Baltic Dry Index. 1881 +12 Brent Crude 79.82

Spot Gold 2294 U S 2 Year Yield 4.87 +0.15

In the run up to the UK General Election on July 4, the LIR will play its part.

Poor people have been voting for Democrats for the last 50 years and they're still poor.

Charles Barkley.

For mini-nuke madness scroll down to the technology section.

The US jobs report came in hot, dashing hopes for an early start to the US central bank cutting its key interest rate next week.

My take is a little different.

I think that a Sahm rule US recession signal was just triggered by the US unemployment rate increasing to 4.0%. The 12 month low is now the 3.5% hit in July 23.

May 24 at 4.0% is 0.5% higher triggering the Sahm rule despite the rest of the report coming in strong.

My guess is that the Fed will ignore the Sahm rule signal next week, opting to ignore it due to the strength of the rest of the report.

I think that will be a mistake. We now have both the Sahm rule and the faster McKelvey rule signalling the onset of a US recession.

After next week, the Fed's next policy meeting is July 31. By then it should be apparent if the US economy is stumbling and laying off workers.

Given the lag in interest rates impacting the economy, cutting at the end of July will not have much effect before November unless they cut drastically. But a 1 percent rate cut would probably panic the markets given the Fedster’s have only signalled baby cuts of a quarter of one percent.

Supporting my case, the US yield curve is flattening again. The Brent crude oil price easing suggests a slowing global economy, not a global economy booming.

Market backs off on hopes for interest rate cuts following strong jobs report

PUBLISHED FRI, JUN 7 2024 1:01 PM EDT

May’s surprising pace of job growth and wage rise added to the conviction that the Federal Reserve will stay on hold through this summer and possibly beyond.

The Bureau of Labor Statistics reported Friday that nonfarm payrolls increased by 272,000 for the month, considerably higher than the Wall Street consensus of 190,000 and well above April’s comparatively muted gain of 165,000. In addition, average hourly earnings rose 4.1% over the past 12 months, more than expected.

Beyond signaling a still-vibrant labor market, the data at the very least adds to the narrative that the Fed doesn’t have to rush to lower interest rates.

As inflation runs above the central bank’s 2% target, there’s scant evidence that higher rates are endangering broad metrics of economic growth.

“I’ve been a little flummoxed at the parlor game of when will the Fed start cutting,” said Liz Ann Sonders, chief investment strategist at Charles Schwab. “I’ve been more in the camp that neither of the components of the Fed’s dual mandate are pointing to the need to start cutting, and higher-for-longer means nothing could happen this year.”

The Fed’s “dual mandate” entails maintaining both full employment and stable prices.

Even with the unemployment rate rising to 4% in May, the labor market appears vibrant.

However, on the other side of the mandate, inflation is still running well above the Fed’s target. Most gauges have prices rising annually at about a 3% rate, down significantly from the peaks of mid-2022 but still running hot.

Lowering expectations

Following the jobs numbers, futures traders cut bets on rate cuts.

Pricing in fed funds futures pointed to almost no chance of a reduction at either the Federal Open Market Committee’s meeting next week or on July 30-31. From there, pricing indicates about a 50-50 chance of a September move, and only about a 46% probability that the Fed will follow up with a second cut before the end of the year, according to the CME Group’s FedWatch measure Friday afternoon.

All of those probabilities were down sharply from Thursday levels.

----Moreover, the household survey, which is used to calculate the unemployment rate, showed a decrease in employment of 408,000 and a continuing trend of part-time employment far outpacing full-time positions.

“And thus, the Federal Reserve’s mandate of price stability and full employment comes very much into balance,” Rieder wrote in a post-report analysis. “With these conditions, the Fed can lower the Fed Funds rate from very restrictive territory to merely restrictive positioning.”

“We believe the Committee can still start cutting the policy rate by 25 basis points at its September meeting, with a desire to get one more cut done this year, but inflation readings from here need to be supportive of this,” he added.

Similarly, Citigroup, long above consensus on Wall Street as the firm continued to expect aggressive rate cuts, said it now sees the Fed not moving until September but then continuing to cut rates from that point.

“The jobs report does not change our view that hiring demand, and the broader economy, is slowing and that this will ultimately provoke the Fed to react with a series of cuts beginning in the next few months,” Citigroup economist Andrew Hollenhorst wrote.

Market backs off on hopes for interest rate cuts following strong jobs report (cnbc.com)

U.S. job gains totaled 272,000 in May, much more than expected

PUBLISHED FRI, JUN 7 2024 8:31 AM EDT

The U.S. economy added far more jobs than expected in May, countering fears of a slowdown in the labor market and likely reducing the Federal Reserve’s impetus to lower interest rates.

Nonfarm payrolls expanded by 272,000 for the month, up from 165,000 in April and well ahead of the Dow Jones consensus estimate for 190,000.

At the same time, the unemployment rate rose to 4%, the first time it has breached that level since January 2022. The increase came even though the labor force participation rate decreased to 62.5%, down 0.2 percentage point. However, the survey of households used to compute the unemployment rate showed that the level of people who reported holding jobs fell by 408,000.

Job gains were concentrated in health care, government and leisure and hospitality, consistent with recent trends. The three sectors respectively added 68,000, 43,000 and 42,000 positions. The three sectors accounted for more than half the gains.

Other significant growth areas came in professional, scientific an technical services (32,000), social assistance (15,000) and retail (13,000).

Regarding wages, average hourly earnings were higher than expected as well, rising 0.4% on the month and 4.1% from a year ago. The respective estimates were for increases of 0.3% and 3.9%.

Jobs report May 2024: U.S. job gains totaled 272,000 in May (cnbc.com)

Strong US Payrolls and Wage Growth Push Back Bets for Fed Cuts

Fri, Jun 7, 2024, 3:00 PM GMT+1

(Bloomberg) -- US job growth surged in May and wages accelerated, prompting traders to push back the expected timing of Federal Reserve interest-rate cuts.

Nonfarm payrolls advanced 272,000 last month, a Bureau of Labor Statistics report showed Friday, beating all projections in a Bloomberg survey of economists. Average hourly earnings climbed 0.4% from April and 4.1% from a year ago, both picking up from the prior report.

However, the unemployment rate — which is derived from a separate survey — increased to 4% from 3.9%, rising to that level for the first time in over two years.

The latest figures highlight a labor market that continues to defy expectations and blunt the impact on the economy from high interest rates and prices. That strength risks keeping inflationary pressures stubborn, which will likely reinforce the Fed’s cautious stance on monetary policy as officials debate just how restrictive rates are.

“It’s a very Fed-unfriendly report – an easing-unfriendly report,” said Jay Bryson, Wells Fargo & Co. chief economist. “Taking this piece of data by itself means the Fed is likely to remain on hold for the next several months.”

Strong US Payrolls and Wage Growth Push Back Bets for Fed Cuts (yahoo.com)

In EV news, nothing good. Why would anyone buy a second hand EV with a dodgy battery at any price?

EV slump, Hertz fire sale take used Teslas to ‘no haggle’ $25,000 price

PUBLISHED THU, JUN 6 2024 12:02 PM EDT

The race to the $25,000 EV in the U.S. car market has been won, but not in the way the auto industry wanted.

Since January, Hertz Global Holdings has been in Tesla sales mode, with 20,000 electric vehicles from its global fleet, representing nearly a third of the rental-car company’s existing EV inventory, on the dealer lot. The move, viewed as a stumble in Hertz’s EV strategy — in 2021, it heralded plans to order hundreds of thousands of Teslas, Polestars and battery-electric GM models — also reflects a sobering up of the electrification hype within the U.S. auto industry, which has run into a consumer in 2024 spurning at least the expected pace of the transition away from gas-powered cars.

While EV sales in the U.S. more than quadrupled from 2020 to 2023, and now account for more than 9% of total light-duty vehicle sales, the pace of growth has slowed and automakers are focusing more on selling hybrids. Yet the eventual transition to EVs remains inevitable, as sticker prices become more in line with those of internal combustion engine (ICE) vehicles — something the sales slump is making happen even faster as auto companies attempt to move EVs — battery technology improves driving range and the charging infrastructure expands. And there is the overarching imperative to reduce the tons of climate-changing carbon emissions that cars and trucks produce.

More.

EV slump, Hertz fire sale take used Tesla to no haggle $25,000 price (cnbc.com)

Finally, more bureaucratic idiocy from the EUSSR..

The Race to Meet EU Sourcing Rules Spans Six Continents

By Agnieszka de Sousa June 6, 2024 at 12:00 PM GMT+1

From a lush corner of Sumatra to the mountains of Honduras, farmers around the world are racing to map out their land.

That’s a prerequisite if they want to continue to ship their produce to the European Union as part of the bloc’s new law aimed at curbing deforestation, known under the acronym EUDR.

By late 2024, large companies handling seven key commodities — coffee, cocoa, soy, palm oil, cattle, rubber and wood, and products derived from them — will be required to prove that people in their supply chains didn’t work land that was deforested after 2020, legally or illegally.

That means that every coffee bean, carcass of beef and log of wood — along with such things as chocolate, tires and books — will need to be traced to the exact locations they came from, or the EU will levy hefty penalties.

But the geolocating task is huge and nowhere near done, threatening far-reaching consequences for more than $110 billion of trade annually and economies across six continents. Already, there are warnings of higher prices for consumers in Europe.

An analysis of trade data by Bloomberg News shows there are more than 55 countries that each export on average at least $100 million a year of goods to the EU that will be affected by EUDR. The impact will depend on the commodities they ship, who buys them and whether there are resources to handle farm mapping and all the necessary paperwork. Countries like Ivory Coast, Honduras and Uruguay are among the most dependent nations for trade with the bloc.

The task is magnified in the world of coffee, which relies on more than 12 million farmers around the world, virtually all of whom contribute to Europe’s morning espresso and the vast majority of whom are unaware of the regulation, haven’t had their farm digitally mapped, according to Enveritas, which visits farms regularly.

“For small and especially smallholder farmers or smallholder producers, it is going to be extremely difficult,” said Pamela Coke-Hamilton, executive director of the International Trade Centre, which works with vulnerable economies.

“There’s the abject fear of countries of what this will mean for their exports and therefore for their bottom line, which is their GDP and their ability to earn export foreign exchange earnings,” she said.

Supply Chain Latest: EU Deforestation Rules - Bloomberg

Global Inflation/Stagflation/Recession Watch.

Given our Magic Money Tree central banksters and our spendthrift politicians, inflation/recession now needs an entire section of its own.

Interview: Dan Rawitch says US markets could drop by 22% or more in the coming recession

June 7, 2024

Experts say a US recession lurks ahead.
We spoke to senior trader and founder of the University of Options Dan Rawitch on what's coming.
Find out when the recession will hit, what it'll likely do and best recession-proof buys, in his opinion.

The economic landscape of 2024 has not turned out as first expected for the US in January. Inflation has remained sticky, interest rate cuts recede like horizons and now, analysts the world over are issuing stark warnings.

Sometime near end 2024 or early 2025, the United States will likely enter a recession. Some, like renowned financial analyst and commentator, Gary Shilling, believe it could wipe as much as 30% off the stock market.

We discussed the coming gloom with Dan Rawitch: senior trader, entrepreneur, and founder of University of Options. Edited excerpts:

Many analysts, yourself included, see a US recession coming and, with it, a stock market plunge. Which markets or indices will be the hardest hit?

In the past, I have always said that small caps take the first and worst punch. But this time feels different because only 7 mega stocks make up a whopping 40% of the NASDAQ.

While these Magnificent 7 companies may still be fairly valued, many investors have made considerable money on the way up. If things get dicey, many will run to lock in their gains.

That said, when the market plunges, investors start caring about earnings, sales growth and balance sheets. And 30% of the companies that make up the Russell 2000 are losing money. They will get hit hard and fast.

We call these ‘zombie companies’. They are the walking dead and do not earn enough to pay their debts. They are essentially bankrupt and survive only on newly invested capital.

Interview: Dan Rawitch says US markets could drop by 22% or more in the coming recession | Invezz Interview: Dan Rawitch says US markets could drop by 22% or more in the coming recession

Covid-19 Corner

This section will continue until it becomes unneeded.

The disproportionate toll that COVID-19 took on people with diabetes continues today

Story by Jamie Hartmann-Boyce, Assistant Professor of Health Promotion and Policy, UMass Amherst, UMass Amherst

June 6, 2024

At the start of the pandemic, many people living with diabetes were wondering what COVID-19 meant for them. Diabetes was already known to put people at higher risks from other infectious diseases, including flu. Would it be the same with COVID-19? At the time, all scientists could do was make educated guesses.

In 2024, things look very different. A great deal more research is available, as well as effective vaccines, and life has in many ways returned to something like normal.

COVID-19 hasn’t disappeared, however, and for the more than 400 million people living with diabetes worldwide, very real risks and impacts from the pandemic remain.

I specialize in drawing on and combining existing evidence to inform health policy across a range of areas. I’ve been studying COVID-19 and diabetes since the start of the pandemic and have experienced firsthand some of the many ways in which COVID-19 has affected people with diabetes. I’ve lived with Type 1 diabetes for the past 30 years. And at the start of the pandemic, I had a lot of questions about what COVID-19 meant for me.

Diabetes is characterized by having higher than normal blood sugars. Different types of diabetes create this condition in varying ways.

The disproportionate toll that COVID-19 took on people with diabetes continues today (msn.com)

Technology Update.

With events happening fast in the development of solar power and graphene, I’ve added this section.

Mini-nuke madness. In our new violent terrorist age of Gaza, Ukraine, Sudan and Myanmar, do we really want hundreds, if not thousands of vulnerable mini-nuke power stations at all, whatever the supposed cost benefit?

Once we start putting mini-nuke power plants in towns and cities, factories, hospitals, industrial estates across the G-7, they become a magnet for terrorists, hostile powers, anti-nuke demonstrators and probably the mentally ill.

With hundreds or thousands of mini-nukes possible, keeping them running safely 24/7/365 with trained teams of operators, becomes as big a problem as adequately guarding them. A problem that only gets worse as they age. But who trains the teams, who vets them to prevent malignant sleeper infiltration?

What happens in a mini-nuke Windscale, Three Mile Island, Chernobyl error event? How much collateral damage is acceptable? Who pays?

Finally, eventually comes the problem of decommissioning them and adequately storing all the decommissioned material. Some of it for hundreds or thousands of years.

Landfill? Mines? The ocean? Space? The Moon? All deeply problematic.

With a mini-nuke probable lifespan of 30-50 years, what are we thinking?!!!

Small modular nuclear reactors get a reality check in new report

By Michael Franco May 31, 2024

A new report has assessed the feasibility of deploying small modular nuclear reactors to meet increasing energy demands around the world. The findings don't look so good for this particular form of energy production.

Small modular nuclear reactors (SMR) are generally defined as nuclear plants that have capacity that tops out at about 300 megawatts, enough to run about 30,000 US homes. According to the Institute for Energy Economics and Financial Analysis (IEEFA), which prepared the report, there are about 80 SMR concepts currently in various stages of development around the world.

While such reactors were once thought to be a solution to the complexity, security risks, and costs of large-scale reactors, the report asks if continuing to pursue these smaller nuclear power plants is a worthwhile endeavor in terms of meeting the demand for more and more energy around the globe.

The answer to this question is pretty much found in the report's title: "Small Modular Reactors: Still Too Expensive, Too Slow, and Too Risky."

If that's not clear enough though, the report's executive summary certainly gets to the heart of their findings.

"The rhetoric from small modular reactor (SMR) advocates is loud and persistent: This time will be different because the cost overruns and schedule delays that have plagued large reactor construction projects will not be repeated with the new designs," says the report. "But the few SMRs that have been built (or have been started) paint a different picture – one that looks startlingly similar to the past. Significant construction delays are still the norm and costs have continued to climb."

Small modular nuclear reactors get a reality check in new report (newatlas.com)

Windscale fire

The Windscale fire of 10 October 1957 was the worst nuclear accident in the United Kingdom's history, and one of the worst in the world, ranked in severity at level 5 out of 7 on the International Nuclear Event Scale.^[1] The fire was in Unit 1 of the two-pile Windscale site on the north-west coast of England in Cumberland (now Sellafield, Cumbria). The two graphite-moderated reactors, referred to at the time as "piles," had been built as part of the British post-war atomic bomb project. Windscale Pile No. 1 was operational in October 1950, followed by Pile No. 2 in June 1951.^[4]

The fire burned for three days and released radioactive fallout which spread across the UK and the rest of Europe.^[5] The radioactive isotope iodine-131, which may lead to cancer of the thyroid, was of particular concern at the time. It has since come to light that small but significant amounts of the highly dangerous radioactive isotope polonium-210 were also released.^[6]^[5] It is estimated that the radiation leak may have caused 240 additional cancer cases, with 100 to 240 of these being fatal.^[1]^[2]^[3]

At the time of the incident, no one was evacuated from the surrounding area, but milk from about 500 km² (190 square miles) of the nearby countryside was diluted and destroyed for about a month due to concerns about its radiation exposure. The UK government played down the events at the time, and reports on the fire were subject to heavy censorship, as Prime Minister Harold Macmillan feared the incident would harm British-American nuclear relations.^[3]

Windscale fire - Wikipedia

Next, our latest new section, the world global debt clock. Nations debts to GDP compared.

World Debt Clocks (usdebtclock.org)

This weekend’s music diversion. A half-way intermission from our Vivaldi season with the ever excellent J. D. Heinichen. Approx.4 minutes.

Concerto in A Major - Oboe d'amore, Strings & B.C., Seibel 228: Allegro (3)

Concerto in A Major - Oboe d'amore, Strings & B.C., Seibel 228: Allegro (3) - YouTube

Johann David Heinichen

Johann David Heinichen - Wikipedia

This weekend’s chess update. Approx. 12 minutes.

Hikaru Loves Chess Too Much To Play for A Draw || Norway Chess 2024 ARMAGEDDON

Hikaru Loves Chess Too Much To Play for A Draw || Norway Chess 2024 ARMAGEDDON - YouTube

This weekend’s final, YouTube diversion. CA’s $20 minimum wage.