Baltic
Dry Index. 1801 +11 Brent Crude 81.75
Spot Gold 2343 US 2 Year Yield 4.92 -0.04
In
the run up to the UK General Election on July 4, the LIR will play its part.
Of all the animals, man is the only one that lies.
Mark Twain.
Thursday was an interesting day that will go down in history. Political 1930s style show trials concluded in Hong Kong and New York with the inevitable guilty verdicts. Of the two trials only the verdict in NYC really matters.
HK had long suffered communist interference in rule of law, but New York’s show trial and verdict calls into question rule of law everywhere.
In the stock casinos, it’s time to dress up the
month-end closing prices after what has turned into a terrible week so far.
Asia markets rise on data-heavy day
UPDATED FRI, MAY 31 20241 0:39 PM EDT
Asia-Pacific
markets rose on Friday as investors parsed data from major economies across the
region.
Japan’s industrial output figures
showed a surprise 0.1% fall in April from the previous month, against a Reuters
poll forecast for a 0.9% rise.
Another dataset showed core
inflation in Japan’s capital Tokyo rose 1.9% in May, in line with Reuters poll
expectations.
South Korea’s industrial
production index rose 2.2% month-on-month in April on a seasonally adjusted
basis, beating a Reuters poll expectation of a 1.1% rise.
Data from China showed its
manufacturing sector unexpectedly contracted in May, with the official
purchasing managers index coming in at 49.5, from 50.4 in April.
Mainland China’s CSI 300 index
rose 0.4%, while Hong Kong’s Hang
Seng index gained 1.3%.
Japan’s Nikkei 225 rose
0.41%, while the broader Topix index gained nearly 0.9%.
South Korea’s
Kospi gained 0.4%, while the smaller-cap Kosdaq reversed gains to trade 0.22%
lower.
In Australia, the S&P/ASX 200 index
rose 0.46%.
Overnight, Wall Street’s main indexes closed
lower as investors looked ahead to the release of key U.S. inflation data.
The Dow Jones Industrial Average slid
330.06 points, or 0.86%. The S&P
500 lost 0.6%, while the Nasdaq Composite shed
1.08%.
The latest reading for the personal
consumption expenditures price index will be released Friday,
which is the Federal
Reserve’s preferred gauge for inflation, and is expected to
show prices in April running at a 2.7% annual rate, according to Dow Jones
estimates.
Asia
markets rise on data-heavy day (cnbc.com)
Stocks close lower, Dow falls more than 300
points as Salesforce plunges 20%: Live updates
UPDATED THU, MAY 30 2024 4:45 PM EDT
Stocks
closed lower Thursday as Salesforce logged
its worst day in around two decades. Traders also looked ahead to the release
of key U.S. inflation data.
The Dow Jones Industrial Average slid
330.06 points, or 0.86%, to 38,111.48. The S&P 500 lost
0.6% to close at 5,235.48. The Nasdaq Composite dipped
1.08% to 16,737.08, underscoring the weakness in technology names.
Salesforce plunged 19.7% after
missing revenue
expectations for the fiscal first quarter and providing a weak
outlook, marking its worst
session since 2004. Artificial intelligence darling Nvidia also
slid more than 3%, notching its first negative session following its
blockbuster earnings report last week. Microsoft declined
more than 3% for its worst day since October.
Those drops dragged on the major
indexes given the companies’ weight in the market, masking strength elsewhere.
For example, though the S&P 500 as a whole took a leg down, more than 360
member stocks recorded gains. Meanwhile, the small cap-focused Russell 2000 rose
1%.
Thursday’s moves come amid a
tough, holiday-shortened trading week. The S&P 500 has slipped around 1.3%,
while the Nasdaq Composite has shed 1.1%, putting both on track to snap
five-week winning streaks. The Dow has tumbled more than 2%, on pace for its
second straight losing week.
---- Despite the rocky
week, the indexes are all on track to end the trading month, which also
concludes with Friday’s closing bell, higher. The Nasdaq Composite and S&P
500 have jumped nearly 7% and 4%, respectively, in May. The Dow has risen 0.8%
in the month. All three indexes hit record highs in May.
More
Stock
market today: Live updates (cnbc.com)
Fed’s favorite inflation gauge is expected to
show very slow progress on Friday
Inflation is taking baby steps towards coming back
to where policymakers want it, with a report due Friday expected to show more
of that creeping progress.
The Commerce Department’s measure
of personal consumption expenditures prices is expected to show inflation in
April running at a 2.7% annual rate, according to the Dow Jones estimates both
for overall inflation and the “core” that excludes food and energy costs.
If that forecast holds, it will represent a slight decline on the core
measure and little change on the overall rate, though economists will be
looking at both the annual and monthly measures. Core inflation is expected to
have slowed to 0.2%, which would represent at least some further progress
toward easing price pressure on weary consumers.
Overall, the report, due at 8:30
a.m. ET, likely will point to another incremental move back to the Federal
Reserve’s 2% target.
“We do not expect any major upward
or downward surprises in Friday’s PCE as most of the recent economic data is
indicative of an economy that has settled into a nice long-term simmer of not
too hot and not too cold,” said Carol Schleif, chief investment officer at BMO
Family Office. “That said, getting to the Fed’s 2% target is apt to be a bumpy
landing.”
Getting a handle on inflation is
proving tricky these days.
The Fed parses the data in many
ways, most recently introducing what has been known as the “super-core” level
that looks at services costs excluding food, energy and housing as a way to
measure longer-term trends.
However, policymakers’ expectations that housing inflation will cool this
year have been largely thwarted, throwing another wrinkle into the debate.
Moreover, the Fed’s preference on
PCE is a bit arcane, as the public focuses more on the Labor Department’s
consumer price index, which has shown much higher trends. CPI
inflation ran at 3.4% for the all-items measure in April and
3.6% for core, well above the Fed’s target.
The Fed prefers the PCE measure as it accounts for
shifts in consumer behavior, such as when shoppers will substitute
less-expensive items for pricier ones. The theory is that the methodology
provides a better look at the actual cost of living rather than just absolute
prices. Fed officials particularly focus on core as it serves as a better
longer-term indicator.
The Commerce Department delivered
some good news Thursday — again, in modest terms — when it reported that PCE for the first quarter rose 3.3% on
headline and 3.6% on core, both 0.1 percentage point lower than the initial
estimate. Similarly, the “chain-weighted” price index was at 3%, also 0.1
percentage point below the first print.
However, those numbers are still a
good deal from the Fed’s target.
More
Fed's favorite inflation gauge is expected to show very slow progress on Friday (cnbc.com)
Finally, supply chain (bad) news.
The $10,000 Shipping Container Looms in Latest Trade
Strains
May 29, 2024
Companies transporting goods from
Asia face costs of as much $10,000 for an urgent full-size shipping container
over the next month — about double current spot rates, according to prices
circulating between carriers and importers.
Marseille, France-based CMA CGM SA,
the world’s No. 3 carrier, already announced a $7,000 rate for a 40-foot
container for the second half of June for goods shipped to northern Europe from
Asia. That’s up from the current charge of about $5,000. For the first half of
June, rates range from $6,000 to $6,500, with premium service offered at $7,500
to $10,000.
With
capacity stretched by more than five months of attacks on vessels in the Red
Sea, the container shipping industry is scrambling to meet
demand that’s picking up in the US and Europe. Another dynamic behind the price
gains is that importers are ordering more on concern about disruptions ranging
from port congestion and labor strikes to higher tariffs on
Chinese-made merchandise.
QuickTake: The Six Choke Points That Can Upend Global Trade
“Companies are changing stock
strategies and responding to longer lead times, shifting normal shipping
patterns,” said Trine Nielsen, senior director and head of ocean EMEA at
Flexport Inc., a logistics technology company based in San Francisco. “Some companies
are even double-booking or increasing booking numbers to secure space, adding
to the noise.”
In
September 2021, spot rates for 40-foot containers to the US West Coast from
China soared to more than $20,000 amid a surge in demand tied to the pandemic,
according to Freightos data compiled by Bloomberg. Four months later, the rate
for China-to-Europe shipments peaked at almost $15,000.
The chief executive of Hamburg,
Germany-based Hapag-Lloyd AG, the world’s No. 5 container carrier, attributed
the latest spike to the Red Sea capacity issues and “really strong demand” that
supports the case for an early peak season and inventory restocking.
While it’s impossible to know how
long the surge in short-term container rates will continue, “it could still
last for another couple of months if the Red Sea situation doesn’t improve,”
Rolf Habben Jansen said in an interview Wednesday on Bloomberg Television.
The $10,000 Shipping Container Looms in Latest Trade Strains (msn.com)
Global Inflation/Stagflation/Recession
Watch.
Given
our Magic Money Tree central banksters and our spendthrift politicians,
inflation now needs an entire section of its own.
ECB set to press ahead with rate cut next week thanks
to German inflation reading
May 30, 2024
The European Central Bank is expected
to push ahead with its first interest rate cut in June despite signs inflation
is yet to be defeated.
A flash estimate published on Wednesday
shows German consumer price inflation was 2.4 per cent year-on-year in
May, up from 2.2 per cent in April, owing to higher services inflation.
But
the all-important measure of core inflation, which excludes energy and food
costs, was stable at 3 per cent for the month despite expectations of a slight
jump.
And,
barring any major shocks from EU-wide inflation data due on Friday, analysts
say prospects of the ECB leapfrogging both the US Federal Reserve and Bank of
England with its fist interest rate cut next week look all but confirmed.
UBS said: 'The signals that emerged
from the ECB meeting on 11 April and subsequent public remarks by ECB officials
have been clear: The ECB is on track to cut rates by 25 basis points (bps) to
3.75 per cent in the upcoming meeting on 6 June.'
The bank expects the EU's May
headline inflation figure will 'rise temporarily' owing to higher energy
inflation, forecasting a 2.5 per cent year-on-year inflation figure for the
month.
It added: '[But] even disappointing
May inflation data…would not stop the ECB.'
Felix Feather, economist at asset
manager Abrdn, agreed next week's rate cut 'is almost guaranteed'.
While markets are confident of next
week's cut, there is far less certainty about the ECB's policy outlook for the
remainder of this year amid concerns about sticky inflationary pressures and
the potential impact of decoupling with US policy.
Feather said: 'Services inflation and
wage growth data remain too hot for back-to-back cuts in June and July, so this
could be a 'hawkish cut'.
'An uptick in the headline rate is
widely expected but it would have to be extremely large to knock the ECB off
course for a June cut.
'However, what happens to core
service inflation will be key to setting expectations for the ECB path beyond
June. The recent strength in labour cost growth could mean that services
inflation strengthens, leaving the ECB on hold for a period after the initial
cut.'
Current market pricing suggests the ECB will
cut its key interest rate by 25bps two or three times by year-end, bringing it
to between 3.25 and 3.5 per cent.
More
ECB set to press ahead with rate cut next week thanks to German inflation reading (msn.com)
Covid-19 Corner
This section will continue until it becomes unneeded.
Germany
scraps a COVID-19 vaccination requirement for military servicepeople
May 29, 2024
Germany has scrapped a requirement for its military
servicepeople to be vaccinated against COVID-19, a mandate that had been in
place since late 2021, the government said Wednesday.
People serving with the German military, the Bundeswehr,
are required to get vaccinations against a number of diseases — including
measles, mumps and flu — so long as individuals have no specific health issues
to prevent that.
COVID-19 was added to the list in
November 2021, meaning that anyone who refused to get vaccinated against it
could face disciplinary measures.
Defense Minister Boris Pistorius has
now dropped the COVID-19 requirement following recommendations from the
Bundeswehr's chief medical officer and a military medical advisory committee,
ministry spokesperson Mitko Müller said. It has been replaced by a strong
recommendation to get the vaccine.
News of the decision came as
Germany's Federal Administrative Court considered a complaint by a
noncommissioned officer in the navy against the continued vaccination
requirement.
Germany contemplated a COVID-19
vaccine mandate for all adults in the country in late 2021 and early 2022, but
some government lawmakers and most of the opposition balked at the idea.
In April 2022, lawmakers rejected a
narrower bill that would have required all people 60 and over to be vaccinated.
Germany scraps a COVID-19 vaccination requirement for
military servicepeople (msn.com)
Technology
Update.
With events happening fast in the
development of solar power and graphene, among other things, I’ve added this
section. Updates as they get reported.
Google’s
weird AI answers hint at a fundamental problem
May
29, 2024
It’s not uncommon for an
exciting new tech feature to debut with some bugs. But at least some of the
problems with Google’s new generative-AI-powered search answers may not be
fixable anytime soon, five AI experts told Tech Brief on Tuesday.
Last week,
Google’s new “AI Overviews” went viral for the wrong reasons. Hyped as the
future of online search, the feature — in which Google’s software directly
answers a user’s question, rather than just linking to relevant websites — spat
out a slew of responses that ranged from absurd to dangerous. (No, geologists
don’t recommend eating one small rock per day, and please don’t put glue in your pizza.)
Google initially downplayed the
problems, saying the vast majority of its AI Overviews are “high quality” and
noting that some of the examples going around social media were probably fake.
But the company also acknowledged that it was removing at least some of the
problematic results manually, a laborious process for a site that fields
billions of queries per day.
“AI Overviews are designed to surface
high quality information that’s supported by results from across the web, with
prominent links to learn more,” spokesperson Ned Adriance said
Tuesday. "As with other features we’ve launched in Search, we’re using
feedback to help us develop broader improvements to our systems, some of which
have already started to roll out.”
“All large language models, by the
very nature of their architecture, are inherently and irredeemably unreliable
narrators,” said Grady Booch, a renowned computer scientist. At a
basic level, they’re designed to generate answers that sound coherent — not
answers that are true. “As such, they simply cannot be ‘fixed,’” he said,
because making things up is “an inescapable property of how they work.”
At best, Booch said, companies using
a large language model to answer questions can take measures to “guard against
its madness.” Or they can “throw enormous amounts of cheap human labor to
plaster over its most egregious lies.” But the faulty answers are likely to
persist as long as Google and other tech companies use generative AI to answer
search queries, he predicted.
More
Google’s weird AI answers hint at a fundamental
problem (msn.com)
Next, our
latest new section, the world global debt clock. Nations debts to GDP compared.
World Debt
Clocks (usdebtclock.org)
Another
weekend and a weekend to take in the week’s dramas. Show trials in China and
America. Stock casinos showing signs of topping out. Was May the top? Is the ECB about to cut its key interest rate
next week? Can anyone end two murderous unnecessary polarising wars. What new calamities will June bring?
The statesmen will invent cheap lies, putting the blame upon the nation that is attacked, and every man will be glad of those conscience-soothing falsities, and will diligently study them, and refuse to examine any refutations of them; and thus he will by and by convince himself that the war is just, and will thank God for the better sleep he enjoys after this process of grotesque self-deception.
Mark Twain.
