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China ''considers'' issuing at least 1 tn yuan of additional sovereign debt for infrastructure spending to boost economic growth, which would raise budget deficit well above 3% cap, pretty big if/when confirmed FED'S Logan : higher yields may mean less need to raise rates, that's a turn in wording at least... meaning, risk premium or 'term premia' is doing the job for them..similar to Golsbee, Bostic, Daly last week, so the message seems quite clear (supply issues always remain in the background though) >>> Two Federal Reserve officials have suggested that the central bank may leave interest rates unchanged at its next meeting in three weeks From a US government spending perspective, it is astonishing to think that the huge government spending currently, is with a defense expenditure that has remained near historical lows! (chart available) Bank of America's blunder on interest rates left it with a lopsided portfolio of long-dated bonds and almost $110 billion in paper losses >>> and that's ok ? Metro Bank rescue deal - imposes 40% haircut on their Thier2 bonds due 2028 China’s rich entrust total strangers to sneak cash out of the Country. Professional wealth advisers connect clients to remittance firms that rely on customer trust—and sometimes criminal cash-BBG The average U.S interest rate on US credit card balances has moved up to 21.2%. With data going back to 1994, that's the highest rate ever. 30y U.S. Mortgage Rates jump to 8.09%, the highest level in more than 23 years IMF lowers global growth for 2024 to 2.9% (from 3%) and raises global CPI to 5.8% (from 5.2% in July), warns of inflation's tenacity Rishi Sunak, who last week committed to building dozens of new transport projects across the country, now tells the BBC that they were merely a "range of illustrative projects that could be funded..." Markets : WTI chart below - large spec liquidation last week, and back on trend higher SPX500 4200 200dma remain the key for Q4, U.S CPI up next, earnings season soon and geopolitics into the mix. Equity markets will like a softer usdollar and enough CTA short positioning out there to squeeze higher from here, big picture Dutch TTF gas ending the day up 15% at €44/MWh as competition for supply heats up again UST's reacting to FED talks, possible switch, 10's UST yields down about 20bps since Friday post NFP levels... huge supply this week though coming USDollar has been overbought >> watch out FED switch and China stimulus >>> could force decent unwinding of long $$$'s out there, watch price action!! IF U.S CPI come in as expected or mild(er) we could well be onto some sort of a mini turn 2 Federal Reserve officials say spike in bond yields may allow central bank to leave rates alone (qz.com) Fed's Philip Jefferson, Lorie Logan Are Wary of Surge in Bond Yields - Bloomberg China Mulls New Stimulus, Higher Deficit to Meet Growth Goal - Bloomberg Israel-Gaza Conflict What it means for financial markets | Saxo Group (home.saxo) 8mins from Steen & Co Israel-Hamas War Latest: Over 1,100 Dead, Oil Price Soars - Bloomberg Nick Timiraos on X: "Logan’s speech is worth reading: the “why” of this recent bond selloff matters importantly for the Fed. If this is about the market expecting a higher policy path, that wouldn’t necessarily change the path. But higher term premiums “have a different implication altogether.” https://t.co/CBIJj3Ag6O" / X (twitter.com) Financial conditions and the monetary policy outlook - Dallasfed.org (1) Bloomberg Markets on X: "Bank of America's blunder on interest rates left it with a lopsided portfolio of long-dated bonds and almost $110 billion in paper losses https://t.co/YNbPOxATk8" / X (twitter.com) Reality vs the ''don't worry things are fine and rates are going lower again'' Metro Bank agrees rescue deal with investors | Metro Bank | The Guardian Was läuft bei Lindt&Sprüngli? - Inside Paradeplatz Joe Weisenthal on X: "This is a great read on how wealthy Chinese people smuggle their cash out of the country. Among other great details in here, some private bankers in Europe, as a free service, will introduce clients to underground remittance operators. https://t.co/v3dniWgPbp https://t.co/K0h4lhuvdM" / X (twitter.com) FTX Founder's Trial: The Insiders Are Talking (finews.asia) EURUSD - been on trend lower since mid July - 1.0625+ and few things could change. AUUSD been trying to form a base too latel 0.6300-.64 area, China news may well help a squeeze higher too SPX500 WTI crude

Shocking news over the weekend - BBG-For the oil market, it's not October 1973 again -- but oil prices are still likely to rise (they just went down 10%..) particularly if Israel concludes that Hamas acted on instructions of Tehran and attacks Iran, if confirmed it could snowball into a bigger conflict in the ME which will keep oil prices buoyant for a while. Some claims, it is one of the biggest intelligence failure in Israel history.... U.S Equity markets off about 0.5% on the 'weekend futures', local markets in Israel down sharply though, note USDILS been bid (like all usd) for a while mind .. Amazon is hiring 250,000 employees for the holidays, and making its largest ever annual investment in U.S. hourly wages Levi Strauss cut its full-year sales forecast, citing weak sales of its denim at department stores and big-box retailers, folks struggling to even buy jeans? U.S Credit card debt exploded by $14.68 billion last month >> end of cycles, when savings are drained and folks take out new credit cards.. The autumn bond rout is challenging Wall Street’s longstanding belief that the U.S. government can’t sell too many Treasurys... huge supply this week! The People's Bank of China released its September gold reserve data today. In September, PBOC purchased 840,000 oz of gold, increasing its holdings for the 11th consecutive month, with a current gold reserve of 70.46 million oz The U.S. Dollar was used for 46% of all international payment transactions in July, a RECORD high. But we were told...BRICS? Markets >>> U.S payrolls still very strong (U.S claims the tell..and JOLTS), average earnings up slightly, which markets loved on Friday, next up U.S. CPI and geopolitics in Middle East, depending on how's involved, Crude could rally strongly over few months, just as it came off 10pct last week.. and given SPR empty, that's strategically not particularly clever! TLT closed at its lowest price in more than 16years last week, approaching the lowest price since inception in 2002. The longest duration bond ETF ($ZROZ) is down over 60% from its peak in 2020 and now has a negative return over the last 10 years A few bullets on Friday's sell low, chase high agony: 1. CTA positioning: Currently SHORT -$40B on SPX, the most significant short in the model's history. 2. HFs have increased their short positions. US notional short exposure is around the 80th percentile since early 2018. 3. Rate volatility decreased...chart shows MOVE inv vs SPX. 4. Employment report was not as strong as headlines suggested. Wage growth was softer, and unemployment remained consistent in the household report. (GS) Nick Timiraos on X: "Average hourly earnings in Sept posted its mildest monthly increase since Feb 2022 and its smallest year-over-year gain since June 2021 The index of aggregate weekly payrolls for private-sector workers, which combines hiring, wages, and hours, ticked down in September https://t.co/b5LxxyoLjL" / X (twitter.com) Saudi Arabia, Qatar, Iran say Israel has only itself to blame for Hamas attacks | The Hill Biden, Macron others voice support for Israel after Hamas attack (cnbc.com) Israel-Gaza latest: US Navy ships and planes to move closer to Israel; 'at least 700' Israelis killed; '800 Hamas targets' struck in Gaza | World News | Sky News All had to refresh our memories 1973 oil crisis - Wikipedia no idea whether this is similar or not, everyone will have a view.. Gold Trends on X: "Exactly 60 years ago, the Yom Kippur War of 1973 (October 6 to October 25) started. In the next 7 years Crude went from $5 to 50 Interest Rates from 6.5 to 18 Gold from 42.22 to 875 Stocks lost almost 50% the following 52 weeks but ended about even after 7 years https://t.co/TowQRXC7Q5" / X (twitter.com) Wall Street Isn’t Sure It Can Handle All of Washington’s Bonds - WSJ Amazon is hiring 250,000 seasonal employees for the holidays in the U.S. (aboutamazon.com) Levi Strauss cuts full-year sales forecast again, as inflation takes a toll (msn.com)

Solar industry warns of hurdles to EU’s green tech drive: ‘Europe isn’t profitable’ Europe’s bid to expand its green tech industry faces a host of challenges, including high energy costs and supply chain issues, solar industry representatives gathered in Madrid warned on Thursday IMF chief Georgieva: soft landing possible, but fiscal, debt risks abound U.S yield curve 'un-inverting', textbook recession behaviour ? hence why the FED would appear to have 'leaked' a pause in Nov, due to 'financial conditions tightening'.. quite possible! employment data which remains key for Powell JOLTS were much stronger, ADP a little softer in mid week, now time for NFP : payrolls expected to fall to 150K from 187K, U rate expected to hold at 3.8%. Average hourly earnings forecast to rise 0.3% MoM and 4.1% YoY, from 0.2% and 4.3% respectively EV maker Rivian plans $1.5 bln convertible bond sale Australia concludes China decoupling ‘impossible’ after carrying out series of classified studies Developed nations pledge $9.3 billion to global climate fund at gathering in Germany Alibaba accused of ‘possible espionage’ at European hub The 30-Year Mortgage Rate in the US has moved up to 7.49%, the highest level since December 2000. U.S. Bank losses on held-to-maturity assets have soared to an all-time high of $400 Billion. US small banks’ credit card delinquency rates hit a multi-decade high Markets : GOLD most oversold since 2015/Thread UST 10's just above 4.7% ahead of NFP, bonds oversold, but.. long-term yields could drop towards 4.4/4.5% and the long-term picture wouldn't change technically, and with supply coming it's hard to think of much more of a correction than this, Yellen going on a UST selling spree in a holiday shortened 3 day window next week.. total of nearly $550bn in gross issuance (bills and bonds) with $85bn of net issuance of which $61bn comes from 3s/10s/30s USDollar similar, overbought slightly, as bonds and equity got a little oversold too, one NFP data is quite irrelevant, but decent swing possible in short-term sentiment SPX500 200dma key for 'medium-term' direction into Q4, so far so good, we held this week! yet underneath it has been pretty terrible for rates sensitive stocks, take #BAC and #Citi stocks hitting 1y lows Crude steadying $82 area after a huge liquidation of leveraged CTA/Spec positions, though long-term no real evidence of weak aggregate demand for crude, so soon a buy again.. bar a nasty recession call of course #HYG also had its largest 10day sell.-off since banking crisis in March 2023, when 10's UST yields reached 4% Solar industry warns of hurdles to EU’s green tech drive: ‘Europe isn’t profitable’ - The Globe and Mail IMF chief Georgieva: soft landing possible, but fiscal, debt risks abound - CNBC Africa JPMorgan’s Cash-Hoarding Bond Manager Sees 6% Yield Within Reach (yahoo.com) Russia, Saudi Arabia Can't Monopolize the Oil Story - Bloomberg jeroen blokland on X: "If you are focused only on the reason why the US #yieldcurve is 'uninverting' (short end vs. long end), you are missing the critical point of what is already a small sample size: The yield curve inverted only in the run-up to a #recession!" / X (twitter.com) >>> Inverted 10-year Treasury yield and Nasdaq 100 formed a significant divergence from April to July 2023 Yield Curve Inversion Gets Dangerous When Dissed: John Authers - Bloomberg fred hickey on X: "Gold is so oversold. Only time have seen RSI this low (21.6) in past 8 yrs. was late-2015(gold's bottom), end of 2016 & Fall of 2018. Major extended rallies grew out of each of those lows. RSI didn't even get that low last Fall -when gold rallied $420 in 7 mos. &miners jumped 60% https://t.co/0qK1wHak1W" / X (twitter.com) Developed nations pledge $9.3 billion to global climate fund at gathering in Germany (qz.com) Alibaba accused of ‘possible espionage’ at European hub | Financial Times (ft.com) Tesla cuts US prices of Model 3, Model Y cars (yahoo.com) Exxon in advanced talks for $60 bln acquisition of Pioneer - sources | Reuters EV maker Rivian plans $1.5 bln convertible bond sale, shares fall | Reuters ‘Seismic night in Scotland’: Labour crushes SNP in Rutherglen and Hamilton West byelection | Byelections | The Guardian Australia concludes China decoupling ‘impossible’ after carrying out series of classified studies (msn.com) Donald Trump Drops Off The Forbes 400 For Second Time In 3 Years >>> As the New York attorney general accuses Donald Trump of fraud, Forbes answers the question at the heart the case: What is he really worth? HYG - high yield credit

The EIA report is making substantial damage for the energy bull case here with the headline that "the implied 4 week average of the gasoline demand is at a 25yr seasonal low", that's the top at $100 in place then.. ADP Private Payrolls 89K, Exp. 150K . "We are seeing a steepening decline in jobs this month... Additionally, we are seeing a steady decline in wages in the past 12 months." , ADP weak, jet JOLTS were much higher, so what will NFP tell us tomorrow.. -Rates are expected to stay higher for longer, an idea Fed officials have tried to get the market to accept and which investors are only now beginning to absorb >>> getting used to a more typical rate structure doesn’t sound like such a terrible thing. But after 15 years of living in IZIRP and NIRP and $30trn of funny money created, normal sounds, well, abnormal China's holdings of US Treasuries continue to fall sharply. Since April, China has sold over $40 billion of US Treasuries. Since their peak roughly a decade ago, China has unloaded nearly $500 billon of US Treasuries The total return of 30yr Treasury bonds is now negative since quantitative easing was launched, read this again, and while everyone is focused UST yields up, the Junk Bond yield has shot up to 9.25% (highest since last November). Corporate debt service is exploding, as revenue withers. McCarthy ouster raises chances of government shutdown, Goldman says Emerging market bond yields are sending a worrying signal "The only way the Fed could help longer yields is by hiking so aggressively that markets are convinced a recession is imminent and rush to buy longer rates." -- Barclays Janet Yellen said a surprisingly resilient US economy has prompted investors to question what it will take to bring inflation down, but she cast doubt on whether that would force interest rates to stay elevated for a long period Matt Gaetz has thrown the House into chaos. What comes next is anyone’s guess...“You know what I think marches this institution towards chaos? Marching us towards the US Dollar not being the global reserve currency anymore.” Hong Kong banks struggle to sell foreclosed homes even at 20% discount JPMorgan steps up securitisation effort ahead of new US capital rules FT-A sell-off in global bond markets has pushed borrowing costs to their highest levels in a decade or more. That means potentially heavy losses for banks, insurers, pension funds and asset managers that own trillions of dollars of sovereign and corporate debt after loading up in recent years The US National Debt has now increased by over $2 trillion since the debt ceiling was suspended just 4mos ago, now about $33.5trn The U.S. is now importing more goods from Mexico than from China for the first time in 20 year Markets : For the first time since early October last year, no sector ETF is trading above its 50-day moving average (apart from the magnificent 7 index - is that's an official one) Equity markets held up, SPX500 held the 200dma, pretty much to the point, defense stocks fell as paralyzed U.S House with no speaker puts UK/UKR aid at risk, small caps and financials in real danger of breaking long-term supports ( #XLF and #IWM ) #SPX500 has made 33 lower lows in the last 50 trading days which equals the most in its history, oversold ! maybe but doesn't necessarily mean much, if we were to break 200dma Crude got smocked ! (...just when many invest banks got all bulled up for 120-150usd oil shock..classic)... 10$ down sharpish, still on trend higher, OPEC+ should know better that a $100+ price would risk a global slowdown (already fragile with rates..) Duration risk : everyone wants toa void 'IT? become a credit risk...cost of capital, value of UST collateral matters, credit 'crunch' risk rising... US Treasury Yields yesterday before ADP - which pushed them down about 6bps across curve : -3-Month: 5.62% (highest since Jan '01) -1-Year: 5.49% (highest since Dec '00) -2-Year: 5.15% (highest since Jul '06) -5-Year: 4.80% (highest since Jul '07) -10-Year: 4.81% (highest since Aug '07) -30-Year: 4.95% (highest since Sep '07) Who feels the pain from the bond sell-off? | Financial Times (ft.com) A sell-off in global bond markets has pushed borrowing costs to their highest levels in a decade or more. That means potentially heavy losses for banks, insurers, pension funds and asset managers that own trillions of dollars of sovereign and corporate debt after loading up in recent years. Ousting of House Speaker Kevin McCarthy raises chances of government shutdown, Goldman says (yahoo.com) Yellen Says Higher-for-Longer Scenario Is ‘By No Means a Given’ (msn.com) She's worried clearly Something is breaking in financial markets: What's behind the sell-off (cnbc.com) How America’s broken information environment birthed the chaos wrought by Matt Gaetz (msn.com) a lot spoken about 'chaos', good grief, U.S politics to get even worse from here Voices: Matt Gaetz has thrown the House into chaos. What comes next is anyone’s guess... (msn.com) Emerging Market Bond Yields Are Sending a Worrying Signal (yahoo.com) These UST need to stop going down, but the U.S government is addicted to spending.. Apple CEO Tim Cook Offloads $88 Million Of Shares—His Biggest Selloff In Years (msn.com) Hong Kong banks struggle to sell foreclosed homes even at 20% discount | The Straits Times UK prime minister wants to raise the legal age to buy cigarettes in England so eventually no one can (qz.com) Alstom cuts free cash flow target as production ramps up, order delays weigh (yahoo.com) Metro Bank looking to raise up to £600m in new financing (msn.com) JPMorgan steps up securitisation effort ahead of new US capital rules | Financial Times (ft.com) Plenty of similar articles about new Funding requirements, not just financials mind Belgian intelligence monitors Alibaba hub over ‘espionage’ concerns | Financial Times (ft.com) Sam Bankman-Fried's Lawyer Says the 'Math Nerd' Wasn't the Problem, Caroline Ellison Was (businessinsider.com) United Auto Workers Strike Cost GM $200 Million in First 2 Weeks - Bloomberg WTI SPX500 - key levels calling for a volatile October/Q4, bearish sentiment vs many calls for 'bullish seasonality', all about 200dma 4200 area

Stormy weather ahead, volatility on the increase In the US, the unprecedented removal of the Speaker of the House, first time in history, has raised fears of paralysis at the highest levels of government Meta, the parent company of Instagram and Facebook, is reportedly planning to charge European users up to $17 (£14) per month for an ad-free subscription tier, #META has rallied huge in 2023...beware possible negative reaction Credit card losses rising at fastest pace since 2008, according to Goldman Sachs JOLTS : Job openings in August just unexpectedly jumped from 8.92 million to 9.61 million. This jump of 690,000 job openings is the biggest since July 2021 >>> USD went bid, USDJPY traded towards 150.25, and it seems BoJ stepped in, USDJPY dropped briefly to about 147JPY China has fewer dollars to recycle into Treasuries. In fact, China has been selling $300bn in Treasuries since 2021 Oil stocks will be in focus as OPEC+ meets to discuss output. The group is expected to leave production unchanged amid tight supply RBNZ left rates unchanged and avoided any hawkish surprises on their comments Mester remained on the hawkish side of FOMC participants. Her baseline is one more rate hike this year before holding rates for “some time” as the Fed assesses incoming data Goldman estimates US interest costs as a share of US GDP to reach a new peak by 2025 on the back of higher rates. Goldman projects US net interest expense to rise from 2% of GDP in 2022 to 3% by 2024 and 4% by 2030 >>> The US added $275 billion in debt in, ONE day...total US debt is now $33.4trn, hit $33 trillion just 2 weeks ago, and on pace to rise by $1 trillion this month alone.. Am azing.. Amazon used secret ‘Project Nessie’ Algorithm to raise prices, the strategy, as described in redacted parts of FTC lawsuit, is part of agency’s case that Amazon has outsize influence on consumer prices Ford reveals seventh offer to striking UAW workers; GM announces more layoffs Since its inception 50 years ago, the principles of the Chicago School of Economics shaped global economic policy until the 2008 financial crisis signaled an end to its dominance EU Formally Opens Anti-Subsidies Probe Into EVs Made In China - BBG, EU pretty busy going after many targets, from techs to EV's Markets : Germany's 10-year yield is also surging, now back to its 2011 debt crisis levels, 3% and UK bond market will not take kindly any 'spending spree' for the Tories, 10's UK 4.65% and finally 30y UST reaches 5%, highest since 2007 USD and UST yields are rising, price falling because of the super loose fiscal policy in the U.S, not necessarily because the economy is strong.. #bondvigilantes >>> and (clear risk) is that suddenly duration risk becomes credit risk >>> The UST curves was -110 2months or so ago, now -33, recession watch could turn into recession warnings, particularly if unemployment ticks up, that's the play for markets... (JOLTS was still very strong this week though), NFP next on Friday USD stays firm(er), classic risk-off moves in CAD, MXN, AUD, FXEMG, CROSSJPY's now topping with BoJ threats near 150USDJPY (not confirmed but GS estimates they sold $6bn up there yesterday) SPX500 : all about 200dma around 4200/10, will set the tone for Q4 and become 'THE' level to watch for sentiment (other indices already broke down through that level in recent days-weeks) VIX still below/around 20, barely moved, if this jumps higher, BEWARE of some sort of liquidity gap, mini credit event etc and through 200dma SPX500 could gather some downside momentum Quarterly Outlook Q4 2023 | Executive summary | Saxo Group (home.saxo) The core thesis in this Quarterly Outlook is that real rates are too positive, creating a fallout from sectors and consumers with refinancing needs. As spending is likely to slow and the US fiscal cycle is turning from tailwind to headwind, the world may indeed have reached ‘peak rates’, providing a once-in-a-decade opportunity to go long bonds. Ford reveals seventh offer to striking UAW workers; GM announces more layoffs (yahoo.com) Kevin McCarthy: US House Speaker removed from office for first time in history | US News | Sky News Amazon Used Secret ‘Project Nessie’ Algorithm to Raise Prices - WSJ Credit card losses rising at fastest pace since Great Financial Crisis (cnbc.com) RBNZ Official Cash Rate remains at 5.50% - Reserve Bank of New Zealand - Te Pūtea Matua (rbnz.govt.nz) Meta plans to charge European users for Meta and Instagram (cityam.com) >>> time to get a little short on the name ??.. #META Nick Timiraos on X: "Job openings jumped to 9.6 million in August from 8.9 million in July The three-month moving average for job openings held steady at 9.2 million There were 1.5 openings for every unemployed worker in Aug, little changed from July https://t.co/OyExnUp1rz https://t.co/3EJCwIC3ki" / X (twitter.com) Lisa Abramowicz on X: ""Maybe China is behind the rise in US long rates...China has fewer dollars to recycle into Treasuries. In fact, China has been selling $300bn in Treasuries since 2021, and the pace of Chinese selling has been faster in recent months," selling $40bn since April: Apollo's Slok https://t.co/2wncyVUtct" / X (twitter.com) Laying Chicago Economics to Rest by Antara Haldar - Project Syndicate (project-syndicate.org) SPX500 - that support line is also the 200dma

On this day 33years ago... Q4 starts where we left off in Q3 (apart from last day fix..), with higher duration yields, 10's UST 4.7% and USDollar has a strong leg higher, AUDUSD breaking down through recent months lows around 0.6350/75 area, USDCAD 1.37+, USDMXN not too far, USDCNH 7.3250 again too >>> Fed's Barr's focus is on how long to hold rates high, Fed's Mester 'one more rate hike may be needed this year', URA : often discussed Uranium with you last 2-3years, ok so the ETF has rallied form 10 to 30 last 3years, it's still a long way down from the Fukushima levels (chart below), imho, it was always going to be near impossible to do without nuclear TSLA reported 435k deliveries in Q3, 25K below expectations, and the 1st decline in deliveries in 2 years >>> planned factory closures were to blame JPMorgan's Lebovitz: “If rates continue to rise the way they’ve been rising, there will be a financial accident. Something will break and that will get the Fed moving in the other direction." "Rivian vehicles sell for over $80,000 on average. Yet they’re so expensive to build that in the second quarter the company lost $33,000 on every one it sold. That’s roughly the starting price of a base model Ford F-150." - WSJ Cleveland Fed President Loretta Mester: “We are likely near or possibly at the peak of the fed funds tightening cycle. Now our task turns to ensuring that we keep monetary policy restrictive for long enough” to get inflation to 2% in a timely way Crude : that's a different view from most in markets : Citigroup with a renewed bearish call for oil, arguing that Brent would drop to the low ~$70 in 2024 on "more oil coming into the market." , “OPEC+ cuts have driven oil higher in a prolonged bull run, but 4Q ‘23 is set to move lower, with further 2024 downside” Credit default swaps of the biggest US banks are rising - again the surprise is that they haven't really done too much, up until last couple of weeks Swiss inflation : SNB in a good spot, smaller rebound in expected headline CPI in Sep, with core easing to 1.3% YoY Gaetz files motion to remove Speaker McCarthy from leadership position Markets : Equity markets hanging in here, mostly (only) on the magnificent 7's (been all along the new 'defensive play for Mr Market'..)... European markets through looking pretty soft and 6months lows (would respect the lag effect, first pops up in large caps vs small caps, and can reach a broad sell-off if/when jobs are hit, which is what Powell focuses on now for any signs of economic weakness (inflation we know is topping out but will remain sticky, for now anyway), we remain defensive and watch those 200dma now : A god number of indices have fallen through 200dmas (Dax, MSCI EMG, Shanghai composite, stocxx600 and even the Dow jones, the big SPX500 is trading 2% or so above that threshold (around 4200), QQQ holding up on large cap 7's, while underneath, it looks MUCH worse, China property stocks keep sliding to the lowest since 2008 XLU - SPX500 utilities sector dropped sharply again yesterday, lowest point since June 2020 (interest sensitive sectors hit again, Reits, and energy down on softer Oil) USDollar remains on a firm trend higher, bar any big change from somewhere Bonds : all the moves are about Reals, so in effect tighter conditions, higher & steeper >>> The latest yield surge shows Treasuries are detached from their fundamental drivers: JPMorgan analysts. Ed Yardeni says the selloff shows broad concern about the US's fiscal policy of escalating federal budget deficits >>> BBG - the Bond vigilantes are back and we could get a BoJ pivot sooner or later ...(JPN yield curve is steepest in history..), Japan's 10-year government bond yield hasn't been this high since the 2013 "taper tantrum" in the US Copper hitting March lows, Crude 3week lows too - good news Metals got hit as well, GOLD fell hard through 200dma in late Sep (1935$) and in fact Silver got butchered since Friday, liquidity tightening-event ? Few signs of capitulation in few places other than the Mag 7 ! Speech by Governor Bowman on the economy and bank regulation - Federal Reserve Board >>>A Timely Journey Back to Price Stability: Are We There Yet? No. Will We Get There? Yes. A Timely Journey Back to Price Stability: Are We There Yet? No. Will We Get There? Yes. (clevelandfed.org) Fed's Barr says his focus is on how long to hold rates high | Reuters How the Fed Made a Worrisome Economic Signal Go Away (msn.com) Quote from article to explain the magic of the Fed's accounting: "The Fed’s losses don’t represent a direct hit to the economy, since the way Fed accounting works the central bank just carries losses on its books, to be washed away when it starts making profits again. When the Fed turns a profit, on the other hand, it makes payments to the Treasury Department, which can help offset budget deficits. However, the Fed’s recent accumulated losses do mean that, even if it returns to profitability, it won’t be contributing to the Federal budget right away, as it first has to dig itself out of a hole." Lisa Abramowicz on X: "The latest yield surge shows Treasuries are detached from their fundamental drivers: JPMorgan analysts. Ed Yardeni says the selloff shows broad concern about the US's fiscal policy of escalating federal budget deficits. https://t.co/1WkusgVrf5" / X (twitter.com) Robin Brooks on X: "Markets are very negative on China. That's odd because China's manufacturing PMI is better than the US or Euro zone (lhs) and its services PMI is also just slightly better (rhs). Markets instead should focus on the Euro zone, where manufacturing and services look very weak... https://t.co/JzhJfVR3fB" / X (twitter.com) there is always a point where markets get über bullish or too bearish - are we there ? Will Berlin's monument to German Unity ever be completed? (msn.com) Michael Pettis on X: "1/8 I don't have enough experience in manufacturing to know how available tooling engineers are in either the US or China, but I am old enough to remember that we were saying exactly the same things about Japan in the 1980s and Germany more recently." / X (twitter.com) Japan to stress-test banks for risk of Silicon Valley Bank-style crisis - Nikkei Asia Gaetz files motion to remove Speaker McCarthy from leadership position (yahoo.com) Trump rails against fraud trial as it appears legal team did not submit request for jury – live (msn.com) whoops! Tesla 3Q sales rise 27% but fall short of expectations due softening demand and factory downtime (qz.com) NextEra Energy plunges despite Buy rating reiterated at Goldman, as drop overdone (msn.com) >>> lag of financial headwinds with higher rates and the cost of capital on renewables etc Kochie’s big rates call: ‘As bad as it will be’ (yahoo.com) RBA - bar any surprised, looks like we are done, as always the question is whether/when rates will come down in this environment of stick inflation (high for longer) A Timely Journey Back to Price Stability: Are We There Yet? No. Will We Get There? Yes. (clevelandfed.org) Rishi Sunak’s Commons majority in peril as 60 Tories join Liz Truss group | Conservatives | The Guardian Ammmazing Sam Bankman-Fried must now convince a jury that the former crypto king was not a crook (qz.com) Mali in meltdown as militants advance and U.N. withdraws | Reuters terrible state of affairs URA ETF in perspective

TSLA is expected to announce its Q3 deliveries today, expected top be a miss on estimates due to planned factory shutdowns and soft demand, which resulted in the EV maker discounting prices. Miners will be in focus too, after GS reported that China's demand for Copper rose 8% YoY and Iron Ore 7%, higher than recent expectations (Chinese iron ore inventories at the ports are now close to seven year lows…) >>> Going to be 'choppy' into earnings reports, also note FED's Powell last week outlined again some of the risks ahead for Wall Street, namely strikes, government shutdown (avoided for now, pushed back 45days..), resumption of student loan payments, 'high for longer' funding for mortgages and credit cards and potentially an oil price shock (which no.one really wants, so the Saudis/OPEC+ will probably want to avoid it !).. The US government has avoided a federal shutdown after both House and Senate agreed on a short-term funding deal. A bill ensuring funding until 17 November received overwhelming support, and was signed into law by President Joe Biden minutes before a deadline. No limit, no brake on spending >> was it not Hartnett who said ?“markets stop panicking when politicians start panicking.” Absolutely nobody in Washington is panicking about deficits. The Panama Canal is reducing the maximum number of ships allowed to travel the waterway to 31 per day due to a drought that has cut the supply of fresh water needed to operate the locks “The damage in bonds has been more severe and more sustained than for equities and you can’t help wondering where the real damage is. You can’t have this much value destruction in bonds without there being some stress somewhere:” DB’s Jim Reid, BoA and many other research groups made similar comments last 20days.. New $4B Panasonic electric vehicle (EV) battery factory in Kansas requires so much power that the facility will need its own COAL plant to run - not even kidding.. Plus ca change..The Bank of Japan said on Monday it would conduct additional bond buying operations, seeking to slow a rise in yields after the benchmark reached its highest in a decade >>> do they want USDJPY to the moon ? Markets : CBOE Volatility index VIX, has closed uner 19 for nearly 90 consecutive trading days SILVER rallied a few pct on Friday initially....and got chopped nearly 10pct on Friday late, amazing 'price action'^, metals softer together with USD and US yields higher USD picks up day 1 of Q4, with some strength, after 'quarter-end' light weakness, should higher, be supported together with duration, 'high(er) for longer UST yields Equity markets held into quarter-end similar price action to UST 10's, a little of buying for the rebalancing, but note 10's UST back already to 4.62% UST's : higher and steeper looks to remain the name of the game Overall, would remain tactically light in risk, be ready for new investment opportunities in Q4 2023, we have our strategy ready to get into quality risk at better levels for our clients, the higher for longer is beginning to byte, should hardly be a surprise, but markets will be eager to check consumer strength during earnings reports and any indication from corporate that USD strength and financing costs hard to deal with US Congress avoids government shutdown in last-minute deal - BBC News  (spglobal.com) ASEAN Manufacturing #PMI slipped into contraction territory for the first time in over two years at 49.6 (Aug: 51.0). Employment levels likewise fell S&P Global PMI™ on X: "#Eurozone manufacturers continued to report a sharp contraction in September, the @HCOB_economics #PMI signalled (43.4), as new orders shrank at one of the fastest rates since the survey began in 1997. Read more: https://t.co/JZvQoE3Kgb https://t.co/e3Mj1DJuGV" / X (twitter.com) not particularly goo din Europe either! Panama Canal reduces the maximum number of ships travelling the waterway to 31 per day (qz.com) Paris-Berlin relations slump is holding up key EU decisions, says German MEP | European Union | The Guardian Barchart on X: "CBOE Volatility Index $VIX has closed under 19 for 87 consecutive trading days, the longest streak since a 93 day stretch ended in early 2020. https://t.co/egEH9i2qBr" / X (twitter.com) “Higher wages don’t combat skilled workers shortage”, say Swiss employers - SWI swissinfo.ch How a prolonged, higher interest rate shapes asset allocation - FTAdviser.com Rishi Sunak needs to rally his flagging Conservatives. He hopes a dash of populism will do the trick (qz.com) Singapore Banks Tighten Scrutiny (finews.asia) ...after a huge expansion last couple of years... New Brexit checks to cost UK business £330m a year | The Independent Another winner! The U.S. Lost 4.1 Million Days of Work Last Month to Strikes - WSJ out few weeks back, no matter how you slice it, it's a of of working days New $4B Panasonic electric vehicle (EV) battery factory in Kansas requires so much power that the facility will need its own COAL plant to run – NaturalNews.com Nuclear renaissance in Europe? | FT Energy Source | Financial Times no wonder really John Lennon’s stolen watch found in Geneva - SWI swissinfo.ch NASDAQ held Aug lows - just about - stay defensive

The new quarterly JPMcollar is 'short 3410SPXput, and long 4'050/4500 SPX500 call spread >>> This collar while not intended to be directional (it's a hedge vs ETF's etc)... is not particularly bullish at all... with an expected upside cap of 4500 SPX by EOY... that is not even making it back to the high of year... Week ahead : no U.S government shut-down, we get to all get exited about it all again in 45 days...UAM strike is giving ideas to others : More than 75,00 union healthcare workers at Kaiser Permanente say they will strike on Wednesday if a new contract is not reached. The existing contract expired on Saturday. The union says if the strike happens, it will be the largest strike of healthcare workers in U.S. history, with picket lines in California, Oregon, Washington, Colorado, Virginia and Washington D.C. >> risk is there will be more of them, once some get big pay rise, others will fenzy theri chances... >>< NFP on Friday, Lagarde, Powell, RBA, RBNZ meetings and we go into Q4 with earning season upon us, will AI confirm ? will bond yields, inflation worry investors on those hefty valuations ? >>> big profit growth priced/expected for megacaps, but with higher yields, risk of further discount to be priced in Last Friday : 12-month core PCE inflation declined across all three buckets in August (goods, housing, non-housing services), but most notably in goods / Thread MS : The technicals and breadth (e.g., equal versus cap weight performance) for Consumer Discretionary stocks look particularly challenged. We believe this price action reflects slower consumer spending trends, student loan payments resuming, rising delinquencies in certain household cohorts, higher gas prices, and weakening data in the housing sector. Our economists, who wisely avoided making the recession call earlier this year, see a weakening consumer spending backdrop. They forecast negative real PCE growth in 4Q and a muted recovery thereafter. While travel & leisure has been a bright spot for consumption, that dynamic may now be changing, according to our survey work B of A: “.. 520 central bank rate hikes past 24 months likely ain’t finished breaking stuff .. stay bearish/defensive & sell the last hike.” [Hartnett] FDIC quarterly banking report on bank losses for 3Q due in around 55 days (so by end Nov), unrealized HTM+AFS losses will be pretty ugly >>> U.S. Banks are facing roughly $600 billion of unrealized losses which accounts for roughly 25% of total banking capital, near the highest levels in history Fed’s Williams says interest rates ‘at, or near peak.’ But they won’t be coming down soon >>> The first FED cut is currently priced for August 2024 (top panel), or 337 days away/Thread -And finally, you don't often see those kind of news : “A female sea lion, known as Sally, escaped from her enclosure at the Central Park Zoo briefly on Friday, swimming out of the pool where she is kept when the heavy rains lashing New York City flooded the zoo grounds.” Equity markets look to be opening up slightly, by about 0.5% Top 5 things to watch in markets in the week ahead (yahoo.com) Congress avoids government shutdown but US could face another in 45 days. What that could mean for Florida - CBS Miami (cbsnews.com) Fed’s Williams says interest rates ‘at, or near peak.’ But they won’t be coming down soon. (msn.com) Moody’s warns of ‘systemic risk’ from leveraged lending market | Financial Times (ft.com) Jim Bianco on X: "1/2 When will the Fed start cutting rates? This chart is derived from market pricing. The first cut is currently priced for August 2024 (top panel), or 337 days away (bottom panel). https://t.co/t2tvvkf91o" / X (twitter.com) Holger Zschaepitz on X: "Stress in the financial system is rising: The value of global bonds dropped another $428bn this week as the interest rate world keeps repricing for a higher for longer. In past quarter, bonds lost ~$1.8tn in value and everyone is puzzling over who has the losses on their books. https://t.co/fDk8AO7875" / X (twitter.com) Artificial intelligence technology behind ChatGPT was built in Iowa — with a lot of water (cnbc.com) Nick Timiraos on X: "12-month core PCE inflation declined across all three buckets in August (goods, housing, nonhousing services), but most notably in goods Core goods: +0.5% Housing: +7.4% Core services ex-housing: +4.4% https://t.co/6LWHxrKNHE" / X (twitter.com) Top financial regulator seeks global clampdown on hedge fund borrowing | Financial Times (ft.com) should have thought about that a LONG time ago.. have a great start to the week Team PVM

Iconic Sycamore Gap tree at Hadrian's Wall cut down by 'vandals' All topped out short-term on the last fixings yesterday... rates-duration, USD, crude and Equity market found some buyers into 'those'..slightly oversold levels, pretty classic price action into quarter-end...moves 'faded' on last fixings...after such strong moves last few sessions... NOW, a mixture of risk with US core PCE ahead this afternoon (most important), UAW strikes and possible govt shutdown The UAW wants to emerge from its strike against Ford, GM and Stellantis with at least a 30% pay raise. At that level (lower than initial 40% demand), the union believes will satisfy members and organize non-union plants. That includes a cost-of-living allowance and a wage increase Fed's Goolsbee's remarks yesterday were relatively dovish. He cautioned against 'policy overshooting' while highlighting the way forward to achieve the Fed's mandate Taiwan reveals first domestically made submarine in defense milestone Swiss KOF Leading Indicator Sep: 95.9 much better than expected 90.5 Britain's economic performance since the start of the COVID-19 pandemic has been stronger than previously thought, with faster growth than Germany or France, according to revisions to official data released on Friday, good news! Italy's 10y risk spread over Germany rose to over 2OObps, for the 1st time since March with Italy 10y yield on course to 5%, definitely one to watch for in Q4 (credit etc) Dutch headline CPI fell 0.3% from a year ago >> read this carefully, negative dutch inflation, German inflation softened a little more than expected, Sep CPI 4.5% from 6.1% in Aug, The Bundesbank data confirms that German core inflation slowed markedly in Sep to around 2% MoM annualized, this was the lowest in 2 years and due to an outright fall in core goods prices, the first in 30 months, looks real, good signs. Eurozone inflation hits two-year low U.S 30Y mortgage: 7.83% >> make it stop! Nvidia Linked to Dawn Raid by French Competition Regulator, French agency announced the move on its website Wednesday The bests of Charlie Munger - 5mins video (see below) priceless The Fed’s ability to influence the economy depends on whether “people understand what we are saying,” Chair Jerome Powell said, highlighting the importance of work done by economic educators Markets : As mentioned yesterday, markets got a little too bearish (short-term positioning) and got to key support levels in NASDAQ 14500 area, SPX500 4230 (less than 1pct of 200dma) and the month-end flows are probably mostly out of the way by now...>>>> same price action on USD and duration/USTyields which seem to have done 'enough' for now near 4.5-4.6% in 10's, equities (big 7's in particular) don't mind steeper curves SPX500 still on trend, just about, chart below, as long as 200dma holds nearer to 4210, markets will feel nothing has changed, same NASDAQ 1450 Aug lows levels USdollar topped out into quarter-end fixes... : 0.9200CHF, 1.0500 EURO, 1.2150 GBP, 1.3500CAD and 0.6400 AUD. USDJPY nearer to 150JPY also has 'fears of intervention' to potentially put a top there - early days though! Crude : similar price action >>> prices so key for Q4, inflation and all, crude above $100 on a sustained basis is not good for growth globally either UST10's same price action hit a 4.66 or so yesterday, backing off about 10bps again overnight, always hope that 'we are getting there'' finally.. >>>> HOWEVER, estimate of US Treasury ballooning borrowing requirements for 2024FY to go even higher, this IS the big worry still going forward: supply (a known known but the supply is on the increase still) Explainer: US government shutdown nearing, its impact, what next | Mint (livemint.com) Powell Says Public’s Understanding Key to Fed Impact on Economy (yahoo.com) Austan Goolsbee on X: "“Inflation still needs to come down. But we also can’t lose sight of the fact that the Fed has the chance to achieve something quite rare in the history of central banks—to defeat inflation without tanking the economy." @PIIE: https://t.co/KYyfav10oO https://t.co/i2kdX2YuXn https://t.co/S4XPCDyFq3" / X (twitter.com) USD picture fairly similar in few pairs ... here is an example : AUD/USD survives another "death trap" this week | Forexlive Yen intervention a hard sell even as 150/dlr 'red line' beckons | Reuters What went right this week: ‘spectacular’ renewables boom keeps 1.5C in sight - Positive News - Positive News UK economy performed stronger than expected in first quarter (cityam.com) which is it ?.. Welcome to Britain – where nothing works except the metaphors of decline | Evening Standard Sunak expected to limit powers of councils in England to curb car use | Transport policy | The Guardian Sycamore Gap tree at Hadrian's Wall cut down by 'vandals' - BBC News iconic tree gone, why why why... pathetic Taiwan reveals first domestically made submarine in defense milestone - The Korea Times US quietly acknowledges Iran satellite successfully reached orbit as tensions remain high | AP News Coinbase CEO Brian Armstrong: 'Ditch your JPMorgan Chase accounts' - CityAM Nope! nothing wrong with a bit of diversification though Apple's iPhone 15 Pro Draws Overheating Complaints (businessinsider.com) Taxpayers Stuck Paying the Bills for Oligarchs’ Seized Yachts and Mansions - WSJ Ray Dalio says the U.S. is going to have a debt crisis (cnbc.com) Nvidia French Offices Raided by Antitrust Authority, WSJ Says - Bloomberg Dividend Growth Investor on X: "The Best of Charlie Munger https://t.co/rEfYK5CYbn" / X (twitter.com) Charlie Munger and some of the best of his wisdom words ! priceless, gret 5 minutes I promise SPX500

Yields on 10's UST closed on new post 2007 highs yesterday, WTI closed at the highest level for over 12mos and the euro looks to be breaking through 1.0500 - key long-term level >>> ALL about credit now, ( the like sof #JNK #HYG ) which is beginning to move, perhaps the surprise is how well behave they have been so far...relatively speaking, so beware, this IS key for Q4 Tesla CEO Elon Musk Slams Biden For Supporting UAW Demands: 'Sure Way To Drive GM, Ford And Chrysler Bankrupt' >>> suspect Elon fears that his work force calls him out with big wage increase too... Petrobras is recruiting Chinese banks to finance its deepwater oil expansion in a sign of growing ties between Brazil’s state-controlled oil company and the world’s second-biggest economy The US Department of Justice escalates a probe into Credit Suisse and UBS over suspected failures that allowed Russian clients to evade sanctions Fed's Kashkari confirmed his hawkish stance, in terms of the dot plot, reiterating his views from his essay from Monday, his base case seems to be one more hike later this year (5.625% for 2023) and no rate cuts in 2024 (5.625% for 2024). That means Kashkari's 2024 dot was the second highest. Fed's Bowman's rate expectation appeared to be the most hawkish on the Committee based on recent speech China Evergrande has suspended trading on its shares as well as the shares of its other units listed in Hong Kong. This is occurring in the midst of continued debt troubles and reported police surveillance of its chairman Costco is selling gold bars : CEO said "I've gotten a couple of calls that people have seen online that we've been selling gold - 1 ounce gold bars, yes, and when we load them on the site, they're typically gone within a few hours and we limit two per member." The WGA is calling its new deal "exceptional." Here's why. Hollywood writers have secured a better deal on pay, AI, and residuals JPMORGAN: “.. we are not saying that the situation now is the same as in 2007-2008 .. But signs of stress are beginning to appear. .. lags are longer this time, which has resulted in complacency and broad acceptance of the soft landing, or even no-landing, thesis ..” (Kalonovic - he may get his day, though he's always been bearish) Percentage of credit card and auto loan balances transitioning to serious delinquency have surpassed pre-pandemic levels/Fitch Nikki Haley unveils economic proposal while slamming both parties over government spending >>> ''If Congress doesn’t pass a budget, they shouldn’t get paid. No budget, no pay'' Markets : Leverage and higher interest rates don't mix well Bond markets : beginning to look like the biggest sell-off in history..certainly the pace of it >>> which may well have been exaggerated with quarter-end flows and since FOMC reset (+50bps in 2024) and markets giving up and accepting the 'high for longer' which we've talked about for over 6months >>> we may well go to 5% in 10's UST, but proceed cautiously from here, take some profits, if you followed the advice and went short bonds, steeper play etc.. USDollar stayed firm on yields diff, and got another BID tone into quarter-end, similar story, well flagged, we may correct a little softer into October, but the differential remain the same, BoJ will eventually capitulate, but again market need to perhaps challenge them 150JPY+ first, USDCHF has doen some very good work after the 'SNB hold', woul dnot be shocked if we go towards 1.0000 now though >>> tough to be short usd, it's very expensive.. Crude rallied 2-3pct again y'day!, WTI 95$, reaching the levels we talked about 3months ago...now the whole street is getting pretty bullish, staying with it, key whether Saudi were to increase prod >>> Oil is back to where it was a year ago but the US SPR now has 250MM fewer barrels of emergency oil Equity markets : we reached Aug lows on QQQ and bounced yesterday off those levels, reaching slightly oversold levels in SPX500 and Nasdaq (most oversold since Nov 2002 - but let's face it we hardly moved last 3-6months, so we got very easily into oversold level..), SPX500 200dma is around 4200, is the first big line of support for going into Q4 Many pointing out still that the equal weighted S&P500 is now flat for the year, while the big '7' are up about 80% BTP-Bund spread approaching uncomfortable levels again (credit..) Overall, we remain cautious on macro side, as higher rates are definitely biting, lag effects, slowly hitting home Carl Quintanilla on X: "JPMORGAN: “.. we are not saying that the situation now is the same as in 2007-2008 .. But signs of stress are beginning to appear. .. lags are longer this time, which has resulted in complacency and broad acceptance of the soft landing, or even no-landing, thesis ..” [Kolanovic] https://t.co/4M9JQ7ORgJ" / X (twitter.com) Tesla CEO Elon Musk Slams Biden For Supporting UAW Demands: 'Sure Way To Drive GM, Ford And Chrysler Bankrupt' - Stellantis (NYSE:STLA), Tesla (NASDAQ:TSLA), Ford Motor (NYSE:F), General Motors (NYSE:GM) - Benzinga U.S got its manufacturing back, and now it also has the Unions that are back in a position of force, asking for big wage increases, can't blame them, but this will complicate things, we had 3 to 4 decades of globalization and manufacturing in China, with the West hunting for the cheapest labor forces, it's all but over..., onshoring is great and welcome, but it comes at a higher price... Nikki Haley unveils economic proposal while slamming both parties over government spending (msn.com) Petrobras Taps Chinese Banks to Finance Deepwater Oil Expansion (yahoo.com) UBS, Credit Suisse Face Growing Probe over Alleged Russian Sanctions Evasion - Bloomberg Binance, the World’s Biggest Crypto Firm, Is Melting Down - WSJ Not a good sing when top execs leave tha firm Winklevoss twins secretly withdrew $282M in Gemini assets before Genesis collapse: sources (nypost.com) Donald Trump may no longer be able to do business in New York (qz.com) Allegedly , if nominated, he could even govern from prison...if we get there, certainly the journey to next election will be lively! Greece to tap into undocumented migrants to curb labour squeeze (yahoo.com) Evergrande and Subsidiaries Suspend Trading (finews.asia) Costco is selling gold bars and they are selling out within hours (cnbc.com) More Brits forecast to turn to gold and silver for wealth creation (thearmchairtrader.com) Here’s what to know about the WGA’s new deal with Hollywood studios (qz.com) Hotel rates in New York City likely to go up with Airbnb rentals gone (cnbc.com) US steps up probe of Credit Suisse and UBS over sanctions breaches - SWI swissinfo.ch WTI EUTOstoxx50 DOW Jones

BBG - That's a headline ! : the average of all U.S. bonds are trading at 86 cents to the $ (including all USTs, corps bonds, mortgages and al) >>> Hedge Funds continue to short treasuries at historic levels while asset managers are building their largest long positions ever recorded! (have charts if you need them) Nearly 700 US banks now exceed the 2006 Commercial Real Estate (CRE) loan concentration guidance/Thread OpenAI is reportedly raising funds at a valuation of $80 billion to $90 billion Pressure on China Evergrande intensifies; chairman under police watch, risk of liquidation FTC calls Amazon a monopolist in massive antitrust case (...which could last years?) A top European Union official says the social network X, formerly known as Twitter, is the biggest source of fake news and urged owner Elon Musk to comply with the bloc’s laws aimed at combating disinformation More Japanese companies are moving their production facilities from China to Japan, fearing further disruptions from the novel coronavirus pandemic as well as the increasing friction between Washington and Beijing The Senate voted to advance a short-term funding bill Tuesday to avoid government shutdown The 10y UST bond is down about 3% YTD, this would represent the 3rd consecutive annual decline, which has basically never happened (down 4% in 2021 and 18% in 2022) Fed's Kashkari revealed his interest rate "dot" from the latest SEP : one more hike this year, and only one cut next year under his modal outlook for the economy MS’s Mike Wilson calls this economy “purgatory land.” “This is the most difficult part of the economic cycle. What you can argue is the late-cycle can persist for a lot longer than people have expected.” Markets : Investors have to 'adjust' to Treasury yield curve at higher levels than anticipated few weeks back, pre FOMC >>> makes me think of 2010-12period, when the market was constantly asking, wondering when ZIRP, NIROP and QE would stop...it took a decade.....now we are going to wonder for a decade whether rates go down and how far ? >>> so all in all, there is no doubt that higher rates are biting hard on consumers and various businesses, more downside risk than upside risk overall USD stays bid, if it was to really rally hard on further risk-off, beware the likes of MXN (posiitoning..), CNH, EMG, AUD, even CAD For equity markets : a higher for longer period of rates in this 'late cycle', means a continuation of 'quality investments, balance-sheets' remain a preference vs 'growth at any costs' kind of company Markets continue to allocate funds to government bonds, TLT etc hoping for a return to a disinflationary environment, IMHO, we could very well go back to a world that needs 1 to 2% real rates, so on 3% US inflation (as an example), the markets will require more of a 5% yield in 10y UST than a 3% yield, particularly with the fiscal situation that is not going to improve in a hurry.. Nick Timiraos on X: "Minneapolis Fed President @neelkashkari reveals his interest rate "dot" from the latest SEP: one more hike this year, and only one cut next year under his modal outlook for the economy He also takes up his long-run rate projection to 2.5% from 2% https://t.co/VIbsMAN1ni https://t.co/otIOpvntyU" / X (twitter.com) If ever 'investors' need to cash in' on the big winners of 2023, a quick reminder that they are still up big YTD: (not saying it will happen, just pointing out where profits 'may' be taken, as the divergence between TLT and QQQ is pretty extreme, and could well matter/correct in the intermediate term) NVDA +180% NFLX +30% AMZN + 50% META + 150% AAPL + 32% MSFT + 30% Jesse Felder on X: "'If you buy the S&P500 today, you are basically buying a handful of companies that make up 34% of the index and have an average P/E ratio around 50.' https://t.co/G8nJ9GuTUK https://t.co/Ldz0pcHsUx" / X (twitter.com) Stock Market Is Stuck in a Late-Cycle ‘Muddle,’ Morgan Stanley’s Wilson says - Bloomberg OpenAI is reportedly raising funds at a valuation of $80 billion to $90 billion | TechCrunch Russia is increasingly using China’s currency to evade sanctions | Financial Times (ft.com) The Kobeissi Letter on X: "JUST IN: Nearly 700 US banks now exceed the 2006 Commercial Real Estate (CRE) loan concentration guidance. What is the CRE loan concentration guidance? It's guidance by the FDIC for the amount of exposure that small banks should have to CRE loans. Currently, small banks hold… https://t.co/ZYCcDLy45o" / X (twitter.com) Pressure on China Evergrande intensifies; chairman under police watch, risk of liquidation | Reuters Credit card losses rising at fastest pace since Great Financial Crisis (cnbc.com) Outlook for Public and Private Markets - Apollo Academy 'ten downside risks to the U.S economy' - many well documented lately already, but imho not entirely priced in, lag reaction in markets from higher rates ... JPMorgan to settle Jeffrey Epstein suit by Virgin Islands (cnbc.com) $75mio.. FTC calls Amazon a monopolist in massive antitrust case (siliconrepublic.com) Tesla faces EU probe over China EV subsidies: FT (yahoo.com) Musk's X is the biggest purveyor of disinformation, EU official says (qz.com) Seems bang on For some Japan firms, era of cheap production in China is over | The Asahi Shimbun: Breaking News, Japan News and Analysis Target says rampant theft forcing it to close 9 stores | Fortune Senate votes to advance short-term funding bill to avoid government shutdown | The Hill SPX - while sub 4350 area, we should be heading towards 200dma which is around 4200 area, once/when trendline supports gives way on weekly chart - with quarter-end flows and ODTE things can happen pretty swiftly

FED >>> no recession in sight, yet, rates stay high for longer, if not much longer (depends how you define 'much longer''), as a LOT can happen between now and mid 2024 (when about 2 cuts are expected into end of 2024), the U.S economy will remain vulnerable to UAW strikes, government shutdown and higher yields, higher mortgages, credit cards funding etc >>> >>> The Fed is forecasting FedFundRate in Dec 2024 to be at 5.1%, with inflation down to 2.5%, if this forecasts stands correctly, it will be the longest period of restrictive monetary policy since the 205-2007 period Moody's : A U.S government shutdown would underscore institutional and governance weakness, and would be credit negative for the U.S sovereign ECB's Lagarde : Interest rates will stay high 'as long as necessary JPMorgan’s big call that oil could spike to $150 within a “higher-for-longer” energy macro outlook >>> Jerome Powell is scheduled to speak again this week on Wednesday right at market close 4PM South American leaders issue ultimatum on EU trade pact Telegraph/How Greek shipping oligarchs are reaping billions from Putin’s war. Rise of Russian shadow fleets has eroded the effectiveness of the G7’s oil price cap For many nationalist parties like Spain’s Vox and Germany’s Alternative für Deutschland, Giorgia Meloni’s rise to power offers both a playbook and a cautionary tale. In her first year in office, Italy's far-right prime minister dispelled fears she would break with NATO and fiscal rectitude. But inaction in dealing with the country’s long-term economic problems will make the rest of her term much harder JP Morgan CEO Jamie Dimon says the world is not prepared for the worst case scenario of interest rates rising to 7% and stagflation setting in Chinese government probe casts new doubt over Evergrande restructuring FT-Global trade falls at fastest pace since pandemic. Demand for goods exports weakens on the back of higher inflation, rate rises and spending on services Markets : If credit starts to move, equity markets will continue to struggle, kind of obvious, but this is key, if long-end sell-off doesn't calm down, we will get some sort of credit events in few places and USD could suddenly take a big leg higher too.. HYG chart below TLT trading back to April 2011 lows around $90 - whaoo - is this enough !!? we must be getting there USD looks to go bid into quarter-end, major US invest house adding to the view... together with higher yields and potential risk-off, USDMXN again, AUD at risk, USDJPY going to test BoJ nearer to 150JPY, USDCHF making a nice push since SNB hold (more to come ? back towards 'par' over next few months ? quite possible, unless something changes fundamentally on USD side.. Equity markets can unlock very quickly when you consider that Zero-day options are now HALF of the S&P 500 options market >>> key going into quarter-end is $, FXEMG, VIX too low (too many shorts) and Credit, all lead by UST 's as always Bonds, duration lower, steeper, in fact yesterday 2's rallied while 20s 30's sold off (over 10bps higher in yield terms! 10's 4.55 - highest since Oct 2007 Remember that 100y Austria, trading at 63 now.. The 1.25% due 2050 UST trading at 47cents too ... whaooo Given what bonds/duration is doing, beware #credit #spx500 and #emgfx #VIX Macro/FX Watch: Dollar remains bid on yield and safety | Saxo (home.saxo) USD remains bid on yield and safety '''AND quarter-end imho..'' Moody’s Warns US Government Shutdown Would Be Negative for Credit Rating - Bloomberg UAW Strike Expansion Did Not Target Pickup Production But Dealerships (yahoo.com) Interest rates will stay high 'as long as necessary,' the European Central Bank's leader says (qz.com) Global trade falls at fastest pace since pandemic | Financial Times (ft.com) Behind The Memo: Fewer Losers, or More Winners? - The Memo by Howard Marks | Podcast on Spotify top 30mins - love it - what's your risk tolerance ? Wall Street Is Hoping $100 Oil Ain’t What It Used to Be - WSJ JPMorgan analyst sees oil price surge as high as $150 - The Statesman Michael Pettis on X: "1/2 The purpose of an efficient bankruptcy process is to return assets and resources as quickly as possible to the productive economy and to reduce the considerable financial distress costs associated with insolvency. https://t.co/K3VqizwmmI" / X (twitter.com) Otavio (Tavi) Costa on X: "A total bloodbath in Treasury notes, bonds, and mortgage-back securities again: Here is a reminder that these instruments account for over 80% of the Federal Reserve's balance sheet. If they were to be reevaluated using a mark-to-market methodology, the Fed's assets could be… https://t.co/x0YNQez2iJ" / X (twitter.com) Gunjan Banerji on X: "Long-term protection on US, Euro equities is very cheap --SocGen https://t.co/0Om13IsDM7" / X (twitter.com) never really been cheaper ! if you need it Senior Nomura banker barred from leaving China, report says - The Japan Times Not a great time to be an investment banker working for a foreign firm ! would you want to go and work there ? South American leaders issue ultimatum on EU trade pact | Financial Times (ft.com) The Battle Over Spain’s Next Government - Bloomberg Inheritance tax cut could save Sunak £300m, analysis suggests (thelondoneconomic.com) probably just normal The inside story of the mini-budget disaster - BBC News what a farce this was! expensive farce Julius Baer Teams Up with Swiss (finews.com) Charlie Bilello on X: "New: The Week in Charts ‼ -- Are Higher Rates Here to Stay? -- $33 Trillion in National Debt -- Good Times & Bad Times for Bond Market Investors -- Will There Be a "Soft Landing?" -- Why Rising Rates Haven't Hurt Many Companies Yet -- And more... 📺: https://t.co/49Ox96pJqr" / X (twitter.com) video How Greek shipping oligarchs are reaping billions from Russia’s war (telegraph.co.uk) Francesco Sassi on X: "🇷🇺Russia has succeeded in avoiding🇺🇸🇪🇺🇨🇦🇯🇵G7 sanctions on most of its oil exports, a shift in trade flows, boosted by crude rising towards $100 a barrel. The Kremlin's strategy is de-facto countering Western efforts to curb energy revenues to stop the invasion of🇺🇦Ukraine https://t.co/3Pi67hu4tn" / X (twitter.com) Meloni’s Italian job is a lesson for EU’s right | Reuters Gatwick airport cancels more than 160 flights and imposes cap amid air traffic control staff shortages (msn.com) headline seems a little more worrying than reality, but still - please no HYG - there are many different way to look at credit - that's one of them - key supports around here TLT