The annual inflation in the United States clocked in at 4.9% in April, edging down slightly from March’s figure of 5%, the Labor Statistics Bureau announced in its report on Wednesday. Month on month, Consumer Price Index (CPI) was up by 0.4%. Shelter prices were the main contributor to the monthly rise. The energy index tumbled 5.1% for the 12 months ending April, while the figure was 0.6% higher on a monthly basis. The food prices jumped 7.7% in comparison to the same timeframe in 2022, with the monthly reading remaining unchanged.
The core CPI, which excludes food and energy, advanced 5.5% in April year over year,
marking a 0.1 percentage point fall from the March reading. Compared to the month prior, the figure increased 0.4% in April.
“Today’s consumer inflation report supports the case for the Fed to seriously contemplate a pause in rate hikes in June, but does not support any near-term rate cuts,” said Scott Anderson, chief economist at Bank of the West in San Francisco. “On balance, inflation is still too high and it is not going to fall back to 2% if it increases 0.4% a month,” said Chris Low, chief economist at FHN Financial in New York. “We need to see steady increases around 0.15% to get there.”
NN: i do not see inflation dropping…… And neither does the FED.
Russian President Vladimir Putin stated on Tuesday that today, civilization is yet again “at a turning point.” Delivering remarks at the Victory Day Parade, the head of state underlined that the Western world has been provoking conflicts and destroying “traditional values,” in order to “further dictate its own rules.” He said that Russia wants to see peace and stability in the future, and that “any ideology of superiority is unacceptable,” as by nature, such ideology is “criminal and deadly.” Putin underscored that for his country there exist no hostile nations, “neither in the West nor in the East.”
“A real war has once again been unleashed against our Motherland. But we have repulsed international terrorism. We will protect the inhabitants of Donbass [and] we will ensure our security,” he concluded. NN: Take this man who has the worlds biggest and best nuclear weapons very seriously. He has the power to bring his war to the entire world. And no one is stooping him.
Freight rates for supertankers have plunged by 75% in a month since several large OPEC+ producers announced a new round of oil production cuts that will lead to lower volumes shipped between May and December this year. Daily rates on the Middle East to China route for the very large crude carriers (VLCC) capable of shipping up to 2 million barrels of oil have crashed from nearly $100,000 per charter day in March to just $24,000 a day at the end of last week, per data from the Baltic Exchange cited by Bloomberg.
The key reason for the crash is the recent surprise cut from OPEC+ which will reduce the global supply of crude by sea.
Early last month, in a move that shocked markets and drew criticism from the United States, several major OPEC+ producers announced an additional cut to production. On April 2, a day before a regularly scheduled OPEC+ panel meeting, the biggest OPEC producers in the Middle East and several other members of the OPEC+ pact announced a total of 1.16 million bpd of fresh production cuts. OPEC heavyweights Saudi Arabia, Iraq, the United Arab Emirates (UAE), and Kuwait, plus OPEC’s Algeria and Gabon, and non-OPEC Oman and Kazakhstan, announced the 1.16 million bpd cut. That’s on top of Russia’s current 500,000 bpd cut, which was extended until the end of the year. Saudi Arabia is also cutting 500,000 bpd and said the move was “a precautionary measure aimed at supporting the stability of the oil market.” Before the latest OPEC+ cuts, supertanker rates had surged to $100,000 per day amid high Chinese demand and the embargo on Russian crude imports into the EU, which created a major shift in global crude trade. Many tankers now have to travel on much longer routes from Russia’s Baltic and Black Sea export terminals to Asia instead of just a few days’ trip to Europe. NN: Think of Artificial Intelligence as computer generated bullshit. And for now the spin is oil demand is dropping due to the global recession… Simply not true!
Riyadh: Saudi oil giant Aramco posted first-quarter net profit of 119.54 billion riyals ($31.88 billion) on Tuesday, a fall of about 19 per cent from the previous year. It said the drop was mainly driven by lower crude prices, although partially offset by lower taxes and zakat and a rise in finance and other income. Net profit was 3.75 per cent higher than in the fourth-quarter but also below analysts’ median forecast of $30.8 billion, according to Refinitiv data. The world’s top oil exporter will pay $19.5 billion in dividends for the first quarter, in line with the previous quarter. CEO Amin Nasser in a statement said Aramco was looking at introducing performance-linked dividends, in addition to its base distribution. The additional payouts would target 50 per cent-70 per cent of annual free cash flow, net of the base dividend and other amounts including external investments, it said. Aramco reached deals to expand its downstream business abroad in the first quarter, including investments in China and completing a $2.76 billion acquisition of Valvoline’s products business.
We are also moving forward with our capacity expansion, and our long-term outlook remains unchanged as we believe oil and gas will remain critical components of the global energy mix for the foreseeable future
– Amin Nasser, CEO of Saudi Aramco
The company’s compression projects at Haradh and Hawiyah fields are expected to begin initial production and achieve full capacity during 2023, it said. The Saudi Arabian government owns 90 per cent of Aramco’s stock directly, with a further 8 per cent held by the sovereign wealth fund. The shares have climbed 11 per cent this year. NN: The Saudis are not happy. They are short on their budget revenue which is based upon a minimum WTI price of $85. They will correct the budget shortfall at their next OPEC+ meeting
(Reuters) -Credit conditions for U.S. business and households continued tightening in the first months of the year, according to a Federal Reserve survey of bank loan officers, but the results seemed to mark the accumulating impact of Fed monetary tightening rather than the cliff-like decline in credit some feared after the March collapse of Silicon Valley Bank. The Fed’s quarterly Senior Loan Officer Opinion Survey, or SLOOS, among the first measures of sentiment across the banking sector since the recent run of bank failures, showed a net 46.0% of banks tightened terms of credit for a key category of business loans for medium and large businesses compared with 44.8% in the prior survey in January – a modest, stepwise change. For small firms, conditions were slightly more stringent with a net 46.7% of banks saying credit terms were stiffer now versus 43.8% in the last survey. Banks reported that firms of all sizes were showing less demand for credit than three months earlier. Credit access may be just part of the story, with banks also reporting they were capping loans sizes and raising the cost of borrowing. On the consumer side, banks said soft demand prevailed again for credit card, automobile and other forms of household credit, although not to the degree seen at the end of last year. Banks on balance showed diminished willingness to provide consumer installment loans, and were also limiting the size of auto loans for example. “It wasn’t a sea change…The tightening in standards probably wasn’t as severe as one might imagine given the banking stress,” wrote J.P. Morgan Chief U.S. Economist Michael Feroli. But the drop in demand, particularly the more than half of banks seeing a drop in small firms wanting to borrow, “appears to paint a grim picture about the outlook.” The tightening also reflected modestly rising concerns among banks about the need to conserve capital and maintain adequate liquidity amid a weaker economic outlook. Mid-sized banks, the Fed said in reporting the survey results, seemed particularly stretched. “Banks most frequently cited an expected deterioration in the credit quality of their loan portfolios and in customers’ collateral values, a reduction in risk tolerance, and concerns about bank funding costs, bank liquidity position, and deposit outflows as reasons for expecting to tighten lending standards over the rest of 2023,” the release said. “Mid-sized banks reported concerns about their liquidity positions, deposit outflows, and funding costs more frequently than the largest banks.”
“The strains that emerged in the banking sector in early March appear to be resulting in even tighter credit conditions for households and businesses,” Fed Chair Jerome Powell said in a press conference on Wednesday. “In turn, these tighter credit conditions are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain.”
The net share of banks tightening commercial loan standards for large and middle-sized firms, for example, rose from 24% for the survey covering the April through June period to 45% for the survey covering roughly the last three months of the year. “Just like Fed hikes, there is a long and variable lag from the impact of tighter lending standards on the economy,” Michael Kantrowitz, chief investment strategist with Piper Sandler & Co. wrote on Monday. “This confirmation of tighter lending standards pushes recession odds even higher.” NN: Its all about the cost of funds. And the banking rule of 3. Which WAS borrow short term money at 3 lend long at 6 and be at the golf course by 3. The OLD new rule of 3 is borrow at 1 lend at 3 and do 3 lines of coke. The new NEW rule of 3 is find anyway possible to foreclose on the 3% LOANS YOU MADE with 1% money ! And get 3 foreign passports….
Brent crude oil was up nearly 2% on Monday, largely driven by the easing of economic slowdown fears in the U.S. At 10:39 a.m. EST on Monday, Brent was trading up 1.62% at $76.52, for a $1.22 gain on the day, while West Texas Intermediate (WTI) was trading up 1.95% at $72.73, for a $1.39 gain on the day. Last week, while Brent was up on Friday, the crude benchmark shed over 5% and WTI shed over 7% on the week, hitting their lowest levels since Q4 2021. Friday also marked three straight weeks of price slides. Driving bearish sentiment in markets are renewed fears of a US banking crisis contagion and lukewarm industrial figures from China. Hijacked tankers in the Strait of Hormuz, falling US inventories, and the lack of a deal to unlock Kurdish oil exports all failed to offset the macroeconomic doom and gloom. Recession, though, has been the buzzword putting oil prices in reverse, and Monday saw traders change course with the view that the sell-off had been overdone. Traders were also looking at the U.S. April jobs market data, though with a bit of caution as a strong labor market could prompt more rate hikes from the Federal Reserve. Some analysts continue to be concerned about future oil demand, based on what is viewed as a deteriorating growth outlook, which has since been somewhat eased by the April jobs report.
However, over the weekend, Goldman Sachs labeled the oil sell-off as “overblown” in the face of a strong demand outlook, also noting that production cuts from OPEC+ begin this month, putting further pressure on supply to meet demand.
The market will now be looking first to OPEC’s monthly oil market report due out on May 11, followed by the next OPEC+ meeting scheduled for June 4. NN: OPEC has scheduled a live meeting in Vienna for June 4th. They did not schedule a live meeting for nothing. I expect further production cuts. OPEC is not happy with oil in the seventies…..
WASHINGTON, May 7 (Reuters) – U.S. Treasury Secretary Janet Yellen on Sunday issued a stark warning that a failure by Congress to act on the debt ceiling could trigger a “constitutional crisis” that also would call into question the federal government’s creditworthiness.
Yellen sounded the alarm over possible financial market consequences if the debt ceiling is not raised by early June, when she has said the federal government could run short of cash to pay its bills.
The negotiations on the issue should not take place “with a gun to the head of the American people”, Yellen told the ABC program “This Week.” Biden has asked Congress to raise the debt ceiling with no conditions. The Republican-led House of Representatives last month passed a bill that would raise the government’s $31.4 trillion debt ceiling, but the measure included sweeping spending cuts over the next decade that Biden and his fellow Democrats oppose. Biden is preparing to meet on Tuesday at the White House with Republican House Speaker Kevin McCarthy, Republican Senate Minority Leader Mitch McConnell and top congressional Democrats to discuss the issue. “It’s Congress’s job to do this. If they fail to do it, we will have an economic and financial catastrophe that will be of our own making,” Yellen said. “And we should not get to the point where we need to consider whether the president can go on issuing debt. This would be a constitutional crisis,” Yellen added, alluding the delineation of powers of the executive and legislature under the U.S. Constitution. Biden has steadfastly said he will not negotiate over the debt ceiling increase, but would discuss budget cuts after a new limit is passed. Congress has often paired debt-ceiling increases with other budget and spending measures. Washington regularly sets a limit on federal borrowing. Currently, the ceiling is equal to roughly 120% of the country’s annual economic output. The debt reached that ceiling in January and the Treasury Department has kept obligations just within the limit, but by July or August, Washington could have to stop borrowing altogether.
Under that scenario, shockwaves could ripple through global financial markets as investors question the value of U.S. bonds, which are seen as among the safest investments and serve as building blocks for the world’s financial system.
The House-passed bill would pare spending to 2022 levels and then cap growth at 1% a year, repeal some tax incentives for renewable energy and stiffen work requirements for some anti-poverty programs. Democratic Senate Majority Leader Chuck Schumer last week began to clear the way for a vote for a bill that would suspend the government’s debt limit for two years without conditions. But Republicans in the Senate and House have said that they would not vote for such a measure. A group of 43 Senate Republicans on Saturday said they oppose voting on a bill that only raises the U.S. debt ceiling without tackling other priorities, showing they could block such a plan by Democrats. Legislation would require 60 votes to proceed in the 100-seat Senate. With only a 51-49 Democratic majority in the Senate, Schumer would need the support of at least nine Republicans to clear a 60-vote threshold to advance such legislation. Top House Democrat Hakeem Jeffries, speaking on the NBC program “Meet the Press,” said Biden has made clear there could be a conversation with lawmakers on spending, investments and revenues but that the responsible course of action would be to raise the debt ceiling. “We have to make sure that America pays its bills to avoid a dangerous default on our debt in a manner that will blow up the United States economy,” Jeffries said. Deputy Treasury Secretary Wally Adeyemo also underscored the perils in a potential default.
“Default is catastrophic for the United States,” Adeyemo told MSNBC’s “The Sunday Show.” “If we were to default on our debt, it would have a terrible impact on interest rates.” NN: This issue is now on my radar screen….. I think a lot of lefty liberals in power do not regard raising the debt limit as a big deal,,,,, they may need to see a stock market crash to bring them to the table,
BEIJING, May 7 (Reuters) – China’s foreign exchange reserves rose more than expected in April, official data showed on Sunday, as the dollar fell against other major currencies. The country’s foreign exchange reserves – the world’s largest – rose $21 billion to $3.205 trillion last month, compared with $3.192 trillion tipped by a Reuters poll of analysts and $3.184 trillion in March. The yuan fell 0.63% against the dollar in April, while the dollar last month fell 0.94% against a basket of other major currencies. China held 66.76 million fine troy ounces of gold at the end of April, rising from 66.50 million ounces at end-March. The value of China’s gold reserves rose to $132.35 billion at the end of April from $131.65 billion at the end-March. NN: An economy that generates that much trade profit is not in a slow down. Another sign the dragon has awakened from its COVID slumber. And it takes lots and lots of energy that the fire breathing Dragon burns in its factories. To be precise the fuel the fire breathing Chinese dragon consumes is crude oil… More and more and more of it every single day. After the awakening from the draconian lock downs means they are consuming record amount of crude. So lets not let the manipulators make an asshole out of you. Now you understand the proof is 3 trillion dollars of the worlds money its has taken in on a net bases. More and more of the worlds debt is owed to China……
Greek shipping companies are making a lot of money by moving large volumes of Russian oil that other tanker companies are unwilling to touch.
Ukraine has added the tanker firms of several Greek tycoons to its list of “international sponsors of war”.
Many of these tankers are still covered by Western insurance companies, suggesting they have been complying with the price cap.
Greek shipping tycoons and their tanker companies are moving large volumes of Russian oil and are making a lot of money off these trades, which are mostly shunned by other Western ship owners after the West moved to sanction Russia’s crude. Tankers owned by EU member Greece, one of the world’s biggest merchant vessel owners, continue to enjoy Western insurance, analyses have found, suggesting that they are involved in price cap-compliant trades of Russian oil, below the $60 per barrel cap, to the best of their knowledge. Western shippers and insurers must have the so-called attestation that they are transporting Russian oil bought below the price cap to be compliant with the sanctions.
Since the price cap came into effect on December 5, Greek-owned tankers have been second only to the so-called “dark fleet” in the number of calls at Russia’s key oil export terminals, according to data from Lloyd’s List Intelligence data compiled by Lloyd’s List.
Analyses suggest that Greece’s tankers and tanker owners are careful to comply with the G7 price cap and avoid murkier trades that could have them stripped of protection and indemnity (P&I) coverage and undermine future credibility. Still, the Greek fleet and their billionaire owners rake in a lot of money from trade in Russian oil. In the absence of many other Western shippers, the Greeks charge at least 30% more from traders to charter their tankers for Russian oil compared to charter rates for crude that is not under sanctions, ship brokers have told The Wall Street Journal. The G7 price cap mechanism was strongly advocated – and finally achieved – by the United States, which wanted continued oil flows from Russia, with lower revenues for Putin, to avoid another major spike in domestic gasoline prices. But Ukraine is not happy with the Greek tanker owners. After calling last year on Greek shippers to stop dealing with Russian oil, Ukraine has included the tanker firms of several Greek tycoons in a list of “international sponsors of war.” TMS Tankers, owned by George Economou, Thanassis Martinos’ Eastern Mediterranean, George Prokopiou’s Dynacom Tankers, and Andreas Martinos’ Minerva Maritime are all included in the list proposed for sanctions. Those are “companies that provide the public and private sector with goods and services of critical purpose, as well as contribute to the Russian budget, thereby financing terrorism,” Ukraine says. Economou’s TMS Tankers is the second-largest shipper of Russian oil, behind only Sovcomflot, the Russian state-owned shipping firm, NGO Global Witness said in an analysis cited by the Journal. But many TMS Tankers still enjoy coverage from Norwegian insurer Gard, suggesting that the company is complying – to the best of the Norwegians’ knowledge – with the price cap mechanism. “Gard has thorough procedures in place to ensure that we comply with relevant sanctions at all times, including the G-7 price cap,” a spokeswoman for the insurer told the Journal. Greece-owned tankers accounted for 31% of tankers that called at five key Russian oil export ports in the Black and Baltic seas in February, Lloyd’s List has found. Some of the tankers remain insured by P&I Clubs, “underscoring that attestation processes and assurances the shipments were compliant with the price caps were in place,” Lloyd’s List’s Michelle Wiese Bockmann notes. In the first year since the Russian invasion of Ukraine, tankers ultimately owned by the Greek tycoons collectively carried 292 million barrels of oil and oil products, Global Witness said in February 2023. Minerva Marine, owned by Andreas Martinos and family, responded to Global Witness by stating, “we confirm that all business is conducted always in full compliance with all applicable sanctions laws and regulations”. Greek tanker operators have dominated Russian oil trade since the sanctions came into effect, and the size of the Greek-operated fleet is nearly 2.5 times bigger than the next fleet, Russia’s, according to a Vortexa analysis from last month. Almost all the Greek-operated vessels still have coverage under the International Group of P&I Clubs, which “could give us an indication that the price cap mechanism is being used,” Mary Melton, a graduate analyst at Vortexa, says.
Greek operators are even more crucial for the Russian oil product trade.
“Greek operators have the largest share of the fleet engaging in the Russian CPP trade, but by a much wider margin than when analysing the total tanker fleet. The Greek-operated fleet moving Russian CPP is about 4 times larger than the next-largest fleet,” Melton noted. NN: BlackMask Pod Cast:
Oil prices are still on track to finish out the week in the red, but crude prices saw a strong rally on Friday morning as the market attempts to rebalance itself from the disconnect between bearish sentiment and fundamentals. Much of the previous week’s price slide can be falsely attributed to a disappointing crude oil demand look out of China on the back of lackluster manufacturing activity, compounded by bank sector stressors in the United States.
Nevertheless, little has changed in the way of oil market fundamentals, and the market is looking to make that correction.
The price of WTI crude oil shot up $2.73 per barrel (+4.33%) on Friday’s close to $71.32, undoing most—but not all—of the week’s earlier losses. Brent crude oil rose $2.72 (+3.99%) per barrel to $75.11 on NY Fridays close.
The price rebound follows Thursday’s notice from Saudi Aramco that it had lowered its Official Selling Price (OSP) of all crude grades to its prized market, Asia, for June 2023. It also comes despite market suspicions that Russia hasn’t cut production as much as it said it was going to—likely because Russia must keep the oil—and cash—flowing to support its shaky economy. The crude oil price rally also came despite strong U.S. labor data that could prompt the Federal Reserve to continue hiking interest rates—a usual stressor on oil prices. WTI prices are still about $40 per barrel under where they were this time last year, shortly after Russia invaded Ukraine, and $9 per barrel under where they were a month ago today, despite increased pledges from the OPEC+ group to cut even more crude oil off its production quotas. NN: Our oil trade got crowded with a lot of retail traders in it. They are plump tuna’s the sharks love to eat. Their trading is predictable with their candle sticks and simplistic alogs. The secret as we have to survive and take advantage of the swings the billion dollar manipulates create as they eat them. Its really very simple. Its a binary trade and Chins energy demand is soaring. The global economy is far from a slow down. And dumb bakers mismanagement of their duration risk is not a factor affecting oil demand,
