Authored by Mike Shedlock via MishTalk.com,

Hoot of the day: The Democratic Republic of the Congo flag was behind Biden for the duration of his speech.

The Wall Street Journal reports Biden Renews Call for Gaza Cease-Fire at Morehouse Commencement

“I support peaceful, nonviolent protest. Your voices should be heard. I promise you I hear them,” Biden said.

A small number of graduates turned their seats away from the stage during Biden’s speech, and many listened with their heads down. Faculty members on the stage behind the president displayed a large flag of the Democratic Republic of the Congo for the duration of his speech. Antiwar activists have in recent weeks called for international aid to support citizens of that country amid worsening violence.

Fewer than two dozen of the more than 400 graduating students stood to applaud his speech, as a bloc of alumni rose to whistle and cheer. 

Clip of Biden at Morehouse College

Joe Biden inspires Black graduates at Morehouse College by telling them that they’re victims and America hates them.pic.twitter.com/ofxa90Zo5F

— Libs of TikTok (@libsoftiktok) May 19, 2024

Correct and Correct

“Joe Biden is hemorrhaging the black vote and he’s trying to insult them into returning.”

Correct and correct
Discussed this morning. 👇https://t.co/KqCgANZdFd

— Mike “Mish” Shedlock (@MishGEA) May 19, 2024

Please play the video in the Tweet above.

My first reaction was wow, what a dismal round of applause. And that’s still my reaction, now backed up by numbers. Fewer than 24 of 400 blacks applauded Biden.

I did not plan to do two political posts in a row, nor did I have any idea that Morehouse College graduates would have this reaction or that Biden was even speaking at Morehouse College.

Biden has serious issues with Black voters judging from recent polls. And judging from the reaction to Biden’s speech to the graduating class of Morehouse College on Sunday, his support may be less than the polls indicate.

Why Biden Is Desperate to Debate Trump

Trump Leads in 5 Key States, as Young and Nonwhite Voters Express Discontent With Biden according to Nate Cohn at the New York Times.

New York Times Swing State Poll Detail

Earlier this morning, I commented Two New Swing State Polls Show Why Biden Is Desperate to Debate Trump

The Shocker

18-29 year-olds turned out en masse for Biden four years ago. Trump now leads age groups 18-29 and 30-44.

And it’s not just the youth vote. According to Pew, Biden captured 92 percent of the black vote in 2020. Now it’s 49-14-11 (Biden, Trump, Kennedy).

People Who Rent Will Decide the 2024 Presidential Election

On April 20, before the latest polls, I commented People Who Rent Will Decide the 2024 Presidential Election

Immigration won’t decide the election. Polls have not yet captured what will. This may come as a surprise, but the top issue housing. More explicitly, it’s shelter costs.

Who Are the Renters?

The answer is younger voters and blacks.

The Apartment List 2023 Millennial Homeownership Report shows Millennial homeownership seriously lags other generations.

Generation Z homeownership is dramatically lower still.

And according to the National Association of Realtors, the homeownership rate among Black Americans is 44 percent whereas for White Americans it’s 72.7 percent.

That’s the largest Black-White homeownership rate gap in a decade.

Young voters are angry about rent, angry over home prices, and angry over mortgage rates. That is reflected in the polls.

Economists still don’t get it. They think the economy is doing great

If these percentages hold, Trump is going to win every swing state plus a few more not yet presumed to be in the ballpark.

Authored by Tristan Greene via CoinTelegraph.com,

Geoffrey Hinton, a world-renowned artificial intelligence (AI) expert often referred to as the “Godfather of AI,” recently consulted with members of the United Kingdom’s government at Downing Street, where he advised lawmakers to consider adopting a universal basic income (UBI) to address the impending threat of job losses.

Until recently, Hinton worked for Google, developing high-level AI features for neural networks. This underlying technology powers most modern generative AI systems, such as Google’s Gemini and OpenAI’s ChatGPT.

According to Hinton, the AI revolution will mostly benefit the rich. Laypersons, blue-collar workers, and those employed in jobs that can be automated stand to lose their means of income and “that’s going to be bad for society,” he recently told the BBC in an interview.

“I was consulted by people in Downing Street,” said Hinton, “and I advised them that universal basic income was a good idea.”

Hinton isn’t the only major player in the field of AI who believes that we’ll need UBI to offset the impact automation will have on the human economy.

Before becoming one of the most famous CEOs in the tech industry, OpenAI co-founder Sam Altman studied under Hinton and helped pioneer the neural network. These days, Altman is known for his tenure as OpenAI’s top brass, as well as his full-throated support for UBI.

Altman’s other venture, Worldcoin, is focused on providing UBI through the adoption of a cryptocurrency token provided free of charge to anyone who signs up for the service and submits to a retinal scan to verify their identity.

Aside from saving humanity from employment displacement through the advent of UBI, both Hinton and Altman have expressed their belief that AI could pose an existential threat to humanity.

Hinton reportedly left his post at Google to speak more freely about his concerns over the impact AI could have on the future of our species. For his part, Altman claims the entire reason he co-founded OpenAI with Elon Musk and others was to ensure that advanced AI systems were developed carefully and for the benefit of humanity.

In his recent BBC interview, Hinton said we may only have a handful of years before the threat becomes imminent:

“My guess is in between five and 20 years from now there’s a probability of half that we’ll have to confront the problem of AI trying to take over.”

After last week’s non-stop rollercoaster, it will be a quieter week ahead for global macro with perhaps the most interesting event of the week being Nvidia’s earnings on Wednesday. The company always reports a couple of weeks after the main stretch of US earnings season is over so it will act as a potent “digestif” to Q1 reporting. As DB’s Jim Reid reminds us, this time last year the mainstream AI frenzy began around the time of Nvidia’s results where the company climbed over 20% on results day and has now tripled in value over 12 months.

Staying in the US, the FOMC minutes on Wednesday are likely to be the main economic event however, it’s unlikely to contain much new material especially since the meeting we have seen CPI and PPI. Perhaps the busy week for Fedspeak will prove more interesting. Vice Chair Jefferson today and Governor Waller tomorrow are early week highlights with the rest in our day-by-day week ahead at the end as usual. In all, there are a whopping 16 Fed speakers this week. Lagarde and the BoE Bailey speak tomorrow.

In terms of US data, notable releases include durable goods orders (DB forecast +0.5% in April vs +2.6% in March) and the final reading of the University of Michigan’s survey on Friday, as well as housing market data throughout the week. For the UoM survey, inflation expectations will be a highlight as the preliminary reading showed short- and longer-term expectations edging up. The survey is currently transitioning from 100% phone to 100% web-based responses over a 4-month period. So strange or inconsistent readings are possible.

The global flash PMIs on Thursday will be a highlight alongside UK inflation on Wednesday and retail sales and consumer confidence on Friday. DB’s UK economist expects the headline to drop to around 2.2% YoY, 18 months after peaking at 11.1%. He sees core CPI at 3.6% and services at 5.4%, both also down. He sees risks to the headline projection as skewed to the downside. Canada’s CPI is also out tomorrow.

In Germany, PPI tomorrow and the breakdown of Q1 GDP on Friday, are likely the main events in mainland Europe. In Asia, the national CPI in Japan on Friday is the main release. Our Chief Japan economist expects core inflation ex. fresh food to be up 2.2% YoY (2.6% in March) and core-core ex. fresh food and energy up 2.5% (+2.9%), both rising +0.1% on a seasonally-adjusted MoM basis.

Courtesy of DB, here is a day-by-day calendar of events

Monday May 20

• Data : China 1-yr and 5-yr loan prime rates, Japan March Tertiary industry index
• Central banks : Fed’s Bostic and Barr speak
• Earnings : Palo Alto Networks, Zoom, Ryanair

Tuesday May 21

• Data : US May Philadelphia Fed non-manufacturing activity, Germany April PPI, Italy March current account balance, ECB March current account, Eurozone March construction output, trade balance, Canada April CPI, Denmark Q1 GDP
• Central banks : Fed’s Bostic, Barkin, Barr, Waller and Williams speak, ECB’s Lagarde speaks, BoE’s Bailey speaks, RBA minutes of May policy meeting
• Earnings : Macy’s, Lowe’s

Wednesday May 22

• Data : US April existing home sales, UK March house price index, April public finances, CPI, RPI, PPI, Japan March core machine orders, April trade balance, EU27 April new car registrations, Sweden April unemployment rate
• Central banks : FOMC meeting minutes, Fed’s Bostic, Goolsbee, Collins and Mester speak, BoE’s Breeden speaks, RBNZ decision
• Earnings : Nvidia, Snowflake, Target, Analog Devices, TJX, Synopsys
• Auctions : US 20-yr Bonds ($16bn)

Thursday May 23

• Data : US, UK, Japan, Germany, France and Eurozone May PMIs, US May Kansas City Fed manufacturing activity, April Chicago Fed national activity index, new home sales, initial jobless claims, Eurozone May consumer confidence
• Central banks : Fed’s Bostic speaks, BoE’s Pill speaks
• Earnings : Lenovo, Workday, Intuit
• Auctions : US 10-yr TIPS (reopening, $16bn)

Friday May 24

• Data : US May Kansas City Fed services activity, April durable goods orders, UK May GfK consumer confidence, April retail sales, Japan April national CPI, Germany Q1 GDP detail, France May manufacturing confidence, Canada March retail sales
• Central banks : Fed’s Waller speaks, ECB’s Schnabel, Centeno, Vasle, Nagel and Muller speak

* * *

Finally, turning to just the US, the key economic data releases this week are the existing home sales report on Wednesday, the durable goods orders report and the University of Michigan report on Friday. The minutes from the May FOMC meeting will also be released on Wednesday. There are several speaking engagements from Fed officials this week, including remarks from Vice Chair for Supervision Barr, Vice Chair Jefferson, Governor Waller, and Presidents Bostic, Mester, Barkin, Williams, Collins, and Goolsbee.

Monday, May 20

• No major economic data releases scheduled.
• 07:30 AM Atlanta Fed President Bostic (FOMC voter) speaks: Atlanta Fed President Raphael Bostic will be interviewed on Bloomberg TV. On April 3, Bostic said “if the economy evolves as I expect and that’s going to be seeing continued robustness in GDP and employment, and a slow decline in inflation over the course of the year, I think it will be appropriate for us to start moving [the fed funds rate] down at the end of this year, the fourth quarter.” He also noted that he now expects inflation to drop incrementally through 2024 and 2025 with the 2% target rate reached “sometime in early 2026.”
• 08:45 AM Atlanta Fed President Bostic (FOMC voter) speaks: Atlanta Fed President Raphael Bostic will give welcoming remarks for the Atlanta Fed’s Financial Markets conference.
• 09:00 AM Fed Vice Chair for Supervision Barr speaks: Fed Vice Chair for Supervision Michael Barr will give the keynote speech at the Atlanta Fed’s Financial Markets conference on monetary policy and bank regulation. A moderated Q&A is expected. On February 14, Barr said, “As Chair Powell indicated in his most recent press conference, my FOMC colleagues and I are confident we are on a path to 2% inflation, but we need to see continued good data before we can begin the process of reducing the federal funds rate.”
• 09:00 AM Fed Governor Waller speaks: Fed Governor Christopher Waller will give welcoming remarks for the Third Conference on the international roles of the US dollar. The speech text is expected. On March 27, Waller said, “[The recent data] tells me that it is prudent to hold the rate at its current restrictive stance perhaps for longer than previously thought to help keep inflation on a sustainable trajectory toward 2%.” He also noted, “The strength of the US economy and resilience of the labor market mean the risk of waiting a little longer to ease policy is small and significantly lower than acting too soon and possibly squandering our progress on inflation.” Waller also spoke on May 17 but did not comment on monetary policy.
• 10:30 AM Fed Vice Chair Jefferson speaks: Fed Vice Chair Phillip Jefferson will speak on the US economic outlook and housing price dynamics at the Mortgage Bankers Association Secondary and Capital Markets conference. The speech text is expected. On May 13, Jefferson said that it is appropriate to keep interest rates steady until there is additional evidence that inflation will return to the Fed’s 2% target. He also said, “The diversity of viewpoints among policymakers lends itself to stimulating debates and, ultimately, better policy, but in such a situation, more communication could increase rather than reduce uncertainty about our policies.”
• 02:00 PM Cleveland Fed President Mester (FOMC voter) speaks: Cleveland Fed President Loretta Mester will be interviewed on Bloomberg TV. On May 16, Mester said, “The most likely scenario for the overall economy and that of the region is that the current restrictive stance of monetary policy will continue to help moderate growth and labor market conditions and that this moderation will contribute to the further easing of price pressures.” She also noted, “I expect progress on inflation over time, but at a slower pace than we saw last year.”
• 07:00 PM Atlanta Fed President Bostic (FOMC voter) speaks: Atlanta Fed President Raphael Bostic will moderate a keynote address by Harvard’s Edward Glaeser at the Atlanta Fed’s Financial Markets conference.

Tuesday, May 21

• No major economic data releases scheduled.
• 09:00 AM Richmond Fed President Barkin (FOMC voter) speaks: Richmond Fed President Thomas Barkin will give welcome and opening remarks at the Richmond Fed’s Investing in Rural America conference. On May 6, Barkin said he expects high interest rates to slow the economy further and cool inflation to the Fed’s 2% target. He also noted that the strength of the labor market offers the Fed time to gain confidence that inflation is moving sustainably lower before lowering borrowing costs, but there’s a risk continued housing and services inflation will keep price gains elevated — as seen this year.
• 09:00 AM Fed Governor Waller speaks: Fed Governor Christopher Waller will speak on his outlook for the US economy and monetary policy. The speech text is expected. A moderated Q&A is expected.
• 09:05 AM New York Fed President Williams (FOMC voter) speaks: New York Fed President Williams will give opening remarks at the 2024 Governance and Culture Reform conference. On May 3, Williams said, “Years of experience—and years of careful analysis—have taught us that, first and foremost, central banks must own the responsibility for maintaining low and stable inflation and have the independence of action to achieve that goal.” He also noted, “The future is uncertain, but as we continue to move closer to our 2 percent longer-run inflation goal, I’m confident we have the foundation of theory and experience to guide us in restoring price stability and set the stage for sustained economic prosperity. We are committed to getting the job done.”
• 09:10 AM Atlanta Fed President Bostic (FOMC voter) speaks: Atlanta Fed President Raphael Bostic will offer brief welcome remarks at the Atlanta Fed’s Financial Markets conference.
• 11:45 AM Fed Vice Chair for Supervision Barr speaks: Fed Vice Chair for Supervision Michael Barr will discuss the economy, lessons learned from the 2023 liquidity crisis, and regional banking supervision in a fireside chat at the 2024 Regional State Member Bank Director and Executive conference. A moderated Q&A is expected.
• 07:00 PM Boston Fed President Collins and Cleveland Fed President Mester (FOMC voter) speak: Boston Fed President Susan Collins and Cleveland Fed President Loretta Mester will participate in a panel conversation moderated by Atlanta Fed President Raphael Bostic at the Atlanta Fed’s Financial Markets conference. A moderated Q&A is expected. On May 8, Collins said that it will take longer than previously thought to bring inflation down. She also said that she remains optimistic that inflation can be brought back to the Fed’s goal of 2% in a reasonable amount of time and with a job market that remains healthy.

Wednesday, May 22

• 09:00 AM Chicago Fed President Goolsbee speaks: Chicago Fed President Austan Goolsbee will give opening remarks at the Chicago Fed Holding Company symposium. On April 19, Goolsbee said, “So far in 2024, that progress on inflation has stalled. You never want to make too much of one month’s data, especially inflation, which is a noisy series, but after three months of this, it can’t be dismissed.”
• 10:00 AM Existing home sales, April (GS +1.8%, consensus -0.1%, last -4.3%)
• 02:00 PM FOMC meeting minutes, April 30-May 1 meeting: The May FOMC meeting was mostly uneventful but dovish overall. We saw two takeaways from Chair Powell’s press conference. First, Powell pushed backed strongly against the possibility of rate hikes and emphasized that he is confident that the current policy stance is restrictive. Second, Powell offered no major clues on the timing of a rate cut but struck a consistently dovish tone on inflation. Consistent with our views, he said he took little signal from the inflation uptick in Q1. We have left our forecast unchanged and continue to expect two rate cuts this year in July and November.

Thursday, May 23

• 08:30 AM Initial jobless claims, week ended May 18 (GS 220k, consensus 220k, last 222k); Continuing jobless claims, week ended May 11 (consensus 1,790k, last 1,794k)
• 09:45 AM S&P Global US manufacturing PMI, May preliminary (consensus 49.6, last 50.0)
• 09:45 AM S&P Global US services PMI, May preliminary (consensus 51.3, last 51.3)
• 10:00 AM New home sales, April (GS -4.0%, consensus -2.6%, last +8.8%)
• 03:00 PM Atlanta Fed President Bostic (FOMC voter) speaks: Atlanta Fed President Raphael Bostic will participate in a Q&A session with an MBA class at the Stanford University.

Friday, May 24

• 08:30 AM Durable goods orders, April preliminary (GS -2.0%, consensus -0.8%, last +0.9%); Durable goods orders ex-transportation, April preliminary (GS +0.1%, consensus +0.1%, last flat); Core capital goods orders, April preliminary (GS +0.1%, consensus +0.1%, last -0.2%); Core capital goods shipments, April preliminary (GS +0.1%, consensus +0.1%, last -0.1%): We estimate that durable goods orders fell 2.0% in the preliminary April report (mom sa), reflecting weak commercial aircraft orders as well as aircraft order cancellations. We forecast modest increases core measures, including 0.1% increases in both core capital goods shipments and core capital goods orders.
• 09:35 AM Fed Governor Waller speaks: Fed Governor Christopher Waller will give the keynote address on r-star at a Central Bank of Iceland event in Reykjavík, Iceland. The speech text will be made available.
• 10:00 AM University of Michigan consumer sentiment, May final (GS 67.9, consensus 67.8, last 67.4); University of Michigan 5-10-year inflation expectations, May final (GS 3.1%, consensus 3.1%, last 3.1%): We expect the University of Michigan consumer sentiment index increased to 67.9 in the final May reading. We estimate the report’s measure of long-term inflation expectations remained unchanged at 3.1%, somewhat above the recent trend, reflecting higher gasoline prices and the higher-than-expected price data reported in 2024.

Source: DB, Goldman, BofA

Futures are higher across the board as investors shift their focus from macro to micro, following a rollercoaster week that saw stocks slide then reverse higher after a soggy CPI and retail sales print, to close at an all time high and the Dow above 40,000. AI is in focus this week with NVDA earnings on deck, plus we will see a relaunch of sell-side industry conferences. As of 7:30am, S&P futures are up 0.1% and poised to open near record highs on Monday, while Nasdaq futures gained 0.2% as investors looked past the inflation implications of a commodity rally and wagered interest-rate cuts will remain on the cards this year.

Bond yields are down 1-3bps and USD starts the week flat. Iran’s President Ebrahim Raisi was killed in a helicopter crash on Sunday, renewing the debate over who will succeed 85-year old supreme leader Ayatollah Khamenei. Oil fluctuated as the market watched for any fallout from political ructions in one of the world’s major crude producers. Elsewhere in commodities, ags are higher and metals are soaring, while energy – despite the death of Iran’s president – is weaker ex-natgas as the Biden oil trading desk sits on the sell button; precious metals, sugar, and wheat are the standout performers all up at least 1.2%. Copper and Nickel also sharply higher after while gold and copper surged to record highs.

With Bloomberg’s commodity index up almost 5% this month, there are fears of a fresh inflation uptick that could take the shine off equities and bonds. Many investors remain confident, however, that price pressures will continue to ease, allowing  the Federal Reserve, European Central Bank and others to cut rates in the coming months. The macro data focus this relatively quiet week will be on the FOMC Minutes (Weds), Flash PMIs (Thurs), and Durable Goods/Consumer Sentiment (Fri). We also have 16 Fed speakers this week.

In premarket trading, semis are outperforming with SMH +0.6% led by NVDA +1.4%. The Mag 7 are all higher ex-AAPL. NVDA is higher after at least three brokerages, Stifel, Barclays and Baird, raised their price target on the stock (to $1,085, $1,100 and $1,200 from $910, $850, and $1,050 respectively). Johnson Controls International shares jumped 4.4% after Bloomberg reported that Elliott Investment Management had built up a large position in the company, citing people familiar with the matter. Jaguar Health shares plummet 34% after the natural products pharmaceutical company announced a 1-for-60 reverse stock split on Friday.

With much of the macro data in the rearview mirror, traders are now awaiting earnings on Wednesday from AI bellwether Nvidia which has driven a major chunk of this year’s Wall Street gains and comprises 5% of the S&P’s market value.

“Fundamentally, investors are not concerned about the health of the economy,” said Gene Salerno, chief investment officer at SG Kleinwort Hambros Bank Ltd. “I am not too worried about the commodity rally as it’s only one component of inflation and we are seeing other aspects of inflation, such as the froth in the jobs markets, starting to come off.”

The timing of the Fed’s likely pivot to rate cuts has shaped trading across financial markets in recent days. The Dow Jones Industrial Average closed above 40,000 for the first time on Friday, while the S&P 500 has hit a series of record highs. That’s prompted Morgan Stanley strategist Michael Wilson — a prominent Wall Street bear — to turn positive on the stock market and predict further gains, potentially sealing the fate of the rally.

However, a number of policymakers have urged caution over cutting rates, with the ECB’s Martins Kazaks the latest to warn against hasty cuts after the first move in June. Cleveland Fed President Loretta Mester, New York Fed President John Williams and Richmond Fed President Thomas Barkin all said last week it may take a while for inflation to ease to the 2% target.

In Europe, equities got a boost from record-high prices for copper and gold. The Stoxx Europe 600 Index hovered near a record high, led by mining stocks including Glencore Plc and and KGHM SA. Here are some of the biggest European movers on Monday:

• Metsa Board shares rise as much as 7.3% after DNB Markets upgraded the Finnish packaging maker to buy from hold on the prospect of an earnings recovery
• Hilton Food Group shares rise as much as 1.7% after the food maker said year-to-date sales were ahead of last year. Analysts welcomed higher volumes
• Ryanair slips as much as 1.6% as analysts highlight “cautiously optimistic” commentary from management on summer pricing, seen flat to modestly higher in the peak season
• Keywords Studios shares gain as much as 70% after it says EQT Group is in advanced talks to buy it for £25.50 per share
• Ubisoft shares rise as much as 4.1% after Cantor Fitzgerald says it’s “now or never” to buy as the company gears up for its strongest game pipeline in recent years
• Trainline shares rise as much as 2.5% after analysts at Deutsche Bank started coverage of the online coach and train ticket supplier with a buy rating

Asian stocks rose, headed for a seventh-straight day of gains, as China’s latest property-rescue measures and expectations for global interest-rate cuts buoyed sentiment. The MSCI Asia Pacific Index climbed as much as 0.7%, led by mining stocks on a strong rally in metal prices. Key indexes in Japan led advances around the region, with notable increases also in South Korea and Australia. Chinese shares gained after Beijing unveiled a policy package to bolster the slumping housing market, even as concerns linger that the measures may be too small.

In FX, the dollar is little changed as traders paid close attention to a string of Federal Reserve speakers this week to gauge the US central bank’s policy outlook. The Bloomberg Dollar Spot Index was steady after last week’s 0.7% drop. Fed officials including Chairman Jerome Powell, Raphael Bostic, Michael Barr, Christopher Waller, Philip Jefferson, Loretta Mester, Tom Barkin, John Williams and Austan Goolsbee are due to speak this week.

“Following the soft US CPI data last week, investors have re-factored in about 50 basis points worth of rate cuts by the Fed by year end,” said David Forrester, senior FX strategist at Credit Agricole CIB in Singapore. So Fed officials’ remarks this week will be important, and the risk of mispring is supporting the dollar, he added.

In rates, treasuries traded in a narrow overnight range with yields within a basis point of Friday’s close across the curve into the early US session. US 10-year yields around 4.42%, little changed on the day, with bunds and gilts lagging by 0.5bp and 1.5bp in the sector. Slight lag in long-end Treasuries steepens 5s30s spread by almost 1bp on the day. US sales this week include $16b 20-year bonds Wednesday and $16b 10-year TIPS reopening Thursday.

In commodities, copper surged to its highest-ever level, lifting futures on the London Metal Exchange above $11,000 for the first time. Spot gold surges to an all-time high, climbing as much as 1.4% to hit $2,450.07/oz as the death of Iranian President Ebrahim Raisi in a helicopter raised concerns of fresh tensions in the Middle East, offering the haven metal a boost. Oddly enough, crude prices actually dropped despite the latest chaos in the middle east, having risen 10% so far this year, as Biden does everything to prevent an oil and gasoline price spike ahead of the elections.

Bitcoin rises again, trading just above $67k, whilst Ethereum posts mild gains and holds just above $3.1k.

Looking at today’s calendar, there is no US economic data this session; this week includes FOMC meeting minutes, manufacturing and services PMIs, new home sales, durable goods orders and University of Michigan sentiment. Fed officials’ scheduled speeches include Bostic (7:30am, 8:45am, 7pm), Barr, Waller (9am), Jefferson (10:30am), and Mester (2pm)

Market Snapshot

• S&P 500 futures little up 0.1% at 5,336.75
• STOXX Europe 600 up 0.1% to 523.59
• MXAP up 0.4% to 182.58
• MXAPJ up 0.3% to 572.14
• Nikkei up 0.7% to 39,069.68
• Topix up 0.8% to 2,768.04
• Hang Seng Index up 0.4% to 19,636.22
• Shanghai Composite up 0.5% to 3,171.15
• Sensex up 0.1% to 74,005.94
• Australia S&P/ASX 200 up 0.6% to 7,863.66
• Kospi up 0.6% to 2,742.14
• German 10Y yield little changed at 2.53%
• Euro little changed at $1.0873
• Brent Futures up 0.1% to $84.09/bbl
• Gold spot up 1.0% to $2,439.46
• US Dollar Index little changed at 104.48

Top Overnight News

• Iranian President Ebrahim Raisi was killed in a helicopter crash on Sunday, depriving Supreme Leader Ayatollah Ali Khamenei of a longtime ally as Tehran angles for regional dominance through armed militias that are fighting the U.S. and Israel. Raisi’s death was announced early Monday, after state television reported Sunday afternoon that a helicopter carrying him and Foreign Minister Hossein Amir-Abdollahian had made a landing” in northwestern Iran. WSJ
• China has signaled it will retaliate against trade barriers introduced by the US and the EU as it launched an anti-dumping probe into chemical imports. The Ministry of Commerce announced on Sunday that it is probing imports of polyoxymethylene copolymer, a thermoplastic widely used in the consumer electronics and automotive industries, from the EU, the US, Japan and Taiwan. FT
• Japanese companies agree to wage increases of 5.58% at the annual talks that concluded in March, the biggest jump in decades. Speculation rises that the BOJ could be forced to hike sooner than anticipated due to persistent JPY weakness. Nikkei
• A St Petersburg court has seized over €700mn of assets belonging to three western banks — UniCredit, Deutsche Bank and Commerzbank — according to court documents. The seizure is one of the biggest moves against western lenders since Moscow’s invasion of Ukraine prompted most international lenders to withdraw or wind down their businesses in Russia. It comes after the European Central Bank told Eurozone lenders with operations in the country to speed up their exit plans. FT
• ECB’s Martins Kazaks warns markets against assuming a rapid succession of cuts after the June meeting. BBG
• The US and Saudi Arabia are “very, very close” on a landmark security agreement and could go ahead with a bilateral deal given the intractable issue of Gaza and a Palestinian state. NYT
• G7 countries warming to a plan that would extend tens of billions of dollars in aid to Ukraine via a loan that will be paid back by profits earned from seized Russian assets (the money would be disbursed prior to the US election in Nov). FT
• Bank capital rule proposals from the Fed are set to be eased significantly – the original B3 endgame plan would have mandated a 20% capital increase, but now the number will likely to be half as much. WSJ
• Apple is preparing to unveil a partnership w/OpenAI at WWDC next month that will bring ChatGPT to the next version of iOS, and OpenAI is now “racing to ensure it has the capacity” to accommodate the massive influx of new users. BBG
• Revisions to consensus 2024 EPS estimates have been better than usual due to upward guidance from the largest firms. Bottom-up consensus since 1985 has cut annual EPS by a median of 4% each year. Analysts YTD have lowered 2024 EPS estimates for the S&P 493 by 2% but lifted estimates for the Magnificent 7 by 8%, so the aggregate 2024 S&P 500 EPS forecast has been flat: Goldman

A more detailed look at global markets courtesy of Newsquawk

APAC stocks began the week on the front foot despite last Friday’s indecisive performance on Wall St where the major indices traded sideways but remained near record levels, while there was also a lack of fresh macro developments over the weekend. ASX 200 was led by outperformance in miners after gold and copper prices climbed to fresh record levels. Nikkei 225 surged above the 39,000 level with the index unfazed by the mild uptick in yields and absence of fresh drivers. Hang Seng and Shanghai Comp conformed to the positive mood but with gains capped in the mainland amid lingering frictions after China

Top Asian News

• Chinese Loan Prime Rate 1Y (May) 3.45% vs. Exp. 3.45% (Prev. 3.45%)
• Chinese Loan Prime Rate 5Y (May) 3.95% vs. Exp. 3.95% (Prev. 3.95%)
• China MOFCOM announced symbolic sanctions against Boeing Defense, Space & Security, General Atomics Aeronautical Systems Inc. and General Dynamics Land Systems Inc. which were added to China’s “unreliable entity” list for providing weapons to Taiwan.
• China’s Mofcom launched an anti-dumping probe into polyoxymethylene copolymers (used in electronics and cars) from the EU, US, Taiwan and Japan, according to FT.
• Taiwan’s President Lai was sworn in and called on China to stop threatening Taiwan politically and militarily, while he called on Taiwan and China to take on the global responsibility of maintaining peace and stability in the region. President Lai said they seek peace but cannot have illusions and must work together with democratic countries to form deterrence and avoid war, as well as noted that Taiwan will maintain the status quo and cannot make any concessions on democracy and freedom.
• South Korea plans to partially lift the short-selling ban in June, according to Yonhap.
• BoJ survey finds many firms say they can no longer hire enough workers if they curb wages and more firms are starting to pass on rising labour costs to sales prices.
• Chinese financial market regulators will meet Europe funds this week to attract investments, according to Bloomberg. Vice head of CSRC will meet investors from Wednesday, along with PBoC senior officials, according to Bloomberg

European bourses (Stoxx 600 +0.1%) are modestly firmer, though with price action contained in what has been a catalyst-thin session thus far. European sectors are mostly firmer; Basic Resources and Energy reside as the standout outperformers amid price action in underlying commodities. Except for those two, the breadth of the market is narrow with no overarching theme or bias. US equity futures (ES -0.1%, NQ -0.3%, RTY -0.5%) are trading sideways and around the flat mark ahead of a slew of Fed speakers.

Top European News

• ECB’s Kazaks said the rate-cutting process must be cautious and gradual; will look at the data again after June’s meeting; June meeting is quite likely to be the start of ECB rate cuts.
• BoE’s Broadbent said direct effect on inflation of the pandemic and the war have now faded; now left with the more persistent, second-round effects of that earlier surge on domestic inflation; possible Bank Rate could be cut some time over the summer.
• Rightmove said asking prices for UK homes hit a record high in the four weeks to mid-May although the pace of increase was the slowest YTD.

FX

• USD is flat vs. peers in what has been a quiet weekend/session of newsflow thus far. DXY is currently towards the bottom end of Friday’s 104.39-79 range.
• EUR/USD is unable to launch a test of 1.09 after advancing as high as 1.0894 last week. 1.09 hasn’t been breached since 21st March, where 1.0942 was the high that day.
• Flat trade for the GBP vs. the USD and EUR. Cable kissed Friday’s monthly peak at 1.2711 earlier in the session but was unable to break above it in quiet trade.
• For once, USD/JPY is hugging the unchanged mark which is testament to how quiet trading conditions have been today. As it stands, the pair is contained within Friday’s 155.24-97 parameters.
• Antipodeans are both broadly steady vs. the USD in quiet newsflow. AUD/USD is holding just below the 0.67 mark with an overnight peak of 0.6709, which is just shy of last Thursday’s peak at 0.6714.
• PBoC set USD/CNY mid-point at 7.1042 vs exp. 7.2162 (prev. 7.1045)

Fixed Income

• Horizontal trade for USTs amid quiet newsflow and a sparse calendar. The back-end of last week saw profit-taking on the CPI/retail sales induced gains earlier in the week.
• Bunds are softer on the session, in a continuation of the downside seen since last Thursday. Traders are mindful of a potential improvement in upcoming PMI metrics. Currently at 130.63, and a far cry from last week’s 132.11 peak.
• Gilts: Similar price action to its German counterpart with the Jun’24 Gilt contract extending on the downside seen since last week. Currently holding around 97.83, and well off last week’s 98.76.

Commodities

• Crude was choppy for much of the European morning, before succumbing to selling pressure, taking the complex into the red with a lack of clear geopolitical catalyst. Although with little follow through, much of today’s focus has been on the death of the Iranian President and Foreign Minister, due to a weather-related helicopter crash. Brent near session lows at around USD 83.85/bbl.
• Precious metals are mostly firmer with focus on spot silver and spot gold, with the latter notching a fresh record high overnight as it zeroes in on the USD 2,050/oz mark; XAU hit a peak at USD 2,450/oz (vs low USD 2,414.72/oz) overnight before stabilising around USD 2,435/oz.
• Base metals are firmer across the board with APAC focus on industrial metals, namely copper and iron following China’s recent property support efforts. Iron ore prices hit their highest level in three months while 3M LME copper hit record highs.
• Iraqi PM said there is no progress in talks with oil companies to resume exports from Kurdistan to Turkey, according to Reuters.
• Libya began operating the new pipeline from its North Hamada oilfield with the initial transfer capacity expected at 2k bpd, according to the National Oil Corporation cited by Reuters.
• Ukrainian intelligence sources said the SBU and military drones struck an oil refinery and airfield in Russia’s southern Krasnodar region in an overnight attack, according to Reuters.

Geopolitics: Middle East

• A helicopter carrying Iranian President Raisi and Foreign Minister Amir-Abdollahian crashed due to adverse weather conditions, according to state TV. Iran’s Supreme Leader Khamenei reassured Iranians the country’s management would not be affected by the incident and that no disruption would occur in Iran’s state affairs, while it was later confirmed that all passengers including President Raisi were killed in the crash.
• Israel said it is not involved the death of Iranian president Raisi, according to an Israeli official cited by Reuters.
• Israel’s Gallant tells US advisor Sullivan that “we are committed to broadening the Rafah ground operation”
• Israel’s Gantz demanded that the war cabinet agree to a six-point plan for the Gaza conflict by June 8th which should lay out a post-war vision for Gaza governance and equitable Israeli military conscription. Furthermore, Gantz warned his party would quit the emergency coalition government if Israeli PM Netanyahu does not meet expectations, according to Reuters.
• White House National Security Adviser Sullivan discussed with Israelis methods to ensure the defeat of Hamas while minimising harm to civilians, while Sullivan reiterated US President Biden’s longstanding position on Rafah and proposed a series of concrete measures to ensure more aid flows into Gaza. Furthermore, Sullivan held constructive meetings in Saudi Arabia and briefed Israeli PM Netanyahu on the Saudi meetings and the potential that may now be available for Israel and the Palestinians, according to Reuters citing the White House.
• US Central Command said Houthis launched an anti-ship ballistic missile into the Red Sea and struck M/T Wind which is a Panamanian-flagged, Greek-owned oil tanker which caused flooding and resulted in a loss of propulsion and steering. However, the crew was able to restore propulsion and steering, and there were no casualties reported, according to Reuters.

Geopolitics: Other

• Ukrainian forces destroyed a Russian Black Sea fleet minesweeper, according to the Ukrainian navy.
• Russia’s Defence Ministry said Russian forces took control of Starytsia in Ukraine’s Kharkiv region, according to TASS. In relevant news, Russia’s Defence Ministry said Russia shot down US ATACMS missiles and drones Ukraine used to attack Russian regions overnight, according to Reuters.
• North Korea said it would reconsider measures necessary for improving the overall nuclear deterrence posture after the recent US subcritical nuclear test, while it added that the US subcritical nuclear test fuels an international nuclear arms race, according to KCNA.

US Event Calendar

• Nothing scheduled

Central Bank speakers

• 07:30: Fed’s Bostic on Bloomberg TV
• 08:45: Fed’s Bostic Gives Welcome Remarks
• 09:00: Fed’s Barr Gives Keynote Remarks, Q&A
• 09:00: Fed’s Waller Gives Welcoming Remarks
• 10:30: Fed’s Jefferson Speaks on Economic Outlook, Housing
• 14:00: Fed’s Mester on Bloomberg TV
• 19:00: Fed’s Bostic Moderates Keynote Remarks

DB’s Jim Reid concludes the overnight wrap

I’m off to the West Coast this morning. San Fran that is, not Cornwall. It was a very emotional weekend. My twins had their first-ever cricket match at 6 and Jürgen Klopp managed his last game for Liverpool. I’m not one for tears but the latter was an emotional watch. My wife said the only time she’s ever seen me cry is due to sport. Tough to argue with that.

It will be a quieter week ahead for global macro with perhaps the most interesting event of the week being Nvidia’s earnings on Wednesday. The company always reports a couple of weeks after the main stretch of US earnings season is over so it will act as a potent “digestif” to Q1 reporting. Remember this time last year the mainstream AI frenzy began around the time of Nvidia’s results where the company climbed over 20% on results day and has now tripled in value over 12 months.

Staying in the US, the FOMC minutes on Wednesday are likely to be the main economic event. However, it’s tough to see how it will contain much new material especially as since the meeting we have seen CPI and PPI. Perhaps the busy week for Fedspeak will prove more interesting. Vice Chair Jefferson today and Governor Waller tomorrow are early week highlights with the rest in our day-by-day week ahead at the end as usual. Lagarde and the BoE Bailey speak tomorrow.

In terms of US data, notable releases include durable goods orders (DB forecast +0.5% in April vs +2.6% in March) and the final reading of the University of Michigan’s survey on Friday, as well as housing market data throughout the week. For the UoM survey, inflation expectations will be a highlight as the preliminary reading showed short- and longer-term expectations edging up. The survey is currently transitioning from 100% phone to 100% web-based responses over a 4-month period. So strange or inconsistent readings are possible.

The global flash PMIs on Thursday will be a highlight alongside UK inflation on Wednesday and retail sales and consumer confidence on Friday. Our UK economist previews the inflation data here and expects the headline to drop to around 2.2% YoY, 18 months after peaking at 11.1%. He sees core CPI at 3.6% and services at 5.4%, both also down. He sees risks to the headline projection as skewed to the downside. Canada’s CPI is also out tomorrow.

In Germany, PPI tomorrow and the breakdown of Q1 GDP on Friday, are likely the main events in mainland Europe. In Asia, the national CPI in Japan on Friday is the main release. Our Chief Japan economist expects core inflation ex. fresh food to be up 2.2% YoY (2.6% in March) and core-core ex. fresh food and energy up 2.5% (+2.9%), both rising +0.1% on a seasonally-adjusted MoM basis.

Asian equity markets are advancing this morning tracking Friday’s gain on Wall Street and maintaining some momentum after Beijing’s measures to stimulate the nation’s beleaguered property sector at the end of last week. Across the region, the Nikkei (+1.11%) is leading gains with the KOSPI (+0.59%), the Hang Seng (+0.26%), the Shanghai Composite (+0.38%) and the CSI (+0.20%) all also edging higher. S&P 500 (+0.14%) and NASDAQ 100 (+0.19%) futures are also ticking higher.

Coming back to China, the PBoC held its one-year loan prime rate (LPR) unchanged at 3.45% as expected while the five-year rate, a reference for mortgages, was also kept intact at 3.95%. Elsewhere, yields on the 10yr JGBs touched a high of 0.975% for the first time since 2013 before settling at 0.972% (+3bps) as I type amid expectations that the BOJ will trim its bond buyin at its regular operations to support the struggling yen.

Meanwhile, investors will again keep an eye on the Middle East after a helicopter carrying Iranian President Ebrahim Raisi crashed amid heavy fog in northern Iran . Official reports have now said that the President and Foreign Minister are amongst those dead.

Recapping last week now and it was another strong one for equities. The S&P 500 was up +1.54% in a fourth consecutive weekly increase (+0.12% Friday), its longest winning streak since February. The most notable milestone of the week came very late in Friday’s session as the Dow Jones index closed above the 40,000 level for the first time (+0.34% on Friday).

Renewed tech optimism supported outperformance for the NASDAQ (+2.11% over the week, despite -0.07% on Friday) but the equity gains were broad-based with the small cap Russell 2000 up +1.74% over the week. Global equities saw mixed gains, as Europe’s STOXX 600 clocked a +0.42% rise (-0.13% on Friday) while the MSCI EM index was up +2.63% (+0.11% on Friday).

Briefly on meme stocks, GameStop finished the week up +27.2%. That is despite substantial losses on Friday (-19.7%) following an announcement of plans for the firm to sell up to 45 million shares. They started the week at a price of just under $17.5, before more than tripling to just over $60 at their peak early Tuesday and then slumping back at $22.2 at the end of week. The meme-stock rally also petered out elsewhere. For example, AMC Entertainment fell -5.17% on Friday, although was still up +51.2% from last Monday’s open.

The broader strength in US equities was initially helped by investors increasing the amount of rate cuts they were expecting this year following the slight downside surprise in the headline April US CPI print on Wednesday. That said, this trade saw some retracement in the latter half of the week, with the amount of Fed cuts expected by year-end rising from 41bps at the start of the week to 52bps on Wednesday, before falling back to 44bps by Friday’s close. That retracement was greater for the ECB, with investors trimming the number of cuts expected by December by -5.3bps on Friday to 67bps from a peak of 75bps on Wednesday (and 69bps a week earlier).

This pattern also resulted in somewhat different sovereign bond moves on either side of the Atlantic. Yields on 10yr and 2yr Treasuries fell -7.5bps and -4.1bps respectively over the week, despite a sell-off on Friday (+4.6bps and +3.0bps respectively). Over in Europe, yields on 10yr bunds traded flat on the week (-0.1bps) with a sell off on Friday (+5.6bps) reversing earlier gains.

Lastly, in commodities, gold recorded a second consecutive week of gains, with a +2.32% increase (+1.39% on Friday) leaving it at another all-time high of $2,415/oz. In oil, prices recovered from two-month lows helped along by falling US inventories. Brent crude rose +1.44% to $83.98/bbl (+0.85% on Friday), and WTI rose +2.30% to $80.06/bbl (+1.05% on Friday).

Via Schiff Gold,

Last week, Peter debated Steve Hanke, professor of economics at Johns Hopkins University, on inflation, the debt crisis, and the future of the dollar. David Lin hosted the debate on The David Lin Report and provided moderation for the event. While Peter and Hanke have their disagreements, both ultimately agree that the United States is in rough fiscal and monetary shape, and terrible monetary policy played a key role in getting it there.

The debate gets off to a fiery start when Peter and Hanke clash on inflation. First, Peter explains the crux of the problem:

“The Federal Reserve that ends up monetizing all that government debt— that is what’s driving the problem. And I think ultimately, as our budget deficits are exploding, it’s going to cause a big loss of confidence in the dollar, in U.S. treasuries. And so as the dollar starts to fall, that puts even more upward pressure on consumer prices because the dollar now has less value internationally.”

The two argue about how to define inflation:

“But that [an increasing money supply] doesn’t just cause inflation. That is inflation. What is being inflated is the money supply. You go back and get an old dictionary. Even in the 70s, you get a dictionary, Webster’s Dictionary, look up inflation and it says ‘an expansion of the money supply.’ And it’s also money and credit. Rising prices are a result, a consequence of inflation. They are not inflation, and they do not cause inflation. They are a byproduct of inflation.”

Peter claims the only way out of the current crisis is for the Fed to lean in even more to taxation via inflation:

“Nobody wants to see government spending cut dramatically. Nobody wants the US to have to honestly default on its debt. … I mean, if they raise taxes on the rich who are already paying a tremendous amount of taxes, I don’t know how much additional revenue they’re likely to get. In fact, they may even lose revenue, depending on how they do it. What we need is consumption-based taxes, like a national sales tax or a higher payroll tax. But no one’s going to vote for that!”

Hanke stresses that inflation comes solely from monetary policy, while Peter emphasizes that fiscal and monetary policy are intertwined:

“The Fed enabled the deficit spending. The Fed should have been more independent. They should have had much higher interest rates. They never should have done quantitative easing. They should be putting pressure on Congress to cut the deficit spending, just like Volcker used to do. They’re not doing it. … It takes two to tango.”

Hanke skewers the political class for deflecting the blame for inflation:

“I’m in a clarifying mood here, and that is that the idea and the propaganda that was put out by the Fed and the White House and the Congress that non-monetary factors caused the inflation problem that we’ve gotten ourselves into. That Putin oil, supply side shocks, all this rubbish— and it’s pure rubbish. What caused it is the explosion in the money supply that went up at the peak, 27% year over year, in early 2021. We’ve never seen it that high before. And as night follows day, when the money supply explodes like that with a long and variable lag, you’ll get inflation.”

Peter thinks it’s too late to stave off a recession, and Americans can feel it:

“I believe we’re in a recession. I just don’t believe a lot of the numbers that we get from the government. I know that the Great Recession of 2008 — it began in December of `07, but they didn’t officially acknowledge it until December of `08. And they went back, and they revised an entire year’s worth of data to show that we had been in a recession for the entire year. And even up until mid-2008, most economists and Wall Street strategists didn’t see a recession coming, even though we were in the middle of the Great Recession. So I think something similar could be going on. And I also think that the weakness in the economy— this stealth recession— is the reason that Biden and Harris are so unpopular.”

Authored by Andrew Korybko via Substack,

Continued maritime exports to the Indian Ocean Region across the Baltic, Black, and Mediterranean Seas might be deemed strategically undependable due to tensions with the West, hence the need to pioneer a more reliable alternative.

Afghanistan’s acting Industry and Trade Minister Nooruddin Azizi told Reuters earlier this month that his country agreed with Kazakhstan and Turkmenistan to build a logistics hub in its northwestern Herat province, which he said will also facilitate the export of Russian oil to South Asia via road and rail routes. The outlet noted that he’s particularly optimistic about Russia exporting this resource to Pakistan in the coming future, though they’ve yet to reach a strategic energy deal despite several years of negotiations.

Even in the absence of one, it might be more convenient for Russia to export oil to India and other countries in its namesake ocean’s region via the North-South Transport Corridor’s Arabian Sea and Gulf ports, which Herat is connected to by the new railway to Iran’s border town of Khaf. Continued maritime exports to the region across the Baltic, Black, and Mediterranean Seas might be deemed strategically undependable due to tensions with the West, hence the need to pioneer a more reliable alternative.

Furthermore, the creation of that selfsame alternative right on Pakistan’s doorstep might incentivize its de facto military rulers to finally reach a strategic energy deal with Russia instead of continuing to dillydally indefinitely as a favor to their American patrons, thus unlocking their full trade potential. Azizi is optimistic that this might indeed occur after revealing on the sidelines of last week’s annual Russia-Islamic World Forum that he hopes to sign a transit deal with Russia, Pakistan, and Turkmenistan.

He also told Sputnik about his government’s vision of facilitating Russian oil exports to South Asia via Afghanistan that he earlier shared with Reuters, though Moscow has yet to confirm its participation in these plans, but that doesn’t mean that it isn’t interested. Talks with Pakistan are presumably ongoing behind the scenes as suggested by Azizi’s optimistic media claims, which adds more context to the possibility of Russia inviting Pakistan to participate in the “Outreach”/“BRICS-Plus” Summit in October.

The preceding hyperlinked analysis explains how this could inadvertently offend Russia’s decades-long strategic partners in India, while these three here, here, and here detail its pro-BRI policymaking faction that emerged over the past year and the influence that it’s exerting over these calculations. The relevance to the present piece is that this profitable opportunity might convince the Kremlin to invite Pakistan to the aforesaid summit with a view towards increasing the odds of clinching an energy deal.

Leaving aside the unintended consequences that this could have for Russian-Indian relations in the event that Prime Minister Narendra Modi skips the summit out of protest on whatever pretext, improved Russian-Pakistani relations could  lead to the Russian-mediated improvement of Afghan-Pakistani ones. It was analyzed in August 2022 that “The Taliban Envisions Russia Playing A Big Role In The Group’s Geo-Economic Balancing Act”, which is aimed at maintaining Afghanistan’s sovereignty vis-à-vis Pakistan.

It’s beyond the scope of the present piece to explain, but these two analyses here and here detail their spiraling security dilemma that brought them to the brink of war in early 2023 and still remains tense. If Pakistan at least partially liberates itself from the American yoke enough to finally seal its long-negotiated strategic energy deal with Russia, then it therefore follows that it would have to improve ties with Afghanistan as well in order to facilitate the planned large-scale transit of oil via that country.

Russia, which has equally excellent relations with both in spite of occasional disputes such as Moscow’s disappointment with the Taliban’s refusal to form an ethno-politically inclusive government that respects women’s rights and suspicions about Pakistan arming Ukraine, could naturally mediate these talks. Any successful outcome would reinforce Moscow’s “Ummah Pivot” from the past few years that can be learned more about here, here, and here, the last of which specifically covers its Afghan dimension.

Russia – or rather its rapidly emerging and newly influential pro-BRI policymaking faction – might calculate that these benefits outweigh the potential loss of soft power in Indian society that would occur if it invites Pakistan to October’s summit in order to set the above into motion. India’s defiance of the US’ sanctions threats over its newly sealed Chabahar port deal with Iran and reaffirmation of its interest in continuing to scale trade with Russia might convince it that the tangible consequences would be nil.

This latest possible development in Russia’s “Ummah Pivot”, which requires finalizing a long-negotiated strategic energy deal with Pakistan and then mediating an improvement in Afghan-Pakistani relations, largely hinges on Russia’s reportedly planned Afghan oil hub that Azizi was the first to publicly reveal. If substantive progress is made on this by summer’s end, then that’ll greatly raise the chances that Russia invites Pakistan to October’s summit, while a lack therefore would keep the odds at their present level.

While oil remains oddly muted amid yet another middle-eastern shock, the same can not be said for various precious metals and commodities which are soaring to start the week, and which according to Bloomberg’s Jake Lloyd-Smith, will make for a lively session in Europe and the US, with flow-through gains on the cards for mining-industry stocks that have already been put on edge as BHP Group bids to swallow (most of) Anglo American.

Copper and gold – the leading lights of the base and precious metals arenas – are in what Lloyd-Smith puts as “history making mode”, as both powered to record highs in early Monday trading. Here’s a handful of things to watch in what could be a compelling week.

• Copper: Everybody’s favorite base metal is benefiting from the fallout from a dramatic short squeeze on the Comex that plays straight into long-standing hype about global deficits to come given the energy transition. Still, some physical indicators remain weak, so watch to see if copper’s prompt spread — which has been mired in an ugly, bearish contango — narrows more this week

• Gold: The Godfather of metals is up +18% YTD and is positioned to challenge $2,500/oz. Its latest leg higher appears to stem from a return to usual drivers: real 10-year Treasury yields are coming off a three-week drop, the longest run in a year. A decent batch of Fedspeak, as well as FOMC minutes will help to set the tone

• Silver: is flexing its muscles with gold, up 12% last week and roaring higher again on Monday. Watch to see if the ratio to gold realigns with the long-standing average. That gauge is now back to ~75 , closer to the ~68 since the start of this millennium

• And finally for good measure, here is nickel too, which while not at an all time high yet, may get there soon.

Authored by Mike Shedlock via mishtalk.com,

I’m all in favor of hydrogen-powered plants to produce electricity if only we had cheap hydrogen. But we don’t and likely won’t.

A Bad Bet on Hydrogen Hype

Bloomberg cautions Europe’s Spending Billions on Green Hydrogen. It’s a Risky Gamble

Today, the bright yellow power plant tucked behind a graffiti-covered fence burns planet-warming gas to produce electricity. But if all goes to plan, it will one day switch to emissions-free hydrogen. It’s the first, tiny part of a dream energy system being sketched out by policymakers across Europe, who are banking on the green fuel to meet some of the world’s most aggressive climate targets. That dream rests on converting newly built polluting infrastructure to burn hydrogen, a fuel that’ll be many times more expensive than natural gas and that no one has figured out how to move safely and cheaply in bulk.

Governments and companies that are racing to meet net-zero deadlines but worried about energy security can still build billions of dollars worth of gas infrastructure as long as it’s “hydrogen-ready.” Nine of the world’s 10 biggest carbon polluters have published hydrogen strategies and incentives to grow the fuel’s use, which globally already exceed $360 billion, according to BloombergNEF.

Gas-dependent economies including Germany, the Netherlands, Spain, Italy and the UK are among Europe’s biggest proponents for using hydrogen and some have plans to use it to generate electricity. But there’s no official definition of what makes a plant hydrogen-ready, opening the door for greenwashing. For power plants, burning hydrogen hasn’t even been tested at scale.

“There has not yet been any measurable progress in the construction of hydrogen-ready, gas-fired power plants,” said Eric Heymann, an economist at Deutsche Bank Research.

Then there’s the problem of moving hydrogen around. The Leipzig plant isn’t hooked up to the grid (and hasn’t yet set up its own electrolyzers), which means the highly combustible fuel will have to be trucked in until the second part of the government’s grand plan comes to fruition. It’s building a €1 billion liquefied natural gas terminal in Brunsbuettel, a town along the North Sea, that will initially import LNG but be designed to also handle futuristic clean fuels.

Hydrogen can only be liquefied at -253C (-423F), well beyond the capabilities of today’s LNG ships. So Germany is planning to import hydrogen in the form of liquid ammonia, a combination of hydrogen and nitrogen that can more easily be turned into a liquid. But ammonia is toxic and handling requires better ventilation systems. Many components in the terminal, including control valves and fire and gas sensors as well as inline devices — most of which have not been tested with ammonia — will also need upgrades, according to Fraunhofer ISI, an energy think tank.

Not Viable But Full Speed Ahead

Germany doesn’t have an ammonia pipeline network and there are limitations to moving it via trucks on an industrial scale because it’s hazardous. That means ammonia will have to be converted back into hydrogen, yet there’s no economically viable technology currently available to do that. The terminal’s operator said it will discuss alternative strategies if none emerge by next year.

Wind and solar produce clean electricity — a commodity the world already uses. Green hydrogen, on the other hand, will require building more solar and wind farms when, in many cases, it would be simpler to just use that clean energy directly. By the time hydrogen is made, stored and burned to make electricity again, there’s nearly 70% less energy than at the start — and the cost has tripled.

Plans Only Exist On Paper

For the most part, the plans only exist on paper. That’s because they only work on paper.

A trial in the UK was cancelled when people made an uproar after learning they would have to replace their furnaces and stoves for new hydrogen appliances.

That does not apply to the situation discussed above which proposes burning hydrogen to produce electricity. However, there is a 70 percent loss of energy in the conversion from hydrogen to ammonia then back to hydrogen to burn it.

This makes no sense anywhere. Nonetheless, Germany is spending $20 billion to make electricity plants “hydrogen ready”.

Wasting $20 billion is a monthly occurrence in the Biden administration, but that’s a lot of money to Germany which unlike the US has budget rules.

China Shock

Germany is feeling the pinch of China shock. But the US is on deck too. A global trade war looms.

For discussion, please see China Shock II Is Coming, the EU Will Be Hit Hard, Then the US

Germany has too much else to worry about to waste money on absurd projects.

Baltimore officials announced that the “refloat and transit” of the container ship that toppled the Francis Scott Key Bridge nearly two months ago will begin around 0500 ET on Monday. 

This is video of what the #KeyBridgeCollapse site looks like today. You can see the progress—but there’s still a chunk of the Beltway on the Dali. You can also see the massive cut pieces of steel from the old Key Bridge on a salvage barge. @wjz pic.twitter.com/Rd3cSGpFfY

— Mike Hellgren (@HellgrenWJZ) May 17, 2024

Unified Command wrote in a Saturday statement:

Optimum conditions call for the transit of the M/V Dali to commence at high tide, predicted to be Monday at 5:24 a.m. The vessel will be prepared at 2 a.m., allowing the M/V Dali to catch the peak high tide for a controlled transit.

Five tugboats will tow and push the Dali about two and a half miles to the Seagirt Marine Terminal in the Port of Baltimore. The 984-foot, 106,000-ton ship will travel at one mph to the marine terminal and take an estimated three hours. 

 Maryland Gov. Wes Moore said on Sunday that the deep water shipping lane will reopen by the end of the month.

 “I’m proud that we’re on track that by the end of May we’ll have that federal channel reopened,” Moore said on NBC’s Meet the Press, adding, “And within days, we’re going to have that massive vessel, the Dali, out of that federal channel.”

The collision of the Dali with the bridge in the early hours of March 26 has caused severe disruptions at the port and the local economy. This incident underscores the need for state and federal governments to increase protections for critical infrastructures. 

The FBI and Coast Guard are investigating what caused the ship’s loss of propulsion system minutes before the bridge strike. 

Authored by Steve Watson via modernity.news,

A Congolese man who was previously held up as an example of successful migrant integration has been jailed for only nine years in Germany for raping his own mother and beating her almost to death.

The German outlet Nuis reports that 30-year-old Moise Lohombo was sentenced by the Wiesbaden District Court, with the judge barely being able to believe what he had read in the case file.

The report notes that Lohombo, just been released from prison for drug offences last August, returned to an apartment he shared with his mother, who is only 12 years older than him, and proceeded to threaten her at knifepoint to have sex with him.

In an act of desperation, the mother offered him money to spend on a prostitute, the report further notes.

Lohombo then proceeded to rape his own mother while punching her repeatedly in the face. He then called an ambulance and fled.

Investigators noted that they found the apartment walls covered in blood spatter, which Lohombo had attempted to clean off.

The report further details that the mother miraculously survived after being treated for severe brain bleeding. She also suffered psychological trauma and expressed anxiety that her own son may have impregnated her.  

The court found the migrant guilty and rejected a plea to incarcerate him in a psychiatric institution.

The only thing Lohombo said during the trial was “I don’t know how this happened,” according to the report.

It also details how Lohombo was featured in an article in 2017 in the Deutsche Handwerkszeitung newspaper as a migrant who had turned his life around in Germany after arriving from Congo aged 8, turning away from previous violence and crime and completing an apprenticeship as a baker and then training to be a professional boxer.

The piece described Lohombo as “a charming, friendly young man who enthusiastically shows pictures of his bull terrier dog Betty on his cell phone.”

It further described Lohombo’s life as having “ups and downs” and claimed he had “literally fought his way through” and left his “youthful sins” behind.

That certainly did not age well.

As we have noted, recent German government statistics show that 41 percent of all crime suspects are foreigners, despite them making up a much smaller percentage of the population.

Violent crimes, especially knife attacks and rapes, have increased exponentially.

As we also highlighted last week, a German politician was found guilty of ‘incitement’ by a district court and fined $6000 after she posted a link to the same government statistics on crimes committed by migrants, specifically rape, and asked why they are so disproportionately high.

A recent survey found that seven in ten citizens of European countries believe there is too much unchecked immigration. Among Germans, the number was 77 percent.

This also dovetails with another stunning poll out of Germany that finds widespread opposition to mass migration across the board.

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