BlackMask Breaking News

NEW YORK, May 27 (Reuters) – Major U.S. retailers that recently scrambled to restock shelves amid product shortages disclosed this week that their stores are now packed with too much merchandise, and some are even doing what was unthinkable just a few months ago: discounting unsold goods. It’s a sign of possible more trouble to come for retailers amid soaring inflation and higher gas prices. With shoppers’ tastes quickly shifting, many retailers now find themselves with a surplus of merchandise, driving up costs.

Costco Wholesale Corp (COST.O) said its inventories ballooned 26% in its fiscal third quarter ended May 8 that included a “few hundred million dollars” of extra holiday merchandise and being a “little heavy” on small appliances and household items.  At Gap Inc (GPS.N), a 34% spike in inventories was caused by poor sales at Old Navy and longer transit times for goods, CFO Katrina O’Connell said Thursday.  Similarly, Macy’s CEO Jeff Gennette this week cited an “imbalance” in inventory. “Supply chain constraints relaxed,” resulting in it receiving goods from overseas earlier “than we expected,” he said. Meanwhile, shoppers changed buying patterns, buying fewer home items while snapping up occasion-based clothing and other merchandise.

Average retail inventories in the United States are rising at a faster pace than sales growth, according to Citi research on 18 retailers’ first-quarter results as of May 22. At 11 of the 18, inventories rose by 10 percentage points more than sales did, according to Citi analyst Paul Lejuez. That is the widest gap since before the coronavirus pandemic began, illustrating a trend that began in March 2022.

During the supply-chain crisis, major retailers went on buying sprees, loading up on a range of merchandise and bulking up investments in merchandise so they would have enough goods in stock for shoppers flush with cash due to stimulus checks.

But the retailers’ moves backfired, according to executives and analysts. With inflation soaring and fuel prices jumping, shoppers retrenched quite rapidly, buying less clothing, TVs and high-margin appliances.

That scenario is prompting retailers like Walmart (WMT.N) and Macy’s (M.N) to clear out excess inventories by discounting more items and offering deeper promotions, a move that could erode margins. Walmart CEO Doug McMillon said on its earnings call that it had started “aggressive” price rollbacks to boost sales of some higher-margin goods, including apparel. To be sure, retailers are still battling high costs of sourcing goods and hiring workers, which could limit the breadth and depth of promotions they offer, The Roosevelt Investment Group’s Senior Portfolio Manager Jason Benowitz said. “You will see some discounting and it will be more than last year but ultimately it will be held back by the still high cost of sourcing inventories and labor,” said Benowitz, whose firm holds shares in Amazon.com Inc (AMZN.O), Ross Stores (ROST.O) and Autozone Inc (AZO.N). As inflation lifted prices of everything from TVs to toothpaste, some lower-income consumers have curbed their spending, according to Walmart and Target.  Higher-income shoppers have shown resiliency, snapping up suits, gowns and footwear and spending more on services, economic data and results from retailers that cater to more affluent households showed. Holding excess merchandise proves expensive as warehousing costs rise. Walmart store and distribution centers had 32% more merchandise, Target had 43% more goods compared to a year earlier and Best Buy (BBY.N) had 9% more merchandise in the first quarter, the retailers said. Macy’s said on its earning call inventories rose 17% from the same period in 2021. Macy’s (M.N) Chief Financial Officer Adrian Mitchell said on Thursday consumers’ quick shift away from “pandemic categories” and receiving items sooner than expected, due to a loosening supply chain, resulted in higher inventories. He forecasted Macy’s second-quarter gross margins to reach 2019 levels. Some anticipate that many retailers this year will start to discount more to clear out unsold merchandise. Macy’s CFO’ warned of “an elevated promotional environment,” for example. Data from research firm StyleSage showed mid-tier department stores, such as Macy’s and Kohl’s (KSS.N), stepped up price promotions in mid-May, implementing them on 57% of items. In the clothing category, retailers put in place discounts on 36% of items as of mid-May, up from 32% in the whole of April, according to StyleSage. The average discount, however, remained steady at 12% since January. Kohl’s offered eight promotions in the second week of May, versus three in the year-earlier period, according to research from Jane Hali & Associates. Similarly, Walmart was offering up to 65% off on top-rated items and up to 25% of on tech and home goods during the week of May 9. At the same time last year, deals for tech products were just 10% and offers on home products were only on select items. NN: Retailers  algo’s had retailers double orders when the supply chain emptied. Just as those inventories are rising the consumer stunned by inflation driven price increases have pulled in  heir horns. A massive inflation that will soon be a depression is upon us, Retailers will soon be dumping inventories and a little later on this year their will be fire sales all over the place

https://youtu.be/YuIU0kz2i1s

The European Union proposed banning seaborne oil from Russia while delaying restrictions on imports from a key pipeline in an effort to satisfy Hungarian objections and clinch an agreement on a stalled sanctions package that would target Moscow for its war in Ukraine. The European Commission, the EU’s executive arm, sent a revised proposal to national governments on Saturday that would spare shipments of oil through the giant Druzhba pipeline, which is Hungary’s main source of crude imports, according to people familiar with the matter. Member states would phase out their imports of seaborne crude in six months and refined petroleum products in eight months, said the people, who asked not to be identified because the discussions are private.  The proposal would give more time to Hungary, which has opposed the deal, to find a technical solution that satisfies its energy needs. It would also address the concerns of other landlocked countries, including Slovakia and the Czech Republic. Under the revised draft, Bulgaria would get a transition period until June or December 2024 and Croatia could get an exemption for imports of vacuum gas oil. The commission also proposed restricting re-exports of Russian oil supplied by pipeline to other member states or third countries. The commission also appears to have limited the scope of a provision that would affect services linked to the shipment of oil to third countries. The draft currently prohibits providing technical assistance, brokering services or financing or financial assistance in six months following its adoption. The previous proposal also included “any other services,” which was understood as a reference to providing insurance for shipments. EU ambassadors are scheduled to meet on Sunday when they could discuss the revised package. Some member states are pushing to have an agreement before EU leaders meet in Brussels on Monday to discuss the war in Ukraine.  The sanctions package requires the backing of all member states. Several nations had previously opposed distinguishing between seaborne and pipeline deliveries over concerns that such a split was unfair as it would disproportionately hit their supplies. The EU had previously proposed phasing out all Russian oil imports by early next year. Hungary and Slovakia would have been given until the end of 2024 to comply, while the Czech Republic would have been granted an exemption until June 2024. The countries are heavily reliant on Russian oil, but they account for a relatively small portion of the EU’s overall imports from Moscow. NN: When sanctions are little more then press releases. Unhook my dick. Politicians canot run squat. They are clueless… See how they run!!

• Russian forces advance in east, shifting momentum
• Capture of Lyman would set stage for next phase of offensive
• Sievierodonetsk under assault

KYIV, May 29 (Reuters) – Russian forces intensified their assault on the largest city held by Ukrainian forces in the Donbas region in the east on Sunday as Kyiv said it was hopeful longer-range weapons it desperately needs from Western allies could soon arrive. Slow, solid Russian gains in recent days in eastern Ukraine’s Donbas, comprising the Luhansk and Donetsk regions, point to a subtle momentum shift in the war, now in its fourth month. Invading forces appear close to seizing all of the Luhansk region, one of the more modest war goals the Kremlin set after abandoning its assault on the capital, Kyiv, in the face of Ukrainian resistance. Russia’s defence ministry said its troops and allied separatist forces were in full control of Lyman, the site of a railway junction west of the Siverskyi Donets River in the Donetsk. However, Ukraine’s deputy defence minister, Hanna Malyar, said the battle for Lyman continued,  Sievierodonetsk, some 60 km (40 miles) northeast of Lyman on the eastern side of the river and the largest Donbas city still held by Ukraine, was under heavy assault. “The situation has extremely escalated,” said Serhiy Gaidai, the governor of Luhansk. The shelling was so intense it was not possible to assess casualties and damage, though two people were killed on Saturday and 13 more buildings in the city were destroyed, he said. Gaidai said on Friday that Ukrainian troops might have to retreat from the city to avoid capture but it was not clear whether they had begun to pull out. Russian artillery was also pounding the Lysychansk-Bakhmut road, which Russia must take to close a pincer movement and encircle Ukrainian forces, and police said there was “significant destruction” in Lysychansk. Ukrainian presidential adviser and peace negotiator Mykhailo Podolyak repeated a call for U.S.-made long-range multiple-rocket launchers. U.S. officials have told Reuters such systems are actively being considered, with a decision possible in coming days. “It is hard to fight when you are attacked from 70 km away and have nothing to fight back with … we need effective weapons,” Podolyak posted on Twitter. President Volodymyr Zelenskiy voiced hopes in a late-night video address that Ukraine’s allies would provide needed weapons, adding that he expected “good news” in the coming days. In a sign of frustration over Western differences on the war as its economic costs become more evident, Ukrainian Deputy Prime Minister Olga Stefanishyna said NATO had shown itself incapable of mounting a united response. Ukraine is a major grain exporter, and the blockage of its exports threatens to result in food shortages in a number countries, including in Africa. Zelenskiy said in a television interview he believed Russia would agree to talks if Ukraine could recapture all the territory it has lost since the invasion began on Feb. 24. Russia says it is waging a “special military operation” to demilitarise Ukraine and rid it of nationalists threatening Russian-speakers there. Ukraine and Western countries say Russia’s claims are a false pretext for a war of aggression. NN: I fully expect the bad news to keep coming. NATO, the EU and US are still living in LALA land. The Ukraine cannot win the war without LONG range rockets and a REAL air force. As we have learned the side that has the longest reach and controls the skies usually wins. NATO refuses to face the reality… Its their fight! Better fight in the Ukraine then Poland!.

 

https://youtu.be/N1_OSmV1di0

Conflict between Russia and Germany risks leaving one of central Europe’s biggest natural gas depots empty next winter, just as the continent urgently needs to ensure supplies due to the war in Ukraine. The Haidach underground depot — located in Austria but connected only to the German grid — is unlikely to get filled after Moscow cut supplies to a Gazprom PJSC unit seized by Berlin’s government, according to energy officials in Vienna, who asked not to be identified in exchange for discussing sensitive topics. The depot is equivalent to about a quarter of Austrian storage capacity.  Europeans need to build fuel inventories to keep warm and run their industries next winter. But Russian sanctions on Gazprom Germania GmbH — in retaliation for Berlin seizing the unit earlier this year — are depriving Haidach of crucial supplies needed for energy security should the war in Ukraine disrupt gas transit to the continent. To make matters worse, Austrian efforts to break the German bottleneck and stash gas at the site is plagued by pipeline constraints. The Alpine country would need to find a way to connect Haidach to the Austrian network and the nation’s grid operator said it’s still studying how it could meet the government’s demand. “From a technical perspective, a connection between the storage facility and the Penta West pipeline would have to be built,” operator Gas Connect said in emailed response to Bloomberg questions.  Austria’s Penta West is the closest pipeline that could be extended to connect Haidach with the rest of Austria’s 900-kilometer (559-mile) network. Receiving the necessary regulatory and environmental permissions for that could take years, one official said. Even if all approvals were granted, the Penta West pipeline’s capacity is already fully booked by traders fueling west European markets. A second gas tender being prepared in Vienna, which could be awarded to help fill Haidach with supplies other than Russian, is also facing challenges because there’s no way of verifying where the fuel comes from once it’s been injected into pipelines, a second official said. Haidach was built by Gazprom and Germany’s Wingas Gmbh and opened in 2007. It’s operated by Austria’s RAG AG. The facility has capacity to store about 33 terawatt hours of gas, enough to cover almost four months of Austrian consumption. Austria gets about 80% of its gas from Russia and has warned that being cut off from its biggest supplier would plunge the country into recession. Leonore Gewessler, Austria’s top energy official, said earlier this month that the country was prepared to spend as much as 5 billion euros ($5.4 billion) to top off storage depots, through tenders that may include Russian suppliers.  On Tuesday, the country paid a 45% premium over benchmark European prices in its first tender to create a strategic gas reserve before heating season begins. NN: its a lot different story then being presented in US media. Their are no replacement supplies and oil will hi t$150 a barrel. And that will end the inflation has peeked silliness. Since we are talking about myths the “hero”  Ukrainian freedom fighters  are getting their asses kicked,,,,,….. But,  if you admit that then NATO the toothless fighters should join the fight…… Speaking of joining the fight and engaging the enemy, If you want to keep the kiddies safe lock the fucking door. And make sure the donuts eater in blue stays at the front door as he is paid to do. Oh yes and see if you can get the liberal lefties that need victims to push their agenda get trained, carry and use a gun… As far as the steroid monsters their job is to take down a shooter now right now…… Not sit around for a hour!

A little pre-summer cheer finally filtered its way into the stock market the week before Memorial Day, but it will likely take more than the Dow Jones Industrial Average’s first winning week since late March to convince rattled investors that the pain is in the past. What happened? Real, or inflation-adjusted, interest rates fell over the past week, corporate credit spreads — the yield premium over U.S. Treasurys demanded by investors to buy bonds issued by companies — tightened, and investor expectations for future Federal Reserve rate increases moderated, noted Mahmood Noorani, chief executive of research firm Quant Insight, in an interview. That gave some breathing room for a bounce. Quant Insight’s model showed the S&P 500 had sunk below fair value but is now right in line with the metric. The S&P 500 SPX, +2.47% had narrowly averted a close in bear-market territory on May 19 after hitting a session low more than 20% below its Jan. 3 record close. It then rose 6.6% over the past week, ending Friday 13.3% below its early January peak as it snapped a streak of seven straight weekly declines. The Nasdaq Composite COMP, +3.33%, which remains solidly in bear-market territory, also broke a run of seven weekly falls, rising 6.8%. The Dow’s DJIA, +1.76% matching 6.8% rise marked the end of an eight-week run of losing weeks, its longest since 1932. Kevin Dempter, an analyst at Renaissance Macro Research, also pointed to a handful of positive factors, including a significant pullback by the U.S. dollar, deeply oversold technical conditions and extremely bearish sentiment, while some stocks, such as that of Nvidia Corp. NVDA, +5.38%, managed to reverse to the upside despite bad news. Neither Noorani nor Dempter were prepared to call a market bottom, however. And there was no shortage of outright bearish expectations. Michael Burry, the founder of Scion Asset Management, rose to fame after anticipating the collapse of the U.S. housing market as chronicled in the Michael Lewis book “The Big Short,” in a since-deleted tweet implied parallels with the 2008 market collapse. In a fresh Friday tweet, he mused about the prospects of a consumer-led recession: That echoes the fears that were raised earlier in May as retailers Target TGT, +2.41% and Walmart WMT, +1.97% reported disappointing earnings, triggering a deepening of the stock-market selloff on worries that inflation pressures were beginning to hit corporate bottom lines. A further pullback in real yields could allow stocks to rise further in the near term, Noorani said, but he argued that it’s unlikely yields have peaked. After all, while data, including Friday’s reading of the core personal consumption expenditure index, the Fed’s preferred inflation indicator, shows inflation is slowing, the job of getting price pressures back under control is far from done, he argued. That leaves uncertainty about how high the federal funds rate, currently at 0.75% to 1%, will ultimately go. Market pricing points to a so-called terminal rate between 2.5% and 3%, but anything that hints it will be higher than that will rattle investors, he said. The single most important driver for yields “is going to be Fed policy,” he said, observing that central bankers “have been spooked by inflation at these historically high numbers.” Even if it’s painful for the real economy, “they have to hit the brakes pretty hard and get those numbers lower.” While the S&P 500 hasn’t technically confirmed that it’s in a bear market, many market watchers view that as a mere formality, observing that stocks have been exhibiting bearlike behavior for much of the 2022 selloff. Dempter, in a Friday note, played down the consumer discretionary sector’s sharp outperformance of the rest of the market in the previous session, acknowledging that, historically, discretionary sees sharp improvement in relative performance about a month before growth troughs. The move was likely an oversold bounce rather than a bottom, he argued, explaining that RenMac would be more optimistic “if growth were weaker, and inflation had peaked.” “History suggests that both growth and inflation need to weaken further before a bottom occurs,” he said, noting that the energy sector’s continued outperformance of healthcare suggests that inflation has yet to peak. NN: obviously inflation has not peeked and the FED burnt by waiting to long to raise rates is not done… Not by a long shot. This rally in time will be proved to be folly.

Stocks have fallen to near-bear market territory. Bonds have suffered big price declines. Foreign currencies have nosedived against the US dollar. Cryptocurrencies, SPACs and other speculations have collapsed. But commodities have been on a tear. The Bloomberg Commodity Spot Index has surged 33% this year, with energy, metals and agriculture prices all showing big gains. Investors, spooked by faster inflation, rising geopolitical risks and accumulating portfolio losses, are pushing into commodity exchange-traded funds to hedge their portfolios. This year through April, $21.4 billion flowed into commodity ETFs in contrast to the $63 billion in outflows in the first four months of 2021, according to Morningstar. Commodities bulls may soon regret their enthusiasm as both demand and supply forces look like they will soon start to depress prices. Covid-19 has led to continuing lockdowns in China, causing dramatic production cutbacks in the world’s second-largest economy, which accounts for 18.1% of global gross domestic product and 23.9% of manufacturing. The pain has spread to China’s imports of commodities from countries such as Brazil, Chile and Australia of oil, copper and iron ore as well as manufacturing exporters like Germany, South Korea and Taiwan. According to Nomura Holdings Inc., Chinese imports of iron were down 13% in April from a year earlier, copper fell 4% and imports of cars and chassis dropped 8%. Russia’s invasion of Ukraine has also disrupted global demand and the robust dollar has curtailed demand for commodities by developing countries since their currencies have fallen 3% on average since April. Of 45 major commodities traded globally, 42 are priced in dollars. The only exceptions are wool (Australian dollars), amber (Russian rubles) and palm oil (Malaysian ringgit). Developing economy commodity imports are also depressed by their growing need to use scarce foreign exchange to service dollar-denominated debts. From 2018 through 2021, Chile’s non-bank dollar debt rose from 34.7% of GDP to 50.3%, Mexico’s from 21.9% to 30.1% and Turkey’s from 23.0% to 28.2%. Commodities also suffer as economic growth favors services over goods. Since World War II, American spending on goods has dropped from 61% of their total outlays to 35% while spending for services rose from 38% to 65%. That’s also true for developing countries like China. On the supply side, the world d continues to face higher commodity prices.  NN: Its a dangerous game we play. Shorting the bear market rally back. Their is no doubt in my mind that another sell off in stocks is coming. But we are playing a dangerous game that could blow up in our face. We are selling this rally back. As we often do. AND WE COULD GET CRUSHED…. SO you might rightfully ask WHY DO IT: The simple answer is that’s what we do!. But a better answer is markets this nervous stop on a dime and CAN make stunning reversals. Some of the  greatest gains to be made are in markets that are about to see capitulation. Which has not occurred….. yet. The reality is the fed has only just begun raising rates and inflation is out of control. The drivers for inflation becoming more powerful by the day. I still see eenrgy prices soaring, I still see supply chain shortage and material shortages…. I still see Russia pounding the shit out of Ukraine. Embargo and food and energy shortages are growing war is polarizing Europe. Dragging in more participants. With more and more countries taking side and supplying more and more and bigger arms. And do not forget the FED is way behind the power curve on raising rates and has not begun to claw back stimulus…..