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Thread: Intersting thoughts

  1. #1626  
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    Fed meeting finesse
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    The Federal Reserve takes center stage, but the decision could well be a dud for a market that's been hyping up big macro events lately. This is certainly the most important FOMC meeting since, well, the last FOMC meeting. But if Chairman Jay Powell and company avoid taper talk and keep rate forecasts steady, Wall Street could shrug it off, like recent jobs and inflation reports. While nobody expects a rate hike when the statement arrives, there's plenty for the FOMC to try and finesse in its statement and for Powell to address at his Q&A.

    The "Fed has to navigate desire to taper asset purchases through land mines of uncertainties about the economy and the risks posed by variants, debt ceiling politics, China & inflation," Diane Swonk, chief economist at Grant Thornton, tweeted yesterday. Stock index futures are higher after dip-buying faded yesterday and the broader market closed lower again. The 10-year Treasury yield is up 1 basis point to 1.33%. There is some speculation that the recent market selloff, with the S&P looking at its worst monthly performance in a year, could make Fed members gun-shy about a hawkish tilt. But Renaissance Macro Research says the current selloff is "not even close to having the Fed shift course."

    The "S&P 500 (SP500) (NYSEARCA:SPY) is basically flat since the Fed’s July 28 confab," RenMac tweets. "When we think about the last few times China was the source of the concern 2015/2016, the US equity decline was far more pronounced."

    Asset purchase tapering: Calls for the Fed to trim its $120B per month in asset purchases are growing as inflation heats up. But the consensus is that there will be no official announcement today. Two-thirds of 52 economists surveyed by Bloomberg expect a November announcement, with more than half expecting the Fed to start the taper in December. Still, Powell has been adamant he will give ample notice for any moves. The August jobs report gave "the doves on the Federal Reserve’s board, essentially where we think the Chair resides today, some fodder for postponing a tapering of the QE asset purchase program, though we think this would be a mistake," BlackRock's Rick Rieder writes. "Yet, we do believe that we will learn more details in September from the FOMC meeting, relative to what the Fed’s schedule for tapering will be."

    A change in the wording of the statement may be where the market gets that signal. "If the Fed signals any change, expect different language in the third paragraph of its statement, where the committee may update the risk to the outlook as balanced, which may signal tapering before the end of the year," economist Joseph Brusuelas writes in his Real Economy Blog. "In 2013, before its previous round of tapering, the Fed used its statement to signal coming policy action, so it may choose to take that approach this week." Mohamed El-Erian says the Fed needs to act as the window to tapering is closing.

    Dissecting the dot plot: The latest dot plot chart of Fed member interest rate projections, which caused a stir last time, will also be closely watched, much to the chagrin of Powell. The "sole purpose" of the "fabled dot plot ... is to increase confusion and misunderstanding in financial markets," UBS Chief Economist Paul Donovan writes. The dot plot is meant to illustrate where individual members see rates going, but not where they will or necessarily want them to go and the Fed chief has said it is not a great forecaster. But if three members raise their 2022 dots, the new median will be for a quarter-point hike that year, and Wall Street banks have been aggressively marketing short-term interest rate derivatives that would pay off with tightening pulled forward, Bloomberg reports. "Watch the dots - likely will see initial rate hike pulled into 2022 with more in 2023," Kathy Jones, chief fixed income strategist for Schwab, tweets. "Look out for (jobless) projections - (that) will indicate what Fed sees as 'full employment.'"

    Ethics questions: Beyond monetary policy, Powell may face some difficult questions about the recent controversy of the asset portfolios of Fed governors. Dallas Fed President Robert Kaplan's trading in individual stocks last year, including several megacaps that tend to benefit from lower interest rates, prompted the Fed chairman to open an ethics review. And Powell and two other Fed members owned securities that the central bank was buying last year. (8 comments)


    Energy
    Permian purchase
    ConocoPhillips (NYSE:COP) will become the second-largest oil and gas producer in the Lower 48 U.S. states following its $9.5B acquisition of Shell's assets in the Permian Basin, as the pecking order is reshuffled among top U.S. shale drillers.

    Adding an estimated 200K boe/day will put Conoco within striking distance of leader Exxon Mobil (NYSE:XOM), which is expected to produce about 1M boe/day from the Lower 48 this year.

    Conoco's deal will propel it past Chevron (NYSE:CVX), EQT Corp. (NYSE:EQT), Occidental Petroleum (NYSE:OXY) and EOG Resources (NYSE:EOG), according to consulting firm Rystad Energy. (20 comments)


    Consumer
    Cashing in on shorts
    AMC Entertainment (NYSE:AMC) and Blackstone (NYSE:BX) top the list of stocks that short sellers might be tempted to cash in on.

    S3 Partners' Ihor Dusaniwsky breaks down the one-day return for stocks with a short interest level of over $1B as he factors in the gains on a percentage basis. The mark-to-market gains are seen making those stocks more likely to be cashed in by short sellers. (29 comments)


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    Earnings
    Adobe earnings
    Adobe (NASDAQ:ADBE) fell in extended-hours trading after it reported fiscal third-quarter earnings where it beat consensus on top and bottom lines and guided above expectations for the current quarter.

    Revenue rose 22% to a record $3.94 billion, with gains spread broadly. Gross profit jumped to $3.47 billion from $2.8B, a year ago. Non-GAAP operating income came to $1.81 billion. (25 comments)


    IPOs
    Toast IPO
    Toast (NYSE:TOST), a restaurant-specific software platform priced its IPO of 21.7M common shares at $40/share, significantly above its expected range of $34-$36, upped from the previous price of $30-$33.

    The company will raise $869.6M for a valuation of about $20B. Shares are set to begin trading Wednesday on NYSE. Founded in 2011, Toast makes software for restaurants to manage functions like business operations, online ordering and delivery, and integrated payments. (1 comment)


    Trending
    Evergrande interest payments
    Bloomberg reports that Hengda Real Estate - the main unit of troubled Chinese property developer Evergrande - will make its Thursday bond coupon payment.

    This hardly means Evergrande is out of the woods. Indeed, a restructuring at some point still remains likely. But a disorderly unwind seems off the table at the moment. (68 comments)


    Today's Markets
    In Asia, Japan -0.67%. Hong Kong Closed. China +0.4%. India -0.13%.
    In Europe, at midday, London +1.17%. Paris +1.10%. Frankfurt +0.58%.
    Futures at 6:20, Dow +0.59%. S&P +0.55%. Nasdaq +0.34%. Crude +1.59% at $71.61. Gold +0.1% at $1775. Bitcoin -3.1% at $42103.
    Ten-year Treasury Yield +1.2 bps to 1.336%

    Today's Economic Calendar
    7:00 MBA Mortgage Applications
    10:00 Existing Home Sales
    10:30 EIA Petroleum Inventories
    11:30 Results of $26B, 2-Year FRN Auction
    2:00 PM FOMC Announcement
    2:30 PM Chairman Press Conference

    Companies reporting earnings today »

    What else is happening...
    Morgan Stanley (NYSE:MS) eyes a correction, S&P 500 (SP500) falling as much as 20%.

    QuantumScape (NYSE:QS) soars after another deal with 'top ten' automaker.

    Freshworks (FRSH) prices 28.5M-share IPOabove range at $36.

    U.S. nat gas (NG1:COM) slides to two-week low on more bearish weather outlook.

    Facebook (NASDAQ:FB) debuts new portable Portal video device.

    AT&T's (NYSE:T) Stankey: HBO Max deserved value unlock; Cost cuts one-third complete.

    DOJ, six states sue American Airlines (NASDAQ:AAL), JetBlue (NASDAQ:JBLU)over alleged anticompetitive partnership.

    Office REIT stocks make headway after Google's (GOOG, GOOGL) $2.1B office deal reported.


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  2. #1627  
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    September 23, 2021

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    Built on shaky financial foundations.Aly Song/Reuters


    The Evergrande trade

    Fears of the fallout from Evergrande’s potential collapse faded somewhat as Chinese regulators reportedly instructed the embattled property developer to repay some of its debts and China’s central bank injected money into the country’s financial system. Evergrande’s stock jumped nearly 20 percent today, even as large holders said that they might dump their stakes and doubts swirled around an $83 million interest payment on a dollar bond due today.

    Market watchers are assessing the implications of a potential restructuring of Evergrande’s $300 billion in debts. A full-blown bailout is unlikely, analysts say, but Beijing has the means to limit the damage if the company fails. “We believe that Evergrande is an exceptional case that is unlikely to lead to a broader systemic crisis in the property sector,” Houze Song of the Paulson Institute wrote in a recent report.

    International investors in Evergrande’s bonds are preparing for turmoil — and in some cases buying more. Evergrande’s debt is in the portfolios of many major investment firms, and some hedge funds have been adding more to their holdings as prices have tumbled. A group of bondholders has tapped restructuring advisers at Kirkland & Ellis and at Moelis. For its part, Evergrande has hired the firms Houlihan Lokey and Hong Kong Admiralty Harbour Capital. How might the negotiations play out?


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    U.S. institutional investors are largely invested in Evergrande’s offshore bonds, which are worth a relatively small portion of the company’s overall debt. Those securities are linked to various private and public companies separate from Evergrande’s property business, such as an electric-vehicle division. The units could still have value even if the real-estate business defaults, and bonds issued by Evergrande’s Cayman Islands-based units are governed by different rules than the debt issued in mainland China.

    Beijing’s intentions are unclear, especially when it comes to prioritizing debt holders at home and abroad. In the bankruptcy of Dubai World, in which confidence in a country’s financial system was similarly wrapped up in a single company, the company managed to pay back its creditors. But Dubai is a big borrower that relies on international credit markets, quite unlike China, which has recently discouraged local companies from listing abroad, among related measures. Despite all the uncertainty, with prices on some of Evergrande’s offshore dollar bonds that mature within months trading below 30 cents on the dollar, bargain hunters with a big appetite for risk see a bet worth taking.


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    HERE’S WHAT’S HAPPENING

    Boosters for some, but not for all. The F.D.A. approved an extra dose of the Pfizer-BioNTech coronavirus shot for people 65 and older and for those at risk of becoming severely ill from Covid. Separately, President Biden said that the U.S. would purchase 500 million more doses of the Pfizer vaccine to donate abroad.

    Facebook’s chief technology officer is leaving. In a rare change to the company’s top ranks, Mike Schroepfer will departas the tech giant faces scrutiny for issues as varied as toxic speech, misinformation and privacy.

    Lawmakers take aim at key SPAC sponsors. Senator Elizabeth Warren and other Democrats sent letters to serial backers of blank-check investment vehicles, including Michael Klein and Chamath Palihapitiya, expressing concern about “misaligned incentives.” They asked the financiers to respond to a list of questions about how their SPACs work by Oct. 8.

    The next U.S. comptroller of the currency could be a Bitcoin skeptic. President Biden is reportedly set to nominate Saule Omarova, a law professor who has criticized cryptocurrencies and said that regulators (like the office of the comptroller) should oversee fintech firms as closely as banks.


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    The White House moves to limit a major driver of climate change. The E.P.A. is expected to announce today a rule that would reduce the use of hydrofluorocarbons, or HFCs, which are widely used in air-conditioners and refrigerators. Experts said that the change would be a major step in cutting the country’s greenhouse gas emissions.


    For the Fed, is now the time?

    The Federal Reserve said yesterday that it could soon slow the large-scale bond purchases that have propped up the economy during the pandemic. “It’s time for us to begin to taper them,” Jay Powell, the Fed chair, said. With that end in sight, DealBook asked some experts whether it was the right time to pull the plug on the extra support.

    • Adam Posen, the president of the Peterson Institute for International Economics and a former top adviser to the Bank of England, said that before the pandemic, Powell promised he would allow inflation to rise to make the economy more inclusive. Now, the Fed has reverted to worrying about inflation when millions are still out of work and price increases are the result of supply-chain problems, Posen said. “If inflation comes in higher than expected, the Fed is going to tighten faster than it should want, and that is a mistake,” he said.

    • Vincent Deluard, the global macro strategist at StoneX, said that the Fed’s pledge to get the official unemployment rate back down to where it was before the pandemic had led it to take too long to taper. “The idea that we are going back to something where people are as tied to a full-time employer as they were before is probably something that is impossible to achieve,” he said.
    • Robert Eisenbeis, a former top Fed staffer who is now the chief monetary strategist for Cumberland Advisors, is critical of the ambiguity around the Fed’s plan, which could stoke market volatility. Powell said that a specific timeline for tapering had not been set, and that at least one more month of solid job growth was necessary. “Powell has said the Fed has a ‘wonderful framework for communication,’” Eisenbeis said. “It’s garbage.”


    Seen and heard

    ► “There just came a point where I didn’t know what to believe about Theranos anymore.”

    — The former Theranos director Jim Mattis, giving testimony at the trial of Elizabeth Holmes. The retired four-star general and former defense secretary said that he had been misled by the claims made by Holmes, the founder of Theranos.

    ► “It’s clear that you think AMC should accept Dogecoin. Now we need to figure out how to do that. Stay tuned!”

    — Adam Aron, the C.E.O. of AMC Entertainment, the theater chain and meme-stock darling, after conducting a poll on Twitter.

    ► “The hard-working warehouse employees who have helped sustain us during these unprecedented times should not have to risk injury or face punishment as a result of exploitative quotas.”

    — Gov. Gavin Newsom of California, who signed a bill yesterday that restricts warehouse operators from setting certain productivity quotas, which could alter Amazon’s labor practices. Business groups said that it would lead to litigation and supply-chain disruptions.


    Toast’s I.P.O. pops up

    Shares of Toast, a company that makes technology for restaurants, jumped more than 50 percent yesterday in its first day of trading. It closed the day with a market capitalization of more than $30 billion, up from an $8 billion private valuation in November. DealBook spoke with Chris Comparato, Toast’s C.E.O., about the company’s debut — and about what’s in store.

    “We had a great roadshow, there was a ton of investor interest,” Comparato said. The company priced its I.P.O. above an already raised target range, giving it a market cap of $20 billion going into the start of trading yesterday. “We felt like we priced where the business was valued,” Comparato said. “At that point, we said, ‘Pens down.’”

    Toast had to lay off about half of its staff early in the pandemic as restaurants closed during lockdowns. But helping restaurants adapt to delivery and takeout orders — what Comparato calls “an omnichannel, off-premise experience” — has become a boon for Toast, which brought in $703 million in revenue in the first half of 2021, more than in all of 2019.



    A look inside Robinhood during meme-stock mania

    The trading app Robinhood has grown explosively, gone publicand, for good measure, is now getting into crypto wallets. But internal exchanges between company managers revealed in a new legal filing — featuring Robinhood’s C.E.O., Vlad Tenev — highlight the tensions between fast growth and consumer protection.

    A class-action lawsuit brought by Robinhood users alleges that the company was negligent during a period of extreme market volatility in late January, knowing it had insufficient capital to handle all the trading by new and existing users. That ultimately led the company to impose limits on trading in meme stocks like GameStop and AMC, the subject of subsequent congressional hearings.

    Here’s a glimpse inside Robinhood in the days before it limited trading in meme stocks:

    Jan. 23: As Robinhood discussed how to manage the risks of the frenzied trading in GameStop, a company insider wrote that “the process outlined above covers firm risk well, but from a public perception POV, we may want to consider the risks our customers face. Is there a comms need or other action we should consider?”

    Jan. 25: Company engineers and executives chatted about surging trading volumes.“There are internal things that are starting to buckle under pressure,” a software engineer wrote. An engineering executive noted that a “code yellow” could be declared, putting all other work at the company on hold. “Only the paranoid survive,” Tenev responded. “One who panics first panics best,” added the company’s head of data science. “Joy,” said Tenev.

    Jan. 28: Robinhood limits trading in meme stocks during the peak of the short squeeze, facing inquiries from the National Securities Clearing Corporation about whether it had enough capital to cover the trading risk. In an internal chat, Robinhood’s chief operating officer, David Dusseault, wrote that the company was “to [sic] big for them to actually shut us down.”

    Maurice Pessah, attorney for the plaintiffs, said that the communications showed that Robinhood executives had been willing to put investors and markets at risk to advance their own interests. In a statement, a Robinhood spokeswoman told DealBook that the company stood by its decisions and that “communications cited by the plaintiffs are entirely consistent with Robinhood’s communications and actions on Jan. 28.”


    Want to share The New York Times with your friends and family? Invite them to enjoy unlimited digital access to our journalism with this special offer.

    THE SPEED READ

    Deals

    • Veritas Capital and Elliott Management, the owners of Athenahealth, are reportedly considering a sale or I.P.O. that could value the health tech firm at more than $20 billion. (Bloomberg)
    • The trading platform eToro delayed to the fourth quarter its plan to list via a SPAC merger. (CoinDesk)
    • Deutsche Bank’s C.F.O., James von Moltke, said that the banking industry in Europe needed to prepare for more consolidation. (Reuters)

    Policy

    • The E.U. unveiled a plan to require a standard charging port for all smartphones, tablets and other devices sold in the bloc. (NYT)
    • “It’s Not Really a ‘$3.5 Trillion’ Bill” (Times Opinion)
    • The wealthiest 400 households in the U.S. pay an effective federal income tax rate of just over 8 percent, White House economists say. (NYT)

    Best of the rest

    • Automakers will lose out on more than $200 billion in sales because of the global chip shortage. (Bloomberg)
    • Apple is not letting Fortnite back on the App Store until the verdict in its court case with Epic Games is final. (WaPo)
    • Male C.E.O.s with “manly” voices get paid more, a study shows. (Quartz)


    Anna Schaverien contributed reporting.

    Thanks for reading! We’ll see you tomorrow.

    We’d like your feedback. Please email thoughts and suggestions to dealbook@nytimes.com.



    Andrew Ross Sorkin, Founder/Editor-at-Large, New York @andrewrsorkin
    Jason Karaian, Editor, London @jkaraian
    Sarah Kessler, Deputy Editor, Chicago @sarahfkessler
    Stephen Gandel, News Editor, New York @stephengandel
    Michael J. de la Merced, Reporter, London @m_delamerced
    Lauren Hirsch, Reporter, New York @LaurenSHirsch
    Ephrat Livni, Reporter, Washington D.C. @el72champs


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  3. #1628  
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    September 23, 2021
    Fiat Lux

    Featured Trade:
    (THE MAD HEDGE TRADERS & INVESTORS SUMMIT VIDEOS ARE UP!)
    (WHY WARREN BUFFET HATES GOLD),
    (GLD), (GDX), (ABX), (GOLD)



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    Why Warren Buffet Hates GoldThose in the investment business are well used to the Armageddon crowd. These are the guys who are perennially predicting the collapse of the dollar, the default of the US government, hyperinflation, and the end of the world.

    Maybe after 11 years of rising, stocks are finally expensive on a relative basis?

    Their perennial recommendations are to keep all your assets in gold and silver, store at least a year’s worth of canned food, and keep your untraceable guns well-oiled and supplied with ammo, preferably in high capacity magazines.

    If you followed their advice, you lost your shirt.

    I have broken many of these wayward acolytes of their money-losing habits. But not all of them. There seems to be an endless supply emanating from the hinterlands.

    The “Oracle of Omaha” Warren Buffet often goes to great lengths to explain why he despises the yellow metal.

    The sage doesn't really care about the gold, whatever the price. He sees it primarily as a bet on fear. I imagine he feels the same about Bitcoin, the modern tulips of our age.

    If investors are more afraid in a year than they are today, then you make money on gold. If they aren't, then you lose money.

    The only problem now is that fear ain’t working.

    If you took all the gold in the world, it would form a cube 67 feet on a side, worth $5 trillion. For that same amount of money, you could own other assets with far greater productive earning power, including:

    *All the farmland in the US, about 1 billion acres, which is worth $2.5 trillion.
    *Two Apple’s (AAPL), the largest capitalized company in the world at $2.1 trillion.
    Instead of producing any income or dividends, gold just sits there and shines, making you feel like King Midas.
    I don't know. With the stock market at an all-time high, and oil trading at $70.49/barrel, a bet on fear looks pretty good to me right now.

    I'm still sticking with my long-term forecast of the old inflation-adjusted high of $2,300/ounce. But it might be very long term.

    It is just a matter of time before emerging market central bank buying pushes it up there. And who knows? Fear might make a comeback too.



    Quote of the Day“Every recession sows the seeds for the next business recovery, and every recovery sows the seeds of the next recession,” said hedge fund manager Leon Cooperman of Omega Advisors.



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  4. #1629  
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    September 24, 2021

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    Behind closed doors, the Treasury Department is devising new crypto rules.Stefani Reynolds for The New York Times


    Making the case for stablecoins

    Financial regulators are racing to regulate stablecoins. These digital currencies pegged to a stable asset like the dollar are used in crypto trading, banking and decentralized finance, addressing the problem of price volatility that plagues Bitcoin and others. Stablecoins have become an important bridge between digital currencies and the traditional financial system.

    But despite their name, stablecoins may be shaky. The urgency among regulators to rein in the industry has, in turn, generated a flurry of crypto industry lobbying all over Washington, Eric Lipton, Jeanna Smialek and DealBook’s Ephrat Livni report.

    From boom to bank run? In their short history, lightly regulated stablecoin issuers have shown that they don’t always have the cash reserves they claim. Tether, the company behind the most popular stablecoin, settled an investigation by the New York attorney general this year that alleged that it had obscured what it held in reserve. Officials fear a digital-era bank run may loom if new rules aren’t created soon for the booming stablecoin sector.

    “Regulators really start to care more when risks get greater for society,” said Jeremy Allaire, the C.E.O. of Circle, a payments and digital currency company that helped create the fast-growing stablecoin USD Coin with the crypto exchange Coinbase. Collectively, dollar-tied stablecoins have jumped from $30 billion in circulation in January to about $125 billion as of mid-September.


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    Executives are pushing their perspectives. Ahead of a Treasury Department report on stablecoins expected this fall, crypto businesses have in recent weeks held dozens of meetings with cabinet members, White House staff members, federal lawmakers and financial regulators. Tight regulations could drive innovation abroad, hamper financial inclusion, risk the dollar’s primacy and kill the promise of digital finance, the industry argues. And each company is advancing a view on regulation that, if embraced, would put them ahead of the competition.

    “If we think back on the 20th century, first you had key innovations like aviation or automobiles,” said Tomicah Tillemann, a onetime aide to Joe Biden when Mr. Biden was a senator but who now works for Andreessen Horowitz, the venture capital firm that’s a major crypto investor. “And then you have investments in regulatory frameworks that helped to bring the benefits of those technologies to larger numbers of people.”

    In other crypto news, government agencies in China today reiterated that all cryptocurrency-related activities are illegalin the country, vowing harsher crackdowns. Prices are falling.

    HERE’S WHAT’S HAPPENING

    A government cash crunch is weeks away. In a report today, the Bipartisan Policy Center said that the U.S. government could run out of cash and start missing payments on things like Social Security checks as soon as Oct. 15, but no later than Nov. 4. The White House has started to advise federal agencies to prepare for the first government shutdown since 2019.


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    Workers in risky jobs can also get a coronavirus booster shot, the C.D.C. director says. Dr. Rochelle Walensky overruled her agency’s advice by recommending an additional Pfizer vaccine dose for health care workers, teachers and others whose jobs put them at increased risk. The agency had recommended boosters only for people over 65 and those with underlying medical conditions.

    New York City sets new rules for delivery workers. The first-of-its-kind legislation requires app-based delivery companies like Grubhub to disclose their tipping policies, gives delivery workers more control over where they work and requires restaurant owners to make bathrooms available to delivery workers.

    The S.E.C. flexes its muscles on market abuse. The commission in the past week has charged 14 individuals, across eight different cases, of multimillion-dollar frauds. Yesterday, a former Oppenheimer Funds trader was charged with placing more than 3,000 illegal trades, generating $8.5 million in gains, in a “front running” scheme.

    Delta Air Lines calls for a national “no fly” list of unruly passengers. The company said in a memo to other airlines that it had banned 1,600 people, and it called for carriers to combine their internal lists. A congressional panel yesterday heard that the F.A.A. had logged 4,284 “unruly passenger reports” since January, with about three-quarters related to mask wearing.


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    What’s going on at Evergrande?

    Evergrande, the beleaguered Chinese property developer, left investors wondering yesterday about the fate of an $83 million interest payment due on a dollar-denominated bond. One bondholder told DealBook they had not been paid, but the covenants provide a 30-day grace period before a default.

    Shares of Evergrande dropped more than 10 percent today, but they are still up on recent lows. Global markets are also giving back some, but not all, of their recent gains. How worried should investors be about Evergrande’s potential collapse? Here’s a refresher on where we are and what might happen next.

    How did Evergrande get so big? The company’s billionaire founder, Xu Jiayin, is affiliated with the Chinese Communist Party, most likely giving creditors more confidence to keep lending money as Evergrande rode the country’s epic property boom. Eventually, though, Evergrande amassed more debt — some $300 billion — than it could seemingly pay back. Now, Chinese regulators are cracking down on the aggressive borrowing habits of developers as China’s property market cools.

    Could its troubles hurt the Chinese economy? A messy restructuring or default could hit confidence, drag down property prices and dent household wealth. It could also make it harder for other Chinese companies to finance their businesses with foreign investments. Avoiding that fate and containing the fallout could force China to backstop Evergrande, directly or indirectly.

    How exposed are international investors? Ralph Hamers, the C.E.O. of UBS, said Evergrande’s troubles had “not been keeping me up at night.” (UBS is an Evergrande bondholder, but the bank’s direct exposure is “immaterial,” Hamers said.) Noel Quinn, the C.E.O. of HSBC, also an Evergrande bondholder, said the situation was “concerning” but that the bank hadn’t changed its approach to commercial real estate in China. On Wednesday, the Fed chair, Jay Powell, described Evergrande’s troubles as “particular to China.”


    “The name of the game for these old guys is to show they are like her.”

    — The Times’s Christopher Schuetze on how the two leading candidates to become Germany’s next chancellor, Armin Laschet and Olaf Scholz, have pitched themselves to voters ahead of Sunday’s election. Angela Merkel is stepping down after 16 years, and much is at stake for the next leader of Europe’s largest economy. Listen to “The Daily” for more on Germany after Merkel, and here’s what else you need to know about the vote.


    A push to keep annual meetings virtual

    Last year, roughly 2,000 public companies in the U.S. held their annual shareholders meetings virtually, according to Broadridge Financial Solutions. That was up from about 300 in 2019. Now, a group of shareholder activists are pushing companies to keep those meetings virtual, or add a remote option, permanently. They are having some success.

    This week, the S.E.C. ruled that two companies, Brinker International and Campbell Soup, had to allow a shareholder vote on whether the remote option for meetings would continue. The companies had asked the S.E.C. to allow them to exclude the proposals at their upcoming meetings. After the ruling, Brinker decided to make its meeting open to remote attendees. Campbell will hold a vote on the matter at its next meeting.

    Shareholder meetings have traditionally been in-person affairs. Companies generally prefer that format because it limits attendees — and with it questions board members might face. Shareholder advocates have long said that virtual meetings level the playing field for smaller investors who might not have the resources to travel to a meeting.

    Virtual meetings “fundamentally change the scope of shareholder engagement and accessibility,” Matthew Prescott, a shareholder advocate and senior director at the Humane Society, told DealBook. His group sponsored the proposals about virtual meetings at Brinker and Campbell.

    Shareholders have long had the ability to vote remotely before a meeting. A study this year found that meetings held virtually didn’t tend to generate more shareholder engagement than in-person meetings. “These shareholder proposals will not garner any meaningful support,” said Douglas Chia, a corporate governance expert and the author of the study.


    Harper

    Weekend reading: Maximum resiliency

    The pandemic hasn’t changed everything about how we live and work, but it has changed a lot. And there is more change to come, argues the former F.D.A. commissioner Dr. Scott Gottlieb in his new book, “Uncontrolled Spread.” DealBook spoke to Dr. Gottlieb, who is a Pfizer board member, about doing business in the new world that Covid is creating. The interview has been edited and condensed.

    DealBook: What does the previous pandemic tell us about the future after this one?

    Dr. Gottlieb: The 1918 flu pandemic was an inflection point in history. Very clearly, this pandemic has changed the course of history. In terms of culture and society, it’s early to say what the effects will be. But Covid has exposed the vulnerabilities in many aspects of society — essential workers, people with lower incomes, older populations and minorities. We’ll be forced to change.

    How will workplaces change?

    A workplace needs to be made impervious to viral threats. There are no clear lines demarcating phases, but at some point, Covid will become a persistent threat, like the flu. We need to think about de-densifying spaces, better airflow, changing commutes and businesses voluntarily requiring vaccination.

    What about conferences?

    Events will have to be moved outdoors and held in specific seasons. Conferences could become more bespoke, and there will be hybrid approaches, both live and virtual.

    How else will our thinking change, in the big picture?

    We’ll have to look systematically at our entire system of government and business, the way we operate in the world, how we evaluate risks globally and, from that, create a new framework based on a need for preparedness. We will have to think about maximum resiliency versus maximum efficiency, taking a view of public health as a priority — an economic and national security issue.


    Want to share The New York Times with your friends and family? Invite them to enjoy unlimited digital access to our journalism with this special offer.

    THE SPEED READ

    Deals

    • Barry Diller’s IAC is reportedly in talks to buy the magazine publisher Meredith for $2.5 billion. (WSJ)
    • Daimler is teaming up with Stellantis to produce battery cells at new gigafactories in France and Germany. (FT)
    • Vitalize is the latest venture fund to start an angel investing program for non-accredited investors. (Twitter)
    • Gorillas, a European grocery delivery start-up, raised funds at a $3 billion valuation. (The Information)

    Policy

    • New federal flood insurance rules that reflect the real risks of climate change will make the premiums for waterfront homes soar. (NYT)
    • EQT, the largest listed private equity firm in Europe, is being investigated for market abuse in Sweden. (Bloomberg)
    • The F.E.C. rejected complaints about election interference made by Representative Matt Gaetz and former President Donald Trump against Twitter and Snapchat. (Insider)

    Best of the rest

    • The wealth gap between Black and white Americans is so enormous that only reparations can fix it, an economist argues. (NYT)
    • “When You ‘Ask App Not to Track,’ Some iPhone Apps Keep Snooping Anyway.” (WaPo)
    • A memoir from a well-connected businessman in China gives a rare insight into the interplay between money and power in the country. (NYT)
    • Rihanna, the pop star turned fashion mogul, on becoming a billionaire. (NYT)


    Anna Schaverien contributed reporting.

    Thanks for reading! We’ll see you tomorrow.

    We’d like your feedback. Please email thoughts and suggestions to dealbook@nytimes.com.



    Andrew Ross Sorkin, Founder/Editor-at-Large, New York @andrewrsorkin
    Jason Karaian, Editor, London @jkaraian
    Sarah Kessler, Deputy Editor, Chicago @sarahfkessler
    Stephen Gandel, News Editor, New York @stephengandel
    Michael J. de la Merced, Reporter, London @m_delamerced
    Lauren Hirsch, Reporter, New York @LaurenSHirsch
    Ephrat Livni, Reporter, Washington D.C. @el72champs

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  5. #1630  
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    What's your thoughts on GLD?
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  6. #1631  
    RX Senior
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    Quote Originally Posted by CoachCB View Post
    What's your thoughts on GLD?
    Did you read this today CB?

    https://www.cnbc.com/2021/09/24/is-g...nvestment.html

    I'm in WB's corner
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  7. #1632  
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    Global Market Comments
    September 24, 2021
    Fiat Lux

    Featured Trade:
    (TESTIMONIAL)
    (SEPTEMBER 22 BIWEEKLY STRATEGY WEBINAR Q&A),
    (TLT), (TBT), (V), (AXP), (MA), (FSLR), (SPWR), (USO), (UNG), (PFE), (JNJ), (MRNA), (MS), (JPM), (FCX), (X), (FDX), (GLD), (UPS), (SLV), (AAPL), (VIX), (VXX), (UAL), (DAL), (ALK), (BRK/B), (BABA), (BITCOIN), (ETHEREUM), (YELL)


    TestimonialAll my friends tell me that I’m the smartest person they know. All I’m doing is repeating back to them what I read in your newsletter, Thanks for all you do.

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    September 22 Biweekly Strategy Webinar Q&ABelow please find subscribers’ Q&A for the September 22 Mad Hedge Fund Trader Global Strategy Webinar broadcast from the safety of Silicon Valley.
    Q: When’s the United States US Treasury bond fund (TLT) going to go down?
    A: When J. Powell tapers, which will be either today or in 6 weeks. That's the time frame we’re looking at now, and people are positioning now for the taper—that's why financials are taking off like a rocket. Buy those financials and don't expect too much from your tech stocks for the next few months.
    Q: What do you think of adding corporate or municipal bonds to my portfolio?
    A: Don’t do that on pain of death please; you will lose money. Corporate bonds will get slaughtered the second interest rates turn because they have the most exposure from a credit point of view to any downgrades resulting from rising interest rates. Better to keep your money in cash than buy bonds here. It was a great idea 10 years ago, but a terrible idea today. Just buy cash or buy extremely deep-in-the-money LEAPS which will get you a 10-20% per year return.
    Q: What are the chances that the government defaults?
    A: Zero, because corporate profits this year will increase from $2 trillion to $10 trillion, spinning off massive tax revenues for the government. The deficit will come down substantially in the future as a result. Keep expecting upwards surprises in profits and taxable revenues. That may be why the (TLT) is staying so high.
    Q: I need a customized LEAPS on a stock.
    A: We do those for our concierge customers. If you’re interested, then email Filomena at customer support at support@madhedgefundtrader.com.
    Q: What brand of shot did you get?
    A: Pfizer (PFE).
    Q: The Government is showing no sign of balancing a budget and the hole will only get deeper; what are your thoughts?
    A: I agree, and that’s why I'm short the (TLT). All we need is a taper to really get some juice under that trade; we really don’t need that much. Ten-year US Treasury yields are now around 1.30% and we only need the yield to get up to about 1.70% for us to make a maximum profit on our positions. One taper hint and it could get us up to those levels.
    Q: Why is Visa (V) dropping so much?
    A: Fear of being replaced by Bitcoin. This is the big thing dragging all three credit card companies down, including American Express (AXP) and master Card (MA). That's why I have not added a Visa position among my financials in this go around.
    Q: How can the Fed unwind their balance sheet and normalize interest rates to a historical average of 4-5%?
    A: Quite easily: quit buying bonds. They’re still buying $120 billion/month worth. Technology has accelerated with the pandemic and we all know this is highly deflationary. I expect the next peak in interest rates to be only 3% or 3.5%, not the 6% we saw in the last peak in interest rates in the 2000s. So yeah, bonds are going to go down but not back to 2000’s level.
    Q: Thoughts on the Johnson & Johnson (JNJ) shot?
    A: No thank you. If you get to choose, Moderna (MRNA) is now producing the best immunity data on a year-to-date basis if you’re starting out from scratch. Some people are mixing, they start out with Pfizer and then get Moderna. They get a worse reaction because the Moderna initial reaction shot sees the Pfizer vaccine as a new virus, so you may get a small flu as a result of that.
    Q: What is the put spread you’re recommending on the TLT?
    A: The May 2022 $150-$155 vertical put spread. That is the sweet spot now on the short side on (TLT) LEAPS. You should earn a 115% profit in eight months on this trade if interest rates remain unchanged or fall.
    Q: Do you expect the ProShares Ultra Short 20 year+ Treasury ETF (TBT) to make it to $20 this year?
    A: Yes, I do; $16 to $20 isn’t that much of a move. Remember, the (TBT) is a two times short ETF.
    Q: Are you recommending bank stocks?
    A: Yes, Morgan Stanley (MS) and JP Morgan (JPM) are two of the best. They will lead the yearend rally starting from here.
    Q: When do you expect the semiconductor shortage to end?
    A: End of next year, or maybe even 2023, because what all the analysts keep underestimating is that the end of shortages is based on companies getting the chips they want today. The actual issue is that companies are designing billions of chips into their products at an exponential rate, and what they’ll need in a year from now is far higher than most people realize. The semiconductor shortage is much more structural than people realize—that's my theory. They don’t throw up a $2 billion fab overnight. So, this will keep going on for a while and be a drag on economic growth.
    Q: Are you sure we won’t see $100 oil (USO)?
    A: With oil, you're never sure about anything, although I highly doubt it. We’d have to have monster economic growth in China to get oil up to $100 a barrel. Right now, China is going the other way.
    Q: What’s your view on the debt ceiling? Will it give us a good buying opportunity?
    A: Probably not, our good buying opportunity was yesterday or Monday. These debt crises are always one minute before midnight solutions. They always get solved. Never underestimate the ability of Congressmen to spend money in their own district. So, I don’t think that would create a stock market crash like it might have done 20 years ago.
    Q: What about Freeport McMoRan (FCX)?
    A: It’s taking a dip here because of a possible real estate crash in China, and of course China is the world’s largest buyer of copper for apartment construction. I’m kind of taking a break here on Freeport McMoRan and US Steel (X) until we learn a little more about the China situation. They did move to start a bailout today. Let’s see if that continues.
    Q: When will the airlines come back?
    A: They’ll come back when business travel returns, which I think could be next year. If you eliminate the virus completely, these things double easily. That's the bet you’re making. Let’s see if the covid boosters work, the childhood shots work, and then you can take another look at Delta (DAL) and Alaska (ALK).
    Q: If Bitcoin gains mass adoption, does that put banks out of business just like electric vehicles are making oil obsolete?
    A: No, not if the banks go into the Bitcoin business. And the banks actually have the cash, resources, and infrastructure to take over the Bitcoin area once the technology matures. And the corollary to that is that the oil industry is that the majors have the infrastructure, the manpower, and the capital to take over the alternative energy business if they choose to do so and oil goes to zero, which it eventually will. The proof of that is the largest investor in all the Silicon Valley energy startups are Saudi Arabian venture capital funds. They’re huge investors in solar here. If Saudi Arabia has a lot of oil, they have even more solar. Believe me, I’ve been there.
    Q: Will a lack of inventory and rising interest rates end the bidding wars on houses soon?
    A: Only if you consider 10 years soon. That is how long it will take for the sizes of different generations to come into balance, the Millennials (85 million) versus the Gen Xers (45 million). That’s when the housing bubble will end, but that won’t be for another decade. We still have a structural shortage of new home construction (about 5 million units a year) because all the home builders who went bust in the financial crisis in 2008/2009 and never came back—all of that new construction is still missing. And the surviving ones haven’t increased production to meet that shortfall because they want to manage their risk. Eventually, they will and that probably will be the next top, but that’s really 2030 type business.
    Q: What about Federal Express (FDX)?
    A: Labor shortages. It's hitting (UPS), (FDX), the Post Office, and DHL too—all the couriers.
    Q: When do you think gold (GLD) and silver (SLV) rise back to 2,000?
    A: I am avoiding gold and silver as long as Bitcoin has buyers. The action in Bitcoin is 10x the movement you get in gold and that’s attracted all the speculative capital in the market, draining all interest from gold, which hit a new six-month low just last week.
    Q: What’s your buy target for Apple (AAPL)?
    A: I would say if you can get it at $135, that would be a gift. We did get close to $140 at the lows this week; that’s when you start nibbling, and then you double up again at $135. I doubt Apple is going down more than 10% in this cycle. There are too many people still trying to get into it. And they’re still the largest buyer of stock in the world. They only buy one stock, their own.
    Q: I never got any IPath Series B S&P 500 VIX Short Term Futures ETN (VXX) alerts.
    A: That's because we never sent any out. (VIX) has become an incredibly difficult game to play, accumulating positions for months and then trying to get out on a one-day spike that lasts a few minutes. The insiders have too much of a house advantage here, who only play from the short side. There are too many better fish to fry.
    Q: What about the Apple electric vehicle?
    A: I’ll believe it when I see it; I've been hearing about this for something like seven years. My guess is that Apple is more likely to supply consoles and parts to other EV makers and help them get into the game with software and so on. I think that will be Apple's role in all of this.
    Q: How much has China Evergrande Group stock fallen?
    A: It’s a really illiquid stock in China so we never got involved in it. I think it’s down more than half. Even the professional short-sellers like Jim Chanos and Kyle Bass, have been targeting that stock for 10 years are now screaming they’re vindicated. Of course, they lost fortunes in the meantime. So, I'll pass on that one.
    Q: What about stop losses on LEAPS trades?
    A: I don’t really run LEAPS portfolios or issue stop losses. The idea is to run these into expiration, and we’ve never had one expire out of the money, although I may break that record if TLT doesn’t turn around in the next three months.
    Q: How would autonomous trucking impact rail transportation?
    A: They’re two totally different things. Trucking companies like Yellow Corporation (YELL) carry smaller cargo for local deliveries or small long-distance deliveries. 7Some 70% of all railroad traffic is coal going to China, and the rest is bulk commodities like wood chips, iron ore, etc. Trucks don’t carry any of that, so they’re totally separate businesses. But, if we went totally autonomous on trucking, it would make all the main trucker companies massively profitable, as they get rid of their drivers. Right now, every trucking company in the US has a driver shortage.
    Q: United Airlines (UAL) pilots are now ordered to get vaccinated.
    A: I think within months to hold a job anywhere in the US, you will have to get vaccinated. They do not want you in the office without a vaccination. Jobs are not worth risking lives, and we hit 2,000 deaths again yesterday. The corporations are taking the lead, not the government. The exception will be the politically motivated companies, like the My Pillow Guy; I doubt they'll ever require vaccinations at My Pillow. And there are a few other companies such as Hobby Lobby that are also anti-vaxers. But all public transport companies, hospitals, etc., are going to say get vaccinated or get out—it’s very simple.
    Q: Should I buy Berkshire (BRKB) here?
    A: Yes, it’s a great entry point, even if you can't get my price. Go higher in the strikes or go farther out in maturity.
    Q: Is copper metal (CPER) a buy here?
    A: Probably long term, but short term will be subject to the whims of the Chinese real estate crisis if there is one.
    Q: Won’t Natural Gas (UNG) outperform in the power grid since all EVs must be charged?

    A: Not if the grid is 100% electric. Natural gas still has carbon in it, although only half as much as oil or gasoline. I think even natural gas eventually gets phased out because you can expect solar panels to improve by 80% over the next ten years. At that point, any other energy source won’t be able to compete—oil, natural gas, you name it. And that is why you don’t see any long-term money going into carbon energy sources.

    Q: Iron ore has just gone from $200 to $100, why are you bullish?
    A: Yes, Because it has just gone from $200 to $100. Eventually, China recovers, despite a short-term financial and housing crisis. Buy low, sell high—that’s my revolutionary new strategy.
    Q: What are your thoughts on Bitcoin vs Ethereum?
    A: I think Ethereum will outperform Bitcoin because it has a more modern technology. It’s only six years old, vs 12 years for Bitcoin. It’s also more efficient, using less energy in its production. In fact, we did get a double in Ethereum in August as opposed to only a 50% move in Bitcoin.
    Q: Do you have any concerns on holding the financials through earnings in October?
    A: No, I think the results will be fantastic, and I want to be long going into those.
    Q: What does the current situation with China mean for Alibaba (BABA)?
    A: Keep your stocks, you’ve already taken the hit—down 53%. The next surprise is that China quits beating up on capitalism and these things will all recover bigtime. However, any options you may have could expire before that happens. So, keep the stocks, get rid of the options, salvage whatever time value you can, and then wait for China to start doing the right thing.

    Q: What are the best solar stocks?
    A: First Solar (FSLR) and SunPower (SPWR), which have both done great.
    Q: If bonds are a no-no, and governments are getting more indebted than ever, who will buy them?
    A: Governments. The only buyers of bonds now are non-economic buyers. Those would be governments, central banks, and banks who are required by law to own certain amounts of bonds to meet regulatory capital requirements. No individual in their right mind is buying any bonds here at all, nor is any financial advisor recommending them.
    To watch a replay of this webinar with all the charts, bells, whistles, and classic rock music, just log in to www.madhedgefundtrader.com, go to MY ACCOUNT, click on GLOBAL TRADING DISPATCH, then WEBINARS, and all the webinars from the last ten years are there in all their glory.
    Good Luck and Stay Healthy.

    John Thomas
    CEO & Publisher
    The Diary of a Mad Hedge Fund Trader








    Quote of the Day?Bull markets go everywhere from 1-2 years to five years after the Fed begins tightening. We've got a long way to go before we have to worry about bonds competing against stocks,? said Professor Jeremy Siegel of the Wharton School of Business


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  8. #1633  
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    Semana Tres NFL entreténimiento.

    TAMPA BAY -1
    SD+7
    ATL / NYG Under 48
    Washington / Buffalo Under 46

    
    Read in Browser
    Top News
    Yield signs
    Shutterstock
    The markets are no strangers to delayed reactions as investors digest many different influences on a post-pandemic economy. And one arrived in the bond market in earnest yesterday. Treasury yields surged back to levels last seen in the middle of the summer. After taking the Fed's hawkish tilt, telegraphing tapering and pulling forward rate liftoff expectations on the dot plot, pretty much in stride on Wednesday, traders went the other way yesterday.

    The curve, as measured by the gap between the 2-year Treasury and the 10-year, had flattened after Fed chief Jay Powell's press conference, with the gap narrowing about 4 basis points. Yesterday saw steepening, with the gap jumping more than 10 basis points. It now stands around 117 basis points. The 10-year yield saw its biggest one-day move since February, pushing above 1.4% for the first time since early July. It's seen a ceiling of about 1.8% this year.

    "Take a step back and just think about how low yields are even relative to where we were in the first quarter of this year," Zachary Griffiths, Wells Fargo macro strategist, told Reuters. "We do have very high inflation, high economic growth forecasts and it's really been kind of hard to justify where yields have been up to this point."

    The 30-year Treasury yield surged more than 13 basis points for its biggest one-day move since March 2020 when the Fed announced QE round one. (NYSEARCA:TBT)(NASDAQ:TLT) Real yields, the difference between nominal yields and inflation, were a driver of the move, with the 10-year TIPS now at -0.9%. (NYSEARCA:TIP). That puts the 10-year breakeven inflation expectation at 2.33%, around the lowest they've been since the highs in May.

    LPL Financial's Ryan Detrick says the 10-year yield could break out of its range this week, with today's trading crucial to the weekly chart. It's "on the verge of moving higher," he says.

    Delayed Reaction: The run-up in yields didn't really start until just before stocks opened on Thursday, underscoring the argument that investors should be wary of Fed-day moves. A lot of short and long positions are unwound in a very short space of time right after the FOMC statement is released. But by the next day, the market began to look at a global landscape where central banks, the ECB excluded, are removing historically high accommodation.

    "A hawkish Fed meeting, with the dots increasing and the end of QE potentially accelerated, didn’t quite have the ability to move markets but the global dam finally broke yesterday with Norway being the highest profile developed country to raise rates this cycle (expected), but more importantly a Bank of England meeting that saw the market reappraise rate hikes," Deutsche Bank's Paul Reid writes in a note. In addition, as bond prices fell, sell stops were triggered, adding to the technical impact of the move.

    Stocks holding up: Even with the pressure higher yields puts on megacaps and other stocks with high valuations that have underpinned the stock market, the major averages closed higher thanks to reflation plays. The S&P 500 (SP500)(NYSEARCA:SPY) is now in positive territory for the week and closed above its 50-day moving average, providing some support for today's trading. Equity investors appear to be looking at the Fed moves as a sign of confidence in the recovery and a commitment to combat inflation.

    “While we are far from the end of QE and near-zero rates, the tide seems to be beginning to change," Anu Gaggar, global investment strategist at Commonwealth Financial Network, told Bloomberg. "So far, the market had welcomed bad news as good news, but a market reacting to signs of an economy able to stand on its own without the monetary policy crutches is a refreshing change.” (2 comments)


    Earnings
    NIKE trips
    NIKE (NYSE:NKE) shares are down premarket after the company's fifth consecutive earnings beat. Revenue for the quarter ended Aug 31, 2021, was slightly below expectations at $12.2B (+16% Y/Y), missing by $220M, and down $100M sequentially due to global supply chain issues and the Vietnam lockdown.

    The company reports that its owned physical retail stores have surpassed pre-pandemic levels, growing 24% Y/Y. Digital sales were up 25%, led by a 43% increase in North America. Gross margin expanded 170 bps from last year and 70 bps from the prior quarter to 46.5%, driven by NIKE Direct business margin expansion and fewer promotions, offset by higher freight costs. (13 comments)


    Tech
    iFootball
    The NFL is leaning toward Apple (NASDAQ:AAPL) as the new home for the premium Sunday Ticket programming package, The Athletic reports. That's a report contrary to conventional wisdom, which points to Amazon.com (NASDAQ:AMZN) putting in a strong bid for the out-of-market games, or ESPN (NYSE:DIS) taking it on.

    And that may be due to changes the league might like to see from the traditional one-price, all-the-games menu. Apple is reportedly considering allowing fans to pay for just one team's out-of-market games - or even individual games a la carte.

    There's still a while to go in negotiations, but one thing that seems clear is that DIRECTV (recently divested by AT&T (NYSE:T), which maintains an interest) won't keep the Sunday Ticket rights it's held for decades.
    (80 comments)


    Industrials
    China plane demand
    Boeing (NYSE:BA) slightly raises the 20-year forecast for China's airline market, forecasting the country will need 8,700 new aircraft valued at $1.47T by 2040 to meet rising air travel demand. In its annual commercial market outlook, Boeing notes the Chinese market's resilience during COVID-19 and estimates the market opportunity for commercial aviation services in the region at nearly $1.8T.

    China's economic fundamentals and a middle-income demographic that is expected to double in two decades underpin the anticipated increase in air travel, Boeing says. (34 comments)


    Trending
    Buybacks rebounding
    "Despite remaining cautious with their buyback expenditures," S&P 500 companies' stock buybacks for Q2 rose 11.6% Q/Q to $198.8B, up 124.3% from the year-ago period, S&P Dow Jones Indices says. Buybacks are 11% off the all-time high of $223B set in Q4 2018. (18 comments)

    Cryptocurrency
    China crypto crackdown
    China's crackdown on cryptos is escalating, with the People's Bank of China taking aim at transactions and Beijing making more moves to curb mining, Bloomberg reports. Bitcoin (BTC-USD) is down 1.7% and Ethereum (ETH-USD) falling 6%. (2 comments)

    Today's Markets
    In Asia, Japan +2.1%. Hong Kong -1.5%. China -0.80%. India +0.30%.
    In Europe, at midday, London -0.16%. Paris -0.72%. Frankfurt -0.51%.
    Futures at 6:20, Dow -0.11%. S&P -0.23%. Nasdaq -0.40%. Crude +0.31% at $73.53. Gold +0.33% at $1756. Bitcoin +1.4% at $44493.
    Ten-year Treasury Yield +1 bps to 1.42%

    Today's Economic Calendar
    8:45 Fed's Mester: “Bouncing Back in the Post-Pandemic Economy”
    10:00 New Home Sales
    10:00 Jerome Powell: “Fed Listens: Perspective on the Pandemic Recovery”
    10:00 Fed’s Bowman: “Fed Listens: Perspective on the Pandemic Recovery”
    10:00 Fed’s Clarida: “Fed Listens: Perspective on the Pandemic Recovery”
    10:00 Fed’s George: U.S. Economic Outlook and Monetary Policy
    12:00 PM Fed’s Bostic: “From Policy to Progress: Partnering to Create Equitable Community Development”
    1:00 PM Baker-Hughes Rig Count

    Companies reporting earnings today »

    What else is happening...
    Twitter (NYSE:TWTR) to add Bitcoin payments in its mobile app.

    Costco (NASDAQ:COST) reports double-digit sales growth in all segments.

    Federal agency calls for more regulation of Texas power grid, natural gas.

    COVID-19 test maker Cue Health (NASDAQ:HLTH) prices 12.5M-share IPO at $16.

    Brent crude (CO1:COM) settles near three-year high; WTI (CL1:COM) best since July.

    HIVE Blockchain Technologies (NASDAQ:HIVE) reports full year results.

    Seeking More
    Seeking Alpha’s Wall Street Breakfast Podcast

    Seeking Alpha's Wall Street Breakfast podcast brings you all the news you need to know for your market day. Released by 8:00 AM ET each morning, it is a quick listen that you can put on as you get ready to start your working day.


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  9. #1634  
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    September 25, 2021

    Good morning. The construction industry has hundreds of thousands of unfilled jobs — and it is likely to have more if President Biden’s infrastructure bill passes. In today’s newsletter, we examine an often overlooked issue in the industry that may prevent those jobs from getting filled — and ways to solve it.

    (Was this newsletter forwarded to you? Sign up here.)


    Michael Reynolds/EPA, via Shutterstock


    To fill jobs, expand the labor pool

    By Patrick Sisson

    The Biden administration estimates that if the $1 trillion bipartisan infrastructure bill passes, it could add two million jobs per year over a decade.

    But those jobs, mostly in construction, may be difficult to fill in an industry that is already experiencing labor shortages, with 321,000 unfilled jobs in July.

    One way some industry leaders see to address the scarcity of skilled workers? Diversify the industry.

    Nearly 90 percent of the 10.8 million people employed by the construction industry are white, and just 11 percent are women, according to the Department of Labor. Despite efforts in recent decades to make the industry more inclusive, and some progress, a long history of exclusionary hiring practices and informal recruitment networks has blocked some groups from opportunities.

    If the infrastructure bill passes, the industry could be short a million and a half to two million workers by 2025, estimates Boyd Worsham, the president of the National Center for Construction Education and Research. That would create an immediate challenge, but also an opportunity to hire from communities that the industry has ignored.


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    “Traditionally, heavy industries have not been diverse,” said Kevin DeGood, director of infrastructure policy at the liberal Center for American Progress. “The benefits for labor should flow to those communities where the work is going to be done and where jobs traditionally haven’t been.”

    The Biden administration’s initial infrastructure proposal earmarked $100 billion for new training programs, including $12 billion specifically for workers from underserved communities. (While this funding was cut from the infrastructure bill, President Biden’s $3.5 trillion social policy package does include work force training.) And some industry leaders who are seeking to plug existing talent shortages are already focusing on broadening recruitment.

    “We need diversity because it improves the outcome,” Mr. Worsham said. “Different life experiences and different ways of looking at things can apply to the work.”

    Initiatives in Maryland, Louisiana, Alabama, Georgia and elsewhere show the promise of focusing on underrepresented groups — for both the construction industry and for local communities.


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    In Baltimore, a pre-apprenticeship program called Project JumpStart has trained more than 800 participants, most of them formerly incarcerated, for construction jobs. Local building contractors started the program 15 years ago, when Johns Hopkins University sought to build a biotech campus in a predominantly Black neighborhood and employ residents during construction. It has placed 75 percent of its graduates in jobs.

    Mike Henderson, who runs JumpStart and has testified in Congress about its success, said it had been a meaningful way to expand the work force, create middle-class jobs and dispel hurtful stereotypes about his hometown.

    “Remember the Freddie Gray riots?” said Mr. Henderson, a chapter president of the Associated Builders and Contractors. “Baltimore was taking an incredible P.R. hit. The narrative was that nobody really wanted to work, that people were happy to protest. We knew that wasn’t true.”

    Pushing past stereotypes has also been a driving factor for an Associated Builders and Contractors program that trains prisoners at the Louisiana State Penitentiary, known as Angola, in carpentry and electrical work.


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    “When they come out of their incarceration period, they can fully re-enter society, and can better define their own long-term employment prospects,” said the local chapter president, David Helveston. About 1,400 prisoners have completed the program since it started in 2010.

    Other programs, such as Power UP in Birmingham, Ala., seek to encourage, educate and place women in construction trades. Kathleen Culhane, president of Nontraditional Employment for Women, or NEW, which has been training women for jobs in construction and other trades since 1978, said the organization’s partners in trade unions now set aside 15 percent of their job slots for NEW graduates. (It was 10 percent about five years ago.)

    In the early ’80s, women could show up at a construction site, tools in hand, and wouldn’t be able to find work, Ms. Culhane said. Despite progress, she said, there’s still work to be done, especially in providing access for women of color to these “life-sustaining, family-sustaining careers.” Women still fill just 3 percent of “hands on tools” jobs (as opposed to management and administrative jobs) in the construction industry, according to NEW.

    To improve those disparities, other programs target a younger audience, when stereotypes about who can work in construction may be less entrenched. The Construction Education Foundation of Georgia, founded in 1993, shares construction skills and training with around 20,000 students in 175 elementary and secondary schools statewide. In districts that fully adopt the program, students encounter construction education from second grade on, including themed lesson plans in math and science classes, and even apprenticeship programs in high school to help students graduate into the field with a job.

    “We’re building bridges between industry and education, and all genders and ethnicities are able to try this out,” said Zach Fields, vice president of the foundation.

    Actively opening the construction industry to a broader range of people would increase the pool of recruits, allowing for more opportunities to train them to assume in-demand positions. But it wouldn’t be a silver bullet. Better wages, labor standards and benefits would also help attract more workers to long-term careers in the skilled trades, especially when wages are rising for jobs that require less training.

    Andrew Garin, an economics professor at the University of Illinois, said the overall economic data didn’t point to a shortage of workers building infrastructure as much as a shortage of workers at the going rate.

    “Sure, I could say there’s a shortage of affordable Ferraris,” he said, adding that policymakers should understand that the industry needs training programs with better incentives.

    Mr. DeGood believes that if the final social policy bill does not include money for training, Congress will eventually appropriate more funding. It will become obvious, he said, that you can’t “snap your fingers and create a new labor force.”


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    Andrew Ross Sorkin, Founder/Editor-at-Large, New York @andrewrsorkin
    Jason Karaian, Editor, London @jkaraian
    Sarah Kessler, Deputy Editor, Chicago @sarahfkessler
    Stephen Gandel, News Editor, New York @stephengandel
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  10. #1635  
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    Stocks flip-flopped between gains and losses Friday to end a volatile week on Wall Street, as investors appeared content to consolidate positions after worries over China Evergrande and a slowing global economy prompted traders to pull $28.6 billion from U.S. equity funds over the first three days of the week, the most since February 2018. But stocks then staged a two-day rally after the Federal Reserve signaled no removal of its easy money policy, at least for now. Tech stocks trailed Friday after a crackdown on bitcoin by China overnight hurt sentiment in the sector, but financial stocks rose as the 10-year U.S. Treasury yield reached its highest since July. For the week, the Dow gained 0.6% and the S&P 500 added 0.5% while the tech-heavy Nasdaq finished flat.

    Stocks
    China property crisis
    The possibility of China property company Evergrande collapsing and overall worries about China's crackdown on indebted firms took a toll on Hong Kong shares. The Hang Seng Index (HSI) fell more than 3% on Monday with China and Japan closed for a holiday. The benchmark index hit an 11-month low, with the index tracking construction and property off more than 6%. Evergrande (OTCPK:EGRNF)(OTCPK:EGRNY) sunk more than 11% and has fallen more than 80% this year as it struggles to meet debt payments. The company has more than $300B in debt and defaulted on an interest payment on a bond later in the week.

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    Energy
    Permian purchase
    ConocoPhillips (NYSE:COP) will become the second-largest oil and gas producer in the Lower 48 U.S. states following its $9.5B acquisition of Shell's assets in the Permian Basin, as the pecking order is reshuffled among top U.S. shale drillers. Adding an estimated 200K boe/day will put Conoco within striking distance of leader Exxon Mobil (NYSE:XOM), which is expected to produce about 1M boe/day from the Lower 48 this year. Conoco's deal will propel it past Chevron (NYSE:CVX), EQT Corp. (NYSE:EQT), Occidental Petroleum (NYSE:OXY) and EOG Resources (NYSE:EOG), according to consulting firm Rystad Energy.

    Central Banking
    Fed evolution
    The Federal Reserve avoided a shock to equities in an already weak September, but will investors remain comfortable with the hawkish tilt? As expected from its decision yesterday, members pulled forward rate-hike expectations on the dot plot. And Fed chief Jay Powell telegraphed a tapering announcement at the next meeting in November. Tapering is expected to end around mid-2022 and liftoff could occur after that, although 2023 still seems the most likely timing for the start of rate hikes for now.

    "What is clear is that inflation is likely to be the determining factor for liftoff and the pace of rate hikes," Deutsche Bank Chief U.S. Economist Matthew Luzzetti writes in a note. "If inflation is at or below the Fed's current forecast next year of 2.3% core PCE, liftoff is likely to come in 2023, consistent with our view. However, if inflation proves to be higher with inflation expectations continuing to rise, the first rate increase could well migrate into 2022." Scott Ruesterholz, portfolio manager at Insight Investment, is expecting a gradual liftoff and notes the Fed "is expecting inflation to run above 2% through 2024 even as they keep rates below their neutral 2.5% estimate." "That shows how committed they are to fostering as strong of a labor market recovery as possible." But was also the discussion and debate about asset purchases and how to communicate a taper within the FOMC and the markets a waste of energy?


    Consumer
    Nike and peers fall
    NIKE (NYSE:NKE) shares fell hard despite the company's fifth consecutive earnings beat. Revenue for the quarter ended Aug 31, 2021, was slightly below expectations at $12.2B (+16% Y/Y), missing by $220M, and down $100M sequentially due to global supply chain issues and the Vietnam lockdown. The company reports that its owned physical retail stores have surpassed pre-pandemic levels, growing 24% Y/Y. Digital sales were up 25%, led by a 43% increase in North America. Gross margin expanded 170 bps from last year and 70 bps from the prior quarter to 46.5%, driven by NIKE Direct business margin expansion and fewer promotions, offset by higher freight costs. Investors reacted to softer guidance than anticipated from Nike and concerns over the impact of inventory all the way into spring from the supply chain disruption. Peers Adidas (OTCQX:ADDYY), Deckers Outdoor (NYSE:DECK) and JD Sports (OTCPK:JDSPY) also fell after the Nike numbers dropped.

    U.S. Indices
    Dow +0.6% to 34,798. S&P 500 +0.5% to 4,455. Nasdaq +0.% to 15,048. Russell 2000 +0.8% to 2,254. CBOE Volatility Index -14.7%to 17.75.

    S&P 500 Sectors
    Consumer Staples -0.3%. Utilities -1.2%. Financials +2.2%. Telecom -0.7%. Healthcare -0.4%. Industrials +0.8%. Information Technology +1.%. Materials +0.1%. Energy +4.7%. Consumer Discretionary +0.3%.

    World Indices
    London +1.3% to 7,051. France +1.% to 6,638. Germany +0.3% to 15,532. Japan -0.8% to 30,249. China 0.% to 3,613. Hong Kong -2.9% to 24,192. India +1.8% to 60,048.

    Commodities and Bonds
    Crude Oil WTI +2.8% to $73.98/bbl. Gold -0.1% to $1,750.4/oz. Natural Gas +1.4% to 5.174. Ten-Year Treasury Yield -0.6% to 132.09.

    Forex and Cryptos
    EUR/USD -0.05%. USD/JPY +0.71%. GBP/USD -0.49%. Bitcoin -11.8%. Litecoin -15.1%. Ethereum -15.2%. Ripple -11.9%.

    Top Stock Gainers
    Zivo Bioscience (NASDAQ:ZIVO) +95%. Marin Software Inc (NASDAQ:MRIN) +80%. Aerocentury Corp (NYSE:ACY) +66%. Medirom Healthcare Technologies Inc ADR (NASDAQ:MRM) +58%. Ensysce Biosciences Inc (NASDAQ:ENSC) +52%.

    Top Stock Losers
    Eargo Inc (NASDAQ:EAR) -68%. Innovage Holding Corp (NASDAQ:INNV) -49%. Nuvalent Inc Cl A (NASDAQ:NUVL) -37%. Beyondspring Inc (NASDAQ:BYSI) -33%. China Liberal Education Holdings Ltd (NASDAQ:CLEU) -32%.

    Where will the markets be headed next week? Current trends and ideas? Add your thoughts to the comments section.

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  11. #1636  
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    NFL 8-4 on the season 2-2 week three.




    September 27, 2021
    Continue reading the main story
    SUPPORTED BY

    Good morning. (Was this newsletter forwarded to you? Sign up here.)


    How big is Ozy, really?Bryan Bedder/Getty Images for Ozy Fusion Fest 2017


    A meeting gone wrong

    “As he spoke, however, the man’s voice began to sound strange to the Goldman Sachs team, as though it might have been digitally altered.” That is the eye-opening revelation in a new column by The Times’s Ben Smith about Ozy, a digital media company that has raised tens of millions of dollars from investors like Laurene Powell Jobs, Marc Lasry, Ron Conway, Axel Springer, LionTree, iHeart Media, the Ford Foundation and others.

    When Ozy was closing in on a $40 million investment from Goldman Sachs, things got weird. On a conference call that Ozy arranged in February, members of Goldman’s asset management division were expecting to hear from a YouTube executive about the media outlet’s extensive reach on the site. After the strange audio on the call, the Goldman investors reached out to the YouTube executive. He said he wasn’t on the call.

    Really weird: It turns out that Samir Rao, the co-founder and C.O.O. of Ozy, was impersonating the YouTube executive on the call, according to four people who were briefed on the meeting. Carlos Watson, the C.E.O. of Ozy, attributed the incident to a mental health crisis. Rao took time off work after the call and is now back at Ozy. (Watson and Rao both once worked for Goldman.)


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    Ozy, founded in 2013, has for years raised eyebrows over its claims about its audience size. “Trying to fool the world’s most famous bank, even by the hype-ridden standards of the media business, is way over the line,” Ben writes. Watson told Ben in an email that he understood the skepticism but that Ozy’s growth “has been completely real.”

    The security team at Google determined a crime might have been committed and alerted the F.B.I. Goldman Sachs has since received an inquiry from federal law enforcement officials. Watson said that Ozy had not been contacted by investigators.

    Investors were split in their reaction. Lasry, a hedge fund manager, said “the board was made aware of the incident, and we fully support the way it was handled.” Darren Walker, the president of the Ford Foundation, which backed Ozy with grants, said he had confidence in the company. A spokeswoman for Powell Jobs’s Emerson Collective distanced the company from Ozy, saying that it did not participate in Ozy’s latest investment round and has not served on its board since 2019.

    In April, two months after Goldman Sachs walked away, Ozy raised another round of financing, Ben writes.


    HERE’S WHAT’S HAPPENING

    Are President Biden’s spending plans doomed? A $3.5 billion spending package and $1 trillion infrastructure bill are in trouble after Democratic lawmakers whose votes are crucial in a narrowly divided Congress, including Senator Kyrsten Sinema and three House members from Texas, expressed opposition to tax increases. Speaker Nancy Pelosi delayed a vote on the $1 trillion bill to Thursday.


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    Angela Merkel’s party comes up short in Germany. In yesterday’s election, the center-left Social Democratic Party led by Olaf Scholz won 1.6 percentage points more of the vote than Merkel’s Christian Democratic Party. But with only around 26 percent of the vote, the Social Democrats will have to form a coalition to govern, which could get messy.

    Britain struggles with fuel shortages and other supply disruptions. Panic buying led to long lines at gas stations over the weekend, with many saying that they are now out of fuel. An acute shortage of truck drivers is behind fuel and food shortages, leading Prime Minister Boris Johnson to issue thousands of special visas for foreign drivers and to suspend some competition rules.

    Google takes on the E.U. in court. A five-day hearing starts today in which the tech giant is challenging a 2018 antitrust fine of more than $5 billion. The European Union said that Google had abused its power in the smartphone market; the penalty was the first in a number of rulings targeting U.S. tech giants in Europe.

    Huawei’s long-running sanctions case is resolved. Meng Wanzhou, the Chinese company’s finance chief who had been detained in Canada since 2018, reached a deal with the U.S. Justice Department, allowing her to return to China in exchange for admitting wrongdoing in a fraud case that became symbolic of China and America’s fraying relationship. In return, two Canadians who had been imprisoned in China since Meng’s detention were freed.


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    Polestar’s $20 billion SPAC deal

    Polestar, the Swedish high-end electric vehicle company, has signed a deal to go public at a $20 billion valuation, via a merger with a SPAC backed by the Gores Group and Guggenheim Capital. Polestar is owned by Volvo Cars and Volvo’s Chinese parent, Geely, with other investors including Leonardo DiCaprio. Polestar’s equity owners will roll over all of their interest in the deal and ultimately retain a 94 percent stake in the company.

    Polestar has two models on the road, and it wants to launch three more by 2024. It delivered approximately 10,000 vehicles in 2020, but lags far behind the market leader, Tesla. “Compared to us, Tesla is a very old company,” said Thomas Ingenlath, Polestar’s C.E.O. Rather than spend capital building out electric-charging infrastructure, as Tesla did, Polestar can take advantage of existing infrastructure, he said. (In the U.S., that may still not be enough.)


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    Its valuation is conservative — for an electric car company. Lucid, which went public via SPAC in July, is valued at $41 billion. Rivian is expected to be valued at about $70 billion in its coming I.P.O. Tesla is worth nearly $770 billion. “Public markets are a little bit more challenging today, especially for SPACs,” said Mark Stone, the C.E.O. of Gores Group. The deal includes $250 million in financing, which the Gores Group chair, Alec Gores, said can be adjusted as needed, as in the case of redemptions by SPAC shareholders. (In premarket trading, the SPAC’s stock jumped above its I.P.O. price, a rarity among pre-merger SPACs these days.) The deal includes a six-month lockup period.

    The deal comes amid heightened tensions between the U.S. and China. Polestar manufactures cars in China but “we are a European company,” Ingenlath said, noting that the company’s headquarters are in Sweden. The SPAC sponsors studied the “China issue” thoroughly, Gores said, adding that Polestar has manufacturing capabilities outside of China, like those it’s building in the U.S., that can be tapped as necessary.


    “This is not like neurosurgery where you might want to pay a premium for someone to have years of experience.”

    — Sabrina Corlette, a research professor at Georgetown who has studied coronavirus testing practices. Some start-ups charge as much as $380 per test (usually less than $20 at a drugstore). Insurers must pay certain labs whatever price they list online, which has led to court battles and calls for price caps.


    The week ahead

    ► A debt deadline looms: Thursday is the deadline for the Senate to pass a bill that would avert a partial government shutdown the next day. And the government’s borrowing authority could run out as soon as next month. Republicans and Democrats have long sparred over the debt ceiling, but this time the odds are growing that the U.S. could default.

    ► Evergrande uncertainty: The property developer appeared to miss an $83 million interest payment last Thursday. Markets have steadied amid reassurances from China that it can contain a crisis, but the government’s plan to deal with the fallout for the economy has yet to take shape.

    ► Consumer confidence: Tomorrow, the Conference Board is set to report its consumer confidence index for September. The results for the previous month showed the index’s sharpest decline since February.

    The New York Times

    From the TimesMachine: Thousands of commuters in London’s financial district experienced a moving walkway for the first time on this day in 1960, when a passageway between two subway platforms received an upgrade. The Times reported that plans for a similar conveyor belt system in New York had been abandoned a few years before, dismissed as impractical.


    Tracking China’s corporate crackdown

    China’s ability to blend top-down control of politics with market-based capitalism was for years seen as a source of strength. That balancing act, though, appears to be teetering. Economic growth is slowing and the country is facing a potential financial crisis in the collapse of Evergrande.

    China’s reaction to its challenges is to exert greater control over its largest companies, making it clear who calls the shots in the world’s second-largest economy. This has significant implications for foreign investment, geopolitics and more, as a quick tour of some of Beijing’s recent crackdowns shows:

    Cryptocurrency: On Friday, China bolstered its ban on all activity linked to digital currencies, which some saw as part of a broader effort to channel citizens away from private financial services providers, which include popular apps like AliPay and WeChat. The move could also be seen in the context of the Chinese central bank’s development of its own digital currency, which would allow it to track and control transactions.

    Technology: China has been turning the screws on its largest tech companies, citing unfair competition. Officials recently limited online game playing to three hours a week for anyone under 18, denting companies like Tencent. Earlier this summer, Chinese officials stopped Didi from signing up new users days after China’s largest ride-sharing app listed its shares in the U.S. The government said it had to do with data privacy, but the timing cast a chill over Chinese companies listing abroad.

    Electric vehicle manufacturers: China is putting the brakes on its homegrown electric vehicle industry, which has been fueled by government subsidies. This month, a minister declared that the country had “too many” EV companies.

    For-profit education companies: In July, China banned tutoring companies from making profits and restricted foreign investment in the $100 billion sector. It is now estimated to be worth considerably less.


    Want to share The New York Times with your friends and family? Invite them to enjoy unlimited digital access to our journalism with this special offer.

    THE SPEED READ

    Deals

    • Evergrande’s electric vehicle unit pulled plans for a secondary listing in Shanghai after warning of a “serious shortage of funds.” (FT)
    • The Chinese oil company Cnooc is planning a $5.4 billion listing in Shanghai after it was delisted from the NYSE. (Yahoo Finance)
    • A bidding war is breaking out over the German pet food retailer Zooplus. (Bloomberg)
    • SPAC shareholder redemptions are running at more than 50 percent, a sign that the blank-check boom may be turning to bust. (FT)

    Policy

    • If the debt ceiling isn’t raised, the Fed has an emergency playbook that could guide its response. (WSJ)
    • YouTube’s C.E.O. said free speech is a “core value” of the company, in her first comments since the platform removed content in response to pressure from the Russian government. (Bloomberg)
    • Britain’s largest police force is expanding its facial recognition capabilities. (Wired)

    Best of the rest

    • As the North Sea’s oil production wanes, can floating wind turbines offer an alternative? (NYT)
    • “There’s Another Gender Pay Gap: Stock Options.” (WSJ)
    • Orlando, Fla., is making a major effort to become a tech hub. (Insider)
    • Walter Scott Jr., the Omaha businessman who made billions buying utilities with his childhood friend Warren Buffett, died at age 90. (Bloomberg)
    • An obscure tracker of used-car prices has become Wall Street’s leading inflation indicator. (NYT)


    Anna Schaverien contributed reporting.

    Thanks for reading! We’ll see you tomorrow.

    We’d like your feedback. Please email thoughts and suggestions to dealbook@nytimes.com.



    Andrew Ross Sorkin, Founder/Editor-at-Large, New York @andrewrsorkin
    Jason Karaian, Editor, London @jkaraian
    Sarah Kessler, Deputy Editor, Chicago @sarahfkessler
    Stephen Gandel, News Editor, New York @stephengandel
    Michael J. de la Merced, Reporter, London @m_delamerced
    Lauren Hirsch, Reporter, New York @LaurenSHirsch
    Ephrat Livni, Reporter, Washington D.C. @el72champs

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  12. #1637  
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    Global Market Comments
    September 27, 2021
    Fiat Lux
    Featured Trade:(THE MAD HEDGE SUMMIT VIDEOS ARE UP)
    (MARKET OUTLOOK FOR THE WEEK AHEAD, or THE YEAREND RALLY HAS BEGUN),
    (DIS), (TLT), (SPY), (GS), (JPM), (BLK), (MS), (BRKB), (GOOG)


    The Mad Hedge Summit Videos are UpThe Mad Hedge Summit videos are up from the September 14-16 confab. Listen to 27 speakers opine on the best strategies, tactics, and instruments to use in these volatile markets. It is a true smorgasbord of investment strategies. Find the best one to suit your own goals.

    The product discounts offered last week are still valid. Start, stop, and pause the videos at your leisure. Best of all, access to the videos is FREE. Access them all by clicking here at www.madhedge.com, click on SEPTEMBER 14-16, 2021 REPLAYS in the upper right-hand corner, and then chose the speaker of your choice.





    The Market Outlook for the Week Ahead, or The Yearend Rally has BegunThe calls started coming in as soon as the market closed.

    More than a dozen subscribers called, emailed, and texted me on Thursday to say that they just had the best day in the market this year, and for some, their entire lives.

    Holding fire until you saw the whites of their eyes worked. I used both visits to the (SPY) to $430 to load the boat with financial stocks, which then took off like a tribe of scalded chimps.

    Mad Hedge made 5.6% on that day alone. One Concierge client reported a breathtaking $5.3 million profit after dumping a lot of his techs and piling into banks and brokers. Suffice it to say that I am very welcome in a well-to-do suburb of Seattle, Washington.

    The washout was so dramatic and the recovery so rapid I think it is safe to say that our fall correction is over. We may get some small retracements and sideways chop from here. But the writing is on the wall. We are headed to new all-time highs in stocks by the end of 2022.

    I received a lot of questions about how easily I was able to spot the bottom so easily. A Volatility Index (VIX) of $29 was a big help. So was the outflow of $34 billion from equity ETFs and mutual funds the previous week, the most in six months. And when the Mad Hedge Market Timing Index hits a rare low of 19, you don’t sit on your hands very long.

    The $300 billion China Evergrande Group debt crisis gave us the crisis and the final flush we needed to establish a clear bottom.

    Nothing else can stop this. New Covid cases are falling off a cliff, and childhood vaccinations out next month will accelerate this trend.

    A massive infrastructure budget will pass in congress. It is almost irrelevant whether it’s a $3.5 trillion or $1.5 trillion. It will be more than can be spent in any reasonable amount of time.

    In the meantime, the ultimate driver of share prices, the exponential growth of post covid corporate profits, continues unabated.

    The wall of money keeps getting ever larger. The Fed reported that in Q2, Household Net Worth soared by $5.9 trillion is an incredible $141.7 trillion largely through the appreciation of stock and home prices. The Fed balance sheet has exploded from $4.1 trillion to $8.4 trillion in a mere 18 months.

    This will continue for another decade. Keep piling on those leveraged long-term LEAPS. Flat is the new down.

    Enjoy.

    Four to six Interest RatesRises by 2024 which may start as early as 2024, says Fed governor Jay Powell. The taper could start in November. Bonds rose slightly on the news, but the writing is now definitely on the wall. The Fed now expects a stratospheric 5.9% GDP for 2021 and 3.8% for 2022. Sell all rallies in the (TLT) and buy all financial stocks.

    Bonds Crash, down -$3.43 points after Jay Powell’s super bearish comments from Wednesday soak in. The 50-day moving average has been smashed and the next target is the 200-day at $1344.59. Watch the 50-day rollover from here on. My final target is a 1.76% yield on the ten-year US Treasury bond by January.

    Back up the Truck, it’s time to load up on stocks on the back of yesterday’s 985-point swan dive. You especially want domestic recovery ones that benefit from rising interest rates, like banks, brokers, fund managers, commodities, and steel. The taper may be only weeks away and will drive stocks to new highs by yearend. You wanted a dip to buy, so buy the dip. Don’t expect much from technology stocks for a while.

    China’s Largest Real Estate Developer Goes Bust, China Evergrande Group, with $300 billion in debt. The move smashed risk markets globally, opening the Dow Average down 650. Bitcoin plunged 10%. Is this China’s Lehman moment, or just another day at the office? It does take them another step back towards real communism.

    China Bans Crypto, triggering a 7% plunge in Bitcoin. Financial systems the government can’t control are forbidden in the Forbidden City. It’s all part of a flight out of a restricted Yuan into unrestricted crypto by wealthy Chinese. China used to account for 99% of all Bitcoin mining and now it is at zero. The business will flock to the US, Canada, and any other country with cheap electricity. It’s a short-term negative for crypto but a long term positive. Buy Bitcoin and Ethereum on the dip.

    Pfizer Boosters for over 65 were approved by the FDA for immediate distribution. Those younger will have to wait. It turns out that the Pfizer effectiveness drops from 99% to 66% in eight months. That puts older recipients, like me, at risk. Under 12 kids to come in October. See you at Costco! Buy (PFE) on dips.

    Pandemic Tops 1918 US Death Toll at 675,000, although on a per capita basis we are still only a third of the Spanish Flu. We are not even close to this ending yet. We need vaccinations for kids and booster shots for all to be dome with this, getting national immunity up to 90%.

    Housing Starts for August up 3.9% with apartment buildings the big driver. Single family homes fell. Building Permits are up 6.0% and are a 50% increase from the summer lows.

    Existing Home Sales Drop, by 2% in August to 5.88 million units annualized according to a signed contract basis. Only 1.29 million homes are for sale, a 2.6-month supply, down 13% YOY. The Median Price rose to an eye-popping $356,700, up 14.9% YOY. Million-dollar homes are up 40% YOY.

    Google (GOOG) Buys $2.1 Billion in New York Office Space, which is why I love this company. You can forget about those end of New York City stories. Always follow the money, where companies are putting their money, and you will find great stock. Or so the chairman of JP Morgan Bank taught me 40 years ago. Buy (GOOG) on dips.

    Weekly Jobless Claims Pop to 351,000 last week, up 16,000. Leading Economic Indicators jump in August, coming in at 0.9%. March saw the high for the year at 1.3%. Getting a lot of noisy and conflicting economic data points this week as delta works its way through the system.

    My Ten-Year View


    When we come out the other side of pandemic, we will be perfectly poised to launch into my new American Golden Age, or the next Roaring Twenties. With interest rates still at zero, oil cheap, there will be no reason not to. The Dow Average will rise by 800% to 240,000 or more in the coming decade. The American coming out the other side of the pandemic will be far more efficient and profitable than the old. Dow 240,000 here we come!

    My Mad Hedge Global Trading Dispatch saw a robust +6.63% gain so far in September. My 2021 year-to-date performance soared to 85.20%.The Dow Average was up 13.60% so far in 2021. September 23 saw my biggest up day of the year, some 5.61%

    I held fire until the Dow Average 1,000-point washout, then loaded the boat with financial stocks, writing the trade alerts as fast as I could. That leaves me 70% long financial stocks, 10% in cash, and 20% in short (TLT).

    That brings my 12-year total return to 507.75%, some 2.00 times the S&P 500 (SPX) over the same period. My 12-year average annualized return now stands at an unbelievable 43.52%, easily the highest in the industry.

    My trailing one-year return popped back to positively eye-popping 117.34%. I truly have to pinch myself when I see numbers like this. I bet many of you are making the biggest money of your long lives.

    We need to keep an eye on the number of US Coronavirus cases at 43 million and rising quickly and deaths topping 688,000, which you can findhere.

    The coming week will be slow on the data front.

    On Monday, September 27 at 8:30 AM, Durable Goods are for August are reported.

    On Tuesday, September 28 at 9:00 AM, The S&P Case Shiller National Home Price Index for July is published.
    On Wednesday, September 29 at 10:00 AM, we get Pending Home Salesfor August.
    On Thursday, September 30 at 8:30 AM, Weekly Jobless Claims are announced. The final report of the Q2 US GDP is disclosed.
    On Friday, October 1 at 8:30 AM, we learn Personal Income and Spending for August. The September Nonfarm Payroll Report is not out for another week due to the first day of the month rule. At 2:00 PM, the Baker Hughes Oil Rig Count is disclosed.

    As for me, when I first met Andrew Knight, the editor of The Economistmagazine in London 45 years ago, he almost fell off his feet. Andrew was well known in the financial community because his father was a famous WWII Battle of Britain Spitfire pilot from New Zealand.

    At 34, he had just been appointed the second youngest editor in the magazine’s 150-year history. I had been reporting from Tokyo for years, filing two stories a week about Japanese banking, finance, and politics.

    The Economist shared an office in Tokyo with the Financial Times, and to pay the rent, I had to file an additional two stories a week for them as well. That’s where I saw my first fax machine, which then was as large as a washing machine even though the actual electronics would fit in a notebook. It cost $5,000.

    The Economist was the greatest calling card to the establishment one could ever have. Any president, prime minister, CEO, central banker, or war criminal were suddenly available for a one-hour chat about the important affairs of the world.

    Some of my biggest catches? Presidents Gerald Ford, Jimmy Carter, Ronald Reagan, George Bush, and Bill Clinton, China’s Zhou Enlai and Deng Xiaoping, Japan’s Emperor Hirohito, terrorist Yasir Arafat, and Teddy Roosevelt’s oldest daughter, Alice Roosevelt Longworth, the first woman to smoke cigarettes in the White House in 1805.

    Andrew thought that the quality of my posts was so good that I had to be a retired banker at least 55 years old. We didn’t meet in person until I was invited to work the summer out of the magazine’s St. James Street office tower, just down the street from the palace of Prince Charles.

    When he was introduced to a gangly 25-year-old instead, he thought it was a practical joke, which The Economist was famous for. As for me, I was impressed with Andrew’s ironed and creased blue jeans, an unheard-of concept in the Wild West.

    The first unusual thing I noticed working in the office was that we were each handed a bottle of whisky, gin, and wine every Friday. That was to keep us in the office working and out of the pub next door, the former embassy of the Republic of Texas from pre-1845. There is still a big white star on the front door.

    Andrew told me I had just saved the magazine.

    After the first oil shock in 1972, a global recession ensued, and all magazine advertising was cancelled. But because of the shock, it was assumed that heavily oil-dependent Japan would go bankrupt. As a result, the country’s banks were forced to pay a ruinous 2% premium on all international borrowing. These were known as “Japan rates.”

    To restore Japan’s reputation and credit rating, the government and the banks launched an advertising campaign unprecedented in modern times. At one point, Japan accounted for 80% of all business advertising worldwide. To attract these ads, the global media was screaming for more Japanese banking stories, and I was the only person in the world writing them.

    Not only did I bail out The Economist, I ended up writing for over 50 business publications around the world in every English-speaking country. I was knocking out 60 stories a month, or about two a day. By 26, I became the highest-paid journalist in the Foreign Correspondents’ Club of Japan and a familiar figure in every bank head office in Tokyo.

    The Economist was notorious for running practical jokes as real news every April Fool’s Day. In the late 1970s, an April 1 issue once did a full-page survey on a country off the west coast of India called San Serif.

    It warned that if the West coast kept eroding, and the East coast continued silting up, the country would eventually run into India, creating serious geopolitical problems.
    It wasn’t until someone figured out that the country, the prime minister, and every town on the map was named after a type font that the hoax was uncovered.
    This was way back, in the pre-Microsoft Word era, when no one outside the London Typesetter’s Union knew what Times Roman, Calibri, or Mangalmeant.
    Andrew is now 82 and I haven’t seen him in yonks. My business editor, the brilliant Peter Martin, died of cancer in 2002 at a very young 54, and the magazine still awards an annual journalism scholarship in his name.
    My boss at The Economist Intelligence Unit, which was modelled on Britain’s MI5 spy service, was Marjorie Deane, who was one of the first women to work in business journalism. She passed away in 2008 at 94. Today, her foundation awards an annual internship at the magazine.
    When I stopped by the London office a few years ago, I asked if they still handed out the free alcohol on Fridays. A young writer ruefully told me, “No, they don’t do that anymore.”

    Good Luck and Good Trading.

    John Thomas
    CEO & Publisher
    The Diary of a Mad Hedge Fund Trader




    Quote of the Day"It is fine to have the longest view in the room, as long as the thing at the end of the vista is a gigantic hill of money," said John Lanchester of The New Yorker magazine.





    This is not a solicitation to buy or sell securities
    The Mad Hedge Fund Trader is not an Investment advisor
    For full disclosures click here at:

    http://www.madhedgefundtrader.com/disclosures

    The "Diary of a Mad Hedge Fund Trader"(TM)
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  13. #1638  
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    Top News
    Fed musical chairs
    Shutterstock
    Two regional Federal Reserve bank presidents are leaving their positions early in the wake of controversy over portfolio holdings. Boston Fed President Eric Rosengren and Dallas Fed President Robert Kaplan will depart over the next 10 days.

    Rosengren announced his Sept. 30 departure early Monday, saying he needs a kidney transplant. He was due to retire in June next year and at the time of the statement there was speculation his involvement in the controversy over the portfolios and trading of Fed officials played a part in the decision.

    Dallas Fed President Robert Kaplan's announcement that he would leave on Oct. 8 confirmed those suspicions as he said specifically he is leaving to eliminate distractions caused by his trading. Kaplan traded millions of dollars in securities last year, including individual high-valuation megacap stocks that benefit from lower interest rates. Rosengren came under scrutiny for securities tied to real estate and securities the Fed bought last year. Neither ran afoul of any of the current Fed rules on holdings and trading.

    Fed Chairman Jerome Powell has opened an ethics panel over the issue and said at his recent press conference changes to current rules must happen. Powell reportedly also held securities that the Fed bought.

    Dot plot shuffle: While a rare occurrence, the loss of two regional presidents underscores the dangers of a market trading as though the Fed is a static entity represented by its Summary of Economic Projections rather than a fluid group where minds can change quickly.

    Along with the plan for asset tapering, the focus of the last FOMC was on the dot plot of rate forecasts that moved market expectations forward to an initial hike in 2022. Now two of those dots are going away. Rosengren and Kaplan are both in the hawkish camp, with Kaplan considered one of most hawkish voices for the Fed in calling for removal of accommodation. Two dovish replacements could quickly shift the dots back to liftoff in 2023. (District presidents are identified through a search committee formed by the respective bank).

    When it comes to FOMC voting on rates, the rotation was set to bring in three hawkish regional presidents next year: Rosengren, St. Louis President James Bullard and Kansas City Fed President Esther George, as well as hawkish-leaning Cleveland Fed President Loretta Mester. And there could be further shifts in the Fed makeup. Powell's renomination is not secured. Although it looks like the continuity would please the markets, President Joe Biden could ensure more dovish leadership with Lael Brainard (voting members turn dovish in 2023 and Kaplan now won't be part of that class).

    Vice Chairman Richard Clarida, a centrist, sees his term expire on Jan. 31, and Randal Quarles sees his position as vice chairman of supervision end on Oct. 13, although his term ends in 2032.

    Markets still see policy on track. While the game of musical chairs is going on, the bond market is still expecting a global move to tightening as yields keep climbing. The 10-year Treasury yield is up 6 basis points to 1.54% this morning. The 5-year yield, most tied to fed funds rate expectations, is setting a new high for 2020, up 3 basis points to 1.03%.

    The message coming from Fed speakers is still for tapering to start in November and end in the middle of next year. "Fed presidents exist to provide entertaining and extreme comments to the media, and to dissent from policy decisions only when permitted," UBS Chief Economist Paul Donovan writes. "New York Fed President Williams is the Fed president with authority (having a permanent vote on policy). Williams reiterated the market base case of a quantitative policy tightening this year, and pointed out that a US default would be less than ideal. Markets are well aware of both of these views."

    In what could be seen as an extreme opinion, Chicago Fed President Charles Evans, who loses a voting slot next year, argued yesterday that the Fed may need to see more inflation. (3 comments)


    Energy
    Natural gas surge
    U.S. natural gas prices soared to their highest level in more than seven-and-a-half years, with traders citing contagion fears as gas and other energy shortages sweep Europe and Asia, which is leading to heavier demand for U.S. liquefied natural gas.

    Front-month gas futures (NG1:COM) for October delivery settled up 11% to $5.706/MMBtu, the highest closing price since February 2014 and the contract's biggest daily percentage gain since this February's Texas freeze.

    "Spectacular prices around the world are feeding into the sentiment here," Again Capital's John Kilduff tells Reuters, adding that "gas as a commodity is getting repriced" and "now that we've hit these price heights, it will be easy to do it again." (107 comments)


    IPOs
    NordicTrack IPO
    NordicTrack parent iFIT Health & Fitness (IFIT) released details Monday for a planned IPO that could value the firm at up to $6.7B. iFIT said in a revised S-1 filing with the U.S. Securities and Exchange Commission that it plans to offer some 30.8M Class A shares within an $18-$21/share range. It’s also granting underwriters the option to buy as many as roughly 4.6M extra shares for overallotments. Plans call for the stock to list on the Nasdaq under the ticker symbol “IFIT.” (3 comments)

    Sponsored by SS&C ALPS Advisors
    Exposure to Master Limited Partnerships with one ETF - AMLP
    Energy infrastructure master limited partnerships (MLPs) play a vital role in connecting energy production with local and global demand by transporting, storing, and processing hydrocarbons, as well as facilitating exports. Do you have energy infrastructure MLPs in your portfolio?
    Alerian MLP ETF (AMLP), the largest*, most liquid MLP ETF, provides exposure to energy infrastructure MLPs with an emphasis on tax-advantaged income (no K-1).
    Explore AMLP
    See important disclosures.
    ALPS Portfolio Solutions Distributor, Inc. is the distributor for the Fund.
    * Based on the ETF.com peer group segment Equity U.S. MLPs: Master Limited Partnership.

    Automotive
    Ford EV bet
    Ford (NYSE:F) unveils plans to team with South Korean battery maker SK Innovation to spend $11.4B to build an electric F-150 assembly plant and three battery plants in the U.S., in a substantial acceleration of its push into electric vehicles.

    Ford will build two massive battery factories in Glendale, Ky., and a third in Stanton, Tenn., alongside a new truck factory set to begin producing electric F-series pickups by 2025, creating 11K jobs.

    The company says the planned $5.8B Blue Oval City complex in Tennessee "will usher in a new era for American manufacturing," comparing it to the Rouge complex in Michigan a century ago. (69 comments)


    Global
    Evergrande fallout
    China's central bank said it will protect consumers exposed to the housing market, though it didn't specifically name debt-laden China Evergrande (OTCPK:EGRNF, OTCPK:EGRNY), Reuters reports, giving investors some confidence that spillover effects from the developer's liquidity crisis may be manageable. Evergrande missed an $83.5M interest payment on March 2022 bonds on Sept. 23 and is scheduled to pay a $47.5M coupon on Sept. 29.

    In addition to the People's Bank of China statement, the Shenzhen government started investigating Evergrande's wealth management unit, Reuters reports, citing a letter to investors, another sign that authorities may take some action to contain the fallout from the real estate developer's troubles. (1 comment)


    Today's Markets
    In Asia, Japan -0.19%. Hong Kong +1.20%. China +0.54%. India -1.63%.
    In Europe, at midday, London -0.34%. Paris -1.22%. Frankfurt -0.78%.
    Futures at 6:20, Dow -0.31%. S&P -0.66%. Nasdaq -1.31%. Crude +1.03% at $76.23. Gold -0.54% at $1742.50. Bitcoin -4.2% at $41866.
    Ten-year Treasury Yield +4 bps to 1.524%

    Today's Economic Calendar
    8:30 International Trade in Goods (Advance)
    8:30 Retail Inventories (Advance)
    8:30 Wholesale Inventories (Advance)
    8:55 Redbook Chain Store Sales
    9:00 Fed's Evans Speech
    9:00 S&P Corelogic Case-Shiller Home Price Index
    9:00 FHFA House Price Index
    10:00 Consumer Confidence
    10:00 Richmond Fed Mfg.
    1:00 PM Results of $62B, 7-Year Note Auction
    1:00 PM Money Supply
    1:40 PM Fed's Bullard Speech
    3:00 PM Fed's Bostic Speech
    7:00 PM Fed's Bullard Speech

    Companies reporting earnings today »

    What else is happening...
    Activision Blizzard (NASDAQ:ATVI) struck a deal with EEOCto settle discrimination claims.

    U.S.'s 5.2% unemployment rate is understated; Jerome Powell Senate testimony.

    Disney's (NYSE:DIS) 'Shang-Chi' wins fourth week, becomes top 2021 film.

    Aurora Cannabis (NASDAQ:ACB) CEO: Focusing on medical revenue rather than chasing recreational business.

    Raytheon (NYSE:RTX), Northrop Grumman (NYSE:NOC)successfully test fire hypersonic weapon.

    Sanofi (NASDAQ:SNY) reports positive interim results for its first mRNA COVID-19 vaccine candidate.

    Merck (NYSE:MRK) closing in on deal for Acceleron (NASDAQ:XLRN) - WSJ.

    Facebook (NASDAQ:FB) is unstoppable, even if it's toxic to our mental well-being - Loup Ventures' analyst.

    Seeking More
    Seeking Alpha’s Wall Street Breakfast Podcast

    Seeking Alpha's Wall Street Breakfast podcast brings you all the news you need to know for your market day. Released by 8:00 AM ET each morning, it is a quick listen that you can put on as you get ready to start your working day.


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  14. #1639  
    RX Senior
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    Global Market Comments
    September 28, 2021
    Fiat Lux

    Featured Trade:
    (TESTIMONIAL),
    (THE DEATH OF KING COAL),
    (BTU), (ARCH)



    TestimonialHi John,
    You have been doing this for a long time indeed. The recent bounce has been nice. How did you feel that it was going to bounce given the Fed meeting and the noise around the China Evergrande Group?
    Or have you seen this movie so many times that unless it was a major black swan event (like February-March 2020) that this was always buy the dip?
    Or does it even matter as long as you are controlling your risk given how much you have made in the market in your lifetime?
    For someone trying to reset and start growing their account, I don't have this luxury but have been selectively choosing the trades to take.
    Again, great trading.
    Regards,
    Dallas
    Melbourne, Australia





    The Death of King Coal
    Virtually all of the research you receive are about stocks you should buy. This report is about stocks you should sell….with both hands as fast as you can.

    It is perhaps the most important data release of the last several years that no one noticed. As a result, one of the best shorting opportunities in years is rearing its ugly head.

    US coal production hit a 41-year low in 2020. Coal as a percentage of US power output has plunged from 28% to 10% over the last decade to only 437 million short tons. Total coal production has plunged by 64% during this time.

    The end result will be a massive shift of wealth out of the major coal-producing regions of the US in the east.

    If energy has a proverbial buggy whip maker, it is king coal. And while US coal production has been in free fall, alternatives have been rising sharply, especially solar, now accounting for 20% of US energy consumption.

    The implications for the US economy are enormous. I used to be kept awake at night by the wailing whistles of Union Pacific (UNP) engines delivering Wyoming coal to California ports for shipment on to China. They have all disappeared.

    Those trains are now moving oil south from Canada and North Dakota to the oil distribution hub in Cushing, Oklahoma, or even all the way to Gulf ports, except that this time they are using a North/South rail line like Norfolk Southern (NSC) rather than the East/West running Union Pacific. Clearly, there are consequences.

    In recent the last year, the few listed coal names left have enjoyed a nice rally. This is because of the generalized global “RISK ON” move that has unfolded since the pandemic peaked. The Van Eck Vectors Coal ETF was shut down in 2020 for lack of interest.

    It also helps that the incoming Biden administration is unlikely to hammer away at China on trade front as did the previous one. China is far and away the world’s largest buyer of coal.

    I believe that in the coming years, the entire US coal industry will go bankrupt and get purchased by the Chinese for pennies on the dollar, or for their outstanding debt alone at a big discount. Needless to say, this makes the entire sector a great candidate for a core short.

    Coal is hopelessly uncompetitive with natural gas. Burning gas produces a fraction of the carbon dioxide of coal, and alternatives like wind and solar produce none whatsoever. Coal faces onerous environmental regulation, which will almost certainly get worse under a future administration. US utilities are therefore closing coal-fired power plants as fast as they can.

    The outgoing administration was the most pro-coal one in American history. Yet, not a single new coal-fired was built during their reign.

    However, coal-dependent communities are not about to turn into ghost towns. They have the great advantage of offering some of the lowest operating costs anywhere in the country. Free rent is becoming common. You'd be nuts to start a new business in the San Francisco Bay Area these days, which has become a haven of the wealthy.

    Throw in some decent broadband and they can handily join the global economic community. Yes, you can turn coal miners into programmers, at least the young ones. They all grew up playing video games just like the rest of us.




    I Don’t See Any Future in This, Do You?


    Quote of the Day"The question is not whether Tesla will sell 80,000 or 90,000 cars this year, but whether they will sell 14 million or 15 million in 15 years. I believe they can do it," said Ron Baron of long-term value player, Baron Capital.



    This is not a solicitation to buy or sell securities
    The Mad Hedge Fund Trader is not an Investment advisor
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    Futures trading involves a high degree of risk and may not be suitable for everyone.




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  15. #1640  
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  16. #1641  
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    September 29, 2021

    Good morning. We hope you can join us next week for a DealBook Dialogue call on “Greening Crypto.” On Oct. 5 at 1 p.m. Eastern, the DealBook team will dive into crypto’s effect on the environment, how to measure its impact relative to its utility, and some of the unique technological innovations taking place in the industry to shift that balance. R.S.V.P. here.

    (Was this newsletter forwarded to you? Sign up here.)


    Treasury Secretary Janet Yellen told Congress that the debt limit must be raised by Oct. 18.Stefani Reynolds for The New York Times


    Scenario planning

    Yesterday’s market plunge seemed to suggest that investors, after months of ignoring the fight over raising the debt ceiling, were suddenly taking the once-unthinkable possibility of a U.S. debt default seriously. Treasury Secretary Janet Yellen warned lawmakers at a Senate hearing of “catastrophic” consequences if they failed to suspend or raise the debt limit before the government hit it, which the Treasury estimated could come as soon as Oct. 18.

    This isn’t the first time the government has flirted with the debt ceiling, an artificially imposed borrowing limit that Congress used to raise routinely, but that in recent years has become a partisan cudgel. Nor is it the most immediate economic threat coming out of Washington. A government shutdown, which could happen as early as Friday, would furlough federal workers and disrupt other government services.


    ADVERTISEMENT


    But a potential government debt default is what particularly worries market watchers. Here are two of the main scenarios being discussed on Wall Street as the debt ceiling closes in.

    The “short-term panic” scenario. A brush with a ceiling-induced default in 2011, the first in a while, riled markets and led many to predict that the U.S.’s ability to borrow would be permanently affected: Standard & Poor’s downgraded the country’s credit rating for the first time in 70 years. (A decade later, interest rates are lower than ever.) Similarly, in 2013, during another debt-ceiling standoff, short-term government borrowing rates shot up, but quickly fell back to where they were before once the debt ceiling was raised. In both cases, the broader economy — jobs, house prices and the like — over time brushed off the temporarily higher borrowing costs.

    Yellen’s “catastrophic” scenario. A prolonged standoff could result in something a lot worse than what happened in 2011 or 2013. The main problem: Treasuries are widely used as collateral to back up short-term loans. If the U.S. defaults on some of its bonds, lenders may be unwilling to accept those tainted securities as collateral. Worse, Wall Street’s trading systems have not really been set up to sort defaulted Treasuries from the rest, because few thought a U.S. default was possible. This could lead to a short-term lending market that grinds to a halt, like at the beginning of the financial crisis.

    Investors appear to have regained a measure of confidence today, with stock futures up and bond yields falling. It could be a sign that investors are betting on the first scenario — yet another episode of debt-ceiling brinkmanship that is eventually resolved before things tip over the edge. What do you think? Let us know at dealbook@nytimes.com. Include your name and location and we may feature your response in a future newsletter.


    ADVERTISEMENT


    HERE’S WHAT’S HAPPENING

    United says its Covid vaccine mandate is working. More than 99 percent of the airline’s U.S.-based employees have met the firm’s vaccination requirement or have applied for a religious or medical exemption. In an internal memo, the airline also said that nearly 600 workers who haven’t yet complied with the policy could be fired.

    Japan’s likely next prime minister is named. The country’s governing party selected Fumio Kishida as its choice for the next prime minister. The former foreign minister and moderate party stalwart has offered little to distinguish himself from the departing prime minister, Yoshihide Suga.

    Senator Elizabeth Warren calls the Fed chair a “dangerous man.” The Democrat of Massachusetts said during Jay Powell’s appearance before the Senate Banking Committee that when his term as head of the central bank ends next year, she would not support his renomination. Warren and other progressives oppose reappointing Powell because of his track record on financial regulation. The White House hasn’t hinted what it will do when his term is up.

    Mastercard gets into the buy-now, pay-later market. The card giant announced plans for new services in the industry that offer shoppers interest-free installment payments. The pay-later industry, which accounts for around a fifth of sales in Germany and in Sweden, accounts for only around 2 percent of sales in the U.S. but is expected to triple in the next three years.


    ADVERTISEMENT


    Ozy’s board begins an internal investigation. The digital media company has hired a law firm to investigate its “business activities” and requested that Samir Rao, its chief operating officer, take a leave of absence. A Times report this weekrevealed that Rao had impersonated a YouTube executive during a conference call with Goldman Sachs as Ozy tried to raise money from the bank.


    Warby Parker eyes its market debut

    Warby Parker is set to go public today, in a direct listing that could value the trendy eyewear retailer at about $5 billion. Warby is one of a number of direct-to-consumer brands, like AllBirds and Fabletics, set to make market debuts in the coming months. The companies aim to take advantage of sky-high valuations for tech companies and strong interest in consumer names. DealBook spoke with Neil Blumenthal and Dave Gilboa, Warby’s co-founders and chief executives, about how the brand got here and what comes next.

    On growth during a pandemic.

    Warby’s sales grew 6 percent in 2020, beating rivals like the Ray-Ban parent EssilorLuxottica, which saw sales fall by double digits over the same period. Warby’s mix of online and in-store sales “enabled us to take market share, even during the year that we were hobbled,” Blumenthal said. But that came at a cost: The company’s marketing spend jumped to 19 percent of sales in 2020 from 13 percent the previous year.

    On marrying a digital-first business with a growing offline retail presence.

    Warby was one of the first brands born online that sought to combine the brand awareness that comes from stores with the reach of digital sales. (It was founded in 2010, opened its first dedicated store in 2013 and now has 145 retail outlets, with plans to open more.) Warby generated about two-thirds of its revenue in stores before the pandemic, but the mix of offline and online sales is now closer to 50-50 because of various restrictions. As for the ideal mix, the company is “channel agnostic,” Gilboa said.

    On the flurry of direct-to-consumer brands going public.

    “Clearly, a lot of companies that have raised money are looking to access a broader investor base,” Blumenthal said, seeking to distinguish Warby — whose direct listing won’t raise new funds — from others. So far this year, 12 internet retail companies have gone public, compared with nine last year, according to Renaissance Capital. Performance of these and related retail names have been mixed: Shares of Honest Company, Jessica Alba’s wellness brand, are down 53 percent since listing, while Figs, the upmarket scrubs company, is up 29 percent.


    Seen and heard

    ► “The term ‘paradigm shift’ is always overused, so people tend to ignore it. But that’s a good way of describing what’s happening right now.”

    — Leland Miller, the head of the consulting firm China Beige Book, on how the struggles of the property developer Evergrande reveal “the beginning of the end of China’s growth model as we know it.”

    ► “I’m sorry to all my friends, but we’re not all going back.”

    — Marc Benioff, the C.E.O. of Salesforce, on how many, if not most, of the company’s employees may continue working from home after the pandemic.

    ► “I had builders and developers explaining to me how it’s not possible to get concrete to do that, even as I walked them up to our 3-D-printed house. Now our biggest challenge is we’ve just got to make more printers.”

    — Jason Ballard, the head of Icon, a construction technology company that has delivered more than two dozen 3-D-printed homes across the U.S. and Mexico.


    Ike Perlmutter’s Palm Beach justice

    Isaac Perlmutter, the billionaire chairman of Marvel Entertainment, has been in an epic dispute with Harold Peerenboom, a neighbor in Palm Beach, Fla., for about a decade. It began with a disagreement over tennis courts and devolved into an eight-year libel case brought by Peerenboom against Perlmutter, claiming that the Marvel executive was behind a hate mail campaign against Peerenboom in retaliation. An envelope with traces of DNA from Mr. Perlmutter’s wife was cited as evidence linking the couple to the letters.

    This week, a judge dismissed the lawsuit. The hate mail campaign turned out to be the work of a former employee of Peerenboom’s, according to the judge’s order. The DNA was apparently lifted at a deposition attended by the Perlmutters. “It was like an episode of ‘Curb Your Enthusiasm’ gone off the rails,” Josh Dubin, a lawyer for the Perlmutters, told DealBook. “But it’s a cautionary tale.”

    The case is bigger than Palm Beach. Dubin, who runs a legal consulting firm and is an ambassador for the Innocence Project, a criminal justice initiative that works on clearing wrongful convictions, is steeped in the intricacies of DNA evidence. After his legal ordeal, Mr. Perlmutter became a criminal justice reform advocate, according to his lawyer. (In other legal news, House Democrats this week accused Mr. Perlmutter of breaking federal transparency laws.)

    The fight isn’t over. The Perlmutters’ counterarguments against Peerenboom, claiming injury related to DNA theft, are proceeding. “This is a very wealthy white man who had the means to fight back,” Dubin said. Mr. Perlmutter has donated about $550,000 to criminal justice reform in the past 18 months, Dubin added. He and Dubin also met with former President Donald Trump to push for the pardon of Jawad Musa, whose sentence of life in prison for a nonviolent drug offense was commuted on Trump’s final day in office.


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    THE SPEED READ

    Deals

    • Evergrande will sell its stake in a commercial bank for $1.5 billion as it tries to raise funds to service its $300 billion debt load. (WSJ)
    • Bank mergers are on pace to hit their highest level since the 2008 financial crisis. (WSJ)
    • A federal court is set to hear oral arguments today in the case of Citi trying to recoup a mistaken payment that hedge funds refused to return: Audio is available live here or in a file here after arguments conclude. (U.S. Court of Appeals for the Second Circuit)

    Policy

    • More than 130 federal judges have broken the law by overseeing cases where they or their family had a financial interest. (WSJ)
    • “How the Huawei Case Raised Fears of ‘Hostage Diplomacy’ by China.” (NYT)
    • On regulating crypto, Elon Musk said governments should “do nothing.” (CNBC)

    Best of the rest

    • Insider trading is everywhere. (Bloomberg Businessweek)
    • A “fat finger” mistake saddled a crypto exchange with a $24 million fee on a $100,000 transaction. (Yahoo Finance)
    • Dave Komansky, the former longtime chief executive of Merrill Lynch who led the bank’s growth and diversification, died this week at age 82. (NY Post)


    Anna Schaverien contributed reporting.

    Thanks for reading! We’ll see you tomorrow.

    We’d like your feedback. Please email thoughts and suggestions to dealbook@nytimes.com.



    Andrew Ross Sorkin, Founder/Editor-at-Large, New York @andrewrsorkin
    Jason Karaian, Editor, London @jkaraian
    Sarah Kessler, Deputy Editor, Chicago @sarahfkessler
    Stephen Gandel, News Editor, New York @stephengandel
    Michael J. de la Merced, Reporter, London @m_delamerced
    Lauren Hirsch, Reporter, New York @LaurenSHirsch
    Ephrat Livni, Reporter, Washington D.C. @el72champs

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  17. #1642  
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    Fiat Lux

    Featured Trade:
    (PLEASE SIGN UP NOW FOR MY FREE TEXT ALERT SERVICE NOW),
    (BIDDING MORE FOR THE STARS)



    PLEASE Sign Up for My Free Text Alert Service Now!\Earlier this year, my customer support office spent the entire day taking calls from readers who missed my Trade Alert to buy the iShares Barclays 20+ Year Treasury Bond Fund (TLT) March 2019 $177-$180 in-the-money vertical BEAR PUT spread at $2.40 or best. A few days later, it became a $4,000 profit.

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    Hook Me Up to John Thomas



    Bidding More for the StarsThe stock market has turned into the real estate market, where everyone is afraid to sell for fear of being unable to find a replacement. Will it next turn into the Bitcoin market, which has gone ballistic?

    Risk assets everywhere are now facing a good news glut.

    My 2021 market top target of 40,000 for the Dow Average has come within range.

    This year’s price action really gives you the feeling of an approaching short-term blow-off market top. If Covid-19 crashed the market, will the vaccine boosters the recovery?

    A few years ago, I went to a charity fundraiser at San Francisco’s priciest jewelry store, Shreve & Co., where the well-heeled men bid for dates with the local high society beauties, dripping in diamonds and Channel No. 5.

    Amply fueled with Dom Perignon champagne, I jumped into a spirited bidding war over one of the Bay Area’s premier hotties, who shall remain nameless. Suffice to say, she is now married to a well-known tech titan and has a local sports stadium named after her.

    Obviously, I didn’t work hard enough.

    The bids soared to $33,000, $34,000, $35,000.

    After all, it was for a good cause. But when it hit $36,000, I suddenly developed a severe case of lockjaw. Later, the sheepish winner with a rampant case of buyer’s remorse came to me and offered his date back to me for $35,000. I said, “no thanks.” $34,000, $33,000, $32,000?

    I passed.

    The altitude of the stock market right now reminds me of that evening.

    If you rode the S&P 500 (SPX) from 700 to 4,50 and the Dow Average (INDU) from 7,000 to 35,000, why sweat trying to eke out a few more basis points.

    And if there was ever an excuse to take a break it is the blistering 18,000 point rally off the March 2020 bottom.

    I realize that many of you are not hedge fund managers and that running a prop desk, mutual fund, 401k, pension fund, or day trading account has its own demands.

    But let me quote what my favorite Chinese general, Deng Xiaoping, once told me in person: “There is a time to fish, and a time to hang your nets out to dry. You don’t have to chase every trade.

    At least then I’ll have plenty of dry powder for when the window of opportunity reopens for business. So, while I’m mending my nets, I’ll be building new lists of trades for you to strap on when the sun, moon, and stars align once again.

    What Am I Bid?

    Quote of the Day“In the next recession, the US will be the worst-performing stock market in the world. We won’t see new highs again in my lifetime,” said Doubleline Capital’s Jeffrey Gundlach.



    This is not a solicitation to buy or sell securities
    The Mad Hedge Fund Trader is not an Investment advisor
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  18. #1643  
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    Top News
    In need of direction
    Shutterstock
    U.S. stock futures turned higher overnight - Dow +0.6%, S&P 500 +0.8%, Nasdaq +1% - following heavy losses seen on Wall Street in the previous session. A spike in bond yields sent equities plunging, with the Nasdaq closing down nearly 3% for its worst day since March. Hardest hit were growth stocks - given their lower relative value of future earnings - as the benchmark 10-year Treasury yield touched a high of 1.567%. Facebook (FB), Microsoft (MSFT) and Alphabet (GOOGL) all lost more than 3%, triggering a tech out that hit the broader markets.

    Bigger picture: Inflation and the prospect of higher interest rates are prompting investors to dump government bonds and reposition their stock portfolios. The Fed meeting last week indicated a willingness to respond to growing inflationary pressures by lifting borrowing costs as soon as next year, as well as tapering bond buying as soon as November. Combined with surging prices for oil and other commodities, the rhetoric was enough to send bond yields flying, with the 10-year Treasury climbing 20 basis points over the last week alone.

    "The interest rate induced selloff is a reminder of how impactful monetary stimulus has been with the Fed signaling a swift removal of the emergency stimulus measures is coming soon," noted Charlie Ripley, senior investment strategist for Allianz Investment Management. "This is an uncomfortable period for market participants as the removal of Fed support will be underway soon and equity markets will have to learn how to stand on their own again. However, we should be reminded that it is unlikely the Fed would move forward with tapering bond purchases if they didn’t think the economy was ready."

    Fedspeak: More commentary on the economic landscape will come today as Fed Chair Jerome Powell participates in a policy panel discussion before virtual European Central Bank Forum on Central Banking at 11:45 a.m. ET. It won't be the only event to watch. Philly Fed President Patrick Harker, San Francisco Fed President Mary Daly, Atlanta Fed President Raphael Bostic and New York Fed President John Williams will give additional perspectives at a series of webinar discussions and virtual speeches throughout the day. (11 comments)


    Economy
    U.S. credit default?
    Inflation and tapering aren't the only forces spooking investors. Debt ceiling drama is intensifying in Washington ahead of a Thursday night deadline, with the risk of a partial shutdown starting Friday morning. Nearly two weeks later, on Oct. 18, the government will run out of money to meet its obligations to debtholders, according to Treasury Secretary Janet Yellen. A separate fight over a $1.2T infrastructure bill and a $3.5T reconciliation bill is also rattling parties and lawmakers, prompting President Biden to cancel a planned trip to Chicago today to save his economic agenda.

    Quote: "The only way Congress in this day and age ever gets anything done is by coming very close to deadlines," declared Capitol Hill strategist Jim Manley. "So far, we as a country have not suffered the economic consequences from such political gamesmanship, but at some point, somebody is going to make a mistake and something bad is going to happen to the country."

    The words couldn't ring truer at the current moment as corporate leaders start to sound the alarm over the rapidly approaching debt ceiling deadline. JPMorgan (JPM) CEO Jamie Dimon said the lender has begun to prepare for the "potentially catastrophic event" of a U.S. credit default, while Morgan Stanley (MS) is planning for a similar scenario. The Business Roundtable, one of Washington's leading business lobby groups, meanwhile announced that a failure to raise the debt ceiling would pose an "unacceptable" risk to the U.S. economy.

    Analyst commentary: "Investors should note that there is no clear path to dealing with the debt ceiling," said Brian Gardner, a policy analyst at Stifel. "It could be a tense few weeks in Washington which could add to market volatility." (20 comments)



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    IPOs
    Warby Parker
    Investors today will be eyeing the public debut of Warby Parker (WRBY), which will hit the New York Stock Exchange via a direct listing (a cheaper, but less common way of going public). The company is known for its affordable eyeglasses, which start at $95 a pair, and are sold online and through its network of 145 stores. Last night, the NYSE assigned a reference price of $40 to Warby's 111.5M outstanding shares, giving it a valuation of around $4.6B (during its last fundraising round in August 2020 it was valued at $3B).

    Backdrop: Warby Parker was founded in 2010 by four friends at the University of Pennsylvania's Wharton School: Neil Blumenthal, David Gilboa, Andrew Hunt and Jeffrey Raider. The group desired to create high-quality, affordable glasses by adopting a direct-to-consumer process, while providing the flexibility of free home try-ons and returns. Warby also runs a philanthropic program through which it distributes glasses to someone in need for each pair of eyewear purchased by a customer. Blumenthal and Gilboa are now co-CEOs of the business, while Hunt and Raider remain as directors of the company.

    Warby Parker's growth has been financed by a total of $535.5M in venture capital raised in funding rounds from backers including D1 Capital Partners and T. Rowe Price (NASDAQ:TROW). While the company notched $393.7M in revenue during 2020 - up from $370.5M in 2019 - it posted a net loss of $55.9M, following a breakeven 2019 and a loss of $22.9M in 2018. Warby also had 2.08M active customers as of June 30, up from 1.81M in 2020 (the metric is defined as those who have purchased a pair of glasses in the last 12 months). Some of its publicly traded rivals include National Vision Holdings (NASDAQ:EYE) and France-based EssilorLuxottica (OTCPK:ESLOF), which have both seen share gains of around 50% over the past year.

    Outlook: Statistics from the Vision Council of America suggest that Warby Parker is operating in a growth market valued at $35B in the U.S. 75% of American adults use some type of vision correction, and of that number, 64% wear glasses. The eyewear industry is also pretty resilient to economic cycles due to its medical and nondiscretionary nature. However, some still say the company is overvalued despite its well-known brand and visibility, like SA author David Trainer. In an article entitled, See Through This Optical Illusion, he argues that Warby Parker operates in a highly fragmented market with many small private companies, as well as consumers that still favor in-store purchases.


    Tech
    Meet Astro
    Amazon's (AMZN) robot is here after all. Despite conventional wisdom that the announcement would wait a while, the tech giant unveiled its Astro home assistant - a sort of wheeled Echo device that can follow you around. The dog-like product, designed to appear animated and friendly, looks to bring together the company's strengths in robotics, artificial intelligence, home monitoring and cloud services.

    Is it worth $1,000? The robot can be integrated with Amazon's smart home security subsidiary Ring and patrol a user's home while they're away. It's also equipped with Alexa, the voice assistant that can set reminders, deliver entertainment and control smart home devices. Astro additionally sports a cup holder on its rear and a robot arm that can extend and look at things from up to four feet.

    Digital adopters concerned about privacy can be rest assured that Astro's camera, microphone and motion sensors can be switched off by pressing a button (or at least until the next scandal). Users can also pick "out of bounds zones," or certain rooms that are off-limits to the robot via mapping software.

    Other items announced at the hardware event: Amazon's first smart thermostat, the Echo Show 15, an Echo partnership with Disney (DIS) and a new Halo View fitness tracker. Amazon also unveiled Glow, an oddity of a chat/videoconferencing device with a built-in tabletop projector that can cast images of games, books or puzzles in a clear target for children. (23 comments)



    Today's Markets
    In Asia, Japan -2.1%. Hong Kong +0.7%. China -1.8%. India -0.4%.
    In Europe, at midday, London +0.9%. Paris +1.2%. Frankfurt +1%.
    Futures at 6:20, Dow +0.6%. S&P +0.8%. Nasdaq +1%. Crude -0.8% at $74.70. Gold +0.4% at $1745. Bitcoin +1.6%at $42406.
    Ten-year Treasury Yield -4 bps to 1.5%

    Today's Economic Calendar
    7:00 MBA Mortgage Applications
    9:00 Fed's Harker: Economic Outlook
    10:00 Pending Home Sales
    10:00 State Street Investor Confidence Index
    10:30 EIA Petroleum Inventories
    11:00 Survey of Business Uncertainty
    11:45 Jerome Powell Speech
    1:00 PM Fed’s Daly Speech
    2:00 PM Fed’s Bostic: “Inclusive Payments”
    5:00 PM Fed’s Williams Speech

    Companies reporting earnings today »

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  19. #1644  
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    Quote Originally Posted by Bozzie View Post
    I've been following it, doing well. I got out a while back, slightly ahead.
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  20. #1645  
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    Quote Originally Posted by CoachCB View Post
    I've been following it, doing well. I got out a while back, slightly ahead.

    16 days till the PDUFA...till will be a 17 dollar stock or a 3 dollar stock depending on the PDUFA.


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  21. #1646  
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    September 30, 2021

    Good morning. (Was this newsletter forwarded to you? Sign up here.)


    Nine in 10 of Tyson’s U.S. workers are now vaccinated.Michael Conroy/Associated Press


    Exclusive: Inside Tyson’s vaccine drive

    On Aug. 3, Tyson Foods announced it would require coronavirus vaccines for all 120,000 of its employees in the U.S. The move was notable because it included the meat-processing firm’s frontline workers at a time when corporate mandates mostly applied only to office workers. DealBook spoke with Dr. Claudia Coplein, Tyson’s chief medical officer, about the results of its decision nearly two months later.

    91 percent of Tyson’s U.S. work force is now fully vaccinated. When it announced the mandate “as a condition of employment,” less than half of its work force was inoculated. Tyson did not release vaccination by type of worker, but “certainly the vaccination rate amongst our frontline workers was lower than our office-based workers at the beginning of this,” Dr. Coplein said.

    The United Food and Commercial Workers union, endorsed the mandate in return for more benefits, like paid sick leave. Frontline workers have until Nov. 1 to get vaccinated (or request an exemption), while the company’s roughly 6,000 office workers have until Oct. 1 to do so. Similar to the company overall, Tyson said that about 91 percent of its 31,000 unionized employees are now vaccinated. Unlike some other big companies, Tyson has not faced any lawsuits over its mandate.


    ADVERTISEMENT


    A poultry plant went to 100 percent vaccinated from 78 percent vaccinated after Covid hit close to home. A viral video about Caleb Reeves, a young Arkansas man who died of Covid, helped to highlight the risk of the virus to young people, “and we have many young frontline workers,” Dr. Coplein said. Reeves’s uncle worked at a Tyson plant, and the video “gave them a personal connection to say, ‘Hey, that could be my family, too,’” Dr. Coplein said.

    Tyson executives have visited plants to have small group conversations about the vaccines. Some questions Dr. Coplein regularly hears are whether vaccination will affect fertility or pregnancy (the evidence suggests not). “The most powerful conversations have been when I sat down with somebody who was scared or emotional or otherwise hesitant to get the vaccine,” she said, “and they just really needed somebody to listen to them with empathy.”

    Fortune 500 companies and the White House’s Covid task force have reached out to discuss Tyson’s experience, particularly after the White House asked OSHA to order large employers to make vaccination mandatory. (Tyson has lost a handful of employees over its mandate, though that number may increase as the deadline nears.) Tyson expects that when OSHA outlines more details and a timeline for mandates, which could take weeks, more companies will announce vaccine requirements. When that happens, the options will be limited for those who quit (or are let go) because of a mandate.

    More vaccine news:



    ADVERTISEMENT


    HERE’S WHAT’S HAPPENING

    Lawmakers scramble to avert a shutdown. Democrats are preparing legislation to avert a government shutdown at midnight tonight, perhaps by unlinking it from a measure to raise the debt ceiling. The fate of a $1 trillion bipartisan infrastructure bill that was scheduled for a vote today remains unclear.

    Facebook releases internal reports on the eve of congressional hearings. The two reports, both from 2019, provide more evidence that Facebook was aware of the effect of Instagram on young users’ mental health. The company annotated the reports to highlight limitations of the research. A Facebook executive will testify today at a Senate subcommittee hearing on “Protecting Kids Online.”

    Citigroup presses judges to “rewind” a mistaken $504 million payment. In an appeals proceeding yesterday, Citi’s lawyer argued that the accidental early repayment of a loan for Revlon should have raised red flags among creditors, some of whom refused to return the funds (and won a judgment against Citi in an earlier case).

    Macy’s is suing over an Amazon billboard. The department store hopes to block the e-commerce giant from advertising on a 2,200-square-foot displaynext door to its flagship store in Manhattan. Its lawsuit against the billboard’s owner said that the negative impact of allowing a “direct competitor” to take the spot would be “immeasurable.”


    ADVERTISEMENT


    Mary Barra is the new chair of the Business Roundtable. The General Motors chief will be the first woman to lead the influential lobbying group, which represents chief executives of major U.S. companies. She will succeed Doug McMillon, Walmart’s C.E.O.


    Everybody is talking about inflation

    Prices have recently been rising faster than expected. A related phenomenon — executives mentioning “inflation” on calls with investors — has also been running hot.

    Mentions of “inflation” on earnings calls are at their highest in more than a decade. FactSet said the term came up more than 220 times in second-quarter earnings calls at S&P 500 companies. The previous record was one quarter earlier, showing that the surge in prices isn’t a passing preoccupation.


    This doesn’t appear to be a big problem for profits — yet. A few companies have recently trimmed their forecasts because inflation was eating into their margins, but earnings expectations on the whole for S&P 500 firms are higher today than they were in June, according to FactSet.

    • Sherwin-Williams cut its sales and earnings forecast this week, citing rising prices and shortages of raw materials. “We are increasing our full-year raw material inflation outlook to be up a high-teens percentage compared to last year,” John Morikis, the company’s C.E.O., told analysts.
    • FedEx trimmed its full-year profit guidance last week, in part because of the “higher operating costs we are incurring,” said Mike Lenz, the company’s C.F.O. FedEx is raising many of its shipping rates by nearly 6 percent starting next year.

    • At General Mills, “ideally you’d not like to go back to retailers multiple times or consumers with price increases, but we’re clearly not in an ideal market,” said Jeff Harmening, the company’s C.E.O., adding, “People understand the need to revise plans.”

    In the next few weeks, companies will start to report third-quarter results. Central bankers have said that supply disruptions could prolong a period of high inflation, so it’s a safe bet that the “i” word will remain a popular discussion topic.

    In other inflation news, the discount retailer Dollar Tree said it would start selling more products above $1.


    “The allegations in The New York Times, which caught me by surprise, are serious and deeply troubling, and I had no choice but to end my relationship with the company.”

    — Katty Kay, a former BBC anchor who had recently joined Ozy Media, in a statement announcing her resignation. The digital media company is under pressure on multiple fronts after The Times reported that an Ozy co-founder had apparently impersonated a YouTube executive on a conference call with Goldman Sachs. Ron Conway’s seed fund, SV Angel, said this week that it was giving up the shares it acquired in the company in 2012.



    Peering down the pipeline

    The work of financial regulation may not seem personal, yet it determines who has access to economic opportunities. The fact that there have been very few Black economic policymakers appointed to top positions suggests to Chris Brummer of Georgetown Law that rules will continue to be devised without everyone’s interests in mind. The pipelines that lead to these jobs are also wanting.

    “No one likes to go through these numbers,” Brummer said, “but the numbers tell a story. Not a very flattering one.” Last year, in a study of Black appointees at federal financial agencies, he found that only 10 of the 327 people appointed to regulatory positions were Black. To him, this suggested that a dearth of Black congressional staff members in early-career positions could help explain the lack of diversity at financial agencies.

    The Biden administration has turned to universities for top nominees. So Brummer gathered data on corporate law professors at five top law schools — experts in antitrust, bankruptcy, corporations, securities and tax — and said the numbers were worse than he expected. Among his findings, at the top five schools — Columbia, Harvard, Stanford, Yale and the University of Chicago — 67 of 71 corporate law professors are white and four are Asian, while 62 of 71 are men.

    If these numbers don’t improve, economic policy will fail the underrepresentedbecause policymakers lack important perspectives, he told DealBook: “Rules are designed with assumptions made about the people they are intended to protect and support.”


    Business schools chart a new course

    Speaking of academia … amid the uncertainty created by the pandemic, business school professors are trying to prepare aspiring corporate leaders for a future that challenges the conventional wisdom about management and the very purpose of companies.

    The Aspen Institute’s latest Ideas Worth Teaching awards named eight “especially bold” courses that pushed the “boundaries of what was previously thought possible,” the institute’s Jaime Bettcher told DealBook. These professors are “leveraging the moment” to chart a new path, she said, by integrating environmental, social and governance issues into more traditional B-school fare.

    Click the links to see the syllabus and video clips of the winning courses:



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    THE SPEED READ

    Deals

    • China’s regulatory crackdown has chilled the market for new listings in Hong Kong. (FT)
    • The investor Chamath Palihapitiya, a Tesla bull, sold all of his stock in the electric vehicle company to invest in other projects. (CNBC)
    • Lordstown Motors, the embattled electric truck maker, is reportedly nearing a deal to sell its Ohio factory to Taiwan’s Foxconn. (Bloomberg)
    • Global M.&A. in the third quarter, at more than $1.5 trillion, is set to break records. (Reuters)

    Policy

    • Proposed regulation from the S.E.C. would require hedge funds and other investment firms to disclose how they voted on executive pay. (Insider)
    • The F.A.A. completed its investigation of Virgin Galactic’s space flight in July, accepting the company’s proposals to change how it operates its missions. (WSJ)
    • Carlyle and CalPRS announced an effort to standardize E.S.G. reporting. (Bloomberg)

    Best of the rest

    • What’s behind the critical shortage of truck drivers in Britain. (NYT)
    • Amazon settled with two former employees who said they were fired for speaking out about the company’s environmental impact and working conditions. (NYT)
    • Crypto job listings are exploding. (Insider)
    • “The Pandemic Made the Finance Industry’s Toughest Test Tougher.” (NYT)


    Anna Schaverien contributed reporting.

    Thanks for reading! We’ll see you tomorrow.

    We’d like your feedback. Please email thoughts and suggestions to dealbook@nytimes.com.



    Andrew Ross Sorkin, Founder/Editor-at-Large, New York @andrewrsorkin
    Jason Karaian, Editor, London @jkaraian
    Sarah Kessler, Deputy Editor, Chicago @sarahfkessler
    Stephen Gandel, News Editor, New York @stephengandel
    Michael J. de la Merced, Reporter, London @m_delamerced
    Lauren Hirsch, Reporter, New York @LaurenSHirsch
    Ephrat Livni, Reporter, Washington D.C. @el72champs


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  22. #1647  
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    Top News
    Supply crunch
    Shutterstock
    Things appear to be getting worse, not better, along the global supply chain, which was upended by the coronavirus pandemic over a year ago. That means entire companies and industries are going to have to deal with more extremes for the foreseeable future, making business investment a shaky decision that compounds the original problem. The volatility and uncertainty also destroy demand as prices become too high for consumers. The phenomenon, called the "bullwhip effect," could end up damaging the economy in the short-term, with violent swings in a range of goods.

    Warning bells: In an open letter to the United Nations General Assembly, business leaders from the International Chamber of Shipping, IATA and other transport groups (that account for more than $20T of annual global trade) sounded the alarm on the risks of a supply chain meltdown. "We are witnessing unprecedented disruptions and global delays and shortages on essential goods including electronics, food, fuel and medical supplies. Consumer demand is rising and the delays look set to worsen ahead of Christmas and continue into 2022. Our calls have been consistent and clear: freedom of movement for transport workers, for governments to use protocols that have been endorsed by international bodies for each sector and to prioritize transport workers for vaccinations... before global transport systems collapse."

    Some of the effects were on display this week as three more U.K. energy companies were pushed out of business by sky-high natural gas prices. China is also considering raising power prices for factories as an energy shortage there has unleashed turmoil in commodities markets and prompted silicon makers to dramatically slash production. Over in the U.S., the Commerce Department delayed a decision on solar tariffs with the price of panels set to rise, while Dollar Tree (NASDAQ:DLTR) said it would sell more items above $1 to offset cost increases on a range of goods.

    Do something! This time around, higher prices have put central banks between a rock and a hard place. Inflation is traditionally fought off by raising interest rates, but that might not be effective at the present given the supply chain issues taking place across the globe and the stage in the economic recovery. On the other hand, if easy monetary policy is left in place, price pressures could be compounded and result in a reduction in purchasing power or lead the economy to overheat.


    Tech
    Anti-vax content
    The biggest social networks banned misinformation about COVID-19 early on in the pandemic, but some are taking further steps to weed out related content. Facebook (NASDAQ:FB) banned misinformation on all vaccines in February, Twitter (NYSE:TWTR) followed in March, while YouTube (GOOG, GOOGL) is now removing content that falsely alleges approved jabs are dangerous and cause severe health effects. That means videos will now be blocked on claims made against shots for diseases like measles or chickenpox, or clips that assert they cause autism, infertility or cancer.

    Bigger picture: YouTube is going one step further by taking down the channels of high-profile anti-vaccine activists including Joseph Mercola and Robert F. Kennedy Jr., who experts say are sowing skepticism that's contributed to slowing vaccination rates across the country. "Free speech is the essential core value of liberal democracy. All other rights and ideals rest upon it. There is no instance in history when censorship and secrecy have advanced either democracy or public health," Kennedy responded through a representative.

    YouTube didn't act sooner because it was focusing on misinformation specifically about coronavirus vaccines, said Matt Halprin, YouTube's vice president of global trust and safety. "Developing robust policies takes time... We wanted to launch a policy that is comprehensive, enforceable with consistency and adequately addresses the challenge."

    Exception to the rule: "Given the importance of public discussion and debate to the scientific process, we will continue to allow content about vaccine policies, new vaccine trials, and historical vaccine successes or failures on YouTube."


    Stocks
    Making sense of it all
    Continuing some strength seen in the previous session, U.S. stock index futures all climbed another 0.6% overnight following a major selloff seen earlier in the week. The Dow and S&P 500 finished Wednesday up 0.2%, while tech stocks and the Nasdaq closed lower, down 0.2%. Bonds and higher rates are also in the spotlight, with the 10-year Treasury yield pulling back 3 bps to 1.51% after touching an intraday high of 1.56% on Wednesday.

    Where do we go from here? "Some investors seem ready to move on from the 'there is no alternative' mind-set that has guided their decisions since the 2008 crisis, but TINA may be harder to quit than they think," writes the WSJ's Jon Sindreu. Others see pockets of alternative investments that provide a yield, or jumping into attractive individual stocks, with general market returns likely to be much more muted going forward. Looking for some new plays? Check out Seeking Alpha's Stock Ideas.

    Analyst commentary: "The froth has continued. Only time will tell how long that will go," said Mary Erdoes, JPMorgan Chase head of asset and wealth management. Since the response by central banks to the coronavirus pandemic, "markets are up 30% to 50%, clearly not normal. We're enjoying it, but this is not a normal time period."

    "If you own entire markets with the view that asset selection doesn't matter, that's great when the markets are going up," added Ashbel Williams, executive director and CIO of the Florida State Board of Administration. "But when things become really tough, and circumstances hit different industries and different companies in different ways... this is a time active management makes sense."


    Outlook
    Trillion-dollar coin
    The House on Wednesday passed a bill to suspend the U.S. debt ceiling, though the plan looks doomed in the Senate, with only hours to go before a partial shutdown of the federal government. Treasury Secretary Janet Yellen has also warned that on Oct. 18 the government will run out of money to meet its obligations to debtholders, setting up a drama-filled atmosphere on Capitol Hill. Congress has raised or suspended the ceiling 78 times since 1960, according to the Treasury, with the most recent motion taking place in 2019.

    Game of chicken: Democrats are struggling to get the votes needed in the Senate if they go at it alone since they need all 50 senators within their caucus. Friction among party members over the amount of spending, as well as whether to tie the procedure to infrastructure or social programs and climate policy is also creating some theatrics. For their part, Republicans want to tie the debt ceiling increase to Democrats' massive legislation, which would put a spotlight on the party if they can't get it together ahead of the 2022 midterm elections (or would take the blame if the U.S. defaults).

    "While I am hopeful that common ground can be found that would result in another historic investment in our nation, I cannot - and will not - support trillions in spending or an all or nothing approach that ignores the brutal fiscal reality our nation faces," critical centrist Sen. Joe Manchin (D., W. Va.) said in a statement.

    Has the U.S. ever defaulted? While the technicals are always debated, and some say the U.S. has never formally defaulted, there were some scenarios in the past that could resemble it. The first time was in 1790, when the U.S. defaulted on its external debt obligations, while during the Great Depression in 1933, America had another domestic debt default related to the repayment of gold-based obligations. Some consider President Nixon's refusal in 1971 to redeem dollars for gold to constitute a partial default, while the U.S. was said to default on some Treasury bills in 1979.

    Trillion-dollar coin: Echoing an idea that was originally floated during the debt ceiling crisis of 2011, there has been renewed talk in Washington of producing a very high-value currency to avoid the debt ceiling. Basically, the Treasury would mint a $1T platinum coin (under commemorative clauses), deposit it at the Federal Reserve, and the asset swap would result in an extra $1T to cover a big portion of Washington's bills. While not illegal, the accounting gimmick would be unprecedented, threaten the checks and balances of Congress and open a Pandora's box about all of public finance.


    Today's Markets
    In Asia, Japan -0.3%. Hong Kong -0.4%. China +0.9%. India -0.5%.
    In Europe, at midday, London +0.2%. Paris flat. Frankfurt -0.3%.
    Futures at 6:20, Dow +0.6%. S&P +0.6%. Nasdaq +0.6%. Crude -0.2% at $74.72. Gold +0.2% at $1725.40. Bitcoin +1.1% at $42937.
    Ten-year Treasury Yield -3 bps to 1.51%

    Today's Economic Calendar
    8:30 GDP Q2
    8:30 Initial Jobless Claims
    8:30 Corporate profits
    9:45 Chicago PMI
    10:00 Fed's Williams: “Implications of Federal Reserve Actions in Response to the COVID-19 Pandemic”
    10:30 EIA Natural Gas Inventory
    11:00 Fed's Bostic: “Economic Mobility as a Tool for Sustainability”
    11:30 Fed's Harker: "The Federal Reserve in Conversation: Developing Regulation, Sustainable Assets and Financial Markets"
    12:30 PM Fed's Evans Speech
    1:05 PM Fed's Bullard Speech
    2:30 PM Fed's Daly Speech
    3:00 PM Farm Prices
    4:30 PM Fed Balance Sheet

    Companies reporting earnings today »

    What else is happening...
    Warby Parker (NYSE:WRBY) pops following direct-listing IPO.

    Walmart (NYSE:WMT) to hire 150K associates for holiday season and beyond.

    Uber (NYSE:UBER) launches 'The Holiday Shop' for on-demand seasonal delivery.

    Virgin Galactic (NYSE:SPCE) takes off after FAA ends investigation.

    Altria (NYSE:MO) may strategically divest stake in AB InBev (NYSE:BUD).

    WSJ report finds Facebook (NASDAQ:FB) was targeting pre-teens for years.

    Apple (NASDAQ:AAPL) analysts see early signs of strong iPhone 13 demand.

    Elon Musk slams Biden's EV policy, wants unregulated crypto.

    Regulation underway... Bitcoin (BTC-USD) faces biggest monthly decline since May.

    AstraZeneca's (NASDAQ:AZN) COVID-19 jab shows 74% efficacy in U.S. trial - Reuters

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  23. #1648  
    RX Senior
    Join Date
    Dec 2007
    Location
    Oregon Coast
    Posts
    5,150


    Global Market Comments
    September 30, 2021
    Fiat Lux

    Featured Trade:
    (WHAT TO BUY AT MARKET TOPS?),
    (CAT), ($COPPER), (FCX), (BHP), (RIO),

    (EUROPEAN STYLE HOMELAND SECURITY),
    (TESTIMONIAL)



    What to Buy at Market Tops?I will start today’s letter by listing six more data points showing how overbought stocks have become.

    1) While the number of outstanding shares in the US has remained unchanged since 2006, thanks to M&A, buybacks, bankruptcies, and privatizations, the average weighted share price has more than doubled from $50.15 to $137.00.

    2) The Volatility Index (VIX) has just jumped from a recent high of $29 to $21 today.

    3) The Mad Hedge Market Timing Index has just soared from a recent low of 19 eight months ago to 30 today, still in “BUY” territory.

    4) 2022 forward stock earnings growth maintains at 20%.

    5) Almost every investor is bullish once more, now that their stocks are going up.

    6) The stock market has had its best 18 months in history. Grizzled, long in the tooth readers can’t be more cautious right now.

    This all leads to the urgent question of the day, WHICH stocks do you buy as we approach market tops? The answer is very simple. You buy cheap ones. And what are the cheapest stocks out there?

    Commodity stocks.

    My friend, Jim Umpleby, said that we are just entering a ten-year super cycle in commodities.

    Jim should know. He is the CEO of Caterpillar (CAT), a company I have been following for 45 years. I even have one of their cool worn yellow baseball caps from years past.

    Thanks to the 2017 tax bill, companies can now buy Caterpillar’s bulldozers, backhoes, and heavy trucks, and expense 100% of the investment in the first year. (Last year, I bought a new $162,500 Tesla Model X using the same break). That makes a purchase of (CAT)’s products one of the best tax breaks ever.

    Needless to say, this has created a stampede to buy the companies heavy machinery because they fear this tax windfall will be reversed by the next administration. This is equipment with a 30-year life or longer.

    Industrial commodities are in fact the perfect sector to buy right now. Take a look at the long-term chart for copper prices, which are a great bellwether for the entire industry. They are imminently poised to make a long-term upside breakout.

    Copper last peaked at the beginning of 2011, when the Chinese infrastructure build-out suddenly outdrew to a juddering halt. Prices cratered from $4.60 a pound to a lowly $1.90. Mines were sold off, mothballed, or permanently closed at a record rate.

    Copper prices fell so low that the US Mint finally started making a profit on pennies they struck.

    Then a funny thing happened.

    Copper will soon bottom, assisted by the global synchronized economic recovery I have been writing about for years. The recent collapse of the Chinese real estate market prompted by the China Evergrande Group will eventually give us a great entry point.

    The share prices of copper and other major commodity producers will go ballistic. Freeport McMoRan (FCX), the world’s largest copper producer, (whose management is a long-time reader of this letter) has just seen its stock jump ten-fold from a near $4.00 a share to $46.00. It is now back at $33.00.

    You may think that it’s too late to get into the commodities space, but you’d be wrong. Having covered the sector for nearly a half-century there is one thing you learn quickly. While you can shut down a mine in weeks, it can take years to bring them back on line.

    As for developing a new mine from scratch, that can take a decade by the time you get design, permits, infrastructure, equipment, and labor in place.

    My Australian readers tell me that (BHP) is flying young skilled workers from Brisbane an incredible 2,000 miles to work in Northwest mines in a six weeks on - six weeks off work schedule and paying them $200,000 a year to do it. And they’re making a profit doing this!

    The bottom line here is that a short squeeze has developed for industrial commodities which will last for years.

    Oh, and that global economic recovery? It is on vacation until delta ends. That could happen in a few months, and no more than a year.

    At least you have something to buy now besides more technology stocks. As much as we here at the Mad Hedge Fund Trader all love them for the long term, they are extremely overbought for the short term.

    Tech always comes back.


    Commodities Are In Our Blood



    European Style Homeland Security
    I have just seen the movie “Dunkirk” for the second time, a film that is close to me because I knew several of the participants. A boat that made the crossing memorialized with a bronze plaque moored in the canal in front of my West London mansion for several years.

    I also recall a lunch I had with British comedian John Cleese many years ago (he is my height) soliciting an investment in my hedge fund. He kept his money, but I recall with great humor his version of homeland security.

    The English are feeling the pinch in relation to recent geopolitical events, and have therefore raised their security level from "Miffed" to "Peeved."

    Soon, security levels may be raised yet again to "Irritated" or even "A Bit Cross." The English have not been "A Bit Cross" since the blitz in 1940, when tea supplies nearly ran out.

    Terrorists have been re-categorized from "Tiresome" to "A Bloody Nuisance." The last time the British issued a "Bloody Nuisance" warning level was in 1588, when threatened by the Spanish Armada.

    The Scots have raised their threat level from "Pissed Off" to "Let's get the
    Bastards." They don't have any other levels. This is the reason they have been used on the front line of the British army for the last 300 years.

    The French government announced yesterday that it has raised its terror alert
    level from "Run" to "Hide." The only two higher levels in France are "Collaborate" and "Surrender." The rise was precipitated by a recent fire that destroyed France 's white flag factory, effectively paralyzing the country's military capability.

    Italy has increased the alert level from "Shout Loudly and Excitedly" to
    "Elaborate Military Posturing." Two more levels remain: "Ineffective Combat Operations" and "Change Sides."

    The Germans have increased their alert state from "Disdainful Arrogance" to
    "Dress in Uniform and Sing Marching Songs." They also have two higher levels: "Invade a Neighbor" and "Lose."

    Belgians, on the other hand, are all on holiday as usual; the only threat they
    are worried about is NATO pulling out of Brussels.

    The Spanish are all excited to see their new submarines ready to deploy. These beautifully designed subs have glass bottoms so the new Spanish navy can get a really good look at the old Spanish navy.

    Australia, meanwhile, has raised its security level from "No worries" to
    "She'll be alright, Mate." Two more escalation levels remain: "Crikey! I think we'll need to cancel the barbie this weekend!" and "The barbie is canceled." So far no situation has ever warranted use of the final escalation level.

    -- John Cleese - British writer, actor and tall person.





    Testimonial
    Hey John and the MAD Team, here's an early Happy New Years!

    You really nailed and keep nailing great reversals and trends that are just beginning to deserve a watchful eye. I nailed it today, so far, just buying the JPY pairs, and shorting the big bond, this past couple weeks?
    I'm still a bit stuck on futures, but I realize the safety in your spreads is a lot smarter...Thx for all you know and for all you do.
    Rod,
    Alberta, Canada









    Quote of the Day
    “Fear of missing out is losing to fear of looking stupid,” said Roelof Botha, partner at venture capital firm Sequoia Capital.








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  24. #1649  
    RX Senior
    Join Date
    Dec 2007
    Location
    Oregon Coast
    Posts
    5,150

    Read in Browser
    Top News
    Shutterstock
    Stocks rebounded Friday after a rough September, as investors took heart from a study showing Merck’s experimental Covid-19 pill cut in half the risk of hospitalization or death from the virus. Sectors that would expect to benefit most from a pickup in economic activity -- including energy, finance and industrials -- outperformed. The dollar fell and U.S. Treasuries rose, with the yield on the 10-year note slipping back below 1.5% even after government data for August showed the highest rate of core inflation since 1991. Friday's stock market bounce came after the major indexes suffered their worst month of the year in September amid rising fears of inflation, slowing growth and rising rates. The Dow Jones was down 4.3%, the S&P 500 fell 4.8%, and the Nasdaq Composite was off 5.3%

    Central Banking
    Fed musical chairs
    Two regional Federal Reserve bank presidents, Dallas' Robert Kaplan and Boston's Eric Rosengren, announced they would leave their positions early in the wake of a controversy over their portfolio holdings. Kaplan traded millions of dollars in securities last year, including individual high-valuation megacap stocks that benefit from lower interest rates, while Rosengren came under scrutiny for securities tied to real estate and securities bought by the central bank. Meanwhile, Fed Chair Jay Powell opened an ethics panel over the issue and said at a recent press conference changes to current rules must happen.

    What it means: While a rare occurrence, the loss of two regional presidents underscores the dangers of a market trading as though the Fed is a static entity represented by its Summary of Economic Projections rather than a fluid group where minds can change quickly.

    Along with the plan for asset tapering, the focus of the last FOMC was on the dot plot of rate forecasts that moved market expectations forward to an initial hike in 2022. Now two of those dots are going away. Rosengren and Kaplan are both in the hawkish camp, with Kaplan considered one of most hawkish voices for the Fed in calling for removal of accommodation. Two dovish replacements could quickly shift the dots back to liftoff in 2023.

    Go deeper: When it comes to FOMC voting on rates, the rotation was set to bring in three hawkish regional presidents next year: Rosengren, St. Louis' James Bullard, Kansas City's Esther George, as well as hawkish-leaning Cleveland Fed President Loretta Mester. There could be further shifts in the Fed makeup and Powell's renomination is also not secured. While it looks like the continuity would please the markets, President Biden could ensure more dovish leadership with Lael Brainard. (29 comments)



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    IPOs
    Nice frames
    Warby Parker (WRBY) popped 36% in its public debut on Wednesday, but lost some ground the rest of the week, after hitting the New York Stock Exchange via a direct listing (a cheaper, but less common way of going public). The company is known for its affordable eyeglasses, which start at $95 a pair, and are sold online and through its network of 145 stores. The NYSE initially assigned a reference price of $40 to Warby's 111.5M outstanding shares, giving it a valuation of around $4.6B (during its last fundraising round in August 2020 it was valued at $3B).

    Backdrop: Warby Parker was founded in 2010 by four friends at the University of Pennsylvania's Wharton School: Neil Blumenthal, David Gilboa, Andrew Hunt and Jeffrey Raider. The group desired to create high-quality, affordable glasses by adopting a direct-to-consumer process, while providing the flexibility of free home try-ons and returns. Warby also runs a philanthropic program through which it distributes glasses to someone in need for each pair of eyewear purchased by a customer. Blumenthal and Gilboa are now co-CEOs of the business, while Hunt and Raider remain as directors of the company.

    Warby Parker's growth has been financed by a total of $535.5M in venture capital raised in funding rounds from backers including D1 Capital Partners and T. Rowe Price (NASDAQ:TROW). While the company notched $393.7M in revenue during 2020 - up from $370.5M in 2019 - it posted a net loss of $55.9M, following a breakeven 2019 and a loss of $22.9M in 2018. Warby also had 2.08M active customers as of June 30, up from 1.81M in 2020 (the metric is defined as those who have purchased a pair of glasses in the last 12 months). Some of its publicly traded rivals include National Vision Holdings (NASDAQ:EYE) and France-based EssilorLuxottica (OTCPK:ESLOF), which have both seen share gains of around 50% over the past year.

    Outlook: Statistics from the Vision Council of America suggest that Warby Parker is operating in a growth market valued at $35B in the U.S. 75% of American adults use some type of vision correction, and of that number, 64% wear glasses. The eyewear industry is also pretty resilient to economic cycles due to its medical and nondiscretionary nature. However, some still say the company is overvalued despite its well-known brand and visibility, like SA author David Trainer. In an article entitled, See Through This Optical Illusion, he argues that Warby Parker operates in a highly fragmented market with many small private companies, as well as consumers that still favor in-store purchases. (7 comments)


    Economy
    Supply crunch
    Things appear to be getting worse, not better, along the global supply chain, which was upended by the coronavirus pandemic over a year ago. That means entire companies and industries are going to have to deal with more extremes for the foreseeable future, making business investment a shaky decision that compounds the original problem. The volatility and uncertainty also destroy demand as prices become too high for consumers. The phenomenon, called the "bullwhip effect," could end up damaging the economy in the short-term, with violent swings in a range of goods.

    Warning bells: In an open letter to the United Nations General Assembly, business leaders from the International Chamber of Shipping, IATA and other transport groups (that account for more than $20T of annual global trade) sounded the alarm on the risks of a supply chain meltdown. "We are witnessing unprecedented disruptions and global delays and shortages on essential goods including electronics, food, fuel and medical supplies. Consumer demand is rising and the delays look set to worsen ahead of Christmas and continue into 2022. Our calls have been consistent and clear: freedom of movement for transport workers, for governments to use protocols that have been endorsed by international bodies for each sector and to prioritize transport workers for vaccinations... before global transport systems collapse."

    Some of the effects were on display this week as three more U.K. energy companies were pushed out of business by sky-high natural gas prices. China is also considering raising power prices for factories as an energy shortage there has unleashed turmoil in commodities markets and prompted silicon makers to dramatically slash production. Over in the U.S., the Commerce Department delayed a decision on solar tariffs with the price of panels set to rise, while Dollar Tree (NASDAQ:DLTR) said it would sell more items above $1 to offset cost increases on a range of goods.

    Do something! This time around, higher prices have put central banks between a rock and a hard place. Inflation is traditionally fought off by raising interest rates, but that might not be effective at the present given the supply chain issues taking place across the globe and the stage in the economic recovery. On the other hand, if easy monetary policy is left in place, price pressures could be compounded and result in a reduction in purchasing power or lead the economy to overheat. (295 comments)


    Tech
    Facebook grilling
    During a three-hour Senate hearing on Thursday, Facebook (FB) came under fire from lawmakers who were upset about the revelations brought to light by The Wall Street Journal's "Facebook Files." Internal documents showed that Instagram makes body image issues worse for a substantial minority of teen girls and was blamed for increases in anxiety and depression. With the company on the defensive (and minimizing its own research), it looks to be signaling new enthusiasm among Senators for regulatory proposals that had stagnated a bit.

    Criticism from both sides of the aisle: "We now have deep insight into Facebook's relentless campaign to recruit and exploit young users. And we now know it is indefensibly delinquent in acting to protect them," said Sen. Richard Blumenthal (D-CT). "Facebook is incapable of holding itself accountable." Senator Marsha Blackburn (R-TN) was also quick to admonish the tech giant. "We do not trust you with influencing our children."

    Some, like Sen. Ed Markey (D-MA), even compared the social network to Big Tobacco, which "pushes a product that they know is harmful to the health of young people." He also announced plans to reintroduce legislation that would regulate a number of features, including follower counts, autoplay videos, and marketer and influencer promotions on apps aimed at young children.

    Go deeper: Facebook on Monday said it would pause work on a controversial effort to build an Instagram for those under 13 (currently prohibited from joining the service). During the hearing, however, Antigone Davis, Facebook director of global safety, was noncommittal about whether the company would shelve Instagram Kids for good. "Sen. Markey, those are the kinds of features that we will be talking about with our experts trying to understand in fact what is most age appropriate and what isn’t age appropriate, and we will discuss those features with them of course." (56 comments)


    Explainer
    Funding, infrastructure and debt
    Keeping track of the latest happenings on Capitol Hill can get confusing, especially when deadlines are as close together as they are in the fall of 2021. While it's still too early to tell how things will play out, investors have been monitoring the events as lawmakers play politics with the nation's pocketbook. Here are the three big items that are on the radar and how they could impact your portfolio:

    Government funding - Late on Thursday night, Congress passed stopgap spending legislation to avert a U.S. government shutdown, which was later signed by President Biden. The bill will keep the lights on at federal agencies through Dec. 3, giving Congress nine more weeks to pass a full budget plan. Buzz surrounding government shutdowns can trigger some market volatility, but this is the least likely event to affect investor holdings.

    Infrastructure - House Speaker Nancy Pelosi promised to move ahead with a vote on a $1.2T bipartisan infrastructure bill before Democrat progressives said they have the numbers to stall it. They want the Senate to agree to a separate $3.5T social spending and climate policy package (or what the White House terms "human infrastructure") before pressing ahead on this front. Negotiations are still ongoing, but the developments have the potential to dent some sentiment in the market, especially infrastructure-related names, since the bill was a key part of Biden's economic agenda. At the very end of the week, Biden went to the Capitol for a half-hour meeting with Democrats which ended with no clear agreement, although he promised that they're going to get it done.

    Debt ceiling - Treasury Secretary Janet Yellen has said the U.S. will run out of funds to pay its bills by mid-October and even called on Congress yesterday to eliminate the mechanism entirely. A default would "likely precipitate a historic financial crisis that would compound the damage of the continuing public health emergency," according to Yellen. It could also "trigger a spike in interest rates, a steep drop in stock prices and other financial turmoil. Our current economic recovery would reverse into recession, with billions of dollars of growth and millions of jobs lost." On Friday, Fitch Ratings warned that the debt ceiling fight could force the firm to downgrade the AAA credit rating of the U.S.(47 comments)


    U.S. Indices
    Dow -1.4% to 34,326. S&P 500 -2.2% to 4,357. Nasdaq -3.2% to 14,567. Russell 2000 -0.3% to 2,242. CBOE Volatility Index +19.2% to 21.15.

    S&P 500 Sectors
    Consumer Staples -2.6%. Utilities -2.%. Financials -0.3%. Telecom -1.8%. Healthcare -3.5%. Industrials -1.7%. Information Technology -3.3%. Materials -0.9%. Energy +5.8%. Consumer Discretionary -2.4%.

    World Indices
    London -0.4% to 7,027. France -1.8% to 6,518. Germany -2.4% to 15,156. Japan -4.9% to 28,771. China -1.2% to 3,568. Hong Kong +1.6% to 24,576. India -2.1% to 58,766.

    Commodities and Bonds
    Crude Oil WTI +2.4% to $75.72/bbl. Gold +0.5% to $1,761.2/oz. Natural Gas +7.9% to 5.547. Ten-Year Treasury Yield +0.1% to 132.2.

    Forex and Cryptos
    EUR/USD -1.03%. USD/JPY +0.32%. GBP/USD -0.99%. Bitcoin +11.8%. Litecoin +10.5%. Ethereum +12.7%. Ripple +8.8%.

    Top Stock Gainers
    Paltalk Inc (NASDAQ:PALT) +151%. Grom Social Enterprises Inc (NASDAQ:GROM) +69%. Camber Energy Inc (NYSE:CEI) +59%. Pedevco Corp (NYSE:PED) +52%. Gogo Inc (NASDAQ:GOGO) +51%.

    Top Stock Losers
    Elite Education Group International Ltd (NASDAQ:EEIQ)-56%. Spire Global Inc (NYSE:SPIR) -49%. Omeros Corp (NASDAQ:OMER) -46%. Ensysce Biosciences Inc (NASDAQ:ENSC) -36%. Adagio Therapeutics Inc (NASDAQ:ADGI) -36%.

    Where will the markets be headed next week? Current trends and ideas? Add your thoughts to the comments section.

    Seeking Alpha’s Wall Street Breakfast Podcast

    Seeking Alpha's Wall Street Breakfast podcast brings you all the news you need to know for your market day. Released by 8:00 AM ET each morning, it is a quick listen that you can put on as you get ready to start your working day.

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  25. #1650  
    RX Senior
    Join Date
    Dec 2007
    Location
    Oregon Coast
    Posts
    5,150
    Picks...8-4 on the season / week 4
    straght bets and 4 team parlay.

    Seattle+3
    giants+7
    tampa -7
    miami -2
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