Category: zerohedge

After a surprisingly large upward revision for March (from +1.5% MoM to +2.4% MoM), April’s Industrial Production rose 0.7% MoM (less than the +0.9% expected).

Source: Bloomberg

Of course, thanks to the collapse comps, industrial production surged over 16% YoY.

Drilling down, Manufacturing output rose 0.4% MoM (far less than the stimmy-enabled 3.1% MoM surge in March…

Source: Bloomberg

Capacity utilization rose to 74.9% from 74.4% in March, which was unrevised from initial release.

Notably Motor vehicle manufacturing plunged again in April )amid shutdowns over chip shortages)…

It would appear the renaissance of the manufacturing economy is slowing fast absent new stimmies.

By Michael Every of Rabobank

Fear and Loathing in Los Mercados

We were somewhere around Barstow on the edge of the desert when the drugs began to take hold. I remember saying something like “I feel a bit lightheaded; maybe you should drive….” And suddenly there was a terrible roar all around us and the sky was full of what looked like huge bats, all swooping and screeching and diving around the car, which was going about a hundred miles an hour with the top down to Las Vegas.

Yesterday’s US PPI number reinforced the giant custard pie factor of the CPI number, soaring 0.6% m/m headline to 6.2% y/y and 0.7% m/m core to 4.1% y/y. In short, in the near term prices are going to get high. The market response: sell commodities and crypto, and buy stocks and bonds. In short, markets decided to get high again too rather than grapple with reality.

Yes, the Colonial pipeline is back on line, and so energy prices reversed. And despite Elon Musk pumping Dogecoin –because it was a day ending in ‘y’, and Tesla’s shares were dropping again?– Colonial paid *Russian* hackers a ransom of USD5m IN CRYPTO, which could not make a clearer case for why the SEC might want to be step in. Yet to think risk is suddenly on again for real is an interesting lifestyle choice.

The pipeline cyberattack, which put a swathe of key US military airbases out of operation(!), saw President Biden claim Russians were involved – but not the Russian government; that as he publicly announced the US is considering a response in kind. Will it be via the government, or just some people he knows in Langley, Virginia? Japan is extending its state of virus emergency, even as the Olympics is still apparently on very soon. India’s Covid crisis is still raging. And in Gaza, Hamas declared it deliberately fired rockets at Israel’s nuclear reactor in Dimona –which missed or were shot down– despite being downwind and not far from it. Time to roll out this meme again.

Of course, Wall Street wanting to get (stocks) high is hardly new: think of ‘The Wolf of Wall Street’. And a world flooded with QE and central-bank intervention like cheap heroine can justify trading that looks like what one would normally do on a combination of laughing gas, poppers, and K. But are we perhaps taking things too far? The PPI and CPI numbers, many claim, suggest we are close to a QE overdose as too much liquidity chases too many real world things. However, markets are going to market.

Indeed, at a micro level – literally – I think back to news from a few weeks ago that a US start-up dismissed its CEO because he took LSD before a meeting: he told Bloomberg he was experimenting by taking a limited amount of the drug, or micro-dosing, in an effort to boost his focus(!) Perhaps the most straight to the point one can make here is that anyone who thinks taking LSD before a business meeting to enhance focus really shouldn’t be in charge of anything. Even making a bowl of cereal. However, I can perhaps see what the CEO was trying to ‘grok’.

Consider Hunter S Thompson and ‘Fear and Loathing in Las Vegas’. The book, and movie, are not exactly the stuff which Zoom or Teams meetings should replicate (though many of us may have been tempted to want to throw something electric into the bath at some point). Yet it isn’t just a hedonistic tale of Olympian proportions. It has genuine cultural, and even socio-economic significance. In the words of one reviewer, it “holds an almost mythic quality in its mix of Gonzo reportage, drug frenzies, and soulful meditation of the Sixties’ generation of America. It reflects the loss of a utopia and chronicles its spiral into violence and mass cultural sell-out.”

Far less splenetic, Huxley’s ‘The Door of Perception’ is all about trying to get a wider vision through psychedelic experience: “The man who comes back through the Door in the Wall will never be quite the same as the man who went out. He will be wiser but less sure, happier but less self-satisfied, humbler in acknowledging his ignorance yet better equipped to understand the relationship of words to things, of systematic reasoning to the unfathomable mystery which it tries, forever vainly, to comprehend.” Doesn’t that sound a better trading mind-set than “Buy all the things?”, or “Buy a crypto that insults Elon Musk with your life savings at 100 times leverage”?

Or turn back closer to Vegas and Yaqui psychedelic mysticism via Carlos Castaneda and ‘The Teachings of Don Juan’: “The average man is hooked to his fellow men, while the warrior is hooked only to infinity”; and “A man of knowledge is one who has followed truthfully the hardships of learning, a man who has, without rushing or faltering, gone as far as he can in unravelling the secrets of personal power.” One can see the ego trip involved in wanting to become a Man of Knowledge in markets (which the Don specifically warns about the dangers of, by the way).

Yet all of that extra perception of how things really connect, and even the ability to turn into a crow, won’t help when it comes back to the simple fact that central banks are still pumping, and all the hawks have turned to doves. Sometimes ignorance can be bliss.

My own personal, prosaic, and melancholy response is to harken back to an old movie from 70’s/80’s US narco-comedians Cheech and Chong –I forget which one– where Chong is tripping in the back of a car while in drag, and wearing a feather boa. (“Because Cheech and Chong”.) At some point, he starts to get The Fear and wails to get the boa off of him because it’s alive. Cheech tries to calm him down that it is in fact dead. Which only sees Chong freak out even more because he has a dead object round his neck.

In short, there’s no ‘happy ending’ that springs to mind with all the conflating problems we have right now. Inflation and rate hikes? Bad. Inflation and no rate hikes? Still bad. Stagflation? Very bad. Deflation? Really bad. And let’s not get started on the underlying big picture risks. Nonetheless, markets are going to market while they can: by focusing on getting (stocks) high.

“No, this is not a good town for psychedelic drugs. Reality itself is too twisted.”

Earlier this week, in a routine bridge inspection, an engineer climbed onto the section of the Interstate 40 bridge over the Mississippi River and spotted a massive fracture in the frame that resulted in the immediate shutdown of the bridge on Wednesday. Traffic is being rerouted to Interstate 55 Memphis & Arkansas Bridge, creating traffic jams in the Memphis area. On the Mississippi River, the situation is much worse. Hundreds of barrages are piling up on either side of the bridge as the US Coast Guard has closed the critical waterway. 

After a routine inspection, officials with the Tennessee Department of Transportation (TDOT) announced that the Hernando de Soto Bridge would be closed due to a crack on the bottom side of the bridge truss. 

Here’s a diagram of the bridge and where the fracture in the beam occurred. 

A picture of the massive fractured beam. The repair could take weeks, if not months, to fix. 

While road traffic is chaotic in the Memphis metro area, a much larger and possibly underreported story is the closure of the lower Mississippi River that is a critical waterway for the transportation of farm goods. 

Reuters reports as of Thursday, the logjam of barrages swelled to 771. Coast guard officials closed the waterway Wednesday, preventing any vessel from passing underneath the bridge. 

“At the spot where the river is closed, 26 vessels with 430 barges are waiting to pass north, and 21 vessels with 341 barges are in the queue to go south, said Petty Officer Carlos Galarza,” a Coast Guard spokesman told Reuters. 

Mike Steenhoek, executive director of the Soy Transportation Coalition, citing USDA data, told Bloomberg that agricultural supplies on barges north of Memphis were 84% corn and about 13% soybeans. 

Galarza said a decision to reopen the waterway would occur when the TDOT completes their investigation of the fractured bridge. 

TDOT officials may “have a decision for river traffic” either today or in the coming days. 

At mile markers 736 and 737 on the lower Mississippi, the closure creates a logistical nightmare for vessels loaded with farm goods and destined for Gulf of Mexico export facilities to be loaded on large bulk carriers or other large ships for transport worldwide. 

After hot-hot-hot inflationary prints this week, following dismal jobs data last week, all eyes are on this morning’s retail sales data to discern if America’s future is a stagflationary cornering of The Fed. While no one expected a repeat of March’s explosive gains, analysts still expected a modest rise (while BofA – who have been consistently correct – warned that a big disappointment was possible with retail sales actually falling MoM). It turns out, BofA was right as retail sales disappointed in April, printing unchanged from March (versus +1.0% expected) after an upwardly revised +10.7% MoM stimmy surge in March.

Source: Bloomberg

Worse still Core Retail Sales tumbled 0.8% MoM (versus expectations of a 0.3% rise)

Source: Bloomberg

Under the hood, clothing, gas stations, and online retailers saw sales sink MoM…

Of course, on a YoY basis – due to the collapse comps – retail sales are up a stunning 51%…

Source: Bloomberg

Worse still, the Control Group – which feeds into GDP, tumbled 1.5% MoM…

Source: Bloomberg

And to put it all in context, thanks to trillions in free money, US retail sales are officially “above trend”…

Source: Bloomberg

Put another way – We’ve brought forward 5 years of trend retail sales growth since the pandemic started due to stimulus

We’re gonna need more stimmies!

Among the difficulties of entering uncharted macroeconomic territory, where daily “transitory” changes cause wild volatility in all corners of the market, is documenting key themes as they emerge. 

One of the better analyses of the current market environment that we have read has come from Bloomberg Opinion writer John Authers. In a piece published on Friday, Authers lays out two key market themes heading into the end of Q2:

1. The developing problem of inflation, especially as it relates to the cost of food, in emerging markets.

2. How Elon Musk has, alongside of all of his devotees and disciples, placed himself firmly on the wrongside of what could be a serious coming market correction. 

Rising Food Prices In Emerging Markets Could Eventually Lead To Civil Unrest

First, Authers points out the obvious: commodity prices have blown through the roof. Producer price inflation came in at “its highest in four decades, bar a brief peak in the summer of 2008,” he notes of this week’s data.

He notes that while the 2008 price spike was driver by oil, there’s no such pressure now. The Bloomberg Commodity Index is up 48.4% over the last 12 months, a stunning rise. Authers also points out that “in developed markets at least, the contribution of core goods — excluding oil and agricultural products — to inflation isn’t very significant”.

He notes that commodity inflation isn’t a major problem for the products and services that dominate the developed world…

…but that they still play a crucial role in emerging markets. For example, places like Sub-Saharan Africa and Asia are far more affected by commodity prices than places like Europe and North America.

And when these moves happen in emerging markets, they tend to be sustained. The last such move in commodity prices came during the Global Financial Crisis and lasted for “a couple years”, Auther notes.

The rising prices can beget social unrest, he notes, citing that the spark that lit the Arab Spring revolts of 2011 was protests in Tunisia over high food prices. 

“Only in a rich nation could one exclude nourishment and staying warm as anything other than ‘core.’ Commodity price inflation can thus be very politically destabilizing, especially in countries without strong and flexible systems of governance,” wrote Jason DeSenna Trennert of Strategas Research Partners.

He continued: “Sadly, riots for food in countries like India, Egypt, and Indonesia became commonplace. With America’s twin deficits approaching 20% of GDP, it is difficult to get bullish about the U.S. dollar, especially against commodities and hard assets. In this way, the dollar is, as Treasury Secretary John Connally once said, “our currency and your problem.”

The risk is real, Authers notes. He makes the case that food makes up 29.8% of consumer expenditures in India, as much as 59% in Nigeria, while only accounting for 6.4% in the U.S. As a result, headline inflation in emerging markets will rise, he argues.

At that point, countries could consider interest rate hikes when their economies “aren’t ready” for them, Authers says.

These rising rates would be largely unexpected, as noted in the BNP chart above. Authers concludes his argument by noting that the combination of expensive food and rising rates are both “unpopular” trends in emerging markets – especially during a pandemic. This, obviously, would raise the risk for unrest.

Elon Musk’s Crypto Advocacy Has Taken A “Dark Turn”

Shifting gears, Auther also approaches the subject of one of the most well known beneficiaries of the market over the last 18 months, Elon Musk. Musk has seen his net worth rise over $100 billion in the last 18 months as the result of Tesla’s astronomical (and mysteriously timed) rise. 

Authers introduces how Musk advocating for cryptocurrencies became a mutually reinforcing theme for both Bitcoin and Tesla. “The narrative involving Musk and cryptocurrencies has taken a much darker turn,” Authers writes.

Questioning whether or not Musk’s statements about dogecoin and bitcoin have been jokes or not, Authers points out the very real effect Musk has had on the price of the coins, noting the dip on Sunday and the rise yesterday, after Musk tweeted positively about dogecoin.

But he also notes that Musk’s involvement in coins means he “might be in danger of turning himself into an unserious figure, which isn’t a great narrative for the CEO of one of the world’s largest companies.”

We’d argue Musk already isn’t a serious figure – but that’s what makes a market, we guess.

Authers can’t help but align Musk’s comments about coins and the recent drop in Tesla shares, noting that its down 35% from its peak.

“Charts like this don’t look good,” he writes, before going on to conclude that Musk has “jumped the shark”:

After years of triumphantly and cheekily proving the doubters and short sellers wrong, Musk is now on the wrong end of a nasty correction, and vulnerable to a new narrative that he has “jumped the shark” — taken his eye off the ball of his business, and enjoyed a second career as an entertainer. Hubris, or “pride comes before a fall” is one of the oldest human narratives. He doesn’t want to play to it. And as there have been plenty of signs of investment bubbles, particularly in crypto but also in the range of growth and “meme” stocks that support them, a burst bubble looms as another potentially self-fulfilling narrative.

While we think Authers’ timing may be a little late in recognizing Musk for the carnival barker he is, we can’t help but feel as though he finally has his finger on the pulse.

US index futures rose with for a second day alongside global markets as a continued drop in commodity prices helped ease fears about inflation risks. Treasuries advanced, cryptocurrencies rebounded from a Thursday rout while the dollar slumped. After a bruising week that saw the biggest one day drop for the S&P since February, higher S&P 500 and Nasdaq 100 contracts signaled a market recovery was gaining momentum.

The three main U.S. stock indexes snapped a three-day losing streak on Thursday after better-than-expected weekly jobless claims data. At 7:15a.m. ET, Dow e-minis were up 150 points, or 0.44%, S&P 500 e-minis were up 26 points, or 0.63%, and Nasdaq 100 e-minis were up 132 points, or 1.00%.

As Bloomberg notes, markets are regaining their equilibrium at the end of their biggest retreat in 11 weeks, with the focus of the benefits of an economic rebound overriding worry about the negative side-effect of inflation, for now. That may help to reinvigorate the reflation narrative of picking value shares tied to economic growth over pandemic stay-at-home favorites. Meanwhile, the Fed again reassured markets about the transitory nature of inflation. Among Fed speakers overnight, Governor Christopher Waller signalled that rates won’t rise until policymakers either see inflation above target for a long time or excessively high inflation. He also said he would only get worried if inflation rose above 4%, defining the Fed’s first real “red-line.”

Some notable pre-market moves:

• FAAMG mega-caps led gains in early trading rising about 1% each
• Tesla rebounded from yesterday’s rout which saw its stock drop below the 200DMA briefly, adding about 3%.
• Disappointing Walt Disney subscriber additions overshadowed better-than-expected overall profits, driving down shares of the entertainment company by 3.8%.

Repeating what everyone knows by now, Louise Dudley, global equities portfolio manager at the international business of Federated Hermes said that “stocks with more attractive valuations and slower growth will do well in a higher-interest rate environment” Expensive growth stocks, by contrast, “are sensitive to higher interest rates,” she wrote in a note to clients. In signs that life was returning to normal, revised guidance from the CDC said fully vaccinated people do not need to wear masks outdoors and can avoid wearing them indoors in most places.

Gains in European stocks were led by banks, while miners fell amid a retreat in some raw-material prices. Eurostoxx 600 rose 0.6% bolstered by banks, tech and retail sectors with basic resources the sole sector in the red. Here are some of the biggest European movers today:

• Sanne shares rise as much as 28%, the most on record, to 770p after the private equity firm Cinven made a proposal to the asset management services provider regarding a possible cash offer of 830p a share, which was rejected earlier this week.
• Datalogic shares jump as much as 12% after the bar code reader maker reported 1Q results late yesterday, which Equita says are better than expected.
• Man Group shares jump as much as 4.6% as Credit Suisse raises its 2021 EPS estimate by 30% on higher revenue estimate.
• Banco BPM shares gain as much as 3.7% after Deutsche Bank upgraded their rating to buy from hold on expectations that its “speculative appeal” will significantly increase as merger talks among Italian lenders should intensify in the 2H following benign earnings.
• ERG shares fall as much as 9.1% in Milan trading, the steepest intraday decline since March 2020, and is the day’s worst-performer on the FTSE Italia All- Share Index; Banca Akros notes the 2025 Ebitda target is lower than its estimates and consensus.
• Geox shares drop as much as 6.9% in biggest intraday decline since October after the Italian shoe manufacturer said its 1Q sales were heavily affected by lockdowns.
• SICIT shares fall as much as 4.7% after Syngenta and Valagro decided against pursuing their interest in the Italian agriculture biostimulants maker.

Earlier in the session, Asian stocks also stormed higher, with the regional benchmark snapping a three-day slump that plunged it into a technical correction. The MSCI Asia Pacific Index rose 1.2%, with equities in China and Japan leading the region. Technology stocks, which have been at the forefront of the recent rout, were the biggest boost to the gauge’s advance. The rebound comes after the Asian index lost 4.9% in a three-day slide that was its worst since June last year, owing to rising investor concern over inflation and a resurgence in virus infections in many countries. Sentiment worsened further after data showed U.S. consumer prices climbed in April by the most since 2009, with the Asian equities gauge extending its losses from a mid-February peak to more than 10% as of Thursday. “The U.S. CPI was higher than expected, but with that, the rise in inflation has been priced it for the time being and the market didn’t respond that much to the U.S. PPI data,” said Nobuhiko Kuramochi, a market strategist at Mizuho Securities Co. “With the latest data, people were able to grasp how high U.S. inflation could get and, while the numbers may remain high for the next few months, the extent of the surprise will likely be limited,” Kuramochi said. Chinese shares also rallied after the MSCI China Index tumbled into a bear market on Thursday as losses from its mid-February high extended to more than 20%.

Equities in Hong Kong and on the mainland have suffered as Beijing cracks down on heavyweight tech firms over monopolistic practices, adding to concerns of liquidity tightening in China. Chip-making giants Taiwan Semiconductor Manufacturing and Samsung Electronics were among the biggest contributors to the Asian benchmark’s gain Friday. Financials and industrials were other top-performing sectors. Yet even with Friday’s advance, the MSCI Asia Pacific Index dropped more than 3% this week, putting it on course for its worst weekly loss since February. Mark Matthews, head of Asia research at Bank Julius Baer & Co., expects “choppy” trading ahead for the region’s equities in the near term, as slow progress in vaccinations could lead to a divergence in economic fundamentals with places like the U.S. “You have to have a strong vaccination program in order to open up and rejoin the rest of the world and keep the virus at bay,” Matthews said, noting how some Asian countries are resorting to lockdowns again. “The longer that this persists I think it’s bad for Asia.”

Japanese shares led the rebound in Asian markets on Friday, building on the lead from investors on Wall Street snapping up stocks that would benefit most from an economic recovery. Japan’s Nikkei jumped 1.3%. The rally interrupted a three-day rout for stocks globally, as market jitters over accelerating U.S. inflation were calmed by Federal Reserve officials reiterating that price pressures from the reopening of the economy would prove transitory.

“U.S. equities were up, so there is a bit of relief in Asia,” said Frank Benzimra, head of Asia equity strategy at Societe Generale in Hong Kong. However, “we certainly are going to have some volatility near-term,” as markets react to CPI and other economic indicators for clues on the path for U.S. monetary policy. The Fed may open the discussion on tapering its asset purchases as soon as the policy meeting next month, he said.

In rates, the 10-year Treasury yield fell to 1.63% and Treasuries recovered from the prior session’s weakness, and outperformed Bunds. Treasuries rose with stock futures after regional bond buyers returned during Asia session. Treasury 10-year yields around 1.634% are ~2bp richer on the day; long-end-led gains flatten 5s30s and 2s10s by more than 1bp. Gains were sustained during European morning led by gilts with bunds lagging, as S&P 500 futures exceeded Thursday’s highs. A busy U.S. economic data slate includes retail sales and industrial production. U.S. swap spreads widen by up to 2bp across long-end following Thursday’s sharp tightening move.

In FX, the U.S. currency was steady against a basket of its major peers, with the dollar index consolidating around the 90.70 level for a second day on Friday, following Wednesday’s 0.6% jump. The Bloomberg Dollar Spot Index extended losses in the European session as the greenback fell versus all of its Group-of-10 peers and the euro climbed back above $1.21. Norway’s krone led G-10 gains, paring some of this week’s losses, after nearing the 55-DMA yesterday; the pound was the weakest G-10 performer on the day, but still headed for a second week of gains against a bruised dollar. The Aussie steadied but still headed for its biggest weekly decline in seven weeks, with losses driven by faster-than-expected U.S. inflation data and a slide in iron ore. Australia’s government said it’s ready to resume dialog with China. Japan’s bonds rose as the central bank’s purchases encouraged investors to take advantage of the recent increase in yields; the yen headed for a weekly loss. The yuan gained while most other emerging Asian currencies stayed in narrow ranges as investors assessed the impact of rising global inflation and coronavirus cases on the economic growth.

The market may still be finding its equilibrium after the post-CPI USD spike,” says Terence Wu, FX strategist at foreign- exchange strategist at Oversea-Chinese Banking Corp. “Expect major USD-Asia pairs to be implicitly heavy for now, save for the USD-SGD, which is higher on idiosyncratic COVID-19 developments”; he also said that the market is not yet in an outright risk-on mode, and sentiment could turn south again.

Some wondered if the bubble in commodities had popped as iron ore continued its fall from a record amid efforts by China to clamp down on surging prices, with the metal set for the biggest two-day plunge since 2019. Copper prices were on course for their first weekly decline since the start of April on Friday as rising inflation fears and a dip in demand from China dragged prices down. Oil prices remained subdued following a drop on Thursday as a recent rally paused as investors turned their attention to the coronavirus crisis in India, and as the top U.S. fuel pipeline network resumed operations. Brent crude was little changed at $67.02 a barrel, while U.S. West Texas Intermediate crude edged up 0.1% to $63.85 a barrel. Gold traded at around $1,824 an ounce at the end of the week, largely unchanged from the previous day, when it recovered some of Wednesday’s losses.

In cryptocurrencies, bitcoin recovered back over $50,000 on Friday, after plunging to a 2-1/2-month low of $45,700 in the previous session, while Ethereum was back over $4000, when a media report of a regulatory probe into crypto exchange Binance added to pressure from Tesla chief Elon Musk’s reversing his stance on accepting the digital currency.  Much smaller rival dogecoin jumped as much as 20% to $0.52 after Musk said on Twitter that he was involved in work to improve the token’s transaction efficiency.

To the day ahead now, and the data highlights from the US include April’s retail sales, industrial production and capacity utilisation, along with the University of Michigan’s preliminary consumer sentiment index for May. From central banks, the ECB will be publishing the account of its April meeting, and Dallas Fed President Kaplan will be speaking.

Market Snapshot

• S&P 500 futures up 0.6% to 4,130.25
• STOXX Europe 600 up 0.3% to 438.83
• MXAP up 1.3% to 200.43
• MXAPJ up 0.8% to 670.04
• Nikkei up 2.3% to 28,084.47
• Topix up 1.9% to 1,883.42
• Hang Seng Index up 1.1% to 28,027.57
• Shanghai Composite up 1.8% to 3,490.38
• Sensex down 0.1% to 48,620.49
• Australia S&P/ASX 200 up 0.5% to 7,014.24
• Kospi up 1.0% to 3,153.32
• Brent Futures up 0.4% to $67.29/bbl
• Gold spot up 0.5% to $1,834.96
• U.S. Dollar Index down 0.32% to 90.46
• German 10Y yield down -0.9 bps at -0.130%
• Euro up 0.4% to $1.2124

Top Overnight News from Bloomberg

• U.K. ministers may bring forward second vaccine doses for millions of people and local restrictions could be imposed to curb the spread of a Covid-19 variant from India
• Bitcoin was on course for a weekly slump of more than 10% after Tesla Inc.’s Chief Executive Officer Elon Musk doubled down on his attack on the token’s energy demands
• Iron ore’s slump from a record accelerated as China ramps up efforts to control a dizzying surge in prices. Tangshan city banned steelmakers from fabricating or spreading price-hike information, the latest in a list of measures targeting the hub, after Premier Li Keqiang earlier this week urged China to deal with surging prices
• The U.K. Debt Management Office (DMO) announces the appointment of a syndicate to sell by subscription the forthcoming launch of the new 0 1/8% Index-linked Treasury Gilt 22-March-2039. The transaction is planned to take place in the week commencing 24 May 2021, subject to demand and market conditions
• Israel’s ground forces fired artillery into the Hamas-run Gaza Strip early Friday after a blistering four-day air assault failed to quell militant rocket attacks, sweeping aside international appeals for de-escalation and possibly preparing for an assault by troops

Asia-Pac stocks were higher as the region took impetus from the firm performance in the US where the major indices recovered from the recent inflation-triggered sell-off and snapped a 3-day losing streak, with sentiment helped by data releases including pandemic-low jobless claimant numbers and although PPI printed firmer than expected, it remained within the range of analysts’ estimates unlike the recent blow out CPI. ASX 200 (+0.5%) was led higher by commodity-related stocks and with the energy sector atoning for the underperformance in US counterparts despite the continued retreat of oil prices from cyclical highs, while Treasury Wine Estates was among the biggest gainers as it plans to pivot to the US market and focus on its profitable Penfolds brand in an effort to spur profit growth amid the impact from Chinese tariffs. Nikkei 225 (+2.3%) benefitted from recent favourable currency moves and the global stock rebound, which has helped participants look past the ongoing COVID concerns and looming inclusion of 3 additional prefectures to the state of emergency list. Hang Seng (+1.1%) and Shanghai Comp. (+1.8%) were also firmer but with gains initially moderated as US-China tensions lingered following comments from US Secretary of State Blinken who reiterated support for Australia against economic coercion from China and USTR Tai suggested new trade laws are required to address the anti-competitive threats from China against key high-tech US industries. Earnings releases also provided a catalyst for price moves with Alibaba shares the biggest laggard in the Hang Seng. Finally, 10yr JGBs were positive as they tracked the rebound in T-notes and with the BoJ also present in the market for nearly JPY 1.4tln of JGBs with 1yr-10yr maturities, although gains in the 10yr benchmark were capped amid the outperformance in Japanese stocks.

Top Asian News

• JD Logistics $3.5 Billion IPO Said to Draw SoftBank, Temasek
• IPhone Maker Hon Hai Again Warns Components Crunch Worsening
• Japan Post Insurer Will Buy Back $3.3 Billion of Its Shares
• China Orders Didi, Meituan to Rectify Ride-Hailing Abuses

Bourses in Europe trade with broad-based gains across the board (Euro Stoxx 50 +0.6%) following the recovery seen on Wall Street yesterday which resulted in a positive vibe reverberating across APAC after a tumultuous week. US equity futures also see modest gains with participants awaiting fresh fundamental catalysts and further US data releases in what has, thus far, been a quiet morning. Sectors in Europe are mostly in the green except for Basic Resources amid a pullback in base metal prices (see commodities section), but it is difficult to discern a particular risk profile. Banks, Insurance, Retail, Household Goods, Oil & Gas, and Tech reside as the top performers while Healthcare and Travel & Leisure dwell among the laggards. Travel & Leisure has been underwhelmed by reports of uncertainty regarding UK tourism in Portugal after the Portuguese “state of calamity” was extended. In terms of individual movers, Adidas (+1.2%) are firmer amid source reports that Authentic Brands Group has teamed up with Wolverine World Wide to offer around USD 1bln for Reebok, albeit sources valued the unit at around EUR 1.2bln back in February. Meanwhile, French heavyweight Danone (-1.7%) is pressured after being downgraded at Goldman Sachs.

Top European News

• U.K. Fraud Prosecutor Opens Investigation Into GFG
• German Curbs Set to Ease as Covid Cases Drop Below Key Level
• Londoners Eye a Return to City Center as Rental Viewings Soar
• Sanne Rises 28% After Rejecting Proposal at 830p/Share

In FX, the Dollar continues to cool off after its midweek melt-up in response to significantly stronger than forecast US CPI data, awaiting the remaining releases of the week that comprise retail sales, ip and preliminary Michigan sentiment with updates to year ahead and 5 year inflation expectations, all before another speech from Fed hawk Kaplan. The Buck is also drifting back amidst renewed bull-flattening along the Treasury curve, albeit fairly mild and more in relief that the latest Quarterly Refunding has been completed rather than a positive reaction to the long bond finale that was far from well received. Moreover, broad risk sentiment has recovered somewhat following a positive Wall Street session to ‘end’ a 3-day run of consecutive losses to leave the DXY prone to further retracement from Wednesday’s peaks and a test of support around 90.500 having narrowly failed to scale technical resistance ahead of 91.000 when the headline and core inflation heat was full on.

• CHF/EUR/NZD – All taking advantage of the Greenback’s loss of impetus, with the Franc now considerably closer to 0.9000 compared to just shy of 0.9100 at the current w-t-d peak and Euro looking appreciably more comfortable on the 1.2100 handle than it has of late, while the Kiwi is probing 0.7200 again irrespective of a marked slowdown in NZ’s manufacturing PMI.
• AUD/CAD/GBP/JPY – The Aussie has overcome another pretty sharp reversal in copper and iron ore overnight to bounce firmly from the low 0.7700 area vs its US counterpart, but may find the half round number above tough to breach again given 1.3 bn option expiry interest rolling off at the NY cut. Conversely, a recovery in oil has helped the Loonie pare declines and regain 1.2150+ status even though BoC Governor Macklem expressed concerns about further Cad appreciation and the adverse impact this might have on Canadian exports plus policy settings if the Loonie rallies a lot further. On that note, and for reference Usd/Cad hit circa 1.2046 lows only 2 days ago to set yet another multi-year trough and was as high as 1.2654 before the BoC tapered QE and swivelled hawkishly on rates. Elsewhere, the Pound is still pivoting 1.4050, but looks increasingly bearish against the Euro as the cross rebounds a bit further above 0.8600, while the Yen is straddling 109.50 where 1.1 bn option expiries reside and not displaying too much dismay over Japan’s deteriorating COVID-19 situation at this stage against the backdrop of more favourable (softer) UST yields.
• SCANDI/EM – Some relief for the Nok after Thursday’s slide via the aforementioned revival in risk appetite and crude prices, while the Mxn has reclaimed 20.0000+ status in wake of Banxico maintaining rates as expected, but retaining a commitment to ensure that headline inflation converges to the 3% target within the policy horizon. However, the Czk has not gleaned much upward thrust from CNB minutes largely confirming a hike in June.

In commodities, WTI and Brent front month futures have trimmed overnight losses and some more, with traders citing yesterday’s weakness to an unwind in the Colonial pipeline premium alongside the worsening COVID situation in Asia – with India still in a critical condition whilst Taiwan and Singapore see rising cases which prompted the latter to tighten restrictions. Meanwhile, geopolitics remain in vogue as the Israeli/Palestinian conflict remains heated, as headlines also emerged regarding an Azeri/Armenian violation and Russia is reportedly involved as a mediator. Meanwhile, there is little to report on the JCPOA front. WTI Jun has reclaimed a USD 64/bbl handle (vs low 63.33/bbl) whilst Brent Jul extends gains above USD 67/bbl (vs low 66.50/bbl). Elsewhere, precious metals have been moving in tandem with yields and the Buck and thus have been grinding higher, with spot gold just under USD 1,850/oz (vs low 1,826/oz) whilst spot silver inches higher above USD 27/oz. Base metals meanwhile have been seeing losses with LME copper back below USD 10,250/t at the time of writing following the recent run, whilst iron ore and coke futures in Dalian hit limit down overnight as China top steel-making Tangshan said it requires firms to control price surges and will severely punish price manipulation.

US Event Calendar

• 8:30am: April Import Price Index YoY, est. 10.2%, prior 6.9%; MoM, est. 0.6%, prior 1.2%
• 8:30am: April Export Price Index YoY, est. 14.0%, prior 9.1%; MoM, est. 0.8%, prior 2.1%
• 8:30am: April Retail Sales Advance MoM, est. 1.0%, prior 9.8%, revised 9.7%
  • April Retail Sales Ex Auto MoM, est. 0.6%, prior 8.4%
  • April Retail Sales Control Group, est. -0.4%, prior 6.9%;
• 9:15am: April Industrial Production MoM, est. 0.9%, prior 1.4%; Manufacturing Production, est. 0.3%, prior 2.7%
• 10am: March Business Inventories, est. 0.3%, prior 0.5%
• 10am: May U. of Mich. Sentiment, est. 90.0, prior 88.3; Expectations, est. 84.5, prior 82.7;  Current Conditions, est. 99.8, prior 97.2
• 10am: May U. of Mich. 5-10 Yr Inflation, prior 2.7%; 1 Yr Inflation, est. 3.5%, prior 3.4%

DB’s Jim Reid concludes the overnight wrap

Following a torrid start to the week, markets finally showed signs of recovering their footing yesterday, something that’s extending overnight. The S&P 500 (+1.22%) and the MSCI World Index (+0.55%) both advanced after a run of 3 successive declines. The mood got better as the day went on, with Europe’s STOXX 600 pulling back from an intraday low of -1.75% to close just -0.14% lower, while S&P 500 futures were also pointing lower during the morning in Europe (-0.72% at the lows). Markets are hanging on the current dovish words from Fed officials to offset some of the inflation shock but relatively positive data on US jobless claims also helped to support the mood, which saw 444 companies in the S&P 500 move higher on the day, the broadest advance in over a month. Technology stocks continued to underperform, with the NASDAQ up “just” +0.72% and with the NYFANG+ index declining -0.73%, with the latter heavily-concentrated index now down -2.25% YTD.

Indeed yesterday’s Fed speakers helped to reassure investors that the central bank was in no hurry to raise rates, and expectations for future rate hikes moved down marginally from where they were the previous day. Richmond Fed President Barkin said that he didn’t see persistent recurring inflation as likely, while later on Fed Reserve governor Waller joined the chorus saying that the rise in prices is “temporary”. This comes even as he forecasts inflation remaining above the 2% target through 2022, though he acknowledged that persistent 4% monthly increase would be “very concerning”. Waller wants to observe a few months of economic data before calling any point an outlier or adjusting any policy stances. Waller explained that, “despite the unexpectedly high CPI inflation report yesterday, the factors putting upward pressure on inflation are temporary, and an accommodative monetary policy continues to have an important role to play in supporting the recovery.” St. Louis Fed President Bullard, a non-voter this year, thinks that inflation “is likely to be meaningfully above 2% over the forecast horizon,” but that an inflation outcome modestly above the 2% inflation target in the short term “would be a welcome development for the FOMC, as inflation has generally been below target for many years.” So no real concern. Overall the Fed are seemingly doubling down on the transitory inflation message which will help the market in the short-term but creates more asset price risk if they are forced to admit that there is a permanence to some of the inflation further down the road.

Another small respite on the inflationary front yesterday came from declines in a number of key commodities, with Bloomberg’s commodity spot index down -2.31% yesterday in its worst day for nearly two months. Obviously this is just one day lower in what’s generally been a strong march upwards over the last year, but the rise in a number of key inputs has been a contributing factor to the strong price pressures we’ve seen lately. In terms of the specific moves, both WTI (-3.42%) and Brent crude (-3.27%) oil prices lost ground, copper (-0.99%) fell for a 2nd day running, and corn futures were down -5.08% as they remained on track to end a run of 6 successive weekly advances.

Nevertheless, while commodity prices were falling, the latest data on US producer prices added to the theme of building inflationary pressures, with the month-on-month reading coming in at a stronger-than-expected +0.6% in April (vs. +0.3% expected), which in turn sent the year-on-year number up to +6.2%. All eyes will be on today’s retail sales reading to see where that comes out for April, with our economists expecting a +2.0% monthly gain on the headline number. The CoTD yesterday (link here) showed that we’ve already pulled forward around 5yrs of retail sales growth since the pandemic started. Remarkable.

Ahead of this report, we also got some positive signs on recent labour market progress following the disappointing April jobs report, as the initial jobless claims for the week through May 8 fell to 473k (vs. 490k expected), their lowest level since the pandemic began. Interestingly, in yet another sign that firms were struggling to hire in the current labour market, McDonald’s announced that they’d be raising hourly wages in company-owned restaurants by 10% on average. Amazon joined in yesterday announcing that its hiring 75k employees across the US and Canada with a focus on positions in its warehouses. In order to entice potential employees, the retailer is offering a $100 bonus if workers are already vaccinated and signing on bonuses of as much as $1000 in some locations. Wages also reportedly have increased to $17/hr, a marked increase from the $15/hr starting wage typically offered by the firm. Is the “Amazonification” impact becoming more balanced rather than just disinflationary?

Back to markets and Sovereign bond yields hit fresh highs in Europe yesterday, although they came off these heady heights towards the close. Yields on 10yr bunds were up a further +0.5bps to their highest level in nearly 2 years, as were 10yr gilts with their own +1.2bps increase. Treasuries had a much stronger performance however, with 10yr yields coming down -3.4bps to 1.657%, which included a decline in inflation breakevens (-2.6bps) to 2.54%, coming off their 8-year high the previous day.

Overnight in Asia, markets have taken Wall Street’s lead with the Nikkei (+2.27%), Hang Seng (+0.95%), Shanghai Comp (+1.21%) and Kospi (+0.81%) all up. Futures on the S&P 500 are also up +0.47%. Elsewhere, in a further sign of easing commodity prices, iron ore prices are down -8.87% this morning while SHF steel rebar prices are also down -6%. In other news, the Federal Reserve in its new schedule, which runs from May 14 to June 11, has tweaked the US treasury purchases to buy more securities maturing in seven years or longer while keeping the monthly pace at about $80bn. The Fed will now buy $20.25bn in those longer terms tenors (vs. $17.75bn previously).

Elsewhere, bitcoin (-9.5%) saw a significant slump yesterday as the cryptocurrency fell back beneath the $50,000 mark again, closing beneath that level for the first time since April 25. It’s fairly flat overnight. As we touched on in yesterday’s edition, this followed Elon Musk tweeting that Tesla was suspending vehicle purchases using bitcoin, saying that they were concerned about its use of fossil fuels. Later in the day, he went on to put out another tweet highlighting its electricity consumption, which is something that we previously highlighted in a CoTD back in February (link here). Nevertheless, even before Musk’s tweets there were already signs that the astonishing rally we saw in bitcoin around the turn of the year has begun to peter out, with April seeing its first monthly decline since September, and its performance so far in May leaving it on track for a second one.

On the pandemic, the news continued to brighten somewhat at the global level, with the rate of new cases continuing to decline since their peak 2 weeks ago. However, a number of countries in Asia are continuing to impose fresh restrictions to deal with the pandemic. Overnight, the Japanese government has said that it will be expanding the state of emergency to three more prefectures to include the northern island of Hokkaido as well as the Hiroshima and Okayama prefectures, effective from May 16 through to the end of the month. Japan’s current emergency measures covers Tokyo, Osaka, Hyogo, Kyoto, Aichi and Fukuoka prefectures, which make up about 40% of the country’s economy and the imposition of emergency rules in the additional prefectures increases the risk that the economy might slip back into recession. Singapore’s local cases have now also risen to the highest since July and this is leading to concerns that a travel bubble with Hong Kong may get delayed again.

Meanwhile, here in the UK, the government might bring forward second vaccine doses for millions of people, according to a Bloomberg report. This comes as the spread of a Covid-19 variant from India has risen to 1,313 new cases from 520 over the past week and Public Health England has assessed the strain to be “at least as transmissible” as the so-called Kent variant that took hold in December. Elsewhere the US announced passing another marker on the path-to-normal, as the CDC said fully vaccinated Americans no longer need to physically distance or wear masks indoors or outside. However the mask guidance remains in place for airports, trains and other forms of public transportation. 59% of American adults have now received at least one shot, though vaccination raters have slowed somewhat over the last few weeks. In a move that could have follow-through to employment numbers, the president of the largest teacher union in the US (American Federation of Teachers) called on a full reopening of schools in the Fall, a critical shift from an important voice in the effort.

To the day ahead now, and the data highlights from the US include April’s retail sales, industrial production and capacity utilisation, along with the University of Michigan’s preliminary consumer sentiment index for May. From central banks, the ECB will be publishing the account of its April meeting, and Dallas Fed President Kaplan will be speaking.

In an unsettling reminder that COVID-19 is still spreading, even as a scandal-scarred Gov. Andrew Cuomo pushes ahead with reopening the Empire State – and even as practically everybody in the organization has already been vaccinated – the Yankees have seen their starting lineup crippled (shortstop Gleyber Torres was kept out of Wednesday’s starting lineup during a game against Tampa Bay) and a number of coaches and staff sidelined due to a sudden flareup of COVID-19.

But the surprising thing is that the Yankees have essentially required players and staff to get vaccinated, so this latest outbreak is afflicting staff and players who have already been fully vaccinated.

The Yankees – which, like the Mets, are reportedly planning to segregate fans in to “vaccinated” and “unvaccinated” sections – have tested all players and staff at least three times since Tuesday.

Manager Aaron Boone shared more information on the situation inside the team on Wednesday in a COVID-themed update that sounded like an unwelcome relic from last season.

…Boone said MLB’s Joint COVID-19 Health and Safety Committee is waiting and reviewing a number of test results. The members of New York’s traveling party have been tested at least three times each since Tuesday.

“I know everybody is going to read into that but hopefully it’s nothing, it’s more just getting all the information,” Boone said of Torres.

Boone said the Yankees expect to receive an update about Torres on Wednesday night. He added that Torres tested positive for COVID-19 in December and has been vaccinated.

Aside from Gleyber, seven staffers and coaches have tested positive, bringing the total to 8. Boone revealed that pitching coach Matt Blake has joined third base Phil Nevin and first base coach Reggie Willits as members of the coaching staff who recently tested positive. 2 additional staff members have tested positive, bringing the total for the non-coaching staff to four. In total, six of the seven coaches and staff were asymptomatic. He also offered some hopeful news:

“We’re seeing the vaccinations also kind of blunt the effects of the virus,” Boone said. “We’re also learning as we go and getting informed as what we need to do exactly and just try to do as best we can to be able to make quick adjustments on the fly. Just doing the best we can with it all.”

Pitcher Jameson Taillon said the team has been doing a good job of rolling with the punches.

“We’ve been dealing with this thing now for over a year,” Yankees pitcher Jameson Taillon said. “We’re just going to roll with the punches and try to protect each other, and do our responsibility to keep everyone safe. But we’re here and we’re to play.”

New York City is planning to “fully reopen” on July 1, and last night President Biden decreed that Americans who have been fully vaxxed can finally dispense with wearing masks.

Big news from the CDC: If you’re fully vaccinated, you do not need to wear a mask – indoors or outdoors, in most settings.

We’ve gotten this far. Whether you choose to get vaccinated or wear a mask, please protect yourself until we get to the finish line. pic.twitter.com/XI4yPmhWaD

— The White House (@WhiteHouse) May 13, 2021

While Pfizer and Moderna have confronted stories like this in the past by reminding the public that their vaccines are only 95% effective. But how can it explain larger outbreaks like this?

Or are these asymptomatic positives simply the result of false positives produced by high-cycle PCR thresholds?

Which is it?

Authored by Charles Hugh Smith via OfTwoMinds blog,

So hey there Corporate America, the Fed and your neofeudal cronies: take this job and shove it. This time it really is different, but not in the way the Wall Street shucksters are claiming.

Conventional economists, politicos and pundits are completely clueless about the unraveling that’s gathering momentum beneath the superficial surface of “reflation” because they don’t yet grasp we’re entering an unprecedented new type of recession: a ‘Take This Job and Shove It’ recession which is unlike any previous downturn.

Long-time readers know I’ve addressed the emergent class structure and systemic decay of the socio-economic order for many years. Just as a quick refresher, here are a few of the dozens of essays I’ve written on these topics:

America’s Nine Classes: The New Class Hierarchy 4/29/14

The Managerial/ Professional Class Is Burning Out 3/28/16

America’s Metastasizing Class Wars 8/27/20

This Is How It Ends: All That Is Solid Melts Into Air 9/10/20

This Is Why Inflation Will Rip Everyone’s Face Off 9/17/20

What the chattering class of apologists, toadies, lackeys, factotums and apparatchiks missed about the pandemic lockdown was the tidal change in perceptions of work and life enabled by a withdrawal from the deranging frenzy of work: once people had time to reflect on their lives, mortality, goals, identity and the soaring costs and dwindling rewards of their efforts to “get ahead” via slaving away in a dead-end job / career, the tune that began to haunt their subconscious ruminations was Johnny Paycheck’s timeless classic, Take This Job And Shove It (2:31).

Whether anyone in the halls of power cares to notice or not, a mass withdrawal from the workforce is underway. What’s remarkable about this swelling exodus is that it isn’t confined to one class of workers: low-wage workers are jumping ship en masse, but so are mid-level white-collar workers and well-paid but overworked technocrats in the top 10%.

As the professional apologists frantically spew rah-rah PR about the “recovery” (you mean we’re all addicts and are now “recovering”?), the workforce is finally awakening to the emptiness of the PR: the rewards of the economy have flowed to two classes: the Financial Aristocracy (a.k.a. the New Nobility in our neofeudal economy), the top 0.1% who now own more wealth than the bottom 80% of American households, and speculators, from the scammers on Wall Street to the daytraders gambling their stimmy payments.

The reality that wages have stagnated for the past 50 years is finally sinking in, and people are responding accordingly. By any realistic measure, most workers have lost ground when the purchasing power of their wages in the 1980s is compared to what their earnings buy now in healthcare, childcare, rent, higher education, property taxes, etc.

The erosion of labor’s value has been catastrophic for the bottom 60%. As I recently noted, I was making $12 an hour in 1985, an OK wage but nothing special, and after 36 years of inflation, many workers are still earning $12 an hour–or less. Measured in purchasing power, wages have declined since the early 1970s.

Take a glance at the chart below of wage’s share of the economy and observe it’s been in a downtrend since the early 1970s.

Meanwhile, the cost of big-ticket expenses such as healthcare, childcare, rent/housing and higher education have tripled. Even high-earners such as physicians have lost ground, as their salaries in 1985 bought far more goods and services than their salaries do today.

Young high-earners have been flocking to the FIRE movement for years: financial independence, retire early is the upper-middle class way of saying Take This Job And Shove It, as the goal is to save enough earnings by scrimping and saving to exit the workforce for good while still in your early 30s.

Lower-wage workers are finding other workarounds. Much to the consternation of employers, many are milking the extended unemployment payments. But beneath the radar, others have carved out informal-economy niches or found ways to slash their living costs–for example, constructing a micro-home on a cheap plot of rural land and saying good-bye to McMansion dreams and $2,000 a month rents for tiny apartments in decaying urban cores.

Even highly paid people are realizing that the meager rewards of slaving away to make Corporate America another couple trillion in profits isn’t worth their life. As desperate employers offer overworked technocrats bonuses to keep them slaving away, the workers are ploughing the bonuses into bets they hope will pay off and fund their escape from neofeudal serfdom sooner than planned.

While the apologists, toadies, lackeys, factotums and apparatchiks serve their neofeudal lords for pennies tossed in the sawdust, the most productive workers are melting away. Nobody dares mention the number of physicians and nurses who are leaving America’s sickcare system; once again, the pandemic served as a catalyst for action to be taken on long-simmering frustrations.

YOLO (you only live once) isn’t just about making risky bets in bubblicious markets–it’s about deciding to do something else with you life other than make Corporate America another couple trillion in profits or keep your small business afloat as taxes, fees, penalties, surcharges, rent and every other expense soars.

The pandemic posed a question few had time to ponder: what’s the point? What no financial analyst dares confess is the corporate profits they cheer every quarter have come at a cost that many Americans will soon be unable to bear. Millions of highly experienced, essential employees are either planning to quit, retire, cut their hours or switch to lower stress jobs.

It isn’t easy to escape the clutches of the Corporate-State neofeudal system; the costs (tangible and intangible) of self-employment have been rising steadily for decades:

The Troubling Decline of Financial Independence in America (August 28, 2015)

The Fading American Dream of Working for Yourself (October 2015)

Social Mobility between classes has decayed, and people are finally beginning to grasp this. After you do all the right things–borrow a fortune to get a college degree, build your resume with low-paying jobs working ridiculous hours, etc., you eventually realize you’re a precariat just like everyone else. Maybe a better paid precariat, or maybe a poorly paid precariat, but this is all the Financial Mobility you’re ever going to get.

The Top 0.1% winners in this system are protected by the Federal Reserve, while the losers are stripmined by crushing taxes. Even if they don’t understand the exact mechanisms of the Federal Reserve’s bag of tricks, they now understand the rich get richer and the state protects them from the precariats and serfs doing all the work.

The Federal Reserve can conjure up trillions of dollars out of thin air to further enrich the nation’s parasitic elite, but they can’t print experienced, motivated workers or people with entrepreneurial skills.

The danger to the state is not who rebels but who opts out. Outright rebellion suits the state, as it can turn its monopoly on force on the citizenry. But when those keeping everything glued together have had enough and find a way to quit, the entire system starts unraveling in ways the state is powerless to stop.

If the Technocrat Caste opts out, the private sector loses its tax donkeys and managerial expertise. If what remains of the middle class opts out, what’s left of America’s civic glue disappears.

If the working poor opt out, the scut work required to provide the upper classes with their comforts will not get done. (Hey, Mr. State Bureaucrat and Mr. Financier, here’s a saw and a knife. Butcher your own meat.)

There’s only so much inequality and unfairness a workforce can bear, and America is well past that point. To those who claim “people can’t afford to quit,” just watch. Those who’ve had enough are finding ways to opt out. There’s plenty of woodwork to disappear into.

So hey there Corporate America, the Fed and your neofeudal cronies: take this job and shove it. This time it really is different, but not in the way the Wall Street shucksters are claiming.

So take this job and shove it, I ain’t working here no more. I’m stepping off the rat-race merry-go-round, thank you very much. You can find some other sucker to do your dirty work and BS work, all for the greater glory and wealth of your New Nobility shareholders. I’m outta here. So I won’t get rich, that dream died a long time ago. What I’m interested in now is getting my life back and getting the heck out of Dodge as things unravel.

*  *  *

If you found value in this content, please join me in seeking solutions by becoming a $1/month patron of my work via patreon.com.

*  *  *

My recent books:

A Hacker’s Teleology: Sharing the Wealth of Our Shrinking Planet (Kindle $8.95, print $20, audiobook $17.46) Read the first section for free (PDF).

Will You Be Richer or Poorer?: Profit, Power, and AI in a Traumatized World (Kindle $5, print $10, audiobook) Read the first section for free (PDF).

Pathfinding our Destiny: Preventing the Final Fall of Our Democratic Republic ($5 (Kindle), $10 (print), ( audiobook): Read the first section for free (PDF).

The Adventures of the Consulting Philosopher: The Disappearance of Drake $1.29 (Kindle), $8.95 (print); read the first chapters for free (PDF)

Money and Work Unchained $6.95 (Kindle), $15 (print) Read the first section for free (PDF).

Former Top Gear host James May took to YouTube in a video published Wednesday titled “James May’s Tesla Model S has failed!” to include one of the top things he hates about his Model S. May, who has already made a video about the “dozen or so things he doesn’t like about his Tesla” included another annoying issue with the car: Its 12-volt battery tends to die, transforming the vehicle into an electric brick. 

May explains the Tesla has “two batteries.” It has a “great big battery that powers the car, and it also has, here in the front, a conventional 12-volt battery that keeps all the systems alive.” He said the car sat for a while and the 12-volt battery went “flat.” Since the 12-volt battery powers the car’s computer and locks, he could not unlock the front bonnet to charge the battery. 

May then proposed the question: Why does the 12-volt battery go flat when it has a great big battery underneath the car?

He said Tesla provided him an answer that when the great big battery underneath the car is topped off, the car’s charging system turns off and doesn’t charge the 12-volt battery. 

It took May about an hour to get into the front bonnet, where he had to remove part of the plastic wheel wells on the front driver and passenger side to pull emergency cords to unlock the bonnet. After that, he removed a ton more plastic and finally found the 12-volt battery buried deep inside. 

May concludes to charge the 12-volt battery “you have to dismantle the car – it was about an hour’s work – and frankly, it has pissed me off.”

The former Top Gear host isn’t the only one to experience 12-volt batteries dying in Teslas, locking owners out of their cars. The problem became so rampant that Elon Musk in late 2020 tweeted, “major software improvements are already in place to extend its life & more coming.” 

The 12-volt battery debacle hasn’t been an isolated issue with just Tesla. Some Ford Mustang Mach-E have turned into “electric bricks” because of a software issue that would drain the 12-volt battery. 

As for May, he said the solution is to attach a trickle charger cable to the Tesla’s 12-volt battery and cut a hole through the plastic to make it easily accessible when the front bonnet is open. 

Underlining the uncertainty surrounding SARS-CoV-2 and its many mutant offshoots (while offering a helpful reminder that Pfizer and Moderna are looking to maximize profits for their newest line of business) a group of scientists from around the world have banded together to push back against advanced marketing of COVID-19 booster shots and annual vaccines.

In what could be good news for the market’s outlook on global growth, more than a dozen “influential infectious disease and vaccine development expert said there is growing evidence that a first round of global vaccinations may offer enduring protection” from COVID, and that the booster shots and flu-style annual vaccinations touted by Pfizer CEO Albert Bourla might not be necessary.

Additionally, some of the scientists “expressed concern” that public expectations about the vaccine “are being set by executives” and not other scientists. If pressed, we suspect many of these same executives would acknowledge that they have a “fiduciary duty” to their shareholders to maximize returns, which is why Pfizer is looking to transform its COVID vaccine business into a “durable business line.”

Some of these scientists expressed concern that public expectations around COVID-19 boosters are being set by pharmaceutical executives rather than health specialists, although many agreed that preparing for such a need as a precaution was prudent.

They fear a push by wealthy nations for repeat vaccination as early as this year will deepen the divide with poorer countries that are struggling to buy vaccines and may take years to inoculate their citizens even once.

“We don’t see the data yet that would inform a decision about whether or not booster doses are needed,” said Kate O’Brien, director of the Department of Immunization, Vaccines and Biologicals at the World Health Organization (WHO).

O’Brien said the WHO is forming a panel of experts to assess all variant and vaccine efficacy data and recommend changes to vaccination programs as needed.

Pfizer Inc Chief Executive Albert Bourla has said people will “likely” need a booster dose of the company’s vaccine every 12 months – similar to an annual flu shot – to maintain high levels of immunity against the original SARS-CoV-2 virus and its variants.

Former Obama Administration CDC head Dr. Tom Frieden was especially vehement: “There is zero, and I mean zero, evidence to suggest that that is the case.”

“It’s completely inappropriate to say that we’re likely to need an annual booster, because we have no idea what the likelihood of that is,” Frieden, who now leads the global public health initiative Resolve to Save Lives, said of Pfizer’s assertions on boosters.

Unfortunately for countries like India and South Africa, which are crying out for more vaccines, the US, EU and Israel have already made deals with Pfizer and Moderna to acquire more vaccines later this year to keep on hand in case they need to be deployed as boosters. This means that developing economies, which have been left to duke it out in the international market, will have less supply to go around.

But outsiders aren’t the only ones criticizing the scaremongering about vaccine boosters. Dr. William Gruber, Pfizer’s senior vice president of vaccine clinical research and development, reportedly told Reuters that the predictions for yearly boosters were based on “a little evidence” of a decline in immunity over those six months, evidence which was since been countered with research showing antibody retention is more durable.

A Moderna scientist, meanwhile, said that boosters may be needed, and governments are right to stockpile jabs, while noting that “”All governments are in conversations with (Moderna) and other companies about boosters,” he said.

We can’t help but wonder: if the vaccine IP waiver proposal that India and South Africa have brought to the WTO does pass, and tech transfers are part of the deal, will ‘Big Pharma’ change its tune about the need to stockpile boosters?