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‘Sound Of Freedom’ Shatters Expectations, Hits $100 Million Milestone At Box Office

‘Sound Of Freedom’ Shatters Expectations, Hits $100 Million Milestone At Box Office

Despite the mounting hit pieces from BloombergRolling Stone, and other corporate media outlets about Jim Caviezel’s anti-child-trafficking film “Sound of Freedom,” Americans are still flocking to movie theaters nationwide as it appears the film has become one of the summer’s biggest blockbusters so far. 

The low-budgeted, faith-inspired film is based on the life of Tim Ballard, the founder of Operation Underground Railroad – an organization committed to rescuing children from sex trafficking – achieved a significant milestone on Wednesday, taking in more than $100 million from US theaters since its July 4 debut. 

Last weekend, Sound of Freedom finished second place behind Paramount Pictures’ new Mission: Impossible while outpacing Disney’s latest Indiana Jones. 

Sound of Freedom “is the first indie release in post-pandemic times to surpass $100 million at the domestic box office,” Variety said. It noted the film currently “stands as the 16th-highest-grossing North American release of the year.” 

“‘Sound of Freedom’ has become the people’s movie,” said Jared Geesey, SVP of global distribution at Angel Studios. 

Geesey continued, “This is the opposite of the top-down system developed by Hollywood gatekeepers. We are empowering people to be part of choosing, funding, and sharing stories that amplify light and impact culture.”

But as we noted in the beginning, many mainstream media outlets have unleashed a crusade against the film to demonize it and loop it in with ‘conspiracy theorists’ despite Angel Studios saying this “powerful film is based on a true story” of “Tim Ballard, a former Homeland Security agent, as he battles against human trafficking. His relentless pursuit of justice exposes the dark underbelly of this global crime, leaving an indelible impact on the fight for freedom.” 

The film’s release comes as disgraced financier Jeffrey Epstein’s sex trafficking operation is still fresh in the minds of millions of Americans. Just last week, the US Virgin Islands said in a court filing that it seeks nearly $200 million from JPMorgan Chase for failing to detect and report Epstein’s sex trafficking operation. 

Regardless of the mainstream media’s constant bashing of the film, Americans remain undeterred, continuing to fill theater seats. 

The public consciousness is shifting, with this awareness now entering the mainstream. The matrix that legacy media has controlled for decades is ‘glitching.’ 

Tyler Durden
Fri, 07/21/2023 – 12:45

“They Literally Become Missiles”: Fiery Explosion Near Phoenix Airport Damages 30 Cars

“They Literally Become Missiles”: Fiery Explosion Near Phoenix Airport Damages 30 Cars

A propane business near the Phoenix Sky Harbor Airport went up in flames Thursday evening, resulting in a fiery explosion that damaged at least 30 cars and caused propane tanks to fly through the air.

At approximately 5pm, fire crews were dispatched to Bill’s Propane Service near the airport after Arizona Family reported seeing a fire. After they arrived, firefighters found the business engulfed in massive flames, while propane tanks flew through the air.

“They literally become missiles. Very dangerous situation,” said Phoenix Fire Capt. Rob McDade,.

Fire crews reported hundreds of propane tanks throughout the immediate area – some of which landed 500 yards from “ground zero,” KTAR reports.

After extinguishing a structure fire at a nearby scrapyard, crews let the rest of the propane tanks off-gas.

“Crews were able to extinguish that fire with the fire trucks on scene. We have over 150 firefighters at this incident this time with close to 75 to 80 fire trucks working to put this out,” said Captain Scott Douglas, the department spokesman.

Tyler Durden
Fri, 07/21/2023 – 12:25

Pfizer Plant Damaged In Tornado Could Worsen Nationwide Drug Shortage Crisis

Pfizer Plant Damaged In Tornado Could Worsen Nationwide Drug Shortage Crisis

A tornado caused extensive damage at a large Pfizer pharmaceutical plant in North Carolina on Wednesday, threatening critical supplies of medicines nationwide at a time of worsening drug shortages

On Thursday, Food and Drug Administration Commissioner Dr. Robert Califf tweeted the FDA is “aware of the storm damage at Pfizer’s NC plant & is grateful employees there are unharmed.” 

“I spoke w/Pfizer’s CEO this afternoon to understand the extent of the damage & any potential impact to the drug supply & to offer our support. We’re following the situation closely,” Califf said. 

Not much is known in the public domain if the destruction of Pfizer’s Rocky Mount plant, one of the largest sterile injectable facilities in the world, with more than 1.4 million square feet of manufacturing space on 250 acres, will disrupt medical supply chains. 

However, Bloomberg reports healthcare service providers Premier Inc. and Vizient Inc. have already asked other drugmakers to increase production. Vizient has also asked distributors to manage their drug inventory carefully. Before the tornado hit the plant, there were drug shortages across the US, including ADHD drugs, antibiotics, and cancer treatments. Recall this note we penned in June, “Drug And Food Shortages Are Here, And They Will Get A Lot Worse.” 

In what could be a sign of future supply chain disruptions, a White House spokesperson said the FDA “is monitoring the situation closely as it evolves and is working with the company to understand the extent of the damage and any potential impact to the nation’s drug supply.”

Pfizer’s website says the plant produces a wide range of products, “including anesthesia, analgesia, therapeutics, anti-infectives and neuromuscular blockers.” It said, “More than 400 million units leaving the Rocky Mount site annually help treat patients around the world.” 

Erin Fox, who runs the University of Utah’s drug information service, has warned that the scarcity of drugs in the US has reached a nine-year peak. Currently, there are 309 drugs medicines in short supply, including 177 sterile injectables. 

Using the News Trend function on the Terminal, news stories containing “drug shortage” spiked during Covid and have surged since late 2022. 

Due to a lack of transparency from Pfizer, there are still too many unknowns of what drugs might be in short supply following the tornado demolishing its Rocky Mount facility. 

 

 

Tyler Durden
Fri, 07/21/2023 – 12:05

The Yield Curve Is Now In The Deepest Inversion Since 1981

The Yield Curve Is Now In The Deepest Inversion Since 1981

Authored by Ryan McMaken via The Mises Institute,

In today’s episode of Radio Rothbard, Mark Thornton and I both mentioned the yield curve’s inversion as an alarming indicator of a significant recession in the not-too-distant future. 

For more on why an inversion of the yield curve predicts recession can be found here and here

Thornton mentioned that the most recent inversion of the yield curve is no small or minor inversion, but is an inversion deep into negative territory. This, Thornton notes, gives us good reason to expect a serious economic event, whether a recession or even a full-blown economic crisis. 

How big is big when it comes to the latest inversion?

To measure the magnitude of the inversion, a time series of the gap between the yields on a long-term and a short-term is calculated. The most common-used measure of this is the gap between the 10-year Treasury and the 3-month Treasury.  If we graph this difference between the 10-year and the 3-month, we can see that we’re now experiencing the largest inversion in more than 40 years:  

In June, the average gap was -1.67. That’s far deeper into negative territory than anything we’ve seen since 1981, 42 years ago. As we noted on the podcast, these sorts of inversions have reliably preceded recessions for several decades.

As we can see in this graph that takes a longer time frame going back 50 years, the recession of the 1970s and the 1980 recession and the severe 1981-1982 recession were all preceded by a yield curve inversion.

Moreover, to find an inversion deeper as the current one, we have to go back to 1980. 

The only period showing a larger inversion that what we saw during the 1970s was in the lead up to the Great Depression in 1928 and 1929. 

In response to this, some people might say “if the yield curve is so inverted, where is the mass unemployment and recession?”

Well, there is a generally a sizable lag between the yield curve inverting and the onset of recession.

For example, the yield curve inverted in 1989, but the 1990 recession did not begin until 13 months later. Similarly, the yield curve inverted in August 2006, but the Great Recession did not begin until December 2007, 16 months later. The yield curve again inverted in May 2019, and it is extremely likely there would have been a recession in late 2020 had the Federal Reserve not engaged in massive amounts of monetary pumping throughout the year to blow a series of bubbles designed to cover up the economic effects of forced lockdowns on the economy. 

Now, the yield curve has been inverted since November 2022, but only seven months have passed since then. Experience suggests we could be looking at at least another six months before the effects are clear. 

Tyler Durden
Fri, 07/21/2023 – 11:45

Ahead Of Today’s $2.4 Trillion “Record” OpEx, VIX Is The Most Underpriced Since Q3 2008

Ahead Of Today’s $2.4 Trillion “Record” OpEx, VIX Is The Most Underpriced Since Q3 2008

As we previewed in far more detail yesterday, today is the largest July options expiration in history, driven by continued growth in index and ETF options volumes.

According to Goldman estimates, over $2.3 trillion of notional options exposure will expire including $500 billion notional of single stock options at the close, and $1 trillion in index options at the open.

And since the market has rallied through significant overwrites for the second month in a row (+200 handles between May and Jun expiry // +150 handles between Jun and July expiry), following this morning’s index expiration, Goldman’s vol desk notes that dealers will be left “long right tails and relatively clean (which might as well be short) left tails.” Translation: exposure is very call-sided.

While superficially that means that the VIX will likely get whacked, it’s not immediately clear that we will see another VIX bleed: according to Goldman’s Gillian Hood, the average realized move this earnings season has been +/-4.6% vs a +/-3.6% implied move 5 days prior to earnings: as Hood notes, “this 1% difference is quite large” and “it’s rare to see the average realized move outperform the implied move by this much, or at all.

In fact, the last time we saw stocks meaningfully outperform their implied moves was Q3 2008, suggesting that implied volatility (i.e. VIX) is extremely underpriced.

Another way to visualize it: the lower the implied less realized, the greater the realized stock moves versus implied. i.e., market is prone to downside shocks.

As Goldman concludes, while it’s still early in the earnings season (only ~50 SPX names have reported thus far), this is a great testament to the “vol is too low” sentiment.

Tyler Durden
Fri, 07/21/2023 – 09:23

Coutts Apologises To Nigel Farage After Bank Account Closure

Coutts Apologises To Nigel Farage After Bank Account Closure

Authored by Owen Evans via The Epoch Times,

Natwest’s chief executive, owner of the prestigious bank Coutts, has apologised to Nigel Farage and has promised a full review of the bank’s processes after a dossier said that his views “were at odds with our position as an inclusive organisation.”

On Thursday, Alison Rose, chief executive of NatWest Group, of which Coutts is part of the wealth management division, wrote to the former Brexit Party leader Mr. Farage to apologise for “deeply inappropriate comments” made about him in official documents.

Mrs. Rose did not give him the option of having his original Coutts account back.

In July, Mr. Farage claimed the prestigious bank he has been with for over 40 years has closed his account with “no explanation.”

He said that he believe that he had been persecuted for his views and that he may have been deemed a politically exposed person (PEP), a term used for someone who, through their prominent position or influence, is more susceptible to being involved in bribery or corruption.

Political and Personal Views

The documents published in full in the Daily Mail contained a 40-page memo by the bank’s Wealth Reputational Risk Committee.

The document, cited that he reshared a tweet by the comedian Ricky Gervais mocking transgenderism, which the document called “a transphobic comedy sketch” as well as his friendship with tennis player Novak Djokovic, who is opposed to Covid vaccinations. It also said that Mr. Farage is “xenophobic and racist.”

In document cited Brexit 86 times, Russia 144 times and PEP ten times. His support for former President Donald Trump as well as his views on immigration, net zero and the COVID-19 vaccine are listed as reasons to exit him.

Mrs. Rose said:

Both freedom of expression and access to banking are fundamental to our society. It is not our policy to exit a customer on the basis of legally held political and personal views. Decisions to close an account are not taken lightly and involve a number of factors including commercial viability, reputational considerations, and legal and regulatory requirements.

“I fully understand the public concern that the processes for bank account closure are not sufficiently transparent. Customers have a right to expect their bank to make consistent decisions against publicly available criteria. Those decisions should also be communicated clearly and openly with them, within the constraints imposed by the law.

“To achieve this, wider change is required. But the experience of clients highlighted in recent days has shown we need to act now to put our processes under scrutiny.

“The deeply inappropriate comments made in the now published papers prepared for the Wealth Reputation Risk Committee, do not reflect the view of the bank. No individual should have to read such comments and I apologise to Mr. Farage for this. I have written to him today to make that apology and reiterate our offer of alternative banking arrangements.”

Lobbying

Toby Young from Free Speech Union told The Epoch Times by email that after his organisation was de-banked by PayPal last year, they started talking to City and Treasury Minister Andrew Griffith about what “could be done to stop this happening to other people.”

“He invited us to submit evidence to the Treasury about how widespread this form of censorship is. We duly did that, citing numerous cases, and the upshot is that the Payment Services Regulations are now being tightened up to stop banks and payment processors from closing people’s accounts for exercising their right to lawful free speech,” said Mr. Young.

He added that the government “deserves a lot of credit for acting quickly to stamp out this sinister new form of cancel culture.”

“We kicked up a stink about it, the government listened and I’m happy to say it has done something about it,” said Mr. Young.

Conservative MP Sally-Ann Hart told The Epoch Times by email that “this is an extremely worrying development that needs to stop now.”

She said she was “appalled to see wider financial services being denied to individuals exercising their right to lawful free speech.”

Last year, after the Free Speech Union’s dealings with PayPal, Mrs. Hart had floated a potential amendment to the Financial Services and Markets Bill, which would have made it illegal for a financial services provider to withhold or withdraw service from a customer if it was related to their freedom of expression. She removed it due to the issue needing to be looked at by the British government in more detail.

On Mr. Farage’s case, she said:

“We are not a totalitarian country that silences legitimate views, however much we might disagree with them, nor should we tolerate attempts by any individual or organisation to silence them.”

“I am aware that the Chancellor will be setting out plans soon to toughen up the rules regarding account closures. This is absolutely necessary to protect freedom of expression,” she added.

Cracking Down

On Wednesday, the government announced that it is in the process of cracking down on financial services being denied to anyone exercising their right to lawful free speech.

During Prime Minister’s questions, Rishi Sunak said it “wouldn’t be right” for financial services to be denied for lawful free speech.

MP Jacob Rees-Mogg called for an inquiry.

Mr. Rees-Mogg told the Commons: “Does (the prime minister) share my unease that a bank that has the Government as its largest shareholder should close the account of a senior opposition politician?

“Will he use the Government’s shareholding to ensure that there is an inquiry into these circumstances?”

Mr. Sunak said: “It wouldn’t be right if financial services were being denied to anyone exercising their right to lawful free speech.

“Our new Financial Services and Markets Act puts in place new measures to ensure that politically exposed persons are being treated in an appropriate and proportionate manner.

“Having consulted on the Payment Services Regulations, we are in the process of cracking down on this practice by tightening the rules around account closures.

“But, in the meantime, any individual can complain to the Financial Ombudsman Service, which has the power to direct a bank to reopen their account.”

The Epoch Times contacted the Treasury for comment.

Tyler Durden
Fri, 07/21/2023 – 09:05

Bud Light’s Popularity At Bars And Restaurants Is “Almost Non-Existent”

Bud Light’s Popularity At Bars And Restaurants Is “Almost Non-Existent”

Union, a data-driven hospitality engagement platform with a point-of-sales system in bars and restaurants nationwide, published a new report showing Bud Light’s “fall from No. 1 was swift following the marketing controversy that spurred a nationwide boycott.” 

“Sales of what was once America’s best-selling beer dropped 2.6 points from 11.3 percent dollar sales share to 8.73 percent at Union’s network of thousands of high-volume venues in the first week of the boycott alone,” the report said. 

It continued, “That sales spiral continued throughout Q2 at Union venues as the boycott took a stronghold across the US, dropping 34 percent in sales share compared to the prior year, since the fallout began on April 1.” 

On April 2, we were among the first to point out Did Bud Light Go ‘Woke’ With Trans-TikTok Star? Boycott Calls Intensify… And it was only weeks that high-frequency data from bars, restaurants, and distributors that Bud Light’s marketing partnership with transgender influencer Dylan Mulvaney on TikTok led to one of the largest boycotts by consumers of a product in recent memory. From neighborhood bars to high-end restaurants, even on golf courses, the message with many beer drinkers was consistent: Bud Light’s too ‘woke.’ 

“Our on-premise ordering data shows that domestic beer brands are reaping the most benefits from the Bud Light fallout,” said Layne Cox, chief marketing officer at Union. 

Cox said, “Modelo may have unseated Bud Light at retail, but at high-volume bars and restaurants, it’s a different story.”

We have noted that Bud Light was dethroned last month as the number-one-selling beer in America by Constellation Brands’ Modelo. However, Cox said data from their POS machines “reveals that guests are now spending more on Miller Lite than Bud Light in on-premise accounts.” 

POS data shows Miller Lite’s sales are up 21% in the three months ending June 30, while Bud Light’s sales tumbled 34%. 

Miller Lite, Michelob Ultra, and Coors Light are now the top three selling beers on Union’s POS machines. AB InBev owns not just Bud Light but also Michelob Ultra, which many beer drinkers probably don’t realize of the parent company’s extensive beer portfolio. 

“With the boycott still making headlines three months after the initial incident and Bud Light sales at Union venues still struggling, we believe it will take a while for the brand to see a full rebound,” said Cox.

POS data also showed North and South Carolina experienced the most significant declines in Bud Light sales while Miller Lite demand surged. 

Clayton Dukes, general manager of the Blind Tiger Pub in Charleston, South Carolina, which uses Union’s POS, told the data firm that Bud Light sales became “almost non-existent” since the boycott erupted in early April. 

Dukes continued, “At first I thought this might blow over pretty quick, but I think it is pretty apparent that this isn’t going anywhere for a long time.” 

In a separate report, Deutsche Bank analyst Mitch Collett estimated Bud Light risks a permanent loss of nearly 25% of its business. 

Tyler Durden
Fri, 07/21/2023 – 08:45

“Once You Start Censoring, You’re On Your Way To Dystopia And Totalitarianism”, RFK Jr. Wrecks House Committee

“Once You Start Censoring, You’re On Your Way To Dystopia And Totalitarianism”, RFK Jr. Wrecks House Committee

Authored by Michael Nevradakis,

In a hearing marred by contentious interruptions and attempts by House Democrats to remove him as a witness, Robert F. Kennedy Jr., CHD chairman on leave from Children’s Health Defense (CHD) testified before a U.S. House hearing organized by Subcommittee on the Weaponization of the Federal Government.

The subcommittee, operating within the House Judiciary Committee, said today’s hearing was intended to “examine the federal government’s role in censoring Americans,” “Big Tech’s collusion with out-of-control government agencies to silence speech” and the ongoing Missouri v. Biden lawsuit alleging government censorship.

Other witnesses who testified today included D. John Sauer, special assistant attorney general for Louisiana, an attorney for the plaintiffs in the Missouri v. Biden case, Breitbart journalist Emma-Jo Morris, who in 2020 first revealed the now-infamous “Hunter Biden laptop story,” and Maya Wiley, president and CEO of The Leadership Conference on Civil and Human Rights.

Government censorship and alleged First Amendment violations on the part of the federal government featured prominently in today’s hearing. “We need to be able to talk,” Kennedy told the committee. “And, the First Amendment was not written for easy speech. It was written for the speech that nobody likes you for.”

Morris testified about the threats to a free press, saying:

“What this relationship between the U.S,government officials and American corporations represent is, is an unprecedented push to undermine the First Amendment, the right to think, write, read, say whatever we want, and how we respond will determine whether we see a free press as inalienable or as optional.”

In his testimony, Sauer referred to the July 4 ruling by Judge Terry Doughty of the U.S. District Court for the Western District of Louisiana, which barred the White House and federal agencies from censoring social media posts. He said:

“The government likes to claim that social media platforms acting on their own would apply their policies and censor all this content. … The Louisiana Court found that the platforms would not have suppressed this speech, but for the fact that the federal officials were pushing for it.”

Calling the scope and reach of the federal censorship efforts “staggering,” Sauer added:

“Millions of social media posts and speakers [were censored] all across America. It affects virtually every American who reads, listens, engages, or posts on social media about great disputed political and social questions that federal censors have stuck their fingers into …. Federal officials’ censorship efforts are in full swing and they’re expanding to new frontiers.”

‘Attempt to censor a censorship hearing’

Efforts by Democrats to prevent Kennedy from testifying began earlier this week. On Monday, Reps. Dan Goldman (D-N.Y.), Debbie Wasserman Schultz (D-Fla.) and Judy Chu (D-Calif.) sent a letter signed by 102 House Democrats to House Republican leadership, requesting they “rescind Robert F. Kennedy Jr.’s invitation to testify.”

According to the letter:

“Mr. Kennedy has repeatedly attacked two groups that have long been subject to deadly discrimination. His own credibility as a witness is nonexistent. Allowing Mr. Kennedy to serve as a witness before the Select Subcommittee only services [sic] to legitimize his antisemitic and anti-Asian views,” the letter stated.

House Republican leadership rejected the request prior to the hearing. “The hearing that we have this week is about censorship,” House Speaker Kevin McCarthy (R-Calif.) said. “I don’t think censoring somebody is actually the answer here.”

Kennedy, in response to the accusations levied against him, set aside his prepared testimony for the hearing. Referencing the letter, he told the committee, “The 102 people that signed this [is] itself evidence of the problem that this hearing was convened to address. This is an attempt to censor a censorship hearing.”

Comparing the efforts to the McCarthyism of the 1950s, Kennedy said he is being censored “through smears, through misinterpretations of what I’ve said, through lies, through association,” adding that “While I’m under oath, in my entire life I have never uttered a phrase that was either racist or anti-Semitic.”

Rep. Thomas Massey (R-Ky.), in an impromptu interview after the hearing, said:

“The irony and cognitive dissonance from the other side of the aisle, it’s deafening. You could cut it with a knife. They are at the same time denying that censorship is occurring, but suggesting that there’s more material that needs to be censored.”

Still, efforts to stop Kennedy’s testimony continued throughout the hearing. Wasserman Schultz requested a point of order, claiming that Kennedy was in violation of House Rule 11, Clause 2, because he “repeatedly made despicable anti-Semitic and anti-Asian comments.”

Wasserman said the rule bars testimony that “may tend to defame, degrade or incriminate any person.”

Following a motion by Massey to table the point of order, a roll-call vote was held, which passed 10-8 along party lines, enabling Kennedy’s testimony to continue.

But later in the hearing, Wasserman Schultz persisted, stating that “anti-Semitic incidents … are at the highest level in the United States since 1970. They have nearly tripled in the last six years [yet] you gave Mr. Kennedy a megaphone today.”

When Kennedy attempted to respond to Wasserman Schultz’s accusations, pointing out that he was describing a study funded by the National Institutes of Health and conducted by the Cleveland Clinic, she interrupted, saying she was “reclaiming” her allocated time to speak.

Republican members of the subcommittee later approved a motion to add the Cleveland Clinic study to the record. The study confirmed Kennedy’s claims about the SARS-CoV-2 virus, finding “unique genetic susceptibility across different populations in ACE2 and TMPRSS2,” particularly for the “African/African-American population.” These claims were the basis for labeling Kennedy “racist.”

In his opening statement, Jordan noted that the Biden administration’s censorship efforts began just hours after Biden took office in January 2021.

The first example cited by Jordan concerned White House efforts to censor a tweet by Kennedy earlier that month about the then-recent death of baseball legend Hank Aaron, less than two weeks after he publicly received the COVID-19 vaccine.

“What’s interesting about the email that the White House sent to Twitter,” Jordan said, “is the subject line says ‘Flagging Hank Aaron misinformation,’” referring to information released as part of the “Twitter files” in January.

“‘Misinformation’ is when you don’t have the facts right — you’re saying things that aren’t true,” Jordan said. “But when you look at Mr. Kennedy’s tweet, there was nothing in there that was factually inaccurate. And yet, the White House, on the third day [of the Biden administration], were trying to censor Mr. Kennedy.”

“The irony here is they are trying to censor the guy who’s actually their Democrat primary opponent,” Jordan added, referencing Kennedy’s presidential campaign.

Rep. Chip Roy (R-Texas) of the Judiciary Committee echoed Jordan’s statements. “It is for this that Mr. Kennedy finds himself receiving the scorn of both the political left and right, because if one dares challenge the orthodoxy of the powers that be, then one is their enemy.”

In her opening statement, Rep. Stacey Plaskett (D-V.I.), ranking member of the subcommittee, went on a prolonged attack of Kennedy and the subcommittee’s work.

“Why are we here? … Why are you having this hearing? What does this have to do with inflation? What does this have to do with the cost of living? What does this have to do with the everyday lives of Americans?” Plaskett asked the Republican members.

Referencing Kennedy’s presence as a witness, she asked “Why would the Republican leadership in the committee majority give a hearing and a platform to the witnesses, specifically to Mr. Kennedy, a man who has recently claimed that COVID-19 is targeted to attack Caucasians and Black people?”

Plaskett later claimed that the committee — and those questioning establishment narratives — were seeking to “bully” Big Tech.

“It’s clear that one aim of this investigation is to bully tech and media companies into turning a blind eye,” Plaskett said.

“When extremist conspiracies” are espoused, she said, such speech “violate[s] very basic terms of service about deliberate disinformation and promoting violence.”

Plaskett said the subcommittee’s investigation was intended to “force social media companies to promote conspiracy theories because they think that’s the only way their candidate can win the 2024 election,” via “bully[ing] experts … on disinformation” and giving “expression to the most vile sorts of speech.”

Plaskett also appeared to attack free speech more broadly.

“Many of my Republican colleagues across the aisle will rush to cover that they have Mr. Kennedy here because they want to protect his free speech, that they do not believe in American censorship,” Plaskett said. “This is not the kind of free speech that I know of, the free speech that is protected by the constitution’s First Amendment.”

“Free speech is not absolute,” she added. “The Supreme Court has stated [that] hateful, abusive rhetoric does not need to be promoted in the halls of the People’s House. ”

She also claimed Republicans were seeking to promote “quasi-science,” in reference to Kennedy’s views about COVID-19 vaccines and other topics.

“Even knowing what they know about Mr. Kennedy’s hateful, evidence-free rhetoric,” Plaskett claimed, “Speaker McCarthy and Jim Jordan affirmatively chose to give this a platform. They intentionally chose to elevate this rhetoric to give these harmful, dangerous views a platform in the halls of the United States Congress.”

Plaskett later claimed that Kennedy’s January 2021 tweet on Hank Aaron “has not been taken down,” and attacked CHD, implying Kennedy’s campaign receives funding from the organization and claiming it is “responsible for a majority of the false information about vaccines out there.”

Discovery in the Missouri v. Biden lawsuit revealed White House emails to Twitter requesting Kennedy’s tweet about Aaron be “removed ASAP.”

In her testimony, Wiley connected Kennedy and his alleged statements to violent race-based and religion-based attacks, alleging his supposed remarks “served to drive hate and bias … including violent incidents.”

Kennedy, repeatedly responded to claims of “anti-Semitism” and “racism,” stating that “What you have stated and tried to associate me with through guilt by association is simply inaccurate. All the things that I’m accused of right now by you and in this letter are distortions, misrepresentations.”

“These are defamations and malignancies that are used to censor me to prevent people from listening to the actual things that I’m saying,” Kennedy said.

“And I think … that we should have a real conversation rather than an exchange of ad hominem attacks.”

Kennedy called for unity instead of divisive rhetoric.

“We have to stop trying to destroy each other, to marginalize, to vilify, to gaslight each other. We have to find that place inside of ourselves, of a light, of empathy, of compassion. And above all, we need to elevate the Constitution of the United States, which was written for hard times,” he said.

Kennedy: ‘malinformation is information that is true but is inconvenient’

Responding to Plaskett’s claims that his Hank Aaron tweet was never censored, Kennedy said it had been, and that a new term, “malinformation,” was created soon after the Biden administration came into office, “to censor people like me.”

Kennedy said that his Instagram account had been banned despite containing “no misinformation,” but only content that “was cited and sourced,” including from “peer-reviewed publications or government databases.” Yet, he was “removed something called ‘malinformation.’”

He defined “malinformation” as “information that is true but is inconvenient to the government that they don’t want people to hear.”

Kennedy said this was “information that Facebook and Twitter and other social media sites understood was true, but that the White House and other federal agencies wanted censored anyway for political reasons, because it challenged official orthodoxies.”

Noting though that “it became more difficult for people to censor me outright” after he announced his presidential campaign, Kennedy said he is now “subject to this new form of censorship, which is called ‘targeted propaganda,’ where people apply pejoratives like ‘anti-vax’ … to silence me.”

As an example, Kennedy cited his inclusion in the so-called “Disinformation Dozen,” produced by the Center for Combating Digital Hate (CCDH). Stating that CCDH is “funded by dark money,” he said the White House based its request to social media companies to censor accounts on this list, and that those platforms complied.

Kennedy referenced further examples of censorship when responding to questions from the subcommittee’s members. Roy referenced a 2016 meeting Kennedy had with Anthony Fauci and other federal public health officials, where he requested evidence of any vaccine having undergone a placebo-controlled trial safety test prior to licensing.

According to Kennedy, Fauci and other officials “made a show” of searching for such information, then said it would be sent to him.

When it wasn’t, CHD filed a Freedom of Information Act lawsuit against the U.S. Department of Health and Human Services, forcing the release of information showing HHS was not able to locate a single pre-licensing safety trial placebo control for any of the vaccines mandated for children.

Yet, such examples are used to brand him as an “anti-vaxxer,” Kennedy said.

“My views are constantly misrepresented,” Kennedy said.

“We’re not allowed to have a conversation about that with the American people, [that] vaccines should be tested with the same rigor as other medicines and medications.”

“Trusting the experts is not a function of science. It is not a function of democracy. It is a function of religion and totalitarianism, and it does not make for a healthier population,” he added.

Responding to another question by Roy as to whether “it is a proper function and role for Congress and for all of us to question” the government, Kennedy said “That is exactly the function that the United States Constitution is signed to the people of to the members of Congress.”

Later during the hearing, Kennedy said, “I think democracy is dependent on the free flow of information. And if that information is distorted, if the public has lied to, then it interferes with elections. And by the way, it interferes with public health.”

Kennedy added that “the Wall Street Journal did an article a couple of weeks ago suggesting that the censorship of important health information cost American lives.”

Referring to Plaskett’s claims that the subcommittee’s hearing was a distraction from issues concerning everyday Americans, such as inflation, Kennedy said that his April speech launching his presidential campaign was censored by YouTube when he discussed just these sorts of issues.

“I didn’t talk about vaccines in that speech,” he said.

“I didn’t talk about anything that was a verboten subject. I just was talking about my campaign and the conversation that we ought to be having with each other as Americans. But I was shut down.”

“That is why the First Amendment’s important debate, congenial, respectful debate is the fertilizer, it’s the water, it’s the sunlight for our democracy,” Kennedy added.

“This kind of division is more dangerous for our country than any time since the American Civil War,” Kennedy said.

“How do we deal with that? … Do you think you can do that by censoring people? I’m telling you, you cannot. That only aggravates and amplifies the problem.”

“We need to start being kind to each other,” Kennedy continued. “We need to start being respectful to each other. We need to start restoring the comity to this chamber and to the rest of America. But it has to start here.”

Notably though, Democrat members of the subcommittee directed few questions at Kennedy, instead preferring to question their own witness, Wiley. Chris D. Jackson, an election commissioner and former Democratic party chair from Tennessee, tweeted that this was intentional, “denying him the opportunity to respond.”

‘Federal censorship is ongoing and it shows no signs of relenting’

The ongoing Missouri v. Biden lawsuit was also a prominent part of today’s hearing. In his testimony, Sauer referred to the July 4 decision of a federal court issuing a temporary injunction against several federal agencies and members of the Biden administration, limiting their interaction with social media platforms.

While that decision repeatedly came under attack by Democrat members of the subcommittee, Sauer said the July 4 opinion granting the temporary injunction “contains 82 pages of detailed factual findings, supported by 577 citations of the evidence, which is drawn from roughly 20,000 pages of the federal government’s own emails and communications with social media platforms, and six full-length depositions.”

Sauer said that even though the 5th Circuit Court of Appeals “entered a temporary administrative stay of this injunction and granted expedited argument,” scheduled for August 10 — which he described as “routine practice in the Fifth Circuit,” he also said that “The government has hardly bothered to dispute any of [the] factual findings.”

He added that while it was social media platforms that censored the accounts of the “Disinformation Dozen” and other figures for questioning establishment narratives, “The Louisiana court found that the platforms would not have suppressed this speech” and “often true content.” However, “federal officials were pushing for it.”

Sauer added that “the scope and reach of federal censorship is staggering” and “affects … millions of social media posts and speakers … virtually every American who reads, listens, engages, or posts on social media about great disputed political and social questions that federal censors have stuck their fingers into.”

Moreover, Sauer said “federal censorship is ongoing and it shows no signs of relenting,” adding that “federal officials are most eager, most focused on silencing truthful speech.” If this is “left unchecked, federal censorship will reach virtually any disputed social and political question over which federal officials want to impose their power,” he said.

Referring to an earlier “Twitter files” release, Sauer said “federal officials are deeply intertwined with … the Censorship-Industrial Complex” between the federal government, social media platforms, and other nonprofit and academic organizations.

Sauer said that, as a result, “the federal censorship enterprise has succeeded in transforming online discourse by rendering entire viewpoints virtually unspeakable on social media,” including by “directly induc[ing] changes to the content moderation policies of major social media platforms to disfavor viewpoints in advance.”

He said the federal government has been able to accomplish this via both direct and indirect means, telling the subcommittee that “there’s several way you can violate the First Amendment if you’re a government official,” including “coercion,” “significant encouragement” and “joint participation, where you’ve insinuated yourselves into private decision-making,” adding that “all of those [were] present” in Louisiana v. Bauer.

Kennedy, who along with CHD is party to several lawsuits challenging alleged governmentBig Tech and media censorship, told the subcommittee:

“If a government can censor its critics, that’s a license for every atrocity. It is the beginning of totalitarianism. “

“Once you start censoring, you’re on your way to dystopia and totalitarianism.”

Tyler Durden
Fri, 07/21/2023 – 08:30

Futures Rebound After Thursday’s Tech Rout As Record July OpEx Looms

Futures Rebound After Thursday’s Tech Rout As Record July OpEx Looms

US equity futures are higher as futures pointed to a rebound from yesterday’s selloff, while the yen weakened on a BBG report that the the Bank of Japan won’t make any changes to its yield curve control program. As of 7:45am ET, S&P futures were 0.2% higher while Nasdaq futures rebounded 0.4% from yesterday’s 2.3% rout. Netflix and Tesla climbed in pre-market trading after leading the Nasdaq to sharp losses on Thursday on the back of disappointing results. The Bloomberg Dollar Spot Index traded near the day’s highs, pressuring most Group-of-10 currencies, with the yen suffering the biggest declines after Bloomberg reported that Bank of Japan officials see little urgent need to address the side effects of its yield curve control program. Treasury yields were little changed, mirroring lackluster trading in European and UK bond markets. Brent crude rose more than 1%, while gold fell and Bitcoin gained 0.2%. The Nasdaq rebalance will take effect after close today. Headlines remain quiet this morning; next week, we will receive key MegaCap Tech earnings, starting with GOOGL and MSFT on Tuesday (7/25), and the July FOMC on Wednesday.

In premarket trading, American Express fell almost 3% after the company reported discount revenue for the second quarter that missed the average analyst estimate. Tesla led electric-vehicle stocks higher in US premarket trading after weighing on the sector on Thursday. The stock had slumped after the world’s most valuable carmaker warned of more hits to its already-shrinking profitability. Digital World Acquisition Corp, the SPAC working to bring Donald Trump’s media venture public, soared 21% in premarket trading on Friday after the SEC said it settled fraud charges against the SPAC. Here are some other notable premarket movers:

  • Intuitive Surgical shares drop 4.9% in premarket trading. The medtech’s second- quarter earnings beat was overshadowed by a continued decline in growth rates for bariatric surgery in the US amid patient interest in the new class of weight-loss drugs as an alternative. The weakness in this area was the only “nitpick” in performance across the company’s procedures, Truist Securities said.
  • Emergent BioSolutions rises as much as 20% in premarket trading on Friday after the company said it got FDA approval for its anthrax vaccine. Cowen analyst notes that the approval is an incremental positive as it was largely expected.
  • Sirius XM falls 10% in premarket trading on Friday after Evercore ISI cut its rating on the satellite radio company’s stock to underperform from in line. The downgrade comes after a 42% rally on Thursday that was powered by a short squeeze rather than any fundamental change in the business, the analyst notes.
  • Rayonier Advanced Materials obtains $250m term loan financing from Oaktree Capital Management funds. The stock jumped 9% in postmarket trading.
  • Scholastic climbed 9% in postmarket trading as the distributor of children’s educational books reported adjusted earnings per share for the fourth quarter that rose over 30% from the same quarter a year earlier.

Trading on Friday will be affected by a flood of expiring options before an out-of-cycle rebalancing in the Nasdaq 100. The index shuffle, which takes effect on Monday, is designed to reduce the dominance of megacaps and boost the presence of smaller members. The tech-heavy index’s rejig coincides with the monthly options expiration – which at $2.4 trillion is a record for the month of July (see our preview here)- at a time when traders are anxiously waiting for corporate earnings and next week’s Federal Reserve policy meeting for clues on the market’s outlook.

Stocks slipped Thursday for the first time this week as fresh signs of labor-market resiliency bolstered the case for at least another Fed hike this year. Underscoring the risk-off mood, investors withdrew $2.1 billion from equity funds in the week to July 19, while adding $7.5 billion to money markets and $1.4 billion to bond funds, according to BofA’s Michael Hartnett.

The main focus continues to be whether the rally in a handful of megacap stocks and hype over artificial intelligence has staying power. The S&P 500 has already surpassed most estimates for where it would end the year, confounding strategists convinced that 2023 would be another bad year for markets heading into recession. 

“So where we are right now, we are resting after the massive move over the course of many weeks,” Ken Mahoney, CEO of Mahoney Asset Management, wrote in a note. “A lot of stocks were creating and still are creating bases to break out higher from. No one could believe their eyes after being so conditioned to 2022’s nasty selling conditions when this market gained steam again.”

European stocks were mixed, trading between gains and losses with the German DAX underperforming as SAP shares slump after cloud sales missed estimates. Here are the most notable European stock moves:

  • Schindler shares climb as much as 6.9% to highest since March, after the Swiss elevator maker surprised analysts with a full- year net income guidance that beat estimates, thanks to an uptick in orders
  • Wartsila gains as much as 15%, the most since April 2021, after the Finnish power and marine propulsion products maker positively surprised the market with better-than- expected margins and reassuring order intake
  • Recordati gains as much as 3.6%, the most intraday since June 1, after the Italian drugmaker made an agreement with GSK to commercialize Avodart and Combodart/Duodart products across 21 countries
  • Volvo Cars gained as much as 7.3% after being double-upgraded to outperform at BNP Paribas Exane, which shifts its focus in autos manufacturers to now favor “affordable premium”
  • Babcock shares gain as much as 6.5%, as Citi analyst Samuel Burgess raised his recommendation on the stock to buy from hold, a day after the defense outsourcing company released strong full-year results. He also increased the PT by 35%
  • Truecaller shares surge as much as 34%, the most since Oct. 2021, as the Swedish caller-ID platform delivered results which DNB expects will trigger a rise in 2024 Ebitda consensus by up to 10%
  • Viaplay gains as much as 31% after France’s Canal+ Group said it has built a stake in the Swedish streaming entertainment group. The jump trims some of Thursday’s 49% drop
  • SAP drops as much as 5.6%, the biggest intraday decline since 2022, after the software company reported second-quarter sales in its cloud unit that missed estimates. Jefferies says the miss is a surprise
  • Lonza shares drop as much as 10% as the Swiss pharmaceutical company cut its core Ebitda margin forecast for the full year after posting “weak” 1H, Citi says. ZKB was also critical of communication toward investors
  • Thales falls as much as 4.9%, after the French defense group posted results slightly above expectations but produced a revised assumption on the impact of currency swings
  • SSAB shares plunge as much as 16% after the Swedish steelmaker reported weaker-than-expected second-quarter earnings and gave an outlook that pointed to a worsening environment
  • Stora Enso shares dropped as much as 7.7%, the most in four months, after the Finnish paper & packaging company’s operating Ebit for the second quarter missed estimates
  • Norsk Hydro shares fall as much as 3.9% after the aluminum miner reported 2Q results. Analysts say the firm’s decision to hike its capital expenditure guidance outweighs the earnings beat

Earlier in the session, Asian stocks dropped, as tech stocks led losses following TSMC’s guidance cut while benchmarks in Hong Kong climbed.  The MSCI Asia Pacific Index slumped 1.5% mainly because of the sharp drop in Indian stocks. TSMC, Tokyo Electron and other chip stocks were the biggest drags on the gauge after TSMC cut its annual outlook for revenue and delayed production at a planned facility in Arizona.  The Hang Seng China Enterprises Index advanced as much as 1.4%, while other other Hang Seng gauges were also among the region’s notable outperformers. Their gains come after losses in the past several sessions amid disappointments over the second-quarter growth figures and underwhelming support pledges from Beijing. Investors said the valuations of Chinese equities remained cheap even as it may take time to see a comeback in investor confidence. 

Japan’s Nikkei 225 slumped at the open but was well off its lows amid currency swings and somewhat ambiguous CPI data which printed mostly in line with expectations but showed a slight acceleration for the headline and core inflation.

Key stock gauges in India snapped a six-day winning run to end as the worst performing market in the region on Friday due to a sell off in technology stocks. The S&P BSE Sensex fell 1.3% to 66,684.26 in Mumbai, while the NSE Nifty 50 Index declined 1.2% to 19,745.00. For the week, Sensex and Nifty climbed about 0.9% on continued net buying from foreign institutional investors amid optimism for earnings growth. Global funds net buying of India stocks have climbed to more than $15 billion since February. The MSCI India index ended with a 9.2% drop after a sudden decline in the index around 1:20 pm with index provider MSCI saying it is looking into the movement.

“We need to see evidence of economic data recovering,” Abhilash Narayan, senior investment strategist at Standard Chartered Wealth Management, said in an interview with Bloomberg TV. “But from a valuation perspective, Chinese equities are extremely cheap,” he said adding that there is “a fairly good likelihood” that they will outperform global peers over the next 12 months.  The main Asian equity benchmark is set for about a 1% decline this week, its worst weekly performance this month. Investors are monitoring corporate earnings reports with many heavyweights in Asia scheduled to report their quarterly results next week.

In FX, the Bloomberg dollar index extended gains to a fourth day, its longest winning streak since May. The yen tumbled as much as 1.4% and led losses among Group-of-10 currencies after traders confirmed what we have been saying all along – that there is little chance for a hawkish surprise at the BOJ’s policy decision next week as Bloomberg reported that officials see little urgent need to address the side effects of its yield curve control at this point.

 The currency traded at 141.81 against the dollar, its weakest level in almost three weeks, amid reduced odds for a hawkish surprise at the BOJ’s policy decision next Friday.

In rates, treasury yields edged lower as US trading day begins, led by longer-dated tenors. Narrow ranges during Asia session and European morning include 2.4bp for 10-year yield. On the week, yields are likewise mixed with the curve flatter, after swaps fully priced in a Fed rate hike on July 26 while auctions of 20-year bonds and 10-year TIPS drew strong demand. Yields remain within about 2bp of Thursday’s closing levels, 10- year around 3.84%, holding above 50-day average level breached this week for the first time since May; most other sovereign debt markets also little changed. Inverted 2s10s curve slightly flatter on the day at around -100bp; Thursday’s low -105bp was deepest inversion since July 6. Fed swaps continue to fully price in a 25bp rate hike on July 26 and about a third of an additional quarter-point hike this year.

The pound also jumped after UK retail sales topped estimates, although gains proved short lived with cable now negative. The Bloomberg Dollar Spot Index is up 0.3%. European stocks are little changed with the Stoxx 600 flat after a three-day rally.

Wall Street looks set for a higher open with S&P futures up 0.2% and Nasdaq 100 futures adding 0.4%. Gilts are in the red while bunds and Treasuries trade close to unchanged. Crude futures advance, with WTI rising 1.2% to trade near $76.60

In bitcoin, US House Republicans introduced a new digital assets oversight bill that aims to establish a regulatory framework to protect crypto investors, according to CoinDesk. FTX sues Sam Bankman-Fried and other former executives to recoup hundreds of millions of dollars of alleged fraudulent transfers, according to Reuters.

In commodities,

Wheat fell about 3% as Ukraine made preparations to continue a grain-export deal, which Russia exited this week. The grain is still poised for a weekly gain of 7%, after prices surged on threats to ships arriving at Black Sea ports. The rise in prices could again stoke food costs and feed inflation.

Looking to the day ahead, it’s a fairly quiet one on the calendar with nothing on the US docket. Global data releases include UK retail sales for June, which came in handily above expectations, while earnings releases include American Express which missed expectations.

Market Snapshot

  • S&P 500 futures up 0.2% to 4,574.75
  • STOXX Europe 600 little changed at 463.76
  • German 10Y yield little changed at 2.48%
  • Euro little changed at $1.1136
  • MXAP down 1.5% to 164.63
  • MXAPJ down 1.7% to 519.09
  • Nikkei down 0.6% to 32,304.25
  • Topix little changed at 2,262.20
  • Hang Seng Index up 0.8% to 19,075.26
  • Shanghai Composite little changed at 3,167.75
  • Sensex down 1.1% to 66,806.37
  • Australia S&P/ASX 200 down 0.2% to 7,313.89
  • Kospi up 0.4% to 2,609.76
  • Brent Futures up 0.7% to $80.22/bbl
  • Gold spot down 0.3% to $1,964.31
  • U.S. Dollar Index up 0.10% to 100.98

Top Overnight News from Bloomberg

  • Japan’s BOJ is “leaning towards” keeping the YCC policy unchanged at next week’s meeting as policymakers want to see further data before making adjustments. RTRS
  • Japan’s national CPI for June overshoots the Street at +3.3% on the headline (vs. the Street’s +3.2% and up from +3.2% in May) while ex-energy and ex-energy/food are inline at +3.3% and +4.2%, respectively (the ex-energy/food number of +4.2% ticked down from +4.3% in May, leading some to think inflation may have peaked in Japan). RTRS
  • Chinese authorities announced measures on Friday intended to help boost sales of automobiles and electronics with the goal of shoring up a sluggish economy, but the steps failed to impress investors who have been clamoring for stronger stimulus. RTRS
  • The Asian Infrastructure Investment Bank, Beijing’s answer to the World Bank, has approved one of its highest-profile international partnerships, just weeks after it was accused of being infiltrated by China’s Communist party. FT
  • In the most detailed public account yet given by a U.S. official, the director of the C.I.A. offered a biting assessment on Thursday of the damage done to President Vladimir V. Putin of Russia by the mutiny of the Wagner mercenary group, saying the rebellion had revived questions about Mr. Putin’s judgment and his detachment from events. NYT
  • Russia’s navy conducted a live fire exercise at a training range in the Black Sea, escalating the war’s risk to global food markets. Wheat headed for a weekly gain of more than 10% as the tensions added to concern about extreme weather. BBG
  • Fed Vice Chair for Supervision Michael Barr has laid out a plan to increase capital requirements for the nation’s largest banks in the wake of recent bank failures and is expected to unveil the broad proposal to implement new risk-based capital requirements on July 27, according to three industry officials. RTRS
  • The potential strike by 340,000 UPS workers threatens to revive two of the US economy’s biggest hurdles: inflation and supply-chain disruptions. A walkout would snarl the 19 million US packages UPS moves daily and enable competitors to raise prices. But meeting the Teamsters’ wage demands may also spur inflation pressures. BBG
  • FTX sued Sam Bankman-Fried and his top lieutenants over $1 billion in bad deals as it tries to recover cash for creditors. BBG

A more detailed look at global markets courtesy of newsqquawk

APAC stocks were mixed as further support efforts from China partially offset the headwinds from Wall St where the Nasdaq 100 suffered its second-worst day of the year on tech disappointment and amid a rising yield environment. ASX 200 was subdued amid losses in tech, financials and the mining-related sectors, albeit with downside limited amid the lack of catalysts from Australia. Nikkei 225 slumped at the open but was well off its lows amid currency swings and somewhat ambiguous CPI data which printed mostly in line with expectations but showed a slight acceleration for the headline and core inflation. Hang Seng and Shanghai Comp were underpinned by further supportive efforts from China in which the NDRC released policies to boost electronics products consumption and measures to promote automobile consumption.

Top Asian News

  • China’s NDRC released policies to boost electronic product consumption and encourages scientific research institutes and market entities to apply domestic AI technology to improve the intelligence level of electronic products.
  • NDRC also issued measures to promote automobile consumption and are to encourage regions with purchase restrictions to issue annual purchase targets as soon as possible, according to Reuters.
  • China is to explain anti-espionage law and mineral export restrictions to Japanese, US, South Korean and EU company executives on Friday, according to Jiji.
  • China’s state planner NDRC is to hold a press conference on Monday at 10am local time (03:00BST) on private investments.

European bourses are relatively steady after mixed APAC performance as Chinese support offset the subdued handover, Euro Stoxx 50 -0.1%; in Europe, Tech lags with SAP -3.9%. Sectors are somewhat mixed with Energy seeing upside on benchmark pricing, though off best as the USD picks up, while Tech and the DAX 40 -0.5% lag after SAP missed on top & bottom. Stateside, futures are little changed amid a sparse US-specific docket ahead, ES +0.1%; NQ +0.3% is the incremental outperformer after Thursday’s marked pressure and as the dovish-BoJ reports lend support via lower yields.

Top European News

  • UK PM Sunak’s ruling Conservative party won Boris Johnson’s former parliamentary seat of Uxbridge and South Ruislip but lost the seat of Somerton and Frome, as well as the Selby and Ainsty seat in the by-elections, while the Selby loss broke the record for the largest Tory majority overturned at a byelection by Labour since 1945, according to The Guardian’s Pippa Crerar.
  • UK-India trade talks have gained momentum in the latest rounds, though there is still a long way to go, according to Reuters citing sources.
  • VCI, German Chemical Industry Association’s H1 update: Production -10.5% YY; Revenue -11.5% YY; Producer Prices +5% YY. 2023 guidance: Production -8% (prev. -5%); Revenue -14% (prev. -7%).

FX

  • Yen slides as UST/JGB spreads blow out amidst BoJ sources saying no inclination to tweak YCC next week.
  • USD/JPY close to 142.00 after breach of Fib and psych levels on the way up from sub-140.00 low; subsequent remarks from Kanda pressured it back to 141.40 briefly.
  • DXY boosted by Yen collapse as index tops 101.00 within 100.710-101.080 range.
  • Kiwi and Aussie undermined by a downturn in risk sentiment and Greenback gains, with NZD/USD and AUD/USD under 0.6200 and 0.6750 respectively, while AUD/NZD cross eyes expiry at 1.0900.
  • Sterling unable to appreciate better than forecast UK retail sales as Cable retreats from just over 1.2900 towards 21 DMA not far below 1.2850 in face of broad Buck strength.
  • Euro clings to 1.1100 handle and Loonie underpinned by decent expiry interest around 1.3150 ahead of Canadian retail sales.
  • PBoC set USD/CNY mid-point at 7.1456 vs exp. 7.1965 (prev. 7.1466)
  • China’s FX regulator said yuan flexibility is increasing and market understanding of two-way fluctuation and risk-neutral also increased. China will prevent sharp volatility in the exchange rate and will keep the yuan basically stable at balanced levels in a forceful manner, as well as comprehensively use policy measures to stabilise expectations.
  • Turkey introduced a 15% reserve requirement for FX-protected Lira deposits and is to withdraw TRY 450bln-500bln liquidity from the market through the change in reserves, according to Reuters.

Fixed Income

  • Bonds see-saw in aimless fashion, beyond Gilts and JGBs that have a clearer sense of direction.
  • Bunds volatile either side of 133.00 and T-note pivoting parity within 112-02/08+ confines.
  • Gilts retrace more post-UK CPU upside between 96.70-11 parameters and JGBs rebound firmly from 147.73 to 148.74 at best on the back of dovish BoJ sources

Commodities

  • WTI and Brent September futures are firmer in the early European hours of Friday and hold onto the APAC gains which emanated from further Chinese economic support measures.
  • Spot gold is pressured by the Yen-induced Dollar strength and dips from its intraday peak of USD 1,973.40/oz closer to its 100 DMA which resides around USD 1,960.55/oz today.
  • Base metals meanwhile are broadly underpinned by the aforementioned Chinese stimulus measures.
  • Russian Deputy PM Novak says Russia is not ruling out introducing oil export products quotas; says some domestic refineries postponed maintenance to a later date, via IFX.
  • Asian refiners have booked near-record volumes of August crude for August shipping, replacing Middle Eastern oil, via Reuters citing sources; amid competitive prices and large supplies attracting substantial purchases. Source adds that recently US crude is being aggressively pushed to Asia.
  • Russian missiles have hit the grain terminal of an agricultural enterprise in Ukraine’s Odessa region, with two people injured, according to the Governor of the region cited by Reuters.

Geopolitics

  • US Central Command said the US is to deploy a marine unit following Iran’s recent attempts to seize ships.
  • Poland is to move military formations from the west to the east of the nation due to possible threats from Russia’s Wagner group, according to PAP.
  • Russian navy carried out live fire ‘exercise’ in Black Sea: defence ministry, according to AFP.
  • Russia’s Black Sea Fleet practices firing rockets at surface targets following a warning to Ukraine on ships, via the Defence Ministry. Warships and planes practised sealing off areas temporarily closed to shipping and seizing ships.

US Event Calendar

  • 07:00: Bloomberg July United States Economic Survey

DB’s Jim Reid concludes the overnight wrap

After a pretty strong last couple of weeks for bonds and equities, both sold off yesterday in the US, with tech having one of the worst days of the year. Ironically, outside of disappointing tech earnings, the main catalyst was actually some positive US data, which shifted the debate back towards next week not necessarily being the last Fed hike in the cycle.

Indeed, more hawkish expectations meant that the 2yr real yield hit a post-GFC high intra-day, though it was breakevens that drove the rates sell off at the end of the day. The rates environment was a setback for equities, while weak tech earnings releases weighed even more, with the NASDAQ falling -2.05% in its biggest post-SVB decline and the 3rd worst day of the year.

In terms of the specific data releases, the most important were the weekly US initial jobless claims, which fell to 228k (vs. 240k expected) over the week ending July 15. That’s the lowest claims number we’ve had in a couple of months, and there are growing signs that this is a trend, with the 4-week moving average down for a third week running to 237.5k. It’s true that the continuing claims were above expectations at 1.754m (vs. 1.722m expected), but that was for the previous week ending July 8, and the broader trend downwards is also still evident from the chart. As well as the jobless claims, the Philadelphia Fed released their manufacturing business outlook survey, with the headline index up slightly to -13.5 (vs. -10.0 expected). But the much better news was on the expectations side, with the headline index for 6 months from now up to a 23-month high of 29.1.

With those more positive releases in hand, investors moved to price in a growing chance of further hikes over the months ahead. For instance, futures raised the chances of a second further hike from the Fed after next week to 35%, having been at 30% the previous day. They also dialled back the chances of rate cuts in 2024, with the rate priced in for December up +10.4bps on the day to 4.03%. In Europe it was much the same story, albeit to a lesser extent, with pricing for a second ECB hike after next week up from 87% to 94%.

All that led to a significant selloff among sovereign bonds, with yields on 10yr Treasuries up +10.3bps on the day to 3.85%. That’s their biggest increase in three weeks, and this was echoed across the curve, with the 2yr yield up +7.4bps to 4.84%. As mentioned at the top, there was a shift in the drivers of higher rates through the course of the day. The 2yr real yield hit a post-GFC high intra-day, but breakevens drove most of increase by the close with 10yr breakevens (+8.6bps) seeing their sharpest daily rise since January.

Europe got some positive, albeit backward looking, economic news as well yesterday, as the latest data revisions showed that the Euro Area avoided a technical recession over the winter. That’s because growth in Q1 was revised up to 0.0% (vs. -0.1% previously), so the latest data now only shows one quarterly contraction in Q4, rather than the two consecutive contractions that are often used to define a recession. Alongside the US data, that supported a fresh rise in yields there too, with those on 10yr bunds (+4.6bps), OATs (+5.0bps) and BTPs (+2.9bps) all moving higher.

This put a dent in US equities, with the S&P 500 (-0.68%) seeing its biggest decline in two weeks. That said, more than 50% of the S&P 500 actually posted gains on the day with the decline driven by tech stocks. Tesla (-9.74%) and Netflix (-8.41%) both lost significant ground following their earnings after the previous day’s close. This weakness among tech stocks meant that the NASDAQ (-2.05%) suffered its worst day in four months, whilst the FANG+ index (-4.60%) of megacap tech stocks had its worst day of 2023 so far. In other negative news on the tech front, leading chipmaker TSMC cut its 2023 outlook and signaled a delay on a new planned production facility in Arizona. TSMC shares are trading more than -3% lower in Asia this morning. Finally, the underperformance of tech megacaps may have been exacerbated by a special rebalancing of the NASDAQ 100 index, which will be effective as of next Monday (24 July) and will see a decline in the index weights of the tech megacaps.

On the other hand, with utilities, energy and industrials outperforming, the Dow Jones (+0.47%) advanced for a 9th consecutive session for the first time since 2017. The European bourses also fared much better, with the STOXX 600 up +0.42% to a one-month high.

In the geopolitical sphere, Ukraine said that ships heading to Russian ports may be military targets following the collapse of the Black Sea grain deal, which comes in response to Russia announcing a similar move regarding ships heading to Ukraine. Wheat prices initially spiked higher following the news, but they pared back their gains and ended the session -0.10% lower after a run of 5 consecutive gains. They are +17% up from their recent lows on 12 July.

Asian equity markets are mixed this morning with the Hang Seng (+0.80%) leading gains while the CSI (+0.24%) and the Shanghai Composite (+0.08%) edging higher after the Chinese government announced detailed measures to support the private sector. Elsewhere, the Nikkei (-0.22%) is lower with the KOSPI (-0.08%) swinging between gains and losses. S&P 500 (+0.12%) and NASDAQ 100 (+0.11%) futures have seen a small rebound.

Early morning data showed that Japan’s consumer inflation climbed by +3.3% y/y in June (v/s +3.2% expected), and slightly higher than May’s +3.2% increase while the core consumer prices rose +3.3% y/y in June, in line with market expectations and against the prior month’s gain of +3.2%. Core core was in-line at +4.2% y/y, down a tenth from last month, the first decrease in the y/y rate since January and likely marks the start of a trend lower. The pace of the decline will determine the BoJ’s policy over that period though. Remember we have an important BoJ meeting next week with some whispers of policy change although the market will be once bitten twice shy on this.

In UK by-elections, the Conservative government suffered a double by-election defeat after Selby and Ainsty (considered as a safe seat) voted against the government giving the Labour its largest swing since 1997 and its biggest ever reversal of a numeric majority in a by-election in history. The Government surprisingly held ex-PM Boris Johnson’s seat in Uxbridge London, as an unpopular scheme by the Labour London mayor on expanding the ultra low emissions zone in the capital, put off voters.

Before we look at the day ahead a quick wrap of yesterday’s other data. US existing home sales for June fell to an annualised rate of 4.16m (vs. 4.20m expected), which is their lowest level in 5 months. Separately, the Conference Board’s leading index for June posted a -0.7% decline (vs. -0.6% expected), marking its 15th consecutive monthly decline. Finally in Europe, German PPI inflation fell to just +0.1% in June, which is its lowest level since November 2020.

To the day ahead now, and it’s a fairly quiet one on the calendar. Data releases include UK and Canadian retail sales for June, whilst earnings releases include American Express.

Tyler Durden
Fri, 07/21/2023 – 08:19

Lesson Of The Day: If You Weaponize The Dollar And Confiscate Assets, Expect Retaliation

Lesson Of The Day: If You Weaponize The Dollar And Confiscate Assets, Expect Retaliation

By Mish Shedlock of MishTalk

Russia seized the local assets of Carlsberg beer and yogurt maker Danone. It now threatens Austria’s Raiffeisen bank.

Russia Seizes Western Yogurt and Beer

As backdrop to the Raiffeisen bank story, consider the Bloomberg report, Russia Seizes Western Yogurt and Beer.

President Vladimir Putin signed a decree in April allowing for “temporary” state control over the assets of companies or individuals from “unfriendly” states — which include the US and its allies.

Sunday’s move is the second time the Kremlin has used the decree to seize assets. Previously, Russia took control of utilities owned by Finland’s Fortum Oyj and Germany’s Uniper SE.

Russia and Ukraine accounted for about 13% of Carlsberg’s total sales and about 9% of operating profit in 2021. The company employs about 8,400 people in Russia and had previously separated the operations there from the rest of the group.

Carlsberg is assessing the legal and operational consequences. Fortum last week started a process of arbitration over the April seizure. But with Russia no longer concerned about appearing fair to western investors, it’s difficult to see how much recourse these or any other multinationals will have.

Procter & Gamble, Colgate-Palmolive and Philip Morris International have also remained. Coca-Cola HBC has the largest revenue exposure to Russia among European consumer-staple companies, Morgan Stanley said, saying the regional Coke bottler gets 12% of sales from that market.

Troubles at Raiffeisen Bank

Eurointelligence comments on Raiffeisen Bank Troubles.

After Russia took over Danone and Carlsberg, what fate is awaiting Austria’s Raiffeisen bank? The US and EU’s banking authorities pressure the bank for some time now to exit Russia, but progress is slow and risks are getting higher. After some failed attempts to swap assets with Russian banks in Europe, Raiffeisen is stuck between the rock and a hard place. They still serve western clients present in Russia and face the dilemma of either being hit by sanctions from the US and the EU if they stay or a hostile takeover from the Kremlin if they were to seek an exit.

Amongst western banks, Raiffeisen is the most important bank still operating in Russia, ahead of Italy’s Unicredit, the Dutch ING and the Hungarian OTP.

Half of the western companies still present in Russia have turned towards Raiffeisen since the outbreak of the war, according to Les Echos. Not yet subject to sanctions and still connected to the Swift interbank messaging system, Raiffeisen has been a valuable interconnection between the two worlds.

The result was an increase in its assets by 36% since then. Despite losing 500,000 customers, it still has a total of 3.2m, and deposits have risen by 28% to €20.8bn for their Russian subsidiary. The number of employees rose to 9,890. Its profits for the first three months of this year were up 214% on the first quarter of last year.

Could the Kremlin do to Raiffeisen what it has done to Danone? Taking over a systemically relevant bank has more repercussions than taking over a dairy producer. The moment Russia seizes Raiffeisen’s assets, their link to Swift would be cut off. It also would cause a domino effect to all those other western companies that still rely on Raiffeisen to protect their assets. Either it is done overnight or not at all. It depends on how valuable the link to the Swift system and the presence of those remaining western companies still is to the Kremlin. The move on Danone certainly was a shock and a reminder of how precarious the situation of companies still operating in Russia is.

Weaponization of the Dollar

Neither Bloomberg nor Eurointelligence mentioned retaliation for weaponization of the dollar as the prelude to these recent beer and yogurt events.

The only possible surprise in this story is why it took so long.

At the onset of the war, the Fed, under direction of the Biden Administration, illegally seized Russia’s foreign reserves. Illegal is the correct word.

Federal Reserve Act

The Federal Reserve Act mandates that the Federal Reserve conduct monetary policy “so as to promote effectively the goals of maximum employment, stable prices, and moderate long-term interest rates.”

Nowhere does the act give the Fed the right or power to confiscate the reserves of sovereign nations. But that is exactly what the Fed did when it seized Russia’s US dollar reserves. 

If the Fed can confiscate Russia’s reserves, who’s next?

Weaponization of Swift

Please consider the Richmond Fed article What Is SWIFT, and Could Sanctions Impact the U.S. Dollar’s Dominance? 

The recent removal of Russian banks from the SWIFT messaging system has highlighted the importance of payments in supporting economies. But the weaponization of SWIFT has also left some commentators worrying about the loss of the U.S. dollar’s dominance, as it might drive banks and firms to other substitutes. This Economic Brief discusses the economics of SWIFT and explains why emigrating from the U.S. dollar may be more difficult than we thought.

The Richmond’s Fed’s assessment is self-serving. Yet, it appears accurate. Importantly the Fed even admits weaponization, the emphasis was mine.

Dollar Weaponization Expands – FDIC Message to Foreign Depositors Is Don’t Trust the US

On May 13, I commented Dollar Weaponization Expands – FDIC Message to Foreign Depositors Is Don’t Trust the US

Systemic Risk Assessment

The FDIC made a “systemic risk exception” for Silicon Valley Bank to protect depositor funds beyond its limit of $250,000 per bank account.

FDIC’s stated “insurance” is for US depositors only. But the exception to make all US depositors whole means foreign depositors bear 100% of responsibility for the collapse of SVB.

Since bond holders rate higher than unsecured depositors, and the FDIC had significant losses rated to SVB, foreign depositors may get zero cents on the dollar.

If you are a foreign depositor at any small or midsized bank, the FDIC is affirming that you better get your money out now. 

What Does China Do With a Dollar That’s No Longer Risk Free?

In light of Fed actions against Russia, I pinged Michael Pettis at China Financial Markets some questions on China’s reserves on March 18, 2022.

Please consider my Pettis Q&A post What Does China Do With a Dollar That’s No Longer Risk Free? Buy Gold? 

Q&A With Michael Pettis

Mish: Will China now hold more commodities and fewer dollars despite the pro-cyclical nature of it? More Euros or Yen over dollars? More gold?

Michael Pettis (emphasis mine):

1: “Given that so much of China’s “reserves” are now indirect and held by state-owned banks (all the increase since 2017) it’s hard to say what the currency composition of China’s reserves are.

2: “Officially the US dollar is still by far the biggest component, but it is slowly declining.

3: “I expect that this will continue as far as the official reserves go but, as you know, the hard part of reducing the US dollar component of your reserves is figuring out what the alternative should be, and with such high and growing reserves (once you include the indirect reserves at the state-owned banks) that is a very difficult question to resolve.”

Gold-Backed BRIC Silliness

Pettis’ comment on the hard part is precisely why all the discussion on BRICs and a new currency backed by gold or some sort of weighted or commingled currency is 95 percent hot air.

Launching a BRIC currency is, for now, somewhere between extremely difficult and impossible, in any meaningful sense.

I explain in detail in More Gold Backed BRIC Currency Silliness on Dethroning the Dollar

Thorsten Polleit, chief economist at Degussa, told Kitco, “For making the new currency as good as gold, a truly sound currency, it must be convertible into gold on demand. I am not sure whether this is what Brazil, Russia, India, China and South Africa have in mind.“

Marc Chandler, managing director of Bannockburn Global Forex, told Kitco: “Talk of BRICS gold backed currency seems like an echo chamber. They do not have the gold to back a currency meaningfully. Have we not learned anything from the EMU experience of monetary union without fiscal union. Color me profoundly skeptical.

Importantly, there are no details to the BRIC announcement. The current discussion involves a “trading currency”.

A “trading currency” is a laughable construct because nations don’t trade, individuals and corporations do. It is the sum of individual and corporate actions that give rise to the concept of national trade deficits.

In essence, the proposed trading currency is a return to Bretton Woods, minus the gold, which surely will not be convertible on demand for the actual traders, individuals and corporations.

Details await. If you are honest about things, and understand trade at all, expect to be underwhelmed.

Not Now Does Not Mean Never 

The demise of the current US-dollar financial system with SWIFT at the heart of it is underway. I just cannot tell you when the system crumbles, nor can anyone else. 

Although the dollar avoidance the BRICs seek is much easier said than done, not now doesn’t mean never. The recognition phase has started. 

Most do not realize the EU is involved even though it wants no part of the BRIC structure. Importantly, the EU’s annoyance at SWIFT is far more significant than any yapping by Brazil.

So, don’t be surprised if something truly significant starts with the EU, not the BRICs. That’s an idea I have not seen anyone else suggest.

The EU is hopping mad over US sanctions on Iran. Germany was hopping mad at Trump for threatening to sanction Gazprom. The latter point is now moot, yet still a sore point.

Regardless of where de-dollarization picks up steam, it will mark the end of global sanction madness by Trump and dramatically escalated by Biden. Bring it on. 

Tyler Durden
Fri, 07/21/2023 – 07:20