US PMIs Scream Stagflation As Manufacturing 'Contracts', Prices Rise, Heaviest Job Cuts Since GFC

After a mixed bag from preliminary April European PMIs (Services strong-er, Manufacturing weaker-er, surging prices)...

“Accelerated increases in input costs, likely driven not only by higher oil prices but also, more concerningly, by higher wages, are a cause for scrutiny Concurrently service-sector companies have raised their prices at a faster rate than in March, fueling expectations that services inflation will persist. ”

and after March US PMIs exposed the end of the disinflation narrative...

"Most notable was an especially steep rise in prices charged for consumer goods, which rose at a pace not seen for 16 months, underscoring the likely bumpy path in bringing inflation down to the Fed's 2% target. ”

...S&P Global's preliminary US f°r April just dropped and they were ugly with both Manufacturing and Services disappointingly dropping further as the former    dropped back into contraction:

• •    Flash US Services Business Activity Index at 50.9 (Exp: 52.0; March: 51.7) - 5-month low.

• •    Flash US Manufacturing PMI at 49.9 (Exp 52.0; March: 51.9) - 4-month low.

Source: Bloomberg

Commenting on the data, Chris Williamson, Chief Business Economist at S&P Global Market Intelligence said:

“The US economic upturn lost momentum at the start of the second quarter, with the flash PMI survey respondents reporting below-trend business activity growth in April. Further pace may be lost in the coming months, as April saw inflows of new business fall for the first time in six months and firms’ future output expectations slipped to a five-month low amid heightened concern about the outlook.

“The more challenging business environment prompted companies to cut payroll numbers at a rate not seen since the global financial crisis if the early pandemic lockdown months are excluded.

After March showed accelerating prices, flash April data confirmed the trend

“Notably, the drivers of inflation have changed.

"Manufacturing has now registered the steeper rate of price increases in three of the past four months, with factory cost pressures intensifying in April amid higher raw material and fuel prices, contrasting with the wagerelated services-led price pressures seen throughout much of 2023.”

So slower growth and much faster inflation - that does not sound like a recipe for rate-cuts... in fact quite the opposite.

Tyler Durden Tue, 04/23/2024 - 10:08

Biden's America: 40% Of Renters Think They'll Never Own A Home, Up From 27% Last Year

Bidenomics 101: the American dream of owning a home has become the American nightmare for almost half the US population.

As housing specialist Redfin reports, rising home prices and mortgage rates "are making it harder to believe in the American dream of homeownership. Lack of affordability is the most commonly cited reason renters don’t believe they’ll ever own a home."

The details are dire: Nearly two in five (38%) U.S. renters don’t believe they’ll ever own a home, up from roughly one-quarter (27%) less than a year ago. 

This is according to a Redfin-commissioned survey of roughly 3,000 U.S. residents conducted by Qualtrics in February 2024. This report focuses on the 1,000 respondents who indicated they are renters. The relevant questions were: “Do you believe that you will ever own your own home in the future?” and “Which of the following are reasons you aren’t likely to purchase a home in the near future?” The 27% comparison is from a Redfin survey conducted in May and June 2023. 

Lack of affordability is the prevailing reason renters believe they’re unlikely to become homeowners. Nearly half (44%) of renters who don’t believe they’ll buy a home in the near future said it’s because available homes are too expensive. The next most common obstacles: Ability to save for a down payment (35%), ability to afford mortgage payments (33%) and high mortgage rates (32%). Roughly one in eight (14%) simply aren’t interested in owning a home. 

Buying a home has become increasingly out of reach for many Americans due to the one-two punch of high home prices and high mortgage rates. First-time homebuyers must earn roughly $76,000 to afford the typical U.S. starter home, up 8% from a year ago and up nearly 100% from before the pandemic, according to a recent Redfin analysis. Home prices have skyrocketed more than 40% since 2019, due to the pandemic homebuying frenzy and a shortage of homes for sale. And the current average 30-year fixed mortgage rate is 6.82%. While that’s below the 23-year-high of nearly 8% hit in October, it’s still more than double the record low rates dropped to in 2020. 

Home prices have risen 7% in the last year alone, and monthly mortgage payments have risen more than 10%, which helps explain why renters today are more likely than they were last year to say they don’t see themselves owning a home anytime soon. 

Many renters can’t fathom homeownership because they’re already struggling to afford their monthly housing costs. Nearly one-quarter (24%) of renters say they regularly struggle to afford their housing payments, and an additional 45% say they sometimes struggle to do so.

Rents have soared over the last few years because so many people moved during the pandemic, upping demand for rentals. The median U.S. asking rent is roughly $2,000, near the record high hit in 2022–but the good news for renters is that prices aren’t growing nearly as fast as they were during the pandemic, partly because an influx of apartment supply is taking some of the heat off prices. 

“Housing costs are high across the board, but renting is a more affordable and realistic option for many Americans right now–especially those who have never owned a home and aren’t able to tap into equity from a previous sale,” said Redfin Chief Economist Daryl Fairweather. “While owning a home is usually a sound longterm investment, the barriers to entry and upfront costs of buying are higher than renting. Buying typically requires a sizable down payment and approval for a mortgage–things that are difficult for many people today, when the typical down payment is near $60,000 and mortgage payments are sky-high. The sheer expense of purchasing a home is causing the American Dream of homeownership to lose some of its shine.” 

Gen Z renters are most likely to believe they’ll own a home

Broken down by generation, Gen Z renters are by far the most likely to believe they will become homeowners (maybe it's because they are also the dumbest). Just 8% of Gen Z renters believe they’ll never own a home, compared to 22% of millennials, 40% of Gen Xers and 81% of baby boomers.

Tyler Durden Tue, 04/23/2024 - 09:40

Euro Area PMI Activity Hits 11 Month High On Service Expansion As Manufacturing Recession Gets Worse

Europe's study in paradoxical contrasts continues. On the same day, ECB's de Guindos said a June rate cut looks like a set deal (unless there are surprises) with the end of inflation fight is in sight, the Euro-area's private-sector activity advanced to the highest level since May 2023, driven by a buoyant services sector and Germany's return to growth; UK firms also reported the strongest growth in almost a year

Here are the details: 

France

• Services Flash PMI (Apr) 50.5 vs. Exp. 49.0 (Prev. 48.3);
• Manufacturing Flash PMI (Apr) 44.9 vs. Exp. 47.0 (Prev. 46.2);
• Composite Flash PMI (Apr) 49.9 vs. Exp. 48.8 (Prev. 48.3);
  • "Overall, our HCOB nowcast model for the second quarter points to a recovery of the French economy, driven by the services sector".

Germany

• Manufacturing Flash PMI (Apr) 42.2 vs. Exp. 42.9 (Prev. 41.9);
• Services Flash PMI (Apr) 53.3 vs. Exp. 50.5 (Prev. 50.1);
• Composite Flash PMI (Apr) 50.5 vs. Exp. 48.6 (Prev. 47.7);
  • "Factoring in the PMI numbers into our GDP Nowcast, we estimate that GDP may expand by 0.2%".

UK

• Services PMI (Apr) 54.9 vs. Exp. 53.0 (Prev. 53.1);
• Manufacturing PMI (Apr) 48.7 vs. Exp. 50.4 (Prev. 50.3);
• Flash Composite PMI (Apr) 54.0 vs. Exp. 52.7 (Prev. 52.8)

Euro-Area

• Services Flash PMI (Apr) 52.9 vs. Exp. 51.8 (Prev. 51.5);
• Manufacturing Flash PMI (Apr) 45.6 vs. Exp. 46.6 (Prev. 46.1);
• Composite Flash PMI (Apr) 51.4 vs. Exp. 50.8 (Prev. 50.3);
  • "Considering various factors including the HCOB PMIs, our GDP forecast suggests a 0.3% expansion in the second quarter".

Putting it all together, the Euro area composite flash PMI increased by 1pt to 51.4 in April, above the 50.7 consensus estimate, in expansion (>50) for the second straight month and the highest since May 2023. As shown in the chart below, the improvement in the composite index was skewed heavily towards the services sector, where the index rose (by 1.4pt) to 52.9, while the manufacturing PMI continued to sink.

Across countries, the improvement in the area-wide index was driven by Germany - which was above that key 50 expansion mark for the first time in 10 months driven by services (even as manufacturing continued to shrink, though at a slower pace than the month before) defying analysts who had expected another sub-par reading - and France, partially offset by a slight deceleration in the periphery.

In the UK, the composite flash PMI improved notably to 54.0, above consensus expectations of a decline, on the back of a pick-up in services activity, where the index grew by 1.8pt to 54.9, which was partly offset by a slowdown in manufacturing activity.

Commenting on the results, Goldman saw three main takeaways from today's data.

• First, there are continued improvement in the Euro area headline numbers, coupled with continued, but moderating, optimism for the upcoming year.
• Second, the PMI price components ticked up in April, driven by both sectors, with the risks to cost inflation coming from higher wages and oil prices.
• Lastly, the UK saw another month of expanding activity, also driven by the services sector, which should support growth momentum going forward.

While output prices ticked up only marginally in both the Euro area and the UK, it is important that firms' pricing behavior remains supportive for the disinflationary process, Goldman's economists noted.

The positive figures suggest that the euro area will probably expand by 0.3% in the second quarter, matching the rate of growth in the January-March period, said Cyrus de la Rubia, chief economist at Hamburg Commercial Bank. That’s a more upbeat prediction than the Bloomberg consensus, which sees just 0.1% growth at the start of the year, with data due on April 30.

“It appears that the recession was predominantly concentrated within the manufacturing sector, while the broader economy may have narrowly skirted such a downturn,” de la Rubia said. “The service sector may serve as a catalyst for the overall economy.”

After contracting in the final quarter of last year, Germany was long expected to have had a shallow recession over the winter. But the Bundesbank last week said output may have grown slightly in the first three months of the year because of a pickup in industrial production, exports and construction — meaning the country would avoid such a scenario.

De la Rubia agreed, saying a Nowcast model points to economic expansion of 0.1% in the first quarter followed by 0.2% in the second. German bonds fell across the curve and money markets reduced wagers on the scope for interest-rate cuts after data for the country were published. The two-year maturity, which is sensitive to changes in monetary policy, rose as much as three basis points to 2.99%.

The overall performance was also better in France, where activity remained broadly stable after contracting for 10 months. That development was also driven by services, where rising demand resulted in the first expansion in almost a year. New orders placed with factories fell at the steepest pace since January, increasing the wedge between manufacturers and services firms.

“The French services sector is the workhorse of the economy,” said Norman Liebke, an economist at Hamburg Commercial Bank. “French manufacturing output stays subdued, but we expect it will soon follow the path of the services sector. The manufacturing sector delays the overall economy’s recovery for now, though.”

But the better momentum in both countries was flanked by stronger price pressures, which as Bloomberg notes is a potential source of concern for European Central Bank officials who are gearing up for a first interest-rate cut in June. That development was also centered on the services sector, where rising wages are playing a bigger role.  Diverging fortunes were equally visible in the labor market. While German and French services firms added workers at a quicker pace, factories shed jobs.

Overall though, the currency bloc’s top two economies couldn’t keep pace with the rest of the region, which appears to be recovering after the energy crisis that stifled its post-Covid rebound.

The rise in power costs — triggered by Russia’s war in Ukraine — also fanned inflation, though consumer-price growth has since slowed markedly. The purchasing-manager data showed that price pressures “intensified slightly” this month.

“The PMI figures are poised to test the ECB’s willingness to cut interest rates in June,” de la Rubia said. “Accelerated increases in input costs, likely driven not only by higher oil prices but also, more concerningly, by higher wages, are a cause for scrutiny. Concurrently, service-sector companies have raised their prices at a faster rate than in March, fueling expectations that services inflation will persist.”

Still, he doesn’t expect that to derail a well-telegraphed easing at the ECB’s next monetary-policy meeting. “However, we doubt that the central bank will adopt a ‘pragmatic speed,’ as suggested by Francois Villeroy de Galhau” de la Rubia said. “Instead, we expect a more cautious approach.”

As noted above, comments by ECB Vice President Luis de Guindos earlier on Tuesday reinforce that approach. “The level of uncertainty makes it very difficult to say,” he told Le Monde, according to a transcript on the ECB website. “I already mentioned June. As for what happens afterwards, I’m inclined to be very cautious.”

A separate set of data for the UK showed the economy’s recovery from recession unexpectedly gathered pace at the start of the second quarter as private-sector firms reported the strongest growth in almost a year. PMIs are closely watched by markets as they arrive early in the month and are good at revealing trends and turning points in an economy. A measure of breadth of changes in output rather than depth, business surveys can sometimes be difficult to map directly to quarterly GDP.

US figures later are set to show continued growth. Earlier numbers from Australia, India and Japan pointed to faster expansion.

Tyler Durden Tue, 04/23/2024 - 09:30

Large Structural Short Will Drive Yen Much Higher

Authored by Simon White, Bloomberg macro strategist,

Focus has been on the growing short position in the yen. But the total size is likely to be small in the scheme of things. The real story is the lack of domestic hedging leading to a large structural short in the yen which will drive the currency much higher when it is covered.

There has been some back and forward internally about the extent of the yen short position. FX positioning is hard to get good visibility on unless you are in the flow. The go-to for most people that aren’t is the CFTC data. This certainly shows that yen short-positioning versus the dollar has risen in recent months.

The chart measures the net short versus open interest. Although the short is high, we can see it has been higher, especially in the late 1990s when USD/JPY rose to ~150.

But COT data is based on flows of FX futures, which are low compared to spot and other flows. The net short for the speculator category - which aims to catch hot flows that are more likely to be price moving on a shorter-term basis, and will mainly be CTA flows – is only about $13.4 billion, not earth shattering.

More important for the longer-term outlook is how the yen’s steadily weakening path is leading to domestic investors to allow their foreign asset positions to become underhedged. As a proxy, we can look at the behavior of life insurers, who are among the largest hedgers of their overseas positions. Their hedging ratios have slipped to under 50%.

Japan is the world’s largest net creditor, with over $3 trillion of assets held abroad. Domestic investors’ flows dominate flows of foreigners buying Japanese assets.

Thus, the large and building structural yen short of Japanese investors will be what ultimately sets the path for the currency.

When the wind changes, the yen is primed to change direction with vigor.

Tyler Durden Tue, 04/23/2024 - 09:15

Gaza War At 200 Days: IDF Pivots From Iran Threat Back To Hamas Operations

Monday into Tuesday saw the Israel Defense Forces (IDF) intensify its operations in central and northern Gaza, following a cooling of tensions with Iran after the two almost went to war. Tuesday marks the 200th day of Israel's war in Gaza, in response to the Oct.7 Hamas terror attacks.

"Israel bombarded northern Gaza overnight in some of the heaviest shelling in weeks, panicking residents and flattening neighborhoods in an area where the Israeli army had previously drawn down its troops, residents said on Tuesday," Reuters reports.

Image via United Nations

This strongly suggests that even once the IDF has cleared an area, Hamas has the capability of moving back in - also given its capabilities utilizing Gaza's vast tunnel network.

"Tanks made a new incursion east of Beit Hanoun on the northern edge of the Gaza Strip, though they did not penetrate far into the city, residents and Hamas media said. Gunfire reached some schools where displaced residents were sheltering," Reuters continues.

Starting Sunday night, the IDF launched a 'surprise operation' in the central Gaza corridor, the military confirmed, happening over the Passover holiday: 

The IDF says the “surprise operation” that began Sunday night is aimed at “deepening the achievements” in the Netzarim corridor.

The corridor, built around a road south of Gaza City, enables the IDF to carry out raids in northern and central Gaza while allowing Israel to control access to the north for Palestinians seeking to return after fleeing south.

"The forces are carrying out targeted raids and are thwarting terror in the area," the IDF says in a statement.

The IDF confirmed the return of Hamas militants to areas which had previously been clear enough to halt operations. 

⚡️The moment of the bombing of Al-Sahaba Tower on Al-Wahda Street in the center of Gaza City. pic.twitter.com/p0UcrJNS2Z

— War Monitor (@WarMonitors) April 22, 2024

"Nahal troops spotted several gunmen amid the raid, and called in airstrikes by fighter jets against them and the buildings they were spotted operating at," an IDF statement continued.

As for Rafah in the south, so far it seems the IDF's planned offensive appears to be on pause. An estimated 1.5 million civilians are sheltering in the city, and the White House has urged the Netanyahu government not to attack it. Humanitarian aid groups currently say they don't know what to expect.

The US has urged that Israel evacuate civilians first, but these plans are anything but clear at this point. "I have no idea what the plan with the procurement of tents by the Israelis is," the head of the UN humanitarian office in Gaza, Andrea de Domenico, told Al Jazeera. Recent days have seen dozens of casualties due to shelling of some areas, but a full assault is expected to be a humanitarian nightmare for the refugees there.

Tyler Durden Tue, 04/23/2024 - 08:55

'Its The Economy, Stupid!' Black And Hispanic Voters Embrace Trump On Economics And Well-Being

Authored by J.G. Collins via The Epoch Times (emphasis ours),

Epoch Times reporter Tom Ozimek recently wrote in these pages of former President Donald Trump’s encounter with Kayla Montgomery, a young Republican political consultant whose business is to “engage young, black professionals, students, and community members” in the Atlanta area. The ex-president and Ms. Montgomery met at a Chick-fil-A restaurant during an impromptu campaign stop in Atlanta. Ms. Montgomery was effusive in her praise of President Trump, saying, “I don’t care what the media tells you, President Trump—we support you!” A video of Ms. Montgomery and the former president hugging soon went viral, even as the media and Democrats quickly dismissed the interaction as “staged.”

Supporters of former President Donald Trump walk near his residence at Mar-A-Lago in Palm Beach, Fla., on Aug. 9, 2022. (Giorgio Viera/AFP via Getty Images)

Then, last week, President Trump left his trial in Manhattan to visit a bodega in Washington Heights, a mostly black and immigrant community on the Upper West Side of Manhattan and received a hero’s welcome from the working people there.

Whether the Chick-fil-A event was staged or not is open to debate. What is undeniable, though, is that polling shows Donald Trump has upended much of the black and Hispanic voting support Democrats have enjoyed since at least Lyndon Johnson’s “Great Society” and, at least in some instances, back to FDR’s New Deal.

A Wall Street Journal poll showed that President Trump’s support among black men in swing states had moved to 30 percent earlier this month compared to just 11 percent of black men nationally in 2020. Among black women, those same percentages went from 6 percent in 2020 to 11 percent in April.

‘It’s the Economy, Stupid!’

Political pundits and editorial pages all seem flummoxed by President Joe Biden’s erosion of support among the traditional Democrat coalition.

But no one seems more upset by the erosion of black support than Democrat political strategist James Carville, “the Ragin’ Cajun,” who engineered Bill Clinton’s 1988 victory over incumbent George H.W. Bush. That’s ironic, because it was Mr. Carville who added the memorable phrase “It’s the economy, stupid!” to the American political lexicon when he pinpointed President Bush’s greatest vulnerability 36 years ago.

Between January 2021, when President Biden took his oath of office, up to March of this year, average rents have increased by 20 percent. By comparison, residential rents increased just 12 percent during President Trump’s entire term. The increased costs hit blacks and Hispanics disproportionately because of the vast disparity in home ownership, as illustrated below.

Blacks and Hispanic workers also disproportionately occupy positions in production and transportation/material moving jobs at higher rates (17.8 percent and 16.7 percent, respectively) than whites (12.1 percent). But those are the jobs most vulnerable to being taken by the influx of the purported asylum seekers who typically work for less and are less likely to join unions or file complaints with the authorities against their employer. The asylum seekers have exploded since President Biden lifted U.S. border restrictions.

As Well as Crime ...

Blacks and Hispanics tend to be disproportionately affected as victims of recidivist criminals let go by criminal justice initiatives championed by leftist Democrat “progressives” in so-called “blue” states. As shown in the chart above, black victims of crime actually decreased during the Trump presidency. (The chart is from a study that has not been updated for later years.)

By the same token, black-owned businesses were among the many businesses looted and destroyed by “progressive” George Floyd rioters in 2020.

… and Education

President Trump made permanent a commitment of $255 million in annual funding for historically black colleges and universities, and he increased funding for the Federal Pell Grant program by signing the FUTURE Act.

Within the states, Republican legislators and governors have championed school choice and a “back-to-basics” approach to K-12 that even Democrats acknowledge. Jorge Elorza, the CEO of Democrats for Education Reform and its affiliate Education Reform Now, a think tank, said: ”We’ve lost our advantage on education because I think that we’ve failed to fully acknowledge that choice resonates deeply with families and with voters.”

Meanwhile, Education Week, the Left-leaning magazine for K-12 teachers, summarized President Biden’s policies as follows:

“[He] passed stricter rules for charter schools seeking federal grant funding; awarded $1 billion to boost school safety and students’ mental health; and proposed an overhaul of Title IX that would give LGBTQ+ students explicit protection under the landmark sex discrimination law and bar outright bans on transgender youth who want to join athletic teams that align with their gender identity.”

Summary

Black and Hispanic voters are moving toward President Trump for a simple reason: their pocketbook and their well-being. The viewpoints of mainstream media pundits—college educated, overwhelmingly white, and mostly liberal—have long maintained a soft bigotry of racial expectations without understanding much of the economy of people who work in blue-, pink-, and green-collar jobs. The pundits don’t understand that blacks and Hispanics, like the rest of the country, have experienced a near 20 percent cumulative erosion in the purchasing power of their dollar and rising crime. They see K-12 education policies that deny school choice and that serve teachers’ unions, special interests, and Democrat party gender identity dogma far more than children and parents.

Black and Hispanic voters have every reason to depart from their traditional voting patterns.

It’s common sense.

Tyler Durden Tue, 04/23/2024 - 08:35

Futures Extend Rebound Into Second Day Ahead Of Tesla Earnings Despite Rising Yields

US equity futures are higher for the second day, even as small-caps underperform after bond yields rise about +4bps and trade near session highs. As of 7:40am S&P and Nasdaq futures were 0.3% higher after Wall Street’s rebound from a $2 trillion selloff; European stocks also rose on broad-based strength, with only commodity-related sectors in the red; the UK’s FTSE 100 index hit a record high as a rebound that took hold on Monday gathered momentum. Ahead of Tesla's earnings today, the Mag7 are mixed with semis higher pre-mkt after the recent rout. Commodities are stronger led by Ags and Energy with a flat USD. The macro data focus is on Flash PMIs, Home Sales, Regional Mfg Activity indicators; earnings are skewed towards the Industrials sector with TSLA the first Mag7 stock set to report. We will see if the last few trading sessions sufficiently squared positions and if realized stock moves can match the implied moves, expected to be the largest in 1.5 years.

Early results Tuesday were mostly positive, with shares of United Parcel Service and General Motors rising in premarket trading after earnings beats. PepsiCo slipped after reporting falling volumes in North America. But the main event will be the “Magnificent Seven” cohort of tech megacaps, with Tesla set to be the first to report after today’s market close. Next up is Meta Platforms on Wednesday, followed by Microsoft and Alphabet on Thursday. Here are some other notable premarket movers:

• Abeona Therapeutics shares slumped 48.1% after the biotechnology company’s drug for a rare connective tissue disorder failed to win approval from the US Food and Drug Administration.
• Cadence Design shares drop 5.8% after the maker of semiconductor design software’s revenue and adjusted earnings per share forecast for 2Q fell short of average analyst estimates. Additionally, the company reported 1Q product and maintenance revenue that missed expectations.
• JD Sports shares gained after the British sportswear and sneakers retailer agreed to buy Hibbett (HIBB US) for about $1.1 billion to speed up its US expansion, in a deal expected to be accretive in the first full year of ownership. Hibbett gained 19%.
• Roblox shares rose 4.2% after the game maker was upgraded to overweight from neutral at JPMorgan, which said it sees a “compelling” entry point for a company that has bookings growth of around 20%, exiting a heavy investment cycle and ramping new revenue streams in advertising as well as commerce.
• Sunnova Energy shares fell 2.4% after the renewable energy company is cut to sector weight from overweight by KeyBanc Capital Markets. The downgrade reflects a cautious industry-wide stance, despite Sunnova’s “undemanding valuation,” analyst Sophie Karp writes in a note.

Earnings will stay front and center of investors’ minds this week with about 180 companies — over 40% of the S&P 500 market value — report results. The focus on corporate profits comes after a rout fueled by geopolitical fears and signals the Federal Reserve will be in no rush to lower rates. "Whether markets see further consolidation from here is likely to hinge on the assessment of the sustainability of AI demand ahead following the earnings releases," said Eddie Cheung, a senior strategist at Credit Agricole CIB.

The challenge to S&P 500 returns is that companies will have to produce earnings, and outlooks, that support the already elevated multiples. Profits for the Magnificent Seven are forecast to rise 38% in the first quarter from a year ago, dwarfing the overall S&P 500’s 2.4% anticipated year-over-year earnings growth, according to Bloomberg Intelligence. But excluding Nvidia, the leading chipmaker for AI technology, expected net income growth for the group falls to 23%. Nvidia, which Goldman Sachs Group’s trading desk dubbed “the most important stock on planet Earth,” doesn’t report its earnings for another month.

“We remain focused on the current earnings season, which could re-focus investor attention on solid underlying fundamentals,” Citigroup Inc. strategists Mihir Tirodkar and Beata Manthey wrote in a note. “We would view the recent pullback as a buying opportunity."

Meanwhile, Investor positioning on megacap growth and tech stocks continues to be cut, down from the 97th percentile in early March to the 77th percentile now, according to Deutsche Bank strategists. The group is still the only sector where positioning is above historical average, even if no longer extreme, the strategists wrote, countering the self-serving and incorrect observations by JPM's Marko Kolanovic.

In Europe, the Stoxx 600 index climbed 1%, with technology and retail shares leading gains, while the mining sector lagged. SAP SE jumped more than 4% as a boom in demand for artificial intelligence fueled the German software company’s growth. Drugmaker Novartis AG added as much as 5% after lifting full-year guidance. Here are some other notable premarket movers:

• JD Sports shares gain as much as 7.5% after the British sportswear and sneakers retailer agreed to buy Hibbett for about $1.1 billion to speed up its US expansion
• Novartis shares advance as much as 5%, the most in more than 9 months, after the Swiss drugmaker reported results for the first quarter that impressed analysts
• Nordnet rises as much as 9.7%, the most since October, after the digital bank reported its first-quarter results. Both Citi and Morgan Stanley highlight the company’s higher-than-expected brokerage income
• SAP shares jump as much as 4.4% in Frankfurt after the software company reported quarter-over-quarter acceleration in the growth rate of current cloud backlog, a key indicator of cloud revenue to be booked within next 12 months
• Akzo Nobel shares fall as much as 6.6%, to the lowest since November, after the coatings maker failed to raise its profit forecast for the year. The stock had risen in five of the six sessions leading up to Tuesday’s earnings report
• DNB falls as much as 3.9%, the most since October, after the Norwegian lender reported a net interest income miss for the third quarter in a row, with analysts also flagging a low-quality profit beat due to it being attributable to provision income
• Anglo American falls as much as 3.9% in London after the miner reported first-quarter earnings. Analysts noted that sales were behind production in copper and iron ore, leading to temporary inventory builds
• Kuehne + Nagel shares drop as much as 3.9% after reporting first-quarter earnings in which pricing and cost performance were offset by lower volumes, according to Citigroup
• Boliden declines as much as 5.9% after its first-quarter results, with analysts flagging that headline operating profit missed, but underlying operations performed reasonably well
• OVH shares slide as much as 17%, the biggest drop since March 2023, as weaker-than-expected 2Q growth led the IT services provider to lower its forecast for growth and capex for the year

PMI data on Tuesday reinforced the positive mood in Europe. Private-sector activity advanced to the highest level in almost a year, driven by a buoyant services sector and Germany’s return to growth. And yet, barring any economic surprises, a rate cut in June is a “fait accompli,” European Central Bank Vice President Luis de Guindos said.

Earlier in the session, Asian stocks also rose for a second day as sentiment toward China continued to improve, with easing fears of a wider Middle East conflict offering additional support. The MSCI Asia Pacific Index rose as much as 0.8%, with TSMC and Tencent among the biggest boosts. Most regional markets advanced, though mainland China stocks fell for a third day and Japanese shares trimmed gains as the yen strengthened after Finance Minister Shunichi Suzuki’s comments on possible intervention. Hong Kong stocks led the region’s gains after UBS upgraded Chinese stocks to overweight, citing resilient earnings and a growing focus on shareholder returns. Investors are turning more upbeat on the nation’s assets thanks to green shoots in the economy as well as signs of improving corporate performance.

• Hang Seng and Shanghai Comp. were mixed with outperformance in Hong Kong due to tech strength, while the mainland lagged amid the PBoC's continued tepid liquidity operations and with the US drafting sanctions that threaten to cut some Chinese banks off from the global financial system for aiding the Russian war effort.
• Nikkei 225 traded indecisively and on both sides of 37,500 after briefly wiping out all of its opening gains.
• ASX 200 was led by strength in real estate and tech, while the latest flash PMIs from Australia were varied.

“What makes us more positive now on earnings are the early signs of a pick-up in consumption,” UBS strategists including Sunil Tirumalai wrote in a note. “Any rebound in consumer confidence for us means the possibility of household savings flowing into consumption” and eventually markets.

 

In rates, treasuries are under modest pressure with front-end yields higher by ~2bp before a flurry of bond auctions that will test investors’ appetite after yields hit the highest in 2024: the latest weekly supply cycle (2-, 5- and 7-year auctions) is set to kick off with record $69b 2-year later today. US 10-year yields around 4.645%, higher by nearly 4bps on the day. In Europe, gilts underperform their German counterparts after the UK raised its planned gilt issuance for the fiscal year more than expected, as the government’s budget shortfall overshot forecasts; the belly of gilts curve cheapened after DMO announcement, with 5-year UK yields higher by around 2bp. Treasury coupon auctions resume at 1pm New York time with $69b 2-year, followed by 5- and 7-year notes Wednesday and Thursday. The WI 2-year yield at around 4.965% is ~37bp cheaper than last month’s, which tailed by 0.5bp

In commodities, oil prices advance, with WTI rising 0.4% to trade near $82.20. Gold extends Monday’s drop, down 1% on the day; Monday’s 2.7% drop was biggest in nearly two years. Bitcoin is modestly softer and holds around the USD 66k mark.

Looking at today's calendar, US economic data slate includes April Philadelphia Fed non-manufacturing activity (8:30am), S&P manufacturing and services PMIs (9:45am), March new home sales and April Richmond Fed manufacturing index (10am). From central banks, we’ll hear from the ECB’s Panetta and Nagel, and the BoE’s Haskel and Pill as Fed members have entered quiet period ahead of May 1 policy announcement. Finally, today’s earnings releases include Visa, Tesla, PepsiCo, General Electric, UPS and General Motors.

Market Snapshot

• S&P 500 futures up 0.1% to 5,052.75
• STOXX Europe 600 up 0.6% to 505.15
• MXAP up 0.6% to 170.25
• MXAPJ up 0.9% to 524.40
• Nikkei up 0.3% to 37,552.16
• Topix up 0.1% to 2,666.23
• Hang Seng Index up 1.9% to 16,828.93
• Shanghai Composite down 0.7% to 3,021.98
• Sensex up 0.3% to 73,852.66
• Australia S&P/ASX 200 up 0.4% to 7,683.51
• Kospi down 0.2% to 2,623.02
• Brent Futures up 1.0% to $87.85/bbl
• Gold spot down 0.9% to $2,305.32
• US Dollar Index down 0.14% to 105.93
• German 10Y yield little changed at 2.50%
• Euro up 0.2% to $1.0680

Top Overnight News

• The U.S. is drafting sanctions that threaten to cut some Chinese banks off from the global financial system, arming Washington’s top envoy with diplomatic leverage that officials hope will stop Beijing’s commercial support of Russia’s military production, according to people familiar with the matter. WSJ
• Chinese universities and research institutes recently obtained high-end Nvidia artificial intelligence chips through resellers, despite the U.S. widening a ban last year on the sale of such technology to China. RTRS
• China QE drumbeat grows louder as the country’s finance minister expresses support for the PBOC to resume trading gov’t bonds (although many doubt this would lead to Fed/ECB-style QE). WSJ
• AAPL's iPhone sales in China fell 19% during the March quarter, according to data from an independent research firm that marked the gadget’s worst performance there since Covid struck around 2020. BBG
• Japanese Finance Minister Shunichi Suzuki said last week's meeting with his U.S. and South Korean counterparts has laid the groundwork for Tokyo to act against excessive yen moves, issuing the strongest warning to date on the chance of intervention. RTRS
• ECB’s Luis De Guindos says a June cut is all but guaranteed, but what happens beyond that could depend on the actions of the Fed. WSJ
• Europe’s flash PMIs for April point to firmer growth (and inflation), with the slump in manufacturing showing signs of easing while services rose to 52.9 (up from 51.5 in Mar and above the Street’s 51.8 forecast), and overall price pressures intensified slightly. S&P
• Tesla headlines today’s earnings after seven straight days of declines. Margins, its robotaxi and the fate of its lower-cost EV will be the focus. The company is also being sued in California by a former employee who claims it failed to provide required notice for layoffs. BBG
• MSFT launches smaller AI models that provide “good enough” capabilities for many, but at a fraction of the cost (the models don’t need high-end Nvidia chips to function). NYT

Earnings

• Nucor Corp (NUE) Q1 2024 (USD): EPS 3.46 (exp. 3.66), Revenue 8.14bln (exp. 8.26bln). Expects earnings to decrease in Q2 vs Q1 due to decreased earnings in the steel mills segment. Average scrap and scrap substitute cost per gross ton USD 421 (exp. 399.58). Sales tons to outside customers 6.22mln (exp. 6.41mln).
• SAP (SAP GY) Q1 24 (EUR): Adj. EPS 0.81 (exp. 0.89), adj. revenue 8.04bln (exp. 8.03bln). Adj. cloud and software revenue EUR 6.96bln (exp. 6.93bln). Adj. cloud revenue EUR 3.93bln (exp. 3.94bln). Adj. cloud revenue in constant currencies +25% (exp. +24.5%). Adj. operating profit EUR 1.53bln (exp. 1.7bln). GUIDANCE: Cloud revenue view between 17.0-17.3bln (prev. 13.66bln in 2023). Cloud and software revenue view at EUR 29.0-29.5bln (prev. 26.92bln in 2023) Adj. Operating profit view EUR 7.6-7.9bln (prev. 6.51bln in 2023). Raises 2023 dividend 7% to EUR 2.20/shr vs 2022 dividend. (Newswires) SAP ADR (SAP) rose 2.1% in the US after-hours. Index Weightings: DAX 40 (10.9% - largest), Euro Stoxx 50 (5% - third largest), Stoxx 600 (1.3%).
• Renault (RNO FP) Q1 (EUR): Revenue 11.71bln (exp. 11.7bln). Sales +2.6% Y/Y. Strong order book in Europe, reflecting a very good start to the year. Co. is progressing well toward its target of cost reduction to lower EV costs by 40%. The EV market is a bit slower than had expected a few years ago. Talks with Geely and Aramco on the ICE powertrain JV are at an advanced stage.
• Novartis (NOVN SW) Q1 (USD): Revenue 11.8bln (exp. 11.5bln). Core EPS 1.80 (exp. 1.73); Raises FY24 Net Sales and Core Operating Income guidance. Strong sales momentum in Entresto (+36% cc), Cosentyx (+25% cc), Kesimpta (+66% cc), Kisqali (+54% cc), Pluvicto (+47% cc) and Leqvio (+139% cc). Free cash flow 2.0bln (-24%) - declined due to a prior-year one-timer and timing of payments. Novartis proposes Dr. Giovanni Caforio as Chair of the Board of Directors at AGM 2025. Index Weightings: SMI (15.9% - second largest), Stoxx 600 (2%). Net Sales are expected to grow high-single to low double-digit digits. Core operating income is expected to grow low double-digit to mid-teens.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded with a mild positive bias after the tech-led rebound stateside. ASX 200 was led by strength in real estate and tech, while the latest flash PMIs from Australia were varied. Nikkei 225 traded indecisively and on both sides of 37,500 after briefly wiping out all of its opening gains. Hang Seng and Shanghai Comp. were mixed with outperformance in Hong Kong due to tech strength, while the mainland lagged amid the PBoC's continued tepid liquidity operations and with the US drafting sanctions that threaten to cut some Chinese banks off from the global financial system for aiding the Russian war effort.

Top Asian News

• US is reportedly drafting sanctions that threaten to cut some Chinese banks off from the global financial system as it hopes to stop Beijing's commercial support of Russia's military production, according to WSJ.
• BoJ Governor Ueda reiterated that monetary policy will be data dependent and will depend on the economy and inflation, while he said they don't have any pre-set idea on the timing and pace of future rate hikes and if trend inflation accelerates in line with their forecast, they will adjust the degree of monetary support through an interest rate hike. Ueda also stated if their price forecast changes, that will also be a reason to change policy but noted it is hard to say beforehand how long the BoJ should wait in gathering enough data to change policy and would like to leave some scope for adjustment by not pre-committing to a certain policy too much.
• Japanese Finance Minister Suzuki said the government is ready to respond appropriately to excessive FX moves and is closely watching FX moves with a high sense of urgency, while they won't rule out any option and will deal appropriately with excessive FX moves. Suzuki also said he closely communicated with the US and South Korea on forex in Washington and won't deny that last week's discussions in Washington have laid the groundwork for Japan to take appropriate FX action.
• Senior Japanese ruling party official said recent JPY falls are excessive and out of line with fundamentals; said Japanese authorities could intervene to prop up the JPY at any time
• Japan Business Lobby Keidanren Chair Tokura said he think Government will make appropriate decision on intervention, via Kyodo

European bourses, Stoxx600 (+0.6%) began the session on a strong footing, and has remained at elevated (albeit contained) levels throughout the European morning. There was little reaction to the EZ Flash PMI data. European sectors hold a positive tilt; Tech takes the top spot, benefiting from US tech gains in the prior session, and post-earning strength in SAP (+3.9%). Basic Resources is found at the foot of the pile, amid broader weakness in metals prices. US Equity Futures (ES +0.1%, NQ +0.2%, RTY U/C) are tentative ahead of a busy earnings slate and the key US PMI data.

Top European News

• ECB's de Guindos said a June rate cut looks like a set deal, if there are no surprises; end of inflation fight is in sight; largest remaining threat stems from services inflation. There's a clear slowdown in wage dynamics. Inclined to be very cautious what happens after June. Need to take into account what's happening in the US. What the Fed decides is crucial for the global economy. Beed to take impact of FX movements into account. Indicators point toward modest H2 Euro-area recovery.
• BoE's Haskel said UK food price inflation is "unusually high"; UK labour market is is "extremely tight", via Bloomberg. Inflation will stay high unless the job market weakens.
• Kantar UK Supermarket update (Apr): Grocery price inflation has fallen to 3.2% over the four weeks to 14 April, marking the fourteenth monthly drop in a row

FX

• DXY softer having briefly dipped under 106 amid gains in the EUR. Ultimately though, the index is in consolidation mode ahead of GDP and PCE metrics later this week and FOMC on May 1st. For now, the next downside target comes via last week's low at 105.74.
• EUR is boosted by PMI metrics which saw strong services and composite PMIs overshadow a soft outturn for the manufacturing sector. EUR/USD as high as 1.0695 with the 1.07 level not breached since 12th April; 1.0729 was the high that day.
• GBP: After a soft session yesterday which dragged the pair to a low of 1.23, Cable is on the front foot thanks to a strong showing for services PMI. 1.2388 is the high watermark thus far.
• JPY is steady vs. the USD but made another multi-decade high at 154.85. The closer the pair moves to 155, the louder the calls for intervention will get. For now, jawboning is providing minimal help for JPY.
• Antipodeans are varied the USD with slight outperformance in Aussie after AUD/NZD extended above 1.0900. AUD/USD saw little follow-through from PMI data overnight with the pair lingering around yesterday's best levels after printing a YTD low on Friday.
• PBoC set USD/CNY mid-point at 7.1059 vs exp. 7.2437 (prev. 7.1043).

Fixed Income

• USTs initially remained in overnight ranges, though succumbed to selling pressure, sparked by EZ-PMIs, which dragged EGBs lower. USTs matched yesterday's 107.31 high earlier in the session before pulling back to circa 107.25, and further downside could bring Monday's 107.17 low into view.
• Bunds looked as if they wanted to venture higher in early trade in an extension of yesterday's gains and with de Guindos labelling June as a done deal. However, EZ-wide and regional PMIs acted as a drag thereafter with a strong showing for the services sector, helping composite metrics to beat expectations. 131.47 was the peak before prices made a low at 130.98.
• Gilts started the session on the back foot thanks to an unwind of yesterday's Ramsden-induced gains and higher-than-expected public borrowing figures which saw the UK DMO revise higher its 2024/25 Gilt issuance remit. Gilts down as low as 96.90 with yesterday's trough at 96.71.
• UK DMO revises higher its 2024/25 Gilt issuance remit to GBP 277.7bln (prev. GBP 265.3bln)
• Italy sell EUR 2.5bln vs exp. EUR 2-2.5bln 3.20% 2026 BTP Short Term and EUR 2.5bln vs exp. EUR 2-2.5bln 1.50% 2029 & 1.80% 2036 BTPei:
• Germany sells EUR vs exp. EUR 5bln 2.90% 2026 Schatz: b/c 2.7x (prev. 2.31x) & avg. yield 2.91% (prev. 2.84%) and retention 18.6% (prev. 17.7%)

Commodities

• Upside across the crude complex underpinned by the Flash PMIs from Europe which (although manufacturing fell short of expectations) pointed to a services-led recovery; however, prices have pulled back from best levels in recent trade. Brent June meanwhile trades in a USD 86.97-97.95/bbl range.
• Softer trade across precious metals despite the softer Dollar as the geopolitical unwind from yesterday continues, with relatively broad-based losses seen across spot gold, silver and palladium; XAU fell under USD 2,300/oz to find current intraday support around USD 2,291/oz.
• Base metals are lower across the board with sizeable intraday losses despite the softer Dollar and risk-on tone across the rest of the market. There has been no obvious catalyst for this pullback but some desks cite Asian investors being cautious of the recent rally driven, in part, by speculative trading.
• Anglo American (AAL LN) Q1 Copper Production 198k tonnes (exp. 191.3k tonnes)

Geopolitics: Middle East

• Israeli occupation forces reportedly stormed the city of Jericho in the eastern West Bank, while it was also reported that Israeli gunboats targeted the seashores in the city of Khan Younis in the southern Gaza Strip. In relevant news, sirens sounded in the town of Metulla and the Kiryat Shmona area in northern Israel on suspicion of rocket fire, according to Al Jazeera.
• Hezbollah fired dozens of rockets into northern Israel on Monday which drew retaliatory strikes, while it said its attack was in response to recent Israeli strikes on towns and villages in southern Lebanon, according to Associated Press.
• Israeli raids were reported on the town of Yaroun in southern Lebanon, according to Al Jazeera.
• Hamas said it condemns the statements of US Secretary of State Blinken and his attempt to hold the group responsible for obstructing reaching an agreement, according to Sky News Arabia. Hamas said Blinken's statements contradict the fact that the movement has provided flexibility more than once to facilitate an agreement, while it added that the movement's demands are a permanent ceasefire, the withdrawal of the occupation and the return of the displaced to their homes in all areas of the Gaza Strip.
• US defence official said the Al-Asad airbase in Iraq came under attack from an Iranian proxy group today which is the second attack on a US base in two days, according to Fox.

Geopolitics: Other

• UK PM Sunak is to unveil an extra GBP 500mln of military funding to Ukraine and announce the largest supply of munitions to Kyiv on Tuesday as he travels to Poland and Germany, according to FT.
• North Korean state media reported that leader Kim guided the first nuclear counterstrike drills, while it stated that the drills are a clear warning sign to enemies.

US Event calendar

• 08:30: April Philadelphia Fed Non-Manufactu, prior -18.3
• 09:45: April S&P Global US Composite PMI, est. 52.0, prior 52.1
• 09:45: April S&P Global US Services PMI, est. 52.0, prior 51.7
• 09:45: April S&P Global US Manufacturing PM, est. 52.0, prior 51.9
• 10:00: Revisions: Retail Sales
• 10:00: April Richmond Fed Business Conditio, prior -8
• 10:00: April Richmond Fed Index, est. -8, prior -11
• 10:00: March New Home Sales MoM, est. 1.1%, prior -0.3%
• 10:00: March New Home Sales, est. 669,000, prior 662,000

DB's Jim Reid concludes the overnight wrap

It may not be saying a lot, but markets had their best performance in some time yesterday, as investors became a bit more optimistic about the near-term outlook. Equities recovered, and the S&P 500 (+0.87%) finally managed to advance after a run of 6 consecutive declines. Adding to the positive sentiment were growing hopes that a further escalation in the Middle East would be avoided, and Brent crude oil prices (-0.33%) fell back to their lowest level so far this month, at $87.00/bbl. So there were several pieces of better news for investors, but there’ll be no let-up on the calendar today, as we’ve got lots of earnings reports, including Tesla after the US close. While the Magnificent 7 were up +0.94% yesterday, Tesla was down -3.40%, extending its decline this year to -42.8% and having halved since last July. It's maybe a slight warning for the darlings of the current AI boom that things can change quickly if profits don't follow very high expectations as new technologies grow. Talking of which Nvidia bounced back from their -10.0% decline on Friday and rose +4.35% yesterday.

On top of earnings today, we’ll get an initial indication about how the global economy has performed in Q2, as the April flash PMIs are coming out for the major economies. These will be of particular interest for assessing the nascent recovery in the euro area economy. In March the composite PMI rose above the 50 level for the first time in 10 months. There will also be attention on the price components within the PMIs, especially in the US, where the composite output price index posted a 10-month high of its own last month.

We’ll have to see how those events pan out, but before all that, risk assets managed to post a strong recovery on both sides of the Atlantic. That made a change after three weeks of losses for global equities, with the major indices including the S&P 500 (+0.87%), the NASDAQ (+1.11%) and the STOXX 600 (+0.60%) all advancing. Information technology (+1.28%) and financials (+1.20%) outperformed within the S&P 500. Alongside that, the VIX index of volatility (-1.8pts) fell to 16.94pts, which is its lowest level since Iran launched their recent missile strike on Israel . And here in the UK, the FTSE 100 (+1.62%) even closed at an all-time high, aided by the weakness in sterling (-0.19%), which hit its weakest level against the US Dollar since November.

Henry did a piece yesterday (link here) looking at what happens next after the S&P 500 has seen 6 consecutive declines as we saw before last night's positive close. The subsequent 1-month and 6-month performances have mostly been positive in recent history. Moreover, if the S&P had posted a 7th consecutive decline yesterday, that would have taken us into unusual territory, as it’s something we haven’t seen since February 2020 as Covid-19 spread globally. Indeed, the examples of 7 consecutive losses for the S&P 500 (in the 21st century at least) have either been during a crisis (GFC, US debt ceiling crisis, Euro Crisis, Covid-19) or in anticipation of a pivotal event with significant uncertainty (2016 US election).

As discussed at the top, sentiment was bolstered by the lack of any further escalation in the Middle East. Indeed, yesterday saw Iran’s foreign ministry spokesman say that Israel had received the “necessary response at this stage”. The apparent easing in tensions helped oil prices fall back, and there was also a sharp move lower in gold (-2.59%), which had its biggest daily decline since June 2021. It's down another -0.90% this morning.

The more positive tone was evident across sovereign bonds too. They were supported by the drop in oil prices, which added to hopes that any spike in inflation would prove temporary, and the 1yr US inflation swap (-1.2bps) fell back for a 4th session to 2.71%. In turn, that meant investors grew a bit more hopeful about the prospect of rate cuts, and the amount of Fed rate cuts priced by the December meeting (+1.2bps) inched up to 40bps. Similarly at the ECB, the number of rate cuts priced by December’s meeting (+4.2bps) rose to 78bps.

With more rate cuts being priced in, that helped to push down yields, with those on 10yr bunds (-1.4bps), OATs (-2.7bps) and BTPs (-8.7bps) all moving lower. Admittedly, there was a decent intraday turnaround, as the 10yr bund yield had risen to 2.55% at one point, its highest level since November, before reversing course and ending the day lower at 2.48%. Meanwhile in the US, there was a decline in the 2yr Treasury yield (-1.5bps) to 4.97%, whilst the 10yr Treasury yield (-1.2bps) fell to 4.61%, as it also pared back its earlier losses, having still being above at 4.66% as Europe finished lunch.

In Asia the Hang Seng (+1.64%) is leading gains on a broker upgrade, with the Nikkei (+0.27%), the KOSPI (+0.20%) and the S&P/ASX 200 (+0.41%) seeing minor gains. Chinese stocks are the worst performers with the CSI (-0.56%) and the Shanghai Composite (-0.41%) both trading lower. US stock futures are broadly flat as I type.

Early morning data showed that key gauges of Japan’s manufacturing and service activity improved in April to its highest levels in nearly a year. The au Jibun Bank flash manufacturing PMI rose to 49.9 in April, as against a level of 48.2 in March. The services PMI advanced to 54.6 in April up from 54.1 in March indicating that the service sector continues to remain the primary driver of growth.

Elsewhere, Australia’s Judo Bank PMI data for April showed the manufacturing PMI rising to 49.9 from 47.3. Meanwhile, the service sector PMI came off slightly from 54.4 to 54.2, though still registering a decent growth environment. The composite PMI hit a 24-month high of 53.6 in April, an improvement from the previous month's 53.3.

To the day ahead now, and the main data highlight will be the April flash PMIs from Europe and the US. Elsewhere, we’ll get US new home sales for March, UK public finances for March, and the Richmond Fed’s manufacturing index for April. From central banks, we’ll hear from the ECB’s Panetta and Nagel, and the BoE’s Haskel and Pill. Finally, today’s earnings releases include Visa, Tesla, PepsiCo, General Electric, UPS and General Motors.

Tyler Durden Tue, 04/23/2024 - 08:19

iPhone Sales In China Tumble 19% In Worst Quarter Since 2020

Apple shares are marginally lower in premarket trading in New York following a report that first-quarter iPhone sales in China had been the worst since early Covid. This comes ahead of an earnings report from the world's most valuable company next week and other souring reports from independent research firms tracking the slide in iPhone sales in China. 

Counterpoint reports that overall, China, the world's largest handset market, recorded growth upwards of 1.5% year-over-year in the first quarter, marking the second consecutive quarter of positive year-over-year growth. Huawei is a rising star and the best performer of all major brands, growing 69.7% year-over-year, mainly because of the release of its 5G-capable Mate 60 series last fall. Meanwhile, Apple iPhone sales tumbled 19% in the quarter. 

Here are the highlights of the report:

• China's smartphone sales grew 1.5% YoY and 4.6% QoQ in Q1 2024, marking the second consecutive quarter of positive YoY growth.
• Huawei stood out as the best performer among all OEMs during the quarter, enjoying 69.7% YoY growth; HONOR also saw double-digit growth.
• vivo took the top spot, followed by HONOR and Apple.
• Apple's sales dropped 19.1% YoY in Q1 as Huawei's comeback directly impacted the premium segment.
• The market is expected to see low single-digit YoY growth in 2024.

"Momentum seems to be building on a recovery as China's smartphone sales continued their growth trajectory and grew 4.6% QoQ in Q1 2024. The sales promotions during the Chinese New Year festivities were the biggest growth driver. The average weekly sales during the four weeks leading up to the Chinese New Year saw a robust growth of 20% when compared to a normal week, according to Counterpoint's China Smartphone Weekly Model Sales Tracker," Counterpoint's Associate Director Ethan Qi wrote in a statement. 

Counterpoint's Senior Research Analyst Ivan Lam said on the iPhone recovery story, "We are seeing slow but steady improvement from week to week, so momentum could be shifting. For the second quarter, the possibility of new color options combined with aggressive sales initiatives could bring the brand back into positive territory; and of course, we are waiting to see what its AI features will offer come WWDC in June. That has the potential to move the needle significantly longer term."

Counterpoint's data was published one week after International Data Corporation reported that iPhone shipments plunged by 10% in the quarter. 

Since early January, institutional desks, Barclays, Piper Sandler, and Jefferies have warned about a downturn in iPhone sales, mainly because of a slowdown in the world's largest handset market. 

While Goldman removed Apple from its "Conviction List" and Evercore ISI dropped Apple from its "Tactical Outperform" list earlier this year, Bank of America analyst Wamsi Mohan named Apple the top pick for 2024, citing a "rich catalyst path with defensive cash flows." 

Apple shares have been widely underperforming the S&P500 index on numerous reports this year on weaker iPhone demand in China. 

Just 56% of the analysts tracked by Bloomberg have buy ratings on Apple, while the percentage of bulls for Microsoft, Nvidia, Alphabet, Amazon, and Meta Platforms is around 85%.

Besides waning iPhone sales in China, investors have been given the impression that the company lags in the artificial intelligence race. Just weeks ago, there were reports that the company nuked its car project. Plus, the $4,000 Apple Vision Pro goggles do not appear to be taking off as expected. 

Tyler Durden Tue, 04/23/2024 - 07:45

Which Major City Will Completely Collapse First – Los Angeles, Chicago, Or New York City?

Authored by Michael Snyder via The End of The American Dream blog,

In 2024, virtually all major U.S. cities have certain things in common.  First of all, if you visit the downtown area of one of our major cities you are likely to see garbage, human excrement and graffiti all over the place.  As you will see below, some of our core urban areas literally look like they belong in a third world country.  Most of our politicians don’t seem too concerned about doing anything to clean up all the filth, and so it shouldn’t be a surprise that rat populations are absolutely exploding all over the country.  In some of our largest cities, the total rat population is numbered in the millions.  Meanwhile, rampant theft, out of control violence, endless migration, predatory gangs and the worst drug crisis in the entire history of our nation have combined to create a “perfect storm” of social decay that is unlike anything that any of us have ever seen before.  Millions of law-abiding citizens and countless businesses have been fleeing America’s largest cities, and property values in our core urban areas have been absolutely crashing.  We really are in the early stages of a full-blown societal “collapse”, and things just keep getting worse with each passing day.

In this article, I want to focus on the three largest metropolitan areas in the United States: New York, Los Angeles and Chicago.

John Williams recently took his camera with him as he walked through downtown Los Angeles, and he described what he witnessed as “hell”…

Decades of failed policies have transformed one of the greatest cities in the entire country into one of the worst.

At this point, theft has become so rampant that even the ultra-progressive politicians in California have come to the conclusion that something must be done.

So several bills that would “crack down on shoplifting” have been introduced in the state legislature…

Shoplifters beware.

The California Assembly has introduced a comprehensive package of seven bills aimed at addressing the rising concerns over retail theft across the state.

One of the key initiatives is Assembly Bill 2943, jointly authored by Assemblymember Rick Chavez Zbur (D) and Speaker Robert Rivas (D). The bill targets serial retail thieves by introducing a new crime with penalties of up to three years behind bars for possession of stolen property with intent to resell. It also allows for the aggregation of similar thefts from different victims to charge grand theft, under specific criteria.

Hopefully something will get done, because right now a criminal in the state of California can “literally walk into a retail store every single day of the year and steaI $949 worth of merchandise” and never spend a single minute in jail.

"You can literally walk into a retail store every single day of the year and steaI $949 worth of merchandise"

"And you will NEVER do a minute in jail"

"Under California law, assauIt on a peace officer with anything other than a fully automatic weapon is not a vioIent crime"… pic.twitter.com/jX0l4OK6pA

— Wall Street Silver (@WallStreetSilv) April 19, 2024

Los Angeles has become a paradise for shoplifters, but many would argue that things are even worse in the Big Apple.

As I discussed a few days ago, New York City has “a $4.4 billion shoplifting economy”.

And approximately 90,000 packages are stolen in New York City every single day.

This is just one of the reasons why we have seen a mass exodus.

Countless New Yorkers have already left for greener pastures, and lots more are thinking of leaving…

About 7 million New Yorkers plan to leave the state, a new survey revealed this month.

In a new Marist poll, 37 percent of New Yorkers—roughly 7 million people—said they plan to move away. The number was slightly more concentrated among Republicans, as 46 percent said they plan to leave the state compared to just 29 percent of Democrats.

Unsurprisingly, many of those that are fleeing are heading to Florida…

For many, Florida remains one of the top places to move, but Southern states in general have been recording the biggest influx in transplants.

According to Realtor.com, Philadelphia, Miami, Atlanta, Tampa and Orlando remain some of the top locations for New Yorkers to start again.

I wouldn’t want to live in the Big Apple either.

The rat problem alone would be enough for me to move.

It just continues to escalate, and politicians are now proposing to use “rat contraceptives” to deal with “the millions of rats lurking in subway stations and empty lots”…

In New York City, the idea to distribute rat contraceptives got fresh attention in city government Thursday following the death of an escaped zoo owl, known as Flaco, who was found dead with rat poison in his system.

City Council Member Shaun Abreu proposed a city ordinance Thursday that would establish a pilot program for controlling the millions of rats lurking in subway stations and empty lots by using birth control instead of lethal chemicals. Abreu, chair of the Committee on Sanitation and Solid Waste Management, said the contraceptives also are more ethical and humane than other methods.

Unfortunately, New York City doesn’t have the worst rat problem in America.

That title actually belongs to the city of Chicago…

Chicago has once again been declared the rattiest city in the U.S. according to Orkin’s annual ranking.

Los Angeles surpassed New York on this year’s list now holding the #2 spot and bringing the Big Apple down to #3, Orkin shared.

Other notable shifts included Houston, which moved 10 spots up to #20, and Charlotte, North Carolina that rose 16 spots to #21.

Somehow, the rat problem in Chicago has gone to an entirely new level in 2024.

In fact, one local resident says that it is now the worst that she has ever seen in her entire lifetime…

A resurgence of rats has gotten out of control in Chicago’s Portage Park neighborhood, multiple residents explained Friday as they called for city leaders to take further action.

Diana Gazda, a resident of the Far Northwest Side community for seven decades, said she has never seen an infestation like it.

“We never had a rat problem like this,” she stated. “I’ve been here 71 years in my house.”

In addition to being world famous for rats, the Windy City is also world famous for violence.

In Chicago, you can be gunned down at any time of the day or night.

Nobody is safe, and that is especially true for police officers…

A Chicago police officer was shot to death early Sunday in Gage Park on the Southwest Side in what sources are saying was an apparent carjacking.

Officers responded to a ShotSpotter alert about 2:55 a.m. and found Officer Luis Huesca with multiple gunshot wounds in the 3100 block of West 56th Street, a police spokesperson said in a statement.

Huesca, 30, was driving home from work, according to city officials. Huesca, who was still wearing his uniform, was taken to University of Chicago Medical Center, where he was pronounced dead.

So which of these cities will completely collapse first?

I think that is a very good question.

They are all headed downhill very rapidly, and they are all being run by radical leftists.

Of course the exact same things could be said about dozens of other U.S. cities.

For years, I have been warning my readers about the “cultural transformation” that has been taking place in America.

How we raise our kids really matters.

We have been failing them for decades, and now the consequences can be very clearly seen in the streets of our major cities.

A horrific societal collapse is upon us, and yet this nation continues to refuse to change direction.

*  *  *

Michael’s new book entitled “Chaos” is available in paperback and for the Kindle on Amazon.com, and you can check out his new Substack newsletter right here.

Tyler Durden Tue, 04/23/2024 - 07:20

Homebuyer Payment Hits Record High As Mortgage Rates Climb Back Above 7% For The First Time In 2024

Mortgage rates in the United States climbed to the highest level since November 2023 last week, as higher-than-expected inflation readings have dashed hopes of the Fed starting to cut rates soon.

As Statista's Felix Richter reports, according to Freddie Mac, the average rate for a 30-year fixed mortgage increased to 7.10 percent in the week ended April 18, making it difficult for many would-be homebuyers to afford a house.

You will find more infographics at Statista

Along with the Fed's aggressive rate hikes, mortgage rates have climbed by almost 4 percentage points since the beginning of 2022, threatening to push more and more potential buyers out of the market, especially as high rents and other costs of living make it increasingly difficult to save for a significant down payment.

Making things even more difficult, high mortgage rates don't just affect the demand side of the market.

Supply is also constrained as prospective sellers stay put to avoid taking out a new mortgage at a much higher rate than their current one.

Source: Bloomberg

This in turn has kept home prices elevated, or at least kept them from fully reflecting the significantly higher mortgage rates compared to two years ago.

"When rates go up, people hunker down and don’t spend," mortgage broker Rocke Andrews told Realtor.com.

"They’ve been told for so long that rates are coming down, so they just postpone."

And they made need a little more patience.

Last week, Fed chair Jerome Powell said that policymakers were in no rush to cut rates, making it unlikely for mortgage rates, which tend to follow the same trajectory as the Fed's policy rate, to come down meaningfully anytime soon.

In fact, according to brokerage Redfin, U.S. homebuyers face the prospect of having to pay a “record” amount in monthly mortgage payments to buy a house amid extremely high prices and elevated mortgage rates.

“The median U.S. home-sale price increased 5 percent from a year earlier during the four weeks ending April 14, bringing it to $380,250 - just $3,095 shy of June 2022’s all-time high,” said an April 18 press release from Redfin.

“The average daily mortgage rate this week surpassed 7.4 percent, the highest level since last November, after a hotter-than-expected inflation report and the Fed’s confirmation that interest-rate cuts will be delayed.”

The 12-month inflation had jumped 0.3 percent, to 3.5 percent in March.

“The combination of high mortgage rates and prices have brought homebuyers’ median monthly housing payment to a record $2,775, up 11 percent year over year.”

According to a recent analysis by Bankrate, Americans now need an annual income of $110,871 to afford a median-priced home of $402,343. This is an almost 50 percent increase over a period of just four years.

A six-figure annual income is now mandatory to afford a median-priced home in 22 states and the District of Columbia.

Four years ago, only six states and the District of Columbia had such a high requirement.

Tyler Durden Tue, 04/23/2024 - 06:55

If We Want Something As Good But More Reliable, It'll Cost Much More Money

By Eric Peters, CIO of One River Asset Management

Utopia?

“We added solar and wind like it was going out of style,” said the CIO of the well-regarded US fund. “We have ample land, wind in the middle of the country.” Federal subsidies make electricity almost free. “But it’s a Catch-22 where we’re adding capacity, but reliability is declining.” In Feb 2021 Texas suffered a catastrophic electrical grid failure. Renewables went offline when they were most needed. Gas turbines froze too. 4mm homes went without power. Hundreds died. “Now policymakers across the spectrum seem to be acknowledging the need for both renewables and hydrocarbons.”

“Back in 2018 there was a utopian vision,” continued the same CIO.

“The economics were there, the physics allowed it, all we needed was political will.”

Net zero could be achieved painlessly, while boosting growth.

“But we’ve learned wind turbines frequently break, and don’t recycle well. They kill lots of large birds. Electric cars take a year to repair when you crash them.”

The residual values are lousy when you sell them.

“So now we’re asking better questions and considering the true costs and benefits. The tradeoffs. We’re growing up.”

“Asking good questions is always better for society,” said the CIO.

“There is pushback on the dogmatic view that the future of the world hangs in the balance, and those taking the most extreme positions on the matter have been undermined by an unwillingness to consider nuclear at any price,” he said.

“European banks will not fund hydrocarbons, it’s almost a religious belief at this point. But we will fund them because they’re a vital part of tomorrow’s energy mix and we can earn double-digit returns doing so.”

“If we want to build BMWs using windmills, it’s going to cost a lot to do it, and historically that’s the kind of thing the government must subsidize,” said the CIO. “It’s a societal good, like building parks in cities.” It is not a purely economic decision from the private sector’s standpoint. “A chip factory is being built in Taylor Texas with $6bln in Federal subsidies. Samsung is investing more than $30bln. That’s a societal good too. Because for security reasons, we may all sleep better at night buying some of our chips from Taylor instead of Taipei. But they may well cost more.”

“Ultimately, these decisions are about whether we’re willing to settle for something less good in exchange for something more reliable,” continued the CIO.

“If we want something as good and more reliable, it’ll cost more money. A way to think about these increased costs is a form of insurance.”

Insuring our children’s futures against the risk of cataclysmic climate change. Insuring our access to advanced chips against military conflict over Taiwan.

“Thinking through long-term risks is always a healthy exercise, and insuring against them sometimes requires government funding.”

“Europe made some naïve choices when they went through this exercise,” he said. “Germany shut all its nuclear power plants.” Which required it to increase its dependency on cheap Russian gas, strengthening Putin’s hand, which he then played in Ukraine. “They were going the opposite way; they were essentially selling insurance instead of buying it.”

This of course, is why it is vital that societies ask good questions and consider the true costs and benefits of big decisions.

“And the consequence is that Europe is deindustrializing. It’s stunning.”

Tyler Durden Tue, 04/23/2024 - 06:30

Are Americans Moving From Blue To Red States?

In the last couple of years, large U.S. states where a majority of voters support Democrats – so-called blue states – have been losing population, while some large red states, where there is majority support for Republicans, have gained residents.

An analysis of Census Bureau data shows that there are in fact some big movements of people from states currently defined as blue to those currently defined as red.

However, as Statista's Katharina Buchholz reports, the situation is more accurately described as more people exiting certain blue states – for example New York and California – and heading to other states in general, may they be red or blue.

In 2005 and 2022 alike, those moving from blue states have been almost equally splitting up between blue and red states.

Only their total number has been increasing, from 3.7 million or 2.4 percent of blue states’ population to 4.6 million or 2.7 percent of population in the given years, boosting migration to both red and other blue states.

You will find more infographics at Statista

At the same time, migration from red states has not changed as much – increasing only from 3.3 million in 2005 to 3.6 million in 2022. As in blue states, the split of destinations has stayed almost exactly constant over the years, with red staters choosing other red states 61-62 percent of the time and blue states only 38-39 percent of times.

This means that compared with the mid-2000s, blue states now transfer more than 500,000 more residents towards red states annually (and about as many within blue states). Inflows from red states to blue states have only increased by a little more than 100,000 per year in this time frame.

So while it might be true that a high cost of living and a (perceived) low quality of life is driving people away from certain blue states, this is not driving them towards red states more than in the past, relatively speaking.

Migration from abroad is also boosting U.S. populations.

In 2022, around 1 million more people immigrated into the United States than left the country. International migrants had traditionally chosen larger cities in both red and blue states, but this type of migration has diversified over the past decades.

While this leaves both states like Texas and New York with fewer (official) international arrivals, it has had a more detrimental effect in blue states that already suffer from domestic out-migration.

For the sake of this analysis, states are assigned the designation blue or red based on their vote in the last three presidential elections. For comparability, the definition of red states and blue states was not changed for 2005. Colorado, Virginia and Nevada – where domestic immigration has boomed recently – would technically be defined as red states, not blue, in 2005. However, patterns of migrations for these states are consistent between 2005 and 2022 instead of changing upon their reorientation, also supporting the hypothesis that U.S. migration flows are relatively constant and dependent on factors like location and proximity rather than politics.

Tyler Durden Tue, 04/23/2024 - 05:45

Swiss Bitcoiners Renew Efforts To Orange-Pill The Country's Central Bank

Authored by Brayden Lindrea via CoinTelegraph.com,

Several Swiss-based Bitcoiners are renewing attempts to get the Swiss National Bank to hold Bitcoin in its reserves by holding a referendum to change the country’s constitution — but they will need to convince more than 100,000 locals to sign a petition first.

Adding Bitcoin to the central bank’s reserves would help protect the country’s “sovereignty and neutrality” in an increasingly uncertain world, said Yves Bennaïm, founder and chairman of 2B4CH, a nonprofit think tank leading the charge. 

“We are in the process of completing the organizational preparations for the committee and preparing the documents that must be submitted to the State Chancellery in order to start the process,” Bennaïm told Swiss news outlet Neue Zürcher Zeitung (NZZ) on April 20.

However, 100,000 signatures from Swiss nationals are needed within 18 months for a referendum to be held on issues brought about by Swiss nationals or groups — a threshold that plagued 2B4CH’s first attempt in October 2021.

2B4CH first launched the “Bitcoin Initiative” around that time, stating its mission was to add Bitcoin as a reserve currency to Article 99-3 of the Swiss Federal Constitution.

Switzerland boasts a population of 8.77 million, meaning about 1.15% of locals will need to sign the petition.

Source: Remo Uherek

“By including Bitcoin in its reserves, Switzerland would mark its independence from the European Central Bank. Such a step would strengthen our neutrality,” said Luzius Meisser, president of the Bitcoin-focused trading platform Bitcoin Suisse, who is assisting Bennaïm with the initiative.

Meisser will try to convince the Swiss National Bank about the benefits of adding Bitcoin to its balance sheet in an April 26 meeting. He’ll have three minutes to plead his case.

The executive previously tried to convince the central bank to buy 1 billion Swiss francs ($1.1 billion) of Bitcoin each month as an alternative to German government bonds in March 2022, according to NZZ.

However, Swiss National Bank Chair Thomas Jordan reportedly said Bitcoin didn’t meet the requirements for SNB to add it as a reserve currency in April 2022.

Meisser is now claiming that Switzerland would be 30 billion Swiss francs ($32.9 billion) richer had the central bank followed his suggestion in 2022 and that leaving it any later risks the chances of other central banks swooping in on Bitcoin, forcing Switzerland to buy at “significantly higher prices than everyone else,” he said.

However, Leon Curti, head of research at asset manager Digital Asset Solutions, is hopeful that the recent approvals of spot Bitcoin exchange-traded funds in the United States and Hong Kong will influence the Swiss National Bank to invest in Bitcoin.

The NZZ article brought about a positive response from Joana Cotar, a German politician and Bitcoin activist who strongly opposes a European Union-backed digital currency.

Cointelegraph reached out to 2B4CH but didn’t receive an immediate response.

Tyler Durden Tue, 04/23/2024 - 05:00

Poland "Ready" To Host NATO Nuclear Weapons, President Duda Says

Poland has upped the nuclear rhetoric with Russia, on Monday suggesting NATO nuclear warheads could soon be positioned on its territory. It comes amid general NATO euphoria in the wake of the US House finally passing Biden's giant aid package for Ukraine, despite widespread acknowledgement that Ukrainian forces are being beaten by Russia.

Polish President Andrzej Duda declared in a fresh and hugely provocative statement that Poland is "ready" to host nuclear weapons should NATO decide to do so as reinforcement of its eastern flank. The words were issued in an interview published Monday by Polish outlet Fakt.

President Andrzej Duda, file image

"Russia is increasingly militarizing the Königsberg oblast (Kaliningrad). Recently, it has been relocating its nuclear weapons to Belarus,” Duda continued, apparently wanting to match and mirror Russian moves.

"If our allies decide to deploy nuclear weapons as part of nuclear sharing on our territory as well, in order to strengthen the security of NATO's eastern flank, we are ready for it," he added.

Duda additionally said while discussing the topic of NATO's nuclear sharing program in the interview that Warsaw and Washington have been in talks "for some time."

"I've already talked about it several times. I must admit that when asked about it, I declared our readiness," he emphasized.

But the reality is Brussels and Washington are likely to be deeply hesitant based on the nuclear threats emanating from Moscow of late. Moving NATO warheads to Polish soil would most certainly greatly intensify the already somewhat high nuclear tensions, and at a moment the proxy war in Ukraine shows no sings of abating.

While three NATO members are officially nuclear weapons states - the United States, France and the United Kingdom – others are authorized to host nukes (typically 'tactical' nuclear weapons). They are Belgium, Germany, Italy, the Netherlands and Turkey.

Apparently Poland is now throwing its name in the hat for NATO's nuclear-sharing program, which would expand Western nuke placement right up to Russia's backyard...

You will find more infographics at Statista

In the new Polish media interview, President Duda also addressed his positive relationship with Republican frontrunner and former President Donald Trump. He spoke fondly of Turmp, saying the two find agreement on "a lot of common topics."

“He is a politician with whom I directly cooperated with the United States for four years when he was the president of the United States,” Duda said. "I want to emphasize very strongly that we have been friends since then. I really like talking to him, because he is an extremely interesting personality and has a lot of experience, both political and business."

Tyler Durden Tue, 04/23/2024 - 04:15

Sweden Wants EU To Sanction Russia's Shadow Fleet And Ban Its LNG

By Tsvetana Paraskova of OilPrice.com

The next round of EU sanctions against Russia over the invasion of Ukraine should include measures to address the shadow fleet of tankers helping Russia move its oil and a ban on EU imports of Russian LNG, Sweden’s foreign minister said on Monday.  

“Adopting the 14th sanctions package is one of the most important things,” Swedish Foreign Minister Tobias Billstrom said arriving at an EU foreign ministers’ meeting in Luxembourg, as carried by Reuters.

“We will see to it that we both include an import ban on liquefied natural gas as well as measures to curb the Russian shadow fleet,” the Swedish minister added.

The EU has just started discussions on the 14th package of sanctions and it is not expected to adopt the measure anytime soon.

EU member states are divided on a ban on LNG imports. Sweden and the Baltic countries press for a ban, but other member states and the EU energy regulator say Europe is now much more dependent on LNG to afford an immediate ban on imports of LNG from Russia.

The European Union should be careful in its efforts to ditch Russian LNG as it should protect its security of gas supply, the European Union Agency for the Cooperation of Energy Regulators, ACER, said in a report last week.

As the EU aims to completely end its reliance on Russian fossil fuels by 2027, “the reduction of Russian LNG imports should be considered in gradual steps starting with spot Russian LNG imports,” ACER said in its report.

“While such measures may target to reduce dependence on Russian gas, it’s important to note that substantial volumes have already been contracted under long-term LNG agreements before the Russian invasion of Ukraine,” the EU regulator said.

“Hence, reductions in Russian LNG imports should be approached with caution, particularly in light of the imminent expiration of the ship-or-pay transit contract for gas pipeline supply from Russia to Europe via Ukraine by the end of 2024.”

Tyler Durden Tue, 04/23/2024 - 03:30

EU Leaders Trying To Convince Greece & Spain To 'Sacrifice' Their Own Anti-Air Defenses For Ukraine

NATO and European Union leaders are literally pressuring member states to sacrifice their own national defense for the sake of Ukraine, part of the ongoing saga of desperation which has led some Western nations to deplete domestic arms and ammo stockpiles.

A disturbing report by Financial Times published Monday says Greece and Spain are under intensifying pressure from Western allies to give up what few Patriot anti-air defense systems that they possess.

Image via Greek City Times

Russia has continued to decimate Ukraine's energy, logistics, and communications infrastructure via superior airpower - and Kiev has had few options, limiting its response. President Putin has said the stepped-up air attacks are in direct retaliation to Ukraine's own cross-border drone attacks on Russian oil facilities. Drones have also frequently been sent over Crimea.

President Volodymyr Zelensky issued an urgent appeal Sunday on X, writing that "Patriots can only be called air defense systems if they work and save lives rather than standing immobile somewhere in storage bases."

Commenting on Ukraine's ongoing pleading, one Western official was cited in FT as saying, "We all know who has them, we all know where they are, and we all know who really needs them."

Only Germany has so far answered the call by lately providing a single Patriot battery. FT reported on back-to-back meetings of EU foreign and defense ministers of the last days, where it's been decided that Greece and Spain's anti-air systems aren't really crucial to their homeland defense:

Other EU leaders used a summit in Brussels last week to personally urge Spanish and Greek prime ministers Pedro Sánchez and Kyriakos Mitsotakis to donate some of their systems to Ukraine, according to people briefed on the discussions.

The two leaders, whose armed forces possess between them more than a dozen Patriot systems plus others such as S-300s, were told their need was not as great as Ukraine’s and that they did not face any imminent threat.

An EU diplomat said, "There are countries that are not in immediate need of their air defense systems, to be very honest." This as "Each country is being asked to decide what it can spare," according to the statement. Countries like Poland or those in the Baltics and Eastern Europe are considered too vulnerable at this moment to be asked to give up their defenses.

EU foreign policy chief Josep Borrell is also ramping up the pressure, saying "I don’t have Patriots in Brussels, they are in the capitals, and it is up to them to take decisions."

So this is what it has come to: first European populations are dubiously told that Putin is eyeing expansion of the war deeper into Europe, and next Western countries are told to make drastic decisions which severely weaken their own national security. 

Greece in particular has faced long-running threats from Turkey, with the geopolitical rivals locked in a dispute over maritime territory which has at times very nearly resulted in a shooting war. This has happened on several occasions in the last couple of years. So certainly the Greek population is going to balk when EU leaders in faraway capitals lecture Greece about 'not really needing' anti-air protection. And if they are sent to Ukraine, there's a chance they could be destroyed anyway. 

Tyler Durden Tue, 04/23/2024 - 02:45

NATO's Never-Ending War: The 75-Year-Old Bully Is Faltering

Authored by Ramzy Baroud via Counterpunch.org,

The western discourse on the circumstances behind the creation of the North Atlantic Treaty Organization (NATO), 75 years ago, is hardly convincing.

Yet, that over-simplified discourse must be examined in order for the current decline of the organization to be appreciated beyond the self-serving politics of NATO’s members.

The history records page of the US State Department speaks of the invention of NATO in a language suitable for a US high school history book.

“After the destruction of the Second World War, the nations of Europe struggled to rebuild their economies and ensure their security,” it reads, which compelled the US to take action: “(integrating) Europe as vital to the prevention of communist expansion across the continent.”

This is the typical logic of NATO’s early doctrine. It can be gleaned from most of the statements made by Western countries that established and continue to dominate the organization.

The language oscillates between a friendly discourse – for example, Harry Truman’s reference to NATO as a ‘neighborly act’ – and a threatening one, also Truman’s tough language against “those who might foster the criminal idea of having recourse to war.”

The reality, however, remains vastly different.

Indeed, the US did emerge much stronger, militarily and economically after WWII. That was reflected in the Marshall Plan, an ‘Economic Recovery Plan’, which was a strategic, not a charitable act. It engineered the economic recovery of selected countries who would become the US’ global allies for decades to come.

Upon its establishment, then Canadian Secretary of State Lester Pearson referred to the NATO ‘community’ as part of the ‘world community’, linking the strength of the former to “preserving the peace” for the latter.

As innocuous as such language may seem, it introduced a paternal relationship between the US-dominated NATO and the rest of the world. Thus, it allowed the powerful members of the organization to define, on behalf of the rest of the world – and often outside the umbrella of the United Nations – such notions as ‘peace’, ‘security’, ‘threat’, and, ultimately, ‘terrorism’.

A case in point is that the first major conflict instigated by NATO did not target external threats to Europe or US territories, but took place thousands of miles away, on the Korean Peninsula.

The west’s political discourse wanted to view the civil war in the Peninsula, prior to NATO’s intervention as an example of “communist aggression”. This ‘aggression’ supposedly forced NATO’s hands to react. Needless to say, the Korean War (1950-53) was a destructive one.

The 75 years since then proved the flimsiness of that argument. The Soviet Union has long been dismantled, and North Korea has been desperately fighting to break out of its isolation. Yet, a fractious state of no war-no peace remains in place. It could turn into an outright war at any time.

However, what the war has achieved is something entirely different. The constant state of non-peace provides a justification for the permanent US military presence in the region.

Similar outcomes followed most of NATO’s other interventions: Iraq (1991 and 2003), Yugoslavia (1999), Afghanistan (2001), Libya (2011) and so on.

Yet, the ability to start or exacerbate conflicts, and the inability, or perhaps unwillingness to permanently end wars, is not the real crisis at NATO, 75 years after its establishment.

In an article marking the anniversary, UK Secretary of Defense, Grant Shapps wrote in the Daily Telegraph that NATO must accept that it is now in a “pre-war world”.

He lashed out at those NATO members who were “still failing” to meet the minimally required spending on defense, which equals to two percent of total national GDPs. “We cannot afford to play Russian roulette with our future,” he wrote.

Shapps’ anxieties are often expressed by other top NATO leaders and officials, who are either warning of an imminent war with Russia or criticizing each other for the dwindling influence of the once-powerful organization.

Much of that blame was placed on former US President Donald Trump, who outright threatened to leave NATO during his only term in office.

Trump’s disparaging comments and threats, however, were hardly the instigator of the crisis.

They were symptoms of growing problems, which have continued for years after Trump’s dramatic exit from the White House.

NATO’s crisis can be summarized as this:

• First, the geopolitical formations that existed following the collapse of the Soviet Union and its Warsaw Pact no longer exist.

• Second, the main aspect of the new global competition cannot be reduced to military terms. Rather, it is economic.

• Third, Europe is now largely dependent on energy sources, trade and even technological integration with countries that the US perceives as enemies: China, Russia and others. Therefore, if Europe allows itself to subscribe to the US polarized language on what constitutes enemies and allies it will pay a heavy price, especially as EU economies are already struggling under the weight of continued wars and constant disruption of energy supplies.

• Fourth, fixing all of these challenges and more through the dropping of bombs is no longer an option. The ‘enemy’ is far too strong, and the changing nature of warfare makes traditional war largely ineffectual.

Though the world has greatly changed, NATO remains committed to a political doctrine from a bygone era. And even if the two percent threshold is met, the problem will not go away.

It is time for NATO to re-examine its 75-year-old legacy, and be courageous enough to change directions altogether – instead of opting for a state of non-peace, actually seeking real peace.

Tyler Durden Tue, 04/23/2024 - 02:00

"What Kind Of American Are You?"

Authored by Jim Quinn via The Burning Platform blog,

War, What's It Good For?

We have only seen a handful of movies in a theater over the last decade. Ever since the kids grew up, there hasn’t been a reason to spend too much for too little. Regal Cinemas in Oaks was the place to go in the old days. It had 24 theaters and was always packed. You could never get a parking spot close to the venue. The restaurant near the theater always had a line and you usually had to wait 30 minutes to get a seat.

We decided to go and see Civil War on Friday night, and boy times have changed. Regal Cinemas went bankrupt a few years ago after Covid, and the theater was taken over by some local businessmen. They now play four or five movies, but $10 per ticket is pretty reasonable compared to the chains. Instead of hundreds of cars in the parking lot, there were about 30 cars. We expected a long wait time at the PJ Whelihans, but there were dozens of seats at the bar and booths.

When we ventured over to the cinema, there was no one checking that we had tickets, and it was like a ghost town. A Friday night at the movies a decade ago was a big deal. The place would have been bustling. I can’t see this place making it over the long haul.

There were eight people there to see Civil War. The previews were so loud, we thought we were going to need ear plugs. The sound became more reasonable once the movie started.

I had read a few reviews of Civil War and they leaned negative, for a myriad of reasons. Some people seemed disappointed and angry that the director did not pick a side, or even make a single political statement.

My interest in this movie stemmed from the snippet shown in previews, where a guy holding some journalists at gunpoint asks them who they are, they respond “Americans”, and he asks them:

I think that is a profound question, as this country has already split into at least two enemy camps, with the leftists already fighting the war using any means necessary.

Laws and morality no longer matter during this time of coming conflict. Knowing we are in the back end of this Fourth Turning, there is a high likelihood of civil and/or global war in the next few years. Whenever I point this out, many scorn the possibility of civil war. Some think keyboard warriors will never actually have the guts to get into a shooting war with the government and/ or leftist fanatics.

I was hoping the movie would provide some thought provoking fodder giving me an inkling of what might be on the near term horizon. The movie is more about the journalist characters traveling from NYC to Washington DC in order to get an interview with the embattled president. There was no background regarding what started the civil war, who were the good guys, and whether the entire country was involved. The entire movie took place in the eastern U.S.

My observations are as follows:

• The conflict was between the Western Forces versus the existing U.S. government forces. The Western Forces constituted Texas and California, with Florida leaning in their direction. It was not clear whether all the states chose a side. Since both sides had high tech military weapons, the assumption is the U.S. military split its allegiance. That means rogue generals did what southern generals did in 1860.

• For most of the movie, you can’t tell who is fighting who. That seems realistic in a civil war scenario. The scene where the journalists are asked “What kind of American are you?” captures how confusing and chaotic it would be. I don’t think the guy dressed in military garb is on either side. They were dumping bodies into a hole. Without anyone to enforce laws, warlords will rise up and execute retribution on locals they consider enemies. Every local community will become a battleground. Neighbors versus neighbors, families versus families. With 300 million guns, there will be blood.

• Two characters let it be known that their parents have stayed on their farms in Missouri and Colorado, pretending their is no civil war. They seemed dismayed that they wouldn’t choose sides. That made me wonder whether those who choose to not participate in the coming civil war will be able to work their farms in peace. Since modern society will come to a grinding halt, with shortages of fuel and food, I’m afraid small farmers will come under attack by the hungry masses. It will be essential for small communities of like minded folk to form militias to protect their farms and communities.

• We all know our existing uni-party government is corrupt, evil and hates us. Whether we call it the Deep State, corrupt oligarchy, or corporate fascist totalitarians, it is clear they are our enemy. They are continuing to implement their Great Reset/Great Taking scheme, and will only be stopped through violent means. This movie did not take sides, but did imply the existing government will be defeated. The question is who or what takes their place. Sadly, it is unlikely that a republic will be reborn from the ashes of this empire of debt, delusion and decay.

Civil War was a sobering and depressing movie. I think it is a foreshadowing of what lies ahead.

Innocent people will die. Senseless slaughter will be the norm. The boundaries between good and evil will blur. Right and wrong will become meaningless. It will be unclear who are the good guys and who are the bad guys. Conflict is upon us. Will the cessation of our Constitution before the upcoming election be the spark that starts this civil war? Where and when will our Fort Sumter moment happen? I don’t know, but I fear it is close upon us.

“The tree of liberty must be refreshed from time to time with the blood of patriots and tyrants. It is it’s natural manure.” – Thomas Jefferson in a letter to John Adams

*  *  *

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Tyler Durden Mon, 04/22/2024 - 23:40

US & Philippines Kick Off Largest Ever Joint Drills On 'China's Doorstep'

Tensions are soaring in waters off China as the US and its close regional ally the Philippines launched expansive joint war drills Monday, not far from hotly disputed maritime areas.

At over 16,000 troops, the exercises called the "Balikatan" drills (or "shoulder to shoulder") mark the largest ever conducted between the two allies. "The 2024 iteration is not only the largest but the most complex," Newsweek confirmed of the annual exercise.

US Marine Corps image

The joint exercises will focus on "seizing maritime terrain, HIMARS infiltrations, and coastal defense and maritime strike operations among others" — and are taking place around the the Philippine provinces of Palawan and Batanes, geographically near disputed China Sea areas as well as Taiwan.

A US Marine Corps statement described Balikatan as a "cornerstone event between the US and the Philippines, directly supporting the refinement and understanding of our shared Mutual Defense Treaty obligations."

To be expected, Beijing has blasted the war games as a provocation, with Chinese Foreign Ministry spokesperson Lin Jian warning against the placement and deployment of US weapons systems "at China's doorstep." He further put the Philippines on notice, saying there will be "serious consequences of pandering to the United States."

He further said Manilla "should understand that drawing in countries outside the South China Sea to flex their muscles and stoke confrontation in the region will only intensify tensions and undermine regional stability." 

Russia's Sputnik has the following details on the scope of the new drills:

• Some of the drills will also involve other countries, such as Australia and France, in secondary roles.
• 14 nations will reportedly act as observers, including India, Japan, as well as some ASEAN and European Union countries.
• In a first, six Philippine Coast Guard (PCG) vessels will participate in the drills in an active role.
• The drills will simulate seizing islands in the vicinity of Taiwan and South China Sea.
• For the first time, the exercises will be held at multiple Philippine locations, 12 nautical miles offshore, outside of the country's territorial waters, near the disputed South China Sea – waters that are claimed by both China and the Philippines.
• The maiden deployment by the US military of the Mid-Range Capability missile system in the Philippines has been denounced as contributing to a regional arms race.

Recently, rival Chinese and Philippine coast guard patrols have directly clashed over maritime territory and fishing rights. Often these involve the firing of water canons well as dangerous ramming situations.

Washington and Manillas are defense treaty partners - meaning that if Philippine forces ever come under direct military attack, the United States is 'obligated' to intervene on their behalf.

Tyler Durden Mon, 04/22/2024 - 23:20

Supreme Court Denies Bid To Expand No-Excuse Mail-In Ballots In Texas

Authored by Tom Ozimek via The Epoch Times (emphasis ours),

The U.S. Supreme Court has declined to hear a legal challenge to a Texas law that requires voters under the age of 65 to provide justification to vote by mail, meaning that the Democrat-aligned attempt to sharply expand “no-excuse” mail-in ballots in the Lone Star state has failed, with implications for other states.

Empty envelopes of opened vote-by-mail ballots for the presidential primary are stacked on a table at King County Elections in Renton, Washington, on March 10, 2020. (Jason Redmond/AFP)

According to an April 22 order list, the high court denied petition for a writ of cetriorari in a case that stems from a federal lawsuit filed in 2020 on behalf of the Texas Democratic Party and several voters who requested that Texas lift its age-based limitations on no-excuse mail-in voting.

Texas law only allows individuals to vote by mail without a qualifying excuse, like sickness, if they are 65 years or older. In their original complaint, which made its way through a number of lower courts before ending up before the Supreme Court, the petitioners alleged that the Texas voting law violates the 26th Amendment of the U.S. Constitution, which prohibits denying the right to vote due to age.

The Supreme Court’s refusal to hear the appeal means that the Texas law stays in place, delivering a win to election integrity advocates who argue that no-excuse mail-in voting is prone to fraud and makes elections less secure.

At the same time, the high court’s decision to deny certiorari is a setback for groups who see laws like Texas’s age-based limits on no-excuse mail-in ballots as “voter suppression” or an unfair attempt to impose barriers to voting for certain groups, in this case younger voters.

The high court’s decision not to hear the appeal has broader implications, however, since six other states–Indiana, Kentucky, Louisiana, Mississippi, South Carolina, and Tennessee–have similar laws on the books that let older voters to request absentee ballot without having to provide any justification.

Public opinion in Texas over the issue of no-excuse mail-in voting is split, according to some polls.

More Details

In their initial petition filed in 2020 on behalf of the Texas Democratic Party and a group of voters amids the COVID-19 pandemic, the plaintiffs requested that Texas lift its age-based restrictions to no-excuse mail-in voting, citing public health risks related to the outbreak.

A district court judge sided with the plaintiffs in May 2020, temporarily blocking the Texas law.

Led by Texas Attorney General Ken Paxton, Texas officials then filed an appeal with the 5th U.S. Circuit Court of Appeals, which paused the district court’s ruling while the appeal played out.

The plaintiffs then asked the U.S. Supreme Court to reimpose the district court’s decision to freeze enforcement of the age-based limits to no-excuse mail-in voting, or to take the case up for review, but the high court rejected both requests.

Ultimately, the 5th Circuit voided the lower court’s May 2020 order in full. This led the plaintiffs to file an amended complaint in the district court, this time asserting other claims, including ones of racial discrimination under Section 2 of the Voting Rights Act and arguing that the age limitations on mail-in ballots violated the Equal Protection Clause of the 14th and 26th Amendments.

In a July 2022 order, the district court judge dismissed all of the plaintiffs’ claims, leading to another appeal before the 5th Circuit, which ultimately affirmed the district court’s decision to dismiss.

The plaintiffs filed a petition for a writ of certiorari in the U.S. Supreme Court in December 2023, asking the high court to declare Texas’s age-based voting law unconstitutional.

The court declined to review the plaintiffs’ appeal, leaving Texas’s age restrictions in place and denying a bid to expand no-excuse mail-in voting in the Lone Star state.

The Epoch Times has reached out to counsel for both petitioners and respondents with a request for comment on the high court’s decision.

Election Integrity or Voter Suppression?

The Supreme Court ruling comes amid a broader fight between those who see election integrity efforts as “voter suppression” and those who believe that the security of U.S. elections is too lax and should be tightened.

According to a running tally by the left-leaning Brennan Center for Justice, expansive voting laws far outpaced restrictive ones in 2023.

At least 53 expansive voting laws were introduced last year in at least 23 states, compared to 17 restrictive laws being passed in 14 states, suggesting that the election integrity movement is falling behind.

Amid concerns over voter fraud, former House Speaker Newt Gingrich recently suggested that to win the presidential election in November, Republicans need to outvote Democrats by a significant margin.

“Everybody who wants an honest election should know that in the long run, we need the French model: Everybody votes on the same day, everybody has a photo ID, everybody’s accounted as a person,” Mr. Gingrich said in a February interview on Fox News.

“But until we get to that, if Republicans want to win this year, under the rules that exist this year, they need to outvote the Democrats by about 5 percent, which is a margin big enough that it can’t be stolen,” he said.

Elsewhere, an election integrity monitor laid out over a dozen “critical” reforms that it believes are necessary in order to secure voter integrity in the 2024 election, including outlawing ranked choice voting and non-citizen voting, consolidating election dates, requiring voter ID, and safeguarding vulnerable mail ballots.

Tyler Durden Mon, 04/22/2024 - 23:00