The FTC’s socialist wunderkind and Liz Warren puppet, Lina Khan, has decided to cremate what little was left of her reputation, and after failing to break up even one “monopoly”, moments ago the FTC announced it would extend its catastrophic track record by suing Amazon.com in a long-anticipated antitrust case, accusing the e-commerce giant of monopolizing online marketplace services by degrading quality for shoppers and overcharging sellers.

In a complaint filed in federal court in Seattle Tuesday, the FTC and 17 states accused Amazon of engaging in a course of conduct to exclude rivals in online marketplace services and stifle competition. The company was also accused of illegally forcing sellers on its platform to use its logistics and delivery services in exchange for prominent placement and of punishing merchants who offer lower prices on competing sites.

“Amazon is a monopolist and it is exploiting its monopolies in ways that leave shoppers and sellers paying more for worse service,” FTC Chair Lina Khan said in a briefing with reporters. “The stakes here are high. There is immediate harm that is ongoing. Sellers are paying $1 of every $2 to Amazon.”

In response, Amazon criticized the FTC’s lawsuit, saying it “is wrong on the facts and the law, and we look forward to making that case in court,” according to a post from David Zapolsky, Senior Vice President, Amazon Global Public Policy & General Counsel.

“If the FTC gets its way, the result would be fewer products to choose from, higher prices, slower deliveries for consumers, and reduced options for small businesses—the opposite of what antitrust law is designed to do,” Amazon said.

The suit is the fourth the agency has filed this year targeting Amazon, underscoring the determination of the Biden administration to put the growing concentration of corporate power, especially among Big Tech companies, at the heart of economic policy.

In May, the agency sued the e-commerce giant in two separate cases for failing to delete data about kids collected by its Alexa speakers and illegally spying on users of its Ring doorbells and cameras. Amazon said it disagreed with the FTC’s allegations, but agreed to pay $30.8 million to resolve the cases. One month later, the FTC again sued Amazon in a consumer protection case, alleging the company duped consumers into signing up for Prime membership and deliberately made it hard to cancel — echoing longstanding complaints from consumer watchdogs. Amazon denies the allegations, and that suit is ongoing.

The latest case represents a career-defining moment for Biden’s FTC puppet, 30-something figurehead Lina Khan, who has long had Amazon in her sights. As a young law student, Khan wrote a paper arguing that the existing antitrust enforcement framework was poorly equipped to tackle the potential harm Amazon poses to competition. That’s what got her the top antitrust job, ironic considering that it is Jeff Bezos’ Washington Post that has been the most vocal Biden cheerleader in the past 7 years.

Amazon has pushed the FTC to recuse Khan from its case, citing her academic work and prior statements about the company. It has also accused the agency of harassing founder Jeff Bezos and the company’s Chief Executive Officer Andy Jassy with document and interview requests.

The FTC is separately investigating Amazon’s proposed $1.65 billion acquisition of Roomba vacuum maker iRobot Corp. as are European antitrust authorities. In July, the companies renegotiated the price of the deal as the regulatory reviews remain ongoing.

“If we succeed, competition will be restored and people will benefit from lower prices, better quality,” Khan said Tuesday.

In retrospect, Amazon longs may be better served not to fight the lawsuits: Khan is best known for not only being incompetent, but also effectively working on behalf of company shareholders, as the WSJ discussed over the weekend in “The Hedge Fund That Made a Killing Betting Against Lina Khan“

Authored by Lance Roberts via RealInvestmentAdvice.com,

“Compound market returns.” During bullish markets, there is inevitably a regurgitation of this myth that was contrived to extract capital from retail investors and place it in the hands of Wall Street.

However, the compound market returns myth was contrived from the myth that “markets always go up,” therefore, it is ALWAYS a good time to invest. How often have you seen the following chart presented by an advisor suggesting if you had invested 120 years ago, you would have obtained a 10% annualized return?

It is a true statement that over the very long term, stocks have returned roughly 6% from capital appreciation and 4% from dividends on a nominal basis. However, since inflation has averaged approximately 2.3% over the same period, real returns averaged roughly 8% annually.

The obvious problem with that statement is that you don’t have 123 years to invest, that is, unless you have discovered the secret to eternal life or are a vampire.

For the rest of us, mere mortals, time matters.

Let’s revisit the chart above, add valuations, and review the market’s various “life-cycle” periods. As you will notice, when valuations were previously elevated, the future price action of the markets was negative until that overvaluation was reversed.

Unfortunately, individuals only have a finite investing time horizon until they retire. Therefore, as opposed to studies discussing “long-term investing” without defining what the “long term” actually is – it is “TIME” that we should be focusing on.

When I give lectures and seminars, I always take the same poll:

“How long do you have until retirement?”

The results are always the same. The majority of attendees responded that they have about 15 years until retirement. Wait…what happened to the 30 or 40 years always discussed by advisors?

Think about it for a moment. Most investors don’t start seriously saving for retirement until their mid-40s. This is because by the time they graduate college, land a job, get married, have kids, and send them off to college, a real push toward saving for retirement is tough to do as incomes haven’t reached their peak. This leaves most individuals with 20 to 25 productive work years before retirement age to achieve investment goals. 

Let’s review the chart above concerning starting valuations. As shown below, market returns approached zero during periods throughout market history. Those periods were the result of the reversion of previous overvaluation.

What should be evident is that “WHEN” you start your investing journey is incredibly important to future outcomes.

This analysis leads us to the second market myth, “Compound Market Returns.”

The Eighth Wonder Of The World

Albert Einstein once stated:

“Compound interest is the eighth wonder of the world. He who understands it earns it; he who doesn’t pays it.”

Notice that Einstein said “interest,” not “stock market returns.”

Financial advisors and the media latched on that quote to promote the idea of dollar-cost averaging into the stock market. Of course, this is good for those charging a fee on assets they hold for you. Here is a good example.

“Let’s say you invest $500 a month in a brokerage account over a 20-year period. All told, you’re sinking $120,000 into your account, which is a lot of money. But if your investments during that time generate an average annual 8% return, which is below the stock market’s average, you’ll end up with about $275,000. All told, that’s a gain of $155,000. And compounding is what helps make that possible.” – Motley Fool

Here is the problem. Compound Interest and Compound Market Returns are two different things.

Einstein was correct. If I buy an investment, like a bond or a CD, that pays INTEREST, my money compounds over time. This is because the interest payment is fixed, and the principal is returned at maturity.

However, as shown above, the stock market does NOT provide a fixed annual rate of return over time. It is variable, and that variability impacts the ending return of the investment over time. The chart below shows an investment in the stock market over time versus a compound market rate of return of 8%, as suggested by Motley Fool.

As you can see, there is a vast difference between an actual return over time and an AVERAGE or COMPOUND market return.

The difference has everything to do with the math.

Compound Market Returns Are A Myth

This past week, Visual Capitalist produced a chart on “The Rule Of 72.” As they note, the rule of 72 is a classic shortcut that estimates how long it takes to double your investment. The math is simple. Take any rate of return you desire, say 8%, and divide that into 72, which tells your money will double in 9 years.

This is a true statement, as shown below. If we invest $10,000 into an investment that yields 8% annually, the value of my investment will double in 9 years.

However, the math changes drastically when introducing negative return years. The chart below shows the impact of a single loss, two losses, and a singular market crash (like the Dot.com crash or the Financial Crisis) on the time to double my return.

The investment community’s promotion of “buy and hold” strategies is understandable. It is easy. It makes them money on the fees they charge, and, given that markets go up more often than they fall, it is an easy story to sell.

However, what should be clear is that compound market returns do not exist.

The real-world damage that market declines inflict on investors hoping to garner annualized 8% returns to compensate for the lack of savings is all too real and virtually impossible to recover from. When investors lose money in the market, it is possible to regain the lost principal given enough time. However, and most importantly, what can never be recovered is the lost “time” between today and retirement. “Time” is exceptionally finite and the most precious commodity investors have.

With valuations currently elevated along with high-interest rates, the risk of another market and economic downturn is too real. As such, investors should consider what that means to future market returns and the time horizon required to meet financial goals.

But one thing is for sure.

Assuming the market will go up every year by 8% is not, and has never been a reliable investment thesis.

Wouldn’t everyone who ever invested in the markets be fabulously wealthy if it was?

Conclusion

For investors, understanding potential returns from any given valuation point is crucial when considering putting their “savings” at risk. Risk is an important concept as it is a function of “loss.” 

The more risk an investor takes within a portfolio, the greater the destruction of capital will be when reversions occur.

The analysis above reveals the important points that individuals should OF ANY AGE should consider:

• Investors should adjust expectations for future returns and withdrawal rates downward due to current valuation levels.

• The potential for front-loaded returns in the future is unlikely.

• Your life expectancy plays a huge role in future outcomes. 

• Investors must consider the impact of taxation.

• Investment allocations must carefully consider future inflation expectations.

• Drawdowns from portfolios during declining market environments accelerate the principal bleed. Plans should be made during up years to harbor capital for reduced portfolio withdrawals during adverse market conditions.

• Investors MUST dismiss expectations for compounded annual return rates instead of variable return rates based on current valuation levels.

Over the last two decades, two massive bear markets have left many individuals further away from retirement than they ever imagined.

The myth of “compound market returns” is dangerous to individuals trying to save and invest their way to retirement.

Bear markets matter, and they matter much more than you think.

A high ranking Polish government official is pressing for Warsaw to begin an extradition request for Yaroslav Hunka, the 98-year-old Ukrainian Canadian who served the Nazi SS Galizien formation in WWII. Hunka was hailed as a “Ukrainian hero” and a “Canadian hero” by Justin Trudea’s government days ago, receiving a standing ovation in the House of Commons also as Ukraine’s Volodymyr Zelensky looked on and cheered.

Polish Education Minister Przemysław Czarnek announced on Tuesday he has “taken steps” to initiate the extradition of Hunka to Poland for possible war crimes.

“In view of the scandalous events in the Canadian Parliament, which involved honoring, in the presence of President Zelenskyy, a member of the criminal Nazi SS Galizien formation, I have taken steps towards the possible extradition of this man to Poland,” Czarnek said in a Tuesday social media post.

Canadian public broadcaster CBC has confirmed the Polish minister’s announcement, saying it adds pressure to growing calls for Speaker Anthony Rota to step down, after he took responsibility for inviting and failing to properly vet the Nazi war veteran: 

Opposition parties said it’s not enough for Rota to apologize for inviting Hunka to the day’s festivities. NDP MP Peter Julian, the party’s House leader, said “regretfully and sadly” Rota cannot continue in his role after this incident.

“The Speaker has to be above reproach,” Julian said. “This is an unforgivable error that puts the entire House in disrepute. Unfortunately, I believe a sacred trust has been broken.”

Polish Education Minister Przemysław Czarnek’s announcement saying legal extradition is being pursued:

Wobec skandalicznych wydarzeń w kanadyjskim parlamencie polegających na uhonorowaniu w obecności także prezydenta Zełenskiego członka zbrodniczej, hitlerowskiej formacji SS Galizien, podjąłem kroki w kierunku ewentualnej ekstradycji tego człowieka do Polski.… https://t.co/92qK1voktN pic.twitter.com/5J4lljH5JX

— Przemysław Czarnek (@CzarnekP) September 26, 2023

The letter says, according to a tranlation: “In view of the scandalous events in the Canadian parliament, which involved honoring, in the presence of President Zelensky, a member of the criminal Nazi SS Galizien formation, I have taken steps towards the possible extradition of this man to Poland.”

Czarnek has submitted the letter to the Institute of National Remembrance (IPN) – which is a government historical body possessing prosecutorial powers – demanding an investigation, to “urgently [establish] whether Yaroslav Hunka is wanted for crimes against the Polish nation or Poles of Jewish origin.”

“Such crimes constitute grounds for applying to Canada for his extradition,” the letter emphasizes. The issue is particularly sensitive for Poles given the WWII history of massacres of Poles by Ukrainian nationalist groups, many of them Nazis. All of this also comes as Ukraine-Poland relations are deeply strained for the first time since the Russian invasion over a grain import ban. Warsaw also said it is done arming Ukraine, and will invest in its own defense preparedness.

According to regional news source Notes From Poland, there were hundreds of Ukrainian SS veterans who were allowed to settle in Canada: 

Hunka himself was among around 600 members of the division who were allowed to settle in Canada after the war. He is now a dual Ukrainian-Canadian citizen.

In the 1980s, a Canadian commission of inquiry found that “charges of war crimes” against the Ukrainian SS division had “never” been substantiated

In 2017, Polish IPN prosecutors requested the extradition from the United States of another member of the Ukrainian SS division, Michael Karkoc, who had settled in Minnesota after the war. However, he passed away in 2019 aged 100 before the process could be completed.

Needless to say this adds yet more levels of embarrassment for Trudeau and Canadian officials. Not only has the story gone viral and gained international attention and condemnation from leading Jewish groups – but notably the ADL has remained completely silent. 

How — after a lifetime of appearing in black face — does Justin Trudeau get caught applauding an SS soldier who fought with the Nazis, and then instantly starts babbling about “Russian disinformation”?

Do you see how Western elites use RUSSIA to blame for all their failings? https://t.co/yAIYr93ody

— Glenn Greenwald (@ggreenwald) September 25, 2023

Trudea has meanwhile tried to refocus this as a warning against “Russian disinformation” in a transparent attempt to deflect controversy which even mainstream media has seen through. At the same time, some Left politicians in Canadian parliament are seeking to get the whole incident expunged from official records, as we detailed earlier.

Journalist Glenn Greenwald questioned, “How — after a lifetime of appearing in black face — does Justin Trudeau get caught applauding an SS soldier who fought with the Nazis, and then instantly starts babbling about “Russian disinformation”?“

Update (1230 ET):

Biden lands in Detroit. 

🇺🇸Air Force One lands at Detroit for President Biden’s trip to Michigan to visit UAW members on strike at the picket line#UAWStrike #UAWSolidarity pic.twitter.com/yQ9QEHjyQT

— Attentive Media (@AttentiveCEE) September 26, 2023

No EVs in Biden’s motorcade. 

President Biden has arrived in Detroit, to join a UAW picket line. pic.twitter.com/rnjWGAZwhm

— Matt Viser (@mviser) September 26, 2023

*   *   * 

On the twelfth day of strikes, President Biden plans to stand with striking United Auto Workers members on the picket lines in Wayne County, Michigan, a day before a scheduled visit to the state by former President Trump. 

Reuters said Biden will join UAW members in Wayne County around 1200 ET on Tuesday. Sources said UAW boss Shawn Fain is also expected to join the most pro-union president in history. 

On Monday, Biden said, “I think the UAW gave up an incredible amount back when the automobile industry was going under [GFC]. They gave everything from their pensions on, and they saved the automobile industry.” 

“Now that the industry is roaring back they should participate in the benefits,” the president added.

Remember, Biden was VP when former President Obama bailed out the auto industry over a decade ago. 

Erik Loomis, a University of Rhode Island professor and an expert on labor history, told AP News that Biden standing at the picket lines is “absolutely unprecedented. No president has ever walked a picket line before.” 

Loomis said presidents historically “avoided direct participation in strikes. They saw themselves more as mediators. They did not see it as their place to directly intervene in a strike or in labor action.”

I’m out at the Ford Assembly Plant in Wayne, MI awaiting Biden’s appearance to join UAW strikers. pic.twitter.com/NEfLAT9rri

— Tessa (@OsborneTessa) September 26, 2023

Coming up live from Michigan UAW Local 900 as autoworkers continue their strike and are joined today and tomorrow by special guests, President Biden today and former President Trump tomorrow. pic.twitter.com/aDphG29Ywt

— Kellie Meyer (@KellieMeyerNews) September 26, 2023

Union Auto Workers (#UAW) strike against the big three automakers: Ford, Stellantis, and General Motors in Wayne, Michigan.
President #Biden is expected to arrive soon, but the exact location where he will be is unknown. pic.twitter.com/48VE4ak5eX

— Madalina Vasiliu (@mada7ina) September 26, 2023

The ongoing strike has yet to reach a resolution for a new labor agreement between the union and Detroit’s Big Three: Ford, GM, and Stellantis. UAW is demanding approximately a 40% wage increase over a new four-year contract along with a 32-hour work week, while the automakers are proposing around 20%.

Ford announced on Sunday that there were still “significant gaps to close” in negotiations with the union. A recent Deutsche Bank note shows the union and automakers are still far apart. 

The latest data from The New York Times shows about 12% of the 150,000-member union is on strike, equivalent to about 18,300 workers. Strikes are nationwide. 

And on Wednesday, Trump is expected to address hundreds of workers at a non-union auto supplier in a Detroit suburb. 

Meanwhile, there are strikes at Tesla – the most American-made automobile. 

*  *  * 

Watch Live:

Authored by Simon White, Bloomberg macro strategist,

Bonds’ diminishing ability to act as a hedge for stocks jeopardizes the concept of the standard 60% equities, 40% bonds approach to portfolio design.

A lack of viable alternatives for bonds may lead to increased stock exposure, threatening long-term financial and economic stability.

TINA is coming back, but this time with a vengeance. In the salad days of zero rates and fast-expanding central bank balance sheets, stocks were the only game in town. Nothing – not bonds, commodities or real estate – offered higher returns. TINA – There Is No Alternative – really was it.

One pandemic, multi-decade-high inflation and over 500 bps of rate rises later, the investing landscape has changed fundamentally. Equities entered a bear market and have yet to re-take their January 2022 highs, but still, owning them might start to look even more unavoidable than before.

The game-changer is inflation. In last week’s column, I explained how elevated inflation has taken the stock-bond correlation positive after being negative for most of the last two decades. Bonds, i.e. USTs, are losing their ability to act as a portfolio and recession hedge. They are therefore prone to structurally higher yields as the negative risk premium they commanded for their hedging abilities is wiped out and significantly reversed.

If bonds won’t cut it any more, what then are some of alternatives for the “40” portion of the 60/40 portfolio? The attractiveness 60/40 with USTs was that they significantly reduced portfolio volatility, while only marginally reducing the total return over the past quarter of a century.

Thus any viable alternative to Treasuries ideally has a lower Sharpe ratio. I considered corporate bonds (Baa), TIPS, commodities, gold and cash as the 40% part of a 60/40 portfolio. I built indexes for each from the late 1960s, and looked at their excess returns (i.e. versus compounded three-month T-bill rates), in both real and nominal terms.

Over the whole period (1968-2003) stocks have the highest excess real and nominal return. They returned 8.2% annualized compared with 4.6% for cash, giving an excess nominal return of 3.7%. But inflation was 4% annualized over the period, meaning stocks have posted a negative real excess return over the past 55 years.

Other asset classes and 60/40 constructions I looked at delivered a lower excess return, while commodities posted a negative excess return over the period in question. Beating cash and inflation over the long term is not easy.

Let’s see how this changes when we condition on whether the stock-bond correlation is positive or negative (using the two-year correlation of one-week changes in the S&P and the Bloomberg Treasury Bond Index, smoothed over two years).

The results are not necessarily what you would expect. For a start, 60/40 with USTs has one of the lowest Sharpes in regimes when the stock-bond correlation was negative, being cleanly beaten by 60/40 with TIPS, commodities and gold.

In positive stock-bond correlation environments it’s even worse, with the Sharpe of 60/40 with USTs dropping to 0.27 from 0.56. Even though the nominal return of 60/40 USTs was higher at 9.7%, cash was also higher – as is typical when stocks and bonds are moving together. That led to a real excess return of only 3.1%, neatly illustrating why the bar for performance is even higher in positive-correlation regimes.

A 60/40 gold and 60/40 commodities strategy delivered the highest real Sharpe ratios when the correlation is negative, perhaps surprisingly given gold and commodities have greater volatility than equities.

High returns in especially the 1970s compounded up over time and outweighed the effect of their elevated volatility.

We are now in a positive-correlation regime, and there are no good options as all strategies, including 60/40 with USTs, have delivered a lower real Sharpe when stocks and bonds are positively correlated.

Naively, looking at the chart above, one would choose 60/40 with corporate bonds as the least worst option. But the Treasury market dwarfs the corporate bond market, and managers with liquidity constraints would be unable to replace the bulk of their USTs with corporates. Ditto with TIPS, gold and commodities, which anyway have lower real Sharpes than USTs. And cash is an unrealistic long-term option for investors who have to justify their fees, as well as entailing high rollover risk.

Bonds will still serve their purpose for liability matchers such as pension funds, but those running 60/40-like strategies (with hundreds of billions if not trillions of dollars under management) will find it increasingly difficult to justify maintaining the same proportion of bonds if they are not serving their central purpose of smoothing portfolio returns.

With no viable alternatives that are liquid enough, or likely to improve risk-adjusted returns, the temptation to add more equity risk and chase returns may become too great. That’s even more the case when we remember that both cash and inflation are higher than average when stocks and bonds track each other, as they do currently, intensifying the need to maximize returns.

There’s a weary familiarity to all of this. Needless to say, such rising concentration risk will increase financial instability and expose markets to significant falls over the longer term. This time, then, TINA’s return may be her swan song.

What does Jamie Dimon know that we don’t?

Having tamped down his prior warnings of economic “hurricanes”, JPMorgan CEO warned, in an interview with the Times of India, that the world faces a worst-case scenario threat of stagflation and is unprepared for central bankers’ response (higher rates) to that outcome.

Addressing the risk of a hard- or soft-landing, Dimon highlights the fact that “no one knows. There is a range of outcomes…”

“It will be affected by everything else – Ukraine, oil, gas, war, Europe,” adding that “I would be cautious.”

The most famous Fed whisperer fears the market’s false sense of complacency at a goldilocks outcome:

“I think we are feeling pretty good because of all the monetary and fiscal stimulus. But it may be a little more of a sugar high. We have to deal with all these serious issues over time, and your deficits can’t continue forever. So rates may go up more. But I hope and pray there is a soft landing.“

The JPM CEO warned that rates may need to rise further to fight inflation, highlighting the fact that the difference between 5% and 7% would be more painful for the economy than going from 3% to 5% was.

“First of all, interest rates went to zero. Going from zero to 2% was almost no increase.

Going from zero to 5% caught some people off guard, but no one would have taken 5% out of the realm of possibility.

I am not sure if the world is prepared for 7%.

I ask people in business, ‘are you prepared for something like 7%?’ The worst case is 7% with stagflation.

If they are going to have lower volumes and higher rates, there will be stress in the system.

We urge our clients to be prepared for that kind of stress.

Warren Buffett says you find out who is swimming naked when the tide goes out. That will be the tide going out.

These 200bps will be more painful than the 3% to 5%.”

Certainly, The Fed and the market are not expecting rates to go much higher from here…

Are Dimon’s comments an open acknowledgement that inflation is not going anywhere and laying the foundation for The Fed’s recent hawkish tone to escalate? Certainly it would be a problem for the unprepared.

“When rates go up sharply, there is stress in debt repayments. How are businesses living with such high rates?”

“The world is certainly not prepared for a 7% Federal Reserve funds rate,” Charlie Jamieson, chief investment officer at Jamieson Coote Bonds, told Bloomberg Television on Tuesday. 

“At that level we would expect that we would have a deflationary asset unwind, it would burst a lot of asset bubbles, it just simply wouldn’t be sustainable.”

Additionally, and away from the main headlines, Dimon commented on the state of the banking system, dismissing claims that the recent crisis was triggered by social media-driven runs:

“I think that is being blown out of proportion. Social media and online banking existed during the great financial crisis.”

Given his warnings above on rates, he sees more pain ahead…

“The problem of interest rate exposure was known to everyone. I do not think we want a system where no bank ever fails. So, having a bunch of failures is not a terrible thing. But if it causes havoc in the system, we have to modify regulations to stop that from happening.”

And guess who would be more than happy to step in and scoop up all those deposits?

It’s almost time for another small bank failure so Jamie Dimon can soak up all their deposits. pic.twitter.com/lDCcC5eTaH

— zerohedge (@zerohedge) September 22, 2023

Perhaps Dimon does know something that many in the market refuse to accept (and with regional banks utilizing over $108 billion in emergency funding from The Fed to fill their balance sheet holes, JPMorgan may be about to get even ‘too bigger to fail’).

Dimon went on to give a lengthier interview with CNBC:

Citadel hedge fund founder Ken Griffin is reported to have joined a group of investors led by Sir Paul Marshall to bid on the UK’s Telegraph Media Group, according to Financial Times. 

Marshall, co-founder of London-based hedge fund Marshall Wace and joint-owner of right-leaning TV channel GB News, is preparing to bid on The Telegraph through his UnHerd Ventures media group in an auction next month. He is working with Moelis Investment Bank on the bid and is gathering advice from Paul Zwillenberg, a former executive at Daily Mail owner DMGT, said two people familiar with the bid. 

Earlier this year, Lloyds took control of the UK-based newspaper from the Barclay family over debts that exceeded $1 billion to the bank. Lloyds has engaged Goldman Sachs to oversee the sale, with Lazard also advising the bank. Additionally, AlixPartners has been appointed as the receivers for the business.

FT noted the Barclay family has reached out to its contacts in the Middle East for funding in an attempt to buy back The Telegraph in a deal that could fetch well over half a billion dollars at auction. 

Other potential bidders include Czech billionaire Daniel Kretinsky and Daily Mail & General Trust Plc. FT said Rupert Murdoch has also shown interest in the upcoming sale. 

“Griffin would only invest in such an effort personally, not through his company,” a person familiar with the situation told Bloomberg. 

Over the years, Griffin has been a big donor to the Republican party. This development surfaces as the 2024 US presidential election cycle quickly approaches.

US equity futures are weaker, reversing Monday’s modest gains amid a global risk-off tone that has sent European and Asian markets sliding, and which JPM’s market intel team says is “a trend that may continue throughout the week.” As of 7:30am, S&P futures were down 0.4%, off the worst levels of the session, while Nasdaq 100 futures are down 0.5%. Yields on TSYs and European govvies dropped after hitting decade highs even as the Bloomberg dollar index extended gains following its strongest close since December. Oil retreated as the impact of a rising dollar sapped demand. There is a $48bn auction for 2Y bonds today; this likely requires some concession to be digested and is the first of several auctions this week that are larger than normal size. Today’s macro data focus includes housing prices, new home sales, regional Fed activity surveys, and consumer confidence.

In premarket trading, Tesla shares were 1.5% lower, after Bloomberg reported that during the evidence-gathering that precipitated this month’s surprise announcement of an EU anti-subsidy probe into Chinese EVs, the US carmaker was among the companies found to have likely benefited, according to people familiar with the matter. Coty was down 3.3% after offering 33 million shares as part of a plan by the beauty company to add a Paris stock listing. Thor Industries dropped 2.4% even after the recreation vehicle firm reported net sales that beat estimates, with analysts citing potential slower production and revenue rebound pace as well as a challenging macroeconomic backdrop. Here are some other notable premarket movers:

• DraftKings rises 3.4% after JPMorgan upgrades the online sports-betting company to overweight from neutral, citing sluggish share-price performance since late July, as well as the attractive sector it operates in and industrywide improving expense control.
• Fisker gains 4.7% after saying it has built 5,000 Fisker Ocean SUVs and expects to ramp deliveries of the Ocean to 300 vehicle per day later this year.
• Immunovant jumps 56% after the company announced top-line results from an early-stage trial of its drug for autoimmune diseases. Majority shareholder Roivant Sciences is also up 17% before the market open.
• Omega Therapeutics shares slide 4.3% after it announced preliminary clinical data from a trial of its drug candidate for liver cancer.
• Pliant Therapeutics is up 20% ahead of a call the company set for Tuesday morning to discuss interim mid-stage clinical trial data.
• United Natural Foods falls 13% after issuing a profit outlook for the fiscal year that missed the average analyst estimate. The food wholesaler also added three new members to its board as part of its ongoing customer- and supplier-focused transformation plan.

Overnight, JPM CEO Jamie Dimon warned the world may not be ready for a worst-case scenario of the Fed raising rates to 7% along with stagflation; at the same time Minneapolis Fed chief Neel Kashkari said he expects one more hike this year.

The threat of tight policy is undoing some of the market’s biggest gains this year, in high-flying tech stocks. These growth companies are prized for their long-term prospects but hold less appeal when future profits get discounted at higher rates. That’s reflected in growing short positions against the technology-heavy Nasdaq 100 Index. According to Citi, positioning in the Nasdaq 100 is now one-sided net short at $8.1 billion, with all long positions unwound.

“With weak but positive growth holding recession at bay on both sides of the Atlantic, central banks will not be able to ease financial conditions between now and the end of the year,” said Nadège Dufossé, global head of multi asset funds at Candriam. “With positive surprises now largely priced in, there seems to be little room for further appreciation in equity markets, suggesting a degree of caution on risky assets.”

One Fed speaker after another in the past week has delivered emphatic messages that they will keep policy tighter for longer if the economy is stronger than expected. Federal Reserve Bank of Minneapolis President Neel Kashkari said he expects the US central bank will need to raise interest rates one more time this year. Data on US consumer confidence and manufacturing activity expected later Tuesday could provide more clues on the outlook for the economy and monetary policy.

Elsewhere, Bloomberg reported that Senate Republicans and Democrats are closing in on a deal for a short-term spending measure designed to avert a government shutdown. The legislation would extend funding for four to six weeks, a shorter timeframe than Democrats had pushed for, although it may cost speaker Kevin McCarthy his job. Moody’s warned that a government shutdown would be credit-negative.

In the latest development surrounding the Detroit-3 strikes, Joe Biden will visit a UAW picket line in Michigan later today. His trip comes as Ford’s largest labor union blasted it for halting construction on a $3.5 billion battery plant in the state. Adding to labor woes, performers in the video-game industry voted to authorize a strike.

European stocks dropped for a second day, with the Stoxx 600 down 0.4% as China property worries persist and investors process sharply higher bond yields. Technology and consumer shares fall the most while insurance and health care gain. Luxury stocks including Richemont and LVMH drop after Morgan Stanley lowered its earnings estimates on the sector, while Barclays is the Stoxx 600 index’s best performer after an upgrade. Here are the biggest movers on Tuesday:

• Barclays shares rise as much as 3.1%, among top performers in the Stoxx 600 on Tuesday, after Morgan Stanley upgraded the UK bank to overweight, citing a better outlook for revenue and capital efficiency.
• Siltronic shares gain as much as 5.7% after Stifel upgrades the German silicon wafer manufacturer to buy from hold and raises its price target to a Street high, saying the risk/reward profile has turned positive.
• Elekta shares rise as much as 2.5% after SEB raised its recommendation for the Swedish medical technology firm to buy from hold, saying recent share-price weakness is unwarranted and consensus expectations are now favorable.
• Asos shares fall as much as 6.9% after the online fast-fashion retailer reported adjusted like-for-like revenue down 15% in the fourth quarter. The company’s end to the year was “tough,” according to Jefferies.
• TUI shares drop as much as 5.8% in London to the lowest on record amid broader market concern about a protracted period of high interest rates.
• ASM International shares fall as much as 5.8% after giving new guidance for 2025 and beyond. Jefferies says the Dutch chip gear maker’s raised revenue target for 2025 of €3 billion to €3.6 billion is “somewhat underwhelming.”
• Lanxess shares drop as much as 4.7% after analysts at Jefferies cut the price target cut to a Street low, citing weak earnings for the German specialty chemicals company.
• CD Projekt shares decline as much as 5.3% after global release of paid add-on to Cyberpunk 2077 as analysts predict positive player opinions won’t be enough to push company sales above estimates.
• Johnson Matthey shares fall as much a 2.5%, declining for the fourth consecutive day to lowest since August, after Jefferies cuts Ebit estimate for next year and price target, citing lower platinum grade metal prices affecting earnings at UK-based chemicals company.
• Carmat shares plunge as much as 51% after the French developer of an artificial heart says it needs financing to fund its activities after the end of October.
• Close Brothers shares fall as much as 7% after the UK merchant bank reported full-year results. Canaccord analysts say though outlook flagged a good start to FY24, there’s near-term cost pressure weighing on the firm.

Earlier in the session, Asian stocks declined for a second day as surging Treasury yields and the ongoing property crisis in China dampened risk appetite. The MSCI Asia Pacific Index falls as much as 0.7%, with technology firms among the biggest drags on the gauge amid worries over higher-for-longer interest rates. Chinese stocks extended their slide, with a gauge of property developers slumping by the most in nine months as Evergrande missed a debt payment and former executives were detained. Former executives at the company have also been detained, while there are issues facing other developers like China Oceanwide and Country Garden too. The new turmoil engulfing property developers could jeopardize the latest efforts by authorities in the country to end the housing crisis.

“Ongoing China Evergrande’s debt-restructuring woes suggest that the worst-is-over for China’s property sector is far from being seen,” Yeap Jun Rong, market strategist at IG Asia, wrote in a note. High bond yields and a firmer US dollar “did not provide much conviction for risk-taking for now,” he said.

• Hang Seng and Shanghai Comp declined with sentiment not helped by trade frictions after the US imposed restrictions on additional Chinese and Russian companies related to supplying Russia with components to make drones, although losses in the mainland were stemmed by another substantial liquidity operation and hope that the approaching Mid-Autumn Festival and National Day Golden Week holidays would provide a boost to consumption and economic activity.
• Japan’s Nikkei 225 was pressured following the acceleration in Services PPI data and as recent currency moves keep participants on their toes regarding FX intervention.
• Australia’s ASX 200 was subdued by underperformance in real estate and tech as domestic yields climbed.
• Korea’s tech-heavy benchmark was the worst performer in the region. The gauge hit its lowest level since May, weighed down by Samsung, SK Hynix and LG Energy Solution.
• Stocks in India dropped on Tuesday, in line with most regional peers, as information technology shares extended slide on worries over interest rates staying higher for longer. The S&P BSE Sensex fell 0.1% to 65,945.47 in Mumbai, while the NSE Nifty 50 Index was little changed at 19,664.70. The benchmark gauge has dropped for five out of six sessions through Tuesday.  ICICI Bank contributed the most to the Sensex’s fall, decreasing 0.8%. Infosys and Tech Mahindra were key decliners among software makers as the sectoral gauge fell for a sixth consecutive session, its longest stretch of losses since March 16.

In FX, the Bloomberg Dollar Spot Index rose as much as 0.3% to a nine-month high. USDCHF rose as much as 0.3% to 0.9151, the highest since April; franc’s selloff enters a 11 day, the longest losing streak since 1975. USDJPY little changed at 148.84; it rose earlier to 149.19 and fell sharply after Japanese Finance Minister Shunichi Suzuki’s warnings.

In rates, Treasury futures are higher on the day, unwinding a portion of Monday’s losses and following similar gains in core European rates. Curve has broadly held recent steepening move with 5s30s spread trading at around 4bp, near top of Monday’s range, while 2s10s spread is slightly flatter on the day. US session includes housing market and consumer confidence data, while auctions recommence with 2-year note sale. US yields are richer by 1bp to 3bp across the curve with gains led by 10-year sector, which trades around 4.505%, near day’s low; bunds trail by ~1bp in the sector while gilts trade broadly in line. The US 5s30s spread is steeper by 0.5bp on the day, while 2s10s is flatter by almost 2bp, unwinding portion of Monday’s sharp widening.  Treasury auctions resume with $48b 2-year note sale at 1pm, with $49b 5-year and $37b 7-year notes scheduled later this week.

In commodities, crude futures decline with WTI falling 1.1% to trade bear $88.70. Spot gold falls 0.2%.

Looking to the day ahead now, and data releases from the US include the Conference Board’s consumer confidence for September, the Richmond Fed’s manufacturing index for September, new home sales for August, and the FHFA house price index for July. Central bank speakers include the Fed’s Bowman, and the ECB’s Lane, Simkus and Holzmann.

Market Snapshot

• S&P 500 futures down 0.4% to 4,361.50
• STOXX Europe 600 down 0.3% to 448.98
• MXAP down 0.8% to 157.87
• MXAPJ down 0.9% to 488.93
• Nikkei down 1.1% to 32,315.05
• Topix down 0.6% to 2,371.94
• Hang Seng Index down 1.5% to 17,466.90
• Shanghai Composite down 0.4% to 3,102.27
• Sensex little changed at 65,979.55
• Australia S&P/ASX 200 down 0.5% to 7,038.19
• Kospi down 1.3% to 2,462.97
• German 10Y yield little changed at 2.78%
• Euro little changed at $1.0597
• Brent Futures down 1.2% to $92.21/bbl
• Gold spot down 0.1% to $1,914.82
• U.S. Dollar Index little changed at 105.97

Top Overnight News

• China says it is willing to play a “constructive” role in the success of the upcoming APEC summit in San Francisco this Nov (markets are hoping Xi attends this event and meets with Biden). CNBC
• The crisis at China Evergrande Group deepened Monday after the company’s mainland unit said it failed to repay an onshore bond, adding a new layer of uncertainty to the developer’s future as a restructuring plan with its offshore creditors teeters. BBG
• Germany slashed the volume of gov’t bond issuance for Q4 by EU31B as support measures designed to shelter people from elevated energy costs begin to wind down. BBG
• Italy’s budget, which is due out on Wed, will be closely scrutinized by markets as Meloni attempts to keep her tax cut promises while reducing the deficit, all in an environment of cooling growth. RTRS
• US gov’t shutdown would delay publication of critical economic data, including the Sept BLS jobs report (due out on 10/6) and the Sept CPI (due out on 10/12). RTRS
• Jamie Dimon repeats prior warnings of a potential worst-case scenario whereby the Fed is forced to hike rates to 7%. BBG
• Global trade volumes slumped at their fastest pace since the pandemic during the month of July, a sign that rising rates are starting to weigh on economic activity. FT
• Tesla will be investigated by the EU as part of its probe into China’s state subsidies for electric vehicles, people familiar said. Domestic manufacturers including BYD, SAIC Motor and Nio will also be probed, with the EU taking any necessary countervailing measures to level the playing field for their industry. BBG
• Senate nearing a bipartisan compromise on a short-term continuing resolution (CR) that would keep the gov’t open for 4-6 weeks and once passed, McCarthy would come under pressure to bring it up for a vote. BBG
• Americans outside the wealthiest 20% of the country have run out of extra savings and now have less cash on hand than they did when the pandemic began, according to the latest Federal Reserve study of household finances. For the bottom 80% of households by income, bank deposits and other liquid assets were lower in June this year than they were in March 2020, after adjustment for inflation. BBG

A More detailed look at global markets courtesy of Newsquawk

APAC stocks were mostly lower with headwinds from the rising global yield environment. ASX 200 was subdued by underperformance in real estate and tech as domestic yields climbed. Nikkei 225 was pressured following the acceleration  in Services PPI data and as recent currency moves keep participants on their toes regarding FX intervention. Hang Seng and Shanghai Comp declined with sentiment not helped by trade frictions after the US imposed restrictions on additional Chinese and Russian companies related to supplying Russia with components to make drones, although losses in the mainland were stemmed by another substantial liquidity operation and hope that the approaching Mid-Autumn Festival and National Day Golden Week holidays would provide a boost to consumption and economic activity.

Top Asian News

• China’s MOFCOM said China and the EU reached agreements on supply chain cooperation in which the agreements also include WTO reform and financial opening, while China urged the EU to exercise prudence in trade remedy.
• Alibaba (BABA), on the proposed spin-off and listing of Cainiao, said HKEX has confirmed that the Co. may proceed with the spin-off, while details have not yet been finalised, and added there is no assurance that the proposed spin-off will take place or when, according to Reuters.
• Some Evergrande (3333 HK) offshore creditors are planning to join the winding-up petition in the event that no new debt restructuring plan is submitted by October 30th, according to Reuters sources.
• China’s Auto Industry body CAAM said it hopes the EU will use trade remedy measures prudently, cautiously, and launch countervailing investigation with regards to measures against China’s EV products, according to Reuters.
• Japan maintains its overall view on the economy for September, and said “it is recovering moderately”; raises its view on corporate profits in September for the first time since March 2022, suggesting it is “improving as a whole”, according to Reuters.
• Japanese Finance Minister Suzuki said they are closely watching FX moves with a great sense of urgency, according to Reuters.
• Japan is reportedly mulling tapping budget reserves that were originally set aside for COVID inflation countermeasures for upcoming economic package and extra budget, according to Reuters.
• Japanese Cabinet Official said BoJ Governor Ueda told a top economic council meeting that it was important to nurture positive signs of change in corporate behaviour, according to Reuters.
• Ex-BoJ board member Sakurai said the BoJ may hold off on ending negative rates until April, according to Reuters.
• Hyundai Motor (005380 KS) and Kia (000270 KS) are to cut EV prices in South Korea until the end of the year. The Cos plan discounts as government expands subsidies for EV purchases. Cos sees EV sales remaining sluggish in South Korea, according to Bloomberg.

European bourses are on the backfoot but off the worst levels seen at the cash open despite a lack of fresh fundamental headlines, with the UK’s FTSE outperforming on a weaker GBP. Sectors in Europe are mostly lower with a slightly more defensive bias vs the cash open, with Healthcare and Utilities towards the top of the bunch while Tech remains the laggard. US futures are pressured amid a generally negative risk tone across the market and a lack of any fresh catalysts.

Top European News

• ECB’s Simkus said policy is currently on track for 2% inflation in 2025. He would not rush with an answer when it comes to the timing of rate cuts, according to Bloomberg.
• ECB’s Muller said he is not expecting additional rate hikes as things stand, according to Bloomberg.
• UK will sign a trade pact with Washington state aimed at facilitating aerospace deals with the US, according to Bloomberg.
• Germany cut its planned Q4 Federal debt issuance by EUR 31bln. The announced borrowing on the capital market will be reduced by EUR 8bln in Q4 and EUR 23bln less will be raised on the money market, according to the press release.
• Chip-name ASM International (ASM NA) raised its 2025 revenue target and provided 2027 guidance at its Investor Day. Co. sees FY25 Revenue between EUR 3.0-3.6bln (prev. 2.8-3.4bln) while Q3 2023 was guidance reiterated, according to a press release.

FX

• DXY has trimmed earlier upside after initially gaining more ground against the majority of its currency rivals amidst the ongoing rout in debt, and in the run-up to month end in which Citi and Barclays models both point to Dollar buying.
• USD/JPY temporarily rose above 149.00 to a 149.19 high before reversing lower in conjunction with jawboning from Japanese Finance Minister Suzuki.
• GBP/USD is among the laggards under 1.2200 against its US peer against the backdrop of softer UK short-end rates and yields.
• EUR/USD bounced from 1.0570 to test 1.0600 to the upside where EUR 1.7bln option expiries are due to roll off at the NY cut.
• PBoC set USD/CNY mid-point at 7.1727 vs exp. 7.3174 (prev. 7.1727).
• Credit Agricole FX Month-End Rebalancing: month-end portfolio-rebalancing flows are likely to be mild USD buying across the board with the strongest buy signal in the case of the USD vs the CAD.

Fixed Income

• Bonds regained some composure with some aid from Germany’s Q4 issuance remit, which saw the expected reduction confirmed and was overall a positive development, but the bulk of the cut was at the short end.
• Bunds are holding above 129.00 and BTPs defended 110.00 in wake of reasonable German and Italian auctions in relief more than positive response to the results.
• Gilts plunged to 94.82 before rebounding to 95.64, while T-note fell to the edge of 108-00 at 108-05 before trimming losses to trade back towards 108-12+.
• UK sold GBP 3bln 0.875% 2033 Green Gilt: b/c 2.56x (prev. 3.02x), average yield 4.315% (prev. 4.239%) and tail 1.3bps (prev. 0.2bps).
• Germany sold EUR 3.25bln vs exp. EUR 4bln 2.40% 2028 Bobl: b/c 2.0x (prev. 2.1x), average yield 2.76% (prev. 2.56%) & retention 18.75% (prev. 15.15%)
• Italy sold EUR 3bln vs exp. EUR 2.5-3.0bln 3.60% 2025 BTP & EUR 1.75bln vs. Exp. EUR 1.25-1.75bln 1.50% 2029, 2.55% 2041 BTPei.

Commodities

• Crude futures are softer intraday following the choppy price action seen yesterday, while the European morning has seen continued downside across the complex as a result of the risk aversion seen across the broader markets.
• Dutch TTF prices are lower by some 7% at the time of writing following the recent surge, which desks believe is due to the upcoming heating seasons, whilst Norway’s Troll field reportedly saw a delayed startup.
• Spot gold and silver are subdued as the Dollar surged in early European trade, while copper prices are off worst levels and iron ore futures saw another session of losses in the East.

Geopolitics

• South Korean President Yoon warned if North Korea uses nuclear weapons, the overwhelming response by South Korea and the US is to bring its regime to an end, while he added that only a strong military can ensure peace, according to Reuters.
• Chinese Foreign Minister Wang said China opposes ‘wanton’ expansion of military alliances and squeezing the security space of other countries, according to Reuters.
• China MOFCOM said China firmly opposes the US inclusion of some Chinese companies and individuals in the Iran list, according to Reuters.
• Philippines Coast Guard said four Chinese Coast Guard vessels were nearby prior to the Philippines cutting the barrier at the South China Sea shoal and China removed the remnants of the barrier, while China’s Coast Guard was not that aggressive and saw media on board the Philippines vessel, according to Reuters.

US Event Calendar

• 09:00: July S&P CS Composite-20 YoY, est. -0.10%, prior -1.17%
  • July S&P/CS 20 City MoM SA, est. 0.70%, prior 0.92%
  • July FHFA House Price Index MoM, est. 0.4%, prior 0.3%
• 10:00: Sept. Conf. Board Consumer Confidenc, est. 105.5, prior 106.1
  • Sept. Conf. Board Present Situation, prior 144.8
  • Sept. Conf. Board Expectations, prior 80.2
• 10:00: Aug. New Home Sales, est. 698,000, prior 714,000
  • Aug. New Home Sales MoM, est. -2.2%, prior 4.4%
• 10:00: Sept. Richmond Fed Index, est. -7, prior -7
• 10:30: Sept. Dallas Fed Services Activity, prior -2.7

Central Bank speakers

• 13:30: Fed’s Bowman Delivers Welcoming Remarks

DB’s Jim Reid concludes the overnight wrap

Morning from New York where it seems I’ve taken London type weather with me. It was another stormy day for duration yesterday with fresh milestones reached across several different asset classes. Just to give you a sense of what happened: the 10yr Treasury yields rose +10.0bps and closed comfortably above 4.5% for the first time since 2007; 10yr real yields were near 15yr highs; the 10yr bund yield traded above 2.8% for the first time since 2011; the VIX index of volatility flirted with its highest level since May intra-day; the US dollar index hit a YTD high; and European natural gas prices reached their highest level in almost 6 months. And if that weren’t enough, we remain days away from a potential US government shutdown, unless Congress can agree to pass funding beyond September 30. So a pretty tough backdrop for just about everything. Having said that, the S&P 500 recouped a little of its recent losses to close +0.40% higher, as positive AI demand rhetoric from Amazon and a likely end to the Hollywood writers’ strike boosted tech sentiment.

Of course, the biggest story yesterday was the dramatic rise in sovereign bond yields, which left them at multi-year highs on both sides of the Atlantic. For example, the 10yr US Treasury yield ended the day up +10.0bps at a post-2007 high of 4.53%, and overnight they’re up a further +1.6bps to 4.55%. Meanwhile, the 30yr yield rose +12.8bps to a post-2011 high of 4.65%, and is up +1.6bps overnight to 4.67%. Watch out for the latest 30yr mortgage rates! The recent rise in yields is partly because investors are pricing in that policy rates will remain higher for longer, particularly after the Fed’s dot plot last week. But it’s also been driven by the growing realisation that supply is set to remain elevated given mounting budget deficits, along with a small uptick in longer-term inflation expectations. Indeed, although real rates led the moves in longer-dated yields (10yr +11.7bps to 2.17%), the 30yr inflation breakeven was still up +1.0bps yesterday to 2.39%, which is its highest level in over 6 months. My CoTDs over the last two days have shown that 10yr USTs are now at their 230 plus year average again and that c.86% of time over that period, 10yr rolling inflation has averaged below 4.5%. So after a decade plus of having little value in historical terms, it is finally a competitive asset class again against others such as equities, which raises the question about what return equity investors should demand going forward. See the two here and here.

For European sovereigns it was a similar yield rising story yesterday. Yields on 10yr bunds (+5.6bps) closed at their highest level since 2011, at 2.79%, and those on 10yr OATs (+5.7bps) closed at their highest since 2012, at 3.34%. That said, there was a modest rally at the front end, with 2yr bunds yields down -2.1bps. The moves came with the backdrop of comments by ECB President Lagarde, who said to the European Parliament that rates “will be set at sufficiently restrictive levels for as long as necessary”. This reiterates the language from the ECB press conference back on September 14.

US equities showed resilience to the bond sell off, with the S&P 500 rebounding +0.40% from its 3-month low on Friday, and ending a run of four consecutive declines. Tech mega caps outperformed, with the Magnificent Seven index up +0.87%. Meanwhile, real estate, utilities and consumer staples were the underperformers in the S&P 500 with the higher rates story. As a reminder of the narrow nature of this year’s equity rally, the equal-weighted version of the S&P 500 is up only +1.28% YTD (+0.25% yesterday) compared to +12.97% for the headline S&P 500. Over in Europe, the equity moves were more definitively negative, and the STOXX 600 (-0.62%) fell to a one-month low.

Another important development yesterday was a fresh rise in European natural gas prices, which hit their highest level since April, at €44.44/MWh. Now it’s worth noting that the situation is far better than this time a year ago, when prices were still above €150/MWh, and European gas storage is also more plentiful and secure relative to 12 months ago. But clearly, the latest increase in natural gas prices is an unhelpful development when there’s been other signs that the European economy is slowing. Speaking of which, the Ifo’s business climate indicator from Germany came in at 85.7 in September. That was better than the 85.2 reading expected, but still beneath the revised 85.8 reading from August, which means that the index has fallen for 5 consecutive months now.

Whilst there were growing signs of a slowdown in Europe, the US Dollar continued to strengthen yesterday, with the dollar index (+0.39%) reaching its highest level of 2023 so far, and overnight it’s inched up another +0.02%. Conversely, that pushed the euro beneath the $1.06 mark for the first time since March, whilst sterling also fell to a 6-month low of $1.2212 just as I visit the Apple Store in Manhattan this week. That comes as US real yields have hit their highest in years, and the 30yr real yield (+11.7bps) surpassed its recent peaks in 2010 and 2011 yesterday to close at its highest level since 2009, at 2.27% .

Overnight in Asia we’ve seen more negative sentiment in markets, including losses for all the major equity indices. That includes the KOSPI (-1.22%), the Nikkei (-0.98%), the Hang Seng (-0.84%), the CSI 300 (-0.45%) and the Shanghai Comp (-0.33%). And as it stands, the Hang Seng is currently on track to close at its lowest level since November. We’ve also seen some headlines return about issues in the Chinese property sector, after Evergrande said yesterday that their mainland unit missed an onshore bond payment. Their shares fell by -21.82% yesterday, and overnight they’re down a further -6.98%. Looking ahead, US equity futures are pointing to renewed losses, with those on the S&P 500 down -0.32% this morning.

Looking at yesterday’s other data, the Dallas Fed’s manufacturing index unexpectedly fell to -18.1 in September (vs. -14.0 expected) even if the comments in the press conference were a little more upbeat.

To the day ahead now, and data releases from the US include the Conference Board’s consumer confidence for September, the Richmond Fed’s manufacturing index for September, new home sales for August, and the FHFA house price index for July. Central bank speakers include the Fed’s Bowman, and the ECB’s Lane, Simkus and Holzmann.

Ahead of President Biden’s scheduled visit to Michigan on Tuesday to support the United Auto Workers on the picket line, Ford Motor Co. announced a pause in building a multi-billion battery factory in the state on Monday. This comes as Congressional Republicans investigate Ford’s connections with a Chinese electric vehicle battery company. 

“We’re pausing work, and we’re going to limit spending on construction at Marshall until we’re confident about our ability to competitively run the plant,” Ford spokesman T.R. Reid told The Detroit News on Monday.

Reid mentioned that multiple “considerations” influenced the decision. However, he did not specify whether the ongoing UAW strike, currently in its second week, was one of the main factors leading to the decision to shutter construction at the Marshall, Michigan, battery plant. 

The Wall Street Journal said several Republican-led committees in the House have opened an investigation into Ford’s deal with Contemporary Amperex Technology (CATL), one of the world’s largest EV battery manufacturers based in China, to manufacture battery cells. 

Former US Ambassadors Peter Hoekstra and Joseph Cella, co-founders of the Michigan-China Economic and Security Review Group, were quoted by Fox News as saying:

“We applaud that the construction of this reckless deal has been halted.

“From the outset, Ford Motor Company, the State of Michigan, the Michigan Economic Development Corporation and all other parties to it have been irresponsible in advancing this deal.”

They continued:

“There was zero strict scrutiny or due diligence, concerns of our intelligence and national security agencies were ignored and mocked.

“The halting of the construction is the natural result of the consent of the governed being ruptured by government and business elites. With citizen activists, we are not relenting or letting our guard down. We will keep fighting against the Ford-CATL and Gotion deals until they are no more.”

Many Michigan Democrats support the Ford-CATL deal, while Republicans oppose it.

On Sunday, ultra-liberal New York Representative Alexandria Ocasio-Cortez told CBS’s Face the Nation that she intends to sell her non-union-made Tesla Model 3 for a union-made EV from Michigan. Notably, Tesla’s are the most American-made EVs, a detail often overlooked by Democrats who prefer EVs from General Motors or Stellantis, which source their parts internationally. This only suggests some Democrats are prioritizing radical politics over their so-called ‘climate change’ and ‘build back better’ narrative. 

Although the practice of gold mining has been around for thousands of years, it’s estimated that roughly 86% of all above-ground gold was extracted in the last 200 years.

With modern mining techniques making large-scale production possible, global gold production has grown exponentially since the 1800s.

Visual Capitalist’s Govind Bhutada and Miranda Smith created the infographic below, using data from Our World in Data, to visualize global gold production by country from 1820 to 2022, showing how gold mining has evolved to become increasingly global over time.

A Brief History of Gold Mining

The best-known gold rush in modern history occurred in California in 1848, when James Marshall discovered gold in the Sacramento Valley. As word spread, thousands of migrants flocked to California in search of gold, and by 1855, miners had extracted around $2 billion worth of gold.

The United States, Australia, and Russia were (interchangeably) the three largest gold producers until the 1890s. Then, South Africa took the helm thanks to the massive discovery in the Witwatersrand Basin, now regarded today as one of the world’s greatest ever goldfields.

South Africa’s annual gold production peaked in 1970 at 1,002 tonnes—by far the largest amount of gold produced by any country in a year.

With the price of gold rising since the 1980s, global gold production has become increasingly widespread. By 2007, China was the world’s largest gold-producing nation, and today a significant quantity of gold is being mined in over 40 countries.

The Top Gold-Producing Countries in 2022

Around 31% of the world’s gold production in 2022 came from three countries—China, Russia, and Australia, with each producing over 300 tonnes of the precious metal.

North American countries Canada, the U.S., and Mexico round out the top six gold producers, collectively making up 16% of the global total. The state of Nevada alone accounted for 72% of U.S. production, hosting the world’s largest gold mining complex (including six mines) owned by Nevada Gold Mines.

Meanwhile, South Africa produced 110 tonnes of gold in 2022, down by 74% relative to its output of 430 tonnes in 2000. This long-term decline is the result of mine closures, maturing assets, and industrial conflict, according to the World Gold Council.

Interestingly, two smaller gold producers on the list, Uzbekistan and Indonesia, host the second and third-largest gold mining operations in the world, respectively.

The Outlook for Global Gold Production

Gold prices have been hovering around the $1,900-$2,000 per ounce near all-time highs. For mining companies, higher gold prices can mean more profits per ounce if costs remain unaffected.

According to the World Gold Council, mined gold production is expected to increase in 2023 and could surpass the record set in 2018 (3,300 tonnes), led by the expansion of existing projects in North America. The chances of record mine output could be higher if gold prices continue to increase.