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China’s inflation down to 0.9% in March

China’s consumer price inflation fell below one percent in March, official figures showed Tuesday. The March consumer price index (CPI) — the main gauge of inflation — came in at 0.7 percent, down from the one percent seen a month earlier, according to the country’s National Bureau of Statistics (NBS). Beijing is targeting an average inflation rate of three percent for 2023, which is still far below the current rates of many developed economies. Analysts had expected a faster pace in March, with economic activity picking up again after the abandonment of zero-Covid restrictions at the end of 2022. The producer price index (PPI), which measures the cost of goods leaving factories, shrank for the sixth consecutive month, with prices falling 2.5 percent — indicating lower margins for businesses.

“Economic recovery is on track but not strong enough to push up prices,” Zhiwei Zhang of Pinpoint Asset Management wrote in a note.

“This suggests the economy is still running below its potential,” he added, suggesting the data made an interest rate cut more likely. Fresh fruit prices rose 11.5 percent year-on-year, and pork, the most consumed meat in the country, jumped 9.6 percent.

The cost of fuel for transport fell 6.4 percent.

Globally, commodity and food prices are rising, though China has remained relatively unscathed by increases linked to the war in Ukraine. “We think consumer price inflation will rebound in the coming months as the labour market tightens again,” analysts from Capital Economics said in a note. “But it will be well below the government’s ceiling of around three percent, and the increase in inflation will be far smaller than what was seen elsewhere when they opened up.” China is targeting five percent economic growth this year, one of the lowest targets in decades. NN: Chinese central bank has played this perfectly. Plenty of real cash…. huge foreign currency reserves, and the high tech factory to the world,… How did this happen. Well ticktock in China is not  dribble a basket ball, shake your booty, wiggle your titties and deal with weighty issues like what sex your are or wanna be. In china try pulling off that shit and you will be dragged off in the night. Something to be said for a police state. Ticktock in china is about science and engineering and getting a degree in serious science.  As versus  in the US climate change, comparitive religions .. or my favorite sitting in the desert with a paint brush (digging up dried turds) getting a degree in anthropology. This is if the America student be bothered to  read in between climate change protest, demonstrating for slave representations or going to the latest rainbow rally……

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Inventory Draws Across The Board Push Oil Prices Higher

Oil prices climbed higher today, after the Energy Information Administration reported a crude oil inventory draw of 3.7 million barrels for the week to March 31.

At 470 million barrels, inventories are about 4 percent above the five-year average for this time of the year, the authority said.

Last week’s draw compares with a draw of 7.5 million barrels estimated for the previous week, which helped push oil prices higher. Of course, this week’s breaking news about OPEC+ deciding to reduce oil production by another million barrels daily had an even stronger effect on prices, pushing both Brent crude and West Texas Intermediate above $80 per barrel in a matter of hours.

Meanwhile, the EIA also reported an inventory decline in gasoline and another one in middle distillate inventories for the last week of March.

In gasoline, inventories fell by 4.1 million barrels in the period, with production averaging 9.9 million barrels daily. This compared with an inventory draw of 2.9 million barrels for the previous week, with production then averaging 10 million barrels daily.In middle distillates, the EIA estimated an inventory decline of 3.6 million barrels for the last week of March, with production at 4.7 million bpd. This compared with a distillate stock build of 300,000 barrels for the previous week, when production averaged 4.6 million bpd. Meanwhile, after the initial surge in prices on Monday, following the OPEC+ announcement, benchmarks stabilized, with Brent crude a bit over $84 a barrel and West Texas Intermediate at over $80 per barrel, slightly retreating from earlier today. Analysts explained the stabilization with continued questions about the immediate future of oil demand. “We will need to see demand hold and grow to push crude into the upper $80’s,” BOK Financial, senior vice president for trading Dennis Kissler told Reuters.

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NY Fed: 1-year inflation expectations R I S E S to 4.7% in March

The New York Federal Reserve stated Monday in its latest Survey of Consumer Expectations that 1-year inflation expectations increased from 4.2% to 4.7% in March. According to the report, the figure for the 3-year inflation expectations came in at 2.8%, up from 2.7% last month, while for the 5-year declined to 2.5% from 2.6%. “Credit access perceptions deteriorated, with the share of households reporting that it is harder to obtain credit than one year ago rising and reaching a series high,” the report said. NN: this was not suppose to happen.

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What Commercial Real Estate Stress Means for Banks and Bond Funds

In the last month or so, two macro risks have become top of mind for investors. One is the stability of regional banks. The other is the weakness in the commercial real estate market. On some level, they’re separate stories, but they’re also linked, since regional banks tend to do more commercial real estate lending than larger, national banks. Of course, the links are complicated. CRE is not a monolith — and banks are just one source of financing for CRE projects, alongside private credit funds, insurance companies and other sources of capital. On this episode of the podcast, we speak with Jim Costello, chief economist for real assets at MSCI, about what to watch for.

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Indian Fuel Demand Continues To Rise

  • India’s fuel demand increased by 5% in March compared to a year earlier, reaching 20.5 million tons.
  • Demand for both gasoline and diesel climbed in March compared to March last year and February this year.
  • Fuel consumption in India is expected to rise by 4.7% in the fiscal year between April 2023 and March 2024. India’s fuel demand jumped by 5% in March compared to a year earlier, official data showed on Monday, as the world’s third-largest crude oil importer continues to see consumption growing.Indian fuel consumption stood at 20.5 million tons last month, according to data from India’s Oil Ministry cited by Reuters.  Demand for both diesel and gasoline rose in March compared to both March last year and February this year, the data showed. Gasoline demand jumped by 6.8% year-on-year. In February, Indian fuel demand was estimated to have jumped to the highest level in at least 24 years, and refiners in India raised crude throughput by 2% in February compared to January. Indian refiners processed 20.85 million tons of crude in February. In barrel-per-day terms, the throughput was at 5.46 million bpd, the highest in bpd terms in Reuters records dating back to 2009. Fuel consumption in India is expected to rise by 4.7% in the fiscal year between April 2023 and March 2024, estimates by the Indian Ministry of Petroleum and natural gas showed earlier this year. India’s gasoline demand is forecast to increase by 7.1% over the next fiscal year, while gasoil demand is expected to rise by 4.2%, according to the projections. India’s robust fuel demand coincides with record-high crude oil imports from Russia, with Indian refineries snapping up cheaper Russian crude. Russia’s largest oil firm, state-controlled Rosneft, signed last month a term agreement with Indian Oil Corporation to raise the supply of Russian crude to India significantly.  From a negligible buyer of Russia’s oil before the Russian invasion of Ukraine, India has become a key export market for Moscow and is importing record volumes of Russian crude. In February, Russia remained India’s top oil supplier for a fifth consecutive month.  India is not abiding by the G7 price cap as it seeks opportunistic purchases of cheap crude, and it doesn’t intend to
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2 Trillion in Real Estate Debt will Refinance 300 Bases Points Higher…… IF THEY CAN FIND THE MONEY

  • Morgan Stanley sees refinancing risks front and center
  • Office, retail property valuations could fall as much as 40%

Almost $1.5 trillion of US commercial real estate debt comes due for repayment before the end of 2025. The big question facing those borrowers is who’s going to lend to them?

“Refinancing risks are front and center” for owners of properties from office buildings to stores and warehouses, Morgan Stanley analysts including James Egan wrote in a note this past week. “The maturity wall here is front-loaded. So are the associated risks.”

The investment bank estimates office and retail property valuations could fall as much as 40% from peak to trough, increasing the risk of defaults.

Adding to the headache, small and regional banks — the biggest source of credit to the industry last year — have been rocked by deposit outflows following the demise of Silicon Valley Bank, raising concerns that will crimp their ability to provide finance to borrowers.

Smaller Banks Pushed Into Commercial Real Estate Lending

Source:MSCI

The wall of debt is set to get worse before it gets better. Maturities climb for the coming four years, peaking at $550 billion in 2027, according to the MS note. Banks also own more than half of the agency commercial mortgage-backed securities — bonds supported by property loans and issued by US government-sponsored entities such as Fannie Mae — increasing their exposure to the sector. “The role that banks have played in this ecosystem, not only as lenders but also as buyers,” will compound the wave of refinancing coming due, the analysts wrote. Rising interest rates and worries about defaults have already hurt CMBS deals. Sales of the securities without government backing fell about 80% in the first quarter from a year earlier, according to data compiled by Bloomberg News. Sentiment toward multifamily housing also remains much more positive as rents continue to rise, one reason why Blackstone Real Estate Income Trust had a positive return in February even as rising numbers of investors lodge withdrawal requests. The availability of agency-backed loans will help owners of those properties when they need to refinance.

The lenders are the biggest credit provider in each real estate category

Source: MSCI

Still, when apartment blocks are excluded, the scale of the problems facing banks becomes even starker.

As much as 70% of the other commercial real estate loans that mature over the next five years are held by banks, according to the report.

“Commercial real estate needs to re-price and alternative ways to refinance the debt are needed,” the analysts said. European real estate issuers, meanwhile, have the equivalent of more than €24 billion due for repayment over the remainder of the year, Bloomberg Intelligence analyst Tolu Alamutu wrote in a note.  “We are definitely seeing real estate companies do all they can to delever – scaling back investment programs, more joint ventures, bond buybacks and where possible, dividend cuts,” she said in an email. “Disposals are a key focus too. Some recent comments from real estate issuers suggest it’s still not easy to sell large portfolios.”

BlackMask PodCast:

TICKING TIME BOMB
 
 
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Russia slashed oil production by 700,000 barrels a day in March, far more than originally planned

  • Russia cut oil production by 700,000 barrels of oil a day in March, per Bloomberg.
  • That is a bigger reduction than the 500,000 barrels a day that the country pledged to cut originally.
  • The reduced output comes as OPEC+ pledges production curbs of 1.1 million barrels a day starting in May.

Russia reduced its production of crude oil by 700,000 barrels a day last month, a larger cut than previously pledged, Bloomberg reported. However, Bloomberg said the data sows doubt over how much oil Russia actually produced, as it doesn’t align with the country’s seaborne exports and domestic refinery supplies. In February, Russia announced plans to cut 500,000 barrels a day of its crude oil production throughout March, in retaliation to Western sanctions and energy price caps over its invasion of Ukraine. After already extending the reduction to June, Russia’s Deputy Prime Minister Alexander Novak announced Sunday that the output cuts would be continued to the end of the year. On the back of his comments — as well as weekend news that OPEC+ would also be cutting its oil output by 1.1 million barrels a day — oil markets rallied,

indicating the potential for crude prices to return to $100 a barrel this year.

The collective reduction in the commodity’s supply may also cause future volatility and force Western nations to reassess the $60 price cap on Russian oil. OPEC nations pursued the cutbacks following a momentary drop in oil prices during March’s banking turmoil and fears of a recession that could hurt energy demand.

Bloomberg’s data shows that Russia pumped around 1.285 million tons of crude oil a day, or over 9.4 million barrels. At the same time, exports of the commodity grew considerably, up 4.13 million barrels a day in the last week of March.

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S&P raises China’s 2023 GDP forecast from 4.8% to 5.5%

The Chief Asia-Pacific Economist of S&P Global Ratings says the agency has adjusted its forecast for the China’s GDP growth this year from 4-point-8 percent to 5-point-5 percent. He told CGTN reporter Yang Shanshan the move comes amid a recovery led by consumption and services.

YANG SHANSHAN, Beijing “Why do you decide to adjust China’s GDP growth forecast to 5.5% this year?”

LOUIS KUIJS, Asia Pacific Chief Economist, S&P Global Ratings “So last time we did our forecast was last November of 2022. At that time, we didn’t know what the government would do with the COVID policy and how the reopening would look like. So now, we have more information with that, it looks like from the data we have seen the first part of this year, that this is a pretty decent recovery. You know it’s still early, we felt that on the whole, we want to raise our forecast a bit, reflecting that data from the first part of this year and what we expect to see in terms of consumption and the other part of the economy.”

YANG SHANSHAN, Beijing “What kind of risks do you think Chinese economy is facing?”

LOUIS KUIJS, Asia Pacific Chief Economist, S&P Global Ratings “Yes, a little bit in line with what I just mentioned. I think those global risks are also an issue for China. We were to see a spill-over from the financial stress if the US Fed continue to raise rates more aggressively than what we now expect. We still expect the US Fed to raise its policy interest rates by another 25 basis points this year, and unlike the market, we do not expect a cut by Fed, so we are not as hopeful as you want, that compared to the market that we are going to get an easier news from US FED. That means we will continue to look at what does this mean for our APEC economy in terms of pressure from the Central Bank, this matters for a lot of economies, but also matters for China, where the PBOC is looking at that external picture of US interest rate and what does it mean for currency and policy. I think other challenge for the authorities are what I have just mentioned, how to assure you don’t amid the recovery a bud by too early too quickly, while start to focus on reining in financial risks and credits.”  NN: pretty simple binary trade. The more the Chinese economy grow the more oil it consumes…..

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Brainard: Jobs report consistent with steady growth

White House National Economic Council Director Lael Brainard said on Friday that the latest United States jobs report is “really nice” and consistent with stable growth. “I see a lot of positives in the job market,” Brainard told MSNBC. “I think generally this report is consistent with steady and stable growth,” she added and attributed the recent layoffs in the tech sector to the fact that s”some other industries that may have over-hired” and are not “rethinking a little bit.” Earlier, the US Bureau of Labor Statistics reported that the country added 236,000 nonfarm jobs in March, while unemployment was up from February at 3.5%. Brainard emphasized the Biden administration’s efforts to lower the prices of gas, prescription drugs and health care premiums. “We are very focused on bringing costs down for working Americans,” Brainard added.

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US nonfarm payrolls rise by 236,000 in March….. 160,892,000: Number of Americans Employed Sets Fourth Straight Record in March

US payrolls rose last month as the unemployment rate fell, Making another increase in the FED FUNDS rate a slam dunk. . Nonfarm payrolls increased 236,000 after an upwardly revised 326,000 advance in February, the Bureau of Labor Statistics said Friday. The unemployment rate fell to 3.5% and average hourly earnings climbed 4.2% from a year ago. Average hourly earnings on a monthly basis rose  0.3%.

160,892,000: Number of Americans Employed Sets Fourth Straight Record in March

After setting three straight monthly records, the number of employed Americans leaped again last month, reaching another all-time high in March. The Labor Department’s Bureau of Labor Statistics says 160,892,000 Americans were employed last month, an increase of 577,000 over February’s record 160,315,000. BLS defines employed Americans as those who, during the reference week, did some work for pay or profit, or did at least 15 hours of unpaid work in a family-operated business.

As the number of employed Americans jumped again last month, the number of unemployed Americans — no job, but looking — dropped by 97,000, producing an unemployment rate of 3.5 percent, down a tenth of a point from February. (The 3.4 percent unemployment rate in January was the lowest it’s been since 1969.)

Among the major worker groups, the unemployment rate for Hispanics decreased to 4.6 percent in March, essentially offsetting an increase in the prior month. The unemployment rates for adult men (3.4 percent), adult women (3.1 percent), teenagers (9.8 percent), Whites (3.2 percent), Blacks (5.0 percent), and Asians (2.8 percent) showed little or no change over the month. In another positive sign, the labor force participation rate climbed a tenth of a point to 62.6 percent, the highest it’s been in three years. In March, the civilian non-institutional population in the United States was 266,272,000. That included all people 16 and older who did not live in an institution, such as a prison, nursing home or long-term care facility. Of that civilian non-institutional population, 166,731,000 were participating in the labor force, meaning they were either employed or unemployed — they either had a job or were actively looking for one during the last month. This resulted in a labor force participation rate of 62.6 percent, the highest it’s been since Joe Biden became president, and up from 62.5 percent in February. BLS says the non-farm economy added 236,000 jobs last month,  job creation has averaged around 334,000 in the prior six months.

Breaking it down by industry:

— Leisure and hospitality added 72,000 jobs in March, lower than the average monthly gain of 95,000 over the prior 6 months;

— Government employment, +47,000;

— Professional and business services, +39,000;

— Health care, +34,000 jobs;

— Transportation and warehousing, +10,000;

— Retail trade, -15,000;

— Employment showed little change over the month in other major industries, including mining, quarrying, and oil and gas extraction; construction; manufacturing; wholesale trade; information; financial activities; and other services.

The number of Americans counted as not in the workforce — no job and not looking for one — dropped in March for a third straight month to 99,541,000. This group includes a growing number of retirees. And the number of people not in the labor force who want a job — 4,925,000 — hasn’t been this low since December 2019. (These individuals were not counted as unemployed because they were not actively looking for work during the 4 weeks preceding the survey or were unavailable to take a job.)

In March, average hourly earnings for all employees on private nonfarm payrolls rose by 9 cents, or 0.3 percent, to $33.18. Over the past 12 months, average hourly earnings have increased by 4.2 percent.

The change in total nonfarm payroll employment for January was revised down by 32,000, from +504,000 to +472,000, and the change for February was revised up by 15,000, from +311,000 to +326,000. With these revisions, employment in January and February combined is 17,000 lower than previously reported. NN: lately the much watched inflation reports have been ballyhooed as “going down” coming in under estimates. That is WallStreet estimates… When reality is ALL the reports show inflation still climbing and a red hot job market. Their are no signs of a slow down in the important statistics the FED bases its interest rate decisions on… Talk about fake news.