"We Have Our Jury": All 12 Jurors Seated For Trump Trial

Update (1705ET): All 12 jurors have been selected for Trump's NY hush money trial following the dismissal of two people earlier in the day.

Former President Donald Trump gestures as he returns from a recess in his trial for allegedly covering up hush money payments linked to extramarital affairs, at Manhattan Criminal Court in New York City on April 18, 2024. (Brendan McDermid/Pool/AFP via Getty Images)

As part of the process, dozens of jurors were almost immediately excused after admitting they couldn't be fair or impartial during the trial (and the rest lied, of course).

"We have our jury," said Judge Juan Merchan, after the 12th juror was selected. As The Hill notes:

One primary juror is originally from Lebanon and retired.

Another lives on the Upper East Side and said while she does “have opinions,” she does “firmly believe I can be fair and impartial.”

A third was born in Ohio and works in e-commerce. The fourth is from California and just watches “late night news.” And the fifth is a physical therapist who listens to podcasts related to sports and faith.

The first of six alternate jurors was also selected. She is a woman who grew up in England and Hong Kong.

There are five alternates left to select.

Let the games begin!

*  *  *

Authored by Chase Smith via The Epoch Times (emphasis ours),

A second juror who was seated on the jury for former President Donald Trump in the Manhattan ‘Hush-Money’ Trial earlier this week was excused on Thursday, after prosecutors said that someone with the same name was arrested in the 90s for “tearing down political advertisements.”

The Associated Press also reported that this juror, an IT consultant who previously described President Trump as “fascinating and mysterious,” failed to disclose his wife was allegedly a previous participant in a corruption inquiry by the Manhattan district attorney’s office.

Earlier in the day, a juror was dismissed after saying she had concerns about her ability to be fair and impartial and had concerns about her identity being made public.

The two were sworn in earlier in the week with five others, including one alternate, on the second day of the trial.

The two dismissals by New York Supreme Court Justice Juan Merchan reduce the number of seated jurors to five. A total of 18 jurors need to be seated before the trial begins, six of which will be alternates.

AP described the scene in the Manhattan courtroom on Thursday morning as “frenetic,” as prosecutors also asked the judge to hold President Trump in contempt of court over social media posts they claim violated a gag order by Judge Merchan.

Second Dismissal

The second dismissal Thursday came when prosecutors raised concerns the juror may have not been forthcoming during jury selection when a question was asked whether he had ever been accused of or convicted of a crime, AP reported.

The juror was summoned to the court to answer questions after an article was found regarding a person with the same name being arrested in the 1990s for tearing down political campaign signs supporting conservative candidates in Westchester County, a suburban county of New York.

The prosecution also disclosed the man’s wife may have been involved in a deferred prosecution agreement with their office, also in the 1990s.

AP reported that the questions by Judge Merchan were “off-microphone” and thus his responses to the judge’s questions were not fully known, along with whether or not he confirmed or denied the allegations were indeed connected to him.

Thursday’s events bring a roadblock to an already difficult task of finding enough jurors to seat in the largely liberal Manhattan jury pool who are found to be able to decide President Trump’s fate fairly and impartially.

Inside the court, there’s broad acknowledgment of the futility in trying to find jurors without knowledge of Trump. A prosecutor this week said that lawyers were not looking for people who had been “living under a rock for the past eight years.”

But Thursday’s events laid bare the inherent challenges of selecting a jury for such a landmark, high-publicity case. More than half the members of a group of 96 prospective jurors brought into the courtroom were dismissed Thursday, most after saying they doubted their ability to be fair and impartial.

Earlier Dismissal

Early in the morning, Judge Merchan reported that the woman also known as “Juror 2” had slept on the decision to sit on the jury overnight and informed the court she wished to be dismissed.

She was brought into the room and said after thinking about it, she has friends, colleagues, and family that “push things” and outside influences that would likely affect her impartiality. She added that she had been identified as a juror from news reports.

The juror, an oncology nurse, said her family and friends had questioned her about whether or not she was a juror based on media reports. The judge in turn ordered journalists to refrain from publishing information about the juror’s current and prior jobs.

Justice Merchan said, “As evidenced by what’s happened already, it’s become a problem,” according to AP. The answers also will be redacted from court transcripts.

Prosecutors additionally asked for the employer question to be removed from the questionnaire for jurors, while the judge disagreed with the argument and said it was necessary information.

Other Developments

Also in court on Thursday, prosecutors asked for the 45th president to be held in contempt for what they said were social media posts that violated a gag order that bars him from attacking witnesses.

Those posts, prosecutors argued, included an article referring to witness and former Trump attorney Michael Cohen as a serial perjurer and another by a Fox News personality that liberals were disguising their true motives to be seated on the jury.

Mr. Trump’s attorney said that Mr. Cohen had attacked his former boss in public and the president was replying to those attacks.

On Monday, when Justice Merchan asked 96 prospective jurors if they couldn’t be fair and impartial in the trial, more than half of them raised their hands. They were then dismissed.

The Case

The legal case against President Trump involves an alleged $130,000 payment made by his former lawyer, Michael Cohen, to adult performer Stephanie Clifford, also known as Stormy Daniels, to keep her claims of having an affair with the president from becoming public.

President Trump has pleaded not guilty to the charges, asserting that it’s part of a longstanding and widespread effort to prevent him from being reelected. Earlier this week, President Trump wrote on Truth Social and told reporters that being in court every day will hamper his campaign, noting that he won’t be able to visit potential battleground states with just months to go before the November election.

The trial is expected to last upwards of eight weeks. Of that, the jury selection process could last as long as two weeks, analysts speculate.

The New York case is one of four criminal prosecutions the former president faces. The other cases stem from his alleged mishandling of classified information and activity in challenging the results of the 2020 election.

He has pleaded not guilty to those charges, too, although it’s not clear whether the three cases will make it to trial before November.

The federal election case was placed on hold by a Washington-based judge as the appeals process plays out. In the documents case in Florida, the federal judge has yet to reschedule a new trial date.

In Georgia, the former president has appealed state election-related charges in Fulton County, putting that case on hold. It came amid allegations that the Fulton County district attorney, Fani Willis, engaged in inappropriate behavior that the defendants say should have led to her dismissal.

Jack Phillips and The Associated Press contributed to this article.

Tyler Durden Thu, 04/18/2024 - 17:05

The Great Freight Recession Has Now Lasted Longer Than The COVID Bull Market

By Greg Fuller, CEO of FreightWaves

On March 31, 2022, FreightWaves declared that a freight recession was imminent. More than two years later, the freight market remains in one of its deepest and longest recessions in history.

The trucking industry is asking, “How much longer is the market going to remain in a recession?” (Photo: Jim Allen/FreightWaves)

Our original conclusion was derived from signals from FreightWaves SONAR. Its high-frequency datasets, which track freight supply and demand in real-time, indicated an imminent collapse. When FreightWaves first published the article, many were not only skeptical of the conclusion, they derided FreightWaves for the call. Even after the recession took hold, few would have guessed that the freight downturn would be as deep or as long as it has been.

As we enter the third year of the Great Freight Recession, the trucking industry asks, “How much longer is the market going to remain in a recession?”

We believe that we are now at the bottom of the market.

SONAR’s Outbound Tender Rejection Index, or OTRI, measures the percentage of truckload transactions rejected by carriers. OTRI indicates that conditions are better than they were a year ago, albeit not by much.

Tender rejections are a highly reliable indicator of the balance of supply and demand. The higher the rejection rate, the more load options a carrier has. The lower the rate, the fewer load options a carrier has. While some will look at the absolute value of tender rejections, we also look at them in the context of where they have been.

Tender rejections are currently at 3.95%, up from the 2024 low of 3.39 on March 26 and up substantially from 2.88% a year ago.

The Outbound Tender Rejection Index. To learn more about FreightWaves SONAR, click here

We believe that tender rejections bottomed out in late March and have steadily increased throughout April, which is historically a soft month in freight. This indicates that the 2024 low is in the rearview mirror.

Contracted load accepted volumes, another SONAR index measuring contracted load demand, tell us that the market has grown since January 2023.

As of April 15, 2024, year-over-year contracted volumes are up 9%.

Contract accepted volumes are currently down 6% compared to April 2021, the peak of the COVID bull run.

Contract Load Accepted Volume. To learn more about FreightWaves SONAR, click here

While a gap certainly exists between peak volumes and current volumes, the gap is narrowing. In the past year, contracted load accepted volumes have increased by 9%.

Contract Load Accepted Volume. To learn more about FreightWaves SONAR, click here.

The Atlanta Federal Reserve now forecasts that year-over-year GDP growth is up by 3%. In a normal growing economy, freight demand grows faster than economic growth. If the economy grows above 2% for the year, we expect that contracted load accepted volumes in 2025 will surpass the 2021 peaks.

Capacity will continue to decline

The growth in contracted load accepted volumes will occur at the same time that capacity continues to bleed out of the market.

Another of the many indices in the SONAR platform is the Carrier Details Net Revocation Data, which shows the increase or decline in the number of trucking companies in the market. In the chart below, anything above zero (green) shows an expansion in the number of trucking authorities, while anything below zero (red) shows a decline.

To learn more about FreightWaves SONAR, click here.

The index has been in negative territory since the fourth quarter of 2022. Capacity continues to leave the market, allowing the market to return to balance.

During the two years of the freight market’s COVID bull run, fleets built up substantial operating surpluses and were able to build strong balance sheets. This has enabled them to hang on for a long time.

For much of the Great Freight Recession, trucking fleets have been running many of their miles at losses. This has forced them to tap into the financial reserves they built up during the COVID bull run.

The Great Freight Recession has gone on longer than the COVID bull run, meaning that since the first days of the COVID lockdowns, truckers have operated primarily in recessionary territory. For those who remain in the market, their reserves are likely exhausted, as is their stamina.

However, for those who can continue, the tough times may be ending. The data suggests that a recovery in the balance of supply and demand will come as soon as fall 2024, but almost certainly by spring 2025.

Tyler Durden Thu, 04/18/2024 - 17:00

Money-Market Fund Assets See Largest Outflows Since 'Lehman'

Total money-market fund assets plunged by $112BN in the last week as Tax-Day demands took the total assets below $6 Trillion for the first time sine January (to $5.97 Trillion)...

Source: Bloomberg

Corporate taxes collected from April 11 through April 17 totaled $100.7 billion, Treasury data show.

While Tax-Day's impact matters obviously, we note that this is the largest weekly drop in money-market fund assets since Lehman (Sept 2008) and the biggest two-week drop (-$143BN) on record...

Source: Bloomberg

Much of the decline in money-market fund assets was led by institutional outflows that totaled $96.6BN in the week ended April 17 - the largest drawdown since an extended tax-filing deadline in mid-October. Retail investors pulled about $15.5 billion out of money-market funds../.

Source: Bloomberg

In a breakdown for the week to April 17, government funds - which invest primarily in securities like Treasury bills, repurchase agreements and agency debt - saw assets fall to $4.8 trillion, a $99 billion decline. 

Prime funds, which tend to invest in higher-risk assets such as commercial paper, meanwhile, saw assets fall to $1.01 trillion, a $12 billion decline.

Still, cash is expected to continue piling into money funds as long as the Federal Reserve keeps rates on hold - and this week has seen rate-cut expectations tumble further...

Source: Bloomberg

The Fed's balance sheet shrank to its smallest since February 2021...

Source: Bloomberg

As The Fed starts discussing tapering QT and usage of The Fed's bank bailout facility (now expired but these are 12 month term loans) fell by $4.1BN more to basically erase all the late-period arb-driven inflows, leaving a huge $126BN hole in bank balance sheets still being filled by this...

Source: Bloomberg

Finally, we note that bank reserve at The Fed slipped last week as it appears the reality for US equity market cap is starting to dawn...

Source: Bloomberg

While there may be no rate-cuts anytime soon... will The Fed taper QT in a big enough manner to avoid that recoupling?

Tyler Durden Thu, 04/18/2024 - 16:44

Netflix Reports Blowout Q1 Results & Sub Adds, But Warns Gains Will Slow, Will End Reporting Of Quarterly Subs; Stock Slides

After suffering a historic collapse at the end of 2021, when in the span of five months Netflix lost 75% of its value, and when Ackman first bought then immediately dump the stock just around the generational bottom, the company has enjoyed a stellar recovery over the past two year when it rose by nearly 300%, from a low of $166 to a recent high of price of $636, just shy of the record hit in late 2021.

It is therefore not surprising that after this tremendous ascent and nearly 3x return, that both Goldman and UBS agree that Netflix remains a very crowded long with investors very bullish. According to UBS, "the bull thesis continues to revolve around the residual impact of password sharing and they are just scratching the surface on the scale of the ads business" while "the rationalization of content spend and direct-to-consumer efforts from competitors will also be a tailwind for Netflix." Goldman chimes in that positioning and sentiment skew more long - as NFLX’s multiple is approaching multi-year highs - with stock up ~28% YTD and short interest back at 10 year lows.

That said, UBS cautions that stretched positioning and the stock near $620 cause some to pause, but given they are the first one out of the gate, the stock could benefit from investors using it as a safety play.

On the earnings print, investors will be focused on:

1. magnitude of upside to sub net adds
2. pricing updates as estimates are underpinned by price increases eventually hitting;
3. tailwinds from paid sharing and if there are legs left versus already in run rate;
4. updates on scaling in ad business progress into 2H/2025, and consistent message on revenue re-acceleration;
5. updates to margin expectations (~2-3pts y/y annual OM expansion) and spending plans given pullback at peers; and
6. updates on live content/sports strategy.

And here are the main bogeys:

• Q1 Subscriber Adds: 8MM (heard a wide range of estimate - some higher, up to 10MM, some lower, 7-8MM, Goldman expects +7MM)
• Q1 Revenue Growth adjusted for FX: +16-17%
• Q1 Reported Revenue Growth: +14%
• Q1 EBIT: $2.4B, +40% y/y
• Q2 Subscriber Adds: 4M
• Q2 Revenue Growth adjusted for FX: +17%
• Q2 Reported Revenue Growth: +16%
• Q2 EBIT: $2.4BN
• FY24 Operating Margin: reiterate guide at 24%
• FY24 FCF Guide: $6BN

With that in mind, and considering that options are pricing in a roughly 7% swing after hours today, here is what NFLX reported for its first quarter:

• EPS $5.28, beating the estimate $4.52, and more than double the $2.88
• Revenue $9.37 billion, up a whopping 15% y/y, and beating the estimate $9.26 billion
  • Revenue was above the company's guidance as paid net additions (9.3M vs. 1.8M in Q1’23) were higher than we forecast.
• Streaming paid net change +9.33 million smashed estimates of 4.84 million, were just shy of the highest whisper number of 10 million and were far above the +1.75 million subs added a year ago. This was the best start of the year since 2020!
  • UCAN streaming paid net change +2.53 million vs. +100,000 y/y, beating estimates of +988,580
  • EMEA streaming paid net change +2.92 million vs. +640,000 y/y, beating estimates of +1.58 million
  • LATAM streaming paid net change +1.72 million vs. -450,000 y/y, beating estimates of +837,467
  • APAC streaming paid net change +2.16 million, +48% y/y, beating estimates of +1.48 million
• Operating margin 28.1% vs. 21% y/y, estimate 25.7%
• Operating income $2.63 billion, a whopping +54% increase y/y, and beat estimates of $2.43 billion
• Free cash flow $2.14 billion, +0.9% y/y, and also beat estimate $1.87 billion

Bottom line: Q1 subscriber adds smashed estimates in what was the best Q1 for NFLX since 2020 when the pandemic led to an unprecedented growth surge.

Netflix ended Q1 with total streaming paid memberships of 269.6 million, up 16% y/y, and well above the estimate of 264.52 million. The subs are in line with what it guided last quarter when it said that "paid net additions to be down sequentially but to be up versus Q1’23 paid net adds of 1.8M."

About 40% of Netflix’s new customers are selecting the advertising option in markets where it’s available, the company said. The advertising tier is still minuscule relative to online video giants like YouTube.

Netflix has successfully rebounded from a post-covid slowdown in 2021 and 2022 to grow at its fastest rate since the early days of the coronavirus pandemic. That is due largely to its crackdown on people who were using someone else’s account. The company estimated more than 100 million people were using an account for which they didn’t pay. While executives at Netflix feared a backlash from customers, the company has been able to convince millions of moochers to pay for access.

Looking ahead, for Q2 Netflix sees the following:

• Revenue $9.49 billion, missing the estimate $9.51 billion
• EPS $4.68, beating the estimate $4.54
• Operating margin 26.6%, beating estimate 25.4%

Drilling down into the Q2 forecast reveals:

• revenue growth of 16% which equates to 21% growth on a F/X neutral basis due primarily to price changes in Argentina and the devaluation of the local currency relative to the US dollar.
• paid net additions should be lower in Q2’24 vs. Q1’24 due to typical seasonality
• the company also forecasts global ARM to be up year-over-year on a F/X neutral basis in Q2. This is what the quarterly subs look like historically and vs WS estimates:

For the full year, NFLX sees revenue growth between 13% and 15%, boosted its operating margin outlook to 25%, beating the estimate of 24.1%, and above the 24% expected previously; the company still sees free cash flow about $6 billion, estimate $6.49 billion

And here are the results and projections summarized:

And here is the regional detail: for the third consecutive quarter, EMEA (Europe, the Middle East and Africa) accounted for the largest share of Netflix’s growth in the quarter. The company added almost 3 million customers in that region, following the 5 million added last quarter. The average amount Netflix makes per customer has increased only modestly in the past year, at $16.64, and rising 3%.

Yet despite the blowout numbers this quarter, something bad may be on deck because NFLX reported that starting next year with 1Q 2025 earnings, the company will stop reporting quarterly membership numbers and ARM; to counter that, the company will also start providing annual revenue outlook. Here is the explanation, straight from the quarterly report:

As we’ve noted in previous letters, we’re focused on revenue and operating margin as our primary financial metrics — and engagement (i.e. time spent) as our best proxy for customer satisfaction. In our early days, when we had little revenue or profit, membership growth was a strong indicator of our future potential. But now we’re generating very substantial profit and free cash flow (FCF). We are also developing new revenue streams like advertising and our extra member feature, so memberships are just one component of our growth. In addition, as we’ve evolved our pricing and plans from a single to multiple tiers with different price points depending on the country, each incremental paid membership has a very different business impact. It’s why we stopped providing quarterly paid membership guidance in 2023 and, starting next year with our Q1'25 earnings, we will stop reporting quarterly membership numbers and ARM.

We’ll continue to provide a breakout of revenue by region each quarter and the F/X impact to complement our financials. For guidance, we’ll add annual revenue guidance on top of what we already provide today: our annual operating margin and free cash flow forecast and forecasts for quarterly revenue, operating income, net income, and EPS. We’ll also announce major subscriber milestones as we cross them.

Instead of subs, NFLX - like Musk - plans on providing more details on overall engagement: "we’ve been providing progressively more information on engagement, starting with our Top 10 weekly and most popular lists and more recently our bi-annual report into viewing on Netflix (which covers ~99% of all video watch time on our service). This is more information than any of our competitors provide, and we expect to provide even more over time."

Netflix finished the quarter with gross debt of $14B and cash and cash equivalents of $7B; curiously, it boosted the revolving credit facility to $3 billion from $1 billion. NFLX expects to refinance its upcoming debt maturities and we don’t currently have plans to lever up to buy back stock as we value balance sheet flexibility

Expectations for Netflix’s first quarter had soared in recent days, as one analyst after another published rosy forecasts. Pouring some cold water on expectations, NFLX said subscriber gains will be lower this period, even as revenue will increase 16%, or more than expected.

Netflix also said it will stop reporting paid quarterly membership and revenue per subscriber, starting with the first quarter of 2025. Those metrics have long been the primary way Wall Street evaluated the company’s performance, but Netflix has tried to shift the focus to traditional measures like sales and profit. Management will continue to report major subscriber milestones.

“The movement to no longer disclose quarterly subscriptions from next year will not go down well,” Paolo Pescatore, founder and analyst at PP Foresight, said in an email. “More so given the subscriber growth that the streaming king has seen over the last year.”

To be sure, new customers have had plenty to watch. Netflix has delivered a new hit every couple weeks so far this year, including limited series such as Fool Me Once and Griselda, the dramas The Gentleman and 3 Body Problem and the reality show Love Is Blind. The streaming service accounts for 8.1% of TV viewing in the US,  and is a leading TV network in most of the world’s major media markets.

“With more than two people per household on average, we have an audience of over half a billion people,” the company said in its letter. “No entertainment company has ever programmed at this scale and with this ambition before.”

Yet even skeptical analysts have been impressed with the company’s recent performance, lifting their price targets for investors. To sustain its growth going forward, Netflix has also introduced a cheaper, advertising-supported version of its service targeting cost-conscious customers. It’s also begun to invest in live programming, including stand-up specials, wrestling and an upcoming boxing match.

Turning to the once-problematic cash flow statement, the company generated cash from operating activities of $2.2B in Q1, and free cash flow of $2.1B (both flat with Q1’23).

During the quarter, NFLX paid down $400M of senior notes with cash on hand and repurchased 3.6M shares for $2B. The company finished the quarter with gross debt of $14B and cash and cash equivalents of $7B.

NFLX is still forecasting full year 2024 free cash flow of approximately $6B and cash content spend of up to $17B.

Finally, here is the explanation for why NFLX is boosting its revolver:

We’re modestly evolving our capital allocation strategy to better reflect our investment grade status. Going forward, rather than anchoring to $10-$15B of gross debt and minimum cash equivalent to two months of revenue, we’ll maintain financial policies consistent with a solid investment grade credit rating. In particular, we’ll continue to prioritize profitable growth by reinvesting in our business, maintain a healthy balance sheet and ample liquidity, and return excess cash (beyond several billion dollars of minimum cash and any used for selective M&A) to shareholders through share repurchases.

As part of this evolution, we’ve upsized our revolving credit facility from $1B to $3B. This will bolster our access to liquidity, and enable us to improve our cash efficiency, over time. We also expect to refinance our upcoming debt maturities and we don’t currently have plans to lever up to buy back stock as we value balance sheet flexibility

The recent growth lifted Netflix shares back toward record highs, giving the company a market value of more than $260 billion. It set an all-time closing high of $691.69 in November 2021, although today's earnings will likely slow down the recent gains: while the result were solid, and the beat was across the board, the stock initially spiked then, and at last check NFLX was down about $20 from its closing price of $610, and about $100 below its record high from Nov 2021.

Tyler Durden Thu, 04/18/2024 - 16:36

This Is The Uniparty 'Reveal': Speaker Johnson To Pass $95.3 Billion Foreign Aid Package Using Democrats

House Speaker Mike Johnson (R-LA) is scrambling - both to keep his job, and to pass several bills to devote billions in US taxpayer funds to foreign entanglements that Johnson's conservative base has little-to-no appetite for. The bills would provide around $60.8 billion for Ukraine, $26.4 billion for Israel, and $8.1 billion for Ukraine. Meanwhile, following Republican outcry - Johnson included a fifth bill which would revive the Secure Border Act - so US border security is essentially an afterthought.

In order to appease said base, Johnson - who faces a growing threat of removal by House conservatives - has added a US border security measure to the package, which he told lawmakers the House would vote on Saturday night. The $95.3 billion package includes three aid bills to send funds to Ukraine, Israel and Taiwan, after claiming that the situation in Ukraine was at a tipping point, and the "axis of evil" of Russia, China and Iran are coordinating to help Russia to push further into Europe, like Hitler.

Speaker Mike Johnson: "We're going to stand for freedom and make sure that Putin doesn't march through Europe... we're the greatest Nation on the planet, and we have to act like it"

He confirms Trump supports him and the record-breaking Ukraine funding plan he just introduced pic.twitter.com/uTUjs7rRz2

— Michael Tracey (@mtracey) April 17, 2024

Seriously? 

"To put it bluntly, I would rather send bullets to Ukraine than American boys," said Johnson, the Washington Times reports.

He’s a stupid, gullible, dishonest person whose incompetence is eclipsed only by his cowardice. Imagine being alive and sentient and witnessing the last 10 years of Deep State skullduggery and then allowing yourself to be manipulated by the most corrupt intelligence apparatus on… https://t.co/h0DIvuNstb

— Sean Davis (@seanmdav) April 18, 2024

The Ukraine aid would be provided as a loan, but with provisions allowing for the loan to be canceled.

A fourth bill would allow the use of seized Russian assets for aid, and sanctions for Russia, China and Iran. It also includes the language of a House-passed bill requiring TikTok to divest from China, a proposal that stalled in the Senate.

A fifth, separate bill includes core components of the House GOP’s Secure the Border Act. -Washington Times.

Far-right conservatives in the House balked at the new plan, calling the border language “watered down” and demanding it to be attached to Ukraine aid.

Conservatives slam

Rep. Bob Good (R-VA) called it a "joke," arguing that Johnson is more worried about Ukraine than the US-Mexico border - which the speaker had previously promised to pair together.

"He certainly doesn’t want to try to use border security because I guess he’s afraid it might mess up Ukraine," Good added.

Rep. Thomas Massie said on X that Johnson "plans to pass the rule for the $100 billion foreign aid package using Democrats on the Rules Committee," adding "This is the Uniparty "reveal.""

This is the Uniparty “reveal.”

— Thomas Massie (@RepThomasMassie) April 18, 2024

GOP Gives up on Johnson: @RepThomasMassie says Mike Johnson has betrayed the Republican conference on 2 big occasions and he is about to do it a third time. Massie has called on Johnson to resign as John Boehner did and allow the GOP to elect a new speaker. #TheGreatAmericaShow pic.twitter.com/Xz2RY2kJAG

— Lou Dobbs (@LouDobbs) April 18, 2024

The Secure Border Act - passed by the House but shut down in the Democrat-led, open-border Senate, would restart the construction of Donald Trump's southern border wall, and would include other measures to stem the flow of migrants.

Momentum Builds for Ouster

According to The Hill, momentum is "growing quickly" to oust ('vacate') Johnson if he moves to alter the 'motion to vacate' rule as part of the above package. The move would raise the threshold for forcing a vote on a motion to vacate - which can currently be called by a single lawmaker. This would reverse an agreement struck between former GOP Speaker Kevin McCarthy (CA) and conservatives in January of last year as a condition of their support for his leadership.

Johnson denied that he's considering such a modification, however he told CNN on Wednesday that the ouster mechanism "has been abused in recent times," adding that "maybe, at some point, we change that."

The denial has done little to mollify the conservatives, who huddled with Johnson for a long and tense discussion on the chamber floor Thursday — a meeting that featured plenty of yelling. Afterward, some of the conservatives said they’re ready to support a motion to vacate if Johnson endorses the rule change making it harder to launch that very process. 

“It’s a red line for me, for sure,” Rep. Lauren Boebert (R-Colo.) told reporters after the gathering broke up.

Rep. Matt Gaetz (R-Fla.), who led the effort to oust McCarthy from the Speakership in October, would not commit to supporting Johnson’s removal over the rule change but suggested that it could be the last straw for him.

“I think a motion to vacate is something that could put the conference in peril, and Ms. Boebert and I were working to avoid that,” Gaetz said. “Our goal is to avoid a motion to vacate. But we are not going to surrender that accountability tool, particularly in a time when we are seeing America’s interests subjugated to foreign interests abroad.” -The Hill

The controversy comes as Rep. Marjorie Taylor Greene (R-GA) has repeatedly threatened to drop a motion to vacate on Johnson over his willingness to negotiate deals with Democrats on key issues such as federal spending, government surveillance, and most recently - Ukraine aid.

"He’s serving Ukraine first and America last, and that would be the worst thing to do," said Greene. "I can’t think of a worse betrayal ever to happen in United States history. And here’s what’s really ironic: the constitutional attorney, Mike Johnson, is literally betraying the American people in order to keep his grip of power on the Speakership."

Tyler Durden Thu, 04/18/2024 - 15:20

Huge Bond Wagers Make Some Hedge Funds Too-Big-To-Fail, IMF Warns

Who could have seen this coming?

btw this is where the next really big crash will start https://t.co/XcK2RezYEk

— zerohedge (@zerohedge) February 1, 2024

Bloomberg's Ye Xie reports that a small group of funds has accumulated such large short wagers in the Treasury market that they could destabilize the broader financial system during times of stress, according to the International Monetary Fund.

“A concentration of vulnerability has built up, as a handful of highly leveraged funds account for most of the short positions in Treasury futures,” the IMF said in its Global Financial Stability Report released this week.

“Some of these funds may have become systemically important to the Treasury and repo markets, and stresses they face could affect the broader financial system.”

The IMF’s comments came in a section discussing the so-called basis trade, which contributed to turmoil in the world’s biggest bond market at the time of the pandemic outbreak in 2020.

In this trade, hedge funds exploit tiny differences between the prices of cash Treasuries and futures, using large sums of money borrowed from the repurchase-agreement market to amplify returns. Because of this leverage and reliance on short-term funding, the bet has drawn increasing scrutiny from regulators. And now the IMF is highlighting another risk: concentrated positions.

As of December, about half the two-year Treasury short positions in the futures market were in the hands of eight traders or less, according to the IMF. It was at a similar level at the end of 2019, just before a surge in funding costs in the early days of the pandemic spurred traders to unwind the positions, which helped boost volatility in bonds at a time of upheaval across financial markets.

Source: IMF’s Global Financial Stability Report

The use of basis trades swelled along with the Federal Reserve’s interest-rate hikes, which potentially make the strategy more profitable by widening the price gap between the cash and futures markets.

A Fed study last month estimated that hedge funds have amassed at least $317 billion in Treasury holdings related to basis trades since the first quarter of 2022, although the size is “significantly” less than it previously estimated.

The Securities and Exchange Commission has been working to rein in basis trades and increase the transparency of hedge funds’ exposure to the strategy.

In December, the SEC required the funds and brokerages to centrally clear far more of their US Treasuries transactions, a move to bolster oversight of basis trades.

Source: IMF’s Global Financial Stability Report

Since then, there are signs that use of the trade may be waning: Commodity Futures Trading Commission data shows a decline in leveraged funds’ short positions in bond futures.

The concentration in these bets has also diminished.

In two-year futures, net short positions controlled by eight traders or less have dropped to about 38% of total open interest, from 50% in early January, according to CFTC data compiled by Bloomberg.

Source: CFTC's Commitments of Traders data

Note: Data show percentage of two-year Treasury short futures contracts held on a net basis

Despite that unwinding, the IMF noted the short positions of leveraged funds remain large, which means they may still loom as a risk.

As the Fed shrinks its holdings of Treasuries, a process known as quantitative tightening, it also may reduce the liquidity in the financial system, potentially triggering a jump in funding costs and leading the basis trade to unravel, the IMF said.

“Basis trade investors rely on low repo haircuts and low repo rates to leverage their positions and increase basis trade profitability,” the report said.

“A spike in repo rates — triggered, for example, by surprises in quantitative tightening — can render the trade unprofitable and could trigger the forced selling of Treasury securities and a brisk unwinding of futures positions as funds seek to quickly delever.”

Which explains, as we noted previously, why the SEC is now scrambling to figure out just how much capital is truly allocated to basis trades within multi-manager/multi-strat hedge funds, but based on our quick look at regulatory leverage, the actual amount allocated to basis is orders of magnitude greater than $550BN, more likely in the $2+ trillion ballpark across the entire global hedge fund industry.

And there you have it: all the basis trade is, is the latest manifestation of the "collecting pennies in front of a steamroller" trade, because when it works it generates 10% returns every year like clockwork, with the only gating factor being how much leverage a hedge fund has access to.

However, during a crisis, such as the Sept 2019 repo fiasco or the March 2020 crash, it all goes to hell... and the Fed rushes to bail out not just bank but hedge funds which are now so tightly interwoven in the financial fabric (via ultra loose and generous Prime Brokerage linkages) that central banks have no choice but to bail out everyone, including the billionaires who run the hedge funds that have put on trillions of basis trades on!

...and The IMF is worried.

Tyler Durden Thu, 04/18/2024 - 15:00

Breaking Down The 2024 Bitcoin Halving: Implications & Predictions For Bitcoin Miners

Authored by 'El Sultan Bitcoin' via Bitcoin Magazine,

The Bitcoin halving event, a pivotal occurrence, is scheduled for April, 19 2024. This quadrennial event will reduce the block subsidy for Bitcoin miners from 6.25 BTC to 3.125 BTC, thereby halving the reward that miners receive for their efforts.

Such events have historically led to profound shifts in the mining landscape, potentially influencing various economic and operational facets of Bitcoin mining.

ECONOMIC OUTLOOK AND MARKET PREDICTIONS

After the halving, the immediate impact is a considerable decrease in miner revenue due to the reduced block subsidy. This could lead to a decline in the hashrate as less efficient miners may turn unprofitable and exit the network. Luxor’s Hashrate Index Research Team projects about 3-7% of Bitcoin’s hashrate could go offline if Bitcoin’s price maintains its current level. However, if prices fall, up to 16% of the hashrate could become economically unviable, depending on the trajectory of Bitcoin prices and transaction fees post-halving.

The hashrate, a critical security measure for Bitcoin, might adjust along with difficulty levels to align with the new economic realities. Luxor’s analysis suggests different scenarios where the network's hashrate could end up ranging from 639 EH/s to 674 EH/s by year's end, reflecting adjustments to the new earning potential post-halving.

ASIC PRICING AND BREAKEVEN POINTS

Post-halving, the profitability of different ASIC models will become crucial as the mining reward drops. Lower rewards mean that only the most efficient machines will be able to operate profitably if the price of Bitcoin does not see a significant increase. For instance, according to Luxor’s projections, next-generation ASICs like the S19 XP and M30S++ might have breakeven power costs ranging from $0.07/kWh to $0.15/kWh, depending on post-Halving hashprice.

This shift in profitability will likely lead to a repricing of ASIC machines. Historical data suggests that ASIC prices are highly correlated with hashprice; therefore, the anticipated reduction in hashprice will prompt a downward adjustment in ASIC values. This will particularly impact older and less efficient models, potentially accelerating their phase-out from the market.

THE ROLE OF CUSTOM ASIC FIRMWARE POST-HALVING

To combat reduced profitability, miners are increasingly turning to custom ASIC firmware to improve the efficiency of their hardware. Firmware like LuxOS and BraiinsOS can enhance the performance of machines by optimizing their power usage and hashrate output, thus lowering the breakeven point for electricity costs. For example, underclocking an S19 with custom firmware could extend its operational viability by reducing its power draw, thereby maintaining profitability even at lower hashprices.

Public miners, in particular, are adopting custom firmware to boost the efficiency of their fleets. Companies like CleanSpark and Marathon have reported using custom solutions to enhance their operational efficiencies. This trend is expected to grow as more miners seek to maximize their output and minimize costs in the face of decreasing block rewards.

2024 BITCOIN HALVING AND BEYOND

The 2024 Bitcoin Halving is set to reshape the mining landscape significantly, just as previous halvings have. While the exact outcomes are uncertain, the event will undoubtedly present both challenges and opportunities. Miners who plan strategically, taking into account both economic forecasts and operational efficiencies, will be better positioned to navigate the post-halving environment.

For those in the Bitcoin mining industry, staying informed and adaptable will be key to leveraging the halving event as an opportunity rather than a setback. With the right preparations, particularly in ASIC management and firmware optimization, miners can continue to thrive even under tightened economic conditions.

Tyler Durden Thu, 04/18/2024 - 14:25

'Israel Propped Up Hamas': Fireworks Ensue During ZeroHedge Debate, Dennis Prager Says Atrocity Claims 'Libel'

On Wednesday night, against the backdrop of the war in Gaza expanding to Lebanon and Syria, ZeroHedge held a debate to discuss the war in the Middle East.

Debating that question and more at last night’s ZeroHedge debate were talk show host Dennis Prager and Newsweek opinion editor Batya Ungar-Sargon vs. Young Turks founder Cenk Uygur and libertarian Dave Smith. The event was masterfully moderated by Saagar Enjeti, founder of Breaking Points.

Key themes included the morality of Israel's invasion and the broader historical and political context that led to it, historical narratives - including grievances, perceptions of historical rights to land, and the impact of these narratives on current attitudes and policies, and future prospects of potential solutions and the feasibility of peace in the region.

Summarizing the participants' general positions:

• Dennis Prager: Argues that the root of the conflict is the non-acceptance of a Jewish state by Israel's neighbors. He emphasizes that if Israel disarmed, it would lead to genocide against Jews, drawing a parallel between the hostility Israel faces and historical antisemitism.

• Cenk Uygur (The Young Turks): Criticizes the conduct of Israel in the conflict, pointing to the high number of Palestinian casualties and the broader humanitarian impact. He challenges the portrayal of Hamas and Palestinian resistance, comparing it to historical resistance movements against oppression.

• Batya Ungar-Sargon: Focuses on whether Israel's actions since the invasion were just and suggests that while the devastation is immense, Israel's military actions are justified as self-defense against a terrorist group (Hamas) embedded within civilian areas.

• Dave Smith: Discusses the complexities of the situation, suggesting that simplistic narratives about good vs. evil do not capture the realities of the conflict. He stresses that both Israelis and Palestinians include individuals who desire peace and those who pursue more extreme outcomes.

The feedback was overwhelmingly positive, and we agree - it's worth a watch.

Thank you, It was an interesting, informative, and civil debate.

— Freedom Florida, Free America (@Randrenn) April 18, 2024

Everyone should watch this debate

— djbowzer (@djbowzer) April 17, 2024

For those who missed it last night, here are some highlights:

Were the Palestinians actually "offered a state"?

Prager and Smith debated what transpired during the Camp David Accords of 2000 between Bill Clinton, Ehud Barak of Israel, and Yasser Arafat of the Palestinian Authority. The event is commonly used to depict the unwillingness of Palestinians to make necessary compromises for the right to establish their own state.

ZH middle-east war debate highlights:

Were the Palestinians actually "offered a state"?

Prager and Smith debated what transpired during the Camp David Accords of 2000 between Bill Clinton, Ehud Barak of Israel, and Yasser Arafat of the Palestinian Authority. The event is… pic.twitter.com/EpH3N7rMPn

— zerohedge (@zerohedge) April 18, 2024

Israel has a "superior" culture to the Middle East?

Does Israel’s comparatively freer society and more prosperous society grant it moral authority over the war in Gaza? Prager pressed the issue to Smith and Uygur: “How’s this that none of you like to talk about? There are 2 million Palestinians in Israel.”

ZH middle-east war debate highlights:

Israel has a "superior" culture to the Middle East?

Does Israel’s comparatively freer society and more prosperous society grant it moral authority over the war in Gaza? Prager pressed the issue to Smith and Uygur: “How’s this that none of… pic.twitter.com/DvHsSz7ioh

— zerohedge (@zerohedge) April 18, 2024

Smith says there have been atrocities on both sides:

“The internet has a permanent memory” pic.twitter.com/vfN4yjRtm2

— Dave Smith (@ComicDaveSmith) April 18, 2024

Cenk vows a tax strike if the US goes to war with Iran!

As the Iran debate heated up, Cenk Uygur said enough is enough when it comes to Middle Eastern wars, making the firm claim that he will refuse to pay taxes if the U.S. “tries to send one of our guys into the Middle East” to “die for Netanyahu.”

ZH middle-east war debate highlights:

Cenk vows a tax strike if the US goes to war with Iran

As the Iran debate heated up, Cenk Uygur said enough is enough when it comes to Middle Eastern wars, making the firm claim that he will refuse to pay taxes if the U.S. “tries to send… pic.twitter.com/frztg5JBTg

— zerohedge (@zerohedge) April 18, 2024

Netanyahu covertly funded Hamas

Smith challenged Prager and Ungar-Sargon on Netanyahu’s covert campaign to fund Hamas for the purpose of undermining a Palestinian state. Both pro-Israel candidates acknowledged the veracity of such reports but claimed Netanyahu “didn’t know” it would lead to October 7.

Prager then went on to claim that Israel does not commit atrocities (outside of wartime). “That is a libel of Israel and it’s dishonest!” he said when Smith stated that both sides have affected “ungodly” atrocities.

ZH middle-east war debate highlights:

Netanyahu covertly funded Hamas

Smith challenged Prager and Ungar-Sargon on Netanyahu’s covert campaign to fund Hamas for the purpose of undermining a Palestinian state. Both pro-Israel candidates acknowledged the veracity of such… pic.twitter.com/25CMjFOiKU

— zerohedge (@zerohedge) April 18, 2024

pic.twitter.com/R937dhVXKi

— Dave Smith (@ComicDaveSmith) April 18, 2024

Watch the full debate below:

Tyler Durden Thu, 04/18/2024 - 14:05

Iran's Oil Exports Climb To The Highest Level In 6 Years

By Irina Slav of OilPrice.com

Crude oil exports from Iran hit the highest level in six years during the first quarter of the year, data from Vortexa cited by the Financial Times has shown.

The daily average over the period stood at 1.56 million barrels, almost all of which was sent to China, earning Tehran some $35 billion.

“The Iranians have mastered the art of sanctions circumvention,” Fernando Ferreira, head of geopolitical risk service at Rapidan Energy Group, told the FT. “If the Biden administration is really going to have an impact, it has to shift the focus to China.”

The news comes as the EU and the United States prepare new sanctions against Iran in a bid to convince Israel to not retaliate against Tehran after the latter’s drone and missile attack on Israeli military targets last weekend.

Iran’s oil industry would be the no-brainer target for new sanctions as suggested by U.S. Treasury Secretary Janet Yellen.

"Clearly, Iran is continuing to export some oil. There may be more that we could do. I don't want to preview our actual sanctions activities, but certainly, that remains in focus as a possible area that we could address," Yellen said earlier this week as quoted by Reuters.

Analysts, however, have told the FT that the Biden administration is reluctant to tighten the sanction noose too much as this would inevitably lead to an increase in oil prices that a president running for re-election cannot really afford in an election year.

Iran is producing record amounts of oil, enabling it to pay for missiles, drones and whatnot, as Biden refuses to enforce Trump's sanctions against Iran oil exports afraid an oil price spike would further crush his approval rating pic.twitter.com/eeX0OnwYBA

— zerohedge (@zerohedge) April 15, 2024

That’s especially relevant in light of the fact that the federal government would hardly be able to repeat the SPR release from 2022 to tame prices at the pump as the reserve sits at the lowest level in 40 years after that 2022 release.

Also, any heavy-handed action against Iran’s oil exports would affect relations with China, which is virtually the only outlet for Iranian crude. That crude, according to the FT, covers a tenth of China’s total oil imports.

Tyler Durden Thu, 04/18/2024 - 13:45

Workers Who Had Their Middle-Class Status Offshored By 40-Years Of Neoliberalism Are Finally Vindicated

By Benjamin Picton of Rabobank

An Eye For An Eye

Treasury yields fell yesterday for the first time this week. The 2-year was down 5.5bps to 4.93%, while Brent crude gave up 3% to be sitting well below the $90/bbl again. Crude is sending some interesting signals. It rose every day in the week of Israel’s suspected attack on an Iranian compound in Syria that killed a senior Quds Force commander. Last week crude vacillated between gains and losses as markets awaited the Iranian response and this week, having ‘bought the rumour’ a fortnight ago, markets appear content to ‘sell the fact’.

That’s not to say that there isn’t another geopolitical shoe yet to drop. It seems very likely that there is. Axios reports that the Israeli war cabinet considered giving the IDF the green light to retaliate on Monday, despite urgings from the White House and the G7 for Israel to do nothing. According to Axios, the decision to strike back is already made, only the timing and the scale remains in question. Israel must now run the calculus on how to extract a price from Iran without overplaying its hand and sparking a multi-front war. Iran has threatened that any attack by Israel could be met with a response that is 10x the scale of the weekend attacks and involving more sophisticated weaponry. Clearly, the stakes are high.

Nevertheless, the price action seems to suggest that markets are untroubled by these reports. Commentary in recent days has variously swung between imminent WWIII (unlikely) and “it’s all just for show” (naïve). The entreaties from G7 leaders for Israel to ‘turn the other cheek’ reveal the extent to which Israel’s position is mis-read in the broader West. The post-protestant instinct of European and American leaders to ‘take the win’ on shooting down the vast majority of Iran’s deadly projectiles is at odds with the Israeli viewpoint.

Israel is THE Jewish state. Bibi - and several members of his war cabinet - are old-covenant kinds of guys. “An eye for an eye and a tooth for a tooth” is more than just a millennia-old theological disposition, it is a security imperative for a country attempting to maintain strategic deterrence while surrounded by foes.

So where does that leave markets? Highly irrational in some respects. Risk premia is being rapidly priced out of the energy complex, despite G7 sanctions on Iran, the threat of interruption in the Strait of Hormuz, and news overnight of new US sanctions on Venezuelan oil. Bear-steepening of the Treasuries curve suggests that markets are much more attuned to the ‘game of basis points’ being played in inflation and policy rate projections, rather than the ‘game of pointing missiles at bases’ being played in the Middle East.

To wit, Fed speakers Bowman and Mester have followed up on Powell’s delayed rate cuts admission of a day ago. Mester – usually a hawk – rolled out the back catalogue by saying that the Fed “need[s] to see more data to be sure of [the] inflation path”. Bowman – a definite hawk – said that “progress on inflation may have stalled” and that “time will tell if policy is sufficiently restrictive.”

That last line makes it sounds as if Bowman doesn’t believe policy is sufficiently restrictive. Is she resigned to the idea of the FOMC erring by keeping the Fed Funds rate unchanged while they cross their fingers and toes that three months of rising inflation is just a bump in the road? Perhaps she’s wise to be wary of assurances that “it’s transitory!”

The Fed isn’t the only central bank with difficult decisions ahead. CPI inflation reports for the UK and New Zealand both threw up concerns yesterday, particularly on the trajectory for services inflation.

New Zealand CPI for Q1 came in at 0.6% q-o-q and 4% y-o-y, which is above the RBNZ’s 3.8% forecast. The services component rose from 4.7% y-o-y to 5.3%, while non-tradable inflation (i.e. inflation generated within the country) rose on a quarterly basis from 1.3% to 1.6%. That means that all of the heavy lifting on the headline rate was done by a larger-than-expected fall in tradeable inflation (-0.7% vs expectations of -0.2% q-o-q) that might actually be transitory, given lag effects for energy and freight prices.

Over in the UK the headline inflation rate fell from 3.4% y-o-y to 3.2% in March. The consensus of the Bloomberg survey was for 3.1%, so this was definitely a miss. The median estimate of surveyed economists on the services component was 5.8%, but the actual result came in at 6%, just one-tick lower than the previous month. Our resident BOE watcher, Stefan Koopman, says that this result – taken in conjunction with the prior day’s labour market data – pretty much rules out a rate cut in May. Stefan expects the BOE to cut in August, with two follow-up cuts later in 2024.

Aussie labor market data released earlier today saw some mean-reversion in the headline employment figures. According to the ABS, Australia shed 6,600 jobs in March after gaining 117,600 in February. Rabobank had been expecting 10,000 jobs to be lost - which puts us equal closest to the pin amongst forecasters - but despite a 1-tick rise, the unemployment rate of 3.8% remained below our forecast (and below the market consensus) because of a fall in participation. All-in-all, it was another strong result for the Aussie labour market that does nothing for the view that Australia will be cutting rates imminently.

Herein lies a developing theme. Stronger-than-expected domestic inflation pressures driven by stronger-than-expected labor market outcomes. Is this likely to change? Not if politicians have anything to do with it. Labor demand in the West is being stoked by fiscal expansion as governments scramble to catch up with China on industrial policy.

Overnight Joe Biden announced a tripling of the 7.5% tariff on Chinese steel and aluminium imports and Mario Draghi gave a speech arguing that “radical change is what is needed”; making the case for Europe to respond to Sino-US protectionism with coordinated industrial policy of its own. According to Draghi, failure to do so will inevitably lead to (further) loss of industry to offshore competitors who provide cheaper energy, lower regulatory burdens and state-subsidies.

Even in small, open economies like Australia the fortress mentality is developing. Prime Minister Anthony Albanese’s ‘A Future Made in Australia’ strategy will be a centrepiece of the upcoming May budget, with new government support for green energy, minerals processing and defence. Treasurer Chalmers says that the budget will contain “significant new public investments”, but that there will also be a heavy emphasis on attracting private investment. That sounds similar to Draghi’s contention that government will call the tune, but the private capital will need to be mobilized to cover the investment gap (see Erik-Jan van Harn’s recent report on France’s over-stretched public finances here).

So, real production is back in vogue, and the workers of developed countries who had their middle-class status offshored by 40-years of neoliberalism are vindicated. But talking is much easier than doing, especially when you lack the infrastructure, the expertise or the labor supply to re-industrialize. If the West is serious about responding to security threats and hostile trade practices with ‘an eye for an eye’ in an environment of real constraints, hard decisions will need to be made on how to allocate scarce labour and capital. THAT will be a huge departure from the pre-Covid paradigm.

Tyler Durden Thu, 04/18/2024 - 13:05

SAAB CEO Says Rising War Risk Drives Defense Spending; Missile Stocks In Bull Market  

Let's start with these five most recent headlines that show why defense spending needs to increase in a world evolving into a multi-polar state marked by conflict and uncertainty:

• World Stumbles Into "More Dangerous Decade" As Defense Spending Soars, Says Military Think Tank

• Germany Reportedly Goes On Military Spending Spree To Hit NATO Spending Minimums For First Time

• Lockheed Martin Wins $17BN Interceptor Contract To Protect US Homeland

• German Tank Builder Says "New Decade Of Security Policy Begins" As Defense Bull Market Roars

Saab CEO Micael Johansson, who spoke with Bloomberg TV on the sidelines of the European Defence & Security summit in Brussels on Wednesday, expanded more on the risks of escalating conflict in Eastern Europe and the Middle East and how uncertainty will drive defense spending higher. 

Bloomberg's Oliver Crook asked Saab CEO Johansson: "I just want to start with the sort of latest developments that we saw from Iran and Israel and the attacks. Do you think that that is going to encourage even more spending, or do you think it changes things in the defense industry, or is this more of the kind of story that we've been seeing unfold?" 

Johansson responded, "Well I think it's um the political focus on what sort of where the threat environments is in the world will of course change a bit. I'm more worried that the the focus on the war in Ukraine will sort of disappear and that uh that wouldn't be good." 

"I think all tensions, all threat environments, and the political tensions that happen now will definitely drive defense spending. It's hard to say whether this sort of what's happening in the Middle East now will ultimately result in even more defense spending. But I think right now, the focus on Ukraine versus the Middle East is worrying me," he continued. 

Crook then asked: "It's hard to get exact figures on this, but I saw some reporting saying that you know - much has been made as Israel's very successfully shooting down these 300 drones and missiles - though the cost approximate associated with that was sort of $600 million. And I saw that's 2 million per drone - and the economics of that if you have a prolonged conflict doesn't really work. So, as a defense company, how do you think about this? How do you solve that problem?" 

Before Johansson responds, let's introduce readers to Saab, a Swedish aerospace and defense company that supplies NATO countries and allies with missiles and bombs. Some of those weapons include anti-ship missiles, anti-drone missiles, and anti-tank missiles. 

Back to Johansson's response: "You have to take them out with the systems you have, but over time this will change. I think it'll become more efficient, and we're all putting research into this." 

He also reiterates that Europe must boost its military-industrial complex manufacturing capacity to reduce its reliance on weapon imports from outside the EU. 

Here's the interview. 

Early this year, military think tank International Institute of Strategic Studies said global defense spending jumped 9% to a record $2.2 trillion in 2023, driven mostly by heightened geopolitical tensions caused by the Russia-Ukraine conflict. 

In March, former Allied Commander at NATO, Adm. James Stavridis, told Goldman Sachs' Allison Nathan, "In my career, I've never seen a higher level of maritime risk than I do today. That owes first and foremost to the return of great power competition, which we thought was basically over when the Soviet Union collapsed." 

And now, risks of further escalation between Israel and Iran have driven global defense stocks to fresh record highs.  

Johansson is correct. The defense industry is in a bull market. War = moar money for the military-industrial complex. 

Tyler Durden Thu, 04/18/2024 - 12:45

New Study Calls Into Question Whether DEI Programs Really Boost Corporate Earnings

Authored by Jonathan Miltmore via The Epoch Times (emphasis ours),

It’s safe to say that diversity, equity, and inclusion (DEI) is one of the more controversial ideas of our time (and a multibillion-dollar industry).

(Benjamin Child/Unsplash.com)

Some, such as Elon Musk, argue that DEI—which, definitionally speaking, means addressing structural inequalities in society—constitutes blatant racism. Others contend that DEI is simply about creating more equitable and harmonious workplaces and offers clear financial benefits to companies as well.

“Study after study has proved that diverse companies perform better than their more homogeneous counterparts,” Inc. reported in 2023. “Companies that don’t foster an inclusive environment or prioritize diversity initiatives do so at their own peril.”

“Proved” is a heavy (and inaccurate) word here, but Inc. isn’t wrong about the abundance of evidence showing that DEI initiatives make companies more profitable. Between 2015 and 2023, McKinsey & Co., a multinational strategy and management consulting firm, released four separate studies showing that DEI initiatives boost corporate earnings. Unfortunately for DEI advocates, the research appears to be bunk.

A new study published in Econ Journal Watch, a semiannual peer-reviewed academic journal, shows that researchers were unable to replicate the results of all four McKinsey studies.

“Our results indicate that despite the imprimatur often given to McKinsey’s 2015, 2018, 2020, and 2023 studies, McKinsey’s studies neither conceptually ... nor empirically ... support the argument that large US public firms can expect on average to deliver improved financial performance if they increase the racial/ethnic diversity of their executives,” professors John R.M. Hand and Jeremiah Green found.

This is not the only research that shows that DEI initiatives are not the panacea for corporate earnings that supporters claim them to be. Writing in the Harvard Business Review, Robin J. Ely, a professor of business administration at Harvard, and David A. Thomas, president of Morehouse College, pointed out that “the rallying cries for more diversity in companies” are not supported “by robust research findings.”

Ms. Ely and Mr. Thomas said, “We say this as scholars who were among the first to demonstrate the potential benefits of more race and gender heterogeneity in organizations.”

The idea that all these studies showing clear financial benefits to DEI are rubbish might be shocking to some readers, but it’s a familiar academic pattern. For more than a decade, scholars and media have publicly worried about the “replication crisis” in science. It turns out that an astonishing number of findings in various fields—from psychology and economics to sociology, medicine, and beyond—fail to hold up when other researchers attempt to replicate the findings, as Vox has explained.

None of this is to say that diversity and inclusion are inherently bad, of course.

I value diversity and am an inclusive person, and I encourage others to be the same. It’s the means that we choose to achieve diversity and inclusion that is the problem, as well as that word wedged in between them: equity. To many, advancing social equity is a paramount value. Because of this, many support illiberal means (in the classical sense) to achieve this end—including supporting policies that actively discriminate on the basis of race.

Coleman Hughes, a fellow at the Manhattan Institute and author of “The End of Race Politics,” recently appeared on “The View” and offered a better approach.

“My argument is that we should try our very best to treat people without regard to race, both in our personal lives and our public policy,” Mr. Hughes told the hosts (who accused him of being “co-opted” by the right).

He is right to say that this is the North Star that we should be aiming for: the equal treatment of all people regardless of race or class.

The great orator and abolitionist Frederick Douglass saw that such a view is the true path to progress.

“In a composite nation like ours, as before the law, there should be no rich, no poor, no high, no low, no white, no black, but common country, common citizenship, equal rights, and a common destiny,” Mr. Douglass noted in a speech in 1867.

The ethos of DEI runs counter to this, which is precisely why both the concept and the industry should be scrapped. A good place to start would be to dispense with the fiction that DEI programs are a rainbow leading to a pot of gold in corporate profits.

Originally published by the Washington Examiner

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 Thu, 04/18/2024 - 12:25

Biden's 'Punishing' Iran Sanctions For Israel Attack End Up Being Meek Political Smokescreen

President Biden has unveiled the administration's promised new sanctions on Iran targeting the country's drone, steel and automotive industries, which is 'punishment' in response to the unprecedented Saturday overnight Iranian ballistic missile and drone attack against Israel.

Biden's Thursday statement presented the sanctions as part of his vow to help defend Israel and all about "holding Iran accountable". Biden touted that during the weekend attack, "Together with our allies and partners, the United States defended Israel."

"The sanctions target leaders and entities connected to the Islamic Revolutionary Guard Corps, Iran’s Defense Ministry, and the Iranian government’s missile and drone program that enabled this brazen assault," he said, also emphasizing that G7 partners are committed to "acting collectively to increase economic pressure on Iran." 

Washington Post/Getty Images

This is toward restricting "Iran's destabilizing military programs" and to utilize sanctions "that further degrade Iran’s military industries." But at the same time US have officials have reportedly been warning Israel behind the scenes that it should not pursue a military strike against Iran. 

Other Western allies, including Germany and the UK, have taken the US stance of wanting to cool any potential escalation which could spiral to major regional war. Prime Minister Netanyahu on Wednesday said he was receiving "all kinds of suggestions and advice," but Israel will nevertheless "make our own decisions, and the State of Israel will do everything necessary to defend itself."

A fresh Thursday statement from US Treasury said the new Iran sanctions are being coordinated with Britain, particularly measures which target the Islamic Republic's drone program.

"We're using Treasury's economic tools to degrade and disrupt key aspects of Iran's malign activity, including its UAV program and the revenue the regime generates to support its terrorism," said Treasury Secretary Janet Yellen. According to details revealed thus far the sanctions target 16 individuals and two entities overseeing Iran's drone production, per Axios:

• Five companies that provide materials for "Iran's Khuzestan Steel Company (KSC)," will also be listed, according to the release.
• In addition, three subsidiaries of the Bahman Group, an Iranian automaker, will also be sanctioned.

But so far it doesn't look like new sanctions on Iranian oil are on the table, which will no doubt result in further Republican anger that Biden has been more worried about gasoline prices (and his own re-election chances) than Israel's security.

In the background is also the last September decision of the White House to release some $6 billion in Iranian oil revenue in exchange for the release of some hostages that were held in Iranian prisons. Critics point out that Biden could hit Tehran's military funding where it really hurts, but is intentionally turning a blind eye - specifically regarding China's massive and ongoing purchases of Iranian oil.

I don't think the word "oil" is in there | #OOTT https://t.co/iHrMZbbKwO

— Javier Blas (@JavierBlas) April 18, 2024

The Wall Street Journal also took a swipe at the administration this week:

Treasury Secretary Janet Yellen said Tuesday that "all options" are on the table to disrupt Iran’s terror financing. Great, and we hope this means the Administration will welcome the 383-11 vote in the House Monday to expand sanctions against Chinese financial institutions that buy Iranian oil.

It's no secret the White House has been reluctant to stiffen sanctions against Iranian oil lest prices rise before the November election. The Administration has looked the other way as Chinese “teapot” refineries have imported an increasing amount of Iranian crude at a discount.

Meanwhile Iran's oil exports are at a six-year high, as FT points out: "Iran is exporting more oil than at any time for the past six years, giving its economy a $35bn-a-year boost even as western countries discuss stepping up sanctions in response to its attack on Israel."

The awkward political dance by the administration is basically summed up in this:

Iran is producing record amounts of oil, enabling it to pay for missiles, drones and whatnot, as Biden refuses to enforce Trump's sanctions against Iran oil exports afraid an oil price spike would further crush his approval rating pic.twitter.com/eeX0OnwYBA

— zerohedge (@zerohedge) April 15, 2024

Yellen alluded to "all options" on Tuesday, and yet Thursday's formal announcements on anti-Iran sanctions curiously leave out anything regarding oil. "Clearly, Iran is continuing to export some oil. There may be more that we could do. I don't want to preview our actual sanctions activities, but certainly, that remains in focus as a possible area that we could address," Yellen had said.

But Republicans are expected to do something about this, in the form of stuffing Iran oil sanctions into the House foreign aid package that House Speaker Mike Johnson is looking to bring to a vote. Senator James Risch of Idaho was cited in Bloomberg as saying "The pot’s boiling right now" as there are "discussions in the two houses to include some of those kinds of things in this package that will hopefully pass out of the House."

Tyler Durden Thu, 04/18/2024 - 12:05

Existing Home Sales Plunged (Again) In March... But Prices Continue To Rise

After the collapse in housing starts and permits in March, it is no surprise that existing home sales disappointed in the same month, dropping 4.3% MoM (-4.1% exp) after surging 9.5% in February. That is the biggest drop since Nov 2022.

Sales were down almost 10% from a year earlier on an unadjusted basis, as sales of both single-family homes and condominiums and co-ops dropped.

Source: Bloomberg

This dragged total existing home sales SAAR back down to 4.19mm...

Source: Bloomberg

"Though rebounding from cyclical lows, home sales are stuck because interest rates have not made any major moves," said NAR Chief Economist Lawrence Yun.

"There are nearly six million more jobs now compared to pre-COVID highs, which suggests more aspiring home buyers exist in the market."

...and it's about to get worse...

Source: Bloomberg

Total housing inventory registered at the end of March was 1.11 million units, up 4.7% from February and 14.4% from one year ago (970,000). Unsold inventory sits at a 3.2-month supply at the current sales pace, up from 2.9 months in February and 2.7 months in March 2023.

“More inventory is always welcomed in the current environment,” Yun said.

“It’s a great time to list with ongoing multiple offers on mid-priced properties and, overall, home prices continuing to rise.”

All price levels saw sales decline except $1mm+...

The median selling price increased 4.8% from a year ago to $393,500, the highest for any March on record.

Source: Bloomberg

...and existing home prices are about to top new home prices...

Source: Bloomberg

First-time buyers made up 32% of purchases in March, up from 26% a month earlier.

Tyler Durden Thu, 04/18/2024 - 10:12

"Yikes": Impeachment 'Whistleblower' Was In The Loop Of Biden-Ukraine Affairs That Trump Wanted Probed

Authored by Paul Sperry via RealClear Wire,

The ‘whistleblower’ who sparked Donald Trump’s first impeachment was deeply involved in the political maneuverings behind Biden-family business schemes in Ukraine that Trump wanted probed, newly obtained emails from former Vice President Joe Biden’s office reveal.

In 2019, then-National Intelligence Council analyst Eric Ciaramella touched off a political firestorm when he anonymously accused Trump of linking military aid for Ukraine to a demand for an investigation into alleged Biden corruption in that country.

But four years earlier, while working as a national security analyst attached to then-Vice President Joe Biden’s office, Ciaramella was a close adviser when Biden threatened to cut off U.S. aid to Ukraine unless it fired its top prosecutor, Viktor Shokin, who was investigating Ukraine-based Burisma Holdings. At the time, the corruption-riddled energy giant was paying Biden’s son Hunter millions of dollars.

Those payments – along with other evidence tying Joe Biden to his family’s business dealings – received little attention in 2019 as Ciaramella accused Trump of a corrupt quid pro quo. Neither did subsequent evidence indicating that Hunter Biden’s associates had identified Shokin as a “key target.” These matters are now part of the House impeachment inquiry into President Biden.

“It now seems there was material evidence that would have been used at the impeachment trial [to exonerate Trump],” said George Washington University law professor Jonathan Turley, who has testified as an expert witness in the ongoing Biden impeachment inquiry. “Trump was alleging there was a conflict of interest with the Bidens, and the evidence could have challenged Biden’s account and established his son’s interest in the Shokin firing.”

Ciaramella’s role – including high-level discussions with top Biden aides and Ukrainian prosecutors – is only now coming to light thanks to the recent release of White House emails and photos from the National Archives.

The emails show Ciaramella expressed shock – “Yikes” is what he wrote – at Biden’s move to withhold the $1 billion in aid from Kyiv, which represented a sudden shift in U.S. policy. They also show he was drawn into White House communications over how to control adverse publicity from Hunter taking a lucrative seat on Burisma’s board.

Yet there is no evidence Ciaramella raised alarms about the questionable Biden business activities he witnessed firsthand, which is in sharp contrast to 2019. In that instance, he was galvanized into action after being told by White House colleague Alexander Vindman of an “improper” phone call between President Trump and Ukrainian President Volodymyr Zelensky. During the call, Trump solicited Zelensky’s help in investigating Burisma and Hunter Biden’s role in the company.

Some former congressional investigators say Ciaramella effectively helped cover up a scandal far worse than what Trump was impeached over. What’s more, he failed to disclose that he had a potential conflict of interest stemming from his connection to the matter Trump asked Zelensky to probe when he lodged his complaint against Trump. RealClearInvestigations was the first to identify the then-33-year-old Ciaramella as the anonymous impeachment “whistleblower,” something major media continue to keep under tight wraps.

Ciaramella worked under CIA Director John Brennan when President Obama made Biden his point man on Ukraine in 2014, the same year Burisma hired Hunter. The next year, the CIA detailed Ciaramella, a longtime advocate for aid to Ukraine, to the White House, where he worked closely with Biden and his staff as a top adviser on key Ukrainian policies. After Biden left office, he stayed on at the GOP White House until mid-2017 even though he’s a Democrat, working as a Ukrainian and Russian analyst on Trump’s National Security Council. Co-workers there accused him of trying to sabotage Trump, including allegedly leaking sensitive information to the press.

RealClearInvestigations has reviewed more than 2,000 pages of newly disclosed archived emails from the former vice president’s office related to Ukraine, of which more than 160 contained references to Ciaramella. They reveal that his role advising Biden’s office potentially intersects with the current impeachment inquiry in several areas. Chiefly, Ciaramella focused on aid to Ukraine and anti-corruption reforms in the country. In that capacity, he:

• Hosted, cleared into the White House, and met face-to-face there with senior Ukrainian prosecutors.
• Gave a “readout” of the meeting to his superiors, who in turn pushed for Shokin’s firing.
• Traveled with Biden to Kyiv during the 2015 trip during which Biden demanded Shokin’s firing.
• Wrote media “talking points” for Ukrainian officials.
• Huddled with the top Biden officials involved in discussions concerning the $1 billion aid package and Shokin, including: Amos Hochstein; Victoria Nuland; Geoffrey Pyatt; Bridget Brink; and Michael Carpenter.
• Corresponded with Biden officials coordinating responses to negative media reports about Hunter’s cushy and controversial Burisma job.

Former Obama-Biden administration officials have confirmed in recent closed-door congressional testimony that Ciaramella was a key part of Biden’s process for making policy in Ukraine. In 2016, for instance, a White House photo shows him taking notes at a White House meeting Biden held with then-Ukrainian Prime Minister Arseniy Yatsenyuk to discuss Ukraine’s anti-corruption reforms and other issues.

Ciaramella also worked directly with top Obama and Biden administration diplomats on Ukraine, including senior State Department official Victoria Nuland. “Eric was regularly the clearing authority to get me into the White House for interagency meetings on Ukraine,” Nuland revealed in a 2020 Senate deposition. Asked if she ever discussed Ukraine policy and Shokin with Ciaramella, Nuland testified: “Of course, I did. He was part of the interagency process. He was also on my negotiating team for the six, seven rounds of negotiations I did with the Russians on [the disputed Ukraine region] Donbas.”

Ciaramella was directly involved in talks concerning the massive U.S. aid package to Ukraine that Biden conditioned on the removal of Shokin, who at the time had seized the assets of the corrupt Burisma oligarch employing Hunter Biden. He also arranged and participated in White House talks with Ukrainian prosecutors visiting from Shokin’s office.

White House visitor logs confirm Ciaramella escorted Shokin’s deputy prosecutor, David Sakvarelidze, into the White House for a January 2016 meeting. A White House agenda for the meeting lists Ciaramella as “point of contact” for the Ukrainian delegation. He also checked in Andriy Telizhenko, the Ukrainian Embassy official who says they discussed Burisma and Hunter Biden during the meeting and struggled to understand why his U.S. counterparts were suddenly hostile to Shokin after praising him in earlier talks.

Emails from the time show Ciaramella appeared surprised to hear about the linkage between the $1 billion loan to Ukraine and the dismissal of Shokin. Though Biden maintains he insisted Kyiv oust Shokin because he was too soft on weeding out fraud in entities that included Burisma, Ciaramella suggested he didn’t share the view that Shokin was corrupt. “We were super impressed with the group,” Ciaramella added, “and we had a two-hour discussion of their priorities and the obstacles they face.”

On Jan. 21, U.S. Ambassador to Ukraine Geoffrey Pyatt emailed Ciaramella and other White House aides an article from the Ukrainian press – “U.S. loan guarantee conditional on Shokin’s dismissal.”

“Yikes. I don’t recall this coming up in our meeting with them,” Ciaramella replied, referring to the White House meeting he hosted with top Ukrainian prosecutors.

But in a closed-door 2020 deposition before the Senate, Pyatt sounded skeptical that Ciaramella was in the dark about the decision. “I think you have to ask Eric what he meant by ‘Yikes,’” Pyatt told Senate investigators. He said that he believed conditioning the loan guarantee on Shokin’s removal “obviously came up in those meetings” hosted by Ciaramella, suggesting that Biden’s aide knew of the quid pro quo before Pyatt circulated the article about it from the Ukrainian press.

The day before he hosted the Ukraine prosecutors, Ciaramella received an agenda from a State Department official that asked him to “note the importance of appointing a new PG [Prosecutor General], reiterating that Shokin is an obstacle to reform,” according to emails. The agenda also called on Ciaramella to “ask the del [Ukrainian delegation] what high-level cases are on the docket for prosecution,” which raises suspicions in some quarters that Biden’s advisers were fishing for information about Shokin’s plans for prosecuting Burisma oligarchs, something Hunter Biden had been asked to find out.

In a Jan. 21 email, Pyatt told Ciaramella to “buckle in” because, as he later explained to Senate investigators, the deal was a “difficult issue” and “there was going to be political controversy around this [news].”

The former ambassador demurred when asked if conditioning the $1 billion on Shokin’s firing was Biden’s idea or came from his office. “It was the – our interagency policy,” he testified, adding, “I don’t remember when the vice president would have weighed in on this.”

However, Pyatt allowed that it was a sudden change in policy. “At the beginning,” he said, “it was not our expectation that Shokin’s removal would be necessary.” Indeed, an Oct. 1, 2015, memo summarizing the recommendation of the Interagency Policy Committee on Ukraine stated, “Ukraine has made sufficient progress on its [anti-corruption] reform agenda to justify a third [loan] guarantee.” Ciaramella was a member of the IPC task force, which monitored Shokin’s office. The next month, moreover, the task force drafted a loan guarantee agreement that did not call for Shokin’s removal. Then, in December, Joe Biden flew to Kyiv to demand his ouster.

If what Ciaramella expressed in his email (which he knew would be part of archived White House records) was a genuine reaction, it appears that Vice President Biden went against the recommendation of one of his top NSC advisers on Ukraine. If Ciaramella were genuinely alarmed, he might have blown the whistle on his boss like he did on Trump, but he stayed mum. If, on the other hand, Ciaramella were a party to the quid-pro-quo discussions, as Pyatt suggests, then he had “a direct conflict,” noted Derek Harvey, the former congressional investigator involved in the first impeachment. Either way, Ciaramella clearly found himself in the middle of a major controversy.

Just weeks prior, White House photos indicate that Ciaramella traveled with Biden on the same December 2015 Air Force Two flight the vice president took to Kyiv to threaten Ukrainian President Petro Poroshenko to ax Shokin. Republicans have accused Biden of pushing Shokin’s ouster to block scrutiny of his son’s actions.

“Biden called an audible and changed U.S. policy toward Ukraine to benefit his son on the plane ride to Ukraine,” House Oversight Committee Chair James Comer said, and “later bragged about withholding a U.S. loan guarantee if Ukraine did not fire the prosecutor [Shokin].”

Biden and his supporters have repeatedly claimed Shokin had to go because he wasn’t cracking down on corruption and that everyone else in the administration, as well as Europe, agreed Shokin should be fired. This remains the prevailing narrative in major U.S. media. But around that time, Shokin had conducted a raid of Burisma oligarch Mykola Zlochevsky’s home, seizing his house, cars, and other assets.

IRS Special Agent Joseph Ziegler, who examined Hunter’s emails as part of his investigation of Hunter for tax evasion, said Shokin was identified as a “key target” in emails exchanged between Hunter and Burisma officials in November 2015 – the month before Biden traveled to Ukraine to demand Shokin’s removal. Just days before Biden arrived in Kyiv in early December 2015 to demand Shokin’s ouster, Hunter allegedly called his father from Dubai following a meeting there with Burisma official Vadym Pozharskyi, who asked him to pressure his father to shut down Shokin’s investigation. Vice President Biden was familiar with Pozharskyi, having met with him in April 2015 during a dinner at the Cafe Milano in D.C. arranged by Hunter.

“The unstated goal was to have the Ukrainian prosecutor removed in an effort to close the criminal case against [Burisma founder] Zlochevsky,” Ziegler said in recent testimony before the House impeachment inquiry. After Shokin was pushed out of office, the Burisma investigation dried up.

Ciaramella tried to marshal a defense for Biden in the whistleblower complaint he sent to Rep. Adam Schiff in August 2019. He listed among Trump’s concerns at the time of the fateful July phone call “that former Vice President Biden had pressured Poroshenko in 2016 to fire Shokin in order to quash a purported criminal probe into Burisma Holdings.” But Ciaramella attempted to pour cold water on the notion by referencing a Bloomberg News article that quoted a “former senior Ukrainian prosecutor” who falsely claimed “that Mr. Shokin in fact was not investigating Burisma at the time of his removal in 2016.”

White House emails reveal that Ciaramella was looped into messages sent by Biden’s communications team, who were concerned that Hunter Biden taking a position on corrupt Burisma’s board created unseemly optics and undercut their boss’ mission to clean up corruption in Ukraine.

In a Dec. 8, 2015, email, for example, Biden’s communications director Kate Bedingfield copied Ciaramella on a link to a New York Times article headlined, “The Knotty Ties Between Joe Biden, His Son and Ukraine.” Bedingfield is quoted in the story, authored by James Risen, denying Hunter had traveled with his father to Ukraine in an attempt to downplay his influence. She also said Ukrainian officials never raised his position on the Burisma board with Biden as an issue of concern. Risen got spun, however, on the issue of compensation for Hunter, reporting that it was “not out of the ordinary.”

At the time, Burisma was paying Hunter, who had no energy sector experience, $1 million a year just for lending his name to its board. It turns out that Hunter never traveled to Ukraine for a single meeting in the five years he sat on Burisma’s board. Republicans suspect Biden got the prosecutor ousted to keep the money flowing from Burisma to the Biden family.

Career State Department officials led by George Kent, who was stationed in Ukraine at the time, tried to get Biden’s aides to raise the issue of potential family conflicts with the vice president. Despite their concerns, Biden never asked his son to step down from the Burisma board, which would have made all questions go away. And despite Kent and other officials identifying Burisma founder Zlochevsky by name as a corrupt actor in Ukraine, Biden himself never publicly called Zlochevsky out as corrupt while Hunter served on his board and pocketed millions in payments from him. For all his talk of fighting corruption in Ukraine, Biden failed to distance himself from one of the most corrupt oligarchs in the country.

Harvey, who served as the staff investigator for the Republican side of the House Intelligence Committee during the 2019 Trump impeachment hearings, said: “The [Biden] impeachment inquiry should compel Ciaramella to testify since we now know he was involved in communications about Biden using the $1 billion in aid to extort Ukraine into firing Shokin.”

Harvey said Ciaramella would make a valuable material witness against Biden in the probe, which centers on whether Biden used his White House clout or political influence on behalf of his son’s foreign paymasters. White House photos indicate Ciaramella took notes during his meetings with Biden, his staff, and Ukrainian officials – materials that lawmakers could subpoena along with his testimony.

Another former staff investigator noted that Ciaramella is no longer protected by federal whistleblower laws. He has left the government and now works as a senior fellow focusing on Ukraine and Russia for the Carnegie Endowment for International Peace in Washington, where he is consulting with White House officials and pushing for billions more in U.S. aid for Ukraine – including “a Marshall Plan for the Ukrainian military.” Through a spokesperson, Ciaramella declined to comment.

“None of the whistleblower protections apply to this particular situation,” said Jason Foster, former chief investigative counsel for the Senate Judiciary Committee and a whistleblower expert. He also noted that the Whistleblower Protection Act doesn’t shield whistleblowers from any other conduct they might have been involved in, including their own conduct. Nor does it give them a legal right to anonymity.

A spokeswoman for the House Oversight Committee, which is leading the Biden impeachment inquiry, declined to say whether Ciaramella is on the witness list. “I don’t have anything for you on this at this time,” said House Oversight Communications Director Jessica Collins. However, Comer has publicly described the “whistleblower” impeachment of Trump as a “cover-up” operation for the alleged Biden blackmail scheme in Ukraine involving U.S. aid and the Burisma corruption probe.

What Ciaramella witnessed and what he documented in notes he took during high-level Biden-Ukraine meetings could now be relevant to the active impeachment inquiry of President Biden. The House may have little choice but to hold the kind of hearings the Democrats blocked during the earlier impeachment by keeping Ciaramella’s identity – and his own potential conflict – secret.

As the catalyst for Trump’s impeachment, Ciaramella could now be a reluctant witness for Biden’s.

Tyler Durden Thu, 04/18/2024 - 09:25

Apple's Dominance On Watch: Huawei Unveils New Smartphone Lineup With Advanced Chip 

China's smartphone market has stumbled into a downturn as economic woes turn consumers cautious. At the same time, consumers are ditching Apple's new iPhone 15 and have embraced domestic brands.

Huawei Technologies Co. is one of those domestic brands that gained popularity with Chinese consumers last fall when it released its 'Made-in-China' Mate 60, which helped erode Apple's market dominance in high-end handsets. 

Now, Huawei has announced, first published on its corporate WeChat account, that the company plans to release a new smartphone called the "Pura 70" to compete with iPhone 15 models. 

On April 18, 2012, Huawei's first P series mobile phone was launched. Over the past twelve years, hundreds of millions of consumers have captured countless wonderful moments with P series mobile phones. With everyone's company and support, HUAWEI P series has been fully upgraded to HUAWEI Pura, starting again with a new attitude! Today, we launched the "HUAWEI Pura 70 Series Pioneer Plan". Pura 70 Ultra and Pura 70 Pro will go on sale at 10:08 Pioneer. Everyone is welcome to try it!

Here are the starting prices for the Pura lineup: 

• Pura 70: 5,499 yuan
• Pura 70 Pro: 6,499 yuan
• Pura 70 Pro Plus: 7,999 yuan
• Pura 70 Ultra: 9,999 yuan

The iPhone 15 in China starts at around 5,999 yuan, while the iPhone 15 Pro Max starts at 9,999 yuan - yet a sign Huawei is directly challenging Apple. 

According to Bloomberg, the Pura lineup has a domestic Kirin 9010 chipset. This comes after Chinese state media lauded the made-in-China Kirin 9000s inside the Mate 60 Pro in the fall that circumvented Biden's chip bans. 

Huawei's resurgence in the world's largest smartphone market is a troubling sign as Apple's dominance wanes. 

Tyler Durden Thu, 04/18/2024 - 09:05

It's Time To Pay Attention To Funding Risks Again

Authored by Simon White, Bloomberg macro strategist,

The risk of a squeeze in US funding markets is increasing as the yield curve bear steepens, i.e. longer-term yields rise more than short-term ones. More attractive bill yields and climbing interest-payment costs on government debt are depleting reserves and reducing their velocity, increasing the chance of a disorderly upswing in funding rates, as well as posing a risk to the stock market.

The bond market intimidates everybody, in the oft-cited words of Bill Clinton’s chief strategist James Carville. That description is apt today as rising yields reverberate across the financial system. Funding risks are intensifying again, increasing the chance of a rate-volatility driven correction in stocks.

Concerns about funding issues have been in abeyance for most of this year, but it is time to sit up and take notice again as the backdrop becomes more pernicious. The bear steepening of the yield curve is a double whammy, accelerating the rate of reserve depletion through a declining reverse repo facility (RRP) and rising government interest payments.

The curve has been bear steepening in the 3-12 month versus 10-year sectors as inflation fears drive term premium higher, with the measure now close to levels last seen in 2008 (using tradeable forward OIS rates rather than “academic” term premium).

A bear steepening is particularly problematic in the current set-up.

First note that the RRP has been hugely important in keeping risk assets supported despite the fastest rate-hiking cycle for decades and ongoing QT.

The Treasury’s decision to pivot issuance toward short-term bills allowed money market funds (MMFs) to tap the more than $2.5 trillion liquidity idling in the RRP to fund the government. That prevented enormous public issuance crowding out other assets, and allowed the rally in stocks and bonds to continue.

But the RRP falling and eventually going to zero is a harbinger total reserves overall are potentially nearing their so-called lowest comfortable level — with estimates for the LCLoR ranging from about $2.5 to $3 trillion — where abrupt and acute funding problems become more likely. This week the domestic RRP fell as low as $327 billion, and is now at $440 billion, the lowest levels it has reached since June 2021, taking the sum of reserves and the RRP to just over $4 trillion.

The RRP has been declining as six-month and 12-month bill yields have been rising in response to the market reducing the number of rate cuts expected from the Fed, making bills more attractive to MMFs relative to the RRP facility.

Some of the RRP’s recent fall has also likely been driven by seasonal tax payments. But that should not mask the clear downwards trend in the facility and its rising volatility. It would not be the first time that a telegraphed non-risk becomes a real risk precisely because peoples’ guards are down.

That’s potentially the case today. As I noted in a column earlier this year, a portent of previous funding episodes was a sharp drop in funding volumes immediately preceding a rapid rise in them, similar to a tsunami wave. As the chart below shows, when the total amount of reserves + RRP declines, volumes in fed funds (i.e. reserves) tend to also decline.

Further falls in fed funds volumes would be a sign that funding problems are potentially fomenting.

Rising longer-term yields are the other side of the coin in the bear steepening. The US government’s interest-rate bill is climbing rapidly, and is now over $1 trillion on an annual basis. This is set to grow much higher.

The 10-year yield gives us a near real-time barometer for the US’s annual interest expense. The recent rise in yields projects the expense will soon double to almost 5% of total debt outstanding, or over $1.7 trillion - i.e. about the GDP of Australia each year in interest.

Here lies the rub: to pay that interest, the government needs to tax and borrow. But that is an ever-greater drain on reserves and their velocity, accentuating the effects of the Fed’s ongoing QT program.

You might ask why that is the case given the interest is paid to bond holders and is therefore re-injected into the economy?

But that’s unlikely to be so for two reasons.

• The first is that the corporate and household sectors, the two most likely to spend interest back in the domestic economy, together only account for about 10% of UST holdings. The much larger financial and foreign sectors are more likely to save the proceeds, or spend them abroad.

• Second, reserves that end up as savings are of lower velocity, especially if they were originally higher-velocity bank deposits used to pay taxes. The more that interest payments percolate through the system, the more they end up with holders who have an increasingly lower propensity to spend them.

Thus a bear steepening squeezes the RRP and outstanding reserves — as well as their velocity — in a pincer movement, increasing the risk of a funding episode.

The last such major squeeze was in September 2019. It’s notable that in the days running up to that, the yield curve was bear steepening (in fact, it was in the top 1% of eight-day rises for the 2s10s curve going back 2000).

The bear steepening therefore means we should once again be vigilant to funding risks, and keep a close eye on the Funding Stress Trigger shown below.

The signal is inactive at the moment and the SOFR rate is currently well-behaved, but that can change quickly. In the last two major funding flare ups in 2018 and 2019, there were very few signs of what was to come, with the signal triggering only a few days before rates started to spike higher.

Funding stress would also be likely to increase rate volatility, which in turn would lead to higher stock-index correlation. That means a higher VIX, increasing the likelihood of a market correction as the stock perpetual motion machine shudders to a halt.

The potential risks, of course, may not come to pass, and funding markets continue to operate smoothly. But there are enough ex ante reasons to justify heightening one’s senses. The bond market may be intimidating, but a bear-steepening yield curve in the current market set-up is especially menacing, and should be watched closely.

Tyler Durden Thu, 04/18/2024 - 08:45

Jobless Claims Remains Deader Than Joe Biden's 'Uncle Bosey'

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

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

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

The number of Americans filing for jobless benefits for the first time last week was unchanged at 212k (SA), basically flat since September of last year, and claims ticked modestly lower on an NSA basis...

Source: Bloomberg

Continuing Claims remains muted (elevate but muted) at 1.812mm Americans. It is now practically unchanged since August 2023...

Source: Bloomberg

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

Source: Bloomberg

Ah, Bidenomics!!

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

Tyler Durden Thu, 04/18/2024 - 08:37

Senate Can Stop Expansion Of Government Surveillance

Authored by Bob Goodlatte & Mark Udall via RealClear Wire,

When the U.S. House passed the Reforming Intelligence and Securing America Act (RISAA), which reauthorizes the FISA Section 702 surveillance authority, it overlooked something big – an amendment that would drive the greatest expansion of government surveillance authority in recent history. The Senate has time to correct this and restore balance between the needs of national security and the safeguarding of Americans’ civil liberties.

Section 702 of the Foreign Intelligence Surveillance Act is a legal authority enacted by Congress to enable the surveillance of foreign threats located abroad. But it has increasingly become a means of surveilling Americans located within the United States whose communications are often caught up in the government’s global trawl of data. Section 702 authority has been used millions of times in recent years to query, or target, Americans’ communications. In the House, reformers proposed an amendment to add a warrant requirement before the government can query a U.S. person’s data. That amendment, which failed in a tie vote, was the primary focus of debate on the bill.

As RISAA comes to the Senate, attention is now being cast on another amendment – one from the House Permanent Select Committee on Intelligence (HPSCI) that many have come to call the “Everyone’s a Spy” provision. This measure was portrayed  as a “narrow” definitional change to the law concerning electronic communications service providers – big telecom and Internet companies – which obligated them to cooperate with NSA surveillance. These big companies can be compelled to spy for the government, and then be subject to gag orders, forbidding them from telling customers they have been surveilled.

The new expanded definition of the Everyone’s a Spy provision is much broader than what many members of Congress thought. It would give the government the right to similarly compel millions of small businesses that provide Wi-Fi, or have access to routers or other ordinary communications equipment, to act as the government’s partners in surveillance. They, too, would be bound not to tell their customers about this surveillance.

The HPSCI amendment achieves this by including any service provider who has access to equipment that transmits communications. After critics complained that digital loungers in hotel lobbies and coffeehouses would have their data hoovered up by the government, the authors of this amendment provided carve-outs for hotels, restaurants, dwellings, and community centers. This was a good PR move. But this measure still applies to most everyone – owners and operators of any facilities (other than the exempted categories) that house equipment used to store or carry data.

If this became law, millions of American small business owners would have a legal obligation to hand over data that runs through their equipment. These small businesses could be forced to give the NSA direct access to their equipment, or else they might just copy messages en masse and turn them over. And when they’re done with doing their part in mass surveillance, these small businesses would then be placed under a gag order to hide their activities from their customers.

Small businesses are just waking up to what is about to be done to them by the Everyone’s a Spy amendment. Customers are sure to be outraged when they learn that the businesses they patronize are potentially spying on them. All U.S. business might suffer, as this law is sure to also widen the wedge between the United States and European Union on the contentious issue of spying and data privacy. Meanwhile, U.S. consumers and businesses would have no legal way to resist these intrusions. It is easy to see why Sen. Ron Wyden of Oregon (pictured) calls this expansion of government surveillance “terrifying.”

The intelligence community is pressing the Senate to act before this authority lapses on April 19. But the agencies have already secured permission from the FISA Court to continue conducting Section 702 surveillance in its current form until April 2025. So the Senate has plenty of time to act with deliberation. It can boldly strike this toxic Everyone’s a Spy amendment. And considering the popularity of adding a warrant requirement for searching for and accessing Americans’ communications caught up in Section 702 databases, it should do that as well.

Bob Goodlatte represented Virginia’s 6th District as a Republican in Congress from 1993 to 2019 and chaired the House Judiciary Committee. He is a senior policy adviser to the Project for Privacy and Surveillance Accountability.

Tyler Durden Thu, 04/18/2024 - 08:20

Futures Rise After 4 Straight Days Of Losses

US equity futures are higher after four consecutive days of selling, although that is the same pattern we have seen all week as futures initially rise only to dump later in the day. As of 7:40am, S&P futures are up 0.3% while tech stocks were set to outperform, pushing the Nasdaq 0.4% higher after TSMC delivered a better-than-projected revenue outlook. An index of global chip stocks and AI poster child Nvidia fell into a technical correction amid the recent selloff, with Evercore ISI analyst Julian Emanuel thinking this is only the start, with the downdraft in stocks only starting and set to continue through the rest of 2024. The dollar steadied, while US Treasuries pared an earlier gain to trade flat. In Europe, major markets are higher with Spain/France leading and Germany lagging. Commodities are mixed: oil is falling further; precious and base metals are higher. Reports from Netflix and L’Oreal are due after the close of their respective markets. Investors will also be parsing initial US jobless data, the latest Leading Index and Existing Home Sales data, as well as speakers from a raft of central banks.

In premarket trading, semis are rebounding from yesterday’s post ASML selloff (MD +1.0%, NVDA +1.4% and MU +2.5%) after  Taiwan’s TSMC, the main chipmaker for Nvidia and Apple, reported sales guidance that was better than expected and it stuck by plans to spend up to $32 billion over the course of this year, shoring up expectations for a sustained increase in AI demand. Also on the chip sector front, Micron Technology shares are up 1.5% in premarket trading after Bloomberg reported that the largest maker of US computer memory-chips is poised to get more than $6 billion in grants from the Commerce Department to help pay for domestic factory projects. MegaCap Tech are also mostly higher: AAPL +32bp and AMZN +23bp. Here are the other notable premarket movers:

• Blackstone Inc. collected more fees from big retail funds and credit strategies this year, compensating for the slower pace of deal exits, the asset manager said in its first-quarter report.
• EBay shares rise 3.5% after Morgan Stanley double-upgrades the e-commerce firm to overweight from underweight. Analysts recommend a pair trade with Etsy on the prospect of a narrowing valuation gap as eBay approaches positive growth thanks to a boost from AI.
• Etsy shares fall 3.7% as Morgan Stanley cuts Etsy to underweight.
• JetBlue shares advance 1.6% after the airline was upgraded to neutral from underweight at JPMorgan, which sees the company as “increasingly well-positioned for a modest potential move to the upside based on improving market sentiment.”
• Las Vegas Sands decline 2.5% after reporting first quarter results late Wednesday. The casino operator exceeded adjusted profit expectations in the quarter, but results at its Macau locations broadly missed Wall Street’s estimates.
• Match Group shares slip 2.3% after the dating-app company was downgraded to equal-weight from overweight at Morgan Stanley, which flags concerns over Tinder saturation and execution.
• Synovus Financial shares trade 7.7% lower after first-quarter net interest income missed the average analyst estimate.
• Williams Cos. shares edge 0.7% lower on low volumes as the natural gas pipeline and processing firm receives its only sell-equivalent rating. Wolfe downgrades to underperform from peerperform saying it is a “great company, not a great value.”
• Zscaler shares rise 2.4% as KeyBanc Capital Markets raised the recommendation on the security software firm’s stock to overweight from sector weight.

In the last week, investors have been unwinding gains from a record rally in the first quarter as they come to grips with an overlever, overheating US economy and stubborn inflation that’s forced them to recalibrate rate bets. Money markets signal just two rate cuts by the Fed this year, starting in September, down from 7 at the start of the year, after a fresh round of hot inflation sent Treasury yields soaring to 2024 highs. Offsetting disappointment about the speed of rate cuts, though, investors are more optimistic about growth and the potential feedthrough to corporate profits, according to Peter Oppenheimer, global equity strategy chief at Goldman Sachs.

“Growth is fine, but we’re not likely to get the boost in terms of lower rates that the markets had expected,” Oppenheimer said in an interview with Bloomberg TV. “That’s causing some indigestion, so earnings will really be crucial here.”

Overnight, Loretta Mester became the latest Fed official to warn it shouldn’t rush to cut rates. Meanwhile, Michelle Bowman said progress on inflation may have stalled and questioned the degree to which monetary policy is restraining the economy.

Elsewhere, Joe Biden ramped up his campaign rhetoric, calling China “xenophobic” and highlighting its economic woes, as he sought to make the case for US economic strength.

In Europe, the Stoxx 600 rises 0.4% as investors weighed a slate of upbeat corporate earnings reports against concerns around higher-for-longer interest rates. The utilities sub-index leads gains while energy stocks fall the most. In company news, engineering company ABB hit another record high after it posted strong first-quarter earnings. Here are some of the biggest European movers Thursday:

• ABB (ABBN SE +5.2%) jumps after posting an overall 1Q beat, according to analysts, driven primarily by its electrification unit performance
• Aixtron (AIXA GY +6.1%) climbs after the German chip equipment maker said that Wolfspeed placed multiple tool orders in 3Q and 4Q last year
• Edenred (EDEN FP +3.8%) rises following its first-quarter results, which Citi says are a “step in the right direction” for the payment-service provider
• Tele2 (TEL2B SS +5.1%) advances after it beat estimates to 1Q Ebitda, driven by strong performance in its key Swedish market, as well as “decent” growth in the Baltics
• Nordea Bank (NDA FH +0.4%) rises after reporting record profits and net interest income in the first quarter on the back of an enduring tailwind from interest rates
• National Grid (NG/ LN +1.6%) gains after it said a change in the way it reports earnings will boost EPS over the current financial year. Analyst reactions were mixed
• Sartorius (DIM FP -14%) plunges after the company reported revenue for the first quarter that missed the average analyst estimates
• EQT (EQT SS -5.1%) falls with analysts saying that the Swedish private equity firm’s quarterly print is showing continued slowness in fundraising
• Schindler (SCHP SE -0.4%) drops after the elevator maker reported revenue shy of expectations, according to Vontobel
• International Distributions Services (IDS LN -3.9%) falls, trimming some gains from Wednesday’s rally that followed news of a rejected takeover bid from Czech entrepreneur Daniel Kretinsky’s firm
• Rentokil (RTO LN -2.8%) drops after the pest control company delivered 1Q in-line results. Investors remain cautious about the integration of the Terminix acquisition, Citi says

Earlier in the session, Asia’s stock benchmark rebounded after a six-day selloff, as sentiment stabilized with the region’s currencies regaining some footing. The MSCI Asia Pacific Index rose as much as 1.1% but pared the gain to 0.6%, set for its best day since April 9. Tencent, Samsung Electronics and BHP Group were among the biggest contributors to the advance. Chip stocks were in focus as TSMC delivered a better-than-projected revenue outlook and stuck with plans to spend as much as $32 billion in 2024. Shares in Hong Kong were among the region’s best performers. Benchmarks in mainland China extended their advance to the second day following a clarification from the country’s securities regulator over delisting rules.

• Hang Seng and Shanghai Comp conformed to the positive mood but with upside capped in the mainland by US-China trade frictions after President Biden called for an increase in tariffs on Chinese metals.
• Nikkei 225 recovered all of its opening losses and returned to above the 38,000 level.
• ASX 200 was led by the mining industry after BHP's encouraging quarterly production update.

In FX, the Bloomberg Dollar Spot Index is down 0.1%, falling for a second day. The dollar has jumped about 4% this year, outperforming all major currencies, as reduced prospects for Fed rate cuts feed greenback strength and higher US yields.  Separately, the Bloomberg Asia Dollar Index edged higher, supporting investor appetite toward the region. The yen was steady following a joint statement from US Treasury Secretary Janet Yellen alongside the finance ministers of Japan and South Korea that noted “serious concerns” about the depreciation of the two Asian currencies. A global gauge of emerging-market currencies gained for a second day, suggesting some stability after hitting a 2024 low earlier this week.

In rates, treasuries erased an earlier gain US 10-year yields unchanged at 4.58%, near Wednesday’s low, trailing gilts by 1.5bp in the sector; curve spreads remain within 1bp of Wednesday’s close, inverted 2s10s around -35bp. Gilts outperform their German counterparts. $23b 5-year TIPS sale at 1pm New York time is week’s final coupon auction.

In commodities, oil prices added to Wednesday’s drop, with WTI down another 0.6% to trade near $82 a barrel, weighed by weaker Chinese industrial data and a swelling in US crude inventories, while gold rose. Spot gold rises 0.8% to around $2,379/oz.

Bitcoin was back above $62k after briefly dipping below $60k yesterday, while Ethereum finds support around $3k. Binance converted the entire pool of assets held in an emergency fund for users into USDC stablecoin. The fund serves as a backstop for customers in “extreme situations”, according to Bloomberg.

Looking at today's calendar, US session includes weekly jobless claims data, a packed Fed speaker slate and 5-year TIPS new-issue auction.  US economic data slate includes April Philadelphia Fed business outlook and weekly jobless claims (8:30am), March Leading index and existing home sales (10am). Fed speakers include Bowman (9:05am, 9:15am), Williams (9:15am), Bostic (11am, 5:45pm) and Collins (12pm)

Market Snapshot

• S&P 500 futures up 0.3% to 5,076.50
• STOXX Europe 600 up 0.3% to 500.26
• MXAP up 0.8% to 170.64
• MXAPJ up 0.9% to 524.05
• Nikkei up 0.3% to 38,079.70
• Topix up 0.5% to 2,677.45
• Hang Seng Index up 0.8% to 16,385.87
• Shanghai Composite little changed at 3,074.23
• Sensex little changed at 72,888.80
• Australia S&P/ASX 200 up 0.5% to 7,642.11
• Kospi up 2.0% to 2,634.70
• German 10Y yield little changed at 2.44%
• Euro little changed at $1.0676
• Brent Futures down 0.3% to $86.99/bbl
• Gold spot up 0.8% to $2,379.19
• US Dollar Index little changed at 105.86

Top Overnight News

• BOJ board member Asahi Noguchi said on Thursday the pace of future rate hikes would likely be much slower than that of its global peers in recent policy tightenings, as the impact of rising domestic wages has yet be fully passed onto prices. RTRS
• A US congressional effort to force TikTok’s Chinese owner to divest the app has gained steam after House Speaker Mike Johnson unveiled a new package of legislation that could compel the Senate to support the measure. FT
• Berkshire Hathaway priced ¥263.3 billion ($1.71 billion) of bonds in the firm’s largest yen debt deal since its 2019 debut sale. The surprisingly big offering raises speculation that Warren Buffett may be planning another foray into Japanese stocks. BBG
• TSMC’s rebound accelerated, with “extremely high” AI demand bolstering its outlook. The chipmaker expects revenue to grow as much as 30% this quarter following its first profit rise in a year. Chip stocks may see some relief on the results. Nvidia ticked up premarket, as did ASML’s stock. BBG
• European diplomats traveled to Israel on Wednesday to make one more plea for restraint in response to the aerial attack that Iran launched this weekend, but Britain’s foreign secretary acknowledged that an Israeli reprisal seemed inevitable. NYT
• Fed’s Mester says the central bank will require additional time before deciding when to commence rate cuts, but she expressed confidence in the disinflationary process eventually resuming. Barron's
• Corporate pension funds are shifting money into bonds. State and local government funds are swapping stocks for alternative investments. The nation’s largest public pension, the California Public Employees’ Retirement System, is planning to move close to $25 billion out of equities and into private equity and private debt. WSJ
• The Biden administration said Wednesday it would allow some American and European oil companies to carry on in Venezuela after U.S. efforts to coax President Nicolás Maduro into democratic overhauls by lifting economic sanctions ended in a hardening of his authoritarian regime. WSJ
• Cash paid out from PE funds has tumbled to a decade low, leaving investors less able, or willing, to allocate new money. As a result, the biggest backers want buyout executives to put in more of their own assets, prompting them to load up on debt and pledge personal possessions — including their homes. BBG
• Iran is exporting more oil than at any time for the past six years, giving its economy a $35bn-a-year boost even as western countries discuss stepping up sanctions in response to its attack on Israel. Tehran sold an average of 1.56mn barrels a day during the first three months of the year, almost all of it to China and its highest level since the third quarter of 2018. FT

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded mostly higher after gradually shrugging off headwinds from the tech-led selling in the US. ASX 200 was led by the mining industry after BHP's encouraging quarterly production update. Nikkei 225 recovered all of its opening losses and returned to above the 38,000 level. Hang Seng and Shanghai Comp. conformed to the positive mood but with upside capped in the mainland by US-China trade frictions after President Biden called for an increase in tariffs on Chinese metals.

Top Asian News

• PBoC Governor Pan met with Fed Chair Powell and they exchanged views on the economic situation, monetary policy and financial stability, while Pan also met with IMF's Georgieva in Washington and exchanged views on cooperation between China and the IMF.
• PBoC Deputy Governor says there is still room for monetary policy going forward.
• US President Biden commented there is no trade war when asked about the proposed China metals tariffs, while he also commented that he wants fair competition, not conflict, with China.
• US Secretary of State Blinken is travelling to China on April 23rd, according to Politico.
• BoJ Board Member Noguchi said it is essential for the BoJ to maintain ultra-loose monetary policy and it is essential to continue to maintain an appropriate balance between labour supply and demand through the continuation of its accommodative monetary policy to achieve the 2% price target. Noguchi said it will take a significant amount of time until trend inflation continues to rise to around 2%, while the focus now is on the pace at which the policy rate will be adjusted and at what level it will eventually stabilise.
• Japanese Finance Minister Suzuki held a bilateral meeting with US Treasury Secretary Yellen and agreed to communicate closely on FX, while Suzuki said he wants to closely consult with the US and South Korea on FX.
• Japanese Vice Finance Minister for International Affairs Kanda said Japan is always communicating with the US and each country's authorities on Japan's stance on FX and financial markets.
• PBoC official says high real interest rates in some sectors may help control capacity and reduce inventories.

European bourses, Stoxx600 (+0.3%) are mostly, but modestly firmer. Initially futures were lifted following strong TSMC results/guidance, though equities have tilted slightly lower in recent trade. European sectors are mixed, having initially held a positive tilt; Energy underperforms, given the slump in oil prices following bearish crude inventory data and geopolitical updates. Utilities is found at the top of the pile. US Equity Futures (ES +0.1%, NQ +0.2%, RTY +0.1%) are incrementally firmer, though ultimately resides around the unchanged mark; TSMC (-2.2%) beat on Q1 expectations and notes of strong AI demand, name was initially firmer in the pre-market but has since trimmed markedly and fallen into the red.

Top European news

• ECB's Schnabel said financial markets repricing of rates over the last few months shows investors expect policymakers, at least for now, to continue to pay more attention to actual inflation outcomes.
• ECB's Vasle said he sees the deposit rate 'much closer' to 3% by year-end if disinflation goes to plan, according to Reuters.
• ECB's de Guindos says inflation has fallen further this year, expected to continue declining in the medium term but the pace will be slower. If inflation conditions are met, it would be appropriate to reduce the current level of restrictions.

FX

• USD is softer vs. all major peers with the DXY back on a 105 handle after printing a 106.51 high earlier in the week.
• EUR/USD has continued its recovery after printing a base around the 1.06 mark earlier in the week. That being said, policy divergences remain wide between the Fed and ECB, therefore, focus amongst strategists is on whether the pair can hold above 1.05.
• GBP is attempting to claw back some losses vs. the USD but Cable hasn't been able to reclaim a 1.25 handle throughout the week.
• Antipodeans are both firmer vs. the USD following a pick-up in sentiment in APAC hours and firm trade in base metals. AUD/USD saw little sustained follow-through from Aus. jobs as the unexpected contraction in employment was driven by part-time jobs.
• PBoC set USD/CNY mid-point at 7.1020 vs exp. 7.2281 (prev. 7.1025).

Fixed Income

• USTs are bid, but only modestly so with newsflow somewhat limited thus far ahead of IJC & Fed speak. Positive undertones continue from the strong 20yr sale on Wednesday; USTs around their 108-10+ peak, surpassing Tuesday's 108-08 best.
• Bunds are also firmer and closer to USTs than Gilts in terms of the magnitude of gains thus far. Holding just off the 131.87 peak around Wednesday's 131.67 best.
• Gilts are outperforming but largely a function of catch-up play to the strong 20yr US sale, yesterday's Bailey remarks and the general bullish grind for benchmarks late doors on Tuesday. As it stands, Gilts at a 97.20 peak having picked up markedly from Wednesday's 96.01 contract low.
• Spain sells EUR 6.143bln vs exp. EUR 5.5-6.5bln 2.50% 2027, 1.95% 2030, 3.25% 2034 & 3.45% 2066.
• France sells EUR 12.417bln vs exp. EUR 11.0-12.5bln 0.00% 2027, 2.50% 2027, 2.75% 2030 & 0.00% 2032 OATs.

Commodities

• The crude complex extended on yesterday's slide, with prices subdued by the lack of Israeli response against Iran coupled with this week's inventory builds in weekly data. More recent reports meanwhile suggested a potential Israeli strike on Iran after Passover; Brent June looking to test USD 85.50/bbl to the downside.
• Precious metals are firmer across the board amid the softer Dollar, with mild outperformance in palladium vs gold and silver; XAU currently sits at the top of USD 2,361.10-2.381.10/oz range.
• Base metals are higher trade across the board for base metals with copper reaching a level last seen in June 2022, and iron ore continuing to surge higher. The complex is supported by optimism surrounding China coupled with the intraday fall in the Dollar.
• Qatar set June-loading Al-Shaheen crude term premium at USD 2.54/bbl which is the highest in six months.
• Chile President Boric said 'totally clear' that copper prices are on the upswing, while he added that Codelco copper production levels are going to slowly grow as of this year and reach 1.7mln tons by 2030. Furthermore, the government is dedicated to speeding up the mining permitting process and they hope to double lithium output.
• Kazakhstan's Energy Ministry says oil production losses due to floods have amounted to 16k tons; Azerbaijan is in talks to ship up to 5mln tons of Kazakh crude via Baku-Supsa pipeline.

Geopolitics: Middle East

• "Multiple reports claiming Netanyahu is postponing counter strike on Iran till after Passover next week", according to Sky News' Waghorn "Al Araby al Jadeed claiming he’s promised a more limited retaliation in return for freedom to strike Rafah hard."
• US has reportedly agreed to back an Israeli operation in Rafah in return for Israel not conducting a major strike on Iran, via JNS citing Egyptian officials.
• "Israel Broadcasting Corporation: The army is waiting for the green light to start its operations in Rafah, south of Gaza", according to Al Arabiya.
• "Al-Arabiya correspondent: Large movements of Israeli armoured vehicles near the outskirts of the city of Rafah", according to Al Arabiya.
• US Pentagon spokesman said won't hesitate to defend Israel and will work to protect its forces in the region, while the spokesman added that Defense Secretary Austin made a series of contacts to de-escalate so as not to go to a wider war, according to Al Jazeera.
• UK Ministry of Defence insider speaking to Politico says they now expect “strikes back and forth” between Israel and Iran, via Politico

Geopolitics: Other

• G7 statement noted significant geo-political risks from Russia's war against Ukraine and the Middle East situation could affect trade, supply chains and commodity prices, while they welcomed the EU proposal to direct extraordinary revenues from Russia's frozen assets to aid Ukraine and will continue working on all possible avenues by which frozen Russian assets could be used to support Ukraine. It was also reported that Japan's top currency diplomat Kanda said the G7 discussion on Iran-related language was a bit complicated and they haven't yet reached a conclusion on what sanction should be applied.

US Event Calendar

• 08:30: April Continuing Claims, est. 1.82m, prior 1.82m
• 08:30: April Initial Jobless Claims, est. 215,000, prior 211,000
• 08:30: April Philadelphia Fed Business Outl, est. 2.0, prior 3.2
• 10:00: March Existing Home Sales MoM, est. -4.1%, prior 9.5%
• 10:00: March Home Resales with Condos, est. 4.2m, prior 4.38m
• 10:00: March Leading Index, est. -0.1%, prior 0.1%

Central Bank Speakers

• 09:05: Fed’s Bowman Gives Opening Remarks
• 09:15: Fed’s Williams Participates in Moderated Discussion
• 09:15: Fed’s Bowman Speaks at SIFMA Basel III Endgame Roundtable
• 11:00: Fed’s Bostic Speaks in Fireside Chat on Economy
• 12:00: Fed’s Collins Travels to Connecticut
• 17:45: Fed’s Bostic Chats About Economy, Monetary Policy

DB's Jim Reid concludes the overnight wrap

I’m struggling at the moment. For the last 2-3 weeks all that I can hear in my head is Beyonce’s latest single (a number one around the world over the last few weeks) which if you haven’t heard is an irritatingly catchy country-style song. In quiet (and busy moments) all I have going on in my mind is a jaunty “It’s a real-life boogie and a real-life hoedown....” with the next line containing parental advisory lyrics so I can’t print! I need something to dislodge it before it drives me crazy and/or infiltrates my research.

Markets have been doing the “Do-si-do” this week as initial recoveries have given way to sell-offs as rates and concerns over events in the Middle East dominate, while weaker tech sentiment was a major driver yesterday as the day progressed. This morning we've seen more flipping as Asia is higher again. Before that, yesterday saw the S&P 500 peak at +0.5% near the open but closed -0.58% lower and with it lost ground for a 4th consecutive session, which last happened in early January. Moreover, the index has now shed over 3% over these last four sessions, which is the first time that’s happened since October 23, the same day that the 10yr Treasury yield moved above 5% intraday. To be fair, there was a recovery for bonds, but that was partly a risk-off move into safe havens, which pushed the 10yr Treasury yield (-8.0bps) down from its 5-month high the previous day to 4.59%. Lower oil which we'll discuss below also helped. Yields are another couple of basis points lower across the curve in Asia.

At the close, the S&P 500 had fallen by -4.42% from its all-time high at the end of March, which is more than double the largest pullback it had seen during its remarkable +27% rally that started in late October. The latest decline yesterday was led by tech stocks, with the NASDAQ down -1.15%, and the Magnificent 7 down -1.23%. Chipmakers in particular underperformed as the producer of chipmaking equipment ASML (-6.68%) reported a sizeable decline in orders in Q1. This saw the Philadelphia semiconductor index (-3.25%) fall to its lowest level in nearly two months, with Nvidia down -3.87% in sympathy. Small-cap stocks were still affected as well though, with the Russell 2000 (-0.99%) falling to a two-month low. T he main exception to this pattern came from Europe, where the STOXX 600 (+0.06%) stabilised after its worst daily performance in nine months. The index did close when the US equity market had only dipped to flat, but Euro STOXX futures have edged back into positive territory this morning after a strong Asia session with S&P (+0.30%) and Nasdaq (+0.43%) futures also rebounding again.

Overnight in Japan, we heard from the BoJ’s currency chief Kanda, who confirmed the central bank’s commitment on the yen. Kanda pushed back against a stronger dollar, stating that excessive currency moves harm the economy. Moreover, US Treasury Secretary Yellen acknowledged Japan’s worries over a sharp yen depreciation in a joint statement with her counterparts in Japan and South Korea after a trilateral meeting that suggested the US would give a green light to intervention in both currencies. The yen stabilised off the back of these comments and is now up +0.07% against the dollar as I type. The offshore Chinese yuan also held steady after the People’s Bank of China emphasised its commitment to preventing exchange rate overshoot in a strong dollar environment. Against this backdrop, Asian equities are mostly in the green. As I type, the Nikkei 225 is up +0.49%, the Hang Seng +1.16%, the Korean Kospi +1.71%, and in China, the CSI 300 and Shanghai Comp are up +0.61% and +0.55% respectively. Elsewhere, Australian unemployment came in at 3.8% (vs 3.9% expected), but the downside surprise was largely offset by an otherwise mixed jobs report.

The bond rally we discussed above has been helped by the latest decline in oil prices, with Brent Crude (-3.03%) closing at a 3-week low of $87.29/bbl, which came as the latest EIA report showed US crude inventories at their highest level in 9 months. And in Europe, natural gas futures also fell back after their recent advance, with a decline of -6.43% on the day. So a wild ride in commodities this week.

The decline in oil prices played out even as uncertainty remains over the direction of the conflict in the Middle East. Yesterday, Israeli PM Netanyahu met with UK Foreign Secretary Cameron and German Foreign Minister Baerbock yesterday, but he also said that “I want to make it clear - we will make our own decisions, and the State of Israel will do everything necessary to defend itself." The comments raised the prospect that some sort of response would still happen, and Cameron said that “It’s right to have made our views clear about what should happen next, but it’s clear the Israelis are making a decision to act”.

Back in Europe, the decline in yields was more modest with yields on 10yr bunds (-2.1bps), gilts (-3.7bps) and OATs (-2.8bps) all seeing moderate dips. The moves were more muted at the front-end, at +0.6bps for 2yr bunds and -1.0bps for 2yr gilts. In part, that reflected continued concerns about sticky inflation following the UK’s latest inflation data, which showed that headline CPI only fell back to +3.2% in March (vs. +3.1% expected), whilst core CPI was also a tenth above expectations at +4.2%.

That led investors to dial back the likelihood of a June rate cut by the Bank of England to less than 25% intra-day from 38% the previous day, though this rose back to 35% in part thanks to fairly dovish comments from Governor Bailey. He noted that with the latest inflation data “we are actually pretty much on track” with what the BoE projected back in February. Our UK Economist Sanjay Raja has pushed back his expectation of the first cut from May to June but still sees an additional 50bps this year split between September and December. The terminal rate of 3% will be hit in H1 2026. See his report here for the full explanation. Meanwhile, there was little change in ECB pricing with ECB commentary continuing to point to a rate cut at the next meeting in June. Bundesbank President Nagel, one of the more hawkish ECB voices, said that “a rate cut in June has become more likely” although “there are still some caveats”.

Finally, the IMF published their latest Fiscal Monitor yesterday, which projected that government debt would continue to rise globally over the years ahead. Their forecasts for general government gross debt saw an increase globally from 93.2% of GDP in 2023 to 98.8% by 2029. For the United States, it saw debt rising from 122.1% in 2023 to 133.9% in 2029.

To the day ahead now, and US data releases include the weekly initial jobless claims, the Philadelphia Fed’s business outlook for April, the Conference Board’s leading index for March, and existing home sales for March. From central banks, we’ll hear from ECB Vice President de Guindos, the ECB’s Nagel, Centeno, Simkus and Vujcic, the Fed’s Bowman, Williams, and Bostic, along with the BoE’s Greene.

Tyler Durden Thu, 04/18/2024 - 08:16