Druckenmiller Dropped The Biggest 'F' Bomb

By Michael Every of Rabobank

F is for Fed; Biden; Trump; and the 1980s

In a sea of lurid, stupid headlines today, it was billionaire investor Stanley Druckenmiller who arguably dropped the biggest F bombs via a TV interview.

First: “Bidenomics, If I was a professor, I’d give him an ‘F’. Basically, they misdiagnosed Covid and thought [the economy] was going into a depression... Treasury is still acting like we’re in a depression. They’ve spent and spent and spent, and my new fear now is that spending and the resulting interest rates on the debt that’s been created are going to crowd out some of the innovation that otherwise would have taken place.... Everybody seems to get it but Yellen, who just keeps spending and spending. I think it’s dumb politically because it’s causing inflation and it doesn’t take a genius to figure out that the average American is getting hurt by the inflation.”

Investor Stanley Druckenmiller on Bidenomics: "If I were a professor, I'd give them an 'F'." pic.twitter.com/WfsU4ecO6y

— Squawk Box (@SquawkCNBC) May 7, 2024

As an aside, one of the reasons the White House is able to get away with this fiscal splurge is not just that ‘the US is the US’, which is true, but rather that 24/7 markets don’t have an easy spoon-fed monthly number for the US fiscal deficit as a percentage of GDP on a Bloomberg screen like CPI or GDP. What is the US fiscal deficit now and compared to cycles where unemployment was below 4%? If you know off the top of your head, I’m impressed: and you’re depressed (ZH: here is the answer).

Fiscal stimulus is off the charts: 6.5% budget deficit implies 8% unemployment (instead of 3.8%). Very soon this fiscal turbo boost will be handed over to monetary stimulus pic.twitter.com/U5TRyijf1K

— zerohedge (@zerohedge) March 24, 2024

Looking ahead to the post-2024 landscape, Druckenmiller stated:

“With Biden, I’m more worried about stagflation, with all the government spending, with all the tricks that Yellen has been using to manipulate yield curve, with the way the Fed seems to have reignited financial conditions. I think the inflationary outcome could be there. But I also fear regulation and everything else preventing productivity.”

However, he didn’t have much nice to say about Trump either and noted that inflation was likely to be even higher under his presidency, particularly if he interferes with the Fed’s independence and raises tariffs, as pledged. (Perhaps Stanley reads the work of our own Philip Marey, who has been arguing the same? It’s a small world, after all.) So that’s a pre-emptive F for Trump as well.

He therefore bewailed, “I’m basically a guy without a candidate. I’m an old-style Reagan, free markets, pro-immigration, and anti-tariff Republican.” Which would explain why he’s so unhappy. Because as I had argued before it started happening, that “The 1980s called, they want their economic policy back” recipe is being repeatedly given an F by both realpolitik and voters. That fact was just underlined by the latest US restrictions on chip sales to Huawei, TikTok’s decision to fight divest-or-close legislation in court, and any dozen other headlines from around the world.  

Druckenmiller was equally acerbic about the Fed’s December pivot, where markets were suddenly led to believe that rates were going to fall rapidly again, and we were heading back to the New Normal, as if the world had not changed: as I have put it before, the Pavlov’s dogs on Wall Street started to surf a wave of their own saliva. He argued, “It seemed to me the Fed was in a perfect position. Inflation was coming down, financial conditions were tightening. To some extent, I feel like they fumbled on the five-yard line.” And this is coming from someone who is a self-proclaimed “major beneficiary” of this alleged policy error.

So, what we have now is stagflationary.

What we may have next is inflationary.

And the time-machine policy some want to see is delusionary.

Tyler Durden Wed, 05/08/2024 - 10:45

WTI Rises After Crude Draw, Biden Admin Adds Most To SPR Since Dec

Oil prices are rebounding off overnight lows - once again testing the technical support of the 100-day moving average - after sliding following API's report of across the board inventory builds last night.

Oil has been on a downtrend since early April, posting losses in three of the past four weeks, with weakness not just in timespreads but in processing margins too.

That decline has come as much of the geopolitical premium from tensions in the Middle East has unwound, bringing traders’ focus back to a cooling market.

OPEC is due to meet next month to assess supply policy after implementing production cuts over the first half of the year to support prices. Most traders expect that the curbs will be extended, possibly to the year-end

For now, the next leg will be decided by the official supply/demand data...

API

• Crude +509k (-1.40mm exp)

• Cushing +1.339mm

• Gasoline +1.46mm

• Distillates +1.713mm

DOE

• Crude -1.36mm (-1.40mm exp)

• Cushing +1.88mm

• Gasoline +915k

• Distillates +560k

After last week's large crude build (and the API report overnight), expectations remained for a small draw... and the official data confirmed exactly that (opposing what API reported). Stocks at the Cushing Hub rose considerably and products also saw builds...

Source: Bloomberg

The Biden admin added 947k barrels to the SPR - the most since Dec 2023

Source: Bloomberg

US Crude production was flat near record highs at 13.1mm b/d...

Source: Bloomberg

WTI was trading around $78 ahead of the official data, just below its 100DMA...

...and WTI extended gains after the 'surprise' draw...

Overall, "oil is lower because a renewed battle between Israel and Hamas, in isolation, does not really affect oil-producing nations," Stewart Glickman, energy equity analyst at CFRA Research, told MarketWatch.

If Iran is "subsequently encouraged to do more direct attacks on Israel, it may be different," he said, but the market is "discounting this possibility."

Finally, President Biden will use crude oil from the strategic petroleum reserve should the need arise, energy adviser Amos Hochstein has said, noting there was enough oil in the reserve.

"We have been replenishing into the SPR for the last several months. I think we have sufficient supply in the SPR to address any kind of concern in the economy if we need it," Hochstein said, speaking at the Milken Institute Global Conference, as quoted by Reuters.

Tyler Durden Wed, 05/08/2024 - 10:37

APPLE EMBED

 

 

At The Money: Concentrated Portfolios:  Andrew Slimmon, Morgan Stanley (May 8, 2024)

Are your expensive active mutual funds and ETFs actually active? Or, as is too often the case, are they only pretending to be active? Do they charge a high active fee but then behave more like an index fund? AndrewToday, we discuss the advantages of concentrated portfolios. If you want to own active funds, then make sure they differ its benchmarks and truly are active.

Full transcript below.

~~~

About this week’s guest:

Andrew Slimmon is Managing Director at Morgan Stanley Investment Management, and leads the Applied Equity Advisors team; he serves as Senior Portfolio Manager for all long equity strategies.

For more info, see:

Personal Bio

Masters in Business recording

LinkedIn

Twitter

~~~

Find all of the previous At the Money episodes here, and in the MiB feed on Apple Podcasts, YouTube, Spotify, and Bloomberg.

 

SPOTIFY EMBED

 

 

TRANSCRIPT

 

Are your expensive active mutual funds and ETFs actually active? Or, as is too often the case, are they only pretending to be active? Do they charge a high active fee but then behave more like an index fund? If so, you are the victim of closet indexing. We discuss the best ways to avoid the funds that charge high fees but fail to provide the benefits of active management.

Andrew Slimmon is Managing Director at Morgan Stanley Investment Management, and leads the Applied Equity Advisors team; he serves as Senior Portfolio Manager for all long equity strategies.

Barry Ritholtz: How many stocks do you need to own to really be diversified? The number is probably a lot lower than you think. Concentrated portfolios are the opposite of bropad market indexes or funds and ETFs. They only own, A handful of stocks, typically 203-0 names. The goal is to own the best performers without all of the dead weight.

I’m Barry Ritholtz, and on today’s edition of At The Money, we’re going to discuss whether or not you should own a concentrated portfolio.

To help us unpack all of this and what it means for your holdings, let’s bring in Andrew Slimmon. He’s the Managing Director at Morgan Stanley Investment Management, where he leads the Applied Equity Advisors team and serves as Senior Portfolio Manager for all of Morgan Stanley’s long equity strategies. His team manages about 8 billion in client assets. Slimmon’s portfolios have done well against the indexes and his global portfolio has trounced the benchmarks. Let’s start with the basics. What exactly is a concentrated portfolio?

Andrew Slimmon: As I think about a concentrated portfolio, it means two things. As you said, it can be a limited number of positions. So, you know, 10 to 20 stocks is can be concentrated or it can mean a a limited number of what I would call directional position. So if you think about the S&P 500 has lots of different sectors, you could have a lot of stocks, but say you put them all in one or two sectors, you would, you would have a concentrated portfolio simply because it had made a directional, positioning versus a more diversified situation.

Barry Ritholtz: So what are the advantages of having just a few stocks or just a few sectors? How does that generate better returns than the market?

Andrew Slimmon: If you have a limited number of stocks, you’re trying to find the best the best stocks, uh, in that group and eliminate the, you know, the dogs.  I think that there is a benefit to that, but what’s important is to make sure that your positions are diversified. What’s perverse about this is I could have 10 stocks and be more diversified then if I owned a hundred stocks, because as long as those 10 stocks don’t zig and zag the other, they, they might be in different sectors; they might be different — some might be growth or value or defensive., I might be more diversified owning 10 stocks than if I owned lots and lots of stocks that, you know, that are highly correlated. So I think, It’s a combination of the number of positions, but whether you diversify, which I’m fully in favor of really depends on what is the correlation, the relationships of the stocks and the portfolios.

Barry Ritholtz: So there’s no magic number where at X number of shares, you’re really diversified. It depends on. the companies themselves, the sectors they are in what various factors and qualities they have. Is that a fair way to describe that?

Andrew Slimmon: That’s exactly right. That’s exactly right. Here’s a great example. We own in our fund NVIDIA, but we also own MasterCard and you’d say, Oh wow, NVIDIA is, you know, a tech company. It’s a semiconductor company. Uh, and MasterCard is a finance, Transactional company. So boy they, that, that’s, those stocks don’t zig and zag together. They’re, they’re not correlated…

Well, actually they are because they’re both large cap growth stocks. And at the end of the day. As we’ve discussed in the past, Barry, stocks move with their, with their factor; Those are both growth stocks. So with growth stocks work, those will work together and growth stocks don’t work. They won’t work together. So understanding the correlations is more than just, well, what sector they, they, they fall into.

Barry Ritholtz: So previously we’ve discussed active share. What does that mean in the world of concentrated portfolios? How much active share do you need to make a concentrated set of holdings look different than the index?

Andrew Slimmon: The studies show that you need to have active share of somewhere between 80 and 90 percent, which means 90 percent of your of your portfolio differs from the index.

Now I’m a believer in owning stocks that are in your benchmark, but just not owning many of them. You could have a high active share again by owning stocks that are not in the index. But over time, the higher your active share, the better managers do, because If you only own say 20 stocks, it’s going to become pretty apparent whether you’re good or not, because you’re not kind of moving on a daily basis with the index.

And, so there is survivorship bias, but higher active shares proven to outperform lower active share over time.

Barry Ritholtz:  I know you’re a fan of various market factors like value, quality, and momentum. How does that fit into the equation of a concentrated portfolio?

Andrew Slimmon: Just academically, we know that any stock, and I’ll go back to NVIDIA, it is a large cap, technology, growth stock, and over time or Apple, same thing, large cap growth technology stock about two thirds of its return in any one year can be defined by those what I’d call factor exposures. Only a third comes from what’s going on at the company level. So in other words, As a portfolio manager, I need to make sure that I understand what is going to work in the future. Are we in an environment where growth stocks are going to work? Are we environment where value stocks are going to work? Value has a little bit more inflation sensitivity. And so in value stocks have worked recently. Um, so I think understanding those large factors Has to play into it. I can’t just put my blinders on and say, I’m just going to buy 20 stocks that, you know, I love fundamentally, and I’m not going to look at anything else.

I’ve seen so many managers that have made that mistake is they. Don’t focus on the bigger factors as well. And so we play into that. And that’s why I go back to that invader versus Mastercard example, which is, uh, on the surface, two different sectors, but they are both growth stocks and therefore they will move with the growth factor.

So if I have 20 stocks and I don’t want to have just exposure to the growth factor, I better go find another finance stock that’s not correlated to the growth factor, say a bank or whatever.

Barry Ritholtz: Given your concentrated portfolios, 20 internationally, 30 domestically, how much more risk is contained in that small number of stocks versus your benchmarks that in some cases are 500 or 1,600 different names.

Andrew Slimmon: That is true, but there are very, very large stocks in the index today. And if you in our global country, we don’t own app. Well, Apple had a very tough first quarter. So, that added a lot of relative performance to our portfolio because it’s a big waiting in the index.  I think it’s understanding what is the makeup of the index, and identifying stocks you think will work and ones in being underweight, the ones that won’t work.

Barry Ritholtz: And what about different regions? Can you run a concentrated portfolio with a global tilt, very separate from, from the US

Andrew Slimmon: If I said to you, Barry, I want to run a portfolio for you and I want to just be able to buy the best companies I can find that I think I can make the most money for you. And I don’t care where they come from. Just the best opportunities. Would you say yes to that more than I just, I want to buy only European stocks for you; or only emerging markets are only this region or only this style. What would you jump at?

And I just always remember I was at a conferences about 10 years ago and, uh, in London and this international manager says to me, so Andrew, you run a global concert, your global fund, how, you know, what European banks do you invest in? And I said, I don’t have a single European bank. Wow. You can’t do that. It’s in my European benchmark. I don’t like European banks either, but I got to own them.

And it was really at that point, I thought, you know, this is crazy. Let’s just, let’s just find the best ideas we can, you know, around the world and just have a limited number of them.

I just think that that’s, you know, it’s a better approach than presuming that you can allocate to these specific regions or styles because managers then they’re going to buy things that they may not want to own because they’re in the index.

Barry Ritholtz: You are one of the few active managers I am familiar with who seem to also embrace passive indexing. Tell us a little bit about how a concentrated portfolio matches up with a broad index.

Andrew Slimmon: Look, I’ve got no problem with people getting market exposure, but there is a place for active management. And I’m a believer in finding great companies and making sure they’re all, they’re not, um, you know, they’re not highly correlated and sticking with them.

What I’m absolutely not a fan of. Is low active share, mutual funds that own lots and lots of positions. And the number of times I’ve read articles, where someone says, “Oh, I love this stock. It’s my favorite position.” And then, you know, you look up and they have a one and a half or 2 percent position. Well, it’s ridiculous because even the stock doubles, you know, they’re not, they’re not really, they don’t really believe in those companies if they own, you know, the small position. So I, you know, my, the, my enemy is not passive strategies. My enemy is really, uh, it’s the closet, the closet indexers because I think they’re bringing a bad name to, you know, to active managers.

So I embrace passive strategies. I have, you know, I have passive strategies in my personal, uh, portfolio, but I have active managers that I know have done very well over time. And I, I’ve stuck with them and you know, it’s worked.

So there’s a place for both. It’s just the closet indexers is no place for it.

Barry Ritholtz: So to wrap up, if you’re going to go active, well then go active. Own a percentage of your portfolio in a concentrated set of holdings with an active manager with a high active share. That marries up well to an inexpensive passive index and it improves the odds of outperforming The broad indices, it can add a little sizzle to a conservative set of market holdings.

I’m Barry Ritholtz, and this has been Bloomberg’s At The Money.

 

 

 

~~~

 

The post At The Money: Concentrated Portfolios appeared first on The Big Picture.

Here is another monthly update on lumber prices.
SPECIAL NOTE: The CME group discontinued the Random Length Lumber Futures contract on May 16, 2023.  I've now switched to a new physically-delivered Lumber Futures contract that was started in August 2022. 
Unfortunately, this impacts long term price comparisons since the new contract was priced about 24% higher than the old random length contract for the period when both contracts were available.

This graph shows CME random length framing futures through last August (blue), and the new physically-delivered Lumber Futures (LBR) contract starting in August 2022 (Red).
LBR is currently at $498.50 per 1000 board feet, mostly unchanged from a year ago.
Click on graph for larger image.

There is somewhat of a seasonal demand for lumber, and lumber prices usually peak in April or May.
We didn't see a significant runup in prices last Spring due to the housing slowdown, and we didn't see much of a pickup in early 2024.

US Futures Mixed As European Stocks Hit All Time High, Yields And Dollar Rise

US equity futures flipped between gains and losses on Wednesday while European stocks hit an all time high as May’s rally in equities continued amid a clutch of solid earnings reports. As of 7:45am,  S&P 500 futures traded down 0.2%, and was near session lows reversing an earlier modest gain after the underlying gauge advanced the previous four sessions. The benchmark Treasury yield rose two basis points to 4.48%. Oil fell to the lowest level since mid-March, after a mildly bearish US stockpile report. The renewed plunge in the yen took the USDJPY as high as 155.5 amid a renewed bout of impotent jawboning by Japanese officials who however have now lost all credibility. Later today the focus will be on comments from Fed officials, including Lisa Cook, and earnings from Uber, Arm and Airbnb.

Among notable premarket movers, Lyft shares rose after the ride-hailing firm’s results and outlook beat estimates. Reddit rises 13% after the social-media company reported first-quarter results that beat expectations and gave an outlook that surpassed estimates even though there is no way in hell the company can ever achieve that forecast but at least it will enjoy a higher stock price for a few months. Here are some other notable premarket movers:

• Arista Networks gains 6.8% after the cloud-networking company posted a 1Q profit that beat estimates amid strong AI demand trends.
• Confluent climbs 7.6% after the application software company reported first-quarter results that beat expectations.
• Coupang falls 7.8% after earnings per share missed estimates, driven mostly by losses attributable to its Farfetch acquisition.
• DoubleVerify plummets 42% after the digital media measurement software company cut its full-year forecast.
• Dutch Bros jumps 7.8% after the drive-thru coffee chain lifted full-year projections for revenue.
• Electronic Arts slips 3.8% after the video-game maker’s first-quarter bookings forecast fell shy of estimates.
• Luminar rises 6% after the LiDAR sensor maker’s results broadly met expectations
• Lyft gains 5% after the ride-hailing firm’s results and outlook beat estimates.
• Rivian drops 6.8% after the EV-maker reported a wider-than-expected adjusted loss for the first quarter.
• Shoals Technologies (SHLS) falls 16% after the solar energy equipment supplier cut its revenue guidance for the year.
• Shopify shares tumble 18% after the Canadian e-commerce company reported a surprise net loss in the first quarter.
• Treace Medical tumbles 59% after the medical device company cut its full-year revenue guidance.
• TripAdvisor drops 16% after management determined that there is no transaction with a third party that is in the best interests of the company and its stockholders.
• Twilio falls 8% after the software company’s second-quarter guidance fell short of the average analyst estimate.
• Uber Technologies falls 6% as gross bookings in the first quarter missed analysts’ estimates.
• Upstart declines 12% after the consumer finance company forecast revenue for the second quarter that missed analysts’ expectations.
• ZoomInfo Technologies slumps 23% after the infrastructure software company’s forecasts for revenue and profit trailed Wall Street’s expectations.

Investors saying goodbye to Q1 earnings season and enjoying a 3% S&P 500 rally in May are now uncertain what comes next, as US policymakers signal bets on a pivot to easier policy may be premature. Minneapolis Fed president Neel Kashkari said it’s likely the central bank will keep rates where they are “for an extended period of time" although Neel is best known for always being wrong about everything so taking the other side my seem prudent.

“We are now crawling through the tail end of earnings season and the market is lapsing into complacency,” said Hugh Grieves, fund manager of the Premier Miton US Opportunities fund. “The economy is ‘okay,’ rate cuts remain on the table and the oil price is declining. Unfortunately that’s not a stable equilibrium.”

The Fed’s stubborn hawkish stance as a result of even more stubborn inflation has put it out of sync with central banks in Europe that have already embarked on easing. Earlier Wednesday, Sweden’s Riksbank kicked off its rate cutting cycle, easing policy for the first time in eight years. That followed the Swiss National Bank’s decision to leapfrog peers with an interest rate cut in March. Meanwhile, Fed Governor Lisa Cook is due to speak later Wednesday.

Europe's Stoxx 600 rose 0.4%, sending European stocks rise to a record high after another batch of strong corporate earnings including sold results from Siemens Energy (for once).

Elsewhere, strong earnings from AB InBev lift food and beverages, which leads gains among sectors, while auto stocks and miners lag, with BP notching a second day of losses. Here are the most notable European movers:

• AB InBev shares rise as much as 5%, the most in three months, after reporting stronger organic adjusted Ebitda growth than expected in the first quarter.
• Ahold Delhaize shares rise as much as 4.6% after improvement in US sales momentum and the timing of the Easter holiday drove a beat in 1Q Ebit.
• Fresenius shares gain as much as 5% after the German health-care company increased its organic revenue growth guidance for the full year.
• Siemens Energy shares rise as much as 14% after the company posted forecast-beating orders and boosted its guidance.
• Puma shares rise as much as 6.4% after the apparel retailer delivered a 1Q Ebit beat and reaffirmed its guidance for the full year.
• Alstom shares gain as much as 11% after the French train maker announced plans for a capital increase of around €1 billion.
• Evonik shares climb as much as 2.2% after the chemicals company reported 1Q adjusted Ebitda that beat estimates.
• Auto1 shares jump as much as 25% after the German used-car-dealer raised its gross profit forecast for the full year.
• Grifols shares advance as much as 5.4% after the Spanish blood plasma firm’s board of directors adopted various resolutions to strengthen corporate governance.
• Sabadell shares slip as much as 3.8% after the Spanish bank released a letter sent to its chairman on the weekend from rival BBVA, saying it had no room to improve its takeover offer.
• Continental shares fall as much as 1.8% after the German tiremaker’s 1Q Ebit missed the average analyst estimates.
• Securitas shares fall as much as 4.5% after the firm reported its latest earnings which analysts say were hit by weak cash performance.
• Carl Zeiss Meditec shares drop as much as 6.9%, the most in about a year, after the German medical optics company reported weaker-than-expected results for the second quarter.

“Right now we’re seeing the broadening of performance, especially from the earnings perspective,” Nataliia Lipikhina, head of EMEA equity strategy at JPMorgan Private Bank, said in an interview on Bloomberg TV. “The market wanted to see that earnings in different sectors, not just tech, are delivering.”

Earlier in the session, stocks in Asia were set to halt a four-day winning streak as focus shifted to earnings to validate a recent rally. The MSCI Asia Pacific Index slipped as much as 0.9% after closing at a two-year high in the previous session. Japanese tech firms Sony and Nintendo were among the biggest drags to the gauge, with the latter dropping more than 5% on weak outlook. The country’s benchmarks fell more than 1% in the region’s worst performance. Chinese onshore benchmarks posted their first decline this week amid a warning from Morgan Stanley strategists that the recent rally is likely to abate. Hong Kong stocks also fell. Index heavyweights Tencent and Alibaba are among key tech firms to release earnings next week, and the results will be crucial for the rally to resume.  

In FX, the Swedish krona is among the worst performing G-10 currencies, falling 0.4% versus the greenback after the Riksbank cut its benchmark interest rate for the first time in eight years and said it could be reduced twice more in the second half of 2024. The yen weakens 0.5% against the dollar, with USD/JPY around 155.50.

In rates, treasuries were slightly cheaper across the curve with losses led by intermediate- to long-end sectors, steepening curve spreads. US long-end yields are cheaper by 2bps, steepening 2s10s spread by 1.5bp, 5s30s by 0.5bp; the 10-year is around 4.48% with bunds lagging by 1.5bp in the sector amid new record high for Europe’s Stoxx 600 Index after another batch of strong corporate earnings. Supply concession is also a factor for Treasuries with 10-year note sale later Wednesday and 30-year bond auction Thursday. Indeed, the week's refunding auction cycle continues at 1pm New York time with $42b 10-year new issue one day after Tuesday’s 3-year note sale drew good demand, stopping through by 0.3bp. WI 10-year yield at around 4.48% is 8bp richer than April’s, which tailed by 3.1bp in a poor result.

In commodities, oil prices decline, with WTI falling 1.6% to trade near $77.20. Spot gold drops 0.1%.

Looking at today's calendar, the US economic data slate includes March wholesale inventories (10am). Fed members’ scheduled speeches include Jefferson (11am), Collins (11:45am) and Cook (1:30pm) From central banks, the Riksbank was the latest western bank to commence an easing cycle cutting rates to 3.75%. Finally in the US, a 10yr Treasury auction is taking place.

Market Snapshot

• S&P 500 futures little changed at 5,214.75
• STOXX Europe 600 up 0.3% to 515.72
• MXAP down 1.0% to 176.52
• MXAPJ down 0.4% to 550.52
• Nikkei down 1.6% to 38,202.37
• Topix down 1.4% to 2,706.43
• Hang Seng Index down 0.9% to 18,313.86
• Shanghai Composite down 0.6% to 3,128.48
• Sensex little changed at 73,495.37
• Australia S&P/ASX 200 up 0.1% to 7,804.49
• Kospi up 0.4% to 2,745.05
• German 10Y yield little changed at 2.44%
• Euro down 0.1% to $1.0741
• Brent Futures down 1.2% to $82.15/bbl
• Gold spot down 0.4% to $2,305.33
• US Dollar Index up 0.18% to 105.60

Top Overnight News

• Chinese iPhone shipments jumped about 12% in March after Apple Inc. and its retailers slashed prices, official data showed, suggesting efforts to arrest an accelerating decline in sales are yielding early results. BBG
• The BOJ may take monetary policy action if yen falls affect prices significantly, governor Kazuo Ueda said on Wednesday, offering the strongest hint to date the currency's relentless declines could trigger another interest rate hike. Ueda also said the BOJ could raise interest rates sooner than expected if inflation overshoots its forecasts, or risks to the price outlook increases. RTRS
• Germany’s industrial production for Mar was a bit better than anticipated, coming in -0.4% M/M (vs. the Street’s -0.7% forecast), although Feb was revised lower (from +2.1% to +1.7%). BBG
• Sweden’s central bank lowered rates 25bp (from 4% to 3.75%) and said two additional reductions could happen in H2 (the Riksbank is only the second monetary body from an advanced economy to commence easing since the post-COVID inflation surge after Switzerland’s central bank cut in March). RTRS
• Indiana primary results showed Haley performing very well, signaling a large anti-Trump faction of the GOP exists. Politico
• Trump’s classified documents trial in Florida has been postponed indefinitely, raising the odds that the current Stormy Daniels/hush money one underway in NYC is the only verdict voters will receive before the election. WaPo
• Corporate profits are performing very well (firms beat in Q1 and analysts have been raising estimates for Q2), suggesting an economic downturn won’t occur anytime soon. WSJ
• Saudi-backed chip and AI investment firm Alat said it would divest from China if it were asked to do so by the US. The comments came after people familiar said the US revoked licenses allowing Huawei to buy chips from Intel and Qualcomm. BBG
• FTX will amass as much as $16.3 billion in cash once it sells all of its assets, far more than it needs to cover what customers lost. The extra will be used to pay them interest but nothing will be left for equity holders. BBG

Earnings

• BMW (BMW GY) Q1 (EUR): Revenue 36.61bln (exp. 36.82bln). EBIT 4.05bln (exp. 3.96bln). Automotive revenue 30.94bln (exp. 31.01bln). Automotive EBIT Margin 8.8% (exp. 9.05%). EBT Margin 11.4% (exp. 10.6%). BEV sales +28% Y/Y. 2024 outlook confirmed. Shares -4.5% in European trade
• Siemens Energy (ENR GY) Q2 (EUR): FCF 483mln (prev. -294mln Y/Y), Profit before special items 170mln (prev. 41mln Y/Y), Net Profit 108mln (exp. -11mln). Outlook: Expects sales growth 10-12% (exp. +6%), Profit margin of -1% to +1% (prev. guided -2% to +1%). Now expects FCF pretax of up to 1bln (prev. guided negative at up to 1bln). Shares +12.5% in European trade

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mostly lower after the choppy US performance and in the absence of fresh catalysts. ASX 200 lacked firm direction with gains in industrials and energy offset by weakness in miners and financials. Nikkei 225 underperformed as participants digested earnings including disappointing guidance by Nintendo. Hang Seng & Shanghai Comp were ultimately lower amid trade and tech-related frictions after the US revoked export licences that allowed Intel (INTC) and Qualcomm (QCOM) to supply Huawei with semiconductors.

Top Asian News

• BoJ Governor Ueda said the BoJ will scrutinise the impact of yen moves on the economy in guiding monetary policy and FX moves could have a big impact on the economy and prices, so could warrant a monetary policy response, while he added the BoJ may need to respond via monetary policy if such impact from yen moves affect trend inflation. Ueda said they expect trend inflation to gradually head towards 2% and will adjust monetary policy as appropriate if trend inflation heads toward 2% as projected or if they see a risk of inflation overshooting their forecast. Furthermore, Ueda said they don't see yen moves as having a big impact on trend inflation so far but there is a risk the impact could become more significant in the future and they won't necessarily wait until inflation achieves their forecasts in 1.5 to 2 years to raise rates with the central bank to adjust the degree of monetary support accordingly if trend inflation moves as projected.
• Japanese Finance Minister Suzuki said he is watching FX movements with a sense of urgency and won't comment on forex levels, while he added it is important for currencies to move in a stable manner reflecting fundamentals. Furthermore, he said they will take a thorough response for forex and don't believe that resources for intervention are limited.
• Chinese April Prelim Retail Car Sales -2% Y/Y (vs +6% in March).
• BoJ Governor Ueda says Japan's economy is recovering moderately albeit with some weakness; will guide policy appropriately from perspective of stably and sustainably achieving the price target. Rapid/abrupt and one-sided Yen falls are negative for Japan's economy are undesirable.

European bourses, Stoxx600 (+0.3%) are almost entirely in the green, with indices initially opening tentatively around the unchanged mark before picking up gradually to session highs throughout the morning. European sectors are mixed, with Food Beverage and Tobacco at the top of the pile, lifted by post-earning strength in AB InBev (+4.4%). Basic Resources is the clear underperformer, given the weakness in underlying metals prices; Autos are also hampered by poor BMW (-4.5%) results. US Equity Futures (ES U/C, NQ U/C, RTY -0.3%) are mixed and trading with little direction, continuing the tentative price action seen in the prior session. Apple (+0.6% pre-market) gains amid reports that its China iPhone shipments rose 12% in March.

Top European News

• The BoE should leave rates unchanged at its meeting on Thursday but consider lowering them in June, according to the Times' shadow MPC.
• UK Home Office announced on Tuesday night that it was aware of a technical issue affecting E-gates across the country, while it was working closely with the Border Force and affected airports to resolve the issue. However, Heathrow Airport later stated that all Border Force systems were now running as usual and it did not expect any issues this morning when the operation starts up.
• ECB's Scicluna is to face charges of “fraud and misappropriation,” relating to his time as the Finance Minister of Malta, via Politico citing documents.
• Riksbank cuts its Rate by 25bps to 3.75% (as expected by a majority of respondents); Policy rate is expected to be cut two more times during H2 if inflation outlook cuts (bringing total 2024 cuts to 3 vs prev. guided just over 2).
• Barclays European Equity Strategy; raises Utilities to Market Weight from Underweight; cuts Energy to Market Weight from Overweight

FX

• USD is firmer vs. all peers but to varying degrees. Support for the DXY has in large part been provided by further upside in USD/JPY. Fresh US fundamentals are lacking in what could well be a quiet week ahead of next week's inflation metrics, though a handful of speakers and supply populate today's docket. As such, DXY has continued to consolidate around the mid-point of the 105 handle.
• EUR is softer vs. the USD but less so than peers with some support via the EUR/GBP and EUR/SEK crosses. Fresh fundamental drivers for the Eurozone are lacking and expectations of a June ECB cut remain firmly anchored. Currently trading around 1.074.
• GBP is softer vs. the broadly firmer USD with UK specifics light ahead of tomorrow's BoE which some are framing as a potential dovish hold. Cable has slipped to the 1.24 handle, going as low as 1.2468.
• JPY is losing further ground to the USD with jawboning efforts from Japanese officials futile. 155.41 is the high watermark thus far with the next target a test of 156. CPI next week likely to be the next inflection point for the pair. Commentary from BoJ Governor Ueda sparked some volatility, though was ultimately unreactive to the commentary.
• Antipodeans are both softer vs. the USD with AUD lagging alongside downside in metals prices. AUD/USD has extended on yesterday's downside which has seen the pair dragged from Friday's post-NFP peak at 0.6647 to a current low of 0.6565.
• SEK is losing ground vs. peers as the Riksbank pulls the trigger on a rate reduction and leaves the door open to another two cuts in the second half of the year. Accordingly, EUR/SEK has jumped from 11.691 to a high of 11.7564 but has failed to test the YTD peak at 11.7708.
• PBoC set USD/CNY mid-point at 7.1016 vs exp. 7.2202 (prev. 7.1002).

Fixed Income

• USTs are a touch softer, in-fitting with the narrative outlined for Bunds above but with USTs yet to meaningfully or lastingly deviate from the unchanged mark in narrow 108-28+ to 109-03 bounds. 10yr supply and Fed speak from Cook, Collins and Jefferson scheduled.
• Bunds are under modest pressure as the fixed income complex takes a very slight breather from the bullish action that has been in place since the Payrolls report on Friday. After printing an earlier 131.45 base Bunds have since stabilised around 20 ticks above this.
• Gilts are essentially unchanged, and under some very modest pressure at the open which was softer by 15 ticks given bearish leads elsewhere. UK-specific developments light. Overnight, the Times Shadow MPC said the BoE on Thursday should leave rates unchanged. Currently holding around 97.95 towards Tuesday's close and by extension at the top-end of that session's 97.48-98.08 bounds.
• UK sells GBP 2.5bln 1.50% 2053 Green Gilt: b/c 3.26x (prev. 3.05x), average yield 4.545% (prev. 4.565%), tail 0.6bps (prev. 0.3bps).

Commodities

• A downbeat morning for the crude complex with newsflow rather light and Israel's Rafah operation seemingly not likely to spark a wider conflict as things stand, though the situation remains very fluid. Brent July slipped from USD 83.05/bbl to 81.96/bbl, with some flagging the 200 DMA around USD 81.95/bbl.
• Another soft session for precious metals, likely as Israel's "limited" Rafah operation has failed to spark a regional war, with international efforts also underway to cushion the impact of the incursion. XAU trades towards the bottom of a 2,303.75-2,321.53/oz range.
• Lower across the board for base metals amid a firmer Dollar and following the downbeat mood in Chinese markets overnight.
• US Private Energy Inventory Data (bbls): Crude +0.5mln (exp. -1.1mln), Cushing +1.3mln, Gasoline +1.5mln (exp. -1.3mln), Distillate +1.7mln (exp. -1.1mln).
• Russian Deputy PM Novak said there are no discussions about an oil output increase at OPEC+.
• EU Ambassadors will today be discussing a new package of sanctions against Russia, where the focus will be on restricting LNG profits, via Politico.
• Indonesia's President said copper concentrate export permits for Freeport and Amman will be extended with the details of the extension still being calculated, according to Reuters.
• Morgan Stanley has removed its USD 4/bbl risk premium from Brent forecasts, reverts forecast back to forecast of USD 90/bbl by Q3; expects OPEC to extend current production agreement at June 1st meeting, eventually to year-end, including voluntary cuts.
• China Industry Ministry says the draft rules would guide Lithium battery firms to reduce manufacturing projects that "purely" expand production capacity

Geopolitics: Middle East

• "IDF: We are conducting a precision operation in limited areas east of Rafah in the southern Gaza Strip", according to Asharq News. Additionally, "IDF says it continues operations east of Rafah", via Al Arabiya, "IDF: Hamas military infrastructure destroyed in the Rafah crossing area".
• Israeli artillery shelling was reported east of Rafah in the southern Gaza strip, according to Al Jazeera.
• Hamas said Cairo talks are the 'last chance' for Israel to recover hostage talks, according to Al Arabiya. Furthermore, a Hamas official said the group set red lines in the ceasefire negotiations that cannot be conceded, according to Sky News Arabia.
• White House thinks the Israeli operation to capture the Rafah crossing doesn't cross President Biden's "red line" that could lead to a shift in US policy towards the Gaza war although the US warned that if it broadens or gets out of control and Israeli forces go into the city of Rafah itself, it will be a breaking point, according to US officials cited by Axios.
• CIA Director Burns plans to travel to Israel on Wednesday for talks with Israeli PM Netanyahu and Israeli officials, according to a source cited by Reuters.

Geopolitics: Other

• Ukrainians hit a fuel depot in the Russian-controlled city of Luhansk, according to sources via X.
• Russia launched an air attack on Kyiv, according to Ukraine's military. It was later reported that Russia targeted energy facilities in Kyiv, Poltava, Lviv and other regions, according to Ukraine's Energy Minister. Furthermore, Ukraine's largest private electricity company said the Russian attack caused serious damage at three thermal power plants.
• Taiwan's leader is open to dialogue with Beijing on an equal footing, according to Taipei's de facto envoy to the US under President-elect Lai cited by SCMP.

US Event Calendar

• 07:00: May MBA Mortgage Applications, prior -2.3%
• 10:00: March Wholesale Trade Sales MoM, est. 0.8%, prior 2.3%
• 10:00: March Wholesale Inventories MoM, est. -0.4%, prior -0.4%

Fed speakers

• 11:00: Fed’s Jefferson Speaks About Careers in Economics
• 11:45: Fed’s Collins Speaks to MIT Students
• 13:30: Fed’s Cook Speaks on Financial Stability

DB's Jim Reid concludes the overnight wrap

As summer finally threatens to arrive here in London, even if I'm looking out on fog this morning as I type, markets continued their advance yesterday, with the risk rally continuing post what was deemed to be a very dovish payroll print last Friday. As recently as April 25th, 10yr yields peaked at 4.735% intra-day but a -28bps rally to 4.46% has come alongside a more optimistic view on rate cuts this year again. Obviously Fed Chair Powell helped this by playing down the prospect of further rate hikes at last week’s FOMC. 10yr yields have rallied around 24bps since their peak on FOMC day and yields have now fallen for a 5th consecutive session. That’s the longest run of declines since August.

Those moves on the rates side supported risk assets too, with the STOXX 600 (+1.14%) and the FTSE 100 (+1.22%) both hitting a new record yesterday as UK equities resumed trading after the holiday. The advance was more moderate in the US, but the S&P 500 (+0.13%) still posted a 4th consecutive advance despite underperformance from tech stocks. It now means the S&P has posted its strongest 4-day rally since November, having risen by +3.37% since the close last Wednesday after Powell’s press conference. Moreover, it’s worth noting that the equal-weighted S&P 500 managed to post a stronger +0.28% gain, since the Magnificent 7 (-0.50%) dragged down the rest of the index amidst larger declines from Tesla (-3.76%) and Nvidia (-1.72%). Otherwise, Disney (-9.51%) was a standout after their earnings release, and was the second-worst performer in the S&P 500 yesterday.

Asian markets are running out of a bit of steam this morning though with the Nikkei (-1.43%) the biggest underperformer across the region, slipping from multi-week highs while the CSI (-0.66%), the Shanghai Composite (-0.41%), the Hang Seng (-0.16%) and the KOSPI (-0.12%) are all lower. US stock futures are pretty much flat though with Treasury yields back up 0.5bps-1.5bps across the curve.

In FX, the J apanese yen continues to struggle trading -0.29% lower at 155.16 versus the dollar despite the B OJ Governor Kazuo Ueda stating that the central bank may take appropriate monetary action if yen moves significantly impact Japan’s inflation. Nothing particularly new in those comments but the government's popularity is also under pressure over the weak currency and cost of travelling to, and importing from, abroad. Trade figures for April are out tomorrow.

Back to markets and one asset that continues to struggle is oil. Brent Crude was down another -0.35% to $83.04/bbl yesterday and is trading down at $82.74 this morning. We peaked above $92 in the second week of April after Middle East tensions ramped up. This reversal has been supportive for the broader market, since its helped to ease fears about more persistent inflation. For instance, US 5yr inflation swaps were down another -0.8bps yesterday to 2.49%. This is the first time since March that they’ve closed beneath 2.5%, having fallen for 7 of the past 8 sessions.

We’ll have to wait another week for the next US CPI release and the latest on inflation, but in the meantime, and as discussed at the top, sovereign bonds posted a fresh rally on both sides of the Atlantic yesterday. In the US, that saw yields on 10yr Treasuries (-3.0bps) decline to 4.46%, whilst 2yr yields were -0.2bps to 4.83%. 2yr yields had been as low as 4.80% intra-day, with a modest rise later on in part following some hawkish comments from Minneapolis Fed President Kashkari (a non-voter this year). He said in a blog post that “ with inflation in the most recent quarter moving sideways, it raises questions about how restrictive policy really is.” But Kashkari was already one of the most hawkish-sounding members on the FOMC, so the comments have to be taken in context. Year-end Fed pricing was unchanged on the day, with 44bps of cuts priced in.

Over in Europe, the focus continued to be on the ECB, with anticipation mounting that they’ll cut rates at their next meeting in 4 weeks’ time. That contributed to a fresh rally for sovereign bonds, with the 10yr bund yield (-4.9bps) falling for a 4th consecutive day to 2.42%. That was echoed across the continent, with yields on 10yr OATs (-5.2bps) and BTPs (-2.9bps) also moving lower, whilst those on 10yr gilts (-9.9bps) saw a larger decline as they caught up with the previous day’s moves.

There wasn’t much other data yesterday, although we did get the UK construction PMI for April, which hit a 14-month high of 53.0 (vs. 50.4 expected). By contrast, in Germany the construction PMI fell to 37.5, whilst the factory orders data for March contracted by -0.4% (vs. +0.4% expected). So some negative news after what have been more encouraging recent growth data for Europe’s largest economy of late. Finally, Euro Area retail sales were up +0.8% in March (vs. +0.7% expected).

To the day ahead, and data releases include German industrial production and Italian retail sales for March. From central banks, the Riksbank will be making its latest decision, and we’ll hear from Fed Vice Chair Jefferson, the Fed’s Collins and Cook, and the ECB’s Wunsch and De Cos. Finally in the US, a 10yr Treasury auction is taking place.

Tyler Durden Wed, 05/08/2024 - 08:26

Syrian Hamsters Dead After Chinese Scientists Engineer Horrific Ebola-Enhanced Virus

A group of Chinese scientists have engineered a new virus in which they took a common animal disease (vesicular stomatitis virus, or VSV) and added parts of Ebola in order to mimic Ebola symptoms in a lab setting using animals.

The result? A group of Syrian hamsters that received the lethal injection "developed severe systemic diseases similar to those observed in human Ebola patients, including multi-organ failure, the Daily Mail reports, citing the team's study.

The team studied five female and five male hamsters that were three weeks old - all but two of which died between two and three days. The females - all of which died, showed decreased rectal temperature and up to 18% weight loss, the males lost 15% of their weight and died - except two, which survived and gained 20% more weight than they started with.

Some of the infected hamsters developed disgusting secretions in their eyes, which impaired vision and resulted in scabs on the surface of their eyeballs.

Upon harvesting the organs from the deceased animals, they found the virus in various organs - including the heart, liver, spleen, lung, kidney, stomach, intestines and brain tissues - with the highest concentrations found in the liver, and the lowest found in the brain.

The group of female hamsters also had  multi-organ failure

According to the scientists, "It is a sign that 3-week-old Syrian hamsters infected with VSV-EBOV/GP have the possibility of playing a role in the study of optic nerve disorders caused by EVD." 

The team concluded that the infected hamsters showed a rapid onset of symptoms, shock liver, systemic infection, and developed severe systemic diseases similar to those observed in human EBOV patients.

They also noted that the experiments provided a rapid preclinical evaluation of medical countermeasures against Ebola under BLS-2 conditions, concluding the study was a success. -Daily Mail

Are we in danger?

According to Dr. Richerd Ebright, a Rutgers University chemical biologist, it's unlikely that a lab leak involving VSV would lead to widespread infection in the public.

"[It] will be imperative to verify that the novel chimeric virus does not infect and replicate in human cells, and does not pose risk of infectivity, transmissibility, and pathogenicity in humans, before proceeding with studies at biosafety level 2," he said.

So, not yet.

Tyler Durden Wed, 05/08/2024 - 07:45

A Warning For Washington From The 'Breakdown Nations'

Authored by Ruchir Sharma via FT,

At a time when two big economies, the US and India, are attracting a lot of hype for their enduring strength, it is worth looking at nations that not too long ago were billed as star performers but are now breaking down. All are among the world’s 50 largest economies and, so far this decade, have suffered both a sharp decline in real per capita income growth, and a fall in their share of global gross domestic product.

Led by Canada, Chile, Germany, South Africa and Thailand, these “breakdown nations” carry a lesson. Growth is hard, sustaining it even harder, so the stars of today are not necessarily the stars of tomorrow.

Take Canada first. Widely admired for how it weathered the global financial crisis of 2008, it missed the boat when the world moved on, driven by big tech instead of commodities. Canada’s per capita GDP has been shrinking 0.4 per cent a year since 2020 — the worst rate for any developed economy in the top 50. New investment and job growth is being driven mainly by the government.

Private-sector action is confined largely to the property market, which does little for productivity and prosperity. Many young people can’t afford to buy in one of the world’s most expensive housing markets. Pressed to name a digital success, Canadians cite Shopify — but the online store is the only tech name among the country’s 10 largest companies, and its shares are trading at half their 2021 peak.

Then there’s Chile. Hailed in the 1990s as a model of deft, East-Asian style government in Latin America, its halo has since vanished. The country now makes headlines for political strife over its constitution. Anaemic tax collection has gutted public services, triggering violent street protests. Red tape has spread — the time required to get new investments approved doubled to nearly 20 months — chasing off investors.

As a result, manufacturing industries remain small compared with emerging world peers, including neighbouring Argentina. Mining products such as copper still account for most of its exports and billionaire wealth, making Chile look more like an old-fashioned commodity economy than an East Asian star.

No developed economy has seen a more dramatic turn for the worse than Germany. Its per capita income growth fell from 1.6 per cent in the past decade to less than zero in the past few years. During the pandemic Germany looked flush and flexible, poised to excel in the post-Covid world. Now it looks undone by its heavy dependence on exports to China and energy imports from Russia. Investment has contributed nothing to growth in recent years, industrial productivity is declining at a shocking annual pace of 5 per cent. Suddenly, the future of the Mittelstand — the network of manufacturers that has long been the engine of German growth — looks murky.

South Africa, meanwhile, was added to an acronym for big, fast-growing emerging markets led by Brazil, Russia, India and China back in 2010, when Bric became Brics. The largest economy in Africa, resource-rich South Africa was powered by a commodity boom that then went bust, exposing the country’s many faultlines.

The African National Congress has held power for 30 years yet presides over the same dogged set of failures: youth unemployment above 50 per cent, a shocking share of the population on welfare, weak investment, rolling power outages. While voters could oust the ANC next month, the malaise looks too deep to end soon. The IMF predicts negative per capita GDP growth over the next five years in only one top 50 economy: South Africa.

Finally, Thailand. A leader of the “Asian Tigers” before debts tripped them up in the crisis of 1998, it is now the runt of the lot, the only former Tiger to see its per capita GDP decline in this decade. It has one of the world’s highest inequality rates with 79 per cent of the poor living in rural areas. A running political battle between the rural poor and the Bangkok elite focuses public debate on how to distribute — not expand — the economic pie. Despite efforts to turn its location on global trade routes into a factory hub, productivity growth is stagnating and Thailand is losing out to manufacturing rivals like Vietnam.

The takeaway here is not that smart countries somehow turned stupid. It is that hidden traps line the path of development and can spring on nations at every income level from the middle to the rich. One basic mistake or miss, and any country can find itself stuck — until it finds the leadership and vision to chart a way out. For current stars, the message is a warning: don’t take growth for granted.

Tyler Durden Wed, 05/08/2024 - 07:20

From the MBA: Mortgage Applications Increase in Latest MBA Weekly Survey

Mortgage applications increased 2.6 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 3, 2024.

The Market Composite Index, a measure of mortgage loan application volume, increased 2.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 3 percent compared with the previous week. The Refinance Index increased 5 percent from the previous week and was 6 percent lower than the same week one year ago. The seasonally adjusted Purchase Index increased 2 percent from one week earlier. The unadjusted Purchase Index increased 2 percent compared with the previous week and was 17 percent lower than the same week one year ago.

“Treasury rates and mortgage rates fell last week on the news of a slowing job market, with wage growth at the slowest pace since 2021, and the Federal Reserve’s announced plans to ease quantitative tightening in June and to maintain its view that another rate hike is unlikely. The conventional 30-year rate dropped 11 basis points, and the FHA rate fell 17 basis points to 6.92 percent, back below 7% for the first time in three weeks,” said Mike Fratantoni, MBA’s Senior Vice President and Chief Economist. “Mortgage applications increased for the first time in three weeks, with refinances up 5 percent. Even with the increase, which included a 29 percent jump in VA refinances, refinance application volume remains about 6 percent below last year’s already low levels.”

Added Kan, “Driven by a 5 percent gain in FHA applications, purchase activity was up 2 percent. First-time homebuyers account for roughly half of purchase loans, and the government lending programs are an important source of financing for these homebuyers. The gain in FHA activity is a sign that this segment of the market is active.”
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) decreased to 7.18 percent from 7.29 percent, with points unchanged at 0.65 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.
emphasis added

Click on graph for larger image.

The first graph shows the MBA mortgage purchase index.

According to the MBA, purchase activity is down 17% year-over-year unadjusted.  
Red is a four-week average (blue is weekly).  
Purchase application activity is up slightly from the lows in late October 2023, and below the lowest levels during the housing bust.  

The second graph shows the refinance index since 1990.

With higher mortgage rates, the refinance index declined sharply in 2022, and has mostly flat lined since then.

Apple iPhone Shipments In China Jump 12% After Discounts 

New data shows iPhone shipments in China surged in March, reversing a previous multi-month decline. This increase comes after Apple discounted handset prices throughout the first quarter, mostly in response to waning demand due to unofficial bans on the device by government agencies and competition from local brands. 

Bloomberg cites official data from a new monthly report by the China Academy of Information and Communications Technology showing iPhone shipments in China bounced 12% in March. 

Shipments of foreign-branded smartphones—most of which are Apple iPhones—increased to 3.75 million units in March from a year earlier. This follows a 37% decline in the first two months of the year. 

Source: Bloomberg 

A report from the beginning of the year showed Apple offered an 'ultra-rare' iPhone discount of up to 500 yuan ($70)

At the time, Apple's website stated, "Discounts this year encompass everything from the iPhone 13 to the iPhone 15 Pro Max." 

The rare discount was made shortly after analysts from Piper Sandler and Barclays downgraded Apple due to slumping iPhone demand.

Currently, analysts tracked by Bloomberg show Apple has 35 "buys," 18 "holds," and 4 "sells." 

The discounts early this year were the highest on record, according to analysts from Jefferies. 

At the time, we noted the two main drivers driving iPhone sales lower in the world's largest handset market:

1. We suspect the made-in-China Mate 60 Pro, which defied Western tech sanctions and has a top-of-the-line processor, has spurred patriotic fervor among Mainland consumers for domestic handsets. 
2. Also, companies and government agencies have told staffers to abandon Apple devices. 

Last week, Apple CEO Tim Cook addressed an analyst's question about the March quarter. He said iPhone revenue in mainland China increased "on a reported basis" before adjustments for Covid-related supply chain disruptions in 2022.

Cook did not provide further details on this metric but reiterated Apple's commitment to the Chinese market, which, despite its contraction, still represents 18% of the company's net sales.

According to Statista data, China is very important to Apple, accounting for nearly 20% of the company's total sales. 

This is why analysts and investors closely watch iPhone demand trends in the world's second-largest economy. 

Tyler Durden Wed, 05/08/2024 - 06:55

The Great Ukraine Robbery Is Not Over Yet: Ron Paul

Authored by Ron Paul via the Ron Paul Institute,

The ink was barely dry on President Biden’s signature transferring another $61 billion to the black hole called Ukraine, when the mainstream media broke the news that this was not the parting shot in a failed US policy. The elites have no intention of shutting down this gravy train, which transports wealth from the middle and working class to the wealthy and connected class.

Reuters wrote right after the aid bill was passed that, “Ukraine’s $61 billion lifeline is not enough.” Senate Minority Leader Mitch McConnell went on the Sunday shows after the bill was passed to say that $61 billion is “not a whole lot of money for us…” Well, that’s easy for him to say – after all it’s always easier to spend someone else’s money!

Ukraine’s foreign minister,  Dmytro  Kuleba, was far from grateful for the $170 billion we have shipped thus far to his country. In an interview with Foreign Policy magazine as the aid package was passed, Kuleba had the nerve to criticize the US for not producing weapons fast enough. “If you cannot produce enough interceptors to help Ukraine win the war against the country that wants to destroy the world order, then how are you going to win in the war against perhaps an enemy who is stronger than Russia?”

How’s that for a “thank you”?

It may be understandable why the Ukrainians are frustrated. Most of this money is not going to help them fight Russia. US military aid to Ukraine has left our own stockpiles of weapons depleted, so the money is going to create new production lines to replace weapons already sent to Ukraine. It’s all about the US weapons industry. President Biden admitted as much when he said, “we are helping Ukraine while at the same time investing in our own industrial base.”

This is why Washington Is desperate to make sure that if Donald Trump returns to the White House, the “Ukraine” gravy train cannot be shut down by his – or future – administrations. Last week news broke that the Ukrainian government was in negotiations with the Biden Administration to sign a ten-year security agreement that would lock in US funding for Ukraine for the next two and a half US Administrations. That would unconstitutionally tie future presidents’ hands when it comes to foreign policy and would leave Americans on the hook for untold billions more dollars taken from them and sent to the weapons industry and to a corrupt foreign government.

The US weapons industry and its cheerleaders in Washington DC are determined to keep Ukraine money flowing…until they can figure out a way to gin up a war with China after losing the current war with Russia. That, of course, depends on whether there is anything left of us when the smoke clears.

When President Biden signed the $95 billion bill to keep wars going in Ukraine and Gaza and to provoke a future war with China, he called it “a good day for world peace.” Yes, and “War is peace.” Debt is good. Freedom is slavery. We are living in a post-truth society where billions spent on pointless wars are “not a whole lot of money.” But the piper will be paid and the debt will be cleared.

Tyler Durden Wed, 05/08/2024 - 05:00

China's Xi In Serbia Says 'Never Forget' This Unprecedented US Atrocity 

Chinese leader Xi Jinping has been in France since Sunday where he met with French President Emmanuel Macron to talk about range of topics but especially the Ukraine war and trade between China and the European Union.

But on Tuesday he traveled to Serbia, and importantly the trip falls precisely on the 25th anniversary of the bombing of the Chinese Embassy in Belgrade, which came in the midst of NATO’s bombing of the Serbs of Yugoslavia during the 1999 Kosovo war.

via AP

Just ahead of arriving in the Serbian capital, Xi wrote a letter which has been published by the Serbian outlet Politika. In it he lambasted NATO and by extension United States for its historic war crime..

"Twenty-five years ago today, NATO flagrantly bombed the Chinese Embassy in Yugoslavia, killing three Chinese journalists," Xi's words introduced.

It happened on May 7, 1999 during US-NATO 78-day bombing campaign over Yugoslavia. That's when five US Joint Direct Attack Munition guided bombs hit scored a direct hit on the Chinese embassy in Belgrade, killing the journalists.

The US was adamant that it was inadvertent and unintentional, and eventually then President Clinton issued a formal apology to the Chinese government. It had marked the first time in all of modern history that a sovereign government's military attacked another country's embassy. It had not even happened once during World Wars I and II.

"This we should never forget. The Chinese people cherish peace, but we will never allow such tragic history to repeat itself," Xi wrote.

"The Chinese-Serbian friendship, forged with the blood of our compatriots, will stay in the shared memory of the Chinese and Serbian peoples," he continued.

His emphasis on the line "never forget" is interesting given it is a common line used by Americans when it comes to remembering the 9/11 terror attacks, as well as in the West when it comes to Holocaust remembrance days.

To review of what we've featured in a previous post called "America's Benevolent Bombing of Serbia," President Bill Clinton commenced bombing Belgrade in the name of human rights, justice, and ethnic tolerance. Approximately 1,500 Serb civilians were killed by NATO bombing in one of the biggest sham morality plays of the modern era. 

As British professor Philip Hammond has noted, the 78-day bombing campaign “was not a purely military operation: NATO also destroyed what it called ‘dual-use’ targets, such as factories, city bridges, and even the main television building in downtown Belgrade, in an attempt to terrorise the country into surrender.”

NATO bombing of Yugoslavia

Clinton’s unprovoked attack on Serbia, intended to help ethnic Albanians seize control of Kosovo, set a precedent for “humanitarian” warring that was invoked by supporters of George W. Bush’s unprovoked attack on Iraq, Barack Obama’s bombing of Libya, and Donald Trump’s bombing of Syria.

Tyler Durden Wed, 05/08/2024 - 04:15

AfD Politician Convicted For Warning About Gang Rapes

Junge Freiheit via The European Conservative,

The Verden regional court in Lower Saxony has upheld a verdict against Rotenburg AfD leader Marie-Thérèse Kaiser for incitement to hatred. The 27-year-old was also found guilty in the appeal hearing on Monday of inciting hatred against Afghan local workers.

For this, the politician now has to pay 100 day fines (a type of fine related to daily income of the convicted) plus a fine of €60, a total of €6,000. In Germany, you are considered to have a criminal record if you are sentenced to pay more than 90 day fines. 

The charge was based on a post that Kaiser had spread on her social media accounts in August 2021. In it, she wrote: “Afghanistan refugees; Hamburg SPD mayor for ‘unbureaucratic’ acceptance; Welcoming culture for gang rape?”

Among other things, the politician linked to an article showing that Afghans in Germany are particularly heavily involved in gang rape. 

The verdict has now also caught the attention of X CEO Elon Musk. He retweeted a post summarizing the punishment and wrote: “Are you saying the penalty was imposed for repeating accurate government statistics? Was there anything wrong with what she said?”

Are you saying the fine was for repeating accurate government statistics?

Was there anything inaccurate in what she said? https://t.co/itSzTx1Ybv

— Elon Musk (@elonmusk) May 6, 2024

Gang rape warning

The reason for Kaiser’s post from 2021 was statements made by Hamburg’s First Mayor, Peter Tschentscher (SPD), who announced that he would take in 200 Afghan local workers in Hamburg. The AfD politician justified her concern about uncontrolled immigration with statistics and warned of rapes by “culturally alien masses.”

Before the district court hearing, Kaiser said: “The mere mention of numbers, data, and facts is to be declared a criminal offense simply because the establishment refuses to accept reality. I won’t let myself be silenced.”

AfD politician: “Trust in the rule of law” shaken

Judge Heiko Halbfas saw things differently on Monday: “Those who attack human dignity cannot invoke freedom of speech.” Kaiser deliberately created an image in the minds of others that led to hatred of a nationally determined group, the district newspaper reported.

After the verdict, Kaiser announced her intention to appeal and expressed dismay over the verdict: She told Junge Freiheit: 

The whole world is astonished by this decision by the German courts. After even Elon Musk picked up on my case, I have received numerous messages of support and press inquiries. The demand for a way to donate is also becoming louder and louder. 

She described this as “overwhelming.”

Kaiser added: “My trust in the German rule of law was once again severely shaken yesterday, but all the letters give me courage and confidence.”

Tyler Durden Wed, 05/08/2024 - 03:30

AstraZeneca Pulls Covid Vaccine After Admitting Rare Side Effect

In yet another damning development for the 'safe and effective' crowd, AstraZeneca has announced the worldwide withdrawal of its Oxford-AstraZeneca vaccine, branded as Vaxzevria, due to a rare but serious side effect. This decision marks the end of the vaccine once hailed as a "triumph for British science" by Boris Johnson and credited with saving over six million lives, The Telegraph reports.

 The vaccine has been credited with saving millions of lives Credit: GETTY IMAGES EUROPE/MATTHEW HORWOOD

The pharmaceutical giant voluntarily withdrew its "marketing authorization" in the European Union earlier this week, with similar actions expected soon in the UK and other approving countries. The move, described by the company as driven by "commercial reasons," coincides with the availability of newer vaccines designed to combat emerging variants.

That said, the timing of the withdrawal follows months of intense scrutiny over a rare side effect. In a recent High Court document, the company admitted that Vaxzevria could, in very rare instances, cause Thrombosis with Thrombocytopenia Syndrome (TTS), which has been linked to at least 81 deaths in the UK. Despite these admissions, AstraZeneca maintains that the decision to pull the vaccine is unrelated to the ongoing legal challenges or its potential side effects.

"We are incredibly proud of the role Vaxzevria played in ending the global pandemic. According to independent estimates, over 6.5 million lives were saved in the first year of use alone and over three billion doses were supplied globally," the company said in a statement. "Our efforts have been recognised by governments around the world and are widely regarded as being a critical component of ending the global pandemic."

The European Medicines Agency has begun the process to formally withdraw the vaccine, reflecting an expected move away from monovalent vaccines, which target only the original COVID-19 strain. Marco Cavaleri, head of vaccines at the agency, emphasized that this is a standard procedure for vaccines that are no longer in use.

Legal experts and victims, however, see the withdrawal as a vindication of their long-held concerns over the vaccine's safety. "To those who we represent, all of whom have suffered bereavement or serious injury as a result of the AstraZeneca vaccine, this decision to withdraw marketing authorisation, ending the usage of the AstraZeneca vaccine in the EU, will be welcomed," said Sarah Moore, a partner at Leigh Day, the law firm representing many of the claimants.

"It will be seen as a decision linked with AstraZeneca’s recent admission that the vaccine can cause TTS, and the fact that regulators across the world suspended or stopped usage of the vaccine following concerns regarding TTS."

Victims and their families have reported a range of severe reactions, from fatal thrombosis to lasting disabilities, sparking a debate over the adequacy of vaccine safety monitoring and compensation for vaccine injuries.

Kate Scott, whose husband suffered a permanent brain injury after receiving the vaccine, expressed mixed feelings: "AstraZeneca’s Covid vaccine no longer being used in the UK or Europe, and soon the rest of the world, means no one else will suffer from this awful adverse reaction," she said. "They say it is for commercial reasons, but maybe it’s because it can no longer be seen as being within the acceptable safety parameters, with 445 confirmed cases of VITT, 81 of these fatal in the UK alone."

Mr Scott, pictured with his wife, wishes the vaccine had been withdrawn much earlier Credit: ANDREW FOX via The Telegraph

The government's vaccine damage payment scheme has been criticized for not providing sufficient compensation, prompting calls for reform. "This is an important regulatory step, but still our clients remain without fair compensation. We will continue to fight for the compensation our clients need and campaign for reform of the vaccine damage payment scheme.," Moore added.

Tyler Durden Wed, 05/08/2024 - 02:45

EU Leaders Confronts China's Xi Over Trade At Paris Summit

By Dorothy Li of The Epoch Times

The European Union pressed China over its unfair trade practices as communist regime leader Xi Jinping began his official visit aimed at bolstering relationships with European leaders.

European Commission President Ursula von der Leyen delivers a speech to the press at the French representation of the European Commission in Paris on May 6, 2024

China’s subsidized products—such as electric vehicles and steel—“are flooding the European market,” but Beijing “continues to massively support its manufacturing sector” at a time of weak domestic demand, European Commission President Ursula von der Leyen told reporters following a trilateral meeting with French President Emmanuel Macron and Xi on Monday. “The world cannot absorb China’s surplus production.”

Xi landed in Paris on Sunday afternoon, kicking off his first European visit in five years. Outside observers suggested that Xi’s six-day trip was designed by Beijing to create divisions between Brussels and Washington, as the two sides are currently united in their approach to addressing threats posed by the Chinese Communist Party (CCP).

Monday’s trilateral meeting took place at a time of rising tensions between the 27-member bloc and China on multiple fronts, from the war in Ukraine and Beijing’s support of Russia to its burgeoning production in green-energy sectors, such as electric vehicles (EVs) and their batteries.

Last November, Ms. von der Leyen, in a clear demonstration of the EU’s commitment to fair trade, announced that the European Commission—the EU’s executive branch—had formally initiated a probe to determine whether EVs made in China were benefiting from state subsidies. In December 2023, Brussels launched an anti-dumping investigation into biodiesel imported from China after producers in the bloc voiced concerns about the serious harm caused by low-price Chinese imports to the industry.

In the months leading up to Xi’s visit, the EU has been looking into certain sectors in China, such as wind turbine and solar panel production, and most recently, China’s procurement of medical devices.

In Monday’s briefing, Ms. von der Leyen said the EU is ready to act to protect its businesses from Beijing’s unequal market access.

“For trade to be fair, access to each other’s market also needs to be reciprocal,” she told the briefing in Paris. “We stand ready to make full use of our trade defense instruments if this is necessary.”

“Europe cannot accept market-distorting practices that could lead to deindustrialization here at home.”

Ms. von der Leyen described Brusells’s relationship with Beijing as complex, emphasizing that European leaders approach it “clear-eyed, constructively, and responsibly.”

“At the same time, Europe will not waver from making tough decisions needed to protect its economy and its security,” she added.

France's President Emmanuel Macron speaks with European Commission President Ursula von der Leyen as they leave after holding a trilateral meeting, which included the Chinese regime leader Xi Jinping, as part of Xi's two-day state visit, at the Elysee Palace in Paris, on May 6, 2024

Speaking later alongside Xi after the two met several times during the day, reviewed troops together, and repeatedly shook hands for the cameras, Mr. Macron told reporters: “The EU today has the world’s most open market ... but we want to be able to protect it.”

The EU’s more robust stance on trade with China dovetails with Washington’s approach. U.S. Treasury Secretary Janet Yellen has warned China that Washington will not accept new industries being “decimated” by Chinese imports.

According to a summary of the meeting released by China’s foreign ministry, Xi told Ms. von der Leyen and Mr. Macron that dialogues are necessary to “address economic and trade frictions.”

However, the CCP boss pushed back criticism of its industrial overcapacity, saying the issue “does not exist either from the perspective of comparative advantage or in light of global demand.”

Spreading Propaganda

Xi’s visit to Europe came as the regime grapples with a slowing economy burdened by a prolonged property crisis, weak business confidence, and mounting local government debts.

Amidst the CCP’s sluggish economy and escalating political infighting, Xi is eager to reassure the Chinese public. Outside observers say Xi’s Europe trip, which also included stops in Hungary and Serbia, provides a perfect opportunity to spread propaganda at home.

“Hungary is the most CCP-friendly nation in the European Union, while Serbia is the most friendly non-EU country in Europe,” Cheng Chin-mo, an expert on European security and international relationships at Taiwan’s Tamkang University, told The Epoch Times ahead of Xi’s trip.

“It’s easy for Xi to receive a high-level reception in the two countries, which will be used for domestic propaganda operations and showcase what they call a ’major achievement' of Xi’s foreign visit,” Mr. Cheng added.

As the EU’s relationship with China continues to strain over the regime’s human rights record, unfair trade policies, and other issues, Hungary has maintained a close political and economic relationship with the CCP. Budapest is a member state of Beijing’s 16+1 platform, an initiative the CCP used to bolster ties with central and eastern European countries in wide-ranging areas, including infrastructure, economy, and technology.

After Xi launched his signature Belt and Road Initiative (BRI) in 2013, Hungary was among the first EU members to join the multi-billion infrastructure project. Hungarian Prime Minister Viktor Orban was the only EU leader to attend a forum in Beijing last November celebrating the 10th anniversary of the BRI.

In a sign of the CCP’s deepened influence in Budapest, Chinese police officers are allowed to perform joint patrols in several locations across Hungary as part of the security deals that the Orban government signed with the CCP, raising security concerns in Brussels.

As for Serbia, a European Union candidate, China has invested billions of dollars in the Balkan country, mostly in the form of soft loans for infrastructure and energy projects, as part of its BRI initiative to open foreign trade links. Xi has described Serbia as an “ironclad friend” of the regime.

Even the date of his Europe tour is carefully selected. Mr. Cheng noted that Xi is likely to stop off in Serbia around the 25th anniversary of the deadly U.S. bombing of a Chinese embassy in Belgrade. The incident, which took place on May 7, 1999, and resulted in the death of three Chinese journalists, was portrayed by China’s state media as a deliberate strike by the U.S. military at the time and sparked significant outrage in China. Thousands of demonstrators also mobbed the U.S. embassy and consulates in Beijing and other Chinese cities.

The United States described the attack as a “mistake“ and blamed out-of-date maps, while then-President Bill Clinton issued a formal apology. But China’s state media often uses the event to take a veiled swipe at Washington to fuel anti-American sentiments.

Continue reading at The Epoch Times

Tyler Durden Wed, 05/08/2024 - 02:00

Yes, The Constitution Does Matter... A Lot

Authored by Rob Natelson via The Epoch Times (emphasis ours),

Most of my columns for this newspaper relate to the Constitution. A common reaction among some readers—both in the online “comments” section and in direct correspondence—is that I’m wasting my time because the Constitution doesn’t matter any more. It’s irrelevant.

I have spent most of the past 30 years working in constitutional law. I think I know something about the subject. And I can report to you that the Constitution, while wounded in a few places, is mostly alive and well. This column will explain why the Constitution still matters—and matters very much.

An honor guard stands next to the original copies of the Declaration of Independence, the Constitution, and the Bill of Rights at the National Archives in Washington on July 4, 2001. (Alex Wong/Getty Images) Confusing Exceptions for the Rule

Let’s begin with a stock market analogy:

Over time, the price of a publicly traded company tends to follow (among other factors) the company’s earnings and projected earnings. Similarly, the valuation of the market as a whole tends to follow corporate earnings and projected earnings.

If earnings and projected earnings drop in a way unlikely to be remedied soon, then the price of stock generally falls. If they rise in a way that does not appear to be a fluke, the price of stock generally rises.

But this is not always so; sometimes there are exceptions. In other words, sometimes stock prices rise or fall without regard to earnings or projected earnings.

When deviations persist for any amount of time, self-promoting pundits claim that “the rules have changed” and “earnings don’t matter any more.” People who believe them irrationally buy stock (causing a bubble) or irrationally dump it (panic selling). And when the market corrects—as it always does—those people get nailed.

Their mistake is in thinking that an exception to the rule (a one-time bump or slump) is the rule itself.

Most of us get our image of constitutional law from mainstream media reports of rare and controversial cases decided by the U.S. Supreme Court.

But as in the stock market analogy, reliance on these reports leads people to mistake (purported) exceptions for the rule.

The media reports about the highly publicized cases are often wrong or distorted.

More importantly, the highly publicized cases represent only a small fraction of the controversies the Supreme Court resolves (often unanimously) upon accepted constitutional principles ... and all of the Supreme Court’s cases together are only a small fraction of the disputes resolved by lower appeals courts—also upon accepted constitutional principles ... and the cases resolved by lower appeals courts represent only a small fraction of those decided by the trial courts ... and the cases decided by the trial courts are only a small fraction of those settled by the parties out of court ... and the settled disputes are only a small fraction of the questions answered daily by constitutional lawyers in the normal course of business.

So the public’s perception of the Constitution and constitutional law is being formed by (1) often-erroneous media reports on (2) a small fraction of (3) a small fraction of (4) a small fraction of (5) a small fraction of (6) a small fraction of constitutional decisions!

You simply cannot reach conclusions about the Constitution’s viability based on such a tiny and mis-reported sample.

Another Reason Some Think the Constitution Doesn’t Matter

Another common mistake is expecting the Constitution to do too much. People angry that the Supreme Court overruled Roe v. Wade, for example, seem to believe that because they favor legal abortion, the Constitution must require it. There is an opposing group who believe that because abortion is evil, the Constitution must prohibit it. In fact, as the late great Justice Antonin Scalia remarked, the Constitution says nothing at all about abortion. It is an issue left to be resolved by other means.

The Constitution was not designed to solve all human problems, nor could any man-made document ever do so. Even if every clause in the instrument were enforced quickly and perfectly, life still would be marred by foolish laws, unfair conditions, political and economic mistakes, and other human failings.

Mistakes in Interpretation

Sometimes an official mistake in applying the Constitution leads people to think the document doesn’t matter. But this also is wrong.

For one thing, misinterpretations can be corrected over time. During the mid-20th century, the Supreme Court misinterpreted the Religion Clauses of the First Amendment by giving insufficient protection to freedom of religion. Since the 1980s, however, the court has been correcting its mistakes, and its freedom-of-religion law is now much closer to that envisioned by the Founders.

Additionally, some mistakes result in the Constitution mattering even more than originally intended. One of my recent columns discussed the Supreme Court’s latest case on the Fifth Amendment “Takings Clause.” I wrote that the justices probably erred in applying the Takings Clause against a local government.

But does that mean the Constitution is irrelevant? Of course not. Without the Constitution, there would be no Takings Clause at all. It is far better that the clause be too broad than non-existent.

Here’s a more controversial illustration: When Sen. Barack Obama campaigned for the presidency, many people claimed he was not constitutionally qualified because he is not a natural born citizen.

My own view, after examining the factual and legal evidence, is that President Obama is natural born. But whether or not that is true, think of why we had that discussion. We had that discussion because the Constitution requires the president to be natural born. If the Constitution didn’t matter, there would be no reason to debate the issue.

And there would have been no reason for President Obama to produce a birth certificate (however disputed) showing that he was born in Hawaii.

What If the Constitution Really Didn’t Matter?

Let’s look at it another way. Suppose it were true that the Constitution didn’t matter—that the only important thing was what our masters in the “woke” establishment decided. In that event:

• The Supreme Court would not be enforcing the First Amendment, so religious people would be under severe constraints and this newspaper would not exist.

• If the government took your land, you would be paid nothing.

• You could not own a gun.

• The presidential term could be any length set by whoever was in power. Same for congressional terms.

• President Obama could have run for a third term in 2016. And a fourth in 2020. And a fifth in 2024. (Assuming he remains influential in the Biden administration, that’s not the same as being president.)

• Donald Trump would not have been elected president in 2016. But because the Constitution features an institution known as the Electoral College—and because the Constitution matters—he became president.

• In fact, he probably would be in jail. But because the Constitution requires due process and because the Constitution matters, he is free and running for president again.

• Greta Thunberg, environmental enfant terrible, could be president even though (1) she is not a native-born American (she is Swedish), and (2) she is only 21 years old.

• And if the Constitution didn’t matter, we probably would not have elections at all—even imperfect ones. Yet we continue to do so, year after year, because the Constitution requires it. And in the overwhelming majority of cases, the certified results reflect the election’s actual results.

I could go on. Suffice to say that without the Constitution, America would be an entirely different place.

Why the Inaccuracy Is Dangerous

The inaccurate view that the Constitution doesn’t matter can have dangerous consequences. If we accept that view, then no one is bound to anything in the document. We have no legal basis for protest when an election has been corrupted or even canceled.

If we believe “the Constitution doesn’t matter,” then we have no positive law basis for complaining about loss of rights to freedom of religion, freedom of speech, keeping and bearing arms, property—or any of the other hundreds of rights and rules we take for granted in daily life.

Ideally, we should not take those rights and rules for granted. But on a day-to-day basis we are able to do so precisely because the Constitution matters so much.

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

Tyler Durden Tue, 05/07/2024 - 23:40

These Are The Countries With The Most Students Studying Abroad

The world's two most populous nations, China and India, have the highest numbers of students studying overseas.

Statista's Anna Fleck reports that, according to data published by UNESCO, more than one million Chinese students were studying abroad in 2021. India’s total was close to half of this, with around 508,000 students living in other countries.

Following some way behind come Vietnam, Germany and Uzbekistan.

You will find more infographics at Statista

The United States was the largest destination country for students studying abroad with over 833,000 there in 2021. It was followed by the United Kingdom (nearly 601,000), Australia (around 378,000), Germany (over 376,000) and Canada (nearly 318,000).

This data was published as part of the International Organization for Migration's (IOM) 2024 World Migration Report, which provides an overview of the global state of migration using the latest available data, published Tuesday. This ranges from data on asylum seekers fleeing war to economic migrants seeking labor opportunities, and as this chart shows, to students living abroad.

According to the report, the total number of internationally mobile students has been on the rise over the last two decades. UNESCO data reveals that where 2.2 million students were studying abroad in 2001, that figure had climbed to 6.39 million students in 2021.

Tyler Durden Tue, 05/07/2024 - 23:20

Wisconsin Voter Roll Transparency Challenged By Public Interest Legal Foundation

Authored by Steven Kovac via The Epoch Times (emphasis ours),

Public access to Wisconsin’s state voter roll is too restricted and too expensive, according to the Public Interest Legal Foundation (PILF), a national election integrity watchdog organization.

Residents cast their ballots during in-person absentee voting at City Hall in Green Bay, Wisconsin, on Nov. 4, 2022. (Scott Olson/Getty Images)

To remedy the situation, PILF is suing the Badger State’s chief election official, Meagan Wolfe, to reduce the $12,500 price for a digital copy of the state voter roll and to force her to provide the year of birth of the registrants on purchased data.

Wisconsinite Peter Bernegger, a computer analyst from the election integrity organization Election Watch, told The Epoch Times that the $12,500 fee is a hardship and a deterrent for every grassroots watchdog group trying to keep regular tabs on Wisconsin’s “bloated and often inaccurate state voter roll.”

A Federal Election Assistance Commission report found that, of the 622,370 address confirmation notices mailed to Wisconsin registrants between Jan. 1, 2021, and Dec. 31, 2022, 299,490 were returned as undeliverable.

Like Election Watch, PILF uses state election roll data to analyze the activities and programs of state and local election officials to ensure the rolls are kept current and accurate according to law.

In a complaint filed in the U.S. District Court Western District of Wisconsin on April 30, 2024, PILF attorneys produced evidence in which the Wisconsin Election Commission (WEC) acknowledged on its website that effective and accurate public evaluation of its voter list maintenance activities is impossible because the public does not have access to date of birth information.

Year of birth information is a key tool in confirming duplicate names on the voter list and eliminating ineligible registrations.

Despite its acknowledgment, WEC is still refusing to provide PILF with the requested year of birth information in alleged violation of the National Voting Rights Act of 1993 (NVRA).

The act requires states to “make available for public inspection and, where available photocopying at a reasonable cost, all records concerning the implementation of programs and activities conducted for the purpose of ensuring the accuracy and currency of official lists of eligible voters.”

WEC has repeatedly claimed that Wisconsin has been exempt from NVRA since it became law in 1993 because, before the statutory cut-off date of Aug. 1, 1994, the state had a same-day voter registration program in place that allowed all voters to register on Election Day.

At the time, Wisconsin and six other states received NVRA exemptions for either having no voter registration at all or having same-day registration.

North Dakota still has no voter registration for state and federal elections.

According to the complaint, the year of birth data on the roll is a record subject to the NVRA’s public disclosure provision because, as noted above, the act says “all” election records must be made available for public inspection.

PILF contends that, even though the privacy of the year of birth information is protected by Wisconsin statute, state law must give way to federal law because of the Supremacy Clause of the U.S. Constitution.

Prohibitive Fee An Obstacle

Ms. Wolfe’s refusal to turn over the year of birth data and a digital copy of the state voter roll at a reasonable price is seen by PILF as an obstacle to Congress’ objectives outlined in the NVRA.

Wisconsin's top election official, Meagan Wolfe, speaks during a virtual press conference on Nov. 4, 2020. (Wisconsin State Handout via Reuters)

Congress declared that one of the purposes of NVRA is to protect the integrity of the electoral process and to ensure that accurate and current voter registration rolls are maintained.

Because it is purportedly exempted from the NVRA, Wisconsin is not required to make all voter list maintenance records public, nor is it required to limit records production fees to the cost of photocopying.

PILF attorneys assert that Wisconsin’s NVRA exemption “is invalid with respect to the law’s public disclosure provision.”

They cite the principle of equal state sovereignty, as affirmed by the U.S. Supreme Court in Shelby County v. Holder (2013), as a precedent to support their argument.

“Because the NVRA’s Public Disclosure Provision exists to further the NVRA’s purposes and aid in its enforcement” it is as equally relevant to Wisconsin as it is to other states.

“Congress designed the NVRA to protect the fundamental right to vote, remove unfair registration laws, protect the integrity of the electoral process, and maintain accurate voter rolls,” the complaint said.

Wisconsin Should Not Be Exempt

PILF argued that the injuries Congress sought to remedy by passing the NVRA are “equally prevalent” in Wisconsin as in other states.

According to PILF, the U.S. Supreme Court’s Shelby County decision reaffirmed that all states enjoy equal sovereignty and that if Congress treats states differently, the differential treatment must be “sufficiently related to the problem [the statute] targets” and must “make sense in light of current conditions.”

PILF is asking the Federal District Court to order, the defendant, Meagan Wolfe, to produce the Official Registration List to the foundation in electronic format without the payment of “unlawful costs.”

In a written statement, PILF President J. Christian Adams said: “No state should be exempt from transparency. All states should be treated equally under the law and no exemption should allow certain election officials to hide documents relating to voter list maintenance activities.

“This lawsuit is the first step to bringing the National Voter Registration Act’s transparency requirements to all 50 states.”

Ms. Wolfe did not respond to a request for comment, but WEC spokesman Riley Vetterkind referred The Epoch Times to Wisconsin statutes that Ms. Wolfe is relying on as justification for her denial.

Tyler Durden Tue, 05/07/2024 - 23:00

India Leads Global Inbound Remittances

India received by far the highest international remittances of any country worldwide in 2022, according to World Bank data published in the International Organization for Migration’s (IOM) 2024 World Migration Report on Tuesday. International remittances are defined as money sent from workers living abroad to their home countries. 

Additionally, as Statista's Anna Fleck reports, it is also the first country ever to have passed the $100 billion mark for inbound remittances. India was trailed some way behind by Mexico ($61.1 billion), which had toppled China ($51 billion) from the second position in 2021.

You will find more infographics at Statista

The majority of the inflows for France and Germany, which appear in rank 5 and 10, respectively, are not household transfers but “relate to salaries of cross-border workers who work in Switzerland while residing in France or Germany”, according to the report.

In terms of the top sources of international remittances, the United States ($79.15 billion in 2022), Saudi Arabia ($39.35 billion), Switzerland ($31.91 billion), Germany ($25.60 billion) and China ($18.26 billion) are the biggest senders.

The UAE’s data was not published this year by the World Bank but would usually also appear in the top 10 list.

According to the IOM, 2022 marks the first year that remittances have overtaken foreign direct investment in low- and middle-earning countries. International remittances have risen by 650 percent from $128 billion in 2000 to $831 billion in 2022. As with previous years, much of this ($647 billion) was received by low- and middle-income countries. Since the mid-1990s, remittance has also greatly surpassed Official Development Assistance, i.e. government aid designed to "promote the economic development and welfare of developing countries” .

The writers of the report highlight that the World Bank’s global data on international remittances does not take into account unrecorded flows through formal or informal channels. This means the data provided is likely below the actual figures.

Tyler Durden Tue, 05/07/2024 - 22:40

China Remains World's Biggest Jailer Of Journalists: World Press Freedom Index 2024

Authored by Alex Wu via The Epoch Times (emphasis ours),

A policeman covers a camera to stop journalists from recording footage outside the Shanghai Pudong New District People's Court, where Chinese citizen journalist Zhang Zhan is set for trial in Shanghai on Dec. 28, 2020. (Leo Ramirez/AFP via Getty Images)

As May 3 marked World Press Freedom Day, Reporters Without Borders (RSF) released its 2024 World Press Freedom Index.

China ranked near the bottom—172nd among 180 countries and regions—while maintaining its title from the previous year as the world’s biggest jailer of journalists.

RSF, the Paris-based international non-governmental organization dedicated to safeguarding freedom of information, said in the report that “in addition to detaining more journalists than any other country in the world,” the Chinese communist regime “continues to exercise strict control over information channels, implementing censorship and surveillance policies to regulate online content and restrict the spread of information deemed to be sensitive or contrary to the party line.”

RSF also pointed out in the report that “China is the world’s largest jailer of journalists, with more than 100 currently detained.”

Compared with last year’s ranking of 179th—second last place—China’s ranking this year has increased. However, the report indicated that the only reason for this slight upward movement in the rankings is the deterioration of situations in other countries and regions, such as in the Taliban controlled Afghanistan, rather than any improvement in China.

The press freedom ranking of Hong Kong—which is controlled by the Chinese regime—this year has also increased slightly, to 135th place, which is higher than its 140th position in 2023. However, its freedom score dropped 1.8 points from last year’s 44.86 “due to an increase in the persecution of journalists under the national security law imposed by Beijing in 2020,” says the report. RSF explained, “Some countries’ rises in the Index are misleading inasmuch as their scores fell and the Index rises were the result of falls by countries previously above them.”

Over 100 Chinese Writers Jailed

Meanwhile, New York’s PEN America released its Freedom to Write Index 2023.

The report, released on May 1, pointed out that China also remains the world’s leading jailer of writers and public intellectuals. “In 2023, China jumped above 100 cases, jailing 6 writers during the year for a total of 107. Of the total number of writers, 9 are female.”

Among the 107 writers imprisoned, 50 were online commentators who post their opinions on a range of social, political, and economic topics on social media platforms. The report said that the ruling Chinese Communist Party (CCP) uses the vague charge of “picking quarrels and provoking trouble” to arrest and imprison them.

Riot police pepper spray journalists on the 23rd anniversary of the city's handover from Britain to China as protesters gathered for a rally against the new National Security Law in Hong Kong on July 1, 2020. (Dale De La Rey/AFP via Getty Images)

Canada-based journalist and writer Sheng Xue told The Epoch Times on May 4 that the numbers published by these international organizations are just the few leaked out to the outside world under the CCP’s tight control of information.

“No one knows how many journalists in China have been persecuted to death, how many have been secretly arrested, sentenced, persecuted, and tortured,“ Ms. Sheng said. ”The entire system of the CCP is a state-terrorist regime, which means not only the central committee of the CCP is an autocratic and authoritarian system, [but] all levels of its power operate the same as a dictatorial and tyrannical regime. Therefore, it is impossible for the outside world to know many incidents. It is difficult to collect statistics. To be honest, even [CCP leader] Xi Jinping does not know.”

“I believe China is definitely the country where press freedom and freedom of speech are most severely persecuted in the world,” Ms. Sheng added. “Its political system enables it to reach such an extent.”

Lai Jianping, a Chinese human rights lawyer who currently resides in the United States, told The Epoch Times on May 4 that press freedom and freedom of speech in China, including Hong Kong, are actually declining and deteriorating.

“The reason why the CCP continues to tighten its control over speech is mainly because it is facing increasingly profound and unprecedented political, social, and economic crises. Its ruling status is threatened, and it wants to maintain one-party dictatorship and one-man dictatorship. Therefore, it continues to strengthen its control over all aspects of social life. So [suppressing] freedom of speech and freedom of the press are top priorities for the CCP and are the most important aspects of social life that it needs to control.”

Chinese Citizen Journalists

Chinese citizen journalists have also been targets of the Chinese regime’s suppression and persecution.

Chinese citizen journalist Zhang Zhan was sentenced to four years in prison for reporting the truth about the COVID-19 outbreak in Wuhan in 2020. Her sentence will be completed on May 13. RSF urges the international community to pay attention and put pressure on Beijing so that she can fully regain her freedom in a press release last month. Ms. Zhang was the winner of the RSF’s 2021 Prize for Courage.

A pro-democracy activist holds a placard urging Chinese authorities to release Chinese citizen journalist Zhang Zhan and 12 detained Hongkongers outside the Chinese central government's liaison office, in Hong Kong, on Dec. 28, 2020. (Kin Cheung/AP Photo)

Wuhan citizen journalist Fang Bin has been released from prison for a year but continues to face harassment by CCP authorities. Currently, he faces eviction while his electricity and water have been cut off at his residence, as Wuhan police pressure his landlord. He may soon be forced to live on the streets.

During the outbreak of COVID-19 in Wuhan in February 2020, Mr. Fang posted his video reports on social media revealing the massive number of deaths at that time, which attracted widespread international attention. Later, he was arrested by the local police and sentenced to three years’ prison for “picking quarrels and provoking trouble.”

Chinese citizen journalist Fang Bin in a YouTube video posted on Feb. 4, 2020 reporting the deaths in Wuhan during the COVID-19 outbreak. (Screenshot via The Epoch Times)

Mr. Lai said, “Citizen journalists are a basic link in the entire freedom of press [ecosystem]. Not only the [Chinese] official media and official journalists’ freedom of speech and press freedom are suppressed, but private citizen journalists are also suppressed, and even more seriously.”

He added, “There are fewer and fewer areas in which they can report and intervene, and there is almost no space for them. Because the CCP wants to monopolize the entire discourse system and right to discourse, there is basically no room for citizen journalists to survive.”

Ms. Sheng said that at this point, “there are no citizen journalists in China any more. When we talk about freedom of press, freedom of speech, media freedom, etc. in China, the Communist Party has given us the best answer—it has already declared that the media is the CCP’s mouthpiece.”

Luo Ya and Fang Xiao contributed to this report.

Tyler Durden Tue, 05/07/2024 - 22:20

MQ-9 Reaper Drone, At $30 Million A Pop, Top's Zelensky's Wish List

Because it's never enough... Ukraine is now eyeing the US-made MQ-9 Reaper even while Kiev awaits F-16 deliveries from the West.

It is the latest long-range weapon system being sought by the Zelensky government. Politico has reported that the $30 million drone has moved to the top of Kiev's arms shopping 'wish list'.

Picture alliance/dpa

"Ukraine is increasingly interested in obtaining the MQ-9 Reaper spy drone from the U.S., bumping it up to the top of its wish list in recent months as it plans operations for the summer and seeks new ways to help identify Russian targets deep behind the front lines," the report indicates.

"Since the early days of the war, the Reaper has been a priority for Kyiv as it sought to use them for strike and surveillance missions," Politico continues. "But recently, Ukraine has dialed back that request and is mainly interested in using Reapers only for reconnaissance, according to four people familiar with the issue who were granted anonymity to discuss the new strategy."

Ukrainian officials who now claim the Reaper would be used "only for reconnaissance" appear to in reality to be creating political cover for the Biden administration. US officials might otherwise be fearful of the risks.

At $30 million a piece, the MQ-9 would be a prime target for the Russians to shoot down. In 2023 the Pentagon lost a Reaper over the Black Sea after an encounter with Russian fighter jets. A jet dumbed its fuel on the drone, after which the drone crashed, and later the Russian navy recovered the wreckage.

The Pentagon has also lost three MQ-9 drones over Yemen and the Red Sea of late. A deep reluctance to see them shot down over Ukraine is likely a main reason the US is still holding back. The drone is typically equipped with expensive Hellfire missiles and other advanced defense tech.

But, the Biden administration has more recently seemed to back off its prior insistence that Ukraine not strike inside Russian territory...

Kirby says “if Russia is worried to be hit by western weapons they should just leave.”
pic.twitter.com/ioLbfrw3Ae

— The_Real_Fly (@The_Real_Fly) May 7, 2024

Already Ukraine forces are newly receiving the Army Tactical Missile System (ATACMS), which has the longest range of anything supplied from Washington thus far.

Meanwhile, UK leadership is positively encouraging strikes deep inside Russian territory. This has elicited a strong response from Moscow who has also stepped up its aerial attack especially on Ukraine's energy infrastructure and military command and control centers, including in Odessa of late.

Tyler Durden Tue, 05/07/2024 - 22:00