Month: April 2025

It had already been a miserable month for oil, which has suffered its worst monthly performance since 2021 and also is on pace for its month of April on record… and then it got even worse when shortly before noon ET, when Reuters reported, citing multiple sources, that Saudi Arabian officials are briefing allies and industry experts to say the kingdom is unwilling to prop up the oil market with further supply cuts and can handle a prolonged period of low prices.

This shift in Saudi policy could suggest a move toward producing more and expanding its market share, a major change after five years spent balancing the market through deep output as a leader of the OPEC+ group of oil producers. Those cuts had supported prices, in turn bolstering the oil export revenue that many oil producers rely on, but many OPEC+ members – most notably Kazakhstan – took advantage of the production restraint and blew away through their export quotas, infuriating other cartel members.

Sure enough, Reuters notes that Riyadh has been angered by Kazakhstan and Iraq producing above their OPEC+ targets. And after pushing members to adhere to those targets and to compensate for oversupply in recent months, a frustrated Riyadh is changing tack, OPEC+ sources said.

Saudi Arabia pushed for a larger-than-planned OPEC+ output hike in May, a decision that helped send oil prices below $60 a barrel to a 4-year low.

And now that Kazahkstan blew it for all cartel members, everyone will share the pain equally, as lower prices are bad news for producers that rely on oil exports to fund their economies. Although producers like Saudi have a very low cost of production, they need higher oil prices to pay for government spending. When oil prices fall, many large oil-producing countries come under pressure to cut their budgets.

And just to confirm that they are not bluffing, the Saudis appear to be briefing allies and experts that they are ready to do just that. The last time they did just that was in March 2020, just before covid shut down the global economy and briefly sent oil prices negative, sparking budget crises across all OPEC members.

Saudi officials in recent weeks have told allies and market participants the kingdom can live with the fall in prices by raising borrowing and cutting costs, the five sources said.

“The Saudis are ready for lower prices and may need to pull back on some major projects,” one of the sources said. All sources declined to be named due to sensitivity of the issue.

The problem is that Saudi Arabia needs oil prices above $90 to balance its budget, higher than other large OPEC producers such as the United Arab Emirates, according to the International Monetary Fund (IMF). As a result, Riyadh may need to delay or cut back some projects due to the price drop, analysts have said.

OPEC+, which besides the Organization of the Petroleum Exporting Countries also includes allies such as Russia, may decide to speed up output hikes again in June, OPEC+ sources have said. OPEC+ is cutting output by over 5 million barrels or 5% of global supply, to which Saudi Arabia is contributing two-fifths.

Russia, the second largest exporter in OPEC+ behind Saudi Arabia, is aware of Riyadh’s plans for faster output increases, said two of the five sources who are familiar with the Russian thinking and conversations with Riyadh. Even so, Russia would prefer the group stick to slower output increases.

Saudi Arabia and Russia, the de facto leaders of OPEC+, make the biggest contributions to OPEC+ cuts. Russia’s budget balances at about $70 a barrel and the Kremlin’s spending is on the rise due to the Russian war in Ukraine.
Russia may see a further fall in revenue as prices for its discounted, sanctioned oil could fall below $50 a barrel as a result of OPEC+ output rises, one of the two sources said.

Theories on the apparent change in Saudi strategy range from punishing OPEC+ members exceeding their quotas to a move to fight for market share after ceding ground to non-OPEC+ producers such as the United States and Guyana. Higher output may also be a fillip to U.S. President Donald Trump, who has called for OPEC to boost output to help keep U.S. gasoline prices down.

Trump is due to visit Saudi Arabia in May and could offer Riyadh an arms package and a nuclear agreement. OPEC+ decided to triple its planned output increase to 411,000 bpd.

That still leaves OPEC+ holding back more than 5 million bpd, curbs the group aims to unwind by the end of 2026. 

“We would still call this a ‘managed’ unwind of cuts and not a fight for market share,” UBS analyst Giovanni Staunovo said.

“This confirms the market’s fears that Saudi Arabia’s accelerated unwinds were not temporary, but a long-term strategy shift,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group. It raises the question of whether “Saudi is going to repeat the 2020 playbook to dramatically increase production.”

For now the market is voting “yes”, and the news sent WTI tumbling as much as 4%,or more than $2 to just under $58, the lowest price since early 2021 (and a level which was only briefly breached after Trump’s Liberation Day sent oil to $55 before rebounding rapidly).

OPEC+ rocked the crude market in early April, with a surprise decision to increase supply in May by 411,000 barrels a day, the equivalent of three monthly tranches from a previous plan. Morgan Stanley has said it expects a “meaningful surplus” to develop over time, while JPMorgan Chase & Co. warned the cartel may accelerate planned production increases at a meeting next week.

Beyond OPEC+, non-cartel nations are also expected to add supplies, including drillers in Canada and Guyana, feeding concerns about a global glut.

At the same time, hopes are fading that there will be quick breakthroughs in US-led trade negotiations, weighing on the outlook for energy demand. The US economy contracted for the first time since 2022 in the first quarter as a result of a surge in pre-tariff imports and softer consumer spending. In China, factory activity slipped into the worst contraction since December 2023, revealing early damage from the trade war.

Authored by Zachary Stieber via The Epoch Times (emphasis ours),

A federal appeals court on April 29 turned down the Trump administration’s bid to block restrictions on deporting Venezuelans from Colorado.

The government did not show that it is likely to be irreparably harmed if a lower court order remains in place, a unanimous three-judge panel of the U.S. Court of Appeals for the 10th Circuit ruled.

Under court precedent, a party seeking a stay pending appeal must show it will likely be irreparably harmed absent a stay.

U.S. District Judge Charlotte N. Sweeney recently issued a temporary restraining order requiring the Trump administration to give Venezuelans arrested for alleged links to the Tren de Aragua gang three weeks’ notice before deportation.

The order applies to all noncitizens in Colorado who were, are, or will be subject to President Donald Trump’s March invocation of the Alien Enemies Act. The president at the time said that Tren de Aragua had invaded the United States, and he directed officials to arrest and deport its members.

“All members of the class are in federal custody. And given the important unresolved issues under the Alien Enemies Act (AEA) and the ruling of the United States Supreme Court that no one in that proceeding be removed under the AEA until further order of that Court … there is no realistic possibility that the government could remove any member of the class from this country before final expiration of the TRO on May 6, 2025,” the 10th Circuit panel stated.

Lawyers for the government and the plaintiffs in the case did not respond to early morning requests for comment.

Four factors must be met to secure a stay pending appeal. The appeals court did not address the other three factors, which include presenting a strong showing that a party is likely to succeed in the case since the irreparable harm standard was not met, the judges said.

The panel consisted of U.S. Circuit Judges Harris L. Hartz, Gregory A. Phillips, and Joel M. Carson.

Government lawyers had said in filings that Sweeney lacked jurisdiction to halt deportations because the plaintiffs were not in custody at the time of the ruling. Immigration and Customs Enforcement had released the plaintiffs because it determined they were not subject to the Alien Enemies Act.

The lawyers also argued that the restraining order “irreparably harms the United States’ conduct of foreign policy” because it “usurps the President’s statutory and constitutional authority to address what he has identified as an invasion or predatory incursion.”

Attorneys representing the Venezuelans had said in response that the restraining order was proper because the government had been giving people arrested under the invocation just 24 hours’ notice of removal, which they said did not achieve due process.

Nvidia CEO Jensen Huang warned Wednesday at the Hill and Valley Forum in Washington, D.C., that the U.S. and China are in a fierce, long-term AI supremacy race, while touting AI’s potential to transform industries and drive a trade jobs boom.

“China is right behind us,” Huang told CNBC’s Squawk on the Street after his forum appearance. “We’re very, very close.” The billionaire tech founder, whose company dominates the AI chip market, framed the competition as enduring. “This is a long-term, an infinite race,” he said. “In the world of life, there’s no two-minute drill or end of the quarter.” Huang’s comments underscore the high stakes of AI development as both nations channel vast resources into the transformative technology. “We’re going to compete for a long time,” he added.

Nvidia CEO Jensen Huang says China is right behind the U.S. in the AI race while at the Hill and Valley Forum. pic.twitter.com/XbVL5iQgFf

— Turpentine (@TurpentineMedia) April 30, 2025

At the forum, Huang, in conversation with Jacob Helberg, Under Secretary of State for Economic Growth, Energy, and the Environment nominee and forum co-founder, weighed in on AI’s impacted on manufacturing. “Every company that makes things today—whether lawnmowers or construction machinery—will shift from manual to autonomous or semi-autonomous systems,” he said. “When it becomes autonomous, it’ll be software-defined, and you’ll need factories to produce the AI that powers it.” Huang envisioned a dual industrial model: one factory building physical products, another generating the AI “tokens” that drive them.

NVIDIA CEO Jensen Huang explains to @jacobhelberg how every company with a physical factory will also operate an AI factory: pic.twitter.com/R8MyrPMEEP

— Turpentine (@TurpentineMedia) April 30, 2025

Huang also addressed AI’s impact on the labor market, predicting that the changes, though severe, will be a net-positive for society. “New jobs will be created, some jobs will be lost, every job will be changed,” he said, advocating a first-principles approach to avoid hyperbolic forecasts. He pointed to San Francisco’s revival as evidence of AI’s economic potency. “Just about everybody evacuated San Francisco. Now it’s thriving again—all because of AI,” he said. The technology is reshaping software development, moving from human-coded programs on CPUs to machine-learning-generated code on GPUs, spawning new roles in data curation and AI safety. “All of that technology is being invented right now, and it creates tons of jobs,” Huang noted.

The most lucrative opportunity, Huang argued, lies in “AI factories”—massive facilities converting electricity into computational intelligence. These complexes, he said, represent a new industrial frontier. “A one-gigawatt factory is $60 billion,” he said, roughly equivalent to Boeing Co.’s annual revenue. With plans for factories scaling to 7-10 gigawatts, their construction and operation promise an economic windfall, particularly for skilled trades.

Nvidia CEO Jensen Huang on how AI will transform the labor market and be a boon for tradecraft workers like electricians and plumbers: pic.twitter.com/9cYDbB1GU4

— Turpentine (@TurpentineMedia) April 30, 2025

“You need carpenters, steelworkers, masons, mechanical and electrical engineers, plumbers, and IT specialists,” Huang said, estimating a three-year construction cycle per factory. “A whole bunch of new trade jobs have to be created.”

China’s manufacturing activity in April saw its worst contraction since December 2023, exposing sharp signs of weakness in Asia’s biggest economy from the trade war with the US, and boosting calls for fresh Chinese stimulus, which is always “just around the corner” but never arrives.

In the aftermath of significantly higher US tariffs, China’s official NBS manufacturing PMI fell to 49.0 in April from 50.5 in March, much lower than consensus expectations, the lowest reading since May 2023. The non-manufacturing PMI, which includes services and construction, fell to 50.4 from 50.8 also missed expectations driven by weakness in both construction and services sectors, but remained above the 50-mark separating growth from contraction.

Separately, the unofficial Caixin manufacturing PMI also fell to 50.4 in April from 51.2 in March.

The reading contrasts with Chinese officials’ conviction that the world’s second-largest economy is well placed to absorb the U.S. trade shock and confirms that domestic demand remains weak as factory owners struggle to find alternative buyers overseas.

Here are the details:

1. The NBS manufacturing PMI headline index fell to 49.0 in April from 50.5 in March, the lowest reading since May 2023. Among major sub-indexes of NBS manufacturing PMI, the output sub-index fell to 49.8 from 52.6, the new orders sub-index declined to 49.2 from 51.8, and the employment sub-index fell to 47.9 from 48.2. The suppliers’ delivery times sub-index inched down to 50.2 in April from 50.3 in March. NBS commented that the output and new orders sub-indexes of textile and metal products were below 50 in April.
    
2. On the trade-related sub-indexes, the manufacturing new export order sub-index decreased notably to 44.7 in April (vs. 49.0 in March), the lowest reading since December 2022. The import sub-index fell to 43.4 in April (vs. 47.5 in March). Inventory and price sub-indexes showed inventory drawdowns and deflationary pressures. The raw material inventories sub-index edged down to 47.0 from 47.2, and the finished goods inventories sub-index decreased to 47.3 from 48.0. The input cost sub-index decreased sharply to 47.0 (vs. 49.8 in March). The output prices sub-index also fell to 44.8 (vs. 47.9 in March). Larger manufacturers appeared to show a bigger activity deceleration. By enterprise size, the PMI of large/medium/small enterprises fell to 49.2/48.8/48.7 from 51.2/49.9/49.6 in April, respectively.

   
    

3. The Caixin manufacturing PMI, which was released shortly after the NBS print, fell to 50.4 in April from 51.2 in March, amid a sharp fall in new export orders and overall factory activity slowing. Sub-indexes in the Caixin manufacturing PMI suggest a modest decline in the output sub-index in April (51.6 vs. 51.8 in March), a significant slowdown in new orders (50.5 vs. 52.1 in March), weaker employment (49.0 vs. 50.1 in March), and deflationary pressures in price indicators (input prices increased to 49.7 from 48.4 and output prices increased to 49.2 from 49.1). The new export orders sub-index fell sharply to 47.5 in April from 52.0, the lowest reading since July 2023, suggesting weaker external demand amid higher US tariffs. Surveyed companies noted that greater competition among vendors amid subdued demand for inputs led to a drop in input costs in April. Firms often shared cost savings with their customers, and lowered their selling prices accordingly.
4. The official non-manufacturing PMI (comprised of the services and construction sectors) fell to 50.4 in April (vs. 50.8 in March). The services PMI decreased to 50.1 (vs. 50.3 in March). According to the survey, the PMIs of air transportation, telecommunications, radio, insurance, television and satellite transmission services sectors were above 55 while the PMIs of water transportation and capital market services were below 50 in April. The construction PMI fell in April to 51.9 (vs. 53.4 in March). NBS noted that the growth of the infrastructure-related construction PMI rose to 60.9 in April from 54.5 in March.

Manufacturers had been front-loading outbound shipments in anticipation of the duties, but the arrival of the levies has called time on that strategy, putting pressure on policymakers – who had for the past year merely promised to do something instead of actually doing something – to finally address rebalancing the economy.

“The sharp drop in the PMIs likely overstates the impact of tariffs due to negative sentiment effects, but it still suggests that China’s economy is coming under pressure as external demand cools,” Zichun Huang, China Economist at Capital Economics, said. 

“Although the government is stepping up fiscal support, this is unlikely to fully offset the drag, and we expect the economy to expand just 3.5% this year.”

Huang added that negativity among the survey’s respondents “probably exaggerates the impact of the tariffs,” noting that “the new export orders index dropped back to its lowest level, COVID-19 disruptions aside, since April 2012.”

Trump’s decision to single Beijing out for import duties of 145% comes at a particularly difficult time for China, which is struggling with deflation due to sluggish income growth and a prolonged property crisis.

Beijing has largely relied on exports to shore up the fragile economic recovery since the end of the pandemic and only began to take steps to boost domestic demand more earnestly late last year. 

Zhao Qinghe, an NBS statistician, said the drop was largely down to “sharp changes in (China’s) external environment,” in a note accompanying the release. China’s yuan inched lower against the dollar following the data’s release, as the first data since Trump’s tariff announcement pointed to early signs of damage to the economy.

While China has repeatedly denied it is seeking to negotiate with the U.S. a way out of the tariffs, and appears to instead be betting that Washington makes the first move, continued economic deterioration will force Beijing’s hand. 

“We expect the manufacturing PMI to be in contraction in May, but it is expected to rise to about 49.5, driven by an increase in stable growth policies,” said Wang Qing, chief macro analyst at Oriental Jincheng.

He said further cuts to interest rates and the amount commercial banks must hold in reserve may be needed as conditions worsen. On Monday, the vice head of China’s state planner said the National Development and Reform Commission (NDRC) would roll out new policies over the second quarter in line with the prevailing economic conditions of the time.

That followed pledges by the Communist Party’s elite decision-making body, the Politburo, on Friday to support firms and workers most affected by the duties. The general consensus among China observers is a second trade war with the U.S. will significantly weigh on growth, but the NDRC’s Zhao Chenxin said he was confident the country would achieve its 2025 economic growth target of around 5%.

The International Monetary Fund, Goldman Sachs and UBS all recently revised down their economic growth forecasts for China over 2025 and into 2026, citing the impact of U.S. tariffs – none of them expect the economy to hit Beijing’s official growth target.

Authored by Jonathan Turley,

The first 100 days of the Trump administration have been described in the same way on sites ranging from the ACLU to Vanity Fair: Chaos.

It seems like the Justice Department is battling everywhere on everything at the same time.

It is indeed chaos, but it is not necessarily as random or as reckless as it may seem to the naked eye.

I have been critical of a number of legal moves by the Trump administration, including policies that undermine free speech values. Yet there is a type of legal chaos theory behind all of these actions. In science, chaos theory suggests that, even in a system of seemingly random actions, there can be patterns and interconnections.

The hyperkinetic litigation around the country reflects two realities.

• First, Democratic state governments and groups have a massive war chest to challenge any and every new policy of President Trump. In California, the Democrats actually pre-approved a litigation fund before the inauguration to do precisely that.

• Second, and more importantly, Trump promised sweeping changes from immigration to transgender policies to education reforms.

If you know that you are going to be challenged, it is better to get into court as soon as possible to move critical cases through the legal system. What you need is finality. Even if you lose cases, you need to know what authority you have.

Immigration wins

This is an administration in a hurry. Trump learned in his first term that you need to move as fast and as far as possible in the first two years of a presidential term.

With the midterm elections looming, Trump knows that reforms may end and investigations and impeachments will begin if the Democrats retake the House in 2026.

Despite some losses, the Justice Department has succeeded generally in reaffirming its authority to seek the reduction of government and to root out waste. It has also made real progress in other areas.

Take the area of greatest success for the Trump administration: Immigration.

One thing that was clearly established in the first 100 days is that the entry of millions of unlawful immigrants was a choice made by the Biden administration and the Democrats. They could have stopped most of these entries at any time, but elected to leave the southern border effectively open for four years as millions poured over.

In a matter of weeks, Trump effectively closed the border. In February, there were just 8,326 southern border encounters, down from 189,913 in February 2024. Daily encounters this week declined 97% from Biden.

As many of us stated during the Biden administration, Democrats could have shut down the border, but clearly did not want to. Now with millions in the country, Democrats are calling for “pathways to citizenship” by arguing that there is no way to process so many illegals allowed in under Biden.

In the meantime, the public overwhelmingly favors deportations and elected Trump on his pledge to carry out such removals. Polling shows that 83% of Americans support deportations of immigrants with violent criminal records and roughly half support mass deportation of all undocumented persons.

A new CBS polls shows that, after the first 100 days, 56 percent approve of President Donald Trump’s “program to find and deport immigrants who are in the U.S. illegally.”

National injunctions

To carry out that policy, Trump is seeking to use new expedited systems. For the worst individuals, he has turned to the centuries-old Alien Enemies Act, a little-used act that presents a series of novel, unresolved questions.

Even with this smaller subset of detainees, individual hearings and appeals could make Biden’s decision to allow millions into the country a permanent reality. Many immigrants have been given initial court dates that extend beyond the Trump term.

Trump also pledged to reduce trade barriers for American exports and he is pushing existing laws to the breaking point on tariffs. He is right on the merits.

Even our closest allies impose unfair barriers to our goods and Trump sought to change the status quo with sweeping tariffs issued under his own authority.

Democrats have challenged that authority in various courts and, again, there are good-faith arguments that must be hashed out in court.

It is too early to tell how successful these cases will prove. However, a district court injunction (or even a dozen injunctions) a crisis does not make.

The Supreme Court is about to hear arguments on limiting the use of national injunctions and some of these district court decisions are highly challengeable on appeal.

There is no question that Trump is moving at a lightning speed and the Justice Department has to move at the same pace as the president.

There is also no question that it would better to slow down to avoid some of the unforced errors in the first 100 days.

However, Trump knows that time is of the essence. If he is going to realign the markets and make progress on issues like deportations, he has to put points on the board before the midterm elections. Ronald Reagan lost 26 seats in the House in his first midterm, Bill Clinton lost 54, and Barack Obama lost a breathtaking 63 seats.

The greatest problem for the Justice Department is that the White House and the political team appear to be largely dictating these moves. Political aides see these hills as worth dying on. Even if they lose in court, fighting to remove criminal aliens or to reduce certain foreign aid remains popular with voters.

Don’t alienate judges

The frenzy, however, can come at a cost. That includes alienating justices on the Supreme Court. The resistance to court orders and hyperbolic rhetoric seems to be wearing thin with members like Chief Justice John Roberts.

Trump will need these votes when they really count on big-ticket items like his inherent authority to act in areas ranging from markets to migrants.

Fights over Kilmar Armando Abrego Garcia are burning time and effort. If he was simply returned as ordered by a court, Abrego Garcia could be promptly and correctly deported right back to El Salvador. He has no cognizable basis for remaining in the United States.

Richard Carlson, a Bay Area psychotherapist, famously wrote a book titled “Don’t Sweat the Small Stuff … and it’s all Small Stuff.” Fights like Garcia are small stuff.

Of course, much of what presidents do is “big stuff” and you have two years to make those things happen. In a curious way, the Trump administration is fortunate to have many of these issues in court early to gain greater finality on the lines of authority. However, it needs to focus on the big stuff . . . and a short calendar.

*  *  *

Jonathan Turley is a law professor at George Washington University and the author of best-selling book “The Indispensable Right: Free Speech in an Age of Rage.”

Authored by Daniel Lacalle,

On April 23rd, I participated in a conference at the European Parliament on the future of nuclear energy with experts from all over Europe, where I warned that, with the current energy policies, blackouts will be the norm, not a coincidence.

The shortsighted and sectarian policy of the activists who populate the government has led us to the worst blackout in the history of Spain. We have been without communication or electricity for nearly eleven hours.

This blackout, with the immediate collapse of fifteen gigawatts of power in the system, is the consequence of a policy that penalizes base energy, key to providing stability to the system, and plunders the energy sector.

Governments have been dedicated to closing nuclear power plants, making them unviable with abusive and confiscatory taxation; penalizing investment in distribution with absurd regulations; imposing a volatile and intermittent energy mix; and burdening energy with elevated taxes and administrative delays. What could go wrong? Everything.

And it happened.

Renewable energies, while essential in a balanced energy mix, cannot provide safety and stability due to their volatility and intermittent nature. That’s why it is essential to have a balanced system with base-load energy that operates all the time, such as hydropower, nuclear, and natural gas as backup.

Destroying access to nuclear energy with unnecessary closures and confiscatory taxation has been part of the fundamental causes of the disaster and the blackout.

Last week, they had to close the remaining nuclear power plants because their taxes are so high that they cannot cover their fixed costs. They have destroyed nuclear plants’ economics by political design. Moreover, those plants would have provided stability to the grid if national and regional governments, which use nuclear and hydroelectric power as cash cows for their revenue-hungry policies, had prioritized supply security over energy sectarianism.

There is much more.

Spain and Portugal produce electricity with more than 60% solar and wind energy. Hydraulic, nuclear, and combined cycle gas plants must cover the shortfalls in solar and wind production, which is intermittent. There is no possibility of having a stable and secure system with a continuous supply if the electrical grid is not balanced to avoid a total blackout.
According to Euronews, France sometimes produces too much electricity, leading the network operator RTE to disconnect solar or wind sites. The consumer pays taxes to cover the operator’s losses. This procedure prevents a general blackout of the grid.”

In Spain, the president of Red Eléctrica, Beatriz Corredor, whose experience in energy is more than scarce, has never given a message or coordinated actions to prevent blackouts that were happening more frequently recently. We have been experiencing sporadic supply cuts to the industry for years, and just a week ago, the Chamartín station had a severe supply cut episode.

The crisis was not only a disaster due to the shortsighted energy policy of the current and previous governments. It was a disaster due to the inaction of the Ministry of Defence. Similar to the recent floods, our security forces exhibited astonishment at their lack of mobilization. Trains and elevators blocked thousands of travelers for hours, while the army stood by, waiting for orders.

Six days ago, the government, left-wing parties, and many media outlets celebrated that Spain’s power grid ran entirely on renewable energy for a weekday for the first time. Bravo. A week later, a massive blackout in Spain, Portugal, and parts of France. France quickly restored electricity because it has the largest nuclear fleet in Europe. In Spain, the government maintained a confiscatory taxation system that prevented nuclear plants from operating, resulting in nearly eleven hours of darkness and no communication.

Red Eléctrica reported that the cause was a “strong oscillation in the electrical grid” that “forced the Iberian Peninsula to disconnect from the European system”. The collapse was immediate and long-lasting. It was the longest power outage in the history of Spain. The recovery efforts were in vain as they attempted to restore frequency control and stability with a system dependent on volatile and intermittent renewables.

A system without physical inertia, provided by baseload energies that operate all the time—nuclear and hydroelectric—makes it impossible to stabilise the grid in the face of supply disruptions.

When the collapse occurred, the Spanish electrical grid had almost 80% renewable generation, 11% nuclear, and only 3% natural gas. There was practically no base generation or physical inertia to absorb the shock that was generated.

For years, experts have issued warnings. Experts from around the world have been accused of being mouthpieces for invented lobbies when they warned of the risk to the system from overloading with renewables and eliminating or limiting base-load energies. In 2017, the European Network of Transmission System Operators warned that the increase in renewables would raise the risk of cascading failures if urgent investment was not made in synthetic inertia and storage technologies. Moreover, even if investment is made in storage, hundreds of experts warned about the additional burden with the electrification of the mobile fleet. Despite the warnings from energy companies and operators, the European Commission maintained its bet on renewable development that was poorly planned and worse executed. This included a New Green Deal that ignored the importance of networks and backup and seemed designed by school activists.

The Spanish government wanted to present itself as the top student of that so-called ecological sectarianism, which ignores copper and lithium mining, the importance of backup, and system stability. What have they achieved? They have created a disaster that has the potential to repeat itself.

Blackouts, which should have been something obsolete and forgotten, have become the norm since politicians have ideologised energy. Other countries have suffered similar problems: Australia (2016), Germany (2017), and the United Kingdom (2019) experienced blackouts or near-blackouts due to insufficient energy reserves or grid stability measures. However, none of these incidents have been as dramatic or scandalous as the one in Spain.

The governments of Spain have decided that the closure of all our nuclear power plants will be effective in 2035, despite all the technicians reminding us that they work perfectly and their lifespan could be extended by at least ten years. This action is going to increase dependence on renewables and Russian natural gas. In other words, Spain’s shortsighted policy is going to make the country more dependent on China and Russia for energy and face constant blackouts and supply cuts to the industry as if it were a third-world dictatorship.

Propaganda told us that renewables would bring competitiveness and stability to the grid, but the reality shows that an over-reliance on certain renewables and a shortage of base-load energy sources indicate that the electrical grid increasingly depends on the few nuclear and natural gas plants that operate to maintain supply stability.

The blackout in Spain was not caused by a cyberattack but by the worst possible attack, that of politicians against their citizens.

It is urgent that Spain radically changes its energy strategy, that we maintain and expand the nuclear and base energy park, or we will depend more on Russia and China and, moreover, with blackouts.

In our preview of today’s quarterly refunding announcement we said to focus on three things: i) when will Treasury hike coupon sizes again, ii) if there will be any change to the language holding auction sizes steady for “at least” the next several quarters, and iii) will Bessent change the Treasury buyback program to a more activist exercise (similar to what Yellen did with her Activist Treasury Issuance strategy which boosted markets for 2 years as reverse repo drained).  In retrospect, there were no big surprises, and in line with our forecast for $370BN in May gross offering, and $125BN in 3/10/30 quarterly refunding auctions…

… the Treasury announced just that, revealing a $125BN refunding calendar, made up of the following:

• $58 billion of 3-year notes on May 5
• $42 billion of 10-year notes on May 6
• $25 billion of 30-year bonds on May 8

The refunding will raise new cash of about $30.8 billion. The balance of Treasury financing requirements over the quarter will be met with regular weekly bill auctions, cash management bills (CMBs), and monthly note, bond, Treasury Inflation-Protected Securities (TIPS), and 2-year Floating Rate Note (FRN) auctions, or visually:

The table above is a carbon copy of the one we laid out on Monday, so again, no surprises here at all.

With regard to TIPS, Treasury detailed the following adjustments for the February to April period:

• To increase the June 5-year TIPS reopening by $1 billion
• Boost the July 10-year TIPS new issue by $1 billion

More importantly there were no surprises in the Treasury’s forward guidance put in place iin January of 2024, as it kepts is language unchanged saying the “Treasury believes its current auction sizes leave it well positioned to address potential changes to the fiscal outlook and to the pace and duration of future SOMA redemptions. Based on current projected borrowing needs, Treasury anticipates maintaining nominal coupon and FRN auction sizes for at least the next several quarters.“

Dealers had expected that the Treasury would avoid ramping up longer-dated securities sales for now, in the face of a raft of uncertainties along with the constraint of the debt limit. Since the start of this year, the debt ceiling has left debt managers unable to boost the overall net supply of Treasuries, forcing them to deploy cash reserves and so-called special accounting measures to make good on payment obligations.

“The Treasury is in wait-and-see mode when it comes to debt management,” Santander economist Stephen Stanley wrote in a note ahead of the announcement. “The fiscal outlook is highly uncertain, with a huge tax-and-spending package making its way through Congress over the next few months,” and it’s not yet clear whether federal revenue will ramp up off the back of tariff hikes, or get hurt by an economic downturn, he said.

Stanley, along with many dealers, estimated that the Treasury wouldn’t need to resume boosting the size of note and bond auctions again until early 2026; of course, as a result of outsized fiscal deficits – which everyone agrees have to be slashed but everyone refuses to start doing it now – which are running at $2 trillion a year, mean most analysts see an increase as inevitable at some point.

Separately, some dealers had been on the lookout for any hints that Bessent may be leaning towards boosting the share of bills over time – setting aside past criticism of Yellen for doing just that. In response, the Treasury clarified that “until the debt limit is suspended or increased, debt limit-related constraints will lead to greater-than-normal variability in benchmark bill issuance and significant usage of CMBs” which was also expected. That question is what happens after the debt ceiling deal is reached some time in the late summer.

Turning to the big wildcard in today’s announcement, the expectations that Treasury Buybacks may be used more actively while the dormant Fed wakes up to stabilize the bond market, the Treasury advised that it’s “evaluating potential enhancements to its buyback program to better achieve its liquidity support and cash management goals.” As we noted previously, the surprising change comes after Treasury Secretary Scott Bessent earlier this month flagged that “we could up the buybacks” in case needed to address any tumult in the Treasuries market.

Specifically, this is what the Treasury said as it evaluates supplanting the Fed’s missing QT with treasury buybacks:

Given the success of the buyback program since its launch last year, Treasury believes it is an appropriate time to consider ways to improve its efficacy.  Accordingly, Treasury will evaluate a broad range of possible enhancements such as: changes to maximum purchase amounts, buyback operation scheduling and frequency, security eligibility, maturity bucket composition, execution process, and counterparty eligibility.  In considering these options, Treasury will be guided by the objective of financing the government at the lowest cost over time.  Treasury is committed to engaging with a wide range of market participants, including the primary dealers and Treasury Borrowing Advisory Committee, to assess these potential enhancements to the buyback program.

US debt managers will be looking at potential changes to the maximum purchase amounts of their buybacks, along with the frequency of the operations and other details. The current buyback program kicked off last year, and is aimed at improving the liquidity of older securities along with helping smooth out the Treasury’s management of cash.

The Treasury also released its latest buyback schedule for the upcoming refunding quarter.  As the schedule indicates, Treasury plans to conduct weekly liquidity support buybacks of up to $4 billion per operation in nominal coupon securities.  In longer-maturity buckets, Treasury plans to conduct two operations, each up to $2 billion, over the refunding quarter.  Treasury also plans to conduct two operations, each up to $500 million, in each of the TIPS buckets.

Turning to the next potential political scandal, namely the debt limit, the Treasury said that it has been using extraordinary measures to finance the government on a temporary basis.  “The period of time that cash and extraordinary measures may last is subject to considerable uncertainty due to a variety of factors, including the unpredictability of tax receipts and the normal challenges of forecasting the payments and receipts of the U.S. government months into the future. Given this unavoidable uncertainty, Treasury is not able at this time to provide an estimate of how long its cash and extraordinary measures may last. We expect to provide an update during the first half of May after the majority of receipts from the April income tax filing season have been received.”

Perhaps the most stunning development is that the department has questioned dealers on the potential bill demand from stablecoins, in one possible indication officials are contemplating a structural change in the market. The minutes of a meeting of the Treasury Borrowing Advisory Committee, a panel of the most important bond market participants in the US, said that “dealers agreed that the digital asset space was important to monitor on an ongoing basis as a potential source of Treasury demand.”  Here is the section at hand:

With the growth of the cryptocurrency and digital asset economy has come the expansion of the “stablecoin” market in the United States and abroad. As this asset class continues to grow, the distinctions between money funds and payment stablecoins has continued to converge. Some stablecoins are moving towards paying interest, money market funds are exploring tokenization, and Congress is considering explicitly defining what constitutes a collateralized dollar-backed payment stablecoin. Please articulate the terminal effects of interest-bearing stablecoins from a perspective of Treasury demand, USD hegemony, the expansion of dollar-backed payment stablecoins, and potential effects for insured depository institutions. Further, do tokenized money funds present a risk should they be allowed to compete with other payment or settlement instruments?

And the most notable highlight from the presentation: “Rapid growth in stablecoins, as well as market volatility, could lead to a materially heightened demand for or supply in USTs, with an implied incremental demand of ~$900bn for T-Bills.”

Some more slides from the stablecoin presentation:

The full stablecoin presentation is below (pdf link)

Much more in the full Refunding statement.

Oil prices extended their recent plunge this morning as traders expect Saudi Arabia to steer OPEC+ to agree on another supply surge next week as the kingdom continues its campaign to discipline the cartel’s errant members.

“History shows that when OPEC+ leadership decides to encourage compliance by supply pressure, it does not stop until it achieves its goal,” said Bob McNally, president and founder of Rapidan Energy Advisers LLC and a former White House energy official.

Overnight we saw a mixed bag from API (big crude build and bid product draws). Now let’s see what the official data has to show…

API

• Crude +3.8mm

• Cushing +674k

• Gasoline -3.1mm

• Distillates -2.5mm

DOE

• Crude -2.696mm

• Cushing +682k

• Gasoline -4.003mm

• Distillates +937k

The official data was just as mixed but showed a sizable draw in crude inventories and gasoline stocks (fell for the ninth week in a row)…

Source: Bloomberg

Even including a large 1.065mm barrel addition to the SPR, total US Crude stocks fell last week…

Source: Bloomberg

US crude production remains near record highs but ‘drill baby drill’ is not so obvious in the rig count data…

Source: Bloomberg

WTI is ‘off the lows’ after the official data…

Finally, while the price rout does offer relief for consumers and central banks still feeling the effects of inflation, it spells financial pain for oil producers.

Texas oilman Bryan Sheffield has urged companies to scale back drilling to avert an industry “blood bath,” while consultant Rystad Energy slashed its estimates for US onshore crude growth by more than half. The Saudis themselves aren’t immune, requiring an oil price near $90 a barrel to cover government spending, according to the International Monetary Fund.

“Increasing supply to maximize revenue might be the optimal strategy” for producers, said Natasha Kaneva, head of global commodities research at JPMorgan Chase & Co.

The Fed’s favorite inflation indicator – Core PCE – printed cooler than expected in March, unchanged MoM (vs +0.1% exp), bring prices up 2.6% YoY – the lowest since March 2021…

Source: Bloomberg

…with non-durable goods deflating MoM the biggest drag on Core PCE

…but, but, but we were told tariffs would spark hyper-super-scary-inflation?

The headline PCE was -0.045% MoM – the biggest MoM drop since COVID lockdowns…

…dragging headline PCE YoY down to +2.3%…

SuperCore PCE also saw the YoY pace slow significantly…

Spending outpaced incomes significantly in March…

Source: Bloomberg

Which means that the savings rate fell to 3.9% from 4.1% in February, which was revised lower from 4.6%…

Adjusted for inflation, real personal spending surged 0.7% MoM (not a total surprise given that ‘consumers’ are panicking over an imminent surge in inflation, of course they should be spending)….

It appears DOGE is doing its jobs too – crushing govt wage growth

• March Government worker wages and salaries up just 2.9%, down from 3.2% in Feb and the lowest since Sept 2020

• March Private worker wages and salaries up 5.4%, down from 5.7%, and lowest since Dec 2022

…and there goes the stagflation scenario.

Authored by Tom Ozimek via The Epoch Times (emphasis ours),

A federal judge in California has barred U.S. Border Patrol agents from arresting suspected illegal immigrants within parts of the state without a warrant or specific evidence that the individual poses a flight risk—while delivering a rebuke to tactics used during a controversial January enforcement sweep.

In an April 29 order, U.S. District Judge Jennifer L. Thurston issued a preliminary injunction against the Department of Homeland Security (DHS) and Border Patrol, siding with the United Farm Workers and five Kern County residents who sued after the raid, dubbed “Operation Return to Sender,” unfolded across the Bakersfield area earlier this year.

The plaintiffs, represented by the American Civil Liberties Union (ACLU), alleged in their Feb. 26 complaint that the sweep violated their Fourth and Fifth Amendment rights, along with federal immigration statutes governing warrantless arrests and due process.

Under Thurston’s order, Border Patrol agents operating in California’s Eastern District are now prohibited from making detentions or arrests without first establishing reasonable suspicion of unlawful presence in the country and, for arrests, probable cause that the individual is likely to flee before a warrant can be obtained.

“The evidence before the Court is that Border Patrol agents under DHS authority engaged in conduct that violated well-established constitutional rights,” Thurston wrote in the ruling.

The court also restricted the agency’s use of “voluntary departure,” a process by which illegal immigrants agree to leave the United States without a hearing before an immigration judge. Going forward, agents must clearly inform individuals of their rights and obtain genuine, informed consent before initiating such removals.

The judge further ordered DHS to submit regular reports documenting any warrantless stops or arrests, along with justifications, for the duration of litigation. She also instructed DHS to issue written guidelines clarifying the legal threshold for initiating stops.

“This guidance shall include, among other things, that refusal to answer questions does not, without more, constitute a basis for reasonable suspicion to justify a detentive stop,” she wrote.

The case stems from allegations that, beginning in early January 2025, dozens of Border Patrol agents traveled more than 300 miles inland from the U.S.–Mexico border to Bakersfield, targeting predominantly Latino neighborhoods and day laborer gathering spots without individualized suspicion.

The plaintiffs described “Operation Return to Sender” as a sweeping dragnet based on racial and occupational profiling, claiming agents pulled over vehicles, blocked parked cars, conducted warrantless searches, and detained people without evidence of unlawful presence.

Once in custody, detainees were allegedly transported to a facility near the border, denied access to attorneys, and pressured into signing “voluntary departure” forms without understanding the consequences—a process plaintiffs described as “summary expulsion” that can carry long-term reentry bans.

Once in custody, detainees claimed they were transported to a Border Patrol facility near the border, where they were denied access to lawyers and coerced into signing “voluntary departure” forms under misleading pretenses, which they described as a “form of summary expulsion.”

Attorneys for the Justice Department argued the case should be dismissed, claiming the plaintiffs lacked standing and that no official policy mandated unlawful stops or arrests. They further contended that any potential violations were isolated incidents, not part of a broader pattern, and that the lawsuit had become moot after DHS issued revised internal guidance.

But the court rejected those arguments, finding that the plaintiffs demonstrated a credible threat of repeated harm. Thurston wrote that the new DHS policy did not eliminate the risk of future violations and “could be withdrawn or altered in the future” without constraint.

The Epoch Times contacted the Justice Department and the ACLU with requests for comment on the ruling.