Don't Call it a Pivot - Midday Macro - 10/4/2022
Color on Markets, Economy, Policy, and Geopolitics
Midday Macro – 10/4/2022
Market Recap:
Price Action and Headlines:
Equities are higher, with yesterday's rally continuing at full speed, helped overnight by a smaller than expected rate hike by the RBA and JOLTs data this morning showing reduced labor market tightness
Treasuries are lower, but yields and the curve are little changed given the recent volatility and despite new developments
WTI is higher, supported by a rumored larger than expected production cut by OPEC+ sending prices out of their recent down channel
Narrative Analysis:
Day two and the bear-market, dead-cat-bounce, short-covering, whatever else you want to use to discount this rally continues, occurring now at a more global level as Asia and Europe caught up to America overnight, helped by the RBA raising rates less than expected last night and JOLTs data this morning showing reduced labor market tightness, lowering wage-spiral inflation fears for the Fed. The breadth of advances in equities is high, with all sectors up on the day and the S&P close to 6% higher since Sunday night's open lows. Rates are suspiciously quiet today, taking a pause after hogging traders’ attention last week. Oil has made a $10 move higher since last week as it's clear OPEC+ does not care what the Biden Administration wants, with production cuts now forecasted to be 2 million barrels a day. Aggs are more mixed, with price action more muted there. The dollar is now notably off its highs, but the $DXY is still at 110, as the Euro and Pound are up close to 1.5% on the session while only the Aussie Dollar is down amongst major crosses.
The Russell is outperforming the Nasdaq and S&P with Small-Cap, Growth, and Value factors, and Energy, Financials, and Material sectors all outperforming on the day. There is a divergence between outperforming sectors and factors (Energy and Materials vs. Small Cap & Value) over the last week, with a more cyclical sector tilt verse a more domestic safety bid.
@KoyfinCharts
S&P optionality strike levels have the Zero-Gamma Level at 3988 while the Call Wall is 3835. The 3800 Vol Trigger level remains a strong resistance line overhead while support is down at the 3600 Put Wall. Dealer hedging has been chasing the market from 3600 due to the large level of negative gamma, and that flow should fall into 3800. Looking forward, things are unclear as options positions here are not large in this area, and there is no major expiration for 2-3 weeks.
@spotgamma
S&P technical levels have support at 3785, then 3745, with resistance at 3800, then 3820. Fridays drop to new lows on the year looks like a big failed breakdown and bottoming signal. However, with RSIs now signaling an extremely overbought condition, it is likely a retesting of 3745 or at least some consolidation of recent gains is needed before any push above 3800 and stronger resistance at 3855 can occur.
@AdamMancini4
Treasuries are lower, with the 10yr yield at 3.63%, higher by 1 bps on the session, while the 5s30s curve is steeper by 4.3 bps, moving to -16 bps.
Deeper Dive:
“Dear Diary, it is day two of this broad global risk-asset rally, and I want to believe the bottom is in, but I’ve been fooled before. Do I chase, or should I still fear the Fed?” Things are moving quickly, and like a smitten schoolgirl, we want to believe that there have been some fundamental developments to warrant a continuation in what is still mainly being seen as a short-covering bear market bounce. To be clear, today's larger-than-expected drop in job openings indicates labor market tightness is easing. This was backed by a contracting employment picture in yesterday’s ISM manufacturing PMI report, which also showed further improvements in supply chains. Add in growing macroprudential financial stability concerns, made clear by the BoE’s actions last week and reiterated by the RBA’s lower-than-expected rate hike last night, and traders have had good reasons to at least not get more defensive or outright short this market. With real rates, volatility, and the dollar all falling and reducing financial condition tightness, as well as the general shift off extremely negative sentiment levels due to central bank developments, the S&P was able to bounce off its 200-week moving average and is now higher by almost 6% from its Sunday night open (low of the year). We see Friday’s Job report as the true test, with “bad being good” and a number lower than the expected 250K (although not too much lower), as well as reduced wage pressures cementing the current positive momentum into the Q3 earnings season, which starts the end of next week. Until then, we are happy with our current positions (Long S&P, Copper, Long-end Treasuries, and Short Dollar) and still advise patience and tight stops in what continues to be a highly volatile and tactical landscape.
In reality, not much has changed to warrant any expectation of a reduction in the Fed’s terminal rate or the duration they plan to hold rates at that level despite the market beginning to price in a “policy pivot” again. The deluge of Fed officials speaking this week has continued to stress that more rate hikes are needed, continuing the post-September-FOMC unified message. Even some concerns raised by Chicago Fed President Evans and a speech highlighting financial stability transmission channels by Governor Brainard, and by extrapolation “concerns,” hardly were heard over the chorus of “job is not yet done” speakers. However, and recently forgotten by markets, we do take comfort that the Fed is data-dependent, with Powell reducing the importance of forward guidance at the end of summer (due to the high level of uncertainty over forecasting). Of course, this was before the September FOMC SEPs raised the terminal rate by 1% and effectively signaled the committee was expecting a recession next year, also signaling that they were not happy with where markets were on expectations. As a result, it's hard to gauge just how data-dependent they are right now, but this week’s data so far has been a step in the right direction.
*The Eurodollar curve is back to pricing in a single rate cut in 2023
*However, the cut is expected at the very end of 2023 after a terminal rate of 4.5% is reached
The good news is that we continue to see growing signs (outside recent core CPI/PCE monthly gains) that inflation is decelerating due to supply-side improvements and demand destruction, as seen in business surveys or higher frequency data. In no particular order; there are high levels of durable goods inventories while business pricing power is falling (now occurring in new autos on top of more traditional discretionary goods), likely meaning mark-downs are coming this holiday season, higher frequency data showing rents have peaked, and housing prices fell last month, commodity prices are generally staying lower, especially energy-related ones, the stronger dollar is making imports cheaper, employment agencies have recently seen wage pressures easing, and shipping costs have fallen hard. It is still likely that shelter and healthcare costs will increase and are sticky, but headline inflation and the goods part of core inflation are poised to fall further in September. As a result, consumer/business and market-derived inflation expectations continue to fall. Fears that inflation expectations were becoming de-anchored have not materialized, and this should reduce the urgency to tighten policy, especially given what has already been done.
*ISM PMIs and regional Fed business surveys continue to show pricing pressures falling thanks to improving supply-side dynamics and likely reduced demand/urgency
*Although the one-year has a ways to go, it is hard to say that 5-10yr inflation expectations aren’t trending back to a more historically normal level
*The Atlanta Fed’s Year-Ahead Business Inflation Expectations Index looks to have peaked in April and has trended lower since then
*Inflation-related financial products are now pricing a significant drop in inflation next year
We are still leaning towards a softer landing next year as supply and demand balances normalize and drive inflation back toward the Feds target of 2%. At the same time, the job market, all be it cooling, keeps aggregate real disposable income from cratering and overall consumer and business confidence strong enough to forgo any overtly negative feedback loop that might cause a protracted recession. Yes, earnings will fall, but we are not as pessimistic on margins (due to reduced input costs and cost-cutting measures) as most and do not see top-line growth staying meaningfully below trend for multiple quarters. Also, how much negativity is already priced in? We fully acknowledge that the ability to forecast too far into the future is minimal right now and will continue to challenge our views here as new data comes forth. But at the highest level, despite the extraordinary array of headwinds from the Fed, inflation, geopolitical uncertainty, and more micro-orientated stories, U.S. consumers and firms have shown significant resilience up until this point in the cycle. If inflation continues to fall and the job market holds up, it is likely an improving real disposable income story will keep aggregate demand healthy enough to forgo the “MARKETS IN TURMOIL” recessionary apocalyptic scenario some fear is coming. We don’t believe today’s rally is indicative of this but are sympathetic to a slowly improving narrative that may allow the short-covering rally to morph into a more sustained upward channel into year-end.
*Too much money chasing too few goods/services led us to the current inflation predicament, but it also means the consumer isn’t rolling over
*Business sentiment is still very poor as survey-based readings show a weaker demand backdrop now increasingly weighing on confidence. However, reduced inflationary pressures should increasingly improve the future outlook
*Things have certainly been moving around the last two days, and as a result, the mock portfolio is now down -1.5% since inception, with 60% invested and no urgency to put more “cash” to work. Speaking of cash, we may soon have to give that a yield.
Econ Data:
The number of job openings in the U.S. dropped to 10.1 million in August from a downwardly revised 11.2 million in the prior month, under market expectations of 10.8 million. The largest decreases in job openings were in health care and social assistance (-236K), other services (-183K), and retail trade (-143K). Hires and total separations were little changed at 6.3 million and 6.0 million, respectively. Within separations, quits (4.2 million) and layoffs and discharges (1.5 million) were little changed. Meanwhile, the so-called quits rate unchanged at 2.7%.
Why it Matters: It was the lowest reading since June of 2021 for total openings. Interestingly the largest drop in openings was in areas that Fed officials sight as still having large shortages, specifically in retail and other services. However, with hired and total separations as well as the “quits rate,” little changed in the month, it's hard to get too excited. For labor tightness to truly weaken and wage inflation pressures to subside, turnover will have to fall much further. The number of job openings per unemployed person is still highly elevated by historical standards. So yes, a good step, but much more wood to chop here for the Fed’s wage spiral fears to be diminshed enough to see a lasting policy pivot.
*Declines in the lower paying service sector jobs drove the greater than expected miss in the headline number. Weren’t these just the jobs NY Fed President Williams said were still hard to fill yesterday?
*Powell’s often sited “job openings per unemployed persons” still has a long way to go to be near historical averages, but last month's drop is notable
The ISM Manufacturing PMI fell to 50.9 in September, compared to 52.8 in August and market forecasts of 52.2. New Orders (47.1 vs. 51.3 in August) and Employment (48.7 vs. 54.2) were the most notable sub-indexes to drop into contractionary territory. Production (48.7 vs. 54.2) increased only slightly. Meanwhile, Price (51.7, the lowest since June 2020 vs. 52.5) pressures continued to ease. In support of this trend, Inventories (55.5 vs. 53.1), Supplier Deliveries (52.4 vs. 55.1), and Backlog of Orders (50.9 vs. 53) all moved in directions indicating less future inflationary pressures. The stronger dollar is increasingly impacting Imports (52.6 vs. 52.5) and New Export Orders (47.8 vs. 49.4) in the way you would expect.
Why it Matters: There was a little bit of everything in this report allowing markets to see what they wanted. There was certainly a slowdown in new demand while production levels stayed steady, showing the economy was slowing, but not at an alarming rate. Future inflationary pressures looked reduced as the urgency to produce and hire fell, as seen in a contractionary reading in the employment sub-index, a fall in the backlog of orders and delivery times, and a higher reading in inventories. "Following four straight months of panelists’ companies reporting softening new orders rates, the September index reading reflects companies adjusting to potential future lower demand. Many business survey panelists’ companies are now managing headcounts through hiring freezes and attrition to lower levels, with medium- and long-term demand more uncertain", Timothy R. Fiore, Chair of the ISM, said. Fiore was also on Bloomberg TV later in the day, making notable comments on the report. He highlighted that employment intentions are trending lower quickly, with previous reports showing an 8 to 10 ratio of firms hiring verse not. This month it was a two-to-one ratio. He expects hiring freezes to pick up but doesn’t expect layoffs until the first quarter of next year, given the season. On a sector-specific level, he pointed out that Chemicals have been the most concerning area, with production and new orders down for three months now. A strong dollar and higher energy costs are hurting export demand and margins, with demand from Europe especially weak, with 20% of export comments focused on that region. Finally, he noted the supply chain situation is improving even with many known factors, such as China lockdowns, still in play, with respondent concerns diminishing. However, there are still specific areas that continue to have problems, such as semiconductors.
*Drops in New Orders and Employment are now negatively contributing to the headline reading, while the decline in Supplier Deliveries since last year shows supply chain issues are abating
*Stepping back, the moves in the sub-indexes align well with the current narratives already known with falling demand and higher levels of inventory, reducing the urgency to produce and improving supply-side dynamics that are reducing pricing pressures
Construction spending fell by -0.7% in August to a seasonally adjusted annual rate of $1.78 billion in August, more than the market expectations of a -0.3% decrease and compared to an upwardly revised -0.6% drop in July. Spending on private construction fell by -0.6%, dragged by residential (-0.9%), power (-0.9%), and manufacturing (-0.5%) construction. Also, public construction decreased by -0.8%, as residential (-2.7%) and nonresidential (-0.8%) construction both fell.
Why it Matters: There were no real surprises in the August report, with most areas in private construction cooling or contracting while every sub-category of public construction fell. It's worth noting that total residential construction is still higher by 12.4% on the year, with manufacturing (21.5%) and commercial (19.1%) construction also notably higher YoY. With financing costs rising and uncertainty over the future high, construction spending will likely be more focused and regionally diverse until recession fears fall.
*August saw the biggest monthly fall in total construction spending since the early days of the pandemic
*Not surprisingly, this was mainly driven by residential investment as home-builders become less aggressive, although there is still a historically high level of new single and multi-family homes in the pipeline
New orders for manufactured goods were flat in August, after a -1% decrease in July and in line with market expectations. Orders for durable goods went down -0.2% (vs. -0.1% in July), mainly due to a drop in transportation equipment (-1.1%) and fabricated metal products (-0.7%). On the other hand, orders for nondurable goods were higher by 0.2%, rebounding from a -1.9% drop last month. Excluding transportation, factory orders increased 0.2% after a 1.1% decline in July. Shipments increased 0.8%, led by transportation equipment (2%). Unfilled orders increased by 0.5%, also driven by transportation equipment. Finally, Inventories decreased by -0.1%, as nondurables fell (petroleum and coal).
Why it Matters: Similar to what was seen in the ISM Manufacturing survey, new orders were down while shipments (production) held steady. However, the increase in unfilled orders differed with future demand not falling too hard and capacity constraints potentially persisting more than indicated elsewhere. Finally, the rise in durable inventories also mirrored what was seen in other business surveys and continues to indicate less inflationary pressures are possible from durables in Q4.
*Factory orders were flat in August, recovering from a -1% monthly drop in July, of course, when adjusting for PPI inflation, the 13.2% YoY increase is much lower.
*As a reminder, the ISM PMI surveys are just that, surveys, prone to emotional biases and differing from harder manufacturing or service data
Policy Talk:
Fed Governor Lael Brainard gave a speech titled “Financial Stability Considerations for Monetary Policy,” a Fed research conference at the Federal Reserve Bank of New York. She began her remarks by highlighting the current high inflationary environment, warning future unforeseen events mean it is far from certain that inflation has peaked. However, the bulk of the speech focused on how tighter financial conditions affect the global economy. It was a notable speech as the third “shadow” mandate, financial stability, has been missing in much of the Fed’s recent conversations/speeches as they overly focus on fighting inflation.
“At a global level, monetary policy tightening is also proceeding at a rapid pace by historical standards. Including the Federal Reserve, nine central banks in advanced economies accounting for half of global GDP have raised rates by 125 basis points or more in the past six months. Global financial conditions have likewise tightened.”
“The real yield curve is now in solidly positive territory at all but the very shortest maturities, and with the additional tightening and deceleration in inflation that is expected over coming quarters, the entire real curve will soon move into positive territory.”
“Some estimates suggest that the spillovers of monetary policy surprises between more tightly linked advanced economies such as the United States and Europe could be about half the size of the own-country effect when measured in terms of relative changes in local currency bond yields.”
New York Fed President John Williams gave a speech titled “A Bedrock Commitment to Price Stability” at the U.S. Hispanic Chamber of Commerce National Conference in Phoenix. Using an onion analogy, he noted that input costs from commodities and supply chain disruptions have come down, reducing inflationary pressures. However, he goes on to say shortages of workers, rising rents, and the reopening of the economy continue to put “broad-based” pressures on goods and services generally, the middle of the onion and hardest part to get to (according to him, not us). The overall tone of the speech was more hawkish than expected and seemed backward-looking regarding the inflation picture. However, it was notable that Williams highlighted that inflation expectations remain well anchored. He also said that other central banks are echoing the Fed's tightening actions, which would “speed the process of restoring balance to global supply and demand.”
“…it is useful to think of inflation in terms of three distinct layers of an onion… The innermost layer of the onion consists of underlying inflation, which reflects the overall balance between supply and demand in the economy. Therein lies our biggest challenge.”
“Prices for services have been rising at a fast rate as the economy has recovered from the recession. In particular, rents for new leases have climbed rapidly. And labor shortages are everywhere, leading to higher labor costs. Indeed, inflation pressures have become broad-based across a wide range of goods and services.”
“Unfortunately, that's it for the good news on inflation. The fact is, lower commodity prices and receding supply-chain issues will not be enough by themselves to bring inflation back to our 2 percent objective.”
“I expect the combination of cooling global demand and steady improvements in supply to result in falling rates of inflation for goods that rely heavily on commodities, as well as for those that have been most affected by supply-chain bottlenecks. These factors should contribute to inflation declining to about 3 percent next year.”
Technicals and Charts:
Four Key Macro House Charts:
Growth/Value Ratio: Growth is higher on the day and the week but generally little changed. Mid-Cap Growth is the best performing size/factor on the day.
Chinese Iron Ore Future Price: Iron Ore futures are higher on the day and on the week but generally flat. Home prices continue to fall, and government support for the property sector continues to have questionable results as expectations for any recovery move further out in time.
5yr-30yr Treasury Spread: The curve is steeper on the day and the week as the “right” kind of data today and yesterday continue to reduce Fed tightening expectations/duration while foreign developments support Treasuries more generally
EUR/JPY FX Cross: The Euro is stronger on the day and the week as a global risk-on rally has been more beneficial there, likely due to Euro short positions being closed.
Other Charts:
It seems silly to talk about seasonals when markets are down this much, but it's likely to be a positive factor moving into year-end.
There is nowhere to hide as the central bank sledgehammer, led by the Fed, has hurt almost all assets globally.
The S&P has correlated well to the overall growth of global M2. Further expected decreases do not bode well for the S&Ps performance moving forward.
Why is the global money supply falling so fast? Central banks have reduced their balance sheets by $3.1 trillion in the last seven months.
“To our clients who refused to pay the above sticker for a new car, your patience is about to pay off. A stalling US SAAR and a 17mo high in new days’ supply may finally bring deflation to new prices. Make room in your garage for a cheaper new car ..” Morgan Stanley’s Jonas
Lower oil prices have historically moved airfare costs down on a three-month lag, meaning this summer's drop will only now start to be reflected.
“..the case for a sharp inflation drop builds,” thanks to “falling energy.. and easing bottleneck pressures.” Despite European increases, “we project global inflation to slow below 4%ar in the three months through September—less than half its pace in the previous year.” – J.P. Morgan Research
Expectations are for OPEC+ to cut production by 2 million barrels a day. However, they are already below their target by almost twice that much.
Article by Macro Themes:
Medium-term Themes:
Real Supply-Side Situation:
Picked Up: U.S. Logistics Managers’ Gauge Rises for First Time Since March - Bloomberg
Supply-chain activity in the U.S. picked up for the first time since March, buoyed by elevated inventories even as transportation costs slid for a sixth straight month. The Logistics Managers’ Index increased to 61.4 in September from 59.7 a month earlier. Transportation capacity increased while prices fell for a third straight month. Inventory levels continued to grow as earlier-than-usual efforts to be prepared for the holiday season were evident. Warehousing capacity remained low while utilization needs jumped, boding ill for companies hoping for warehousing costs to ease.
Why it Matters:
“Transportation continues its slump, while warehousing is chugging along at the same breakneck pace we have observed for much of this post-pandemic recovery period,” the LMI report said. “Much of this confusion can be attributed to the high levels of inventory that continue to permeate global supply chains.” It is possible that inventories are in a holding pattern and will begin moving again when goods spending picks back up in Q4. However, right now, inventory is moving at a much slower rate than what we have seen over the last two years.
China Macroprudential and Political Situation:
Not by Winter: Moderna refused China request to reveal vaccine technology – FT
Moderna has refused to hand over to China the core intellectual property behind the development of its breakthrough COVID-19 vaccine, leading to a collapse in negotiations on its sale there, citing commercial and safety concerns. The mRNA vaccine technology used by Moderna and BioNTech/Pfizer provides longer-lasting and higher levels of protection than the inactivated vaccine technology used by Chinese makers. Several Chinese pharma companies are racing to develop a homemade mRNA alternative but have struggled with the emergence of more infectious variants.
Why it Matters:
China has not approved any mRNA products for therapeutic purposes, and the mass production of this kind of vaccine is more complex than China’s existing inactivated vaccines made by Sinopharm and Sinovac. To date, Beijing has offered two routes for foreign COVID-19 vaccine makers to distribute in China, dependent on regulatory approval: carrying out a full technology transfer to a domestic drugmaker or establishing a manufacturing facility in China with a local partner, while keeping control of the underlying technology. Moderna says it is still “eager” to sell the product to China but will not abide by Chinese demands. As a result, our view that a mRNA vaccine would be distributed by wintwer no longer looks possible.
Longer-term Themes:
National Security Assets in a Multipolar World:
Preventing: U.S. Seeks to Further Restrict Cutting-Edge Chip Exports to China – WSJ
The Biden administration is preparing new export controls on semiconductors and the machines to make them, the latest push in its effort to deny China the ability to make the fastest, most cutting-edge circuitry possible. The administration has already recently placed new restrictions on some U.S. exports of chips used for artificial intelligence calculations and manufacturing equipment used to make some of the most powerful number-crunching chips. But more export curbs are under consideration, including ones targeting high-end memory-chip manufacturing capabilities and advanced components that go into some of the most cutting-edge chip-making tools. Advanced quantum computing is another target under discussion, they said.
Why it Matters:
The two measures (one already done) would be some of the most significant steps taken by the Biden administration to cut off China’s access to advanced semiconductor technology. Over time, as supercomputer performance levels rise, the cap could seriously hinder China’s ability to develop the powerful number-crunching technology that forms the building block of innovations across an array of fields, including biosciences, artificial intelligence, and missile engineering. As we often write, AI and quantum computing will be significant national security assets, and clearly, the U.S. is intent on starving China of any benefits from its own developments there.
Propo’s: Meta Blocks ‘Inauthentic’ Pages, Groups From Russia and China – Bloomberg
Meta announced that it had taken down two networks using fake social media accounts engaged in covert influence campaigns being run from China and Russia. The Russian network was the “largest and most complex” of its kind that Meta has discovered since the start of Russia’s invasion of Ukraine. It comprised more than 60 websites masquerading as legitimate European news platforms with stories echoing Kremlin propaganda, criticizing western sanctions on Russia, as well as Ukraine and Ukrainian refugees. The Chinese network was the first the company had found targeting U.S. politics ahead of the midterms. It operated across several social media platforms including Facebook, Instagram, and Twitter. It targeted both Republicans and Democrats, with posts expressing support both for and against protecting gun rights and abortion access.
Why it Matters
Wars are won in the mind, and the historically high political division in this country is being fueled by geopolitical rivals with the hope of undermining our democracy and way of life. Meta’s report noted the overlap between the Russian and Chinese campaigns on “a number of occasions,” although the company said they were unconnected. The overlap reflects the growing cross-fertilization of official statements and the desire to undermine western societies. The accounts associated with the Chinese campaign posted material from Russia’s state media, including those involving unfounded allegations that the United States had secretly developed biological weapons in Ukraine. In previous influence campaigns, China’s propaganda apparatus concentrated more broadly on criticizing American foreign policy while promoting China’s view of issues like the crackdown on political rights in Hong Kong and the mass repression in Xinjiang. The new goal of sowing division shows a step up in tactics.
Electrification and Digitalization Policy:
Amended: US senators aim to amend cybersecurity bill to include crypto – TechCrunch
U.S. senators Marsha Blackburn, Republican of Tennessee, and Cynthia Lummis, Republican of Wyoming, are introducing a reformed biull called the Cryptocurrency Cybersecurity Information Sharing Act, which would amend the Cybersecurity Information Sharing Act of 2015 to include cryptocurrency firms. The bill aims to mitigate losses from a number of cyber-related incidents, including data breaches, ransomware attacks, business interruption and network damage. “The Cryptocurrency Cybersecurity Information Sharing Act will update existing regulations to address this misuse directly. It will provide a voluntary mechanism for crypto companies to report bad actors and protect cryptocurrency from dangerous practices,” Blackburn said in a statement to TechCrunch.
Why it Matters:
During the second quarter of this year, there was a significant rise in crypto-focused phishing attacks, according to a report by CertiK. In the first half of this year, over $2 billion was lost to hacks and exploits racking up an amount larger than the entirety of 2021 in half the time, the report stated. In general, Senator Lummis has been a vocal supporter of the crypto industry and has sponsored and proposed new bills focused on the crypto industry in recent months. In June, Lummis proposed a bipartisan crypto bill alongside Senator Kirsten Gillibrand, Democrat of New York, with a goal of installing guide rails around the digital asset sector. The bill covered a broad range of crypto market subsectors, from how to tax crypto transactions to guidelines for backing stablecoin.
More and More: International conflicts driving increased strength of DDoS attacks – The Record
Wars and regional disputes are fueling an increase in distributed denial-of-service attacks, according to a new report from NETSCOUT. The company said most of the six million DDoS attacks it has registered so far this year were related to Russia’s invasion of Ukraine or Chinese aggression towards Taiwan and Hong Kong. The report tracked increased attacks in Ireland, India, Taiwan, Belize, Romania, Italy, Lithuania, Norway, Poland, Finland, and Latvia. It said many of those countries were attacked explicitly for their stance on the conflict in Ukraine, with several being targeted by the pro-Russian Killnet group. Finland saw a 258% year-over-year increase in DDoS attacks since announcing its intent to apply for NATO membership, the report found.
Why it Matters:
Richard Hummel, senior manager of threat intelligence at NETSCOUT said that in the past, most DDoS attacks deployed by nation-state criminals were diversionary tactics designed to draw attention. While the same is largely true today, Hummel said it is increasingly being used for a variety of other reasons: disruption, smokescreen, morale degradation, communications interruption, and other purposes. Part of why the attacks have grown in frequency is because they are cheap, easy to deploy, and accessible with very little risk or repercussions, according to Hummel. By their nature, DDoS attacks lend themselves to anonymity because of how distributed they are. There are also many free tools that now assist with the DDoS attack process.
Commodity Super Cycle Green.0:
Get in Line: EV Demand Sparks Revival of US Manganese Mining After Decades – Bloomberg
South32 Ltd. aims to accelerate the development of the first new U.S. manganese mine for decades as carmakers rush to secure a supply of the metal needed in electric vehicle batteries. Automakers are “super keen” to secure supply from the company’s Clark Deposit in Arizona, which would become the only U.S. domestic source of the metal. Prospects for general production in the U.S. are also being bolstered by efforts to reduce supply chain reliance on China under President Joe Biden’s Inflation Reduction Act, or IRA. Development of the Clark Deposit at South32’s Hermosa mine project could be accelerated under this legislation aimed at promoting the fast development of clean energy and other infrastructure projects.
Why it Matters:
Demand for manganese from the battery sector is set to surge ninefold by 2030, the fastest growth rate of any of the industry’s key metals, according to BloombergNEF. South Africa, Gabon, and Australia account for more than two-thirds of the production of manganese, mainly used in the steel sector, and domestic output in the US ended in the 1970s. China currently dominates the refining of the metal into materials used in the battery sector, accounting for 95% of manganese sulfate production capacity last year, according to BloombergNEF.
ESG Monetary and Fiscal Policy Expansion:
Pay to Play: House passes antitrust bill that hikes M&A fees as larger efforts targeting tech have stalled - CNBC
The House on Thursday passed an antitrust package that would give federal enforcers more resources to crack down on anticompetitive behavior. A version of the Merger Filing Fee Modernization Act already passed the Senate, and the House package gained the support of the White House in a statement last week. The bill would increase the fees businesses pay to federal agencies when a large merger deal requires government review, which would raise money for the Federal Trade Commission and Department of Justice Antitrust Division. In the case of smaller deals in need of review, fees would be lowered. The House bill also incorporated the formerly separate Foreign Merger Subsidy Disclosure Act, which would require merging companies to disclose subsidies by foreign adversaries, like Chinese and Russian entities. The bill also included the State Antitrust Enforcement Venue Act which would give state attorneys general more control over which court will hear their antitrust cases.
Why it Matters:
The antitrust agencies have complained of being severely under-resourced for years, even as the rate of deal-making has soared and many lawmakers have increasingly expected them to bring more cases enforcing antitrust statutes. The Congressional Budget Office recently estimated the measure would save the federal government $1.4 billion over the next five years. Despite the largely simple and bipartisan nature of the legislation, it still sparked infighting among Republican representatives shortly before the votes.The divides underscore how tough it will be to pass the sweeping American Innovation and Choice Online Act.
Appendix:
Current Macro Theme Summaries:
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