Baltic
Dry Index. 1411 +25
Brent Crude 62.52
Spot Gold 3254 US 2 Year Yield 3.70 +0.10
US Federal Debt. 36.796 trillion!!!
On the whole, human beings want to be good, but not too good, and not quite all the time.
George Orwell
I hadn’t intended to use my private email alert of yesterday, but on reflection, I think it unethical not to share my concerns in the LIR. Hoping to be completely wrong. Please use the comment section below if you would like to be added to my occasional private email updates.
Sell in May, go away, goes the old Wall Street adage, so I thought it timely on Mayday to review our stock casinos as of today. Bull or bear.
Well dinosaur Graeme is bearish.
The US economy is contracting, with more contraction likely to come over the next few quarters due to tariffs generating an inventory drawdown.
The Fed’s favourite inflation indicator Core PCE is 2.6%, but Goldman is expecting 3.5% in a few months due to the Trump tariff hit.
The US consumer is increasingly showing sign of stress. Credit card minimum payments are rising as are defaults, albeit from a modest level. Over 40% of consumers are reportedly/allegedly using “buy now, pay later” loans for groceries. Mortgage delinquency rates are rising. Tariff inflation/emptying shelves has yet to kick in.
Having declared trade war on friend and foe alike, friend and foe alike seems to have declared a tourism war on the USA, led of course by a deeply offended Canada and Denmark, supported in depth by Germany, France and most of the other EU.
More importantly though, Warren Buffet is sitting on over 340 billion in cash and isn't buying this dip. Why would he with the Buffett Indicator still at 177%, above 100 represents stocks in bubble territory?
The Cape Ratio is at 33. Far above a normal 15-16, suggesting a crash is the likely ending.
Unless Team Trump abandons the tariff war and soon, as in immediately, I expect by July the US and global economies to be heading into Great Depression 2.0, but this time with Pacific Ocean sized consumer and national debt. Something that didn't exist for consumers back in Great Depression 1.0. Europe had vast national debt due to WW1, but America was debt free.
A banking crisis developing in the US Agriculture States too, as the US harvest season gets underway in June, but with little to no export potential due to tariffs.
Briefly, to me rallies in the stock casinos, if they occur, are exit rallies for holders of large stock positions. I see a vast tariff global trade disaster looming, starting slowly this month, accelerating in June, but soaring like a rocket in July when the 90 day pause on Trump's tariffs ends.
In better news, Team Trump are desperate to get trade talks started with China. Another Trump U-turn coming on China tariffs?
Hong Kong stocks lead gains in Asia as China
evaluates possibility of trade talks with the U.S.
Updated Thu, May 1 20251 1:58 PM EDT
Asia-Pacific markets rose after China
said that it was evaluating possible trade talks with the U.S.
Markets in the region also trailed gains
on Wall Street after all three key benchmarks advanced overnight on optimism
that a slowdown in the global economy will not impede the progress of
developments in artificial intelligence.
Hong
Kong markets led gains in the region, with the Hang Seng Index up 1.74%
while the Hang Seng Tech index surged 3.45%.
India’s benchmark Nifty 50 moved up 0.46%
while the broader BSE Sensex was flat in early trade.
Japan’s benchmark Nikkei 225 added 0.87% while
the broader Topix index advanced 0.3%.
Over in South Korea, the Kospi index edged up 0.19%
while the small-cap Kosdaq moved 0.76% higher.
Australia’s S&P/ASX 200 climbed
0.94%.
China markets are closed for the Labor Day
public holiday.
U.S. stock
futures edged up as investors cheered China’s consideration of trade
talks with the U.S.
Overnight
stateside, stocks rose as strong quarterly results from Meta Platforms and Microsoft - two Big Tech
“Magnificent Seven” stocks - eased concerns of a slowdown in artificial
intelligence-powered developments amid the current macroeconomic uncertainty.
The Dow Jones Industrial Average climbed
83.60 points, or 0.21%, to close at 40,752.96. The S&P 500 gained 0.63% to
end at 5,604.14, still slightly below its levels from before President Donald
Trump’s “Liberation
Day” tariffs announcement in early April. The Nasdaq Composite increased
1.52%, to close at 17,710.74 and wipe out the decline it experienced since
April 2.
Asia
markets live: Stocks trade mixed
China says it’s evaluating the possibility of
trade talks with the U.S.
Published Thu, May 1 2025 8:36 PM EDT
China said it is evaluating U.S. overtures
to initiate trade negotiations, potentially paving the way for the world’s two
largest economies to start talks to resolve a trade war that has rumbled
financial markets and cast a pall on global economic activity.
Senior U.S. officials have reached out
recently “through relevant parties multiple times,” hoping to start
negotiations with China on tariffs, a spokesperson for the commerce ministry
said in a statement Friday.
While assessing the possibility of
starting any negotiations, Chinese authorities reiterated Beijing’s request for
the U.S. to remove all unilateral tariffs. Failure to do so would indicate “an
outright lack of sincerity” from Washington and “further compromise mutual
trust,” according to a CNBC translation.
“If the U.S. wants to talk, it should show
its sincerity and be prepared to correct its wrong practices and cancel the
unilateral tariffs,” according to the statement.
U.S. President Donald Trump has slapped
tariffs of 145% on imported Chinese goods this year, prompting China to impose
retaliatory levies of 125%. So far, both sides have sought to blunt the
economic impact of tariffs by granting exemptions on certain critical products.
Chinese offshore yuan strengthened 0.14%
to 7.2665 against the U.S. dollar following the statement. While China’s
onshore markets are closed for a holiday, Hong Kong’s Hang Seng index jumped 1.2%
on open.
The latest comments from Beijing follow a
flurry of conflicting statements from the Trump administration and Chinese
leadership on whether talks were underway, with both sides wanting to avoid
being seen as the first to back down.
---- While Beijing appears to signal its
readiness to engage in talks with the Trump administration, analysts cautioned
that reaching a comprehensive deal will be a complex and time-consuming
endeavor.
The wildcard Beijing must contend with
before entering any negotiations is the unpredictability of Trump, said Dan
Wang, China director at risk consultancy firm Eurasia Group.
“The negotiation is difficult to start
because Trump is chaotic. China will not risk losing control of the situation
just for the negotiation sake,” Wang said.
She anticipates that both sides will only
arrange open negotiation after all details are agreed privately. “A more likely
scenario is just a long-lasting painful truce with both sides doing their own
type of rolling back in practice without backing down politically in public. It
can easily last the entire Trump term,” Wang said.
That said, the substance of such talks —
if they happen — will also hinge on both sides’ strategic priorities and
economic red lines, with both sides showing little appetite for compromise.
----- “One of the major asks of China will be
for tariffs to go back to pre-‘liberation day’ levels, at least during the
negotiation period. Such a move could provide significant relief to businesses
on both sides; however, it remains uncertain how receptive the Trump
administration would be to this proposal,” said Montufar-Helu.
U.S. officials, including Treasury
Secretary Scott Bessent, have indicated that there could be an easing
in tensions with China.
More
China
says it's evaluating the possibility of trade talks with the U.S.,
US economic woes chip away at McDonald's: Burger
chain suffers its biggest sales slump in five years
May 1, 2025
McDonald’s has suffered its biggest US
sales slump in five years as consumers cut back on fast food.
Chief executive Chris Kempczinski said
lower and middle class Americans were anxious about inflation and wider
growth prospects.
US sales fell 3.6 per cent in the first
quarter, the biggest decline since 2020. Sales declined by 1 per cent overseas
– led by a downturn in the UK. Profits fell 3 per cent to £1.4billion.
It is the latest evidence that Donald
Trump’s trade war is thwarting hopes that he could turbo-charge growth. The
McDonald’s update came a day after figures showing US gross domestic product
shrank at the start of this year, for the first time since 2022.
Kempczinski said: ‘We’re not immune to the
volatility in the industry or pressures our consumers are facing.’
Rivals have also come under pressure, with
sales falling at Yum Brands, the owner of the Taco Bell, KFC and Pizza Hut.
US economic woes
chip away at McDonald's: Burger chain suffers its biggest sales slump in five
years
In other news, will the tariff wars destroy Boeing?
Ryanair threatens to cancel huge Boeing order if
tariffs raise prices
1 May 2025
DUBLIN (Reuters) -Ryanair on Thursday
threatened to cancel orders for hundreds of Boeing aircraft if a U.S.-led
tariff war leads to materially higher prices, and said it could look at
alternative suppliers, including Chinese planemaker COMAC.
The threat by Europe's largest low-cost
carrier and one of Boeing's biggest customers was the latest sign of a
potential reordering of the global aerospace industry if U.S. President Trump
does not exempt the sector from his tariff plans.
But with COMAC not yet certified in Europe
and Boeing's main rival Airbus saying it is sold out through the rest of the
decade, Ryanair may find it hard to follow through on its threat, one industry
source said.
In a letter to a senior U.S. lawmaker,
Ryanair's chief executive Michael O'Leary said Trump's tariffs could threaten
330 Boeing 737 MAX aircraft that his airline has on order, which have a list
price of more than $30 billion.
"If the U.S. government proceeds with
its ill-judged plan to impose tariffs, and if these tariffs materially affect
the price of Boeing aircraft exports to Europe, then we would certainly
reassess both our current Boeing orders, and the possibility of placing those
orders elsewhere," O'Leary said.
More
Ryanair threatens
to cancel huge Boeing order if tariffs raise prices
Major airlines deliver dire warning to Trump
administration as grim new twist emerges in tariff drama
1 May 2025
Two major airlines have warned that
European tourists are avoiding visiting the US this summer.
Air France and Lufthansa reported
weaker demand for transatlantic bookings from Europe to the US in the first
quarter of the year.
It comes as Donald
Trump's aggressive trade policies and border crackdowns are putting
tourists off vacationing in America.
'We know there are a lot of customers that
are holding back in buying tickets for a little more clarity on... the border,
and things like that,' Air France-KLM CEO Ben Smith told investors on an
earnings call on Wednesday.
Air France saw a 2.4 percent dip in
transatlantic bookings from Europeans for travel in May and June compared with
the same time last year, The
Financial Times reported.
Steven Zaat, the airline's chief financial
officer, said that the impact on the airline had been limited as there was more
demand for tickets going from the US to Europe.
However, a continued pullback in
transatlantic travel could spell major issues for European long-haul airlines
which are dependent on the high-margin trips to the US.
Lufthansa, British Airways and Air France
all make around 50 percent of their profits from their flights to and from the
US, according to analysis from Barclays.
Lufthansa also reported a weakening in
transatlantic bookings as Europeans show hesitancy about visiting the US during
the usually busy summer period.
'When it comes to vacation trips to the
US, especially from the German, Austrian and Swiss markets, it's easy to
imagine conversations around the kitchen table where families are saying,
"We don't know yet if we really want to go,"' CEO Carsten Spohr
explained on the airline's earnings call on Tuesday.
However, Spohr said he hoped the
recent softening
in the White House's rhetoric on tariffs would lead to a pick-up in demand
later in the year.
'The discussions about tariffs are no
longer as heated as they were four weeks ago,' he told analysts.
'That is why we believe that some of these
bookings will be recovered in the coming weeks.'
Despite the hopeful note, Lufthansa still
plans to pull back its plans to expand the amount of transatlantic flights from
6 percent to 3 percent by the final quarter of the year.
The total number of foreign visitors to
the US dropped by 12 percent in March compared to the same time last year, The
Financial Times reported.
One of the biggest hits has come from
Canadians, many of whom are actively
boycotting the US following
Trump's aggressive trade policies and threats to annex the country into
becoming the '51st state.'
More
Auto
giants ditch financial guidance as industry reels from Trump tariff chaos
Published
Thu, May 1 2025 1:13 AM EDT
European
auto giants reported a sharp drop in first-quarter profit, and many suspended
or cut full-year financial guidance, partially attributing the industry pain to
U.S. President Donald Trump’s trade tariffs.
The
corporate updates were made shortly after Trump imposed a 25% tariff
on automotive imports into the U.S. in early April.
Trump
sought to water down these
levies on
Tuesday, signing an executive order designed to prevent a range of other
separate duties — such as an additional 25% tariffs on steel and aluminum —
from “stacking” on top of one another.
Some
automakers applauded the new stance, although analysts warned the fast-changing
nature of Trump’s trade tariffs will likely keep any long-term corporate
investment decisions at bay.
Stellantis
Stellantis, which owns
household names including Jeep, Dodge, Fiat, Chrysler and Peugeot, on
Wednesday said that it was
withdrawing its full-year financial guidance due to tariff-related
uncertainties.
It added the company
was “highly engaged” with policymakers on tariff policies, while taking action
to adjust production plans and identify opportunities for improved sourcing.
The
multinational conglomerate reported first-quarter net revenues of 35.8 billion
euros ($40.7 billion), reflecting a 14% drop from the same period last year.
Mercedes
Germany’s Mercedes also scrapped its 2025 earnings
guidance and reported sharply lower first-quarter profit.
The
automaker said full-year
reporting figures could not “be estimated with the necessary level of
certainty,” citing the current volatility over tariffs, mitigation measures and
potential direct and indirect effects.
“Assuming
current trade policies persist, [earnings before interest and taxes] and free
cash flow of the industrial business, as well as the adjusted returns on sales
of Mercedes-Benz Cars and Mercedes-Benz Vans, will be negatively impacted,” the
company said in a statement.
Rella
Suskin, equity analyst at Morningstar, said Trump’s recent move to ease car
tariffs provides “partial relief” to European automakers.
“The
tariff adjustment relieves imported auto parts up to 15% of a car’s content,”
Suskin said, noting that BMW and Mercedes assemble roughly half of their
vehicles sold in the U.S. domestically.
She
nevertheless added that “until there is greater certainty around the permanence
and quantum of tariffs, the automakers are unable to make long-term capital
allocation decisions.”
Volkswagen
Volkswagen was did not
join the ranks of Europe’s top original equipment manufacturers (OEMs) that
pulled their financial guidance.
Europe’s
biggest carmaker, however, did say it expects
operating return on sales, net cash flow and net liquidity to come in at the
bottom end of its annual forecasts, citing increasing trade restrictions,
political uncertainty and emissions regulations.
Volkswagen
on Wednesday posted operating profit of 2.9 billion euros for the first three
months of the year, marking a 37% decline from the same period last year.
More
Auto giants ditch guidance as industry reels from Trump tariff chaos
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.
Weekly
jobless claims surge to 241,000, more than expected, in latest sign of economic
trouble
Published
Thu, May 1 2025 8:33 AM EDT
Initial
unemployment claims posted an unexpected increase last week in a potential
trouble sign for the wobbling U.S. economy.
First-time
filings for unemployment insurance totaled a seasonally adjusted 241,000 for
the week ended April 26, up 18,000 from the prior period and higher than the
Dow Jones estimate for 225,000, the Labor Department reported Thursday.
This was the highest total since Feb. 22.
Continuing
claims, which run a week behind and provide a broader view of layoff trends,
rose to 1.92 million, up 83,000 to the highest level since Nov. 13, 2021.
Much
of the gain seemed to come from one state — New York, where claims more than
doubled to 30,043, according to unadjusted data. There was no apparent reason
for the surge listed in the news release.
The
District of Columbia, which had seen a sharp increase earlier this year amid
President Donald Trump’s efforts to
shrink the federal government payroll, saw a modest rise last week.
The
report comes amid several trouble signs for the economy, though the labor
market has remained stable.
----Despite
the rise in the claims, the longer-term trend remains intact. The four-week
moving average climbed 5,500 to 226,000, largely in line with recent trends.
The
Labor Department on Friday will release its nonfarm payrolls total for April,
with economists expecting an increase of 133,000. The Thursday release will not
factor into that number as it is beyond the survey week used for the report.
Weekly jobless
claims surge to 241,000, more than expected, in latest sign of economic trouble
Fed
inflation gauge sets up stagflation risks as tariff policies bite
April
30, 2025
The
Federal Reserve's preferred inflation gauge remained elevated last month,
following a weaker-than-expected first-quarter GDP reading that could stoke
stagflation concerns in the world's biggest economy.
The
Bureau of Economic Analysis's PCE Price Index report for March, which the Fed
closely tracks for a clearer indication of inflation pressures, on Wednesday
showed core prices rising at an annual rate of 2.6%. That's just inside the
February reading of 2.8% and matched Wall Street's consensus forecast of 2.6%.
Core
price pressures, which strip away volatile food and energy components, were
unchanged on the month, compared with February's reading of a 0.4% increase and
Wall Street's consensus estimate of a 0.1% advance.
The
BEA's headline PCE inflation index held at an annual rate of 2.3%, just ahead
of Wall Street's estimate of 2.2% but inside the 2.7% pace recorded in
February. The BEA said prices were unchanged on the month, compared with the
0.4% increase recorded in February.
The
BEA also noted that personal incomes for March rose 0.5%, while spending surged
0.7% as consumers rushed to purchase big-ticket items before the Trump
administration implements its tariff plans..
Softer
growth + sticky inflation = stagflation risk
Overall,
however, the softening growth story set against sticky inflation could suggest
the economy is facing early stagflation risks.
"Even
if today’s weak GDP may have partially reflected companies trying to get ahead
of tariffs, it was still a stagflation warning shot over the bow of the
economy," said Ellen Zentner, chief economic strategist for Morgan
Stanley Wealth Management.
"This
type of data won’t soothe the markets, and it won’t make the Fed’s job any
easier."
Fed inflation
gauge sets up stagflation risks as tariff policies bite
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.
Graphene:
Breakthrough Industrial Applications
May 1, 2025 | By Mamoun Taher, Graphmatech
As
research continues, commercial applications expand and manufacturing scales up,
graphene is not only set to invigorate existing industries, but also to lay the
groundwork for entirely new ones
Graphene, a two-dimensional material derived solely
from carbon, is one of the most abundant and versatile elements on Earth. The
development of carbon as coal, petroleum and natural gas as energy sources
marks the beginning of modern industrial chemistry. Due to its naturally
occurring abundance, carbon exists in many forms, such as diamond, fullerenes,
carbon nanotubes, charcoal and of course, graphite and graphene.
Graphite is a carbon-based
material composed of carbon atoms arranged in a hexagonal lattice structure
stacked on top of each other. As a result of its unique properties, such as
electrical and thermal conductivity, thermal stability and lubricating characteristics,
it has significantly impacted many industries, such as electronics, batteries,
composites and refractories.
In 2004, at the University of
Manchester, after years of research, difficulty and failed attempts, two
academics, Andre Geim and Konstantin Novoselov, carved at graphite until they
pulled away a single layer of carbon atoms — what we now know as graphene [1].
Since then, more than two decades of research and development have positioned graphene to make the leap
into the commercial sphere, with many promising applications across numerous
industries, as described further in this article. Geim and Novoselov’s
groundbreaking discovery led to extensive research and innovation into
graphene’s unique structure and properties, revealing its potential as a
revolutionary “miracle” material across a multitude of industries. Imagine
graphite as a thick book made up of many pages stacked together, each page
representing a layer of carbon atoms, and graphene is just one single page from
that book.
Graphene’s chemistry contributes to industrial
applications
Graphene is a single layer of
carbon atoms arranged in a two-dimensional honeycomb lattice (Figure 1). It
stands out as a groundbreaking material due to its versatile combination of
properties. Graphene’s strength is nearly 200 times that of steel, due to the
strong bonds between the carbon atoms. Graphene is lighter than cotton, yet it
also exhibits exceptional barrier properties against various gas molecules
and superior electrical conductivity compared to copper. Moreover, graphene can
be sustainably produced from abundant resources like CO2, graphite, wood, methane and recycled waste [2, 3].
Previously, conventional
materials could only combine a maximum of two of these properties (strength,
lightness, conductivity and sustainability in production). Graphene breaks this
limitation and offers a unique combination of all these properties, presenting
a versatile solution to various applications and enabling engineers to further
push boundaries of what materials can do.
It is worth noting that
graphene is not a single material, but rather a family of different grades,
each with distinct manufacturing processes and characteristics. Among these are
pristine graphene, graphene-polymer composites, graphene oxide, graphene nanotubes, reduced graphene oxide, graphene nanoplatelets,
graphene metal powders (Figure 2), graphene metal composites, and task-specific functionalized graphene. Each grade’s unique
properties are suitable for specialized applications and directly impact
performance expectations and the material’s effectiveness in a given use case.
More
Graphene: Breakthrough Industrial Applications | Page 1
Next, the
world global debt clock. Nations debts to GDP compared.
World Debt
Clocks (usdebtclock.org)
Another
weekend and another week closer to the end of the Trump tariff pause. What
could possibly go right next week? A massive Trump U-turn on China tariffs to
get China trade negotiations underway? But isn’t that China winning? Have a great weekend everyone.
If you
want to destroy a nation, give it too much - make it greedy, miserable and
sick.
John
Steinbeck
