Kamala Harris at climate summit: World must ‘fight’ those stalling action

DUBAI — The vast, global efforts to arrest rising temperatures are imperiled and must accelerate, U.S. Vice President Kamala Harris told the world climate summit on Saturday. 

“We must do more,” she implored an audience of world leaders at the COP28 climate talks in Dubai. And the headwinds are only growing, she warned.

“Continued progress will not be possible without a fight,” she told the gathering, which has drawn more than 100,000 people to this Gulf oil metropolis. “Around the world, there are those who seek to slow or stop our progress. Leaders who deny climate science, delay climate action and spread misinformation. Corporations that greenwash their climate inaction and lobby for billions of dollars in fossil fuel subsidies.” 

Her remarks — less than a year before an election that could return Donald Trump to the White House — challenged leaders to cooperate and spend more to keep the goal of containing global warming to 1.5 degrees Celsius within reach. So far, the planet has warmed about 1.3 degrees since preindustrial times.

“Our action collectively, or worse, our inaction will impact billions of people for decades to come,” Harris said.

The vice president, who frequently warns about climate change threats in speeches and interviews, is the highest-ranking face of the Biden White House at the Dubai negotiations.

She used her conference platform to push that image, announcing several new U.S. climate initiatives, including a record-setting $3 billion pledge for the so-called Green Climate Fund, which aims to help countries adapt to climate change and reduce emissions. The commitment echoes an identical pledge Barack Obama made in 2014 — of which only $1 billion was delivered. The U.S. Treasury Department later specified that the updated commitment was “subject to the availability of funds.”

Meanwhile, back in D.C., the Biden administration strategically timed the release of new rules to crack down on planet-warming methane emissions from the oil and gas sector — a significant milestone in its plan to prevent climate catastrophe.

The trip allows Harris to bolster her credentials on a policy issue critical to the young voters key to President Joe Biden’s re-election campaign — and potentially to a future Harris White House run. 

“Given her knowledge base with the issue, her passion for the issue, it strikes me as a smart move for her to broaden that message out to the international audience,” said Roger Salazar, a California political strategist and former aide to then-Vice President Al Gore, a lifetime climate campaigner. 

Yet sending Harris also presents political peril. 

Biden has taken flak from critics for not attending the talks himself after representing the United States at the last two U.N. climate summits since taking office. And climate advocates have questioned the Biden administration’s embrace of the summit’s leader, Sultan al-Jaber, given he also runs the United Arab Emirates’ state-owned oil giant. John Kerry, Biden’s climate envoy, has argued the partnership can help bring fossil fuel megaliths to the table.

Harris has been on a climate policy roadshow in recent months, discussing the issue during a series of interviews at universities and other venues packed with young people and environmental advocates. The administration said it views Harris — a former California senator and attorney general — as an effective spokesperson on climate. 

“The vice president’s leadership on climate goes back to when she was the district attorney of San Francisco, as she established one of the first environmental justice units in the nation,” a senior administration official told reporters on a call previewing her trip. 

Joining Harris in Dubai are Kerry, White House climate adviser Ali Zaidi and John Podesta, who’s leading the White House effort to implement Biden’s signature climate law. 

Biden officials are leaning on that climate law — dubbed the Inflation Reduction Act — to prove the U.S. is doing its part to slash global emissions. Yet climate activists remain skeptical, chiding Biden for separately approving a series of fossil fuel projects, including an oil drilling initiative in Alaska and an Appalachian natural gas pipeline.

Similarly, the Biden administration’s opening COP28 pledge of $17.5 million for a new international climate aid fund frustrated advocates for developing nations combating climate threats. The figure lagged well behind other allies, several of whom committed $100 million or more.

Nonetheless, Harris called for aggressive action in her speech, which was followed by a session with other officials on renewable energy. The vice president committed the U.S. to doubling its energy efficiency and tripling its renewable energy capacity by 2030, joining a growing list of countries. The U.S. also said Saturday it was joining a global alliance dedicated to divorcing the world from coal-based energy. 

Like other world leaders, Harris also used her trip to conduct a whirlwind of diplomacy over the war between Israel and Hamas, which has flared back up after a brief truce.

U.S. National Security Council spokesperson John Kirby said Harris would be meeting with “regional leaders” to discuss “our desire to see this pause restored, our desire to see aid getting back in, our desire to see hostages get out.”

The war has intruded into the proceedings at the climate summit, with Israeli President Isaac Herzog and Palestinian Authority leader Mahmoud Abbas both skipping their scheduled speaking slots on Friday. Iran’s delegation also walked out of the summit, objecting to Israel’s presence.

Kirby said Harris will convey “that we believe the Palestinian people need a vote and a voice in their future, and then they need governance in Gaza that will look after their aspirations and their needs.”

Although Biden won’t be going to Dubai, the administration said these climate talks are “especially” vital, given countries will decide how to respond to a U.N. assessment that found the world’s climate efforts are falling short. 

“This is why the president has made climate a keystone of his administration’s foreign policy agenda,” the senior administration official said.

Robin Bravender reported from Washington, D.C. Zia Weise and Charlie Cooper reported from Dubai. 

Sara Schonhardt contributed reporting from Washington, D.C.

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‘El Loco’ at the helm: What next for Argentina under outsider president Javier Milei?

A former TV personality-turned political maverick, Argentina’s president-elect Javier Milei has promised no half-measures as he bids to make his stricken country “great again”. Riding a wave of anti-establishment rage, the far-right outsider known for his foul-mouthed outbursts will have no time to bask in his stunning victory as he inherits an economy mired in crisis, with no experience and few allies to implement his radical agenda for change.

For years, Argentina’s discredited ruling class has been sitting on a powder keg, unable to lift the country out of a seemingly intractable crisis that has sowed anger and despair in South America’s second-largest economy.

On Sunday, the long-simmering anger boiled over, carrying to power a chainsaw-wielding political outsider who has promised to “blow up” the system and whose own supporters call him “El Loco” (the madman).

Milei, a former economist and TV pundit with almost no political experience, has surged to power on a wave of anger over decades of economic mismanagement. He has vowed to “put an end to the parasitic, stupid, useless political caste that is sinking” a country crippled by triple-digit inflation, where the poverty rate has reached 40%.

The self-styled “anarcho-capitalist” handily defeated his Peronist opponent, Finance Minister Sergio Massa, in a runoff election on Sunday – defying forecasts of a close race in a contest analysts had described as a tussle between two deeply flawed candidates.

“Argentinians were forced to choose between two very unappealing options,” said Benjamin Gedan, head of the Washington-based Wilson Center’s Latin America Program and director of its Argentina Project. He cautioned against reading the result as a wholehearted endorsement of Milei’s personality or agenda.


“On one side, you had the current finance minister who has presided over an utterly failing economy,” Gedan explained. “On the other, a very radical outsider figure who offered something extraordinarily different: who wants to dolarise the economy, close the central bank, liberalise gun ownership and the sale of organs, a quirky individual who has cloned his dog and claims his pets are his senior advisers.”

Trump, Bolsonaro – and Wolverine

Milei’s astonishing rise to power is a measure of the frustration of Argentinian voters, laying bare the depth of resentment at the ruling class and the country’s state of affairs. It is also a product of television channels plugging provocative talking heads to boost their ratings, mirroring the rise of extremist pundits-turned politicians elsewhere.

Read morePushing far-right agenda, French news networks shape election debate

Argentina’s next president made his name by furiously denouncing the “political caste” on television programmes, while also rambling on about inflation and his sex life. His anti-establishment rage resonated with Argentinians yearning for change, while his dishevelled mop of hair – inspired by X-Men anti-hero Wolverine – and profanity-laden rhetoric only contributed to his notoriety.

Two years ago, Milei’s rising television stardom helped him secure a lawmaker seat in Argentina’s lower house of Congress. He was seen as a very long shot for the presidency only months ago – until he scored the most votes in August primary elections, upending the political landscape.

Before entering the public spotlight, Milei was chief economist at Corporación America, one of Argentina’s largest business conglomerates that runs most of the country’s airports. His flagship economic policies include “dollarising” the economy by 2025 to halt the “cancer of inflation”, meaning he would drop the peso – Argentina’s battered currency – and thereby relinquish control over monetary policy.

Milei has cast himself as a fierce adversary of the state, which he accuses of curtailing people’s freedoms and emptying their pockets. At campaign rallies he often appeared on stage revving a chainsaw to symbolically cut the state down to size. He has vowed to slash public spending by 15%, privatise state companies and reduce subsidies on fuel, transport and electricity.

The president-elect, who is due to take office on December 10, started to outline some of his planned policies in a radio interview on Monday morning, saying would quickly move forward with plans to privatise state-run media outlets that gave him negative coverage during the campaign, describing them as “a covert ministry of propaganda”.

“Everything that can be in the hands of the private sector will be in the hands of the private sector,” he told Bueno Aires station Radio Mitre, adding that the state-controlled energy firm YPF would be revamped so it can be “sold in a very, very, very beneficial way for Argentines”.

Javier Milei brandishes a chainsaw at a campaign event in La Plata on September 12, 2023.
Javier Milei brandishes a chainsaw at a campaign event in La Plata on September 12, 2023. © Natacha Pisarenko, AP

An admirer of former US president Donald Trump, Milei has likewise embraced his maverick status, commanding unrivalled attention throughout the campaign with his provocative statements. He has not shied away from lashing at revered compatriots, including Pope Francis, whom he branded an “imbecile” for defending social justice.

It is no surprise that he has adapted Trump’s best known slogan, promising to “Make Argentina Great Again”.

Like Trump and his Brazilian ally Jair Bolsonaro, Milei has appealed to the conservative vote by promising a crusade against progressive politics. He has described sex education as a Marxist plot to destroy the traditional family unit and has proposed a plebiscite to repeal abortion, which Argentina legalised in 2020. He also rejects the notion humans have a role in causing climate change.

All of this is “very worrying not only for women, but for minorities in general, because Milei is waging the same cultural wars that the far right is waging elsewhere”, said Juan-Pablo Ferrero, a senior lecturer in Latin American politics at the University of Bath.

“He is also rolling back on the human rights agenda that has gained Argentina international recognition” since the transition to democracy, Ferrero added. “Minorities will have to resist his moves in parliament and on the streets.”

Taking another page from the Trump and Bolsonaro playbooks, Milei also made unfounded claims of election fraud before Sunday’s runoff, raising concern about his respect for democratic norms. His victory also means the rise of Victoria Villaruel, his controversial running mate who has minimised the number of victims of Argentina’s brutal 1976-1983 dictatorship.

A ‘stress test’ for Argentinian democracy

In the run-up to the vote, Massa and his allies had warned Argentinians that Milei’s plans would sharply curtail hard-won rights and the public services and welfare programs many rely on. Their margin of defeat suggests the strategy – which Milei had dismissed as a “campaign of fear” – may ultimately have backfired.

“Despite Milei, despite all his campaign mistakes, despite all his peculiarities that raise doubts, concerns (…) despite all of that, the demand for change prevailed,” Lucas Romero, the head of Synopsis, a local political consulting firm, told the Associated Press.

Having cast himself as the “only solution” to Argentina’s woes, Milei will have little time to bask in his victory. Even before his election, analysts had already shed doubt on the feasibility of many of his campaign pledges, starting with his much-touted “dolarizacion”.

Ditching the peso in favour of the dollar requires a hefty stock of greenbacks, and the International Monetary Fund (IMF) has warned that Argentina’s dollar reserves are dangerously low. Analysts have flagged the risk of a run on the peso as people panic believing dollarisation is imminent.

“Milei is someone who promises big new ideas but maybe too big and maybe not feasible,” said Gedan, noting that the president-elect has no parliamentary majority to back him and even less of a foothold in local government. “It’s far from clear he can implement his agenda, given his fledgling party, his few allies in Congress, the small and inexperienced group that surrounds him, and the fact that he controls none of the country’s provinces,” he added.

Milei’s Liberty Advances party counts just seven seats out of 72 in the Senate and 38 out of 257 in the lower Chamber of Deputies. He will be hoping to win support from the mainstream right of former president Maurico Macri, which threw its electoral weight behind him ahead of Sunday’s runoff in a bid to ensure defeat for the incumbent Peronist camp.

“It remains to be seen whether this electoral support will translate into a political agreement,” said FRANCE 24’s Argentina expert David Gormezano. “Will some of Macri’s circle join the government? Will conservative lawmakers offer their support? It’s too early to know.”

The lure of power, and a common detestation of Peronism, could be enough of an incentive.

“One can imagine the conservative camp going a long way to back Milei, including in some of his excesses, in order to get their revenge over the Peronist camp,” Gormezano added, though noting that Milei would still be short of a majority in Congress even with conservative support.

According to Ferrero, Milei’s election signals the “biggest stress test” for Argentina’s democracy since the end of military rule. Under the country’s constitution, “presidents have the power to rule by decree in exceptional circumstances – but that tests the system,” he explained. “We will see to what extent he makes use of those powers.”

There will be plenty of scrutiny of Milei’s first steps on the international stage, too. The Argentinian provocateur has already raised alarm bells in a number of Latin American countries and said he would seek to reduce trade with China, Argentina’s second-biggest trading partner after Brazil.

While Trump and Bolsonaro were quick to hail the election result on Sunday, neither is currently in power. The centre-left leaders of Argentina’s two largest neighbours, Brazil and Chile, have been noticeably more guarded in their response.

Brazil’s President Luis Inacio Lula da Silva on Sunday extended his best wishes to the newly elected president, but did not make direct mention of Milei. He had previously expressed his hope that Argentinian voters would choose a president who supports democracy and the Mercosur trading bloc – which Milei has suggested Argentina should leave.

Milei has criticised Brazil’s president multiple times and labelled him an “angry communist” with a “totalitarian” bent. On Monday, a close Lula aide said Argentina’s president-elect must apologise to the Brazilian leader before talks between the two can be organised.

“He freely offended President Lula,” Social Communications Minister Paulo Pimenta told reporters. “It’s up to Milei, as president-elect, to call and apologise.”

Whether at home or on the international stage, Argentina will be sailing through uncharted – and choppy – waters with “El Loco” at the helm.

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In Bullish Trends, Seek Value and Momentum; Three Sectors to Watch as Year-End Rally Progresses

The combination of a pause in the Fed’s rate hikes and strong year-end seasonal tendencies have created an opportunity for investors to end the year on a positive note. The fly in the ointment, in the short term, could be a bad set of readings on the upcoming Consumer (CPI) and Producer (PPI) price gauges. Aside from that, the negative sentiment on Wall Street is still thick enough to push prices higher.

As I noted last week, “The stock market seems to have bottomed, as short sellers panicked and recently frightened buyers rushed back into the markets. It’s about time, as the signs of a pending reversal have been in place for the past two months, namely a slowing economy and fears about the Fed’s rate hike cycle, which have been mounting as investor’s pessimism rose to a fever pitch.”

On the other hand, Fed Chairman Powell proved once again that a few words can kill any rally, when he noted the central bank was “not confident” that inflation was fully vanquished on 11/9/23 and stocks sank. Whether that was just tough talk or a sign that he knows what the CPI and PPI numbers will show is anyone’s guess. Thankfully, the market recovered, although, as I discuss below, breadth remains weaker than one would hope for.

That said, there is no substitute for being prepared for any eventuality. For now, the trend is bullish, so here are three groups that should move higher, barring any unpleasant surprises.

It’s What’s Inside That Matters; Three Sectors Worth Watching as the Year End Rally Develops

Most investors focus on areas of the market which are exhibiting strength. That’s because, in bull markets, strength usually leads to further strength. This, of course, is the essence of momentum investing.

At the same time, it’s also useful to review the action in weak sectors, as underperformers are often future areas of value. Moreover, it’s important to know what you’re buying. Here is what I mean.

The software sector encompasses a wide swath of companies ranging from security companies to app developers, along with those in the increasingly popular AI sector. With so many companies, it’s often more practical to buy into a diversified portfolio, such as an ETF.

One such ETF is the Invesco Dynamic Software ETF (IGPT), recently renamed Invesco AI and Next Gen Software ETF, which is closing in on what could be a major breakout. But don’t let the title fool you; this ETF holds the usual large-cap tech stocks that typically rally when the tech sector moves into a rising trend, such as what is currently developing and is evident in the price chart for the Invesco QQQ Trust ETF (QQQ). QQQ holds many of the same companies, but currently trades at ten times the price of IGPT.

So, you can pay ten times more for QQQ, or get the same general market exposure via IGPT for a fraction of the price. Consider that IGPT is currently trading below $40 per share, which means you can own shares in Meta (META), Alphabet (GOOGL), Adobe (ADBE), and even NVDIA (NVDA) for a fraction of the price of each of these blue chips.

And here’s what the price chart is telling us regarding IGPT:

  • The ETF is back in bullish territory, as it just crossed above its 200-day moving average;
  • Accumulation/Distribution (ADI) is moving higher after a recent consolidation as short sellers leave the scene;
  • On Balance Volume (OBV) is in an established uptrend, as buyers come in; and
  • A move above $36 will likely take this ETF higher, as long as the bullish trend in the technology sector remains in place.

Another bullish sector which remains undervalued is the uranium mining sector, as in the Global X Uranium ETF (URA), in which I own shares and which is a core holding at Joe Duarte in the Money Options.com. Nuclear power is slowly becoming an option for areas of the world which are trying to find a compromise between clean fuels and reliable power generation.

URA’s appeal has been boosted by the demise of the renewable power sector over the last few months, due to the expense burden and supply chain challenges required to build wind turbines. Note the difference in the performance of URA versus the First Trust ISE Global Wind Energy ETF (FAN).

For one, URA is in a bullish consolidation pattern after its recent breakout. Note the excellent support at $26, where the 50-day moving average and a large Volume-by-Price (VBP) bar continue to attract buyers. Moreover, note the bullish uptrend in OBV as buyers sneak into the shares.

Certainly, FAN is in a consolidation pattern of its own after its recent collapse. Note, however, that neither ADI or OBV have turned up yet, which means that there is currently little interest in these shares from bullish investors. On the other hand, from a contrarian standpoint, it’s not a bad idea to keep an eye on this ETF as the cycle works itself out. All it would take for this sector to bottom out would be something like a large infusion of government cash, such as what may be materializing in Europe, according to reports.

I recently recommended an ETF which is now breaking out in a big way. Join the smart money at Joe Duarte in the Money Options.com, where you can have access to this ETF and a wide variety of bullish stock picks FREE with a two-week trial subscription.

Bonds Retain Bullish Tone Ahead of Inflation Numbers

As I noted last week, bond yields have made at least a short-term top. In fact, just three weeks ago, the U.S. Ten Year note yield (TNX) hit the 5% point, an event that unhinged both stock and bond traders.

Since then, things have quieted down and TNX has settled into a trading range, with 4.5% and the 50-day moving average as the floor.

If the inflation numbers are bullish, and TNX breaks below 4.5%, expect a big move up in stocks.

Keep an eye on the SPDR S&P Homebuilders ETF (XHB), specially the $78-$80 area. If CPI and PPI are bullish and bond yields fall, XHB should rise as short sellers get squeezed. Note the improvement in ADI, as the shorts cover their bets, while OBV is still holding steady, as buyers remain patient.

I’ve recently posted several detailed articles on mortgage rates, bonds, and homebuilders at my Buy Me a Coffee page. You can access them here. For the perfect price chart set up, check out my latest Your Daily Five video here.

Market Breadth Lags Rally as Indexes Outperform

The NYSE Advance Decline line (NYAD) has bottomed out, but has yet to cross above its 50- or 200-day moving averages. So, for now, NYAD is neutral to slightly positive. If it doesn’t show a bit more pop in the next few weeks, it may signal that the rally will have short legs.

In contrast, the Nasdaq 100 Index (NDX) is nearing a breakout after rallying above its 50-day moving average. Both ADI and OBV turned higher as short sellers cover (ADI) and buyers move in (OBV). A move above 15,800-16,000 would likely extend the rally further.

The S&P 500 (SPX) is also lagging NDX, but has delivered a minor breakout above 4400. SPX is well above its 200-day moving average, returning to bullish territory after its recent dip below 4150. Moreover, it has now survived a test of the 4350 support area.

VIX is Back Below 20

The CBOE Volatility Index (VIX) is well below 20. This is bullish.

A rising VIX means traders are buying large volumes of put options. Rising put option volume from leads market makers to sell stock index futures, hedging their risk. A fall in VIX is bullish, as it means less put option buying, and it eventually leads to call buying. This causes market makers to hedge by buying stock index futures, raising the odds of higher stock prices.

To get the latest information on options trading, check out Options Trading for Dummies, now in its 4th Edition—Get Your Copy Now! Now also available in Audible audiobook format!

#1 New Release on Options Trading!

Good news! I’ve made my NYAD-Complexity – Chaos chart (featured on my YD5 videos) and a few other favorites public. You can find them here.

Joe Duarte

In The Money Options

Joe Duarte is a former money manager, an active trader, and a widely recognized independent stock market analyst since 1987. He is author of eight investment books, including the best-selling Trading Options for Dummies, rated a TOP Options Book for 2018 by Benzinga.com and now in its third edition, plus The Everything Investing in Your 20s and 30s Book and six other trading books.

The Everything Investing in Your 20s and 30s Book is available at Amazon and Barnes and Noble. It has also been recommended as a Washington Post Color of Money Book of the Month.

To receive Joe’s exclusive stock, option and ETF recommendations, in your mailbox every week visit https://joeduarteinthemoneyoptions.com/secure/order_email.asp.

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Fed holds rates steady, upgrades assessment of economic growth

The Federal Reserve on Wednesday again held benchmark interest rates steady amid a backdrop of a growing economy and labor market and inflation that is still well above the central bank’s target.

In a widely expected move, the Fed’s rate-setting group unanimously agreed to hold the key federal funds rate in a target range between 5.25%-5.5%, where it has been since July. This was the second consecutive meeting that the Federal Open Market Committee chose to hold, following a string of 11 rate hikes, including four in 2023.

The decision included an upgrade to the committee’s general assessment of the economy. Stocks rallied on the news, with the Dow Jones Industrial Average gaining 212 points on the session.

“The process of getting inflation sustainably down to 2% has a long way to go,” Fed Chair Jerome Powell said in remarks at a news conference. He stressed that the central bank hasn’t made any decisions yet for its December meeting, saying that “The committee will always do what it thinks is appropriate at the time.”

Powell added that the FOMC is not considering or even discussing rate reductions at this time.

He also said the risks around the Fed doing too much or too little to fight inflation have become more balanced.

“This signals that while there is a potential risk for the Fed to do more, the bar has become higher for rate hikes, and we are clearly seeing this play out with two consecutive meetings of no policy action from the Fed,” said Charlie Ripley, senior investment strategist at Allianz Investment Management.

Economy has ‘moderated’

The post-meeting statement had indicated that “economic activity expanded at a strong pace in the third quarter,” compared with the September statement that said the economy had expanded at a “solid pace.” The statement also noted that employment gains “have moderated since earlier in the year but remain strong.”

Gross domestic product expanded at a 4.9% annualized rate in the third quarter, stronger than even elevated expectations. Nonfarm payrolls growth totaled 336,000 in September, well ahead of the Wall Street outlook.

There were few other changes to the statement, other than a notation that both financial and credit conditions had tightened. The addition of “financial” to the phrase followed a surge in Treasury yields that has caused concern on Wall Street. The statement continued to note that the committee is still “determining the extent of additional policy firming” that it may need to achieve its goals. “The Committee will continue to assess additional information and its implications for monetary policy,” the statement said.

Wednesday’s decision to stay put comes with inflation slowing from its rapid pace of 2022 and a labor market that has been surprisingly resilient despite all the interest rate hikes. The increases have been targeted at easing economic growth and bringing a supply and demand mismatch in the labor market back into balance. There were 1.5 available jobs for every available worker in September, according to Labor Department data released earlier Wednesday.

Core inflation is currently running at 3.7% on an annual basis, according to the latest personal consumption expenditures price index reading, which the Fed favors as an indicator for prices.

While that has decreased steadily this year, it is well above the Fed’s 2% annual target.

The post-meeting statement indicated that the Fed sees the economy holding strong despite the rate hikes, a position in itself that could prompt policymakers into a prolonged tightening stance.

In recent days, the “higher-for-longer” mantra has become a central theme for where the Fed is headed. While multiple officials have said they think rates can stay where they are as the Fed assesses the impact of the previous increases, virtually none have said they are considering cuts anytime soon. Market pricing indicates the first cut could come around June 2024, according to CME Group data.

Surging bond yields

The restrictive stance has been a factor in the surging bond yields. Treasury yields have risen to levels not seen since 2007, the earliest days of the financial crisis, as markets parse out what is ahead. Yields and prices move in opposite direction, so a rise in the former reflects waning investor appetite for Treasurys, generally considered the largest and most liquid market in the world.

The surge in yields is seen as a byproduct of multiple factors, including stronger-than-expected economic growth, stubbornly high inflation, a hawkish Fed and an elevated “term premium” for bond investors demanding higher yields in return for the risk of holding longer-duration fixed income.

There also are worries over Treasury issuance as the government looks to finance its massive debt load. The department this week said it will be auctioning off $776 billion of debt in the fourth quarter, starting with $112 billion across three auctions next week.

During a recent appearance in New York, Powell said he thinks the economy may have to slow further to bring down inflation. Most forecasters expect economic growth to tail off ahead.

A Treasury Department forecast released earlier this week indicated that the pace of growth likely will tumble to 0.7% in the fourth quarter and just 1% for the full year in 2024. Projections the Fed released in September put expected GDP growth at 1.5% in 2024.

In the wake of the Fed’s comments, the Atlanta Fed’s GDPNow growth tracker slashed expectations for fourth-quarter GDP almost in half to 1.2% from 2.3%. The gauge takes in data on a real-time basis and adjusts its estimates with the latest information.

Whitney Watson, co-CIO of fixed income and liquidity solutions at Goldman Sachs Asset Management, said it’s likely the Fed will keep its policy unchanged into next year.

“There are risks in both directions,” Watson said. “The rise in inflation expectations, owing to higher gas prices, combined with strong economic activity, preserves the prospect of another rate hike. Conversely, a more pronounced economic slowdown caused by the growing impact of higher interest rates might accelerate the timeline for transitioning to rate cuts.”

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Energy crisis: Who has the priciest electricity and gas in Europe?

The pre-tax prices of electricity and natural gas soared after Russia’s full-scale invasion of Ukraine, but they’re now on the decline. Although slightly higher than the second half of 2022, the final prices for customers, including taxes, reached their peak in the first half of 2023.


Electricity and gas costs, which experienced a sharp increase after the Russian invasion of Ukraine, are now steadying in Europe, after peaking in the first half of 2023.

While pre-tax prices are decreasing, some countries have already frozen the support measures they offered households, resulting in higher consumer prices. 

The EU appears to be more ready for winter this year now that it has largely replaced Russian energy, but it’s worth noting that there’s disparity between electricity and natural gas prices among individual countries both within and outside the bloc.

Which countries have the highest and lowest prices in Europe, and by how much have electricity and natural gas prices increased since Russia’s full-scale invasion of Ukraine started in February 2022?

In the first half of 2023, average household electricity prices including all taxes in the EU rose from €25.3 per 100 kWh to €28.9 per 100 kWh, compared with the same period in 2022. 

Average natural gas prices also climbed from €8.6 per 100 kWh to €11.9 per 100 kWh in the same period. These are the highest prices recorded by Eurostat, the EU’s official statistical office.

Looking at the percentage changes year-over-year, the electricity prices in the EU increased by 14.5% in the first half of 2023, and gas prices rose by 37.9%. These figures are lower than the second half of 2022, when the percentage changes year-over-year reached their peak.

The figures suggest that electricity and gas prices are stabilising in the EU, according to Eurostat, even though the final consumer prices with taxes are slightly higher than in the second half of 2022: Pre-tax prices on electricity and natural gas are decreasing, yet countries are partly withdrawing their energy price support measures, explaining the increase.

In the first half of 2023, electricity prices including taxes for household consumers in the European Economic Area (EEA) ranged from €11.4 per 100 kWh in Bulgaria to €47.5 per 100 kWh in the Netherlands.

The Netherlands was followed by Belgium (€43.5), Romania (€42) and Germany (€41.3).

Electricity prices were higher in nine EU Member States than the EU average. 

As France has the highest share of nuclear in its electricity mix (68.9% in 2021) in the EU, its electricity prices were significantly below the EU average, with €23.2 per 100 kWh in the first half of 2023.

This was not the case for Belgium, where the share of nuclear in its electricity production was 50.6%. Belgium came in second on the most expensive electricity price list.

EU candidate countries had the cheapest electricity

When the EU’s candidate countries are also included, Turkey recorded the cheapest electricity prices with €8.4 per 100 kWh. The six countries at the bottom were all EU candidates, with prices fluctuating little between them.

The average household gas prices in the first half of 2023 were lowest in Hungary (€3.4 per 100 kWh), Croatia (€4.1) and Slovakia (€5.7), and highest in the Netherlands (€24.8), Sweden (€21.9), and Denmark (€16.6).

The EU average was €11.9. Gas prices were higher in eight EU member states than the EU average, suggesting households in these countries paid substantially more.

Gas prices were lowest in Turkey (€2.5) when EU candidate countries are included. Contrary to electricity prices, the candidates didn’t have the cheapest gas prices, as shown by the likes of North Macedonia (€10.4) and Bosnia and Herzegovina (€5.9).

In the first half of 2023, the Netherlands had the most expensive electricity and gas prices in the EU.


Electricity and gas prices rose in almost all EU countries

Household electricity prices increased in 22 EU countries in the first half of 2023 compared with the first half of 2022, according to the Eurostat data, and gas prices climbed in 20 out of the 24 EU members.

Why did Dutch electricity prices skyrocket by almost 1000%?

The Netherlands recorded the largest increase year-over-year in electricity prices by a country mile, at 953%. According to Eurostat, this extraordinary rise is related to several factors: not only were tax relief measures from 2022 discontinued in 2023, but at the same time, household electricity taxes doubled. 

However, the government is due to incorporate a price cap which will lower prices at all levels quite significantly in 2023.

The Netherlands was followed by Lithuania (88%), Romania (77%) and Latvia (74%).

On the flipside, electricity prices fell in five EU member states, with Spain recording a significant decrease of 41%, followed by Denmark at 16%.


Gas prices climbed more than 100% in some countries

Natural gas prices rose substantially in several countries across Europe, climbing more than 100% per cent in Latvia, Romania and Austria. They were followed by the Netherlands (100%), Turkey (92%) and Ireland (73%).

EU countries Italy, Estonia and Croatia saw decreases less than 1%. North Macedonia, an EU candidate, showed the largest fall overall by 14%. All these changes are based on national currencies.

EU energy imports from Russia dramatically fell

Eurostat has recorded a dramatic shift in the amount of energy the EU has imported from Russia since it launched its war against Ukraine. A huge growth in renewables, as well as gas from Norway and the US, has helped to make up for the dramatic drop in Russian energy.

The most striking change can be seen in natural gas. 

EU natural gas imports from Russia made up almost 50% of the total before the war. This decreased significantly in 2022, down to 12% in October.


It remains to be seen whether the recent outbreak of the Israel Hamas war will have a similar, lasting effect on European energy supplies and prices.

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It’s time to hang up on the old telecoms rulebook

Joakim Reiter | via Vodafone

Around 120 years ago, Guglielmo Marconi planted the seeds of a communications revolution, sending the first message via a wireless link over open water. “Are you ready? Can you hear me?”, he said. Now, the telecommunications industry in Europe needs policymakers to heed that call, to realize the vision set by its 19th-century pioneers.

Next-generation telecommunications are catalyzing a transformation on par with the industrial revolution. Mobile networks are becoming programmable platforms — supercomputers that will fundamentally underpin European industrial productivity, growth and competitiveness. Combined with cloud, AI and the internet of things, the era of industrial internet will transform our economy and way of life, bringing smarter cities, energy grids and health care, as well as autonomous transport systems, factories and more to the real world.

5G is already connecting smarter, autonomous factory technologies | via Vodafone

Europe should be at the center of this revolution, just as it was in the early days of modern communications.

Next-generation telecommunications are catalyzing a transformation on par with the industrial revolution.

Even without looking at future applications, the benefits of a healthy telecoms industry for society are clear to see. Mobile technologies and services generated 5 percent of global GDP, equivalent to €4.3 trillion, in 2021. More than five billion people around the world are connected to mobile services — more people today have access to mobile communications than they do to safely-managed sanitation services. And with the combination of satellite solutions, the prospect of ensuring every person on the planet is connected may soon be within reach.

Satellite solutions, combined with mobile communications, could eliminate coverage gaps | via Vodafone

In our recent past, when COVID-19 spread across the world and societies went into lockdown, connectivity became critical for people to work from home, and for enabling schools and hospitals to offer services online.  And with Russia’s invasion of Ukraine, when millions were forced to flee the safety of their homes, European network operators provided heavily discounted roaming and calling to ensure refugees stayed connected with loved ones.

A perfect storm of rising investment costs, inflationary pressures, interest rate hikes and intensifying competition from adjacent industries is bearing down on telecoms businesses across Europe.

These are all outcomes and opportunities, depending on the continuous investment of telecoms’ private companies.

And yet, a perfect storm of rising investment costs, inflationary pressures, interest rate hikes and intensifying competition from adjacent industries is bearing down on telecoms businesses across Europe. The war on our continent triggered a 15-fold increase in wholesale energy prices and rapid inflation. EU telecoms operators have been under pressure ever since to keep consumer prices low during a cost-of-living crisis, while confronting rapidly growing operational costs as a result. At the same time, operators also face the threat of billions of euros of extra, unforeseen costs as governments change their operating requirements in light of growing geopolitical concerns.

Telecoms operators may be resilient. But they are not invincible.

The odds are dangerously stacked against the long-term sustainability of our industry and, as a result, Europe’s own digital ambitions. Telecoms operators may be resilient. But they are not invincible.

The signs of Europe’s decline are obvious for those willing to take a closer look. European countries are lagging behind in 5G mobile connectivity, while other parts of the world — including Thailand, India and the Philippines — race ahead. Independent research by OpenSignal shows that mobile users in South Korea have an active 5G connection three times more often than those in Germany, and more than 10 times their counterparts in Belgium.

Europe needs a joined-up regulatory, policy and investment approach that restores the failing investment climate and puts the telecoms sector back to stable footing.

Average 5G connectivity in Brazil is more than three times faster than in Czechia or Poland. A recent report from the European Commission — State of the Digital Decade (europa.eu) shows just how far Europe needs to go to reach the EU’s connectivity targets for 2030.

To arrest this decline, and successfully meet EU’s digital ambitions, something has got to give. Europe needs a joined-up regulatory, policy and investment approach that restores the failing investment climate and puts the telecoms sector back to stable footing.

Competition, innovation and efficient investment are the driving forces for the telecoms sector today. It’s time to unleash these powers — not blindly perpetuate old rules. We agree with Commissioner Breton’s recent assessment: Europe needs to redefine the DNA of its telecoms regulation. It needs a new rulebook that encourages innovation and investment, and embraces the logic of a true single market. It must reduce barriers to growth and scale in the sector and ensure spectrum — the lifeblood of our industry — is managed more efficiently. And it must find faster, futureproofed ways to level the playing field for all business operating in the wider digital sector.  

But Europe is already behind, and we are running out of time. It is critical that the EU finds a balance between urgent, short-term measures and longer-term reforms. It cannot wait until 2025 to implement change.

Europeans deserve better communications technology | via Vodafone

When Marconi sent that message back in 1897, the answer to his question was, “loud and clear”. As Europe’s telecoms ministers convene this month in León, Spain, their message must be loud and clear too. European citizens and businesses deserve better communications. They deserve a telecoms rulebook that ensures networks can deliver the next revolution in digital connectivity and services.

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Getting to 2% inflation won’t be easy. This is what will need to happen, and it might not be pretty

A construction in a multifamily and single family residential housing complex is shown in the Rancho Penasquitos neighborhood, in San Diego, California, September 19, 2023.

Mike Blake | Reuters

In theory, getting inflation closer to the Federal Reserve’s 2% target doesn’t sound terribly difficult.

The main culprits are related to services and shelter costs, with many of the other components showing noticeable signs of easing. So targeting just two areas of the economy doesn’t seem like a gargantuan task compared to, say, the summer of 2022 when basically everything was going up.

In practice, though, it could be harder than it looks.

Prices in those two pivotal components have proven to be stickier than food and gas or even used and new cars, all of which tend to be cyclical as they rise and fall with the ebbs and flows of the broader economy.

Instead, getting better control of rents, medical care services and the like could take … well, you might not want to know.

“You need a recession,” said Steven Blitz, chief U.S. economist at GlobalData TS Lombard. “You’re not going to magically get down to 2%.”

Annual inflation as measured by the consumer price index fell to 3.7% in September, or 4.1% if you kick out volatile food and energy costs, the latter of which has been rising steadily of late. While both numbers are still well ahead of the Fed’s goal, they represent progress from the days when headline inflation was running north of 9%.

The CPI components, though, told of uneven progress, helped along by an easing in items such as used-vehicle prices and medical care services but hampered by sharp increases in shelter (7.2%) and services (5.7% excluding energy services).

Drilling down further, rent of shelter also rose 7.2%, rent of primary residence was up 7.4%, and owners’ equivalent rent, pivotal figures in the CPI computation that indicates what homeowners think they could get for their properties, increased 7.1%, including a 0.6% gain in September.

Without progress on those fronts, there’s little chance of the Fed achieving its goal anytime soon.

Uncertainty ahead

“The forces that are driving the disinflation among the various bits and micro pieces of the index eventually give way to the broader macro force, which is rising, which is above-trend growth and low unemployment,” Blitz said. “Eventually that will prevail until a recession comes in, and that’s it, there’s nothing really much more to say than that.”

On the bright side, Blitz is among those in the consensus view that see any recession being fairly shallow and short. And on the even brighter side, many Wall Street economists, Goldman Sachs among them, are coming around to the view that the much-anticipated recession may not even happen.

In the interim, though, uncertainty reigns.

“Sticky-price” inflation, a measure of things such as rents, various services and insurance costs, ran at a 5.1% pace in September, down a full percentage point from May, according to the Atlanta Fed. Flexible CPI, including food, energy, vehicle costs and apparel, ran at just a 1% rate. Both represent progress, but still not a goal achieved.

Markets are puzzling over what the central bank’s next step will be: Do policymakers slap on another rate hike for good measure before year-end, or do they simply stick to the relatively new higher-for-longer script as they watch the inflation dynamics unfold?

“Inflation that is stuck at 3.7%, coupled with the strong September employment report, could be enough to prompt the Fed to indeed go for one more rate hike this year,” said Lisa Sturtevant, chief economist for Bright MLS, a Maryland-based real estate services firm. “Housing is the key driver of the elevated inflation numbers.”

Higher interest rates’ biggest impact has been on the housing market in terms of sales and financing costs. Yet prices are still elevated, with concern that the high rates will deter construction of new apartments and keep supply constrained.

Those factors “will only lead to higher rental prices and worsening affordability conditions in the long run,” wrote Christopher Bruen, senior director of research at the National Multifamily Housing Council. “Rising rates threaten the strength of the broader job market and economy, which has not yet fully digested the rate hikes already enacted.”

Longer-run concerns

The notion that rate increases totaling 5.25 percentage points have yet to wind their way through the economy is one factor that could keep the Fed on hold.

That, however, goes back to the idea that the economy still needs to cool before the central bank can complete the final mile of its race to bring down inflation to the 2% target.

One positive in the Fed’s favor is that pandemic-related factors largely have washed out of the economy. But other factors linger.

“Pandemic-era effects have a natural gravitational pull and we’ve seen that take place over the course of the year,” said Marta Norton, chief investment officer for the Americas at Morningstar Wealth. “However, bringing inflation the remainder of the distance to the 2% target requires economic cooling, no easy feat, given fiscal easing, the strength of the consumer and the general financial health in the corporate sector.”

Fed officials expect the economy to slow this year, though they have backed off an earlier call for a mild recession.

Policymakers have been banking on the notion that when existing rental leases expire, they will be renegotiated at lower prices, bringing down shelter inflation. However, the rising shelter and owners’ equivalent rent numbers are running counter to that thinking even though so-called asking rent inflation is easing, said Stephen Juneau, U.S. economist at Bank of America.

“Therefore, we must wait for more data to see if this is just a blip or if there is something more fundamental driving the increase such as higher rent increases in larger cities offsetting softer increases in smaller cities,” Juneau said in a note to clients Thursday. He added that the CPI report “is a reminder that we do not have good historic examples to lean on” for long-term patterns in rent inflation.

Core service numbers show inflation is still relatively elevated, says Nationwide's Kathy Bostjancic

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Morning Digest | Army officer injured in ‘grenade accident’ at a post in J&K’s Rajouri; supply copy of FIR to NewsClick founder, court tells Delhi Police, and more

Army says officer injured in ‘grenade accident’ at a post in J&K’s Rajouri

The Army on October 5 evening said one officer has been injured in a likely grenade accident at a post in Jammu and Kashmir’s Rajouri sector. “The officer was evacuated and stable post initial treatment. Further investigation of the incident in progress,” the Army said in an official statement. 

Sikkim flash floods death toll mounts to 18; searches on for 98 missing people

The toll in the flash flood in Sikkim mounted to 18 on Thursday as Army and NDRF teams worked their way through slushy earth and fast flowing water in the Teesta river basin and downstream north Bengal for the second day in search of those who were swept away and are still missing, officials said. Ninety eight people, including 22 army personnel, remained missing after a cloudburst over Lhonak Lake in North Sikkim in the early hours of Wednesday triggered the flash flood, Chief Secretary V.B. Pathak said.

Supply copy of FIR to NewsClick founder, court tells Delhi Police

The Patiala House Court on Thursday allowed news portal NewsClick founder Prabir Purkayastha and its human resource head Amit Chakraborty to get a copy of the First Information Report (FIR) in the Unlawful Activities (Prevention) Act (UAPA) case filed against them by the Delhi Police. The police had opposed the application earlier in the day. Additional sessions judge Hardeep Kaur passed the order after hearing the counsel of the accused, Arshdeep Singh, and Additional Public Prosecutor Atul Srivastava.

Amit Shah suggests uniform anti-terrorism structure under NIA for all States 

Union Home Minister Amit Shah said on Thursday that along with a ruthless approach, an uniform anti-terrorism structure should be established under the purview of National Investigation Agency (NIA) in all the States. Mr. Shah made the remarks at the inauguration of the two-day anti-terror conference organised by the NIA.

INDIA parties speak up for arrested AAP MP Sanjay Singh; Congress gives qualified support

The Congress has extended qualified support to Aam Aadmi Party leader and Rajya Sabha MP Sanjay Singh, who was arrested on Wednesday by the Enforcement Directorate in connection with its money laundering probe linked to the Delhi excise policy case. Equating Mr. Singh’s arrest with that of Congress MLA Sukhpal Singh Khaira in Punjab, the party’s general secretary (organisation) K.C. Venugopal said, “We cannot become those we oppose”. The remark was also a swipe at the AAP government in Punjab over the arrest of Mr. Khaira. 

IIT-Bombay ‘veg. table’ row | Dean says policy made by elected body, calls protest ‘provocative, insensitive’

As voices against the policy of a hostel canteen of the Indian Institute of Technology-Bombay (IIT-B), segregating certain tables for vegetarian food begin to grow louder within the campus, the Dean of Student Affairs (SA) on October 5 sent an email to all students and staff on the issue, the first from the administration on the controversy.

India, Canada in conversation on parity of diplomatic staff: MEA

India and Canada are in conversation about attaining “parity” in the diplomatic staff posted in each other’s missions, the Ministry of External Affairs said on Thursday. During his weekly press briefing, MEA spokesperson Arindam Bagchi reiterated India’s charge of Canadian “interference” in India’s internal affairs and indicated that India expects Canada to reduce the total number of its diplomats stationed here. 

India conveys concerns to U.S. over American envoy to Pakistan’s visit to Gilgit-Baltistan

India on Thursday said it raised its concerns with the U.S. over American envoy to Islamabad Donald Blome’s recent visit to Gilgit-Baltistan in Pakistan-occupied Kashmir and called on the world community to respect the country’s sovereignty and territorial integrity. External Affairs Ministry Spokesperson Arindam Bagchi asserted that Jammu and Kashmir is an integral part of India.

Reports say dozens have been killed and wounded as drone strikes hit a Syrian military ceremony

A drone attack struck a packed graduation ceremony for military officers in the Syrian city of Homs on Thursday, killing and wounding dozens, including civilians and military personnel, reports said. No one immediately claimed responsibility for the attack and the reports could not be independently confirmed.

EU Parliament decries ‘ethnic cleansing’ in Nagorno-Karabakh

EU lawmakers on Thursday accused Azerbaijan of carrying out “ethnic cleansing” against the Armenian residents of Nagorno-Karabakh, and urged the bloc to impose sanctions on Baku. Almost all of the 120,000-strong ethnic Armenia population has fled the breakaway region since Azerbaijan seized it back in a lightning offensive last month.

Chinese firm sold satellites for intelligence to Russia’s Wagner: contract

Russian mercenary group Wagner in 2022 signed a contract with a Chinese firm to acquire two satellites and use their images, aiding its intelligence work as the organisation sought to push Russia’s invasion of Ukraine, according to a document seen by AFP. The contract was signed in November 2022, over half a year into Moscow’s invasion of Ukraine in which the Wagner group under its founder Yevgeny Prigozhin was playing a key role on the battlefield.

Musk’s X strips headlines from news links

Elon Musk’s social media platform X has stripped headlines from news articles shared by users, in a move likely to further worsen relations with media groups. The tycoon has long railed against the “legacy media” and claims X, formerly Twitter, is a better source of information. However, he said the latest change was for “aesthetic” reasons — news and other links now appear only as pictures with no accompanying text.

Political stability, policy consistency needed to ensure Indian economy’s growth to world’s third-largest: FM

Taking on critics who argue that India will become the world’s third largest economy in a few years with or without government intervention, Finance Minister Nirmala Sitharaman said that political stability and policy consistency was essential for the prospect to turn into a reality, especially in a world marred by unprecedented volatility. 

Lower prices for tomatoes, chillis and LPG may have pulled food inflation down last month

Retail food inflation may have eased in September, thanks to cooling tomato prices and a reduction in LPG cylinder prices, even as onion prices rose further during the month, a CRISIL study on food plate costs suggested. Retail inflation had eased to 6.83% in August from a 15-month high of 7.44% in July, but food price inflation stood at about 10%.

SEBI to tell court Adani inquiry began 2014, but hit dead end: sources

Markets regulator SEBI will tell the Supreme Court why it paused, then restarted investigations into the Adani Group after a tip in 2014 amid questions around regulatory delays, according to two people with direct knowledge of the matter. SEBI will say for the first time that India’s customs authority alerted it to an alleged misuse of offshore funds by Adani Group companies in 2014 but that the initial investigation did not yield anything and was paused in 2017, the sources said.

Asian Games | Indian compound archery teams’ domination complete

With the scores tied at 200 each, Indian archers needed to hit three perfect 10s in a row to stay alive in the compound women’s team final at the Fuyang Arena. First, Parneet Kaur hit a 10 before Aditi Swami and Jyothi Surekha followed suit with 10s to put the pressure back on Chinese Taipei. Taipei slipped up with the first arrow which assured India’s gold medal and it won 230-229 Later, the trio of Abhishek Verma, Ojas Pravin Deotale and Prathamaesh Jawkar won the men’s team gold by beating South Korea 235-230 in the final.

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Why hard-right libertarian Javier Milei wants to dollarise Argentina’s economy

Javier Milei, the “anarcho-capitalist” presidential candidate who took the lead in the August primaries with his “Liberty Advances” political coalition, owes much of his electoral success to his promise to dollarise the Argentine economy. Disoriented by hyperinflation and rising poverty, many Argentinians see the adoption of the US dollar as the country’s official currency as the long-awaited solution to an economic crisis that they’ve been struggling to escape from since 2018.

With inflation reaching new heights – 124 percent per year – and yet another devaluation of the peso – by almost 20 percent – in August, Argentina increasingly looks like it will never wake up from its economic nightmare. In this context, the emergence of Javier Milei, an anti-system candidate who preaches economic shock measures, came as little surprise to many observers. 

The herald of a “libertarian” capitalism imported from the US that aims to reduce the role of the state to a bare minimum, this former economist turned media animal largely won the “open primaries” of August 13 – essentially a nationwide poll to determine each party’s candidates – organised before the first round of the presidential election, which will be held on October 22. With 29.86 percent of the vote, Milei achieved a result beyond anything that any poll had predicted, beating both Patricia Bullrich, the candidate for the right-wing Juntos por el cambio, and the Peronist candidate, and current finance minister, Sergio Massa.

Read moreFar-right populist Milei finishes first in Argentina’s presidential primary

Since then, the proposals of this overbearing candidate – who wants, for example, to put an end to the political “caste”, who he compares to rats – have taken centre-stage: abolish the central bank and eight ministries (including those of health and education), review the liberalisation of abortion (obtained by Argentinian women in 2021) and abolish all legislation on environmental protection. But it’s his flagship proposal to ditch the peso in favour of the dollar – “dolarizacion” – that has become the subject of endless debates.

Rejection of the political class 

“Given the poor record of the two previous presidencies, that of Mauricio Macri and that of Alberto Fernandez, the speech of Javier Milei, who wants to be a candidate who breaks with the elites who would have governed Argentina badly, has credibility and substance,” explained Gaspard Estrada, executive director of Sciences Po’s Political Observatory of Latin America and the Caribbean (OPALC). “From my point of view, it’s because of this that Javier Milei’s proposals have drawn the interest of some parts of the public.”

Indeed, after the presidency of liberal Mauricio Macri (2015-2019) and that of centre-left Peronist Alberto Fernandez (2019-2023), the combined effects of inflation, devaluations, the Covid-19 pandemic and budget deficits have pushed the country’s poverty rate from 30 percent to more than 40 percent.

So when Milei brandishes a chainsaw as he promises to cut state spending, or when he flourishes giant 100-dollar bills bearing his own face, he inevitably attracts some degree of sympathy in the face of a disoriented political class that no longer has any solid answers to offer Argentinians a way out of an endless economic crisis.

Is it even possible?

Since he became the favourite, though, the former economist has moderated his project somewhat. Dollarisation has subsequently become a “system of free competition of currencies” in which the dollar would ultimately triumph over the peso.

For most economists, this plan does not hold water. Like many of his colleagues, Eduardo Levy Yeyati believes that “dollarisation usually requires a stock of liquid dollars to replace the monetary base”. According to Yeyati, “this amounts to roughly $20 billion to $25 billion in international reserves” in Argentina, but “its central bank has recently posted negative net reserves”. 

“Official dollarisation would require a very substantive loan,” he wrote.

Borrowing on international markets being a priori impossible for an Argentina constantly on the verge of default, this promise from the anti-elite candidate might leave some scratching their heads. The IMF, a key player in Argentina’s political and economic life for at least a quarter of a century, has made its concerns known

“Dollarisation is not a substitute for sound macroeconomic policies,” IMF spokesperson Julie Kozack told reporters on September 28.

Presidential candidate Javier Milei waving a chainsaw during a political rally in La Plata, Buenos Aires Province, Argentina, on September 12, 2023. © AFP – Marcos Gomez, AG La Plata via AFP

For the economists around Milei, such as Emilio Ocampo, who would take over the direction of the central bank in the event of the ultraliberal candidate’s election, it’s a non-issue. For him, “dollarisation has already been done” de facto as, according to central bank data, Argentinians have nearly 245 billion dollars “under the mattress” – that is to say, held in cash or in foreign accounts – despite fairly strict foreign exchange controls. 

“The Argentinians have already chosen their currency,” the candidate never tires of saying, alluding to Argentinians’ frantic race to convert every last peso into dollars.

Dreaming of dollarisation

Tempted by dollarisation, Argentines seem to have forgotten that the previous experiment of that sort ended in 2001 in an unprecedented debacle: a banking crash, bloody riots, the plundering of people’s savings and an explosion of poverty.

In the 1990s, to remedy a hyperinflation that had reached 2,000 to 3,000 percent a year, President Carlos Menem succeeded in establishing “uno por uno” convertability – one dollar for one peso. This inflation-free decade, which Argentines have dubbed “pizza and champagne”, is still remembered as a period of opulence, notably for members of the middle class, who found themselves suddenly rich in dollars.

Read moreStruck by an inflation crisis, Argentinians seek any means necessary to stay afloat

Dollarisation as a remedy for crisis has not met with a great deal of success elsewhere in Latin America either. Across the continent, three countries have trod this path: Panama in 1904, Equador in 1999 and El Salvador in 2000.

Economic journalist Romaric Godin notes, however, that unlike Argentina, “the economies of dollarised countries are often small”, and that in the case of El Salvador and Equador, these two countries can rely on a stable flow of dollars from oil exports (in the case of Equador) and remittances from emigrants living and working in the US.

Estrada also told FRANCE 24 that “the Equadorian experience shows that dollarisation in itself is not an instrument to solve the problems of an emerging economy in Latin America”. 

“What’s more,” he said: “This deprives the Argentine state of a monetary policy, as it will be dependent on the decisions of the United States.”

But these technical arguments are unlikely to dissuade Argentinians from dreaming of dollarisation. And the finance minister, who according to the latest polls could face Milei in the second round of the presidential election, has nothing but tried-and-tested recipes to suggest: run the printing press and increase the budget deficit.

 “This is an election about change, and the question is to know which candidate will have a monopoly on a change that will reassure Argentines,” Estrada said. “One of the main criteria for Argentians to make their choice on is the economy, and the will to evolve and to change economic policy. From this point of view, Javier Milei has the trump card to win the second round if it should come to it.”

This article has been translated from the original in French.

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Bonds, Secular Bear Market, and the Impact on Small Caps

Bonds have had one of the worst years in modern times and one of the fastest rates of interest rate rises.

The good news is the market has absorbed the bond’s performance. A better risk-on environment is when the SPY outperforms the long bonds. The same is true with junk bonds outperforming long bonds. Another indicator of risk-on.

The yield curve remains inverted — or the potential recession indicator has not, to date, caused a recession. Hence talk of a soft landing. Will yields tap out at 5.5-5.75%? Many think so. However, higher for longer seems more likely.

Furthermore, inflation is not quite done. The PCE, due out this week, is at 4%, not 2% And just as it took from 2020 until spring 2022 to see inflation soar then peak, it is likely we will not see the impact on these rates until 2024 or even 2025. Talking technical, bonds do not look likely to rally from here (TLT). However, we are watching the October 2022 lows carefully.

A potential double bottom exists if TLTs can clear back above 98. A move under 95, though, points more to a retest and possible break of the low 91.85.

How does this impact small caps?

Small caps, as measured by IWM, are key for the fall and into 2024. You can also look at SML, the S&P 600. Over the weekend, we covered that the Russell 2000 (IWM) could be forming an inverted head-and-shoulders bottom going back from the start of 2023. First though, it must hold 180 and clear 190. No small task.

Small caps are related to commercial real estate, so that is a caveat.

Why could small caps do well? The Government has spent a lot of money on US manufacturing, and the Dallas-fed index fell less than expected. In the US quest for more independence on goods, we must look to costs and labor for the trend to sustain. It must be noted though, that prices and wages paid soared. 

The IWM chart shows a lack of leadership thus far against the SPY. The Real Motion Indicator has no real divergence from price. Nonetheless, IWM needs more everything-more rally, more leadership, and more momentum.

Our small caps quant model has done well this year, buying companies with earnings growth. The basket is an interesting combination of semiconductor companies, home building and beauty staples.

For more detailed trading information about our blended models, tools and trader education courses, contact Rob Quinn, our Chief Strategy Consultant, to learn more.

If you find it difficult to execute the MarketGauge strategies or would like to explore how we can do it for you, please email Ben Scheibe at [email protected].

“I grew my money tree and so can you!” – Mish Schneider

Get your copy of Plant Your Money Tree: A Guide to Growing Your Wealth and a special bonus here.

Follow Mish on Twitter @marketminute for stock picks and more. Follow Mish on Instagram (mishschneider) for daily morning videos. To see updated media clips, click here.

Mish served as guest host for the Monday, August 28 edition of StockCharts TV’s The Final Bar! Mish puts her own spin on the Market Recap, starting with the indices and then exploring sectors using her “Economic Modern Family” analysis. She then sits down with Keith Schneider for an insightful interview. Keith discusses topics such as agricultural commodities, biotechnology, and volatility.

Mish and Charles discuss a secular bear market in bonds and why gold could outshine expectations in this appearance on Fox Business’ Making Money with Charles Payne.

Mish and Paul Gruenwald discuss soft landings, recession, inflation, GDP and China on Yahoo Finance.

Mish looks at a selection of popular instruments and outlines their possible direction of travel in this appearance on CMC Markets.

Mish talks NVDA and “Trading the Weather” in these two appearanceson Business First AM.

Read Mish’s commentary on Gold in these two articles from Kitco.

Mish and Nicole discuss where to park your money, barring any watershed event, in this video from Schwab Network.

On the Friday, August 18 edition of StockCharts TV’s Your Daily Five, Mish covers bonds, the dollar, risk-off indications and several key commodities with actionable levels to consider.

Mish joins Maggie Lake of Real Vision to discuss what rising bond yields mean for investors across the market landscape, what comes next for stocks and commodities, and why she is taking profits here in the growth and AI stocks.

Mish shows why January and now the July reset worked in this appearance on Business First AM.

Mish discusses Alibaba’s stock price in this appearance on CNBC Asia.

In this guest appearance on David Keller’s The Final Bar on StockCharts TV, talks higher rates and why China may deserve a second look for investors.

Mish discusses inflation, bonds, calendar ranges and places to park your money on the Benzinga Morning Prep show.

Mish covers why August is a good time for caution in this appearance on Business First AM.

Mish and Jared go over oil and what might happen with small caps and regional banks in this appearance on Yahoo! Finance.

Coming Up:

Mish will be on break starting August 30 and return Tuesday, September 5th.

September 7: Singapore Breakfast Radio, 89.3 FM

September 12: BNN Bloomberg & Charting Forward, StockCharts TV

September 13: Investing with IBD podcast

October 29-31: The Money Show

  • S&P 500 (SPY): 440 now back to pivotal.
  • Russell 2000 (IWM): Popped off the key support. 185 pivotal.
  • Dow (DIA): Will watch to see if it can back over 347.
  • Nasdaq (QQQ): 363 pivotal.
  • Regional Banks (KRE): Needs to hold 44 to be convincing.
  • Semiconductors (SMH): 150 back to pivotal.
  • Transportation (IYT): 239 still support to hold, with 252 biggest overhead resistance.
  • Biotechnology (IBB): Compression between 124-130.
  • Retail (XRT): The 6-month calendar range low is 62.90 — needs to clear it.

Mish Schneider


Director of Trading Research and Education

Mish Schneider

About the author:
Mish Schneider serves as Director of Trading Education at MarketGauge.com. For nearly 20 years, MarketGauge.com has provided financial information and education to thousands of individuals, as well as to large financial institutions and publications such as Barron’s, Fidelity, ILX Systems, Thomson Reuters and Bank of America. In 2017, MarketWatch, owned by Dow Jones, named Mish one of the top 50 financial people to follow on Twitter. In 2018, Mish was the winner of the Top Stock Pick of the year for RealVision.

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