In a day seeing relentless economic data barrage, moments ago the UMich delivered a second hawkish punch (the first being Waller’s hawkish remarks earlier in the day) when it unexpectedly showed that 1-year inflation expectations soared by 1% from 3.6% in March – the lowest print since April 2021 – to 4.6% in April, the highest since November 22. This was the biggest jump in 1-Year inflation expectations since May 2021, and a number which quickly caught the market’s attention as it confirms Waller’s view that near-term inflation expectations – really a proxy for gas prices – are about to take off again (courtesy of OPEC).

According to UMich, these expectations “have been seesawing for four consecutive months, alternating between increases and decreases” as uncertainty over short-run inflation expectations continues to be notably elevated, indicating that the recent volatility in expected year-ahead inflation is likely to continue.

That said, the bumpiness in inflation expectations is limited to the short run as long-run inflation expectations remained remarkably stable: they came in at 2.9% for the fifth consecutive month and have stayed within the narrow 2.9-3.1% range for 20 of the last 21 months.

Curiously, while one would expect a spike in near-term inflation expectations to result in a drop in sentiment, that was clearly not the case because according to the latest goalseeked numbers, in April UMich consumer sentiment not only rose across the board but beat all expectations!

• Sentiment 63.5, beating exp. 62.1, Last 62.0
• Current Conditions 68.6, beating exp. 66.0, Last 66.3
• Expectations 60.3, beating exp. 58.5, Last 59.2

“These patterns reveal that consumers are fully aware that inflation has softened from its peak, but that high prices continue to make them feel less financially secure,” Joanne Hsu, director of the survey, said in a statement.

Consumer sentiment has been generally subdued as inflation ebbs only slowly, and higher interest rates have made buying both everyday items and bigger purchases much harder. Data out earlier Friday showed US retail sales fell for a second month in March.

Paradoxically, buying conditions for durable goods also improved as consumers noted some disinflation for car . Still, about 42% of respondents blamed high prices for eroding their personal finances, the most since December.

And something else curious: despite the alleged spike in inflation expectations, the number of spontaneous mentions of high prices dropped again, confirming that there is something quite inconsistent within the entire report.

What is most remarkable however, and consistent with the March readings, the bank crisis appears to have little impact on sentiment – as confidence levels were similar whether or not consumers mentioned the failures, the report said – something which casts doubt on the validity and credibility of the entire UMich survey which like most other economic indicators appears to have been subsumed to some political agenda.

Blink and you’ll miss the meltup.

Just moments after Bloomberg blasted a market comment note that was woefully late by the time it hid the terminal…

… with many expecting that today’s better than expected Retail Sales control group and the hawkish comments from Waller would finally prompt some selling, the short squeeze we warned about three days ago (see “Why The Non-Stop Squeezes: Stubborn Hedge Funds Are Most Short The S&P In 12 Years“) kicked in, pushing spoos above the upper end of the channel that had defined the market’s narrow range since the start of the month…

… pushing stocks to the highest level in two months.

What’s behind this latest spike? Why the same thing we have been warning bears about for the past six months: overly bearish technicals and positioning. Here is Goldman’s John Flood echoing what we have been saying:

Our PB (prime brokerage) data shows aggregate US Financials long/short ratio standing at 2.05 (vs. 2.64 at the start of 2023), the lowest level since Mar ’20. Negative sentiment and light positioning remain as steady mkt tailwinds (much to the chagrin of many HFs). Investors are bracing for the worst in regards to earnings (not exclusive to banks) which makes me believe risk is skewed to the upside as earnings really get going. At this point “OK prints” will be good enough…

Sure enough, blowout earnings from JPM and solid earnings from the banks means that all the dire, apocalyptic expectations for all hell to break loose this earnings season will have to be shelved for at least another three months.

With two weeks of recess under their belts, House Republicans plan to return next week with a framework of proposals for the upcoming debt ceiling debate, according to Politico, citing a ‘list widely circulating’ of ‘the most popular ideas that have emerged through two months of rank-and-file “listening sessions” with House Majority Whip Tom Emmer (R-MN), and so-called “five families” talks with Rep. Garret Graves (R-LA).

Politico made clear that the list is “NOT the GOP’s official demands,” according to six GOP sources close to leadership.

According to several Republicans, the talks have been less about specific goals and more about unifying the GOP against the Democrats.

“This is just an opening salvo,” said one House Republican close to the discussions, who added that no one is whispering anything just yet – aside from the circulating list of 10 “likely” asks.

It’s nowhere near the GOP’s final list of demands for debt

“This is just an opening salvo,” House R tells me – a way to kickstart talks with Biden

Many of the ideas came out of private meetings over the last 2 months with Emmer & Co and McCarthy/Garret Graves’s “five families”

— Sarah Ferris (@sarahnferris) April 14, 2023

According to Politico, the list includes across-the-board spending cuts, a GOP energy bill, COVID clawbacks and more:

— A one year extension of the debt limit, punting the fight until summer of 2024. Some Republicans said they’re unsure this can get support across the conference, but we’re told there’s one big reason it was included: It would put Republicans on the record raising the debt limit by about $2 trillion — as opposed to the $4 trillion figure required to punt the whole shebang until after the 2024 election. (They could alternatively suspend it, letting them sidestep voting for a hard number, for one year.)

— If you’ve been following our reporting, some of the details won’t surprise you: Republicans plan to pitch work requirements and attach at least some parts of a sweeping energy bill that includes long-sought permitting reform to any debt proposal. The GOP is also floating a crackdown on regulatory power, the “REINS Act,” which we’ve been hearing about for awhile.

— Cutbacks to non-defense spending to FY22 levels, with a 1 percent uptick each year after that. But others in the GOP conference are agitating for caps on defense spending, too, creating another thorny issue. We’re told there are many options under discussion for the topline — but all would be some kind of cut.

Meanwhile, an item which didn’t make it onto the framework list is a push from the House Freedom Caucus for an $80 billion clawback of the IRS tax enforcement included in the Democrats’ tax, climate and health bill from last year. Also not included were border policies pushed by Rep. Chip Roy (R-TX) and others.

On the surface today’s Industrial Production number was solid, coming in at 0.4%, double the expected 0.2%, and following an upward revised 0.2% (from 0.0%), it certainly put a dent in expectations for an imminent recession, or so one would think.

That’s because the number is only “solid” until one reads the fine print, because all of the upside was due to a near record surge in Utility output, up some 8.4% M/M, as the return to more seasonal weather after a mild February sent the demand for heating soaring. Meanwhile both Manufacturing output and Mining shrank by 0.5%, confirming that the economic slowdown is indeed coming. Furthermore, the Mining component is now down 4 of the past 5 months.

Some more details on the all important Manufacturing output data:

Manufacturing output decreased 0.5 percent in March and was 1.1 percent below its year-earlier level. For the first quarter as a whole, the manufacturing sector edged up 0.3 percent at an annual rate. The indexes for durable manufacturing and nondurable manufacturing moved down 0.9 percent and 0.1 percent in March, respectively, while the index for other manufacturing (publishing and logging) fell 0.7 percent. Most durables industries posted losses; wood products posted the largest drop, of 2.9 percent, followed by nonmetallic mineral products, which fell 2.6 percent. Within nondurables, gains of at least 1 percent were registered by apparel and leather and by petroleum and coal products; chemicals posted the largest loss, at 0.9 percent.

Turning to mining output, the number dropped 0.5 percent in March, with declines in the indexes for oil and gas extraction, other mining, and support activities.

Finally, as noted above, the output of utilities jumped 8.4 percent, with advances for both electric and natural gas utilities on the back of a surge in heating demand.

Confirming the ongoing slowdown, capacity utilization for manufacturing moved down 0.5 percentage point in March to 78.1 percent, a rate that is 0.1 percentage point below its long-run average. The operating rate for mining fell 0.5 percentage point to 91.1 percent, while the operating rate for utilities jumped 5.6 percentage points to 75.3 percent. The rate for mining was 4.7 percentage points above its long-run average, while the rate for utilities remained substantially below its long-run average.

Overall, if the Fed is hoping its actions will push the economy into a recession, today’s IP data confirms as much.

Boeing Co. had just turned the corner with a surge in quarterly deliveries, surpassing rival Airbus SE for the first time in nearly five years. However, this week it was revealed that parts had been installed incorrectly on the plane maker’s top-selling 737 Max jets, resulting in a production issue and causing some deliveries to be placed on hold.

Boeing Co. is pausing deliveries of some 737 Max jets after learning of a manufacturing issue that doesn’t affect the safety of planes in the air, the company said Thursday.

“This airplane is designed by clowns, who are in turn supervised by monkeys”

— zerohedge (@zerohedge) April 13, 2023

Boeing expects a significant impact on near-term deliveries of the 737 MAX 7, 737 MAX 8, and MAX 8-200 jets, as well as the P-8 military reconnaissance planes. 

$BA will pause the delivery of some 737 Max models after the company discovered issues with a supplier’s component. @Lebeaucarnews reports: pic.twitter.com/5vB1qCMbuZ

— Squawk Box (@SquawkCNBC) April 14, 2023

According to Barron’s, a statement was sent via email by a spokesperson from the company, who explained the issue:  

“A supplier has notified us that a nonstandard manufacturing process was used during the installation of two fittings in the aft fuselage section of certain [737 MAX] airplanes, creating the potential for a nonconformance to required specifications.

“This is not an immediate safety of flight issue and the in-service fleet can continue operating safely. However, the issue will likely affect a significant number of undelivered 737 MAX airplanes, both in production and in storage.”

Boeing further stated that the Federal Aviation Administration had been notified about production issues and that efforts are underway to examine and replace faulty parts. 

Bloomberg identified Spirit AeroSystems Holdings Inc. as the supplier of the nonconforming parts. 

Shares of Boeing slid more than 5% in premarket trading in New York, and shares of Spirit AeroSystems tumbled 11.5%. 

Max issues have been a concern to investors, given that the aircraft was grounded globally from March 2019 to November 2020 after two fatal crashes occurred within five months of each other, killing 346 people. 

It remains to be seen whether the production issue will have a meaningful impact on Boeing’s plan to increase 737 production. The problem doesn’t immediately affect the safety of planes in service with airlines.

For more color on the situation, Bloomberg Intelligence said:

“The stoppage is concerning given the airplane is vital to Boeing’s turnaround. Its importance likely means a remedy will be urgently pursued, though reworking it could be costly and an extended pause would significantly hurt commercial profit, cash generation and the balance sheet.

“We have processes in place to address these of types of production issues upon identification, which we are following,” Spirit said in a separate statement. “Spirit is working to develop an inspection and repair for the affected fuselages,” George Ferguson, BI aerospace industry analyst, wrote. 

Jefferies analyst Sheila Kahyaoglu told clients:

“There is an investigative process along with determining the root cause and remedy, which could have an unknown timeline to complete.” 

And Truist analyst Michael Ciarmoli wrote:

“The Boeing news comes as a negative surprise, analyst Michael Ciarmoli writes, given the expectation of Max production-rate increases in the near term.” 

Ciarmoli added:

“Spirit AeroSystems will be the most impacted, and analyst expects the entire sector to be under pressure.” 

Another production quality and standards issue will further erode Boeing’s credibility and trustworthiness. 

Several years ago, NYT obtained emails from Boeing employees who said, “This airplane is designed by clowns, who are in turn supervised by monkeys.” 

Oh yeah, and there’s this…

…

Institutional traders, portfolio managers, and analysts using Bloomberg LP’s Terminal software can anticipate an exciting upgrade, as CNBC reports that the same underlying technology as OpenAI’s GPT will be integrated into the financial platform. 

About two weeks ago, Bloomberg released a research paper detailing the development of Bloomberg GPT. This internal AI model can answer financial questions in the search function like “CEO of Silicon Valley Bank,” asses the bullish or bearish sentiment of headlines, and even write headlines based on text. 

The tech behind Bloomberg GPT wasn’t developed using supercomputers, nor is it using OpenAI’s technology. Instead, Bloomberg used “freely available, off-the-shelf AI methods and apply them to its massive store of proprietary — if niche — data,” CNBC said. 

About half the data used to create Bloomberg’s model is derived from non-financial sources gathered from the web, such as GitHub, YouTube subtitles, and Wikipedia. This data is combined with 100 billion words from a proprietary dataset called FinPile, which encompasses financial information the company has collected over the past two decades. The FinPile dataset comprises securities filings, press releases, Bloomberg News articles, stories from other outlets, and a web crawl specifically targeting financial web pages.

Bloomberg’s future upgrade to the Terminal is a great start considering the platform starts at around $30,000 per year. There was no word if additional fees would be applied to customers once the technology integration is complete. 

“Both the capabilities of GPT-3 and the way that it achieved its performance through language modeling wasn’t something that I expected.

“So when that came out, we were like, ‘OK, this is going to change the way that we do NLP [natural language processing] here,'” Gideon Mann, head of ML Product and Research at Bloomberg, told CNBC. 

Here are some example of how a Terminal can use Bloomberg GPT: 

Asking about CEOs… 

Write a headline… 

Furthermore, Bloomberg GPT will allow users to efficiently search through vast amounts of financial data, thereby saving time.

“There’s a lot of work we’re doing to help clients address that data deluge of news stories, whether that’s through summarization, or monitoring, or being able to ask questions on those news stories or transcripts. There are a lot of applications there,” Mann said.

CNBC noted Bloomberg is planning to integrate its GPT into Terminal features and services in the near term, although there was no word if a ChatGPT-style chatbot would be released on the platform. 

*   *   * 

Read the Bloomberg GPT white paper:

Authored by Ronni Stoeferle via GoldSwitzerland.com,

There is a good reason why the Chinese understand the saying “May you live in exciting times!” as a curse. Economic and (geo)political developments in recent weeks and months have indeed been exciting. In many areas, it looks as if we are heading for a showdown, for a lasting, formative change. The following five charts present the multi-faceted showdowns that are happening right now before our eyes.

We cannot choose that the times are currently so exciting. However, we can choose how to deal with these exciting times so that they do not become a curse for us, but rather an advantage for us and as many people as possible.

1. Inflation – History (still) rhymes

The parallels between the inflation trend in the 1960s, 1970s and early 1980s and the inflation trend since 2013 is almost frighteningly striking. Only the scaling needs to be slightly reduced by a quarter, loosely based on Mark Twain’s well-known statement: “History doesn’t repeat itself, but it rhymes!”

If the parallelism continues in this way, a disinflationary environment can be expected until early summer 2024, after which the second wave of inflation would set in, breaking only in fall 2027.

2. Inflation is likely to prove more persistent

Some prices are adjusted quickly to reflect changes in the market situation. These include, for example, gasoline prices, many food prices or car rental prices. Other prices react only with a significant delay, such as garbage charges, the cost of a doctor’s visit, prices in the education sector or rents.

The different price development of these two subgroups is reflected by the Federal Reserve Bank of Atlanta in proprietary indices. After a historical increase to almost 20%, flexible prices are now falling sharply. The sticky prices are behaving quite differently. At just under 7%, they are at a level not seen since the inflation wave of the late 1970s/early 1980s. They are now rising even more strongly than flexible prices and remain at a high level.

3. Interest rate increase cycles

“This time is different” – four words suffice to describe one of the greatest economic illusions. Every generation of investors has yet to succumb to this illusion that a development – in our case interest rate hikes – which in the past have (always) led to one and the same result – in our case severe economic turbulences – -will not happen this time.

In everyday life, we would call such behavior stupid.

4. A recession seems inevitable

While stock markets give the impression that the worst is already behind us, many leading indicators point to the imminent slide into recession, including the Conference Board Leading Economic Index.

This index is composed of 10 economic indicators selected for their ability to predict changes in economic activity. The indicators are selected based on their sensitivity to changes in the economy, their timeliness, and their ability to predict future trends. The 10 components include such diverse economic developments as money supply trends, interest rate spreads, consumer confidence, and initial claims for unemployment insurance. This index has correctly predicted every recession in the past 5 decades as soon as the index slipped significantly into negative territory.

5. Central banks are going for gold

2022 saw record central bank demand for gold. Never since 1950 have central banks increased their gold reserves as much as in 2022, with net purchases totaling 1,136 tons. Three aspects require particular attention. A breakdown of gold purchases by quarter shows that three quarters of gold purchases by central banks in 2022 were made in the second half of the year. Since, as in previous years, it was mainly non-Western central banks that increased their gold holdings, this can be interpreted as a very quick reaction on the part of central banks to the freezing of Russian US dollar and euro currency reserves. Second, China has been making official purchases again since November 2022. And third, about 50% of gold purchases cannot (yet) be attributed to any country.

In this economically and (geo)politically fragile environment with an uncertain outcome, gold has once again proven to be a stable anchor in recent weeks and has made strong gains. Since the interim low at the beginning of November 2022, gold gained 24.0%, since the beginning of the year 10.7%, and since the outbreak of the banking crisis 11.3%. And there is no reason to believe that gold will not continue to excel at this task in the exciting times ahead.

*  *  *

A short message on our own behalf: the In Gold We Trust team is currently working furiously on the In Gold We Trust report 2023, which will be published on ingoldwetrust.report on May 24, 2023. You can already sign up for the mailing list on the website. You will then be informed by us on time about the publication of the In Gold We Trust report 2023.

Authored by Paul Joseph Watson via Summit News,

A report published by the UK Health Security Agency (UKHSA) found that “no evidence could be presented” to prove medical-grade face masks protected vulnerable people from COVID.

The study investigated whether so-called high quality masks such as N95, KN95 and FFP2 coverings helped protect vulnerable people in the community from catching the virus.

“The review did not identify any studies for inclusion, and so could provide no evidence to answer the research question,” the authors concluded.

“No studies matching the inclusion criteria were found, so no evidence could be presented.”

Well, there goes the narrative.

Prof Carl Heneghan, professor of evidence-based medicine at the University of Oxford, noted that it was a “significant failing” that there were virtually no high quality trials showing that face masks were effective at preventing infection.

“I do not understand why there’s been a lack of will to do high-quality trials in this area,” he told the Telegraph. “We have completely failed to address this issue and I actually consider that to be an issue that the [Covid] inquiry needs to look at.”

Thanks for admitting this 3 years later after all the demeaning crap you put everybody through. pic.twitter.com/I9WGPkeHzw

— Paul Joseph Watson (@PrisonPlanet) April 12, 2023

“If there’s another pandemic around the corner, we still haven’t addressed any of these issues. We’ve not learned anything,” Prof Heneghan added.

Despite there never being any conclusive evidence either way that masks work, their supposed effectiveness was entrenched from the early days of the pandemic (after health authorities initially told people not to wear them as they could exacerbate the situation).

Those who questioned the effectiveness of face masks were vilified by COVID cultists and banned by social media networks, while people who refused to wear them in public were humiliated and sometimes physically attacked.

The UK government later acknowledged that masks were more of a symbolic tool to remind everyone they were in a pandemic to keep fear levels high and guarantee greater obedience to lockdown rules.

A massive international research collaboration earlier this year that analyzed several dozen rigorous studies focusing on “physical interventions” against COVID-19 and influenza found that face masks provide little to no protection against infection or illness rates.

In a revealing study published by Frontiers in Psychology, it was found that people who consider themselves less attractive were more likely to continue wearing face masks.

That explains a hell of a lot.

*  *  *

Brand new merch now available! Get it at https://www.pjwshop.com/

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Liz Truss, who briefly served as the UK’s Prime Minister in 2022, has this week called for Ukraine to be fast-tracked into NATO. “I also believe we should fast-track Ukraine’s membership of NATO. We should have done it years ago, but the best time to do it will be now,” Truss emphasized in a speech at a Heritage Foundation event.

The Kremlin has responded firmly in the face of these recent calls, which have also come from Polish leadership and of course Ukrainian officials, by pledging that the Black Sea will ‘never be NATO’s sea’, according to state media.

Kremlin spokesman Dmitry Peskov on Thursday said that “The Black Sea will never be a ‘NATO sea.’ This is a common sea for all coastal states, it should be a sea of cooperation, interaction and security. And it should have indivisible security,” Peskov said.

“The Kremlin believes that NATO and demilitarization are mutually exclusive concepts,” he added, suggesting that the Western military alliance is a threat to peace and not its solution. 

The specific references to ‘ownership’ of the Black Sea came in specific response to provocative words of  Ukrainian Foreign Minister Dmytro Kuleba, who urged that allied powers turn the Black Sea into a “NATO sea”. Ironically enough he at the same time called for its demilitarization.

Last month there was a rare downing of a US Reaper drone after the Pentagon says it was harrassed by a pair of Russian Su-27 Flanker jets.

The $32 million drone crashed into the Black Sea after being sprayed with jet fuel as the Russian warplanes passed close by. US analysts said the maneuver had never been seen before, and was enough to damage the Reaper to the point of it having to be put down.

Authored by Dave DeCamp via AntiWar.com,

The US on Wednesday imposed sanctions on a bank based in Hungary over its ties to Russia, a move that further strains ties between Washington and Budapest.

According to Reuters, the sanctions targeted three top officials in the International Investment Bank in Budapest, two Russian nationals, and one Hungarian national. US Ambassador to Hungary David Pressman said the US had previously warned Hungary about the bank.

“Unlike other NATO allies previously engaged with this Russian entity, Hungary has dismissed the concerns of the United States government regarding the risks its continued presence poses to the alliance,” Pressman told reporters in Budapest.

Hungarian Prime Minister Viktor Orban has attempted to maintain good relations with Moscow and has been calling for peace talks to end the war in Ukraine and has previously delayed EU sanctions on Russia, angering officials in Brussels and Washington. Hungary also secured an exemption from the Russian oil ban since it’s a land-locked country and is reliant on pipeline infrastructure.

“We have concerns, about the continued eagerness of Hungarian leaders to expand and deepen ties with the Russian Federation,” Pressman said. Orban’s government has also come under more general criticism from the US and EU since he won reelection last spring.

The sanctions came after a top-secret CIA document that surfaced on the internet as part of a trove of leaks revealed that the US was likely spying on Orban.

Maybe one of the strangest items in the leaked documents. It’s possible Orban said something to this effect — but Hungary is also in a military alliance run by the US, which would be a strange relationship for “adversaries.” Note, this is a CIA paraphrase rather than exact quote pic.twitter.com/wL1vS6YHz6

— Michael Tracey (@mtracey) April 11, 2023

As The Washington Times reviews of the leaked document: 

The purported CIA assessment relating to Mr. Orban was first reported by The Wall Street Journal, which characterized it as underscoring a rift between the U.S. and Hungary and noted that the document raises the possibility of U.S. spying on the Fidesz Party.

The CIA intelligence update of March 2 said Mr. Orban’s inclusion of the U.S. as a top adversary in a Feb. 22 political-strategy meeting “constitutes an escalation of the level of anti-American rhetoric,” according to The Journal, which reported that the document listed the U.S. Embassy as the source for the information.

The document said in a February meeting with his aides, Orban named the US as one of his Fidesz Party’s top three adversaries.