.

  • DXY - Antipodean Dollar outperformance aside, the Buck continues to flounder post-Powell and on the back of ADP most recently as the index struggles to find sure footing around 92.500 and the Greenback any real traction overall. However, the DXY is holding within a 92.536-388 range compared to Wednesday’s 92.376 low awaiting more pre-NFP jobs proxies that come via Challenger lay-offs today, but also a more timely snapshot of the labour market via IJC alongside trade and before factory orders, then 2 scheduled Fed speakers (Bostic and Daly).
  • CAD/GBP - A partial recovery in crude has given the Loonie another fillip and incentive to probe 1.2600 again in the run up to Canadian building permits and trade, while the Pound is back within striking distance of 1.3800, but still striving hard to defend or contain declines around 0.8600 against the Euro in the absence of anything UK specific.
  • EUR/JPY/CHF - All hugging tight lines vs their US counterpart, with the Euro taking a firmer grip of the 1.1800 handle and hardly hindered by stronger than expected Eurozone ppi data in contrast to the Yen that remains anchored around 110.00 following very dovish commentary from BoJ’s Katoaka. To recap, he stated that given economic developments bolder steps on monetary policy are needed, including an increase in bond buying to push short and long term rates down. Elsewhere, the Franc is restrained between 0.9160-40 and largely shrugged off, if not quite ignored conflicting Swiss macro releases, as CPI came in a tad firmer than forecast, but Q2 GDP missed and retail sales fell.

In commodities, WTI and Brent front month futures have been erring higher throughout the European session in the aftermath of the OPEC+ confab which turned out to be a smooth (and timely) affair. Producers, as expected, stuck to the plan of hiking 400k BPD – with the White House also welcoming the decision in a statement. WTI and Brent have erased the losses seen post-Novak yesterday, with the former just under USD 69/bbl and the latter near USD 72.00/bbl. Elsewhere, and from a policy standpoint, developments surrounding Iranian oil and nuclear talks will likely gain focus in the run-up to the next OPEC meeting in October. The Iranian Oil Minister said that as soon as the US’ unilateral illegal sanctions are lifted, Iran is ready to increase its oil output to the highest possible level to compensate for the losses caused by the sanctions, while he also noted that Tehran is determined to raise its oil exports irrespective of this. Aside from that, crude prices may take their cues from risk sentiment ahead of tomorrow’s US labour market report. In terms of bank commentary, the UBS notes that with oil demand set to rise, the bank expects the oil market to stay undersupplied, thus supporting prices. “We reiterate our advice for investors with a high-risk tolerance to be long Brent, add exposure to longer-dated oil contracts, or sell downside price risks”, the Swiss bank says. Elsewhere, spot gold and silver are once again uneventful within the same European ranges seen throughout most of this week thus far. LME copper remains subdued following yesterday’s selloff which was followed by a mild reprieve overnight – but again awaiting catalysts. Elsewhere, the Dalian commodity exchange is to raise speculative trading margin requirements for coking coal and coke futures to 15%, as of settlement on September 6th.

US Event Calendar

  • 8:30am: Aug. Initial Jobless Claims, est. 345,000, prior 353,000; Continuing Claims, est. 2.81m, prior 2.86m
  • 8:30am: 2Q Nonfarm Productivity, est. 2.5%, prior 2.3%; Unit Labor Costs, est. 0.9%, prior 1.0%
  • 8:30am: July Trade Balance, est. -$70.9b, prior -$75.7b
  • 10am: July Factory Orders, est. 0.3%, prior 1.5%
  • 10am: July Durable Goods Orders, est. -0.1%, prior -0.1%
  • 10am: July Cap Goods Ship Nondef Ex Air, prior 1.0%; -Less Transportation, est. 0.7%, prior 0.7%
  • 10am: July Cap Goods Orders Nondef Ex Air, est. 0%, prior 0%;
  • 10am: July Factory Orders Ex Trans, est. 0.5%, prior 1.4%

DB's Jim Reid concludes the overnight wrap

Markets continue to creep higher as we await the all important US jobs report tomorrow. That was in spite of a mixed bag of data releases yesterday. By the close of trade, the MSCI World index (+0.41%) reached all-time highs once again, even though the S&P 500 sold off late in the session to close only +0.03% higher - just short of its record. Meanwhile the dollar weakened for the 8th time in the last 9 sessions, as the greenback has had to deal with Fed Chair Powell’s dovish Jackson Hole speech last week, alongside more hawkish rhetoric from the ECB and the domestic impact of the delta variant.

Running through those data releases, the first big one was the ADP’s report of private payrolls for August which strongly underwhelmed at +374k (vs. 625k expected). That said, the ADP’s reports have missed the actual number of private payrolls significantly in recent months, with last month’s initial reading also coming in beneath expectations at 330k (vs. 690k expected), before private payrolls then rose by +703k. So markets didn’t seem too disturbed by the release yesterday. Later on in the session, we then got the ISM manufacturing print for August, which unexpectedly rose to 59.5 (vs. 58.5 expected), with new orders up to 66.7 (vs. 61.0 expected), but the employment reading came in at a contractionary 49.0, so again not a great sign ahead of the jobs report tomorrow.

Against this backdrop, investors reallocated to more defensive sectors in the S&P 500, which was just better than unchanged (+0.03%) while trading in a c.15pt (0.3%) range yesterday. The search for defensives led to a decent outperformance from tech stocks, with both the NASDAQ (+0.33%) and the FANG+ Index (+1.28%) close to all-time highs of their own, as 9 of the 10 megacap tech stocks in the FANG+ moved higher on the day – Tesla (-1.9%) was the sole laggard. The concentrated tech index has now gained in 8 of the last 9 sessions, with the index up +8.73% over that time.

However, energy stocks lagged (-1.51%) amidst a further decline in oil prices. Brent Crude (-2.34%) followed up its poor August performance by sliding lower, while WTI recovered from falling -2.0% by midday to end up +0.13%. That came as the OPEC+ group agreed that they should continue with their planned production increases that will see a further 400k barrels per day added to supply. Other cyclicals similarly weighed on the index with banks (-1.29%) and capital goods (-0.65%) the other main S&P laggards as investors shifted to more defensive industries. This rotation saw bond proxies such as utilities (+1.30%) and real estate (+1.69%) lead the S&P’s gain, along with the aforementioned tech rally.

European stocks outperformed as US stocks slid after the close of trading here, with the STOXX 600 up +0.48%. Unlike in the US, the reopening trade did well on this side of the Atlantic with retail (+1.83%), travel & leisure (+1.81%), and consumer products (+1.81%) leading the way, though tech (+1.43%) outperformed as well.

Sovereign bond markets had a much more divergent performance yesterday, though yields on 10yr bunds (+1.0bps) rose once again as hawkish noises around next week’s ECB meeting continued. In particular, Bundesbank President Weidmann said that “we shouldn’t disregard the risk to too-fast inflation”, and that risks to the upside predominate. That follows the flash CPI estimate that showed Euro Area inflation at +3.0% in August, the highest in almost a decade. However, Greek central bank governor Stournaras said that higher inflation was due to temporary factors and he’d advise caution about the path of inflation relative to the medium-term target. As core European debt lost ground though, peripheral debt benefited, with yields on 10yr BTPs down -1.8bps. And in the US, yields on 10yr Treasuries declined -1.5bps to 1.294%, led by falling real yields (-1.8bps).

Sentiment in Asian markets this morning is being supported by the PBoC move to provide CNY 300bn of low cost funds to banks so they can lend to small and medium-sized companies. Besides this the PBoC has also announced other measures such as interest subsidies to firms hit hard by the pandemic and a bigger role for local special bonds in driving investment. This has helped Chinese stock markets to outperform overnight with the Shanghai Comp (+0.55%) and Shenzhen Comp (+0.23%) both advancing. Other Asian markets are also posting gains with the Nikkei (+0.28%) and Hang Seng (+0.08%) also up. The Kospi (-0.70%) is trading lower though. Elsewhere, futures on the S&P 500 (-0.05%) and the Stoxx 50 (-0.11%) are slightly lower.

Turning to the pandemic, data from the UK’s ONS showed that 94% of the adult population in England had Covid antibodies in the week commencing August 9, which is the highest percentage yet. Nevertheless, that number has shown signs of plateauing over recent weeks, having risen just 1 percentage point relative to 4 weeks earlier. The 16-24 age bracket were the least likely of the over-16 groups to have antibodies, at 85.4%, which is in line with them also being the least likely to be vaccinated. There is some evidence of antibodies waning for the earlier vaccinated elderly with rates down from their early summer peak by 2-3pp. They are still comfortably in the 90 plus percentage point range though. Staying in the UK, Scotland will be instituting vaccine passports to enter nightclubs and large events starting later this month, with the mandate going to members of the Edinburgh legislature by the end of the week. Meanwhile the weekly average of US hospitalisations fell for the first time since late-June yesterday in a sign that the current surge may be declining.

Looking at yesterday’s other data, the final manufacturing PMI readings for August cemented the picture seen in the flash readings late last month. The Euro Area reading was revised down a tenth to 61.4, its lowest level in 6 months, while the US reading was also revised down a tenth to 61.1. Another notable release were German retail sales, which fell by a larger-than-expected -5.1% in July (vs. -1.0% expected), but that was largely a normalisation following the strong increases in May and June after Covid restrictions were phased out.

To the day ahead now, and data highlights from the US include July’s industrial production, factory orders and trade balance, along with the weekly initial jobless claims. From the Euro Area, we’ll also get the PPI reading for July. Otherwise, central bank speakers include the Fed’s Bostic and Daly.

Tyler Durden Thu, 09/02/2021 - 07:47
Published:9/2/2021 7:02:47 AM
[Markets] 2 Top Stocks Getting Hammered After Hours The stock market started September with mixed performance from major indexes, as many investors looked forward to employment data due out Friday to give a hint on the future direction of the market. The Nasdaq Composite (NASDAQINDEX: ^IXIC) managed to climb to another record high, but the S&P 500 (SNPINDEX: ^GSPC) was just about unchanged, and the Dow Jones Industrial Average (DJINDICES: ^DJI) actually gave up ground. The string of high-profile earnings reports continued after the market closed on Wednesday, and some stocks took big hits despite companies offering relatively strong results. Published:9/1/2021 6:01:46 PM
[Markets] Rally Fizzles As Banks And Energy Dump While FANGs Hit All-Time High; Cryptos Soar Rally Fizzles As Banks And Energy Dump While FANGs Hit All-Time High; Cryptos Soar

For the second day in a row, stocks rushed out of the gate only to stumble late in the day.

On the first day of the month, following a stellar Aug which saw 12 all time highs in the S&P - the most since 1987, September started off with a whimper as a broad divergence emerged beneath the market surface as energy and banks slumped while duration-sensitive and small cap stocks traded in the green.

As a result, the S&P failed to hold on to gains and closed broadly unchanged.

The slumping reflation trade was once again offset by strength in gigacaps, as the NYSE FANG+ Index climbed about 1.5% to reach a new all time high....

... with utilities and real-estate sectors also rising. The benchmark gauge of American equities traded near its all-time high, while the Dow Jones Industrial Average fluctuated.

Helping the FANGs was an upgrade by Wolfe Research of Apple to peer perform from underperform on the back of strong demand trends for the iPhone. The stock hit an all time high briefly before fading much of its gains.

Tech outperformance was also driven by another day of declining rates, with the 10Y yield sliding as soon as the ugly ADP print showed a huge miss to expectations, sparking concerns about Friday's payrolls report...

... which in turn dragged the broader curve lower.

“The private payrolls numbers have been all over the map during the pandemic, and often not the strongest indicator of how the rest of the jobs report will play out,” said Mike Loewengart, managing director of investment strategy at E*Trade Financial. “With so much pressure on improvement on the labor-market front coming from the Fed, this could send a signal that jobs growth is stagnating. That’s likely a good thing for the markets though, as it means easy-money policy continues.”

In short, good news is good but bad news is better, leading to a relentless meltup but while the market hasn't had a 5% drawdown since November, it also hasn't had a 3% drop since May as stocks become a one-way diagonal line higher.

There is debate on what happens next, with bulls and bears once again torn: For Linda Duessel, senior equity strategist at Federated Hermes, it’s still too early to get bearish on the market. While more Wall Street voices are predicting a pullback soon, she told Bloomberg TV Wednesday that the “unbelievable” landscape of strong earnings and fiscal stimulus means stocks can run higher for longer.

Meantime, Citigroup Inc.’s Tobias Levkovich is sticking to his bearish call. The bank’s chief U.S. equity strategist predicts the index will end the year at 4,000 before reaching 4,350 by June 2022. Both levels sit below its last close of 4,522.68. Underpinning his view are stretched valuations and a planned tax rise that will hurt corporate profits.

One thing which however appears quite likely is even more gains for cryptos: with the prospect of even more monetary easing on deck, and as the NFT craze finds a second and far more powerful wind, cryptos jumped with Ethereum surging to the highest level since May, with many expecting ETH to take out its May all time highs in the coming weeks.

Away from cryptos, commodities were flat with gold flatlining and oil paring steep earlier losses as traders found comfort from a bullish U.S. government oil inventory report which saw a more than 7mm bbl inventory draw. Nerves were also soothed by the speed with which OPEC and its partners agreed - with hardly any discussion  -  to continue with a plan to add about 400,000 barrels a day of supply the group had shut last year when the pandemic destroyed demand.

But if today was boring, expect even more muted volumes tomorrow when traders will refrain from taking any major positions ahead of Friday's NFP which, however, as noted above will be bullish if it beats, and more bullish if it misses.

Tyler Durden Wed, 09/01/2021 - 16:02
Published:9/1/2021 3:28:01 PM
[Markets] Dow Jones Slips Despite Apple; Nasdaq Hits Fresh High As Tech Stocks Rally Stocks were mixed midday Wednesday, as the Nasdaq hit a record high but the Dow Jones Industrial Average lagged despite Apple's fresh high. Published:9/1/2021 11:51:10 AM
[Markets] Dow Jones Falls As Jobs Data Misses Estimates; Apple Hits All-Time High The Dow Jones Industrial Average reversed lower Wednesday, as jobs data missed estimates. Apple stock hit a new high. Published:9/1/2021 11:30:53 AM
[Markets] Dow stalls out to kick off September trade, while S&P 500, Nasdaq clamber higher after ADP jobs report for August U.S. stock benchmarks were mixed Wednesday, with equity indexes trading mostly higher, even as data on private-sector employment came in weaker than expected. A report from Automatic Data Processing showed that businesses in the U.S. created 374,000 new jobs in August, versus 600,000 that economists had forecast on average, based on a Dow Jones survey. The lackluster report suggests that the delta vairant of COVID-19 may be stalling out job creation in the recovery phase from the pandemic. The D Published:9/1/2021 9:00:26 AM
[Markets] Dow Jones Futures Rise After Market Rally Pauses; Tesla, Snap In Buy Zones Dow Jones futures: Stocks took a break but look healthy. Tesla is in a buy zone with China rivals set to report sales. CrowdStrike led key earnings overnight. Published:8/31/2021 10:18:57 PM
[Markets] Dow Jones Futures: Market Rally Pauses But Tesla, Snap In Buy Zones; CrowdStrike Earnings Top Dow Jones futures: Stocks took a break but look healthy. Tesla is in a buy zone with China rivals set to report sales. CrowdStrike led key earnings overnight. Published:8/31/2021 7:21:45 PM
[Markets] Dow Jones Reverses As Apple Drops From Record Highs; Zoom Crashes 17% On Earnings The Dow Jones Industrial Average fell 100 points Tuesday, as Apple stock dropped from all-time highs. Zoom stock crashed 17% on earnings. Published:8/31/2021 11:14:26 AM
[Markets] Dow Jones Falls As Apple Drops From Record Highs; Zoom Crashes 17% On Earnings The Dow Jones Industrial Average fell 100 points Tuesday, as Apple stock dropped from all-time highs. Zoom stock crashed 17% on earnings. Published:8/31/2021 10:14:00 AM
[Markets] Dow Jones Futures Fall As Zoom Dives 12% On Earnings Dow Jones futures were higher Tuesday after the stock market rally hit new highs. Zoom stock dived on earnings after the close. Published:8/31/2021 6:45:52 AM
[Markets] Dow Jones Futures Reverse Lower As Zoom Dives 12% On Earnings Dow Jones futures were higher Tuesday after the stock market rally hit new highs. Zoom stock dived on earnings after the close. Published:8/31/2021 6:15:08 AM
[Markets] Dow Jones Futures Rally: Stock Market Rally, Apple Stock Hit New Highs; Zoom Dives 12% On Earnings Dow Jones futures were higher Tuesday after the stock market rally hit new highs. Zoom stock dived on earnings after the close. Published:8/31/2021 5:42:25 AM
[Markets] 3 of the Dow's Worst-Performing Stocks Over the Trailing Year Are Now Screaming Buys For the past 125 years, the iconic Dow Jones Industrial Average (DJINDICES: ^DJI) has been one of the stock market's most consistent measures of success. Initially comprised of 12 companies, the Dow Jones now contains 30 multinational stocks, nearly all of which are profitable, time-tested businesses. Although Dow stocks aren't often the fastest growing, this hasn't hurt the index's ability to reach new heights. Published:8/31/2021 5:23:57 AM
[Markets] Dow Jones Futures: Stock Market Rally, Apple Stock Hit New Highs; Zoom Dives 10% On Earnings Dow Jones futures were little changed late Monday after the stock market rally hit new highs. Zoom stock dived on earnings after the close. Published:8/30/2021 4:16:59 PM
[Markets] Dow Jones Lags As Apple Pops; Buy; Moderna Dives As CDC Muses Vaccine Boosters; Facebook Passes Buy The Dow Jones lagged the Nasdaq. Moderna stock fell as a CDC panel examined vaccine booster shots. Facebook stock and Apple stock rose Published:8/30/2021 2:32:17 PM
[Markets] Dow Jones Turns Positive As Nasdaq, S&P 500 Hit New Highs; 3 Breakout Stocks To Watch Stocks rose midday Monday as the Dow Jones Industrial Average reversed higher, while the Nasdaq and S&P 500 rallied to all-time highs. Published:8/30/2021 11:34:43 AM
[Markets] 6 Dow Jones Stocks To Buy And Watch In August 2021: Apple Jumps To Record High Apple and Microsoft are among the best Dow Jones stocks to buy and watch in August 2021. Published:8/30/2021 11:06:36 AM
[Markets] Dow Jones Rallies As Apple Jumps To Record Highs; Zoom Earnings Due The Dow Jones Industrial Average rallied 25 points Monday, as the Nasdaq and S&P 500 hit more record highs. Zoom earnings are due late. Published:8/30/2021 10:07:14 AM
[Markets] Dow Jones Falls As Nasdaq, S&P 500 Hit Record Highs; Zoom Earnings Due The Dow Jones Industrial Average declined 50 points Monday, as the Nasdaq and S&P 500 hit more record highs. Zoom earnings are due late. Published:8/30/2021 9:34:26 AM
[Markets] Stocks edge higher as S&P 500, Nasdaq attempt to build on records U.S. stocks opened slightly higher Monday, with the S&P 500 and Nasdaq Composite attempting to build on record finishes. The Dow Jones Industrial Average was up 37 points, or 0.1%, at 35,493. The S&P 500 rose 0.2% to 4,519, while the Nasdaq Composite was up 0.3% at 15,180. The S&P 500 and Nasdaq ended at records on Friday, with stocks buoyed after Federal Reserve Chairman Jerome Powell said he favored beginning to scale back the central bank's asset purchases this year but offered no clear timet Published:8/30/2021 9:08:36 AM
[Markets] Dow Jones Extends Week's Gains After Powell Speech; These Stocks Score Breakouts The Dow Jones moved higher, continuing its weekly gains in today's stock market, while the S&P 500 and Nasdaq also gained. Published:8/27/2021 2:49:23 PM
[Markets] Dow Jones Futures: Stock Market Rally Boosted By Pfizer Covid-19 Vaccine FDA Approval, But Fed Summit Looms Dow Jones futures were higher Tuesday after the stock market received a boost following full FDA approval of Pfizer's Covid-19 vaccine. Published:8/24/2021 6:59:19 AM
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