Baltic
Dry Index. 1813 +05 Brent Crude 77.51
Spot Gold 2342 US 2 Year Yield 4.77 -0.05
In
the run up to the UK General Election on July 4, the LIR will play its part.
There is no act of treachery or meanness of which a political party is not capable; for in politics there is no honour.
Benjamin Disraeli.
In most stock casinos, continued hopium that central bank interest rate cuts, starting later today in Canada, followed tomorrow in the EU by the ECB, will kick off a summer bonanza in stocks.
Well maybe, but that’s not the new message coming out of the US bond market, where the much forecast but never arriving US recession, may finally be arriving, just at the wrong time. Not that there’s ever a right time for recessions in our debt over loaded 2024 world.
Nor is it the message coming out of the fast
sinking crude oil market.
European markets
head for a higher open as investors look ahead to ECB meeting
European stocks are expected to open higher
Wednesday, with investors in the region looking ahead to the next meeting of
the European Central Bank (ECB).
The U.K.’s FTSE index
is seen opening 42 points higher at 8,274, Germany’s DAX up
88 points at 18,501, France’s CAC 40 up
46 points at 7,983 and Italy’s FTSE MIB 174
points higher at 34,491, according to data from IG.
Investors will be keeping an eye on
earnings from Spanish clothing company Inditex. On the data front, final
purchasing managers’ index (PMI) data for the euro zone in May, a measure of
services and manufacturing activity in the single currency area, is due.
The ECB is widely expected to cut
interest rates for the first time since 2019 when policymakers meet on
Thursday, but investors will watch closely to see whether a slightly higher-than-expected euro
zone inflation print released last Friday will affect the central bank’s
decision-making.
In other news, Asia-Pacific
markets were mixed overnight as investors assessed India’s
election results after Prime Minister Narendra Modi’s Bharatiya Janata Party fell
short of an outright majority in the lower house of parliament.
Nevertheless, Modi is set for a
third term in power after the BJP-led National Democratic Alliance secured
294 seats, more than the 272 needed for the coalition to form the
government.
U.S. stock futures were near flat
Tuesday night as investors geared up for private payroll data, with economists
polled by Dow Jones anticipating the data will show private employers added
175,000 jobs in May.
European
markets: stocks, news, data and the next ECB decision (cnbc.com)
Stock
futures rise marginally ahead of private payrolls report: Live updates
UPDATED WED, JUN 5 2024 1:11 AM EDT
Stock
futures are were marginally up Tuesday night as investors geared up for private
payroll data while analyzing the latest corporate earnings.
Dow
Jones Industrial Average futures advanced
92 points, or 0.24%. S&P 500
futures climbed
0.19% and Nasdaq 100 futures also
rose around 0.32%.
In after-hours trading, Hewlett Packard Enterprise climbed
more than 16% after surpassing Wall Street expectations on both lines in its
fiscal second quarter. CrowdStrike jumped
almost 7% on stronger-than-expected earnings and guidance.
Those moves follow a muted
but winning day on Wall Street. The Dow climbed
about 140 points, while the S&P 500 and Nasdaq Composite each
added close to 0.2%.
Tuesday brought the first of
several data points offering insight to the state of the labor market, an
important topic for traders looking for signs that the Federal Reserve has seen
enough economic tightening to begin cutting interest rates. Job opening and
labor turnover data came out Tuesday morning — known as JOLTS — and showed 8.059
million vacancies in April, the lowest level in more than three
years. It also came in well below the 8.4 million consensus forecast from
economists surveyed by Dow Jones.
The next notable set of
employment stats come Wednesday morning with a release from ADP. Economists
polled by Dow Jones are anticipating the data will show private employers added
175,000 jobs in May.
Traders will also monitor data on
services and nonmanufacturing purchasing due Wednesday. After that, attention
will turn to weekly jobless claims numbers on Thursday and Friday’s
all-important May jobs report.
“Upcoming labor market releases
are a clear focus for the broad market,” said Bill Northey, investment director
at U.S. Bank Wealth Management. “Investors are eyeing the most recent readings
on labor market health — JOLTS today, the ADP survey tomorrow and the [Bureau
of Labor Statistics] labor report on Friday. All are important data points
from a monetary policy standpoint.”
On the earnings front, discount
retailer Dollar Tree is
expected to share results before the bell. Athleisure maker Lululemon is
slated to post earnings after the market closes.
Stock market today: Live updates (cnbc.com)
In other, more concerning news. Is the US economy sliding into recession?
US farmers opt for
soy to limit losses as all crop prices slump
By Karl Plume
June 4, 2024 11:05 AM GMT+1
CHICAGO, June 4 (Reuters) - Mark Tuttle planted
more soy and less corn on his northern Illinois farm this spring as prices for
both crops hover near three-year lows and soybeans' lower production costs
offered him the best chance of turning a profit in the country's top soy
producing state.
He even planted soybeans in one of his fields for a
second straight year, breaking the traditional soy-corn-soy rotation for field
management. He and many other farmers are hoping to just minimize losses.
Planting more soy at a time
of sputtering demand from importers and domestic processors will only serve to
drive prices lower, further swell historically large global supplies and erode
U.S. farm
incomes already poised for the
steepest annual drop ever in dollar terms.
But Midwest farmers' other main options - seeding more corn or
leaving fields fallow - could have resulted in even wider losses.
"There's a better chance of making money with soybeans than
there is for corn right now," Tuttle said. "But if we have another
bigger crop, prices are going to go lower and that's not going to bode well for
the farmer."
In March, the U.S. Department of Agriculture
forecast farmers would plant 86.5 million acres of soybeans nationwide this
spring, the fifth most ever. Some analysts expect soybean acres to increase by
another million acres or more as heavy rains close the window on corn planting.
In nearby Princeton, Illinois, Evan Hultine also
increased soy plantings and scaled back corn. High production costs due in part
to a jump in interest rates looked likely to erode most or all of his corn
returns, while soybeans remained marginally profitable, he said.
The farm's profits will
likely be the thinnest in at least five years, Hultine said.
In an annual early season crop
budget estimate, University of Illinois
agricultural economists projected negative average farmer returns in the state
for both crops, though losses would be smaller for soybeans.
More
US
farmers opt for soy to limit losses as all crop prices slump | Reuters
Bond yields are
falling. This time, it’s not being treated as good news.
‘We
are back at a point where the Fed might need to help the economy,’ one trader
says
Rates on U.S.
government debt fell for the fourth straight session on Tuesday, fueled by
evidence of slowing economic activity that could take the edge off of
inflation.
For much of 2024,
such a view would have been treated as good news because of the pressure it
takes off of the Federal Reserve to keep interest rates at the highest levels
in 23 years.
More,
subscription required.
Bond yields are falling. This time, it’s not being treated as good news. - MarketWatch
Yield curve
disinversion is the recession signal to watch
By Jamie McGeever
June 4, 2024 3:49 PM GMT+1
ORLANDO, Florida, June 4 (Reuters) - Of all the
economic rules of thumb the COVID-19 pandemic seemingly ripped up, few have
caused as much soul-searching as the inverted U.S. yield curve - though it may
just be interpreted incorrectly.
After almost two years of short-term interest rates
topping long-term yields, the recession that it traditionally presages still
hasn't shown up.
Whether it's the difference between three-month and
10-year yields, or two-year and 10-year yields, the downward sloping yield
curve has now been in place for the longest stretch on record.
Every one of the last eight U.S. recessions going
back to the 1960s has come after the three-month yield has fallen below the
10-year yield. All six recessions going back to the mid-1970s, when the
two-year/10-year yield curve can first be traced, have also followed inversion.
But the problem is timing the turn. In the 19
months since the 3-month/10-year curve and 23 months since the
"2s/10s" curve last inverted, respectively, recession is still
nowhere to be seen and there is very little sign of it on the horizon.
Not only has recession not reared its head, the
economy has barely flinched in the face of both the highest inflation and most
aggressive Fed rate-hiking cycle in 40 years. The comfort blanket of historical
accuracy is steadily being removed.
But if investors and economists think they got a
bum steer in expecting a recession after the curve first inverted, they should
perhaps have put more weight on the fact the curve disinverts just before the
recession actually hits.
Jim Bianco, president and macro strategist at
Bianco Research, notes the average time to recession from the 3-month/10-year
curve first inverting is 334 days, but only 66 days from when the curve
disinverts.
Crucially, in each of the past eight recessions
that "uninversion" of the curve has been the result of a "bull
steepening" where short-dated yields have tumbled as the Federal Reserve
has cut rates in the face of very obvious economic or market stress.
More
Yield curve disinversion is the recession signal to watch | Reuters
Finally, more on the looming EV catastrophe
coming soon to western nations everywhere.
Hopes of a 10-year EV transition
are an ‘irrational’ pipe dreams because we don’t have enough battery
materials—opening up a single copper mine takes 23 years
Thu, May 30, 2024, 9:36
PM GMT+1
As electric vehicles have
become cheaper and more reliable,
governments have set ambitious timelines to phase out gas-powered cars and
electrify their fleets. California has committed to
only selling new zero-emissions vehicles by 2035, and an executive order from
President Biden sets a goal
of having half of all new cars sold be electric just six years from now (the
figure is currently hovering at a
little over 7%.) But natural
resource experts insist policymakers’ goals simply aren’t possible for one key
reason: There’s not enough copper.
“It's
almost irrational, the expectation that we can electrify everything and have
all the materials that we actually need for batteries and electric vehicles…by
2030, or 2035,” M. Stephen Enders, a professor at the Colorado School of Mines
and a 48-year veteran of the mining industry, told Fortune. “We can't supply the metals fast
enough.”
Copper
is an essential component in electric vehicles because of its conductive
properties: a typical EV requires over
132 pounds of copper, as opposed to just 52 pounds for the average gas-powered
car. As the auto industry
continues to electrify, it’s driving an exponential increase in copper demand that the notoriously slow, long-term oriented
mining industry simply isn’t capable of meeting.
New research shows that in order to meet policymakers’ EV and green
energy hopes, we will need to mine more than twice as much copper over the next
25 years as has been mined throughout all of human history up to 2018.
“It is
highly unlikely that there will be sufficient additional new mines to achieve
100% EV by 2035,” wrote Cornell University professor Lawrence Cathles and
University of Michigan professor Adam Simon in a recent report. Reaching that target “requires unprecedented rates of
mine production.”
More
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.
Business confidence declines in German car industry
June 4,
2024
The business
climate in the German automotive industry deteriorated significantly in May, a
leading economic institution reported on Tuesday.
The
Munich-based ifo Institute's index measuring business sentiment fell from minus
2.4 points in April to minus 8.6 points. The companies surveyed assessed their
current business situation negatively for the first time since October 2022.
Car
manufacturers and their suppliers remain pessimistic about the second half of
the year. A strong reaction from China to the trade conflict over electric cars
with Europe and the US could hit German car manufacturers hard, said Oliver
Falck, head of the ifo Centre for Industrial Economics and New Technologies.
The indicator
for the industry's earnings situation fell to minus 17.8 points. "In order
to cut costs, companies in the automotive industry are planning to employ fewer
staff," the economic researchers wrote. The corresponding indicator fell
to minus 20.2 points.
The industry
association, the VDA, says the German automotive industry employs around
780,000 people. It estimates that car production in Germany fell by 2% in April
compared to the same month the previous year.
Business
confidence declines in German car industry (msn.com)
US factory activity slips for a second month in May,
ISM says
June 3, 2024
(Reuters) - U.S. manufacturing
activity slowed for a second straight month in May as new goods orders dropped
by the most in nearly two years, but a measure of input inflation fell back
from the highest since mid-2022, a monthly survey showed on Monday.
The Institute for Supply Management's
manufacturing purchasing managers index for May fell to 48.7 from 49.2 in
April. It was both the second straight decline and the second month below the
50 level that separates growth from contraction.
Economists polled by Reuters had a
median estimate for 49.6.
The factory sector has been under
pressure for well over a year, with ISM's measure of output in contraction now
for 18 of the past 19 months, as high interest rates resulting from Federal
Reserve monetary policy tightening curbed demand for goods. The year began with
broad hopes for the Fed to begin cutting rates by mid-year, but
stiffer-than-expected inflation through the first quarter forced central bank
officials to push back against those expectations. September is now seen as the
earliest reductions might begin.
With borrowing costs stuck at the
highest in roughly two decades, ISM's measure of new orders for manufacturers
plunged by the most since June 2022, dropping 3.7 points to a reading of 45.4,
a one-year low. A report on Friday showed consumer outlays on goods - both
durables and nondurables - fell in April amid an overall softening of spending,
a trend economists see persisting as household savings dwindle and reliance on
credit cards grows.
There was some relief, however, on
factory input costs that had been re-accelerating this year after a run of
decreases through much of 2023. ISM's prices paid index dropped to 57 from
60.9, which had been the highest level since June 2022. Economists had forecast
the index would fall to 58.5.
Factory employment - also in the
doldrums for the better part of two years - grew for the first time since last
September.
US factory activity slips for a second month in May, ISM says (msn.com)
Covid-19 Corner
This section will continue until it becomes unneeded.
Fauci defends his work
on COVID-19, says he has an ‘open mind’ on its origins
Tue, June 4, 2024 at
1:16 AM GMT+1
WASHINGTON — Dr. Anthony Fauci
defended his decision-making during the COVID-19 pandemic on Monday, testifying
before Congress about his work on the virus as the director of the National
Institute of Allergy and Infectious Diseases during two presidencies.
House Republicans who called the
hearing grilled Fauci during the contentious three-hour session about the
origins of COVID-19, which killed more than 1 million Americans, as well as
Fauci’s role in the response. It was the first time Fauci, 83, who also served
as chief medical adviser to President Joe Biden, had appeared before Congress
since leaving government employment in 2022.
Fauci repeatedly said he didn’t
conduct official business using personal email in response to allegations he
did so to avoid oversight. He also said he has kept an open mind about the
origins of the virus, and explained to members of the Select Subcommittee on
the Coronavirus Pandemic why guidance shifted so much during the first several
months of the pandemic.
“When you’re dealing with a new
outbreak, things change,” Fauci said. “The scientific process collects the
information that will allow you, at that time, to make a determination or
recommendation or a guideline.”
“As things evolve and change and you
get more information, it is important that you use the scientific process to
gain that information and perhaps change the way you think of things, change
your guidelines and change your recommendation,” Fauci added.
Republicans on the panel repeatedly
asked Fauci about how the Wuhan Institute of Virology in China received grant
funding from the U.S. government, as well as whether it, or another lab, could
have created COVID-19. That theory is counter to another that the virus emerged
from a “spillover event” at an outdoor food market.
When you’re dealing with a new
outbreak, things change. The scientific process collects the information that
will allow you, at that time, to make a determination or recommendation or a
guideline.
– Dr. Anthony Fauci
Fauci testified that it was
impossible the viruses being studied at the Wuhan Institute under an NIH
subgrant could have led to COVID-19, but didn’t rule out it coming from
elsewhere.
“I cannot account, nor can anyone
account, for other things that might be going on in China, which is the reason
why I have always said and will say now, I keep an open mind as to what the
origin is,” Fauci said. “But the one thing I know for sure, is that the viruses
that were funded by the NIH, phylogenetically could not be the precursor of
SARS-CoV-2.”
Fauci added that the $120,000 grant
that was sent to another organization before being sent to the Wuhan Institute
of Virology, was a small piece of the budget.
More
Fauci defends his work on COVID-19, says he has an
‘open mind’ on its origins (yahoo.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.
More on BEV trains. Siemens says its
BEV engine powered UK trains will save the environment and UK train operators
£3.5 billion. So, ticket prices will come down then, right?
Siemens’
Yorkshire-made battery trains will save ageing British railways £3.5bn
June 3, 2024
New battery trains which
could replace ageing diesel fleets at a slew of rail companies will save
Britain’s struggling railways £3.5bn, new research shows.
Siemens Mobility, which is
assembling the trains at its new facility in Goole, Yorkshire, says the battery bi-mode trains will also knock off 12m tonnes in
CO2 emissions over the next 35 years. That’s
equivalent to removing around 80,000 cars or planting a forest across an areas
the size of the Isle of Man.
The trains are powered
by overhead wires on already
electrified routes and can switch to pure battery power on sections with no
wires.
It means
only small sections of the routes and particular stations have to be
electrified, making it easier and less expensive to replace diesel trains when
compared with full electrification.
Siemens estimates the battery
trains would only require around 20 to 30 per cent of a line to be electrified.
Using Lithium Titanate Oxide battery chemistry, full charge can be reached in
20 minutes, either while moving along electrified sections or stopping at
stations.
Sambit Banerjee, Joint CEO of
Siemens, said: “Britain should never have to buy a diesel passenger train
again. Our battery trains, which we’d assemble in our new Goole factory in
Yorkshire, can replace Britain’s ageing diesel trains without us having to electrify
hundreds of miles more track in the next few years.
----The announcement
comes after the government pledged in 2018 to remove diesel-only
trains from Britain’s railways by 2040.
Around 29 per cent of
Britain’s current train fleet is run solely on diesel fuel, while the railway
sector’s carbon footprint has risen by one-third since 1999.
A number of train operators
are looking to replace their diesel fleets, including Chiltern, Great Western
Railway (GWR), Northern and Transpennine Express.
But the transition to greener
fleets has been hampered by ongoing financial issues affecting the sector since
Covid-19 wiped out passenger demand.
Siemens’ Yorkshire-made battery trains will save
ageing British railways £3.5bn (msn.com)
Next, our
latest new section, the world global debt clock. Nations debts to GDP compared.
World Debt
Clocks (usdebtclock.org)
It's no exaggeration to say that the undecideds could go one way or another.
President George H. W. Bush.
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