London Irvine Report: Special Update 01/03/2025 PCE Inflation. A Ukraine Bust. No US Recession Hope

Baltic Dry Index. 1229 +70 Brent Crude 72.81

Spot Gold 2858 U S 2 Year Yield 3.99 -0.08

US Federal Debt. 36.539 trillion.

Wealth is not to feed our egos but to feed the hungry and to help people help themselves.

Andrew Carnegie.

The big news yesterday was the very ugly spat between President Trump and Ukrainian “dictator” Zelensky, completely swamping the news of a slight increase in the Fed’s preferred inflation indicator, the core PCE price index, which came in as expected at +2.6 percent.

Look away from that flight to safety in US bonds now.

Europe stocks secure 10-week winning streak, outperforming U.S. in February

Updated Fri, Feb 28 2025 12:10 PM EST

European markets closed mixed on Friday, but notched a tenth straight week of gains despite uncertainty from U.S. President Donald Trump’s tariff threats.

The pan-European Stoxx 600 index pulled back from earlier losses to close fractionally above the flatline. The Stoxx Technology index was the worst performer, falling 1.5% as it felt the knock-on effects from Thursday’s sell-off of chipmaking giant Nvidia. The global tech bellweather rebounded Friday as investors continued to assess its quarterly earnings report.

Dutch semiconductor manufacturer BE Semiconductor was down 1.7%, while ASM International and ASML both lost more than 2%.

Trump earlier this week threatened to impose 25% duties on imports from the EU, saying the tariffs would be announced “very soon” and apply to “cars and all other things.”

The president also confirmed on Thursday that sweeping 25% tariffs on goods entering the U.S. from Canada and Mexico would come into effect on March 4, while China will face additional 10% tariffs from that date.

Following talks with U.K. Prime Minister Keir Starmer in Washington on Thursday, Trump hinted that Britain may manage to avoid his tariffs regime.

Despite Friday’s stock market downturn, the Stoxx 600 is set to end the week with a modest gain, continuing an unbroken run in the green this year, and adding more than 3% in February.

The S&P 500 has meanwhile suffered a loss of around 2.5% this month. The benchmark gauge for European markets also outperformed the U.S. in January, with factors including a possible end to the Russia-Ukraine war, solid earnings and a brighter economic outlook boosting sentiment.

Europe markets: Live updates as chip stocks, U.S. tariffs in focus

The first quarter is on track for negative GDP growth, Atlanta Fed indicator says

Published Fri, Feb 28 2025 2:56 PM EST

Early economic data for the first quarter of 2025 is pointing towards negative growth, according to a Federal Reserve Bank of Atlanta measure.

The central bank’s GDPNow tracker of incoming metrics is indicating that gross domestic product is on pace to shrink by 1.5% for the January-through-March period, according to an update posted Friday morning.

Fresh indicators showed that consumers spent less than expected during the inclement January weather and exports were weak, which led to the downgrade. Prior to Friday’s consumer spending report, GDPNow had been indicating growth of 2.3% for the quarter.

While the tracker is volatile and typically becomes a more reliable measure much later in the quarter, it does coincide with some other measures that are showing a growth slowdown.

“This is sobering notwithstanding the inherent volatility of the very high frequency ‘nowcast’ maintained by the Atlanta Fed,” Mohamed El-Erian, chief economic advisor at Allianz and president of Queens’ College Cambridge, said in a post on social media site X.

The gauge had pointed to GDP gains as high as 3.9% in early February but has been on a decline since then as additional data has come in.

On Friday, the Commerce Department reported that personal spending fell 0.2% in January, missing the Dow Jones estimate for a 0.1% increase. Adjusted for inflation, spending fell 0.5%. As a result, that shaved a full percentage point off the expected contribution to GDP, down to 1.3%, according to the GDPNow calculation.

At the same time, the contribution of net exports tumbled from -0.41 percentage point to -3.7 percentage points.

The combination of data and its impact on the growth outlook comes with surveys showing decreasing consumer confidence and worries about rising inflation. The Commerce Department also reported that an inflation measure the Fed favors moved lower during the month, as the core personal consumption expenditures price index fell to 2.6%, down 0.3 percentage point from December.

The week also brought some concerning news out of the labor market as initial unemployment claims hit a level that was last higher in early October.

In addition, the bond market also has been pricing in slower growth. The 3-month Treasury yield this week moved above the 10-year note, a historically reliable indicator of a recession at the 12- to 18-month horizon.

The economic and policy uncertainty has led to a bumpy start to the year for the stock market. The Dow Jones Industrial Average is up 2% in 2025 amid wild fluctuations in a volatile news cycle.

“My sense is that the complacency that has crept into asset markets is about to be disrupted,” said Joseph Brusuelas, chief U.S. economist at RSM.

Markets increasingly believe the Fed will respond to the slowdown with multiple interest rate cuts this year. Traders in the fed funds futures market increased the odds of a quarter percentage point reduction in June to about 80% as of Friday afternoon and raised the possibility of three such cuts total this year.

The first quarter is on track for negative GDP growth, Atlanta Fed indicator says

Here's what to know about today's inflation data from the PCE report

February 28, 2025

The personal consumption expenditures (PCE) price index, the Federal Reserve's preferred inflation measure, rose 2.5% in January on an annual basis, matching economists' expectations and providing some reassurance on the heels of hotter-than-expected inflation data earlier this month.

The PCE index and other inflation yardsticks, such as the Consumer Price Index, measure the change in prices over time of a typical basket of goods and services.

By the numbers

The January numbers match forecasts that the PCE rose 2.5% on an annual basis, according to economists polled by financial data firm FactSet.

While inflation has plunged from its recent peak of about 9% in June 2022, it still remains higher than the Fed's goal of driving it to an annual rate of 2%. Today's PCE data follows on the heels of the most recent CPI report, which showed that inflation accelerated in January to 3% on an annual basis.

What economists say

The PCE report shows that inflation "rose at a mild pace in January, which offers some relief after a string of economic reports suggesting that inflation is heating up again," said Key Wealth managing director of fixed income investments Rajeev Sharma in an email.

The recent sticky CPI report had reinforced the Fed's decision in January to pause on additional rate cuts, but today's data suggests that the central bank could still introduce more reductions this year. That said, "thoughts of multiple rate cuts for 2025 may be overly optimistic based on today's data," Sharma added.

Many consumers are also expressing their concerns about stubborn inflation, with a large majority of Americans telling CBS News polling that their incomes aren't keeping pace with inflation. Some are expressing concern about their ability to save or buy extras, the poll found.

Consumer sentiment is souring amid stubborn inflation and other headwinds, according to some recent measures. "The University of Michigan's index of consumer sentiment for Democratic-leaning consumers plunged to the lowest since the economic collapse of 2008 in February," noted Bill Adams, chief economist for Comerica Bank, in an email.

He added, "Consumers who are worried about tariffs, DOGE cuts and fears of deportations seem to be pulling back on discretionary spending."

Here's what to know about today's inflation data from the PCE report

Next, that Trump v Zelensky mauling.

Volodymyr Zelensky breaks silence after storming out of Ukraine peace talks

28 February 2025

Ukrainian President Volodymyr Zelensky broke his silence after his disastrous meeting with Donald Trump in Washington. Earlier this evening, the Ukrainian leader became embroiled in a fiery exchange with US President Donald Trump and Vice President JD Vance in front of the world's media in the White House.

Following the meeting, a scheduled press conference that was set to follow the signing of an historic deal to provide US access to Ukrainian minerals was cancelled. Taking to X after he was seen leaving the White House, Mr Zelensky wrote: "Thank you America, thank you for your support, thank you for this visit. Thank you @POTUS, Congress, and the American people. Ukraine needs just and lasting peace, and we are working exactly for that." The White House subsequently confirmed that the minerals deal, which Zelensky had travelled to Washington to conclude, was not signed by either party.

The historic meeting, which came on the back of weeks when both leaders exchanged scathing comments, has flipped the balance of the Ukraine war upside down.

Last week, the US President called Zelensky a "dictator" after elections in the country had to be postponed following the Russian invasion. Yesterday, when questioned about the comments as he met Keir Starmer, Trump appeared to row back, saying "Did I say that? I can't believe I would say that".

The Ukrainian leader had accused Trump of living "in a disinformation space" following the comments.

---It remains to be seen what impact the shocking exchange will have on funding for the Ukrainian war and on any future peace negotiations with Moscow.

On Sunday, the UK Prime Minister is set to hold a summit of more than a dozen leaders from Europe and the EU to "drive forward" action on Ukraine.

The summit will likely play an even more prominent role in holding together a shaky alliance of nations that has stood firm for three years.

This week, Starmer and French President Emmanuel Macron had visited the White House in an attempt to obtain security guarantees ahead of any potential peace deal.

Despite being viewed widely as a success, the latest scenes in the Oval Office leave the future of the Ukraine war and the ability of the armed forces to continue to hold off Russian invaders in jeopardy.

Volodymyr Zelensky breaks silence after storming out of Ukraine peace talks

Zelenskyy won't apologize to Trump, but calls clash 'not good for both sides'

Published Fri, Feb 28 2025 6:13 PM EST

Ukrainian President Volodymyr Zelenskyy repeatedly refused on Friday evening to apologize for his stunning Oval Office clash with President Donald Trump and Vice President JD Vance hours earlier.

“No,” Zelensky said, when Fox News’ Bret Baier asked if he owed Trump an apology, after Trump had accused him of disrespect.

But Zelenskyy said, “This kind of spat is not good for both sides.”

The Ukrainian leader in his televised interview also said that “it will be difficult for us” to defend his country from invading Russian military forces if Trump discontinues aid to Ukraine.

“That’s why we’re here,” Zelenskyy said. “It will be difficult without your support.”

“Your people help to save our people,” he later said.

He expressed gratitude to Trump and the American people for the U.S. aid provided so far.

“I’m very thankful to Americans for all your support. You did a lot. I’m thankful to President Trump and to Congress,” Zelenskyy said.

“You helped us a lot. From the very beginning, during three years of full-scale invasion, you helped us to survive.”

The clash earlier Thursday at the White House began when Zelenskyy disputed Vance’s argument that Ukraine could obtain peace with Russia through diplomacy, with the Ukrainian president noting how Russian leader Vladimir Putin has repeatedly violated prior agreements.

“He killed our people, and he didn’t exchange prisoners,” Zelenskyy said about Putin. “What kind of diplomacy, JD, you are speaking about? What do you mean?”

Vance blasted Zelenskyy for not thanking Trump in public Friday, and Trump said Zelenskyy was risking the deaths of millions of people, and of starting “World War III” if he did not reach a peace deal.

Zelensky soon after left the White House without signing a planned deal to give the United States access to rare earth minerals in Ukraine. Zelenskyy wants that deal to be a precursor to Trump guaranteeing support for Ukraine if Russia violates a potential peace agreement.

In his Fox News interview, Zelenskyy said he regretted his dispute with Trump and Vance was televised, and in front of reporters.

“We are thankful and sorry for this. I mean this, we wanted very much to have strong relations,” he told Baier.

Pressed if he should apologize to Trump, Zelenskyy said, “I think that we have to be very open and very honest.”

“And I’m not sure that we did something bad,” Zelenskyy said.

Asked if he believed that his relationship with Trump could be salvaged, the Ukrainian leader said, “Yes, of course.”

Shortly before the interview, Trump said Zelenskyy had “overplayed his hand.”

“He’s looking for something that I’m not looking for,” Trump told reporters outside the White House.

“He’s looking to go on and fight, fight, fight. We’re looking to end the death.”

Trump’s message drew sharp rebukes from European and NATO leaders, who reiterated their support for Ukraine in statements across social media.

Zelenskyy talks Trump clash: 'Not good for both sides'

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.

Consumers Pull Back on Spending—But There’s a Silver Lining

February 28, 2025 at 10:45 PM GMT

US consumers pulled back on spending on goods like cars in January amid extreme winter weather. Inflation-adjusted consumer spending fell 0.5%, marking the biggest monthly decline in almost four years after a robust holiday season. The drop in outlays was driven by an outsize decline in motor vehicle purchases and drops in categories like recreational goods.

“The key question is whether this is the onset of a more cautious consumer in 2025,” said Gregory Daco, chief economist for EY. “Spending on the services front was modest, so it may be a little bit more than just a post-holiday breather.” After two weeks of sobering news on the inflation and employment front, there was however a little silver lining: the Federal Reserve’s preferred measure of underlying inflation offered some relief on Friday from all those ill tidings.

----Flailing consumer confidence, a big jump in jobless claims, gloomy housing data—there are lots of reasons to worry about the fate of the US economy, and anxiety has been taking hold across markets. To be sure, it’s nice that a late-day rally on Friday boosted the S&P 500 (see the aforementioned silver lining), but it’s inescapable that investor sentiment is deteriorating. Treasuries are off to their strongest start to a year since the pandemic arrived in early 2020, while stocks have nearly wiped out 2025 gains. Now the big money managers, like those at Manulife Asset Management and Penn Mutual Asset Management, are paring equity positions while building bond exposure. “If the consumer weakens materially and corporations pull back on growth plans, economic growth deterioration becomes a major headwind,” said Nathan Thooft at Manulife Investment Management in Boston, which oversees $160 billion. “There is little room for policy missteps.”

Consumers Pull Back on Spending—But There’s a Silver Lining - Bloomberg

Jobless claims may have just fired the clearest recession warning yet — here’s why investors should be worried

27 February 2025

The U.S. economy has started to show signs it is losing momentum.

Growing uncertainty about the Trump White House’s economic plans, including layoffs of federal workers carried out by the so-called Department of Government Efficiency, has caused consumers and businesses to further question the economic outlook. If this results in a serious pullback, the U.S. economy could be headed for a recession in the next few quarters.

While there are still more questions than answers, “a U.S. recession remains improbable, but is not longer unthinkable in the coming quarters,” said Ajay Rajadhyaksha, global chair of research at Barclays.

Given that the economy is slowing, could layoffs of federal workers spearheaded by Elon Musk’s “DOGE” push the economy over the edge into recession?

Jobless claims spiked to the highest level in three months on federal job cuts.

While devastating for the individuals involved, for the most part, economists don’t think the federal job losses will be a massive issue for the labor market overall.

“Keep in mind that the federal government only employs about 3 million people, which makes up about 2% of the overall nonfarm job market,” said Beth Ann Bovino, chief economist at U.S. Bank.

“The loss of federal jobs would be a negative shock, but the U.S. economy would need to suffer several shocks in order to experience a recession,” Bovino added.

Estimates of job losses in the federal government are now at around 200,000 by October. That equates to roughly 20,000 per month.

Andrew Husby, senior U.S. economist at BNP Paribas, thinks the labor market will stay resilient, with the unemployment rate holding at around 4%, he said.

While the economy is slowing, which means less demand for labor, that will be offset by a lower supply of workers, given immigration restrictions, he said.

“While growth slows, we don’t think it actually means the labor market loosens very materially here,” Husby said.

Concerns by businesses and consumers over the past two weeks come after “a really impressive back half of 2024,” and some payback is not a signal of a big shift in the outlook, he said.

The Atlanta Fed’s GDP tracker sees first-quarter growth running at a 2.3% annual rate. That’s down from initial estimates of close to 4% early this month. The economy expanded at a 3.2% rate in the final three months of 2024.

Husby and other economists said they will be watching consumer spending especially closely.

“Unless the consumer is really going to throw in the towel, it’s hard to write down really weak numbers for the U.S. economy,” said Jonathan Pingle, chief U.S. economist at UBS Securities.

Pingle said there’s some solace for federal workers in that most are college graduates. With the unemployment rate for college graduates at a low 2.3%, those who have been laid off will likely be able to find work, he said.

“It’s not like getting laid off in the midst of a recession where there isn’t a normally functioning labor market and expanding labor demand,” Pingle said.

Jobless claims may have just fired the clearest recession warning yet — here’s why investors should be worried

Bank of England chief issues fresh inflation 'risk' warning to millions of Brits

28 February 2025

A Bank of England policymaker has issued a fresh warning about inflation amid the ongoing economic uncertainty.

During a meeting in South Africa on Friday, Dave Ramsden, the bank's deputy governor for markets and banking, said there is now more risk of inflation rising than there was before.

He said: "Given the increased uncertainty and risks to inflation on both sides ... I am even more certain than I was that taking a gradual and careful approach to the withdrawal of monetary restraint is appropriate."

While the Bank cut interest rates to 4.5% at its February meeting, the chances of further rate cuts took a knock after higher-than-expected inflation figures in the weeks since.

The core rate of inflation across the economy rose to 3% in January from 2.5% in December.

Mr Ramsden pointed to a recent employment market report, which indicated that earnings growth hit an eight-month high, with regular pay growth hitting 5.9% in the three months to December.

He said he is "less certain than I was about the outlook for the UK labour market and its implications for future inflation persistence and growth".

The Bank aims to bring inflation back to its 2% target over the coming years, though higher wage growth could pose a challenge to this goal.

He added that inflation risks are now "two-sided, reflecting the potential for both inflationary and disinflationary scenarios."

Bank of England chief issues fresh inflation 'risk' warning to millions of Brits

Covid-19 Corner

This section will continue until it becomes unneeded.

Yale doctor's cancer vaccine puts nine patients into remission

24 February 2025

A groundbreaking cancer ‘vaccine’ developed by a Yale University scientist has reversed the disease in nine patients.

All patients enrolled in the study between March 2019 and September 2021 were free from kidney cancer at the three-year follow-up in July 2023, marking a major milestone.

The type of kidney cancer they had - stages three and four clear cell renal cell carcinoma (ccRCC) - kills between 85 and 90 percent of patents.

The vaccine was able to snuff out the remaining cancer cells after surgery while avoiding healthy cells by being finely tuned to each patient’s biology.

The shots, developed by a team at the Yale Cancer Center and Dana-Farber Cancer, were designed to train the immune system to recognize only the specific mutations in a patient’s tumor that are not present in normal, healthy cells.

Dr David Braun, first author of the report and lead investigator at the Yale Cancer Center, said: ‘The idea behind this trial was to specifically steer the immune system toward a target that is unique to the tumor.'

Every case of cancer is unique, and researchers have been working to develop tumor-specific vaccines that can both destroy cancer cells in a highly targeted manner and prevent cancer from recurring, which happens to 20 to 50 percent of patients.

Their research is focused on this particular type of cancer, though if the shot proves efficacious in later studies, it could inform the way doctors in other specialties design theirs.

The phase one trial aimed to determine the vaccine's safety and how well the patient’s bodies tolerated it.

All nine patients, each of whom received the vaccine, did not see their cancer return by the study’s end three years later.

Kidney cancer is the seventh most common type of cancer among men in the US and tenth most common among women.

Only around 10 to 15 percent of patients diagnosed with late stage ccRCC survive after five years.

The latest study administered the vaccine to all nine participants.

Each patient received a total of seven doses of the vaccine during the study (5 doses during the priming phase and 2 during the booster phase).

Four patients received just the vaccine, and five others received small doses of the immunotherapy drug ipilimumab to evaluate how well the vaccine worked on its own, without the added influence of immunotherapy.

Yale doctor's cancer vaccine puts nine patients into remission

Technology Update.

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

This weekend something different.

UK soil breakthrough could cut farm fertiliser use and advance sustainable agriculture

22 February 2025

A biological mechanism that makes plant roots more attractive to soil microbes has been discovered by scientists in the UK. The breakthrough – by researchers at the John Innes Centre in Norwich, Norfolk – opens the door to the creation of crops requiring reduced amounts of nitrate and phosphate fertilisers, they say.

“We can now think of developing a new type of environmentally friendly farming with crops that require less artificial fertiliser,” said Dr Myriam Charpentier, whose group carried out the research.

Excess use of fertilisers has become a major ecological problem in recent years and has been linked to soil degradation, while run-offs from fields are causing major pollution in rivers where algae blooms spread across the water, and kill fish and other aquatic life.

However, the research has uncovered a route that could lead to the development of crops that could reduce this problem by helping them scavenge nutrients from the soil more effectively – by gaining a little help from soil microbes. The basis of this approach is a process known as endosymbiosis, in which one organism exists within another in a mutually beneficial relationship.

This activity helps some plants to scavenge nutrients from nutrient-poor soil using the assistance of microbes in natural settings. However, in agricultural settings, where fertilisers are used to boost yields, these disrupt the natural interaction between crops and microbes.

The team led by Charpentier has announced that it has discovered a mutation in the legume Medicago truncatula which enhances partnerships with bacteria and fungi that supply the roots with nitrogen and phosphorus. This process improves the plant’s take-up of nutrients.

Crucially, the team – whose research was recently published in Nature – showed the same gene mutation in wheat enhances similar partnerships in field conditions. This opens the door to the creation of wheat varieties that can exploit soil microbes to provide nutrients and so reduce the need to use large amounts of artificial inorganic fertilisers.

“This discovery is created in a wheat variety that is non-GM,” Charpentier added. This means that plant breeders can use traditional breeding methods to develop varieties that possess the trait.

The discovery is causing excitement because it opens the door to the use of endosymbiotic agents as natural alternatives to inorganic fertilisers for major crops. The team’s finding offered “great potential for advancing sustainable agriculture”, Charpentier told the Observer.

UK soil breakthrough could cut farm fertiliser use and advance sustainable agriculture

Next, the world global debt clock. Nations debts to GDP compared.

World Debt Clocks (usdebtclock.org)

This weekend’s music diversion. Another long-forgotten maestro from Italy via Mexico. Approx. 10 minutes.

Sinfonía en Sol mayor- IGNACIO JERUSALEM Y STELLA~Orchestral Galant Music in the New Spain (ca.1760)

Sinfonía en Sol mayor- IGNACIO JERUSALEM Y STELLA~Orchestral Galant Music in the New Spain (ca.1760)

Ignatius of Jerusalem and Stella

Ignatius of Jerusalem and Stella (June 2, 1707 – 1769) was a Neapolitan violinist and composer. He began his musical activity in his native Kingdom of Naples as a violinist, he was also a musician at the Coliseum of Cádiz and in New Spain he became chapel master of the Cathedral of Mexico. His contemporaries knew him as the "musical miracle" because his talent and musical abilities equaled the chapel master of Madrid.