Nov 02

Today’s News 2nd November 2023

  • Why Target Date Funds Fail Investors: A $3 Trillion Delusion
    Why Target Date Funds Fail Investors: A $3 Trillion Delusion

    Authored by Michael Lebowitz via RealInvestmentAdvice.com,

    Morningstar estimates that as of 2022, there is nearly $3 trillion invested in target date mutual funds. Per Morningstar: Target date strategies remain the investment vehicle of choice for retirement savers.

    Whether retirement savers in target date funds know it or not, and we presume most don’t, they are mindlessly investing their wealth. The allocations between stocks and bonds in these funds are not based on risk or reward but solely on the calendar. Managing target date funds requires zero investment expertise, yet mutual fund and ETF managers rake in hundreds of millions of dollars a year in management fees.

    The volatile market environment helps us appreciate why target date funds are foolish.

    What Are Target Date Funds?

    • Barrons estimates that approximately 42% of all retirement plan dollars are in target date funds.

    • Per Investopedia, more than 75% of investors have some money in target date funds.

    • The Department of Labor claims that 70% of employers use target date funds as their default investment.

    Target Funds are passive mutual funds run by simple algorithms. To be frank, the word algorithm makes their investment process seem more complicated than it is.   

    The funds with the target dates furthest in the future are almost fully allocated to stocks with a minimal allocation to bonds. As each year passes, the funds slowly allocate away from stocks and toward bonds. The stock-bond targets for the funds are based solely on the target date.

    The graphic below, courtesy of Vanguard, the world’s largest manager of target date funds, shows the “glide path” of investment allocations based on age.

    Time dictates the funds’ allocation between stocks and bonds, not the traditional metrics investors use, like potential risks, rewards, and valuations.

    Do You Care About Expected Returns? 

    Target date fund investors, by default, must believe that stocks will outperform bonds over the long haul. While such is often true, it is far from accurate over shorter or medium-term periods. Further, such a longer-term approach misses incredible short- to medium-term opportunities in stocks and bonds. Accordingly, target fund investors are sometimes making poor investments, which may not align with their investment goals.

    To help appreciate these inherently flawed investment strategies, we ask two questions. In both questions, we ask you to allocate your retirement nest egg into A and B securities.

    Question 1: 

    Security A has an expected ten-year annualized total return of 6.00% with a likely range of returns of 0% to 12%. Security B has a guaranteed annualized return of 0.75%.

    Question 2:

    Security A has an expected ten-year annualized return of 2.50% with a likely range of returns from 7.00% to -4.50%. Security B has a guaranteed annualized return of 5.00%.

    If you favored A in the first question and B in the second, expected returns and risk probabilities matter to you.

    Question 1 is based on data from March 2020, when stock valuations cheapened considerably, and bond yields were among the lowest in U.S. history.

    Question 2 corresponds to the current investment environment for stocks and bonds.

    Questions 1 and 2 represent recent extremes of stock and bond return expectations. More importantly, they correspond to periods when target date stock and bond allocation percentages were likely inappropriate for a decent proportion of target date fund investors.

    What About Today?

    Let’s go into more detail on question 2 to better appreciate the current risk-reward framework for stocks and bonds. To repeat question 2:

    Security A (stocks) has an expected ten-year annualized return of 2.50% with a likely range of returns from 7.00% to -4.50%. Security B (bonds) has a guaranteed annualized return of 5.00%.

    Should a 2025 target date fund be heavily invested in bonds while a 2055 fund be almost solely invested in stocks in the current environment?  

    The easy way to answer is by studying the graph below. It shows every monthly instance of CAPE 10 stock valuations and the following ten-year return, including dividends. The green line shows the current ten-year UST yield (4.90%), and the blue line indicates the investment-grade corporate bond yield (6.45%).

    The current CAPE, as starred, is slightly over 30. The yellow box highlights each instance when CAPE was 30 or greater.

    The expected annualized total return on stocks for the next ten years is 2.35%, much lower than the returns on bonds. Of all the instances in which CAPE was greater than 30, only a few of them were followed by a ten-year period in which stock returns beat Treasury bond returns. The number dwindles to one when stocks are compared to investment-grade corporate bonds.

    Let’s take the analysis further and focus on maximum drawdowns when CAPE was greater than 30. The following graph shows the peak percentage drawdown from the month each CAPE valuation eclipsed 30. As it shows, skewing allocations toward bonds in environments like today allows you to preserve cash and take advantage of lower stock prices.

    Ten Year Forecasts Don’t Mean Ten Year Investments

    Bonds are much more likely to offer a better return over the next decade than stocks. However, and this is a big issue, markets change rapidly. In a year, we could be amid a recession with bond yields at 2% and equity valuations near normal. If so, profits on bonds should be taken, and a reallocation back toward stocks would likely be appropriate.

    Target date funds will not adjust for the lopsided return probabilities. Target-date funds are blind to risk and reward. Therefore, they are indifferent to what is in the best interest of their investors.

    Summary

    In the current environment, 25-year-olds and 75-year-olds should have increased allocations to bonds versus stocks. In target date fund terminology, the 2025 and 2050 funds should look much more alike than they do. The Vanguard 2050 fund holds under 10% of bonds and 90% of stocks. The Vanguard 2025 fund has approximately 45% of bonds and 55% of stocks.

    A blind formula dictates these percentages, not basic financial investment management rules.

    Investing for the long run is thoughtful. Investing without considering risks and rewards is idiotic.

    Tyler Durden
    Wed, 11/01/2023 – 15:20

  • Joe Biden Snagged Another $40K In 'Laundered' Chinese Money From Brother's CEFC Payment: Comer
    Joe Biden Snagged Another $40K In ‘Laundered’ Chinese Money From Brother’s CEFC Payment: Comer

    Remember when Democrats insisted that Trump was compromised by Russia because of some alleged loan he had in the early 90’s according to ‘several sources with knowledge’ (who never materialized)?

    The same Democrats – and the same media, are of course dead silent over what’s now grown to $240,000 in laundered Chinese that ended up in Joe Biden’s pocket via his brother. We know, we know – huge shock.

    On Wednesday, the House Oversight Committee revealed that President Biden received $40,000 in Chinese funds which were “laundered” through his brother, James Biden, in a “complicated financial transaction” marked as a ‘loan,’ which took place just weeks after Hunter Biden threatened the Chinese with his father’s wrath in a July 30, 2017 text message to a CEFC China Energy employee.

    The alleged 2017 transfer from first brother James Biden to the future president involves the same business deal in which Joe Biden was called the “big guy” and penciled in for a 10% cut — and would be the first proven instance of the commander-in-chief getting a piece of his family’s foreign income.

    …

    The money ended up in Joe Biden’s bank account on Sept. 3, 2017, via a check labeled “loan repayment” from his younger brother, who partnered with Hunter in the venture. -NY Post

    “Remember when Joe Biden told the American people that his son didn’t make money in China?” asked Oversight Committee Chairman James Comer (R-KY) in a video posted to X. ““Well, not only did he lie about his son Hunter making money in China, but it also turns out that $40,000 in laundered China money landed in Joe Biden’s bank account in the form of a personal check.”

    “Even if this $40,000 check was a loan repayment from James Biden, it still shows how Joe benefited from his  family cashing in on his name — with money from China no less,” Comer continued.

    Bank records released this year by Comer show that CEFC — a since-defunct reputed cog in Beijing’s “Belt and Road” foreign influence campaign — paid Hunter and James Biden at least $6.1 million in 2017 and 2018 — about $1 million in March 2017 shortly after Biden left office as vice president and the remainder within 10 days of Hunter’s threat invoking his dad.

    A $5 million wire was sent on Aug. 8, 2017, to “Hudson West III, a joint venture established by Hunter Biden and CEFC associate Gongwen Dong,” a committee synopsis of the memo says. -NY Post

    “That same day, Hudson West III sent $400,000 to Owasco, P.C., an entity owned and controlled by Hunter Biden. On August 14, 2017, Hunter Biden wired $150,000 to Lion Hall Group, a company owned by President Biden’s brother James and sister-in-law Sara Biden,” the synopsis continues.

    “On August 28, 2017, Sara Biden withdrew $50,000 in cash from Lion Hall Group. Later the same day, she deposited it into her and James Biden’s personal checking account. On September 3, 2017, Sara Biden cut a check to Joe Biden for $40,000 for a ‘loan repayment.'”

    But hey, no more mean tweets!

    Tyler Durden
    Wed, 11/01/2023 – 15:00

  • The Party's Over: Atlanta Fed Slashes Q4 GDP Estimate From 2.3% To 1.2%
    The Party’s Over: Atlanta Fed Slashes Q4 GDP Estimate From 2.3% To 1.2%

    Remember when we mocked the BEA’s recent report that Q3 GDP had hit a scorching 4.9% (well above estimates) on the back of such laughably “growth” factors as surging inventories and government consumption…

    … and said prepare for Bidenomics to collapse in Q4?

    Well it just did, and not once but twice.

    First, it was the ISM Chair Tim Fiore who earlier today said that “the past relationship between the Manufacturing PMI and the overall economy indicates that the October reading (46.7 percent) corresponds to a change of minus-0.7 percent in real gross domestic product (GDP) on an annualized basis.”  Translation: the economy is already in contraction, which would hardly be a shock since Europe is also in contraction, China’s economy is imploding and the US will never decouple from the rest of the world.

    And now, it’s the same Atlanta Fed which last quarter stunned Wall Street with its 5%+ Q3 GDP estimates, and which just came out with its second Q4 GDP forecast which was a doozy: at 1.2% it was almost 50% below the Atlanta Fed’s first Q4 GDP estimate of 2.3%.

    Here are the details:

    The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2023 is 1.2 percent on November 1, down from 2.3 percent on October 27.

    After this morning’s construction spending release from the US Census Bureau and the Manufacturing ISM Report On Business from the Institute for Supply Management, the nowcasts of fourth-quarter real personal consumption expenditures growth and fourth-quarter real gross private domestic investment growth decreased from 3.0 percent and -2.2 percent, respectively, to 1.5 percent and -2.8 percent, while the nowcast of the contribution of the change in real net exports to fourth-quarter real GDP growth increased from 0.11 percentage points to 0.22 percentage points.

    Bottom line: the Bidenomics trendline that was so laughably interrupted by the one-time, artificial, and debt-driven burst in Q3 GDP is back to normal…

    … and the ridiculous economic “boost” that Biden tried to represent as being the normal, is now gone. Next step: recession, rate cuts, more stimmies, and so on.

    Tyler Durden
    Wed, 11/01/2023 – 14:41

  • Watch Live: Fed Chair Powell Tries Not To Break Anything
    Watch Live: Fed Chair Powell Tries Not To Break Anything

    No change in policy rates… as expected; and a barely-changed statement, mean all eyes will be on Fed Chair Powell for the nuance leaning hawkish or dovish.

    With money markets and many Fed officials believing that the Fed is done with rate-hikes, Powell will not want to rock the boat of the central bank “proceeding carefully” to let cumulative tightening continue to work through as inflation trends lower and the labor market rebalances.

    His recent comments at The Economic Club of New York suggested ‘satisfaction‘ with current policy settings… with the ubiquitous caveat that they are ‘data dependent’.

    Powell will be treading very carefully as, given the addition of the term “financial conditions” means anything less than the right amount of hawkishness will prompt the kind of reflexive gains in bonds and stocks that will reverse the tightening of financial conditions that he has been quietly comfortably allowing.

    Will Powell be asked about the messaging of that one word?

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    One final point before he speaks: while most expect no surprises from the Fed, the market is uneasy about something with the implied-implied move in the S&P today is 0.89%, which would make it the highest implied move since May according to Goldman.

    What are they worried about?

    Watch Powell’s press conference live here (due to start at 1430ET):

    Tyler Durden
    Wed, 11/01/2023 – 14:25

  • Fed Remains 'Paused', Acknowledges Tightening Financial Conditions Are 'Doing Its Job'
    Fed Remains ‘Paused’, Acknowledges Tightening Financial Conditions Are ‘Doing Its Job’

    Tl;dr: The Fed kept rates unchanged, as expected but the addition of one word is key:

    “Tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation.”

    Is that The Fed sending a message to Janet Yellen: “stop spending like drunken sailors.”

    *  *  *

    Since The Fed’s last statement and press conference on September 20th, the market’s movements (impacted by the ongoing chaos in Israel also) have been somewhat remarkable.

    Bitcoin has soared higher, stocks and bonds (the latter worse than the former) have both been hammered as gold and the dollar have rallied in unison…

    Source: Bloomberg

    We note that Gold has been on quite a path in the last two months but is back  – again – at around the same levels as it has been for the last two FOMC meetings…

    Source: Bloomberg

    Additionally, The Fed’s jawboning of “higher for longer” is increasingly being accepted by the rates market as the SOFR spreads for Dec 2023-2024 and 2023-2025 have surged since the last FOMC…

    Source: Bloomberg

    Of particular note, we have seen financial conditions tighten significantly since the last FOMC (while at the same time, macro surprise data has improved marginally – not fallen apart)…

    Source: Bloomberg

    Specifically, the period since the last FOMC brought some surprisingly strong readings on inflation and the economy more broadly. Here are some headline numbers:

    • Third-quarter GDP growth was a whopping 4.9%, higher than forecast and an a historic figure for the US, where growth tends to hover around 2%-3%

    • September payrolls were also strong, with employers adding 336,000 jobs, nearly double what economists had been expecting

    • A variety of inflation indicators cooled less than anticipated, or posted slight gains. The employment cost index, a broad and reliable indicator, ticked up 1.1% in the third quarter, a pace far above its pre-pandemic average of 0.7%.

    However, the last chart above is of increasing relevance as the narrative that “the market is doing The Fed’s job for it” continues to keep hopes alive that Powell and his pals are done (due to this dramatic tightening).

    For today, expectations are for no change (0.5% odds of a rate-hike priced-in), but the market remains more dovishly priced still than The Fed’s projections (at least until 2026)…

    Source: Bloomberg

    The Fed statement is expected to be more or less identical to September’s.

    And so, what did we get?

    The Fed – as expected – left rates unchanged:

    • *FED HOLDS BENCHMARK RATE IN 5.25-5.5% TARGET RANGE

    The Fed leaves more hikes on the table:

    • *FED REPEATS IT WILL ASSESS EXTENT OF ADDITIONAL POLICY FIRMING

    And sure enough, as we noted above, The Fed likes the market doing its job for it, specifically adding reference to tighter “financial” conditions

    • “Tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation.”

    The message is clear:

    https://platform.twitter.com/widgets.js

    The question we are left with is – what is the trigger for The Fed to not ‘leave the rate hike option’ on the table.

    Read the full redline below:

    Powell’s press conference is coming right up but we note that despite everything very much ‘as expected’, the market is uneasy and the implied-implied move in the S&P tomorrow is 0.89%, which would make it the highest implied move since May according to Goldman.

    Here’s what to expect (assume a ‘hold’)

    Tyler Durden
    Wed, 11/01/2023 – 14:00

  • Elon Musk Exposes How Soros 'Hijacked' US Cities Without Changing Any Laws
    Elon Musk Exposes How Soros ‘Hijacked’ US Cities Without Changing Any Laws

    Elon Musk appeared on Joe Rogan’s podcast Tuesday and explained how leftists “completely controlled” Twitter and weaponized the social media platform against political opponents and anyone who disagreed with the official government narrative. The billionaire said Twitter was almost like Russian state media “Pravda.”

    “The degree to which Twitter was simply an arm of the government was not well understood by the public,” Musk said.

    He continued, “Republicans were suppressed at ten times the rate of Democrats. That’s because old Twitter was fundamentally controlled by the far-left.” 

    Far-left elites in Washington and Silicon Valley, along with ‘fact checkers’ (think tanks) and the FBI, were able to conduct mass censorship campaigns from within Twitter, that’s until Musk bought the social media company about one year ago. 

    In the conversation with Rogan, Musk then explains George Soros’ massive bet (now overseen by his son, Alexander Soros) on funding city and state district attorney elections nationwide. He said, “The value for money in local races is much higher than in national races – the lowest value for money is a presidential race.”

    “Soros realized you don’t actually need to change the laws – you just need to change how they’re enforced – if nobody chooses to enforce the law – or the laws differentially enforced – it’s like changing the laws,” Musk said. 

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    This leaves with a new interview from one Maryland sheriff, just outside of crime-ridden Baltimore City, in Wicomico County, who drops a truth bomb about radical progressive lawmakers in the state, some of whom have likely been funded by Soros, who purposely fail to enforce law and order and only embolden criminal. 

    “I’m in my 40th year of law enforcement, and I have never ever seen it this bad,” Sheriff Mike Lewis said.

    Lewis continued: “I’ve never seen a government so ingrained – and quite frankly complicit – in the criminal activity taking place in our nation.” 

    https://platform.twitter.com/widgets.js

    The sheriff is referring to all those Soros-backed candidates who won elections in Manhattan, Los Angeles, San Fransico, Portland, Baltimore, DC, New York, Philadelphia, Boston, St. Louis, and Chicago, that have transformed these areas into crime-ridden hellholes. 

    The term “apocalypse” in Greek translates to “revelation,” and this is precisely what Musk and the team behind the “Twitter Files” have offered the public. Their actions have disrupted the ‘matrix’ controlled by radical leftists with an agenda to install communism. 

    Tyler Durden
    Wed, 11/01/2023 – 13:45

  • Schwab Announces Over 2,000 Layoffs To 'Maintain Competitive Edge'
    Schwab Announces Over 2,000 Layoffs To ‘Maintain Competitive Edge’

    Update (Wednesday): 

    A Charles Schwab spokesperson confirmed to Bloomberg that up to 6% of its 35,900-member workforce (or about 2,154 employees) were recently laid off. 

    “These were hard but necessary steps to ensure Schwab remains highly competitive, with industry-leading levels of efficiency, well into the future,” the spokesperson said in an emailed statement, adding, “We worked diligently to ensure affected employees were treated with care and respect throughout this difficult process.”

    The cuts were first reported by The Wall Street Journal on Monday night (read the previous update below). 

    The last time Schwab went on a hiring – then firing spree was the Dot Com bubble. It appears the pattern is repeating. 

    According to the layoff tracker website Layoffs.FYI, hundreds of thousands of tech employees have been fired in the last two years. 

    The latest ADP print shows the labor market has slowed. 

    *   *   * 

    Charles Schwab, the largest publicly traded US brokerage firm, began laying off employees on Monday in an effort to streamline its business model by reducing expenses ahead of next year, which could be full of turbulence in financial markets. This comes as the market’s excitement in meme stocks, SPACs, IPOs, and crypto, which soared in 2020-21, has since plunged due to a rising interest rate environment. 

    The Wall Street Journal first revealed the Schwab layoffs on Monday night:

    Charles Schwab on Monday began laying off employees across the company.

    Schwab, the largest publicly traded US brokerage, didn’t disclose how many employees were affected in an internal message seen by The Wall Street Journal. Some remaining employees will have new jobs or managers, according to the message.

    In the message, CEO Walt Bettinger and President Rick Wurster said:

    “We know this has been a challenging year, and that today was hard. We also know the work needed to come through this change even stronger than before is just beginning.” 

    Perhaps trouble at Schwab comes as retail traders, badly bruised from holding worthless meme stocks, lost interest in financial markets this year. 

    Besides retail’s waning interest in markets, the company has been under scrutiny from shareholders about deposit flight driven by higher interest rates. 

    Schwab shares are down 40% since peaking at the $84 handle in March 2021. 

    In August, Schwab detailed in a regulatory filing about plans to slash its headcount and downsize corporate offices to reduce operating costs. These proposed cuts are expected to save the company $500 million annually. 

    The last time Schwab hired too many people was during the Dot Com bubble. We all know what happened next… 

    Rumors on the anonymous jobs forum Blind said the layoffs at Schwab include “lots of people in the company’s tech division.” 

    Tyler Durden
    Wed, 11/01/2023 – 13:35

  • Tulsi Gabbard: LGBTQ+ Activists At Pro-Palestine Marches "Don't Understand" Islamists Want To Kill Them
    Tulsi Gabbard: LGBTQ+ Activists At Pro-Palestine Marches “Don’t Understand” Islamists Want To Kill Them

    Authored by Steve Watson via Summit News,

    Former Democratic Representative Tusi Gabbard has called out the hypocrisy of LGBTQ+ activists attending pro-Palestine marches alongside radical Islamists who literally want gay and trans people to be murdered.

    Appearing on Laura Ingraham’s show Tuesday, Gabbard noted that “Democrats, they have called people like me an Islamophobe for many years just for speaking the truth about radical Islam. About the threat that this Islamism poses to the freedom and peace of security of the American people and people around the world.”

    Gabbard continued, “we are so concerned about Biden’s open borders and the fact that we have got millions of people coming in who are not vetted in any way, shape, or form who have not been checked.”

    Ingraham interjected, “they say you can’t call it a clash of civilisations, why not? It is a clash of civilizations. No women’s rights. No belief in pluralism. The dignity of the individual. Free expression. None of that. That’s not on the table.”

    The former Congresswoman replied, “And that is the hypocrisy of seeing these LGBTQIA activists out there holding and waving the trans flags combined with the Palestinian flag.”

    “That’s a new level of stupid,” Ingraham asserted.

    Gabbard replied, “They don’t know and understand what this Islamist ideology is, this radical Islam ideology where they actually want to kill people. They want to kill those people specifically.”

    Watch:

    https://video.foxnews.com/v/embed.js?id=6340261906112&w=466&h=263Watch the latest video at foxnews.com

    Related:

    *  *  *

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    Tyler Durden
    Wed, 11/01/2023 – 13:25

  • Israeli Army Suffers More Casualties As Hamas Publishes Video Showing Tanks Blown Up
    Israeli Army Suffers More Casualties As Hamas Publishes Video Showing Tanks Blown Up

    Update(1318ET): The Israeli death toll is rising, and Hamas has claimed to have ambushed and destroyed several tanks as they plunge deeper into Gaza City, also amid building to building searches for the hostages.

    15 Israeli soldiers have now been killed in the Gaza operation, the IDF has announced Wednesday, which in total marks 320 total troops killed since the Oct. 7th massacre (and with over 1,100 more Israeli and foreign civilians). 

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    Widely circulating footage shows Knesset members crying after a closed-door session (below), leading to speculation that Israeli troops could be sustaining higher than known casualty rates.

    But the emotional scene is reportedly due to a special viewing in parliament of newly compiled footage of the Oct.7 terror attacks, as The Times of Israel details: 

    A compilation of raw footage documenting Hamas’s grisly October 7 rampage through the western Negev was screened Wednesday for Knesset members. The 43-minute-long video was produced by the IDF Spokesperson’s Office and shows uncensored, difficult-to-watch videos, many taken from terrorists’ bodycams.

    After a request from Knesset Speaker Amir Ohana to the military, lawmakers were granted permission to hold a closed-door screening of the footage where recording and cellphones were not allowed.

    Ohana, speaking before the screening, said that he had arranged the event so that Israeli lawmakers would “know who and what we are facing,” and so that “we will all know how much our path in this war against this evil is justified,” according to sources familiar with the event.

    …More than 50 MKs were in attendance, and some broke down in tears, including Ra’am head Mansour Abbas, the Maariv news outlet reported.

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    * * *

    The Israel Defense Forces has said it is in close quarters combat with Hamas as troops push further into Gaza, resulting in an announced Tuesday death toll of eleven. By early Wednesday that figure rose to 13 Israeli soldiers killed, after Israel’s defense minister warned of the “heavy toll” which would be paid by troops in the operation to eradicate Hamas.

    As the death toll among Gazans approaches 9,000, the EU’s top diplomat Josep Borrell has lashed out at Israel’s airstrikes and massive civilian casualties. Borrel says he is “appalled by the high number of casualties following the bombing by Israel of the Jabalia refugee camp.” Jabalia camp has reportedly been struck again, a day after the initial massive attack which had killed at least 52 Palestinians, according to the Gaza Health Ministry.

    IDF tanks inside Gaza, IDF handout/Reuters

    But Israel’s military said that its Jabalia strike had taken out a top Hamas commander and other Hamas officers, and said Israeli decision-makers took into account the harm to civilians in the densely populated urban area.

    On Wednesday Prime Minister Benjamin Netanyahu expressed condolences for the IDF’s fallen soldiers along side other leaders. He said “We are in a tough war. This will be a long war. We have important achievements, but also painful losses.”

    According to more from his message: “We know that every one of our soldiers is an entire world. All of Israel embraces you, the families, from the bottom of our hearts. All of us are with you during this time of mourning. Our soldiers fell in a war where there was no justice, a war for our home,” he said. “I promise you, the citizens of Israel: we will complete the task – we will continue until victory.”

    IDF troops have begun the slow process of going door to door as they search for the missing Israeli and foreign hostages, which is up to 240, according to new military statements. Hamas has issued new statements claiming Israeli airstrikes killed a group of hostages. “Seven detainees were killed in the Jabalia massacre yesterday, including three holders of foreign passports,” said a Hamas statement issued from its military wing.

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    But the “painful losses” are mounting in much greater numbers for the Palestinian side, and civilians are bearing the brunt of suffering. International outrage and pressure has mounted on Tel Aviv, which has voiced that has warned Gaza civilians they must move to the southern half of the Strip if they want to escape the bombs. According to a fresh Gaza health ministry update as republished in Al Jazeera:

    • The number of people killed in Israeli attacks on Gaza has gone up to 8,796, including 3,648 children and 2,290 women.
    • At least 22,219 people have been wounded.
    • There are 2,030 reports of people missing including 1,020 children buried under the rubble.
    • 130 paramedics and medical crew have been killed, 28 ambulances have been destroyed, and there have been more than 270 attacks on the healthcare system in Gaza.
    • 16 hospitals out of 35 are out of operation, and 51 out of 72 primary healthcare clinics have shut down.
    • In the occupied West Bank, 128 Palestinians have been killed and at least 1,980 have been wounded.

    There has meanwhile been a rare positive development on the humanitarian front. For the first time since the start of the war, foreigners and wounded Palestinians have been allowed to exit Gaza through the Rafah crossing into Egypt. 

    Some 500 foreign passport holders had reportedly been stuck at Rafah crossing for weeks since the start of the conflict after Oct.7. The area near the crossing had also been bombed by Israeli jets on several occasions. Ambulances have been observed Wednesday ferrying the wounded into Egypt. 

    Hundreds are foreign passport holders are also belatedly being let through, among them Americans. “At least five NGO workers who have been confirmed as Americans are listed as approved to cross on Wednesday but it remains to be seen how many of at least 400 American citizens the U.S. State Department says are stuck in Gaza will be able to cross in coming days,” CBS News reports. Some have lashed out at Washington over the lack of serious evacuation efforts in place for those dual nationals stuck in Gaza: 

    “They started letting foreigners out today but it’s not Americans because I guess we’re not as important as we thought,” Utah resident Susan Beseiso told CBS News on Wednesday.  

    “The American Embassy and the State Department haven’t called us since the last time we went to the border and got bombed four times. They haven’t been communicating with us or doing anything to get us out,” Beseiso said.

    “It’s like they’re holding us hostages — not Hamas holding us hostages — it’s the IDF soldiers, Egypt and America. They’re using us as a human shield in a way.”

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    The fresh evacuees are undergoing security checks on the Egyptian side. Among those exiting include Palestinians holding Austrian, Bulgarian, Indonesian, Japanese Jordanian, Italian, Greek, Australian and Czech citizenships, and many others. Various nationals working for several NGOs are also on the departure list.

    According to The Times of Israel, “A source briefed on the development told Reuters that the evacuations were agreed on in a deal mediated by Qatar between Egypt, Israel and Hamas in coordination with the US.”

      Tyler Durden
      Wed, 11/01/2023 – 13:18

    • Israel Rushes Warships To Red Sea After Yemeni Houthis Launch Ballistic Missile & Drones
      Israel Rushes Warships To Red Sea After Yemeni Houthis Launch Ballistic Missile & Drones

      Israel has rushed warships to the Red Sea, where US naval assets are also patrolling, after Yemen’s Houthis declared “war” earlier this week. The Houthis had also reportedly launched a ballistic missile at Israel, and released a video showing the launch. In total the Houthis are believed to have attempted three drone and missile attacks on Israel. One of the initial projectiles days ago had been intercepted by a US warship off Yemen, and another was stopped as follows: 

      The Israeli military on Tuesday used its Arrow missile defence system for the first time to intercept an “aerial threat” over the Red Sea, believed to have been a ballistic missile.

      An Israeli navy missile boat seen off the coast of Eilat in the Red Sea, IDF handout.

      According to newly released Israeli military images, Sa’ar-class corvettes are now patrolling near Eilat port in the Red Sea.

      They will be monitoring skies over the Red Sea and around Israel after the Yemeni rebel group widely seen as backed by Iran has vowed to “help the Palestinians to victory.”

      While apart from Gaza, Israel has been most focused on the Hezbollah threat on the northern border – having engaged in daily exchanges of fire with the militant group in southern Lebanon – the Yemeni action raises the specter of the situation spiraling into a broader regional war.

      Sporadic fire along the occupied Golan Heights, and Israel’s attacks south of Damascus, also raises the possibility of the Gaza war spilling into Syria. 

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      According to fresh reporting in The New York Times, the Houthis are already escalating their attacks on faraway Israel:

      Yemen’s Houthi militia claimed an attempted attack on southern Israel on Tuesday, saying it had launched a “large batch” of ballistic and cruise missiles as well as drones toward Israeli targets.

      The Iran-backed militia carried out the attempted assault in response to what it called “brutal Israeli-American aggression” in Gaza, the Houthi military spokesman, Yahya Sarea, said on the social media platform X. Mr. Sarea said the attack was the third operation conducted by the Houthis “in support of our persecuted brothers in Palestine,” and threatened further missile and drone assaults.

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      The Houthis have been locked in a war with Saudi Arabia (and allies UAE & the US) since 2015. In 2014 the Shia rebel group overran the Yemeni capital of Sanaa, sparking the Saudi-UAE intervention to uphold the pro-Saudi government. Many tens of thousands have been killed over the last half-decade of fighting, with the country also on the brink of starvation. 

      Disagreement persists among analysts over whether the Houthis possess missiles that could effectively reach Israel.

      The US and Israel have long accused Tehran of shipping weapons to the Houthis. It’s believed that their surprisingly sophisticated missile arsenal comes from the Iranians, and these have been used to attack Saudi Arabia several times, including strikes on Saudi Aramco oil facilities.

      Tyler Durden
      Wed, 11/01/2023 – 13:05

    • Estee Slaughter: Beauty Giant Implodes To 6 Year Low As Consumers Hit Brick Wall
      Estee Slaughter: Beauty Giant Implodes To 6 Year Low As Consumers Hit Brick Wall

      When we looked at the performance of consumer stocks last quarter, we found a not unexpected divergence between companies catering to lower income consumers, which have been hammered for much of 2023, and those targeting rich buyers, which – especially in the case of a handful of European luxury giants such as LVMH, Kering and Hermes  – had done tremendously well for much of the past year, making Bernard Arnault the richest man in the world, if not for long.

      Fast forwarding to today, while we have yet to hit rock bottom when it comes to lower income cohorts, it is becoming increasingly clear that the answer to our question from May, namely “did the luxury bubble just burst” is now a resounding yes as the following boom-to-bust chart of European luxury giants LVMH, Hermes and Kering shows.

      Today, the bursting of the luxury bubble took its latest casualty, Estée Lauder, whose already-battered shares plummeted even more, tumbling as much as 21%, their biggest one-day drop in history, after the beauty giant slashed its full-year outlook on troubles in China and the Middle East. The stock has lost almost half of its value in 2023 alone.

      As BBG notes, the owner of the MAC and Tom Ford brands has been “floundering in its crucial travel retail business in Asia due to weaker-than-expected demand.” The continued weakness in that channel, as well as an added drag from the Israel-Hamas war, show the beauty company has failed once again to get its footing, meaning it is likely to keep ceding market share to archrival L’Oréal.

      For the current fiscal year, Estée Lauder expects net sales in a range of negative 2% to positive 1% versus the prior year, while earnings are seen at $2.08 to $2.35 a share. In August, it had forecast net sales to increase between 5% to 7% and saw earnings of $3.43 to $3.70 a share.

      Estée Lauder said net sales in the most recent quarter fell 10%, in line with the downbeat outlook the company forecast in August (the only positive was that the company did a +6% in the Americas vs a Consensus -2%, although that too is about to reverse now that Americans are finally paying down their student loans, credit cards are maxed out and any “excess savings” are long gone).

      For the current quarter, the company now expects net sales to decrease between 9% to 11% versus a year ago and sees diluted net earnings between 47 cents and 57 cents a share. The potential risks from disruption in Israel and the Middle East are expected to have a dilutive impact of 8 cents. The company doesn’t break out what portion of revenue it generates in the region.

      “The big question, like last quarter, and the one before it, will be: ‘Is this the final cut?’” Bernstein analysts led by Callum Elliott wrote in a research note.

      Chief Executive Officer Fabrizio Freda said in a statement that the New York-based company lowered its fiscal 2024 outlook due to slower growth in prestige beauty in Asia travel retail and mainland China, as well as the risk of disruption to its business in Israel and elsewhere in the Middle East.

      Remarkably, even though Estée Lauder had already lowered expectations in the previous quarter – after already cutting its outlook several times in the past year leading to another near record price drop back in April – the market was still caught off-guard, sending the stock down the most on record. That’s raised concerns among investors that executives don’t have a good grip on what’s happening in their business.

      “We thought that this quarter could be the trough and did not expect another guidance cut,” RBC Capital Markets analyst Nik Modi wrote in a research note. “All the read thrus suggested China was weak, but we thought EL’s guidance last quarter accounted for the weakness. Clearly we were wrong.”

      On a call with analysts, CEO Freda said: “We expect calendar year 2023 to be the final and, frankly, painful post-Covid reset period for the company.”

      Good luck with that.

      Curiously, the cosmetic industry may be the one place where lower-income consumers are holding out better then their higher-income peers. Estée Lauder’s quarterly results are in contrast to competitor L’Oréal, which said late last month that sales were up 4.5% in the three months that ended on Sept. 30. While the French beauty giant – which sells more mass-market items under brands such as Maybelline New York and L’Oréal Paris – has also been hit by the slowdown in duty-free sales in China and South Korea, the business represents a much smaller portion of its revenue versus Estée Lauder.

      L’Oreal’s cheaper products have sold more briskly than items from its more expensive brands as inflation-weary consumers have become pickier. Estée Lauder, meanwhile, sells more higher-end products and on Wednesday cited the “slower-than-expected recovery of overall prestige beauty.”

      Which brings us to a key question: has the consumer finally hit a brick wall? While we are confident that recent results indeed confirm that consumers are virtually tapped out, a slightly more cheerful take comes from Goldman consumer trader Scott Feiler who tries to present today’s dismal results in a slightly better light.

      Here is his take on today’s earnings onslaught:

      • Bottom-Line Intact for 3Q: The magnitude of top-line upside has begun to slow, but companies have pretty continued to beat across the board on the EPS/EBITDA line for 3Q. Even the names with the biggest downward reactions this morning so far in the pre (Wayfair, EL, CCEP, GOOS) largely all beat EPS for this quarter.
      • Top-Line Upside is slowing though: While bottom-line remains intact (for 3Q at least), the top-line upside does appear to be harder to come by. See YUM, EAT, EL, GOOS etc for prints that largely saw in-line sales, even as EPS handily beat.
      • Restaurants remain a relatively bright spot in the US: YUM (+1.5% comp beat), FWRG (40 bps comp beat) and EAT (20 bps comp beat at Chili’s) are all “fine” still with still constructive commentary, even as traffic has slowed some.
      • China Unsurprisingly called out as weak: 2 of the biggest stock disappointments this morning are EL (called out incremental headwinds from a slower-than-expected recovery of overall prestige beauty in mainland China) and YUMC (said they observed softening consumer demand emerged in late September through October).
      • The 2 biggest single names in focus in our IB chats – EL and Wayfair.  
        • For EL, the guidance cut only 1 quarter in is well below any of the worst estimates we had heard. The only “positive” is the bulk of it was blamed on China (somewhat known) and the Middle East.  They did a +6% in the Americas vs a Consensus -2%, and so we think a focus on the 930AM call will be whether there were shipment benefits that helped that figure. Despite the better Americas and Jason’s note titled ““bottom perhaps finally found,” the overwhelming feedback continued to be negative this morning on lack of conviction in an EPS bottom.
        • For Wayfair, the stock dropped hard as soon as the release hit. A ton of inbounds from most asking why. Yes, revenues missed for 3Q but it was only a 1% miss vs consensus and the bogey, while margins beat by about 150 bps. The big concern here seems to be less about margins (most understand a beat was likely) and more about top-line, especially fears around 4Q. On the call, they spoke to QTD gross revenues running around flat. We think expectations were well below the consensus +5% for the full 4Q, so agree that the -10% move lower in the pre is a bit surprising. This is a shoot first, ask questions later type tape though.

      Needless to say, that is hardly the kind of tape one sees at the start of bull markets.

      Tyler Durden
      Wed, 11/01/2023 – 12:45

    • House GOP Plan To Offset Israel Aid With IRS Funding Would Expand National Debt Via Reduced Enforcement: CBO
      House GOP Plan To Offset Israel Aid With IRS Funding Would Expand National Debt Via Reduced Enforcement: CBO

      A GOP plan to offset $14.3 billion in aid to Israel by reducing the IRS’s roughly $60 billion boost from the Inflation Reduction Act ($80 billion less negotiated cuts) would backfire and add around $30 billion to the national debt, because – according to both the CBO and the Committee for a Responsible Federal Budget (CRFB), it would reduce the amount that the agency will be able to collect via audits.

      Speaker Mike Johnson

      Israel, with GDP of almost half a trillion dollars and a debt-to-GDP ratio that is half of that of the United States, and a super-advanced military, still somehow needs $14.3 billion from US taxpayers in order to continue its extensive bombing campaign throughout Gaza following the October 7 Hamas terrorist attack.

      While the Senate uniparty has insisted on US aid for both Israel and Ukraine (with a smattering of border security funds to mollify the America First types), House Republicans want to separate the two amid pushback from the Freedom Caucus – and pay for Israel aid by reducing the aforementioned IRS funding.

      The CBO says it would decrease tax revenues by $26.7 billion, while the CFRB says it would add over $30 billion to the national debt.

      Of note, the amount Congress wants to send Israel is almost precisely the amount the Trump administration wanted to secure the southern US border, which Trump said Mexico would pay for indirectly via trade deals. Instead, we’re engaged in proxy wars on at least two fronts while more than five million illegal immigrants have crossed into the United States since Biden took office.

      “Paying for new spending by defunding tax enforcement is worse than not paying for it at all,” said CFRB President, Maya MacGuineas, adding “Instead of avoiding new borrowing, this plan doubles down on it.”

      According to Howard Gleckman, senior Urban-Brookings Tax Policy Center fellow, said it was “pretty clear” that “cutting this kind of IRS funding would actually increase the deficit.”

      “Instead of being an offset, it would actually make matters worse,” he argued. “The general rule of thumb that the budget scorekeepers use is it’s about 2-to-1. So if you cut IRS funding [by $14 billion to $15 billion], you’re actually going to increase the deficit by about $30 billion.”

      Whose rule of thumb? Is there anything back that statement?

      A ‘non starter’ anyway

      The House is expected to vote on the proposed funding on Thursday, however Democrats say it’s a “non-starter” ion the Senate.

      “If Republicans had an ounce of shame they wouldn’t condition support for Israel and Ukraine on giveaways to wealthy tax cheats. Making aid to Israel and Ukraine dependent on gutting IRS enforcement funding is an absolute nonstarter,” said Sen. Ron Wyden (D-OR), the Senate Finance Committee Chair in a Tuesday statement.

      Mittens echoes neocon refrain

      “I don’t think you reduce the number of IRS agents then expect that you’re going to get more tax revenue,” Sen. Mitt Romney (R-UT) told The Hill.

      “I think reducing agents means less tax revenue,” he continued.

      The Treasury Department said earlier this month that the U.S. borrowed $1.7 trillion in the one-year period ending in late September, a spike over the previous year that Biden officials partly attributed to low revenue.

      The U.S. is currently running a $33 trillion debt, which spiked above its trend line during the pandemic as the government expanded major tax credit programs for lower earners and sent out checks to families while the economy was shut down.

      As part of the Inflation Reduction Act (IRA) passed last year by Democrats, the IRS was given an additional $80 billion in funding over the subsequent 10 years. That allotment would have increased revenues by around $200 billion for a net deficit reduction of around $114 billion, according to a CBO analysis. –The Hill

      Some Senate Republicans have endorsed the House measure, but acknowledge that the budgetary impact could pose a challenge.

      “If you’re looking for a pay-for, which they clearly are, I think it’s as good as one as there could be,” said Sen. Kevin Cramer (R-ND).

      “The challenge you’re gonna have is a CBO score.”

      Tyler Durden
      Wed, 11/01/2023 – 12:25

    • Khamenei Calls On Muslim World To 'Stop Oil Exports' To Israel
      Khamenei Calls On Muslim World To ‘Stop Oil Exports’ To Israel

      Via The Cradle,

      Iran’s Supreme Leader Ali Khamenei spoke about the Gaza-Israel during a meeting with a group of students at the Imam Khomeini Hussainiyah in Tehran on Wednesday, chastising Gulf Arab states for their complicity in Israeli aggression.  

      “What Muslim states must insist on is the immediate cessation of [Israeli] crimes in Gaza. They must promptly stop the bombardment of Gaza and stop the export of oil and other commodities to the Zionist regime,” Khamenei stressed.  

      Image: https://khamenei.ir/

      “Muslim states must not cooperate economically with the Zionist regime but denounce these catastrophes and crimes vociferously and without hesitation in all international forums,” he added.  

      Khamenei also highlighted that the ongoing war is “between truth and falsehood, between the power of faith and the power of arrogance.” He added: “Of course, the power of arrogance comes with military pressure, bombardment, as well as calamities and crimes, but the power of faith will overcome all of these by God’s grace.”

      Khamenei also mentioned that Gaza is a “human movement” whose influence spread outside of the Levant.  

      “[The people of Gaza managed to] move the human conscience […] look what is happening in the world; in western countries, in Britain, France, Italy, and various US states, people come in large crowds to the streets and chant slogans against Israel and the US itself,” Khamenei added.  

      “It was an absolute disgrace for them, which they can neither recover from nor justify,” Khamenei said. “The Muslim world should not forget that all through the critical issue of Gaza, the [parties] which stood against Islam and the oppressed Palestinian nation was [the US], France and Britain.” 

      https://platform.twitter.com/widgets.js

      Speaking about the movements in the west, Khamenei touched on those who are blaming Iran for the protests, mockingly saying that “we see a fool coming and saying that the gathering of people in England to support the Palestinian people is the work of Iran.” 

      During his talks with the students of Iran, he looked back at the role played during the 1979 takeover of the US embassy in Iran, saying, “The US was disgraced. This was the blow of the Iranian nation to the US.”

      Tyler Durden
      Wed, 11/01/2023 – 12:05

    • Pfizer To Shut Down Two Facilities Amid Major Cost Cuts
      Pfizer To Shut Down Two Facilities Amid Major Cost Cuts

      Authored by Jack Phillips via The Epoch Times (emphasis ours),

      Pharmaceutical giant Pfizer confirmed it will be closing down two of its facilities in North Carolina amid a cost-cutting initiative after it revealed that sales of its COVID-19 vaccine and other products would see a drop.

      Pfizer CEO Albert Bourla gestures during a session at the World Economic Forum annual meeting in Davos, Switzerland, on May 25, 2022. (Fabrice Coffrini/AFP via Getty Images)

      The company told multiple local media outlets that it would be closing its sites in Durham and Morrisville, saying the closures are part of an effort “to operate more efficiently and effectively.”

      “As part of this effort, Pfizer has decided to close the Kit Creek facility in Morrisville … and the Durham Clinical Manufacturing Facility,” the company said, according to the Triangle Business Journal. “Pfizer continues to operate its largest North Carolina facilities, including two in Sanford and one in Rocky Mount.”

      It’s not clear how many workers would be impacted or laid off. The Epoch Times has contacted the company for comment Monday.

      “All job-related decisions will be made with transparency, compassion, and respect, and in compliance with applicable laws,” Pfizer told the News & Observer publication. And any employee who is impacted by the closures will be offered a “generous separation package,” Pfizer told ABC11 TV, or will be given the chance to apply for another position.

      Morrisville Mayor T.J. Cawley suggested that some workers might be laid off, according to the paper. Multiple Pfizer employees who had worked at the two North Carolina facilities listed the hashtag OpenToWork on their LinkedIn profiles in recent days.

      “Overall, I think our area is pretty well buffered from the economic downtown,” the mayor said. “Talent will always move around from company to company. We have such a strong talent pool that companies will keep coming here.”

      Before the closures were confirmed by the company, a number of unnamed Pfizer workers complained on social media that they would be getting laid off soon amid the company’s cost-cutting scheme. Posts alleged that Pfizer officials held a live stream with thousands of workers to announce the cuts earlier in October.

      Pfizer told Newsweek about a week ago that “we updated our plans last Friday in this release” and that “we are prepared to launch an enterprise-wide cost improvement program aligned with the longer-term revenue projections for our business. Details of this program will be shared over the coming months and as part of the full-year guidance for 2024.” Other details were not provided.

      Under federal regulations, employers have to file what’s known as a WARN Notice 60 days before closing down a site that impacts at least 50 workers. As of Monday, Pfizer hasn’t filed a WARN Notice regarding layoffs, according to the News & Observer, citing the state’s Department of Commerce website.

      Pfizer Lowers Guidance

      About 12 million people, or around 3.6 percent of the population, have gotten one of the latest booster shots, said Dr. Mandy Cohen, director of the U.S. Centers for Disease Control and Prevention (CDC), last week.

      Dr. Mandy Cohen, COO and chief of staff of the Centers for Medicare and Medicaid, testifies during House Ways and Means Committee hearing on Capitol Hill in Washington, on Nov. 3, 2015. (Mark Wilson/Getty Images)

      “I think we’re on track. Would I love to see more? Of course, that’s my job as CDC director is to want more,” she told Politico.

      Earlier this month, the drug giant released a report saying it would slash its profit and revenue estimates for a full year due to lower demand for COVID-19 products, including its mRNA vaccine and anti-viral drug Paxlovid.

      It now expects 2023 sales of $58–61 billion, down from previous forecasts of $67–70 billion, said a report released Oct. 13. It’s down “solely due to its COVID products,” according to the report.

      Sales of its COVID-19 vaccine will be about $2 billion lower than was previously forecast, the company said. It comes after the company’s updated COVID-19 booster was made available by U.S. federal regulators in September, although uptake of the latest shot appears to be slow, according to federal health data.

      At the same time, Pfizer reduced its guidance for Paxlovid, an antiviral drug that targets COVID-19, by approximately $7 billion.

      “We remain proud that our scientific breakthroughs played a significant role in getting the global health crisis under control,” Pfizer CEO Albert Bourla said in a statement Friday. “As we gain additional clarity around vaccination and treatment rates for COVID, we will be better able to estimate the appropriate level of supply to meet demand.”

      “We are in the middle of the COVID fatigue. Nobody wants to speak about COVID,” Mr. Bourla also said during a call earlier this month, according to CNBC. “We have the big anti-vaccination rhetoric.”

      Over the past month or so, Pfizer’s stock has dropped about 10 percent, to just above $30 per share as of Monday morning. Rival pharma Moderna, which also produces an mRNA COVID-19 vaccine, has seen its stock drop by more than 29 percent over the past month, to $72 per share as of Monday.

      Hospitalizations for COVID-19 consistently to drop over the past several weeks after rising somewhat during the summer, according to data posted weekly by the U.S. Centers for Disease Control and Prevention. Emergency room visits and case numbers have also dropped, the data show.

      Tyler Durden
      Wed, 11/01/2023 – 11:25

    • Tesla Wins Court Battles In U.S., China, Over Alleged Autopilot Fatalities
      Tesla Wins Court Battles In U.S., China, Over Alleged Autopilot Fatalities

      Tesla has won its battle in court over a fatal Autopilot crash that killed a California driver four years ago. 

      A jury in Riverside, California sided with Tesla in a lawsuit which blamed Tesla’s Autopilot for the fatality. Passengers who had survived the accident were suing for $400 million for the death of the driver, as well as physical injury and mental anguish, Bloomberg reported this week. 

      It took the jury four days of deliberation to come to its decision. 

      The month-long Riverside trial centered on Micah Lee, whose 2019 Model 3 crashed into a tree in Southern California. While plaintiffs claimed an Autopilot defect caused the crash, Tesla argued Lee had been drinking and offered no proof that Autopilot was engaged, Bloomberg reported.

      At the trial’s outset, Tesla’s attorneys blamed “classic human error” for the accident. They presented a video of passenger Molander stating that both she and Lee had consumed alcohol at Downtown Disney in Anaheim before the crash. 

      Brian Jazaeri, Tesla’s senior litigation director, commented: “The jury’s conclusion was the right one. There was no evidence of a defect in our Autopilot technology. Tesla’s cars are well-designed and making the roads safer every day.”

      Plaintiff counsel Jonathan Michaels commented: “It’s undeniable that a national lens is now focused on this pressing matter. Tesla, despite its stature, was pushed to its limits during the trial. The jury’s prolonged deliberation suggests that the verdict still casts a shadow of uncertainty.”

      Talking about how the vehicle malfunctioned during the crash and sent a “excessive steering wheel angle command”, Michaels told the jury: “We know it’s not possible for a driver to have done this. We know Autopilot went crazy. We know this is a manufacturing defect.”

      Tesla’s lawyer, Michael Carey, dismissed allegations of an Autopilot flaw as “hot air,” asserting that evidence shows the car’s steering was manually altered. Carey emphasized to the jury that while Tesla sympathizes with Molander and her son, the company bears no responsibility for the incident.

      Separately this week, according to Shanghai Securities News and cited by Bloomberg, a Chinese court also found that Tesla was not at fault in a November 5, 2022 accident that occurred in Chaozhou in Guangdong province, which injured three people. 

      Bloomberg noted the following remaining cases still pending regarding Tesla’s Autopilot:

      Tyler Durden
      Wed, 11/01/2023 – 11:05

    • US Sends 300 More Troops To Middle East, Raising Total To 1,200
      US Sends 300 More Troops To Middle East, Raising Total To 1,200

      Authored by Andrew Thornebrooke via The Epoch Times,

      The United States will deploy 300 additional troops to the Middle East following several new attacks on U.S. and Coalition forces in Iraq and Syria, the Pentagon has announced.

      The forces will deploy to undisclosed locations in the Middle East outside of Israel, Pentagon spokesperson Brig. Gen. Pat Ryder told reporters on Oct. 31.

      The move follows the deployment of 900 troops to the region last week.

      While many of the troops sent last week were operating in air defense elements, the 300 now deploying will primarily focus on support tasks including communications and explosive ordnance disposal, Gen. Ryder said.

      The troops are intended to help the United States prevent the Israel-Hamas War from expanding into a regional conflict, as well as to prevent further attacks on U.S. service members.

      “They are intended to support regional deterrence efforts and further bolster U.S. force protection capabilities,” Gen. Ryder said.

      New Attacks by Iran-Backed Groups

      Gen. Ryder said that there were 27 attacks on U.S. troops by Iran-backed groups in Iraq and Syria throughout October.

      “Right now, we’re tracking a total of 27 attacks,” Gen. Ryder said. “16 in Iraq, 11 in Syria.”

      The Pentagon has frequently claimed that the attacks are a separate issue from the ongoing Israel-Hamas War in Gaza, but Iran and the other groups involved have stated that they will increase their attacks on U.S. troops should Israel pursue a full-fledged invasion of Gaza.

      “I think it’s important to differentiate what Iranian proxies and Iran might be saying and the perspective that we bring to this,” Gen. Ryder said. “Our forces are in Iraq and Syria for one purpose, which is the enduring defeat of ISIS.”

      “This is separate and distinct from the situation in Israel, between Israel and Hamas.”

      The attacks in Iraq and Syria have resulted in wounds to at least 21 American service members, including 19 who were diagnosed with traumatic brain injuries. All have since returned to duty.

      In addition to the growing number of rocket and drone attacks on U.S. and Coalition bases, several medium-range cruise missiles were launched by Iran-backed Houthi rebels in Yemen.

      The USS Carney shot down four such missiles in the Red Sea on Oct. 19.

      Pentagon leadership said that the missiles were headed north, possibly towards Israel, but that they were shot down because they were deemed a threat to the vessel.

      “We cannot say for certain what these missiles and drones were targeting, but they were launched from Yemen heading north along the Red Sea, potentially toward targets in Israel,” Gen. Ryder said at the time.

      The United States launched two retaliatory strikes over the weekend on facilities in Syria associated with Iran’s Islamic Revolutionary Guard Corps, which the United States designates as a terror organization.

      The escalating conflict follows an unprecedented attack on Israel on Oct. 7, when Islamist terrorists murdered more than 1,400 Israelis, abducted women and children, and engaged in acts of torture.

      Experts have warned that the Hamas terrorist organization, which receives funding and training from Iran, seeks to unleash an international conflict that will encourage more violence against Israel and the United States.

      The Biden administration has said that it retains the right to retaliate against Iran at a time and in a manner of its own choosing.

      “We know that these groups are funded, trained, and sponsored by the Iranian government,” Gen. Ryder said. “And we hold the Iranian government responsible.”

      Tyler Durden
      Wed, 11/01/2023 – 10:45

    • WTI Holds Gains After Small Crude Build, Cushing Just Off 'Tank Bottoms'
      WTI Holds Gains After Small Crude Build, Cushing Just Off ‘Tank Bottoms’

      Oil prices surged overnight, recovering all of yesterday’s losses after EIA made substantial upward demand revisions in its monthly reports (again) to the highest in four years. This combined with renewed war premia amid continuing escalations in the middle east with further incursions by Israel into Gaza and threats from Iran calling for exports of oil and goods from Muslim nations to Israel to stop.

      On the bright side, some foreigners and Palestinians were allowed to leave Gaza for the first time since Israel began its ground invasion on Wednesday.

      Also on the bearish oil side, manufacturing in China, the world’s biggest oil importer, fell back into contraction last month.

      So what will this morning’s official inventory and production data show?

      API

      • Crude +1.35mm (+500k exp)

      • Cushing +375k

      • Gasoline -357k (-500k exp)

      • Distillates -2.48mm (-1.9mm exp)

      DOE

      • Crude +773k (+500k exp)

      • Cushing +272k

      • Gasoline +65k (-500k exp)

      • Distillates -792k (-1.9mm exp)

      Crude inventories rose – very marginally – for the second straight week and stocks at Cushing also rose (against de minimously). Distillates saw the only notable draw – 5th week in a row…

      Source: Bloomberg

      The SPR was left untouched for the 4th week in a row…

      Source: Bloomberg

      Cushing remains barely off tank bottoms…

      Source: Bloomberg

      US Crude production was steady at record highs (13.2mm b/d) as the rig count trends lower…

      Source: Bloomberg

      WTI was hovering around $83 and leaked lower after the print…

      We note that today’s bounce in WTI occurred right the 100DMA…

      Additionally, oil options are tentatively pricing in a smaller risk of escalation in the Middle East as a result of the Gaza war.

      As Bloomberg reports, a rare so-called call skew emerged – and then became extreme – in oil options trading in the days after the war began. It meant traders were willing to pay more for protection against prices spiking than for insurance against a slump.

      But, as the chart shows, while the skew remains, it has reduced significantly – indicating less confidence that the war will spread/escalate.

      Tyler Durden
      Wed, 11/01/2023 – 10:40

    • US Job Openings Unexpectedly Rose For A Second Month To 9.6 Million, Beating Estimates
      US Job Openings Unexpectedly Rose For A Second Month To 9.6 Million, Beating Estimates

      After today’s below-estimate ADP report, and the disappointing Manufacturing ISM index where the employment number tumbled into contraction from 51.2 to 46.8 – the second lowest since the covid crash – all eyes were on the September JOLTS report for additional insight into Friday’s jobs report. However, those expecting a big outlier print were to be disappointed after the BLS reported that in September, the number of job openings rose modestly by 56K, from a 9.497MM August print (which of course was revised lower from the original 9.610MM number, which as a reminder was driven by a staggering – and goalseeked0 – 35% increase in professional and business services job openings) to 9.553MM…

      … above consensus estimates of a 9.4MM print.

      According to the BLS, job openings increased in accommodation and food services (+141,000) and in arts, entertainment, and recreation (+39,000); job openings decreased in other services (-124,000), federal government (-43,000), and information (-41,000).

      As for last month’s “surge” in professional services job openings, it looks like we are back to reality.

      The 2nd consecutive increase in the number of job openings meant that in September the number of job openings was 3.193 million more than the number of unemployed workers, the highest since June and reversing the last three months of normalization in the labor market.

      Curiously, despite the recent surge in job openings, the concurrent increase in unemployed workers (which in September rose to 6.36 million), meant that the number of job openings for every unemployed worker was virtually unchanged for the 3rd month at 1.50.

      And while the paradoxical continued increase in job openings at a time when even the ISM institute is saying that the latest Manufacturing print implied a -0.7% Q4 GDP, remained a head-scratcher one certainly could not see a similar euphoria in the other data points tracked by the JOLTS reported, starting with the number of quits, which dropped in September to 3.661 million, down from 3.663 million, and far below the quitting frenzy observed in late 2021/early 2022 when 4.5 million workers quit their jobs every month.

      Furthermore, while the DOL goalseeked job openings higher, it forgot to do the same to not only quits but also hires; in fact, hires rose a tiny 21K to 5.5871 million, also just barely above the lowest level since March 2021.

      And while we have previously discussed the chronic fabrication of job openings data by the BLS, which goes against all private surveys, we are confident that when the Biden admin finally falls and some enterprising forensic accountant digs to find out just where all these bullshit numbers came from, what they will find is some political hack at the BLS/DOL claiming that it’s not their fault, but rather that it’s the response rate. And indeed, as the BLS itself indicates, the response rate to most of its various labor (and other) surveys has collapsed in recent years, nothing is as bad as the JOLTS report where the actual response rate has tumbled to a record low 31%

      In other words, more than two thirds, or 70% of the final number of job openings, is estimated!

      And at a time when it is critical for Biden to still maintain the illusion that at least the labor market remains strong when everything else in Biden’s economy is crashing and burning (or soaring as is the case of inflation) we’ll let readers decide if the admin’s Labor Department is plugging the estimate gap with numbers that are stronger or weaker.

      As for the market, it appears to also have given up on any signaling information from JOLTS because unlike last month when yields spiked on the JOLTS report, today’s increase in job openings had exactly zero impact on rates, which dropped to session lows, focusing far more on the ugly ISM employment number and the ADP miss, while completely ignoring the JOLTS data.

       

      Tyler Durden
      Wed, 11/01/2023 – 10:29

    • Bankman-Fried Admits To Wining And Dining With Bill Clinton, Tony Blair, In Last Day Of Testimony
      Bankman-Fried Admits To Wining And Dining With Bill Clinton, Tony Blair, In Last Day Of Testimony

      The end to Sam Bankman-Fried’s time on the witness stand at his own trial was, to say the least, unceremonious.

      On the last day of his cross-examination, Tuesday, SBF testified that he was aware in 2020 that FTX’s customer funds were stored in a bank account managed by its affiliate, hedge fund Alameda Research, according to CNN. He also stated he doesn’t remember instructing Alameda staff to secure those funds.

      US Assistant Attorney Danielle Sassoon also pointed out SBF’s hobnobbing with the political elite and members of the Bahamian government, CNN noted. 

      In his testimony, Bankman-Fried said he dined with the prime minister of the island, as well as former U.S. President Bill Clinton and former UK Prime Minister Tony Blair.

      After FTX temporarily halted customer withdrawals during a liquidity crisis last November, he testified that he briefly reinstated withdrawals for Bahamian customers. SBF also stated that he doesn’t remember instructing Alameda staff to avoid using FTX customer deposits.

      Then, despite later finding out in fall 2022 that Alameda owed FTX $8 billion, no one was terminated as a result, he testified. 

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      Finally, on Tuesday, Mark Cohen, Bankman-Fried’s lawyer, allowed him to elaborate on the FTX-Alameda relationship. SBF stated that after stepping down as Alameda’s CEO, he reduced his involvement but remained engaged in its financial updates, venture investments, and crucial hedging decisions, which he viewed as vital for the firm’s survival.

      “I was essentially uninvolved with those core operations,” he claimed. 

      Judge Lewis Kaplan said at about lunchtime Tuesday: “That concludes the presentation of evidence in this case.”

      Closing arguments are slated for Wednesday.

       

      Tyler Durden
      Wed, 11/01/2023 – 10:15

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