Confidence Boost For The Fed

By Bas van Geffen, Senior Macro Strategist at Rabobank

Last Wednesday, Powell said that there had been a lack of further progress toward the Fed’s 2% inflation objective. Indeed, both the latest CPI and PCE prints had already dashed hopes that the Fed would cut rates by summer. It would, therefore, take more time for the FOMC to gain enough confidence to start cutting rates, the Fed Chair added.

Just two days later, the April employment report gave policymakers quite the confidence boost.

The growth in non-farm payrolls slowed substantially to 175,000. The data suggest that jobs creation peaked at 315,000 in March. Sectors like construction and leisure and hospitality were strong drivers of employment growth, but job growth in these sectors virtually came to a standstill in April. The largest increase in new jobs came from healthcare, which is a non-cyclical sector. What’s more, the household survey reported even weaker employment growth, resulting in an increase in the unemployment rate from 3.8% to 3.9%. In line with the slowing demand for labour, average hourly earnings growth slowed down to 0.2% m/m or 3.9% y/y.

The employment report therefore puts both doors to a first rate cut a bit further ajar: the deceleration in wages should give the FOMC more confidence that inflation will continue to slow in the coming months, and a deterioration in the employment metrics could also convince policymakers that a rate cut is warranted. This strengthens our conviction that the Fed will cut rates in September and December.

The market seems to agree. Following the release of the non-farm payrolls, yields plummeted across the board as traders brought forward their expectations of a first rate cut from November to September. European markets are holding on to this rate cut optimism amidst relatively quiet trading this morning, with equities posting modest gains and bond yields taking another leg down.

Tyler Durden Mon, 05/06/2024 - 13:45

Robusta Coffee Bean Prices Near Half-Century High As Vietnam Supply Woes Spark World Crunch 

A new report from the International Coffee Organization reveals an alarming situation in the coffee market. Robusta coffee prices have skyrocketed to a 45-year high, a clear indication of the severity of the supply crunch and the rampant bean hoarding that is gripping the world's largest bean producer.

The London-based group, in their monthly report, delivered a sobering update. ICO's gauge of wholesale prices, based on spot prices across key markets, surged 17% in April to the highest level since 1979. The report also highlighted Vietnam's struggles in its coffee belt, enduring several years of poor harvests. 

Bloomberg notes, "Farmers and middlemen continue to hold onto beans so they don't miss out on better deals after a weak 2023-24 harvest." This has sparked a tidal wave of exporters defaulting on their contracts due to lack of supply. 

A long El Niño-induced drought in Vietnam has been the main culprit behind a decline in bean production. Robusta beans are typically used for instant drinks and espresso coffee. Vietnam accounts for about a third of the world's bean supply. 

"We can't tell when prices will peak," said Tran Thi Lan Anh, deputy director of Vinh Hiep Co., a major Vietnamese exporter.

Mid-last month, we pointed out robusta bean prices were "hyperinflation' in a note titled "This Next Bean Is Hyperinflating, And It's Not Cocoa."

Bloomberg noted, "Vietnam's coffee belt could start to recover from drought this month, and hedge funds are placing bets on further price gains." 

Soaring bean prices could eventually affect retail coffee prices at the supermarket. And it's not just going to be coffee. Cocoa prices have hyperinflated in recent months but have recently declined. 

Tyler Durden Mon, 05/06/2024 - 13:25

Six Reasons Why Tulsi Gabbard Is Donald Trump's Best Choice As A Running Mate

Authored by Richard Truesdell via American Greatness,

Despite the unprecedented and coordinated lawfare deployed against him, Donald Trump has emerged as the Republican presidential front-runner.

Tulsi Gabbard, a former Democrat who is both a centrist and moderate (by today’s definitions), has emerged as his most compelling and logical selection to be his running mate. I base my analysis on six compelling factors.

Reason Number One: She’s a woman. Let’s face 2024’s political reality. To have any chance to grab his fair share of suburban female voters in crucial swing states, Trump almost definitely has to pick a woman. While I once thought Kristi Noem would have been a great running mate, she committed political suicide last week with a puppy-killing narrative that ended any hope of that, especially after mainstream media gaslighted her in their attempt to destroy her. That narrative will never go away. Neither will the salacious reports that she had a not-too-secret extra-marital affair with Trump-aligned political consultant Cory Lewandowski. Gabbard has no such liability.

In a sane world without gender balance being an overriding consideration, I’d prefer either Kentucky Senator Rand Paul or Louisiana Senator John Kennedy to be Trump’s running mate. But both are more valuable as members of Republican leadership in the Senate. Either would be a great pick to be Majority Leader in a Republican-led Senate during Trump’s second term. And while I hate to say it, being a woman puts Gabbard in the best position among all of Trump’s potential choices to help him defuse any potentially dangerous fallout over the abortion issue—currently the only issue on which Biden has any measurable lead over Trump in polling. Gabbard’s and Trump’s positions on abortion are generally in sync, referring the issue to the states to decide.

Reason Number Two: Gabbard currently holds no elective office. This works against many others reportedly on Trump’s shortlist. These include (in alphabetical order) North Dakota Governor Doug Burgrum, Florida Representative Byron Donalds, Arkansas Governor Sarah Huckabee Sanders, South Dakota Governor Kristi Noem, Florida Senator Marco Rubio, South Carolina Senator Tim Scott, New York Representative Elise Stefanik, and Ohio Senator J. D. Vance—all of whom might be more valuable as surrogates and elected politicians than as Trump’s running mate. I’ve left off this list of other non-elected officials like Tucker Carlson and Ben Carson, as well as Florida Governor Ron DeSantis (who ruled out accepting such a role but who could end up being one of Trump’s most important surrogates in the fall).

Reason Number Three: She’s an ex-Democrat who was forced from her party by its ideological move to the far-left post-2016 after calling the Democrat Party an “elitist cabal of warmongers driven by cowardly wokeness.” On that issue, she’s totally in sync with Trump, bringing a sense of bipartisanship to a potential Trump ticket that is almost unprecedented in national presidential politics. Can she also appeal to the voting base where Trump is weakest—college-educated women? Certainly. Can you think of anyone on Trump’s shortlist who would be better suited in this regard? Can she peel off disaffected Democrats in crucial swing states, especially Pennsylvania, that are already having a hard time voting for a second Biden term after all his policy failures? Yes, I believe she is uniquely qualified to do so.

Reason Number Four: She’s an active, current military reserve officer, another area where Trump is weak (but no weaker than Biden). Her military record and experience are better than any other potential choice among Trump’s short list of candidates. When you combine her military experience with her multicultural background (her mother is from Indiana and her father is from American Samoa), she has wide appeal. Raised Hindu, this is another area where she brings cultural strength to the ticket, certainly as much as Kamala Harris added to the Biden ticket in 2020.

On a side note, before she left the Democrat Party in 2022, she served as vice chair of the Democratic National Committee, so she has intimate knowledge of the kind of dirty tricks the Democrat Party will deploy in the run-up to November 5th. Possibly her biggest political liability is that before leaving the Democrat Party in October 2022, she had endorsed Bernie Sanders in 2016 and Joe Biden in 2020 after ending her presidential bid in March 2020.

Reason Number Five: Temperament. With a strong personality and a well-documented history of political success combined with her military leadership, she is not a potential threat to Trump’s outsized personality. She would not try to upstage him if that was ever a possibility. On the contrary, her measured personality combined with her military experience makes her a perfect counterbalance to help defuse any media criticism of Trump’s lack of service in uniform.

What will the media do to criticize her record? Probably anything, but that’s a non-starter, even for the mainstream media, which previously tried to tar Gabbard, unsuccessfully, as a Vladimir Putin apologist and puppet. But it certainly didn’t stop Hillary Clinton in 2019. She also burnished her foreign policy credentials on a 2017 Middle Eastern visit to Lebanon and Syria, meeting with Syrian President Bashar al-Assad.

Reason Number Six: I’ve saved the best for last. Can you imagine Gabbard again on a debate stage in October, as early voting is starting, across from Kamala Harris? After the way she almost single-handedly wrecked and ended Harris’ 2020 presidential bid, this is one opponent that Harris fears the most. Gabbard, because she’s such a skilled politician, would absolutely destroy Harris a second time. Harris is uniquely unqualified to be vice president after all her policy failures as Biden’s vice president, especially on the border, which is Trump’s biggest winning issue, with the possible exception of the economy.

Selecting a running mate is often a matter of balance, sometimes geographically, and what crucial Electoral College votes the vice presidential pick could bring to a potential ticket. That may have been important decades ago, but is less so today. In 2016, Trump selected Mike Pence as his running mate, thinking that he would bring conservative Christians and evangelicals to the ticket, which it did to a degree. But to measure Gabbard’s strengths, ask yourself this question: Will she help Trump more in 2024 than Pence did in 2016? I think the answer is an unequivocal yes.

Tyler Durden Mon, 05/06/2024 - 13:05

Russia Warns It Can Hit UK's Military "Beyond" Ukraine Amid Nuclear Saber-Rattling

We reported earlier Monday that Russian President Vladimir Putin has ordered his armed forces to conduct tactical nuclear weapons drills in order for the country to be fully 'ready' to deter threats against it.

A specific date for these nuclear drills has yet to be publicized, but importantly the Kremlin has made it clear that the order is directly in response to recent threatening comments by Western powers. For example both the US and UK have lately pledged to continue arming Ukraine "for as long as it takes" - and further British officials have openly stated that Ukraine may use UK-supplied weaponry to attack inside Russia if need be. There's also the example of France's Macron continually talking about being open to Western boots on the ground in defense of Ukraine.

British Foreign Secretary David Cameron was in Ukraine late last week, his second trip there since the war began, where he stated provocatively, "Ukraine has that right. Just as Russia is striking inside Ukraine, you can quite understand why Ukraine feels the need to make sure it's defending itself."

Russian strategic bomber, via Ministry of Defense (MoD)

Russia's foreign ministry in response promptly summoned UK Ambassador to Moscow Nigel Casey over the remarks. "Casey was warned that the response to Ukrainian strikes using British weapons on Russian territory could be any British military facilities and equipment on the territory of Ukraine and beyond," the ministry stated after the meeting.

Importantly, the Kremlin laid out that Cameron's words mean he "de facto recognized his country as a party to the conflict." This marks possibly the first time that the Russian government specifically threatened to attack British military installations and equipment within Ukraine and beyond.

The foreign ministry statement further said this constitutes "evidence of a serious escalation and confirmation of London’s increasing involvement in military operations on the side of Kiev."

Ambassador Casey has been urged to "think about the inevitable catastrophic consequences of such hostile steps from London and to immediately refute in the most decisive and unequivocal manner the bellicose provocative statements of the head of the Foreign Office."

French Ambassador Pierre Levy has also been summoned to the Russian foreign ministry on Monday, and the French government likely was also issued similar warnings. Again this comes as Macron is still pushing the idea of NATO troops in Ukraine, which a number of allies have rejected.

A timeline for the drills has yet to be revealed, but the Kremlin has confirmed the exercise will take place "in the near future"...

Russia will test its ability to deploy tactical nuclear weapons, the Defense Ministry announced. The drills will be conducted ‘in the near future’ and were ordered by President Vladimir Putin. pic.twitter.com/QgAza5jDib

— RT (@RT_com) May 6, 2024

Moscow in a follow-up statement said the drills will "cool down the ‘hot heads’ in Western capitals and help them understand the possible catastrophic consequences of the strategic risks they generate."

Tyler Durden Mon, 05/06/2024 - 12:45

A Disbarred, Serial Perjurer Walks Into A Court And Asks To Take An Oath...Seriously, No Joke

Authored by Jonathan Turley,

A disbarred, serial perjurer walks into a courtroom and asks to take an oath . . . No, seriously, this is not a joke. Michael Cohen will soon appear in a Manhattan courtroom in what is sure to be one of the most bizarre moments in legal history.

Cohen nearly comprises the prosecution’s entire case against former President Donald Trump under a criminal theory that still has many of us baffled. It is not clear what crime Trump was supposedly trying to conceal by making “hush-money” payments to former porn actress Stormy Daniels.

What is clear is that none of the witnesses called in recent weeks has had any direct involvement with Trump on the payments.

The witnesses had a lot to say about Cohen, and most of it was not good. They described an unprofessional, self-proclaimed “fix-it man” who created a shell corporation to buy out Daniels with his own money. The money was later paid back by Trump after the election, with other legal expenses.

So Cohen will now make the pitch to the jury that they should put his former client in jail for following his own legal advice.

This would be difficult even for a competent and ethical lawyer. For Cohen, it is utter insanity. But Bragg is betting on a New York jury looking no further than the identity of the defendant to convict.

Cohen has an impressive history of lies and exaggerations that may be unparalleled. Just weeks ago, another judge denounced him as a serial perjurer who was still gaming the system.

This is not the defendant, mind you, but Alvin Bragg’s star witness.

I have been an outspoken critic of Cohen going back to when he was still representing Trump. His unethical acts were matched only by his unprofessional demeanor.

In 2015, after students on the Harvard Lampoon played a harmless prank on Trump, Cohen was quoted by a student on the Lampoon staff as threatening them with expulsion.

When a journalist pursued a story Cohen did not like, he told the reporter that he should “tread very f—ing lightly because what I’m going to do to you is going to be f—ing disgusting. Do you understand me?”

It is not hard to “understand” Cohen. He has long marketed his curious skill of voluntarily saying whatever the highest bidder wants him to say.

He is a convicted perjurer who seems to lie even when the truth would do. Each time he is caught lying, he claims to be the sinner who has finally seen the light, seeking redemption.

When he was called before the House to testify against Trump soon after his plea agreement with the Justice Department (for lying), Cohen was again accused of perjury. House Oversight Chairman Elijah Cummings (D-Md.), warned Cohen repeatedly that he had better tell the truth this time. Cohen then testified that Trump wanted him to work in his administration and offered him multiple jobs, which he turned down. He also claimed, “I have never asked for, nor would I accept, a pardon from President Trump.”

Multiple sources have said that Cohen’s lawyer pressed the White House for a pardon, and that Cohen unsuccessfully sought a presidential pardon after FBI raids on his office and residences last year.

Even after being stripped of his law license and sentenced to three years in prison, Cohen continued the pattern. In 2019, Cohen failed to appear to testify before the Senate Intelligence Committee, citing an inability to travel due to surgery. He was then seen partying before the hearing date with five friends.

Even while in jail, Cohen was accused of lying to a court, in violation of an order for early release due to medical problems. He was ordered back into custody after being spotted at a high-end restaurant.

But the most impressive moment came when Cohen was put back on the stand under oath and matter-of-factly claimed that he had lied in his prior hearing, when he pleaded guilty to lying.

In his 2018 guilty plea before U.S. District Judge William Henry Pauley III, Cohen admitted to this conduct under oath.

Then, when Cohen was asked by Trump’s counsel, “Did you lie to Judge Pauley when you said that you were guilty of the counts that you said under oath that you were guilty of? Did you lie to Judge Pauley?”

Cohen responded, “Yes.”  He was then again asked “So you lied when you said that you evaded taxes to a judge under oath; is that correct?” He again responded, “Yes.”

Most of us expected the Justice Department to bring new perjury charges at that point. It is rare that a defendant will actually take the stand and confess to perjury. However, Cohen was now useful again. This time, he was willing to deliver Trump. The Justice Department and Manhattan prosecutors were clearly willing to tolerate a little perjury for that prize.

Cohen’s conduct has already loomed large in the Manhattan proceedings. When Keith Davidson took the stand — the attorney who represented both Stormy Daniels and former Playboy model Karen McDougal — he recounted how Cohen was furious about not being offered a job in the White House. That directly contradicts Cohen’s congressional testimony. Davidson said that Cohen believed he might be named attorney general.

The account, if true, shows that Cohen is not only unethical, but also delusional. Cohen was found incapable of being an attorney, let alone an attorney general.

As prosecutors set the table for the grand arrival of their star witness, the testimony only got worse. David Pecker, the former owner of the National Enquirer, said charitably that Cohen was “prone to exaggeration.”

Davidson described Cohen’s profane and unprofessional conduct, stating that “the moral of the story is nobody wanted to talk to Cohen.” That may be the first time the word “moral” was used in the same line with Cohen.

Former Trump associate Hope Hicks mocked Cohen on the stand. She said that he constantly tried to insinuate himself into the campaign, without success, and that he “used to like to call himself Mister Fix It, but it was only because he first broke it.”

Mind you, these were his fellow prosecution witnesses, not the defense.

These witnesses also contradicted the basis for the prosecution. Pecker said that he killed stories for various celebrities for years, and that he did so for Trump for over a decade before he ran for office. Davidson testified that he did not consider the deal to be “hush money” but simply “consideration” to kill bad press.

Hicks testified that she believed Trump wanted to kill the stories in significant part to protect his family from embarrassment.

Cohen could not even maintain a consistent position during the trial. Many of us have denounced the gag order on Trump that prevents him from responding to Cohen’s unrelenting attacks in the media. Cohen then promised to stop any further comments. That promise may have set a record for Cohen. He kept it for roughly three days before being accused of trolling for dollars on social media by attacking Trump.

District Attorney Bragg will now call this disbarred, serial perjurer to make the case against a former president.

Under New York law, the oath administered by the court is supposed “to awaken the conscience and impress the mind of the witness in accordance with that witness’s religious or ethical beliefs.”

Before the bailiff administers the oath to Cohen, Judge Juan Merchan may have to warn spectators in the courtroom not to laugh. For anyone familiar with Cohen, it will sound like the ultimate punchline to a bad joke.

Tyler Durden Mon, 05/06/2024 - 12:25

Boeing Faces 10 More Whistleblowers After Mysterious Deaths

In the span of two months, two Boeing whistleblowers have died under mysterious circumstances.

John Barnett (L), Joshua Dean

The first, 62-year-old John Barnett, died from an apparent self-inflicted gunshot wound on March 9. He was found dead in his Dodge Ram truck holding a silver pistol in his hand in the parking lot of a South Carolina hotel after he failed to show up for the second half of his testimony for a lawsuit against the company. Barnett, who retired in 2017, warned that Boeing had cut corners to speed its 787 Dreamliners into service. He gave numerous interviews in which he described how he lodged internal complaints about serious security flaws. 

The second, 45-year-old Joshua Dean, a former Spirit AeroSystems quality auditor, died last Tuesday from a fast-growing infection. In 2022 he raised the alarm over improperly drilled bulkhead holes for the 737 MAX, and was fired less than a year later.

"I think they were sending out a message to anybody else," Dean told NPR, adding "If you are too loud, we will silence you."

Now, Boeing faces 10 more whistleblowers - and attorneys for the deceased men are hoping that the deaths don't spook the rest away, the NY Post reports.

Boeing whistleblowers (from left) quality engineer Sam Salehpour; Ed Pierson, executive director of the Foundation for Aviation Safety and a former Boeing engineer; Joe Jacobsen, aerospace engineer and technical adviser to the Foundation for Aviation Safety and a former FAA engineer; and Shawn Pruchnicki, PhD, professional practice assistant professor for integrated systems engineering at the Ohio State University, are sworn in before they testify at a Senate hearing to examine Boeing’s broken safety culture (AP)

"These men were heroes. So are all the whistleblowers. They loved the company and wanted to help the company do better," attorney Brian Knowles - who represented both Barnett and Dean, told the Post. "They didn’t speak out to be aggravating or for fame. They’re raising concerns because people’s lives are at stake."

According to Knowles, "I knew John Barnett for seven years and never saw anything that would indicate he would take his own life," but added "Then again, I’ve never dealt with someone who did (commit suicide). So maybe you don’t see the signs. I don’t know."

Knowles pointed out that the Charleston, SC, police are still wrapping up their investigation of Barnett’s death — and that it may take some weeks for tests to reveal more about Dean’s passing.

“It’s a stunning loss,” Spirit AeroSystems spokesman Joe Buccino said of Dean. (The company is not to be confused with Spirit Airlines.) “Our focus here has been on his loved ones.”

Buccino insisted that Spirit “encourages” employees to come forth with their concerns and that they are then “cloaked under protection.” -NY Post

And while Boeing says they also "encourage" employees to speak up, that's news to other Boeing whistleblowers who say they've either face retaliation or been ignored.

For example, Ed Pierson, 61, a former senior manager at Boeing's Renton, Washington 737 factory, left Boeing six years ago and created the Foundation for Aviation Safety - after trying in vain to get Boeing execs to shut down production of the plane prior to two 737 MAX crashes in 2018 and 2019 which left 346 people dead.

"It’s an unstable company right now from the top to the bottom," Pierson told the Post. "Senior corporate leadership is so fixated on not admitting the truth that they can’t admit anything."

Last month, Pierson told Congress about what he characterized as a "criminal cover-up" by Boeing bosses.

"Boeing is an American icon," Pierson said. "This company is incredibly important to our country, both economically and in terms of national security with its commercial aviation side and its military defense work. But it doesn’t work when you have the wrong people driving the bus."

Following Barnett's death, Boeing employees told The Post that he had made "powerful enemies," and one said that they were skeptical that it was a suicide.

This guy is about to become Boeing’s highest-paid employee. https://t.co/QcUPFz0D1h pic.twitter.com/qoOEvndPHe

— Robert Sterling (@RobertMSterling) May 5, 2024

Tyler Durden Mon, 05/06/2024 - 12:05

Hungarian Foreign Minister Warns Macron Risks Sparking World War III

Authored by Paul Joseph Watson via Modernity.news,

Hungarian Foreign Minister Peter Szijjarto has warned that French President Emmanuel Macron’s threat to send NATO troops to Ukraine risks sparking World War III.

In an interview with The Economist last week, Macron said the question of sending western troops to Ukraine would “legitimately” arise if Russia broke through the Ukrainian front lines and Kyiv made such a request.

Kremlin spokesman Dmitry Peskov reacted by describing Macron’s statements as “very dangerous.”

Now Hungarian diplomat Peter Szijjarto warns that the French leader’s comments represent a stunning escalation.

“If a NATO member commits ground troops, it will be a direct NATO-Russia confrontation and it will then be World War Three,” said Szijjarto.

He also drew attention to the fact that such a conflict would likely escalate into nuclear confrontation.

“Let’s be clear: if there is a nuclear war, everything and everyone will be lost. If there is a nuclear war, everyone will die and everything will be destroyed, which no one with any common sense can wish for,” said Szijjarto.

Meanwhile, senior Italian government officials have joined the growing number of prominent voices condemning Macron over his comments.

“Sending Italian soldiers to fight outside the EU borders? Follow the obsessions of some dangerous and desperate European leader like Macron? No thanks, never in the name of the League,” remarked Deputy Prime Minister Matteo Salvini.

Italian Defence Minister Guido Crosetto also told the Corriere della Sera newspaper, “I don’t judge a president of a friendly country like France, but I don’t understand the purpose and usefulness of these declarations, which objectively raise tensions.”

As we previously highlighted, the former commander of the UK’s Joint Forces Command General Sir Richard Barrons said Ukraine is at “serious risk” of having to admit defeat to Russia this year.

Barrons said that pessimism is starting to set in amongst the population, generating a general malaise and a feeling that Ukraine “can’t win.”

*  *  *

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Tyler Durden Mon, 05/06/2024 - 11:45

Saudi Arabia's Price Hike May Signal Oil Bottom

One of the recent positives for bonds and non-energy stocks could have run its course after Saudi Arabia raised the price of its flagship crude to Asia for a third consecutive month, according to Bloomberg markets live reporter Garfield Reynolds

Over the weekend, state-owned Saudi Aramco raised the June official selling price of Arab Light crude for customers in Asia by 90 cents to $2.90 a barrel above the regional Oman-Dubai benchmark, Bloomberg reported. It compares with an increase of 60 cents forecast in a Bloomberg survey of six refiners. Prices for other lighter and heavier varieties were also increased from May.

The hike highlights Saudi Arabia’s efforts to keep the market tight amid fading war risk in the Middle East, which has helped drive oil prices in London lower. Most traders and analysts predict that the Organization of the Petroleum Exporting Countries and its allies will extend their output curbs, potentially to the end of the year.

Crude took a marked step lower last week thanks to a surge in US inventories and optimism that Middle East tensions can cool further, but there’s a decent chance it’s busy finding a new floor rather than settling in for sustained declines according to Reynolds who notes that if Israel and Hamas can agree on a truce — a substantial if with the status of talks unclear after the latest round in Cairo — that would likely set off a fresh, rapid drop in the short term for crude.

But even then it looks as though Saudi Arabia and the other producers would be likely to respond with further efforts to trim supply to prop up prices.

With two-year US inflation swaps sitting at ~2.5% that shows bonds remain vulnerable to sticky oil prices even with WTI under $80/barrel.

Tyler Durden Mon, 05/06/2024 - 11:25

Despite Powell's QTeasing, The Correction May Not Be Over Yet

Authored by Lance Roberts via RealInvestmentAdvice.com,

The latest FOMC meeting caused a stock rally as Jerome Powell turned more “dovish” than expected. While Powell did note that progress on inflation has been lackluster, the announcement of the reversal of “Quantitative Tightening” (QT) excited the bulls.

Beginning in June, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion. The Committee will maintain the monthly redemption cap on agency debt and agency mortgage‑backed securities at $35 billion and will reinvest any principal payments in excess of this cap into Treasury securities”

Of course, the reversal of QT means a buyer of Treasury bonds is returning to the market, increasing overall market liquidity. It also means the Treasury will issue $105 billion less in gross in Q3. The bond market also got the memo, as the Fed’s return to the bond market suggests lower yields in the months ahead, easing financing pressure in the economy.

We have previously discussed the following chart of “liquidity,” which subtracts the Treasury General Account and Reverse Repo from the Federal Reserve’s balance sheet. The recent market decline coincided with a sharp drop in liquidity as the TGA account surged to almost $1 trillion from April tax receipts. Over the next few months, that liquidity in the TGA will get released into the economy. At the same time, the Federal Reserve will reduce its balance sheet runoff, which will further add to overall liquidity.

Notably, the market has weathered the reduction in liquidity to date. While higher rates and the reversal of “Quantitative Easing” led to a 20% market decline in 2022, investors began to “front run” the Fed in anticipation of rate cuts and a return to balance sheet expansion.

Given that “QE” programs increase bank reserves by crediting their reserve accounts for bonds bought, the introduction of the tapering of “QT” is the first step in increasing system liquidity.

This is why there was a vicious stock rally last week. For the markets, this rang “Pavlov’s Bell.”

The Correction May Not Be Over Just Yet

While the stock rally last week certainly surprised many, given the weaker-than-expected economic data, there are some reasons to suspect the correction may not be complete just yet.

In mid-March, we suggested that due to the “buyback blackout” window, a 5-10% correction was likely. To wit:

“As noted, the market remains in a bullish trend. The 20-DMA, the bottom of the trend channel, will likely serve as an initial warning sign to reduce risk when it is violated. That level has repeatedly seen ‘buying programs’ kick in and suggests that breaking that support will cause the algos to start selling. Such a switch in market dynamics would likely lead to a 5-10% correction over a few months.“

The following month, the market violated that 20-DMA, and selling commenced, leading to a 5.5% drawdown. However, buyers initially stepped back in at the 100-DMA, which has now acted as support over the last two weeks. With the rally last week, the stock rally is now testing crucial resistance at the 50-DMA.

The stock rally is at a critical juncture, and what happens next will determine whether the current market correction is over. Three possible scenarios over the next month or so exist.

Path A: The market breaks above the 50-DMA and retests previous highs. While this path is indeed possible, the markets are overbought on a very short-term basis, suggesting further price appreciation will become more challenging.

Path B: Many investors were surprised by the recent market decline. As such, these “trapped longs” will likely use the current stock rally as an opportunity to reduce risk. Another retest of the 100-DMA seems probable before the next leg of the current bull rally ensues.

Path C: With earnings season mostly behind us and stock buybacks set to resume, a reversion to the 200-DMA seems the least probable. However, as is always the case, it is a risk that we should not ignore. A sharp uptick in inflation or stronger-than-expected economic data could spark concerns about a “higher for longer” Fed policy. Such an event would likely lead to a further repricing of risk assets.

I am less concerned about “Path C” for three reasons.

Little Evidence Of Market Stress

While a more profound decline is certainly possible, there is little evidence of market stress. For example, even during the latest correction, volatility remained very subdued. Yes, volatility increased during the decline but failed to reach the levels witnessed during the 10% correction last summer.

Secondly, a substantially deeper market decline would likely widen credit spreads between junk bonds and treasuries. That was not evident during the latest market decline, as spreads remain well below the long-term average. Watching credit spreads is the best indicator for investors to determine market risks.

Third, the window for stock buybacks reopens this week, and with Apple and Google announcing $110 and $70 billion programs, respectively, those two companies alone will account for roughly 18% of this year’s slated activity.

Combining current sentiment, buybacks, and liquidity hopes makes the stock rally over the last two weeks logical. Furthermore, given that early summer months tend to be bullish for markets during election years, it is likely too soon to be overly bearish.

However, we are also not completely oblivious to the numerous risks that lie ahead. Weaker economic data, the lag effect from higher rates, and sticker inflation pose portfolio risks worth monitoring. Furthermore, in the two months before the election, investors tend to de-risk their portfolios. This year, we could see a larger-than-normal event, given the risks associated with the current matchup.

While Powell’s “dovish” twist fueled the current stock rally, continue to manage risk accordingly. There is a reasonable chance this correction is not over just yet.

Tyler Durden Mon, 05/06/2024 - 11:05

Key Events This Week: Things Finally Quiet Down

After a whirlwind two weeks which saw both the latest FOMC decision and the April jobs report, not to mention the peak of earnings season when all of the top tech companies reported, the calendar takes a quieter turn after the deluge of macro events last week, and the focus shifts on whether markets can continue to find a more solid footing. The latter half of last week saw strong gains for most asset classes thanks to an FOMC meeting that avoided hawkish surprises coupled with a softer payrolls report on Friday that reignited hopes of a soft landing for the US economy. 10yr Treasury yields saw their largest weekly decline of the year so far (-15.5bps) while the S&P 500 posted its best 2-day run in 10 weeks (+2.18%).

Looking forward, the health of the US economic cycle will remain in focus with today’s Senior Loan Officer Survey from the Fed. The SLOOS has seen a gradual improvement in the past few quarters after the sharp tightening following the regional banking stress last March. A key question is whether the rise in yields since the start of the year could derail the nascent improvement in bank credit conditions. Later in the week, the University of Michigan consumer survey will attract attention on Friday given the recent softening in US consumer confidence indicators.

The main macro event in Europe will be the latest BoE decision on Thursday. Our UK economist expects this week’s meeting to set the stage for the first rate cut in June and foresees dovish shifts in the MPC’s modal CPI projections and its forward guidance. You can see the full preview here. We will also have the RBA decision on Tuesday (see our economists' preview here), while on Wednesday the Riksbank could deliver the first rate cut of the cycle there. Finally, we’ll have the accounts of April ECB meeting due on Friday. These are unlikely to deliver major surprises, with April's clear if conditional signal of a June rate cut having solidified in recent ECB commentary. But we will watch for any hints on the ECB reaction function beyond June, including on what sort of data might justify consecutive ECB cuts.

The earnings season will begin to taper off this week, with almost 400 of S&P 500 members having already reported. Notable releases will include Walt Disney, Vertex, Uber and Airbnb in the US, Ferrari, Telefonica and Leonardo in Europe and Toyota and Nintendo in Japan.

Day-by-day calendar of events

Monday May 6

• Data : China April Caixin services PMI, Italy April services PMI, Eurozone March PPI
• Central banks : Fed's SLOOS, Barkin and Williams speak, ECB's Villeroy, Nagel and Panetta speak
• Earnings : Vertex, Palantir, Williams Cos, Simon Property Group, Realty Income

Tuesday May 7

• Data : US March consumer credit, UK April construction PMI, new car registrations, China April foreign reserves, Germany March trade balance, factory orders, April construction PMI, France Q1 wages, private sector payrolls, March trade balance, current account balance, Eurozone March retail sales, Switzerland April unemployment rate
• Central banks : Fed's Kashakari speaks, ECB's De Cos speaks, RBA decision
• Earnings : Walt Disney, BP, Arista Networks, Duke Energy, McKesson, Occidental Petroleum, Kenvue, Nintendo, Ferrari, Electronic Arts, Rockwell Automation, Leonardo, Reddit, Lyft
• Auctions : US 3-yr Notes ($58bn)

Wednesday May 8

• Data : US March wholesale trade sales, Italy March retail sales, Germany March industrial production
• Central banks : Fed's Cook, Jefferson and Collins speak, ECB's Wunsch speaks , Riksbank decision
• Earnings : Toyota, Arm, Uber, Airbnb, Emerson Electric, Teva, Shopify, Vistra, Affirm, Siemens Energy, AB InBev
• Auctions : US 10-yr Notes ($42bn)

Thursday May 9

• Data : US initial jobless claims, UK RICS house price balance, China April trade balance, Japan March leading and coincident index, labor cash earnings
• Central banks : BoE decision, April DMP survey, Pill speaks, BoJ summary of opinions April MPM, ECB's Cipollone and Guindos speak, BoC's financial system review
• Earnings : Constellation Energy, Roblox, Telefonica, Enel, Warner Bros Discovery, Warner Music Group
• Auctions : US 30-yr Bonds ($25bn)

Friday May 10

• Data : US May University of Michigan survey, April monthly budget statement, UK Q1 GDP, March monthly GDP, trade balance, industrial production, index of services, construction output, China Q1 current account balance, Japan March trade balance, current account, household spending, April Economy Watchers survey, bank lending, Italy March industrial production, February industrial sales, Canada April jobs report, Norway, Denmark April CPI
• Central banks : Fed's Goolsbee, Barr and Bowman speak, ECB's account of the April meeting, Cipollone speaks, BoE's Pill speaks
• Earnings : Tokyo Electron

* * *

Finally, looking at just the US, Goldman notes that the key economic data release this week are the University of Michigan report on Friday. There are several speaking engagements by Fed officials this week, including remarks from Vice Chair Jefferson, Vice Chair for Supervision Barr, Governors Cook and Bowman, and Presidents Barkin, Williams, Kashkari, Collins, and Goolsbee.

Monday, May 6

• 12:50 PM Richmond Fed President Barkin (FOMC voter) speaks: Richmond Fed President Thomas Barkin will deliver a speech on the economic outlook in Columbia, South Carolina. Audience and media Q&A are expected. On April 10, Barkin said “of course it’s conceivable that we’re going to get to a soft landing, the numbers in a big picture have been great… We need to be humble about how easy it is to get there.”
• 01:00 PM New York Fed President Williams (FOMC voter) speaks: New York Fed President John Williams will participate in a fireside chat conversation at the Milken Institute Global Conference. A Q&A is expected. On April 18, Williams said “I definitely don’t feel urgency to cut interest rates.” He went on to say, “I think interest rates will need to be lower at some point but the timing of that will be based on the economy.”
• 02:00 PM Senior Loan Officer Opinion Survey 2023Q4

Tuesday, May 7

• There are no major economic data releases scheduled.
• 11:30 AM Minneapolis Fed President Kashkari (FOMC non-voter) speaks: Minneapolis Fed President Neel Kashkari will participate in a fireside chat at the Milken Institute Global Conference. A Q&A is expected. On April 4, Kashkari said “in March I jotted down 2 rate cuts this year. But if inflation continues moving sideways, that would make me question whether we need to do those rate cuts at all.”

Wednesday, May 8

• 10:00 AM Wholesale inventories, March final (consensus -0.4%, last -0.4%)
• 11:00 AM Fed Vice Chair Jefferson speaks: Vice Chair Philip Jefferson will participate in a moderated discussion on careers in economics. On April 16, Jefferson said “my baseline outlook continues to be that inflation will decline further, with the policy rate held steady at its current level, and that the labor market will remain strong, with labor demand and supply continuing to rebalance.” He went on to say that “the outlook is still quite uncertain, and if incoming data suggests that inflation is more persistent than I currently expect it to be, it will be appropriate to hold in place the current restrictive stance of policy for longer.”
• 11:45 AM Boston Fed President Collins (FOMC non-voter) speaks: Boston Fed President Susan Collins will provide remarks to MIT students followed by a fireside discussion. Speech text and a Q&A are expected. On April 11, Collins said “I expect to see further evidence that inflation is durably, if unevenly, returning toward 2 percent, and that the economy is coming into better balance, with demand and supply more closely aligned amid a healthy labor market.”
• 01:30 PM Fed Governor Cook speaks: Fed Governor Lisa Cook will discuss the Fed’s latest semi-annual Financial Stability Report at an event hosted by Brookings. Remarks will be followed by a panel discussion. A Q&A is expected. On March 25, Cook said “the path of disinflation, as expected, has been bumpy and uneven, but a careful approach to further policy adjustments can ensure that inflation will return sustainably to 2% while striving to maintain the strong labor market.”

Thursday, May 9

• 08:30 AM Initial jobless claims, week ended May 4 (GS 215k, consensus 212k, last 208k): Continuing jobless claims, week ended April 27 (consensus 1,785k, last 1,774k)

Friday, May 10

• 09:00 AM Fed Governor Bowman speaks: Fed Governor Michelle Bowman will speak on financial stability risks at the Texas Bankers Association Annual Convention. Speech text and a moderated Q&A are expected. On May 3, Bowman said “with annualized 3-month core PCE inflation jumping to 4.4 percent in March, well above average inflation in the second half of last year, I expect inflation to remain elevated for some time,” but went on to say “my baseline outlook continues to be that inflation will decline further with the policy rate held steady, but I still see a number of upside inflation risks that affect my outlook.”
• 10:00 AM Dallas Fed President Logan (FOMC non-voter) speaks: Dallas Fed President Lorie Logan will speak in a moderated Q&A to the Louisiana Bankers Association Annual Conference in New Orleans. On April 5, Logan said “I’m increasingly concerned about upside risks to the inflation outlook. To be clear, the key risk is not that inflation might rise – though monetary policymakers must always remain on guard against that outcome – but rather that inflation will stall out and fail to follow the forecast path all the way back to 2 percent in the timely way.”
• 10:00 AM University of Michigan consumer sentiment, May preliminary (GS 76.2, consensus 76.8, last 77.2); University of Michigan 5-10-year inflation expectations, May preliminary (GS 3.1%, consensus 3.0%, last 3.0%): We expect the University of Michigan consumer sentiment index decreased to 76.2 in the preliminary May reading. We estimate the report's measure of long-term inflation expectations rose 0.1pp to 3.1%, reflecting higher gasoline prices and the higher-than-expected price data reported in 2024. The transition to web-based interviews could also exert upward pressure.
• 12:45 PM Chicago Fed President Goolsbee (FOMC non-voter) speaks: Chicago Fed President Austan Goolsbee will speak in a moderated Q&A at the Economic Club of Minnesota luncheon. On April 19, Goolsbee said “so far in 2024, that progress on inflation [we saw in 2023] has stalled. You never want to make too much of any one month’s data, especially inflation, which is a noisy series, but after three months of this, it can’t be dismissed."
• 01:30 PM Fed Vice Chair for Supervision Barr speaks: Fed Vice Chair for Supervision Michael Barr will give a commencement speech for American University School of Public Affairs Graduation.

Source: DB, Goldman

Tyler Durden Mon, 05/06/2024 - 10:55

Where Unsold EVs Go To Die: Belgium's Ports Drowning Under Glut Of Chinese Imports

Ten years ago this week, we posted one of out most viral stories, highlighting the over-capacity in the auto industry:  "Where the World's Unsold Cars Go To Die," which highlighted the 'endgame' of automakers' 'channel stuffing' efforts to disguise the sudden lack of demand for all the exciting new models that they had forecast would boom to the moon...

And now, as MishTalk's Mike Shedlock reports,  we are seeing similar pictures across Europe...

"Some are parked here for a year, sometimes more."

Le Monde reports Belgium’s ports drowning under glut of Chinese electric cars: ‘Some are parked here for a year, sometimes more’

Due to China’s overcapacity in production – as it aims to capture a quarter of the European electric vehicle market – the ports of Antwerp and Zeebrugge are inundated.

You probably need to see it to appreciate the challenges the automobile industry faces in transitioning to electricity. You also need to come here to understand how the Chinese industry’s overcapacity has flooded the European market. That morning, as the sun unexpectedly lit up the maze of highways leading to this remote arm of the port of Antwerp, Belgium, a huge cargo ship from the Norwegian company Höegh Autoliners unloaded thousands of cars at one of the terminals of International Car Operators (ICO), a subsidiary of the Japanese group Nippon Yusen Kaisha.

Alongside Swedish-Norwegian Wallenius Wilhelmsen, it is one of the main operators of the now merged port of Antwerp-Bruges, the world’s largest automotive terminal, through which the production of some 40 brands used to transit. But that was before the emergence of their Chinese competitors.

Car Parks

Quartz reports Cars are piling up at European ports at an alarming rate

Imported vehicles are seriously piling up at European ports, turning them into “car parks.” Automakers are distributors are struggling with a slowdown in car sales as well as logistical bottlenecks that make it hard to alleviate the buildup of new, unsold vehicles.

Some Chinese brand EVs had been sitting in European ports for up to 18 months, while some ports had asked importers to provide proof of onward transport, according to industry executives. One car logistics expert said many of the unloaded vehicles were simply staying in the ports until they were sold to distributors or end users.

“It’s chaos,” said another person who had been briefed on the situation.

This is another part of the escalating trade war between China and the rest of the world.

China Produces 55 Percent of All Steel, Biden and Trump Eye Tariffs

Yesterday, I commented China Produces 55 Percent of All Steel, Biden and Trump Eye Tariffs

On April 22, I cautioned A Big Deflationary Push From China But Will Biden or Trump Allow That?

China keeps returning to a well that has run dry, using exports as a means for growth. China is about to hit a brick wall, with global consequences.

My #1 issue looking ahead to 2025 is a global trade war with serious repercussions.

Tyler Durden Mon, 05/06/2024 - 10:40

Shell Sold Millions In Carbon Credits That It Never Earned

The carbon credit con band plays on...

The most recent chapter in the 'green' initiative has been supermajor Shell being found to have sold 'phantom' carbon credits that were twice the volume of emissions the company actually avoided, according to FT.

Shell has reportedly sold millions of carbon credits, tied to CO₂ removal, to Canada’s main oil sands companies, despite doubts arising over the validity of the claimed emissions reductions.

Keith Stewart with Greenpeace Canada commented: “Selling emissions credits for reductions that never happened . . . literally makes climate change worse.”

Under a subsidy initiative by Alberta's provincial government to support the industry, Shell was permitted to register and sell carbon credits double the amount of emissions purportedly avoided by its Quest carbon capture facility from 2015 to 2021. However, this subsidy was phased out by 2022.

Consequently, Shell managed to register 5.7 million credits which were then sold to leading oil sands producers including Chevron, Canadian Natural Resources, ConocoPhillips, Imperial Oil, and Suncor Energy.

Alberta's environment ministry stated that the crediting support scheme did not lead to "additional emissions" by industrial polluters.

Energy firms globally, including those in Canada, are advocating for increased government backing for carbon capture and storage initiatives. Alberta, known for its vast and carbon-intensive oil resources, has seen a surge in production, hindering Canada's efforts to meet emission reduction goals.

The Financial Times report noted that the Quest facility, operated by Shell Canada and co-owned by Canadian Natural Resources, Chevron, and Shell Canada, is integral to the Scotford processing and refining complex. At Quest, CO₂ is extracted during hydrogen gas production, crucial for converting bitumen from oil sands into synthetic crude oil.

Canada offers substantial incentives for CCS projects, yet the industry's profitability remains challenging. Quest's annual report revealed a total cost of $167.90 per tonne of carbon avoided in 2022, compared to Alberta's $50 carbon price for major industrial emitters.

Documents obtained by Greenpeace Canada, shared with the Financial Times, disclosed that Shell initially sought a three-for-one deal on carbon credits at Quest. Alberta introduced a two-for-one scheme in 2011, exclusively for plants operational by the end of 2015, such as Quest. The incentive decreased to three-quarters of a credit by 2022 and was eventually phased out with the rise in carbon prices.

“At the end of the day, the oil and gas sector and the oil sands firms in particular need to get going with respect to emissions reductions,” concluded Jonathan Wilkinson, Canada’s minister of energy and natural resources.

Tyler Durden Mon, 05/06/2024 - 10:20

Russia's Tactical Nuclear Weapons Exercises Are Meant To Deter A NATO Intervention In Ukraine

Authored by Andrew Korybko via Substack,

Sputnik reported on Monday that the Russian General Staff is preparing to carry out drills for practicing the use of tactical nuclear weapons, which follows Foreign Ministry spokeswoman Zakharova warning over the weekend that NATO’s “Steadfast Defender” drills are possible preparations for war with Russia. Italy’s La Repubblica also reported over the weekend that NATO might conventionally intervene in Ukraine if Russia crosses into there from Belarus or carries out “provocations” against fellow members.

These developments follow GUR deputy chief Skibitsky telling The Economist last week that the front lines might soon collapse, which aligns with the Ukrainian Intelligence Committee’s worst-case scenario that they shared in late February. It’s also worth mentioning that Macron just reaffirmed his threat from that time to intervene in Ukraine (most likely around Odessa) in that event, that Poland is no longer ruling out doing the same, and the Ukrainian premier just said that he might request NATO troops.

It's little wonder then that Russia interpreted these signals as preconditioning the Western public to accept that possibility, ergo why its General Staff is now preparing to carry out drills for practicing the use of tactical nuclear weapons. La Repubblica’s report claimed that a whopping 100,000 NATO troops could flood into Ukraine if the decision is made, with the only realistic way to stop them from going beyond the Dnieper and directly clashing with Russian troops is to use tactical nukes in self-defense.

Everything is moving so fast that nobody can say with confidence exactly what will or won’t happen, but a reminder of each side’s interests as their policymakers conceive them to be can help obtain a better idea of how likely certain scenarios might be.

Russia wants to demilitarize and denazify Ukraine while NATO wants to stop them, with neither being able to achieve their maximum goals in this respect. The game-changing variable, however, will be what each does if/when the front lines collapse.

Russia will at least move to secure the full administrative borders of its four recently reunified regions, but it might go beyond that and potentially also open up more fronts in the north (whether from Belarus and/or around Sumy-Kharkov) in order to achieve as much of its aforesaid goals as possible. Should that happen, then NATO might panic depending on how far and fast Russia advances, thus serving to justify whatever pretext they concoct for commencing a conventional intervention in Ukraine.

The NATO-Russian security dilemma, which frames the abovementioned sequence of events, would unprecedentedly worsen since Russia might then panic depending on how far and fast NATO advances. The bloc might just occupy everything west of the Dnieper, but it could also cross the river and place its forces in position to attack Russia’s. Any perceived move in that direction, let alone actual ones, could prompt Russia to preempt that with tactical nukes. If they’re dropped, then the whole world will change.

The most effective way to defuse this apocalyptic security dilemma is for a neutral third party like India or the Pope to mediate between each side and discover their intentions to pass along to the other. If Russia doesn’t plan to march on Kiev once again and NATO doesn’t plan to cross the Dnieper, then neither might panic and overreact by inadvertently crossing the other’s red lines. A semi-orderly Ukrainian military withdrawal over the Dnieper to demilitarize the east as a buffer zone could then occur.

That would be the best-case scenario for de-escalating these dangerous dynamics, though it of course can’t be taken for granted since nobody is presently mediating between them, and one or the other might lie to whoever does in order to deceive their opponents. Nevertheless, hopefully someone steps up to try before the front collapses and their noble efforts are sincerely welcomed by both sides, since the reluctance to do so could doom the world to destruction in the worst-case scenario.

Tyler Durden Mon, 05/06/2024 - 10:00

Trump Found In Contempt Again, Judge Threatens "Jail Sanction" Next

Former President Donald Trump has been found in contempt of court for a second time by a New York judge overseeing his hush-money trial.

On Monday, judge Juan Merchan said that Trump had violated a gag order with additional social media posts about witnesses in the case, and will consider jail if there are additional violations.

Merchan:

"The last thing that I want to do is to put you in jail," calling it a last resort.

The judge notes that Trump is a former president and possibly a future one.

— Adam Klasfeld (@KlasfeldReports) May 6, 2024

"It appears that the $1,000 fines are not serving as a deterrent," said Merchan. "Mr. Trump, I want you to understand the last thing I want to do is put you in jail."

"The magnitude of such a decision is not lost on me, but at the end of the day, I have a job to do."

Last week, Merchan fined Trump $9,000 and held the former president in criminal contempt of court for violating the gag order nine times.

Tyler Durden Mon, 05/06/2024 - 09:39

Columbia Cancels 2024 Commencement Amid Security Concerns

Columbia University announced Monday that it's canceling its two main 2024 commencement ceremonies on May 15, and will instead hold "smaller-scale, school-based celebrations," according to officials.

Columbia University students participate in an ongoing pro-Palestinian encampment on their campus on April 26, 2024 in New York City.
(Photo: Stephanie Keith/Getty Images)

The move comes after weeks of pro-Palestinian protesters had to be forcibly removed and suspended after they refused to leave their encampment which sprouted on campus April 17, when around 50 tents were pitched by students demanding a ceasefire in Gaza. The students also insist that the university divest from companies they say could be profiting from war. Dozens of faculty members came out in support.

NOW: Columbia University faculty link arms and form a wall in front of the entrance to the ‘Gaza Solidarity Encampment’ as hundreds of students encircle the both lawns

Students remaining in the encampment were told they could face disciplinary action after 2PM pic.twitter.com/C1XRgHzs8b

— katie smith (@probablyreadit) April 29, 2024

According to NBC News, the decision was made over security concerns, after administrators at Ivy League school met with student leaders following a NYPD raid on Hamilton Hall, after student protesters broke in, barricaded themselves inside, and wrecked the place.

Taking over Hamilton Hall as done in 1968, Columbia students unfurl a banner that reads "Hind's Hall," in reference to Hind Rajab, a six-year-old girl killed by Israeli forces.
Hundreds of students cheer as the banner is revealed, erupting into chants to "Free Palestine." pic.twitter.com/Oi8WgdZmqf

— Prem Thakker (@prem_thakker) April 30, 2024

Destruction inside Hamilton Hall at Columbia University, after police cleared out protesters.

They were all released and all charges dropped so nobody will be held accountable and the destruction will continue pic.twitter.com/UM5tM5gtsF

— Rob (@_ROB_29) May 2, 2024

"Our students emphasized that these smaller-scale, school-based celebrations are most meaningful to them and their families," the university said Monday. "They are eager to cross the stage to applause and family pride and hear from their school’s invited guest speakers. As a result, we will focus our resources on those school ceremonies and on keeping them safe, respectful, and running smoothly."

Now, students will be "honored individually alongside their peers" in the smaller ceremonies, called "Class Days."

The "Class Days" and other school ceremonies which were originally scheduled at the South Lawn of Morningside campus have also been relocated to the Columbia Baker Athletics Complex.

"These past few weeks have been incredibly difficult for our community. Just as we are focused on making our graduation experience truly special, we continue to solicit student feedback and are looking at the possibility of a festive event on May 15 to take the place of the large, formal ceremony," said school officials.

"We are eager to all come together for our graduates and celebrate our fellow Columbians as they, and we, look ahead to the future."

Now, on May 15, graduation ceremonies will take place at different times and different locations for the the journalism school, college of physicians and surgeons, Barnard College, and the school of arts. Other school-based ceremonies will occur throughout next week as well.

The University Of Southern California was the first known major university to cancel a graduation ceremony over the nationwide demonstrations.

So all that hard work for this, kids... and on the heels of the pandemic. Normal life eludes once again.

Tyler Durden Mon, 05/06/2024 - 09:35

Cryptos Dump After Robinhood Reveals SEC Wells Notice Related To Its Crypto Listings

For all its positives, bitcoin is perhaps the only security that prices in the same news over, and over, and over again (especially when the news is bad).

We saw this last month when bitcoin tumbled repeatedly after every single fake attack in the fake "Iran-Israel war", as if it was pricing nuclear Armageddon over and over instead of actually reading between the lines of the staged theater between the two middle-eastern states. It eventually rebounded and recouped most losses but not before finding something else to be just as shocked over, even though this too is not news at all.

Moments ago, bitcoin and other cryptocurrencies dumped sharply when Bloomberg reported that Ken Griffen's favorite retail frontrunning exchange, Robinhood, has received a Wells Notice, i.e., it has been formally warned by regulators that it may face an enforcement action tied to its cryptocurrency dealings.

The so-called Wells notice - which gives a company time to rebut the agency’s allegations and doesn’t necessarily indicate an enforcement action will follow - from the SEC concerns Robinhood Crypto and its cryptocurrency listings, custody of cryptocurrencies and platform operations, the company said in a regulatory filing Monday.

The agency’s staff told Robinhood that it made a “preliminary determination” to recommend that the SEC file an enforcement action.

The result could be an injunction, a cease-and-desist order, disgorgement and other penalties or limits on activities, according to the filing. The company was previously subpoenaed and has cooperated with the investigation, Robinhood said.  

Dan Gallagher, chief legal, compliance, and corporate affairs officer at Robinhood Markets wrote in a May 6 blog post:

“After years of good faith attempts to work with the SEC for regulatory clarity including our well-known attempt to ‘come in and register,’ we are disappointed that the agency has decided to issue a Wells Notice related to our U.S. crypto business.”

Gallagher added that Robinhood doesn’t see any of its listed assets as securities:

“We firmly believe that the assets listed on our platform are not securities and we look forward to engaging with the SEC to make clear just how weak any case against Robinhood Crypto would be on both the facts and the law.”

Of course, anyone with a room-temperature IQ would have been able to anticipate this turn, which comes about a year after the SEC served Coinbase with an identical Wells Notice, and which comes just days before the SEC has to rule - negatively, at least until the courts force it to reverse its decision - on whether to greenlight an Ethereum ETF, something which Liz Warren's pocket fascist enforcer, Gary Gensler, has sworn he will not allow simply because it goes against the interests of Warren's biggest backers. To be sure, eventually the courts will greenlight an ETH ETF, just as Larry Fink requires in order to complete his vision of tokenization as "the next generation for markets" but not before some token resistance from the anti-crypto Democrats in Congress.

And while we wait, bitcoin and ETH both dumped on the news - as of course they always do because the algos that trade them have a 10 millisecond attention span and can't be bothered to even google that what they are reacting to has been widely priced in countless times in the past.

It goes without saying that the rebound is just a formality at this point as the algos that sold just minutes ago on the Wells Notice "news" forget why they sold, and being a momentum ignition program higher, but the bigger question is whether the end of the anti-cyrpto Biden admin in early November will be the biggest pro-bitcoin catalyst in recent history, far bigger even than the halving.

Tyler Durden Mon, 05/06/2024 - 09:19

Berkshire's Growing Cash Pile Has A Hidden Message On Stocks

Authored by Ven Ram, Bloomberg cross-asset strategist,

US stocks are seeing no evil and certainly hearing none, but Berkshire Hathaway’s ever-growing cash pile should hold a tacit warning for those who are overexuberant.

Berkshire’s war chest surged to a record $189 billion at the end of the first quarter, and Chair Warren Buffett told shareholders over the weekend that he expects the pile will rise to $200 billion soon:

“We’d love to spend it, but we won’t spend it unless we think we’re doing something that has very little risk and can make us a lot of money.”

Wall Street, of course, equates higher return with higher risk, but here is one of the best investors of all time decrying the very notion that one needs to do something egregiously risky to earn the additional dollar of return over and above what is available to passive investors who buy the entire market.

Stocks rallied on Friday after the markets interpreted the April non-farm payrolls data as providing just the right backdrop for the Federal Reserve to cut rates eventually. Considering that since of the end of 2022 alone, the S&P 500 has surged about 33% and the Nasdaq almost 50%, one would think that all the good news out there and more is already reflected in their price tag.

Over the long term, stocks can’t yield returns in excess of corporate earnings and economic growth, but investors have been in no mood to listen — and they may yet stay complacent in the short term. The S&P 500 now promises an earnings yield of less than 5%, well below the historical average. The Nasdaq 100 is, of course, trading even loftier, offering a prospective earnings yield of less than 4%.

At the moment, investors are paying a lot for stocks on the premise of promise. That is what Buffett may characterize as too much risk.

Tyler Durden Mon, 05/06/2024 - 09:05

'Romance' Scammer Promised Fake Gold To Bilk Victims For Millions

Authored by Ken Silva via Headline USA,

It was an old-fashioned romance scam, involving a man posing as a female online to induce unfortunate men to send him their life savings.

This scam, however, was fairly complex, involving a fake bank website and non-existent gold bars. The alleged perpetrator of this scam, Richard Opoku Agyemang, was arrested last month by the U.S. Postal Inspection Service.

According to the complaint against Agyemang, a USPIS agent interviewed a victim in January who sent $345,280 to Agyemang, who was posing online as “Emily.”

The victim told the USPIS agent that Emily spoke with an accent and purported to reside in Miami, where she was working as an ICU nurse at Jackson Memorial Hospital.

Eventually, Emily began asking the victim for money, which he sent to her. Emily told him the funds were going to pay for experimental and expensive medications meant for her mother in London.

“According to Victim 1, Emily also said she needed more money to pay ‘Mercury Assets Security Company’ in order to release two boxes of gold bars worth $9.2 million,” the complaint said.

“Victim 1 has never met Emily in person and has not received any gold bars.”

A second victim in New Mexico allegedly sent Agyemang $410,000 while the defendant was posing online as “Kathy.”

That victim told the same USPIS agent he developed a romantic relationship with “Kathy” that moved to text messages and eventually to speaking on Skype and via email. Instead of enticing him with gold, “Kathy” told the second victim “she” was supposed to be receiving an inheritance of diamond stones from her deceased father valued at $3.8 million.

The scam against the second victim also involved a fake bank website, according to the complaint.

“Based on screenshots of emails provided by Victim 2, it appears that the suspects created fraudulent websites for the First National Bank of London and for Neelevet, as well as fraudulent ‘customer support’ communications,” the complaint said.

The Virginia and New Mexico victims were the only ones highlighted in the criminal complaint, but the USPIS agent said there are at least “four dozen” other victims that have been bilked for more than $2 million combined.

“I have been able to interview some of the other suspected victims and confirmed that, at least as to those individuals, the funds were sent in connection with a romance fraud,” the agent said in his affidavit.

“For example, one victim provided copies of emails showing that he had been induced to send $13,000 to the RISUN LLC Wells Fargo account to pay for alleged taxes on gold bars being imported to the United States by his alleged online romantic partner.”

Agyemang was indicted on April 24 with one count of conspiracy to commit wire fraud, six counts of money laundering, and several other charges.

He currently has a jury trial set for June 24, though, at this early stage of the case, it’s likely that the Justice Department has yet to offer him a plea deal.

Ken Silva is a staff writer at Headline USA. Follow him at twitter.com/jd_cashless.

Tyler Durden Mon, 05/06/2024 - 08:25

Futures, Global Markets Rise On Rising Fed Cut Bets

Global stocks and US equity futures jumped to start the new week, with the S&P 500 poised to extend last week’s rally as traders grew increasingly confident in the likelihood that the Fed will cut interest rates this year. As of 7:40am, S&P 500 and Nasdaq 100 futures added 0.3%, tracking gains in European and Asian markets although trading volumes were lower than average as UK and Japanese markets are shut for a holiday. Apple slid in pre-market trading after Berkshire Hathaway trimmed its stake for a second consecutive quarter. German 10-year yields fell and the yen weakened. Oil advanced after Saudi Arabia raised prices for customers in Asia. On today's calendar we get the latest Senior Loan Officer Opinion Survey (SLOOS) which will signal whether demand for tight credit remains dismal.

In premarket trading, Apple dropped 1.2% after rising strongly over the past two sessions and as Berkshire Hathaway reported it had trimmed its stake in the company. Shares in cryptocurrency-linked companies rally as Bitcoin nears $65,000 level after adding around 10% in the last four sessions. Some of the biggest movers are Marathon Digital (MARA US) +5.6%, Riot Platforms (RIOT US) +4.1%. Steward Health Care filed voluntary petitions for relief under Chapter 11. Here are some other notable premarket movers:

• Luminar Technologies shares fall as much as 17% after the company confirmed it will cut about 20% of jobs and sub-lease parts or all of some facilities.
• Paramount rises 4.5% as it weighs Apollo and Sony’s $26 billion offer to buy the company.
• Perficient gains 55% after EQT agreed to buy the technology consultant in a deal valued at about $3 billion including debt.

With a light US economic calendar this week, the market’s direction may come from central bank officials, as well as policy meetings in the UK, Australia and Sweden. European Central Bank Chief Economist Philip Lane said recent data have made him more certain that inflation is returning to the 2% goal, according to an interview with Spanish newspaper El Confidencial, raising the likelihood a first interest-rate cut in June. New York Fed President John Williams and the Richmond Fed’s Thomas Barkin are due to make remarks on Monday, followed by Neel Kashkari of Minneapolis on Tuesday.

“This week is expected to be calmer on the economic front: few economic data releases and limited central bankers’ intervention,” wrote Credit Agricole strategists led by Jean-Francois Paren.

But while this week may be boring, strategists are already starting to hone in on the importance of next week’s US inflation print for April. “The price reaction on the back of this release may be more important than the data itself given how influential price action has been on investor sentiment amid an uncertain macro set up,” Michael Wilson wrote in a note.

Europe was broadly higher, tracking US equity futures, with the Stoxx 600 rising 0.6% and trading near session highs although volumes were low due a UK public holiday. Among individual stocks in Europe, PostNL NV shares declined after it reported weak volumes. Demant A/S also fell as it reported a miss in sales driven by soft retail. Atos SE jumped after it received four offers that will frame the discussions with its stakeholders around its restructuring. Here are the biggest movers Monday:

• Indra Sistemas shares jump as much as 11%, after the Spanish defense company beat estimates in the first quarter and forecast Ebit for the full year of above EU400 million
• Know IT gains as much as 6% after Handelsbanken raised its short-term recommendation for the Swedish IT consultancy to hold from sell, noting small green shoots in end markets
• Maurel & Prom rise as much as 10%, the most since October, after the French oil firm received a license for operations in the Urdaneta Oeste field in Lake Maracaibo in Venezuela
• Demant falls as much as 5.3%, the most since November, after the Danish hearing-aid group reported softer-than-expected 1Q sales, with retail a stand-out disappointment, Citi says
• Castellum falls as much as 3% after DNB cut its recommendation for the Swedish landlord to hold, noting “rather soft” 1Q earnings which showed that vacancy rates is a concern
• ING Bank Slaski falls as much as 4.3% after the bank reported first-quarter results below estimates. Citi attributed the earnings miss to low non-core revenue figures and higher net provisioning

Earlier in the session, Asia stocks rose led by Chinese shares which led gains as mainland markets played catchup following a holiday break, although here too conditions were holiday-thinned with Japan and South Korea shut for holidays. The CSI 300 Index jumped as much as 1.8%, while stocks in Hong Kong took a breather following a nine-day winning streak.

• Hang Seng & Shanghai Comp were somewhat varied as Hong Kong stocks took a breather after the recent hot streak and as attention shifted to the mainland where stocks outperformed as they played catch up on their return from the Labour Day Golden Week holidays with property stocks boosted by recent support pledges, while participants also digested Caixin Services PMI data which matched estimates.
• ASX 200 was led higher by continued outperformance in the rate-sensitive sectors, while financials were also underpinned following Westpac's earnings, special dividend and buyback announcement.

In FX, the Blooomberg Dollar index steadied as the Norwegian krone, British pound and Australian dollar led Group-of-10 gains; The prospect of central bank easing boosted risk sentiment sending global stocks higher. USD/JPY advanced as much as 0.6% to 154, paring some of last week’s more than 3% drop as short dollar positions by fast-money accounts were squeezed, according to an Asia-based FX trader. EUR/USD steadied around 1.0768, after composite PMI data for April came in above estimates and euro-area PPI for March fell 0.4% month-on-month in line with forecasts; ECB Chief Economist Philip Lane said recent data has made him more confident inflation will return to the 2% goal.

In rates, Treasuries reopened with yields lower by around 2bps at 4.48% after being closed for Japan and UK holidays. Gains have support from bunds, rallying on comments from ECB Chief Economist Philip Lane. US yields lower by around 2bp to 3bp across the curve with German yields down 3bp to 5bp after ECB’s Lane said recent data has improved his confidence that inflation will return to the 2% goal. Treasury auction cycle begins Tuesday with $58b 3-year note sale, followed by $42b 10- and $25b 30-year new issues Wednesday and Thursday.

In commodities, oil rebounded strongly after tumbling on Friday as hopes for a ceasefire in the Middle East once again died a miserable death. WTI traded 1.2% higher above $79 and Brent rose to $83.70. Gold was also significantly higher, trading about $2320.

In crypto, Bitcoin is back on a firmer footing and now holds around $65k, while Ethereum hovers around $3.2k, both have erased last week's sharp losses. The next potential objective/resistance level for Bitcoin is at $67,200 and that represents a 61.8% correction of the 73,797-56,527 fall, via market contacts.

Looking at today's calendar, the US economic data slate empty for the session, though Fed releases Senior Loan Officer opinion survey on bank lending practices at 2pm New York time. The calendar is light this week, leaving focus on Treasury refunding auctions and about a dozen Fed speakers scheduled. Fed members’ scheduled speeches include Barkin (12:50pm) and Williams (1pm). Ahead this week are Kashkari, Jefferson, Collins, Cook, Daly, Bowman, Logan, Goolsbee, Barr and Mester

Market Snapshot

• S&P 500 futures up 0.2% to 5,165.25
• STOXX Europe 600 up 0.3% to 506.89
• MXAP up 0.3% to 178.04
• MXAPJ up 0.7% to 551.80
• Nikkei little changed at 38,236.07
• Topix little changed at 2,728.53
• Hang Seng Index up 0.6% to 18,578.30
• Shanghai Composite up 1.2% to 3,140.72
• Sensex little changed at 73,916.80
• Australia S&P/ASX 200 up 0.7% to 7,682.37
• Kospi down 0.3% to 2,676.63
• German 10Y yield little changed at 2.46%
• Euro up 0.1% to $1.0775
• Brent Futures up 0.9% to $83.74/bbl
• Gold spot up 0.8% to $2,319.71
• US Dollar Index little changed at 105.03

Top Overnight News

• China’s May Day holiday saw aggregate spending rise 13.5% above pre-pandemic levels, although spending per capita lagged behind 2019 levels. RTRS
• China’s effective exchange rate is back to where it was in 2014 in real terms (given CNY weakness and the absence of domestic inflation) and this is turbocharging the country’s exports, creating trade friction with the US, EU, and other economies. WSJ
• The case for a ECB interest rate cut in June is getting stronger as services inflation is finally starting to ease, ECB Chief Economist Philip Lane told Spanish newspaper El Confidencial on Monday. The ECB has all but promised a rate cut on June 6, provided incoming data strengthen policymakers' belief that inflation will head back to its 2% target by the middle of next year. RTRS
• A US crackdown on banks financing trade in goods for Vladimir Putin’s invasion of Ukraine has made it much more difficult to move money in and out of Russia, according to senior western officials and Russian financiers. Moscow’s trade volumes with key partners such as Turkey and China have slumped in the first quarter of this year after the US targeted international banks helping Russia acquire critical products to aid its war effort. FT
• The Israeli military has told tens of thousands of Palestinians to leave the southern Gazan city of Rafah as Israel’s defense minister warned of an imminent military “operation” as talks to free Israeli hostages appeared to have stalled. At least 100,000 civilians in eastern Rafah, along the border with Israel, should move to what Israel calls a humanitarian zone on the Mediterranean, an Israel Defense Force spokesperson told reporters, in “a limited scope” operation as part of a “gradual plan”. FT
• Saudi Arabia and its allies in OPEC+ are likely to keep oil production unchanged for a further three months when ministers review output allocations on June 1. The tightening of petroleum supplies and depletion of inventories widely anticipated at the start of the year has failed to materialize so far. RTRS
• Maersk warned that ongoing Red Sea shipping disruptions will reduce industry capacity between the Far East and Europe by 15-20% in Q2. RTRS
• The final chief executive of Credit Suisse, Ulrich Körner, is set to leave UBS in the coming weeks, as the Swiss bank prepares to complete a crucial step in the integration of its former rival. FT
• Warren Buffett said Apple is “even better” than AmEx and Coca-Cola. The stock will remain Berkshire’s top holding despite selling a large chunk. The sale bolstered his firm’s cash pile to a record $189 billion. BBG

A more detailed look at global markets courtesy of Newsquawk

APAC stocks traded with a positive bias after a dovish jobs report from the US but with the upside limited amid holiday-thinned conditions with Japan and South Korea shut for holidays. ASX 200 was led higher by continued outperformance in the rate-sensitive sectors, while financials were also underpinned following Westpac's earnings, special dividend and buyback announcement. Hang Seng & Shanghai Comp were somewhat varied as Hong Kong stocks took a breather after the recent hot streak and as attention shifted to the mainland where stocks outperformed as they played catch up on their return from the Labour Day Golden Week holidays with property stocks boosted by recent support pledges, while participants also digested Caixin Services PMI data which matched estimates.

Top Asian News

• PBoC Shanghai is reportedly to support the renewal of large-scale equipment.
• Chinese President Xi said the China-France relationship is a model of peaceful coexistence and win-win cooperation between countries with different systems, while he added they are ready to consolidate the traditional friendship, enhance political mutual trust, build strategic consensus, as well as deepen exchanges and cooperation with France, according to Xinhua.
• EU is lobbying China to exclude agriculture from a series of escalating commercial disputes and called for the ‘strategic sector’ to be protected from trade tensions in the renewable energy and electric vehicle industries, according to FT.
• A magnitude 6.1 earthquake was reported in Seram, Indonesia, according to GFZ.

European bourses, Stoxx600 (+0.3%) are entirely in the green, albeit modestly so, taking impetus from a positive APAC session. EZ Final PMIs were generally revised higher, though ultimately sparked little reaction in the equities complex. European sectors are mostly firmer, though with the breadth of the market fairly narrow. Insurance takes the top spot, alongside Energy. The latter is benefitting from broader strength in the crude complex given the recent updates around Rafah. US Equity Futures (ES +0.2%, NQ +0.2%, RTY +0.5%) are entirely in the green, building on the strength seen on Friday. Apple (-1.1%) is lower pre-market after Berkshire Hathaway declared it had decreased its stake in the Co. in Q1 and in a breather from Friday's post-earnings strength.

Top European News

• UK PM Sunak reportedly cancelled plans for a summer general election after local election defeats with the election anticipated to occur in Autumn, according to The Telegraph.
• UK PM Sunak was warned by Conservative MPs to show some vision and start digging his party out of a hole after a disastrous set of local election results, while it was also reported that the Labour Party comfortably won the London mayoral contest to give Sadiq Khan an unprecedented third term as London Mayor, according to FT.
• ArcelorMittal (MT NA) warned the UK government that one of its main divisions could be forced to exit the UK if an application to close and redevelop a commercial port in south-east England receives approval this week, according to FT.
• ECB's Lane said in an interview with El Confidencial that the April slowdown in services inflation marks significant progress and confidence on inflation is improving, while he added exaggerating the impact of the ECB and Fed divergence is not necessary and Fed decisions have limited impact on the euro area.
• Fitch affirmed Italy at BBB; Outlook Stable and affirmed Denmark at AAA; Outlook Stable on Friday.

FX

• DXY is modestly softer and within a very tight 105.02-20 range, should selling pressure intensify, the 105.00 mark could be brought into focus.
• EUR is marginally firmer/flat vs the Dollar, though losing in the EUR/GBP cross. Price action today has been contained within a tight 1.0756-75 range, well within the prior session’s bounds. EZ final PMIs today were generally revised higher, albeit slightly, and provided little lasting move in the EUR.
• GBP is slightly firmer against the Dollar, despite UK equities/gilt markets closed on account of the region's bank holiday and with catalyst light. Currently trading just off session highs of 1.2584.
• JPY is by far the biggest underperformer vs the Dollar, going as high as 154.00, paring much of Friday’s USD/JPY losses, amid holiday-thinned conditions with Japan away.
• Antipodeans are both marginally firmer vs USD, though very much within a contained range as catalysts remain thin. Over in China, the Caixin PMI were in-line with expectations which helped to lift sentiment on the region's return from holiday.
• PBoC set USD/CNY mid-point at 7.0994 vs exp. 7.2127 (prev. 7.1063).
• S&P upgraded Turkey’s rating to 'B+'; Outlook Positive on Friday and cited economic rebalancing.

Fixed Income

• Bunds are bid with specific drivers limited, though upside was trimmed by unusually large upward revisions to the French and then EZ Final PMIs though the internal commentary around German continues to point to stagnation/incremental growth. Current 130.98-131.62 parameters surpassed Friday's best by a handful of ticks with little of note thereafter until 132.00.
• USTs are a touch firmer, in-fitting with EGBs, but with magnitudes thin given the UK Bank Holiday and Japan's absence; docket ahead a touch busier with Fed's Barkin & Williams due after the latest Employment Trend numbers.

Commodities

• Crude benchmarks are bid with geopols in focus. WTI and Brent have been grinding higher throughout the morning as the geopolitical narrative around Rafah continues to gradually escalate. Most recent developments have civilians being evacuated and the Israeli Finance Minister saying the army must enter Rafah today.
• Supported on geopols; XAU to a USD 2324/oz peak but one that leaves it over USD 20/oz shy of last week's best but with the USD 2339/oz 21-DMA the first point of resistance.
• Base metals are bid on China's return to the market with the metal following suit to APAC performance where the region was propped up by Friday's NFP-tailwinds and in-line Chinese PMIs.
• Saudi Arabia raised its oil prices for all grades to Asia for June with Arab Light OSP to Asia set at a premium of USD 2.90/bbl vs Oman/Dubai average and OSP to NW Europe set at a premium of USD 2.10/bbl vs ICE Brent, while it set the OSP to the US at a premium of USD 4.75/bbl vs ASCI.
• UAE’s Sharjah announced the discovery of a new gas field which is said to carry ‘promising quantities’, according to a statement cited by Reuters.

Geopolitics: Middle East

• Israeli forces are now launching raids east of Rafah, via Sky News
• Israel military says not going to put a timeframe on the Rafah evacuation and will make "operation assessments"
• Israeli military says evacuating Rafah as part of a "limited scope" operation
• The Israeli army has ordered civilians in several parts of Rafah to leave the city as it begins an invasion of the southern city, via journalist Soylu
• Israeli Defence Minister, speaking with US Defence Secretary Austin, that action in Rafah is required due to Hamas' refusal of hostage-release proposals
• Senior Hamas Official says to Reuters that Israel's Rafah evacuation order is a "dangerous escalation that will have consequences"; Hamas may withdraw from truce talks due to Rafah operations.
• Israel’s military said the Kerem Shalom Crossing with Gaza is now closed to aid trucks after it came under fire with mortar shelling which killed 3 Israeli soldiers and wounded 12 others from the Givanti and Nahal brigades, while Hamas claimed responsibility for the mortar attack on Kerem Shalom and said it targeted an Israeli army base, according to Reuters.
• Israeli PM Netanyahu said they cannot accept Hamas’s demands for an end to the war and the withdrawal of forces from Gaza, while he noted that ending the Gaza war now would keep Hamas in power and Israel would not accept terms that amount to a capitulation with Israel to keep fighting until its war aims are achieved. It was separately reported that Israel’s Defence Minister said Hamas appears uninterested in a deal meaning strong military action in Gaza’s Rafah could happen very soon, according to Reuters.
• Israeli army is said to have started to evacuate civilians from parts of Rafah, according to Haaretz cited by Walla's Guy Elster. Subsequently, Bloomberg reported that the Israeli military asks some Rafah civilians to move out of the city, according to Bloomberg.
• Hamas’ leader said they are still keen on reaching a comprehensive agreement, while the group said the round of negotiations in Cairo has ended and the delegation will leave to consult with the group’s leadership, according to Reuters. It was separately reported that Hamas agrees that Israel can commit to ending the war in the second stage of the hostage deal not the first, according to Times of Israel via social media platform X.
• CIA chief Burns is to travel to Doha for an emergency meeting with Qatar’s PM as Gaza talks are said to be ‘near to collapse’, while Qatar and the US are to exert maximum pressure on Israel and Hamas to continue negotiations, according to an official briefed on talks cited by Reuters. It was separately reported that Burns will stay in Qatar on Monday and likely travel to Israel this week to meet with Israeli PM Netanyahu, according to an Axios reporter.
• US reportedly put a hold on an ammunition shipment to Israel last week, according to two Israeli officials cited by Axios.
• Iraqi armed factions announced they targeted an Israeli air base in Eilat with drones, according to Al Arabiya.
• Israeli Cabinet decided to close Qatari TV network Al Jazeera’s operations in Gaza, according to a statement cited by Reuters. It was later reported that Israel’s communications ministry said a police raid was conducted at an Al Jazeera premises in Jerusalem.

Geopolitics:

• Russia said it took full control of Ocheretyne village in eastern Ukraine, according to the Defence Ministry, cited by Reuters.
• Russian Defence Ministry says preparations are beginning for the commencement of a missile exercises in the southern district, incl. aviation & navy forces

US Event Calendar

• 14:00: Senior Loan Officer Opinion Survey on Bank Lending Practices

Central Bank Speakers

• 12:50: Fed’s Barkin Speaks on Economic Outlook
• 13:00: Fed’s Williams Participates in Fireside Chat
• 14:00: Senior Loan Officer Opinion Survey on Bank Lending Practices

DB's Peter Sidorov concludes the overnight wrap

Filling in for Jim with the UK off for the May Day bank holiday. As the calendar takes a quieter turn after the deluge of macro events last week, the focus will be on whether markets can continue to find a more solid footing. The latter half of last week saw strong gains for most asset classes thanks to an FOMC meeting that avoided hawkish surprises coupled with a softer payrolls report on Friday that reignited hopes of a soft landing for the US economy. 10yr Treasury yields saw their largest weekly decline of the year so far (-15.5bps) while the S&P 500 posted its best 2-day run in 10 weeks (+2.18%). See the full recap at the end.

Looking forward, the health of the US economic cycle will remain in focus with today’s Senior Loan Officer Survey from the Fed. The SLOOS has seen a gradual improvement in the past few quarters after the sharp tightening following the regional banking stress last March. A key question is whether the rise in yields since the start of the year could derail the nascent improvement in bank credit conditions. In their latest chartbook, Jim and Henry highlighted the delayed pass through of higher rates as one of their “What keeps us awake at night?” themes, while my own earlier note (see here) discussed how further improvement in the bank credit cycle may be unlikely without rate cuts materialising. Later in the week, the University of Michigan consumer survey will attract attention on Friday given the recent softening in US consumer confidence indicators.

The main macro event in Europe will be the latest BoE decision on Thursday. Our UK economist expects this week’s meeting to set the stage for the first rate cut in June and foresees dovish shifts in the MPC’s modal CPI projections and its forward guidance. You can see the full preview here. We will also have the RBA decision on Tuesday (see our economists' preview here), while on Wednesday the Riksbank could deliver the first rate cut of the cycle there. Finally, we’ll have the accounts of April ECB meeting due on Friday. These are unlikely to deliver major surprises, with April's clear if conditional signal of a June rate cut having solidified in recent ECB commentary. But we will watch for any hints on the ECB reaction function beyond June, including on what sort of data might justify consecutive ECB cuts.

The earnings season will begin to taper off this week, with almost 400 of S&P 500 members having already reported. Notable releases will include Walt Disney, Vertex, Uber and Airbnb in the US, Ferrari, Telefonica and Leonardo in Europe and Toyota and Nintendo in Japan.

Asian equity markets are mostly trading higher this morning in holiday thinned trading, catching up to the strong end of last week for US equities. As I type, mainland Chinese stocks are leading gains in the region with the CSI (+1.3%) and the Shanghai Composite (+1.05%) both trading notably higher after returning from a long holiday break while the S&P/ASX 200 (+0.60%) is also edging higher and on pace for a third straight day of gains. Elsewhere, the Hang Seng (-0.05%) is swinging between gains and losses in early trade while markets in Japan and South Korea are closed for a public holiday. Outside of Asia, US stock futures are trading marginally higher (+0.08% for the S&P 500).

In terms of early morning data, China’s Caixin Services PMI came in line with expectations at 52.5 in April (vs. 52.7 the previous month). The Composite PMI edged up from 52.7 to 52.8, its highest level since May 2023, so suggesting a reasonably positive performance of the Chinese economy.

In the FX space, the yen is trading moderately down (-0.57%) against the dollar at 153.92 as I type. The yen had been on course to breach its 1990 lows early last week, but ended up seeing its strongest weekly gain against the dollar since late 2022 (+3.45%) amid suspected FX intervention.On this topic, we heard from US Treasury Secretary Janet Yellen over the weekend, who didn’t comment on whether Japan had intervened but added that “we would expect these interventions to be rare and consultation to take place”.

Events in the Middle East have been in focus over the weekend. Hopes of a ceasefire in Gaza had risen on Friday following comments by Hamas officials that it was studying Israel’s latest proposals with a “positive spirit” but weekend talks ended inconclusively. Israel’s prime minister Netanyahu said on Sunday that it would not agree to Hamas demands to end the war in Gaza completely and Israel closed a crossing into Gaza after a rocket attack by Hamas. Oil prices have moved a little higher this morning with Brent futures (+0.31%) trading at $83.22/bbl, also on news that Saudi Arabia increased its monthly selling oil price to Asia. Geopolitics will remain in focus this week, not least with a visit by China’s President Xi Jinping to Europe that lasts until Friday.

Recapping last week in detail, the US payrolls release on Friday came in softer than expected across an array of indicators. The headline payrolls result rose 175k month-on-month (vs 240k expected), the smallest monthly gain in the last six months. The unemployment rate also ticked up to 3.9% (vs 3.8% expected), while average hourly earnings (+0.2% month-on-month vs +0.3%) and hours worked (34.3 vs 34.4) were both a tenth below expectations. So on the whole, the payrolls print was soft landing positive, with our US economists noting that some ad hoc factors may have overstated the weakening. See their post-payroll labour market chart book here for more.

Off the back of this, markets raised their expectations of rate cuts, with thenumber of Fed cuts priced in by the December meeting rising +11.4bps (and +4.8bps on Friday) to 45bps.The hope for additional Fed rate cuts was given further fuel on Friday after the April ISM services PMI came in at 49.4 (vs 52 expected), its lowest level since December 2022. On the other hand, the ISM services prices paid index rose to a three-month high of 59.2 (vs 55.0 expected), but this was largely driven by an increase in energy prices. This sent 2yr Treasury yields down -5.7bps on Friday, building on the earlier post-FOMC rally and down -17.8bps over the week. 10yr Treasuries also rallied, as yields fell -15.5bps to 4.51% (and -7.2bps on Friday) in their strongest week of the year so far. Lower yields saw the broad dollar index post its worst week in eight weeks (-0.86%).

For Europe, it was a similar story, as investors become increasingly certain that the ECB would be cutting rates at their June meeting. By the end of Friday, markets were pricing in a 95% chance of a rate cut in June, up from 88% at the beginning of the week. That lent support to European fixed income, as 10yr German bund yields fell -8.0bps (and -4.6bps on Friday). 10yr gilts fell -10.2bps (and -6.4bps on Friday).

With the payrolls print boosting soft landing hopes, equities enjoyed a strong end to the week, with the S&P 500 rising +1.26% on Friday and paring back earlier losses (+0.55% on the week). Markets were buoyed by the strong results from Apple, which gained +8.32% last week (and +5.98% on Friday). This saw the tech heavy NASDAQ outperform, rising +1.99% (and +1.43% last week). Overall, the rally was broad-based, as the Russell 2000 index of small caps rose +1.68% (and +0.97% on Friday), returning into positive territory year-to-date (+0.43%). It was a bit gloomier over in Europe, as the STOXX 600 fell -0.48%, although the index posted a small rally on Friday (+0.46%).

Finally in commodities, a more positive geopolitical backdrop and an increase in US oil inventories saw oil prices retreat last week. Brent crude fell -7.31% to $82.96/bbl (-0.85% on Friday), and WTI crude -6.85% to $78.11/bbl (-1.06% on Friday), their lowest levels in seven weeks. Gold retreated for the second week in a row, falling -1.55% to $2302/oz (+0.09% on Friday).

Tyler Durden Mon, 05/06/2024 - 08:11

Trump Campaign Ad Highlights UNC Frat Defending American Flag

The Trump campaign has released a new ad featuring students pushing back against leftist protesters - including a fraternity from the University of North Carolina (UNC) who went viral for keeping the American flag off the ground.

"While campuses struggle to get control of their students, at UNC Chapel Hill, they are bringing order back," says the narrator of the ad, posted to Truth Social and the Trump War Room Twitter account on Friday.

College patriots represent the majority of Americans loving their schools and their country! pic.twitter.com/sQqaCkCmkc

— Trump War Room (@TrumpWarRoom) May 3, 2024

In the ad, the young men from the UNC chapter of Pi Kappa Phi can be seen holding up the flag to keep it from touching the ground while protesters screech at them and throw water bottles.

The incident, which took place Tuesday, came after pro-Palestinian supporters replaced the American flag with a Palestinian flag. Following the scene, a GoFundMe was established to throw the fraternity "a Rager," which is now standing at more than $500,000. Notable contributors include Bill 'Redpill' Ackman, who's been in recent battles after Business Insider wrote a hit-piece on his wife after he slammed recent higher education plagiarism scandals and criticized DEI.

One of the fraternity brothers, Guillermo Estrada, wrote on X that he was heading to class and felt "immediately upset" the moment he saw a Palestinian flag hovering in place of the American flag.

"My fraternity brother and others ran over to hold [the flag] up, in order for it not to touch the ground," he wrote. "People began throwing water bottles at us, rocks, sticks, calling us profane names. We stood for an hour defending the flag so many fight to protect."

(Thread) Today was a sad yet empowering day at Chapel Hill. When I walked to class, I saw the Palestinian flag raised on our quad flag pole, and was immediately upset at the act that these “protestors” had made. I cannot say I am fully educated on the Israel/Palestine conflict pic.twitter.com/tZrZEOSu8a

— Guillermo Estrada (@estradguillermo) April 30, 2024

As the Epoch Times notes further, the fraternity drew the attention of country star John Rich, who offered to put on a free concert for their "celebration of freedom."

In an update on Wednesday, the “Save a Horse” singer told his followers on X that he had been in contact with the UNC frat members and was setting up the show.

“I’ve made contact with the Patriots at UNC!” he wrote. “Working on a date to have a massive event to celebrate our flag and those who love her. I‘ll keep ya’ll posted! Let’s call it Flagstock Can you make Flagstock trend? LESSGO!” A Simple Solution to Protect American Flags X owner Elon Musk has also weighed on the social media sensation, offering a simple suggestion for those who would replace an American flag with that of another country—a one-way plane ticket to that country.

“Proposed law: if someone tears down the American flag and puts up another flag in its place, that person should get a free (but mandatory) one-way trip to that flag’s country,” he wrote Thursday on X alongside a poll asking how many users would support such a policy going forward.

“I’m not saying they can’t come back, but they have to experience that country for some period of time before returning,” he explained.

Upon the unveiling of the final poll results on Friday, the response to Mr. Musk’s proposition was overwhelmingly positive. Among 1.5 million X users who voted in his poll, nearly 1.2 million of them (79.9 percent) showed support for such a policy, while under 300,000 (20.1 percent) said they opposed it.

Tyler Durden Mon, 05/06/2024 - 07:45