Baltic
Dry Index. 1688+03 Brent Crude 83.93
Spot Gold 2316 US 2 Year Yield 4.96 -0.08
Central banks have gotten out of the central banking business and into the central planning business, meaning that they are devoted to raising up-if they can-economic growth and employment through the dubious means of suppressing interest rates and printing money. The nice thing about gold is that you can't print it.
James Grant.
As expected, the US central banksters opted to leave their key interest rate unchanged.
In after
Fed meeting, press meeting, “double-speak” guidance, Fed Chairman Powell
deliberately took further interest rate hike off the table, no matter what
happens to US inflation, boosting Wall Street’s latest stocks bubble, President
Biden’s Joe Biden’s re-election prospects and Chairman Powell’s future
job prospects after leaving the Fed.
Fed
leaves rates unchanged, flags 'lack of further progress' on inflation
By Howard Schneider and Ann Saphir May 2, 20246 :07 AM GMT+1
WASHINGTON, May 1 (Reuters) - The U.S. Federal
Reserve held interest rates steady on Wednesday and signaled it is still
leaning towards eventual reductions in borrowing costs, but put a red flag on
recent disappointing inflation readings that could make those rate cuts a while
in coming.
Indeed, Fed Chair Jerome Powell said that after
starting 2024 with three months of faster-than-expected price increases, it
"will take longer than previously expected" for policymakers to
become comfortable that inflation will resume the decline towards 2% that had
cheered them through much of last year.
That steady progress has stalled for now, and while
Powell said rate increases remained unlikely, he set the stage for a
potentially extended hold of the benchmark policy rate in the 5.25%-5.50% range
that has been in place since July.
U.S. central bankers still believe the current
policy rate is putting enough pressure on economic activity to bring inflation
under control, Powell said, and they would be content to wait as long as needed
for that to become apparent - even if inflation is simply "moving
sideways" in the meantime.
The Fed's preferred inflation measure - the
personal consumption expenditures price index - increased at a 2.7% annual rate
in March, an acceleration from the prior month.
"Inflation is still too high," Powell
said in a press conference after the end of the Federal Open Market Committee's
two-day policy meeting. "Further progress in bringing it down is not
assured and the path forward is uncertain."
Powell said his forecast remained for inflation to
fall over the course of the year, but that "my confidence in that is lower
than it was."
Whether there are rate cuts this year or not
remains in doubt.
"If we did have a path where inflation proves
more persistent than expected, and where the labor market remains strong but
inflation is moving sideways and we're not gaining greater confidence, well,
that would be a case in which it could be appropriate to hold off on rate
cuts," Powell said. "There are paths to not cutting and there are
paths to cutting. It's really going to depend on the data."
Despite the uncertainty of the current economic
moment, Powell's characterization of rate hikes as "unlikely" cheered
investors concerned about a newly hawkish Fed chief.
U.S. stock and bond prices turned higher as Powell
preached patience that may delay rate cuts, but also means a high bar for any
more hikes. The Fed raised its benchmark policy rate by 5.25 percentage points
in 2022 and 2023 to curb a surge in inflation.
Powell's remarks on Wednesday were "notably
less hawkish than many feared," said analysts at Evercore ISI. "The
basic message was that cuts have been delayed, not derailed."
Investors in contracts tied to the Fed's policy
rate increased bets that rate cuts could begin in September rather than later
in the year as reflected in earlier market pricing.
More
Fed leaves rates unchanged, flags 'lack of further progress' on inflation | Reuters
European markets
head for positive open as traders react to Fed decision
UPDATED THU, MAY 2 20241 2:26 AM EDT
European stocks are heading for a positive open
on Thursday as global markets react to the U.S. Federal Reserve’s latest
monetary policy decision.
Central bank
policymakers kept rates steady in their May meeting, holding at a range of
5.25% to 5.5%, as expected. Federal Reserve Chair Jerome Powell said it was
unlikely that the central bank’s next move will be a rate hike.
The comment spurred a rally for the three major
U.S. averages Wednesday, with the Dow surging more than 500 points in its
session high.
Asia-Pacific
markets were mostly higher overnight as traders reacted to the
Fed’s stance, while U.S. stock futures advanced as investors looked ahead to
more corporate earnings due Thursday.
It’s a busy day for earnings
reports in Europe Thursday, with AXA, ArcelorMittal, Novo Nordisk, Orsted,
Vestas, Hugo Boss, Shell and Standard Chartered among the companies reporting.
Data releases include Swiss inflation figures for April and Italian producer
prices for March.
European
markets live updates: stocks, news, Fed reaction, earnings (cnbc.com)
Stock futures
rise after Fed decides to hold rates steady: Live updates
UPDATED THU, MAY 2 2024 7:09 PM EDT
Stock
futures advanced Wednesday night as investors looked ahead to more corporate
earnings due Thursday and key labor data set for later in the week.
Dow
Jones Industrial Average futures added
80 points, or 0.2%. S&P 500
futures climbed
about 0.3%. Nasdaq 100 futures increased
by 0.3%.
In after-hours trading, chipmaker Qualcomm rose
more than 3% on better-than-expected
adjusted earnings and strong revenue guidance. Restaurant
delivery service DoorDash dropped
15% after reporting a wider
loss per share than Wall Street forecast.
Those moves followed a choppy day
on Wall Street as investors reacted to the Federal Reserve’s decision to keep
interest rates unchanged.
In the closely-watched press conference, Fed Chair Jerome Powell essentially ruled
out an interest rate hike as the central bank’s next move,
despite few recent signs of easing inflation.
All three major stock indexes
leapt by more than 1% at their highs of the day, but they cooled considerably
by the close of Wednesday’s bumpy
session. The Dow finished
about 0.2% higher, while the S&P 500 and Nasdaq Composite both
closed the session lower by roughly 0.3%.
Powell’s emphasis on the next
central bank move likely not being a hike “should be soothing for financial
markets,” according to Eric Winograd, director of developed market economic
research at AllianceBernstein. Still, when the Fed might actually begin lowering
borrowing costs remains uncertain, a question that has been top of mind for
traders.
″‘Higher for longer’ is the Fed’s
mantra,” Winograd said. “We are past the ‘higher’ part and into the ‘longer,’
unless something dramatic changes.”
Investors will watch Thursday for
economic data on weekly jobless claims, first-quarter worker productivity and
unit labor costs, as well as March figures on the trade deficit and factory
orders. Those releases all come ahead of Friday’s closely watched April jobs
report.
Thursday’s quarterly earnings
reports are dominated by Apple and Amgen after
the close, alongside Coinbase and DraftKings.
Before the market opens, Moderna and Peloton are
both scheduled to post results.
Stock market today: Live updates (cnbc.com)
But back in the real economy, far from the Fed’s Wall Street fantasy, fiat money, debt fuelled, money out of thin air, bubble economy, things are starting to turn ugly.
US crude oil inventories rose, suggesting falling demand, bursting the crude oil bubble?
But
if the US economy is finally rolling over, this is the top for nearly all
stocks trading on hopium/
Long-predicted
consumer pullback finally hits restaurants like Starbucks, KFC and McDonald’s
It’s finally here: the long-predicted consumer
pullback.
Starbucks announced a
surprise drop in same-store sales for its latest quarter,
sending its shares down 17% on Wednesday. Pizza Hut and KFC also
reported shrinking same-store sales. And even stalwart McDonald’s said
it has adopted
a “street-fighting mentality” to compete for value-minded
diners.
For months, economists have been predicting that consumers would cut back
on their spending in response to higher prices and interest rates. But it’s
taken a while for fast-food chains to see their sales actually shrink, despite
several quarters of warnings to investors that low-income consumers were
weakening and other diners were trading down from pricier options.
Many restaurant companies also
offered other reasons for their weak results this quarter. Starbucks said bad
weather dragged its same-store sales lower. Yum Brands,
the parent company of Pizza Hut, KFC and Taco Bell, blamed January’s snowstorms
and tough comparisons to a strong first quarter last year for its brands’ poor
performance.
But those excuses don’t fully
explain the weak quarterly results. Instead, it looks like the competition for
a smaller pool of customers has grown fiercer as the diners still looking to
buy a burger or cold brew become pickier with their cash.
The cost of eating out at
quick-service restaurants has climbed faster than that of eating at home. Prices for limited-service
restaurants rose 5% in March compared with the year-ago period, while prices
for groceries have been increasing more slowly, according to the Bureau
of Labor Statistics.
“Clearly everybody’s fighting for fewer consumers or consumers that are certainly visiting less frequently,
and we’ve got to make sure we’ve got that street-fighting mentality to win,
irregardless of the context around us,” McDonald’s CFO Ian Borden said on the
company’s conference call on Tuesday.
Outliers show that customers will still order their favorite foods, even
if they’re more expensive than they were a year ago. Wingstop,
Wall Street’s favorite restaurant chain, reported its U.S. same-store sales
soared 21.6% in the first quarter. Chipotle Mexican Grill,
whose customer base is predominantly higher income, saw traffic rise 5.4% in
its first
quarter. And Restaurant Brands
International’s Popeyes
reported same-store sales growth of 5.7%.
“What we’ve seen with the consumer
is, if they are feeling pressure, they have a tendency to pull back on more
high-frequency [quick-service restaurant] occasions,” Wingstop CEO Michael
Skipworth told CNBC.
He added that the average Wingstop
customer visits just once a month, using the chain’s chicken sandwich and wings
as an opportunity to treat themselves rather than a routine that can easily be
cut due to budget concerns. Skipworth also said that Wingstop’s low-income
consumers are actually returning more frequently these days.
Even so, many companies in the
restaurant sector and beyond it have warned consumer pressures could persist.
McDonald’s CEO Chris Kempczinski told analysts the spending caution extends
worldwide.
“It’s worth noting that in [the
first quarter], industry traffic was flat-to-declining in the U.S., Australia,
Canada, Germany, Japan and the U.K.,” he said.
Two of the chains that struggled in
the first quarter cited value as a factor. Starbucks
CEO Laxman Narasimhan said occasional
customers weren’t buying the chain’s coffee because they wanted more variety
and value.
“In this environment, many
customers have been more exacting about
where and how they choose to spend their money, particularly with stimulus
savings mostly spent,” Narasimhan said on the company’s Tuesday call.
Yum CEO David Gibbs noted that
rivals’ value deals for chicken menu items hurt KFC’s U.S.
sales. But he said the shift to value should benefit Taco Bell, which accounts
for three-quarters of Yum’s domestic operating profit.
“We know from the industry data
that value is more important and that others are struggling with value, and
Taco Bell is a value leader. You’re seeing some low-income consumers fall off
in the industry. We’re not seeing that at Taco Bell,” he said on Wednesday.
It’s unclear how long it will take
fast-food chains’ sales to bounce back, although executives provided optimistic
timelines and plans to get sales back on track. For example, Yum said its first
quarter will be the weakest of the year.
For its part, McDonald’s plans to
create a nationwide value menu that will appeal to thrifty customers. But the
burger giant could face pushback from its franchisees, who have become more
outspoken in recent years. While deals drive sales, they pressure operators’
profits, particularly in markets where it is already expensive to operate.
More
Starbucks, McDonald's, Yum earnings show consumers pulling back (cnbc.com)
Finally,
news from dodgy, all too often crooked cryptoland.
Crypto washout sends
bitcoin below $58,000 into bear market
By Amanda Cooper May 1, 2024 9:21 AM GMT+1
LONDON, May 1 (Reuters) - Bitcoin fell for a third day on Wednesday,
having posted its worst monthly performance in April since late 2022, as
investors pulled money out of cryptocurrencies ahead of an interest rate
decision by the Federal Reserve later.
The value of the world's most traded cryptocurrency fell by nearly 16%
in April, as investors booked profits on a sizzling rally that has taken the
price to record highs above $70,000.
Bitcoin was last down 4.7% to $57,055, its lowest since late February,
while losses in ether were more modest, down 3.6% at $2,857, also at its
weakest since February.
The price of bitcoin is now a full 22% below March's record of $73,803,
technically putting it in a bear market. But it is still up 35% so far this
year and double where it was this time last year, thanks in large part to the
billions of dollars flowing into newly minted exchange-traded funds since
January.
"The recent downtrend can be attributed to increased profit-taking
by investors who entered the market during the downturns of 2022 and 2023, as
well as ETF investors who witnessed significant price appreciation on their
shares after entering the market in the early weeks of 2024," Fineqia
research analyst Matteo Greco said.
On the macro front, the Fed is not expected to make any changes to
interest rates later, but the view is taking root among investors that the
central bank may not cut rates at all this year, delivering a blow to interest
rate-sensitive assets such as cryptocurrencies, emerging market stocks and
bonds or even commodities.
More
Crypto washout sends bitcoin below $58,000 into bear
market | Reuters
Binance
co-founder Zhao set to keep on growing his $33 billion fortune even as he heads
to prison for four months
PUBLISHED TUE, APR 30 2024 7:34
PM EDT
Changpeng Zhao, the billionaire co-founder and
former CEO of Binance, is expected to see his mammoth wealth remain intact and
likely continue to climb even as he faces time behind bars after his sentencing
in a Seattle court.
Zhao, who is commonly referred to as “CZ” in
crypto circles, was sentenced to four months in prison on Tuesday, after pleading guilty to charges of
enabling money laundering at his crypto exchange.
The sentence handed down to Zhao in Seattle
federal court was significantly less than the three years that federal prosecutors had been seeking for
him. The defense had asked for five months
of probation. Sentencing guidelines called for a prison term of 12 to 18
months.
A Binance spokesperson said in a statement to CNBC
the crypto exchange has made “considerable compliance enhancements,” including
with regards to anti-money laundering detection and “hiring key compliance
personnel.”
A lawyer for Zhao did not immediately respond to
CNBC’s request for comment.
In November, Zhao
struck a deal with the U.S. government to resolve a multiyear investigation into Binance. As part of Binance’s $4.3 billion settlement with the
U.S. Department of Justice, Zhao stepped down as the company’s CEO, and the
exchange agreed to form a board of directors with independent members, as well
as compliance and audit committees.
Of the seven total directors recently named to
the since-formed board of directors, three were designated as being “independent” — and five
of them, including all of the board’s independent members, submitted letters to
the judge in Zhao’s criminal case asking for leniency in sentencing.
More
Binance founder Zhao's huge wealth unaffected by prison sentence (cnbc.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.
UK pessimists 'in retreat' as business confidence and
mortgage lending bounce back
April
30, 2024
Pessimism
about the economy is ‘in retreat’ as business confidence returns and mortgage
lending bounces back.
In an upbeat
survey published today, the Institute of Directors (IoD) said its economic
confidence index is at its highest level since May last year.
Bosses in
Britain are calling on the Bank of England to cut interest rates from the
current 16-year-high of 5.25 per cent to turbocharge the recovery.
They are
likely to be disappointed next week, however, with the Bank set to leave rates
unchanged until later in the year.
The call for
rate cuts came as separate figures from the Bank showed lenders approved 61,325
mortgages in March, up from 60,497 in February and the highest total since
September 2022.
However, it is
feared that further delays to cut rates could derail the recovery in the
property market as well as the wider economy.
Lenders
including Nationwide, Santander and Natwest have raised mortgage rates in
recent days, dealing a blow to households hoping for cheaper loans.
Roger Barker,
director of policy at the IoD, said: ‘It remains the case that business leaders
are, on balance, pessimistic about UK economic prospects.
‘However,
since March, the pessimists have been in retreat. Confidence has been edging
upwards and is now within striking distance of a more neutral perspective.
‘However, a
significant obstacle to improved business confidence is the current high level
of UK interest rates.’
He added:
‘Business leaders will be looking for a significant shift in the monetary
stance of the Bank of England before they are able to buy into a rosier
economic outlook.’
Peter Arnold,
chief economist at consultants EY UK, said: ‘The recovery in mortgage demand
continued in March.
‘However, the
increase in mortgage interest rates over recent months appears to have taken
some of the momentum out of the recovery.’
More
UK pessimists 'in retreat' as business confidence and
mortgage lending bounce back (msn.com)
Covid-19 Corner
This section will continue until it becomes unneeded.
Today, more on the Chinese covid coverup.
Chinese scientist who published
COVID-19 virus sequence allowed back in his lab after sit-in protest
Updated Wed, May 1, 2024
at 6:06 AM GMT+1
BEIJING (AP) — The first
scientist to publish a sequence of the COVID-19 virus in China said he was
allowed back into his lab after he spent days locked outside, sitting in protest.
Zhang Yongzhen wrote in an online
post on Wednesday, just past midnight, that the medical center that hosts his
lab had “tentatively agreed” to allow him and his team to return and continue
their research for the time being.
“Now, team members can enter and
leave the laboratory freely,” Zhang wrote in a post on Weibo, a Chinese social
media platform. He added that he is negotiating a plan to relocate the lab in a
way that doesn’t disrupt his team’s work with the Shanghai Public Health
Clinical Center, which hosts Zhang’s lab.
Zhang had been staging a sit-in
protest outside his lab since the weekend after he and his team were suddenly
told they had to leave and were locked outside, a sign of continuing pressure on Chinese scientists conducting research on the coronavirus.
Zhang sat outside on flattened
cardboard in drizzling rain, and members of his team unfurled a banner that
read “Resume normal scientific research work," pictures posted online
show. News of the protest spread widely on Chinese social media, putting
pressure on local authorities.
In an online statement Monday,
the Shanghai Public Health Clinical Center said that Zhang’s lab was being
renovated and was closed for “safety reasons.” It added that it had provided
Zhang’s team an alternative laboratory space.
But Zhang responded that his team
wasn’t offered an alternative until after they were notified of their eviction,
and the lab offered didn’t meet safety standards for conducting their research,
leaving his team in limbo.
Zhang’s dispute with his host
institution was the latest in a series of setbacks, demotions and ousters since
the virologist published the sequence in January 2020 without state approval.
Beijing has sought to control information related to the
virus since it first
emerged. An Associated Press investigation found that the government froze domestic and
international efforts to trace it from
the first weeks of the outbreak. These days, labs are closed, collaborations
shattered, foreign scientists forced out and some Chinese researchers barred
from leaving the country.
Zhang’s ordeal started when he
and his team decoded the virus on Jan. 5, 2020, and wrote an internal notice
warning Chinese authorities of its potential to spread — but did not make the
sequence public. The next day, Zhang’s lab was ordered to close temporarily by
China’s top health official, and Zhang came under pressure by Chinese
authorities.
Foreign scientists soon learned
that Zhang and other Chinese scientists had deciphered the virus and called on
China to release the sequence. Zhang published it on Jan. 11, 2020, despite a
lack of permission from Chinese health officials.
Sequencing a virus is key to the
development of test kits, disease control measures and vaccinations. The virus
eventually spread to every corner of the world, triggering a pandemic that
disrupted lives and commerce, prompted widespread lockdowns and killed millions of people.
More
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.
Not many people want to buy a limited
use Electric Vehicle, but would any want to buy a Chinese made EV? Approx. 10 minutes.
Why
China Can’t Censor and is Panicking about this EV Disaster
Why China Can’t Censor and is Panicking about this EV
Disaster (youtube.com)
The
military are always early adopters of new incoming technology, yet no military
on Earth has adopted the Electric battle tank or APC. “Would you mind, awfully,
not firing at us for the next 5 hours, while we recharge our tank?”
Or great
fun if firing an RPG at the E Tank’s battery compartment hoping to start a
thermal runaway, not so much fun for the crew inside the ET waiting for the
barbecue to start.
Thousands of Chinese electric cars flood into UK amid
fears over 'intelligence gathering'
The
Port of Bristol announced it had received its biggest ever single shipment of
cars last week - largely Chinese-made MG Ev vehicles. China is the world's
biggest producer of electric cars
11:29, 24 Apr 2024 UPDATED 09:43,
25 APR 2024
Striking images
show how the UK is being flooded with thousands of affordable electric vehicles
from China.
Last week
the Port of Bristol announced it had received its
biggest ever single shipment of cars - largely Chinese-made MG Ev vehicles. A
giant car transporter arrived at the port carrying 4,694 cars from China some
of which will retail for less than £10,000. Images show thousands of the cars
brightly coloured orange, white, blue and more lined up as they prepare for
transfer to dealerships across the UK.
More
Finally,
our latest new section, the world global debt clock. Nations debts to GDP
compared.
World Debt
Clocks (usdebtclock.org)
I do not like debt and do not like to invest in companies that have too much debt, particularly long-term debt. With long-term debt, increases in interest rates can drastically affect company profits and make future cash flows less predictable.
Warren Buffett.
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