Solwd

Authored by Richard Truesdell via American Greatness,

Despite the unprecedented and coordinated lawfare deployed against him, Donald Trump has emerged as the Republican presidential front-runner.

Tulsi Gabbard, a former Democrat who is both a centrist and moderate (by today’s definitions), has emerged as his most compelling and logical selection to be his running mate. I base my analysis on six compelling factors.

Reason Number One: She’s a woman. Let’s face 2024’s political reality. To have any chance to grab his fair share of suburban female voters in crucial swing states, Trump almost definitely has to pick a woman. While I once thought Kristi Noem would have been a great running mate, she committed political suicide last week with a puppy-killing narrative that ended any hope of that, especially after mainstream media gaslighted her in their attempt to destroy her. That narrative will never go away. Neither will the salacious reports that she had a not-too-secret extra-marital affair with Trump-aligned political consultant Cory Lewandowski. Gabbard has no such liability.

In a sane world without gender balance being an overriding consideration, I’d prefer either Kentucky Senator Rand Paul or Louisiana Senator John Kennedy to be Trump’s running mate. But both are more valuable as members of Republican leadership in the Senate. Either would be a great pick to be Majority Leader in a Republican-led Senate during Trump’s second term. And while I hate to say it, being a woman puts Gabbard in the best position among all of Trump’s potential choices to help him defuse any potentially dangerous fallout over the abortion issue—currently the only issue on which Biden has any measurable lead over Trump in polling. Gabbard’s and Trump’s positions on abortion are generally in sync, referring the issue to the states to decide.

Reason Number Two: Gabbard currently holds no elective office. This works against many others reportedly on Trump’s shortlist. These include (in alphabetical order) North Dakota Governor Doug Burgrum, Florida Representative Byron Donalds, Arkansas Governor Sarah Huckabee Sanders, South Dakota Governor Kristi Noem, Florida Senator Marco Rubio, South Carolina Senator Tim Scott, New York Representative Elise Stefanik, and Ohio Senator J. D. Vance—all of whom might be more valuable as surrogates and elected politicians than as Trump’s running mate. I’ve left off this list of other non-elected officials like Tucker Carlson and Ben Carson, as well as Florida Governor Ron DeSantis (who ruled out accepting such a role but who could end up being one of Trump’s most important surrogates in the fall).

Reason Number Three: She’s an ex-Democrat who was forced from her party by its ideological move to the far-left post-2016 after calling the Democrat Party an “elitist cabal of warmongers driven by cowardly wokeness.” On that issue, she’s totally in sync with Trump, bringing a sense of bipartisanship to a potential Trump ticket that is almost unprecedented in national presidential politics. Can she also appeal to the voting base where Trump is weakest—college-educated women? Certainly. Can you think of anyone on Trump’s shortlist who would be better suited in this regard? Can she peel off disaffected Democrats in crucial swing states, especially Pennsylvania, that are already having a hard time voting for a second Biden term after all his policy failures? Yes, I believe she is uniquely qualified to do so.

Reason Number Four: She’s an active, current military reserve officer, another area where Trump is weak (but no weaker than Biden). Her military record and experience are better than any other potential choice among Trump’s short list of candidates. When you combine her military experience with her multicultural background (her mother is from Indiana and her father is from American Samoa), she has wide appeal. Raised Hindu, this is another area where she brings cultural strength to the ticket, certainly as much as Kamala Harris added to the Biden ticket in 2020.

On a side note, before she left the Democrat Party in 2022, she served as vice chair of the Democratic National Committee, so she has intimate knowledge of the kind of dirty tricks the Democrat Party will deploy in the run-up to November 5th. Possibly her biggest political liability is that before leaving the Democrat Party in October 2022, she had endorsed Bernie Sanders in 2016 and Joe Biden in 2020 after ending her presidential bid in March 2020.

Reason Number Five: Temperament. With a strong personality and a well-documented history of political success combined with her military leadership, she is not a potential threat to Trump’s outsized personality. She would not try to upstage him if that was ever a possibility. On the contrary, her measured personality combined with her military experience makes her a perfect counterbalance to help defuse any media criticism of Trump’s lack of service in uniform.

What will the media do to criticize her record? Probably anything, but that’s a non-starter, even for the mainstream media, which previously tried to tar Gabbard, unsuccessfully, as a Vladimir Putin apologist and puppet. But it certainly didn’t stop Hillary Clinton in 2019. She also burnished her foreign policy credentials on a 2017 Middle Eastern visit to Lebanon and Syria, meeting with Syrian President Bashar al-Assad.

Reason Number Six: I’ve saved the best for last. Can you imagine Gabbard again on a debate stage in October, as early voting is starting, across from Kamala Harris? After the way she almost single-handedly wrecked and ended Harris’ 2020 presidential bid, this is one opponent that Harris fears the most. Gabbard, because she’s such a skilled politician, would absolutely destroy Harris a second time. Harris is uniquely unqualified to be vice president after all her policy failures as Biden’s vice president, especially on the border, which is Trump’s biggest winning issue, with the possible exception of the economy.

Selecting a running mate is often a matter of balance, sometimes geographically, and what crucial Electoral College votes the vice presidential pick could bring to a potential ticket. That may have been important decades ago, but is less so today. In 2016, Trump selected Mike Pence as his running mate, thinking that he would bring conservative Christians and evangelicals to the ticket, which it did to a degree. But to measure Gabbard’s strengths, ask yourself this question: Will she help Trump more in 2024 than Pence did in 2016? I think the answer is an unequivocal yes.

We reported earlier Monday that Russian President Vladimir Putin has ordered his armed forces to conduct tactical nuclear weapons drills in order for the country to be fully ‘ready’ to deter threats against it.

A specific date for these nuclear drills has yet to be publicized, but importantly the Kremlin has made it clear that the order is directly in response to recent threatening comments by Western powers. For example both the US and UK have lately pledged to continue arming Ukraine “for as long as it takes” – and further British officials have openly stated that Ukraine may use UK-supplied weaponry to attack inside Russia if need be. There’s also the example of France’s Macron continually talking about being open to Western boots on the ground in defense of Ukraine.

British Foreign Secretary David Cameron was in Ukraine late last week, his second trip there since the war began, where he stated provocatively, “Ukraine has that right. Just as Russia is striking inside Ukraine, you can quite understand why Ukraine feels the need to make sure it’s defending itself.”

Russian strategic bomber, via Ministry of Defense (MoD)

Russia’s foreign ministry in response promptly summoned UK Ambassador to Moscow Nigel Casey over the remarks. “Casey was warned that the response to Ukrainian strikes using British weapons on Russian territory could be any British military facilities and equipment on the territory of Ukraine and beyond,” the ministry stated after the meeting.

Importantly, the Kremlin laid out that Cameron’s words mean he “de facto recognized his country as a party to the conflict.” This marks possibly the first time that the Russian government specifically threatened to attack British military installations and equipment within Ukraine and beyond.

The foreign ministry statement further said this constitutes “evidence of a serious escalation and confirmation of London’s increasing involvement in military operations on the side of Kiev.”

Ambassador Casey has been urged to “think about the inevitable catastrophic consequences of such hostile steps from London and to immediately refute in the most decisive and unequivocal manner the bellicose provocative statements of the head of the Foreign Office.”

French Ambassador Pierre Levy has also been summoned to the Russian foreign ministry on Monday, and the French government likely was also issued similar warnings. Again this comes as Macron is still pushing the idea of NATO troops in Ukraine, which a number of allies have rejected.

A timeline for the drills has yet to be revealed, but the Kremlin has confirmed the exercise will take place “in the near future”…

Russia will test its ability to deploy tactical nuclear weapons, the Defense Ministry announced. The drills will be conducted ‘in the near future’ and were ordered by President Vladimir Putin. pic.twitter.com/QgAza5jDib

— RT (@RT_com) May 6, 2024

Moscow in a follow-up statement said the drills will “cool down the ‘hot heads’ in Western capitals and help them understand the possible catastrophic consequences of the strategic risks they generate.”

Authored by Jonathan Turley,

A disbarred, serial perjurer walks into a courtroom and asks to take an oath . . . No, seriously, this is not a joke. Michael Cohen will soon appear in a Manhattan courtroom in what is sure to be one of the most bizarre moments in legal history.

Cohen nearly comprises the prosecution’s entire case against former President Donald Trump under a criminal theory that still has many of us baffled. It is not clear what crime Trump was supposedly trying to conceal by making “hush-money” payments to former porn actress Stormy Daniels.

What is clear is that none of the witnesses called in recent weeks has had any direct involvement with Trump on the payments.

The witnesses had a lot to say about Cohen, and most of it was not good. They described an unprofessional, self-proclaimed “fix-it man” who created a shell corporation to buy out Daniels with his own money. The money was later paid back by Trump after the election, with other legal expenses.

So Cohen will now make the pitch to the jury that they should put his former client in jail for following his own legal advice.

This would be difficult even for a competent and ethical lawyer. For Cohen, it is utter insanity. But Bragg is betting on a New York jury looking no further than the identity of the defendant to convict.

Cohen has an impressive history of lies and exaggerations that may be unparalleled. Just weeks ago, another judge denounced him as a serial perjurer who was still gaming the system.

This is not the defendant, mind you, but Alvin Bragg’s star witness.

I have been an outspoken critic of Cohen going back to when he was still representing Trump. His unethical acts were matched only by his unprofessional demeanor.

In 2015, after students on the Harvard Lampoon played a harmless prank on Trump, Cohen was quoted by a student on the Lampoon staff as threatening them with expulsion.

When a journalist pursued a story Cohen did not like, he told the reporter that he should “tread very f—ing lightly because what I’m going to do to you is going to be f—ing disgusting. Do you understand me?”

It is not hard to “understand” Cohen. He has long marketed his curious skill of voluntarily saying whatever the highest bidder wants him to say.

He is a convicted perjurer who seems to lie even when the truth would do. Each time he is caught lying, he claims to be the sinner who has finally seen the light, seeking redemption.

When he was called before the House to testify against Trump soon after his plea agreement with the Justice Department (for lying), Cohen was again accused of perjury. House Oversight Chairman Elijah Cummings (D-Md.), warned Cohen repeatedly that he had better tell the truth this time. Cohen then testified that Trump wanted him to work in his administration and offered him multiple jobs, which he turned down. He also claimed, “I have never asked for, nor would I accept, a pardon from President Trump.”

Multiple sources have said that Cohen’s lawyer pressed the White House for a pardon, and that Cohen unsuccessfully sought a presidential pardon after FBI raids on his office and residences last year.

Even after being stripped of his law license and sentenced to three years in prison, Cohen continued the pattern. In 2019, Cohen failed to appear to testify before the Senate Intelligence Committee, citing an inability to travel due to surgery. He was then seen partying before the hearing date with five friends.

Even while in jail, Cohen was accused of lying to a court, in violation of an order for early release due to medical problems. He was ordered back into custody after being spotted at a high-end restaurant.

But the most impressive moment came when Cohen was put back on the stand under oath and matter-of-factly claimed that he had lied in his prior hearing, when he pleaded guilty to lying.

In his 2018 guilty plea before U.S. District Judge William Henry Pauley III, Cohen admitted to this conduct under oath.

Then, when Cohen was asked by Trump’s counsel, “Did you lie to Judge Pauley when you said that you were guilty of the counts that you said under oath that you were guilty of? Did you lie to Judge Pauley?”

Cohen responded, “Yes.”  He was then again asked “So you lied when you said that you evaded taxes to a judge under oath; is that correct?” He again responded, “Yes.”

Most of us expected the Justice Department to bring new perjury charges at that point. It is rare that a defendant will actually take the stand and confess to perjury. However, Cohen was now useful again. This time, he was willing to deliver Trump. The Justice Department and Manhattan prosecutors were clearly willing to tolerate a little perjury for that prize.

Cohen’s conduct has already loomed large in the Manhattan proceedings. When Keith Davidson took the stand — the attorney who represented both Stormy Daniels and former Playboy model Karen McDougal — he recounted how Cohen was furious about not being offered a job in the White House. That directly contradicts Cohen’s congressional testimony. Davidson said that Cohen believed he might be named attorney general.

The account, if true, shows that Cohen is not only unethical, but also delusional. Cohen was found incapable of being an attorney, let alone an attorney general.

As prosecutors set the table for the grand arrival of their star witness, the testimony only got worse. David Pecker, the former owner of the National Enquirer, said charitably that Cohen was “prone to exaggeration.”

Davidson described Cohen’s profane and unprofessional conduct, stating that “the moral of the story is nobody wanted to talk to Cohen.” That may be the first time the word “moral” was used in the same line with Cohen.

Former Trump associate Hope Hicks mocked Cohen on the stand. She said that he constantly tried to insinuate himself into the campaign, without success, and that he “used to like to call himself Mister Fix It, but it was only because he first broke it.”

Mind you, these were his fellow prosecution witnesses, not the defense.

These witnesses also contradicted the basis for the prosecution. Pecker said that he killed stories for various celebrities for years, and that he did so for Trump for over a decade before he ran for office. Davidson testified that he did not consider the deal to be “hush money” but simply “consideration” to kill bad press.

Hicks testified that she believed Trump wanted to kill the stories in significant part to protect his family from embarrassment.

Cohen could not even maintain a consistent position during the trial. Many of us have denounced the gag order on Trump that prevents him from responding to Cohen’s unrelenting attacks in the media. Cohen then promised to stop any further comments. That promise may have set a record for Cohen. He kept it for roughly three days before being accused of trolling for dollars on social media by attacking Trump.

District Attorney Bragg will now call this disbarred, serial perjurer to make the case against a former president.

Under New York law, the oath administered by the court is supposed “to awaken the conscience and impress the mind of the witness in accordance with that witness’s religious or ethical beliefs.”

Before the bailiff administers the oath to Cohen, Judge Juan Merchan may have to warn spectators in the courtroom not to laugh. For anyone familiar with Cohen, it will sound like the ultimate punchline to a bad joke.

In the span of two months, two Boeing whistleblowers have died under mysterious circumstances.

John Barnett (L), Joshua Dean

The first, 62-year-old John Barnett, died from an apparent self-inflicted gunshot wound on March 9. He was found dead in his Dodge Ram truck holding a silver pistol in his hand in the parking lot of a South Carolina hotel after he failed to show up for the second half of his testimony for a lawsuit against the company. Barnett, who retired in 2017, warned that Boeing had cut corners to speed its 787 Dreamliners into service. He gave numerous interviews in which he described how he lodged internal complaints about serious security flaws. 

The second, 45-year-old Joshua Dean, a former Spirit AeroSystems quality auditor, died last Tuesday from a fast-growing infection. In 2022 he raised the alarm over improperly drilled bulkhead holes for the 737 MAX, and was fired less than a year later.

“I think they were sending out a message to anybody else,” Dean told NPR, adding “If you are too loud, we will silence you.“

Now, Boeing faces 10 more whistleblowers – and attorneys for the deceased men are hoping that the deaths don’t spook the rest away, the NY Post reports.

Boeing whistleblowers (from left) quality engineer Sam Salehpour; Ed Pierson, executive director of the Foundation for Aviation Safety and a former Boeing engineer; Joe Jacobsen, aerospace engineer and technical adviser to the Foundation for Aviation Safety and a former FAA engineer; and Shawn Pruchnicki, PhD, professional practice assistant professor for integrated systems engineering at the Ohio State University, are sworn in before they testify at a Senate hearing to examine Boeing’s broken safety culture (AP)

“These men were heroes. So are all the whistleblowers. They loved the company and wanted to help the company do better,” attorney Brian Knowles – who represented both Barnett and Dean, told the Post. “They didn’t speak out to be aggravating or for fame. They’re raising concerns because people’s lives are at stake.”

According to Knowles, “I knew John Barnett for seven years and never saw anything that would indicate he would take his own life,” but added “Then again, I’ve never dealt with someone who did (commit suicide). So maybe you don’t see the signs. I don’t know.”

Knowles pointed out that the Charleston, SC, police are still wrapping up their investigation of Barnett’s death — and that it may take some weeks for tests to reveal more about Dean’s passing.

“It’s a stunning loss,” Spirit AeroSystems spokesman Joe Buccino said of Dean. (The company is not to be confused with Spirit Airlines.) “Our focus here has been on his loved ones.”

Buccino insisted that Spirit “encourages” employees to come forth with their concerns and that they are then “cloaked under protection.” -NY Post

And while Boeing says they also “encourage” employees to speak up, that’s news to other Boeing whistleblowers who say they’ve either face retaliation or been ignored.

For example, Ed Pierson, 61, a former senior manager at Boeing’s Renton, Washington 737 factory, left Boeing six years ago and created the Foundation for Aviation Safety – after trying in vain to get Boeing execs to shut down production of the plane prior to two 737 MAX crashes in 2018 and 2019 which left 346 people dead.

“It’s an unstable company right now from the top to the bottom,” Pierson told the Post. “Senior corporate leadership is so fixated on not admitting the truth that they can’t admit anything.”

Last month, Pierson told Congress about what he characterized as a “criminal cover-up” by Boeing bosses.

“Boeing is an American icon,” Pierson said. “This company is incredibly important to our country, both economically and in terms of national security with its commercial aviation side and its military defense work. But it doesn’t work when you have the wrong people driving the bus.”

Following Barnett’s death, Boeing employees told The Post that he had made “powerful enemies,” and one said that they were skeptical that it was a suicide.

This guy is about to become Boeing’s highest-paid employee. https://t.co/QcUPFz0D1h pic.twitter.com/qoOEvndPHe

— Robert Sterling (@RobertMSterling) May 5, 2024

Authored by Paul Joseph Watson via Modernity.news,

Hungarian Foreign Minister Peter Szijjarto has warned that French President Emmanuel Macron’s threat to send NATO troops to Ukraine risks sparking World War III.

In an interview with The Economist last week, Macron said the question of sending western troops to Ukraine would “legitimately” arise if Russia broke through the Ukrainian front lines and Kyiv made such a request.

Kremlin spokesman Dmitry Peskov reacted by describing Macron’s statements as “very dangerous.”

Now Hungarian diplomat Peter Szijjarto warns that the French leader’s comments represent a stunning escalation.

“If a NATO member commits ground troops, it will be a direct NATO-Russia confrontation and it will then be World War Three,” said Szijjarto.

He also drew attention to the fact that such a conflict would likely escalate into nuclear confrontation.

“Let’s be clear: if there is a nuclear war, everything and everyone will be lost. If there is a nuclear war, everyone will die and everything will be destroyed, which no one with any common sense can wish for,” said Szijjarto.

Meanwhile, senior Italian government officials have joined the growing number of prominent voices condemning Macron over his comments.

“Sending Italian soldiers to fight outside the EU borders? Follow the obsessions of some dangerous and desperate European leader like Macron? No thanks, never in the name of the League,” remarked Deputy Prime Minister Matteo Salvini.

Italian Defence Minister Guido Crosetto also told the Corriere della Sera newspaper, “I don’t judge a president of a friendly country like France, but I don’t understand the purpose and usefulness of these declarations, which objectively raise tensions.”

As we previously highlighted, the former commander of the UK’s Joint Forces Command General Sir Richard Barrons said Ukraine is at “serious risk” of having to admit defeat to Russia this year.

Barrons said that pessimism is starting to set in amongst the population, generating a general malaise and a feeling that Ukraine “can’t win.”

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One of the recent positives for bonds and non-energy stocks could have run its course after Saudi Arabia raised the price of its flagship crude to Asia for a third consecutive month, according to Bloomberg markets live reporter Garfield Reynolds

Over the weekend, state-owned Saudi Aramco raised the June official selling price of Arab Light crude for customers in Asia by 90 cents to $2.90 a barrel above the regional Oman-Dubai benchmark, Bloomberg reported. It compares with an increase of 60 cents forecast in a Bloomberg survey of six refiners. Prices for other lighter and heavier varieties were also increased from May.

The hike highlights Saudi Arabia’s efforts to keep the market tight amid fading war risk in the Middle East, which has helped drive oil prices in London lower. Most traders and analysts predict that the Organization of the Petroleum Exporting Countries and its allies will extend their output curbs, potentially to the end of the year.

Crude took a marked step lower last week thanks to a surge in US inventories and optimism that Middle East tensions can cool further, but there’s a decent chance it’s busy finding a new floor rather than settling in for sustained declines according to Reynolds who notes that if Israel and Hamas can agree on a truce — a substantial if with the status of talks unclear after the latest round in Cairo — that would likely set off a fresh, rapid drop in the short term for crude.

But even then it looks as though Saudi Arabia and the other producers would be likely to respond with further efforts to trim supply to prop up prices.

With two-year US inflation swaps sitting at ~2.5% that shows bonds remain vulnerable to sticky oil prices even with WTI under $80/barrel.

Authored by Lance Roberts via RealInvestmentAdvice.com,

The latest FOMC meeting caused a stock rally as Jerome Powell turned more “dovish” than expected. While Powell did note that progress on inflation has been lackluster, the announcement of the reversal of “Quantitative Tightening” (QT) excited the bulls.

Beginning in June, the Committee will slow the pace of decline of its securities holdings by reducing the monthly redemption cap on Treasury securities from $60 billion to $25 billion. The Committee will maintain the monthly redemption cap on agency debt and agency mortgage‑backed securities at $35 billion and will reinvest any principal payments in excess of this cap into Treasury securities”

Of course, the reversal of QT means a buyer of Treasury bonds is returning to the market, increasing overall market liquidity. It also means the Treasury will issue $105 billion less in gross in Q3. The bond market also got the memo, as the Fed’s return to the bond market suggests lower yields in the months ahead, easing financing pressure in the economy.

We have previously discussed the following chart of “liquidity,” which subtracts the Treasury General Account and Reverse Repo from the Federal Reserve’s balance sheet. The recent market decline coincided with a sharp drop in liquidity as the TGA account surged to almost $1 trillion from April tax receipts. Over the next few months, that liquidity in the TGA will get released into the economy. At the same time, the Federal Reserve will reduce its balance sheet runoff, which will further add to overall liquidity.

Notably, the market has weathered the reduction in liquidity to date. While higher rates and the reversal of “Quantitative Easing” led to a 20% market decline in 2022, investors began to “front run” the Fed in anticipation of rate cuts and a return to balance sheet expansion.

Given that “QE” programs increase bank reserves by crediting their reserve accounts for bonds bought, the introduction of the tapering of “QT” is the first step in increasing system liquidity.

This is why there was a vicious stock rally last week. For the markets, this rang “Pavlov’s Bell.”

The Correction May Not Be Over Just Yet

While the stock rally last week certainly surprised many, given the weaker-than-expected economic data, there are some reasons to suspect the correction may not be complete just yet.

In mid-March, we suggested that due to the “buyback blackout” window, a 5-10% correction was likely. To wit:

“As noted, the market remains in a bullish trend. The 20-DMA, the bottom of the trend channel, will likely serve as an initial warning sign to reduce risk when it is violated. That level has repeatedly seen ‘buying programs’ kick in and suggests that breaking that support will cause the algos to start selling. Such a switch in market dynamics would likely lead to a 5-10% correction over a few months.“

The following month, the market violated that 20-DMA, and selling commenced, leading to a 5.5% drawdown. However, buyers initially stepped back in at the 100-DMA, which has now acted as support over the last two weeks. With the rally last week, the stock rally is now testing crucial resistance at the 50-DMA.

The stock rally is at a critical juncture, and what happens next will determine whether the current market correction is over. Three possible scenarios over the next month or so exist.

Path A: The market breaks above the 50-DMA and retests previous highs. While this path is indeed possible, the markets are overbought on a very short-term basis, suggesting further price appreciation will become more challenging.

Path B: Many investors were surprised by the recent market decline. As such, these “trapped longs” will likely use the current stock rally as an opportunity to reduce risk. Another retest of the 100-DMA seems probable before the next leg of the current bull rally ensues.

Path C: With earnings season mostly behind us and stock buybacks set to resume, a reversion to the 200-DMA seems the least probable. However, as is always the case, it is a risk that we should not ignore. A sharp uptick in inflation or stronger-than-expected economic data could spark concerns about a “higher for longer” Fed policy. Such an event would likely lead to a further repricing of risk assets.

I am less concerned about “Path C” for three reasons.

Little Evidence Of Market Stress

While a more profound decline is certainly possible, there is little evidence of market stress. For example, even during the latest correction, volatility remained very subdued. Yes, volatility increased during the decline but failed to reach the levels witnessed during the 10% correction last summer.

Secondly, a substantially deeper market decline would likely widen credit spreads between junk bonds and treasuries. That was not evident during the latest market decline, as spreads remain well below the long-term average. Watching credit spreads is the best indicator for investors to determine market risks.

Third, the window for stock buybacks reopens this week, and with Apple and Google announcing $110 and $70 billion programs, respectively, those two companies alone will account for roughly 18% of this year’s slated activity.

Combining current sentiment, buybacks, and liquidity hopes makes the stock rally over the last two weeks logical. Furthermore, given that early summer months tend to be bullish for markets during election years, it is likely too soon to be overly bearish.

However, we are also not completely oblivious to the numerous risks that lie ahead. Weaker economic data, the lag effect from higher rates, and sticker inflation pose portfolio risks worth monitoring. Furthermore, in the two months before the election, investors tend to de-risk their portfolios. This year, we could see a larger-than-normal event, given the risks associated with the current matchup.

While Powell’s “dovish” twist fueled the current stock rally, continue to manage risk accordingly. There is a reasonable chance this correction is not over just yet.

After a whirlwind two weeks which saw both the latest FOMC decision and the April jobs report, not to mention the peak of earnings season when all of the top tech companies reported, the calendar takes a quieter turn after the deluge of macro events last week, and the focus shifts on whether markets can continue to find a more solid footing. The latter half of last week saw strong gains for most asset classes thanks to an FOMC meeting that avoided hawkish surprises coupled with a softer payrolls report on Friday that reignited hopes of a soft landing for the US economy. 10yr Treasury yields saw their largest weekly decline of the year so far (-15.5bps) while the S&P 500 posted its best 2-day run in 10 weeks (+2.18%).

Looking forward, the health of the US economic cycle will remain in focus with today’s Senior Loan Officer Survey from the Fed. The SLOOS has seen a gradual improvement in the past few quarters after the sharp tightening following the regional banking stress last March. A key question is whether the rise in yields since the start of the year could derail the nascent improvement in bank credit conditions. Later in the week, the University of Michigan consumer survey will attract attention on Friday given the recent softening in US consumer confidence indicators.

The main macro event in Europe will be the latest BoE decision on Thursday. Our UK economist expects this week’s meeting to set the stage for the first rate cut in June and foresees dovish shifts in the MPC’s modal CPI projections and its forward guidance. You can see the full preview here. We will also have the RBA decision on Tuesday (see our economists’ preview here), while on Wednesday the Riksbank could deliver the first rate cut of the cycle there. Finally, we’ll have the accounts of April ECB meeting due on Friday. These are unlikely to deliver major surprises, with April’s clear if conditional signal of a June rate cut having solidified in recent ECB commentary. But we will watch for any hints on the ECB reaction function beyond June, including on what sort of data might justify consecutive ECB cuts.

The earnings season will begin to taper off this week, with almost 400 of S&P 500 members having already reported. Notable releases will include Walt Disney, Vertex, Uber and Airbnb in the US, Ferrari, Telefonica and Leonardo in Europe and Toyota and Nintendo in Japan.

Day-by-day calendar of events

Monday May 6

Data : China April Caixin services PMI, Italy April services PMI, Eurozone March PPI
Central banks : Fed’s SLOOS, Barkin and Williams speak, ECB’s Villeroy, Nagel and Panetta speak
Earnings : Vertex, Palantir, Williams Cos, Simon Property Group, Realty Income

Tuesday May 7

Data : US March consumer credit, UK April construction PMI, new car registrations, China April foreign reserves, Germany March trade balance, factory orders, April construction PMI, France Q1 wages, private sector payrolls, March trade balance, current account balance, Eurozone March retail sales, Switzerland April unemployment rate
Central banks : Fed’s Kashakari speaks, ECB’s De Cos speaks, RBA decision
Earnings : Walt Disney, BP, Arista Networks, Duke Energy, McKesson, Occidental Petroleum, Kenvue, Nintendo, Ferrari, Electronic Arts, Rockwell Automation, Leonardo, Reddit, Lyft
Auctions : US 3-yr Notes ($58bn)

Wednesday May 8

Data : US March wholesale trade sales, Italy March retail sales, Germany March industrial production
Central banks : Fed’s Cook, Jefferson and Collins speak, ECB’s Wunsch speaks , Riksbank decision
Earnings : Toyota, Arm, Uber, Airbnb, Emerson Electric, Teva, Shopify, Vistra, Affirm, Siemens Energy, AB InBev
Auctions : US 10-yr Notes ($42bn)

Thursday May 9

Data : US initial jobless claims, UK RICS house price balance, China April trade balance, Japan March leading and coincident index, labor cash earnings
Central banks : BoE decision, April DMP survey, Pill speaks, BoJ summary of opinions April MPM, ECB’s Cipollone and Guindos speak, BoC’s financial system review
Earnings : Constellation Energy, Roblox, Telefonica, Enel, Warner Bros Discovery, Warner Music Group
Auctions : US 30-yr Bonds ($25bn)

Friday May 10

Data : US May University of Michigan survey, April monthly budget statement, UK Q1 GDP, March monthly GDP, trade balance, industrial production, index of services, construction output, China Q1 current account balance, Japan March trade balance, current account, household spending, April Economy Watchers survey, bank lending, Italy March industrial production, February industrial sales, Canada April jobs report, Norway, Denmark April CPI
Central banks : Fed’s Goolsbee, Barr and Bowman speak, ECB’s account of the April meeting, Cipollone speaks, BoE’s Pill speaks
Earnings : Tokyo Electron

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Finally, looking at just the US, Goldman notes that the key economic data release this week are the University of Michigan report on Friday. There are several speaking engagements by Fed officials this week, including remarks from Vice Chair Jefferson, Vice Chair for Supervision Barr, Governors Cook and Bowman, and Presidents Barkin, Williams, Kashkari, Collins, and Goolsbee.

Monday, May 6

12:50 PM Richmond Fed President Barkin (FOMC voter) speaks: Richmond Fed President Thomas Barkin will deliver a speech on the economic outlook in Columbia, South Carolina. Audience and media Q&A are expected. On April 10, Barkin said “of course it’s conceivable that we’re going to get to a soft landing, the numbers in a big picture have been great… We need to be humble about how easy it is to get there.”
01:00 PM New York Fed President Williams (FOMC voter) speaks: New York Fed President John Williams will participate in a fireside chat conversation at the Milken Institute Global Conference. A Q&A is expected. On April 18, Williams said “I definitely don’t feel urgency to cut interest rates.” He went on to say, “I think interest rates will need to be lower at some point but the timing of that will be based on the economy.”
02:00 PM Senior Loan Officer Opinion Survey 2023Q4

Tuesday, May 7

There are no major economic data releases scheduled.
11:30 AM Minneapolis Fed President Kashkari (FOMC non-voter) speaks: Minneapolis Fed President Neel Kashkari will participate in a fireside chat at the Milken Institute Global Conference. A Q&A is expected. On April 4, Kashkari said “in March I jotted down 2 rate cuts this year. But if inflation continues moving sideways, that would make me question whether we need to do those rate cuts at all.”

Wednesday, May 8

10:00 AM Wholesale inventories, March final (consensus -0.4%, last -0.4%)
11:00 AM Fed Vice Chair Jefferson speaks: Vice Chair Philip Jefferson will participate in a moderated discussion on careers in economics. On April 16, Jefferson said “my baseline outlook continues to be that inflation will decline further, with the policy rate held steady at its current level, and that the labor market will remain strong, with labor demand and supply continuing to rebalance.” He went on to say that “the outlook is still quite uncertain, and if incoming data suggests that inflation is more persistent than I currently expect it to be, it will be appropriate to hold in place the current restrictive stance of policy for longer.”
11:45 AM Boston Fed President Collins (FOMC non-voter) speaks: Boston Fed President Susan Collins will provide remarks to MIT students followed by a fireside discussion. Speech text and a Q&A are expected. On April 11, Collins said “I expect to see further evidence that inflation is durably, if unevenly, returning toward 2 percent, and that the economy is coming into better balance, with demand and supply more closely aligned amid a healthy labor market.”
01:30 PM Fed Governor Cook speaks: Fed Governor Lisa Cook will discuss the Fed’s latest semi-annual Financial Stability Report at an event hosted by Brookings. Remarks will be followed by a panel discussion. A Q&A is expected. On March 25, Cook said “the path of disinflation, as expected, has been bumpy and uneven, but a careful approach to further policy adjustments can ensure that inflation will return sustainably to 2% while striving to maintain the strong labor market.”

Thursday, May 9

08:30 AM Initial jobless claims, week ended May 4 (GS 215k, consensus 212k, last 208k): Continuing jobless claims, week ended April 27 (consensus 1,785k, last 1,774k)

Friday, May 10

09:00 AM Fed Governor Bowman speaks: Fed Governor Michelle Bowman will speak on financial stability risks at the Texas Bankers Association Annual Convention. Speech text and a moderated Q&A are expected. On May 3, Bowman said “with annualized 3-month core PCE inflation jumping to 4.4 percent in March, well above average inflation in the second half of last year, I expect inflation to remain elevated for some time,” but went on to say “my baseline outlook continues to be that inflation will decline further with the policy rate held steady, but I still see a number of upside inflation risks that affect my outlook.”
10:00 AM Dallas Fed President Logan (FOMC non-voter) speaks: Dallas Fed President Lorie Logan will speak in a moderated Q&A to the Louisiana Bankers Association Annual Conference in New Orleans. On April 5, Logan said “I’m increasingly concerned about upside risks to the inflation outlook. To be clear, the key risk is not that inflation might rise – though monetary policymakers must always remain on guard against that outcome – but rather that inflation will stall out and fail to follow the forecast path all the way back to 2 percent in the timely way.”
10:00 AM University of Michigan consumer sentiment, May preliminary (GS 76.2, consensus 76.8, last 77.2); University of Michigan 5-10-year inflation expectations, May preliminary (GS 3.1%, consensus 3.0%, last 3.0%): We expect the University of Michigan consumer sentiment index decreased to 76.2 in the preliminary May reading. We estimate the report’s measure of long-term inflation expectations rose 0.1pp to 3.1%, reflecting higher gasoline prices and the higher-than-expected price data reported in 2024. The transition to web-based interviews could also exert upward pressure.
12:45 PM Chicago Fed President Goolsbee (FOMC non-voter) speaks: Chicago Fed President Austan Goolsbee will speak in a moderated Q&A at the Economic Club of Minnesota luncheon. On April 19, Goolsbee said “so far in 2024, that progress on inflation [we saw in 2023] has stalled. You never want to make too much of any one month’s data, especially inflation, which is a noisy series, but after three months of this, it can’t be dismissed.”
01:30 PM Fed Vice Chair for Supervision Barr speaks: Fed Vice Chair for Supervision Michael Barr will give a commencement speech for American University School of Public Affairs Graduation.

Source: DB, Goldman

Ten years ago this week, we posted one of out most viral stories, highlighting the over-capacity in the auto industry:  “Where the World’s Unsold Cars Go To Die,” which highlighted the ‘endgame’ of automakers’ ‘channel stuffing’ efforts to disguise the sudden lack of demand for all the exciting new models that they had forecast would boom to the moon…

And now, as MishTalk’s Mike Shedlock reports,  we are seeing similar pictures across Europe…

“Some are parked here for a year, sometimes more.”

Le Monde reports Belgium’s ports drowning under glut of Chinese electric cars: ‘Some are parked here for a year, sometimes more’

Due to China’s overcapacity in production – as it aims to capture a quarter of the European electric vehicle market – the ports of Antwerp and Zeebrugge are inundated.

You probably need to see it to appreciate the challenges the automobile industry faces in transitioning to electricity. You also need to come here to understand how the Chinese industry’s overcapacity has flooded the European market. That morning, as the sun unexpectedly lit up the maze of highways leading to this remote arm of the port of Antwerp, Belgium, a huge cargo ship from the Norwegian company Höegh Autoliners unloaded thousands of cars at one of the terminals of International Car Operators (ICO), a subsidiary of the Japanese group Nippon Yusen Kaisha.

Alongside Swedish-Norwegian Wallenius Wilhelmsen, it is one of the main operators of the now merged port of Antwerp-Bruges, the world’s largest automotive terminal, through which the production of some 40 brands used to transit. But that was before the emergence of their Chinese competitors.

Car Parks

Quartz reports Cars are piling up at European ports at an alarming rate

Imported vehicles are seriously piling up at European ports, turning them into “car parks.” Automakers are distributors are struggling with a slowdown in car sales as well as logistical bottlenecks that make it hard to alleviate the buildup of new, unsold vehicles.

Some Chinese brand EVs had been sitting in European ports for up to 18 months, while some ports had asked importers to provide proof of onward transport, according to industry executives. One car logistics expert said many of the unloaded vehicles were simply staying in the ports until they were sold to distributors or end users.

“It’s chaos,” said another person who had been briefed on the situation.

This is another part of the escalating trade war between China and the rest of the world.

China Produces 55 Percent of All Steel, Biden and Trump Eye Tariffs

Yesterday, I commented China Produces 55 Percent of All Steel, Biden and Trump Eye Tariffs

On April 22, I cautioned A Big Deflationary Push From China But Will Biden or Trump Allow That?

China keeps returning to a well that has run dry, using exports as a means for growth. China is about to hit a brick wall, with global consequences.

My #1 issue looking ahead to 2025 is a global trade war with serious repercussions.

The carbon credit con band plays on…

The most recent chapter in the ‘green’ initiative has been supermajor Shell being found to have sold ‘phantom’ carbon credits that were twice the volume of emissions the company actually avoided, according to FT.

Shell has reportedly sold millions of carbon credits, tied to CO₂ removal, to Canada’s main oil sands companies, despite doubts arising over the validity of the claimed emissions reductions.

Keith Stewart with Greenpeace Canada commented: “Selling emissions credits for reductions that never happened . . . literally makes climate change worse.”

Under a subsidy initiative by Alberta’s provincial government to support the industry, Shell was permitted to register and sell carbon credits double the amount of emissions purportedly avoided by its Quest carbon capture facility from 2015 to 2021. However, this subsidy was phased out by 2022.

Consequently, Shell managed to register 5.7 million credits which were then sold to leading oil sands producers including Chevron, Canadian Natural Resources, ConocoPhillips, Imperial Oil, and Suncor Energy.

Alberta’s environment ministry stated that the crediting support scheme did not lead to “additional emissions” by industrial polluters.

Energy firms globally, including those in Canada, are advocating for increased government backing for carbon capture and storage initiatives. Alberta, known for its vast and carbon-intensive oil resources, has seen a surge in production, hindering Canada’s efforts to meet emission reduction goals.

The Financial Times report noted that the Quest facility, operated by Shell Canada and co-owned by Canadian Natural Resources, Chevron, and Shell Canada, is integral to the Scotford processing and refining complex. At Quest, CO₂ is extracted during hydrogen gas production, crucial for converting bitumen from oil sands into synthetic crude oil.

Canada offers substantial incentives for CCS projects, yet the industry’s profitability remains challenging. Quest’s annual report revealed a total cost of $167.90 per tonne of carbon avoided in 2022, compared to Alberta’s $50 carbon price for major industrial emitters.

Documents obtained by Greenpeace Canada, shared with the Financial Times, disclosed that Shell initially sought a three-for-one deal on carbon credits at Quest. Alberta introduced a two-for-one scheme in 2011, exclusively for plants operational by the end of 2015, such as Quest. The incentive decreased to three-quarters of a credit by 2022 and was eventually phased out with the rise in carbon prices.

“At the end of the day, the oil and gas sector and the oil sands firms in particular need to get going with respect to emissions reductions,” concluded Jonathan Wilkinson, Canada’s minister of energy and natural resources.