The US Commercial real estate crisis – which according to Jim Cramer “isn’t going to destabilize the system” thus guaranteeing another global crash – has crossed the Atlantic and made landfall in Sweden where commercial landlord SBB – one of the most-owned stocks in Sweden – saw its share price crater to the lowest level since 2018 years after the company announced plans to postpone a dividend and cancel a rights issue intended to shore up its finances.

Shares in Samhallsbyggnadsbolaget i Norden AB — as SBB is formally known — plummeted more than 20% and have fallen 14 out of the last 15 trading days. Today’s plunge compounded the losses from Monday when the stock cratered 20% following a credit rating cut to junk by S&P Global Ratings. Its market capitalization has dropped from over $17 billion in late 2021 to less than $1.5 billion, a historic collapse for its more than 260,000 shareholders.

In a statement issued at 11 p.m. Stockholm time on Monday, the property company said that “the market reaction thereafter has made it impossible to carry out the rights issue of ordinary D-shares on the intended terms”, Bloomberg reports, noting that it is seeking to push back its dividend payment date until next year’s shareholders meeting “at the latest.” The Stockholm-based company also said it will not carry out the issuance of 2.6 billion kronor ($260 million) worth of new class D shares.

The dividend cut comes one day after SBB’s credit rating was cut to junk by S&P Global Ratings, which warned a further downgrade is possible if the company is “unable to secure sufficient funding sources in the next couple of quarters to sustainably cover its short-term financial obligations.” The ratings firm said it no longer believed the landlord could meet its thresholds for investment-grade debt; the downgrade adds to the company’s costs by triggering so-called “step-up” coupons on its existing debt. That adds up to an additional 285 million kronor in financing costs.

The developments raise serious questions for one of Sweden’s biggest landlords as it grapples with an $8.1 billion debt load amid sharply rising interest rates and ballooning credit spreads. It’s also symptomatic of the problems facing the wider commercial property sector in Sweden.

The collapse in SBB’s price is also a crushing blow for CEO Ilija Batljan, who has repeatedly assured investors he would take action to defend the company’s credit profile. SBB derives most of its rental income from regulated residential properties in the Nordic region.

Similar to their US peers, Swedish landlords must roll over $40.8 billion of maturing bond debt over the next five years, a quarter of which falls due in 2023. They have been viewed as the canary in the coal mine for European real estate because much of that debt is short term and floating rate, making it particularly exposed to interest rates.

Analysts at Arctic Securities AS welcomed the plan by SBB to improve its liquidity position. “These two decisions, pausing the dividend payout and cancelling the planned issue of D-shares, are as a whole positive for SBB shareholders,” real estate analyst Michael Johansson said by phone.

“The problem for SBB is that the dividend has already been voted through at the AGM, so their only option is to pause it,” he added.

Others were less sanguine: “This will be yet another negative overhang for the sector,” even if SBB’s situation doesn’t directly correlate with its Swedish peers, said Molly Guggenheimer, an equity strategist at Danske Bank in Stockholm; he added that the canceled share issue was “illustrative of SBB’s current lack of access to capital markets, increasing refinancing risks.”

Carnegie downgrades SBB to sell from hold, with analyst Fredric Cyon saying downside risks remain high, and that corporate actions are required to improve the balance sheet. “Further disposals are an option, but we doubt this would be enough to restore investor confidence,” Cyon writes, cutting price target to SEK7 from SEK13.

The plunge in SBB hammered European real estate stocks which dropped 3.2%, led by Swedish firms with Sagax -7.8%, Balder -7.6%, Wallenstam -5.9%, Fabege -4.4%. European sector peers falling include Kojamo -5.3%, Aroundtown -5.1%, Safestore -5%, Tritax Big Box REIT -4.8%.

A 15% decline in residential home prices in Sweden – one of the world’s worst property routs – exacerbates the challenges facing the real estate sector more broadly by making sales less lucrative. But with banks tightening lending and bond markets all but closed for lower rated issuers, few options are available.

In a sign of the tension, the statement was issued close to 11 p.m. local time on Monday following an emergency meeting of SBB’s board.

Authored by Mark Tapscott via The Epoch Times,

National Institute of Health (NIH) officials have re-activated a previously terminated $576,290 federal grant to EcoHealth Alliance to study how outbreaks of deadly viruses like SARS, MERS, and now COVID-19 originate from wildlife and transfers to humans.

The move has prompted one Republican lawmaker to demand that NIH explain the decision she described as “absolutely reckless.”

“Most emerging human viruses come from wildlife, and coronaviruses in particular represent a significant threat to public health and biosecurity in the U.S. and globally, as was demonstrated by the SARS, MERS, and COVID-19 outbreaks,” is how the NIH describes the purpose of the renewed grant.

The renewed grant is to be administered through the NIH’s National Institute for Allergies and Infectious Diseases (NIAID), the research arm headed for several decades by the recently retired Dr. Anthony Fauci. The description was made public by Rep. Morgan Griffith (R-Va.), who is chairman of the House Energy and Commerce Committee’s Oversight and Investigations Subcommittee.

“This project seeks to understand what factors allow bat-origin coronaviruses, including close relatives to SARS, to jump into the human population by studying their evolutionary diversity, the patterns of spillover in people that live in high-risk communities, and analyzing characteristics of bat coronaviruses that could allow them to emerge,” the grant description continues.

EcoHealth issued a celebratory statement declaring that the NIH decision “reflects a reversal of the previous termination and suspension of a [grant] awarded in 2019, but halted in April 2020 due to concerns about continuing collaborative laboratory research with the Wuhan Institute of Virology (WIH).”

Several U.S. agencies and independent scientists have concluded that a leak from within the WIV lab is the most likely source of the COVID-19 pandemic that, to date, has killed more than 1.1 million Americans since January 2020 and in excess of six million people world-wide.

Dr. Anthony Fauci, director of the National Institutes of Allergy and Infectious Diseases, testifies on Capitol Hill in Washington on Sept. 14, 2022. (Drew Angerer/Getty Images)

EcoHealth defenders, including Fauci, have argued that the most likely origin of the COVID-19 virus is through a transference from bats to humans via sale of the creatures’ meat in a market near WIH.

The WIH lab has been the scene of extensive gain-of-function research by Chinese scientists, much of it funded in whole or part prior to the pandemic by NIH grants through EcoHealth. The NIH has awarded seven grants totaling more than $4.1 million to EcoHealth to study various aspects of SARS, MERS, and other coronavirus diseases.

Fig. 1. Risky research methodology used by EcoHealth Alliance, WIV, and their collaborators to attempt to create bat vaccines. There’s no way of knowing in advance the pandemic potential of unnatural, chimeric SARS-like viruses created in this workflow.

EcoHealth said in its statement that its agreement with NIH requires researchers to conduct all of their studies outside of China and in conjunction with a Singapore-based health facility, as well as other measures designed to address concerns about the lack of proper safety procedures at WIH and its connection with the Chinese military.

“The specific aims have been revised in consultation with NIAID and NIH staff, and respond to any ongoing concerns by removing all on-the-ground work in China and all recombinant virus culture or infection experiments. We have also agreed to all additional oversight mechanisms applied by NIH,” EcoHealth said.

“The renewed work will involve collaboration only between EcoHealth Alliance and the Duke-National University of Singapore Medical School, with the following specific aims: (1) identifying high-spillover risk bat SARSr-CoV sequences in southern China and assessing drivers of recombination; (2) conducting community- and clinic-based surveillance of archived pre-COVID-19 human samples to identify SARSr-CoV spillover events, routes of exposure, and potential public health consequences; and (3) characterizing SARSr-CoV binding, ability to evade therapeutics/vaccines, and identifying spillover hotspots,” the EcoHealth statement continued.

Security personnel keep watch outside the Wuhan Institute of Virology during the visit by the World Health Organization team tasked with investigating the origins of COVID-19, in Wuhan, Hubei Province, China, on Feb. 3, 2021. (Thomas Peter/Reuters)

Those revisions may not satisfy congressional critics of NIH’s decade of funding for such research by EcoHealth.

“It’s absolutely reckless that the NIH has renewed a grant for EcoHealth Alliance given their negligence and the breach of their contract with the NIH on the coronavirus research done at the Wuhan Institute of Virology. It is now believed likely that COVID-19 was the result of a lab incident at the Wuhan Institute,” Griffith said in a May 8 statement.

“From my observations, EcoHealth Alliance has not been contrite about their failures. And even worse, they have refused to cooperate with Congress in our attempts to get information about the research they were doing at the Wuhan Institute,” Griffith said.

“Until they can demonstrate a willingness to work with Congress to resolve outstanding questions and fulfill all of the terms of their federal contracts, paid for with American taxpayer dollars, all funding should remain suspended, and no new contracts should be awarded,” he said.

Griffith, alongside House Energy and Commerce Committee Chairman Cathy McMorris Rodgers (R-Wash.) and Subcommittee on Health Chairman Rep. Brett Guthrie (R-Ky.), pushed NIH in an April 25, 2022, letter to Acting Director Lawrence Tabak to investigate EcoHealth President Peter Daszak for multiple alleged failures to comply with federal grant regulations and stipulations.

Peter Daszak, right, the president of the EcoHealth Alliance, is seen in Wuhan, China, on Feb. 3, 2021. (Hector Retamal/AFP via Getty Images)

“Our review of EcoHealth Alliance’s reports about its humanized mice experiments at the Wuhan Institute of Virology (WIV) using funds from the National Institutes of Health (NIH) shows pervasive discrepancies, inconsistencies, and omissions in its progress reports and renewal application that raise serious questions about scientific and ethical misconduct, violations of NIH policies and regulations, and possible false statements and fraud.”

A NIH spokesman did not respond to The Epoch Times’ request for comment.

FTX founder Sam Bankman-Fried asked a federal court in Manhattan Monday to dismiss 10 out of 13 criminal charges against him linked to the collapse of the failed crypto exchange. SBF has pleaded not guilty to fraud, conspiracy, campaign finance law violations and money laundering.

In a Monday filing, SBF’s lawyers argued that the US government had issued the original indictment against their client on Dec. 9 in a “classic rush to judgement” less than a month after the firm’s bankruptcy, and that several of the charges failed to properly state a crime.

“Rather than wait for traditional civil and regulatory processes following their ordinary course to address the situation, the government jumped in with both feet, improperly seeking to turn these civil and regulatory issues into federal crimes,” his lawyers wrote.

According to the letter, a campaign finance charge must be dismissed because it wasn’t included in the surrender warrant signed by the Bahamian government for his extradition.

SBF’s lawyers also attack the DOJ for bringing new charges against their client that alleged criminal conduct far beyond the Original Indictment and which are improperly brought.”

“Even if they are considered, the charges should be dismissed as legally flawed,” they added.

After Mr. Bankman-Fried properly consented to a simplified extradition procedure, the Bahamian government agreed to release him to U.S. authorities and issued a warrant of surrender specifying that he be tried on seven of the eight counts in the Original Indictment––but not the count relating to alleged campaign finance violations. Despite this clear direction from the Bahamian government, the Government now seeks to have Mr. Bankman-Fried tried on that charge as well.

The other charges they are attempting to have dismissed include those related to the unlicensed transmitting of money, bribery and bank fraud.

“The market crash took down many of the major players in this sector, not just FTX,” wrote the attorneys, noting that the broad market rout in 2022 hit many other cryptocurrency exchanges.

SBF’s trial is set for Oct 2. His right-hand(job) woman, former Alameda CEO Caroline Ellison and FTX co-founder Gary Wang both pleaded guilty in December to various federal wire fraud and conspiracy charges.

By Michael Every of Rabobank

Bloomberg notes US firms are embracing higher prices even if it means sacrificing volumes; the White House says US airlines must compensate for delayed or cancelled flights, which will make flying more expensive; a Financial Times op-ed argues no firm should have more than 25% of any market, and no country rely on any other for more than 25% of imports or exports, to tackle monopoly power and geopolitical vulnerabilities driving inflation; the EU says it will sanction some Chinese firms supporting Russia, which China says will trigger a response in kind; China started an anti-spying crack-down on foreign consultants; Canada kicked out a Chinese diplomat for allegedly planning to intimidate a politician; Brazil announced a friend of President Lula, who wants lower rates and doesn’t want to trade in the US dollar, will head its central bank – backing the buck; and it was shown that the EU has dramatically reduced its enforcement of its internal level playing field, with protectionism rising, potentially risking its key achievement. To cap it all off, Noah Smith argues why the US must fight the economic Cold War 2 even if requires an enormous shift in priorities and resources.

Against this turbulent, structurally inflationary backdrop some in markets look like Wile E. Coyote holding up a sign with the word “TRANSITORY!” on it, rather than “HELP!”; others are running off a high cliff while chasing the Road Runner going “beeps beeps!”

On which, the Fed is warning of a credit crunch risk after the recent US banking turmoil. Vice-Chair Goolsbee, a dove, says that he is looking at data and credit conditions. The Fed’s bi-annual Financial Stability Report warns of the same tail risk: you would have to be blind not to see it.

Yet the Senior Loan Officer Opinion Survey on Bank Lending Practices released yesterday was more nuanced than some dramatic headlines suggest. Q1 saw bank respondents report tighter standards and weaker demand for commercial and industrial loans to all firms; and for commercial real estate loans; and residential real estate loans except GSE-eligible and government residential mortgages, which are the majority; and for home equity lines of credit; and for all consumer loan categories except credit cards. Banks widely reported expecting to tighten their lending standards over the rest of the year – and one can assume demand for loans will weaken further too. Yet none of the numbers in the data tables showed a spike in tightening credit or a collapse in demand, just moderate shifts.

Yes, we need to keep an eye on this area: but so far it looks to be what the Fed would want to see after having hiked rates to 5.25%. Indeed, some even think the Fed is happy to outsource tightening to banks to prevent having to hike to 6 or 7%, now that outsourcing of supply chains is not what it once was.

Meanwhile, Chinese bank stocks are soaring as Bloomberg reports a “trading frenzy” underway on a “tide of optimism not seen since the nation’s 2015 equity bubble” as traders bet Beijing will let state-owned firms have access to more capital and play a bigger role, despite them previously being seen as the least efficient users of capital. In which case, if the US is indeed to fight Cold War 2, and if its banking sector does wobble, wait and see how enthusiastically markets react when we get some form of US mirroring of these Chinese actions, as D.C. has in other areas so far.

In short, we aren’t yet at a Minsky Moment, despite headline claims to that effect; which as I pointed out to a friend yesterday, come from people who haven’t ever read any Minsky. After all, if one takes the extreme physical and intellectual effort (for a market analyst) to Google ‘Minsky’ one sees that his economic influences were:

• Henry Simons, who supported abolishing fractional reserve banking;

• Karl Marx, who spoke of “fictitious” vs. “productive” capital, as China does today;

• Joseph Schumpeter, whom we lazily associate with “creative destruction” rather than his sweeping economic history and latter views on Quadragesimo anno and the ‘common good’;

• Wassily Leontief, who underlined the paradoxes of international trade theory;

• Michał Kalecki, who called negative rates in 1943 if capitalists don’t recycle profits into productive investment or wages;

• John Maynard Keynes, who said in the 1930s: “The decadent international but individualistic capitalism, in the hands of which we found ourselves after the War, is not a success. It is not intelligent, it is not beautiful, it is not just, it is not virtuous – and it doesn’t deliver the goods. In short, we dislike it, and we are beginning to despise it.” Which sounds like the ‘New Washington Consensus’ just offered by the White House;

• Irving Fisher, who knew a thing or two about the stupidity of asset bubbles; and

• Abba Lerner, one of the intellectual founders of MMT.

Do you think many market participants have any knowledge of any of this easily accessible knowledge, or are they just going “beeps beeps!”?

Take all of the above views together with the news and opinion-flow I started this Daily with and consider what the real tipping point is. It’s the neoliberal global architecture, in one form or another. However you think markets work, you are likely wrong if more of that architecture crumbles ahead.

So, yes, we are close to a ‘Minsky Moment’ of sorts, I suppose. Just not the kind those hoping for imminent Fed pivots are looking for.

Authored by Ven Ram, Bloomberg cross-asset strategist,

Front-end Treasuries have fallen since Friday’s non-farm payrolls data and Monday’s much-anticipated Senior Loan Office Opinion Survey from the Fed. Still, the increase in yields can only go so far.

While markets were expecting a middling number on the jobs front for April, US employers were still hiring at full speed. Only three of 77 in Bloomberg’s survey had imagined the number would be north of 250k, and coming hot on the heels of the banking turmoil, that expansion was particularly significant. Hourly earnings increased and the unemployment rate extended its decline from a multi-decade low. The Fed reckons that we need a jobless rate of 4.5% to align supply in the economy with demand, but we got a number that went the other way. Clearly, the long tail of the economy will continue to wag.

The SLOOS report proved to be long on excitement, but short on what it ultimately delivered: US lenders tightened their standards in the first quarter, but not by a whole lot. The more interesting read-out showed the weakest demand for credit among large and mid-size firms since 2009.

So it wasn’t a shocker to see two-year yields clawing their way back to 4%, some 20 basis points higher than before the payrolls data.

Even so, front-end Treasuries may find the equilibrium range has moved lower to between 4.00% and 4.20% – and there are enough factors that will support bonds.

President Joe Biden is due to meet Congressional leaders later Tuesday, with Senate Republican leader Mitch McConnell warning that there is no “secret plan” to solve the debt-ceiling impasse.

While we have seen this movie before, the uncertainty will do the economy no good and push it that much closer to a recession.

For now, front-end yields may nudge higher, but there isn’t too much fuel left in the tank.

Social media posts by the mass murderer who killed eight innocent shoppers and wounded several more at a huge outdoor mall in Allen, Texas reveal that he scouted the site of his crime for weeks in advance, and had a penchant for Nazi imagery and ideology.

Just after 3:30 on Saturday afternoon, 33-year-old Mauricio Garcia approached a busy sidewalk at Allen Premium Outlets in a silver sedan, exited, and began killing people with an AR-15 rifle. He was shot to death by a police officer who was in the vicinity to handle an unrelated matter.  

Now, investigators and journalists poring over Garcia’s social media posts are finding that the Hispanic man embraced Nazi themes — to the extent of adorning his body with swastika and “SS” tattoos — and also lashed out at women.  

In one of his posts, Garcia argued that Latinos are white people, last month offering as an example Nick Fuentes, who has a half-Mexican father. “I think I even read in the news Hispanics could be the new white supremist [sic],” he wrote. “Just the other day this black dude told me the line is blurring. He can’t tell the difference anymore. Someone would look white but their [sic] actually Hispanic.”

For weeks leading up to his attack, he posted dozens of photos of the Allen Premium Outlets, as well as screenshots of Google data that appeared to have highlighted the busiest hours for the enormous shopping center about 25 miles north of Dallas.

On the day of his murder spree, he uploaded a video showing him removing a Scream mask and asking, “Not quite what you were expecting, huh?” 

In other posts, he reportedly: 

• Praised the female-to-male trans nut-job who killed six people at a Christian school in Nashville

• Wrote approvingly of Adolph Hitler

• Said he was originally from Mexico

• Described mass shootings as a sport

• Posted receipts indicating he spent over $3,200 on three firearms in June

• Shared a photo of a tactical vest with an RWDS (Right Wing Death Squad) patch; this was posted before the shooting

• Spewed anger toward women in a manner consistent with what’s found in “involuntary celibate” discussions; he also applauded a 2014 murder spree by an “incel”

• Said Jews had “engineered society so that men cannot mate with a woman” 

According to the US Army, Garcia enlisted in June 2008 but was ejected after three months due to an unspecified mental health condition. 

He had been living in an extended-stay hotel, the address of which was on his drivers license. In his room, authorities found ammunition, a holstered knife and handcuffs and several handwritten notes.  In one of his last social media posts, he said his mental health was beyond the point where a psychologist could do any good. 

Meanwhile, in a surprise move on Monday, the Texas House Select Committee on Community Safety voted 8-5 to advance a bill that would make it illegal for Texans under age 21 to buy “certain semiautomatic rifles,” specifically, those with a caliber greater than .22 and which accept detachable magazines. The May 2022 massacre at Robb Elementary School in Uvalde, Texas was perpetrated by an 18-year-old. 

By Bill Blain, author of Blain’s Morning Porridge

Stagflation is much more likely than Deflation

“Hope is never a strategy.”

This morning: The Market Commentariat think deflation will counter inflation, rates will fall, and recession will be limited. The world is more complex – supply side factors are more volatile. Stagflation is a more likely outcome than recession.

I seem to have developed a reputation as an uber-bear. On recent Radio/TV appearances I’ve been greeted as a bad-news Cassandra, always warning of economic catastrophe approaching around each and every corner. Nonsense. I am a happy person with a bright and sunny disposition who only sees joy and happiness in the spring sunshine and bluebell woods…. (Sarcasm alert.) I do believe things are never as bad as we fear…  but that doesn’t get you air-time! The critical point is we need to understand the reality – and my concern today is markets are completely misreading the threat-board. Its worse than they assume!

Why? This week will be dominated by inflation. Just how sticky will US core inflation look when we get CPI tomorrow? The market risk is inflation across the West proves more persistent than the market bulls have been praying for. We might be headed for something different and much worse– recession and sticky prices in some economies; Stagflation!

Yesterday, I noted a number of banks quietly rowing back expectations Central Banks are about to start reversing the recent run of rate hikes – putting cuts back to 2024. Macro hedge funds are shorting rate cuts. What do they know that we don’t? They’ve got a view on sticky inflation and how central banks will respond.

Deflation is a hope – not a reality.

The professional market commentariat of economists, analysts and guessors, are largely talking about deflation – that interest rates will shortly come down in line with inflation as a result of downwards pressure on prices. Reasons for them to think inflation will fall include the slowing economy, declining demand for goods and services as a result of crashing discretionary consumer spending, but also that recession will be limited by the reopening of the global economy and supply chains post-Covid (particularly in China), boosting the supply of cheap goods. There is a general expectation spikes in food and commodity prices will reverse in much the same way as energy prices. And, the collapse in “broad money” “M2” is seen by the monetary augurs as proof positive that prices must fall.

Conventional thinking for unconventional times.

Wishing for deflation to magic away the present raft of troublesome economic issues is not a good strategy. It falls into the same bucket of misplaced hopes as Central Banks telling us how “transitory” inflation would be last year. Conventional wisdom says inflation can only be addressed by higher rates – any phule know that! But real interest rates are still negative – clearly unaddressed.  (Sadly, the truth is employing economic austerity to pray away stubborn inflation that’s been triggered by a series of exogenous shocks isn’t likely to work – a lesson in political economy we really need to talk more about..)

To figure out what comes next in inflation and thus interest rates, we need to understand the current crises in supply and demand, and the fundamental causes of the current market instabilities and uncertainties. The market is full of contradictory signals.

Yesterday was a bank holiday here in the UK, but US 3 month Treasury-bills hit 5.2% (a 20-years plus record level). That was partially a reflection of fears a US debt ceiling shutdown will hit as early as next month, but also the reality of an inverted curve presaging recession. Warren Buffet told his audience at the annual Berkshire Hathaway jamboree a downturn is coming: “Get used to making less.” He has been selling stocks this year.

One analyst report informed me the collapse in container prices from Asia to Europe is profoundly deflationary, while another said it is normalising the volatility in shipping costs and a sign of a stabilising market. Taken in conjunction with the slower than expected pace of the Chinese economy, I humbly suggest it means less goods are being shipped. Global trade has changed – in line with changed geo-politics.

The economic reality of the last 25 years has been global deflation in the price of goods – primarily on the expansion of the Chinese and other Asian economies as cheapest-to-produce economies. Lower prices has had profound economic consequences on the West – pricing out domestic production in favour of imports. (Over the weekend I read how the UK is having to import the steel for new frigates from Poland – we allowed the strategic production of military grade steel to fall into abeyance.)

China’s priorities have changed. It’s no longer about growth to expand the economy and create jobs through exports, but about directing the economy towards rising domestic consumption. The simple reality is China is no longer the default cheapest-to-deliver manufacturer – and it will take years for new supply chains to establish that foregone production elsewhere as cheaply. (Look at Apple trying to shift production to India.)

What is inflation?

Inflation is a consequence of mismatched demand and supply.

We pretty much know what will demand will be – that’s why companies, banks and governments employ legions of researchers to measure and determine demand and thus what they produce and supply. The demand side of the economy changes slowly – in line with demographics. When we get a paradigm shift, as we are seeing in the switch from ICE to Electric vehicles, it has all kinds of complex economic consequences on supply chains and materials costs.

Supply is more volatile. It’s the cost of producing things that’s the primary variable in an economy. Key components in production costs include the price of labour and materials. A key factor in what we buy is its relative cost of production – the cheaper it is to make, the more will be sold. (The China effect!) At present the global economy is still adapting to a succession of supply-side economic shocks:

• Covid
• Supply Chains
• Energy Spike
• Geopolitics

Each of these factors triggered a host of ancillary consequences – such as workers leaving the market or switching out of one sector to another, or redefining supply-chains. These are not “transitory” – they have long-term effects how the supply side of the economy works.

Post-Covid we had a brief demand side inflation spike, fuelled by money not spend during lockdowns, and economies reopening. We are now into the supply side inflation. Companies are being accused of artificially pushing up prices – but their material and energy costs have risen dramatically and become increasingly uncertain. Across industry I am hearing multiple supply chain issues that could take years to stabilise. For instance; in the aviation market the supply of parts is severely constrained, and combined with a shortage of engineers (many retired during Covid or left the industry), its taking months longer for planes to be serviced and maintained – thus pushing up costs.

At present the costs of labour remain elevated. We know that from both the resilient US employment reports – which keep surprising to the upside, and from the shortages of labour across all aspects of the economy in the UK. There is no downside pressure on wages from the slowing economy. As the current slew of strikes in the UK and across Europe highlight, workers are complaining they are not paid enough to meet basic needs.

What does it all mean: Deflation or Stagflation?

Strip if down to the basics and I doubt we are in a deflationary environment – that is just too simple a view of the complex global economy.

Global supply chain uncertainty and reinvention, shifting trade patterns, commodity volatility, and labour shortages will keep prices unstable for longer. I suspect inflation remains highly elevated for longer. Addressing it by cutting wages is not sustainable. Governments and central banks may need a rethink on wages – which will further fuel inflation. Therefore, in a slowing economy, when nations like the UK have stalled… Stagflation rather than deflation looks nailed on

Not an easy call..

Meanwhile… Elsewhere:

UK: I was asked whether we should worry about UK Gilts in wake of expected increased supply. My answer is no, but we should worry – because after the Tories were humiliated at the polls last week, the pressure on PM Rishi Sunak to pander to electorally pleasing policies from within his own party is increasing. There were even muttered rumblings of yet another revolution and his possible replacement. That would be yet another clear break of the UK’s Virtuous Sovereign Trinity of a stable currency, a sustainable bond market and competent politics – resulting in yet another Lis Truss style economic disaster. Watch this space.

Stripe: Last week I went off on a rant about Stripe and the impossibility of getting any help to resolve an issue trying to set them up on the Morning Porridge. I got an email direct from the CEO, and co-founder of the company – Patrick Collinson. He apologised for the problems and committed his senior leadership team to fixing the problem. It happened. They sorted it. Respect to him. I now a Stripe fan.

UK Coronation: The undoubted star of the Coronation was Princess Anne’s Red Hackle on her Admiral’s Hat. Seated directly in front of the Ginger Whinger, the hackle obscured his face for the whole event. Brilliant – someone on the production/planning team will get a gong for that.

Authored by Tom Mitchellhill via CoinTelegraph.com,

The number of Ordinals inscriptions on the Bitcoin network has witnessed another meteoric rise, almost doubling from 2.5 million to 4.78 million in just the last eight days. 

While the Ordinals protocol was initially used to mint images as non-fungible tokens (NFTs), users began to realize that they could use text-based inscriptions to create fungible tokens in a similar way to those minted via the ERC-20 token standard on the Ethereum (ETH) network.

The total number of Bitcoin Ordinals inscriptions since December 14. Source: Dune Analytics

These text-based inscriptions, now popularized as the BRC-20 token standard, have been the main cause of the massive uptick in Ordinals inscriptions on the Bitcoin blockchain.

As highlighted by Glassnode co-founder and chief technology officer Rafael Schultze-Kraft on Twitter, text-based inscriptions are now the most popular form of Ordinals inscription, with more than 2.8 million text-based inscriptions as of May 5.

8/ In fact, text inscriptions are now the most prominent Ordinal inscription type in the #Bitcoin network.

Text: 2.8M
Images: 650k
Video: 1.8k
Audio: 347
Other: 19k

Inscriptions dashboard: https://t.co/YKwAbthEXL pic.twitter.com/O12MZj0qLT

— Rafael Schultze-Kraft (@n3ocortex) May 4, 2023

More recent data from popular blockchain data hub Dune Analytics shows that since April 25, the overwhelming majority (99%) of all new Ordinals inscriptions have been text-based.

Ordinals inscriptions by type since December 14. Source: Dune Analytics

According to brc-20.io, a new tool that allows users to track BRC-20 tokens, there are currently a total of 14,200 new tokens hosted on the Bitcoin blockchain. Counted among the most popular Bitcoin-based tokens are “ordi”, “nals” and even a Bitcoin-based version of the now-notorious memecoin Pepe (PEPE) being listed at number 3 by total market cap.

The total number of BRC-20 tokens currently available. Source: brc20.io.

While the total market cap of BRC-20 tokens currently hover around the $700 million mark, digital asset investment firm Galaxy Digital asserts that the market for “Bitcoin NFTs” may reach $4.5 billion by 2025.

The rise of Ordinals over the last few months has continued to spark debate around whether Ordinals are ultimately a positive for the Bitcoin ecosystem.

Some Bitcoin proponents, such as Dan Held, claim that Ordinals offers a wider spread of financial use cases for Bitcoin, while more hardline Bitcoiners argue that Ordinals stray from the original vision of Satoshi Nakamoto, who intended for Bitcoin to be used as an electronic, peer-to-peer cash system.

Meanwhile, miners have enjoyed an enormous influx of revenue due to the transaction fees related to the burst of new activity on the network.

Despite Ryanair CEO Michael O’Leary’s prior detrimental comments on Boeing management, it seems the lifting of the global health emergency by WHO has prompted the Ireland-based airline to announce a huge purchase of Boeing’s largest 737 variant.

Ryanair said it plans to buy at least 150 Boeing 737 10 Max planes with options for 150 more.

The 150 planes in the firm order are worth more than $20 billion at list prices, but airlines generally receive significant discounts for such big orders.

Ryanair stopped negotiations for a big Max order in September 2021 because of a dispute over pricing.

Ryanair’s CEO Michael O’Leary said the new planes will replace older 737 jets in its fleet. The 150 additional jets it has optioned would allow it to fly more than 300 million passengers a year by 2034, he said.

Boeing shares are up over 2% on the news…

…and that is dragging The Dow (futures) higher (though still in the red for now).

Finally, we note that this move by Ryanair marks an important endorsement from one of the US manufacturer’s most important customers (and historically most critical) and highlights how carriers are willing to splurge on fleet upgrades again as travel rebounds.

Authored by Turner Wright via CoinTelegraph.com,

Following United States-based crypto exchange Coinbase announcing the launch of its global derivatives platform, key executives at the firm are meeting with industry leaders and policymakers in the United Arab Emirates.

In a May 7 blog post, Coinbase said CEO Brian Armstrong and some of the firm’s executive team planned to discuss the potential for the UAE “to be a strategic hub” for the crypto exchange. According to the company, it was working with regulators in the Abu Dhabi Global Market and Dubai’s Virtual Assets Regulatory Authority as part of efforts to potentially expand into the region.

“[The UAE is] exciting for us as a potential hub to build as well, an international hub for Coinbase that could serve not only in the Middle East but parts of Africa or other countries in Asia,” said Armstrong at the Dubai Fintech Summit on May 8.

“I think the U.S. right now is a little bit behind in terms of regulatory clarity and some of the rhetoric from the top.”

Great meeting with Minister of Economy H.E. Abdulla Bin Touq Al Marri in UAE 🇦🇪@Economyae pic.twitter.com/1zIH5dZFeB

— Brian Armstrong 🛡️ (@brian_armstrong) May 8, 2023

On May 2, Coinbase announced the launch of the Coinbase International Exchange, a platform offering crypto derivatives trading. The launch came amid the U.S. Securities and Exchange Commission potentially charging Coinbase with securities violations following the issuance of a Wells notice in March. Though Armstrong has sometimes been critical of regulatory clarity affecting digital assets in the U.S., he told shareholders in a Q1 earnings call that he had no intention of moving operations outside the country.

“The region is standing-out as a leader in the development of a web3 ecosystem, making it an attractive location to consider investing in,” said the Coinbase blog, referring to the UAE.

“The vacuum created by other notable jurisdictions means that international counterparts, such as the UAE, are racing to fill the regulatory gap.”

Before its Wells notice, Coinbase officials, including Armstrong, had met with U.S. policymakers to discuss crypto regulations in the country. Chief legal officer Paul Grewal said the firm had meetings with SEC representatives “more than 30 times over nine months” as of March but largely did not receive feedback on its proposals.

The UAE has steadily opened up opportunities for crypto firms, seemingly to draw in capital and jobs. Dubai established a legal framework for cryptocurrencies and set up the Virtual Assets Regulatory Authority in March 2022, taking advantage of the Emirates’ free-trade zones with separate rules and regulations.