Via The Brownstone Institute,

There is a battle going on for our freedoms this week. And very few Americans are even aware of what is at stake…

New York attorney Bobbie Anne Cox single-handedly goes up against the State of New York this week, after the state appealed a New York State Supreme Court ruling that a so-called “quarantine camp” regulation (“Isolation and Quarantine Procedures”) issued by Governor Kathy Hochul was unconstitutional.

The order concerns quarantine of citizens by the state government. Like other states, New York already has in place laws regarding quarantine of the citizenry – laws duly passed by the elected state representatives. Those laws were crafted by legislators (whose job it is to do this work) and passed by a majority vote of both Assembly and Senate and signed by the governor. That law not only provides for protecting the public by use of quarantine, but also includes protections for individual rights.

There are problems with the governor’s action.

• The executive branch does not have the power to make laws under the constitution. That is reserved to the legislature.

• With one state executive branch taking power not given to them constitutionally, it creates a precedent that could be used similarly for other issues to violate the rights of citizens on a host of other issues – not only in New York, but in all the other states as well.

So, what is in this regulation, you ask? It has to do with quarantine of the citizenry. There is a history of government-mandated quarantine during times of epidemics in our country. Whether or not the existing laws have been misused against individuals is another debate (see the case of Typhoid Mary, for example, who was imprisoned for more than 23 years under the quarantine law of the time). 

This governor’s regulation puts the power at the highest levels of the state government – centrally controlled. The governor’s regulation not only circumvents the legislature’s power and responsibility to enact appropriate laws for the citizenry, but it also takes that power beyond the local level, where it can most appropriately be considered, and completely fails to protect the rights of the individuals against misuse or mis-application by the state officials.

In this regulation, there is no requirement for the state government to prove that the targeted individual is infected, has been exposed to an infectious disease, or poses any actual risk to his/her fellow citizens. The application of the regulation is broad – not just limited to Covid cases. There is no limit regarding the age or medical condition of the individual (it could be imposed on a child or a very elderly person), and there is nothing specified as to the duration of the quarantine, or how that duration would be determined. Most concerning: there is no mechanism provided for the individual to be released.

During the initial court case, it was clearly stated that the only possible mechanism for release was for that individual to sue the state, unless the state officials decided to lift it of their own accord.

Under the provisions of the governor’s regulation, the state government can use law enforcement to forcibly remove citizens from their homes or businesses against their will to place them in unspecified quarantine locations for an indeterminate period with no mechanism for release!

This terrible infringement on citizens’ rights, however, doesn’t stop here. It sets a precedent for more executive branch overreach. If it is not overturned in the appellate court, it will embolden other governors to make more forays into the realm of executive usurpation of the legislative branch of government (see the recent NM Governor’s action to remove 2nd Amendment rights by executive order).

There is no doubt that those who take this type of executive action (Lujan Grisham in New Mexico and Hochul in New York) know that this is outside their scope of power within our governmental system. They also know that, until someone files a lawsuit and prevails against them, they have a period of time when these executive regulations and orders will be in place.

It is essential that the appeals court upholds the ruling in the case of this regulation by Governor Hochul – for the good of all the people of New York, but also for all of us in other states.

This passionate, articulate, brilliant lawyer is fighting for all of us.

And Bobbie Anne Cox has suffered for it. She has set aside her normal legal practice to pursue this effort and has been focusing solely on this case for an extended period. She has sacrificed valuable time with her family, spending countless hours in the maze of motions, filings, dockets, scheduling, and research that are part and parcel of the legal system with all its complexities.  The work has been arduous, solitary, and, to some extent, thankless. If she wins the appeal, there is no financial benefit to her or any of the plaintiffs that will be realized.

She has no large staff of paralegals and junior attorneys assisting her to put this case together. She has not had assistance from her other colleagues in New York in fighting this battle.

And, because it has to do with complexities of the legal system, it gets little coverage in the media. Perhaps it is so difficult to imagine just why a state government even wants this type of power over the citizenry, that people find it very hard to grasp that it is really just what Bobbie Anne describes in terms of the potential abuse of individual rights.

No public outcry has occurred. No groundswell of support for her work has happened. And while many are supportive of the great work she has done and were so relieved when she won the case initially, the vast majority of people who stand to benefit from her work will never know they owe her a debt of gratitude.

On Wednesday, September 13, 2023 at 10:00 am EST (at the courthouse in Rochester, NY, located at 50 East Avenue), Bobbie Anne Cox goes forth as a sort of David to meet Goliath, depending on her knowledge of the law rather than a slingshot and stones. She is relying on the New York panel of judges to truly prove that there still exists blind justice in New York. 

The merits of her case are clear – even to people not that familiar with the law. Basic Civics shows us the correctness of her contention. This is not a partisan issue. While she is representing Republican plaintiffs, she is not one herself.

If you are able to support her by physically attending the hearing, do so. Perhaps by your presence you can be a silent reminder to the court that New Yorkers are interested in this and are supportive of her efforts.

If you cannot be there in person, consider watching the oral arguments live on the court’s website at: https://ad4.nycourts.gov/go/live/. Please also keep her and the court judges in your thoughts and prayers and share this information with your circle of friends and colleagues.

May she prevail.

It’s only been two years since former-Bond-King Bill Gross ‘feuded’ with someone (his neighbor) and spent five days in jail for it.

Watch these clips and decide for yourself. Who’s out of line here? Underwear-clad Bill Gross with @50cent’s “In Da Club” blasting? Or Mark Towfiq, the neighbor who’s filming him? Part 1: pic.twitter.com/2R0CyTsIFt

— Meghann Cuniff (@meghanncuniff) December 7, 2020

So perhaps the grumpy old man was due for another fight and who better to battle than the current-Bond-King Jeff Gundlach.

Bloomberg reports that the ex-PIMCO-boss seems unable to hand over his crown…

“First of all, to be a bond king or queen, you need a kingdom,” Gross said at a live recording of the Odd Lots podcast at the Future Proof conference for the wealth management industry in Huntington Beach, California.

“Pimco had $2 trillion, ok? DoubleLine’s got like $55 billion. Come on — that’s no kingdom, that’s like Latvia or Estonia.”

Apparently, the ‘beef’ between the bond-kings began when Gross visited Gundlach after he left PIMCO, asking if they could work together:

“I went up to his house and said “Maybe I could work with you, we could be two bond kings,” he said during the podcast recording.

“And he trashed me for the next 12 months… And look at his record for the last five, six, seven years,” Gross added. “I got you back, Jeff.”

But Gross admits much of his success to a 30-year bond bull market:

“I don’t think there could be another bond king,” Gross said in a slightly less contemptible tone.

“It was the function of a bull market for 30 years that was growing and Pimco was doing well.”

He concludes that asset managers may no longer be wearing the crown…

“The bond kings and queens are at the Fed,” he added.

“So they’re in charge.”

As a reminder, Gross left PIMCO in 2014 after clashing with colleagues.

As the 79-year-old tries a dick-measuring contest, we remind readers that Gundlach is not afraid of mud-slingers.

As yet, Gundlach has not commented…

Authored by Charles Hugh Smith via OfTwoMinds blog,

This is the direct consequence of the Federal Reserve’s decades of unprecedented stimulus: extremes of wealth and income inequality that gave the wealthiest households the means to bid up housing to the point it’s no longer affordable to the bottom 90%.

The superficial conclusion that the reason why housing is unaffordable is a scarcity of housing misses a key dynamic in supply and demand: who has too much money and where do they park it??

The reality is obvious but conventional analysts don’t see it, largely because it doesn’t fit the approved narratives. Here’s why housing is unaffordable to the bottom 90%:

1. The U.S. economy is a bubble economy that funnels the vast majority of gains into the top 10% who own 90% of all income producing assets. Bubbles create astounding sums of unearned wealth and distribute it very asymmetrically: the already-wealthy who inherited assets or acquired them when they were cheap reap most of the gains.

Please examine the first two charts below to see how this works. The first chart shows that the top 10% own between 85% and 95% of all income producing assets: business equity, stocks, bonds and other securities, and non-home real estate, i.e. second homes and income-generating properties.

The second chart shows that Household Net Worth–concentrated in the top 10%–soared far above GDP in the Bubble Economy, in effect creating $55 trillion out of thin air and handing 90% of it to the wealthy. Recall that net worth is assets minus liabilities such as debt, so this is what’s left after subtracting liabilities/debts. The less wealthy tend to have fewer assets and more debts, so someone may hold title to a $1 million home, but if their mortgage is $900,000, their net worth is only $100,000.

Also note that the family home doesn’t generate income, other than for the owner of the mortgage; to the homeowner, it is an expense, not an income source.

Turning to the second chart, we see that if Household Net Worth had tracked the general economy’s expansion, i.e. Gross Domestic Product (GDP), it would be less than $90 trillion. Thanks to the Bubble Economy, it’s $145.9 trillion, according the Federal Reserve’s database. That $55 trillion above the real-world economy’s actual expansion is an artifact of the Bubble Economy, an artificial construct of the Federal Reserve’s decades of unprecedented manipulation of interest rates and monetary stimulus.

Note that in the previous housing and stock market bubble circa 2006-08, Household Net Worth only exceeded GDP by $5 trillion. A nice chunk of change, to be sure, but an order of magnitude smaller than the gargantuan $55 trillion in “bubble wealth” created in the current central bank Everything Bubble.

2. As the chart below of housing bubbles #1 and #2 shows, the Fed’s unprecedented stimulus inflated Housing Bubbles # and #2. The stock market bubble took off around 1995 (with the introduction of the Netscape browser), and housing’s ascent lagged a few years, beginning in the late 1990s. (The chart is the Case-Shiller National Home Price Index.)

But Housing Bubble #1 really only took off after the dot-com stock market bubble popped, and the Fed aggressively lowered interest rates: the Fed Funds Rate fell from 6.5% in summer 2000 to 1% in the summer of 2003.

It remained at a historically low 3% well into 2005, when the housing bubble entered its rocket booster phase of euphoria. The Fed eventually normalized rates, returning to 5% by mid-2007, but as the housing bubble began popping, the Fed quickly started cutting rates again, dropping the Fed Funds Rate to near-zero by December 2008 (0.16%).

3. The wealth created by the Fed’s stock and bond bubbles flowed into housing. It is not a coincidence that the Housing Bubble #1 expanded rapidly from 2000 onward. As the stock market bubble deflated, those who had reaped the gains sought a new place to park their excess wealth, and with interest rates falling due to the Fed, housing was the place to put that bubble-generated capital to work: mortgage rates hit historic lows, and the resulting bubble was self-reinforcing: simply securing the purchase rights to an as-yet unbuilt house with a small down payment could generate astounding gains in a few months.

Financial fraud–oops, I mean “innovations”–added icing to the Fed’s bubble cake: liar loans, zero down payment mortgages, adjustable rate mortgages, deceptive packaging of toxic mortgages into highly rated mortgage backed securities, etc., fueled the bubble’s final blow-off top.

Massive, sustained Fed stimulus inflated Housing Bubble #2, a bubble that went ballistic in 2020 as the Fed engaged in unprecedented stimulus, doubling its balance sheet to $9 trillion, dropping the Fed Funds Rate from a meager 2.4% back to zero, and boosting its portfolio of mortgage-backed securities to $2.6 trillion.

Fed stimulus also inflated bubbles in stocks and bonds: as interest rate fell to near-zero, bonds soared in value, and the S&P 500 index of stocks rocketed from 666 in early 2009 to 3,380 in early 2020–a five-fold increase.

4. The vast majority of these massive gains accrued to the top 10%, roughly 13 million households. (There are 131 million households in the U.S.) The top 10% includes the Financial Nobility (billionaires and those worth hundreds of millions, the top 0.01%); the Financial Aristocracy (households worth tens of millions, the top 0.5%), the wealthy (net worth in the many millions, the top 1%), and the upper middle-class (the bottom 9% of the top 10%).

Historically speaking, the upper-middle class has often owned more than one property: a vacation cabin on the lake or beach, raw land held for investment, or a rental property. With interest rates locked by the Fed at unprecedented lows, the 12 million households in this class who had seen their stock, bond and property portfolios zoom to staggering heights, tapped their new-found wealth and ample credit to go on a housing / real estate buying spree.

Recall that housing was still affordable in the mid to late 1990s. Mechanics and librarians could still buy a modest home in a good neighborhood in the San Francisco Bay Area and many other now-unaffordable metro areas. When the Housing Bubble #1 finally popped, housing was very briefly affordable circa 2012.

5. Many frugal, investment-savvy upper-middle class households acquired properties when they were still affordable. It’s not at all uncommon for families to own multiple income properties in addition to the family home. Vacation homes bought decades ago at low prices were converted to short-term vacation rentals for part of the year, generating income when the family wasn’t using the home. Nearby cabins were snapped up for investment rentals.

The upper-middle class also inherited properties and other assets. Assets–for example, houses–bought decades ago for $30,000 or $40,000 have soared to $1 million valuations in many metro areas–or even $2 million in desirable neighborhoods. Selling a home for $1+ million leaves more than enough capital to buy multiple properties in less pricey regions.

6. Unfortunately for the upper-middle class, the Financial Aristocracy and the wealthy already own the most desirable properties in the most desirable areas. So the upper-middle class lowered their sights to what was still affordable, and this has driven gentrification: as those with excess capital and credit seek a place to park that wealth that will rise in value, neighborhoods that were once affordable quickly become unaffordable to the bottom 90% as the top 10% bid prices to the moon.

7. The immense wealth created by the Bubble Economy hasn’t just enriched a few billionaires; it’s created an entire class of wealthy numbering in the millions. When 10 million households have the wealth and credit to buy houses beyond the family home they live in, that’s a very large pool of buyers–buyers who have seen their initial purchases soaring in value, incentivizing additional purchases of housing.

8. Housing is priced on the margins, so a relative handful of purchases can push the valuations of an entire neighborhood to the moon. Compared to stocks and bonds, housing is illiquid; transactions are few and take months to settle. The last five sales will adjust the valuation (via appraisals seeking nearby comparables) of the surrounding 100 homes.

Corporations and the super-wealthy have also been on massive buying sprees, snapping up hundreds or thousands of houses as rental properties. The $55 trillion in excess “bubble wealth” is always seeking a higher return, and as rents have soared (see chart below), rental housing has been seen as a safe and profitable haven for the trillions of dollars floating around seeking a low-risk high return.

As the last chart shows, the current housing bubble is far more extreme than Housing Bubble #1. It took a much shorter period of time to reach far higher heights of overvaluation.

This is why the bottom 90% can’t afford a house: the Bubble Economy created $55 trillion out of thin air and 90% of that went to the top 10%, a class historically attuned to owning real estate for income and investment. The bottom 90% skimmed a few bucks in the past 25 years of the Bubble Economy, but nowhere near enough to compete with corporations, the Financial Aristocracy or the upper-middle class.

This is the direct consequence of the Federal Reserve’s decades of unprecedented stimulus: extremes of wealth and income inequality that gave the wealthiest households the means to bid up housing to the point it’s no longer affordable to the bottom 90%.

*  *  *

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In a brief clip dropped last night, Tucker Carlson rages (in his inimitable manner) that the current system of governance in the US does not genuinely reflect the majority’s will but benefits a small group of people with power.

“Most governments are run by a small group of people for their own benefit without reference to what the majority wants,” he says.

Carlson highlights, based on public opinion polls as evidence, that there is often a disconnect between what the people want and what their leaders prioritize:

“Take a look at the latest Gallup poll, pick a poll. What are the top 10 issues for people in the United States and then compare those to the priorities of your leaders.”

The former Fox News host takes aim at Governors Gretchen Whitmer of Michigan and Greg Abbott of Texas as case examples of this disconnect.

Regarding Whitmer, who he calls a “low IQ lunatic”, Carlson says her priorities are not in line with the majority of her constituents, specifically regarding social issues like “misgendering”:

“The things that people care about, Gretchen Whitmer couldn’t care less about.”

Abbott, who Carlson calls a “liar, and betrayer of your own people”, is accused of not taking significant action on illegal immigration, despite having the resources to do so:

“Don’t you have a National Guard? Why don’t you seal the Border? Oh, it’s very complicated. No, it’s not.”

Carlson concludes that this deviation from public will is a betrayal of American democracy.

“It’s not just frustrating; it’s a betrayal of the core promise of the country, which is the people rule,” he proclaims; suggesting that the current situation represents a “criminal act,” and, in what some have suggested sounded the most like a campaign/stump speech, urges the audience to reconsider their belief that a majority vote will automatically translate into action or law.

Watch the full clip below:

What do Gretchen Whitmer and Greg Abbot have in common? Unfortunately, quite a bit. pic.twitter.com/QCwk7371kJ

— Tucker Carlson (@TuckerCarlson) September 12, 2023

Authored by Eva Fu via The Epoch Times (emphasis ours),

BlackRock is closing a China-focused offshore fund amid congressional scrutiny over its alleged role in directing U.S. dollars to blacklisted Chinese firms.

In a recent letter to shareholders, BlackRock Global Funds Chairwoman Denise Voss said the world’s largest money manager will close the China Flexible Equity Fund over a “lack of shareholder interest” and the investment cost to keep the fund running, which she noted is “not in the best interests of shareholders.”

BlackRock intends to liquidate all assets under the fund and redeem any outstanding shares by Nov. 7. Existing shareholders have the options to switch their investments into another fund, sell back their shares ahead of the liquidation date, or receive automatic payments for the shares when the fund closes down.

Opened in October 2017, China Flexible Equity Fund had an asset value of about $21.4 million as of late August. It recorded a negative 16.7 percent return in 2021, a number that nearly doubled in 2022, to negative 30.5 percent.

The fund closure came just a month after the House Select Committee on the Chinese Communist Party initiated a probe into BlackRock and investment index provider MSCI regarding the alleged investments in Chinese companies the U.S. government has deemed problematic.

The two firms together facilitated investment into more than 60 Chinese entities hit with U.S. sanctions over national security or human rights issues, the lawmakers said, noting that their review was far from comprehensive and thus the actual number of benefited Chinese companies is likely higher. Across five funds, BlackRock has invested more than $429 million in such Chinese firms against U.S. interests, according to the House committee.

One of the top invested Chinese entities for China Flexible Equity Fund is Tencent, a Chinese state-backed tech giant that had aided Beijing in silencing dissent and spreading propaganda through its popular messaging app WeChat. Two others are state-owned hydropower operator China Yangtze Power and Nari Technology, the country’s largest supplier of electric power equipment.

In a response to the congressional probe, BlackRock told The Epoch Times that it “complies with all applicable U.S. government laws” regarding “all investments in China and markets around the world” and noted that it is one of 16 asset managers offering U.S. index funds that invest in Chinese companies.

The firm didn’t immediately respond to a request for comment regarding the China fund closure.

But across the board, there are growing signs of wariness from U.S. investors toward the Chinese market. The long-hoped-for economic recovery after the regime lifted its stringent COVID-19 policies hasn’t happened. Instead, the country faces a slowing economy, with a sharp drop in trade, millions of young Chinese people struggling to find jobs, a housing crisis, and growing tensions with the United States.

In August, President Joe Biden signed an executive order to restrict U.S. investments in China in advanced technologies such as artificial intelligence, quantum technology, and semiconductors, citing risks for U.S. national security.

For a U.S. investor, “there is nothing bigger than the current trade tensions between the U.S. and China,” Gary Dugan, chief investment officer at the UAE-based Dalma Capital, a global alternative investment platform and an avid China investor, told The Epoch Times.

China’s regulatory environment also presents increasing challenges to foreign investors. In July, China officially expanded an anti-espionage law that could criminalize regular business activities. Authorities this year have also ordered a raid on Bain & Co.’s office in Shanghai and due diligence firm Mintz Group’s office in Beijing. In May, it told local operators of “critical information structure” to stop buying products from U.S. chipmaker Micron Technology.

“Increasingly, I hear from American business that China is uninvestable because it’s become too risky,” Commerce Secretary Gina Raimondo said on Aug. 29 during an official visit to China. She said she had made 120 to 150 calls with business and labor leaders in preparing for the trip.

Foreign investors have dumped Chinese stocks at a record pace in August as China’s economy continues to decline. Data from Hong Kong’s Stock Connect trading scheme show that sales by offshore traders on the Chinese equity market reached about $11 billion over three weeks since Aug. 7.

Early in August, HSBC said it had cut its Chinese commercial property exposure by $5.5 billion by the end of June compared with last year. Standard Chartered also reduced exposure to $3 billion, from $3.7 billion a year ago.

Oil prices had been coiling for a few days ahead of this data and are breaking out now after OPEC reports that global oil markets face a supply shortfall of more than 3 million barrels a day next quarter – potentially the biggest deficit in more than a decade.

If realized, it could be the biggest inventory drawdown since at least 2007, according to a Bloomberg analysis of figures published by OPEC’s Vienna-based secretariat.

OPEC’s 13 members have pumped an average of 27.4 million barrels a day so far this quarter, or roughly 1.8 million less than it believes consumers needed, according to the report.

WTI pushed above $88 on the news, its highest since Nov 2022…

As Bloomberg reports, The kingdom’s hawkish strategy, aided by export reductions from fellow OPEC+ member Russia, threatens to bring renewed inflationary pressures to a fragile global economy.

Diesel prices have surged in Europe, while American airlines are warning passengers to brace for increased costs.

It could even become a political issue for President Biden as he prepares for next year’s reelection campaign, with national gasoline prices nearing the sensitive threshold of $4 a gallon.

US futures are slightly lower, but holding on to much of yesterday’s tech-driven gains, with European bourses and Asian markets mixed ahead of tomorrow’s CPI print. At 7:30am ET, both emini S&P500 and Nasdaq 100 futures slipped 0.3%, reversing yesterday’s rally. Tech stocks retreated as Oracle dropped 10% after posting slowing cloud sales, while the euro and pound weakened on concern the Europe faces a growing threat of stagflation. Tech will also be the center of attention on Tuesday, with Apple set to unveil a new product lineup including the new iPhone 15, and SoftBank-owned chip designer Arm gearing is set to price the biggest IPO of the year. US Treasuries edged lower, commodities are higher led by base metals with oil trading near its highest level this year before the OPEC monthly report. Gold fell while bitcoin redovered much of yesterday’s losses.

In premarket trading, Oracle tumbled 10% after it reported slowing cloud sales growth in the quarter. Analysts said the report failed to live up to high expectations, although they remain positive on the company’s long-term prospects; Morgan Stanley analysts said the results raise questions about the timing of generative AI demand turning into revenue across the broader business. Apple is up 0.20% ahead of the new iPhone 15 reveal. Here are some other notable premarket movers:

• Acelyrin shares sink 58% after the biopharmaceutical company’s lead product, izokibep, did not meet the primary endpoint of a clinical trial of patients with hidradenitis suppurativa, a chronic inflammatory skin condition. Analysts found the miss to be disappointing, with Piper Sandler highlighting the “puzzling” dropout rates.
• RTX shares dip 1.11% as Barclays and RBC Capital Markets downgraded their recommendations on the stock after the aerospace and defense company cut its full-year sales forecast. Meanwhile, Citi reduces its price target on the stock.
• Sight Sciences shares slumped 34% after the glaucoma surgery device maker reduced its revenue outlook as uncertainty about the future of Medicare coverage for its products hurts demand.

After today’s Apple event, all eyes will turn to the US CPI report due Wednesday at 830am ET, and the ECB decision on Thursday.  The consumer-price index report Wednesday will provide the latest insight into how much further the Fed may need to go to pull inflation back toward its target. Monthly inflation is expected to surge accelerate to 0.6% in August from 0.2% in July, even as core CPI is seen stable at 0.2%, according to economists’ estimates.

“Markets are gearing up to this week’s main events,” wrote ING Group NV strategists including Benjamin Schroeder. “It is not just about this Thursday’s ECB meeting, but also about crucial data in the US and UK ahead of next week’s respective central bank meetings.”

US consumers’ inflation expectations were mostly stable in August, but households grew more concerned about their finances and more pessimistic about the job market, according to a Fed Bank of New York survey which showed the highest 5-year inflation expectations since the start of 2022.

“If we do see potentially a more sticky inflation number than the 0.6% expected by economists or 0.2% on core, I would expect to see the bond market start to potentially price in another rate hike before the end of the year, potentially as early as November,” Anthony Doyle, head of investment strategy at Firetrail Investments Pty Ltd, said on Bloomberg Television.

In Europe, the Stoxx 50 fell 0.4% with the FTSE 100 outperforming peers, adding 0.4%, DAX lags, dropping 0.5%. Packaging company Smurfit Kappa Group plunged 13% after it announced a deal to combine with WestRock. Here are the most notable European movers:

• AB Foods gain as much as 5.4% after the Primark owner reported fourth-quarter comparable sales growth of 8% for the clothing-retail business. Morgan Stanley analysts said the results show top-line resilience for Primark, while Shore Capital plans to increase its estimates.
• HelloFresh shares climb as much as 8.3% after JPMorgan placed the meal-kit maker on positive catalyst watch following meetings with company management, saying it is “ready to beat.”
• Jet2 shares rise as much as 4.9% after Morgan Stanley adds to the clean sweep of positive ratings on the company, starting coverage at overweight based on a continued supportive package holiday market outlook.
• Smurfit Kappa shares fall as much as 13% after the packaging firm agreed on the terms of a merger with WestRock, just a week after disclosing talks to combine. Analysts note the premium paid for WestRock is higher than investors anticipated.
• Campari shares fall as much as 6.1% in Milan after the company said Bob Kunze-Concewitz has decided to retire as CEO, effective as of April 2024, according to a statement.
• PolyPeptide slumps as much as 8.3% after the Swiss biotechnology company gets downgraded to sell from neutral at Citigroup, which cited operational issues as a drag on profitability.
• Dowlais shares fall as much as 6.3%, the most since July 11, after the co. reported 1H23 earnings that revealed uncertainty around possible US strikes affecting its 2H23 demand and kept its FY outlook unchanged.
• Fevertree shares decline as much as 7.1% after the high-end tonic maker reported first-half sales and earnings that missed estimates and lowered Ebitda guidance for the year. Analysts were encouraged by the 2024 margin outlook, though the miss to profit expectations weighed.
• Pepco shares drop as much as 5.2% after discount retailer reported sudden departure of CEO Trevor Masters and cut its Ebitda guidance due to weaker sales, even after previously signaling consumer recovery in its key markets in East Europe.
• Keywords Studios shares fall as much as 6.4%, dropping to the lowest intraday level since April 2020, after the video-game industry services firm reported first-half adjusted pretax profit that missed estimates. Jefferies and Shore Capital noted that writer and actor strikes in the US were a headwind.

Stocks in Asia fluctuated and Chinese shares were back in the red. The MSCI Asia Pacific Index rose as much as 0.3%, with Toyota and TSMC the biggest boosts. Hong Kong shares erased losses following a report that distressed developer Country Garden got approval to extend repayment on its yuan bonds. Chinese gains triggered by news on Country Garden Holdings, which secured payment extension approval from its bondholders, were not enough to keep the positive sentiment going for long.  With Chinese equities still struggling even after a slew of recent market-support measures, regional investors await retail sales and factory data due Friday for signs of recovery in the economy. China’s underperformance has held the MSCI Asia gauge to a gain of 4% this year while the S&P 500 Index has climbed 17%. “In the near term, we need to see more policy actions and data turning more positive” in order to see more reallocations to Chinese equities, Nupur Gupta, a portfolio manager at Eastspring Investments, said in an interview with Bloomberg TV.

• Australia’s ASX 200 was lacklustre amid weakness in energy, tech and financials, with trade also contained after a somewhat mixed business survey and weaker consumer sentiment data.
• Japan’s Nikkei 225 gained amid strength in automakers and with SoftBank among the early leaders after its Arm unit IPO was oversubscribed by 10 times although price action was choppy and the index nearly pared all of its gains before revisiting session highs.
• Indian stocks opened higher, while South Korean shares fell amid losses in chip and EV battery names.

In FX, the Bloomberg Dollar Spot Index edged up 0.2%, recovering from a 0.7% slide – the biggest in two months – while the yen resumed its fall. The yuan was little changed after China’s central bank set its daily fixing rate at below 7.20 versus the dollar, another sign that it won’t tolerate excessive yuan weakness. The euro and the pound both traded around 0.3% lower against the dollar. UK wage growth held at a record high in the three months through July, a sign of persistent inflation that will keep pressure on the Bank of England to raise interest rates again. Investor confidence in Germany’s economy improved for a second month, while lingering at a level that will do little to dispel intensifying concerns over the country’s status as Europe’s growth laggard.

In rates, US Treasury yields remained within 1bp of Monday’s closing levels, with 10-year yields at 4.285% ahead of $35 billion reopening auction at 1pm New York time, as the front-end underperforms, slightly flattening 2s10s. . Demand was soft for Monday’s 3-year sale. Gilts outperformed after UK labor market data showed signs of cooling, while bunds trade marginally cheaper vs Treasuries. Dollar IG issuance slate contains a handful of names, including Slovenia 10Y benchmark, and another busy day is expected ahead of CPI and PPI due Wednesday and Thursday; eleven names priced almost $11b Monday, with at least one borrower electing to stand down. Today’s 10-year note auction is poised to draw the highest yield since 2007, as did the 3-year, which tailed by around 1bp; cycle concludes with $20b 30-year reopening Wednesday

In commodities, WTI trades within Monday’s range, adding 0.9% to trade near $88. Most base metals trade in the red; LME nickel falls 2.2%, underperforming peers. Spot gold falls roughly $3 to trade near $1,920/oz.

Bitcoin has rebounded from Monday’s weakness, rising back over $26L after tumbling to a $24.9k low rumors of forced FTX liquidations.

Looking to the quiet day ahead, data releases include UK employment data for July, the German ZEW survey for September, and in the US we also get the NFIB small business optimism index for August, which came in at 91.3, just below the 91.5 expected and down from 91.9. The SEC’s Gensler testifies at Senate Banking Committee at 10.00 a.m. New York time. Apple is expected to launch an India-assembled iPhone 15 with a USB-C port at 1.00 p.m. Arm bankers plan to stop taking orders for the IPO by Tuesday afternoon. The Google antitrust trial begins in Washington D.C. On Wednesday, US inflation data for August is out at 1.30 p.m. time along with mortgage applications data at noon.

Market Snapshot

• S&P 500 futures down 0.3% to 4,478.25
• MXAP up 0.1% to 162.00
• MXAPJ down 0.1% to 503.65
• Nikkei up 1.0% to 32,776.37
• Topix up 0.8% to 2,379.91
• Hang Seng Index down 0.4% to 18,025.89
• Shanghai Composite down 0.2% to 3,137.06
• Sensex little changed at 67,162.91
• Australia S&P/ASX 200 up 0.2% to 7,206.85
• Kospi down 0.8% to 2,536.58
• STOXX Europe 600 little changed at 456.50
• German 10Y yield little changed at 2.62%
• Euro down 0.3% to $1.0721
• Brent Futures up 0.5% to $91.06/bbl
• Gold spot down 0.1% to $1,921.00
• U.S. Dollar Index up 0.17% to 104.75

Top Overnight News

• Tech stocks were in retreat as Oracle Corp. posted slowing cloud sales, while the euro and pound weakened on concern the Europe faces a growing threat of stagflation.
• The European Central Bank’s decision is a cliffhanger for investors, but even participants in the meeting have no inkling of the likely outcome, according to people familiar with the matter.
• The new Cold War is a business opportunity, and Mexico looks better placed than almost any other country to seize it.
• The global economy is shifting toward a higher-for-longer period for interest rates, making the coming flurry of monetary decisions across the developed world pivotal in mapping out that plateau.
• Apple Inc.’s biggest day of the year has arrived, and the company is set to unveil updated versions of its iPhone, smartwatch and AirPods.
• Arm Holdings Ltd.’s initial public offering is already oversubscribed by 10 times and bankers plan to stop taking orders by Tuesday afternoon, according to people familiar with the matter.
• The luxury armored train carrying North Korean leader Kim Jong Un crossed into Russia ahead of a summit with President Vladimir Putin that the US said would focus on supplying weapons for Moscow’s war on Ukraine.

A more detailed look at global markets courtesy of Newsquawk

APAC stocks were mixed with the region tentative in the absence of any fresh macro catalysts and with participants bracing for the US CPI data due midweek. ASX 200 was lacklustre amid weakness in energy, tech and financials, with trade also contained after a somewhat mixed business survey and weaker consumer sentiment data. Nikkei 225 gained amid strength in automakers and with SoftBank among the early leaders after its Arm unit IPO was oversubscribed by 10 times although price action was choppy and the index nearly pared all of its gains before revisiti ng session highs. Hang Seng and Shanghai Comp traded ultimately flat with early downside cushioned following the PBoC’s liquidity effort and after Country Garden Holdings received approval to extend 6 onshore bond repayments by 3 years.

Top Asian News

• Country Garden Holdings (2007 HK) received approval to extend 6 onshore bond repayments by 3 years and it delayed the voting deadline on two bond payment extensions to Tuesday evening.
• New Zealand pre-election economic and fiscal update sees 2023/24 operating balance before gains and losses at NZD -11.4B (Budget forecast NZD -7.6bln), while it sees net at 43.6% of GDP (Budget forecast 43.1%) and expects to return to an OBEGAL surplus in 2026/2027 (Budget forecast of 2025/26).
• Several Chinese banks have reportedly said that regulators as of this year no longer require them to report the proportion of property loans/mortgages in total loans, via Xinhua; indicating a relaxation of restrictions on property financing.

European bourses are diverging slightly and generally struggling for direction with newsflow light ahead of the week’s risk events, Euro Stoxx 50 -0.3%. The breakdown has the DAX 40 lagging following after-market earnings from ORCL -9.1% in pre-market trade which in turn is weighing on heavyweight SAP -2.7%. As such, Tech is the laggard among European sectors while Telecom and Retail names see some relative outperformance. Stateside, futures are incrementally lower across the board with tech in focus given Oracle and as we await the AAPL, +0.2% pre-market, event; ES -0.2%, NQ -0.3%

Top European News

• BoE’s Breeden agrees with the MPC that the risks to inflation around the August forecasts are to the upside; expects inflation to be around the 2% target in two years. Sees balances risks to growth an unemployment in both directions. UK economic activity is weak. Breeden replaces Cunliffe on the MPC from November 1st.
• German Ifo residential construction survey (Aug): Crisis intensified in August, number of Co’s reporting cancelled projects at a new high. Click here for more detail.
• Germany’s ZEW says experts are even more pessimistic about the current economic situation in Germany vs August. More positive economic expectations for Germany are accompanied by significantly optimistic outlook for development on the international stock market, in part due to stable interest rates in EZ and US. Experts expect a further easing of interest rate policy in China.

FX

• Buck finds its feet after a rocky start to the week, DXY towards the top of 104.820-430 range.
• Sterling stumbles on weak UK labour market metrics alongside strong headline average earnings, Cable retreats from 1.2530 towards 1.2460
• Euro shrugs off mixed German ZEW survey as VDMA and Ifo deliver bleak outlook updates, EUR/USD closer to base of 1.0713-68 parameters
• Kiwi undermined by downgrades to NZ fiscal projections, NZD/USD heavy on 0.5900 handle
• Yen keeps afloat of 147.00 vs Greenback as a Fib supplements psychological support
• PBoC set USD/CNY mid-point at 7.1986 vs exp. 7.2859 (prev. 7.2148)

Fixed Income

• Bonds bid, but off peaks after solid bounces from Monday lows.
• Bunds topped out at 130.99 within a range down to 130.60.
• Gilts reached 94.97 from 94.27 and outperformed on the back of weak components in the UK jobs report.
• T-note straddled parity between 109-28/23 confines awaiting US CPI tomorrow
• DMO’s 2051 linker and Germany’s Schatz tap both well received ahead of USD 35bln 10 year US refunding leg

Commodities

• WTI and Brent futures are somewhat choppy within tight ranges amid quiet newsflow this European morning and ahead of key risk events including US CPI on Wednesday, the ECB decision on Thursday, and Chinese activity data on Friday.
• Dutch TTF remains supported with modest intraday gains as the Australian LNG strike and the extended maintenance at Norwegian fields keep prices underpinned.
• Spot gold is softer intraday amid the firmer Dollar, but the yellow metal remains within yesterday’s ranges and trades on either side of its 200 DMA (USD 1,920.03/oz today) after finding support at the 21 DMA (USD 1,916.41/oz today) yesterday.
• Base metals see modest softness amid the broader Dollar strength and cautious trade across stocks, although Singapore iron ore futures hit over five-month highs with analysts citing better-than-expected Chinese loans data and pre-holiday stocking ahead of the Chinese mid-Autumn festival at the end of the month.
• The Australia union said it is to oppose Chevron’s (CVX) intractable bargaining application and it wants industrial action to continue until it secures a union-negotiated deal at Australian LNG facilities, according to Reuters.
• Western Australia State Government says they have no current plans to engage with the Fair Work Commission in the Chevron (CVX) dispute, at this stage there has been no disruption to Western Australia’s domestic gas supply.
• Kazakhstan’s Karachaganak gas condensate field is undergoing maintenance on September 11-15th, output will be reduced by 27k tonnes, according to the Energy Minister.
• China is looking to buy LNG again in latest risk to the global gas market’s delicate balance, according to Bloomberg sources; Unipec released a tender to purchase more than a dozen shipments for this winter, in addition to deliveries through the end-2024.
• India imposed anti-dumping duty on some Chinese steel for five years.

Geopolitics

• US President Biden’s administration is close to approving long-range missiles including ATACMS or GMLRS both armed with cluster bombs for Ukraine, while these missiles would give Kyiv the ability to cause significant damage deeper within Russia-occupied territory, according to Reuters citing four US officials.
• US Secretary of State Blinken confirmed they exercised a waiver to allow the transfer of USD 6bln from South Korea to Qatar as part of a US-Iran prisoner swap, according to Reuters.
• North Korean leader Kim left Pyongyang on Sunday to visit Russia and his train arrived at Khasan Station in Russia’s far east, while the White House urged North Korea not to provide weapons to Russia.
• Kremlin spokesman said Russian President Putin and North Korean leader Kim will discuss bilateral ties and seek to build good, mutually beneficial relations, while a spokesman also stated that Russia is not interested in Washington’s warnings on Moscow’s contact with North Korea.
• No separate meeting between Russian and North Korea defence ministers planned, via Ifax citing Russia’s Peskov; Russian President Putin and North Korean Leader Kim to meet in the “coming days”.
• Russian President Putin says FSB captured Ukrainian saboteurs who sought to damage our nuclear power station; Saboteurs were instructed by British services; that is worrying and consequences could be serious.
• Taiwan’s Ministry of Defence 2023 National Defence Report stated that China’s military intimidation and intrusions are a new normal and China is using grey-zone tactics to change the status quo.

US Event Calendar

• 06:00: Aug. Small Business Optimism 91.3, est. 91.5, prior 91.9
• 10:00: Income, Poverty and Health Insurance report: 2022

DB’s Jim Reid concludes the overnight wrap

Welcome to my annual day of being seduced into buying a new iPhone that I don’t really need but desperately want. Apple launch their new product suite today which actually is a potential macro mover. It goes alongside the annual “buy a new golf driver I don’t really need” day usually in the Spring. However, I’m nearly 50 and I’ve only ever owned two cars, so allow me these extravagances.

As I type this on a dull old iPhone 14, markets are mostly awaiting tomorrow’s all-important US CPI print. As we wait, the most interesting moves over the last 24 hours have been the dollar putting in one of its worst daily performances in the past two months and Tesla climbing over 10% to be up +122% YTD but actually almost -10% YoY. Timing is everything. There was also a fresh sell-off for bonds as speculation about rate hikes and inflation gathered pace. But, on the other hand, risk assets did quite well, with the S&P 500 (+0.67%) recovering from last week’s declines, helped by tech and Tesla.

The bond sell-off carried on from the overnight moves before Monday’s Western market open after BoJ Governor Ueda’s comments over the weekend (that we discussed yesterday along with our revised BoJ call – link here) that then spread globally. In Japan, yields on 10yr JGBs had already closed at a post-2014 high of 0.70% (0.713% this morning) but we then saw yields on 10yr Treasuries up +2.5bps to 4.29%, which was their highest closing level in nearly 3 weeks. It was a similar story in Europe too, with yields on 10yr bunds (+2.9bps), OATs (+3.2bps) and BTPs (+4.8bps) all rising. Interestingly, markets are continuing to price in a growing likelihood that the ECB will deliver a hike on Thursday, with overnight index swaps now giving it a 41% probability, up from a low of 23% on 1 September, the day after the August euro area inflation print. The last time there was as much doubt about an ECB decision was back in March after SVB’s collapse, although back then the question was more between 25bps vs 50bps rather than no hike at all.

When it came to the bond sell-off, 10yr gilts (+4.9bps) saw the largest increase in yields, which followed comments from the BoE’s Mann, the most hawkish member of the MPC. She said that her preference was to tighten further, and that to “pause or to hold the policy rate lower for longer risks inflation becoming more deeply embedded”. And she added further that “holding rates constant at the current level risks enabling further inflation persistence”. For now, markets continue to price in a 79% likelihood of another BoE hike next week, which would take the policy rate up to 5.5%. As an aside, our rates strategist Francis Yared wrote a piece here suggesting that central banks should be erring on the side of doing too much rather than too little. It’s worth a read after the recent Table Mountain talk.

Those movements in the bond market occurred alongside some interesting shifts in the FX space. In particular, the Japanese Yen surged +0.93% against the US Dollar, which came as investors priced in a growing likelihood of a policy shift from the BoJ. This morning the Yen (-0.03%) is slightly lower. And there was also a significant appreciation in the Chinese Yuan (+0.74%), which followed comments from the People’s Bank of China, which said in a statement that FX market participants should “resolutely avoid behaviors that disturb market orders such as conducting speculative trades.”. The dollar index had been on course for its worst performance in nearly two months yesterday, though it ended the day a smidgen shy of this mark, down -0.50% (which marked its first decline in eight sessions). It is fairly flat this morning.

There wasn’t much data to speak of yesterday, but the New York Fed’s latest Survey of Consumer Expectations offered some interesting findings that added to signs of a weakening economy. For instance, the mean probability of losing one’s job over the next 12 months rose to 13.8% in August, which was the highest since April 2021. There were also signs of tightening credit availability, since the share saying that credit was “much harder” or “somewhat harder” to obtain credit than a year ago rose to 59.8%, which is the highest since the series began over a decade ago. In the meantime, the inflation expectations series were broadly steady, with 1yr inflation expectations ticking up a tenth to 3.6%. On the topic of risks to the US economy, our economists yesterday published a note updating their recession probability models. See here for more.

Despite the broader moves in markets, equities managed to put in a resilient performance yesterday, with the S&P 500 advancing +0.67%. That was supported by a large gain for Tesla (+10.09%), which was the top performer in the entire S&P yesterday on the back of a big broker upgrade. This helped drive the outperformance from the NASDAQ (+1.14%) and the FANG+ Index (+2.07%). To narrow down the tech rally even further we are going to start quoting the “Magnificent Seven” performance regularly in the EMR. They rose +2.71% yesterday buoyed by Tesla with only Nvidia down (-0.86%).

Talking of tech, last week, Bloomberg reported that Huawei and China’s top chipmaker, SMIC, have surprised the market by building an advanced 7nm (N+2) chip and installing it in the latest Huawei smartphone. This is the most recent development in what has become known as the US-China high tech decoupling. In their latest chartbook, my team members Marion Laboure and Cassidy Ainsworth-Grace explore how this tech decoupling began, the cost of a full global technological decoupling, and break down the ten technologies most at risk of decoupling. See here for more.

Back in Europe, the STOXX 600 (+0.34%), the DAX (+0.36%) and the FTSE 100 (+0.25%) all rose. Unlike the US, European tech stocks underperformed on a broadly positive day that saw 69% of the STOXX 600 constituents post a gain.

Asian equity markets are relatively quiet overnight. As I check my screens, the Nikkei (+0.61%) is outperforming the region with the CSI (+0.03%) and the Shanghai Composite (+0.04%) trading a tad higher while the KOSPI (-0.52%) is trading in negative territory. The Hang Seng (-0.01%) is flat but has come back from over -1% down near the open. Country Garden got creditor approval to extend the duration of 6 onshore bonds which has helped lift its shares by 10% and turn the property sector from around -2% to nearly +3%. S&P 500 (-0.12%) and NASDAQ 100 (-0.09%) futures are inching lower.

There wasn’t much other data of note yesterday, but the European Commission downgraded its growth forecast for the Euro Area in 2023 and 2024 by three-tenths in both years. That now leaves its forecasts at +0.8% this year and +1.3% in 2024. For inflation, it sees a slightly lower figure this year at +5.6%, down two-tenths, but the 2024 projection has been raised a tenth to +2.9%. Elsewhere, Italian industrial production fell by a larger-than-expected -0.7% in July (vs. -0.3% expected).

To the day ahead now, and data releases include UK employment data for July, the German ZEW survey for September, and in the US there’s the NFIB’s small business optimism index for August.

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

The Internal Revenue Service (IRS) has announced that, thanks to a new funding boost, it’s launching a “sweeping, historic” tax enforcement initiative using artificial intelligence and other cutting-edge technologies to catch tax evaders more effectively.

“The changes will be driven with the help of improved technology as well as Artificial Intelligence that will help IRS compliance teams better detect tax cheating, identify emerging compliance threats and improve case selection tools to avoid burdening taxpayers with needless ‘no-change’ audits,” Mr. Werfel said.

The new enforcement thrust is said to focus on higher-earning Americans and big corporations, with the IRS pledging not to increase audit rates for people earning less than $400,000 per year.

This has been an oft-repeated promise in the face of Republican assertions that working-class taxpayers would be subjected to tougher enforcement thanks to the tens of billions of dollars in additional IRS funding.

As part of the new enforcement crackdown, the tax agency said that it would prioritize cases involving taxpayers earning over $1 million but with recognized tax debt of more than $250,000.

To that end, complex computer algorithms have already been used by the agency to assist with identifying targets for tax enforcement.

The IRS said that “cutting-edge machine learning technology” has already played a role in helping the agency flag and open investigations into 75 of the largest partnerships in the United States, each with over $10 billion in assets on average.

“With the help of AI, the selection of these returns is the result of groundbreaking collaboration among experts in data science and tax enforcement, who have been working side-by-side to apply cutting-edge machine learning technology to identify potential compliance risk in the areas of partnership tax, general income tax and accounting, and international tax in a taxpayer segment that historically has been subject to limited examination coverage,” the IRS said in the announcement.

The Inflation Reduction Act that President Joe Biden signed into law in 2022 initially included around $80 billion to expand the IRS’ budget over ten years, drawing Republican ire that some of that money would go to hiring an “army” of tax enforcers who would reach for low-hanging fruit and target ordinary Americans rather than wealthier, more financially sophisticated taxpayers who are trickier to audit.

That $80 billion in additional IRS funding has since been pared down to around $60 billion due to the debt-ceiling deal struck between President Biden and House Majority Leader Kevin McCarthy (R-Calif.), which clawed back $10 billion in each of calendar years 2024 and 2025 from the tax agency’s appropriations.

Mr. Werfel said in a memo to Treasury Secretary Janet Yellen that part of what is now a $60 billion cash infusion would buy artificial intelligence tools and that “technology and data advances will allow us to focus enforcement on taxpayers trying to avoid taxes, rather than taxpayers trying to pay what they owe.”

In the plan, the IRS focused mostly on the customer service aspects of the technology boost, pledging to improve the taxpayer experience by introducing chatbots, online portals, and electronic notice responses.

However, the agency also said in the plan that it expects its technology-driven enforcement to boost tax collections and revenue for government programs.

That plan is now fast becoming a reality, according to Mr. Werfel’s latest remarks on Sept. 8.

“The nation relies on the IRS to collect funding for every critical government mission—from keeping our skies safe, our food safe and our homeland safe,” Mr. Werfel said.

“It’s critical that the agency addresses fundamental gaps in tax compliance that have grown during the last decade,” he added.

According to IRS estimates, taxpayers in America pay around 85 percent of the total taxes they owe, with the difference between what is owed and what is paid known as the tax gap. Between the years 2014 and 2016, the IRS estimated that the annual tax gap was around $496 billion.

“We need to make sure digital assets are not used to hide taxable income, and the proposed regulations are designed to provide a clearer line of sight into activities by high-income people as well as others using them,” Mr. Werfel said in an Aug. 25 press release.

The IRS said Friday that initial reviews of taxpayer compliance in the digital currency sector have raised concerns, with a potential non-compliance rate as high as 75 percent among taxpayers identified through record production from digital currency exchanges.

Accordingly, the agency is looking to increase the number of digital asset cases it develops for compliance work going forward.

Also, the IRS is turning its attention towards FBAR violations, especially among high-income taxpayers.

Under current regulations, U.S. individuals with a financial interest in foreign financial accounts exceeding $10,000 must file an FBAR to disclose their holdings and related taxes.

Recent IRS analysis of multi-year filing patterns has identified hundreds of potential FBAR non-filers, many of whom maintain account balances averaging over $1.4 million.

The IRS said it has also identified a concerning trend in the construction industry, where some contractors make payments to apparent subcontractors through “shell” companies that lack legitimate business relationships.

To tackle this issue, the IRS plans to expand its scrutiny in this area with a combination of civil audits and criminal investigations.

The IRS has said earlier it plans to hire 20,000 people over the next two years, with around one-third of them earmarked for tax enforcement

MGM Resorts International was hit with a “cybersecurity issue” Monday that affected gaming, entertainment, and hospitality properties nationwide.

“Promptly after detecting the issue, we quickly began an investigation with assistance from leading external cybersecurity experts. We also notified law enforcement and took prompt action to protect our systems and data, including shutting down certain system,” according to a post on the company’s X account on Monday morning. 

MGM shared limited information about the cyberattack, including when it began and what systems were affected. However, X users at MGM properties posted videos online showing gambling machines were down. 

@LasVegasLocally Everything down still. No ATMs. No Withdrawals from Cashier. Now all the slots seem to be going down pic.twitter.com/iZtQjcGohp

— connor o’brien (@ob1989) September 11, 2023

Scene in MGM Grand according to a TikTok user who said slots machines down and casino floor empty after cyber attack. She also says staff had to make and distribute physical room keys and an admin error caused her to walk in on another guest. Source: https://t.co/etNWW0S49y pic.twitter.com/ZgYkv1fD58

— Joe Tidy (@joetidy) September 12, 2023

We went to a few MGM properties today to find several slot machines down due to the cyber security breach@8NewsNow pic.twitter.com/NRsW0fT6zz

— Victoria Saha (@VictoriaSaha) September 11, 2023

Las Vegas-based KTNV Channel 13 said, “The outages are leading to guests not being able to charge anything to their rooms, make reservations, or use their digital room keys.” 

It was unclear how many thousands of rooms in Las Vegas, with properties including Aria, Bellagio, Mandalay Bay, and MGM Grand Las Vegas, were affected by the cyber disruptions. 

MGM RESORTS’ COMPUTER 💻 SYSTEMS HACKED!

“MGM Resorts recently identified a cybersecurity issue affecting some of the company’s systems”

-Casino & hotel computer systems were shut down

-Guests locked out of hotel rooms

– Casino machines malfunctioned

[🎥: bryanhorwath] https://t.co/vSt79bbAfi pic.twitter.com/SARGGBhJaT

— Biasedly Unbiased (@DiRealDan) September 11, 2023

KTNV said the FBI’s field office in Las Vegas on late Monday had “started to look into the situation.” 

On Tuesday morning, MGM released a new statement indicating that “Our resorts, including dining, entertainment and gaming are currently operational.” The statement continued, “Our guests remain able to access their hotel rooms and our Front Desk staff is ready to assist our guests as needed.” 

… but not websites. 

But not all systems are up, and many are reporting MGM’s App is still down as of early Tuesday. Customers asked if their data had been exposed, while others called this incident an “absolute disaster.” 

“How much ransom did you end up paying?” one X user asked MGM.