Month: July 2024

Mrs Watanabe will not be best pleased again this morning as it appears – having dumped billions of dollars into the FX markets overnight to try and maintain the momentum higher in yen – the Bank of Japan is ‘intervening’ in the currency markets.

USDJPY just puked almost two big figures after the hotter than expected PPI print…

Presumably they were hoping for a miss and planned their intervention – just like yesterday’s – to exaggerate the momentum lower in USDJPY.

Comments overnight from Japan’s top currency official, Masato Kanda, who stuck with a strategy of trying to keep market players guessing, prompted a spike lower also but that failed very fast.

He told reporters in Tokyo on Thursday night that he wasn’t in a position to say if the move was intervention.

“Our practice is basically not to say whether we have intervened or not,” he said Thursday.

“While some believe the move was a reaction to the CPI results, others say that other forces may have been at work.”

He followed up with comments early Friday, saying that given the yield gap between the US and Japan, speculation was probably behind the moves.

TV Asahi, a Japanese broadcaster, reported officials had stepped into the currency market.

Daily newspaper Mainichi Shimbun also reported an intervention, citing an unidentified Japan government official.

More problematically, according to a Bloomberg analysis of central bank accounts, the scale of intervention was probably around ¥3.5 trillion ($22 billion), based on a comparison of Bank of Japan accounts and money broker forecasts.

“Right now we are seeing two-way activity in the market but no clear directional bias,” said Ruchir Sharma, London-based global head of FX option trading at Nomura International Plc.

Sharma added that there was “palpable nervousness in the market” in recent sessions from hedge funds looking to protect carry trades for scenarios like the one that just played out.

The spike on Thursday shared similarities with this year’s previous interventions, in which the Ministry of Finance bought ¥9.8 trillion to stem losses in apparent moves on April 29 and May 1.

The yen’s Thursday rally was the biggest on a one-day basis since May 1.

Not much bang for their buck and the PPI ‘beat’ ruined the momentum this morning, with USDJPY stalling at yesterday’s lows.

“Certainly the extent of the move does suggest it could well have been intervention,” said Jane Foley, head of currency strategy at Rabobank.

“It’s quite exciting and does cause ripples on our trading desk.”

However, the lack of follow-through makes us wonder if the BoJ running out of ammo (or fortitude) to maintain any control of its currency?

US equity futures are flat, erasing a modest earlier gain, as yesterday’s rotation continues this morning with RTY rallying +0.8% pre-mkt even as megacap tech stocks are higher (NVDA +93bp, AAPL +39bp, AMZN +19bp). As of 8:45am, S&P futures were little changed after the index fell almost 1% in the previous session.  The yield on 10-year Treasuries was unchanged at 4.21% and the USD is lower despite a PPI report that came in hotter than expected. Commodities are mixed: oil is higher, base metals are lower. Today, the key focus will be PPI (which beat across the board) and banks earnings (which were mixed).

In premarket trading, Wells Fargo sank 5% after warning it won’t be able to whittle away costs as fast as forecast amid higher-than-expected expenses. JPMorgan swung between gains and losses after reporting record profit, while missing on a few key metrics, like net interest income. Citigroup climbed 3% as equity trading beat estimates even as the lender said costs for the year are likely to be at the high end of the range previously provided. Here are some other notable premarket movers:

• Tesla dropped 1% after UBS cut its rating on the electric-vehicle maker to sell, saying the stock has rallied “too much, too soon.”
• Array Technologies gains 5% after Citi raised the solar tracking equipment company to buy, touting its growth potential.
• AT&T slips 2% as the company suffered a massive hack of customer data — separate from one reported earlier this year — that included records of calls and texts for nearly all of its mobile-phone users for a six-month period in 2022.
• Bally’s ticks 1% higher after securing a funding commitment from Gaming and Leisure Properties.
• JPMorgan falls 1% despite investment banking revenue beating estimates. CEO Jamie Dimon said while there has been some progress, inflation and rates may stay higher than expected.

US producer prices climbed in June more than forecast as a pickup in margins at service providers more than offset declines in the cost of goods. Investors are also eager to hear from the largest banks about the state of the US economy and expectations for the rest of the year, including the potential impact of the presidential elections in November.

In Europe, the Stoxx 600 is up 0.2% – rising for a third day – led by gains in energy and consumer product shares.  Here are the biggest movers Friday:

• Ericsson shares rise as much as 9.3% to the highest since September 2022 after the company reported stronger-than-expected sales, in part thanks to a growth revival in the key US market
• Addtech advances as much as 13%, the most since 2021 and to a record high, with DNB seeing a “solid” 1Q report from the Swedish industrial technology group, with net sales 4% ahead
• Lifco shares jump as much as 12% to hit a new record high after the maker of dental equipment, machinery and tools reported quarterly net sales above expectations in the second quarter
• Norwegian Air shares rise as much as 8.2% after 2Q Ebit surpassed expectations, leading analysts to predict upgrades to consensus forecasts, with DNB describing the report as “slightly postitive”
• Elkem shares jump as much as 11%, the most since July 2022, after the Norwegian silicon maker reported Ebitda for the second quarter that beat the average analyst estimate
• BFF Bank jumps as much as 14% to touch a two-month high after the Italian lender reported an increase in its past due exposures and risk-weighted assets, following a credit reclassification
• Volkswagen gains as much as 1% as Redburn raises its recommendation to neutral, saying the firm faces less exposure to any tariff escalations, with negotiations potentially dragging on
• European shipping companies extend their slide, with Denmark’s Maersk shedding as much as 4.6%, as economic uncertainty and excess capacity concerns continued to pressure freight rates
• Axfood falls as much as 8.8%, the most since 2022, after the Nordic retail group reported its latest earnings. DNB sees an overall week report, with its Dagab logistics unit the main drag
• EMS-Chemie shares slump as much as 7.2%, the most since 2020, after the Swiss company cut its revenue forecast and said the challenging economy and rising costs are weighing on demand
• Avanza shares drop as much as 6.5%, the most in three months, after the Swedish online bank and trading platform reported operating income for the second quarter that missed estimates
• Europris falls as much as 6.1% after DNB cut its recommendation for the Norwegian retail group to hold due to soft sales trend in its key Norwegian market and for its Swedish retail chain ÖoB

Earlier, Asian stocks declined as tech shares tracked their US peers lower after slowing inflation data. Equities in Hong Kong bucked the selloff amid prospects of lower borrowing costs. The MSCI Asia Pacific Index fell as much as 1.1%, the most in over a month, with TSMC, Samsung Electronics and Tokyo Electron among the biggest laggards. Tech-heavy markets such as Taiwan, Japan and South Korea led declines in the region. Equities in mainland China fluctuated as traders rebalanced their holdings ahead of next week’s Third Plenum. Property stocks climbed amid rising expectations for more support for the sector at the meeting. Meanwhile, shares in Hong Kong rose as soft US consumer price print boosted hopes for potential interest rate-cuts in the city. Here are the most notable movers:

• BOC Aviation shares rise as much as 5.3%, the most since April, after it closed a self-arranged club loan transaction with 25 banks globally totaling $2.3 billion.
• CK Infrastructure shares climb as much as 7.5% in Hong Kong, the most since December 2023, as the company considers a second listing on an overseas stock exchange.
• BayCurrent shares climb as much as 19%, the most since January 2022, after the Japanese IT services company reported first quarter operating income that beat analyst estimates and saw unit rates grow quarter-on-quarter.
• Chalco rises as much as 10% in Hong Kong and 6.4% on the mainland after JPMorgan upgrades the stock to overweight on expectations the company will raise its full-year payout ratio after its preliminary 2Q results beat estimates.
• Seven & I shares plunge as much as 8.4%, the most since August 2020, after the Japanese retail conglomerate reported first-quarter operating income that missed the average analyst estimates and weak performance in overseas convenience stores.
• Fast Retailing shares decline as much as 4.1%, the most since April 12, on concerns the stock’s recent gains will increase the probability that the Nikkei will reduce the company’s weighting in its benchmark average.
• Astro Malaysia Holdings shares plunge as much as 9.7% after the Inland Revenue Board served the company notices of additional tax assessment for 2019 to 2023.
• Huafon Chemical shares rise as much as 8%, the most since Feb. 7, after the company said it expects to report 1H profit rose by 1.6% to 24% y/y.
• Hanssem shares rally as much as 10% after Samsung Securities says the furniture manufacturer’s profits may get a lift from rising home sales in South Korea.
• Xtep International shares rise to the highest since June 11 as Goldman Sachs says the company’s ‘solid’ 2Q retail revenue growth is driven by online and emerging brands sales that were ahead of target.

In FX, the yen initially weakened against the dollar, paring some of the sharp rally seen in the prior session, before resuming its trek higher. An analysis of Bank of Japan accounts suggests authorities did step into the markets to prop up the yen on Thursday. USD/JPY was flat at ~158.90. The Bloomberg Dollar Spot Index is down 0.1% and set for a third day of declines. The Swedish krona is the weakest of the G-10 currencies, falling 0.5% against the greenback after underlying inflation slowed more than expected.

In rates, treasuries edged lower, with US 10-year yields rising 1bps to 4.22%. Long-end yields are higher by ~1bp with 2s10s spread steeper by ~1bp; US 10-year around 4.225% outperforms bunds by ~4bp, gilts by ~6bp. European government bonds underperform their US peers.

In commodities, oil prices advance, with WTI rising 1% to trade near $83.50 a barrel. Spot gold falls $12 to around $2,404/oz.

Bitcoin is incrementally softer and holds just above USD 57k, after briefly dipping below the level earlier. Ethereum remains firmly above USD 3k.

Today’s economic data slate includes June PPI (8:30am, which beat across the board) and July preliminary University of Michigan sentiment (10am). No Fed members are scheduled to speak

Market Snapshot

• S&P 500 futures little changed at 5,643.50
• STOXX Europe 600 up 0.3% to 521.21
• MXAP down 0.6% to 187.44
• MXAPJ up 0.1% to 587.14
• Nikkei down 2.4% to 41,190.68
• Topix down 1.2% to 2,894.56
• Hang Seng Index up 2.6% to 18,293.38
• Shanghai Composite little changed at 2,971.30
• Sensex up 1.0% to 80,665.58
• Australia S&P/ASX 200 up 0.9% to 7,959.28
• Kospi down 1.2% to 2,857.00
• German 10Y yield rose 4bps at 2.51%
• Euro up 0.1% to $1.0884
• Brent Futures up 0.9% to $86.16/bbl
• Gold spot down 0.4% to $2,406.32
• US Dollar Index little changed at 104.37

Top Overnight News

• US President Biden mistakenly referred to Ukrainian President Zelensky as President Putin before correcting himself during comments at the NATO summit, while he also mistakenly referred to Vice President Harris as Trump during his press conference. Furthermore, Biden said he has to finish the job because there is so much at stake and has taken three significant and intense neurological exams which say he is in good shape.
• US President Biden is expected to face a deluge of calls from House Democrats urging him to drop out of the presidential race regardless of his performance at the NATO press conference, according to Axios. It was also reported that dozens of Democratic lawmakers are to call for US President Biden to quit the race in the coming 48 hours: CBS.
• Three Biden officials directly involved in his re-election told NBC News that his chances of winning are zero and one said he needs to drop out, while it was also reported that some Biden advisers were discussing how to convince him to step aside: NYT.
• The Biden campaign is quietly assessing the viability of Vice President Harris’ candidacy against Donald Trump in a new head-to-head poll: MSNBC.
• Softbank has acquired U.K. semiconductor company Graphcore, the latest in a series of steps taken by the Japanese tech investment company in the artificial-intelligence field. The Bristol-based chip company, which specializes in AI, said that it is now a wholly-owned subsidiary of SoftBank Group and will continue to operate under the Graphcore name. WSJ
• Fed’s Goolsbee (non-voter) said the June CPI report is excellent and the improvement on shelter inflation is profoundly encouraging, while he added this is what a path to 2% inflation looks like and as inflation falls, leaving Fed policy rate steady means Fed is tightening policy. Goolsbee said the reason to tighten policy would be if the economy is overheating but added they are not overheating, as well as noted that he doesn’t like tying their hands on policy decisions and they need to decide when to cut rates, not trying to figure out a rate path for next seven months.
• China’s already formidable exports surged in June, China’s customs administration reported on Friday. But imports shrank, with Chinese companies and households becoming more cautious about spending money. The result was a record monthly trade surplus of just over $99 billion. NYT  
• Despite billions of dollars in additional weapons and security assistance that NATO announced this week, allied officials said Ukraine would not be ready to launch a dramatic counteroffensive or retake large swaths of territory from Russia until next year. NYT
• Some American officials have grown more optimistic that a deal to release Israeli hostages held in Gaza in return for a cease-fire is at hand. But people briefed on the talks say it will be days until it is clear whether a breakthrough has been achieved because of difficulties in communication between Hamas officials in Qatar and the group’s leaders in Gaza. NYT
• Joe Biden vowed to stay in the presidential race despite new gaffes, including mixing up Volodymyr Zelenskiy and Vladimir Putin, and VP Kamala Harris and Donald Trump, during a press conference on the sidelines of the NATO summit. At least three more House Democrats, including Jim Himes, the top member from his party on the Intelligence Committee, called for Biden to drop his re-election bid. BBG
• Big bank earnings kick off today with JPMorgan, Citi and Wells Fargo as shares trounce the broader market. Investors are looking past another projected drop in net interest income, instead focusing on investment banking and a rebound in loan profits. BBG
• Boeing is said to have told some 737 Max customers that aircrafts due in 2025 and 2026 face additional delays. BBG
• U.S. Republican lawmakers are seeking a probe into Microsoft’s  $1.5 billion investment in artificial intelligence firm G42, citing concerns about the transfer of advanced technology and possible ties the Abu Dhabi-based company may have with China. WSJ
• Axel Springer is considering a break-up, w/a separation of its media assets (including Politico and Business Insider) and classifieds business. FT

A more detailed look at global markets courtesy of Newquawk

APAC stocks took their cues from the mixed performance stateside where softer-than-expected CPI data boosted Fed rate cut bets and spurred a stock rotation out of large-cap tech into small-cap cyclicals. ASX 200 gained amid lower yields with gold miners, real estate, and consumer stocks leading the advances. Nikkei 225 underperformed after recently sliding back from record highs and amid speculated FX intervention. Hang Seng and Shanghai Comp. diverged as the former rallied back above the 18,000 level with strength seen in property and tech, while the mainland was lacklustre after mixed Chinese trade data in which Exports topped forecasts but Imports surprisingly contracted.

Top Asian News

• China’s Foreign Minister said in a phone call with his Dutch counterpart that China is willing to establish close ties with the new Dutch government and carry out all-around dialogue, as well as enhance mutual understanding. Furthermore, China believes the Dutch side will encourage the European side to look at China objectively and rationally and play a constructive role in maintaining a healthy and stable development of China-EU relations.
• Japanese government official said Japan conducted currency intervention to prop up the yen on Thursday, according to Mainichi citing an unidentified official. It was separately reported that the BoJ likely conducted rate checks in EUR/JPY on Friday, according to Nikkei.
• Japanese Finance Minister Suzuki said currency rates should be set by the market and rapid FX moves are undesirable, while he wouldn’t comment on FX levels, FX intervention and media reports that Japan conducted FX rate checks.
• Japanese Chief Cabinet Secretary Hayashi said no comment on FX intervention and wouldn’t comment on forex levels, while he added it is important for currencies to move in a stable manner reflecting fundamentals and they are ready to take all possible means on forex.
• Japanese top currency diplomat Kanda said no comment on FX intervention and noted recent yen moves are somewhat rapid, while he added they will take appropriate action on forex if needed. Furthermore, he is puzzled about the media report on intervention, while he did not comment on whether they intervened in the FX market and cannot think if government officials commented on forex intervention.
• BoJ Survey says wage growth spreading among small and medium firms this year. Growth being driven by rising prices, hiring competition and a recovery in earnings performance.
• Japan’s business lobby Doyukai Chief Niinami has asked the BoJ to raise rates in July, according to Nikkei.
• Japanese gov’t is reportedly expected to slightly cut its economy growth forecast for FY24 from the current view of 1.3%, via Reuters citing sources.
• BoJ data suggest Japan intervened in the FX market on July 11th, may have spent between JPY 3.37-3.57tln, according to Reuters; Accounts point to intervention of some JPY 3.5tln, according to Bloomberg.

European bourses, Stoxx 600 (+0.3%) are entirely in the green, continuing the price action seen in the prior session. Indices initially opened tentatively higher and continued higher as the morning progressed, though has edged off best levels in  recent trade. European sectors hold a strong positive bias; Energy takes the top spot, benefiting from underlying strength in the crude complex. The Telecoms sector has been lifted by post-earnings strength in Ericsson (+7.2%). US equity futures (ES +0.1%, NQ U/C, RTY +0.7%) are mixed with the ES and NQ taking a breather from yesterday’s hefty selling pressure; the RTY continues to advance and holds at highs, with the rotation narrative remaining firm. Bank earnings today: BNY Melon, JPMorgan, Wells Fargo, Citi. Intel (INTC) exec. says they are on track for cumulative software sales of USD 1bln by end-2027
UBS has downgraded Tesla (TSLA) to Neutral from Sell with a price target of USD 197

Top European News

• Rio Tinto (RIO LN) studies mining megadeals after collapse of the BHP (BHP AT)-Anglo American (AAL LN) swoop; Rio is said to have held talks with bankers to ‘wargame’ a potential USD 32bln offer for Teck Resources (TECK), via Sky News. The article notes that Teck is among a “refreshed list” of potential takeover targets. One source stated that Rio is “not about to launch an imminent bid for Teck Resources, but acknowledged that it was on a list of possible targets.”

FX

• Despite initial upside earlier in the session, USD strength has begun to wane with the DXY now flat. Should the downside continue, a test of Thursday’s low at 104.07 could be seen.
• EUR/USD firmer on the session as the attempted recovery in the USD has begun to wane. Upside focus for EUR/USD remains on a potential breach of 1.09 after topping out bang on that level yesterday.
• GBP firmer vs. the USD with Cable on a 1.29 handle but below yesterday’s 1.2949 high. It has been a solid week of gains for the GBP amid hawkish interjections from MPC’s Haskel, Mann and Pill as well as a solid M/M June GDP print.
• JPY is a touch softer vs. the USD after some wild price action yesterday spurred by US CPI and suspected Japanese intervention. Since then, more volatile price action was observed overnight with the Nikkei suggesting the BoJ likely conducted rate checks in EUR/JPY.
• Antipodeans are both firmer vs the Dollar; AUD/USD is currently extending its winning streak vs. the USD to a 9th consecutive session, albeit is currently below yesterday’s CPI-induced 0.6798 peak.
• Soft Swedish inflation data saw EUR/SEK spike higher from 11.4240 to 11.4600. The significantly cooler than expected print serves to reinforce market expectations for an August cut.
• PBoC set USD/CNY mid-point at 7.1315 vs exp. 7.2514 (prev. 7.1339).

Fixed Income

• USTs are very slightly softer, in a paring of US CPI-induced strength and following a subdued 30yr auction on Thursday. Docket today includes US PPI and UoM Prelim. Currently trading around 110’30.
• Bunds hold a bearish bias, but still remains at elevated levels sparked by the dovish US CPI report. Bunds are down to a 131.56 base where they appear to have made a bit of a floor thus far having pulled back from an overnight 131.81 peak.
• Gilt price action is in-fitting with peers given the lack of UK-specific newsflow. Gapped lower by 26 ticks to 98.25 before slipping further to lows of 97.87; complex awaiting next week’s key wage and inflation metrics.

Commodities

• Crude is extending on yesterday’s modest gains which were supported by a softer Dollar following the US CPI metrics, with the strength continuing in APAC hours. Brent September topped USD 86/bbl to trade in a current USD 85.45-86.35/bbl parameter.
• Downbeat trade across all precious metals following yesterday’s US CPI-induced surge, with underperformance this morning seen in spot silver and palladium whilst spot gold posts shallower losses ahead of US PPI. Spot gold is subdued in a current USD 2,400.14-2,416.26/oz band.
• Mixed trade across base metals with copper bucking the trend this morning following yesterday’s slide despite the constructive US data for the metal.

Geopolitics

• “Israeli warplanes breach the sound barrier over areas north of Beirut (capital of Lebanon)”, according to Sky News Arabia
• US President Biden said NATO confirms support for Ukraine and will not allow Russia to achieve victory.
• NATO Secretary General Stoltenberg said Ukraine can count on NATO now and for the long haul, while he added that Chinese exercises with Belarusian forces are part of a pattern and confirms authoritarian regimes are aligning more.
• German Chancellor Scholz said more needs to be done to ramp up air defences for Ukraine, while he added their defence industry needs to be capable of expanding production capacities swiftly.
• South Korea and the US signed a guideline on nuclear deterrence and operation in the Korean Peninsula, according to the South Korean Presidential Office.
• “Israel says it was bombed in southern Syria in response to a projectile fired from the Golan”, via Al Arabiya..

US Event Calendar

• 08:30: June PPI Final Demand MoM, est. 0.1%, prior -0.2%
  • June PPI Final Demand YoY, est. 2.3%, prior 2.2%
  • June PPI Ex Food and Energy YoY, est. 2.5%, prior 2.3%
  • June PPI Ex Food and Energy MoM, est. 0.2%, prior 0%
• 10:00: July U. of Mich. Current Conditions, est. 66.0, prior 65.9
  • July U. of Mich. Sentiment, est. 68.5, prior 68.2
  • July U. of Mich. Expectations, est. 69.3, prior 69.6
  • July U. of Mich. 1 Yr Inflation, est. 2.9%, prior 3.0%
  • July U. of Mich. 5-10 Yr Inflation, est. 3.0%, prior 3.0%

DB’s Jim Reid concludes the overnight wrap

Markets got another boost yesterday, as the latest US CPI print surprised on the downside once again, which led to growing hopes that inflation was finally being tamed. Of course, it’s worth remembering that one report doesn’t make a trend, but recent months have brought some of the weakest inflation numbers since the current surge began in 2021, and it’s led to growing expectations that the Fed will finally be able to start cutting rates in the months ahead. In fact, investors are now fully pricing in a rate cut by the September meeting, and yesterday saw the 2yr Treasury yield (-10.6bps) post its biggest daily decline since January. Equities also put in a strong session for the most part, and the small-cap Russell 2000 (+3.57%) had its best daily performance of 2024 so far. That said, one very notable exception were the Magnificent 7 (-4.26%), which put in their worst performance since October 2022, and their concentration meant that the S&P 500 (-0.88%) ended its run of 7 consecutive daily gains, even though nearly 80% of the index’s members were actually higher on the day.

In terms of the details of that CPI report, headline CPI for June actually fell by -0.1% on the month (vs. +0.1% expected), which was the biggest outright decline in prices since May 2020 during the Covid-19 pandemic. Other details in the report were also very promising, as core CPI came in at just +0.1% (vs. +0.2% expected), which is the weakest month for core inflation since January 2021. The declines were driven by several factors, but there was a meaningful step lower in shelter inflation, with Owners’ Equivalent Rent up just +0.28% in June, which was its weakest month since April 2021, and down from +0.43% in May. Bear in mind that the OER category alone makes up more than a quarter of the CPI basket, and around a third of core CPI, so if that shift lower is durable, then that’s very good news in terms of keeping inflation low.

Markets were also reassured that the latest print followed a series of softer inflation numbers in Q2, raising hopes that it wasn’t simply one good month. In fact, on a 3-month annualised basis, core CPI is up just +2.1% now, which is the lowest since March 2021. To be fair, the 6-month core CPI is still at +3.3%, which reflects the stronger prints from Q1, but that’s also on a downward trajectory, and similar prints to the last two would cement the idea that inflation is on a clear path lower. On the back of the print, our US economists have lowered their 2024 core CPI forecast by three tenths to 3.0% (on Q4/Q4 basis). See their full reaction note here.

With that inflation report in hand, there was immediate speculation that the Fed might accelerate the timing of their rate cuts and announce a first cut as soon as the September meeting. For instance, f utures are now fully pricing in a move by September, whereas beforehand it was only fully priced in by November. Likewise for the year as a whole, there were growing expectations that the Fed would deliver multiple rate cuts, with 61bps of cuts now priced in by the December meeting at the close, up from 51bps the previous day. When it came to Fed officials themselves, Chicago Fed President Goolsbee said that the latest data was “excellent”, and that his view “is this is what the path to 2% looks like”.

As investors priced in more rate cuts, the US Dollar index weakened -0.58%, and US Treasuries rallied strongly, with both the 2yr and 10yr yields falling to their lowest level since March. Specifically, the 2yr yield (-10.6bps) was down to 4.51%, in its biggest daily decline since January, and the 10yr yield (-7.4bps) was down to 4.21%. Treasuries did give up some of their initial post-CPI gains late on however, with the 10yr yield having traded as low 4.165% intra-day. And overnight, the 10yr yield (+1.0bps) has moved a bit higher to 4.22%. There were similar moves in Europe, with yields on 10yr bunds (-7.0bps), OATs (-6.3bps) and BTPs (-7.0bps) all falling as well.

For equities though, there was a much more divergent performance in the US, with small-caps surging whilst the Magnificent 7 slumped. That meant the small-cap Russell 2000 (+3.57%) had its best daily performance since December, rising to its highest level since March 2022. By contrast, the Magnificent 7 (-4.26%) had its worst performance since October 2022. Ultimately though, that meant the S&P 500 (-0.88%) fell back by a sizeable amount, even though more than three-quarters of the index’s members actually rose on the day. The equal-weighted S&P 500 (+1.17%) posted a strong advance, with the largest daily performance gap versus the main market cap-weighted index since 2020. Rate-sensitive sectors including real estate (+2.66%) and utilities (+1.83%) outperformed within the S&P 500. Meanwhile in Europe, there were more consistent gains, with advances for the STOXX 600 (+0.60%), the DAX (+0.69%) and the CAC 40 (+0.71%).

Speaking of Europe, there were some strong growth numbers from the UK yesterday, where monthly GDP was up by +0.4% in May (vs. +0.2% expected). The monthly GDP numbers can be a bit choppy, but if you look at the full three months leading up to May, the economy was +0.9% bigger than the previous three months, which is the fastest growth since January 2022. In turn, that meant that gilts underperformed, with the 10yr yield only down -5.2bps, and the weakness in the dollar also helped sterling reach its strongest level against the dollar in almost a year, at $1.2911. Staying on the UK, Luke Templeman and Galina Pozdnyakova published a piece yesterday on the country’s new listing rules, which you can read here.

Overnight in Asia, equity markets have lost ground across the region, with losses for the Nikkei (-2.23%), the KOSPI (-1.31%), the Shanghai Comp (-0.21%) and the CSI 300 (-0.20%). The main exception to that is the Hang Seng, which has surged +1.98% this morning. For the Nikkei, those losses have come amidst a sharp appreciation in the Japanese Yen, which strengthened by +1.79% yesterday against the US Dollar, reaching 158.83. In part that was down to the weakness of the dollar after the CPI print, but there was speculation about whether there’d been an intervention, and Japan’s current chief Masato Kanda said he was “not in a position” to comment on whether Japan had intervened. Looking forward, US equity futures haven’t seen much movement this morning, with those on the S&P 500 unchanged, and those on the NASDAQ 100 down -0.14%.

When it came to yesterday’s other data, the US weekly initial jobless claims for the week ending July 6 came in at a 6-week low of 222k (vs. 235k expected). Moreover, the continuing claims fell to 1.852m (vs. 1.860m expected) over the week ending June 29, which ends a run of 9 consecutive weekly gains.

To the day ahead now, and data releases include the US PPI reading or June, along with the University of Michigan’s preliminary consumer sentiment index for July. We’ll also get earnings releases from JPMorgan Chase, Citigroup, Wells Fargo and BNY Mellon.

Authored by Brandon Smith via Alt-Market.us

Yeah, it’s happening. The last half of 2024 is shaping up to be one of the most politically insane in a century and the sparks are already flying. The biggest moment of absurdity so far might be the first presidential debate between Donald Trump and Joe Biden, in which it was made abundantly clear for all the world to see that Biden is on the fast track to crazy town. We’ve been saying for four years that the guy is gone, a dementia case propped up and protected by the DNC and the media. Now, it’s undeniable:

There’s a vegetable sitting in the Oval Office and the nation is in a panic.

Leftists are panicking because they’re now realizing their candidate is a farce, the emperor has no clothes and they bet all their cash on one very retarded race horse. Conservatives are celebrating, but also panicking because they think Biden in his senility might launch nukes at any moment.

There are even people calling for a 25^th Amendment intervention to remove Biden because they actually think he makes decisions. He doesn’t. Biden is a proxy for more powerful interests and always has been. Getting rid of Biden early doesn’t solve the greater problem, nor would it prevent a nuclear Apocalypse (if that was ever the plan to begin with). Other people are making his decisions for him.

In the meantime, there are a host of surprises that could take place before November. As I noted in my article ‘The Juggling Act: Is 2024 A Pivotal Year For The Globalists?’ published in January, the election of 2024 is developing into its own Black Swan event. I stated that:

“…There is the potential for shock events, such as Biden stepping down at the last minute. Trump being arrested but winning anyway. Or, a major geopolitical crisis which is used by the Democrats as an excuse to “postpone” the election…”

It’s looking more and more like at least one of these scenarios is about to play out (Biden stepping down or being pushed out by the DNC).  It’s also becoming increasingly more likely that Donald Trump will return to the White House regardless.  For now it appears that Biden wants to cling to his position, but even if he is replaced there’s not a Democrat candidate yet that has the numbers to prevail in November.  And if you think election fraud will be a factor, don;t forget that the votes have to be close in order to rig the outcome.

The question is, what will this mean for conservatives and patriots going forward? Is this cause for elation, or should Americans be getting ready for the rug to be pulled out from underneath them?

After Trump’s win in 2016 (which I predicted a year ahead of the elections) I suggested that Trump might be set up as the next Herbert Hoover; the scapegoat for a host of economic and social calamities caused by obscure and shadowy interests.  I also questioned whether or not Trump would be a willing participant in this theater.

Keep in mind, his cabinet picks in 2016 were a nightmare – Packed with a swarm of banking elites, a member of the Rothschild cartel (Wilber Ross), CFR members and other bad actors. He truly had some of the worst people standing over his shoulder at the time (like Anthony Fauci, for example…).  Even if Trump had good intentions, his advisers certainly did not.

With the combination of BLM riots, Federal Reserve interest rate hikes, the pandemic hysteria, covid stimulus triggering stagflation, the January 6^th “insurrection”, Trump was turned into a pariah (for the most part unjustly). Conservatives in 2020 and beyond were labeled the ultimate villains; the “destroyers of democracy.”  Trump was, in many ways, pigeonholed as another Hoover.

But something happened during this process that I believe the globalists did not intend; the pandemic agenda failed. The vaccine passports failed. The mandates failed. The average infection fatality rate was a tiny 0.23% and the public was not sufficiently terrified. Too many patriots were refusing to comply. The CDC numbers on vaccinations were clearly inflated to make it look like more people were taking the jab. Almost no one took the boosters.

It was perhaps one of the biggest blunders the globalists have ever faced. The WEF’s Klaus Schwab, Dr. Evil himself, has faded into the background and retired as executive chairman. The big play for medical tyranny bombed. Now what to do?

Is it a mistake that the establishment has continued to stick with Biden despite his delirium? Or, did they send Biden into that first debate knowing exactly how bad it was going to go?  Is this a ploy designed to complete the Herbert Hoover scenario? This year, Trump hinted in an interview with Fox Business that he “does not want to become the next Herbert Hoover” inheriting a time bomb economy from Biden. Biden argued in response that Trump was ALREADY like Herbert Hoover because of the jobs lost during covid.

This is, of course, a false claim.  But the narrative is everywhere: “Trump will oversee a crash in America similar to 1929.”

Consider for a moment how many different elements of the US economy today are misrepresented by rigged stats. Biden has suppressed inflation stats like CPI by dumping strategic oil reserves onto the market. His employment stats are a complete circus with almost every job “created” going to illegal immigrants, artificially pumping up BLS numbers.  Biden has created false growth in American manufacturing by subsidizing green energy companies with tax dollars.  The media seems intent to ignore the national debt issue, with interest payments amassing over $1 trillion every three months. Finally, the border surge continues unabated (except for a 74% decrease in Texas where they are putting up actual walls and barbed wire).

And how about that Ukraine situation?  The one which is quickly escalating into wider conflict?  My readers know my predictions on this but think about it from Trump’s perspective:  Biden is leaving behind all the volatile elements of a world war in the making.  Trump will be inheriting a cauldron of nitroglycerine.

What happens when Biden walks away? All of that economic rigging disappears, and then the real data comes out while Trump is in office.  Maybe WWIII kicks off, too.  And guess who will be blamed?  The fingers will point at Trump, but they will also point at YOU.

The agenda will be to put conservative and liberty movement principles on trial and paint them as ideals of calamity. Meritocracy, individualism, independence, personal liberty, responsibility and discipline, free markets, private property, everything that makes up the foundations of western civilization is going to be put on the pyre.  Giving Trump an easy win against a cognitive deficient like Biden (or any other weak candidate) might be a setup; letting conservatives gain a moment of power only to find they’re sitting on the throne of a crumbling castle.

Am I saying don’t to vote for Trump? No. At the very least, the act of voting for Trump sends a message that the American people want what Trump is supposed to represent, and they reject what Biden is supposed to represent. The candidates are far less important than the ideals they are meant to embody.  What I’m saying is, this election might be extra weird for a reason – the fact that Trump is being elevated as the clear choice is suspicious.

At the very least there will be organized leftist riots in major cities across the US.  As we witnessed in France, the political left has no intention of giving up power and they will do anything to keep it, including burn down the neighborhood.  More reserved liberals will join forces with the most extreme socialist activist groups in order to win at any cost.  Trump’s presence in the Oval Office would be the perfect trigger for an endless parade of DEI clowns and Antifa freaks creating as much pandemonium as possible.

I’m not talking about the false left/right paradigm.  The false left/right paradigm is irrelevant when it comes to the root problem, which is the preponderance of patriot action or apathy.  If the American people in large numbers stood up tomorrow and all at once decided we were going to shut down the leftists, boot out the globalists and take the government back, we would succeed and there’s nothing anyone could do to stop us.  We’re the largest armed population in the world and by extension the largest army in the world by far.

It’s up to us, not Trump, to determine the course of our nation’s future.  And if he (or any other political leader) fails to live up to our standards, then at that point we’ll have to do the ugly thing that everyone knows is necessary but no one wants to be responsible for. Just remember that we’re going to be painted as bad guys, not freedom fighters, when we take that step.

After yesterday’s soft CPI, this morning’s PPI seems somewhat ‘less than’ but as we noted earlier, in fact it is key to the ongoing disinflationary trend (and in fact suggests all may not be trending smoothly).

After May’s MoM deflationary impulse (thanks to a plunge in energy costs), June was expected to see a modest 0.1% rise (and we have seen energy prices starting to rise again). Sure enough, headline PPI printed HOT at +0.2% MoM (and May was revised higher), pushing the YoY print up to 2.6% (well above the 2.3% expected)…

Source: Bloomberg

That is the highest PPI since March 2023.

Core PPI rose by 0.4% MoM (double the 0.2% exp), sending the YoY price rise up by 3.0% (also the hottest since March 2023)…

Source: Bloomberg

The jump in PPI was driven by a resurgence in Services costs as Energy remains deflationary (for now)…

Source: Bloomberg

The June rise in the index for final demand can be traced to a 0.6-percent increase in prices for final demand services. In contrast, the index for final demand goods decreased 0.5 percent

Perhaps worse still, the pipeline for PPI (intermediate demand) is accelerating…

Source: Bloomberg

This is not what the doves wanted to see…

And we’re off: Q2 earnings season has officially open after two of the largest US banks – JPM and Wells – reported results moments ago, with what was a bit of a mixed bag. We will cover Wells elsewhere, but here are the highlights for the largest US commercial bank, JPMorgan.

Here is a summary of what JPM just reported for Q2:

• Adjusted Revenue $50.99BN, up $8.6BN from a year ago, but not comparable to estimates for reasons outlined below
  • Investment banking revenue $2.46 billion, +46% y/y, beating estimates of $2.13 billion
  • FICC sales & trading revenue $4.82 billion, +4.6% y/y, missing estimates of $4.85 billion
  • Equities sales & trading revenue $2.97 billion, +21% y/y, beating estimates of $2.66 billion
  • Advisory revenue $785 million, +45% y/y, beating estimates of  $640.5 million
  • Equity underwriting rev. $495 million, +56% y/y, beating estimates of $387.6 million
  • Debt underwriting rev. $1.08 billion, +51% y/y, beating estimates of $905.9 million
• EPS $6.12, up $1.37 from a year ago and includes significant one-time items
• EPS excluding significant items was $4.40
• Compensation expenses $12.95 billion, beating estimates of $12.72 billion

Overall, a strong showing except that miss by FIC (more on that below). What is notable is that for yet another quarter JPM reported record quarterly profit of $18.1 billion, up $3.7 billion YoY,  thanks to revenue beats by the company’s equity traders and investment bankers, while Net Interest Income printed at $22.86BN, just above the $22.82BN expected (the “unmanaged” number came in just below estimates) even though the net yield on interest-earning assets was 2.62% below the estimate of 2.65%. That said, much of the bottom-line surge was one-time as JPM took a multibillion-dollar gain ($7.9BN pretax) tied to a Visa share exchange.

The bank also recorded $546 million in net investment securities losses: it will be interesting to find out what this is and if JPM has quietly been cultivating yet another CIO “whale”. Strip those away and JPM’s net income was only $13.1 billion, down from both a quarter ago and from a year ago. Also of note, JPM’s return on equity hit 23%, and that’s up to 28% if you follow the bank’s ROTCE stat. As for the bank’s CET1 capital ratios, the standard came in at 15.3% and advanced hit 15.5%. This means that the bank’s total loss-absorbing capacity is now $534 billion.

Something else worth noting: JPM revealed that its Q2 stock buybacks jumped to $4.9 billion from $2.8 billion last quarter. This took place even before the Fed greenlighted more shareholder returns on June 28 – the last day of the quarter – which means Jamie Dimon frontran the “successful” stress test results.

What we also find notable is that in a reversal from last quarter, the bank actually built reserves by $821 million (vs a $72 million release in Q1): this was the biggest reserve build since the bank crash quarter in Q2 2023 when the bank added $1.5 billion in reserves. This meant that provision for credit losses rose to $3.05 billion, above the $2.83 billion expected even as total charge-offs came in at $2.23 billion, just below the $2.26 billion expected.

Looking at the bank’s balance sheet and consumer banking division, there were no major surprises here, with total deposits down 1% YoY to $2.40TN (vs est $2.43TN), and flat QoQ, while total loans (including First Republic) were up 6% YoY to $1.32TN, and also flat QoQ.

“There has been some progress bringing inflation down, but there are still multiple inflationary forces in front of us: large fiscal deficits, infrastructure needs, restructuring of trade and remilitarization of the world,” Jamie Dimon said in a statement Friday. “Therefore, inflation and interest rates may stay higher than the market expects.”

Dimon was somewhat modest when citing investment banking fees rising 50%: “albeit against a low base.” He does however brag that the bank opened 450,000 net new checking accounts (“our 50th consecutive quarter of net new account growth”), and that results included “a record number of first-time investors.”

Dimon also said that market valuations and credit spreads “seem to reflect a rather benign economic outlook,” yet the bank is “vigilant about potential tail risks.” Those are the same ones we’ve been hearing about, from geopolitics that are “potentially the most dangerous since World War II,” to “multiple inflationary forces,” the prospect that “interest rates may stay higher than the market expects,” and the unknown effects of “quantitative tightening on this scale.”

But if the world’s future is ambiguous, Dimon suggests the bank’s isn’t. Its 15.3% CET1 ratio provides the bank “with excess capital even after the uncertainty created by Basel III endgame,” he writes, and the board is going to boost its dividend for the second time (“a 19% cumulative increase compared with the fourth quarter of 2023”). Dimon’s bottom line: “Our priorities remain unchanged.”

That said, a closer read of the Consumer Bank reveals continued weakness in the bank’s Card services group, where charge offs are rising fast, culminating in credit costs of $2.6 billion. Some more details:

• NCOs of $2.1B, up $813mm YoY, predominantly driven by Card Services as newer vintages season and credit normalization continues
• Net reserve build of $579mm was primarily in Card Services, predominantly driven by loan growth and updates to certain macroeconomic variables

Turning to the Commercial and Investment Bank (including markets), it is here that JPM reported solid Investment Banking and Equity Trading numbers, offset by a miss in FICC:

• IB revenue was $2.46 billion, up 46% YoY, and beating the estimate of $2.13 billion; this was “driven by higher fees across all products”
• Equity trading almost rose to the “vaunted” $3 billion mark ($2.97 billion), beating estimates of $2.66 billion driven by strong performance in Equity Derivatives and Prime.
• However, FICC revenue was $4.82B, up 4.6% YoY, and missing estimates of $4.85; the number was largely driven by Securitized Products.
• Merger advisory came in at $785 million, which was the best quarter since Q3 2022, even as Dimon continues to maintain a cautious stance on the possibility of risks around the corner.
• Finally, Securities Services revenue of $1.3B, up 3% YoY, driven by higher volumes and market levels, largely offset by deposit margin compression.

Two other notable highlights: 

• JPM is paying a lot to retain traders: total expense for the group jumped 12% YoY to $9.2B, “driven by higher compensation, including revenue-related compensation, higher legal expense and higher volumerelated non-compensation expense”
• Credit costs were $384mm as a results of i) Net reserve build of $220mm, “driven by incorporating the First Republic portfolio into the Firm’s modeled approach, as well as net downgrade activity, primarily in Real Estate, largely offset by the impact of net lending activity”, and ii) NCOs of $164mm, of which approximately half was in Office.

Finally, a 17% ROE in the unit was a very healthy number, even if it is down from the 20% in Q1.

Going down the investor presentation, JPM’s asset and wealth management business now holds $3.7 trillion in assets, up15% YoY, lifted by the surge in markets in the last three months. For the quarter, AUM had long-term net inflows of $52B and liquidity net inflows of $16B.

Of course, JPMorgan’s assets aren’t the only thing that make this bank big. Its headcount is now up to 313,206, up 4% from 300,066 a year ago.

Looking ahead, the bank said that it sexpect a net interest income this year of about $91 billion which is just under the expected adjusted expense of $92 billion — which includes the boost to the first quarter’s FDIC special assessment and a contribution to the bank’s foundation (but excludes legal costs). The bank adds that expected net charge-off rates for its card services unit will be about 3.4%. Here is a summary:

• Still Sees Full Year Net Interest Income About $91B, Est. $91.33B
• Still Sees Full Year  NII Ex-CIB Markets About $91B
• Still Sees FY Adj. Expense About $92B
• Expects 2024 Card Services NCO Rate of ~3.4%

After all that, the market reaction was mixed: the stock initially pumped, then dumped, and at last check was flat as markets try to make some sense of what the earnings mean for the bank going forward. That said, don’t cry for Jamie: the largest US banks — with the exception of Morgan Stanley — are up more than 20% this year.

The full Q2 investor presentation is below (pdf link).

Surprise. Surprise. AT&T has revealed a massive hack of customer data for the second time this year. This latest batch of customer data includes “records of customer call and text interactions” that occurred “between approximately May 1 and October 31, 2022, as well as on January 2, 2023,” the company wrote in a regulatory filing Friday. 

AT&T said the data does not include “content of calls or texts, personal information such as Social Security numbers, dates of birth, or other personally identifiable information,” but noted the data does include “periods of time, records of calls and texts of nearly all of AT&T’s wireless customers and customers of mobile virtual network operators (“MVNO”) using AT&T’s wireless network.” 

The filing explained that hackers “unlawfully accessed an AT&T workspace on a third-party cloud platform and, between April 14 and April 25, 2024.” As of the date of this filing, AT&T said, “At least one person has been apprehended.” 

According to a Bloomberg report, the third-party cloud platform that the hackers accessed to steal the data is Snowflake.

In markets, AT&T shares fell 3%, while Snowflake shares dropped 5%. 

AT&T does not believe the data has been leaked on the dark web yet. Bloomberg pointed out:

While much remains unknown about the breach, it has the potential — if the data is released — to be devastating for some customers. That includes anyone who doesn’t want others knowing who they are calling, such as politicians, executives, activists, journalists and their sources.

We reported on March 31 that the personal data of 73 million AT&T accounts were leaked onto the dark web. Much of the data appeared to be from 2019 or earlier. 

Authored by Mike Maharrey via Money Metals,

Two months ago, the gold-silver ratio broke an important support level, indicating the white metal could be in the early stages of closing its gap with gold.

The gold-silver ratio indicates how many ounces of silver it takes to buy one ounce of gold given the spot price of both metals. In other words, it tells you the price of gold in ounces of silver.

The current gold-silver ratio is hovering just about 76-1. That means it takes 76 ounces of silver to buy one ounce of gold.

The ratio remains historically high, meaning that silver is underpriced compared to gold, but there is some indication the trend is in the early stages of reversing.

In the modern era, the gold-silver ratio has averaged between 40-1 and 60-1. When the gold-silver ratio gets far above the high end of that historical average, it tends to return to the mean with a vengeance. 

For instance, in 2020, the gold-silver ratio set a record of 123-1 as Covid hysteria gripped the world and then plunged to around 60-1 as central banks around the world cranked up the money creation machine to cope with governments shutting down economies. 

In another example of this snap-back, the gold-silver ratio fell to 30-1 in 2011 after rising to over 80-1 during the money creation of the Great Recession in the wake of the 2008 financial crisis. 

Three months ago, the gold-silver ratio climbed as high as 87-1. Two months ago, the ratio fell to around 73-1, below the 13-year support level. It briefly rallied, climbing back to 80-1, but it failed to regain 13-year support before dipping over the last five days to the current level.

Given that the scenario still looks bullish for gold with the likelihood of a rate hike this fall increasing, silver could be set up for a significant bull run.

Keep in mind that silver historically outperforms gold in a gold bull market. For instance, gold charted a gain of around 40 percent during the pandemic. Meanwhile, silver was up a whopping 141 percent!

The recent breakdown of the support level in the gold-silver ratio takes on more significance given the fundamentals. Demand for the metal is at record levels while supply has flatlined.

Silver demand is expected to hit 1.2 billion ounces this year. That would rank as the second-highest annual silver demand on record. Given the supply outlook, this level of demand would create a structural market deficit of 176 million ounces. That would be the fourth consecutive year of demand outstripping supply, cutting further into global silver reserves.

The structural deficit in 2023 came in at 184.3 million ounces.

Demand will likely increase in the years ahead due to the solar energy market. Not only is the demand for silver panels growing, but the amount of silver used in each panel is also increasing.

According to a research paper by scientists at the University of New South Wales, solar manufacturers will likely require over 20 percent of the current annual silver supply by 2027. By 2050, solar panel production will use approximately 85–98 percent of the current global silver reserves.

Given both the supply and demand fundamentals and the technical breakdown in the gold-silver ratio, this may be an outstanding time to buy silver in the early stages of a bull run. 

Between 2022 and 2023, the U.S. added approximately 1.58 million people, or grew its population by about 0.5%. However, not all states grew by the same proportion.

In fact, some states saw their number of residents drop, both from net population loss (deaths outnumbering births) and from net migration (emigrants outnumbering immigrants).

Visual Capitalist’s Palla vi Rao visualizes the U.S. states with population declines between July 1, 2022 and July 1, 2023, along with the percentage change.

Data is sourced from Census Bureau estimates, released May 2024.

Ranked: Population Changes in U.S. States

A demographic reshuffling is taking place across the U.S., with states in the Northeast and the West seeing shrinking populations.

Below are the changes for all U.S. states, Washington D.C., and Puerto Rico, ranked from declines to gains in ascending order.

U.S. State	2023 Population	Population Change (2022–23)	% Population Change (2022–23)
New York	19,571,216	-101,984	-0.52%
California	38,965,193	-75,423	-0.19%
Illinois	12,549,689	-32,826	-0.26%
Puerto Rico*	3,205,691	-14,422	-0.45%
Louisiana	4,573,749	-14,274	-0.31%
Pennsylvania	12,961,683	-10,408	-0.08%
Oregon	4,233,358	-6,021	-0.14%
Hawaii	1,435,138	-4,261	-0.30%
West Virginia	1,770,071	-3,964	-0.22%
Alaska	733,406	+130	+0.02%
Vermont	647,464	+354	+0.05%
Mississippi	2,939,690	+762	+0.03%
New Mexico	2,114,371	+895	+0.04%
Rhode Island	1,095,962	+2,120	+0.19%
Wyoming	584,057	+2,428	+0.42%
New Hampshire	1,402,054	+3,051	+0.22%
Kansas	2,940,546	+3,830	+0.13%
Michigan	10,037,261	+3,980	+0.04%
North Dakota	783,926	+5,014	+0.64%
Maine	1,395,722	+6,384	+0.46%
Iowa	3,207,004	+7,311	+0.23%
District of Columbia**	678,972	+8,023	+1.20%
Connecticut	3,617,176	+8,470	+0.23%
South Dakota	919,318	+9,449	+1.04%
Montana	1,132,812	+9,934	+0.88%
Nebraska	1,978,379	+10,319	+0.52%
Delaware	1,031,890	+12,431	+1.22%
Kentucky	4,526,154	+14,591	+0.32%
Maryland	6,180,253	+16,272	+0.26%
Nevada	3,194,176	+16,755	+0.53%
Massachusetts	7,001,399	+18,659	+0.27%
Missouri	6,196,156	+18,988	+0.31%
Wisconsin	5,910,955	+20,412	+0.35%
Arkansas	3,067,732	+21,328	+0.70%
Minnesota	5,737,915	+23,615	+0.41%
Idaho	1,964,726	+25,730	+1.33%
Ohio	11,785,935	+26,238	+0.22%
Washington	7,812,880	+28,403	+0.36%
Indiana	6,862,199	+29,925	+0.44%
New Jersey	9,290,841	+30,024	+0.32%
Oklahoma	4,053,824	+34,553	+0.86%
Alabama	5,108,468	+34,565	+0.68%
Utah	3,417,734	+36,498	+1.08%
Colorado	5,877,610	+36,571	+0.63%
Virginia	8,715,698	+36,599	+0.42%
Arizona	7,431,344	+65,660	+0.89%
Tennessee	7,126,489	+77,513	+1.10%
South Carolina	5,373,555	+90,600	+1.71%
Georgia	11,029,227	+116,077	+1.06%
North Carolina	10,835,491	+139,526	+1.30%
Florida	22,610,726	+365,205	+1.64%
Texas	30,503,301	+473,453	+1.58%

Note: *Territory. **Federal district.

New York’s population shrank by approximately 102,000 people in 2023 compared to 2022. Most of that drop occurred in New York City, where the net population fell by 77,000 people. This is more than the amount by which California’s population shrank (75,000 people).

In conjunction with the Northeast and Western states’ declines, Southern states (Texas, Florida, and North Carolina to name a few) saw gains in the same period. In fact, Texas added nearly half a million people, a 1.5% gain, or three times the national average.

These patterns could indicate ongoing interstate migration. For example, between 2020 and 2021, more than 100,000 Californians moved to Texas. A 2021 New York Times analysis found that Texas in particular is teeming with jobs and good schools alongside a low crime rate. As a result it has become a preferred destination for those looking to maintain their quality of life for lower costs, compared to New York City and California.

Authored by Craig B. Smith & William D. Fletcher via RealClearEnergy,

THE PROPOSAL

Carbon capture and storage — the concept of sucking carbon dioxide (CO2) from the atmosphere and storing it underground — is being considered as a way to reduce greenhouse gases. It’s been suggested that such technology is a way to buy time while the world transitions away from fossil fuels to renewable energy. It’s discussed as a possible way to stall global warming.

There is theory, and then there is reality.

OUR OPINION

Sucking CO2 from the atmosphere is not a magical solution, as some have made it out to be. Operating carbon capture technology at a scale that would have a meaningful impact on the climate crisis, which is trending toward catastrophic impacts, would be a trillion-dollar endeavor annually — even in a best case scenario in which projects stay on budget, on schedule and the technology can both effectively work to capture and store emissions for the long term. In a worst case scenario, a lot of time and money can be wasted on an ineffective process that does little to nothing to reduce emissions, while polluters continue producing fossil fuels under the guise that their emissions are accounted for elsewhere.

The reality is that a serious approach to carbon capture with serious emission reductions in mind would involve huge capital outlays, huge electrical power consumption, and it would take decades to have any measurable effect on the amount of carbon dioxide in the atmosphere, if it worked at all. Not to mention the very real reason for concern if Big Oil is running the show. The fossil fuel industry — the sector most responsible for human-driven climate change — has sought to lead the charge of the budding carbon capture and storage industry in an effort to simultaneously rectify a polluting image and create a way to continue production of fossil fuels.

This path is not viable. It’s not reasonable or responsible to distract from other emissions reduction strategies by entertaining the far-off potential of large-scale carbon capture to save the climate. Here’s why:

THE COMPLEXITIES

Direct air capture is technically challenging. First, selectively capturing carbon dioxide molecules among the billions of other, more abundant, molecules found in air (including oxygen, O2, ozone, O3, nitrogen, N2, sulfur and others) is difficult to begin with. Then there is the magnitude of the problem. At present, the atmosphere contains over 3,300 billion metric tons of CO2, plus smaller quantities of other greenhouse gases — removing them would require an operation on a massive scale to have a meaningful impact and require power at an immense scale as well. Finally, CO2 concentration in the atmosphere is about 0.04%. If the removal process was 100% efficient — an optimistic assumption — it would be necessary to process 2,500 tons of air to capture one ton of CO2. Air movement would require considerable energy. Three physical processes might be deployed to capture CO2. They are adsorption, absorption and membranes. Power will be required for pumping and compressing air or gas containing CO2, and for extracting concentrated CO2, and finally, it must be stored  in some manner forever, such as in depleted oil fields or other underground strata, and this takes even more energy to accomplish.

Carbon capture will require large amounts of electricity — estimated as 2,500 kWh per metric ton of CO2 or more. The end product is to obtain a concentrated stream of CO2. Then, by various methods, the concentrate can be converted to a carbonate or methanol or used for enhanced oil recovery. Depending on the final process, additional energy and expense is required for pumping, storage, injection wells and other plant operations. Moving and eventually storing vast quantities of a dilute gas or liquid will require giant fans, huge pumps, and other equipment. The success of the concept depends on having large supplies of renewable energy for operation, rather than fossil fuels.

At a smaller scale, there may be some value in strategically sited carbon capture projects (if they were part of a more comprehensive emissions reduction strategy working to eventually end fossil fuel production): A variation on air capture can be used to extract CO2 from existing power plant exhausts. Capturing carbon in this way would be easier to achieve because the exhaust from a modern gas-fired power plant is about 4 to 5% CO2, which is 100 times greater than the atmosphere. Coal-fired power plant exhaust contain about 15% CO2. Several pilot plants are using this approach.

PILOT PLANTS

The first plant, known as Orca, was developed by a company called Climeworks and opened in Iceland in 2021. This plant has the added advantage that it is powered by geothermal energy, so it does not release greenhouse gases during operation. It has capacity for capturing 4,000 metric tons of CO2 per year at a recovery cost of $600-$800 per metric ton. At this plant, captured gas is bubbled into water and injected underground, where it hardens into stone. Climeworks recently announced the construction of a second plant in southern Iceland with capacity to capture 36,000 metric tons of CO2 per year when completed. After collecting and sequestering the CO2, Climeworks sells “offsets based on that captured carbon,” to those looking to make up for a significant carbon foot print.

Currently a larger plant with capacity of 500,000 metric tons of CO2/year and a construction cost of $1.1 billion is being constructed by Occidental Petroleum — yes, an oil company — in the Permian basin area of Texas and is tentatively named Stratos. Occidental will be using $1.2 billion from the Biden administration’s Inflation Reduction Act for “direct air capture projects.” Occidental’s estimate is that it currently costs $500 to $1,000 to capture one metric ton of carbon dioxide. Occidental Petroleum CEO Vicki Hollub described the proposed plant: Captured CO2 would be injected deep into underground reservoirs (former oil fields), where, in theory, it would be trapped and could potentially form new carbonate minerals. The carbon dioxide also could be sold to companies manufacturing plastics or synthetic fuels, or alternatively, it could be injected to produce more oil and gas from old wells. Hollub defended the idea of using captured CO2 to produce more fossil fuels, claiming that there would be no net increase in CO2 emissions, since the greenhouse gases released by the new fossil fuels production would be offset by the amount being removed from the atmosphere.

At 2,500 kWh/mtCO2, the Stratos plant would require 2 650-MW solar farms, at an approximate cost $2.5 billion each, just to capture CO2, not including storing it underground. Occidental says it plans to build 130 plants by 2035. Occidental is not alone: Chevron, Exxon and BP are all investing in carbon capture.

A more important question is: How effective would direct air capture plants be in reducing the burden of greenhouse gases currently in the atmosphere? One part per million (ppm) of CO2 in the atmosphere equals 7.8 billion metric tons of CO2. To reduce atmospheric CO2 by just 1 ppm would take 15,800 of Occidental’s Stratos plants, an investment of $17 trillion. For context, this sum is greater than the net worth of all the major oil companies. Last year, global emissions of carbon dioxide exceeded 40 billion metric tons. Using the most optimistic estimate of capture cost — $500 per metric ton — it would cost an estimated $20 trillion in operating expense to remove one year’s emissions.

A BETTER ALTERNATIVE

Why spend so much money to remove CO2 from the atmosphere, when we could just not put it there in the first place? Why not charge a fee to polluters for putting it there, rather than allowing polluting to be free and removing emissions to be cost-prohibitive at scale? About 50 countries have instituted some form of a carbon tax, which is a fee charged to entities that emit carbon dioxide in the course of their operations. Carbon taxes in existence today range from $1 per metric ton to $100 per metric ton. One might reasonably ask, wouldn’t it make more sense to spend $100 dollars to prevent carbon from going into the atmosphere, as opposed to spending $5,000 to take it back out again? You can guess the answer: This measure has historically been bitterly opposed by oil companies.

PAYDAY

Shell and other oil companies are embarking on similar projects, planning to rebrand themselves as “carbon capture” companies, although they will actually continue to produce and profit from fossil fuels. Critics claim that this is a move to sidetrack efforts to reduce fossil fuel use. Occidental says, “selling CO2 and carbon credits could become a billion-dollar business” and “could save our industry.” Yet, Professor Mark Z. Jacobson of Stanford University describes proposals for carbon capture as a dangerous distraction, likely to do “more harm than good.”

Given that globally scalable, reliable carbon capture technology is not a reality, attention paid to carbon capture promises from fossil fuel companies could not only worsen emissions but cost us valuable time in the race to slow the worsening impacts of  climate change. We should know better than to trust fossil fuel polluters with saving the planet.

Despite the average energy consumption per person trending downward since 2000, energy cost still represents a significant part of American household budgets.

This map, via Visual Capitalist’s Bruno Venditti, compares the total monthly energy bills in each of the 50 states.

WalletHub calculated each state’s average monthly energy bill by multiplying the average consumption of electricity, natural gas, home heating oil, and motor fuel by their respective prices and adding these amounts together as of June 3, 2024.

Wyoming Leads the Ranking

Wyoming has the highest energy costs in 2024.

The state has the highest gas and residential oil consumption per capita, and residents’ average monthly energy bill is $1,591. Among many factors, the state also has extremely cold winters, and many residents live in remote areas with limited heating options.

North Dakota, another state with harsh winters, has the second-most expensive average monthly energy bill, at $840. Interestingly, aside from heating oil, energy is relatively inexpensive in the state. It’s just high usage that drives up monthly bills.

Iowa is the third-most energy-expensive state, with residents’ average monthly energy bill costing $798, about half of the cost in Wyoming.

Overall Rank	State	Total Energy Cost
1	Wyoming	$1,591
2	North Dakota	$840
3	Iowa	$798
4	Montana	$787
5	Minnesota	$782
6	Massachusetts	$759
7	Connecticut	$750
8	Alaska	$716
9	South Dakota	$709
10	Virginia	$694
11	Rhode Island	$690
12	Utah	$684
13	Alabama	$677
14	Pennsylvania	$669
15	Maryland	$665
16	New Hampshire	$662
18	West Virginia	$659
17	Wisconsin	$659
20	Indiana	$645
19	Maine	$645
21	Vermont	$644
22	New Jersey	$643
23	Ohio	$630
24	Illinois	$622
25	Washington	$618
27	Idaho	$591
26	Oregon	$591
28	New York	$589
29	Hawaii	$583
30	Michigan	$583
31	Missouri	$578
32	Delaware	$564
33	North Carolina	$557
34	Kentucky	$556
35	Arkansas	$541
36	Nevada	$538
37	Georgia	$533
38	South Carolina	$533
39	Tennessee	$524
40	Oklahoma	$477
41	Californa	$476
42	Louisiana	$474
43	Colorado	$470
44	Florida	$462
45	Mississippi	$457
46	Nebraska	$453
47	Texas	$437
48	Kansas	$436
49	Arizona	$400
50	New Mexico	$376

Meanwhile, New Mexico is the state with the lowest energy costs, at $376.

According to the U.S. Energy Information Administration, the highest energy consumption of the year is recorded during summer in July, followed by August.