Baltic Dry Index. 1342 -59 Brent Crude 60.29
Spot Gold 3010 US 2 Year Yield 3.71 -0.02
US Federal Debt. 36.701 trillion!!!
How much would you pay to avoid a second Depression?
Ben Bernanke
No need for my input this morning the articles below cover Trump’s tariff wars on friend and foe alike, triggering a new stocks casinos bear market and probably a US and global recession.
Look away from that collapsing crude oil price and Baltic shipping index now.
Coming all too soon, a round of consumer and corporate debt defaults.
South Korea’s Kospi in bear market as Trump’s
country-specific tariffs kick into high gear
Updated Wed, Apr 9 2025 12:09 AM EDT
Asia-Pacific markets fell on Wednesday as
U.S. President Donald Trump’s country-specific tariffs comes into effect.
Australia’s S&P/ASX 200 slid 1.06%.
Japan’s Nikkei 225 lost 3.14%, while
the Topix traded 3.26% lower. South Korea’s Kospi edged 0.95% lower. The
benchmark has lost 20% from its July high, confirming a bear market. The
small-cap Kosdaq lost 0.44%.
Hong Kong’s Hang Seng Index fell 3.86%,
while the Hang Seng Tech Index declined 5.42%.
Additional Trump tariffs have come into
effect, adding to the 10% baseline duty that was already implemented on
Saturday. Chinese goods will now face a cumulative tariff rate of 104%.
Investors will also be keeping an eye out
for Reserve Bank of India’s decision later in the day. India’ central bank is
expected to deliver a second straight rate cut today, according to economists
polled by Reuters, which will bring its policy rate to 6%.
Overnight in the U.S., the three major
averages closed lower. The Dow
Jones Industrial Average dropped 320.01 points, or 0.84%, and closed
at 37,645.59, bringing its four-day loss on tariff angst to more than 4,500
points. Apple led the
losses with the iPhone maker’s costs set to surge with new China tariffs.
The S&P 500 declined 1.57% to
end at 4,982.77. The index was inches away from closing in a bear market, down
nearly 19% from its February record, and it ended the session below 5,000 for
the first time since April 2024. Over the past four days, the S&P 500 has
fallen more than 12%.
Asia-Pacific
markets: Trump tariffs, China yuan
Stock futures fall as tariff fears cause a
four-day S&P 500 rout of 12%: Live updates
Updated Wed, Apr 9 2025 8:04 PM EDT
Stock futures fell on Tuesday, as
investors braced for the rollout of President Donald Trump’s tariffs set
to take effect shortly after midnight Wednesday. The S&P 500 was inches
away from a bear market, under pressure in recent days from the worst
selling since the outbreak of the pandemic in 2020.
Futures tied to the Dow
Jones Industrial Average dropped 469 points, or 1.2%. Nasdaq-100 futures declined
1.8%, while S&P 500
futures pulled back 1.5%.
Anxiety around the rollout of the tariffs,
which Trump announced late last Wednesday, have fueled a
four-day rout for stocks. The volatility continued on Tuesday, with
the S&P 500 up
more than 4% at one point before ending the day with a loss of 1.6%. The
30-stock Dow climbed
3.9% at its high for the day but ultimately fell 0.8% at the end of trading.
The broad market index is nearly 19% off its record high.
Over the course of four days, the Dow has
lost more than 4,500 points, while the S&P 500 has sustained a 12% loss.
The Nasdaq Composite is
down more than 13% in that period.
Tech giant Apple has suffered keenly in
that period, with the iPhone manufacturer expected to see higher costs with
incoming China tariffs. Shares have dropped nearly 23% in the past four days,
marking Apple’s worst stretch of that length since October 2000.
Investors could be in for another
roller-coaster ride as a raft of tariffs takes effect on Wednesday just after
midnight. These duties include an anticipated 104% levy on Chinese imports.
Customs will begin collecting new tariffs on imports from 86 nations.
Certain affected countries are poised to
strike back, with Canada reconfirming Tuesday its plans to put into effect 25% retaliatory
tariffs on U.S.-made vehicles, expected to take effect after midnight
Wednesday. This includes vehicles that aren’t compliant with the United
States-Mexico-Canada Agreement, in addition to non-Canadian and non-Mexican
content of USMCA-compliant fully assembled vehicles brought into Canada from
the U.S.
“Our base case is tariffs will, over time,
drift lower than today’s level but stay off the charts – at the highest levels
of our lifetimes,” Piper Sandler analyst Andy Laperriere wrote on Tuesday.
“They are more likely to go higher in the near-term, though there could be some
deals (probably minor ones) in the near term, too.”
Aside from the tariff rollout, investors
will keep an eye on the Federal Reserve’s meeting minutes, due Wednesday.
Stock
market today: Live updates
Brussels threatens to block US from bidding for
public contracts
7 April 2025
Brussels has threatened to bar American
companies from bidding for taxpayer-funded contracts as Europe seeks to
retaliate against
Donald Trump’s tariffs.
Stéphane Séjourné, executive vice
president of the European Commission, said the EU has “the cards” to
hit back at Mr Trump’s new levies of 20pc on goods and 25pc on cars.
“We could decide to withdraw all American
companies from European public procurement,” Mr Séjourné, who is also
commissioner for industrial strategy, told Radio France.
It represents a fresh threat to the US
defence industry as European capitals are considering how much of the spending
in their rearmament drive should go to American manufacturers compared to
domestic suppliers.
American dominance in the tech industry
may make it difficult for the EU to eject all US companies from public sector
contracts, but other industries with major European operators could be booted
out of bidding for work.
“It’s an economic bazooka because for
certain services we have no other option but to choose the Americans,
particularly digital services,” said Mr Séjourné.
“So this has implications for European
companies, and we need to look at the sectors in which and for what we can do
this, but it’s one of the topics on the table and under discussion with the
American administration.
“This also has major impacts for American
companies, and, to use Donald Trump’s vocabulary, we also have the cards and
the tools to make the Americans give in.”
His comments come amid fears that
America’s trade war risks tipping the anaemic European economies into
recession, despite plans from Germany to boost defence and infrastructure
spending.
European governments are major customers
of the US defence industry, and have been prompted to spend more by Mr Trump’s
complaints that Nato allies spend too little, effectively free riding on
America’s expenditure.
However, Mr Trump’s seeming ambivalence
towards Ukraine and to Nato, as well as the apparent softening of the White
House’s stance on Russia, has sparked fears that US supplies may prove
unreliable in the event of any row between the transatlantic partners.
As a result, European politicians are
increasingly keen to build up domestic supply chains as a more trustworthy
alternative to making purchases from the US.
Robert Habeck, Germany’s economy minister,
said the EU had the upper hand in negotiations with Mr Trump.
He added: “The stock markets are already
collapsing and the damage could become even greater. America is in a position
of weakness.”
Mr Habeck indicated that there was
widespread support for Mr Séjourné’s proposals: “We have to take a close look
at the anti-coercion instrument, which are measures that go far beyond tariff
policy,” he said.
Sentiment among European investors slumped
this month, according to the Sentix survey.
Melanie Debono, at Pantheon
Macroeconomics, said: “The higher-than-expected US trade tariff hikes announced
at last week’s “liberation day” are weighing heavily on investor sentiment.
“The plunge in global financial markets
all but wiped away investors’ joy surrounding greater defence and
infrastructure spending in Germany and the EU.
“Sentiment will continue to melt away amid
signs of retaliation from other countries around the world – nothing good can
come from an escalating trade war.”
Brussels threatens to block US from bidding for public contracts
EU would rather negotiate US tariffs, but will
start collecting duties in one week
7 April 2025
LUXEMBOURG (Reuters) - The European Union
said on Monday it would start collecting retaliatory duties on some imported
U.S. goods next week, as EU trade ministers agreed they preferred negotiations
to remove tariffs imposed by President Donald Trump over retaliation.
The 27-nation bloc faces 25% import
tariffs on steel and aluminium and cars and "reciprocal" tariffs of
20% from Wednesday for almost all other goods under Trump's policy to hit
countries he says impose high barriers to U.S. imports.
Ministers overseeing trade met in
Luxembourg on Monday to debate the EU's response, as well as discuss relations
with China. Many said the priority was to launch negotiations and avert an
outright trade war.
"We need to remain calm and respond
in a way that de-escalates. The stock markets right now show what will happen
if we escalate straightaway. But we will be prepared to take countermeasures if
needed to get the Americans at the table," Dutch Trade Minister Reinette
Klever told reporters.
European Commission President Ursula von
der Leyen told a press conference in Brussels that the EU stood ready to
negotiate a "zero-for-zero" tariff pact for industrial goods.
"Sooner or later, we will sit at the
negotiation table with the U.S. and find a mutually acceptable
compromise," EU Trade Commissioner Maros Sefcovic told a news conference.
He also said the EU would start would
start collecting a first tranche of targeted retaliatory duties on U.S. imports
from April 15 and a second wave from May 15, in reaction to the U.S. tariffs on
European steel and aluminium.
EU READY TO FIGHT BACK IF NEEDED
He also made clear that while preferring
to negotiate the removal of the tariffs with the U.S., the EU was ready to step
up its response. This could include the EU's Anti-Coercion Instrument (ACI),
which would allow it to target U.S. services or to limit U.S. companies' access
to public procurement tenders in the EU.
"We are prepared to use every tool to
protect single market," he said, echoing the views of French Trade
Minister Laurent Saint-Martin.
But some EU countries, particularly
exposed to trade with the United States, urged caution. Irish Foreign Minister
Simon Harris described the ACI as "very much the nuclear option" and
said he believed most EU countries were not ready to go near it, at least for
now.
Outgoing German Economy Minister Robert
Habeck said the EU should realise it was in a strong position - if it was
united.
"The stock markets are already
collapsing and the damage could become even greater ... America is in a
position of weakness," he said in Luxembourg. Habeck added that Trump
lieutenant Elon Musk's hope of zero tariffs between Europe and the United
States reflected this point.
The EU is likely to approve this week an
initial set of countermeasures on up to $28 billion of U.S. imports ranging
from dental floss to diamonds, in response to Trump's steel and aluminium
tariffs rather than the broader reciprocal levies.
But even that move has proven fraught,
with Trump threatening a 200% counter-tariff on EU alcoholic drinks if the bloc
goes ahead with an earmarked 50% duty on U.S. bourbon. France and Italy, major
exporters of wine and spirits, have expressed concern.
The 27-nation bloc is expected to produce
a larger package of countermeasures by the end of April, as a response to U.S.
car and "reciprocal" tariffs.
However, in a war of tariffs on goods,
Brussels has less to target than Washington, given U.S. goods imports into the
EU totalled 334 billion euros ($366.2 billion) in 2024, against 532 billion
euros of EU exports. ($1 = 0.9121 euros)
EU would rather
negotiate US tariffs, but will start collecting duties in one week
Finally, belatedly US hedge funds followed Warren Buffett.
Hedge funds pile up record short bets against
stocks as traders go into ‘self-protection mode’
Published Mon, Apr 7 2025 3:01 PM EDT
Hedge funds loaded up on a record number
of short bets against stocks as President Donald Trump’s steeper-than-expected
tariffs wreaked havoc on Wall Street, according to Goldman Sachs’ prime
brokerage data.
Fast-money professional traders made their
largest-ever, one-day net sales of global equities last week through Thursday,
the day after Trump rolled out his sweeping levies, said Goldman, which has
been collecting the data since 2010.
“Liberation Day was a knock-down, drag-out
affair — there was a harshness that surprised even the most hawkish people I
know,” Tony Pasquariello, head of hedge fund client coverage at Goldman
said in a note to clients.
Hedge funds rapidly added protection as
fears grew that Trump had set off a global trade war that will lead to a
recession. Trump’s policy could effectively raise the U.S. tariffs rate from
2.5% to well past 20%, the highest level since 1910 — higher even than the
devastating Smoot-Hawley
tariffs of
1930 that many economists see as contributing to the Great Depression.
The Dow Jones Industrial Average suffered
back-to-back 1,500-point losses last Thursday and Friday for the first time
ever in its 129-year history. The S&P 500 plunged 10% in those two days.
Billionaire investor Stanley
Druckenmiller made
a rare comment over the
weekend, reiterating his opposition to tariffs above 10%. Leon Cooperman, another
billionaire investor, said the bottom is not
in yet and
stocks are set to continue their downward spiral. The chair and CEO of the
Omega Family Office believes Trump’s tariffs are a “mistake” and will tip the
U.S. economy into a recession.
Nine of 11 investment sectors in the
S&P 500 were net sold last week, led by financials, technology and consumer
discretionary stocks, Goldman said. The selling in financials came at the
fastest pace since January 2021 and the second fastest pace on record, the Wall
Street investment bank said.
“Lower prices drew out huge selling from
many corners of our franchise; as one of the great traders of all time put it:
‘people are just getting into self-protection mode,’” Pasquariello said.
Pasquariello noted the increased
probability of “indiscriminate, short-cycle rips” higher in prices that
can happen when there is a massive number of short positions. That was evidenced Monday, when stocks
seesawed dramatically in reaction to headlines covering the Trump
administration’s shifting trade policy.
Hedge funds make record short bets against stocks in 'self-protection mode'
There is no cause to worry. The high tide of prosperity will continue.
Andrew Mellon, 1929
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.
"The
Avalanche Has Really Just Started" - Credit Market Cracks Raise Fears Of
Bankruptcy Wave
Tuesday,
Apr 08, 2025 - 07:00 PM
Just
over a week ago, before the proverbial tariff fecal matter struck the rotating
market object, we warned that cracks were starting to appear in the
credit market...
...a
week later, things started to 'escalate quickly'...
And
while stocks have rebounded (amid utter chaos and headline roulette), credit
market remain stressed and Saba Capital Management founder Boaz
Weinstein warned Bloomberg that the selloff in corporate bonds
accelerate by tariffs tensions could spur a wave of bankruptcies that may ramp
up faster than in previous market crises... and The Fed is hamstrung from
taking action (cutting rates to save the world) because of inflation fears.
“The
avalanche has really just started,” Weinstein said on Friday during an
interview for an upcoming Bloomberg
Originals series, Bullish.
“The
hit could be faster and the bankruptcy rate could spike much faster than other
crises.”
Investors
shouldn’t rule out the possibility of a severe recession, he added
Weinstein,
whose hedge fund firm is known for navigating volatile markets, added that
he expected the credit selloff “to accelerate.”
“There
might be something in between that stops the boulder, but I’m very concerned
about a crash,” he
said.
As
Bloomberg reports, Weinstein joins a chorus of investors and
strategists who have swiftly started revising down their economic forecasts. A
JPMorgan Chase & Co. team led by Bruce Kasman hiked the odds of a
global recession to 60% on Thursday.
Weinstein's
warning is that "you cannot out this genie back in the bottle":
“Maybe
it’s not a buy the dip,” Weinstein said.
“Maybe
it’s a phrase no one ever used before, a sell the dip because this is not going
to get fixed tomorrow.”
Weinstein,
the former co-head of credit at Deutsche Bank AG, made a now famous trade back
in 2012, when he rode a bet on a bank rushing to offload risk, taking the other
side of outsize wagers made by JPMorgan’s so-called London Whale.
“This
is really, really major,” he said.
“The
range of outcomes is so wide here, and markets started quite expensive, credit
especially, so I think we could go a lot lower.”
Returning
back to where we started, if the credit markets do crack (more), then The Fed
will be increasingly forced to address the uncomfortable need to cut rates in a
stagflationary environment (as Trump has demanded) as Powell's
"pause" gets put on hold until markets stabilize.
Stagflation
is America's most 'optimistic scenario' at this point, former Fed president
says
April
7, 2025
Once
painted as a worse-than-recession scenario, stagflation might now be
the best that Americans can hope for with the trade war about to be in full
swing.
Bill
Dudley, former president of the New York Federal Reserve Bank, says only one
question remains: how bad will the damage be?
Whereas
a "Goldilocks
economy"
seemed alive and well at the start of this year, tariff policy has flipped
the economic
outlook in
a matter of days.
Writing
in a Bloomberg opinion
piece,
Dudley said he expects devastating consequences from the White House's
across-the-board tariffs. As dwindling demand derails US growth, 5% inflation
is likely in the next six months, he said.
Dudley
added that a slowdown will occur even if Congress is able to implement tax
cuts, "because there will be a considerable lag, and because
low-to-moderate-income families, which tend to spend more of their income, will
be hurt by tariffs more than helped by tax relief."
Hard
times for the market
Rising
inflation in a cooling economy is the basis for stagflation. The scenario has
no clear solution, making it a paralyzing situation for central banks.
If
central bankers raise interest rates to clamp down on inflation, they restrict
economic growth. Cutting rates, meanwhile, could cause prices to spiral higher
again.
"All
told, stagflation is the optimistic scenario. More likely, the US will end up
in a full-blown recession accompanied by higher inflation," Dudley
estimates.
It's
bound to be a no-win situation for stocks, he added. Since President Donald
Trump announced the tariffs on Wednesday, indexes have tanked into bear
market territory.
"If
companies pass along the cost of higher
imports to consumers,
inflation will be more persistent and the Fed less friendly. If they can't,
profit margins will shrink and earnings will underwhelm. Not to mention the
risk of foreign tariff retaliation."
Don't
bet on rate cuts
Of
course, the Federal Reserve can hope the tariff inflation bump is temporary, an
idea investors seem to agree with. Traders see the central cutting
interest rates by
100 basis points through December, implying that growth will be the Fed's main
concern.
Dudley
sees it differently.
If
Fed officials allow US inflation to remain above the 2% target rate — as has
been the case for five years — it could amplify inflation expectations.
Meanwhile, a tariff-induced productivity shock will historically impact
inflation for longer, forcing the Fed to raise rates down the road.
Others
have taken the same stance. Rockefeller International Chair Ruchir Sharma
warned that if the Fed
chooses to stimulate growth with rate cuts, it would harm its reputation as
a bulwark against inflation.
"After
missing its target for many years, it would be a mistake for the Fed to dismiss
the inflation fallout from tariffs as transitory and revert once again to
stimulating the economy," he wrote for the Financial
Times.
Not
only might investors be wrong in expecting large-scale rate cuts this year, but
one Wall Street heavy hitter warned that the Fed might tighten policy, instead.
"This
notion that the Federal Reserve is going to ease four times this year, I see
zero chance of that. I'm much more worried that we could have elevated
inflation that's going to bring rates up much higher than they are today,"
BlackRock CEO Larry Fink said Monday.
Stagflation is America's most 'optimistic scenario' at this point, former Fed president says
Covid-19
Corner
This
section will continue only occasionally when something of interest occurs.
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.
Solar power
sees 29% increase in 2024, marking new record
8
April 2025
The
share of solar power in global electricity generation rose to 6.9% in 2024, up
from 5.6% in 2023, according to a new report by energy think tank Ember.
Solar
saw a 29% increase in the last year and added more than twice as much
electricity generation in 2024 as any other electricity source.
"Solar
power has become the engine of the global energy transition. Paired with
battery storage, solar is set to be an unstoppable force," said Phil
MacDonald, Ember's managing director.
China
led global solar growth, adding 250 terawatt hours (TWh) — accounting for 53%
of the global increase — four times more than the next-largest increase in the
United States.
The
rise in solar, along with gains in wind, hydro and nuclear, lifted clean
electricity's global share to 40.9% in 2024, up from 39.4% a year earlier.
Wind
power grew by 7.9%, supported by capacity additions and slightly offset by
reduced wind speeds in some regions.
Hydropower
remained the largest clean source at 14.3%, followed by wind (8.1%), solar
(6.9%) and nuclear (9%).
Coal
remained the dominant power source globally, generating 34.4% of electricity,
followed by gas at 22% and other fossil fuels at 2.8%.
Solar power sees
29% increase in 2024, marking new record
Next, the
world global debt clock. Nations debts to GDP compared.
World Debt
Clocks (usdebtclock.org)
The
Great Depression was not a sign of the failure of monetary policy or a result
of the failure of the market system as was widely interpreted. It was instead a
consequence of a very serious government failure, in particular a failure in
the monetary authorities to do what they'd initially been set up to do.
Milton
Friedman
No comments:
Post a Comment