BlackMask Breaking News

Investors keyed in on an agreement between President Joe Biden and top congressional Republican Kevin McCarthy to negotiate a deal directly, with Biden cutting short an Asia trip to return to talks on Sunday. Analysts highlighted how both parties agreed to new, smaller teams to continue negotiations, which they took as a sign that discussions have moved to a more advanced stage. So still work to do, and still room for twists in this tale before the Treasury runs out of cash as soon as June 1, which would trigger a disastrous, first-ever default.

The air may be getting thin in some stock markets, particularly Japan’s. The Nikkei came within 130 points of its highest since 1990 – back in the days of the “bubble economy” – after smashing through 30,000 a day earlier for the first time in 20 months.

The Nasdaq is on the cusp of a 13-month peak, and the Dax is hovering near its highest since January of last year.

May is traditionally a month for selling, but the U.S. default timeline is delaying the start of traders’ summer vacations, so several analysts still predict a correction is coming, but maybe not until June. The European data cupboard is largely bare today, meaning the next macro focal point will be a smattering of U.S. indicators, including the Philly Fed survey, jobless claims and existing home sales. Some resilient data lately has suggested the Fed doesn’t need to rush to cut rates, and the market has even priced a 1-in-5 chance of a quarter-point hike in June, from next to zero last week. In Asia, there was new evidence that China’s post-COVID recovery is already past its peak, this time from Japan, where exports grew at the weakest pace in more than two years in April as shipments to its neighbour slumped for a fifth straight month. NN:

Russia’s President Vladimir Putin has contradicted the position by OPEC+ that its 1.2 million barrels per day production cut announced in April was intended to balance the markets, with the Russian leader saying it was necessary to maintain relatively high oil prices.  According to Putin, the situation in the global oil markets is “absolutely stable” as Russia maintains output cuts in a bid to support prices adding that Russia was cutting production at the “required level”.

“But all our actions, including those related to voluntary production cuts, are connected precisely with the need to maintain a certain price environment on world markets, in dialogue and contact with our partners in OPEC+,” Putin added.

A week ago, the UAE energy minister Suhail al-Mazrouei told Reuters that additional voluntary output cuts by the OPEC+ producer group were implemented to balance the oil markets.

“I’m not that worried about the very short term, I think we can manage balancing the supply with demand. I’m more worried about the level of investment required for years to come,” he said.

The United States and Europe have been strongly opposed to production cuts by the cartel, with President Joe Biden’s administration accusing Saudi Arabia of colluding with Russia and supporting its war in Ukraine shortly after OPEC+ announced the first cuts.

“The Saudi Foreign Ministry can try to spin or deflect, but the facts are simple, this will increase Russian revenues and blunt the effectiveness of sanctions,” National Security Council spokesman John Kirby said in a strongly worded statement in October.

U.S.-based Energy Information Administration (EIA) recently revised down its crude oil price forecast in the May Short-Term Energy Outlook (STEO) and said the recent declines in oil prices were triggered by concerns about China’s economic growth as well as concerns regarding a possible U.S. recession.  The EIA has predicted that a drop in OPEC production as well as seasonal increases in demand will ‘‘…slightly raise prices over the next few months.’’

Oil futures surge about 3% as Russia cuts output

The world’s oil demand is set to rise by 2.2 million barrels per day (bpd) this year to a record 102 million bpd, the International Energy Agency (IEA) said on Tuesday, revising up its forecast by 200,000 bpd as China’s demand hit a record. The Chinese recovery continues to exceed expectations, the agency said in its Oil Market Report today, noting that China set an all-time record for its oil consumption in March 2023 at 16 million bpd.  In last month’s report, the IEA also expected the world to see record demand for oil this year but pegged the growth at 2 million bpd in 2023 compared to last year. Demand in the developed economies in the OECD, which was weak in the first quarter of this year, is expected to return to growth this quarter, and demand growth in OECD is set to average 350,000 bpd this year. But this small increase “pales in comparison” with an expected growth of 1.9 million bpd in non-OECD oil demand, the IEA said.

The current pessimistic mood on the market, due to macroeconomic concerns, clashes with expectations of a tight market later this year, when demand is set to outstrip supply by almost 2 million bpd, the agency added.

Global observed oil inventories declined in March, also setting the stage for a tighter market later in 2023. Per IEA estimates, those inventories fell by 7.9 million barrels in March as a surge in oil on water and a slight increase in non-OECD stocks failed to offset a massive decline of 56 million barrels in the OECD.

Supply issues have compounded in recent weeks, with the halt of oil exports from Kurdistan, outages in Nigeria, and wildfires shutting in part of Canadian output. These would add to the new OPEC+ oil production cuts, which began this month and will continue until December.  NN BlackMask Pod Cast:

Once again I am opposition To WallStreet

The decline in oil prices over the past few weeks contrasts with an expected tightening of the market later this year when demand exceeds supply by nearly 2 million barrels per day (bpd), the International Energy Agency (IEA) said on Tuesday. Since the middle of April, oil prices have lost all the gains from OPEC+’s latest announcement of new production cuts. Early on Tuesday, WTI Crude traded at around $71 per barrel, down from more than $80 a barrel in the days following OPEC+’s surprise news of more than 1 million bpd cuts between May and December 2023. In the latter part of April and early May, the price of Brent oil slumped by $16 a barrel in just two weeks, as concerns about the economy and future demand weighed on market sentiment, the IEA said in its closely-watched Oil Market Report today.  Oil prices registered last week their fourth week of weekly losses as concerns about the Chinese and U.S. economies continued to negatively impact market sentiment. This was the longest weekly losing streak for oil since November 2021.   “Prices were pressured lower by muted industrial activity and higher interest rates, which, combined have led to recessionary scenarios gaining traction and worries of a downward shift in oil demand growth,” the IEA said in its report, commenting on the oil prices. “The current market pessimism, however, stands in stark contrast to the tighter market balances we anticipate in the second half of the year, when demand is expected to eclipse supply by almost 2 mb/d,” the international agency added. Global oil supply has been lower in recent weeks due to outages in Iraq, Nigeria, and Brazil, and supply losses are set to increase in May with wildfires shutting in part of Canada’s production and OPEC+ producers starting to implement the latest cuts, the IEA noted.  NN: Do not let the algo guys make a asshole out of you. Oil will do a zoom zoom zoom. Demand is soaring and supplies cannot keep up. Forget sanctions and the Ukrainian 3 ring circus. reality is their is not enough oil to meet coming demand increases pure ans simple… China is on fire retail sale are up by 18.4%.

Retail sales of consumer goods for April in China landed slightly above analysts’ projections, despite increasing by 18.4% compared to the same time last year, the country’s National Bureau of Statistics (NBS) reported on Tuesday. Analyzed by different areas, the data for the three-month period showed that the retail sales in urban areas reached 3.0 trillion yuan, up by 18.6% on a yearly basis, while in rural areas the figure remained increased by 17.3% year-on-year to reach 451 billion yuan.

Industrial production in China rises 5.6% in April

China’s industrial production advanced 5.6% in April year-on-year to land in line with analysts’ projections, the country’s National Bureau of Statistics revealed on Tuesday. The figure marks a 0.47% increase month-on-month and a 1.7 percentage points improvement compared to the yearly increase seen in March. In April 2023, the state-holding enterprises added 6.6% year-on-year, with the share-holding and private enterprises advancing 4.4% and 1.6% respectively, while the enterprises funded by foreign investors or investors from Hong Kong, Macao and Taiwan increased by 11.8%. NN: China and for that matter all of Asia is opening back up. Spin that its a slow opening is once again bogus AI news….

May 15 – U.S. central bankers on Monday signaled they see interest rates staying high and, if anything, going higher, given sticky inflation – a stark contrast with the market’s view that the Federal Reserve will be cutting rates well before 2023 is over. Now that the Fed has increased its benchmark overnight interest rate to a range of 5.00%-5.25%, Atlanta Fed President Raphael Bostic told CNBC, “the appropriate policy is really just to wait and see how much the economy slows from the policy actions that we’ve had.” Inflation has eased some and should cool further, he said, but the process will not be quick enough to merit rate cuts anytime soon. Indeed, he added, “if there is going to be a bias to action, for me there would be a bias to increase a little further, as opposed to cut.” Minneapolis Fed President Neel Kashkari said the Fed probably has “more work to do on our end, to try to bring inflation back down.” Inflation, which edged down in April to a 4.9% annual pace from 5% in March based on the Consumer Price Index, is still “much much too high,” he said, and the labor market, with 3.4% unemployment, is still hot. “We should not be fooled by a few months of positive data,” Kashkari told the Minnesota Transportation Conference & EXPO in St. Paul, Minnesota. “We still are well in excess of our 2% inflation target, and we need to finish the job.” Chicago Fed President Austan Goolsbee said that voting for the U.S. central bank’s most recent rate hike in May was for him a “close call” because of his worries over tightening credit conditions in the wake of recent bank failures. And he said he believes the full impact of the Fed’s rate hikes so far have yet to be felt. “We want to be sure, to the extent possible, to get inflation back to the correct path, the target path, without starting a recession,” he told CNBC. But he also had a warning, reminding listeners that Silicon Valley Bank had stopped hedging against higher rates “because they believed what the market was saying” about a coming reversal in the Fed’s rate-hike policy. The failure to manage interest-rate risk was a key factor in the collapse of the Santa Clara, California-based lender in March. Financial markets, meanwhile, are factoring in only a small chance of a further rate hike at the Fed’s June 13-14 policy meeting, and interest rate futures contracts are pricing for the policy rate to end the year in the 4.25%-4.50% range. Part of that pricing could be reflecting hedges against a deeper recession than is widely expected. Bostic on Monday said that any recession would likely be neither long nor deep. Financial markets may also be expecting inflation to fall quite quickly.”Market pricing is too aggressive in expecting a lower (federal) funds rate over time,” Jan Hatzius, chief economist at Goldman Sachs, said at an event at the Atlanta Fed. “The economy continues to expand even with inflation subsiding.” NN: Wall street does this every time. As the FED raises rates they constantly declare inflation dead and time for the FED to LOWER rates. It never happens as they would have you believe with their fake news. Reality is inflation is alive and well and way over target. In fact if you want to know how bad it is. Fed Funds will be over 6% and they still will be in tighting mode.

Fed’s Jefferson: Core inflation process ‘discouraging’

United States Federal Reserve Board of Governors member Philip Jefferson underlined that the latest reading of the core inflation was “discouraging,” pointing to a slower-than-projected rate of decline in core goods prices.

“Supply and demand imbalances in the goods sector seem to be resolving less quickly than expected,” the policymaker said in a speech before Standford University’s Hoover Institution.

“I expect slower consumer spending growth over the remainder of the year in response to tight financial conditions, depressed consumer sentiment, greater uncertainty, and declines in overall household wealth and excess savings,” Jefferson explained, but argued that the Federal Reserve’s monetary policy is “well on track.”

WASHINGTON/BERLIN, May 14 (Reuters) – Leaders of the Group of Seven (G7) nations plan to tighten sanctions on Russia at their summit in Japan this week, with steps aimed at energy and exports aiding Moscow’s war effort, said officials with direct knowledge of the discussions. New measures announced by the leaders during the May 19-21 meetings will target sanctions evasion involving third countries, and seek to undermine Russia’s future energy production and curb trade that supports Russia’s military, the people said. Separately, U.S. officials also expect G7 members will agree to adjust their approach to sanctions so that, at least for certain categories of goods, all exports are automatically banned unless they are on a list of approved items. The Biden administration has previously pushed G7 allies to reverse the group’s sanctions approach, which today allows all goods to be sold to Russia unless they are explicitly blacklisted. That change could make it harder for Moscow to find gaps in the sanctions regime. While the allies have not agreed to apply the more-restrictive approach broadly, U.S. officials expect that in the most sensitive areas for Russia’s military G7 members will adopt a presumption that exports are banned unless they are on a designated list. The exact areas where these new rules would apply are still being discussed. “You should expect to see, in a handful of spaces, particularly relating to Russia’s defense industrial base, that change in presumption happen,” said a U.S. official who declined to be named. The precise language of the G7 leaders’ joint declarations is still subject to negotiation and adjustment before it is released during the summit. The G7 comprises the United States, Japan, Canada, France, Germany, Italy and the United Kingdom. The G7 leaders’ action on Russia comes as Ukraine’s Western allies hunt for new ways to tighten already restrictive sanctions on Russia, from export controls to visa restrictions and an oil price cap, which have put pressure on Russian President Vladimir Putin but not halted the full-scale invasion that started over a year ago. Some U.S. allies have resisted the idea of banning trade broadly and then issuing category-by-category exemptions. The European Union, for instance, has its own approach and is also currently negotiating its 11th package of sanctions since Russia invaded Ukraine, with the bulk focused on people and countries circumventing existing trade restrictions. “The sometimes-discussed approach of ‘we ban everything first and allow exceptions’ will not work in our view,” said one top German government official. “We want to be very, very precise and we want to avoid unintended side effects.” Meanwhile, any change in language, including language specifying that certain trade is banned unless specifically exempted, by the G7 leaders may not necessarily lead to more bans immediately or indeed any change in Russia’s posture. “At least on day one, that change in presumption doesn’t change the substance of what’s allowed, but it matters for the long-term trajectory of where we’re going and the restrictiveness of the overall regime,” the U.S. official said. NN: I am sure the EU will shoot themselves in the ass. Why do i say ass. That is because everyone has an ass. And in this day and age thats the only thing assured to still be their as people are mutilating themselves.