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Selling off deepens across global stocks following US employment data shock
Japan's Nikkei 225 plunged 5.8pc in its worst day since 2020 amid a brutal sell-off on Asia's stock markets - JEON HEON-KYUN/EPA-EFE/Shutterstock The global sell-off in stock markets deepened as US unemployment hit a three-year high amid growing fears that the US Federal Reserve has left it too late to begin cutting interest rates. Nonfarm payrolls grew by 114,000 in July, which was down from a downwardly revised 179,000 last month and much lower than the 175,000 expected by analysts. The unemployment rate also rose to 4.3pc from 4.1pc, its highest level since October 2021. The pan-European Stoxx 600 index fell as much as 2.3pc to a three-month low, while Germany’s Dax also dropped as much as 2.3pc. The Cac 40 in France dipped as sharply as 1.4pc. The FTSE 100 fell as much as 0.8pc. Japan’s Nikkei 225 index had already closed down by 2,216.63 points - its second-largest points drop in history - after weaker than expected US factory data showed output dropped to an eight-month low in July, while weekly initial jobless benefit claims by Americans rose to the highest level in nearly a year. Federal Reserve chairman Jerome Powell indicated on Wednesday that a first interest rate cut could come in September as policymakers held interest rates at 23-year highs of 5.25pc to 5.5pc. However, markets around the world dropped sharply overnight and this morning as traders priced in that the Fed will be forced to cut interest rates at all three of its remaining meetings this year. Traders have bet there is a 50pc chance that the Fed will use one of those meetings to cut borrowing costs by half a percentage point, and have forecast that policymakers will to make 1.75 percentage points of interest rate cuts over the next 12 months in a race to avoid a recession. The sell-off was exacerbated by poor results from Big Tech giants on Wall Street as results from Apple, Intel and Amazon failed to impress. Kiyoshi Ishigane, chief fund manager at Mitsubishi UFJ Asset Management, said: “I didn’t expect stocks to fall this much. “This is probably because there are concerns that the US economy will collapse in a big way, which is the most unpleasant pattern for Japanese stocks.” José Torres, a senior economist at Interactive Brokers, said: “The short-lived satisfaction of Fed chief Powell communicating decent odds of a September rate cut has turned sour as investors are now panicking that the central bank isn’t trimming soon enough.” Read the latest updates below. 06:37 PM BST Signing off... Thanks for joining us today. The Markets blog will be back on Monday morning but I’ll leave you with more on the Government’s decision to axe £1.3bn of supercomputer projects. Our technology editor James Titcomb reports: Story continues Sir Keir Starmer has cancelled more than £1bn in funding for supercomputer projects announced under the previous Conservative government. The Department for Science, Innovation and Technology (DSIT) said it would not take forward £800m earmarked to build Britain’s most powerful supercomputer in Edinburgh. It has also dropped a plan to spend £500m on artificial intelligence computing announced earlier this year. The Government said it was making “difficult and necessary spending decisions” and that commitments by the previous government had been unfunded. However, the decision was criticised by the Conservatives as “extremely short sighted”. Britain’s biggest supercomputer, the Archer 2 facility in Edinburgh, ranks 49th in the global rankings but the most powerful US computer, Frontier, is more than 60 times as powerful. The £800m had been promised for a successor that would be 50 times more powerful and work had already begun on building it, but the project is now believed to be on hold. Read the full story... 06:13 PM BST Markets have ‘gotten ahead of themselves’ on interest rates, warns economist While JP Morgan and Citibank analysts are predicting a half a percentage point cut to US interest rates next month, others are more sceptical. Gregory Daco, chief economist for Ernst & Young, told Bloomberg: Given Fed officials’ hawkish bias, I would anticipate this seals the deal for a September cut, but there will be resistance to a cut. Joseph Lavorgna, chief economist at SMBC Nikko Securities, said: If the Fed goes 50, it will look like panic. He added that markets had “gotten ahead of themselves” in pricing big cuts. 06:01 PM BST European shares have worst day in more than a year Shares across Europe fell today, with the benchmark Stoxx 600 index closing down 2.7pc. The index, which includes some of Britain’s biggest companies along with continental giants, had its worst fall since March 15 2023. Meanwhile, France’s Cac 40 fell 1.6pc, while Germany’s Dax fell 2.3pc. A handful of defensive stocks, companies which tend to provide consistent dividends and stable earnings regardless of the state of the overall stock market, were the rare winners. Individual heavyweights such as consumer staples giants Unilever and Nestle and healthcare firms AstraZeneca and Sanofi gained between 0.3pc and 1.3pc. 05:52 PM BST Major volatility in share prices ‘will probably be short-lived’ Investors should be ready for “some major volatility”, a New York advisory firm has said. Michael Purves, chief executive of Tallbacken Capital Advisors, said: This is a good excuse for investors to sell after a huge year to date rally. Does this weaker jobs number portend a recession that’s coming two quarters from now? There’s a lot of conflicting data. Investors should be prepared for some major volatility, particularly in the big tech stocks. But it will probably be short-lived. The earnings reports haven’t been blockbuster, but they haven’t been bad either. 05:44 PM BST Biden issues statement saying US ‘making progress’ on economy While many investors have been selling today, the White House has issued a statement pointing to the strength of the American economy. President Joe Biden said: Today’s report shows employment is growing more gradually at a time when inflation has declined significantly. Business investment remains strong thanks in part to our investing in America agenda, which is creating good-paying jobs in communities that have been left behind. There’s more to do, but we’re making progress growing the economy from the middle out and the bottom up. But Senator Elizabeth Warren, a leading Left-wing Democrat, said Fed chairman Jerome Powell “made a serious mistake not cutting interest rates” in the central bank’s most recent meeting. “The jobs data is flashing red,” she added in a social media post. Fed Chair Powell made a serious mistake not cutting interest rates. He's been warned over and over again that waiting too long risks driving the economy into a ditch. The jobs data is flashing red. Powell needs to cancel his summer vacation and cut rates now — not wait 6 weeks. https://t.co/PmzEi45Ggi — Elizabeth Warren (@SenWarren) August 2, 2024 Nationwide Mutual Insurance Company chief economist Kathy Bostjancic warned the the latest data’s “across-the-board weakness” feeds the view that the Fed is late to easing monetary policy. “The bond market is pricing in much more aggressive rate cuts” of at least one percentage point by year-end, she added in a note. 05:34 PM BST Tech-heavy Nasdaq sinks in ‘old-fashioned correction’ Worries over tech earnings and a slowing US economy slammed the Nasdaq Composite index on Friday, putting it on track for a 10pc decline from its early July record high, commonly termed a “correction” by market participants. The tech-heavy index was down around 3pc this afternoon, after a softer-than-expected jobs report spurred worries over whether the Federal Reserve will need to deliver hefty rate cuts at its next meeting to prevent the economy from spiraling into recession. Disappointing earnings from Amazon and Intel have also spooked investors. The Nasdaq has dropped 10.4pc from its record close of 18,647.45 points on July 10. An index or stock is widely considered to be in a correction when it closes 10pc or more below its previous record closing high. Tom Plumb, chief executive and portfolio manager at Plumb Funds, said: This is an old-fashioned correction going on. We passed the economic torch from the perception of growth to the perception of needing government intervention with lower interest rates to stabilise the economy. Over the last 44 years, the index has slipped into correction territory after hitting a new high 24 times, or about once every two years, according to a Reuters analysis of LSEG data. The Nasdaq is still up 12pc this year. 05:27 PM BST Bank of America believes the US market has peaked for 2024 America’s benchmark S&P 500 index has probably already made the gains it is going to make, according to analysis by Bank of America. Savita Subramanian, the firm’s head of US equity and quantitative strategy, said that “a full-fledged bear market is unlikely” in comments quoted by Bloomberg earlier this week. Mr Subramanian reportedly said that there is potential for strong returns in some areas, including among strong dividend payers and “old school” businesses in infrastructure, construction and manufacturing. 05:20 PM BST Market drops on fears of a ‘hard landing’ in America Global stock markets are down 2.2pc, according to the MSCI World index, as fears abound today that the US is headed for a hard landing. The US Federal Reserve has for months been looking for confirmation that inflation is well on the way down and that the labour market is softening before cutting rates. It has largely been confident it could achieve a “soft landing” - slowing the economy down without tipping it into recession. Briefing.com analyst Patrick O’Hare said: And just like that, the market is worried about the US economy suffering a hard landing. A sober market didn’t need any more cold water poured on it, but that is exactly what it got with the July employment report, which was filled with ample headline disappointment. 05:07 PM BST FTSE 250 has biggest drop in nearly two years The FTSE 250 fell nearly 3pc today, on its worst day since September 29 2022. Some 241 of its members closed down on a day of red ink across world markets. Carnival led the declines, with shares down 8.5pc. 05:01 PM BST JPMorgan predicts half-point Fed cuts in September and November Banking giant JPMorgan has said it expects half a percentage point interest rate cuts in both September and November. Meanwhile, economists at Citi have said they expect half-point rate cuts in September and November and a quarter-point cut in December, according to a Bloomberg report. It previously predicted quarter-point cuts at each of the three meetings. 04:58 PM BST FTSE 100 closes down in worst day since April The FTSE 100 fell 1.3pc, the biggest drop since April 16. HSBC contributed the most to the index’s decline, because of its sheer size, and fell 3.4pc. But Unilever provided the biggest boost, rising 1.3pc. BA owner IAG had the biggest share price swing, in percentage terms, up 4.7pc, followed by toothpaste maker Heleon, which rose 2.7pc. At the other end of the index, Intermediate Capital Group dropped 7.13pc, while distribution group Diploma fell 7pc. 04:52 PM BST Spain’s Iberdrola to buy Electricity North West Spanish energy giant Iberdrola has agreed to buy a majority stake in British power network Electricity North West for €2.5bn (£2.1bn). Electricity North West operates a distribution grid for around five million people in northwestern England including cities such as Manchester and Lancaster. It was formerly part of the North West Electricity Board, before privatisation in 1990. The deal is to buy 88 percent of the company from a consortium of investors from Japan led by Kansai Electric Power Company. The remaining 12 percent of Electricity North West will stay in the hands of the consortium. Iberdrola already operates distribution grids in Britain through its ownership of Scottish Power. The deal still must be approved by regulators. 04:44 PM BST US oil giant abandons California after 150 years over ‘harsh’ green policies One of America’s biggest oil companies is to abandon its headquarters in California amid a backlash against “harsh” green policies. Industry editor Matt Oliver reports: Chevron on Friday said it would relocate to Houston, Texas, breaking a historic association with the Golden State that stretches back to the 1870s. Chevron’s decision follows repeated warnings from bosses that stringent environmental regulations and other moves by the Californian government had made doing business there too difficult. It is the latest oil company to walk away from the state, while other employers such as Elon Musk’s SpaceX have also relocated following rows with state authorities about new legislation. In January, Chevron wrote up to $4bn (£3.1bn) off the value of its assets there and complained the “increasingly harsh regulatory environment” was deterring investment. Read the full story... A Chevron petrol station in Rodeo, California, in June - David Paul Morris/Bloomberg 04:40 PM BST Turkey blocks Instagram, claiming ‘censorship’ Turkey blocked access to social media platform Instagram today for allegedly failing to comply with the country’s “laws and rules”. The move came after a senior Turkish official accused the platform of blocking condolence posts following the assassination of Ismail Haniyeh, leader of Hamas. Abdulkadir Uraloglu, the country’s transportation and infrastructure minister, said: “We warned Instagram about certain offences. We want some rules to be followed ... We intervene when they disregard legal rules and public sensitivities. “We are in contact with them. Our sensitivities are clear, as soon as they correct those shortcomings, we will remove the ban. This is a country with laws and rules.” On Wednesday, Turkish communications official Fahrettin Altun criticised Instagram for what he called its decision to block condolence posts after Haniyeh was killed in Tehran. “This is censorship, pure and simple,” Mr Altun said. The Telegraph has approached Instagram owner Meta for comment. 04:39 PM BST US crosses tripwire historically indicating a recession The US unemployment rate’s jump to 4.3pc in July crossed a tripwire that historically has signalled that the United States is in recession - though economists say the gauge probably is not reliable in the topsy-turvy post-pandemic economy. Hiring may have been disrupted by Hurricane Beryl, which slammed the Texas economy last month. Julia Pollak, chief economist at the job marketplace ZipRecruiter said that employers have cut workers’ hours and put some on temporary layoffs - perhaps signalling that they are optimistic that Fed rate cuts will turn things around. Ms Pollak said: They’re not cutting jobs outright. They are just slowing hiring and putting people on temporary layoff, furlough. They want to get back to business. They see lots of opportunities to expand. They they just need rates to be . The so-called Sahm Rule, named after the former Fed economist who came up with it, Claudia Sahm, holds that a recession is almost always already underway if the unemployment rate (based on a three-month moving average) rises by half a percentage point from its low of the past year. The jump to 4.3pc unemployment crossed the threshold. However, Ms Sahm, now chief economist at the investment firm New Century Advisors, said before the unemployment data came out that this time “a recession is not imminent’’ even if the Sahm Rule were triggered. That is partly because America’s jobs numbers have been unsettled by an unexpected surge in immigration, much of it illegal, over the past couple of years. The new arrivals have poured into the American labour force and helped ease labour shortages across the economy. But not all of them have found jobs right away, pushing up the jobless rate. 04:23 PM BST German bond yields hit one-year low as weak US data shakes markets German government bond yields tumbled today to their lowest level in more than a year as investors snapped up sovereign debt after weak US economic data raised fears for global growth and caused stocks to fall sharply. Germany’s two-year bond yield, which is particularly sensitive to European Central Bank rate expectations, fell more than 0.12 percentage points to 2.326pc, its lowest since March 2023. Germany’s 10-year bond yield, the benchmark for the euro zone, hit 2.149pc at one point this afternoon, the lowest since January. It is currently down 0.08 percentage points at 2.17pc. Torsten Slok, chief economist at Apollo Global Management, said he now expects the Fed to cut rates in September. He previously expected the central bank to hold rates for all of 2024. He said: With inflation coming down and the labour market softening we now think the Fed will cut rates in September. But with GDP in the second quarter coming in at 2.8pc, the economy is not crashing. 04:19 PM BST London stocks continue to slide amid US worries Share prices continue to deteriorate in London amid major pessimism about the US economy. The FTSE 100 is down 1.4pc right now. Only 14 stocks out of 100 have risen. Meanwhile, the mid-cap FTSE 250 has lost 3pc. Only six stocks out of 250 have risen. 04:02 PM BST Fed ‘made a policy error’ in not cutting rates this week The US central bank made an error by not cutting interest rates this week, a wealth manager has said. Jamie Cox, managing partner at Harris Financial Group in Virginia, said: The jobs data are signaling ... that the Federal Reserve made a policy error by not reducing the Fed Funds rate this week. It’s very possible the Fed alters its inter-meeting communications on the balance of risks to remove all doubt September rate cut. 03:56 PM BST Vodafone-Three £15bn merger delayed further as watchdog extends probe Vodafone and Three will have to wait longer before finding out if a £15bn planned merger has the seal of approval from the UK’s competition regulator. The Competition and Markets Authority (CMA) said it had extended the period of time it needs to investigate the deal. The plans to combine have been under scrutiny since being announced last summer, delaying what would create the UK’s largest mobile phone network. The two mobile firms say the deal will allow them to invest more in their services and better compete with major rivals, EE operator BT and Virgin Media-O2. In an update published on Friday, the CMA said it was giving itself until December 7 to complete the probe and publish its findings. The extension reflects the “very wide scope” of the inquiry and the “technical and regulatory complexity of the sector”, the watchdog said. It has also been taking time to examine large quantities of evidence provided by both businesses. A spokesman from Vodafone said it was “not unusual” for the regulator to extend its investigations. It said: We appreciate the additional time it is taking to assess the extensive evidence submitted, which sets out how this transaction will significantly benefit over 50 million mobile customers, enhance competition and help transform the UK’s digital infrastructure. 03:53 PM BST Investors worry rate cuts ‘too late to stave off a US recession’ Red ink abounds in the world’s stock markets this afternoon after US unemployment rose in the US and the country’s latest payrolls report was weaker than expected. Chris Beauchamp, chief market analyst at online trading platform IG, said: In the space of barely two days markets have gone from looking forward to a Fed rate cut in a growing economy to fretting about an impending recession. Today’s huge payrolls miss and the surge in the US unemployment rate has sparked a fresh flight from risk assets already reeling from some poor earnings reports and concerns about a wider conflict in the Middle East. Original Article Here: Read the full article
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BTC Wealth Event to Repeat on APRIL 22
Dear Reader, Bitcoin has officially hit a new all-time high. But if you think you’re too late… Think again. According to my research… This bull market is not even halfway over. In fact, it’s just getting started. This video explains everything. In it, I share why I expect Bitcoin to double in price by next year. I also explain why, despite this, I don’t own any Bitcoin. That’s right… In fact, there are at least 10 investments that I like even better. I identified them using a special strategy that already helped me turn $25,000 into $1 million in four years. But the way things are going, I expect some investors will see gains like this by the end of next year. I name all 10 investments in a secret report. You’re not too late. But you absolutely must watch this video before April 22. On that date, a key event that has driven EACH of Bitcoin’s biggest price hikes is set to repeat. When that happens, I’m afraid we’ll never see another opportunity like this again. This could be your last chance. Get the full details here before it’s too late. Regards, James Altucher Original Article Here: Read the full article
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BTC Wealth Event to Repeat on APRIL 22
Dear Reader, Bitcoin has officially hit a new all-time high. But if you think you’re too late… Think again. According to my research… This bull market is not even halfway over. In fact, it’s just getting started. This video explains everything. In it, I share why I expect Bitcoin to double in price by next year. I also explain why, despite this, I don’t own any Bitcoin. That’s right… In fact, there are at least 10 investments that I like even better. I identified them using a special strategy that already helped me turn $25,000 into $1 million in four years. But the way things are going, I expect some investors will see gains like this by the end of next year. I name all 10 investments in a secret report. You’re not too late. But you absolutely must watch this video before April 22. On that date, a key event that has driven EACH of Bitcoin’s biggest price hikes is set to repeat. When that happens, I’m afraid we’ll never see another opportunity like this again. This could be your last chance. Get the full details here before it’s too late. Regards, James Altucher Original Article Here: Read the full article
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Gold Could Spike By $500 When This One Event Happens
A lot of gold bugs like myself still think that the precious metal is undervalued here at around $1820/oz., not only based on the Fed’s ridiculous track record of easy money over the last 15 years but also due to the new burgeoning bifurcation of the global economy that looks to be taking place with Russia – and potentially China - looking to back their respective currencies with gold. For many of us, this means that despite the fact that the Fed is hawkish, we still think gold is undervalued. I continue to believe that gold and silver miners represent some of the best and most undervalued equities in a market that is swiftly on its way to redirecting its attention to actual cash flow and dividends, instead of revenue growth and bombastic claims. And what we’re seeing now in the gold market is a pullback based on the Fed posturing that it is going to continue to raise rates. Even with this “pullback”, gold is resting at levels that formerly used to be its ceiling. On a 30 year gold chart, it’s easy to see that the $1,800 level that formerly served as resistance has now likely turned to support. Gold, non-inflation adjusted, 30 year chart Gold is reacting to the assumption that the Fed is going to hold course and continue to raise rates. With the 10 year already well above 3%, the market is fully baking in the Fed returning to its “neutral rate” - whatever the frig they decide that is this week. 10 Year Treasury Yield I think it’s safe to say at this time that the market has bought the Fed’s posturing hook, line and sinker. Equity markets are certainly diverting their focus from risk in a profound way for the first time in more than a decade as a result of the Fed’s rate hikes and concurrent posturing. On Tuesday, Jerome Powell kept his nerve for the time being, stating during a Wall Street Journal event that “Restoring price stability is a nonnegotiable need. It is something we have to do” and “there could be some pain involved.” He also acknowledged, as I have said many times, that we are in unprecedented territory, stating: “If you look in the history book and find it—no, you can’t. I think we are in a world of firsts.” “I would say there is no disagreement really. It is a challenging task, made more challenging the last couple months because of global events, It is challenging because unemployment is very low already and because inflation is very high,” he continued. “We will go until we feel like we are at a place where we can say, ‘Yes, financial conditions are at an appropriate place. We see inflation coming down. We will go to that point, and there will not be any hesitation about that.” But despite the pullbacks of recent months, especially in the tech-heavy NASDAQ, we are still above where we were prior to Covid striking. From here, the only question that matters is going to be whether or not the Fed can hold its nerve. I have a long postulated that one of two scenarios will be forthcoming: (1) either the Fed is simply going to destroy equity markets, causing them to plunge likely another 30% to 40% from here or.. Original Article Here: Read the full article
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White House Says It's 'Watching' The Market
Imagine this: you’re President Biden, you’ve been a career politician, your understanding of economics boils down to believing you can price fix oil prices, being on the political influencer dole, funded by China, through deals liaised by your ne'er-do-well son and clinging to the inane concept that over-taxation can solve all the nation’s problems because they can help fund the country’s most incompetent capital allocator: the government. You wake up on any given Monday to find that the stock market has just casually shaved off 5% from everybody in the nation’s retirement accounts. The culprit today? A cryptocurrency lending firm called Celsius has caused additional market volatility on top of the volatility that the Fed is causing as a result of its fight against inflation. “Damnit, Joe. It’s time to act,” you think to yourself, convinced there is some type of government solution to free markets taking 1 day to start to puke back 20 years of pornographic monetary policy. You pull up a chair in the Oval Office and grab a pen and a fresh legal pad, both bearing the seal of the President of the United States of America. Time to get some work done. You scribble down the word ‘Celsius’ on the pad. You stare at it for about 6 minutes. “Celsius,” you say to yourself. Then, you underline it. Starting to get exhausted, you repeat to yourself again, “Celsius”, while trying to remember metric/standard conversions from 7th-grade science class. “Celsius. What in the world do I do with Celsius. Think, Joe. Think.” It then occurs to you that you don’t actually know what Celsius is. You call in one of your younger interns who might know. They correct you for not using their zee/zir gender pronouns correctly and change the subject to climate change. They’re no help. Friggin kids. You’re on your own with this one. Back to the drawing board. In the background, CNBC is showing the stock market crash in real-time. “These people are financial experts,” you think to yourself. “They’ll know what’s going on.” You turn around to the TV and find this: You study this image. The guitar. The fire. What does it all mean? Unable to ascertain an answer from CNBC, you flip the channel to another financial news network. “There’s no bullshit on other networks, they’ll know what to do,” you think to yourself, feeling satisfied. You turn the channel and find this: Before you can try to digest this savvy analyst’s take on inflation or the markets, your press secretary bursts through the door, urging you to give her a statement so she can fend off the media, who has been asking about the market crash all day. “Tell them we’re keeping an eye on the market,” you tell her boldly, proudly content with your answer. But last month we told reporters "That's not something we keep an eye on every day, so I'm not gonna comment on that from here," she reminds you. You motion to her that it’s all OK now. We’ve got our heads wrapped around the problem: rate hikes are the only way to stop inflation but they’ll also crash the market. And after all, you’re writing things down on your legal pad - figuring shit out; Presidential shit - and you nod approvingly to her before pulling down your aviator shades. She leaves the room to inform “the wolves” of your major decision to make a statement. It hits the wires: WHITE HOUSE WATCHING STOCK MARKET CLOSELY: JEAN-PIERRE Ha. Success. That’ll hold those sons of bitches off for a while. Turning back to your legal pad, you think to yourself that we may need a congressional hearing to figure out what in the hell is really going on here. “This is what happens when Putin has influence and when billionaires don’t pay their fair share,” you think to yourself. You meekly manage to generate a subatomic particle worth of an idea: I wonder if Powell can print enough money to just buy stocks, you think to yourself. Would that help inflation? You glance at the clock. 5 hours have gone by. It’s closing time at the Oval Office and tomorrow is another day. Turning the lights off as you walk out of the room, you stop and glance back at an empty Oval Office and the desk where you’ve produced today’s Presidential achievements. You shake your head in disbelief that the nation could have such a low approval rating for you. You exhale. “Celsius,” you mutter to yourself as you walk out. Original Article Here: Read the full article
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The government’s “science” behind Monkeypox is hilarious
Through the pandemic, public health officials have taken some ridiculous actions with their “health” powers. In some cases, they barred people from accessing their own property, and in others locked them inside their homes. They threatened to cut off utilities to businesses that didn’t shut down, threatened to separate families, and tried to force parents to be vaccinated to keep custody of their kids. Don’t even get me started on Australia’s COVID concentration camps and walled-off towns. It was all supposedly in pursuit of following “the science”. COVID Warlord Anthony Fauci was the leading cheerleader in the US for mandatory mask policies and draconian lockdowns. But when Texas refused to shut down or mask up, Fauci shrugged and said he was “not really quite sure” why COVID cases in Texas didn’t skyrocket, as he had ominously predicted. Yet despite being a man of science, Fauci wasn’t interested in finding out why he was so wrong. You probably also remember when Fauci tried to con everyone into wearing two masks, instead of just one. Asked about the specific science behind this recommendation, Fauci said, “you put another layer on, it just makes common sense.” Hold on — are we doing science, with the experimental method and rigorous studies, or are we doing what one person considers common sense? Fauci also predicted in December of 2021 that the Omicron variant would cause record COVID hospitalizations and deaths. The Biden Administration warned that we were heading into a “winter of severe illness and death for the unvaccinated – for themselves, their families, and the hospitals they’ll soon overwhelm.” Those predictions didn’t pan out either. When courts finally ruled that the CDC (Centers for Disease Control) overstepped its bounds with a mask mandate on airplanes, we found out that these government orders were never about public health or science at all… Fauci admitted that “It’s more a matter of principle of where the authority lies than it is about whether or not there is going to be a mandate on a plane or not.” Now these same public health officials (and their media lapdogs) are responding to the scariest new threat: monkeypox! “The science” shows that the disease is spreading mostly through skin-to-skin contact at places like raves and orgies. Both the CDC and UK Health Security Agency say that the disproportionate majority of cases have thus far been found among gay men. And by the way, according to the Chinese World Health Organization, Monkeypox has a fatality between 3-6%, which is higher than COVID-19. So, given the specific risks to the gay community of this extremely fatal disease, you’d think that the government would have followed their own COVID playbooks and canceled gay pride month. Or at least they would have banned all the pride parties and parades held throughout June, which was the peak of the Monkeypox outbreak. That’s what the “science” said. But of course, they didn’t do that. Canceling PRIDE MONTH would have been extremely un-woke. So instead, the CDC released guidelines on “Social Gatherings, Safer Sex and Monkeypox.” One section is entitled, “How can a person lower the chance of getting Monkeypox at places like raves, parties, clubs, and festivals?” Unlike with COVID where the CDC demanded we all cower in fear at home, with Monkeypox during Pride Month, they had a totally different answer. If people are going to pile into sweaty, steamy mosh pits, “where there is minimal clothing and where there is direct, personal, often skin-to-skin contact” the CDC advises to “avoid any rashes or sores you see on others and consider minimizing skin-to-skin contact when possible.” Naturally, we also want our government bureaucrats to weigh in on other essential questions, like, “How can a person lower their risk during sex?” The CDC advises you to self pleasure with a sexual partner at a distance of six feet, or “consider having sex with your clothes on or covering areas where rash or sores are present.” Also remember not to “share things like towels, fetish gear, sex toys, and toothbrushes.” So, your kids couldn’t go to school during COVID even though their risk was minuscule. But — with Monkeypox, it’s perfectly fine for members of the gay community (who specifically have the highest risk of infection according to the CDC) to attend raves and parties, as long as they don’t share sex toys. Make sense? Not to be outdone by the idiotic priorities of public health bureaucrats in the West, the World Health Organization has made its own priorities clear. You’d think they’d be racing to control the spread of this virus with the same fervor as COVID. But no. With Monkeypox, their priority is making sure that no one is offended. Recently the WHO said it will change the name of Monkeypox after scientists wrote a letter on the “urgent need for a non-discriminatory and non-stigmatizing nomenclature for Monkeypox virus.” Yep. This is their priority. It’s like these public health officials are trying to destroy any shred of public confidence they had left. It’s so obvious now that these ‘public health’ decisions have nothing to do with public health. Or science. As Fauci said, it’s about authority. And supporting whatever ridiculous political agenda happens to be popular at the moment. Original Article Original Article Here: Read the full article
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Look beyond equity markets
Equity futures look to be fading into the night and important levels to have been breached: S&P 4400, QQQ 350, AMD 100. It is important to understand the controlling narrative of the market: Energy/commodities/resources need to peak and China’s supply chain issues need to settle before the bond market can stop free-falling. - Expect more heightened volatility, BUT… - There is a greater chance of the fed becoming incrementally more dovish in 6-9 months rather than incrementally more hawkish. (A positive for equities) - Fundamentals were always just a narrative. Price action matters most. - Fresh relative lows for Microsoft and Nvidia. Most people are panicking. An opportunity there. - Sentiment is at multi-decade lows (way too low), and the AAII bullishness sentiment survey is at the lowest level since 1992 here. This chart has been up since January. Gold is still strong GSG is coming back for vengeance We were bullish GSG last week (+6%) in weak markets AAII survey bullishness declined to the lowest level (15.8%) since 1992. 12m forward returns are typically+++ Return always wants its risk payment. Not Investment Advice. Original Article Here: Read the full article
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What the Heck is Happening to Silver?!
The dollar rose this week, from 17.87mg gold to 18.24mg (that’s “gold fell from $1,740 to $1,705” in DollarSpeak), a gain of 2.1%. In silver terms, it rose from 1.61g to 1.67g (in DollarSpeak, “silver dropped from $19.24 to $18.64), or 3.7%. As always, we want to look past the market price action. Two explanations are hot today. Let’s look at them first, before moving on to our unique analysis of the basis. JP Morgan and Motte and Bailey JP Morgan’s manipulation of gold and silver prices is the focus of discussion in the gold community again, as another criminal trial is now underway, this time the accused is the former head of precious metals trading at the bank (we have discussed the manipulation conspiracy theory here and here). Central to this trial—and the previous one—is spoofing. Bloomberg describes spoofing as placing “orders that are quickly canceled before they can be executed -- to push precious metals up or down”. Unfortunately, many commentators in the gold community use this at the Motte in a Motte and Bailey Fallacy. A Motte and what?! It’s named after a medieval fortification. The Motte is strongly defensibly, but not a pleasant place to spend a lot of time. The Bailey is a better place, but not so defensible. The Fallacy is like a bait-and-switch. The arguer starts with an uncontroversial statement. In this case, that JP Morgan traders were caught entering orders they intended to cancel. And since one can’t really dispute this, the arguer moves on to the important proposition. The Bailey is not defensible, but by the tactic of having just sold the Motte, the arguer hopes the Bailey will not need to be defended. The Bailey is that the prices of gold and silver would be far higher, but for manipulation. Of course, spoofing has no long-term effect on prices. If it works at all (the whistleblower did not make much money as a trader for JP Morgan), it is because it momentarily distorts the price signal, and the trader can trick other market participants into paying too much or charging too little. N.B. JP Morgan did spoofing in both directions. You can’t get there, from here. You can’t convict the Godfather of murder by proving his grandson stole candy from the store. And you can’t argue gold would have been $50,000 decades ago, by proving JP Morgan traders entered orders they intended to cancel. Silver Price Suppression? The other hot topic du jour is the Commitment of Traders Report. The conspiracy view holds that banks sell futures to suppress the price. According to this view, the greater the number of futures contracts outstanding, the more the price is suppressed. So, in this view, it’s notable that the number of open silver contracts is now near a multiyear low. In the conspiracy theorists’ minds, this means that silver is ready to launch to much higher prices. This is almost right, but for the wrong reason. In reality, open interest responds to the basis. A high and rising basis offers a profit to carry metal. To carry, a bank borrows dollars to buy metal and simultaneously sells a contract. The basis is the profit they can earn in this trade. Basis is (basically) future price – spot price (quoted as an annualized percentage rate). The interest rate factors into this trade. So, in a changing interest rate environment, one can’t just look at the basis. One needs to consider interest as well. Fortunately, we have an indicator which does. The lease rate. Lease rate is (basically) LIBOR – basis. Here’s our graph of the silver lease rate. As we have written in the past, we ignore the period after the economy was slammed with Covid lockdown. Disruption to air travel meant that arbitragers could not reliably move metal between markets such as New York and London, and hence did not want to take the risk of putting on positions such as carry. And the result was that spreads such as the basis blew out (also the bid-ask spread in gold). However, notice the rising trend from around mid-April this year. A rising lease rate is an indicator of rising scarcity. It costs significantly more to lease silver now than in the last several years. Indeed, it costs more now than at any time since the global financial crisis. The lease rate, LIBOR – GOFO, is based on arbitrage in the commercial bullion markets, it has nothing to do with the rate Monetary Metals charges bullion dealers, jewelers, mints, recyclers, and refiners. Understanding Gold and Silver Movements So what does all this mean? Most readers want to know what is likely to happen to the price of gold and silver next. We will address this question. But first, let us indulge in a little more chart fun. Here is the gold continuous basis chart. Since mid-March, we have had a rising price of the dollar (in DollarSpeak, “gold has been falling”). And while this was going on, the basis was rising and cobasis was falling. Basis is our measure of abundance and cobasis is our measure of scarcity. Gold has become more abundant / less scarce while its price has been dropping! What does this mean? There is a global dollar liquidity crisis going on. People are selling the other currencies hand over fist to raise dollar cash. Well, they are buying dollars too (in DollarSpeak, “they are selling gold”). Why are they doing this? Did we mention that the crisis is global? Just ask those who held euros near $1.20 a year ago, and now the euro has been sold down to $1.00 so far! Everyone is facing margin calls, capital calls, loans are being called, etc. Here is the chart for silver. It does not look anything like the gold chart! Granted, the price move has been more dramatic. Whereas the gold price fell from $1,950 to $1,705, -12.6%, the price of silver fell from $25.50 to $18.64, -27%. However, the basis has been falling since late April and cobasis has been rising. Silver has been getting less abundant / more scarce. Gold Cobasis Now let’s look at the high-resolution intraday cobasis and price chart for gold this week. While the dollar rose from 17.85mg gold to 18.25mg, the cobasis chopped around and ended unchanged on the week. You can see that, at times, it correlated with the price. When cobasis moves with the price of the dollar, it means futures traders are positioning and repositioning themselves. No change in the fundamentals. However shortly after noon (GMT) on Thursday, the two lines divorce. Cobasis heads down. At first, price of the dollar is heading down, but then it heads back up, while the cobasis temporarily recovers, then chops sideways, and finally ends back down on Friday. We haven’t seen a chart like this in, well, we don’t recall how long. While buyers of metal could get more aggressive in the future, the current market conditions are not looking bullish for gold. By the way, we do expect them to get more aggressive. This market is characterized by intense selling by those desperate for liquidity and intense buying by those seeking to avoid the ravages of bad policies by governments and their central banks. Eventually, the latter will overpower the former. This was not that week (if we may butcher Aragorn’s classic line). Silver Cobasis Here’s silver. The dollar moved up from 1.6g silver to 1.66. In silver this week, the cobasis more closely tracked the price of the dollar. This may be why, after noon on Thursday, the dollar begins to weaken in silver terms (“silver went up”, in DollarSpeak). However, the cautionary note is that the cobasis depleted all of its energy in that move. It dropped from 2.25% to 0.8%. This means it was buyers of futures—speculators—who bought silver in the expectation that the price will rocket higher after the low on Thursday. Much of the backwardation in the September silver contract dissipated. The Monetary Metals Gold Fundamental Price is $1,820 and the Silver Fundamental Price is $21.89 (we’ve overloaded this article with charts, so omit the fundamental charts, but interested readers can find them on our website). Original Article Here: Read the full article
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BlackRock's iShares Bitcoin Trust experiences significant growth, CEO Fink optimistic about future of BTC
At Extreme Investor Network, we are constantly on the lookout for groundbreaking developments in the world of cryptocurrency and blockchain. Recently, BlackRock's iShares Bitcoin Trust (IBIT) caught our attention as it recorded a historic growth of $13.5 billion in just 11 weeks of trading. The surge in interest towards IBIT is not just a mere coincidence but a strong indicator of the growing mainstream acceptance of Bitcoin and its underlying technology. What makes this achievement even more significant is the fact that BlackRock's CEO Larry Fink has expressed his optimism for Bitcoin's long-term viability, signaling a shift in the perception of digital assets within the traditional financial space. IBIT's remarkable performance can be attributed to various factors, including the demand for digital assets as a hedge against inflation and market volatility, as well as the increasing interest from both retail and institutional investors seeking diversified investment options. This success story not only benefits BlackRock but also highlights the potential of Bitcoin as a viable investment asset in today's market. While the success of IBIT is worth celebrating, it is essential to approach the cryptocurrency market with caution due to its inherent volatility and regulatory uncertainties. However, with a financial giant like BlackRock endorsing Bitcoin through initiatives like IBIT, we may see a shift towards more widespread adoption and integration of digital assets within the traditional investment landscape. As we navigate through this evolving narrative of Bitcoin as a legitimate and valuable component of modern investment portfolios, it is evident that the financial community will closely monitor the impact of BlackRock's foray into the crypto ETF space. Stay tuned to Extreme Investor Network for more insights and updates on the latest trends in the world of cryptocurrency and blockchain. Source link Original Article Here: Read the full article
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Gen Z prioritizes soft saving over retirement planning
In today's economy, there is a growing trend towards soft saving, a method that focuses on making small, consistent efforts to build up savings over time. This approach contrasts with the FIRE movement, which stands for Financial Independence, Retire Early, and promotes drastic measures to achieve financial freedom. According to Ted Rossman, a senior industry analyst at Bankrate, many younger adults feel discouraged about their financial future due to factors like inflation, high living costs, and student loan debt. A survey from Bank of America found that 53% of Gen Zers see the high cost of living as a barrier to their financial success. Despite facing financial challenges their parents did not encounter, such as lower wages and larger student loan balances, young adults have the advantage of time when it comes to saving for long-term goals. Rossman emphasizes the power of compound interest, highlighting the benefits of starting to save early and letting the money grow over time. It's important for young adults to prioritize building an emergency fund, even if it means sacrificing some immediate wants for long-term financial security. By setting aside at least three to six months' worth of expenses, individuals can protect themselves from unexpected events like car repairs or medical bills. Financial experts also recommend taking advantage of employer matches in retirement accounts and gradually increasing savings through auto-escalation. While there are no shortcuts to financial success, developing healthy saving habits and being patient can lead to long-term wealth accumulation. Ultimately, the key to financial stability lies in consistent efforts to save and invest wisely over time. By prioritizing financial security and being proactive about building savings, young adults can secure a better future for themselves.Source link Original Article Here: Read the full article
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Social Token Platform Rally Shuts Down, Crypto Assets at Risk of Becoming Stranded
Social token platform, Rally, has announced that it is ending its operations and discontinuing its Ethereum sidechain. This sudden move has raised concerns among its users, who are creators and fans holding Rally tokens. In an email sent out to its users, Rally warned that the NFTs on its sidechain would not be transferable to mainnet, and once the site shuts down, they would no longer be accessible. The challenging year of 2022, combined with macro headwinds, has been cited as reasons for the shutdown by Rally. Despite raising $57 million from investors in 2021, the startup has not been able to overcome the current environment and continue its operations. The value of Rally's token, RLY, has declined by 93% since January 31, 2022, according to Nansen. It is a sad day for the crypto community, as another platform succumbs to the pressures of the market. The impact of this shutdown will be felt by many, and it is important for crypto enthusiasts to be aware of the risks involved in holding crypto assets on platforms that may not be sustainable in the long run. Original Article Here: Read the full article
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Can Powell Tame Inflation and Keep the Market Happy?
Jim Caron, head of macro strategies for global fixed income at Morgan Stanley Investment Management, warns of potential volatility in the market due to potential misinterpretations of Powell's comments. Investors will be closely monitoring Powell's outlook on the economy, with economists forecasting a potential recession and the Fed projecting slow growth and a rise in the unemployment rate. No major changes are expected in the Fed's policy statement, as it stated in its last statement that "ongoing increases" in the target rate range are necessary to bring inflation back to 2%. The Fed is making progress against inflation, with core inflation rising by 0.3% in December and standing at 4.4% annually, the slowest increase since October 2021. Strategists believe the Fed will wait until March to make any significant changes, with the possibility of two more quarter-point hikes. The next release of economic projections will come at the March meeting, providing markets with more insight on the intended rate path. Michael Gapen, Bank of America's chief U.S. economist, states that the Fed is unlikely to make any major changes to its statement and will likely maintain its line about "ongoing increases." It will be challenging for Powell to sound too hawkish, according to Gapen, as decelerating the rate hike for a second straight meeting could undermine any hawkish language. Peter Boockvar, chief investment officer at Bleakley Advisory Group, believes that Powell should focus on bringing down inflation and keeping it down, rather than helping the stock market. Boockvar believes that Powell's legacy will not be determined by the stock market, but rather by his success in controlling inflation. Original Article Here: Read the full article
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Will Easy Credit and Rising Stocks Hinder the Fed's Inflation Fight?
Could Overly Easy Credit and a Soaring Stock Market Threaten the Fed's Fight Against Inflation? As the Federal Reserve kicks off its two-day meeting, stocks continue to rally, with the S&P 500 ending January with a gain of 6.2%. The tech sector performed even better, with a 9.2% increase in the same period. Meanwhile, interest rates have fallen, with the benchmark 10-year Treasury yield settling at 3.5% after closing December at 3.9%. BlackRock's Chief Investment Officer for Global Fixed Income, Rick Rieder, anticipates Fed Chair Jerome Powell to express his views in a more hawkish manner. Rieder predicts that if Powell's speech is indeed hawkish, the market has already priced it in. However, a non-hawkish outlook could spark another market boom. In the futures market, Fed funds futures indicate a terminal rate of less than 5%. Moreover, these futures suggest that investors anticipate the Fed to change direction and cut rates by 25 basis points by the end of 2023. Jim Caron, Head of Macro Strategies for Global Fixed Income at Morgan Stanley Investment Management, agrees with Rieder's assessment. Caron believes that the Fed's downsizing of its rate hikes alone will be perceived as a dovish move. Before the 50 basis point hike in December, the central bank raised rates by 75 basis points in four consecutive moves. Caron suggests that Powell aims to preserve the validity of the 5% to 5.25% terminal rate forecast, while at the same time, he recognizes the declining trends in housing prices, auto sales, retail sales, and wage inflation. Despite the latter being above comfort levels, it is still coming down. Original Article Here: Read the full article
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AMD Stock Rises Despite Guided Sales Decline
AMD has released its fourth-quarter earnings and the results have beaten Wall Street's expectations for sales and profit. Despite the positive results, the company has guided analysts to a 10% decline in year-over-year sales in the current quarter. Despite this, the stock rose over 2% in extended trading. In the quarter ending December, AMD's EPS was $0.69, adjusted, versus $0.67 per share expected, and its revenue was $5.6 billion, versus $5.5 billion expected. One of the key reasons for the company's success is the strong growth in its embedded and data center businesses. In the data center segment, sales rose 42% year-over-year to $1.7 billion, and in the embedded segment, growth was 1,868% due to sales from the purchase of Xilinx. However, the company's gaming segment and client group, which includes sales from PC processors, were both down. While the demand environment is mixed, AMD CEO Lisa Su is confident in the company's ability to gain market share in 2023 and deliver long-term growth based on its differentiated product portfolio. Despite slow sales in its PC chips and graphics processors, AMD expects its data center and embedded sales to grow in the current quarter. Original Article Here: Read the full article
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The Rise and Fall of NFTZ: What Happened to the World's First NFT ETF?
The world's first exchange-traded fund (ETF) for NFTs, NFTZ, is shutting down. Defiance ETFs, the company behind NFTZ, recently announced its decision to "close and liquidate" the fund by February 28th. This news has come as a surprise to many, especially since NFTZ had a highly anticipated launch back in December 2021. NFTZ was a novel investment vehicle that allowed investors to gain exposure to companies involved in the NFT and cryptocurrency space. The ETF tracked firms like toy collectibles company Funko, online marketplace Ebay, and digital asset exchange Coinbase. With shares of the fund listed on the New York Stock Exchange, NFTZ was poised to be a game-changer in the investment world. However, things did not go as planned for NFTZ. Despite the hype surrounding the NFT market in 2021, the ETF struggled to gain traction and fell 11% in its first two days of trading. This price drop, along with a general decline in interest in the crypto world, ultimately led to the downfall of NFTZ. ETFs, such as NFTZ, are popular investment vehicles that offer indirect exposure to underlying assets through shares. In the case of NFTZ, investors could own a stake in several companies related to the NFT space without having to store the assets themselves. This was a novel concept, as other NFT ETFs, like KuCoin's NFT ETF, only allowed users to own proportionally shared ownership of specific NFTs. The rise of NFTs in 2021 was nothing short of spectacular. Celebrities, major companies, and investors flocked to the NFT market, eager to get in on the action. However, with the price of Bitcoin and other cryptocurrencies plummeting, interest in the crypto world has waned, and NFTs have not been immune to this trend. The Future of Crypto ETFs Despite the downfall of NFTZ, the SEC has approved a fourth Bitcoin futures ETF. This ETF is different from previous offerings in that it tracks the futures of Bitcoin rather than directly tracking the digital currency itself. Bitcoin spot ETFs, which directly track the largest digital currency, are not yet available in the US. While many major crypto companies have applied to launch one, they have thus far been rejected by the SEC. In conclusion, the story of NFTZ serves as a cautionary tale for those looking to invest in the crypto space. The rapid rise and fall of NFTZ is a reminder of the inherent risks and volatility of the cryptocurrency market. It remains to be seen what the future holds for NFTs and other crypto ETFs, but for now, investors should proceed with caution. Original Article Here: Read the full article
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Federal Reserve Expected to Raise Interest Rates and Signal Continued Vigilance against Inflation
The Federal Reserve is predicted to increase interest rates by a quarter of a percentage point and also likely indicate that it will continue to remain cautious in its efforts to combat inflation, even as it decreases the magnitude of its hikes. On Wednesday at 2 PM ET, the Fed will announce its latest rate decision and Fed Chair Jerome Powell will address the media at 2:30 PM. The expected quarter-point hike comes after a half-percentage point increase in December and will be the smallest hike in the federal fund's target rate range since the start of the cycle last March. Although the meeting is predicted to be uneventful, strategists believe that it may pose a challenge for the Fed Chair to manage the market's reaction. The markets have been rising as investors anticipate that the central bank will achieve a smooth transition for the economy and also effectively control inflation, allowing it to return to easing policies. "How will he convince people to calm down, take it easy, and not get too excited about the end of the interest rate hikes?" asked Peter Boockvar, the Chief Investment Officer at Bleakley Financial Group. "He will do this by reiterating that the Fed will remain tight for some time. Just because the hikes are finished does not mean there will be an immediate transition to easing policies." The Fed's rate hike on Wednesday will be the eighth since March. It will result in the fed funds target rate range being 4.50% to 4.75%. This is just a half percentage point away from the Fed's estimated final rate range of 5% to 5.25%. "I believe he will push back on financial conditions, which the markets are anticipating," said Rick Rieder, BlackRock's Chief Investment Officer for Global Fixed Income. "People are aware of how much credit spreads, equity markets, and tech stocks have changed this month, which has been extraordinary." Original Article Here: Read the full article
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