'Global markets on alert for Biden exit as Trump-win trades mount'

  The red-hot Washington debate over whether President Joe Biden will scrap his run for re-election is spilling into Wall Street, where traders are shifting money to and from the dollar (DX=F), Treasurys and other assets that would be impacted by Donald Trump’s return to office.

The recalibration of portfolios kicked off at the end of last week after Biden’s disastrous debate with Trump heightened concerns the 81-year-old Democrat is too old to serve another term. The trading action afterward was most acute in the bond market, where yields on benchmark 10-year Treasuries jumped as much as 20 basis points across the following days.

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With speculation now mounting rapidly that Biden could drop out of the race — betting markets see less than a 50% chance he remains a candidate — investors are hastily making contingency plans to react to such an announcement during Thursday’s Fourth of July holiday and the subsequent weekend.

One fund manager, speaking on condition of anonymity given the sensitivity of the topic, said he was heading into the vacation stretch biased toward the dollar and short-term debt as hedges against the spike in risk he reckoned would be sparked by a Biden withdrawal. No president has opted against seeking a second term since Lyndon Johnson in 1968 and the election is just four months away.

“Markets have already been repricing election odds since the debate, so the news over the past 24 hours has really only added fuel to the fire,” said Gennadiy Goldberg, head of US rates strategy at TD Securities in New York.

President Joe Biden in the first presidential debate with former President and Republican presidential candidate Donald Trump at CNN's studios on June 27. (ANDREW CABALLERO-REYNOLDS/AFP via Getty Images) (ANDREW CABALLERO-REYNOLDS via Getty Images)

The consensus among traders and strategists is a re-election of Trump, a 78-year-old Republican, would spur trades that benefit from an inflationary mix of looser fiscal policy and greater protectionism: A strong dollar, higher US bond yields and gains in bank, health and energy stocks.

Even some 10,000 miles away, in Sydney, they’re bracing. Rodrigo Catril, a strategist at National Australia Bank, said “everyone” is preparing trading plans in case Biden ends his campaign.

“Either way, the market is betting on Trump winning the election,” said Catril. “It seems Democrats are stuck with very difficult choices, none of them easy, and none of them likely to yield a better outcome.”

Here’s how the so-called Trump trade is materializing across markets:

Dollar’s signal

The dollar (DXY) gave one of the earliest signals as to how markets would adjust to a potential Trump victory, gaining in the hours after last week’s debate. While the greenback has gotten a boost this year from the Federal Reserve’s indications that it intends to keep interest rates for higher longer, the currency got a clear bump in real-time as Trump dominated the faceoff with Biden.

Trump has floated cutting taxes and slapping 60% tariffs on imports from China and 10% duties on those from the rest of the world. Goldman Sachs Group Inc.’s chief economist Jan Hatzius said this week that such levies could lift inflation and force the Fed to lift rates about five more times than otherwise.

“A Trump victory raises the prospect of higher inflation and a stronger dollar, given his promise of more tariffs, and a tougher stance on immigration,” said JPMorgan Chase & Co. strategists led by Joyce Chang.

Potential losers in the face of a rising dollar and Trump’s expected support for tariffs include the Mexican peso (MXN=X) and Chinese yuan (CNY=X).

Yield-curve trade

In the aftermath of the debate, money managers in the $27 trillion Treasury market reacted by buying shorter-maturity notes and selling longer-term ones — a wager known as a steepener trade.

A slew of Wall Street strategists have touted the strategy, including Morgan Stanley and Barclays Plc, urging clients to prepare for sticky inflation and higher long-maturity yields in another Trump term.

In a two-day span starting late last week, 10-year yields rose by about 13 basis points relative to 2-year rates, in the sharpest curve steepening since October.

Signs of traders bracing for near-term volatility in the Treasury market emerged Wednesday, through a buyer of a so-called strangle structure, which benefits from a move higher or lower in futures through the strike prices. Along with potential risk over the holiday weekend around Biden’s candidacy, the expiry also incorporates Friday’s US jobs data and testimony next week from Fed Chair Jerome Powell.

Stocks gain

The prospect of a Trump victory has supported myriad stocks that stand to benefit from his perceived stances on the regulatory environment, mergers and trade relations. The broad market has powered higher in the wake of the debate.

The turn in the electoral tide since last week has “meant higher stocks as Republicans are generally viewed as more business friendly,” said Tom Essaye, president and founder of Sevens Report.

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Health insurers UnitedHealth Group Inc. (UNH) and Humana Inc. (HUM) and banks stand to benefit from looser regulations. Discover Financial Services (DFS) and Capital One Financial Corp. (COF) are among credit card companies that have risen on optimism over Trump, given that pair’s pending deal and speculation around possible changes to late fee rules.

Energy stocks like Occidental Petroleum Corp. (OXY) rose after the debate, given the former president is seen as having a pro-oil stance. Private prison stocks like GEO Group Inc. (GEO) have reacted to his perceived tough-on-immigration views.

Financials ETFs

The exchange-traded fund market has shown one clear investing strategy of late: Long banks on bets that Trump will spur deregulation and a steeper Treasury curve thanks to his potentially inflationary agenda.

The Financial Select Sector SPDR Fund (ticker XLF), a $40 billion fund, last week saw its largest inflow in more than two months, with investors adding roughly $540 million. So far this week, they’ve added $611 million amid the latest gyrations in the interest-rate market.

Meanwhile, a thematic-investing strategy designed to ride the Trump trade has struggled to gain traction. An ETF that sports the eye-catching ticker MAGA and invests in Republican-friendly stocks has been slow to garner assets and hasn’t seen any material inflows this year, data compiled by Bloomberg show.

Asian impact

Asia’s markets aren’t immune to the speculation either, with US-China tensions simmering and tariffs in play.

“The re-election of Mr. Trump should be a negative factor for China equities as Mr. Trump supports the idea of imposing substantially higher tariffs on US imports from China,” said Tomo Kinoshita, global market strategist at Invesco Asset Management Japan. “In that regard, Japanese stocks with high exposure to Chinese market are likely to be hurt if Mr. Trump wins.”

Crypto support

Trump has shown support for the crypto industry in recent weeks by meeting with industry executives and promising he would ensure all future Bitcoin mining is done in the US.

That makes the Solana (SOL-USD) token — the fifth-largest cryptocurrency with a market capitalization of about $67 billion, according to CoinMarketCap — one potential beneficiary of a Trump return to the White House. Asset managers VanEck and 21Shares have filed for ETFs that would directly invest in the digital currency.

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While many consider approval a long shot, the thinking among some market participants is that a newly re-elected Trump would appoint a Securities and Exchange Commission chair who is more crypto-friendly than Gary Gensler has been under Biden. That’s an outcome that would make a Solana ETF — and a corresponding rally in the token — more likely.

The prospect of a shakeup to the Democratic ticket is also likely to boost Bitcoin, according to Stephane Ouellette, chief executive of FRNT Financial.

“The crazier that the US political system looks, the better that Bitcoin looks,” Ouellette said “This is the kind of vibe that Bitcoin would go for. Craziness in the US political system is a pro-Bitcoin factor.”

https://finance.yahoo.com/news/wall-street-alert-biden-exit-175354983.html

'In Wake of SCOTUS Ruling, Biden Tells Doctors to Provide Emergency Abortions'

 The Biden administration told emergency room doctors they must perform emergency abortions when necessary to save a pregnant woman's health, following last week's Supreme Court ruling

opens in a new tab or window that failed to settle a legal dispute over whether state abortion bans override a federal law requiring hospitals to provide stabilizing treatment.

In a letter being sent Tuesday to doctor and hospital associations, HHS Secretary Xavier Becerra and CMS Director Chiquita Brooks-LaSure reminded hospitals of their legal duty to offer stabilizing treatmentopens in a new tab or window, which could include abortions. A copy of the letter was obtained by the Associated Press.

"No pregnant woman or her family should have to even begin to worry that she could be denied the treatment she needs to stabilize her emergency medical condition in the emergency room," the letter said.

It continued, "And yet, we have heard story after story describing the experiences of pregnant women presenting to hospital emergency departments with emergency medical conditions and being turned away because medical providers were uncertain about what treatment they were permitted to provide."

CMS will also resume investigations into complaints against emergency rooms in Idaho, after the Supreme Court ruled last week that hospitals there must be allowed to perform emergency abortions for now, despite the state's abortion ban.

But enforcement in Texas, the country's most populous state with a strict 6-week abortion banopens in a new tab or window, will still be on hold because of a lower court ruling.

The letter is the Biden administration's latest attempt to raise awareness about a 40-year-old federal lawopens in a new tab or window that requires almost all emergency rooms -- any that receive Medicare dollars -- to provide stabilizing treatment for patients in a medical emergency. When hospitals turn away patients or refuse to provide that careopens in a new tab or window, they are subject to federal investigations, hefty fines, and loss of Medicare funding.

The Texas Alliance for Life responded to the letter by saying the Biden administration "falsely suggests that Idaho and other state pro-life laws fail to protect women facing life-threatening emergencies during pregnancy."

"This is untrue," the anti-abortion group said in a statement. "All state pro-life laws provide an abortion exception for those rare but tragic circumstances in which a pregnancy poses a threat to a mother's life, including circumstances when death is not imminent. Those include Texas and Idaho."

The emergency room is the last place that the Democratic White House has argued it can federally require rare emergency abortions to be performed, despite strict state abortion bans. After Roe v. Wadeopens in a new tab or window was overturned in 2022, and U.S. women lost the constitutional right to an abortion, HHS quickly sent letters to doctors, saying that they were required to provide abortions in emergency medical situations when they were needed to keep a woman medically stable.

An Associated Press investigationopens in a new tab or window found that complaints about pregnant women being turned away from emergency rooms spiked in 2022 after the U.S. Supreme Court overturned Roe, raising concerns about emergency pregnancy care in states that have enacted strict abortion laws.

In Idaho, enforcement of the federal law in emergency abortion cases had been on hold since January, when the state's strict abortion ban took effect. Idaho's state law threatens doctors with prison sentences if they perform an abortion, with an exception only if a pregnant woman's life, not her health, is at risk.

The Biden administration has argued that this conflicts with a federal law called the Emergency Medical Treatment and Active Labor Act, or EMTALAopens in a new tab or window. Roughly 50,000 women every year develop serious pregnancy complications, like blood loss, sepsis, or organ loss. Some of those women may show up in emergency rooms and in the most serious cases where a fetus is unlikely to be viable, doctors may recommend a termination of the pregnancy.

For example, if a woman's water breaks during the second trimester, a condition known as a preterm premature rupture of membranes, the fetus may not be viable, and continuing the pregnancy means that the patient may risk developing sepsis, an infection that can be deadly.

Texas is also suing the Biden administration over its guidance around the law. The Department of Justice has appealed a lower court ruling that said the law could be enforced to the Supreme Court, which could decide on taking up the case later this year.

HHS has also sought in recent months to make it easier for any patient who is turned away or not appropriately transferred to file complaints against hospitals. Earlier this year, CMS unveiled a new web page that allows anyone to submit a complaint in a straightforward, three-step process.

"We will continue to build on our recent actions to educate the public about their rights to emergency medical care and to help support efforts of hospitals and healthcare professionals to meet their obligations under EMTALA," the letter said.

The department said the complaint webpage will also be available in Spanish, starting today.

Lupe Rodriguez, executive director of the National Latina Institute for Reproductive Justice, said her team has had conversations for a few months with the HHS secretary to encourage the office to make tools available in Spanish.

Latinas are more likely to be uninsured, lack access to prenatal care, and live in states with abortion bans, she said. This is even more of a concern for Latinas with limited English language skills or who are in mixed immigration status families, she said.

"It's incredibly important to be centering Latinas and people of color because we're the most impacted by these abortion bans and attempts to restrict emergency care," she said.

https://www.medpagetoday.com/obgyn/abortion/110943

Financial Incentives for Quitting Smoking: A Mixed Bag

 The jury is still out on financial incentives for quitting smoking among socioeconomically disadvantaged adults following mixed results from a trial plagued by missing data.

Among 320 longtime smokers who were uninsured or on Medicaid, offering upwards of $500 in potential gift cards along with usual care of counseling and pharmacotherapy was not associated with a significantly greater likelihood of biochemically verified smoking abstinence at 26 weeks compared with usual care alone (13.8% vs 8.7%, respectively; adjusted odds ratio [aOR] 1.79, 95% CI 0.85-3.80).

However, that result was based on a conservative analysis that counted all participants with incomplete smoking status as still smoking -- and the trial only had complete smoking status data available for 65.3% of participants at 26 weeks, reported Darla Kendzor, PhD, of the University of Oklahoma Health Sciences Center in Oklahoma City, and coauthors of the Prevail II trial.

Investigators eked out a signal of smoking cessation benefit associated with financial incentives through 12 weeks (19.7% vs 11.2%; aOR 3.18, 95% CI 1.70-5.95) and at 26 weeks when they utilized multiple imputation to handle the problem of missing data (23.5% vs 12.1%; aOR 2.29, 95% CI 1.14-4.63), according to the findings in JAMA Network Openopens in a new tab or window.

E. Neil Schachter, MD, of the Icahn School of Medicine at Mount Sinai in New York City, told MedPage Today that the data for financial incentives were not "totally convincing," but that they are a step in the right direction. In the current study, he noted, incentives could be linked to smoking abstinence as early as 4 weeks.

Schachter, who was not involved in the trial, stressed that "every person is a different story" when it comes to quitting smoking, and factors like socioeconomic status can play a part in their journey. He added that the pandemic and its associated stressors may have made it more difficult for anyone looking to quit smoking.

Indeed, Kendzor's team reported that rates of follow-up were significantly lower if they were scheduled during the COVID-19 pandemic (the trial was conducted from January 2017 to February 2022).

Based on the previous literature, patients who are socioeconomically disadvantaged are less likely to quit smokingopens in a new tab or window, often due to "stress and/or adversity and smoking-conducive environments," said Kendzor and co-authors. A recent reviewopens in a new tab or window found that cessation-related incentives, even offered temporarily, can help improve abstinence rates, while a smaller study out of Texas indicated that adults with low socioeconomic statusopens in a new tab or window had increased short-term quit rates with incentives.

"The bottom line is that it's very hard to get people to stop smoking," commented Schachter. "Even a 1%, 2%, or 3% improvement in the smoking cessation rate -- I mean, there are millions of smokers still out there -- would be a great benefit. And financially, it could be a win-win situation because of the health costs involved in people who continue to smoke."

Prevail II trialopens in a new tab or window randomized 320 participants referred to a tobacco cessation clinic in Oklahoma City to usual care alone or with additional financial incentives. Eligible volunteers needed to have greater than 6th grade English literacy, be willing to attempt quitting smoking, smoke five or more cigarettes per day, and have an expired carbon monoxide (CO) level of at least 8 ppm.

The total cohort averaged 49 years and 63% were women. The patient population was 63% white, 26% Black, 8% multiracial or of another race, 5% Hispanic, and 4% American Indian or Alaska Native. Nearly 55% had an annual household income below $11,000. At baseline, participants had been smoking 19 cigarettes a day for 29 years on average, and had an average expired CO of 22.5 ppm.

Individuals in the financial incentive group were compensated through department store gift cards and were offered $50 for completing a baseline assessment, $30 for each weekly assessment from their quit day through 4 weeks, and $40 for follow-up assessments at 8, 12, and 26 weeks.

They were also able to earn up to $250 from abstinence demonstrated by self-reports and breath samples. Ultimately they earned an average of $72 in abstinence-contingent incentives throughout the first 12 weeks following their quit day, with an average cost per quit between about $310 to $521, depending on how missing data were categorized.

Usual care comprised a pre-quit counseling session with a tobacco treatment specialist and participants were offered five more weekly counseling sessions starting on their quit day. Most people (78%) also got complimentary combination nicotine replacement therapy (NRT), such as nicotine patches and gum or lozenges, until 12 weeks after their quit day. Those who did not use NRT were prescribed other complementary pharmacotherapies free of charge when appropriate.

The trial's primary smoking cessation endpoint was defined as self-reported smoking abstinence over the past 7 days and a CO reading of no more than 6 ppm, or CO 6 ppm or less alone if self-reported information was missing.

Participants were asked to attend in-person study appointments at the clinic, until the onset of the COVID pandemic, after which they were asked to complete virtual assessments, attend sessions via phone or video call, and submit their CO breath samples remotely via breath monitor.

One potential limitation to the trial was its recruitment from a single state, which may limit generalizability to other populations. Additionally, Kendzor's team noted, Black people had been disproportionately screened out of the trial due to their smoking fewer than five cigarettes per day.

Disclosures

The trial was supported by funding from the National Cancer Institute, the Oklahoma Tobacco Settlement Endowment Trust, the National Institute on Minority Health and Health Disparities, the National Institute on Drug Abuse, the Stephenson Cancer Center Mobile Health Shared Resource, the Oklahoma Shared Clinical and Translational Resources, and the National Institute of General Medical Sciences.

Kendzor reported royalties from Oklahoma University Health Science Center (OUHSC)–Insight Mobile Health Platform as a co-inventor of Insight, research support from Pfizer, and serving as a member of the scientific advisory board of Qnovia. A coauthor also reported a relationship with OUHSC–Insight Mobile Health Platform.

Schachter reported a relationship with the American Lung Association.

Primary Source

JAMA Network Open

Source Reference: opens in a new tab or windowKendzor DE, et al "Financial incentives for smoking cessation among socioeconomically disadvantaged adults: A randomized clinical trial" JAMA Netw Open 2024; DOI: 10.1001/jamanetworkopen.2024.18821.

https://www.medpagetoday.com/pulmonology/smoking/110937

Can Biden Clear The Next Hurdle? Stakes High For Friday Primetime Interview

 Though he separately assured staffers and governors on Wednesday that he's staying in the race all the way to Election Day, President Biden has privately conceded to close allies that he must excel in his public appearances over the next several days if his campaign is to survive, according to the New York Times.  

Those upcoming events include weekend campaign stops in swing states Wisconsin and Pennsylvania, but the most attention by far will be paid to a Friday night sit-down interview with ABC News host George Stephanopoulos. After taping the interview on Friday, July 5, ABC will provide a first glimpse of the conversation that evening via "World News Tonight with David Muir." The full interview -- after ABC's edits -- will air as a "primetime special" on Friday at 8pm ET, and again on Sunday morning's "This Week."  

As ABC's Friday sit-down interview approaches, the stakes are high for both Biden and Stephanopoulos (photos by Getty Images via Fox News)

In contrast to last week's debate -- when Americans who hadn't been paying attention were shocked by Biden's shuffling gait, periodic incoherence, weak voice and slack-jawed stares -- the ABC interview will be pre-recorded, and it will be edited. However, seemingly in response to backlash about that taped-and-edited format, ABC has committed to releasing a full transcript of the interview on Friday.

As Fox News notes, that's a decision with some significant historical context where both ABC and Stephanopoulos are concerned: 

In 2018, ABC News was heavily criticized for a massive editing job when former FBI Director James Comey sat down with Stephanopoulos for his first interview since he was abruptly fired by then-President Trump the previous year. The full transcript released by the network revealed it chose not to air several key moments during its Sunday night special, such as when Comey ripped former President Obama. 

Readers will naturally view the idea of a Stephanopoulos interview with justifiable wariness of soft-pitch questions and friendly editing. However, we're in a different political world than last week, one where liberal media has abandoned its monolithic shielding of Biden's mental health from public scrutiny. It's a world where Stephanopoulos won't be uniformly pressured by his peers and leftist mobs on social media to make Biden look "sharp as a tack," to borrow the propaganda line that Biden's defenders regularly employed in the months leading up to the debate.  

To appreciate how much has changed, consider that the cornerstone leftist media institution -- the New York Times -- crossed the Rubicon last weekend. Its editorial board, noting Biden's "infirmity" that Americans had "[seen] with their own eyes," urged Biden to quit the race, saying that would be "the greatest public service Mr. Biden can now provide."

The Atlanta Journal-Constitution and Boston Globe followed suit, along with columnists and pundits across the country, from Paul Krugman to James Carville and Joe Scarborough. Emboldened by the media's lead, elected Democrats have started to issue their own pleas for Biden to quit, starting with Texas Rep. Lloyd Doggett and Arizona Rep. Raul Grijalva. A draft letter, intended to be signed by multiple members, is circulating on Capitol Hill. At least two House reps have publicly said Biden can't win after what Americans saw in the debate. 

Given the debate-triggered earthquake that's altered the leftist landscape, Stephanopoulos will likely feel significant pressure to act something like a real journalist, for once. Indeed, the interview could prove to be the most historically significant of his career. 

On the other side, Team Biden has every interest in molding the event to its benefit. On Wednesday night, the Daily Beast reported that Biden's handlers are pulling on one very significant lever -- the length of the interview, which will take place in Wisconsin as Biden is on the campaign trail:

The Beast has learned that behind the scenes there is deep concern inside ABC News’ upper echelons that Stephanopolous could get as little as 15 minutes to conduct what should be a searching interview offering insight into the president’s mental state...

One source suggested it would be more in the range of 20 minutes—still a relatively short period of time for even an accomplished interviewer to cover questions both over Biden’s cognitive state and his ability to stay in the campaign

The Biden campaign is forced to balance two huge risks. A longer interview increases the odds of a major Biden flub, while a shorter interview could anger Democrats who -- wary of not only losing the White House but also suffering consequences up and down the ballot -- are demanding that Biden quickly and urgently make a strong case that he's mentally fit to serve another term. 

In the week following the debate, Biden's response has disappointed Democratic leaders and major donors alike, with a senior campaign advisor telling the Washington Post that Biden had met widespread panic with "deafening silence." 

His few efforts to shore up public opinion during that stretch have been terribly underwhelming. Attendees at a celebrity-laden fundraiser in the Hamptons on Saturday said Biden's appearance only reinforced their deep worries about his fitness. The event was tightly orchestrated, and Biden did his speaking with the aid of a teleprompter, reminding attendees that he struggles to manage unscripted dialogue -- even with a friendly audience. 

Similarly, when Biden took to a White House podium to address the Supreme Court ruling providing a large degree of legal immunity to former President Trump, he read from a teleprompter and left without taking any questions from the press.   

ABC is certain to garner high ratings on Friday night; Biden's chance of prospering from the opportunity is much lower. 

https://www.zerohedge.com/political/can-biden-clear-next-hurdle-stakes-high-friday-night-primetime-interview

'Sharp And Focused But Sometimes Confused': AP Gaslights With New 'Fiery But Mostly Peaceful'

 While Democrats scramble to perform triage on the Joe Biden situation following last week's disastrous debate against Donald Trump, which has included multiple calls for him to exit the race from his own party - and the editorial boards of several major newspapers, the Associated Press just dropped the most propagandistic damage control headline since CNN's 'fiery but mostly peaceful' khyron during a 2020 BLM riot over a police shooting.

This is the same outlet that laundered a Biden State Department hit-piece against ZeroHedge, accusing us of 'spreading Russian propaganda' in early 2022.

Remember when Biden was sharp and focused as he bit his wife Jill's finger during a 2019 campaign event?

The headline, an IQ test for idiots, was rightly mocked:

This comes on the heels of Axios reporting that Biden 'maintains a schedule that tires younger aides.'

As much as you hate corporate media, it's truly not enough. 

https://www.zerohedge.com/political/sharp-and-focused-sometimes-confused-ap-gaslights-new-fiery-mostly-peaceful-propaganda