Southwest Plunges After Revenue Guidance Slashed As Troubles Mount 

Southwest Plunges After Revenue Guidance Slashed As Troubles Mount 

Just over two weeks after activist shareholder Elliott Investment Management was revealed to have nearly a $2 billion equity stake in budget airline Southwest, the investment firm’s head, Paul Singer, is already experiencing a turbulent ride. 

Shares of Southwest plunged as much as 10% in premarket trading in New York, with some of those losses reversed as of 0815 ET, following news the airline slashed its guidance for revenue per available seat mile, a commonly used top-line metric also known as “RASM,” for the second quarter. 

Southwest wrote in a filing with the Securities and Exchange Commission that it expects a revenue per available seat mile decline of as much as 4.5% in the second quarter, down from a prior estimate of 1.5% to 3.5%. 

“Based on revenue performance to date, the Company now expects second-quarter 2024 RASM to decline in the 4.0 percent to 4.5 percent range compared with its prior expectation of a 1.5 percent to 3.5 percent decline, both on a year-over-year basis,” the airline said.

Southwest explained, “The reduction in the Company’s RASM expectations was driven primarily by complexities in adapting its revenue management to current booking patterns in this dynamic environment.” 

Despite the downward revision in RASM, the airline noted, “The Company continues to expect an all-time quarterly record for operating revenue in the second quarter of 2024.” 

In late April, Southwest shares tumbled after the company reported a wider-than-expected first-quarter loss and lower-than-expected revenue due to delays in Boeing jet deliveries. 

“The recent news from Boeing regarding further aircraft delivery delays presents significant challenges for both 2024 and 2025,” Southwest CEO Bob Jordan wrote in the company’s first-quarter financial results statement. 

Meanwhile, as of early April, Paul Singer has become one of Southwest’s largest shareholders and aims to turn the struggling airline around. However, someone should warn Singer not to elimate the ‘bags fly free’ policy or face a wave of angry passengers. 

Tyler Durden
Wed, 06/26/2024 – 09:10

via ZeroHedge News https://ift.tt/lfn6Ajg Tyler Durden

Seattle Mandates $4.99 Fee On Uber Eats ‘To Help Drivers’, Deliveries Crash 45%

Seattle Mandates $4.99 Fee On Uber Eats ‘To Help Drivers’, Deliveries Crash 45%

Authored by Mike Shedlock via MishTalk.com,

Drivers are not helped by wage mandates is Seattle and New York. And customers complain higher prices and cold food.

It’s a perfect trifecta of complaints.

Neither drivers nor customers are happy with misguided politicians attempting to help driver get better pay.

It’s losses all around as Delivery Drivers Got Higher Wages. Now They’re Getting Fewer Orders.

The delivery companies—whose businesses are built on gig workers they don’t employ full- time—say they can only afford to pay so many workers under the two cities’ latest pay standards. The cities want the companies to pay couriers a minimum hourly wage based on the time they spend delivering orders and reward the most efficient workers. New York City now requires that the companies pay couriers at least $19.56 per hour before tips, up from an average of $5.39 per hour before its rules went into effect in December.

Uber Eats’ UBER orders in Seattle fell 45% last quarter from the same period a year earlier after the company imposed a $4.99 fee on each order to cover the city’s new pay requirements. Demand also cooled in New York City, Uber and DoorDash DASH.

Consumers already pay the apps a service fee and delivery fee, in addition to tipping workers. For some, the latest app fees were the last straw.

Seattle-based researcher Ro Singh was hooked on ordering in several times a week until the city adopted its pay measure in January. App prices “became absolutely nuts,” he said, after adding varying delivery fees in addition to tipping. He started picking up the food himself.

“It’s like double the price to order a $20 burrito now” compared with the pickup price, he said. “This is insane.”

Uber Chief Executive Dara Khosrowshahi said the company has had to cut 25% of the delivery drivers who previously worked for the app in New York City. “So far, regulation has definitely hurt the people that it’s supposed to protect,” Khosrowshahi said last month on a call with analysts.

Shuai Zhang, the owner of Poprice, an Asian street-food restaurant in New York City, says his delivery sales are a third of what they were before the changes. Drivers who once picked up from his restaurant are now asking him for jobs. He hired two of them.

Fewer workers delivering for the apps means it takes longer to pick up orders. Customers are complaining about deliveries arriving cold and soggy, Zhang said. To make up for lost sales, he has started working as a restaurant consultant.

Seattle driver Gary Lardizabal said he makes less money now despite working more hours. Breakfast and afternoon-snack delivery orders have disappeared. Smaller deliveries don’t make sense because of the new $4.99 fee, he said.

Perfect Trifecta of Who Is Unhappy

  • Drivers because they are making less money

  • Restaurants because they are losing business

  • Customers because of slower deliveries, cold food, and higher prices

The city loses too. Seattle collects a sales tax of 3.85 percent.

Seattle vs New York

New York City says the plan is working. The only thing I can come up with is reduced traffic.

Seattle City Council President Sara Nelson is pushing to reverse the new earnings standard after complaints from drivers, restaurants and consumers, though she wants to ensure that workers still make the city’s minimum hourly wage before tips.

What a hoot.

Not having learned anything from this, Nelson still wants to mandate minimum wages. I wonder what miserable failure she will concoct next.

Price Wars at McDonalds, Starbucks, Walmart, Target

Meanwhile, please note A $5 Meal Deal at McDonalds, Price Wars Also at Starbucks, Walmart, Target

Still more signs of consumer exhaustion are evident in tactics by McDonalds, Starbucks, and other chains’ attempts to woo back customers who said no more to rising prices.

Breadsticks at Olive Garden Highlight Financial Strain on America’s Middle Class

In case you missed it, please see my June 20 post, Breadsticks at Olive Garden Highlight Financial Strain on America’s Middle Class

Traffic at Olive Garden is up 3.9 percent but but same store sales are down 1.5 percent. Are people filling up on unlimited breadsticks? Drinking less wine?

Discretionary Spending

Repeating comments I made in the McDonalds post, all of the articles in this post have one thing in common. They are all about discretionary spending.

Consumers are tapped out and that is the first, if not only thing consumers can cut back on.

Tyler Durden
Wed, 06/26/2024 – 08:50

via ZeroHedge News https://ift.tt/PamOiXV Tyler Durden

Whirlpool Shares Surge 18% Amid Bosch Takeover Rumors

Whirlpool Shares Surge 18% Amid Bosch Takeover Rumors

Shares of Whirlpool Corp. soared in premarket trading in New York after a Reuters report explained that German appliance and engineering giant Robert Bosch is eyeing a potential takeover bid for the appliance maker. 

Bosch has been talking to potential advisers about the possibility of making an offer for Whirlpool, which has a market capitalization of about $4.8 billion, one of the sources said.

The sources said it was not certain that an offer would be made, and asked not to be identified because the matter is confidential. -Reuters

Reuters pointed out that Bosch’s potential acquisition of Whirlpool could significantly strengthen its home appliance division amid increasing competition from Asian rivals. This deal would also allow Bosch, the world’s largest automotive supplier, to diversify its portfolio beyond the automotive industry and into home appliances.

As of Monday’s close, Whirlpool had a market capitalization of $4.75 billion. Sources were unclear about the composition of the deal, and a Bosch spokesperson called the report “market rumors.” 

In markets, Whirlpool shares peaked in May 2021 just north of $250 a share, and since then, have plunged 65% to around the $87 handle on Monday, or about to the lowest levels since the early days of government-enforced lockdowns in the early Covid days.

WHR is up 18% in the pre-market…

Also, Whirlpool’s float is 13% short, or about 7.1 million shares, equating to about 4.8 days to cover. This may suggest the squeezing in premarket trading.

Tyler Durden
Wed, 06/26/2024 – 08:35

via ZeroHedge News https://ift.tt/E9l1LOU Tyler Durden

Futures Fade Despite Continued Tech Meltup, Japanese Yen Craters

Futures Fade Despite Continued Tech Meltup, Japanese Yen Craters

Futures are trading modestly in the red near sessions lows, erasing earlier gains of as much as 0.2% even as gigacap tech stocks continue their meltup. At 8:00am ET, S&P futures were down 0.1%, while Nasdaq futures were still green, rising 0.1% but also fading their earlier gains in another quiet start to the day (volumes this week have been tracking down 10-15% vs 10dma), with the snapback in momentum yesterday looking to continue its rally this am (NVDA +2% in premarket). Bond yields are 2-4bp higher after Fed Governor Michelle Bowman reiterated her view that borrowing costs should remain elevated for some time; USD is higher as the yen plunges below 160 vs the USD, the lowest since 1986 with another BOJ intervention now imminent. Commodities are mixed: oil and Ags are higher, while base metals are lower. Today, the key macro focus will be on MBA Mortgage Applications (up 0.8%), New  Home Sales (10am, est 633k), $70bn UST 5yr note auction, Fed will release bank stress test results after the close today; Micron, Jefferies and General Mills are among companies reporting results.

Pre-mkt, Tech/Semis are continuing yesterday’s rally: Nvidia climbed more than 2% in US premarket trading, adding to Tuesday’s 7% gain. Rival Micron Technology Inc. rose more than 3% ahead of its third-quarter results later Wednesday (WTD +4.3%). Other tech names rising are QCOM +70bp, AMZN +65bp, AAPL +32bp.  Here are the most notable premarket movers:

  • FDX +14% pre mkt after company reported EPS upside thanks to higher op. margins and the F25 EPS outlook mid-point is slightly above plan ($21 vs. the Street $20.85). Iin addition to earnings, mgmt. outlined a plan to repurchase $2.5B in shares this FY (including $1B in FQ1) and suggested the FedEx Freight unit could be sold (the potential for a FedEx Freight sale is the key driver of the stock rally).
  • Rivian Automotive shares soared 38% after Volkswagen said it plans to establish a joint venture and invest up to $5 billion until 2026 in the electric-car maker. Analysts were positive about the investment and noted that the JV is a vote of confidence for Rivian’s business. VW shares slipped.
  • Aptiv shares fell 5.7% as Piper Sandler downgraded to underweight from neutral, saying that the Volkswagen-Rivian JV strikes at the core of the auto parts company’s strategy.
  • Southwest Airlines shares drop as much as 10% in premarket trading after the US carrier cut its guidance for operating revenue per available seat mile for the second quarter.
  • Whirlpool shares surge as much as 20% in premarket trading after Reuters reported that Robert Bosch GmbH is considering an offer for the appliance maker.
  • General Mills shares fall 4.1% in premarket trading after the packaged-food company’s full-year forecast for organic net sales growth missed the average analyst estimate. The cereal maker also reported a steeper-than-expected decline in organic net sales for the fourth quarter.
  • Tesla is on the verge of losing a key bragging right it’s held for the past six years: outselling all EV competitors in the US combined.
  • Home Depot shares gain 0.5% in premarket trading after D.A. Davidson & Co. raised the home-improvement retailer to buy from neutral, saying a return to positive comparable sales “is in sight” with industry trends no longer getting worse.
  • Grindr shares jump 5.9% in premarket trading after Dow Jones reported that the LGBTQ company raised its revenue growth forecast for the year ahead of an investor day.
  • Cruise operator Carnival Corp. gained after posting a surprise quarterly profit and raising its earnings outlook.

The volatility  in Nvidia shares, which account for one third of the S&P’s advance this year, has raised renewed concern about the concentration of megacap technology stocks in equity indexes.

“Nvidia’s volatility has weighed on market sentiment, but we think the structural investment case for artificial intelligence remains intact,” said Mark Haefele, chief investment officer at UBS Global Wealth Management. “We also hold a constructive outlook for broader equities amid solid fundamentals.”

Among other premarket movers, FedEx Corp. surged more than 13% after an upbeat profit forecast.  Cruise operator Carnival Corp. gained after posting a surprise quarterly profit and raising its earnings outlook. Southwest Airlines Co. fell as much as 6.7% after cutting guidance.

Fed officials recently forecast just 25 basis points of reductions by the end of this year and a total of 125 basis points by  end-2025, while market participants are pricing in about 75 basis points by the first quarter of 2025. But some are starting to hedge against deeper and more rapid easing: positioning in the rate options market shows an increase in bets that stand to benefit if the Fed reduces its key rate to as low as 2.25% over the next nine months — a whopping 3 percentage points of cuts.

The Stoxx Europe 600 index reversed an early advance and slipped 0.4% as declines for car makers and travel and leisure stocks offset gains in the tech sector. Among individual movers in Europe, Danske Bank A/S rose as much as 2.4% after lifting its full-year outlook. Just Eat Takeaway.com NV and Delivery Hero SE fell as much as 4% each after JPMorgan forecast tepid growth for the food delivery sector. Here are the most notable European movers:

  • Mail delivery stocks climb on Wednesday after US firm FedEx issued a profit forecast above Wall Street’s expectations.
  • Deliveroo shares rise after Reuters reported that US food delivery firm DoorDash approached the company for takeover talks. European food delivery peers waive early gains.
  • Sanofi shares rise as much as 2% after Bloomberg reported that the French pharmaceutical giant  has called for initial bids for its $20 billion consumer health division ahead of a potential listing.
  • Danske Bank shares gain as much as 2.4% after raising its outlook for the full year, citing the strong quality of loans it has issued.
  • Philips shares rise as much as 3.3% after Italy’s billionaire Agnelli family raised its holding in the Dutch medical device manufacturer, giving it a stake worth $4.19 billion.
  • Future shares gain as much as 8.1% after Jefferies double upgrades to buy, removing the media company’s only negative analyst rating, on renewed confidence over a strong return of revenue growth.
  • Fincantieri shares gain as much as 8% in Milan trading, rebounding from a 9.3% drop on Tuesday, after the Italian shipbuilder launched a €400m capital increase earlier this week.
  • D’Amico shares advance as much as 8.1% as Pareto adds to the clean sweep of positive ratings, starting coverage with a buy rating as notes strong re-pricing potential for the stock.
  • PTWP shares rise as much as 9.2% on their first day of trading on the Warsaw Stock Exchange’s main market, after the application software firm moved its listing from the NewConnect platform for smaller companies.
  • Phoenix Group shares slip as much as 1% after the UK insurer said it would explore the sale of its SunLife business.
  • Volex shares slump as much as 9.3%, the most since August 2022, after the producer of interconnectors and power products reported full year results.
  • Alfen shares fall as much as 43%, the most on record, after the Dutch energy infrastructure firm cuts its revenue forecast and said it expects its Ebitda margin to be mid-single digit for the full year.

In the absence of major data from the euro zone on Wednesday, traders are taking their cues from policy signals. Investor expectations for the European Central Bank to loosen monetary policy twice more this year are fair, according to Governing Council member Olli Rehn, who added that officials shouldn’t overly dampen economic activity.

Earlier, in Asia equities advanced for a second day as tech shares rebounded after Nvidia drove a rally in US peers. The MSCI Asia Pacific Index rose as much as 0.4%, with TSMC and SK Hynix among the biggest boosts. A gauge of the region’s tech shares advanced after a three-day decline. Benchmarks gained in Japan, South Korea and mainland China. Australian stocks slid as a hotter-than-expected inflation data print bolstered the case for the Reserve Bank to resume raising interest rates.
Wall Street’s tech rally overnight helped lift chip-related stocks in the region, though any bullish sentiment may be contained as uncertainties remain on the Federal Reserve’s monetary policy path. Investors are watching the central bank’s preferred inflation gauge due Friday for more clues on its path to easing. China’s 10-year bond yield fell to a more than two-decade low as investors flocked to fixed-income securities amid concern about the slowing economy and expectations for further stimulus.

In FX, it was all about the continued disintegration of the yen, which breached 160 per dollar, a level that triggered a sharp reversal on April 29 due to suspected intervention, raising speculation Japanese authorities may take steps to support the currency again. As of 8:00am, the USDJPY rose to 160.36, the lowest since 1986.  

In rates, treasuries are cheaper across the curve on Wednesday, holding on to losses seen during Asian trading hours amid a selloff in Australian government bonds after the country’s May inflation reading beat estimates, raising the odds that the Reserve Bank will resume raising interest rates at its next meeting. US yields are cheaper by 2.5bp to 3.5bp across the curve, with the front and belly of the curve broadly leading losses on the day. US 10-year yields trade at around 4.28%, cheaper by 3bp on the day with bunds and gilts trading broadly in line. Aussie 2-year notes climbed 18bp following CPI data. Treasury coupon issuance resumes at 1pm New York time with $70 billion in 5-year notes, which follows a 2-year sale on Tuesday which stopped on the screws. This week’s auctions conclude Thursday with $44 billion in 7-year notes. The WI 5-year yield at around 4.305% is ~25bp richer than May’s stop-out, which tailed the WI by 1.3bp

In commodities, oil rose ahead of a US government report on crude inventories and fuel demand following the release of mixed industry data. Iron ore climbed for a second day. Copper fell to the lowest in more than two months with prices facing sustained pressure from unusually weak Chinese demand. Gold was little changed. Bitcoin softer but essentially consolidating at the top-end of Tuesday’s range which itself was a consolidation of Monday’s marked Mt. Gox/technical inspired downside; at a base of USD 61.4k

The US economic data slate includes May new home sales at 10am. There are no Fed officials scheduled to speak for the session. The focus for the US session also includes a 5-year note auction, which follows solid demand for Tuesday’s 2-year sale.

Market Snapshot

  • S&P 500 futures up 0.2% to 5,549.25
  • STOXX Europe 600 up 0.5% to 520.12
  • MXAP up 0.3% to 180.97
  • MXAPJ up 0.2% to 568.06
  • Nikkei up 1.3% to 39,667.07
  • Topix up 0.6% to 2,802.95
  • Hang Seng Index little changed at 18,089.93
  • Shanghai Composite up 0.8% to 2,972.53
  • Sensex up 0.7% to 78,604.07
  • Australia S&P/ASX 200 down 0.7% to 7,783.01
  • Kospi up 0.6% to 2,792.05
  • German 10Y yield +2bps at 2.43%
  • Euro down 0.2% to $1.0696
  • Brent Futures up 0.1% to $85.12/bbl
  • Gold spot down 0.2% to $2,315.93
  • US Dollar Index up 0.18% to 105.79

Top Overnight Stories

  • China’s benchmark bond yields fell to a more than two decade low, even as economists raised growth forecasts on export optimism. But adding to signs of slowing activity, vacancies are climbing at warehouses, souring global investors’ $100 billion bet. BBG
  • A rare unscheduled revision to Japan’s first-quarter gross domestic product (GDP) may lead to a sharp downgrade, possibly affecting the central bank’s growth forecasts and the timing of its next interest rate hike, some analysts say. RTRS
  • Rivian shares jumped 37% in premarket trading after Volkswagen agreed to invest $5 billion in a joint venture, providing a much-needed cash infusion. VW shares slipped. BBG
  • Australia’s CPI came in ahead of expectations in May (+4% vs. the Street’s +3.8% forecast), which means the RBA could be forced to hike rates further in Aug. WSJ
  • Switzerland dealt a surprise hit to UBS after opting to proceed with scheduling Basel III bank capital rules in January, despite wrangles over them in the US. UBS had urged the government to delay part of the rules that relate to banks’ trading books. BBG
  • The ECB’s Olli Rehn said market expectations for two more cuts this year — and taking the deposit rate to as low as 2.25% in 2025 — were “reasonable,” in some of the most explicit remarks yet on the rate path from a policymaker. BBG
  • US companies have been able to reprice almost $400bn of debt at lower interest rates this year due to booming investor appetite for junk loans, in an easing of financing conditions for corporate America. FT
  • In New York’s 16th district, George Latimer defeated Rep. Jamaal Bowman in the most expensive congressional primary in US history. Bowman’s loss is a blow to liberals who’ve been trying to push the Democrats further left; he’s a member of the so-called “Squad” and has been critical of Israel. BBG

A more detailed look at global markets courtesy of Newsquawk

APAC stocks followed suit to the mixed performance stateside where the major indices reversed Monday’s price action and tech rebounded as Nvidia snapped its losing streak, while markets continue to await fresh catalysts. ASX 200 was pressured with sentiment not helped by a hot monthly CPI print which saw both Deutsche Bank and Morgan  Stanley call for a 25bps hike at the next RBA meeting in August, Nikkei 225 outperforms following recent currency weakness and with tech names boosted after Nvidia’s rebound. Hang Seng and Shanghai Comp. were mixed with the former kept afloat above the 18,000 level, while the mainland was subdued despite another firm liquidity injection by the PBoC with sentiment clouded by tech and trade-related frictions as OpenAI was reportedly taking steps to block China access to its AI tools.

Top Asian News

  • RBA Assistant Governor Kent said a range of measures shows that monetary policy is restrictive and policy is contributing to slower growth of demand and lower inflation, while he added that recent data reinforced the need to be vigilant to upside inflation risks and hence, they are not ruling anything in or out for interest rates.

European bourses higher across the board following the tech-led upside on Wall St.; Stoxx 600 +0.2%. Sectors mostly in the green, Tech leads while Autos lag amid pressure in Volkswagen after their investment in Rivian. Stateside, futures firmer but only modestly so, ES +0.2% & NQ +0.3% as we count down to Micron earnings after-hours; Fedex leading in the pre-market +13% post-earnings. DigiTimes reported that Nvidia (NVDA) CEO Jensen Huang was reportedly concerned about the company’s business development, with slow data centre expansion possibly impacting chip sales. Equity specifics between Volkswagen-Rivian & FedEx detailed below.

Top European News

  • ECB’s Rehn said he sees bets for two more rate cuts this year as reasonable and the market’s terminal rate view of 2.25%-2.50% is also appropriate, while he sees the possibility for rate moves at any policy meeting and noted that rate cuts are contingent on additional disinflation. Rehn said he sees no disorderly market moves in France, as well as noted there is no debt crisis ahead and no need for TPI.
  • ECB reportedly to begin the next strategic review once the summer break concludes, via Bloomberg; looking to present findings in H2-2025.
  • Volkswagen (VOW3 GY) is to invest an initial USD 1bln in Rivian (RIVN), as part of a new, equally controlled JV to share EV architecture and software. The potential investment could rise to as much as USD 5bln by 2026 if certain milestones are achieved. The transaction could result in an unplanned cash outflow of up to EUR 2bln for Volkswagen in the current FY. Volkswagen expects FY24 net cash flow to range between EUR 2.5-4.5bln. Volkswagen will further its software-defined-vehicles plans via the JV, and transition to a pure zonal architecture. Each company will continue to separately operate their respective vehicle businesses. Rivian’s stock jumped higher by 50% in extended trading, adding around USD 6bln to its market cap. (Volkswagen).
  • Switzerland is to implement Basel III trading rules as of January 1st 2025, according to Bloomberg; sees no reason to deviate from the Basel III timetable. Note, the EU has delayed it by one year to January 2026.

FX

  • USD/JPY has breached 160.00 to the upside, for the first time since April 29th when it peaked at 160.20, a session which saw intervention and a large pullback in the pair; note, the breach of 160.00 this morning was accompanied by modest two-way action. Currently holding around a 160.06 session high.
  • DXY continues to incrementally build on Tuesday’s advances to a current 105.86 peak but is yet to breach Monday’s 105.90 high, which essentially matches Friday’s 105.91 best.
  • Action which is weighing on peers across the board; EUR/USD lost 1.07 to a 1.0686 base while Cable continues to slip from 1.27 and is approaching 12650.
  • Aussie is the clear outperformer, bolstered by hot CPI which has increased the odds of a August hike to c. 33% (12% pre-release, AUD/USD to a 0.6688 peak; Kiwi softer and weighed on by the cross with NZD/USD just beneath Tuesday’s 0.6107 base.

Fixed Income

  • Benchmarks in the red as the overall risk tone saps haven demand and amid a lack of fresh fundamental drivers for the complex, European docket focuses on a speech from ECB’s Lane.
  • Bunds at the low-end of a 45 tick band that has seen it slip below Monday’s 132.22 base to a new WTD low, if this goes, support at 132.02 before the figure and then 131.61.
  • OAT-Bund spread steady at 71bp with no fall out from an unsurprisingly fiery French election debate.
  • Gilts in-fitting with only a modest uptick on the back of a robust 2038 auction, complex looks ahead to the last Sunak-Starmer debate before the election this evening.
  • USTs also have a thin docket ahead with no Fed speak due and the main highlight being the 5yr auction, a tap which follows a better-than-average 2yr sale; USTs at a 110-09 fresh WTD base and holding just above last week’s 110-06+ low.

Commodities

  • Initially contained trade with specifics quite light after the bearish inventory report has given way to a modest but growing bid for the crude benchmarks which are at the top-end of c. USD 1.0/bbl parameters.
  • Action which comes despite a slight easing in the European risk tone (though still constructive overall) and an ongoing grind higher for the USD.
  • Precious metals saw a contained start given the twin headwinds of a robust dollar and risk appetite. Yellow metal is at the low-end of a USD 2309-2323/oz band; one that sees it slip further from its 10-, 21- & 50-DMAs.
  • Base metals tracking the tone but the gains capped by the dollar, overall the complex is firmer, it is yet to break the downward trend that has been in place for the likes of copper since end-May.
  • US Private Inventory Data (bbls): Crude +0.9mln (exp. -2.9mln), Distillate -1.2mln (exp. -0.3mln), Gasoline +3.8mln (exp. -1.0mln), Cushing -0.4mln.
  • Trading Hub Europe’s Frank remarks that German gas caverns curently show comfortable filling levels; Europe has enough LNG terminal capacities and southbound transit capacities from the north-west have been boosted.

Geopolitics: Middle East

  • US Defense Secretary Austin said Hezbollah’s ‘provocations’ threaten to drag Israeli and Lebanese people into war.
  • Pentagon said US Secretary of Defense Austin discussed with his Israeli counterpart efforts to de-escalate tensions on the Israeli-Lebanese border, while he warned that a war between Israel and Hezbollah would be catastrophic for Lebanon, according to Asharq News.

Geopolitics: Other

  • Ukrainian President Zelensky will attend Thursday’s European Union summit in Brussels where he is expected to sign an agreement on EU security commitments for Ukraine, according to the French President’s office cited by AFP.
  • Russian Defence Minister Belousov warned US Defense Secretary Austin regarding the dangers of an escalation of continued US arms supplies to Ukraine, according to the Russian Ministry.
  • North Korea launched a suspected ballistic missile which was believed to have fallen outside of Japan’s EEZ shortly after with no damage reported, while Yonhap later reported that North Korea’s missile launch was believed to have failed and South Korean military said the missile used by North Korea in its failed launch was potentially a hypersonic missile.
  • South Korean marines are to conduct live fire drills, according to Dong-A.
  • NATO allies select Mark Rutte as the next Secretary General.

US Event Calendar

  • 07:00: June MBA Mortgage Applications, prior 0.9%
  • 10:00: May New Home Sales MoM, est. -0.2%, prior -4.7%
  • 10:00: May New Home Sales, est. 633,000, prior 634,000

DB’s Jim Reid concludes the overnight wrap

I can safely say that this is the first time I have written the EMR from a castle. It’s in the Frankfurt countryside and quite an incredible place. This morning you need to look out at the market from the highest possible watchtower as the last 24 hours have seen a lot of differing trends from all directions.

On the plus side, tech stocks posted a decent recovery, with Nvidia (+6.76%) rebounding from its slump over recent days. But on the more negative side, several data releases were underwhelming, and multiple headlines leant on the hawkish side, i ncluding an upside surprise in both Canadian and Australian CPI. Indeed, DB have overnight changed their RBA call to a hike in August. Moreover, political events have also remained in focus, with the CAC 40 (-0.58%) and other European indices losing ground ahead of France’s election on Sunday.

We’ll start with the good news, as there was finally a bounceback for tech stocks after three consecutive declines, which helped to lift US equities more broadly. In particular, Nvidia was the second best performer in the entire S&P 500, which pushed its market cap back above the $3tn mark again. Those gains were seen amongst all the big tech stocks, with all of the Magnificent 7 (+2.40%) advancing on the day. In turn, that helped the NASDAQ (+1.26%) post a strong rebound, and it also lifted the S&P 500 up +0.39%.

But unfortunately, the good news mostly ended there, as even though the headlines pointed to a recovery for US equities, the move was dominated by the big tech stocks. In fact, over 75% of the S&P 500 actually fell yesterday, and the equal-weighted S&P 500 was down by a significant -0.72%. So as it stands with just a few days of the quarter left, the S&P 500 is up +4.09% in Q2 so far, whereas the equal-weighted index is down -2.89%. So a different story depending on which part of the market you look at, and this builds on the tech outperformance we already saw in Q1.

Matters weren’t helped by several hawkish headlines, with sovereign bonds coming under pressure after Canada’s CPI report for May. That showed headline CPI unexpectedly rising to +2.9% (vs. +2.6% expected), and the two core inflation measures followed by the Bank of Canada also rose. As it happens, the Bank of Canada did announce an initial cut at their meeting earlier this month, but after the inflation report, investors swiftly moved to dial back the chance of a follow-up move in July. Indeed, overnight index swaps had been pricing a 61% chance of a July cut on the previous day, but that was down to 16% by the close. Canadian government bonds also lost ground, with the 10yr yield up +5.0bps.

The inflation surprise has continued in Australia overnight with the latest CPI reading seeing it surge to its highest level this year. It printed at +4.0% y/y in May, above market expectations for a +3.8% gain and up from +3.6% in April. Our Aussie economist now believes the RBA will hike 25bps in August. See his report justifying the call here. Following the CPI data, the Australian dollar has risen +0.44% to trade at 0.6676 versus the dolla r while yields on the policy sensitive 3yr government bonds are currently +16.8bps higher at 4.09%, its biggest one-day gain since April, while yields on the 10yr are +11.7bps, standing at 4.32% as I type.

US Treasuries are also edging up around +1.5bps across the board after the Aussie CPI print after rising yesterday on the Canadian CPI beat. By last night’s close, 2yr Treasury yields were up +1.7bps to 4.74%, and the 10yr yield was up +1.6bps to 4.25%. Treasury yields did come slightly off their intra-day high seen around the European close following a solid 2yr auction which saw the highest bid-to-cover ratio since September. There was also some hawkish Fedspeak though, with Governor Bowman warning that “we are still not yet at the point where it is appropriate to lower the policy rate.” In addition, she said that cutting rates “ too soon or too quickly could result in a rebound of inflation, requiring further future policy rate increases to return inflation to 2 percent over the longer run.” Meanwhile, Fed Governor Cook maintained patience on rate cut prospects, saying these will be appropriate “at some point”.

Back in Europe, risk assets struggled, with the STOXX 600 (-0.23%), the CAC 40 (-0.58%) and the DAX (-0.81%) all posting losses. However, the Franco-German 10yr spread did tighten a bit, coming down by -1.1bps to 76bps, and yields came down across the continent, including on 10yr bunds (-1.1bps). With regards to politics, last night saw the debate between three potential French PM candidates though there are no immediate signs that this will materially alter the election race. Polls continue to put Marine Le Pen’s National Rally party in the lead, and yesterday’s Ifop poll had the National Rally on 36%, the left-wing alliance on 28.5%, and President Macron’s centrist group on 21%.

Asian equity markets are again mixed this morning with the Nikkei (+1.41%) sharply higher and with the KOSPI (+0.23%) edging higher. On the other hand, the S&P/ASX 200 (-0.80%) is the worst performer following the CPI data discussed above. Elsewhere Chinese stocks are also losing ground with the Hang Seng (-0.16%), the CSI (-0.39%) and the Shanghai Composite (-0.36%) all lower in morning trade. S&P 500 (+0.05%) and NASDAQ 100 (+0.08%) futures are slightly higher.

Finally on the data yesterday, the Conference Board’s consumer confidence measure for the US fell back to 100.4 (vs. 100.0 expected). The FHFA’s house price index was also up by +0.2% in April (vs. +0.3% expected).

To the day ahead now, and data releases include US new home sales for May. From central banks, we’ll hear from the ECB’s Rehn, Panetta, Lane and Kazaks.

Tyler Durden
Wed, 06/26/2024 – 08:20

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German Police Responding To Birthday Party Group Chanting “Foreigners Out” Surprised By What They Find

German Police Responding To Birthday Party Group Chanting “Foreigners Out” Surprised By What They Find

By Dénes Albert of Rmx.news

Germany has featured more and more incidents involving young people charting, “Foreigners out, Germany for the Germans,” over the beat of the hit electronic song “L’amour toujours” by Gigi D’Agostino. Now, police are being deployed in “operations” to respond to such instances. This time, police arrived at a birthday party in Cochem on the Moselle River, in the German state of Rhineland-Palatinate, only to be surprised when they learned who was singing the song.

Once on the scene, officers learned that everyone calling for foreigners to leave Germany were actually foreigners.

What is remarkable in this context is that the women were all non-German nationals and only one woman had any significant knowledge of German,” said the Mayen police department. According to Bild, all the people present only spoke Bulgarian, Romanian and Ukrainian.

The police determined that they were singing the song due to its spread on TikTok and other social media platforms. They were allegedly unaware that those singing the song face criminal prosecution, according to police. However, in similar cases, prosecutors have already dropped such cases, saying they did not rise to the level of criminal prosecution. Top politicians in Germany have called for those singing the song to face the “maximum penalty.”

Police still opened an investigation into “incitement of hatred.”

The first time the “Foreigners out” chant was sung was at a 2023 harvest festival in Bergholz, Germany. Since then, a number of high-profile incidents involving people singing the song have sprung up across Germany, most notably a video from the island of Sylt, which was released in May.

Chancellor Olaf Scholz responded at the time that “such slogans are disgusting. They are unacceptable.”

On Wednesday, during the European Football Championship match between Hungary and Germany, Hungarian fans chanted the song in Stuttgart. It is unclear if a criminal investigation has been opened due to this instance.

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Tyler Durden
Wed, 06/26/2024 – 06:55

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Greenwashing Kamala Harris: How The Veep Casts Herself As An Environmental Justice Crusader

Greenwashing Kamala Harris: How The Veep Casts Herself As An Environmental Justice Crusader

Authored by Lee Fang via RealClearInvestigations,

Vice President Kamala Harris has long cast herself as a fearless pioneer of efforts to fight for social and environmental justice.

When I was elected DA of San Francisco,” Harris told a gathering at the Georgia Institute of Technology in Atlanta last year, “I started the first environmental justice unit of any DA’s office in the country.”

In her telling, the San Francisco District Attorney formed the special environmental justice unit in the early 2000s especially to protect the long-neglected community of Bayview Hunters Point, a predominantly African American and impoverished part of the city, which had become “a dumping ground for people from other places.” 

In dozens of speeches and interviews in recent years, Harris has bragged that she went “after polluters” and protected minority communities in San Francisco in novel ways as a local prosecutor. 

The narrative has become a bedrock of Harris’ political identity. She featured her DA environmental justice crimes unit in her first statewide television advertisement and she rarely missed an opportunity to tout the history during her presidential bid, during which she promised similar initiatives if elected.

But records from the San Francisco District Attorney’s office and interviews with local environmental advocates point to a different, far less ambitious record. 

We’re unaware of any major or semi-major environmental justice work done by Harris in Bayview Hunters Point, including on the Hunters Point Shipyard Superfund site,” said Bradley Angel, executive director of Greenaction for Health and Environmental Justice, a progressive watchdog group that seeks to “to promote environmental, social, economic and climate justice.”

Steve Castleman, an attorney with UC Berkeley’s Environmental Law Clinic, who has worked on urban pollution issues in the Bay Area, also noted that he did not know of any significant Harris environmental justice action as DA.

Far from targeting powerful corporate interests, Harris’ environmental justice unit appears to have filed only a few lawsuits, all against small-time defendants. The targets included a young man who conducted illegal smog checks at a small auto body shop in the city and a left-leaning community newspaper accused of illegally dumping leftover ink in an abandoned lot. Another defendant charged by the unit was a small construction company accused of using adulterated concrete. The major industrial polluters of San Francisco were left untouched under Harris’ watch during her two terms that ended in 2010.

Ernie Apreza, Harris’ spokesperson, did not respond to repeated requests for comment.

Despite its green reputation, San Francisco has a fraught history of urban pollution, and Bayview Hunters Point, a roughly four-square-mile area with about 35,000 residents, is a notoriously polluted area. The community, once an industrial hub and a beacon for black workers who flocked to the city for jobs during World War II, is filled with contaminated former factories and commercial warehouses. It is currently the site of a scrap metal recycling facility and a notorious sewage treatment plant. Diesel trucks still frequent the neighborhood, often sitting idle and spewing emissions into the air. 

Most of all, there is the toxic legacy of the U.S. Navy shipyard that once occupied this area. The Navy once cleaned and repaired its ships used for atomic bomb missions in the Pacific at Hunters Point. The legacy left all types of hazardous waste from these operations in the soil here, a mess that remains unresolved. The city impaneled a special oversight grand jury to investigate the Hunters Point shipyard. The 2022 report concluded that much of the former area is still a wasteland of not only radioactive materials but also industrial pollution featuring “piles of asbestos, ponds of oil, crushed heavy metals, discarded batteries, spilled acids, and other toxic chemicals.”

The federal contractor hired in 2002 to clean up the area at a cost of about $1 billion, Tetra Tech, has faced major delays and a legacy of fraud. Two of its workers were sentenced in 2018 for falsifying records. Despite claims of progress, radioactive materials continue to be found, as recently as December.

Against this backdrop, there were many potential investigative targets for any aggressive campaign to hold corporate polluters accountable. But Harris, records suggest, was far more keen to provide gestures toward enforcement rather than action.

Harris came into office in 2004 after a bitter campaign, during which she had galvanized much of the city’s donor community to back her bid against an unpopular incumbent. As Harris began building a national profile, she confronted anger around decades of neglect over Bayview Hunters Point. The EPA had deemed much of the neighborhood near the shipyard a Superfund site, yet little action had been taken. At a June 2005 rally in front of city hall, representatives of the Community First Coalition, a local group, complained that the neighborhood had become a “toxic soup” of pollution.

In response, Harris unveiled a new initiative, which she promoted to the media. “Recognizing that criminal prosecution can be an effective way to hold polluters accountable and protect the health of our city’s residents,” read a press release from her office, “District Attorney Harris recently established the Environmental Justice Unit.”

Harris hired Davina Pujari, an experienced prosecutor with a history of environmental law and public integrity cases, to lead the office, and soon after its creation, the EJU pursued its first case.

In December 2004, the DA charged Alameda Publishing Corp. – the parent of several Bay Area newspapers catering to the black community, including the Oakland Post, the San Francisco Post, and the Berkeley Tri-City Post – and two men with felony dumping violations. The year before, the company had reportedly hired the men to haul away about 40 five-gallon buckets of red, green, black, and blue ink. In exchange for $500, the men roamed around and found an empty lot in Bayview Hunters Point where they left the unopened buckets. The crime was hardly that of a sophisticated criminal operation: Stickers left on the buckets identified the newspaper owners. 

The DA’s office came down hard, charging felonies and fees related to removal of the five-gallon containers. The East Bay Express, a local alt-weekly, noted at the time that the charges were brought just one week after the paper’s longtime owner, Velda Berkley, had completed the sale of the paper. A long legal battle ensued between her and the new owner, Paul Cobb. While reporting that no firm connection could be established, the Express reported that Harris’ mother, while denying knowing Berkley, said she “might belong to a bridge group that I have gone to.”

Despite the minor nature of the charges, Harris and her office celebrated the case as a major victory.

“The fact that they’ve been active in the African American community and empowering that community and then they go and dump this waste in another disenfranchised community – the ironies are replete,” said Pujari, hailing the Environmental Justice Unit’s case.

Locals Disappointed

In one of the only other cases brought by the EJU, Harris charged a 26-year-old man with two felonies for operating a fraudulent smog-check station to help drivers bypass mandatory emissions checks on vehicles. 

Harris called a press conference at a gas station, standing side by side with local air quality officials. “We cannot afford any breakdown in the systems that keep high-polluting vehicles off our roadways and their dirty emissions from tainting the air we breathe,” she said.

The disappointing results from the office were noticed by locals. “We are anxious to see some outcome,” Marie Harrison, a Bayview Hunters Point community organizer, told a local media outlet when asked about Harris’ Environmental Justice Unit. But, Harrison noted, “I haven’t seen any outcome as of yet.”

While the unit produced little in terms of environmental justice, it quickly generated political capital. When she successfully ran for California Attorney General in 2010, Harris frequently pointed to the creation of the office to show off her bona fides as a crusader for the Earth. The Sierra Club and League of Conservation Voters cited her creation of the unit in their endorsements of her campaign.

The pattern in many ways continued under her job as the state’s top law enforcement official. Harris’ office continued campaigning loudly as an advocate for the environment, but sidestepping cases against the most powerful corporate defendants. Her office reportedly refused to consider charges against utility giant PG&E, which employed many of her campaign aides as paid advisers to the company, over claims that the firm’s reckless actions led to a pipeline explosion that killed eight people and injured another 58. 

Greenaction similarly petitioned her office to take action on the hazardous waste dump in Kettleman, California, an overwhelmingly low-income, Latino city in the Central Valley, that faced myriad health issues because of pollution. The Kettleman case seemed perfect for any environmental justice focus. Harris, however, declined. 

The barriers for effective cleanup of Bayview Hunters Point may have also touched on donor interests. Many powerful groups sought to expedite the development of the land with as little scrutiny of the environmental risks as possible. Records released a few years ago show that a development company with interests in the Hunters Point Naval Shipyard quietly paid $1.3 million to a firm controlled by former San Francisco Mayor Willie Brown, who previously dated Harris and helped connect her to the city’s elite as she started her political career. The payments were for “facilitating communications between the various federal, state and local agencies to accelerate the completion” of the Hunters Point cleanup.

Still Frisco’s ‘Most Polluted’

Yet Bayview Hunters Point and its pollution woes were not entirely forgotten. They remained the focus for Pujari, the attorney Harris tapped to lead the DA’s Environmental Justice Unit. As Harris ascended the political ladder, Pujari went on to work as the outside counsel for Tetra Tech, defending the contractor over claims that it had misled the government and concealed radioactive waste in the neighborhood. Pujari, records show, helped defeat Greenaction in its petitions to the government over the failed remediation work at the contaminated shipyard. Pujari, now a partner at the firm WilmerHale, did not respond to a request for comment.

Last month, she was featured in a press release for her law firm, for helping lead Norfolk Southern in its settlement with the EPA over the 2023 trail derailment in East Palestine, Ohio. The disaster released massive amounts of hydrogen chloride and phosgene into the community, a crisis that has hardly been championed by voices in the environmental justice movement. Norfolk Southern escaped criminal liability and admitted no wrongdoing in its settlement. 

As Harris has ascended to the heights of American politics, Hunters Point has remained what Inside Climate News calls “San Francisco’s Most Polluted Neighborhood.” In 2021, an analysis by the state of California concluded that the area was “disproportionately burdened by multiple sources of pollution.”

Outside the Bayview public library this month, at a campaign event connected to the city’s upcoming mayoral election, voters were surprised when told of Harris’ purported environmental justice record in the area. “I haven’t heard about any of that, no,” said Yvonne Clark, a longtime resident of the neighborhood.

Tyler Durden
Wed, 06/26/2024 – 06:30

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Michael Bloomberg Sends $19 Million To Pro-Biden PAC: Filings

Michael Bloomberg Sends $19 Million To Pro-Biden PAC: Filings

Authored by Austin Alonzo via The Epoch Times (emphasis ours),

Michael Bloomberg, one of the most prominent liberal donors in the United States, is throwing his financial weight behind President Joe Biden.

Former New York City Mayor Michael Bloomberg attends an event in New York City on Feb. 10, 2022. (Arturo Holmes/Getty Images)

On June 20, a pair of committees linked to the president’s reelection effort published their monthly disclosures with the Federal Election Commission. The filings showed Biden For President and FF PAC collectively raised about $77.1 million in May. Together, the two groups ended the month with about $183.9 million in cash on hand.

In a June 20 statement to the press, the principal campaign committee for Biden For President announced that the campaign raised more than $85 million during the month and entered June with a “$212 million war chest.”

However, the release did not specify where those funds were deposited. Furthermore, the claims cannot be independently verified because not every committee associated with President Biden released disclosure statements on June 20. A full accounting cannot be performed until the president’s joint fundraising committees publish their financials on July 15.

While the documents do not provide a complete picture of the president’s campaign finances, they shed light on who is offering millions to support his campaign.

Bloomberg Steps Up

President Biden’s allied hybrid political action committee received an eight-figure boost in May.

On May 30, former New York Mayor Michael Bloomberg sent FF PAC, or Future Forward, $19 million. The check was the largest cashed by the Biden-supporting PAC in 2024.

Mr. Bloomberg, the founder of the media and financial services company Bloomberg LP, served as New York City’s mayor from January 2002 to December 2013. He was elected as a Republican and changed to an independent in 2007. He briefly ran for president as a Democrat in 2020.

The former mayor and billionaire entrepreneur is the current chair of the Defense Innovation Board. The board exists to consult the U.S. Department of Defense “on catalyzing innovation,” according to its website. Reid Hoffman, a fellow Democrat Party megadonor and Future Forward supporter, also sits on the Board.

In addition to his business career and government work, Mr. Bloomberg is one of the most significant financial supporters of liberal causes.

According to the watchdog organization OpenSecrets, Mr. Bloomberg was the fifth-largest individual donor of the 2022 election cycle, the second-largest donor of the 2020 cycle, the second-largest donor of the 2018 cycle, the tenth-largest donor of the 2016 cycle, the second-largest donor of the 2014 cycle, and the fifth-largest donor of the 2012 cycle.

All told, Mr. Bloomberg has used about $364 million of his wealth on federal political causes between 2012 and 2022. It almost always went toward the Democrat Party or progressive causes.

Mr. Bloomberg is the main financier of Independence USA PAC. According to FEC records, Independence spent about $56.5 million in support of President Biden in 2020.

Simons, Soros, Eychaner, Unions

In May, FF PAC also received millions in donations from a fund linked to liberal megadonor George Soros and from crucial Democrat Party supporters James Simons and Fred Eychaner.

On May 3, a week before his death, legendary investor James Simons sent FF PAC $6.6 million. Mr. Simons was the founder of Renaissance Technologies.

Mr. Simons, who is survived by his wife Marilyn, was a prolific supporter of the Democrat Party and progressive causes. Recently, he contributed $2.5 million to the Democrat-supporting Senate Majority PAC and $2 million to its counterpart House Majority PAC.

On May 7, Democracy PAC, the group linked to Mr. Soros, the Open Society Foundation founder, sent $5 million to FF PAC.

Democracy PAC has received money directly from Mr. Soros, but most of its funding comes from the Fund for Policy Reform Inc., a 501(c)(4) nonprofit organization. According to its tax records, the Fund lists George Soros’ son, Alexander Soros, as a director.

On May 31, NewsWeb Corp. President Fred Eychaner sent $2 million to FF PAC. Mr. Eychaner, a consistent financial ally of President Biden and the Democrats, has now sent $5 million to FF PAC in 2024, according to federal records.

According to donor rankings maintained by OpenSecrets, between the beginning of 2023 and the end of April 2024, Mr. Eychaner made about $18.4 million in political donations. Most of that money went to Democrats or liberal causes.

Along with the megadonors, FF PAC cashed a slew of six- and seven-figure checks from various unions or their associated political action funds and PACs.

In May, five groups—the United Food and Commercial Workers International Union, Service Employees International Union, Laborers’ International Union of North America, Transport Workers Union of America, and The United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada—sent about $3.2 million to the hybrid PAC.

At least two of those unions, SEIU and LIUNA, formally endorsed President Biden’s 2024 campaign. Out of the aforementioned groups, the United Association is the largest individual supporter of FF PAC. According to FEC records, it’s now given the PAC about $1.5 million.

Tyler Durden
Wed, 06/26/2024 – 05:45

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Want Reliable Money? Stop Trusting Central Bankers

Want Reliable Money? Stop Trusting Central Bankers

Authored by Jp Cortez via Money Metals,

Author and historian Yuval Noah Harari recently commented that Bitcoin is a currency of “distrust,” emphasizing that “the preference for Bitcoin is based on distrust of human institutions.” He argues that “the whole purpose of money is to create trust between strangers,” enabling large-scale economic cooperation.

These musings may seem insightful, but they are completely incorrect.

This perspective misunderstands the function and history of money. Money’s whole purpose is to facilitate transactions between parties without requiring trust.

Before money, there was barter. In this system, multiple parties must have exactly what the other wants, at the same time, and in the right amount in order to transact. A small island economy could function this way: a couple of coconuts traded for fishing line, or a bushel of bananas in exchange for bamboo with which to build a shelter.

The effectiveness of the barter system breaks down as economies become more complex. Imagine that a farmer wants to buy a pair of boots, so he visits the town cobbler and tries to trade a dozen eggs in exchange. However, the cobbler doesn’t want eggs. The cobbler might want beef, but the farmer isn’t willing to slaughter his cow for boots.

The infeasibility of a moneyless society becomes evident as an economy grows. This issue, referred to as the “double coincidence of wants,” limits the scope of direct barter and highlights the importance and value of money.

One does not have to like, respect, or agree with a vendor to participate in economic transactions. One simply has to trust the money. Historically, gold and silver emerged not through government proclamation but by millions of market actors across the globe acting in their own best interests.

The global scarcity of gold, or silver, (or Bitcoin, to Harari’s point) makes it difficult to manipulate money buttressed by these assets. This difficulty in increasing the supply of money (in both human effort and dollar terms) is a necessary condition for sound money.

Holders of sound money can be confident that politicians won’t weaponize their money, and that central banks won’t debase, dilute, or inflate it into oblivion — not because government actors are known to be honest and truthful at all times, but because they can’t manipulate sound money, by design.

Inflation, an abnormal increase in the volume of money and credit resulting in a substantial and continuing rise in the general price level, undermines money’s role as a store of value and disrupts economic stability.

According to Austrian economists like Ludwig von Mises, Nobel-laureate Friedrich Hayek, and Murray Rothbard, money’s essential role is to facilitate trade independent of the need for “trust.”

This understanding stems from the inherent properties of money—durability, divisibility, stability of value, and fungibility—which ensure its acceptance and value without relying on trust in the other party. These characteristics allow for economic transactions between strangers, making money a cornerstone of a market economy.

Harari’s critique fails to acknowledge the problems inherent in central banking and fiat money, which do require trust in the exact same institutions that have frequently proven to be unreliable caretakers of America’s money.

For example, the Federal Reserve’s inflationist policies, particularly following the 2008 financial crisis and then set on hyperdrive during the COVID years, involved creating massive amounts of money out of thin air. This led to a massively devalued dollar, economy-wide distortions, and an increase in poverty, homelessness, food insecurity, and more.

Mises recognized the folly of central bank money creation, writing in Human Action, “There is no means of avoiding the final collapse of a boom brought about by credit expansion.” Monetary manipulation is the drug; recessions, depressions, and economic downturns are the economy trying to sober up.

Money in the U.S.

America’s founders understood the risks of a money backed by edict rather than sound money. That’s why the U.S. Constitution, in Article 1, Section 10, prescribes the use of gold and silver coins as money. These commodities have historically served as stable stores of value and mediums of exchange because of their resistance to arbitrary expansion by central authorities, thus maintaining their value over time.

Unsurprisingly, once the federal government eliminated the U.S. Dollar’s final tether to gold in 1971, deficit spending increased exponentially, and the purchasing power of the money fell dramatically.

Fortunately, state and federal lawmakers are working to fix this error. 

In 2024 so far, more than 60 pro-sound money bills have been introduced across more than half of all states in the U.S. 

In D.C., we’ve seen Rep. Mooney’s bill to exempt gold and silver from federal capital gains, Rep. Massie’s bill to End the Federal Reserve, and the most significant digital asset law in history in the Financial Innovation and Technology for the 21st Century Act.

These initiatives all point to a growing dissatisfaction with the actions of central monetary planners at the Federal Reserve and within the federal government. People want money that is stable, retains its purchasing power, and isn’t weaponized as a cudgel for political purposes. 

Despite Harari’s pleas, the various government institutions and the sapiens who run them have shown that they can’t be trusted as stewards of America’s money.

Government institutions have no God-given claim to the trust of the people they represent, and these institutions themselves are solely responsible for the precipitous decline in the trust granted to them by citizens.

By restoring sound money principles, we eliminate the need for trust in central banks, ensuring more stable and predictable economic interactions over the long term.

Jp Cortez is a graduate of Auburn University and a resident of Charlotte, North Carolina. He is the Executive Director of the Sound Money Defense League, an organization working to remonetize gold and silver through nationwide legislative efforts. Follow him on X (Twitter) @JpCortez27.

Tyler Durden
Wed, 06/26/2024 – 05:00

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Visualizing GDP Per Capita, By G7 Country (2019-2029F)

Visualizing GDP Per Capita, By G7 Country (2019-2029F)

GDP per capita takes the total economic output of a country in a year, and divides it by the total population, providing a measure of a country’s economic performance and living standards on a per person basis.

In this graphic, Visual Capitalist’s Marcus Lu visualized GDP per capita for G7 nations, from 2019 to 2029 (forecasted). All figures come from the International Monetary Fund (IMF), and are as of April 2024.

Data and Key Takeaways

The data we used to create this graphic can also be found in the table below.

From this data, we can see that the U.S. has managed a very strong post-COVID recovery relative to its G7 peers. While Canada also saw a strong resurgence in 2021 and 2022, its GDP per capita actually fell in 2023.

This is attributed to the country’s high levels of immigration in 2023, which helped boost population by 3.2% (1,271,000 people). Because this increase outpaced economic growth, Canada’s per capita output decreased.

Looking towards the future, the IMF believes that the U.S. will reach a GDP per capita of $101,000 by 2029, which is significantly higher than any other G7 nation. It also believes that the UK will perform well in the second half of this decade, climbing from fourth to second place among this peer group of countries.

If you enjoyed this post, be sure to check out Ranked: The Top 6 Economies by Share of Global GDP (1980-2024).

Tyler Durden
Wed, 06/26/2024 – 04:15

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Europe’s Top Airline To Introduce Surcharge To Cover Cost Of Clean Fuel

Europe’s Top Airline To Introduce Surcharge To Cover Cost Of Clean Fuel

By Tsvetana Paraskova of OilPrice.com

The Lufthansa Group, the biggest airline group in Europe, is introducing a so-called Environmental Cost Surcharge of up to $77.20 (72 euros) per flight to cover part of the costs for using additional volumes of sustainable aviation fuel (SAF), the Germany-based airline said on Tuesday.

The surcharge of between $1.07 (1 euro) and $77.20 (72 euros) will apply to all tickets issued from June 26, 2024 with departure from January 1, 2025 from the 27 EU countries as well as the UK, Norway, and Switzerland.

“The surcharge is intended to cover part of the steadily rising additional costs due to regulatory environmental requirements,” Lufthansa said in a statement.

“These include the statutory blending quota of initially two percent for Sustainable Aviation Fuel for departures from European Union (EU) countries from January 1, 2025, adjustments to the EU Emissions Trading System as well as other regulatory environmental costs such as the Carbon Offsetting and Reduction Scheme for International Aviation.”

Despite investing a lot in new technology and fuels, Lufthansa “will not be able to bear the successively increasing additional costs resulting from regulatory requirements in the coming years on its own,” it said.

“Part of these expected costs for the year 2025 are now to be covered by the new Environmental Cost Surcharge.”

Back in 2022, another major Europe-based airline, Air France-KLM, added a sustainable fuel surcharge on its departures in Europe to help offset the rising costs of using more expensive SAF.  

Last year, Willie Walsh, Director General at the International Air Transport Association (IATA), said that the airline industry would be ready to embrace the fact that SAF would always be more expensive than oil-based jet fuel.

Despite numerous pledges from airlines and government support for SAF production, the alternative of the petroleum-based jet fuel faces challenges in supply, costs, and feedstock, analysts say.

According to the IATA, SAF has the potential to reduce CO2 emissions by up to 80%.

Tyler Durden
Wed, 06/26/2024 – 03:30

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