War. Interest Rates. October.

Baltic Dry Index. 2071 -34            Brent Crude  93.27

Spot Gold 1977                   US 2 Year Yield 5.14 -0.05

How to make a small fortune on Wall Street. Start with a large one.

Wall Street saying.

In the stock casinos, gloom from war, rising interest rates, a widely expected Israeli incursion into Gaza at the weekend and general pressure from October, the usual month for stock selloffs.

Risk off time for all but the bravest of desperate speculators.

Asia markets extend losses after Powell’s comments; Japan inflation slows

UPDATED FRI, OCT 20 2023 12:21 AM EDT

Asia-Pacific markets were all lower Friday, extending losses from Thursday’s broad sell-off.

This comes as U.S. Federal Reserve Chair Jerome Powell said inflation was still too high and would likely require lower economic growth. The benchmark U.S. 10-year Treasury yield also crossed 5% for the first time in 16 years Thursday evening.

While he noted that recent data showed progress toward slowing prices, Powell also added that monetary policy was not yet too tight.

Asia investors will also assess Japan’s September inflation data, which came in at 3%, the 18th straight month above the BOJ’s 2% target, as well as China’s one-year and five-year loan prime rates.

In Australia, the S&P/ASX 200 slid 1.12%.

Japan’s Nikkei 225 fell 0.29% after the inflation reading was released, while the Topix was down 0.12%, with both indexes paring losses.

South Korea’s Kospi dropped 1.42%, while the Kosdaq was 1.9% lower.

Hong Kong’s Hang Seng index edged 0.41% lower, while China’s benchmark CSI 300 index slipped 0.24%. China’s central bank kept its benchmark loan rates unchanged for October.

Overnight in the U.S., all three major indexes lost ground as Powell’s comments and rising bond yields weighed on markets. The benchmark 10-year Treasury yield traded as high as 4.996% on Thursday, inching closer to the well-followed 5% level that was last crossed in 2007.

The Dow Jones Industrial Average shed 0.75%, while the S&P 500 dropped 0.85%. The Nasdaq Composite led losses among the indexes, falling 0.96%.

Asia stock markets extend losses after Powell's comments; Japan inflation slows (cnbc.com)

 

Stock futures slip as 10-year Treasury yield crosses 5% for the first time since 2007: Live updates

UPDATED THU, OCT 19 2023 9:46 PM EDT

Stock futures dipped Thursday evening as traders focused on a recent run higher in the 10-year Treasury yield.

Futures tied to the Dow Jones Industrial Average were down 63 points, or 0.2%. S&P 500 futures fell 0.3%, and Nasdaq 100 futures dropped about 0.4%.

The yield on the benchmark 10-year Treasury crossed 5% for the first time in 16 years. The 10-year yield hit 5.001% around 5 p.m. ET, the first time it has traded above that level since July 20, 2007 when it yielded as high as 5.029%.

In after-hours trading, shares of SolarEdge tumbled 21% as the company trimmed its third-quarter revenue guidance. Knight-Swift Transportation gained 15% after beating estimates in the third quarter on both the top and bottom lines.

The action follows a volatile day for stocks. The 30-stock Dow shed 250.91 points, or 0.75%, while the S&P 500 lost 0.85%. The Nasdaq Composite slid nearly 1%.

Stocks were rattled Thursday after Federal Reserve Chair Jerome Powell spoke in New York. He said inflation remains too high and lower economic growth will likely be needed to bring it down. Powell also said he doesn’t think rates are too high now.

“While the path is likely to be bumpy and take some time, my colleagues and I are united in our commitment to bringing inflation down sustainably to 2 percent,” he added.

Though Powell did not commit to a path forward for rates at his speaking engagement, the market seems to think the central bank will skip a hike in November.

Fed fund futures pricing reflects a 92% likelihood that the central bank will keep rates the same at the conclusion of its November meeting, according to the CME FedWatch Tool.

The major averages are on pace for losses on the week. The S&P 500 is down 1.2% through Thursday’s close, while the Nasdaq is off 1.7%. The Dow is down nearly 0.8%.

On the earnings front, investors will look for results from Comerica, Regions Financial and American Express. Oilfield services company SLB is also on deck to report.

Stock market today: Live updates (cnbc.com)

Falling stocks, climbing mortgage rates: how 5% Treasury yields could roil markets

By Saqib Iqbal Ahmed  October 20, 20233:04 AM GMT+1

NEW YORK, Oct 19 (Reuters) - Relentless selling of U.S. government bonds has brought Treasury yields to their highest level in more than a decade and a half, roiling everything from stocks to the real estate market.

The yield on the benchmark 10 year Treasury - which moves inversely to prices - briefly hit 5% late Thursday, a level last seen in 2007. Expectations that the Federal Reserve will keep interest rates elevated and mounting U.S. fiscal concerns are among the factors driving the move.

Because the $25-trillion Treasury market is considered the bedrock of the global financial system, soaring yields on U.S. government bonds have had wide-ranging effects. The S&P 500 is down about 7% from its highs of the year, as the promise of guaranteed yields on U.S. government debt draws investors away from equities. Mortgage rates, meanwhile, stand at more than 20-year highs, weighing on real estate prices.

"Investors have to take a very hard look at risky assets," said Gennadiy Goldberg, head of U.S. rates strategy at TD Securities in New York. "The longer we remain at higher interest rates, the more likely something is to break."

---- Here is a look at some of the ways rising yields have reverberated throughout markets.

Higher Treasury yields can curb investors' appetite for stocks and other risky assets by tightening financial conditions as they raise the cost of credit for companies and individuals.

Elon Musk warned that high interest rates could sap electric-vehicle demand, which knocked shares of the sector on Thursday. Tesla’s shares closed the day down 9.3%, as some analysts questioned whether the company can maintain the runaway growth that has for years set it apart from other automakers.

With investors gravitating to Treasuries, where some maturities currently offer far above 5% to investors holding the bonds to term, high-dividend paying stocks in sectors such as utilities and real estate have been among the worst hit.

The U.S. dollar has advanced an average of about 6.4% against its G10 peers since the rise in Treasury yields accelerated in mid-July. The dollar index, which measures the buck’s strength against six major currencies, stands near an 11-month high.

A stronger dollar helps tighten financial conditions and can hurt the balance sheets of U.S. exporters and multinationals. Globally, it complicates the efforts of other central banks to tamp down inflation by pushing down their currencies.

For weeks, traders have been watching for a possible intervention by Japanese officials to combat a sustained depreciation in the yen, down 12.5% against the dollar this year.

"The correlation of the USD with rates has been positive and strong during the current policy tightening cycle," BofA Global Research strategist Athanasios Vamvakidis said in a note on Thursday.

The interest rate on the 30-year fixed-rate mortgage - the most popular U.S. home loan - has shot to the highest since 2000, hurting homebuilder confidence and pressuring mortgage applications.

More

Falling stocks, climbing mortgage rates: how 5% Treasury yields could roil markets | Reuters

In Middle East war news, the world is now on the cusp of a much wider war.

 

US troops attacked in Iraq, Syria and on alert for more strikes

October 20, 2023 1:56 AM GMT+1

WASHINGTON, Oct 19 (Reuters) - U.S. troops have been repeatedly attacked in Iraq and Syria in recent days, U.S. officials said on Thursday, as Washington is on heightened alert for activity by Iran-backed groups with regional tensions soaring during the Israel-Hamas war.

President Joe Biden has sent naval power to the Middle East in the past two weeks, including two aircraft carriers, other warships and about 2,000 Marines.

 

There has been an uptick in attacks on U.S. forces since the conflict in Israel broke out on Oct. 7 when Palestinian militants from Hamas attacked southern Israel. On Wednesday, a drone hit U.S. forces in Syria resulting in minor injuries, while another one was brought down.

 

During a false alarm at Al-Asad airbase in Iraq, a civilian contractor died from a cardiac arrest.

Earlier this week, U.S. forces thwarted multiple drones targeting troops in Iraq. On Thursday, drones and rockets targeted the Ain al-Asad air base, which hosts U.S. and other international forces in western Iraq, and multiple blasts were heard inside the base.

 

Rockets hit another military base hosting U.S. forces near Baghdad's international airport, Iraqi police said on Thursday, without providing further details.

 

"While I'm not going to forecast any potential responses to these attacks, I will say that we will take all necessary actions to defend U.S. and coalition forces against any threat," Pentagon spokesman Brigadier General Patrick Ryder told reporters on Thursday.

"Any response, should one occur, will come at a time in a manner of our choosing," Ryder said.

A U.S. Navy warship traveling near Yemen on Thursday intercepted missiles and several drones that were launched by what Ryder said was the Iran-aligned Houthi movement, though it appeared that the projectiles were potentially heading in the direction of Israel.

 

Israel has called up a record 360,000 reservists and has been bombarding the Palestinian enclave of the Gaza Strip nonstop following Hamas's Oct. 7 assault, which killed about 1,400 people, mostly civilians.

At least 3,785 Palestinians have been killed and 12,493 wounded in Israeli strikes on Gaza, the health ministry in Gaza said.

But Ryder said he did not see a link between the rise in attacks and the conflict between Israel and Hamas.

"At this point, again, the information that we have does not show a direct connection to the Hamas attacks on October 7," he said.

The United States has 2,500 troops in Iraq, and 900 more in neighboring Syria, on a mission to advise and assist local forces in combating Islamic State, which in 2014 seized swathes of territory in both countries.

In Iraq, tension over the war in Gaza had already been high. Its top Shi'ite Muslim cleric, Grand Ayatollah Ali al-Sistani, last week condemned Israel and called on the world to stand up to the "terrible brutality" in besieged Gaza.

Kataib Hezbollah, a powerful armed faction with close ties to Iran, accused the United States of supporting Israel in "killing innocent people" and said it should leave Iraq.

More

US troops attacked in Iraq, Syria and on alert for more strikes | Reuters

Global Inflation/Stagflation/Recession Watch.

Given our Magic Money Tree central banksters and our spendthrift politicians, inflation now needs an entire section of its own.

Tesla joins GM, Ford in slowing EV factory ramp as demand fears spread

By Abhirup Roy and Ben Klayman  October 19, 202312:45 PM GMT+1

SAN FRANCISCO, Oct 19 (Reuters) - Tesla (TSLA.O) on Wednesday joined General Motors (GM.N) and Ford (F.N) in being cautious about expanding electric vehicle (EV) production capacity, citing economic uncertainties and underscoring fears of a slowdown in demand.

 

Tesla CEO Elon Musk said he was worried that higher borrowing costs would prevent potential customers from affording its vehicles despite substantial price cuts, and that he would wait for clarity on the economy before ramping up its planned factory in Mexico.

 

"People hesitate to buy a new car if there's uncertainty in the economy," Musk said on a post-earnings call where he also talked about "paycheck-to-paycheck" pressures on American workers. "I don't want to be going into top speed into uncertainty."

 

Musk's comments came after warning bells from other automakers and EV startups. It sent shares of Tesla down 7% in premarket action Thursday as well as shares of other EV makers.

GM said on Tuesday it would delay production by a year of Chevrolet Silverado and GMC Sierra electric pickup trucks at a plant in Michigan, citing flattening demand for EVs.

 

Detroit peer Ford said last week it would temporarily cut one of three shifts at the plant that builds its electric F-150 Lightning pickup truck. The automaker in July slowed its EV ramp-up, shifting investment to commercial vehicles and hybrids.

More

Tesla joins GM, Ford in slowing EV factory ramp as demand fears spread | Reuters

 

Big banks are quietly cutting thousands of employees, and more layoffs are coming

PUBLISHED THU, OCT 19 2023 10:41 AM EDT UPDATED THU, OCT 19 2023 3:20 PM EDT

The largest American banks have been quietly laying off workers all year — and some of the deepest cuts are yet to come.

Even as the economy has surprised forecasters with its resilience, lenders have cut headcount or announced plans to do so, with the key exception being JPMorgan Chase, the biggest and most profitable U.S. bank.

Pressured by the impact of higher interest rates on the mortgage business, Wall Street deal-making and funding costs, the next five largest U.S. banks have cut a combined 20,000 positions so far this year, according to company filings.

The moves come after a two-year hiring boom during the Covid pandemic, fueled by a surge in Wall Street activity. That subsided after the Federal Reserve began raising interest rates last year to cool an overheated economy, and banks found themselves suddenly overstaffed for an environment in which fewer consumers sought out mortgages and fewer corporations issued debt or bought competitors.

“Banks are cutting costs where they can because things are really uncertain next year,” Chris Marinac, research director at Janney Montgomery Scott, said in a phone interview.

Job losses in the financial industry could pressure the broader U.S. labor market in 2024. Faced with rising defaults on corporate and consumer loans, lenders are poised to make deeper cuts next year, said Marinac.

“They need to find levers to keep earnings from falling further and to free up money for provisions as more loans go bad,” he said. “By the time we roll into January, you’ll hear a lot of companies talking about this.”

More

Big banks cut thousands of jobs, more layoffs coming (cnbc.com)

Nokia to cut up to 14,000 jobs after 69% profit plunge

PUBLISHED THU, OCT 19 2023 1:41 AM EDT

Nokia on Thursday said it would cut up to 14,000 jobs as part of a cost reduction plan following a plunge in third-quarter earnings.

The Finnish telecommunications giant said that it will reduce its cost base and increase operation efficiency to “address the challenging market environment.”

It is targeting to lower its cost base on a gross basis from 2023 by between 800 million euros ($842.5 billion) and 1.2 billion euros by the end of 2026.

This will reduce the number of employees currently from 86,000 to between 72,000 and 77,000.

The substantial layoffs come after Nokia reported third-quarter net sales declined 20% year-on-year to 4.98 billion euros. Profit over the period plunged by 69% year-on-year to 133 million euros.

Earlier this year, Nokia’s rival Ericsson announced plans to lay of 8,500 employees, also as part of a cost cutting plan.

One of the world’s largest telecommunications equipment makers, Nokia has been facing headwinds from a slowing global economy and from infrastructure spending reductions made by mobile operators.

Sales from Nokia’s biggest unit by revenue, its mobile networks business, declined 24% year-on-year to 2.16 billion euros, with operating profit for the division diving 64% year-on-year.

Nokia said this was mainly driven by declines in North America. The company also described sale volumes in key market India as “moderated,” as 5G deployments “normalize.” 5G is next-generation mobile internet that promises faster speeds, and Nokia is part of India’s rollout of the technology.

Cost cutting measures have also taken place in the U.S. this year, particularly with carriers such as Verizon and AT&T.

More

Nokia to cut up to 14,000 jobs after 69% profit plunge (cnbc.com)

London rental prices clock biggest monthly bump since records began

WEDNESDAY 18 OCTOBER 2023 12:05 PM

London saw a record increase in private rental prices in September, according to the latest government figures, as high mortgage rates put pressure on landlords.

Data released by the Office for National Statistics (ONS) on Wednesday showed rental prices in London increased by 6.2 per cent in the year to September, up from 5.9 per cent in August.

This figure marks the highest increase of any UK region and the biggest jump since the London data series began in 2006.

Meanwhile, the average number of enquiries for each UK property has more than tripled to 25 from eight over the last four years, according to Rightmove.

Private rental prices in London make up nearly a third of the country’s rental expenditure, with lodgers in the city seeing costs reach fresh highs this year.

London is experiencing a decreasing supply of homes available to let, which has enabled many landlords to hike their rent and desperate tenants to overbid on homes. 

Lettings platform Goodlord found last month that nearly half of UK landlords had tried to sell their property in the last year, with more than three quarters of respondents in London citing high mortgage payments as a reason to exit the housing market.

Greg Tsuman, a director at north London estate agent Martyn Gerrard, said the private rental market is nearing an “implosion” and called on the government to review changes earlier this year that put higher taxes on landlords.

“Lack of supply has been weighing heavily on the market, with affordable two-bedroom properties attracting as many as 80 enquiries from desperate tenants,” he added. “The situation is pushing renters to move to more affordable areas, creating a ripple effect on prices as people leave urban centres for the suburbs. Trends in the city are reverberating outwards.”

“Our agents report that more and more tenants are falling into arrears, but without government intervention to incentivise investment, this is going to worsen,” said Nathan Emerson, chief executive of Propertymark.

“Governments across the UK need to urgently address the underpinning reason for these issues which is undersupply and must now look to adequately incentivise landlords to provide desperately needed homes in the private rented sector.”

More

London rental prices surged by 6.2 per cent in September (cityam.com)

Covid-19 Corner

This section will continue until it becomes unneeded.

FDA Finds Safety Signal for COVID-19 Vaccination Among Toddlers

A safety signal is a sign that a health condition may be caused by vaccination, but further research is required to verify a link.

0/17/2023 Updated: 10/17/2023

 

A safety signal of seizures for young children following COVID-19 vaccination has been detected by the U.S. Food and Drug Administration (FDA).

Seizures/convulsions "met the statistical threshold for a signal" in children aged 2 to 4 following receipt of a Pfizer COVID-19 vaccine and children aged 2 to 5 following receipt of a Moderna COVID-19 vaccine, researchers with the FDA and three large healthcare companies said in a new preprint study.

A safety signal is a sign that a health condition may be caused by vaccination, but further research is required to verify a link.

The data came from three health claims databases run by Optum, Carelon Research, and CVS Health, supplemented with vaccination information from state and local systems. The health claims databases are part of the FDA's Biologics Effectiveness and Safety System, a drug safety monitoring system.

Researchers looked at 15 health conditions following vaccination entered in the commercial databases and compared rates among children aged 6 months old to 17 years old to background rates from 2019, 2020, or both.

Overall, 72 cases of seizures/convulsions were recorded within seven days of a shot among toddlers and other young children. Most happened within three days of a shot.

When stratifying the data by dose, the researchers found signals for dose one and dose two for Pfizer's shot in two of the three databases in children aged 2 to 4. They also found a signal following dose two of Moderna's shot in children aged two to five.

The signal for seizures/convulsions for the young children "has not been previously reported for this age group in active surveillance studies of mRNA COVID-19 vaccines," the researchers said, referring to the Pfizer and Moderna shots.

There are reports of seizures and convulsions after COVID-19 vaccination among children in the Vaccine Adverse Events Reporting System, the researchers noted. Though anybody can lodge reports with the system, most are made by health care professionals.

Another five convulsions were reported after Pfizer vaccination in Pfizer's clinical trial.

More

FDA Finds Safety Signal for COVID-19 Vaccination Among Toddlers | The Epoch Times

Technology Update.

With events happening fast in the development of solar power and graphene, among other things, I’ve added this section. Updates as they get reported.

World may have crossed solar power 'tipping point'

Date:  October 17, 2023

Source:  University of Exeter

Summary:  The world may have crossed a 'tipping point' that will inevitably make solar power our main source of energy, new research suggests.

The world may have crossed a "tipping point" that will inevitably make solar power our main source of energy, new research suggests.

The study, based on a data-driven model of technology and economics, finds that solar PV (photovoltaics) is likely to become the dominant power source before 2050 -- even without support from more ambitious climate policies.

However, it warns four "barriers" could hamper this: creation of stable power grids, financing solar in developing economies, capacity of supply chains, and political resistance from regions that lose jobs.

The researchers say policies resolving these barriers may be more effective than price instruments such as carbon taxes in accelerating the clean energy transition.

The study, led by the University of Exeter and University College London, is part of the Economics of Energy Innovation and System Transition (EEIST) project, funded by the UK Government's Department for Energy Security and Net Zero and the Children's Investment Fund Foundation (CIFF).

"The recent progress of renewables means that fossil fuel-dominated projections are no longer realistic," Dr Femke Nijsse, from Exeter's Global Systems Institute.

"In other words, we have avoided the 'business as usual' scenario for the power sector.

"However, older projections often rely on models that see innovation as something happening outside of the economy.

"In reality, there is a virtuous cycle between technologies being deployed and companies learning to do so more cheaply.

"When you include this cycle in projections, you can represent the rapid growth of solar in the past decade and into the future.

"Traditional models also tend to assume the 'end of learning' at some point in the near future -- when in fact we are still seeing very rapid innovation in solar technology.

"Using three models that track positive feedbacks, we project that solar PV will dominate the global energy mix by the middle of this century."

However, the researchers warn that solar-dominated electricity systems could become "locked into configurations that are neither resilient nor sustainable, with a reliance on fossil fuel for dispatchable power."

Instead of trying to bring about the solar transition in itself, governments should focus policies on overcoming the four key "barriers"

More

World may have crossed solar power 'tipping point' | ScienceDaily

Another weekend and another war weekend for Israel and Gaza. The Middle East has turned into a powder keg again, a powder keg impacting oil. Have a great weekend everyone.

In bear markets, stocks return to their rightful owners.

Wall Street saying.