Russia To Seize $440 Million From JPMorgan

Seizing assets? Two can play at that game...

Just days after Washington voted to authorize the REPO Act - paving the way for the Biden administration confiscate billions in Russian sovereign assets which sit in US banks - it appears Moscow has a plan of its own (let's call it the REVERSE REPO Act) as a Russian court has ordered the seizure of $440 million from JPMorgan.

The seizure order follows from Kremlin-run lender VTB launching legal action against the largest US bank to recoup money stuck under Washington’s sanctions regime.

As The FT reports, the order, published in the Russian court register on Wednesday, targets funds in JPMorgan’s accounts and shares in its Russian subsidiaries, according to the ruling issued by the arbitration court in St Petersburg.

The assets had been frozen by authorities in the wake of the western sanctions, and highlights some of the fallout western companies are feeling from the punitive measures against Moscow.

Specifically, The FT notes that the dispute centers on $439mn in funds that VTB held in a JPMorgan account in the US.

When Washington imposed sanctions on the Kremlin-run bank, JPMorgan had to move the funds to a separate escrow account. Under the US sanctions regime, neither VTB nor JPMorgan can access the funds.

In response, VTB last week filed a lawsuit against the New York-based group to get Russian authorities to freeze the equivalent amount in Russia, warning that JPMorgan was seeking to leave Russia and would refuse to pay any compensation.

The following day, JPMorgan filed its own lawsuit against the Russian lender in a US court to prevent a seizure of its assets, arguing that it had no way to reclaim VTB’s stranded US funds to compensate its own potential losses from the Russian lawsuit.

Yesterday's decision sided with VTB, ordering the seizure of funds in JPMorgan’s Russian accounts and “movable and immovable property,” including its stake of a Russian subsidiary.

JPMorgan said it faced "certain and irreparable harm" from VTB’s efforts, exposed to a nearly half-billion-dollar loss, for merely abiding by U.S. sanctions.

The order was the latest example of American banks getting caught between the demands of Western sanctions regimes and overseas interests. Last summer, a Russian court froze about $36mn worth of assets owned by Goldman following a lawsuit by state-owned bank Otkritie. A few months later the court ruled that the Wall Street investment bank had to pay the funds to Otkritie.

The tit-for-tat continues.

Tyler Durden Thu, 04/25/2024 - 10:45

Falling Bond Yields Show It's Crunch Time In China

Authored by Simon Black, Bloomberg macro strategist,

Sovereign yields in China have been falling in recent months, in marked contrast to almost every other major country. This is a key macro variable to watch for signs China is ready to ease policy more comprehensively as its tolerance is tested for an economy that is becoming increasingly deflationary. Further, vigilance should be increased for a yuan devaluation. Though not a base case, the tail-risk of one occurring is rising.

Year of the Dragon in China it may be, but the economy has yet to exhibit the abundance of energy and enthusiasm those born under the symbol are supposed to possess. China failed to exit the pandemic with the resurgence in growth seen in many other countries, and the outlook has been lackluster ever since.

But we are entering the crunch phase, where China needs to respond forcefully, or face the prospect of a protracted debt-deflation. The signal is coming from falling government yields. They have been steadily falling all year, at a faster pace than any other major EM or DM country. Indeed yields have been rising in almost every other country.

That’s a problem for the yuan. The drop in China’s yields is adding pressure on the currency. Widening real-yield differentials show that there remains a strong pull higher on the dollar-yuan pair.

The question is: will this prompt a devaluation in the yuan? The short answer is less likely than not, but it can’t be discounted, and the risks are rising as long as capital outflows continue to climb.

We can’t measure those directly in China as the capital account is nominally closed. But we can proxy for them by looking at the trade surplus, official reserves held at the PBOC, and foreign currency held in bank deposits. The trade surplus is a capital inflow, and whatever portion of it that does not end up either at the PBOC or in foreign-currency bank accounts we can infer is capital outflow.

This measure is rising again, as more capital typically tries to leave the country when growth is sub-par, as it is today.

So far, China appears to be managing the decline in the yuan versus the dollar. USD/CNY has been bumping up against the 2% upper band above the official fix for the pair. But China is stabilizing the yuan’s descent through the state-banking sector. As Brad Setser noted in a recent blog, the PBOC has stated that it has more or less exited from the FX market. Instead, that intervention now takes place unofficially using dollar deposits held at state banks.

China has plenty of foreign-currency reserves to stave off continued yuan weakness (more so than is readily visible, according to Setser), but there is always the possibility policymakers decide to ameliorate the destructive impact on domestic liquidity from capital outflow by allowing a larger, one-time devaluation. There is speculation this is where China is headed, and that it is behind its recent stockpiling of gold, copper and other commodities.

However, there are risks attached to such a move, given it might be detrimental to the more normalized markets that China covets in the name of financial stability, as well potentially prompting a tariff response from the US.

A devaluation is a low, but non-zero, possibility that has risen this year. Either way, the drop in bond yields underscores that China will soon need to do something more dramatic to avert the risk of a debt deflation.

In the past, the current rate of decline in sovereign yields has led to a forthright easing response from China, with a rise in real M1 growth typically seen over the next six-to-nine months.

But M1 growth in China has singularly failed to bounce back so far despite several hints that it was about to. This is likely a deliberate policy choice as rises in narrow money are reflective of broad-based “flood-like” stimulus that policymakers in China have explicitly ruled out as recently as January, in comments from Premier Li Qiang. Policymakers are laser-focused on not re-inflating the shadow-finance sector, which continues to be squeezed.

Shadow finance led to unwanted speculative froth in markets, real estate and investment that China does not want to see reprised. But its curbs have been too successful. Credit remains hard-to-get where it is needed most, typically the non state-owned sectors.

The slowdown this fostered was amplified by China’s response to the pandemic. Rather than supporting household demand, policymakers in China supported the export sector, leading to a surge in outward-bound goods.

Stringent lockdowns prompted households to become exceptionally risk averse, increasing their savings, and being reluctant to spend even after restrictions were lifted, lest the government decided to paralyze the economy again at some future time.

This also caused the real estate sector to implode, prompting multiple piecemeal easing measures to support housing prices and indebted property developers, to little avail so far: leading indicators for real estate such as floor-space started remain muted or weak, while the USD-denominated debt of property companies continues to trade at less than 25 cents in the dollar.

China has a large and growing debt pile that is only set to get worse as its demographics continue to deteriorate. The alarming chart below from the IMF projects public debt (including local government financing vehicles) in China to accelerate way ahead of that in the US in the coming years, to around 150% of GDP by the end of the decade. Total non-financial debt is already closing in on 300% of GDP.

Source: IMF

This raises the risk of a debt-deflation, when the value of assets and the income from them fall in relation to the value of liabilities. Debt becomes increasingly difficult to service and pay back, leading to lower consumption and investment, entrenched deflation and derisory growth that is difficult to escape.

Woody Allen once quipped that mankind is at a crossroads, one road leads to despair and utter hopelessness and the other to total extinction. China’s choices are not yet that stark, but the longer it waits to deliver an emphatic response to its predicament, they may soon become that way.

Tyler Durden Thu, 04/25/2024 - 10:30

Wall Street Reacts To Today's Stagflationary Data Dump

After today's stagflationary GDP print, which came below the lowest Wall Street estimate even as core PCE came in above the highest estimate...

... there has been an outcry of horror from Wall Street's traders, analysts and strategists as the BEA once again steamrolled all over Wall Street's benevolent forecasts for a soft, or no, landing and crash-landed right into stagflation nation.

Below we excerpt from some of the most notable kneejerk responses and comments:

Ian Lyngen at BMO Capital Markets, on the potential implication of the core PCE inflation gauge this morning on tomorrow’s monthly release:

“The question has quickly become whether this is due to revisions from Jan/Feb or if tomorrow’s monthly core-PCE report will reveal a stronger-than-consensus (+0.3%) print.”

Ira Jersey, Bloomberg Intel chief Rates strategist

“The rate market is keenly focused on the PCE deflator beating expectations in 1Q. We still target 4.70% as a key technical level for 10-year Treasury yield. A break of that targets the cycle highs around 5%.”

“It looks like the fiscal drag on the economy may have begun with federal government consumption actually a drag on GDP this quarter. Not huge, but any negative print is still a shift from the past few years. But 2.5% consumption growth still isn’t anywhere near recession, and services consumption growing at 4% suggests a more pronounced slowdown could be a long way off.”

Sebastian Boyd, Bloomberg analyst

Bond traders can read the GDP data in two ways. The growth number was a big miss, but prices rose faster than expected. Of course this is the first pass at the data, but if it holds up then it shows the US economy is considerably weaker than thought, which would open the way to earlier interest rate cuts. On the other hand, the Fed is more likely to focus on inflation than growth, and the price index, especially the core price index, doesn’t offer any comfort on that front. Two-year yields initially fell, but are now much higher on the day. Stock futures are down; the dollar is spiking. Keep an eye on the yen.

Lindsay Rosner, head of multisector fixed income investing at GSAM

"The report has a disappointing headline and consumption line item, but at this point, inflation concerns weigh more than GDP softness for the Fed.”

Quincy Krosby, Chief Global Strategist at LPL Financial:

“The softer first read of Q1 GDP could shift -- again- the Fed’s timetable for initiating the rate easing cycle, with July coming back into play. If the PCE report due tomorrow similarly suggests the downward path of inflation has begun to once again momentum, it could serve as a catalyst for the market.”

Dan Suzuki, deputy CIO at Richard Bernstein Advisors,

"The GDP print is not as bad a print as it appears on the surface.  The main drags were in goods demand (which we already knew based on the manufacturing PMIs), government spending and exports. I think it was actually pretty encouraging to see solid investment spending in both capex and housing, while weaker net exports reflect the robust domestic demand for imports, even as economic growth outside the US has been a bit more tepid.”

Enda Curran, Bloomberg Fed watcher and commentator

"The other political takeaway from today’s data is that just six months out from the presidential election, it looks like the economy is finally slowing down. The details of the data are overall robust -- but it’s the headline that counts for politicos."

Rubeela Farooqi, chief US economist at High Frequency Economics:

“The outlook going forward is uncertain. Strength in the labor market is likely to keep household spending and growth positive for now. However, a delay in Fed rate cuts to counter sticky inflation could be headwinds for consumption and the growth trajectory over coming quarters.”

Olu Sonola, head of US economic research for Fitch Ratings:

“The hot inflation print is the real story in this report. If growth continues to slowly decelerate, but inflation strongly takes off again in the wrong direction, the expectation of a Fed interest rate cut in 2024 is starting to look increasingly more out of reach.”

Jan Hatzius, Goldman economist

Real GDP rose 1.6% annualized in the advance reading for Q1 (qoq ar)—0.9pp below consensus and the first quarter below 2% since the second quarter of 2022. The composition was not as soft, as the contribution from inventories (-0.4pp vs. GS +0.2pp) and foreign trade (-0.9pp vs. -0.4pp) accounted for the bulk of the miss. Indeed, domestic demand growth proceeded at a strong pace of +2.8% annualized. This reflected a double-digit pace of residential investment growth (+13.9%) and solid growth in consumption (+2.5%) and business fixed investment (+2.9%), the latter reflecting gains in two of the three capex subcategories (equipment +2.1%, intellectual property +5.4%, structures -0.1%). Government spending growth slowed more than we expected to +1.2% (vs. GS +1.9% and Q4 +4.6%), reflecting a surprising decline in federal (-0.2%) and a smaller-than-forecast rise in state and local (+2.0%) spending.

Alan Detmeister, UBS economist

We had 3.5% so were slightly less surprised than the consensus. The months that go into the Q1 number released today will be used in the 12-month change on Thursday, however the weighting across those months is quite different with the January monthly change getting much more weight in today’s quarterly number than it does in the 12-month change released tomorrow (and the opposite for the March monthly change). Nonetheless the 0.2pp upward surprised on the annualized Q1 core PCE price change definitely increases the risk of an upward surprise to the 12-month change tomorrow. (Treating months equally it would suggest tomorrow’s estimate of the 12-month change around 5bp higher than what we have.)  It is more difficult to say anything on the March monthly because it is quite possible that today’s surprise was upward revisions to January or February, so again today’s data raises the upside risk on March, but hard to say how much.

Source: Bloomberg

Tyler Durden Thu, 04/25/2024 - 10:07

US Pending Home Sales Rise In March, But...

After new home sales soared (thanks to prior downward revisions) and existing home sales plunged in March (along with the collapse in housing starts and permits in March), this morning's pending home sales data was expected to rise very modestly MoM (less than in February) but remain lower on a YoY basis.

In an odd turn of events, pending home sales beat on a MoM (SA) basis (+3.4% vs +0.4% exp) but missed on a YoY (NSA) basis (-4.5% vs -3.0% exp). Sales were up 0.1% YoY on a seasonally-adjusted basis...

Source: Bloomberg

This is the 28th straight month of YoY declines for non-seasonally-adjusted pending home sales.

That leaves pending home sales hovering just off record lows...

Source: Bloomberg

The gains were led by the South and the West, and, to a lesser extent, the Northeast, with the MidWest seeing sales slump 4.3$ MoM. All regions are lower on a YoY basis.

While the pending-sales index reached a high point, “it still remains in a fairly narrow range over the last 12 months without a measurable breakout,” NAR Chief Economist Lawrence Yun said in a statement.

“Meaningful gains will only occur with declining mortgage rates and rising inventory.”

And given the tight correlation with mortgage rates, it looks like pending home sales are set to continue their downward slope...

Source: Bloomberg

As a reminder, the pending-home sales report is a leading indicator of existing-home sales given houses typically go under contract a month or two before they’re sold.

Tyler Durden Thu, 04/25/2024 - 10:06

This "Emperor" Has No Clothes

Authored by James Rickards via DailyReckoning.com,

Does the Fed even matter that much to the real economy and investor portfolios?

That’s an important question that doesn’t get nearly enough scrutiny. It’s possible that neither the Fed nor the reporters who cover the Fed want to ask hard questions about what the Fed really does.

Could it be the case that the emperor has no clothes?

Financial journalists often refer to a Goldilocks economy (“not too hot, not too cold, just right!”) as a tribute to the Fed’s finesse in handling rates. It’s also called the “soft landing” scenario because the Fed supposedly tamed inflation without causing a recession.

These narratives have no factual foundations; they’re just stories designed to get you to buy stocks and pump up stock prices.

The truth is the Fed is always behind the curve and doesn’t finesse the economy. And there’s no such thing as a soft landing; the economy does not gradually shift gears. It’s either growing fast or going into recession.

So where does the Fed stand today? Will it start cutting rates as Wall Street keeps (wrongly) predicting?

Wall Street Keeps Getting It Wrong

The Fed will not cut rates at its May or June meetings. Wall Street’s been predicting rate cuts for almost two years and they’ve been wrong every time. They’re predicting a June rate cut, and they’ll be wrong again.

A rate cut at the July 31 meeting is possible but is in jeopardy now due to inflation going up again in the latest report. We’ll have three more months of inflation, unemployment and GDP data between now and then.

If the Fed does cut rates in late July, it won’t be for good reasons. It’ll be because the economy has fallen into a recession. But given the boost to U.S. growth from out-of-control government spending in an election year, the recession may be postponed. So don’t count on a July rate cut either.

There’s no Fed meeting in August. The next meeting after that is Sept. 18. The Fed may be ready for a rate cut by then but here’s the problem: The Sept. 18 date is just seven weeks before the election on Nov. 5. The Fed pretends it’s non-political but in fact, it is highly political.

A rate cut in September will be viewed as helping Biden by boosting the economy and hurting Trump. At the same time, Trump is the likely winner based on currently available polling data and trends.

The Fed won’t want to be in the position of appearing to boost Biden and hurt Trump if Trump is going to win. Trump will make the Fed Public Enemy No. 1 and that’s the last thing they want. So the Fed will take a pass in September.

There’s no Fed meeting in October. The next two Fed meetings after that are on Nov. 7 and Dec. 18, both safely after the election. The Fed could cut rates at both meetings. But the Fed has painted itself into a corner on that.

The Fed’s Running out of Time

Beginning at the FOMC meeting on March 20, the Fed promoted the narrative that there would be three rate cuts before the end of the year. If they don’t cut in May, June, July or September (for reasons noted above) and there are no meetings in August or October, then the Fed would have at most two rate cuts this year, in November and December.

In short, the Fed is running out of meetings in which to conduct three rate cuts and may have to settle for two.

The Fed’s reckless promise and the dictates of the calendar are what are driving the stock market. The stock market’s fixated on the Fed, but the Fed doesn’t know what they’re doing. That’s a recipe for volatility and a sharp reversal of the first-quarter gains.

So why doesn’t the Fed just get on with it and start cutting rates in May? They could make an announcement and hire a band to play “Happy Days Are Here Again.”

The Fed thought they had won the battle when inflation dropped from 9.1% (CPI year-over-year) in June 2022 to 3.0% in June 2023. Nice job, Fed. It was when that June 2023 reading came out in July 2023 that the Fed put in one last rate hike, and then stopped dead. Since then, it’s been a countdown to rate cuts.

The problem is that inflation isn’t done. From the 3.0% in June 2023, inflation rose to 3.7% in August, and 3.7% again in September 2023. Inflation fluctuated between 3.1% and 3.4% until recently. March inflation came in at 3.5%, a full 0.3 percentage points higher than in February.

Oil’s up 24% in 4 Months

That’s not all that’s going up. The price of oil was $68.50 per barrel last Dec. 12 and is over $83.00 per barrel today. That’s about a 21% increase in just four months.

That oil price shock hasn’t worked its way through the supply chain yet. It has resulted in some price increases, but more are in the pipeline. This oil price spike will keep inflation at current levels or higher in the months ahead. The Fed is looking for signs that inflation is coming down but they’re not going to get them, as shown in the latest inflation report.

The price of one gallon of regular gasoline (regular, national average) was $3.64 as of yesterday, April 22. It was $3.57 on April 4, $3.55 on April 3, $3.54 on March 28, $3.52 on March 4 and $3.51 on April 4, 2023.

Put differently, gas prices are higher than they were last week, last month and last year.

That’s a bad sign for Biden politically, but it’s a worse sign for the Fed in terms of inflation. That gas price rise isn’t over because the wholesale price of oil is still on the rise. And oil prices affect far more than the price of gas at the pump.

Higher oil prices mean higher transportation costs whether by truck, train, plane or ship since all goods have to be transported to market. That means the price of everything is going up.

Other factors driving inflation from the supply side include the Key Bridge collapse in Baltimore, the closing of the Red Sea/Suez Canal shipping route and continued fallout from Ukraine war sanctions. Some of these supply side constraints may be deflationary in the long run, but they are definitely inflationary in the short run.

Running on Fed Happy Talk

The stock market has been running on Fed Happy Talk. That situation may end abruptly on June 12 if the Fed doesn’t cut rates and signals that rate cuts are not to be expected in the near future and perhaps not before the end of the year.

By then, we may be facing one of the worst economic outcomes possible: recession + inflation = stagflation.

Anyone under the age of 60 probably has no acquaintance with stagflation.

The U.S. last experienced this in 1977–1981. I remember that period well. It was great for leveraged holders of hard assets such as gold and real estate.

It was a nightmare for holders of stocks. (The long-term bull market in stocks did not start until August 1982.)

Investors might keep that winning hard asset portfolio allocation in mind as events unfold between now and June.

Tyler Durden Thu, 04/25/2024 - 09:35

Harvey Weinstein Conviction Overturned On Appeal

A New York Court of Appeals has overturned Harvey Weinstein's 2020 conviction on felony sex crime charges, for which he was sentenced to 23 years in prison.

In a 4-3 decision, the court found that the trial judge in the disgraced mogul's case had made a critical error, allowing prosecutors to call a series of women as witnesses who said that Weinstein had assaulted them, but whose accusations weren't part of the charges against him, the NYT reports.

In 2020, Lauren Young and two other women, Dawn Dunning and Tarale Wulff, testified about their encounters with Weinstein under a state law that allows testimony about “prior bad acts” to demonstrate a pattern of behavior. But the court in its decision on Thursday said that “under our system of justice, the accused has a right to be held to account only for the crime charged.”

...

Citing that decision and others it identified as errors, the appeals court determined that Mr. Weinstein, who as a movie producer had been one of the most powerful men in Hollywood, had not received a fair trial. The four judges in the majority wrote that Mr. Weinstein was not tried solely on the crimes he was charged with, but instead for much of his past behavior. -NYT

The decision was determined by one vote on a majority female panel of judges, who in February held a searching public debate over the fairness of the original trial.

Weinstein was convicted of raping aspiring actress Jessica Mann at a DoubleTree hotel in 2013 when she was 27-years-old, and forcing oral sex on former production assistant Mimi Haleyi, then 28, at his apartment in 2006.

Now, Manhattan DA Alvin Bragg, who's currently prosecuting former President Donald Trump, will have to decide whether to seek a retrial of Weinstein - who remains in an upstate prison in Rome, NY at the moment. It's unclear how the decision will affect his future. In 2022, he was convicted by a California court of raping a woman in a Beverly Hills hotel and sentenced to 16 years in prison. The jury found Weinstein guilty of rape, forcible oral copulation, and sexual penetration by foreign object involving a woman known as Jane Doe 1.

The 2022 jury acquitted Weinstein of a sexual battery charge made by a massage therapist who treated him at a hotel in 2010, and was unable to reach a decision on two allegations, including rape, involving Jennifer Siebel Newsom, the wife of California’s Democratic governor Gavin Newsom. She was known as Jane Doe 4 in the trial, and had testified to being raped by Weinstein in a hotel room in 2005.

Weinstein was convicted of sexually abusing over 100 women - and was convicted of assaulting two of them in the New York case.

"That is unfair to survivors," said actress Ashley Judd, the first actress to come forward with allegations against Weinstein, the NYT's Jodi Kantor reports. "We still live in our truth. And we know what happened."

 

Tyler Durden Thu, 04/25/2024 - 09:17

'Stagflationary' GDP Data Sparks Market Turmoil, Rate-Cut Hopes Crushed

Weaker than expected growth and hotter than expected prices... the perfect example of a central banker's nemesis: Stagflation...

...and the market is very unhappy about it.

Olu Sonola, head of US economic research for Fitch Ratings:

“The hot inflation print is the real story in this report. If growth continues to slowly decelerate, but inflation strongly takes off again in the wrong direction, the expectation of a Fed interest rate cut in 2024 is starting to look increasingly more out of reach.”

Rate-cut expectations have dropped back near cycle lows (for 2024 and 2025)...

Source: Bloomberg

Treasury yields are soaring, led by the short-end...

Source: Bloomberg

With 2Y back above 5.00% (will it hold)...

Source: Bloomberg

Stocks are getting spanked...

Commodities are less anxious with oil sliding a little, gold rallying modestly even with the dollar rising...

Source: Bloomberg

Crypto is heading lower...

Source: Bloomberg

What time is the Biden press conference to confirm there will be rate-cuts this year?

Tyler Durden Thu, 04/25/2024 - 09:00

Initial & Continuing Jobless Claims Continue To Ignore Reality

In the real world labor market, 2024 has been a shitshow of layoffs...

1. Everybuddy: 100% of workforce
2. Wisense: 100% of workforce
3. CodeSee: 100% of workforce
4. Twig: 100% of workforce
5. Twitch: 35% of workforce
6. Roomba: 31% of workforce
7. Bumble: 30% of workforce
8. Farfetch: 25% of workforce
9. Away: 25% of workforce
10. Hasbro: 20% of workforce
11. LA Times: 20% of workforce
12. Wint Wealth: 20% of workforce
13. Finder: 17% of workforce
14. Spotify: 17% of workforce
15. Buzzfeed: 16% of workforce
16. Levi's: 15% of workforce
17. Xerox: 15% of workforce
18. Qualtrics: 14% of workforce
19. Wayfair: 13% of workforce
20. Duolingo: 10% of workforce
21. Rivian: 10% of workforce
22. Washington Post: 10% of workforce
23. Snap: 10% of workforce
24. eBay: 9% of workforce
25. Sony Interactive: 8% of workforce
26. Expedia: 8% of workforce
27. Business Insider: 8% of workforce
28. Instacart: 7% of workforce
29. Paypal: 7% of workforce
30. Okta: 7% of workforce
31. Charles Schwab: 6% of workforce
32. Docusign: 6% of workforce
33. Riskified: 6% of workforce
34. EA: 5% of workforce
35. Motional: 5% of workforce
36. Mozilla: 5% of workforce
37. Vacasa: 5% of workforce
38. CISCO: 5% of workforce
39. UPS: 2% of workforce
40. Nike: 2% of workforce
41. Blackrock: 3% of workforce
42. Paramount: 3% of workforce
43. Citigroup: 20,000 employees
44. ThyssenKrupp: 5,000 employees
45. Best Buy: 3,500 employees
46. Barry Callebaut: 2,500 employees
47. Outback Steakhouse: 1,000
48. Northrop Grumman: 1,000 employees
49. Pixar: 1,300 employees
50. Perrigo: 500 employees
51. Tesla: 10% of workforce

But, according to the government-supplied data...

The number of Americans filing for jobless benefits for the first time last week dropped to just 207k (SA), below the 215k expectation, and back near YTD lows.

Source: Bloomberg

Continuing Claims also improved (though still a little elevated) falling back below 1.8mm (1.781mm to be exact) - near the lowest of the year...

 

Source: Bloomberg

But, here's the thing... WARNs are soaring... and Challenger-Grey just announced that March saw the most job cuts (90,309) since January 2023...but government-supplied data on initial jobless claims continues to smoothly tick along near record lows...

Source: Bloomberg

Ah, Bidenomics!!

If Trump wins in November, will all this data suddenly be 'allowed' to reflect reality?

Tyler Durden Thu, 04/25/2024 - 08:39

US Secretly Armed Ukraine With Long-Range ATACMS Last Month

Authored by Dave DeCamp via AntiWar.com,

The US confirmed on Wednesday that it had secretly sent Ukraine long-range Army Tactical Missile Systems (ATACMS) last month as part of a $300 million arms package.

The long-range ATACMS can be fired from the HIMARS rocket systems and can hit targets up to 190 miles away, a range that marks a significant escalation in US support for Ukraine.

An M270 firing an ATACMS, US Army image

Last year, the US secretly shipped an older cluster bomb variant of the ATACMS that has a range of about 100 miles. Previously the Pentagon signaled it was intentionally limiting ranges of missiles shipped to Ukraine.

A Biden administration official said Ukraine has already used the longer-range ATACMS twice, including in an attack on a Russian base in Crimea. US-supported attacks on Crimea or the Russian mainland always risk a major escalation from Moscow.

National Security Advisor Jake Sullivan said a "significant number" of the ATACMS have been sent to Ukraine but wouldn’t specify how many.

He said more were on the way as part of a $1 billion arms package that President Biden approved on Wednesday, although the Pentagon didn’t list ATACMS when it announced the weapons shipment.

The $95 billion foreign military aid bill President Biden signed into law on Wednesday included a provision that said Ukraine would be sent long-range ATACMS.

In response to that news, the Kremlin reaffirmed its long-stated position that it will take more territory in Ukraine to counteract the long-range NATO missiles.

Tyler Durden Thu, 04/25/2024 - 08:25

US Futures Tumble After Facebook Implodes; GDP Data On Deck

The three-day rebound from last week's rout ended with a thud after the close yesterday when Meta imploded, plunging as much as 17% and losing $200 billion in market cap, after the company revealed disappointing revenue guidance coupled with higher capex projections. The report sent US futures lower, and as of 7:50am, S&P futures are down 0.6% with Nasdaq futures sliding 1% (Meta accountied for more than half of the decline) dragged by Mag7 names (META -12.6%, AMZN -2.2%, MSFT -1.5%, GOOGL -2.8% but Semis are broadly stronger, buoyed by META’s capex spend (at least $70bn over next 2 years). Bond yields are flattish with the 10Y trading at 4.65% and the curve slightly steeper as the USD is moving lower but not for the yen which continues its historic implosion as the hopeless BOJ sits in shock and watches its currency collapse (there is a BOJ meeting tonight where we expect nothing from the headless chickens). Commodites are rising today with strength in Energy and Metals. In macro, we get Q1 GDP numbers today with an update on March inventories and the normal jobless claims, but tomorrow's s PCE is the more impactful number. After the close we get earnings from GOOG/MSFT which take on heightened importance given META’s price reaction.

In premarket trading, Meta tumbled as much as 15% after it projected second-quarter sales below analyst expectations and increased spending estimates for the year (JPM tech trader Jack Atherton says he would buy the dip with META). Alphabet Inc., which reports earnings later along with Microsoft Corp., also dropped. IBM shares are also down over 8% following weak demand for the company’s consulting unit. Here are the most notable US premarket movers:

• Arista Networks (ANET US) shares rise 2.7% as analysts note that the cloud-networking company could benefit from Meta’s increased spending plans.
• Ford (F US) shares gain 3.0% after the automaker reported first-quarter adjusted earnings per share that came ahead of consensus estimates. Citi said the results were an “encouraging outcome.”
• International Business Machines (IBM US) shares slip as much as 9.0% after the company reported results that showed weak demand for the company’s consulting unit. It also confirmed the acquisition of software firm HashiCorp Inc.
• Meta Platforms (META US) shares slump 13% after the Facebook parent gave a revenue forecast that was seen as weak and increased its spending estimates for the year amid an ongoing push into AI.
  • Social media and online advertising companies trade lower following disappointing results from Facebook parent Meta. Snap (SNAP US) -5.1%, Pinterest (PINS US) -4.5%, Alphabet (GOOGL US) -2.9%, Trade Desk (TTD US) -3.3%
• ServiceNow (NOW US) shares fall 4.9% after the software company gave a full-year subscription revenue forecast that was slightly weaker than expected. Analysts are broadly positive on the report.
• Silicon Laboratories (SLAB US) shares rise 2.3% as Needham & Co. upgrades rating to buy from hold. The broker says the semiconductor device company “is well positioned for the semiconductor cyclical recovery.”

Hopes for tech megacaps have been red hot after the frenzy around artificial intelligence powered Wall Street’s record-breaking rally. But gains at the start of the week are flagging, suggesting wagers on an AI-driven profit boost may be overdone. US data due Thursday could turn the focus back to the timing of Federal Reserve policy easing.

“I think we are just hitting a little bit of a reality check,” Sonja Laud, chief investment officer at Legal & General Investment Management, said on Bloomberg Television. “This doesn’t take away the excitement around the potential going forward, but it’s probably valuation coming back to a more realistic pathway.”

Beyond corporate results, traders are also bracing for US economic growth figures after scaling back expectations for Fed interest-rate cuts for weeks. Economists predict GDP cooled to around 2.5% in the first quarter from 3.4%, with the figures still potentially suggesting persistent inflationary pressures.

“Any downside surprises could see markets bringing expected Fed interest rate cuts earlier — after having been pushed out to much later this year,” economists at Rand Merchant Bank in Johannesburg said. “However, upside surprises could see continued market volatility as the market tries to ascertain the risk that a hotter-than-expected economy poses to anticipated interest-rate cuts.”

Meanwhile, Secretary of State Antony Blinken said the world’s largest economies must “lay out our differences,” as he began two days of talks in China, with the threat of US sanctions targeting Beijing over its support of Russia’s war in Ukraine looming over his visit.

Europe’s Stoxx 600 Index edged lower with food beverage and industrial goods sectors leading declines, while mining and personal care drug shares are the biggest outperformers as traders processed a deluge of corporate updates on the busiest day of the earnings season. Anglo American Plc soared 14% after rival BHP Group made an all-share takeover proposal valuing it at £31.1 billion ($38.8 billion) in a deal that would create the world’s largest copper miner. Here are the biggest movers Thursday:

• Anglo American soars as much as 14%, hitting the highest level since July, after the miner received an all-share takeover approach worth $39 billion from global industry leader BHP
• AstraZeneca jump as much as 6.5%, the most since November 2020, after the drugmaker reported better-than-expected results for the first quarter
• Unilever gains as much as 5.3%, the most in over a month, after the consumer goods giant delivered a strong sales beat in the first quarter and showed volumes are improving
• Barclays rises as much as 5.2% to the highest since Feb. 2022, after investment banking revenue for the first quarter met the average analyst estimate
• Sanofi advances as much as 4.5%, the most since March 2023, after the French drugmaker reported first-quarter results that beat expectations, helped by new drug products Beyfortus and Altuviiio
• Adyen slumps as much as 15% after the Dutch payment firm’s 1Q report showed a decline in take rates, offsetting stronger-than-expected growth in processing volumes
• Pernod Ricard shares drop as much as 3.1% after the spirits maker reported fiscal 3Q results. Organic sales missed estimates as US buyers work through high inventories and the Chinese market remains slow
• Telia shares fall as much as 9.6% after reporting free cash flow well below estimates, with the Swedish telecom operator blaming higher interest costs and different timing of pension refund this year, among others
• Kesko slides as much as 6.5%, the most since June, after the Finnish home goods and improvement retailer reports weaker-than-expected earnings and cuts 2024 guidance, with its construction arm dragging on growth
• Neste declines as much as 11% to their lowest since 2020 after Finnish refiner reports adjusted 1Q Ebitda for the first quarter that missed estimates, driven by a weaker renewable diesel market, RBC says

In FX, the Bloomberg Dollar Spot Index falls 0.1% while the pound is among the best performing G-10 currencies, rising 0.4% versus the greenback. The yen extended losses after weakening beyond 155 per dollar for the first time in more than three decades on Wednesday, heightening the chances of intervention ahead of Bank of Japan’s policy decision Friday. The Japanese currency weakened to 155.74 per dollar on Thursday, a new 34-year low. The BOJ is forecast to keep its interest rate settings unchanged, while the yen’s plunge makes it more likely the bank will tone down its stance on keeping policy easy. Governor Kazuo Ueda’s press conference “is expected to take a hawkish tone, and even if depreciation in the yen doesn’t accelerate, the government is likely to intervene at the same time and swing the yen stronger by about 5 yen,” said Eiji Dohke, a strategist at SBI Securities. The first intervention would probably be for trillions of yen, followed by smaller long-term purchases, he said.

In rates, treasuries were little changed after yields rose in the previous session. US 10-year yields around 4.64% are near flat on the day with bunds and gilts outperforming by 1.5bp and 2.5bp in the sector. Core European rates outperform Treasuries, with little reaction in Spanish short-end bonds to Prime Minister Pedro Sanchez’s threat to resign, made after European markets closed on Wednesday.  The week's treasury coupon auction cycle concludes with $44b 7-year note sale at 1pm New York time, following solid results for both 2- and 5-year sales earlier this week; WI 7-year yield at ~4.652% is roughly 47bp cheaper than last month’s, which stopped 0.8bp through in a strong result.

In commodities, oil prices are little changed, with WTI trading near $82.80 a barrel. Spot gold rises 0.4% to around $2,325/oz.

Bitcoin was flat in choppy trade and briefly approached the $64,000 level before fading back.

Looking at the calendar, US data releases include the initial Q1 GDP reading from the US, along with the weekly initial jobless claims, pending home sales for March, and the Kansas City Fed’s manufacturing index for April. Meanwhile from central banks, we’ll hear from ECB President Lagarde, the ECB’s Schnabel, Vujcic, Nagel and Panetta. And we’ll also get the ECB’s latest Economic Bulletin. Finally, today’s earnings releases include Microsoft, Alphabet, Caterpillar and Intel.

Corporate Highlights:

• Caterpillar Inc. reported first-quarter results that showed machinery sales dipping from a year earlier and warned its second-quarter figures are also expected to be lower.
• Lazard Inc. posted its best first-quarter revenue on record as the investment bank jostles for position among boutiques to take advantage of the rebound in mergers and acquisitions.
• Southwest Airlines Co. is slowing growth, ending service at four airports and offering voluntary leaves to address “significant challenges” in 2024 and 2025 created after Boeing Co. again reduced the number of aircraft the carrier will receive this year.
• Barclays Plc posted first-quarter revenue that topped analyst estimates after its stock traders collected a surprise windfall from tumultuous global markets.
• Deutsche Bank AG relied on its traders and investment bankers to make up for a slowdown in income from lending, as Chief Executive Officer Christian Sewing seeks to deliver on an ambitious revenue goal.
• BNP Paribas SA’s fixed-income traders trailed all of the large Wall Street banks in the first quarter, taking the shine off a strong performance in other parts of the investment bank.
• Unilever Plc sales jumped more than expected in the first quarter as Chief Executive Officer Hein Schumacher pushes ahead with his turnaround plan.
• Nestle SA sales growth sputtered in the first quarter as the maker of Nespresso coffee was hit by cooler demand in North America and supply constraints at its vitamins unit.
• STMicroelectronics NV reported weaker sales than analysts expected, exacerbated by a slowdown in chip demand from the automotive sector.

Earnings

• Meta Platforms Inc (META) Q1 2024 (USD): EPS 4.71 (exp. 4.32), Revenue 36.46bln (exp. 36.16bln), Q2 24 revenue view 36.5-39bln (exp. 38.38bln), FY24 capex view 35-40bln (exp. 34.73bln), also expects capex to increase in FY25 (exp. 37.73bln). Shares are down -12.9% pre-market.
• International Business Machines Corp (IBM) Q1 2024 (USD): Adj. EPS 1.68 (exp. 1.60), Revenue 14.46bln (exp. 14.55bln). Shares are down 8.5% pre-market
• Ford Motor Co (F) Q1 2024 (USD): Adj. EPS 0.49 (exp. 0.42), Revenue 42.8bln (exp. 40.1bln). Shares are up 3.2% pre-market
• Barclays (BARC LN) Q1 (GBP): Investment Bank Revenue 3.33bln (exp. 3.35bln). FICC Revenue 1.4bln (exp. 1.52bln); affirms FY24 NII guidance. CEO said seeing an uptick in deals flow and equity markets
• AstraZeneca (AZN LN) Q1 (USD): Core EPS 2.06 (exp. 1.89). Revenue 12.7bln (exp. 11.9bln); Confirms a 7% increase in the annual dividend announced at AGM.
• Unilever (ULVR LN) Q1 (GBP) Revenue 15bln (exp. 14.7bln). Underlying Sales +4.4% (exp. +3.6%). Co. is increasingly confident in its ability to deliver sustained volume growth and positive mix; affirms FY24 underlying sales growth.
• Nestle (NESN SW) Q1 (CHF): Organic Revenue +1.4% (Exp. 2.9%); Revenue 22.1bln (prev. 23.5bln Y/Y). CEO said “We had expected a slow start and see a strong rebound in Q2 with reliable delivery for the remainder of the year.”
• STMicroelectronics (STM FP) Q1 (USD): Revenue 3.47bln (exp. 3.63bln). Guides Q2 Revenue 3.2bln (exp. 3.8bln) and gross margin 40% (exp. 42.4%). Cuts FY24 Revenue guidance amid slower than expected Auto chip demand, now between 14-15bln (exp. 16.2bln). (Newswires)

Market Snapshot

• S&P 500 futures down 0.6% to 5,079.25
• STOXX Europe 600 down 0.1% to 504.95
• MXAP down 1.0% to 171.56
• MXAPJ down 0.4% to 531.90
• Nikkei down 2.2% to 37,628.48
• Topix down 1.7% to 2,663.53
• Hang Seng Index up 0.5% to 17,284.54
• Shanghai Composite up 0.3% to 3,052.90
• Sensex up 0.6% to 74,269.03
• Australia S&P/ASX 200 little changed at 7,683.00
• Kospi down 1.8% to 2,628.62
• German 10Y yield little changed at 2.58%
• Euro up 0.3% to $1.0726
• Brent Futures up 0.4% to $88.40/bbl
• Gold spot up 0.4% to $2,326.48
• US Dollar Index down 0.25% to 105.60

Top Overnight News

• The South Korean economy grew at the fastest pace in more than two years in the first quarter beating all estimates with a pick-up in domestic consumption and robust exports, but the market questioned if the recovery was sustainable. GDP for the January-March quarter was 1.3% higher than the preceding three months on a seasonally adjusted basis, the sharpest expansion since the fourth quarter of 2021. RTRS
• French President Emmanuel Macron, who was instrumental in making Ursula von der Leyen the European Commission president five years ago, is now in talks with fellow EU leaders to find a different candidate — such as Mario Draghi — to fill the top job. BBG
• BHP has proposed a £31bn takeover of Anglo American that would bring together two global mining companies and rank as one of the industry’s largest transactions in years. FT
• Ukraine is set to increase long-range attacks inside Russia as an influx of western military aid aims to help Kyiv shape the war “in much stronger ways”, the head of the UK military has said. FT
• Israel will no longer pursue an all-out assault on Rafah but instead proceed gradually and in a more targeted fashion so as to limit civilian casualties. WSJ
• Pivotal GDP data looks set to confirm an ongoing economic boom last quarter, adding to pressure on the Fed to keep rates steady. GDP probably rose at a 2.5% annualized rate, with consumer spending seen advancing 3%. That would mean the fastest growth on a four-quarter basis in two years. BBG
• White-collar hiring is stalling out across much of the US. Hiring in professional services, finance and tech is running at one-third the rate of the overall labor market. Wage growth for high-paid workers has also cooled. BBG
• Micron is poised to receive $6.1 billion in grants and as much as $7.5 billion in loans from the US government, to build new American factories. BBG
• Mark Zuckerberg rekindled investor fears that he would not control costs at Meta after vowing to increase spending and turn the social media group into “the leading AI company in the world”, sending its shares tumbling more than 12 per cent in pre-market trading on Thursday. FT
• Boeing DoJ aims to determine by late May if Boeing breached an agreement shielding it from criminal prosecution over 2018 and 2019 fatal crashes, Reuters reports. Families of victims urged prosecution in five-hour meetings on Wednesday. Separately, Boeing said it was disappointed at not advancing in the US Air Force's Collaborative Combat Aircraft programme, but remains committed to delivering next-gen autonomous combat aircraft, including MQ-25 Stingray, MQ-28 Ghost Bat, and undisclosed proprietary programmes.

A more detailed look at global markets courtesy of Newsquawk

 

APAC stocks were mostly subdued after the uninspiring handover from the US where futures were pressured after-hours following Meta's underwhelming guidance, while the region also digested several earnings releases and markets in both Australia and New Zealand markets were closed for ANZAC Day. Nikkei 225 underperforms and retreated beneath the 38,000 level amid tech weakness and with earnings releases influencing price action, while the BoJ also kick-started its 2-day policy meeting. KOSPI was dragged lower amid losses in tech heavyweights despite stronger-than-expected GDP data and a blockbuster earnings report from SK Hynix. Hang Seng and Shanghai Comp. were positive with the Hong Kong benchmark underpinned amid resilience in the property industry, while the mainland eked slight gains after Premier Li noted China seeks to enhance development momentum and with US Secretary of State Blinken calling for the US and China to manage differences responsibly during a trip to China.

Top Asian News

• China is to speed up the local government special bond offer and is expected to accelerate special bond issuance in Q2 and Q3, according to PBoC-backed Financial News.
• China's mission to the EU said if the European side suspects the existence of so-called subsidies, it is entirely possible to verify and resolve the situation through communication with the firm or a government department, after Chinese security equipment company Nuctech's Dutch and Polish offices were raided by EU competition regulators.
• US Secretary of State Blinken called for the US and China to manage differences responsibly, according to AFP.
• Japanese Chief Cabinet Secretary Hayashi said won't comment on forex levels or intervention but reiterated it is important for currencies to move in a stable manner reflecting fundamentals and rapid FX moves are undesirable, while he added they are closely watching FX moves and will be ready to take full response.
• Japanese Finance Minister Suzuki said closely watching FX markets and will handle it appropriately.
• South Korea's market watchdog is preparing a new monitoring system to detect illegal stock short selling with the new mechanism to be implemented in a speedy manner, according to Reuters.
• CNOOC (883 HK) Q1 (CNY): Net 39.7bln (+24% Y/Y). Oil & Gas sales revenue CNY 89.98bln. Total net production -9.9% Y/Y

European bourses, Stoxx600 (-0.1%) initially opened mixed, though sentiment quickly soured and indices now hold a negative bias. European sectors hold a negative tilt; Basic Resources is the clear outperformer, with Anglo American (+11.5%) taking the lion’s share of the gains on BHP takeover reports; positive price action in the metals complex is also helping. Food Beverage & Tobacco is found at the foot of the pile, following post-earning losses in Nestle (-3.9%) and Pernod Ricard (-2.9%). US Equity Futures (ES -0.5%, NQ -0.9%, RTY +0.5%) are mixed, with clear underperformance in the tech-heavy NQ, dragged down by Meta (-13%) post-earnings, with IBM (-8%) also fuelling the downside.

Top European News

• ECB's Schnabel said may face bumpy last mile of disinflation; wage growth seems to be easing in line with projections.
• ECB's Muller said not comfortable starting with back-to-back cuts, via Bloomberg.
• BHP (BHP AT) confirmed that on the 16th April, it made an offer to Anglo America (AAL LN) regarding a potential combination; valuing Anglo American's share capital at GBP 31.1bln (vs GBP 25.75bln market cap on Wednesday's close)

FX

• Dollar is losing ground vs. peers (ex-JPY) with no obvious driver. DXY dipped under yesterday's 105.59 trough but it remains to be seen how much the dollar is sold ahead of upcoming tier 1 US data.
• EUR is benefiting from the broad softness in USD with EUR/USD eclipsing yesterday's 1.0714 peak and eyeing the 12th April high at 1.0729.
• GBP is enjoying a session of gains vs. the USD and to a lesser extent the EUR. Cable is back on a 1.25 handle for the first time since April 12th; 1.2558 was the high that day, which roughly coincides with the 200DMA at 1.2557.
• JPY is the only of the majors losing ground to the USD as USD/JPY's ascent above 155.50 overnight is sustained. Intervention speculation remains. However, comments from an LDP lawmaker yesterday that 160 could be the line of the sand has given USD/JPY bulls confidence to chase prices higher.
• Antipodeans are at the top of the leaderboard for the majors vs. the USD. AUD/USD breached its 200DMA at 0.6526 alongside strength in copper and iron prices.

Fixed Income

• USTs are in consolidation mode below the 108 mark as traders brace for today and tomorrow's tier 1 US data. For today's quarterly PCE data, ING notes that a 0.4% MoM reading tomorrow could see Fed easing expectations cut back to just 25bp. Currently USTs remain contained within yesterday's 107.20-108.02.
• Steady trade for Bunds with macro drivers on the light side, and unreactive to typical hawkish-leaning commentary from ECB's Muller; Bunds are contained within yesterday's range with greater attention to the downside with the 10yr just circa 20 ticks above the recent contract low.
• Gilts are marginally firmer in quiet UK trade. However, the modest gains need to be taken in the context of recent selling pressure post-Pill. 96.18 is the high for today but is a far cry from Wednesday's 96.67 peak.

Commodities

• Choppy sideways trade for the crude complex; initial gains in the morning have now faded, with oil prices now lower on the session; Brent June in a USD 87.80-88.49/bbl parameter.
• Firm bias across precious metals amid a weaker Dollar and as geopolitical risks remain. Price action is more contained ahead of US GDP and PCE. XAU found support at USD overnight support at 2,305/oz before rising to a USD 2,328.88/oz intraday peak.
• Base metals are mostly firmer with clear outperformance in copper prices this morning and gains in iron overnight, with desks citing robust Chinese demand prospects. Elsewhere, mining giant BHP made a takeover offer for peer Anglo American.

Geopolitics

• Russian Foreign Ministry said the appearance of NATO nuclear facilities in Poland makes it a military target for Russia, according to Al Arabiya.
• Belarusian President Lukashenko said probability of incidents on the Belarusian-Ukrainian border is quite high; around 120k Ukrainian servicemen deployed near the border; Belarus has moved several battalions of fully operational readiness to the border.

US Event Calendar

• 08:30: 1Q GDP Annualized QoQ, est. 2.5%, prior 3.4%
  • 1Q Personal Consumption, est. 3.0%, prior 3.3%
  • 1Q GDP Price Index, est. 3.0%, prior 1.6%
  • 1Q Core PCE Price Index QoQ, est. 3.4%, prior 2.0%
• 08:30: April Initial Jobless Claims, est. 215,000, prior 212,000
  • April Continuing Claims, est. 1.81m, prior 1.81m
• 08:30: March Wholesale Inventories MoM, est. 0.3%, prior 0.5%
  • March Retail Inventories MoM, est. 0.5%, prior 0.5%, revised 0.6%
• 08:30: March Advance Goods Trade Balance, est. -$91b, prior -$91.8b, revised -$90.3b
• 10:00: March Pending Home Sales (MoM), est. 0.4%, prior 1.6%
  • March Pending Home Sales YoY, est. -3.0%, prior -2.2%
• 11:00: April Kansas City Fed Manf. Activity, est. -5, prior -7

DB's Jim Reid concludes the overnight wrap

Markets have had a challenging 24 hours, and futures on the S&P 500 are down -0.66% overnight after Meta reported a disappointing outlook after the market close. Ahead of that, risk assets had already experienced a mediocre session yesterday, with equities flat in the US but down in Europe, as a bond selloff and geopolitical tensions weighed on sentiment. The losses for bonds didn’t have a single catalyst, but they gathered pace throughout the day, and in Europe it left 10yr yields at their highest levels of 2024 so far. To be honest, there were few assets that did particularly well, with the dollar index (+0.17%) the notable exception. Today will see more tech results come out as well, with Microsoft and Alphabet reporting after the US close.

Kicking off with Meta, its shares fell -15% in after-hours trading yesterday, as even though its Q1 results slightly exceeded revenue and earnings estimates, revenue guidance for Q2 came towards the lower end of analysts’ expectations. The company also raised its cost expectations for 2024, seeing capex spending totalling $35-40bn (vs. $30-37bn earlier guidance). All this led to what was in many ways a mirror image of the reaction to Tesla’s results the day before, with Meta’s outlook disappointing relative to lofty expectations that had seen its shares rise +39.4% year-to-date. Adding to more negative tech sentiment overnight, IBM slumped -8.5% after-market after its own results.

Prior to this, the sizeable bond selloff was the bigger story yesterday. This was most prominent in Europe, leaving yields on 10yr bunds (+8.6bps) at 2.59%, which is their highest level since November. One factor behind that were comments from Bundesbank President Nagel, who cautioned that a rate cut in June “would not necessarily be followed by a series of rate cuts.” So that adds to the suggestions that an initial cut doesn’t have to be followed by lots of further cuts. On top of that, we then got the Ifo’s latest business climate indicator from Germany, which rose to 89.4 in April (vs. 88.8 expected). That was its highest level in 11 months, and the expectations component also hit a one-year high of 89.9 (vs. 88.9 expected). So several headlines leant in a hawkish direction, and that came on top of the positive European PMIs the previous day.

Against that backdrop, markets dialled back their expectations for ECB rate cuts, and the amount priced in by the December meeting came down -3.9bps on the day to 73bps. That meant sovereign bonds lost ground across the continent, and yields on 10yr gilts (+9.3bps), OATs (+9.2bps) and BTPs (+13.8bps) all reached their highest levels year-to-date. Meanwhile in the US, yields on 10yr Treasuries (+4.1bps) closed at 4.64%, just beneath last week’s high for the year, and the 30yr yield (+4.4bps) hit a post-November high of 4.77%.

Higher rates had led to a mixed day for equities prior to Meta’s results. The S&P 500 was flat on the day (+0.02%), with the Magnificent 7 (+0.66%), posting a third consecutive gain thanks to a significant boost from Tesla (+12.06%), which surged after its own results the previous day. But there were also pockets of weakness, especially for the more cyclical sectors, with industrials (-0.79%) seeing the biggest declines, whilst the small-cap Russell 2000 was down -0.36%. Over in Europe, equities saw moderate losses, as the STOXX 600 (-0.43%) erased its earlier gains to close lower.

Sentiment wasn’t helped yesterday by geopolitical developments, and Israel said they had struck around 40 Hezbollah targets in Lebanon. Currently, investors don’t appear as concerned as they were last week after Iran’s strikes, and Brent crude oil prices actually came down -0.45% to $88.02/bbl. However, there are still nerves about the prospect of a further escalation, and the Israeli shekel (-0.26% against the US Dollar) lost ground after the headlines came through. Otherwise, the VIX index of volatility ticked up again, with a +0.28pts rise to 15.97pts.

Overnight in Asia, equity markets are struggling for the most part, with the Nikkei (-2.00%) experiencing a significant decline. That comes as the Japanese Yen (-0.09%) has posted further losses, falling to its weakest level since 1990 against the US Dollar, at 155.49 per dollar. T he Bank of Japan will also be making their latest policy decision tomorrow. Meanwhile in South Korea, the KOSPI (-1.20%) has also lost ground, even though the Q1 GDP data was much stronger than expected, with quarter-on-quarter growth of +1.3% (vs. +0.6% expected). Nevertheless, other equity indices did post a stronger performance, including the Hang Seng (+0.55%), the CSI 300 (+0.24%) and the Shanghai Comp (+0.17%).

Looking forward, we’ll get the first estimate of US GDP for Q1 today, which follows some very strong growth over the previous couple of quarters. Those previous releases showed an annualised growth rate of 4.9% in Q3 and +3.4% in Q4, and for today, the consensus is expecting a deceleration to an annualised 2.5% pace. Otherwise yesterday, US durable goods orders were up +2.6% in March (vs. +2.5% expected), but the previous month’s growth was revised down six-tenths to +0.7%. And for core capital goods orders, they were up +0.2% as expected, but the previous month’s growth was also revised down three-tenths to +0.4%.

To the day ahead now, and US data releases include the initial Q1 GDP reading from the US, along with the weekly initial jobless claims, pending home sales for March, and the Kansas City Fed’s manufacturing index for April. Meanwhile from central banks, we’ll hear from ECB President Lagarde, the ECB’s Schnabel, Vujcic, Nagel and Panetta. And we’ll also get the ECB’s latest Economic Bulletin. Finally, today’s earnings releases include Microsoft, Alphabet, Caterpillar and Intel.

Tyler Durden Thu, 04/25/2024 - 08:09

US Births Alarmingly Slide To Lowest Level Since 1979, Failing To Exceed Replacement Rate Since Before GFC

"There are certainly some big risks that humanity faces. Population collapse is a really big deal, but I wish more people would think about...the birth rate is far below what's needed to sustain civilization at its current level," Elon Musk explained in a recent interview posted on X.  

Elon Musk: "There are certainly some big risks that humanity faces. Population collapse is a really big deal, but I wish more people would think about...the birth rate is far below what's needed to sustain civilization at its current level. We need to take action on climate… pic.twitter.com/GDoSfVJr1H

— Camus (@newstart_2024) April 16, 2024

Musk wrote in a post on X early last week, "Any nation with a birth rate below replacement will eventually cease to exist." 

Any nation with a birth rate below replacement will eventually cease to exist

— Elon Musk (@elonmusk) April 15, 2024

This leaves us with a new report from the US National Center for Health Statistics showing US births continued a multi-decade slide to levels not seen in more than four decades. 

There were 3.59 million babies born in 2023, down 2% from 3.66 million recorded in 2022. This number is the lowest since 1979, when 3.4 million babies were born. 

"People are making rather reasoned decisions about whether or not to have a child at all," Karen Benjamin Guzzo, director of the Carolina Population Center at the University of North Carolina at Chapel Hill, said, who was quoted by The Wall Street Journal. 

Guzzo continued, "More often than not, I think what they're deciding is, 'Yes, I'd like to have children, but not yet.'"

America's declining total fertility rate peaked at 3.75 births per woman after World War II and has since collapsed to about 1.617, well below the replacement rate of 2.1. 

Source: The Wall Street Journal

A nation without children is a nation without a future. The intersection of deaths exceeding births per year appears imminent. 

Source: The Wall Street Journal

US birth rates for most age groups are all declining, except for women ages 35-39 and 40-44. 

Source: The Wall Street Journal

Only the Hispanic fertility rate has rebounded. 

Source: The Wall Street Journal

With the total birth rate well under the level of replacement since 2007, it should now make sense (read here) why the Biden administration has facilitated the greatest illegal alien invasion this nation has ever seen. 

Tyler Durden Thu, 04/25/2024 - 07:45

These Countries Saw The Largest 'Happiness' Gains Since 2010

In 2011, Bhutan sponsored a UN resolution that invited governments to prioritize happiness and well-being as a way to measure social and economic development.

And thus, the World Happiness Report was born.

In 2012, the first report released, examining Gallup poll data from 2006–2010 that asked respondents in nearly every country to evaluate their life on a 0–10 scale. From this they extrapolated a single “happiness score” out of 10 to compare how happy countries are.

More than a decade later, the 2024 World Happiness Report continues the mission to quantify, measure, and compare well-being. Its latest findings also include how countries have become happier in the intervening years.

Visual Capitalist's Pallavi Rao visualizes these findings in the chart below, which shows the 20 countries that have seen their happiness scores grow the most since 2010.

Which Countries Have Become Happier Since 2010?

Serbia leads a list of 12 Eastern European nations whose average happiness score has improved more than 20% in the last decade.

In the same time period, the Serbian economy has doubled to $80 billion, and its per capita GDP has nearly doubled to $9,538 in current dollar terms.

Since the first report, Western Europe has on average been happier than Eastern Europe. But as seen with these happiness gains, Eastern Europe is now seeing their happiness levels converge closer to their Western counterparts. In fact, when looking at those under the age of 30, the most recent happiness scores are nearly the same across the continent.

All in all, 20 countries have increased their happiness score by a full point or more since 2010, on the 0–10 scale.

Tyler Durden Thu, 04/25/2024 - 02:45

Iran Vs Israel: What Happens Next Now That Shots Have Been Fired?

Authored by Brandon Smith via Alt-Market.us,

In October of 2023 in my article ‘It’s A Trap! The Wave Of Repercussions As The Middle East Fights “The Last War”’ I predicted that a multi-front war was about to develop between Israel and various Muslim nations including Lebanon and Iran. I noted:

“Israel is going to pound Gaza into gravel, there’s no doubt about that. A ground invasion will meet far more resistance than the Israelis seem to expect, but Israel controls the air and Gaza is a fixed target with limited territory. The problem for them is not the Palestinians, but the multiple war fronts that will open up if they do what I think they are about to do (attempted sanitization). Lebanon, Iran and Syria will immediately engage and Israel will not be able to fight them all…”

So far, both Lebanon and Iran have directly engaged Israeli military forces and civilian targets. Syrian militias are also declaring they will once again start attacking US military bases in the region. In my article ‘World War III Is Now Inevitable – Here’s Why It Can’t Be Avoided’ published on April 5th I noted that:

“I warned months ago…that the war in Gaza would expand into a multi-front conflict that would probably include Iran. I also warned that it would be to Israel’s benefit if Iran entered the war because this would eventually force the US to become directly involved. To be sure, Iran has already been engaging in proxy attacks on Israel through Lebanon, but Israel’s attack on the Iranian “embassy” or diplomatic station in Syria basically ensures that Iran will now directly commit to strikes on Israeli targets.”

Iran did indeed commit to a large scale missile and drone based attack on Israel, a situation which has had some curious consequences. Of course, US naval forces aided Israel’s Iron Dome in shooting down the majority of drones and missiles sent by Iran. However, even though there are several videos showing that some cruise missiles hit their targets, the Israelis have been reticent to admit that any damage was done.

I suspect it’s because the cruise missiles struck military targets instead of civilian targets and Israel doesn’t want to release any information on what was hit. Iran’s drones were likely meant to act as decoys for anti-air defenses. They are much cheaper than the missiles used by Israel and the US to shoot them down.

Whether or not these strikes had any real affect on Israeli offensive capabilities we’ll probably never know. What we do know is that Israel’s counter-strike was much smaller than most analysts expected. Does this mean that the tit-for-tat is over and both sides are going hands-off? That would probably be the smart decision, but no, that’s not what’s happening here.

Israel’s limited response was likely due to a lack of clarity on how much the US government under Biden is willing to participate in the war during an election year. What we will see in the next six months is a steady escalation towards winter, followed by new bombardments with far more extensive destruction than we recently witnessed.

In other words, spring is just the dress rehearsal for what will happen in winter.

Here are the most probable scenarios as 2024 rolls forward…

Air Strikes On Iran

I have little doubt that Israel will commit to extensive aerial strikes on Iran this year or very early in 2025, and we’ll see very quickly if Russian air defense technology sold to the Iranians is effective or ineffective. Iran’s drone program may be useful in helping to even the playing field against Israeli fighter jets, but then again, the technology gap could be extensive.

The Israeli public position will be that their strikes are focused on taking down any existing Iranian nuclear labs. There is no solid evidence that Iran has made much headway in developing nukes (they might have dirty bombs), but the notion of nukes is more than enough in terms of public relations and justification for the war.

Iran Blocks The Strait Of Hormuz

The Strait of Hormuz would be at the top of the list of primary targets for Iran. It is the narrowest point of access to the Persian Gulf and oversees the passage of around 25%-30% of the world’s total oil exports. Blocking it is relatively easy – All Iran has to do is sink a few tankers into the shallow waters or destroy enemy ships passing through, creating a barrier that will make transport of oil impossible.

This would also make naval operations for Israel or the US difficult. Clearing obstructions would take time and expose forces to Iranian artillery which can be fired from up to 450 miles away. Once artillery is locked in on a narrow point or pasage, nothing is going to get through. As we’ve seen in Ukraine, a blanket of artillery fire is essentially unstoppable.

Anti-ship missiles wouldn’t even be necessary and would probably prove less effective, unless they are hypersonic. Iran can also utilize its small fleet of diesel submarines to deploy naval mines in the strait.

Once the Hormuz is disrupted and global oil shipments slow down the US military will join the war if they haven’t done so already.

Israeli Attack Leads To Ground War With Iran/Lebanon

A ground war between Iran and Israel is inevitable if the tit-for-tat continues, and much of it will be fought (at least in the beginning) in Lebanon and perhaps Syria. Iran has a mutual defense pact with both countries and Lebanon is generally a proxy for Iranian defense policy.

Iran will have active troops or proxy forces in all of these regions, not to mention the Houthis in Yemen striking ships in the Red Sea. There are questions in terms of how Iraq will respond to this situation, but there’s not a lot of love between the current government and Israel or the US.

The Iraq government did not initially condemn the attack by Hamas against Israel on October 7th and has voiced support for the Palestinians in Gaza. It’s unlikely that they would willingly allow the use of their territory for projecting an offensive against Iran. The use of Saudi Arabian and Kuwaiti territory is possible for invasion IF the US gets involved, and the Persian Gulf would be a primary point of attack. But, both the US and Israel lack enough regional bases needed to project large scale ground forces into Iran (keep in mind that bases in Afghanistan are now gone).

Turkey is another staging ground for US forces but they certainly don’t like Israel, meaningTurkey is going to be off limits. Like Iraq, I think it will be difficult to convince Turkey, a vocal defender of Gaza, to support an invasion force or exploit their border for operations.

What about Pakistan? No, not a chance. It’s important to remember that many of these nations have worked with the US in the past, but they have angry populations to deal with. Support for an attack on Iran could lead to civil unrest at home.

The war would mostly be fought by air and by sea with US and Israel seeking to dominate the Persian Gulf. A lot of the ground fighting will be done in neighboring countries. A direct invasion of Iran would be an exhaustive affair with mountain terrain that must be reached by going through allied territories.

Can it be done? Yes. Could the US and Israel/allies win? Yes, as long as the goal is destruction and not occupation. Would it be costly? Absolutely. Far too costly to be acceptable to the western public these days, and a war that would require extensive military recruitment or a draft which Americans in particular will not tolerate.

Gas Prices Skyrocket

Think gas prices are high now? Just wait until 25% of the world oil exports are locked out of the market for months at a time. We might see double the prices at the pump; perhaps even triple, and that’s not counting the inflationary conditions already ongoing in the west.

This would be a disaster for the economy as energy prices affect EVERYTHING else. Costs on the shelf will climb right along with oil.

Military Draft And Attacks On Liberty Activists

Below the surface, there are many benefits to expanding the war in the Middle East for the globalists. War can be blamed for the inflationary collapse they created. War can be used as an excuse to implement even more aggressive censorship standards in Europe and the US. War can be used to create a military draft which will trigger great unrest in the US and some parts of the EU. War could invariably be used to rationalize martial law. And, it could even be used to stall or disrupt elections.

At bottom, the war in Ukraine, the war in the Middle East and the many other regional wars that will probably erupt in the next few years have a cumulative effect that causes confusion and chaos. All that is needed is a short period of disarray and a lot of economic panic and the public may even forget who created the mess in the first place Liberty activists caught in the middle of these events will take action to defend their freedoms, and I have no doubt we will be accused of “aiding foreign enemies” or working as “agents of the Russians, Iranians, etc.”

Russian Involvement And World War

Given that NATO has seen fit to engage in a proxy war in Ukraine it makes sense that Russia would return the favor and engage in a proxy war in Iran. Don’t be surprised to see a lot of discussion in the media in the coming months about Russian “advisers” in Iran as well as Russian weaponry. Russia already has military bases in Syria and defense agreements with Iran. It would appear that the US and allies are being set on a collision course with Russia that will lead to direct kinetic interactions.

At this stage world war will already be well underway. Russia and the US may never actually try to strike each other’s territory and nuclear exchange makes little sense for anyone (especially the globalists who would lose their financial and surveillance empire in the blink of an eye) but they will be fighting each other in regional wars in multiple spots across the globe. It seems to me that this process has already been set in motion, and once the avalanche starts, it’s very hard to stop.

*  *  *

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Tyler Durden Thu, 04/25/2024 - 02:00

Divide And Conquer: The Government's Propaganda Of Fear And Fake News

Authored by John and Nisha Whitehead via The Rutherford Institute,

“It is the function of mass agitation to exploit all the grievances, hopes, aspirations, prejudices, fears, and ideals of all the special groups that make up our society, social, religious, economic, racial, political. Stir them up. Set one against the other. Divide and conquer. That’s the way to soften up a democracy.”

- J. Edgar Hoover, Masters of Deceit

“Nothing is real,” observed John Lennon, and that’s especially true of politics.

Much like the fabricated universe in Peter Weir’s 1998 film The Truman Show, in which a man’s life is the basis for an elaborately staged television show aimed at selling products and procuring ratings, the political scene in the United States has devolved over the years into a carefully calibrated exercise in how to manipulate, polarize, propagandize and control a population.

Take the media circus that is the Donald Trump hush money trial, which panders to the public’s voracious appetite for titillating, soap opera drama, keeping the citizenry distracted, diverted and divided.

This is the magic of the reality TV programming that passes for politics today.

Everything becomes entertainment fodder.

As long as we are distracted, entertained, occasionally outraged, always polarized but largely uninvolved and content to remain in the viewer’s seat, we’ll never manage to present a unified front against tyranny (or government corruption and ineptitude) in any form.

Studies suggest that the more reality TV people watch—and I would posit that it’s all reality TV, entertainment news included—the more difficult it becomes to distinguish between what is real and what is carefully crafted farce.

“We the people” are watching a lot of TV.

On average, Americans spend five hours a day watching television. By the time we reach age 65, we’re watching more than 50 hours of television a week, and that number increases as we get older. And reality TV programming consistently captures the largest percentage of TV watchers every season by an almost 2-1 ratio.

This doesn’t bode well for a citizenry able to sift through masterfully-produced propaganda in order to think critically about the issues of the day.

Yet look behind the spectacles, the reality TV theatrics, the sleight-of-hand distractions and diversions, and the stomach-churning, nail-biting drama that is politics today, and you will find there is a method to the madness.

We have become guinea pigs in a ruthlessly calculated, carefully orchestrated, chillingly cold-blooded experiment in how to control a population and advance a political agenda without much opposition from the citizenry.

This is how you persuade a populace to voluntarily march in lockstep with a police state and police themselves (and each other): by ratcheting up the fear-factor, meted out one carefully calibrated crisis at a time, and teaching them to distrust any who diverge from the norm through elaborate propaganda campaigns.

Unsurprisingly, one of the biggest propagandists today is the U.S. government.

Add the government’s inclination to monitor online activity and police so-called “disinformation,” and you have the makings of a restructuring of reality straight out of Orwell’s 1984, where the Ministry of Truth polices speech and ensures that facts conform to whatever version of reality the government propagandists embrace.

This “policing of the mind” is exactly the danger author Jim Keith warned about when he predicted that “information and communication sources are gradually being linked together into a single computerized network, providing an opportunity for unheralded control of what will be broadcast, what will be said, and ultimately what will be thought.”

You may not hear much about the government’s role in producing, planting and peddling propaganda-driven fake news—often with the help of the corporate news media—because the powers-that-be don’t want us skeptical of the government’s message or its corporate accomplices in the mainstream media.

However, when you have social media giants colluding with the government in order to censor so-called disinformation, all the while the mainstream news media, which is supposed to act as a bulwark against government propaganda, has instead become the mouthpiece of the world’s largest corporation (the U.S. government), the Deep State has grown dangerously out-of-control.

This has been in the works for a long time.

Veteran journalist Carl Bernstein, in his expansive 1977 Rolling Stone piece “The CIA and the Media,” reported on Operation Mockingbird, a CIA campaign started in the 1950s to plant intelligence reports among reporters at more than 25 major newspapers and wire agencies, who would then regurgitate them for a public oblivious to the fact that they were being fed government propaganda.

In some instances, as Bernstein showed, members of the media also served as extensions of the surveillance state, with reporters actually carrying out assignments for the CIA. Executives with CBS, the New York Times and Time magazine also worked closely with the CIA to vet the news.

If it was happening then, you can bet it’s still happening today, only this collusion has been reclassified, renamed and hidden behind layers of government secrecy, obfuscation and spin.

In its article, “How the American government is trying to control what you think,” the Washington Post points out “Government agencies historically have made a habit of crossing the blurry line between informing the public and propagandizing.”

This is mind-control in its most sinister form.

The end goal of these mind-control campaigns—packaged in the guise of the greater good—is to see how far the American people will allow the government to go in re-shaping the country in the image of a totalitarian police state.

The government’s fear-mongering is a key element in its mind-control programming.

It’s a simple enough formula. National crises, global pandemics, reported terrorist attacks, and sporadic shootings leave us in a constant state of fear. The emotional panic that accompanies fear actually shuts down the prefrontal cortex or the rational thinking part of our brains. In other words, when we are consumed by fear, we stop thinking.

A populace that stops thinking for themselves is a populace that is easily led, easily manipulated and easily controlled whether through propaganda, brainwashing, mind control, or just plain fear-mongering.

Fear not only increases the power of government, but it also divides the people into factions, persuades them to see each other as the enemy and keeps them screaming at each other so that they drown out all other sounds. In this way, they will never reach consensus about anything and will be too distracted to notice the police state closing in on them until the final crushing curtain falls.

This Machiavellian scheme has so ensnared the nation that few Americans even realize they are being brainwashed—manipulated—into adopting an “us” against “them” mindset. All the while, those in power—bought and paid for by lobbyists and corporations—move their costly agendas forward.

This unseen mechanism of society that manipulates us through fear into compliance is what American theorist Edward L. Bernays referred to as “an invisible government which is the true ruling power of our country.”

It was almost 100 years ago when Bernays wrote his seminal work Propaganda:

“We are governed, our minds are molded, our tastes formed, our ideas suggested, largely by men we have never heard of... In almost every act of our daily lives, whether in the sphere of politics or business, in our social conduct or our ethical thinking, we are dominated by the relatively small number of persons...who understand the mental processes and social patterns of the masses. It is they who pull the wires which control the public mind.”

To this invisible government of rulers who operate behind the scenes—the architects of the Deep State—we are mere puppets on a string, to be brainwashed, manipulated and controlled.

All of the distracting, disheartening, disorienting news you are bombarded with daily is being driven by propaganda churned out by one corporate machine (the corporate-controlled government) and fed to the American people by way of yet another corporate machine (the corporate-controlled media).

“For the first time in human history, there is a concerted strategy to manipulate global perception. And the mass media are operating as its compliant assistants, failing both to resist it and to expose it,” writes investigative journalist Nick Davies.

So where does that leave us?

Americans should beware of letting others—whether they be television news hosts, political commentators or media corporations—do their thinking for them.

A populace that cannot think for themselves is a populace with its backs to the walls: mute in the face of elected officials who refuse to represent us, helpless in the face of police brutality, powerless in the face of militarized tactics and technology that treat us like enemy combatants on a battlefield, and naked in the face of government surveillance that sees and hears all.

As I make clear in my book Battlefield America: The War on the American People and in its fictional counterpart The Erik Blair Diaries, it’s time to change the channel, tune out the reality TV show, and push back against the real menace of the police state.

If not, if we continue to sit back and lose ourselves in political programming, we will remain a captive audience to a farce that grows more absurd by the minute.

Tyler Durden Wed, 04/24/2024 - 23:30

Biden Calls For Record High 44.6% Capital Gains Tax Rate

By John Kartch of Americans For Tax Reform

President Biden has formally proposed the highest top capital gains tax in over 100 years.

Here is a direct quote from the Biden 2025 budget proposal: “Together, the proposals would increase the top marginal rate on long-term capital gains and qualified dividends to 44.6 percent.”

Yes, you read that correctly: A Biden top capital gains and dividends tax rate of 44.6%.

Under the Biden proposal, the combined federal-state capital gains tax exceeds 50% in many states. California will face a combined federal-state rate of 59%, New Jersey 55.3%, Oregon at 54.5%, Minnesota at 54.4%, and New York state at 53.4%.

Worse, capital gains are not indexed to inflation. So Americans already get stuck paying tax on some “gains” that are not real. It is a tax on inflation, something created by Washington and then taxed by Washington. Biden’s high inflation makes this especially painful.

Many hard working couples who started a small business at age 25 who now wish to sell the business at age 65 will face the Biden proposed 44.6% top rate, plus state capital gains taxes. And much of that “gain” isn’t real due to inflation. But they’ll owe tax on it.

Capital gains taxes are often a form of double taxation. When capital gains come from stocks, stock mutual funds, or stock ETFs, the capital gains tax is a cascaded second layer of tax on top of the current federal corporate income tax of 21%. (Biden has also proposed a corporate income tax hike to 28%).

The proposed Biden top capital gains tax rate is more than twice as high as China’s rate. China’s capital gains tax rate is 20%. Is it wise to have higher taxes than China? And with Biden’s combined federal-state capital gains rate of 59% in California, residents will face a rate nearly three times as high as China.

The capital gains tax was created as its own tax in 1922, at a rate of 12.5%. See the chart below to see how Biden’s proposed capital gains tax for 2025 puts the United States in uncharted territory.

Biden’s proposed capital gains tax hike will also hit many families when parents pass away. Biden has proposed adding a second Death Tax (separate from and in addition to the existing Death Tax) by taking away stepped-up basis when parents die. This would result in a mandatory capital gains tax at death — a forced realization event.

As previously reported by CNBC:

“When someone dies and the asset transfers to an heir, that transfer itself will be a taxable event, and the estate is required to pay taxes on the gains as if they sold the asset,” said Howard Gleckman, senior fellow in the Urban-Brookings Tax Policy Center. 

Biden’s proposal to take away stepped-up basis has already been tried, and it failed: In 1976 congress eliminated stepped-up basis but it was so complicated and unworkable it was repealed before it took effect.

As noted in a July 3, 1979 New York Times article, it was “impossibly unworkable.”

NYT wrote:

“Almost immediately, however, the new law touched off a flood of complaints as unfair and impossibly unworkable. So many, in fact, that last year Congress retroactively delayed the law’s effective date until 1980 while it struggled again with the issue.“

As noted by the NYT, intense voter blowback ensued:

“Not only were there protests from people who expected the tax to fall on them — family businesses and farms, in particular — bankers and estate lawyers also complained that the rule was a nightmare of paperwork.“

Biden’s 2025 budget calls for about $5 trillion in tax increases over the next decade.

Tyler Durden Wed, 04/24/2024 - 22:10

Russia Vetoes US-Authored UN Resolution Banning Nuclear Weapons In Space

Russia has just vetoed a very rare and interesting resolution set before the United Nations Security Council focused on banning nuclear weapons in space:

The treaty bars signatories, including the U.S. and Russia, from placing "in orbit around the Earth any objects carrying nuclear weapons or any other kinds of weapons of mass destruction" or anywhere else in outer space.

On Wednesday Russia registered the lone veto which shot down the draft resolution aimed ultimately at preventing a future nuclear arms race in outer space.

Illustration via bne IntelliNews

China was the only abstention while the US was among the 13 UNSC members that voted in favor. It had been drafted and brought forward by the US and Japan.

In February the US government alleged that Russia was preparing to deploy a 'space weapon' which might be nuclear, which subsequently set off a frenzy of media speculation. 

Reuters  had reported at the time, "The space-based weapon U.S. intelligence believes Russia may be developing is more likely a nuclear-powered device to blind, jam or fry the electronics inside satellites than an explosive nuclear warhead to shoot them down, analysts said."

The Kremlin has blasted what it characterized as a "malicious fabrication". It claimed US officials were seeking to distract the public and ram through more foreign aid and defense spending in Congress.

The US press release summarizing Wednesday's failed resolution included the following description:

The detonation of a nuclear weapon in space would destroy satellites that are vital to communications, agriculture, national security, and more worldwide, with grave implications for sustainable development, and other aspects of international peace and security. The diverse group of cosponsors of this resolution reflects the strong shared interest in avoiding such an outcome.

Additionally National Security Council spokesman John Kirby warned that in the absence of any international prohibition or treaty, nukes in space could cause "physical destruction" on Earth.

Putin issues orders for nuclear space program https://t.co/t07yQ26tku pic.twitter.com/IGJQf0MTf2

— Newsweek (@Newsweek) April 11, 2024

US Ambassador Thomas-Greenfield after Moscow's no vote lashed out at Russia's ambassador: "Today's veto begs the question: why? Why, if you are following the rules, would you not support a resolution that reaffirms them? What could you possibly be hiding," she said.

Tyler Durden Wed, 04/24/2024 - 21:50

COVID-19 Vaccine Protection Among Children Plummets Within Months: CDC Study

Authored by Zachary Stieber via The Epoch Times,

Children who received an original COVID-19 vaccine have little protection against hospitalization just months after vaccination, according to a new study from the U.S. Centers for Disease Control and Prevention (CDC).

Children initially have 52 percent protection against hospitalization but that estimated effectiveness plummeted to 19 percent after four months, according to the paper.

Protection against so-called critical illness also dropped sharply, from 57 percent to 25 percent, researchers found.

The researchers include CDC employees and the paper was published in the CDC’s weekly digest on April 18.

The study covered children who received two or more doses of the original Pfizer-BioNTech or Moderna COVID-19 vaccines from Dec. 19, 2021, through Oct. 29, 2023.

The study involved children aged 5 to 18 who were hospitalized with acute COVID-19 and tested positive for the illness and compared them to a control group of children hospitalized with COVID-19-like symptoms but who tested negative for COVID-19.

Researchers drew data from the Overcoming COVID-19 Network, which includes health care sites in most of the United States, and ended up with 1,551 case patients and 1,797 in the control group.

The study found that “receipt of ≥2 original monovalent COVID-19 vaccine doses was associated with fewer COVID-19–related hospitalizations in children and adolescents aged 5–18 years; however, protection from original vaccines was not sustained over time,” Laura Zambrano, a CDC epidemiologist, and her co-authors wrote.

It also recorded a similar drop in protection against critical illness, defined as being placed on mechanical ventilation, vasoactive infusions, extracorporeal membrane oxygenation, or dying.

The researchers asserted that the results highlighted the current CDC guidance that all people aged 6 months and older receive one of the newest COVID-19 vaccines, which were introduced in the fall of 2023 with clinical data from just 50 humans and no efficacy estimates. The CDC only publishes papers in its weekly digest, the Morbidity and Mortality Weekly Report, after they’re shaped to “comport with CDC policy.” The papers are not peer-reviewed.

Ms. Zambrano did not respond when asked for data suggesting that the currently available shots provide longer-lasting protection than the original vaccines.

The CDC’s website says, in promoting vaccination, that COVID-19 vaccines are “effective at protecting people from getting seriously ill, being hospitalized, and dying” but the hyperlink that ostensibly supports the statement goes to a page that is not live.

U.S. authorities have been moving COVID-19 vaccines to a once-a-year model, similar to influenza vaccines. The model features updating the formulation of the vaccines on an annual basis, in an acknowledgment that any protection the vaccines give quickly wanes. The formulation is typically updated in the fall.

Just 14 percent of children, and 23 percent of adults, have received one of the newest vaccines as of April 6, according to CDC estimates. The available vaccines are messenger RNA (mRNA) shots from Pfizer and Moderna and an alternative from Novavax.

Dr. Jane Orient, executive director of the Association of American Physicians and Surgeons, noted that, according to the new paper, the maximum effectiveness estimates against hospitalization were 61 percent, regardless of how the data were sliced, that more deaths were recorded among the case patients, and the median hospitalization duration was four days for both groups.

“I do not see how a clinician whose concern is treating patients and whose job does not depend on pushing mRNA vaccines would find this a basis for recommending shots—quite the contrary,” Dr. Orient, who was not involved in the research, told The Epoch Times in an email.

“It reeks of conflict of interest.”

Stated limitations of the paper include not assessing post-infection immunity and a lack of sequencing data.

The conflict of interest section runs 688 words and includes some of the authors reporting funding from Pfizer and Moderna or ownership of Pfizer stock.

Tyler Durden Wed, 04/24/2024 - 21:30

Biden's $60BN Can't Fix Ukraine's Manpower & Recruitment Crisis

With Biden's $60 billion in funding for Ukraine now fully authorized and implemented, the question is now what? The US President on Wednesday announced just after signing the bill that the Pentagon will start sending equipment to Ukraine "in the next few hours" straight from the US stockpile.

The Kremlin in response is vowing to push back the front lines deeper into Ukraine, and says that newly infused American weapons will burn. Russian Ambassador to the US Anatoly Antonov has said in fresh remarks that "The American aid won’t save Zelensky. New weapons will be destroyed, and the special military operation goals will be achieved."

The diplomat continued, "the military shipments of the US and its satellites have been burned, are being burned and will be burned by the Russian Armed Forces."

Getty Images

Wednesday afternoon comments by Biden's national security adviser Jake Sullivan hailed that the long sought defense aid for Kiev has finally become a reality, but also cautioned that Russia could still break through Ukrainian defensive positions soon.

"It was a long road to secure this funding, and I have to say standing here today, it was too long, and the consequences of the delay have been felt in Ukraine," Sullivan told reporters, and explained that troops have had to resort to rationing ammunition, resulting in lost ground in the east.

"And while today's announcement is very good news for Ukraine, they are still under severe pressure on the battlefield. And it is certainly possible that Russia could make additional tactical gains in the coming weeks," he warned.

The reality is that Ukraine is fundamentally suffering a severe crisis of manpower. This essentially means that even as US weapons and equipment arrive, there are fewer and fewer troops experienced enough to actually man and operate them.

This is a grim trend which has especially been on display this week, for example in a Tuesday announcement by  Foreign Minister Dmytro Kuleba, who said the government would be cutting off consular services for military-age men living abroad. The move is to encourage them to return home and fight for their country.

"How it looks like now: a man of conscription age went abroad, showed his state that he does not care about its survival, and then comes and wants to receive services from this state," the top diplomat wrote on X. "It does not work this way. Our country is at war."

"The obligation to update one’s documents with the conscription centers existed even before the new law on mobilization was passed," Kuleba also explained. The new policy requires that all men 18 to 60 must update their information with a state office - and if they don't comply then they get cut off from all consular services abroad.

According to The New York Times, US weapons could start arriving in Ukraine within days. But on parts of the front line, Ukraine's situation is desperate. And it still has a major problem that aid can't fix: a lack of troops.

"The most important source of Ukrainian weakness is the lack of manpower," Konrad Muzyka, director of the Rochan military consultancy in Poland, told Reuters. --Business Insider

Meanwhile, inside Ukraine military officials are trying to get creative amid the ongoing manpower shortage. Reuters reports, "As Ukraine's efforts to conscript enough men to fight Russia are stymied by public skepticism, defense officials and military units are embarking on a multi-pronged charm offensive to recruit a citizens' army to resist the invasion."

The “Experts” are finally admitting that Russia is winning the war in Ukraine, but they are still lying about why. The reason is not congressional inaction over further funding. The reason is that Russia has more manpower than Ukraine; it produces more artillery than the West;… pic.twitter.com/TnE7EuLEII

— David Sacks (@DavidSacks) April 16, 2024

"This softer call-up is being conducted on job-search sites and outreach centers, as well as billboards and social media, and offers a wartime novelty: an element of choice," the report continues. "Candidates can select their precise unit and roles suiting their skills, for instance, as well as how long they will serve."

And yet we are likely to still witness more examples of recruitment officers brutally seizing young men off the streets, as was seen at various times over the course of the first two years of the war.

Tyler Durden Wed, 04/24/2024 - 21:10

ATF Rule-Change Creates A Trap For The Unwary

Authored by Christopher Roach via American Greatness,

On Friday, the 31st anniversary of the massacre of Branch Davidians in Waco, Texas, the ATF issued new regulations that make it more difficult to comply with federal laws regulating gun dealing and background checks.

Since the 1930s, federal law has required gun dealers to be registered as Federal Firearms Licensees (FFL). The requirements hinged on the meaning of “engaged in the business of” gun dealing. This language has always been ambiguous, and there has never been (even after the announcement of the new rules) a true “bright line” that distinguishes when one graduates from selling a few guns from one’s personal collection into full-fledged gun dealing.

The law previously required the primary purpose of sales to be “livelihood and profit.” The new rules reduce the requirements to seeking profit alone, tracking the a congressional amendment to existing law in 2022. The changes are more extensive than the legislative guidance, though, by stating that selling guns in the original packaging or shortly after purchase create a rebuttable presumption of being “engaged in the business.”

The potential risk is substantial, as violations are felonies. Flipping a gun for a price higher than one paid, even if one originally intended to keep it, now may turn one into a dealer, making any such sale unlawful if it does not involve all the licensing and paperwork that govern FFLs.

The War on Gun Collecting

The new rule is the latest salvo in the ATF’s longstanding war on gun shows and private transfers. In the 1980s, the ATF wanted to make it easier to become a dealer because that meant fewer private transfers as well as more records and tax revenue. In those days, it only took $10 and filling out some forms to become an FFL. These were sometimes referred to as the “kitchen table” dealers, and the numbers of FFLs increased substantially.

Then, during the Clinton years, the ATF wanted to limit FFLs, so it began requiring a larger fee as well as a storefront. They realized a lot of guns were being sold by these guys, and these measures cut down FFLs considerably. Clinton thought gun control was a great wedge issue to peel off suburban moderates from the Republican coalition.

Now, with a Democrat again at the helm, the ATF wants to further limit private sales with the threat of criminal punishment by expanding the definition of gun dealing while leaving it vague enough to dissuade private sales.

Everything under the sun that is collected has a community and events associated with it, and this typically includes shows. Shows are places where people can buy, sell, trade-up, and learn about their hobby. Fishing, boating, cars, coins, beanie babies and every other hobby and collectable has shows.

Gun shows are particularly popular because guns tend to hold their value well, and lots of people collect guns. Since many gun owners are of modest means, many of these guns eventually need to be sold, taken to a pawn shop, or otherwise converted into money after they are purchased. Gun shows allow ordinary people to sell guns to other collectors and enthusiasts, whether they are dealers or not.

Background Checks Sound Good, But Accomplish Little

While the 1993 Brady Bill mandated FFLs conduct background checks on all transfers, private sales are unregulated. This is sometimes described incorrectly as the “gun show” loophole. Contrary to the propaganda, most sales at gun shows are conducted by FFLs, and all FFL sales include a background check. But, whether conducted at a gun show or a barbeque, private sellers transferring their personal firearms do not have to conduct a background check. As I was told by a cop when I was new to the game, selling a personal gun is like selling a toaster.

While this lack of regulation conjures images of shady back-alley transactions, these sales often involve family and friends, fellow collectors at a gun show, and sales to FFLs, who have already been thoroughly vetted when they were licensed. The only legal requirement is that a gun cannot be knowingly sold or transferred to a felon.

We have heard a lot in recent years about universal background checks as a cure for most criminal misuse of guns. This doesn’t sound crazy on its face. Most people support background checks because they don’t want guns in the hands of criminals and lunatics. Also, background checks are not particularly scary because most gun owners have been through many background checks when buying guns from FFLs or obtaining concealed weapons permits.

Even so, mandatory background checks would prevent the private sales that facilitate gun collecting as a hobby. Moreover, while background checks sound like they would stop illegal guns, they don’t seem to have much of an impact. There is an extensive black market for guns, and many criminals using guns are already prohibited possessors because of felony records.

One more law is unlikely to stop criminals from getting guns, and the inevitable failure of such a law will be used to provide support for a national gun registry, which is a necessary precursor to mass confiscation.

Letting Criminals Go Free While Turning the Law-Abiding Into Criminals

Like most gun control laws, reducing crime appears to be a secondary goal of the latest ATF move. But this change will have the effect of harassing and dissuading gun enthusiasts. The new and ambiguous regulations will have a chilling effect, making gun owners think twice before liquidating a personal collection or conducting a private sale. This will make gun ownership more expensive and less inviting to newcomers.

The law will also, through selective prosecution and strong pressure to turn people into confidential informants, destroy organic gun clubs and friend groups. Facing decades in prison, the pressure put on those caught in the net to become snitches will be tremendous. Government-sponsored sales, entrapment, and the creation of unintentional new criminals may become widespread in the same way it always is when federal law enforcement is involved.

The Democratic Left’s continuing pursuit of gun control is a bit of a surprise. In the 1990s, they hypothesized that it would get suburban moms to vote their way, but it has barely moved the dial as a wedge issue. Many thought it backfired, motivating gun owners in certain swing states to vote Republican.

That said, as with much of the left’s actions in education, popular culture, and sexual mores, any short-term political cost is outweighed by a longer-term and more sinister aspect. In this case, the accretion of rules and uncertainty surrounding gun collecting and trading undermines the networking, organic friendships, and cooperation that allow gun owners to organize and present a real threat to the leviathan state.

Tyler Durden Wed, 04/24/2024 - 20:50

China Is Winning Big On Smaller EVs

Smaller is better...at least in the world of building EVs for the Asian market.

And while less scrupulous publications might take this opportunity to make stereotypical jokes about height, we'll do no such thing and instead will simply report that according to the IEA's Global Electric Vehicle Outlook 2024, released Tuesday, China dominated the EV market in 2023.

In fact, it made up 60% of global sales, according to a new report from Reuters. The report forecasts that by 2030, electric vehicles will represent one-third of all cars in China.

The latest IEA report highlights China's increasing dominance in the global electric vehicle market, particularly across Asia's burgeoning economies. China is capitalizing on its extensive industrial capabilities to expand its EV influence, promoting more affordable electric vehicles in nations like Thailand, Vietnam, and Indonesia, the report says.

The key to China's success has been managing cost, the IEA report notes: "In China, we estimate that more than 60% of electric cars sold in 2023 were already cheaper than their average combustion engine equivalent."

It continued: "However, electric cars remain 10% to 50% more expensive than combustion engine equivalents in Europe and the United States, depending on the country and car segment."

"In 2023, 55% to 95% of the electric car sales across major emerging and developing economies were large models that are unaffordable for the average consumer, hindering mass-market uptake," the IEA report continued, according to Reuters.

"However, smaller and much more affordable models launched in 2022 and 2023 have quickly become bestsellers, especially those by Chinese car makers expanding overseas."

The report emphasizes China's growing edge due to making affordable EVs, which is proving successful across Asia.

European and U.S. automakers, by contrast, target wealthier customers with costlier, luxury EV models.

In Asia, countries like Thailand, Vietnam, and Indonesia are rapidly adopting EVs, supported by favorable policies and incentives, enhancing the market share of Chinese manufacturers.

In 2023, EV sales soared in these regions despite broader market contractions. Additionally, China faces its challenges, including potential EU tariffs and an oversupply in its EV market. The IEA report suggests that for widespread EV adoption, European and U.S. manufacturers need to focus on lowering costs and improving infrastructure.

You can read the IEA's full report here. 

Tyler Durden Wed, 04/24/2024 - 20:30