A Friday combo of the annual McAlvany Wealth Management client conference and Oregon Duck football at Autzen Stadium forced me to keep this week’s post short.
First of all, despite all the pre-Fed meeting focus on weakness and vulnerability, the U.S. economy has a decent head of steam going. At 254,000, September’s gain in Non-Farm Payrolls blew away estimates (150k). While manufacturing lost another 7,000 jobs (less than August’s 27k decline), the service sector is booming. The 202,000 Services-Producing jobs gained was the strongest since May 2023. From AP: “Restaurants and bars added 69,000 jobs. Healthcare companies gained 45,000, government agencies 31,000, social assistance employers 27,000 and construction companies 25,000.”
The Unemployment Rate declined to 4.1% – and hasn’t been lower since May. September Average Hourly Earnings increased 0.4%, beating expectations of 0.3%, while August Average Hourly Earnings were revised up to 0.5% (from 0.4%). Average Hourly Earnings were 4.0% higher than a year ago – and haven’t been higher (y-o-y) since March’s 4.1%. During the two-decade period 2000 through 2019, annual growth in Average Hourly Earnings averaged 2.5% - with a high of 3.6% during December 2008.
Friday’s strong Non-Farm Payrolls report was not an aberration. At 8.04 million job openings, Tuesday’s August JOLTS data beat forecasts by 347,000. Job openings are now slightly ahead of April’s level. At 143,000, ADP’s September job gain was ahead of estimates and the strongest report since June. Challenger Job Cuts were down month-over-month, while Weekly Unemployment Claims remain at an historically depressed level (225k last week).
“Fed policy works with a lag.” Often repeated, but in need of an update. Traditionally, Fed policy adjustments (rates and bank reserves) would over time work to either strengthen or weaken bank lending, in the process impacting (on the margin) economic activity and system liquidity. It would take some time, but Fed policy adjustments would affect general financial conditions and economic momentum.
These days, “Financial conditions work with somewhat of a lag.” And, most importantly, markets, not our central bank, have the greatest impacts on financial conditions. The Fed aggressively eased monetary policy on September 18th. But conditions had remained loose throughout the Fed’s policy tightening cycle – and loosened significantly about a year ago when the Fed signaled to the markets that it had likely concluded its tightening measures.
My point: months of extraordinarily loose financial conditions (including lower market yields and record debt issuance) should now provide a tailwind to economic activity. The Fed aggressively cutting rates with financial conditions already so loose elevates overheating risks.
October 3 – Bloomberg (Vince Golle): “US service providers expanded in September at the fastest pace since February 2023, driven by a flurry of orders and stronger business activity. The Institute for Supply Management’s index of services advanced 3.4 points to 54.9 last month… The latest figure exceeded all projections… The group’s new orders gauge jumped 6.4 points, the most since the start of 2023. Combined with a four-month high in a measure of business activity, which parallels the ISM’s factory output gauge, the data suggest the economy was on solid footing at the end of the third quarter. The pickup in demand growth also helped to fuel an acceleration in prices paid for materials and services. The index of costs paid rose to 59.4 last month, the highest since January, from 57.3.”
The services sector is booming, a not all too surprising development considering abundant Credit availability and bubbling financial markets. Pricing pressures are persistent.
It’s worth noting that money market fund assets rose another $39 billion the past week. Money market fund assets have surged $329 billion, or 31% annualized, over the past nine weeks – to a record $6.463 TN. The ongoing inflation of money fund deposits is nothing short of phenomenal.
When it comes to the ongoing extraordinary growth in money market fund assets, repos and the “basis trade,” it’s radio silence from the Federal Reserve. For now, it seems only the unemployment rate matters. This week, the Bank of England said the quiet part out loud.
October 2 – Financial Times (Martin Arnold): “The Bank of England has warned of rising ‘vulnerabilities’ in the financial system stemming from increased bets by hedge funds against US government bonds, which reached a record high of $1tn in recent months. The BoE said… that if hedge funds unwound these ‘short’ positions it would have ‘the potential to amplify the transmission of a future stress’. These short bets are often part of so-called basis trades, where hedge funds aim to profit from small discrepancies between prices of US Treasuries and futures contracts linked to them. A period of volatility in global financial markets in August ‘illustrates the potential vulnerabilities in market-based finance to amplify shocks’, the BoE said in a report… The… ‘the current period of elevated geopolitical risk and uncertainty… could place further pressure on sovereign debt levels and borrowing costs’… The net short positioning of hedge funds in US Treasury futures markets hit a new high of $1tn in recent months, up from a previous peak of $875bn. ‘Relative to the size of the US treasury market, this was larger than the previous high reached in 2019…’ A rapid deleveraging of these short positions could be triggered by a number of factors, including ‘if repo market functioning were to deteriorate materially; if counterparty credit risk were to increase; or if investors in the basis trade were to take losses on their positions’.”
Ten-year Treasury yields jumped 22 bps this week, with yields rising to an almost two-month high. Two-year yields surged 36 bps to 3.92%, and benchmark MBS yields rose 34 bps to 5.22%. The market ended the week pricing a 4.28% Fed funds rate at the Fed’s December 18th meeting, up 22 bps this week. This implies 55 bps of rate reduction by year end. For the end of 2025, the market is pricing a 3.29% fed funds rate – up a notable 44 bps this week. This implies 154 bps of rate reduction by the end of 2025.
Crude prices surged 9.1% this week to $74.38. After reaching almost $85 a barrel in early July, crude traded down to $65 in September, before closing the quarter at about $68. The Bloomberg Commodities Index rose to 107.54 in May, before reversing sharply lower to close September 10th at 93.33. Since then, the Bloomberg commodities index has rallied almost 9% to 102.08. Crude closed the week at a six-week high. The help weak energy and commodities prices were providing on the inflation front may have run its course.
Fortunately, it appears the East Coast longshoreman’s strike has been resolved for now. But there are other developments pointing to upward pricing pressures. Bloomberg: “Global Food Prices Risk Spiking on Worst-Ever Drought in Brazil.” WSJ: “Food Prices Rose at Fastest Rate in 18 Months in September, UN Says.”
And we should give significant weight to China’s recent “whatever it takes” moment when pondering inflation risk. Until proven otherwise, Beijing seems hell-bent on reflation. Talk of possible Israeli strikes on Iranian oil infrastructure had the crude market in somewhat of a tizzy. And seeing Hurricane Helene’s incredible destruction reminds me of how much spending these massive storms will spur for both reconstruction and preparation measures. It looks like a stretch to believe the current backdrop is conducive to consumer inflation stabilizing back down at the Fed’s 2% target.
October 2 – Reuters (Howard Schneider): “The U.S. central bank’s fight to return inflation to its 2% target may take longer than expected to complete and limit how far interest rates can be cut, Richmond Federal Reserve President Thomas Barkin said… Barkin said he supported the half-percentage-point rate cut the Fed approved last month… But he said he was concerned inflation could prove sticky next year and prevent the Fed from cutting rates as far as investors and some of his colleagues expect… Beyond the next few months and into the second half of 2025, ‘I'm more concerned about inflation than I am about the labor market,’ Barkin said, with a combination of continued solid demand and renewed tightness in the labor market making it hard for the Fed to travel the ‘last mile’ in lowering inflation.’”
For the Week:
The S&P500 added 0.2% (up 20.6% y-t-d), while the Dow was little changed (up 12.4%). The Utilities increased 0.6% (up 28.4%). The Banks gained 0.7% (up 19.4%), and the Broker/Dealers jumped 2.6% (up 27.3%). The Transports dropped 2.3% (down 0.5%). The S&P 400 Midcaps were unchanged (up 12.1%), while the small cap Russell 2000 dipped 0.5% (up 9.2%). The Nasdaq100 was little changed (up 19.1%). The Semiconductors slipped 0.2% (up 24.7%). The Biotechs gained 0.6% (up 9.1%). With bullion slipping $5, the HUI gold index dropped 3.1% (up 30.0%).
Three-month Treasury bill rates ended the week at 4.50%. Two-year government yields surged 36 bps to 3.92% (down 33bps y-t-d). Five-year T-note yields jumped 30 bps to 3.80% (down 4bps). Ten-year Treasury yields rose 22 bps to 3.97% (up 9bps). Long bond yields gained 15 bps to 4.25% (up 22bps). Benchmark Fannie Mae MBS yields surged 34 bps to 5.22% (down 5bps).
Italian yields increased six bps to 3.51% (down 19bps y-t-d). Greek 10-year yields gained six bps to 3.16% (up 11bps). Spain's 10-year yields increased four bps to 2.97% (down 2bps). German bund yields jumped eight bps to 2.21% (up 19bps). French yields gained six bps to 2.99% (up 43bps). The French to German 10-year bond spread narrowed about two to 78 bps. U.K. 10-year gilt yields jumped 15 bps to 4.13% (up 59bps). U.K.'s FTSE equities index dipped 0.5% (up 7.1% y-t-d).
Japan's Nikkei Equities Index dropped 3.0% (up 15.5% y-t-d). Japanese 10-year "JGB" yields increased three bps to 0.89% (up 27bps y-t-d). France's CAC40 sank 3.2% (unchanged). The German DAX equities index fell 1.8% (up 14.1%). Spain's IBEX 35 equities index dropped 2.6% (up 15.4%). Italy's FTSE MIB index slumped 3.3% (up 10.7%). EM equities were mixed. Brazil's Bovespa index declined 0.7% (down 1.8%), and Mexico's Bolsa index slipped 0.3% (down 8.3%). South Korea's Kospi index dropped 3.0% (down 3.2%). India's Sensex equities index sank 4.5% (up 13.1%). China's Shanghai Exchange Index rose 8.1% (up 12.2%). Turkey's Borsa Istanbul National 100 index sank 6.8% (up 21.9%).
Federal Reserve Credit declined $34 billion last week to $7.022 TN. Fed Credit was down $1.834 TN from the June 22, 2022, peak. Over the past 264 weeks, Fed Credit expanded $3.295 TN, or 88%. Fed Credit inflated $4.211 TN, or 150%, over the past 621 weeks. Elsewhere, Fed holdings for foreign owners of Treasury, Agency Debt declined $5 billion last week to $3.312 TN. "Custody holdings" were down $113 billion y-o-y, or 3.3%.
Total money market fund assets jumped another $39 billion to a record $6.463 TN. Money funds were up $577 billion y-t-d, or 12.7% annualized, and $825 billion, or 14.6%, y-o-y.
Total Commercial Paper dropped $41 billion to $1.191 TN. CP was down $11 billion, or 0.9%, over the past year.
Freddie Mac 30-year fixed mortgage rates increased four bps to 6.12% (down 141bps y-o-y). Fifteen-year rates rose nine bps to 5.25% (down 164bps). Bankrate's survey of jumbo mortgage borrowing costs had 30-year fixed rates up 13 bps to 6.92% (down 96bps).
Currency Watch:
For the week, the U.S. Dollar Index rallied 2.1% to 102.52 (up 1.2% y-t-d). For the week on the upside, the Mexican peso increased 2.1%. On the downside, the Japanese yen declined 4.4%, the New Zealand dollar 2.9%, the South Korean won 2.8%, the Swedish krona 2.7%, the South Korean won 2.7%, the Swiss franc 2.1%, the British pound 1.9%, the Singapore dollar 1.8%, the euro 1.7%, the Australian dollar 1.6%, the Norwegian krone 1.5%, the Canadian dollar 0.4%, and the Brazilian real 0.4%. The Chinese (onshore) renminbi declined 0.11% versus the dollar (up 1.16% y-t-d).
Commodities Watch:
The Bloomberg Commodities Index rose 1.8% (up 3.5% y-t-d). Spot Gold slipped 0.2% to $2,654 (up 28.6%). Silver rose 2.0% to $32.20 (up 35.3%). WTI crude surged $6.20, or 9.1%, to $74.38 (up 4%). Gasoline rallied 7.3% (down 1%), while Natural Gas declined 1.7% to $2.854 (up 14%). Copper slipped 0.6% (up 18%). Wheat gained 1.7% (down 6%), and Corn rose 1.6% (down 10%). Bitcoin dropped $3,700, or 5.6%, to $62,080 (up 46%).
Middle East War Watch:
October 1 – Reuters (Nectar Gan): “Israeli Prime Minister Benjamin Netanyahu promised that arch foe Iran would pay for its missile attack against Israel on Tuesday, while Tehran said any retaliation would be met with ‘vast destruction’, raising fears of a wider war. As Washington expressed full backing for its longtime ally Israel, Iran's armed forces said direct intervention by Israel's supporters against Tehran would provoke a ‘strong attack’ from Iran on their ‘bases and interests’ in the region… ‘Iran made a big mistake tonight - and it will pay for it,’ Netanyahu said… In its attack on Tuesday, Iran fired more than 180 ballistic missiles at Israel... Alarms sounded across Israel… Israelis piled into bomb shelters and reporters on state television lay flat on the ground during live broadcasts.”
October 2 – Reuters (Gerry Doyle): “The Iranian ballistic missile attack against Israel… was larger, more complex and involved more advanced weapons than the strikes in April, experts say, putting greater stress on missile defences and allowing more warheads to get through. Although debris from the more than 180 missiles is still being collected and analysed, experts say the latest attacks appear to have used Iran's Fattah-1 and Kheybarshekan missiles, both of which have a reported range of about 870 miles. Iran has said both missiles have manoeuvring warheads, which can make defence more difficult, and use solid fuel, meaning they can be launched with little warning.”
October 2 – Financial Times (Felicia Schwartz, James Politi and Henry Foy): “The US and its western allies are trying to limit Israel’s response to Iran’s ballistic missile attack in the hope of preventing a widening regional conflict from spiralling out of control. Washington has made clear it supports Israel’s right to respond militarily to Tuesday’s missile attack, and is holding frequent calls with Israeli officials as they plan their next move. US President Joe Biden on Wednesday spoke with the other leaders of the G7 to co-ordinate sanctions on Tehran for the attack and advise Israel on its response. ‘We’ll be discussing with the Israelis what they’re going to do… all seven of us agree that they have a right to respond, but they should respond in proportion,’ Biden told reporters…”
October 3 – Bloomberg (Natalia Drozdiak and Peter Martin): “Iran has rarely looked more on the back foot after weeks of Israeli attacks that degraded its proxies Hezbollah and Hamas. And Tehran’s barrage of some 200 missiles fired at Israel on Tuesday was judged ‘ineffective’ by the US. But those setbacks may have an unintended and dangerous consequence, according to current and former government officials in the US, Israel and the Arab world. They fear that Iran, backed into a corner and feeling more threatened, may speed up its nuclear advances and pursue atomic weapons. Hardline factions inside Iran may push Supreme Leader Ayatollah Ali Khamenei to order the development of nuclear weapons… According to one Israeli official, Khamenei is likely calculating which way to go.”
September 29 – Financial Times (Raya Jalabi): “Over the past two decades, Lebanese of all political persuasions got used to a familiar routine: whenever a significant national event took place, Hizbollah leader Hassan Nasrallah would address them and signal the direction his movement would seek to push the country. But this weekend, Lebanese woke up with their fragile nation in crisis and without the man who had for years dominated their news feeds and towered over their elected leaders. ‘I am in complete shock,’ said a tearful May Saad, a social worker, of Nasrallah’s assassination... ‘I don’t agree with Hizbollah’s politics or anything, but he was like a father for the nation… even when he did things we didn’t like.’ Whether they loved or loathed him, Nasrallah held the nation captive, its fractured politics revolving around him and the militant group he built into Lebanon’s most powerful force.”
September 29 – Financial Times (Najmeh Bozorgmehr and Andrew England): “Within hours of Israel launching strikes to assassinate Hassan Nasrallah, large posters appeared across Tehran declaring ‘Hizbollah is Alive’. Iranian state media initially said Nasrallah… was ‘in a safe place’, but there was a conspicuous silence from regime officials. It was as if the Islamic republic’s leaders were not ready to acknowledge the loss of Tehran’s most important regional ally. Israel’s assassination of Nasrallah… delivered not just a catastrophic blow to Hizbollah, but a devastating hit to its main patron: Iran. For more than three decades, Tehran looked to Nasrallah and his movement as the key pillar in its regional security and deterrent strategy — the frontline in its long shadow war with Israel. An Iranian official said Ayatollah Ali Khamenei… considered Nasrallah a ‘son’.”
September 29 – New York Times (Roger Cohen): “Over almost a year of war in the Middle East, major powers have proved incapable of stopping or even significantly influencing the fighting, a failure that reflects a turbulent world of decentralized authority that seems likely to endure. Stop-and-start negotiations between Israel and Hamas to end the fighting in Gaza, pushed by the United States, have repeatedly been described by the Biden administration as on the verge of a breakthrough, only to fail. The current Western-led attempt to avert a full-scale Israeli-Hezbollah war in Lebanon amounts to a scramble to avert disaster... ‘There’s more capability in more hands in a world where centrifugal forces are far stronger than centralizing ones,’ said Richard Haass, the president emeritus of the Council on Foreign Relations. ‘The Middle East is the primary case study of this dangerous fragmentation.’”
Ukraine War Watch:October 3 – Associated Press (Hanna Arhirova and Samya Kullab): “New NATO Secretary-General Mark Rutte visited Ukraine on Thursday in his first official trip since taking office and pledging the alliance's continued support for Kyiv in its war with Russia. Rutte met with Ukrainian President Volodymyr Zelenskyy in Kyiv as air raid sirens twice went off in the Ukrainian capital. The new head of NATO vowed when he took office on Tuesday to help shore up Western support for Ukraine…”
Taiwan Watch:
October 4 – Bloomberg (Roxana Tiron and Tony Capaccio): “The US has sent Taiwan self-guided Longbow anti-tank missiles made by Lockheed Martin Corp., sniper rifles, machine guns and a range of ammunition, new Pentagon documents show. The weapons and ammunition are listed in budget documents sent to congressional defense committees as part of efforts to shift funding, known as reprogramming, to pay for equipment to restock US military shelves.”
Market Instability Watch:
October 1 – Bloomberg (Alexandra Harris): “Rates in the US funding-market surged at the turn of the quarter in a sign that liquidity pressures are building in the plumbing that underlies the world’s biggest financial system. Volatility intensified this week beyond the typical spikes seen at the ends of months and quarters, when banks shore up their balance sheets for regulatory purposes by reigning in activity in the market for repurchase agreements. That is fueling debate around how much longer the Federal Reserve can remove liquidity from the system via its quantitative tightening program — known as QT — without causing a crunch.”
September 30 – Financial Times (Nicholas Megaw): “Investors are seeking to profit from the uncertainty over the outcome of the US presidential race by turning to complex derivatives trades… With fewer than 30 trading days to go, the election remains extremely close, risking a repeat of 2020’s disputed result. A growing number of investors are seeking to tap into this potential market turbulence by betting on volatility rising sharply in the coming weeks. Options markets are currently pricing in a roughly 2.8% swing in the benchmark S&P 500 stock index on November 6, the day after the vote, according to… UBS. That figure has been gradually rising over the past month…”
October 2 – Bloomberg (Ruth Carson, Masaki Kondo and Winnie Hsu): “Japan’s investors are starting to lose their decades-long infatuation with overseas assets. In the first eight months of the year, Japanese investors snapped up a net ¥28 trillion ($192bn) of the nation’s government bonds, the largest amount for the time frame in at least 14 years. They also cut purchases of foreign bonds by almost half to just ¥7.7 trillion and their buying of overseas equities was less than ¥1 trillion. ‘It’s going to be one of the mega trends and it is a super cycle for the next five to 10 years,’ said Arif Husain, head of fixed-income at T. Rowe Price... ‘There will be a sustained, gradual but massive flow of capital back into Japan from abroad.’”
Global Credit Bubble Watch:
October 1 – Bloomberg (Caleb Mutua and Josyana Joshua): “Companies and governments around the globe spent the past month streaming into debt markets, seizing on declining interest rates… With September’s order books now closed, the velocity of those debt sales is becoming clear, shattering records from New York to Beijing. More than 1,226 of issuers sold over $600 billion of bonds last month… That’s the most for September in records going back more than two decades. Issuance in the US high-grade bond market was the busiest ever in September.”
October 3 – Bloomberg (Hannah Benjamin-Cook): “Year-to-date bond sales in Europe have topped €1.5 trillion in record time as companies rushed to take advantage of falling borrowing costs... The only other time Europe has exceeded €1.5 trillion of annual sales was in 2020 and 2021… Debt sales have exceeded even the most bullish expectations as central banks unleashed multiple interest-rate cuts.”
October 1 – Bloomberg (Allison McNeely): “Apollo Global Management Inc. expects to generate $10 billion of annual earnings across its asset management and retirement businesses by 2029, driven by investor demand for private credit and annuities. Fee-related earnings are forecast to grow 20% on average annually for the next five years…”
October 1 – Bloomberg (Gillian Tan and Paula Seligson): “JPMorgan… has agreed to partner with Cliffwater, FS Investments and Shenkman Capital Management Inc. in an effort to broaden its reach in the $1.7 trillion private credit market… As part of the arrangement, the bank will originate loans and invest in them alongside the direct lenders, who can only decline to participate in a handful of transactions over a pre-determined period of time…”
September 29 – Yahoo Finance (David Hollerith): “Big banks and private equity giants are joining forces to create new Wall Street super groups, with the goal of capturing a bigger slice of the $1.7 trillion private credit market. The newest team to emerge is an alliance between Citigroup and Apollo Global Management, which on Thursday announced a $25 billion private credit fund focused on direct lending. It is the biggest lending partnership yet between a private financial institution and a big bank.”
AI Bubble Watch:
September 28 – Wall Street Journal (Jennifer Hiller): “Tech companies scouring the country for electricity to power artificial intelligence are increasingly finding there is a waiting list. In many places the nation’s high-voltage electric wires are running out of room, their connection points locked up by data centers for AI, new factories or charging infrastructure for electric vehicles. A mad dash to lock up available power has ensued. The tech industry is pinballing from one market to the next looking for places with the capacity to connect campuses that would consume up to a gigawatt of power—about as much as San Francisco uses. Some requests are as much as four to five times as large as that. But wires are getting so crowded that some prospective data center customers… are being told they may have to wait until the next decade to get the power they are seeking. Others are receiving less power than they expected.”
October 2 – Bloomberg (Jane Lanhee Lee, Yoolim Lee and Christina Kyriasoglou): “Global semiconductor makers are monitoring supplies of high-purity quartz, a material critical to the industry, after Hurricane Helene halted production at two North Carolina mines that produce most of the world’s supply. Taiwan Semiconductor Manufacturing Co. — the world’s largest chipmaker — and Germany’s Infineon Technologies AG said… they were keeping tabs on the situation but didn’t anticipate any significant impact to their operations.”
October 3 – Bloomberg (Jeran Wittenstein and Carmen Reinicke): “Nvidia Corp. insiders have cashed in on shares worth more than $1.8 billion so far this year — and more selling is on the horizon. Nearly 11 million shares have been sold by Nvidia executives and directors in 2024, the most in a year since at least 2020 after adjusting for stock splits…”
Bubble and Mania Watch:
October 1 – Financial Times (Emma Boyde): “Quarterly flows into global exchange traded funds have smashed previous records with investors throwing half a trillion dollars worth of new money into the vehicles over the past three months. Data from ETFGI… indicates that $501bn of net new money had already flowed into ETFs by the end of trading on September 27, which means… third quarter flows had already soared past the previous record of $398bn set in the first quarter of this year… Q3’s bonanza meant the industry had also set a record for flows in the first three quarters of the year of $1.45tn. There has been a corresponding ballooning of assets which, aided by rising markets, rose from $11.6tn at end of 2023 to $14.1tn by the end of trading on September 27.”
September 29 – Financial Times (Joshua Franklin and Costas Mourselas): “In Manhattan, Goldman Sachs and Jane Street are separated by a street, a century, and a 160% average pay gap. Goldman and its rival investment banks were once the titans of trading. Now it is Jane Street that paid an average of over $900,000 per employee last year to Goldman’s $340,000… The upstart… is among a handful of highly secretive trading firms — also including Citadel Securities, Susquehanna International Group, XTX Markets and DRW — to have capitalised on the electronification of financial markets… Citadel Securities handles $455bn in trades every day, including almost a quarter of all US stock trading. Jane Street says it now accounts for more than 2% of all trading in over 20 countries. Last year, it traded $6.3tn worth of exchange traded funds and options with a notional value of $32tn. First-half trading revenues totalled $8.4bn at Jane Street and just under $5bn at Citadel Securities…, both up about 80% on a year earlier.”
October 3 – Reuters (Matt Tracy and Shankar Ramakrishnan): “The beleaguered U.S. office property market may be bottoming out, analysts told Reuters, pointing to a string of sales of stressed properties at big discounts over the last quarter… Prices for office buildings have fallen 12.4% year-over-year as of the second quarter, according to the RCA Commercial Property Price Index… Office sales averaged $35 billion per quarter pre-COVID-19 but as property valuations dipped on continued vacancies and high operating costs, they have averaged only $13.4 billion per quarter since 2023, according to data from MSCI Real Capital Analytics.”
U.S./Russia/China/Europe Watch:
October 1 – CNN (Nectar Gan): “Chinese leader Xi Jinping reiterated his pledge to achieve ‘reunification’ with Taiwan on the eve of Communist China’s 75th birthday, as Beijing flexed its military might in the run-up to the national holiday… Xi used his address to underscore his resolve to achieve the ‘complete reunification of the motherland.’ ‘It’s an irreversible trend, a cause of righteousness and the common aspiration of the people. No one can stop the march of history,’ he told the thousands in attendance at the Great Hall of the People in Beijing…”
September 30 – New York Times (Edward Wong): “Call it the Axis of Anger. It is ripped from the pages of the World Wars or the Cold War: a coalition of powers working to strengthen one another’s militaries to defeat America’s partners and, by extension, the United States. That is how the Biden administration characterizes Russia, China, North Korea and Iran, as those nations align more closely. U.S. officials have been sounding the alarm in speeches and closed-door talks around the world, most recently at the United Nations General Assembly in New York… As the conflict in the Middle East widens… U.S. officials feel an even greater sense of urgency.”
October 2 – Reuters (Ron Popeski): “Russia stands alongside China on Asian issues, including the criticism of the U.S. drive to extend its influence and ‘deliberate attempts’ to inflame the situation around Taiwan, its foreign minister said… Sergei Lavrov… also praised Beijing's approach to the war in Ukraine and said both countries wanted to eliminate the problems that Moscow says lie behind the conflict… Writing to mark the Russia's 75th anniversary of diplomatic relations with China, Lavrov said Moscow and Beijing held close positions ‘in assessing the risks associated with the advance of the West in the Asia-Pacific region’. ‘The United States and its satellites deliberately stir up the situation in the Strait of Taiwan,’ Lavrov wrote.”
October 2 – Bloomberg (Josh Xiao): “China said its Coast Guard vessels entered the Arctic Ocean for the first time, patroling the waters jointly with Russian ships on a mission that underscored the growing cooperation between Beijing and Moscow in the region. The foray took place during China’s week-long National Day Holiday… The US Coast Guard said two Russian ships and two Chinese vessels were spotted on Saturday passing through the Bering Sea, which separates Russia from Alaska.”
De-globalization and Iron Curtain Watch:
October 4 – Reuters (Philip Blenkinsop): “The European Union will press ahead with hefty tariffs on China-made electric vehicles, the EU executive said on Friday, even after the bloc's largest economy Germany rejected them, exposing a rift over its biggest trade row with Beijing in a decade. The proposed duties on EVs built in China of up to 45% would cost carmakers billions of extra dollars to bring cars into the bloc and are set to be imposed from next month for five years.”
October 3 – Wall Street Journal (Wenxin Fan): “China’s Communist Party has for years stoked patriotism in the state media and the country’s classrooms, driving nationalist fervor that at times spun out of control. Now, three stabbing attacks in four months that targeted Japanese and Americans have exposed a dark side of that campaign, what many in China describe as ‘hate education.’ In one of the past year’s viral videos, a desk-pounding schoolteacher lectures to her students about China’s ‘blood feud’ with Japan, admonishing them to never forget the atrocities conducted by the Japanese army in World War II. State media praised her, and other teachers reposted her video. In another video, a Chinese mother expresses pride as her grade-school daughter rebukes her baffled preschool brother over his love of Ultraman, the Japanese science-fiction character.”
Inflation Watch:
October 1 – Bloomberg (Laura Curtis, Deena Shanker and Michael Sasso): “Union chief Harold Daggett, clad in a blue sweatshirt that read ‘The Docks Are Ours,’ relished the fear he says gripped his negotiating rivals when they saw his opposition to automation — a key sticking point in the first strike on the US East and Gulf ports since 1977. ‘You guys don’t realize it but you’re making history,’ Daggett said through a bullhorn… to members of the International Longshoremen’s Association… ‘I got strong language that’s going to go in the new contract — they’re scared.’ It’s too early to enshrine Daggett’s ILA in the annals of union lore. But there’s little doubt that paralysis at the nation’s ports heading into the holidays and a contested presidential election provides him solid leverage against the United States Maritime Alliance, the group of shipping lines and port operators.”
September 30 – Bloomberg (Keira Wright, Bernadette Toh and Charlotte Hughes-Morgan): “Droughts, downpours and fires from Asia to the Americas are stoking worries about crop harvests, pushing up prices for food staples that could eventually flow through to higher grocery bills. The Bloomberg Agriculture Spot Index — which includes nine major products — had a monthly gain of more than 7%, the most since Russia’s invasion of Ukraine sent markets soaring in early 2022. While it remains far from that year’s peak, the rally comes as farms from Brazil to Vietnam and Australia battle both flooding and overly dry weather, threatening sugar, grain and coffee.”
October 4 – Bloomberg (Dayanne Sousa and Andrew Rosati): “The worst drought in Brazil’s history is doing more than jeopardizing coffee, sugar and soybean crops. Dead vegetation is giving way to fires, sending greenhouse gases into the atmosphere and disappearing more of the Amazon rainforest. Key rivers, responsible for transporting a third of the nation’s prized soy crop, are drying out. Utility costs are up given that the country gets two-thirds of its energy from hydropower. And as one the world’s largest crop exporters, any trouble in Brazil’s agriculture business has knock-on effects for food prices around the world.”
October 1 – Wall Street Journal (Gina Heeb): “Ryan Harper and his wife decided to sell their Santa Clarita, Calif., mansion last year after the insurance premium on it nearly tripled. An exodus of home insurers from the state had left them with a state government insurance policy, as well as a supplemental private one, that cost more than $7,000 a year. The Harpers listed the six-bedroom Spanish-style home, which had been labeled fire-prone by the state, at $1.25 million. Months went by with little interest. For the handful of potential buyers who did emerge, insurance costs would often come up as a concern. The couple dropped the price by $75,000, then took it off the market. ‘To sell a home in California right now seems almost impossible,’ Harper said. ‘The insurance market is crazy.’”
Federal Reserve Watch:
September 30 – Reuters (Howard Schneider): “Federal Reserve Chair Jerome Powell indicated… the U.S. central bank would likely stick with quarter-percentage-point interest rate cuts moving forward and was not ‘in a hurry’ after new data boosted confidence in ongoing economic growth and consumer spending. ‘This is not a committee that feels like it is in a hurry to cut rates quickly,’ Powell told a National Association for Business Economics conference…”
September 30 – New York Times (Jeanna Smialek): “Jerome H. Powell… underscored… that officials are likely to lower interest rates in the coming months — but that policymakers do not expect to make those rate cuts in large increments if the economy shapes up as expected. Fed officials lowered interest rates by half a percentage point… at their meeting on Sept. 18, the first reduction in more than four years. Policymakers usually cut borrowing costs in quarter-point increments, so that was an unusually large decrease… ‘That would mean two more cuts, it wouldn’t mean more 50s’ Mr. Powell said…. ‘Of course, that will depend on the data. But ultimately, that’s what the baseline is.’”
October 3 – Reuters (Michael S. Derby): “U.S. Federal Reserve losses crossed the $200 billion point this week… The Fed reported that… the level of its so-called earnings remittance to the Treasury Department stood at negative $201.2 billion. The number represents a paper loss that central bank officials have noted does not impair their ability to conduct monetary policy. The negative number is captured in an accounting measure the Fed calls a deferred asset. The Fed must cover this shortfall before it can begin returning excess earnings to the Treasury.”
October 3 – Bloomberg (Catarina Saraiva): “Federal Reserve Bank of Chicago President Austan Goolsbee reiterated interest rates need to come down over the next year by ‘a lot.’ Goolsbee emphasized how the central bank’s narrow focus on inflation has expanded to the jobs market, adding he’d like to keep the unemployment rate — currently at 4.2% — from rising any further. ‘Inflation is coming down and is close to target, unemployment has come up and the job market is basically where we would want it to be… Rates need to come down over the next 12 months by a lot.’”
U.S. Economic Bubble Watch:
October 4 – CNBC (Jeff Cox): “The U.S. economy added far more jobs than expected in September… Nonfarm payrolls surged by 254,000 for the month, up from a revised 159,000 in August and better than the 150,000… forecast. The unemployment rate fell to 4.1%, down 0.1 percentage point… Strength in job creation spilled over to wages, as average hourly earnings increased 0.4% on the month and were up 4% from a year ago… Restaurants and bars led job creation for the month, with the hospitality industry adding 69,000 positions in September… Health care, a consistent leader in job growth, contributed 45,000, while government grew by 31,000. Other gainers included social assistance (27,000) and construction (25,000).”
October 3 – New York Times (Alan Rappeport and Ana Swanson): “The United States economy is suddenly staring down an array of new and potentially damaging crises, with tensions flaring in the Middle East, port workers striking on the East and Gulf Coasts and several states grappling with fallout from a devastating hurricane. The events hit just as American policymakers were gaining confidence that they had successfully tamed inflation without pushing the economy into a recession and as polls and consumer surveys suggest that Americans’ sour economic mood had begun to improve. But in just a week, new risks have emerged. The economy now faces the prospect of an oil price spike, new supply chain disruptions and the aftermath of a storm that could inflict more than $100 billion in damage upon large swaths of the southeast.”
October 2 – Reuters (Lucia Mutikani): “U.S. private payrolls increased more than expected in September, boosted by hiring in the construction, leisure and hospitality industries, adding to the evidence of a stable labor market… The ADP… Report… followed government data… that showed there were 1.13 job openings for every unemployed person in August compared to 1.08 in July. Private payrolls increased by 143,000 jobs last month after rising by an upwardly revised 103,000 in August… Construction employment increased by 26,000. The leisure and hospitality sector added 34,000 jobs… Wages for workers remaining in their jobs increased 4.7% on a year-over-year basis after a rise of 4.8% in August. That jump slowed to 6.6% for those changing jobs, down from a 7.3% advance in August.”
October 1 – Reuters (Lucia Mutikani): “U.S. job openings unexpectedly increased in August after two straight monthly decreases… The Labor Department's Job Openings and Labor Turnover Survey, or JOLTS report…, also showed layoffs declining. There were 1.13 job openings for every unemployed person in August compared to 1.08 in July… Job openings… rebounded by 329,000 to 8.040 million by the last day of August… Data for July was revised higher to show 7.711 million… instead of the previously reported 7.673 million.”
October 3 – Reuters (Dan Burns): “U.S. layoff announcements slipped in September from August's five-month high but for the year to date have now edged past last year's pace… Firms announced 72,821 layoffs last month, down 4% from the 75,891 announced in August, which had been the highest since March, outplacement firm Challenger, Gray and Christmas said. For the year-to-date, however, announced staff reductions through September of 609,242 are 0.8% higher than through the first nine months of 2023…”
October 3 – Reuters (Lucia Mutikani): “The number of Americans filing new applications for unemployment benefits increased marginally last week, but the devastation unleashed by Hurricane Helene in the U.S. Southeast and strikes at Boeing and ports could distort the labor market picture in the near-term… Initial claims for state unemployment benefits increased by 6,000 last week to a seasonally adjusted 225,000 for the week ended Sept. 28.”
October 1 – Reuters (Lucia Mutikani): “U.S. manufacturing held steady at weaker levels in September, but new orders improved and prices paid for inputs declined to a nine-month low… The Institute for Supply Management (ISM) said… its manufacturing PMI was unchanged at 47.2 last month.”
October 1 – Associated Press: “The U.S. dockworkers who went on strike… are just the latest unionized group to back their demands for better contracts by walking off the job to illustrate their value to both the national economy, and their employers’ bottom line. Unions representing auto workers, actors, hotel housekeepers and aircraft assembly workers all called strikes as organized labor made itself heard over the past year... Between 2022 and 2023, the number of work stoppages rose 9% to 466 strikes and four lockouts, according to… Cornell University’s ILR School. However, the number of workers involved in work stoppages, approximately 539,000, was more than double than the previous year, according to the school’s research.”
October 2 – CNBC (Diana Olick): “Mortgage rates moved ever so slightly higher last week, but it was enough to take a little heat out of what had been a briefly red-hot refinance market… Applications to refinance a home loan fell 3% for the week but were still a striking 186% higher than the same week one year ago… Applications for a mortgage to purchase a home rose 1% for the week and were 9% higher than the same week one year ago.”
September 29 – Yahoo Finance (Claire Boston): “Cash-strapped Americans are using their homes to pay down debt and keep up with the rising cost of living. Use of home equity lines of credit — a type of revolving loan that developed a troubled reputation for its role in the 2008 financial crisis — is on the rise after hitting post-crisis lows two years ago. The products have long been a popular means of financing home renovation projects, but lately, mortgage lenders say many of the applications that cross their desks are for debt consolidation. ‘It’s so much easier,’ said Rochelle Adamson, a self-employed hairdresser… who consolidated more than $55,000 of debt across seven credit cards with a HELOC she took out on a rental property last year.”
September 30 – Wall Street Journal (Aaron Zitner, Jon Kamp and Brian McGill): “Americans’ reliance on government support is soaring, driven by programs such as Social Security, Medicare and Medicaid. That support is especially critical in economically stressed communities throughout the U.S., many of which lean Republican and are concentrated in swing states crucial in deciding the presidential election. Neither party has much incentive to dial back the spending. The big reasons for this dramatic growth: A much larger share of Americans are seniors, and their healthcare costs have risen. At the same time, many communities have suffered from economic decline because of challenges including the loss of manufacturing, leaving government money as a larger share of people’s income in such places.”
China Watch:
September 30 – Bloomberg: “President Xi Jinping urged caution in the face of what he said could be a rough patch ahead for China, in his first public comments since the government announced an unprecedented stimulus package. ‘We must be mindful of potential dangers and be prepared for rainy days,’ Xi said… in a speech marking the 75th anniversary of the founding of the People’s Republic of China.”
October 3 – Bloomberg (Josh Xiao): “A leading economist in China said the country has room to ramp up fiscal support for the economy by issuing as much as 10 trillion yuan ($1.4 trillion) in special debt, reflecting rising expectations for Beijing to expand public spending as part of its stimulus package. Jia Kang, a former head of a research institute affiliated with the Ministry of Finance, said authorities could lift confidence by drastically raising government investment in public projects.”
September 30 – Reuters (Ellen Zhang and Ryan Woo): “China's factory activity shrank for a fifth straight month and the services sector slowed sharply in September, suggesting Beijing will need even more stimulus to hit its 2024 growth target with only three months left in the year. The National Bureau of Statistics (NBS) purchasing managers' index (PMI)… nudged up to 49.8 in September from 49.1 in August, still below the 50-mark separating growth from contraction… However, paired with a downbeat private-sector Caixin survey and weak service PMIs, the data showed China's factory and consumer activity remains a pain point for policymakers…”
September 30 – Bloomberg: “China’s residential slump deepened in September before the government released a basket of measures to put a floor under the yearslong property crisis. The value of new-home sales from the 100 biggest real estate companies fell about 37.7% from a year earlier to 251.7 billion yuan ($35.9bn), faster than the 26.8% decline in August…”
September 30 – Wall Street Journal (Rebecca Feng): “China’s real-estate bust left behind tens of millions of empty housing units. Now that historic glut of unoccupied property is colliding with China’s shrinking population, leaving cities stuck with homes they might never be able to fill. The country could have as many as 90 million empty housing units, according to a tally of economists’ estimates. Assuming three people per household, that’s enough for the entire population of Brazil. Filling those homes would be hard enough even if China’s population were growing, but it’s not. Because of the country’s one-child policy, it is expected to fall by 204 million people over the next 30 years. ‘Fundamentally, there are not enough people to fill the homes,’ said Tianlei Huang, a research fellow at the Peterson Institute for International Economics.”
September 30 – Financial Times (Eleanor Olcott): “The tropical island of Hainan in southern China has long been a place for dreamers. The white beaches, clean air and climate have attracted waves of migrants from the north of the country. But it has also seen those dreams turn into nightmares. In 1993, Hainan became the site of China’s first property crisis in modern history, following a construction boom catering to the influx of new residents. Real estate prices cratered and 95% of developers in the capital Haikou collapsed… While today’s property crisis in China is not concentrated in Hainan, there is evidence of the national trend and challenges ahead for policymakers. Prices of existing homes in 25 large cities around China have fallen by 25 to 30% from a peak in July 2021… Another problem is the glut of unfinished pre-sold homes… Nomura economists estimate that there are 20mn units of pre-sold homes that have not been delivered on time due to a funding gap that is equivalent to Rmb3tn. Driving through Hainan brings life to these numbers. The island is scattered with unfinished construction projects…”
September 29 – Bloomberg: “Chinese property shares rallied after three of the country’s largest cities eased rules for homebuyers, following through on the central government’s latest efforts to prop up the embattled real estate sector. A Bloomberg gauge of Chinese property stocks jumped as much as 14% on Monday morning after Shanghai, Shenzhen and Guangzhou relaxed homebuying curbs. The central bank on Sunday also said it will allow refinancing of mortgages.”
October 1 – Bloomberg (Sangmi Cha): “Shares of Chinese property developers rallied most on record after Beijing joined its peers to ease rules for homebuyers, following the Asian nation’s call to stem the property market decline. A Bloomberg Intelligence gauge of Chinese real estate stocks surged as much as 31% — a record — on Wednesday… The index has risen 92% over the last five trading days. During the same period, stocks of some of defaulted developers — including Shimao Group Holdings Ltd. and Sunac China Holdings Ltd. — have surged more than 200% each.”
October 1 – Bloomberg (Venus Feng and Jack Witzig): “China’s largest stimulus package in years has helped the country’s richest get a whole lot richer. The collective fortunes of the 54 Chinese people on the Bloomberg Billionaires Index jumped about 19% in the week ended Sept. 30, the largest on record for a week-long wealth gain of the country’s tycoons since the ranking started… in 2016. China’s moguls have seen almost $130 billion of combined wealth added over the period, according to the index.”
October 1 – Financial Times (Lee Harris and Joseph Cotterill): “The Asian Infrastructure Investment Bank, Beijing’s answer to the World Bank, is giving its backing to what it believes will be a wave of renminbi bonds issued by developing nations wanting to tap Chinese investors. Jin Liqun, president of the world’s second-biggest development bank by members, told the Financial Times he had seen ‘great demand’ for local currency borrowing and that a number of countries had asked for help on how to sell so-called panda bonds.”
Central Banker Watch:
October 2 – Financial Times (Delphine Strauss): “Conflicts, climate change and trade tensions mean central banks will need to raise interest rates ‘more forcefully’ during future bouts of inflation to prevent price pressures taking hold, a senior official at the Bank for International Settlements has said. Andréa Maechler, deputy general manager…, said monetary policymakers could no longer afford to ‘look through’ short-term price rises caused by disruption to the supply side of the economy — such as crop failures, blockages in ports, swings in commodity prices or shutdowns at oil refineries. Such shocks could become ‘larger and more frequent’ because of rising geopolitical risk, more widespread floods and droughts and a ‘bumpy transition’ to greener technologies, she said. ‘This may require adjustments to the conduct of monetary policy,’ Maechler said. ‘At times, forceful monetary tightening will be needed to ensure that inflation expectations remain anchored.’”
Europe Watch:
October 1 – Reuters (Balazs Koranyi): “Euro zone inflation dipped below 2% for the first time since mid-2021 in September, reinforcing an already solid case for a European Central Bank rate cut this month as a three-year battle to tame runaway price growth nears its end. Inflation in the 20 countries sharing the euro currency eased to 1.8% in September from 2.2% in August…, coming below expectations for 1.9%..., primarily on falling energy costs and muted goods prices.”
September 29 – Financial Times (Sam Jones): “Austria’s far-right Freedom party scored a historic victory in the country’s parliamentary election on Sunday… It is the first time the FPÖ, which has embraced increasingly hardline and extremist policies on immigration and the war in Ukraine in recent years under Kickl, has come first in a national election. The breakthrough comes as the latest in a series of strong performances by Europe’s far right — most notably in France and the Netherlands…”
Japan Watch:
October 3 – Bloomberg (Alastair Gale and Yuki Hagiwara): “New Japanese Prime Minister Shigeru Ishiba emphasized in his first speech to parliament that his top economic priority is to defeat deflation and put the nation on a stable growth track. ‘I will decisively end deflation and build a future for our economy,’ Ishiba said during a speech…”
October 3 – Reuters (Makiko Yamazaki): “Japan's new economy minister, Ryosei Akazawa, said... the timing of changes in the Bank of Japan's monetary policy should be aligned with the government's broader goal of exiting deflation. ‘The timing of various monetary policy changes is very important,’ Akazawa said… ‘It's important that they are aligned with our policy priorities such as exiting from deflation and growth in wages and investments.’”
October 3 – Bloomberg (Toru Fujioka): “New Japanese Prime Minister Shigeru Ishiba’s unexpected warning against raising interest rates is pushing back expectations of another central bank move this year and increasing doubts about his communications. Ishiba triggered a sharp yen slide on Wednesday after he said Japan wasn’t ready for higher borrowing costs for the time being, in an unusually direct remark for a prime minister following his meeting with Bank of Japan Governor Kazuo Ueda.”
October 3 – Reuters (Leika Kihara): “Japan's central bank has scope to raise interest rates further but must move cautiously and slowly to avoid hurting the economy, a dovish policymaker said…, reinforcing market views it will be in no rush to lift borrowing costs. The comments from Bank of Japan board member Asahi Noguchi come a day after Japan's new prime minister, Shigeru Ishiba, said the economy was not ready for further rate hikes…”
Leveraged Speculation Watch:
October 2 – Bloomberg (Ruth Carson and Mia Glass): “A yen-centered carry trade that helped fuel a market meltdown in August is back on investors’ radars. Traders are re-loading speculative positions anticipating a weaker yen, emboldened by comments from Japanese Prime Minister Shigeru Ishiba that the economy isn’t ready yet for further interest rate hikes… ‘It’s back on,’ Nick Twidale at ATFX Global Markets, who has traded Japan’s currency for a quarter of a century, said of the carry trade. ‘The new PM is essentially giving us the green light to sell the yen for now.’”
Social, Political, Environmental, Cybersecurity Instability Watch:
October 2 – Reuters (Karl Plume): “Tens of thousands of North Carolina residents remained without running water on Wednesday, six days after Hurricane Helene slammed into Florida and carved a destructive path through much of the U.S. Southeast, killing more than 180 people. The powerful storm inundated the western part of the state with catastrophic flooding, destroying pipes, damaging water plants and cutting off power. One-fifth of the 1 million residents in the western half of North Carolina either had no water at all or low system pressure on Wednesday…”
October 3 – Bloomberg (Lauren Rosenthal, Brian K Sullivan and Christopher Cannon): “Forecasters had warned for days that Hurricane Helene was likely to cause widespread devastation. But when the powerful storm struck Florida and barreled through the eastern US last week, killing more than 180 people and taking whole communities offline, it still managed to come as a shock. Florida’s Big Bend, where Helene made landfall, previously went decades without a hurricane strike. In the past year or so, it has now seen three. The western half of North Carolina, once held up as a haven from the worst impacts of climate change, has been paralyzed by floods. Across the US, natural catastrophes are becoming more expensive and more common. Global warming is supercharging the atmosphere with more water and energy, fueling increasingly violent weather. The destructive storms, droughts, floods and wildfires are colliding with communities where millions of people live, with more costly homes and possessions — and so much more to lose.”
October 2 – Reuters (Michael S. Derby): “Homes in the New York, New Jersey and Connecticut areas face some of the most severe risk of flooding in the U.S., a report… by the Federal Reserve Bank of New York said. One in 10 properties in the region ‘are at serious risk of flooding,’ the report said, with these properties in the top 25% of the riskiest nationwide, even when more traditional areas of risk like the southeast of the United States are included… ‘Flood risk is not just found in coastal communities or in New York City,’ the report said. ‘Inland communities like Buffalo, Syracuse, and Newark face substantial risk from heavy rainfall, flash flooding, and overflowing rivers,’ the study said, adding ‘this risk has grown in recent years and is projected to continue increasing.’”
September 29 – Financial Times (Jana Tauschinski and Radhika Rukmangadhan): “World cities will face longer heatwaves, greater disease risk and ‘skyrocketing’ energy demand for cooling, according to a new report on post-industrial global warming of 1.5C to 3C… While low-income cities were likely to be the hardest hit, developed global centres including Tokyo, Rome, Madrid, Rio de Janeiro, Beijing, Sydney, London and New York were also likely to be severely affected. For most cities the difference will be substantial, with increased rainfall, heat and droughts rising in severity and frequency, the report by the World Resources Institute found.”
Geopolitical Watch:
October 1 – Reuters (Mari Yamaguchi): “Japan’s new Prime Minister Shigeru Ishiba pledged to stick to the vital Japan-U.S. alliance while calling for it to be more equitable after he took office Tuesday vowing to tackle a slow economy and regain public trust before an upcoming election. Shigeru Ishiba replaced Fumio Kishida... In a show of Japan’s respect to its most important ally, the United States, Ishiba spoke by telephone with President Joe Biden early Wednesday and told reporters he reassured Biden of his plan to further strengthen the Japan-U.S. alliance that Biden and Kishida have significantly elevated. His new Cabinet emphasizes defense… Ishiba called for stronger military cooperation with like-minded partners. He has been vocal about his wish to form a NATO-like alliance in the region.”
October 3 – Bloomberg (Nguyen Dieu Tu Uyen): “Vietnam accused Chinese law enforcement of a ‘brutal’ attack on a Vietnamese fishing vessel Sunday that threatened the lives of crew members in disputed waters of the South China Sea. An alleged attack by Chinese law enforcement authorities on a Vietnamese fishing vessel… resulted in injuries to 10 crewmen, including three that suffered broken bones, state media… reported.”