US Rising Debt. And The Wheels Came Flying Off. Get Gold.

Baltic Dry Index. 1337 -03           Brent Crude 64.95

Spot Gold 3337                US 2 Year Yield 4.00 +0.03

US Federal Debt. 36.880 trillion!!!

I do like low interest rates. I'm not making that a big secret. I think low interest rates are good. I like a dollar that's not too strong. I mean, I've seen strong dollars. And frankly, other than the fact that it sounds good, lots of bad things happen with a strong dollar.

Donald Trump

Little need for my input this morning.

After a failed Japanese bond auction recently, all attention is now focused on Uncle Scam’s massive Federal debt and President Trump and the Republican Party’s attempt to doble it in about 10 years.

Given the fiat dollar is just that, a fiat dollar unbacked by anything, the Great Nixonian Error of Fiat Money is coming to its end. We just don’t know what replaces it, when or how disruptive it will be.

But disruptive it will certainly be, made worse by a Trump tariff war on friend and foe alike. Look away from that US Treasury yield curve now.

FIAT

Noun. Decree, command, edict, mandate, permission. A cheap Italian car.

FIAT CURRENCY

A currency whose value is whatever it is decreed to be, undetermined by intrinsic value. One Italian Lira.

Asia-Pacific markets fall after Wall Street declines as U.S. stares at ballooning debt

Updated Thu, May 22 2025 12:46 AM EDT

Asia-Pacific markets fell Thursday, tracking declines on Wall Street as investor sentiment soured on fears that a new U.S. budget bill could substantially add to the country’s debt.

Japan’s benchmark Nikkei 225 fell 1.06% at the open, while the Topix lost 0.85%. South Korea’s Kospi slipped 0.59% and the small-cap Kosdaq declined 0.69%.

Australia’s benchmark S&P/ASX 200 fell 0.36%.

Hong Kong’s Hang Seng index slipped 0.24% in the open while mainland China’s CSI 300 fell 0.14%.

Investors will be looking out for the unveiling of New Zealand’s 2025 budget.

Stock futures were flat in overnight trading Wednesday following a sizable sell-off on Wall Street as worries about a ballooning deficit deepened.

Futures on the Dow Jones Industrial Average dipped 60 points. S&P 500 futures and Nasdaq 100 futures were both little changed.

Overnight stateside, the three major averages closed lower. Stocks sold off, pressured by a sharp spike higher in Treasury yields as traders grew worried that a new U.S. budget bill would put even more stress on the country’s already large deficit.

The Dow Jones Industrial Average lost 816.80 points, or 1.91% to 41,860.44. The S&P 500 shed 1.61% to 5,844.61. The Nasdaq Composite slid 1.41% to 18,872.64.

The 30-year Treasury bond yield last traded around 5.09%, touching the highest level going back to October 2023. The benchmark 10-year Treasury note yield traded at 4.59%.

Asia-Pacific stock markets live updates: New Zealand budget 2025

Emerging markets said to see the next bull run as the ‘sell U.S.’ narrative gains ground

Published Wed, May 21 2025 6:54 PM EDT

Emerging markets stocks are in the spotlight again as the “sell U.S.” narrative gained fresh momentum, following Moody’s recent downgrade of the U.S. credit rating.

The Bank of America heralded emerging markets as “the next bull market” recently. 

“Weaker U.S. dollar, U.S. bond yield top, China economic recovery…nothing will work better than emerging market stocks,” Bank of America’s team, led by investment strategist Michael Hartnett, said in a note. 

Similarly, JPMorgan upgraded emerging market equities from neutral to overweight on Monday, citing thawing U.S.-China trade tensions and attractive valuations.

A dented confidence in U.S. assets, which kicked into high gear last month marked by a selloff in U.S. Treasurys, equities and greenback, has fueled the bullishness for emerging markets.

The MSCI Emerging Markets Index, which tracks large and mid-cap representation across 24 EM countries, is up 8.55% year-to-date. This compares against a 1% climb by the U.S. benchmark S&P 500 across the same period.

The difference was more stark in the weeks after April 2, when U.S. President Donald Trump unveiled “reciprocal” tariffs on friends and foes alike. 

While most benchmarks fell across the board in the immediate days after April 2, the week that followed showed a divergence between emerging market equities and U.S. stocks. Between April 9 to 21, the S&P 500 declined over 5%, while the MSCI Emerging Markets Index rose 7%.

Even though U.S. equities and Treasurys rebounded slightly since, the recent Moody’s downgrade has reignited traders’ concerns. On Monday, the U.S. 30-year Treasury yield briefly grazed above 5% to hit levels not seen since November 2023, while U.S.  equities also snapped a six-day winning streak on Tuesday.

Start of a new rotation?

The events that unfolded recently have reinforced the need for more diverse geographical exposure, said Malcolm Dorson, head of the active investment team at Global X ETFs.

“After underperforming the S&P over the past decade, EM equities are uniquely positioned to outperform over the next cycle,” he added.

“This possible perfect storm stems from a potentially weaker U.S. dollar, extremely low investor positioning, and outsized growth at discounted valuations,” he told CNBC.

More

Emerging markets are the next 'bull market' says market watchers

CNBC Daily Open: It’s hard to imagine a ‘Trump put’ for a deficit-induced U.S. market sell-off

Published Wed, May 21 2025 9:23 PM EDT

It’s one bad headline after another coming from the White House these days. Just as the tariff-related turmoil rocking markets subsided — and only temporarily, since the clock is still ticking on the pause on “reciprocal tariffs” — fears of ballooning U.S. debt are sparking another broad sell-off in markets. This time, investors are wary because President Donald Trump’s tax bill is projected to add $3 trillion to $5 trillion to the U.S. debt, reported Reuters, citing nonpartisan analysts.

A fiscally challenged U.S. means investors will demand higher returns to hold the country’s debt. Indeed, Treasury yields jumped Wednesday. The 30-year Treasury bond yield crossed the 5% level for the second time this week and the 10-year traded at 4.61%, the highest since February. While rising yields mean bond prices drop, they also promise higher returns at potentially lower risks, dulling the allure of stocks.

Under pressure from spiking Treasury yields — which mean elevated borrowing costs for companies and consumers — U.S. markets sold off Wednesday, a sharp reversal from the rally beginning May 12 which gave the S&P 500 a six-day win streak. Unlike tariffs, which Trump seems to be able to conjure or dismiss unilaterally at a wave of his hand, a tax bill needs to pass through the different layers of the government and be agreed on by fractious politicians. It’s hard to imagine a “Trump put” happening here.

More

CNBC Daily Open: Hard to imagine a 'Trump put' for U.S. deficit fears

In other news.

Honda slashes EV budget in fresh blow for the electric car industry

20 May 2023

Honda has slashed its plans to invest in electric vehicles (EVs) by 30 per cent, or £15billion, after lowering its expectations for EV sales in the coming years.

The Japanese automotive giant says it now expects around 20 per cent of its car sales to be electric by 2030, rather than 30 percent, amid dwindling demand.

The company has also cut its budget for new EV projects by almost a third to seven trillion yen (£36.2billion) - and will invest more immediately in expanding its range of hybrid vehicles instead.

It comes amid industry predictions that demand for electric cars will wane as governments, including Britain, ease the pressure on car makers to go fully electric.

US President Donald Trump has revoked an executive order made by his predecessor Joe Biden to require all new cars in the States to be electric by 2030.

The UK, meanwhile, has given car makers permission to continue selling hybrid vehicles - which still have internal combustion engines - until 2035, but will still ban the sale of purely fossil fuelled vehicles by 2030.

Honda's cuts come just days after Nissan scrapped plans to build an £822million battery production plant in Kitakyushi, Japan and said it would cut 20,000 jobs.

It had originally hoped to make 30 per cent of its car sales electric by the end of this decade, scaled back from a target of 40 percent that was set in 2021

But Honda CEO Toshihiro Mibe told a press conference: 'It's really hard to read the market, but at the moment we see EVs accounting for about a fifth by then.'

He added: 'EV investment hasn’t been abandoned, just pushed back.' 

Mr Mibe suggested that the changes in regulation made by the US and UK Governments, among others, were stopping people from buying electric cars - and hit out at the recent tariff wars for creating 'increasingly uncertain' trading conditions.

More

Honda slashes EV budget in fresh blow for the electric car industry

Microsoft-backed UK tech unicorn Builder.ai collapses into insolvency

Once high-flying group founded by Sachin Dev Duggal says its was unable to recover from ‘past decisions’

20 May 2025

Builder.ai, one of the UK’s best-funded technology start-ups, is entering insolvency proceedings, weeks after restating its revenues and admitting “problems” under its past leadership.

The London-based group, which is backed by Microsoft, informed employees it was filing for bankruptcy during a company-wide call on Tuesday.

The company confirmed to the Financial Times that its main unit, Engineer.ai Corporation, “will be entering into insolvency proceedings and will appoint an administrator to manage the company’s affairs”.

The insolvency is a blow to Builder.ai’s blue-chip backers such as Microsoft and Qatar’s sovereign wealth fund, which collectively poured more than $500mn into a company that claimed it could use artificial intelligence to make the process of building an app or website “as easy as ordering pizza”.

The company’s founder Sachin Dev Duggal stepped down as chief executive earlier this year but retained his board position and title of “chief wizard”.

Builder.ai said on Tuesday that it was “unable to recover from historic challenges and past decisions that placed significant strain on its financial position”.

The company’s new chief executive Manpreet Ratia told employees that Builder.ai’s senior lenders had placed the company into default and that the company’s cash reserves were seized, according to people on the call.

Ratia disclosed that the company had secured a $50mn debt line in October, but its cash reserves had dwindled to about $7mn when he stepped in and joined as CEO in March.

Builder.ai was then able to raise $75mn from some of its existing shareholders to try to fix its balance sheet, according to two people familiar with its finances.

However, Ratia said on the call that the company also owed $85mn to Amazon and $30mn to Microsoft.

Ratia added that he had been trying to run the business with “zero dollars” in its UK and US bank accounts in recent days. He added that he had tried to transfer out money left in a Singaporean bank account in a bid to pay employees’ wages, but creditors had also seized this.

He said that Builder.ai therefore had no ability to make payroll in the US or UK.

Duggal came under scrutiny after the FT revealed last year that he had been named by authorities in India in relation to a high-profile criminal probe, while he also fought a series of other legal disputes during his career.

Duggal has denied wrongdoing in relation to the Indian case and his lawyers have previously maintained that he is just a witness in the case.

A person familiar with Builder.ai said that lawyers last week delivered a preliminary report stemming from an internal investigation into the company’s past financial conduct.

In April, Ratia said the company had lowered the revenues it recorded for 2023 to $140mn and that it had lowered its forecasted revenue for the second half of 2024 by 25 per cent.

 Earlier this year, the FT reported that Builder.ai had drawn scrutiny for accounting practices that included relying on an auditor with long-standing links to Duggal. Duggal,

Amazon and Microsoft did not immediately respond to requests for comments.

Microsoft-backed UK tech unicorn Builder.ai collapses into insolvency

As Beijing and Washington reached a temporary truce in their trade war last week, Chinese exporters are rushing to ship goods to the U.S. before conditions change again. The scramble has sent freight rates soaring and overbooked cargo slots across major ports.

In the wake of the agreement, several top global financial institutions raised their forecasts for China’s 2025 economic growth, pointing to the temporary easing of tensions. Yet analysts warn the reprieve may be short-lived. Deep-rooted geopolitical rivalry and structural economic divergence between the U.S. and China continue to pose long-term risks to bilateral trade stability.

Trade War Monitor: U.S.-China Trade War Truce Prompts Export Frenzy

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.

How CFOs Are Preparing For A Looming Recession

May 20, 2025, 12:00pm EDT

For months, economists and analysts have looked at the numbers and tried to predict if a recession is coming. And while the official declaration depends on indicators such as GDP, employment figures and economic activity, CFOs are already preparing. According to a recent study from Billtrust, more than four in five financial decision-makers see recession as either likely or possible in the next year, and they’re adapting policies to get through it now. Almost all of them—97%—reported having specific plans in place.

These preparations include a much more conservative approach to cash management, spending and planning. About six in 10 are actively strengthening their financial positions through cash reserves and debt restructuring. The same proportion are reducing discretionary spending and capital investments. Just under a third are diversifying revenue streams or pursuing strategic acquisitions. And they’re reviewing their forecasts much more often—38% reassess at least monthly—so they can make changes as needed.

Complicating everything is the looming presence of tariffs, which a quarter of financial decision-makers said has the biggest impact on their financial planning. More than four out of five report moderate to significant cost increases from tariff changes over the last six months, with 23% reporting increases of more than 15%. About 84% said they are actively managing those challenges—55% through increasing customer prices—but that’s not the only method. Four in 10 are rebuilding their supplier networks, 34% are changing approaches to inventory, and 30% are reconfiguring manufacturing footprints.

One area financial leaders aren’t cutting back on is AI investments. The study found that about 90% rely on AI for financial decisions, and 83% said that it has positively influenced their approach to managing financial risk this year alone. Two-thirds of financial leaders said they are dedicating more than 10% of their 2025 budget to AI and automation technology.

But even if the economic disarray means your company has no additional funds to spend on technology upgrades, there’s still likely money available through careful cost management. I talked to two executives at enterprise tech consulting firm Rimini Street—CEO Seth Ravin and CFO Michael Perica—about how companies can cut their IT budgets without sacrificing technological advancements. An excerpt from our conversation is later in this newsletter.

While President Donald Trump was in the Middle East forging business deals last week—many dealing with technology, AI and defense—the stock market saw a tech bump. But Wall Street’s underlying issues didn’t go away. On Friday, financial ratings firm Moody’s downgraded the U.S. government’s credit, citing rising government debt and interest payment ratios. Moody’s was the last of the three ratings agencies to rank the U.S. as Aaa, and lowered it to Aa1.

----Businesses are still wrestling with tariffs. On Monday, U.K.-based alcoholic beverage company Diageo said it expects to lose $150 million in annual profits to tariffs. Last week, Walmart CEO Doug McMillon told investors that despite the company’s attempts to hold the line, tariffs would result in higher prices in coming weeks, especially on items including bananas, avocados, coffee and roses that primarily come from other countries. Trump responded on Truth Social that Walmart should “EAT THE TARIFFS,” especially because of Walmart’s large profits. Sony also said last week that tariffs could drive the company to increase prices on its games and systems, and analysts say U.S. consumers may see higher prices soon.

The Moody’s rating drop hits at an interesting time. The ratings agency wasn’t just looking at the volatile economic situation in the U.S. right now, but also the ever-growing national deficit and its repayment. Forbes senior contributor Erik Sherman spoke with analysts who defined the problem succinctly: The deficit has been too high for an Aaa rating for at least 17 years. And that doesn’t seem like it’s about to change anytime soon. On Sunday night, Trump and Republicans’ mega budget bill, which includes $3.7 trillion in tax cuts over the next decade, writes Forbes’ Kelly Phillips Erb, passed the House Budget Committee. The bill is expected to add up to $4 trillion to the national debt, and five Republicans initially voted against moving it out of the committee last week. Four of them voted “present” on Sunday night so it could advance.

More

How CFOs Are Preparing For A Looming Recession

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.

BMW Group and Solid Power are testing all-solid-state battery cells in a BMW i7

20 May 2025

The BMW Group is bringing large-format, pure ASSB cells from Solid Power to its test vehicle, a BMW i7, which is being operated in the Munich area. The potential benefits of ASSB technology: higher energy density in a very compact storage system compared to current technologies.

Since 2022, the BMW Group and Solid Power, Inc. (Nasdaq: SLDP) have intensified their activities for the development of all-solid-state battery (ASSB) technology through their technology transfer agreement.

The BMW Group and Solid Power believe in the potential of genuine ASSB technology. With a higher energy density compared to current battery technologies, ASSB batteries have the potential to achieve longer ranges in vehicles without the disadvantages with regard to the weight of the overall storage system.

“Solid Power is extremely proud that our partnership with BMW has resulted in the first demonstration of truly all-solid-state battery cells in a vehicle,” said John Van Scoter, President and Chief Executive Officer of Solid Power.  “We believe in the promise of ASSB’s and continue to drive innovation of our sulfide electrolyte in support of that future for EV’s.”

Martin Schuster, Vice President Battery Cell and Cell Module at the BMW Group, says: “Our BMW i7 ASSB test vehicle on the road is a perfect example of the BMW Group's technology-open mindset. We are continuously advancing the development of new battery cell technologies and are constantly expanding our know-how with valuable partners such as Solid Power. ”

The concept battery integrated in the BMW i7 test vehicle combines proven Gen5 construction principles (prismatic cells in modules) with new, innovative module concepts for integrating ASSB cells from Solid Power.

The management of cell expansion will be investigated here. In addition: How is the operating pressure controlled and how to adjust the temperature conditions.

The use of solid power cells with sulfide-based electrolytes and their complete integration into a battery pack will provide the BMW Group with further important findings in the test program over the coming months.

The innovative cells were developed and manufactured by Solid Power in collaboration with experts from the BMW Group. Further development steps are required to implement ASSB technology in a competitive overall storage system.

The BMW Group and Solid Power have been cooperating since 2016 through an extended “Joint Development Agreement”, which was supported by BMW Group's investment in Solid Power in May 2021 as part of a financing round.

Since 2008, the BMW Group has been steadily expanding its expertise in the area of battery cell technology. Since 2019, this know-how has been bundled at the BMW Group's Battery Cell Competence Center (BCCC) in Munich. The BCCC covers the entire value chain, from research and development to battery cell design and production capability.

In order to be able to implement innovations in battery cell technology quickly and efficiently, the BMW Group cooperates in a network of around 300 partners, including established companies, start-ups and universities.

BMW Group and Solid Power are testing all-solid-state battery cells in a BMW i7

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

World Debt Clocks (usdebtclock.org)

Near the top of the market, investors are extraordinarily optimistic because they've seen mostly higher prices for a year or two. The sell-offs witnessed during that span were usually brief. Even when they were severe, the market bounced back quickly and always rose to loftier levels. At the top, optimism is king, speculation is running wild, stocks carry high price/earnings ratios, and liquidity has evaporated. A small rise in interest rates can easily be the catalyst for triggering a bear market at that point.

Martin Zweig

Global Recession Nears. Retail Inflation Next. Stocks, A Crash Landing?

Baltic Dry Index. 1340 -07          Brent Crude 66.55

Spot Gold 3305                US 2 Year Yield 3.97 unch

US Federal Debt. 36.875 trillion!!!

Facts are stubborn, but statistics are more pliable.

Mark Twain

In the stock casinos, more disconnect from a fast arriving harsh global economic reality.

To dinosaur Graeme, around commodity and stock markets since autumn 1968, I think the stock casinos are heading towards a 1929 style crash landing. I can only hope to be wrong.

Asia-Pacific markets mostly rise after Wall Street rally pauses

Updated Wed, May 21 2025 11:22 PM EDT

Asia-Pacific markets traded mostly higher Wednesday after Wall Street halted its six-day win streak.

Japan’s benchmark Nikkei 225 slipped 0.23% after the country reported that exports slowed for a second straight month as the country reels under U.S. President Donald Trump’s sweeping tariffs.

South Korea’s Kospi climbed 0.58% while the small-cap Kosdaq traded 0.95% higher.

Australia’s benchmark S&P/ASX 200 climbed 0.43%.

Hong Kong’s Hang Seng index rose 0.45% at the open, while mainland China’s CSI 300 traded flat.

The Bank of Indonesia is also slated to release its policy decision later in the day. The bank slashed policy rates in September 2024, and then again in January 2025, but has kept rates on hold at 5.75% since, HSBC noted in a report.

“Given growth weakness, Bank of Indonesia may have to embark on a deep rate-cutting cycle,” the bank wrote.

“For several reasons, we believe it’s time to restart the easing cycle in May,” the bank’s economists said, citing weak first-quarter GDP growth and weakening currency against the greenback.

U.S. futures were little changed. S&P 500 futures wavered Tuesday night following a losing session on Wall Street that snapped a winning streak. Futures tied to the broad index shed 0.2%, as did Nasdaq 100 futures. Dow Jones Industrial Average futures lost 93 points, or 0.2%.

Overnight stateside, the three major averages closed lower. Stocks slipped on Tuesday as the big tech-led rally lost steam and the S&P 500 ended a six-day winning run.

The S&P 500 fell 0.39% to end at 5,940.46, while the Nasdaq Composite dipped 0.38% and closed at 19,142.71. The Dow Jones Industrial Average lost 114.83 points, or 0.27%, finishing at 42,677.24. Investors dumped tech stocks, which had led the run over the past six days. The sector lost 0.5%. Nvidia slid 0.9%. Advanced Micro Devices, Meta Platforms, Apple and Microsoft also dropped.

Asia-Pacific markets live: Japan trade, Bank of Indonesia

S&P 500 futures are little changed after benchmark snaps six-day win streak: Live updates

Updated Wed, May 21 2025 8:14 PM EDT

S&P 500 futures wavered Tuesday night following a losing session on Wall Street that snapped a winning streak.

Futures tied to the broad index shed 0.1%, as did Nasdaq 100 futures. Dow Jones Industrial Average futures lost 59 points, or 0.1%.

Tuesday night’s action comes after a tough session for the three major averages. The S&P 500 ended a six-day win streak, while the Nasdaq Composite saw its first negative day in three. The Dow fell more than 100 points, breaking a three-day positive streak.

That marks a pullback amid a major recovery rally for U.S. equities. Investors had been cheering progress on trade deals following President Donald Trump’s announcement of broad and steep tariffs last month.

All three major averages are still above where they traded on April 2, the day Trump unveiled his import tax policy. The S&P 500 is now up on the year, a sharp reversal after at one point falling on an intraday basis into bear market territory, a term referring to a decline of at least 20% from a recent high.

“The equity market’s recovery over the past month has been extraordinary in terms of both speed and scale,” said Kristian Kerr, head of macro strategy at LPL Financial. “While it may be tempting to interpret this powerful rally as a definitive signal that risks have subsided, the reality is that plenty of uncertainty remains.”

Investors are continuing to monitor Washington, D.C, for updates on the budget bill and the federal deficit. There is no economic data of note expected on Wednesday.

Traders will also parse a plethora of corporate earnings slated for Wednesday. Lowe’s, Target, Canada Goose and TJX Cos. are all expected before the bell, followed by Snowflake after the market closes.

Stock market today: Live updates

In other news, after Japan, Germany?

Japan PM warns financial condition worse than Greece’s

19 May 2025

Japanese prime minister Shigeru Ishiba said his country’s financial condition was worse than Greece’s as he rejected calls for tax cuts at a time of rising borrowing costs.

Mr Ishiba said he didn’t think it was a good idea to fund tax cuts with government bonds just days after the economy was reported to have shrunk for the first time in a year, and at a pace faster than expected, in the face of US president Donald Trump’s trade policies.

Opposition parties have been putting pressure on Mr Ishiba to cut taxes, including consumption tax.

Japan’s GDP for the March quarter contracted by 0.7 per cent as against the median market forecast of 0.2 per cent, data released last week showed.

“It’s important to recognise the dangers of a society and a world with interest rates. The government is not in a position to comment on interest rates, but the reality is we are facing a world with them. Our country’s fiscal situation is undoubtedly extremely poor, worse than Greece’s,” the prime minister told the parliament on Monday.

“Japan is seeing interest rates turn positive and its fiscal state is not good," he said, warning of the rising costs of funding the already enormous national debt. "While tax revenues are rising, social welfare costs are also increasing.”

According to the International Monetary Fund, Japan’s general government debt as a percentage of gross domestic product stood at 234.9 per cent as of 2025 while it was at 142.2 per cent for Greece.

Japan, however, has managed to escape a fiscal crisis of the kind Greece witnessed in 2009 because domestic investors hold most of its sovereign debt and it remains a major creditor to other nations with significant foreign asset holdings.

Finance minister Katsunobu Kato said while Japan was not facing difficulty raising funds through debt issuance now, it must strive to maintain market trust in its finances.

"A loss of market trust in our finances could lead to sharp rises in interest rates, a weak yen and excessive inflation that would have a severe impact on the economy," Mr Kato told the same parliament session.

The decline in GDP is being attributed to stagnant private consumption and falling exports, suggesting Japan’s economy was losing support from overseas demand even before Mr Trump announced sweeping import tariffs on almost all major trading partners in early April.

Japan faces the prospect of at least a 24 per cent levy starting in July unless it can negotiate a deal with Washington.

In addition, the US has announced a 25 per cent import levy on cars, steel and aluminium, dealing a blow to Japan's economy which relies heavily on automobile exports to America. Japanese automakers, in fact, are already feeling the pain.

Japan PM warns financial condition worse than Greece’s

German battery firm’s collapse highlights industry woes

19 May 2025

CustomCells, a German battery manufacturer, has filed for bankruptcy due to payment issues faced by its largest client. The future of its 200 employees remains uncertain.

Founded in 2012 as a spin-off from the German research institute Fraunhofer-Gesellschaft, the company operates two locations in Germany: its headquarters in Itzehoe (Schleswig-Holstein) and a production plant in Tübingen (Baden-Württemberg). It specialises in producing high-quality lithium-ion cells.

Battery manufacturer collapses despite recent funding

The portal swr.de reports that the battery manufacturer filed for bankruptcy unexpectedly. Notably, the federal state of Baden-Württemberg recently announced a grant of 8 million euros for the Tübingen plant to finance a pilot installation for so-called round cells.

The company's financial woes stem from the insolvency of its main client in the aviation industry, resulting in millions of euros in overdue receivables. Despite intensive efforts to attract new investors and secure state support, insolvency could not be avoided.

Salaries secured only until June. What lies ahead for the battery manufacturer?

The bankruptcy filing raises questions about the future of approximately 200 employees. Currently, the company continues to operate, with employees' salaries secured until the end of June 2025.

To save the company, a temporary insolvency administrator has been appointed, and ongoing efforts are being made to find an investor.

Volkswagen supplier on the brink. Over 600 employees face uncertainty

CustomCells is just one of several German companies facing serious challenges. In April 2025, the automotive parts supplier Bohai Trimet also declared bankruptcy, with Volkswagen among its clients.

A bankruptcy proceeding has been filed for all four of the company's subsidiaries, affecting approximately 680 employees. Their wages are secured for the next three months. The insolvency manager is actively seeking investors to save the plants in Harzgerode and Sömmerda.

German battery firm’s collapse highlights industry woes

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.

Majority of US companies say they have to raise prices due to Trump tariffs

Over half (54%) of companies surveyed by insurer Allianz say they will have to raise prices to accommodate cost of tariffs

Tue 20 May 2025 14.00 BST

A majority of US companies say they will have to raise their prices to accommodate Donald Trump’s tariffs in the US, according to a new report.

More than half (54%) of the US companies surveyed by insurance company Allianz said they will have to raise prices to accommodate the cost of the tariffs. Of the 4,500 companies across nine countries, including the US, UK and China, surveyed by Allianz only 22% said they can absorb the increased costs.

The unpredictability of US trade policy has also dented exporters’ confidence. The survey found 42% of exporting companies now anticipate turnover to decline between -2% and -10% over the next 12 months, compared to fewer than 5% before 2 April “liberation day” – when Trump unveiled his tariff policy.

Though Trump has pulled back on many of the levies he initially proposed, key tariffs remain in place, including a 10% universal tariff on all US imports, a 30% tariff on Chinese imports and extra tariffs on specific industries like metal and auto parts.

Trump has insisted that tariffs will make America “very wealthy again”, though it appears that American companies and consumers are simply expecting to pay higher prices as the tariffs settle into place. In April, consumer expectations of inflation reached their highest point since 1981, according to the University of Michigan’s Institute for Social Research.

Instead of immediately raising prices, which could deter customers, many companies have spent months trying to get ahead of Trump’s tariffs by stockpiling goods to temporarily circumvent them.

Nearly eight out of 10 American companies said that they frontloaded shipments to China before Trump announced his tariffs, with 25% saying they had started to front-load before the November 2024 election.

Inflation data from April showed that US price increases remained roughly level for the month. Economists say that it will take a while for tariff-related price increases to show up in data and companies have started to say they will pass some of the cost of tariffs onto consumers.

“Given the magnitude of the tariffs, even at the reduced levels announced this week, we aren’t able to absorb all the pressure,” Doug McMillon, Walmart’s CEO, said in an earnings call last week. “The higher tariffs will result in higher prices.”

More

Majority of US companies say they have to raise prices due to Trump tariffs | Trump tariffs | The Guardian

Recession indicators are out of control. When will this madness end?

May 19, 2025

They’re everywhere. There’s no escape.

Americans are on the lookout for signs of a recession. The signs have been with us, depending on whom you ask, pretty much since the last recession in early 2020. First-quarter GDP showed the economy shrinking by 0.3% instead of the forecast 0.4% growth. Two straight negative quarters of GDP growth is viewed as a slam-dunk indication that an official recession call is imminent, but is a drop of 0.3% really that bad?

Clearly, a trade war is not a welcome prospect and, understandably, millions of Americans are on edge after years of recession predictions, geopolitical unrest in the Middle East, a war in Europe, President Donald Trump’s tariffs, a Federal Reserve seemingly stymied by the conflicting signs of economic growth and the next potential political twist. If a recession is inevitable, they want it over already. 

You’d better watch out. Recession indicators are coming for your peace of mind and your summer vacation, mainly because there are so many of them. When a $70 million Alberto Giacometti bronze bust failed to sell at a Sotheby’s auction last week, could that have been the thousandth harbinger of recession or merely indicative of the fact that similar sculptures by the same artist sold for $50 million in recent years?

These days, everything except jobless claims, which have held steady, and GDP appears to be a recession indicator. Last month, Beyonce tickets were selling for less than $60. “The timing is tough with a potential recession in the cards,” Samyr Laine, co-founder of Freedom Trail Capital, a venture-capital firm, told MarketWatch. Or maybe Taylor Swift’s Eras tour stole Beyonce’s thunder?

The list of “soft data” recession indicators has almost no end. They include Chipotle’s “burrito index,” appointments at hairdressers and a drop in sales at coffee shops. (If you are unwilling to stand in line at Starbucks and pay $5.75 for a latte — or $4.75 if you don’t live in New York — maybe that means you’re using your money wisely, and it bodes well for the U.S. economy?)

Even fashion trends like skinny jeans that existed during the Great Recession are farcical fodder for the recession-indicator grinder. The “lipstick effect,” another quirky sign of a potential downturn, posits that people want to make themselves feel good when they are feeling financially insecure and, rather than splashing out on luxury goods, buy a $20 lipstick instead.

Economist predictions gone awry

When will this madness end? Such internet memes are part clickbait and part genuine curiosity about human beings and a desire to understand our behavior. These memes are curious predictors, if there are genuine reasons to suspect a recession is afoot — or they’re merely a form of reverse engineering to spur more lipstick purchases and retroactively act as an I-told-you-so.

You can look at consumer trends highlighted by social-media influencers or you could look at the stock market, official measurements of consumer confidence and hard data like jobs figures. Anecdotal evidence is colorful, but data are more reliable: The University of Michigan’s gauge of U.S. consumer sentiment, for what it’s worth, has now fallen for five consecutive months and April retail sales were virtually flat.

Economists have also lowered their recession probability scores, although that has done little to dull many recession indicators. Goldman Sachs economists cut their probability of a recession over the next 12 months to 35% from 45% after Trump lowered his China tariffs to 30% from 145% earlier this month. Similarly, JPMorgan Chase said the chances of recession, while elevated, are now below 50%.

----Limitations of an inverted yield curve

Other, arguably more reliable indicators, have yet to bear fruit. There is something endlessly fascinating and, perhaps, even sinister about the dreaded inverted yield curve. There’s a “dark arts” aspect to the science behind it that makes it compelling to observers. Even the name suggests an economy that’s been distorted and mangled in an economist’s hall of mirrors.

An inverted yield curve, as its name suggests, occurs when shorter-term yields are higher than those of longer-term Treasurys, flipping the usual or “healthy” spread between short- and long-term borrowing costs. An inverted curve suggests that investors are more pessimistic about the long-term prospects of the economy. At least, this one has some form.

The San Francisco Fed has long pointed out that every U.S. recession over the past 60 years has been preceded by an inverted yield curve. What’s more, it said an inverted yield curve has consistently been followed by an economic slowdown. It is a reliable indicator, it’s true, but it can take many, many, many months for the spread to presage a recession.

The 10-year yield recently was lower than the 2-year yield for the longest span of time in history, more than two years or 783 days, surpassing a record 624-day inversion recorded in 1978. It finally became uninverted in August 2024. That was eight months ago, and we are still waiting for the promised recession. That length of time stretches even the inverted-yield-curve signal’s credibility.

More

Recession indicators are out of control. When will this madness end?

Mortgage rates jump above 7% after Moody’s downgrade of U.S. credit

‘The timing is really not ideal for prospective buyers,’ economist says

Published: May 19, 2025 at 1:14 p.m. ET

Mortgage rates surged after the credit-rating agency Moody’s downgraded U.S. debt.

Moody’s cut the U.S.’s sovereign credit rating from AAA to Aa1. It was the last of the major credit-rating firms to strip the country of its triple-A rating. S&P Global Ratings downgraded U.S. debt in the summer of 2011. 

From the archive (August 2011): U.S. triple-A debt rating cut by Standard & Poor’s

The downgrade of debt put upward pressure on bond prices on Monday morning. That pushed the 30-year fixed-rate mortgage up 12 basis points to 7.04%, according to Mortgage News Daily. It later settled at 6.99% later in the day.

Moody’s  cited an increase in government debt and interest-payment ratios that were significantly higher than similarly rated sovereigns as reasons for its decision.

Mortgage rates tend to move in tandem with Treasury yields. With the 10-year yield 

TY00 +0.20%   going up, the 30-year fixed mortgage rate was going to trend upward as well, Jake Krimmel, a senior economist at Realtor.com, told MarketWatch. 

(Realtor.com is operated by News Corp subsidiary Move Inc., and MarketWatch publisher Dow Jones is also a subsidiary of News Corp.)

Mortgage rates going up is “really not ideal for prospective buyers,” Krimmel added. 

The housing market, meanwhile, is mired in a crisis of affordability. Elevated mortgage rates and record-high home prices have put homeownership out of reach for many Americans, as demonstrated in the chart below.

Against this backdrop, “the housing market really does not need another factor pushing mortgage rates up — or preventing them from coming down,” Krimmel said. 

Economic uncertainty is also weighing on residential builders, who are responsible for a critical part of housing supply. In their most recent housing-market confidence reading, builders expressed a heightened level of pessimism. The reasons cited for the gloomy outlook include high interest rates, policy uncertainty and building-material costs. 

The silver lining is that the housing market is becoming more buyer-friendly.

Price cuts are becoming more commonplace. More builders are slashing prices on new homes, with 34% cutting prices in May, which was up from 29% the previous month. The size of the average price cut was 5%.

More selling homeowners are offering concessions to buyers in some markets. About 25% of listings on Zillow  

ZG -2.79%  , a major real-estate platform, saw a price cut in April. That was the highest share for this busy time of year since the company began keeping track in 2018.

The median sale price of a U.S. home as of April, the most recent month for which complete data are available, was $438,500, according to data from the real-estate brokerage Redfin

RDFN -2.22%  . That was up 1.4% from a year ago.

Mortgage rates jump above 7% after Moody’s downgrade of U.S. credit - MarketWatch

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.

Archer enters partnership with Paragraf for Biochip development

19 May 2025

Archer Materials, a company developing quantum technology for medical diagnostics, has signed an agreement with UK graphene-based electronics company Paragraf.

The agreement is to advance development of Archer’s Biochip potassium ion sensor for testing of chronic kidney disease. The agreement will be in two stages, with each stage of work to be carried out over three months at a total estimated cost of £222,000.

The partnership is intended to accelerate technical progress towards meeting the blood potassium sensing target product profile (TPP) using a gFET. Work performed by Paragraf with Archer will complement the activities ongoing in Sydney.

Stage one will involve developing and optimising measurement protocol, improving gFET quality checks, and proprietary work on the sensor functionalisation. The expected outcomes include enhanced sensor accuracy, as well as data to improve foundry fabrication processes and device qualification procedures.

Stage two will build on stage one and include chip redesign to move from lab testing devices to more product representative chips. The teams will also work on sensor stability, lifetime and robustness. These are key metrics in the TPP.

It is expected that the work will result in several pieces of intellectual property (IP) that will enable Archer’s sensing product. All product-specific IP generated from the work in the partnership will be owned by Archer, in accordance with the agreement.

Paragraf is developing the commercialisation of mass-produced graphene-based electronic devices using standard semiconductor processes. Graphene Hall Sensors (GHS) and Graphene Field-Effect Transistors currently in production, and other semiconductor devices in development, make use of Paragraf’s proprietary graphene growth process to fully harness the wonder material’s myriad features.

Archer will be working with Paragraf’s engineering and business development teams with both teams leveraging their expertise in a range of fields from semiconductor manufacturing, biological sensing, chemistry, and the medical diagnostics industry. The development and learning on the sensing chip will feed directly into the ongoing work around integration with other sensing components as well as the product’s cartridge design.

Commenting on the Paragraf partnership, Simon Ruffell, CEO of Archer, said, “Formalising an agreement with Paragraf ensures the acceleration of the Biochip’s development. The work will be critical for producing a first sensor prototype which will, in turn, allow us to continue building strategic partnerships to support latter stages of product development and clinical trials for regulatory approval.”

Archer partners with Paragraf for Biochip development

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

World Debt Clocks (usdebtclock.org)

The trouble with the world is not that people know too little; it's that they know so many things that just aren't so.

Mark Twain