Baltic
Dry Index. 1418 +65 Brent
Crude 62.78
Spot
Gold 3289 U S 2
Year Yield 3.89 -0.03
US
Federal Debt. 36.917 trillion US GDP 30.040 trillion
You
don't have to believe in Feng Shui for it to work. I just know it brings me
money.
Donald Trump
Predictably, on the
last trading day of May, the US stock casinos dressed up stocks, somewhat. By
previous month-end standards, this was a miss.
The Fed’s favourite
inflation indicator, core PCE came in tame too, although from here on out a
tariff inflation effect is likely to start showing up.
But while tariff
uncertainty rules for now, President Trump seems determined to blow up the US
economy by raising steel tariffs from 25 percent to 50 percent, wrecking the
domestic auto industry.
Even worse, President
Trump is about to weaponise the US Treasury market, cutting it off from most
global potential buyers.
An increasingly
dismal US and global economy seems to lie directly ahead.
S&P
500 is flat to close out a 6% May gain as investors continue to look past trade
policy confusion
Updated
Fri, May 30 2025 4:24 PM EDT
The S&P
500 was little changed on Friday to close out a big winning month, as
investors shook off trade war fears after President Donald Trump said China
violated its preliminary trade agreement.
The broad index inched down by 0.01% to end at
5,911.69. The Nasdaq
Composite slid 0.32% to 19,113.77, while the Dow Jones Industrial Average added
54.34 points, or 0.13%, to finish at 42,270.07.
Friday’s trading session marked the end of a strong
May trading month, with a chunk of the rally following a trade
deal announcement between the U.S. and UK. Investors hoped that could
pave the way for more agreements with other countries facing duties.
The S&P 500 added 6.2% this month, while the
Nasdaq surged 9.6% in that time. Both notched their best months since November
2023. The 30-stock Dow has gained 3.9% on the month.
For the week, the S&P 500 jumped 1.9%, while the
30-stock Dow rose 1.6%. The tech-heavy Nasdaq advanced 2%.
Stocks initially tumbled in Friday’s session after
Trump said in a social media post that China “violated” its
current trade agreement with the U.S. Later in the trading day, a Bloomberg report, citing people familiar, said the
administration plans to broaden restrictions on China’s tech sector.
That came after Treasury Secretary Bessent said in
a Fox
News interview that U.S.-China trade talks “are a bit stalled.”
Investors are now wondering if, or when, a long-term agreement between China
and the U.S. can be reached.
The administration has found its contentious plan
for broad and steep levies in legal limbo. Legal concerns hit a boiling point
after the Court of International Trade on Wednesday night halted
the majority of Trump’s tariffs.
However, an appeals court granted
a stay on Thursday afternoon, allowing the duties to remain in place
until next week. The Trump administration considered using a provision of the
Trade Act of 1974 to implement tariffs of up to 15% for 150 days, according
to The Wall Street Journal.
The legal battle around tariffs offers the latest
dose of uncertainty for what was already an uneasy market. Investors have
contended with macroeconomic concerns tied to tariffs and worry that the
shakeup to U.S. trade policy could cause a recession.
“It’s an awkward time,” said Jay Hatfield, CEO of
Infrastructure Capital Management. “If you’re an investor, you want to bet on
good earnings, not good tweets about tariffs.”
Trump
says U.S. will double steel tariffs to 50%
Published
Fri, May 30 2025 12:45 PM EDT
President
Donald Trump told U.S. steelworkers on Friday that he will double tariffs on
steel imports to 50%.
“We’re
going to bring it from 25% to 50%, the tariffs on steel into the United States
of America,” Trump said during remarks at U.S. Steel’s Irvin Works in West
Mifflin, Pennsylvania. The president said the steep tariffs would “further
secure the steel industry.”
“At
25%, they can sort of get over that fence,” Trump said. “At 50%, they can no
longer get over the fence.”
The
new import duties will start June 4, the president posted on Truth Social.
Trump
was delivering remarks at U.S. Steel after indicating last week that he will
clear a controversial merger with Japan’s Nippon. Investors and union members
were listening for answers from the president on what structure the deal will
take, though he delivered little in the way of additional detail.
Trump
said Nippon has committed to keep U.S. Steel’s blast furnaces operating at full
capacity for a minimum of a decade. There will be no layoffs and “no
outsourcing whatsoever” due to the deal, the president said. U.S. Steel workers
will receive a $5,000 bonus, he added.
Trump has avoided calling the deal a merger, describing it instead as
a “partnership” in a May 23 post on his social media platform Truth
Social. The president said U.S. Steel’s headquarters would remain in Pittsburgh
and Nippon would invest $14 billion over 14 months in the more than
120-year-old American industrial icon.
U.S.
Steel has called the deal as a “merger” in which it will become a “wholly owned
subsidiary” of Nippon Steel North America but continue to operate as separate
company, according to an April 8 filing with the Securities and Exchange Commission.
More
Trump
says U.S. will double steel tariffs to 50%
U.S.
foreign tax bill sends jitters across Wall Street
Published Fri, May 30 2025 5:01 AM EDT Updated Fri,
May 30 2025 9:17 AM EDT
While U.S. President Donald Trump’s tariffs play
out in U.S. courts, another one of his proposed laws could weaponize the
American tax system.
Investment banks and law firms warn this step could
prove to be as significant as the impact of duties on investors.
The “One Big Beautiful Bill Act,” which passed
through the U.S. House of Representatives last week, includes the most sweeping
changes to the tax treatment of foreign capital in the U.S. in decades under a
provision known as Section 899. The bill must still gain the Senate’s approval.
“We see this legislation as creating the scope for
the US administration to transform a trade war into a capital war if it so
wishes,” said George Saravelos, global head of FX research at Deutsche Bank on
Thursday.
“Section 899 challenges the open nature of US
capital markets by explicitly using taxation on foreign holdings of US assets
as leverage to further US economic goals,” Saravelos added in the note to
clients, under the subtitle “weaponization of US capital markets in to law.”
Section 899 says it will hit entities from
“discriminatory foreign countries” — those that impose levies such as the
digital services taxes that disproportionately affect U.S. companies.
France, for instance, has a 3% tax on revenues from
online platforms, which primarily targets big technology firms such as Google, Amazon, Facebook, and Apple. Germany is reportedly considering a similar tax of 10%.
What
does the proposed tax do?
Under the new tax bill, the U.S. would hit investors
from such countries by increasing taxes on U.S. income by 5 percentage points
each year, potentially taking the rate up to 20%.
Emmanuel Cau, head of European Equity Strategy at
Barclays, suggested that the mere passage of the tax legislation could make
dollar assets less valuable for foreign investors.
“In our view, this is a risk for those companies
generating US revenues, and domiciled in countries that have enacted Digital
Services Taxes (DST) or are implementing the OECD’s Under Taxed Payment Rule
(UTPR),” Cau said in a Friday note to clients.
He highlighted companies such as London-listed Compass Group, which provides
catering services to U.S. schools, and InterContinental Hotels, which owns
at least 25 luxury hotels in the U.S., are likely to be affected by the
proposed law.
“Given US net international investment position is
sharply negative, there is indeed scope for capital outflows if indeed S899
passes through the Senate in its current form,” he added.
The impact of the bill won’t be limited to European
companies or individuals from those states.
The bill “could significantly increase tax rates
applicable to certain non-U.S. individuals and business, governmental, and
other entities,” said Max Levine, head of U.S. tax at the law firm Linklaters.
This means it could also ensnare governments and
central banks, which are large investors of U.S. Treasuries. France and
Germany, for instance, held a combined $475 billion worth of U.S. government bonds as of
March.
The proposed tax would lower returns on U.S.
Treasuries for those investors as “the de facto yield on US Treasuries would
drop by nearly 100bps,” Deutsche Bank’s Saravelos added. “The adverse impact on
demand for USTs and funding the US twin deficit at a time when this is most
needed is clear”.
“It’s very bad,” said Beat Wittmann, chairman of
Switzerland-based Porta Advisors. “This is huge — this is just one piece in the
overall plan and it’s completely consistent with what this administration is
all about.”
“The ultimate judge for this is not our opinions,
it’s the bond market,” Wittmann added. “The U.S. bond market is discounting
these developments, and we have seen in the last few weeks, that if there was a
safe haven move, investors clearly prefer German bunds.”
More
U.S.
foreign tax bill sends jitters across Wall Street
In other news.
CNBC
Daily Open: Definite tariffs could be better for markets than on-and-off ones
Published
Thu, May 29 2025 9:05 PM EDT
A
U.S. federal trade court striking down President Donald Trump’s “reciprocal”
tariffs on a broad swathe of countries seems, on the surface, a positive
development all around. A lack of tariffs leads to cheaper goods, likely more
consumer spending and higher corporate revenue, which tends to flow back to
stock prices.
This
ideal scenario, however, rests on the assumption that the court’s decision is
final and the Trump administration does not have other ways of reinstating its
muscular trade policies.
Events
on Thursday have already shown us that is not the case. An appeals court
temporarily paused the tariff ruling to allow the Trump
administration to respond to the case. “Even if we lose, we will do it another
way,” Trump trade advisor Peter Navarro told reporters at the White House
Thursday afternoon.
This
uncertainty could roil markets and trade negotiations with countries further.
If tariffs could pop in and out of existence based on policy and judicial
decisions, how do nations discuss trade deals, and how do investors allocate
their capital efficiently? Indeed, the S&P 500 was up nearly 0.9% when
trading began, but fell sharply after the Trump administration said it may ask
the Supreme Court to halt the federal trade court’s ruling.
“In
general, markets don’t like uncertainty, because it makes forecasting more
difficult,” said Larry
Tentarelli, founder of the Blue Chip Daily Trend Report. “We expect the tariff
news cycle to be an extended process, which can lead to higher short-term
volatility.”
In
other words, if there was a definite universal tariff of 10% — while it’s
undeniably still a tax — the surety of it could be better for markets and
economies globally in the long run.
CNBC Daily Open:
Markets would prefer definite tariffs
Multiple
Countries Issue Travel Warnings for USA After Immigration Crackdowns Target
Foreign Visitors
30
May 2025
Germany
Warns Citizens After Border Detentions
Something
shocking is happening at America's borders that's making headlines across
Europe. Germany's Foreign Office adjusted its travel advisory after several of
its citizens were reportedly arrested and detained by immigration authorities
while entering the U.S., according to local media reports.
A German official on Saturday told NPR the country's consulates general are
aware of cases of citizens being detained and are in contact with their
families as well as U.S. officials.
The warning followed reports of three German nationals who were detained at the
U.S. border and deported, according to Reuters.
The German government's response sends a clear message that even traditionally
friendly allies aren't taking any chances with America's new immigration
stance. A message on Germany's foreign office website notes that, "Neither
a valid ESTA authorization nor a valid U.S. visa constitutes a right to entry
into the USA. The final decision regarding entry is made by the U.S. border
official. It is recommended that you bring proof of your return journey (e.g.,
flight booking) upon entry.
There is no legal recourse against this decision. German diplomatic missions
abroad are unable to influence the reversal of a denial of entry." This
stark warning represents a dramatic shift in how Germany views travel to its
longtime ally.
United
Kingdom Issues Stern Entry Warnings
The
United Kingdom is also warning its residents to comply with all entry rules or
they "may be liable to arrest or detention." The move comes after a
tourist from the U.K. was reportedly arrested and detained by ICE at the
U.S.-Canada border earlier this month.
The U.K.'s foreign office also updated its advice for its citizens traveling to
the U.S. The warning says that, "Travelers should only enter the United
States with a valid ESTA or visa that corresponds to the intended purpose of
their stay.
Criminal records in the United States, false information about the purpose of
their stay, or even a slight overstay of their visa upon entry or exit can lead
to arrest, detention, and deportation."
British
authorities are leaving nothing to chance, making it crystal clear that the
consequences of any misstep could be severe. On Mar. 20, the U.K.
updated its advice on travel to the United States, noting harsh consequences
may come to those who violate immigration laws. "The authorities in the
U.S. set and enforce entry rules strictly," the office said. "You may
be liable to arrest or detention if you break the rules." The language is
unusually direct for diplomatic communications, reflecting the gravity of the
situation.
----Netherlands
and Belgium Join the Warning Wave
The
Netherlands and Belgium are the latest two European countries moving to update
their travel advice for the United States for LGBTQ+ citizens and all people
traveling to the U.S. The Dutch foreign ministry has warned that U.S.
customs and laws regarding sexual minorities may differ from those in the
Netherlands. Belgium is also set to update its advice soon due to
"tightened border controls" and new challenges for LGBTQ+ people,
according to reports.
Similarly, the Netherlands Ministry of Foreign Affairs updated its guidance on
Tuesday stating that Dutch citizens must also include their gender at birth on
their ESTA and visa applications. While no citizens from the Netherlands are
known to have been turned away at the US border, the country put out an
advisory that "you must indicate your gender at birth when applying for an
ESTA or a visa" to the United States.
These advisories represent a coordinated European response to protect their
citizens from potential complications at U.S. borders.
The timing suggests governments are responding to specific incidents and policy
changes that have created uncertainty for travelers.
More
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.
US
inflation gauge cools with little sign of tariff impact, so far
May 30, 2025
WASHINGTON (AP) — A key U.S. inflation gauge slowed
last month as President Donald Trump’s
tariffs have yet to noticeably push up prices. Spending by Americans slowed
despite rising incomes, potentially an early reaction to higher prices on some
imported goods.
Friday’s report from the Commerce Department showed that
consumer prices rose just 2.1% in April compared with a year earlier, down from
2.3% in March and the lowest since September. Excluding the volatile food and
energy categories, core prices rose 2.5% from a year earlier, below the March
figure of 2.7%, and the lowest in more than four years. Economists track core
prices because they typically provide a better read on where inflation is
headed.
The figures show inflation is still declining from
its post-pandemic spike, which reached the highest level in four decades in
July 2022. Economists and some
business executives have warned that prices will likely head higher as
Trump’s widespread tariffs take effect, though the timing and impact of those
duties are now in doubt after they were struck
down late Wednesday in court.
On a monthly basis, overall prices and core prices
both increased just 0.1% from March to April. The cost of big-ticket
manufactured goods rose a hefty 0.5%, though that increase was offset by a 0.1
decline in other goods, such as groceries. The cost of services rose just 0.1%
from March to April.
The big increase in durable goods prices could
reflect the early impact of tariffs. Americans also cut back their spending on
longer-lasting factory goods in April, the report showed.
Overall consumer spending — which includes spending
on services — rose 0.2% in April from March, the report said, but that’s down
from a big 0.7% rise in March.
The slowdown in spending could reflect some early
caution on the part of consumers, economists said, in response to higher goods
prices. It also suggests that some of the spending jump in March reflected
consumers purchasing items like cars to get in front of the impact of tariffs.
“The pulling forward of consumer spending ahead of
the tariff increases will continue to dampen household spending in the coming
months, especially as they face higher prices and a softening labor market,”
Kathy Bostjancic, chief economist at Nationwide, said in an email. “We
anticipate that the improved inflation trend will reverse in the second half of
the year as companies are forced to begin passing along a portion of the
increased tariffs in order to protect profit margins.”
More
US
inflation gauge cools with little sign of tariff impact, so far | AP News
US Economy Shrinks 0.2% on Weaker Spending, Larger
Trade Impact
May 29, 2025
(Bloomberg) -- The US economy
shrank at the start of the year, restrained by weaker consumer spending and an
even bigger impact from trade than initially reported.
Gross domestic product
decreased at a 0.2% annualized pace in the first quarter, the second estimate
from the Bureau of Economic Analysis showed Thursday. That compared with an
initially reported 0.3% decline.
The economy’s primary
growth engine — consumer spending — advanced 1.2%, down from an initial
estimate of 1.8% and the weakest pace in almost two years. Meantime, net
exports subtracted nearly 5 percentage points from the GDP calculation,
slightly more than the first projection and the largest on record.
The slight upward
revision in GDP reflected stronger business investment and a greater accumulation
of inventories. Federal government spending wasn’t as much of a drag as
originally reported.
GDP figures are revised
multiple times as more data become available, enabling the government to
fine-tune its estimate. The first projection, released in late April, showed
the economy contracted for the first time since 2022. The final
estimate is due next month.
Economic growth was
dragged down at the start of the year by a surge in imports as US businesses
tried to get ahead of President Donald Trump’s tariffs. More moderate consumer
spending, as well as a decline in federal government spending, also weighed on
the figure.
Since then, the White
House has walked back or delayed some of the more punitive levies, and most of
the tariffs have been blocked by a US trade court. While the pauses
have helped calm Americans’ concerns about the economy
and prompted many economists to scrap their recession calls, tariff rates are still substantially higher
than before Trump took office.
Forecasters largely
expect GDP to rebound in the second quarter as higher duties discourage
imports, and the goods already brought in will accumulate in larger inventories
that add to growth. Beyond that, economists and policymakers will be paying
close attention to how Trump’s policies — including trade, but also immigration
and taxation — will impact consumer and business spending going forward.
Thursday’s data showed
underlying demand across the economy was weaker than initially thought in the
first quarter. Final sales to private domestic purchasers — a measure favored
by economists that combines consumer spending and business investment — rose at
a 2.5% rate, the slowest in nearly two years.
Consumer spending was
revised lower largely on weaker demand for cars. Outlays for services,
including health care and insurance, were also lower.
Trump contends his trade
policies will stoke economic growth over the longer term through the revival of
domestic manufacturing, which he says will boost employment and lower the
prices of US-made goods.
GDI Estimate
The government’s other
main gauge of economic activity — gross domestic income — fell 0.2%, after a
5.2% annualized advance in the fourth quarter. That was the first decline since
the end of 2022. Whereas GDP measures spending on goods and services, GDI measures
income generated and costs incurred from producing those same goods and
services.
The GDI data include
figures on corporate profits. The 2.9% decrease in profits — the most since
2020 — followed a 5.4% advance in the fourth quarter.
While recent data have
suggested businesses are mostly taking the hit so far, many firms — including Walmart
Inc., the world’s largest retailer — are warning that consumers will start
seeing price hikes soon.
More
US Economy Shrinks 0.2% on Weaker Spending,
Larger Trade Impact
Technology
Update.
With events happening
fast in the development of solar power and graphene, I’ve added this section.
Chinese hold on solar-power tech raises fresh sabotage fears in
Europe
May 29, 2025, 01:12 PM
THE HAGUE, Netherlands — Hidden components in Chinese-made solar
power equipment have caused alarm bells in Western capitals amid concerns over
Beijing’s ability to interfere with power grids. Europe may be particularly
vulnerable, experts say, with most of its solar farms potentially at risk of
remote shutdown.
The revelation of undeclared remote access devices in American
solar farms, first reported by Reuters earlier
this month, came less than a month after a power outage that shut down
electricity for millions throughout Spain, Portugal, Andorra and parts of
France, highlighting the possible fragility of even highly developed and
integrated European power grids.
According to unnamed sources cited by Reuters, the communication
devices that were embedded in solar farm gear were not shown on schematics and
customer information of the products, suggesting they may have been
deliberately concealed. The undisclosed devices were reportedly found during a
routine disassembly of Chinese-made power inverters, which serve to connect
solar farms to the electricity grid, control the flow of power and maintain the
all-important grid frequency.
While Iberian authorities have ruled out a cyber attack in the
case of the peninsula’s massive blackout, the finding has nonetheless instilled
a new sense of urgency in European planning to make the continent’s integrated
electrical grid safe and resilient.
Market dominance
Inverters are crucial in linking photovoltaic (PV) power plants,
which output DC electricity, to the broader electricity network, which runs on
AC. In 2023, 78% of all inverters installed in Europe came from Chinese
vendors, with the overwhelming majority being made by Huawei and SunGrow, according to DNV,
a risk consultancy. The report was commissioned by SolarPower Europe, an
industry advocacy group.
This market dominance can likely be explained by a combination of
China’s large manufacturing capacity and the comparatively lower prices of
Chinese inverters compared to European ones.
Control over the inverters allows outsiders to simultaneously
disconnect generating capacity from the grid, which can cause blackouts. It
would also allow them to manipulate voltage and frequency settings to
destabilize local grids and to override safety protections like anti-islanding
systems.
Both Huawei and Sungrow have documented links to the Chinese
government and the country’s ruling Communist Party, including formal ties,
participation in government projects, and officials holding high-ranking
positions simultaneously in both the companies and the state.
Under Chinese law, Huawei faces mandatory cooperation requirements
with intelligence services. The 2017 National Intelligence Law declares that Chinese
companies must “support, assist, and cooperate with” China’s
intelligence-gathering authorities. As a result of questions over its
independence and safety, the electronics giant has already faced restrictions
on work on critical communications infrastructure – especially 5G networks – in
several countries. It is also front and center in a major investigation
currently ongoing in Brussels surrounding bribery of European officials.
----“Europe’s energy sovereignty is at serious risk due to the
unregulated and remote control capabilities of photovoltaic inverters from
high-risk, non-European manufacturers – most notably from China,” said the
European Solar Manufacturing Council, an industry association.
This isn’t purely hypothetical, either. In November 2024, some
solar inverters in the U.S., U.K. and Pakistan were actually disabled remotely
from China. Very little was publicly revealed about this incident and its
consequences; investigations later showed that the shutdown may have been the
result of an industry dispute, according to Günter
Born, a German tech and cybersecurity journalist.
More
Chinese hold on
solar-power tech raises fresh sabotage fears in Europe
Next, the
world global debt clock. Nations debts to GDP compared.
World Debt Clocks (usdebtclock.org)
This
weekend’s music diversion. 10 minutes of harpsicord genius. Well, the first 10
minutes, anyway. Approx. 20 minutes.
Antoine-Frédéric
Gresnick (1755-1799) - Concerto per il Cembalo (1782)
Antoine-Frédéric
Gresnick (1755-1799) - Concerto per il Cembalo (1782)
This
weekend’s tariff and shipping diversion. Approx. 12 minutes.
Canada
Ditches the U.S. in $40B Deal—Europe Wins Big, Washington Stunned
Canada Ditches the
U.S. in $40B Deal—Europe Wins Big, Washington Stunned - YouTube
Finally,
IMF Portwatch a partnership with Oxford University, global trade monitor.
Winning is important, but survival is even more important. If
you don't survive, you don't get to fight the next battle.
Donald Trump
