After two ugly auctions, at 1pm ET the Treasury concluded the week’s coupon issuance with the sale of $38BN in 7 year paper in what was actually a rather recent auction.

The high yield of 4.908% was above last month’s 4.673% and was the highest on record, but more importantly it stopped through the When Issued 4.910% by 0.2bps, a reversal of last month’s modest 0.3bps tail.

The bid to cover of 2.704 was a solid improvement to last month’s 2.465 and was the highest going back to the March 2020 bond market rollercoaster.

The internals were also solid with Indirects awarded 70.6%, just above the recent average of 70.4%, and with Directs taking down 18.4%, Dealers were left holding just 11.0% below the 6-auction average of 12.0%.

The strong auction took the market, which has gotten used to expecting fire and brimstone on every auction day, by surprise and pushed 10Y yields down to session lows around 4.86%, down more than 10bps from the session highs hit earlier in the session.

Authored by Eric Lundrum via American Greatness,

On Wednesday, the far-left American Civil Liberties Union (ACLU) made a surprising statement condemning a federal judge’s attempted gag order on former President Donald Trump…

As Politico reports, the ACLU’s statement came as a shock to many who support the group, as it had been one of Trump’s primary enemies during his presidency, frequently suing his administration to block many of his policies.

But in a new friend-of-the-court brief, the ACLU agreed with Trump’s assertion that a gag order by U.S. District Judge Tanya Chutkan is a violation of his First Amendment rights to freedom of speech, as well as a violation of the public’s right to hear him speak.

“The obvious and unprecedented public interest in this prosecution, as well as the widespread political speech that it has generated and will continue to generate, only underscores the need to apply the most stringent First Amendment standard to a restraint on Defendant’s speech rights,” the ACLU’s statement read.

The ACLU told Chutkan that she should re-evaluate her order, parts of which the group described as so vague that it was “unknown and perhaps unknowable.”

The group focused on one particular portion which forbade President Trump from making any statements that could be perceived as making a “target” out of Special Counsel Jack Smith, the prosecutors, court personnel, or attorneys or witnesses in the case.

“Reading the order, Defendant cannot possibly know what he is permitted to say, and what he is not,” the ACLU noted.

Chutkan had tried to justify her decision by claiming that Trump’s status as a leading presidential candidate does not make him any different from any other defendant in a criminal case, but the ACLU disagreed, citing the heightened public interest in his case and other legal cases.

“Defendant’s ability to speak publicly about the substance of the prosecution, even including potential witnesses and testimony, is in many ways inextricable from the 2024 presidential campaign in which he is a declared candidate,” the ACLU observed.

Judge Chutkan recently agreed to temporarily halt her own gag order as President Trump’s legal team appeals the order itself. President Trump also faces three other cases, with another being in Washington D.C., one being in New York City, and one in Atlanta, Georgia. The cases generally revolve around his efforts to combat voter fraud in the 2020 election, as well as accusations of “inciting insurrection” for his speech to a crowd of peaceful protesters on January 6th, 2021.

Despite the dozens of charges he faces, President Trump’s approval ratings have consistently gone up every time a new indictment was announced, both in polling for the GOP presidential primary and for the general election in a head-to-head matchup with Joe Biden.

Perhaps wanting to show the public and the world that the ground incursion is still going to happen, and following widespread reports that Washington successfully got Netanyahu to stall the offensive – also as hostage negotiations involving Qatar are likely ongoing – the Israel Defense Forces (IDF) have published footage of an overnight limited raid in Gaza which relied on military bulldozers and tanks. 

Infantry forces were transported by a column of tanks to up to kilometer into the northern part of the Strip, according to a Thursday morning IDF statement. The IDF said it suffered no casualties during the raid, which lasted a few hours, and appeared fundamentally to be a clearing operation.

Footage has been released showing the Armored Assault last night by the Israeli Defense Force into the Northern Gaza Strip involving a number of Merkava Mark lV Main Battle Tanks, Caterpillar D9 Armored-Bulldozers, and Puma Armored-Engineering Vehicles; during the Assault the… pic.twitter.com/s3JCgtk0N3

— OSINTdefender (@sentdefender) October 26, 2023

“Through the raid, we eliminated terrorists, neutralized threats, dismantled explosives, neutralized ambushes, in order to enable the next stages of the war for the ground forces,” announced IDF Spokesman Rear Adm. Daniel Hagari.

The statement further said that “numerous” Hamas terrorists were taken out, as well as anti-tank positions, but most importantly the operation was to “prepare the battlefield” by forging a wider, direct path.

The Givati infantry brigade and the 162nd Armored Division led the raid, which the IDF further acknowledged as crucial to setting up for the “next stages of the war.” Hagari said, touting its ‘success’ further, “we eliminated terrorists, neutralized threats, dismantled explosives, neutralized ambushes, in order to enable the next stages of the war for the ground forces.”

While “localized raids” have been occurring since the Oct.7 Hamas assault, also as part of intelligence gathering operations for information on the whereabouts of hostages – or even body retrieval – this one is being called the biggest and deepest yet in terms of breaching Gaza Strip territory.

Israeli aerial operations meanwhile have continued in airstrikes on the Strip at an unprecedented rate. This is causing a growing international outcry, especially from Arab leaders in the region, as Gaza health authorities have said the death toll has surpassed 7,000. They estimate that nearly 3,000 of those killed are children.

Amnesty International has condemned the “unprecedented humanitarian catastrophe” and is urging an immediate ceasefire, which on the other side has included daily Hamas rockets, launched deeper and deeper into Israel.

Amnesty International’s Secretary General, Agnes Callamard pointed out there have been “Serious violations of international humanitarian law, including war crimes, by all parties to the conflict continue unabated. In the face of such unprecedented devastation and suffering, humanity must prevail.”

Amnesty additionally said that any major Israeli ground offensive will have “cataclysmic consequences for Gaza’s civilians.” But so far Israeli leadership have not backed off what they say are confirmed plans for an offensive, but with no timetable as of yet, but which will be arrived at by consensus.

Authored by Mike Shedlock via MishTalk.com,

Nonstore retailers are holding pandemic gains as department stores slowly sink into oblivion…

Mish calculation from advance retail sales reports.

Non-store retailers include kiosks, vending machines, direct selling, telemarketing, direct marketing and e-tailing. Amazon is the largest non-store retailer.

I calculate the percentage excluding items that cannot or normally do not happen except in person. That list includes gas stations, food services, grocery stores, and motor vehicles.

Nonstore Retail Sales as Percent of Advance Retail Sales Detail

34 percent of sales excluding those items are now made online. Amazon is the biggest beneficiary and department stores are the biggest loser.

Advance Retail Sales Major Categories

Department stores are dying a slow death. There really is no point to them.

Big Surge in Retail Sales Will Put More Fed Rate Hikes on the Table

On October 17 I noted Big Surge in Retail Sales Will Put More Fed Rate Hikes on the Table

Retail sales unexpectedly rose 0.7% in September vs. 0.3% expected. The Commerce Department revised August from 0.6% to 0.8%.

See the above link for more details.

Trucking Recession Deepens: Convoy Suspends Operations and Cancels All Shipments

In a related post, note the Trucking Recession Deepens: Convoy Suspends Operations and Cancels All Shipments

There’s some sad news today in the trucking business today that unfortunately has some people cheering.

Why the Cheers?

“Early investments came from vehicles backed by Microsoft co-founder Bill Gates, Amazon founder Jeff Bezos and former U.S. Vice President Al Gore.”

Lots of people hate Bill Gates and Al Gore. Bezos is mot particularly well liked either.

But it’s not like Bill Gates, Al Gore, or Jeff Bezos is going to be hurt by this. It will hardly matter to them at all.

Meanwhile, housing is in the gutter, auto companies are on strike, inflation is soaring, mortgage rates are 8.0 percent, and there is excess capacity in the shipping business.

Authored by Dave DeCamp via AntiWar.com,

The House on Wednesday approved a resolution that expressed strong support for Israel, the first bill brought to the floor after Rep. Mike Johnson (R-LA) was elected as the chamber’s new speaker.

The resolution passed in a vote of 412-10 and says that the US “stands” with Israel in the wake of the October 7 Hamas attack and as Israel is relentlessly bombing Gaza. The resolution reaffirmed the US commitment to providing military aid to Israel and said Congress will work to pass more.

The bill says the House “stands ready to assist Israel with emergency resupply and other security, diplomatic, and intelligence support.” It also called for the US to continue enforcing sanctions on Iran and condemned the Hamas attack.

Nine Democrats voted against the resolution, including Reps. Jamaal Bowman (NY), André Carson (IN), Cori Bush (MO), Al Green (TX), Summer Lee (PA, Alexandria Ocasio-Cortez (NY), Ilhan Omar (MN), Delia Ramirez (IL) and Rashida Tlaib (MI). The sole Republican who voted against the measure was Rep. Thomas Massie (KY).

Explaining his opposition to the bill on X, Massie pointed to the sanctions aspect and the promises of military support and aid. “It contains an open-ended promise of military support that is so broad that it could be interpreted to commit US soldiers to the conflict. US troops should not be engaged in this conflict,” he said.

Johnson won the speakership hours before the vote and pledged his first action would be in support of Israel. “Our nation’s greatest ally in the Middle East is under attack. The first bill that I’m gonna bring to this floor in just a little while will be in support of our dear friend Israel,” he said.

President Biden has requested $14 billion in new military aid for Israel as part of a massive $105 billion spending package that also includes $61 billion for the Ukraine war, $7.4 billion that will go toward military aid to Taiwan, and other spending in the Asia Pacific, and funds for border security.

I condemn the barbaric attack on Israel and I affirm Israel’s right to defend itself.

However, I will not be voting for House Resolution 771 today because:

1) It calls for sanctions on a sovereign country. Sanctions are a prelude to war and hurt the citizens of the country more…

— Thomas Massie (@RepThomasMassie) October 25, 2023

It’s not clear if the House will take up the entire spending package or if it will seek to divide it into individual bills.

Johnson has previously voted against spending on Ukraine, earning him a grade of “F” from Republicans for Ukraine, a neoconservative group that’s trying to rally GOP support for the proxy war.

Things really must not be going according to plan for Sam Bankman-Fried’s defense team, because it was reported yesterday that the former FTX founder is likely going to wind up taking the stand in his own defense. 

The FTX founder is likely the last chance the defense has to make a meaningful impact about what his actions were in the lead up to the company’s collapse. The court has already heard damning testimony from SBF’s closest confidants and co-workers, including Alameda Research head and former love interest Caroline Ellison, who have all turned on the founder. 

His former co-workers described him as “the mastermind of a years-long scheme to defraud FTX customers and investors”, Bloomberg wrote on Wednesday night. 

On a teleconference with the court, legal counsel for Bankman-Fried indicated that he is slated to testify in his own fraud trial once the prosecution concludes its arguments. Subject to any unforeseen shifts, the 31-year-old could take the stand as early as today. We sure hope there’s enough adderall in the courtroom to keep SBF lucid…

Generally when the accused wind up taking the stand in their own defense, it can be seen as a last minute “hail mary” by the defense. And recall, just days ago we published this take from The Epoch Times explaining why the trial doesn’t seem to be going SBF’s way so far. 

The paper wrote that the trial “…has thus far strongly supported the prosecution’s charges of securities fraud, analysts say; meanwhile, any questions regarding his massive political donations have been put off for another day.”

Since its start on Oct. 3, the trial has featured compelling testimony from former colleagues FTX co-founder Gary Wang and Alameda CEO Caroline Ellison, both of whom pointed the finger at Mr. Bankman-Fried—also known by his initials, SBF—as the ringmaster of one of the largest financial frauds in U.S. history. The defense has struggled to make its case, although Mr. Bankman-Fried’s attorneys may still have cards to play, The Epoch Times wrote.

“As of now, it’s not going well for the defense,” Braden Perry, a former federal enforcement attorney who’s currently a partner at Kennyhertz Perry, told The Epoch Times. “Both Ellison and Wang have testified that SBF directed them to commit the crimes.”

Regardless, we’re assuming the coverage will not be televised…

How much is the pay per view of SBF’s cross examination i) on meth and ii) without meth

— zerohedge (@zerohedge) October 26, 2023

After puking 7.1% MoM last month, pending home sales were expected to continue their decline (down 2.0% MoM) in September, following existing home sales weakness (and ignoring new home sales surprising surge).

However, pending home sales rose 1.1% MoM (best since Jan 2023), pushing sales up to -13.1% YoY (the smallest decline since May 2022)…

Source: Bloomberg

The Pending Home Sales Index bounced off record low…

Source: Bloomberg

The South, Midwest and Northeast posted increases in September pending home sales. Contract signings in the West, meantime, fell to a fresh record low.

“Despite the slight gain, pending contracts remain at historically low levels due to the highest mortgage rates in 20 years,” Lawrence Yun, NAR’s chief economist, said in a statement.

“Furthermore, inventory remains tight, which hinders sales but keeps home prices elevated.”

The unexpected jump could be related to mortgage rates stabilizing in September… but don’t expect this to continue in October…

Source: Bloomberg

The pending-home sales report is a leading indicator of existing-home sales given houses typically go under contract a month or two before they’re sold.

How long with Powell and his pals be able to keep this ‘higher for longer’ stress up as Americans’ largest source of wealth evaporates?

Update (0955ET): Bowman has pleaded guilty to one misdemeanor for pulling a fire alarm in the Cannon House Office Building last month during a key House vote, leading to an evacuation of the entire building while the House was in session. The building was reopened an hour later, after Capitol Police determined the situation was not a threat.

Bowman appeared in DC Superior Court Thursday morning for his arraignment, the day after he was issued a criminal summons for his behavior. He will pay $1,000 and write an apology to the Capitol Police under the terms of an agreement with prosecutors.

Bowman got off light, with some Republicans accusing him of intentionally trying to sabotage a vote. Others went so far as to call for Bowman’s expulsion.

“What I did was against D.C. law,” Bowman told reporters before entering the courthouse. “I said, from the very beginning, I was not trying to disrupt any congressional proceedings. I’m glad that the investigation yielded that. And so it was against D.C. law, and I got to take responsibility for it, which I’m here to do.”

Bowman was processed at the Capitol Police headquarters earlier in the day.

*  *  *

Democratic lawmaker Rep. Jamaal Bowman was issued a criminal summons by the DC Superior Court, after he was caught on CCTV pulling the fire alarm in the House office building on Oct. 1 while Democrats were trying to delay a House vote on the stopgap bill (which eventually passed at the 11th hour).

Bowman – who founded a school that would have held several fire drills per year, wants us to believe he mistook this fire alarm…

…for an automatic door opener that he was trying to use to open a clearly marked emergency exit.

Bowman wanted us to believe that he “came to a door that is usually open for votes but today would not open,” and that he’s “embarrassed to admit that I activated the fire alarm, mistakenly thinking it would open the door. I regret this and sincerely apologize for any confusion this caused.”

And now, Bowman has to appear before the court on Oct. 26 at 9:30 a.m. on the charge of a “fire false alarm.”

BREAKING: The Superior Court of DC has issued a criminal summons to Jamaal Bowman on the charge of False Fire Alarm pic.twitter.com/8L2oLt2D9R

— Jack Poso 🇺🇸 (@JackPosobiec) October 25, 2023

In response, Bowman said on Wednesday: “I’m thankful for the quick resolution from the District of Columbia Attorney General’s office on this issue and grateful that the United States Capitol Police General Counsel’s office agreed I did not obstruct nor intend to obstruct any House vote or proceedings,” adding “I am responsible for activating a fire alarm, I will be paying the fine issued, and look forward to these charges being ultimately dropped. I think we all know that Republicans will attempt to use this to distract everyone from their mess.”

As the Epoch Times noted at the time; The fire alarm in the Cannon House Office Building, often called the “Old House Office Building,” was triggered around noon, leading to an evacuation of the entire building while the House was in session. The building was reopened an hour later, after Capitol Police determined the situation was not a threat.

Capitol Police said in a statement late Saturday that an “investigation into what happened and why continues.”

The fire alarms in the Old House Office Building are pull down triggers encased in bright red boxes that read “FIRE.”

🚨🚨🚨 BREAKING: Insurrectionist Democrat Rep. Jamaal Bowman has been CAUGHT ON-CAMERA pulling the Capitol fire alarm seconds before critical vote to keep government open.

Violation of 1512(c)(2) obstruction of an official proceeding.

ARREST & Prosecute Rep. Bowman IMMEDIATELY! pic.twitter.com/3m883RB88A

— Benny Johnson (@bennyjohnson) September 30, 2023

At the time of the evacuation, Democrat lawmakers in the House were working to delay a vote on a 45-day funding bill to keep federal agencies open. They said they needed time to review the 71-page bill that Republicans had just released to avoid a shutdown.

‘The law for thee, but not for me…’

Authored by Tsvetana Paraskova via OilPrice.com,

• A new report from the Economist Intelligence Unit shows global energy consumption rising by 1.8% in 2024, hitting a new record high.

• Despite high prices and supply disruptions, the report shows crude oil and natural gas demand climbing in 2024.

• Demand for renewable energy is also expected to rise in 2024, climbing by 11%.

Global energy and fossil fuel consumption is set to defy wars and high prices and hit a record high level in 2024, led by strong Asian demand, the Economist Intelligence Unit said in a new report on Wednesday.

Next year, global energy consumption is expected to increase by 1.8%, according to the EIU report.  

“Despite still-high prices and unsolved supply chain disruptions, demand for fossil fuels will reach record levels, but demand for renewable energy will rise by 11%,” the authors of the report wrote.

Oil demand alone is expected to increase by 1.7% next year, per the report. Natural gas demand is set for 2.2% growth, led by Asia and the Middle East, while Europe will continue to see depressed demand as it looks to save gas and energy.

Renewable capacity additions are set for a record high this year at around 400 gigawatts (GW) and will continue to rise in 2024, according to the report.

Global oil demand is set to rise by 2.4 million barrels per day (bpd) to a new record-high this year and by another 2.2 million bpd next year amid an improving Chinese economy, OPEC said in its latest monthly report earlier in October, leaving its demand forecast for both 2023 and 2024 unchanged, despite fears of slowing economies and demand destruction. World oil demand is set to reach a record average of 102.1 million bpd in 2023, driven by a 2.3-million-bpd demand increase in the non-OECD region, OPEC noted. 

Coal demand globally is also expected to remain at record-high levels this year, said none other than the International Energy Agency (IEA) earlier this year.

The same agency reiterated this week its forecast that global demand for oil, natural gas, and coal is set to peak before 2030, which undermines the case for increasing investment in fossil fuels.

Update: 

The United Automobile Workers and Ford Motor Company reached a tentative agreement on a new four-year labor contract on Wednesday night. This comes six weeks after UAW initiated strikes targeting Detroit’s Big Three automakers.

UAW provided details about the “record contract” with Ford:

The agreement grants 25% in base wage increases through April 2028, and will cumulatively raise the top wage by over 30% to more than $40 an hour, and raise the starting wage by 68%, to over $28 an hour.

The lowest-paid workers at Ford will see a raise of more than 150% over the life of the agreement, with some workers receiving an immediate 85% increase immediately upon ratification.

The agreement reinstates major benefits lost during the Great Recession, including Cost-of-Living Allowances and a three-year Wage Progression, as well as killing divisive wage tiers in the union. It improves retirement for current retirees, those workers with pensions, and those who have 401(k) plans. It also includes a historic right to strike over plant closures, a first for the union.

“We won things nobody thought was possible,” said UAW boss Shawn Fain Wednesday night in a video posted on X.

Fain continued, “Since the strike began, Ford put 50% more on the table.”

Record profits mean record contracts. We have a tentative agreement at Ford. #StandUpUAW pic.twitter.com/Z00T5CfQJN

— UAW (@UAW) October 26, 2023

The labor agreement is subjected to an Oct. 29 vote with UAW leadership. Then, it must be ratified by Ford’s 57,000 US hourly workers. 

Ford issued a brief statement that said, “We are pleased to have reached a tentative agreement on a new labor contract with the UAW covering our US operations.”

As far as labor costs for Ford, Bloomberg Intelligence revealed:

“Ford’s tentative labor agreement with the UAW may increase its costs by more than $900 million in its first year, based on an 11% raise in year one, putting additional pressure on the company’s efforts to enhance its mediocre profitability.”

Those costs will be passed down to the consumer… 

NEWS: Ford is increasing the price of the F-150 Lightning for the 2024 model year by up to $9,600.

Trims:
• Pro: $52,090 ($2,095 increase)
• XLT: $59,590 ($2,500 increase)
• Flash: $72,090 (new trim for 2024)
• Lariat: $79,590 ($9,595 increase)
• Platinum: No 2024 pricing… pic.twitter.com/N8tgDUENxp

— Sawyer Merritt (@SawyerMerritt) October 25, 2023

“This agreement sets us on a new path to set things right at Ford, at the Big Three and across the auto industry,” Fain said.

UAW continues negotiating with General Motors and Stellantis. 

*   *   * 

One week after United Auto Workers boss Shaw Fain targeted Ford Motor Company’s largest and most profitable plant in Kentucky, sources tell AP News that the union appears to be inching closer to a tentative contract agreement with the automaker that could end the six-week strike. 

Two people familiar with discussions said UAW made a counter-offer to Ford of a 25% general wage increase over the new four-year contract. They said Tuesday talks between the union and automaker extended well into Wednesday morning. Ford has previously offered UAW a 23% pay hike. 

They added that Ford would include cost-of-living pay adjustments that could send pay increases above 30%, and workers would receive annual profit-sharing checks. 

It’s still possible that contract talks could sour, and UAW boss Fain could hit Ford with a ‘surprise‘ labor action, sort of like what happened last week when Ford’s Louisville plant, which makes Ford Super Duty pickups, the Ford Expedition, and the Lincoln Navigator SUVs, was hit with an 8,700-member UAW strike. 

The progress with Ford comes a day after the UAW hit General Motors’ largest and most profitable SUV plant in Arlington, Virginia, with a 5,000-member strike on Tuesday. Sources say there has been some progress in labor talks with GM. 

As of Wednesday, 46,000 UAW workers are striking across all three automakers, or about 32% of the union’s 146,000 members. 

“I think that Shawn Fain struck these plants at this particular time over the past week because he thought they would be near a deal and this would be the extra nudge to get something cemented,” Marick Masters, a business professor at Wayne State University in Detroit, told AP. 

Masters continued, “When you look at the movement and the concessions, they’re getting smaller but moving closer to what the union wanted.”

During GM’s earnings report on Tuesday, CFO Paul Jacobson said, “We can’t get ourselves in a situation of signing a deal that we can’t afford to pay or that doesn’t allow us to compete in the global marketplace.”

And this. 

NEWS: Ford is increasing the price of the F-150 Lightning for the 2024 model year by up to $9,600.

Trims:
• Pro: $52,090 ($2,095 increase)
• XLT: $59,590 ($2,500 increase)
• Flash: $72,090 (new trim for 2024)
• Lariat: $79,590 ($9,595 increase)
• Platinum: No 2024 pricing… pic.twitter.com/N8tgDUENxp

— Sawyer Merritt (@SawyerMerritt) October 25, 2023

Thanks, UAW.